Hong Kong is ripe for more tycoon-led buyouts 23 Mar 2020 The Fung clan wants to take Li & Fung private. Online retail, the trade war and Covid-19 have battered the supply-chain group, making a $1.4 bln valuation look generous. As such opportunistic deals gather pace, investors in the Asian hub may start to demand more of buyers.
UK adds fiscal steel to economy’s virus defences 20 Mar 2020 Britain will cover employees’ wages at firms hit by Covid-19 and beef up social security payments. That puts it among the more enlightened European states battling to keep their economies afloat. The activist approach is welcome given a slow approach to containing the outbreak.
Coming U.S. jobless spike is unusual and dangerous 20 Mar 2020 It’s not hard to see how the 20% unemployment estimated by Treasury Secretary Steven Mnuchin could come to pass. An early hit to hospitality and retail will swiftly spread, and the hit will almost certainly be faster than prior crises. This time there’s no flattening the curve.
Senate stock trades add to post-virus reform list 20 Mar 2020 Several U.S. lawmakers sold shares after briefings on Covid-19. One is even married to the New York Stock Exchange chairman and downplayed the disease. It looks like another case of the powerful benefiting during the outbreak. Congress can tackle it by banning stock ownership.
Trump can make oil markets balance in his favour 20 Mar 2020 To hike low crude prices, the U.S. President needs a big producer to cut supply. He already has leverage over Saudi Arabia and more scope to threaten Russia with sanctions. Add in output curbs by shale, and a path exists to keep American producers afloat but oil values in check.
Viewsroom: How to run virus bailouts 20 Mar 2020 The rapid economic slowdown caused by the spread of Covid-19 has brought to the fore the prospect of companies getting help from taxpayers. Which firms to target and what strings to attach will be the big questions. Plus: Pepsi, credit cards and cancer drugs drive virus-era M&A.
Corona Capital: Dining bonds 20 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: Restaurant industry cooks up a unique form of funding to help alleviate revenue wipeout.
Review: A loose cannon on the deck of the world 20 Mar 2020 Saudi Arabia’s decision to launch a full-on oil price war is destabilising, risky and aggressive. But as Ben Hubbard’s new book shows, it’s a signature move for Crown Prince Mohammed bin Salman. It seems unlikely that his kingdom will become any less repressive – or volatile.
Corporate bailouts should be quick, big and wide 20 Mar 2020 From large airlines to small restaurants, companies are pleading for state support to cope with plunging revenue. Governments can help by swiftly offering a cheap loan to any business that wants it. It’s the best way to prevent a severe downturn from becoming a prolonged slump.
BoE gives lenders handy crisis-accounting template 20 Mar 2020 The UK regulator told banks to treat the virus shock as temporary when calculating bad debt. That gives them leeway to be flexible with vulnerable borrowers without worrying about a capital whack. It’s less drastic than suspending accounting rules. Other watchdogs should follow.
Covea should be haggling hard with the Agnellis 20 Mar 2020 The French insurer’s proposed $9 bln purchase of Exor’s reinsurer PartnerRe has gone from dear to ridiculous in a month. Crashing peer valuations, pressure on Agnelli-owned Fiat Chrysler and a shortage of cash buyers give boss Thierry Derez ample room to negotiate a better deal.
Tortuous Japanese hotel deal takes viral twist 20 Mar 2020 Unizo is backing a sweetened $1.9 bln bid from Lone Star that matches Blackstone’s price. Top owner Elliott is ready to accept, eight months into the bidding war. Fresh Covid-19 volatility may accelerate an endgame, but also calls into question the frontrunner’s takeover plan.
Trade war truce sabotaged by virus battle 20 Mar 2020 Removing tariffs could provide an estimated $170 bln boost to the ailing global economy, yet any rollbacks hardly seem imminent. The White House just slapped fresh duties on Airbus. Relations with China are also worsening. Such intransigence only makes a bad situation worse.
Trump Org bailout would be ultimate self-deal 19 Mar 2020 The U.S. hotel industry is seeking $150 bln in government aid as it reels from virus fallout. Where does that leave the president’s hotels and golf resorts? Ideally, Trump would set an example by using his own wealth to preserve jobs. To let taxpayers do so would set a new low.
More regulation, less return for U.S. utilities 19 Mar 2020 A defensive sector looks less so amid the coronavirus pandemic. A sharp rise in unemployment will make regulators less willing to green-light rate increases. Yet the grid still needs heavy investment, virus or not. PG&E’s return from bankruptcy illustrates the dilemma.
