China’s Luckin Coffee roasts a rich IPO 7 May 2019 The chain is seeking to raise up to $590 mln as it races to overtake Starbucks. Luckin is growing fast, but burning cash to do so. Although its strategy diverges from that of its Seattle rival, on a comparative revenue-per-store basis the implied $4 bln valuation is high.
Casino mogul’s Cambodia cash hedges investors’ bet 7 May 2019 Boss Chen Lip Keong will use some $1.8 bln of his own money to fund half of NagaCorp’s new venture, Asia’s largest gambling resort. Competition is increasing, and both Cambodia and the industry depend heavily on China. It’s still a show of confidence that can cheer punters.
Nature is capitalism’s biggest loser 6 May 2019 Hedge-fund boss Ray Dalio and others rightly fret about the gap between rich and poor. Global poverty is on average declining, at least. But a new report shows land, water and species pay an unsustainable price. Changing that means properly valuing what underpins human gains.
Exxon becomes test of investors’ carbon capture 6 May 2019 New York State and the Church of England want to split the chair and CEO roles and oust the board after the $328 bln U.S. oil giant squashed their emissions-reduction push. They have won peers over in other climate fights, but taking on Exxon’s top brass may be too much for many.
U.S.-China tension will outlast Twitter trade spat 6 May 2019 Global markets fell after Donald Trump tweeted that he’d increase tariffs on Chinese goods. Even if trade talks get back on track, other U.S. moves will damage relations. They include curbs on investment from, and tech sales to, the PRC as well as an enforcement push.
Buffett makes dubious art of anti-virtue signaling 6 May 2019 Berkshire Hathaway’s annual meeting eschewed lofty talk of global warming or social purpose often heard from other investors. A $10 bln investment in shale underlines Warren Buffett’s priorities. But it’s a missed opportunity to leave a legacy beyond above-market returns.
Disney sports deal is small fumble in long game 6 May 2019 The Magic Kingdom sold some regional networks to Sinclair for $10.6 bln – much less than what was expected. But Disney completes a necessary task to clear its $71 bln deal for bits of Rupert Murdoch’s Fox. The launch of streaming services, with Fox content, is the greater prize.
Norwasian telecom deal dials right numbers 6 May 2019 Telenor and Malaysia’s Axiata are aiming to form a regional champion with some 300 mln customers by merging their South and Southeast Asian businesses. Bigger looks better with savings worth some $5 bln expected. Kuala Lumpur might raise an eyebrow at less competition, though.
China loses leverage in battle against debt 6 May 2019 Hours after Donald Trump threatened to raise tariffs on Chinese goods, the central bank made another $40 bln available for small mainland firms to borrow. Prior easing moves helped stocks and housing more than the productive economy. This delicate balancing act looks wobbly.
Trump tariff threats shake trade deal foundations 6 May 2019 The U.S. president says he will soon hike duties on $200 bln of Chinese goods. It may well be a negotiating ploy, but has rattled markets anyway, just as both economies have steadied. Such bursts of frustration are worrying, and may make it harder for an eventual pact to stick.
Refined Occidental bid leaves one box unchecked 5 May 2019 The $43 bln U.S. oil driller upped the cash in its offer for rival Anadarko. Financing from Warren Buffett and a side-deal to sell assets to Total make it look deliverable. Dispensing with a vote by Oxy shareholders should boost the bid too, though not investors’ peace of mind.
India Insight: Voters could deliver a strongwoman 6 May 2019 If Narendra Modi’s BJP fails to secure enough seats in an ongoing election, a coalition of regional parties may emerge. One potential leader is West Bengal’s fiery chief, Mamata Banerjee. She has some of the prime minister’s controlling traits, but far looser purse strings.
Naruhito can give Japan’s economy a morale boost 6 May 2019 Tuesday marks the first working day of the Reiwa Era, ushered in by the accession of Naruhito, the world's only emperor. He will preside over a $5 trln engine stuck in low gear. Lacking a policy remit, he could still leverage his spiritual role to treat Japan's economic soul.
Vision Fund IPO could self-disrupt 3 May 2019 SoftBank may be mulling a float of the $100 bln tech fund. That suggests rich Gulf backers aren’t a shoo-in for a second iteration. While going public would diversify ownership, the entity might trade at a big discount. That would turn off both public and existing investors.
More American workers take one for the team 3 May 2019 U.S. job creation accelerated in April, trimming the unemployment rate to a 50-year low of 3.6 pct. Yet wage growth remains modest and other data suggest slack in the labor market. Employees getting less than their historical share is the price for keeping the recovery going.
