Closed Coronavirus: Federal Reserve warns outbreak ‘a new risk’ to US outlook — as it happened

FILE PHOTO: Foxconn employees wearing masks attend the company's year-end gala in Taipei

Live coverage of the coronavirus outbreak.

Melco shelves Crown share purchase over coronavirus

Jamie Smyth reports from Sydney

Melco Resorts and Entertainment, the Hong-Kong-listed casino company, has abandoned plans to raise its stake in Australian rival Crown Resorts to 19.99 per cent over the significant hit to its business from the coronavirus.

Melco, which is controlled by Lawrence Ho, said it would reassess all its non-core investments in light of the severe drop in tourism in Asia to integrated resorts facilities following the outbreak of the virus, which has temporarily closed all casinos in Macau.

“As a result of this decision, Melco will not pursue its planned investment in Australia for the second tranche of shares in Crown Resorts Limited (“Crown”) … at this time, its capital needs to be deployed on its core assets,” said Melco in a statement.

In May, Melco announced it would spend A$1.76bn ($1.2bn) on a 19.99 per cent stake in Crown, which is controlled by Australian billionaire James Packer, a former business associate of Mr Ho. The Hong-Kong listed casino operator has already acquired an initial 10 per cent stake in Crown but the remaining shares have not changed hands as Australian authorities have initiated a probity investigation into Crown and the intended share sale to Melco.

Shares in Macau casino operators have fallen sharply since the territory ordered the temporary closure of all resorts due to the coronavirus.

Death toll hits 636 in China

The number of deaths in China from novel coronavirus rose to 636 as of the end of Thursday, Chinese health authorities announced.

China has confirmed 31,161 cases of the virus.

Chinese whistleblower doctor dies after coronavirus infection

Li Wenliang, the Chinese doctor who became a hero to millions for raising the alarm over the coronavirus epidemic, died after he became infected with the virus.

Li shot to fame when he warned fellow medics in an online chat group in December that seven new pneumonia cases had been identified. His comments were shared on Weibo with the hashtag “Wuhan SARS” before the posts were scrubbed by censors. He was then accused of “rumour mongering” by Chinese authorities as they scrambled to downplay the outbreak.

Read our full coverage of Li Wenliang

Hong Kong doctors warn of shortages of protective equipment

Primrose Riordan reports from Hong Kong

Hong Kong doctors who say they are dealing with 80 to 90 suspected cases of coronavirus each day are warning that they could run out of equipment to protect them from the novel coronavirus in as soon as a week’s time, and have accused the local government of missteps in handling the outbreak.

There have been at least 24 confirmed cases and one death in the city linked to the virus. Local authorities have declined calls from medical staff to shut all border crossings with mainland China. Hospital workers began strike action on Monday.

Dr Arisina Ma, the president of the Hong Kong Doctors Association, said due to equipment shortages, the hospital authority had advised that only doctors in “high risk” areas which were dealing with suspected novel coronavirus cases should wear the full suite of medical protective equipment, such as masks, hair nets, and other facial and body coverings.

“Even in the high risk area we worry that supply might run low soon, if we don’t have new supply maybe some of the N95 mask or personal protective equipment may run out in a month’s time or even in a week’s time,” Dr Ma said.

She said private hospitals have stopped taking any suspected cases of the virus, and were redirecting people to public hospitals, which are already under pressure.

Hong Kong authorities announced this week they would shut some border crossings with mainland China and that people coming across the border would be quarantined for 14 days from Saturday.

Dr Ma said the Hong Kong government missed a chance to limit the spread of the virus by implementing border controls and now it was not clear how the quarantine would work.

“I have no idea where the government can find quarantine facilities,” Dr Ma said.


Cases of virus treble on quarantined cruise ship in Japan

Robin Harding reports from Tokyo

Japan has found another 41 cases of coronavirus on board the Diamond Princess, a cruise ship in quarantine off Yokohama, bringing the total on the vessel to 61. The cases were found after tests on 273 passengers who either showed symptoms or had close contact with those who did, according to the health ministry.

In total, there are around 3,700 passengers on board the ship. Diagnosed cases of coronavirus are being evacuated to hospitals in the Greater Tokyo area while all the remaining passengers have been asked to quarantine themselves in their cabins for two weeks.

Following criticism for an overly relaxed approach to the new pathogen, prime minister Shinzo Abe vowed to step up Japan’s response, saying yesterday that foreign passengers on board the Westerdam, another cruise ship that was due to visit the country, will not be permitted to disembark.

Hong Kong and Macau citizens required to self-quarantine in Taiwan

Kathrin Hille reports from Taipei

Hong Kong and Macau citizens visiting Taiwan are required to self-quarantine at home for 14 days after entry, as of today.

The move comes alongside heightened worries over those who have passed through Hong Kong and Macau, as well as mainland China.

Foreign nationals who don’t have Taiwan resident status and visited or were residents of mainland China, Hong Kong or Macau in the past 14 days are also not allowed to enter, as of today.

Chinese nationals are currently not allowed to enter Taiwan, in line with measures that took effect late last month.

S&P says coronavirus will hit Chinese GDP in 2020

S&P on Friday said it expects China GDP growth to slow to 5 per cent in 2020, on the back of the economic impact of the coronavirus.

The rating agency added that it expects “lost ground” to be made up the following year.

It added that it anticipates a “material effect on global growth”:

The global impact will be felt through four real economy channels: sharply reduced tourism revenues, lower exports of consumer and capital goods, lower commodity prices, and industrial supply-chain disruptions. These spillovers could become larger if markets start to price in the risk of a material global slowdown and financial conditions tighten as risk premia rise across asset classes.

