(Bloomberg) -- Canada’s six-biggest banks are poised to set aside C$8.9 billion ($6.4 billion) for souring loans in the fiscal second quarter -- a record amount that will wipe out more than half the industry’s profits.The total is the average estimate of five analysts who attempted to calculate potential loan losses through a fog of uncertainty caused by the coronavirus pandemic and plunging oil prices. The total is three times higher than the first quarter and will be the key reason Canada’s biggest banks will see profits plunge in the period ended April 30 when they report results next week.The six large lenders are expected to post a 44% earnings decline for the second quarter, the median of estimates compiled by Bloomberg Intelligence. That would be the biggest drop in 11 years, when banks were sideswiped by a global financial crisis.“It’s going to be bad -- they’re going to be taking big allocations and provisions,” Craig Basinger, chief investment officer for Richardson GMP, said in an interview. “We’re not overly concerned on that side, but we just think the negative news is going to probably keep weighing them down in the near term.”Government relief efforts and measures by banks such as mortgage deferrals and lower credit-card interest rates may just be delaying the reckoning: the mortgage reprieve, for example, kicked in in late March and was good for six months.A sharp spike in reserves, though, would show how worried banks are for Canadian households and businesses as they emerge from the pandemic and into recession. New accounting standards adopted by the industry in late 2017 require banks to forecast the likelihood of good loans going bad.This quarter’s jump in provisions may be three to four times higher than a year ago and will be mostly for loans that have yet to go bad, according to Bloomberg Intelligence analyst Paul Gulberg.Widespread Impact“Reserves build will span across borders and impact both commercial and retail loans,” Gulberg said in an interview. U.S. bank earnings pointed to elevated provisions over the next two to three years, implying the same possibility for Canada, he said.Toronto-Dominion Bank already gave a window into how bad things will get -- at least in the U.S., where it has a branch network that stretches from Maine to Florida. Canada’s second-largest lender by assets expects to record about C$1.1 billion in loan-loss provisions for its U.S. retail division, according to May 8 disclosures. The bank also said it will set aside C$600 million tied to U.S. credit cards that consist primarily of its retailer partners’ share of provisions, though those are offset and won’t affect earnings.Equity investors have already made up their minds that things will get ugly. Bank stocks have plunged 25% this year, double the decline in the benchmark S&P/TSX Composite Index.National Bank of Canada analyst Gabriel Dechaine says investors will likely come back when credit deterioration has peaked. “We believe it is still too early to make that call, and the only way to gain confidence in it is to assess the progress of Canadian economic re-opening,” he said in a May 14 report.For Cormark Securities analyst Meny Grauman, the main question for investors is whether they should buy the dip -- a strategy that worked well as the economy recovered from the global financial crisis. “The answer to that question is tied to the nature of the Canadian economic recovery, and the bottom line for us is that at this stage the level of uncertainty is very high,” he said.Throwing DartsEstimating provisions for credit losses (PCLs) is “like throwing darts”, according to Desjardins Securities analyst Doug Young.“The banks are in a ‘damned if they do, damned if they don’t’ position,” Young said in a May 12 note. “Report PCLs and allowances that are too low and the market will be skeptical and will likely assume that more hits will come in future quarters. Record sizeable increases and some may wonder what management sees behind the scenes.”Barclays Plc analyst John Aiken expects Canada’s eight largest publicly traded banks to set aside C$14 billion for performing loans that may go sour over the next two quarters, though he doesn’t anticipate that such a “large” number will translate into negative earnings in what he expects to be a “difficult” earnings period for the industry.“We believe the quarter will showcase a difficult earnings environment, underscored by a jump in credit losses, intensifying margin pressures, more challenged and slower loan growth, and varied but lower expense levels,” Aiken said.Reporting Dates:May 26: Bank of Nova Scotia and National Bank of CanadaMay 27: Bank of Montreal and Royal Bank of CanadaMay 28: Canadian Imperial Bank of Commerce and Toronto-Dominion BankMay 29: Laurentian Bank of Canada and Canadian Western Bank(Lists when banks report at end.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- Anthony Fauci, who is leading the U.S. infectious disease control effort, said he was “cautiously optimistic” about Moderna’s vaccine. Oxford University and AstraZeneca started recruiting subjects for advanced human studies of one of the fastest-moving experimental vaccines.Brazil had another record day of deaths and its government agreed to the terms of a financial aid package. Americans are expected to head to parks and beaches over the Memorial Day weekend after weeks of home isolation, prompting concerns of a spike in infections.Earlier, Beijing abandoned a growth target for 2020 amid the uncertainty caused by the coronavirus, while central banks in Japan and India stepped in to help their economies. Britain posted a record budget deficit in April and retail sales slumped.Key Developments:Virus Tracker: Cases top 5.1 million; deaths around 333,000Coronavirus is a stress test many world leaders are failingMillions face risk of virus contagion in storm-hit South AsiaNobody’s happy about all the contact-tracing apps out nowBankers to the ultra-rich deprived of glamor turn to ZoomScared and sick, U.S. meat workers crowd into reopened plantsSubscribe to a daily update on the virus from Bloomberg’s Prognosis team here. Click VRUS on the terminal for news and data on the coronavirus. See this week’s top stories from QuickTake here.Fauci Optimistic About Moderna Vaccine (7:36 a.m. NY)Moderna shares rose after Anthony Fauci, the leading U.S. infectious disease official, said he was optimistic about the company’s vaccine. “Even though there were only eight individuals, we saw neutralizing antibodies at a reasonable dose of the vaccine,” Fauci said on CNN. “Although the numbers were limited, it was really quite good news because it reached and went over an important hurdle in the development of vaccines. That’s the reason why I’m cautiously optimistic about it.”Fauci said on NPR that he expects the full results of a Phase 1 study of the biotech’s experimental Covid-19 vaccine within weeks. Earlier this week, an experimental vaccine from the company showed signs that it can create an immune-system response to fend off the new coronavirus. In 25 people who got either of the two smaller doses used in the study, researchers reported that the levels of antibodies equaled or exceeded the levels of antibodies found in patients who had recovered from the virus.The second test, evaluating the quality of those antibodies, was only available for eight of the people because it takes longer to perform. But in all eight people, the vaccine successfully stimulated the body to create antibodies capable of neutralizing the virus in the test tube, so it can no longer infect cells.Alibaba Growth Slows; Deere Tractor Sales Hold Up (7:15 a.m. NY)Alibaba Group Holding Ltd. reported its slowest pace of revenue growth on record after China’s economic contraction drove down spending across its online marketplaces. The results demonstrate the world’s second largest economy has yet to fully shake off Covid-19, with consumers still hesitant about spending on big-ticket items.Deere & Co. shares rose after the world’s biggest tractor maker navigated coronavirus upheavals better than expected in the height of the pandemic. For the three months through April, sales and earnings fell less than analysts projected as agriculture -- deemed essential in the lockdown era -- proves more resilient than many other industries.U.K. Contact-Tracing App Roll-Out Delayed (6:20 a.m. NY)Britain’s mobile phone app for tracking coronavirus infections has been delayed by bureaucracy and the addition of more symptoms to monitor, according to a person familiar with the matter -- who said they expected the government to abandon it in favor of the model backed by Apple Inc and Alphabet Inc.’s Google.The app is being developed by VMware Inc. and Zuhlke Engineering Ltd at a cost of 4.7 million pounds ($5.8 million). There has been controversy about the U.K.’s decision to reject the structure backed by Apple and Google, a move that has been criticized by privacy campaigners.The U.K. has opted for a “centralized” model, where people who test positive for coronavirus upload all their recent contacts to a database, and those people are then contacted and warned. Apple Inc. and Google released their Covid-19 exposure-notification tools on Wednesday. Some governments have criticized the “decentralized” system because it doesn’t let authorities store data on who has the virus and track where it is spreading. Instead, it just notifies individuals if they have been exposed.Germany Plans One-Time Child Bonus (6 a.m. NY)German Finance Minister Olaf Scholz is planning a one-time bonus for families of 300 euros ($327) per child as part of a government stimulus program worth as much as 150 billion euros, Der Spiegel magazine reported, without identifying the source of its information. The bonus could cost the government 5 billion to 6 billion euros. Scholz is also considering vouchers to boost consumer spending.Belgian Virus Spread Remains Under Control (5:54 p.m. HK)A weekly update of Belgium’s infection rate showed the epidemic remains under control in the country after lock-down measures were gradually eased starting May 4. The so-called reproduction factor rose to 0.86 for the 7 days ending May 20 from about 0.8 in the previous week, below the key threshold of 1.0.Belgium reported 276 new infections in the past 24 hours, based on 18,182 diagnostic tests. That’s up from 252 the prior day, which was based on 18,918 tests. New hospital admissions fell to 56 from 71 the day before, as the total number of beds occupied declined to 1,415.U.K. Will Fine Arrivals Who Break Quarantine (5:29 p.m. HK)Passengers arriving in the U.K. will be forced into quarantine for two weeks and face fines of 1,000 pounds ($1,217) if they break the rules. The plan is designed to stop travelers re-introducing coronavirus to the country after becoming infected overseas and is likely to have a major impact on the aviation industry’s attempts to recover after the lockdown.Home Secretary Priti Patel will set out the details of the new quarantine system at the daily government press conference at 5 p.m. on Friday. Her Cabinet colleague, Brandon Lewis, said the measures will be reviewed every three weeks, along with the rest of the government’s coronavirus response.Putin Presses Plan to Extend Rule (4:20 p.m. HK)Thrown off course by the coronavirus pandemic, Vladimir Putin is moving to regain the political initiative for his plan to remain as Russia’s president potentially until 2036. Putin may announce a snap ballot within weeks on proposed changes to the constitution that allow him to sidestep term limits, said four people familiar with Kremlin discussions on the matter. Electronic voting will be used as well as polling stations to boost turnout and the result, the people said.Putin delayed the referendum on constitutional amendments originally scheduled for April 22 when the coronavirus crisis erupted in the spring. What had seemed a formality then now looks a harder sell. Like millions around the world, Russians were thrust into hardship and uncertainty about their jobs after Putin in late March ordered a nationwide lockdown that sparked a 33% plunge in economic activity.While there are signs the Covid-19 epidemic is starting to wane in Russia, which has the world’s second-highest number of infections, the turmoil unleashed by the virus and an unprecedented slump in oil prices continues to rip through the economy. Confirmed cases increased by 8,894 to 326,448 on Friday, while the number of deaths in the past day rose by 150, the most so far, to 3,249.Oxford, AstraZeneca Begin Advanced Trials (3:47 p.m. HK)The University of Oxford and AstraZeneca Plc have begun recruiting more than 10,000 subjects for advanced human studies of one of the world’s fastest-moving experimental Covid-19 vaccines.A smaller part of the trial will expand the age range of testing to children from 5 to 12 years old and adults 56 and older, according to a statement. The other, larger stage will test the vaccine’s effectiveness in