Beijing's trading floors are being overrun by COVID-19, which is also spreading quickly to Shanghai's financial hub.
The abrupt abandonment of its zero-COVID policy earlier this month caused bulk testing to be suspended, and as a result, official figures no longer dependably catch new case numbers. Regulators were forced to cancel a weekly meeting to review public share sales because of the illness and absence, which further weakened the already slack market.
The measures put forth to address earlier COVID crises have been revived by several banks and asset managers, adding another another layer of volatility to the currency and stock markets, where the outlook is clouded by a difficult exit from stringent health curbs.
Because most currency traders in Beijing are not in the office, "trading volume would naturally fall," according to a trader at a state-owned institution who spoke on the condition of anonymity because they are not authorized to discuss such topics with the media.
According to internal polls conducted by many large asset managers and banks, more than half of their staff in Beijing, the epicenter of the viral outbreak, have tested positive.
The average daily yuan/dollar trading volume in China's interbank market fell to around $20 billion last week, the lowest amount since April 2022, when Shanghai was placed under a harsh two-month lockdown to halt the spread of the virus.
Last week's stock trading volume also decreased. The Shanghai Composite had 139 billion shares traded in total for the week, which was a little less than the 143 billion shares traded per week average for the previous three years.
Initial public offers (IPOs) are also being impacted by the pandemic, with the China Securities Regulatory Commission canceling a weekly meeting last week to review them. If the meeting will resume this week is unclear.
A news conference intended to discuss the economic data for November was likewise canceled by the National Bureau of Statistics.
Undoubtedly, a number of organizations are prepared to endure disruption thanks to years of tight COVID regulations.
"We travel a lot, and we have several people on one IPO project, so we take turns do the job if one banker is on sick leave," one banker at Shanghai-based Haitong Securities told Reuters, speaking on condition of anonymity.
Still, the predicament that awaits is unprecedented as the virus spreads widely.
"We have a backup and recovery disaster plan and revived backup offices in two locations just like how we did during Shanghai lockdown in April and May," a senior trader at a Chinese bank in Shanghai said.
"We are doing everything we can, as this wave of infections and the situation should be the worst since first half of 2020."
