Royal Caribbean posts $1.6bn loss as pandemic halts sailings
Royal Caribbean reported a wider than expected loss in the second quarter as the cruise operator suspended its sailings as a result of the coronavirus pandemic.
Royal Caribbean revenues fell to $175.6m down from $2.8bn in the same quarter a year ago, but exceeded Wall Street expectations. The company suspended cruises from March 13 and had no voyages in the second quarter. The Cruise Lines International Association (CLIA), an industry group, has called for members to suspend operations until the end of October.
“The Covid-19 pandemic is posing an unprecedented challenge to our industry and society,” said chief executive Richard Fain.
That pushed Royal Caribbean to a net loss of $1.64bn or $7.83 a share, compared with a profit of $472.8m or $2.25 a share in the same period a year ago. Adjusting for one-time items it reported a loss of $6.13 a share, steeper than analysts’ expectations for a loss of $4.82 a share.
While the bookings for the remainder of the year have been hit by the coronavirus-driven suspension, the company said 2021 is trending well, even though it is early in the cycle.
Royal Caribbean expects to burn about $250m to $290m of cash a month “during a prolonged suspension of operations”.
The cruise operator, whose shares are down more than 60 per cent this year, said it expected to report a loss in the current quarter and the full year.
US equities edge higher even as US-China spat escalates
Gains for global stocks were held back on Monday as escalating tension between China and the US weighed against hopes of further economic stimulus.
Beijing has said it will sanction 11 US citizens in response to similar measures from Washington, intensifying the friction between the world’s two largest economies after the introduction of a tough security law on Hong Kong.
US stocks edged higher with the S&P 500 rising 0.2 per cent at market open, as the benchmark index comes within touching distance of its February peak. The tech-heavy Nasdaq rose by the same amount.
London’s FTSE 100 rose 0.4 per cent while Europe’s benchmark Stoxx 600 index gained 0.5 per cent by the afternoon.
Traders were keeping an eye on manoeuvres in Washington and their implications for more US economic support measures. President Donald Trump on Saturday bypassed lawmakers and signed executive orders aimed at cushioning the economic blow from the coronavirus crisis.
Investors have largely brushed off headwinds including rising US-China tensions and stalled negotiations over fiscal support in Washington to push shares higher this month.
Marriott misses sales forecasts as hotel chain swings to quarterly loss
Hotel chain Marriott has said that its full recovery from the coronavirus pandemic “will clearly take time” as revenues missed forecasts and the group was pushed to a wider than expected quarterly loss.
Second-quarter revenue fell 72 per cent year on year to $1.46bn, missing Wall Street expectations for $1.68bn. Revenue per available room, an industry standard for measuring growth, fell 84.4 per cent globally.
The Maryland-based group swung to a net loss of $234m, or 72 cents a share, compared with a profit of $232m, or 69 cents a share, a year earlier. Adjusting for one-time items, the company reported a loss of 64 cents a share, steeper than analysts’ forecasts for 42 cents a share.
“While the full recovery from Covid-19 will clearly take time, the current trends we are seeing reinforce our view that, when people feel safe travelling, demand returns quickly,” the group said.
Ninety one per cent of Marriott’s hotels worldwide have reopened.
“We are seeing steady signs of demand returning,” said chief executive Arne Sorenson. Revenue per available room, which was down 90 per cent in April, improved and was off 70 per cent in July. Worldwide occupancy rates improved to nearly 34 per cent for the week ended August 1 compared with a low of 11 per cent in April.
Notably, the company said it was seeing more “widespread business demand” in Greater China, the region that led the recovery and originally saw a rebound in travel demand.
“The improvement we have seen in Greater China exemplifies the resilience of travel demand once there is a view that the virus is under control and travel restrictions have eased,” Mr Sorenson said.
French economic activity 7% down in July
Victor Mallet in Paris
French economic activity in July was running at 7 per cent below its pre-crisis level as a result of the coronavirus pandemic, a slight improvement on the 9 per cent fall-off in June, according to the latest report from the country’s central bank based on its latest survey of businesses.
In the second quarter as a whole, French GDP was down 13.8 per cent, the Banque de France said.
“Activity continued to recover in July, in industry as well as in services and construction, but at a slower pace than in the previous month,” the bank said.
Activity in August was expected to be stable or improve slightly, confirming predictions of a “birdwing”-shaped recovery marked by a sharp economic upturn after the lockdown ended in May, followed by a second, shallower phase of recovery.
Barrick basks in glow of record gold prices
Henry Sanderson in London
Barrick Gold’s second-quarter profit beat forecasts to more than double, in the wake of a record rally in the yellow metal’s prices.
The world’s second-largest gold miner reported adjusted profit of $415m, or 23 cents a share, up from $154m a year earlier. That beat analysts’ expectations of 19 cents a share. Revenues rose 48 per cent from a year earlier to $3.06bn.
Gold prices have rallied by 34 per cent this year to a record above $2,000 a troy ounce driven by depressed bond yields and fears over the impact of Covid-19 on the global economy. Shares in Toronto-based Barrick have risen 60 per cent this year to trade at C$38.60.
Barrick said its gold production fell 15 per cent in the second quarter from a year earlier to 2.4m ounces due to coronavirus-related disruptions in Argentina. Still Barrick said it was on track to meet its annual guidance of between 4.6m to 5m ounces of gold.