volunteers 18 and older.AstraZeneca received a boost in its efforts to get the immunization tested and ready for use when the U.S. pledged as much as $1.2 billion toward development on Thursday.Nissan May Cut More Than 20,000 Jobs (2:15 p.m. HK)Nissan Motor Co. is planning to cut more than 20,000 jobs across the world, as the Japanese carmaker grapples with factories and showrooms that have been shut down due to the coronavirus pandemic, Kyodo News reported.The outbreak is forcing Nissan to cut back on production, and restructuring measures in Japan are also being considered, the news agency reported. The job reductions are part of a mid-term reorganization plan that Nissan is due to unveil on May 28, Kyodo said. The reduction would be much larger than the 12,500 staff cuts announced in mid-2019.U.K. Posts Record Budget Deficit; Retail Sales Crater (2:15 p.m. HK)Britain posted a record budget deficit in April as the government unleashed an unprecedented package to prevent the collapse of the virus-stricken economy. The shortfall stood at 62.1 billion pounds ($76 billion), the Office for National Statistics said. The figure is equal to total borrowing in the whole of the previous fiscal year. In a separate report, the ONS said retail sales fell the most since at least 1988.The figures reflect the cost of interventions announced by Chancellor Rishi Sunak, including paying the wages of 8 million furloughed workers, a surge in welfare claims and the hit to tax revenue from a shrinking economy. Meanwhile, the U.K. also announced that banks should extend mortgage holidays for struggling homeowners by a further three months, as part of its measures to shore up households.German Infection Rate Holds Below Key Level (1:20 p.m.)Germany’s coronavirus infection rate held below the key threshold of 1.0, while the number of new cases and deaths dipped for a second day. There were 548 new cases in the 24 hours through Friday morning, bringing the total to 179,021, according to data from Johns Hopkins University. Fatalities increased by 59, to 8,203.The reproduction factor of the virus, known as R-naught, was 0.89 on Thursday, compared with 0.88 the previous day, according to the Robert Koch Institute. The figure reflects the number of additional cases generated by one infected person, and authorities consider it important to keep the number below 1.0 to prevent exponential growth that could overwhelm the health system.Thailand Extends State of Emergency (1:15 p.m. HK)Thailand will extend its nationwide state of emergency for another month through June, according to Taweesilp Witsanuyotin, a spokesman for the Covid-19 center. That will help facilitate the country’s reopening in stages three, which begins June 1, and four, Taweesilp said. Once stage four is completed, the government may consider reopening its borders.India Unexpectedly Cuts Interest Rates (12:26 p.m. HK)India’s central bank cut interest rates in an unscheduled announcement on Friday, ramping up support for an economy it expects will contract for the first time in more than four decades.The benchmark repurchase rate was lowered by 40 basis points to 4%, Governor Shaktikanta Das said in a live streamed address. The reverse repurchase rate was reduced to 3.35% from 3.75%. The monetary policy committee met ahead of its scheduled meeting in early June, Das said.Australian State Relaxes Curbs on Pubs, Cafes (11:36 a.m. HK)Australia’s most-populous state will allow pubs, clubs, cafes and restaurants to have as many as 50 customers from June 1, as authorities try to breathe life back into the economy.New South Wales Premier Gladys Berejiklian said that strict social distancing guidelines, including ensuring premises allow for 4 square meters per person, would be in force.Coronavirus Reshapes New Zealand’s Politics (10:42 a.m. HK)New Zealand’s main opposition party elected a new leader after a slump in opinion polls spooked its members of parliament four months out from a general election. National Party MPs backed agriculture spokesman Todd Muller to replace Simon Bridges in a caucus vote Friday in Wellington.Muller challenged for the leadership after two polls this week showed support for National plummeting to as low as 29%, from 46% just three months ago.Muller now faces the daunting task of trying to dethrone Prime Minister Jacinda Ardern, whose crisis management during the coronavirus pandemic has seen her popularity soar. Support for Ardern’s Labour Party surged to 59% in a 1News/Colmar Brunton poll published yesterday, 30 percentage points ahead of National. The election will be held on Sept. 19.China Abandons Growth Target (8:29 a.m. HK)The Chinese government abandoned its decades-long practice of setting an annual target for economic growth amid the storm of uncertainty unleashed by the coronavirus pandemic, and said it would continue to increase stimulus.“We have not set a specific target for economic growth this year,” the report said. “This is because our country will face some factors that are difficult to predict in its development due to the great uncertainty regarding the Covid-19 pandemic and the world economic and trade environment.”Premier Li Keqiang said the government is setting a target for urban job creation of over 9 million jobs. That’s lower than the 2019 target of around 11 million, and a target for the urban surveyed unemployment rate of around 6%, higher than 2019’s goal, according to the document.IBM Joins Tech Giants in Cutting Jobs (7:23 a.m. HK)International Business Machines Corp. cut an unspecified number of jobs across the U.S., eliminating employees in at least five states. The company declined to comment on the total number, but the workforce reductions appear far-reaching.Based on a review of IBM internal communications on the Slack corporate messaging service, the number of affected employees is likely to be in the thousands, said a North Carolina-based worker who lost his job along with his entire team of 12.It’s unclear how many of IBM’s cuts are caused by the pandemic; the company has suffered years of falling revenue. But the tech industry has suffered widespread job losses after the coronavirus pandemic triggered a severe recession. Airbnb Inc. and Uber Technologies Inc. have cut about a quarter of their workforces. Earlier on Thursday, Hewlett Packard Enterprise Co. said it will eliminate some employees to save money, while Dell Technologies Inc. suspended several staff benefits.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
As states begin to reopen their economies, some experts are arguing that it won’t do much to alleviate the effects of the economic shock from the coronavirus.
(Bloomberg) -- U.S. equity futures reversed a decline while European stocks pared a drop on Friday as the volatility that has whipsawed investors all week continued. Treasuries climbed with the dollar while oil snapped a six-day winning steak.Contracts on all three main American equity gauges had pointed to modest losses on Wall Street as traders braced for tension between Washington and Beijing to escalate after China announced plans to impose a national security law on Hong Kong. But they erased declines as the open neared and futures for the S&P 500 turned positive. Deere & Co., the world’s biggest tractor maker, rose in premarket trading after it reported better-than-expected earnings.Food and mining companies led the Stoxx Europe 600 Index lower, though it came off its lows. The risk-off tone had taken hold earlier in Asia, where Hong Kong’s benchmark stock index plunged more than 5% amid a broad selloff. The yuan dipped as China’s National People’s Congress abandoned its decades-long practice of setting an annual target for economic growth amid uncertainty unleashed by the coronavirus pandemic.The prospect of fresh turmoil in Hong Kong following sweeping national security legislation introduced by China comes as the relationship between the world’s two biggest economies appears to be souring. The S&P 500 closed lower on Thursday, with signs mounting that President Donald Trump will make his tough stance on China a key element of his re-election bid. Beijing responded to accusations from Trump, warning that it will safeguard its sovereignty, security and interests, and threatened countermeasures.It all risks choking the rally that took global equities up about 30% from the March lows, spurred by stimulus measures and optimism for a swift economic recovery from the virus.“Although both sides highlighted overnight progress on trade deal implementation and the intention to keep it going, the overall relationship is deteriorating fast,” Sebastien Barbe, the head of emerging-market research and strategy at Credit Agricole CIB, wrote in a note to clients. “The issue may well become a major drag on sentiment until U.S. presidential elections in November.”Meanwhile, the pound weakened for a third day as data showed retail sales in the U.K. dropped by almost a fifth in April. West Texas oil plunged as much as 9.4% before trimming its losses to trade around $32 a barrel in New York.Elsewhere, gold pushed higher. The Australian dollar dipped as Fitch Ratings Ltd. cut the country’s rating outlook to negative. Indian bonds rallied after an unscheduled rate cut. The Bank of Japan held its main rate while saying it will start a new lending program; the yen edged higher.These are some of the main moves in markets:StocksFutures on the S&P 500 Index increased 0.2% as of 7:53 a.m. New York time.The Stoxx Europe 600 Index declined 0.2%.Germany’s DAX Index was little changed.The MSCI Asia Pacific Index decreased 1.9%.CurrenciesThe Bloomberg Dollar Spot Index gained 0.4%.The euro declined 0.4% to $1.0905.The Japanese yen strengthened 0.1% to 107.49 per dollar.The British pound fell 0.4% to $1.2179.BondsThe yield on 10-year Treasuries declined two basis points to 0.65%.Germany’s 10-year yield decreased less than one basis point to -0.50%.Britain’s 10-year yield dipped less than one basis point to 0.169%.CommoditiesWest Texas Intermediate crude dipped 4.8% to $32.29 a barrel.Gold strengthened 0.3% to $1,731.82 an ounce.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- As the biggest cyclone to hit South Asia in two decades loomed over the Bay of Bengal, emergency relief officials realized they were facing a nightmare: They needed to evacuate more than 5 million people to safety at the risk of spreading Covid-19.Right after the weather office elevated the cyclone warning to the maximum on Wednesday, Najmul Alam, a government official in Bangladesh, had the onerous task of evacuating hundreds to storm shelters while at the same time attempting to keep social distancing rules in place. He’s one of many that struggled with the same problem.Alam ordered his team to evacuate residents to safety, but many initially decided to stay home assuming the storm would dissipate. As rain and wind gathered strength, thousands rushed out for help, overwhelming the facilities. By the end of the week, millions across the region took shelter in relief centers as Cyclone Amphan caused widespread damage in India and Bangladesh, killing about 100 people.“I was struggling with what to do. Too many people came in such a short space of time,” said Alam, chief executive of Bhandaria, a coastal sub-district in Bangladesh. The number of people seeking shelter surged to 50,000 before dark and it became tough to maintain social distancing in an area that has already reported eight positive cases of the coronavirus, he said. “The biggest challenge was to prevent them from blending into the crowd.”His battle during the cyclone illustrates the complicated task of saving lives during a natural disaster at a time when the coronavirus pandemic is hitting one of the most densely populated regions in the world. The pandemic has been spreading in India at the fastest pace in Asia, so far infecting more than 100,000 people in the second most-populous nation, while Bangladesh has seen about 30,000 positive virus cases.“Disasters wreak havoc on fighting the pandemic,” said Bhuputra Panda, associate professor of Public Health Foundation of India.“ The possibility of increasing the rate of transmission rises sharply” as it becomes almost impossible to maintain social distancing, personal hygiene, wearing mask and even quarantine centers are converted into cyclone shelters.”Virus RiskOf the initial plan to evacuate more than 5 million, Bangladesh ended up evacuating about 2.4 million people, while eastern Indian states of West Bengal and Odisha moved about 700,000 people before the cyclone hit the region.