British parliament opts to run down Brexit clock 30 Jan 2019 The vote to reopen talks with the European Union is unlikely to resolve the impasse. But it will delay the crunch moment for a few more weeks. The risks of Britain leaving without a deal are rising. Hopes lawmakers will intervene to prevent that outcome have suffered a setback.
CEO mess overshadows Santander’s stellar outlook 30 Jan 2019 The Spanish lender reported an 11.7 pct return on tangible equity last year thanks to rapid growth in Brazil. Chairwoman Ana Botin may be able to increase that to 14 pct in the medium term, if she can avoid further missteps, like the bizarre choice to hire and drop Andrea Orcel.
LVMH and peers have a suitably high-quality issue 30 Jan 2019 The top four makers of luxury bags and watches could wind up with 12 bln euros of net cash by 2020. If they gear up to manageable levels, they’d have a 40 bln euro war chest. So far, so good – except investors might start to complain if it’s not used for M&A or returned to them.
Nasdaq’s Oslo Bors assault has Nordic edge 30 Jan 2019 The U.S. group is spoiling Euronext’s party with a $770 mln cash bid for the Norwegian bourse. The new offer carries a sweetener of just 5 pct but has the backing of two big local investors. Nasdaq’s larger presence in the region could sway investors and mean bigger synergies.
Xinjiang is an extreme case of China’s growth woes 30 Jan 2019 Beijing is trying to de-radicalise its Uighur minority in giant camps. Officials call them vocational training centres, but mass detentions are not helping investment or jobs. As provinces cut 2019 targets, the region is becoming an acute example of widespread capital retreat.
India’s competitive populism sets ugly fiscal path 30 Jan 2019 Congress party chief Rahul Gandhi is promising voters a minimum basic income of sorts, on top of a pledge to waive farm loans across the country. That would blow a hole in the budget. With an election close, it also puts pressure on Narendra Modi’s government to respond in kind.
Apple cash and services salve iPhone worries 29 Jan 2019 The tech giant’s holiday quarter was dismal, as warned. A 5 pct sales drop shows Tim Cook’s company can no longer expect to sell significantly more phones or jack up prices. But rising margins on services for iPhone users and hefty capital returns buys Apple time to refresh.
Harley’s tariff woes are more sidecar than engine 29 Jan 2019 The $6 bln motorcycle maker clashed with Donald Trump over trade barriers. But its big problem is generational. With Hog-riding baby boomers aging fast and the appeal of big internal-combustion engines on the wane, Harley needs products that will spark millennials’ interest.
PG&E takes pre-emptive bankruptcy to a new level 29 Jan 2019 The California utility has filed, despite having a $20 bln surplus of assets over liabilities, offers of finance, and one less big wildfire to worry about. The company hasn’t yet made a persuasive case for choosing a process that will surely be lengthy, expensive and distracting.
Thruppence: Who wins by sponsoring UK book prize? 29 Jan 2019 Man Group has ended its support for the UK’s prestigious Booker award. The hedge fund decided there were worthier recipients of its 1.6 mln pound annual cheque. Luckily for aspiring authors, Breakingviews columnists have a handy shortlist of those who could step into the breach.
The Exchange: Joseph Tsai 29 Jan 2019 Alibaba’s co-founder and executive vice chairman joins Breakingviews to reveal what the future holds for the $400 billion tech giant. As investors fret over economic uncertainties, Tsai also tackles the recent fallout from Huawei, a bruising trade war and the case for tax cuts.
Europe’s telcos have 20 bln reasons to love Huawei 29 Jan 2019 Ditching the Chinese supplier could push up costs for the region’s carriers, and knock 7 pct off their market value. Politicians may deem that a price worth paying to ensure the security of mobile networks. Yet slow-growing, debt-heavy telcos hardly need another cash flow hit.
Philips could be a tortoise to Healthineers’ hare 29 Jan 2019 The 31 bln euro Dutch medical tech group has a lower valuation and operating margin than its larger German peer. Steady growth and a Healthineers stumble could help it close the gap. Global ageing should lift both companies, though Philips has the greater recovery potential.
Abu Dhabi’s $6 bln oil deal is a three-way hedge 29 Jan 2019 The emirate has sold 35 pct of its oil group’s refining arm to two European producers. Italy’s Eni gets to offset a heavy reliance on exploration, while Austria’s OMV gets non-European refining. Abu Dhabi hedges its dependency on crude by turning crown jewels into cash.
Vale’s Brazil dam damage will hurt its peers too 29 Jan 2019 A second disaster in three years has already cost the mining giant $19 bln in market value. Fines and a management overhaul will likely follow. Fresh scrutiny from stakeholders will hit an industry already grappling with high costs, slow projects and risk-averse shareholders.
