U.S.-listed Chinese stocks had their best week since at least March on Friday, with one of the popular ETFs posting its biggest weekly gain since 2011, while U.S. stocks rose from gains rebounded from a sharp sell-off last week.
The KraneShares CSI China Internet ETF ( KWEB ) rose 6.3% on Friday and was up nearly 25% for the week, its biggest weekly gain since the week ended March 18, when it rose 28.8%, according to FactSet data. The closely watched ETF tracks the performance of some of the largest Chinese stocks listed on American Depositary Receipts (ADRs).
Other China-focused ETFs and companies also recorded their best performances for as long or longer.
Meanwhile, the iShares MSCI China ETF (MCHI) rose 2.5% on Friday, bringing its gain for the week to 12.3%. The gain surpassed the 12.2% gain for the week ended Nov. 4, making it the ETF’s biggest weekly gain since October 2011.
Chinese concept stocks listed in the United States also rose sharply this week. Weilai (NIO-US) shares rose 8.6% on Friday, and this week’s increase reached 29.1%, almost exceeding the increase in the week ended March 18. Alibaba (BABA-US) rose 4.8% on Friday and 19.3% for the week, while Tencent (TCEHY-US) rose 3.7% and rose more than 12% for the week.
Anti-epidemic policies are expected to be relaxed
Chinese stocks have fallen sharply since the start of the year, largely due to strict lockdowns and growing confrontation between Xi Jinping’s government and the West, with the U.S. Biden administration imposing more bans to cut off China’s access to key semiconductor technologies.
Thomas Matthews, senior market economist at Capital Economics, pointed out that this week’s rebound comes from expectations that the Chinese government may significantly relax epidemic prevention restrictions, and the slowdown in the Fed’s escalation will also benefit Chinese companies.
China-focused ETFs saw strong inflows of $1.2 billion this week, according to a report by Jefferies global equity strategist Sean Darby.
Meanwhile, Chinese President Xi Jinping said during a meeting with European Council President Michel in Beijing on Thursday that the less lethal Omicron is now the main coronavirus strain prevalent in China, a European official said. Gabriel Wildau, managing director of consultancy Teneo Holdings LLC in New York, said it appeared to be another sign that China was laying the groundwork for an exit from zero.
Restrictions loosened everywhere
Mainland media revealed that in the past few days, many places in China have further optimized and adjusted epidemic prevention and control measures, involving travel, medical treatment, drug purchase, nucleic acid testing and other aspects.
The Beijing Municipal Transportation Commission issued on December 2: Starting from the first train on December 5, bus and subway operators shall not refuse to board passengers without a 48-hour negative nucleic acid certificate when verifying their health information.
On December 3, the Guangdong Shenzhen Municipal Transportation Bureau issued a notice: From now on, take public transportation, subways, taxis, online car-hailing and other means of transportation in the city, scan the code of the venue, check the green code of the health code, and no longer check the nucleic acid test certificate. .
The Chongqing Municipal Health and Health Commission stated on December 2 that public transportation in Chongqing has gradually resumed. Citizens only need to go through the Yukang code inspection when taking transportation, but a 72-hour nucleic acid negative certificate is required to enter public places.
Compared with the previous dynamic general policy of “zeroing out”, the implementation restrictions in various places have been relaxed. On December 2, officials at the Guangzhou epidemic prevention and control press conference stated that the total number of local positive infections and asymptomatic infections was about 90%. Experts pointed out that Omicron has very low viral power, and citizens can stock up on medicines for common colds.
