Home Coronavirus Coronavirus Emergency Hits Japan, And 460,000 Chinese Companies Go Bust
Coronavirus Emergency Hits Japan, And 460,000 Chinese Companies Go Bust

Coronavirus Emergency Hits Japan, And 460,000 Chinese Companies Go Bust


Remember the flattened curve?

Well, it’s flat in China. But rising in Japan, in Hong Kong, in Singapore. If the coronavirus pandemic has an end in sight, it’s not April and it’s probably not May, judging by what’s unfolding now in Asia.

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After being relatively flatlined for infection rates of the new SARS coronavirus that causes the deadly COVID-19 disease, Japan saw a massive spike in people that have contracted the disease over the last 48 hours: over 500 people on April 3, based on the most recent data compiled by Johns Hopkins University.

The month of March has also been a bad one for Singapore. After shutting down its border with China early in the epidemic that began in Wuhan, infection rates have risen steadily and are now over 1,300. Schools have now gone completely online.

Hong Kong has only around 700 cases of SARS-CoV-2, but they’re not taking any chances. Having lived through SARS 1 in 2003, they are closing bars and nightlife, among other social gatherings.

As China decelerates, despite saying they will now count asymptomatic carriers of the new coronavirus in their data, their neighbors and most important trading partners are in sick bay. They are hunkering down, and isolating.

Economies will suffer greatly, with a Chinese central bank official saying today that a worldwide great depression is now possible.

Japan Declares National Emergency

Japan closed all pre-school and kindergarten classes today in at least two cities — Osaka and Kobe. The country’s national emergency measures and self-quarantining begin on April 8.

On Sunday, Prime Minister Shinzo Abe ordered a declaration of emergency for seven prefectures (or states), including Tokyo, in order to flatten the curve.

Countries around the world have been doing this due to the wildfire spreading nature of the virus. Although no more than 25% of people infected will need a hospital bed, based on data from numerous sources including from China, Italy and the U.S., the fast nature of the pandemic means more patients would be in quick need of urgent care all at once. The stress on hospital and medical staff warrants the quarantine measures worldwide, trumping economic matters for now.

The iShares MSCI Japan (EWJ) rose on Monday as investors are expecting more stimulus measures to prop up the markets, and take a sigh of relief regarding energy markets — huge drivers of the commodity, currency and fixed income trades.

Over 460,000 Go Belly Up

We may never know how many people were laid off in China because of the pandemic. Their official unemployment numbers hold steady at 4% year after year.

But seeing how the U.S. had 10 million unemployment claims filed in just two weeks, it is likely that China had at least that seeing how their governments took much more draconian measures to fight the coronavirus.

For instance, the entire city of Wuhan, all 11 million inhabitants, were forced to stay home. Only essential businesses were open.

More than 460,000 Chinese businesses were closed permanently in the first quarter as the coronavirus went from Chinese epidemic to global pandemic. More than half of them were relatively new businesses with just three years in operation. The closures include businesses whose operating licenses were revoked, suggesting they would have closed regardless of public health emergencies, but it also included businesses who closed down because of the pandemic. The number also includes some 26,000 exporters going out of business, according to Tianyancha, a commercial business intelligence firm out of Beijing.

The South China Morning Post reported today that exporters dependent on the U.S. saw, in some cases, at least 90% of their orders suspended.

Hong Kongers Getting Angrier

Last year ended with Hong Kongers already ticked off at the Chinese government. This year is no better. Despite the anti-Communist Party protests of 2019 being squashed due to public gathering restrictions, the latest measures to tighten quarantine measures has people fed up.

Like Singapore, Hong Kong has been one of the worst hit economies due to the stoppage of work in China, their most important market.

Wall Street might have called a bottom in Hong Kong, which hit its year low on March 23 and is up 10.2% since, but the Kowloon District isn’t celebrating.

Hong Kong is in a state of virtual lockdown as it further tightens border controls and the locals are advised to work from home. Hong Kong is facing a resurgence of imported and community-spread coronavirus infections, the South China Morning Post reports.

Last week, Japan required all Hong Kong flight passengers to a forced 14-day quarantine upon arrival. It is unclear at this time if they will ban flights altogether.

Over the weekend, police fired tear gas to disperse about 100 protesters who blocked streets, started a fire and clashed with police officers as tensions begin flaring up again against the government.

None of this bodes well for a speedy recovery, of the kind markets are aching for as the summer months approach here in the U.S.

Even though Monday looks like a good day for markets, thanks in large part to pressure being lifted off of the OPEC-Russia production dispute, the pandemic promises to be a job killer. Business and consumer sentiment might not return to pre-pandemic levels until 2021, numerous investment firms, including Barclays, are now telling clients.

“If the economic fallout from quarantine efforts proves to be more material and persistent than expected, it could cause the type of imbalances consistent with structural bear markets, which tend to be longer and of greater magnitude,” writes Jason Pride, CIO, and Michael Reynolds, the investment strategy officer for Glenmede Trust Company in a client note today.

Outside of Asia, Italy seems to have hit peak coronavirus as expected and should plateau over the next week or two before seeing a marked deceleration in new cases, and rising recovery rates.

All told, Italy had 128,948 people test positive for the SARS-CoV-2, of which 21,815 have recovered and 15,887 have died. Italy has the world’s highest death rate, though the U.S. public health gurus on the President’s Coronavirus Task Force said the U.S. will be many times worse than Italy, perhaps because the U.S. population is more than five times that of Italy.

The coronavirus has put European unity under the spotlight. The Financial Times had an eye-opening feature out on Monday where they spoke to Italian bureaucrats once pro-EU who now have their doubts.

“This is an existential threat, I am not sure if we are going to make it,” Carlo Carlenda, a former Italian minister and representative of Italy to the European Parliament, told the FT today. “You have to consider my party is one of the most pro-European parties in Italy and I now have members writing to me saying: ‘Why do we want to stay in the EU? It’s useless.’”

“Va bene, Carlo.”


This article was written by Kenneth Rapoza from Forbes and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.