China, Hong Kong stocks climb as prospect of end to US-China trade war boosts confidence
- China’s President Xi Jinping ‘is scheduled to meet’ with the US trade talks delegation this week, the Post reported
- President Trump said he would consider pushing back a March 1 deadline for trade negotiations with China
Higher risk appetite and improved sentiment bolstered stocks in China and Hong Kong on Wednesday, as all benchmark indexes staged a mini rally.
The Hang Seng Index rose to a near six-month high, boosted by investors who are increasingly confident that the US China trade talks in Beijing this week will bring the two biggest economies in the world closer to a deal.
It finished up by 1.15 per cent, or 324.8 points, to close at 28,496.13, the highest level since August. All but eight of the 50 constituents of the blue chip index rose. Mainboard turnover climbed to HK$121 billion (US$15.42 billion).
Gains in Chinese indexes were even stronger. The Shenzhen Component Index rose 2.01 per cent, or 161.14 points, to 8,171.21, while the Shanghai Composite Index gathered momentum later in the day, closing up 1.84 per cent, or 52.56 points, at 2,849.66. That was its highest level since October.
On Wednesday, the SCMP cited sources saying President Xi Jinping “is scheduled to meet” members of the US trade talk delegation, including US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin this week. If confirmed, such arrangements would signify a show of goodwill in trying to seal a deal with the US.
Even if a trade deal cannot be reached imminently, the market is expecting at least an extension of the March 1 deadline, without which the US will impose higher taxes on another US$200 billion in Chinese imports.
On Tuesday, US President Donald Trump said he would consider pushing back the deadline if both sides were close to making a deal. His comments drove the S&P 500 Index up by more than 1 per cent.
“Currently investors’ risk appetite is high, and market sentiment is positive. This has meant that buying interests have been switching around different sectors of the blue chip index this week,” said Ben Kwong Man-bun, a director at KGI Asia.
In Hong Kong, leading the gains was insurance group AIA, which rose 2.01 per cent to HK$74.5, and HSBC Holdings, up 1.28 per cent to HK$67.1.
Hong Kong Exchanges and Clearing (HKEX), the bourse operator, closed higher by 2.7 per cent, at HK$258.8. Morgan Stanley recently lifted its target price for HKEX to HK$340 and HK$290, maintaining its “overweight” rating.
China’s largest smartphone maker, Xiaomi, came back strong from Tuesday’s losses, finishing the day 7.36 per cent higher at HK11.38. Media reported on Wednesday that the company will next week launch its latest flagship smartphone, the Mi9, on a launch date that would likely coincide with the Samsung Galaxy S10 launch.
In Shanghai, Foxconn Industrial Internet extended the previous day’s gain and led the benchmark up on Wednesday, jumping 9.97 per cent to 13.79 yuan. On Tuesday global index provider MSCI announced that it was among stocks to be added to its Emerging Markets Index at the end of February.
In Shenzhen, leading the index higher was BOE Technology, which shot up 9.97 per cent to 3.31 yuan.
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