Breakingviews

Corona Capital is a daily column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.

U.S. Secretary of State Mike Pompeo declared the Asian financial hub no longer autonomous from China, days after Beijing unveiled plans to ban sedition and subversion there. Breakingviews columnists in the city untangle what it means amid the trade war, pandemic and protests.  

Hong Kong’s financiers should study the lesson Man Group learned during the Chinese stock crash of 2015. Chinese authorities detained bankers and brokers, including the British hedge fund’s China head, as state media blamed foreign forces for sabotaging markets. Beijing’s proposed new security law will extend this attitude to Hong Kong. Traders and investors may have as much cause to worry as protesters.

The United States has found a new way to make China pay for Covid-19: by targeting Hong Kong.

The coronavirus may have done what euro zone crisis could not: persuade the European Union to shrug off its bond taboo. European Commission President Ursula von der Leyen on Wednesday unveiled a plan to jointly borrow 750 billion euros to help EU states recover from Covid-19. There are obstacles. But the pandemic may help the 27-member union lose its aversion to joint borrowing.

After Covid-19 is tamed, inflation rates are going to rise fast and far. Or maybe lockdowns will be followed by years of global deflation. The pandemic has unleashed a furious debate between extremists on either side of the monetary divide. Policy and habit suggest they’re both wrong.

The U.S. Senate is taking pressure on China to a new level. A bipartisan bill doing the rounds on Tuesday would impose sanctions on Beijing officials and local banks if the country puts into place fresh curbs on Hong Kong. Tensions between the two superpowers are already high. The legislation would bump that up several notches.

The Covid-19 pandemic will spark hugely damaging debt defaults in developing countries, hampering rebuilding and recovery. Many emerging markets borrowed heavily both from official governmental lenders, as well as from international private sector investors, mostly in U.S. dollars. Now they are confronted by rising debt service costs at a time of rising economic difficulties and capital flight. We must start planning for this right away. 

Vegan businesses could be headed for leaner times. Meat substitutes are currently enjoying a spectacular boom driven by changes in tastes and problems in meat providers’ supply chains. It may not last.