Asian markets soar on hope of trade deal with the ‘meeting plus dinner’ between Trump and Xi

Hong Kong’s benchmark Hang Seng Index saw the biggest weekly gain in 42 months, or more than three years this week, powered by technology and casino shares, as it soared along with Asian equity indexes on Friday.

This came as investors’ mood turned optimistic on news that presidents Donald Trump and Xi Jinping had agreed to a “meeting plus dinner” appointment next month, raising the possibility that a deal could be reached to end the US-China trade war.

Markets gauges jumped from Seoul to Wellington. Hong Kong’s key Hang Seng Index jumped 4.21 per cent, or 1,070.35 to close at 26,486.35 on Friday , leading to a net gain of 1,768.72 this week after five straight weeks of declines and a volatile October.

The weekly gain at 7.2 per cent was the biggest since the week ended 10 April 2015, which reaped a gain of 7.9 per cent. Turnover of the main board on Friday alone amounted to HK$170.3 billion.

The Hang Seng China Enterprises Index lifted 3.97 per cent, or 408.45, to close at 10,687.77 on Friday.

All 50 stocks in the Hang Seng Index rose on Friday. Technology shares continued to lead the gains.

Sunny Optical Technology skyrocketed 10.3 per cent to close at HK$80.5 on Friday, which led to a weekly gain of 25 per cent, the biggest since the 28.68 per cent in the week ended January 15, 2010.

“Technology shares, which mainly export products, continued the rebound because they can benefit from easing trade tensions expected from the meeting between the presidents,” said Dickie Wong, executive director of research at Kingston Financial Group. “It was also reported that Donald Trump asked his cabinet to draft trade deals with China.”

Tencent soared 9.3 per cent to close at HK$303.6 on Friday, leading to a weekly gain of 16.8 per cent, the biggest since the 25.14 per cent for the week ended October 31, 2008.

“The results of Tencent to be released should not be too bad despite previous worries about its games not being approved,” said Wong. “It is rebounding after the negative news faded.”

Casino shares also mounted great gains on Friday. Sands China skyrocketed 10.7 per cent to HK$35.2. Galaxy Entertainment elevated 9.5 per cent to HK$47.9.

“Casino dropped too much previously,” said Wong. “Driven by the golden week early October, the gaming revenue last month was also the highest this year so far. Casino shares deserve a good rebound.”

Notably, Hong Kong Exchanges and Clearing leapt 6.4 per cent to HK$227.2 while Ping An Insurance jumped 5.5 per cent to HK$79.05.

Benchmarks advanced on the two exchanges in mainland China, with the Shanghai Composite Index rising by 2.7 per cent, while the Shenzhen Composite Index advanced by 3.4 per cent.

The US president wrote on his Twitter account that he had a “very good conversation” with his Chinese counterpart overnight.

Later in the day, people familiar with the Chinese president’s schedule told the South China Morning Post that Trump will host a dinner for Xi on December 1 in Buenos Aires, after the conclusion of the G20 leaders summit. Trump, who had originally planned to leave the Argentine capital as soon as the G20 meeting ends, has decided to postpone his departure to accommodate the dinner, a source said, declining to be identified for disclosing confidential arrangements.

“Positive comments from President Trump over US-China trade tension are cheering the market in the short term,” said JPMorgan Asset Management’s Asia-Pacific chief market strategist Tai Hui. A moderation in the strength of the US dollar, a stabilising relationship between the US and China, and more economic stimulus from Beijing “will be the key ingredients to revive market confidence in Asia,” he wrote in a report.

In their overnight phone call, the heads of the world’s two largest economies spoke about trade and North Korea, ahead of their highly anticipated meeting at the G20 summit in Argentina this month. “Those discussions are moving along nicely,” Trump wrote.

Xi, meanwhile, said he is open to talking with Trump about trade and other issues at the summit, according to state-owned China Central Television, in a post on its Weibo social media platform.

Prospects of a resolution to the trade war lifted US stocks overnight, boosting the S&P 500 by more than 1 per cent to 2,740.37 while the technology-heavy Nasdaq rose 1.8 per cent to 7,434.06. The Dow Jones Industrial Average rose more than 1 per cent to close at 25,380.74 overnight.

“While we are still cautious over a full resolution of recent tensions in the medium term, resumption of dialogue between Washington and Beijing would be good enough to investors for now,” Hui wrote.

On the Shanghai exchange, stocks rose across the board, with conglomerates, industrial companies and consumer stocks pacing gains.

Shares of Weifang Yaxing Chemical, Chunghsin Technology Group and Hubei Mailyard jumped by their 10 per cent daily limit.

On the Shenzhen exchange, home to China’s technology hub and a hotbed for private enterprises, gainers outpaced losers by more than 10 to 1, with more than 20 companies soaring by their 10 per cent daily limit.

Investors were cheered by the outcome of a Politburo meeting this week, where the most important decision-making group of the ruling Communist Party conveyed their commitment to support the role of private enterprises, further boosting the morale of what is seen as the lifeblood of the economy.

“President Xi’s direct support of the private sector has boosted the market sentiment, and there is a shift in the mood among investors,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “Investors care more about policies than the strength of the economy now.”