China Market swings to gains

The Mainland China equity market closed higher in volatile trade on Friday, 12 October 2018, as investors chased for beaten down stocks after benchmark indices fell to four year lows on Thursday amid a global sell-off and as China posted record trade surplus in September 2018. However, market gains were limited as investor sentiments remained low amid lingering anxiety over the Sino-U.S. trade war and rising U.S. interest rates. At closing bell, the benchmark Shanghai Composite Index rebounded 0.91%, or 23.46 points, to 2,606.91, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.2%, or 2.45 points, to 1,296.36. The blue-chip CSI300 index rose 1.5%, or 46.62 points, to 3,170.73. So far this year, the Shanghai stock index and the CSI300 dropped fell almost 21%. Shanghai stocks declined 7.6% this month.

Chinese customs data showed that exports rose 14.5% from a year earlier in September 2018, well above August's 9.8% gain, while imports grew at 14.3% in September 2018 from 19.9% in August, resulting trade surplus of US$34.13 billion in September, surpassing the record of US$31.05 billion in August.

 

Market concerns about Chinese currency manipulation somewhat eased yesterday after reports U.S. Treasury Department staff had advised Secretary Steven Mnuchin that China was not manipulating the yuan - welcome news as the Trump administration prepares a closely watched report on foreign currencies. But China reported on Friday an unexpected acceleration in export growth in September and a record trade surplus with the United States, fanning concerns the already-heated trade spat could get uglier.

CURRENCY NEWS: China's yuan weakened against the U.S. dollar on Friday amid soft mid-point fixing by central bank and as unexpectedly strong China exports data renewed anxiety over the Sino-U.S. trade war. Prior to market open, the People's Bank of China set the yuan mid-point at 6.9120, the weakest fixing since March 10, 2017 prior to trade on Friday.

OFFSHORE MARKET NEWS, US stock market tumbled for a second straight day on Thursday, rattled by rising interest rates, signs of a slowdown in the global economy and the US-China trade dispute. The Dow Jones Industrial Average slumped 2.1% to 25,052.83, down 2.1% or 545 points. The broad-based S&P 500 also dropped 2.1% to 2,728.26, while the tech-rich Nasdaq Composite Index fell 1.3% to 7,329.06.

European shares hit their lowest in more than 21 months on Thursday following a slide on Wall Street as jitters over rising US Treasury yields and signs of slowing global growth prompted broad selling of risky assets. The German DAX Index slumped by 1.5%. The French CAC 40 Index and the U.K.'s FTSE 100 Index both fell by 1.9%.

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