A meeting by Chinese health officials on Tuesday had some sections of financial markets cheering, amid hopes that officials may start to shift toward more effective COVID-19 policies.
China’s adherence to its strict zero-COVID plans appeared to reach a boiling point with citizens as demonstrations against the lockdown rules intensified over the weekend. Those protests seemed to stem from a deadly apartment block fire in the city of Urumqi that killed 10 people.
Amid calmer streets on Tuesday and heavy police presence imposed to clamp down on protesters, the markets turned to a Tuesday morning meeting with China’s National Health Commission.
The media briefing announced a push to vaccinate the elderly and cut the amount of times between boosters to three months for over 80-year-olds, as the country deals with its worst virus outbreak thus far in the pandemic.
The significance of boosting vaccination rates among the elderly could be explained by China having a large proportion of the population made up of over 65s – 200 million in 2021. China has also received criticism on its zero-COVID policy by Dr. Anthony Fauci, who has said the strategy “doesn’t make public health sense.”
Chinese markets had already been pushing up higher early on Tuesday in anticipation of the health authorities briefing. The country’s consumer stocks rallied on the announcement, with shares of China COVID-19 vaccine company CanSino Biologics
jumping more than 6%.
European markets also got a lift with the FTSE 100
up 1% and the pan-European Stoxx 600
was up 0.53% in early Tuesday trading, while the Hang Seng Index
closed up 5.2%.
hit highs of 0.7% to $0.1397 against the U.S. dollar “as the risk-on mood dampens investor appetite for the greenback,” said Victoria Scholar, head of investment at interactive investor.
The development is positive given the prevalence of multigenerational households in China, and helps a push toward an eventual reopening of the economy, said Brian Tycangco, analyst at Stansberry Research, in a comment on Twitter.
Peter Losif, Senior Research Analyst at IronFX, said in a note ahead of the conference that there may be some positive effect on “riskier assets” if market sentiment improves regarding the strict COVID rules in China.
“Should the market sentiment continue to improve we may see a positive effect on riskier assets, while safe havens may experience outflows, while on the commodities front oil prices may get some support from a possible easing of COVID measures in China, albeit at this point we have to note that EU’s intentions for a price cap on Russian oil may continue to weigh on the commodity’s price,” he said.
Analysts have also been discussing the impact of further protests and prolonged lockdowns in the country.
Susannah Streeter, senior investment and markets analyst t Hargreaves Lansdown, said there was “every chance” of more protests, which could complicate economic recovery, she says. Lockdowns have already disrupted shipments for companies such as Apple
“Worries about fresh supply chain snarl ups have been weighing on investors’ minds as fresh waves of infections hit cities across China, with stocks on Wall Street falling back,” she added.
“Apple is the example of how lockdowns can disrupt shipments given that iPhone production is reportedly taking another knock as its supplier’s megafactory in Zhengzhou is hit with a lockdowns and a workers’ revolt,” she said.