China stocks surge on reports Sino-US trade deal seen soon

SHANGHAI: Chinese stocks surged yesterday, adding to recent gains after reports that Washington and Beijing are close to reaching a deal to end their year-long trade war, and as China prepared for the opening of its annual session of parliament.

At the midday break, China’s benchmark Shanghai Composite was 2.6 per cent higher, breaking through the 3,000-point level to end the morning at 3,073.03 points.

The index has gained more than 20 per cent so far this year.

The blue-chip CSI300 index rose even more, adding 3 per cent to 3,862.01 points.

In Hong Kong, Chinese H-shares rose 1.88 per cent at 11,723.25, while the Hang Seng Index was up 1.16 per cent at 29,147.64.

The smaller Shenzhen index was up 3.52 per cent and the start-up board ChiNext Composite index was higher by 4.71 per cent.

The rise in the Shanghai Composite follows the strongest weekly gains for the index in more than 4 years last week, powered by expectations for government stimulus and policy support, renewed optimism about US-China trade talks, and the announcement by global index provider MSCI that it will quadruple the weighting of Chinese A-shares in its global benchmarks later this year.

Zhang Yanbing, an analyst at Zheshang Securities in Shanghai, said the rally was a continuation of market strength “prompted by the combination of many favourable factors” that have emerged since October of last year.

But he said that the news of a possible forthcoming agreement between China and the United States, and the opening of the annual session of China’s parliament on March 5 could be seen as specific factors driving gains on Monday.

Chinese leaders are expected to set less ambitious targets for economic growth this year, but Premier Li Keqiang’s 2019 work report is expected to offer more assurances of Beijing’s support for small businesses, and plans to boost domestic demand and safeguard jobs. —Reuters