• 4 minutes Energy Armageddon
  • 6 minutes "How to Calculate Your Individual ESG Score to ensure that your Digital ID 'benefits' and money are accessible"
  • 12 minutes "Europe’s Energy Crisis Has Ended Its Era Of Abundance" by Irina Slav
  • 5 hours GREEN NEW DEAL = BLIZZARD OF LIES
  • 17 hours Is Europe heading for winter of discontent with extensive gas shortages?
  • 1 hour "False Flag Planted In Nord Stream Pipeline, GFANZ, Gore, Carney, Net Zero, U.S. Banks, Fake Meat, and more" - NEWS in 28 minutes
  • 6 days Wind droughts
  • 7 hours ""Green" Energy Is a Scam. It Isn't MEANT to Work." - By James Corbett of The Corbett Report
  • 3 days Kazakhstan Is Defying Russia and Has the Support of China. China is Using Russia's Weakness to Expand Its Own Influence.
  • 9 days "Natural Gas Price Fundamental Daily Forecast – Grinding Toward Summer Highs Despite Huge Short Interest" by James Hyerczyk & REUTERS on NatGas
  • 2 days Xi Is Set To Be Re-Elected As China’s Leader
  • 7 days Oil Prices Fall After Fed Raises Rates
  • 9 days Oil Stocks, Market Direction, Bitcoin, Minerals, Gold, Silver - Technical Trading <--- Chris Vermeulen & Gareth Soloway weigh in
  • 2 days 87,000 new IRS agents, higher taxes, and a massive green energy slush fund... "Here Are The Winners And Losers In The 'Inflation Reduction Act'"-ZeroHedge
  • 12 days Beware the Left's 'Degrowth' Movement (i.e. why Covid-19 is Good)
New ESG Wave Hits Wall With Disinterested Investors

New ESG Wave Hits Wall With Disinterested Investors

Some funds have become obsessed…

Is China’s Digital Yuan The Death Knell For Crypto?

Is China’s Digital Yuan The Death Knell For Crypto?

China has just introduced another…

ZeroHedge

ZeroHedge

The leading economics blog online covering financial issues, geopolitics and trading.

More Info

Premium Content

Investors Caught Off Guard By Chengdu Covid Lockdown

  • The unexpected lockdown of Chengdu due to a new Covid outbreak sent Asian stocks tumbling.
  • Chengdu is one of China’s most important manufacturing hubs, with 96 listed companies within the metro area.
  • New lockdowns will pressure Beijing's economic planners as the economy slips into the abyss as a worsening property market slowdown is causing turmoil.

Asian stocks tumbled after China announced the metropolis of Chengdu would lock down its 21 million residents as authorities battled a new Covid-19 outbreak. In China's Western region, officials in Chengdu launched massive Covid testing and requested residents to abide by "stay home in principle" from 6 pm on Thursday. The new measure allows one person per household the ability to procure essential items at places like supermarkets. 

"The current state of epidemic control is abnormal, complex, and grim," officials said, adding the lockdown aims to "decisively arrest the spread of the outbreak and guarantee the health of all citizens."

Chengdu is the biggest city to shut down since Shanghai's lockdown earlier this year. The move to lock down Chengdu will generate even more macro instability for the world's second-largest economy. It accounts for 1.7% of the national economy and is one of southwestern China's most important manufacturing hubs. 

As the capital of Sichuan province -- the 6th-largest province in terms of annual GDP -- the metro area is home to 96 listed companies in the automobile, aerospace, IT, machinery, and pharmaceutical industries. 

Automakers, including Toyota Motor Corp. and VW China. Foxconn Technology Group, the world's largest assembler of Apple Inc.'s iPhones and other devices. All have manufacturing facilities in the city. 

The lockdown was unexpected and caught investors off guard: Hong Kong's Hang Seng Index slumped almost 2%, and CSI 300 Index dropped by nearly 1% to its lowest in three months. 

Some US-listed Chinese stocks declined on the lockdown news. Alibaba traded 2% lower in the US premarket, while EV stocks such as Nio, XPeng, and Li Auto were down 3.4%, 3.1%, and 2.2%, respectively. 

A spillover of pessimism from China leaked into European luxury stocks after HSBC analyst Erwan Rambourg downgraded LVMH, Hermes, Richemont, and Swatch to a "hold" from "buy." Rambourg wrote in a note he was more cautious about the short-term industry outlook, and valuation at these levels didn't make sense. 

Related: Japan Is Eyeing A Historic Return To Nuclear Energy

Analyst commentary (provided by Bloomberg) was overwhelmingly negative due to the uncertainty zero-Covid produces for the Chinese economy.

Bloomberg Intelligence, (Marvin Chen) 

  • "China's Covid-zero policy will continue to be a risk for markets and sporadic lockdowns mean any reopening recovery will likely be a bumpy one" 
  • "Local governments may ramp up efforts to contain rising Covid cases ahead of the 20th party congress" 

Union Bancaire Privee, (Vey-Sern Ling) 

  • Sporadic Covid-19 lockdowns such as this will pressure already-weak economic conditions in China but we do not expect the Covid-zero policy to shift substantially ahead of the 20th party congress in October" 

AutoML Capital, (Rebecca Lim) 

  • "This worsens the worry of China's economic slowdown, deepening of property crisis and even contagious to banking crisis if bad-loan continues" 
  • The "stringent zero-Covid measures have been enforced for more than 2 years and the wider economic environment will have a bigger impact"

All residents in the southwestern Chinese city will be confined to their homes until they test negative for Covid. There was no guidance from officials on how long the lockdown will persist. 

Also, in the Nanshan district in Shenzhen, tighter Covid measures beginning today through Sunday will close indoor public places, including cinemas, gyms, and bars, and halt in-person tutoring services to contain an outbreak. 

New lockdowns will pressure Beijing's economic planners as the economy slips into the abyss as a worsening property market slowdown is causing turmoil among developers. 

China's playbook to unleash stimulus primarily focused on infrastructure spending might not be enough to counter Covid lockdowns and a property market slump. 

By Zerohedge.com

More Top Reads From Oilprice.com:


Download The Free Oilprice App Today

Back to homepage





Leave a comment

Leave a comment




EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News