Deutsche Bank mulls waiving 2020 management bonuses due to coronavirus: source

FRANKFURT (Reuters) – Deutsche Bank (DBKGn.DE) is discussing whether it will waive bonuses for its management board in 2020 due to the fallout from the coronavirus crisis, a person with knowledge of the matter said on Wednesday.

The discussion comes after the European Banking Authority on Tuesday said banks should be “conservative” in how they award bonuses to preserve capital and keep lending to an economy hit by the coronavirus outbreak.

A decision hasn’t been made yet but the bank is likely to result in waiving bonuses for top board members, the person said.

Handelsblatt first reported that Deutsche Bank was considering the measure.

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Preliminary study finds UK lockdown is slowing spread of COVID-19

LONDON (Reuters) – Lockdown and social distancing measures introduced by the British government to slow the spread of COVID-19 may already be working, according to preliminary research findings, and could soon see Britain’s epidemic of infections declining.

Scientists used an online survey to ask 1,300 people in Britain to list their contacts for the previous day – and found that the average number of contacts now is more than 70% lower than before the lockdown.

“If we see similar changes across the UK population, we would expect to see the epidemic to start to decline,” said John Edmunds, who led the study at the London School of Hygiene & Tropical Medicine (LSHTM).

He added, however, that the findings were very preliminary and should not be seen as suggesting “job done”.

“Rather, they should be used as motivation for us all to keep following UK government instructions,” Edmunds said. “It’s imperative we don’t take our foot off the pedal. We must continue to stop transmission of the virus to reduce the burden on the National Health Service now and over the coming months.”

Like many other countries affected by the pandemic of disease caused by the new coronavirus, Britain has imposed strict social distancing measures including shop and school closures. Authorities are also asking everyone to stay at home except for essential travel.

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REPRODUCTION NUMBER

The research, which was not peer-reviewed but was posted on LSHTM’S Centre for the Mathematical Modelling of Infectious Diseases website, looked at a key feature of infectious disease epidemics known as the reproduction number, sometimes called the R0, or ‘R nought’.

This describes the number of people, on average, who will catch a disease from a single infected person. If that number can be brought down to below 1.0, this signals that an epidemic will decline.

Using the change in contact patterns, the Edmunds’ team calculated a change in reproduction number between the pre-lockdown and post lockdown periods.

The finding that the mean number of contacts per person measured is more than 70% lower now than before the lockdown suggests that the R0 reproduction value now would be between 0.37 and 0.89, they said, with the most likely value being 0.62.

Independent experts not directly involved in the research said its findings were useful and encouraging.

“Given the flattening in new cases and that we have some measures in place now for over two weeks and a type of lockdown for over one week, their conclusion that R0 may be below 1 is credible,” said Keith Neal, a professor of infectious disease epidemiology at Nottingham University.

Jennifer Cole, a biological anthropologist at Royal Holloway University of London, added: “It is also valuable that this study shows that R0 can be reduced significantly even when people are still allowed to go out for essential food and medicines and with essential workers still operating.”

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Worker crunch hits world's top medical glove maker as demand spikes

KUALA LUMPUR (Reuters) – The world’s biggest maker of medical gloves is grappling with a serious shortage of workers as it tries to meet a huge surge in demand as countries such as the United States run out of personal protective gear due to the coronavirus outbreak.

Malaysia’s Top Glove Corp Bhd (TPGC.KL), which makes one out of every five gloves in the world, needs to urgently recruit up to 700 more workers as orders in the past few weeks have doubled, the company told Reuters on Wednesday.

It has already said it would not be able to meet all of the increased demand, and its struggle to recruit workers could make the task of quickly adding production lines even more difficult.

The hiring drive has been hampered by Malaysia’s month-long curbs on travel as well difficulties in flying in workers from countries such as Nepal, the company’s main source of labor.

A relatively industrialized nation of 32 million, Malaysia heavily relies on labor from South Asian countries.

“We were already experiencing a shortage of workers in the beginning of the year, which has now become more serious following the implementation of Malaysia’s movement control order,” executive chairman Lim Wee Chai said.

