Zero COVID Policy in China and What it Means for YOUR Retirement Plan

China & COVID:

Whether directly investing in Chinese equities or just indexing with the S&P500, China Covid policies have been news for almost three years for your investments.

I’m Chris Perras, Chief Investment Officer with Oak Harvest Financial Group. And this is our investment team’s mid-week release when we examine a news item, headline, or story making the rounds from publicly available
sources and ask, “Is it News or Noise?” for your money.

This week we are once again discussing China, its Covid policies, and how, even though it’s thousands of miles away from our shores, these policies will likely affect your investments over the coming 6-12 months. As most global investors are aware, China’s leader, Chairman Xi, has implemented a unique policy since Covid arose in early 2020, centered around a zero tolerance for infections.

While some recent optimism has surfaced around relaxing this policy in front of the year-end holidays, time and time again, the Chinese government has dashed investor hopes and Chinese citizens.

Last week the mainland Covid case count climbed toward 30,000, near levels last seen in April. The latest Covid wave hit the southern city of Guangzhou, the capital city of Beijing, and many central parts of China which are
key for technology manufacturing, prompting local officials to tighten restrictions on businesses and social activities once again.

If one believes that the statistics are close to true, nearly 20% of China’s economy, the second largest economy in the world, was negatively affected by Covid controls last week.

According to Nomura Securities, about 412 million people, or over 30% of the population, were affected by lockdown measures. That’s an increase of over 20% week to week. Lockdowns have led to Chinese factories and ports being shut for long periods, also affecting a number of foreign companies that operate in China or originate goods there, which in turn affects businesses and consumers in the rest of the world who have come to rely on China for supplies of goods.

Locked Down:

A lockdown at the Foxconn plant in Zhengzhou has affected the production of Apple iPhones, leading to fears of a worldwide shortage for their higher-end models that were just released a few months ago. Factory closures have also led to fears of a shortage of toys worldwide in the run-up to Christmas.

These dynamics are a short-term negative to consumers of Chinese manufactured products and their manufacturers. The good news, however, is that it has a positive effect on keeping commodity inflation lower as the Chinese demand for many commodities has plunged.

Whether one invests directly in China or not, being the second largest economy in the world, China’s covid policies will continue to be news we are following in 2023 as the reach of these policies extends far beyond the shores of mainland China. Are you trying to meet your needs or your greed in retirement?

Give us a call here and schedule an initial consultation with an Oak Harvest Advisor. We will sit down with you, and help you and your family do the math to figure out if you will be able to meet your retirement goals and needs.

At Oak harvest, we think our clients are best served by us helping them plan for their future needs instead of focusing on the past. The future is always uncertain, and that’s why our advisors and retirement planning teams plan for your retirement needs first and your greed second.

Give us a call to speak to an advisor, and let us help you craft a financial plan that helps you meet your retirement goals.

Call us here at (877) 896-0040, and schedule an advisor consultation. We are here to help you on your financial journey into and through your retirement years.

– I’m Chris Perras and from everyone here at Oak Harvest, have a blessed week.