Photo: IC

The yuan rallied against the US dollar and equities in the Chinese mainland rose on Monday, following reports of "substantial progress" achieved during the latest round of trade consultations between the US and China.

The onshore yuan rose more than 300 basis points against the dollar to close at 7.0669 on Monday, while the offshore yuan stood at 7.0796 to the  dollar at press time after reaching an intra-day high of 7.0510. 

"The rise in the yuan's exchange rate mainly reflects positive expectations from the trade consultations between the two sides as well as a weak US Dollar Index," Zhao Qingming, a Beijing-based international finance expert, told the Global Times on Monday.

During the two-day high-level trade talks, which concluded on Friday (US time) in Washington, the two sides achieved substantial progress in areas including agriculture, intellectual property rights protection, exchange rates, financial services, expansion of trade, technology transfers and mechanisms for dispute settlement, the Xinhua News Agency reported.

Considering movements by the dollar, euro and yen, there is little possibility that the yuan will breach its previous low point, Zhao said. 

He added that "we still need to pay attention to changes in the China-US trade and economic relationship as well as domestic economic fundamentals."

The trade talks also contributed to A-share gains on Monday. The Shanghai Composite Index rose 1.15 percent, breaking above the psychologically important 3,000-point level at Monday's close. The Shenzhen Component Index was up 1.24 percent, while the ChiNext board rose 0.75 percent.

Transaction volume surged at both the Shanghai and Shenzhen bourses, with the amount in one hour exceeding that seen in a half day on Friday.

Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co, told the Global Times on Monday that previously investor sentiment mainly focused on China-US trade conflicts, so the progress in bilateral trade talks will undoubtedly serve as a catalyst for market growth.

"Currently, the A-share market is at a historic low, while the US stock market is at a 10-year peak. The trend is increasingly obvious that capital flows out of US stocks are moving into China's stock market, especially since the US and EU economies show sign of recession, while China's economic growth is relatively stable," Yang said.

"The release of policies to support the real economy, including cutting fees and taxes, together with continuing capital market opening up, will attract more foreign capital to China," he said.

China is scheduled to release the GDP figure for this year's first three quarters on Friday, with the average forecast by nearly 20 institutions standing at 6.1 percent, domestic news site finance.cnr.cn reported.

The China Securities Regulatory Commission announced a timetable for allowing full foreign ownership of financial services companies on Friday. 

According to a statement on the commission's website, foreign ownership limits on fund management firms will be lifted starting April 1 next year, while shareholding caps on foreign investors faced by brokerages will be scrapped from December 1 next year.