Is China a safe-haven? Stocks in the country where the coronavirus originated have dodged the worst of the falls on Western indexes. The Shanghai Composite index is down by less than 10% since the start of the year, compared with 29%-33% losses in the US and Europe.
China is gradually getting back to work but with tough restrictions, say Ryan McMorrow and Qianer Liu in the Financial Times. Employees often have their temperatures taken multiple times per day and most companies are only allowing about half of their workers back into the office. Compulsory face mask wearing remains common.“Halting the world’s second-largest economy has proved easier than restarting it,” writes Keither Bradsher in The New York Times.
Most factories have reopened but are operating at two-thirds of their capacity, while tens of millions of workers remain in quarantine or stuck in other towns. Early data hints at the severe impact of the country’s “vast containment efforts”. Industrial production, retail sales and investment all dropped by double-digits during the first two months of 2020 compared with a year before.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
China may now be on course for its first quarterly contraction since 1976. This week Goldman Sachs predicted a 9% plunge in first-quarter economic activity in the wake of the shutdown.
“Investors seem to be betting that the crisis in China is mostly over,” says Jacky Wong in The Wall Street Journal. The “relative isolation” of the country’s financial system has also insulated its stocks from the global sell-off; just 2.1% of equities are in foreign hands.
Yet that optimism appears misplaced. The disease may yet flare up again as restrictions are relaxed. As the world’s largest exporter China cannot dodge the incoming global demand hit as other countries bring in lockdowns, nor supply chain disruptions coming from abroad. China may have contained the epidemic for now, but “the economic consequences will... continue to widen”.
-
Should you invest in UK equities?The FTSE 100 hit a record high this week, but UK equities remain unloved and undervalued compared to their global and US peers. Should you snap them up at a discount?
-
State pension errors: DWP urged to check for mistakes among divorced peopleFormer pensions minister Steve Webb says there are a high number of divorced women on low state pensions. Now MPs want the DWP to check if there were any errors in “potentially underpaying men and women who are divorced”.
-
China’s economy is heading for a sharp slowdownNews With a slowing property market, Covid lockdowns sapping growth and the CSI 300 stock index down by 22% this year, China’s economy is in trouble.
-
China’s property downturn deepensNews Chinese house prices have fallen for ten months in a row, made worse by a residential “mortgage strike”.
-
Hong Kong’s brain drainBriefings A change in the political atmosphere and a harsh zero-Covid regime has seen thousands flee the global financial hub. Does it have a future – or will Shanghai take over?
-
Xi Jinping’s zero-Covid dilemmaNews Xi Jinping’s zero-Covid strategy is toast, but strongmen don’t say so. Matthew Partridge reports.
-
Surge in Covid cases in China rattles markets. What is going on?News The resurgence of Covid in China has led to fears that lockdowns could derail the global economic recovery. Saloni Sardana explains what is going on and how it affects the global economy.
-
How China's “zero-Covid” policy could affect the global economyAnalysis As part of t its “zero Covid” policy, China is imposing stringent lockdowns as the number of cases rises sharply. Saloni Sardana looks at how this could affect the global economic recovery.
-
China’s economy faces a triple shockNews Power cuts, the pandemic and the property slowdown are slowing China's economy down.
-
China’s property woes are spreading beyond EvergrandeNews Instability sparked by the troubles of Evergrande, China’s heavily-indebted property giant, is spreading to the wider property market, and it could affect the country’s growth for years to come.
