China stocks rally, renminbi gains after US-China reach trade deal
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China’s blue-chip CSI 300 Index closed up 1.2 per cent and the Shanghai Composite Index added 0.8 per cent.
PHOTO: AFP
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SINGAPORE/SHANGHAI – Chinese stocks rallied and the renminbi strengthened on May 12, after the United States and China said they had agreed to a deal to slash reciprocal tariffs in a substantial de-escalation of a potentially damaging trade war.
Speaking after talks with Chinese officials in Geneva over the weekend, US Treasury Secretary Scott Bessent told reporters that the two sides had reached a deal for a 90-day pause on measures and that reciprocal tariffs would come down by 115 percentage points.
Hong Kong’s benchmark Hang Seng Index extended the gains to over 3 per cent after the news, while the Hang Seng Tech Index rallied more than 5 per cent.
The renminbi strengthened to 7.2001 against the US dollar to reach a six-month high, while its offshore counterpart rose more than 0.5 per cent.
China’s blue-chip CSI 300 Index closed up 1.2 per cent and the Shanghai Composite Index added 0.8 per cent before the details came out.
“The result far exceeds market expectations. Previously, the hope was just that the two sides can sit down to talk, and the market had been very fragile,” said Mr William Xin, chairman of hedge fund Spring Mountain Pu Jiang Investment Management in Shanghai.
“Now there’s more certainty. Both China stocks and the yuan will be in an upswing for a while.”
Ahead of the talks, US President Donald Trump had signalled that punitive tariffs of 145 per cent on China would likely come down and even floated an alternate tariff figure of 80 per cent that he said “seems right”
China is at the epicentre of Mr Trump’s global trade war, which has roiled financial markets, upended supply chains and fuelled risks of a sharp worldwide economic downturn.
Tensions between the two sides have steadily ratcheted up since Mr Trump’s inauguration in January, intensifying after his April 2 “Liberation Day” announcement of sweeping tariffs and Beijing retaliating with equally hefty tariffs on US goods.
China’s blue-chip CSI300 Index dropped sharply the week following those tariff announcements, but has since recovered. It is now nearly back at around the April 2 level.
The Hong Kong benchmark Hang Seng has been down 0.3 per cent since April 2. The renminbi has benefited from the capital flight from US markets and dollar assets, and has been up 0.4 per cent since early April.
Leading gains on May 12, the CSI Defence Index surged 5 per cent and the info-tech sub-sector index jumped 0.9 per cent. REUTERS
