Flash Market Update: Hang Seng
Chinese stocks and commodities soar on speculation Xi's lockdown may end
The Hang Seng Index soared 5.36% overnight on reports that the Communist Party newspaper, the Global Times, said local government officials were instructed not to impose excessive restrictions to curb Covid infections, according to AP News.
As opposed to lockdowns that cripple the economy, the Global Times said the Chinese National Health Commission had asked local governments to curb Covid outbreaks but use the "minimum scale affected, and the shortest time and lowest cost possible.”
As we discussed in a recent post, the big economic issue in China has been Xi’s stronghold on the Chinese people and it’s economy via his continuing zero-Covid policy.
If there is indeed to be an end to the lockdown in China this may bode well not only for the Hang Seng and other emerging markets, but perhaps also for energy and commodity stocks as well as for the general global economy.
In the US pre-market this morning we see big moves in prices including the following:
Crude Oil: +3.61%
Silver: +2.68%
Copper: +5.44%
iShares MSCI China: +5.59%
Alibaba: +9.03%
Baidu: +8.27%
Now whether or not the news out of China is perfectly accurate, the move in asset prices this morning suggests even more clearly that an actual end to the Chinese lockdown could indeed have a significant positive impact on markets and the economy.
In our Portfolio we have been gearing up for such news and we feel we are in a great position to benefit from such action should this continue to play out.
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