Chinese Stocks In U.S. Fall As Citizens Defy Covid Curbs In Unrest
The civil unrest is adding another twist to the turbulent Chinese stock market, which has been on a recovery path since Beijing loosened some Covid restrictions.
(Bloomberg) -- Chinese shares listed in the US declined in premarket trading, with major internet stocks bearing the brunt of a selloff triggered by nationwide protests against Beijing’s Covid Zero policies.
The exchange-traded KraneShares CSI China Internet Fund, which holds more than 40 Chinese stocks, traded 0.8% lower. E-commerce giants Alibaba Group Holding Ltd. and JD.com Inc. slipped by 2% each. Shares of electric car makers Nio Inc. and Li Auto Inc. also fell.
Protesters took to the streets in various cities and universities across China over the weekend in a rare act of defiance against the government and its landmark Covid Zero strategy. The demonstrations were fueled by a deadly fire in a high-rise apartment block in Urumqi, with some blaming that virus restrictions hampered rescue efforts, although local officials denied.
“The path to reopening is likely to be noisy with local infections at risk of remaining high in winter months,” Citigroup Inc. economists led by Johanna Chua said in a note. While the protest and further tightening in Covid restrictions “are unlikely to bode well for sentiment, we are cautious not to interpret these as overly bearish,” they said.
The civil unrest is adding another twist to the turbulent Chinese stock market, which has been on a recovery path since Beijing loosened some Covid restrictions in a surprising policy pivot earlier this month. The MSCI China Index is on pace for its best month this century, but remains down 27% for the year as of Friday’s close, with investors still waiting for a clear signal that Beijing is softening its zero-tolerance stance toward the pandemic.
Stocks that are most sensitive to economic reopening outperformed, with online travel agency Trip.com and restaurant operator Yum China Holdings Inc. in the green before the bell. The resilience underscores optimism over a potentially quicker end to China’s Covid Zero strategy, even though Goldman Sachs Group Inc. economists said there could be a chance of a “disorderly” exit.
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