China Covid Cases Hit 6-Month High; Goldman Sees Reopening Still ‘Months Away’ despite Talk of Preparations

The number of daily Covid cases in China has risen to its highest level in over six months as widespread outbreaks have occurred while health officials have vowed to maintain China’s stringent virus regulations.

The country reported 5,436 cases on Sunday, a 27% increase from the previous day and the highest since May 2, when Shanghai was under a months-long lockdown.

Economists at Goldman Sachs said on Saturday that the announcement proved “the government still needs to keep its zero-Covid policy until all preparations are done.” They said, “this may take a few months in our view,” with a “baseline” forecast of reopening in the April-June quarter.

While last week’s market boom could be attributed in part to Goldman’s expectations that China will reopen, the firm’s economists also warn that this is still “months away.”

“The actual reopening is still months away as elderly vaccination rates remain low and case fatality rates appear high among those unvaccinated based on Hong Kong official data,” economists said in a note.

They also mentioned that the government is likely planning an exit strategy, and that the firm anticipates China to reopen in the second quarter of 2023.

In addition to this, Goldman stated that a complete China reopening will drive a 20% gain in Chinese equities.