By Sarah Wu and Norihiko Shirouzu

TAIPEI/BEIJING -China’s efforts to curb its largest COVID-19 outbreak in two years has forced companies from Apple supplier Foxconn to automakers Toyota and Volkswagen to suspend some operations, raising concerns over supply chain disruptions.

Multiple Chinese provinces and cities have tightened restrictions in line with Beijing’s zero-tolerance goal of suppressing contagion as quickly as possible, among them the southern Chinese tech hub of Shenzhen.

Shenzhen, China’s Silicon Valley, is carrying out mass testing after dozens of new local cases were recorded. Officials have suspended public transport and urged people to work at home this week as much as possible.

White House press Secretary Jen Psaki said on Monday that the Biden Administration was monitoring the lockdown of the tech hub “incredibly closely.”

“What we’re looking at is of course … the impact on some of these ports around the impacted areas of China,” she said in a Monday afternoon briefing.

China has reported more local symptomatic COVID-19 cases so far this year than it recorded in all of 2021.

Foxconn, formally known as Hon Hai Precision Industry Co Ltd, said its Shenzhen operations would be suspended until further notice, adding it would deploy backup plants to reduce disruption.

Two sources familiar with the matter told Reuters that Foxconn and its subsidiaries’ operations in Shenzhen would be suspended for the first half of the week.

One of the people said the government was allowing companies to operate if they could create a “closed management” system where employees would live and work in a bubble. Such a system was in place during the Beijing Winter Olympics.

Other Taiwan companies which said they had suspended Shenzhen operations included chip substrate and printed circuit board maker Unimicron Technology Corp, which also supplies Apple and Intel, and flexible printed circuit board maker Sunflex Technology Co Ltd.

Sunflex said its plant would be closed until Sunday.

Apple did not immediately respond to requests for comment. Intel declined to comment.

Paul Weedman, who runs manufacturing consultancy Victure Industrial Co., Ltd in Shenzhen, warned that the restrictions were having a ripple effect beyond Shenzhen to the wider Guangdong province. Production for some of his customers’ orders have been suspended, and many factory visits cancelled, he said.

“Imagine you have a factory of 100 people and all of a sudden you can’t do anything – you can’t fulfil your existing orders, you can’t accept new orders. The impact is not 2 or 3 weeks, but 3-6 months.”

Shenzhen’s Yantian International Container Terminal (YICT), one of China’s busiest ports, said in a WeChat statement it was operating normally, although two companies with warehouses at the port said they needed to temporarily suspend operations.

CHANGCHUN LOCKDOWN

Other cities have enacted restrictions to varying extents. Officials have locked down Changchun city, the capital of northeastern Jilin province, shut schools in the financial hub of Shanghai and suspended public transport in the manufacturing centre of Dongguan.

Toyota said on Monday its joint venture with China’s FAW Group had suspended production in Changchun, while its Tianjin city operations remained unaffected.

Volkswagen, which also has a joint venture with FAW, said it had suspended production at its vehicle and component plants from Monday to Wednesday. FAW, which is headquartered in Changchun, did not respond to a request for comment.

A factory owner in Dongguan, who gave his surname as Lau, said his plant was forced to shut down from Sunday until Tuesday. They were also experiencing some issues in obtaining materials from suppliers due to the virus restrictions, he added.

“Hopefully they will let us carry on with the production soon,” he said. “There’s not much we can do. The whole world has moved on, except for China. They should just let go of the zero-COVID strategy.”

(Reporting by Sarah Wu, Ben Blanchard and Yimou Lee in Taipei, Norihiko Shirouzu in Beijing; Additional reporting by Josh Horwitz in Shanghai, Stella Qiu in Beijing, and Alexandra Alper in Washington; Writing by Brenda Goh; Editing by Jane Wardell, Nick Macfie and Richard Pullin)

-Russia on Monday temporarily banned grain exports to ex-Soviet countries and most sugar exports, but a senior minister said it would keep on providing special export licences to traders within its current quota.

Russia is the world’s largest wheat exporter with Egypt and Turkey among the main buyers. It competes mainly with the European Union and Ukraine.

Prime Minister Mikhail Mishustin on Monday signed an order banning the export of white and raw sugar until Aug. 31, and banning wheat, rye, barley and maize exports to neighbouring Eurasian Economic Union states until June 30.

Deputy Prime Minister Viktoria Abramchenko, however, said the export of grain within the quota under individual licences would continue to be allowed.

