Hong Kong stocks jump on report of Covid easing

After a report that the government may loosen Covid restrictions, Hong Kong stocks jumped with shares related to the economy reopening surging.

The Hang Seng Index rose as much as 2.8%, which was a reversal of Wednesday's selloff, while a separate gauge of Chinese stocks trading in the city increased more than 3%. A Bloomberg gauge of Macau casino shares rallied as much as 9.7%. Cathay Pacific Airways Ltd., the city's flagship carrier, extended gains.

The market upswing was followed by a local media report that Hong Kong is considering removing its outdoor mask mandate and easing test requirements for inbound travelers. Hong Kong is trying to keep its status as a financial hub in the region, gradually reopening its border in a bid to revive its economy and markets.

Combined with moves by Chinese authorities to soften their Zero Covid stance, investors are more optimistic about the outlook for shares in the region.

As China relaxes policies, it gives room for Hong Kong to relax as one of the first major border reopenings will be between the mainland and Hong Kong, said Marvin Chen, an analyst at Bloomberg Intelligence. This will be a boost to the Hong Kong economy, which has struggled in the absence of mainland arrivals. On Wednesday, China tossed key tenets of its virus elimination strategy, including forcing infected people into quarantine camps.

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