China-exposed stocks have rallied twice in the past week on rumours that Xi Jinping is preparing to ease the country’s COVID restrictions.
Those comments have been interpreted by thousands of local government officials as a licence to double down, rather than ease up at a time when daily cases are hitting records. Cases in China hit a daily six-month high of 5643 on the weekend, the government confirmed on MondayThat figure is still half the daily numbers that Victoria and New South Wales are reporting alone, and minuscule for a country of 1.4 billion people.
That kind of sentiment is based more on wishful thinking than anything else. Investors, like many residents of China, desperately want to see an end to zero-COVID, but it is not happening – at least not in the short term.“We continue to believe that, while Beijing may introduce some fine-tuning of COVID measures in coming weeks, those fine-tuning measures could be more than offset by local officials’ escalation on zero- COVID,” Nomura chief China economist Ting Lu says.