Hong Kong, Shanghai Soar Despite New Tariffs

Shares in Hong Kong and the mainland rallied on Friday, ending a painful week on a positive note, as investors keep a close eye on crunch trade talks between China and the United States.

The Hang Seng Index jumped 0.8 percent, to 28,550.

Across the border, the Shanghai Composite Index surged 3.1 percent, to 2,939 while the Shenzhen Composite Index advanced 3.8 percent, to 1,568.

Equities started the day on a high as dealers took heart from positive comments from US President Donald Trump on the prospects for a deal but the region turned negative as the threatened levies kicked in and China vowed to hit back, saying it "deeply" regretted the US move.

The regional stocks ended mixed despite the rally on the mainland and Hong Kong. Sydney and Singapore each added 0.3 percent, while Seoul was up a similar amount as investors brushed off news that North Korea had tested a long-range weapon, which is likely to raise tensions after the breakdown of denuclearisation talks with the United States. Mumbai added 0.2 percent.

But Tokyo finished down 0.3 percent, while Wellington, Manila, Taipei, Jakarta and Bangkok also fell.

"Given the deadline has now passed there is the possibility that tariffs could still be avoided given that US officials allowed for goods currently in transit to be exempt from the new tariff increases," said Michael Hewson, chief market analyst at CMC Markets UK.

"Which means there is a potential window, albeit a limited one, for an agreement to be hammered out."

But a lot of uncertainty remains.

"Markets will be in a holding pattern as we await the outcome of the meeting," said Khoon Goh, head of Asia research at ANZ Bank. "If there is a breakdown and the tariffs go up, then we will see a risk-off tone in markets." (AFP)