10 The EconomistFebruary 8th 2020
The world this week Business
The coronavirus crisis in
Chinaunnerved the country’s
stockmarkets. The csiindex
fell by 8% in a day, its worst
performance since August
2015, before rebounding some-
what. As an emergency mea-
sure China’s central bank
injected extra liquidity into the
financial system, the biggest
such one-day intervention
since 2004, and cut some
interest rates. Macau closed its
casinos for two weeks.China is the linchpin in the
supply chains of many global
manufacturers, but the dis-
ruption from the coronavirus
lockdown has been most acute
in the motor industry. Hyundai
halted production at its fac-
tories in South Korea because it
couldn’t get components from
China. Many foreign carmak-
ers in China extended the
Chinese new year break and
kept their plants closed.Keeping to one of its pledges in
the “phase one” trade deal with
America, China’s government
said it would cut tariffson
$75bn-worth of American
exports. Some said the an-
nouncement was timed to
cheer the markets. China is
also committed to make exten-
sive purchases of American
goods under phase one, but
that could be difficult amid the
coronavirus outbreak.The price of oilfell sharply, in
part because demand from
Chinese industry and interna-
tional airlines is expected to
drop because of the Wuhan
virus. opecand Russia met to
discuss emergency cuts to
output that could shore up
prices. bpsaid that the out-
break could reduce projected
global growth in oil demand
this year by up to 40%.Alongwithotherinternational
energycompanies,bpreported
a plungeinannualincome.
Thecompany’sheadlineprofit,
hurtbyloweroilprices,fellby
a fifthin2019,to$10bn.Still,bp
raiseditsshareholderdividend
andsaidit hadcompleteda
sharebuy-backprogramme.It
wasBobDudley’slastearnings
reportaschiefexecutivebefore
handingthereinstoBernard
Looney.Electrifying
Tesla’sshare price crashed by
17% on February 5th, bringing
an end to a remarkable rally.
The carmaker had added more
than $40bn to its value over
two trading days, taking its
market capitalisation to
roughly $160bn; Ford is worth
less than $40bn on the market.
But will the rally resume?The British government
brought forward a target for a
ban on new diesel, hybrid and
petrol vehicles from 2040 to- The motor industry
slammed the plan as unwork-
able. smmt, an industry body,
accused the government of
moving the goalposts, noting
that while new plug-in models
are coming to the market, the
overall demand for the “expen-
sive technology” still makes up
“a fraction of sales”. The gov-
ernment was unable to provide
much detail on the cost impli-
cations for the industry or
taxpayers, simply saying it
would result in “a net saving”.Aston Martinagreed to a
rescue deal put forward by a
consortium led by Lawrence
Stroll, a Canadian business-
man. Under the agreement the
struggling British sports-car
maker will receive a capital
injection and issue new shares.
Mr Stroll’s Formula One racing
team will be rebranded with
the Aston Martin name.Disney+now has 28.6m sub-
scribers, according to Robert
Iger, Disney’s chief executive.
That is well above market
expectations, less than three
months after the streaming
service was launched. The cost
of rolling out Disney+ has
dented profit. Although rev-
enue was up by 36% in the last
three months of 2019 com-
pared with the same quarter a
year earlier, Disney’s net in-
come was down by 23%.Tony Fernandes stepped aside
as chief executive of AirAsia
for at least two months, after
the Malaysian airline was
linked to a bribery investiga-
tion involving Airbus. Airbus
recently settled with Britain’s
Serious Fraud Office and regu-lators in other countries for
$4bn. Mr Fernandes, an
ebullient entrepreneur, who
also owns Queens Park Rang-
ers, a London football club,
bought AirAsia in 2001 for 1
ringgit (26 cents) with his
business partner, Kamarudin
Meranun, who is also standing
aside as AirAsia’s chairman.
Both men deny wrongdoing.The American economygrew
by 2.3% last year. That was the
slowest pace since 2016 but
around the annual average
since the global financial crisis
of 2007-09. An initial estimate
found that the euro zone’sgdp
grew by 1.2% in 2019, the weak-
est rate since 2013.The deepest cut
It was a hairy week for the razor
industry, as the Federal Trade
Commission launched a bid to
block the proposed takeover of
Harry’s, an online supplier of
shaving gear, by Edgewell,
which owns the Schick and
Wilkinson Sword brands. The
ftcdescribed Harry’s as a
“uniquely disruptive compet-
itor in the wet shave market”
that has broken the duopoly of
Edgewell and Procter & Gam-
ble’s Gillette. Harry’s co-foun-
ders bristled at the decision;
they believe the acquisition
should go ahead.