China Stocks Get Extra Lift on Hopes for Longer Tariff Deadline

(Bloomberg) -- Chinese stocks listed in Shenzhen advanced Thursday afternoon after U.S. President Donald Trump was said to be weighing a 60-day extension to the March 1 tariff deadline.

The Shenzhen Composite Index climbed 1.1 percent before paring the gain to 0.7 percent and settling at 1,399 points, its highest close since Nov. 19. The gauge has rallied 9.7 percent in five trading days, its best performance over such a period since March 2016. Stocks were already buoyed by supportive measures from Beijing, and reports that the U.S. may hold back on potentially more than doubling tariffs on Chinese goods provided an extra boost.

Thursday’s gains were hardly euphoric, as uncertainty continues to swirl around the U.S.-China trade relationship. While Trump said he was open to extending the deadline, he added that he still isn’t inclined to do so, according to people familiar with the matter. A high level U.S. delegation including Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin is in Beijing for discussions this week.

China Stocks Get Extra Lift on Hopes for Longer Tariff Deadline

Chinese small caps have outperformed since last week’s Lunar New Year holiday as investors flocked to riskier assets, a turnaround from before the break when hundreds of profit warnings rattled the market. The ChiNext gauge, which is dominated by tech stocks, rose 0.3 percent Thursday, taking its five-session gain to 11 percent. The Shanghai Composite Index slipped 0.1 percent.

Hong Kong stocks were marginally lower, with the Hang Seng Index dropping 0.2 percent at the close. Sunny Optical Technology Group Co. was the worst performer on the benchmark, falling 5 percent after saying late Wednesday that it expects 2018 net income to decline as much as 15 percent.

Walmart Inc. supplier Li & Fung Ltd. was one of the top performers on the Hang Seng Composite Index, posting its biggest gain since Oct. 31. “Investors hold positive expectations on U.S.-China trade talks, which boosted Li & Fung’s share price,” said Linus Yip, chief strategist at First Shanghai Securities.

Other movers:

  • Gome Retail surged as much as 13% amid speculation its founder Huang Guangyu could be released from jail earlier than expected
  • Sa Sa tumbled as much as 10% on disappointing holiday sales

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