What to watch: Tesco completes China exit, European stocks, German worries on coronavirus
Here are the top business, market, and economic stories you should be watching today in the UK, Europe, and abroad:
Tesco completes China exit with £275m sale
Tesco (TSCO.L) on Tuesday said that it had finalised its exit from China as it continues to assess its operations in Asia.
The retailer sold its 20% stake in the Gain Land joint venture — worth £275m ($356m) — to a unit of its state-run partner, China Resources Holdings.
Tesco had already pulled back in the country, and in 2013 announced that it would combine its 131 solo-brand stores with some 2,986 sites owned by China Resource Holdings.
Even then, the UK’s largest retailer had struggled to capture a slice of the Chinese market.
Tesco said the sale of its stake would allow it to “further simplify and focus the business on its core operations.”
The supermarket said in December that it was reviewing the future of its business in Asia. It has already sold its South Korean operations.
Its significantly larger operations in Thailand and Malaysia have reportedly garnered interest from investors in Asia.
Coronavirus continues to dent European stocks
European stocks slipped again on Tuesday as investors contended with soaring coronavirus infections and the previous session’s steep losses.
The pan-European STOXX 600 index (^STOXX), which had its worst day since 2016 on Monday, fell by almost 0.9% on Tuesday morning.
Italy’s FTSE MIB Index (FTSEMIB.MI), which sank by 5.4% on Monday, fell by 1.1%.
The FTSE 100 (^FTSE) was down by around 0.8% in London. Germany’s DAX (^GDAXI) was down by almost 0.9%, while France’s CAC 40 (^FCHI) also fell by around 0.8%.
Markets were roiled by the number of infections in Italy, which on Sunday locked down around a dozen towns in the country’s northern Lombardy and Veneto regions.
There have now been more than 230 confirmed cases in the country, which has become the epicentre of the virus outbreak in Europe. Some seven people have died in Italy.
Germany pessimistic about coronavirus hit to exports
The mood among German exporters has darkened significantly this month as they expect the ongoing coronavirus outbreak to take a big toll on their businesses in the short term.
The Ifo Institute’s Business Barometer, which surveys 2,300 German companies, found that sentiment had fallen from 0.8 points to -0.7 in February from the month before.
Germany’s export-reliant businesses expressed little hope for an improvement in the coronavirus situation in the short term, especially since China is Germany’s most important trading partner.
“The developments around the coronavirus give little hope for improvement in the short term,” said Ifo president Clemens Fuest.
The German automotive industry in particular is fearful of falling exports in the coming months. Coronavirus brought car sales in China to a screeching halt in the first half of February.
The China Passenger Car Association said sales plunged by 92% as most dealerships were closed because of the virus, and “barely anybody” wanted to buy a car.
Banknote maker De La Rue to slash £35m in costs
De La Rue (DLAR.L), the embattled manufacturer of the new polymer £20 note, on Tuesday unveiled an “extensive” three-year cost-cutting plan, and said it hoped to save £35m ($45m) per year from the second half of its upcoming financial year.
The company, which has issued four profit warnings in around two years, is currently under investigation for suspected corruption in South Sudan.
De La Rue said that it was targeting cost savings in its currency division. The company, which prints Bank of England banknotes, designed the polymer material and technology used in the new £20 note featuring artist JMW Turner.
The company said that, as part of the “accelerated” cost-cutting plan, it would achieve saving of £35m per year on an annualised basis from the second half of its 2020/21 financial year.
This includes £10m in “already realised” savings from previous measures, but means that the company’s annualised savings target of £20m has been increased significantly.
De La Rue said that it was too early to determine what impact, if any, the plan would have on jobs at the company.
What to expect in the US
Futures are pointing to a steady open for US stocks.
S&P 500 futures (ES=F) are up marginally and Dow Jones Industrial Average futures (YM=F) are down slightly. Nasdaq futures (NQ=F) are up.
