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Shanghai has been forced to lock down and face stringent zero-Covid restrictions. Will it share the same fate as Hong Kong?

After repeatedly ruling out a lockdown last week, Shanghai made a policy U-turn on late Sunday and rolled out a two-phase plan to restrict the city of over 25 million which has lately been facing a surge in Covid cases. 

The lockdown was officially in effect at 5am yesterday beginning with the eastern part of Shanghai which contains the Pudong financial hub. Mass testing and the lockdown of the eastern area will conclude 5am on Friday while the same process will begin for the western area from 3am on Friday to Tuesday next week on April 5.

Residents will be required to stay home while their area is locked down with public transport suspended, though essential services, such as delivery, will continue.

Hub Status

While China has already undergone numerous lockdowns during the pandemic – southeastern tech hub Shenzhen eased its weeklong lockdown restrictions last Monday – Shanghai is the largest city in the country to conduct such restrictions and the second major financial hub to attempt to do so after Hong Kong. 

Aside from the challenges of simply executing a lockdown, Shanghai will test the resilience of its hub to withstand the effects of daily restrictions while maintaining key economic operations. 

The city not only houses top financial institutions – the country’s largest stock, currency, futures and gold exchanges are all based in Shanghai – but also is also a hub for international business, shipping and manufacturing.

Financial Sector Response

The financial sector responded swiftly and strongly with banks, brokers, asset managers and more reportedly rushing staff in before the 5am deadline yesterday with some asking employees to camp out in the office during the lockdown and rest in sleeping bags. 

The Shanghai Stock Exchange is in full-out contingency mode with hundreds of staff «essential living in the office», according to an «SCMP» report citing unnamed sources. The bourse is also publicly committing to maintaining operations through arrangements such as better use of online communication tools with issuers, virtual ceremonies for the trading debut of newly listed companies and the fast-tracking of bond issuance approvals for companies hit by the pandemic.

And this is not limited to local companies. Sino-British asset management joint venture HSBC Jintrust Fund Management said it had prepared enough supplies to support employees to work from the office beyond April 5, according to a «Bloomberg» report with an image of an employee preparing a cot next to a cubicle. 

Hong Kong Story