414April 2020 THE WEEKGlobalstockmarketsbouncedback
stronglyinresponsetothewallof
firepowerdeployedbycentralbanksto
calmthesystem–WallStreetenjoyed
oneofitsbiggestweeklyreboundssince
theaftermathofthe 1929 crash.But
investors,strugglingtoadapttoarapidly
shrinkingglobaleconomy,werestill
countingthecostofabruisingquarter.
TheFTSE 100 fell26%inQ1 2020 –its
worstperformancesince1987,the
poundslidtoa35-yearlow,andthe
priceofoilfellsoprecipitouslythat
someanalystspredicteditcouldturn
“negative”.Oneoftheearlycasualties
ofthevirus,Singapore,revealedthatits
GDPcontractedby10.6%inthequarter.
AsBritainsteeleditselfforwhatone
fundmanagerdescribedasaperiod
of“corporateDarwinismonsteroids”,
economistsatinvestmentbankNomura
forecastthatunemploymentissetto
doubleinthecomingmonths:from
3.9%inJanuaryto8%intheApril-June
quarter–theequivalentof1.4million
lostjobs.Insurerswerereportedtobe
tighteningtheirtermsonbusinessto
excludedisruptionduetocoronavirus.
BrightHouse,the household goods rent-
to-own group, and the Italian dining
chainCarluccio’swent into
administration, blaming “challenging”
conditions exacerbated by the virus.
Johnson&Johnsonannounced it might
be able to getavaccine into testing in
September.M&SjoinedSainsbury’sand
Tescoin rewarding workers with 10-15%
bonuses. Bosses at building chainTaylor
Wimpeybecame the latest to takeapay
cut: volunteering fora30% reduction
while the lockdown lasts.CITYCompanies in the news...and how they were assessedUKgrocers:breakingrecords
Atthestartoftheyear,whenBritain’s
grocersweretakingstockofapretty
averageChristmas,nooneforesawthe
trauma–andthebonanza–ahead.Suffice
ittosaythat“panic-buyingshoppers”have
madeMarch“thebusiestmonthonrecord
forsupermarketsacrosstheUK”,saidKit
HerenintheLondonEveningStandard.
Salesjumpedby20.6%overfourweeks,
accordingtomarketresearcherKantar,as
customersbentonstockingupbeforethe
lockdown“madeanextra 42 millionvisits
tosupermarkets”injustfourdays.Overall,
thenationshelledout£10.8bnongroceriesinMarch–“evenhigherthanlevelsseenat
Christmas”.Boozesalesjumped22%to£200m;salesofstore-cupboardingredientsrose
by28%.Andwithpubsandrestaurantsclosedfortheforeseeablefuture,thegravytrain
lookssettocontinue.Allthemoresobecausesupermarketsarealso“inlinefora£3bn
taxbreak”,saidPhilipAldrickinTheTimes.Allretailershavebeengrantedaone-year
exemptionfrombusinessratesintheChancellor’seconomicrescuepackage,butgroups
likeTesco,Sainsbury’sand Asda“willbesomeofthe biggestbeneficiaries”.Thatshould
help offsetthe cost ofrevvingup onlinedeliveryand click-and-collectservicestocope
withthe surge. Nowondertheycomegarnishedwithanalyst“buy” recommendations.
EasyJet:Stelioserupts
Groundingtheentirefleetwas“the easy bitfor easyJet”,saidNilsPratleyinThe
Guardian.“Nowcomes the trickytaskofnegotiatinginpublic”with founder SirStelios
Haji-Ioann ou“who, metaphorically speaking, isthreateningtostormthecockpitand
takehostages”.Haji-Ioannouwants the airline,ofwhichheand hissiblings retaina34%
stake, totorchamultibillion-poundorderfor107 Airbusplanesas amatterof urgency.
Andhe’sdemandingshareholders“fireone easyJetnon-executivedirectoreveryseven
weeks”untilhegetswhathewants. Atasimple level,Steliosmakesafair pointabout
theorder beingthe“largest singlethreat”tothe airline’ssolvency. Butdoesit haveto be
soallornothing?Surelythere’sflexibility tostagger,trimordelay the contract? You’d
thinkso,said AlistairOsborne inThe Times.Sadly,“justthethoughtof the new planes”
hassent him“intofullEyjafjallajökullvolcano mode”–we’rewitnessing“thesortof
eruption notseenfromMount Stelios foradecade”.Too manyplaneshaslongbeenone
ofthefounder’sfavou rite grouches(though hetendstogo“mysteriouslyquiet”when
sharesarerising).“Covid-19 hasclearlyreturnedhimto financialcrisis-stylepanic.”
Virgin:stir it up
Over atVirginAtlantic,SirRichardBranson hascomeup trumps,saidLex intheFT.
Criticisedat thestart ofthe crisisforaskingstafftotakeeightweeks’unpaidleave“to
savecosts”,Branson has nowpledged toinject$250mintohisVirginempire –with
mostofitgoingtotheairline.Callit astickingplaster,saidLaToyaHardingin The
DailyTelegraph.Chanc ellorRishiSunakmighthaveruledoutasector-widegovernment
rescueofUK-basedairlines,but Virgin willbe among the firstseekingaid on a“last
resort”case-by-casebasis. The airlineis re portedly“looking forapackageof c ommercial
loans andguarantees”to help it battle thecrisis.Succ esswould doubtlessgalvanise other
carriers,including easyJet, Loganair andEasternAirways, which may alsobe“mulling”
adecisiontorequest government funds.When it comes to stirring thingsup, Virgin is
proving equally adept Down Under, saidPatrickHatchin The Sydne yMorni ng Herald.
The“debt-laden, loss-making”Virgin Australi a(Australia’ssecond-largest carrier )has
written to ScottMorrison’sgovernment requestingaA$1.4bn emergencyloan. Having
previouslydeclareditself ingood e nough shapeto survive unaided,the largerQantasis
nowdemandingA$4.2bn “tolevelthe playingfield”. Talkaboutaid inflation.
Uber/Airbnb/WeWork:that isolated feeling
“Untiljustafewweeks a go, the so-called sharingeconomylookedlikethe f uture,” said
OliviaRudgardin TheSunday Telegraph.But theold disruptors are crumblingunder the
weightofthe pandemic.“Thelikes ofAirbnband Uberhave seen theirbusinessplummet
during theoutbreak.”And thi ngs aren’tlooking too pretty atWeWork,either. Even
beforethevirus struck, theoffi ce-s pacefirm was“struggling”, saidHilaryOsborne in
The Observer. Now it faces thehefty cost of maintaininglong leases onitsproperties,
while customers cancel short-term spacecontracts.NewsthatWeWork’s chiefsugar
daddy,theJapanese techinvestor SoftBank, may walk awayfro ma$3.3bn investment
cou ld prove the final straw. No wonderWeWorkers slammed the move as “unethical”.
Slack’n’Zoom
The onslaught of “online offices” and
“virtual water coolers” has proved a
game-changer for companies such as
Slack, said Danny Fortson in The Sunday
Times. The $16bn workplace messaging
service reports it has signed up 9,000
new accounts in the past three weeks –
“nearly equal to the 10,000 it signed in
the preceding six months”. Shares in the
other big tech winner, Zoom Video, have
jumped by 30%. The latter is proving
strangely compulsive, one nosey banker
told the Financial Times. “WhatIlove
[on Zoom calls] is looking at people’s
bookcases–the amount of John
Grisham they have on there. And
these are educated people!”Sevendaysin the
Square Mile