China, Hong Kong stocks slip as investors weigh Trump-Xi summit outcome

Hong Kong and Chinese stocks fell on Thursday as investors doubted the outcome of the US President Donald Trump and Chinese President Xi Jinping's summit in Washington. The China's blue-chip CSI300 Index dropped 1.3% by lunchtime, while the Shanghai Composite Index fell around 1%. Hong Kong's Hang Seng Index decreased by 0.5%. Trump hosted Xi in Washington for a three-day visit, which tested the relationship between the two superpowers.

Xi was the first Chinese leader to visit the US in nearly three years. Although Treasury Secretary Scott Bessent stated the two countries agreed to extend the trade truce by two months, the extension was shorter than market expectations for a one-year rollover. The extension, however, helped maintain stability in the bilateral relationship, according to UBS.

The absence of Chinese business leaders during Xi's visit, which Beijing had sought, also impacted investor sentiment. Most sectors were lower by midday, with gold equities, materials, and AI hardware stocks leading the decline. The broad selloff mirrored the overnight weakness on Wall Street, where stocks retreated due to higher oil prices and rising US Treasury yields.

Energy and shipping stocks in Hong Kong, however, outperformed. CLSA's head of north Asia semiconductors research, Sanjeev Rana, said while there are expectations of cooperation between Beijing and Washington on AI development and ensuring AI safety, he does not foresee any relaxation of US chip export controls. Some investors remain optimistic, with Shenzhen Dragon Pacific Capital Management's chairman, Charles Wang, stating that US-China relations are evolving from outright confrontation to mutual understanding, compromise, and a framework of co-existence.