Reuters Insider - Asia Insight: China's central bank vows to step up support for virus-hit economy

SB Technology

07/02/2020 08:30

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Source: Reuters Insider

Description: China's central bank will step up support for the economy to
cushion the blow from a coronavirus outbreak, but it says activity is likely
to recover once the virus is brought under control.
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Video Transcript:

Hello and welcome to your Asia Insight. I am Angeline Ong. China’s
central bank says it will step up support for the economy to cushion the blow
from the Coronavirus outbreak. Now, the death toll from the epidemic stands at
636, with more than 31,000 people infected. Widespread travel and public
health restrictions are taking an increasing toll on tourism, restaurants, and
other parts of the services sector too. Many factories have suspended
operations until next week or longer as authorities try to contain the spread.
However, the People’s Bank of China says it believes the economic impact
of the outbreak will be temporary. Hundreds of experts will meet in Geneva
next Tuesday and Wednesday to set research and development priorities for
Coronavirus drugs, diagnostics, and vaccines. Participants will include
experts in clinical investigations and research into an animal source of the
virus which emerged at a market in Wuhan. The WHO-led mission may include
experts from the US Centers for Disease Control and Prevention.

We’ve done our best to ensure that we have the right people at the table.
We will try to bring in people virtually as well because it is difficult at
the last minute and, frankly, many of these individuals are on the front line
working and dealing with this. But we want to bring the best minds together,
the people who have experience in this, so that we can come away with a
comprehensive research agenda around the Novel Coronavirus. 

Now, Australia’s central bank says the economic impact of the Coronavirus
could be worse than SARS. Governor Philip Lowe says the Reserve Bank of
Australia would consider quantitative easing but only when the cash rate eases
to 0.25%. The bushfires across the country have also acted as a break on
economic activity.

The potential risk to the Australian economy is bigger than SARS and really
the truth is, none of us know how this is going to play out. If the infection
rate comes down quickly, then I think it’ll stabilize and rebounds back,
but if infection rate does not come down quickly and the number of cases is
kind of doubling every four days, the Chinese authorities presumably will have
to kind of tighten up further on movement of people, movement of goods,
movement of services. And because we’re so integrated with China,
we’re going to feel—

Now in other economic news, Japan’s household spending slumped in
December. Consumer spent 4.8% less compared with the same period a year ago.
Arising consumer taxes is hurting household budgets. The effects of the
Coronavirus are still unknown. Now, Asian share markets fell as the growing
death toll and economic damage from the outbreak snuffed out a late week
rally. Michael McCarthy, Chief Market Strategist at CMC Markets in Sydney says
the rate of infection is not slowing. I’m a little surprised at the way
European and US investors have shrugged this off. I think a reaction in the
Asia Pacific region is much more reasonable. Now, oil prices seesawed after
Russia says it agrees with proposals by OPEC and others for output cuts.
Lachlan Shaw, Head of Commodities Research at National Australia Bank, says
the OPEC plus cuts are supportive of prices near-term, but we’re still
facing uncertainty about the timing and speed of Chinese activity restarting
post-Chinese New Year. Now a look at some companies in the news then and
Japanese telco SoftBank has reported a 15% rise in third quarter operating
profit, beating estimates. SoftBank also raised its full-year operating profit
forecast. The rise in earnings was underpinned by a strong performance in its
mobile unit. Honda has raised its forecast for full-year operating profit by
6%, with a weaker Yen increasing the value of its overseas sales. But like
other carmakers, Honda is extending the closure of its factories in Wuhan in
line with government directives. Some of China’s biggest players in
mobile technology are joining forces to mount a challenge to Google’s
Play Store. Huawei, Xiaomi, Oppo, and Vivo will develop a platform for
developers outside China to upload apps onto all of their app stores
simultaneously. Google Play Store earned almost $9 billion in 2019. And
that’s from your Asia Insight. Don’t forget you can watch more
videos on Reuters.com. I’m Angeline Ong, and this is Reuters