China stocks log best week since June on hopes of trade talks, stimulus

06 Sep, 2019

** The blue-chip CSI300 index rose 0.6%, to 3,948.51, while the Shanghai Composite Index closed up 0.5% at 2,999.60.

** For the week, CSI300 and SSEC were both up 3.9%, marking their best week since late June.

** China and the United States on Thursday agreed to hold high-level talks in early October in Washington, cheering investors hoping for a trade war thaw as new U.S. tariffs on Chinese consumer goods chip away at global growth.

** These would be the first in-person, high-level discussions since a failed U.S.-China trade meeting at the end of July prompted U.S. President Donald Trump to proceed with fresh tariffs on virtually all remaining Chinese imports so far untouched by the trade war.

** The robust gains were also bolstered by Beijing's pledge to further support the economy.

** China will implement both broad and targeted cuts in the reserve requirement ratio (RRR) for banks "in a timely manner," China's cabinet said in a meeting on Wednesday, an indication that a cut in the key ratio aimed at boosting lending could be imminent.

** Many of China's analysts believe the negative impact on the A-share market from the Sino-U.S. trade war would marginally decrease with time, as Beijing rolls out more measures to boost the economy at a time when A-shares' valuations are reasonable and more international money flows in as the country further opens up its capital markets.

** Major index providers MSCI and FTSE Russell will announce further increased inclusion factors for the A-share market later this year, while S&P Dow Jones Indices will also include Chinese A-shares in its global benchmarks from September.

** For the day, investors via the Stock Connect linking Hong Kong and the mainland purchased a net 9.1 billion yuan ($1.28 billion) worth of A-shares, extending their recent buying interest.

** Around the region, MSCI's Asia ex-Japan stock index  was firmer by 0.57%, while Japan's Nikkei index  closed up 0.54%.

** At 0717 GMT, the yuan was quoted at 7.128 per U.S. dollar, 0.31% firmer than the previous close of 7.1499.

** The largest percentage gainers in the main Shanghai Composite index were Hefei Metalforming Intelligent Manufacturing Co Ltd, up 10.04%, followed by Yangzhou Yaxing Motor Coach Co Ltd, gaining 10.04% and Haohua Chemical Science & Technology Corp, up by 10.01%.

** The largest percentage losses in the Shanghai index were North China Pharmaceutical Co Ltd down 8.09%, followed by Bomin Electronics Co Ltd losing 7.2% and Western Region Gold Co Ltd down by 5.84%.

** As of 07:18 GMT, China's A-shares were trading at a premium of 28.15% over the Hong Kong-listed H-shares.

Copyright Reuters, 2019

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