CHINA: Politburo Sparked Rally on Friday

Bloomberg Headline: China’s Politburo Ignites Market Rally With Vows on Growth, Tech
Subheadline: Unusual midday announcement provides relief for stocks, yuan
Top leaders promise to guarantee supply chains and logistics

China’s top leaders promised to boost economic stimulus to spur growth and vowed to contain the country’s worst Covid outbreak since 2020, which is threatening official targets for this year.

“We should waste no time in planning more policy tools and enhance the strength of adjustment in due course,” the Communist Party’s Politburo said Friday, according to a readout of a meeting of the leadership on state broadcaster China Central Television.

Led by President Xi Jinping, the Politburo signaled its commitment to Covid Zero, a strategy that’s forced major cities like Shanghai to shut down, disrupted business operations and roiled global supply chains. Xi earlier this week highlighted infrastructure as a big focus for the government as growth comes under pressure, a pledge reiterated by the leadership meeting today.

The midday timing of the statement was unusual, since Politburo readouts are typically made public late in the afternoon or during the CCTV’s flagship evening news program.

A lunchtime announcement gave markets an opportunity to react: The benchmark CSI 300 Index rose to its session high after trading resumed in the afternoon, gaining as much as 2.5%. The offshore yuan reversed its earlier weakness to strengthen as much as 0.65% at 6.6166 per dollar.