China stocks bleed on Trump-Xi meet outcome doubt

China and Hong Kong markets continued their downward trend on Thursday, as investors remained doubtful about the outcome of a meeting between US President Donald Trump and Chinese President Xi Jinping, according to Reuters. China's CSI300 index slipped 1.3% by midday, while the Shanghai Composite index fell about 1%. Hong Kong's Hang Seng Index dropped 0.5%.

Trump hosted Xi in Washington for a three-day visit aimed at testing the relationship between the two economic giants. Although the trip was not expected to yield significant breakthroughs, both countries agreed to extend their trade truce by two months, as reported by Reuters. This extension, shorter than the one-year expectation, may help stabilize bilateral trade relations.

The absence of a delegation of Chinese business leaders during Xi's visit further dampened investor sentiment. Beijing had invited the executives to Washington for meetings with Trump, but the delegation failed to materialize, reported Reuters, citing sources familiar with the situation.

Most sectors suffered losses by midday, with gold equities, materials, and AI hardware stocks among the hardest hit. The decline mirrored overnight losses on Wall Street, driven by higher oil prices and rising US Treasury yields, indicating pressure on equities, as noted by Reuters.

Hong Kong's energy and shipping sectors managed to outperform the broader market, providing some support. However, investors remained wary of the prospects for technology trade between Washington and Beijing. CLSA's Sanjeev Rana expressed hope for cooperation on AI development and safety, but did not anticipate any easing of US restrictions on chip exports to China, as reported by Reuters.

While some investors saw potential for a gradual shift in US-China relations towards understanding, compromise, and coexistence, the focus shifted to whether the Trump-Xi talks could produce concrete agreements beyond the trade truce extension, particularly regarding tariffs, technology restrictions, and broader economic cooperation, concluded Reuters.