Biden Meets Xi Jinping, Chinese Markets Rally on "Expectations of Tension Easing"

On the 14th (local time) in Bali, Indonesia, Chinese President Xi Jinping (left) and U.S. President Joe Biden met and shook hands on the occasion of the Group of Twenty (G20) summit. The two leaders held their first face-to-face meeting for about three hours that day, clashing over economic policies and the Taiwan issue, but they agreed to continue dialogue on international issues where their interests do not sharply conflict.
[Image source=Yonhap News]

[Asia Economy Reporter Kim Daehyun] On the 15th, following the first face-to-face summit between U.S. President Joe Biden and Chinese President Xi Jinping, Greater China stock markets showed strong performance. It appears that expectations for eased U.S.-China tensions were reflected after the two leaders met.

According to foreign media such as Bloomberg, the Hong Kong Hang Seng Index closed up 4.11%. The Hong Kong H-Share Index (HSCEI), composed of mainland Chinese companies listed in Hong Kong, also rose 4.84%. The Shanghai Composite Index in mainland China closed up 1.64%, and the Shenzhen Component Index rose 2.05%.

This is analyzed as an effect of the discussion on "tension easing" during the summit between President Biden and President Xi the previous day. At their first face-to-face meeting held in Bali, Indonesia, they agreed on the need for communication and principles to prevent escalating tensions from leading to conflict. Last week's real estate measures and COVID-19 prevention easing policies announced by the Chinese government also positively influenced investor sentiment.

Although China's economic indicators released that morning were weak, they did not stop the stock market's upward trend. China's retail sales in October decreased by 0.5% compared to the same period last year. This fell short of both September's (+2.5%) growth and the market forecast of a 1.0% increase. It was the first decline since the Shanghai lockdown in May due to COVID-19.

Industrial production in October increased by 5.0% year-on-year, but this also fell short of September's (+6.3%) growth and the market forecast of a 5.2% increase.

On the same day, Taiwan's TAIEX also closed up 2.62%. Warren Buffett's Berkshire Hathaway, known as the "investment master," revealed that it purchased over $4.1 billion (approximately 5.43 trillion KRW) worth of shares in TSMC, the world's number one foundry (semiconductor contract manufacturing) company and Taiwan's leading stock, during the third quarter. TSMC's stock price jumped 7.87%.

Comments from Lael Brainard, Vice Chair of the U.S. Federal Reserve (Fed), regarding the benchmark interest rate also attracted market attention. In an interview the previous day, she predicted that the pace of rate hikes would slow but emphasized that slowing the pace does not mean abandoning the monetary tightening policy.

South Korea's KOSPI rose 0.23%, and Japan's Nikkei 225 increased by 0.10%. Asian currencies also strengthened. The Korean won-dollar exchange rate closed at 1,317.6 won, down 8.3 won from the previous day. As of 5:23 PM Korean time, the onshore Chinese yuan-dollar exchange rate was at 7.0309 yuan, down 0.0381 yuan, the offshore yuan-dollar rate was at 7.0273 yuan, down 0.0404 yuan, and the yen-dollar exchange rate was moving around 139.51 yen, down 1.04 yen.

This content was produced with the assistance of AI translation services.