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Asia equities staged a strong rally today on unconfirmed speculation that the country may finally move away from its stringent COVID Zero policy that has continuously acted as an overhang for the market.
SSE Composite Index, which tracks all stocks that are traded at the Shanghai Stock Exchange, rose 2.6%. Hong Kong’s HSI Index surged as much as 5.2% to record the largest daily gain since May 2009.
A rumor appeared on social media that China formed a “reopening committee,” which was later denied by the Chinese Foreign Ministry Spokesperson.
“I don’t know where you got this information. I truly don’t know anything about this,” foreign ministry spokesman Zhao Lijian said.
The committee is apparently formed to discuss reopening policies as China looks to exit the COVID Zero policy. Influential Grow Investment Group Chief Economist Hao Hong tweeted that Wang Huning, Politburo Standing Member, is leading the “reopening committee.”
“The Committee is reviewing COVID data from US/HK/SG to assess various reopening scenarios, target 03/2023 reopen,” Hong added in a tweet.
Foxconn, Apple’s (NASDAQ:AAPL) major supplier, has been reportedly experiencing issues in iPhone production amid the new tightening measures to curb COVID-19 spread. Disney (NYSE:DIS) was also forced to close its park in Shanghai in recent days.
“I’m not surprised by the rumor circulating online about a conditional reopening,” Liu Xiaodong, a fund manager at Shanghai Power Asset Management, told Bloomberg.
“The state council could be waiting for the deliberation by the team of experts to determine the next step. The market is also willing to buy that an inflection point is near for Covid Zero.”
Today’s rally in Asian equities comes on the same day when the Global Financial Leaders’ Investment Summit is due to begin in Hong Kong.
