China Business Digest: Gilead’s Remdesivir Produces Conflicting Results; China, South Korea Agree on ‘Fast-Track’ Entry for Business Travelers
Russian premier becomes the latest senior official to contract the coronavirus. Early results are in for a U.S. government-led trial of Gilead’s experimental Covid-19 drug, and they’re much better than China’s. Chinese companies in a wide range of industries report poor earnings for the first quarter because of the outbreak. And regulators are looking at new tools to spur the virus-hit economy.
— By Mo Yelin (firstname.lastname@example.org) and Han Wei (email@example.com)
** ON THE CORONAVIRUS
Russian prime minister tests positive for coronavirus
Russian Prime Minister Mikhail Mishustin tested positive for the new coronavirus, he said Thursday in a video conference with President Vladimir Putin. Mishustin said he will temporarily step down for self-isolation while First Deputy Premier Andrey Belousov becomes acting prime minister. Mishustin, 54, was appointed to the position in January 2020.
China, South Korea to allow ‘fast-track’ entry for business travelers
The two countries reached an agreement on Wednesday to establish a “fast-track channel” that will allow business travelers to easily cross back and forth between the countries, Chinese Foreign Ministry spokesperson Geng Shuang said (link in Chinese) at a regular press conference on Thursday.
A batch of 10 provinces and cities in China will be the first allowed to receive travelers from South Korea, Geng said, without naming them specifically. Relevant South Korean personnel will be granted visas after they pass health screenings, but will still be subject to quarantines on arrival according to Chinese policy, according to Geng. Chinese travelers will not be subject to quarantines in South Korea once they meet all the necessary health requirements, Geng said.
Gilead’s experimental Covid-19 drug produces conflicting results
Gilead Sciences Inc. got a big lift on Wednesday after a U.S. official said its remdesivir drug showed significant positive effect in treating Covid-19 in a government-initiated trial. That was the complete opposite (link in Chinese) of results for a Chinese trial that were revealed the same day, leaving many questions about the drug’s effectiveness.
China reports four new cases on Wednesday
On Wednesday, the Chinese mainland reported (link in Chinese) four new Covid-19 cases, all of them imported, compared with 22 new cases the previous day. No new deaths were reported. Thirty-three asymptomatic cases were reported, including two from abroad. As of the end of Wednesday, China had 998 asymptomatic coronavirus cases under medical observation.
Other virus news
• As of Thursday afternoon Beijing time, global infections had reached over 3.2 million, with over 227,000 deaths, according to data compiled by Johns Hopkins University.
• The Boao Forum for Asia said (link in Chinese) Thursday that it would scrap its annual conference this year due to challenges posed by the global Covid-19 pandemic.
• After authorities announced the easing of some Covid-19 restrictions in Beijing starting from Thursday, local residents rushed to book trains, planes and hotels for a chance to leave the Chinese capital for the long Labor Day holiday that starts Friday. Previously, most Beijing residents who left the city were required to undergo a lengthy quarantine upon their return.
Caixin’s coverage of the new coronavirus
** TOP STORIES OF THE DAY
Pilot Test of Publicly Traded REITs to Spur Economy
Chinese authorities announced a long-awaited pilot program for real estate investment trusts (REITs) to provide new funding for infrastructure projects. The trial will allow the issuance of publicly-traded REITs, which have long been absent from the China market.
Regulator urges BOC to probe troubled product
China’s banking regulator demanded that Bank of China investigate losses generated by an investment product linked to crude oil prices that may have caused losses totaling 10 billion yuan.
Revised rules to attract more companies to list at home
In revised rules, China’s securities regulator lowered capital requirements for overseas-listed Chinese companies seeking to list on the domestic market in an effort to attract companies to return to the home market.
China’s manufacturing activity slumps again in April: Caixin PMI
The Caixin China General Manufacturing Purchasing Managers’ Index (PMI) fell to 49.4 in April from 50.1 the previous month, according to a report released Thursday. A number above 50 indicates an expansion in activity, while a reading below that signals a contraction.
