Hong Kong shares soar on hopes China COVID rules may ease

Hong Kong’s Hang Seng fell back slightly in afternoon trading, gaining 6.8% to 16,379.26. The Shanghai Composite added 2.5% to 3,073.86

Shares soared more than 7% in Hong Kong on Friday after a Communist Party newspaper reported that local officials were being urged not to impose overly burdensome controls to curb coronavirus infections.

The Shanghai Composite index jumped 2.5% as sentiment also was buoyed by an article in the party newspaper People’s Daily by China’s former top trade envoy, Liu He, who said the country would continue its market reforms. He appeared to be seeking to allay concerns after Mr. Liu and some other prominent reformers were dropped from the top ranks of leadership at a party congress last month.

Hong Kong's market has gyrated in the past few days as investors speculated over signs that Beijing might ease stringent “zero-COVID" policies that have led to entire cities being kept in lockdown for weeks. The policies also require frequent mass testing and lengthy quarantines for travellers.

The newspaper Global Times said the Chinese National Health Commission advised on Wednesday that officials should try to curb outbreaks using the “minimum scale affected, and the shortest time and lowest cost possible."

It said that was “in a bid to correct mistakes from overly strict measures that have caused damage to people's properties and lives." However, it also said that China was “unswervingly adhering to the dynamic zero-COVID strategy by preventing the import of cases and internal rebounds."

This week has brought a flurry of speculation over the possibility that Beijing might alter course nearly three years into the pandemic. Investors are watching for signs of recovering demand in China, the world's second-largest economy, and an end to disruptions to manufacturing and transport that have affected global supply chains.

There has been no official confirmation of broad policy changes.