In 2019, the Chinese economy grew 6.1 per cent, the lowest rate since 1990.

Toyota extends shutdown of its plants in China

Kana Inagaki reports from Tokyo

Toyota has extended the shutdown of its plants in China until Feb 16 as the coronavirus outbreak wreaks havoc on global supply chains.

The world’s second-largest carmaker, which has 12 plants in China for cars and vehicle components, said its decision took into account guidelines from local authorities and issues to do with its parts supply and logistics. It had originally hoped to restart operations from Monday.

“We are treating the week starting from Feb 10 as a period for our team to prepare for the return to normal operations from next week and beyond,” the company said in a statement on Friday.

The decision by Toyota came a day after the carmaker said it expected a dent to car sales in China as the spreading epidemic depresses consumer spending.

Rival Fiat Chrysler has also warned that one of its European plants will be forced to halt production in a matter of weeks, as its struggles to source key parts from Chinese suppliers.

What’s happening on Friday

An update on the latest developments

- Li Wenliang, the doctor who warned of the virus’s outbreak, has died in Wuhan. News of his death first began circulating on Thursday and was confirmed overnight, prompting an outpouring of grief and anger in China. Total deaths from the coronavirus reached 636 on Friday.

- Cases of coronavirus have trebled on a cruise ship that is quarantined off the coast of Japan. The Diamond Princess, which is carrying around 3,700 passengers, now has a total of 61 cases.

- Hong Kong doctors, who say they are dealing with 80 to 90 suspected cases a day, have warned over a shortage of medical equipment. Concerns over Hong Kong and Macau have also risen elsewhere – Taiwan is requiring visitors from the two cities to self-quarantine for 14 days.

Hong Kong banks plan relief measures for borrowers

Hudson Lockett reports from Hong Kong

Hong Kong banks are planning to roll out temporary relief measures for customers put in difficult straits by the coronavirus, according to the territory’s de facto central bank.

The Hong Kong Monetary Authority said in a letter yesterday that the outbreak was “adversely affecting the Hong Kong economy” and that some banks were considering measures, including principal moratorium for residential and commercial mortgages, fee reduction for credit card borrowing and restructuring of repayment schedules for corporate loans.

The HKMA said it encouraged other banks to follow suit and added that lenders “should adopt a sympathetic stance in dealing with customers facing financial stress due to the novel coronavirus”.

Foxconn adds production line for medical face masks

Kathrin Hille reports from Taipei

Apple supplier Foxconn, the world’s largest electronics manufacturer, is building a production line for face masks and expects to have a daily capacity of 2m by the end of the month.

“There is no change in the company’s main business,” Foxconn Industrial, one of the Taiwanese company’s biggest affiliates in China which is normally focused on factory automation, said in a statement to the Shanghai Stock Exchange on Friday. “The addition of a production line for medical face masks is for the purpose to quickly meet the needs of fighting the epidemic based on the local government’s demands against the background of prevention of novel coronavirus pneumonia.”

The company said the mask line at a plant in Shenzhen had started trial production, a revelation which indicates that the Chinese government’s ban on all but essential manufacturers returning to work before next Monday, is being implemented flexibly.
Foxconn Industrial said the masks produced at the new line were intended mainly to protect its own workers against infection, but the company might provide some externally as well later.

Hon Hai, the group’s Taiwan-listed flagship, has refused to provide details to the media on how its factories in China, where it employs roughly 1m people, are affected by the outbreak. It did not communicate the mask production measure to shareholders in Taiwan.


Chinese official says Hong Kong evacuations would be an “over-reaction”

Sue-Lin Wong reports from Hong Kong

A top Chinese official in Hong Kong said any evacuations of foreign citizens and diplomats from the Asian financial centre due to the coronavirus outbreak would be an “over-reaction.”

Xie Feng, China’s foreign ministry commissioner in Hong Kong, made the comments after US airlines United and American said on Wednesday they were suspending flights to Hong Kong, in a blow to territory.

The United States and Australia are among several countries that have barred entry to foreign nationals flying from mainland China. There are growing concerns for people flying from Hong Kong to other countries that similar restrictions will be implemented.

The commissioner, addressing the territory’s diplomatic corps on Friday, said: “It is our hope that you will assess the outbreak in a science-based and calm manner and avoid overreaction such as evacuation of citizens and diplomats,” noting that the World Health Organization does not recommend the evacuation of citizens from Hong Kong at present.

As the coronavirus spreads to dozens of countries, Mr Xie called the “shocking hatred and violence” directed against some people of Chinese citizenship and descent around the world “lethal.” “The novel coronavirus will be defeated but the virus of discrimination, hatred and racism will have far more devastating impacts if left unchecked.”

Australia’s largest travel agency warns of virus impact on earnings

Jamie Smyth reports from Sydney

Flight Centre, Australia’s largest travel agency, warned on Friday the spread of the coronavirus would make it difficult for the group to achieve its earnings guidance for the 2020 financial year.

Graham Turner, Flight Centre managing director, said on Friday it was too early to predict the virus’s overall impact but revealed it had already adversely affected its corporate travel operations in China, Singapore and Malaysia, which together generated A$625m in transaction value in 2019.

“It is impossible to predict the virus’s impact on our business or on leisure and corporate travel in general at this early stage, but it will impact travel patterns to some degree in the near-term,” he said.

