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Coronavirus Hits Hong Kong as Economy Reels From Protests – The Wall Street Journal

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Residents in Hong Kong protest over plans for an empty housing estate to become a temporary quarantine camp for frontline medical staff and patients with coronavirus.


Photo:

philip fong/Agence France-Presse/Getty Images

Hong Kong banned visitors from the Chinese province at the center of a new virus epidemic as echoes of SARS send panic through the community, threatening more misery for an economy already in recession after months of protests battered tourism and retail sales.

Many people in the city donned masks as local authorities confirmed at least eight cases of infection by the deadly pathogen from the Chinese city of Wuhan, the outbreak’s epicenter. Disneyland shuttered, Lunar New Year festivities were scrapped and schools will remain closed until Feb. 17.

As fear of the coronavirus spreading rises, consumer spending is set to be a casualty as people stay away from restaurants, malls and crowded places. A similar strain known as SARS, or severe acute respiratory syndrome, engulfed Hong Kong from the mainland in 2003, killing nearly 300 people in the city and sending its economy into a three-month tailspin.

Hong Kong was among the worst hit by SARS, with sales in restaurants and retail outlets dropping by some 50% according to a University of Hong Kong report, before bouncing back quickly. As stock markets swooned and people pared travel plans recently, Hong Kong is bracing for a more severe replay of such economic turbulence.

This time, Hong Kong is already in recession. Seven months of street protests, slower Chinese economic growth—a key engine of Hong Kong’s economy—and U.S.-China trade tensions combined to shrink gross domestic product by 2.9% in the third quarter, the territory’s first year-over-year contraction since the global financial crisis in 2009.

The losses from tourist spending, as virus-hit China locked down many cities ahead of the Lunar New Year, are just the top of a fresh set of economic worries for Hong Kong. Professional unions have threatened strikes to protest the government’s handling of the crisis, amid fear among the public of a looming crush of mainland visitors seeking medical resources.

Police on Sunday used tear gas to break up protesters who had blocked roads and built barricades outside a housing estate that the government wanted to turn into a quarantine camp for infected people. Officials later halted the plan.

Hong Kong Disneyland Resort, where attendance in recent months has already been battered by protests, said it would shut from Sunday until it could work out with health authorities when to reopen. The city’s official Lunar New Year celebrations have been scrapped.

Cathay Pacific Airways Ltd.,

Hong Kong’s flagship carrier, has suspended flights to and from Wuhan through the end of February and offered refunds on all mainland China routes as virus cases crop up around the country. “We are monitoring the situation closely and will continue to coordinate with the health authorities,” it said in a statement.

Tour operators including industry major Hong Thai Travel Services Ltd. canceled all group tours to mainland China for at least the rest of January. Hong Kong’s Travel Industry Council said Friday that about 2,600 group tours to the mainland through mid-February had been canceled. Hong Kong’s high-speed rail operator has indefinitely suspended trains to and from Wuhan.

Compounding these pressures, a federation of medical staff unions along with other professional trade unions have threatened strikes if the government doesn’t escalate efforts to contain the disease, including turning back all visitors from mainland China. The government since Monday barred entry to visitors from Hubei, China’s most virus-affected province.

Neighboring Macau also began a similar ban Monday, posting its sixth confirmed infection as its casino-focused economy too faces pressure from a drought of mainland holidaymakers.

Also Monday, the dean of the University of Hong Kong’s medical school, Gabriel Leung, estimated some 44,000 people in Wuhan alone could be infected—far higher than the official mainland tally—and urged “draconian measures” to check the outbreak. He said cases, if unhindered, would likely double every six days. China health officials didn’t immediately respond.

The Hong Kong government has also expanded visitor health declaration requirements, and are looking for more remote sites for quarantine camps. Of nearly 400 suspected cases of infection in Hong Kong, nearly half have been hospitalized.

Chinese authorities are urging the public to remain calm as they try to contain a mysterious, fast-spreading coronavirus that has killed dozens of people and infected thousands. However, millions have already left Wuhan, the city at the center of the outbreak. Photo: Associated Press

Chinese health authorities have confirmed dozens of infections in Shenzhen, the megacity north of Hong Kong, and hundreds more suspected in nearby cities. The as-yet-unnamed coronavirus has killed at least 80 people on the mainland and infected almost 3,000 by official tallies. The outbreak has also reached the U.S. and Europe, and spread across Asia.

Hong Kong’s economy is heavily dependent on individual and household spending, and has become more so since the SARS era. Private consumption last year accounted for 65% of the territory’s economic output, up from 58% in 2002, official data show.