“We are battling a pandemic on one hand and there is a cyclone situation in some parts,” India’s Prime Minister Narendra Modi said in a Twitter Post. Modi undertook an aerial survey of the affected area in West Bengal on Friday and announced a financial assistance of 10 billion rupees ($132 million) for immediate relief activities in the state, according to a government statement. In Bangladesh, Prime Minister Sheikh Hasina ordered the local administrations to provide relief to displaced people and reconstruct damaged houses.The storm has now dissipated, but not before leaving a trail of disaster. An airport and several low-lying areas were flooded, power supplies to millions of homes were snapped, and trees and buildings were left damaged. Relief operations and efforts to restore power supply are continuing in the affected areas.“At relief centers, we are providing masks and some food to people,” Kolkata Mayor Firhad Hakim said. “We have arranged beds for them. There are so many people that it’s difficult, but we are trying to maintain social distancing as much as we can. We will make sure that nobody catches coronavirus at the relief centers.”Pradeep Gooptu, secretary at the Bengal Initiative, a Kolkata-based think tank, said he’s worried about the disaster relief force, who don’t appear to have the necessary protective equipment such as masks to give to people inside the shelters. The cyclone has “severely compromised” the fight against Covid-19, he said.“Evacuated people, or those fleeing their ruined homes, are in no position to maintain social distancing,” Gooptu said. “At this juncture, relief without preventive health measures or safety appears to be a severe lapse.”The natural disaster has also added to the pain of about 1 million Rohingya refugees, who are staying in crowded camps in Bangladesh. The nation has evacuated many of them to various mosques, but the risk of the spread of the virus has intensified. At least four refugees have tested positive for the virus.“Saving lives comes first,” said Mahbub Alam Talukder, refugee relief and repatriation commissioner of Bangladesh. “It’s difficult to maintain social distancing when a threat like Cyclone Amphan appears. We’ll think about social distancing later.”Braving the risk of contagion, Amir Hossain, a dweller of Char Montaz, a small rural island of fishermen in southern Bangladesh, left home in a hurry along with his wife and their two children and ended up with 300 other inhabitants in the lone cyclone shelter. “I was worried. And I thought I have to save my family from the cyclone and took them to the storm center,” Hossain, 43, said by phone.Damage“We’re trying to get the full picture of the damage to lives and property,” said Mohammad Shafiul Arif, deputy commissioner of Bangladesh’s Jashore, one of the districts hardest-hit by the cyclone. “Roads to remote areas are blocked by uprooted trees. Half of the areas in my district are still without electricity,” Arif said, adding that 12 people had died in the district.As many as 80 people were killed in West Bengal, while at least 22 people have lost their lives in Bangladesh, according to officials and media reports. The cyclone had snapped power supply to about 5.5 million homes in Bangladesh and caused tidal surges, flooding homes.State-owned refiner Indian Oil Corp. has cut the run rate of its Haldia refinery in West Bengal to half its capacity after the cyclone disrupted electricity and fresh water supplies, according to a company spokesperson. GTL Infrastructure Ltd. said its 2,500 telecom towers were affected by the cyclone, while Bandhan Bank said its business of around 65,000 micro-banking borrowers, amounting to an exposure of about 2.60 billion rupees, may be impacted by the storm.(Updates to add detail, comment from 15th paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- Japan’s government and its central bank issued a rare joint statement Friday, vowing to cooperate further on aggressive measures to fund struggling companies and support a battered economy.On a day when inflation fell below zero for the first time in more than three years, Prime Minister Shinzo Abe’s administration and the Bank of Japan focused on battling the economic impact of the coronavirus while putting the risk of deflation on the back burner for now.First the BOJ unveiled an additional 30 trillion yen ($279 billion) of loan support for small businesses at an emergency meeting that makes its package of virus measures roughly equivalent to the annual lending of one of the nation’s three mega banks.Then came the joint statement pledging BOJ cooperation with the government after a meeting between Governor Haruhiko Kuroda and Finance Minister Taro Aso.“The Bank of Japan and the government must send the message to the world that we are coming together as one,” said Aso. Central banks and governments in some countries simply weren’t on the same page and needed a reminder of the benefits of joint action, he added.“Even if Japan manages to escape this predicament by itself, it’ll still suffer if other nations can’t, and exports and inbound tourism can’t grow,” Aso said.The vow to take any action needed in support of the economy, corporate financing and market stabilization highlights the needs of a world changed by Covid-19. A previous joint statement in 2013 had focused on action to escape deflation.Kuroda said the BOJ would continue to collaborate with the government and emphasized the significance of the new lending program.Combined with an earlier lending facility and its buying of corporate bonds and commercial paper, the BOJ said its coronavirus response measures now total 75 trillion yen. By comparison, the overall size of the government’s record stimulus package in response to the pandemic is 117 trillion yen.“They are certainly trying to avoid the stigma of doing ‘too little, too late’ because that led to the yen strengthening after the global financial crisis,” said Masamichi Adachi, chief Japan economist at UBS Securities, referring to the BOJ’s package of programs.The latest lending program, due to run through March next year, won’t offer direct assistance to businesses like the Fed’s Main Street Lending Program. Instead, it will funnel money to companies via commercial banks and other financial institutions.The facility will encourage lending to companies by providing free loans to financial institutions and then paying them 0.1% interest on the amount they in turn lend out.The combination of BOJ support programs is big enough to have an impact on the economy, said Shunsuke Oshida, head of credit research at Manulife Asset Management, comparing it in size to one of Japan’s big three banks. “Mizuho’s total lending is about 85 trillion yen, so with BOJ programs worth a total 75 trillion yen it seems Japan now has another mega bank,” Oshida said.The program’s financial incentive for banks to lend will likely work positively over the short term for the economy because there are companies needing cash, said Ryoji Yoshizawa, senior director at S&P Global Ratings.“But there are negative elements as well as positive ones. If you help companies that have little prospect of surviving stay afloat, their existence might end up undermining firms that have worked hard to stay competitive,” he added.What Bloomberg’s Economist Says“The Bank of Japan is moving swiftly to deliver more financial support for Japan’s hard-hit small companies, with a new 30 trillion yen loan program. If extended by commerical banks as intended, it would be a large dose -- equal to 185% of total new loans extended in April.”\--Yuki Masujima, economistClick here to read more(Adds comments from Kuroda, Aso joint press conference)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
NEW DELHI — The coronavirus pandemic accelerated across Latin America, Russia and the Indian subcontinent on Friday even as curves flattened and reopening was underway in much of Europe, Asia and the United States.Many governments say they have to shift their focus to saving jobs that are vanishing as quickly as the virus can spread. In the United States and China, the world's two largest economies, unemployment is soaring.The Federal Reserve chairman has estimated that up to one American in four could be jobless, while in China analysts estimate around a third of the urban workforce is unemployed.But the virus is roaring through countries ill-equipped to handle the pandemic, which many scientists fear will seed the embers of a second global wave.India saw its biggest single-day spike since the pandemic began, and Pakistan and Russia recorded their highest death tolls. Most new Indian cases are in Bihar, where thousands returned home from jobs in the cities. For over a month, some walked among crowds for hundreds of miles.Latin America’s two most populous nations — Mexico and Brazil — have reported record counts of new cases and deaths almost daily this week, fueling criticism of their presidents, who have slow-walked shutdowns in attempts to limit economic damage.Cases were rising and intensive-care units were also swamped in Peru, Chile and Ecuador — countries lauded for imposing early and aggressive business shutdowns and quarantines.Brazil reported more than 20,000 deaths and 300,000 confirmed cases Thursday night — the third worst-hit country in the world in terms of infection by official counts. Experts consider both numbers undercounts due to widespread lack of testing.“It does not forgive, it does not choose race, or if you are rich or poor, black or white,” Bruno Almeida de Mello, a 24-year-old Uber driver, said at his 66-year-old grandmother’s burial in Rio de Janeiro. “It’s sad that in other countries people believe, but not here.”She had all the virus’s symptoms, but Vandelma Rosa’s death certificate reads “Suspected of COVID-19,” he said, because her hospital lacked tests. That means she didn’t figure in the death toll, which nevertheless on Thursday marked its biggest single-day increase: 1,181.President Jair Bolsonaro has scoffed at the seriousness of the virus and actively campaigned against state governors’ attempts to limit movement and commerce.Bolsonaro fired his first health minister for supporting governors. His second minister resigned after openly disagreeing with Bolsonaro about chloroquine, the predecessor of the anti-malarial often touted by U.S. President Donald Trump as a viable coronavirus treatment.Mexican President Andrés Manuel López Obrador downplayed the threat for weeks as he continued to travel the country after Mexico’s first confirmed case. He insisted that Mexico was different, that its strong family bonds and work ethic would pull it through.The country is now reporting more than 400 deaths a day, and new infections still haven’t peaked.Armando Sepulveda, a mauseleum manager in the massive Mexico City suburb of Ecatepec, said his burial and cremation business has doubled in recent weeks.“The crematoriums are saturated,” Sepulveda said. “All of the ovens don’t have that capacity.” Families scour the city looking for funeral services that can handle their dead, because the hospitals can’t keep the bodies, he said.Meanwhile Mexico’s government has shifted its attention to reactivating the economy. Mining, construction and parts of the North American automotive supply chain were allowed to resume operations this week.Russian health officials registered 150 deaths in 24 hours, for a total of 3,249. Many outside Russia have suggested the country is manipulating its statistics to show a comparatively low death rate. The total confirmed number of cases exceeded 326,000 on Friday.The governor of the German region of Saxony, Michael Kretschmer, suggested that his country could bring in Russian patients, as it has those from European Union countries as a gesture of “solidarity.”Prime Minister Mikhail Mishustin, who himself recovered from coronavirus, has said only 27 regions out of 85 are ready to gradually lift their lockdowns. At least three cabinet ministers also contracted the disease, as well as the Kremlin spokesman.China announced it would give local governments 2 trillion yuan ($280 billion) to help undo the damage from shutdowns imposed to curb the spread of the virus that first appeared in the city of Wuhan in late 2019 and has now infected at least 5.1 million people worldwide, according to a tally by Johns Hopkins University.The Bank of Japan said it would provide $280 billion in zero-interest, unsecured loans to banks for financing small and medium-size businesses.European countries also have seen heavy job losses, but robust government safety-net programs in places like Germany and France are subsidizing the wages of millions of workers and keeping them on the payroll. Tourism, a major income generator for Europe, has become a flashpoint as countries debate whether to quarantine new arrivals this summer for the virus's two-week maximum incubation period.Spain's National Statistics Institute published its tourism report Friday showing columns of zeros for overnight stays, average length of stays and occupancy rates in April. Spain is Europe’s second most popular tourist destination, after France, and an economic recovery without visitors is all but unthinkable.Nearly 39 million Americans have lost their jobs since the crisis accelerated two months ago. States from coast to coast are gradually reopening their economies and letting people return to work, but more than 2.4 million people filed for unemployment last week alone.Federal Reserve Chairman Jerome Powell said over the weekend that U.S. unemployment could peak in May or June at 20% to 25%, a level last seen during the depths of the Great Depression almost 90 years ago. Unemployment in April stood at 14.7%, a figure also unmatched since the 1930s.In an eerie echo of famous Depression-era images, U.S. cities are authorizing homeless tent encampments, including San Francisco, where about 80 tents are now neatly spaced out on a wide street near city hall as part of a “safe sleeping village” opened last week. The area between the city’s central library and its Asian Art Museum is fenced off to outsiders, monitored around the clock and provides meals, showers, clean water and trash pickup.Nathan Rice, a 32-year-old who is camping there, said he’d much rather have a hotel room than a tent on a sidewalk.