Millions of Chinese Firms Face Collapse If Banks Don’t Act Fast

Brigita, a director at one of China’s largest car dealers, is running out of options. Her firm’s 100 outlets have been closed for about a month because of the coronavirus, cash reserves are dwindling and banks are reluctant to extend deadlines on billions of yuan in debt coming due over the next few months. There are also other creditors to think about.

“If we can’t pay back the bonds, it will be very, very bad,” said Brigita, whose company has 10,000 employees and sells mid- to high-end car brands such as BMWs. She asked that only her first name be used and that her firm not be identified because she isn’t authorized to speak to the press.

With much of China’s economy still idled as authorities try to contain an epidemic that has infected more than 75,000 people, millions of companies across the country are in a race against the clock to stay afloat.

A survey of small- and medium-sized Chinese companies conducted this month showed that a third of respondents only had enough cash to cover fixed expenses for a month, with another third running out within two months.

While China’s government has cut interest rates, ordered banks to boost lending and loosened criteria for companies to restart operations, many of the nation’s private businesses say they’ve been unable to access the funding they need to meet upcoming deadlines for debt and salary payments. Without more financial support or a sudden rebound in China’s economy, some may have to shut for good.

“If China fails to contain the virus in the first quarter, I expect a vast number of small businesses would go under,” said Lv Changshun, an analyst at Beijing Zhonghe Yingtai Management Consultant Co.

Despite accounting for 60% of the economy and 80% of jobs in China, private businesses have long struggled to tap funding to help them expand during booms and survive crises.

Support from China’s banking giants in response to the outbreak has so far been piecemeal, mostly earmarked for directly combating the virus. Industrial & Commercial Bank of China Ltd., the nation’s largest lender, has offered relief to about 5% of its small business clients.

In an emailed response to questions from Bloomberg News, ICBC said it has allocated 5.4 billion yuan ($770 million) to help companies fight the virus. “We approve qualified small businesses’ loan applications as soon as they arrive,” the bank said.

As a group, Chinese banks had offered about 254 billion yuan in loans related to the containment effort as of Feb. 9, according to the banking industry association, with foreign lenders such as Citigroup Inc. also lowering rates. To put that into perspective, China’s small businesses typically face interest payments on about 36.9 trillion yuan of loans every quarter.

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Stringent requirements and shortlists restrict who can access special loans earmarked by the central bank for virus-related businesses, while local governments and banks have imposed caps on the amounts, according to people familiar with the matter. A debt banker at one of China’s largest brokerages said his firm opened a fast lane to ease debt sales by businesses involved in the containment effort, with borrowers required to prove they will use at least 10% of the proceeds to fight the disease.

That’s of little help to a car dealership. Brigita, whose firm owes money to dozens of banks, said she has so far only reached an agreement with a handful to extend payment deadlines by two months. For now, the company is still paying salaries.

Many of China’s businesses were already grasping for lifelines before the virus hit, pummeled by a trade war and lending crackdown that sent economic growth to a three-decade low last year.

At most risk are the labor-intensive catering and restaurant industries, travel agencies, airlines, hotels and shopping malls, according to Lianhe Rating.

Yang, a property manager of a seven-story mall in Shanghai, says a tenant who runs a 150-room hotel that’s usually busy has called asking for a month’s rent waiver after business dried up. She expects the massage parlor that rents space in the mall is also struggling and is open to extending some help.

A deputy financing director at a small developer in central Anhui province said his firm is even being denied loans under existing credit lines. A drop in sales has hurt the company’s credit profile and a dearth of new projects means there’s no collateral to put up. Without access to credit, the business can survive for about four months, or maybe longer if some payments can be delayed, he said.

Banks are hardly any better off themselves. Many are under-capitalized and on the ropes after two years of record debt defaults. Rating firm S&P Global has estimated that a prolonged emergency could cause the banking system’s bad loan ratio to more than triple to about 6.3%, amounting to an increase of 5.6 trillion yuan.

