(Bloomberg) – Chinese stocks traded volatile on Wednesday after a dizzying rally as investors assessed the country’s path to reopening amid a spread of infections and measures to quell Covid protests.
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The Hang Seng China Enterprises Index swung between gains and losses after rising around 6% in the previous session. The gauge rose more than 25% in November, on track to cap its best month since late 2003.
Sentiment towards the nation’s assets has improved this month as Beijing eased some of its tough virus approach. The shift has raised hopes that China is laying the groundwork for an eventual exit from Covid Zero, prompting traders to place bets even as a spike in infections and nationwide protests suggest the The road to reopening will be strewn with pitfalls.
Read: U.S.-listed Chinese stocks have their best month ever
“In terms of information flow, the situation is clearly fluid,” wrote Chris Weston, head of research at Pepperstone Group Ltd., in a note. “The broad consensus remains that the reopening, although not linear, should really kick off” after the main political meetings in March 2023, he added.
U.S.-listed Chinese stocks are also heading for their best month ever, with the Nasdaq Golden Dragon Index up 30% this month, a dramatic turnaround from October’s 25% plunge. .
With the timing of China’s reopening highly uncertain, investors took inspiration from every little development in Covid policy. Markets rallied on Tuesday as the leading health body said it would boost vaccinations for the elderly, while warning against excessive control measures.
The mood turned more cautious on Wednesday as a heavy police presence deterred repeats of weekend protests and the Communist Party’s top police and public security body vowed to crack down on ” hostile forces” and their “sabotage”.
–With the help of John Cheng.
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