“I hear it on the news, hear it from people here that they’re going to be getting us hotel rooms,” he said. “That’s what we want, you know, to be safe inside.”Despite an often combative approach to scientists who disagree with him, Trump’s approval ratings have remained steady, underscoring the way Americans seem to have made up their minds about him. A poll from The Associated Press-NORC Center for Public Affairs Research says 41% approve of his job performance, while 58% disapprove. That’s consistent with opinions of him throughout his three years in office.The World Bank announced a $500 million program for countries in East Africa battling COVID-19 and deadly flooding along with historic swarms of ravenous desert locusts. The added threat of the pandemic has further imperiled a region where millions lack regular access to food.While many African countries have been praised for their response to the coronavirus, Tanzania is the most dramatic exception, run by a president who questions — or fires — his own health experts and says prayer has solved the crisis.The East African country’s number of confirmed virus cases hasn’t changed for three weeks, and the international community is openly worrying that Tanzania’s government is hiding the true scale of the pandemic. Just over 500 cases have been reported in a country of nearly 60 million people.___Hinnant reported from Paris and Biller from Rio de Janeiro. Associated Press reporters around the world also contributed.___Follow AP pandemic coverage at http://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreak.Lori Hinnant, Sheikh Saaliq And David Biller, The Associated Press
(Bloomberg) -- Hertz Global Holdings Inc. has been at loggerheads with a key group of creditors with time running out to cut a deal that addresses missed debt payments, according to people with knowledge of the matter.The deadlock between the car-rental company and creditors, including holders of asset-backed securities tied to fleets of vehicles, comes as some investors have grown more confident they’ll be made whole if Hertz files for bankruptcy and is forced to sell the cars backing their bonds, the people said.Hertz has until Friday to either extend a forbearance agreement or make around $400 million of lease payments. If no deal can be reached, Hertz may need to seek court protection in the coming days, according to the people. Top shareholder Carl Icahn could still swoop in with a last-minute rescue to protect a $1.6 billion investment, now worth about $170 million as of Thursday’s close, one of the people said.A representative for Hertz declined to comment. The company’s shares fell 2.9% to $2.98 as of 7:45 a.m. Friday in New York, before the start of regular trading.Icahn, ApolloAn uptick in used-vehicle prices from dismal levels seen in March and April have given ABS holders less incentive to extend the forbearance period for Hertz a second time, the people said. Back in April, lenders were more willing to be lenient to avoid selling the vehicles backing the ABS into a deeply depressed market.Prices of used vehicles hit bottom the week ending April 19, down more than 15% from where they were prior to government shutdown orders, according to market researcher J.D. Power. By the end of the first week of May, prices were down less than 10%.Still, any liquidation scenario does pose a risk to bondholders. Selling off cars quickly can help maximize the value of assets that rapidly depreciate, but flooding the market with too many cars depresses prices.“Cars aren’t like fine wine; they don’t get better with age,” said Dan Zwirn, chief executive officer of Arena Investors, who has held both debt and equity stakes in auto companies for over 20 years.Few bondholders expect used-vehicle prices to fall so low that holders of the largest, highest-rated portions of the ABS would take losses. Though Hertz ABS have faced downgrades, any pain from liquidations would likely be felt in smaller, lower-rated slices of the securities, the people said.Senior slices of Hertz debt issued between 2015 and 2019 changed hands Thursday for between 93.5 and 95 cents on the dollar. A lower-rated portion of a 2015 deal dropped around 19 points to trade at 81 cents, according to Trace.Any move by Icahn could force him to deal with bondholders like Apollo Global Management Inc., which has been buying Hertz debt at distressed prices to offset a short bet it had in the credit-default swaps market.A representative for Icahn didn’t immediately respond to a request seeking comment, while Apollo declined to comment.(Updates with early trading in the fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Telehealth companies enabling individuals to see physicians without stepping foot into a physical doctor’s office are having their moment, as the coronavirus pandemic confines individuals and would-be patients across the country largely to their homes.
A Maryland multimillionaire says the biggest legal transfer of wealth in American history has just gotten underway—here’s #1 step you must take.
BEIJING — China’s No. 2 leader on Friday promised higher spending to revive its pandemic-stricken economy and curb surging job losses but avoided launching a massive stimulus on the scale of the United States or Japan.Premier Li Keqiang told lawmakers Beijing would set no economic growth target, usually a closely watched feature of government plans, in order to focus on fighting the outbreak. The virus battle “has not yet come to an end,” Li warned.Also Friday, legislators took up a proposed national security law for Hong Kong that activists complain might be used to suppress political activity. The Trump administration has warned it might withdraw the former British colony's preferential trade status if the “high degree of autonomy" promised by the mainland is eroded.The coronavirus pandemic that prompted China to isolate cities with a total population of 60 million people added to strains for the ruling Communist Party that include anti-government protests in Hong Kong and a tariff war with Washington.China has reported 83,000 virus cases and 4,634 deaths from the virus. It was the first country to shut down factories, shops and travel to fight the pandemic and the first to reopen in March but it is still struggling to revive activity.Private sector analysts say as much as 30% of the urban workforce, or as many as 130 million people, have lost their jobs at least temporarily. They say as many as 25 million jobs might be lost for good this year.Beijing will give local governments 2 trillion yuan ($280 billion) to spend on meeting goals including creating 9 million new jobs, Li said. That is in line with expectations for higher spending but a fraction of the $1 trillion-plus stimulus packages launched or discussed by the United States, Japan and Europe.“These are extraordinary measures for an unusual time,” the premier said in the nationally televised speech.The world’s second-largest economy contracted by 6.8% over a year earlier in the three months ending in March after factories, offices, travel and other businesses were shut down to fight the virus. Forecasters expect little to no growth this year, down from 2019’s 6.1%, already a multi-decade low.The big deficit “indicates significant policy support for the domestic recovery,” Louis Kuijs of Oxford Economics said in a report.However, Beijing is reluctant to launch a stimulus that would add to already high Chinese debt and strains on the financial system, Kuijs said.Li also promised to work with Washington to carry out the truce signed in January in their fight over Beijing’s technology ambitions and trade surplus. The premier gave no details, but President Donald Trump has threatened to back out of the deal if China fails to buy more American exports.Strains with Washington have been aggravated by Trump’s accusations that Beijing is to blame for the virus’s global spread.Also Friday, the government announced the military budget, the world's second-biggest after the United States, will rise 6.6% to 1.3 trillion yuan ($178 billion). The military budget excludes some large items including acquisitions of major weapons systems.This year's annual session of the ceremonial National People’s Congress is being held under intensive anti-disease controls. Officials are holding news conferences by video instead of meeting reporters face to face. Reporters are required to undergo laboratory tests for the virus before being allowed into the press centre.The proposed Hong Kong security law will authorize the NPC to change the territory's Basic Law, or mini-constitution, to require its government to “prevent, stop and punish acts endangering national security,” according to Wang Chen, a deputy chairman of the Congress's Standing Committee.Friday’s move appears to have been prompted by anti-government protests in Hong Kong that began in June over a proposed extradition law and have expanded to cover other grievances and demands for more democracy. A similar measure was withdrawn from Hong Kong’s legislature in 2003 following massive public protests.Wang said Beijing had to take action because activities in Hong Kong “threatened national security,” according to the official Xinhua News Agency. Wang blamed the territory's failure to enact such measures on “sabotage and obstruction” by “external hostile forces” and people “trying to sow trouble in Hong Kong."The Trump administration is delaying submission to Congress of a report on Hong Kong’s status to see whether the NPC takes steps that “further undermine” its autonomy, said a spokesman for the U.S. Embassy in Beijing.“Any effort to impose national security legislation that does not reflect the will of the people of Hong Kong would be highly destabilizing, and would be met with strong condemnation from the United States and the international community,” the spokesman, Frank Whitaker, said in an email.Amnesty International complained in a statement that such “repressive security regulations” are a “threat to the rule of law in Hong Kong” and an “ominous moment for human rights in the city.”Hong Kong’s main stock market index tumbled 5.6% on the news. Other Asian markets also declined due to concern about U.S.-Chinese tension but none by such a wide margin.Li urged officials to make progress in areas including employment, trade, attracting foreign investment, meeting the public’s basic living needs and ensuring the stability of industrial supply chains.Ensuring economic growth is “of crucial significance” even though Beijing set no official target, Li said. Pressure on employment has “risen significantly," he said.Automakers and other manufacturers say production has rebounded almost to normal levels, but consumer spending, the main engine of economic growth, is weak amid widespread worries about potential job losses.Forecasters say China is likely to face a “W-shaped recovery” with a second downturn and millions of politically volatile job losses later in the year due to weak U.S. and European demand for Chinese exports.The ruling party hopes to achieve longer-term goals including eliminating rural poverty despite virus-related disruptions of efforts to double economic output and incomes from 2010 levels by this year.“We will give priority to stabilizing employment and ensuring people’s livelihood and resolutely win the battle to overcome poverty," the premier said.Joe McDonald, The Associated Press
As people stayed indoors and brick-and-mortar stores remained shut during the health crisis, online orders surged, with the company's core commerce business rising nearly 19% to 93.87 billion yuan ($13.16 billion) in the quarter. With China's economy starting up again much ahead of major economies in Europe and the United States, the e-commerce giant said it expects to generate over 650 billion yuan in revenue in fiscal 2021. The company has been pushing into new businesses and technologies as online shopping space heats up with competition from smaller rival JD.com Inc <JD.O> and Pinduoduo Inc <PDD.O>, which is popular with residents in China's lower-tier cities.
