Corona Capital: ZoomInfo IPO, U.S. trade 4 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: ZoomInfo goes public with a big pop despite Covid-19; and America’s goods-trade deficit with Europe will test Washington’s mood.
HSBC Hong Kong tightrope walk comes with huge fall 4 Jun 2020 The $102 bln bank publicly backed a Chinese security law opposed by many of the city’s residents. HSBC has little choice but to toe Beijing’s line. But the risks to its Hong Kong business, and of being caught in the China-U.S. stand-off, will continue to weigh on its shares.
Make-up artist’s star power tested by $1 bln tag 4 Jun 2020 That’s how much Puig is close to paying for Charlotte Tilbury’s cosmetics company, Bloomberg reports. Famous friends and e-commerce helped the entrepreneur boost sales. To justify the price, the Spanish perfumer needs to lift margins after Covid-19, without smudging the brand.
Reliance makes clever use of buy now, pay later 4 Jun 2020 Purchases by installment are hot in retail but the Indian conglomerate is bringing them back to capital markets. Investors buying into a $7 bln rights issue can settle up through November 2021. It sidesteps a Covid-19 cash crunch and boss Mukesh Ambani’s backstop covers up flaws.
UK’s Hong Kong stance is so far mostly spin 4 Jun 2020 Prime Minister Boris Johnson says he is offering 3 million residents of the former colony a possible route to citizenship. For now the tweaks to the visa regime look limited and vague. That's a missed opportunity for a post-Brexit economic boost as well as for righting a wrong.
Warner Music is opening act for mini IPO-palooza 3 Jun 2020 The record label’s shares climbed more than 20% after the biggest U.S. IPO this year. It suggests there is investor demand for companies resistant to pandemic disruption. Current market conditions make good mood music for companies that offer stability, growth, or both.
Argentina risks stumbling at the finish line 3 Jun 2020 The nine-time defaulter and its creditors are nearing a $65 bln restructuring deal. It might not seem fair for Argentina to give more ground, especially when it has IMF support. It can’t risk being frozen out of global capital markets, though. Playing tough could backfire.
Tiffany share drop offers LVMH a bargaining chip 3 Jun 2020 Fears that Bernard Arnault may pull his $16.2 bln bid amid U.S. unrest have hit the jeweler’s shares. The French billionaire may see an opportunity to renegotiate, but it’s not without risk. Buying Tiffany shares on the market would be a less aggressive way to meet a similar end.
Even Zoom’s lockdown boom needed Amazon delivery 3 Jun 2020 The $60 bln videoconferencing service had an astonishing first fiscal quarter as revenue surged 169% and profit rocketed. Zoom’s ability to rent thousands more servers daily from Jeff Bezos' company shows the flexibility and earnings leverage possible from operating in the cloud.
Europe’s frenzied mall openings hide harsh reality 3 Jun 2020 Shares in landlords like Unibail-Rodamco-Westfield and Klepierre jumped after they reopened shopping centres. Queues outside IKEA suggest pent-up demand. But fewer shoppers and shorter visits will mean lower retail rents. Investors appear to be pricing in a 50% decline.
Fintech superstars face brutal financial comedown 3 Jun 2020 Digital banks like Chime and Monzo have millions of customers but are tackling their first big crisis with scant revenue. Online lenders from Kabbage to Klarna face rising defaults, less new business, and funding concerns. Valuations, business models, even survival, look shaky.
Corona Capital: Crisis loans, Jet fighting 3 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: Bank customers are no longer making a dash for cash, loan drawdowns suggest. Meanwhile, a U.S. block on Chinese passenger flights suggests domestic battles haven’t dimmed President Trump’s desire to make China pay.
Private equity hangers-on face diminishing returns 3 Jun 2020 France’s Ardian raised $19 bln to buy stakes in other buyout funds. The niche, known as secondary investing, did well after the last crisis and is booming as conventional fundraising slows. Yet sellers are less desperate this time, and an oversupply of capital may hurt returns.
Tycoon’s rig empire leaves lenders deep underwater 3 Jun 2020 Oslo-listed Seadrill, founded by billionaire John Fredriksen, wants to swap its $7.4 bln of debt for equity. A slump in crude prices means creditors will face heavy losses. But, with oil majors retrenching and rigs heading for the scrapyard, a bankruptcy could be even messier.
Dollar’s crisis crown is slipping 3 Jun 2020 The greenback has fallen to its lowest in nearly three months. The scale of Fed Chair Jerome Powell’s stimulus has calmed nerves and lured investors into riskier assets. The more confident money managers are that he has their back, the more the U.S. currency will weaken.
