Tag: virus

Bottom of pyramid businesses & SMEs are not highly leveraged, says Aditya Puri of HDFC Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

To know how the banking sector was coping up with this absolute mayhem and what would be the next steps required, CNBC_TV18 spoke with Aditya Puri of HDFC Bank.

Firstly, we must understand that the virus has to be controlled and any measure we take whether the market reacts positively or not is important. “I am very happy that we have done this lockdown, we should see if we can control it and cases start falling – that will be the best thing that can happen to everybody this is the first part.”

Second part is what is going to happen to the financial markets and the economy. “If you see crisis wise this is hell of a crisis. We need to have financial backing, the difficulty that we will be going through. We should have a non-schedule rate cut. This is both to keep the yields in check as well as give a clear message to the market that we are willing to go to whatever stake necessary. I don’t know why it is taking so long because there is no alternative. We have to give forbearance for a cash flow problem that the virus will create, it is not that the companies are going bad, they could be cash flow mismatches and the more liquidity that we can give them we can make sure that life after virus is better,” he said.

While giving picture about his bank he said, “If the companies survive, the country will survive and the banks will also survive. We have been working on this. We are sitting on liquidity of USD 5 billion. Our total portfolio is rated AAA at internal risk rating of 4.3. We have lend most of our wholesale to 80 percent to AAA companies. On the PL side also we have lent to the same fellows for salary and before you start laying off – is a very difficult decision for a company to take and I don’t think that would come but there will probably be salary cuts before that so 75-80 percent of our personal loans and our credit cards are to the same salaried employees there.”

“As far as SME portfolio is concerned compared to the others, 80 percent of our portfolio has got additional collateral and we have a self-funding ratio in our SME of 85 percent.  I am more concerned with the health aspect than being concerned about the bank.”

He further added, “Our bottom of the pyramid on the businesses are not highly leveraged, so when we went to the ground for the shopkeepers etc. they are not highly leveraged. A large part of SMEs also are not highly leveraged.”

Talking about rural India he said, “Rural India, actually, surprisingly is functioning in its own world. Only thing we have to do is stop people going back there and spreading. They have the money, our demand is coming from there.”

With regards to earnings, he said, “You cannot look absolutely at a flat quarter, and you cannot look at a drop in profit, you would be surprised with the numbers. I will also create a corona reserve and come out still okay.”

On the work from home structure he said, “Approximately 33 percent of our people are working from home now, I see no reason why they shouldn’t continue after corona which gives us a further drop in our costs. So our cost to revenue is going down. We have substantially increased our distribution, we have the technology, and we have USD 5 billion of liquidity and it is still coming in.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

There is a legitimate need to expand testing of COVID-19, says Biocon’s Kiran Mazumdar Shaw

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

With the coronavirus now spreading at an alarming rate, accredited private labs would be allowed to test for Covid-19. However, this has raised several questions regarding costs, sanitation, hygiene etc.

Kiran Mazumdar Shaw, chairperson and managing director of Biocon; Viren Shetty, ED & group COO of Narayana Health and Naresh Trehan, CMD of Medanta in an interaction with CNBC-TV18 tried to clear some of the doubts.

Mazumdar Shaw said, “There is a legitimate need for expanding capacity of testing, which the government clearly recognises now. There is concern that if we don’t have some controls, things could run amok because there will be attempts to profiteer under this situation of panic. I also believe that we need to be very judicious about who is tested. I don’t think there is any need for everybody to be tested. So, from that point of view I think there is justification in what the government is concerned about. Having said that, I do believe that the private sector has to be a partner in this whole battle against this invisible enemy as it is often referred to.”

She further added, “We do have a large number of labs in the private sector which can test the Coronavirus and we need to put in place the capacity. Now as far as whether it is free or not, the understanding was if the government supplies the private sector with kits there is a possibility that some of the labs might be able to waive off their service charges and just do the test for free. By and large I think this whole question on whether free or not can be solved by maximum retail price (MRP) and also controlling it through prescription based diagnostic.”