“At the moment, due to the surge in demand, we require unskilled workers, especially to speed up the packing function and quality assurance function, so that the ready output can be shipped out quickly to our customers.”

Despite the coronavirus restrictions that will last until mid-April, the company managed to recruit some 300 people last month and has engaged staffing firms to look for workers more aggressively. It is now trying to hire more Malaysians and is conducting interviews over WhatsApp video calls.

Top Glove has 18,000 employees and 44 factories in three countries with the capacity to make 73.8 billion gloves a year, which it wants to increase given the global shortage.

An emergency stockpile of medical equipment maintained by the U.S. government has nearly run out of protective gear including masks, respirators, gloves, gowns and face shields, Reuters reported on Tuesday citing officials.

Malaysia, the world’s biggest glove producer, has the highest number of coronavirus infections in Southeast Asia with 2,908 cases.

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China and Australia target Pacific with coronavirus aid

SYDNEY (Reuters) – Beijing has ramped up its diplomatic push into the Pacific, pledging coronavirus aid and medical advice, although its efforts are being impeded as islands close borders to stop the spread of the disease from hotspots including China.

Chinese embassies have held cheque presentation ceremonies in multiple Pacific islands, after Beijing pledged to provide $1.9 million for testing kits and protective equipment this week.

“This is a global effort by China to change the perception of early January that China was the source of the virus, to China is the source of the solution,” said Richard McGregor, senior fellow with Australian foreign policy think tank the Lowy Institute.

“If their system is mobilized to not just sending these materials to New York and Italy but even tiny countries, it gives you a sense of how galvanized they are to use this moment to build China’s reputation.”

The Pacific islands have grown as a strategic priority for China and the United States and its allies, including Australia, who are keen to lock in relationships with countries that control strategic waterways between the Americas and Asia.

Australia is the region’s biggest aid donor but Pacific islands have turned to China in recent years for budget assistance.

A World Health Organization (WHO) spokeswoman said New Caledonia, French Polynesia, Fiji and Guam can test for COVID-19, but other countries need to send specimens to Australia, New Zealand or the United States for testing.

China’s ambassador to Papua New Guinea (PNG), Xue Bing, said 2,000 testing kits, face masks and goggles were ready to be shipped from China, although flight restrictions prevented their delivery, PNG’s Post Courier newspaper reported.

FACE MASKS

PNG’s health minister Jelta Wong told Reuters: “If China sends it down we will receive it.”

“We have not opened our borders as yet and we won’t open until we are sure we have protocols in place,” Wong said.

PNG, with one confirmed case of COVID-19, tests at a local medical institute using two machines donated by Australia, he said.

“We only have aid coming from Australia,” said Wong.

The Solomon Islands, which switched diplomatic recognition from Taiwan to Beijing last year, said it received $300,000 from China and was advised by the Chinese embassy in Honiara to buy equipment from the Beijing Genomics Institution.

The office of Solomon Islands Prime Minister Manasseh Sogavare said it was trying to charter a flight from French Polynesia to China to return with medical supplies.

The Chinese embassy had also organized for a ship from Guangdong to carry several thousand face masks and protective suits donated by Guangdong province.

The secretary of Kiribati’s ministry of health and medical services, Kaaro Neeti, told Reuters the island was unable to test for COVID-19 but a Chinese donation “is in the pipeline”.

China has also offered test kits and medical supplies to Vanuatu, Tonga and French Polynesia.

McGregor, from the Lowy Institute, said China’s capacity to organize a teleconference for health officials from 10 Pacific nations on March 10 with Chinese medical experts in Beijing was “astounding” and the Australian government would be concerned its aid effort was being surpassed by China.

“If they are sending much-needed equipment it is a good thing, but it also has a geopolitical aspect.”

Australia will redirect its existing aid budget for the Pacific to focus on COVID-19, and keep essential aid workers in Pacific countries, an official said.

At a G20 leaders video conference last week, Australian Prime Minister Scott Morrison urged other nations to contribute to the Pacific.

China’s Foreign Ministry didn’t immediately respond to questions.

