China Stocks end mixed as market awaits Sino-US trade talks news

Headline indices of the Mainland China equity market closed mixed on Thursday, 14 February 2019, as better-than-expected China trade data offset by caution before outcome of the Sino-U.S. trade negotiators talks. At closing bell, the benchmark Shanghai Composite Index advanced 1.36%, or 35.66 points, to 2,653.90. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.66%, or 9.16 points, to 1,398.84. The blue-chip CSI300 index rose 0.15%, or 5.11 points, to 3,402.14.

China's exports unexpectedly returned to growth in January after a shock decline the previous month, while imports fell much less than expected. China's January dollar-denominated exports rose 9.1% from a year ago, ompared with the previous month's 4.4% decline, according to Chinese customs data. China's imports fell 1.5% over the same period. Imports in December fell 7.6% from a year ago. Thus, China's overall trade surplus of $39.16 billion in January. China's closely watched trade surplus with the U.S. fell to $27.3 billion in January, from $29.87 billion in December. In January, China's exports to the U.S. fell 2.4% from a year ago, while imports from its trade war opponent tanked 41.2% over the same period.

Investors were watching for developments coming out of Beijing today and tomorrow as they sized up positive remarks by US President Donald Trump about trade talks with China. Today, US Secretary of the Treasury Steve Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese officials to try and come up with a deal. They are also scheduled to meet with Xi Jinping.

U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25% from 10% if the two sides do not reach a deal by March 1.

On Wednesday, President Trump told reporters at the White House that trade talks with China were going along very well, a comment that came ahead of high-level meetings between Chinese vice premier Liu He and central bank governor Yi Gang, and US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The negotiations over the next two days will centre on structural changes demanded by the US of China relating to forced technology transfer, intellectual property protection, non-trade barriers, cyber intrusions and cybertheft among others.

Investors are also optimistic about avoiding government shutdown. The White House has said that the President is likely to sign the deal negotiated between the Democrats and Republicans in Congress.

CURRENCY NEWS: China's yuan eased against the U.S. dollar on Thursday. Prior to market opening on Thursday, the People's Bank of China (PBOC) set the midpoint rate at 6.7744 per dollar, 69 pips or 0.1% weaker than the previous fix 6.7675. In the spot market, the onshore yuan opened at 6.7702 per dollar and was changing hands at 6.7620 at midday, 20 pips weaker than the previous late session close but 0.18% stronger than the midpoint.

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