Chinese stocks are rallying as Shanghai eases pandemic restrictions. And while Chinese equities enjoyed gains for the fifth consecutive week, tech shares also rallied in Hong Kong to the highest in nearly four months.
The CSI 300 Index gained 1.1%, adding 4% in three sessions, led by consumer shares. In addition, Hong Kong’s Hang Seng index was up 2.35% at the end of trading on Monday, while the Hang Seng Tech index popped by 4.71%. Alibaba’s shares in the city rose 3.7% while Meituan was up 3.5%. This rally is taking place as Shanghai’s leader declared victory in defending the financial hub against COVID and will this week allow indoor dining in restaurants considered to be in low-risk areas.
“We are inclined to put more money into China again, depends on the portfolio,” said abrdn plc’s regional Chairman Hugh Young in an interview with Bloomberg on Monday, adding that while “it’s very hard to be super bullish about anything at the moment,” valuations in China are reasonable and the investing landscape could improve.
This rebound, which kicked off in April while stocks from other countries were selling off, is picking up steam due in part to an improved economic outlook and a continued fiscal stimulus. President Xi Jinping’s scheduled trip to Hong Kong and easing pandemic restrictions are also serving as a boon to stocks. And in an attempt to balance its zero-COVID policy against pressures it is facing on its economy, China’s National Health Commission said on Tuesday it would loosen its quarantine requirements for international travelers.
“Sentiment around China has been negative for so long that severe pessimism has set in. But the reality is that we are starting to see real green shoots and catalysts emerge,” said Kevin T. Carter, founder and CIO of EMQQ Global. “COVID lockdowns are loosening. There are signs that the crackdown in the tech space is decelerating. Valuations are very low, and expectations are even lower. Companies in the space are buying back their own stocks at record levels.”
More than half of the assets in EMQQ Global’s Emerging Markets Internet & Ecommerce ETF (NYSE Arca: EMQQ) are weighted toward China. By focusing on the internet and e-commerce in emerging markets, EMQQ looks to capture the growth and innovation happening in some of the largest and fastest-growing populations in the world.
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