6 The EconomistMarch 14th 2020
The world this week Business
Staggering from the effects of
coronavirus on business,
stockmarkets were also sent
reeling by Saudi Arabia’s deci-
sion to instigate an oil-price
warwith Russia, as the pair’s
agreement over production
levels broke down. Oil prices
plunged in the sharpest one-
day decline since 1991. Saudi
Aramco, the state-controlled
oil company, is increasing
capacity by 1m barrels of oil a
day to a record 13m, saturating
an already over-supplied mar-
ket. Trading remained volatile;
the decade-long bull run in
stockmarkets was deemed to
be over.Amid the turmoil Saudi
Aramco saw its stock fall
below 32 riyals ($8.50) for the
first time, the price at which
the shares were offered when
they floated on the stock-
market in December.The Bank of England made an
emergency cut to interest
rates, lowering its main rate by
half a percentage point to
0.25%. It also extended cheap
funding to banks so that they
can “bridge a potentially chal-
lenging period”. The European
Central Bank prepared to ease
policy and offer a range of
supportive actions to compa-
nies and banks. The Federal
Reserve pumped money into
the short-term repo market to
support the “smooth function-
ing of funding markets”.The aviation industryis being
battered by the covid-19 out-
break. Boeing lost a fifth of its
market value in a day amid
reports that it would soon use
the remainder of a $13.8bn loan
it had only recently secured.
Korean Air, which has can-
celled 80% of its international
flights, said that prolongeddisruption threatened its
survival. The suspension of
many flights, and a general
reluctance to travel, has al-
ready led to a collapse in book-
ings, which will be compound-
ed by America’s ban on flights
from Europe. Chinese airlines
have been the worst affected.
Chinese passenger numbers
tumbled by 85% in February
compared with February 2019.China’s exportsdropped
sharply in January and Febru-
ary, and imports fell, produc-
ing a surprise trade deficit of
$7.1bn. That raises questions
about whether China will be
able to meet its commitments
under the “phase one” trade
deal with America, through
which it is supposed to buy
more American products.The bank that likes to save Yes
India’s central bank stepped in
to rescue Ye s, the country’s
fourth-largest private lender,
which is grappling with high
debt. The bail-out involves
State Bank of India, the biggest
government-owned bank,
taking a stake in Yes.Jamie Dimon, the chief exec-
utive of JPMorgan Chase, had
an emergency procedure on
his heart, leaving two senior
executives in charge until herecovers. Mr Dimon has run
the company since 2005, mak-
ing him the longest-serving
ceoof any big American bank.Aonand Willis Towers Wat-
son, the world’s second- and
third-largest insurance bro-
kers, agreed to combine in a
$30bn deal. Separately, Tesco,
one of the world’s biggest
supermarket chains, said it
would sell its operations in
South-East Asia to Charoen
Pokphand, a Thai conglomer-
ate, for $10.6bn. It is the big-
gest-ever takeover in Thailand.Twitter reached a truce with
activist investors led by Elliott,
a hedge fund, seeking changes
at the company. Three new
directors were added to the
board. Jack Dorseykeeps his
job as chief executive; he has
been criticised by the investors
for having too many outside
interests. As part of the deal a
committee has been tasked
with evaluating a “succession
plan” for Mr Dorsey.In Britain, dozens of Conserva-
tive mps backed an amend-
ment to a bill that would end
the involvement of Huawei, a
Chinese maker of telecoms
equipment, in the country’s 5g
networks, on the grounds of
national security. The amend-
ment was defeated, but it wasthe first Tory rebellion against
Boris Johnson’s government.The Chinese owner of Grindr,
the world’s most popular gay-
dating app, found a buyer for
the business after the Ameri-
can government reportedly
pressed it to sell. In 2016
Beijing Kunlun Tech acquired
Grindr from its American
developers. But that led to
concerns that China could tap
into data on the app in order to
blackmail American citizens.The unand World Meteoro-
logical Organisation released a
report on the rise of carbon-
dioxide emissions. “Green-
house-gas concentrations are
at the highest levels in three
million years, when the Earth’s
temperature was as much as
three degrees hotter and sea
levels some 15 metres higher,”
said António Guterres, the un’s
secretary-general.Not business as usual
The list of eventscancelled or
postponed because of covid-
mushroomed. Casualties
include the rest of thenba
season in America and the
Coachella festival in southern
California. The Council on
Foreign Relations scrapped a
roundtable on “doing business
under coronavirus”.Brent crude oil price
2020, $ per barrelSource: Datastream from Refinitiv60504030February March