China’s gentle German auto bid may work too well 25 Jun 2018 The Wang family, owners of a Chinese car parts supplier, made an $882 mln offer for headrest maker Grammer. A pledge to save jobs and the buyer’s size make a full takeover tricky. Yet shareholders wary of the increasingly messy governance probably won’t want to stick around.
Trump’s trade-war scriptwriters lack an ending 25 Jun 2018 The White House plans to curb investment from China, which has already dropped off sharply. Meanwhile, Harley-Davidson will move some production abroad due to EU tariffs. Firms are hurting but it’s unclear what resolution would look like – or whether the U.S. side even knows.
Turkey’s strongman gains mandate for bad policies 25 Jun 2018 Tayyip Erdogan and his AK Party emerged victorious from presidential and parliamentary elections. Enhanced powers may encourage the Turkish leader to implement inflationary stimulus and again challenge the central bank’s independence. Investors will be less forgiving than voters.
Xiaomi super-syndicate lifts noise-to-signal ratio 25 Jun 2018 The Chinese handset-maker picked 23 banks for its $6 bln Hong Kong IPO. Having so many hangers-on jostling for $76 mln of fees could make it hard to gauge demand. That has tripped up previous listings and is unhelpful for a debut that has already had to dial down its exuberance.
UK estate agents wounded by taxes and technology 25 Jun 2018 Britain’s largest real estate broker, Countrywide, has become the latest to warn earnings will fall as transactions dwindle. Higher taxes have hit amateur landlords while online property companies are squeezing fees. Given high fixed costs, agents will struggle to plug the gap.
Jack-of-all-apps Meituan masters few for IPO 25 Jun 2018 The unprofitable Chinese tech firm revealed in its Hong Kong debut plans that food delivery, travel and a handful of other areas account for over 90 pct of revenue. To justify a possible $60 bln valuation, investors will have to believe it can succeed in more cutthroat markets.
Trump gives China a fresh excuse to push bailouts 25 Jun 2018 Beijing will release $108 bln into the banking system to calm markets rattled by trade war talk. Unfortunately, officials want lenders to use most of the cash to swap bad debt for equity in ailing state commodity firms. The private sector needs the money more.
Conagra food deal could leave heartburn 22 Jun 2018 The $15 bln owner of Hebrew National and Reddi-wip could tie up with smaller rival Pinnacle after hedge fund Jana has come calling. Bulking up is one way to fight slow growth as consumers shift from processed fare. But justifying a deal requires cost cuts which may be a stretch.
Fox’s final stop could be $76 billion 22 Jun 2018 Back out the bits that Disney and Comcast don’t want, adjust for the time vale of money, and it looks like investors think Rupert Murdoch’s media empire will squeeze $5 billion more from its two suitors. Though the numbers could still shift, it suggests the fight isn’t over.
Saudi Arabia finds OPEC solution that helps itself 22 Jun 2018 At the oil producer group’s Vienna meeting Riyadh needed to hike output without sparking an Iranian walkout. It succeeded, and in a way that could gee Saudi oil revenue. The catch is that President Donald Trump may soon twig that the deal may not help to curb high oil prices.
Guest view: Beware emerging market storm clouds 22 Jun 2018 A new period of mounting risks and uncertainties looms on the horizon for developing economies like Turkey, Malaysia, Brazil and Mexico, argues former Citibank executive William Rhodes. Rising price volatility and pressures on a range of currencies are merely the warning signs.
Airbus’ Brexit certainty drive is wishful thinking 22 Jun 2018 The nature of the planemaker’s business means that earmarked transition periods after a UK exit could be too short. But its call for clarity on future arrangements will fall on deaf ears. Even if UK politicians weren’t bungling the process and wanted to help, they can’t.
Greece swaps bailout hell for eternal purgatory 22 Jun 2018 Eight years after seeking financial help Athens can at last support itself, helped by extra euro zone funds and debt relief. But borrowings of over 300 bln euros mean it must maintain a tight budget, and submit to regular scrutiny. Doubts over its debt sustainability will linger.
Saudis’ OPEC tightrope has trade war safety net 22 Jun 2018 The kingdom’s desire for oil output hikes faces pushback from Iran, its usual antagonist. Even if it strikes a deal in Vienna on Friday, lost supply from Venezuela may still push up prices. Riyadh’s saving grace could come if a trade war between the U.S. and China saps demand.
BoE wrangle reflects rate setters’ identity crisis 22 Jun 2018 The opposition Labour party wants the Bank of England to include productivity targets in its mandate. The idea seems flawed - monetary policy is a weak tool for boosting efficiency. But it reflects a growing political dissatisfaction with independent yet impotent central banks.
