China Market falls after Fitch outlook downgrade

Mainland China share market finished session significantly in negative territory on Wednesday, 10 April 2024, dragged by real estate shares as sentiment soured after Fitch revised its outlook of the country's sovereign credit rating to negative, citing increasing risks to the country's public finance outlook.

Ratings agency Fitch downgraded its outlook on Chinas sovereign credit rating to negative from stable due to risks to the country's public finances amid increasing uncertainty in its economy. It also forecast economic growth would slow to 4.5% in 2024. The latest downgrade followed Moody's downgrade warning on China's credit rating in December.

Investors are awaiting a string of key economic data due this week and the next to gauge the path of monetary policy in the world's two largest economies. Market participants will next look to China inflation data on Thursday, trade on Friday and first quarter gross domestic product data and activity indicators next week.

At close of trade, the benchmark Shanghai Composite index was down 0.7%, or 21.20 points, to 3,027.34. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.74%, or 30.52 points, to 1,720.28. The blue-chip CSI300 index sank 0.81%, or 28.78 points, to 3,504.71.

Shares of real estate companies declined after several property developers reported weakening sales in March.

CURRENCY NEWS: China's yuan was tad weaker against the dollar on Monday, inline with softer midpoint fixing by the central bank. Prior to the market's opening, the People's Bank of China set the midpoint rate at 7.0959 per U.S. dollar prior to market open, only 3 pips weaker than the previous fix 7.0956. In the spot market, the onshore yuan CNY=CFXS yuan was changing hands at 7.2311 at midday, 18 pips firmer than the previous late session close and 1.91% weaker than the midpoint.

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