HONG KONG: The yuan and Chinese consumer stocks rallied as key cities eased Covid restrictions, spurring bets that the worst of the economic impact from strict lockdowns is over.
Tsingtao Brewery Co and Chongqing Brewery Co were among the biggest gainers on China’s CSI 300 Index, rallying at least 7% each. The benchmark gauge advanced up to 1% yesterday. The onshore yuan strengthened as much as 0.8%, the most in about two weeks.
Strict movement restrictions in key Chinese cities have weighed on the nation’s economy and financial markets, drawing a dire warning from premier Li Keqiang who urged officials to carry out stimulus. The latest relaxation in curbs and Shanghai’s moves to revitalise the economy is giving a much-needed boost to investor sentiment.
“Covid cases and lockdowns have been the key factors holding back China equity valuations, so the easing of these will be positive,” said Bloomberg Intelligence analyst Marvin Chen. Continued reopening with more stimulus may kick start a recovery in the second half, he added.
Shanghai will loosen Covid test requirements for people who enter public places from June 1, while offering tax rebates for companies and allowing all manufacturers to resume operations.
The plan also includes an accelerated approval of property projects and incentives for car purchases, among others.
Curbs on movement in several Beijing districts also started to be loosened over the weekend after authorities said the outbreak there was under control.
In Hong Kong, sportswear maker Li Ning Co rose as much as 9.4% while restaurant chain Haidilao International Holding Ltd advanced 8.8%, helping drive a more than 2% gain in the city’s benchmark gauge.
Meanwhile, travel and transportation shares also surged. Jinling Hotel Corp gained by the 10% limit on the mainland as Guangzhou Baiyun International Airport Co rose more than 6%. Trip.com Group Ltd. added more than 4% in Hong Kong.
Overseas investors have net purchased 1.1 billion yuan (US$165mil or RM721mil) of local shares so far in May, while onshore traders have bought around HK$44bil (US$5.6bil or RM24.5bil) of Hong Kong stocks. — Bloomberg