Shortly after the United States had confirmed that it would be sending a trade delegation to China next week, Hong Kong and Chinese markets immediately rallied as positive sentiments increased. The upcoming meeting has been seen by most as a positive sign that both countries may now be a step closer to ending their year-long trade dispute.
Markets in China and Hong Kong rallied for the third straight day Thursday, with major indexes showing positive upticks. The Shanghai Composite Index jumped by 0.5 percent to 2,937.36 on Thursday, while the Shenzhen Component Index saw a 0.9 percent increase.
The ChiNext Index of startups also rallied during the same day with a 0.8 percent gain. Hong Kong's Hang Seng Index, the city-state's free-float-adjusted market-capitalization-weighted stock-market index, rose by 0.3 percent to 28,594.3 during the same day.
China also confirmed the news of the meeting this week, with officials stating that the country's trade negotiators will be meeting with their US counterparts in Shanghai next Tuesday and Wednesday. The talks will essentially kick off the restarting of negotiations between both countries since its collapse back in May.
According to China's Ministry of Commerce spokesman Gao Feng, the talks next week will hopefully be based on mutual respect. Gao expressed his sentiments during a press conference this week to officially confirm that the meeting was indeed happening.
Analysts have explained that the spikes are expected in the markets given that investors will be speculating on the different possible outcomes of the upcoming meeting. The fact alone that both countries are willing to hold a meeting is apparently already a positive sign for both economies. However, some have warned that there are still a lot of hurdles to go through before both countries will come to an agreement.
Critics have mentioned that the meeting may be a positive step forward, but it will likely not result in substantial progress to end the dispute. Meetings, such as the one that will be held next week, will likely need to be held on a consistent basis to iron out the finer details of an amicable trade agreement.
As for the markets, investors apparently need to prepare for a very bumpy ride as stocks react to each and every move by both countries. Meanwhile, the recent launch of China's technology innovation board, or Star Board, has caused the markets to fluctuate further. The 25 stocks listed on the board immediately soared after the board's debut, with most immediately correcting. Only two stocks managed to continue their climb this week.
