These Stocks Take A Hit As Covid-19 Outbreak Leads To Megacity Lockdown In China

Zinger Key Points
  • China is locking down Chengdu, a city with over 21 million residents.
  • Hong Kong recorded 10,586 coronavirus infections on Thursday.

China announced on Thursday that it would declare a state of emergency in Chengdu, a prominent southwestern province. Some 21 million residents will shelter in place amid a new COVID-19 outbreak, according to South China Morning Post (SCMP).

China’s Covid Outbreaks Are Rampant: Up to 51 new asymptomatic cases and 106 new symptomatic cases were reported from the provincial capital. Since the outbreak began around a week ago, the city has seen over 600 symptomatic cases.

Elsewhere, China’s Huaqiangbei district — where the largest electronics wholesale market in the world is located — has been shut down by local authorities, causing regional supply disruptions.

On Thursday, the southern tech center reported 87 cases, the most daily cases in nearly six months.

Hong Kong recorded 10,586 coronavirus infections on Thursday, the first time a five-digit number has been recorded in more than five months.
See Also: Hot Wage Growth, Encouraging Jobs Data: 5 Reactions As Interest Rates Hang In The Balance

Stocks Take A Hit: As lockdowns in significant economic regions rekindled investor concerns about production limitations and harm to company profitability, Hong Kong stocks declined for a fourth week of losses.

“Repeated lockdowns have hurt market sentiment,” said Wang Chen, a partner at Xufunds Investment Management in Shanghai to SCMP. “That has added to investors’ concerns about the outlook of the economy, which has already been battered by rising raw-material costs and shrinking demand. Such a scenario will continue to put corporate earnings at risk.”

After reporting weaker-than-expected August earnings, shares of electric-car manufacturers in China slid. Li Auto fell 2% to HK$108.90, Xpeng fell 5.18% to HK$66.80, and Nio fell 3.2% to HK$145.50. After Warren Buffett sold 1.72 million shares of the automaker, BYD lost 1.8% to HK$228.40, bringing this week's decline to 12.1%.

The same stocks took a hit on American exchanges:

  • Xpeng Inc - ADR XPEV
  • Li Auto Inc LI
  • Nio Inc - ADR NIO
  • BYD Company ADR BYDDF

Following a succession of earnings reports affected by the virus, Chinese real estate firms also saw declines: Country Garden Holdings CTRYF fell 6% to HK$2.17 and China Overseas Land and Investment CAOVF dipped 2.3% to HK$20.95.

Image: Pixabay

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