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• Chinese cities have loosened COVID restrictions in the wake of mass protests, lifting Chinese stocks. 
• But market watchers are still preparing to see if China is ready to announce a full reopening of its economy. 
• Here are five things experts say they’re watching in China after protests shook the market. 

Chinese equities finished higher last week after cities throughout the country relaxed some strict COVID-19 restrictions, but questions remain whether the government will fully scrap the zero-COVID policy it put in place after the outbreak began in 2019.  

Protests in at least 17 cities erupted last week after 10 people died in an apartment fire in the city of Urumqi, with local residents angered by the building being blocked off by lockdown measures. Protestors, in a rare display of dissent against China’s authoritarian government, called for President Xi Jinping to resign.  

China’s top pandemic official last week appeared to signal a softening in the zero-COVID policy but the government has yet to pledge a comprehensive step-down. Hong Kong’s Hang Seng Index climbed 6.3% and the Shanghai Composite gained 1.8% last week but each remained sharply lower for 2022, down 20% and 13%, respectively.

“Hopefully … the Chinese government will start to unlock a little bit more. But knowing China, they have a habit of keeping a tight fist, “Darrell Martin, founder and CEO of Apex Trader Funding, a proprietary trading platform, told Insider. 

Retail investors should be prepared to move defensively should Beijing’s decisions on zero-COVID policy go against their respective positions, Martin said. 

“I think you definitely need to learn how to trade short in this market. That’s something that many retail traders are foreign to – where they can sell first and buy second,” he said. “There are short ETFs … and for more active investors, they can short the market in  a regular trading account or investing account.”  

Here’s what some market experts are looking at as global investors watch for developments surrounding the Chinese government’s zero-COVID stance. 

More crackdowns, more market losses. 

Emerging markets investing legend Mark Mobius said last week that Chinese stocks may come under further pressure in the face of the government’s response to dissent. 

“It’s clear to me that Xi cannot tolerate any protests, so there will be a very tough crackdown on any protesters,” Mobius told Bloomberg TV. “More people will be arrested and they will probably go further in terms of population control in many areas.”

“So if you have that kind of scenario, then you’ve got to consider that the market will probably not do that well in the short term,” he added.

FOMO is back in China 

The “recent pickup in China equity inflows … suggests the fear of missing out is back,” Emmanuel Cau, European equity analyst at Barclays, wrote this week. “China mobility in 2022 is now lower than it was in 2020, when the pandemic started, while it is the opposite for Europe and US,” he wrote. 

“So while reopening may not be a smooth process, all else equal, it seems reasonable to expect a positive growth impulse, or less growth drag, from zero-Covid next year in China compared to this year, in our view.” 

Metals prices to get a lift 

A China reopening would contribute upside potential for certain metals, Bank of America said, noting China accounts for 50% of global metals demand. 

“A second leg higher in the Fed’s tightening cycle in 2H23 remains a key downside risk to commodity prices, particularly gold. Yet we expect Chinese economic activity to pick up firmly as Zero Covid policies are gradually eased lending support to the commodity complex,” wrote Francisco Blanch, head of global commodities at BofA. 

The bank said it’s increasingly constructive on transition metals like copper as Chinese spending on infrastructure and its electrical grid should combine with rising sales of electric vehicles. Copper could rise to $12,000 a ton next yea and aluminum may reach $2,738 a tonne.  

Position for China’s re-opening 

Being bullish on energy stocks in the way to be positioned if China were to “truly” reopen its economy in the second quarter of 2023, Anastasia Amoroso, chief investment strategist at iCapital, wrote in a note. 

The “country’s traffic congestion, airline bookings and flights, and overall mobility should [recover] meaningfully, supporting more demand for oil in an otherwise constrained supply environment,” she said. 

Brent crude oil traded above $85 a barrel on Friday and has lost about 13% over the past month. The S&P 500 energy sector has risen modestly over the past month but it’s zoomed up 64% during 2022. 

