8 The EconomistAugust 22nd 2020
The world this week Business
TheTrumpadministration
issuedanedicttighteningthe
embargoonHuawei. The
measurepreventsanyonefrom
supplyingsemiconductorsto
theChinesemakerofnetwork
equipmentif theyaremade
usingAmericantechnology.It
isthebiggestblowtheAmeri-
cangovernmenthasyetlanded
onHuawei,whichwillnowtap
thestockpileofchipsit has
accumulatedtocoversuchan
eventuality.Chinasaid
America’sactioncontravened
internationaltraderules.The clock ticks, for TikTok
Oraclewas considering wheth-
er to bid for TikTok, according
to reports. TikTok is another
Chinese tech firm that has
fallen foul of the American
government; Donald Trump
has ordered its parent com-
pany, ByteDance, to sell its
American operations (though
his decree is legally dubious).
Microsoft is already vying to
buy TikTok, but Mr Trump now
supports Oracle’s bid.The operator of the Hong Kong
stock exchangereported a
solid set of earnings for the
first half, as revenues from
trading, listing fees and clear-
ing increased. The city’s politi-
cal turmoil has done little to
dent appetite foripos. A stream
of Chinese tech companies are
also offering secondary listings
of their shares in Hong Kong,
supplementing their listings in
New York, as a hedge against
warnings from American
regulators that they face being
delisted if they do not abide by
usaccounting rules.Airbnbmade it official and
filed papers for an ipo. There
were no details about when it
might float shares on the
stockmarket, or how many
shares it would offer, but it is
expected to be one of the big-
gest ipos this year.In Europe Ryanairreduced its
flight schedule for September
and October by a fifth. Book-
ings have drooped again be-
cause of the resurging corona-
virus. The airline had hoped to
operate 70% of its capacity.Official data showed that
Japan’sgdpwas 7.8% smaller
in the second quarter than in
the first. A plunge in consump-
tion during the pandemic and
a drop in exports were to
blame, though the contraction
was less severe than in Ameri-
ca or most European countries.
Japan was already in recession
following a steep rise in the
sales tax last year.Thes&p500closedata record
high for the first time since
February. Like some other
share-price indices the s&phas
rocketed back from the market
rout of mid-March, when
America and Europe went into
lockdown, though this has
been fuelled mostly by the
success of tech companies.
Alphabet, Amazon, Apple,
Facebook and Microsoft ac-
count for around a fifth of the
index; the stocks of most other
companies on the s&pare still
below their February levels.Applethis week hit $2trn in
value, after adding another
$1trn to its market capitalisa-
tion in just five months.The rebound in stockmarkets
led to more consternation
about their detachment from
the performance of the real
economy. The dollaris another
bellwether of the economic
fallout of covid-19 in America.
It dropped to a two-year low
this week against a basket of
currencies.Californians were told to pre-
pare for rolling power black-
outs for the first since 2001. A
number of factors including a
heatwave were responsible. So
was what Gavin Newsom, the
governor, described as a “gap”
in the ability of solar powerto
respond to increased demand.Epic Games, which makes
Fortnite, is taking Appleto
court over the technology
giant’s policy on in-app pur-
chases. Apple takes a 30% cut
from money spent within most
iPhone apps, something that
has long annoyed software
developers. After Epic deliber-
ately flouted Apple’s payment
rules, Apple removed Fortnite
from its app store, meaning
iPhone users can no longer
download one of the world’s
most popular games.The bloodbath on Britain’s
high streets showed little sign
of abating, as Marks & Spencer
announced 7,000 job cuts. The
retailer is shedding around a
tenth of its staff in total, the
most in its 136-year history.Walmarthad another bumper
quarter. Net sales from its
American operations for the
three months ending July 31st
were up by 9.5% compared
with the same quarter last year,
helped by a 97% rise in rev-
enues from online shopping.
At Target, a 195% increase in
revenues from e-commerce
helped the company chalk up
its biggest-ever rise in quarter-
ly sales.The work-life boundary
Carlyle, a global private-equity
firm, reportedly told its staff
not to use public transport to
commuteto their offices when
they reopen, and if they use
trains and buses at the week-
end to quarantine for 14 days.
Like other firms, Carlyle wants
to limit the spread of covid-19.
But the directive raises ques-
tions about how far a company
can interfere in an employee’s
private life. Using public tran-
sport during the pandemic is
perfectly legal for its workers
in London, for example; the
only rule is to wear a face mask.Share prices
March2nd2020=Source:DatastreamfromRefinitiv175
150
125
100
75
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