Chinese stocks shot higher today, amid rumours that the country could begin to relax its stringent zero-Covid policy early next year and hopes for an easing of US-China tensions.
The Hang Seng surged 5.3 per cent and notched its biggest weekly gain in 11 years. The Shanghai Composite rose 2.4 per cent for a 5.3 per cent weekly gain, the largest in more than two years. China-sensitive assets around the world rose sharply.
The gains for Chinese shares came as German chancellor Olaf Scholz became the first western leader to meet President Xi Jinping since the Chinese president embarked on an unprecedented third term as leader of the Communist Party.
Tension between the west and China has been exacerbated this year by Xi’s close relationship with Vladimir Putin and his refusal to condemn Russia’s invasion of Ukraine.
But rumours circulating on social media today that Zeng Guang, the former head of China’s Center for Disease Control and Prevention, had said at a conference held by Citigroup that the country could reopen its border with Hong Kong in early 2023, with more relaxations on international border controls to follow, boosted investor sentiment. Citigroup refused to comment.
Stock markets in China have also been helped this week by reports that local authorities in the country have approved a new vaccine to tackle coronavirus. The Hong Kong-listed shares of CanSino Biologics rose as much as 70 per cent on Wednesday after the Chinese pharma group said its inhaled Covid-19 vaccine had been approved for use in some cities.
A summit of global financiers in Hong Kong also helped lift stock markets in the city and on the mainland, despite a handful of executives withdrawing from the event at short notice.
Separately, traders said shares were getting a lift today from a Bloomberg report, citing unnamed sources, stating that a US review of Chinese corporate audit papers in Hong Kong had finished early. It was viewed as a sign of progress in the process to prevent the US delisting of hundreds of stocks, from Alibaba to Yum China.
Calculations by the Financial Times based on exchange data show mainland investors in China bought roughly $3.7bn worth of Hong Kong-listed stocks this week.
Five more stories in the news
1. Exclusive: HSBC investor Ping An calls for ‘aggressive’ cost cuts The bank’s largest shareholder has called for “much more aggressive” cost reduction and job cuts, while warning that its board lacks experience in Asia. Chinese insurer Ping An has been privately urging HSBC to hive off its Asian operations to boost returns.
2. Mass lay-offs begin at Twitter A plan to cut about 3,700 jobs at Twitter has begun. Staff at the social media company will be notified of their employment status by 9am Pacific time on Friday, according to an email seen by the Financial Times. One staffer said many employees lost access to their corporate Slack account and email last night. This is a developing story. For updates follow our live blog.
More technology lay-offs: Ecommerce platform Stripe and ride-hailing service Lyft yesterday announced hundreds of staff redundancies and Amazon said it would pause new hires in its corporate workforce.
3. Jeff Bezos and Jay Z prepare bid for Washington Commanders NFL team The founder of Amazon and the music mogul are teaming up to acquire the Washington Commanders in a bid that could value the National Football League team at up to $6bn, said two people briefed about the matter. Josh Harris, the billionaire private equity executive who left Apollo last year, is also competing to buy the team from existing owner Dan Snyder, who has been forced to sell after being engulfed in a financial scandal.
4. Judge authorises monitor to oversee Donald Trump’s businesses A New York judge will allow an independent monitor to oversee Donald Trump’s business interests and has imposed restrictions on the Trump Organization’s assets pending a trial over allegations of widespread fraud.
5. Saudi Arabia agrees electric vehicle partnership with Foxconn Saudi Arabia’s sovereign wealth fund has agreed a deal with Apple partner Foxconn to produce electric vehicles in the kingdom as part of its push to diversify its oil-dependent economy. The joint venture between Saudi Arabia’s Public Investment Fund and Foxconn will operate under the brand name Ceer, which sounds like the word for “drive” in Arabic.
How well did you keep up with the news this week? Take our quiz.
The days ahead
US non-farm payrolls: US job growth is expected to have cooled for the third straight month, a sign that the Federal Reserve’s aggressive monetary tightening has finally started to restrain a historically tight labour market. Canada is also anticipated to report slowing employment growth with 5,000 jobs forecast to have been added in October, down from 21,000 in September.
Earnings The maker of Hershey’s Kisses and Jolly Ranchers should provide insights into consumer demand, including the outlook for the holiday season based on Halloween trends. Joining Hershey in reporting before the bell are Royal Caribbean, Blue Owl Capital, Duke Energy, Dominion Energy, DraftKings, Liberty Media, CBOE, Huntsman and Canopy Growth.
Berkshire Hathaway Warren Buffett’s conglomerate will report third-quarter earnings tomorrow. Investors will be watching for any signals on share buybacks, which Buffett often adjusts when he thinks public markets are overvaluing or undervaluing the company. Due to the vast array of businesses in Berkshire’s portfolio, investors will also be watching for potential signals on the health of the economy.
What else we’re reading
Starbucks’ Schultz: ‘The soul of the company was being compromised’ Four years after retiring and three since his abortive presidential campaign, Howard Schultz is back for a third shift as Starbucks’ chief executive. In an interview with the Financial Times he discusses succession, a barista revolt, the impact of the pandemic and the challenges ahead for the global coffee chain.
Republicans benefit in first ‘post-pandemic’ election High inflation and poor school test results as well as rising levels of crime have replaced Covid-19 on the list of voter concerns. But all those issues have been exacerbated to some degree by the pandemic and its aftermath. And it is Republican candidates who are reaping the benefits.
Luxury brands look to expand across US From Fifth Avenue to Fort Worth demand for expensive handbags and clothes has been surprisingly strong since the pandemic. And far from entrenching in the face of the economic gloom hanging over the US economy, the world’s largest luxury goods groups are planning to open dozens of new stores across the country.
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Kherson residents describe reign of terror under Russian rule As Ukraine pursues its counteroffensive in Kherson, those living in the southern region have said the occupying authorities are terrorising anyone who defies them, with an alleged public hanging of a defiant woman just one example of Moscow’s brutal occupation.
Executives wake up to their collective blind spots We learnt from the financial crisis that when networks lack diversity, they are vulnerable to a single shock, writes Gillian Tett. But what is striking, in retrospect, is that the non-financial world seems to have learnt so little from it.
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Source: Economy - ft.com
