The Economist - 03.14.2020

6 The EconomistMarch 14th 2020
The world this week Business

Staggeringfromtheeffectsof

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 prolonged

disruptionthreatenedits

survival.Thesuspensionof

manyflights,anda general

reluctancetotravel,hasal-

readyledtoa collapseinbook-

ings,whichwillbecompound-

edbyAmerica’sbanonflights

fromEurope.Chineseairlines

havebeentheworstaffected.

Chinesepassengernumbers

tumbledby85%inFebruary

comparedwithFebruary2019.

China’sexportsdropped

sharplyinJanuaryandFebru-

ary,andimportsfell,produc-

inga surprisetradedeficitof

$7.1bn.Thatraisesquestions

aboutwhetherChinawillbe

abletomeetitscommitments

underthe“phaseone”trade

dealwithAmerica,through

whichit issupposedtobuy

moreAmericanproducts.

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 he

recovers. 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 was

the 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 barrel

Source:DatastreamfromRefinitiv

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