tv Business Deutsche Welle February 28, 2020 5:45pm-6:01pm CET
exchanges despite all the warnings investors are doing exactly what we're not meant to do when a situation like this they're panicking the dow jones had its worst one day point drop in history tumbling almost 4 and a half percent yesterday and scared to look today like so many people who hold stocks the virus has well and truly infected asian exchanges shanghai is composite down by 3.7 percent a similar case for the nikkei in tokyo considering that they could be calling off the olympics we're not sure yet it's planned for july august and hong kong's hang seng closed down by almost 2 and a half percent i've been hearing stories all day of panic ords of travelers have been canceling holidays people in some parts of the world stockpiling food others stashing away medicine or hoarding protective masks chemists here in berlin have been running out this infect and is in high demand and supply chains in general a faltering the urgency mirrored on financial markets. markets around the world
a sinking fast it's the worst week in a decade for global stocks and investors in hong kong on the only ones seeking safer territory in london where some firms like chevron sent their workers home this week the footsie dropped 4.5 percent early on friday elsewhere in europe losses on frankfurt dax index reach more than 5 percent germany's and the world's biggest chemicals maker be a asset says it's braced for the unpredictable impact of coronavirus. i mean you know in africa lower demands on production outages in many industries are already visible consequences of the measures taken to prevent the further spread of the virus begin to fade to the adverse effects of the corona virus will have a significant impact worldwide particularly in the 1st and 2nd quarters of this year . as the corona virus continues to spread to more and more countries so it has its
negative impact on their economies this is milan in northern italy europe's worst affected area normally busy tourist hot spots are now deserted and restaurants are empty. the international monetary fund says it's still getting to grips with how deep the global effects will be the virus is going to have an impact. on growth. a lot just depends on. the speed of recovery in ensuring you know other countries the spillover effects. the effects on supply chains with concern about the economic and health implications of coronavirus growing government looking for global solutions but experts warn that the world is not prepared for what may be down the road. ok let's bring in a great hang in singapore and chelsea delaney in frankfurt our financial correspondent chelsea starting with you crash correction what are we seeing here. i
think for now it's a correction that could very easily turn into a longer term crash investors are very concerned that this could turn into a global recession but that the also about the unpredictability of the situation we don't know at this point how much further the virus is going to spread what this is going to do to businesses if it's going to lead to more production shutdowns more supply chain disruptions how this is going to in fact impact consumers there's all these big questions that are really unanswerable right now but if this does turn into a session this could certainly put an end to this 11 year rally in stocks that we. we've had good times and. still in some of yours the numbers are dropping like flies today but what's interesting is there is no single safe haven that investors are running to. you're right over there it was red red red all of the markets probably better than the jacket that i'm wearing right now even here in
singapore stocks were a tumble down to a 15 month low of the benchmark s.t.i. dropping down to $3.00 dropping 2.2 percent but since you're asking that actually is the one safe haven that investors are looking to pump money at in these jittery times and they stay in all of the stocks now you know according to one report investors found that technology stocks are the more resilient ones compared to traditional blue chip stocks and so a lot of people are putting their money in there analysts say that 2 reasons to this it's a show that the government chinese government particularly is introducing the right support measures amid the outbreak but at the same time it's also because chinese consumers themselves are starting to look at technology stocks and technology products ever since the u.s. sanctions on china because singapore is a hub of oil activity tell us what what oil markets are doing this hour.
