Shanghai’s benchmark index rises above 3,000 for first time in a month with yuan acting as catalyst
- A possible US-China trade deal next month raises hopes for a stronger yuan
- In Hong Kong, financial and casino stocks steal the show, with all eyes on Carrie Lam’s policy address on Wednesday
China stocks rose on Monday, with the benchmark Shanghai Composite Index going past the 3,000 level for the first time in nearly a month amid expectations of trade deal between presidents Xi Jinping and Donald Trump next month. A strengthening yuan acted as a catalyst.
The Shanghai index rose 1.2 per cent to 3,007.88 – it’s highest level since September 16, while the CSI 300 Index of blue chips listed on Shenzhen and Shanghai gained 1.1 per cent to 3,953.254.
In Hong Kong, the Hang Seng closed higher for a third straight session. The index added 0.8 per cent to 26,521.85, its highest level since September 18.
Alvin Cheung, associate director at Prudential Brokerage, said that mainland-listed stocks got a boost from a strengthening yuan, which rose to 7.0611 against the US dollar on Monday.
Bank of America Merrill Lynch said that it has revised its year-end forecast for the yuan to 7.3 per US dollar, from 7.5 previously.
“Expectation in the market is rising that China’s central bank is unlikely to allow the yuan to continue to weaken further as we go into the next meeting between the two presidents, as the proposed official deal could be signed at the APEC summit on November 16-17 [in Chile],” said Cheung.
The yuan’s rise came despite weaker trade data from China on Monday. Exports fell for the second straight month in September, as the trade war with the US continued to hit its economy. Shipments fell by 3.2 per cent year on year, worse than the 2.8 per cent expectation from analysts polled by Bloomberg.