Chinese stocks in Hong Kong jumped as the world’s second-largest economy moved to reopen its borders to the outside world, dismantling the remnants of the Zero Covid policy.
(Bloomberg) — Chinese stocks in Hong Kong jumped as the world’s second-largest economy moved to reopen its borders to the outside world, dismantling the remnants of the Zero Covid policy.
The Hang Seng China Enterprises Index gained as much as 3% before trimming gains as traders returned from a holiday. Shares related to tourism and retailers rallied, with a Bloomberg gauge tracking six casino operators in Macau briefly rising more than 5%.
China is set to emerge from years of self-imposed global isolation as the government removed quarantine requirements for inbound travelers from Jan. 8, in addition to re-issuing passports and travel permits to Hong Kong. The moves may further reinvigorate Chinese shares after the nation’s worsening outbreak and disruptions to economic activity cooled sentiment.
The government will also resume express checkpoints on the borders with Hong Kong and Macau on Jan. 8, the National Immigration Administration said.
READ: China Tourism Stocks Rally as Nation to Issue New Passports
The latest policy announcements are “a catalyst for market rally as the reopening theme enhances growth momentum and positions China for an economic rebound in 2023,” said Banny Lam, head of research CEB International Investment Corp Ltd.
The Hang Seng China gauge has gained about 6.5% this month following a 29% rally in November. Markets in Hong Kong opened for the first time this week after a Christmas break. On the mainland, the CSI 300 Index declined on Wednesday, on track to end a two-day advance.
Sentiment was more downbeat across Asia as investors focused on the potential for higher inflation spurred by China’s reopening. Most markets traded lower apart from Hong Kong.
“It’s still important to keep an eye on whether the healthcare end of things can keep pace and how the reopening translates into fundamental data for consumption and trade,” said Christina Woon, investment director for Asian equities at abrdn plc. “The road to a full reopening is bumpy, as we have seen across the world.”
(Updates with comment)
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