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China stock market
BusinessChina Business

Shanghai lockdown: ‘China put’ in play as foreign funds buy Moutai, China Tourism stocks amid calls for rate cuts, fiscal boost

  • Foreign funds scoop up A shares, banking on official backstop, or so-called ‘China put,’ to prop up the market and sliding economy
  • Lockdown in Shanghai has widened to affect other tech and car-making hub in Kunshan, putting Beijing’s 5.5 per cent GDP target at risk

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Calls for stimulus turn louder as deserted highways and shuttered factories put China’s growth target at risk. Photo Bloomberg
Zhang Shidong
An extended lockdown of Shanghai, China’s biggest commercial hub and financial hub, has done little to damp trading volume or risk appetite on the biggest stock exchange in Asia.
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Turnover on the Shanghai Stock Exchange since the citywide curbs since March 28 averaged 379 billion yuan (US$59.5 billion) a day, about 3 per cent below the three-month daily average, according to official data. The Composite Index, which tracks 2,076 companies, gained 1.2 per cent over the same period, while the Hang Seng Index climbed 2.2 per cent.

The sustained trading volume suggests investors may be positioning for a swift rebound after yet another dodgy performance last quarter that ranked the market as the worst in Asia-Pacific this year. Calls for stimulus have gotten louder of late with Goldman Sachs, Citic Securities and other brokerages predicting some sooner rather than later.

02:13

Shanghai fighting its worst Covid-19 outbreak since start of the pandemic

Shanghai fighting its worst Covid-19 outbreak since start of the pandemic
“We expect further legs to the rally in the second quarter, driven by easing of Covid-19 restrictions and kicking in of reflationary policies,” Tham Mun Hon, head of Greater China research at UOB KayHian said in an email on Friday. Property-sector easing, tweaks to zero-Covid strategy point to some urgency to safeguard growth momentum, he added.

Despite heightened concerns about earnings and growth setbacks, foreign investors have surprisingly been net buyers, scooping up 16.3 billion yuan (US$2.6 billion) of A-shares since March 28, according to Stock Connect data. That compares with 65.9 billion yuan of net selling in three weeks preceding the lockdown.

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Their biggest bets during that period included the nation’s most-valuable company Kweichow Moutai, China State Construction and China Tourism Group Duty Free, according to Stock Connect data.

03:49

Covid wave paralyses Shanghai’s food deliveries

Covid wave paralyses Shanghai’s food deliveries
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