Chinese stocks have surged after reports that Washington and Beijing are close to reaching a deal to end their year-long trade war.
A source briefed on negotiations says the US is poised to roll back tariffs on at least $US200 billion ($282 billion) worth of Chinese goods, as Beijing makes pledges on structural economic changes and eliminates retaliatory tariffs on US goods.
US President Donald Trump and Chinese President Xi Jinping are tipped to seal a formal trade deal at a summit around March 27 given progress in talks between the two countries, the Wall Street Journal reported on Sunday.
During the eight-month trade war, the United States has imposed punitive tariffs on $US250 billion worth of imports from China, while Beijing has hit back with tariffs on $US110 billion worth of US goods, including soybeans and other commodities.
At the midday break on Monday, China’s benchmark Shanghai Composite was 2.6 per cent higher, breaking through the 3000-point level to end the morning at 3073.03 points.
The index has gained more than 20 per cent so far this year.
The blue-chip CSI300 index rose even more, adding 3 per cent to 3,862.01 points.
In Hong Kong, Chinese H-shares rose 1.88 per cent at 11,723.25, while the Hang Seng Index was up 1.16 per cent at 29,147.64.
The smaller Shenzhen index was up 3.52 per cent and the start-up board ChiNext Composite index was higher by 4.71 per cent.
The rise in the Shanghai Composite, which comes as China prepares for the opening of its annual session of parliament, follows the strongest weekly gains for the index in more than four years last week.
The gains were powered by expectations for government stimulus and policy support, renewed optimism about US-China trade talks, and the announcement by global index provider MSCI that it will quadruple the weighting of Chinese A-shares in its global benchmarks later this year.
Zhang Yanbing, an analyst at Zheshang Securities in Shanghai, said the rally was a continuation of market strength “prompted by the combination of many favourable factors” that have emerged since October.
But he said that the news of a possible forthcoming agreement between China and the US, and the opening of the annual session of China’s parliament on March 5 could be seen as specific factors driving gains on Monday.
Chinese leaders are expected to set less ambitious targets for economic growth this year, but Premier Li Keqiang’s 2019 work report is expected to offer more assurances of Beijing’s support for small businesses, and plans to boost domestic demand and safeguard jobs.
Comments from President Trump that a strong dollar was hurting US competitiveness, helped to lift the yuan to 6.688 per US dollar, 0.3 per cent firmer than the previous close of 6.7078.