Protests may be last straw for U.S. global stature 1 Jun 2020 Unrest over police brutality has spread across America, even as President Trump ditches treaties and condemns China’s crackdown in Hong Kong. Such isolationism and hypocrisy dismays allies. It will be difficult to reclaim the moral high ground, and losing it comes at a high cost.
India Insight: Mukesh Ambani sets high bar for Jio 1 Jun 2020 At $68 bln, the tycoon’s telecom operator is being valued like a tech startup. It’s backed by A-list investors from KKR to Facebook, and more are queuing up. Growth has been impressive. But the wannabe super-app could encounter serious competition in the country’s digital race.
SpaceX mans up in private planetary race 31 May 2020 Elon Musk’s reusable rockets have slashed the price of sending cargo into orbit, but his private $36 bln firm has yet to show that lower costs unleash untapped demand. Successfully launching humans delivers additional cash and political capital to chase bigger dreams.
U.S. sanctions on China are means without an end 29 May 2020 President Trump says he may penalize PRC officials linked to a new security law for Hong Kong. The first move of its kind would escalate tensions. Yet it probably won’t deter Beijing and could spur retaliation. Unlike tariffs, there's also no clear goal beyond punishment.
Civil unrest puts U.S. economy in a vicious circle 29 May 2020 Violence broke out in Minnesota after an African American man died in police custody. Minorities are disproportionately represented in U.S. Covid-19 deaths, and job losses are hitting these groups hard. Unrest may make reopening tough, making the country’s wealth gaps even worse.
Mall-to-retailer relationships will get creative 29 May 2020 Brookfield Asset Management launched a $5 bln fund to invest directly in retailers. It’s an effort to salvage some of the Canadian mall owner’s top customers. As Neiman Marcus and J.C. Penney march into bankruptcy, other real estate owners will rethink traditional rents, too.
Review: MMT lives up to some of its promises 29 May 2020 “The Deficit Myth” clearly explains why governments should aim to balance the economy, not the budget. Stephanie Kelton’s book comes at a good time, as huge deficits will help limit the pandemic’s damage. Unfortunately, Modern Monetary Theory suffers from narrowness and naivete.
Irish eyes keep smiling despite a strict lockdown 29 May 2020 Village pubs are shut until August. The Emerald Isle’s restrictions may look extreme but have kept deaths low even if unemployment has soared to near 30%. Yet with ample supplies and a clear reopening plan, Matt Damon isn’t alone in finding Ireland an ideal pandemic bolthole.
German carmakers step on Chinese electric pedal 29 May 2020 VW is taking big stakes in two Chinese EV firms, while Daimler may invest in battery-maker Farasis Energy’s $480 mln IPO. Demand remains tepid, oil is too cheap, and the targets look richly priced. But these deals lock in supply, and position both to compete with Tesla in China.
Virus bailouts will be messier than past rescues 29 May 2020 Governments are ponying up trillions of dollars to save lockdown-hit firms. Further assistance looks inevitable as economies falter. States will demand higher taxes and jobs in return, putting them at odds with private owners. And lending to smaller firms creates bigger tensions.
Corona Capital: Saving/not spending, Pandemic Pig 29 May 2020 Concise views on the pandemic’s corporate and financial fallout: what to make of falling spending and the growing taste for meat alternatives.
China can live with a less special Hong Kong 28 May 2020 The entrepôt's unique autonomy brought prosperity without Beijing having to cede control of the economy and people. Hong Kong’s importance has dwindled, however, and may even be holding China back. A U.S. move to strip its special status only shows how disposable that status is.
Chinese online tutor gets lesson in multiplication 29 May 2020 GSX Techedu deflected one sloppy short-seller attack and a second sensational one. A third from Muddy Waters calling the $7 bln company a fraud hit as Luckin buckled and Congress moved on U.S.-listed Chinese stocks. Growing scepticism will require targets to have strong defences.
Amazon steers towards self-driving leverage 28 May 2020 Jeff Bezos’s $1.2 trln behemoth is one of the obvious big buyers of autonomous vehicles. Acquiring startup Zoox would give it an even bigger say in how the technology gets rolled out. That would also help deepen its customers’ dependence on Amazon’s fast and cheap shipping.
Twitter can’t please everyone but still has to try 28 May 2020 Fact-checking a President Trump tweet has put founder Jack Dorsey in a political spotlight he had previously avoided. A spring clean of tweets is good for business in the long term. But unlike peers, Dorsey needs to please shorter-term investors too, like activist fund Elliott.
