Time for Boohoo bosses to put on an ESG hair shirt 6 Jul 2020 The 4 bln pound retailer has been accused of sourcing clothes from UK workshops which don’t pay minimum wage or observe Covid-19 restrictions. Betting that consumers and investors don’t care is old hat. Adding ESG metrics to its bumper bonus plans would make them more palatable.
OneWeb’s relaunch shortens distance to profit 6 Jul 2020 The satellite startup is back in the internet space race with $1 bln from India’s Bharti - the world’s third-largest telco - and the UK government. The deal will shore up future revenue, reducing risks for investors going head-to-head with Jeff Bezos and Elon Musk in orbit.
Chip IPO tests Hong Kong-China feedback loop 6 Jul 2020 SMIC more than doubled its Shanghai offer to $6.6 bln on strong demand. Its Hong Kong shares had risen sharply ahead of the mainland listing valuing the semiconductor maker at 100 times forecast earnings. That’s hard to justify, even with Beijing’s aim of tech self-sufficiency.
Macron will retreat on French reform to win again 3 Jul 2020 The president is reshuffling his government. Expect more spending, especially on green projects, given Emmanuel Macron’s flagging popularity. He may also have to dilute plans for pension changes, undermining what remains of his reformist credentials, if he wants a second term.
New L’Oreal boss will put e-commerce above M&A 3 Jul 2020 The $180 bln cosmetics giant is looking for Jean-Paul Agon’s successor as CEO. Buying brands like CeraVe or Urban Decay and selling them globally has added growth. But high valuations raise the relative importance of reaching more consumers with what it has already got.
Corona Capital: Quarantines, UK bailout, Drugs 3 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Britain relaxes its “bonkers” quarantine rules; a small UK bailout sets a troubling transparency precedent; and India’s drugmakers click into dealmaking mode.
Gold mining in Greenland is smarter than it sounds 3 Jul 2020 Canada’s AEX Gold wants to raise 45 mln pounds via a UK listing to reopen a mine on the North Atlantic island. The tricky location and fickle bullion prices are obvious risks. The potential returns and scope to gain a head start in a local resource scramble are opportunities.
Review: The callous roots of caffeine capitalism 3 Jul 2020 “Coffeeland” recounts Englishman James Hill’s rise from travelling salesman to king of El Salvador’s coffee industry. Though his farms brought wealth to some, they made the country less equal and heavily reliant on one resource. Many African nations face a similar dilemma today.
Sea’s $55 bln valuation can rise with the tide 3 Jul 2020 The Tencent-backed tech outfit’s market cap has risen eight-fold in the three years since its New York debut. A virus-related boom in games and e-commerce in Southeast Asia has helped justify a rapid rise, and expansion plans are on. Its payments unit may provide an extra buoy.
Tencent’s hot sauce fraud exposes expired tech 3 Jul 2020 The Chinese video-games titan appears to have been taken by crooks pretending to work for Lao Gan Ma, a popular spicy condiment, using a forged company seal to ink an advertising deal. Such old-fashioned methods have embroiled others including SoftBank. Digitisation is overdue.
Viewsroom: Wirecard, Hong Kong and Tesla 2 Jul 2020 The German fintech scandal shines a light on its hapless regulator; China’s new security law stinks up the fragrant harbor and Elon Musk hasn’t just surpassed Toyota in market value, he’s becoming as rich as Croesus. Breakingviews columnists around the world weigh in.
Bye, bye Mister Hedge Fund Guy 2 Jul 2020 Fund manager John Paulson had the guts to go all-in betting against subprime mortgages over a decade ago. Unable to replicate his biggest claim to fame, he’s turning his fund into a family office. He’s not alone in that, but it’s still a moment that bookends the financial crisis.
YRC bailout throws U.S. taxpayers under the truck 2 Jul 2020 The Treasury is, unusually, taking a 30% stake in a freight company it says is an essential military supplier. On several measures, though, it’s a poor trade. The debt on offer is too cheap, the government won’t have voting influence, and YRC is far from a governance role model.
Mexico’s stingy populist is haunted by history 2 Jul 2020 The president, known as AMLO, is the rare left-winger queasy about budget deficits, even in the face of a pandemic. This may be because of his nostalgia for the country’s mid-century boom, which was undone by debt-fueled spending. He has learned the wrong lessons from the past.
U.S. economic reboot menaced by bug in the system 2 Jul 2020 Almost 5 million Americans found work in June as the unemployment rate fell to 11%. But the recovery could easily crash again, or freeze, because of coronavirus spikes caused by premature reopenings. Infections, not jobs, are the better numbers to track.
