Shanghai Composite also heats up… recovers 4,000 level for first time in 10 years

Expectations for U.S.-China to refrain from escalating the trade war

The Shanghai Composite Index in China surpassed the 4,000 mark intraday on the 28th. It is the first time in 10 years since 2015.

The Shanghai Composite closed the day at 3988.22, down 0.22% from the previous trading day. In the morning session it surged to as high as 4010.73, surpassing the 4,000 level. It is the first time the Shanghai Composite, China’s representative index, has exceeded 4,000 since August 19, 2015—10 years and 2 months ago.

The Shanghai Composite fell to 3096.58 on April 7 under the shock impact of the U.S.-China tariff war. Since then, as the two countries suspended the imposition of high tariffs and Chinese authorities have successively announced domestic industry support policies, the index has continued its upward trend.

With the U.S.-China summit scheduled for the 30th, the two countries repeatedly sent signals to refrain from escalation, raising the likelihood that the reprieve on retaliatory tariffs, which expires on the 10th of next month, will be extended again, acting as a positive factor. On the 27th, the top diplomats of the U.S. and China hinted at the possibility of trade talks in a phone call. Wang Yi, director of the Office of the Central Foreign Affairs Commission of the Communist Party of China and foreign minister, said in the call, "Xi Jinping, President of China, and Donald Trump, President of the United States, have maintained long exchanges and mutual respect," adding, "This is the most precious strategic asset of the bilateral relationship." Marco Rubio, U.S. Secretary of State, also said, "The bilateral relationship is the most important between any two countries in the world, and I hope high-level exchanges will send a positive signal to the world." As expectations spread that trade negotiations would be finally concluded at this U.S.-China summit, analysts say buying interest has flowed into the Chinese stock market.

Beijing=Eunjeong Kim, special correspondent kej@hankyung.com