Beijing has been watching Shanghai city residents experience some of the harshest lockdowns yet imposed by China. But now, after seeing a handful of cases within its own city limits, many are worried that China’s capital will experience a similar fate. China has ordered mandatory testing on most of the city’s population, with officials saying there will likely be more cases in the next few days. Panic buying has well and truly started. Havens like the dollar and treasuries gained, while stocks, commodities and the yuan tumbled over fears of a Beijing lockdown. Oil also sunk below US$98, with a lockdown endangering China’s oil demand.
“The scourge of Covid continues, with China unwavering in its zero tolerance policy," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “As cases erupt in Beijing, there is concern that prolonged lockdowns will hit employment and lead to a sharp slowdown in growth as well as sparking fresh shipping logjams and supply chain issues."
“There are concerns about the Covid situation in Beijing evolving into what happened in Shanghai with some prolonged lockdowns that bites the economy,” said Kevin Li, portfolio manager at GF Asset Management (Hong Kong).