China/HK Equities Recover Further, Despite Push-Back On Change To Covid Stance

After a shaky start, Hong Kong shares are comfortably in positive territory, helping to drag the rest of the region higher. Lower US equity futures is providing some offset, although we are away from worst levels. Eminis and Nasdag futures sit -0.10-0.20% lower. Apple stated it would trim new Iphone output by 3m units due to moderating demand. Supply disruptions in China, due to Covid related lockdowns, was also reported earlier.

• The HSI is +3.4% at this stage, with the underlying tech index up just over 5%. China H shares are up +3.5%. These moves come despite the China health authorities pushing back fairly firmly over the weekend on any imminent shift away from the Covid zero stance. No doubt some investors are mindful that when any formal announcement does emerge, markets may have already recovered considerably.
• The rough sell-side consensus also suggests full re-opening is more likely from late Q1/early Q2 next year, while domestic covid case numbers continue to trend higher.
• Mainland China shares are also up, but only by around 0.50% for the CSI 300 and Shanghai Composite. China trade figures continue to point to near term downside economic risks, with both export and import growth below 0% in y/y terms.
• Elsewhere, the Kospi is +1%, continuing to recover, while the Taiex is +1.50% and the Nikkei 225 +1.30% at this stage. None of these markets are showing too much impact from the weaker US futures picture at this stage.
• The ASX 200 is up a little over 0.50%, lagging some of the broader tech gains seen in the region.