Chinese stocks fall as lockdown in Shanghai strains supply chains

Electric car maker Nio led Chinese markets lower on Monday as dealers grappled with severe supply chain disruptions in China caused by authorities sealing off Shanghai from the rest of the country.

Nio fell as much as 14.4 percent in morning trade in Hong Kong after it said over the weekend that suppliers in Shanghai, neighboring Jiangsu province and Jilin had halted production “one after the other” and were postponing shipments.

The Hang Seng China Enterprises Index fell 3.6 percent and China’s benchmark CSI 300 index of stocks listed in Shanghai and Shenzhen fell 2.8 percent.

The market slumps signal the increasing financial and economic impact of a lockdown wave across China and particularly in Shanghai, the center of the country’s worst coronavirus outbreak in two years, which has become one Test of Beijing’s zero-Covid policy.

The disruptions to Chinese supply chains have worsened after the complete lockdown of the financial center since April 1, exacerbated strains on transportation and logistics as strict measures halted activities in China’s largest onshore financial center and city.

“Shanghai is economically important to both China’s domestic economy and trade with the rest of the world,” said Johanna Chua, chief Asia economist at Citigroup. She added that waiting times for semiconductor shipments had already increased and that “given Shanghai’s important trade links to East Asia, this could impact regional supply chains,” particularly in South Korea, Taiwan and Vietnam.

China reported more than 27,000 new cases daily, the vast majority of them in Shanghai, according to official figures. Authorities said over the weekend some communities in the city would reopen if no cases were reported for 14 days, but most of the metropolis of 25 million remains under a strict lockdown that has sparked complaints access to food and medicine.

The southern city of Guangzhou said over the weekend it would also begin mass testing of its 18 million residents after new cases were reported.

Zhenro Properties Group, which became the latest Chinese property developer to default over the weekend, blamed its missed bond payments on the “unforeseen extent and length of the lockdown in Shanghai,” which halted some operations and delayed both sales and asset disposals.

Inflation data released on Monday showed consumer prices rose nearly 1 percent year-on-year, mainly due to increases in fuel costs and food prices. Chinese stocks fall as lockdown in Shanghai strains supply chains

Adam Bradshaw

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