Hong Kong shares fall amid lingering worries about China’s economy

SHANGHAI, June 1 (Reuters) – Hong Kong stocks fell on
Wednesday, despite eased coronavirus restrictions on the
mainland, as concerns linger over the economic impact from
Beijing’s tough zero-COVID policy.

** Hong Kong’s Hang Seng Index lost 0.6%, while the Hang
Seng Tech Index fell 1.1%.

** China’s financial hub Shanghai sprung back to life on
Wednesday after two months of bitter isolation under a ruthless
COVID-19 lockdown.

** It comes after China’s cabinet announced a package of 33
measures covering fiscal, financial, investment and industrial
policies on Tuesday to revive its pandemic-ravaged economy.

** “Much has been made of the ending of Shanghai
restrictions today, with many seeming to think it offers an
instant panacea to an Asian slowdown. Unfortunately, I must add
a word of caution here,” wrote Jeffrey Halley senior market
analyst, Asia Pacific OAND.

** “China’s zero-COVID strategy has not suddenly gone
away… any returning outbreaks in Beijing or Shanghai or
Shenzhen etc, will put China back to square one.”

** “The outlook is more challenging in H2 as COVID policies
remain broadly restrictive,” Peiqian Liu, China economist at
NatWest Group wrote on Wednesday, adding that Chinese
policymakers will face a policy trilemma: controlling debt,
stabilizing growth and maintaining zero-COVID.

** In Hong Kong, most sectors fell, with healthcare
and commodity shares leading the decline.

** However, Kristina Hooper, chief global market strategist
at Invesco, said there could be an opportunity in Chinese
stocks, whose valuations are very attractive. “In addition, I
anticipate continued monetary policy accommodation and strong
fiscal stimulus.”
(Reporting by the Shanghai Newsroom; Editing by Shailesh Kuber)