Supply Chain : focus China

Cum Clave analysis N.05 preview.

Companies are considering alternative suppliers as facilities in the Wuhan region face the crisis with production delays. All suppliers have alternative sources and obviously they are working on different plans to compensate for any expected production loss. Sources of supply outside the Wuhan area, the impact is still unclear but there should be no further alarmism. Many factories were already closed for the New Year, the interruption was extended due to the epidemic.

Normal activities are expected to resume on February 10, we report that the Wuhan region is home to plants in the automotive sector. Hypothesis of transport reduction until March 2020, where one of the main airlines and freight, Cathay will reduce its capacity “50% starting from January 30th.

Wuhan is also home to drug manufacturers. The U.S. Food and Drug Administration says these producers have not reported an impact on supply following the outbreak.
Temporary factory closings would only partially affect Chinese production. If this were the case, there would be a heavy decline with the partial stoppage of American production. Strange that everything coincided with the beginning of the US-Iraq war.

Asian stocks and currencies fell as the death toll rose and more cases were reported with fears growing that the hit to China’s economy will ripple around the world in the coming months.

The move pushes some sector companies to their knees. Whoever controls the flow of money, observes new opportunities, opening new roads and scenarios. The Cassandras mention a loss of a potential 1% of Chinese GDP, but for now it is not credible.

The repercussions are more technical than emotional.

Paraphrasing Baron Nathan Rothschild, a famous English banker from the late 1800s, he said: the time to buy is when blood flows in the streets …
Without discussing the banker too much, is blood really flowing in the streets or is it the usual controlled panic, or the usual correction of a market that doesn’t know what to do?

Elements of reflection:

1. Usually when the Chinese New Year arrives the exchanges are rarefied, and low volumes and the volatility increases with strong bidirectional movements (up and down)….

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