Exit of China’s economic truth-teller leaves a gap 4 Apr 2019 Lou Jiwei leaves the social security fund he led in a tad better shape. Yet the former finance minister’s career was defined by his outspokenness on the need for reform. With his departure, Beijing’s political centre may edge further toward caution, rather than change.
Netflix gives a new meaning to “Hollywood ending” 3 Apr 2019 A proposal to require that movies be shown in theaters for a set time to be eligible for Oscars may be illegal, the U.S. antitrust chief warned. It’s odd the DOJ cares, but it has a point. Such tactics show how much streaming services like Netflix threaten Tinseltown’s old guard.
Exxon shows climate activists a red rag 3 Apr 2019 The oil giant squashed an investor proposal to set emissions-reductions targets, with help from the U.S. markets watchdog. It’s pretty short-sighted, and raises the risk disgruntled shareholders start using blunter weapons, like votes on board directors and executive pay.
Super leaders don’t need supervoting shares 3 Apr 2019 Lyft is one of many growth companies with dual-class stock that entrenches its creators. But Steve Jobs dominated Apple without such wheezes. Elon Musk’s survival at Tesla isn’t just down to governance quirks. And Uber seems better off freed from the control of its architect.
Hadas: What a new hip taught me about economics 3 Apr 2019 As the codeine wore off, I pondered the mass delivery of individualised care. My lessons: Adam Smith was wrong about specialised labour’s inhumanity, Karl Marx was mostly wrong about class conflict, Max Weber was right about bureaucracy and free markets can’t cure medical ills.
Twitchy sterling sends traders running for cover 3 Apr 2019 Speculative bets on the pound are at their lowest level since 2012. Little wonder given that Britain could crash out of the EU, postpone its departure, or cancel Brexit in the next few weeks. The first signs of clearer direction will trigger a huge move on the foreign exchanges.
Theresa May’s soft-Brexit pivot has three barriers 3 Apr 2019 The prime minister offered to strike a deal with the opposition Labour party to avoid crashing out of the EU. Its leader Jeremy Corbyn may refuse to help, her own party might revolt, and Europe could reject another extension. A chaotic Brexit is less likely, but still possible.
Santander’s Latam double-down comes at a cost 3 Apr 2019 The bank run by Ana Botin wants to raise its return on equity to as much as 15 percent. That looks hard with the UK mired in Brexit, and Europe slowing. Allocating more capital to fast-growing countries like Brazil makes sense, but risks making the business more volatile.
UK army contractor’s next target lies overseas 3 Apr 2019 Submarine-fixer Babcock has hired Ruth Cairnie as its new chair. She inherits a moribund share price and a firm weighted to UK contracts that may wither if the opposition Labour party gains power. Further hiking overseas revenues is the first thing to push for.
KKR plays weaker cards well Down Under 3 Apr 2019 The stakes got high in its $1.4 bln buyout of Australian software developer MYOB after a U.S. hedge fund pressed for a better price. It made a reasonable case holding a potential blocking stake, but KKR stood pat and the pushy investor folded. Seasoned gamblers are hard to bluff.
Two big clouds eclipse Samsung’s silver lining 3 Apr 2019 South Korea's $270 bln chipmaker already flagged a dismal first quarter because of a glut. Fewer competitors mean supply cuts could more readily lift prices. But Samsung investors may be underestimating the risks of both stockpiled inventory and weaker demand from new industries.
Iron ore surge masks Vale risks 3 Apr 2019 A fatal dam accident in January wiped almost $21 bln off the Brazilian company’s value. It has since clawed back most of that sum, thanks in part to a jump in the mineral’s price. Given the long-term cost of Vale’s second accident in three years, the recovery looks premature.
India’s RBI lost a bad debt battle, not the war 3 Apr 2019 A central bank order forcing defaulting firms into bankruptcy has been quashed by the country's top court. Some lenders will go back to delaying resolution. Yet the judiciary has mostly upheld the newish bankruptcy code: the regulator can still turn the screws on Indian tycoons.
Shell hits climate ball back into investors’ court 2 Apr 2019 The $260 bln oil major is tying lobbying to its emissions-reduction agenda, augmenting its status as the industry’s most progressive on global warming. It’s a low bar, though. Shell’s modest concession should motivate shareholders to keep holding big polluters’ feet to the fire.
TPG leaves Russian retail with a whimper 2 Apr 2019 A decade after first investing, the buyout group is to sell its stake in retailer Lenta to tycoon Alexey Mordashov at an implied valuation of $1.7 bln. A 12 pct return is decent enough, but still below what TPG might have hoped for.
