Khashoggi affair presents economic risk for Egypt 30 Oct 2018 Repercussions of the Saudi journalist’s murder could dent Egypt’s return to growth and stability. Cairo depends on the remittances of workers in the kingdom and the flow of Gulf tourists to build foreign exchange reserves, without which the central bank can’t easily lower rates.
Ping An’s tech wizardry hits old-school hurdles 30 Oct 2018 The $165 bln Chinese insurer posted a 7 pct drop in earnings, weighed down by its property and casualty arm. Nifty tech like AI has helped it offer more targeted policies. Yet outdated rules have meant a higher tax bill. The group can afford to work its magic on regulators.
Wilbur Ross finally picks right fight with China 30 Oct 2018 Washington has put a provincial chipmaker under an embargo similar to that which crippled telecoms giant ZTE. Fujian Jinhua is accused of IP theft by Idaho-based Micron; this retaliation presumes guilt. Still, targeting smaller state-backed firms is smarter than blanket tariffs.
Korean conglomerate accentuates the discount 30 Oct 2018 Nearly six years after selling a controlling stake in Coway to a private equity shop, Woongjin is buying it back with a partner for $1.5 bln. News of a return to its original steward erased 25 pct of the appliance rental company’s value. It’s a reminder of just how sprawl can scare.
Henry Kravis joins gaming value “emote routine” 29 Oct 2018 The billionaire’s private-equity firm is investing in the company behind the Fortnite craze at a $15 bln valuation. Epic has shown free games can be lucrative. But the deal clocks in at what seems an over-enthusiastic price. It’s a bet Epic can stay ahead of teenage fads.
UK exploits fiscal good luck while Brexit allows 29 Oct 2018 Finance minister Philip Hammond plans to control the deficit while spending more on health, defence and schools without big tax hikes. Economic serendipity allows him to. A messy EU exit would end a run of good fortune, since he has used up much of the windfall that came his way.
China tax cut would only be band-aid for carmakers 29 Oct 2018 Halving the levy on new vehicle sales might help prop up falling demand. But it could delay the country’s much-needed industry consolidation. Meanwhile foreign automakers have far more to fear from U.S. and European slowdowns – not to mention the prospect of more trade tariffs.
Bankers should see Irish pay cap as an opportunity 29 Oct 2018 Ireland’s 500,000 euro salary limit for Allied Irish Bank’s CEO is why the incumbent just quit. But that still buys a lot of Dublin property, and need not deter global talent. Ambitious high-flyers should see the chance to cut their teeth on AIB as the path to a bigger CEO gig.
Investors put excess faith in new Brazil president 29 Oct 2018 Markets approve of far-right populist Jair Bolsonaro’s election victory. Yet he’s only a recent convert to free-market policies and has odd ideas about the rule of law. Perhaps he can stick to his guns and dragoon Congress to fix the country’s fiscal woes. But it’s a risky wager.
Uber-Ola strike flags dangerous transit dependency 30 Oct 2018 Drivers demanding higher fares protested for eight straight days in Mumbai, disrupting a city with poor transport options. Uber and Ola steered into trouble by cutting effective salaries paid to partners. The fallout drives home the need for tighter regulation.
Angela Merkel exit to polarise Germany and Europe 29 Oct 2018 Germany’s chancellor has called time on her own tenure by deciding to not seek re-election as chairwoman of her party, the Christian Democrats. They could shift rightwards after her departure and adopt a tougher line on those, like Italy, who flout Europe’s budget rules.
IBM overpays for relevance with $34 bln cloud deal 29 Oct 2018 Big Blue’s grab bag of businesses has mostly shrunk for years, and returning cash to investors reached its limit. IBM hopes paying 10 times sales for Red Hat can make it the Switzerland of cloud neutrality. But it will be hard to cut costs and grow sales enough for a good return.
HSBC leans on rate rises to ease trade tensions 29 Oct 2018 The Asia-focused bank reported a 28 percent increase in quarterly pre-tax profit despite tariffs starting to squeeze some clients. Fortunately for boss John Flint, Fed policy is moving in HSBC’s favour. If it continues, his double-digit profitability target should be in reach.
Hitachi clinches honourable Italy truce with Singer 29 Oct 2018 The Japanese giant is paying 12.7 euros a share to Elliott and others to buy out rail-signal group Ansaldo. After a two-year saga, the activist’s boss Paul Singer has secured a better deal. But Hitachi’s scope for further deals in a changing rail sector means it also gains.
Best to avoid answering call of Chinese telecom 29 Oct 2018 China Unicom, Mobile and Telecom delivered solid earnings growth this year and have mostly bucked the slide in the broader market. Valuations are cheap, they’re insulated from U.S. tariffs and a merger could help. The costly rollout of 5G, however, could offset those benefits.
