LONDON/HONG KONG (Reuters Breakingviews) – Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
Formula One F1 – Bahrain Grand Prix – Bahrain International Circuit, Sakhir, Bahrain – November 29, 2020.
– McLaren injection
– Chinese exports
– Fur frenzy
NEED FOR SPEED. Lossmaking supercar maker McLaren has pulled over for a much-needed pit stop. The UK company on Sunday announced it had sold a 33% stake in its Formula 1 racing team, once home to Lewis Hamilton and the late Brazilian track legend Ayrton Senna, to a group led by MSP Sports Capital at a valuation of 560 million pounds. Thats a trophy price considering the business accounted for only around a tenth of McLarens 1.5 billion pounds in sales in 2019 and reported negative EBITDA in the last two financial years.
The 185 million pound investment injects some fuel into McLarens knackered financial engine, which has been hobbled by pandemic-slammed car sales and net debt of 661 million pounds. Last week, the boss of the automotive segment mooted a possible deal to reverse itself into a special purpose acquisition company and raise up to 500 million pounds in equity. The F1 deal should at least allow McLaren to keep driving forward. (By Christopher Thompson)
PEAK SEASON. Exports from China surged 21% in November from a year ago, while the weekly export container shipping index set a fresh record on Friday as orders pile up on the countrys congested docks.
The appetite for Chinas consumer goods is going well beyond medical protective equipment. However, exporters think clients are front-loading orders to stock up months in advance, worried about a repeat of the paralysis that occurred at the beginning of this year when the virus outbreak froze supply chains. Absent a real recovery in global demand, Chinese exporters are fretting about their razor-thin profit margins and rising raw material costs. Nearly one year on, the pandemic is still distorting businesses and trade flow. (By Yawen Chen)
SACRIFICIAL MINK. The pandemic has saddled some luxury fashion houses with a supply chain dilemma. Denmark killed 17 million mink after Covid-19 outbreaks at hundreds of farms. After years of falling prices because of lower demand, the massive cull may boost the $22 billion market for alternative furs like chinchilla and fox. Luxury giant LVMH, which Reuters reported said it is using only 100% certified mink, fox and finn-raccoon, is likely to see costs go up.
Longer term, however, the gruesome saga may speed up the shift away from fur. Designers such as Coach and Chanel have already banned the use of fur in its collections, and those houses that still do use it are looking increasingly outmoded. The mink deaths may not have been in vain. (By Dasha Afanasieva)
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Breakingviews – Corona Capital: F1 injection, China exports, Mink – Reuters
