China protests send global stocks lower as strategists see Covid disruption persisting

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Global stocks pulled back on Monday after rare protests erupted across China amid growing unrest over the government's zero-Covid policy.

, which said in a note Monday that rising Covid-19 infections would remain a significant drag on growth.and the official response, but the latest developments add to uncertainty for offshore investors and may weigh on sentiment," said Mark Haefele, chief investment officer at UBS Global Wealth Management. UBS does not yet see this impacting its base case for a full reopening around the third quarter of 2023.

Thus far, supply chains have been less severely affected than during April's outbreak as the wave has not extended to China's major ports or manufacturing hubs, but iPhone assembler Foxconn has faced large protests from workers over the past week over working and living conditions. "So, we do not expect economic or market headwinds in China to abate significantly over the coming months. Policy support remains focused on stabilizing the economy, rather than spurring growth, in our view," Haefele said, adding that the mounting social discontent "adds to execution and implementation risks" for Beijing.

 

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