China’s Guinea snub sends bearish iron ore signal 29 Oct 2018 Chinalco has stepped back from a 2016 deal to take control of the $23 bln-plus Simandou project from partner Rio Tinto. That’s a headache for the mining giant and a blow to West Africa's ambitions. It suggests Beijing sees sustained cooling in demand for the steel ingredient.
Chinese super-rich disrupt and are disrupted 29 Oct 2018 The People’s Republic is minting two new billionaires each week. Soon they will outnumber their U.S. peers. Younger, creating wealth faster, and losing it faster too: Chinese are redefining what it means to be ultra-rich.
Struggling Filipino deals expose market flaws 29 Oct 2018 Local champion San Miguel was forced to shrink a stock sale while Melco met resistance to its casino takeover plan. Both episodes provide timely reminders about structural shortcomings for an exchange that trades less daily than smaller Vietnam. To grow will require some fixes.
Review: Howard Marks wants you to calm down 26 Oct 2018 Writing has always been therapy for the Oaktree founder, helping him work out his views. Now he’s putting investors on the couch. In “Mastering the Market Cycle,” he urges readers to buck the tides of emotion that drive booms and busts. He could hardly have timed it better.
Constellation investors aren’t buying weed yet 26 Oct 2018 The $40 bln drinks company may sell some wine brands to focus on buzzier businesses. Its $4 bln investment in cannabis vendor Canopy Growth hasn’t done anything for shares, though. Pot and beer may eventually be a potent combination, but shareholders regard it as a pipe dream.
Solid U.S. GDP buries rising trade deficit for now 26 Oct 2018 The U.S. economy grew at a 3.5 pct annualized pace in the third quarter and unemployment is at a 49-year low. Those figures obscure the increasing trade deficit, which hit a record high last month at $76 bln. As effects of the Republican tax cuts fade, it may be harder to ignore.
Saudi reforms crash into royal reputational risk 26 Oct 2018 In October 2017, Saudi Arabia’s Crown Prince Mohammed bin Salman outlined a more liberal and market-friendly vision in Riyadh. A year on, the kingdom is under fire after the death of Saudi journalist Jamal Khashoggi. Breakingviews explains what happened in between.
RBS sends not-so-subtle warning on hard Brexit 26 Oct 2018 The state-owned UK lender’s 100 mln pound provision to cover the risk of a messy UK exit from the EU is trifling given its loan-book size. Yet private UK banks have taken the same step less noisily. A decade after it was rescued, RBS still wears its public embrace uncomfortably.
Amundi’s issues are of a higher quality than peers’ 26 Oct 2018 The BlackRock of Europe is sticking by a 7 pct adjusted net income target through 2020. That’s higher than what it managed in the third quarter. But a faster rise in net inflows despite choppy market conditions is better than the outflows seen by rivals.
Car parts M&A starts looking more compelling 26 Oct 2018 France’s Valeo is the latest in the auto sector to issue a profit warning, sending its shares down by a fifth. Crashing valuations might help deals make more financial sense. Rival Faurecia’s purchase of Japanese peer Clarion shows how the fleetest can exploit the opportunity.
E-book: A year in the life of MbS 26 Oct 2018 In October 2017, Saudi Arabia’s Crown Prince Mohammed bin Salman outlined a more liberal and market-friendly vision in Riyadh. A year on, the kingdom is under fire after the death of Saudi journalist Jamal Khashoggi. Breakingviews explains what happened in between.
Khashoggi showcases moral trilemma of big business 26 Oct 2018 Total sent its CEO to Riyadh for Saudi’s flagship conference despite its role in a Saudi journalist’s death. HSBC fielded a big team, too. Firms strive to be larger, profitable and ethical, but often only achieve the first two. Profit’s lead over ethics appears to be narrowing.
China drives backwards with $144 bln auto bailout 26 Oct 2018 Beijing has awarded FAW, a state-owned dinosaur, a credit line worth almost as much as the whole of Toyota. Propping up the maker of Mao's limousine will discourage foreign partners like Volkswagen. Worse, it will unbalance the overdue consolidation of domestic car giants.
Hostile buyer may lose at Hong Kong hide-and-seek 26 Oct 2018 Private equity firm PAG is trying to bypass a property owner’s management with its takeover bid. Local conventions make it hard to track down Spring REIT’s many small investors and there are restrictions on contacting them directly. It’s time to rewrite the rules of the game.
Hollywood rewrites Hong Kong IPO script 26 Oct 2018 STX, the studio behind “Bad Moms,” abandoned plans to go public in the Asian financial hub. A rocky market and new story are easily blamed, but losing an international issuer with Chinese backers will sting the exchange, which has struggled to escape its parochial proclivities.