China Stocks lower ahead of US tariff on Chinese goods

Headline shares of the Mainland China equity market were lower on Wednesday, 04 July 2018, as uncertainty over trade policy was still hanging over markets, outweighing reports that nation's central bank vowed to keep the currency stable and not to deploy it as a weapon in the trade conflict with the U.S. Many investors fear Washington will go ahead with its plan to impose tariffs on $34 billion worth of Chinese goods on July 6, which Beijing has vowed to match with tariffs on U.S. products, raising the risk of a full-blown trade war. Around afternoon, the benchmark Shanghai Composite Index declined 0.7%, or 18.98 points, to 2,767.91, while the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 1.4%, or 21.90 points, to 1,572.35. The blue-chip CSI300 index slipped 0.9%, or 29.01 points, to 3,380.27.

The uncertainty over trade policy was still hanging over markets. Planned tariffs on up to $34 billion on Chinese products are set to go into effect on Friday. The Trump administration was seen as keeping the U.S.-China tensions alive after late Monday saying it seeks to block China Mobile from operating in the U.S. market. The White House cited national security interests as the reason for refusing China Mobile access to the U.S.

 

However, some investors elected to return to the market after the nation's central bank vowed to keep the currency stable and not to deploy it as a weapon in the trade conflict with the U.S. The onshore yuan slipped past the 6.7 per U.S. dollar mark yesterday for the first time in almost a year, prompting what traders described as efforts by State-owned banks to prop up the currency as anxieties over U.S. trade frictions deepened. The yuan fell to 6.7204 per U.S. dollar, its weakest since Aug. 7, 2017 and the first time it dropped below 6.7 since Aug. 9, 2017, before recovering to 6.6997 per U.S. dollar. The currency has lost more than 4 percent of its value against the U.S. dollar since mid-June.

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