India’s shadow bank fix shows much-needed audacity 21 Nov 2019 The regulator is taking control of a credit crisis, sending housing lender DHFL and $12 bln of liabilities to bankruptcy court. Unpicking a financial institution’s woes with a process designed for regular corporates is bold. It might also be the only way to break an impasse.
Viewsroom: Rising Hong Kong tensions 21 Nov 2019 After more than five months of unrest in the city, a prolonged violent siege on a university campus ratcheted things up anew. Blocked roads and trains shuttered schools as tear gas wafted through the central business district. Its status as a financial hub may be under threat.
ConocoPhillips gives eco-investors an easy target 20 Nov 2019 The U.S. oil company plans to bulk up returns and dividends by 2029 on modest production increases. Whether that’s realistic depends on climate-risk assumptions that CEO Ryan Lance hasn’t disclosed. That’s low-hanging fruit for green-focused shareholder activists to go after.
Private-equity bosses will come under scrutiny yet 20 Nov 2019 Blackstone, KKR and peers were a no-show at a U.S. political hearing about their activities. Lawmakers landed few blows. But private equity’s sheer sprawl means the heat will intensify. The ultimate targets may not be companies, but the billionaire buyout barons themselves.
Fed’s stability is an appreciating asset 20 Nov 2019 Ambassador Gordon Sondland implicated not just President Donald Trump, but also the vice president and secretary of state in the House impeachment probe. The central bank’s independence should comfort investors – unless Trump starts threatening Chair Jay Powell’s job again.
Saudi bankers’ sweat will lubricate Aramco IPO 20 Nov 2019 The kingdom’s lenders are extending credit to domestic investors buying into the oil giant’s $25 billion float. That means locals could face hefty margin calls if Aramco shares slump. Bankers’ best sedative is that Riyadh has very strong incentives to prop up the price.
Target effectively plants a foot in both worlds 20 Nov 2019 The U.S. retailer reported better-than-expected sales at its stores. It’s one of the sector’s winners despite being an e-commerce latecomer. The lesson is that the sweet spot for retailers may be somewhere between the real and digital worlds – something even Amazon has noticed.
HSBC markets boss exit presages U.S. and EU pain 20 Nov 2019 Investment-bank head Samir Assaf may be replaced as part of interim CEO Noel Quinn’s shakeup. His division’s consistent 10%-11% return on equity has been solid if unremarkable, and hides weaker U.S. and European units. Cost cuts should fall most heavily in those regions.
Agnellis poised to overtake Peugeots with car deal 20 Nov 2019 Two historic industrial families are negotiating to unite. Shares of the Peugeot clan’s $3 bln holding FFP have outperformed $19 bln Exor over the past five years. But bigger savings for Fiat in a Peugeot merger should allow the Italian dynasty to reclaim its longer-term edge.
Aviva’s drift to mediocrity may tempt an activist 20 Nov 2019 The UK insurer pledged to simplify its business. Yet new CEO Maurice Tulloch’s strategy review disappointed hopes for asset sales, and mostly reaffirmed older aims. The $21 bln group’s sprawling structure, and discount to peers make it a juicy target for an uppity investor.
Cairn obstructs Delhi’s $100 bln energy target 20 Nov 2019 India’s oil minister says there is no better place to invest, as he courts foreign firms and a lofty investment goal. A long-running tax fight between the government and Cairn, however, undermines the promise of predictable policies. The sooner the case is resolved, the better.
The Exchange: Carbon-free superpower 20 Nov 2019 Bushfires and a historic drought have put climate change front and centre for Australia, increasing pressure on a pro-coal government to act. Ross Garnaut, economist and former Canberra adviser, explains why there's an opportunity Down Under that may outweigh the cost of change.
Hadas: Hong Kong tips Beijing’s balance quandary 20 Nov 2019 The territory’s economy is already hurting as residents battle the forces of oppression. The damage could multiply, if Xi Jinping were to follow the kind of tough strategy he’s using in Xinjiang. It is the autocratic dilemma: discontent rises with the costs of squelching it.
Slack would be better off as part of a team 19 Nov 2019 Shares of the work-messaging service are down 45% since its June IPO. For all Slack’s charms, Microsoft’s alternative has nearly double the users, and is untroubled by the need to raise capital or turn a profit. Slack’s best course is to find a rich benefactor, like Salesforce.
Tech cartel would be handy for U.S. housing 19 Nov 2019 Apple, Facebook and Google have pledged a total of $4.5 bln to build homes in the San Francisco area. California needs at least 200 times that amount. Silicon Valley firms get criticized for being too big, but this is one area where they could throw their weight around more.
