India’s Yes Bank rescue plan is a messy experiment 9 Mar 2020 State Bank of India could inject up to $1.4 bln and own 49% of the collapsed lender in a two-step process. That would keep Yes out of government control, but private investors might be wary of a public partnership. Such contortions also won’t necessarily shore up confidence.
Review: The rent is too darn political 6 Mar 2020 Sky-high housing costs are the scourge of many U.S. cities – especially in California. Fixing zoning and reducing costs are musts, but vulnerable renters might need quicker action. Conor Dougherty’s non-ideological stance makes “Golden Gates” feel downright radical.
OPEC Russian roulette yields circular firing squad 6 Mar 2020 Moscow has rejected the cartel’s pleas for a supply cut to ease a virus-linked demand slump. Given the scale of the oil market imbalance, an inadequate deal was the best that could have been hoped for. But OPEC’s efforts to force the issue look like leaving everyone worse off.
M&A protectionism could bite at worst time 6 Mar 2020 Cross-border deals are getting harder because of the White House’s America-first stance and tougher merger reviews, deal advisers say. Yet a blooming pandemic will make big companies more keen to cut costs and tighten control of their supply chains. It’s an unhelpful combination.
Virus Plan Bs will get banks thinking about costs 6 Mar 2020 HSBC and others may split staff into separate camps so that jobs like trading continue if an office closes. That sounds inefficient and costly. But it might not be over time if executives find they can live with small teams in less glamorous but cheaper office space.
Jamie Dimon gives succession plan a scary test run 6 Mar 2020 JPMorgan’s CEO is recovering after emergency heart surgery. Deputies Daniel Pinto and Gordon Smith are in charge for now. Others have been waiting in the wings too. How well they get along and manage the virus crisis will provide investors with a glimpse of the bank’s future.
Russia rainy day fund raid sets bad precedent 6 Mar 2020 The country’s National Wealth Fund may buy the central bank’s 50% stake in Sberbank for $36 billion. It’s a sneaky way for the government to boost spending without breaking its fiscal rules. The danger is that President Vladimir Putin repeats the ruse with other state firms.
Pandemics give rich selfish reason to aid the poor 6 Mar 2020 Developing countries are often worst hit and they undercut the containment efforts of wealthier ones. The spreading coronavirus knocks the case for globalisation but it promotes the need for cooperation on health. One idea to fund such assistance is a travel-linked pandemic tax.
Alibaba’s health shift prescribes market medicine 6 Mar 2020 The e-commerce group is injecting assets into a healthcare subsidiary, now worth a punchy $25 bln. It’s a bet that the coronavirus will accelerate reforms, like opening China’s $370 bln drug industry to web retailers. Alibaba’s scale could deliver a potent treatment to investors.
Viewsroom: Fear factor 5 Mar 2020 U.S. Fed Chairman Jerome Powell surprised markets with a rate cut ahead of schedule. Democratic presidential contender Joe Biden unexpectedly won the most states on Super Tuesday. Covid-19 may show up in China M&A clauses. The coronavirus is inspiring flights to safety.
Exxon positions as the climate-doubter’s choice 5 Mar 2020 Boss Darren Woods has reaffirmed he is actively pursuing fossil-fuel projects as rivals cut back. Success would bolster Exxon’s dismal returns. But Woods’ faith in Big Oil’s longevity makes the U.S. oil giant something of an outlier. At least investors have options.
Virus stimulus strains bloated U.S. balance sheet 5 Mar 2020 Congress approved an $8 bln plan to mitigate a potential outbreak. It’s a rounding error next to the hundreds of billions that may be needed to stem economic damage. Tax cuts and a spending jump had already pushed the deficit to $1 trln, reducing fiscal room to deal with crises.
White House race mirrors corporate diversity trap 5 Mar 2020 Senator Elizabeth Warren dropped out of the race to become America’s first woman president. More females are in Congress and closer to the C-suite than ever, but the pipeline breaks down at the top. In politics, voter whim plays a big role. Companies don’t have that excuse.
Yes Bank bailout to leave Indian lenders stranded 5 Mar 2020 State Bank of India looks set to rescue its private-sector rival for a pittance. That will crush lingering hopes for industry privatisation. A government-led rescue also undermines the idea that richly valued private lenders are better risk managers than their state rivals.
Sysco may risk indigestion with stodgy German meal 5 Mar 2020 The $36 bln cafeteria supplier is eyeing European wholesaler Metro. It’s an odd move for new CEO Kevin Hourican, who led CVS’ pharmacy roll-out. Europe’s weak growth and profitability mean he would need a bargain to make the deal work. And the target’s noisy owners won’t help.
