Peter Wells 3/18/2020, 10:58:03 AM
Finland’s GDP forecast to shrink 4% – central bank
Richard Milne in Oslo
Finland’s economy is likely to contract by 4 per cent this year due to the effects of the coronavirus outbreak, according to the Nordic country’s central bank.
The Bank of Finland said on Wednesday it had two economic scenarios currently for this year – a fall of 1.5 per cent in GDP or a drop of 4 per cent. It added that the ongoing spread of coronavirus meant the gloomier scenario was “increasingly likely” under household consumption would decline significantly and domestic supply chains would be disrupted by measures to contain the pandemic.
The bank said in its interim forecast for 2020: “The Finnish economy began the year in a weak starting position even without the impact of the coronavirus … This year, Finland’s economy will sink into recession on account of the coronavirus pandemic.”
Myles McCormick 3/18/2020, 10:55:42 AM
Eurogroup head says EU rules will not impede support measures
Peter Wise in Lisbon reports:
Mário Centeno, head of the eurogroup of eurozone finance ministers, guaranteed on Wednesday that EU rules on fiscal deficits and state aid would not obstruct government measures to support national economies during the coronavirus pandemic.
“We will ensure that the EU’s fiscal and state aid rules do not hamper support for our economies,” Mr Centeno, Portugal’s finance minister, said in Lisbon as he announced a €9.2bn government package to support the Portuguese economy. “There is flexibility [within the EU rules] and it will be used in full.”
Mr Centeno said he was borrowing the words of Mario Draghi, the former head of the European Central Bank, to emphasise that “we will do everything necessary to confront our difficulties”.
For Portugal, he announced a €3bn line of credit to support companies, particularly in the tourism and restaurant industries, which account for about 15 per cent of the country’s national output and have been hit hard by the pandemic.
The emergency package included a further €5.2bn in tax deferments and €1bn in deferments for social security contributions.
Later on Wednesday Marcelo Rebelo de Sousa, Portugal’s president, is scheduled to announce his decision on whether to declare a state of emergency, which would grant the Lisbon government sweeping powers to fight the pandemic.
Sarah Provan 3/18/2020, 10:54:09 AM
‘Worst is yet to come,’ says Spain’s prime minister
Daniel Dombey in Madrid reports:
Spain could forfeit as many as three months of economic activity because of the coronavirus, the prime minister said, as he called for an emergency budget to bolster the welfare state and “reconstruct” the country once the immediate health crisis has abated.
“It is obvious that annual GDP will go down, as the European Commission has indicated: 2020 will not have 12 months, but 10 or even nine,” Pedro Sánchez told a near empty chamber of deputies, from which most MPs stayed away for health reasons, with staff disinfecting the podium after each speaker’s turn.
In the economic field, the milestones will be to halt the fall in production and the destruction of employment.. and recover production and employment.
Spain is reeling from one of the world’s fastest spreads of the Covid-19 virus.
But Mr Sánchez warned: “The worst is still to come, when the health system feels the impact of the people who have been exposed, when the days of isolation increase and the economic repercussions arrive.”
His comments indicated the possible duration of the paralysis of Spain’s economy following the nationwide shutdown he decreed on Saturday. Parliament must approve the extraordinary powers under which Mr Sánchez took that step, and opposition leaders have said they would be willing to extend the initial period of 15 days.
Philip Georgiadis 3/18/2020, 10:49:30 AM
Iraq begins curfew
Chloe Cornish in Beirut reports:
Iraq has begun a week-long country-wide curfew as authorities try to contain the spread of the virus.
The country’s health ministry said that 154 people have contracted the illness in Iraq, while 11 sufferers have died so far.
Flights were suspended on Tuesday until March 24th and major religious gatherings have been prohibited. Despite the official lockdown, people in Baghdad reported they were still allowed to walk around freely.
Myles McCormick 3/18/2020, 10:49:05 AM
Nigeria imposes travel ban on worst-hit countries
Neil Munshi in Lagos reports:
The Nigerian government has imposed a travel ban on all countries with more than 1,000 cases of coronavirus, as Africa’s most populous nation took its first major step toward containing the pandemic. The move came as the number of cases rose from three to eight on Wednesday morning.
Nigeria’s response has lagged behind other African countries, which have imposed much more stringent travel restrictions and social distancing measures with similarly few cases.
The government also announced that it would suspend all visas on arrival and that anyone arriving from those 13 countries — including China, the US, UK and Italy — would be subject to supervised self-isolation and testing for 14 days.
Africa’s biggest economy is one of the most religious countries in the world, famed for its massive megachurches, but it has yet to ban gatherings of more than 50 people. Schools remain open.
Health experts have warned that Africa, with its fragile health infrastructure, is the part of the world least prepared for a potential pandemic. So far the continent has reported around 500 confirmed cases, mostly connected to travelers from Europe.
Sarah Provan 3/18/2020, 10:43:59 AM
Scientific adviser says Westminster has ‘a lot’ of Covid-19
Clive Cookson in London has more from Neil Ferguson:
Neil Ferguson, the Imperial College scientist who was the head of the modelling team that led the UK government to adopt stronger social distancing measures to fight coronavirus, developed symptoms of Covid-19 overnight.
After his 7am tweet about developing a high fever in the middle of the night Professor Ferguson felt slightly better this morning — “still grotty” but well enough for a phone interview on the Today programme on BBC Radio 4.
“Central London is really the kind of hotspot in the UK at the moment… in Westminster, there is a lot,” he said. “It is becoming quite a widespread community infection especially in hotspots like London.”
On Monday afternoon, Prof Ferguson attended a Downing Street press conference where the government announced stronger action to keep people apart, based substantially on his team’s warning that otherwise the National Health Service would be overwhelmed and hundreds of thousands would die in the UK.
“I’ve been in so many meetings the last few weeks and a number of my colleagues at universities who’ve been advising government in those meetings have also developed symptoms,” he added.
Prof Ferguson’s illness may add to the pressure on senior politicians, MPs and their advisers to take more stringent social distancing measures themselves.
Philip Georgiadis 3/18/2020, 10:39:19 AM
US cancels Hong Kong visa appointments
The US Consulate in Hong Kong and Macau has cancelled all routine visa appointments until further notice.
“We will resume routine visa services as soon as possible,” the consulate said in a statement.
Emergency appointments for issues such as medical reasons, funerals and urgent business travel were available via an online form.
Myles McCormick 3/18/2020, 10:38:44 AM
Brazilian Congress to ‘urgently’ consider call for state of emergency
Andres Schipani in São Paulo reports:
Brazil’s Congress will “urgently” handle a request from the government of President Jair Bolsonaro seeking authorisation from lawmakers to declare a state of emergency in the face of the coronavirus.
Brazil has 291 confirmed cases of the disease and reported its first fatality on Tuesday.
The president, who said he has tested negative for Covid-19, wants to declare a state of emergency to allow the government of Latin America’s largest economy to loosen fiscal targets and release funds to combat the coronavirus. A statement from the president’s office said:
In view of the permanent monitoring of the Covid-19 pandemic, the need to increase public spending to protect the health and jobs of Brazilians and the prospect of falling revenues, the Federal Government will request the National Congress to recognise the state of emergency.
The state of emergency would grant the federal government freedom from tight spending caps, allowing it to direct more money to fight the outbreak.
Rodrigo Maia, the powerful speaker of the lower house, told O Globo newspaper that once the decree is passed along, Congress will “urgently process and approve it so that the government has fiscal space to be able to make the necessary investments to face this crisis”.
The government has already allocated R$147m ($29m) to fight the economic hardships stemming from the coronavirus at a fragile time for the Brazilian economy. The president has also shut its northern border with crisis-stricken Venezuela.