Kohl’s gets lost in the Amazon jungle 19 Nov 2019 Investors torched a fifth of the retailer’s market value after it missed earnings and cut its outlook. CEO Michelle Gass’s partnership with the e-commerce giant isn’t helping. Its small size and store locations leave Kohl’s too exposed to the power Amazon wields.
Low bond yields wreck age-old investment credos 19 Nov 2019 Allocating 60% to equities and 40% to fixed income used to count as a balanced choice. Yet depressed debt yields mean such portfolios offer a dwindling buffer against setbacks in stocks. Investors who turn to hard-to-trade assets to diversify risks will only face other problems.
EasyJet finds budget way to offset Greta Thunberg 19 Nov 2019 The low-cost carrier will pay 25 mln pounds a year to compensate for CO2 emissions. That’s less green than it sounds. The benefits of offset schemes are disputed and, at just 25 pence per passenger, won’t change behaviour. It’s more about countering the Swedish teen’s guilt trip.
Russian tech investors see benefits of state grip 19 Nov 2019 Internet group Yandex’s shares jumped after it tweaked its governance to avoid a clampdown on foreign ownership. The new setup hands power to a fuzzy Russian entity, and could enable government meddling. But shareholders have less to worry about than peers in China, or America.
Hong Kong becomes potent piece in trade-war games 19 Nov 2019 China has challenged the territory’s judicial independence, just as a three-day siege at a local university ratchets up tensions again. U.S. lawmakers are backing protesters and increasing pressure on Donald Trump to follow. That could imperil an already-precarious trade deal.
Dr. Jart applies prettier M&A than Kylie Jenner 19 Nov 2019 Estée Lauder is buying the South Korean skincare line’s maker, Have & Be, at a $1.7 bln valuation, or about 3 times sales. Coty, meanwhile, unveiled plans to pay 6 times for the Kardashian’s makeup. A more conservative price for a less faddish brand wins this beauty deal prize.
5G hype faces a U.S. market sanity check 18 Nov 2019 Next-generation networks have inspired big deals, killed off others and kicked off a political arms race. Now the regulator wants to auction some spectrum publicly, rather than letting its owners sell privately. That might help raise more funds, but it also raises the stakes.
TikTok has escape route that Huawei lacks 18 Nov 2019 The Chinese-owned video app and its telecom compatriot are both under fire from U.S. lawmakers who fear political meddling. TikTok may have fewer allies to lobby on its behalf, but owner ByteDance could sell or spin its subsidiary off. Huawei, though, is in a long-term trap.
T-Mobile US CEO exit leaves big question dangling 18 Nov 2019 Boss John Legere is leaving the telecom just as its $26 bln merger with Sprint nears its final hurdle. Successor Mike Sievert is a safe pair of hands. Still, the timing is peculiar, especially when Legere’s counterparts at Disney and AT&T stuck around to see M&A plans through.
HP-Xerox could turn into battle of logic over ego 18 Nov 2019 If merging the printer and copier makers creates the savings Xerox has outlined, a $35 bln tie-up really is a no-brainer – but only if both can compromise. For shareholders, HP should be buying Xerox, not the other way around. But Xerox’s boss would be the best choice to lead it.
Renault needs to break pay taboo to get right boss 18 Nov 2019 The French carmaker wants a new CEO, whose first job is to mend the Nissan relationship. But pay restraint at state-owned firms will deter contenders like Toyota’s Didier Leroy. Still, Air France busting its remuneration ceiling gives chair Jean-Dominique Senard some flexibility.
Swiss bourse buys costly ticket to EU trading room 18 Nov 2019 Zurich-based exchange operator SIX is offering 2.8 bln euros cash for Spain’s BME, which is also being courted by rival Euronext. Building up scale makes sense. But extracting savings to justify the 34% premium may be challenging. It’s an expensive way to gain an EU foothold.
E-book: Water, climate and finance 18 Nov 2019 Global warming makes itself felt most keenly through floods, drought and changing rain and snowfall patterns. This collection of columns lays out Breakingviews’ take on what that means for companies, investors and economies around the world.
Just Eat M&A takeout is best served with cash 15 Nov 2019 Investors in the $6 bln group have an all-share offer from peer Takeaway.com and a higher cash bid from tech giant Prosus. Taking the money means quitting the fast-growing food-delivery sector before it has matured. Since profit margins are falling, that may be a good thing.
It’s a super-hard road to a Japanese super app 18 Nov 2019 SoftBank and South Korea's Naver want to merge Yahoo Japan and Line in a complex, multi-step deal. Investors are excited about a $30 bln payments-to-messaging giant, but there are many hurdles to clear. Shareholders and regulators may balk. And even then, a JV structure awaits.