Relaxation of China’s Covid-zero Policy is Expected to Help Asia Equity Markets

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The Asian capital markets expect a boost in 2023 after three-year lows, following China’s anticipated reopening as the country’s government ditches its stringent Covid-zero Policy.

Edward Byun, Goldman Sachs’ co-head of equity capital markets in Asia, noted, “As China’s reopening happens, market activity will come in stages. As confidence in the recovery builds, we will begin to see the conditions emerge for a resumption of the IPO market.”

Experts expect that China’s reopening will prompt global investors to redirect investments into the world’s second-largest economy after avoiding it entirely in the past two years. However, according to Harish Raman, head of the equity syndicate of Asia Pacific for Citigroup, China is expected to bring back investors to the country.

“Many international investors moved money back to the US, but China is still the elephant in the room. You can’t ignore it. If you feel that the US has peaked and valuations are getting out of hand, and you want to make some profit, where will you deploy that? It has to come back to China,” he added.

Meanwhile, in Australia, experts look forward to positive IPO activity in the first half of 2023. According to Matthew Beggs, co-head of equity capital of Australasia for USB, if the country sees positive IPO activity and the global economy calms down, Australia is set for more activities by the second half of 2023.

However, multiple reports say China is seeing a surge in cases after it announced relaxing its Covid-zero policy last 7 December. Government officials are working to calm the public and avoid overloading the country’s medical systems.

Larry Hu, the chief China economist for Macquarie, noted, “We will see things getting worse before they are getting better. For three to six months, we will see disruptions in production and consumption,” he says, as ‘consumers will feel anxiety’ over the outbreak.

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