China, HK stocks gain after extension of trade truce deadline

HONG KONG: China and Hong Kong shares climbed on Tuesday, as the extension of a tariff truce between the US and China, the world’s two largest economies, helped cushion investor sentiment.

Washington and Beijing on Monday extended a tariff truce by 90 days in a decision that markets had widely expected.

At the close, the Shanghai Composite index rose 0.5% to 3,647.55, extending rally to highest level since Dec 16, 2021. The blue-chip CSI300 index gained 0.52%.

Hong Kong’s benchmark Hang Seng went up 0.25%, while Hang Seng Tech was down 0.38%.

“This is not a surprise to the financial markets. Investors already assumed the deadline would be extended,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.

The trade negotiation will take months and investors have shifted their focus to the US-Russia summit, he added.

China markets have been trending higher in recent weeks, as investors priced in positive signals from a series of US-China trade talks, which focussed on bringing tariffs down from triple-digit levels.

China’s blue-chip stocks have gained 15% and Hong Kong’s Hang Seng have rebounded more than 20% since early April when US President Donald Trump first announced the duties.

Semiconductors lifted mainland A-shares on Tuesday, with both Wafer Works (Shanghai) and Cambricon Technologies soaring 20%.

Hong Kong-listed shares of Chinese top foundry Semiconductor Manufac uring International Corp jumped 5% after Bloomberg reported that China urged local firms not to use Nvidia’s H20 chips.

Some investors remained cautious on China stocks even as the immediate concerns over tariff had eased.

Ben Bennett, Asia head of investment strategy at L&G Asset Management said they are neutral on Chinese equities.

“We don’t think the government will provide significant extra stimulus in the coming months, but would stand ready if the US turns up its tariff pressure,” he said.

“It’s largely a stalemate situation where the can is being kicked down the road for further trade negotiations,” said Moh Siong Sim, a currency strategist at Bank of Singapore.