China, HK stocks inch up on trade talk progress

Stocks in Mainland China and Hong Kong edged higher on Friday as Beijing and Washington appeared to make further progress in the trade talks. However, concerns over domestic economic growth limited the gains. ** At the midday break, the Shanghai Composite index was 0.1 percent higher at 2,537.98 points. ** The blue-chip CSI300 index was also up 0.1 percent, with its financial sector sub-index rising 0.3 percent, and the consumer staples sector gaining 0.6 percent. The sub-index for information technology rose 0.1 percent. ** Chinese H-shares listed in Hong Kong rose 0.2 percent. The Hang Seng Index was also up 0.2 percent at 26,570.92 points. ** The smaller Shenzhen index rose 0.1 percent, while the start-up board ChiNext Composite index eased 0.3 percent. ** U.S. Treasury Secretary Steven Mnuchin announced on Thursday that Chinese Vice Premier Liu He will "most likely" visit the U.S. capital later in January for trade talks. ** Also on Thursday, U.S. President Donald Trump said his country is "having tremendous success with China" in trade negotiations, a day after the two sides concluded a three-day discussion on trade. ** Uncertainty remains, however, as the world's largest economies prepare for the next stage of talks, which will tackle the more contentious issues of alleged intellectual property theft and forced technology transfers. ** China will cut taxes and fees for manufacturers in 2019 to support them, state television quoted the industry minister as saying on Thursday. China had earlier pledged to cut taxes to support the economy. ** The comments came after China reported the slowest monthly rise in producer prices in over two years in December, adding to investors' worries over lacklustre Chinese economic growth. ** In a note on Friday, analysts at TF Securities warned against picking stocks that are closely linked to economic cycles, suggesting that "their performance will constantly go below expectation, hitting both valuation and profit." ** Amid the murky economic picture, "investors (should) closely follow changes in policies, liquidity and external markets," Zhang Gang, a Shanghai-based analyst at Central China Securities, wrote in a memo on Friday. He expects the Shanghai Composite to stay volatile around its 20-day moving average, which stood at 2531.65 as of midday. ** The Shanghai stock index is also below its 50-day moving average and below its 200-day moving average. ** The Federal Reserve will be patient in approving any further rate increases as officials gauge whether the U.S. economy will slow this year, chairman Jerome Powell stressed on Thursday, calming fears in the financial markets that fresh hikes will hurt already-troubled global growth. ** Around the region, MSCI's Asia ex-Japan stock index was firmer by 0.2 percent while Japan's Nikkei index gained 0.9 percent. ** The largest percentage gainers in the main Shanghai Composite index were Wintime Energy Co Ltd, Henan Zhongfu Industrial Co Ltd and China Aluminum International Engineering Corp Ltd, all up by 10.1 percent. ** The largest percentage losses in the Shanghai index were Zhongchang Big Data Corp Ltd, down 10 percent, followed by Shanghai Guangdian Electric Group Co Ltd , losing 8.2 percent, and Jinzhou Port Co Ltd , down by 8.1 percent. ** At midday, China's A-shares were trading at a premium of 17.99 percent over the Hong Kong-listed H-shares.

(Reporting by Noah Sin, Editing by Shreejay Sinha)