“So peace can be the way forward. Government is willing to listen to whatever model the private sector comes up with,” she said.

Trehan said, “Most definitely we need to test wider and if the need be that the private labs need to be recruited – then definitely they should be. You can fix a price. If you do the exact costing of what it will take for the labs to collect the samples – one of the dangers that I have heard from the private labs is that if a large number of people are suspected to be Coronavirus, descent on their labs then they don’t have the capacity to deal with them. So the proposal is that they should pick up the samples from home in a viral transport medium, do the test and deliver the results. The real cost can be easily calculated. There are enough labs in this country who have the PCR and all the capabilities.”

He further added, “If we are all on the same platform, we have the same rules of the game the same cost price – I would go a little further – there are some people who will not be able to afford and who need it so every lab can volunteer 10 percent of the test or x number of test to do free, so that will help the people who are unable to afford it. So this is a time for us to put our heads together and in our CSR, we should be able to help or assist the people and the government in achieving the objective of trying to contain it.”

When asked how to prevent profiteering in such situation Shetty said, “In terms of profiteering at the time of panic there is nothing you can do to prevent that, but the fact is government has all the ability to fix the prices of the test and the other one is we are a free market. If you allow every private lab to do the test, some labs will decide they are five star labs, they will charge more for it, some labs will decide we will charge it at the budget and for those who can’t afford it they can go to the government labs anyway for the past two months the government labs have been doing it for free. The problem is we are very under testing our population, we are doing only 5 test per million people so we have to take a more aggressive response to this because this is a very aggressive disease.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Situation looking grim, say retailers as malls get shut down, footfalls dry up

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The retail industry is bearing the brunt of government’s order of keeping malls and theatres closed amid rising positive cases of novel coronavirus.

“The situation is looking very grim,” said Lalit Agarwal, CMD at V-Mart Retail. “Stores in certain districts have been closed to try and prevent people to assemble at one place. We have already closed down more than 10 stores till now.”

“Things don’t look very positive, footfalls are drying up. But as an organisation, we are trying to be with the government to help them prevent and contain the virus,” Agarwal added.

Several states have ordered shutdown of shopping malls etc in order to prevent a further outbreak of the coronavirus. This has resulted in shares of retailers getting affected.

Shares of Future Retail, V-Mart Retail and Trent have fallen between 25 and 50 percent over the past two months, as investors brace for the impact of the shutdowns on the industry.

“For the retail space, it is a brave call. The situation on the ground today [in terms of the coronavirus cases] is not so grim but the country as a whole is preparing for what could be in-store,” said Amnish Aggarwal, head of research at Prabhudas Lilladher.

But since some of the states and some of the bigger cities the malls have been closed or cinema halls have been closed. it will take quite a bit of time for the things to come back,” said Amnish Aggarwal.

Aggarwal added that it would be difficult to forecast the impact on retailers’ earnings.

“We don’t know to what extent the virus is going to impact the country. So maybe another month or two months are going to be testing times for that and after that it will require some time for the consumers to start flocking into these places. As of now, for anyone to say that how much will be the earnings cut, it will be too premature a call,” he said.

V-Mart’s Agarwal added that he was looking at a very Q1. “A lot of events are getting cancelled, marriages may get affected. A lot of ceremonies are getting cancelled. So all the reasons why people will shop are not there. It is going to be difficult in Q1.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Retail investors with good risk appetite can start nibbling, says Vaibhav Sanghavi of Avendus Capital

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

In such volatile times for the market should retail investors start buying at dips is the big question. Vaibhav Sanghavi, Co-CEO of Avendus Capital Alternate Strategies Private Limited said is of the view that it is very tricky time and probably the volatility is purely because of the event that is the spread of virus.

“Now we have to understand that till the time the news flow keeps coming, the volatility in the market will continue. Having said that independently if we try and assess the valuation piece in terms of the businesses, then they are available at attractive valuation. So if somebody has a risk appetite and is able to see through the volatile times then probably it is probably good to start nibbling,” he said.

