Asian stocks tick higher as China switches focus to growth

Asian stocks climbed higher on Friday, as wide-ranging relaxations to China’s strict zero-Covid policies boosted investors’ hopes that the world’s second-biggest economy would reopen early next year.

Hong Kong’s Hang Seng index added 2.3 per cent and has now risen more than a fifth in the past month, with all sectors apart from healthcare stocks in positive territory in early afternoon trading.

The Hang Seng Mainland Properties index, which tracks some of China’s largest developers, rose 9.9 per cent, bolstered by Beijing’s recent moves to end a ban on equity refinancing and extend $162bn in loans through state banks. Country Garden, the country’s biggest real estate company by sales, added 8.5 per cent.

Mainland China stocks also ticked higher, with the CSI 300 index of Shanghai- and Shenzhen-listed shares gaining 1 per cent.

The moves come as China continues to ease its zero-Covid approach, prioritising economic growth over suppressing the virus for the first time since the pandemic began. Analysts, however, caution that infections are likely to surge as a result, delaying a swift reopening of the economy.

“Activity will probably remain depressed until the second half of 2023, with the reopening infection wave keeping many people at home,” said Julian Evans-Pritchard, senior China economist at Capital Economics.

Elsewhere, Europe’s Stoxx 600 added 0.1 per cent and London’s FTSE 100 was flat.

Contracts tracking Wall Street’s benchmark S&P 500 and the tech-heavy Nasdaq 100 rose 0.2 per cent and 0.4 per cent respectively, ahead of the release of US producer price data for November.

Prices are forecast to have risen 5.9 per cent year on year, down from 6.7 per cent in October. A hotter than expected reading is likely to unsettle investors who have largely priced in a 0.5 percentage point interest rate rise from the Federal Reserve next week, a move that would end a run of four consecutive 0.75 percentage point increases.

US government debt rallied, with the two-year Treasury yield down 0.03 percentage points to reach 4.28 per cent and the 10-year yield losing 0.01 percentage points to 3.48 per cent. Yields fall as prices rise.

Oil prices were steady, with Brent crude, the international oil benchmark, trading at $76.17 a barrel.