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Hong Kong Exports Plunged Even Before Virus Showed Full Impact

Hong Kong Exports Plunged Even Before Virus Showed Full Impact

(Bloomberg) --

Hong Kong can’t catch a break.

January was supposed to be the month that sagging exports from the Asian finance hub’s huge port started to bottom. Instead, they slumped. By a lot more.

Total outbound shipments plunged 23% from a year earlier, far worse than the 3.7% drop that economists expected, figures released Tuesday showed. Exports from the facility, one of the 10 largest ports in the world, saw big drops to key markets: down 21% to the rest of Asia, 33% to the U.S. and 37% to the U.K.

While the data were probably affected by the annual Lunar New Year holidays, they also show that whatever dividend was likely from the U.S. and China trade deal has already evaporated. The focus now is on how much worse the pain could get as the city braces for fallout from the coronavirus.

The disruptions, meanwhile, are reverberating:

  • The shipping industry will remain volatile for most of the year, said Gene Seroka, executive director of the Port of Los Angeles. In an interview, he said cargo traffic at the largest U.S. container port is down about 25% so far this month, a drag that could push total container volume down 15% in the first quarter.
  • The U.S. imported half the amount of goods from China in the week ending Feb. 20 as it did in the same period last year, according to IHS Markit data compiled by Bloomberg.
  • Economists are beginning to war game what an untethered outbreak could mean for global growth. Oxford Economics reckon an international health crisis could be enough to wipe more than $1 trillion from global gross domestic product.
  • China’s mammoth steel sector — which accounts for more than half of global production —  is in turmoil. Stockpiles of rebar, a key construction material used to reinforce concrete, have swelled to a record. That’s hurting the price of iron ore, Australia’s biggest export.
  • When Bloomberg reporters recently fanned out across the globe, they found plenty of examples of companies feeling the strain: New Zealand lobsters that were released back into the wild. A San Diego game studio that faced delays to its latest fantasy board games. A Hong Kong watch maker who couldn’t get coils or wheels.

Charting the Trade War

Hong Kong Exports Plunged Even Before Virus Showed Full Impact

The British government is refusing to ask ports to get ready to implement new checks on goods moving between Britain and Northern Ireland, a decision that risks inflaming tensions between London and Brussels ahead of next week’s trade talks.

Today’s Must Reads

  • Japanese investment | Nissan Motor gave the starkest warning yet on the future of the Japanese group’s car factories in western Europe, with a plant in the U.K. threatened by Brexit.
  • Dispatch from Delhi | U.S. President Donald Trump and India’s Prime Minister Narendra Modi discussed issues from defense to regional security, but hopes faded for a trade deal this year.
  • Profit warnings | Mastercard and United Airlines were the latest companies to warn sales and profit are getting hurt as the epidemic spreads beyond its center in China’s Hubei province.
  • Sour taste | The U.K. shouldn’t allow imports of food that fall short of the country’s own standards when it draws up trade agreements, the head of the National Farmers Union said.
  • Debt fuel | The coronavirus outbreak is threatening to scupper a debt refinancing for the world’s third-largest container shipping company.

Economic Analysis

  • China insight | Could growth be slowing below 3%? Here are the latest tracking estimates for 1Q GDP.
  • U.K.-EU scenarios | Services, rules would be only slightly better in an FTA than no deal.

Coming Up

  • Feb. 28: U.S. advance goods trade balance, Mexico trade balance
  • March 1: South Korea trade balance
  • March 6: Canadian merchandise trade
  • March 7: China trade balance

--With assistance from Craig Stirling, Krystal Chia, Michelle Jamrisko and Michael Arnold.

To contact the editor responsible for this story: Brendan Murray at brmurray@bloomberg.net, Zoe Schneeweiss

©2020 Bloomberg L.P.