LONDON/MUMBAI (Reuters Breakingviews) - Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
LATEST
- Eurostar
- Working from home
- HDFC Bank
LEAVES ON THE LINE. Britain’s reluctance to throw Eurostar a lifeline looks increasingly odd. The rail service linking the UK capital to Paris and Brussels has already received 200 million euros of support from its shareholders, including French state rail giant SNCF, which has a 55% stake. Yet a collapse in passenger numbers means it may still go bust by the summer. There are multiple reasons why London should chip in.
As a low carbon dioxide emitter, state support for Eurostar is more in line with Britain’s green ambitions than aid for companies like British Airways, Ryanair and easyJet. A rail journey from London to Paris produces 90% less carbon dioxide than a flight. Eurostar’s collapse within months of Brexit would also undermine Britain’s stated desire to remain a friend of Europe. There are already more hurdles to movement across the EU-UK border since the beginning of the year. There’s no need to make things worse. (By Ed Cropley)
REMOTE CONTROL. Working from home may have lasting effects on office owners. The number of job advertisements that allowed remote working trebled to 80,700 in November 2020 compared with the same month the previous year, data from recruitment firm New Street Consulting Group showed on Monday. To compound the misery for office landlords, fewer jobs are being created. The number of job vacancies fell by nearly a third to 547,000 in the three months to November, according to the national statistics office.
The effects of empty offices can already be seen in the valuations of property companies. Shares in Great Portland Estates, which specialises in offices, are down by nearly a third since before the pandemic in February of last year. Optimistic investors reckoned this might be a temporary hit as a result of lockdowns. But if companies are making more permanent changes to the locations of their workers, office owners may be heading for a bigger hit. (By Aimee Donnellan)
BLINK OF AN EYE. India’s top private lender is relatively unscarred by the pandemic. HDFC Bank stock rose 2% on Monday after the lender reported strong earnings over the weekend, driving its market capitalisation up to $112 billion. While the central bank expects that the industry’s gross non-performing loans will increase 600 basis points to a massive 13.5% in the year to September, HDFC isn’t sharing much pain. Its own pro-forma ratio was about flat at 1.38% and its collections efficiency has recovered to 97%, almost pre-pandemic levels. Just 0.5% of HDFC’s advances are being restructured because of Covid-19.
It’s a good start for new boss Sashidhar Jagdishan, and justifies the bank’s enviable valuation of nearly 4 times book value. His team is treading cautiously, though. While overall loans grew 15.6% for the December quarter year-on-year, credit to companies grew at a faster pace than to retail borrowers. (By Una Galani)
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January 18, 2021 at 06:45PM
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Breakingviews - Corona Capital: Eurostar, Remote work, HDFC Bank - Reuters
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