Moscow last week voiced concern about the quick pace of its grain exports to neighbouring ex-Soviet countries, with which it shares free customs zones under the Eurasian Economic Union. Supplies to the union are not subject to Russia’s grain export quotas and current taxes.

The measures were adopted “to protect the domestic food market in the face of external constraints,” the government statement said.

European wheat prices rose on Monday after Interfax news agency reported on Russia’s bank on grain exports. It did not initially mention the exclusions from the ban.

The government made no mention of the export licenses in its statement either, but said that international transit of grain via the Union would be allowed.

Russian wheat exports are down by 45% since the start of the current July-June marketing season because of a smaller crop, grain export taxes, and the export quota set at 11 million tonnes of grain, including 8 million tonnes of wheat, for Feb. 15-June 30.

The country still has 6 million to 6.5 million tonnes of wheat to export until June 30, Dmitry Rylko, head of the IKAR agriculture consultancy, said.

($1 = 0.9111 euros)

(Reporting by Michael Hogan in Hamburg, Sybille de La Hamaide in Paris and Conor Humphries in Dublin; Editing by Jan Harvey, Nick Macfie, Jane Merriman, Richard Chang and Tim Ahmann)

By David Shepardson

WASHINGTON -The U.S. Transportation Department on Monday barred regional carrier SkyWest Inc from ending service to 29 locales until replacement carriers can be found under the government’s subsidy program to provide air service to smaller communities.

SkyWest provides regional service for key airlines such as United Airlines, Alaska Airlines, Delta Air Lines and American Airlines. SkyWest operates the 29 routes under the United Express name providing regional service for United Airlines.

SkyWest last week announced plans to end service to the 29 communities under the Essential Air Service subsidies program effective on June 8, saying “the pilot staffing challenges across the airline industry preclude” the carrier from continuing service.

The Transportation Department said SkyWest cannot terminate service through July 8 “and for additional 30-day periods as necessary” in the event federal officials do not secure another air carrier to provide service under the program at any of the 29 communities.

Some of the communities with United Express flights operated by SkyWest being cut include: Cape Girardeau, Joplin and Fort Leonard Wood, Missouri; Decatur, Illinois; Clarksburg and Greenbrier/Lewisburg, West Virginia; and Fort Dodge, Mason City and Sioux City, Iowa. Some others include: Muskegon and Houghton/Hancock, Michigan; Hattiesburg/Laurel, Mississippi; Johnstown, Pennsylvania; Kearney, Scottsbluff and North Platte, Nebraska; Salina, Liberal, Hays and Dodge City, Kansas; Eau Claire, Wisconsin; and Victoria, Texas.

Each route typically has a separate contract. Such contracts. Each contract generally has around $3 million in annual government subsidies.

SkyWest said it is “eager to work with officials toward solutions that would enable us to reconnect these communities to the National Air Transportation System in the future, and we are committed to remaining flexible and adjusting our plans if the situation improves more quickly than currently expected.”

The Transportation Department said it wants other carriers to file proposals no later than April 11 to offer flights to replace the canceled service.

United Airlines Chief Executive Scott Kirby told Congress in December the airline had nearly 100 regional airplanes effectively grounded “because there’s not enough pilots to fly them. … The country is going to need thousands of pilots.”

(Reporting by David Shepardson; Editing by Will Dunham)

By Chibuike Oguh

New York – Oil prices fell and European stocks rose on Monday as investors weighed positive comments from ceasefire talks between Russia and Ukraine, while U.S. Treasury yields hit two-and-a-half year highs on expectations of a first U.S. rate hike.

U.S. stocks were mostly lower as investors remained cautious on the Ukraine conflict, with the market focus on this week’s Federal Reserve meeting.

Russian and Ukrainian officials gave their most upbeat assessments on Sunday of progress in their talks to end the conflict, with some delegates saying draft agreements could be reached within days.

European stocks closed higher on the tentative hopes of progress in the peace talks, while oil prices retreated to their lowest in two weeks on the prospects of increased global supplies.

“Everything seems to be heading towards an acute point where we should have some headway. The fact is neither side has a complete edge and as a result talks are the most sensible outcome, with some type of resolution,” said Thomas Hayes, chairman at Great Hill Capital in New York.

On Wall Street, the benchmark S&P 500 and the tech-heavy Nasdaq fell as traders sold big growth stocks ahead of the Fed’s meeting on Wednesday, when the U.S. central bank is expected to raise interest rates for the first time in three years.

The Dow Jones Industrial Average rose 1.05 points to 32,945.24, the S&P 500 lost 0.74% to 4,173.11 and the Nasdaq Composite dropped 2.04% to 12,581.22.