Flight Centre said it had encouraged staff in its China corporate travel business to take leave over the next few weeks, while the outlook remains uncertain. Other businesses could be affected in the upcoming months, such as corporate travel, leisure travel and hotels and resorts, the group said.

Flight Centre said it would be difficult for it to deliver full-year earnings guidance of A$310m to A$350m. The group said its first-half profit before before tax was likely to be slightly above the midpoint of its A$90-110m guidance.

Cruise ships become prison hulks

Earlier on Friday, it emerged that infections on board a cruise ship quarantined off the coast of Japan had trebled to 61.

The Diamond Princess is already one of the most potent images of this week’s escalation in the corona virus.

Across the region, the plans of other cruise ships have also been thrown into turmoil, raising questions over whether some passengers will be able to disembark.

The Westerdam will not be allowed to dock in Tokyo, while Taiwan has said it will not allow foreign passengers on the Super Star Aquarius, due back today, to land.

Read more detailed coverage from FT’s reporters in the region here.

Thai official says tourists refusing to wear masks should be “kicked out”

John Reed reports from Bangkok

A senior Thai government official said on Friday that “farang” (European or white) visitors to the country who refused to wear face masks should be “kicked out”.

Anutin Charnvirakul, Thailand’s health minister and deputy prime minister, made the remarks at an event in which he handed out surgical masks to ward off transmission of the coronavirus.

He said that while Chinese and other Asian tourists were accepting the masks, some Europeans were not wearing them.

“Those ‘farang’ tourists – that’s something the embassies should be notified of and the public as well,” Mr Anutin said. “They don’t care about the big picture and these tourists are in the country, we’re giving the masks to them and they still refuse.”
He added: “They need to be kicked out of Thailand.”

Thailand’s tourist industry, which accounts for more than 10 per cent of GDP in south-east Asia’s second-largest economy, is reeling from a collapse in visitor arrivals from the mainland. China accounted for more than 10m of the 38m foreign tourists who visited the country last year.

On February 1-5, the latest dates for which data are available, international arrivals at Bangkok’s main Suvarnabhumi airport were down nearly 40 per cent on the same period a year ago, according to the Tourism Authority of Thailand. Arrivals were down 52 per cent at the Thai capital’s Don Mueang airport, a hub for budget flights to China.

Prayuth Chan-ocha’s Thai government has come under criticism on social media for its handling of the crisis.

Burberry warns coronavirus impact on its business will worsen

The fashion house has told the stock exchange that visits to its Chinese stores have greatly reduced because of travel restrictions, while its international shops, which are popular destinations for wealthy Chinese tourists, will likely also be affected.

Burberry said:

Our most recent guidance for the year ended March 2020 predates the impact of the coronavirus outbreak and we wanted to update the market.

Currently 24 of our 64 stores in Mainland China are closed with remaining stores operating with reduced hours and seeing significant footfall declines. This is impacting retail sales in both Mainland China and Hong Kong S.A.R.

The spending patterns of Chinese customers in Europe and other tourist destinations have been less impacted to date but given widening travel restrictions, we anticipate these to worsen over the coming weeks.

Chief executive Marco Gobbetti commented:

The outbreak of the coronavirus in mainland China is having a material negative effect on luxury demand. While we cannot currently predict how long this situation will last, we remain confident in our strategy. In the meantime, we are taking mitigating actions and every precaution to help ensure the safety and wellbeing of our employees.

Burberry has been focusing its expansion strategy on mainland China to take advantage of a shift by the nation’s luxury goods shoppers towards buying at home instead of when they visit Europe and the US.

In the three months to November, Burberry told analysts on an earnings call, sales growth in mainland China was running in the “high teens”.

The group’s business in Hong Kong has already been suffering because of widespread pro-democracy protests in the semi-autonomous Chinese territory.

Burberry reported a 38 per cent decline in Hong Kong sales for the quarter to last November. But on that earnings call Mr Gobbetti also said: “”we expect China to remain the greatest contributor to luxury growth over the next five years.”


Wuhan government mourns death of doctor, state media says

Chinese state media has reported that Wuhan’s local government has expressed “deep condolences and sadness” over the death of Li Wenliang, the doctor who warned over the spread of the coronavirus.

In a statement reported on Xinhua, Wuhan’s municipal government said: “We express our deep condolences and sadness, pay our tribute to him for fighting on the front line against the epidemic, and show our sincere sympathy to his family.”

The death of the doctor, who was censored by the government over his earlier warnings, has sparked an outpouring of grief and anger in China.

The news, which emerged overnight, dominated social media site Weibo on Friday, where users heavily criticised the government over its handling of the crisis.

Also on Friday, China’s central government said it was sending a team to Wuhan to investigate “problems reported by the masses” involving Li Wenliang.

Read more on the impact of Li Wenliang’s death here.

Semiconductor group labels virus situation ‘a negative lottery’

By Kathrin Hille in Taipei

The world’s largest semiconductor testing and packaging company has warned it is unable to predict how the novel coronavirus epidemic will impact its business.

Taiwan-based ASE Technology Holding said whether and when it could resume production in China following the Lunar New Year holiday was entirely in the hands of government officials.

Chinese authorities are scrambling to contain the spread of the disease with a raft of restrictions on economic activity and the movement of people.

“These measures will determine the availability of labour, the health of the supply chain and the health of overall demand,” said Ken Hsiang, the company’s head of investor relations. He called the outbreak a “negative lottery” which had sparked an overabundance of caution on the personal, corporate and national government levels.

