China and Hong Kong stocks retreat before Washington and Beijing prepare to sign trade deal

Zhang Shidong

China and Hong Kong stocks retreated on Wednesday, with benchmarks falling for a second day, as investors stepped back ahead of the signing of an interim trade deal between US and China in Washington.

The Shanghai Composite Index fell 0.5 per cent to 3,090.04 for the biggest loss in a week. The Hang Seng Index shed 0.4 per cent to 28,773.59.

While China’s delegates led by Vice-Premier Liu He are in Washington to sign the phase one trade agreement later on Wednesday, traders were put on edge by media reports that some of the current US tariffs will remain in place until after the presidential election and the Trump administration plans to come up with a new edict to curb exports to Huawei Technologies.

“While both sides US and China have compartmentalised these issues away from the trade, it still points to further frictions,” said Stephen Innes, a strategist at AxiTrader.

Shenzhen Sunyes Electronic Manufacturing Holding led some of the Chinese suppliers of Huawei lower. The company, which derives 42 per cent of its sales from the telecom equipment behemoth, dropped 1.6 per cent to 7.49 yuan. Shennan Circuits slipped 1 per cent to 170.24 yuan and Tianma Microelectronics lost 1.1 per cent to 16.83 yuan. Huawei contributes at least 17 per cent of the revenues to the two companies, according to Bloomberg data.

The US Commerce Department was drafting a rule that would block exports to Huawei, if American components make up more than 10 per cent of products’ values, the Reuters reported. The rule would be issued in weeks without a chance for public comment, it said.

Muyuan Foodstuff retreated 1.2 per cent to 89.68 yuan even after the pig-farming company said profit jumped by as much as 1,130 per cent year on year in 2019 because of rising pork prices.

Xinhuanet, the news portal of China’s state-run Xinhua news agency, surged by the 10 per cent daily limit for a third straight day to 32.32 yuan, taking its gain to 58 per cent over the past three weeks.

China News Development Shenzhen and China Economic Info Service, the parties acting in concert with biggest shareholder Xinhua, plan to sell no more than 10.4 million shares, or a 2.01 per cent stake, in the listed company in the following six months, according to an exchange statement. Xinhua and the two entities control about 64 per cent of the listed unit.

In Hong Kong, Chow Tai Fook Jewellery Group fell 1.1 per cent to HK$8.41 after the retailer said it plans to close up to 15 of its Hong Kong stores by the end of its next financial year in March 2021.

Kingsoft jumped 11 per cent to HK$24.10, rising for five consecutive days. Macquarie Bank is bullish on the Beijing-based software company, citing strong growth outlook with rapid client adoption.

This article China and Hong Kong stocks retreat before Washington and Beijing prepare to sign trade deal first appeared on South China Morning Post

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