Signs of economic slowdown caused by China’s uncompromising Covid policy have elevated the significance of the Communist Party’s Politburo meeting this week as traders look for a cure to end US$2 trillion stock rout this year. The monthly meeting, which typically reviews the state of the economy and sets the policy tone and direction for industries, comes into sharper focus amid factory closures and supply-chain disruptions caused by the citywide pandemic lockdown in Shanghai and curbs elsewhere. Foreign funds have cut their holdings of onshore stocks. More than US$238 billion in market value has evaporated from the MSCI China Index since March 15 when the market hit a five-year low, bringing total losses for the year to US$2.7 trillion, according to Bloomberg data. “Beijing is clearly worried,” Rory Green, chief China economist at TS Lombard, a London-based research firm, said in a report last week. “State spending needs to do the heavy lifting because Covid outbreaks reduce the demand for credit and the multiplier of stimulus measures.” The 25-member Politburo, headed by General Secretary Xi Jinping, is the highest decision-making body within the party. Its members, who also serve concurrently in legislative, administrative and military roles, hold big sway on the financial market. In the December 2020 meeting, the members called for stronger anti-monopoly efforts to prevent “disorderly expansion of capital,” precipitating a c rackdown and a trillion-dollar rout in Chinese tech stocks at home and abroad. “We expect the upcoming Politburo meeting to focus on the current Covid situations and the related economic challenges,” said Dong Chen, head of Asia macroeconomic research at Pictet Wealth Management. It would be unrealistic, however, to expect a massive stimulus, he added in an interview. China’s central bankers have remained cautious, given the push to contain excessive leverage in the financial system. Other headwinds are weighing on the market too, including a liquidity squeeze among debt-laden developers and regulatory uncertainties in the technology sector, said Chen. “The [Chinese] government needs to send a stronger signal to convince the market”, said Alicia Garcia Herrero, Asia-Pacific chief economist at Natixis Corporate and Investment Banking. The zero-Covid policy has brought much market uncertainty that is “hard to be completely offset by only monetary or fiscal policies.” There’s a good chance the Politburo will enhance Xi’s message this week. The Chinese president on Tuesday called for efforts to boost spending on infrastructure construction, including transport, energy and water conservancy. He also urged widening the funding channels. Stocks likely to gain on positive Politburo surprises are those related to infrastructure, while real estate might perform better as authorities offer support to ease the pressure on debt defaults, said Herrero. Everbright Securities said infrastructure growth is likely to remain high in the first half this year, which could benefit China State Construction, China Railway and China Communications Construction. Other potential winners include China Energy Engineering Corporation and Anhui Honglu Steel Construction Group, it said in a report. “Smaller-than-expected policy stimulus [has] added to investors’ disappointment,” analysts Emily Li and Jasmine Duan at RBC Wealth Management said in a report on Friday. “Investors are now looking for easing signals from the Politburo.”