Barrick said its cost of gold production rose 19 per cent to an all-in sustaining cost of $1,031 an ounce.
US virus cases breach 5m mark
Total coronavirus cases in the US has topped 5m as the country worst hit by Covid-19 has struggled to get the pandemic under control.
Johns Hopkins University data showed that cumulative cases reached the milestone on Sunday while the death toll was in excess of 162,000 people in America.
The volume of daily cases has been decreasing slowly across the country but remains elevated at about 50,000 and the daily death count from the virus has risen steadily to average more than 1,000 per day over the past week, according to calculations by the Financial Times.
California, Texas and Florida are the three states that have been recording the highest number of daily cases and deaths over the past month, although case numbers appear to be trending downwards.
Efforts to push through more stimulus in the US to prop up the economy, which has been devastated by the pandemic, have run into a roadblock. President Donald Trump bypassed lawmakers on Saturday by signing orders following the collapse of talks with Democrats over a fifth Congressional stimulus package.
Saudi Arabia to launch late-stage trial of Chinese-developed vaccine
Ahmed Al Omran in Jeddah
Saudi Arabia will soon start Phase III clinical trials for a Covid-19 vaccine developed by China’s CanSino Biologics, the kingdom’s health ministry said.
The vaccine candidate will be tested alongside a placebo on 5,000 volunteers in the capital Riyadh as well as the cities of Mecca and Dammam, according to a statement published by the Saudi state news agency.
CanSino, which is collaborating with the Chinese military, in March became the first company in the world to begin clinical trials of a vaccine based on adenovirus that stimulates an immune response using a chemically weakened common cold to carry genes from the new coronavirus into the body.
Several companies in the US, UK, Germany and China are currently developing their own vaccine, but none has been approved for commercial use yet.
The kingdom has reported more than 288,000 confirmed cases and 3,176 deaths of coronavirus.
Second-wave fears fail to damp optimism over Europe’s recovery
Investor sentiment towards the eurozone economy brightened in August for the fourth consecutive month with the easing of coronavirus-related restrictions likely to sustain an economic improvement.
The overall index for the bloc climbed 4.8 points to minus 13.4, a slower pace of improvement than last month, although the increase was larger than economists polled by Reuters had been expecting, a measure produced by Frankfurt-based research house Sentix showed.
A negative score indicates a larger proportion of institutional and private investors reporting a bad economic situation than those reporting a good one. The score has climbed from its low of minus 42.9 in April.
Investor sentiment towards the current economic situation for the single currency zone improved to minus 41.3, up 8.2 points. Patrick Hussy, managing director of Sentix, said “there is still no rejoicing in absolute terms” since the figure points to a recession in the third quarter but “the recovery is progressing”. Most economists predict a sharp rebound with growth of more than 6 per cent in the three months to September.
The forward-looking expectations in the index were virtually unchanged from July at 19.3, indicating that investors have not become more fearful about the economic impact of a second wave of coronavirus infections in Europe yet.
“It is remarkable in this context that a second wave of corona infections does not leave a new fear reflex in the economic indicators,” Mr Hussy said.
Investor sentiment towards Germany recovered at a much faster pace than other European countries, partly due to a strong rebound in orders for German manufacturers, Sentix said.
Turkish lira falls anew after hitting record low last week
The lira has struck new lows as the week kicks off with many analysts doubtful that Turkish authorities will be able to steady the currency without significant rate increases.
In early London trading, the lira dropped about 0.7 per cent against the US dollar to TL7.338, following last week’s 4.5 per cent tumble.
Turkey’s central bank and bank regulator have taken a series of steps to drain the abundance of lira in the market and make it more difficult to bet against the currency in an apparent attempt to ease the selling pressure.
President Recep Tayyip Erdogan on Friday described the fall as “temporary” and said it was caused by the coronavirus pandemic and last week’s deadly explosion in Beiruit. But investors and analysts have said Turkey’s drastic rate cuts, which have left the country’s main lending rate well below the level of inflation, have heaped downward pressure on the currency.
“No cocktail of these banking system tinkering or partial capital control measures is capable of turning the lira trend around. Harsher capital controls can buy some more time, perhaps,” said Tatha Ghose, currencies analyst at Commerzbank.
“But the underlying weakness arises out of an inconsistent monetary policy framework, featuring no inflation targeting – and this will continue to build up stress in the background until it ultimately forces fundamental change.”
The latest fall comes also comes as Turkey’s attempt to prop up the lira, effectively pegging it at about TL6.85 to the dollar since mid-June, appeared to be coming undone.
Goldman Sachs estimates the central bank has spent at least $65bn in the intervention this year, far beyond the $40bn that it spent from its foreign-currency reserves in the whole of last year.
Superdry sets up additional £70m funding
Superdry has agreed an additional £70m funding from its lenders to help shore up its financial position after the coronavirus crisis has compounded its troubles.
The asset-backed lending facility, agreed with its lenders HSBC and BNP Paribas, will be extended until January 2023 and replaces one that was due to expire a year earlier, the clothes retailer said on Monday.
Trading over the first three months of its financial year showed a better performance than Superdry’s initial expectations, even as the disruption from Covid-19 pandemic was knocking its performance compared with a year earlier.
