Protest vote is big winner in Italy’s election 5 Mar 2018 The anti-establishment 5-Star Movement is set to win a third of votes in a poll that delivered a hung parliament. The radical League also surged. Together, they may have the seats to govern. But whatever coalition emerges, voters have clearly rejected traditional, pro-EU parties.
AXA pays XL premium to insure more stable future 5 Mar 2018 The French insurer is offering $15.3 bln for Bermuda-based XL to beef up coverage of storms and other catastrophes. Cost savings don’t even cover half of the 33 pct premium, while reducing debt depends on a successful IPO of AXA’s U.S. arm. It’s a hefty price for diversification.
Siemens IPO price has a healthy dose of realism 5 Mar 2018 The German industrial group is selling a modest 15 pct of its Healthineers arm at a lower-than-expected 30 bln euro valuation. Siemens’ conservatism is partly because it doesn’t need the cash. But recent market ructions also make this the wrong time to be aggressive on pricing.
China’s economic targets invite promise fatigue 5 Mar 2018 More money and more credit, less tax and red tape, plus the same old 6.5 pct growth target: Beijing’s key economic conference opened with cautious tweaks to last year's playbook. Chinese promises in Davos that reform will "exceed foreign expectations" look thin already.
Chinese homecoming could fire up tech stocks 5 Mar 2018 Beijing could let Alibaba, Baidu, Tencent and others issue “Chinese depositary receipts”. A loyal local investor base is likely to further bid up the companies’ already lofty share prices. And the scheme could ruin Hong Kong’s own plans to attract banner technology listings.
Spotify’s tippy valuation requires more top line 2 Mar 2018 The streaming-music firm may be worth $23 bln when it goes public. To justify that value, Spotify needs to almost double revenue and turn a profit, a back-of-the-envelope analysis suggests. Pulling it off would involve gobbling up more than half of the global music market.
Trump’s incoherent strategy dooms tariff crusade 2 Mar 2018 The U.S. president defended his steel and aluminum duties, arguing trade wars are “easy to win.” But his tax cuts increase the budget deficit and the country’s reliance on foreign capital, almost guaranteeing a worsening trade balance. The conflicting tactics are self-defeating.
BlackRock puts gun-complex boards in crosshairs 2 Mar 2018 The $6 trln asset manager outlined steps to ensure the makers and sellers of AR-15s it owns through index funds make "a positive contribution to society." The philosophy of engagement can be more effective than divestment. For directors, their jobs are at stake.
Review: Some economic ideas do get old 2 Mar 2018 Economist Richard Koo has been talking about balance-sheet recessions since the 1990s. The insight is still valuable, but his latest book pushes it too hard, along with fairly random comments on current topics. Modern economies are too complicated for his style of analysis.
JD’s ad boom is silver lining in Alibaba fight 2 Mar 2018 Costs are soaring at the $66 bln Chinese web retailer as competition with its arch-rival takes new forms. Hence a surprisingly big quarterly operating loss, which upset investors. At least JD's lucrative advertising business is growing fast, offering a welcome boost to margins.
Debt straitjacket will confine Italy’s next leader 2 Mar 2018 Candidates in Sunday’s election promise to spend more. But the winner won’t have much wiggle room. If Italy’s primary budget surplus dips below 1 pct of GDP, cutting overall debt will be hard, a Breakingviews calculator shows. Rising interest rates are a further constraint.
Cowed LafargeHolcim sets sights appropriately low 2 Mar 2018 The new boss of the world’s largest cement maker has scrapped a share buyback and set the group’s EBITDA growth target at 5 pct. Jan Jenisch can probably do better. Still, given LafargeHolcim’s various headaches since its merger the conservatism is understandable.
GKN recruits stateside backup for Melrose bid 2 Mar 2018 The UK engineer fighting a 7 bln pound hostile bid may merge its car unit with U.S auto supplier Dana. Though a deal would be complex, it reinforces GKN’s case that a breakup creates value. The prospect of bringing in new management also defuses one of Melrose’s criticisms.
