China stocks jump on easing Covid curbs

CHINA stocks posted their best day in three weeks on Tuesday (Dec 27), as the country relaxed Covid curbs further, while a faster-than-expected coronavirus infection peak raised expectations of a quicker economic recovery.

China’s blue-chip CSI 300 Index ended 1.2 per cent higher, while the Shanghai Composite Index added 1 per cent. Both the indexes logged their biggest daily jumps since Dec 5.

Hong Kong markets were closed on Tuesday for Christmas.

China will stop requiring inbound travellers to go into quarantine starting Jan 8, the National Health Commission said on Monday. It will also downgrade the seriousness of Covid-19 as it has become less virulent and will gradually evolve into a common respiratory infection.

“It marks another major step in China’s reopening, especially to the rest of the world, despite recent spike in local infection cases,” JP Morgan analysts wrote in a note.

They expected a shorter transitional pain in Q1 2023, followed by above-trend sustained recovery from Q2 2023 onwards.

Shares in consumer staples, banks and transportation jumped between 1.5 per cent and 2 per cent to lead the gains.

The upbeat mood came even as data showed profits at China’s industrial firms contracted further in the January-November period due to strict Covid-related curbs.

However, tourism-related companies slipped 0.7 per cent, and some drugmakers tumbled as a few investors booked profits following the news.

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Air China lost 2.4 per cent, Yunnan Tourism declined 2 per cent and Shijiazhuang Yiling Pharmaceutical slumped 7.7 per cent.

China’s banking and insurance regulator said the country will step up financial support to small and private businesses in the catering and tourism sectors that were hit hard by the pandemic.

Huaan Securities said the spread of the virus was faster than expected. “The infection will gradually peak before the Spring Festival, based on local health commissions’ estimates and the Baidu search index,” they wrote in a note.

“Therefore, the pace of consumption recovery will come earlier, and it will provide a better environment for the implementation of support policies.”

Huaan analysts added that traffic volume and consumption data during the Chinese New Year holidays will be important indicators to measure the recovery of consumption in the first quarter of 2023. REUTERS