China reopening stocks jump on report of Covid policy easing

[BEIJING] China's consumer and retail shares rallied on Thursday (Mar 3) after a report said that Beijing was weighing an exit from its strict Covid-Zero policy.

Sands China jumped as much as 8.1 per cent to pace gains in the benchmark Hang Seng Index, while a Bloomberg gauge of Macau gaming stocks surged 5.5 per cent.

Airlines and restaurant firms also rallied. Air China added 6.1 per cent and Haidilao International Holding 5.9 per cent in Hong Kong.

Authorities in Beijing are unlikely to ease Covid-19 controls before next spring, but experimental opening measures could arrive in select cities as early as this summer, the Wall Street Journal reported, citing unidentified people.

Travel stocks also gained, with Trip.com Group rallying 11 per cent, BTG Hotels Group rising 7.9 per cent in Shanghai and Utour Group surging the maximum 10 per cent allowed in Shenzhen. Commercial property owners such as Wharf Real Estate Investment advanced.

China is the last major country still trying to live with a Covid-Zero strategy. A relaxation of the rules is likely to buoy the nation's equities, which have turned in a lacklustre performance this year despite bullish calls from money managers such as BlackRock and UBS Group. Traders have shrugged off China's policy easing efforts as Covid controls weigh on spending.

Shares linked to the reopening of China's economy were in focus earlier this year after the authorities issued a broad plan to promote internal and external travel. Tourism stocks in China have been actively traded amid speculation that a shift in restrictions may be imminent ahead of the Communist Party's 20th leadership congress later this year.

A relaxation in Covid policies could also likely shore up China's economy, after some recent indicators pointed to a moderation in the pace of expansion. A services purchasing managers' index slipped to a 5-month low in February.

Optimism also spilled over into Thailand, a major destination for Chinese tourists before the pandemic. The Thai baht gained as much as 1 per cent versus the dollar in the biggest advance since October. BLOOMBERG