Aussie bank overhaul gets fat reality check 1 Nov 2021 Shareholders took $4.6 bln off Westpac’s market value after high costs and income pressure hurt its earnings. A stock buyback did little to soften the blow. The reaction is a warning to boss Peter King to up his turnaround game and prioritise profitability over market share.
Crypto is next fintech battle for India’s Gen Z 1 Nov 2021 CoinSwitch Kuber makes buying and trading bitcoin and ethereum easier than ordering a pizza. The $2 bln Coinbase-backed group is rapidly luring users who are new to financial investing. It’s a dicey path to building the next super-app, even if demographics are on its side.
Capital Calls: Microsoft vs. Apple, U.S. consumers 29 Oct 2021 Concise views on global finance: The software giant overtakes the iPhone maker to become the world’s most valuable company at $2.5 trln. Meanwhile, slower U.S. consumer spending in September is likely to be temporary; inventory glitches are bigger problem for Apple, Amazon.
Silicon Valley can’t slice and dice lower returns 29 Oct 2021 Veteran Sequoia is ditching its traditional VC model in favor of allowing the fund to hold assets indefinitely. It’s an effort to stay competitive as SPACs and others bid up unicorns. But extraordinary valuations and founders with the catbird seat can’t be papered over.
Deal crackdowns boost buyers without baggage 29 Oct 2021 U.S. merger watchdog Lina Khan is stepping up promises to thwart serial acquirers’ deal ambitions. What’s bad for the industry titans in the crosshairs, though, could be a boon for buyout barons and lawyers dreaming up novel ways to deal with the roadblocks.
Exxon is the stock investors will hate to love 29 Oct 2021 Like its peer Chevron, the U.S. oil giant has been blunt about its commitment to fossil fuels. A 60% jump in sales last quarter shows that paid off. With fewer drillers to feed returning demand, and crude above $80 a barrel, the companies are well placed for a mini-comeback.
Agnelli insurance bonus is asset-inflation victim 29 Oct 2021 The Italian clan revived a $9 bln sale of PartnerRe to Covéa at the same price as last year’s failed deal. But the French group is paying a lower premium for the reinsurer’s assets. Meanwhile, pumped-up valuations of potential targets mean the Agnellis’ windfall will go less far.
European banks’ bad-debt nerves outlive lockdowns 29 Oct 2021 Britain’s NatWest is retaining a chunk of the 3 bln pound dud credit buffer it built up last year. It’s a similar story for BNP Paribas and Santander. With global shortages denting growth, pushing up prices and potentially lifting interest rates, a careful approach is wise.
Nomura deal skeletons leap from tomb for Halloween 29 Oct 2021 Japan’s biggest investment bank is trying to move on from its $2.9 bln Archegos mess. Yet ancient transactions just came back to life to suck last quarter’s profit nearly dry. Buybacks and belated risk management upgrades are unlikely to soothe frightened shareholders.
China’s Li Ning risks running too far off trail 29 Oct 2021 The $28 bln sportswear maker is raising $1.3 bln to capitalise on a stock rally partly fuelled by nationalistic Gen Z. International expansion and brand-building are among the targeted uses for the money. It might get more bang for the buck by beefing up a small R&D budget.
Macquarie’s green gloss will struggle to shine 29 Oct 2021 The Australian financial powerhouse has cut its dividend and is raising A$1.5 bln in equity. Such steps often signal caution, but in this case the sensible idea is to invest, not least in renewables. With a valuation sitting at 3 times book value, however, expectations are high.
Facebook rebrand more Altria than Alphabet 28 Oct 2021 The tech giant will call itself Meta, to reflect Mark Zuckerberg’s focus on creating a “metaverse” blending immersive virtual experiences with reality. Delivering the many technologies needed may take decades. For today, the rebrand just applies gauze to a tarnished name.
Amazon’s secret weapon: Gen Z 28 Oct 2021 The e-commerce giant is becoming a bigger marketing threat to Google and Facebook. Quarterly ad sales grew by 50%, while attracting plenty of teenage and young adult shoppers. That augurs a promising future. It also makes social issues like worker treatment even more important.
Brookfield pays less than jackpot in lotto deal 28 Oct 2021 Scientific Games is selling its lottery business to the asset manager for $6 billion. The price looks good, even if a bid to list the unit in Australia may have left some dreaming of more. Yet the $9 bln parent’s stock tanked 13%. Bullish markets create demanding shareholders.
Biden faces legacy of widening wealth gap 28 Oct 2021 Billionaires like Tesla boss Elon Musk will feel only slight pain from a Democratic tax plan. Fights in the U.S. president’s political party also cut spending on social programs by half to $1.8 trln. It’s better than nothing but his push to create a fairer economy has failed.
