China Market falls on Sino-U.S. tensions

The China share market finished session lower on Tuesday, 11 August 2020,as risk aversion selloff triggered on rising Sino-US tensions after imposition of sanctions on 11 U.S. citizens including lawmakers from President Donald Trump's Republican Party on Monday in response to Washington's imposition of sanctions on Hong Kong and Chinese officials accused of curtailing political freedoms in the former British colony. Sentiments were also subdued on caution ahead of a meeting between top U.S. and Chinese trade officials on Saturday to review the first six months of the Phase 1 trade deal.

At closing bell, the benchmark Shanghai Composite Index dropped 1.15%, or 38.96 points, to 3,340.29. The Shenzhen Composite Index, which tracks stocks on China's second exchange, declined 1.49%, or 33.97 points, to 2,243.45. The blue-chip CSI300 index fell 0.91%, or 43.08 points, to 4,681.79.

 

China imposed sanctions on 11 U.S. citizens that included Senators Ted Cruz, Marco Rubio, Tom Cotton, Josh Hawley and Pat Toomey. The move from Beijing followed after Washington last week said it will impose sanctions on 11 individuals including Hong Kong leader Carrie Lam for her role in overseeing and implementing Beijing's policies of suppression of freedom and democratic processes.

Investors are awaiting a meeting between top U.S. and Chinese trade officials on Saturday to review the first six months of the Phase 1 trade deal. China faces challenges in fulfilling the trade agreement, with the energy commitments of the deal looking difficult due to the coronavirus-driven plunge in demand. China bought only 5% of the targeted $25.3 billion in energy products from the United States in the first half of 2020, falling well short of its trade deal commitments at a time when relations between the two top economies are already sour.

CURRENCY NEWS: The yuan was tad higher against greenback on Tuesday, despite softer mid-point fixing by central bank, ahead of key trade talks between top Chinese and U.S. officials this weekend, which have been shrouded by tit-for-tat sanctions between the world's two largest economies over a growing dispute about Beijing's new security law in Hong Kong. Prior to the market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.9711 per dollar, 0.09% weaker than the previous fix of 6.9649. The onshore yuan CNY=CFXS firmed 0.18% to 6.9495 per dollar and the offshore yuan CNH=D3 gained 0.23% to 6.9447 by 0406 GMT.

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