China, HK stocks power ahead as eased trade tensions fuel rally

SHANGHAI: China and Hong Kong stocks powered ahead on Wednesday as signs of eased Sino-U.S. trade tensions added fuel to a rally driven by Beijing’s campaign against intense price wars and a trillion-yuan hydropower dam project in Tibet.

• China’s blue-chip CSI300 Index climbed 0.7% by the midday break, reaching an eight-month peak and on track for a fifth straight session of gains. The Shanghai Composite Index rose 0.8%.

• Hong Kong’s benchmark Hang Seng jumped more than 1% to hit its highest level in almost four years.

• In a sign the rally likely has legs, daily turnover in China stocks has expanded to near five-month highs, while margin financing - money borrowed to buy stocks - has hit a level not seen in nearly four months, signalling revived ‘animal spirits’.

• “External and internal headwinds have subsided faster than expected,” Huatai Securities said in a note to clients, adding that “in the latest round of tariff talks with the U.S., China has strengthened its hand.”

• China’s economy benefits from the government’s stepped-up campaign against ‘involutionary competition’ and positive real estate policies, Huatai added.

• In a sign of reduced tensions, U.S. Treasury Secretary Scott Bessent said on Tuesday that U.S. and Chinese officials will meet in Stockholm next week to discuss an extension to the deadline for negotiating a trade deal. “I think trade is in a very good place with China,” Bessent said.

• Chinese tech stocks, which are sensitive to Sino-U.S. relations, jumped on Wednesday.

• China’s tech-focused STAR50 Index gained 1%, while Hong Kong’s Hang Seng Tech Index jumped nearly 2%.

• China-listed chemicals and steel continued to rise amid bets producers in these sectors will benefit from Beijing’s expected industrial capacity cuts.

• Building materials and construction engineering stocks also powered ahead, as China’s massive hydropower dam project brightened the sectors’ prospects.

• “The construction of a hydropower dam in Tibet has greatly lifted investor sentiment as well as earnings forecasts of related industries,” Guotai Haitong Securities said in a report.