Reopening hopes catapult Chinese share prices

Hong Kong stocks rose on Monday (December 5) after several Chinese cities announced plans to ease their Covid rules and restrictions over the weekend, including new provisions to allow infected people to quarantine at home and skip regular Covid tests.

The Hang Seng Index, the benchmark of Hong Kong’s stock markets, rose 842 points to close at 19,518 on Monday.

Among the market gainers, Ali Health rocketed 19.9% to HK$8.69 while Alibaba Group rose 9.3% to HK$92.65. Xiaomi Group was up 13.6% to HK$11.5 while JD.com closed up 11.2% to HK$241.6. Longfor Properties surged 17.1% to HK$26 and Country Garden was up 8.8% to HK$3.1.

At the same time, some Chinese cities are still lagging behind in relaxing their Covid rules in wake of recent Covid protests that have rocked national stability in recent days. On Sunday, hundreds of university students protested on a campus in Wuhan, reputedly the original epicenter of the epidemic, urging the school to end its lockdown measures.

They rallied because the Wuhan university’s administration would not allow them to return home after hundreds of positive cases were identified on the campus. Media reports said the school’s management later agreed to end the lockdown and allow students to study online or in the classroom.

Due to protests and riots at a Foxconn factory in Zhengzhou last month, Apple Inc is reportedly accelerating plans to relocate some of its production lines from China to other countries including India and Vietnam, according to a Wall Street Journal report.

The company said it planned to produce 45% of its iPhones in India and most of its computers, watches and AirPods in Vietnam. The Zhengzhou-based Foxconn factory will only be able to resume full production at the earliest in late December or early January, Reuters reported.

Chinese medical experts said there was still room for China to further relax its Covid rules as the coronavirus is now less pathogenic with the Omicron. Since early 2020, China had been using a health code system to locate the close contacts of the infected.

A person is given a red code after he or she tests positive while people in the same building would be given a yellow code, which often limits their freedom of movement. Moreover, people in many cities are or were required to take PCR tests every two days in order to use buses and trains or go to supermarkets and drugstores.

Now, from Monday, people will not be required to show negative PCR test results to use public transport or go to parks or tourist sites, the Shanghai government said in a statement on Sunday. However, they will still be required to wear masks, keep a social distance and show a green health code in public places.

Shenzhen also canceled its PCR test requirements for public transport users but maintained its green code system.

Hangzhou, where Alibaba’s headquarters are located, said Sunday that people would not have to show a green code before using public transport or entering shopping malls from Monday. A green code is needed only if people want to enter elderly care homes, schools and nurseries.

In Zhengzhou, people will not need to show a negative PCR test result, but rather only a green code to use public transport and enter cinemas, libraries, sports centers and restaurants, in line with the new orders being implemented in Beijing and Shanghai.

All these announcements came after Chinese Vice Premier Sun Chunlan said on November 30 that China’s Covid battle had entered a “new stage” with “new tasks” as the coronavirus was now less pathogenic.

China recorded a total of 29,724 cases on Sunday, including 25,477 asymptomatic cases. No Covid-related deaths were reported.

Wang Guiqiang, a medical expert with the Comprehensive Team for Joint Prevention and Control Mechanism for Covid-19 under the State Council, told mainland media that most Covid patients could recover by taking Chinese medicine while high-risk groups could take prescription Covid medicine.  

China’s perceived as mixed messaging over whether it is maintaining or loosening its “zero-Covid” policy has whipsawed markets in recent weeks.

The Hang Seng Index fell to 14,687 on October 31, the lowest in 13 years, as Beijing said it would maintain its zero-Covid policy for some time. But it softened its stance last week after Covid protesters, many of whom held white papers in an expression of tacit defiance, rallied in cities across the country in late November.

Since late October, the Hang Seng Index has rebounded by 32.9% while the Shanghai Composite Index has gained 11%, thanks in part to a softening of the US dollar.

While many cities have started to ease their anti-epidemic rules, some cities have still been slow to implement the central government’s 20-point notice, which was unveiled on November 11 to call for a limiting of lockdowns. 

Zhang Wenhong, chief of the Infectious Diseases Division at Shanghai’s Huashan Hospital, said China would from now not focus on achieving zero cases or conducting mass PCR tests but rather aim for a low death rate among Covid patients.

He said data showed without elaborating that using a different type of Covid vaccine for booster shots could help reduce serious cases. 

Read: Protests push policy as ‘zero-Covid’ eased in mild cases

Follow Jeff Pao on Twitter at @jeffpao3