Brexit plan B is an exercise in UK humility 23 Aug 2018 Britain’s contingency plans for leaving the European Union without an exit deal distil the economic risks of red tape, border delays, and financial disruption. While the scenarios aren’t novel, they underscore the extent to which the UK is relying on Brussels’ good will.
Alibaba channels old-school conglomerates 23 Aug 2018 Quarterly sales at the Chinese e-commerce firm soared 61 pct to $12 bln, but earnings were flat compared to a year ago. That's due to investments in cloud computing, supermarkets, video streaming and other bets. Alibaba's unwieldy mix of businesses may merit a valuation discount.
HSBC downgrades rainmakers to a nice-to-have 23 Aug 2018 The departure of a senior UK advisory banker underscores the lender’s lowly status among global investment banks. Year-to-date M&A fees are broadly half what they were in 2015. But a focus on trade-related income means boss John Flint needn’t chase pricey dealmakers.
Corbyn goes mainstream with UK tech tax idea 23 Aug 2018 The opposition Labour Party’s leader, Jeremy Corbyn, wants to tax tech giants like Google and Facebook to fund journalism. The normally radical politician is in line with European thinking. His proposed solution has flaws but a better designed subsidy would be worth considering.
Britain can limit no-deal Brexit currency crisis 23 Aug 2018 The UK is publishing contingency plans for a no-deal EU exit. Its unspoken parachute, however, is Britain’s vast pile of overseas assets, which cushion a sterling crash and calm solvency fears. The bad news is that the impact on the City of London could erode that defence.
Hong Kong office space gets unneeded bitcoin lift 23 Aug 2018 Cryptocurrency exchange operator BitMEX is paying a record $344 a square foot per year to rent in the world’s priciest commercial property market. Chinese capital controls and rising interest rates haven’t cooled things off. The city’s real estate is a safer bet than bitcoin.
Chinese news app IPO delivers hilarious feed 23 Aug 2018 Tencent-backed Qutoutiao, or "fun headlines", filed to go public in New York hours after raising money privately. The unprofitable outfit pays users to read, lacks important licenses to operate in China, and even rights to its name are shaky. The prospectus befits the business.
Australia’s Huawei ban undercuts “Made in China” 23 Aug 2018 Security and political concerns prompted Canberra to block the telecom titan from backing the country’s 5G network. It’s a setback for Huawei, but also for Beijing. The world-beating national champions it wants to cultivate are increasingly seen as dangerous arms of the state.
Santos doubles down on independence with Quadrant 23 Aug 2018 Fresh from rejecting a $10.8 bln takeover bid, the Australian energy group is buying its Perth peer for $2.2 bln. The move tests a newly healed balance sheet, but investors value Santos equally as predator and prey. It’s a big bet on Quadrant’s new discoveries and the oil price.
Viewsroom: Amazon’s JEDI rebellion 23 Aug 2018 Amazon looks set to win the Pentagon’s $10 bln JEDI cloud contract, but Oracle is fighting back. Plus: Is it time for Airbnb to sell its China business? And should Elon Musk be worried about a Chinese Tesla lookalike listing in New York?
Aramco’s failed IPO is a beginning not an end 22 Aug 2018 Saudi’s oil company has called off its $2 trillion stock listing. An army of investment bankers has been spared the need to sell an overambitious deal to unwelcoming markets. But there are plenty more Saudi deals to be done – which advisers will hope can be more easily executed.
West Texas mergers test shareholder blind faith 21 Aug 2018 A gush of mergers in the oil-rich Permian Basin region has totaled nearly $30 bln in a few months. Consolidation brings down costs, which have been rising. But high prices leave scant margin for error, and synergies may be overstated. “Trust us” strategies don’t suit wildcatters.
Smug markets underestimate Trump volatility risk 22 Aug 2018 The U.S. president renewed his auto-tariff threat after a former campaign chief was convicted of tax fraud and his ex-lawyer implicated him in election-finance abuses. Duties on $500 bln in Chinese imports also loom. Yet investors aren’t pricing in the potential economic damage.
Hadas: Shareholder value is a hard habit to kick 22 Aug 2018 Elizabeth Warren remembers when companies served the common good as well as investors. But the U.S. senator is wrong to hope that the old days can be restored with a few tweaks to governance. Renewed corporate responsibility requires big changes in five entrenched practices.
Gas mega-merger hubris deflated by regulators 22 Aug 2018 Linde needs to sell more assets to close its $83 bln tie-up with Praxair. That means hurried disposals and fewer savings. The rationale for creating the world’s largest gas supplier holds, but the mess shows shareholders should apply a hefty discount to ambitious dealmaking.
