China’s zero-COVID policy has been ‘re-characterised’: strategist

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KraneShares Chief Investment Officer Brendan Ahern joins Yahoo Finance Live to discuss the rise in Chinese stocks following the easing of COVID-19 restrictions in China and the Singles’ Day event.

Video transcript

Jared Blikre: And in addition to COVID news, today is the biggest shopping event in the world, Singles Day. Last year, shoppers in China spent around $134 billion. And optimism over Singles Day and COVID restrictions is pushing Chinese tech stocks higher.

Joining us now is KraneShares Chief Investment Officer Brendan Ahern. And I have to tell you, Brendan, I’ve been following a lot of stories this week. And I just arrived in China. And it’s huge. So how is your digestion? How do you see all this news today, from the explosive singles numbers to the biggest news, of China reversing, or at least partially reversing, its zero-tolerance policy?

BRENDAN AHERN: Yes, I mean, definitely, zero-COVID has now been characterized as dynamic zero-COVID. It is therefore not to be expected that zero-COVID will disappear. Chinese government decision makers never pull the proverbial bandage when it comes to policy adjustments.

We are therefore witnessing another progressive movement towards openness. And certainly a lot of the changes that the State Council, in its first meeting after the Party Congress, are really aimed at alleviating a lot of the burdens that have been on the Chinese people, and therefore, on domestic consumption trends. . So a real positive point for those who live in China.

RACHELLE AKUFFO: And I mean, and as we see Alibaba shares rise today, electric vehicle maker NIO is also rising. Trip.com is obviously on the rise due to a lot of welcoming news for travelers as well. Are you surprised at how far off that rally is right now?

BRENDAN AHERN: Well, I think I think investors have really left the space that they really feared for a number of issues, including zero-COVID, political tensions between the US and China, law on the liability of foreign companies. And so you see progress on a few of those fronts that PCAOB auditors are doing audits on Alibaba, jd.com, and Yum China.

You have President Biden meeting President Xi next week at the G20. And then we have this zero-COVID adjustment. So we’re seeing some of the issues that have really weighed on sentiment starting to subside. So we are seeing some enthusiasm returning to the market.

DAVE BRIGGS: Yeah, good to see you, my friend. It’s been a while, by the way. We see your ETF, which is KWEB, up 6% today as well. I want to ask about this meeting between Xi and Biden. What are your expectations for getting out? And if I may ask a question, what do you think about Alibaba not disclosing Singles Day sales for the first time in its 14 year history?

BRENDAN AHERN: Yeah, that’s a great observation, Dave, that they said the Singles Day sales were live. So we think that’s basically in and around what they did last year, maybe a little higher, maybe a little lower. Net, net, it’s a victory.

Expectations because of zero-COVID, really the weight on consumer confidence in China because of zero-COVID, we think Q3. But we should see in the fourth quarter, and into 2023, this domestic consumption story really come to life. So I think even though it’s in line, Dave, I still think it’s a beat.

DAVE BRIGGS: All right, Brendan Ahern, good to see you, my man. KraneShares. Let’s have a tequila, let’s get the kids together this weekend too. OK?

BRENDAN AHERN: 100% Dave.

DAVE BRIGGS: All right, great to have you.

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