Sarah Provan 3/18/2020, 10:33:03 AM
Aviva Investors suspends UK property fund
Siobhan Riding and George Hammond in London report:
Aviva Investors has become the latest asset manager to halt trading in its UK property fund in the wake of the coronavirus-driven market turbulence.
The fund house said it was taking the step to suspend its £461m UK Property fund temporarily after the market sell-off led to “material uncertainty” over the valuation of its underlying assets.
The Aviva Investors fund is the third open-ended property fund to suspend in three days, and more are expected to follow. More than £3bn of investors’ money is trapped in the funds, which includes strategies run by Kames Capital and Janus Henderson.
UK property funds were in “completely uncharted waters”, said John Forbes, an independent property consultant. “What is the value of a pub, a hotel, or retail premises if you can’t use it? What’s the valuation of an office if no one can get into it?”
The last time property funds were forced to gate en masse was following the UK’s referendum on EU membership in June 2016. This sparked questions about whether an open-ended fund structure, which allows investors to withdraw their money daily, is compatible with assets such as property that can take months to sell.
Myles McCormick 3/18/2020, 10:29:22 AM
UK calls in military scientists to help fight against virus
Helen Warrell in London reports:
Scientists at the UK defence laboratory Porton Down have been seconded to help public health efforts in mapping and testing for coronavirus as the outbreak spreads.
The Ministry of Defence lab, which was instrumental in identifying the Novichok nerve agent used against former Russian spy Sergei Skripal and his daughter Yulia in Salisbury two years ago, has deployed a small team to work on managing the virus.
“The Defence Science and Technology Laboratory is providing hazard assessment, microbiological testing and operational analysis support to government”, the MoD said in a statement.
Porton Down is a secretive laboratory that specialises in researching chemical weapons and dangerous pathogens, such as ebola, plague and anthrax. It has been working on a vaccine against the coronavirus. Matt Hancock, health secretary, visited the lab last month to announce a £20m boost for military scientists who he said were “leading the way” in the search for source of immunity against the disease.
News of Porton Down’s role in the operational side of managing the virus, first reported by the BBC, was welcomed by armed forces minister James Heappey.
Philip Georgiadis 3/18/2020, 10:23:26 AM
Sterling slides below $1.20
Eva Szalay reports:
The pound slumped below $1.20 to hit multi-decade lows as a global rush to safety continued. The currency is down nearly 10 per cent since the start of the year with most of the losses coming since March 9 when the impact of the coronavirus hit Europe.
The currency is also significantly weaker against the euro, with the pound losing more than 6 per cent since the start of the month and over 8 per cent since January.
On Wednesday morning in Europe sterling traded at $1.1988, the lowest level since 1986. The euro climbed to its strongest since August last year to trade at 91.69p.
Philip Georgiadis 3/18/2020, 10:17:05 AM
Iran’s president mocks Western nations for ‘fighting over tissues’
Najmeh Bozorgmehr in Tehran reports:
Iran is doing better than Western states in keeping its people supplied with food and basic goods, president Hassan Rouhani has said.
The country, which has reported almost 1,000 deaths from coronavirus and is scrambling to secure enough medical equipment amid US sanctions, has “something to be proud of” because supplies of basic commodities remain plentiful, the president said in a live, televised address.
I insist on this as something to be proud of. Compare this government’s supply of people’s needs in Tehran to that in London, in Berlin and Paris…where their supermarkets’ shelves were emptied. People were fighting over tissues.
This coronavirus was God’s test, so you can compare Iran with other countries.
On Wednesday, supermarkets in Tehran remain well-stocked with food, allowing residents to stock up ahead of the Persian New Year. Still, this contrasts with the nation’s struggles with testing for and treating the coronavirus.
Myles McCormick 3/18/2020, 10:11:57 AM
US crude hits lowest level in 17 years, nearing $25 a barrel
The US crude oil benchmark fell to its lowest level since 2003 on Wednesday, dropping towards $25 a barrel as the coronavirus crisis crushes demand while the Saudi-Russia price war boosts supply.
West Texas Intermediate hit a low of $25.88 a barrel, down almost 5 per cent on the day and taking losses since early January to around 60 per cent.
Brent crude, the international marker, dropped 3 per cent to $27.90 a barrel.
Crude prices have collapsed as the coronavirus pandemic threatens the biggest demand drop in the oil market’s history, with countries in Europe and North America locking down or putting restrictions on travel in place to try and curb its spread.
With Saudi Arabia and Russia boosting supply at the same time, as the two oil powerhouses prioritise market share over price, some of the world’s top traders are now warning that storage for crude surplus could be maxed out within months.
For more on this story, click here
Myles McCormick 3/18/2020, 9:46:27 AM
Bonds sell off as investors dump liquid assets
Tommy Stubbington in London reports:
Government bond prices around the world tumbled on Wednesday as investors scrambled to dump liquid assets.
The 10-year US Treasury yield surged by 0.2 percentage points to 1.19 per cent, its highest in nearly a month. Germany’s 10-year yield climbed sharply to minus 0.24 per cent, the highest in two months, while UK 10-year yields leapt to 0.74 per cent as funds sold bonds usually considered safe havens even while equity markets dived. Bond yields rise as prices fall.
Traders said the prospect of a big increase in bond issuance in the US and Europe to fund efforts to tackle the coronavirus crisis was further weighing on bond markets, but the absence of any flight to safety suggested a need to raise cash was the driving force.
“This is fire-selling of liquid assets by those who need to meet redemptions,” said Mike Riddell, a portfolio manager at Allianz Global Investors. “A lot of people need cash and they’re liquidating the only thing that they can.”
Moves were even bigger in riskier eurozone government bonds. Italy’s 10-year yield spiked by 0.6 percentage point to 2.7 per cent, up from just 1 per cent at the start of March.
Global equities were also under pressure as investors raced into cash. The UK’s FTSE 100, Germany’ Dax and and France’s CAC 40 all dropped more than 4 per cent.
US S&P 500 futures fell 3.7 per cent, the maximum allowed fall. State Street’s $240bn SPY ETF, which tracks the S&P 500 and is not subject to the same trading limits as futures, fell almost 6 per cent in pre-market dealings, suggesting Wall Street stocks may fall more than futures suggest. The market had rebounded 6 per cent on Tuesday after the worst fall since 1987 the previous day.
Myles McCormick 3/18/2020, 9:40:42 AM
SocGen boss promises ‘credit for everyone’
David Keohane in Paris reports:
The chief of French bank Société Générale and the head of its banking federation has promised that “there will be credit for everyone” as France gears up to keep its businesses afloat in the face of the coronavirus.
“There will be credit for everyone, we are here, we have made commitments to be able to process requests in less than five days,” said Frédéric Oudéa on French radio station Europe 1 on Wednesday morning.
While declaring “war” on the virus and putting the country into virtual lockdown earlier this week, president Emmanuel Macron reaffirmed unlimited state financial support for businesses and employees affected by the coronavirus outbreak, including up to €300bn of state guarantees for bank loans to companies
Mr Oudéa, who was speaking as head of the French banking federation, said that “we are waiting in the next two, three days for all the details of the government’s plan, we will be there to help all businesses.”
It’s the heart of the strategy which is the right one, save the business and thereby save the workers.
Myles McCormick 3/18/2020, 9:34:49 AM
Volkswagen and Jaguar Land Rover extend central Europe shutdowns
James Shotter in Warsaw reports
Volkswagen and Jaguar Land Rover have announced further plant closures in central Europe as a result of the uncertainty caused by the coronavirus pandemic.
