Robo-taxi payday is a marathon self-drive away 3 Mar 2020 The prospect of mass adoption of autonomous cars has won Alphabet unit Waymo outside investors, helped boost Tesla’s stock and has GM positing a $5 trln global market. Robo-taxis could be big money-spinners. But aligning tech, costs, regulation and user readiness will take years.
EU green deal is a 1 trln euro diversion 4 Mar 2020 The European Union’s big investment plan to cut emissions, due on Wednesday to be backed by legally binding targets, has been getting a kicking. Fair enough: it’s a typical Brussels fudge. Its main role is to keep the EU busy until political cover exists to properly price carbon.
Agnellis best the French in $9 bln reinsurer sale 4 Mar 2020 Covea is paying a 38% premium over book value for PartnerRe. That’s more than Exor paid four years ago and the same price mooted three-plus weeks ago. Since then, rival insurers have tumbled in value. Covea’s mutual structure looks to give it incentives to misallocate capital.
War with Bank of East Asia may be short on spoils 4 Mar 2020 The $6 bln Hong Kong lender has hired Goldman to conduct a strategic review. It’s a small victory for Elliott Management, which has been agitating there for five years. Selling assets now could be difficult, though, which calls into question the campaign’s return on investment.
Chinese shares offer perverse safe haven 4 Mar 2020 U.S. equities fell and gold jumped following the big Fed cut. China’s benchmark stock index, however, has improved a world-beating 11% over the last month as local monetary stimulus eclipses weak business activity. That fondness for looser money creates a counterintuitive hedge.
Virus will change beauty in eyes of beholders 4 Mar 2020 Cosmetics makers such as L’Oréal and Estée Lauder owe much of their recent growth to duty-free shops and the like. A sharp drop in Chinese tourists caused by Covid-19 exposes the dependence on so-called travel retail. Valuations of 30 times earnings are due for longer-term cuts.
Which CEO should run HP-Xerox? Both, or neither 3 Mar 2020 Bosses’ egos loom large in mergers. Yet hostile bidder Xerox’s John Visentin and HP’s Enrique Lores bring complementary skills. Rationally, HP should buy Xerox, Visentin stick around to help execute the combo, and Lores run the show. Or they should both make way for new blood.
Robinhood’s trading arrows turn into friendly fire 3 Mar 2020 Rivals like Schwab matched the startup’s chief appeal, and $7.6 bln valuation, by ditching fees. Now outages during frenetic markets are landing more blows. Valuable service can overcome glitches, as Twitter and Slack show. But Robinhood’s 10 mln customers have plenty of options.
Tariff-infected medical supply chains get sicker 3 Mar 2020 U.S. stocks of face masks, gloves and gowns were already under tariff pressure, which cut into just-in-time inventories. Shortages worsen as fears of a virus outbreak grow. Trump wants to inoculate against globalization. When it comes to medical equipment, he may have a case.
Fed easing shocks more than it awes 3 Mar 2020 U.S. central bank boss Jay Powell cut rates by half a percentage point because of economic risks from the coronavirus. Easing from the provider of global financial liquidity sets the scene for others to follow. The impact would have been bigger had G7 peers acted simultaneously.
OPEC readies knife for oil demand-slump gunfight 3 Mar 2020 The cartel and its Russian allies are set to curb crude supply again, to counter a virus-induced price fall. But even a 1 mln barrels per day cut may not do the job. To hike prices, OPEC needs Russia to prove helpful, Libya to stay troubled, and the coronavirus to not get worse.
Covid-19 monetary placebos start Down Under 3 Mar 2020 Australia’s central bank cut rates to a record low 0.5%, becoming the first in the developed world to trim post-outbreak. Others are expected to follow in some coordinated fashion. Any effects will be marginal or misplaced. Governments are better placed to deliver support.
Thermo Fisher gives booster shot to M&A spirits 3 Mar 2020 The $122 bln U.S. healthcare services firm is buying Qiagen for $11.5 bln. CEO Marc Casper is paying a rich price for the German diagnostics group, at a time when the coronavirus outbreak is crushing investor confidence. The timing suggests bullish spirits still linger.
Spanish banks get slightly lighter loan albatross 3 Mar 2020 EU judges have ruled that local courts can resolve a dispute over unfair floating-rate mortgages. That could spare Spanish lenders billions of euros in potential losses. The catch is that the same loans are increasingly unprofitable as rates head south.
