Green laggards face war on multiple fronts 18 Dec 2019 Businesses slow to react to the impact of climate change have so far got off lightly. In 2020, investors will broaden their activism and target passive funds, too. Meanwhile, some governments may impose stricter measures, and more valuation clarity will wake up short sellers.
Aramco’s next stop will be bond, not stock, market 18 Dec 2019 Despite raising $25.6 bln from listing 1.5% of Saudi Aramco, Riyadh will want to flog more. But even if it can find a friendly foreign wealth fund, Saudi might still have to cut the price. An easier path would be to load Aramco up with debt and pay itself a fat special dividend.
Lebanon’s financial alchemy is losing its magic 18 Dec 2019 The world’s third most indebted nation – with borrowings north of 150% of GDP – may be careening toward a default and an IMF rescue. A complex financial engineering scheme that propped up the banking system is now sputtering. Local banks and foreign bondholders could take a hit.
Bringing back Tata’s old boss offers no panacea 18 Dec 2019 A court has ordered the $160 bln Indian giant to reinstate Cyrus Mistry – ousted as chairman in 2016 – and declared his successor’s appointment illegal. The disruption may exacerbate Tata woes that range from cars to steel. And returns under Mistry were only slightly better.
Peugeot and Fiat hit the road in a low gear 18 Dec 2019 PSA and FCA are to create the world’s fourth-largest carmaker. But with investors yet to buy into the promise of 3.7 bln euros of annual savings, a deal was the easy part. Peugeot boss Carlos Tavares still has to work his integrational magic to get the market on side.
German listings breakup puts LBO shop in fast lane 18 Dec 2019 Hellman & Friedman paid 3 bln euros for the car sales division of classifieds group Scout24. It’s a rich price, but the unit’s racy growth means the buyout fund should make a healthy return. A higher exposure to risky property leaves the seller’s investors with a bumpier ride.
The hottest new car model is a Daimler-BMW deal 18 Dec 2019 The German giants want to save a combined 13 bln euros to fund the pricey transition to electric cars. But crunching together could yield synergies worth more than three times that. The Fiat-Peugeot playbook will be scrutinised heavily in Stuttgart and Munich in the year ahead.
Ukraine bank battle pits oligarch vs. reformers 18 Dec 2019 Ukrainians central to President Donald Trump’s impeachment inquiry are busy at home too. The billionaire who owned PrivatBank when a $6 bln balance sheet hole was found is unlikely to get the lender back. But any deal could undermine antigraft reforms and threaten foreign aid.
Taiwan will widen U.S.-China schism in 2020 18 Dec 2019 The island's significance in supply chains stands to grow as manufacturing shifts accelerate. Anti-Beijing sentiment is also gaining traction in the United States. Both dynamics herald deeper ties between Taipei and Washington, bolstering the case for a controversial trade deal.
Chinese bottled water IPO offers up a muddy glass 18 Dec 2019 Market-leader Nongfu Spring could raise more than $1 bln in Hong Kong. Mainland households are drinking more of the bottled stuff as incomes rise. That thirst, though, has brought competitors, and may also prompt a much-needed tightening of environmental and consumer rules.
App stores are tech’s next Battle Royale 17 Dec 2019 Google and Apple collect enormous fees through their dominant online app stores. Those are coming under attack – Fortnite owner Epic Games is the latest to lob a grenade. If regulators seek new ways to challenge Silicon Valley, these distribution channels are an easy target.
Nasty pieces of WeWork 17 Dec 2019 The shared-office outfit’s absurd $47 bln valuation wasn’t all that got exposed during a shambolic IPO attempt that led to SoftBank’s bailout. With any luck, founder worship, supervoting shares, weak governance, wacky missions and more will be knocked down a peg – or several.
Guest view: Cities are $24 trln green opportunity 17 Dec 2019 Metropolises account for 70% of global carbon emissions. That puts them at the forefront of the battle to keep global warming to a minimum, argues Christiana Figueres, the former UN climate chief behind the 2015 Paris accords. But cities cannot do it alone.
Hadas: Maybe Paul Volcker wasn’t all that great 17 Dec 2019 The U.S. central banker, who died on Dec. 8, supposedly broke the 1970s inflation with recession-inducing high interest rates. After 40 years of falling inflation worldwide, his contribution looks less certain. He also missed an early chance to criticise financial deregulation.
Unilever boss needs to channel his inner activist 17 Dec 2019 The consumer goods giant warned sales in 2019 will grow less than 3%. CEO Alan Jope blames weakness in countries like India, but the miss heaps pressure on him to turn around the sprawling business. Setting out clear targets for dumping sluggish food brands would be a start.
