SHANGHAI: China and Hong Kong stocks rose on Friday, buoyed by US President Donald Trump’s comments that his recent conversation with Chinese counterpart Xi Jinping was “friendly”, and that he could reach a trade deal with China.

China and HK stocks tumble on Trump’s tariff threats

• The markets were also aided by strength in high-dividend shares, beneficiaries of Beijing’s plan to introduce long-term funds that some estimate could be worth 1 trillion yuan ($137.88 billion) in fresh capital each year.

• China’s blue-chip CSI300 Index jumped 1% by the lunch break, while the Shanghai Composite Index gained 0.7%. Hong Kong’s benchmark Hang Seng, which is more sensitive to geopolitical tides, jumped 1.9%.

• Trump said in an interview with Fox News aired on Thursday that “it was a good, friendly conversation” with Xi, and that he would rather not use tariffs against China.

• The fact that Trump did not impose tariffs immediately after taking office, as promised, had triggered a relief rally in China stocks early this week and his latest suggestion that tariffs on the country could be avoided further eased investor anxiety.

• Sentiment was also upbeat after Chinese regulators told insurers and mutual funds to buy more stocks. Hwabao Securities estimates the plan could bring roughly 1 trillion yuan worth of long-term money into Chinese stocks each year.

• China’s STAR 100 Index jumped more than 2%. The regulators have approved the first batch of 12 exchange-traded funds (ETFs) tracking the newly launched STAR Market Composite Index, potentially drawing fresh capital into companies listed on the tech board.

• The CSI Dividend Index also rose as investors bet high-dividend stocks, including banks, insurers and utility firms, will benefit from the influx of long-term money from state insurers and sovereign pension funds.

• In Hong Kong, the Hang Seng Tech Index jumped nearly 3%.

• Other gainers included tech, Internet and raw material stocks.