The high level of dependence on private consumption amplifies any hit to the tourism, hotel, and related industries. Tourism contributes about 5% of gross domestic product—mostly from inbound visitors—and employs more than 250,000 people. Officials deem the sector one of “four pillars” of Hong Kong’s economy, alongside financial services, logistics, and professional services.

SARS arrived in Hong Kong in early 2003 as the city grappled with a housing market slump and the aftermath of the Asian financial crisis. The outbreak lasted some three months and Hong Kong rode a broad-based recovery in the second half of 2003, posting 3.1% growth that year.

The new coronavirus is flourishing amid grimmer economic conditions. Even before the outbreak, tourist arrivals in November had fallen 56% year-over-year, nearing the 60% declines in April and May 2003 during SARS. Arrivals last year fell 14% from 2018, driven by a decline that sharply accelerated after June, official data show.

Commuters wear face masks in Hong Kong’s subway Sunday.


Photo:

jerome favre/Shutterstock/european pressphoto agency

Private spending fell 4.8% in the third quarter, the latest available data—a sharp reversal from 3.3% growth in the April-to-June period, the government said.

Visitors from mainland China account for most of Hong Kong’s tourists, reaching 84% of total arrivals at its peak in February 2015. The measure fell to 72% in November, its lowest since March 2017.

Hotel occupancy rates in November were 66%, compared with 95% a year earlier, official data show. Restaurants are struggling to attract diners, with some putting staff on leave.

“As the SARS outbreak infected more than 8,000 people and killed over 700 people across Asia in 2002 and 2003, there is now greater awareness of how contagious diseases can have a crippling effect on businesses,” said

Patrick Zeng,

Hong Kong and Greater China chief executive for the global insurer Allianz Global Corporate & Specialty.

Write to Chuin-Wei Yap at chuin-wei.yap@wsj.com and Joyu Wang at joyu.wang@wsj.com

Copyright ©2019 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8

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Toronto Stock Exchange hits record high on energy boost

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Toronto Stock Exchange

Energy shares pushed Toronto Stock Exchange index to a record high on Tuesday, as investors eyed the U.S. Federal Reserve’s meeting this week for cues on the tapering of its monetary policy.

* The energy sector climbed 1% tracking crude prices, which were buoyed by expectations that demand will recover rapidly in the second half of 2021. [O/R]

* The Fed kicks off its two-day meeting on Tuesday, and officials are faced with ongoing tension between their two main goals, as inflation rises faster than expected even with millions of Americans still unemployed.

* At 9:38 a.m. ET (1338 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was up 77.55 points, or 0.38%, at 20,235.2, an all-time high.

* Producer prices in Canada most likely rose 3.1% in May from April, pushed higher mainly by softwood lumber, Statistics Canada said in a preliminary flash estimate.

* The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.4%.

* On the TSX, 163 issues were higher, while 61 issues declined for a 2.67-to-1 ratio favoring gainers, with 17.47 million shares traded.

* The largest percentage gainer on the TSX was BRP Inc, which jumped 4.6%, after the insurance distribution company issued a $350 million worth substantial issuer bid.

* Its gains were followed by Aritzia Inc, which rose 4.5%, after the apparel retailer acquired 75% of the athletic apparel maker Reigning Champ in deal worth $63 million

* Miners First Quantum Minerals Ltd and Hudbay Minerals Inc, fell the most on the TSX, down 4.1% and 3%, respectively.

* The most heavily traded shares by volume were Canadian Natural Resources Limited, BCE Inc and Auxly Cannabis Group Inc.

* The TSX posted 18 new 52-week highs and no new low.

* Across all Canadian issues there were 102 new 52-week highs and five new lows, with total volume of 32.21 million shares.

 

(Reporting by Amal S in Bengaluru; Editing by Amy Caren Daniel)

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Canadian dollar hits 7-week low

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Canadian dollar

The Canadian dollar weakened against its U.S. counterpart on Tuesday as investors weighed prospects of the Federal Reserve turning less dovish, with the commodity-linked currency extending its pullback from a recent six-year high.

The loonie was trading 0.4% lower at 1.2192 to the greenback, or 82.02 U.S. cents, after earlier touching its weakest level since May 6 at 1.2204. Earlier this month, it touched its strongest in six years at 1.2007.

“We’ve had such a strong move with commodity currencies and that trade has been slowly getting unwound,” said Edward Moya, a senior market analyst at OANDA in New York.

“We are starting to see a little bit more of an expectation that you are going to have a slightly less dovish Fed tomorrow and the commodity trade could continue to get undone a little bit,” Moya added.

