China markets flat, Hong Kong dips as initial trade optimism wanes

New Straits Times

a day ago

HONG KONG: Chinese stocks steadied after an initial fall and Hong Kong shares were trading lower on Thursday, led by declines in the tech sector, as markets struggled to sustain positive momentum from Sino-US trade talks that provided few concrete details.
A trade truce between the world's two biggest economies was back on track, according to U.S President Donald Trump, a day after negotiators from Washington and Beijing agreed on a framework to ease bilateral retaliatory tariffs.
Under the agreement, Beijing will lift export restrictions on rare earths minerals while the US will restore Chinese students' access to its universities, Trump said on Truth Social.
Yet the terms remain subject to final approvals with details notably absent. The 55 per cent tariffs on Chinese imports will also remain unchanged, US Commerce Secretary Howard Lutnick said.
"We still don't know if what Trump says will actually happen. It's disappointing that the tariffs rates was not dialled down at all and tech curbs on China was not even mentioned," said Jason Chan, senior investment strategist at Bank of East Asia, Hong Kong.
The talks left key issues like chip exports unaddressed, meaning conflicts are set to emerge in the future, while no one knows how long the current truce will last, he added.
At the midday trading break, China's blue-chip CSI 300 Index was up 0.03 per cent, reversing an earlier loss of as much as 0.6 per cent and climbing back to a three-week high touched in the previous session.
Hong Kong's benchmark Hang Seng index fell 0.5 per cent to pull back from its highest level in nearly three months.
Tech shares led losses in both onshore and offshore markets. The CSI Semiconductor Index declined 1.1 per cent, while the Hang Seng Tech Index lost 1 per cent in Hong Kong.
Among major losers, chipmaker SMIC declined 1.7 per cent to a one-week low. Alibaba weakened around 2 per cent and EV-maker Xpeng slid 5 per cent.
The CSI Rare Earth Index edged up 0.4 per cent after slipping nearly 1 per cent in the morning session, touching the highest level since November.
Chinese markets have been struggling to recover from trade shocks for the past two months, after Trump announced sweeping tariffs on April 2 that threatened the global trade system.
The CSI 300 Index has barely eked out any gains since then, while Hong Kong's benchmark Hang Seng Index has climbed around 4 per cent, with both lagging the around 10 per cent bounce in the MSCI World Index.
Wang Zhuo, partner at Zhuozhu Investment, said the market is less sensitive to trade talks and investors are shifting their focus to economic fundamentals.