Stock futures were lower Friday morning as ongoing signs of the economic damage from the coronavirus pandemic compounded with fears of rising U.S.-China tensions. A slew of quarterly corporate earnings results came in mixed.
With Facebook's adoption of permanent remote work on Thursday, Chief Executive Mark Zuckerberg has untethered one of Silicon Valley's biggest companies from the place that incubated it. As lockdowns dragged into their third month, message boards popular with well-paid tech workers have lit up with fantasies of working long-term from tropical beaches and spacious houses in affordable small towns in the Midwest. Afraid not, Zuckerberg said, addressing employees in a publicly broadcast livestream on his Facebook page.
BANGKOK — India reported its biggest single-day spike in virus cases Friday ahead of a resumption of domestic flights after a two-month halt.The 6,088 new cases reported in the last 24 hours took its total to 118,447. Deaths rose to 3,583 while more than 48,000 people have recovered, according to the health ministry.Maharashtra continues to be the worst-affected state in India with more than 41,000 cases. The number of fatalities in the state rose to 1,454, the highest in the country.India has the 11th most confirmed cases in the world. It has eased its nationwide lockdown to restart economic activities and gave states more power to set the next phase of reopenings. Some domestic flights will resume on Monday.In other developments in the Asia-Pacific region:— NEW SOUTH KOREA CASES: South Korea reported 20 new cases as authorities scrambled to stem transmissions as schools gradually reopen. The figures announced by the Korea Centers for Disease Control and Prevention on Friday brought the national totals to 11,142 cases and 264 deaths. South Korea has managed to stabilize infections with aggressive tracing and testing. Its schools began reopening Wednesday, though dozens in Incheon, near Seoul, sent students back home after some tested positive. More students are to return to schools next week. Meanwhile, health authorities are reviewing the possible use of Apple and Google’s new smartphone technology that automatically notifies users when they have come close to infected people. But officials say it isn’t clear whether the Bluetooth-based apps would meaningfully boost the country’s technology-driven fight against COVID-19, in which health workers have aggressively used cellphone data, credit-card records and surveillance videos to trace and isolate potential virus carriers.— CHINA CONGRESS OPENS: China reported four new confirmed cases, including two in the northeastern province of Jilin that has seen China’s latest outbreak. Another 372 people are in isolation and undergoing monitoring for being suspected cases or for testing positive without showing symptoms; 82 people remain in hospitalized. The new cases come as China opens the delayed session of its ceremonial parliament, the National People’s Congress, which is being held largely behind closed doors in Beijing to avoid cross-infections as China seeks to avoid a second wave of cases. The country has reported 4,634 deaths among 82,971 cases.— LI TOUTS PROGRESS: Chinese Premier Li Keqiang says China has made solid progress in fighting the coronavirus outbreak but must “redouble our efforts to minimize the losses ... and fulfil the targets and tasks for economic and social development this year.” In his address Friday to the annual session of China’s ceremonial parliament, Li called the outbreak the “most challenging public health emergency China has encountered since the founding of the People’s Republic” in 1949. He said China wishes to strengthen co-operation with other countries in countering the virus, and “uphold the international system with the United Nations at its core and an international order based on international law.” The U.S. in particular has been highly critical of China’s handling of the initial outbreak of the virus in the city of Wuhan and suspended funding for the U.N.’s World Health Organization partly over what it says is a pro-China bias.— RESTAURANT RULES EASING: Leaders of Australia’s most populous state are increasing the maximum number of customers that restaurants can seat from 10 to 50 from June 1. New South Wales Premier Gladys Berejiklian said bookings will be limited to parties of 10 people when customer numbers are increased for restaurants, cafes and pubs. Restrictions vary across Australia’s eight states and territories, but New South Wales is set to allow the largest restaurant customer numbers. New South Wales and neighbouring Victoria have no restrictions on crossing state borders and have Australia’s highest numbers of COVID-19 infections. All the other states restrict their borders. So does the Northern Territory, but the Australian Capital Territory does not. Berejiklian wants the borders opened to further stimulate her state’s economy, but leaders of neighbouring Queensland state say that won’t happen while New South Wales continues to record new infections. Australian has recorded 7,081 cases of COVID-19 and 100 patients have died.— CRUISE SHIPS BANNED: Australia has extended its ban on cruise ship visits for a further three months until Sept. 17 in response to the coronavirus pandemic. The Australian Border Force on Friday announced the extension of the ban, which began March 27 when 28 cruise ships were in Australian waters. Any cruise ship capable of carrying more than 100 passengers is prohibited from operating in the country. Outbreaks linked to cruise ships and aged care homes have proven the most deadly in Australia.— MALAYSIAN LEADER TESTED FOR VIRUS: Malaysian Prime Minister Muhyiddin Yassin was tested for the coronavirus on Friday after an official at a meeting he chaired on Wednesday was diagnosed with the disease. The prime minister’s office said Muhyiddin, a cancer survivor, tested negative for the virus but would observe a 14-day quarantine. It said all other officials at the meeting have also been ordered to be tested and to quarantine themselves. It said strict health measures and social distancing are practiced in all meetings at the prime minister’s office. Malaysia has reported 7,137 infections and 115 deaths. Most businesses have reopened since a virus lockdown in mid-March but mass gatherings and inter-state travel are still banned.The Associated Press
The Latest on the coronavirus pandemic. The new coronavirus causes mild or moderate symptoms for most people. For some, especially older adults and people with existing health problems, it can cause more severe illness or death.TOP OF THE HOUR:— Virus accelerates across Latin America, India, Pakistan.— Indonesian government apologizes for the danger of the coronavirus.— Portugal says tourists are welcome as Spain, Italy and the United Kingdom move towards self-isolation rules for arrivals.— Malaysia's prime minister tests negative for virus after scare.___JAKARTA, Indonesia — Indonesian Vice-President Ma’ruf Amin apologized to all Indonesians as the threat of COVID-19 in the country is not over yet.As of Friday, the government announced there are 634 new COVID-19 cases, bringing the total number of confirmed cases to 20,796. About 1,300 deaths and more than 5,000 recoveries have been recorded.“We, the government, apologizes as the danger of coronavirus is not over yet. It is not easy to eliminate it. Besides it is difficult to fight the coronavirus, Indonesia has a high population number, compared to other ASEAN countries, and a wide region from Sabang to Merauke. Some of the Indonesians are also lacking discipline and not following the healthy protocol,” Amin said on Friday.In the recorded video published at the daily video conference, Amin said the country is still dealing with the threat of COVID-19 and working on preventing the virus transmission, especially during the Eid al-Fitr holiday. People were asked to avoid mass gatherings during the celebration of the end of Ramadan, the holiest month for Muslims.“The government appeals to people to stay home during the Eid al-Fitr and not to go to the mosque or the open fields since we are still facing the danger of the COVID-19,” he said.___LISBON, Portugal — Portugal’s foreign minister says tourists are welcome in his country and no quarantine will be imposed on people arriving by plane.Foreign Minister Augusto Santos Silva said Friday that “minimal health controls,” which he did not specify, will be enacted at airports. Other European countries, including Spain, Italy and the United Kingdom, have preferred a 14-day self-isolation rule for arrivals.Santos Silva said in an interview with Observador radio station that Portugal’s public health system has coped well with the new coronavirus outbreak, though doctors and nurses have complained of shortcomings.Also, Portugal has issued rules so that beaches, hotels, restaurants and national monuments can reopen, Santos Silva noted.Tourism accounts for 15% of Portugal’s GDP and 9% of the country’s jobs, and authorities are striving to salvage some part of the summer vacation season following a lockdown.Portugal has officially attributed 1,277 deaths to COVID-19 and recorded almost 30,000 cases.___KUALA LUMPUR, Malaysia — Malaysian Prime Minister Muhyiddin Yassin had a virus scare after an official at Wednesday’s post-cabinet meeting that he chaired was diagnosed with COVID-19.The prime minister’s office said Muhyiddin, a cancer survivor, underwent a virus test Friday morning and was negative. But it said in a statement that Muhyiddin will observe a 14-day quarantine.It said all other officials at the meeting have also been ordered to test for the virus and to quarantine themselves. The statement said strict health measures and social distancing were practiced in all meetings at the prime minister’s office.Malaysia has reported over 7,000 infections and more than 100 deaths. The government has reopened most businesses, but still bans mass gatherings and inter-state travel.___MADRID — The latest report from Spain’s National Statistics Institute makes grim reading for the country’s tourism sector.The report published Friday said that in April hotel occupancy was “nil,” as establishments locked down due to the new coronavirus outbreak.The institute, which is a government body, published columns of zeros for overnight stays, average length of stays and occupancy rates.Spain is Europe’s second most popular tourist destination, after France.