Financial Times Europe - 26.03.2020

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Briefing

iCongress closes in on ‘wartime’ stimulus

Mitch McConnell, the Senate majority leader, has

described the $2tn stimulus package agreed early

yesterday in the upper chamber of Congress as a

“wartime level of investment in our nation”.— PAGE 4

iEurozone capitals call for ‘coronabonds’

France, Italy, Spain and six other capitals have

called for joint European debt to finance the virus

battle, setting up a clash with Berlin, which sees it as

premature.— PAGE 2; EDITORIAL COMMENT, PAGE 16

iShale boom set to run out of steam

Industry watchers have warned oil output will

begin falling steeply in the second half of the year

and could fall 2.5m b/d by the end of 2021, dashing

hopes for US energy independence.— PAGE 8

iPutin postpones vote on rule extension

The Russian leader has bowed

to pressure to delay a vote that

was set to lengthen his rule

after being warned the virus

outbreak was far worse than

official data suggest.— PAGE 3

iResearch points to summer respite

Studies have suggested the coronavirus outbreak

will follow the marked seasonality shown by other

respiratory viruses and that Covid-19 will find it

harder to gain a foothold in the tropics.— PAGE 3

iFears for rural India amid virus exodus

Experts have warned migrant workers may have

carried coronavirus into the rural hinterland, where

health services are woefully unprepared, in the

exodus following the Mumbai lockdown.— PAGE 3

iSouth African bid to free money markets

The central bank has started to buy government

bonds in a drive to unblock local money markets as

Africa’s most industrial economy braced itself for a

three-week lockdown to stem infections.— PAGE 10

Datawatch

THURSDAY 26 MARCH 2020 WORLD BUSINESS NEWSPAPER EUROPE

World Markets

STOCK MARKETS

Mar 25 prev %chg

S&P 500 2467.14 2447.33 0.

Nasdaq Composite 7406.52 7417.86 -0.

Dow Jones Ind 21263.40 20704.91 2.

FTSEurofirst 300 1235.83 1196.75 3.

Euro Stoxx 50 2782.47 2715.11 2.

FTSE 100 5688.20 5446.01 4.

FTSE All-Share 3102.98 2969.58 4.

CAC 40 4432.30 4242.70 4.

Xetra Dax 9874.26 9700.57 1.

Nikkei 19546.63 18092.35 8.

Hang Seng 23527.19 22663.49 3.

MSCI World $ 1742.61 1602.11 8.

MSCI EM $ 801.66 758.20 5.

MSCI ACWI $ 416.27 384.04 8.

CURRENCIES

Mar 25 prev

$ per € 1.083 1.

$ per £ 1.176 1.

£ per € 0.921 0.

¥ per $ 111.435 111.

¥ per £ 131.048 131.

SFr per € 1.060 1.

€ per $ 0.923 0.

Mar 25 prev

£ per $ 0.850 0.

€ per £ 1.086 1.

¥ per € 120.712 120.

£ index 74.742 73.

SFr per £ 1.150 1.

COMMODITIES

Mar 25 prev %chg

Oil WTI $ 24.55 24.01 2.

Oil Brent $ 27.45 27.15 1.

Gold $ 1605.75 1525.40 5.

INTEREST RATES

price yield chg

US Gov 10 yr 0.83 -0.

UK Gov 10 yr 0.44 -0.

Ger Gov 10 yr 103.26 -0.27 0.

Jpn Gov 10 yr 0.03 0.

US Gov 30 yr 131.02 1.34 -0.

Ger Gov 2 yr 105.26 -0.61 0.

price prev chg

Fed Funds Eff 1.58 1.55 0.

US 3m Bills 0.01 0.02 -0.

Euro Libor 3m -0.32 -0.31 -0.

UK 3m 0.54 0.52 0.

Prices are latest for edition Data provided by Morningstar

ORTENCA ALIAJ— NEW YORK

Billionaireinvestor Bill Ackman has

cashed in $2.6bn from bets that compa-

nies would struggle to pay their debts,

less than a week after warning the

American people that “hell is coming”

as a result of coronavirus.

The founder of Pershing Square hedge

fund told investors yesterday that he

was ploughing the winnings into the

equity market, after the US federal gov-

ernment said it was “all-in” to mitigate

the damage the virus has inflicted on the

economy.

Pershing Square disclosed this month

that it had bought $27m of credit protec-

tion on investment grade and high-yield

bonds to add to existing positions at

“deeply discounted prices”.

In an emotional interview with CNBC

last week, Mr Ackman said he became

ever more bearish in January after wak-

ing up from a nightmare about the

virus. He called on the US government

to impose a month-long shut down to

stop the spread.

The credit protection trades — using

derivatives tied to the perceived credit-

worthiness of corporate borrowers —

generated a $2.6bn windfall that helped

shield Pershing Square’s $6.5bn portfolio

from market turbulence. Its funds were

down 6.5 per cent for the year to March.

Encouraged by the Trump adminis-

tration’s approach to the economic fall-

out, Mr Ackman said he had this week

removed all the hedges he held and was

now betting heavily on a US recovery.

“We became increasingly positive on

equity and credit markets last week,

and began the process of unwinding our

hedges and redeploying our capital in

companies we love at bargain prices,” he

wrote in a letter to investors yesterday.

Pershing Square has bolstered its

stakes in Burger King-owner Restaurant

Brands International, DIY retailer

Lowe’s and Warren Buffett’s Berkshire

Hathaway, as well as hotel operator

Hilton, which Mr Ackman warned last

week could “go to zero” if no action was

taken by the government. The investor

also bought a stake in Starbucks, the

coffee-house chain he sold out of this

year after banking a 73 per cent return.

