China Tweaks ZCS, Risk-Positive Flows Ensue

News of China’s freshly optimised COVID restrictions (which include a rollback of the country’s international travel restrictions and reduced quarantine time for international travelers) has resulted in a fresh round of risk-positive flows ahead of London dealing, building on the theme witnessed in early Asia-Pac dealing. A reminder that such adjustments had been flagged via news wire source reports in recent days.

• Gains in the Hang Seng (+8%) are particularly impressive, with a surge in Chinese property developer stocks noted.
• E-minis are through Thursday’s post-CPI highs, while USD/CNH has broken comfortably below yesterday’s base.
• Commodities trade sees SGX iron ore print 6% higher on the day, while WTI futures are over $2 better off.
• A reminder that the Chinese authorities had pointed to a need to fine-tune ZCS, with the more targeted restrictions aiming to limit the economic impact of COVID. Today’s move came even as the country lodged a fresh multi-month high in new COVID cases, with the localised restrictions in the current COVID hotspot of Guangzhou flagging a lighter touch approach from the authorities (with a city wide lockdown avoided, at least for now).
• Sell-side consensus continues to look for a broader re-opening of China at some point in the Spring.