FTSE 100 on the back foot as coronavirus more deadly than SARS, and will NMC Health go private?

“News that the number of deaths from the coronavirus has exceeded those from the SARS outbreak in 2003 appears to have given investors pause for thought on Monday.

“China is, in theory, returning to work today after an extended New Year holiday aimed at containing the virus, but not all factories are coming back on line yet.

“The pace of this process could be telling in the eventual economic impact of the health crisis so markets are likely to be following events closely.

“One of the first announcements on the Chinese economy since the outbreak began was released this morning, notably showing a big rise in inflation as food prices soared.

“And with the World Health Organisation warning that we may only have seen the tip of the iceberg in terms of coronavirus cases outside China, equities still look vulnerable to further weakness,” says Russ Mould, Investment Director at AJ Bell.

NMC Health

“Just when you thought it couldn’t get any stranger with NMC Health, there are two new twists in the tale of the troubled hospital operator. Firstly the FTSE 100 member believes that two directors’ shareholdings have been incorrectly reported, implying it has poor information controls. Secondly, it has confirmed takeover interest from KKR and GK Investment following recent share price weakness.

“NMC has been surrounded by so many surprise events in the past year, triggering extreme share price volatility. It has been under attack from short-seller Muddy Waters which has accused it of understating debt levels and inflating cash flow. This triggered NMC to hire a former FBI director to conduct an investigation into allegations of financial wrongdoing.

“Two of NMC’s controlling shareholders have sold a large amount of stock, followed by another shareholder, Emirates NBD Capital, also reducing its stake.

“Concerns have been flagged in various parts of the market before these events happened, with critics saying the company had grown too fast and that acquisitions were masking poor organic growth. There were a lot of questions about corporate governance, opaque accounting and supply chain finance.

“Taking the business private might be the best thing to happen to NMC as it has lost credibility with the market and it will take a lot to rebuild trust with investors.”

These articles are for information purposes only and are not a personal recommendation or advice.