November 30, 2018 / 8:19 AM / 8 months ago

China stocks climb in low-volume trade, but trade risks loom large

* SSEC +0.8 pct, CSI300 +1.1 pct

* Policy support expected if Trump hikes tariffs on China

By Noah Sin

HONG KONG, Nov 30 (Reuters) - China stocks rose on Friday in thin trading volume, amid caution ahead of a most-awaited meeting between U.S. President Donald Trump and his Chinese counterpart Xi Jinping on the sidelines of the G20 summit in Argentina. ** The Shanghai Composite index was up 0.8 percent at 2,588.19, gaining 0.3 percent for the week. The blue-chip CSI300 index was up 1.1 percent, climbing 0.9 percent for the week. ** CSI300’s financial sector sub-index was higher by close to 1 percent, the real estate index rose 0.9 percent and the healthcare sub-index was up 1.3 percent. ** The smaller Shenzhen index ended up 0.9 percent and the start-up board ChiNext Composite index was higher by 1.3 percent. ** Trump sent mixed signals on Thursday about the possibility of a deal, whereas China Daily, Beijing’s mouthpiece, said a deal is possible but added that Washington must be “fair minded” in the negotiations. ** The meeting is coming after China’s manufacturing sector reported its weakest growth in two years on Friday morning.

** With moderate domestic economic growth on one hand and a lingering tariff spat with the United States on the other hand, Chinese fund managers have further lowered their suggested equity allocations for the next three months, a Reuters poll found this week. ** “The market may be up, but volume is not,” said Zhang Gang, an analyst at Central Securities in Shanghai. ** About 13.93 billion shares were traded on the Shanghai exchange. The volume in the previous trading session was 15.72 billion. ** Certain sectors are ticking up after declining for much of the year, such as securities companies, the CSI300 sub-index for which gained 1.6 percent on Friday, but that is no indicator for investors’ confidence in China and the U.S. reaching a trade truce this weekend, he added. ** The agricultural sector also made gains on Friday for reasons unrelated to the Trump-Xi meeting. China is considering buying port for its state reserves to support struggling farmers whose livestock is affected by the African swine fever epidemic. CSI 300’s sub-index for the sector was up 1.4 percent. ** “The worst scenario is that the U.S. increases the tariffs (to 25 percent) right away, that will have an obvious impact on A-shares and the rest of Asia,” Central Securities’ Zhang said. “But the impact will be temporary, because China will come up with policies to cushion the economic impact.” ** “There is a joke in the market: if there is an agreement at G20, you’d gain if you’re long Chinese stocks. If there is no agreement, the government will support the market, which means you will also gain if you’re long,” said another Shanghai-based analyst at a separate Chinese brokerage. ** The largest percentage gainers on the main Shanghai Composite index were Jiangsu Sunrain Solar Energy Co Ltd, up 10.1 percent, followed by BanBao Co Ltd and SEC Electric Machinery Co, both up by 10 percent. ** The largest percentage losers on the Shanghai index were Jinzhou Jixiang Moly Co Ltd and Ginwa Enterprise Group Inc, both down 10 percent, followed by Guangxi Radio and Television Information Network Corp Ltd, which lost 9.6 percent.

Reporting by Noah Sin; Editing by Subhranshu Sahu

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