Talking about investing strategies, he said, “In terms of different products, we have different strategies but from risk point of view what we typically do is basically when there is huge amount of uncertainties, we generally be in cash till things stabilises. Once things stabilise then there would be times when we can probably deploy money more and take that opportunity. Till then, for the time being, we will probably sit by the side and wait.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Global markets have not priced-in sufficient downside risk to the economies, says Citi Private Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The global markets have sold off hugely. Ken Peng of Citi Private Bank is of the view that the key driver is that markets have not priced in sufficient downside risk to the economies and the potential for the coronavirus to spread outside of China. So, until the rest of the world is as prepared as China is to fight this virus, markets will still be a fairly vulnerable.

“Two days ago, the US market had completely ignored this thing as if nothing has happened and that is just absolutely the wrong attitude to take. Firstly, I don’t think this thing ultimately ends, this expansion. For the first quarter it is going to be decline for just about everybody and we are likely to get a pretty strong snap back in the second quarter whether it starts in March and April is really a question at the moment,” he said.

“I don’t agree with the view that suggest this would drag on for a long time because these things tend to be fairly temporary in terms of the impacts on markets and economies. But it is also wrong to think that this doesn’t matter,” he said in an interview with CNBC-TV18.

When asked how long markets would continue to react this way, he said, “It was early February – when the number of new cases in China started to drop but outside of China the number of new cases are climbing. So when we come to a point, when the new cases begin to drop that would probably offer little bit more comfort or stability in the market. The other key thing to watch out for would be of any development on medical fronts, with regards to vaccine, effective drugs are developed.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

COVID-19 may put $29 billion revenue hole in airlines’ revenue: IATA

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The outbreak of the new virus threatens to erase $29 billion of this year’s revenue for global airlines, mostly for Chinese carriers, as travel crashes worldwide, according to the International Air Transport Association.

The trade group for global airlines said Thursday that the virus causing COVID-19 has the potential for causing a 13 percent decline in demand for Asian carriers this year. The contraction comes at a time when Asian airlines’ sales had been growing, the group said.

Global air traffic will be reduced by 4.7 percent for the year, marking the first overall decline in such demand since the financial crisis of 2008 and 2009, IATA said in a statement. How profits will be affected was still unclear, it said.

The estimates foresee a scenario where COVID-19 has a “V-shaped impact,” similar to what happened during the SARS virus outbreak in 2003, with a sharp dive followed by a quick recovery, according to IATA.

The virus, which began in China late last year, has sickened more than 75,000 people in China and some 2,000 people have died in China. More than 1,000 cases have been found outside mainland China.

International airlines including British Airways, Germany’s Lufthansa, Australia’s Qantas and the three largest US airlines have suspended flights to China, in some cases until late April or May. Cathay Pacific asked employees to take three weeks of unpaid leave to help it weather the crisis.

Travel restrictions inside China and fear of the illness have devastated demand for domestic flights in the fast-growing China market. Many nations are warning people not to travel to China, or barring travellers from China, especially from the Wuhan area, at the centre of the outbreak.

People around the world are also voluntarily scaling back travel, while some governments and health experts are encouraging people to stay indoors not only in China but also in South Korea and Japan to avoid getting infected.

“These are challenging times for the global air transport industry. Stopping the spread of the virus is the top priority,” said Alexandre de Juniac, IATA’s Director General and CEO. “This will be a very tough year for airlines.”

Analysts at Cowen, a US investment bank and financial services company, noted IATA might be underestimating the impact on Asia travel outside of China, noting the recent reports of dozens of cases in South Korea.

“While still relatively small, and too early to tell if it will spread further, we see this as a material negative data point on the global containment of the virus,” the Cowen report said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Nature is scary. And she unleashes epidemics to keep humanity in fear

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Man is curious by nature and our need to know has taken us to the farthest corners of not just the space but our planet has been explored by the intrepid and the brave as well. The documentary called Night On Earth reveals exactly what happens when the Sun sets and the stars come out in the sky:

Whether it is the scorpion eating mouse that can survive many stings or the big elephant seals that are happy to hunt for baby seals, nature is as scary as it is beautiful. This documentary shows us the hitherto unseen night sky, night hunt and the flowering of the beautiful cacti in a South American desert.