Pershing Square has also added a

stake in private equity group Black-

stone, which has lost 25 per cent of its

market value in the past month.

Even during the CNBC interview pre-

dicting catastrophic effects from coro-

navirus on the economy, Mr Ackman

said he was buying stocks “aggres-

sively”, later adding on Twitter that he

saw “bargains of a lifetime”.

Ackman gains $2.6bn from markets

rout and ploughs it back into equities

© THE FINANCIAL TIMES LTD 2020

No: 40,358★

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha

ReportiPAGE 6

Banks’ trading revenues

soar in frenzied markets

Austria €3.90 Malta €3.
Bahrain Din1.8 Morocco Dh
Belgium €3.90 Netherlands €3.
Bulgaria Lev7.50 Norway NKr
Croatia Kn29 Oman OR1.
Cyprus €3.70 Pakistan Rupee
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.
Egypt E£45 Qatar QR
Finland €4.70 Romania Ron
France €3.90 Russia €5.
Germany €3.90 Serbia NewD
Gibraltar £2.90 Slovak Rep €3.
Greece €3.70 Slovenia €3.
Hungary Ft1200 Spain €3.
India Rup220 Sweden SKr
Italy €3.70 Switzerland SFr6.
Latvia €6.99 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.90 UAE Dh20.
North Macedonia Den

Britons are

coming to accept

that Covid-19 will

probably have a

lasting impact on

the economy. On

Friday, two-thirds

said they believed

the coronavirus

would have a

long-term impact;

a similar share

thought jobs

would be affected

Hitting home

 of Britons who say Covid-

will have a lasting impact

   

Economy

Jobs

Wages

Prices

Finances

House prices

Mar  Mar 

Source: YouGov

Coronavirus: the

global impact

3 Lessons from the global financial crisis— GORDON BROWN

3 Get ready for the world’s $4.5tn takeover— JONATHAN GUTHRIE

3 Resilient Trump knows no one likes bad news— JANAN GANESH

DELPHINE STRAUSS AND
JONATHAN WHEATLEY— LONDON

The IMF and World Bank have called on
governments to offer immediate debt
relief to the world’s poorest countries to
help them tackle the coronavirus
outbreak.
“These are difficult times for all, espe-
cially for the poorest and most vulnera-
ble,” said David Malpass, president of
the World Bank. “Our first goal is to pro-
vide prompt support during the crisis,
based on a country’s needs.”
Campaigners say the pandemic will
put unsustainable pressure on govern-
ments whose public finances are
already under stress and whose health
systems are ill-prepared for the crisis,
which has now claimed more than
20,500 lives globally.

The IMF and World Bank have been

warning for some time of the build-up of

unsustainable debt in the poorest coun-

tries. Many are now under intense pres-

sure as the global scramble for dollars

drives down the value of their curren-

cies, making it harder to finance dollar-

denominated debts.

Some have also been hit by the big

falls in commodity prices and by the

slump in global tourism.

Countries receiving bilateral develop-

ment assistance are due to make repay-

ments of about $40bn to public and pri-

vate creditors this year. The IMF and

World Bank are calling for relief on

country-to-country loans, which repre-

sent about $18bn of that total.

The remainder is owed to multilateral

institutions and external private credi-

tors, according to estimates by Jubilee

Debt Campaign, a charity. Tim Jones, its

head of policy, said a moratorium on all

debt payments was “urgently needed”.

In a joint statement, the IMF and

World Bank called on all official bilat-

eral creditors to suspend debt repay-

ments at once, if asked for forbearance

by countries that qualify for the World

Bank’s concessional lending programme.

This is a group of 76 countries, most of

them small economies with very low per

capita income but also including larger

countries such as Nigeria and Pakistan.

They account for a quarter of the world’s

population and two-thirds of those liv-

ing in extreme poverty.

Kristalina Georgieva, IMF managing

director, said last week the fund could

channel $10bn of emergency financing

to the poorest countries, with a further

$40bn available for middle-income

emerging economies. The priority was

to boost frontline health spending to

care for those affected by the virus and

stop its spread, but she also underlined

the need to soften the economic blow.

Mr Malpass said this week that the

multilateral lender was ready to front-

load lending of up to $35bn to these

countries and find additional resources

to help them cope with the pandemic.

However, the lender would not allow the

money to be used to repay creditors.

Almost 80 countries have approached

the World Bank for assistance. The IMF

and World Bank said it was “impera-

tive... to provide a global sense of

relief for developing countries, as well as

a strong signal to financial markets”.

Poorest nations need debt relief

to tackle virus, say global lenders

3 World Bank and IMF appeal to state creditors 3 $18bn due in repayments this year

Cleansing Giza

Egypt sprays

tourist spots

Workers in Egypt yesterday begin to
disinfect tourist spots shut down by the
coronavirus outbreak, including the
area around the Great Pyramid of Giza,
on the outskirts of Cairo.
With passenger flights to and from
Egypt suspended — except for those
repatriating the last remaining tourists
— the country’s archaeological sites and
museums have closed. A nightly curfew
for two weeks also began yesterday as
authorities attempt to curtail the virus.
Egypt has so far reported more than
400 cases of coronavirus, including 21
deaths. Most early cases were linked to a
cruise vessel on the Nile from which
both foreign passengers and local crew
tested positive, dealing a blow to the
country’s crucial tourism sector.
Amr Abdallah Dalsh/Reuters

3 Coronavirus

news & analysis

Pages 2-

3 Corporate

response

Pages 6-

3 Markets

Pages 10-

3 Editorial

Comment

Page 18

3 Opinion

Page 19

3 LexPage 20

Inside

PAGE 19

MARCH 26 2020 Section:FrontBack Time: 25/3/2020 - 19:06 User: simon.roberts Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1 , 1