BREAKINGVIEWS

Saudi turmoil is new twist on old C-suite dilemma

20 October 2018

The kingdom’s admission that Jamal Khashoggi died in its Istanbul consulate damages the crown prince’s ability to execute his Vision 2030 strategy. If Saudi were a company, its chairman would replace the CEO and continue with economic reforms. That possibility remains remote.

Facebook hires one weapon for two-handed fight

19 October 2018

Nick Clegg, former UK deputy PM, will lead global affairs at the $450 bln social network. His anti-Brexit stance and EU background could help with tribulations in Brussels. But he’s an odd choice to deal with Washington, where scrutiny may intensify after the midterm elections.

P&G’s innovation drive could use a boost

19 October 2018

Healthy consumers helped the consumer-goods giant report strong sales. Even its troubled razor business has sharpened up a little. P&G is following activist Nelson Peltz’s advice and trying new things. With costs rising and pricing power weak, it can’t afford to slacken the pace.

Spanish bank tax hit not as scary as it looks

19 October 2018

Shares in Spanish lenders dropped sharply after a court ruled banks may have to refund mortgage taxes. That could mean a collective hit to earnings of up to 1.5 bln euros, based on the last four years of new loans. With lending rates set to rise, that’s painful but manageable.

Italy tries risky EU gamble on budget

19 October 2018

The radical government wants to boost spending despite Brussels’ opposition. Lengthy procedures mean the spat will drag on until European Parliament elections in May. With radical parties gaining ground, the new Commission could be more lenient. But markets won’t wait that long.

ABB belatedly succumbs to industrial revolution

19 October 2018

While European heavyweights like Thyssenkrupp and Siemens restructure, the $45 bln Swiss-Swedish group still sits on a largely unrelated power business. Now CEO Ulrich Spiesshofer is finally mulling action, he should opt for a full spinoff rather than a half-hearted partial sale.

Nigeria bank reform offers olive branch for MTN

19 October 2018

The continent’s most populous nation has invited telecom groups to launch mobile payment services. South African operator MTN could be a big winner. The prospect of a lucrative new market gives it a good reason to end its $10 billion dividend and tax feud with the government.

Movie-themed casino IPO sticks to messy script

19 October 2018

Macau-based Studio City, part of Lawrence Ho’s $9 bln gambling empire, made a stellar New York debut with a 24 pct pop. The listing provides some needed capital and could help existing minority investors eventually stage an exit. It also features Melco’s costly complex structure.

China needs shadow bankers to unclog growth

19 October 2018

The economy expanded only 6.5 pct last quarter, missing expectations. The campaign to quash financial risk is squeezing private companies, and exhorting banks to lend more won’t cut it over the long run. It’s time to let unconventional credit play a bigger role.

Bond investors add fuel for Uber’s profit bonfire

18 October 2018

The ride-hailing company has tapped the junk market for $2 bln, even though it generates no EBITDA from which to pay interest. Investors are betting either that Uber will turn a profit – or more likely, that its dash for growth will lure future investors who can pay them back.

Brexit impasse moves UK and EU closer to abyss

18 October 2018

With five months to go, Prime Minister Theresa May still can’t come up with a plan that satisfies the European Union and hard-line parliamentarians. To avoid a chaotic Brexit, at least one side must cave. That won’t happen until the disastrous alternative gets even closer.

Blackstone’s $1 trln goal needs some protection

18 October 2018

Steve Schwarzman’s outfit hopes insurers can help double its assets by 2026. Its credit funds offer the higher yields the industry is dying for, while steady fees might boost Blackstone’s valuation. The trick is to persuade risk-averse insurers that a buyout firm is a good home.

U.S.-EU derivatives kumbaya could get canned

18 October 2018

The U.S. swaps regulator wants to increase global cooperation. But trade tensions, Iran sanctions and a long and painful history of overreach by the U.S. itself are reasons for Europe to say no. Even though both sides could benefit, attempts at playing nice could come to grief.