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China Market drops as trade row worries mount

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Capital Market
Last Updated : Sep 17 2018 | 1:50 PM IST
The Mainland China equity market closed down on Monday, 17 September 2018, as renewed U.S.-China trade tensions weighed on investor sentiment. The outlook for global trade -- which appeared to improve last week on reports the U.S. and China may enter fresh talks -- has quickly turned sour after news that President Donald Trump instructed aides to proceed with tariffs on about $200 billion more in Chinese products. At closing bell, the benchmark Shanghai Composite Index fell 1.1%, or 29.85 points, to 2,651.79, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 1.54%, or 21.53 points, to 1,380.98. The blue-chip CSI300 index shed 1.15%, or 37.17 points, to 3,204.92.

As per reports, Trump was going ahead with plans to impose new tariffs on about $200 billion of Chinese imports. The tariff level will likely be set at about 10%, below the 25% announced earlier this year. At the same time, U.S. officials, led by Treasury Secretary Steven Mnuchin, are preparing to hold new talks on the tariff dispute with Beijing. Envoys met last month in Washington but reported no progress. The two governments have already imposed 25% tariffs on $50 billion of each other's goods. Beijing has issued a list of another $60 billion of American products for retaliation if Trump's next tariff hike goes ahead.

Shares of commodity producers closed down amid drop in commodity prices following reports that Donald Trump was preparing to impose tariffs on a further US$200 billion of Chinese imports. Wanhua Chemical Group lost 4.7% to 40.21 yuan and Shandong gold Mining fell 3.8% to 22.57 yuan.

Pharmaceutical companies continued to head south after a loss of 6.5% last week on concern a new procurement method by public hospitals will bring down drug prices. Yunnan Baiyao Group, a maker of traditional Chinese medicine, tumbled 4.5% to 70 yuan and Lepu Medical Technology plunged 6.5% to 27.45 yuan.

CURRENCY NEWS: China's yuan appreciated against the U.S. dollar on Monday, despite softer mid-point fixing by People Bank of China, as investors awaited details on a new round of U.S. tariffs against China, which could further sour relations between the two giants. Prior to market opening on Friday, the People's Bank of China set the yuan's midpoint rate at 6.8509 per dollar, 147 basis points softer than the previous fix of 6.8362.

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First Published: Sep 17 2018 | 1:29 PM IST

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