China suffers economic ‘bloodbath’ as Covid and Russia rumours spook investors

Investors are spooked as Covid cases in China have doubled and rumours are growing of sanctions headed its way.

There are concerns China’s booming economy is faltering because of its zero Covid strategy and also allegations the nation will aid the Russian invasion.

In what has been described as a “bloodbath” by commentators, Chinese companies have plunged on the stock market in recent days due to a panicked sell-off.

On Monday, $72 billion was wiped off the personal wealth of China’s wealthiest business owners, from companies including Alibaba, Tencent (which owns WeChat) and bottled water empire Nongfu Spring Co.

China’s filthy rich saw their shares tank, with as much as $7 billion wiped off one person’s individual net worth.

US officials fuelled the uncertainty by warning that Russia had asked Beijing to help with its globally condemned invasion of Ukraine.

This prompted fears the communist nation would soon be slapped with economic sanctions from the West, which have already crippled Russia’s economy.

To top that off, investors have also pulled out of China’s share market as Covid-19 rips through the country.

A couple walk past a sign showing the numbers for the Hang Seng Index as shares fell in early trading in Hong Kong this week. Picture: Peter Parks/AFP

At the moment, more than 50 million citizens are in a strict lockdown as the subvariant of Omicron wreaks havoc in China.

On Tuesday, China’s National Health Commission warned Covid-19 cases had doubled in just 24 hours.

The response was swift and brutal.

Shanghai, a huge economic hub, was shut down, with residents in the city’s iconic Shanghai Tower trapped from leaving. Flights heading into the city were diverted.

Meanwhile, the northeastern province of Jilin, with a population of 24 million, was abruptly locked down.

Shenzhen, which has 17 million people and is where many of the country’s technology giants operate, was also placed into lockdown for seven days.

Consequently, Foxconn, one of Apple’s biggest suppliers, shuttered operations in response.

In the past, experts have warned that China’s obsession with a “zero Covid” strategy would see its economic activity flatline.

Workers in protective clothes in a locked down areas of Shanghai on Tuesday. Picture: Hector Retamal/AFP

Zhong Shanshan is currently the richest billionaire in China due to his bottled water empire Nongfu Spring Co, but the company dropped 10 per cent in a single day earlier this week, which is the most it has slumped in 18 months.

An eye-watering $6.9 billion was lost in the process.

Then the third highest net worth individual in China, Pony Ma of Tencent Holding Ltd — which oversees popular Chinese social platform WeChat — saw his fortunes drop by a staggering 9.8 per cent, the most it has dropped in a decade.

Mr Ma of Tencent shed $4.6 billion of his personal fortune in 24 hours, according to Bloomberg.

And last Friday, Asian rideshare company Didi Global Inc lost a record 44 per cent after its founders delayed listing on Hong Kong’s share market.

Consequently, Didi’s founder Cheng Wei lost his billionaire status.

Originally published as China suffers economic ‘bloodbath’ as Covid and Russia rumours spook investors