Right now, we’d do well to be afraid of nature. Because when nature decides to get even with us, thousands just die. And her revenge for humanity polluting the lakes and rivers and chopping down trees is simple. Flu Virus. And it is delivered to us via innocuous carriers: ducks, chicken, seagulls, bats and pigs.

Our world today is watching the situation in Wuhan and on the floating flu cruise ship very carefully. There is a very deadly coronavirus epidemic that has affected 75,748 people, caused 2,129 confirmed deaths and has spread across 27 countries. The World Health Organisation official website has a dashboard for this virus is scarily fascinating. If Wuhan, China is been the epicentre of the outbreak, then you wonder how with all the modern healthcare we have and stringent health screenings, how one person has reported being affected in as far away land as Finland?

How do we survive a pandemic like this flu? As you should know by now, there is always a fascinating documentary series if you want to know more, feel less scared. Netflix is a treasure trove for documentary seekers. I watched the docuseries Pandemic and I know there is hope. Because caregivers and researchers all across the world – New York, San Francisco, Guatemala, Oklahoma, Cairo, Goma (Congo), and even Jaipur – are working tirelessly to help patients deal with everything from the deadly Ebola to Swine Flu and even the ordinary flu.

I am a fan now of Dr Syra Madad who is working to make sure hospitals are prepared for the outbreak and am sure that if I go to Jaipur, I will seek out Dr Dinesh Vijay who works at a government hospital. And know that it would be great to host Dr Goracke, Dr Kayali, Dr Michael Yao should they come to Bombay. I found myself rooting for the researchers of a biotechnology company who are working to find one universal vaccine shot that can tackle the transmission cycle, break the zoonotic network where the virus moves to animals to humans.

You must have read about Anti-Vaxxers? People, who think vaccinating children is against their spiritual and lifestyle beliefs? There is a serious outbreak of measles across the United States because people do not want to vaccinate their kids! In Africa, teams of health workers who are working with patients of Ebola have to face death threats from the militia and hostility from the public who believe that the healthcare workers are actually bringing the disease to their towns! I was surprised at how much the doctors in India in the documentary are respected. But the words of Dr Yao from Congo resonated with me: If you quarantine people, the people will run away and hide, which means the disease will spread even more.

Remember how they wanted to quarantine entire towns in the movies Contagion and the original scary Outbreak? Dustin Hoffman and Renee Russo in hazmat suits is something that brings a shiver down my spine even today.

If you have been binge-watching drug cartel shows about clever Narcs or DEA agents going undercover to catch the drug lords, then you will love to hear from the man who discovered that there was a rampant drug epidemic in the United States even before it became universally acknowledged as a crisis. The Pharmacist on Netflix is all about the single-minded madness of one father who lost his son to a drug deal gone bad and decided that he was going to examine why so many were dying of an overdose of prescription painkiller called OxyContin.

The Opioid epidemic has decimated so many lives and affected families everywhere, and the American government has not managed to do anything to the Sacklers to own Purdue Phrama who created Oxycontin. They say that hedge funds are backing off from investing in the company, but isn’t it too little, too late?

There are many stories of epidemics that put the fear of God into you. And I’m sure even God will tell you to wash hands (and feet) ever so often and to stay at home of you have the flu.

But what happens if the deadly virus mutates inside you? And turns you into a carnivorous insect? It takes Japanese Anime to bring you this strange world where people safe from the mutation are forced to live within a walled city, the world is scary dangerous (because, insects) and needs insect hunters. Watch Cagasters Of An Insect Cage on Netflix. The animation takes time to get inside your head, but when a cool, laconic hero promises to save a girl, what is there not to like?

