China Stocks fall after poor coronavirus drug trial results

Headline indices of the Mainland China equity market closed down for second day in row on Friday, 24 April 2020, as lingering economic uncertainty sparked by the coronavirus pandemic kept share prices under pressure. Sentiments were also hammered on doubts about progress in developing drugs to treat COVID-19. However, market losses caped on hopes of more economic support from the government to shore up the world's second- largest economy. At closing bell, the benchmark Shanghai Composite Index declined 1.06%, or 29.97 points, to 2,808.53. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 1.48%, or 26.10 points, to 1,736.93. The blue-chip CSI300 index dropped 0.86%, or 32.78 points, to 3,796.97. For the week, both SSEC and CSI300 shed 1.1% each.

Risk sentiment deteriorated after a news report, citing inadvertently released results, said the closely watched antiviral drug remdesivir had had no effect on patients in its first randomised clinical test.

The market shrugged off a cut by the PBOC to targeted medium-term lending facility (TMLF) rates earlier in the session, following similar reductions to borrowing costs on other liquidity tools in the past few weeks to support the economy.

China's central bank cut the interest rate on its targeted medium-term lending facility (TMLF) on Friday, following similar reductions to borrowing costs on other liquidity tools in the past few weeks to support the economy. The People's Bank of China (PBOC) said it lowered the one-year interest rate on the TMLF by 20 basis points to 2.95% from the 3.15% of the last operation in January. In the same statement, the central bank also said it injected 56.1 billion yuan (US$7.93 billion) into the economy, just as 267.4 billion yuan of TMLF loans was due to expire.

Investors widely expected the central bank would inject additional cash through various tools though the market was already "flush with liquidity".

CURRENCY NEWS: China's yuan eased against the dollar on Friday, as broad strength in the greenback continued to weigh on the Chinese currency. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0803 per dollar, 84 pips or 0.12% firmer than the previous fix of 7.0887. In the spot market, onshore yuan CNY=CFXS opened at 7.0800 per dollar and was changing hands at 7.0836 at midday, 164 pips weaker than the previous late session close.

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