· CORONAVIRUS UPDATES:
There are 75,748 confirmed cases of COVID-19 and at least 2,129 deaths, primarily in mainland China, according to the latest figures from the World Health Organization (WHO). The number of newly confirmed cases worldwide (463 cases) is significantly smaller than the increase reported on Wednesday (1,871 cases).
Outside of China, the outbreak has spread to 26 other countries, leading to 1,076 cases and seven deaths, including two recently reported deaths in Iran, WHO officials said Thursday.
The death toll in China from the coronavirus epidemic rose to 2,233 on Friday after 115 more people died in Hubei province, the hard-hit epicentre of the outbreak.
IMF says it’s too early for accurate figures on impact on global growth
It is premature to give precise projections of economic growth in China and the World in 2020 following the outbreak of coronavirus, IMF Managing Director Kristalina Georgieva said. The IMF is still reviewing its projections for growth in China while looking at the impact of the epidemic on the global economy, Georgieva told a news conference in Morocco’s capital Rabat, where she discussed preparations for IMF and World Bank Group meetings to be held in October 2021 in Marrakech. The IMF said last month global growth is projected to rise from an estimated 2.9% in 2019 to 3.3% in 2020 and 3.4% in 2021. “We are still hoping that the impact will be a V shaped curve” with a sharp decline in China and sharp rebound after the countainment of the virus, she said. “But we are not excluding that it might turn to be a different scenario like a U curve where the impact is somewhat longer.”
Global air travel demand set to decline
Global air travel demand is set to decline for the first time since 2009 because of coronavirus, the International Air Transport Association said Thursday. Pauses in corporate travel and overall slumping demand due to warnings of the rapidly-spreading illness have prompted carriers to suspend service or drastically reduce China service. The outbreak will cost Chinese airlines $12.8 billion in revenue and nearly $29 billion for carriers in the Asia-Pacific region, IATA estimated. The trade group, which represents most of the world’s airlines, had forecast demand growth in 2020 of 4.1%, which it’s now revised to a contraction of 0.6%.
S&P Global says Chinese banks could see bad loans double
Chinese banks may face increasing pressure from a rise in bad loans, according to a new report from S&P Global Ratings. The coronavirus epidemic could nearly double the number of questionable loans on the books of Chinese banks. The Chinese government has much of the country under lockdown to try to contain the outbreak, pressuring the finances of companies and consumers alike. Most of that economic impact will likely be felt in the first quarter of this year, the report said, with a recovery firmly in place by the third quarter.
Based on that slowdown, S&P Global estimates that the share of questionable loans could rise from 6.5% to 7.5% of all loans before the outbreak to a peak of about 10.5% to 11.5% in the aftermath of the epidemic. The rise in bad loans comes as Chinese bank regulators have been working to tighten accounting standards. S&P Global analysts said the coronavirus crisis will likely slow those reforms, as authorities focus instead on financial and social stability.
Coronavirus cases outside China remain low, but WHO chief warns ‘that may not stay the same for long’
World health officials said Thursday that the new coronavirus has not yet spread widely around the world, but emphasized that the virus could break out globally at any time.
“The number of cases in the rest of the world is very small compared to what we have in China, but that may not stay the same for long,” World Health Organization Director-General Tedros Adhanom Ghebreyesus told reporters at the organization’s headquarters in Geneva on Thursday.
‘China is still China’ so start making post-epidemic business plans, experts say
Business activity in China may look like it’s at a standstill amid the COVID-19 outbreak, but investors should start planning their next moves, experts said on Thursday.
“China is still China, the economy is still the economy, the consumers are still consuming,” said Frank Lavin, CEO of Export Now, a digital solutions company.
“Whatever the initial logic was that might have propelled you to go to the China market six months ago still holds today — even though we are the middle of some very bad weather,” said Lavin, a former U.S. ambassador to Singapore under the George W. Bush administration.
Although China’s economy this year will be hit by the ongoing health crisis, it would “still be a very nice year for the Chinese GDP,” said Lavin. China posted 6.1% GDP growth in 2019.
Lavin said he thinks there could still be a few more weeks of bad news after China “got off to a very bad start” handling the new coronavirus crisis. But Chinese authorities are “more or less getting their arms around it” now, Lavin told CNBC’s “Capital Connections.”