VW said late on Tuesday that it was stopping production at its plants in Poznan and Wrzesnia in Poland, and Hanover in Germany, for 10 days from Thursday, while JLR said that it would stop work at its new factory in Nitra in Slovakia from Friday.
“The coronavirus pandemic has had an impact on our entire business: on supply chains, on production, on sales, and on our distribution and service partners,” said Thomas Sedran, head of VW’s Nutzfahrzeuge brand.
For this reason … we have decided to scale down production at all three locations. This decision is the only correct course of action, in order to avoid exposing our workers to any unnecessary health risks.
VW said that its move would affect 24,000 workers in Poland and Germany.
Philip Georgiadis 3/18/2020, 9:23:53 AM
Toyota closes European factories
Peter Campbell, Global Motor Industry Correspondent, reports:
Toyota has closed its remaining European sites, including two plants in the UK, for the foreseeable future, citing supply chain shortages and market uncertainty.
The sites include two in Poland, one in Turkey and a joint plant with PSA in the Czech Republic. Earlier in the week the company shuttered its plants in France and Portugal.
Its closure, which follows BMW’s similar actions on Wednesday, mean only a handful of car factories are open anywhere in Europe.
Of the mainstream facilities:
• Volvo’s operations in Sweden and Kia’s plant in Slovakia are still operational
• Hyundai’s plant in the Czech Republic – which is closely linked to the Kia facility – is also running.
• Jaguar Land Rover’s UK facilities remain open, though the company announced it will close its Slovakian plant from Friday.
• Honda’s UK plant and its motorbike facility in Italy are also operational.
• Aston Martin’s UK plants remain open, the company confirmed on Wednesday.
Adam Samson 3/18/2020, 9:21:21 AM
Why have US stock futures triggered trading curbs?
US stock-index futures have fallen sharply, triggering circuit breakers that are designed to limit volatility outside of Wall Street trading hours.
As we have written about frequently recently, in the US stock-index futures market, these trading curbs are set at a 5 per cent level, meaning S&P 500 futures should not fall by more than that magnitude when equities are not trading.
A peculiar situation has taken hold this week, however, that has added an extra level of complexity to how these measures operate. The price change you will see quoted in the FT and on financial terminals is the per cent change from the previous day’s settlement level on the Chicago Mercantile Exchange.
The settlement takes place at 4.15pm New York time. That is 15 minutes after the closing bell for the Wall Street equities market.
On Tuesday, that settlement level for the March contract (the one that we are referencing in our coverage) was 2495.50. S&P 500 futures are currently trading at 2,403.5, a fall of 3.7 per cent from the settlement level.
That has triggered the circuit breaker. “But you just said it requires a 5 per cent fall!” you might say (I also asked that very same question).
It turns out the circuit breaker is not built on the settlement level, but instead a “fixing” in the 30 seconds to 4pm in New York. The CME Group sets its trading curbs in this way to “co-ordinate with circuit breakers provisions” for the main US cash equities market.
The co-ordination comes into play when the US stock market opens because US stocks have several of their own circuit breakers that affect the entire cash equities market. The 5 per cent circuit breaker in futures turns off when Wall Street opens, and then matches these levels — 7 per cent, 13 per cent, and 20 per cent.
Here are a few useful links:
-US equities futures settlement levels
-US equities futures price limits
-US equities futures fixing level
Myles McCormick 3/18/2020, 9:18:55 AM
Ex-ECB council member calls for ‘full financial firepower’
Arthur Beesley in Dublin reports:
The European Central Bank and EU member states should move immediately to deploy their “full financial power” to stem the fallout from the coronavirus pandemic, a former member of the ECB governing council has said.
Patrick Honohan, who was governor of Ireland’s central bank at the height of the eurozone emergency a decade ago, said the ECB’s current leadership and governments should avoid repeating their slow response to the sovereign debt crisis that was criticised for worsening it.
“In facing the sharp economic crisis that is spinning out of the pandemic, European fiscal and monetary policymakers must not forget lessons learned in the 10 years since the euro area crisis got under way. There can be no excuse for repeating the errors that were made then,” Mr Honohan wrote in the Irish Times.
It is a moment for rapid, strong and all-embracing official policy to ensure that the economic side-effects of the pandemic are contained and equitably shared. Europe has the capacity to do this; but in order to be successful, the timidity and suspicion that characterised too much of policy during the euro area crisis must be avoided this time.
Noting a jump in Italian borrowing costs because of market fears that Rome alone will have to sustain coronavirus pressure on its public finances, he called for “urgent action” by European leaders to quash such suspicions.
“The ECB has a clear, immediate role. It could unleash its outright monetary programme (‘whatever it takes’) of asset purchases if Italy were to apply for an International Monetary Fund-style programme,” said Mr Honohan, who was professor of international financial economics at Trinity College Dublin before he became governor in 2009.
Sarah Provan 3/18/2020, 9:13:01 AM
European car sales slide as virus impact knocks demand
Valentina Romei in London writes:
Car sales dropped in Europe as the coronavirus impact hit shoppers and added to the disruption due to changes in vehicle taxations in various member states.
The European Automobile Manufacturers Association reported a 7.4 per cent drop in EU passenger registrations in February compared with the same month last year.
Among the largest markets, Germany reported the largest fall with a 10.8 per cent drop, followed by Italy and Spain.
Car sales were badly hit in China where the virus spread first. The Asian country reported a 20 per cent drop in car sales January and an 82 per cent dive in February.
Myles McCormick 3/18/2020, 9:10:55 AM
German regulators ease capital rules for banks
Olaf Storbeck in Frankfurt reports:
Germany’s top financial watchdog is scrapping a planned tightening of capital rules for banks in an attempt to give the financial sector more leeway to cope with the economic fallout of the coronavirus crisis.
Bonn-based banking regulator Bafin has abandoned last year’s decision to lift the so-called countercyclical capital buffer from zero to 0.25 per cent of risk-weighted assets by July.
“This is a preventive measure intended to strengthen the German banking sector’s ability to lend,” the German Financial Stability Committee, a joint body comprising the Finance Ministry, Bafin and Bundesbank, said in a statement on Wednesday morning.
People familiar with the numbers estimate that the decision will free up around €5.5bn in common equity tier one across the banking sector. The banks can use this additional legroom either to absorb losses or to increase lending to the corporate sector and households.
The regulators had previously decided to increase the counter cyclical buffer in a move to counter growing risks to financial stability from increased bank lending. But the Association of German Banks has been campaigning in favour of looser capital rules since early March, warning that the liquidity needs of German banks will rise “massively” due to the economic fallout of the coronavirus outbreak.
Myles McCormick 3/18/2020, 9:03:22 AM
BMW becomes latest carmaker to close European plants
Joe Miller in Frankfurt reports:
BMW will follow Volkswagen and Daimler in shutting down its European plants, as concerns over the safety of staff and the security of the auto supply chain mount.
The Munich-based carmaker said it would also close factories in Germany, Austria, the Netherlands and the UK for at least a month, as well as its production line in Rosslyn, South Africa.
The company also revised its guidance for 2020, saying it expected deliveries to be “significantly below the previous year’s level”.
Nicolas Peter, BMW’s chief financial officer, said:
The current uncertainty surrounding future worldwide developments impacted by the coronavirus makes it difficult to provide an accurate forecast for 2020.
“According to the latest developments, our guidance for the full year assumes that the sales situation will deteriorate in all major markets,” he added.
Net profits at BMW fell by almost 30 per cent in 2019, despite record revenues and strong sales of luxury SUVs in the last three months of the year, as the German premium brand poured billions of euros into the development of electric vehicles.
