China stocks hit four-week low as Covid cases spread and factory output shrinks

Investor mood was also hit by new official data from China that showed factory activity continued to contract in the world’s second largest economy following strict Covid lockdowns and The losses in Chinese stocks came as the country battles an intensive wave of Covid outbreaks. All mainland Chinese provinces have identified locally transmitted Covid-19 cases in the past 10 days, according to CNN’s calculations based on data from the National Health Commission.The fast spread of cases has sparked worries about more lockdowns. Earlier this year, China placed Shanghai and other key cities under strict lockdowns for months, hammering consumer activity and disrupting global supply chains.Earlier this week, authorities in Shenzhen, the country’s technology hub, shut down the world’s largest Also upsetting investors is news that China’s massive manufacturing industry continued to shrink in August amid the country’s worst heat wave in six decades. A government survey released on Monday showed that the manufacturing Purchasing Managers’ Index rose to 49.4 in August from 49 in July, but remained in contraction territory. The 50-point mark separates contraction from growth.”Economic activities stayed weak in August, partly due to power shortage caused by heat waves,” said Zhiwei Zhang, president and chief economist at Pinpoint Asset Management, in a note on Wednesday.A record heat wave and drought have swept across southern China in the past month, causing power outages in industrial heartlands and disrupting factory operations for several international businesses, such as Tesla (TSLA) and Toyota.The power crisis has eased this week, with energy supply to industrial users being restored in Sichuan and Chongqing. But the main constraint for the economy — the zero-Covid policy — has not been removed, analysts warned.”The disruption from the power shortages is now receding,” but the Covid situation is “worsening again,” wrote Julian Evans-Pritchard, senior China economist for Capital Economics, in a report on Wednesday. “For now, the resulting disruption appears modest but the threat of damaging lockdowns is growing,” he said. — CNN’s Beijing bureau and Simone McCarthy contributed to this report.