___LONDON — The British government says people flying into the U.K. will have to self-isolate for 14 days and could be fined 1,000 pounds ($1,220) if they fail to comply.Home Secretary Priti Patel will announce details of the quarantine plan on Friday. The government has already said it is likely to start in early June and will apply to arrivals from everywhere except Ireland, which has a longstanding free-movement agreement with the U.K.There are likely to be exemptions for some travellers, including truckers and medics.Britain did not close its borders during the worst of the coronavirus outbreak and is introducing its quarantine just as many other European countries are starting to open up again. Airlines have warned that the British move could hobble their efforts to recover from the devastation wreaked by pandemic-related travel restrictions.There has also been confusion about the U.K. policy, after the government initially said it would not apply to people arriving from France. That prompted a rebuke from the European Union, which wants a co-ordinated policy across the 27-nation bloc.Britain later said France would not be exempt.___LONDON — UK government borrowing swelled to 62.1 billion pounds ($75.7 billion) last month as programs meant to cushion the blow of the COVID-19 pandemic hit the public purse.The UK Office of National Statistics says the figure was the highest for any month on record.The ONS also cautioned that its estimate could be significantly revised as the full impact of the outbreak becomes clearer.Michael Hewson of CMC Markets says that “none of these numbers should be a surprise to anybody … as every other country is in the same leaky boat.’’He says the numbers are expected to go even higher because of Treasury chief Rishi Sunak’s decision to extend a program for furloughed employees into the fall.___THE HAGUE, Netherlands — The owner of an abattoir in the eastern Netherlands says that health authorities have placed all 600 staff in home quarantine for two weeks after 45 workers tested positive for the coronavirus.The meatworks is in Groenlo, close to the Dutch border with Germany. Authorities in Germany agreed this week to crack down on labour conditions in slaughterhouses following the discovery of clusters of COVID-19 cases.Ronald Lotgerink, CEO of Vion Food Group that owns the abattoir said he was surprised by the infections. Vion is an international food company with production locations in the Netherlands and Germany.“As a crucial company, we took all necessary measures to ensure the protection and health of our staff,” Lotgerink said in a statement Friday.He added that the company and meat sector “must learn from this quickly and change our behaviour and share that with each other.”___COPENHAGEN, Denmark — A Danish government agency that maps the spread of the coronavirus in Denmark said between 0.5% and 1.8% of the country’s 5.8 million people have had the COVID-19 infection, according to early results.Statens Serum Institut, or SSI, said the figures, based on 2,600 people that were randomly chosen in Denmark’s five cities and who were given the anti-body tests, must be “interpreted with great caution.”“Furthermore, whether the figures can be transmitted to the entire Danish population can also be influenced by whether groups with different patterns of infection choose or not choose to accept the offer to be tested,” said Steen Ethelberg who heads the project group behind the SSI study.He added that the results were “the first part of the gradual roll-out of the study” and more results are expected in the coming weeks.He said to get a full picture, 6,000 people “have to be tested to achieve the desired precision” across the country.Danish media, citing an SSI report distributed to lawmakers only, have speculated that the virus’ strength might be decreasing.Denmark ordered a lockdown March 11 and has in recent weeks slowly opened up society with museums and cinemas reopening, and hospitals winding down their coronavirus units.___MOSCOW — Russia has reported the highest daily spike in coronavirus deaths on Friday, as health officials registered 150 deaths in the last 24 hours, bringing the country’s toll to 3,249.Russia’s comparatively low mortality rate has raised eyebrows in the West, with some suggesting that the country’s government may be underreporting virus-related deaths and manipulating the statistics. Russian officials vehemently deny the allegations and attribute the low numbers to the effectiveness of the measures taken to curb the spread of the outbreak.Russia’s coronavirus caseload has exceeded 326,000 on Friday, with health officials reporting almost 9,000 new infections.Earlier this month President Vladimir Putin announced gradually lifting lockdown restrictions, saying that Russia was able to “slow down the epidemic” and it was time for gradual reopening. The vast majority of the country’s regions have been on lockdown since March 30.___BRUSSELS — The European Union’s transactions with the rest of the world fell from 252 billion euros ($274.8 billion) to 228 billion ($248.6 billion) in March compared with the first month of the year as the lockdown measures implemented to limit the spread of the coronavirus impacted the international exchanges of goods.According to figures released by the bloc’s statistical office Eurostat, the machinery and vehicles sector was heavily hit, with a decrease of 20% of extra-EU exports amounting to 14 billion euros ($15.3 billion) compared with January. Imports of vehicles, other manufactured goods and energy products also decreased.Despite the general downturn, exports of chemicals however increased by 4%, the equivalent of four billion euros ($4.4 billion), the agency said.___NEW DELHI, India — India has reported 6,088 new coronavirus cases in the last 24 hours for its biggest single-day spike, increasing the country's total number of infections to 118,447.The death toll due to the pandemic rose to 3,583 on Friday. More than 48,000 people have recovered, according to health ministry data.Maharashtra remains the worst-affected state in India with more than 41,000 cases after it added over 2,000 new infections for the fourth straight day. The number of fatalities in the state rose to 1,454, highest in the country.India has the 11th-most cases in the world.The nationwide surge comes ahead of the “calibrated” re-opening of domestic flights beginning Monday.___SEOUL, South Korea — South Korean health authorities say they’re reviewing the possible use of new smartphone technology from Apple and Google that automatically notifies users when they come close to people infected with the coronavirus.But officials also say it isn’t clear whether the Bluetooth-based apps would meaningfully boost the country’s technology-driven fight against COVID-19, where health workers have aggressively used cellphone data, credit card records and surveillance footage to trace and isolate potential virus carriers.Vice Health Minister Kim Gang-lip said Wednesday that the U.S. tech giants in a message conveyed through South Korean cellphone carrier KT recommended that the Korea Centers for Disease Control and Prevention consider using their technology.Lee Kang-ho, another health ministry official, said officials were discussing whether the apps would be useful, but added “our methods in anti-virus efforts differ from methods and goals pursued over there.”The software released by Apple and Google — a product of a rare partnership between the industry rivals — relies on wireless Bluetooth technology to detect when someone who downloaded the app has spent time near another app user who later tests positive for COVID-19.Following a 2015 outbreak of a different coronavirus, MERS, South Korea rewrote its infectious disease law to allow health authorities quick access over a broad range of personal information when fighting epidemics, which includes medical and credit card records and location information provided by police and cellphone carriers.Health workers have been vigorously using these powers while carrying out an aggressive test-and-quarantine program.___UNITED NATIONS — The United Nations secretary-general is again urging factions in conflict to heed his call for a global cease-fire to help tackle the COVID-19 pandemic.In a report to the U.N. Security Council released Thursday, Antonio Guterres pointed to the more than 20,000 civilians killed or injured in 2019 attacks in 10 countries — and millions more forced from their homes by fighting. He said the pandemic is “the greatest test the world has faced” since the United Nations was established 75 years ago and has already had a severe impact on efforts to protect civilians, especially in conflict-affected countries where weak health care systems can be overwhelmed.The U.N. chief said support for his March 23 cease-fire appeal from governments, regional organizations, armed groups, civil society and individuals throughout the world has been “encouraging” — but he said in many instances “challenges in implementing the cease-fire still need to be overcome.”Guterres reiterated his global cease-fire call, saying “as the world confronts the monumental challenge of the COVID-19 pandemic, the need to silence the guns could not be more acute.”He issued the appeal in his annual report to the Security Council on the protection of civilians where he stressed that the most effective way to protect them “is to prevent the outbreak, escalation, continuation and recurrence of armed conflicts.”___SYDNEY — Leaders of Australia’s most populous state say they will lead the nation in reopening the economy, increasing the maximum number of customers restaurants can seat from 10 to 50 beginning June 1.New South Wales Premier Gladys Berejiklian said Friday bookings will be limited to parties of 10 people when customer numbers are increased for restaurants, cafés and pubs.Customers will have to be seated and each must be allowed four square meters (43 square feet) for social distancing.Restrictions vary across Australia’s eight states and territories, but New South Wales is set to allow the most customers in restaurants.Australia has reported 7,081 cases of COVID-19, and 100 patients have died.___Follow AP news coverage of the coronavirus pandemic at https://apnews.com/VirusOutbreak and https://apnews.com/UnderstandingtheOutbreakThe Associated Press
