A person walks along a road in Beijing, China, on Monday, October 24, 2022. Source: Bloomberg
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Chinese stocks rallied on Monday after major Chinese cities reports continue to ease The restrictions are related to Covid, a positive sign for an economy that has struggled with stringent virus containment measures for more than two years.
The protest comes after Beijing and Shenzhen announced over the weekend that they would lift measures requiring passengers to have a negative Covid test result before travel, despite a wave of cases. recent Covid infection.
The Hang Seng TECH Index, which represents the 30 largest technology companies listed in Hong Kong, rose 8% in Asian trading.
The jump is based on the index’s performance so far this quarter, up about 20% year-to-date. But it is still sitting in bear market territory with a loss of about 27% year-to-date.
technology heavyweights Bilibili increased by more than 25%, Tencent increased by 6% and Meituan increased by more than 3%, while alibaba increased by 8% and Xiaomi increased by about 11%. electronic vehicle manufacturer Xpeng up 24%, leading gains for the broader index, Automobiles 12% increase and Nio increased by more than 15%.
The Hang Seng Index rose 4% while China’s CSI 300 index, which tracks the largest stocks listed on the mainland, gained nearly 2%.
Grow Investment Group’s Hao Hong said on CNBC’s “Street Signs Asia” that the stock market rally was due to the “obvious” path out of China’s Covid-free policy.
“The direction is very clear, because before that, many people and the market had a lot of doubts about whether China was serious about moving towards gradual elimination of Covid-0,” he said.
“Now it seems to most people that Covid-0 is slowly being phased out and that is why the market is reacting so strongly,” he said.
of China ashore and overseas yuan also strengthened further, surpassing the 7-level threshold against the US dollar for the first time since mid-September. Oil prices also spiked at the open of the Asian session, with Brent oil crude oil futures and US West Texas Intermediate Futures rose more than 2% on hopes of increased Chinese demand.
The latest change in China’s Covid regulations also increased optimism for investors betting on continued reopening in the broader region, stretching to the Chinese casino sector. Macao.
Hong Kong-listed casino operators also posted significant gains, with MGM China up 19%, Wynn Macau up 16% and chinese sand 13% more. galactic entertainment up 6% and SJM . Corporation increased by more than 7%.
Morgan Stanley upgraded to overweight
Following news of China’s continued easing of some Covid-19 restrictions, strategists at Morgan Stanley upgraded their rating on Chinese stocks to overweight.
Strategists led by Laura Wang said in a note on Sunday that the upgrade marks the end of the company’s balanced stance on Chinese stocks that it has held for 23 months since January 2021, which is almost two years.
Morgan Stanley has noted many factors indicating “meaningful positive development” for Chinese stocks since November, including what the company sees as a “confirmed path towards reopening after the pandemic”.
“The road towards reopening is finally set, possibly bumpy but no turning back,” the note said, adding that a clear direction for the nation to reopen was cemented as officials medical detailed planning announcement to increase immunization for the elderly.
– Abigail Ng of CNBC, Michael Bloom contributed to this report
