Guest view: Finance can do better on development 29 Jun 2018 Big banks should be helping emerging countries meet the Sustainable Development Goals, a challenge that could open new markets worth $12 trln. Yet well-intentioned rules meant to keep the financial sector safe can get in the way, argues Christopher Lee of the Milken Institute.
Fed lets Goldman, Morgan Stanley off lightly 29 Jun 2018 Neither firm can boost buybacks or dividends after their leverage ratio fell below the stress-test minimum. A one-time hit from last year’s tax changes caused it. But Amex, JPMorgan and others handled that smoothly. The two Wall Street banks are lucky the Fed didn’t flunk them.
Messianic AMLO may give Mexico what it least needs 29 Jun 2018 Presidential front-runner López Obrador has pledged to root out corruption and dampen drug violence while boosting the economy and lifting up the poor. That may win him Sunday’s election, but such goals require strong institutions and fiscal nous. His rise may bring the opposite.
World Cup Soccernomics 29 Jun 2018 A Breakingviews calculator predicted 14 of the 16 teams that made the soccer tournament’s knockout stage. But the analysis of player values, home support and participation did not foresee defending champion Germany’s early exit. The data now points to Brazil lifting the trophy.
Winner’s curse defeats numbers game at World Cup 29 Jun 2018 A Breakingviews calculator predicted 14 of the 16 teams that made the soccer tournament’s knockout stage. But the analysis of player values, home support and participation did not foresee defending champion Germany’s early exit. The data now points to Brazil lifting the trophy.
EU immigration deal papers over two big problems 29 Jun 2018 A fudge on migration whipped up by leaders satisfies Italy’s new government and gives German Chancellor Angela Merkel something that may placate her Bavarian allies. But the former’s confrontational stance and the domestic weakness of the latter remain worrying fault lines.
Novartis contact lens spinoff defies messy optics 29 Jun 2018 Separating its Alcon eyecare division is an admission of failure for the Swiss pharma group, which spent $52 bln on the unit seven years ago. Though the listing won’t unlock much value, it should help Alcon’s recovery, and let new boss Vasant Narasimhan focus on making drugs.
Caixabank wisely exits Spain property party early 29 Jun 2018 The lender has sold real estate assets worth 12.8 bln euros to Lone Star, at a better valuation than deals by Santander and BBVA. With prices recovering, Caixa could have got an even better outcome by waiting. Given the mess the sector has made, moving now makes more sense.
Xiaomi humble IPO pie still good enough to eat 29 Jun 2018 The Chinese smartphone maker priced its Hong Kong float at the bottom end of a marketed range, valuing it at $54 bln. This isn’t a failure, and investors who believe in the company will like the discount. Missteps by executives and bankers offer lessons for those next in line.
Dinner-table loan IPO is best bet in dicey sector 29 Jun 2018 Listing a 1.3 billion pound consumer credit group may look risky at this stage in the economic cycle. But Amigo has expanded quickly with family-guaranteed loans that are much cheaper than regular payday lenders. That helps justify its premium valuation.
Australia’s ban on Huawei would be a costly call 29 Jun 2018 Having passed a law on foreign meddling in its politics, Canberra now looks set to block the Chinese telecom giant from working on its next-generation mobile network. There are valid concerns. But a ban carries costs: pricier 5G, and worsening ties with its best export customer.
China’s renewable giants can live without handouts 29 Jun 2018 Authorities are pulling state subsidies for solar and wind companies. The shake-out recalls earlier crises, which claimed stars like Suntech. Now, however, cheaper technology and better supporting infrastructure give clean energy champions a chance to thrive on their own.
Failed exam suggests deeper U.S. cuts at Deutsche 28 Jun 2018 The German lender was the only bank to flunk the Fed’s annual stress test, adding to its U.S. regulatory woes. Given compliance costs, the result could force new boss Christian Sewing to shrink the bank’s American presence even further. Wall Street titans will strut higher still.
Viewsroom: Trump goes hog wild on trade 28 Jun 2018 The U.S. president rejected hard-liners’ calls to ban China investing in sensitive U.S. tech. Yet he’s pushing for tariffs that could cost carmakers $45 bln and is livid Harley-Davidson will no longer make EU-bound bikes in the States. Plus: tapping China’s shale reserves.
Chobani swaps TPG for something sweeter 28 Jun 2018 The buyout firm exacted a high price for helping the yogurt-maker out in 2014. Now Chobani has found a Canadian pension fund to help show TPG the exit. Chobani’s value may have increased by more than 50 pct in four years. Private equity may have been unpalatable, but it worked.