LSE is suspended in comfortable limbo 2 Mar 2018 Despite a boardroom spat over the departure of CEO Xavier Rolet, the exchange operator’s adjusted operating profit rose 18 percent last year. The next boss will face big questions about consolidation and Brexit. The answers will determine whether LSE can justify its valuation.
China techie’s $47 bln trade leaves arbs in shade 2 Mar 2018 Zhou Hongyi led a $9 bln buyout of his U.S.-listed antivirus firm in 2016. Now its successor is trading in China at $56 bln. That far outstrips what most hedge funds or commodity traders achieve in years of arbitraging price gaps. Alas for copycats, this is not easy to follow.
Battery-powered IPO should be handled with care 2 Mar 2018 Ganfeng Lithium is coming late to the electric vehicle party. The Chinese miner and battery maker wants to raise at least $1 bln in Hong Kong as competition to make power cells intensifies and prices are peaking. Investors will want to know it isn't just cashing out at the top.
Trump tariff chaos shoots America in its own foot 1 Mar 2018 The president is to impose sweeping import duties on steel and aluminum, citing national-security concerns – though details are scant. It’ll help domestic steelmakers. But the move ignored some U.S. agencies and could deliver a blow to vital allies like Canada and South Korea.
Exxon is running out of convenient excuses 1 Mar 2018 The $320 bln oil giant is ending its Rosneft partnership, blaming U.S. sanctions. CEO Darren Woods hopes investing $50 bln stateside will charm investors. But they’re concerned about returns and climate change. Exxon’s 10 pct stock drop this year suggests Woods is striking out.
Holding: Shareholders may snag win from M&A defeat 1 Mar 2018 Delaware courts are cracking down on settlements and appraisal claims for higher payouts in mergers like HP’s $2.7 bln Aruba union. Many are rattled, but it’s too soon to panic. The rulings could cut abuse and uncertainty in the legal process, leading to more and better deals.
Coin-offering boom carries seeds of its own demise 1 Mar 2018 The SEC is cracking down on initial coin offerings with subpoenas, the Wall Street Journal reported. Tighter scrutiny is welcome given the billions being raised. With hundreds of ventures in the pipeline and many business plans sketchy, the odds of success get longer by the day.
Peugeot’s purring engine has one rattle: Opel 1 Mar 2018 The French carmaker’s main brands hit a record operating margin last year thanks to a hot new SUV. But plans to revive its loss-making Opel unit look optimistic given carbon emission fines and a row with former owner GM. Boss Carlos Tavares needs to drum up more cost savings.
Cox: How to rid your portfolio of assault weapons 1 Mar 2018 Since Breakingviews first highlighted the role of BlackRock, Vanguard and other fund managers in financing manufacturers of AR-15 rifles after the Parkland school shooting, readers have asked how they can be sure they're not complicit. Here's a handy tear sheet to guide them.
WPP raises spectre of adland stagnation 1 Mar 2018 Martin Sorrell’s group lost 2.5 bln pounds of value after it said sales and operating margins may flatline in 2018. That looks conservative, since events like the World Cup help advertisers. A bigger concern is new earnings forecasts that suggest stasis in the long term.
AB InBev is one step short of a strong footing 1 Mar 2018 The world’s top brewer served up better-than-expected EBITDA in the fourth quarter and a welcome chaser of volume growth. That will soothe investor worries that ruthless cost cuts are hurting sales. Now it needs to reverse falling market share in its most important U.S. market.
Advent’s UK car technology bet safer than it looks 1 Mar 2018 The private equity group is snapping up British tech firm Laird for 1.2 bln pounds including debt. Paying a 73 percent premium for a group exposed to the car sector post-Brexit sounds punchy. But Advent doesn’t need to reinvent the wheel to spruce up its undervalued target.