FirstFT: Renminbi hits 12-week high in China rally

Chinese stocks shot higher and the renminbi rose to a 12-week high against the dollar yesterday on further signs that Beijing was easing its harsh zero-Covid restrictions and as Morgan Stanley upgraded the country’s equities to “overweight”.

Hong Kong’s Hang Seng China Enterprises index jumped 5.1 per cent, while the CSI 300 index of Shanghai- and Shenzhen-listed stocks rose 2 per cent. China’s currency also rallied, with the renminbi rising 1.3 per cent against the greenback to Rmb6.9629 per dollar, the highest level since September.

The gains for Chinese assets come on the heels of further easing of Covid-19 restrictions over the weekend, stoking expectations that authorities may drop the longstanding economically disruptive zero-Covid policy more quickly than expected.

Officials in Beijing, Shanghai and Shenzhen said commuters would no longer need to present PCR test results to use public transport, while some apartment complexes in Beijing told residents they could quarantine at home if they tested positive.

In the US, stocks fell on Monday after data showed the vast American services sector was still growing, even though the Federal Reserve has been trying to cool the world’s biggest economy with aggressive interest rate rises.

Five more stories in the news

1. Start of Russian oil cap causes tanker traffic jam A traffic jam of oil tankers has built up in Turkish waters after western powers launched a “price cap” targeting Russian oil and as authorities in Ankara demanded insurers promise that any vessels navigating its straits were fully covered.

2. Covid chaos at Foxconn causes 29% revenue fall Revenues at Foxconn, Apple’s biggest manufacturing partner, fell sharply in November during a crucial pre-holiday period, in the latest signal of the damaging impact of its chaotic handling of a Covid-19 outbreak at the world’s largest iPhone plant. It is the first time in 12 years that the company has announced a month-on-month fall in November, a time of high production to meet Christmas sales.

3. Crypto group Circle ends $9bn Spac deal Stablecoin group Circle has ditched plans to go public in a $9bn deal through a blank-cheque company chaired by former Barclays chief executive Bob Diamond, underlining how successive crises have hit the crypto sector.

4. Canada to send more warships through Taiwan Strait Canada plans to sail more frigate warships through the Taiwan Strait to affirm the waters claimed by China are international after Ottawa released an Indo-Pacific strategy that described Beijing as an “increasingly disruptive” power. “We will continue to enforce the international rules-based order when it comes to the Taiwan Strait,” Canada’s foreign minister Mélanie Joly told the FT.

5. Turkish inflation cools for first time in 18 months Despite the slowdown in inflation, prices are still far higher than the central bank’s forecast for the end of the year. Consumer prices rose at an annualised rate 84.4 per cent in November, official data showed yesterday, roughly meeting economists’ expectations of 84.8 per cent in a Bloomberg poll.

The day ahead

State memorial service for Jiang Zemin A memorial service for the China Communist Party general secretary of 13 years will take place in Beijing today. Current and former leaders are expected to attend. (FT, SCMP)

Reserve Bank of Australia interest rate decision The central bank is expected to raise interest rates by another 25 basis points, according to a poll of economists. (Reuters)

US Senate runoff election in Georgia Voters will go to the polls in a contest between incumbent senator Raphael Warnock and Republican opponent Herschel Walker that will determine control of the US Senate.

Join us online for FT Advancing Sustainability in the Service Sector today. Speakers include Infosys vice-president Mitrankur Majumdar, Swissport International chief strategist Nadia Kaddouri and more. Register for free here.

What else we’re reading

FT Person of the Year: Volodymyr Zelenskyy Written off by many before the February invasion as something of a joke, the 44-year-old president of Ukraine embodies the resilience of his people and has become a standard bearer for liberal democracy. He has earned a place in history for his extraordinary display of leadership and fortitude.

Australia, China and the judgment of the Solomons Despite their remoteness, the Solomon Islands have become an unlikely flashpoint in the growing strategic rivalry between China and the west as the signature of a security pact between the Solomons and China continues to spark alarm in Washington and Canberra, writes Gideon Rachman.

India takes off? Huh. We didn’t this coming, writes Robin Wigglesworth in Alphaville. India has quietly become an emerging-market standout over the past decade. Not only has it easily posted the best performance of any leading EM, it’s also been pretty much the only one to generate positive returns.

The hunt for the next market fracture With soaring inflation, rising rates and fiscal shocks sucking liquidity out of markets and sudden price moves provoking vicious margin calls and forced sales, where will the next shock come from? Here are the corners of the market that policymakers and investors are watching closely.

Why HR needs to go back to basics Too many leaders have been tempted to think that a book club, a meditation app or a weekly yoga session will be enough to make their restive troops more loyal. But post-Covid and in a tight labour market HR departments are overwhelmed. If they can get the basics right, they might have to spend less time and energy on hollow perks, writes US Business Editor Andrew Edgecliffe-Johnson.

Crossword

Do you know who the manager of Manchester United was from 1981-1986? Try your luck at 33-across in this week’s Polymath crossword puzzle.