SINGAPORE: Chinese markets soared and the yuan rose on Friday, with about a trillion dollars added to the value of Chinese stocks in week, as rumours and news reports fed hopes for twin relief in US-China tension and China's tough Covid rules.
The Hang Seng surged 5.3 per cent and notched its biggest weekly gain in 11 years. The Shanghai Composite rose 2.4 per cent for a 5.3-per cent weekly gain, the largest in more than two years and China-sensitive assets around the world rose sharply.
Bloomberg News reported initial US inspections of audit papers at US-listed Chinese companies - a long-running point of regulatory tension and risk - finished ahead of time, raising hopes that the US officials were satisfied.
Unsubstantiated social media posts flagging an aim to relax Covid rules in March have also driven optimism all week and seemed to get new momentum on Friday.
A former Chinese senior disease control official told a closed-door conference that substantial changes to the country's zero-Covid policy were set to take place in the next five to six months.
"Any indication that some rules could be relaxed would be an immediate dose of grease in the jarring cogs of China's economy," said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.
Focus was now on a press conference from China health authorities on November 5.
Gains were broad, overshadowing a downbeat mood in global markets on the prospect of US interest rates rising further than previously expected. Property and tech shares led the way.
Shares in online giants Alibaba and JD.com each rose more than 10 per cent and the Hang Seng Tech index rose 7.5 per cent. Property manager Country Garden Services rose 15 per cent and an index of mainland developers rose 9 per cent.
Hedge fund manager Lei Ming said the re-opening rumour is just the trigger for a rebound in an oversold market.
"The main reason for the market jump is that selling pressure had been exhausted after the market fell so much."
Gains in value, across Hong Kong, Shenzhen and Shanghai over the week are approximately $1 trillion. However the Hang Seng remains down 30 per cent this year against a 24-per cent fall in world stocks . The Shanghai Composite is down 15 per cent this year.
The rally extended to commodities markets with iron ore futures surging on Friday, and China-sensitive stocks listed in London and Europe.
Miners such as Rio Tinto and Anglo American rose sharply along with luxury retails like LVMH and Swiss jeweller Richemont.
US-listed China stocks surged in premarket trading, with KraneShares CSI China Internet ETF and iShares MSCI China ETF set for weekly gains after sharp declines in October.
Strategists at TD Securities continue to expect a gradual easing of zero-Covid restrictions, warning that markets could be in for some disappointment if investors are expecting something more rapid. -- Reuters