Shanghai stocks hit 11-year highs in AI frenzy ahead of Trump-Xi meeting

SHANGHAI: Shanghai stocks hit 11-year highs and Hong Kong shares swung to gains on Wednesday as investors bought an early dip in tech plays ahead of a meeting between U.S. and Chinese leaders later this week.

The unexpected addition of Nvidia’s Jensen Huang to a group of CEOs travelling with President Donald Trump to Beijing injected fresh dynamism into Chinese artificial intelligence stocks as investors shrugged off concerns over the Iran war and inflation.

The Shanghai Composite Index opened lower but ended the session up 0.7%, hitting the highest level since July, 2015. The blue-chip index CSI300 rose 1%.

In Hong Kong, the Hang Seng Index recouped earlier losses and edged up 0.2%.

U.S. President Donald Trump and Chinese leader Xi Jinping this week will hold their first face-to-face talks in more than six months as they try to stabilize ties strained by trade, the Iran war and other disagreements.

“Geopolitics will be at the front of minds for many investors, particularly if the meeting helps energy supply concerns in the Gulf,” said Ben Bennett, L&G’s head of investment strategy in Asia.

“I think expectations are relatively low for meaningful agreements, so there’s upside risk here,” Bennett said, adding that he’s looking at any concrete deals around shipments of Chinese rare earths and U.S. chips.

More than a dozen CEOs and top executives from companies such as Tesla, BlackRock and Illumina were expected to accompany Trump on his visit on May 14 and 15.

Nvidia CEO Jensen Huang also joined following a last-minute call from Trump.

“We’ve seen this movie before, and we know it doesn’t end with a breakthrough agreement that resets the U.S.-China relationship. That creates a pretty low bar for success,” said Phillip Wool, chief research officer and head of portfolio management at Rayliant Investment Research.

“The low bar of ‘just don’t mess anything up’ means even modest progress - an announcement of some extension to the tariff truce, for example - could give stocks on both sides a boost.”

Chinese investors continued to snap up high-flying stocks across the AI supply chain, including sectors such as green electricity, cloud computing, big data and chipmaking.

Chinese robot makers and defence firms also rose.

But livestock and agriculture stocks fell amid expectations China and the United States may reach a farm deal during the Trump-Xi summit.