China Stocks Plunge as Xi Offers No Respite From Covid Lockdowns
Comment of the Day

April 21 2022

Commentary by Eoin Treacy

China Stocks Plunge as Xi Offers No Respite From Covid Lockdowns

This article from Bloomberg may be of interest to subscribers. Here is a section:

In a sign that authorities are keen for the slide to end, the China Securities Regulatory Commission said that on Thursday it met with institutional investors such as the National Social Security Fund, banks and insurers to ask them to boost their equity investments.

Lockdowns in major cities across the country, coupled with capital outflow risks as the Federal Reserve hikes rates, have dampened sentiment toward local Chinese shares. Investors who had expected authorities to ramp up stimulus have since been underwhelmed, with Wednesday’s decision by banks to keep lending rates unchanged serving as another setback.

“The market is flooded with pessimism,” said Wu Wei, fund manager at Beijing Win Integrity Investment Management Co. “While there have been some policies since Liu He, the greater weight on people’s minds now is the virus. No one can accurately guess the bottom. Judging from the virus situation, we could still see a further slide.”


Eoin Treacy's view

As predicted early this year, China’s covid problem was the wildcard no one was properly prepared for. Politics is the primary concern of every Communist administration. The leadership question will be settled at the Party Congress in November. There is no chance of the Covid-zero policy being abandoned before then.

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