BANGKOK (AP) — The Shanghai Composite index tumbled nearly 8% on Monday as Chinese regulators moved to stabilize markets jolted by a virus that has spread to more than 20 countries, slamming regional tourism and threatening global growth.
The outbreak of the virus in China has prompted governments around the world to step up surveillance and quarantine requirements as airlines cancel hundreds of flights. Millions of Chinese remained in lock-down as the number of people infected by the virus topped 17,000 as of Sunday night. It has killed more than 360 people, all but one in China.
The Shanghai benchmark dropped almost 9% after markets opened after a week-long Lunar New Year holiday that was extended by three days. It was its worst day since August 2015, despite the central bank’s effort to put billions of dollars of extra cash into the markets through short-term securities purchases.
Many analysts have dropped their forecasts for China, the world’s second-largest economy, to near 5% from earlier forecasts of 6% economic growth for the year. With tens of millions of Chinese city dwellers ordered to mostly stay home, retailer and tourism-related businesses already are suffering.
China’s communist leaders have massive resources for intervening to staunch panic selling of shares and have deployed them during past crises, including the 2008 global financial meltdown and the 2002-2003 outbreak of SARS, or severe acute respiratory syndrome. Most of the country’s largest companies and financial institutions are state-controlled.
On Sunday, the central bank announced it was putting 1.2 trillion yuan ($173 billion) into the markets to ensure there would be enough cash. The Shanghai Composite fell 2.8% on Jan. 23, its last day of trading before the holiday.
While shares in many sectors fell on Monday, prices for some Chinese pharmaceutical companies hit their 10% upside limit in early trading. Shandong Lukang Pharmaceutical, Jiangsu Sihuan Bioengineering and Harbin Pharmaceutical Group Co. were among the limit-up companies. Major conglomerate New Hope Group plunged to the 10% downside limit, as did Dongfang Electric Co.
The benchmark for China’s smaller market, in Shenzhen, plunged 8.4%.
Worries over the potential harm to businesses and trade from the virus, first reported in the central Chinese city of Wuhan, have triggered wide swings in share prices around the globe. On Wall Street on Friday, the Dow skidded more than 600 points as the widening pandemic stoked fears that travel restrictions and other uncertainties could dent global growth. The U.S. market, which had calmly been setting record after record, suffered its worst January since 2016 and its first monthly loss since August.
“The worst case scenario is that this Wuhan coronavirus rages on unchecked like the ebola crisis in west Africa several years ago,” said Francis Lun, a stock analyst in Hong Kong.
It could take two or three years for China to recover, he said.
“Because China is the big elephant in the room now. If it falls, it will bring down all these smaller fries like Hong Kong, Taiwan, South Korea and even Japan. So nobody is immune,” Lun said.
The central bank said its open market operations were aimed at ensuring sufficient liquidity. The People’s Bank of China often uses reverse repurchases of securities that it plans to sell back, basically serving as very short-term loans, to increase the amount of money circulating in markets.
A large share of the 1.2 trillion yuan put into the markets was going to meet payment obligations falling due on Monday, analysts said.
“This is well beyond the band-aid fix, and if this deluge doesn’t hold risk-off at bay, we are in for a colossal beat down,” Stephen Innes of AxiCorp. said in a client note.
The plunge when markets reopened was expectable, he said.
“It’s not the earthquake at the open but rather the aftershocks that will drive risk sentiment on Monday,” he said.
In a separate statement Saturday, the PBOC said financial institutions should follow local quarantine regulations and try to minimize gatherings to reduce risks of spreading the virus. That includes allowing rotating shifts, working online from home and other strategies, it said.
Regulators have also urged banks and other financial institutions to boost lending and soften repayment requirements in areas severely affected by the pandemic. State media reported that short-selling using borrowed shares was also banned.
Trading in Shanghai is mostly conducted electronically, so there is no crowded, raucous trading floor. Shanghai authorities have extended the Lunar New Year holiday for the city until Feb. 9.
The virus outbreak has cast a shadow over the initially upbeat start to 2020, as the U.S. and China signed a trade deal that eased a big source of uncertainty and raised hopes a global slowdown might have bottomed out.
Just two weeks ago, the S&P 500 closed at an all-time high, having climbed around 13% since early October. Volatility was running at 12-month lows and even a dust up between the U.S. and Iran didn’t rock markets. Britain’s exit from the European Union on Friday barely registered.
The action on other Asian markets Monday was less dramatic.
Japan’s Nikkei 225 index lost 1.0% to 22,971.94, while the S&P ASX/200 declined 1.3% to 6,923.30. In South Korea, the Kospi was flat, at 2,118.88. Hong Kong’s Hang Seng, which has many mainland Chinese heavyweights, climbed 0.2% to 26,356.98.
Benchmark U.S. crude oil picked up 4 cents to $51.61 per barrel in electronic trading on the New York Mercantile Exchange. It lost 58 cents to $51.56 on Friday. Brent crude, the international standard, gave up 21 cents to $56.42 per barrel.
In currency trading, the U.S. dollar rose to 108.55 Japanese yen from 108.35 yen on Friday. The euro slipped to $1.1076 from $1.1095.
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Associated Press writer Alice Fung in Hong Kong contributed.
TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.
The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.
“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.
The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.
But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.
Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.
“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.
“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”
Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.
The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.
In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.
Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.
The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.
The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.
Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.
Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.
It will also re-evaluate its design ranks.
Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.
Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.
This report by The Canadian Press was first published Sept. 13, 2024.
VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.
No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.
About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.
Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.
Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.
A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”
This report by The Canadian Press was first published Sept. 12, 2024.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
