Shares of Chinese restaurant operators fell on Wednesday amid renewed lockdown fears after a rise in Covid-19 cases in parts of the country.
Shares of Yum China Holdings Inc., YUMC, -6.89% one of the country’s biggest fast-food restaurant operators, was 6.1% lower at midday, while hotpot operator Haidilao International Holding Ltd. 6862, -6.16% s lipped 5.3%. Restaurant operator Jiumaojiu International Holdings Ltd. 9922, -6.28% declined 4.2% and Xiabuxiabu Catering Management (China) Holdings Co. 520, -3.47% was off 1.5%.
China reported a steep rise in Covid-19 infections in the past week, with new cases in recent days numbering in the hundreds and the capital of Shaanxi province going under lockdown.
“New rounds of Covid testing in Shanghai have increased fears of further lockdowns for China, which would have a ripple effect on other markets,” ANZ analysts said in a research note.
Goldman Sachs late last month cut its 2022-23 earnings forecasts for Yum China and Haidilao to reflect a more conservative outlook on same-store-sales recovery and store expansion in the second half.
Fitch Ratings said in a research note last month that it expects dining restrictions and sporadic lockdowns throughout China to weigh on the recovery in dining demand over the coming six to 12 months.
“The sudden and prolonged Covid-19 control measures so far this year have been more severe than our earlier expectations and the initial pandemic impact in 2020,” Fitch said.
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