Hong Kong shares jump 3% as China relaxes some virus rules

Morgan Stanley strategists raised its recommendation for Chinese stocks to overweight, according to a Sunday note.

The upgrade marks the end of the company’s equal weight position in Chinese stocks that it has held for nearly two years, strategists led by Laura Wang said.

Morgan Stanley noted that several factors are seeing “significant positive development” since November, including what the company sees as “a confirmed path to eventual post-Covid reopening.”

-Michael Bloom, Jihye Lee

Chinese tech, consumer and travel companies listed in Hong Kong saw strong gains in early trading after some cities in China saw some easing of Covid restrictions.

Tech heavyweights Tencent gained 5.5% and Meituan rose 3.5%, while Alibaba jumped 4.72% and Xiaomi added 7.31%. Electric vehicle stocks such as Li Auto jumped 9.19% and Nio 11.5%.

Meanwhile, shares of Hong Kong-listed casinos also surged, with MGM China up 12.44%, Wynn Macau up 12.35% and Sands China up 7.5%. Galaxy Entertainment increased by 3.61% and SJM Holdings increased by 4.82%.

Hotpot restaurant operator Haidilao climbed 15% and airline stocks also surged. China Southern Airlines and China Eastern Airlines each increased by more than 5%, while Air China gained 4%.

The broader Hang Seng index rose 3.21%.

—Abigail Ng, Jihye Lee

The Caixin/S&P Global services Purchasing Managers’ Index for November came in at 46.7, representing the lowest reading in six months.

The print also marks the third consecutive month of contraction in output and new work, after October’s reading came in at 48.4, while September’s was 49.3.

PMI readings are sequential and represent month-to-month changes in plant activity. The 50 point mark separates growth from contraction.

“The rate of decline was solid overall, but remained lower than the drops seen during the previous large wave of Covid-19 cases from March to May,” Caixin said in a statement.

“Efforts to curb the spread of Covid-19 amid a notable increase in the number of cases in recent weeks, weighed on service sector business operations and customer demand across China in November,” he said. he added.

China’s official non-manufacturing PMI released last week came in at 46.7, the lowest since April 2022.

—Abigail from

The Chinese currency strengthened to around 7 against the US Dollar following the latest reports of further easing of China’s Covid policies.

The offshore yuan was trading at 6.9861 against the greenback, strengthening above the 7 levels for the first time since mid-September.

Beijing and Shenzhen are taking steps to ease testing requirements and quarantine rules despite daily case counts hovering near all-time highs.

The latest measures come about a week after public unrest erupted over the strict measures in various parts of the country.

—Jihye Lee

A seasoned Schroders fund manager has named two global retailers who are poised to “dominate” their industry.

Andrew Brough, who runs the Schroder UK Mid Cap Fund, said the two conservatively managed companies are taking market share before a recession by quietly acquiring failing competitors cheaply.

One such stock has already risen 30% this year while its benchmark has fallen 29%.

CNBC Pro subscribers can learn more here.

—Ganesh Rao

Stock futures fell as bond yields rose in response to 8:30 a.m. jobs data that came in stronger than economists expected.

Here’s how each major futures index and notable bond yields moved in the 30 minutes leading up to and following the data release:

Goldman Sachs sees an opportunity in electric vehicles that is on an “uptrend”.

This trend will accelerate as electric vehicles become “increasingly technology-driven” and simpler to build, Goldman analysts said in a Dec. 1 report.

That should benefit a global stock, said Goldman, which gives the stock up to 90% upside in its bullish case for the company.

CNBC Pro subscribers can learn more here.

—Weizhen Tan

Job growth was stronger than expected in November despite the Federal Reserve’s efforts to cool the labor market.

Nonfarm payrolls rose by 263,000 last month while the unemployment rate remained unchanged at 3.7%, according to the Labor Department on Friday.

Payroll figures are expected to rise by another 200,000 jobs, according to Dow Jones consensus estimates. The unemployment rate was expected to remain at 3.7%.

Stock futures fell after the payrolls were released.

—Sarah Min