Myles McCormick 3/18/2020, 8:59:25 AM
Global cases climb towards 200,000
Steve Bernard, senior data visualisation journalist, reports:
The global death toll from Covid-19 approached 8,000 while cases neared 200,000 after the largest one-day increase reported. with an additional 15,615 cases.
Europe remained the largest contributor with 11,139 cases recorded. Italy, Spain, Germany and France reported increases of more than 1,000 cases, with Italy worst affected on 3,526.
There were an additional 821 deaths worldwide, the highest since the outbreak began, of which 628 were in Europe. In Italy and Spain 345 and 191 died.
Myles McCormick 3/18/2020, 8:53:50 AM
Saudi Arabia halts most private sector work
Simeon Kerr in Dubai reports:
Saudi Arabia has suspended work in most of the private sector for 15 days, the state news agency reported.
As Gulf states increase measures to restrict the spread of coronavirus, the Saudi ministry of human resources said on Wednesday that remote working should be implemented in sectors apart from sensitive infrastructure, such as utilities and communications.
The ministry ordered the suspension of main offices in the private sector for 15 days while reducing staffing to no more than 40 per cent at secondary offices to maintain supply chains.
Businesses were also asked to limit contact between employees and monitor them for symptoms of the virus. Workers over the age of 55, pregnant women and others vulnerable to the disease are to be given an additional 14 days’ compulsory leave.
The kingdom, which has reported 171 cases, exempted businesses that provide crucial supplies, such as food and health products, to government agencies.
Philip Georgiadis 3/18/2020, 8:49:39 AM
UK pledges more economic support for individuals
Sebastian Payne reports:
Alok Sharma, UK business secretary, said that the government’s proposals to help businesses had been “well received” but more measures to help individuals and renters would be announced “very soon”.
He told the BBC:
I completely understand that people want us to go further — particularly on this issue about support for employees, for employment … we will come forward in the coming days with further measures.
We will do whatever it takes to protect people’s health, to protect their livelihoods, to protect businesses, and the measures we announced yesterday are a big step. But of course, that is not the end and we will keep the situation under review.”
Mr Sharma said that the government was also examining ways of helping businesses receive more funds. Confirming that further action is planned to help renters struggling with payments, the business secretary said “we are looking very actively” at measures that would be announced “very shortly”.
When asked about the levels of testing for coronavirus, Mr Sharma said the government was ramping up the level of testing but had to remain focused on those who need it the most.
Sarah Provan 3/18/2020, 8:36:26 AM
ECB insists it is ready to act as council member stokes debate
Martin Arnold in Frankfurt reports:
The European Central Bank has rebuffed a claim by the head of the Austrian central bank that its monetary policy has reached its limits, in a rare move to officially deny a statement by one of its own governing council members.
The public statement by the ECB, insisting that it “stands ready to adjust all of its measures”, was in response to remarks by Robert Holzmann, the head of Austria’s central bank who frequently criticises ECB monetary policy for being too loose.
The rebuffal underlines the debate that is rumbling on within the ECB’s rate-setting committee over how it should respond to the crisis caused by coronavirus.
Mr Holzmann in Austria’s Der Standard newspaper on Wednesday stated that ECB president Christine Lagarde had said that “monetary policy has reached its limits”.
The ECB said its governing council was in unanimous agreement that in addition to the easing measures it announced on Thursday it would be monitoring the consequences of the pandemic and adjusting its measures as appropriate.
Myles McCormick 3/18/2020, 8:26:08 AM
Miner Ferrexpo defers dividend decision
Neil Hume in London reports:
Ferrexpo, a major supplier of iron ore to the steel industry in Europe and Asia, has reported higher annual profits but said it will not declare a dividend until the impact of the coronavirus pandemic becomes clearer.
The London-listed company on Wednesday said it would defer a decision on shareholder payouts to an “appropriate time when the market situation and the effect of the Covid-19 virus has become clearer”.
Analysts had forecast the company, which has a strong balance sheet, to declare a final dividend of about 13 cents per share, taking payments for 2019 to 26 cents a share.
Ferrexpo said earnings before interest, tax, depreciation and amortisation, the measure tracked by analysts, rose 17 per cent to $586m in 2019 boosted by higher prices for its products. The result was roughly in line with market forecasts.
From its mines in Ukraine, Ferrexpo produces pellets, small balls of high-grade iron ore that are fed directly in the blast furnaces. Its biggest customers are in Europe and Asia.
The price of the steel-making ingredient rose last year helped by a string of supply disruptions and strong demand from China. But there are fears it could decline this year because of the stockpiles of steel that are building up in China.
Philip Georgiadis 3/18/2020, 8:24:31 AM
Russia to fall into budget deficit
Henry Foy in Moscow reports:
Russia’s budget will swing into a deficit this year due to the crash in oil prices and the impact of coronavirus, the country’s finance minister said.
Russia this month pulled out of an oil production agreement with Saudi Arabia, sparking a price war exacerbated by plunging demand for crude caused by the pandemic that sent oil prices crashing below $30 a barrel.
“A decrease in energy prices has always been one of the main risk factors for our economy. Now a much more serious problem has been added: coronavirus infection,” Anton Siluanov said. “Unfortunately, the situation is not developing in the best way.”
Russia’s 2020 budget envisaged a Rbs930bn ($12bn) surplus, but it will now be forced to tap its national wealth fund to offset an estimated Rbs3tn ($38.5bn) reduction in oil revenues this year, according to Mr Siluanov.
“Of course we will switch to a deficit budget this year,” he said. Cash will be provided to businesses and regional authorities to weather the impact of the pandemic.
Adam Samson 3/18/2020, 8:13:07 AM
European stocks drop 3% as renewed tumult sweeps markets
Hudson Lockett in Hong Kong, Philip Georgiadis in London and Leo Lewis in Tokyo report:
European and Asian stocks dropped on Wednesday, as government measures to shield economies from the impact of the coronavirus failed to reassure investors.
London’s FTSE 100 fell 3.4 per cent at the open as concern over the global economy snuffed out a brief market rally. The losses were spread across Europe — in Frankfurt the Dax slid 3.5 per cent and in Paris the Cac 40 lost 2.4 per cent.
Futures trading suggested that selling would resume on Wall Street on Wednesday with contracts for the S&P 500 dropping 3.7 per cent, the maximum allowed. The index had rebounded 6 per cent overnight in a volatile US trading session as the Trump administration and US central bank unveiled large support packages.
“The trajectories of Covid-19 are likely being contained in Europe but not in a complacent US and the economic damage is severe,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.
Governments this week announced large-scale support measures in an attempt to cushion the blow from the coronavirus, which has caused an economic standstill in parts of Europe, Asia and the US.
Myles McCormick 3/18/2020, 8:01:44 AM
Second wave of coronavirus cases hits Asia
Edward White in Wellington, Kathrin Hille in Taipei, Stefania Palma in Singapore and Alice Woodhouse in Hong Kong report:
The number of coronavirus cases has spiked across Asia, fuelling concerns that hopes the region had contained the outbreak could be premature as a second wave of infections takes hold.
Officials in South Korea, Taiwan, Japan and parts of China and south-east Asia are now rushing through new measures in response to an uptick in new infections over recent days after weeks of declines.
Experts say the sudden increase in cases has revealed the limits of both China’s sweeping lockdown of citizens and of the massive public testing and social distancing campaigns rolled out across Asia in recent weeks.
But it also highlights growing anxieties about new cases coming from abroad, as the number of so-called imported infections has risen sharply as people arrive in the region in a bid to flee the escalating coronavirus outbreak in Europe.
