Breakingviews – Corona Capital: Bankers, Virus vices, Student digs

HONG KONG/LONDON (Reuters Breakingviews) – Corona Capital is a column updated throughout the day by Breakingviews columnists around the world with short, sharp pandemic-related insights.

A sign is displayed in the window of a student accommodation building following the outbreak of the coronavirus disease (COVID-19) in Manchester, Britain, October 5, 2020.


– Mizuho

– Imperial Brands/GVC Holdings

– Unite Group

PART-TIMERS. Japan’s Mizuho Financial Group says it will give some 45,000 of its employees the option to work three- or four-day weeks as executives in Tokyo and beyond experiment with workplace flexibility amid the pandemic. In April, the brokerage arm of Sumitomo Mitsui implemented a three-day workweek. New Zealand’s Prime Minister Jacinda Ardern has also recommended something similar to the private sector as a way to boost productivity and domestic tourism.

Japan’s third-largest lender by assets clearly has more than morale in mind. Those who opt to work three-day weeks will earn 60% of original pay, while four-day workers get 80%. Mizuho could use the savings: net profit shrank 25% year-on-year in the three months ended June 30.

The question is whether anyone will bite. Japan’s salarymen are infamous for unused vacation days and labouring through public holidays. You can lead workaholics out of the office, but you can’t make them relax. (By Pete Sweeney)

STRESS RELIEF. The deadly respiratory virus is sparking some surprisingly unhealthy behaviour. Just look at British tobacco maker Imperial Brands, which on Thursday said the pandemic has increased demand for cigarettes. The maker of Golden Virginia expects sales to grow by roughly 1% this year – an achievement given plunging consumer spending in other areas. Fellow vice peddler GVC Holdings, the 6.5 billion pound bookie, is doing even better. EBITDA could hit 790 million pounds this year – higher than 2019 – as punters lay sports wagers online.

The question for investors is whether customers’ chain-smoking, heavy-betting ways represent a permanent change or just a coping mechanism for lockdowns. That’s where the picture differs: Imperial shares are down 26% this year, suggesting shareholders regard higher demand as a blip, while GVC’s are up by roughly the same amount. Not all pandemic vices are here to stay. (By Liam Proud and Aimee Donnellan)

FRESHERS’ COVID. UK student accommodation landlord Unite Group has so far had a relatively good crisis. Unlike peers that own offices or shopping malls, it has managed to keep its properties open, and its shares have risen 38% since March. Still, it’s not immune. On Thursday, the 4.5 billion pound group said that 21% of its beds were empty, up from 4% at this stage last year. Chief Executive Richard Smith warned that Unite could lose up to 20% of its rental income next year as students shun universities, or take out shorter leases.

That may be optimistic. More than a third of the country’s universities have already recorded coronavirus cases. Packed student digs will further spread the disease, especially if, like in Manchester, freshers organise “Covid Positive” parties. If a vaccine doesn’t emerge soon, many more campuses may need to close next year. (By Karen Kwok)


Reuters Breakingviews is the world’s leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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