Bankers Reportedly Seek to Flee Shanghai amid Lockdown

The city of Shanghai is in danger of losing its status as a financial hub, as international bankers and traders consider fleeing the city to escape its brutal coronavirus lockdown — and the perpetual threat of further lockdowns imposed without notice under China’s “dynamic zero-Covid” policies.

Reuters on Tuesday reported Shanghai’s four-week lockdown “has started to weigh on prospective financial deals with some transactions being put on hold due to logistical challenges.”

A private equity investor named Melvyn Xu said he was thinking about moving his family to Hong Kong as soon as possible, retaining Shanghai “as a ground for work only.” Others spoke of taking their business interests with them when they relocate:

“Once this lockdown is over, expats across all industries will negotiate a new career outside of China,” said Jason Tan, Shanghai-based director specializing in wealth, buyside and fintech at headhunter REForce group.

Conversations with financial professionals in Shanghai have shown deep concerns about the lockdown measures, Tan said. “(It’s) not very attractive moving forward … This lockdown can happen again. Next time it might be longer and tighter.”

Common complaints from unhappy financial industry workers included the surprise imposition of Shanghai’s lockdown – a common feature of China’s “dynamic zero-Covid” policy, as the government does not want residents fleeing from cities about to be quarantined — to the stony indifference of the authorities to citizen complaints, and the sense of helplessness experienced under draconian coronavirus restrictions.

“I think the biggest frustration is you cannot do anything about it, which is particularly upsetting. For people living here, you’ve got utterly zero bargaining power,” Xu explained.

A lobbying group called the Asia Securities Industry and Financial Markets Association (ASIFMA) on Wednesday urged Shanghai officials to allow hundreds of exhausted financial industry employees to go home, after weeks of being forced to live in their offices.

“Not knowing how long this outbreak will last, or if future outbreaks might lead to additional lockdowns, we seek solutions for rotational support to help build a sustainable model and to promote stability of the financial markets,” ASIFMA said, suggesting it is aware that some of its members are pulling out of Shanghai because they fear the lockdown nightmare could happen again.

Three other financial industry associations on Tuesday pleaded for stability in the Shanghai stock market and emergency rescue financing for companies devastated by the lockdown.

“Professional institutional investors should demonstrate responsibility and actively play their roles by discovering value, stabilizing markets and boosting market confidence,” the Shanghai Securities, Futures, and Asset Management Associations said in a joint statement – possibly a rebuke to the investors who are talking about leaving town as soon as they are permitted to travel.

The Shanghai shutdown is causing severe problems for industrial supply chains as well as the financial industry, as millions of dollars in product pile up at depots across China.

“Things are getting crazy again. Everything is halted. There are closures this very minute that are adding to the supply chain nightmare we’ve been experiencing for two years,” the president of an L.A.-based housewares company told the Washington Post on Wednesday.

“And there are signs things could only get worse. Continuing lockdowns in Shanghai – a major hub for America’s semiconductor and electronics supply chains – has set up automakers, electronics companies and consumer goods firms for months of delays and higher costs,” the Washington Post added grimly.