Chinese stocks fall ahead of latest trade talks outcome
Chinese stocks fell on Thursday as investors awaited the outcome of the Sino-U.S. trade negotiations, but China's better-than-expected export numbers tamed the fall. At the midday break, the Shanghai Composite index was down 0.3 percent at 2,712.43 points, while the blue-chip CSI300 index lost 0.2 percent. CSI300's financial sector sub-index fell 0.6 percent, the consumer staples sector edged up 0.4 percent, while energy shares lost 0.3 percent.
The smaller Shenzhen index gained 0.1 percent while the start-up board ChiNext Composite index was flat. Chinese Vice Premier Liu He, U.S. Trade Representative Robert Lighthizer and U.S. Treasury Secretary Steven Mnuchin have kicked off high-level trade talks, which will wrap up on Friday. Discussions among lower-ranking officials started on Monday. A deal between China and the United States "will ultimately take… President Trump and President Xi sitting down face-to-face," White House Press Secretary Sarah Sanders said on Wednesday.
U.S. tariffs on $200 billion worth of imports from China are scheduled to rise to 25 percent from 10 percent if the two sides do not reach a deal by March 1, though U.S. President Donald Trump suggested this week that the deadline might be moved. Bloomberg reported in late morning Asia trade that Trump is considering a 60-day extension to that deadline. The Hang Seng Index clawed back 70 points on the news, though it was still down percent 0.4 percent at 28,392.13 points. A-shares rebounded slightly after 03:00 GMT, as China reported that its exports in January went up by 9.1 percent, beating forecasts of a 3.2 percent decline. Trade surplus also came in higher than expected.
If trade talks go well, "the only remaining negative factor is the (Chinese) economy slipping," but that risk should be limited as the Chinese government will likely roll out new policies "to ensure economic growth stops falling and rebounds," analysts at Essence International wrote in a note on Thursday. China is considering measures to drive adjustments in financial institutions' lending rates for companies to improve credit flow into the economy, China Daily, a state newspaper, cited a central bank official as saying on Thursday.
Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.2 percent while Japan's Nikkei index was up 0.2 percent. The largest percentage gainers in the main Shanghai Composite index were Sichuan Em Technology Co Ltd, Henan Ancai Hi-tech Co Ltd and Shanghai Sanmao Enterprise Group Co Ltd, all up by 10.1 percent. The Shanghai stock index is above its 50-day moving average and below its 200-day moving average. At midday, China's A-shares were trading at a premium of 17.52 percent over the Hong Kong-listed H-shares.
(With inputs from agencies.)
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