November 13, 2018 / 7:57 AM / a year ago

China stocks extend gains on trade optimism, hopes of policy support

* SSEC 0.9 pct higher, CSI300 up 1 pct

* Investors expect more policy support to contain risk

By Noah Sin

HONG KONG, Nov 13 (Reuters) - China stocks closed higher for a second straight session on Tuesday, supported by expectation of further policy support, signs of fresh trade talks between Beijing and Washington, and gains in consumer scrips. ** The Shanghai Composite index climbed 0.9 percent and the blue-chip CSI300 index rose 1.01 percent. ** CSI300’s financial sector sub-index was higher by 0.9 percent, the real estate index up 0.8 percent and the healthcare sub-index up 1 percent. ** The smaller Shenzhen index gained 1.6 percent and the start-up board ChiNext Composite index was higher by 1.7 percent. ** After regulators stepped in to help out companies crippled by pledged share financing, investors are hopeful that authorities will roll out more measures to keep stock prices stable, said Zhang Qi, an analyst with Haitong Securities in Shanghai. ** “Most of the stocks that are rallying now have fallen quite a bit this year,” he said. “This is hardly value investing. This is based on the expectation of more policy support, and the idea that earnings will improve as we see more merger and acquisitions, as they are encouraged by regulators.” ** The commerce ministry said on Monday that China’s foreign trade will face a more severe and complicated situation in 2019 and the government will push the implementation of policies to ease burdens on exporters and importers. ** The market was upbeat after South China Morning Post reported that Chinese Vice Premier Liu He may visit Washington to lay the ground for a meeting between Chinese President Xi Jinping and U.S. President Donald Trump, citing sources from both sides. ** Consumer stocks led the rise. CSI300’s sub index for consumer staples shot up 2.6 percent. Consumer discretionaries also went up, by 1.5 percent. ** “Headlines of pressure to the Chinese consumer remain in contrast to the reality of company results and outlooks,” Douglas Morton, head of research for Asia at Northern Trust Capital Markets, wrote in a note. ** “For those companies exposed to the Chinese consumer, despite their recent selloff, they remain, in many cases, at valuations higher than the peak valuation before the last Chinese consumer-led downturn in 2015,” Morton added. ** At 07:23 GMT, the yuan was quoted at 6.9558 per U.S. dollar, 0.12 percent firmer than the previous close of 6.9644. State-owned banks were seen selling dollars at 6.97 on Tuesday, in what appears to be an attempt to stop the yuan’s march towards the 7 per dollar barrier ahead of Trump and Xi’s scheduled meeting at the G20 summit this month. ** The largest percentage gainers on the main Shanghai Composite index were Zhongmin Energy Co Ltd, Guangdong Meiyan Jixiang Hydropower Co Ltd and Weifang Yaxing Chemical Co Ltd, all up by 10.1 percent. ** The largest percentage losers on the Shanghai index were Qijing Machinery Co Ltd, which was down 3.3 percent, followed by Ningbo Xusheng Auto Technology Co Ltd, losing 2.9 percent, and Tangshan Sunfar Silicon Industries Co Ltd, which fell by 2.7 percent. ** So far this year, the Shanghai stock index and the CSI300 are both down 19.7 percent.

Reporting by Noah Sin; Editing by Subhranshu Sahu

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