HONG KONG/LONDON (Reuters Breakingviews) – Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
LATEST
– Australia and China
– Temasek
– Halfords
PRESS TO EJECT. The last two Australian reporters working in China, Bill Birtles and Mike Smith, have left for home after being questioned by China’s Ministry of State Security. It is unclear what Beijing’s primary concern was, but the episode marks a further decline in a decaying relationship, which took a major hit when Prime Minister Scott Morrison called for a global inquiry into the origins of Covid-19. Australian citizen Cheng Lei, an anchor at Chinese state television, was detained in August.
One Chinese official recently compared Australia’s behavior to Brutus’ murder of Caesar. The two nations still trade iron ore, key to restarting both pandemic-ravaged economies, but Canberra is otherwise trying to reduce its exposure, blocking acquisitions by mainland companies and banning Huawei Technologies gear from its networks. Beijing keeps slapping tariffs on Australian agriculture. The situation is bad, and getting worse. (By Jamie Lo)
SINGAPORE SLING. Temasek isn’t getting too excited about a post-Covid recovery quite yet. The $306 billion Singapore state investor used its annual review to warn that the global market outlook remained volatile and uncertain against the backdrop of a resurgence of coronavirus infections in some countries.
Given that its year ended in March, Temasek’s minus 2.3% return in Singaporean dollar terms doesn’t say too much about Covid-19’s impact. One thing in its favour is that it seems to have stopped short of underpinning every local struggler. Despite playing a full role in Singapore Airlines’ generous support package in March, Temasek recently used a material adverse change clause to escape a $3 billion deal to raise its stake in conglomerate Keppel. That should afford some protection to its 2020 numbers. (By George Hay)
REINVENTING THE WHEEL. Pumped-up demand for bicycles, especially trendy battery-assisted ones, is showing few signs of losing pressure. With Brits avoiding public transport, retailer Halfords reported a 59% year-on-year surge in two-wheel-related sales since April. E-bikes and scooters, which have an electric motor that kicks in when the going gets tough, are proving especially popular, with sales up 230% year-on-year. Breakingviews predicted that gear-change back in July.
Happily for Halfords, the virus struck during the sunnier summer months. Lingering concerns about public transport, particularly acute in the UK, is a following wind, as are government noises about tackling national obesity. But the arrival of winter weather could mean an uphill struggle, as could rising unemployment and a damaging Brexit. Halfords shares are up 2% since January and have nearly quadrupled since their Covid-19-driven lows in March. The bike boost may be coming to the end of its natural cycle. (By Ed Cropley)
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Breakingviews – Corona Capital: China exits, Singapore, Cycles – Reuters
