It’s been five of the maddest days of trade – possibly the maddest – anyone’s ever seen in Hong Kong.

On Wednesday, around lunchtime here in Sydney, the benchmark Hang Seng index burst into sudden life. I mean, one moment there it is lying comatose with what appears to be some kind of locked-in syndrome – the next it’s all sprite-like, pulling at its various tubes and ready to rock on what will become its best day since Beijing was still the Olympic city, athletically vaulting 9% in almost half-a-session.

The index came in early to work on Thursday a la Gordon Gecko and led gains across the region, jumping, nay cantering to a 6.3% gain, casually erasing the nightmare record losses  which had it flatlining a day earlier.

Even more gothic – the instant resurrection of the Hang Seng’s surviving Chinese tech giants.

After getting their pants pulled down by the open market on Monday – poisoned chalice as it sometimes is – these outcasts are suddenly kitted out in its finest regalia for two days running as shares in China’s tech giants went technically nuts.

In Thursday trade, the Hang Seng’s Tech index tripped higher 7.5%. An absolutely untouchable Tencent (a few hours earlier it suggested 30% of its workforce could go) up 7%.  (Where is) Jack Ma’s Alibaba, jumping 10% and surging 16%.

Up until then, Jack Ma was having a typically sh*te week

But from the dark ages of barely 48 hours earlier, a full-blown renaissance was in swing over in New York. The now aptly-named Nasdaq Golden Dragon Chinese Index, a benchmark for US-traded Chinese companies, was up 25%.

Well you might ask, where the bloody hell am I?

Let’s start at the beginning

And why not, it’s only a few days ago that Chinese equities actually suffered their worst losses since 2008, the Hang Seng led tumultuous falls last Friday as news of another Covid-lockdown reached the southern tech metropolis of Shenzhen.

The initial fall was fanned by a gaggle of simmering doubts and fears – all familiar by now.

But let’s get reacquainted with a few of them…

Hong Kong, the financial capital of Asia a year ago, is still acclimatising to its new status as a client-province to the mainland. Its citizens are bereaved, its economy numbed. It faces reverse migration, of which the brain-drain is stupiding-down its cultural and political gene-pool. The mainland’s brick by brick dismantling of democratic privileges and just the ‘overbearing sense of the f..king forlorn’ – as one resident told Stockhead via email this week – is just the start.

Hong Kong is depressed. The mainland economy is back at different speeds.

This end-of-days-real-estate-event-horizon business is far from done. Word only arrived today of yet another property monster defaulting on its debts.

Then again, this Russian stuff doesn’t bode either, as Western powers actually unite against commonly perceived enemies (the whole “no-limits friendship” line was ill-timed at best, a set-up at worst).

The subsequent energy crisis and commodity crunch loom only too large and too real in resource dependent  China.

‘Big Shot’

There’s also still a good deal of market participant PTSD after Xi Jinping’s wonderfully arbitrary-yet-targeted ongoing crackdown on big tech firms.

There’s scary-to-watch celebrity persecutions over tax avoidance.

Ping Rong, a 24 million fan Guangzhou-based live-streamer, copped a 60 million yuan ($14m) for tax evasion last month. The next day she didn’t show up on in-app searches, and has not since.

The show trial round up of corporate suspects over corruption, which is certainly rife, continues with state media directed glee. The selective application of punishment reminding those of wealth and stature, and everyone watching, that no-one is either above the law, or even beside it… or that in Xi Jinping’s China, the law itself is beneath nothing.

Which does make the behaviour of nickel demigod Xiang Guangda, better known as Big Shot, a little odd – or state-sanctioned. Either way Big Shot it turns out has been living up to his name and being, well, a bit of a dick. His choices were – if viewed through the lens of Xi Jinping thought – not just greedy, but ugly. His exposure played out across global markets, forcing the London Metals Exchange to pack it in and giving Nickel Mines MD Justin Werner the longest 72 hours of his young life.

It’s not a good look when the leaders of private but state-backed industry pretend to be a big shot on the global stage while ordinary Chinese are being told not to move. If nickel doesn’t manage to pull off a Hang Seng soon, it’s not impossible that Big Shot may’ve fired his last.

Yet for all of these legitimate doubts and fears, nothing, not even a war in Ukraine, can freak out a Chinese stock market like a case of COVID-19.

It’s spreading like some kind of virus

The problem here is China is struggling with the opening tremors of by far its worst COVID-19 outbreak since the virus first materialised in Wuhan a lifetime ago in mid-2020. The official case rate stands at 1,500, but the years have taught district level officials that volunteering the truth is  a fool’s errand – and so those numbers could already be anywhere and everywhere.

The new outbreak is all Omicron – which we know is fast, hellishly-transmissable, often asymptomatic and yet still lethal to China’s vast, aged population.

