The dramatic spread of Covid-19 in China has hit trading floors in Beijing and is spreading in the financial hub of Shanghai.
Even regulators vetting public share sales were forced to cancel a weekly meeting, because illness and absentee workers had thinned equity trading that is light for seasonal reasons.
Many banks and asset managers have dusted off plans devised to cope with previous Covid crises, injecting another layer of unpredictability into currency and stock markets, where the outlook is clouded by a rocky exit from strict health curbs.
With mass testing halted after China abruptly dropped its zero-Covid policy earlier this month, official data no longer reliably capture new case numbers.
Internal surveys by several big asset managers and banks suggest more than half of their employees in Beijing, the epicentre of the virus surge, have tested positive.
“I would say more than half of colleagues in Beijing are sick, compared with 5%-10% in Shanghai,” a fund manager at PICC Asset Management, said. He declined to be named as he’s not authorised to speak to the media.
Forex Trading Drops
In China’s interbank market, average daily yuan/dollar trading volume fell to about $20 billion last week, the lowest level since April 2022, when Shanghai was put under a painful two-month lockdown to prevent the spread of the virus.
Stock trading volume also eased last week. The weekly total of 139 billion shares traded for the Shanghai Composite was a bit lower than the average for the past three years of about 143 billion.
Most currency traders in Beijing are absent from offices, so “trading volume would naturally fall,” said a trader at a state-owned lender, who also spoke on condition of anonymity.
The bank has asked any employee who lives with people with fever or has tested positive not to come to the office. “Remote trading doesn’t solve the problem that you’re sick in bed, and you also have your family to take care of,” the trader said.
CSRC Drop IPO Meeting
The pandemic also has an impact on initial public offerings (IPOs), with the China Securities Regulatory Commission calling off a weekly meeting vetting them last week. It is not clear if the meeting will be revived this week.
The National Bureau of Statistics also cancelled a news conference scheduled for November’s economic data.
To be sure, years of strict Covid rules have left a lot of businesses well placed to handle disruption.
“We travel a lot, and we have several people on one IPO project, so we take turns to do the job if one banker is on sick leave,” one banker at Shanghai-based Haitong Securities said.
Still, the situation ahead is without much precedent as the virus begins to spread far and wide.
“We have a backup and recovery disaster plan and revived backup offices in two locations just like how we did during Shanghai lockdown in April and May,” a senior trader at a Chinese bank in Shanghai said.
“We are doing everything we can, as this wave of infections and the situation should be the worst since first half of 2020.”
- Reuters with additional editing by Jim Pollard