The group showed £57.8m cash on its balance sheet as of August 6, up from the £39.8m it reported in May and £2.1m a year earlier, it said in its first-quarter trading statement.
Group revenue for the 13 weeks to July 25 fell 24.1 per cent from a year earlier as store closures during coronavirus-related lockdown measures hit the clothing retailers. Almost 95 per cent of its stores have reopened but its store revenue in the three months is down 58.1 per cent from a year earlier. That is about 32.3 per cent on a like-for-like basis.
“The actions we have taken to date have greatly strengthened our cash position, which together with our new ABL facility, give us the flexibility to execute our current plans and to secure our recovery,” chief executive Julian Dunkerton said.
I’m confident we can reset the brand and deliver on our transformation plans.
Superdry was struggling even before the pandemic struck and forced the government to order a number of non-essential stores to be closed from late March. In January the clothing group said its annual profits could be wiped out following a disappointing performance over the Christmas trading period, sending shares in the fashion brand down almost a fifth.
Mr Dunkerton, the co-founder of Superdry, has pledged to return to the company’s original design philosophy — producing colourful, Japan-influenced clothing — and to increase product choice and reduce discounting. He returned as chief executive last year after a boardroom coup.
German companies expect Covid-19 to affect public life until April
German businesses expect restrictions on public life to continue for another 8.5 months on average, as the pace of the economic recovery from the pandemic in Europe’s largest economy has shown signs of slowing down.
Companies in the leisure industry anticipate restrictions to last for the longest, a July survey by Ifo, a Munich-based think-tank showed. Those focused on sports, amusement and recreational activities forecast a further 13 months of measures to comply with, which would mean restrictions extend until August next year.
At the lower end of expectations, postal and courier services only expected restrictions to be in place for little over half a year.
Many businesses have reported uncertainty until the year-end but the survey sheds light on businesses’ expectations over the longevity of coronavirus-related restrictions into 2021.
But early signs of a second wave of the virus across Europe have grown stronger in August. Daily coronavirus cases have risen to 857 on average in the past week in Germany, a third higher than the end of July, leading to the tightening of quarantine requirements for travellers from certain countries and the closure of a handful of schools to stop the virus spreading.
Asiana sale in doubt as consortium issues new demands
Song Jung-a in Seoul
The Won2.5tn ($2.1bn) sale of troubled Asiana Airlines, South Korea’s second-biggest airline, to a local property developer may fall apart as the deal signed in December has been stalled for months with the aviation industry hit hard by the coronavirus pandemic.
The Hyundai Development-Mirae Asset consortium has dragged its feet on the acquisition since April and is now demanding an additional 12 weeks of due diligence on the debt-laden carrier, citing the changed business environment due to the pandemic.
The consortium has already completed seven weeks of due diligence on Asiana. Main creditor Korea Development Bank and Kumho Asiana, which controls the airline, are opposed to the consortium’s new demand.
Leaders of Hyundai Development, KDB and Kumho Asiana Group will meet on Monday to narrow their differences before Tuesday’s deadline.
Creditors hope that surprisingly strong Asiana earnings will renew the appetite of Hyundai Development to buy the airline, which swung to a net profit of Won116.15bn in the April-June quarter from a net loss of Won183.14bn a year earlier.
Asiana has suspended most of its international flights since March amid border closures and entry restrictions but its strong cargo business has offset weak travel demand as air freight of memory chips and mobile devices increases.
Its bigger domestic rival Korean Air also reported a second-quarter operating profit of Won43.7bn last week as cargo sales have doubled to Won1.23tn.
British bosses take pay cuts ahead of pandemic
Daniel Thomas in London
Pay for chief executives at the 30 largest companies in the UK fell almost a tenth last year, marking a five-year low for investor pay revolts as boards kept stricter watch on remuneration.
Among the FTSE 30 listed companies, CEO pay dropped more than 7 per cent to £5.9m in 2019 on a median basis, although wages for top executives across the wider FTSE 100 were static at about £3.7m.
Pay across chief financial officers in the FTSE 100 dropped about 12 per cent to £1.9m, according to the annual executive remuneration report by Deloitte.
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NZ plans to set up travel corridor with Cook Islands
The New Zealand government announced on Monday it hopes to establish a coronavirus-free travel corridor with the Cook Islands, in the South Pacific, by the end of this year.
Jacinda Ardern, New Zealand’s prime minister, said her cabinet met on Monday to discuss a draft agreement, adding:
We are working studiously to get this ready but we will make sure it’s based firmly on assurance and we don’t run the risk of exporting and importing Covid-19.
New Zealand has gone 101 days without a local Covid-19 infection, while the Cook Islands, 3000km north-east of Auckland, have not experienced any positive cases.
About 17,000 people live in the self-governing archipelago, which covers 1m sq km. Many islanders live in New Zealand, and the Cooks are a popular holiday destination for New Zealanders.
The Cook Islands became a British protectorate in 1888, but oversight was transferred to the then colony of New Zealand in 1901. Wellington is now responsible only for the islands’ foreign affairs and defence.
CanSino to launch final-stage vaccine trial in Saudi Arabia
Christian Shepherd in Beijing
One of China’s leading vaccine makers, CanSino Biologics, is planning its final-stage safety trials in Saudi Arabia, as Chinese companies push Covid-19 vaccine development beyond the country’s borders.
