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Shanghai Faces a Key Test as Disney Plans Amusement Park Reopening

Daniel SmootStansberry NewsWire

The Chinese city of Shanghai continues to ease its COVID-19 restrictions...

Disney (DIS) announced its Shanghai Disney Resort will restart operations starting on Friday – marking a pivotal step for the company and city's reopening after 81 days of lockdowns.

While the park will operate at a limited capacity upon its reopening, CEO of Shanghai Yaheng International Travel Li Wenjie said it will be a "watershed moment" for the city.

He told the South China Morning Post that if its gradual reopening steps and strict virus controls unfold as planned, it may boost the company's confidence and the path toward a full reopening.

It could also help "prove" to local authorities that this approach is not only reducing the number of reported cases, but also driving a return to normal economic activity in the region.

Shanghai has already begun to reopen small businesses, transportation services, and manufacturing locations – fueling a much-needed increase in the flow of goods, domestically and internationally.

Now that entertainment venues are entering the fray, we could see money managers' concerns further alleviated... as it may remove at least one macroeconomic headwind clouding their forecasts.

Still, this is a trend that will take months to unfold. And given Beijing's zero-tolerance approach, any spike in cases could force the government to once again reverse course.