China Market falls as manufacturing PMI shrinks in July

The Mainland China equity market were lower on Wednesday, 31 July 2019, as investors booked profits after the benchmark closed at three-week high on Tuesday. Meanwhile, selloff pressure mounted after manufacturing PMI shrank for a third straight month in July 2019 and worries over US-China trade negotiations after US President Donald Trump's negative tweets on China. Around late afternoon, the benchmark Shanghai Composite Index declined 0.67%, or 19.83 points, to 2,932.51. The Shenzhen Composite Index, which tracks stocks on China's second exchange, dropped 0.68%, or 10.77 points, to 1,571.30. The blue-chip CSI300 index rose 0.9%, or 34.96 points, to 3,835.36.

U.S. President Donald Trump said in a series of tweets Tuesday that China is not keeping its promise of buying more U.S. agricultural products. Trump on Tuesday warned China against waiting out his first term to finalize any trade deal, saying if he wins re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China. The remarks came as top U.S. and Chinese trade officials met in Shanghai on Wednesday for talks in a bid to end a year-long protracted trade war.

 

Meanwhile, investors await the U.S. Federal Reserve's announcement of its decision on interest rates. The Fed is set to deliver its decision on interest rates later Wednesday, with expectations that it will cut interest rates by a quarter point.

Shares in Chinese developers slid after a top decision-making body of the ruling Communist Party said on Tuesday that China will not use the property market as a form of short-term stimulus. These comments imply that the Chinese leadership hopes to stimulate economic growth through consumption, stimulus real estate and investment is not a policy option at the moment. Policymakers also stressed they will step up efforts to boost demand and support the economy, and will continue to implement the policy of tax and fee cuts.

ECONOMIC NEWS: China manufacturing sector continued to contract in July, with a manufacturing PMI score of 49.7, the latest survey from the National Bureau of Statistics showed on Wednesday. That's up from 49.4 in June, although it remains beneath the boom-or-bust line of 50 that separates expansion from contraction. The bureau also said its non-manufacturing index fell to 53.7 from 54.2 in June. The composite index came in with a score of 53.1, up marginally from 53.0 in the previous month.

CURRENCY NEWS: China yuan softened against greenback on Wednesday, inline with softer midpoint fixing by central bank. Before the market open, the PBOC set the midpoint of the yuan's daily trading band at 6.8876 per dollar, 0.09% weaker than the previous fix of 6.8862. In the spot market, onshore yuan fell 0.64% to 6.9287 per dollar.

Powered by Capital Market - Live News