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  1. Home
  2. / Investing
  3. / Stocks

Wuhan Finally Free as Chinese Stocks Rebound

Mainland Chinese shares have halved their losses for the year, even as questions about China's body count swirl.
By ALEX FREW MCMILLAN
Apr 08, 2020 | 07:44 AM EDT

Wuhan, epicenter of the coronavirus outbreak, has been under lockdown for 76 days. It was the depth of winter when that began; the streets are now leafy-green.

On Tuesday, Wuhan reported zero deaths from the Covid-19 disease, the very first time since this all began. As the clock ticked midnight into Wednesday, movement out of the city began again.

Now another migration is likely to occur. The local government reports that around 65,000 people are likely to be leaving the city on Wednesday. Surrounding Hubei Province saw its travel ban eased two weeks ago. From midnight, traffic-control checkpoints are being dismantled, and normal rail, airport, highway, bus and boat traffic out of Wuhan can resume.

The city was sealed off on Jan. 23, at which time it had around 530 confirmed cases. Public transportation ceased, business was suspended, and citizens were required to stay indoors.

But 5 million people left the city ahead of the lockdown, according to the mayor. And millions more moved around China during the Lunar New Year, which this year fell on Jan. 25, and traditionally lasts 15 days. For many migrant workers, it's the only time each year that they return home.

The lifting of Wuhan's restrictions, while a relief for citizens of the city, is worrying citizens in other parts of China. Next-door Zhejiang Province will test all people arriving from Wuhan and monitor them over the next 14 days. There were clashes on the border between Hubei and Jiangxi Province when Hubei opened up. Jiangxi residents and police blocked people from Hubei from crossing a bridge at the border. Furious citizens overturned police vehicles in a mini-riot you can see here, and the two provincial police forces started fighting.

The official Global Times newspaper concedes there are "frictions in some places" because people across the country "still have concerns over those coming from Hubei or Wuhan." Concerns combine with the expectation of the resumption of work. "We are moving forward with ambivalence," the newspaper says in an editorial.

Officially, China has posted 82,897 cases of Covid-19, and 3,333 deaths. But nobody here in Hong Kong believes those figures. The CIA has also been warning the White House since early February that China has "vastly understated" its coronavirus infections, according to The New York Times, and can't be relied on to provide an authentic count.

The CIA has also not been able to generate a reliable count using its sources in China - understandable, since some 60 million people in the most-affected areas were under total lockdown. Around half China's 1.4 billion population ultimately faced travel restrictions of some kind.

China was until March 31 not counting people who tested positive for the coronavirus unless they showed symptoms of the disease, more or less necessitating hospitalization. It changed that procedure this month to "address public concerns." Of the 885 cases reported in the last eight days, 68% were asymptomatic.

The true number of infections could be higher again, since the figures only show results for people who got tested. A pulmonary doctor in Wuhan told the official Health Times newspaper that there are probably between 10,000 and 20,000 "invisible carriers" in Wuhan, who carry the virus but show no signs of it.

How to treat case counts is being debated around the world. South Korea is counting everybody who tests positive, which seems to make the most sense to me. But the United States and the United Kingdom are also only counting patients who show signs of the virus. Here in Hong Kong, we count them all, and only 16% of the 936 cases reported so far show no symptoms of the disease.

There were 199 new cases of the coronavirus reported in mainland China on Tuesday. Of those, 137 showed no symptoms, and 107 came from abroad.

China has made big news about "imported" cases of the virus. Government officials started what appeared to be a concerted effort to spread disinformation about where the virus might have originated. This sometimes involved repeating conspiracy theories suggesting, for instance, that U.S. Army soldiers brought the virus to Wuhan.

U.S. readers can read today in the official Global Times that the "Coronavirus blame game is 'a childish distraction,'" according to an interview with Harvard politics professor Graham Allison. The "cause of the U.S. coronavirus crisis" is systemic to the dysfunctional political system of the "Disunited States of America," at a time it needs strong government and a united nationwide effort, an editorial states.

The city, which the municipal government says has an official population of 9.79 million, is China's equivalent of Chicago. It's an inland port, and central on both north-south and east-west high-speed railways. It's also the center of China's auto industry.

Monday was a public holiday in China, the Ching Ming festival. Also known as the grave-sweeping festival, it's a time for people to go to the graves of their relatives and pay their respects.

Of course, the ceremonies have taken on new import this year. Footage of long lines of people waiting outside crematoriums to collect the ashes of the recently deceased have led to speculation that the numbers of dead are far higher than those officially released. Media reports from Hong Kong suggest the funeral homes have been working 24/7 for many weeks to burn the dead.

Early in the outbreak, family members were told to cremate their dead family members quickly, often without any testing as to whether or not they had the disease now known as Covid-19. The cause of death was generally recorded as "pneumonia," or sometimes even more general.

A sure sign of how reliable the Communist Party feels about its efforts to combat the virus involve the kind of controls placed on movement into Beijing, where the top leaders live and work. And Beijing is tightening its restrictions, allowing 1,000 citizens from Wuhan to enter the capital per day.

There are reportedly 11,000 Beijing residents who have been locked up in Wuhan, people now likely to attempt to return to their place of work. But at the earliest, they can only go back seven days after testing negative for the virus. Worryingly for us here in Hong Kong, around 100,000 people are now expected to leave Wuhan and return to Guangdong Province, just across the border.

There is no doubt that the end of the Wuhan lockdown will result in a leap in activity. Spending in Wuhan between March 25 and April 3, when restrictions within the city eased up, saw spending on the Alibaba BABA app Alipay and Tencent Holdings TCEHY app WeChat Pay increase 162% over the previous month. Subway spending shot up by a factor of 15, a rate almost matched by share bikes. Beauty and hair salon spending more than tripled, as did fast food.

Chinese shares were little-moved on Wednesday, with the CSI 300 index of the largest stocks in Shanghai and Shenzhen losing 0.5%. Chinese shares have gained 7.1% since March 23, when death and infection counts clearly started to slow. That trimmed stock losses for the year by half to a 7.7% fall in 2020.

China's economy has forged a path that much of the rest of the world is following. Its activity figures were record-breakingly bad for January and February (the two months were combined to account for Lunar New Year moving from year to year).

Industrial output fell 13.5% from the prior year, the worst reading on record. Retail sales plummeted 20.5%, the first decline on record. The jobless rate rose to 6.2% for February, up from 5.2% in December, and the worst on record.

Those records are there to be broken, and I bet will be, in the rest of the Western world. Asia has been spared the worst economic ravages but, having tamped down the initial rate of infections out of China, is now being hit hard by imported cases of Covid-19. In any case, economies out here in Asia are going to be decimated as well by the lack of demand for the goods we make.

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TAGS: Investing | Markets | Stocks | Trading | World | China | Global Equity | Coronavirus

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