“What many people hadn’t recognised is that it is only a temporary success, it is not a permanent success,” said Ben Cowling, a professor of epidemiology at the University of Hong Kong.
Read more on this story here
Myles McCormick 3/18/2020, 7:56:34 AM
Wagamama owner and Marston’s seek leniency on rents and loans
Alice Hancock in London reports:
The Restaurant Group, owner of the Wagamama chain, and Marston’s, the pub operator, warned on Wednesday that they would be seeking covenant waivers from their lending banks and negotiating for rent reductions with landlords in order to stave off the effects of the coronavirus shutdown.
Both companies said that the outbreak of the virus and the subsequent dramatic slide in footfall across UK high streets and leisure parks had had a “significant’ impact on business.
TRG, which operates 650 restaurants and pubs in the UK, said that it expected an overall decline in sales of 45 per cent in the first half of the year, improving to a 5 per cent decline in the second half. It said that it forecasts a 92 per cent decline in sales in its concessions business, most of which are situated in travel hubs, in the second quarter.
Marston’s said that it was unable to quantify the impact of the government’s advice against consumers going out at this stage but that it was taking “an extremely prudent approach and being cautious in our management of the business during this period of unprecedented uncertainty”.
Marston’s has been working on a plan to lower debt by £200m by 2023. It said that it had made good progress towards this and it would be cutting its capital expenditure, overheads and stocking costs for the foreseeable future. It has an estate of 1,400 pubs.
TRG said it had modelled a scenario whereby it could retain £75m of cash liquidity in the business throughout the remainder of the year.
The announcements came the day after the UK Chancellor Rishi Sunak promised a £330bn package to support businesses including loans and business rates waivers.
Shares in TRG are down about 85 per cent this year, while Marston’s are down 83 per cent.
Sarah Provan 3/18/2020, 7:54:34 AM
Turkey confirms first coronavirus death
Laura Pitel in Ankara reports:
Turkey announced its first coronavirus fatality overnight as the number of confirmed cases more than doubled to 98.
Fahrettin Koca, health minster, said an 89-year-old man had died after catching the disease from a person who had contacts with China.
Turkey reported its first confirmed case of coronavirus early last week. The number of instances has risen rapidly since then, with 51 new cases on Tuesday night.
Mr Koca said that most of those infected were recovering well, and urged the population to abide by strict measures aimed at stopping the spread of the virus.
Recep Tayyip Erdogan, Turkey’s president, is due to address the nation on Wednesday after several days away from the public eye.
Sarah Provan 3/18/2020, 7:52:25 AM
Zara owner to write off nearly €300m of inventory
Daniel Dombey in Madrid reports:
Inditex, the world’s biggest fashion retailer, is writing off €287m of its inventory because of the impact of the coronavirus, which has caused the group temporarily to close half its stores.
As of Tuesday, the company had closed 3,785 stores in 39 countries because of the virus. However, in China, all but 11 stores have reopened.
It said online sales, which last year represented 14 per cent of its total, were continuing and its supply chain was functioning normally.
In a trading update, Inditex added that store and online sales decreased between February 1 and March 16 by 4.9 per cent in local currencies compared with the same period last year, and that the decline accelerated this month: store and online sales decreased by 24.1 per cent between March 1 and March 16.
The inventory provision, which the company included in its 2019 results, announced on Wednesday, brought full-year profits down to €3.64bn from the level of €3.86bn they otherwise would have been. This meant profits grew 6 per cent year-on-year rather than the 12 per cent they would have expanded if the inventory charge had not been necessary.
Inditex said that “in view of the current uncertain situation due to the Covid-19 pandemic, [the company] considers that it is not the right moment to take a decision on the dividend” for last year, adding that the decision would be made by July.
Net sales for 2019 increased by 8 per cent to €28.29bn, with like-for-like sales up 6.5 per cent. Spain accounted for 15.7 per cent of total sales, and the rest of Europe, which the World Health Organization has dubbed the centre of the coronavirus crisis, a further 46 per cent.
The company held net cash of €8.06bn, up 20 per cent year-on-year.
“The solidity of the Group’s 2019 earnings and strong balance sheet puts us in a strong position for tackling the challenges emerging in 2020,” the company said, although it added: “It is too soon to quantify the future impact of the Covid-19 outbreak on our business operations.”
Myles McCormick 3/18/2020, 7:48:42 AM
Top British virus expert self-isolates
A leading British coronavirus expert has self-isolated after developing coronavirus symptoms.
Epidemiology professor Neil Ferguson, head of the modelling programme at Imperial College’s MRC centre for global infectious disease analysis, said he had developed a dry cough yesterday and a high fever in the early hours of this morning and was now in self-isolation.
Prof Ferguson’s team warned this week that the government’s previous “herd immunity” strategy for dealing with the outbreak could have led to around 250,000 deaths. Its new plan of reduced social interaction is likely to reduce this number to “a few thousands or tens of thousands”, according to the Imperial College research.
Myles McCormick 3/18/2020, 7:36:03 AM
Superdry withdraws annual guidance
Superdry has said it can no longer give formal trading guidance for the year as the spread of coronavirus forces it to close its stores and footfall dries up.
The clothing retailer’s most recent guidance had already suggested profits could be entirely wiped out this year. But the Covid-19 outbreak has forced it to reassess its prospects once again.
Superdry said 78 of its stores across Europe — the majority of its outlets on the continent — had been obliged to close due to government restrictions. Europe accounts for 40 per cent of sales.
While stores remain open in the UK, which accounts for half of all sales, footfall has tumbled by a quarter as people opt to stay at home. It has fallen by a similar amount in the US, which makes up the remaining 10 per cent of sales.
Julian Dunkerton, Superdry chief executive, said:
Along with everyone else, Superdry is experiencing major disruption to our business operations and recovery as we seek to protect our staff and customers from Covid-19. We are taking mitigating action wherever we can but the situation is very fluid and uncertain, and we are working to put in place additional financing to secure our recovery.
Philip Georgiadis 3/18/2020, 7:23:06 AM
European and US markets set for new losses
European and US stocks were set to tumble on Wednesday, as aggressive economic interventions from Western government failed to reassure investors concerned over the impact of the coronavirus.
Futures trade pointed to losses of 4 per cent for London’s FTSE 100 and Frankfurt’s Dax when trading opens in less than an hour.
On Wall Street S&P 500 futures fell 3.7 per cent, following a sharp rally in the previous session as investors welcomed a sudden White House shift to more aggressive interventions against the outbreak, including a proposal to send a cheque to every American.
Sarah Provan 3/18/2020, 7:21:25 AM
UK supermarkets seek to control panic buying
Jonathan Eley in London reports:
UK supermarkets are widening the range of items subject to per-customer limits and shrinking their opening hours to try and contain panic buying.
J Sainsbury, the UK’s second-largest chain, said that from Thursday it would close cafes and meat, fish and pizza counters to free up warehouse and transport capacity and focus staff efforts on grocery.
“We have enough food coming into the system, but are limiting sales so that it stays on shelves for longer and can be bought by a larger number of customers,” said chief executive Mike Coupe in a message to customers.
“We still have enough food for everyone – if we all just buy what we need for us and our families,” he added.
Rival Tesco has scaled back the opening hours of many of its largest stores, with formerly 24-hour hypermarkets closing at 10pm to allow for replenishment.
Wm Morrison, the smallest of the “big four”, said that it would extend in-store picking of groceries ordered online to another 100 stores, allowing it to expand its home delivery capacity.
It will set up a telephone ordering line for those who are less comfortable with using the internet, and introduce “essential boxes” that will be assembled at its distribution centres and delivered by courier.