India drops social wildfire on economic tinder 17 Dec 2019 A law easing the path to citizenship for some non-Muslim migrants has led to violent protests and a partial internet shutdown. Japan’s Shinzo Abe cancelled a visit. With growth slow and jobs a problem, it’s a risky time to tinker with divisive issues.
UK takes small step to solving fund liquidity mess 17 Dec 2019 Bank of England Governor Mark Carney wants open-ended investment vehicles to offer redemption terms that match the cost of selling assets. The hope is to avoid blowups like M&G’s frozen property fund. Yet discounts could still encourage investors to run for the exit in a crisis.
Boeing woes help Airbus customers more than Airbus 17 Dec 2019 The U.S. plane maker is suspending production of its grounded 737 MAX jet. Its European rival is already working at full capacity, but Airbus-reliant airlines, including easyJet, are in a sweep spot. They can keep expanding, while a capacity squeeze pushes up fares and margins.
The Exchange: Life after bad debt in India 17 Dec 2019 Kicking off Predictions 2020, Prashant Ruia of Essar Group, Sunil Mehta of Punjab National Bank and Shankar Sharma of First Global come together in Mumbai to explain how India Inc can borrow and lend again with confidence, and propose sharp fixes to kickstart a crashing economy.
Haier’s Hong Kong rejig could help clean house 17 Dec 2019 The world’s top appliances maker wants to take an $8 bln subsidiary private via share swap. The deal would streamline the group’s structure and free up $2.4 bln in cash for the indebted parent to play with. For all these neat benefits, shareholders could demand a premium price.
Boeing 737 MAX cuts will speed margins descent 16 Dec 2019 Limited competition has insulated the $185 bln aircraft maker’s shares from the long grounding. The plane may fly again soon, but investors and CEO Dennis Muilenburg expect rising profitability. Newly zealous regulators, overstretched staff and economic winds say otherwise.
Goldman shows world leaders live in wrong climate 16 Dec 2019 The Wall Street firm is targeting $750 bln of sustainable finance over the next decade, even as politicians dither. It’s a fluffy goal. Yet it shows the hard-nosed Goldman sees money to be made from sustainable investment. Its long-term-greedy mantra fits climate change neatly.
Power Corp tycoons play it commendably straight 16 Dec 2019 Canada’s Desmarais family is simplifying its holding structure, moving outside owners of Power Financial up to its $10 bln parent, Power Corp. A valuation discount is narrowed, transparency is improved, and no one is being forced to sell at cut price. It’s power used responsibly.
Cineworld Canada deal has makings of a good sequel 16 Dec 2019 The UK cinema chain is buying Toronto-based Cineplex for $2.1 bln, its second deal in as many years. More debt-driven M&A looks scary after a dreary year at the box office. But the returns are reasonable, and the target’s high market share should limit the financial chills.
New Bank of England boss may request magic powers 16 Dec 2019 The name of the UK central bank’s next governor is expected shortly. He or she will hope for a smooth exit from the EU. A badly done Brexit could bring recession, inflation, a currency crisis, fiscal incontinence and political interference. If only there was an effective spell.
DuPont’s latest reinvention risks deal fatigue 16 Dec 2019 The $26 bln sale of its nutrition unit looks smart on paper. Yet DuPont has been reworking itself for four years, with no real boost for shareholders. Buyer IFF is still digesting another purchase. And closing is over a year away. Even the right deal can be too much of a grind.
DuPont comes out smelling of roses in $45 bln deal 16 Dec 2019 Executive Chairman Ed Breen is merging his nutrition and biosciences business into International Flavors & Fragrances. He has secured a premium valuation, cash sweetener and a tax-free transfer for DuPont shareholders. IFF gets little besides the dubious benefits of scale.
Daimler grab challenges Germany’s China angst 16 Dec 2019 State-owned BAIC plans to up its stake in the Mercedes-maker, matching domestic peer Geely’s 10%. The move strengthens CEO Ola Kaellenius’ access to the world’s largest car market. While the German government frets about Chinese influence, the benefits for now outweigh the risks.
Italy gives its taxpayers lousy Christmas present 16 Dec 2019 Rome plans to sprinkle at least 1 bln euros on a wobbly southern bank, airline Alitalia and steelmaker Ilva. The EU may sneer at a new dose of state aid, but these are problems without easy market solutions. Besides, failure to act would undermine Italy’s weak pro-EU executive.
China’s health grey zone is hazardous for fintech 16 Dec 2019 Soaring medical costs in the People's Republic have prompted Jack Ma's $150 bln Ant Financial and others to offer insurance-like solutions. A scandal involving a Tencent-backed upstart, though, is a reminder the sector is largely unregulated. That's unlikely to remain the case.