Wu Hai, owner of Mei KTV, a chain of 100 Karaoke bars across China, took to the nation’s premier outlet of discontent, social media platform WeChat, to voice his despair.

KTV’s bars have been closed by the government because of the virus, choking off its cash flow. The special loans from the authorities will be of little help and no bank will provide a loan without enough collateral and cash flow, he said on his official WeChat account earlier this month.

Wu couldn’t be reached for a direct comment, but on WeChat he gave himself two months before he has to shutter his business.

— With assistance by Evelyn Yu, Ken Wang, Zheng Li, Xize Kang, Jun Luo, Emma Dong, and Yinan Zhao

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‘Overprotected’ investors could get stung in the next recession, warns top Barclays strategist

Rattled by rising non-China coronavirus cases — notably in South Korea — investors appear unwilling to load up on stocks heading into the weekend.

That is as they head for perceived safe-haven assets, bonds TMUBMUSD10Y, +0.00% and gold GCJ20, -0.18% this morning.

You’ve heard of helicopter parents? Welcome to the world of helicopter investing and our call of the day from Barclays Wealth Management’s chief investment officer William Hobbs, who finds overly anxious investors living in the “long shadow” caused by the financial crisis.

“The most common narrative in markets is what to do when the next recession comes along — own Treasurys, own gold, own quality to such an extent that my concern would almost be that if the next recession is of a more normal variety, such as a stock retracement of 10% to 15% and moderate declines in unemployment, you’ll find that you have overprotected yourself and the underperformance could actually be in the areas which you thought were giving you safety,” Hobbs told MarketWatch.

“Those companies that offer a degree of economic dependability, that enjoy strong competitive advantages, and strong visible cash flows, their worth may be being exaggerated,” said Hobbs, adding that some government bonds seem to be “return-free risk rather than risk-free returns.”

The truth is, investors can’t reliably predict recessions, and shouldn’t be obsessing about it, he said. “What we can say is some of the previous causes of some of the nastiest recessions in history are so far substantially absent” and Barclays thinks the economic cycle can carry on for a little while longer.

Of course, coronavirus ripples could “roll up in potentially much more cyclical and disruptive ways that we anticipate,” he cautioned.

But a smart investor mindset for the next five to 10 years is one that accepts all the bumps in the road can’t be dodged, whether from the economy or otherwise. Or, said Hobbs, you miss out on the reason for investing in the first place — “to harvest returns from ongoing human ingenuity.”

That means “diversified exposure to the world’s stock markets, and that is the beauty of the modern world relative to the worlds of decades past. I can now get…almost free access to all of the world’s stock markets, and exposure to that global ingenuity,” said Hobbs.

Where to find all that ingenuity? He said Barclays is leaning toward emerging markets, in particular Asia, but away from one area that looks a bit pricey — the U.S. megacap space.

Dow DJIA, -0.78% , S&P SPX, -1.05%  and Nasdaq COMP, -1.79%  traded lower in early action, alongside European stocksSXXP, -0.49%. Korean equities ADOW, +0.00% got pummeled in mixed Asian markets.

Bank of America Merrill Lynch’s chart takes us way back — showing U.S. energy stocks are at the lowest price relative to the S&P 500 since the Pearl Harbor attack of 1941.

Shares of Deere & Co. DE, +7.00% are surging after the tractor maker topped fourth-quarter forecasts and reiterated its full-year view. Also up are shares of file-sharing service Dropbox DBX, +19.96% after upbeat results.

A global airlines trade group says the coronavirus outbreak may cost airlines $29 billion in lost revenue this year. That’s as China automobile sales slid 92% in the first half of February. China says new virus cases came in at just 889, but reported a cluster in jails and the dead included a 29-year-old doctor.

The flash Markit composite purchasing managers indexes contracted in February — falling to 49.6 from 53.3 — for the first time since Oct. 2013.

