The Mainland China equity market closed stronger on Friday 23 August 2019, as investors risk sentiments encouraged by a mix of positive factors including China's monetary easing, upbeat earnings from insurers, and hopes for progress in Sino-U. S. trade negotiations after a constructive exchange this week between deputy-level negotiators. At closing bell, the benchmark Shanghai Composite Index was up 0.5%, or 14 points, to 2,897.43, bringing its gains this week to 2.6%. The Shenzhen Composite Index, which tracks stocks on China's second exchange, eased 0.01%, or 0.21 point, to 1,578.70. The blue-chip CSI300 index added 0.72%, or 27.35 points, to 3,820.8.
The markets welcomed a series of new policy developments this week. China reformed its interest rate formation mechanisms that led to a lower lending reference rate on Tuesday, effectively easing the monetary policy.
Over the weekend, a new plan announced by the government to transform Shenzhen into a globally competitive city also sparked investors' enthusiasm.
Meanwhile, the US and Chinese trade negotiators are schedule to meet in person for the latest round of talks, White House economic adviser Larry Kudlow said on Thursday.
Federal Reserve Chairman Jerome Powell's speech at the Jackson Hole Symposium later today will be closely watched by the markets. He is likely to nod to the possibility that trade tensions, which have escalated, may worsen the global economic slowdown and ultimately make more US rate cuts necessary. Investors believe Powell will use the event to set the stage for a 25 basis point rate cut in September.
Shares of major healthcare firms advanced, as investors' enthusiasm was pushed higher by a new list of drugs covered by the national health insurance released on Tuesday. Market bellwether Jiangsu Hengrui Medicine surged 6.8% to a record high, on the back of its new PD-1 drug to treat Hodgkin's lymphoma.
CURRENCY NEWS: The Chinese currency was little changed against the dollar on Friday. Prior to the market opening, the People's Bank of China (PBOC) lowered the official yuan midpoint to a fresh 11-1/2 year low of 7.0572 per dollar, 82 bps weaker than the previous fix of 7.0490. Spot yuan ended at 7.0825 per dollar, bouncing from an earlier 11-1/2-year low of 7.0992 and 5 bps firmer than the previous late night close.
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