U.S.-China trade deal serves up potential corporate winners

By Lewis Krauskopf

NEW YORK (Reuters) - Beef companies, credit card firms and liquefied natural gas exporters emerged as potential corporate winners on Friday in the wake of trade agreements reached between the United States and China.

Initial reaction on the U.S. stock market was relatively subdued after the announcement late on Thursday, part of Washington's drive to cut its trade deficit with Beijing.

In one of the actions laid out under the agreement, by July 16, China agreed to issue guidelines that would allow U.S.-owned card payment services "to begin the licensing process."

Visa (NYSE: V) shares rose 0.4 percent while MasterCard (NYSE: MA) edged up 0.1 percent as prospects for global payment network operators at last entering the Chinese market remained uncertain. American Express Co (NYSE: AXP) shares were down 0.6 percent.

Foreign-owned firms will also be able to provide credit rating services in China, under the agreement, which are the first results of 100 days of trade talks that began last month.

Shares of credit rating agency Moody's Corp (NYSE: MCO) were off 1 percent, while S&P Global Inc (NYSE: SPGI) dropped 0.6 percent.

The United States also signaled that it was eager to export more liquefied natural gas, saying China could negotiate any type of contract with U.S. suppliers.

Shares of liquefied natural gas (LNG) company Cheniere Energy (NYSE: LNG) were up 4.7 percent. Cheniere said on Friday it has had extensive negotiations with Chinese state-owned companies about increasing U.S. shipments of LNG to China.

Shares of Sempra Energy (NYSE: SRE), a diversified energy company that is building an LNG export terminal, ticked up 0.4 percent.

"The agreement connects the U.S., the fastest growing LNG supplier, with China, the largest LNG growth market," said Massimo Di-Odoardo, Head of Global Gas and LNG research at consultancy Wood Mackenzie.

The agreement also calls for China to issue bond underwriting and settlement licenses to two qualified U.S. financial institutions by July 16. It is unclear which institutions they are, though JPMorgan Chase & Co (NYSE: JPM) and Morgan Stanley (NYSE: MS) both recently secured other regulatory approvals in China. JPMorgan in February said it would be allowed to underwrite corporate bonds there, while Morgan Stanley was granted permission to boost its stake in a Chinese securities venture to 49 percent. Spokespeople for the two lenders did not immediately respond to requests for comment. JP Morgan shares were off 0.5 percent while Morgan Stanley shares were down 1 percent.

NOT GOOD NEWS FOR ALL

In the agreement announced by the U.S. Commerce Department, both sides also identified other issues that will require more effort to resolve and achieve progress on within the 100-day period.

For example, notable for its absence was anything related to the U.S. steel industry, which has been promoted by President Donald Trump.

Shares of U.S. Steel (NYSE: X), which have taken a dramatic fall after soaring the wake of Trump's election, dropped 1.9 percent on Friday, while shares of Nucor (NYSE: NUE) were off 0.3 percent.

The trade deals contained mixed news for U.S. food producers. China will allow U.S. imports of beef no later than July 16, while the United States will issue a proposed rule to allow Chinese cooked poultry to enter U.S. markets.

Shares of Tyson Foods Inc (NYSE: TSN), which sells both beef and chicken, rose 0.8 percent, while Pilgrims Pride Corp (NASDAQ: PPC), the No. 2 U.S. chicken producer, fell 1.3 percent.

For the full U.S. Commerce Department press release about the initial results of the talks, see: https://www.commerce.gov/news/press-releases/2017/05/joint-release-initial-results-100-day-action-plan-us-china-comprehensive

(Additional reporting by Olivia Oran, Lauren LaCapra and Scott DiSavino in New York and Tom Polansek in Chicago; Editing by Nick Zieminski)

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