How do experts explain China’s decision to ask citizens to stock up on food and why Austria is preparing for a Blackout

The policy of eradicating, instead of coexisting with the virus, has imposed the harshest measures: closing regions, cities after just a few cases, schools or kindergartens or blocking exits from an amusement park until the entire population is tested. thousands of people late at night.

There are also geopolitical hypotheses, in the context of tensions with Taiwan, the possibilities of a conflict being debated on social networks, given that Taiwan has its headquarters in TSMC, the largest chip manufacturer, with the most advanced technologies in the world at the moment. , making products for Apple, AMD and Qualcomm, shows Claudiu Cazacu, Consulting Strategist at XTB Romania, a brokerage house on international stock exchanges.

Supply chains, under unusual pressure this year, have recently begun to relax, according to an index compiled by Bloomberg. However, the dynamics are modest compared to previous levels, and the right direction is far from assured. Restoring normal flows could take months, and uncertainty hovers over this estimate. However, China on Monday issued a note from the Ministry of Commerce urging local authorities to inform the population about stockpiling products needed for daily needs and emergencies. It is aimed at gathering reserves for this winter, until spring, along with maintaining price stability, says Claudiu Cazacu, Strategic Consulting at XTB Romania, a brokerage house on international stock exchanges.

Emotions have reached high levels on Chinese social media, with various speculative assumptions about the reasons for the announcement: although such warnings have been made in the past, slightly different language has attracted attention. The need to control new cases of the virus could be the main reason: the policy of eradicating, instead of coexisting with the virus, imposed the harshest measures: closing regions, cities after only a few cases, schools or kindergartens or blocking exits from an amusement park until testing the entire population of thousands of people late at night. Population reserves would thus allow rapid decision-making to close some areas.

The range of a logical, prudent response also includes the possibility that fluctuations in electricity availability will affect production in greenhouses, generating periods of price pressure for vegetables and other agricultural products, all in an environment subject to rising inflation. Measures to control consumption and waste include paying an additional fee for those who leave “too much” food on the plate, and the ability to report restaurants that waste food. Indirectly, the concern about inflation is visible.

Although it may seem counter-intuitive, making supplies, beyond the initial shock, can, under conditions of rational planning, temper prices in the sector, helping to stabilize inflation by reducing sensitivity to other subsequent price variations.

However, i also appearedgeopolitical measures, in the context of tensions with Taiwan, the possibilities of a conflict being debated on social networks. In China the territory is seen as part of the Beijing-led state, while Taiwan insists on self-determination. Economic ties are very strong, and Taiwan is home to TSMC, the world’s largest chip maker with the most advanced technology in the world, making products for Apple, AMD and Qualcomm.

Although speculation about a conflict has surfaced several times in recent years, the emotional level is now higher. However, given the current disruptions in materials and logistics, with an effect on inflation, along with the health situation, the risk appears to be limited for such a scenario in the coming months.

China’s economy grew by 4.9% year-on-year in Q3, below estimates, and slowing from 7.9% in the previous quarter (2nd). The Shanghai Stock Exchange is up just 0.68% this year (Shanghai Composite Index) and just over 10% in the last 5 years. In Germany, the DAX index has advanced by 16.88% this year, and by 56.38% in the last 5 years. The S & P500 has 25.94% more this year, and 123.51% in the last 5 years.

Austria has also carried out preparatory exercises for a long-term power outage, in the wake of the crisis that has recently generated historical energy price records. The prudent approach involves preparedness for risks, even if not very likely, but impactful if they do occur.

For the time being, investors in the capital markets are looking at recent developments: in China, the reasons for a modest performance of the index are also related to the severe corrections in the technology sector, and much less to the announcement of the authorities these days.

European markets show moderate optimism, without being too affected, apart from some industry names, by the energy situation, while in the US stock markets, at historic highs, look in a different direction than the various risks, from installed inflation to additional effects. on global supply chains, which may (or may not) materialize. Again, markets are eyeing the abundant liquidity provided by central banks rather than the risks of the “physical” world.

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