Saudi Arabia’s health ministry announced over the weekend that plans were being drawn up for CanSino to conduct a trial across the cities of Riyadh, Dammam and Mecca.
The trial is expected to involve 2,500 healthy participants who will be given a low dose of the vaccine and a second 2,500 will be given a placebo, and will begin “very soon,” the ministry said on its website.
The announcement brings CanSino up to speed with domestic rivals China National Pharmaceutical Group, or SinoPharm, and SinoVac Biotech, which are conducting final-stage trials in the United Arab Emirates and Brazil, respectively.
Western Union explores using cash for acquisitions
Laura Noonan in Dublin
Western Union, one of the largest digital platforms for money movement in the world, is planning to use opportunities arising from the coronavirus crisis to buy weaker rivals, according to chief executive Hikmet Ersek.
Second-quarter earnings released last week showed Western Union had $1.2bn of cash on its balance sheet at the end of June. “We have a good cash flow position even through Covid-19, and some competitors struggle,” he told the FT.
Pre-tax profits for the quarter came in at $193m, down 74 per cent year on year. This was partly due to the coronavirus crisis and also because the second quarter of 2019 included a big gain on an asset sale.
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India records more than 1,000 deaths in a day for 1st time
Amy Kazmin in New Delhi
India recorded an all-time high of more than 1,000 daily coronavirus deaths on Sunday, a sharp increase over last week’s average of about 860 daily deaths.
The 1,013 new deaths — the first four-digit daily total — pushed India’s aggregate known coronavirus fatalities to more than 44,400, the fifth-highest death toll from the pandemic.
The true death toll is believed to be far higher as victims who die without accessing health care, or being tested are not counted in the total, and the deaths of some coronavirus patients have been attributed to their pre-existing health conditions.
India is now detecting more than 60,000 new infections every day, significantly more than the new cases currently being found in the US and Brazil, which have the world’s two highest coronavirus caseloads.
India’s confirmed caseload has now risen to 2.2m infections, the third-highest in the world.
The steady rise in the daily detection of new cases comes as India is pushing to ramp up its low testing levels to a goal of 1m a day. At present, India is carrying out about 700,000 tests a day.
But its total tests of just 17,450 per million pale in comparison to the 62,000 per million carried out in Brazil or the 197,500 per million conducted in the US.
Sportspeople should set Covid-19 standards: top medic
One of Australia’s top doctors has called on sporting stars to be role models after rugby league authorities disciplined three players for breaching coronavirus movement restrictions at the weekend.
Brisbane Broncos forward Tevita Pangai was dropped after he attended the opening of a barber shop.
The suspension by the National Rugby League follows an announcement by the Newcastle Knights that two unnamed players had broken biosecurity guidelines.
“We have two players now on Covid hold as a result of a potential breach,” a Newcastle spokesperson said.
Nick Coatsworth, one of Australia’s deputy chief medical officers, said players should set examples for their fans and said it was “unfortunate that there’s these occasional high-profile situations where people aren’t doing the right thing”.
He said the majority of players in the NRL and the Australian Football League, the Australian rules body, are “great” role models. “They’re showing us how things are done.”
Chinese stocks drop after Washington unveils sanctions
Hudson Lockett in Hong Kong
Chinese stocks fell on Monday as investors weighed up US sanctions targeting China and Washington’s attempts to extend economic support measures.
China’s CSI 300 benchmark of Shanghai- and Shenzhen-listed shares fell 0.8 per cent and Hong Kong’s Hang Seng dropped 1 per cent in early trading on Monday.
The declines came after US President Donald Trump on Friday imposed economic and financial sanctions on 11 Chinese and Hong Kong officials in response to Beijing imposing a sweeping national security law on the semi-autonomous territory.
The officials subject to sanctions include Carrie Lam, Hong Kong’s leader.
Washington on Friday also issued orders banning US companies from dealing with Tencent’s WeChat messaging app and ByteDance, the Chinese owner of popular video app TikTok.
Tencent fell another 3.2 per cent in Hong Kong after closing 5 per cent lower on Friday. Shares in Alibaba, a Chinese ecommerce group that trades in Hong Kong, dropped 2.8 per cent despite not being directly affected by the US orders.
Elsewhere in Asia on Monday, South Korea’s Kospi index added 0.9 per cent while Australia’s S&P/ASX 200 added 1.3 per cent. Markets in Japan were closed for a public holiday.
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Asia’s garment workers lose out on $6bn in pandemic
Patricia Nilsson in London
Millions of garment workers in Asia have been deprived of $6bn in wages after the world’s biggest fashion brands cancelled or delayed orders and withheld payments because of the pandemic, a labour rights group has warned.
Many workers for suppliers to global fashion brands retailers including Hennes & Mauritz, Topshop and Gap, have allegedly received only partial or no wages at all in the three months ending in May, according to a report by labour union alliance Clean Clothes Campaign.
The average worker in the 50m-person strong Asian supply chain for garments has lost about a fifth of pay, representing roughly $5.8bn in unpaid or lost wages, based on data gathered by the group.
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Pork and vegetables lead China food inflation higher
Christian Shepherd in Beijing
Consumer prices in China rose during July due to higher food costs, while factory activity remained subdued, as widespread flooding slowed efforts to boost the economy following a coronavirus-induced slump.
