Vulnerable Toyota enjoys a moment in the sun 3 Aug 2018 Japan's largest automaker earned nearly $6 bln last quarter, a 7 pct bump. That’s a relief after Nissan, where a drop in U.S. sales weighed. Still, executives are right to strike a cautious tone while Trump's trade guns remain aimed at Tokyo: Toyota is less protected than rivals.
Heineken beats honourable retreat from China 3 Aug 2018 The Dutch giant is handing its business in the People’s Republic to CR Beer and taking a $3.1 bln stake in the country’s top brewer. Focusing on other countries makes sense. Influencing the future of its brand in the world’s largest beer market, however, will be more challenging.
Stake sales could ease CK Hutchison’s debt drag 3 Aug 2018 The ports-to-telecom conglomerate reported strong first-half results. But recent large acquisitions have left new Chairman Victor Li facing a mounting debt pile. Selling part of its Watsons health and beauty chain or Husky Energy would ease the burden without yielding control.
Pakistan shows limits of China’s opaque largesse 3 Aug 2018 A mooted IMF bailout of the South Asian nation has raised new questions about its Chinese debts. The secret nature of Beijing’s support is a big part of the problem. To be sustainable, the country’s “Belt and Road” plan requires more clarity about its terms and conditions.
New rules will spoil India’s e-commerce party 3 Aug 2018 A draft plan to force online retailers to limit discounts, among other things, shields mom-and-pop stores from competition and strikes a nationalist tone. That could dramatically upset the strategies of Amazon and Walmart and leave India's marketplace looking rather Chinese.
Viewsroom: CBS’s $184 mln #MeToo challenge 2 Aug 2018 That’s what CEO Les Moonves gets if he leaves the U.S. TV network – unless fired for cause. That’s rare in corporate America. But allegations he sexually harassed women put the board on the spot. Plus: Hong Kong battles the Big Apple for IPOs. And China faces a vaccine scandal.
CBS directors need to prepare to fire their CEO 2 Aug 2018 Les Moonves was accused of sexual harassment in a published report. The company is belatedly investigating. If he violated CBS rules, the overpaid Moonves should lose the $184 mln he could collect if terminated without cause. That would partially redeem an otherwise feeble board.
Fidelity’s zero fees amplify industry dual track 2 Aug 2018 The giant manager is charging nothing for two new index funds. It’s a way to pull in more money, but at a price. Meanwhile, private equity and other alternative firms collect nearly half of global fees on under a sixth of assets. Market-beating returns are still worth something.
Icahn dusts off early playbook chapter with Cigna 2 Aug 2018 Company launches bad deal. Stock falls. Activist buys, shorts target, lobbies to unwind deal. Buyer stock goes up, seller plunges. Investor rejoices. Icahn did it with Mylan – and now he can repeat with Cigna’s value-destructive Express Scripts purchase. Plus ça change.
Leaving Canada out in the cold chills NAFTA deal 2 Aug 2018 The White House is in talks with Mexico, but that’s not the same as progress on the trilateral trade pact. While U.S. negotiators and southern counterparts are near resolving rules on auto content, Washington and Ottawa remain far apart. Hope for a speedy resolution is misplaced.
Mark Carney raises rates from position of weakness 2 Aug 2018 The Bank of England governor nudged up borrowing costs even though growth is tepid and will suffer if Brexit goes badly. The economy’s speed limit has declined since the financial crisis and EU talks will take time to pan out. He had little choice, but may have to reverse course.
Hadas: The Great Moderation is due for revival 2 Aug 2018 The 2008 financial crisis showed that economic cycles are still inevitable. Or did it? Duller expectations, tamer finance and stronger regulation could make periodic declines unnecessary. Sadly, it looks like at least one more downturn will be needed to get the message across.
Barclays can close value gap quicker than SocGen 2 Aug 2018 The UK and French banks trade at a 25 percent discount to book, yet both are making returns above 11 pct. That implies Barclays and SocGen deserve more investor love. With a second quarter less obscured by one-off charges, Barclays deserves to close its gap more quickly.
GAM plays canary in bond liquidity risk coalmine 2 Aug 2018 Redemption requests spiked after the Swiss hedge fund suspended one of its asset managers. Turning down such demands prevents less agile clients from being penalised. But the move highlights the industry-wide problem of how little it can take to gum up apparently liquid funds.
Siemens will pay a price for ducking breakup 2 Aug 2018 The trains-to-turbines group is dividing itself into three main units and holding onto stakes in non-core businesses. It’s a far cry from a GE-style restructuring. A more profitable, smaller company will emerge over time. But its conglomerate discount will take time to narrow.
