Sino-US consensus on trade relations to spur renewed momentum, say experts

The Chinese A-share market regained confidence on Monday as trade tensions between China and the United States eased, and the momentum is expected to continue, experts said.

The benchmark Shanghai Composite Index was up 0.64 percent to close at 3,213.84 on Monday. The Shenzhen Component Index ticked up 0.87 percent to close at 10,765.35.

According to Zhejiang-based financial information provider HiThink RoyalFlush Information Network, of all the 3,512 A-share companies, 2,745 saw their share prices rally on Monday, of which 63 surged by the daily limit of 10 percent.

Companies from the computer application sector showed the most robust increase with a 3.3 percent rise on average on Monday, according to RoyalFlush. The computer equipment and communication device sectors followed, registering a daily increase of 2.84 percent and 2.23 percent, respectively, on Monday.

A delegation led by Vice-Premier Liu He, President Xi Jinping's special envoy, had talks on Thursday and Friday with a US team headed by Treasury Secretary Steven Mnuchin. The two countries reached a consensus that there will be no trade war and both sides will stop placing tariffs on one another.

Prior to that, US President Donald Trump had signed a memorandum on March 22 that could impose tariffs on imports from China worth up to $60 billion.

Xun Yugen, chief strategy analyst at Shanghai-based Haitong Securities, said that the biggest uncertainty for the A-share market since March 22 has thus been eliminated. The market will start to pick up and the Shanghai Composite Index is very likely to stand between 3,200 and 3,500 in the near future.

Li Daxiao, chief economist at Shenzhen-based Yingda Securities, said that the consensus recently reached between China and the US will lead to positive results for the economy and stock markets of both countries.

"The A-share market has been held down for quite a long time due to the trade tensions. The consensus will stimulate the A shares immediately and the upward trend will last for about one week," he said.

According to Zhang Xia, a senior analyst at Shenzhen-based China Merchants Securities, investors could look for opportunities based on the big picture. Consumer goods brands, which can provide quality products as the Chinese people's income gap narrows, are less affected by trade relations problems, thus promising stable profit.

"There will be mid to long-term investment opportunities in the radio, medicine, computer, military, electronics and telecommunication device industries as the risk of a China-US technology blockade lowers," he said.

Meanwhile, A-share companies with close business ties with US companies such as Apple Inc and Tesla Inc will see positive performances if the cooperation between China and the US expands, he said.