As China takes steps to gradually reopen businesses, and authorities introduce a slew of measures to stimulate activity, there are signs that a revival may be around the corner.
Still, analysts say more needs to be done to repair investor confidence in China, and some big risks haven’t gone away.
“It will take time to repair the business confidence, and sell-offs in Chinese assets might resume if China data proved to be disappointing again,” said Ken Cheung, chief Asian foreign exchange strategist for Mizuho Bank.
Ant Group said Thursday that it “currently doesn’t have any plan to initiate an IPO.” The China Securities Regulatory Commission added that it has not conducted any research work regarding a new Ant IPO.
In Hong Kong, meanwhile, the stock has risen for five straight sessions and is up 22% this week — the best weekly performance since Alibaba’s secondary listing there in 2019.
The Chinese government has brought further relief to the tech sector in recent weeks. Regulators have said that they would support overseas listings of tech companies.
The Hang Seng Tech Index, which tracks the 30 largest Chinese tech stocks in Hong Kong, is up 10% this week.
China also released strong trade data for the month of May, after a slump in April. The country’s exports jumped 16.9% in May from a year ago, compared with only 3.9% growth in April.
Imports, meanwhile, rose for the first time in three months.
“The increase in both exports and imports was mainly due to the reopening of the port of Shanghai, China’s largest port, in the last week of May,” said Iris Pang, chief economist for Greater China at ING Group.
Congestion at the Shanghai port is almost “back to normal,” VesselsValue, a shipping data firm, said earlier this week. Average waiting times have now shortened to 28 hours, compared to 66 hours in late April.
On Wednesday, Premier Li Keqiang urged local government officials to help smooth transportation and logistics and protect supply chains. China would strive to achieve reasonable economic growth in the second quarter and reduce unemployment, he said, reiterating previous calls.
Is this enough?
But analysts remain cautious.
The May trade data does not change “the consensus view that China’s trade surplus is going to narrow,” as demand for Chinese exports weakens because of a slowing global economy, HSBC analysts said Thursday.
“As commodity prices remain elevated, these imports will be costly for China,” they said.
China’s adherence to a policy of tough Covid restrictions also remains a significant risk.
A growing number of neighborhoods in Shanghai face another temporary lockdown this weekend, as authorities launch mass testing days after Covid restrictions were eased for most of its 25 million residents.
Authorities in Beijing’s largest Chaoyang district also announced Thursday the closure of all entertainment venues, just days after allowing their reopening.
“Markets have naively assumed that China was one and done with Beijing and Shanghai,” said Jeffrey Halley, senior market analyst for Oanda, on Thursday.
“Covid-zero is going nowhere in China, and nor is the virus. Thus, the chances of extended restrictions returning, with the ensuing drop in China’s economic activity, remain as high as ever,” he added.
— CNN’s Beijing bureau contributed to this report.