Chinese stock investors strike cautious tone, awaiting further developments in US-China trade talks
China's stock investors took a cautious approach this week to the start of Sino-US trade talks and a 90-day lowering of bilateral tariffs.
"Those who bet Chinese stocks would surge on the news were disappointed," said Wu Kaida, an analyst with TF Securities. "The market response was very conservative as investors take a long-term view and await further news."
He added, "People know it is far from being over yet and also know that the US is prone to make sudden and unexpected shifts in policy, as has happened before."
The Shanghai Composite Index gained 0.76 percent this week, while the Shenzhen Component Index rose 0.52 percent. Both ended lower on Friday after a week of small movements within a narrow 1 percentage point range.
On Thursday, China implemented a 0.5-point cut in the amount of reserves it requires banks to hold. The move is aimed at increasing lending latitude and stabilizing the economy.
Wu said he expects sectors like consumption, military equipment and technology to continue as powerhouses of future growth.
Wang Tao, chief China economist of UBS, who is based in Hong Kong, noted a decrease in US-China trade tensions but said "uncertainties remain high."
The framework for trade talks announced earlier this week is a starting point for negotiations, she said, "but the weighted average tariff rate still imposed by the US on Chinese goods poses significant pressure on China's exports and economic growth."
Hong Kong's Hang Seng, in a week of wider swings, ended with a weekly gain of 2.1 percent. The government announced better-than-expected 3.1 percent growth for the first quarter.
In the US, markets reacted more positively to the easing of US-China trade tensions, which have roiled global supply chains and stirred fears of higher domestic inflation. The S&P 500 index rose for five consecutive sessions to post a weekly gain of 5.3 percent, while the Dow Jones average was up 3.4 percent. The Nasdaq surged 7.2 percent.
