Virus hits markets the way trade war didn’t 24 Feb 2020 Monday’s selloff was overdue, in that the spread of coronavirus outside China poses a bigger risk to global goods and capital flows than protectionism. Tariff spats impact demand and prices. A runaway virus can stop trade and throw a wrench in finely tuned manufacturing chains.
Italy is petri dish for western virus control 24 Feb 2020 Authorities have locked down towns, shut schools and banned gatherings in the wealthy north to contain a coronavirus outbreak. That risks hurting growth in Europe’s industrial core. It’s also a test of how far democratic economies can push draconian emergency measures.
Virus aid one-upmanship spreads across China tech 24 Feb 2020 Meituan Dianping is subsidising takeout while smartphone-maker Xiaomi may diversify into medical equipment to help fight the outbreak. Such moves are laudable, given China’s poor track record in philanthropy. The financial impact on companies, though, looks less certain.
Chinese consumers imperil V-shaped virus rebound 24 Feb 2020 The slowdown in new Covid-19 cases outside Hubei has fed investor optimism. Local stock prices are trading at pre-outbreak levels, helped by stimulus efforts. But even if the epidemic has peaked, which is far from certain, stress in the private sector hints at a slower recovery.
Air France lays down worrying coronavirus marker 20 Feb 2020 The Franco-Dutch airline’s shares fell 7% as it warned of a 200 mln euro hit from the virus. Rivals BA-owner IAG and Lufthansa will also feel the travel drag. Yet Air France-KLM’s estimates count on a quick resolution. That suggests even more pain could be ahead for investors.
Thai IPO tests waning market enthusiasm 20 Feb 2020 Central Retail shares opened flat on their debut. Cornerstone investors helped it price near the top of its range, although the economic timing couldn’t be worse. Thailand’s listing market has stayed hot even as post-IPO performance has cooled. One of these trends can’t last.
Coronavirus may come for boards and CEOs 20 Feb 2020 Infectious diseases are inevitable, but the financial havoc they wreak is not. Pandemics and efforts to contain them eat away an estimated 1% of GDP each year. Too many companies have failed to prepare, and shareholders ought not shrug off the Wuhan episode as a black swan.
Apple jars investors into coronavirus realities 18 Feb 2020 The iPhone maker warned quarterly sales would miss earlier guidance as Chinese consumers and supply chains seize up. Corporate caution thus far has been shrugged off in the markets. The tech titan should help inject greater appreciation for the outbreak’s serious ripple effects.
Dolce & Gabbana will toil to hit Versace’s heights 17 Feb 2020 The Italian brand has been approached by suitors. With sales of 1.4 bln euros, it would command a 4 bln euro price tag if sold on Versace multiples. Lower margins, coronavirus and an ongoing battle to fully restore its damaged image in China are reasons to be more cautious.
Japan’s frail economy will struggle to fight virus 17 Feb 2020 GDP contracted by an annualised 6.3% last quarter, and that’s before any effects from the Wuhan outbreak. Monetary policy is stretched, the yen vulnerable and demand tepid. Reversing a badly timed consumption tax hike would help; banks charging corporate depositors could do more.
Virus could spur buyout appetite for Chinese food 17 Feb 2020 McDonald’s and Haidilao have closed stores as the epidemic spreads. They can weather the storm, but other big local chains are running low on cash. Until now, China’s $717 bln restaurant sector and private equity have remained wary of each other. That may be about to change.
Hong Kong bankers drop-kicked while they’re down 14 Feb 2020 The city’s World Rugby Sevens leg has been postponed six months because of the coronavirus. Sponsor HSBC and its rivals typically schmooze clients and cut loose at the big event. Its absence in the April diary will be a grim reminder of the tough year ahead in Asian finance.
Alibaba’s virus response is as much VC as ESG 13 Feb 2020 The Chinese e-commerce company is waiving merchant fees and slashing logistics costs. It’s just the sort of relief that local businesses need during a debilitating outbreak. And the startup-like use of cash-burning subsidies should help Alibaba keep customers and find new ones.
Epidemics are tough to turn into profit 12 Feb 2020 The new coronavirus has the world on edge. Healthcare companies are ramping up production of test kits and researching treatments and vaccines. Yet past events like SARS show slow R&D, high production costs and political pressure on pricing often add up to disappointing returns.
Viral CLSA note delivers welcome rosy outlook 12 Feb 2020 An interview the Hong Kong broker conducted with a SARS expert has been widely circulated, owing in part to a comparison of the new coronavirus to a bad cold. It’s a rare upbeat assessment that defied consensus. The outcome is instructive for many sheep-like market forecasters.
Hadas: Reckless finance will speed virus recovery 12 Feb 2020 Medical caution helps to limit the spread of infectious disease but for treating the outbreak’s monetary side effects, the best cure may be direct government support. Risky Chinese and China-facing borrowers will suck up cheap credit on an imprudent road to restoring confidence.
Biotech undergoes the ultimate trial by epidemic 11 Feb 2020 Outfits like $8 bln Moderna have unproven technologies that could speed vaccine development, and cut costs to fatten thin profit margins. The battle against Chinese coronavirus provides a chance to demonstrate proof of concept. Success will depend on convincing regulators.
Geely picks odd timing for Volvo IPO reboot 10 Feb 2020 After abandoning a $30 bln flotation of the Swedish carmaker in 2018, its Chinese owner wants to combine it with its Hong Kong unit, and list in Sweden. A merger might create savings. Yet any benefit will be overshadowed by a tough domestic market and the coronavirus fallout.
Rich world is a safer distance from virus fallout 10 Feb 2020 Disruptions to Chinese demand and factories will hurt Japan, Australia and South Korea more than the United States, despite damage done to the likes of Apple and Starbucks. But worst hit will be poor nations that rely more on the People’s Republic for trade, tourists and funding.
IPhones will display China’s back-to-work power 10 Feb 2020 The $38 bln Apple supplier Foxconn is re-opening a key Chinese plant as officials ease curbs. But the handset-maker and others face labour shortages as workers struggle to return home and travel with ongoing contagion fears. The complexities of restarting supply chains run deep.