“The impact on our business is unpredictable,” Mr Hsiang said on a call with investors. ASE said it had considered not giving any guidance, and added that although it had decided against that option, investors should regard its outlook with a wider variance than usual.

ASE forecast revenues in its core chip assembly, testing and materials business in the three months to March 31 to be roughly similar to the level seen in the second and third quarters of last year – between NT$59bn and NT$67bn, and revenues in its electronics contract manufacturing business to be flat compared with the same period a year ago – about NT$35bn.

The company said its forecast took into account expectations of higher labour costs due to the disruption caused by the outbreak. ASE said that in an optimistic scenario, its China-based production could return to 85 per cent of normal levels by the end of this month.

Biotech company sees ‘unprecedented’ interest in its virus tests

Diagnostics company Novacyt said it is in talks with NHS hospitals and Public Health England over a test for coronavirus which it says will give a result in less than two hours.

Researchers are racing to develop effective, portable tests for the current strain of coronavirus, and shares in the Anglo-French medical company have more than doubled in value since it announced it had developed one last week.

On Friday, Novacyt said it has seen “unprecedented” interest in its new tests, and has received 33,000 orders from around the world. It has already sold some to British hospitals for trials, and has applied to US authorities for emergency regulatory approval.

Graham Mullis, chief executive, said:

We have received unprecedented interest in our test and anticipate demand continuing to grow.

Emoticon Burberry shares fall following virus warning

Shares in Burberry have fallen 3 per cent at the open after the luxury fashion group warned over the coronavirus’s impact on Chinese sales.

“It is more serious in Hong Kong than the protests,” said chief financial officer Julie Brown, referring to the street protests that caused sales there to halve from 8 per cent of the group total in the three months to end-December. “This has had even more significant impact on our Hong Kong business.” 

Shares in Burberry have now fallen 17 per cent since mid-January.

Shares in France’s L’Oréal rose 2 per cent even as it warned the outbreak of the coronavirus would cause a temporary slowdown in the beauty market in China, a key driver of its growth, and also affect travel retail, although it was “too early to assess” the extent of the risk. 

Global shares steady after week of records outside China

European stocks were flat in early trading on Friday, as global markets paused following a week of strong gains outside China.

Futures pointed to modest losses on Wall Street, where the focus will be on US jobs numbers later on Friday. Asian shares had a quiet session. Mainland Chinese indexes ended the week deep in the red following Monday’s aggressive sell-off, with the CSI 300 index of Shanghai and Shenzhen-listed shares down 2.6 per cent. Hong Kong’s Hang Seng index was 0.3 per cent lower on Friday.

The composite Stoxx 600 of Europe’s biggest companies fell 0.2 per cent, coming off Thursday’s record close. New York’s S&P500 also finished Thursday trading at an all-time high.

David Lafferty, global market strategist at Natixis Investment Managers, said initial weakness across Asian markets in response to the virus “was a knee-jerk reaction”.

At such an early stage, it is simply fear of an open-end, hard-to-handicap event. Having seen the response from China, markets are rebounding.

Markets have rallied in spite of the fact that the virus is still spreading rapidly.

Honda says it can avoid ‘major’ virus hit if plants reopen next week

Kana Inagaki reports from Tokyo

Honda said it does not expect a major impact on its earnings from the coronavirus outbreak in China if the Japanese carmaker can reopen its three plants in Wuhan on February 14, a new timeline it set on Friday.

While rival Fiat Chrysler has warned that one of its European plants will be forced to halt its production in a matter of weeks due to a parts shortage, Honda said it does not expect production outside of China to be halted from supply chain disruptions if it can stick with its latest schedule.

“We don’t see a major impact on our operating profit if we can resume as scheduled,” Seiji Kuraishi, Honda’s executive vice-president, said at a news conference in Tokyo. “If the shutdown is extended, it will be a different matter.”

Mr Kuraishi said the company keeps about three days worth of inventory for car components, saying it was working to minimise the impact by putting priority on producing parts that could face shortage soon.

While car-assembly plants in Wuhan will be reopened on February 14, production is expected to resume in the week of Feb 17 after the company completes checks on employee safety, manufacturing lines and parts supplies.

Its four other plants in China outside of Wuhan are expected to reopen on February 10.

Chinese copper traders declare force majeure over coronavirus

Sun Yu reports from Beijing:

Copper traders in China, the world’s largest buyer of the metal, have asked miners from Chile to Nigeria to cancel or delay shipments as the deadly coronavirus outbreak hits demand.

Multiple Chinese copper buyers said they had scrapped or postponed overseas orders by declaring force majeure since the end of January, when Beijing began to report a surge in coronavirus infections.

Copper, a barometer for the health of the global economy, is the latest commodity to fall victim to the epidemic.

China’s efforts to contain the virus, ranging from restricting highway traffic to extending the lunar new year holiday, have affected industrial activity and raised concerns about growth in the world’s second-biggest economy. 

Chinese buyers of liquefied natural gas have also considered declaring force majeure, a clause that identifies natural disasters or other unavoidable catastrophes as cause for not fulfilling a contract.

Click here for more on this story.

Singapore grants companies more time to submit annual reports

Regulators in Singapore have given companies a two-month reprieve to submit their annual reports and hold their annual shareholder meetings as the effects of the coronavirus outbreak take hold.

The Singapore Exchange Regulation said on Friday it would grant an extension until June 30 to groups holding their AGMs to approve their earnings reports for the year to December 31 2019. Companies must send their annual reports to shareholders and the exchange at least 14 days before their meeting.

