China shares rebound, HK stocks trim losses on COVID easing hopes

SHANGHAI: China shares rebounded after lunch break on Thursday, while Hong Kong stocks saw their losses trimmed, after a media report said China was considering easing COVID-19 restrictions.

China is considering a cut in the duration of quarantine for inbound visitors from 10 to seven days, Bloomberg News reported on Thursday. Both China’s blue-chip CSI300 Index and the Shanghai Composite Index clawed into positive territories in early afternoon trading.

China, HK stocks sag after Xi emphasises security, reiterates COVID stance

** The Hong Kong benchmark Hang Seng recovered some losses, after hitting levels last seen during the 2008-09 global financial crisis, in the morning trade.

** Even before the Bloomberg report, some investors had been piling into battered Chinese equities, betting the market will trough earlier than inflation-hit US and European peers.

** Many also expect China’s economic stimulus and an eventual exit from zero-COVID policies will lift depressed valuations.

** On Thursday morning, confidence in China assets were shaken after the yuan resumed its slide against the dollar, as the US-China yield spread widens further. Offshore yuan hit a record low of 7.2794 per dollar on Thursday, before recovering some losses.

** Yuan Yuwei, a hedge fund manager at Water Wisdom Asset Management, said yuan depreciation adds woes to the Hong Kong stock market, where dominating sectors including banking, property and Internet are all in decline amid President Xi Jinping’s “Common Prosperity” drive.

** “You cannot rule out a technical rebound at this level. But you don’t expect a reversal of trend” unless global central banks start pumping liquidity again, he said.

** Continued market weakness also reflects disillusionment toward Hong Kong Chief Executive John Lee’s first policy address made on Wednesday. In that speech, Lee prioritised improving competitiveness and attracting more overseas talent, but also stressed the need to bolster national security in the Chinese-ruled city.