Emerging market FX pickup exposed to reversal after new virus surge: Report

The real, the rouble and the rupee are on the spot as infections of Covid-19, the illness caused by the virus, pile up in Brazil, Russia and India.

Emerging market currencies will likely give back recent gains if a resurgence of the coronavirus pandemic continues in the second half of the year, driving foreign exchange flows to the safer US dollar, a Reuters poll of market strategists showed.
The real, the rouble and the rupee are on the spot as infections of Covid-19, the illness caused by the virus, pile up in Brazil, Russia and India, the nations with the highest case counts in the world after the United States.

The outlook for these emerging economies keeps worsening due to the unrelenting health crisis, with Brasilia engulfed in political rows, the Kremlin tightening its grip and Indian cities suffering from a lack of adequate infrastructure.

Over 90%, 63 of 68 respondents in the June 25-July 1 Reuters poll said a second shock from the pandemic would boost the dollar, as in March, when anxious investors dashing for the greenback dealt EM FX its steepest loss since May 2012, according to an MSCI index.

"A second wave of the Covid-19 pandemic represents the major risk," said Roberto Mialich, FX strategist at UniCredit. "If so, we can expect investors to stay in the greenback or even increase their long exposure."

He added emerging market currencies would bear most of the brunt in the event that investors and traders became defensive once again. But he said global conditions would gradually improve, meaning less exposure to the dollar.

Electronics hubs in complete lockdown amid coronavirus outbreak

Operations at the plant, which manufactures large appliances like refrigerators and washing machines, have been suspended till March 25.

Umesh Mishra and his friends were busy discussing the night’s menu for their team. Assembling near the closed gates of LG India Electronics’ manufacturing plant at Greater Noida’s Udyog Vihar Extension, the group of transport workers were in no hurry to take up their next assignment.

As the town undergoes a total lockdown, they could afford to spend the day chatting. Operations at the plant, which manufactures large appliances like refrigerators and washing machines, have been suspended till March 25.

Apart from a couple of security personnel at its entrance, none turned up on Monday. The deserted look that it was wearing on Monday afternoon was quite a sight. This is in stark contrast to the frequent movement of over 200 trucks, hundreds of workers and roadside vendors that used to jostle around.

Mishra, who hails from Bihar’s Muzaffarpur, blames his fate. Like many other peers in his profession, he would have been on the move with his loaded truck by now. But with a lockdown in place, the state transport department has not yet given transport permit to his vehicle. “We are waiting for green light for our vehicle that was loaded with refrigerators on Sunday,” he said.

Attendants at the fuel station, just opposite the Power Spack plant in the vicinity, are bored. The station that used to serve over 500 trucks and hundreds of passenger vehicles a day is now attracting only over 50 cars. Nearly half of the attendants have been asked to stay at home.

The sight at the Oppo India manufacturing plant, about 10 kilometres interior to the LG plant, is lonelier. The three security men behind its closed gates were attempting to sanitize the area with a motorised cleaning equipment. About 100 metres away, over a dozen abandoned trucks were parked and a few grazing buffalos were around. With people staying away from public places as well as workplaces and markets shut, traffic cops in the region are much relieved.

Suresh Raina urges fans not to spread misinformation about coronavirus

Earlier, India opener and Mumbai Indians captain Rohit Sharma had posted a video on his social media handles.

Suresh Raina on Monday cautioned against spreading deception identified with coronavirus and to follow wellbeing warnings. The batsman is relied upon to be seen next in the deferred 2020 period of the Indian Premier League for the Chennai Super Kings.

"It's significant that we comprehend the need of social segregation to break the chain, don't spread data from inconsistent sources, don't overlook the wellbeing warnings and without a doubt follow the cleanliness measures.#coronavirus" he tweeted.

CSK were booked to confront Mumbai Indians at the Wankhede Stadium on March 29 in the opening match of the IPL. In any case, the rising worry over the spread of the coronavirus pandemic has prompted the season being delayed to April 15. Leading group of Control for Cricket in India president Sourav Ganguly said that a choice on whether the matches will be held in void arenas or the new calendar can be chosen after the circumstance is evaluated after April 15.

Prior, India opener and Mumbai Indians skipper Rohit Sharma had posted a video on his web based life handles.

"Most recent couple of weeks have been extreme for us all and the world has ground to a halt which is dismal to see. The main way we can come to commonality is by us all meeting up. Also, we can do this by being somewhat shrewd, somewhat proactive, knowing our environment and as and when we get any indications illuminate your closest clinical specialists," said Rohit in the video.

The legislatures across different states in the nation have prescribed individuals to follow social separating separated from requesting terminations of schools, shopping centers, film lobbies in their offer to stay away from get-togethers.

"This is on the grounds that we as a whole need our children to go to the school, we need to go to the shopping centers and we as a whole need to watch films in the theaters," said the Indian opener.

Coronavirus: Air freight rates skyrocket amid passenger flight cuts

About half of the air cargo carried worldwide normally flies in the belly of passenger jets rather than in dedicated freighters.

Air freight rates are skyrocketing after the grounding of many passenger flights in Asia has left shippers scrambling to book limited spots on cargo planes as Chinese industrial production restarts, according to industry insiders.

About half of the air cargo carried worldwide normally flies in the belly of passenger jets rather than in dedicated freighters. But deep flight cuts in response to the coronavirus outbreak have made the market more dependent on freight haulers.

