Central banks’ debt monsters will need taming 31 Dec 2020 Authorities fought the pandemic by slashing rates and buying bonds, at the expense of pumping up credit further. In 2021, watchdogs can make amends by limiting banks’ exposure to toppy buyouts and shining a brighter light on private loans. They can also skewer credit ratings.
Trade feuds will take on a new, green hue 31 Dec 2020 Slapping tariffs on countries out of the blue isn’t Joe Biden’s style. But the U.S. president-elect may place more emphasis on environmental standards in commerce negotiations. While that would rile Beijing, America will have European backers if Biden chooses to take a stand.
Covid-19 brings capital-raising fee bonanza 31 Dec 2020 Investment banks led by JPMorgan collected a record $125 bln in fees in 2020. Merger advisory, topped by Goldman, was so-so. The real gold came from selling bonds and equity, partly to meet clients’ pandemic liquidity needs. For bankers, 2021 will probably be less exciting.
2020 hindsight: Our best-read stories of the year 31 Dec 2020 The virus and U.S. politics were the focus for readers on Reuters.com. But Refinitiv terminal and Breakingviews’ website subscribers displayed more eclectic tastes. Their top picks included stories on India’s richest man, triathlons, Swedish oat milk, and big data.
Africa’s debt chickens return to restive roost 31 Dec 2020 Even before Covid-19, the continent faced a reckoning. Low commodity prices remove a major growth pillar, while mounting leverage rules out more foreign borrowing. With budgets and citizens under pressure from Angola to Zimbabwe, Africa Rising looks more like Africa Uprising.
Viewsroom: Predictions and prescriptions (Part 2) 31 Dec 2020 A Joe Biden-Xi Jinping reset will be unsatisfying; China’s economic revival will frustrate critics; Southeast Asia will be the next tech hot spot; HSBC will retreat from America; and Hong Kong’s exchange will rethink deals. Pete Sweeney, Jennifer Hughes and Robyn Mak discuss.
China’s gravy train will bypass Wall Street 31 Dec 2020 Foreign banks pocketed about a third of the $6.5 bln in fees paid by Chinese companies to sell shares in 2020. U.S. animosity will lead to fewer New York listings, however. And even as Goldman and others push further onto the mainland, the work there is tougher and reaps less.
When bonuses are paid, cue the great trader exodus 30 Dec 2020 Wall Street’s desk-bound buyers and sellers had a bumper year, powering the bottom lines of commercial and investment banks amid the pandemic. They’ve also gotten a taste of life off the floor. Watch many of them take the money and run, surf, climb, or whatever.
Deposits will become a growing liability for banks 30 Dec 2020 Converting savings into loans is the bedrock of banking. Yet near-zero interest rates and a pandemic-induced deposit surge are squeezing revenue. Some lenders will charge customers to look after their cash. Upstarts will decide regulated deposit-taking is not worth the hassle.
Loeb injects paranoia into Intel a bit too late 30 Dec 2020 Activist investment fund Third Point correctly diagnoses the $200 bln chipmaker's main woe as a loss of its manufacturing edge. Separating chip design and production would help both, perhaps with a little boost from Uncle Sam. Regaining a lost tech lead, however, is hard.
Corona Capital: Spanish banks, British houses 30 Dec 2020 Concise views on the pandemic’s corporate and financial fallout: Unicaja and Liberbank become the latest Spanish lenders to announce a merger; Britain’s housing market continues to defy the country’s dire economic prospects.
Generational wealth gap warrants post-Covid reset 30 Dec 2020 Young people had a shrinking share of housing and equity riches even before the pandemic, which hurt them further by boosting unemployment and state debt. Shifting the tax burden to wealth, rather than income, would help. So would the radical option of millennial cash handouts.
UK’s duty-free golden goose will become albatross 30 Dec 2020 The government’s plan to end tax rebates for inbound tourists was part of its EU horse-trading. But it’s a needless hit to ailing retailers’ Asian custom. Instead of raising revenue in 2021, it will just become a symbol of the UK’s Brexit-era capacity for reckless self-harm.
Moody’s seal of approval comes unstuck in China 30 Dec 2020 Beijing suspended CCXI’s credit rating business after a top-marked miner defaulted soon after selling new debt. A 30% stake held by Moody’s suggests foreign influence didn’t upgrade the industry. Rising state issuance has made pricing risk even more political than financial.
HSBC breakup will turbocharge CEO’s Asian pivot 30 Dec 2020 Noel Quinn's plan to cut costs and shift assets away from America and Europe has failed to boost the bank’s shares. In 2021 he’ll have to opt for more radical moves, like selling the U.S. retail network and spinning off HSBC’s $15 bln UK arm. A higher valuation should follow.
