Business Maverick

Business Maverick

February 21 : Five Things You Need to Know to Start Your Day

Medical staff in protective suits attend to patients at Wuhan Fang Cang makeshift hospital in Wuhan, Hubei Province, China, 17 February 2020 (issued 18 February 2020). The disease caused by the novel coronavirus (SARS-CoV-2) has been officially named COVID-19 by the World Health Organization (WHO). The outbreak, which originated in the Chinese city of Wuhan, has so far killed more than 1,800 people with over 73,000 infected worldwide, mostly in China. EPA-EFE/STRINGER CHINA OUT

The spread of the coronavirus is expected to lead to the first drop in airline traffic since 2009. China’s stock traders are looking at some unusual indicators. And MUFG’s incoming boss is said to be eyeing a stake in Singapore tech giant Grab. Here are some of the things people in markets are talking about today. 

QuicktakeGrounded

The airline industry expects to see the first annual decline in global passenger demand in 11 years, after tallying up the initial impact of the thousands of flights canceled because of the coronavirus outbreak in China. The estimate shaves about 4.7 percentage points off of a passenger-traffic forecast issued just two months ago, with almost all of the impact in the Asia-Pacific region, according to the International Air Transport Association. Meanwhile the head of the World Health Organization has called for nations around the globe to boost funding to contain the virus while the outbreak is still mostly confined to China. Hospitals there are full-to-bursting with patients being treated for the virus, leaving gravely ill patients, including cancer sufferers and those in need of dialysis, with nowhere to go. The negative impact of the virus may soon pose a threat to the stock market rally, according to Goldman Sachs, whose chief equity strategist Peter Oppenheimer wrote in a note: “Equity markets are looking increasingly exposed to near-term downward surprises to earnings growth. While a sustained bear market does not look likely, a near-term correction is looking much more probable.”

Mixed Markets

Asian stocks were set for a mixed start to trading Friday amid renewed concern about the impact of the coronavirus. The dollar rose with Treasuries, and gold climbed to a seven-year high as investors sought havens. Futures were little changed in Japan and Australia, and dropped in Hong Kong. U.S. stocks slipped and the Dollar Index climbed to the highest in almost three years as the rise in virus cases outside of China hit sentiment. The yen extended its fall past 112 per dollar and the yuan weakened. Elsewhere, oil jumped to the highest in almost four weeks as U.S. crude exports surged and the expansion of domestic inventories slowed dramatically.

Strange Signs

China’s stock traders are navigating the vagaries of the country’s coronavirus data for clues on when euphoria fanned by Beijing’s emergency support measures may peak. Assessing the development of the outbreak has become critical, traders say, as a significant turn for the better could reduce the urgency of further policy easing and calls for a cut to bullish positions. But feeling the epidemic’s pulse has been tricky, with the government repeatedly revising data methods. For example, the number of new infections published Thursday for Hubei province, the center of the health crisis, dropped sharply after China changed the way it reports them for the second time this month. It’s prompted investors to get creative, putting indicators ranging from school-reopening dates to work-resumption schedules in different cities on top of their watch list, while eyeing with caution a rally that has seen some $1 trillion of market value recovered following the slump of February 3. Here are some other indicators that may influence fund managers’ investment strategies.

$700 Million Grab

He’s not even the boss yet, but Mitsubishi UFJ Financial Group Inc.’s Hironori Kamezawa is already making his mark on Japan’s biggest bank. As the leader of MUFG’s digital push, Kamezawa is spearheading the lender’s $700 million investment in Singapore tech giant Grab, people with knowledge of the matter said. The deal, which equates to about 5% of Grab’s current estimated $14 billion value, may help MUFG tap the ride-hailing startup’s millions of app users and deepen its presence in Southeast Asia. Kamezawa, 58, was named chief executive officer last month, and he will take the post in April to steer the bank through challenges ranging from negative interest rates to the need to modernize services. Analysts have expected MUFG to accelerate its financial-technology efforts under the new leader, who has already been helming projects including the development of the bank’s digital coin. The University of Tokyo mathematics graduate is a rare breed in an industry where most elites have either law or economics backgrounds. He has been digital transformation officer since 2017, overseeing efforts ranging from introducing more automation at branches to driving blockchain payment initiatives.

Testing Times

Japanese Prime Minister Shinzo Abe has so far managed to keep the coronavirus outbreak from damaging his hard-won relationship with China. That’s getting even more difficult with each new case confirmed in Japan, especially given that an earlier alert from China could have slowed the spread of the disease. Abe has taken a softer approach to China over the virus than the Trump administration, winning praise in Beijing. Unlike others including the U.S., Australia and Singapore, Abe’s government has avoided a blanket ban on visitors from its neighbor, instead restricting entry from just two provinces. While acting quickly to evacuate its citizens from the virus epicenter of Hubei, Japan also used the planes to fly in aid packages for China. That’s contrasted with Japan’s counterparts in the U.S., who have questioned China’s commitment to transparency during the crisis — leading to bickering between the two sides. As the number of cases increases in Japan, can the relationship survive intact?

What We’ve Been Reading

This is what’s caught our eye over the past 24 hours.

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