China Market falls on worries about economic showdown

The Mainland China equity market declined on Thursday, 16 August 2018, as risk sentiments were muted amid worries about an economic showdown in China. However, the market losses were limited after China said it has accepted an invitation from the U.S. for a new round of trade talks to be held in late August. Around afternoon trades, the benchmark Shanghai Composite Index declined 0.87%, or 23.65 points, to 2,699.60, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.89%, or 13.15 points, to 1,468.67. The blue-chip CSI300 index slipped 0.6%, or 19.69 points, to 3,272.67.

China's Ministry of Commerce said that a Chinese delegation led by vice commerce minister Wang Shouwen will travel to the U.S. in late August for trade talks to be held with US Under Secretary of Treasury for International Affairs David Malpass.

 

Tencent (00700) said its profit for the six months ended June 2018 rose 26% year-on-year to RMB41,157 million. For the three months ended June 2018, the profit dropped 23% quarter-on-quarter and 2% year-on-year to RMB17,867 million. The revenue was up 30% year-on-year to RMB73,675 million.

An unexpected drop in profits for Chinese tech giant Tencent surprised investors and added to some recent concerns about the health of China's economy. Tencent, a gaming and messaging company, is the most valuable technology company in China. Earlier this week, reports on growth in factory output, consumer spending and retail sales in China were all slower than expected.

CURRENCY NEWS: China's yuan weakened against the dollar on Thursday, inline with soft mid-point fixing by central bank and amid worries about Turkey's financial crisis and an economic showdown in China. The People's Bank of China (PBOC) weakened 90 basis points to 6.8946 against the U.S. dollar Thursday. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2 percent from the central parity rate each trading day.

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