Chinese stocks decline after US trade talks show signs of faltering

CNN Wire

China stock markets declined Monday after a Chinese delegation reportedly canceled a scheduled visit to US farms, fueling pessimism about the prospect of a trade truce between the world’s two largest economies.

China’s Shanghai Composite Index fell 1.4%. Hong Kong’s Hang Seng Index dropped 0.9%.

A Chinese trade delegation abruptly canceled a visit on Friday to US farms in Montana, cutting short their US trip, according to Reuters. The trip was to prepare for further negotiations between senior officials next month.

Investors had earlier expected a potential cooling of US-China trade tensions as the two sides gear up for talks. But the sudden change in the trip dampened investor hopes for a breakthrough in the negotiations.

Earlier in the day, President Donald Trump had said the United States was looking for a “complete deal” with China and not a partial one.

The news sent US stocks into negative territory on Friday.

The Office of the US Trade Representative issued a brief statement on Friday, calling the meeting “productive.” China’s state-run Xinhua News Agency also said Saturday the discussions were “constructive.” But neither side elaborated further on the talks.

“The market reacted quite negatively as the Chinese trade representatives were thought to have been given their marching orders from Beijing an hour after President Donald Trump said he wasn’t interested in ‘a partial deal,'” said Stephen Innes, a market strategist for Asia Pacific at AxiTrader.

Chetan Ahya, an analyst for Morgan Stanley, said despite the recent goodwill between the United States and China, challenges to achieving a comprehensive deal remain.

“Trade tensions have provided many twists and turns so far, with truces giving way to stalled progress and subsequent escalation,” Ahya wrote in a report on Monday.

Elsewhere in the region, South Korea’s Kospi dipped 0.1%, while Japan’s Nikkei 225 edged up 0.2%.

Investors are looking ahead to the Eurozone’s Purchasing Managers’ Index readings later in the day.

Here are some talking points in Asian markets at 1:00 p.m. Hong Kong time:

  • Shares of Hong Kong Exchanges & Clearing tumbled 2.5% in Hong Kong. The stock exchange operator’s chief executive Charles Li said Saturday at a business forum in China that the company would continue trying to buy the London Stock Exchange, according to Chinese state media. LSE rejected HKEX’s initial $37 billion bid earlier this month.
  • Shares in Chinese conglomerate Fosun International dropped on Monday following the collapse of UK-based tour operator Thomas Cook. Fosun is the British company’s biggest shareholder. Shares in Fosun international fell 1% in Hong Kong, while its subsidiary Fosun Tourism was down more than 5%.
  • Beijing-based UTour Group sank 5.4% in China after a deadly bus crash in Utah killed four Chinese tourists and injured 22 people. The company is the parent of the tour service group that organized the trip.
  • Alibaba Group’s subsidies bucked the weak market trend and pulled higher in Hong Kong, after the company’s annual global investor conference kicked off Monday in Hangzhou, China. Daniel Zhang, the company’s new chairman who has succeeded founder Jack Ma, reiterated Alibaba’s goal of increasing overall sales on its e-commerce platforms to $1.4 trillion in the next five years. Alibaba Health Information Technology rose 1.4%. Alibaba Pictures Group gained 1.5%.

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