Samuel Shen, Georgina Lee
SHANGHAI/HONG KONG (Reuters) – Rumors that strict lockdowns due to the novel coronavirus disease (COVID-19) may end sent Chinese stocks soaring this week. Even though no changes have been announced.
Officials have said nothing about easing the COVID-zero policy that has made China a global outlier and has hurt the world’s second-largest economy while curbing infections. In fact, the official announcement favors a “dynamic zero” approach.
Almost three years after the coronavirus was first detected in central China, the number of daily cases hit a six-month high on Friday. and state media have repeatedly said that zero COVID is the key to saving people’s lives.
Even Tuesday’s unconfirmed social media post that ignited the market’s vibrancy suggests that the “Reopening Commission” is not aiming to ease restrictions by March.
Still, investors are piling up, with the stock market gaining more than $1 trillion in value in just four days. His benchmark CSI300 index is up more than 6% this week, and Hong Kong’s Hang Seng Index is up nearly 9% of his. This is his best week in a decade.
Qi Wang, CEO of MegaTrust Investment (HK) said:
“I don’t know if the rumors are true. My view is that China will eventually have to (open up) … to prioritize economic growth.”
Stocks soar Friday and the yuan rises as U.S. inspections over audits of Chinese companies end ahead of schedule and Beijing ends a system of banning individual flights to bring in coronavirus-infected passengers. Helped by reports of working on a plan.
Also boosting the market was a closed-door meeting of former China’s top disease control official, Zeng Guang, later confirmed by Reuters, with significant changes to zero COVID set to take place in the next five to six months. It was a report that said that it was.
Health officials will hold a targeted press conference on COVID-19 prevention on Saturday, according to an official notice.
Investors have pounced on sectors that would benefit from reopening, such as tourism, hotels and catering. The US-listed tech giant has taken the lead after the audit news.
China, Hong Kong stock market capitalization https://fingfx.thomsonreuters.com/gfx/mkt/gdvzqrellpw/Pasted%20image%201667550293809.png
But sober minds warn that the trajectory of China’s coronavirus deregulation does not resemble this week’s stock chart.
Nanjing-based hedge fund manager Zhang Kaihua said the reopening from COVID is likely to take a “steady and step-by-step approach”, similar to China’s long-running successful economic liberalization. .
“I don’t think China will go for a Western-style opening because if it’s a mistake, the consequences would be intolerable.”
He dismissed this week’s rumors as a mere excuse to boost battered stocks, saying China’s leadership needs time to “make the right decisions that will stand the test of history.”
Even after rising, the CSI300 index is down 24% this year.
“If our leadership doesn’t stick to zero COVID, China will go to hell,” said Yin Peixin, investment manager at Shanghai Jianlong Asset Management Co.
Infections will skyrocket, health care systems will collapse, there will be severe labor shortages and inflation will skyrocket, Yin said.
But while some believe China needs to balance its response to the coronavirus with economic growth, economic growth is likely to continue as the rest of the world chooses to open up their economies and coexist with the coronavirus. are under great pressure.
Liqian Ren, director of WisdomTree Investments, said, “It’s true that COVID-zero protects the older generation. But COVID-zero will bring significant costs to the younger generation. So after considering all factors, China’s We believe that we make trade-offs.”Ltd.
MegaTrust’s Wang says there are signs that COVID restrictions are loosening more than they were months ago, even though COVID remains zero. The opening in Hong Kong “shows that China really wants to reopen its economy,” he said.
Jason Lui, head of East Asia strategy at BNP Paribas, said the rise was likely unsustainable without official announcements on COVID policies in the coming weeks given other economic headwinds.
“The spirit of reopening is well understood by the market, but concrete evidence and announcements are needed to sustain the market dynamics seen over the past week,” Lui said.
(Reporting by Samuel Shen and Georgina Lee; Editing by Vidya Ranganathan and William Mallard)