Here’s how much China stocks could rise from the depths of zero COVID, according to Goldman strategists.

Here’s how much China stocks could rise from the depths of zero COVID, according to Goldman strategists.

Here’s how much China stocks could rise from the depths of zero COVID, according to Goldman strategists.

Wall Street stocks are set to jump to start the week, and politics are in the spotlight as the US midterm elections get underway.

Many expect a split Congress and two years of political gridlock, which isn’t necessarily bad for markets, which tend to favor divided government. Neil Wilson, chief strategist at Markets.com, said markets have performed 19 to 17 times better on a half-year basis in the post-war half than the previous half-year.

Read: Midterm elections on electricity, solar tax breaks and climate change matter

China is another focus, and Wall Street got a bit of a boost late last week on news that the country’s zero-covid policy was being eased, although officials denied that was happening over the weekend. Citing sources: The Wall Street Journal It was reported Monday that China’s leaders are considering steps to reopen, but slowly and without a time frame.

China’s zero-tolerance COVID rules have at times been harsh on the country’s markets and Wall Street. Markets are hoping Beijing will eventually buckle, as we see those COVID policies hamper Apple’s ability to sell higher-dollar phones in time for Christmas (see The Buzz).

Start your engines now for the great Chinese reopening, says ours call of the day From Goldman Sachs, which sees the country’s stock markets rise as much as 20% after the grand reopening. “Empirical cross-country analysis shows that stock markets tend to re-open about a month before trading, and the positive momentum usually lasts for 2-3 months,” said a team of strategists led by Kinger Lau.

The note was written with the MSCI China index at 54, so it includes last week’s 11% gain.

They see steep economic costs being reduced by government determination, and fresh data shows surprise drop in October exports For China.

“Reported cases are rising, but there have been more signs of loosening of the COVID policy since the Party Congress, and our economists expect that China may reopen in 23Q3 due to political and public health concerns,” they said.

Like the rest of the world, the Omicron option has been tough for President Xi Jinping’s government, where cities account for 50% of the country’s economy as of Nov. 4 under some restrictions, Goldman notes. They estimate that the containment moves knocked China’s GDP by 4% to 5% below trend levels.

And while US markets are mired in worries about Fed tightening, China may want to keep boosting to recover from its COVID woes. The Hang Seng:
HSI,
+2.69%

has lost 29% so far this year, compared to the S&P 500’s 20% decline
SPX,
+0.16%
.

Goldman is also encouraged by the planned launch of CanSino’s inhaled vaccine, which boosted Chinese stocks a few days ago, and BioNTech.
BNTX,
+1.64%

a vaccine that has been approved for foreign residents and may see further use.

Goldman is also being encouraged by more international flights to China, as well as some high-profile global events planned for the second half of next year. If China meets a few conditions, such as higher vaccinations of the elderly and access to more affordable and effective COVID pills, next spring could be when we see a major departure from the zero COVID rules.

Goldman Sachs

As for investments, Goldman sees more upside to the reopening of the offshore market than A-shares, particularly the hotel, food and entertainment sectors. Sands China
In 1928
+0.83%
,
Or China?
9987,
+0.86%

YAMC,
+0.08%
,
Trip.com:
9961,
-2.96%

TCOM,
-0.41%
,
Galaxy Entertainment
27,
+0.71%

and China Tourism Group Duty Free
601888,
-2.94%

are some of the names they like.

The markets

Market Watch:

Shares
SPX,
+0.16%

DJIA,
+0.51%

computer,
-0.13%

higher with bond yields
TY00,
-0.24%

TMUBMUSD02Y,
4.742%

shuffled like a dollar
dxy,
-0.41%

pulls back. Oil prices
CL.1,
-0.17%

and natural gas prices are stable
NG00,
+9.49%

are dramatically higher. In Asia, Hong Kong stocks
HSI,
+2.69%

led to conquests in the wider region.

The hum

Most of the earnings news will come after markets close, when Take-Two
TTWO,
-1.27%
,
ActivisionBlizzard
atv
-0.96%
,
Lyft:
ELEVATOR,
-1.64%
,
TripAdvisor:
TRAVEL,
-2.80%

and several others will report.

Apple:
AAPL,
-1.13%

said it expects lower shipments of its iPhone 14 Pro and iPhone 14 Pro Max devices as COVID-19 issues hamper production in China. Softer demand will also lead to 3 million fewer iPhones being produced, reports Bloomberg. Apple shares fell.

Thousands of employees at Facebook’s parent Meta
AFTER
+4.77%

may be off work on wednesday. Meta shares were higher.

CPI inflation and consumer sentiment are in the data spotlight this week. For Monday, we’ll get consumer credit and a speech from Richmond Fed President Tom Barkin, who will talk about inflation at 6pm ET.

Read: Why does a large labor shortage add to high inflation in the US?

The best of the web

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COP27? To view key issues for markets UN climate talks are starting in Egypt

Ukrainians are preparing the worst winter in decades, without power;

Diagram

Watch out for new highs in the energy industry, says Larry Tentarelli, editor and publisher. Blue Chip Daily Trend Report. Specifically, he’s looking at the SPDR S&P Oil & Gas Exploration & Production ETF
ok
+2.52%

which it notes hit a 20-week closing high on Friday.

“(XOP) is trending higher from its rising weekly moving average and could be set up to test new highs. This can be a volatile sector, as can crude oil itself, so a near-term consolidation was not unexpected. For any major pullback, I would like to see the 125-130 level hold,” Tentarelli told clients on his blog.

Blue Chip Daily Trend Report

The tickers

These were MarketWatch’s most searched indicators as of 6 AM ET:

Ladies

Security name

TSLA,
-3.29%

Tesla

GME,
-5.75%

GameStop:

NO,
-3.68%

NO

AAPL,
-1.13%

Apple:

AMC,
-6.46%

AMC Entertainment

AFTER
+4.77%

Meta platforms

AMZN,
-1.46%

Amazon.com:

Mulan,
-3.85%

Mullen Automotive

BBBY,
-5.80%

Bed Bath & Beyond

DWAC,
+23.00%

Accomplishing the digital world

Random readings

The World Cup referee hands over a register 10 red cards In the hot final of Brazil

A cobra dies after being the 8-year-old boy was bitten.

a record number of Americans move to Mexico.

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