Australian telco M&A logic trumps messy governance 22 Aug 2018 Vodafone and Hutchison’s mobile joint venture may combine with the A$7 bln TPG. Mergers of equals are hard enough without three parties, and the embattled broadband group looks like an unequal match. The benefits of less competition mean both sides have reason to hold their nose.
China’s Xiaomi passes first public market test 22 Aug 2018 After a bumpy IPO, the newly listed handset maker delivered better-than-expected maiden results, with quarterly sales up 68 pct to $6.6 bln. Smartphones and gadgets did well at home and abroad. If that growth continues, investors may cut Xiaomi some slack on internet services.
Geely’s cruise-control ride is coming to an end 22 Aug 2018 Volvo's Chinese sister cranked out another solid set of results, with profit up 54 pct to nearly $1 bln. Margins expanded and its domestic market share grew. At nine times expected earnings, Geely fetches a premium to global peers. It’ll have to raise its EV game to justify it.
Chinese beauty app reveals ugly tech reality 22 Aug 2018 Meitu’s dismal results included a fall in revenue and monthly active users. A planned social media makeover for the $2.5 bln photo-editing and smartphone maker also failed to prevent a 17 pct decline in the shares. Stiffer competition and Beijing crackdowns are taking their toll.
Healthscope’s property trick is takeover poison 22 Aug 2018 Having rejected two acquisition bids, the struggling Australian health group will put A$1 bln of hospitals into a trust in which it will sell 49 pct - then rent the facilities back. The cash will be useful, but operating costs and risk will rise, deterring more generous suitors.
Trump’s tariffs threaten Taiwan’s lucky streak 22 Aug 2018 The island has enjoyed decent 3 pct growth for a year thanks to booming exports. But for all Taiwan’s White House fans, U.S. tariffs on China could do collateral damage, even as the mainland tightens screws. It’s bad news for President Tsai as elections loom.
U.S. coal-power plan blows little but hot air 21 Aug 2018 Donald Trump wants to let states set their own emissions rules. It may save some coal plants for a while. But banks prefer not to fund them, other electricity sources are cheaper – or soon will be – and renewable energy provides far more jobs. These trends will win out.
Investment gives U.S. market, economy fresh legs 21 Aug 2018 American companies are pouring a big chunk of their tax-cut windfall into new plant, equipment and software. With the stock-market rally and economic recovery nearing record longevity, the capital-spending surge provides welcome momentum – and insurance against trade troubles.
Warren tries out for swamp drainer-in-chief 21 Aug 2018 The liberal U.S. senator wants to prohibit lawmakers and cabinet members from owning individual stocks and permanently ban them from lobbying. Some of the ideas are over the top but her targets are entirely valid. Laying them out also strengthens Warren’s 2020 presidential pitch.
Consumers offer Ping An cover from market storms 21 Aug 2018 The $160 bln conglomerate's first-half earnings rose by just over a third, thanks to life and health insurance. Market clouds present dangers for an insurer with lots of investments, but its results suggest Chinese households can provide some protection from the squalls.
Italy’s bond fix idea resembles covert bailout 21 Aug 2018 The economic spokesman of the ruling League Party says the euro will collapse unless the European Central Bank limits the gap between euro zone countries’ bond yields to 150 basis points. That bar is too low and would give big spenders free rein to dodge hard budget decisions.
Greece needs a governance reboot 21 Aug 2018 International lenders forced Athens to clean up its banks. Yet non-financial companies and their boards are still often dominated by large shareholders. Better protections for minority investors would attract more foreign capital, and help the economy recover from its bailout.
Russia will keep on mixing toys and politics 21 Aug 2018 Strong first-half sales at children’s store Detsky Mir will help Sistema, which needs to sell its stake after a costly $1.5 billion settlement with Rosneft. A less politically risky owner might help the rapidly growing toy group’s low valuation. Yet that’s in no way guaranteed.
Hong Kong death offers humbling reminder to CEOs 21 Aug 2018 Shares of snack store operator CEC doubled following news that its founder had unexpectedly died. Research suggests such investor reactions are common, albeit usually less dramatic. Boards and bosses often contribute less value than they otherwise might think.
Copper-bottomed BHP can now dig into bigger issues 21 Aug 2018 The $125 bln miner has tidied its portfolio and, as the latest results show, repaired its balance sheet and generated ample cash for shareholders. That gives the board and CEO Andrew Mackenzie room to consider important strategic questions about sticking with oil, gas and potash.