China stocks end week lower on cautious stimulus

  • cuts new loan rate for second month.
  • U.S., Chinese trade deputies face off in Washington.

SHANGHAI: China stocks firmed on Friday but posted modest weekly losses, after ’s cautious monetary easing this week to support an economy hit by a protracted trade dispute with the .

** The blue-chip CSI300 index rose 0.3%, to 3,935.65, while the Shanghai Composite Index ended up 0.2% at 3,006.45.

** For the week, CSI300 lost 0.9%, while SSEC was down 0.8%.

** China cut its new one-year benchmark lending rate for the second month in a row on Friday, a step by the central bank to try to wrestle down borrowing costs and support the economy as the Sino-U.S. trade war drags on.

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** But the move was far more cautious than easing by the U.S. Federal Reserve and the European Central Bank over the past week, suggesting Chinese policymakers remain reluctant to join a global stimulus wave due to worries about mounting debt.

** “Since the new rate is relatively untested, the PBOC (People’s Bank of China) appears to be taking a measured approach at first,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a note.

** The widely anticipated cut came after China maintained a key 1-year money market rate unchanged, indicating Beijing’s reluctance to flood the banking system with excessive liquidity.

** also eyed Sino-U.S. trade talks, though analysts expect a limited impact from it on the A-share market ahead of the 70th anniversary of the founding of China due to Beijing’s inclination to maintain stability in ahead of such significant events.

** Helping underpin the market were robust continued foreign funds, which marked their 16th session of net inflows into the A-share market via the Stock Connect linking and the mainland, according to Refinitiv data.

** “It’s natural for global investors to have proper exposure to equities in China as Beijing further opens up its financial markets,” said Yan Kaiwen, an analyst with China Fortune Securities.

** The northbound net flows via the Stock Connect on Friday alone reached 18.5 billion yuan ($2.61 billion).

** Around the region, ’s ex- stock index  was firmer by 0.5%, while ’s Nikkei index  closed up 0.16%.

** At 07:18 GMT, the yuan was quoted at 7.086 per U.S. dollar, 0.15% firmer than the previous close of 7.097.

** As of 07:19 GMT, China’s A-shares were trading at a  premium of 30.05% over the Hong Kong-listed H-shares.

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Source: Brecorder