China shares close lower as materials firms, overseas outflow considerations weigh

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BEIJING, June 16 (Reuters) – China shares ended decrease on Wednesday, dragged down by losses in material and health care shares, as investors concerned over lofty valuations and the outcome of a U.S. Federal Reserve meeting that could prompt overseas outflows.

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At the shut of trade, the Shanghai Composite index was down 1.07% at 3,518.33 and the blue-chip CSI300 index misplaced 1.67%, acquiring finished weaker on Tuesday.

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Analysts claimed there was a lack of factors for any upside momentum, whilst lofty valuations in some areas of the sector have been a induce of concern.

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The marketplace was also below tension from rising Sino-West tensions soon after G7 leaders took the Asian nation to activity above a variety of troubles, which Beijing termed a gross interference in the country’s inside affairs.

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Between the worst-undertaking sectors on Wednesday, the substance sub-index slumped 3.08% as a report on limitations around condition-owned firms’ abroad commodity exposure accelerated a provide-off in the sector.

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The healthcare sub-index misplaced 3.01%, with sector heavyweight Wuxi AppTec Co Ltd sliding 5.53%.

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The smaller Shenzhen index ended down 2.34% and the start off-up board ChiNext Composite index was weaker by 4.18%.

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“Investors are also nervous in advance of the U.S. Fed conference, as Fed’s hawkishness would force the dollar higher, pressuring the yuan and weighing on the A-share market by prompting foreign outflows,” stated Yan Kaiwen, an analyst with China Fortune Securities.

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China’s central bank has directed economical establishments to keep a lot more foreign exchange in reserve, a go that analysts say could support temper a rally in the yuan right after the forex hit a three-12 months significant from the greenback on Monday.

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Prolonged-expression appreciation in the yuan could have a large adverse effects on China’s economic climate even if there was no substantial impact on the country’s exports in the limited time period, a former senior formal at China’s overseas trade regulator warned.

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Close to the location, MSCI’s Asia ex-Japan stock index was weaker by .42%.

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Reporting by Cheng Leng in Beijing, Luoyan Liu and Andrew Galbraith in Shanghai Editing by Aditya Soni

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