Stocks jump on rumors that China may end COVID zero, but investors really don’t know what to make of Xi’s China
An unverified report that China has formed a “Reopening Committee” has triggered a rally in Chinese stocks, but Beijing has denied any knowledge of the news.
Chinese stocks listed at home and in the U.S. buoyed up today over unverified reports that Beijing is taking steps toward a gradual reopening from its strict COVID-zero policy, in the latest incident of market volatility in a year of investor uncertainty.
The unverified note, originally posted by an anonymous user on Chinese social media and then tweeted by outspoken Hong Kong–based market strategist Hóng Hào 洪灝, said that a “Reopening Committee” had been formed by Politburo Standing Member Wáng Hùníng 王沪宁 — the most important political theorist in Xí Jìnpíng’s 习近平 China and a known ideologue in favor of a strong Party state — and is currently reviewing COVID data overseas to “assess various reopening scenarios,” with a target date set for March 2023.
- Chinese stocks listed in Hong Kong surged: The benchmark Hang Seng Index rose 5.2%; the Hang Seng Tech Index went up 7.8%; China’s onshore Shanghai Composite index rose 2.6%; and the CSI 300 jumped 3.6%.
- The gains were dampened after Chinese Foreign Ministry spokesperson Zhào Lìjiān 赵立坚 said he was “not aware” of such a committee: “I don’t know where you got this information. I truly don’t know anything about this.”
The rebound comes after a recent period of turbulence for Chinese stocks, which were hammered last week after Xi secured his third term as China’s leader — signaling that the country will not pivot from policies like COVID zero or the scrutiny of its private sector, which have stymied global supply chains and shaken investor confidence.
- Stocks slumped on Monday after government data showed that factory and services activity had declined last month in the country, while new COVID restrictions in areas across the nation fueled market concerns of more supply chain woes.
- Shares in Hon Hai Precision Industry, Foxconn’s Taiwan-listed entity, fell 1.4% on Monday, after videos on social media reportedly showed workers fleeing Apple’s largest factory for iPhones in Zhengzhou over fears about COVID lockdowns.
- News of Xi’s dominance at the 20th Party Congress and the Politburo being stacked with his loyalists sent stocks tumbling in late October.
