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Taiwan is grappling with a spike in COVID-19 cases after keeping the coronavirus largely at bay for the past year.

“We contained the coronavirus in the past one year, but now infections come one after another with a more contagious mutant virus spreading faster,” Premier Su Tseng-chang said on May 15. Some of the cases in the current outbreak are connected to the U.K. variant.

On May 17, the self-governing island reported 333 new cases—a new daily record for the island, following 207 cases on May 16 and 180 new infections on May 15. Taiwan’s accumulated case numbers have now jumped to more than 2,260, sparking panic in supermarkets and among stocks on the island that weeks ago was all but COVID-free.

How it began

Taiwan is still closed to foreign tourists, but authorities can trace the current community outbreak to a COVID cluster initially contained within Taiwan’s quarantine hotels.

On April 20, two pilots off a cargo flight for Taiwan’s flag carrier, China Airlines, tested positive for COVID-19 while quarantining in a Novotel. Nine more pilots soon tested positive, too. Quarantine for pilots is only three days long, so several of the nine additional pilots had visited bars and restaurants before testing positive, spreading the outbreak to the general community.

The response

On May 15, the government placed the capital, Taipei, and its surrounding metropolis, New Taipei City, on level-three alert. Cinemas, libraries, and sports centers will be closed until May 28. Indoor gatherings are limited to groups of five, while outdoor groups are capped at 10, and mask-wearing is mandatory.

On May 17, Taipei implemented even stricter measures and closed all schools for two weeks and also banned the arrival of all foreign nationals without residency. Taiwan’s highest response level of four calls for a complete lockdown, with mandatory stay-at-home orders, and will be implemented if daily case numbers exceed 100 for two weeks.

News of the first major community outbreak since last year sparked panic buying in some cities. Consumers rushed to stock up on toilet paper and instant noodles.

The outbreak also prompted a surge in vaccine appointments, with the island administering a record 16,180 jabs on May 12. Like many other Asian governments that had initial success in curtailing the virus, Taipei has struggled to persuade its citizens to get vaccinated. Taiwan received 117,000 doses of the AstraZeneca vaccine in March, but as of May 13, only 0.55% of the population had received their first dose.

Taiwan’s stock market already reflects investor fears that the current outbreak could sprawl into widespread contagion.

As of May 17, Taiwan’s benchmark Taiex index is down 11% from seven days before. It experienced its biggest intraday slide since 1969 on May 12, dropping 8.5%. The plunge might have been due in part to a global rout on tech stocks, as the semiconductor shortage continues to plague makers of electronics and autos.

The world’s largest contract chip manufacturer, Taiwan Semiconductor Manufacturing Co. (TSMC), has a 30% weighting in the Taiex, and shares in the chipmaker sank 1.9% on May 12. A level-four outbreak in TSMC’s home city could pile pressure on already strained semiconductor supply lines.