China stocks wavered on Friday as a summit between US President Donald Trump and China's Xi Jinping entered its last day, having produced few deals between the world's top two economies to excite investors so far.
China’s blue-chip CSI300 Index was largely flat and the Shanghai Composite Index rose 0.1% by the lunch break. Both indexes swung between gains and losses through the morning session but remain close to recent peaks.
Hong Kong’s benchmark Hang Seng fell 0.9% amid a risk-off mood in broader Asian markets, as investors' euphoria over tech stocks gave way to inflation fears amid rising wagers of US rate hikes this year.
Trump and Xi met at the walled-off Zhongnanhai complex, a former imperial garden that houses the offices of Chinese leaders, before Trump departed.
Traders were closely watching for any positive signals from the meeting, including a potential easing of tariffs, with the focus on whether a fragile trade truce struck when the leaders last met in October is extended.
"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.
Investor attention will be on whether there are detailed agreements announced after the two-day summit is over.
It was undecided whether the trade truce will 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.
"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, he added.
THORNY GEOPOLITICS
Investors are focusing on geopolitical issues such as Iran and Taiwan, but it’s 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 has agreed to buy 200 Boeing jets, a number that was far fewer than analysts had expected. That sent shares of Boeing lower and China's aviation stocks fell more than 2%.
Chip stocks, meanwhile, jumped 4% after China's SMIC said foreign clients were shifting orders back to China. Shares in chip equipment maker Advanced Micro-Fabrication Equipment (AMEC) surged 17% on its strong order expectation.
Data showed China's new yuan loans contracted in April for the first time in nine months, sharply undershooting forecasts as seasonal factors and weak household credit demand dragged on lending in the world's second-largest economy.
In currencies, China's yuan remained close to the three-year high against the dollar it hit on Thursday.
The yuan retreated slightly after the People's Bank of China set the midpoint rate at 6.8415 per dollar, 439 pips weaker than a Reuters' estimate.
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.
