China’s phony bad loan fix sends wrong signal 23 Mar 2016 Regulators may let big lenders like Bank of China hold fewer provisions against dodgy credits. That will boost reported earnings but weaken balance sheets just as financial strains are growing. The willingness to bend the rules is another reason to avoid Chinese bank shares.
Online boom carries windfall to Chinese couriers 23 Mar 2016 Alibaba-backed delivery company YTO has unveiled a $2.7 bln backdoor listing in Shanghai. China’s e-commerce boom means demand for logistics has soared. Though higher wage costs are squeezing margins, growth will continue. Besides, the valuation doesn’t look excessive.
Selldown at IMAX China is off-script but smart 23 Mar 2016 The big-screen movie company faced a deluge of potential stock sales in April as a “lock-up” following last year’s flotation expired. Letting two backers pare back early, in return for committing to hold the rest of their shares for longer, is unusual but avoids a sudden selloff.
Optimism seeps through cracks in dam of water woes 22 Mar 2016 Demand for H2O is rising, more nations are using it as a weapon and drought is hitting much of the world. Yet more companies and governments are acknowledging the threat while sensing opportunities. The result should be greater willingness to act – and to finance new solutions.
Moore’s Law may barely outlive its biggest fan 22 Mar 2016 The rule that semiconductors will keep getting smaller, cheaper and better may have had no greater advocate – and beneficiary – than Andy Grove. Yet the former Intel boss’ death comes as the famous law fades. Even Silicon Valley’s bedrock principles are subject to disruption.
Tennis jerks miss point of equal prizes for women 22 Mar 2016 A now ex-tournament boss said women players are riding on the coattails of the men. He failed to recognize the sport’s strength – a broad, gender-balanced constituency of fans. That’s where the money, be it Federer’s $67 mln a year or Sharapova’s $30 mln, really comes from.
John Thain’s M&A-linked pay cut sets good example 22 Mar 2016 CIT docked its departing CEO’s bonus by 30 pct for poor integration of 2015’s $3.4 bln purchase of OneWest. The lender was less disciplined about Thain’s retirement pot, but others could usefully embrace the idea that failures in deal execution should factor into bosses’ pay.
Bang & Olufsen buyout hinges on China bass boost 22 Mar 2016 The Danish electronics maker is in bid talks with Chinese luxury distributor Sparkle Roll. Both companies’ business models are under pressure. At B&O’s inflated $447 mln price it would be hard to make a deal stack up – unless sales can be massively increased in China.
Brussels blasts send European unity two steps back 22 Mar 2016 A recent Turkish deal over migration showed the EU can solve problems collectively, if imperfectly. Yet new attacks will inflame misgivings over security and free movement. As Britons mull whether to stay or go, the risk is that questions of prosperity and fairness get sidelined.
Goldman’s $3 bln 1MDB bond had plenty of red flags 22 Mar 2016 Awkward details keep emerging about the bank’s lucrative bond issues for the disgraced Malaysian sovereign fund. Now it turns out Goldman wired proceeds into a private bank. That should have set off alarm bells. The saga has become even more damaging for the investment bank.
Scary data won’t settle the Brexit debate 22 Mar 2016 A UK exit from the European Union could knock 3.9 pct off domestic GDP in 2030, Oxford Economics reckons. As worst-case scenarios go, this and other similar claims just aren’t that terrifying. The Remain campaign will have to do more to convince all but the most rational voters.
German greed can pay a triple dividend 22 Mar 2016 Public servants are calling for a 6 pct wage hike. Berlin historically has baulked at this kind of raise. Yet higher wages could further rebalance the German economy away from exports and combat euro zone deflation. That could be a useful plus as the migrant crisis bites.
China’s falling art sales paint ugly picture 22 Mar 2016 The country’s art market shrank by a whopping 23 percent in 2015. A slowing economy and corruption crackdown make for cautious buyers and sluggish sales. Meanwhile, the huge quantity and dubious quality of new artworks are undermining collectors’ confidence.
Petrobras’ Augean stables keep on giving 22 Mar 2016 Brazil’s state oil company posted a record $10 bln quarterly loss as falling oil prices sparked a wave of asset writedowns. It is at least a better reason for red ink than the corruption scandal that marred 2014 results. But management has more mucking out to do yet.
In China, life insurance doesn’t last a lifetime 22 Mar 2016 Customers have piled into policies that let them cash out early while pocketing high returns. The need to attract punters is forcing insurers to buy riskier assets. Now regulators are reining in the practice. The crackdown should make the industry safer, but also less profitable.
