China eases COVID-19 rules on Wednesday, 7th December 2022. What has rules have changed? Well, people in China can now self isolate at home if they have mild or no symptoms. They have better accessibility to fever and flu medicines without having to be screened for COVID-19 at fever clinics. Lock downs period are shorter and there will be no more mass testing.
This post is not about the changes in COVID-19 rules but more interestingly, I will like to know the impact of such news to the Hang Seng stock market. The Hang Seng Index is a good measure of the Hong Kong stock market sentiments.
As you can see from the Hang Seng Index chart below, the index is on the uptrend on the earlier part of the day (7th December) when the news was announced. But the Hang Seng Index went south and closed lower at the end of the day.
In my opinion, this means that investors have mixed feelings on whether the relaxation of rules will turn the economy around.
Now, let us take a look at some of the popular giant stocks listed on the Hong Kong stock exchange.
Tencent Holdings Ltd (HKEX:00700)
Alibaba Group Holding Ltd (HKEX:09988)
Meituan (HKEX:03690)
Summary of China Eases COVID-19 Rules
As you observe from the 3 stocks above, the chart looks similar to the Hang Seng Index.
In summary:
- Hong Kong investors have mixed feelings. They started with a positive outlook but sold down on fears.
- It may be too early to jump in to Hong Kong stock market thinking a recovery is in sight. But Hong Kong stock market is cheap now so if you have spare cash, deploy using the tranche strategy.
- Further positive news such as the China border reopening can simulate economy recovery and Hong Kong stock market investor’s confidence.