South Korea draws up plans to weather global credit crunch
Edward White and Kang Buseong report from Seoul
South Korea is drawing up plans to face a possible global credit crunch amid worsening turmoil in financial markets stemming from the economic fallout from the coronavirus.
Kim Yong-beom, vice finance minister, on Thursday pledged that Seoul would move to stabilise the local markets when required, including jawboning the local bond market and supporting companies’ foreign currency funding needs.
“It isn’t just an issue for us (Korea) but foreign investment from equity are flowing out of the country across emerging markets and are adding pressures to stocks and FX markets,” said Kim Yong-beom.
In February the government in Seoul announced record stimulus and new tax breaks to help buffer the fallout for Asia’s fourth-biggest economy.
However, last week Moon Jae-in, the president, warned that further unprecedented actions would be required to protect the economy. South Korea’s won has fallen sharply against the dollar as the pandemic has worsened, and is now trading near a 10-year low.
The local stock market has also been hit hard with the benchmark Kospi index at its lowest in a decade.
José Cuervo boss tests positive for coronavirus
Jude Webber reports from Mexico City
Juan Domingo Beckmann, chief executive of Mexican tequila company José Cuervo, has tested positive for coronavirus, the company said in a statement.
“The company is nevertheless continuing business normally with the CEO in charge of operations and carrying out his responsibilities from home with the support of all the management team,” it said.
It added that Mr Beckmann, who is 52, is in a stable condition.
Asia stocks gain after ECB agrees to bond purchase programme
Asia-Pacific equities rose on Thursday and US stock futures climbed after the European Central Bank agreed to launch a €750bn bond purchase programme in response to coronavirus.
Australia’s S&P/ASX 200 was up 1.2 per cent after the country’s central bank moved to pump liquidity into the banking system, while the Topix in Japan was up 1.8 per cent.
S&P 500 futures pointed to a 2.2 per cent gain when US trading begins.
The ECB has announced plans to buy €750bn in more bonds after an emergency session of its rate-setting committee on Wednesday evening in response to the worsening economic and financial market turmoil caused by coronavirus.
Global stocks, oil prices and government bond yields tumbled on Wednesday in a sign of forced selling, raising doubts that government support packages would be able to stem the economic impact of the coronavirus.
US stocks ended Wednesday down 5.1 per cent and the FTSE 100 in the UK shed 4.1 per cent.
Qantas to stand down two-thirds of employees and suspend international flights
Jamie Smyth in Sydney
Qantas Airways is temporarily standing down two-thirds of its 30,000 employees and suspending all international flights from late March “to guarantee the future of the airline”.
Australia’s largest carrier said on Thursday 150 aircraft would be temporarily grounded and domestic capacity would be slashed to 60 per cent. Payment of shareholder dividends worth A$201m (US$115m) will be deferred until September 2020, it said.
“We’re in a strong financial position right now, but our wages bill is more than A$4bn a year. With the huge drop in revenue we’re facing, we have to make difficult decisions to guarantee the future of the airline,” said Alan Joyce, Qantas chief executive.
“No airline in the world is immune to this, with the world’s carriers making deep cuts to flying schedules and jobs. Our strong balance sheet means we’ve entered this crisis in better shape than most.”
The employee stand-down period will stretch until at least the end of May, during which time staff will be able to draw down on annual and long service leave entitlements. Additional support mechanisms will be introduced, including leave at half pay and early access to long service leave.
Employees with low leave balances at the start of the stand-down period will be able to access up to four weeks leave in advance of earning it. But the airline said inevitable periods of leave without pay for some employees are inevitable.