November 5, 2018 / 7:59 AM / 13 days ago

China stocks hit by trade tensions, uncertainty over new board

* SSEC. down 0.4 pct, .CSI300 down 0.8 pct

* Trade tensions return as White House denies done deal

* Concerns over Xi’s announcement of a new board in Shanghai

By Noah Sin

HONG KONG, Nov 5 (Reuters) - Stocks in China ended their four sessions of gaining streak on Monday as participants awaited the outcome of the U.S. mid-term elections, which may change the White House’s policy direction on trade. Investors also tried to make sense of the Chinese president’s announcement of launching a science and innovation board on Shanghai Stock Exchange. ** The main Shanghai stock market ended 0.4 percent weaker at 2665.43, while its main blue-chip Shanghai Shenzhen CSI 300 index closed down 0.8 percent on the day. ** CSI 300’s financial sector sub-index lower by about 1 percent, the consumer staples sector down 2.7 percent, the real estate index down 1.9 percent and healthcare sub-index down 1 percent. ** The smaller Shenzhen index and start-up board ChiNext Composite index were both flat. ** Trade war returned to investors’ list of concerns over the weekend as Larry Kudlow, a White House economic adviser, denied that Washington has drafted a trade agreement with Beijing. ** Gestures by China and the U.S. to resolve the tension sent Chinese and Hong Kong’s stocks higher last Friday. As the euphoria subsided, investors are vigilant in adding more exposure ahead of the mid-term elections in the U.S. this week, said Steven Leung, director of sales at UOB Hay Kian in Hong Kong. ** Investors were also troubled by Chinese President Xi Jinping’s announcement of a new board for innovative companies in Shanghai on Monday morning. This could diverge funds from the already weak A-share market, said an analyst at a local brokerage, who asked not to be named. ** “It’s fine if you talk about something like this in a bull market,” he said. “But why announce this now?” ** Zhang Gang, a Shanghai-based analyst at Central China Securities, said most domestic investors were worried about the new board taking business away from Shenzhen, home to many technology companies. But they had digested the news by Monday afternoon, trimming losses in the morning session. ** People didn’t have the time to analyse this closely when this was announced,” he said. “But they now understand that the new board will not compete directly with Shenzhen. It’s about giving companies another option, and creating multi-layer capital markets.” ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 1.2 percent, while Japan’s Nikkei index closed down 1.6 percent. ** At 07:26 GMT, the yuan was quoted at 6.9214 per U.S. dollar, 0.5 percent weaker than the previous close of 6.887. ** The largest percentage losses in the Shanghai index were Jiangsu Hongtu High Technology Co Ltd down 10.1 percent, followed by Eastern Gold Jade Co Ltd losing almost 10 percent, and Zhejiang Hugeleaf Co Ltd, which was down by 7.5 percent. ** So far this year, the Shanghai stock index is down 19.4 percent, the CSI300 has also fallen 19 percent. ** As of 07:24 GMT, China’s A-shares were trading at a premium of 20.8 percent over the Hong Kong-listed H-shares .

Reporting by Noah Sin; Editing by Rashmi Aich

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