SHANGHAI: China stocks rebounded sharply from two-year lows on Wednesday, buoyed by hopes that the country would prioritise economic growth and fine-tune its draconian anti-virus policies.
Sentiment was also lifted by data showing profits at China’s industrial firms grew at a faster pace in March from a year earlier, and signs that the yuan is stabilising following its slump recently.
The blue-chip CSI300 index jumped 2.9% to 3,895.54, after touching its lowest since April 2020 in morning trade. The Shanghai Composite Index gained 2.5% to 2,958.28.
The official People’s Daily reiterated the “zero tolerance policy” in the fight against COVID-19, but said “at current stage, our goal is to eliminate outbreaks”, rather than the virus, or the disease.
“My interpretation is that the author indicates the authorities may have recognised the virus and the disease cannot be fully eliminated,” wrote Zhiwei Zhang, president and chief economist at Pinpoint Asset Management. “If that’s the case, it would be a subtle yet important change of policy stance.”
In addition, China’s top decision-making body will likely prioritise growth during a session this week, Standard Chartered said in a note. “Credit support may be highlighted to supplement tax/fee cuts and infrastructure spending,” the bank said.
Meanwhile, China’s securities regulator said it would guide mutual funds to adhere to the concept of “long-term investment” and play a role in stabilising markets.
Nevertheless, Chinese stocks faced headwinds from geopolitical tensions, and lingering threat from COVID.