China, Hong Kong stocks boosted by thaw in trade war, possibility of US rate cuts and deregulation of M&As by Beijing
- Shanghai Composite Index rises 0.5 per cent to close at 3,0001.98
- Hang Seng Index dips 0.3 per cent to close at 28,473.71, but records 5 per cent weekly gain
China and Hong Kong stocks recorded their best weeks since March and last November, respectively, boosted by signs of improving US-China trade relations, a stronger possibility of US interest rate cuts and a proposed deregulation of mergers and acquisitions by China’s stocks watchdog.
The Shanghai Composite Index rose 0.5 per cent to close at 3,0001.98. It advanced 5 per cent over the week for its best weekly performance since March 1. The gauge rallied on every trading day of the week, closing above the important 3,000-point resistance level that it had failed to test since the beginning of May, when the trade war re-escalated.
The ChiNext Index closed 1.7 per cent higher, after spiking by as much as 2.4 per cent during the day. The Shenzhen Component Index rose 0.9 per cent. A total of 183 stocks jumped by the 10 per cent daily limit in Shanghai and Shenzhen on Friday.
In Hong Kong, the Hang Seng Index dipped 0.3 per cent to close at 28,473.71, as profit-taking and fresh protests against a controversial extradition bill weighed on stocks. But the benchmark recorded its best weekly performance since November 2, with a 5 per cent weekly gain. It advanced during the other four sessions this week.
Positive news that boosted market sentiment this week included a phone conversation between presidents Xi Jinping and Donald Trump to confirm they will meet during the G20 summit in Japan, as well as the US Federal Reserve’s signalling of a more dovish stance on interest rates.
Adding to these bull factors, China’s stocks regulator said late on Thursday it was preparing to relax controls on M&As between listed companies, which would open allow back-door listings on the country’s start-up board, ChiNext.
Stocks that are potential “shell companies” for back-door listings on ChiNext took off on Friday. A gauge compiled by data provider xuangubao.com of 67 related stocks jumped 8.8 per cent, with 53 of them rising by the 10 per cent daily limit.