UK’s Sunak hits right target with latest Santa act 8 Jul 2020 Finance minister Rishi Sunak unveiled new stimulus worth up to 30 bln pounds. A tax cut for homebuyers and restaurant subsidies might help. But his best ideas encourage employers to retain workers and hire young people. Avoiding a scarring of the jobs market is vital to recovery.
Boohoo investors sense its strategic straitjacket 8 Jul 2020 The fast fashion retailer’s shares have slumped again, despite a plan to fix its supply chain. The wider issue is that a doubling of UK clothing makers’ pay could halve Boohoo’s EBITDA margins. Other steps – offshoring more production or hiking prices – are problematic too.
Hadas: A virus economic optimist partly recants 8 Jul 2020 Three months ago, it felt bold to predict little lasting damage from the pandemic. Money-fuelled markets have embraced that outcome, but pumped-up hopes are now too high. Global finance is undisciplined, fear and bitterness lurk, and governments may have gained too much power.
Corona Capital: Not so united 8 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: A potential round of cuts at United Airlines lays bare the pitfalls of the government being both savior and investor.
British public would end up paying for Huawei ban 8 Jul 2020 Prime Minister Boris Johnson is mulling whether to bar the Chinese group from the country’s 5G mobile network. Ripping out existing Huawei kit could cost operators BT and Vodafone an extra 1 bln pounds. The bill for a U-turn forced by U.S. sanctions will end up with taxpayers.
BBVA’s green bond is the lightest shade possible 8 Jul 2020 The Spanish bank issued 1 bln euros of contingent convertible hybrid debt, with an environmentally friendly label. The perpetual and fungible nature of bank capital muddies the link to sustainable projects. Demand for such debt gives bankers reason to keep pushing the envelope.
Car finance giants are skidding into the ditch 8 Jul 2020 The Financial Conduct Authority is forcing big auto-finance players to freeze customer payments. The losses mean they may have to buy back more of the loans in securitisations that helped fuel the market’s breakneck rise. That in turn will make it harder to fuel future growth.
This Chinese stock pop has firmer fundamentals 8 Jul 2020 Indexes have spiked to levels not seen since 2015, and leverage is rising, adding to fears of a crash. Weakness in shadow banking and property are pushing speculative funds into shares, but the rally is underpinned by reforms accelerating a fundamental shift into equities.
Food rations point to India’s fiscal poverty 8 Jul 2020 New Delhi is handing out free grains to 800 mln people, a frugal way to support households. Two-thirds of citizens in the world’s fifth-largest economy are vulnerable to income shocks, but the small tax base constrains redistribution options.
Deutsche’s Epstein rap is double lesson in scandal 7 Jul 2020 Its dealings with late sex offender Jeffrey Epstein have saddled the German bank with a $150 million fine from a New York state watchdog. The inquiry found Deutsche had two problems: rogue employees and plain old incompetence. It’s the latter that often proves hardest to expunge.
Tesla rivals’ solar deal brings few rays of light 7 Jul 2020 Blackstone-backed Vivint is selling to Sunrun for $1.5 bln. Price wars and the technology’s low take-up rate have sapped earnings and valuations. Merger cost-cuts will make the business more sustainable. But Tesla’s car heft and stellar valuation make it tough for competitors.
If you build bailouts, they may not come 7 Jul 2020 Uncle Sam has thrown some $3.5 trln at the economic crisis. Unlike the 2008 slump, a big portion is aimed at helping Main Street. But complex and changing terms put off some mom-and-pop businesses while sophisticated firms got help. It offers lessons for the next aid plan.
Palantir mystery extends to public-market value 7 Jul 2020 The data-analytics firm, co-founded by Peter Thiel in 2003, has ramped up revenue slowly – it's set to reach $1 bln this year. A $20 bln valuation, the private mark in 2015, looks optimistic. Yet growth is on the up. The company's worth depends on how durable that is.
WPP boss gets best of both worlds with PR mash-up 7 Jul 2020 Finsbury and two other companies owned by the $10 bln advertising giant are uniting. The trio’s managers will hold nearly 50% of the new company. CEO Mark Read, who keeps control, benefits if they do well while a simpler structure lets him focus on chasing dwindling ad revenue.
The Exchange: PMI CEO Andre Calantzopoulos 7 Jul 2020 The boss of the $110 bln tobacco giant is on a quest to get the world to stop smoking cigarettes and switch over to heated tobacco, mainly PMI’s Iqos brand. Calantzopoulos has a lot of dedicated customers to win over, but he tells Rob Cox how governments might lend him a hand.
