Hong Kong’s fate hangs on demographic fallacy 19 Feb 2021 The city’s population shrank last year for only the second time since the 1997 handover. Yet leader Carrie Lam is pushing young workers to seek jobs across the border. Her administration expects mainland Chinese immigrants will fill the gap emigrants leave. It’s a flawed thesis.
Investors can’t have GameStop cake and eat it too 18 Feb 2021 U.S. lawmakers want it both ways for consumers: cheaper trading and protection from sharp losses. Additional transparency and less game-like software from Robinhood and other trading platforms might help. But risks remain and could rise with more retail access to private markets.
Clayton’s new Apollo role is a non-spicy jalapeño 18 Feb 2021 The former SEC head is becoming lead independent director at the buyout firm, keeping an eye on sidelined founder Leon Black. In some companies, the role is used to avoid naming a separate board chair. In this case, it looks like a way of deferring the clean break Apollo needs.
JPMorgan London hire is at smart end of new trend 18 Feb 2021 Linklaters Senior Partner Charlie Jacobs is joining the U.S. group as co-head of UK investment banking. He’s the latest in a string of senior outsiders to transfer to the industry, including ex-UK Chancellor George Osborne. Lawyers are better prepared to make a successful switch.
Viewsroom: Breakingviews’ new SPAC needs a name 18 Feb 2021 Blank check mania has crossed the Atlantic, bringing with it hopes of riches for well-connected financiers, underwriters, startup founders and ordinary investors. The U.S. example, though, offers some warning signs, our columnists suggest, as they ponder a vehicle of their own.
Capital Calls: Walmart, Buffett/Chevron 18 Feb 2021 Concise views on global finance in the Covid-19 era: Walmart gets an unfair ding from investors over its latest earnings report; and the Sage of Omaha takes another bet on the profit still to be made from fossil fuels.
Credit Suisse traders give CEO strategic quandary 18 Feb 2021 The Swiss bank trailed rivals in profiting from volatile markets in 2020. Boss Thomas Gottstein may hope for a better showing post Covid-19, but Credit Suisse’s trading strengths offer limited benefits to its main wealth division. Further shrinkage looks painful but sensible.
Precision is ECB’s enemy when picking compass 18 Feb 2021 President Christine Lagarde has stressed the need for favourable borrowing conditions to justify her 1.85 trillion euro crisis response. Rate-setters will in March discuss how to measure this concept. Being too specific may backfire and limit the central bank’s wiggle room.
Facebook and Google flaunt dominance Down Under 18 Feb 2021 The social network blocked news in Australia in defiance of Canberra’s effort to make it pay publishers. The search titan’s deals with Rupert Murdoch’s empire and others may protect it from wider oversight. Government and media have only chipped off fragments of Big Tech’s clout.
Aussie banks balance above topsy-turvy economy 18 Feb 2021 ANZ is the latest of the big-four lenders to post good earnings. Australia’s pandemic management has helped, but a mix of low interest rates, underemployment and a housing boom could spell trouble down the line. They are wisely keeping higher capital buffers largely in place.
Americans support a reliable grid, in theory 17 Feb 2021 Nearly 3 million Texans are without power days after a cold snap crippled infrastructure. Free market policies and the desire to avoid oversight deserve blame. Yet California’s power isn’t great either. Reliable grids are expensive. That’s unpopular for all political persuasions.
GameStop blowback will echo “Flash Boys” response 17 Feb 2021 U.S. lawmakers will soon grill Robinhood and Citadel bosses over stock gyrations triggered by retail investors and subsequent trading restrictions. As with past scrutiny of high-frequency trading, the outcome may be some fines but little action to change how the market works.
BlackRock can push harder on climate change 17 Feb 2021 The $9 trillion asset manager will require heavy polluters to disclose their full carbon dioxide footprints and set short-term targets to cut emissions. That’s an improvement. But until BlackRock leans on index providers to up their game too, it’s not deploying all its heft.
EU support is mixed blessing for Mario Draghi 17 Feb 2021 Italy’s prime minister laid out an ambitious overhaul of the public sector and judiciary to help the euro zone economy to grow out of its debt. Europe’s $250 bln of recovery funding will help. Central bank bond-buying, however, means there’s less urgency for change.
Dyal deal hits pothole dug by uneven SPAC spoils 17 Feb 2021 The asset manager’s merger-and-go-public transaction is under legal threat from Sixth Street, an investment firm in which Dyal owns a stake and which claims it can block the tie-up. The real root of the rancor may be who wins financially in such deals and who doesn’t.
