The Hong Kong share market advanced on Tuesday, 02 July 2019, on optimism that the world's two largest economies will draw closer to ending their year-long tariff tussle, following a meeting in Japan of presidents Donald Trump and Xi Jinping. Market gains were however, capped due to political uncertainty after demonstrations in the city that turned uncharacteristically violent overnight. Also, doubts whether Washington and Beijing can pull off a trade deal capped gains. At closing bell, the Hang Seng Index rose 1.17%, or 332.94 points, to 28,875.56. The Hang Seng China Enterprises Index was up 0.91%, or 99.38 points, to 10,981.23. Turnover increased to HK$112.4 billion from HK$71.78 billion on Friday. The local market closed on Monday for a public holiday.
The gains in the city market came after Presidents Donald Trump and Xi Jinping hit the reset button in their trade negotiations over the weekend at the Group of 20 meeting in Osaka, Japan. On Saturday, Trump said the U.S. would hold off for the “time being” plans to impose new tariffs on $300 billion in Chinese goods. The move still leaves 25% import taxes imposed by the U.S. on $250 billon of Chinese imports in place, however. And China maintains the tariffs it placed on $110 billion in American goods, primarily agricultural products. Trump also said he would allow U.S. companies to sell some components to Chinese telecommunications giant Huawei, which last month was placed on an American blacklist as a threat to national security.
U.S. President Donald Trump said on Monday that trade talks with China were underway and any deal would need to be somewhat tilted in favour of the United States. The U.S. government also threatened tariffs on $4 billion of additional European Union goods in a long-running dispute over aircraft subsidies.
Blue chips were mostly higher after a long weekend holiday to catch up with US market's Monday rally. HSBC (00005) gained 0.9% to HK$65.35. HKEX (00388) rose 1.5% to HK$280. Tencent (00700) shot up 2.8% to HK$362.4. China Mobile (00941) nudged up 0.1% to HK$71.2. AIA (01299) climbed 2.3% to HK$86.2.
President Trump made concession on his Huawei issue, indicating that some restrictions on Huawei would be eased. Mobile components suppliers soared on the news. Sunny Optical (02382) surged 9.3% to HK$88.2. AAC Technologies (02018) soared 7% to HK$47.45. BYD (00285) gained 6.8% to HK$11.92. Tongda Group (00698) rocketed 8.3% to HK$0.65. Q Technology (01478) swelled 14% to HK$6.79. FIH Mobile (02038) advanced 6.9% to HK$0.93. ZTE (00763) put on 3.3% to HK$23.3.