China Market bounces on trade, stimulus hopes

The Mainland China equity market closed higher for the first time in five consecutive sessions on Monday, 21 October 2019, as risk sentiments bolstered by reports that the U.S. and China made 'substantial progress' at trade talks and hopes that Beijing would continue its policy support for the economy. Market gains were, however, capped due to worries about European political instability after UK Prime Minister Boris Johnson failed to secure the votes needed to pass the Brexit deal he struck with the EU. At closing bell, the benchmark Shanghai Composite Index inclined 0.05%, or 1.48 points, to 2,939.62. The Shenzhen Composite Index, which tracks stocks on China's second exchange, eased 0.11%, or 1.85 points, to 1,614.87. The blue-chip CSI300 index gained 0.3%, or 11.46 points, to 3,880.84.

The U.S. and China made 'substantial progress' at trade talks, according to Chinese Vice Premier Liu He. Chinese Vice Premier Liu He said on Saturday that China would work with the United States to address each other's core concerns on the basis of equality and mutual respect, and that stopping the trade war would be good for both sides and the world. After reaching a partial trade deal earlier this month, Beijing and Washington are working to pen a written agreement. Both sides have applied tariffs on billions of dollars worth of each other's products, which have roiled global markets, created business uncertainty and dented economic outlooks around the world. China said last week its economy grew by 6% on-year in the third quarter, which is believed to be the slowest GDP gain for the country in at least 27.5 years.

 

China's state planner in September more than doubled its approval for fixed-asset investment projects, as Beijing looks to step up support for the economy expanding at the slowest pace in nearly three decades. The National Development and Reform Commission approved 177.8 billion yuan ($25.15 billion) of investment in 14 fixed-asset projects in September. That compared with its August approval for 68.9 billion yuan worth of projects. In the third quarter, the NDRC approved 35 projects totaling 317.2 billion yuan.

Shares of China Life Insurance (601628 CH) surged 5% to 30.81 yuan after forecasting a jump in profit for the first nine months, while China Citic Bank (601998 CH) led the charge among lenders with a gain of 4.3% after the loan prime rate stayed unchanged this month.

Tianfeng Securities (601162 CH) plummeted by the 10% daily limit to 6.98 yuan in Shanghai after the lock-up period of a 35.4 percent stake in the brokerage expired today, adding to concern about a glut of stock supply.

The 1.83 billion shares, which are held by 36 pre-IPO shareholders, have become available for public trading after Tianfeng's debut in Shanghai a year ago.

CURRENCY NEWS: China's yuan firmed up against greenback on Monday, as the People's Bank of China (PBOC) set stronger midpoint rate on Monday, and as a comment from the central bank chief that the exchange rate. Prior to market opening on Monday, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 7.0680 per dollar, 10 bps firmer than the previous fix of 7.0690, and the strongest since Sept.16. In the spot market, onshore yuan CNY=CFXS opened at 7.0680 per dollar and was changing hands at 7.0678 late afternoon, 132 bps firmer than the previous late session close.

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