Exxon climate activists can call in reinforcements 28 May 2020 Environment-linked resolutions won less backing at the $193 bln energy firm’s annual meeting on Wednesday than at rivals’. Replacing directors is the next logical step. It’s a task traditional activists are more used to – and Exxon’s poor financial record could pull them in.
Activist curve will get flattened by the pandemic 28 May 2020 Dozy boards are crying out for prodding as Covid-19 ravages businesses. But balance sheets will need to be more, not less, robust. And pushy investors can hardly point to great returns. After years of barging down doors, they should prepare to have more slammed in their faces.
Boohoo’s shopping spree needs to nail more looks 28 May 2020 The $5 bln UK online fashion group is buying out minority investors in peer prettylittlething for $400 mln. The fair price counters short-seller warnings of an overly generous payout. Yet the retailer will need to stretch beyond skin-tight tat to justify its own rich valuation.
TikTok’s best move is a clean break from ByteDance 28 May 2020 The video app’s Chinese parent is shifting power away from the People’s Republic. That’s unlikely to win over American lawmakers suspicious TikTok will collect consumer data and send it back to Beijing. ByteDance’s most realistic political option is to sell its rising star.
Vacant arenas fortify TV’s financial grip on sport 28 May 2020 When games restart, distancing rules will mean emptier soccer and baseball stadiums. Sports which rely less on live crowds, like golf or Formula 1, may benefit. More home viewers should further boost the value of media rights, already worth $51 bln, and offset lost ticket sales.
Big Tech faces a post-virus global tax onslaught 28 May 2020 The OECD’s efforts to fashion a fairer global tax system are at risk of stalling. France and Britain already levy charges on the revenue of Facebook, Amazon and others. With public debt soaring and the pandemic boosting Big Tech’s sales, a messy patchwork of levies could ensue.
IWG war chest burnishes anti-WeWork credentials 28 May 2020 The UK office group raised 320 mln pounds to fund acquisitions. Unlike its troubled rival, IWG has little debt and is expanding when competitors are retrenching. CEO Mark Dixon’s plan still relies on the hope that companies will need as much real estate once the lockdown ends.
Viewsroom: Hong Kong crunch 28 May 2020 U.S. Secretary of State Mike Pompeo declared the Asian financial hub no longer autonomous from China, days after Beijing unveiled plans to ban sedition and subversion there. Breakingviews columnists in the city untangle what it means amid the trade war, pandemic and protests.
Corona Capital: GE cash burn, Macy’s lifeline 28 May 2020 Concise views on the pandemic’s corporate and financial fallout: General Electric’s cash flow will be more negative than expected as Covid-19 damages its aviation and power businesses; and U.S. department-store chain Macy’s borrows more, buying time but not much else.
Hong Kong financiers face Man Group’s terror 28 May 2020 During China’s 2015 crash, police detained the China chief of the British hedge fund and others; some state media blamed foreigners for sabotaging markets. Beijing’s proposed new security law will extend this attitude to Hong Kong. Bankers should worry as much as protesters.
Kotak cash call shows India Inc’s fear and greed 28 May 2020 A well-subscribed $1 bln share placement is sufficient to defend the richly valued lender against credit-quality doomsday. Barring that, it’s a massive war chest for acquisitions. Boss Uday Kotak, Asia’s richest banker, is prepared for both deep disruption and deep discounts.
Equity markets hatch a chicken-and-egg scenario 27 May 2020 The month of May logged the most equity offerings in history – beating the record from December 2009. Issuing equity to fortify coffers beats raising more debt for most companies. But raising cash will be easiest for those that already have it, or have other ways to get it.
Hong Kong gets thrown under “make China pay” bus 27 May 2020 America’s top diplomat Mike Pompeo says the city is no longer autonomous. That decision initially hurts the financial hub more than it does Beijing. But an escalation in unrest would set the scene for worse economic pain for China, with a U.S. election raising the stakes.
Economic distancing is sad sequel to social kind 27 May 2020 Coronavirus has struck disproportionately as a disease of the poor. The human tragedy has been especially stark in dense, unequal places like New York. As economic distancing sets in, the gap is going to widen further between black and white, urban and suburban, north and south.
Burst Michigan dams send pollution risk to surface 27 May 2020 Flooding after heavy rain almost reached a Dow chemical-storage site. That’s one crisis averted, but in general, companies pay too little attention to water contamination. Its effects are vast and are part of recent high-profile legal fights. But cleaning up won’t break the bank.