Hong Kong stocks rally on report city may relax Covid rules

HONG KONG stocks rose more than 3 per cent on Thursday (Dec 8) afternoon, wiping out the previous day’s losses, on hopes for China’s reopening and reports that the city was considering easing more Covid restrictions.

The Hang Seng Index (HSI) rose 3.38 per cent, or 635.41 points, to 19,450.23.

Various news outlets said authorities were looking at easing testing requirements for travellers, among other things, raising hopes for a boost to the tourism industry.

The news came as the HSI was already rallying on China’s decision to roll back some of its strict Covid measures that have strangled the economy. But the index lost 3.22 per cent on Wednesday on concerns that the reopening could spark a surge in infections.

A gauge of Chinese tech stocks trading in the city rallied 7 per cent. A Bloomberg gauge of Macau casino shares surged as much as 13 per cent. The city’s flagship carrier, Cathay Pacific Airways, extended gains.

Combined with moves by Chinese authorities to soften their Zero Covid stance, investors are becoming more optimistic over the outlook for shares in the region.  

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“As China relaxes policies, it gives room for Hong Kong to relax as well, as one of the first major border reopenings will be between the mainland and Hong Kong,” said Marvin Chen, an analyst at Bloomberg Intelligence. “This will be a boost for the local Hong Kong economy which has struggled in the absence of mainland arrivals.” 

On Wednesday, China further jettisoned key tenets of its virus elimination strategy, including forcing infected people into quarantine camps. BLOOMBERG