Investors expect the U.S. central bank to hike rates more aggressively this year, after data on Thursday showed that annual inflation in February rose at the fastest pace in 40 years, forcing Americans to dig deeper to pay for rent, food and gasoline.

Benchmark U.S. 10-year yields rose to 2.1419%, the highest since July 2019.

“The Fed is expected to hike rates by 25 basis points (this week) and you’re seeing the 10-yields rise, which is positive from a yield curve perspective and implies the flattening may be coming to an end. We may avoid an inversion and a recession in the near term,” Hayes said.

The pan-European STOXX 600 index rose 1.2% while the MSCI’s gauge of stocks across the globe shed 0.74%. Overnight in Asia, the Nikkei 225 index closed up 0.58%.

Brent futures fell 5.1% to settle at $106.90 a barrel, while U.S. West Texas Intermediate (WTI) crude fell 5.8% to settle at $103.01.

The U.S. dollar dipped modestly against a basket of currencies but remained near a 21-month high hit last week as investors eyed Russia-Ukraine peace talks. [FRX/]

The dollar index fell 0.056%.

Safe-haven gold prices fell as U.S. Treasury yields rose.

Spot gold dropped 1.6% to $1,952.87 an ounce, while U.S. gold futures fell 0.91% to $1,959.60 an ounce.

(Reporting by Chibuike Oguh in New York; Editing by Emelia Sithole-Matarise and Richard Pullin)

By David Randall

NEW YORK – Do you believe in Cathie Wood?

Wall Street’s star stock picker has seen her fortunes wane over the past year as her flagship tech innovation fund slid more than 50%, losing $13 billion in market value.

Yet investors have continued to buy into her futuristic vision, according to data from industry tracker Lipper: not only holding tight but plowing more than $2 billion in additional net inflows into the fund at her firm ARK, a name inspired by the Ark of the Covenant, a Biblical vessel of divine revelation.

“People like to bet on somebody and look someone in their face and see their conviction,” said Tom Lydon, an asset management veteran. “That has helped override any concerns that this fund is broken.”

Wood, one of the few prominent female fund managers on Wall Street, is facing one of the greatest challenges of her professional career: how to show the world that she is simply more than the face of what some are calling the pandemic bubble.

While much has been written about the decline of her ARK Innovation exchange-traded fund, this story is the first to draw on a range of interviews, with about a dozen ARK employees, investors, and others within Wood’s world, to show how she is trying to keep her reputation intact as she navigates the flip side of fame.

Wood related to Lydon a recent conversation she had with an angry client who had millions invested with her fund and was prepared to pull it all out. She listened to their concerns without interrupting. Finally, it was her turn to speak.

“We have the same commitment to our strategy that we did at the market top, and if you liked it back then you should love it even more because valuations have become more attractive,” she told the client from her office high above the palm trees of St. Petersburg, Florida, where she recently moved from New York.

By the end of the conversation, she had not only persuaded him to keep his money invested with her, but to add more to keep his overall allocation to her fund the same.

Stirring the belief of seasoned investors may never be more critical for Wood.

In the space of three years she rose from relative obscurity to being hailed as one of America’s greatest stock oracles in 2020 after she made gains of about 150% by piling into shares such as Tesla and Zoom Video Communications before they hit the stratosphere.

Yet inflation soon began to sap the life out of the highly valued tech disruptor stocks she’s famed for. From there, gravity seemed to take over, pulling the fund lower and lower last year despite a 20%-plus gain in the broad S&P 500. With the Russian invasion of Ukraine compounding losses, Wood’s flagship fund is now down nearly 63% from its February 2021 high.

While Wood declined to be interviewed for this article, those close to her say she is fielding multiple calls a day from financial advisers and investors to convince them to stick with her.

At the same time, she is making a conscious drive to appear in more public forums, such as TV interviews and conferences, in order to bolster the confidence of retail investors who make up a significant portion of her fund base.

SHORTING THE STAR

Her conviction does not waiver in private, said Robby Greengold, an analyst at investment research firm Morningstar who regularly speaks with her. “She doesn’t present herself any differently in person than in public,” he added.

Wood, a prominent backer of bitcoin, believes technology is advancing at a more rapid pace than many investors realize and will cleave a handful of winners away from a growing trash pile of companies on the losing side of disruption.

Not everyone has faith, though. Not by a long shot.

In fact, a lack of confidence in Wood’s long-term prospects led Tuttle Capital to launch an ETF that solely shorts her positions – the first known time that an ETF has specifically shorted the strategy of a single active manager.

