China economy may contract by 9% in Q1 Companies scramble for rescue funding

Beijing/Shanghai, March 17: Goldman Sachs said on Tuesday that China’s economy will likely shrink nine per cent in the first quarter, underscoring how the coronavirus has disrupted normal business activities, while China reported an uptick in new cases of the disease, most of them imported.

Goldman cut its estimate for China’s first-quarter gross domestic product growth to a nine per cent contraction, from a previous forecast of 2.5 per cent growth, citing “strikingly weak” economic data in January and February that was reported on Monday.

It also lowered its fullyear GDP forecast to three per cent growth from an earlier estimate of 5.5 per cent.

For the fourth straight day, imported coronavirus cases in China outnumbered cases of local transmission.

The rising risk of imported cases has prompted some parts of the country to tighten monitoring of foreign travellers, and the Chinese foreign ministry on Tuesday advised its citizens to avoid travel to highrisk countries.

London, March 17: Law firms and banks are scrambling to retrain senior staff in restructuring so they can help dozens of companies looking to raise emergency funds and rearrange debts as the coronavirus pandemic eats into corporate cash.

Lawyers and bankers said companies mainly in the transport, travel and retail sectors had made the first approaches but in the next few months there could be a far wider range of firms as lockdowns and social distancing measures hit economies hard.

World stocks suffered their worst run since the 2008 financial crisis last week on fears the pandemic could wreak havoc on the global economy, and spell disaster for many firms.

“It has been pretty much non-stop,” said a partner at a major US law firm, who has been on calls all day since Friday and had four deals closing on Monday alone.

“These have been prearranged deals but the timing has been accelerated with people being concerned that some will get cold feet — and they involved very large sums of money,” said the partner, who declined to be named.

“British luxury carmaker Aston Martin announced new terms for a rescue rights issue last week and South African chemicals and energy firm Sasol announced a rights issue on Tuesday as part of a $6 billion package to address challenges from Covid-19 and a drop in oil and chemical prices.

Several other firms are close to announcing plans to raise funds to fend off a cash crunch, bankers and lawyers said, saying they had been fielding dozens of calls.

The scramble for cash bears echoes for many of the financial crisis fallout. Then it was real estate firms hitting the skids, keeping lawyers busy redrafting documentation prepared for stock market launches to allow for rights issues instead.