BREAKINGVIEWS

U.S. debt ceiling’s only value is as a warning light

23 June 2017

The Treasury wants lawmakers to raise the $20 trln cap on federal borrowing or risk a default. The 100-year-old idea of the limit is no longer practical, especially when Congress won't link it with budgeted outlays. Still, the ceiling is a symbol of America's growing debt burden.

Natural gas inflicts fresh wounds on old victim

22 June 2017

Southern risks a new writedown after regulators tired of waiting for a novel “clean-coal” plant. As with its troubled nuclear project, the $50 bln U.S. utility tried untested designs. Efforts to diversify fuel sources are admirable but cheap gas prices continue to crush them.

Brexit one year on: an alternative history

23 June 2017

It has been a year since Britain voted narrowly to remain in the EU, a (fake) bank CEO writes in a memo to staff. Few expected uncertainty would linger so long after the referendum. Austerity and populism point to challenges in the UK. Thankfully, the euro zone looks attractive.

Oil markets too calm over Qatar ultimatum

23 June 2017

Doha’s Gulf neighbours have imposed a 10-day deadline to comply with demands including reparations, closing Al Jazeera and regular inspections. Markets have assumed the standoff won’t turn violent and impact oil supply from the region. That assumption is looking less secure.

Bolloré clan’s deal sums don’t add up

23 June 2017

Vincent Bolloré’s Vivendi is buying ad group Havas, run by his son Yannick. The younger Bolloré says it may create at least 390 mln euros of value, justifying the premium. That’s dubious: the premium is arguably bigger than he claims, and the return on investment still looks low.

Italy’s broadband farce risks state overreach

23 June 2017

Ministers are threatening to punish Telecom Italia for building broadband in poor areas. The snag is that it is competing with government-linked rival Enel. Telecom Italia’s French ownership also adds complexity. Whatever the motive, attacking private investment is a risky move.

Sale of Singapore’s GLP seems to stack up

23 June 2017

Buyout firms are boycotting an auction they think favours insiders, the FT says. That is embarrassing for the $10 bln warehouse giant and top backer GIC. But GLP appears to be playing it straight. Securing a full price for shareholders would draw a line under the matter.

Markets call Trump’s bluff with Indian IT rally

23 June 2017

The value of the top outsourcing firms has risen about 9 pct, or $12 bln, since the election of U.S. President Donald Trump. Investors have reason to doubt his hard talk on immigration, and to believe Premier Narendra Modi can help his counterpart see the mutual benefits.

Reasons to fret about Hong Kong’s post-2047 future

23 June 2017

China’s promise to uphold “one country, two systems” does not expire for three decades. Yet property owners and citizens have little idea of what comes next.  Drastic changes to the legal system are unlikely. Still, there is ample room for a crisis of confidence long before 2047.

Weibo walks blurry line between censors, investors

23 June 2017

Beijing has cracked down on politically-sensitive videos on the microblog, wiping $1 bln off its market value in a day. Other Chinese internet outfits are exposed to similar risks. But Weibo's business model will keep putting it at odds with the country’s unpredictable censors.

Next test for big U.S. banks is self-restraint

22 June 2017

All 34 lenders and Wall Street firms cleared the Fed’s annual health hurdle. Next year’s checkup may be less strict on operational risk and other areas. If banks want to make aggressive payouts to investors, future stress tests may give the central bank less power to stop them.

Argentina grinds toward economic credibility

22 June 2017

Within just a couple of days Latin America’s third-largest economy sold a rare 100-year bond and was then surprisingly snubbed for inclusion in a major stock index by MSCI. Amid all the noise, President Mauricio Macri is slowly asserting the dullness of competence.

IPO puts Altice USA’s best program behind it

22 June 2017

Bankers directed a flawless show for the public offering of the Dutch-based cable-TV company’s American business. Altice USA now trades at a higher multiple than Charter and Comcast yet has more onerous debt and no clear path to expand. Shareholders may want to change channels.