SGX RegCo said its decision follows comments from auditors of their “practical difficulties in performing statutory audits”, due to authorities’ measures in response to the novel coronavirus outbreak.

Criteria include companies that call China their main place of business or have significant operations there. Added to that, their statutory audits for FY Dec 2019 were affected due to the travel restrictions and/or other measures imposed by the authorities in response to the virus, the statement from SGX RegCo said.

Singapore’s Accounting and Corporate Regulatory Authority said it will waive the fees to any company seeking an extension providing they fulfil the criteria.

Taiwan cutting transport links with China

Kathrin Hille in Taipei writes:

Taiwan is drastically cutting its air and sea links with China, as the country tries to protect against new infections.

The radical limits are set to hamper the hundreds of thousands of Taiwanese who do business or work in China. Over the past decade, the two sides have opened direct flights between hundreds of Chinese cities and Taiwan’s main airports, flying Chinese tourists to Taiwan and Taiwanese to China for work and travel.

Starting on Monday, all direct flights to and from Chinese airports other than Beijing Capital, Shanghai Pudong, Shanghai Hongqiao, Xiamen, and Chengdu will be suspended until the end of April, Taiwan’s Epidemic Management Centre said. Taiwan is also suspending ferry links between its outlying islands of Kinmen and Matsu with China’s Fujian Province.

The cuts will make it extremely difficult for many Taiwanese companies to keep managing their China operations. More than 1m Taiwanese live and work in China, and Taiwanese-owned companies especially in electronics manufacturing are among China’s largest exporters and employers.

While Taiwan suspended the admission of Chinese citizens late last month – the first country to do so as part of its epidemic response measures – its own citizens are still allowed to travel to and from China, although they have to self-quarantine for 14 days every time they come home.

Taiwan also announced that from Monday, all travellers arriving in the country after transit in any Chinese airport including Hong Kong and Macao will be required to self-quarantine for 14 days.

Trump praises Chinese ‘discipline’ in countering virus

Donald Trump has weighed in on Beijing’s handling of the coronavirus outbreak, taking to Twitter to compliment China on its “great discipline”.

The US president was unsparing in his praise for his Chinese counterpart Xi Jinping, whom he described as “strong, sharp and powerfully focused”.

Mr Trump’s comments follow criticism from Beijing over the US response to the outbreak, in particular a ban on foreign nationals who have travelled to China in the previous two weeks from entering the US.

On Twitter today, Mr Trump insisted: “We are working closely with China to help.”

Singapore confirms three more cases as it raises alert to orange

Singapore has reported another three coronavirus cases, which include those with no travel history to China or links to previously confirmed cases, taking the city state’s total to 33, reports Stefania Palma in Singapore.

Singapore on Friday raised its risk assessment for the virus from yellow to orange. Four of the cases have had no connection to infected individuals or travel history to China.

The increased alert level means taking a number of additional measures, such as urging event organisers to “cancel or defer non-essential large-scale events”, the ministry of health said on Friday.

The city state has requested employers to ensure staff check their temperatures regularly, at least twice a day, as well as enhance “business continuity plans“ including splitting workers into segregated teams.

Schools will suspend inter school and external activities until the end of the March holidays and the government advises people not to shake hands.

The three new cases include Singapore citizens – two women and a man – aged 42, 39 and 53. Of Singapore’s confirmed cases, two patients have been discharged, two are in critical condition and the others are mostly stable or improving.

Battery maker Umicore CEO warns on impact to China EV market

Henry Sanderson reports:

Belgian battery materials maker Umicore has warned that the coronavirus will “amplify” an economic slowdown in China and hit the electric car market.

Marc Grynberg told the Financial Times:

There is a distinct risk … China is the largest EV market in the world … A larger chunk of that supply chain may be affected by the coronavirus. But it’s too early to tell if the effect will be protracted or material.

Europe’s largest cobalt refiner said it did not expect EV sales in China to “show a material degree of recovery” this year, even before the impact of the virus.

The outbreak of coronavirus will “amplify the economic slowdown,” he said.

Sales of new energy vehicles, which include plug-in hybrids and fuel cell vehicles, fell 4 per cent last year in China after Beijing reduced subsidies for buyers of EVs. Mr Grynberg said growth for battery materials was likely to be driven by growth in Europe this year, as carmakers boost sales of EVs to meet strict CO2 guidelines.

“I have a positive view on Europe whereas I’m cautious not to say pessimistic on China,” he said.

ING slashes Taiwan growth prospects for 2020

Analysts have halved their Taiwan growth forecasts for this year as broken supply chains from the fallout of the coronavirus outbreak take a toll on the economy.

ING is revising its estimates for Taiwan’s gross domestic product to expand to 0.8 per cent from 1.6 per cent in 2020. Trade in January, which does not reflect any coronavirus effects, dropped with global exports declining 7.6 per cent, following on from a 4 per cent rise in December. Imports slid 17.7 per cent compared with December’s rise of 13.9 per cent, according to data recorded on Factset.

“The delay of mainland workers going back to factories, following the lockdown of many Chinese cities, will affect the semiconductor, electronics, and smart devices production and shipments,” Iris Pang, ING economist for Greater China, said in a note on Friday.

Taiwan is part of this supply chain, and will inevitably be affected.

Information is too scant to forecast the impact on Taiwan, with the only certainty being “that this will slow production and shipments in the first quarter and possibly also in the second”, Ms Pang said in a note on Friday.

Voters last month re-elected Tsai Ing-wen with the highest vote count ever seen in Taiwan’s presidential elections, in a strong message of rejection of authoritarian China. Beijing claims Taiwan as part of its territory and threatens to invade if the island resists unification indefinitely.