Corona Capital: Texas hold it 7 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: The iconic State Fair of Texas has been canceled as coronavirus cases in the region soar. The decision adds some $500 mln to the Lone Star State’s economic and human toll from the pandemic.
China-UK feud could spill over into nuclear power 7 Jul 2020 The two countries are facing off over Huawei mobile phone kit and Hong Kong. China’s key role in new British nuclear power stations may be the next flashpoint. Unpicking the agreement would upend strategic plans on both sides. But rising tensions suggest a rethink is looming.
TransferWise sellers get the best of $5 bln deal 7 Jul 2020 Investors in the UK fintech may cash out at a 30% premium to a similar transaction last year, Sky News reported. The valuation only makes sense if revenue withstands a Covid-19 slump. Since that’s unlikely, the buyers are taking a dicey punt on the currency-exchange specialist.
China’s firewall casts shadow over Hong Kong 7 Jul 2020 Twitter, Google and Facebook suspended cooperation with local courts as new rules allow police to seize assets and force sites to delete seditious content. Others such as Netflix stand to be affected, and blockages seem likely. That can only accelerate the exodus of talent.
Chinese IPO gives vaping a second, deep puff 7 Jul 2020 Smoore International has been valued at $9 bln in a Hong Kong listing after pricing its shares at the top of a range. The issue defies a global backlash against the battery-powered devices. At 19 times forward earnings, investors have helped to prop up a smoking hot valuation.
Sina’s terrible governance comes home to roost 7 Jul 2020 Less than three years after the Chinese web outfit inexplicably handed control to boss Charles Chao, he wants to take it private. The $2.7 bln offer is at a 20% discount to Sina’s stake in microblog Weibo. Supervoting stock and a weak board put minority holders in a tight spot.
Japanese bond market shift spells stronger yen 7 Jul 2020 Central bank boss Haruhiko Kuroda has kept yields on 10-year debt near zero but let those on longer-dated ones rise. Now most of Japan’s yield curve is above that of France. Dwindling returns on overseas bonds could reduce local demand for foreign currency, sparking a yen rally.
Elliott’s new target looks only weakly defended 6 Jul 2020 The hedge fund wants $71 bln telecom-tower operator Crown Castle to invest less in fiber networks and pay more in dividends. The company says returns will come with time. That's fair, but its credibility is undermined by limited disclosure and an obviously substandard board.
Coronavirus tanks Trump’s election economy 6 Jul 2020 The U.S. president was cruising toward re-election, by one academic model based on GDP per capita and prices. Then the pandemic hit. The model isn’t built for such dramatic swings but it still tells a story. A sharp recession is one of few events that could put a Democrat on top.
New Aviva CEO can break more than one mould 6 Jul 2020 The $13 bln UK insurer that dates back to 1696 has got its first female boss. Amanda Blanc could revive the group by carving out general cover from life insurance. With Covid-19 pressuring costs, it’s a risky move. Sticking with the same conglomerate model is even less appealing.
Uber’s Postmates deal will barely touch the sides 6 Jul 2020 Boss Dara Khosrowshahi is removing a food delivery competitor at a cheap price. More than half of the deal’s $2.7 bln value will be recouped through cost savings. It’s also an amuse-bouche sized test of how regulators will respond to the ride-hailing firm’s future acquisitions.
Warren Buffett makes natural gas his new Dominion 6 Jul 2020 The Sage of Omaha’s energy unit is paying $4 bln plus debt for most of the U.S. utility firm’s pipelines for the fossil fuel. Natural gas prices have slumped thanks to virus-induced lockdowns. But the fuel’s future is more stable than oil’s, and Buffett has drilled a good price.
Corona Capital: Disney/“Hamilton”, U.S. housing 6 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: “Hamilton” reinvigorates Walt Disney’s digital-download challenge, and America’s stay-at-home rules may mean there’s pent-up demand for real estate and home improvement.
Lloyds CEO leaves the big thinking to successor 6 Jul 2020 António Horta-Osório will step down in 2021, when incoming Chairman Robin Budenberg will pick a replacement. It’s a tidier handover than most banks manage. The new broom will inherit a low-cost base, but will have to boost fee income and test regulators’ appetite for UK M&A.
Commerzbank’s exec exodus puts M&A back on menu 6 Jul 2020 The $6 bln lender’s CEO and chairman are leaving under pressure from unions and investor Cerberus. That brings instability but also the hope of real change at the underperforming bank. Since slashing costs won’t cut it, the new team should court peers UniCredit and Deutsche Bank.