China Stocks Plunge as Xi Doubles Down on Covid Strategy

 

Chinese stocks plunged on Friday after the Communist Party’s Politburo Standing Committee called for people to resolutely stick to the country’s zero-Covid strategy and US delisting worries continued to unsettle markets.

The CSI 300 index of stocks listed in Shanghai and Shenzhen dropped by more than 2.5%, while in Hong Kong the benchmark Hang Seng index fell as much as 3.8%.

The Politburo Standing Committee called on Thursday for people to “resolutely fight all words and actions that distort, doubt and negate China’s Covid-containment guidelines and policies.”

It emphasised the threat to elderly citizens, warning that if the zero-Covid policy was relaxed, “it will inevitably lead to large-scale infections, serious illnesses and deaths. Socio-economic development, people’s lives, safety and health will be seriously affected.”

“In our view, China’s government will clearly keep, if not strengthen, its dynamic ZCS for some time,” Nomura Holdings said in a note, adding that unlike previous meetings the committee on Thursday barely mentioned the impact on growth or the economy.

It said a push for residents to show proof of a negative PCR test within the previous 48 hours to move around and enter any public places would be expensive and may only have limited benefits.

 

ALSO SEE: Shanghai Reports Declining Covid-19 Cases as Leaders Back Policy

 

 

Tech Stocks Slump

Tech stocks fell by 5.5% in Hong Kong, with the Hang Seng Tech Index plunging more than 5.3%.

Internet giant Alibaba led the declines with a fall of more than 7.2%, food delivery app Meituan fell 5.4% and Tencent shed more than 4.4%.

Meanwhile, shares of electric car maker Nio plunged by more than 15% after it was added to a US list of potential delisting candidates.  Nio announced on Friday that it plans a secondary listing in Singapore.

“The delisting danger is haunting Nio’s prospects because the US market is the largest capital source and’s Nio burning through funding,’’ said David Zhang, head of research at Jiangxi New Energy Technology Institute. “Investors are worried about Nio’s fund access and uncertain future sales.’’

 

 

• Jim Pollard and Frank Chen

This report was updated with an additional comment.

 

 

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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.