Bank of England deploys old tools for new problem 19 Mar 2020 New boss Andrew Bailey has cut UK interest rates to 0.1% and ramped up bond buying. Among the reasons for the easing is a deterioration in the government debt market that is leading to a tightening of financial conditions. Even massive asset purchases may not fix that headache.
Cox: Are taxpayers ready to rescue the jerks too? 19 Mar 2020 Workers will be human shields for reckless CEOs in the crisis clamor to save jobs. Consider Penn National: The U.S. casino group gorged on debt and bought brash Barstool Sports a month ago. If capitalism had any purity, or morality, Penn would go bust. Watch it get bailed out.
Gulf’s sovereign funds are now gilt-edged airbags 19 Mar 2020 With oil now below $30 a barrel and emerging market outflows exceeding those seen in 2008, the region’s dollar pegs will be tested. Saudi Arabia and others may cut budgets in response. At the very least that implies ADIA, QIA and Mubadala’s dealmaking wings could be clipped.
Next G7 headache is a disorderly currency market 19 Mar 2020 The dollar is surging amid a dash for cash. Exchange rate swings are verging on the sort of unruly moves that policymakers say they dislike. Public expressions of displeasure can be the first line of defence. If these don’t work, official sales of the U.S. currency may be needed.
Christine Lagarde proves a worthy heir to Draghi 19 Mar 2020 The ECB boss echoed her predecessor’s “whatever it takes” pledge by unveiling 750 billion euros of new asset purchases. That eases tension in euro zone bond markets but can’t offset the global dash for cash. Crucially, she also opened the door for other once-taboo measures.
Emerging markets dollar lifeboat leakier than 2008 19 Mar 2020 Capital is heading out of Indonesia, Turkey and other emerging economies faster than in the financial crisis. Like then, the Fed should set up dollar swap lines with some of their central banks, and the IMF should boost reserves. But even these fixes might not stem the torrent.
KKR spots brass in British muck 19 Mar 2020 The private equity group’s infrastructure arm is buying water company Pennon’s trash management unit for 4.2 bln pounds. The valuation looks rich, given recent market moves. But lengthy contracts and growth in recycling mean co-CEO Henry Kravis needn’t fear a grubby return.
Chinese travel site charts course out of virus fog 19 Mar 2020 As most of the world hunkers down in place, $12 bln Trip reckons it may be through the worst of it. First-quarter sales are expected to halve, but boss Jane Sun also sees a rebound at home where the epidemic may be ebbing. It offers a glimmer of hope in a sea of economic gloom.
Cheap gas drives auto industry to distraction 19 Mar 2020 With crude oil futures near $26 a barrel, drivers might lose enthusiasm for electric vehicles if governments put support on hold and let pump prices free-fall. But the push away from hydrocarbons is about more than petrol costs. Carmakers are ill-advised to let investment slide.
Kraft Heinz shows long shelf life has virus limits 18 Mar 2020 The $29 bln ketchup maker is one of the few packaged-foods producers whose stock has sagged during the Covid-19 outbreak. Consumers stocking up on canned and boxed goods have already prompted General Mills and Campbell Soup to raise earnings guidance. Kraft’s debt holds it back.
Quarantine hits home for Canada’s Trudeau 18 Mar 2020 The border with the U.S. is closing. The Canadian prime minister – himself in Covid-19 isolation – also unveiled a fiscal aid package worth about 3.6% of GDP, way short of, say, the UK’s response to the pandemic. As everywhere, though, it’s a down payment on an unknown price.
Hadas: This is no ordinary anti-crisis stimulus 18 Mar 2020 The usual reason to pump money into an economy is to increase economic activity. That’s not possible in the face of the Covid-19 pandemic. But maintaining incomes and solvency will allow fairer and fuller use of what’s available. The crisis is teaching the uses of solidarity.
Climate fight will survive dual oil and virus blow 18 Mar 2020 The Covid-19 outbreak could distract politicians from agreeing cuts to global emissions. The resulting slump in crude prices also removes pressure to ramp up renewables. But behavioural and societal changes to halt the pandemic may prove more potent in tackling global warming.
Virus likely to be a tale of three phases 18 Mar 2020 History and science suggest a serious hit – to the economy and health – lasting months, and varying depending on testing and behavioral changes. Flare-ups and uncertainty will continue until a vaccine is widespread in a year or more. After that, Covid-19 may just be another flu.
ECB has a nascent euro zone crisis to head off 18 Mar 2020 The yield spread between German bonds and French or Dutch ones has suddenly widened. That, more than a blowout in the gap with Italy, was the sign in 2012 that markets were questioning the single currency’s future. ECB boss Christine Lagarde has little time to nip it in the bud.