the times | Tuesday March 15 2022 37
Business
Ben Martin, Didi Tang
Fears are growing that lockdowns in
China to tackle a sharp rise in coronavi-
rus cases are set to disrupt shipping
from one of the world’s biggest ports
and will cause shortages to ripple
through global supply chains.
Chinese markets tumbled yesterday
after authorities imposed a one-week
lockdown on Shenzhen, a city of 17.5 mil-
lion people in the southeast of the
country, to tackle rising infection rates.
Shenzhen, dubbed the Silicon Valley
of China because of its booming
technology industry, has the world’s
fourth largest port, Yantian Inter-
national Container Terminals. Yantian
is thought to handle about 90 per cent
of China’s vast electronics exports,
making it a key cog in global trade.
While Yantian said that the port was
operating normally, the Shenzhen
lockdown is widely expected to hit
trade from the facility. Signs are already
emerging that the lockdown is starting
to cause disruption in the city, including
to two big suppliers to Apple.
Foxconn, the Taiwanese company,
said that it had suspended its opera-
tions in the city, including at an iPhone
factory, until further notice “in co-op-
eration with the local government’s
anti-coronavirus work”. The company
said that it would reallocate work
among back-up plants to minimise dis-
ruption to production. Shenzhen is not
understood to be one of Foxconn’s main
iPhone manufacturing sites.
Unimicron Tech, a maker of printed
circuit boards, said that it would “co-op-
erate with” the local government and
would halt operations in Shenzhen
until further notice. Coronavirus cases
commoditiescommodities currenciescurrencies
$
1.400
1.350
1.300
1.250$£/$
$1.3034 (-0.0029)
140
120
100
80Dow Jones
32,945.24 (+1.05)
38,000
36,000
34,000
32,0001.225
1.200
1.175
1.150£/€
€1.1877 (-0.0066) ¤world markets (Change on the day)
Gold
$1958.50 (-28.71) $
2,200
2,000
1,800
1,600Brent crude (6pm)
$106.99 (-5.79)FTSE 100
7,193.47 (+37.83)Feb 11 21 Mar 1 9 Feb 10 18 Mar 1 9 Feb 11 21 Mar 1 9 Feb 11 21 Mar 1 9 Feb 11 21 Mar 1 9 Feb 11 21 Mar 1 98,000
7,500
7,000
6,500Investors are betting on a Russian
default on its foreign creditors for the
first time since the Bolshevik revolution
after the Kremlin warned that its ham-
strung treasury may resort to servicing
bonds in roubles.
Russia’s finance minister pledged to
pay foreign creditors this week — in
dollars or roubles — in the first inter-
national bond repayment since sweep-
Russian debt default on the cards after Kremlin issues warning
Mehreen Khan Economics Editor ing western sanctions crippled the
country’s central bank.
Moscow owes debt interest worth
$117 million on two bonds due tomor-
row, with Anton Siluanov, the finance
minister, warning that sanctions could
hamper its ability to repay in dollars. “If
we see complications with executing
the order, then on Tuesday we will pre-
pare a relevant transfer order in the
rouble equivalent,” Siluanov told
Russian television yesterday. “From
Russia’s point of view, we are fulfilling
our obligations.” The two bonds do not
contain clauses allowing for repayment
in roubles, according to JP Morgan, and
investors are betting that any failure to
service in dollars will lead to a technical
default. Russia’s five-year credit default
swap, an instrument that insures
against exposure to a default, surged to
fresh records yesterday.
The value of the rouble has fallen
more than 40 per cent against the dollarafter western sanctions froze half the
central bank’s war chest of $630 billion
in reserves last month.
A missed debt payment would trigger
the start of a 30-day grace period for
Russia to meet its obligation to credit-
ors. If a default is declared, it would be
Russia’s first foreign default since the
repudiation of international loans by
Lenin in 1918 and the second since a
domestic default in 1998.
William Jackson, at Capital Econom-ics, the consultancy, said that the conta-
gion effect from a Russian sovereign
default for the rest of the world was rel-
atively limited, given the country’s low
international debt obligations.
“Even if the government halts pay-
ments to foreign investors on all their
holdings of sovereign debt, local and
foreign, the total of around $70 billion is
no larger than the debt Argentina
defaulted on in 2020 without causing
tremors in global markets,” he said.Regional lockdowns spook domestic markets
China’s Covid
surge sparks
supply fears
are rising across China and authorities
are responding with measures in line
with Beijing’s strict zero-Covid policy.
Investors fear that the rapid intro-
duction of restrictions will inflict dam-
age on the world’s second largest eco-
nomy if swathes of its vast industrial
and manufacturing sector are frozen.
The Hang Seng index in Hong Kong
dropped 5 per cent yesterday and the
Shenzhen Composite index in main-
land China lost 2.6 per cent. The Hang
Seng China Enterprises index of Chi-
nese mainland companies fell by 7.1 per
cent, its biggest one-day decline since
the global financial crisis in 2008.
Yesterday a travel ban was imposed
on Jilin province, which is in northeast
China and has more than 24 million
residents. Toyota, the carmaker that
has a joint venture with Chinese state-
owned FAW Group, said that produc-
tion in the city of Changchun, the
province’s capital, had been halted.
Jilin is the first Chinese province to
be locked down since Hubei was put
into quarantine in early 2020. Bus and
subway services have been suspended
in Dongguan, a manufacturing hub
nicknamed “the world’s factory”.
The National Health Commission in
Beijing said that 1,337 new domestically
transmitted infections with confirmed
symptoms had been reported in the
Chinese mainland on Sunday.
“The lockdown announced in
Shenzhen will send shockwaves
through global supply chains,” Simon
Geale, an executive vice-president at
Proxima, the procurement consult-
ancy, said. He estimated that a one-
week delay to shipping would mean
“roughly half a million containers are
not starting their journey”.I
t’s enough to make
Sandra and Carol
totter on their heels
(Alex Ralph writes). TheRoyal Liver Building in
Liverpool, famed as the
entrance to the Mersey
and entrenched in British
popular culture through
the 1970s sitcom The
Liver Birds, is set to be
sold for the second time
in its history, with a price
tag of £90 million.
CBRE, the property
adviser, has been
appointed by CorestateCapital, its owners,
having sold the building
for the first time in 2017
on behalf of Royal
London. The grade I
listed building has been
refurbished over the past
five years and is let to
companies including
Princes Foods, HSBC,
Mott MacDonald, Grant
Thornton and Everton
Football Club. Thebuilding, which opened in
July 1911, also has its a
visitor attraction centre.
It was the tallest office
building in Europe on its
completion and remains a
centrepiece of the city’s
waterfront, where new
regeneration is planned,
including Everton’s new
£500 million stadium,
which is due to be
completed in 2024.Sale brings
new episode
to Liver
Building
ALAMY
The building,
featured in
The Liver
Birds, is on
sale for £90m