China locks down

Delivered on By Justin Pyvis

Good morning! A new poll from WA – the only state with no set end date for its indoor mask mandate (SA will ditch its mandate on 14 April) – found that 30% of people wanted the mandate to end now, while 64% wanted to wait until cases started to decline. The remaining 6% wanted masks to be worn forever. 😲

WA’s daily new case numbers appear to have peaked just below the 10,000 mark back on 30 March, and hospitalisations are significantly (~50%) below what the government’s modelling predicted at the peak.

Yet WA Premier Mark McGowan yesterday “confirmed his intention to keep WA in a state of emergency beyond July”.

What emergency?


Reading the tea leaves

Daily % change

AUD/USD

75.4

+0.7%

AUD/CNY

4.80

+0.6%

AU Bond

2.80

-1.8%

US Bond

2.41

+1.5%

ASX200

7,514

+0.3%

S&P500

4,583

+0.8%

Brent (bbl)

107.9

+0.2%

Gold (oz)

1,936

+0.9%

Iron ore (t)

163.6

+1.4%

Bitcoin

46,147

-0.7%

Ethereum

3,503

-0.6%

Note: Brent oil, gold bullion and iron ore prices are the second futures contract. Bond yields are 10-year Treasuries.

The US S&P500 added 0.81% thanks largely to tech (+1.93%), with social media companies all performing well after the world’s greatest influencer, Elon Musk, announced he had become Twitter’s (+27.1%) largest shareholder with a 9.2% stake.

Another Musk company, Tesla (+5.6%), also performed well after revealing it had increased vehicle sales during the first quarter, “despite the shortages of computer chips and other logistical woes that have forced other carmakers to significantly scale back production”.

Locally, the ASX200 gained 0.27% led by utilities (+1.08%), materials (+0.98%) and tech (+0.96%)

A notable mover was Iluka Resources (+6.1%), which announced that it will build a billion-dollar rare earths refinery in WA “courtesy of a $A1.25 billion low-interest loan” from the federal government.

Yet another big taxpayer subsidy for a commercial project under the banner of diversification… lobbyists have certainly earned their salaries this year!

Elsewhere in the region Chinese tech stocks listed in Hong Kong (mainland Chinese markets were closed) rallied – the Hang Seng Tech Index closed up 5.8% – following a decision by the China Securities Regulatory Commission to relax laws preventing overseas-listed companies from providing sensitive financial information to foreign regulators, allaying fears that they might be delisted.


Food for thought

Barely half of China's most vulnerable are double-dosed vaccinated, leaving the country extremely exposed to a COVID-19 outbreak.
Barely half of China's most vulnerable are double-dosed vaccinated, leaving the country extremely exposed to a COVID-19 outbreak. Source

“China locks down” is a headline we hoped never to have to write over two years into a global pandemic but here we are… from the Chinese government’s mouthpiece, the Global Times:

“The Chinese mainland reported 13,146 local COVID-19 cases on Sunday, including 1,455 confirmed and 11,691 asymptomatic ones, the highest number of daily increase since the latest outbreak, which has already infected over 100,000 people.

While one of the severest-hit regions in Northeast China’s Jilin Province successfully curbed the epidemic, the infection curve has not seen signs of decline, and a new Omicron variant mutation was detected in East China’s Jiangsu Province, neighboring Shanghai, where the mass majority of cases in China have been found in recent days.

Chinese Vice Premier Sun Chunlan stressed that the dynamic zero-COVID strategy must be upheld with resolute and swift action, while recognizing the enormous challenges that the mega city of 25 million faces in both maintaining the normal operation of its core functions and battling the Omicron variant outbreak.”

Why hasn’t China’s government got with the programme and transitioned to living with the virus like just about every other country in the world? It comes down to saving face: democratic governments of the West are weak and ineffective, resulting in millions of COVID-19 deaths, while China’s more autocratic government was able to take control and save millions.

But the reality is very different to the official narrative. The real reason China is persisting with “zero-COVID” is because it failed to vaccinate its most vulnerable, and those it did vaccinate were administered less effective, locally-manufactured vaccines such as Sinovac.

While Chinese entrepreneurs signed supply deals with the likes of Moderna and Pfizer soon after the pandemic hit, China’s government refused to approve their vaccines, instead backing “a nationalist agenda on all fronts, including in the fight against the virus”.

Time will tell whether China’s government will be able to contain this latest outbreak, which appears to a very infectious Omicron mutation yet to be seen elsewhere. The government sent thousands of additional troops to Shanghai on Sunday “to support COVID prevention and control work”, as the city’s ‘4-day’ lockdown runs into its second week.

If China fails to contain the spread it may have no choice but to transition to living with COVID to avoid tanking its already slowing economy, entailing a huge loss of life for a country where barely half of its most vulnerable (those aged 80+) are double-dose vaccinated.


Chewing the fat


Bits and bytes

🛑 Peter Gutwein announced his resignation as Premier of Tasmania and will leave politics, “citing the need to spend more time with his family and that he has ‘nothing left in the tank’”.

👩‍⚖️ ScoMo tweeted that he was “appalled” by the “atrocities against Ukrainian civilians by Russian troops in Bucha”, and that “Russia must and will be held accountable for the actions of its armed forces”.

🕵️‍♀️ “The Victorian Ombudsman will investigate whether the state’s public service has been undermined by the hiring of dozens of Labor apparatchiks for non-political positions.”

💸 The NSW government offered grants of up to $20,000 for each flood-affected household in eight local government areas if they are uninsured and have not already claimed the Disaster Relief Grant.

🏛️ WA’s Police Commissioner Chris Dawson will become the 34th governor of WA, replacing the outgoing Kim Beazley later this year.

📊 Also known as ‘technical analysis’: “China’s securities regulator launched a crackdown on brokerages using feng shui to predict stock market trends.”

📺 Beware a cheap TV: “The Vizio TV that you bought with hard-earned cash… [will] place interactive banner ads over live TV programs.”

🙊 Truth, the social media network created by Donald Trump after he was banned from Twitter, allegedly censured long-time Trump ally Roger Stone after he posted about the threat of “radical Islam”.

🗳️ Serbia’s incumbent President Aleksandar Vucic won a second term in government over the weekend, along with Hungary’s Viktor Orban. Meanwhile, Rodrigo Chaves, “a former Costa Rican finance minister accused of sexual harassment”, will be the country’s next president.

🛢️ The EU is not unified: Slovakia’s economy minister said “The gas [from Russia] must not stop. If there is a condition to pay in roubles, then we pay in roubles.”

👩‍🌾 Sri Lanka’s government imposed a curfew as the fallout from its self-imposed economic crisis intensified. Context: A million farmers lost their crops this growing season after the government imposed a scheme to become the world’s first 100% organic farming nation.

❌ Hong Kong’s pro-Beijing Chief Executive, Carrie Lam, will not seek a second term in office “after a controversial tenure that has seen many of the territory’s civil freedoms eroded”.

⚔️ The UK Ministry of Defence said: “Russian forces are continuing to consolidate and reorganise as they refocus their offensive into the Donbas region.”

🤑 “China’s top liquefied natural gas importers are cautiously looking to purchase additional Russian shipments that have been shunned by the market in a bid to take advantage of cheap prices.”

📈 Time for Erdogan to fire another bureaucrat: “Turkey’s annual inflation surged to 61.14% in March, according to data on Monday, just below forecast but at a two-decade high.”