BlackRock stretch goal: real shareholder democracy 29 Dec 2020 The $8 trln asset manager votes on behalf of millions of small investors. Rather than telling companies how to handle gun safety or climate change, BlackRock might do better to pass the decision to the ultimate owners. That calls for investment in new technology, and new habits.
U.S. is promised land for online gambling 29 Dec 2020 Wagers will be a welcome source of tax dollars across Covid-scarred America, where the potential market for web-based sports betting could be worth up to $23 bln. As watchdogs ease rules in 2021, sites such as Flutter’s FanDuel and casino groups like Caesars and MGM will get lucky.
Look out Europe: a SPAC craze is around the corner 29 Dec 2020 Such listings have been big in America but rare across the pond, where they have a bad rap. But a dearth of typical IPOs will keep investors keen. French rainmakers Xavier Niel and Matthieu Pigasse have broken the ice. Andrea Orcel, Ivan Glasenberg and others should take note.
Landlords’ post-virus refit will leave scars 29 Dec 2020 Remote working and a boom in e-commerce will force property owners to embrace a makeover. If Amazon and co buy defunct malls and offices become flats, asset values in the $33 trln market could recover. But even post-revamp they will be worth less than five years ago.
Stock rewards for all would be valued virus legacy 29 Dec 2020 Woolworths pared manager bonuses so that over 100,000 employees could get a little slice of equity in the Aussie supermarket chain. More companies should follow suit. What’s good for Silicon Valley and Wall Street is good for everyone, starting with frontline pandemic workers.
A Biden-Xi reboot will be frosty but mostly honest 29 Dec 2020 The two leaders have scant tinder with which to warm frozen ties in 2021. China-bashing is a bipartisan sport in America. Xi let nationalist trolls capture his diplomatic corps. But with status quo delusions stripped away, stabilising the economic relationship is within reach.
Corona Capital: U.S. stimulus, Japanese pain 28 Dec 2020 Concise views on the pandemic’s corporate and financial fallout: U.S. President Donald Trump climbs down and signs the coronavirus relief and spending package passed by Congress; and Japan's prime minister tries to keep the pandemic in check with a quiet New Year.
Next London, New York mayors can breathe easier 28 Dec 2020 Fuggedaboutit. That’s what the world’s two top finance centers would love to do with Covid-19. With budgetary, property and transport wounds to heal, it won’t be so easy as 2021 arrives. But after mayoral polls respectively in May and November, urban buzz should start returning.
Default wave will hit the little guy hardest 28 Dec 2020 Covid-19 has saddled companies with debts. Big groups with reserves and access to capital now look like they can ride it out. Smaller outfits won't stay afloat so easily: think local coffee shops vs. Starbucks. Governments need to get creative to help the worst-hit businesses.
Vaccine jostling calls for U.S. rethink on pay 28 Dec 2020 Amazon, Uber and Cargill are among those lobbying for their workers to get priority access. They have a solid case for saying their staff are essential. But employing a workforce that’s critical to the national interest should come with responsibilities as well as privileges.
Ant and Beijing begin delicate, dangerous dance 28 Dec 2020 Having forced the fintech giant to suspend its IPO, officials laid out demands that will curb growth. The orders are vague and allow for manoeuvre, but a forced break-up is possible. While the government needs Ant to support private firms, that’s scant comfort for investors.
Yuan internationalisation season re-opens 28 Dec 2020 The threat of U.S. dollar sanctions on Chinese banks has thrown the lacklustre use of its currency for overseas trade and investment into harsh relief. A recovering economy and rallying renminbi clear the way for reformers to liberalise further, if conservatives let them.
Christmas Eve Brexit deal is second-worst outcome 24 Dec 2020 The UK’s last-gasp agreement with the European Union avoids painful tariffs and a dangerous rupture in relations. Yet trade flows remain hostage to diverging standards. While the costs of exiting the single market will now become clear, the benefits of independence remain vague.
IPO engineers get double Christmas bonus 24 Dec 2020 A new blank-check company that could spawn another rather than starting over is no surprise after 2020’s surge in SPAC activity. Meanwhile watchdogs have approved the raising of capital alongside so-called direct listings. The menu of options for going public is getting longer.
Data centres will become green activists’ target 24 Dec 2020 Server farms and networks each use around 1% of the world’s electricity – more, for now, than electric vehicles. That could hit double-digits by 2030 thanks to 5G and other trends, making related emissions a problem. Poor disclosures put Amazon and peers in ESG investors’ sights.