China stocks reverse losses as investors digest US presidential debate

SHANGHAI: China stocks reversed losses at market close on Friday as the first 2024 US presidential election debate was light on criticisms against China, offering nervous investors - on guard for policy hints that could affect the country’s economy - a breather.

US President Joe Biden and his predecessor Donald Trump, the two candidates in the debate, have both favoured a tough trade stance by imposing and threatening tariffs, particularly on China.

China’s benchmark CSI300 closed up 0.2%, after opening 0.3% lower. Hong Kong’s Hang Seng Index ended almost unchanged.

China’s CSI Aviation Industry Aerospace Defence Index jumped 3.5% in a sign of hedging potential geopolitical risks.

Meanwhile, shares of software company Wisesoft Co Ltd, whose Chinese name sounds like “Trump’s big win” jumped by the daily maximum of 10%, reflecting Chinese speculative bets that Donald Trump will prevail in the election.

For the first half this year, China’s CSI 300 edged up 0.9%, while the Hang Seng Index added 3.9%.

“Market is anticipating China-bashing (being) an election item. They have not talked much on the subject; that is, in a sense, good for the Chinese market,” said Redmond Wong, Greater China strategist at Saxo.

The two candidates traded barbs on abortion, immigration, the wars in Ukraine and Gaza, their handling of the economy and even their golf games as they each sought to shake up what opinion polls show has been a virtually tied race for months.

The market had expected potential discussions during the debate on tariffs as the United States’ China policies might dent investor sentiment in China markets.

“Conflicts between China and the US generally increase before the US election,” SPDB International said in a note.

“If there are emergencies in the second half of this year that lead to a sharp deterioration in Sino-US relations, or if Trump is elected and continues to reiterate a substantial increase in overall tariffs on Chinese exports, confidence in China’s capital market and the economy will be affected.”