Basel tweak gives global banks another helping hand 22 Mar 2018 Global regulators have proposed relaxing the amount of capital banks must hold against some forms of market risk. If implemented, the changes would further shrink the 28 bln euro shortfall big lenders face under new rules. After a decade of tightening, watchdogs are easing up.
China trade spat is bigger than Trump 22 Mar 2018 The U.S. president ordered sweeping duties and investment restrictions. A trade swipe against the PRC has been brewing for years. The issues at stake – state capitalism, intellectual-property theft and national champions – are deep-seated, and tariffs may prove largely symbolic.
Latin America’s pro-market forces need young blood 22 Mar 2018 Pedro Pablo Kuczynski, a 79-year-old ex-banker, has resigned as Peru’s president amid graft allegations. His junior by two years, Brazil's Michel Temer, has failed to deliver key pension reforms to spur the region’s biggest economy. Latin populism needs more vigorous enemies.
Naspers selldown prolongs Tencent dependence 22 Mar 2018 The South African group is offloading shares worth up to $11 bln in the Chinese giant. But it’s keeping the remaining 31 pct for at least three years, and will invest the proceeds. Shareholders have little reason to give it any more credit for its highly profitable Tencent bet.
Self-driving cars may find legal lesson in pharma 22 Mar 2018 Autonomous vehicles should make road deaths like the one involving an Uber prototype a rarity. Paradoxically, as drugmakers found with vaccines, mishaps may raise legal costs and drive companies out of the market. Limits on suits and a compensation fund balanced risk and reward.
Stars align for Mark Carney to raise rates again 22 Mar 2018 UK inflation is high enough for the Bank of England boss to further tighten policy in a couple of months but not so high as to hurt consumer demand, especially as wages are picking up. And Brexit poses less of an immediate danger. Politics and economics are both on Carney’s side.
Chancellor: Index investment riskier than it looks 22 Mar 2018 That investors are abrogating their responsibilities to allocate capital intelligently is a danger from the rapid growth of passive fund management. Less widely aired, but of greater concern, is the threat posed to financial stability by the dominance of benchmark-tracking funds.
Reckitt may yet benefit from Pfizer’s poor timing 22 Mar 2018 The Dettol maker’s shares jumped after it pulled a bid for the U.S. group’s consumer arm. The auction coincided with CEO Rakesh Kapoor’s struggle to digest a big deal, and rival GSK’s need to focus elsewhere. If Pfizer delays the sale, Reckitt could limber up for a second shot.
Illicit money is Europe bank stability blind spot 22 Mar 2018 U.S. authorities arrested the head of a Maltese bank for violating Iran sanctions, prompting calls for it to lose its licence. Similar issues triggered the recent folding of a Latvian bank. Without power to fight financial misconduct, euro zone regulators can’t keep banks safe.
China’s 5G ambition is China Mobile’s punishment 22 Mar 2018 The country's biggest wireless group grew earnings 5 pct in 2017. This year will be tougher. Beijing wants the carrier to deliver a world-beating, ultra-fast network in a jiffy, and sell access cheaply. That will be tough on shareholders, but the state-owned group has no choice.
Chinese drone giant DJI charts a risky flight path 22 Mar 2018 The world’s top maker of unmanned aircraft is raising money at a $15 bln valuation, Reuters says. Sales are soaring and DJI has a commanding market lead. Given drones’ data-gathering ability and military potential, though, DJI could easily hit turbulence in major foreign markets.
Viewsroom: China’s new central banker 22 Mar 2018 Yi Gang has experience working in America. Once considered a liability, that background now may be one of his greatest assets. And the mainland is courting companies to list shares locally, while China’s version of Hulu plans an IPO - in New York.
How Washington could really fix trade with China 22 Mar 2018 President Trump is rolling out tariffs and wants a $100 bln cut to the deficit. Yet Beijing’s import-substitution plans, forced tech transfers and IP policy are the real problems. By ditching them China would justify a truce, and reinforce its claim to free-trade leadership.
Zuckerberg’s slow defense reveals real weakness 21 Mar 2018 The Facebook founder finally explained how users’ information was harvested - four days after it was revealed by press reports. But his promise to tighten controls rings hollow. The trouble is the social network is built on data. Truly securing it may blow up its business.
New Fed chief leaves more questions than answers 21 Mar 2018 Jay Powell sold a rate hike and hawkish economic outlook with dovish language at his first policy meeting. The central bank is divided over how low unemployment can go and whether tax cuts will spark inflation. The chair’s confident showing may buy time to resolve the tensions.
