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China stocks post $1 trillion gain on hopes of reopening, better ties with US

China stocks post $1 trillion gain on hopes of reopening, better ties with US
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  • Hang Seng climbs to best week since 2011
  • Tech and real estate stocks lead gains
  • Yuan, China-sensitive luxury stocks and commodities rise

SINGAPORE, Nov 4 (Reuters) – Chinese markets soared and the yuan rose on Friday, with around $1 trillion added to the value of Chinese stocks in the week, as rumors and news fueled hopes of relief. double in the tension between the United States and China. China’s harsh COVID rules.

The Hang Seng (.HSI) it rose 5.3% and posted its biggest weekly gain in 11 years. The Shanghai Compound (.SSEC) rose 2.4% for a weekly gain of 5.3%, the biggest in more than two years and China-sensitive assets around the world rose sharply.

Bloomberg News reported that initial US inspections of US-listed Chinese companies’ audit documents, a longstanding point of regulatory tension and risk, ended early, raising hopes of that US officials were satisfied.

Unsubstantiated social media posts signaling the goal of relaxing COVID rules in March have also buoyed optimism all week and seemed to pick up a new momentum on Friday.

A former top Chinese disease control official told a closed-door conference that substantial changes to the country’s zero-COVID policy will be implemented in the next five to six months, according to a recording of the session heard by Reuters.

“Any indication that some rules might be relaxed would be an immediate dose of grease in the jarring gears of China’s economy,” said Sophie Lund-Yates, principal equity analyst at Hargreaves Lansdown.

The focus was now on a press conference by China’s health authorities on November 1. 5.

The gains were ample, overshadowing a dovish mood in global markets at the prospect of US interest rates rising higher than expected. Real estate and technology stocks led the way.

Shares in online giants Alibaba (9988.HK) and JD.com (9618.HK) each up more than 10% and the Hang Seng Tech Index (.HSTECH) rose 7.5%. Country Garden Services property manager up 15% and a mainland developer index (.HSMPI) Pink 9%.

Hedge fund manager Lei Ming said the reopening rumor is just the trigger for a rally in an oversold market.

“The main reason for the market jump is that the selling pressure wore off after the market fell so low.”

Value gains in Hong Kong, Shenzhen and Shanghai for the week are about $1 trillion. However, the Hang Seng is still down 30% this year against a 24% drop in global equities. (.MIWD00000PUS). The Shanghai Composite is down 15% this year.

A view of a giant display of stock indices, following the outbreak of the coronavirus disease (COVID-19), in Shanghai, China, October 24, 2022. REUTERS/Aly Song/File photo

The rally spread to commodity markets with iron ore futures rising on Friday and China-sensitive stocks traded in London and Europe.

Miners like Rio Tinto (RIO.L) and Anglo American (AAL.L) rose sharply alongside luxury retailers like LVMH (LVMH.PA) and Swiss jeweler Richemont (CFR.S).

US-listed China stocks rose in premarket trading, with KraneShares CSI China Internet ETF and iShares MSCI China ETF (MCHI.O) set for weekly gains after sharp falls in October.

Strategists at TD Securities continue to expect a gradual easing of zero-COVID restrictions, warning that markets could be disappointed if investors expect anything quicker.

China stock market capitalization

SHOP THE RUMOR

The COVID policy changes have not been officially marked. A spokesman for the Ministry of Foreign Affairs said Tuesday He was unaware of the situation when asked about rumors on social media that China was planning a reopening of strict COVID restrictions in March.

Bloomberg News also reported on Friday, citing unidentified people familiar with the matter, that China was working to relax rules penalizing airlines for carrying COVID-positive passengers.

A Foreign Ministry spokesman said later that he was unaware of the report and that China’s COVID policies were consistent and clear.

An early conclusion of audit checks has also not been confirmed by Chinese or US officials. However, markets have desperate reasons to rally after the Hang Seng hit a 13-year low last month in the wake of the Communist Party of China Congress.

“I don’t see anything new that has changed the investment environment of Hong Kong and China,” said Frank Benzimra, head of Asia equities strategy at Societe Generale in Hong Kong.

“The only explanation I have is that the liquidation has been excessive after Congress, the valuation of some names abroad has been very affected and there is some bottom fishing.”

The coin joined the rally, jumping more than 0.5% to touch a one-week high of 7.2340 per dollar.

Reporting by Medha Singh in Bangalore, additional reporting by Summer Zhen in Hong Kong. Written by Tom Westbrook. Edited by Sam Holmes and Saumyadeb Chakrabarty

Our standards: The Thomson Reuters Trust Principles.

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