Chinese restaurant stocks face extended zero-tolerance COVID policy
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Nomura warned on a negative impact on restaurant operators in China due to the continuation of a zero-tolerance COVID policy.
Analyst Emily Lee noted Shenzhen was placed under COVID-19 lockdown until 20 March.
"On 13 March, China announced that Shenzhen will be put under a citywide lockdown from 14 March, implying ~17mn residents of Shenzhen will be impacted by the COVID-19 lockdown, after the local government reported 66 new confirmed cases. Residents are required to conduct tests three times between 14-20 Mar, and they are required to stay home to avoid further large-scale community transmission. Workers of non-essential businesses must work from home, which will undoubtedly affect traffic flow, in our view. Restaurants are banned from providing dine-in services, and they are only allowed to serve takeaways."
Lee also pointed out that other cities have reported outbreaks with heightened measures, including Shanghai closing schools and dine-in bans in Suzhou.
Starbucks Corporation (NASDAQ:SBUX), Yum China (NYSE:YUMC) and Luckin Coffee (OTCPK:LKNCY), Haidilao International Holding Ltd. (OTCPK:HDALF) and Jiumaojiu International Holdings Limited (OTCPK:JIUMF) are some of the stocks impacted by a zero-COVID policy in China.
Read the latest update on Chinese stocks.