Chinese stocks buoyed by coronavirus containment, economic recovery and an improving outlook for reforms

Name: France aiming for ‘brutal brake on infections’ with its second national lockdown to fight Covid-19
Uploaded: 2020-11-06T07:45:13.000Z
Duration: 3 min 7 s
Description: France aiming for ‘brutal brake on infections’ with its second national lockdown to fight Covid-19

In Europe and the US, fears of a resurgence in coronavirus cases have weighed heavily on market sentiment. In contrast, China’s better control of Covid-19 and broader economic recovery explain the resilience of Chinese equities

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Shanghai’s Pudong financial district. Structural reforms are key for China to maintain its rapid growth over the long term. Photo: EPA-EFE

Sylvia Sheng

Published: 3:45pm, 6 Nov 2020Updated: 3:54pm, 6 Nov 2020

Developed-economy stocks lost more than 3 per cent in a choppy and tense October, their second fall in as many months. The drop was led mainly by European equities, which had their worst month since March, while stocks in the United States and Japan also suffered losses in October. China, however, marching to the beat of its own drum as usual, bucked the trend, with the CSI 300 Index gaining 2.4 per cent.

The resilience of Chinese equities can be partly explained by the China’s better control of Covid-19 outbreaks compared with other nations.

In Europe and the US, fears about the potential economic toll of surging coronavirus cases have weighed heavily on market sentiment. Countries across Europe are seeing sharp spikes in Covid-19 cases, with many now declaring more daily cases than in the first wave in spring.

The surges are stretching hospital capacity across parts of Europe and have resulted in tougher social distancing measures in many EU nations, including France and Germany.

Even though the disruption to industrial activity is likely to be more muted this time, as factories and companies will stay open, the European services sector is already feeling the pressure from the tightening of social distancing rules, as the slumping October purchasing managers’ index (PMI) for euro area services shows.

03:07

France aiming for ‘brutal brake on infections’ with its second national lockdown to fight Covid-19

In the US, the coronavirus situation has also taken a turn for the worse, with daily confirmed cases continuing to set new single-day records in recent weeks.