“No company welcomes this kind of turmoil,” Lavin said. “But most people (who) are looking at China, thinking about China are almost by definition, taking a long-term vie,” he said.
Indeed, investors should now be thinking about their strategies post-epidemic, said Kent Kedl, head of Greater China and North Asia at Control Risks, a consultancy.
Outbreak will not change China's commitments to buy U.S. goods: senior U.S. official
The U.S. government expects China to honor its commitments to buy more U.S. goods under a trade deal signed by the world’s two largest economies in January despite the fast-spreading coronavirus outbreak, a senior U.S. official said on Thursday.
The U.S. Treasury official said it was too soon to make accurate forecasts for the impact of the virus on the global economy, but the base case scenario sees China’s growth dropping in the first quarter and then rebounding sharply. The impact could be more significant if the outbreak worsens, said the official, who requested anonymity.
· Broadly strong dollar grinds yen to 10-month low
The yen fell past 112 to a 10-month low against a broadly stronger U.S. dollar on Thursday, extending recent losses for the Japanese currency as investors fretted about dire economic news out of the country.
Against the yen, the dollar rose 0.71% to 112.14, its highest since April. The yen, which benefits during geopolitical or financial stress as Japan is the worlds biggest creditor nation, has slipped about 2% over the last two sessions, its biggest two-day drop since September 2017.
“The JPY has slipped sharply this week and lost more ground overnight as its safe-haven appeal vanishes amid local virus worries,” Shaun Osborne, chief FX strategist at Scotiabank in Toronto said in a note.
China reported a drop in new coronavirus infections on Thursday, but scientists warned the pathogen may spread more easily than previously believed as two elderly passengers from a ship quarantined in Tokyo became the latest to die.
A run of dismal economic news out of Japan has stirred talk the country is already in recession.
Against a basket of currencies, the dollar was 0.18% higher at 99.744, just shy of the 100 mark, a level not touched in nearly three years.
Financial markets were little moved by U.S. unemployment data. There was encouraging news on the struggling manufacturing sector, with other data showing factory activity in the mid-Atlantic region accelerated to a three-year high in February, likely as tensions diminished in the 19-month trade war between the United States and China.
The U.S. economy is showing no signs of losing steam, U.S Federal Reserve Vice Chair Richard Clarida said in an upbeat assessment of the outlook that showed little alarm about the coronavirus outbreak.
· Soft inflation adds to Japan's economic woes, keeps BOJ under pressure
Japan’s annual core consumer inflation picked up only slightly in January, keeping the Bank of Japan under pressure to maintain its massive monetary stimulus to support a fragile economy saddled with weak growth and prices.
Stubbornly tame inflation is a worry for the world’s third-largest economy as it grapples with a coronavirus outbreak and weak growth. The Bank of Japan is in no mood to top up its already huge monetary stimulus, fearing it would have little ammunition to battle the next financial crisis.
However, BOJ Governor Haruhiko Kuroda has said he would consider additional easing if the coronavirus outbreak significantly threatens Japan’s economy and inflation, calling the flu-like virus the “biggest uncertainty” for the economy.
· Oil posts 6th positive session in 7 on smaller-than-expected inventory build
Oil prices rose on Thursday after the U.S. government reported a much smaller-than-anticipated rise in crude stocks, but gains were capped by worries about the spread of Coronavirus outside China.
Data from the U.S. Energy Information Administration (EIA) showed that crude inventories rose only 414,000 barrels last week, compared with expectations of a 2.5 million barrel rise from analysts in a Reuters poll.
However, scores of new coronavirus cases and a first death in South Korea fanned fears of global pandemic as research suggested it could be more contagious than previously thought.
Brent crude rose 19 cents, or 0.3%, to $59.31 per barrel. The front-month U.S. West Texas Intermediate crude futures contract, which expires Thursday, gained 49 cents, or 0.9%, to settle at $53.78 per barrel. The more-active second-month WTI benchmark was up 95 cents, or 0.7%, at $54.44 a barrel.
Immediately after the EIA data, Brent front month, front month WTI and second month WTI touched their highest in February.
Reference: CNBC, Reuters, Market Watch
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