Singapore clamps down further on arrivals from China

Stefania Palma reports from Singapore:

All work pass holders with travel history to mainland China in the last 14 days will need the ministry of manpower’s approval to return to or enter Singapore after 11:59pm on February 8.

They will also be placed on a compulsory two week leave of absence upon arrival to the city state.

Employers will need to apply for the ministry’s approval online and plan “suitable premises” to house their staff during their leave of absence, the ministry of manpower said.

Those who fail to comply with these rules could face the revocation of work passes and the removal of their privileges.

US authorities prepare to receive 300 Wuhan evacuees

Government agencies in the US are on standby to receive the 300-odd evacuees being transported back to the country from Wuhan in China.

The two flights are the last being chartered by US authorities to evacuate Americans from the city at the heart of the coronavirus outbreak. They left Wuhan overnight and are expected to touch down in the US later today.

The evacuees will be quarantined for 14 days on their arrival back in the US and will be charged $1,000 to cover the cost of the extraction.

A state department email seen by the FT yesterday said “there are no plans for additional US evacuation flights from Wuhan” following this evening’s departures.

Virus fears prompt Ericsson to withdraw from top telecoms trade event

The world’s largest telecoms trade show has suffered a significant blow after Ericsson joined LG in pulling out of this year’s event, due to be held in Barcelona at the end of this month, writes Nic Fildes in London.

Mobile World Congress every year attracts more than 100,000 attendees from around the world including tens of thousands from Asia. The event organisers said this week that there had been minimal impact of people pulling out due to the coronavirus outbreak, adding that it would implement a stricter hygiene regime and advised a “no handshake” policy while at the event.

Ericsson, one of the biggest contributors to the congress, however said on Friday it has withdrawn from the show in what could trigger a domino effect of other companies prioritising staff welfare over the chance to network and show off the latest technology.

Börje Ekholm, president and chief executive of Ericsson, said:

The health and safety of our employees, customers and other stakeholders are our highest priority. This is not a decision we have taken lightly. We were looking forward to showcasing our latest innovations at MWC in Barcelona. It is very unfortunate, but we strongly believe the most responsible business decision is to withdraw our participation from this year’s event.

The congress is scheduled to begin on February 24.

Puffer jacket maker Canada Goose cuts outlook

Canada Goose, the maker of upmarket puffer jackets, slashed its full-year outlook, blaming the adverse impact of the coronavirus outbreak on shoppers particularly in Greater China, writes Peter Wells in New York.

Fallout from the disease “is having a material negative impact” on performance in the fiscal quarter that will end March 29, the Toronto-based retailer said as it reported third-quarter earnings on Friday. The forecast sent its shares down as much as 15.1 per cent in pre-market trade.

The company cut its forecast for revenue growth in the 2020 financial year to a range of 13.8 per cent to 15 per cent, or between $945m to $955m, from a previous forecast of 20 per cent. Earnings are expected to be in the range of of a 2.2 per cent decrease to 0.7 per cent increase on a diluted share basis, well down from a previous forecast for 25 per cent.

Retail stores and e-commerce across Greater China “have and continue to experience significant reductions in revenue”, the company said. It added that global travel restrictions imposed as a result of the highly contagious disease will hit shopping destinations in North America and Europe too. Its supply chain though has not been interrupted.

The company believes that this is a temporary change in consumer behaviour due to health precautions in extraordinary circumstances. However, the extent and duration of the disruptions remain uncertain and prolonged disruptions may also negatively impact future fiscal periods.

The effects of the coronavirus outbreak represent a brisk turn of fortunes for Canada Goose. The company said its brand and business momentum in Greater China remained strong and pointed to the doubling of revenue from Asia during its third quarter, which ended on December 29. That was before the infection was first recorded.

Shares were down 7.4 per cent in pre-market trade on Friday, moderating from an earlier tumble as deep as 15.1 per cent.

Global stock market rally peters out

European shares and US futures slipped slightly, as this week’s stock market rally fizzled out despite US labour market data beating expectations.

The Stoxx Europe 600 fell 0.4 per cent, while the S&P 500 was set for a similar decline at the open on Wall Street.

Global shares are on track for their best week since June as traders bet the coronavirus outbreak will not have a lasting impact on economic growth – MSCI’s All World Index has risen 3.1 per cent this week.

Still, some companies exposed to the Chinese market have begun detailing the hits to their businesses from the disease. Shares in Burberry slipped 1.2 per cent in London after the luxury fashion group said footfall was down 80 per cent in mainland China, while Canada Goose stock fell 7 per cent pre-market after slashing its outlook.

Asian shares had a quiet session. Mainland Chinese indexes ended the week deep in the red following Monday’s aggressive sell-off, with the CSI 300 index of Shanghai and Shenzhen-listed shares down 2.6 per cent.

Outbreak triggers turmoil in global gas market

Harry Dempsey, Derek Brower and David Sheppard in London and Sun Yu in Shanghai report:

The coronavirus outbreak has thrown the global gas market into turmoil with Chinese importers threatening to cancel up to 70 per cent of seaborne imports in February as demand collapses and companies struggle to staff ports.

The move by China, the world’s second-largest importer of liquefied natural gas, has sent prices to their lowest level on record and sparked a row with suppliers, which claim the Chinese companies are breaching their contracts to secure lower prices on the spot market.

