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China Introduces Record Localised Lockdowns Amid Covid Spread

ENERGY

China has imposed nationwide localised lockdowns, mass testing and other curbs after the country reported record-high Covid-19 infections on Thursday.

  • “China is seeing a record level of lockdowns. It is even a bit worse than during the spring Shanghai lockdown because so many cities are partially locked down”, Nomura chief China economist Ting Lu said.
  • Nomura estimates that more than a fifth of China's GDP is under lockdown.
  • Nomura cut its China GDP forecast for 4Q to 2.4% year-over-year from 2.8%, and cut its forecast for full-year growth to 2.8% from 2.9%, which is far short of China's official target of about 5.5% this year. The 2022 was lowered to 4% from 4.3%.
  • "We believe re-opening is still likely to be a prolonged process with high costs", Nomura wrote.
  • Investor hopes are dimmed for China to ease zero-Covid policy soon, weighing on the economic outlook.
  • Covid-19 infections rose to a new record of 31,444 on Wednesday, surpassing April peaks.
  • A weak outlook for Chinese energy consumption has been weighing on crude markets this year with news of further lockdowns adding more downside this week.
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