Downbeat CEOs are a reason to be cheerful 3 May 2019 JPMorgan CEO Jamie Dimon says he’s prepared for recession but doesn’t expect one. So, it seems, are other U.S. companies. They’re posting better earnings than feared but doing fewer deals and taking on less debt. So they should be ready if things worsen, and flush if they don’t.
HSBC’s rich valuation reflects spare buyback ammo 3 May 2019 The emerging market lender’s pre-tax profit jumped a tenth in the first quarter, buoyed by a lending boom in Asia. Investors are assuming the bank will hit its 11 percent return-on-equity target in 2020. Surplus capital of $2.6 bln gives boss John Flint extra room for manoeuvre.
Air France-KLM descent is double Dutch blow 3 May 2019 The airline’s Dutch arm swung to a first-quarter operating loss, weeks after the Netherlands government bought a 14 pct stake. KLM is still faring better than its French partner. But the wobble undermines demands for special treatment and leaves its political backers red-faced.
Metro Bank’s rehab should start with the board 3 May 2019 The upstart lender’s deposits shrank in the first quarter and pre-tax profit halved after a capital blunder. Sliding shares make it harder to sell a planned 350 mln pound rights issue. A governance overhaul - starting with Chairman Vernon Hill - is vital to rebuilding confidence.
Macquarie can keep its edge over Wall Street 3 May 2019 The first full-year results under Shemara Wikramanayake included an impressive 18 pct return on equity. Macquarie cautions things may cool off, but commodities and infrastructure are hot, and play to its strengths. Trading at some 2.5 times book value means expectations are high.
Alibaba’s custom font plays to tech type 3 May 2019 The Chinese e-commerce titan designed Alibaba Sans to push its brand and improve legibility. Text is becoming as personalised in tech-land as accounting metrics. Apple, Netflix and Uber have bespoke characters, too. The bar on visual vanity projects has been raised.
Ditching Jakarta is worth the risk for Indonesia 3 May 2019 President Joko Widodo approved a $30 bln plan to uproot civil servants from the capital. Congestion is crippling and wealth too concentrated in a sinking city. A bold, wholesale move a la Brasilia or Canberra may be too costly, but dispersing government agencies would be a start.
Beyond Meat IPO flips into FOMO territory 2 May 2019 The plant-based burger firm’s stock almost tripled on its market debut. The desire for food that’s tasty, green and ethical is real, and investors are clamoring for a bite. But such big first-day pops are often driven by a fear of missing out that longer-term returns cannot sate.
Viewsroom: Apple versus Alphabet 2 May 2019 Both Silicon Valley giants are looking for the next big thing after a slowdown in their main product – iPhone sales at Apple and online ads at Alphabet. Lower expectations mean Tim Cook’s outfit has more time to act. Plus: Activist Dan Loeb puts Sony back under the microscope.
Fed traditions live to fight another day 2 May 2019 Donald Trump has now lost both his picks for a spot at the U.S. central bank after Stephen Moore joined Herman Cain in taking himself out of contention. Their own shortcomings were to blame more than senators’ respect for the Fed’s independence. But it’s a reprieve all the same.
Tesla’s $2 bln capital raise repeats sins of past 2 May 2019 The electric-car maker’s issue of shares and convertible bonds will barely cover planned capital expenditure, let alone losses like the one it just reported. CEO Elon Musk is betting vehicle sales will rebound quickly. That’s the kind of hubris that put Tesla in its current fix.
Barclays activist gets upside for everyone but him 2 May 2019 Investor Edward Bramson has lost his bid to gain a Barclays board seat, by a wide margin. The win bolsters CEO Jes Staley’s investment banking strategy. Still, activist agitation has improved returns, even if Bramson’s investment remains underwater.
En+ chair gets relatively meagre sanctions bonus 2 May 2019 The Russian energy group has given Chairman Greg Barker $4 mln for successfully lobbying against U.S. sanctions, Bloomberg says. En+’s market value is up $1.5 bln since it avoided the strictures. Paying 0.3 pct to detoxify its business is a reasonable exchange.
BNP requires more than one-off trading boost 2 May 2019 The French lender enjoyed a 3 percent jump in investment banking revenue in the first quarter, implying CEO Jean-Laurent Bonnafé gained market share from peers. But he will only convince sceptical investors that he will hit his 2020 return target if he can maintain such growth.
VW’s reform drive needs more horsepower 2 May 2019 A year after taking the wheel, CEO Herbert Diess has canned a much-needed truck IPO and now expects 2019 operating profit will be at the lower end of his target range. The 82 billion euro carmaker won’t close the valuation gap with peers unless he gets the spinoff back on track.