War for Hong Kong talent is Taiwan’s to lose 3 Jun 2020 The island’s proximity and cultural similarity should appeal to Hong Kongers fleeing Beijing’s crackdown. For its part, the $600 bln economy needs to plug a severe labour shortage and boost investment. But warm political gestures could be offset by bad immigration policies.
American CEOs have huge power. They can use it 2 Jun 2020 Leaders like JPMorgan’s Jamie Dimon support calls for racial justice. Most businesses can do more though, financially and in their workforces. Even if it’s not their job to fix society, U.S. norms and pliant shareholders give executives wide latitude to do what they think best.
Only losing users will get Zuckerberg’s attention 2 Jun 2020 Facebook workers and civil rights groups criticized the social network’s hands-off approach to President Trump’s inflammatory posts. Its co-founder says he’s listening, but Zuckerberg has little incentive to act. Covid-19 has boosted the company, and reduced employees’ leverage.
Once in a lifetime is our hopeful prediction 2 Jun 2020 Humanity either learns key lessons from the pandemic, corrects course and becomes a more resilient species. Or it tears further apart and expands the divisions in society that predated Covid-19. In a new e-book on what will change, Breakingviews takes the more optimistic view.
E-book: Once in a Lifetime? 2 Jun 2020 Humanity either learns key lessons from the pandemic, corrects course and becomes a more resilient species. Or it tears further apart and expands the divisions in society that predated Covid-19. In a new e-book on what will change, Breakingviews takes the more optimistic view.
Corona Capital: Bank fears, Payments M&A, Coal 2 Jun 2020 Concise views on the pandemic’s corporate and financial fallout: A new U.S. regulator wants cities to reopen to prevent bank robberies. Western Union may bid for struggling rival MoneyGram. And the pandemic is hastening the decline of U.S. coal.
Germany’s new $90 bln fiscal bazooka may misfire 2 Jun 2020 Chancellor Angela Merkel’s government is working on new stimulus measures. But the package, which is still being negotiated, is short on infrastructure investment. Consumer handouts and tax cuts may end up boosting savings given concern about the outlook for the economy and jobs.
TUI’s summer cheer may be short-lived 2 Jun 2020 The $3.5 bln holiday operator’s shares have risen by around 60% since Spain said it would welcome tourists again. But fewer sales and high debt could eventually force CEO Friedrich Joussen to raise more equity. With the stock buoyant, it’s a good time to tap shareholders.
Even a chastened SoftBank leans on engineering 2 Jun 2020 Boss Masayoshi Son is scrambling to clean up his “foolish” and costly WeWork mess. Instead of just selling some Alibaba shares, though, he’s using derivatives linked to them to raise $11.5 bln. The transactions are fiddly, but in this case may be a good use of creative finance.
NetEase fortifies itself against global disarray 2 Jun 2020 The $51 bln video-game producer is ready to raise $2.6 bln in Hong Kong. Quarantined customers have helped it defy a U.S. backlash against Chinese stocks. A secondary listing closer to home, following a tougher trail blazed by Alibaba, should add a useful layer of protection.
Clashes are facet of U.S. “exorbitant privilege” 1 Jun 2020 Unrest over racial injustice does nothing for a country already divided and struggling with disease. Yet it takes more to unseat a superpower. America is no longer the only one, but it still has unrivaled heft. The downside: limited pressure to tackle economic or social problems.
Tech giants dare antitrust deal watchdogs 1 Jun 2020 Facebook, Microsoft and Apple have been on a buying spree of small companies. U.S. regulators are examining such deals but their work has been hindered by Covid-19. Big Tech can argue some firms would fail otherwise. But the effect on consumers is a mixed bag.
Zynga puts overvalued shares to risky use 1 Jun 2020 The $9 bln video-game company is buying the Turkish maker of Toon Blast and Toy Blast for $1.8 bln, its biggest deal ever. Zynga is partly financing it with stock puffed up by the pandemic. But the high price and its mixed acquisition record should give investors pause.
Kylie Jenner teaches Coty celeb value is cosmetic 1 Jun 2020 The perfume maker’s stock fell after Forbes suggested the TV star, who sold 51% of her makeup brand to Coty last year, had exaggerated her wealth. Coty had overpaid either way. But the drama exposes the folly of companies buying brands whose value they can’t really control.
Cities exodus will be more fringe than fashion 1 Jun 2020 Covid-19 and its lockdowns have left many urbanites yearning for more space. Technology makes it easier to contemplate working from a hamlet than after past pandemics. But a mass shift to the ‘burbs and beyond requires a lot of investment to overcome a dearth of infrastructure.