BREAKINGVIEWS

J&J’s talc crisis will linger for years

14 December 2018

Investors erased $40 bln of market value after Reuters revealed the U.S. company knew for decades its baby powder was sometimes tainted by asbestos. Based on past consumer scandals, the real hit could be smaller but long-lasting. Lawsuits and brand damage don’t easily dissipate.

German carmakers could show Trump art of the deal

14 December 2018

VW, Daimler and BMW are vulnerable to 25 pct auto tariffs threatened by the U.S. president, who’s also railing against GM for idling plants. The Germans could win some goodwill by taking up some of their American rivals’ spare capacity. That’s easier done for some than others.

LVMH pays luxury price to check into Belmond

14 December 2018

Bernard Arnault’s champagne-to-handbags group is spending $3.2 bln including debt on the owner of Venice’s Cipriani. The multiple of 19 times expected EBITDA is as punchy as a Belmond suite. The French group will need all its limited hotel experience to make the deal work.

Trump can get what he wants from Saudi in 2019

14 December 2018

As the year closes, oil prices have fallen to well below highs that riled the U.S. president. The risk is OPEC supply cuts and sanctions on Iran will send them back up. Yet scope to influence the kingdom on output – as well as its behaviour in the region - gives him a hedge.

German $5 bln listings group is poor LBO advert

14 December 2018

Scout24, which hosts online ads for homes and cars, ticks two boxes for possible private equity suitors: it’s cheaper than peers and has lower margins. But a buyer like Silver Lake would struggle to load much more debt on the firm. Looming regulation is another threat to returns.

Japan’s 2019 could be better than it looks

14 December 2018

An ugly contraction in quarterly growth, plus signs companies are slashing spending, raise doubts over Tokyo's ability to weather a global correction. But the world’s third-largest economy has been underestimated before. If that’s true again, its stock market may be too cheap.

China’s social credit poses rising risk to CEOs

14 December 2018

Beijing’s plan to blacklist executives for misbehaviour is widely misunderstood. But it's worrisome as tensions spike. By holding CEOs accountable for their company's misdeeds, the system blurs China’s already fuzzy line between corporate and personal interests.

Chinese startups will get thrown an M&A lifeline

14 December 2018

Regulatory tightening and skittish investors mean many tech seedlings will struggle to raise funds in 2019. With Tencent less active, it’s a buyer’s market for the likes of Alibaba, SoftBank and Xiaomi. Enterprise tech, AI and electric cars will make for vulnerable targets.

Korean unicorns gallop into the limelight

14 December 2018

Payments app Toss is the latest of a handful of local startups to secure a $1 bln-plus valuation, after fundraising led by U.S. investors. A wealthy, tech-savvy market is nurturing a new breed of tech firms that can stand out abroad too. SoftBank and others are taking notice.

Japan Post tries overseas diversification at home

13 December 2018

It might buy a stake in $33 bln U.S. insurer Aflac, which does business mostly in Japan. Financial conglomerates that mix banking and insurance have a patchy record; so does Japan Post when it comes to overseas acquisitions. At least this would be a watered-down version of both.

Investors could use a bit more skepticism on trade

13 December 2018

Stocks have rallied after signs Beijing is giving ground on some U.S. demands, including cutting tariffs and opening markets. Yet America's hawks won’t be wooed by skin-deep changes and tensions extend broadly, including to Chinese hacking. Any truce could easily be tripped up.

Amazon HQ2 meets NIMBY 2.0

13 December 2018

A month after picking New York for its new location, the $810 bln e-commerce giant is being bashed by local politicians and unions. It’s a rude shock for a firm used to getting its way. This kind of opposition can be eased with money. As Amazon gets bigger, the cost rises.

Peugeot boss has better option to running Renault

13 December 2018

Carlos Tavares may be the most obvious European car executive to fill the Ghosn gap. But buying 22 bln euro Fiat Chrysler may be a more appealing alternative, so long as the Agnellis are looking to hand things over to the leader who best resembles the late Sergio Marchionne.