According to one senior executive, last week was busier than Christmas as stores were repeatedly cleaned out of toilet paper, painkillers, dried goods such as rice and pasta, eggs and long-life milk.
Sarah Provan 3/18/2020, 7:17:26 AM
France, Italy and Belgium expand short-selling ban
Philip Stafford in London reports:
France, Italy and Belgium have extended and widened their bans on short selling stocks, in an attempt to maintain stability on their markets rattled by the coronavirus crisis.
Overnight markets watchdogs in the three countries said they would widen one-day bans that had lasted throughout Tuesday but had covered only selected stocks.
The Autorité des Marchés Financiers (AMF), the French regulator, said its ban would cover all French stocks and last for 30 days, ending on April 16.
Italy’s Consob said its ban would cover all Italian stocks for the first time and last for three months. “These measures were made necessary by the strong turbulences triggered in the last days by the Covid-19 pandemic,” it said.
Belgium’s FMSA said its ban would cover all Belgian stocks and last until April 17. “The emergency situation linked to the pandemic may cause a general state of alert which seriously threatens market confidence,” it said.
The practice of short selling is where investors borrow shares and then sell them, hoping to buy them back later at a lower price before returning them and pocketing the difference. The practice has been blamed for exacerbating volatility during times of stress.
Alice Woodhouse 3/18/2020, 6:34:16 AM
India’s restaurant association calls for government support
Benjamin Parkin reports from Mumbai
India’s restaurant association has asked its members to close until the end of the month but called on the government to help curtail the “astronomical losses” that will ensue.
The number of cases in India has risen to 130, prompting the government and private sector to ramp up efforts to contain the spread of the coronavirus. That has prompted local authorities in some cities to already effectively require eateries and pubs to close.
The National Restaurant Association of India, which says it represents 500,000 restaurants, has asked its members to shut until March 31 or until no new cases are recorded for “a few days.”
“We find ourselves today in an unprecedented situation where we are compelled to make some difficult decisions which have massive financial implications on our businesses,” the NRAI said. “This decision to shut down is extremely hard on us.”
The industry body called on the government to help its members with measures like tax benefits, a moratorium on loan repayments and waiving interest.
Other measures to stem the virus’ spread in India include a travel ban on European and British visitors and a decision to suspend the beginning of upcoming cricket contest the Indian Premier League from later this month to mid-April.
Alice Woodhouse 3/18/2020, 6:25:33 AM
Oman restricts entry to citizens and closes public spaces
Simeon Kerr reports from Dubai
Oman will enter almost full lockdown from noon local time on Wednesday as the sultanate imposes the most restrictive measures across the Gulf states to limit the spread of coronavirus.
A government committee announced it would restrict entry to the country only to Omanis and prevent nationals from leaving. It will also prohibit assembling in public areas, suspend gatherings and close all tourist sites, including beaches, parks and popular outdoor picnic areas. Mosques and other places of worship will close.
Shops and markets will also close, apart from those providing food, consumer items, clinics and pharmacies. Sports facilities and salons will be shut down. Restaurants and cafes will only be allowed to offer delivery services.
Oman has registered 33 coronavirus cases, 12 of whom have recovered.
The spread of the virus has been accelerating across the Gulf states, which have registered more than 1,100 cases with one death reported in Bahrain.
Thomas Hale 3/18/2020, 5:52:02 AM
Dog which tested positive for coronavirus dies in Hong Kong
Primrose Riordan reports from Hong Kong
A dog which previously tested positive for Covid-19 died earlier this week, Hong Kong authorities said on Thursday.
The dog, which passed away on Monday, was being kept in isolation after its owner contracted the virus.
Swabs of the animal had tested “weak positive” for the virus, in the first suspected incident of a pet contracting the disease from a human.
But the dog’s owner said she does not want the local agriculture department managing the case to undertake a postmortem to confirm its cause of death.
Alice Woodhouse 3/18/2020, 5:23:31 AM
Japan stocks climb on hopes of support measures
By Hudson Lockett and Leo Lewis
Stocks across Asia followed Wall Street higher on Wednesday as governments stepped up support measures to shield their economies from the impact of the coronavirus pandemic. However, investors warned that the rebound was likely to be temporary as futures trading pointed to another gloomy session in New York.
Japan’s benchmark Topix index climbed 3 per cent after data showed the central bank bought a record ¥120bn ($1.1bn) of Japanese equities on Tuesday. Japanese markets were also boosted by reports that Prime Minister Shinzo Abe planned to form a panel to discuss further support measures to cushion the blow of the virus outbreak.
China’s CSI 300 index rose 1.6 per cent and Hong Kong’s Hang Seng edged up.
But bucking the trend, Australia’s S&P/ASX 200 slid 6.7 per cent as Scott Morrison, the country’s prime minister, declared a “human biosecurity emergency”, advised citizens to abandon overseas travel and warned that the crisis could disrupt daily life in the country for up to six months.
S&P 500 futures were down 3.7 per cent.
Thomas Hale 3/18/2020, 3:50:54 AM
Taiwan closes its borders after wave of new infections
Kathrin Hille in Taipei
Taiwan is closing its borders to practically all foreigners, as the country battles to stem a wave of new infections imported mainly from Europe.
All foreign citizens except those with diplomatic, business or other documents giving them the right of residence in Taiwan would be barred from entering as of early Thursday, foreign minister Joseph Wu said. The restriction applies to travellers on any flights taking off as of midnight Taiwan time.
Health authorities said those people who are still entering Taiwan, including its own citizens and foreigners regardless where they are arriving from, will be put under 14 days of home quarantine and government-supervised health monitoring.
In addition, the Epidemic Command Centre demanded all Taiwanese who returned from overseas trips from March 5 to report with local government to be put under the same regime. This marks an escalation of efforts started earlier this week to chase and test Taiwanese citizens with recent travel abroad who had seen a doctor for flu-like symptoms since their return.
The stricter measures come as Taiwan’s infection numbers, one of the lowest worldwide with 77 confirmed cases as of Tuesday, has started creeping up: over the last two weeks, the country registered 31 imported infections, more than half in the last couple of days.
Taiwan already has more than 10,000 people under government-supervised health monitoring at home, according to the Epidemic Management Centre. The new steps would put up to another 16,000 people under that regime, the Interior Ministry said.
Separately, Taiwan and the US said they would step up co-operation on fighting the virus. The US would supply Taiwan with hazmat suits, while Taiwan would provide face masks to the US, Mr Wu said. The two countries are also to partner in research, development and production of rapid tests, vaccines and medicines, Mr Wu said in a joint statement with Brent Christensen, director of the American Institute in Taiwan, Washington’s quasi-embassy in Taipei.
Alice Woodhouse 3/18/2020, 3:27:28 AM
Samsung expects computer chip demand to grow in 2020
By Edward White
Samsung Electronics has struck an optimistic tone in its outlook for the memory chip market this year, bucking widespread expectations of a downturn because of the economic carnage caused by coronavirus.
The South Korean technology giant, which is the world’s biggest memory chip producer, said global computer chip demand will increase in 2020 despite “external uncertainties”.
“We expect global chip demand to grow on the back of the growth of artificial intelligence and automotive semiconductor industries, increased investment from data centre firms and expansion of 5G networks,” Kim Ki-nam, vice chair, said at a shareholder meeting in Suwon, near Seoul, on Wednesday.
Market watchers have almost universally downgraded their outlooks for economic growth in 2020 as the fallout from the pandemic continues to rattle investors, disrupt supply chains and weigh heavily on consumer demand.
Kenny Liew, an analyst at Fitch Solutions, said that while production and exports of semiconductors had showed signs of recovery before the Covid-19 outbreak, earlier momentum is now likely to be “derailed”.
