China stocks weaker as trade war uncertainty weighs

China stocks ended lower on Wednesday as lingering uncertainty over the Sino-US trade dispute continued to unnerve investors, and while the positive impact from MSCI's latest phase of China stock inclusion fades.
The blue-chip CSI300 index ended down 0.4% at 3,802.58, while the Shanghai Composite Index lost 0.3% to 2,893.76 points.
Earlier in the week, US President Donald Trump predicted a trade deal with China after positive gestures by Beijing, but China's foreign ministry said it was unaware of any calls made to the United States.
The issue regarding Trump's credibility has taken centrestage, said Jingyi Pan, strategist, IG Group.
"While the baseline view that both the US and China will eventually resolve the trade conflict to avoid sustaining a lose-lose situation remains, President Donald Trump's mercurial temperaments have now been perceived to be a factor likely to invite China to hold their horses on a deal," he wrote, adding that for markets, the added sense of uncertainty could also translate to further volatility.
The market has also lost support from MSCI inclusion on Wednesday. Chinese shares rose in the previous session, after MSCI raised the inclusion factor for A-shares to 15% from 10% after close on Aug. 27, driving passive net inflow of about $4.5 billion into A-shares.
The CSI300 financial sector sub-index was lower by 0.93%, the consumer staples sector ended down 0.08%, the real estate index closed 0.44% lower and the healthcare sub-index down 0.84%.
The smaller Shenzhen index ended down 0.12% and the start-up board ChiNext Composite index was weaker by 0.18%.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.04%, while Japan's Nikkei index closed up 0.11%.
At 0723 GMT, the yuan was quoted at 7.1615 per US dollar, 0.01% firmer than the previous close of 7.1625.
The largest percentage gainers in the main Shanghai Composite index were Wintime Energy Co Ltd, which closed up 10.2%, followed by Shenyang Jinbei Automotive Co Ltd, gaining 10.1% and Guangdong Rongtai Industry Co Ltd, up by 10.09%. The largest percentage losses in the Shanghai index were Suzhou Keda Technology Co Ltd, which closed 10.01% lower, followed by Nanjing OLO Home Furnishing Co Ltd, which lost 10% and Changzhou Xingyu Automotive Lighting Systems Co Ltd, which ended down by 8.25%.