HONG KONG: China and Hong Kong shares were largely flat in choppy trading on Tuesday as investors grappled with uncertainty over the future of US-China relations.
At market close, the Shanghai Composite index pared early losses to end 0.04 percent higher at 3,861.86 points. The blue-chip CSI300 index weakened 0.2 percent.
In Hong Kong, the benchmark Hang Seng Index was down 0.03 percent at 26,438.51, while the tech index added 0.6 percent.
Sentiment was cautious as investors weighed uncertainties around US-China trade talks. Officials from both countries said on Monday that they have reached a framework deal on TikTok pending confirmation in a Friday call between US President Donald Trump and his Chinese counterpart Xi Jinping.
That follows China’s accusation that Nvidia violated the country’s anti-monopoly law on Monday, the latest escalation in its trade war with the United States.
“Stock indexes are likely to remain range-bound in the short term” as markets focus on US-China trade talks and the Fed’s meeting later this week, Nanhua Futures analysts said in a note to clients.
However, downside risks should be limited, they added, citing strong global market performance boosting risk appetite and continued loose liquidity conditions.
“US-China talks reduce near-term geopolitical risk but do not address structural growth challenges,” Gary Tan, portfolio manager at Allspring Global Investments, told the Reuters Global Markets Forum.
Policy and liquidity should continue to provide near-term support to the market, but structural challenges persist, and the firm maintains its underweight position on China, he added.
Weighing on the onshore markets, the rare-earths sector index weakened 1.1 percent on Tuesday. The financial sector sub-index dropped 0.9 percent and the insurance sector slipped 1.2 percent.
Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.7 percent, while Japan’s Nikkei index was up 0.3 percent.
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