Singapore’s Grab cashes up for a bigger taxi fight 2 Aug 2018 The ride-hailing firm won one battle when it pushed U.S. giant Uber out of Southeast Asia. Much of its latest $1 bln funding round will be spent in Indonesia, where Grab is up against local rival Go-Jek. That country is where the region's tech landgrabs will be won or lost.
China’s prickly new watchdog can hit at home too 2 Aug 2018 Fresh from its role in torpedoing Qualcomm’s $44 bln NXP bid, Beijing’s all-in-one consumer regulator is now investigating the newly-listed Pinduoduo over fake goods, sending the stock down 10 pct. China has built a powerful champion: investors are right to be afraid.
Falling yuan alone won’t save China from tariffs 2 Aug 2018 The United States may raise tariffs on $200 bln of Chinese goods to 25 pct up from 10 pct. Sharp depreciation against the dollar will cushion the blow. But the complexity of Asian supply chains, along with collateral damage from a devalued currency, will ensure the impact stings.
Google’s China re-entry plan looks evil and risky 2 Aug 2018 The internet giant is planning a censored search engine for China, The Intercept reports. Taking share from local champions like Baidu could prove profitable. But Beijing wants to get its hands on Google's AI expertise. Morality aside, a return would be dangerous business.
Elon Musk ekes out Tesla breathing space 1 Aug 2018 The electric-car maker burned less cash last quarter, but owed more to suppliers and has debt coming due. The volatile CEO reckons Tesla will avoid having to raise more equity. But investors are already punishing the scourge of “bonehead” analysts for taking on the dare.
Brookfield pays dearly to enter the home 1 Aug 2018 The $16 bln infrastructure investor is making a detour to pick up Canada’s Enercare. A renter of residential water heaters and air-conditioning systems sits oddly inside an owner of utilities, roads and railways. Its steady growth is valuable, but a 53 pct premium is extravagant.
Apple both is and isn’t already a $1 trln company 1 Aug 2018 It’s a tantalizing number, but it’s just that. If the iPhone maker hadn’t bought back so much stock, its market capitalization would have reached 13 digits long ago. Then again, stripping out its cash to value the business alone, there’s still some way to go.
Prada’s hottest trend is investor FOMO 1 Aug 2018 The Italian label grew first-half sales 9 percent thanks to spruced-up handbags. Operating margins are almost two-thirds below their peak, but a full turnaround is priced in. Fear of missing out on the next Gucci-style makeover makes shareholders reluctant to wait for results.
GE put a little too much imagination to work 1 Aug 2018 The shrinking conglomerate may offload parts of its digital business. GE had targeted some $15 bln of revenue by 2020 on the back of the Predix software initiative, and a CFO once dangled the idea of “infinite returns.” It’s a sobering moment for the internet-of-things hype.
Ferrari proves it can run mostly on autopilot 1 Aug 2018 New CEO Louis Camilleri inherits a firm in fine shape from Sergio Marchionne. While FCA cut guidance after its ex-boss’s death, Ferrari posted strong results, even if it qualified its outlook as “aspirational”. The Italian supercar maker looks nonetheless poised to motor ahead.
BNP’s targets have bite despite muzzled traders 1 Aug 2018 France’s biggest lender reported a sharp dip in quarterly investment bank revenue, hindered by an unhelpful trading backdrop. Yet robust European loan growth should boost overall revenue. If BNP can meet its cost targets it can still hit its 10 pct return goal a year early.
Rio’s shareholder bonanza hints at elusive M&A 1 Aug 2018 The giant miner reported a sturdy 12 pct rise in first-half earnings, narrowly missing forecasts. It will, though, hand back $7.2 bln, including a record dividend. That suggests long-expected deals are hard to find despite shaky markets, cheaper shares and M&A noise elsewhere.
India central bank doubles down on inflation fight 1 Aug 2018 The Reserve Bank of India raised rates by a quarter of a percentage point even though manufacturing activity slowed in July. The hike may hamper economic growth but removes doubts about policymakers’ commitment to a relatively new inflation mandate. The trade-off is worthwhile.
Fund managers’ twin-CEO model has short shelf life 1 Aug 2018 Janus Henderson has named Dick Weil as sole chief executive, ditching a two-headed model put in place when the group was formed last year. The integration of Henderson and Janus is nearly done. But clunky governance is a distraction from the big challenges facing money managers.
Generali faces debt cost conundrum 1 Aug 2018 The Italian insurer’s 5.7 pct average debt cost is pulled up by a slug of pricier hybrid debt. Buying it back would sort this and reduce the effect of spiking domestic bond yields on its solvency. The catch is that Generali will probably have to pay up to do so.