China stocks hit 9-month high as investors brush off tariff risks, embrace bull market

SHANGHAI: China stocks rose to their highest level in nine months on Wednesday as investors looked past concerns over U.S. tariff threats and positioned themselves for a long-awaited bull market.

The Shanghai Composite Index rose 0.6% to 3,636 points, its highest level since Oct 2024 and entering a bull market - commonly defined as climbing 20% from a recent trough.

The index has risen for three consecutive months.

U.S. and Chinese officials agreed to seek an extension of their 90-day tariff truce on Tuesday, following two days of what both sides described as constructive talks aimed at defusing an trade war between the world’s two biggest economies that threatens global growth.

“Investors are increasingly insensitive to Sino-U.S. trade talks, and are paying more attention to domestic issues,” said Wang Zhuo, partner of Shanghai Zhuozhu Investment Management.

Earlier this week, Goldman Sachs raised its target for Chinese stocks, citing “brightened prospects for a U.S.-China trade deal.”

Low interest rates are nudging investors into stocks, especially high-dividend blue-chips, while China’s drive to crack down on excessive competition in some industries is improving the outlook for corporate earnings, Wang said.

“Now that the index is entering bull market territory, money will undoubtedly keep flowing in. I don’t see signs of froth, so the bull run has legs.”

China kicked off a 1.2-trillion-yuan ($167.3 billion)hydropower project in Tibet this month, and Beijing has launched a campaign against cut-throat price wars, fanning hopes for an end to the country’s deflationary spiral.

“China’s stock markets are flush with capital, and we’re currently in a bull market driven by this abundance,” said Zeng Wenkai, chief investment officer at Shengqi Asset Management Co.

China A-share market turnover remained elevated over the past week at around 1.8 trillion yuan per day, while the outstanding margin financing balance rose to a 10-year high of nearly 2 trillion yuan.

In Hong Kong, the benchmark Hang Seng Index is near four-year highs. The market has jumped nearly 30% this year on the back of record inflows from mainland China, recovering foreign interest, and a booming market for initial public offerings (IPOs).

Thirty-nine percent of Asia-Pacific family offices planned to increase their investments in Greater China over the next 12 months, according to UBS Global Family Office Report.

By the lunch break, China’s blue-chip CSI300 Index and the Shanghai Composite Index both climbed 0.5% while the Hong Kong benchmark Hang Seng was down 0.4%.

Auto shares dragged the Hang Seng Index, with Li Auto down more than 10%, as the pricing of its new launch and competition concerned investors.

Meanwhile, investors are awaiting details from the July Politburo meeting due this week for more policy direction, though some analysts say recent better-than-expected economic data and easing trade tensions may prompt leaders to hold off on further stimulus measures for now.