China Market extends gain on trade talks optimism

The Mainland China equity market closed higher for second straight session on Wednesday, 24 July 2019, as investors risk sentiments underpinned by hopes the US and China will reached a trade deal after reports that the US Trade Representative Robert Lighthizer and senior US officials are set to travel to China next Monday for the first high-level, face-to-face trade negotiations between the world's two biggest economies since talks broke down in May. At closing bell, the benchmark Shanghai Composite Index rose 0.8%, or 23.33 points, to 2,923.28. The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 1.11%, or 17.10 points, to 1,562.97. The blue-chip CSI300 index jumped 0.8%, or 29.92 points, to 3,819.83.

Local market commenced trading with form footing, following gains on Wall Street overnight and on hopes the US and China will reached a trade deal after reports US Trade Representative Robert Lighthizer and senior US officials are set to travel to China next Monday for the first high-level, face-to-face trade negotiations with Chinese officials.

 

President Donald Trump and Chinese counterpart Xi Jinping met at the Group of 20 summit in Japan last month and declared a tentative truce in their year-long trade war. The leaders directed their negotiators to resume trade talks. Since then Treasury Secretary Steven Mnuchin, Lighthizer and their Chinese counterparts have spoken by phone. On Monday, Trump and senior White House officials, including Mnuchin and Lighthizer, met with chief executives of US technology companies in a step toward easing a ban on sales to China's Huawei Technologies, which has been another point of tension in the relationship.

All of the 25 stocks listed on Shanghai's technology innovation board, also known as the STAR Market, closed higher on its third day, rebounding from sharp losses on Tuesday. Stocks on the STAR board can only be bought in China for now, but are expected to later be available through the Stock Connect programme. Fujian Forecam Optics, which specialises in cameras and optic components, was the top winner, with a 49% increase. Transaction volume in the STAR stocks stood at 23 billion yuan (US$3.3 billion), slightly up from the 20 billion yuan recorded Tuesday.

Technology shares drove the advance, after the US government said it will handle requests by American tech companies for waivers over the Huawei Technologies blacklisting within weeks. The Huawei blacklisting, put in place at the end of May, prevents US companies from supplying hardware, software and services to the Chinese telecom giant.

Stocks related to 5G listed in Shanghai climbed after Eight 5G smartphones recently received approval from Chinese authorities to go to market, with four of the models developed by Huawei, with Shenzhen Envicool Tech, Zhejiang Yueling and Dongshan Precision Manufacture surging by the daily limit of 10%.

CURRENCY NEWS: China yuan depreciated against greenback on Wednesday, as weaker midpoint fixing by central bank and signals on U.S. China trade talks. Prior to market opening, the People's Bank of China set the yuan's midpoint rate at 6.886 per dollar, 0.06% weaker than the previous fix of 6.8818. In the spot market, onshore yuan eased 0.04% to 6.8821 per dollar.

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