Coronavirus

Virus only strengthens Peugeot merger logic

26 Feb 2020

The $17 bln French automaker warned of lower sales growth and margins. The effect of the coronavirus will be a further blow. Still, combining with Fiat Chrysler should lead to a more profitable and resilient group. Investors aren’t giving boss Carlos Tavares enough credit for it.

Animal spirits temper gold miners’ virus appeal

25 Feb 2020

An outbreak of the coronavirus in Italy boosted the price of bullion. While producers of the yellow metal stand to gain from higher prices, a global pandemic could hit some production. The bigger risk is CEOs squandering the windfall on unprofitable ventures or expensive M&A.

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.