Electric carmaker Nio led Chinese markets lower on Monday as traders grappled with severe supply chain disruptions in China caused by authorities cordoning off Shanghai from the rest of the country.
Nio’s shares closed 8 per cent lower in Hong Kong after the company said at the weekend that suppliers in Shanghai, neighbouring Jiangsu province and north-eastern Jilin had suspended production “one after the other” and that it would postpone deliveries.
The Hang Seng China Enterprises index of mainland Chinese stocks fell almost 4 per cent and China’s benchmark CSI 300 index of Shanghai- and Shenzhen-listed shares shed more than 3 per cent. The Hang Seng Tech index tumbled more than 5 per cent.
The market falls signal the rising financial and economic impact of a wave of lockdowns across China and especially in Shanghai, the centre of the country’s worst coronavirus outbreak in two years that has become a test of Beijing’s zero-Covid policy.
Authorities in Shanghai on Monday laid out a blueprint for an easing of lockdown measures in specific residential areas.
Gu Honghui, deputy secretary-general of the municipal government, said the city was dividing compounds into three risk categories and that several thousand so-called “prevention areas” would have lockdowns lifted if they had no reported cases for two weeks.
However, most of the metropolis of 25mn remains under a strict lockdown that has prompted bitter complaints over access to food and medicine. Shanghai accounted for the vast majority of the more than 27,000 new Covid cases recorded across China on Sunday, according to official data.
Disruptions to Chinese supply chains have intensified following the complete lockdown of the financial centre since April 1, exacerbating strains on transport and logistics as stringent measures have brought activity in China’s largest onshore financial hub and biggest city to a grinding halt.
“Shanghai is economically important for both China’s domestic economy and trade with the rest of the world,” said Johanna Chua, head Asia economist at Citigroup. She added that wait times for semiconductor deliveries had already increased and that “with Shanghai’s significant trade links to East Asia, this could have spillover impacts on regional supply chains”, particularly in South Korea, Taiwan and Vietnam.
The southern city of Guangzhou ordered most schools to switch to online learning after the city reported 27 Covid-19 cases on Sunday and has begun mass testing of the city’s 18mn residents, raising fears that the manufacturing hub could be the next to be locked down.
Zhenro Properties Group, which became the latest Chinese property developer to default over the weekend, blamed its missed bond payments on the “unforeseen scale and duration of lockdown in Shanghai”, which it said halted some operations and delayed both sales and asset disposals.
Inflation data released on Monday showed consumer prices rising almost 1 per cent from a year ago, driven mainly by a jump in fuel costs and food prices.
Source: Economy - ft.com
