China Business Digest: Deadliest Day in U.K. and New York; U.S. Equity Rally Fizzles
China has passed a positive landmark as a holiday-shortened work week begins, with no new Covid-19 deaths reported on Monday. Meanwhile, Wuhan is set to end its lockdown tonight. Also, funds raised by issuing special treasury bonds may be used to replenish capital in China’s financial system.
— By Timmy Shen (firstname.lastname@example.org)
** ON THE CORONAVIRUS
U.K., New York Have Deadliest Day
The U.K. and New York state in the U.S. suffered their deadliest day since the Covid-19 outbreak with more than 700 new deaths in each country in 24 hours.
The U.K. reported 786 fatalities from Covid-19 Tuesday, bringing total deaths to 6,159.
In the U.S., hardest-hit New York state confirmed 5,489 deaths, up from 4,758 as of Monday. Despite the surge in fatalities, the rise of new infection showed signs of plateauing in New York after fewer new cases for a third straight day, fueling hopes that the infection rate may be slowing in the U.S.
Total infections in the U.S. surpassed 386,000 while the global caseload topped 1.4 million.
Volatile day for U.S. stocks on outbreak outlook
U.S. equity markets had a volatile day as investors assess the outlook of the outbreak. The Dow Jones Industrial Average finished the day down 0.12%, erasing early gains during the day. The index surged more than 900 points in the morning on expectations the infection rate is slowing in the U.S.
The S&P 500 Index fell 0.16% after surging as much as 3.5%. The benchmark briefly touched a bull market threshold after climbing 20% from its March 23 low. The Nasdaq finished the day 0.33% lower.
China reports no new deaths
China on Monday reported no new coronavirus deaths for the first time since the outbreak began, the nation’s top health body said (link in Chinese).
As of the end of Monday, the Chinese mainland had 1,242 existing cases and 89 suspected ones, and had reported a total of 81,740 confirmed infections since the outbreak began.
Meanwhile, Wuhan residents are waiting for their lockdown to end at midnight on April 8. They will be allowed to leave the city and surrounding Hubei province.
Global turmoil continues
The total number of global confirmed cases had reached over 1.35 million as of Tuesday afternoon, according to data from Johns Hopkins University. The global death toll climbed to more than 74,000.
The U.S. remained the worst-hit nation, reporting over 368,000 infections, including nearly 11,000 deaths.
Japan, which had reported about 3,900 infections and 92 deaths, is facing recession fears. Prefectures representing half of the nation’s economy are set to enter a state of emergency, and some fear that the country’s output could plunge by as much as 20% in the current quarter, Bloomberg reported.
Things aren’t looking good in the U.K. either. The country is facing a leadership crisis as its 55-year-old Prime Minister Boris Johnson, the first major world leader to have tested positive for Covid-19, has been moved to intensive care. The U.K. had recorded over 52,000 infections, including more than 5,300 deaths, according to Johns Hopkins data.
Other virus news
• China’s ambassador to the U.S. has penned an op-ed in The New York Times urging both countries to lay aside xenophobia to combat the coronavirus.
• The latest Caixin cover story explores why there will be no quick cure for trade after the pandemic. Although the country’s economic indicators suggested a rebound in business activity in March, a barometer of new orders remained in contractionary territory following the steepest drop on record in February. The gauge for new export orders remained below pre-pandemic levels.
China faces a 30% decline in external demand in the next one to two quarters because of the pandemic, said Lu Ting, chief China economist at Nomura International Ltd. in Hong Kong.
• An emergency room doctor in New York told Caixin that the situation in the city is getting worse and worse. Younger, sicker patients are seeking treatment in droves even as the local healthcare system comes under tremendous strain. Some hospitals have set up tents outside to handle surging patient numbers. Read the interview in full.
• The Food and Agriculture Organization of the United Nations has raised its estimate for global cereal production in 2019, a move that may restore confidence in the food supply after some countries restricted grain exports amid fears of food shortages.
• Singapore went into “circuit breaker” mode on Tuesday, as residents were urged to stay home and go out only for essential activities such as buying food.
• Also in Singapore, two foreign worker dormitories which have seen large numbers of infections have been designated as isolation areas, The Straits Times reported.
• South Korean tech giant Samsung Electronics expects higher first-quarter profits, as soaring online activity drives sales of semiconductors, Bloomberg reported.
** TOP STORIES OF THE DAY
China’s sovereign debt funds may go to banks
Funds raised by issuing special treasury bonds may be used to replenish capital in China’s financial system, top state economists have said, relieving pressure on banks’ balance sheets as they support the country’s stalling economy.
Luckin Coffee feels the heat
Goldman Sachs is taking action after the default on a $518 million margin loan facility by Haode Investment Inc., a shareholder of embattled Luckin Coffee Inc. controlled by a family trust of the company’s chairman Lu Zhengyao, also known as Charles Lu.
Some shares of Luckin Coffee held by CEO Qian Zhiya, also known as Jenny Qian, had also been pledged to secure the loan. Assuming that all the pledged shares are sold, Lu’s voting interest in Luckin would not decrease. But Qian’s beneficial and voting interests would decrease significantly, Goldman Sachs said.
Airlines retrofit passenger planes to carry goods
Some Chinese and international airlines have managed to retrofit their commercial aircraft to allow them to haul more goods. China Eastern Airlines, one of China’s four major carriers, increased its freight capacity last month by modifying the internal structure of some of its craft, and is scheduled to carry electronics and Tesla automotive parts this month, one of the company’s employees told Caixin.
China is allowing passenger planes to haul goods in a bid to compensate for a sharp drop in air-freight capacity, after it drastically slashed the number of flights which domestic and international airlines can operate in late March.
Asian markets posted gains
East Asia’s major stock markets saw gains Tuesday.
** OTHER STORIES MAKING THE HEADLINES
• Airbnb Inc. has raised $1 million (link in Chinese) from private equity firms Silver Lake and Sixth Street Partners.
• Guangzhou announced that it is allowing more of its residents to buy cars and offering car-buying subsidies in a bid to boost consumption.
• Mutual fund managers in China will soon be allowed to manage some private asset accounts (link in Chinese) starting from May 1, according to guidance published Friday by the Asset Management Association of China.
• JD.com founder Richard Liu Qiangdong has been removed from his posts (link in Chinese) as legal representative, executive director, and general manager of Beijing Jingdong Century Trading Co. Ltd., one of the ecommerce company’s operators.
• In a bid to boost local tourism, the Fujian province city of Xiamen (link in Chinese) has rolled out measures including free public transportation, free admission to national tourist attractions and accommodation subsidies for residents of the province.
** AND FINALLY
China’s first public holiday of the year, the Lunar New Year, arrived just as the coronavirus outbreak became a national crisis. China’s second holiday fell last weekend, with the country marking the Qingming Festival, or Tomb-Sweeping Festival, just as it emerges from lockdown.
Many famous tourist attractions, such as West Lake in Hangzhou and Huangshan Mountain in Anhui province, were swamped with visitors. Huangshan even needed to close temporarily on Sunday after exceeding its 20,000-visitor limit.
Visitors pack onto a bridge across the famous West Lake in Hangzhou, East China’s Zhejiang province, on Sunday. Photo: IC Photo
Contact reporter Timmy Shen (email@example.com) and editor Yang Ge (firstname.lastname@example.org)
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