Irony is often the first casualty of a crisis, so thanks are due to NMC Health2020欧洲杯体育足彩外围app for delivering the bitter laughs as markets nosedived last week.
As its corporate peers watched their valuations suffer in the coronavirus outbreak, the hospital operator took its place as the best performer in the FTSE 100.
Despite being in the middle of what appears to be the most spectacular implosion of an allegedly blue-chip company in recent memory, NMC shares gained by nearly a tenth for the week.
2020欧洲杯体育足彩外围appThat was all before the City watchdog launched an investigation of murky loan guarantees given by the company and trading was suspended on Thursday.
2020欧洲杯体育足彩外围appThe FTSE 100 index, generally composed of much more investable companies than NMC, meanwhile went on to record the worst week since the financial crisis in 2008.
2020欧洲杯体育足彩外围appNMC will certainly be discharged from the blue-chip club this week, never to return (although its shares are no longer trading its bond debt is priced for insolvency). But at least it never lost its sense of humour.
This weekend there is a note of something like panic in the air. Chinese factory activity fell last month at the fastest rate on record. This is the first official yardstick of the world’s second-largest economy since coronavirus emerged, and there will be much more grim data to come from China and around the world as the outbreak becomes a pandemic.
2020欧洲杯体育足彩外围appThe arrival of spring in the northern hemisphere may slow down the spread of the virus, but a peak months from now, in winter, seems assured.
America’s uniquely close coupling of politics and stock markets is making tumbling share prices an election issue already, even if some trade warriors are thrilled by what they see as an opportunity to smash global supply chains in favour of self-sufficiency.
President Trump’s sons have been impotently dispatched to shore up his administration. “In my opinion, it’s a great time to buy stocks,” said Eric, the blond one. “I would be all in.” I wouldn’t.
Regardless, the more Trump focuses on the impact of the coronavirus on the markets and his own popularity, rather than the public policy responses to a pandemic, the worse it will be for him.
Markets cannot be calmed by share tips from Eric. Investors know that the potential shock effects on the demand and supply sides of the economy are unimaginably numerous and unpredictable.
2020欧洲杯体育足彩外围appThe global financial system has not faced a test like the coronavirus. Production and consumption are vulnerable to disruption in ways that have not been observed in the modern era.
Housing could seize up as viewings are cancelled, for instance. For Britain’s residential property market, which is just getting moving again after years of Brexit-induced paralysis, this would be a heavy blow.
The same applies to business investment, which remains desperately needed to end the productivity slump.
S2020欧洲杯体育足彩外围appuch real economy effects are, for now, still a risk rather than a reality in Britain. Yet the market turmoil is already rattling the corporate world, which since the financial crisis has subsisted on easy access to cheap debt.
Equity valuations have meanwhile reached record levels on the basis of not a lot of real profit growth (especially when the US tech giants are excluded from the sums).
Goldman Sachs is now forecasting no earnings growth for American business this year thanks to the coronavirus, which means corporate lenders are already worried.
2020欧洲杯体育足彩外围appAll of a sudden, the bond markets that have fuelled an illusion of value creation for listed businesses – including by funding share buy-backs – have effectively closed.
It means that the coronavirus could be as deadly for weak companies as it is for people.
Last week, both European and US corporate borrowers found that bond markets were suddenly demanding a higher price for money and dumping high-yield bonds. New offerings almost came to a standstill in surprise that lenders were being more discerning after years of being willing to snap up almost any debt.
It could be a temporary effect, but if the cost of borrowing is elevated for long, it will create a vicious cycle for indebted companies.
A good number of those who have borrowed heavily will find when they come to refinance that their failure to invest in innovation and real growth leaves them in a fragile position.
“Exogenous shocks often expose bad leverage,” Bank of America told clients on Friday.
2020欧洲杯体育足彩外围appSectors that are already under pressure from technological change, such as retail, are under scrutiny. John Lewis, which is sitting on £2.4bn of debt and is due to report a big drop in profits on Thursday, is the sort of organisation that ought to be feeling rather under the weather this weekend.
On a vast scale, such troubles in the corporate world could deliver a global shock even if the coronavirus does not end up shutting down real economies. Regulators have been signalling growing alarm at the scale and structure of the corporate debt boom for a couple of years at least, warning that it poses a risk to the financial system.
In particular banks have been backing, packaging and reselling “covenant-lite” loans, to businesses, without the strict conditions that traditionally came with institutional lending. These are, in effect, sub-prime mortgages for businesses.
2020欧洲杯体育足彩外围appExchange-traded funds linked to these loans last week recorded some of their steepest falls on record. There is debate about the risk they pose to the financial system, as opposed to investors, but little argument that a reckoning is due.
2020欧洲杯体育足彩外围appIt is no comfort, but so far the coronavirus is exposing problems that already exist.