China Stock Rally Fails as Coronavirus Issues Restore Negative Sentiment
Chinese stock surge fails as Covid issues muddle the waters once again.
Even as Chinese stocks began to rebound from their historic decline on Monday, traders were reminded of the markets' vulnerability due to President Xi Jinping's zero covid policy.
The Chinese and Hong Kong stock markets lost more than half of their gains after word of a roadblock in a Wuhan area reached the stock tables. When Macau announced the Covid agreement, the casino stock index likewise gave up a significant portion of its gains.
Nearly three years after the virus first surfaced in the city of Wuhan, Xi's dogged pursuit of Covid Zero is dragging on economic development and making Chinese equities some of the worst in the world this year. This is happening while other nations begin to reopen. Expectations of a change of heart have reduced as a result of the president tightening his stance following the leaders' meeting.
The latest impasse, according to Marvin Chen, a Bloomberg Intelligence analyst, "shows that the Covid Zero policy is durable and can only be adjusted gradually." "The increasing China national risk premium, which investors should balance against historically cheap valuations, is what drives risks like Covid-Zero.
As the government works to increase investor confidence, the Hang Seng China Enterprises Index increased 2.6 percent throughout the session but only by 0.7 percent at the close on Wednesday in Hong Kong. More than half of the early gain was erased by China's CSI-300 index, which ended the day up 0.8 percent.
In the previous session, the Hong Kong-listed equities index for China increased by 1.3%. This was the greatest decline since 2008, when the party conference enraged investors by failing to adopt a policy that would sustain the economy and lay out a clear strategy to rebuild it.
This month, the MSCI China Index saw its greatest return since 1999. According to Bank of America, as Xi strives to tighten state control over markets and the economy, international asset managers are "frustrated and enraged."
Supportive remarks
China's central bank and monetary officials declared on Tuesday that they want to maintain a healthy bond and equities market. China's Securities and Exchange Commission said in a separate statement that it intends to hasten the development of a capital market that is "controlled, transparent, open, resilient, and adaptable."
The PBOC and CSRC remarks were issued in response to the 20th party congress, which finished on Sunday, and not in response to the downturn in China's financial markets this week, at previous meetings of the financial regulators.
The Financial News, a publication of the Chinese central bank, had an item in its Wednesday issue stressing the confidence of both domestic and foreign investors towards the Chinese stock market.
The top pages of the main stock market publications in China had, up until now, been devoted to other significant meetings and events after the party conference, thus they had not highlighted Monday's stock market meltdown the following day.
Overall, the outlook for Chinese markets remains dim: the MSCI index has dropped more than 60% since February 2021, close to the losses seen during the global financial crisis. Clients of the China-focused hedge funds run by Goldman Sachs Group Inc. saw their second worst trading day of the year on Monday.
The largest factors in the HSCEI's increase on Wednesday were Meituan and Tencent Holdings Ltd. The Hong Kong benchmark index increased 1%, while the Hang Seng Technology Index ended the day up 2.5%.
Willer Chen, an analyst with Forsyth Barr Asia Ltd., said: "This is a technical recovery, not a fundamental one.
Women are not allowed in the huge boys' club that is the finance summit.
When the pandemic limitations are gone, Hong Kong will be fully operational once more. And the big players in finance agree.
The World Financial Investment Summit, one of a series of events to celebrate the resurgence of the financial center after nearly three years of strict quarantine and political repression by Beijing's Covid, features David Solomon of Goldman Sachs Group Inc. and James Gorman of Morgan Stanley alongside 25 other male speakers.
On the list, there are just four women. A panel discussion on sustainable finance will feature two of them: Jane Fraser from Citigroup Inc. and Valerie Baudson from Amundi SA. A seminar on managing funds in stormy markets will include Hanneke Smits of BNY Mellon Investment Management. On the event's last day, Laura Cha, President of Hong Kong Exchanges and Clearing Ltd, will give a welcoming speech.
Male-only keynote speakers, breakout sessions, and sessions on how to handle difficult times and create value as well as sessions on how technology is influencing the future of finance will all be held.
How is it feasible that 87% of the presenters in today's events are men? In an interview, Utpal Bhattacharya, a professor of finance at the Hong Kong University of Science and Technology, remarked. The good news is that Asia's financial center is back on course, he continued. The bad news is that males continue to control it.
Almost half of the presenters were from American financial institutions, where women make up around one-third of top executives. According to PwC's analysis, women hold one-third of senior management roles and more than half of entry-level jobs in Hong Kong's financial industry.
Diana Cesar, CEO of Hang Seng Bank Ltd. and formerly of HSBC Hong Kong, is a member of the third group. Cesar and 15 other female CEOs made a commitment to advance gender equality in the finance industry in a film that was broadcast on International Women's Day in 2020. Why wait, she questioned. "We can build an inclusive world."
She and the other individuals in the film, including Standard Chartered (Hong Kong) CEO Mary Huen and UBS Hong Kong CEO Amy Lo, vanished from the summit's roster of attendees two years later. Among the speakers are Colm Kelleher, chairman of UBS Group AG, and Bill Winters, CEO of Standard Chartered Plc.
In addition to Goldman Sachs, Amundi, BNY Mellon, and the Hong Kong Stock Exchange, Standard Chartered, Hang Seng, and UBS declined to comment when contacted by Bloomberg. Neither Morgan Stanley nor Citigroup would comment.
According to an email from the Hong Kong finance department, "We are happy to have chairman and CEO level speakers who share our worldwide goal." According to consultations with possible speakers, presentations will be planned based on their choices for topics and availability.
But circumstances in Hong Kong are altering. For instance, according to recent stock market regulations, listed businesses must have at least one woman on their board. By the end of 2024, more than 1,300 board seats will be filled by women only as a result of this.
Of all Hong Kong companies, Caesars Bank has the highest percentage of women on its board at 2/3. Data from Bloomberg News show that in the third quarter of 2022, the average Hang Seng Index membership was 17%.
"Why are people who excel in finance disproportionately male while the gender ratio in business schools is 1:1?" Bhattacharya, who studies gender-related topics, stated. "The issue arises after graduation, not in the educational system.
In the third quarter compared to the previous three months, there were five more women on the boards of businesses in the Hang Seng Index, according to statistics from Bloomberg. While the average board size was 11.1, the average number of women on boards grew from 1.8 to 1.9.