Vcg | Visual China Group | Getty Images BEIJING — Chinese shares rose this week as investors hoped Beijing would soon ease its strict Covid policy. The Shanghai composite gained 5% during the week. The Hang Seng posted weekly gains of well over 8%, retreating from 13-year lows hit over the past two weeks. The Chinese government has yet to announce any official policy changes. Covid-related restrictions on travel, regular virus testing requirements and other measures remained generally as strict. However, the stock rally that accelerated on Friday followed multiple unconfirmed rumors of an upcoming policy change on Covid. “The rally we saw this morning was mainly fueled by the hope that it will reopen earlier than expected,” Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, told CNBC’s “Capital Connection” on Friday. Zhang pointed to a closed-door speech on Friday morning by a chief scientist at the Chinese Centers for Disease Control and Prevention that suggested a transition from a zero-Covid policy could happen soon. CNBC was unable to verify the comments made in the speech. The center for disease control and the National Health Commission did not immediately respond to a request for comment. Chinese financial media Cailian Press reported that officials will hold a press conference on Saturday afternoon at the National Health Commission building on virus control and prevention measures. Controls and ongoing Covid outbreaks have remained a drag on China’s economy, which grew just 3% in the first three quarters of the year from a year ago. Economists have cut their growth forecasts for next year on expectations that restrictions will persist while the rest of the world has shifted to a “live with Covid” approach. On Monday, mainland China marked the end of a period of heightened Covid restrictions due to the Mid-Autumn Festival in September, the National Day in early October and the 20th National Congress of the ruling Communist Party in late October. This week, some official descriptions of Covid included notable references to how the virus was “self-limiting” and controllable. However, the Chinese Communist Party newspaper People’s Daily argued that isolation was still necessary. The National Health Commission also confirmed its commitment to what is officially called a dynamic Covid-zero policy.
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“The clearest message has been given. In the short term, China will stick to its unwavering commitment and zero-tolerance approach, pursuing zero-Covid status as one of the strictest virus eradication policies in the world,” said Bruce Pang, chief economist and head. of Greater China research at JLL. “But in the long term, China is expected to continue to make its response to Covid more scientific and targeted, leading to a softer policy stance, flexible measures and gradually relaxed[r] restrictions,” he said. Pang does not expect the policy to be withdrawn until late June 2023 at the earliest. This week’s market rumors have provided no new details on the timing of any changes. Pinpoint’s Zhang added that also helping Friday’s stock rally was a midday Bloomberg report, citing sources, that suggested US-listed Chinese stocks such as Alibaba could remain listed on US exchanges. The Securities and Exchange Commission, the Treasury Department and the U.S. Accounting Firm Oversight Board did not immediately respond to CNBC’s requests for comment. — CNBC’s Sam Vadas and Abigail Ng contributed to this report.