Manisha Lakhe is a poet, film critic, traveller, founder of Caferati — an online writer’s forum, hosts Mumbai’s oldest open mic, and teaches advertising, films and communication. 

Read her columns here.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Gold holds above $1,600 on fears over economic impact of virus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Gold prices held steady above the key USD 1,600 per ounce mark on Wednesday as an uptick in equities due to a drop in new virus cases was offset by fears of an economic fallout from the epidemic.

Autocatalyst metal palladium, meanwhile, scaled yet another record peak on a sustained supply shortfall.

Spot gold was little changed at USD 1,603.20 per ounce by 0702 GMT, having surged to its highest since Jan 8, at  USD 1,605.26 earlier.

US gold futures rose 0.2 percent to USD 1,606.50.

Asian shares and US stock futures edged cautiously higher as investors tried to shake off worries about the epidemic.

“The big wave of risk-off has sort of dissipated right now, but still the economic fallout is buttressing the demand for gold,” Stephen Innes, chief market strategist at AxiCorp.

China reported 1,749 new cases, the lowest daily rise since Jan 29, bringing the total number of those infected to over 74,000, with 2,004 deaths.

The US dollar, also considered a safe-haven, scaled a more than four-month high against key rival currencies.

“The stronger dollar is not really curbing the inflows to gold … from an inflation perspective, a stronger US dollar is working against the US Federal Reserve’s inflation target and is pointing towards lower interest rates,” AxiCorp’s Innes said.

Investors await the minutes of the Federal Reserve’s Jan 28-Jan 29 policy meeting, due at 1900 GMT.

Lower interest rates reduce the opportunity cost of holding non-yielding bullion and also weigh on the US currency.

Indicative of investor sentiment, holdings of the world’s largest gold-backed exchange-traded fund, SPDR Gold Trust, rose 0.6% to 929.84 tonnes on Tuesday, their highest since Nov. 11, 2016. [GOL/ETF]

“The short-term dynamics are very difficult to tell simply because the market is in a position where it is considerably over-bought and if we get (any) positive news it could possibly trigger a downside move (in gold),” added Axicorp’s Innes.

Deficit-hit palladium rose 3.9 percent at USD 2,738.02 an ounce after having scaled a record high of USD 2,841.54 earlier.

“Another outstanding session for the white metal as investors scramble amid further fears of a supply shortage following Anglo American forecasting an increase deficit in 2020,” MKS PAMP said in a note.

Silver was up 0.6 percent to USD 18.27, having hit a more than one-month high at USD 18.33, while platinum rose 0.6 percent to USD 998.04.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Businesses struggle to fix supply chains disrupted by virus

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Chinese authorities are struggling to strike a delicate balance between containing a viral outbreak and restarting the world’s second-biggest economy after weeks of paralysis.

As the death toll from the newly named COVID-19 illness topped 1,000, global supply chains remain widely disrupted for businesses across the world that have built deep connections to China.

Mail service has been delayed after airlines suspended flights between China and the rest of the world. US chipmaker Intel and Chinese smartphone maker Vivo joined other tech giants in withdrawing from a major European technology fair over virus concerns.

Prices for oil, copper and other basic building-block commodities have tumbled on dwindling demand from China, often called the world’s factory. China alone accounted for half the growth in the world’s oil demand last year, according to IHS Markit. It buys more than 40 percent of the world’s iron ore, coal, nickel, aluminium, copper and finished steel, UBS says.

Shuttered factories and travel restrictions in China have contributed to a 20% drop in oil prices since January 7, when Chinese authorities identified the new virus. Prices for copper, soybeans and even lean hogs have all fallen more than 6% over the same time.

Much of China remains on lockdown. Even factories that are open must contend with logistical bottlenecks and labour shortages as travel restrictions prevent employees from returning to work after the Lunar New Year. That’s all worrisome news for multinational companies that have grown to depend on China for everything from auto parts to toys.

“This is the worst supply chain problem I’ve seen in 40 years,’’ said Isaac Larian, CEO and founder of toymaker MGA Entertainment, which produces the popular LOL dolls. “There is no contingency plan.’’

