Chinese stocks and investment funds and trusts focused on the People's Republic slumped on Monday after China imposed another pandemic lockdown and Russia asked for the country to provide military assistance.
US officials suggested that Russia have asked China for military and economic assistance since the invasion began, according to an FT report.
The article said that the officials didn't provide details on China's response but this came just few hours after White House officials announced that a high-level delegation from the US would meet with a top Chinese official in Rome today.
A lockdown in Shenzhen (population 17.5mln) was imposed after the city reported 66 fresh Covid cases on Sunday, while the nationwide official figure nearly doubled to 3,400, which has prompted authorities to shut schools for at least a week in Shanghai.
The lockdown, which is accompanied by a suspension of public transport, is expected to be in place until 20 March and will be accompanied by three rounds of mass testing of residents.
In Hong Kong, health authorities reported 32,430 new Covid-cases on Sunday with city leader Carrie Lam highlighting that the outbreak has not past its peak.
The Hang Seng index in Hong Kong fell almost 5% today, while the Shanghai Composite was down 2.6% and Shenzen's SZSE Component Index was down 3.1%.
In London, China-focused investment trusts were among the biggest fallers, including Fidelity China Special Situations PLC (LSE:FCSS), Abrdn China Investment PLC, Baillie Gifford China Growth Trust PLC and JPMorgan China Growth & Income PLC, which were all down at least 4%.
“China is at the centre of a new storm which threatens its economic growth and credibility with the Western world,” says Russ Mould, investment director at AJ Bell.
He added: “Shenzhen going into lockdown could have negative effects beyond China’s economy. It is known as ‘the world’s factory’ thanks to its concentration of electronics manufacturing. Any prolonged disruption to operations could cause yet another global supply chain crunch."