The Wall St.Journal 28Feb2020

THE WALL STREET JOURNAL. ***** Friday, February 28, 2020 |A

vestors. “The globalization of

the virus extinguishes confi-

dence in the V-shaped recov-

ery that was the view last

week.”

Microsoft Corp. warned

Wednesday that supply-chain

disruptions from the corona-

virus would hurt sales this

quarter, making it the second

major tech company—after

Apple Inc.—to lower expecta-

tions because of the epidemic.

European indexes also

dropped, with the Stoxx Eu-

rope 600 tumbling 3.7%. In

early trading Friday in Asia,

Japan’s Nikkei 225 was down

3.5%, Hong Kong’s Hang Seng

Index was off 2.3% and South

Korea’s Kospi was down 2.5%.

But S&P futures traded higher.

headlines about the coronavi-
rus epidemic, bracing for a
drop in business activity and
trying to get a grip on expec-
tations for corporate earnings.
“Obviously it’s a blood-
bath,” said David Bahnsen,
chief investment officer of
Bahnsen Group, a wealth-
management firm. “When you
get into a free-fall mode,
there’s really little that can be
done but wait for some sort
of footing to be found.”
Oil prices dropped more
than 2%, with Brent crude set-
tling at its lowest level since
December 2018.
The technology sector,
which until recently was lead-
ing the S&P 500’s gains, lost
5.3% Thursday and is down
12% this week.
Even utilities and con-

ContinuedfromPageOne

The U.S. and Switzerland
formally launched a humani-
tarian trade channel for Iran
on Thursday, a move meant to
counter criticism of Washing-
ton’s economic-pressure cam-
paign while opening the way
for the release of Americans
detained by Tehran.
The humanitarian link allows
international firms to trade in
goods such as medical supplies,
agricultural commodities and
basic necessities without risk of
U.S. sanctions-enforcement

penalties. The Trump adminis-
tration has come under fire, in-
cluding from European allies
and domestic political oppo-
nents, for inadvertently choking
off such trade.
Some U.S. officials and dip-
lomats involved in the matter
say the trade move, if recipro-
cated by Tehran with the re-
lease of five Americans held in
Iran, could cool building ten-
sions and lead to a temporary
halt in months of escalating
provocations.
“We think our humanitarian
gesture should be met with a
humanitarian gesture of re-
leasing innocent detainees in
Iran,” a senior administration
official told The Wall Street
Journal. “This should be a
confidence-building measure,
that would then lead to a con-
sular dialogue so that we can
get all of the remaining Amer-
icans out of jail.”
Iran’s mission to the United
Nations didn’t respond to re-
quests for comment.
The opening of the trade
channel also comes as Iran
works to contain a rapidly
spreading coronavirus epi-
demic. With the official death
toll at 26, the government has
closed schools and banned
some public gatherings.
The senior administration
official said the U.S. is work-
ing on providing assistance to
help Iran address the problem,
but expressed skepticism Teh-
ran would accept it.
Iran worries “they will re-
veal to the world that the cri-
sis is much worse than the re-
gime has been broadcasting,”
the official said.
Iran accuses the U.S. of us-
ing the coronavirus outbreak
to fan fears.
The U.S. has been working to
get the humanitarian trade
channel operational after the
blacklisting of Iran’s central
bank in September for allegedly
financing terrorist activity. That
cut into trade flows already bat-
tered by earlier U.S. sanctions.
The Swiss-American channel
aims to reassure firms that are
skittish about incurring U.S.
penalties by vetting their deals
through the governments.
Swiss-based firms can use the
process without running afoul
of Washington’s stringent
sanctions, worries that until
now had inhibited unsanc-
tioned humanitarian trade.
“This operationalizes the
humanitarian channel because
it removes the uncertainty,”
said Justin Muzinich, deputy
U.S. Treasury secretary.

ByIan Talleyin

Washington andBenoit

Fauconin London

Swiss, U.S.

Open Trade

Channel

To Iran

WORLD NEWS

Japan and caused them to test

dozens of others.

Countries in Asia are using

a grab bag of tools to identify

those who may have been ex-

posed to the virus and impose

limits on their movements.

These have included inter-

views of sickened people,

quarantines and stay-home di-

rectives for those returning

from high-risk countries. But

getting people to tell the truth

or lock themselves in their

homes isn’t easy.

The Singapore case involves

a Chinese man from Wuhan,

where the global outbreak is

believed to have started, who

traveled to the city-state in

January and later tested posi-

tive. His wife, who lives in

Singapore, was quarantined,

the Health Ministry said. Both

were interviewed about the

places they visited in the days

before they were isolated and

the people with whom they

came into contact.