The stand-off is the latest sign of the economic damage being wreaked by the coronavirus outbreak, which is expected to curtail global growth as large parts of the world’s second-largest economy essentially are in lockdown. Earlier on Friday the FT reported multiple Chinese copper buyers said they had scrapped or postponed overseas orders by declaring force majeure since the end of January.

US stock markets open lower

Wall Street has opened lower for the first time this week, even after data showed the US jobs market is in solid shape. The S&P 500 in New York and Stoxx 600 index in Europe recently fell 0.5 per cent.

Marvin Loh, senior global macro strategist for State Street, said that, while the US economy looks strong for now, the impact of the coronavirus outbreak poses a risk to the outlook.

While things look good going into the beginning of the year, people are beginning to worry about what the impact will be of [the outbreak].

CDC screens passengers on cruise docked in New Jersey

US health officials on Friday morning boarded a cruise ship to evaluate passengers who had recently traveled from mainland China.

Personnel from the Centers for Disease Control and Prevention screened 27 passengers in total, according to a statement from the governor of New Jersey, where the ship was docked. Twenty-three passengers were cleared. Four passengers were removed from the ship and transported to a hospital for further evaluation.

There are 12 confirmed cases of coronavirus in the US.

The ship, a Royal Caribbean cruiseliner, was docked in Bayonne, near New York City.


Federal Reserve warns coronavirus ‘a new risk’ to US outlook

The Federal Reserve has warned that “spillovers” from the coronavirus outbreak pose a fresh “risk” to the US outlook.

In its monetary report to Congress, the central bank said: “… possible spillovers from the effects of the coronavirus in China have presented a new risk to the outlook.”

It added:

The recent emergence of the coronavirus … could lead to disruptions in China that spill over to the rest of the global economy.

EM currencies on track for worst day since August

Emerging market currencies are on course for their biggest one day drop in nearly six months, with sharpening worries about the economic toll of the coronavirus sending investors out of the asset class.

The JPMorgan EM currency Index was down 0.7 per cent and on track for its biggest fall since August 2019. China’s renminbi was recently down 0.4 per cent against the buck in offshore trade that takes place in hubs outside of mainland China. It has once against slumped below the Rmb7 to the dollar mark, a level that is closely watched by investors and traders.

Other actively traded EM currencies also came under pressure. The Turkish lira fell 0.7 per cent, sliding below the TL6 to the US dollar mark for the first time since May. The South African rand shed 1 per cent, while Mexico’s peso slipped 0.5 per cent.

Mounting angst over the coronavirus outbreak has dented sentiment. Concerns have built specifically over China, the world’s biggest emerging market. Citigroup warned on Friday that the effect of the virus “will likely be worse than SARS for China and globally.”

The bank said:

It has spread much faster than SARS, and the policy responses worldwide to disrupt travel to-and from China, and disrupt movements within mainland China, have been much more draconian, compounding the demand shock from the large scale behavioural risk avoidance that was so apparent during SARS. Moreover, China now accounts for a third of global growth versus only 10 per cent during the SARS period.

Piotr Matys at Rabobank said: “Why would you take the risk and purchase EM assets if you can buy US stocks or bonds if you are rational and conservative investor who is seriously concerned about the negative consequences of the coronavirus?”

The EM woes have also been compounded by a rise in the US dollar, which was boosted by strong labour market data on Friday and has climbed over the past four trading trading days. “I think the US is one of the least vulnerable to the impact of the coronavirus, adding to the reasons to be bullish the dollar,” said Win Thin at Brown Brothers Harriman.

Global market for masks and gloves ‘facing severe disruption’, WHO says

Clive Cookson in London

World Health Organisation director-general Tedros Adhanom Ghebreyesus says the world market for personal protective equipment “is facing severe disruption” as a result of the coronavirus crisis.

He told the WHO daily press conference in Geneva: “Demand is up to 100 times higher than normal and prices are up to 20 times higher.”

Dr Tedros said shortages of masks, gloves, respirators and gowns were “exacerbated by widespread, inappropriate use of PPE outside patient care. As a result, there are now depleted stockpiles and backlogs of four to six months.”

The WHO Pandemic Supply Chain Network, which includes manufacturers, distributors and logistics providers, “is focusing initially on surgical masks because of the extreme demand and market pressures,” he said.

“We are appreciative of companies that have taken the decision to only supply masks to medical professionals. There is limited stock of PPE, and we need to make sure we get it to the people who need it most, in the places that need it most.

“The first priority is health workers,” he said. “The second priority is those who are sick or caring for someone who is sick. WHO discourages stockpiling of PPE in countries and areas where transmission is low.”

Michael Ryan, executive director at the WHO Health Emergencies Programme, said the shortage was harming efforts to contain other diseases such as Ebola.

“If we start to see the normal civilian market being flooded with N95 and other respirator-type masks and we see doctors and nurses and hospitals not having those, then there is a problem,” Dr Ryan said.

Royal Caribbean passengers showed no signs of coronavirus

Royal Caribbean said none of the four passengers removed from a ship docked on the US east coast showed “clinical signs or symptoms” of coronavirus. One person had tested positive for the flu while onboard.

The Centers for Disease Control and Prevention boarded the Anthem of the Seas cruise in New Jersey on Friday morning to screen 27 passengers who had recently been to mainland China. Four individuals were sent to a local hospital for further evaluation, while the other 23 were cleared.

Royal Caribbean’s records show the four guests undergoing testing have not been in China since January 26.

The cruise operator said authorities have cleared the ship to depart, but “to resassure concerned guests”, it has chosen to delay departure until Saturday, when the CDC will have conclusive test results.

