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China's fresh COVID wave raises concern of trading volume slowdown

Published 05/10/2023, 12:29 AM
Updated 05/10/2023, 12:37 AM
© Reuters. FILE PHOTO: People visit a market at the tourism site of Qianmen street, in Beijing, China March 14, 2023. REUTERS/Tingshu Wang

SHANGHAI/SINGAPORE (Reuters) - A fresh wave of COVID-19 is spreading through China as people return from public holiday travel, reaching trading floors and raising concern of an impact to trading volume - albeit likely not as pronounced as previous pandemic-induced disruption.

More than half a dozen traders and banking sources told Reuters this week that they or colleagues had contracted the coronavirus recently, or had heard of peers testing positive.

"I think about 10% of people around me have caught it again," said a trader at a foreign bank.

COVID-19 swept through trading floors in capital Beijing and the financial hub of Shanghai in December just as China was reopening its economy after three years of stringent containment measures, with illness and absence thinning trading volume and forcing regulators to reschedule meetings.

Traders said they expected less impact this time.

"There's no longer quarantine of cases and close contacts, so the second wave should just slow down trading efficiency," said a second trader at a foreign bank.

The trader said they had been designated as having close contact with a COVID-19 sufferer and had chosen to work remotely from home as some colleagues had tested positive for the virus.

"Impact from COVID shocks should become smaller and smaller. From reopening experiences in other parts of the world, such a trend is similar," said Tommy Xie, head of Greater China research at OCBC Bank.

In China's interbank market, average daily U.S. dollar/yuan trading volume has slowed only slightly. Daily trading volume was $35.9 billion on Monday, the lowest since April 18 and compared with last month's average of $38.9 billion.

While the World Health Organization has declared COVID-19 as no longer a global health emergency, China's health authority this week said case numbers had risen as travel spiked during the five-day Labor Day break through May 3. Still, the number of severe cases in hospitals did not increase significantly.

Virus transmission naturally increases as crowds gather or due to higher mobility during public holidays, so infection in some areas may rebound slightly, said Liu Qing, an official at the National Administration of Disease Prevention and Control.

"However, chances of regional large-scale outbreaks are not high, and there will be no obvious impact on medical treatment and social operations in the short term," Liu said.

A third person at a foreign bank said they recently tested positive and rested at home for a week, though their employer did not have any specific protocols.

© Reuters. FILE PHOTO: People visit a market at the tourism site of Qianmen street, in Beijing, China March 14, 2023. REUTERS/Tingshu Wang

However, at least two lenders - including a major state-owned bank - conducted rapid antigen tests after employees reported feeling unwell, people familiar with the matter said.

"Sooner or later the second wave will arrive. I will take extra care of myself for now," said a fourth trader, who works at a Chinese lender.

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