(Bloomberg) -- Retail landlords are sending out thousands of default notices to tenants, a situation that could tip already-ailing retailers into bankruptcy or total collapse.Department stores, restaurants, apparel merchants and specialty chains have been getting the notices as property owners who’ve gone unpaid for as long as three months lose patience, according to people with knowledge of the matter and court filings.“The default letters from landlords are flying out the door,” said Andy Graiser, co-president of A&G Real Estate Partners, whose firm works with retailers and other commercial tenants. “It’s creating a real fear in the marketplace,” Graiser said.Pressure from default notices and follow-up actions like locking up stores or terminating leases was cited in the bankruptcies of Modell’s Sporting Goods and Stage Stores Inc. Many chains stopped paying rent after the pandemic shuttered most U.S. stores, gambling that they could hold on to some cash before landlords demanded payment.The stakes are enormous, and landlords are suffering, too. An estimated $7.4 billion in rent for April hasn’t been paid, or about 45% of what’s owed, according to data analyzed by CoStar Group.“If the landlords don’t put a pause on their actions, you’re going to see more bankruptcies,” Graiser said.To be sure, not every default letter is followed by a padlock on the door. In some cases, landlords are sending letters just to preserve their legal rights while they talk with their tenants.Simon Property Group Inc. says it’s in discussions with merchants at its malls and trying to take into account their financial status, market position and the depth of their relationship. “The bottom line is, we do have a contract and we do expect to get paid,” Chief Executive Officer David Simon said during the company’s May 11 earnings call.No PaymentsBut the landlords are stuck with their own bills and bank debts to pay. By some measures, they’ve already been more than patient. Normally, they’d send out default notices as soon as 10 days after missed payments, rather than waiting weeks or months.“The landlords do have the legal contract,” said Vince Tibone, a senior analyst at Green Street Advisors. “However, from a practicality standpoint, a lot of these retailers are on the brink of bankruptcy and simply cannot pay right now.”Batches of default notices went out to Stage Stores before it filed for court protection this month, according to court papers. It didn’t pay rent in March, April or May after shuttering its stores and furloughing almost all its staff.The letters began arriving in March and early April, “but the rate of such notices picked up materially in late April and early May,” Stage Stores said. Some landlords began locking the company out “and threatened to evict the debtors and dispose of the in-store inventory.”“Responding to and managing these default notices and related litigation outside of Chapter 11 would have been a monumentally difficult task,” Stage Stores said.For those already weighing bankruptcy, shutdowns caused by the pandemic upended normal calculations. Filing for Chapter 11 allows retailers to reject unwanted leases, but they’re also required to keep paying rent during the process until the court approves the cancellations.That’s hard to do with little or no revenue coming in because of the pandemic shutdowns. Even if the stores can open, consumers may be hesitant to shop, making it hard to raise cash from stores that are meant to survive the bankruptcy or from going-out-of-business sales.Retailers need adequate liquidity at the start of a bankruptcy case to keep operating, Graiser said, and if they have to pay rent while their stores are shuttered, the odds of emerging decrease.“It’s not like there’s a lot of investors out there looking to buy retailers in a Chapter 11,” Graiser said. “Landlords and retailers need to really come together and realize that this a shared pain.”Getting TestySome landlords get it, according to Tom Mullaney, managing director of restructuring at Jones Lang LaSalle Inc., the real estate services firm. Retailers he represents are getting default letters that are understanding and sympathetic; other landlords strike a more combative tone.What’s more interesting is the action, or lack of it, by the landlords afterward, Mullaney said. “In a lot of cases, the letters that are being sent aren’t being followed up on,” he said -- the landlords are simply preserving their legal rights.That said, some property owners have run out of patience and have locked out Mullaney’s clients.“The environment is getting pretty testy and emotional on both sides of the table,” he said. “The only thing worse than being a retailer right now is being a retail landlord.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- Indonesia’s next bond sale in early June may go a long way to show whether demand from local banks cashed up by the central bank’s liquidity measures will be enough to offset the specter of rising debt supply.Local lenders have become the key buyers of the nation’s sovereign debt since the coronavirus crisis spurred foreign investors to cut their holdings amid a sell-off in emerging-market assets. With the government boosting spending to tackle the pandemic, the tug-of-war in Indonesia’s bond market will have critical long-term ramifications for the nation’s financial health.The increase in government spending will probably see the budget deficit widen to 6.27% of gross domestic product this year, Finance Minister Sri Mulyani Indrawati said on Monday, just six weeks after the administration projected it would be 5.07%. The target before the pandemic was only 1.76%.Average monthly issuance at debt sales may now climb to the top end of the finance ministry’s target range of 70 trillion rupiah ($4.8 billion) to 90 trillion rupiah, said Jennifer Kusuma, senior rates strategist at Australia & New Zealand Banking Group Ltd. in Singapore. This is to accommodate the estimated 175 trillion rupiah in extra financing the government requires if it’s to be fully raised from the rupiah bond market based on the 6.27% of GDP target, she said.Foreign funds haven’t been helping. They’ve cut their holdings to about 30% of total government debt outstanding, the lowest in eight years, from as high as 39% in January. Overseas investors are being deterred by risk aversion stemming from the virus outbreak, and also the relatively expensive rupiah hedging costs. The spread between one- and 12-month non-deliverable forwards remains close to 1,000 basis points.Liquidity BoostWhile there are plenty of negatives, the central bank’s raft of measures to boost liquidity announced on April 14 have so far helped support the bond market. Among other steps, Bank Indonesia expanded its term-repo facility and cut the reserve ratio requirement for banks.Benchmark 10-year yields have dropped to 7.54% from as high as 8.38% in the middle of March, according to data compiled by Bloomberg.Bank Indonesia’s surprise decision on Tuesday to keep interest rates on hold can also be seen as a bond positive in that it helped preserve some of the yield premium on local debt. The move took on even greater significance Friday after the Reserve Bank of India unexpectedly cut its own benchmark by 40 basis points at an unscheduled meeting.Indonesia’s most recent sale of conventional bonds on May 12 garnered total bids from investors of 72.7 trillion rupiah, the highest level in three months and more than three times the 20 trillion rupiah of debt initially for sale. Analysts have suggested a lot of the demand was from local banks responding to the additional liquidity measures.While the trend at recent auctions has been positive, the prospect of steadily mounting supply may eventually bring about a reaction. That is why investors will be closely watching the results of the next sale on June 2.Before then though, onshore bond markets will be closed for Hari Raya celebrations and will only reopen on Tuesday.What To WatchThailand will release current-account data on Friday after the March number shrunk to the lowest in 10 months. The nation’s trade outlook may not improve anytime soon following the government’s announcement Friday that it will extend the nationwide state of emergency for another monthThailand will issue 16 billion baht ($503 million) of 10-year bonds (LB29DA) and 12 billion baht of 20-year debt (LB386A) on Wednesday. The previous sale of five-year notes (LB24DB) on May 13 drew a bid-to-cover ratio of 3.3The Philippines is targeting a 30 billion peso ($593 million) five-year bond sale on Wednesday(Updates to add Thailand’s extension of the lockdown under What to Watch subhead)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Some 41.4% of Redfin offers faced competition in the four weeks ending May 10, according to a recent Redfin report.
(Bloomberg) -- Egypt raised $5 billion in its largest-ever issuance in international bond markets, marking the extent of investors’ risk appetite in a recovery from the coronavirus crisis.The issuance was more than four times subscribed, with total bids of $22 billion, “reflecting the confidence of the international markets in the Egyptian economy,” the Finance Ministry said Friday in a statement. Asian, African, American, European and Middle East investors were among those showing demand, helping the country cut final yields on each of the notes by 50 basis points, the ministry said.The sale included $2 billion of notes due 2050 at a yield of 8.875% as well as $1.25 billion in four-year notes at a yield of 5.75%, and $1.75 billion in bonds due 2032 at 7.625%.The Arab world’s most populous nation topped a $2 billion sale in November that included its longest-dated of 40-year notes after securing a fresh batch of cash from the International Monetary Fund.The latest bonds will cover funding needs for 2020-2021 fiscal year as well as the financing needed to combat the Coronavirus, the ministry said. Some of the country’s main foreign-currency sources, including tourism, remittances and Suez Canal receipts, have plummeted due to the virus outbreak.Budget BuffersThe North African country wants to use the momentum from securing $2.8 billion in emergency cash from the IMF. The government in Cairo is also seeking more than $5 billion from the Washington-based lender under a separate stand-by arrangement and $4 billion from other sources, an official told Bloomberg last week.Read More: IMF Emergency Funds Give Egypt Space to Reduce Local Borrowing“Authorities are moving preemptively to raise additional buffers amid an uncertain global environment,” said Mohamed Abu Basha, the head of macroeconomic research at Cairo-based investment bank EFG Hermes.BNP Paribas SA, Citigroup Inc., JPMorgan Chase & Co., HSBC Holdings Plc and Standard Chartered Plc arranged Egypt’s latest sale.(Adds issuance subscription and comments from the finance ministry in second and forth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Geopolitical rivalries, as well as practical considerations, are emerging as real hurdles in the race for a COVID treatment.