Identifying those people is

central to Singapore’s virus-

fighting strategy. Authorities

said the two gave incorrect in-

formation about their where-

abouts, which officials later un-

covered. The case against them

is scheduled to be heard in

court on Friday. If convicted,

they face prison terms of up to

six months, fines of up to

$7,150 or both.

The couple couldn’t be

reached to comment.

In Thailand, officials this

week criticized a 65-year-old

man for not being upfront and

setting back the country’s con-

tainment efforts.

The man returned from

Hokkaido in Japan on Feb. 20

and developed a fever,

Dr. Sukhum Karnchanapi-

mai, an official in the Public

Health Ministry, said. He didn’t

see a doctor until three days

later and mingled with mem-

bers of his family, including his

8-year-old grandson. When he

visited a hospital on Feb. 23, he

was asked about any recent

travels but didn’t disclose his

Japan trip, according to B.Care

Medical Center, which admit-

ted him and began pneumonia

treatment.

It wasn’t until the next day

that he revealed he had been to

Japan. The hospital gave him a

test for coronavirus, which

came back positive. That set

off a broader hunt for family

members and medical person-

nel he may have infected, said

Dr. Karnchanapimai. The man’s

wife, who had traveled to

Japan with him, and his grand-

son, who had not, both tested

positive.

Officials also tested dozens

of children at the grandson’s

school, which was closed down

for 14 days, according to local

authorities. Medical personnel

and some passengers and crew

on his flight from Japan

were also tested. Ninety-seven

people have so far tested nega-

tive, authorities said.

In Hong Kong, two residents

were charged last week for vio-

lating quarantine rules. Under

the rules, those who visited

China in the two weeks before

their entry into Hong Kong

must self-quarantine for two

weeks. That means they can’t

step outside their homes or ho-

tel rooms and are barred from

leaving the city. The two men

were stopped at border check-

points trying to leave Hong

Kong this month, according to

a government spokeswoman.

If they are convicted, they

face a maximum fine of $3,

and up to six months in prison.

—Joyu Wang in Hong Kong

contributed to this article.

Governments trying to con-

trol the fast-spreading corona-

virus are punishing residents

and visitors accused of mis-

leading health investigators,

hiding details of their activities

and flouting quarantine rules.

Singapore this week charged

a Chinese couple under the In-

fectious Diseases Act for giving

false information about their

movements. The city-state has

also stripped people of their

permanent-resident status and

revoked foreigners’ work

passes over virus-related in-

fractions. Thai officials on

Wednesday criticized an in-

fected citizen who delayed tell-

ing authorities he had visited

ByNiharika Mandhana

in Singapore and

Wilawan

Watcharasakwetin

Bangkok

Asia Punishes Quarantine Violators

Thursday said at least 26 peo-

ple have died in an outbreak

that has infected more than

240 people, with 1,000 more

being tested for coronavirus-

like symptoms.

Saudi Arabia on Thursday

temporarily barred visitors

from entering the country for

the Islamic pilgrimage to

Mecca, known as Umrah, and

from visiting the holy mosque

in Medina, worshiped as the

burial place of the Prophet Mu-

hammad, the official Saudi

Press Agency reported. Around

seven million Muslims make

the journey each year. Riyadh

also suspended entry for peo-

ple with tourist visas from

countries affected by the coro-

navirus. Saudi Arabia hasn’t

yet recorded any coronavirus

cases inside the country.

It wasn’t clear if the king-

dom is planning to impose re-

strictions on locals and resi-

dents performing Umrah. Live

streaming of the two sites on

state television showed Mus-

lims performing prayers and

rituals as normal.

“The whole situation is

quite fluid at the moment. But

for now, there has not been

any orders to barricade the

two cities,” said a Saudi offi-

cial familiar with the matter.

“We don’t want to reach a

level similar to that of Iran.”

Iran’s government shut

shrines and mosques in Qom,

a holy Shiite site that attracts

thousands of visitors each

year, and canceled a major re-

ligious festival in the city

scheduled for early March.

President Hassan Rouhani

on Thursday called on Iranians

to avoid public gatherings and

any unnecessary travel.

Yet some worshipers in

Qom are defying those orders

and pushing clerics to continue

delivering prayers, say resi-

dents of the city. The custodian

of the holiest site in the city,

the Fatima Masumeh Shrine,

said it should remain open.

“We consider this holy

shrine a house for cure. House

for cure means people would

come here to get cured from

mental and physical diseases,”

the custodian, Ayatollah Mo-

hammad Saeedi, said in a video

interview published Wednes-

day by Jamaran, an Iranian

news site. “It should be open,

and people should be encour-

aged to come here. Of course,

we believe caution is required,

and we follow hygienic issues.”

The signs of public defiance

in Iran signal challenges ahead

for authorities across the region

that are hosting large numbers

of religious pilgrims or con-

fronting the prospect of their

citizens returning from infected

areas, particularly in Iran.

