Companies that will be hit the hardest

A survey jointly conducted by Tsinghua University
and Peking University estimates that 85 percent
of small and medium-sized enterprises (SMEs) in
China will run out of cash within three months, and
two thirds will run out of money in two months,
if the crisis does not abate.2
The People’s Bank of
China has announced it will provide 300 billion yuan
(US$42 billion) in low-cost loans for banks to lend to
businesses affected by the virus. Several municipal
and provincial governments have also announced
measures to help SMEs, with total support estimated
in the US$70 billion range. However, the impact on
businesses will extend far beyond China, and will
only get worse if the virus continues to spread.
Businesses that are currently struggling for
profitability—those with low cash reserves or
unstable cash flows— are particularly vulnerable.
However, even businesses that appear to be in good
the financial shape may not be immune, depending on
how the situation progresses, and how long it takes
for demand and supply chains to return to normal.
Businesses in sectors such as tourism, hospitality,
entertainment and air transportation has been
particularly hard-hit in the short term. Businesses
in consumer goods and retail may also be at higher-than-normal financial risk, especially those with a high
exposure to China, and those in seasonal businesses
where demand may be lost (as opposed to shifted),
such as such perishable consumer goods and seasonal
apparel. Even commodity-oriented industries, such
as metals and mining or oil and gas, are exposed
as global demand shifts and pricing fluctuates.
Companies that will
be hit the hardest

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