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Factory activity plunges as coronavirus shock deepens

LONDON/TOKYO (Reuters) – Factories fell quiet across most of Europe and Asia in March as the coronavirus pandemic paralyzed economic activity, with evidence mounting that the world is sliding into deep recession.

Manufacturing activity has tumbled, purchasing managers’ index (PMI) surveys showed on Wednesday, with sharp slowdowns in export powerhouses like Germany and Japan overshadowing a modest improvement in China.

The virus pandemic has infected more than 850,000 people around the globe and forced factories, shops and schools to close amid government-imposed lockdowns.

This has upended supply chains and crushed demand for goods as consumers worried about job prospects rein in their spending and stay indoors.

In the euro zone, IHS Markit’s final March manufacturing PMI sank to lowest since mid-2012, when the currency union’s debt crisis was raging, and was well below the mark separating growth from contraction. [EUR/PMIM]

Data from the United States later on Wednesday is likely to show a sharp decline in factory activity there too as authorities enforce strict lockdown measures to control the spread of the virus. (reuters://realtime/verb=Open/url=cpurl://apps.cp./Apps/econ-polls?RIC=USPMI%3DECI poll)

U.S. consumer confidence has dropped to a near three-year low as the pandemic shakes people’s lives, with a record number of Americans filing for unemployment benefits.

Output from Britain’s factories shrank at the fastest pace since the debt crisis as the spread of coronavirus led to a spiraling of delays and hammered business confidence. [GB/PMIM]

“With consumers clamping down on all discretionary spending in the current uncertain environment, the manufacturing sector inevitably will struggle further,” said Samuel Tombs at Pantheon Macroeconomics.

Global fund managers polled by Reuters are convinced the world economy is already in recession, similar to economists’ assessments in another Reuters poll. [ASSET/WRAP][ECILT/WRAP]

As the prospect of a deep recession grows, traders on Wednesday made a fresh dart for the safety of government bonds, the dollar and gold <GOL/>.

CHINA HEALING?

Chinese factory activity improved slightly more than expected after plunging a month earlier, its PMI showed, but growth was marginal, highlighting the intense pressure facing businesses as domestic and export demand slumps.

While factories in China gradually restarted operations after lengthy shutdowns and a fall in virus cases allowed the country to start relaxing travel restrictions, activity in South Korea shrank at its fastest pace in 11 years as many of its trading partners imposed dramatic measures to curb the virus’ spread.

“If you look at the Korean numbers, they’re fairly bad … They’re likely to get worse still because Korea will be dependent on parts from Europe and the United States,” said Rob Carnell, Asia-Pacific chief economist at ING in Singapore.

“(Policymakers) have to accept the inevitable that there is a massive global pandemic here, there is an outbreak in almost every country globally and certainly in our region, which is getting to levels that if they don’t take very dramatic action, it’s going to get much worse,” he said.

Japan’s factory activity contracted at the fastest pace in about a decade in March, adding to views that the world’s third-largest economy is likely already in recession.

A separate “tankan” survey by the Bank of Japan showed business sentiment soured to a seven-year low in the three months to March, as the outbreak hit sectors from hotels to carmakers.

“The tankan clearly shows a sharp deterioration in business sentiment and confirms the economy is already in recession,” said Yasunari Ueno, chief market economist at Mizuho Securities.

China’s Caixin/Markit PMI rose to 50.1 last month from February’s record low of 40.3 and just a notch above breakeven mark, while South Korea’s IHS Markit PMI plunged to its lowest since January 2009 when the economy was reeling from the global financial crisis.

In Japan, where the PMI fell to its lowest since April 2009, the ruling coalition has called on the government to secure a stimulus package worth at least 60 trillion yen ($553 billion).

“Things are likely to get a lot worse in the months ahead,” Alex Holmes at Capital Economics said in a note to clients, noting the survey period for the PMIs likely didn’t capture more recent lockdowns such as those in Malaysia and Thailand.

The consultancy expects global gross domestic product (GDP) to fall by more than 3% this year.

Policymakers across the globe have announced massive monetary and fiscal stimulus measures to try to mitigate the economic fallout from the pandemic, keep cash-starved businesses afloat and save jobs.

