Market analysis

Market analysis
The first is the turmoil caused by the second outbreak of the epidemic. The market is still fluctuating. Many companies have been forced to lay off their employees due to the impact of the epidemic.

British veteran wool spinning group plans to lay off 21,000 employees

According to the “Daily Telegraph” report on the 9th, the Edinburgh Woolen Group, owned by British billionaire Philip Day, is now on the verge of bankruptcy. The group plans to lay off 21,000 employees and close most of its stores.

It is understood that this veteran Scottish clothing manufacturer mainly produces Harris tweed jackets and cashmere sweaters. It owns multiple brands such as Peacocks, Jaeger, Austin Reed and Jacques Vert. Philip Day, the owner of the group, said the group plans to appoint managers to reorganize the company and intends to sell part of its business to maintain operations.

More than 500 major U.S. companies file for bankruptcy

In the context of the new coronavirus pandemic, the number of US corporate bankruptcies is also increasing. Not only are many small and medium-sized enterprises shutting down, but even some large companies cannot escape the impact of the epidemic.

S&P Global Market Intelligence statistics show that as of October 4, the United States has filed for bankruptcy of 504 large-scale companies this year, exceeding the number of bankruptcy applications in any comparable period since 2010. Consumer, industrial, and energy companies accounted for the majority of companies filing for bankruptcy.
Between September 21 and October 4, a large number of US companies in the energy and consumer industries still filed for bankruptcy, including large energy companies with assets of more than 500 million US dollars (such as Lonestar Resources and Oasis)

On September 30, Oasis, a large energy company, filed for bankruptcy. The company is one of the few companies that filed for bankruptcy during the year with a debt of more than $1 billion. The company plans to reduce its debt by $5.2 billion by signing a restructuring plan with creditors.

The above-mentioned bankruptcy analysis of S&P mainly includes listed companies or private companies with public debts. When filing for bankruptcy, the assets or liabilities of listed companies included in the public debt company list must be at least US$2 million. In contrast, private companies must include at least $10 million.

It is reported that if a company applies for Chapter 11 bankruptcy and reorganization, the court will require the applicant company to continue to operate under its supervision and formulate a corporate restructuring plan, the fundamental purpose of which is to rescue the company. In the history of the United States, many companies have experienced the revival of Chapter 11 of the bankruptcy law, such as General Motors.

Judging from historical experience, realizing reorganization is not an easy task. The expenses of industry giants may exceed tens of millions of dollars, and the entire bankruptcy and reorganization process can take from six months to several years. According to data from the US Department of Justice, only 10%-12% of companies can be released from bankruptcy after successful restructuring and get back on track. Most companies ultimately end up in liquidation.

Over 600 companies closed down in Japan
Following in the footsteps of the United States, the wave of bankruptcies in Japanese companies has become more intense.

According to statistics from the Japanese credit investigation company, the Imperial Data Bank, as of October 9, 600 Japanese companies have gone bankrupt due to the epidemic since February this year. Among them, the catering industry was the most “disaster-affected”, which reached 86; hotels and other accommodation enterprises, 59 went bankrupt. In addition, small retail companies have also been hit harder.

According to data released by the Ministry of Health, Labour and Welfare of Japan, as of October 2, the number of dismissed or suspended employment in the country reached 63,347.

In the second quarter of this year, Japan’s GDP shrank by 28.1% year-on-year, marking the third consecutive quarter of decline and the largest decline in the Japanese economy since 1980.

Public information shows that in order to prevent corporate bankruptcy and a surge in unemployment, the Japanese government has launched two rounds of economic assistance. The scale of the two rounds of economic assistance exceeds 234 trillion yen (about 14.8 trillion yuan), which has already accounted for the country’s GDP. Nearly 40% of the total.