The Chinese Foreign Ministry is “not aware” of any committees tasked with coordinating a grand reopening for the country after nearly three years of rolling lockdowns to control a virus that originated on Chinese soil. But the market liked the rumor.
Hong Hao, a famously outspoken analyst who left Bocom this year after his Chinese social media accounts were suspended in apparent connection with posts about the deleterious economic effects of lockdowns, on Tuesday told his 129,000 Twitter followers about a “Reopening Committee” allegedly led by Wang Huning, the Standing Committee’s academic ideologue and long-serving Party éminence grise.
“The Committee is reviewing COVID data from US/HK/SG to assess various reopening scenarios,” Hong said, adding that the “target” date for a reopening is March of 2023. He was pleased with the market reaction he managed to engineer. “CNH is a picture of risk-on,” he said, an hour later, adding that the Hang Seng was up sharply, as were Mainland shares.
Indeed, Chinese shares traded in Hong Kong managed a rousing session, rising almost 7% at the highs. The figure (below) gives you some context.
The gauge trimmed gains to “just” 5.5% by the close, but at session highs, Tuesday counted among the largest rallies in over a decade.
City shares plunged last month after Xi Jinping’s leadership reshuffle found moderates heading for retirement, replaced with loyalists, including Shanghai Party secretary Li Qiang, who oversaw the lockdowns Hong criticized. “Nice for a change after weeks of extended and indiscriminate selling,” Hong said Tuesday. Mainland shares were dramatically higher, rising the most since March.
Needless to say, if or when China does decide to abandon COVID zero (and it surely won’t be presented as an abandonment), risk assets and commodities would likely stage meaningful rallies. The Party congress was widely viewed as delaying any exit from the strict containment protocols favored by Xi, a bitter disappointment given that many would-be “experts” spent the months ahead of the twice-per-decade gathering speculating on the prospects for a loosening of restrictions once Xi’s pathbreaking third term was secure.
Since the congress, China appeared to double down on virus curbs, which are in place in one form or another in Guangzhou, Shanghai, Zhengzhou and, I imagine, other locales. Just Monday, Xi locked everybody in Shanghai Disneyland (again) over a single case traced to the park. Visitors couldn’t leave without a negative test. A year ago (to the day) tens of thousands of people were trapped in the resort, tested, and shipped home on more than 200 specially chartered busses. Then, as now, everyone was negative.
“In order to follow the requirement of pandemic prevention and control, Shanghai Disney Resort, including Shanghai Disneyland, Disneytown and Wishing Star Park will be closed starting Monday, October 31, 2022, with immediate effect,” Disney said, in a notice posted to the park’s official website Tuesday. Disney apologized for “the inconvenience,” promised refunds and thanked patrons for their “understanding and cooperation.”
