China, Hong Kong share surge over bleak hope of softening trade dispute

China and Hong Kong stocks rebounded on Wednesday as weak industrial output and retail sales data reinforced expectations of fresh stimulus measures, while a slight softening in rhetoric from U.S. President Donald Trump eased trade worries. ** The CSI300 index rose 1.4 per cent to 3,694.30 points at the end of the morning session, while the Shanghai Composite Index gained 1.1 per cent to 2,915.28 points.

** The Hang Seng index added 0.7 per cent to 28,326.32 points, while the Hong Kong China Enterprises Index gained 0.7 per cent to 10,835.63. ** Growth in industrial output slowed more than expected to 5.4 per cent in April from a year earlier, pulling back from a surprising strong 4-1/2-year high of 8.5% in March. Retail sales were also worse than expected, with the headline number rising 7.2%, the slowest pace since May 2003. ** The lacklustre April activity data, which also include shrinking exports and stumbling investment, increases "the likelihood of further policy easing", Capital Economics wrote in a note.

** Fears of further escalating in trade tensions were slightly eased after Trump cited the trade war with China "a little squabble" and insisted talks between the world's two largest economies had not collapsed. ** China's CSI300 financial sector sub-index was higher by 1.29 per cent, the consumer staples sector up 3.24 per cent, the real estate index rose 1.61 per cent and the healthcare sub-index climbed 1.42 per cent. ** Chinese H-shares listed in Hong Kong rose 0.67 per cent at 10,835.63, while the Hang Seng Index was up 0.73 per cent at 28,326.32.

The smaller Shenzhen index was up 1.38 per cent and the start-up board ChiNext Composite index rose 1.28 per cent. ** Around the region, MSCI's Asia ex-Japan stock index climbed 0.56 per cent, while Japan's Nikkei index was up 0.17 per cent. ** The yuan was quoted at 6.8744 per U.S. dollar, 0.01 per cent firmer than the previous close of 6.8753. ** The largest percentage gainers in the main Shanghai Composite index were Shanghai Shentong Metro Co Ltd, which jumped 10.07 per cent, followed by Zhongnongfa Seed Industry Group Co Ltd, which gained 10.06 per cent and Jiangsu Nanfang Medical Co Ltd, which rose 10.03 per cent.

The largest percentage losses in the Shanghai index were Sanan Optoelectronics Co Ltd, which fell 9.07 per cent, followed by Aurora Optoelectronics Co Ltd, which lost 5.06 per cent and Luenmei Quantum Co Ltd, which slipped 5.03 per cent.