HONG KONG/LONDON (Reuters Breakingviews) – Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
– Baidu’s U.S. probe
– Hapag-Lloyd gets shipshape
– Dutch unemployment
POOR HEALTH. China’s Baidu has deeper ailments than Covid-19. The company’s $16 billion video-streaming arm iQiyi, has revealed https://iqiyiinc.gcs-web.com/static-files/82fb434a-532d-414b-9f78-1b2348f2dbbb it is under investigation by the U.S. Securities and Exchange Commission over its financial and operating records. That, and a disappointing http://ir.baidu.com/news-releases/news-release-details/baidu-announces-second-quarter-2020-results revenue forecast for the third quarter from Baidu, sent shares of the $43 billion parent and iQiyi down 7% and 12% respectively during after-hours trading in New York.
The probe into Baidu’s crown jewel adds to entrenched problems. Boss Robin Li’s other diversification efforts into artificial intelligence and cloud computing have been slow. Meanwhile, hungry rivals like ByteDance are churning out popular apps which are taking crucial advertising dollars out of Baidu’s pocket. Li is running out of time to get his company in shape. (By Robyn Mak)
SHIPSHAPE. Hapag-Lloyd may emerge from Covid-19 in ruder health than before. The 9 billion euro German container shipping firm said on Friday that net profit nearly doubled in the first half of the year to 285 million euros even though revenue and shipping volumes declined because of lockdown-related trade disruptions. True, fuel costs were 17% lower in the second quarter than a year earlier, but they were 4% higher over the whole of the first half.
Chief Executive Rolf Habben Jansen attributed the improved profitability to his “Performance Safeguarding Programme”. He didn’t have to wait for a global pandemic to start running a tighter ship but at least he has made a start. Hapag-Lloyd shares nearly trebled in May for reasons that remain unclear, including to its management, before promptly collapsing. Friday’s 9% gains appear to be built on firmer foundations. (By Ed Cropley)
LABOUR PANGS. The Dutch unemployment rate jumped to 3.8% in the second quarter from 3% at the end of the first, official data showed on Friday. That’s quite different from Britain https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/bulletins/uklabourmarket/latest, where the jobless rate stayed steady at 3.9% in the three months to the June, or France, where it fell to a 37-year low in the second quarter as lockdowns made it difficult for people to look for work.
Why the difference? It’s not that the Dutch economy is especially weak. After all, Dutch GDP shrank by a relatively modest 8.5% in the second quarter compared with the first. The UK’s reported decline was more than twice https://www.ons.gov.uk/economy/grossdomesticproductgdp/bulletins/gdpfirstquarterlyestimateuk/latest as large. Look rather to the use of flexible contracts in the Netherlands. The drop in employment in the second quarter mainly affected those working under these arrangements, ING economists point out. As more non-working but still employed people in other European countries lose their jobs, other unemployment rates are likely to follow the Dutch lead. (By Swaha Pattanaik)
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