Breaking News
Investing Pro 0
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data

Investors bet China's rally on easing COVID curbs will be furious but fleeting

Stock Markets Dec 05, 2022 04:16AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: A pedestrian walks past a giant display showing the Shanghai stock index, in Shanghai, China August 3, 2022. REUTERS/Aly Song/File Photo/File Photo

By Jason Xue and Summer Zhen

SHANGHAI/HONG KONG (Reuters) - Investors piling into China's tourism, catering and beverage stocks as Beijing eases strict COVID-19 curbs are also keeping an eye on the exits, factoring in risks of a surge in infections early next year that could hit consumption and production.

Many investors say that stocks of drugmakers and medical equipment companies, however, will likely get a more lasting lift from China's bumpy journey towards an eventual economic opening.

China's stocks and currency have jumped and global banks have turned more bullish on its prospects, as Beijing moved towards a more targeted zero-COVID policy while reducing virus testing and quarantines, after it was confronted by widespread anti-lockdown protests.

Zhang Kexing, general manager of Beijing Gelei Asset Management, said he has made big bets on duty-free shopping, home furnishing, and food and beverage stocks that will benefit from easier COVID rules, but some are merely short-term wagers.

"If other economies offer any guide, the consumption recovery is likely to disappoint in the short term after an economic reopening," Zhang said, adding that much of the expected revival has been priced in.

Investors have snapped up Chinese tourism, leisure, retailing and food and beverage stocks over the past week.

A study by Chang Jiang Securities on the correlation between economic growth and COVID-related policies in Asian economies concluded that relaxing COVID rules does not lead to a sustainable recovery in consumption.

A possible jump in infections - and deaths - could curtail social activity and hurt retailers, according to the study, based on data from Singapore, South Korea, Indonesia, Vietnam, Thailand, Hong Kong and Taiwan.

"After curbs are relaxed, China could experience the impact from surging virus cases, along with rising deaths, potentially hitting the economy," the brokerage said.

Christopher Beddor, deputy China research director at Gavekal Dragonomics, said production could also be affected.

"I think it's reasonable to think that as infections rise, they're going to have shortages in some areas of workers," he said.

Grow Investment Group chief economist Hong Hao, warning of confusion and chaotic expectations ahead, recommended internet platform companies and food delivery firms in the short term.

"Intuitively, as cases soar, people will choose to stay home to minimise the contagion risks," he said.

Yin Peixin, investment manager at Shanghai Jianlong Asset Management Co, expected a wave of panic about the pandemic during the Lunar New Year holiday in late January, when many Chinese will be travelling.

Rising infections would benefit drugmakers and producers of medical equipment, he said, but he advised against holding shares in makers of nucleic acid tests used by the authorities, as testing requirements ease.

"Domestic demand and prices will go down," he said.

Sinolink Securities recommends companies that make home-use antigen tests, such as Guangzhou Echom SCI & Tech Co and Sino Biological Inc, since these may instead be in greater demand if infections rise.

Investors bet China's rally on easing COVID curbs will be furious but fleeting

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.
  • Any comment you publish, together with your profile, will be public on and may be indexed and available through third party search engines, such as Google.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
Sign up with Email