Companies that relied on China’s plans for long-term mass testing in cities are now struggling. Still, some health-care firms are now reaping a grim bonanza
Save time by listening to our audio articles as you multitaskTheses firms now face a reversal of their fortunes. Sentiment towards zero-covid has shifted rapidly over the past two weeks. On December 7th the central government announced tand allowed quarantining at home for asymptomatic cases after protests against prolonged, heavy-handed restrictions broke out in cities across the country. The policy shift is the most dramatic since China closed to international travel in early 2020.
It will deal a heavy blow to a once-lucrative business model. The biggest beneficiaries were firms making covid tests. Many saw their share prices soar several times over in the early days of the pandemic. But a number of city governments also sought recently to turn quarantine facilities into sustainable businesses that would attract investors and generate income.hospitals have been set up across the country to accommodate the growing number of covid cases.
Local governments have struggled to pay for testing equipment and quarantine facilities. Analysts put the cost of national mass testing at around 1.7trn yuan a year, or 1.5% of. To pay for the quarantine halls, cities in Shandong, a north-eastern province, coaxed investors to stump up cash. City governments issued some 15bn yuan in bonds to help build about 85 facilities. Some Chinese media reckoned revenues might have been three times that of investment over the lifespan of a project.
Companies that relied on China’s plans for long-term mass testing in cities are also now struggling. Daan Gene, which make testing devices, has seen its share price fall by about 7% over the past week; Dian Diagnostics, another large testing company, has suffered a similar decline. Some firms have also been attacked online for profiting from the country’s misfortunes.
Still, some health-care firms are now reaping a grim bonanza. While the prognosis for testing businesses is poor, shares in health-care and treatment companies have shot up in anticipation of a massive wave of cases as covid rules are relaxed. Those of Yuyue Medical, a ventilator-maker, for example, rose by 25% in the first half of November.
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