Chinese stocks surged and the renminbi rose to a 12-week high against the dollar today as authorities in Beijing further relaxed their strict zero-Covid rules following nationwide demonstrations.
Shenzhen and Shanghai over the weekend scrapped the requirement for commuters to present PCR test results to travel on public transport, following similar moves by Tianjin, Chengdu and Chongqing.
Some apartment complexes in Beijing indicated to residents that if they test positive they could quarantine at home rather than at a centralised quarantine facility.
Rising anger at China’s zero-Covid restrictions, which have been in place for three years, spilled over into a wave of nationwide discontent last month, as residents in cities including Shanghai and Wuhan took to the streets.
A fire in the western Chinese city of Urumqi, in which 10 people died, acted as a catalyst for anger directed at the authorities and President Xi Jinping himself.
However, China’s top leadership body has not made a formal announcement on its stance towards the loosening of restrictions but Xi appears to be steering the policy shift, according to people familiar with the matter.
Signs China is beginning to step back from its severe restrictions led economists to upgrade their outlook for growth in the world’s second-largest economy.
Analysts at Morgan Stanley today upgraded their position on equities in the benchmark MSCI China index to overweight from equal-weight. “Multiple positive developments alongside a clear path set towards reopening warrant an upgrade,” they wrote in a research report.
Some of the biggest stock market gains were among Macau’s casinos, which surged on hopes that a relaxation of Covid rules would lead to more travel. Consumer, transport and infrastructure stocks also gained.
Hong Kong’s Hang Seng China Enterprises index jumped 5.1 per cent while the CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 2 per cent.
China’s currency also rallied, with the renminbi rising 1.3 per cent against the dollar to Rmb6.9629 per dollar, the highest level since September.
Go deeper: The recent dissent will go down as a remarkable moment in modern Chinese history, write our correspondents in the country.
Five more stories in the news
1. Canada to send more warships through Taiwan Strait Canada plans to sail more frigate warships through the Taiwan Strait to affirm the waters claimed by China are international after Ottawa released an Indo-Pacific strategy that described Beijing as an “increasingly disruptive” power. “We will continue to enforce the international rules-based order when it comes to the Taiwan Strait,” Canada’s foreign minister Mélanie Joly told the FT.
2. Opec+ ready to adjust oil output as Russia embargo looms Oil prices rose after Opec +, the cartel led by Saudi Arabia and Russia, vowed to stand ready to take “immediate” action ahead of what will be one of the most dramatic shifts in global energy markets in decades. From today the EU will bar seaborne oil imports from Russia and the G7 will impose a price cap on oil exports from Russia of $60 a barrel. Brent crude, the international benchmark, rose 1.7 per cent to $87.02 a barrel earlier today.
3. EU vows to simplify aid rules to compete with Biden’s climate package The EU must “simplify and adapt” its rules on state aid to counteract the competitive effects of the US’s $369bn climate package, European Commission president Ursula von der Leyen said yesterday in her first public response to Washington’s green energy subsidy. EU leaders have said the scheme risks “fracturing” transatlantic unity by luring European companies to relocate.
4. Asset managers pour money into tech platforms Money managers including State Street, Pimco and Amundi are pouring money into digital investment platforms in the hope of emulating BlackRock’s technology business. BlackRock got into the business of software as a service more than two decades ago and now makes nearly 8 per cent of its revenue from selling technology to rival asset managers and other financial institutions.
5. US companies face backlash for bypassing investors on top pay A growing number of US companies — including two backed by British entrepreneur Richard Branson — are expected to face fire from investors in the coming months over a once-obscure pay practice that has let them reward executives without consulting shareholders.
The day ahead
Outlook for markets The optimism surrounding the outlook for the Chinese economy and markets failed to spread into the US and Europe. The strength of Friday’s labour market data dented hopes that the Federal Reserve will slow its pace of interest rate rises.
Economic indicators The Institute for Supply Management and S&P Global will both release their producers’ indices for services. Last week they each reported the first contraction in the US manufacturing sector since the second quarter of 2020. The US commerce department will release new data on factory orders, including durable goods which include items such as cars and washing machines and are a good gauge of business investment.
SCOTUS The Supreme Court will hear oral arguments in the 303 Creative LLC vs Elenis case. It centres on whether a Colorado-based website maker had the right to refuse to offer services for same-sex weddings. We may also get a verdict in the New York criminal tax fraud trial involving the Trump Organization.
FT Business Book of the Year The winner of the FT’s prestigious award will be announced later today at a ceremony in London. Here is a list of the six finalists. The prize for the Bracken Bower Prize, which is awarded to an author aged under 35, will also be announced.
World Cup The knock out stages of the Qatar World Cup continue today, with Japan taking on Croatia in the early kick off and Brazil playing South Korea later. Yesterday saw England cruise to victory against Senegal, setting up an eagerly anticipated contest with World Champions France on Saturday. The Netherlands will play Argentina on Friday in the other quarter final that has been decided.
What else we’re reading
FT Person of the Year: Volodymyr Zelenskyy Written off by many before the February invasion as something of a joke, the 44-year-old president of Ukraine embodies the resilience of his people and has become a standard bearer for liberal democracy. He has earned a place in history for his extraordinary display of leadership and fortitude.
How Sam Bankman-Fried blurred lines between FTX and Alameda In an interview with the Financial Times, the FTX founder admitted to closer involvement in financial decisions at Alameda Research, the trading firm he majority-owned, than has previously been disclosed. The comments were part of a contrite media campaign launched by the 30-year-old in the past week following the collapse of his $32bn crypto empire. “I fucked up big,” he said, “and people got hurt.”
The hunt for the next market fracture With soaring inflation, rising rates and fiscal shocks sucking liquidity out of markets and sudden price moves provoking vicious margin calls and forced sales, where will the next shock come from? Here are the corners of the market that policymakers and investors are watching closely.
Wall Street braces for big bonus cuts After a dismal year in which dealmaking has dried up and investment banking revenues dropped by half, Wall Street is bracing for a huge cut to bonuses. The situation is worst for bankers who work on mergers and acquisitions and initial public offerings, reports our US Financial Editor.
Why HR needs to go back to basics Too many leaders have been tempted to think that a book club, a meditation app or a weekly yoga session will be enough to make their restive troops more loyal. But post-Covid and in a tight labour market HR departments are overwhelmed. If they can get the basics right, they might have to spend less time and energy on hollow perks, writes US Business Editor Andrew Edgecliffe-Johnson.
Plus: Does the 4-day week actually work? 70 UK companies signed up to a trial and researchers measured the impact of the shorter week. Here’s what they discovered.
Life & Arts
No matter how old we get, there is nothing like family to remind us that we are still hosts to multiple versions of ourselves, writes Enuma Okoro. Through the medium of art, Enuma offers some advice on how to survive the holiday season.
Source: Economy - ft.com
