Everything falling in place for Chinese stocks

CHINESE stocks extended a sharp November rebound, as optimism about easing property woes and signs of reduced US-China tensions outweighed a slew of disappointing economic data.

The Hang Seng China Enterprises Index climbed as much as 4,2 percent on Tuesday morning. It rose nearly 2 percent in the previous session, taking gains from a recent low on October 31 to more than 20 percent and meeting the common definition of a technical bull market. The Hang Seng Index, Hong Kong's benchmark, was poised to hit the milestone as it rose as much as 3,6 percent Tuesday.

The rally marks a sharp reversal of sentiment toward a market that was still mired in pessimism late last month when President Xi Jinping's precedent-defying power grab stoked concern about ideology trumping pragmatism. The conclusion of the major Communist Party congress at that time also triggered worries that Beijing would stick to a Covid Zero policy that has weighed on the world's number two economy.

But an acceleration of moves to ease a cash crunch in the real estate sector, as well as a relaxation of virus curbs in the past week has surprised investors, signaling that reviving economic growth has returned as a policy priority. Also brightening the mood was Monday's meeting between Xi and Joe Biden which generated hopes of warmer ties between the two superpowers.

“China appears to be rapidly addressing all the major issues on investors' minds, such as Covid Zero, real estate slump and US relations,” said Vey-Sern Ling, managing director at Union Bancaire Privee. “Taken together these also mitigate the broader concern that China may become more ideological, less pragmatic and increasingly isolated post the 20th Communist Party Congress.” —