November 8, 2019 / 5:01 AM / 5 days ago

China stocks rise on potential tariff rollback, upbeat data

* SSEC +0.4%, CSI300 +0.4%, HSI -0.4%, HSCE -0.2%

* U.S., China agree to cancel tariffs in phases

* Sources say the plan meets opposition within White House

* MSCI expands A-share inclusion, JPM sees $7 bln passive inflows

HONG KONG, Nov 8 (Reuters) - China stocks rose on Friday after Washington and Beijing hinted at scrapping tariffs if a deal was reached and as domestic data showed exports and imports fell lower than expected. ** Beijing and Washington will roll back tariffs on each others’ goods in a “phase one” trade deal if it is completed, officials from both sides said on Thursday. A White House spokeswoman said the administration is “very, very optimistic that we will reach a deal soon.” ** However, optimism in financial markets was tamed after multiple sources told Reuters on Thursday the plan to cancel tariffs faces fierce internal opposition in the White House and from outside advisers. ** At the midday break, the Shanghai Composite index was up almost 0.4% at 2,989.24 points. The blue-chip CSI300 index also rose 0.4%. ** Data showed on Friday that China’s exports and imports contracted less than expected in October, providing some relief for the export-reliant economy as Beijing seeks to seal a trade agreement with Washington. ** The CSI300 financial sector sub-index fell less than 0.1%, the consumer staples sector rose 0.5% and healthcare shares rose 0.8%. ** The smaller Shenzhen index was up 0.8%, and the start-up board ChiNext Composite index was higher by 0.9%. ** Global index provider MSCI said on Thursday Chinese A-shares will rise to a weight of 4.1% in the MSCI Emerging Market Index, up from 2.55% currently, as it implements the final step of the market’s weight increase in the benchmark. ** MSCI will also add a list of Chinese mid-caps as planned, the index provider said in a statement following its November semi-annual index review. ** The latest round of inclusions will bring $7 billion of passive inflows, with $3.6 billion going to large caps and $3.3 billion to other added shares, Zhang He, an Asia Pacific index research analyst at J.P. Morgan, said in a note on Friday. ** “Given active flows are typically 5x of passive flows in size, J.P. Morgan estimates a total of US$42 bln could be buying China A-share stocks in the near future,” Zhang added. ** The Hong Kong market eased, after rising to its highest in over three months on Thursday. Chinese H-shares listed in the city fell 0.2%. The Hang Seng Index fell 0.4% to 27,726.04. ** Fresh unrest could emerge in Hong Kong after a local university student, who fell during protests at the weekend, died early on Friday morning. ** Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.3%, while Japan’s Nikkei index was up 0.2%. ** The Shanghai stock index is above its 50-day moving average and above its 200-day moving average. (Reporting by Noah Sin, editing by Amy Caren Daniel)

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