Brace for earnings fallout as Chinese firms warn of production setbacks in Covid-19 lockdown cities

Name: Shanghai vows punishment for lockdown violators as the city continues to fight Covid outbreak
Uploaded: 2022-04-19T07:39:03.000Z
Duration: 1 min 34 s
Description: Shanghai vows punishment for lockdown violators as the city continues to fight Covid outbreak

Almost 100 companies have flagged disruptions to business and production facilities in lockdown cities across mainland China

Earnings to turn uglier in the second quarter as lockdowns in major hubs like Shanghai show no sign of ending

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Residents wait to take nucleic acid tests at a community in Pudong New Area in Shanghai on April 4. Photo: Xinhua

Zhang Shidong

Published: 3:39pm, 19 Apr 2022

Almost 100 listed companies in mainland China have been affected by Covid-19 lockdown measures in Shanghai and elsewhere, undermining the corporate earnings outlook on top of other economic headwinds for investors in the world’s second-biggest stock market.

The 98 companies on the Shanghai and Shenzhen exchanges probably saw a slowdown in earnings growth last quarter, because of production halts or supply-chain disruptions, according to analysts at Zheshang Securities based on stock-exchange disclosures.

The affected industries include everything from construction and clothing to food and household appliances, they added. Most of the companies are smaller enterprises, showing their vulnerability to the nation’s uncompromising pandemic-control measures.

“The first-quarter results should be okay as the full impact of the Shanghai lockdown won’t be felt yet,” said Wang Zheng, chief investment officer at Jingxi Investment Management in Shanghai. “The second-quarter number will be uglier and we will need to brace for that.”

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Shanghai vows punishment for lockdown violators as the city continues to fight Covid outbreak

The Shanghai Composite Index has fallen 12 per cent this year, making it the worst performer among major indices in the Asia-Pacific region. At least 20 provinces or municipalities have been placed under lockdown this year. Goldman Sachs said cities with high- and mid-risk districts accounted for a third of China’s economic output in the last two weeks of March.