President Donald Trump and Korean Oscar winner “Parasite” trade barbs.

A misleading coronavirus map went viral.

When Silicon Valley’s homeless have nowhere else to go, they ride the ‘Motel 22’ night bus.

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UBS Chairman Weber Says Coronavirus Effects Are Underestimated

UBS Group AG Chairman Axel Weber said markets are underpricing the risk that the coronavirus poses to the global economy.

“There is going to be quite a bit of impact that is going to go beyond the first quarter and that is where fiscal response, providing businesses with some tax relievers, some emergency funding, that is going to be very important for putting businesses through,” Weber said in a Bloomberg TV interview during the G-20 Summit in Riyadh.

By his estimates, global growth will experience a massive drop from 3.5% to 0.5% and China will post a negative growth rate in the first quarter. That’s not happened since at least 1990, according to data compiled by Bloomberg.

Still, Weber said that the Chinese and other central banks in Asia have room to maneuver that goes beyond just adjusting interest rates. “They run a pretty tight system of controls on investment quotas and they could liberalize that temporarily and try to get investments going,” Weber said.

He added that the room to maneuver comes with the caveat of being innovative with measures and being able to take on a higher risk in expansionary monetary policy.

Bank Succession

UBS moved forward the announcement of its successor to current Chief Executive Officer Sergio Ermotti due to a timing conflict, Weber said in the interview.

The Swiss lender named ING Groep NV’s Ralph Hamers as its next CEO this week, but that coincided with a planned issuance of an AT1 bond by the Dutch bank. That bond was subsequently pulled and the bank urged UBS to make an announcement sooner, Weber said.

Hamers will start on Nov. 1 after a transition period of two months alongside Ermotti. Hamers leaves ING at the end of June.

The choice of an outsider with a record of pushing digital banking came as a surprise to analysts, investors and even insiders because of Hamers’s limited experience in wealth management and investment banking, UBS’s core businesses.

Weber admitted the bank passed up on making history by not choosing Chief Operating Officer Sabine Keller-Busse, who would have been one of the first female CEOs of a major global bank after Alison Rose’s appointment to run RBS Group Plc.

“The issue was we are going through massive changes at the bank,” Weber said. Hamers is “somebody that in the area of moving more of wealth management onto platforms has some experience and Sabine will support him in that.”

Weber added that Keller-Busse is “one of the best female executives we have on the European side in banking, if not globally, and she will build her career. She will be in the future one of the people that you hear more about,” he said.

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Fed Hopeful on Virus Impact Amid Worry It’s Unprepared for Worst

Federal Reserve policy makers sound cautiously confident they’ve got interest rates about right as they assess the fallout from the spreading coronavirus.

What worries them though is their ability to rescue the U.S. economy should things go horribly wrong.

In various venues this week, policy makers from Vice Chairman Richard Clarida on down talked up the resilience of the economy and gently pushed back against mounting financial-market expectations they’ll cut interest rates by mid-year.

“The economy is pretty good,” Atlanta Fed President Raphael Bostic told CNBC television on Friday, adding he had “no impulses” to change interest rates.

Behind the near-term optimism lies a longer-term concern. With interest rates already at low levels, the Fed has limited ammunition to combat a recession should one occur — be it in response to the coronavirus or some other unforeseen shock.

That’s a quandary that Fed Governor Lael Brainard tackled head-on in a Friday speech in which she called for a new recession-fighting strategy that would include caps on Treasury debt yields.

U.S. stocks sank, gold surged and Treasury yields tumbled on Friday as investors took a defensive stance amid renewed concern about the economic impact of the virus as it spreads outside of China.

Dissipation Expected

Fed policy makers, for their part, have their fingers crossed that the epidemic will be contained and that any impact on the U.S. economy will prove to be temporary.

“The base case is that, as other viruses have dissipated, this one will also dissipate,” St. Louis Fed President James Bullard said on CNBC Friday.

