China Stocks fall on GDP data

Headline indices of the Mainland China equity market were lower on Monday, 16 July 2018, as risk sentiments weakened after Chinese official data indicated a slowdown in China's economic expansion in the second quarter, while the heated trade war with the United States threatened to knock exports. Around late afternoon, the benchmark Shanghai Composite Index fell 0.47%, or 13.43 points, to 2,817.76, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, sank 0.04% or 0.62 points, to 1,603.83. The blue-chip CSI300 index shed 0.45%, or 16.55 points, to 3,477.14.

China's economy expanded at a slower pace in the second quarter as Beijing's crackdown on debt risks crimped activity, while June factory output growth weakened to a two-year low in a worrying sign as a heated trade war with the United States threatens to knock exports.

Trade tensions eased somewhat last week as officials in Beijing appeared to moderate their response to President Donald Trump's tariff threats amid a slowing economy, falling stock market and weakening currency.

ECONOMIC NEWS: China gross domestic product climbed a seasonally adjusted 1.8 percent on quarter in the second quarter of 2018, the National Bureau of Statistics said on Monday, following the rise of 1.4 percent in the three months prior. It was the strongest quarterly expansion since the September quarter 2017. Year-on-year, the economy advanced 6.7 percent year-on-year in the June quarter of 2018, after a 6.8 percent growth in the previous three quarters. It was the weakest pace of expansion since the third quarter of 2016.

NEWS HEADLINE: Bourses rule out expanding stock link program -- The Shanghai and Shenzhen stock exchanges said Saturday they would not expand their stock connect program with Hong Kong to foreign firms, companies with different voting right structures and stapled securities. The exchanges were responding to a move in May to include the three types of securities in Hong Kong's Hang Seng Composite Index starting from the third quarter of this year. The Shanghai Stock Exchange said in a statement it reached the decision after consulting with mainland brokerages.

Sovereign fund gears up to invest at home -- CHINA Investment Corp. (CIC), the nation's US$941 billion sovereign wealth fund, wants permission to invest in domestic stocks and bonds for the first time, as per reports, as it tries to end restrictions on its mandate following government moves to open up financial markets.

CURRENCY NEWS: The Chinese yuan was down against the dollar on Monday, July 16, 2018, due to the People's Bank of China softer mid-point rate fixing. The central parity rate of the Chinese currency renminbi, or the yuan, weakened 31 basis points to 6.6758 against the U.S. dollar Monday, according to the China Foreign Exchange Trade System.

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