Arts & Life
Canstar Community News
Hey there, time traveller!
This article was published 28/1/2020 (245 days ago), so information in it may no longer be current.
MONTREAL - Canadian companies are starting to feel the pinch of the deadly coronavirus epidemic as they call off trips and watch their stock values slide.
The S&P/TSX composite index in Canada had its worst trading day in nearly four months on Monday, dropping more than 100 points before partly rebounding Tuesday morning.
Imax Corp. says it postponed the release of five films after China's more than 60,000 movie theatres shut down, including the company's more than 600 locations. The Mississauga, Ont.-based company is in the midst of a major expansion in China, which hosts roughly 40 per cent of its outlets and generates hundreds of millions in box office revenue.
Air Canada has seen its stock fall about 12 per cent in the past week. The Montreal based carrier offers direct flights to Beijing and Shanghai from Canada's three biggest cities, as well as to the airport at Wuhan — the epicentre of the virus — through a partner. Air Canada is allowing passengers to rebook flights to the Chinese cities free of charge.
All sorts of sectors, such as retail, insurance, mining and manufacturing, are bracing for impact. Companies including Canada Goose Holdings Inc., Sun Life Financial, Teck Resources Ltd., and Magna International Inc. — which has nearly 19,000 employees at factories and offices in China — put employees' travel plans on hold or instructed staff to work from home. All except Sun Life saw their stock fall between five and 15 per cent since Jan. 20, when authorities confirmed human-to-human transmission of the virus.
Bombardier Inc., the Montreal-based train-and-plane maker employing some 8,000 workers in China, echoes other Canadian companies with a foothold on the mainland and says it is "monitoring the evolving situation" and asking staff to "strictly follow the travel and public health instructions issued by the Chinese authorities."
Markets beyond the Asia Pacific region are stabilized for now, said Colin Cieszynski, chief market strategist at SIA Wealth Management.
"With efforts still underway to contain the coronavirus outbreak, including curtailing transport between Mainland China and Hong Kong, investors have paused to assess the situation, much of which remains clouded in uncertainty," he wrote in a research note.
The virus has killed at least 106 people and infected more than 2,750 others, Chinese officials report. The flu-like illness has spread to at least 14 other countries in Europe and North America, including two confirmed cases in Toronto and one presumptive case in Vancouver.
Broader proliferation beyond China's shores would lead to "a progressively larger global economic disruption," Beata Caranci, chief economist at TD Economics, wrote in a note.
"There's little doubt that confirmed cases will continue to rise globally in the near-term, but Chinese authorities have demonstrated a swifter and more transparent response than the SARS episode, both domestically and in alerting the World Health Organization."
The extent of the epidemic to date falls well short of the spread of Severe Acute Respiratory Syndrome, an illness from the same family as coronavirus, that spread from China to more than two dozen countries, including Canada, in 2003.
SARS infected more than 8,000 people worldwide, killing close to 800, according to the WHO. The disease sickened about 438 Canadian patients and caused 44 deaths in the Toronto area — the epicentre of the virus outside of China.
SARS cost Canada $5.25 billion and about 28,000 jobs in 2003, according to a 2014 report by Kai Ostwald, an assistant professor at the University of British Columbia's School of Public Policy and Global Affairs.
The damage came in large part from fear-based shifts in consumer behaviour rather than higher medical expenditures, Ostwald wrote in the report.
"Specifically, fear of contagion prompted widespread aversion behaviour, in which people significantly reduced activities that put them in close proximity with others. This included not only things like flying and eating in restaurants, but also activities like workplace and school attendance,'' he wrote.
Another difference between the two outbreaks lies in China's supercharged growth as an economic power over the past two decades. In 2003, China comprised four per cent of global output, compared to 16 per cent today, according to the World Bank.
A disruption could ripple through supply lines and consumer prices if the virus continues to spread.
"China is the engine of the global economy, churning out goods,'' said German health economist Fred Roeder.
Its critical role in international shipping may be thrown into disarray as ships encounter delays at the port at Wuhan, a key hub on the Yangtze River.
"If they cannot leave, it creates huge delays in the supply chain and value chain of businesses all across the world," Roeder said. "It could actually hit the latest generation of smartphone if ports are shutting down.''
Tourism too is at risk, with travel in many parts of China effectively suspended as full or partial lockdowns restrict more than 50 million residents. Canada is increasingly reliant on Pacific countries for tourists, with the number of annual visitors from China shooting up by a factor of 10 since 2000 to 757,000 in 2018.
Meanwhile investors are seeking shelter in bonds amid fears the coronavirus could disrupt global economic activity, said Sherry Cooper, chief economist at Dominion Lending Centres.
The Government of Canada five-year bond yield traded at roughly 1.35 per cent Tuesday morning, well below its nearly 1.70 per cent level one month ago, she pointed out.
This report by The Canadian Press was first published Jan. 28, 2020.
Companies in this story: (TSX:AC, TSX:MG, TSX:GOOS, TSX:TECK, TSX:SLF)
The Winnipeg Free Press invites you to share your opinion on this story in a letter to the editor. A selection of letters to the editor are published daily.
Letters must include the writer’s full name, address, and a daytime phone number. Letters are edited for length and clarity.