In a new policy statement and economic projections due on Wednesday, the Fed is expected to acknowledge the first conversations among its policymakers about when and how fast to pare back the massive bond-buying program launched last year.

The program has supported global economic recovery, boosting commodity prices. Canada is a major producer of commodities, including copper and oil.

Copper fell 4%, extending its pullback from a record high in May. Oil settled 1.8% higher at $72.12 a barrel.

Canadian housing data for May was mixed. Housing starts climbed 3.2% compared with the previous month, while home sales were down for a second month after a blazing start to the year.

Canadian consumer price data is due on Wednesday, which could offer clues on the Bank of Canada policy outlook.

The Canadian 10-year yield was little changed at 1.389%. On Monday, it touched its lowest intraday level in more than three months at 1.365%.

 

(Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

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G7 nations to boost climate finance

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G7 leaders agreed on Sunday to raise their contributions to meet an overdue spending pledge of $100 billion a year by rich countries to help poorer countries cut carbon emissions and cope with global warming, but only two nations offered firm promises of more cash.

Alongside plans billed as helping speed infrastructure funding in developing countries and a shift to renewable and sustainable technology, the world’s seven largest advanced economies again pledged to meet the climate finance target.

But climate groups said the promise made in the summit’s final communique lacked detail and the developed nations should be more ambitious in their financial commitments.

In the communique, the seven nations – the United States, Britain, Canada, France, Germany, Italy and Japan – reaffirmed their commitment to “jointly mobilise $100 billion per year from public and private sources, through to 2025”.

“Towards this end, we commit to each increase and improve our overall international public climate finance contributions for this period and call on other developed countries to join and enhance their contributions to this effort.”

After the summit concluded, Canada said it would double its climate finance pledge to C$5.3 billion ($4.4 billion) over the next five years and Germany would increase its by 2 billion to 6 billion euros ($7.26 billion) a year by 2025 at the latest.

There was a clear push by leaders at the summit in southwest England to try to counter China’s increasing influence in the world, particularly among developing nations. The leaders signalled their desire to build a rival to Beijing’s multi-trillion-dollar Belt and Road initiative but the details were few and far between.

Johnson, host of the gathering in Carbis Bay, told a news conference that developed nations had to move further, faster.

“G7 countries account for 20% of global carbon emissions, and we were clear this weekend that action has to start with us,” he said as the summit concluded.

“And while it’s fantastic that every one of the G7 countries has pledged to wipe out our contributions to climate change, we need to make sure we’re achieving that as fast as we can and helping developing countries at the same time.”

PLEDGE OVERDUE

Some green groups were unimpressed with the climate pledges.

Catherine Pettengell, director at Climate Action Network, an umbrella group for advocacy organisations, said the G7 had failed to rise to the challenge of agreeing on concrete commitments on climate finance.

“We had hoped that the leaders of the world’s richest nations would come away from this week having put their money their mouth is,” she said.

Developed countries agreed at the United Nations in 2009 to together contribute $100 billion each year by 2020 in climate finance to poorer countries, many of whom are grappling with rising seas, storms and droughts made worse by climate change.

That target was not met, derailed in part by the coronavirus pandemic that also forced Britain to postpone the U.N. Climate Change Conference (COP26) until later this year.

The G7 also said 2021 should be a “turning point for our planet” and to accelerate efforts to cut greenhouse gas emissions and keep the 1.5 Celsius global warming threshold within reach.

European Commission President Ursula von der Leyen said the G7 leaders had agreed to phase out coal.

The communique seemed less clear, saying: “We have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitment.”

The also pledged to work together to tackle so-called carbon leakage – the risk that tough climate policies could cause companies to relocate to regions where they can continue to pollute cheaply.

But there were few details on how they would manage to cut emissions, with an absence of specific measures on everything from the phasing out of coal to moving to electric vehicles.

Pettengell said it was encouraging that leaders were recognising the importance of climate change but their words had to be backed up by specific action on cutting subsidies for fossil fuel development and ending investment in projects such as new oil and gas fields, as well as on climate finance.

British environmentalist David Attenborough appealed to politicians to take action.

“We know in detail what is happening to our planet, and we know many of the things we need to do during this decade,” he said in a recorded video address to the meeting.

“Tackling climate change is now as much a political and communications challenge as it is a scientific or technological one. We have the skills to address it in time, all we need is the global will to do so.”

($1 = 1.2153 Canadian dollars)

(Reporting by Elizabeth PiperAdditional reporting by William James and Kate Abnett in Brussels and Andreas Rinke in BerlinEditing by William Maclean, Raissa Kasolowsky and Frances Kerry)

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