But many measures have been short-gap steps to deal with the immediate damage to corporate funding and shore up banking systems amid worries of a credit crisis.

The International Monetary Fund has said the pandemic was already driving the global economy into recession, calling on countries to respond with “very massive” spending to avoid bankruptcies and emerging market debt defaults.

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UK to speed up coronavirus testing as criticism grows

LONDON (Reuters) – Britain’s government said on Wednesday it would ramp up the number of coronavirus tests amid widespread criticism that it was doing far too few, as ministers suggested that shortages of chemicals were partly to blame.

Officials say testing for COVID-19 is key to fighting it, not least to check if medics on the frontline of the epidemic could return to work.

But while Germany has been testing about 500,000 people a week, Britain’s current capacity is just 12,750 a day, a figure the government said it was aiming to double by mid-April.

“I hope on testing … you will see significant increases this week. We expect to be at 15,000 tests over the course of this week and then moving further forward in the future,” housing minister Robert Jenrick told broadcaster ITV.

“We do need to go further and we need to do that faster.”

The number of coronavirus deaths in Britain rose to 1,789 people, figures on Tuesday showed, a 27% increase in a day with one of the victims a 13-year-old boy with no apparent underlying health conditions.

So far, tests have been focused on those suspected to have the virus who have been admitted to hospital but the government says it is trying to extend this to key staff in the National Health Service (NHS).

Jenrick said more than 900 health workers were tested over the weekend and a further 8,240 individuals on Monday, as he faced a barrage of questions in media interviews about the low number of tests.

“Fix Testing Fiasco Now,” the Daily Mail newspaper said on its front page.

At a news conference on Tuesday, Cabinet Office minister Michael Gove said shortages of necessary chemicals had been a factor.

“A critical constraint on the ability to rapidly increase testing capacity is the availability of the chemical reagents which are necessary in the testing,” he said, saying the government was working with companies worldwide to obtain what was required.

The Chemical Industries Association said that, while there was escalating demand, “there are reagents being manufactured and delivered to the NHS”.

“Every business here in the UK and globally is looking at what they can do to help meet the demand as a matter of urgency,” it said in a statement.

An opposition Labour lawmaker said the problem was that ministers appeared not to have ordered enough of the chemicals from companies that had offered to make what the government needed.

“These are often the same chemical companies which are producing chemicals for the tests in Germany,” Bill Esterson said.

“Companies in the UK can make them. They haven’t been asked. The shortage is because they haven’t been ordered.”

Asked about the apparent discrepancy between the government and industry over the shortages, Jenrick said several chemicals were required, “and not all of them, as I understand it, have always been available in the UK in the quantities that we need.”

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Grounded cabin crew get hospital training as Sweden battles coronavirus

STOCKHOLM (Reuters) – Furloughed crew from crisis-hit Scandinavian airline SAS are taking a three-day course in basic hospital duties to help plug gaps in a Swedish healthcare system strained by thousands of coronavirus cases.

The airline, part owned by the governments of Sweden and Denmark, temporarily laid off 10,000 staff – 90% of its workforce – this month to cut costs and ride out a plunge in air travel due the pandemic and related border closures.

With Stockholm’s healthcare system in need of reinforcement as cases rise, Sophiahemmet University Hospital is teaching former cabin crew skills such as sterilizing equipment, making hospital beds and providing information to patients and their relatives.

The first students are due to complete the course on Thursday and the response has been overwhelming.

“We now have a long, long list of healthcare providers that are just waiting for them,” said Johanna Adami, principal at the University. Airlines in Australia, and the U.S. have also enquired about using the training methods for their staff.

She said municipalities, hospitals and nursing homes have all been queuing up to employ the re-trained staff, who will number around 300 in the coming weeks. Adami said airline staff were particularly suited to helping in the healthcare sector.

“They have basic healthcare education from their work. They are also very experienced to be flexible and think about security and also to handle complicated situations,” she said.

Sweden has around 4,500 confirmed cases of the virus and 180 deaths, with the capital especially hard hit. Healthcare officials in Stockholm have scrambled to set up a temporary hospital in a convention center and warned of a lack off staff and safety equipment to meet the crisis.

