China’s zero-COVID policy has been ‘re-characterized’: Strategist

KraneShares Chief Investment Officer Brendan Ahern joins Yahoo Finance Live to discuss the rise in Chinese stocks following the easing of China's COVID-19 restrictions and the singles' day event.

Video transcript

JARED BLIKRE: And on top of the COVID news, today is the biggest shopping event in the world, Singles Day. Last year, shoppers in China spent roughly $134 billion. And the optimism over Singles Day and COVID restrictions driving Chinese tech stocks higher.

Joining us now is Brendan Ahern, KraneShares chief investment officer. And I got to tell you, Brendan, I've been tracking a lot of stories this week. And I'm just now getting to China. And it's a huge one. So what's your digestion? How are you viewing all of this news today from the blowout singles numbers to also maybe the bigger news, China reversing, or at least partially reversing, its zero tolerance policy?

BRENDAN AHERN: Yeah, I mean, certainly, zero-COVID has now been characterized dynamic zero-COVID. So we shouldn't expect that zero-COVID is just going to disappear. The Chinese government policymakers never pull the proverbial Band-Aid when it comes to policy adjustments.

So we're seeing another incremental move toward opening up. And certainly a lot of the changes that the State Council, in their first meeting after the party Congress, are really to alleviate a lot of the burdens that have weighed on China's population, and therefore, domestic consumption trends. So a real positive for those living in China.

RACHELLE AKUFFO: And I mean, and as we see shares of Alibaba up today, also the electric vehicle maker NIO is up. Trip.com obviously up because of a lot of the welcoming news there for travelers as well. Are you surprised at how far reaching this rally is right now?

BRENDAN AHERN: Well, I think I think investors have really vacated the space that they've been really worried about a number of issues, including zero-COVID, US-China political tensions, the Holding Foreign Companies Accountable Act. And so you're seeing progress on a few of these fronts that the PCAOB auditors are doing audit reviews on Alibaba, jd.com, and Yum China.

You've got President Biden meeting with President Xi next week at the G20. And then we have this adjustment to zero-COVID. So we're seeing some of the issues that have really weighed on sentiment started starting to alleviate. So we're seeing some enthusiasm come back into the market.

DAVE BRIGGS: Yeah, good to see you, my friend. Been a while, by the way. We see your ETF, which is KWEB, up 6% as well today. I do want to ask about that meeting between Xi and Biden. What are your expectations to come out of that? And if I can ask a twofer, what do you make of the fact that Alibaba is not disclosing sales for Singles Day for the first time in the 14-year history?

BRENDAN AHERN: Yeah, it's a great observation, Dave, that they've said that the sales for Singles Day was in line. So we think that's basically in and around what they did last year, maybe a little higher, maybe a little lower. Net, net, that's a win.

Expectations because of zero-COVID, really the weighing on consumer confidence in China because of zero-COVID, we think Q3. But we should see Q4, and in 2023, this domestic consumption story really come alive. So I think even though it's in line, Dave, I still think that's a beat.

DAVE BRIGGS: All right, Brendan Ahern, good to see you, my man. KraneShares. Let's get a tequila, get the kids together as well this weekend. All right?

BRENDAN AHERN: 100%, Dave.

DAVE BRIGGS: All right, great to have you on.