Freight forwarder Agility Logistics said on its website that China's air cargo capacity was down 39 per cent in February relative to last year because of the passenger flight cuts.

Shippers wishing to rush products out of China by air face sticker shock, said Refael Elbaz, chief executive of Israel-based Unicargo, which specialises in freight forwarding for Amazon.com sellers.

"The price is three times higher - at least - because there is just no capacity," Elbaz said.

Freight Investor Services said in an update to clients on Monday that cargo pricing on China-to-US routes had reached "abnormal highs" and that intra-Asia traffic was up by 22 per cent over the previous week. TAC Index data shows China-US cargo rates have tripled over the last two weeks to more than $3.50 a kilogram.

The price surge will benefit freight haulers and help cargo-heavy Asian airlines like Cathay Pacific Airways Ltd, Korean Air Lines Co Ltd and Japan's ANA Holdings Inc offset some of the steep revenue losses from halting many of their passenger flights.

Chris Mu, who runs a small logistics company in Shenzhen, China, that often uses air transport to supply Amazon sellers in Europe and to transport UK-made car parts for assembly in China, said prices had tripled since before the Lunar New Year and are rising by the hour.

How badly may Covid-19 hurt India's trade? Could wipe out $348 mn, says UN

The most affected sectors include precision instruments, machinery, automotive and communication equipment.

The trade impact of the coronavirus epidemic for India is estimated to be about $348 million and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade, according to a UN report.

Estimates published by United Nations Conference on Trade and Development (UNCTAD) Wednesday said that the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a 50 billion dollar decrease in exports across global value chains.

The most affected sectors include precision instruments, machinery, automotive and communication equipment.

Among the most affected economies are the European Union ($15.6 billion), the United States ($5.8 billion), Japan ($5.2 billion), South Korea ($3.8 billion), Taiwan Province of China ($2.6 billion) and Vietnam ($2.3 billion).

India is among the 15 most affected economies due to the coronavirus epidemic and slow down in production in China, with a trade impact of 348 million dollars.

The trade impact for India is less as compared to other economies such as EU, the US, Japan and South Korea. Trade impact for Indonesia is 312 million dollars.

For India, the trade impact is estimated to be the most for the chemicals sector at 129 million dollars, textiles and apparel at 64 million dollars, automotive sector at 34 million dollars, electrical machinery at 12 million dollars, leather products at 13 million dollars, metals and metal products at 27 million dollars and wood products and furniture at 15 million dollars.

“Besides its worrying effects on human life, the novel strain of coronavirus (COVID-19) has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations. Any disruption of China's output is expected to have repercussions elsewhere through regional and global value chains,” UNCTAD said.

World Bank doles out $12 bn in emergency aid to combat coronavirus

'The goal is to provide fast, effective action that responds to country needs,' World Bank President David Malpass told reporters.

The World Bank unveiled a $12 billion aid package on Tuesday that will provide fast-track funds to help countries combat the coronavirus outbreak.

"The goal is to provide fast, effective action that responds to country needs," World Bank President David Malpass told reporters.

He said it is critical to "recognize the extra burden on poor countries" least equipped in the struggle to prevent the spread of the COVID-19 virus.

The funds, some of which are targeted to the world's poorest nations, can be used for medical equipment or health services and will include expertise and policy advice, the bank said in a statement.

The virus that erupted in central China in December has killed more than 3,000 worldwide and infected over 90,000 people.

Malpass said the money -- $8 billion of which is new -- will go to countries that request help. The bank has been in contact with many member nations, but he did not specify which are likely to be the first to receive aid.

"The point is to move fast. Speed is needed to save lives," he said in a conference call.

"We want to make the best use of the World Bank's extensive resources and global expertise and the historical knowledge of crises," he said, citing similar crisis funding to combat the Ebola and Zika outbreaks in recent years.

Coronavirus impact: Experts see weakest quarter for global growth since GFC

The main channel of economic disruption at this stage, according to UBS, is largely via reduced tourism flows (in/out of China), and reduced import demand from China.

With coronavirus getting a tighter grip on the China and impacting world trade, most analysts have started lowering global growth forecasts as measured by the gross domestic product (GDP) for the first quarter of calendar year 2020 (Q1-2020). Those at UBS, for instance, expect this would be the weakest quarter for global growth since the global financial crisis (GFC) and on par with the Asian crisis in the late 1990s.

Global GDP, according to Arend Kapteyn, global head of economic research at UBS, will take a serious knock and slip to 0.7 per cent in the January 2020 quarter (Q1-2020) from 3.2 per cent in the December 2019 quarter (Q4-2019). Though he expects growth to rebound in the April – June 2020 quarter, the impact could slow the overall 2020 GDP growth by 20 basis points (bps) to 2.9 per cent.

The main channel of economic disruption at this stage, according to UBS, is largely via reduced tourism flows (in/out of China), reduced import demand from China — particularly of consumption goods — and restrictions imposed by third countries to avoid the virus spreading.

“We expect import growth in China to fall from 3.2 per cent in Q4 to a negative 4 per cent in Q1. The rebound we hope for in Q2 largely reflects delayed consumption effects in China, while the improvement in Q3 reflects the lagged impact of stimulus coming on line, particularly in China,” the UBS report says.

With the number of suspected/confirmed cases rising at an alarming rate, close to 99 per cent of those are in China, reports suggest. The economic impact, experts say, will also be magnified this time around compared to the SARS outbreak as Asia's weight in the global economy has risen from 21 per cent in 2003 to 37 per cent now.

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