“We wanted to short speculative technology and, lucky for us, ARK had already designed that package,” said Matthew Tuttle, the head of Tuttle Management, whose fund has swelled to $350 million in assets and is up about 90% since it began trading in November.

More broadly, short-sellers of ARK funds are up $712 million this year through Feb. 16, marked against market prices, a gain that puts them up 22.16% for the year versus a 5.2% gain for shorting the entire domestic ETF market, according to technology and data analytics company S3 Partners.

On Reddit’s WallStreetBets forum, which helped power the retail pandemic trading frenzy of “meme” stocks, a recent discussion is entitled “What’s the Consensus on Cathie Wood”.

“She literally took all of the bubble stocks, put them into an ETF, and just expected the bubble to just keep skyrocketing,” one post says.

A DAY IN THE LIFE

The interviews with the people close to 66-year-old Wood offer a window upon a day in the life of the celebrated stock picker.

7 a.m: She begins work at her office in a 26-storey tower just a few blocks away from the shimmering waters of Tampa Bay, often listening to earnings calls of companies in her portfolio and potential acquisitions.

8:45 a.m: she joins a call with her analyst team. On Friday mornings, she also holds a two-hour video meeting with her analysts and industry experts on how technology will drive societal change that she occasionally opens to select investors.

The rest of the day is spent on calls with clients, trading decisions, and increasingly frequent media appearances, whether in the form of a nearly 45-minute grilling of her positions on CNBC or the firm’s own YouTube shows and webinars.

“She is more than willing to speak with any client that’s out there to walk through what is happening in the market and just reassure them this is an opportunity,” said Renato Leggi, a client portfolio manager at ARK.

Wood might not need to convince her roughly 45-person staff at ARK Invest, where belief in her remains as powerful as the Florida sunshine.

“People follow and are willing to give their life or entrust in her because of her humility,” said Alex Cahana, a theme developer at ARK since 2014, helping identify the industry trends that could shape ARK’s investment strategy.

Her conviction in the face of piling losses appears to be resonating with investors.

This year alone, they have entrusted more than half a billion dollars in net inflows to her innovation fund, despite it turning in one of the worst performances of all funds tracked by Morningstar over the same time.

Despite its recent losses, the fund has returned an annualised average of 27.5% over the last three years, putting it in the top 2% of the 491 U.S. mid-cap growth funds tracked by Morningstar. That said, many investors who weren’t there from the early days are now underwater.

The fund’s long-term track record is one reason to believe in Wood once inflation subsides, said Jimmy Lee, the head of Las Vegas-based Wealth Consulting Group, which has $2 billion in overall assets under management.

He said his group had added to its ARK investment in recent weeks: “A lot of their names purchased in the past were way too rich in valuation, but now we’re at a good entry point.”

‘GO WHERE YOU NEED TO GO’

Woods, who has a deep-seated Christian faith, shot to finance fame relatively late in life after starting her career in 1980 at New York-based investment advisory firm Jennison Associates. She founded ARK in 2014 after other stints at Tupelo Capital Services and AllianceBernstein.

While the sort of broad, thematic bets that are a hallmark of ARK’s investment style has long been a part of her strategy, her willingness to take large positions – approximately 30% of her flagship fund is invested in the shares of five companies – has not always been welcomed at previous firms where she worked.

While she was chief investment officer of thematic portfolios at AllianceBernstein, the firm began to implement new constraints on how she could manage her fund following the market meltdown in 2008, adding limits on position sizes and requiring more sector diversification.

Frustrated, Wood pitched the idea of a transparent, actively managed ETF to AllianceBernstein in 2013 but was refused, said Leggi. She left the firm and formed ARK Invest the following year.

“You can’t really run a constrained portfolio across innovation. You need to be able to go where you need to go when you want to,” Leggi said.

AllianceBernstein declined to comment for this article.

Wood’s ability to retain investors despite large losses could be a sign that her fund won’t become the pandemic version of the Munder NetNet fund, which soared to more than $11.5 billion in assets in the late 1990s thanks to bets on internet stocks, before falling over 90% once the dotcom bubble burst. Its once-celebrated portfolio manager, Paul Cook, left Wall Street and now works at a human resources software company.

Todd Rosenbluth, head of ETF research at CFRA, said he admired Wood and ARK’s ability to retain their appeal after a torrid year.

“Performance-chasing is much more common than investors demonstrating loyalty in the face of underperformance,” he added. “It is a credit to the shareholder base ARK has built.”

(Reporting by David Randall; Additional reporting by Hannah Lang; Editing by Pravin Char)