China Stocks tumble as trade worries fester

Headline indices of the Mainland China equity market tumbled on Friday, 23 November 2018, as risk aversion selloff triggered on caution ahead of next week's U.S./China trade talks and uncertainties surrounding the U.K.'s divorce negotiations with the European Union. Most of SSE issues declined, with shares in telecom and technology issues being notable losers on reports that the U.S. has been pressuring foreign allies to avoid doing business with China's Huawei Technologies Co. At closing bell, the benchmark Shanghai Composite Index fell 2.5%, or 65.95 points, to 2,579.48, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 3.66%, or 50.68 points, to 1,335.15. The blue-chip CSI300 index shed 2.2%, or 70.95 points, to 3,143.48.

Shares of telecom and technology issues bore the brunt of losses, after report in The Wall Street Journal that said the U.S. has been trying to persuade its foreign allies to avoid using China's Huawei Technologies Co.'s telecoms equipment, citing cybersecurity concerns. News of pressure over Huawei comes just ahead of trade talks between U.S. President Donald Trump and Chinese President Xi Jinping atthe G-20 summit in Argentina next week. U.S. officials warned Americans not to buy Huawei devices in February, saying they could be used to spy on users. Earlier this year, lawmakers introduced the Defending U.S. Government Communications Act, which would ban government agencies from using equipment from ZTE and Huawei.

CURRENCY NEWS: China's yuan fell against the dollar on Friday, despite firmer mid-point fixing, as official data suggested that the People's Bank of China spent more to prop up the currency last month, highlighting the bank's challenges in an environment of unabating U.S. dollar strength. Prior to the open, the PBOC set the daily midpoint rate at 6.9306 per dollar, firmer than the previous fix 6.9391. The spot yuan was changing hands at 6.9395 per dollar at midday, 81 pips weaker than the previous late session close and 0.13% weaker than the midpoint, after opening at 6.9325.

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