Firms are struggling to re-open factories in Shanghai

Shanghai officials today said the covid outbreak was under ‘effective control’ on Friday and that cases have been on a ‘continuous downward trend’ since April 22.

The city has been under lockdown since April 1 and there’s no visibility to when that will end. About 2.3m people are in sealed-off areas while 16.7m are in lower-risk ‘prevention zones’ but how those rules are applied are a point of frustration for residents.

The latest number of cases was 4024 yesterday but the vast majority of those were in quarantine centers. There were 245 locally transmitted cases reported on Saturday.

A survey of Japanese manufacturers on Thursday showed how difficult it is to re-open factories under ‘closed loop’ rules. According to the SCMP:

The Shanghai Japanese Commerce & Industry Club said on Thursday of 54 firms that responded to a survey it conducted between April 27-30, 63 per cent responded that their factories had yet to resume operations.

Out of the 37 per cent that have resumed operations, over three-quarters said production was at or below 30 per cent of normal levels.

That’s a bit dated now but underscores how difficult it will be to reestablish supply chains.

Meanwhile, the centre of the outbreak appears to be moving to Beijing where the Chaoyang district ordered another round of mass testing along with a stop to construction work and office closures. On Saturday, 78 cases were reported compared to 68 a day earlier.

Here’s a great chart from Exante showing what looks like a de facto lockdown in Beijing:

Beijing subway usage

Shanghai COVID-19 a “Black hole of information”

Lack of information, misinformation, and disinformation all coming out of China official media on the situation in Shanghai, which is recording the worst coronavirus outbreak since the pandemic began. With no end in sight.

Case numbers are rocketing higher. Of course, these are probably understated.

26m Shangahi reisdents are being ‘mass tested’.

Some snippets from various reports (from media not approved by China’s state):

  • “The port of Shanghai is still operating, though at considerably lower productivity. Lack of dockworkers, due to restrictions, are impacting loading and unloading. Additionally, limitations and delays on trucking do affect container availability. In an effort to get around the disruptions, shippers are shifting their cargo to nearby ports such as Ningbo and ocean carriers are omitting Shanghai calls,”
  • “This is bad news for carriers as it chokes off the supply of goods and forcibly reduces demand for their services,”

Analysts at Nomura are forecasting additional shipping delays and say:

  • “Markets so far have underestimated the severity of the situation in China”

COVID-19 outbreak is hitting Shanghai “harder than authorities have publicly disclosed”

Via the Wall Street Journal (Journal is gated but there is the link if you can access it):

  • Many patients have died in recent days at a large Shanghai elderly-care hospital that is battling a Covid-19 outbreak, according to people familiar with the situation, a sign that a new wave of infections is hitting China’s financial capital harder than authorities have publicly disclosed.
  • Shanghai’s government hasn’t reported any Covid-related deaths or outbreaks in its hundreds of elderly-care centers since cases began climbing in the city in March.

This is one of China’s biggest lockdowns to date.

  • ordered its 13 million residents to stay at home and avoid unnecessary outings
  • Since Dec. 9, the city in the northwest of China has confirmed more than 140 Covid-19 cases
  • Late Wednesday, the Xi’an city government said on its verified social-media account that another 127 people in the city had tested positive for Covid-19 in an additional round of mass testing. It didn’t say what variant caused the new infections.

While not in the industrial heartland of China the official response is indicative of the risk of further lockdowns ahead and consequent disruptions to supply chains and the Chinese economy.

xi'an china

Covid positivity remains sky high in South Africa

south africa covid data Dec 6

  • 23 Nov: 605
  • 24 Nov: 1018
  • 25 Nov : 1950
  • 26 Nov : 2173
  • 27 Nov : 2629
  • 28 Nov : 2308
  • 29 Nov : 1909
  • 30 Nov: 3143
  • 1 Dec: 6168
  • 2 Dec: 8280
  • 3 Dec: 11553
  • 4 Dec: 11,607
  • 5 Dec: 7929
  • 6 Dec: 4488

On the face of it, that looks like great news but the number of tests is down by two-thirds in the past two days. That’s partially a weekend effect. Just 24,159 tests were processed and positivity was 26.4%, which is the highest during this outbreak. It suggests that most infections are being missed.

The good news is that cases don’t appear to be accelerating faster, even after adjusting for testing. Cases are up 135% w/w with about the same number of tests but that’s an improvement over recent days.

That’s somewhat of a sign that it’s not quite as infectious as feared. Models tend to oversample around outbreak events and in countries where there have been superspreader events.

In terms of severity, there is an increase in re-infection rates, meaning that past infection isn’t as effective. So far infections in vaccinated individuals have been mild.

“Unfortunately, we’re seeing a more than doubling of hospital admissions each day,” said Ian Sanne, an infectious diseases specialist who serves on South Africa’s COVID-19 presidential advisory committee.

Meanwhile, the list of countries where they’ve detected the variant is now too long to name. You can assume that it’s nearly everywhere or will be soon.

What’s encouraging is that markets have stabilized. Oil and copper were both higher today alongside US stock markets. The market has shown a remarkable ability to look beyond covid and that’s likely to be the case once again, baring a turn for the worse in hospitalization.

French health minister says latest COVID-19 wave peak could be “very elevated”

Remarks by French health minister, Olivier Véran

  • The peak could be reached in January
  • By the end of January, the peak could be “very elevated”
It seems like Veran is succumbing to the fact that the omicron variant is going to be more widespread across Europe and may eventually take over from delta as being the dominant variant across the region. Here’s a look at French cases for now:
For added context, France has fully vaccinated around 70% of its entire population as of the end of November with roughly 11% of those persons receiving booster shots.

Daily covid cases in Gauteng rise to 6168 from 3143

Cases in the epicentre in South Africa surge

Cases in the epicentre in South Africa surge
Gauteng province is where cases of the omicron variant first appeared and they’re now up 10x in just 9 days.
Here’s the recent progression:

  • 23 Nov: 605
  • 24 Nov: 1018
  • 25 Nov : 1950
  • 26 Nov : 2173
  • 27 Nov : 2629
  • 28 Nov : 2308
  • 29 Nov : 1909
  • 30 Nov: 3143
  • 1 Dec: 6168
If there’s a silver lining it’s that testing has increased substantially to 51,977 from 42,664 a day earlier and half that two days ago.
That’s where the good news ends though with test positivity today up to 16.5% from 10.2%. That’s shockingly high and suggests far more cases than are being reported.
What sometimes happens in situations like this is that only people who are sick or seriously sick are being tested and new positives are informing close contacts so they get tested. It’s possible the jump in cases isn’t quite as bad as it seems but I don’t think you can spin this as good news, in any way.
There’s some reason for hope on the severity of the illness but transmissibility is certainly looking high.
Here’s a great thread from a virologist who speculates (based on data):
covid threadThe next question you have to ask is: Ok, what’s the worst case scenario and what does that look like in markets. We’ve seen before that markets have a remarkabl

China has reported 113 new coronavirus cases

Uh-oh. This is a big jump from the previous day’s report of 39.

And the largest number increase since November 13.
China is is still aggressively pursuing a ‘zero’ policy so this jump in cases is likely to see a rapid introduction of counter-measures.
From a global markets perspective, the risk is further disruption to supply chains and also to Chinese economic growth.
Pic is not China but its all linked!
disruption to supply chains
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