Qihoo gets its $9 bln buyout, against the odds 18 Dec 2015 The biggest take-private of a U.S.-listed Chinese company has been finalised despite funding challenges. Tapping retail investors may have helped raise the $6 bln equity cheque. But peers eyeing similar buyouts, before re-listing back home, could find their journey harder.
More Carney sounds better for BoE than for him 18 Dec 2015 The Bank of England governor may stay on for three years longer than he planned. Carney has done well so far, but implementing reforms and steering an unbalanced economy look like tough challenges. Add the risk of Britain leaving the EU, and staying may have diminishing returns.
Short-seller attack on Casino ultimately healthy 18 Dec 2015 A withering critique of the French retailer’s book-keeping by a short-seller sent shares down by almost a fifth. Casino is riled. Muddy Waters’ approach raises ethical questions. But one way to see this conflict is as a beneficial kind of pessimism-tinged activism.
Top trades of 2016: Clinton, Mayer, Isis and Uber 18 Dec 2015 A survey of Breakingviews readers suggests that a year from now, the U.S. will have its first female president and Yahoo’s CEO may be free to give her a hand. Uber’s valuation will stall, as worries about Islamic State accelerate. In other news, Twitter hasn’t made us any happier.
China’s catch-all financial slogan: Belt and Road 18 Dec 2015 What do investments in engineering companies, banks and bananas have in common? They’re all justified by China’s “One Belt, One Road” plan to boost trade and spread soft power. Yet early signs are the scheme is another excuse to shuffle money and favours between state companies.
Breakdown: China’s chip ambitions will jolt rivals 18 Dec 2015 National security and industrial policy are driving tens of billions of dollars of investment into China’s semiconductor industry. M&A by state firms like Tsinghua Unigroup is already rattling foreign competitors and governments. Fights over market share will follow.
U.S. OK for IMF reforms could come just in time 17 Dec 2015 Congress has wedged ratification of five-year-old changes into a deal to keep Washington running. The measures would give China and other emerging economies more say. With Venezuela one country that looks close to default, the IMF may soon need all the unity it can muster.
Global corporate profit is under serious threat 17 Dec 2015 U.S. companies are earning close to the most in five decades as measured against national income. It’s a worldwide trend, with bottom lines far larger as a share of GDP than in 1980. Competition, disruption and tax policy – along with weaker growth – are set to change all that.
The Fed may be cutting rates again within a year 17 Dec 2015 With official U.S. money finally costing something, there’s a risk that market overreaction saps funding in emerging markets and hurts exports as global demand softens. While a swift retreat might be insignificant on paper, it would harm the central bank’s credibility.
Safe havens scarce in brewing high-yield storm 17 Dec 2015 Junk bond investors were battered by problems in energy, commodities and the collapse of a Third Avenue fund in 2015. Losses are likely to spread as the Fed raises rates and risk-averse investors rein in lending. Bets that Europe will be able to provide shelter look wrong-headed.
StanChart belatedly fills most important role 17 Dec 2015 The emerging markets bank has hired HSBC’s Simon Cooper to run its corporate bank. Sorting out StanChart’s mess requires deep knowledge of emerging markets and corporate lending – neither of which new CEO Bill Winters obviously has. Cooper is plugging a vital gap.
Casino mogul secretly bought the wrong newspaper 17 Dec 2015 Sheldon Adelson has emerged as the mystery buyer of the Las Vegas Review-Journal. It’s not clear why the billionaire wants it, beyond solidifying his influence in Nevada. Macau matters more to his business than Sin City – maybe he should have grabbed the South China Morning Post.
Pharma CEO’s arrest a sign of health sector ills 17 Dec 2015 Turing’s Martin Shkreli may face fraud charges. That’s not unheard of in an industry prone to financial foibles, but its recent boom offers more chances for misconduct. With good times fading, the excesses stand out like a sore thumb. Pharma’s bad boy is an obvious first target.
Euro banks’ post-Fed good cheer looks short-lived 17 Dec 2015 European bank shares are up after the U.S. rate rise, aided by hints that future increases will be gradual. But EU rates won’t follow anytime soon, and $9.8 trln of non-U.S. dollar credit could get harder to service. Nor is the pace of future Fed hikes set in stone.
AstraZeneca’s M&A flurry clears value hurdle 17 Dec 2015 The UK pharma group has spent $4 bln on a stake in cancer specialist Acerta. Its acquisitions this quarter now total more than $7 bln. The dealmaking reflects new-drug pipeline challenges and sector-wide price pressure. Astra is ratcheting up the risk, but the approach looks sound.
