Rumors that strict lockdowns due to COVID-19 may end have sent China’s stock market soaring this week despite no announced changes, prompting investors to scramble for months It shows a longing for an end to relentless negative news. 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.” U.S. inspections over audits of Chinese companies have ended ahead of schedule, helped by reports that Beijing is working on plans to end a system of banning individual flights to bring in coronavirus-infected passengers. .
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 jumped into sectors that would benefit from the reopening, including tourism, hotels and catering. “Historical Trials”
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 is heading for a Western-style opening because if it’s a mistake, the consequences would be intolerable,” he said, citing rumors this week as just an excuse to boost stocks. He dismissed it, saying China’s leadership needed 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.” Megatrust’s Wang said there were growing signs that coronavirus controls were loosening compared to months ago, even though the virus remained at 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.
(This article is not edited by Devdiscourse staff and is auto-generated from a syndicated feed.)