Food prices soared 13 per cent year on year during the month, pushing the consumer price index up 2.7 per cent, the National Bureau of Statistics said on Monday.
Pork prices, still reeling from an outbreak of African swine fever, led the surge. They rose 86 per cent while fresh vegetable prices gained 8 per cent.
Flooding across southern China throughout June and July has hit a number of important agricultural regions, just as they began to recover from epidemic-induced lockdowns.
The producer price index, a measure of the cost of goods at factory gates, fell 2.4 per cent year on year in July.
Both the CPI and PPI numbers were slightly ahead of forecasts by economists polled by Bloomberg.
The Chinese economy’s recovery from the pandemic has been hit by repeated outbreaks of Covid-19, as well as weak demand in global markets and rising tensions with Washington.
S Korean small investors hit by plunge in Brazil’s real
Song Jung-a in Seoul
Retail traders in South Korea face big losses after bets on billions of dollars of Brazilian government bonds soured, prompting calls for regulators to better protect mom-and-pop investors from risky products.
Investors in the Asian country have ploughed about Won8tn ($6.8bn) into treasuries issued by the South American nation, only to see the assets plummet in value after the Brazilian currency nosedived during the coronavirus pandemic.
The fiasco has renewed concerns over the lack of regulatory oversight of the booming market for exotic, and often volatile, financial products promoted to retail traders and retirees, some of which have been subject to spectacular meltdowns.
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China reports 14 local and 35 imported Covid-19 cases
China reported 49 new Covid-19 cases to Sunday night, the National Health Commission announced on Monday.
Of those, 35 were imported, while all 14 local cases were recorded in the western Xinjiang region.
So far, China has officially recorded 84,668 confirmed cases of coronavirus, including 4,634 deaths.
The country also reported 31 new asymptomatic patients on Monday, compared with 11 a day earlier.
Singapore completes migrant worker dormitory testing
Singapore’s health ministry announced on Sunday it had completed Covid-19 testing of the country’s 300,000 migrant workers living in dormitories.
“The inter-agency task force has completed the testing of all workers in the dormitories on August 7 and some of the test results are still being processed,” a ministry statement said.
There are about 23,500 workers who are still serving out their isolation period in quarantine facilities, authorities said.
“These workers will be tested when their isolation ends, and we expect the case counts to remain high in the coming days, before tapering down thereafter,” the statement added.
The ministry said that of the 175 new Covid-19 cases reported in Singapore on Sunday, 171 were found in worker dormitories, and 98 per cent “are linked to known clusters, while the rest are pending contact tracing”.
JPMorgan reveals sharp shift to electronic bond trading
Tommy Stubbington in London and Colby Smith in New York
The coronavirus crisis has ushered in a “dramatic” shift in the world’s largest bond market away from trading by phone towards electronic execution, according to a report by JPMorgan Chase.
Over the past two years, roughly 50 per cent of trading in the US Treasury market has been carried out electronically, according to the report by JPMorgan’s Treasury trading desk, seen by the Financial Times.
That figure surged to 70 per cent in April and has continued to rise even as the most acute market stress eased, hitting 77 per cent in June. The data suggest that “the way these securities trade is starting to change dramatically”, the report said.
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Australia braces for more bad news after deadly weekend
The Australian state of Victoria recorded 29 coronavirus deaths over the weekend, although one of the country’s top medics indicated the state was gaining control of the surge.
The country’s second most populous state recorded its deadliest day of the pandemic on Monday, with 19 fatalities, following 17 on Sunday and 12 on Saturday.
One of Australia’s deputy chief medical officers, Nick Coatsworth, said on Friday that Victoria appeared to have reached the peak of the outbreak.
“It appears we’re in the plateau but we’re looking for the inflection point that tells Victorians that their efforts are being rewarded,” Dr Coatsworth said.
But the state’s premier, Daniel Andrews, said Sunday’s 394 new cases, the lowest single-day tally in 12 days, should not be interpreted too positively.
Mr Andrews on Monday announced 322 new cases, a two-week low, but said he could not forecast when the state’s strict lockdown, which began on July 9, would end.
Police in Melbourne, the state capital and Australia’s second-largest city, were out in force at the weekend, pictured, checking residents and preventing a planned anti-lockdown rally on Sunday in the central business district.
In New South Wales, two schools were closed on Monday after several students tested positive among 14 new cases in the state.
Queensland reported just one new case — an arrival from overseas in hotel quarantine — as the state passed 200 days without a local infection and prepared to lift restrictions on visitors to aged-care homes.
“That’s really good news for Queensland,” said premier Annastacia Palaszczuk, adding that she hoped the state’s residents would “support the tourism operators, cafes and businesses right across Queensland”.
Queensland closed its borders at 1am on Saturday to visitors from NSW and the Australian Capital Territory, which surrounds Canberra.
Chinese rating agencies boost local government vehicles
Sun Yu in Beijing
Chinese rating agencies have upgraded a record number of local government bond issuers even as fiscal income plunged after the coronavirus outbreak, in a move analysts say could lead to a wave of defaults.
The corporate credit ratings of 100 local government financing vehicles, the main lenders behind China’s infrastructure building boom, have been raised since January, according to Wind, a financial data provider.
