The lockdown in Shanghai was extreme and unexpected. The two-phase closure of China’s financial center of 26 million residents will have far-reaching consequences.

This Blocked for eight days The measures that began on Monday were far more severe than those previously imposed on the city, which is China’s second-richest man after Beijing. The government, which is battling the largest outbreak in two years, has imposed epidemic restrictions with an intensity rarely seen elsewhere. City dwellers cannot leave their homes; bridges, companies and factories are closed; land buying and selling is prohibited.

This means a major blow to China’s economic growth. The city has the largest port in China and the busiest port in the world. Small-scale restrictions in other parts of China were causing panic even before Shanghai closed its doors.

The number of container ships waiting at major Chinese ports has nearly doubled compared to February, according to Bloomberg data. Global supply chains are highly dependent on cities for shipments, not just electronics but everything from fertilizers to pharmaceuticals.

Shanghai is also a leading financial center, and most multinational companies have headquarters and production plants in China. For example, Tesla reportedly suspended production at its Shanghai factory on Monday.

The disruption will further push China toward its target of about 5.5 percent GDP growth this year. Shanghai accounts for 4% of the country’s GDP. Any extension of the lockdown – and similar measures implemented in other cities – would exacerbate the impact on employment, consumer spending and confidence.

The CSI 300 index, the benchmark for stocks listed on the Shanghai and Shenzhen stock exchanges, fell less than 1 percent on Monday. It has fallen 16% this year and is trading at just 2 times book value. As the number of Covid-19 cases starts to rise, the risk of lockdowns is already priced in to some extent.

However, the nature of Shanghai’s sudden lockdown could have a bigger and more lasting impact on the local stock market and investor confidence in the coming months. The announcement on Sunday came a day after government officials in Shanghai denied plans to lock down the city. That leaves investors guessing which companies and cities will be next to be affected by the lockdown.