“If you think the virus is going to dissipate and we’re going to have a temporary shock and everything is going to go back to normal, yeah, I think the Fed is in great shape and we don’t have to lower rates in that scenario,” he added.

Fed officials left interest rates unchanged in a range of 1.5% to 1.75% at their Jan. 28-29 gathering and said the setting was “appropriate” to sustain the U.S. economic expansion and achieve the central bank’s goals of maximum employment and stable prices.

The coronavirus has so far killed more than 2,200 people, mostly in China, and infected more than 75,000, while disrupting travel and commerce worldwide.

In a sign the U.S. economy isn’t immune to the fallout, a measure of business activity shrank in February for the first time since 2013 as the contagion hit supply chains and made firms hesitant to place orders.

The IHS Markit purchasing managers’ index measuring composite output at factories and service providers fell by 3.7 points to 49.6, the lowest level since October 2013, when the U.S. government shut down, according to preliminary figures released Friday. Readings below 50 indicate contraction.

Bank of England policy maker Silvana Tenreyro warned that the coronavirus outbreak could have a big impact on the world economy.

“Even if the virus is contained within China, the impact on global GDP might be large given the size of the Chinese economy,” Tenreyro said Friday at the University of Chicago Booth School’s Monetary Policy Forum in New York.

It was at that forum that the Brainard laid out her plan for beefing up the U.S. central bank’s recession-fighting capabilities.

Rate Pledge

Under her proposal, the Fed would cut rates as low as it can in a downturn and then pledge to keep them there until full employment and 2% inflation is achieved. It would back up that promise with interest-rate caps on short-term U.S. Treasury securities.

Brainard would also have the Fed seek above-target inflation to make up for past undershoots of its 2% price objective.

Brainard’s plan is just one of a number under consideration by the central bank as it carries out an in-depth strategic review it expects to complete around the middle of this year.

The review is aimed at coming up with ways for the Fed to cope with what Chairman Jerome Powell has called a “new normal” of subdued inflation and historically low interest rates.

With its short-term rate target currently at 1.5% to 1.75%, the Fed has less than half the 500 basis points in rate cut ammunition it’s used in past recessions.

Core Challenge

“The current generation of central bankers faces a different core challenge than the last generation, with substantially smaller scope for cutting interest rates to buffer the economy,” Brainard said.

In publicly staking out where she thinks her fellow policy makers should go, Brainard acknowledged that the changes she was proposing may not be sufficient to fully offset future economic contractions.

“In addition to a forceful response from monetary policy, robust countercyclical fiscal policy is vital,” she said.

“Just as monetary policy makers are actively reviewing their tools and strategies, now is the time to undertake a review of fiscal tools and strategies to ensure they are ready and effective,” she added.

— With assistance by Michael McKee, and Craig Torres

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Buffett Spends Record $2.2 Billion Buying Up Berkshire Shares

Warren Buffett kicked his stock-buyback program into high gear, spending $2.2 billion on repurchases in the last three months of 2019, the most ever in a single quarter.

  • Buffett’s Berkshire Hathaway Inc. loosened its buyback policy almost two years ago after being stymied on the dealmaking front. Since then, Berkshire has taken a cautious approach to repurchases, buying back only $6.3 billion of stock. JPMorgan Chase & Co., which counts Berkshire among its investors, bought back $6.7 billion on a net basis in the fourth quarter alone.

