MILAN/LONDON/MUMBAI (Reuters Breakingviews) – Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
Vials with a sticker reading, “COVID-19 / Coronavirus vaccine / Injection only” are seen in front of a displayed U.S. dollar banknote with George Washington and a printed mask in this illustration taken October 31, 2020. REUTERS/Dado Ruvic/Illustration
LATEST
– Unequal pandemic
– Travel bug
– EDF
INEQUALITY VIRUS. The pandemic is spreading its costs unequally across the worlds population. Between mid-March and the end of December 2020, the worlds 10 richest billionaires, including Amazon.coms boss Jeff Bezos and LVMH tycoon Bernard Arnault, increased their collective wealth by $540 billion, an Oxfam analysis of Forbes data shows. Thats nearly four times the cost of delivering two doses of any Covid-19 vaccine to the worlds population, which the UK-based charity estimates at $141 billion, assuming a cost per single dose of around $9.
True, the worlds richest had initially felt some pain. The top 1,000 billionaires wealth jointly shrank by some 30% within the first month of the pandemic hitting the West. But it recovered over nine months. For the poorest, the impact could be felt for a decade, a World Bank report suggests. While vaccines being rolled out may eradicate Covid-19, beating the inequality virus will be a tougher fight. (By Lisa Jucca)
SINKING FEELING. For Europes airlines, 2021 has got off to a no-fly start. Far from enjoying a bounce from rapid vaccine rollouts, carriers are grappling tighter movement controls against mutating strains of the virus. Adding insult to injury, Britains advertising watchdog red-carded low-cost operator Ryanair for its typically ebullient Jab & Go campaign to get young holidaymakers back in the air.
With Prime Minister Boris Johnson talking tough about UK quarantines, London-listed stocks understandably bore the heaviest bruises. British Airways parent IAG lost 8%. In keeping with Covid-19s transnational nature, Germanys Lufthansa and Air France-KLM also shed 4%. The promotional setback for Ryanair, now down 14% this year, is also more than symbolic. Chief Executive Michael OLeary had been banking on young sun-seekers packing summer schedules. Yet that demographic is unlikely to hit the front of the vaccine queue before autumn. Another summer of discontent may lie ahead. (By Ed Cropley)
AUGEAN STABLES. Reforming Frances biggest utility may have been a labour too far even for Hercules. On Monday, shares in Paris-listed power company Électricité de France fell by 17% following local media reports of a delay to its restructuring project named after the Greek demigod. The French government is currently locked in talks with the European Union to potentially introduce higher prices for EDFs nuclear output, which accounts for a majority of the national energy mix. Shareholders hoping for a deal with Brussels in the first half may have to wait an additional six months or longer.
Stronger pricing is seen as key by investors to ringfencing EDFs cash-guzzling nuclear power stations and a prerequisite to spinning off its prized renewables arm. Prior to Monday, EDF shares had risen by a third over the preceding six months, compared to a nearly 10% increase in the benchmark STOXX Europe 600 Utilities index. The vaporisation of nearly 7 billion euros of market value illustrates the cost of prematurely getting their hopes up. (By Christopher Thompson)
FAR FROM NORMAL. At a time whentheglobal elite should be gathered at a Swiss ski resort, the World Economic Forum has instead kicked off a virtual shindig, with Chinas Xi Jinping scheduled togive a special addresslater today. TheDavos Agenda has a pandemic-appropriate theme: A Crucial Year to Rebuild Trust. But even as countriesfacerising public debt and worsening inequality, topics like fairer economies and beyond geopolitics sound depressingly familiar and unlikely to yield real solutions.
Plans for an in-person special annual meeting inSingaporein May also look optimistic. International borders are hardening up as governments seek to keep out new virus strains. So while leaders like Xi, Germanys Angela Merkel and Indias Narendra Modi will all speak at the event that aims to celebrate globalisation, there is no hiding the fact that the world is lurching deeper towards isolationism. (By Una Galani)
RETAIL RUMBLE. Online retailers are finding rich pickings on Britains ailing high street. Fast-fashion company Boohoo bought the Debenhams brand for 55 millionpounds on Monday. The deal includes all of the bankrupt British chains brands, customer lists and websites. But it does not include items like stock, stores or a promise to safeguard jobs.
The buyout looks relatively low-risk for Boohoo, which saw its shares rise 4% on the news. Chief Executive John Lyttle gets a ready-made online sales platform that can act as a shop window for the 4 billion pound companys own brands, as well as Debenhams marques including Mantaray, Principles and Maine. The deal also looks cheap. Boohoos outlay is just one-seventh of Debenhams reported online net revenue of 400 million pounds last year. Previous brand deals have cost Lyttle around 1 times revenue. At these prices, more shopping sprees are sure to follow. (By Aimee Donnellan)
JEUX DAMOUR. National stereotypes say the French have perfected the art of flirtation. Not so Paris-listed water-and-waste group Suez, whose efforts to repel aspiring suitor Veolia received a boost on Monday from strong-second half results. A mere 1% drop in revenue was better than a forecast decline of between 2% and 4%. EBITDA of 1.6 billion euros, when combined with the 1.2 billion euros the company earned in the first half, is nearly 10% better than forecast by analysts, according to Refinitiv data. Lower net debt strengthens Chief Executive Bertrand Camus firm non to his rival and would-be seducer, Veolia boss Antoine Frérot.
Camus may simply be playing hard-to-get. Despite scorning Veolias 11 billion euro indicative takeover offer, he has opened talks with Frérot, whoalready owns a near 30% stake, along with paramours Ardian and Global Infrastructure Partners. The latter two infrastructure funds might still make a counter-offer possibly forcing Frérot to up his dowry. Suez shareholders will hope the love triangle persists. (By Christopher Thompson)
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Breakingviews – Corona Capital: Billionaires & jabs, Travel, EDF – Reuters
