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Asian Markets Mixed; PBOC Injects CNY 500B Via One-Year MLF

Investing.com - Asian markets were mixed in morning trade on Thursday, with Chinese stocks underperforming after the International Monetary Fund (IMF) said it expected China’s growth to slow next year due to a worsening trade relationship with the U.S.

The Shanghai Composite and the Shenzhen Component were down 0.7% and 0.8% by 10:26 PM ET (02:26 GMT). Hong Kong’s Hang Seng Index was little changed at 26,910.50.

The IMF said it expects China’s growth to slow to 6% next year, and to 5.5% by 2024 after Sino-U.S. trade negotiations took a turn for the worse last month.

U.S.-China tariffs, that have been both implemented and proposed, could cut global economic output by 0.5% in 2020 and would cause some $455 billion in gross domestic product to evaporate, the IMF warned.

“There are growing concerns over the impact of the current trade tensions. The risk is that the most recent U.S.-China tariffs could further reduce investment, productivity, and growth. The just proposed U.S. tariffs on Mexico are also of concern,” said Christine Lagarde, the IMF’s managing director.

“Indeed, there is strong evidence that the United States, China, and the world economy are the losers from the current trade tensions,” she added.

The IMF lowered its 2019 growth forecast for the world’s second-largest economy to 6.2% from 6.3%.

Separately, the People’s Bank of China lent CNY 500 billion ($72.32 billion) to financial institutions via its one-year medium-term lending facility (MLF), while keeping the interest rate unchanged, it said in a statement.

"The central bank rolled over the same amount of maturing 463 billion yuan worth of MLF on the day, and extended more to small- and medium-sized banks, bringing the total amount of MLF operations to 500 billion yuan," the central bank said in the statement.

Markets outside of China traded up, as investors are growing more confident that the U.S. Federal Reserve will cut interest rates this year after Fed Chair Jerome Powell said on Wednesday that the U.S. central bank would do what it must to “sustain the expansion. ”

Japan’s Nikkei 225 gained 0.3%. Down under, Australia’s ASX 200 rose 0.6%.

South Korea’s KOSPI is closed for a public holiday.

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