Zero-Covid: China ‘reopening bets’ lit up stocks amid buying frenzy in Hong Kong, Shanghai in preview to end of policy
- Stocks in Shanghai and Hong Kong are logging their best weeks since at least July 2020 amid rumours about Beijing’s zero-Covid policy
- The latest talk was stoked by an unverified transcript citing former top health official about imminent changes to policy
Speculation about an imminent end to the stringent curbs helped power benchmark stock indices in Shanghai and Hong Kong to their best gains in at least two years. The latest came in the form of a transcript attributed to former state epidemiologist Zeng Guang, who spoke at a closed door investment conference organised by Citigroup in Hong Kong.
The reaction underlines how sensitive stock prices are to so-called “reopening bets” as traders blamed the curbs for the cratering consumer spending and market drubbing since the pandemic broke out in early 2020.
“Hong Kong stocks are deeply undervalued,” said Hong Hao, the Hong Kong-based strategist at Grow Investment Group, a Chinese hedge fund manager. “Any good news (on zero-Covid policy] can make the market rally quickly, just like how a single spark can start a prairie fire.”
The Hang Seng Index surged 5.4 per cent on Friday, powered by a more than 10 per cent rally in Alibaba Group Holding and JD.com. The Shanghai Composite Index climbed 2.4 per cent. The stock benchmarks are capped for their best weekly gain since October 2011 and July 2020, respectively.
Today’s transcript, which went viral, quoted Zeng, former chief epidemiologist of the Chinese Center for Disease Control and Prevention, as saying China would make “big and substantive” changes to its zero-Covid policy. In his previous social-media posts in February, he suggested the “dynamic zero” policy is China’s way of living with the virus.
