China equities set for boost as Trump-Xi meeting raises hopes of thaw
Investors are betting a Trump-Xi summit will ease tensions, helping Chinese equities close their long-standing valuation gap
The long-anticipated state visit by US President Donald Trump to China next month could lift sentiment in mainland and Hong Kong equities, as investors bet that easing tensions between Beijing and Washington will support export-driven sectors and companies pursuing overseas expansion.
Trump is scheduled to meet President Xi Jinping on May 14-15, with discussions expected to cover tariffs, purchases of US goods and restrictions on rare earths.
Any progress could clear a path for Chinese firms to step up global sales and investment, while helping markets recover from the recent oil shock.
The visit, originally planned for March but delayed by the US-Israel war with Iran, may also remove a persistent overhang on Chinese equities, which have traded at a discount to other major emerging markets in recent years amid geopolitical tensions.
It could further support a rebound in exports, which slowed to 2.5 per cent in March after posting double-digit growth in previous months.
“The event is definitely a positive for the stock market and will have a far-reaching impact on industries and corporate earnings,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai.
“The manufacturing sector is likely to be a key beneficiary, because it has many listed companies with exposure to exports or plans to go overseas. Electronics, chips and new-material makers are among them.”