This marks a sharp rise, with just 17 reporting a rise in the previous 10 years combined. The shift comes despite local governments reporting a 7.9 per cent drop in revenues in the six months ending in June.
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Trade shows await a world where people can mingle
Patricia Nilsson in London and Wang Xueqiao in Shanghai
The reopening of China’s economy and gradual easing of restrictions in many countries has provided a sliver of hope for the global events industry — valued at roughly $30bn by Citi — with months of preparation required to organise the largest shows.
But the spectre of local lockdowns — as have been imposed in Melbourne and Manchester — continued infections in the US and several European countries, and reluctance by companies to make staff travel because of health concerns mean when and how the sector will recover is far from clear.
Informa chief executive Stephen Carter insists the group, the world’s largest events company which last year organised 450 gatherings, can ride out the storm.
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Asia-Pacific stocks make a cautious start in early trading
Asia-Pacific stocks had a cautious start to the week after US President Donald Trump issued executive orders to aid the economy following the collapse of coronavirus stimulus talks in Congress.
South Korea’s Kospi was flat, Australia’s S&P/ASX 200 added 0.2 per cent and futures tip the Hang Seng in Hong Kong to open 0.2 per cent lower. Japanese markets are closed for Mountain Day.
Mr Trump bypassed lawmakers and signed four presidential orders to help the economy on Saturday after talks over a Congressional coronavirus rescue package collapsed.
Democrats dismissed Mr Trump’s orders as “weak and unconstitutional”.
On Friday, the S&P 500 closed up 0.1 per cent, after the non-farm payrolls report showed the US added 1.8m jobs in July, slightly above the 1.6m forecast.
S&P 500 futures were down 0.1 per cent.
UK jobs outlook likely to be weak in 3rd quarter: survey
The British employment outlook is likely to remain weak in the third quarter of 2020 due to the coronavirus pandemic, according to a survey released on Sunday by the Chartered Institute of Personnel and Development and the Adecco Group, a Swiss-based temporary staffing supplier.
A third of UK-based companies expecting to cut jobs in the July to September period, the data showed. “This is the weakest set of data we’ve seen for several years,” said Gerwyn Davies, an adviser at the CIPD, a professional body for British human resources personnel.
The survey found employers are exploring a variety of options to stave off or minimise redundancies during the pandemic.
The results showed 42 per cent of companies have implemented recruitment freezes, with some sectors particularly affected. Nearly two-thirds of hospitality companies have frozen hiring, as have more than half of business services (54 per cent) and information technology providers (52 per cent).
Some sectors have implemented pay cuts, with construction companies (44 per cent of respondents), business services (30 per cent) and hospitality (29 per cent) most likely to do so.
US reports 51,000 new coronavirus cases on Sunday
The US reported 51,291 new coronavirus cases and 616 new deaths on Sunday, coming in above the tally for the same day a week earlier.
There were 48,694 cases reported last Sunday. A weekend reporting effect means the number of cases and deaths recorded for Saturday to Monday tend to be lower than for the rest of the week, according to the Covid Tracking Project.
Tropical storm Isaias also caused a fall in testing earlier in the week and technical issues in some states, which could also explain the increase for Sunday, the Covid Tracking Project said.
The storm battered the US east coast, killing at least nine people and leaving hundreds of thousands without power.
Many American students have begun moving into university dormitories, such as at Syracuse University in New York state, pictured, for the new academic year, despite fears of further infections.
Aramco sticks to dividend despite earnings plunge
Anjli Raval and Andrew England in London
Saudi Aramco stuck by plans to pay out $75bn in dividends this year despite a 73 per cent drop in second-quarter earnings and surging debt levels, as the state energy group bets on a rebound for the pandemic-hit oil sector.
Like its international peers, Saudi Aramco has had a brutal year. Government imposed lockdowns to curb the spread of coronavirus dramatically hit oil demand and prices, leading to a fall in net income of $6.6bn in the three months to June 30, compared with $24.7bn in the same period a year ago.
It marks a drastic change in fortunes from December, when it raised a record $25.6bn in its initial public offering and became the world’s most valuable listed company — a status it recently lost to technology giant Apple.
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New York state calls for $30bn in economic aid
New York state needs $30bn in aid over the next two years to repair its coronavirus-ravaged economy, political leaders told the state’s Congressional delegation.
Governor Andrew Cuomo and other state figures wrote to New York’s representatives in Washington on Friday calling for urgent assistance.
The letter specifically called for aid to maintain New York City as a global trade and transport hub, noting the Metropolitan Transportation Authority — which provides transit services in 12 counties in New York, including the city, and two in Connecticut — recently posted a $12bn deficit.
“Additional assistance is necessary to sustain its daily operations at a level sufficient to meet the needs of the greater metropolitan area, and indeed to secure its presence as an economic engine in communities in every corner of the state,” they wrote.
The Port Authority of New York and New Jersey “has suffered greatly over this period as their receipts have been curtailed”, the letter stated. The authority needs $3bn to continue improvements at John F. Kennedy and LaGuardia airports, described as “the centerpieces of New York’s resurgence”, the state’s leaders added.
Trump takes executive action on economic relief
Demetri Sevastopulo in Washington
US president Donald Trump signed four executive orders at the weekend, all aimed, he said, at helping Americans cope with the economic fallout from the pandemic after talks with Democrats over a Congressional rescue package collapsed.
