Who would have thought that the ‘zero-COVID’ policy introduced in China, expected to have a detrimental effect on the economy, has the wisdom behind it.
It is projected that the introduced policy will cause an economic downturn in the April to June quarters, with the CSI 300 luxury index down 19% so far this year.
Where is it when jobs, consumer spending, exports and home sales are affected by strict restrictions that hamper operations.
However, drastic measures need to be taken to save lives and ensure China’s healthcare system is at its best in the fight against Covid.
As a result, the Chinese government is not shy about spending more than $ 52 billion this year for test kits, medical facilities and monitoring equipment.
It has also indirectly benefited some of these sectors.
Medical Sector
The Chinese government plans to establish medical facilities in every corner of the city and purchase test kits for the purpose of mass screening.
It has benefited medical firms where:
Pacific Securities, which is responsible for making and providing test kits, estimates it will generate more than $ 15 billion this year.
Dian Diagnostics Group Co. Ltd., the largest test kit maker in China, posted a first quarter (1Q) profit of 60% at $ 690 million.
Adicon Holdings Ltd which received $ 300 million in funding for the Covid test kit from the government has applied for an initial public offering (IPO) on the Hong Kong stock exchange.
Shanghai Runda Medical Technology Co Ltd which produces 400,000 tests per day will generate revenue of $ 30 million a month.
Technology Sector
The Chinese government has also invested in the purchase of thermal imaging and surveillance cameras to monitor its 1.4 billion people and has given a boost to:
Wuhan Guide Infrared Co. Ltd., a manufacturer of thermal imaging equipment, is doubling its revenue by 2020 to supply the product to the rest of China.
Hangzhou Hikvision Digital Technology Co. Ltd., which manufactures surveillance cameras has increased production for the purpose of potentially positive close contact detection.
Development sector
Of course with the doubling of cases, more hospital facilities will be needed.
So it also benefits the construction sector including China Railway Group Ltd, a conglomerate that includes construction, manufacturing and real estate has built temporary hospitals throughout China.
It is estimated that China Railway’s profits have doubled over the past 2 years and analysts expect it to continue to grow, with the firm’s shares hitting a 3 -year high in May.
