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The US market bounced back from its early declines, triggered by Apple’s warning on earnings. This was likely due to the improving trend, as China once again reported lower daily cases. South Korea, however, saw its cases rise by 35% from 33 to 46. Most countries in the region have seen a few days’ hiatus in new cases, but it remains to be seen whether this is through effective controls or ineffective reporting. If the virus is contained by March S&P expects China to bounce back by Q3, improving the global outlook.

Today
Cases: 1,866
Deaths: 136

Total
Cases: 75,223
Deaths: 2,011

Company news
Adidas has said (according to Bloomberg) that its business activity in Greater China has been running around 85% below the prior-year level since Chinese New Year. Most of the impact is in China, with some traffic declines seen in Japan and South Korea. Read-across for Coats.

Crown Resorts (Australian gaming & hotels company): “Crown has recently experienced softer trading conditions as a result of travel restrictions and general community uncertainty in response to Covid-19, particularly over the Lunar New Year period.”

Gooch & Housego (precision optical components): “The impact of the coronavirus is difficult to quantify at this stage, given factories in China are only just reopening after an extended New Year holiday, but it may act as a ‘drag’ on this sector's short-term performance.”

Herbalife (MLM nutrition) – The impact from the coronavirus could materially impact the business in FY20 depending on the extent and duration of the virus.

Lovisa Holdings (jewellery retailer) expects to see further impact on sales over the coming months, with the company’s Singapore and Malaysian markets most affected.

Mondelez has said its four plants in China have reopened, but it is not yet at full capacity. Furthermore, not all of its clients in China are open. There will be an impact on revenue and margins. It also noted that there was a shortage of trucks in China to fulfil its deliveries.

Moxian (an online platform provider) – The company’s personnel have been unable to return to work due to travel restrictions in place across the country.

Plastic Omnium (French auto component) reported its finals this morning. China is 9% of its sales; 17 of its 29 plants have restarted production and this should rise to 22 by the end of this week.

Strix (plant near Guangzhou reopened on 10 February): “Currently two-thirds of the workforce has returned to the facility, and whilst others have been hampered by travel disruption this remains sufficient to fulfil the customer commitments for February and the company is now focused on securing March and April to minimise any disruption. The company remains closely in touch with all of its largest OEM customers. The majority have either resumed production or are expected to imminently. Strix has seen some customers increase order sizes due to disruption elsewhere in its supply chain. There are also no immediate concerns regarding Strix's supply chain, given over 80% are based in the same area near Guangzhou and were able to restart production last week.”

Sulzer (flow control equipment) reported this morning. China is 11% of sales. The company expects a negative impact in H1, but for this to recover through H2. The CEO commented: “… it is too early to estimate the impact of the coronavirus, which is currently affecting our production in and supply chain from China”. Orders and sales suffering due to the coronavirus outbreak “is something that will be recovered”. Although he expects that in this scenario there will be an impact on profits as its five factories will need to run at full capacity with overtime to make up the shortfall. Overtime costs more than normal hours. Currently all five of its factories are up and running and are currently operating at 40% capacity; China accounts for ~25-30% of the supply chain.

TI Fluid Systems – China accounts for 19% of its sales: 12 of its 13 plants have restarted production, the exception being a small systems plant in Wuhan.

Tata Motors (Jaguar Land Rover) shares were hit by up to 4% after reporting coronavirus is affecting JLR output in the UK. Britain's largest car manufacturer is in a scramble to keep production running, as firm CEO Sir Ralf Speth warned it could run out of parts in just two weeks. Production at JLR’s Chinese factory is set to recommence on 24 February, Sir Ralf said this would be, “safe for the very first week”. He added that sales in China – where the firm had seen an important return to form in recent quarters – had also taken a hit. "That's completely stopped. It's zero," Sir Ralf said.

Towerjazz (analogue chip maker) has missed its Q4 earnings estimates as it took a US$5m hit due to coronavirus; it says the future impact is uncertain.

Vicinity Centres, the Australian owner of retail sites across Australia, has said it’s seen a material decline in footfall at many of its key centres, which is having an impact on its revenue. It has attributed this to the public concern around the coronavirus outbreak.

Wal-Mart (conference call comments): “Our China business also continues to operate well and in particular Sam's Club… certainly the coronavirus tempers our expectations. Currently, we do anticipate some financial impact of the China business in Q1 and potentially into Q2. Due to the current sales mix landed heavily toward food and consumables, as well as some increased expenses related to the outbreak, we could see a couple of cents negative impact in Q1, we also continue to monitor how this might impact our sourcing operations. As of now we aren't seeing major impact, but if there are any longer-term shipping issues, it would likely impact our business. Today, all of our stores remain open, albeit the vast majority of them with restricted hours and some have got restricted operations.”

Wisetech (Australian logistics software) – EBITDA guidance cut by 18% and shares down 28%: “While we have a diversified array of revenue drivers that provide resilient organic revenue growth across our global platform, we do anticipate that the manufacturing slowdown as a result of the unexpected outbreak of coronavirus in January 2020 and the effective shutdown of China, a critical driver of the global manufacturing supply chain, will potentially delay execution of logistics activities by logistics service providers. The speed of recovery of China manufacturing, replenishment of inventories worldwide and restoration of supply chain volumes, once started, will likely create a significant rebound in volumes and logistics transactions, however the interim delay may cause some transactional revenues to move into the next reporting period and potentially delay the launch of new products planned for 2H 2020.”

Other
• Federal Reserve’s Robert Kaplan sees slower US oil output and a 10-15% drop in oil sector capex in 2020 partly due to the coronavirus.

• China’s EU Ambassador says the impact from the coronavirus on the Chinese economy is “limited, short-term and manageable”.

• S&P has said that assuming the virus is contained by March it expects China’s GDP growth rate to recover in Q3 and rebound in 2021.

• The cruise ship Diamond Princess, which has been in quarantine since early February, has begun to offload passengers. The ship has had over 540 cases confirmed out of 3,700 passengers, with many coming after quarantine efforts, showing the virulence of the disease.

• The IMF has said the projected recovery in global growth is highly fragile; risks include a coronavirus spread. Growth in China has been disrupted by the outbreak and spillover into other countries is likely.

• Thailand airport has approved a 20% discount to operators during February 2020 to January 2021 in response to falling passenger numbers travelling to the Far East. Tourist numbers from 1-9 February were down 43.47%, with Chinese visitors, the lifeblood of Thai travel retailers, off by a startling 86.55%.

Country-by-country cases
Source: WHO
Japan* 629
Canada 8
Egypt 1
Singapore 81
India 3
Thailand 35
Italy 3
Republic of Korea 47
Philippines 3
Malaysia 22
Russia 2
Germany 16
Spain 2
Vietnam 16
Belgium 1
Australia 15
Cambodia 1
USA 15
Finland 1
France 12
Nepal 1
UK 9
Sri Lanka 1
UAE 9
Sweden 1
*includes international conveyance