Hong Kong shares jump, China down as traders weigh eased Covid rules

CHINA stocks fell while Hong Kong shares jumped on Wednesday (Dec 28), as investors weighed China’s dismantling of most of its Covid rules to reopen its economy to the rest of the world.

China’s blue-chip CSI 300 Index ended lower 0.4 per cent, while the Shanghai Composite Index lost 0.3 per cent.

Hong Kong’s Hang Seng Index climbed 1.6 per cent, while the Hang Seng China Enterprises Index added 2 per cent.

The Hong Kong market reopened on Wednesday after the Christmas holidays, playing catch-up with peers on China’s news of easing Covid rules.

The Hong Kong market was also boosted as the city leader John Lee said Hong Kong will cancel its stringent Covid-19 rules from Thursday, meaning that arrivals will no longer need to do mandatory PCR tests while the city’s vaccine pass would also be scrapped.

Chinese hospitals and funeral homes were under intense pressure as a surging Covid-19 wave drained resources.

It comes as China said it will stop requiring inbound travellers to go into quarantine starting from Jan 8, in a major step towards easing curbs on its borders.

“We view the new guidelines as a major step towards the full reopening, but caution on the increased challenges to China’s medical system in the near term,” said Goldman Sachs analysts in a note.

Shares in automobiles slumped 3.1 per cent, transportation companies fell 2 per cent, but banks rose 1 per cent.

Tech giants listed in Hong Kong surged 2.1 per cent, after their US-listed peers jumped overnight. The Nasdaq Golden Dragon China index added 2.1 per cent on Wall Street.

UBS Securities said surging cases had fuelled worries over an economic recovery, expecting more volatility in the market in the near term.

The reopening should drive a gradual rebound in consumption from the end of the first quarter next year or the beginning of the second quarter, after the first wave of infections is likely to peak around mid-January and level off after the Spring Festival, they said. REUTERS