China Stocks reverse course to end lower

Mainland China equity market finished down after erasing early gains on Friday, 27 December 2019, as investors elected to book recent gains despite upbeat November industrial profit data. At closing bell, the benchmark Shanghai Composite Index declined 0.08%, or 2.32 points, to 3,005.04. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.67%, or 11.54 points, to 1,697.91. The blue-chip CSI300 index was down by 0.1%, or 3.96 points, to 4,022.03.

Investors sentiment got a boot on the prospects of completing a phase-one U.S.-China trade deal after encouraging comments from President Donald Trump and Chinese officials and after Beijing laid out plans to bolster its economy, which included investments in infrastructure and easing of residency curbs.

Chinese Foreign Ministry spokesman Geng Shuang said on Wednesday that officials from Beijing and Washington were in close communication about detailed arrangements for the deal's signing and other follow-up work. Those comments follow remarks from President Trump, who on Christmas Eve said that the deal is done, it's just being translated right now. Trump also said that he and China's leader, Xi Jinping, would hold a signing ceremony for the partial trade resolution in January. We'll be having a quicker signing because we want to get it done.

China scrapped restrictions on household registration permits for cities under 3 million population, and comprehensively loosened such curbs for cities of 3 million to 5 million residents, according to a document issued by the cabinet. In April, China said it would relax residency curbs in many of its smaller cities this year and increase infrastructure spending. Easing norms for urban residency will promote urbanisation and boost housing demand

Investors pocketed gains in semiconductors after a week of stunning gains. Securities brokerages also fell, as enthusiasm based on speculation over a trading tax cut and monetary easing failed to take place.

ECONOMIC NEWS: China Industrial Profits Recover In November-China's industrial profits expanded 5.4% year-on-year in November, in contrast to a 9.9% decrease in October, data from the National Bureau of Statistics showed Friday. Data showed that in January to November period, industrial profits decreased 2.1% from the same period last year.

CURRENCY NEWS: China's yuan inched lower against the dollar on Friday, inline with soft mid-point fixing by the People's Bank of China (PBOC) and speculation of a possible cut to bank reserve requirements ahead of the new year. PBOC set the midpoint rate CNY=PBOC at 6.9879 per dollar prior to market opening, 78 pips or 0.11% weaker than the previous fix of 6.9801. In the spot market, onshore yuan CNY=CFXS opened at 6.9980 per dollar and was changing hands at 6.9989 at midday, 9 pips weaker than the previous late session close.

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