China Market falls for second straight day

The Mainland China equity market closed in the red for second straight day on Thursday, 1 August 2019, as risk sentiments dampened after private survey showed Chinese factory activity contracted in July and as the U.S. and China ended another round of trade talks on Wednesday without much progress. At closing bell, the benchmark Shanghai Composite Index declined 0.8%, or 23.74 points, to 2,908.77. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.52%, or 8.24 points, to 1,563.06. The blue-chip CSI300 index dropped 0.83%, or 31.89 points, to 3,803.47.

The U.S. and China ended another round of trade talks on Wednesday few signs of concrete progress. The two sides conducted frank, efficient and constructive in-depth exchanges on major economic and trade issues, according to Chinese media reports. The White House said Wednesday that both sides discussed topics such as forced technology transfer, intellectual property rights, services, non-tariff barriers and agriculture. U.S. and Chinese trade negotiators plan to meet again in early September 2019, prolonging an uneasy truce in the trade war between the world's two largest economies..

 

The Caixin/Markit Manufacturing Purchasing Managers' Index (PMI), a gauge of sentiment among the country's factory operators, came in at 49.9 for July. It followed the Wednesday release of the National Statistics Bureau's official purchasing managers' index (PMI), which slightly rose from June to 49.7 in July. A reading of below 50 indicates that manufacturing output is contracting.

Shares of consumption and financial players were notable losers. Liquor distiller giant Kweichow Moutai (600519 CH) fell 1.4% to 959.30, while Foshan Haitian Flavouring and Food (603288 CH) fell 3% to 96.9 yuan. Liquor distiller Wuliangye Yibi (000858 CH) also dropped 1.4% to 119.03 yuan. Industrial and Commercial Bank of China (601398 CH) slipped 0.5% to 5.61 yuan, while China Merchant Bank (600036 CH) fell 1% to 36,2 yuan.

Poultry-related stocks get a boost from higher production forecast. Chicken production in China for 2019 will grow by at least 12% this year, reaching 8.51 million tonnes, according to an official from the Ministry of Agriculture and Rural Affairs cited by an Economic Daily report. The official said the growth in white-feathered chickens has been encouraging, reaching 400 million chickens for the month of June, which is the highest in almost three years. The Ministry official expects for that monthly output to continue through the year. The wholesale price of chicken rose in July to 20.11 yuan per kilogram, up 11% from a year ago, according to China Good Agri-products Development & Service Association. Wens Foodstuff (300498 CH) rose 3.6% to 41.92 yuan. Fujian Summer Development (002299 CH) rose 2.9% to 28.71 yuan. Shandong Minhe Animcal Husbandry (002234 CH) rose 2.4% to 36.89 yuan. Shandong Xiantan (002746 CH) was up 1.7% to 17.59 yuan.

CURRENCY NEWS: China yuan declined against greenback on Thursday, inline with softer midpoint fixing by central bank and as bounce in the greenback following signals from U.S. Federal Reserve Chair Jerome Powell that its benchmark rate cut is not the start of an easing cycle. The People's Bank of China (PBOC) set the midpoint rate at 6.8938 per dollar, 0.14% softer than the previous fix of 6.8841. In the spot market, onshore yuan eased 0.24% to 6.9003 per dollar.

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