HONG KONG - China’s stocks listed in Hong Kong advanced after the authorities signalled a shift to a pro-growth stance, as they hinted at business-friendly policies and further support for the property market.
The Hang Seng China Enterprises Index rose in Hong Kong, while a gauge of Chinese tech shares trading there gained more than 1 per cent. Both gauges fell last week after several Chinese cities reported a spike in Covid-19 infections.
The policy pronouncement from the Central Economic Work Conference (CEWC) may add further support to Chinese equities after the government loosened virus restrictions in recent weeks. Still, some analysts have warned that the road to recovery is likely to be bumpy as the nation struggles with economic disruptions from Covid-19 waves.
“The policy environment is turning more friendly for China investing,” Citigroup analysts wrote in a note, adding that the tone reinforces the view of a new political economy cycle, pivoting “from risk management to real business with a refocus on economic development”. However, the readout from the meeting sounded pragmatic, making a “bazooka” strategy unlikely, they added.
Economists said the outcome of the conference indicated the focus in 2023 will be on boosting growth, with policymakers likely to target expansion of at least 5 per cent.
Tech shares were among the biggest gainers in Hong Kong. Alibaba Group Holding jumped as much as 5 per cent and Tencent Holdings surged 3.8 per cent, as officials said they would support Internet platform firms in driving economic growth and creating jobs.
But the optimism failed to translate into gains on the mainland, amid expectations that the nation’s exit from its zero-Covid policy would be fraught with challenges. The CSI 300 Index retreated 0.3 per cent while the Shanghai Composite Index declined 0.7 per cent.
“Although the CEWC delivered some meaningful and practical messages, investors are not too excited as the economy in the next three months is likely to be largely affected by the first and second waves of Covid-19 outbreaks with the market to cool after a one-month rebound,” said Jefferies analyst Chen Shujin in a note.
Beijing passed the first peak of infections over the weekend, with more than 40 per cent of the population infected, Ms Chen estimated, citing data from the mini app City Database.
Shanghai, Shenzhen and Guangzhou are similarly headed for a peak in cases.
However, equities may experience a second leg of rebound if traffic in Tier-1 cities recovers soon to validate the success of China’s “fast-spreading, fast-resumption” strategy, she added. BLOOMBERG
