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China Market falls as trade war fears persist

Headline indices of the Mainland China equity market closed lower for second day in row on Thursday, 30 May 2019, amid intensifying worries over the US-China rivalry on technology, with tech stocks leading the decline. At closing bell, the benchmark Shanghai Composite Index declined 0.31%, or 8.89 points, to 2,905.81. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.62%, or 9.63 points, to 1,582.03. The blue-chip CSI300 index fell 0.62%, or 22.73 points, to 3,641.18.

The market mood was dented by U.S. shades sliding overnight on concerns over the future course of the global economy. Beijing and Washington signalled the heightened risk of a prolonged trade war, stoking investors' concerns about the impact on global economic growth. This kind of deliberately provoking trade disputes is naked economic terrorism, economic homicide, economic bullying, China's Vice Foreign Minster Zhang Hanhui said, as Beijing continued to dial up its rhetoric amid the festering trade war with the United States.

China's Vice Foreign Minster Zhang Hanhui comments came after reports that Beijing may cut exports of rare-earth minerals used in the defense and energy sectors to strike back at Washington after US President Donald Trump remarked he was not yet ready to make a deal with China over trade.

Shares of chip makers closed down, as investors took profits from the recent rally powered by optimism that Huawei Technologies' troubles in the US will force China to become more self-sufficient on semiconductors.

Jiangxi Wisdom Technology, a maker of water meters that has transformed itself into a technology company, plunged by the 10% daily limit to 5.40 yuan, after the run-up earlier this month from its plan to develop semiconductors with a state-backed firm. The stock surged as much as 53% in May amid a frenzy among investors betting on chips.

Guangzhou Zhiguang Electric also tumbled by 10% to 5.97 yuan after the run-up earlier this month. The electrical control equipment maker soared by 45% earlier this month, after announcing a chip manufacturing firm that the company invested in will start mass production in the second half of this year.

CURRENCY NEWS: China yuan appreciated against greenback on Thursday, amid heightened Sino-U.S. trade tensions. Spot yuan opened at 6.9100 per dollar and was changing hands at 6.9109 by midday, 21 pips firmer than the previous late session close.

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