China Market gains on China-U.S. trade hopes

The Mainland China equity market closed higher on Thursday, 15 November 2018, as investors risk sentiments encouraged by signs that China and the United States may be taking steps to de-escalate their bitter trade dispute. At closing bell, the benchmark Shanghai Composite Index added 1.36%, or 35.93 points, to 2,668.17, meanwhile the Shenzhen Composite Index, which tracks stocks on China's second exchange, rose 1.45%, or 20.04 points, to 1,398.40. The blue-chip CSI300 index climbed up 1.17%, or 37.43 points, to 3,242.37.

The Chinese government has presented an offer to the United States to try to push forward stalled trade talks before the leaders of the two economic superpowers meet at the end of this month, according to media reports. Beijing's proposal comes after US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He spoke by phone on Friday to jump start trade discussions ahead of an expected meeting between the two countries' leaders. US President Donald Trump has said he will have a "good meeting" with his Chinese counterpart, Xi Jinping, on the sidelines of the G20 leaders summit in Buenos Aires later this month.

The United States was demanding that the Chinese come up with a clear offer before negotiations on a trade deal could start, while Beijing had been reluctant, seeking talks ahead of making any firm proposals. Both sides have been working toward a path to end the escalating trade war, which has left investors jittery over its impact on consumers and companies in the world's top two economies.

The Trump administration has already slapped tariffs on $250 billion in Chinese products since July. The tariffs on $200 billion of those goods are set to increase to 25% from 10% on January 1, which would further escalate the conflict. China retaliated with tariffs on $110 billion of US products and is likely to respond with more if the United States goes ahead with the increase at the start of January.

CURRENCY NEWS: China's yuan edged higher against the dollar on Thursday, as the central bank set stronger mid-point against greenback amid signs of easing trade tensions between Beijing and Washington. Prior to market opening on Thursday, the People's Bank of China (PBOC) set the midpoint rate at 6.9392 per dollar, 10 pips firmer than the previous fix of 6.9402. In the spot market, the onshore yuan opened at 6.9450 per dollar and rose to 6.9473 before changing hands at 6.9401 at midday, 99 pips firmer than the previous late session close.

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