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Summary: China zero-Covid protests erupt in China over the weekend, in an unprecedented challenge to leader Xi Jinping’s zero-Covid policy. China officials soften tone on Covid curbs seems as an indicator for the China reopening. China’s manufacturing and services activities shrank in November to 7 months low.
China zero-Covid protests erupt in China over the weekend, thousands of people joined protests in cities across China from Hotan in the far west to Shanghai and Beijing, in an unprecedented challenge to leader Xi Jinping’s zero-Covid policy. Public protest is exceptionally rare in China and the protests were triggered by a deadly fire in Urumqi, Xinjiang last Thursday. The fire killed at least 10 people in an apartment building which leading the public anger after video of the incident showed that lockdown measures had delayed the firefighters from saving the victims, although the authorities deny this.
China State Council held a press conference on 29 November after the protests broke out. China reported that 65.8% of the people above 80 years old had received booster shots. It is a significant progress up from 40% as of 11 November as it has been challenging for the China government to get people above 80 years old to get vaccinated. China also announced plans to boost vaccinations for the elderly. This has been seemed as an indicator which is seen as important for the China reopening as experts had previously said it was necessary before any potential relaxation of restrictions.
China November manufacturing PMI contracts further to 48.0 against 49.2 in October and November services PMI contraction deepened to 46.7 against 48.7 in October. China’s manufacturing and services activities shrank in November to 7 months low.
After China's zero-covid protests broke out, major indexes have corrected. Hang Seng Index (HSI) has dropped 1.6% on Monday and rebounded furiously after China officials softened their tone on covid curbs. HSI rose 26% in November, the biggest monthly gain since October 1998. HSI’s P/E ratio is around 6.85 with prices breaking the resistance at around the 18,445 level. Can this rally sustain?
2024: The wasted year
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
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