Chinese and Hong Kong stocks rallied on Monday and the renminbi jumped against the dollar, a positive sign of returning investor confidence amid rising public discontent and ongoing economic turmoil from years of strict blockade.
The zero-covid curbs are being relaxed by China.
On Monday, Hong Kong's Hang Seng index rose 4.5% and China's CSI 300 index rose 2%, both their highest levels in six months.
On Monday, the renminbi was up more than 1% against the U.S. dollar, moving past 7 to the U.S. dollar.
With hopes of increased Chinese demand, oil prices jumped, with global benchmarkBrent and U.S. benchmarkWest Texas Intermediate both up more than 2%.
Morgan Stanley upgraded Chinese equities to overweight on Sunday after almost two years at an equal-weight position.
Goldman said on Monday that there was a better chance that China would abandon its zero-covid policy before April.
Investment firms don't like the idea of China reopening. Many economists and health experts think restrictions will stay in place until the middle of the next decade. The road to reopening may be gradual, painful and bumpy, according to an economist for a Japanese investment bank. According to the Wall Street Journal, the current market optimism is exactly what we saw in some other markets around the world.
Market optimism and optimistic comments from investment firms come as part of an increasing bullish attitude towards China from global investors. China's policies are geared towards eliminating, rather than controlling, Covid, and have been applied harshly and with broad strokes. The economic impact of zero- Covid reaches far beyond China's borders and threatens the global recovery. It has led to the shutdown of factories, cities and other economic hubs and influenced the import and export of goods, which has caused global supply chain issues.
There were waves of protests across China last week. The demonstrations are one of the largest displays of civil unrest in mainland China for a long time. Protesters demanded Beijing drop the curbs, which have been criticized outside of China as unsustainable and ineffectual. While still adhering to the policy, Beijing has begun to show signs that it is changing its approach.
The new easing measures could be announced as early as Wednesday. The 20 already unveiled in November could be supplemented by 10 new measures, according to two sources. Eliminating the need to show a negative test in order to use public transportation is one of the measures already in place.
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