China stocks fall as COVID outbreak fears grow; HK up on easing curbs (updated)

Hua Hong Grace Semiconductor

13/12/2022 08:32

(Updates closing prices; adds chipmakers)
       Dec 13 (Reuters) - China stocks fell on Tuesday, as
optimism over easing COVID-19 restrictions started fading amid
signs of a spike in infections in major Chinese cities including
Beijing.
    Hong Kong stocks however gained on news that the city would
further relax its COVID curbs, boosting consumer and property
shares.
    The benchmark CSI300 Index  .CSI300  fell 0.2%, while the
Shanghai Composite Index  .SSEC  dipped 0.1%. Hong Kong's Hang
Seng Index  .HSI  climbed 0.7%.
    China and Hong Kong stocks had rebounded sharply from their
end-October lows on hopes China would drop its strict zero-COVID
policy.
    Chinese authorities started to unwind strict zero-COVID
policies last week, but optimism about a possible reopening of
the economy is giving away to fears of massive outbreaks and
disruptions following Beijing's abrupt policy pivot.
    "Over the past two weeks, the Chinese government did a
sudden 180-degree turn on ending zero-COVID," Nomura chief China
economist Ting Lu wrote in a note to clients.
    Since official COVID data is no longer reliable due to a
drop in mandatory testing, Nomura used alternative data to track
China's COVID situation, and concluded that Beijing is probably
the epicentre, with several other major cities including Wuhan
and Chengdu also witnessing a spike in infections.
    "We believe China may have to pay a price for its
procrastination in reopening," Lu said, adding that the
outbreaks in big cities might be only the beginning of a massive
wave of COVID infections across China.
    Most sectors in China fell on Tuesday, with medical
companies, which are market darlings recently, also correcting.
    An index tracking Chinese traditional medicine makers
 .CSI930641  dropped 0.6% from 11-month highs. 
    Hong Kong stocks rose as investors cheered news that the
city was easing COVID-related movement restrictions further.
    The financial hub on Tuesday said it would drop a
requirement for incoming travellers to avoid bars and
restaurants in the first three days after their arrival.    
    Hong Kong tech stocks  .HSTECH  rose 0.7%, while consumer
shares  .HSCICD  gained 0.8%.
    Chinese chipmaker Semiconductor Manufacturing International
Corp (SMIC)  0981.HK  jumped nearly 10% in Hong Kong, while Hua
Hong Semiconductor Ltd  1347.HK  surged 17.4%. Reuters reported
China was working on a more than 1 trillion yuan ($143 billion)
support package for its chip-making industry. 
 (Reporting by Shanghai Newsroom; Editing by Subhranshu Sahu)
 ((samuel.shen@tr.com))