TORONTO — Nobody can predict exactly how COVID-19 will reshape our lives in the years to come, but experienced observers of the retail sector say shopping will never be quite the same again.With physical distancing rules in effect and an explosion in the number of digital orders, shopping habits across all demographics have changed dramatically in a matter of weeks, and opened the doors to widespread adoption of new technologies, suggest two industry watchers from KPMG, a global advisory firm."Consumers will need to start getting comfortable with a new way of buying," suggested Katie Bolla, a partner of KPMG's consumer and digital operations in Canada."A lot of the trends we are witnessing now were beginning to happen prior to the pandemic — it's just that the pandemic has accelerated them."Looking toward the future, Bolla and her colleague Kostya Polyakov, KPMG's national leader of consumer and retail, discussed some of their retail predictions with The Canadian Press. CP: We've heard a lot about the uncertainty that's gripping Canadian retailers as they consider reopening their stores, but can we look elsewhere for insight into how getting back to "normal" might play out, and what it could mean for their survival?Polyakov: In this whole COVID world, we have a bit of a time machine in China, right? China is like two months ahead of us and so we are able to see things that may be an indication of what happens for us. I speak with my retail counterparts there quite often and they've seen, in the initial stages of reopening, retail revenue gets to about 30 per cent of what it would've been pre-COVID, on average, as people are hesitant to go (back to stores). It then goes up to about 60 per cent in the first two months. Current forecasts show they're going to get to about 80 or 90 per cent of what their revenue would have been in the past, so no one is back to historical sales levels. CP: We've seen a number of major retailers anticipate that slowdown, in part, by deciding to shutter underperforming locations in recent weeks. Victoria's Secret and Henry's recently announced closures, while Aldo and Reitmans filed for creditor protection, which suggests they'll close locations too. Is this a sign of a broader move to eliminate their physical retail presence in some communities?Bolla: In general, many retailers are taking a more analytical approach to their retail footprint. They're starting to weave together operational data, as well as postal code and customer data, to better understand the needs of a community. Is it through e-commerce? A physical store location? So they're marrying all of those dimensions to get a better perspective on where to put the (storefront) boxes and appropriately fill the boxes with the right merchandise mix.Polyakov: This whole pandemic, in my opinion, brought an entirely new generation of shoppers online. Baby Boomers have not been huge online shoppers, not like some of the younger folks, but this has brought them into the online world. CP: I suppose there aren't that many steps between teaching an older demographic how to FaceTime on their smartphone, and those same people being comfortable with buying products online that ship to their homes. Do you expect those digital habits to play a bigger role in the physical store culture too?Polyakov: You're going to see a huge acceleration in how much technology is used as an alternative to playing with the product. One really good example is Mountain Equipment Co-op where they use augmented reality to project a (camping) tent onto the floor. You're not touching it, but you're getting a good feel for how big it is, and if it's going to suit your needs. CP: Fashion retailers are running against the digital footprint too, but many shoppers are still reluctant to buy online not knowing if the clothes will fit. But at the same time, there's questions about how customers will try on clothes without risk of spreading the virus. Could augmented reality address that concern?Bolla: Some retailers are already experimenting with the ability to try on clothes through a mirror that gives the appearance of what the clothes might look like on your body. It's been more of a pilot for a couple of years, but they might develop that technology more.Polyakov: And we're going to see stores being converted to showrooms, which was an emerging trend before but it's certainly accelerated now. There's no real inventory, and they don't need as much space, but they display product that you're ultimately just going to go and buy online anyway. That is a different business model that has a lower cost, and is a little bit easier to execute. CP: If we're talking about potential contact points, obviously the face-to-face conversations have traditionally played out at the check-out counter. We've seen grocers install Plexiglas at the registers as way to create a distance with staff, but is that a solution for other retailers too?Polyakov: Think about (department stores) or any book store, you're pretty close to the cashier. More than likely, we're going to see a lot more self checkouts. From a brand perspective, the digital screen looks cooler to a customer than a person behind Plexiglas. It has a pleasantness to it. Follow @dfriend on Twitter.David Friend, The Canadian Press
(Bloomberg) -- Mukesh Ambani, Asia’s richest man, has lured more than $10 billion of investment for his India-based digital platform business in a month, even as the economy struggles under the world’s most stringent lockdown to prevent the spread of the coronavirus.New York-based KKR & Co. on Friday became the latest private equity firm to invest in Jio Platforms Ltd., the telecom and digital services holding company controlled by Ambani’s Reliance Industries Ltd., the Mumbai-based company said in a statement. The private equity fund will pay 113.7 billion rupees ($1.5 billion) for a 2.3% stake in Jio.Ambani has been selling stakes in Jio in support of a vow to bring net debt of more than $20 billion to zero at his oil, retail and telecommunications group before March 2021. The deals with U.S.-based giants from Facebook Inc. to Silver Lake and General Atlantic bolster Ambani’s plan to shift away from oil and petrochemicals toward faster-growing consumer businesses.“Reliance Industries is positioning itself as a global technology company with international technology and private equity players lining up for a Jio Platforms stake,” said Sudeep Anand, head of institutional research at IDBI Capital Market Services Ltd. The sales are also “another step toward achieving a zero net-debt company by calender year 2020,” he said.While global giants including Amazon.com Inc. and Walmart Inc. have also made big bets on growth in India’s consumer markets, the companies have faced challenges in scaling their models online in India, where restrictions protect small retailers. Ambani has vowed to build an e-commerce business that works around the barriers by recruiting so-called kirana shops as partners.KKR said Friday its investment in Jio is it’s largest in Asia and that Ambani’s goals played a big role in a quick decision.“The business model is scalable to meet the demand of aspiring Indians,” Sanjay Nayar, head of KKR’s Indian business, said in an interview, adding that the PE firm completed the deal in 10 days. “We invested in Mukesh Ambani’s entrepreneurial vision backed by a world class management.”The fund has also put money into technology-driven companies like enterprise solutions provider BMC Software Inc., ByteDance Ltd., owner of the TikTok social video platform, and Indonesia-based ride-hailing and food-delivery giant GoJek.Ambani’s success in drawing big, seasoned tech investors to Jio comes despite a sharp drop in economic growth caused by the pandemic and uncertainty about how much damage will be done before the deadly pathogen is under control. The willingness of investors to bear those risks underscores Ambani’s appeal as a determined, capable empire builder and the prospects for using Jio’s roughly 400 million wireless phone users as a springboard into digital services.Jio Platforms combines the conglomerate’s digital assets with its wireless carrier, Reliance Jio Infocomm Ltd., into a holding company aimed at becoming a top e-commerce and payments operator in India’s vast consumer market.Started in 2016, Reliance Jio is now India’s largest wireless carrier. The operator stormed past rivals by building a nationwide 4G network, then offering free calling and data services at prices established competitors with older networks could not match without losing money.(Updates with comment from KKR from sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- Sovereign bonds in India rallied after the central bank cut its benchmark policy rate in an emergency session as the economy reeled from the coronavirus outbreak.The yield on the most-traded 2029 bonds dropped seven basis points to 5.96% at the close after falling more than 15 points intraday, while that on the new 10-year notes slid three basis points. The rupee weakened and stocks reversed gains to halt a three-day rally ahead of a long weekend.The Reserve Bank of India slashed the benchmark repurchase rate by 40 basis points, offering more support for an economy headed for its first full-year contraction in more than four decades. Bond traders have been calling for more support with concern mounting over a surge in government borrowings.Average yields on top-rated rupee-denominated corporate bonds maturing in 10 years fell 15-20 basis points on Friday, according to traders. The decline would be the most since May 8, according to data compiled by Bloomberg.“The RBI cuts may not overwhelm the market and the rally may not last beyond a few days as the market was expecting a 50 basis point cut,” said Naveen Singh, head of fixed-income trading at ICICI Securities Primary Dealership. The market needs to see a bond purchase calender given the huge supply of debt, he said.The rupee fell 0.5% to 75.9650 per dollar and the S&P BSE Sensex index slid 0.9%, set for the second straight week of declines. A gauge of lenders declined 2.6% to the lowest level in more than a month.READ: India Cuts Rate to Lowest Since 2000 To Revive Shrinking GDPThe central bank painted a bearish view of the economy, saying it expects Asia’s third-biggest economy to contract in the fiscal year through March 2021 as the impact of the coronavirus and measures taken to contain the pandemic wiped out consumption -- the backbone of the economy.“The RBI’s worries around economic growth are dragging the equities down,” said Sameer Kalra, an investment strategist at Mumbai-based Target Investing. “Rate cuts don’t matter as much as nobody wants to take or give loans as confidence is lacking.”Here are other views of stocks and fixed-income analysts:DBS Bank: (Radhika Rao, economist at DBS Bank in Singapore)“Relief for the bond markets front was absent and until a formal announcement is made, we expect intermittent securities’ purchase as part of liquidity operations to continue”Key priorities will be to lower credit risks, channelize funds to credit-starved sectors and prioritize financial sector health, which will also involve the government’s participationSundaram Asset Management: (Dwijendra Srivastava, CIO for debt)“Today’s rate cut will just act as a sentiment booster. It isn’t going to help the smaller borrowers in a big way as lenders continue to be risk averse. Authorities need to ensure that banks start taking credit calls and lend to lower rated corporate issuers.“Investors are inclined to buy only highly-rated company debt as there are worries about delinquencies rising due to the sharp slowdown of the economy.”HDFC Securities: (Deepak Jasani, head of retail research)“The governor’s comments about the economic situation deteriorating more than expected is weighing on sentiment. Investors are also concerned about how we are running out of stimulus after both the government and the central bank have done their part“With most of the country still under lockdown these steps may not have a direct benefit”Serenity Macro Partners: (Manish Wadhawan, founder and former head of rates trading at HSBC India)The carry trade on Indian bonds has turned lucrative after RBI’s rate cut, with repo rate at 4% and 2029 bond yielding nearly 6%With limited fiscal space, RBI will have to do the heavy-liftingFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
(Bloomberg) -- Beijing finally pulled the trigger on national security legislation for Hong Kong, sowing panic in the city’s $5 trillion stock market.The Hang Seng Index plunged 5.6% by the close on Friday, its biggest loss since July 2015 when a bubble was bursting in Chinese equities. Real estate companies suffered the brunt of the selling, with an industry gauge sinking the most since the global financial crisis, amid concern the city’s uncertain future will spur investors and residents to shift assets overseas.At stake is whether the city can continue to operate effectively as a global financial center once Hong Kong passes laws curbing acts considered against China’s interests, such as sedition and subversion. The legislation was introduced in Beijing on Friday during the annual National People’s Congress, triggering calls in Hong Kong for renewed protests to safeguard local freedoms.The surprise move by the Communist Party also risks exacerbating tensions with the U.S., and destabilizing global markets still reeling from economic fallout of the coronavirus pandemic. U.S. President Donald Trump, when asked about China’s moves, pledged to respond “very strongly.”The stock selloff was widespread in Hong Kong, with more than two-thirds of the Hang Seng index’s 50 members setting new four-week lows on Friday. The MSCI Hong Kong Index was headed for its worst slide since 2008. The gauge, which includes two U.S.-listed shares, was trading at its lowest level since 2008 relative to MSCI Inc.’s global index.Mainland-based investors have been on a 33-week buying spree in Hong Kong, even as the city’s stocks lagged those onshore. They purchased another net $569 million of the shares on Friday -- the most in two months -- undeterred by a 40% surge in the Hang Seng’s version of the VIX Index. Single-day volatility spikes of that magnitude had only happened five times prior in Hong Kong’s stock market.The Hong Kong dollar weakened for a second day after hovering near the strongest it can trade versus the greenback for two months. Signs of nervousness showed in the options market, with volume on Hong Kong dollar derivatives at one point surpassing those on the yen. The currency’s 12-month forward points were set for the highest close since 1999, reflecting increasing demand to hedge against depreciation.The nervousness bled into global markets, with U.S. stock-index futures dropping 0.5% as of 5:36 a.m. New York time and the MSCI Asia Pacific Index slumping 2%. Investors sought safety in the greenback and yen.Hong Kong had failed to pass national security legislation since the U.K. handed the city back to China in 1997. The last time the local government attempted to introduce such laws in 2003 it triggered such widespread protests the bill was shelved.After demonstrations last year over plans to make it easier to extradite residents to mainland China morphed into the worst unrest in decades, Party officials clearly decided the time for patience was over.While the timing may make sense in Beijing, it could hardly come at a worse time for Hong Kong businesses. The economy is in tatters after last year’s protests and the coronavirus squeezed spending and curbed the flow of tourists and business travelers into the city.What seems certain is Hong Kong will continue its transformation into a financial center for Chinese companies to raise funds and do business globally. Intensifying scrutiny from U.S. exchanges is likely to spur a flood of share sales in Hong Kong by mainland companies unworried about national security laws or unrest -- Alibaba Group Holding Ltd. sold shares in the city last November during the height of anti-government protests.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.