China is now reporting more than 30,000 cases a day, which means another major risk for companies.
👉 Background: China has been a huge proponent of the ol’ COVID-zero policy. This is part of the reason why companies with links to China suffered from major supply issues as a result.
👉 What happened: China recently released a softer-touch Covid policy, which means cities don’t shut down immediately upon news of a Covid case. But lo and behold, China is now reporting more than 30,000 cases a day.
👉 What else: This means another major risk for companies with links to China if they go into another lockdown. But it may be a silver lining for some others.
💡There are two sides to every COVID lockdown coin. One the one side, there is enormous impact on businesses that have their manufacturers in China.
💡In fact, more than 180 companies around the world have mentioned terms including “China” and “lockdowns” in their earnings this year. Think Toyota, Under Armour, Apple, Tesla.
💡But there is potentially a big, unexpected winner from any future lockdowns. Extended lockdowns in China means they will require less oil, which means the global demand for oil (and prices) go down. This knock-on effect could be a blessing for countries with sky-high energy costs.
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