Chinese stocks and currency rise as trade tensions thaw

Chinese stocks and the renminbi strengthened on Thursday, as investors cheered expectations of easier US monetary policy, a thaw in trade tensions and a new trading link between Shanghai and London. 

In afternoon trading the country’s CSI 300 index of Shanghai and Shenzhen-listed shares was 3.3 per cent higher, marking the benchmark’s biggest one-day move in more than a month. The index was led higher by shares in local securities brokers including Anxin Trust, Huatai Securities and Great Wall Securities, which all jumped by their 10 per cent maximum daily limit.

Huatai is the first company to take advantage of a trading link between the London and Shanghai stock exchanges, with trading in the broker’s global depositary receipts set for their first full trading day in the UK capital later on Thursday.

The CSI 300 is set to close higher for the third session in a row, taking its gains for the week to almost 5 per cent, amid expectations of relief in the ongoing trade dispute between the United States and China. President Donald Trump will meet his Chinese counterpart Xi Jinping at the G20 summit in Osaka at the end of next week. 

The US Federal Reserve’s nod overnight to possible interest rate cuts in the future, citing rising “uncertainties” about the economic outlook, prompted the dollar to fall against the Chinese currency on Thursday. 

Onshore renminbi, which trades 2 per cent in either direction of a daily midpoint set by the central bank, was up as much as 0.5 per cent to as high as 6.8642rmb, or about a one-month high. The offshore variant, which trades more freely, rose up to 0.4 per cent. 

“The yuan is likely to advance further in the run-up to the G20 Osaka Summit set for 28-29 June,” wrote analysts at Scotiabank on Thursday, “…which has raised fresh hopes of the end to the US-China trade war.”