Headline indices of the Mainland China equity market closed down on Friday, 17 May 2019, amid heightened tensions between Beijing and Washington. At closing bell, the benchmark Shanghai Composite Index dropped 2.48%, or 73.42 points, to 2,882.30. The Shenzhen Composite Index, which tracks stocks on China's second exchange, sank 3.26%, or 61.59 points, to 1,533.22. The blue-chip CSI300 index declined 2.54%, or 95.20 points, to 3,648.76.
Market sentiment has been hurt further by U. S. government moves to block China's Huawei Technologies from buying vital American technology, throwing into question prospects for sales at some of the largest tech companies and drawing a sharp rebuke from Beijing.
An executive order by the Trump administration, aimed at banning Huawei equipment from U. S. networks, took effect on Thursday. The order also subjects the Chinese telecommunications giant to strict export controls. China has threatened to retaliate. It remains to be seen how the move will affect trade negotiations.
Investors had largely priced in the two economic powerhouses to reach a deal this month.
Instead, the U. S. hiked tariffs on $200 billion worth of Chinese imports. China retaliated with higher tariffs on $60 billion worth of goods.
China's state planner said on Friday trade frictions with the United States has had some impact on China's economy, but it was "controllable" and countermeasures would be rolled out when needed to "keep economic operations within reasonable range". The comments came after China reported surprisingly weaker growth in retail sales and industrial output for April this week.
CURRENCY NEWS: China's yuan was down against the U. S. dollar on Friday, inline with China's central bank softer midpoint fixing. Prior to market opening, the People's Bank of China (PBOC) lowered the midpoint rate to 6.8859 per dollar, 171 pips or 0.25 percent weaker than the previous fix of 6.8688. Friday's fixing was the weakest since Dec. 27, 2018. In the spot market, onshore yuan opened at 6.9000 per dollar, fell to a low of 6.9099 at one point, the softest level since Dec. 24, 2018.
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