No 807 - A rocky road

　　currentVersion

　　111

　　222170009FF

　　原创

　　BANDSFinancial

　　磐石金融有限公司（ BANDS Financial Limited ）在香港注册成立，是一家持有香港证监会（SFC）2号牌照的期货经纪公司，业务涉及中国以外全球大部分活跃期货及期权市场。

　　Between the US and China, it is now apparent how polar opposite they are in terms of their experience of the virus. It is pointless to speak of comparative numbers as both countries have different strategies to deal with the infection. However, to set a benchmark the seven-day average of new infections in the US is running at around 400,000 per day, and in China it is 200. As a resident of Shanghai, I lead a relatively unaffected life. I know no one in China who has had any direct experience of Covid in China. Delta, it would seem, although more severe is comparatively slow to transmit, giving the authorities room to track trace and confine. However, that window is closing. In comparison to Delta, Omicronis a sprinter, the risk is that it can run ahead of the current methodology to contain it. Consequently, containment measures are becoming more robust, as the authorities must impose much larger lockdowns, then focus on identifying whom in the containment area has the infection. The city of Xian, home to the terracotta army and some 13 million residents has been locked down since December 23, the streets are largely empty, general movement is curtailed, and risk areas are sealed.Logically, as we go into 2022 one can imagine the tide of infection along China‘s borders rising. China’s response to Omicron infection relies on the speed of its response to contain Omicron when it appears. Regional or city managers are likely to go big and go early, it would therefore be likely that the number and extent of the city or province-wide lockdowns will increase throughout 2022. Although the community may become tired of these interventions, they will not necessarily be unpopular, at present there is a strong narrative around the current low infection and death rate, the ability to travel internally and general normality of life which is supportive.But what of the US or Europe, well, one must suspect, however difficult the current conditions, one might expect as we move into Q2 the situation in the US and Europe will vastly improve as these economies learn to live and adapt to the virus, and reopen their economic borders to travel, trade and tourism with each other.In comparison, Chinas zero covid policy will remain in place probably beyond the Party Congress in October. Although anti-covid measures may hamper the Chinese domestic economy, rolling lockdowns present a problem for domestic confidence and house buying may be deferred generating a difficult basis for the housing developers to stabilise. One might expect the exporting sector to provide support to the Chinese economy as it will be selling into an increasingly confident US and Europe in Q2 and Q3.It is possible that Omicron may encourage a further severing of ties between China and the rest of the world on an interpersonal basis, but Chinese export markets could remain the same or improve. The net effect is that internationally, shortages driven by soaring western demand, and limited supply elasticity and omicron linked supply chain disruptions will probably become common, an issue that will drive the commodity markets and inflation expectations throughout 2022.Best regards