China stocks edged down on Friday and ended lower for the week, as Beijing and Washington talked tough on trade issues before the widely-watched meeting between U.S and China presidents this weekend at the G20 summit. Uncertainty over whether the talks would produce progress in ending the year-long trade war between the world's two largest economies comes, amid signs of rising risks to global growth.
At the close, the Shanghai Composite index was down 0.6% at 2,978.88 and down 0.8% for the week. The blue-chip CSI300 index was down 0.2%, while it also ended 0.2% lower on a weekly basis. The market still ended higher for the month, buoyed by positive developments on the trade deal front earlier in June. The Shanghai benchmark ended the month up 2.8%, while the CSI300 was up 5.4% month-on-month.
CSI300's financial sector sub-index was lower by 0.1%, the consumer staples sector fell 0.2%, the real estate index lost 0.5% and the healthcare sub-index slid 0.4%. The smaller Shenzhen index ended down almost 1% and the start-up board ChiNext Composite index was weaker by 0.9%. US President Donald Trump and Chinese President Xi Jinping will hold trade talks on Saturday at the G20 summit in Osaka, Japan.
Xi on Friday criticised some developed countries for taking protectionist measures that are leading to trade conflicts and economic blockade - calling them the biggest risk of the increase in instability in the global economy. Trump has agreed to no preconditions for his meeting with Xi and is maintaining his threat to impose new tariffs on Chinese goods, White House economic adviser Larry Kudlow said on Thursday.
Even if trade talks resume, Morgan Stanley's analysts said in a note on Friday they are sceptical of a rebound in A-share sentiment "given the recent macro pressure and diminishing effect of trade talk headlines on the equity market." China's factory activity is expected to have pulled back for a second straight month in June, according to a Reuters poll of analysts.
Kaiyuan Securities sees the Shanghai Composite regaining late-April levels - before Trump's tariff threats - if it manages to stand above its 60-day moving average. That average stood at 3010.35 at close. A failure to do that, however, would see investors turning to defensive stocks, it added. The largest percentage losers in the Shanghai index were Cashway Technology Co Ltd, down 10%, Beken Corp, down 9.6%, followed by Polaris Bay Group Co Ltd, which fell 9.2%.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.1%, while Japan's Nikkei index slipped 0.3%. About 18.14 billion shares were traded on the Shanghai exchange, as against 19.54 billion in the previous session.
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