Asian equities weakened slightly on Thursday as soaring COVID cases in China unsettled investors and cast doubt over chances of a swift recovery for the world’s second biggest economy after the relaxation of stringent COVID curbs.
MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) was down 0.78%, and was set to end the last month of the year in the red, capping a brutal 2022.
Futures indicated the dour mood was likely to continue in Europe, with Eurostoxx 50 futures down 0.24%, German DAX futures 0.30% lower and FTSE futures down 0.36%.
China’s health system has come under heavy stress since Beijing started dismantling its zero-COVID regime at the start of the month.
On Monday, China announced it would end quarantine requirements for inbound travellers on Jan. 8, while several countries, including the United States and Japan, have made COVID tests mandatory for travellers from China.
Around half the passengers on two flights from China to Milan’s main airport, Malpensa, tested positive for COVID on Wednesday.
Nomura analysts said in a note that there could be significant waves of infection across China, spreading from urban to rural areas, during the nationwide travel rush for the Lunar New Year which falls on Jan. 22.