The Wall Street Journal - 12.03.2020

THE WALL STREET JOURNAL. ***** Thursday, March 12, 2020 |A

THE CORONAVIRUS PANDEMIC

cluding one to Wuhan on Feb.

5, which evacuated 70 Iranian

students living there, accord-

ing to Iran’s Foreign Ministry.

The students were quaran-

tined after their arrival from

Wuhan, Deputy Health Minis-

ter Alireza Raeisi was quoted

as saying by the official Is-

lamic Republic News Agency.

Mahan Air said the numbers

from the flight tracker are in-

accurate.

Mahan Air’s most recent

flight from China landed in

Tehran from Shanghai on the

morning of March 9, according

to FlightRadar24. There is no

official total count of passen-

gers.

Iran’s Minister for Roads

and Urban Development has

said that an investigation by

the health ministry had con-

cluded that the coronavirus

hadn’t been brought to Iran by

one of the country’s own air-

lines, according to state televi-

sion. The minister didn’t pro-

vide an explanation for that

conclusion.

To combat the epidemic,

Iran’s authorities have erected

checkpoints on roads leading

to and from major cities, and

Revolutionary Guard and po-

lice forces on Friday closed

streets leading to major infec-

tion hubs in the country’s

north, far from Qom.

In contrast to China, which

took draconian measures to

contain the virus in Wuhan,

Iranian officials have insisted

they won’t quarantine Qom.

Many Iranians have refused

to get tested, worried that

they might contract the virus

in hospitals.

China, Russia and the World

Health Organization have deliv-

ered thousands of test and di-

agnostic kits as well as respira-

tory machines. France,

Germany and Britain also have

transported equipment and

pledged close to €5 million

($5.7 million) through the

World Health Organization or

other United Nations agencies.

But Iran officials, traders

and experts say it won’t be

enough to make up for dwin-

dling stocks of supplies and

faulty equipment.

Close Ties to China Fueled Iran Outbreak

Strategic partnership

in face of sanctions on

Tehran forged contacts

opening door to illness

Firefighters disinfected streets in Tehran on Wednesday. According to official statistics, more than 350 Iranians have died from the virus.

ABEDIN TAHERKENAREH/EPA/SHUTTERSTOCK

TJM Investments, speaking

from the floor of the New York

Stock Exchange. But he said

there was a “sign of life” in a

small bounce around 3:30 p.m.

“Tomorrow will be a critical

day,” he said. “Every other time

we’ve had a sharp down day,

we’ve rallied the following

day.”

One surprising development

Wednesday was the sharp de-

cline in the prices of U.S. Trea-

sury securities, which until this

week had risen significantly on

days when U.S. stocks were

falling.

The price declines, which

sent yields higher after a re-

cord fall, were fueled in part by

banks that were selling U.S.

government securities to re-

duce their trading inventories

and raise cash, some traders

said. The whipsaw action could

add to losses hedge funds and

others have been suffering on

stocks, commodities and other

assets.

Shares of banks like JPMor-

gan Chase & Co. and Bank of

America Corp. have suffered

steeper losses than the broader

indexes, hurt by a precipitous

slide in bond yields that have

sunk Treasury yields to re-

cords. Both stocks are off more

than 30% for the year.

Companies linked to travel

have been hit even harder. Nor-

wegian Cruise Line Holdings

Ltd. shares have slumped 74%,

while American Airlines Group

Inc. has fallen 43%.

The just-ended bull market

had faced plenty of threats dur-

ing its run. At varying times,

investors had fretted that

threats ranging from the Euro-

pean debt crisis to a slowdown

in growth in China to Washing-

ton and Beijing’s trade war

might tip stocks over the edge.

