Covid spreading at fastest pace since Shanghai lockdown sends shivers through China markets
As officials nervously track infection charts, investors watch warily for signs of another sudden clampdown
TAIPEI : China’s Covid cases are rising at the fastest pace since late May, unnerving investors wary of a repeat of Shanghai’s two-month lockdown, which snarled global supply chains and sank hopes the country will reach Beijing’s economic-growth targets.
More than 2,300 locally transmitted cases have been reported nationwide in the past seven days, with infections again on the rise in the commercial and manufacturing powerhouse of Shanghai, albeit from a low base. The central province of Anhui, a producer of steel, autos and computers, is the worst-affected—though new daily cases appear to be falling, to just 39 Monday from a peak of 292 more than a week ago. Cases have also surged in neighboring Jiangsu and Shandong.
Chinese leader Xi Jinping had lauded the effectiveness of the nation’s zero-Covid policies in containing outbreaks driven by the highly infectious Omicron variants, which other countries have failed to keep in check. But given that only five of the 31 provincial-level regions have reported zero cases since Shanghai’s lockdown officially ended June 1, preventing another outbreak without severe damage to the economy will be a daunting challenge.
On Sunday, authorities in Shanghai said the city found its first locally transmitted infection of the Omicron subvariant BA.5, which had been traced to an earlier imported case. Now the dominant strain in the U.S., it is considered the most infective version yet of Omicron because of its ability to evade immunity built up by previous infections and vaccines.
“The potential risk of community transmission remains very high," Zhao Dandan, a Shanghai health official, said at a press conference Sunday, adding that two more rounds of mass testing in more than nine districts over three days will start Tuesday.
The uptick in cases is fueling concern about the return of sweeping and stringent pandemic restrictions—particularly in view of the spread of BA.5. China-related stock indexes fell Monday as investors weighed the likely risk to the country’s already weak economy and consumer confidence.
The CSI 300 Index, which tracks the largest companies listed in Shanghai and Shenzhen, fell 1.7% on Monday, while Hong Kong’s benchmark Hang Seng Index slid 2.8%. The selloff was broad, including energy and raw-materials producers, retailers and internet-platform companies.
“Investors still have the muscle memory of the dark days of the monthslong Shanghai lockdown earlier this year, and worry that we might be going back," said Qi Wang, chief executive of MegaTrust Investment (HK), a Hong Kong-based fund manager that focuses on stocks listed in mainland China.
The market was also unnerved by a seven-day lockdown announced by Macau, shutting the casinos in the world’s biggest gaming hub. Shares of Wynn Macau and Sands China both dropped more than 7%.
China’s first locally transmitted case of BA.5 was found in Xi’an last Tuesday, leading to a weeklong lockdown for the city of about 13 million people. Three more cases were discovered the same day in Beijing, officials said a day later.
The country last reported a fatality from Covid-19 on May 26, bringing this year’s toll to about 600. More than six million people have died from the disease world-wide since it first emerged in the Chinese city of Wuhan more than two years ago, including almost 10,000 in the past seven days, according to World Health Organization estimates.
Virologists say BA.5 is concerning because repeated infections—even with only mild symptoms or none at all—increase the rise of complications, such as heart attacks and strokes.
Health officials in Shanghai also pointed to the Omicron subvariant BA.2.2, which led to a cluster related to a karaoke bar infecting more than 200 people between July 3 and 9, adding that the number of people infected creates is a risk of hidden transmission within the community.
In four districts of the city of Lanzhou, in northwestern China’s Gansu province, authorities imposed “one-week temporary restrictions" starting Monday, banning dining-in at restaurants, ordering employees to work from home and shutting schools early for summer holidays. The province reported 45 cases over the past three days—after having had only one since mid-April.
The cities of Haikou, on the southern island province of Hainan, and Nanchang, the capital of Jiangxi province, where a handful of cases were reported over the weekend, ordered gyms, bars and movie theaters to shut—in Haikou for a week and in Nanchang without a specified reopening date.
Macau, which neighbors Hong Kong, reported 59 new cases for the prior 24 hours on Monday, when its more than 680,000 residents braced for the first citywide lockdown in more than two years. Infections there have spiraled in the past month despite the city’s having followed China’s strict border-control policies.
