China Stocks mixed amid fresh U.S.-China trade jitters

Headline indices of the Mainland China equity market were mixed on Friday, 03 August 2018, as risk aversion sentiments dominated across the board on intensifying trade jitters with US after U.S. plans to impose a higher 25% tariff on $200 billion worth of Chinese imports. Around afternoon, the benchmark Shanghai Composite Index rose 0.08%, or 2.12 points, to 2,770.14, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.44% or 6.64 points, to 1,505.41. The blue-chip CSI300 index dropped 0.5%, or 16.64 points, to 3,354.32.

Investors cautious mood came amid an elevation in trade tensions between the world's top two economies intensified midweek after US President Donald Trump raised pressure on China by proposing a higher 25% tariff on $200 billion worth of Chinese imports from a previously announced 10%. China responded on Thursday, saying that it would hit back if the United States takes further steps hindering trade, including applying the higher tariff rate.

 

The United States has already slapped 25% tariffs on Chinese goods worth $34 billion to punish Beijing for what it says are its unfair trade practices. China immediately responded with equal measures.

Investors are becoming increasingly concerned about how the slowing Chinese economy will fare in a major trade spat with the United States. Data released earlier this week suggested that the Chinese economy is already starting to feel pain from US tariffs introduced over the last few weeks. China's July purchasing managers index, which measures the health of the manufacturing sector, suggested the country's huge export industry is cooling.

Investors also remain cautious ahead of the July US jobs report due later on Friday, which will give a reading on the health of the world's largest economy and possible clues about the pace of Federal Reserve interest rate rises.

NEWS FROM THE PRESS: FDI up 1.1% to 446.29 billion yuan in H1FY18 - Foreign direct investment (FDI) into the Chinese mainland rose 1.1% year on year to 446.29 billion yuan in the first six months of 2018, according to the Ministry of Commerce (MOC). In dollar terms, FDI inflow grew 4.1% to US$68.32 billion in H1, MOC data showed.

CURRENCY NEWS: Chinese yuan softened against greenback on Friday, after weak mid-point fixing by central bank. The People's Bank of China (PBOC) set the mid-price for yuan trading at 6.8322, which is 0.6% lower than Thursday's level. 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.

Offshore yuan, which is traded by international investors outside mainland China, was at 6.8824 per US dollar on Friday, extending a 0.8% decline on Thursday, after the Trump administration threatened to increased tariffs on Chinese goods to 25% from 10%. Onshore yuan, which is traded by mainland traders, also dropped to its lowest level in 15 months at 6.8724 yuan per dollar on Friday, down 0.5% from Thursday.

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