well obviously it is something that is low but the coronavirus isn't the only reason for the lower numbers in the oil markets there's also one of the culprits and that's asian demand in general now just to give you some numbers been endless say that the demand in asia for refined oil products has tumble is going to tumble rather and that number is 380000 barrels per day now just to give you a comparison that number in 2019 was 780000 barrels a day it's somewhat to do with the slow it can all make activity in china yes due to the corona virus outbreak but also with the recession that's looming because of the u.s. sanctions are putting a lot of pressure on the chinese economy so did mine generally is slower and produces a special operating rate climate change is actually the 2nd biggest reason behind this. then usual winter months contributing to the also
a number and the travel industry of course is. one that has a lot of oil it's going through its was way since 911 chelsea. yeah the stock $600.00 ths travel and leisure section which mostly includes airlines is down a whopping 20 percent this week airlines have obviously been hit really hard by having to cancel flights to china since since last month but they are also now facing a similar travel shutdown travel bans and other disruptions for the european market as well we've seen a lot of companies in the airline industry come out and say that they're going to be putting people on leave that they're going to be stopping hiring lufthansa here in germany air france also meet someone and outspend someone analysts estimate that this could cut 100000000000 euros from the airline industry its revenues this year chelsea can i just ask you really quickly are we going to see emergency action from
central banks. emergency action from central banks is really in the spotlight today a lot of investors think that the central banks the fed need to come out and really reassure markets and investors and consumers right now but so far what we've heard from central bankers including christine lagarde here in frankfurt yesterday was that they don't really believe that this is going to be a long term economic problem and they're not really ready to step in with interest rate cuts chelsey the lady in favor therefore is another thing in singapore thank you. look at the effects of the coronavirus is having on certain say is now officials calling off the geneva international motor show the biggest in the world it was a joke to begin next week but this was government has banned gatherings of a 1000 people or more of the hof a 1000000 people attended. but it's low cost airline easyjet says it's witnessed a significant softening of demand as
a result of the bars the drop is primarily on flights in and out of its northern italian bases so far these yeezy jets shares a full of more than 20 percent. and british airways says it's expecting a drop in profits this year due to cancelled flights on the back of the coronavirus flights to and from china italy singapore and south korea have been cancelled. the growing spread of the coronaviruses sparking the sell off of so-called pandemic bones there an initiative of the world bank the bones they met shifting some of the burden of preparing against the pandemic onto financial markets instead of low income countries most at risk of a pandemic but now as the risk of a coronavirus pandemic grows the potential for a payout on the bonds shrinks and that's the sell off. a report on other sullivan is following this story for us. this is very very timely or timely i guess you'd have to say. these holders basically cutting their losses yeah that is
basically what's happened so as the reporter said there when the world bank brought these funds in 3 years ago there were 2 different tranche of the bonds and the risk here of the 2 is the one that we're talking about now that bond had about 100000000 worth which was sold to investors and those investors have been getting rid of those in the last week absolutely as quickly as they can because their value is essentially worth nothing anymore because they know that the conditions have been met for those bonds to be paid to as you said low income countries so yes in that sense they are cutting their losses and not take your tranche the bonds the other less risky tranche that has and those conditions have not yet been met so in that case they're still making some money for the investors so they've made some money there cashing in cutting their losses where does that leave low income countries they're the ones who were hoping for this money in this sort of situation and that's the big question about these old pandemic bonds and they have courted controversy from the very beginning so if you look at it from the point of you are they working from an investor point of view which is of the the least important
concern here but they have worked to an extent lots of investors lots of hedge funds have made some money from these but the most important reason behind these pandemic bond. it was to get money to poor countries and all countries really want to especially low income countries in the event of a pandemic and the ultimate proof to show that these don't work is if we look at the original idea came from the ebola outbreak in west africa between 20142016 bombs were brought in and yet in 2018 when there was a new outbreak of ebola the conditions were not met in the democratic republic of congo for the money to be paid to that country which is a very low income country and which needed the money the reason the conditions weren't met is because the virus at that time the boat of ours did not cross an international border so even though you had more than 2000 deaths from ebola in the congo at the time the conditions for not one penny of this money was met to be paid simply because it hadn't crossed the border despite the size of the country so what are you saying that the pandemic bonds we already knew that the that they did what effectively yes and lots of experts in this area have said the same thing for years
if you look at what they said for example jonas she's a short the world bank for 3 years she's now at the harvard global health institute she's extremely critical of them for a long time long before the corona virus outbreak she said in a very interesting article sure all for the magazine journal the scientific journal nature a few weeks a few months back she said this structure of financing has been very good for investors but not good for global health larry summers former u.s. treasury official in the clinton administration he described them as i think goofball economics or goofball finance so no they've been relatively good for investors not good for developing countries have a solution thank you very much and nice to do business with you.
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