Beijing has already slapped Shenzhen, that gorgeous manufacturing hub next door to Hong Kong, into full total nobody-breathe lockdown. The entire province of Jilin has followed. I could check now but then I’d just have to list the latest measures on other places.

Up in Shangers to be sure, restaurants, cinemas, schools and businesses have already shuttered, and the same for the Communist seat of power Beijing and close-by Tianjin which are never, ever really far from closing time these days anyway.

And then the collapses began

So on Friday last, with the number of people locked down tight across China and Hong Kong growing by the tens of millions, someone looked up for a moment and realised there is literally nowhere left for Chinese equities to run.

Between Friday night and Tuesday afternoon, the Hong Kong index lost about 11%. Shedding that weight over a long weekend isn’t good. And if the Hang Seng were a retired sporting treasure, someone would’ve told it too.

And yet, in a horrifyingly reassuring way, the Chinese state has got Hong Kong’s back on this.

Because, despite the looming shadow of Omicron, the word spread on Wednesday – like some kind of virus, I suppose – of old school central government market intervention.

The State Council, China’s top administrative body on Wednesday ‘pledged’ (保证) – not ‘said’ or ‘would consider’ mind you, but pledged – to stabilise the various organ failures spreading across the Chinese markets. Then backed it up (by calling loudly for the economic defribrilliator) by giving strong hints of possible stimulatory measures – in the post for the first quarter.

Vice premier Liu He – we’re calling him China’s economic Tsar at the moment – pledged that the government would support the stock market no matter what, as well as boost economic growth and try to put a halt to the punitive regulatory environment (crackdowns) on major industry.

In an instant, a wave of (unhealth-related) positivity washing across investors.

To make it official: ‘Concrete actions are coming’ – Xinhua

But if that wasn’t enough to get investors pumped – and it clearly was because by Wednesday arvo Hong Kong-listed shares of 2021’s tech-giant whipping boy Alibabas ripped 27% higher and jumped more than 35% – the vows from Beijing to keep markets stable ignited the memories of other big names, decent looking opportunities like Pinduoduo (PDD), and Baidu (BIDU).

In New York shares in Alibaba went off like a prawn in the sun – I said it, you read it – jumping more than 20% in US business.

That’s because the Chinese state is going a big step further, telling listed companies to go ahead and buy back their shares (we’ve got you covered) and encouraging fund managers to pour capital back into their own funds.

The China Securities Regulatory Commission (CSRC) is using a combo-lure of investor-friendly policies to part nurse, part supercharge the world’s second-largest capital market back into Middle Kingdom mode after a 72-hour window of pants-pulling unseen in China since market reforms began.

The CSRC posted on its website Thursday morning the Chinese authorities will “continue to widen access to the capital market and maintain Hong Kong’s market stability through stronger cross-border collaboration”.

The CSRC’s statement came hot on the heels of the Wednesday meet which was chaired by Vice Premier (China’s economic tsar, there he is), Liu He, in which he pledged the one-party state would “uplift the market and the economy”.

When He floated a little thought-bubble in the direction of Xi Jinping, hoping market-sensitive regulatory policies (ie: crackdowns) might be easier for markets to digest if they were “coordinated with financial regulatory authorities in advance”, all bets were back on.

What the supposed Tsar and the investment community would like is to hand-manage market reactions and expectations.

This is happening

After months of being kicked like a can, Alibaba, the first great Chinese tech-story led by the naughty-billionaire Ma, grew in value to the tune of US$80 billion in one session.

In thrilling sell-offs only 72 hours earlier, Alibaba had plummeted to a multi-year intraday low of $73.28. That’s done with. The former world beater lost 50% of its market cap in calendar 2021. Suddenly the deficit is 11%.

The Hang Seng Properties index ended about 8% higher.

Chinese property stocks a sane trader would’ve burned on Tuesday in Hong Kong soared on Thursday.

Remember this fella? Samuel Jacobs does – China Evergrande Group – up 22.5%.

Country Garden – up 23%

Sunac – a good day, all round – up more than 52%

If it walks and talks like stimmy…

The state promises accommodative monetary policy and new loans to achieve its goals, according to  vice premier,  head of the financial stability and development committee and a member of the Political Bureau of the Communist Party of China (CPC) Central Committee. and economic tsar, Mr Liu He.

And so was the icing on the cake:

A wee regulatory about face:

On the regulation over US-listed Chinese firms, the meeting said the Chinese and the US regulatory bodies have maintained good communication and made positive progress. The two sides are working on a concrete cooperation plan.

The Chinese government will continue to support various enterprises to seek listings in the overseas markets, the meeting said.

Done. Listing stateside is back on for Didi et al.

And that is a short week in China.