What happened
Shares of JD.com (JD +1.48%), China's largest online retailer, were falling today as investors worry that the country's strict zero-COVID policy continues to keep large swaths of the population in lockdown.
The tech stock was down by 4.6% as of 11:33 a.m. ET on Thursday.
So what
Investors are growing increasingly concerned that the Chinese government's policy of having as few COVID cases as possible by implementing strict lockdowns will cause an economic slowdown in the country, and potentially spur a recession.
Image source: Getty Images.
Those ongoing fears have helped drag down Chinese stocks over the past few days, and they have pulled down JD.com's share price by 10.7% since Monday.
Reuters reported this morning that an analyst at Nomura estimates that 45 cities in China were in full lockdown as recently as last week, accounting for about 40% of China's gross domestic product.
As a large online retailer, any threat of a potential recession, or even a significant economic slowdown, could end up hurting JD.com's future growth.
Indeed, the company's CEO of retail said on the company's fourth-quarter earnings call last month that "macroeconomic conditions and weak consumption demand" -- as well as rising raw material prices and COVID disruptions -- are putting pressure on China's retail industry.
Now what
There's a lot of uncertainty in the Chinese market right now, which means that long-term investors might want to be careful before starting a position in JD.com or adding to an existing one.
That doesn't mean that the stock couldn't end up being a good long-term investment, but with China's strict COVID policy still causing major disruptions, it's unclear right now what the long-term economic effects will be.
