The long-awaited shift away from China’s zero-Covid policy, forced upon the recalcitrant leadership by unhappy citizens, will lift long-suffering Chinese stocks. But how far the rally goes will depend on whether China’s reopening revives the housing market, too—and just how bad the nation’s Covid “exit wave” turns out to be.

After nearly three years of strict pandemic restrictions, China finally seems to have decided that enough is enough. Some major cities, including Beijing, have eased Covid suppression policies, including some curbs on citizens’ movements and testing requirements, even though case numbers remain high. The government is also making a renewed push to vaccinate China’s elderly after the vaccination drive lost steam mid year: That is a key signal that a measured reopening is finally drawing near. Last week China’s leader, Xi Jinping, told visiting European officials that the virus is less lethal than in the past. State media has also softened its rhetoric on the dangers of the disease.