“The contagion’s key risk is that it could impact both supply and demand for both consumer and enterprise tech goods, given that virus fears will result in lockdowns and more restrictions on the movement of goods.
“Tightening financial conditions and weaker global growth will also lead many companies to hold off on their enterprise IT investment plans pending more certainty on the business impact of the contagion to their operations,” he added.
Thomas Hale 3/18/2020, 3:14:16 AM
Philippine Stock Exchange to resume trading
John Reed reports from Bangkok
The Philippine Stock Exchange is to resume trading, clearing, and settlement on Thursday, two days after beginning an indefinite closure because of a lockdown on Luzon island caused by the coronavirus.
Chief executive Ramon Monzon announced that the PSE would be reopening with shortened hours on March 19. However, its trading floor in greater Manila’s Bonifacio Global City district will remain closed by order of the Philippines’ Inter-Agency Task Force on Emerging Infectious Diseases.
“Trading activities by all trading participants will have to be conducted remotely through offsite locations,” Mr Monzon said in a statement posted to the PSE website, dated March 17.
This came as bond and foreign exchange markets reopened on Wednesday, a day after the PSE became the first major market in the world to close in response to the pandemic. President Rodrigo Duterte on Tuesday declared a “state of calamity in the Philippines”, which has confirmed 187 cases of COVID-19 leading to 14 deaths.
Thomas Hale 3/18/2020, 2:53:09 AM
US auto plants to remain open after companies and unions reach deal
Claire Bushey reports from Chicago
US auto plants will remain open with some restrictions after union officials and carmakers reached a deal on Tuesday to strengthen coronavirus protections for workers.
Workers at the North American plants of Ford, General Motors and Fiat Chrysler America will continue to churn out cars and trucks except for a “rotating partial shutdown of facilities”, the union said.
The companies agreed to clean plants and equipment between shifts, as well as extended periods between shifts and “extensive plans to avoid member contact”.
The UAW initially sought a two-week closure for US factories. Ford said that starting on Thursday it plans to close all its plants in Europe, as the continent becomes the centre of the outbreak. The company has already told its white-collar workforce to work from home.
The agreement was reached the same day Ford temporarily shut its assembly plant in Chicago because of a parts shortage from a supplier, marking the first time the company had to halt production in North America due to the coronavirus pandemic.
The Chicago assembly plant employs approximately 5,800 workers making the Ford Explorer and Lincoln Aviator. Workers have said on social media that they worry about their health coming to work. As one commented on Facebook: “Hard to do social distancing with this job.”
Thomas Hale 3/18/2020, 1:35:01 AM
South Korean cases creep higher as new clusters emerge
By Edward White
The number of new coronavirus cases in South Korea crept higher again as the discovery of new clusters continue to dent optimism over the country’s success in containing the outbreak.
The Korea Centers for Disease Control reported 93 additional confirmed cases on Wednesday, up from 84 reported a day earlier and 74 on Monday. The new cases took the total infection caseload to 8,413.
While the number of new infections in South Korea has broadly declined for more than two weeks, and new cases continue to be outpaced by the number of patients who are cured each day, reports of new clusters at communal areas including churches and rest homes have worried officials over recent days.
On Wednesday, state media reported that as many as 60 patients at a nursing home in Daegu have become infected. The city, South Korea’s fourth-largest, has been at the centre of the country’s outbreak since late February but had seen a decrease in new cases over the past two weeks.
Alice Woodhouse 3/18/2020, 1:25:43 AM
Goldman Sachs tells staff in Europe and Americas to work from home
Laura Noonan reports from New York
Goldman Sachs has asked its staff in Europe and the Americas to work from home starting on Wednesday “until further notice” if their roles allow it, as the bank escalated its response to the coronavirus.
Goldman chief executive David Solomon and his two most senior lieutenants announced the decision in a memo to staff on Tuesday and said it had been taken “given new restrictions implemented by governments in the Americas and EMEA”.
“We encourage most of our people to work from home,” the trio said. “In all regions, for colleagues who need to be in the office due to the nature of their roles, we will adhere to a comprehensive set of precautionary and social distancing measures to help protect your health and wellbeing.”
The news follows JPMorgan Chase’s decision earlier in the week to implement work from home practices across its global workforce where their roles allow it.
Goldman has had four employees test positive for coronavirus in London, Salt Lake City and Sydney. The bank, which employs around 36,000, also reported a “suspected” case involving a third party healthcare worker at its New York headquarters.
Emma Boyde 3/18/2020, 1:22:20 AM
Vietnam halts visa issuance to foreigners
John Reed reports from Bangkok
Vietnam has halted the issuance of visas to foreigners for 30 days because of the coronavirus pandemic. The south-east Asian country also imposed a mandatory quarantine requirement in “concentrated facilities” for travellers arriving from the US, Europe, and countries in the Association of Southeast Asian Nations.
“Those who are not subject to concentrated quarantine must be self-quarantined & put under medical monitoring at their house, enterprises, accommodations or in groups,” government spokeswoman Le Thi Thu Hang said in a tweet outlining the measures on Tuesday evening.
Citizens of countries that do not require Vietnamese visas, and people deemed “experts, business managers or highly skilled workers” will only be allowed to enter the country if they submit paperwork showing they are free of Covid-19, according to a government communique.
The blanket measures, which took effect at midnight, come after a recent spate of coronavirus infections in Vietnam were traced back to people arriving from overseas.
Separately, Vietnam, which holds the rotating chairmanship of Asean, said it was consulting fellow members in the regional grouping about postponing a planned summit in early April because of what Ms Hang said on Twitter were “complicated developments of #COVID19 in the region & the world”.
Alice Woodhouse 3/18/2020, 1:02:17 AM
Chinese factories face components shortage, says business association
Kathrin Hille reports from Taipei
Even as factories in China are gradually returning to work, a significant portion of them expect to face component and material shortages caused by disruptions due to the coronavirus epidemic for months to come, according to a major western business association.
The American Chamber of Commerce in South China said that all 237 foreign and Chinese companies it surveyed between March 9 and March 14 were suffering disruptions to their business, and one-third of them were facing such shortages.
The figures suggest that although China said it had turned the corner on the epidemic, its economy will keep feeling the pain.
On Monday, the National Bureau of Statistics said industrial output fell by 13.5 per cent in the first two months of this year and fixed asset investment plummeted by 24.5 per cent, the worst such official data China has ever reported.
According to the AmCham survey, 15 per cent of those affected have already run out of certain supplies. It indicated that 80 per cent expect the shortages to last three months, and another 11 per cent foresee longer than that.
“[The] world’s supply chain shows signs of being overstretched,” said Amcham South China President Harley Seyedin, urging the US and China to repair their badly strained trade relationship.
“As it is stated in our White Paper research, it will take $2tn-$3tn to replace the current supply chain,” Mr Heyedin said in a message sent with the survey results.
“It will require a co-ordinated international series of actions to minimise the impact of disruption in the supply chain. Today’s events prove we need each other as no one country can do it alone.”
Transport and logistics disruptions were the biggest factors blamed by the surveyed companies for the shortages of components, supplies or material, followed by labour shortages.
Forty-eight per cent of respondents, three-quarters of which are in manufacturing, said their ability to manufacture was affected moderately or severely by the disruptions.
Emma Boyde 3/18/2020, 12:44:45 AM
Credit Suisse cuts Mexico GDP forecast over coronavirus
Jude Webber reports from Mexico City
Credit Suisse has slashed its GDP forecast for Mexico, telling clients to expect a 4 per cent contraction compared with its previous forecast of 0.7 per cent growth.
