An advertisement by the People’s Liberation Army overlooks a street in Beijing on the day Chinese President Xi Jinping and his US counterpart Joe Biden hold a virtual summit, in Beijing, China, November 16, 2021.
Thomas Peter | Reuters
Stocks in Hong Kong and China rise At the end of a tumultuous week last week, fueled by speculation that Beijing could ease its Covid-zero policy soon – but economists at Goldman Sachs think China could be “a few months away” from opening up. back door.
Over the weekend, Chinese health officials reiterate the government’s position adhere to a zero-tolerance policy on Covid, even as most of the world has begun to lift controls.
That didn’t stop optimism from continuing in larger markets in China, and the Hang Seng Tech index jumped 5% shortly during this morning’s Asian session on Monday.
We estimate that a full reopening could send Chinese stocks up 20%…
“The actual reopening is still many months away as vaccination rates among the elderly remain low and the mortality rate among the uninsured,” said Goldman Sachs economists led by Hui Shan. Vaccination is based on official Hong Kong data.
China stocks could rise 20% on reopening
Goldman still maintains that China can reopen in Q2 2023.
When that time comes, which will be good news for the stock market, economists at the US investment bank say there could be a lead-up to a rally, say economists at the US investment bank. to the relaxation of measures.
“We estimate that a full reopening could lead to a 20% increase in Chinese stocks based on empirical, top-down analysis and historical sensitivity,” a separate note by economists said. economists including Kinger Lau said.
“Stock markets generally respond more positively to local policy easing than to international reopenings, with the Domestic Consumer and Cycles sectors performing better,” the note said.
The Chinese government will likely stick to its zero-Covid policy “until all necessary medical preparations are taken,” Goldman analysts said.
Latest Hong Kong government statistics showed that only 60.81% of people 80 years of age and older received all three doses.
Divide government data from Hong Kong found that the mortality rate among unvaccinated people aged 80 years and over was 14.79%, while the mortality rate for people of the same age who received the three doses was much lower, at about 1.48%.
“A safe and orderly reopening is very difficult right now,” the Goldman Sachs note said.
