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Macroscope | Shanghai lockdown should put Covid-19 pandemic back on investors’ radar
- Shanghai’s shutdown is a wake-up call for investors who still believe the pandemic no longer matters
- While a global fund manager survey shows stagflation is at the top of investors’ concerns, the lockdown-induced disruption in China amplifies this risk
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Every month, Bank of America publishes the results of its closely watched global fund manager survey. The latest survey gathers the views of 292 investors with a combined US$833 billion of assets under management.
One of the poll’s key questions concerns the risks that respondents believe could have the biggest impact on financial markets. The last time the Covid-19 pandemic was at the top of investors’ list of concerns was at the start of 2021, and even then the virus was not seen as a major threat to asset prices.
This is not surprising. The roll-out of mass vaccination programmes has allayed fears about the pandemic, allowing most economies to reopen. Investors, moreover, are forward-looking, and tend to shrug off shocks as soon as they believe the bad news is priced in.
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This is already happening to some extent in the case of Russia’s invasion of Ukraine, even though the war continues to rage.
Yet, while pandemic fatigue set in a long time ago, the unexpected lockdown of Shanghai, China’s financial capital and a city that had been relatively unscathed by the virus, has put Covid-19 back on investors’ radar screens.
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By some twist of fate, it is the major economy that had successfully kept the virus at bay with its uncompromising “zero-Covid” policy – a combination of sealed borders, mass testing, meticulous technology-based contact tracing and immediate localised lockdowns whenever cases appear – that has become the focal point of renewed concern about the pandemic.
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