Chinese stocks plunge as Covid cases hit new highs

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Chinese stocks plunge as Covid cases hit new highs

In the US, the US stock market is falling Friday, on line for their first weekly decline this month, with surge in Covid cases and increasing curbs across the country hurting optimism that restrictions will be lifted some time soon.

The Dow Jones Golden Dragon China Index of 65 Chinese stocks is down 3.2%, bringing the benchmark's weekly loss to 5.9%. Internet stocks, including Alibaba Group Holding Ltd. and JD.com Inc., fell more than 4% each, while online lender Lufax Holding Ltd. fell 25% after slashing profit guidance.

After hopes of a pivot from Beijing's zero-tolerance stance on the Pandemic fueled a rebound in Chinese stocks earlier this month, China s struggle to contain a wave of new infections gave a reality check for investors this week. For the first time in a long time, Nationwide Covid cases topped 30,000 on Thursday, forcing many localities to ramp up restrictions.

The largest iPhone manufacturing site, Zhengzhou, is currently under a five day lockdown. In some districts of Beijing, soaring cases caused control measures and panic buying. These curbs came after China released a 20-point playbook earlier this month, which called for local officials to relax on mass testing and movement restrictions.

Wall Street is increasingly bullish on Chinese stocks, with Bank of America strategists the latest to recommend buying the nation's equities for 2023. The government pledge to boost the ailing economy with monetary policies, including a reduction in the reserve requirement ratio on Friday, also gave hope.

The Golden Dragon Index is on track for its best month since September 2007 and has rallied 20% in November. The MSCI China Index has gone up 21% as of Thursday, which would be its best monthly performance this century if the gains hold.

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