January 17, 2020 / 7:38 AM / a month ago

China stocks snap 6-week winning streak after expected trade deal

SHANGHAI, Jan 17 (Reuters) - China stocks inched higher on Friday amid more signs of resilience in the world’s second-largest economy, though they posted modest weekly losses as trader pocketed gains following a rally underpinned by optimism around a Sino-U.S. trade deal.

** The blue-chip CSI300 index rose 0.1%, to 4,154.85, while the Shanghai Composite Index added 0.1% to 3,075.50.

** For the week, CSI300 slipped 0.2% and SSEC lost 0.5%, both snapping six straight weekly gains.

** China’s economic growth slowed to its weakest in nearly 30 years in 2019 amid the bruising trade war and sputtering investment, and more stimulus steps are expected this year to help avert a sharper slowdown.

** But data also showed the world’s second-largest economy ended the year on a firmer note as trade tensions eased, suggesting a raft of growth-boosting measures over the past two years may finally be starting to take hold.

** Analysts and investors believe more signs of modest recovery in China’s economy would help bolster confidence in capital markets.

** China will boost purchases of U.S. goods and services by $200 billion over two years in exchange for the rolling back of some tariffs under the initial trade deal signed by the world’s two largest economies.

** With at least a deal in place, investors and consumers would feel things have stabilised, thus helping shore up confidence, said Fan Lei, an economist with Sealand Securities.

** Though some argue the deal had been mostly priced into a recent strong run in the A-share market and it’s natural for some profit-taking after the signing of the deal whose content is quite unsurprising.

** Besides, caution also grows as the week-long Lunar New Year holiday approaches when trading is usually thin.

** Around the region, MSCI’s Asia ex-Japan stock index was firmer by 0.19%, while Japan’s Nikkei index closed up 0.45%.

** At 07:13 GMT, the yuan was quoted at 6.8607 per U.S. dollar, 0.28% firmer than the previous close of 6.88.

** As of 07:14 GMT, China’s A-shares were trading at a premium of 26.11% over the Hong Kong-listed H-shares. (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)

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