Mainland stocks down, despite yuan’s bullishness

Source:Global Times Published: 2017/9/10 17:18:39

Chinese mainland major indexes ended last week slightly lower, even though investors are pouring fresh money into the market supported by a strong yuan and solid economic growth.

Investors pushed up shares such as commodities, airlines and gold, betting they would benefit from the recent bullishness in the Chinese currency and dollar weakness.

The subindex that tracks nonferrous metal firms rose 0.79 percent Friday, with major gold miners including Zhongjin Gold and Hunan Gold jumping nearly 2 percent.

"Yuan bullishness makes yuan-denominated assets more attractive, and lures money inflows...I believe we're already in a bull market," Wu Kan, fund manager of equities trading at Shanshan Finance, said in a Reuters report.

China's yuan climbed to a near 21-month high against the US dollar Friday.

However, the benchmark Shanghai Composite Index was flat with a slight drop of 0.01 percent to 3,365.24 points Friday. The blue-chip CSI300 index, which tracks big companies on the Shanghai and Shenzhen bourses, fell 0.10 percent to 3,825.99 points.

The market largely shrugged off China's August trade data, which showed that exports in the world's second largest economy rose 5.5 percent year-on-year and imports rose 13.3 percent.

Over the past week, both the Shanghai and CSI300 indexes lost 0.1 percent, snapping a three-week gaining streak.

The weak defensive consumer shares, which shed 2.9 percent last week, were the biggest drag on the market. Still, the Shanghai index remains above the psychologically important 3,300 point level for the 11th session in a row.

Some securities analysts predict that the recent yuan rally was mainly bolstered by broad weakness in the greenback, but they are concerned that the rally cannot last for long as the US economy is expected to gradually pick up.

By the end of this year, the CSI300 index could decrease by 2 percent from the current level to 3,750 points, domestic news portal reported, citing Gao Ting, UBS head of China strategy. Gao forecast a moderate rise in the Chinese mainland stocks this year.

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