China and Hong Kong stocks post best weekly gain in two months on trade, policy optimism
- Stock benchmarks in China and Hong Kong rose at least 3.8 per cent for the week
- Derivative trading on the city’s stock exchange resumed, with volumes of futures contracts surging
Chinese and Hong Kong stocks capped their biggest weekly gain in two months, on prospects of an easing in trade tension and further loosening of monetary policies to stem a slowdown in growth.
The Shanghai Composite Index added 0.5 per cent to 2,999.60 on Friday, rising 3.9 per cent for the week. The Hang Seng Index rose 0.7 per cent to 26,690.76, advancing 3.8 per cent in the five-day period. Both the gauges posted their best weekly performances since June 21.
The appetite for risk assets improved as China and the US agreed to go back to the negotiating table next month to resolve the trade dispute and Premier Li Keqiang called for a timely use of policy tools, including cuts in banks’ reserve requirement ratios, to stabilise economic growth, at a cabinet meeting this week. A rally in US stocks overnight also boosted sentiment.
“The scheduled resumption of the trade talks continues to give the Chinese equity market support,” said Gerry Alfonso, director for international business at Shenwan Hongyuan Group, in Shanghai.
Traders will be braced for a busy week next week, when a set of August economic data is due.