HONG KONG: China and Hong Kong stocks struggled to gain traction on Friday, trimming the week’s rise, as investors awaited the upcoming trade talks between the world’s two largest economies.
At the midday break, the Shanghai Composite index declined 0.3% and the blue-chip CSI 300 index weakened 0.2% after both moved in narrow ranges throughout the day.
Hong Kong’s benchmark Hang Seng Index closed up 0.3% after fluctuating between gains and losses, to stand near a five-week high.
Sentiment was cautious ahead of the Sino-US trade talk this weekend in Switzerland, where top economic and trade officials from the two countries are expected to take steps toward cooling a tariff war that has disrupted the global economy.
China has full confidence in its ability to manage US trade issues, its Vice Foreign Minister Hua Chunying said, a day before the trade talks begin.
On Thursday, US President Donald Trump said he expects substantive negotiations between the world’s two largest economies, signalling that the punitive 145% US tariffs on Chinese goods may come down.
“Tariff de-escalation, if it materializes, would serve as a major positive for Chinese equities. However, we think the negotiation process could be lengthy, with ups and downs,” Morgan Stanley analysts, including Laura Wang, said.
“We advise a balanced portfolio with high-quality, large-cap offshore internet names and A-share blue-chip consumer names.”
China’s leading chipmaker, Hua Hong Semiconductor , dragged on the market, tumbling nearly 10% after reporting a drop in earnings in the last quarter.
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