Key Insights

  • Buffett can’t seem to keep up with the ever-growing pile of cash, which reached $128 billion at the end of 2019. Buffett, Berkshire’s chairman and chief executive officer, has sought to redeploy those funds into higher-returning deals or stock purchases, but has been stymied by what he’s said are “sky-high” prices for good businesses.
  • Kraft Heinz Co., which counts Berkshire as its largest shareholder, had a tumultuous 2019, with writedowns, management shakeups and downgrades to junk. Buffett’s company carries its Kraft Heinz investment on its balance sheet at $13.8 billion, a figure unchanged since 2018’s fourth quarter, even as the market price of the stake dropped to $10.5 billion at the end of last year.
  • Berkshire’s operating earnings fell 23% in the fourth quarter from a year earlier, driven in part by an underwriting loss at its insurance operations.
  • Berkshire’s BNSF railroad posted a 3.8% gain in profit in the fourth quarter, just shy of record earnings in the previous three months, as a decline in expenses helped counter falling revenue across shipments of products such as coal, consumer items and agricultural goods. BNSF posted a regulatory filing Friday night, on the eve of the release of Buffett’s annual letter, giving investors a sneak peek of results.

Market Reaction

  • Berkshire’s Class A shares underperformed the S&P 500 Index last year by the widest margin since 2009. The stock has gained just 1.1% this year.

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  • Berkshire’s net income swung to a profit of $29 billion due to swings in its $248 billion stock portfolio, which started showing up in earnings two years ago following an accounting change.
  • Berkshire’s annual report is here.

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Buffett Spends Record $2.2 Billion Buying Up Berkshire Shares

In this article

Warren Buffett kicked his stock-buyback program into high gear, spending $2.2 billion on repurchases in the last three months of 2019, the most ever in a single quarter.

  • Buffett’s Berkshire Hathaway Inc. loosened its buyback policy almost two years ago after being stymied on the dealmaking front. Since then, Berkshire has taken a cautious approach to repurchases, buying back only $6.3 billion of stock. JPMorgan Chase & Co., which counts Berkshire among its investors, bought back $6.7 billion on a net basis in the fourth quarter alone.

Key Insights

  • Buffett can’t seem to keep up with the ever-growing pile of cash, which reached $128 billion at the end of 2019. Buffett, Berkshire’s chairman and chief executive officer, has sought to redeploy those funds into higher-returning deals or stock purchases, but has been stymied by what he’s said are “sky-high” prices for good businesses.
  • Kraft Heinz Co., which counts Berkshire as its largest shareholder, had a tumultuous 2019, with writedowns, management shakeups and downgrades to junk. Buffett’s company carries its Kraft Heinz investment on its balance sheet at $13.8 billion, a figure unchanged since 2018’s fourth quarter, even as the market price of the stake dropped to $10.5 billion at the end of last year.
  • Berkshire’s operating earnings fell 23% in the fourth quarter from a year earlier, driven in part by an underwriting loss at its insurance operations.
  • Berkshire’s BNSF railroad posted a 3.8% gain in profit in the fourth quarter, just shy of record earnings in the previous three months, as a decline in expenses helped counter falling revenue across shipments of products such as coal, consumer items and agricultural goods. BNSF posted a regulatory filing Friday night, on the eve of the release of Buffett’s annual letter, giving investors a sneak peek of results.

Market Reaction

  • Berkshire’s Class A shares underperformed the S&P 500 Index last year by the widest margin since 2009. The stock has gained just 1.1% this year.

Get More

  • Berkshire’s net income swung to a profit of $29 billion due to swings in its $248 billion stock portfolio, which started showing up in earnings two years ago following an accounting change.
  • Berkshire’s annual report is here.

Source: Read Full Article

Flows Into Inverse ETFs Show Demand for Coronavirus Hedges

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Flows into ProShares exchange-traded funds this year show investor appetite for investments that benefit from a declining stock market as the coronavirus threatens economic growth and investor confidence. The “What Goes Up” podcast talks with Simeon Hyman, head of investment strategy at ProShares, and Bloomberg’s Rachel Evans about how investors are positioning themselves amid the uncertainty. Some highlights of the conversation are below. 

Hyman on why inverse and leveraged-inverse equity ETFs are seeing some of the heaviest inflows among ProShares offerings this year:

 “The virus is creating volatility, and people always look for hedges in times of volatility. It’s quite well-known that after just about every one of these pandemics, epidemics, viruses, you look six to 12 months out, the market’s up. But in the short run, things can happen.”

