Protests in China | Weekly excerpt November 29th

Protests in China spread over the weekend as citizens in major cities including Beijing and Shanghai took to the streets to express their anger over the nation's Covid controls in a rare show of defiance that some believe raises the threat of a government crackdown, prompting investors to rethink investment plans after reopening hopes.

Investor reactions culminated in a violent sell-off in Chinese stocks, the yuan, U.S. stock futures, crude oil and cryptocurrencies, which tumbled as protests in China cast a shadow over the nation's reopening path and rattled investors.

The Hang Seng Chinese Enterprises Index was the hardest hit, falling more than 4% from the start and reducing this month's strong advance to less than 16%.

"We could see some de-risking in Chinese markets.", said Chris Weston, head of research at Pepperstone Group Ltd. "We are seeing some outflows from the yuan overseas, which I think is a good indication of how Chinese markets will fare."

In a note from Goldman China economist Hui Shan, he warned that there is a possibility of a "disorderly" exit of Covid Zero in China, as it "the central government will soon have to choose between more blockades and more Covid outbreaks.". The bank added that "the current situation imposes further downside risk to its fourth quarter GDP forecast, which has a low consensus."