In each case, they were

wrong. Central banks stepped

in to lower rates or shore up

short-term funding markets,

bringing calm to financial mar-

during crises like the Sept. 11,
2001, terrorist attacks.
Wednesday’s stock-market
declines accelerated after the
World Health Organization de-
clared the new coronavirus a
pandemic and said it is “deeply
concerned” by the “spread and
severity” of the virus and by
“alarming levels of inaction.”
The Dow ended the day down
1,464.94 points, or 5.9%,
weighed down by an 18% drop
in shares of Boeing.
Peter Tuchman of Quattro M
Securities Inc., who has been a
floor trader on the New York
Stock Exchange for 35 years, de-
scribed an atmosphere of anxi-
ety as traders considered the
potential effects of the virus not
just on the markets but on life
more broadly.
“We’re groomed to deal with
adrenaline, anxiety, bear mar-
kets and bull markets,” he said.
“We don’t get emotional about
money. But when health and
welfare is involved and people’s
lives are involved, that sort of
eats away at our spirits.”
“It’s kind of a 9/11 feeling,
rather than a financial crisis
feeling,” he said. “You really
wonder, what’s tomorrow going
to bring?”
Adding to the shock for in-
vestors is the speed of the mar-
ket’s fall. The move from all-
time high to bear-market
territory was the fastest on re-
cord for the Dow, taking just 19
sessions.
In previous downturns, it has
taken the index on average 136
trading days to enter a bear
market from a recent high, ac-
cording to Dow Jones Market
Data. It has taken an additional
143 days from the bear-market
entry to the low and 63 trading
days from the low to exit from
the bear market.
Traders said the reaction on
the floor of the New York Stock
Exchange was relatively som-
ber Wednesday as stocks fell.
“It was tense,” said Tim An-
derson, managing director at

ContinuedfromPageOne

Iranian officials trace the or-
igins of the country’s coronavi-
rus epidemic to the holy city of
Qom, home to dozens of semi-
naries and religious shrines—
but also a number of Chinese-
backed infrastructure projects
built by scores of workers and
technicians from China.

This critical link to China,
centered in Qom, has helped
keep Iran’s economy alive in
the face of American sanctions.
And it is now being stress-
tested by the coronavirus. The
exact route of the virus is un-
clear. But Iran’s strategic part-
nership with Beijing has cre-
ated a constellation of potential
contacts that helped unleash
the illness, called Covid-19.
“China has been the trading
partner of last resort but, in
this case, it has turned into a
very toxic bomb,” said Sanam
Vakil, deputy Middle East di-
rector at Chatham House, a
think tank in London.
China Railway Engineering
Corp. is building a $2.7 billion
high-speed rail line through
Qom. Chinese technicians have
been helping refurbish a nu-
clear-power plant nearby.
There are also Chinese reli-
gious students studying at
Qom’s seminaries.
Iranian health officials have
said the source of the out-
break is likely either Chinese
workers in Qom or an Iranian
businessman from Qom who
traveled to China. Iranian offi-
cials haven’t identified the
businessman by name but say
he traveled from China to Qom
through an indirect flight.
Once the pathogen was loose
in Qom, a city of roughly one
million people, it spread rapidly,
taxing a sanctions-stretched
health-care system, amplifying
economic woes and fueling an
anti-Chinese backlash.
“We were unhappy with all

these crappy Chinese goods

everywhere,” said a housewife

who asked to be quoted by her

last name, Ms. Ashtari. “Now

they brought us this crappy vi-

rus, too.”

According to official statis-

tics, more than 350 Iranians

have died from the new virus.

The government says 9,

people have been infected; epi-

demiologists say the number

could actually be in the tens of

thousands. Travelers carried

the virus to at least 15 other

countries, the World Health

Organization and governments

in those countries say.

Dozens of Iranian officials

and parliamentarians have

been infected by the coronavi-

rus since the outbreak began

in Iran. Iranian media Wednes-

day evening reported that

First Vice President Eshaq Ja-

hangiri had been infected,

along with two other cabinet

members. The semiofficial

Fars news agency published a

list of 24 officials infected

with the virus, at the top of

which was Mr. Jahangiri. On

the list were also the minister

of industry, mines and busi-

ness, Reza Rahmani, and the

minister of cultural heritage,

Ali Asghar Mounesan.

The government reacted

slowly to the outbreak. Hours

after the first infections were

announced, the victims were

declared dead, suggesting that

the coronavirus had been al-

lowed to spread for weeks.

For days after the first cases

were discovered on Feb. 19,

Qom’s clerics defied govern-

ment orders to close shrines.

By the end of the month, when

authorities canceled Friday

prayers for the first time in de-

cades in an effort to stem the

epidemic, the disease had

spread to most provinces.

