BREAKINGVIEWS

Walmart is smallest loser in UK supermarket salvo

20 February 2019

British regulators released a damning view on the 7.3 bln pound tie-up of Sainsbury’s and Asda, owned by the U.S. group. The pair need a plan to fend off German discounters. But the verdict limits M&A options. Asda’s global clout helps. Sainsbury’s looks set for further decline.

Glencore treads fine line between green and black

20 February 2019

CEO Ivan Glasenberg will keep coal output at current levels. That’s surprising for a miner which makes a third of group EBITDA from the pollutant. But given the company’s various other hard-to-solve regulatory headaches, bringing ESG investors onside is a logical proactive step.

Brexit and costs cloud Lloyds’ sunlit uplands

20 February 2019

CEO Antonio Horta-Osorio announced a 1.8 bln pound buyback and pledged a 15 pct return on equity. That needs a big fall in one-off charges, and sustained low bad debts. The risks of a chaotic exit from the EU, and the bank’s hairier lending mean investors are rightly nervous.

U.S. soy farmers will suffer trade war shell shock

20 February 2019

Midwestern producers will place a bet on talks between Washington and Beijing, when planting begins. Even with a deal, they face stockpiles and fewer soy-eating pigs in China, after an outbreak of disease. Worse, the spat has taught their top buyer it can live without U.S. supply.

Everyone is right about China’s economy

20 February 2019

Stock markets are charging; bonds defaulting. Holiday spending was weak, but January exports boomed. State-owned companies, and contradictory industrial and monetary policies are muddying performance measures. They betray a growth engine driving in two directions at once.

Kashmir attack exposes the limits of India’s clout

20 February 2019

New Delhi has vowed to secure the “complete isolation” of Pakistan after one of the deadliest assaults in years. Yet Islamabad’s strategic value to Beijing and Riyadh makes that unrealistic, leaving Premier Narendra Modi with few options to show strength ahead of an election.

Asset managers given climate-risk ultimatum

19 February 2019

Groups that signed up to the leading principles of sustainable investing may be in for a shock. From next year they must report on their global-warming risks or face expulsion. Forcing managers of over $40 trln of assets to live up to their word can be a powerful tool for change.

Verisign may be the real dot-com monopoly

19 February 2019

Facebook, Google and others are under fire for social-media dominance. But $21 bln Verisign exclusively manages .com domains. The U.S. government just extended its contract and allowed price increases. With a 63 pct operating margin in 2018, it’s already sitting on a gold mine.

Navient lowball bid reflects lowball prospects

19 February 2019

The student-loan servicer spurned a $3.2 bln offer from its largest shareholder. Canyon Capital’s bid does reek of opportunism. Yet its target faces multiple suits claiming it cheated borrowers, and the risk of student debt is rising. The 7 pct premium maybe isn’t so derisory.

If Chanel were a normal company, it’d be in play

19 February 2019

The Parisian fashion house’s designer for 36 years, Karl Lagerfeld, has now died at 85. Its co-owners, two brothers, are approaching retirement. LVMH boss Bernard Arnault has the firepower to make a $40 bln purchase. Bankers may be salivating, but a deal looks a long way off.

Walmart proves big is relatively beautiful

19 February 2019

The $290 bln company’s quarterly sales defied the overall slump that hit U.S. retailers in December. Earnings beat expectations too. Walmart’s growing online revenue and cheap grocery business should help it capitalize on weaker retailers’ misfortune in a softer economy.

Brexit paints go-slower stripe on UK car industry

19 February 2019

Plant closures like Honda’s in Swindon raise the spectre of decline for Britain’s auto sector. Yet the underperforming site always looked vulnerable. The bigger test is whether global carmakers want to build electric vehicles in the UK. Brexit will prove a huge deterrent.

HSBC pushes investor goodwill to its limits

19 February 2019

The Asia-focused bank fell short of expectations after a fourth-quarter slowdown. Even so, boss John Flint is sticking to his 11 pct return on equity target for 2020 despite strong Brexit and China headwinds. Already valued at 1.2 times book value, there is no room for error.