China rakes in trillions of dollars in hopes of reopening US ties

  • The Hang Seng rises to its best week since 2011
  • Tech, property stocks lead to gains
  • Yuan, commodities, China-sensitive luxury shares rise

SINGAPORE, Nov 4 (Reuters) – Chinese markets rallied and the yuan rose on Friday, as rumors and news fueled hopes of a twin easing in U.S.-China tensions and China, adding nearly a trillion dollars to the value of Chinese stocks for the week. strict COVID rules.

The Hang Seng (.HSI) rose 5.3% for its biggest weekly gain in 11 years. The Shanghai Composite ( .SSEC ) climbed 2.4% to a 5.3% weekly gain, its biggest in more than two years, and China-sensitive assets around the world rose sharply.

Bloomberg News reported that preliminary US reviews of audit documents at US-listed Chinese companies – a long-standing point of regulatory tension and risk – had ended ahead of schedule, raising hopes that US officials would be satisfied.

Unsubstantiated social media posts in March aimed at relaxing the COVID rules also fueled optimism all week and gained new momentum on Friday.

A former top Chinese disease control official said at a closed-door conference that major changes to the country’s zero-covid-19 policy would be made within the next five to six months, according to a recording of the session heard by Reuters.

“Any sign that some regulations may be relaxed could be an immediate dose of oil in the grinding gears of the Chinese economy,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

On November 5, the press conference of the Chinese health authorities was in the spotlight.

The gains were broad and overshadowed bearish sentiment in global markets on the prospect of US interest rates rising further than previously expected. Real estate and technology stocks led the way.

Shares of online giants Alibaba ( 9988.HK ) and ( 9618.HK ) each rose more than 10%, while the Hang Seng Tech index ( .HSTECH ) rose 7.5%. Property manager Country Garden Services rose 15% and the mainland developers index (.HSMPI) rose 9%.

Hedge fund manager Lei Ming said the reopening rumor was the impetus for a rebound in an oversold market.

“The main reason for the market jump is that the selling pressure was exhausted after the market fell so much.”

Value gains in Hong Kong, Shenzhen and Shanghai totaled nearly $1 trillion for the week. However, the Hang Seng remains down 30% this year, versus a 24% decline in world shares (.MIWD00000PUS). The Shanghai Composite is down 15% this year.

The rally covered commodity markets, with iron ore futures rising on Friday and China-sensitive stocks listed in London and Europe.

Miners such as Rio Tinto ( RIO.L ) and Anglo American ( AAL.L ) rose sharply, along with luxury retailers such as LVMH ( LVMH.PA ) and Swiss jeweler Richemont ( CFR.S ).

U.S.-listed Chinese stocks, the KraneShares CSI China Internet ETF and the iShares MSCI China ETF ( MCHI.O ), rose in premarket trade, set to post weekly gains after a sharp decline in October.

Strategists at TD Securities continue to expect a gradual easing of zero-Covid restrictions, warning that markets may be slightly disappointed if investors expect something faster.

Market value of Chinese stocks

BUY the rumor

Changes to the COVID policies have not been officially noted. A foreign ministry spokesman said Tuesday he was unaware of the situation when asked about rumors on social media that China plans to reopen from strict COVID restrictions in March.

Bloomberg News reported on Friday, citing unnamed people familiar with the matter, that China is trying to relax rules punishing airlines that carry COVID-positive passengers.

A spokesperson for the Foreign Ministry later said it was not aware of the report and that China’s COVID policy is consistent and clear.

The early results of the audits have not been confirmed by either Chinese or US officials. Markets have desperate reasons for a rally after the Hang Seng hit a 13-year low last month following the Chinese Communist Party Congress.

“I don’t see anything new changing the investment climate of Hong Kong and China,” said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong.

“My only explanation is that sales have been excessive since Congress, some offshore names have been very difficult to value, and there is bottom fishing.”

The currency joined the rally, rising more than 0.5% to a one-week high of $7.2340.

Reporting by Medha Singh in Bengaluru, additional reporting by Summer Zhen in Hong Kong. Written by Tom Westbrook. Edited by Sam Holmes and Saumyadeb Chakrabarty

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