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Shanghai Composite Gains as Trade War Intensifies

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Trade War escalates

The trade war between the US and China is getting nastier. Yesterday, President Trump signed an executive order prohibiting US companies from using communication technology products from sources considered to be a national threat. Shortly thereafter, Chinese giant Huawei was included in the list of potential threats, essentially barring Huawei from doing business in America, directly or as a vendor.

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On the other hand, data published by the Department of Treasury showed that China sold $20.4 billion worth of US Treasuries in March 2019, the most since October 2016 when it sold $25.8 billion worth of US Treasuries. China, being the largest holder of American debt, may use Treasuries as a card against Trump’s tariffs.

Shanghai Composite gains

In spite of the escalating trade war tensions, China’s benchmark Shanghai Composite Index rose 0.58% today to 2,955.71. The index opened lower but continued its upward momentum throughout the trading day. On the economic data front, house prices continued to grow at a healthy pace. House prices grew 10.7% in April compared to 10.6% in March.

ETFs

The iShares MSCI China ETF (MCHI) continued its upward momentum with 0.92% gains on May 15. Meanwhile, the iShares China Large Cap ETF (FXI) gained 0.48%. It was marginally up in pre-market trading at 4:21 AM EST. The technology-focused KraneShares CSI China Internet ETF (KWEB) gained 0.56% on May 15 during US trading hours. The XTrackers Harvest CSI 300 China A-Shares ETF (ASHR) gained 0.95% on May 15 and was up 0.71% in premarket trading today at 4:57 AM EST.

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