China Market falls as GDP slips

The Mainland China equity market closed steep lower on Friday, 18 October 2019, on concern about economic slowdown after the release of weaker than expected third-quarter growth data. At closing bell, the benchmark Shanghai Composite Index declined 1.32%, or 39.19 points, to 2,938.14. The Shenzhen Composite Index, which tracks stocks on China's second exchange, lost 1.17%, or 19.20 points, to 1,616.72. The blue-chip CSI300 index dropped 1.42%, or 55.84 points, to 3,869.38.

China Gross domestic product (GDP) expanded 6% in third quarter ended September 2019, compared with 6.2% in the second quarter, official figures showed on Friday, as the country grapples with protracted trade war with the US and slowing domestic demand. The Chinese economy grew at 6.6% in 2018. However, the Industrial Production rose 5.8% year-on-year in September, after growth of 4.4% in August. Meanwhile, consumer spending, as represented by Retail Sales, rose 7.8% year-on-year in September.

Investors were beginning to fear that GDP growth, which has fallen in every quarter since beginning this year, is reflecting the fact that the various economic stimulus and supportive monetary measures launched by the government and central bank are having a limited effect.

Britain and the European Union agreed to a severance deal, moving closer toward wrapping up three years of uncertainties after Britons voted to leave the bloc. The deal comes after years of divisive and frequently acrimonious discussions with the EU, including successive days of late-night talks this week.

At a news conference with Prime Minister Boris Johnson, European Commission President Jean-Claude Juncker said the deal meant there would be no need for a further delay to Britain's departure and negotiations on the future relationship between Britain and the EU would begin as soon as the deal was approved by the UK and European parliaments.

On the U.S.-China trade front, White House economic adviser Larry Kudlow's commented that he sees momentum to finalize the initial phase of a U.S.-China trade deal outlined last week, adding it may be signed at the APEC forum next month. China hopes to reach a phased agreement in the trade dispute with the United States and cancel tariffs as soon as possible, the Commerce Ministry said on Thursday, adding that trade wars had no winners. Upbeat statements from Beijing and Washington fueled hopes that a phased agreement could ease the long-running U.S.-China trade war that has rattled markets for months.

Index heavyweight, liquor distiller Kweichow Moutai (600519 CH), lost 0.6% to 1,175,79 yuan. LONGi Green Energy Tech (601012) slumped 3.5% to 23.35 yuan.

Shares of financials declined the most in the Shanghai bourses, with Ping An Insurance (601318 CH) falling 2.2% to 89.75 yuan, China Merchant Bank (600036 CH) dropping 2.2%, to 36.18 yuan, and Industrial and Commercial Bank of China (601398 CH) easing 0.7% to 5.67 yuan.

CURRENCY NEWS: China's yuan eased against greenback on Friday, as the People's Bank of China (PBOC) set the midpoint rate at 7.069 per dollar, nearly 0.14% softer than the previous fix of 7.0789. Spot yuan opened at 7.0710 per dollar and was changing hands at 7.0777 by midday, only 5 bps weaker than the previous late session close.

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