“Buy on rumor, sell on fact.” The first half of this well-said proverb was applied precisely in the Chinese financial market in the last couple of days. An unverified screenshot of some paragraphs in Chinese characters has been circulating on WeChat since Monday night and has mysteriously driven a $450 billion stock market rally for two trading days. 

The unofficial screenshot mentioned that Beijing will soon establish an expert team to put together a “conditional reopening plan.” The goal is to reopen the country by March 2023. The upcoming 10th edition of the COVID guideline is widely expected to provide upside surprises.

According to Bloomberg, it was claimed that China’s No. 4 official Wang Huning — one of seven men on the powerful Politburo Standing Committee — held a meeting on Sunday of COVID-19 experts at the request of Xi Jinping. It called Xi “big boss” and used “WHN” to refer to Wang in a bid to sidestep censors, who strictly manage messages and social media posts on China’s political elite.

Twenty minutes after the screenshot was posted at 11:26 a.m by “96 Old Stock Trader” on the Chinese-language financial platform Xueqiu, prominent Hong Kong-based economist Hong Hao tweeted, “Heard that the ‘Reopening Committee’ has been formed & led by Wang Huning, Politburo Standing member. The committee is reviewing COVID data from US/HK/SG to assess various reopening scenarios, target 03/2023 reopen.”

Investors are unlikely to find a better time to act on that rumor. They stock up on Chinese stocks, which are performing poorly amid a worsening economic outlook, coupled with COVID lockdowns, weak consumption, a housing crisis, and a depreciating yuan. This has led to stocks on the MSCI China Index to rally, making a total of $450 billion in transactions on Novemeber 1 and 2.
While Chinese officials remained silent and state media ignored the news, investors seemed more concerned that this was intentionally spreading rumors to manipulate the market. Alex Yeom tweeted,” I highlightly doubt if it’s credible as we’ve heard such rumors constantly in the past 1.5 years. But one thing is definitely for sure, that is, China has absolutely no chance to win the battle against omicron and we’ll be very likely to see even more unstoppable outbreaks soon.”

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