(Reuters) – Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.
Finally, some good news for retailers. Fast-fashion specialist H&M said on Tuesday that it’s on track to deliver a pre-tax profit of 2 billion Swedish crowns ($228 million) in the three months to the end of August, beating analysts’ expectations 10-fold. Customers even splurged in shops, buying more full-price items, while Chief Executive Helena Helmersson also boasted of “strong cost control”. The pleasant surprise lifted H&M’s shares 12% on Tuesday.
It’s not the only beneficiary from customers’ increased willingness to spend. Online grocery firm Ocado said on Tuesday that its sales soared 52% in the 13 weeks to the end of August, as customers were buying more than they were this time last year. Average orders per week were up nearly 10% to 345,000, while the average spend reached 141 pounds, above pre-coronavirus levels. Consumer spending appears to be fighting fit amid the pandemic.
FOOL’S GOLD. Harmony Gold Mining is getting shown up for doing the right things at the wrong time. Despite record bullion prices, the $4 billion South African group posted a $53 million full-year loss on Tuesday. Harmony’s hedging programme for the yellow metal and currencies, which dates back to 2016, worked against the company as gold prices skyrocketed to $1,950 per ounce. Losses on the positions amounted to about 1.8 billion rand ($108 million) in the 12 months to June 30.
To be fair, Harmony’s hedging programme paid out handsomely in 2017 and 2018: over its lifetime, including the recent hit, the net gain is still about 2.2 billion rand. And the strategy dampens the volatility of results for executives and investors. But with gold’s ascent looking more like a plateau than a peak, the question is whether continued caution is worth the price.
BODY AND MIND. The Asian Development Bank expects developing Asia’s aggregate GDP to contract 0.7% in 2020. Now that regional economies are beginning to emerge from their pandemic shutdowns, the ADB warns governments not to overlook side effects from the pandemic – deteriorating physical and mental well-being.
Residents in the region are ageing, and their health issues are multiplying, but they are also making more money. The bank estimates that so-called wellness industries in Asia – anything that improves physical or mental health such as spas or gyms – contribute to around 11% of output and are growing by one-tenth every year. Covid-19 will contribute to this trend. Hopefully it will have also awakened authorities to medical risks that get downplayed in some local cultures, in particular psychological ailments. Good health policy might be good business too.