Chinese stocks fall for third day as investors brush aside trade deal to keep watch on thorny issues

Chinese stocks retreated for a third day, as traders looked past the tentative truce in the US-China trade war to focus on lingering issues that could still fray the relationship between Beijing and Washington.

The Shanghai Composite Index dropped 0.5 per cent, or 15.96 points, to 3,074.08 on Thursday, taking the three-day decline to 1.3 per cent. Hong Kong’s Hang Seng Index fared better, rising 0.4 per cent to 28,883.04.

While officials from China and the US hailed the signing of the phase one trade deal that would require the Asian nation to do more to protect intellectual property and increase procurement of American goods, some investors including JPMorgan Asset Management said markets may still be primed for wild swings on possible further friction in the future.

“Highly sensitive issues like the US’ export ban on several Chinese companies, increased scrutiny on Chinese investments abroad, and China’s application of its commitment to treat foreign and domestic business alike within China are likely to make headlines throughout the year,” said Hannah Anderson, a strategist for global markets at the asset management firm. “Markets will likely continue to price in an elevated risk premium, which could be a source of volatility throughout 2020.”

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Traders were also awaiting the release of China’s key economic data on Friday, including full-year economic growth for 2019. The economy may have expanded by more than 6 per cent last year, Vice-Premier Liu He said in an interview with the state-run Xinhua news agency after he signed the trade agreement in Washington.

Media and insurance stocks were among the biggest decliners on the mainland., the news portal run by the Communist Party’s People’s Daily, tumbled 8 per cent to 24 yuan and Xinhuanet, owned by Xinhua, sank 6.2 per cent to 30.31 yuan. China Life Insurance dropped 2.5 per cent to 33.92 yuan.

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Guangzhou Automobile Group lost 2.7 per cent to 11.76 yuan in Shanghai on media reports that it planned to invest US$1 billion in cash-strapped Chinese electric carmaker Nio. Its Hong Kong-traded shares shed 3.8 per cent to HK$9.39.

The carmaker clarified that the discussion with Nio was at an early stage and that its investments would not exceed US$150 million.

Beijing-Shanghai High Speed Railway, the operator of the rail network between China’s two biggest cities, rose 39 per cent to 6.77 yuan on the first day of trading on the Shanghai exchange. It raised 30.7 billion yuan (US$4.5 billion) from the initial public offering – one of the biggest stock offerings on the mainland in five years.

Shenzhen Desay Battery Technology surged by the 10 per cent daily limit to 46.41 yuan after the Apple supplier said in a preliminary statement that net income probably increased by as much as 30 per cent year on year to 520 million yuan in 2019.

In Hong Kong, Vitasoy International Holdings, a food and drink maker, gained 5.6 per cent to HK$29.25. The stock erased an intraday loss of as much as 5.1 per cent after the company denied allegations by activist short seller Valiant Varriors that it had inflated profits, capital expenditure and other financials.

This article Chinese stocks fall for third day as investors brush aside trade deal to keep watch on thorny issues first appeared on South China Morning Post

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