China’s Covid-19 easing sends markets soaring, propels Hang Seng Index to its biggest one-day gain in 8 months
- 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
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.
“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.
“The latest comment from Beijing showed they want a more accurate [policy] execution to lower the impact on its economy, and that helped lift sentiment,” said Kenny Wen, head of investment strategy at KGI Asia in Hong Kong. The cooling inflation in the US is “very ideal”, he added.
Speculation about the longevity of Beijing’s zero-Covid policy has caused wild swings in stock prices over the past week, even as China’s health officials continued to warn the curbs would stay as local infection cases jumped to multi-month high and lockdowns persisted in some mainland cities.
Separately, US consumer prices rose 7.7 per cent in October from a year earlier versus 8.2 per cent in September, the smallest increase since the start of the year. The slower-than-expected rise fuelled hopes the Fed will ease its tightening pace in the coming months.
Two stocks debuted on Friday. Glory View Technology, a smart city integrated service provider, surged 24.6 per cent to 50.01 yuan in Shenzhen, while e-commerce platform Zibuyu added 5.5 per cent to HK$8.29 in Hong Kong.
Asia-Pacific markets rose after the US inflation report. The S&P/ASX 200 in Australia jumped 2.8 per cent, the Nikkei 225 in Japan gained 3 per cent, while South Korea’s Kospi advanced 3.4 per cent.