Cox: If GE can break up, so can the United States 28 Jun 2018 Over a century the industrial conglomerate became too unwieldy to manage, unaccountable to stakeholders and financially undisciplined. Sound familiar? What works for corporate America could be applied to the government of a divided country showing similar symptoms of distress.
Amazon starts pharmacy war with carpet bombing 28 Jun 2018 Walgreens’ CEO isn’t “particularly worried” about Amazon buying online drugstore PillPack. But the deal prompted investors to lop some $30 billion off the value of drugstore chains, distributors and insurers. Consumers will happily fuel the fight over the sector’s fat margins.
Wall St feels little of Trump’s deregulatory love 28 Jun 2018 Lobbyists for the likes of Goldman Sachs and JPMorgan want watchdogs to reduce a capital surcharge, arguing it’s superfluous. The Fed wants to give it more weight. It’s another example of how smaller banks benefit most from the president’s pledges to roll back post-crisis rules.
CVC’s Italian pharma foray could prompt a headache 28 Jun 2018 The buyout firm is in talks to acquire rare diseases player Recordati, worth 7 bln euro on the market. The group’s profit margins and international presence are appealing. But CVC may need to load on too much debt to secure decent returns.
Fintech lending throws banks another curveball 28 Jun 2018 Kabbage extends one-fifth of its small business loans at night or over the weekend. It’s no surprise such borrowers aren’t nine-to-fivers. But traditional lenders are. The ability of new entrants to transact 24/7 is just one more way technology is upending the industry.
AC Milan’s UEFA loss is Elliott’s gain 28 Jun 2018 The Italian soccer club has been excluded from next year’s Europa League given doubts over its finances. The ban likely curbs its struggling Chinese owners’ ability to resell it. But it boosts the chances that creditor Elliott ends up taking on the team at a rock-bottom price.
BP’s electric car foray is imperfect oil hedge 28 Jun 2018 The British giant is spending 1 pct of its $16 bln capex budget on battery-powered vehicle chargers. That’s unlikely to protect against a drop in crude demand. But after writing down most of its last $8 bln push into new energies, investors doubt BP can reinvent itself.
Premier Foods’ Japanese flavour has turned stale 28 Jun 2018 Top shareholder Nissin’s stake in the Mr Kipling maker has fared poorly, but a beneficial commercial deal ensures its support. With activist Oasis pushing for CEO Gavin Darby’s ouster, it’s time for the Tokyo-based company to start thinking like an investor.
Debt relief puts floor under Greek bank pains 28 Jun 2018 A government deal with creditors should lower funding costs for Greece’s big four lenders. With bad loans accounting for 48 percent of lending, normality remains a way off. But ending shareholder angst over debt sustainability could be the first step in banks’ rehabilitation.
Baidu’s $1 bln buyback is too little or too much 28 Jun 2018 The $85 bln Chinese web giant has failed to impress with its repurchase plan. The amount wasn't big enough to excite investors and in any event, the search engine operator is supposed to be focused on turning into an AI champion. It has better things to do with the cash.
Chinese used-car sale fails timing test 28 Jun 2018 Online marketplace Uxin has halved the size of its U.S. float. A hefty lending business may be to blame, but its worst offense is probably picking a moment when regulatory uncertainty is already battering Chinese tech stocks. Rivals waiting in the IPO queue should take note.
India’s banking zombies pose a problem 28 Jun 2018 Of 21 state lenders, half face growth restrictions and half will soon be without a CEO. Letting these entities run into the ground could be privatisation by stealth. Given $150 billion of bad debts in the system, real sell-offs would be less embarrassing and more efficient.
Old folks help cruise lines sail past cost iceberg 27 Jun 2018 Shares in $42 bln Carnival sank almost 8 pct as fuel prices and currency rates holed earnings. But the industry, like healthcare, is one of the few where retirees spend good money. As long as cruises remain a popular pensioner pastime, Carnival and rivals should remain shipshape.
Pro-business Supreme Court has dangerous downside 27 Jun 2018 Donald Trump gets to name a second top justice after Anthony Kennedy said he will retire. That favors companies, but may go against their interest on issues they care about, like immigration. The painful and divisive process of getting Senate approval could cause lasting damage.
Holding: Wall Street may soon feel the SEC’s pain 27 Jun 2018 Bankers might like a Supreme Court smackdown of the watchdog’s in-house judges. But that, and a lesser-known ruling last week, portend trouble. Both could weaken the regulator and push more cases into federal court. As BofA and Citi can attest, that’s a mixed blessing at best.