China stocks rise for third day amid reports of ZTE ban resolution, abolition of family planning
Chinese stocks rose for a third day on Tuesday, amid reports that Beijing will scrap the limit on the number of children a family can have. Shares were also boosted by a report in The Wall Street Journal that said China and the United States had reached an agreement on the seven-year ban on ZTE acquiring American technology.
“The news about cancelling the planned birth policy gave a boost to the market,” said Wei Wei, a trader at Huaxi Securities in Shanghai. “But that may be short-lived speculative thematic investment, and isn’t likely to last long. The broader market may need some time to consolidate, as the threat of a trade war seems to be fading now.”
Hong Kong’s markets were closed on Tuesday for a public holiday marking Buddha’s Birthday. The Shanghai Composite Index gained 0.51 points, or less than 0.1 per cent, to 3,214.35 for its highest close since March 22, with turnovers almost matching its 30-day average. It had gained 1.9 per cent during the previous two days, after China agreed to increase imports from the US to temporarily resolve the trade friction between the two countries.
The CSI 300 Index of big caps dropped 0.4 per cent, while the ChiNext gauge of smaller companies added 0.7 per cent.
The Shanghai Composite has rebounded by 4.8 per cent from this year’s low, reached in April, as concerns about the trade war with Washington eased after US Treasury Secretary Steven Mnuchin said on Monday the Trump Administration would not impose tariffs on Chinese products for now.
Sentiment was furthered boosted by The Wall Street Journal report, which said on Tuesday that China and the US were working on details of a settlement on ZTE, which could include changes to management and significant fines.
China’s cabinet has also commissioned research into the repercussions of ending the country’s four-decade-old policy that restricts the number of children a family can have. It intends to enact the change nationwide, Bloomberg reported, citing unidentified sources. Chinese families can have a maximum of two children at the moment.
Ningbo David Medical Device, a producer of infant care equipment, surged by 7.8 per cent to 13.85 yuan. Jinfa Labi Maternity and Baby Articles gained 2.5 per cent to 17.40 yuan and Beingmate Baby and Child Food added 1.4 per cent to 5.08 yuan.
Property developers bucked the trend and ended lower, after China’s Housing Ministry said over the weekend the country should curb speculative home purchases and ensure the stable and healthy growth in the property market. The sector has shown the initial signs of overheating in some cities.
Poly Real Estate slumped by 4 per cent to 13.20 yuan, Future Land Holdings lost 4.8 per cent to 30.46 yuan and Risesun Real Estate Development was down by 3.2 per cent at 10.14 yuan.
Home sales in China’s 46 key cities dropped by 11 per cent from a year earlier in April, with sales in the first-tier cities leading the decline with 24 per cent, according to GF Securities.