Hedge funds are unwitting crisis altruists 5 Jun 2018 It was they, not banks or asset managers, who set the Mexican peso’s level after the 2016 U.S. election and the pound’s after Brexit, a new study finds. The irony is hedge-fund returns have remained mediocre. It suggests price discovery is a social service more than a business.
Shareholder climate activism needs more heat 5 Jun 2018 Owners of companies from Exxon to Rite Aid are asking for more disclosure on sustainability. That’s important, but insufficient. Ensuring bosses take climate goals seriously requires an informed board – and exec pay tied to green goals. These are what investors should target.
Election shake-ups will make NAFTA more elusive 5 Jun 2018 Doug Ford, a Canada-first candidate, has a shot at becoming the next premier of Ontario – the province that will be hardest hit by U.S. steel tariffs. Voters also go to the polls this year in Mexico and the U.S. New political faces will make sealing a trade deal even harder.
Apple’s value can chug well past $1 trillion 5 Jun 2018 The tech giant is close to being the first to pass that threshold in market capitalization, as Breakingviews predicted seven years ago. Growth has slowed but customers remain loyal and today’s valuation is far from stretched. Apple’s focus on data privacy may help it get there.
Italy’s new cabinet draws inspiration from Trump 5 Jun 2018 Rome’s new radical ministers will run departments whose policies they campaigned against. From labour and pensions to infrastructure and health, iconoclasts of questionable competence are taking over. Such “Trumpismo” governance brings added risk to Italy.
UK nod gives Sky suitors licence to overpay 5 Jun 2018 Rupert Murdoch’s Fox can buy the 61 pct it doesn’t own of the pay-TV group if it sells Sky News to Disney, Britain’s media secretary said. A rival Sky bid by Comcast was also cleared. That’s good news for Sky investors, who may now receive toppy bids from the U.S. media giants.
Tesla shareholders box themselves into corner 5 Jun 2018 They ought to strip CEO Elon Musk of the chairmanship thanks to his sprawling responsibilities, production problems and recent outbursts. But investors helped make Tesla a personality-cult stock. Any direct attack on Musk risks undermining the electric-car maker’s fortunes.
SoftBank’s Chinese chip deal doesn’t quite add up 6 Jun 2018 The Japanese group is selling 51 pct of its local Arm unit to unnamed buyers at a curiously low $1.5 bln valuation. SoftBank paid $32 bln for the semiconductor designer and the division accounts for a fifth of sales. China’s tech self-sufficiency push looms as a possible factor.
RBS stake sale makes the best of a bad job 5 Jun 2018 The UK’s sale of an 8 pct holding in the state-dominated bank is miles below where it bought in a decade ago. But it’s not below what the government needs for its budgetary requirements. And if anything it’s above what RBS is actually worth.
Nuclear deal flags UK’s public investment caprice 5 Jun 2018 Britain may take a stake in Hitachi’s likely $20 bln-plus Wylfa power plant. That could make it cheaper than the controversial Hinkley deal. Yet it’s still a big bet on a scheme that energy shifts could render ill-advised, at a time when simpler public projects have been spurned.
Dutch $8 bln payments IPO banks fat growth premium 5 Jun 2018 Amsterdam-based Adyen is listing shares at a higher multiple than peers. That’s arguably justified by booming sales and racy customers like Netflix and Facebook. But card groups like Visa and tech giants are vying for a slice of the payments pie, likely hurting intermediaries.
Aussie cartel case bodes ill for equity bankers 5 Jun 2018 Citi, Deutsche and client ANZ are about to face criminal charges over how they handled leftover stock in a 2015 share sale. That’s a harsh response to common underwriting practice, with no warning. But regulators seem confident - and their success could inspire foreign peers.
Sharp has better shot at PC reboot than Toshiba 5 Jun 2018 The Japanese group is buying its rival’s laptop business for a song. Toshiba was a PC pioneer, but the last thing it needs now is to battle in this cutthroat, scale-dependent and low-growth industry. Backing from Taiwan’s Foxconn puts Sharp in a slightly stronger position.
China’s bond market faces buyer crisis 5 Jun 2018 A crackdown on off-balance sheet wheezes is likely to sap banks' appetite for bonds. They are by far the biggest buyers, so their retreat will hurt prices. Yield-hungry entrants might appreciate higher returns, but the coming liquidity drain could destabilise a rickety market.
Starbucks boss seeks smoother second shot at exit 4 Jun 2018 Howard Schultz is leaving the company he built into a global icon, and he may even run for U.S. president. He stepped away in 2000, but came back eight years later. If he’s to quit Starbucks for good this time, the coffee chain will need ideas that stay fresher for longer.