China policy, after all, is “impossible to predict” 

Activist short-seller Carson Block said this week on CNBC that China has not been outlining its economic policy goals and investors need to price in such risk. 

The founder of Muddy Waters Research said projections from Wall Street investment banks about China’s next COVID policy moves are viewed from the “prior lens” of a government that was open to foreign investment and raising its citizens’ standards of living. 

“You have to understand that nobody has an edge as to predicting China policy anymore. The guy you know who’s got lots of ‘guanxi’ or relationships in China? No, that doesn’t matter anymore,” Block said. “So you have to price in to what you’re willing to pay the understanding that you wake up one morning and [say], ‘It’s down 90%.’ Because that’s what China is now. It is impossible to predict on a macro level.”

• Shannon Epstein, the niece of former New Jersey Gov. Chris Christie, was arrested on Spirit Airlines. 
• Epstein reportedly asked passengers she thought were Latino if they were carrying cocaine
• Epstein had to be handcuffed to a wheelchair, The Times-Picayune reported.

Former New Jersey Governor Chris Christie’s 25-year-old niece was arrested on a handful of charges, including six counts of battery, after causing a scene on a Spirit Airlines flight departing from Louis Armstrong International Airport on Thanksgiving Day, the Times-Picayune reported. 

Before the plane’s departure for New Jersey, Shannon Epstein reportedly made passengers uncomfortable after asking a family she perceived to be Latino if they were “smuggling cocaine,” Capt. Jason Rivarde of the Jefferson Parish Sheriff’s Office told the Times-Picayune. 

After employees requested she be removed from the flight, Epstein resisted and began struggling with deputies, the Times-Picayune reported.

Six deputies were injured, including one who was bit by Epstein. Another deputy was kicked in the groin, the outlet reported.

Epstein was eventually detained after seven deputies handcuffed her to a chair, but the politician’s niece reportedly taunted law enforcement by telling them they would get in trouble for arresting her as a result of Christie’s connections to former President Donald Trump, the outlet reported.

Epstein was released from Jefferson Parish Correctional Center the same day after paying $10,750 bail. She is set to appear in court on January 23. 

The case will most likely end up under the jurisdiction of a federal court, due to federal laws that pertain to passenger disruptions on planes.

The Jefferson Parish Police Department, Spirit Airlines, and representatives for Christie did not immediately respond to Insider’s request for comment.

• Twitter’s decision to throttle stories about Hunter Biden’s laptop prompted bipartisan criticism.
• Though the laptop was authenticated, some reports about its content have not been confirmed.
• Some lawmakers have since called to repeal Section 230, a law “that created the internet.”

Newly published internal communications regarding Twitter’s decision to throttle a New York Post story about Hunter Biden’s laptop in late 2020 revealed the social platform fielded widespread bipartisan criticism over its decision. The criticism has since intensified a movement to repeal Section 230, which could change the Internet forever. 

Matt Taibbi, who writes the Substack newsletter “TK News,” on Friday posted a thread of tweets he titled “The Twitter Files” that included screenshots of internal correspondence about the social platform’s content moderation system. In a note to his readers on Substack, Taibbi wrote he had to “agree to certain conditions” in order to publish the files, though he did not reveal what those conditions were. 

When reached via phone, Taibbi declined to comment to Insider.

Much of Taibbi’s thread focused on Twitter’s handling of the New York Post’s October 2020 story about Hunter Biden’s laptop, which the Post reported was left in a Delaware repair shop. Early reports about the laptop were met with skepticism by social media platforms — which faced heavy criticism about content moderation following the 2016 controversy regarding then-candidate Hillary Clinton’s emails — and warnings from law enforcement about disinformation campaigns spread through social apps.

Elon Musk and representatives for Twitter did not immediately respond to Insider’s requests for comment.

