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Chinese stocks close sharply up after US trade truce
SHANGHAI, Dec 3, 2018 (BSS/AFP) – Chinese and Hong Kong stocks closed up
sharply on Monday and the yuan strengthened after Washington and Beijing
announced a truce in their escalating trade war.
The benchmark Shanghai Composite Index surged 2.57 percent, or 66.61
points, to 2,654.80, while the Shenzhen Composite Index, which tracks stocks
on China’s second exchange, rose 3.27 percent, or 43.81 points, to 1,381.55.
Hong Kong’s main index climbed 2.55 percent, or 675.29 points, to
27,182.04.
The Chinese yuan strengthened by almost one percent to 6.8914.
US President Donald Trump and his Chinese counterpart Xi Jinping agreed in
a meeting at the G20 on Saturday to suspend any new tariffs in the escalating
trade war between the world’s two largest economies, which has weighed on
world markets.
Zhang Yanbing, an analyst with Zheshang Securities, said the trade outcome
would likely spur a “medium to long-term” rally in China.
“The fresh sign of a trade truce gave relief to the industries most
afflicted by the trade war, like telecommunications. Investors will be
closely watching further developments on the Sino-US trade spat,” Zhang
added.
Shenzhen-listed telecoms giant ZTE Corp leapt 7.9 percent to 21.44 yuan,
while Eastern Communications Corp closed the maximum 10 percent higher at
6.22 yuan in Shanghai.
In a research note, Wang Tao, head of China economic research at UBS AG in
Hong Kong, also said the trade news will provide some near-term stability and
improve sentiment.
But analysts have warned that tough negotiations still lie ahead before
the core trade disputes are resolved.
“We are not yet at that happy outcome as the latest agreement does not
undo all of the harm already in place,” Wang said.
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“Increases in tariffs have large negative effects, while resolution does
not undo the harm completely as economies have difficulty bouncing back from
the structural changes induced by tariffs.”
The White House said it would postpone for 90 days a planned January 1
increase in US tariffs on Chinese goods, while China pledged to take in more
US imports.
Trump launched the bitter row earlier this year by implementing tariffs on
billions of dollars worth of goods from China, which he accuses of throwing
up market barriers and using predatory trade practices.
Beijing responded with reciprocal measures.
Oil shares closed higher, boosted by news that Russia and Saudi Arabia had
renewed a pact to cap output ahead of a key meeting of OPEC at the weekend.
While there was no announcement on how much would be cut and for how long,
the pact between the world’s two biggest crude exporters was cheered by crude
traders with both main contracts surging more than four percent.
Sinopec gained 2.71 percent to 6.06 yuan and PetroChina added 1.58 percent
to 7.73 yuan.
The drug sector also rose despite Xi agreeing to Washington’s calls to
designate fentanyl as a controlled substance, as the US seeks to control its
opioid epidemic.
Shanghai-listed Humanwell Healthcare gained 0.53 percent to 11.38 yuan and
Shanghai Fuxing Medicine ended 7 percent higher at 29.79 yuan.
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