The US president signed one order that would partly renew unemployment benefits included in a previous stimulus package which expired last month and another that would suspend the payroll tax — something he had wanted to do long before the recent talks with Congress.
Mr Trump had threatened to take action after Treasury secretary Steven Mnuchin and White House chief of staff Mark Meadows failed to reach agreement with Nancy Pelosi, the Democratic House speaker, and Chuck Schumer, the top Senate Democrat.
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Youth sanguine over post-virus economy, survey finds
While the global coronavirus pandemic is hitting wallets worldwide, as businesses crash and companies institute layoffs and furloughs, young people are less worried about the long-term impact, a survey has found.
Standard Chartered, the bank, said a recent poll revealed that one-third of respondents said Covid-19 had forced them to earn less, while more than half expected the pandemic to further affect their income or employment.
But respondents aged between 18 and 34 expressed the most confidence they would bounce back from the economic hardship caused by the pandemic.
StanChart found that 80 per cent of those aged 18-34 believed they had the digital skills needed to thrive post-pandemic, compared with 63 per cent of those over 65.
About 45 per cent of respondents expected their income to increase over the next three to six months, with 15 per cent expecting income gains of 25 per cent or more.
The bank surveyed 12,000 adults in China (including Hong Kong), India, Indonesia, Kenya, Malaysia, Pakistan, Singapore, Taiwan, United Arab Emirates, UK and US.
Global deforestation accelerates during pandemic
Anna Gross in London, Andres Schipani in Manaus, Stefania Palma in Singapore and Stephanie Findlay in New Delhi
Forests have been razed at an alarming rate across Asia, Africa and South America during the coronavirus pandemic, according to new research, as environmental law enforcement has been sidelined and villagers in the tropics have turned to logging for income.
Since the start of the coronavirus pandemic, forest loss alerts have increased by 77 per cent compared to the average from 2017-2019, according to data from Global Land Analysis and Discovery — a worldwide warning system for the depletion of tree cover — and compiled by conservation body WWF Germany.
The alerts are based on satellite detection of tree cover loss. While they cannot definitively be attributed to deforestation or logging, they are the best global indicator of land change over time.
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One in three child patients requires intensive care: CDC
While children are much less likely than adults to end up in hospital with coronavirus, those that do are just as likely to need intensive care, data collated by the US Centers for Disease Control and Prevention indicate.
While the hospital admission rate for people under 18 is just 8 per 100,000 – compared with 164.5 per 100,000 for adults – children require intensive care at the same rate as adults: about one in three.
“Children are at risk for severe Covid-19,” the latest CDC Morbidity and Mortality Weekly Report noted. “Public health authorities and clinicians should continue to track paediatric [Covid-19] infections,” it added. “Reinforcement of prevention efforts is essential in congregate settings that serve children, including childcare centres and schools.”
A team led by CDC epidemiologist Lindsay Kim analysed data from hospitals in 14 US states between March 21 and July 25. The researchers said the proportion of children needing hospital care had risen during the period from 0.1 to 0.4 per 100,000, with a weekly high of 0.7 per 100,000.
The report acknowledged that most reported infections in children aged under 18 years are asymptomatic or mild, but added: “Less is known about severe Covid-19 in children requiring hospitalisation.”
Weekend news you might have missed …
The US unemployment rate fell to 10.2 per cent in July from 11.1 per cent in June, while employers added fewer jobs than June as the economic rebound from the pandemic was hindered by a jump in Covid-19 cases in the American south and west. The US labour department said employers added 1.8m jobs in July, a much slower pace from 4.8m in June.
New York schools will be allowed to reopen when the academic year begins in September, as the state that served as the pandemic’s early hotspot in the US declared a turning point in its fight against the coronavirus. Andrew Cuomo, the state’s governor, said on Friday that all New York school districts aiming to reopen would need to set out specific plans for doing so.
Britain will “not hesitate” to add other countries to its quarantine list, chancellor of the exchequer Rishi Sunak said on Friday, as fears grow that rising numbers of Covid-19 cases across Europe could disrupt the summer plans of UK holidaymakers. Last week, Belgium, Andorra and the Bahamas were added to the list of countries subject to 14-day quarantine requirements and the spotlight is now on France.
More than 1m employees and freelancers working for festivals, concerts and other events such as Glastonbury, pictured, will lose their livelihoods and put the future of live events in the UK at risk if the government doesn’t provide financial support, according to estimates by Plasa, an events business group. “We will lose a skillset that has taken years to build up,” said Peter Heath, Plasa chief executive.
The UK government on Friday tightened local lockdowns in England by adding Preston to areas where different households cannot meet indoors. The number of new virus cases in Preston, a city of 140,000 people in Lancashire, north-west England, rose to 32.8 per 100,000 people in the week to August 3, up from 20.3 in the previous seven days.
Tens of thousands of Bolivians blocked roads across the country over a decision to delay the presidential election due to coronavirus, prompting fears of a repeat of the chaos and bloodshed that followed the last election nine months ago. The Organization of American States accused protesters of “preventing the passage of oxygen tankers and ambulances necessary to attend the pandemic”.
Hong Kong landlord doubles tenant relief scheme
Hong Kong landlord Link Asset Management said on Sunday it would double the size of its tenant support scheme to HK$600m (US$77m), as a second wave of coronavirus infections grips the Chinese territory.