In lighter fare, Hyman discusses the strategy behind the ProShares Pet Care ETF:
“It’s conversational alpha. If you’re a financial adviser and you’re talking to your clients, it resonates because their pets are near and dear to their heart and they’re spending so much money on them, it’d be nice for them to make a little money off of the pet-care industry as well.” 

Mentioned in this podcast:
Riskiest ETFs Get Green Light, But Brokers Might Not Touch Them

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Xi Pledges Easier Monetary Policy for Economy Pummeled by Virus

China’s top leaders said they will exercise more flexibility in monetary and fiscal policy, signaling a greater focus on reviving an economy pummeled by the virus outbreak.

Fiscal policy will be more proactive, while construction projects will be accelerated, according to a statement issued after a Politburo meeting chaired by President Xi Jinping on Feb. 21.

The central bank will free up part of the reserves of some commercial lenders to unleash long-term funding to the economy, and consider adjusting the benchmark deposit rate at an appropriate time, Deputy Governor Liu Guoqiang said in a separate statement.

The coronavirus has forced officials to keep millions of people at home and away from work, impacting businesses — both big and small — which have suspended or limited operations. The epidemic is weighing on an economy that was already growing at its slowest in three decades, with ratings company S&P Global warning that a prolonged public health crisis could cause the bad loans ratio in China’s banking system to more than triple.

Friday’s Politburo meeting signals an escalation in the easing bias of both monetary and fiscal policy, compared with the stance that was endorsed at a top-level economic meeting in December. Such a shift could pave the way for more tax cuts and monetary easing measures.

The People’s Bank of China will soon conduct a financial inclusion review on commercial banks and offer qualified lenders discounts on their reserve ratios, Deputy Governor Liu said on the central bank’s WeChat account on Saturday. Authorities will keep liquidity sufficient and continue to use targeted re-lending and re-discounting funding to help small firms, he said.

Liu also repeated an earlier pledge that the central bank will consider economic and inflation pressures when adjusting the benchmark deposit rate at an appropriate time. China slashed a range of policy rates this month to blunt the economic impact of the virus outbreak.

Read more: China Benchmark Loan Rate Drops After PBOC Eases Policy (1)

Politburo members pledged to step up efforts to support industries that are involved in vaccines, bio-medicines and medical equipment, as well as 5G and industrial networks, according to the statement. Officials also urged local governments to shift toward restoring business operations and “actively” helping migrants return to work.

“The Politburo employed a more supportive tone in its official release, with stronger and more explicit wording,” Bloomberg economists Qian Wan and David Xu wrote on Saturday. “This reinforces our view that more stimulus is underway to offset the blow to economic activity from the coronavirus.”

CHINA REACT: Politburo Shift to Pro Growth From Virus Defense

On the fiscal side, the meeting also called for better use of political financing, signaling a larger role for state-owned banks in driving public investment, the economists wrote.

— With assistance by Evelyn Yu, and Yinan Zhao

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China's coronavirus picks up globally, claiming lives in seven countries

US is hurting China by hurting Huawei: Huawei chief security officer

Huawei Chief Security Officer Andy Purdy criticizes the U.S.’ decision to file new charges against Huawei due to alleged racketeering and the theft of trade secrets.

A viral outbreak that began in China has infected more than 76,000 people globally. The World Health Organization has named the illness COVID-19, referring to its origin late last year and the coronavirus that causes it.

