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It’s all about hope

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As much as the earlier headline sounds enticing, there is still some ways to go before things normalise in China. Looking at the details of the report, the move is very much just to scrap the system that penalises airlines for bringing virus cases into the country. For some context, this is how things work at the moment:

“Inbound routes are halted for one week if the percentage of infected passengers on a flight hits 4%, and it’s a two-week suspension if the rate reaches 8%. The previous policy triggered a two-week stoppage for a 5% infection rate and a month’s suspension at 10%.”

But at least this is a step in the right direction, that is if you are banking on the reopening trade in China. The next would be for the government to facilitate a return to normal aviation traffic – which arguably seems a distance away considering the number of COVID-19 cases still present across the country.

For now, it’s all about hope. Chinese equities have rallied because of that and we are seeing some spillover to broader market sentiment as well. As for a real shift away from China’s zero-Covid policy, we’re yet to get any concrete evidence that lawmakers are going to push through firmly on that. But markets will always try to look for what’s next and right now, they are hopeful about the reopening trade.