Speculation is mounting that China soon might change its zero-COVID policy.
Pedestrians wait to cross a road at a junction near a giant display of stock indexes in Shanghai, China August 3, 2022. REUTERS/Aly SongWhat the Fed taketh away, China could be about to giveth back.to its zero-COVID policy soon and begin opening the economy back up. Chinese asset prices were on fire at the end of last week, and the glow is expected to continue burning brightly into Monday.
The strong close on Wall Street Friday should also help, but that rally may be vulnerable - the Fed is not pivoting any time soon, implied terminal rates are now above 5%, the yield curve inversion is relentless, and an earnings slowdown next year is highly likely. Could a Chinese pivot on COVID replace the elusive Fed pivot on rates for investors, and spark a year-end rebound across world markets? Some of the moves in China and Hong KongShanghai stocks rose 6.4%, the biggest rise weekly since July 2020; Hong Kong's Hang Seng jumped 8.7%, its best week in 11 years, and the Chinese yuan posted its biggest rise against the dollar on Friday since the currency's one-off revaluation in 2005.for investing in China.
China also grabs the economic data spotlight on Monday, as Beijing releases its trade and FX reserves figures for October. Trade activity is expected to slow and FX reserves, already the lowest in five and a half years, are expected to dip closer towards the $3 trillion mark.China trade balance, FX reserves Our Standards:
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