Malin Ohman, 25, a airline stewardess from northern Sweden was in the first class of students.

“In the a blink of an eye I decided – ‘yes of course, why wouldn’t I’,” she said of her decision to retrain. “I felt that we could just contribute with something,” she added.

The course is free of charge and the companies involved with the training are not seeking to make a profit. Funding, about 7 million Swedish crowns ($698,000) is provided by the Marianne and Marcus Wallenberg foundation.

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Italy frets over lockdown, eyes eventual staggered re-opening

ROME (Reuters) – Italian health officials warned on Tuesday it was too soon to consider lifting lockdown restrictions, saying a deceleration in new cases of coronavirus should not raise hopes that the crisis was near an end.

The government announced on Monday that curbs on movement and business activities introduced nationwide on March 9 would stay in place until at least the Easter holidays in mid-April.

Politicians fear it will be hard to keep people penned up in their houses much beyond that date, especially as the daily medical bulletins start to improve, but doctors on the frontline of the fight against the disease urged caution.

“Today, official sources are suggesting that perhaps we can (lift restrictions) after Easter … It seems to me highly unrealistic to think this nightmare will end by then,” said Guido Marinoni, head of the doctors’ association in Bergamo, the northern city at the epicenter of Italy’s epidemic.

“If we let work resume (too soon), it will reignite the outbreak and the fire will return. This will cause devastating damage, not only for people but also for the whole economy,” he told a group of foreign reporters.

After days of steep rises in cases, the data this week has suggested the pace of growth is slowing, with new infections coming in at 4,053 on Tuesday – some 1,200 less than the daily rate recorded a week ago. Deaths have remained largely steady at over 800 a day.

“The sacrifices and effort we have made are beginning to bear fruit,” Giulio Gallera, the top health official in the northern region of Lombardy, told reporters, adding that there might be a gradual reopening after April 15.

In an effort to make the lockdown more bearable for families, the government said on Tuesday that parents would be allowed to take their children out for short walks around the block, although parks will remain closed.

SECTORS

Italy was the first Western country to introduce swingeing restrictions on movement after uncovering the outbreak almost six weeks ago. It has tightened them week by week, banning all but core strategic activities, while shuttering restaurants, most shops, schools and universities.

The fragile Italian economy is expected to be plunged into a deep recession by the virus, with investment bank Goldman Sachs forecasting a contraction of 11.6%. This is putting huge pressure on the government to get business back up and running.

Industry Minister Stefano Patuanelli said on Tuesday that work restrictions would probably be lifted on a sector-by-sector basis, rather than on a geographical basis.

“Things will have to be reopened in stages, when people’s safety can be guaranteed. Today it is too early to do a timeline analysis. I think it will take a few more weeks before we get anywhere,” he told Radio 24.

Urging against complacency, Silvio Brusaferro, the head of the national health institute ISS, said it was vital to reduce the rate of infection – the number of people each coronavirus sufferer themselves infect.

At the start of the epidemic, the number was as high as four in Lombardy. It has now sunk to around one.

“The ideal is to go to zero … but reaching zero will be quite difficult until we get the vaccine,” Brusaferro told a news conference, adding that in the meantime Italy needed to aim for a level of around 0.5, or below.

However, it might take weeks to reach that point, making it hard for the government to reopen bars, cafes, cinemas and theaters where social distancing is difficult to patrol.

“We must avoid any measure that causes the curve (of cases) to climb again,” said Brusaferro, adding that Italy was in a tough position because it was the first Western country to be hit by the virus so was plotting a path for others to follow.

“There are no studies or literature on this … We are looking into scenarios that have never been taken before by countries that resemble Italy. Other nations are looking at us as a pilot program,” he said.

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Coronavirus shows U.S. too dependent on cheap medical imports, USTR says

(This Mar 30 story adds missing word “from” in last paragraph.)

WASHINGTON (Reuters) – U.S. Trade Representative Robert Lighthizer on Monday said the United States would seek to promote more domestic manufacturing of key medical supplies in light of the strategic vulnerabilities laid bare by the coronavirus pandemic.

