(Yicai Global) April 12 -- Investors in Shanghai are becoming less confident about the Chinese city’s economic outlook as a new wave of Covid-19 and ongoing global geopolitical tensions cast a shadow over the economy, according to a recent study.

The Shanghai Investor Confidence Index sank 9.08 points in the first quarter from the same period last year to 109.46 points, but still remained above the benchmark of 100 indicating optimism, according to a report released by the Shanghai University of Finance and Economics and the SUFE's branch at the Shanghai Social Survey and Research Center today. It is a 11.15-point fall from the fourth quarter last year.

The drop in confidence has to do with the impact of the latest round of Covid-19 on economic development, especially in the catering, retail, tourism and transportation sectors, said Xu Guoxiang, director of the SUFE's branch at the Shanghai Social Survey and Research Center, and Chang Ning, a professor at the SUFE's School of Statistics and Management.

The Russia-Ukraine conflict has pushed up the prices of raw materials, eroding profits, and the slow global economic recovery has affected Chinese firms’ import and export orders, they said.

The entrepreneur investment confidence index, one of the main index’s four core sub-indexes that monitors businesspersons' satisfaction with their current and projected production and operations, slumped 12.07 points in the three months ended March 31 year-on-year to 120.21 points and a quarter-on-quarter drop of 3.62 points.

The government should take immediate measures to minimize pandemic prevention costs while conducting targeted pandemic control and prevention, Xu and Chang said. Specifically, it should give full aid to affected companies and accelerate the implementation of subsidies and financial support.

It should also try to find new growth points to keep the Chinese economy developing steadily amid external changes and market fluctuations, they added. Stable energy supplies need to be ensured, with less reliance on imported energy, to alleviate the impact of external shocks to the Chinese economy.

Editor: Kim Taylor