China and Hong Kong stocks lost steam on Tuesday morning after Monday's sharp rally triggered by the truce in the Sino-US trade war, as investors come to terms with the fact that the relationship between the two countries hasn't improved, while China's economy continues to face downward pressure.
Both the CSI300 index and the Shanghai Composite Index, which jumped almost 3 per cent on Monday, ended Tuesday morning flat, at 3,259.55 points and 2,655.96 points, respectively. In Hong Kong, the Hang Seng index and the Hong Kong China Enterprises Index dipped 0.3 per cent each, to 27,112.01 points, and 10,849.81 points, respectively.
US President Donald Trump and Chinese President Xi Jinping had on Saturday agreed to a ceasefire, holding off on imposing more tariffs for 90 days starting December 1, while they negotiate a deal to end the dispute following months of escalating tensions. Washington disclosed the 90-day truce period, but Beijing didn't mention it, nor did Chinese media.
After studying the news release by the US government, which carries more details, brokerage Zhongtai International said that “US demand on China didn't actually change”, but local media reports fanned optimism in China's stock market. In addition, “macro data shows China's economy still faces downward pressure,” the brokerage said.
China's CSI300 financial sector sub-index was lower by 0.12 per cent, consumer staples sector up 0.15 per cent, real estate index down 2.18 percent and healthcare sub-index up 0.43 per cent. Chinese H-shares listed in Hong Kong fell 0.3 per cent to 10,849.81, while the Hang Seng Index was down 0.26 per cent at 27,112.01.
The smaller Shenzhen index was unchanged for the day and the start-up board ChiNext Composite index was unchanged. Around the region, MSCI's Asia ex-Japan stock index was weaker by 0.30 per cent, while Japan's Nikkei index was down 1.43 per cent.
The yuan was quoted at 6.8389 per US dollar, 0.68 per cent firmer than the previous close of 6.8855. Largest percentage gainers in the main Shanghai Composite index were Shenzhen Geoway Co Ltd, up 10.14 per cent, followed by Shandong Hiking International Co Ltd, gaining 10.08 per cent and Zhonglu Co Ltd, up by 9.99 per cent.
Largest percentage losers in the Shanghai index were Zhejiang Langdi Group Co Ltd, down 10 per cent, followed by Xinjiang Winka Times Department Store Co Ltd, losing 6.74 per cent and Wuhan Hanshang Group Co Ltd, down by 6.24 per cent.
Top gainers among H-shares were Haitong Securities Co Ltd, up 2.18 per cent, followed by CSPC Pharmaceutical Group Ltd, gaining 1.24 per cent and CITIC Securities Co Ltd, up by 1.18 per cent. The three biggest H-shares percentage decliners were Anhui Conch Cement Co Ltd, which has fallen 3.66 per cent, China Resources Land Ltd, which has lost 2.8 per cent and China Petroleum & Chemical Corp, down by 2.2 per cent.