Retail Stocks to Watch as China Tightens COVID Limits

Stocks to Watch

Over the weekend, the 20th National Congress of the CCP came to a close, and the new top leadership was officially announced. Even though some street analysts think otherwise, Nomura still thinks that the Zero COVID Strategy won’t be changed much after the Party Congress. Nomura’s warning on Friday makes it even more worrying that Chinese officials seem to be secretly stepping up the Zero COVID Strategy even more than expected. Some of the stocks to watch that will likely be impacted are from the retail sector. 

Analyst Ting Lu and her team say that there haven’t been many signs that the zero COVID approaches are changing since the Party Congress meeting ended over the weekend.

On the other hand, more and more cities are moving quickly to implement the ZCS because COVID containment is still seen as a key performance indicator by local officials.

The Nomura breakdown can be summed up as follows: instead of the widely expected economic reopening, the situation around the national lockdown has been getting much worse.

Retail stocks to watch

There are a lot of retail companies that could be hurt by more COVID lockdowns in China because of supply-chain and demand problems. Nike (NYSE:NKE), General Motors (NYSE:GM), Starbucks (NASDAQ:SBUX), Luckin Coffee (OTCPK:LKNCY), Yum China (YUMC), Nio (NYSE:NIO), Li Auto (NASDAQ:LI), XPeng (NYSE:XPEV), Wynn Resorts (NASDAQ:WYNN), and Tuniu Corporation (NASDAQ:TOUR) are examples of such companies.  

While China’s zero-COVID plan has in the past had an impact on its economy and market, other factors were at play overnight. The Hang Seng Tech Index fell as much as 6% as a result of comments made by the U.S. Under Secretary of Commerce Alan Estevez regarding a deal with allies to restrict some chip-related exports to China, leading to losses in stocks around Asia. He stated at a Center for Additional American Security event that “we anticipate having a deal done in the near future” and explained how the new restrictions would limit Beijing’s military capabilities. More on 5 Stocks To Watch On Friday: Apple, Intel, Exxon, And More.

Featured Image – Megapixl © Ezthaiphoto 

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