Meta CEO Mark Zuckerberg himself confirmed in an August interview with Joe Rogan that his platforms suppressed reporting on Hunter Biden’s laptop prior to the 2020 election, saying it “fit the pattern” of misinformation Facebook had been advised by the FBI to look out for. Though the laptop and some of its contents have since been authenticated as belonging to Biden, some reports about its content have not been confirmed. 

The documents published by Taibbi focused on internal discussions among Twitter staff regarding the laptop story and the ultimate decision to slow its reach across the platform and label it using the platform’s “hacked materials” policy. At the time, the veracity of the reporting was under question and it was unclear whether the material reported to be on the laptop had been legally obtained, though critics were quick to question why Twitter had chosen to throttle the material.

“I say this as a total Biden partisan and convinced he didn’t do anything wrong,” Taibbi reported Rep. Ro Khanna wrote in an email to the head of Twitter’s legal department, Vijaya Gadde, at the time. “But the story now has become more about censorship than relatively innocuous emails and it’s become a bigger deal than it would have been. It is also now leading to serious efforts to curtail section 230 — many of which would have been a mistake.”

Section 230 is a clause in the Communications Decency Act of 1996, which its advocates have called “the most important law protecting internet speech.” The 26-word phrase “that created the internet” limits legal liability for tech platforms hosting user-generated content — that is, in other words, a social media platform like Twitter cannot be held legally responsible for any illegal content posted by its users.

The section says: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.” Tech companies view a potential reversal as a threat to free speech that would force small web hosts to close their sites or risk legal liability for what their users posts.

Representatives for Khanna did not answer questions about the congressman’s current position on whether or not to repeal Section 230.

“I believe our Constitution and First Amendment are sacred,” Rep. Khanna of California said in a statement emailed to Insider. “As the congressman who represents Silicon Valley, I felt Twitter’s actions were a violation of First Amendment principles so I raised those concerns. Our democracy can only thrive if we are open to a marketplace of ideas and engaging with people with whom we disagree.”

Khanna was not alone in his criticism of Twitter’s move – which the site’s former trust and safety chief has since said was a mistake. Taibbi reported 9 Republicans and 3 Democrats surveyed by a research firm in 2020 also disapproved of the decision — and bipartisan calls for the reform or reversal of Section 230 have increased since the Hunter Biden laptop story.

“I’m more determined than ever to strip Section 230 protections from Big Tech (Twitter) that let them be immune from lawsuits,” Sen. Lindsay Graham tweeted in January 2021, just months after the Hunter Biden story surfaced and shortly after he introduced legislation to repeal section 230. “Big Tech are the only companies in America that virtually have absolute immunity from being sued for their actions, and it’s only because Congress gave them that protection.”

Donald Trump made Section 230 a staple issue of his presidency, singling out Twitter for what he called “selective censorship” after the platform added warning labels to several of his tweets regarding voting by mail. In the final weeks of his presidency, Trump vetoed a $740 billion defense bill, in part because it did not repeal Section 230. 

Republican criticism of Section 230 often centers around claims of tech platforms censoring conservative viewpoints, while Democratic critics say the law allows social companies to avoid doing more to combat hate speech and disinformation.

“I’m calling on Congress to get rid of special immunity for social media companies and impose much stronger transparency requirements on all of them,” Al Jazeera reported Biden said earlier this year, calling to repeal Section 230.

Should Section 230 be repealed, free speech advocates worry the digital landscape would radically change — by forcing website hosts to be held liable for the content posted to their sites, moderators would likely eliminate potential legal risk by drastically limiting what they allow users to post or by shutting down entirely. 

“Repealing Section 230 is a drastic step that would upend the internet, punishing successful firms and internet users for the behavior of an antisocial minority,” read an essay by Will Duffield, a policy analyst for the think tank Cato Institute. “Heaping legal liability on platforms will not render them more thoughtful or judicious. It will cause some to close, and others to exclude all but the most inoffensive sentiments.”