Shanghai stocks hover at 10-day low as Chinese Premier Li Keqiang warns about the employment situation

On May 9, 2022 23

A staff member takes a swab sample from a man for a Covid test in Shanghai. Mainland markets rose on Monday following measures to boost the economy. Photo: Xinhua

Shanghai Composite Index erases gains to end morning session unchanged at 3,001.62
BYD shares fall even after company denies allegations that pollution from its Changsha plant did not cause nosebleeds in children

Mainland Chinese stocks hovered at a 10-day low as Chinese Premier Li Keqiang warned of a “complicated and grim” outlook and urged local governments to rescue the economy and ensure jobs stability amid the Covid outbreak.

The Shanghai Composite Index was little changed at 3,001.62 in the morning session on Monday, a level last seen on April 29, reversing a gain of 0.5 per cent. The Shenzhen Component Index lost 0.3 per cent to 10,782.69.

Hong Kong’s stock market is closed for a public holiday.

Pharmaceuticals firms China Meheco and China Res Double-Crane stood out, climbing 7.6 per cent and 10 per cent, respectively. BYD fell 3.4 per cent in Shenzhen after authorities in the southeastern city of Changsha launched an investigation into the carmaker, following allegations that excessive emissions from its plant caused nosebleeds in children. BYD denied the allegations.

In a teleconference with provincial leaders on Saturday, China Premier Li Keqiang said employment conditions were “complicated and grim”, and local authorities should step up their efforts on stabilising employment to “ensure the achievement of the annual employment goal and welcome the victory” of the Communist Party’s national congress.

While the Covid situation in China was improving, it was still “complicated and severe”, analysts at Beijing-based CSC Financial wrote in a report.

“Growth policies and economic recovery on the ground are still awaited,” the analysts wrote. Pressure from inflation overseas and the interest-rate increase in the US also posed challenges for the Chinese yuan, they added.

New infections in Shanghai, China’s financial capital, fell to 3,947 cases over the past 24 hours, marking a 16th straight day of decline. But fatalities rose by a third to 11, taking the total to nearly 500. New curbs were put in place in Shanghai to prevent cases from resurging.

With businesses in Shanghai gradually resuming production, some 2,000 key manufacturers are likely to obtain fresh funds from banks after the central bank asked lenders to grant easy credit to these companies to bolster their operations.

Similarly, China’s state-owned commercial landlords in Shanghai also promised to exempt their tenants from rents for up to six months, following a call by the central government and city authorities to rescue embattled small businesses and save jobs in the financial hub.

Elsewhere in Asia, markets in Japan and South Korean retreated 2.2 per cent and 1.1 per cent, respectively, while Australian stocks lost 1.2 per cent.

Author: Ann Cao, SCMP