Lighthizer told trade ministers from the Group of 20 major economies (G20) that Washington agreed there was a need to resolve supply chain disruptions and be aware of the impact of its actions on neighbors.

“Unfortunately, like others, we are learning in this crisis that over-dependence on other countries as a source of cheap medical products and supplies has created a strategic vulnerability to our economy,” Lighthizer said.

“For the United States, we are encouraging diversification of supply chains and seeking to promote more manufacturing at home.”

He warned against efforts to use the health and economic crisis to push “other agendas,” either in trade or elsewhere, and said that such efforts would sow distrust, however. He did not elaborate.

Some U.S. officials are concerned that China could seize on the crisis to push for tariff relief before fulfilling its purchase commitments under a Phase 1 U.S.-China trade deal signed in January.

Some U.S. businesses hit by the tariffs have also urged Washington to provide relief at a time of widespread shutdowns across the United States aimed at curbing the spread of the virus. Others are pressuring the Trump administration to keep the tariffs intact, however.

White House trade adviser Peter Navarro last week denied the Trump administration was considering a three-month deferral of tariff payments on imported goods, saying such a move would “enrich China at the expense of American workers.”

Navarro is also crafting an executive order that would expand “Buy America” provisions to the medical and pharmaceutical sectors – a change that Chinese officials have described as unrealistic and unwise.

Navarro last week said 97% of antibiotics sold in the United States came from China.

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U.S. dollar weakens as Fed measure weighs

NEW YORK (Reuters) – The dollar fell against a basket of major currencies on Tuesday modestly pressured by the weight of Federal Reserve measures meant to ensure there was enough liquidity in the global financial system.

The dollar earlier in the session benefited from quarterly and fiscal year-end demand from portfolio managers and Japanese firms, but trading was choppy, with the dollar alternating between gains and losses.

For the quarter, the dollar =USD was the biggest gainer, rising 2.8%. The Norwegian crown was the biggest loser NOK=D3, falling 18% against the dollar.

Analysts said the steep fall in U.S. equity markets during March led to increased buying of dollars for asset managers seeking to rebalance their portfolios at the end of the month.

But the U.S. currency pared gains in the aftermath of the latest Fed move on Tuesday to expand the ability of dozens of foreign central banks to access dollars during the coronavirus crisis. Essentially, the Fed is allowing foreign central banks to exchange their holdings of U.S. Treasury securities for overnight dollar loans.

It is one of a slew of measures that the Fed unleashed to address liquidity problems caused by the economic fallout from the coronavirus pandemic.

That has dented the dollar’s luster a bit as the supply of the U.S. currency expands.

“The dollar will struggle to extend gains significantly at the moment just because of the relative supply of cash coming in from the Fed in dollar terms,” said Shaun Osborne, chief FX strategist at Scotiabank in Toronto.

In afternoon trading, the dollar index =USD was down 0.2% on the day at 99.042.

It reached 102.99, its highest in more than three years, earlier this month as a global market sell-off fueled a rush for dollars.

Dollar demand has ebbed, but analysts are still forecasting more dollar gains.

Against the yen, the dollar slipped 0.2% to 107.57 yen JPY=EBS. For the quarter, the dollar was down 1.1%.

Tuesday was the last trading day of Japan’s fiscal year and the end of the quarter for major investors elsewhere, which has fueled some volatility as big currency market players close their books. The bulk of those positioning changes caused the dollar to strengthen earlier.

The dollar also weakened after data showed U.S. consumer confidence dropped to a near three-year low in March as households worried about the economy’s near-term outlook amid the coronavirus pandemic.

The euro, meanwhile, was down 0.2% against the dollar at $1.1007 EUR=, falling 1.8% in the first quarter.

Some analysts believed that the dollar is likely to remain supported as investors brace for a sharp economic downturn in the coming quarters.

“The Fed’s efforts so far are the closest thing to taming the dollar’s strength,” said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington.

“But the desire to hold dollars remains elevated ahead of what’s expected to be a punishing second quarter for U.S. and global growth.”

Graphic: World FX rates in 2019 here

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