Capital Calls: Tribune, Shopify 17 Feb 2021 Concise views on global finance in the Covid-19 era: Chicago Tribune sells to a hedge fund known for stripping out newsroom costs; Shopify’s strong year doesn’t shield it from competition.
Darktrace is ultimate test of IPO risk appetite 17 Feb 2021 The cyber group’s top investor, Autonomy founder Mike Lynch, is facing U.S. extradition on fraud charges. Its top ranks are packed with his former colleagues. UBS has dropped out of the $5 bln listing. Pushing ahead despite such red flags suggests investors may pinch their noses.
Nestlé, private equity find riches in water flush 17 Feb 2021 The $325 bln group is selling U.S. brands like Poland Spring to One Rock Capital and Metropoulos for $4.3 bln. The buyers get the assets on the cheap, at just 1 times 2019 sales. But the disposal helps Nestlé CEO Mark Schneider’s green goals and protects his premium valuation.
Rio can use sunny outlook to mend leaky roof 17 Feb 2021 Jakob Stausholm’s first results benefitted from soaring iron ore prices, allowing the global miner’s new CEO to hike dividends. But he has a messy situation in Mongolia to resolve, and governance issues. Better to spend time and money fixing these than on splashy new deals.
A stripped-down BYD would run faster 17 Feb 2021 The Chinese automaker’s $3.8 bln share sale tapped a craze for electric vehicles. Yet even after a 500% rally over the last year, its Hong Kong stock looks cheap next to Nio and others. Separating battery-powered cars from other businesses could be one way to narrow the gap.
South Korea leans into wrong sort of socialism 17 Feb 2021 President Moon Jae-in is exploring a plan to encourage corporate titans such as Samsung to share pandemic profit with struggling peers. A crisis that includes soaring unemployment is a good time for bold policy. Shoring up public safety nets would be a better long-term fix.
Parental anxiety complex births $1.4 bln SPAC deal 16 Feb 2021 Baby monitor firm Owlet is listing through a blank check firm with a valuation that puts a high price on parental paranoia. Baby spending is rising, and Owlet promises to be the “digital nursery of tomorrow.” But its projections are as unrealistic as new parents’ expectations.
New Citi CEO gets $500 mln catalyst to clean house 16 Feb 2021 A judge ruled the U.S. bank can’t recoup cash it mistakenly paid creditors of Revlon. Such a big blunder is rare, but it's one more example of missteps that weigh on Citi’s valuation. For incoming boss Jane Fraser, who wants more accountability, it’s an opportunity in disguise.
Jay Powell makes life harder for Christine Lagarde 16 Feb 2021 Global bond yields are rising, partly because the Fed boss says he wants inflation to run above 2% for a while. That stance will keep short-term interest rates low and the dollar weak. All this is unhelpful for the European Central Bank chief’s fight to support euro zone growth.
Greek banking reform takes hazy turn 16 Feb 2021 On the eve of Piraeus Bank’s big recap, the head of the country’s bank bailout fund, HFSF, abruptly resigned. He had championed better corporate governance. The move overshadows welcome Greek banking improvements, including a bad debt cleanup plan and new insolvency code.
Kerry Group’s short-seller defence lacks flavour 16 Feb 2021 A sleuth of bears has accused the Irish maker of Wall’s sausages of overstating the value of acquisitions. The 19 bln euro firm dismissed the criticism and powered ahead with its shopping. But to close the valuation gap with rival Givaudan, a more transparent rebuttal is needed.
Capital Calls: Bubble alert 16 Feb 2021 Concise views on global finance in the Covid-19 era: Bitcoin burst through $50,000, and global fund managers are maximum bullish on the pace of the recovery from the pandemic.
Coal wobble flags Glencore’s green high-wire act 16 Feb 2021 The commodity giant’s EBITDA from the black stuff collapsed in 2020 to just $1.2 bln. Given his increasing climate consciousness, departing CEO Ivan Glasenberg should be happy. But it also shows the risks of a green pivot that requires coal to be used as a financing bridge.
Private equity ESG hoops are too easy to navigate 16 Feb 2021 Lower-rated companies and those controlled by buyout groups are issuing debt with interest payments linked to environmental, social or governance targets. But they’re too mild to change behaviour much. To have real teeth, their conditions need toughening up.
The Exchange: Editorial lessons from Lionel Barber 16 Feb 2021 The former Financial Times editor discusses his views on journalism in the post-Trump, post-Brexit, post-print era with Rob Cox. He also shares some of the juicier stories from his memoir, “The Powerful and the Damned,” like the time he told off Blackstone’s Steve Schwarzman.