By Powerscourt on 28/08/2020
Powerscourt Coronavirus Briefing – 28 August 2020
Donald Trump made an apparently huge promise to the (virtual) Republican National Convention on Thursday evening when he said: “We are delivering life-saving therapies, and will produce a vaccine before the end of the year, or maybe even sooner,”
The thing is, he might be right. There are dozens of vaccine trials and many millions of doses are already being manufactured for rapid deployment if approved in the coming months. Look out for lots of booster talk from Mr Trump.
It cannot come soon enough for city centre retailers, service providers and landlords. As behavioural economists would have it, “nudging” should be more effective than ordering in seeking to change human behaviour. But nobody seems to have told the British public, who are still stubbornly reluctant to go back into their physical offices despite the entreaties of the Prime Minister.
Now the UK government is launching a major publicity campaign to encourage people to go back to work. A media blitz – to be launched at the end of next week after schools in England have reopened – will emphasise the positive social element of working in an office and stress that offices are safe.
Senior members of the Conservative party are reported to be increasingly concerned about job losses which result from lack of footfall into ancillary businesses in major financial centres, such as sandwich shops, gyms and dry cleaners, and frustrated at the expense of operating near-empty transport services.
And a rift has developed at the top of the party as to whether or not to push people to return to physical offices. The health secretary, Matt Hancock, is said to be more concerned with how effectively they are working than where they are working, putting him at odds with the Chancellor, Rishi Sunak, who is concerned about the knock-on impact on the wider economy.
Two days ago, Carolyn Fairbairn, the head of the Confederation of British Industry, warned of a significant economic impact from the increasing trend towards remote working, with financial districts becoming “ghost towns”.
It’s a difficult time to be winning this argument though. On Thursday, the UK recorded 1,522 new coronavirus cases, the highest number since mid-June and next week millions of schoolchildren will go back amid continued anxiety from teachers and parents about their safety.
It won’t have escaped ministers’ notice that South Korea is now tightening restrictions, including closing many private schools, due to a virus resurgence.
India suffered more than 1,000 coronavirus deaths for a second day in a row on Thursday, while the detection of new cases hit an all-time high of 76,826, highlighting that the country is rapidly becoming the epicentre of the virus.
Meanwhile on Thursday, a tale of two companies shows the way coronavirus has bifurcated the economy, with traditional engineering and manufacturing-based companies still reeling while technology-based firms build ascendancy.
Rolls Royce on Thursday unveiled plans to shore up its balance sheet with a £2 billion asset sale as it swung to a record pretax half year loss of £5.4 billion.
But the tech (ish) IPO is back. The Hut Group, an online fast moving consumer goods (FMCG) retailer, is aiming for a valuation of £4.5billion in what will be the largest London listing this year.
Asian markets were lower overnight after reports that Japanese Prime Minister Shinzo Abe will resign for health reasons today.
WHAT ARE COMPANIES SAYING?
The airport announced today that it has seen a 66 per cent decline in passenger numbers during the first half of the year as a result of covid-19. In a statement published this morning, it is included that the airport remained open throughout the pandemic, but saw a 61.3 per cent fall in revenue and a £321m loss for the six months ended 30 June due to a collapse in passenger demand. EBITDA fell by 98.6 per cent. Gatwick currently has 18 airlines flying to 115 airport in 42 countries, while 70 per cent of its employees remain on furlough.
The manufacturer has published its results for the half year ended 30 June 2020, in which it reports a revenue decline of 11.7 per cent to £448.4m and a fall in adjusted operating profit of 40 per cent to £29m. It is included that covid-19 has had a significant impact on the underlying markets in which its components division operates, but noted that revenue and order intake has improved throughout Q2. The company also included that all 71 of its manufacturing and warehouse facilities are now fully operational.
The low cost airline has warned that it will need another rescue package to survive the covid-19 pandemic, shortly after receiving a NKr3bn loan guarantee from Norway’s government unlocked by a NKr15bn debt-for-equity swap. Chief Executive Jacob Shram said this morning: “Given the current market conditions it is not enough to get through this prolonged crisis”. The company plans to put five more aircraft back in the air in September, taking the total to 25 while 115 remain grounded.
Financials & Real Estate
In a Q1 trading update published today, the subprime lender announced that it has granted covid-19 related payment holidays to approximately 47,000 customers, resulting in a revenue reduction of 31.7 per cent to £48.8m. The company has also temporarily paused new lending to all except key workers, which has caused a decline in customer numbers of 5.2 per cent and a reduction in the net loan book of 24.1 per cent year of year.
The global infrastructure investment company has published its interim results today, in which it reports that its portfolio has seen “no material adverse operational or financial impact related to the Covid-19 pandemic”. It is also included that a robust performance during the period combined with the confidence in the business model had allowed the company to reconfirm its dividend target of 7.18 pence per share for 2020, up 2.6 per cent on the 2019 dividend.
IN THE NEWS
‘Go back to work or risk losing your job’: Major drive launched to get people returning to the office – The Daily Telegraph
Switzerland added to UK’s Covid-19 quarantine list – The Financial Times
Facemasks in schools: Head teachers demand clear guidance – The Times