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Chinese stocks rally on hints of authorities' commitment to reopening

Published 11/29/2022, 02:15 AM
Updated 11/29/2022, 02:43 AM
© Reuters.

By Geoffrey Smith 

Investing.com -- Chinese stocks and other risk assets rallied on Tuesday after hints that the Communist Party will stick with its declared intention of loosening COVID-19 restrictions, despite a nationwide surge in cases.

The National Health Commission (NHC) on Tuesday said it will present measures to accelerate vaccination of the over 80s, an age bracket in which over one-third is still unprotected, according to the Chinese Center for Disease Control. The NHC was to hold a press conference detailing the measures at 02:00 ET (07:00 GMT), and newswire headlines suggested there would also be fresh efforts to increase vaccination among those in the 60-79 age bracket too. 

COVID-19 has typically taken its heaviest toll among older age cohorts. 

The move is the first clear signal of official intent since a wave of anti-government protests at the weekend, some of which called explicitly for the Communist Party, and President Xi Jinping in particular, to relinquish power. The protests were arguably the most serious challenge to the Communist Party's authority since the People's Liberation Army crushed pro-democracy protests in Tiananmen Square in 1989.

Additionally, if more tenuously, social media accounts close to official state media also dropped the hint that the government's efforts to reopen the economy and end nearly three years of crippling lockdowns remained on track. 

"With the relaxation of the epidemic prevention and control measures, public sentiment will soon calm down," Hu Xijin, until recently editor of the English-language CCP mouthpiece Global Times, tweeted about the weekend protests: "I can give an absolute prediction: China will not become chaotic or out of control."

Benchmark Chinese equity indices surged by between 2% and 4% on the news, having fallen heavily last week as lockdown measures tightened in several major cities in response to record case numbers, including in Beijing, Shanghai, and Guangzhou. The offshore yuan strengthened 1.0% to 7.1736 against the dollar.

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