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DR. DOOM WARNS CORONAVIRUS WILL SHOCK CHINESE ECONOMY

An official in protective suits measure the temperature of the foreign passengers disembarked from the quarantined Diamond Princess cruise ship before boarding to buses at a port in Yokohama, near Tokyo, Friday, Feb. 21, 2020. (AP Photo/Eugene Hoshik

The latest figures reported by each government's health authority as of Friday in Beijing:

— Mainland China: 2,236 deaths among 75,465 cases, mostly in the central province of Hubei

— Hong Kong: 69 cases, 2 deaths

— Macao: 10

— Japan: 739 cases, including 634 from a cruise ship docked in Yokohama, 3 deaths

— South Korea: 204, 2 deaths

CORONAVIRUS MAY SLASH $29 BILLION FROM AIRLINES' REVENUE

— Singapore: 86

— Thailand: 35

— Taiwan: 26 cases, 1 death

— Malaysia: 22

— Iran: 18 cases, 4 deaths

— Australia: 17

 CORONAVIRUS BREAKS INTO CHINA PRISONS AS GLOBAL MARKETS, BUSINESSES TAKE HIT

— Vietnam: 16

— Germany: 16

— United States: 15 cases; separately, 1 U.S. citizen died in China

— France: 12 cases, 1 death

— United Kingdom: 9

— United Arab Emirates: 9

— Canada: 9

— Italy: 6

— Philippines: 3 cases, 1 death

— India: 3

— Russia: 2

— Spain: 2

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— Belgium: 1

— Nepal: 1

— Sri Lanka: 1

— Sweden: 1

— Cambodia: 1

— Finland: 1

— Egypt: 1

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Gold on track for biggest weekly gain since June as downbeat economic data fuel haven demand

Gold futures rallied on Friday, headed for the sharpest weekly gain in eight months, as downbeat U.S. economic data and steadily sliding government bonds rates offered fresh support to the haven asset that is on pace for a seventh straight session gain.

Goldman Sachs in a recent research note wrote that bullion could top $1,850 an ounce in the near term if the outbreak of COVID-19, the infectious disease that reportedly originated in Wuhan, China, can’t be contained by the second quarter.

The analysts say the illness, which has claimed more than 2,200 lives and sickened 76,767 people, according to the World Health Organization’s latest tally, has more room to run “depending on the magnitude of the monetary policy response.”

Gold for April delivery GCJ20, +1.62% on Comex added $30.90, or 1.9%, to $1,651.0 an ounce on Comex. The metal is on pace for a weekly gain of more than 4%, which would mark the sharpest weekly rally for a most-active contract since the week ended June 21, according to FactSet data.

The powerful rally for the precious metal, which has sparked renewed interest by market analysts, comes as the 30-year bond yieldTMUBMUSD30Y, -3.26% slipped 7.6 basis points to 1.894%, falling below its previous all-time low of 1.95%. Precious metals don’t offer a coupon so falling yields can underpin gains for the hard commodity.

Gold is now in the “fear of missing out,” stage, and “position traders are chasing gold equities and physical gold,” said Jeff Wright, executive vice president of GoldMining Inc.

Investors have been worried that the disease could hamstring Asian economies, considered linchpins for industries like semiconductors and automobiles, and fuel a global economic slowdown.

Data released Friday showed that business in the U.S. contracted in February for the first time in four years due to disruptions caused by the coronavirus and growing angst over the outcome of the 2020 presidential election. The index covering the large service side of the economy sank 4 points to 49.4, IHS Markit said Friday.

Federal Reserve members have been sanguine about the outlook for the domestic economy thus far. St. Louis Fed President James Bullard said Friday in an interview on CNBC that there is a “high probability” the COVID-19 outbreak will be a temporary shock, while Atlanta Fed President Raphael Bostic on CNBC said he expected U.S. gross domestic product to remain healthy.

In other metals trading Friday, March silver SIH20, +1.15% rose 23.1 cents, or 1.3%, to $18.55 an ounce, with a weekly gain of 4.6% in sight, which would mark its sharpest weekly rise since August.

March copper added 0.7% to $2.606 a pound, on track for a weekly rise of nearly 0.3%. April platinum PLJ20, +0.33% added 0.2% to $980.40 an ounce, poised for a weekly rise of more than 1%, while March palladium PAH20, +0.52% climbed 0.5% to $2,596.90 an ounce, ready to notch another record finish and trading up by nearly 12% for the week.

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