ADVFN Morning London Market Report: Monday 28 November 2022

Victoria Scholar, head of investment at Interactive Investor, said: “Rare protests have broken out across major Chinese cities in a backlash against the ongoing draconian zero-tolerance to Covid approach from the authorities that has inhibited the freedoms of Chinese citizens since the start of 2020 and has sharply damaged China’s economy.

“As a result, international investors have become a lot more cautious towards China with the unrest weighing on the Shanghai Composite, the Hang Seng Index and the Chinese yuan in today’s trade.

“In mid-November China reduced its quarantine time for international travel by two days, suggesting that Beijing was finally starting to ease its strict lockdown measures, lifting travel and casino stocks amid optimism towards the potential economic reopening. However, that optimism has faded fast with China recording another record high level of covid infections on Monday, adding to the sense of frustration driving this weekend’s protests.

“While most other nations have reopened their economies with life returning to normal, China is left facing heavy handed restrictions prompting unrest across the country. The expectation is that Beijing will continue with its tough measures until March or April resulting in more lockdowns and more pressure on growth.”

In equity markets, Shell, BP, Harbour Energy, Wood Group and Tullow were under the cosh, with oil prices sharply lower as the protests in China sparked demand worries. Brent crude was down 3% to its lowest level since January.

Miners – which are also heavily dependent on demand from China – fell, with Glencore, Rio, Antofagasta and Anglo American all down.

Housebuilder Persimmon was under pressure after a downgrade to ‘sell’ at UBS. The sector more broadly was hit after property website Zoopla said people selling homes have been having to settle for below the asking price in recent weeks. Zoopla also predicted that house prices will decline by around 5% next year.

Elsewhere, car dealership Inchcape was weaker as it said group chief financial officer Gijsbert de Zoeten had voluntarily tendered his resignation and will be standing down with immediate effect. “This follows an incident at a recent event where, through a lapse in judgement, he displayed personal behaviour falling short of the high standards expected of the leadership of the group,” it said.

On the upside, Just Group rallied after an initiation at ‘buy’ at Jefferies.