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Saturday, May 21, 2022
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China stocks rise as Shanghai aims to check Covid

China stocks rise

The CSI300 index rose 0.4% to 3,974.48 at the end of the morning session, while the Shanghai Composite Index gained 0.6% to 3,072.12

China stocks rose on Friday as Shanghai said it aimed to reach the zero-Covid level in areas outside its tightly regulated quarantine zones this month, with sentiment aided by authorities’ frequent pledges to support the economy.

The CSI300 index rose 0.4% to 3,974.48 at the end of the morning session, while the Shanghai Composite Index gained 0.6% to 3,072.12.

The Hang Seng index added 2% to 19,767.36. The Hong Kong China Enterprises Index gained 2.3% to 6,748.20. The CSI300 index is up 1.7% for the week so far, on track for its biggest jump in six weeks since Shanghai entered a city-wide lockdown, while the Hang Seng index lost 1.2%.

Shanghai officials also said on Friday they will start to steadily ease traffic restrictions and open shops this month, while Beijing on Thursday denied rumours of sweeping lockdown measures and urged people to avoid a frenzy of purchasing essential items and stay at home.

The Covid-19 resurgence is having a ‘huge impact’ on China’s economy, but such impact will be short-lived, the official Xinhua news agency quoted the deputy head of the National Bureau of statistics as saying on Thursday.

Earlier that day, officials said China is ready to take new steps to support the economy when the need arises. Morgan Stanley analysts said in a note that sentiment saw a marginal uptick versus pre-Labour Day reading while suggesting patience in the near term.

The timing and scale of follow-through actions from the recent top-down easing stance remain contingent on the Covid-19 situation, complicated by quantitative tightening and global geopolitical tension, they added. Real estate developers, coal miners, and automobiles surged more than 3% each, while information technology and tourism stocks both lost roughly 1%.

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