Larry Fink keeps succession options wide open 2 Apr 2019 BlackRock is empowering regional managers and tapping a new executive to accelerate its push into private equity. Chief Larry Fink hopes the shakeup will reignite growth after a difficult year. They also leave him with a wealth of choices over who might one day take up his role.
Walgreens ails from inflation deficiency 2 Apr 2019 More than $7 bln in value bled out of the drugstore chain after it slashed earnings guidance. Prescription prices are the root cause: After years of rising, they’re now under pressure and crimping once-fat margins. Walgreens’ “most difficult quarter” won’t be the industry’s last.
Aramco is just not big enough 2 Apr 2019 The Saudi oil producing giant is hyper-efficient, but it still doesn’t warrant the $2 trillion value envisaged by the kingdom’s crown prince.
Saudi Aramco is big, just not big enough 2 Apr 2019 The oil producer’s accounts show it is hyper-efficient. That helps its valuation, as does the rise in the price of crude since Aramco first flirted with an IPO. But while the company is a giant, it still doesn’t warrant the $2 trillion value envisaged by Saudi’s crown prince.
Beijing sovereign wealth giant merits a rethink 2 Apr 2019 China Investment Corp may have a chairman again, after a two-year gap. The $940 bln fund was set up to juice returns on foreign assets, but results have been ho-hum and its detours sometimes inscrutable. The new boss has his work cut out, even to justify CIC’s mandate.
Citi’s Northern Rock wager has political spice 2 Apr 2019 The U.S. bank bought 5 bln pounds of mortgages made by the lender which failed in 2008 from the UK government. The state cuts its debt load, and the buyer gets stable high-yielding assets. The risk is that a left-wing executive takes power, and forces lenders to cut rates.
America can define down China’s harsh cyber rules 2 Apr 2019 Beijing may be willing to bargain over rules for how and where companies doing business in the country store data. It would be a surprise softening of its position. With more allies on the issue than usual, including in China, Washington has a better shot at winning concessions.
Obsolescent Hong Kong lenders get a virtual kick 2 Apr 2019 City regulators have awarded three online-only banking licenses, hoping to shake up a lucrative $23 bln local market after years of underinvestment. Tough requirements mean two have gone to ventures backed by big names, not startups. That won't stop them tackling HSBC and others.
U.S. asset managers target a new arms race 1 Apr 2019 Goldman Sachs and BlackRock are the latest investment firms to bulk up their wares in the $80 trln market for fee-based advisers. These are fast displacing commissions-based brokers in managing Americans’ wealth. And the business offers spoils across the money-managing spectrum.
U.S. AI export crackdown may hurt people, too 1 Apr 2019 Foreigners in America could get caught in a government proposal to restrict exports of robotics and other tech to China and elsewhere. A license may be needed for temporary residents to work on such projects. It would undercut Alphabet, Amazon and others that recruit overseas.
Zuckerberg’s plea for regulation is a siren call 1 Apr 2019 The Facebook founder wants governments to develop more standardized rules for the internet to combat problems from harmful content to data security. The idea has merit. But it also smacks of a way for tech firms to keep profits private while socializing responsibility and costs.
Publicis’ $5 bln deal would push data fad to limit 1 Apr 2019 The French group may buy Alliance Data’s digital-marketing unit. The mooted price tag is manageable given Publicis’ pristine balance sheet. But the low returns on offer suggest that CEO Arthur Sadoun is worried about keeping up with data-rich ad rivals and tech giants.
Aramco flashes its cash but also its independence 1 Apr 2019 The Saudi oil giant’s debut bond prospectus shows $111 bln of net income in 2018. Yet Aramco will only pay half the $69 bln needed to acquire Riyadh’s SABIC stake upfront. Potential debt and equity investors will be heartened that there is an implied limit to government meddling.
Airbnb’s Indian rooms alliance checks out 1 Apr 2019 The $31 bln home-sharing app is investing in no-frills lodging chain Oyo. Both are flourishing in the world’s two largest emerging markets, clipping at the heels of established operators. Joining forces will add zest to Airbnb’s mooted IPO, and gives its smaller peer a U.S. lift.
Swiss freight group gets pirate’s bounty from DSV 1 Apr 2019 The Danish logistics company is handing over shares worth $4.6 bln for Panalpina after a months-long spat involving activist Cevian and a charitable foundation. The price is too good to turn down. Expert acquirer DSV will have to beat its own track record to make the deal pay.