Viacom, Time Warner among 2016 merger wannabes 31 Dec 2015 U.S. media distributors such as cable outfit Comcast have bulked up, and Apple, Amazon and the like have built new streaming models. The giants have 12-digit valuations. With the exception of Disney, traditional content makers are looking puny. They’ll feel the urge to merge.
Review: Making Big Data visible and tangible 31 Dec 2015 Projecting selfies onto a screen in real time shows both the value and vulnerability of today’s flood of ones and zeros. A London exhibition explores the good, the bad and the infrastructure of data from inventive angles. It makes a vital unseen world visible – and scary.
Volkswagen top brass will be up for the chop 31 Dec 2015 The German carmaker’s chairman and CEO are both new to their roles. But in 2016, huge emissions-cheating fines and a scathing external report on VW’s governance will shine a spotlight on leaving long-term insiders in charge. Chairman Hans Dieter Poetsch looks particularly exposed.
Hong Kong filings get weirder as times get tougher 31 Dec 2015 Companies ended the year reporting stolen accounts, puzzling share sales and a raid by gangsters. UK-style disclosure applied to China’s frontier capitalism has long yielded eyebrow-raising revelations. China’s slowdown is likely to bring ever more strangeness to the surface.
European populism poised for troubling second wave 31 Dec 2015 Southern Europe’s high debts and unemployment made it ripe for populism, but movements like Podemos have been held in check partly by economic recovery. They may now gather steam in other European countries, feeding on growing anti-immigration and eurosceptic sentiment.
Malaysia scrubs out half its sovereign fund stain 31 Dec 2015 A $1.7 bln land deal with a Malaysian-Chinese group brings the financial cleanup of the world’s most troubled SWF nearer completion. The overhaul of 1MDB by boss Arul Kanda is impressive. He could now move to redeem a controversial $3 bln bond sold by Goldman Sachs.
Ivan Glasenberg may be mining’s last man standing 31 Dec 2015 The Glencore chief outlasted his peers when the commodity boom turned in 2013. The sector may be due another shakeout in 2016 if prices keep falling. But Glasenberg’s big stake in Glencore and his newfound dash of humility mean his copper plating should last another year.
Oil will blow past $80 a barrel in 2016 30 Dec 2015 Low-cost OPEC producers will win the hydrocarbon price war because they can fight harder for longer. For now, OPEC is flooding the market with cheap crude. But it is building power over prices by making rival output uneconomic. The next big move in the oil price will be up.
Jamie Dimon, 10 years on, is hard bank CEO to beat 30 Dec 2015 Looking back on a decade running JPMorgan, the boss has had missteps like the London Whale, big legal fines and clashes with regulators. Yet Dimon has fashioned a bank with leading market share, top-tier returns and a head start in fintech. It’s well placed for the next 10 years.
Fund glut will send Asia’s buyout barons off-piste 30 Dec 2015 Local private equity firms are flush with unspent capital. Though that’s a global issue, it’s more acute in Asia due to a dearth of sizeable takeover targets. Firms will be tempted to overpay for assets, buy businesses from rivals, or drift into unfamiliar kinds of dealmaking.
U.S. chipmaker etches path for Chinese suitors 30 Dec 2015 Beijing is encouraging local semiconductor companies to buy foreign rivals. The threat of American lawmakers intervening is real, but CFIUS also has approved multiple deals. Fairchild is using these trends to its advantage in a $2.4 bln sale. It could become a popular playbook.
Portugal finds bad solution for BES good bank 30 Dec 2015 Lisbon has recapitalised lender Novo Banco by moving bonds back to failed Banco Espirito Santo, from which it was carved out. The move clears the way for Novo’s privatisation, but highlights the unpredictability of bank resolutions, and does nothing for Portugal’s investibility.
Giants of central banking will be cut down to size 30 Dec 2015 The limited power of the Draghis and Yellens of the world is evident. They can’t conjure up inflation and the market impact of unorthodox monetary policies has waned. Rate-setters did their bit to support the global economy. It’s time fiscal and wage policies did more work.
Luxury groups could shrink their way to riches 30 Dec 2015 Labels like Prada and LVMH have spent a decade expanding like crazy to meet emerging market demand. Burberry has tripled its store base. It’s time to go the other way. While cutting back will be painful, it could spur higher luxury valuations. Hermes is one that has it right.
What you read in 2015: deals, drugs and debacles 30 Dec 2015 This year’s best-read Breakingviews spanned everything from crisis-hit Malaysia to Big Pharma deal-making, Britain’s prospects outside the European Union, and Alibaba’s dangerous blind spot. Views on HSBC, Costco, the Financial Times and Singapore at 50 were also big hits.
