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.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