Retailers are increasingly concerned that shipments will not arrive in time for Easter and Mother’s Day, which would force them to mark down the price of merchandise that missed its sell-by date.

“No one wants women’s bonnets after Easter Sunday,’’ said consultant Rick Helfenbein, former president and CEO of the American Apparel & Footwear Association.

Executives at athletic gear maker Under Armour warned that the outbreak is delaying shipments of fabric, packaging and other raw materials from China and will reduce first-quarter revenue by up to $60 million.

The consequences are severe in part because so many companies depend on “just-in-time’’ deliveries to limit the cost of stockpiling supplies. David Closs, an auto industry expert at Michigan State University, noted that many auto parts coming out of China – especially electronics — are flown to the United States. And American plants don’t have inventory on hand.

“It’s much cheaper to air freight them than it is to have two months of inventory sitting in a container (on a cargo ship) on the water, so there’s not much in the pipeline,” Closs said. “Once they shut the factories (in China) down, the US industry starts feeling it pretty quickly.”

Still, some shut-down companies with operations in China are showing tentative signs that they are beginning to stir back to life.

Toyota spokesman Eric Booth said the company’s plants there are preparing to resume operations as early as next week. And General Motors said its joint-venture partners in China plan to restart production February 15.

“Things are at least stabilizing,” GM spokesman Jim Cain said.

Beijing is trying to limit the economic damage from the coronavirus, which is expected to savage economic growth in the January-March quarter and leave 2020 growth well below the 6 percent — already the lowest figure since 1990 — that economists had expected.

Chinese authorities face “a difficult balancing act between containing the virus and resuming business,’’ Kaho Yu, a senior Asia analyst at the consulting firm Verisk Maplecroft, said in a research report. “The return of workers to crowded environments, such as mines and factories, could push the outbreak to another peak, resulting in rising discontent and political pressure for failing to control the crisis.’’

China’s economy, hobbled by a 19-month trade war with the United States and a deliberate government campaign to rein in runaway debts, was decelerating well before the viral outbreak.

The health crisis is giving multinational companies another reason to rethink their dependence on China, which has been at the centre of repeated outbreaks — bird flu in 1997, SARS in 2003 and now the coronavirus.

Koray Köse, senior director of supply chain research at the Gartner consultancy, said companies need to better assess the risks involved in manufacturing in China and other developing countries.

“It’s a wake-up call,’’ he said. “Companies will have to think about their manufacturing footprint and their appetite for risk.’’

Those companies already had reason to consider moving some production out of China. Costs there are rising. And robotics and other technologies are reducing labour costs and making it more feasible to manufacture in high-wage locations such as the United States and Europe.

Many analysts expect trade tensions between the United States and China — now marked by US tariffs on $360 billion in Chinese imports — to continue even after the protectionist President Donald Trump has left office. Companies have reason to diversify out of China to limit the impact of US tariffs.

But leaving China can be arduous and complicated. Over the past three decades, global companies have come to rely on Chinese manufacturing centres, where specialized suppliers cluster and make it convenient for factories to obtain parts when they need them. China accounts for more than 80 percent of smartphone and notebook production, 55% of global exports of handsets and computers and more than half of global TV and server production, according to estimates by UBS.

It also accounts for 27 percent of global auto production, up from 7 percent in 2003, according to UBS, which said China’s share of global exports of auto parts is about 8 percent, up from 1 percent in 2003.

“It’s all part of a big puzzle,’’ said Barbara Hoopes, associate professor of business information technology at Virginia Tech. “It’s more complex than most consumers realize. You get 87 types of toothpaste on the shelf, and you don’t think of what it takes to get them there.’’

Without China, she said, it is “hard to imagine how anything would get done.’’

Mike Wall, an auto industry analyst for the research firm IHS Markit, was encouraged that some companies are preparing to restart production.

“It will take time to build back up,” Wall said. “As we see these plants come back on … that will help, but we’re not out of the woods.”

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow