(Bloomberg) -- Chinese stocks in the US are falling Friday, on line for their first weekly decline this month, with surging Covid cases and increasing curbs across the country hurting optimism that restrictions will be lifted any time soon.
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The Nasdaq Golden Dragon China Index of 65 Chinese stocks is down 3.2%, bringing the benchmark's weekly loss to 5.9%. Internet stocks including Alibaba Group Holding Ltd. and JD.com Inc. fell more than 4% each, while online lender Lufax Holding Ltd. slumped 25% after slashing profit guidance.
After hopes of a pivot from Beijing's zero-tolerance stance on the pandemic fueled a rebound in Chinese stocks earlier this month, China's struggle to contain a wave of new infections delivered a reality check for investors this week. Nationwide Covid cases topped 30,000 on Thursday for the first time ever, forcing many localities to ramp up restrictions.
Zhengzhou, home to the largest iPhone manufacturing site, is under an effective five-day lockdown. Soaring cases sparked control measures and panic buying in some districts of Beijing. These curbs came after China issued a sweeping 20-point playbook earlier this month, which called on local officials to ease off on mass testing and movement restrictions.
Yet, Wall Street is turning increasingly bullish on Chinese stocks, with Bank of America strategists the latest to recommend buying the nation's equities for 2023. The government's pledge to boost the ailing economy with monetary policies, including a cut in the reserve requirement ratio on Friday, also offered hope.
The Golden Dragon Index has rallied 20% in November, on track for its best month since September 2007. The MSCI China Index has risen 21% as of Thursday, which would mark its best monthly performance this century if the gains hold.
(Updates with share-price moves after the open.)
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