In a note to clients, the bank said Mexico and Chile would be worst hit in Latin America from the global coronavirus crisis because they were the most open economies and heavily reliant on the US and China, respectively.
Credit Suisse said it had decided to lower its 2020 real GDP growth forecast for Mexico on expectations of falling industrial and services output.
The bank said it had also factored in production declines by state oil company Pemex, starting in the second quarter, following the crash in oil prices.
It added that it expected the central bank to cut its overnight rate “soon”.
“Finally, on the fiscal front, we think that the government will end up lowering modestly the primary surplus target (0.7 per cent of GDP for 2020) in order to accommodate additional spending, particularly to address social needs arising from the Covid-19 shock,” the bank said.
President Andrés Manuel López Obrador has summoned his cabinet to a meeting. The Treasury’s official 2020 forecast for growth remains at 2 per cent.
Overall, Credit Suisse forecast a contraction of 1.5 per cent for Latin America in 2020, the largest contraction since 2009 when the region contracted 2 per cent.
It is now forecasting no growth for Brazil, a 2.6 per cent contraction for Argentina, 1.3 per cent growth for Colombia, a 1.5 per cent contraction for Chile, a 2.3 per cent contraction for Ecuador, growth of 1 per cent for Peru and a 12.5 per cent contraction for Venezuela.
Alice Woodhouse 3/18/2020, 12:31:29 AM
Australia announces $429m package for domestic airline industry
Jamie Smyth reports from Sydney
The Australian government unveiled a A$715m ($429m) rescue package for the domestic airline industry on Wednesday in a bid to help carriers cope with a slump in demand due to the coronavirus crisis.
The package involves the refunding and ongoing waiving of government charges on the industry, including aviation fuel excise, air services charges on domestic airline operations and domestic and regional aviation security charges.
The total cost of the measures is estimated to be A$715 million, with an upfront estimated benefit of A$159 million to airlines for reimbursement of applicable charges paid by domestic airlines since February 1.
Qantas Airways, Virgin Australia and several regional carriers are expected to benefit from the relief package, which analysts expect is only the first tranche of state support measures for the industry.
“Our airlines run on tight budgets at the best of times and these past few weeks have been particularly tough,” said Michael McCormack, Australian deputy prime minister.
“Providing this assistance not only helps our airlines but also the entire aviation industry, regional Australians in particular and other industries such as tourism and trade, which depend on aviation.”
On Wednesday, Virgin Australia said it was grounding its international fleet and reducing domestic capacity by 50 per cent until June 14. Qantas has already slashed international capacity by 90 per cent and the government has advised all Australians not to travel overseas.
Qantas and Virgin have said they have enough cash reserves to survive the crisis, although Virgin has more than A$5bn net debt on its balance sheet and had its credit rating slashed to BBB- from BBB+ by S&P on Monday.
Alice Woodhouse 3/18/2020, 12:26:23 AM
Google criticised for running coronavirus-related advertising
Richard Waters reports from San Francisco
Google came under fire from two Democratic senators in the US on Tuesday for continuing to run adverts for face masks and hand sanitiser, contrary to its own policies and a promise to crack down on coronavirus-related advertising.
In a letter to the Federal Trade Commission, Mark Warner and Richard Blumenthal accused the company of carrying adverts that “exploit fear for profit”, while also adding to shortages of “essential health care products at a time of critical need.”
The search company has a rule against adverts that exploit “sensitive events”, such as “a natural disaster, conflict, death, or other tragic event.” It also said a week ago that it would explicitly block adverts for face masks in the US, where there have been shortages. The US Surgeon General has called on the public to stop buying masks to ensure more are available for medical workers.
The senators said that their staff had been “consistently served dozens of ads” while browsing web pages containing information about Covid-19. Targeting information published by Google showed that the ads had been deliberately directed at people looking for information about the virus, they added.
Google did not explain the lapses, but said: “Since January, we have blocked millions of ads that attempted to capitalise on coronavirus and have implemented a temporary ban on all medical face mask ads. We continue to take action to protect users and prevent these ads from serving.”
Emma Boyde 3/18/2020, 12:23:28 AM
Ford closes Chicago plant over parts shortage
Claire Bushey reports from Chicago
Ford temporarily shut its assembly plant in Chicago because of a parts shortage from a supplier, marking the first time the company has had to halt production in North America due to the coronavirus pandemic.
Ford said that starting on Thursday it plans to close all its plants in Europe, as the continent becomes the centre of the outbreak. The company has already told its white-collar workforce to work from home.
The Chicago assembly plant employs approximately 5,800 workers making the Ford Explorer and Lincoln Aviator. Workers have said on social media that they worry about their health coming to work. As one commented on Facebook: “Hard to do social distancing with this job.”
UAW President Rory Gamble and other union leaders are to meet top executives at Ford, General Motors and Fiat Chrysler America to discuss how to keep production workers safe as the virus continues to spread. The union has called for plants to shut down for two weeks, a call it says the automakers have resisted. A taskforce was formed on Sunday to address workers’ concerns.
“If the UAW leadership on the task force … are not satisfied that our members will be protected, we will take this conversation to the next level,” Mr Gamble said.
Alice Woodhouse 3/18/2020, 12:11:49 AM
Asia-Pacific stocks mixed after rebound on Wall Street
Asia-Pacific stocks were mixed on Wednesday after global stocks rebounded in the previous session following a series of government support packages to shield economies from the impact of the coronavirus outbreak.
Australia’s S&P/ASX 200 slid 3.3 per cent, while the Topix in Japan was up 1.9 per cent and the Kospi in South Korea gained 0.7 per cent.
Overnight on Wall Street, the S&P 500 recovered from Monday’s sell-off to end up 6 per cent following a volatile session. European stocks also rebounded with the UK’s FTSE 100 closing 3 per cent higher. The European composite Stoxx 600 gained 2 per cent, having lost more than a third of its value in less than a month.
S&P 500 futures pointed to a 2.5 per cent fall when markets reopen on Wednesday.
The US Federal Reserve said it would enter the market for short-term company debt, known as commercial paper, to provide an extra $500bn to shore up the overnight lending market. The Trump administration said it was considering a support package worth as much as $1.2tn.
Britain unveiled a £330bn package of emergency loan guarantees to business and £20bn of fiscal support and France announced a €45bn rescue package.
Alice Woodhouse 3/18/2020, 12:07:34 AM
Australia advises against overseas travel
Jamie Smyth reports from Sydney
Australia has declared a human biosecurity emergency, advised all Australians from travelling overseas and announced a ban on indoor gatherings of more than 100 people to try and slow the spread of the coronavirus.
But Scott Morrison, Australia’s prime minister, has said schools will stay open for the foreseeable future on the basis of health advice, despite concerns expressed by some doctors, parents and educators that they could become conduits to spread the virus.
“Right now, schools should remain open. That is the clear and crystal health advice,” Mr Morrison told reporters on Wednesday. “Any measure you put in place, you must be prepared to put in place for at least six months. It could be longer.”
Mr Morrison said Australia was following the model in place in Singapore, which has kept schools open but managed to keep the spread of the virus under control.
He warned the virus is a once-in-100-year type event and life is going to change for a period of at least six months but said Australians would be able to rise to the challenge.
Canberra has advised all Australians not to travel overseas and introduced tough 14-day self-isolation restrictions on all inbound passengers.
“The travel advice to every Australian is ‘do not travel abroad’. Do not go overseas. That is very clear that instruction,” said Mr Morrison. “This is an indefinite ban.”
Mr Morrison strongly criticised people engaging in panic buying in supermarkets. “Stop doing it. It’s ridiculous! It’s un-Australian, and it must stop,” he said.