The only place in the world where omicron really matters for markets is China and I believe that market participants are underestimating the risks.
China has done an incredible job containing covid but omicron is a different beast and we continue to see signs of that. Xian remains on an ultra-strict lockdown. The news there has improved with 95 cases reported today, down from over 150 last week. It's still unclear whether that's the delta or omicron variant but the spread points to omicron.
Officials say the lockdown will be gradually lifted when there is zero local transmission and chipmakers in the city say it will further back up their output.
Cases are picking up elsewhere, notably in Hong Kong where an outbreak is ongoing. Today, officials reported that a 42-year-old who couldn't be traced to the restaurant outbreak tested positive, with officials saying it's likely omicron.
“Initial epidemiological research has shown he has not visited any high-risk places or been in contact with other confirmed patients,” Dr Albert Au Ka-wing, principal medical and health officer of the Centre for Health Protection in Hong Kong told a press briefing. “It is possible that there are silent transmission chains in the community.”
The country also had 21 new asymptomatic local cases and 100 new imported cases (67 of them symptomatic).
Yesterday, the city of Yuzhou with 1 million people, was placed on lockdown after reporting three local cases in two days. There were also 8 local infections reported in Ningbo, which is home to the third-busiest port in the world. So far, port operations are unaffected but you can imagine the supply chain disruption if they close it.
The cases in Ningbo so far are from a major garment processing company. I imagine most of the works in that industry work in tight quarters; and so far they're only locking down the district where the factor is located.