It isn’t just in Islamic com-

munities where religious ritu-

als contribute to the spread of

the virus. In South Korea,

about half of the roughly

2,000 cases are tied to the

Shincheonji megachurch. The

church conducts services

where members crowd to-

gether in circles, shake hands

and eat together.

Yet the thousands of reli-

gious Islamic pilgrims now on

the move present a daunting

challenge to the region’s gov-

ernments, particularly Iran.

Some Iranian clerics have

frowned upon worshipers tak-

ing precautionary measures to

guard against infection.

In contrast with China’s

draconian measure of sealing

off the city of Wuhan, the

source of the outbreak there,

the Iranian government has

said there is no need to quar-

antine Qom, even as the coro-

navirus spreads rapidly across

the country. It has urged peo-

ple not to leave, residents

said, but to little effect.

Religious pilgrimages and

ceremonies in the Middle East

have emerged as a dangerous

new risk in the spread of the

coronavirus in the region, as

Iran fights to contain the

deadly epidemic and Saudi

Arabia restricted access to two

of Islam’s holiest sites.

Iran, the hardest-hit coun-

try in the region, has halted an

Islamic festival, sought to curb

mass congregations and can-

celed Friday prayers in 23 cit-

ies across the country, includ-

ing Qom, which officials

believe to be the center of the

outbreak. But the government

faces a reluctance by clerics

and worshipers to interfere

with sacred religious tradi-

tions for millions of faithful,

even as several countries have

linked coronavirus cases to

pilgrimages to Qom.

Iranian health officials on

BYSUNEENGELRASMUSSEN

Muslim Pilgrimage Poses New Risk of Spread

Muslims planning the Islamic pilgrimage to Mecca known as Umrah waited for flights at Juanda International Airport in Sidoarjo, East Java, Indonesia, on Thursday.

JUNI KRISWANTO/AGENCE FRANCE-PRESSE/GETTY IMAGES

sumer staples shares—which

investors typically flock to

during volatility because of

their generous dividend pay-

ments—were hit by the sell-

ing.

All 11 sectors of the S&P

500 are in negative territory

for the year. Investors sought

the relative safety of govern-

ment bonds, sending the yield

on the benchmark 10-year

Treasury note to record lows.

The S&P 500 fell 137.

points to finish 12% below its

record close on Feb. 19. Its

six-session skid since the re-

cord marked the fastest-ever

descent into a correction from

an all-time high, according to

Dow Jones Market Data. The

technology-heavy Nasdaq

Composite dropped 414.

points to 8566.48.

The list of fastest correc-

tions comes with some limita-

tions. It tracks the quickest

10% declines in the S&P 500

following an all-time high—a

caveat that excludes some of

the epic episodes in markets,

including the Oct. 19, 1987,

crash that sent the Dow tum-

bling 22.6% in one day, the

most ever.

The market had gone into

correction the previous week,

eliminating that day from

consideration by this mea-

sure.

At the same time, the pre-

cipitous nature of the decline

this month has grabbed the

attention of traders and port-

folio managers in a way that

few previous selloffs have

during the market’s decade-

long run to new highs.

Investors have grown in-

creasingly pessimistic that ef-

forts to stop the spread of the

virus will prevent significant

damage to the global econ-

omy. Some U.S. companies say

they could lose as much as

half their annual revenue

from China if the coronavirus

epidemic extends through the

summer.

American businesses will

generate no earnings growth

in 2020 if the virus becomes

widespread, Goldman Sachs

Group’s equity analysts

warned.

“Wehavetobraceour-

selves for wave after wave of

earnings downgrades,” said

Paul O’Connor, head of mul-

tiasset at Janus Henderson In-

Government bonds contin-

ued to rally. The yield on the

benchmark 10-year U.S. Trea-

sury, which closed at a record

low 1.310% on Wednesday,

dropped to 1.296% Thursday,

according to Tradeweb. Yields

move in the opposite direc-

tion of bond prices.

A measure of turbulence in

U.S. stocks also rose, with the

Cboe Volatility Index, or VIX,

jumping to a multiyear high of

39.16.

The options-based gauge

tends to rise when markets

fall and investors reach for in-

surancelike contracts to pro-

tect their portfolios.

“It’s very scary on a per-

sonal level, and I think that

psychology pervades through

the market” said Sam Hendel,

president and portfolio man-

ager at Levin Easterly Part-

ners. “As an investor, my job

is to keep a cool head.”

“Everyone is now trying to

assess what the economic im-

pact will be,” said Neil Dwane,

global strategist at Allianz

Global Investors. “The U.S. is

looking at Europe and Japan

as evidence of how the world

is responding.”

Stocks Hit

Correction

Territory

Shares of Virgin Galactic lost 24% on Thursday.

MATT HARTMAN/ASSOCIATED PRESS