China Market gains 0.1%

The Mainland China equity market were higher after recouping early losses on Tuesday, 13 November 2018, as traders awaited significant data about China's slowing economy later this week. In afternoon trades, the benchmark Shanghai Composite Index added 0.11%, or 2.94 points, to 2,633.46, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 0.77%, or 10.48 points, to 1,372.22. The blue-chip CSI300 index climbed up 0.13%, or 4.17 points, to 3,209.31.

Ahead this week in China will be data on money supply and new yuan loans. On Wednesday, figures on retail sales, industrial output and fixed asset investment are due, while on Thursday data on new home prices will be released.

 

NEWS FROM THE PRESS: Foreign buying of bonds slows as yuan falls-- A WEAKER currency and a narrowing premium over U.S. interest rates have dented global investors' enthusiasm for China's roughly US$12 trillion bond market. Foreign holdings of yuan-denominated, domestically traded bonds in China rose by just 250 million yuan (US$35.9 million), or 0.02%, to 1.44 trillion yuan in October, according to data provider Wind. The rate of growth has been decelerating since June, when it peaked at 8.9% month on month, the fastest in 21 months. With U.S.-China trade tensions escalating, the yuan has fallen 8.8% against the dollar since mid-June. It is now close to the symbolically important level of 7 per dollar. Meanwhile, a weakening economy has led Chinese bond prices to rally, pushing yields down, even as rising interest rates send U.S. bonds in the other direction. That means Chinese sovereign debt now offers a much thinner premium over U.S. Treasuries. Yields on benchmark 10-year Chinese securities fell to 0.24%age point above Treasuries late last week, the narrowest gap in more than eight years. Foreign institutions, such as central banks and pension funds, own just 1.7% of China's overall bond market, which is the world's third largest behind the United States and Japan. Foreign investors slowed their purchases of Chinese bonds mostly because of the yuan's fast depreciation,

CURRENCY NEWS: The yuan inched lower against the U.S. dollar yesterday, extending losses from last week as the U.S. currency enjoyed broad support from a solid U.S. economy that kept intact Federal Reserve plans to continue raising interest rates. The yuan is also grappling with persistent depreciation pressure, leaving it vulnerable to negative news flow as China's economy cools in the face of slackening domestic demand and trade frictions with the United States. The Fed last week struck a largely upbeat note on the U.S. economy after holding rates steady, staying on course to raise interest rates further in December and through 2019. Prior to market opening yesterday, the People's Bank of China lowered the midpoint rate for the third straight day to 6.9476 per dollar, 147 pips or 0.2% weaker than the previous fix of 6.9329. Yesterday's fixing was the weakest since Nov. 1. In the spot market, the onshore yuan opened at 6.9500 per dollar, and then fell to a low of 6.9608 before pulling back up a little to 6.9590 at midday, 30 pips weaker than the previous late session close and 0.16% softer than the midpoint. The yuan declined 1% last week for its biggest weekly loss in nearly four months.

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