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All of this happened in China this week. A thread. 1/10
Covid Zero or else. Stern words from China's top leaders, who warn criticism of Xi Jinping’s strategy won't be tolerated. China will “exhaust all means and efforts” to eradicate the virus, they say. 2/10 https://www.bloomberg.com/news/articles/2022-05-05/china-s-top-leaders-reiterate-support-for-covid-zero-cctv
Beijing does everything to avoid a hard lockdown. Train stations are shut, dining-in banned, mass testing conducted in key districts. Averting Shanghai-like chaos in the capital, which reported just 66 cases on Friday, is important. 3/10 https://www.bloomberg.com/news/articles/2022-05-03/beijing-goes-to-extreme-lengths-to-avoid-shanghai-s-covid-fate
April data rolls in, and it's not pretty. Factory activity fell to the lowest level in more than two years. The services PMI is worse than expected at 41.9 vs 48.4 in March. The impact of Covid Zero is obvious. 4/10 https://www.bloomberg.com/news/articles/2022-04-30/china-factory-activity-falls-to-lowest-in-two-years-on-lockdowns
Global companies were already feeling the pain last quarter. Adidas says 1Q revenue in greater China fell 35%, Starbucks says sales fell 23%. The second quarter will likely be worse unless China's consumers go big in June. 5/10 https://www.bloomberg.com/news/articles/2022-05-03/starbucks-results-trail-estimates-amid-higher-costs-china-woes
Hong Kong goes its own way - up to a point. Beaches reopen, masks come off for exercise. All tourists are permitted for the first time in two years. There's still quarantine but as things go, this is welcome news to residents and the economy. 6/10 https://www.bloomberg.com/news/articles/2022-05-04/hong-kong-plots-a-different-covid-path-to-china-s-zero-tolerance
Jack Ma panic. A bizarre incident where someone surnamed Ma is detained and Alibaba loses $26b in value. People are really nervous about what China might / might not do next on tech. (It wasn't Jack, obviously). 7/10 https://www.bloomberg.com/news/newsletters/2022-05-06/next-china-it-wasn-t-jack-ma
Sanctions. The U.S. considers adding Hikvision to its SDN list due to its alleged role in Xinjiang, a significant escalation against a Chinese company. This feeds right into the ESG narrative around China after the Russian example. 8/10 https://www.bloomberg.com/news/articles/2022-05-05/u-s-mulls-unprecedented-sanctions-on-china-tech-giant-hikvision
HSBC decoupling. A push to split the bank, by its largest shareholder Ping An, could create a “China-friendly bank in Asia, and a U.S.-friendly bank everywhere else,” writes the FT. 9/10 https://www.ft.com/content/d38fbe3d-d093-4ffa-a340-fb4b90cd342f
Theme of the week? China is slowing at the wrong time for the global economy and when markets are already panicking over the Fed, inflation and recession risks. 10/10 https://www.bloomberg.com/news/articles/2022-05-06/china-danger-strikes-fear-into-global-investors-stumbling-on-fed
