China Stocks fall as Caixin China PMI hits a low

Headline indices of the Mainland China equity market declined on Wednesday, 1 August 2018, amid sign of a darkening outlook for the Chinese economy and businesses after China's manufacturing sector grew at the slowest pace in eight months in July. Sentiments were also dampened by reports that the Trump administration plans to propose slapping a 25% tariff on $200 billion of Chinese imports, after initially setting them at 10%. Around late afternoon, the benchmark Shanghai Composite Index declined 0.32%, or 9.07 points, to 2,867.33, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.25% or 3.99 points, to 1,572.42. The blue-chip CSI300 index dropped 0.4%, or 14.02 points, to 3,503.64.

The Caixin/Markit Manufacturing Purchasing Managers' index (PMI) declined to 50.8 in July from June's 51.0. The drop in growth pace of China's manufacturing sector in July 2018 was due to decline in export orders amid an intensifying trade dispute with United States. The Caixin survey results were broadly in line with an official PMI released on Tuesday showing slower factory growth in July, with the manufacturing index slipping to 51.2, from June's 51.5. China's official PMI gauge focuses on large companies and state-owned enterprises, while the reading by Caixin and IHS Markit focuses on small and medium-sized enterprises.

 

CURRENCY NEWS: Chinese yuan fell against greenback on Wednesday, after softer mid-point fixing by central bank. The People's Bank of China (PBOC) fixed the yuan midpoint at 6.8293 per dollar, 128 pips or 0.19% weaker than the previous fix of 6.8165. Wednesday's fixing, the lowest since May 31, 2017. In China's spot foreign exchange market, the yuan is allowed to rise or fall by 2% from the central parity rate each trading day.

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