China’s handling of COVID is a total disaster pushing that economy towards negative growth for the first time in decades. This time there is no Western stimulus coming to the rescue, instead Fed rate hikes.

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OUR ENTIRE APPROACH IS A FAILURE, WE MUST REDOUBLE OUR EFFORTS: Authorities now fencing in buildings in Shanghai to stop people from leaving.

“This reeks of something local officials felt obliged to do not because they expect it to limit transmission but because they’re desperate to show their bosses in Beijing how committed they are to the policy. . . . The grim punchline to China trying to move mountains in Shanghai in the name of ‘zero COVID’ is that … there’s now an outbreak in Beijing too. Just 22 cases were recorded today but residents of the capital are understandably terrified, knowing that a Shanghai-style lockdown awaits if the city can’t stamp out transmission quickly.”

Shanghai Stock Exchange just closed down 5.1%

Mainland Chinese indexes led losses as Asia-Pacific markets fell sharply on Monday following a sell-off on Wall Street on Friday. The Shenzhen component tumbled around 6% while the Shanghai composite declined 5.09%.

“It’s no surprise and it makes all sorts of logical sense that the market should be concerned about the Covid situation because that clearly is impacting economic activity. It’s impacting earnings potential for many parts of the market,” said Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs.

China has been struggling to contain its worst outbreak of the virus despite harsh lockdowns in its largest city, Shanghai. Over the weekend, capital Beijing, warned that the virus has been spreading undetected for about a week [in Beijing]. He said there is a lot of policy support on its way, especially in infrastructure spending, but that can’t take place when the economy is locked down. “That’s why the market is very much focused on the near-term issues with respect to Covid,” he told CNBC’s “Street Signs Asia.”

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