Here’s what we know about the rebound in Chinese stocks this week
Local residents wearing personal protective equipment (PPE) line up to enter a specialized hotel for medical observation and quarantine in Zhengzhou city on November 1, 2022.
Vcg | Visual China Group | Getty Images
BEIJING — Chinese stocks rallied this week as investors hoped Beijing would soon ease its strict Covid policies.
The Chinese government has yet to announce any official policy change. Covid-related travel restrictions, requirements for regular virus testing and other measures generally remained as strict as possible.
However, the stock rally that accelerated on Friday followed multiple unconfirmed rumors of an impending change in Covid policy.
“The rally we saw this morning was primarily driven by hopes that the reopening will happen sooner than expected,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, told CNBC on Friday “Capital Connection.”
Zhang pointed to a speech by the chief scientist at China’s Centers for Disease Control and Prevention on Friday morning that suggested a move away from a zero-Covid policy could happen soon.
CNBC could not verify the comments made in the speech. The Centers for Disease Control and the National Health Commission did not immediately respond to a request for comment.
Chinese financial media outlet Cailian Press reported that officials will hold a press conference on Saturday afternoon at the National Health Commission building on virus control and prevention measures.
Controls and the continuation of the Covid epidemic continue to be an obstacle to the Chinese economy, which in the first three quarters of this year grew by only 3 percent compared to last year. Economists have cut their growth forecasts for the coming year as expected, restrictions remain, while the rest of the world has moved to a “live with Covid” approach.
Mainland China on Monday marked the end of a period of heightened Covid restrictions due to the Mid-Autumn Festival in September, a National Holiday in early October and the 20th National Congress of the ruling Communist Party of China in late October.
This week, some official descriptions of Covid included significant references to the virus being “self-limiting” and controllable.
However, the Chinese Communist Party’s People’s Daily claims that it is isolation was still necessary.
The National Health Commission has also confirmed its commitment to what is officially called dynamic zero covid policy.
“The clearest signal has been given. In the near future, China will stick to its unwavering commitment and zero-tolerance approach, following the zero-Covid position as one of the world’s strictest virus elimination policies,” said Bruce Pang, chief economist and director of research for Greater China at JLL.
“But in the long term, China is expected to continue to make its response to Covid more scientific and targeted, leading to a softer policy stance, more flexible measures and a gradual easing[r] restrictions,” he said.
Pang does not expect this policy to be abandoned until the end of June 2023 at the earliest.
This week’s market rumors provided no new details on the timing of any changes.
Pinpoint’s Zhang added that also helping the stock rally on Friday was midday Bloomberg reports, citing sources, it indicated that US-listed Chinese stocks such as Alibaba could remain listed on US exchanges.
The China Securities Regulatory Commission, the Treasury Department and the US Public Company Accounting Oversight Board did not immediately respond to CNBC’s requests for comment.
— CNBC’s Sam Vadas and Abigail Ng contributed to this report.
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