Weeks earlier, on Feb. 1, as

the coronavirus outbreak cen-

tered on the central Chinese

city Wuhan worsened, the Ira-

nian government had banned

its airlines from flying to

China. It gave an exception,

however, to Mahan Air, which

has emerged as a popular

source of air transport for the

country’s powerful Islamic

Revolutionary Guard Corps.

The U.S. government alleges

the airline transported person-

nel, money and arms for the

Guards, and provided trans-

portation for the Lebanese

Hezbollah militia, which

Washington considers a ter-

rorist organization. After the

Guards’ Qods Force com-

mander Qassem Soleimani,

who frequently traveled with

the airline, was killed by a U.S.

drone in January, his coffin

was returned to Iran on a Ma-

han Air flight.

Mahan Air said in a state-

ment to The Wall Street Jour-

nal that it had carried out

eight flights between Tehran

and China between Feb. 1 and

Feb. 9 to transfer Chinese and

Iranian passengers to their re-

spective home countries. Since

Feb. 12, the airline had flown

12 flights with cargo—such as

flying testing kits and dispos-

able masks to Iran—and fol-

lowed disinfection and hygiene

instructions issued by the

health ministry.

“We carry out flights under

full supervision of the health

ministry,” Reza Jafarzadeh,

spokesman of Iran’s Civil Avia-

tion Organization, told state

radio. “Whether incoming for-

eign passengers have been

tested or not is a matter for

the health ministry.”

Mahan Air has made at

least 43 trips since Feb. 1, ac-

cording to online flight re-

cords from FlightRadar24, in-

ByBenoit Faucon,

Sune Engel

Rasmussen

andJeremy Page

Many Iranians have

refused to get

tested, worried

about hospital risks.

kets. The U.S. and China

reached a preliminary trade

agreement last year, pushing to

the back burner the possibility

of a collapse in talks. And

through it all, the U.S. economy

ended up being more resilient

than naysayers had feared.

As recently as January,

many of Wall Street’s top eq-

uity analysts predicted the

stock run would continue for at

least another year.

The U.S. unemployment rate

was hovering at multidecade

lows, corporate profits were

projected to rebound after a

sluggish 2019 and retail sales

showed consumers spending at

a healthy clip.

No one knew that reports of

a novel coronavirus discovered

in China would wind up throw-

ing into doubt all of their as-

sumptions for the rest of the

year.

As news reports in February

showed the novel coronavirus

spreading rapidly and evolving

from a threat within China’s

Wuhan district to one affecting

countries as diverse as Italy,

South Korea, Iran and the U.S.,

money managers were forced

to confront the reality: the U.S.

wouldn’t be escaping the eco-

nomic fallout stemming from

the pandemic.

Analysts at Goldman Sachs

Group Inc. lowered their fore-

casts on Wednesday. The bank

now expects the S&P 500 to fall

to 2450 by midyear, a drop of

about 10% from current levels

and a 24% decline from the be-

ginning of 2020. The analysts

also expect corporate earnings

to decline 5% this year based

on lower oil prices and interest

rates that will hurt results in

the energy and financial sec-

tors.

Unlike during prior market

scares, Federal Reserve action

has proved ineffective so far in

bringing calm to investors.

Stocks briefly rallied at the

start of the month after the Fed

lowered interest rates by a half

percentage point, executing its

first inter-meeting rate cut

since the 2008 financial crisis.

But within minutes, the gains

gave way to selling again, as

traders questioned how effec-

tive central-bank policy, as op-

posed to the development of a

widely available vaccine or

treatment, would be in fighting

the disease.

The selling has been so in-

discriminate that even the

technology stocks that had car-

ried the bull market for much

of its run have sunk, with Face-

book Inc., Apple Inc., Ama-

zon.com Inc. and Alphabet Inc.

all down for the year.

Dow Drop

Ends Bull

Market

S&P500,past10tradingdays

Source: FactSet

3,

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March

Firstcorona-

virusdeath

isreported

intheU.S.

WorldHealth

Organizationdeclares

coronavirusa

pandemic

Fedcuts

rate

Bear market territory

 China’s idled factories face

reopening delays................... B

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