China ramps up COVID restrictions - watch these stocks in the retail sector
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China's Communist Party concluded its 20th National Congress over the past weekend, with the new top leadership team finally confirmed. While some analysts on the Street have been expecting a significant easing of the Zero COVID Strategy right after the Party Congress, Nomura continues to view that scenario as unlikely.
Even more alarming, Nomura warned on Friday that Chinese officials appear to be tacitly ramping up the Zero COVID Strategy even more than anticipated.
Analyst Ting Lu and team noted that since the past weekend when the Party Congress meeting was wrapped up, there have been almost no signs of the zero COVID strategy easing.
"By contrast, the execution of the ZCS has been clearly stepped up in a rising number of cities, as containing COVID remains a key performance measure for local officials."
The Nomura breakdown in a nutshell is that the national lockdown situation has been getting significantly worse, instead of the economic re-opening that was predicted by many.
In the retail sector, companies that could be impacted by more COVID lockdowns in China through supply chain/demand issues range far and wide and could include more blowback for stocks like Nike (NKE), General Motors (GM), Starbucks (NASDAQ:SBUX), Luckin Coffee (OTCPK:LKNCY), Yum China (YUMC), Nio (NIO), Li Auto (LI), XPeng (XPEV), Wynn Resorts (WYNN), Melco Resorts & Entertainment (MLCO), Trip.com (TCOM), Kaixin Auto Holdings (KXIN), Estee Lauder (EL), Anheuser-Busch (BUD), and Tuniu Corporation (TOUR).
Read more about Wuhan going back into lockdown.