HONG KONG: China stocks logged their worst day in a month on Thursday as investors remained sceptical that a meeting between US President Donald Trump and Chinese President Xi Jinping in Washington would produce a broader breakthrough.
At the close, China's blue-chip CSI300 Index fell 1.7%, while the Shanghai Composite Index lost 1.2%, both marking their biggest one-day drop in a month.
Hong Kong's benchmark Hang Seng Index was down 0.3%.
Trump welcomed Xi to Washington on Wednesday for a three-day visit that will test relations between the two superpowers.
Xi's first trip to the US in nearly three years was not expected to yield major breakthroughs, but Treasury Secretary Scott Bessent said the two countries agreed to extenda trade truce by two months.
The extension is "shorter than market expectations" for a one-year rollover but nonetheless helps preserve stability in the bilateral relationship, analysts at UBS said in a sales note.
Also weighing on sentiment was the absence of a delegation of Chinese business leaders during Xi's visit, which Beijing had sought to bring for meetings with Trump, Reuters reported, citing sources.
Most sectors were lower by midday, led by gold equities , non-ferrous metal and AI hardware stocks.
The broad selloff also mirrored overnight weakness on Wall Street, where stocks retreated as higher oil prices and rising US Treasury yields dampened sentiment.
On the other hand, energy, banking and shipping stocks listed in Hong Kong outperformed, offsetting some of the losses in the Hong Kong market.
Sanjeev Rana, head of north Asia semiconductors research at CLSA, said that while there are expectations around Beijing and Washington working together on AI development and making AI safe, he does not foresee any relaxation on chip export controls from the US side.
Some investors are more positive. "Trump is a very pragmatic president, and he understands comparative strength in the global economy very well," said Charles Wang, chairman of Shenzhen Dragon Pacific Capital Management.
"I think US-China relations are evolving from outright confrontation, toward mutual understanding, compromise and a framework of co-existence," he said. - Reuters
