China Market finishes mixed

September 22,2021

The Mainland China share market finished session mixed on Wednesday, 22 September 2021, the first trading day after the Mid-Autumn Festival holiday, as liquidity infusion by People Bank of China as well as assurances by China Evergrande to make bond interest payment helped soothe markets about a possible default.

At closing bell, the benchmark Shanghai Composite Index advanced 0.4%, or 14.52 points, to 3,628.49. The Shenzhen Composite Index, which tracks stocks on China's second exchange, fell 0.25%, or 6 points, to 2,440.05. The blue-chip CSI300 index declined 0.7%, or 34.17 points, to 4,821.77.

Global market turmoil surrounding the developer intensified in the past trading sessions as investors interpreted Chinese government's silence hitherto on the distressed firm as a lack of official support. Investors sentiments soothed on Wednesday after Evergrande unit Hengda announced it will make a coupon payment on its domestic bonds on Thursday. Over the holiday, property and banking stocks slumped in the Hong Kong market due to growing risks of defaults at Chinese property developers and concerns that Beijing's common prosperity agenda would also include Hong Kong real estate names.

The People's Bank of China on Wednesday injected substantially more liquidity into the markets through “reverse repurchase agreements,” or buying short-term bonds from some commercial lenders so banks have more cash on hand. China on Wednesday also kept its benchmark lending rate unchanged, with the one-year loan prime rate (LPR) held steady at 3.85%. The five-year LPR remained at 4.65%.

Shares of energy companies gained after Chinese leader Xi Jinping statement that China would not build new coal-fired power projects abroad, meanwhile, the state planner said it had sent out teams to ensure energy supply and price stabilization measures had been implemented.

CURRENCY NEWS: China's yuan was tad lower against the U.S. dollar on Wednesday after softer mid-point fixing by central bank. Prior to market opening, the People's Bank of China (PBOC) set the midpoint rate CNY=PBOC at 6.4693 per dollar, weaker by 0.26% than the previous fix of 6.4527. In the spot market, the yuan CNY=CFXS was stood at 6.4714, down by 0.08% or 53 pips from the previous late session close of 6.4661.

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