China’s Covid-19 easing sends markets soaring, propels Hang Seng Index to its biggest one-day gain in 8 months

Name: Thousands stuck inside Shanghai Disney Resort after snap Covid lockdown
Uploaded: 2022-11-11T02:15:49.000Z
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China’s Politburo Standing Committee will strive to reduce the impact of zero-Covid curbs on the economy, followed by a move to ease quarantine rules for arrivals

US consumer prices rose by the least since the start of the year, fuelling bets on easier tightening pace by the Federal Reserve going forward

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People wait to cross a street past an electronic sign showing the Hang Seng index in Hong Kong on Friday. Stocks surged as investors bet on the China reopening theme. Photo: AFP

Jiaxing Li

Published: 10:15am, 11 Nov 2022Updated: 5:27pm, 11 Nov 2022

Hong Kong stocks surged by the most in over eight months after China eased some of its Covid-19 restrictions and pledged to minimise the economic fallout from its policy. Slower US inflation raised optimism the Federal Reserve could temper its future rate increases.

The Hang Seng Index advanced 1,244.62 points or 7.7 per cent to 17,325.66 on Friday, the most since mid-March and taking this week’s gains to 7.2 per cent. The Tech Index soared 10.1 per cent, while the Shanghai Composite Index ended with a 1.7 per cent gain. An index tracking US-listed Chinese companies surged 7.6 per cent in New York overnight.

All but two of the 73 index members advanced. Tencent rallied 11.7 per cent to HK$258.40, while Alibaba jumped 12.4 per cent to HK$70.80. JD.com advanced 16.1 per cent to HK$192.50 and Meituan gained 12.5 per cent to HK$159.60. Macau casino operator Sands China and Galaxy Entertainment climbed 11.5 per cent and 8.3 per cent, respectively.

China slashed quarantine time for international arrivals to five days from seven beginning on Friday, plus a three-day home isolation, the State Council’s Covid-19 prevention team said. It plans to add more international flights, and will cancel the “circuit break” mechanism that has deterred arrivals.

“A gradual relaxation of measures would help to revive consumption activity and sentiment,” HSBC’s Greater China economist Liu Jing wrote in a note after the announcement. “The combination of a gradual relaxation of Covid-19 policies, further stabilisation in the housing market and continued policy support, should lead to a steady consumption recovery next year.”

Online travel agency Trip.com surged 17.3 per cent to HK$234.80. The company said searches for international flights to China tripled an hour after China’s relaxation announcement, while bookings doubled. Search volume has jumped by 122 per cent since October 31, the platform said in a statement.

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Thousands stuck inside Shanghai Disney Resort after snap Covid lockdown

Earlier, China’s seven-member Politburo Standing Committee, chaired by President Xi Jinping, said on Thursday it would strive to reduce the damages caused by the “dynamic zero” policy, Xinhua News Agency reported. The policy, which has triggered snap lockdowns and hurt factory production, has been blamed for the malaise in the economy and stock markets.