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 on November 1, 2022.

Vcg | China Optical Group | Getty Images

BEIJING – Chinese stocks rose this week as investors hope that Beijing will soon ease its tough policy on Covid.

The Shanghai boat Gain 5% during the week. The Hang Seng Index It posted weekly gains of more than 8%, bouncing back from 13-year lows hit in the past two weeks.

The Chinese government has yet to announce any change in official policy. Covid-related restrictions on travel and requirements for regular virus testing and other measures in general remain tight.

However, the stock rally that accelerated on Friday followed many unconfirmed rumors of an upcoming change in Covid policy.

“The rally we saw this morning was primarily driven by hope of an earlier-than-expected reopening,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, said Friday on CNBC’s “Capital Connection.”

Zhang pointed to a closed speech Friday morning by the chief scientist of the Chinese Center for Disease Control and Prevention, which indicated that a transition away from a zero-Covid policy could occur soon.

CNBC was unable to verify the comments in the letter. The CDC and the National Health Commission did not immediately respond to a request for comment.

Chinese financial media 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 continuing outbreak of Covid have remained a burden on the Chinese economy, which grew just 3% in the first three quarters of the year compared to last year. Economists have lowered their growth forecasts for next year amid expectations of continued restrictions, while the rest of the world has shifted to a “living with Covid” approach.

On Monday, mainland China celebrated the end of the period of severe COVID-19 restrictions due to the Mid-Autumn Festival in September, the national holiday in early October and the 20th National Congress of the ruling Communist Party of China in late October.

This week, some of the official descriptions of Covid have included notable references to how the virus is “self-limiting” and can be controlled.

However, the Chinese Communist Party newspaper, People’s Daily, emphasized that isolation was still necessary.

The National Health Commission has also confirmed its commitment to the so-called dynamic policy of non-proliferation of Covid.

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There are no details of any timing

“The clearest signal has been given. In the near term, China will stick to its never-ending commitment and zero-tolerance approach, and pursue its zero-sum stance as one of the world’s most stringent virus eradication policies,” said Bruce Pang, chief economist and president. From searching for Greater China in JLL.

“But in the longer term, it is expected that China will continue to make its response to COVID-19 more scientific and targeted, leading to a softer political stance and progressively looser and flexible measures.[r] He said “.

Pang does not expect to drop the policy until the end of June 2023 at the earliest.

This week’s market rumors did not provide new details about the timing of any changes.

Pinpoint’s Zhang added that Bloomberg’s midday report, citing sources, also helped stocks rally on Friday, which indicated that US-listed Chinese stocks such as Alibaba may still be listed on US exchanges.

The China Securities Regulatory Commission, the Ministry of Finance and the US Public Company Accountability 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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