SHANGHAI: China’s share market and the yuan bounced on Monday despite heightened trade tensions between Washington and Beijing after each imposed major tariffs on the other’s goods last week and investors nervously watched for more policy action.
Monday’s equities rally was seen driven by technical factors and government rhetoric to boost market confidence, but traders and analysts said the rise could be fleeting as a trade war with the United States will hit China’s economy and global growth.
“The rally is in part due to marginal improvement in liquidity conditions…and also thanks to a ‘warm breeze’ from regulators and top officials that helped lift market sentiment,” said Zhou Yu, analyst with Pacific Securities.
But she warned that “investors should not be overly optimistic about the short-term rally, as the mid-term uncertainties including trade war worries and Beijing’s deleveraging campaign persist.”
The Shanghai Composite Index, which tracks shares traded on the Shanghai stock exchange, ended 2.5 percent higher, its biggest one-day rise since May 2016. The blue-chip CSI300 Index finished up 2.8 percent, its best since August 2016.
Hong Kong’s Hang Seng Index and a sub-index tracking mainland companies were both up more than 1.5 percent in late afternoon trade.—REUTERS