Covid cluster closes Macau casinos

Just when it looked like China was getting on top of Covid, an eruption in infection numbers in Macau has seen authorities order all the city’s casinos to close from Monday in an effort to stop the spread of the latest Omicron variant.

At the same time Chinese officials in Shanghai have identified a new subvariant of Covid Omicron, the BA.5.2.1 which has now been found in at least four cities – Shanghai, X’ian, Beijing.

The news saw a sharp sell-off on the Hong Kong stockmarket on Monday, and a small slide on mainland Chinese markets.

Gambling company stocks were hit hard in Hong Kong and will be tested in US trading later on Monday and investors receive another reminder that for all the PR campaigns, The Chinese economy remains exposed to Covid and the hardline approach of the government of President Xi.

The Omicron subvariant BA.5, and to a lesser extent, BA.4, is largely behind the latest wave of infections around the world — the seventh of the pandemic (since the start of 2020) and the third since the arrival of Omicron in late 2021.

Both variants evade the protection offered by previous infection and vaccinations and while said not to be as dangerous as the Delta variant, the duo do inflict considerable pain and suffering on those not vaccinated, or only double-dosed.

China though is using vaccines developed at home and do not use the MRNA technique that Pfizer, MRNA and other jabs are now using and which offer a higher level of protection against the new variants in third and fourth jabs.

Chinese media reports on Monday were full of new vaccines being developed by Chinese companies and government researchers, but non seem to be using the MRNA technology, yet. There are stories of research happening in China into home grown MRNA jabs, but none seem to be in use.

For that reason, analysts say it’s no wonder China is battling Covid outbreaks involving the Omicron variants, especially B5.2

That helps explain why new infection levels are rising across the country such as the big central Chinese city of X’ian – in the vital coal mining province of Shanaaxi which is under a seven-day lockdown with officials watching infections closely because infections in the province spread quickly in the middle of last year and saw coal mining curbed and shortages develop at some of China’s major power stations.

News of the closure of Macau’s casinos and the crackdown on movement saw the Hong Kong Stockmarket slide more than 3% in trading on Monday while the Shanghai market lost 1.6% and the CSI 300 was down 2%.

Nomura, the Japanese investment bank estimated in a report that 11 Chinese cities are now under full or partial lockdowns, affecting 115 million people.

It was the first time in more than two years that all casinos have been shut by government edict as authorities battle to contain what has become the worst Covid outbreak yet in the world’s biggest gambling city.

Macau’s more than 30 casinos, along with other non-essential businesses will shut for one week and people have been ordered to stay at home.

Police will monitor flows of people outside and stringent punishments will be imposed for those who disobey, the government said in echoes of the hardline lockdowns seen in mainland cities and towns, such as Beijing and especially Shanghai.

Hospitals, pharmacies, supermarkets and fresh food markets are being allowed to stay open (a problem the Communist mainland government had in Shanghai when it ordered everything shut in April and led for food riots).

Macau has recorded around 1,500 COVID-19 infections since mid-June. Around 19,000 people are in mandatory quarantine, according to government figures, according to data as at last weekend.

Casinos were last closed in Macau in February 2020 for 15 days in an unprecedented move to fight the virus’s first wave.

Reuters and Bloomberg say that the city’s casinos have been effectively shut for the past few weeks, with no gamblers and minimal staffing as the government requires people to work from home.

Analysts said it was likely that the suspension could be extended by another few weeks with a recovery in gaming revenue unlikely until the end of the third or fourth quarters of this year.

“Even if the outbreak in Macau gets under control, it will likely be another few weeks before Macau-Zhuhai can remove quarantine requirements,” Terry Ng, an analyst at Daiwa Capital Markets in Hong Kong told Reuters.

Reuters pointed out that while more than 90% of Macau’s residents are fully vaccinated against COVID-19 (Alpha and Delta variants) this is the first time the city has had to grapple with the fast-spreading Omicron variant.

But the upsurge in Covid infections is not confined to Macau – Hong Kong still is reporting high numbers a day, though down from the levels a month or so ago.

While the start of month surveys of manufacturing and service sector activity showed definite signs of returning to levels of expansion, the inflation report for June at the weekend showed a surge in consumer prices to a multi month high of 2.5% while producer price growth slowed to 6.1%, the lowest for 15 months and signs of the impact of weakening commodity prices, apart from energy.

Reuters pointed out that Shanghai, China’s financial hub and epicentre of the biggest infections and lockdown so far this year, is still seeing flare ups in pockets of infections, despite re-opening a couple of weeks ago.

The Financial Times reported that officials in the city have begun assigning risk levels to subdistricts and even streets in an effort to impose targeted quarantines on residential compounds and spare most of the city’s 26 million residents from a repeat of the controversial lockdowns in April through June.

Media reports say Singapore, Indonesia and several other Asian countries have reported that Covid cases are on the rise again.

And parts of Indonesia, including Bali, are now seeing rising numbers of foot and mouth disease which could, if not checked (especially in Bali) see tough restrictions on movement and on hygiene for tourists. The Australian government had already tightened infection controls on tourists from Bali and Indonesia.