Annual reports offer front-page warnings 30 Dec 2015 Valeant’s investor update boasted of a “simple philosophy” that is now under attack. Volkswagen’s claim of “moving progress” rings hollow. StanChart stock has been “leading the way” down since the bank used that heading in 2012. A smug title may be a sign that hubris has set in.
Carl Icahn’s Pep Boys fight can go another round 29 Dec 2015 The auto-parts chain is spurning Japan’s Bridgestone in favor of a sweetened $1 bln offer from the raider-turned-activist. Icahn is offering a 52 pct premium. But shareholders seem to be betting that Bridgestone has the financial wherewithal to punch its way to a higher price.
Rail mega-deal holds ticket to runaway M&A train 29 Dec 2015 Canadian Pacific’s $28 bln bid for Norfolk Southern involves an industrial buyer facing low growth and an aggressive investor. The offer is unsolicited, cross-border and legally messy. After a record year of mergers, this one transaction foretells much of what to expect in 2016.
Worst CEO job in America for 2016? P&G 29 Dec 2015 David Taylor will struggle to make his mark on the lumbering $200 bln giant. His predecessor-turned-Chairman A.G. Lafley already axed weaker brands, leaving Taylor to sort out growth. He may be forced to break up the Tide-to-Pampers icon or spend the year fighting calls to do so.
Arab sovereign wealth fund exodus just beginning 29 Dec 2015 Oil-dependent Gulf sheikhdoms need money to shore up their budgets. They’ll hold on to trophy assets like stakes in VW or Barclays for as long as possible. But if the price of crude keeps sliding to $20, the region’s rulers might need to liquidate their rainy-day funds by 2020.
Deutsche Bank beats sensible retreat from China 29 Dec 2015 The German lender is selling a $3.8 bln holding in retail bank Hua Xia to a local insurer. Like rivals before it, Deutsche is crystallizing a solid return – while admitting that minority stakes on the mainland are of little use. Capital ratios also get a welcome boost.
Japan’s outbound M&A wave will sweep up minnows 29 Dec 2015 A growing number of companies are trying to buy their way out of a shrinking home market. While blue-chips like Canon, Nippon Life and Mitsubishi UFJ are still shopping abroad, smaller companies are getting bolder. Watch for less familiar names venturing overseas in 2016.
China index: Economy suffers winter blues 29 Dec 2015 Our index climbed a little higher in November, but underlying data gave little cause for cheer. Exports and rail freight volumes tumbled, investment in residential property suffered the steepest fall since Breakingviews records began in 2008, and pollution hit a 13-month high.
Freeport chairman exit eases credibility problem 28 Dec 2015 James “Jim Bob” Moffett is leaving the $9 bln mining group he helped found amid pressure from activist investor Carl Icahn. It’s a needed step to restore confidence after faux pas including an ill-timed, cozy-looking 2012 oil deal. His replacement, though, has his work cut out.
Valeant’s latest fix reinforces its challenges 28 Dec 2015 The $38 bln drug company is handing the reins to three execs while CEO Mike Pearson is on medical leave. And three directors will “oversee and support” them. The double triumvirate shows how reliant on one man Valeant now is as debt, R&D and strategy issues take center stage.
Clinton White House run clouded by home economics 28 Dec 2015 The Democrat who could become America’s first female commander-in-chief in November is ahead in early polls and at the bookies. Growth is up and unemployment down under Obama, too. It might not be enough, though: traditionally, voters only reward bigger economic dividends.
Balance sheets will get more unbalanced in 2016 28 Dec 2015 The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.
London’s bankers should retrain as builders 28 Dec 2015 The City’s banks are sacking thousands of staff. Meanwhile, the construction sector needs 120,000 new pairs of hands to boost UK housing supply to a level that eases house-price inflation. For bankers smarting from accusations of social uselessness, it might make a decent change.
Cheap batteries will give utilities electric shock 28 Dec 2015 Local power suppliers have long enjoyed a natural monopoly. But the arrival of low-cost home energy storage from the likes of Tesla makes consumers less dependent on electricity networks. Batteries may even let some developing countries skip the grid altogether.
Host Brazil may challenge for 2016 Olympics glory 24 Dec 2015 The mighty U.S. will be hard to dislodge from the top spot. But a prediction based on population, GDP, the cost of Nikes and past willingness to dope suggests Brazil could break into the top five by medals. Like Team GB in 2012, that will require capitalising on home advantage.