That result followed a slump in February, when the reading fell to 40.3. The February reading marked the fastest contraction in the index’s 16-year history, as the Chinese economy stalled amid the Covid-19 outbreak.
Wuhan’s GDP plunged 40.5% in first quarter
Wuhan’s industrial sector was hit the hardest, with a 45.4% drop in value-add for the quarter, data from the local statistics bureau showed (link in Chinese). Agricultural value-add dropped by 36.4%, while the services sector fell 37.7%.
Six mainland airlines lost more than a combined 20 billion yuan in first quarter
The big three state-owned airlines — Air China, China Southern Airlines and China Eastern Airlines — made up the majority of the loss with a combined 14 billion yuan ($1.98 billion), according to their earnings reports (link in Chinese).
However, privately owned Hainan Airlines was hit the hardest, losing 6.6 billion yuan for the quarter, followed by China Southern Airlines’s 5.3 billion yuan. Two smaller regional carriers, Spring Airlines and Juneyao Airlines, lost 228 million and 491 million yuan respectively.
Passenger trips plummeted in first quarter
During the first quarter of 2020, Chinese people took 1.85 billion domestic trips, a 58.4% year-on-year drop, the transportation ministry said on Thursday (link in Chinese).
Meanwhile, Beijing-Shanghai High Speed Railway Co. Ltd. reported (link in Chinese) that its net profit for the quarter plummeted 86% year-on-year, while revenues dropped 36%.
Bank of China asks CME to investigate “abnormal fluctuations” in oil futures
Bank of China said on Wednesday it has asked its lawyers to send a letter (link in Chinese) to CME Group asking the U.S. exchange operator to investigate the reasons behind “abnormal fluctuations” in crude oil futures prices on April 21. The massive drop in prices that day resulted in huge losses for clients of the bank’s Yuan You Bao investment product.
** OTHER STORIES MAKING THE HEADLINES
• JPMorgan has applied to increase ownership in its Chinese futures joint venture to 100% from 49%.
• Qualcomm gave a solid sales forecast for the current quarter and said demand is close to returning to normal levels in China.
• Tesla has unveiled new price cuts to be eligible for Chinese government subsidies.
• China’s largest automaker SAIC Motor reported (link in Chinese) its net profit plunged 91% for the first quarter amid a broader downturn in the auto industry that was further exacerbated by the Covid-19 pandemic.
• Shenzhen-listed Unisplendour Corp. Ltd., which makes electronic products, aims to raise up to 12 billion yuan through a private placement to fund development in areas such as 5G.
• CRRC Corp. Ltd., the world’s largest rolling stock manufacturer, reported its net profit dropped by 58% in the first quarter.
• Alibaba Group Holding Ltd. has acquired a 2% stake in Shenzhen-listed Yunda Holdings, Yunda’s earnings report showed. That means Alibaba now holds stakes in all but one of the top privately owned Chinese logistics companies, with SF Express the lone holdout.
• Air conditioner giant Gree reported (link in Chinese) that its revenues dropped 11% to 138.6 billion yuan in 2019.
• China’s movie theaters have taken a severe hit from the ongoing pandemic, with estimated box office losses of over 30 billion yuan for the year. Wanda Film, a major theater chain operator, reported net losses of 600 million yuan for the first quarter.
Nongfu Spring Co. Ltd., one of China’s biggest bottled water and beverage companies, filed an IPO prospectus to the Hong Kong Stock Exchange on Wednesday.
** AND FINALLY
Residents of Beijing’s Chaoyang district welcomed a piece of good news ahead of the May 1 holiday when the district was downgraded to “low-risk” on Thursday, allowing residents to travel more freely to other areas. Before the announcement, Chaoyang district was the only region in China designated as high-risk for Covid-19.
Beijing residents running in Chaoyang park on April 27.
Contact reporter Mo Yelin (firstname.lastname@example.org) and editors Yang Ge (email@example.com) and Gavin Cross (firstname.lastname@example.org)
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