Virus fears push stocks to 2-week low

Shares tumbled in Asian markets as China announced sharp increases in the number of people affected in an outbreak of a potentially deadly virus. (AFP)
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Updated 28 January 2020

Virus fears push stocks to 2-week low

  • China has confirmed more than 2,700 cases of the new virus, with 81 deaths. Most have been in the central city of Wuhan

LONDON: World shares slipped to their lowest in two weeks on Monday as worries grew about the economic impact of China’s spreading coronavirus, with demand spiking for safe haven assets such as Japanese yen and Treasury notes.

The death toll from the coronavirus outbreak in China rose to 106 and the virus spread to more than 10 countries, including France, Japan and the US. Some health experts questioned whether China can contain the epidemic.

By midday in London, MSCI’s All-Country World Index, which tracks shares across 47 countries, was down 0.6 percent to its lowest since Jan. 9.

In Europe, stock markets slumped at the start of trading, tracking their counterparts in Asia. The pan-European STOXX 600 index fell 2 percent to its lowest level since Jan. 6, and the Euro Stoxx 50 volatility index jumped to its highest level since December.

“The coronavirus is an economic and financial shock. The extent of that shock still needs to be assessed, but it could provide the spark for an arguably long-overdue adjustment in the capital markets,” Marc Chandler, chief market strategist at Bannockburn Securities, told clients.

In Asia, Japan’s Nikkei average slid 2 percent, the biggest one-day fall in five months. A Tokyo-listed China proxy, ChinaAMC CSI 300 index ETF, fell 2.2 percent. Many markets in Asia were closed for the Lunar New Year holiday.

US S&P 500 mini futures were last down 1.36 percent, suggesting an open in the red on Wall Street later. The VIX volatility index, also known as Wall Street’s “fear gauge,” hit its highest levels since October.

The ability of the coronavirus to spread is getting stronger and infections could continue to rise, China’s National Health Commission said on Sunday. More than 2,800 people globally have been infected.

China announced it will extend the week-long new year holiday by three days to Feb. 2 and schools will return from their break later than usual. Chinese-ruled Hong Kong said it would ban entry to people who have visited Hubei province in the past 14 days.

“While the continued spread of the virus is concerning, we were expecting that the outbreak could worsen before being brought under control,” UBS strategists wrote in a research note, adding that they expected impact on the region’s economy and risk assets to be short-lived.

“Sentiment may remain depressed in the near term, especially for those sectors most impacted, however we retain a positive outlook for emerging market stocks, including a preference for China equities within our Asia portfolios.”

MSCI’s broadest index of Asia-Pacific shares outside Japan was off 0.45 percent, although markets in China, Hong Kong, Taiwan, South Korea, Singapore and Australia were closed on Monday.

All three major Wall Street indexes closed sharply lower on Friday, with the S&P 500 seeing its biggest one-day percentage drop in over three months.

The S&P 500 lost 0.9 percent, the Dow Jones Industrial Average 0.6 percent and the Nasdaq Composite 0.9 percent. The US Centers for Disease Control and Prevention has confirmed five case of the virus on US soil.

US Treasury prices advanced, pushing down yields. The benchmark 10-year note’s yield fell to a three-and-half-month trough of 1.6030 percent. It last traded at 1.6321 percent.

Elsewhere in bonds, the Italian 10-year yield fell to a three-month low Monday after right-wing leader Matteo Salvini failed in his bid to overturn decades of leftist rule in the northern region of Emilia-Romagna on Sunday, bringing some relief to the government.

In the currency market, the Japanese yen strengthened as much as 0.5 percent to 108.73 yen per dollar, a two-and-a-half-week high.

The euro last traded unchanged to the dollar.

China’s yuan tumbled to a 2020 low, and commodity-linked currencies such as the Australian dollar fell, as growing fears about the spread of a coronavirus from China pushed investors into safe assets.

The coronavirus outbreak also pressured oil and other commodity prices.

US West Texas Intermediate crude futures plummeted 2.69 percent to a three-and-a-half-month low of $52.13. Brent shed more than 3 percent to a three-month low of $58.50 per barrel.

Spot gold rose as much as 1.0% to $1,585.80 per ounce, the highest level since Jan. 8, as the coronavirus outbreak pushed up demand for the safe-haven metal.


Nissan’s new CEO willing to be fired if no turnaround at Japanese giant

Updated 18 February 2020

Nissan’s new CEO willing to be fired if no turnaround at Japanese giant

  • Makoto Uchida, who took over the top job in December, put his job on the line at the automaker’s shareholders’ meeting
  • Uchida pleaded with shareholders to be patient while he comes up with a plan by May to recover from crumbling profits

YOKOHAMA: Nissan’s new chief executive said on Tuesday he would accept being fired if he fails to turn around Japan’s second biggest automaker which is grappling with plunging sales in the aftermath of the scandal surrounding ex-chairman Carlos Ghosn.
Makoto Uchida, who took over the top job in December, put his job on the line at the automaker’s shareholders’ meeting, where he faced demands ranging from cutting executive pay to offering a bounty to bring Ghosn back to Japan after he fled to Lebanon.
Nissan’s worsening performance has heaped pressure on Uchida, formerly Nissan’s China chief who became its third CEO since September, to come up with aggressive steps to revive the company.
On Tuesday, Uchida, who was repeatedly heckled by shareholders, said he was ready to face dismissal if he failed to improve profitability at the company, which is on course to post its worst annual operating profit in 11 years.
“We will make sure that we steer the company in an effective way so that it is visible in the eyes of viewers. I will commit to this: if the circumstances remain uncertain you can fire me immediately,” he said.
Uchida, 53, did not give a timeframe for improving Nissan’s performance.
The new boss must prove to the board he can accelerate cost-cutting and rebuild profits at the 86-year-old Japanese giant, and that he has the right strategy to repair its partnership with France’s Renault, sources have told Reuters.
Uchida pleaded with shareholders to be patient while he comes up with a plan by May to recover from crumbling profits and a corporate shake-up following Ghosn’s arrest in Japan in late 2018 over financial misconduct charges.
“If you can be patient a little bit longer, on a day-to-day basis you will be able to sense we are changing,” he said.
Ahead of the meeting, some shareholders demanded more clarity about Uchida’s plan.
“I just want to know what the plan for recovery is. At the moment, the share price has dropped again, and the value of the company has plummeted,” said a 70-year-old former employee who owns shares in the company.
“If this is the situation, part of me thinks that we would be better off with Ghosn ... If we don’t get a clearer vision of the path the company is taking, it will be a worry.”
Nissan’s shares are trading around their lowest level in more than a decade following its latest earnings.
Last week, Nissan cut its dividend outlook to its lowest since the 2011 financial year, after dwindling car sales drove the company to post its first quarterly net loss in nearly a decade.
Shareholders gathered at the extraordinary meeting in Yokohama to vote in new directors including Uchida and Chief Operating Officer Ashwani Gupta.
Their appointments highlight a changing of the guard at Nissan, as shareholders were also voting on motions for former company stalwarts, CEO Hiroto Saikawa and COO Yashuhiro Yamauchi, to leave their board director positions.