Global economy depends on more than India in 2016 17 Dec 2015 The subcontinent’s expanding GDP is one of next year’s few economic bright spots. But the sluggish United States and decelerating China will still account for nearly half of global growth. Any negative shocks from the two sputtering engines will reverberate widely.
Coal is biggest risk to China’s $6 trln green goal 17 Dec 2015 The best way to cut carbon and smog is to limit the economy’s dependence on coal. Mammoth investment in alternative energy and efficient industry is required, or China will flunk its Paris vows. But finding the private capital needed to drive change will be tough.
Fed liftoff brings relief – and new uncertainty 16 Dec 2015 Getting out of the zero-rate armchair was overdue, and some in the market will be glad it has finally happened. Despite the anticipation, though, it has been seven years since overnight rate muscles have been used. Relearning how to climb the stairs may involve market stumbles.
Valeant has a pricing problem 16 Dec 2015 The $40 bln drug maker has a new distributor: U.S. pharmacy chain Walgreens. But a reduced revenue forecast for the fourth quarter suggests Valeant is cutting prices. The $30 bln of debt from its recent acquisitive past helps give insurers and other buyers an advantage.
A (fake) bank CEO memo on plans to leave London 16 Dec 2015 After the referendum passed on Britain leaving the EU, we will be migrating some operations to centers of excellence in Madrid, Frankfurt and Gdynia. We’ve spent $50 mln preparing for this go-forward possibility. The message to clients: business continues as normal.
SAB’s dregs might wet a private buyer’s whistle 16 Dec 2015 Spinning off Peroni and Grolsch could raise $1.2 bln for the UK brewer’s new owner AB InBev and ease antitrust approval. Rivals like Carlsberg or Asahi have little to gain from SAB’s cast-offs. A buyout firm or acquisitive family investor, though, could spy a double-digit return.
Pricey fintech deal may fall shy of industry hype 16 Dec 2015 Global Payments is forking over $4.3 bln for rival Heartland Payment Systems. It looks like a conventional tie-up in a hot market already losing steam. Cost savings probably won’t cover the 20 pct premium, meaning the buyer needs to boost sales to justify the steep price.
Barclays needn’t rush to get out of Africa 16 Dec 2015 As new boss Jes Staley plans the UK bank’s strategy, emerging markets may look an obvious place to cut. Africa sits oddly in a group that wants to be half American, half English. But the continent’s growth potential, and current commodity turmoil, argue against selling at a low.
Banks ponder blockchain’s first-mover disadvantage 16 Dec 2015 Lenders are racing to adopt Bitcoin-style technology to cut their costs. Successfully incorporating so-called distributed ledgers could eventually cut $20 bln from industry costs. But it’s not clear what models will work, and whether free-riding rivals will share the prize.
China’s edgy tycoons will send more capital abroad 16 Dec 2015 Fosun boss Guo Guangchang is among the country’s most respected business leaders. His brief disappearance suggests no-one is safe from Xi Jinping’s graft crackdown. The heightened campaign, plus economic and currency worries, could worsen China’s capital flight problem.
U.S. visa pain would go beyond Indian IT giants 16 Dec 2015 Fresh attempts to restrict U.S. visas for skilled foreigners are a worry for Indian outsourcers like Tata Consultancy Services and Infosys. The measures, if passed, would hurt a crucial Indian export and damage ties with a newly open India. Any reform would cost U.S. firms too.
Japan index: Onwards and upwards 16 Dec 2015 Business confidence is holding up and revised data shows Japan dodged a technical recession. Our index also suggests the economic picture may be improving. In October the gauge reached its highest point since 2000: prices, stocks, lending, wages and consumption all crept up.
Fed liftoff will reinvigorate key market gauges 15 Dec 2015 Everyone used to watch fed funds futures like hawks (or doves). Seven years of zero rates made them a less important indicator. Along with Eurodollar futures and other traded hints on rates and inflation, though, they are due fresh attention – even if their meaning has morphed.
Jefferies stumbles on Wall Street’s 2015 potholes 15 Dec 2015 Flailing junk-bond markets and sliding energy prices were among the woes that zapped the securities firm in the 12 months to November. As a preview of the full year’s investment banking challenges, it makes being a big diversified financial conglomerate look a whole lot safer.
Disney awakens the financial power of the Force 15 Dec 2015 The media conglomerate appeared to have fallen for a hokey religion when it paid $4 bln for Star Wars maker Lucasfilm. Now, as it prepares to unleash the first of six new movies, it could more than triple its money. Even Jabba the Hutt would be happy with that payoff.