Shares of Chinese companies listed in the U.S. erased earlier gains Monday after China loosened more Covid restrictions to accelerate the reopening of the economy.

The Invesco Golden Dragon China ETF, which tracks the Nasdaq Golden Dragon China Index, last traded 0.5% lower after ralling 3% earlier. Alibaba and Pinduoduo pared earlier gains, rising just 0.5%. Tencent Music Entertainment also rolled over, falling 1%. Bilibili was flat after rallying 10% earlier in the session.

The index holds 65 companies whose common stocks are publicly traded in the U.S. The majority of their business is conducted within the People’s Republic of China.

The earlier rally came as some big cities including Beijing and Shenzhen are taking steps to ease Covid testing requirements and quarantine rules amid an economic slowdown and public unrest. The move marked a shift from China’s zero-tolerance approach that involved enforced lockdowns and frequent testing for the past two years.

China is poised to announce a nationwide reduction in testing requirements and allowing positive cases and close contacts to isolate at home under certain conditions, Reuters reported, citing sources familiar with the matter.

Morgan Stanley upgraded Chinese stocks to an overweight rating in light of the change in policy. Morgan Stanley had held an equal weight rating on Chinese equities for almost two years.

The Wall Street firm called the recent developments “a confirmed path towards final post-Covid reopening.”

The Hang Seng Tech Index, which represents the 30 largest technology companies listed in Hong Kong, surged 9.3% in Asia trading hours. China’s onshore and offshore yuan topped $7 against the U.S. dollar for the first time since mid-September. 

– CNBC’s Michael Bloom and Jihye Lee contributed to this report