The company said it would waive management and air conditioning charges for all tenants in August and September, totalling more than HK$150m, and waive all rents on its 128 non-government and welfare organisation tenants in those months.
“Hong Kong is seeing the worst pandemic in decades,” said chairman Nicholas Allen. Link has about HK$200bn in assets. The company recorded a 5.6 per cent rise in revenues to HK$10.7bn in the year to March 2020 on income of HK$44.2bn.
Link said some tenants’ rents had been reduced, while others were being paid in instalments with interest waived on late payments and a moratorium applied to service charges.
Corporate news you might have missed …
Warren Buffett’s Berkshire Hathaway reported a surge in profits in the second quarter as the value of its stock portfolio rebounded, offsetting a near $10bn writedown and a slide in operating earnings. Berkshire said it would take a $9.8bn writedown on Precision Castparts, the aerospace parts supplier, reflecting the deep contraction in air travel since the onset of the coronavirus pandemic.
Thousands of British Airways staff will find out in the next few days whether they have lost their jobs as the airline pushes ahead with its restructuring plan in a battle to survive the worst crisis in its history. From Friday, BA cabin crew, engineers and ground staff began receiving letters informing them of the outcome of plans to cut up to 12,000 jobs.
Russian discount grocery chain Magnit says a coronavirus-related boost to revenues has accelerated its turnround and helped te company resume its challenge to market leader X5. Profit so far this year is nearly triple that of 2019, said chief executive Jan Dunning, while total revenue is up 14 per cent year on year to Rbs763bn ($10.4bn).
About a third of jobs at London’s Evening Standard are to be eliminated in the most far-reaching cost cuts at any large UK publisher since the pandemic. Staff at the free newspaper were told on Friday of proposals to cut 115 jobs to help save the company, which is owned by Evgeny Lebedev, the Russian-born newspaper proprietor nominated for a peerage last week.
The AA, the British roadside recovery group whose ads once said it “gets someone out of trouble every eight seconds”, is in talks about a rescue of its own. As the coronavirus pandemic has hit earnings, and repayment deadlines edge into view, the company is finally attempting to bring its more than £2.6bn of debt under control.
Realme, a low-cost newcomer Chinese smartphone maker, has carved out a leading position in Asia’s emerging markets, as the pandemic intensifies competition to secure market share in the strategically important region. In the first quarter of 2020, Realme’s sales grew 157 per cent year on year, making it one of only two brands to register positive growth globally during the period.
US small business more confident on hiring: poll
Just over half of US small businesses are hiring, or attempting to hire, employees, signalling the emergence of confidence that the coronavirus pandemic has reached its worst, a survey indicates.
According to a monthly poll of its members by the National Federation of Independent Business, a small-business lobby group, 51 per cent of smaller entities were adding or trying to add to headcounts in July.
But 86 percent of those hiring or trying to hire reported few or no qualified applicants for the positions they were trying to fill, up one point.
“This summer has been a challenging time for small businesses, and we see the evidence of that in the July jobs report,” said NFIB chief economist Bill Dunkelberg.
“Owners are doing everything they can to get their employees back to work but there have been obstacles, including unemployment insurance and government reopening regulations, that are causing further obstacles to small businesses,” he said.
Post-Covid-19 project to connect Christchurch by bike
The New Zealand city of Christchurch is to get six major bicycle routes — some as long as 15km — as part of a Covid-19 economic recovery programme and as lockdowns drove more residents to use bike-riding to socially distance, the government announced at the weekend.
“During lockdown we saw many more families and kids out on their bikes, which shows that when our streets feel safe to cycle people want to ride,” said associate transport minister Julie Anne Genter.
“Construction is expected to start within the next few months, with the remainder beginning in 2021,” she added.
The Christchurch projects, valued at NZ$125m (US$83m), account for more than half the NZ$225m earmarked for the national cycleway network.
The cycleways are part of a NZ$3bn infrastructure fund designed to offset economic damage from the pandemic.
On Sunday, New Zealand passed a milestone of 100 days without a local Covid-19 infection from an unknown source.
Global threats are reordering supply chains: McKinsey
Andrew Edgecliffe-Johnson in London
Companies could shift a quarter of their global product sourcing to new countries in the next five years, according to a new study that warns of rising threats to supply chains such as the coronavirus pandemic.
Goods worth $2.9tn-$4.6tn, or 16-26 per cent of global exports in 2018, are in play, the McKinsey Global Institute estimates in the report.
Cost considerations and government pressures to become more self-reliant could see more than half of pharmaceutical and apparel production move to new countries, it adds.
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Pandemic seals dominance of UK’s biggest banks
Nicholas Megaw in London
The first Metro Bank branch opened 10 years ago with the aim of making UK banking more like the US. A decade on, the coronavirus pandemic has highlighted the gulf that still remains between the two.
Metro may have succeeded in introducing an American-style emphasis on customer service. But investors — and regulators — had also hoped to replicate the competitive lending market that helped the US economy recover when the biggest banks were reluctant to offer loans after the 2008 financial crisis.
Instead, experts fear the latest economic downturn will further entrench the dominance of Britain’s biggest banks — Barclays, HSBC, NatWest and Lloyds.
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