Failed MBO leaves Nordstrom in a jumble 21 Mar 2018 The board's rejection of the founding family's $8 bln offer for the retailer makes both sides look too stubborn. Nordstrom is a middling performer in a struggling industry. Compromise would have suited shareholders well. Instead, they face an ill-fitting future.
Bumble may regret swiping left too soon on Match 21 Mar 2018 The women-friendly dating app dissed its $13 bln rival in an ad after Match sued over patent infringement. “We’ll never be yours” is a strong rejection considering the paucity of suitors in the hookup trade. Then again, playing hard to get is a time-honored negotiating tactic.
U.S. rate hike risks global fallout 21 Mar 2018 Gulf states, Hong Kong and others that peg their currency to the dollar worry that copying Fed moves will dent growth. But with five more hikes expected by the end of 2019, not doing so risks the ire of financial markets. It's a tricky dance that even China may be dragged into.
Hadas: Taking on the Chinese new world order 21 Mar 2018 The People’s Republic lacks the political and cultural appeal to supplant the U.S. as all-round hegemon. Even so, it could soon set many global economic standards. The right response is cognitive empathy and careful choice of battles. Western countries too often choose wrong.
Aviva reminds investors to read small print 21 Mar 2018 The UK insurer has riled shareholders with a plan to retire supposedly “irredeemable” preference shares at their 450 mln pound face value. The juicy 8.5 pct average coupon made them a hit, but also encouraged Aviva to seek legal loopholes. It’s a powerful lesson in buyer beware.
Facebook leads Silicon Valley to its Minsky moment 21 Mar 2018 The social network feasted on burgeoning data and devices, just as banks gorged on easy money before the crisis. Society’s focus on benefits over risk gave tech companies free rein – until the resulting abuses couldn’t be overlooked. As user trust evaporates, regulation beckons.
Time for Germany to make Deutsche/Commerz happen 21 Mar 2018 The country’s two biggest banks are projected to scrape mid single-digit returns on tangible equity by 2019. A merger that cut a tenth of joint costs could get that closer to double-figures. It could also stabilise Deutsche and give Berlin an excuse to sell its Commerzbank stake.
Vivendi discovers quitters can be winners 21 Mar 2018 Vincent Bolloré’s media group has made a capital gain of 153 pct by selling its stake in Ubisoft, which he had long coveted. The restraint is laudable. If only he could exit as easily from an investment in Telecom Italia, where he is stuck with a paper loss and angry investors.
Kingfisher’s refurbishment has a sloppy finish 21 Mar 2018 The DIY merchant’s good 2017 results fail to cover up other problems. Softening demand in Britain chimes with other UK retailers’ experience. But there’s less excuse for poor stock management and underperformance in France. The company’s turnaround plans may be prone to cracks.
Tencent wisely prepares for post-“Kings” era 21 Mar 2018 Hits like "Honour of Kings" powered another blockbuster quarter for the $565 bln web titan. Yet Tencent's incredible run in online games may tail off, as overall market growth in China slows. Pushing into videos and music is vital, despite high upfront costs and distant returns.
Daimler’s creepy Chinese suitor scrubs up well 21 Mar 2018 Geely’s earnings doubled to $1.7 billion in 2017, as its SUVs flew off the lots. Chairman Li Shufu’s surprise stake-building ruffled feathers in Germany. But Li’s company is trouncing Daimler’s current local partner, BAIC. That might in time prompt a rethink in Stuttgart.
Asia’s banks leave room for debt funds to thrive 21 Mar 2018 Traditional lenders neglect many smaller borrowers in the region. But while they are weighed down by bad loans and tough regulation, that creates a gap for new providers. Private debt funds are benefiting from limited competition and better bankruptcy regimes too.
James Packer’s exit deals Crown a better hand 21 Mar 2018 The Australian billionaire has resigned from the board of his casino empire again, this time for health reasons. He leaves a group still reeling from a Chinese crackdown that left staff in prison and prompted a costly global retreat. The path to recovery is clearer without him.
Salesforce’s $6.5 bln MuleSoft deal lacks heft 20 Mar 2018 The software maker is paying a whopping 16 times revenue for the cloud-services firm. The target is at least growing quickly. Unless Salesforce CEO Marc Benioff can convince shareholders he can cut costs and find new revenue, though, his biggest ever deal just looks fluffy.
Pete Peterson built a career, and legacy, on debt 20 Mar 2018 The former Lehman CEO and Nixon cabinet member revolutionized modern finance by teaming with Stephen Schwarzman to found private-equity giant Blackstone. He later used his wealth to champion the cause of deficit reduction. Washington has yet to repay that obligation.