America Inc. may want to revise China growth plans 22 Jun 2018 Trade tensions might hit the U.S. stock market from another angle. A Communist Party tabloid just published an op-ed warning Beijing could target DJIA constituents such as Apple and Boeing. The scope of retaliation is limited by economics, but big expansion could be curbed.
Mongolian coal IPO may keep wandering 22 Jun 2018 The Central Asian nation revived plans to list its prize mine, seven years after it tried at a $15 bln valuation. Coal prices have rebounded from 2015 lows and Chinese demand is strong. With just one big customer and years of false starts, though, investors will need convincing.
U.S. sales-tax fix has global parallels 21 Jun 2018 The Supreme Court scrapped precedent and said states can force retailers to collect levies on sales to residents even if the sellers aren’t physically present. States will regain a tax base eroded by geographical arbitrage and the internet – two causes of worldwide tax tensions.
Tax reform puts utilities’ good credit at risk 21 Jun 2018 Debt investors have long favored power companies because their regulated monopoly status provides good assurance of payback. But tax cuts are limiting companies' billing power and their ability to deduct investment spending. Natural disasters add an extra layer of risk.
People’s Fed will provide armor in economic dip 21 Jun 2018 Chairman Jay Powell says he’ll speak in plain English about what the U.S. central bank does. He also admits the Fed doesn’t have all the answers. Demystifying it should strengthen its credibility. That will be handy when the economy turns and politicians are pointing fingers.
Viewsroom: Disney, Comcast go from zero to berserk 21 Jun 2018 The Magic Kingdom and the cable company are driving up the price for parts of Twenty-First Century Fox in a global M&A battle that throws financial logic out the window. But does it make sense strategically? Plus: India’s cricket league takes a few pages from the NFL playbook.
Cox: Italy’s new Caesars have outdone Donald Trump 21 Jun 2018 The country’s newly elected bosses have quickly mimicked the U.S. president’s style by breaking conventions and proposing radical immigration, economic and trade policies. They’ve even gotten into spats with neighbours - and Canada. But making Rome great again will be harder.
Intel scandal matters little today, a lot tomorrow 21 Jun 2018 The ouster of CEO Brian Krzanich for a relationship that breached company policy need not be a disaster. It shows the relevant rules apply to all, and Intel can run itself smoothly for a while. Mounting tech challenges, however, make it critical to find the right replacement.
Trade war tariffs eat Daimler’s homework 21 Jun 2018 The carmaker’s tariff-induced profit warning is odd, since Chinese duties would hit U.S. cars but not imports from elsewhere. Daimler’s statement could cover for poor performance, or make a political point about a trade war’s costs. Expect other companies to try the same.
Chanel lifts lid on impressive treasure chest 21 Jun 2018 The private luxury brand opened its books for the first time to reveal larger-than-expected sales of $9.6 billion and a plush 28 percent operating margin. The display nixes fears the Parisian label is flagging. Claims it is not preparing for an IPO or sale are less convincing.
Saudi index win is stepping stone not step change 21 Jun 2018 Adding the kingdom to MSCI’s emerging markets index helps Riyadh internationalise its capital market by potentially sucking an extra $44 bln into domestic stocks. Yet the catalyst for a real transformation – a domestic listing of oil giant Aramco – remains up in the air.
Altice’s $2.9 bln towers sale locks in 5G premium 21 Jun 2018 Patrick Drahi’s telecoms group has secured a high price for the possible sale of stakes in its French and Portuguese mobile towers. It’s a vote of confidence from private investors like KKR in new superfast networks. But it only makes a modest dent in Altice’s $36 bln debt pile.
Aussie ad deal offers signs of a frothy M&A market 21 Jun 2018 France’s JCDecaux is bidding $800 mln for APN Outdoor, disrupting the target’s own dealmaking. Australia is an appealing market and this could be a smart deal for the suitor. But the flurry of activity, and the exuberant reaction of JCDecaux shares, sends a worrying message.
India will test Xiaomi’s two-pronged strategy 21 Jun 2018 The Chinese maker of affordable phones has scaled down its IPO with plans now to raise $6 bln. Much of the valuation hangs on internet services, which Xiaomi is starting to roll out in its top overseas market. Rivals in India are plentiful, though, and hungrier for content.
MSCI snub is lesser problem for Vietnam 21 Jun 2018 Heightened trade tensions and selling by foreign investors have ended a bull run for the $140 bln stock market. Now leading index compiler MSCI has delayed Vietnam’s promotion from frontier status. Unlike with the external headaches, Hanoi can reform its way out of this one.