Continental recovery will remain stuck in low gear 5 Mar 2020 The 17 bln euro German auto supplier cut its annual dividend by 16% after operating profit fell sharply. A plan to slash 500 million euros of costs by 2023 will do little to ease shareholder pain. Lower car demand and high spending on new software mean 2020 could well be worse.
Cox: Plague would be one way to meet ESG targets 5 Mar 2020 Pestilence scares come along every so often. Sometimes they’re full-blown levellers of humanity. Think Europe after 1347, or the world post-1918. Perhaps the best outcome from Covid-19 is that it becomes the near-miss society and business need to change course in a hurry.
Fed playbook will need a new page on zero rates 5 Mar 2020 Chair Jay Powell is likely to follow up this week’s emergency rate cut with more. It’s a case of when, not if, the U.S. central bank will revisit 0%. There are tactics it can try before going negative like euro zone and Japanese peers. The problem, though, is diminishing returns.
Airlines are pure punt on V-shaped virus recovery 5 Mar 2020 The coronavirus has hammered demand for air travel, knocking share prices and pushing UK budget carrier Flybe into bankruptcy. Yet past outbreaks like SARS suggest it will be a blip on air travel’s steady upward trajectory. If that’s the case, stronger airlines will bounce back.
ArcelorMittal gets better bargain in Italian row 5 Mar 2020 A legal fumble is forcing Rome to invest in troubled steelmaker Ilva. ArcelorMittal, which was due to pay 4.2 bln euros to buy and relaunch the toxic plant, cuts its bill and exposure to Italy’s virus-infected economy. The state gets stuck with another loss-making asset.
Oyo is not wasting the WeWork crisis 5 Mar 2020 The Indian hotel room provider is cutting 5,000 jobs, including half its China staff, and focusing on profitability and governance. Slower growth might deflate a $10 bln valuation. But it highlights the more grounded new look of Masayoshi Son’s SoftBank empire.
To set Macau’s virus odds, consider 2015 over 2003 5 Mar 2020 A recovery may take as long as six months, warns resort operator Melco. The slump looks more serious than during SARS and is better compared to a corruption crackdown that lopped a third off gaming revenue. This time, though, casinos are losing tourists as well as high rollers.
Hong Kong buyout-firm tax cut sends wrong message 5 Mar 2020 The city plans to reduce levies on so-called carried interest. Such gains are currently taxed like pay or other profit at rates well below global norms. With recent protests rooted partly in growing inequality, sparing private equity barons even that low burden risks a backlash.
DoorDash puts its valuation to the taste test 4 Mar 2020 The SoftBank-backed delivery service filed for an IPO as coronavirus puts extra strain on investors already wary of tech listings. Even on a good day, it may be worth about 40% less than its last $13 bln price tag. Owners are in for a reckoning whether they sell shares or not.
GM’s electric plan gives Musk a fresh challenge 4 Mar 2020 Boss Mary Barra unveiled an industry-leading 400-mile-range battery and $20 bln to invest in new tech by 2025. Sure, her estimated electric car sales will only have GM crawling towards its “zero emissions” goal. But it poses a more serious threat to Elon Musk’s Tesla.
Deal advisers have more to worry about than ever 4 Mar 2020 Even without market volatility and a virulent new disease, rapid shifts in U.S. merger rules have dealmakers on edge. Wall Street’s M&A bankers and lawyers are convening for their annual confab despite the coronavirus, hoping to learn to read more into the Washington tea leaves.
Biden is political equivalent of 10-year Treasury 4 Mar 2020 The former vice president is the Democrats’ preferred candidate for president so far, after winning at least nine states on so-called Super Tuesday. His surge shows that, like investors, voters are seeking a safe haven in uncertain times. It’s bad news for the current president.
Hadas: Good bureaucracy is ultimate virus slayer 4 Mar 2020 Honest and competent administrators make complex societies tick. In a public health crisis, they have to be global, transparent, flexible and sometimes harsh. China and the United States flubbed the coronavirus challenge in their own ways. Sadly, it’s too late for big changes.
Robo-taxis’ earnings horsepower 3 Mar 2020 General Motors reckons autonomous cabs can be a $1 trln market in the United States alone. That requires some heady assumptions about how cheap running such a service can be, and how many people can be persuaded to ditch car ownership for robo-rides.
Banks could use some wiggle room in virus battle 4 Mar 2020 The growing health crisis risks turning into an economic slump and reversing a decade-long crusade to clean up dud loans. Banks can help by jointly relaxing credit terms for otherwise healthy firms. The relief will be more effective if regulators also ease up on bad-debt rules.