China stocks tumble despite central bank's move to support economy

China pumps USD 109 billion into economy as trade war bites on growth

China pumps USD 109 billion into economy as trade war bites on growth

The Chinese central bank announced that it would reduce the reserve requirement ratio by one percentage point for the fourth time this year, in hopes of freeing up a total incremental fund of 750 billion yuan (US$50.989 billion), The Paper reported.

The yuan was also down Monday as expectations of more easing measures plus surging USA bond yields exerted downward pressure on the Chinese currency.

For the Chinese currency, investors always anchor an important "psychological" exchange rate at 7 against the United States dollar, and they worry that market panic may emerge if the renminbi weakens past that rate. "But given the global dollar index stabilised around 94 level in recent sessions, the Chinese unit did not move much", a trader at a Chinese bank said.

The announcement of the relaxing the RRR requirement for the banks, which are also saddled with the huge local government debt of Dollars 2.58 trillion comes amid deepening trade war with US and raising of the interest rates by US Federal Reserve, intensifying the pressure on capital outflows. In the near term, traders expect the yuan to track the dollar's movement after the Fed decision.

On Friday, Chinese technology stocks listed in Hong Kong slumped on a Bloomberg report that the systems of multiple US companies had been compromised by malicious computer chips inserted by Chinese spies.

Arsenal thrash Fulham for ninth straight win
The Frenchman was nominated for the Premier League player of the month for September and has started October in a similar vein. Alexandre Lacazette will lead the line for Arsenal , with Danny Welbeck and Henrikh Mkhitaryan providing support from out wide.

There was also a danger for the US if Beijing had to intervene heavily to support the yuan. It edged up to 6.92 to the dollar on Tuesday. Policy divergenceChina's RRR cut reinforces expectations of more policy easing ahead, putting China on a divergent path of monetary policies with the United States, where 10-year treasuries yields hit seven-year highs as the Federal Reserves keeps raising rates. "As the possibility increases that trade frictions could escalate into political and military confrontation, global investors are more likely to avoid the risks (of Chinese shares)", Guangzhou-based Wanlong Securities Consultation Co said in a research note.

It is likely that further RRR cuts in addition to fiscal stimulus are in the pipeline to cushion the slowdown in the economy. American officials worry they might erode USA industrial leadership. The Philippine Stock Exchange Index fell 27.38 points, or 0.4 percent, to 7,050.82 on a value turnover of almost P4 billion.

MSCI's broadest index of Asia-Pacific shares outside Japan shed 2.7 percent to its lowest in 18 months. "The RRR cut will help but the China economy will need more monetary policy persuasion to snap its current funk". The offshore yuan was trading 0.01 percent firmer than the onshore spot at 6.8697 per dollar.

Brent crude fell 76 cents to $82.33 a barrel, while USA crude dropped 68 cents to $72.49. Brent crude fell 0.9 percent to US$83.38 per barrel.

The CSI300 financial sector sub-index was 0.25 per cent higher, the consumer staples sector added 1.26 per cent, the real estate index lost 0.56 per cent and the healthcare sub-index gained 0.22 per cent.

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