China markets tumble as Trump-Xi summit falls short of expectations
HONG KONG, May 15 — China stocks fell on Friday amid a broader market selloff as a two-day summit between US President Donald Trump and Chinese leader Xi Jinping produced few deals between the world’s top two economies to excite investors.
China’s blue-chip CSI300 Index and the Shanghai Composite Index each closed down more than 1 per cent as a risk-off mood set in global markets.
Both indexes retreated from modest gains in early trade but remained close to recent peaks. Hong Kong’s benchmark Hang Seng lost 1.6 per cent, tracking broader markets as investors’ euphoria over tech stocks gave way to inflation fears amid rising expectations of US rate hikes this year.
Trump and Xi concluded their two-day summit that included talks on trade, Iran and Taiwan on Friday.
“I think we were optimistically looking at the meeting and maybe half expecting some huge trade agreement to be proposed or announced, and from that view, it has disappointed,” said Nick Twidale, chief market analyst at ATFX Global.
It was undecided whether the October trade truce would be extended after it expires later this year, US Trade Representative Jamieson Greer told Bloomberg TV on Friday, but added that deals had been firmed up on Chinese purchases of farm goods and beef.
Investor attention will be on whether detailed agreements are announced now that the summit is over. “This (summit) was not a meeting aimed at a full reset of US-China relations,” said Cliff Zhao, chief economist at CCB International. It was more about promoting high-level communication, reducing near-term uncertainty, and setting clearer boundaries for competition, Zhao said.
Thorny geopolitics
Investors are focusing on geopolitical issues such as Iran and Taiwan, but it was hard to make substantive progress, said Lynn Song, chief economist for Greater China at ING.
“Actions will speak louder than words, and if we see progress on Iran negotiations or shifts in stance on US arms sales to Taiwan, it may suggest that progress was made at this summit,” said Song.
Trump told Fox News Channel that China had agreed to buy 200 Boeing jets, a number that was far fewer than analysts had expected. That sent shares of Boeing lower, while China’s aviation stocks fell more than 2 per cent.
Chip stocks, meanwhile, jumped 4 per cent after China’s SMIC said foreign clients were shifting orders back to China. Shares in chip equipment maker Advanced Micro-Fabrication Equipment (AMEC) rose 12 per cent on its strong order expectation.
Data showed new Chinese yuan loans contracted in April for the first time in 9 months, sharply undershooting forecasts, as seasonal factors and weak household credit demand dragged on lending in the world’s second-largest economy.
In currencies, the yuan weakened past 6.8 against the dollar, as the greenback strengthened, snapping an eight-session rally.
The yuan hit a three-year high in the previous session and is up 2.7 per cent against the dollar so far this year.
The yuan “isn’t likely to be impacted too much by the summit, nor is it likely to be a topic of conversation given the CNY has been on an appreciation trajectory,” said ING’s Song.
