Coronavirus

OPEC shock pours fuel on credit-market cinders

9 Mar 2020

The collapse in oil prices and worsening epidemic are causing turmoil in corporate debt markets. Yet the price moves are hard to justify, even matching the damage from Lehman Brothers’ failure in 2008. That adds weight to fears that bank trading limits can exacerbate a crisis.

Boeing airworthiness takes new viral hits

9 Mar 2020

The aircraft maker’s shares have plunged 25% in under a month – double the damage to the S&P 500. On top of the 737 MAX grounding, a possible pandemic weakens Boeing’s airline customers while also disrupting its supply chain. New CEO David Calhoun needs more than an apology tour.

Saudi sets global oil a stress test few will pass

9 Mar 2020

An all-out price war launched by the kingdom crashed the crude price over 20%. Values well below $40 a barrel are a setback for U.S. shale producers, global oil majors, national budgets, and the climate change fight. At least Saudi oil giant Aramco will share the short-term pain.

Italy’s virus mitigation comes at a hefty price

9 Mar 2020

Rome has quarantined 16 mln people to beat Covid-19. Such harsh steps may slow contagion and relieve a strained health service. The risk is that the economy suffers lasting damage before the epidemic is bested. Other developed countries will inevitably confront the same dilemma.

Coronavirus infects air over global markets

9 Mar 2020

Monday’s plunge in oil prices and signs that Western nations may act drastically to slow the virus reversed a Chinese stock rally; some major Asian indexes fell 6%. Any benefits of cheaper energy are overshadowed by fear of the unknown in export dependent East Asia and beyond.

OPEC Russian roulette yields circular firing squad

6 Mar 2020

Moscow has rejected the cartel’s pleas for a supply cut to ease a virus-linked demand slump. Given the scale of the oil market imbalance, an inadequate deal was the best that could have been hoped for. But OPEC’s efforts to force the issue look like leaving everyone worse off.

M&A protectionism could bite at worst time

6 Mar 2020

Cross-border deals are getting harder because of the White House’s America-first stance and tougher merger reviews, deal advisers say. Yet a blooming pandemic will make big companies more keen to cut costs and tighten control of their supply chains. It’s an unhelpful combination.

Virus Plan Bs will get banks thinking about costs

6 Mar 2020

HSBC and others may split staff into separate camps so that jobs like trading continue if an office closes. That sounds inefficient and costly. But it might not be over time if executives find they can live with small teams in less glamorous but cheaper office space.

Alibaba’s health shift prescribes market medicine

6 Mar 2020

The e-commerce group is injecting assets into a healthcare subsidiary, now worth a punchy $25 bln. It’s a bet that the coronavirus will accelerate reforms, like opening China’s $370 bln drug industry to web retailers. Alibaba’s scale could deliver a potent treatment to investors.

Viewsroom: Fear factor

5 Mar 2020

U.S. Fed Chairman Jerome Powell surprised markets with a rate cut ahead of schedule. Democratic presidential contender Joe Biden unexpectedly won the most states on Super Tuesday. Covid-19 may show up in China M&A clauses. The coronavirus is inspiring flights to safety.

Virus stimulus strains bloated U.S. balance sheet

5 Mar 2020

Congress approved an $8 bln plan to mitigate a potential outbreak. It’s a rounding error next to the hundreds of billions that may be needed to stem economic damage. Tax cuts and a spending jump had already pushed the deficit to $1 trln, reducing fiscal room to deal with crises.

Cox: Plague would be one way to meet ESG targets

5 Mar 2020

Pestilence scares come along every so often. Sometimes they’re full-blown levellers of humanity. Think Europe after 1347, or the world post-1918. Perhaps the best outcome from Covid-19 is that it becomes the near-miss society and business need to change course in a hurry.

Airlines are pure punt on V-shaped virus recovery

5 Mar 2020

The coronavirus has hammered demand for air travel, knocking share prices and pushing UK budget carrier Flybe into bankruptcy. Yet past outbreaks like SARS suggest it will be a blip on air travel’s steady upward trajectory. If that’s the case, stronger airlines will bounce back.

Oyo is not wasting the WeWork crisis

5 Mar 2020

The Indian hotel room provider is cutting 5,000 jobs, including half its China staff, and focusing on profitability and governance. Slower growth might deflate a $10 bln valuation. But it highlights the more grounded new look of Masayoshi Son’s SoftBank empire.

To set Macau’s virus odds, consider 2015 over 2003

5 Mar 2020

A recovery may take as long as six months, warns resort operator Melco. The slump looks more serious than during SARS and is better compared to a corruption crackdown that lopped a third off gaming revenue. This time, though, casinos are losing tourists as well as high rollers.

Deal advisers have more to worry about than ever

4 Mar 2020

Even without market volatility and a virulent new disease, rapid shifts in U.S. merger rules have dealmakers on edge. Wall Street’s M&A bankers and lawyers are convening for their annual confab despite the coronavirus, hoping to learn to read more into the Washington tea leaves.

Hadas: Good bureaucracy is ultimate virus slayer

4 Mar 2020

Honest and competent administrators make complex societies tick. In a public health crisis, they have to be global, transparent, flexible and sometimes harsh. China and the United States flubbed the coronavirus challenge in their own ways. Sadly, it’s too late for big changes.

Banks could use some wiggle room in virus battle

4 Mar 2020

The growing health crisis risks turning into an economic slump and reversing a decade-long crusade to clean up dud loans. Banks can help by jointly relaxing credit terms for otherwise healthy firms. The relief will be more effective if regulators also ease up on bad-debt rules.

Chinese shares offer perverse safe haven

4 Mar 2020

U.S. equities fell and gold jumped following the big Fed cut. China’s benchmark stock index, however, has improved a world-beating 11% over the last month as local monetary stimulus eclipses weak business activity. That fondness for looser money creates a counterintuitive hedge.

Virus will change beauty in eyes of beholders

4 Mar 2020

Cosmetics makers such as L’Oréal and Estée Lauder owe much of their recent growth to duty-free shops and the like. A sharp drop in Chinese tourists caused by Covid-19 exposes the dependence on so-called travel retail. Valuations of 30 times earnings are due for longer-term cuts.