Covid outbreak: China markets decline as cases hit all provinces, factory output continues to shrink
The loss of Chinese stocks occurred as the country faced a strong wave of the Covid-19 outbreak. According to CNN’s calculations based on National Health Commission data, all provinces in mainland China have identified locally transmitted Covid-19 infections in the past 10 days.
The rapid spread of cases has raised worries about more lockdowns. Earlier this year, China placed Shanghai and other key cities in strict lockdown for months, which has affected consumer activity and disrupted global supply chains. .
“The implementation of virus restrictions in some parts of the [China’s] Yeap Jun Rong, market strategist at IG Group, added that Beijing’s tough stance on zero-Covid means the country’s growth prospects may remain subdued.
Also irritating investors was news that China’s massive manufacturing industry continued to shrink in August amid the country’s worst heatwave in six decades.
A government survey released on Monday showed the Manufacturing Purchasing Managers’ Index rose to 49.4 in August from 49 in July, but remained in contractionary territory. The 50 mark separates contraction from growth.
“Economic activities remained weak in August, in part due to power shortages caused by heat waves,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management.
The electricity crisis eased this week, with power supplies to industrial users restored in Sichuan and Chongqing. But the main constraint on the economy – the zero-Covid policy – has yet to be removed, analysts warn.
Julian Evans-Pritchard, senior China economist for Capital Economics, wrote in a report on Wednesday: “Disruptions due to power shortages are easing, but the COVID situation is ‘worsening’ once again. again “.
“For now, the resulting disruption may seem modest, but the threat of key failure is growing,” he said.
– CNN’s Beijing office and Simone McCarthy contributed to this report.
