China's Market Standoff: Stability Amid Trade Uncertainty

China and Hong Kong stocks saw minimal movement on Monday, following Beijing's pledge to stabilize capital markets but without new stimulus announcements. The market, previously buoyed by state-backed buying, faces uncertainty over Sino-U.S. trade talks, lacking policy support. Technology sectors saw growth, while property shares declined.

China and Hong Kong financial markets experienced little change on Monday, as Beijing committed to stabilizing capital markets but refrained from introducing new stimulus in response to significant U.S. tariffs.

Since early April, Chinese stocks have seen an 8% rise due to state-backed purchasing, reacting to U.S. President Donald Trump's 'reciprocal tariffs.' However, this recovery is faltering without further policy intervention from Beijing, or clear signals regarding the initiation of trade discussions between China and the U.S., much less the prospect of reaching an agreement.

The blue-chip CSI300 Index in China dipped by 0.1%, while the Shanghai Composite Index declined by 0.2%. Hong Kong's Hang Seng Index remained mostly unchanged. On Friday, Chinese officials expressed their commitment to support businesses and workers hit by triple-digit U.S. tariffs, encouraging preparation for worst-case scenarios. Despite stable Chinese shares, significant capital influx or positive news from trade negotiations is necessary to boost investor confidence, according to Wang Daqi of Zheshang Securities.

Meanwhile, U.S. Treasury Secretary Scott Bessent expressed uncertainty regarding President Trump's claims of ongoing tariff talks with China. Bessent was unsure if any conversation had transpired between Trump and Chinese President Xi Jinping. In response, Beijing called for the lifting of tariffs to enable negotiations and allowed selective exemptions on U.S. imports amidst counter-tariffs. AI and chip-making stocks saw gains following Xi's call to promote these technologies, while property shares fell due to dashed expectations for immediate monetary easing.

(With inputs from agencies.)