China stocks have best day in 7 weeks as Xi’s speech eases trade war fears
SHANGHAI (Reuters) – China’s stock markets rallied on Tuesday as President Xi Jinping’s vow to further open up the economy soothed fears of a trade war with the United States.
The blue-chip CSI300 index rose 1.9%, to 3,927.17 points, while the Shanghai Composite Index gained 1.7% to 3,190.32, in their best single-day performance in seven weeks.
Xi pledged on Tuesday to open the country’s economy further to foreign investors and lower import tariffs on products including cars, in a speech seen as an attempt to defuse an escalating trade dispute with Washington.
While most of the pledges were reiterations of long-promised measures and were short on specifics, markets believed they signaled some room for a possible compromise with Washington.
“With his speech, Xi is offering a solution to the Sino-U.S. trade dispute,” said Yang Hai, strategist at Kaiyuan Securities.
Jonas Short, head of the Beijing office at Everbright Sun Hung Kai said the market reacted positively to Xi’s speech because it was framed in more positive terms, without the increasingly combative rhetoric seen from both sides.
But he voiced caution about the likely extent of such reforms.
“China is opening sectors where they already have a distinct advantage, or a stranglehold over the sector,” Short said, citing China’s banking industry, which is dominated by domestic players.
Xi also said China would speed up opening up of its insurance industry, with Shanghai Securities News citing a government researcher after the speech saying foreign investors should be able to hold a controlling stake or even full ownership of an insurance company in the future. Sectors rallied across the board on Tuesday. Gains were led by banking and real estate shares.
China’s stocks are among fund managers’ top picks for 2018 as they bet the United States and China will avert a full-blown and potentially costly trade war.