China, HK stocks extend rally as Beijing eases COVID rules



(UPDATE PRICES AT CLOSE)

SHANGHAI, Dec 9 (Reuters) - China and Hong Kong stocks rose on Friday as investors continued to bet on companies that stand to gain from China's COVID policy pivot, driving up consumer and healthcare stocks.

Property shares surged on signs of fresh support by Chinese state banks, as well as developer Sunac China's 1918.HK restructuring proposal.

China's benchmark CSI300 Index .CSI300 gained 1% to a 12-week high, while the Shanghai Composite Index .SSEC edged up 0.3%.

Hong Kong's Hang Seng Index .HSCI climbed 2.3%, as an index tracking mainland developers .HSMPI surged 10% to a four-month high.

Investors are growing optimistic about China's recovery, as authorities dramatically loosened strict COVID-19 measures this week, slashing testing, quarantine and lockdown requirements.

The government also plans to boost vaccination, especially among the elderly, measures investors see as conducive to an eventual reopening of the economy.

"With a set reopening path, we believe Chinese equities will outperform the broad EM and global markets," Morgan Stanley said in a note to clients on Friday.

"We believe execution follow-through and other factors would help lift market sentiment," said the Wall Street bank, which upgraded Chinese equities earlier this week.

Reflecting increasing optimism toward China, the country's stock market recorded $8.5 billion in foreign inflows in November, according to the latest data from the Institute of International Finance. That is a stark contrast to heavy outflows in the first half of this year.

Investors are looking beyond data showing lingering weakness in the economy, as China's factory-gate prices recorded an annual fall for a second month in November while consumer inflation slowed.

Investors continue to pile into healthcare .CSI300HC and consumer stocks .CSICS , betting they will benefit from eased COVID rules.

Property shares extended their rally as more state banks vowed support to the struggling sector.

Sentiment was also aided by news that Sunac 1918.HK proposed a preliminary restructuring framework that includes a deleveraging plan to convert $3 billion-$4 billion of existing debt and certain shareholder loans into shares or equity-linked instruments.
Reporting by Shanghai newsroom; Editing by Jacqueline Wong and Raissa Kasolowsky

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.