Royal Mail decline will make Westminster nervous 29 Jan 2019 The postal service’s latest warning sent its shares well below its 2013 IPO price. Royal Mail is yet to cut its dividend and has minimal debt, but its main earnings generator is in decline. The risk of a lose-lose scenario involving some kind of UK state support has increased.
China’s next stimulus plan looks to the tax man 29 Jan 2019 Caterpillar’s cooler mainland sales are a reminder of Beijing's reluctance to build its way out of trouble. Monetary policy remains cautious too. A lower fiscal burden is the alternative way of encouraging companies to invest, even if local government finances suffer.
Venezuela teaches China a crude diplomatic lesson 29 Jan 2019 Beijing has poured over $50 bln into the oil producer over the past decade, making Caracas a top recipient of its largesse. That bet is now caught in upheaval and sanctions. Worse, the loans have sustained a regime that is battering the very interests it was supposed to serve.
U.S. intervention in Venezuela carries retro risk 28 Jan 2019 Uncle Sam is sanctioning state oil firm PDVSA in a bid to spur regime change. President Maduro’s woeful record has united much of the hemisphere in demanding his ouster. But a U.S. history of regional meddling means the Trump administration must avoid arrogance to retain allies.
U.S. Huawei charges test trade deal appetite 28 Jan 2019 The Justice Department indicted the Chinese telecom firm for fraud just before crucial U.S.-Chinese talks on tariffs. Presidents Trump and Xi are already facing choppy markets and a slowing economy. Their reaction to Huawei will show if they truly want to avert a trade war.
Hedge funds’ outperformance is small consolation 28 Jan 2019 The industry lost less money for investors last year than a bet on the S&P 500. But more than half the top players’ gains came from just two firms, Bridgewater and Renaissance. With fees already under pressure it’s no wonder the number of funds is shrinking after years of growth.
The end of gasoline-powered cars is nigh. Soonish. 28 Jan 2019 Sales of electric vehicles doubled last year while the overall market stagnated. China and California led the charge. The internal combustion engine still dominates, but demographics, governance and economics suggest that dynamic is not far from breaking hard.
Cox: Cannabis and impeachment on readers’ minds 28 Jan 2019 When asked which investment would outperform in 2019, participants at our Predictions events around the world chose Canadian weed stocks most over other assets. Most also put the chance of Congress impeaching Trump at 30 pct or higher. Consider some other surprising results.
Vale disaster threatens Brazil’s deregulation push 28 Jan 2019 A lethal dam collapse wiped $18 billion off the mining company’s value. It may also derail President Jair Bolsonaro’s plans to bolster business by rolling back environmental and other regulations. Angry Brazilians and skittish lawmakers may want to go in the opposite direction.
Mark Zuckerberg still doesn’t get the message 28 Jan 2019 The Facebook founder may knit together the technology behind communication tools including WhatsApp and Instagram. That could help bolster user numbers but would risk aggravating privacy concerns. Moves to strengthen the company’s dominance are unlikely to regain people’s trust.
Howard Schultz’s D.C. ambition may burn Starbucks 28 Jan 2019 The former coffee chain chief is mulling a White House run. Democrats worried that would help President Donald Trump called for a Starbucks boycott. Schultz’s pro-China views could help sales there, but that’s one more reason his candidacy could backfire on the firm’s homefront.
Deripaska markdown will persist at En+ and Rusal 28 Jan 2019 The Russian metals groups have been freed from U.S. sanctions. Though their shares have perked up, they still trade below pre-sanctions level. Given the risk of new penalties should previous majority owner Oleg Deripaska exercise control, the valuation gap will linger.
Italy puts luxury tag on discount Kering tax claim 28 Jan 2019 Authorities are seeking 1.4 bln euros of back taxes from the French-based owner of Gucci. That’s 60 percent of the company’s total bill between 2011 and 2017. Italy may have a case for questioning activity from Kering’s Swiss logistics unit. Yet the claim looks too big.
Chinese markets may wait longer for bold changes 28 Jan 2019 The head of the nation’s securities regulator was replaced over the weekend. Liu Shiyu was more pragmatic than ambitious, an approach that achieved mixed results. His successor, ICBC Chairman Yi Huiman, hardly seems like the type to take big steps like reforming the IPO process.
Asahi gives fuller meaning to beer premiumisation 28 Jan 2019 The Japanese brewer is adding iconic London Pride to Peroni and Grolsch in its cooler. Paying a sudsy 24 times EBITDA for Fuller’s beer signifies the need for upscale and craft ales to keep up with liquor rivals. Cheap money should help make the deal go down easier for Asahi.