China Market falls on profit booking

The Mainland China equity market closed down for second straight session on Wednesday, 11 September 2019, as investors continued withdrawing profit off the table amid lingering uncertainties over potential trade negotiations between China and the United States after a senior White House adviser played down expectations of fresh trade talks. Market losses, however, were limited thanks to Beijing's latest effort to further open up its financial markets. Most of SSE sectors declined, with shares of defensive consumer, tech, financials and healthcare sectors being notable losers. At closing bell, the benchmark Shanghai Composite Index declined 0.41%, or 12.39 points, to 3,008.81. The Shenzhen Composite Index, which tracks stocks on China's second exchange, was down 0.94%, or 15.78 points, to 1,671.54. The blue-chip CSI300 index dropped 0.74%, or 29.16 points, to 3,930.10.

China's foreign exchange regulator said on Tuesday that it had decided to scrap quota restrictions on two major inbound investment schemes, as a weakening yuan and rising outflows prompt Beijing to seek to attract more foreign capital.

 

The investment quota limits under the Qualified Foreign Institutional Investors (QFII) scheme, and the Renminbi Qualified Foreign Institutional Investor (RQFII) programme will both be removed, the currency regulator said on Tuesday, without divulging when the changes would take effect. QFII, set up in 2002, lets foreign funds invest onshore in China's yuan-denominated A shares. The RQFII programme, introduced in 2011, gives investors access to offshore renminbi to buy mainland-traded stocks. The removal of the first quota, after 17 years of a gradual, regulated opening of China's equities, removes one of the major vestiges of the country's closed capital markets. It is also a nod to the ongoing negotiations to resolve the year-long US-China trade war, which has sought to remove restrictions on foreign investments, address American concerns of China's track record on intellectual property, among other trade issues.

Selective tech stocks and financials led the indexes lower. China National Software & Service (600536) fell down 8.5% to 84.24 yuan, while Foxconn Industrial Internet (601138 CH) was down 1.7% at 15.1 yuan. Ping An Insurance (601318 CH) fell 1.1% to 89.44 yuan, China Merchants Bank (600036 CH) lost 1.4% to 35 yuan, while Citic Securities (600030 CH) was down 0.5% at 24.2 yuan.

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