ECB needs a louder megaphone to reach bond markets 28 Oct 2021 President Christine Lagarde said she won’t hike rates as soon as investors anticipate. But that didn’t change their expectations and euro zone debt yields rose. She will have to do a better job of convincing them if she is to avert an unwanted tightening in financing conditions.
T. Rowe Price makes alt the new mainstream 28 Oct 2021 The money manager’s $4.2 bln purchase of loan specialist Oak Hill Advisors gives it a perch in the hot $1 trln market for private credit. Returns in that field may come down as investors pile in or growth suffer as rates rise. But T. Rowe is being characteristically cautious.
Viewsroom: Soccer, steel and the COP; Andrea Orcel 28 Oct 2021 As world leaders and corporate chieftains converge on Glasgow for the UN climate powwow, Rob Cox and George Hay talk about one European steel town's struggle to transition from hydrocarbons to a green new era. And Lisa Jucca discusses the latest on UniCredit’s M&A options.
Apple has the most growth fuel in hand 28 Oct 2021 The $2.5 trln iPhone maker spends much less of its revenue on R&D than its Big Tech peers. Boss Tim Cook not only keeps organic growth efficient, he also avoids splurging on M&A. Investment is edging upward, but the spare capacity is one reason Apple looks relatively cheap.
Shell’s Loeb parry uses cash, capex and chutzpah 28 Oct 2021 The $190 bln oil major needs to deflect activist Third Point’s call to split itself up. High crude prices make it easier to promise fat cash returns and invest more in green energy. Given Shell should have done that anyway, fending off Dan Loeb also requires a certain brass neck.
Lloyds’ capital cannon is best aimed at investors 28 Oct 2021 New CEO Charlie Nunn is plotting a revamp of Britain’s largest lender. He may be tempted to use the bank’s 4.6 bln pounds of spare capital to bulk up in wealth management or insurance. His group’s low valuation suggests investors would rather have the money themselves.
Stellantis has chance to close in on Volkswagen 28 Oct 2021 Hit by a chip shortage, quarterly sales at the Jeep maker fell harder than at the $140 bln German giant. But its operating margin is better, and boss Carlos Tavares is tackling a weakness in battery electric cars. That should help Stellantis narrow a valuation gap with its rival.
Sudan coup throws rock into choppy Nile waters 28 Oct 2021 The army has seized power in Khartoum, pushing it back into diplomatic isolation. Sudan and Egypt had existing gripes with Ethiopia over the damming of the mighty river. Removing Khartoum’s veneer of civilian rule risks future spats over Nile water use spiralling into conflict.
Sony seizes best of hardware and software worlds 28 Oct 2021 Sales of PlayStation consoles and other consumer electronics helped power quarterly sales to $21 bln. Games, music and movies shone too, as boss Kenichiro Yoshida doubles down on content. Even better for investors, a more cohesive strategy linking the different units is emerging.
Capital Calls: Aussie climate plan stumbles 28 Oct 2021 Concise views on global finance: The federal government won’t sign a pledge to reduce methane emissions.
Ford shareholders hit the accelerator too hard 28 Oct 2021 The $61 bln carmaker reinstated its dividend, boosted its earnings outlook and even overtook GM by revenue. That’s all good news, but doesn’t justify the after-hours share rally that widened the valuation gap with its larger rival. Ford is still losing the profit margin race.
Dan Loeb is oversimplifying Shell’s long game 27 Oct 2021 The activist wants the $190 bln Dutch oil giant to break up. That makes sense in theory from a valuation and capital allocation standpoint. But separating out fossil-fuel cash flows from greener energy risks starving Shell's planned transition of the funding it needs.
Rogers board fight puts public shareholders last 27 Oct 2021 A squabble over who is running Canada’s largest wireless carrier is the latest intrigue in an industry defined by dynastic politicking. While it makes for good drama, Canada’s family-controlled telecom giants have helped create a market that is among the world’s most expensive.
Rishi Sunak bets on Goldilocks economy 27 Oct 2021 The UK finance minister is relying on tax hikes and an economic rebound to spend more while shrinking the budget deficit to 3.3% of GDP in the next fiscal year. Hopes of pre-election giveaways hinge on easing supply disruptions, lower inflation and solid growth. It’s a long shot.
Deutsche may score hollow win on turnaround goals 27 Oct 2021 CEO Christian Sewing is generating enough revenue to hit his all-important 8% return on tangible equity target next year. If he succeeds, it’ll be thanks to the markets frenzy boosting his investment bank. Sustaining those returns, let alone raising them, will be a challenge.