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Chinese Indexes Gain as Trump and Xi Sound Optimistic

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Jun. 19 2019, Published 9:17 a.m. ET

The end of the trade war?

After weeks of drama and volatility, the global markets seem to be surging as if nothing had ever happened. On June 18, US indexes surged as President Donald Trump confirmed that he would be having an extended meeting with Chinese President Xi Jinping next week at the G20 summit. He also said that the negotiation teams of both the trade-warring countries would start talking even before their leaders’ meeting in Japan.

Jinping said that both countries would gain from cooperation and lose in a trade war. This sentiment marked a big change from China’s vow to fight to the end, which it’s made several times in the past few weeks.

Calling this an end to the trade war may be premature, as President Trump has the uncanny ability to break deals and change his mind.

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Indexes, ETFs, and stocks

China’s benchmark Shanghai Composite Index posted its third straight gain of the week on June 19. The index opened 1.9% higher but gave up some of those gains to end the day at 2,917.8, a rise of 0.96%. The tech-heavy Shenzhen Component was the bigger gainer of the two with a 1.38% jump.

On June 18, the iShares MSCI China ETF (MCHI) hit a home run with a 3.25% gain. The iShares China Large-Cap ETF (FXI) wasn’t too far behind with its 2.92% gain. The tech-focused KraneShares CSI China Internet ETF (KWEB) was the biggest gainer among the three with a 3.71% gain. Alibaba (BABA), the Chinese e-commerce giant listed on the NYSE, surged 3.5% on June 18 and was up 0.77% in premarket trading at 4:38 AM ET on June 19. Alibaba accounts for 13% and 9% of MCHI and KWEB, respectively.

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