Samsung may force Apple to install patent law 3.0 21 Mar 2016 The Korean smartphone giant won U.S. top-court review of a $550 mln penalty for swiping iPhone designs. It argues persuasively that the amount – tallied under century-old rules – far exceeds the copied features’ value. The entire tech industry can expect an overdue legal update.
Bank CEO letters just warm-up acts for Jamie Dimon 21 Mar 2016 The bosses of BofA, Citi and others have included interesting tidbits in their shareholder missives. With the exception of M&T’s chief, however, they haven’t revealed much about the state of the industry. For that, investors will have to wait for word from JPMorgan’s head honcho.
Valeant’s multiple organ failure puts it in ICU 21 Mar 2016 The beleaguered drugmaker has found accounting improprieties. It is booting CEO Mike Pearson but ex-CFO Howard Schiller has refused to quit as a director. The board, the numbers and the strategy are fractured. Some $30 bln of debt means Valeant risks an Enron or WorldCom endgame.
Marriott’s Starwood deal suffers China syndrome 21 Mar 2016 To trump an interloping bid from Beijing’s Anbang, Marriott raised its offer for its hotelier rival to $13.6 bln. Even with more cost cuts, the math suggests significant value destruction. Anbang may have reasons to pay up, but Western buyers can’t be so careless of shareholders.
IHS-Markit $13 bln merger is long on hope 21 Mar 2016 A bigger, diverse data company could cross-sell to different clients, the theory goes. Markit’s shareholders could end up roughly 10 pct better off. But extra revenue of $100 mln looks aspirational. Big share buybacks and high debts could hobble investment in new products.
AXA stalwart would be partial fix for HSBC 21 Mar 2016 The UK bank already said it will choose an outsider as its next chair. Board member Henri de Castries, stepping down at French insurer AXA, fits the bill. Ideally though, HSBC would pick someone who hadn’t committed the governance no-no of simultaneously being chairman and CEO.
Telecom Italia gets direction at a high price 21 Mar 2016 Chief Executive Marco Patuano is leaving the Italian group amid tensions with shareholder Vivendi. The stock price jump shows investors aren’t too sad. But the departure is abrupt and potentially undemocratic. Vivendi’s intentions and strategy are still unclear.
China’s debt mountain will get even bigger 21 Mar 2016 Total borrowing reached about 250 pct of GDP last year. The state could take some of the burden from stretched corporations and local governments. But pressure to meet unrealistic growth targets means monetary policy remains loose and overall leverage is likely to keep rising.
Sherwin-Williams deal tinted trustbuster yellow 20 Mar 2016 The U.S. paint maker is buying rival Valspar for $11.3 bln. A healthy premium exceeds the value of expected cost savings, raising doubts about the financial logic. And Sherwin’s avowed confidence of passing regulatory muster is colored by terms that may give shareholders pause.
It’s time for Marriott to check out of Starwood 18 Mar 2016 The U.S. hotelier has 10 days to sweeten its offer after China’s Anbang won over the Westin owner with a $13.2 bln cash deal. Marriott may struggle to top that without destroying value for its shareholders. Pocketing the break fee and moving on beats a bidding war.
Assertive investors get deserved D.C. pushback 18 Mar 2016 A new Senate proposal would force activists to disclose 5 pct stakes within two days instead of 10. Stock buyers could, however, still covertly exceed that ownership threshold. The bill is flawed, but lawmakers are due credit for trying to push stealth holdings into the open.
Review: A tycoon’s vision for Chinese consumers 18 Mar 2016 Wang Jianlin says business books are “nonsense” that entrepreneurs don’t need. His own “The Wanda Way” is no exception. Though China’s richest man explains how his overseas M&A spree serves his aim to dominate the country’s consumer market, it fails to deliver juicy details.
Home Retail: A tale of when smaller is better 18 Mar 2016 Even a generous bid isn’t a happy ending for the UK retailer. Investors who bought in at the Argos owner’s market debut a decade ago are now a third worse off. Burberry and Experian, the consumer groups it spun out, have soared. Mergers fix some problems; demergers more so.
Aramco divorce leaves Shell investors in the dark 18 Mar 2016 Shell and Saudi Aramco are negotiating the split of their Motiva joint venture, which spent $10 bln upgrading the United States’ biggest refinery. Shell gets some assets and potentially some cash. But the unwind’s opacity makes it hard to tell which side gets the better deal.
Bank CoCos deserve all the brickbats 18 Mar 2016 Deutsche Bank’s John Cryan thinks new hybrid bank bonds are flawed. Market turmoil is forcing regulators to clarify when baffled investors get coupons. Yet unless there is also standardisation of when they convert from debt to equity, CoCos will always be prone to death spirals.