Capital Raising to Aid Reeling Businesses – BGL, TCL, SES, COH, TRS

  • March 26, 2020 12:35 AM AEDT
  • Team Kalkine
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Capital Raising to Aid Reeling Businesses – BGL, TCL, SES, COH, TRS

Summary

  • Resurgence of coronavirus in Beijing since 12 June, with total infections at 137 has upended daily life for many
  • Local authorities have now imposed more restrictions to stop the outbreak in neighbouring provinces, banning travel, and suspending transportation
  • Morgan Stanley states that the second wave of the virus would be more manageable with adequate supervision and better testing resulting in selective lockdown
  • Experts say that the rise in Beijing virus cases is a small jolt to the economic recovery of China

Coronavirus has resulted in panic and anxiety across the world, accompanied with chaos and dwindling economies. Several countries resorted to lockdown to flatten the coronavirus curve, which forced people to stay at their homes, caused some business closures and disruption in activities.

China had first notified WHO about numerous cases of uncommon pneumonia in Wuhan city on 31 December last year. Later, with rising spread of the virus, WHO declared coronavirus as global emergency and pandemic. Since then, the virus has barged in ~213 countries infecting more than 8.5 million people and taking away over 4,54,349 lives (as on 19 June 2020).

China suspended its air and rail departures on 23 January 2020 and put 3 cities in quarantine, initially. More areas were put under lockdown by the end of that week in the country. As coronavirus cases slowed down in China by late February, Chinese authorities reported 0 new infections for the first time on 23 May. China’s virus outbreak was brought under control through quite strict lockdown measures after it affected the country.

As the businesses in Beijing were ready to put coronavirus behind, re-emergence of the virus has escalated ambiguity over future growth. The nation progressed with passing more than 50 days without any domestically transmitted virus cases, but it reported its 1st case again on 11 June.

Beijing put under scanner amid virus resurgence

Recently, on 11 June, China’s capital city Beijing reported its first case of locally transmitted infection related to COVID-19, when a fifty-two year old male stated that he had not been out of the city for above 2- week period, and had not been in touch with anyone outside the area. The city was put under strict lockdown after the case, and transmission is related to Beijing’s largest wholesale wheat and fish market named Xinfadi.

Beijing had reported less than 500 cases of coronavirus earlier, during the first wave of infection.

A total of 45 people out of 517 tested at Xinfadi market were found positive for COVID-19. The market was immediately shut down, along with surrounding neighbourhood areas after virus cases surfaced

Resurrection of the virus in capital city since 11 June toppled everyday life for many individuals who are gripped with fear like entire city might go under lockdown as number of cases surge up.

As per health officials, 31 new infected cases came up on 16 June, bringing the total collective infections to 137 cases since the disease resurged in the city.

Beijing raised its level of alert to second highest by ordering the closure of schools and urging people to work from home. About 60% of the flights were cancelled or were expected to be abandoned at the Beijing Capital International Airport. All taxi, car services and few bus routes were also withdrawn when the city was placed at level 2 alert.

China’s economic recovery

Small business owners in Beijing who were beginning to see a ray of hope, have now been forced to wait, and watch as new cases appeared before the city. Beijing, which adds about 3.6% to China’s economic output, reported a drop in GDP by 6.6% in Q1 2020.

The Chinese economy had shrunk by 6.8% in Q1 period due to the virus outbreak in the country. It recorded positive economic data for May that have strengthened hopes that the country will rebound in the second half of 2020.

ALSO READ: China’s road to recovery: Production levels up, but demand remains muted

Industrial production in China rose at its most robust pace since December at 4.4% in May while FAI (fixed-asset investment) grew 3.9% after lockdowns were lifted from the country. It showed that manufacturing sector has had been expanding. However, retail sales remained negative, contracting by 2.8% YoY (during May) because of specific remaining social distancing rules adding to conclusion that recovery through increased demand could be on shaky ground.

However, market experts state that reviving of COVID-19 cases in Beijing is only a small jolt in China’s overall economic trend.

Second wave not as damaging

The resurgence of the virus in China has given a bleak glimpse into difficulties the world will face in its fight to conquer coronavirus. Concerns on the second wave have been intensified recently, as many countries are now relaxing lockdown measures levied to contain the virus outbreak. Global economies are facing worst recession due to adoption of lockdown measures that brought the economic activity to a halt.

Deyi Tan, top executive at Morgan Stanley, stated that if there is an emergence of the second wave, it will be more controllable than the first as now policymakers have learned to cope with such conditions. She added that a double-dip is not there in its base case while admitting that every day new cases will soar as economies reopen.

ALSO READ: China’s Economic Outlook: Country faces double whammy of COVID-19 and trade war with the US

A situation of double-dip arises when an economy picks up after a phase of decline but then again weakens. Tan noted that Asian countries like South Korea, Taiwan and Hong Kong have started to reduce restrictions since late April and have reported a rise in daily cases, but the trend is controllable.

The report prepared by the Investment Bank stated that even after a resurgence in coronavirus cases, Asia excluding Japan is anticipated to rebound quickly than other regions with China leading the way. This is due to more effective institutional response in economies like Hong Kong, Taiwan, Korea, and China, where coronavirus was controlled much earlier than other countries, and in few cases, not even feeling the need to impose lockdown.

 

 


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