Japan can handle Olympic defeat 3 Mar 2020 The flame is set to be lit as planned in Tokyo in late July, but the coronavirus casts fresh doubt each day. An economic uplift worth some $280 bln was anticipated. The bulk of it is already booked, though. And the country has plenty of tourism momentum on which to build.
Guest view: Virus may give Chinese banks M&A bug 3 Mar 2020 The outbreak is infecting the financial system. Lenders must provide new loans, roll over existing ones and cut rates. More small institutions might founder. The crisis, argues author Fraser Howie, creates an opening for consolidation, so long as bailouts have strings attached.
Oil’s plunge ratchets up “peak crude” anxiety 2 Mar 2020 The spread of coronavirus has contributed to a one-quarter plunge in oil prices, and even torpedoed the industry’s global pow-wow in Houston. Demand could decline for the first time in a decade. This new demand shock will steal valuable time from companies preparing for peak oil.
The Exchange: BCG investor sentiment survey 2 Mar 2020 Investors faced political uncertainty, a China slowdown and an aging U.S. economic expansion even before recent market ructions. Boston Consulting Group Partner Hady Farag explains what the firm's annual survey of investor sentiment says about today’s risks and opportunities.
Exclusive: UBS CEO tips Swiss to better governance 2 Mar 2020 Sergio Ermotti will become chairman of Swiss Re after his 9-year term ends. It would have been tempting to hold out for the chance to chair Switzerland’s largest bank. But this allows him to embark on a new chapter without complicating life for his successor Ralph Hamers.
Jack Welch created a myth for his moment 2 Mar 2020 The ex-GE boss, who helped forge the twin cults of the American CEO and shareholder value during the 80s and 90s, has died at 84. His ballyhooed management methods generated startling share-price gains and, later, falls. Sustained performance takes more nuance – and a village.
Investment banks have fickle friend in coronavirus 2 Mar 2020 Market volatility has surged alongside the disease’s global spread. Such moves help lenders with big trading desks, whose clients are more likely to need their services. Yet lower IPO and M&A fees may cancel out the gains, and force banks into another painful round of cost cuts.
Gilead’s $4.9 bln deal shows regular death goes on 2 Mar 2020 The $88 bln biotech company has the best antiviral bet against coronavirus; it’s also now buying cancer startup Forty Seven. Investors are focused on the former today, but the purchase at a hefty premium is a reminder that the fight against the grim reaper is a long-term affair.
Virus may vindicate JD’s frail e-commerce strategy 2 Mar 2020 China’s $56 bln retailer expects first-quarter sales to rise at least 10%. As peers grapple with supply chain disruptions and labour shortages, JD’s less lucrative model of holding inventory and shipping goods looks more resilient. Pressure for rival Alibaba to follow will grow.
Virus fight depends on practical economic measures 2 Mar 2020 Italy will spend 4.5 bln euros to fight Europe’s worst coronavirus outbreak. Keeping companies alive through tax breaks and other relief measures while the disease spreads could produce a rebound if the emergency proves short-lived. Monetary policy alone won’t kill the disease.
Nokia CEO’s to-do list starts with spring clean 2 Mar 2020 The Finnish telecom-kit maker’s new boss Pekka Lundmark needs to hit the ground running. Improving the 19 bln euro firm’s profitability is the first step. That will help him navigate choppy waters between Washington and Beijing, and prepare for the next wave of software-based 5G.
Virus could give dealmakers a new big MAC attack 2 Mar 2020 Morgan Stanley’s acquisition of E*Trade carves out Covid-19 from any “material adverse” change. Other buyers and sellers were too late, making the clauses ripe for review. They’re hard to trigger, but Chinese targets are vulnerable. More than $80 bln of M&A hangs in the balance.
Malaysian upheaval turns back clock for Goldman 2 Mar 2020 A surprise new prime minister is supported by the party whose ex-leader is on trial over 1MDB. That undercuts a fight against corruption. It also resets talks with the Wall Street bank over its role in the fund scandal, even if this government may reconsider an $8 bln tab.
Elliott’s Twitter DM does Jack Dorsey a favor 1 Mar 2020 The activist investor wants to remove the CEO of the $26 bln social media company as it underperforms peers. Square, the fintech outfit he also runs, is a distraction. Twitter has opportunity better navigated with fresh eyes, and Dorsey could benefit from having fewer jobs, too.