ST Note - Has China reached a tipping point with its zero-Covid policy? ST Note - Has China reached a tipping point with its zero-Covid policy? ST Note - Has China reached a tipping point with its zero-Covid policy?

ST Note - Has China reached a tipping point with its zero-Covid policy?

Chun Fei Lin

Singapore Sales Trader

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?

Hang Seng Index
FTSE China A50 Index
Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
- Full disclaimer (https://www.home.saxo/en-mena/legal/disclaimer/saxo-disclaimer)


Boulevard Plaza, Tower 1, 30th floor, office 3002
Downtown, P.O. Box 33641 Dubai, UAE

Contact Saxo

Select region

UAE
UAE

Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

Saxo Bank A/S is licensed by the Danish Financial Supervisory Authority and operates in the UAE under a representative office license issued by the Central bank of the UAE.

The content and material made available on this website and the linked sites are provided by Saxo Bank A/S. It is the sole responsibility of the recipient to ascertain the terms of and comply with any local laws or regulation to which they are subject.

The UAE Representative Office of Saxo Bank A/S markets the Saxo Bank A/S trading platform and the products offered by Saxo Bank A/S.