(Bloomberg) — Chinese equities overcame an early bout of volatility to advance on the first day of the new year as optimism grew that Covid infections may have peaked in some parts of the nation.
Most Read from Bloomberg
The Hang Seng China Enterprises Index, which tracks Chinese firms listed in Hong Kong, closed 1.9% higher in its best first-day trading performance in any year since 2018. On the mainland, the benchmark CSI 300 Index climbed 0.4%.
After initial jitters that China may struggle to exit its Covid Zero policy, investors are growing increasingly confident that the final outcome will be positive for the economy and corporate earnings. A recovery in subway use in nearly a dozen major cities and the peaking of the virus outbreak in the southern manufacturing hub of Guangzhou are reinforcing these expectations.
READ: IPhone City is Back at 90% Capacity After Covid Turmoil Subsides
“While it is inevitable to see further surges and more widespread infection at the initial stage of opening, the outlook for the Chinese economy has brightened for 2023,” strategists at Saxo Capital Markets wrote in a note. “In addition to the reopening, China has intensified its effort to support the distressed property sector and given property developers access to credit and equity financing which had been denied to them for the most part of 2022.”
Bets on China’s reopening saw the Hang Seng gauge surge 36% in the last two months, beating a broader Asian index by more than 20 percentage points. The HSCEI measure is expected to rebound in 2023 after capping a third straight year of declines — a record losing run since its inception in 1994.
Mainland investors bought a net HK$4.2 billion ($537 million) of Hong Kong stocks via the trading links on Tuesday, the biggest one-day inflow since Dec. 12, according to data compiled by Bloomberg.
Story continues
READ: China Stock Investors Eye Better 2023 After $3.9 Trillion Rout
Signs of a further easing in China-US tensions also helped underpin gains in equities. New Chinese Foreign Minister Qin Gang offered effusive praise of…
..
