• Friday, March 29, 2024
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BusinessDay

China leads Asia equities rally ahead of trade talks

China leads Asia

Chinese stocks had their best day since early November, jumping more than 3 per cent, as investors held on to the belief that Beijing and Washington will resolve a trade dispute that has hung over the country’s economy.

Sentiment towards Chinese equities has brightened this year in a sharp reversal from 2018, when anxiety over the trade tussle with the US, and evidence of a slowdown in spending by domestic consumers, left the country’s stocks as the world’s worst performing major market.

US President Donald Trump, who has lambasted China for unfair trade practices, tweeted over the weekend that US negotiators had “very productive” meetings in Beijing. Should the talks, which resume this week in Washington, fail to deliver an agreement by the end of the month then US tariffs on $200bn of Chinese exports will move sharply higher.

China’s CSI 300 index of major Shanghai and Shenzhen-listed finished up 3.2 per cent, with the technology, telecoms, healthcare and financial services sectors led the gains. Hong Kong’s Hang Seng rose 1.6 per cent.

Marc Ostwald, a strategist at Admisi, said that investors “continue to focus on the optimism about a positive conclusion to US/China trade talks”.

The spectre of a damaging trade war between the world’s two largest economies contributed to a chill in appetite for stocks last year, with the car industry among those caught in the crosshairs. Weaker Chinese demand has hurt Germany’s exporters, while it is also firmly on the radar of Federal Reserve policymakers who have grown more concerned about the outlook for the global economy.

This year, it is not only optimism over the trade talks that has helped Chinese stocks stage a recovery. Beijing has orchestrated a series of stimulus measures which saw lending from the country’s banks reach a record high in January. Foreign investors last month channelled a record $9bn into Chinese equities, the largest single monthly inflow on record.

European stocks were little changed in early trading, but, like most major equity markets, have bounced after December’s turbulence. The benchmark Stoxx Europe 600 has climbed almost 10 per cent this year. US markets are closed today for the Presidents Day holiday.

Elsewhere in Asia, Tokyo’s Topix jumped 1.6 per cent, with energy stocks leading the way.