Asia’s emerging markets saw a $12.7 billion boost in the first three days of this week with investors encouraged by China’s rollback of its Covid-19 curbs.
Beijing’s sudden dropping of its economically painful restrictions, which have hamstrung its economy for nearly three years, boosted many different asset classes, from commodities and mining stocks to currencies and equity markets in popular tourist destinations, data on Friday from BofA Global Research showed.
Hong Kong’s share benchmark, the Hang Seng Index, closed on Friday at an over six-month high ahead of the Lunar New Year Holiday. Chinese onshore blue chips went into the break at a five-month peak.
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The BofA data also showed weekly flows of $14.4 billion into bond funds, $7.5 billion into equities, $0.6 billion into cash and $0.6 billion from gold.
European equities witnessed their first weekly inflow in almost a year. BofA said there were $0.2 billion of inflows to European stock funds, the first inflows in 49 weeks.
Nonetheless, the BofA note also said that markets still face several major uncertainties despite the recent optimism, as central banks near the end of their aggressive interest rate hikes, as well as the possibility of an economic “hard landing” and political tension in the United States around its debt ceiling.
“We are in the trickiest part of the investment cycle – tightening ending but easing far from beginning, inflation over but recession not yet begun, China reopen versus US recession… little wonder Wall St narratives [are] changing quicker than a TikTok video,” it said.
- Reuters with additional editing by Sean O’Meara
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