BREAKINGVIEWS

Central banks will have to fight reflation tantrum

26 February 2021

Improving economic prospects have boosted bond yields. Fed boss Jerome Powell and his global peers will welcome the cause but not the effect. If their rhetoric can’t halt the sharp rise in borrowing costs, they will be forced to ramp up asset purchases to safeguard the recovery.

EU chip factory fantasy puts cart before horse

26 February 2021

Commissioner Thierry Breton wants an advanced semiconductor plant to cut reliance on Asia. The problem is that Europe’s chip designers and carmakers are ill-equipped to use such a cutting-edge site. Getting them on side, and investing more in research, is the place to start.

Evergrande contagion tests Beijing’s generosity

26 February 2021

China’s $10 bln retailer Suning.com threw a financial lifeline to the troubled property developer. Its founder is now selling a controlling stake as the embattled group faces $5 bln of debt due this year. A government bailout, which may be imminent, would send the wrong message.

AT&T clumsily cuts the cord on DirecTV

26 February 2021

The U.S. telecom titan is spinning off its pay-TV business in a $16 bln deal, six years after buying it for $67 bln. TPG will share control while kicking in just $1.8 bln for a 30% stake that includes a 10% cash coupon. It’s a pricey way to ease out of a disastrous acquisition.

Airbnb’s post-IPO showing is a pre-SPAC throwback

25 February 2021

The home-sharing app’s quarterly revenue fell 22%, yet still beat rivals. Because it went through its growing pains in private, Airbnb’s first results as a listed company show an already solid business. Many startups taking the blank-check route to market won’t have that luxury.

Coinbase’s listing is a cryptic way into crypto

25 February 2021

The exchange for bitcoin may ink a $100 bln valuation in an upcoming listing. Growth and profit are encouraging. But its model relies on transactions, and past crashes are a problem. More disclosure would be reassuring. The prospectus leaves room to assume the worst.

European cardboard box M&A would be tight squeeze

25 February 2021

Paper maker Mondi may bid for envelope rival DS Smith, according to Bloomberg. Wrapping in debt and a premium, the box specialist could be worth 9 bln pounds. The e-commerce boom justifies Mondi pivoting from declining office paper, but only if it can unpack big synergies.

“Good” rises in bond yields can turn bad

25 February 2021

U.S. borrowing costs are climbing. That’s less of a problem for stock markets when the cause is rosier growth prospects. Jay Powell says he isn’t about to tighten monetary policy, the usual party pooper for equity rallies. But inflation concerns would quickly sour the mood.

Klarna listing would be a mixed blessing

25 February 2021

The Swedish fintech’s next funding round could value it at $30 bln, and it’s mulling a direct listing. Allowing early investors to cash out carries obvious appeal. The downside is there would be a daily commentary on Klarna’s regulatory risks and shortcomings relative to rivals.

Pandemic speeds AB InBev’s necessary revamp

25 February 2021

More drinking at home and higher raw materials costs will pressure the $100 bln brewer’s margins in 2021. After years of zero-based budgets, it needs looser purse strings to revive sales. But with $83 bln of debt, its valuation discount to less profitable rivals will persist.

Afterpay zealots buy now and will pay later

25 February 2021

The $30 bln Aussie fintech champ reported more impressive growth as installment-plan purchases swell. A deal to buy out its U.S. business raises fresh valuation questions, however, as do bigger losses, PayPal’s entry and regulatory concerns. A reckoning for investors awaits.

ViacomCBS’s streaming dream comes with a catch

25 February 2021

The U.S. broadcaster’s market value is up by $16 bln since it put a launch date on its streaming service, suggesting the hype enjoyed by Disney and Netflix is contagious. That’s justified if ViacomCBS can hit its subscriber targets, but boss Bob Bakish faces other pressures too.

McKinsey’s public problem may have public solution

24 February 2021

The ouster of boss Kevin Sneader following a $573 mln opioid bill suggests a firm that peddles advice is struggling with its own direction. McKinsey could consider an IPO. Outside investors are no cure-all, but they can help self-absorbed companies see themselves more clearly.