GE needs to put much more imagination to work 4 Jun 2018 A $135 bln debt load and reduced earnings power are weighing down the $120 bln conglomerate. JPMorgan reckons CEO John Flannery needs to raise $30 bln to cut leverage, and the company’s dividend could be in further danger. GE’s 63 pct Baker Hughes stake is the ripest for a sale.
Budget squeeze exacerbates U.S. natural disasters 4 Jun 2018 Weather watchers reckon this year’s natural disasters could be at least as bad as normal. That’s following a record $309 bln in damage when Uncle Sam spent 0.7 pct of GDP on storm costs. With finances under pressure, local and federal governments need more sustainable solutions.
Google defends thin strip of moral high ground 4 Jun 2018 Facing a staff revolt, the company will stop developing AI to help military drones identify targets. It leaves a bigger chunk of multibillion-dollar tech defense spending for the likes of Amazon and Oracle. But Google’s ethical choices aren’t as clear-cut as they seem.
Walmart throws its BRICs into one basket 4 Jun 2018 The retailer is taking a $4.5 bln hit to sell most of its Brazil unit to private-equity firm Advent. As with its China - and UK - retreat, Walmart will at least get some benefit if fortunes improve. But it leaves CEO Doug McMillon’s shop even more dependent on India’s Flipkart.
GitHub deal displays softer side of Microsoft 4 Jun 2018 The $775 bln IT giant is buying GitHub, the most popular site for developing, sharing and talking about software, for $7.5 bln. The old Microsoft was about extinguishing competition – boss Satya Nadella seems more interested in persuading developers to use his services.
Angela Merkel’s euro reform plan is inadequate 4 Jun 2018 The German chancellor wants an investment budget that would help poorer countries and a souped-up bailout fund. The ideas are a pale imitation of French leader Emmanuel Macron’s proposals. With monetary policy exhausted, the euro zone looks ill-prepared for the next crisis.
Italy’s politics is new obstacle to UniCredit deal 4 Jun 2018 The country’s largest lender has debated merging with French rival Société Générale for over a decade. Past talks foundered on executive egos. Italy’s radical government – and fresh jitters over its sovereign debt – are likely to scupper any attempt to revive the combination.
Air France check-in lacks logic for AccorHotels 4 Jun 2018 Buying the French government’s 450 mln euro stake in the ailing airline might help it get tough with unions. But the hotel group would not enjoy any strategic benefits. That AccorHotels is even considering the purchase shows the state’s continuing sway over the private sector.
DS Smith’s repackaging could have further to go 4 Jun 2018 The UK paper group is buying Spain’s Europac for 1.9 billion euros. As online shopping boosts demand for box materials, more European tie-ups are likely. One could be an International Paper deal for DS Smith, if the former’s bid for Smurfit Kappa finds the wastepaper basket.
Bayer M&A magic beans are cheaper but less fertile 4 Jun 2018 The German group’s acquisition of seed-maker Monsanto finally won regulators’ approval. The lengthy antitrust process and disposals mean Bayer is paying $3 bln less than expected and raising less equity. But it won't be able to cut as many costs, and the return is still sparse.
1MDB scandal could yet bring some critical closure 4 Jun 2018 As Malaysia's new prime minister reexamines a case the top U.S. lawman called "kleptocracy at its worst", a Breakingviews e-book recounts the sovereign fund’s rise and fall. Lessons for banks, money managers and politicians will be even sharper if ringleaders are held to account.
Japanese unicorn runs astray ahead of IPO 4 Jun 2018 Mercari, an online flea market, could raise over $1 bln when it lists this month. Tokyo unicorns are rare and this bazaar appeals: it is wooing shoppers and growing fast. Still, a costly push into the United States, tempting but crowded, may warrant a discount at the till.
E-book: 1MDB 4 Jun 2018 The Malaysian scandal once called “kleptocracy at its worst” is being freshly investigated following the country’s shock election outcome. Breakingviews chronicles the sovereign fund’s rise and fall, and the potential repercussions from Kuala Lumpur to Wall Street. Read online or download the book.
Fiat Chrysler investors fear capital-junkie return 1 Jun 2018 Shares fell 7 pct despite boss Sergio Marchionne's pledge to pay a dividend, cut costs and double profit by 2022. The new plan also includes 9 bln euros for electric cars and a U.S. finance unit. That may worry owners that the CEO’s successor could fall off the spending wagon.
The Exchange: Anatomy of a Theranos takedown 1 Jun 2018 John Carreyrou, the author of “Bad Blood,” explains how Elizabeth Holmes used fear and Silicon Valley myth-making to temporarily become a multi-billionaire – and how he exposed that the $9 bln company’s technology didn’t work.