Cruise operator to impose new travel restrictions

Also on Friday, Royal Caribbean updated its travel restrictions in an effort to defend against the spread of coronavirus.

Among the changes, any customer holding a Chinese, Hong Kong or Macau passport will be unable to board any of the company’s ships, “regardless of residency”.

Royal Caribbean is also requiring extra health screenings for the following people:

• Anyone that has been in contact with individuals that have traveled from, to, or through mainland China, Hong Kong, or Macau in the last 15 days.

• Anyone that feels unwell or demonstrates flu-like symptoms.

• Any guest presenting with fever or low blood oximetry in the specialized health screening will be denied boarding.

Royal Caribbean said the changes were made after consulting with health authorities and considering stricter protocols from the CDC, as well as requirements in other countries.

Wall Street extends decline in afternoon trade

US stocks, down for the first day in five, extended their retreat from record highs and sat close to their session lows during afternoon trade on Friday.

Concerns about the spread of the coronavirus, which investors had managed to look past for 80 per cent of the week, got the better of the market in the final trading session of the week.

The S&P 500 was down two-thirds of 1 per cent from Thursday’s peak close, while the Nasdaq Composite was off 0.7 per cent.

For the week, the S&P 500 is eyeing an advance of 3 per cent, which would rank as its best weekly performance since early June.

Futures had tipped US stocks to open lower this morning, and even a forecast-beating jobs report was unable to provide equities with support.

Government bonds rallied, with the yield on the benchmark 10-year US Treasury down 6.6 basis points at 1.5783 per cent.

US allocates $100m for coronavirus fight

By Kiran Stacey and Matthew Rocco

The US government is prepared to spend up to $100m in the fight against the coronavirus outbreak, secretary of state Mike Pompeo announced.

The money, which would come from existing funds, will “assist China and other impacted countries, both directly and through multilateral organizations, to contain and combat the novel coronavirus”, Mr Pompeo said in a statement.

But administration officials admitted they had still not received the go-ahead from China to send a panel of experts from around the world, including the US, to study the disease.

Alex Azar, the US secretary for health and human services, told reporters: “That is a decision for the Chinese. We have made the request now for almost a month.”

He added: “This is a matter for the Chinese leadership to make the formal decision. We feel very optimistic that that will happen. But they have their own processes.”

The state department said it has facilitated shipments this week of nearly 17.8 tons of donated medical supplies to China, including masks, gowns and respirators.

Earlier this week, the World Health Organisation called for $675m in donations to combat the outbreak.

Ford ready to airlift car parts out of China

By Peter Campbell

Ford is preparing to airlift parts out of China in order to keep its international facilities running in the face of the coronavirus, the company’s incoming operations boss told the Financial Times.

Jim Farley said the company has set up “countermeasures including air freight” in its Chinese supply chain, as the company battles to prevent the outbreak hobbling its global operations.

On Thursday Fiat Chrysler said one of its European sites was two weeks away from halting production because of a supplier based in China. Hyundai has already shut its sites in Korea, while Toyota has said it is combing its supply chains to remove risks of shutdowns outside of the country.

Mr Farley, who on Friday was named as Ford’s new chief operations officer, told the FT it was “too early to tell” whether sites outside of China would be affected.

“We have been watching so carefully, we already put in countermeasures such as air freight in place,” he said.

He said the business will “work around the supply base”, especially for parts bought from non-Chinese businesses with factories inside the country.

The larger risk was the shutdown of the Chinese car market, which is the largest and most profitable in the world, he added.

“Right now the area that is most difficult is when customers come back and start buying,” he said.

“We may find consumers come back, but right now, we don’t know until the middle of February [when plants are due to re-open] what that trajectory will be.

“We can’t forecast what that is going to look like.”

Here’s what scientists know about coronavirus

The FT’s Clive Cookson breaks down what scientists know about coronavirus, how it spreads and which individuals are most vulnerable to infection.

Coronaviruses are most commonly spread through the air by coughing or sneezing. Health workers and family members are also vulnerable to infection from close personal contact, if they do not have adequate protection using gloves, gowns and surgical masks.

It’s rare that coronavirus can be spread by an individual who isn’t showing symptoms, according to Maria Van Kerkhove, acting head of emerging diseases at the World Health Organisation.

Dr Van Kerkhove said infected individuals have shown symptoms across a wide spectrum. “We have mild cases like a common cold, all the way through pneumonia with different levels of severity to multiple organ failure and death.”

Read more about the virus here.

Hedge fund Bridgewater develops ‘virus index’ to gauge risks

The FT’s Ortenca Aliaj reports:

Hedge fund giant Bridgewater Associates has created an index to measure how sensitive various markets are to the coronavirus.

The so-called virus index is comprised of a basket of assets — including equities, commodities, sovereign bonds and currencies — whose returns are likely to be most vulnerable to risk from the virus. Among them, equities in China and neighbouring countries are estimated to be worse affected as well as commodities sensitive to the region’s growth like copper, oil and soyabeans.

Chief security officer Richard Falkenrath, who was a senior White House official during the 2003 SARS epidemic, said the outbreak could be “the most significant medical disruption in decades”.

The impact of coronavirus is likely to be more pronounced than SARS because China is a much bigger part of the global economy than it was in 2003, according to Mr Falkenrath.

“The market action—including the sell-off over the last couple of days—has been somewhat more severe and broad-based than during SARS,” Mr Falkenrath wrote. “However, there is still a long way to go before these impacts spiral into a more sustained drag”.