Investors, juggling greed and fear, creep back into ‘uninvestable’ China markets

AS valuations of Hong Kong and Chinese stocks hit historic lows, there are signs that investors are ready to make a comeback and jump back in for a manic ride on fears of missing out on new growth themes.

Speculation over China’s relaxation of its zero-Covid policy – which would be key in order to spur growth – has dominated much of trading, even before the Chinese Communist Party (CCP) congress last month. By the first week of November, it reached a feverish pitch as Hong Kong hosted top global bankers at a major finance summit and delighted rugby fans with the return of the Sevens tournament last week. 

Investors poured trillions of dollars into sectors that will benefit from China’s reopening and growth themes, from pharmaceuticals, hotels, tourism, consumer to tech, new energy vehicles and renewable energy. Chinese stocks listed in Hong Kong enjoyed their best week in more than seven years, and Shanghai-listed shares recorded their highest weekly gain since July 2020 as markets bet on a rapid reopening.