Fed keeps yield-curve control in back pocket 2 Jul 2020 Minutes of the U.S. central bank's June meeting suggest ambivalence about the policy. It’s unnecessary for now, with bond markets quiescent. If that changes, Japan’s experience shows the tactic can effectively cap long-term interest rates. But it may not deliver higher inflation.
BaFin’s rejuvenation starts with finding new boss 2 Jul 2020 The German regulator investigated journalists and investors rather than fraudulent Wirecard. Beefing up oversight of payments and auditing will have little impact if the watchdog doesn’t properly use its powers. Change is unlikely while President Felix Hufeld remains in charge.
Norilsk Nickel underlines funds’ ESG blind spot 2 Jul 2020 The Russian miner had a bad pollution record even before it leaked 21,000 tonnes of fuel in the Arctic Circle. Passive investors like BlackRock have pledged to engage more closely with ESG miscreants. But when the company is controlled by oligarchs, they may just be ignored.
Corona Capital: Tesla, OPEC 2 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Tesla speeds past its traditional rivals, and OPEC’s next meeting shapes up to be a bruising encounter.
Oil majors’ Atlantic divide shows up in valuation 2 Jul 2020 U.S. and European producers’ divergence in climate change action is becoming increasingly obvious. Yet investors value Exxon Mobil and Chevron higher than Royal Dutch Shell and BP. At least for now, investors seem reluctant to view energy transition awareness as a good thing.
Germany has chance to embrace new economic model 2 Jul 2020 Finance Minister Olaf Scholz is splurging to boost domestic demand as exports, the usual mainstay of growth, slump. Cutting taxes will help, as will upgrading crumbling infrastructure. It will make a real difference if Berlin sticks with its changed habits after the pandemic.
Ukraine central banker exit is nail in reform hope 2 Jul 2020 Governor Yakiv Smoliy quit, citing political pressure. He tamed inflation and stood up to the former owners of nationalised PrivatBank. His resignation scuppered a bond issue and puts a $5 bln IMF loan at risk. Opaque vested interests are winning out over transparency in Kyiv.
Pinduoduo is stuck in startup governance mode 2 Jul 2020 China's e-commerce darling has swapped its founder CEO for the other co-founder. The pair wields supervoting stock and controls the board. The $100 bln company doesn’t even have a CFO or other top executives. They need to upgrade management, but this is an odd way to start.
Ping An untangles one knot in its leadership 2 Jul 2020 Ma Mingzhe is giving up his CEO role and will remain chairman of the $187 bln insurer. The split is welcome but quirky governance endures with three other co-CEOs. Multiple bosses can be effective when responsibilities are clearly divided. Ping An mostly ticks that box.
IPO pricing gets back to business-as-unusual 1 Jul 2020 Dun & Bradstreet shares leapt 18% on their debut, even after its underwriters raised the price range – as they also did with insurer Lemonade, which starts trading on Thursday. Last week Albertsons aimed too high in its debut. Which strategy is better depends who is asking.
Fast food franchise model has burnt edges 1 Jul 2020 NPC International, the U.S.’s largest Pizza Hut franchisee, filed for bankruptcy. An LBO flip, heated competition, and higher labor costs left it larded with debt. Parent company Yum appears resilient. But its restructuring portends sizzling problems in the franchise model.
Tesla market milestone puts Musk pay in overdrive 1 Jul 2020 The Silicon Valley upstart has overtaken Toyota to become the world’s largest carmaker by market worth. Its rapid ride to a $210 bln value also starts the clock on another huge payout for CEO Elon Musk. But production and income show investors have gotten ahead of themselves.
Competing interests blur M&A regulation 1 Jul 2020 The U.S. government wants to curb a big jump in Chapter 11 filings in May. Dealmaking would help on that front. But agencies are also issuing antitrust guidelines that may make tie-ups harder. Jobs are at stake either way. It’s a trade-off between bailouts and consumer harm.
Hadas: Wirecard woes show need for fraud-busters 1 Jul 2020 Accountants EY may have been particularly inept in missing fraudulent bank balances at the German payments processor, but auditors are normally right to presume companies are fairly honest. Sniffing out cheating is a job for separate, licensed and powerful forensic specialists.
Corona Capital: Drug hoarding, Vacation-free world 1 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Stockpiling of Covid-19 treatment remdesivir may come back to haunt the Trump administration, while a forecast of $3.3 trillion in lost tourism is more than an inconvenience for some national economies.