China shares rise ahead of Trump-Xi summit

China's stock markets experienced a surge on Monday, with both domestic and Hong Kong shares climbing ahead of a forthcoming summit between US President Donald Trump and Chinese President Xi Jinping. The Shanghai Composite Index climbed 1% to reach 3,949.91 points, while China's blue-chip CSI300 Index gained 0.7%. The ChiNext Composite, which tracks technology stocks, rose by 0.8%, and the Shanghai-focused STAR50 Index gained 0.3%. The CSI AI Index added 1.1%.

Investors appeared optimistic about the meeting, anticipating a potential extension to the recent trade truce between the two nations. The discussions between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng, which took place in New York on Sunday, focused on a proposed AI safety notification mechanism.

Market expectations for the summit are moderate, with analysts at Goldman Sachs expecting both sides to aim for relative stability in US-China relations. However, a comprehensive bilateral agreement seems unlikely. Among the sectors that benefited from the market rally were the real estate and defense sectors, both of which gained 6.9% and 2%, respectively.

Healthcare stocks also enjoyed a positive response, with the sector up 3.6% after a Reuters report suggested that the US was working on rules for pharmaceutical companies investing in China. The rules would likely enable these companies to continue striking licensing deals for Chinese drugs. In Hong Kong, the Hang Seng Index rose 1.2% to 25,042.71, while the Hang Seng Tech Index gained 0.4%.

Overall, global share markets edged higher on Monday, with chipmakers leading the charge, and oil prices falling on news that more oil was leaving the Middle East than initially reported.