Mainland China and Hong Kong stocks advanced on Tuesday, with the Shanghai Composite Index crossing the 4,000-point mark for the first time since August 2015, driven by optimism over a potential trade deal ahead of a planned meeting between U.S. President Donald Trump and Chinese President Xi Jinping in South Korea on Thursday. By midday, the Shanghai benchmark was up 0.21% at 4,005.44 points, while the CSI300 Index gained 0.22% and Hong Kong’s Hang Seng Index rose 0.01%.

Investors are cautiously optimistic, anticipating signs of de-escalation in the U.S.-China trade tensions, though analysts warn that any agreements may be temporary. Larry Hu, chief China economist at Macquarie, noted that the “pattern of ‘escalate and de-escalate’ will likely continue” and that no competitive edge in the trade war is permanent. He also highlighted that innovation and technological self-reliance will remain a top priority for Beijing over the next five years amid ongoing U.S.-China competition.

The People’s Bank of China (PBOC) reaffirmed its supportive monetary stance, committing to moderately loose monetary measures, while the China Securities Regulatory Commission (CSRC) introduced reforms to streamline the qualified foreign investor regime, aiming to ease access requirements, improve operational efficiency, and expand the investment scope for foreign participants.