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Thursday, August 08, 2019, 16:08
China stocks halt week-long losses on firmer yuan
By Reuters
Thursday, August 08, 2019, 16:08 By Reuters

HONG KONG - Shares in China ended six straight sessions of losses on Thursday as the yuan staged a small recovery, which calmed fears in global markets of the escalation of US-China trade tensions.

At the close, the Shanghai Composite index was up 0.9% at 2,794.55, while the blue-chip CSI300 index rose 1.3%. 

Haunted by the trade tension escalation, the two indexes lost more than 6% in the past six trading days and fitted in and out of negative territory for much of the past month. On Thursday, they recorded the largest daily gains since July 1. 

CSI300's financial sector sub-index was higher by 1.4%, the consumer staples sector climbed 1.6%, the real estate index was up 0.2% and the healthcare sub-index was up 1.7%. 

The smaller Shenzhen index ended up 1% and the start-up board ChiNext Composite index was higher by 1.5%. 

China's central bank on Thursday set its official yuan midpoint below the key 7/dollar threshold for the first time since the 2008 global financial crisis. 

Still, the yuan fixing was stronger than markets had feared and supported Asian equities broadly. State banks were also seen supporting the currency earlier this week. The yuan was quoted at 7.0440 per US dollar at 0708 GMT, almost 0.2% firmer than the previous close. 

China's exports unexpectedly rose in July, growing 3.3% from a year earlier, customs data showed on Thursday, besting analysts' estimate of a 2% fall. 

US President Donald Trump reiterated on Wednesday that his trade policies on China would ultimately benefit the American economy. 

MSCI confirmed (https://www.msci.com/eqb/pressreleases/archive/MSCI_Aug19_QIRPR.pdf) on Wednesday it had gone ahead with further inclusion of Chinese A-shares in its Emerging Market Index, as part of its three-step process to expand the inclusion. 

Foreign investors were net buyers through the Stock Connect, buying almost 3 billion yuan (US$426.00 million) of shares on Thursday. They were net sellers on Wednesday. 

With economic slowdown still hurting corporate earnings growth, Chinese shares will remain under pressure, China Post Securities' analysts said in a note on Thursday. "The market has limited momentum for recovery, and could break a new bottom in the medium term," they said. 

Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.8%, while Japan's Nikkei index closed up 0.4%. 

So far this year, the Shanghai stock index is up 12.1% and the CSI300 has risen 21.9%. Shanghai stocks have declined 4.7% this month. 

About 14.95 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 15.77 billion. (US$1 = 7.0422 Chinese yuan)

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