Emerging markets expert and founder of Mobius Capital Partners, Mark Mobius, has said that China is likely to ease its Covid Zero policy by the end of 2022 as its economy is struggling and the government needs money “badly,” reported Bloomberg.
“I don’t think Covid is an issue going forward,” Mobius responded to queries from Bloomberg News. “China has no choice but to open up to ensure the economy can function. Lip service will be given to it but the reality on the ground will be different,” he said.
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The Xi Effect: The emerging markets expert stated he has become “more negative” on China in the wake of a shift in policy with the elevation of President Xi Jinping to “the pinnacle” of the country’s leadership and control. “I am afraid that the private sector will be suppressed in favor of state-controlled organizations, thus impacting innovation and creativity in the economy,” he said.
Market Rout: Foreign investors sold a record net 17.9 billion yuan ($2.5 billion) of mainland China shares through trading links with Hong Kong on Monday, with the year-to-date investment level turning into a small net outflow. The plunge in the stock market followed Xi’s consolidation of power as expectations regarding the continuation of key policies like Covid-Zero intensified.
On Friday, shares of Alibaba Group Holding Ltd BABA were trading over 4% lower in Hong Kong while Tencent Holdings Ltd TCEHY, Baidu Inc BIDU and Meituan MPNGF fell over 5% as mixed earnings prompted traders and investors to pare positions before the end of the week.
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