ByteDance’s lukewarm 2021 presages a bleak 2022 21 Jan 2022 TikTok’s owner grew annual sales 70% to $58 bln. That’s slower than the previous year and is mostly from its home market. An advertising slowdown will further bite, while China’s crackdowns in education and video games have foiled nascent bets. Finding new growth will be hard.
U.S. relisting for Luckin would be hard to swallow 21 Jan 2022 China’s would-be challenger to Starbucks may be plotting a market comeback after $300 mln in fake sales got it booted from Nasdaq. It has restructured and is moving towards profitability, but otherwise is covered with red flags. Even floating on a local bourse would be ambitious.
Incompetence and greed fuel U.S. airline 5G battle 20 Jan 2022 Major airlines said a rollout of 5G could make flights dangerous. Airlines, wireless firms, and government agencies had over a year to solve the problem. The weakened air industry may not want extra costs. But other countries figured it out while U.S. taxpayers are left hanging.
Netflix could be Activision’s Plan B 20 Jan 2022 Microsoft’s $69 bln bid for the “Call of Duty” maker may fall foul of trustbusters – and the same issue could deter other tech firms like Alphabet and Meta Platforms. That creates an opening for Netflix. Activision could neatly further the streaming giant’s video game ambitions.
Ukraine sabre-rattling hits Russian bank investors 20 Jan 2022 If President Vladimir Putin invades, the United States has vowed to punish the country’s lenders. Sberbank and VTB don’t need foreign funding and can count on state support. Yet tumbling stocks this year show that shareholders can still get crushed by diplomatic failure.
Capital Calls: Siemens Gamesa, Psych SPAC 21 Jan 2022 Concise views on global finance: The 11 billion euro wind turbine manufacturer serves up its third profit warning in nine months; Hope for drugs to treat depression is tempered after rivals suffer mishaps.
Viewsroom: Credit Suisse chair, Unilever’s GSK bid 20 Jan 2022 As António Horta-Osório quits the Swiss lender after less than a year, Liam Proud explains what happened and offers career advice. And Unilever’s 50 bln pound offer for the pharma giant’s consumer unit puts both CEOs on the spot, say Aimee Donnellan and Dasha Afanasieva.
Rising IPO tide could lift all Gulf boats 20 Jan 2022 Riyadh, Abu Dhabi and Dubai are fighting it out to be the region’s listing venue of choice. But recent evidence suggests much greater foreign investor interest in Gulf IPOs in general than previous misfires like Aramco. The competitive tension may wind up being good for everyone.
China reluctantly gives property market a break 20 Jan 2022 Beijing will let stressed real estate developers tap escrowed pre-payments, building on surprise cuts to interest rates and fresh support for M&A. It’s an imperfect, partial solution to a worsening problem, but the tough official deleveraging stance is softening by necessity.
New England chooses expensive dirty power 19 Jan 2022 Like Japan, the area has shut down nuclear plants and is relying more on gas, wind and solar. But unwillingness to build pipelines and upgrade electric transmission creates a system that is costlier, dirtier, and potentially more unstable than need be.
Fed rate feast leaves crumbs for bank customers 19 Jan 2022 Big U.S. lenders like JPMorgan are readying for an inflow of interest income as the central bank puts up rates. But the amount they pass to depositors is likely to be even more paltry than in past cycles. Competition from upstarts like SoFi may improve service but not returns.
GSK consumer fiasco leaves Unilever vulnerable 19 Jan 2022 The Dove maker ruled out raising its 50 bln pound bid for the pharma group’s toothpaste unit. Investors will be relieved CEO Alan Jope isn’t overpaying. But he’s now stuck with a food portfolio he’s clearly not happy with. His rash strategy will increase pressure for a breakup.
Morgan Stanley’s $10 trln target leads to another 19 Jan 2022 That’s how much client money James Gorman wants his firm to manage in the future, more than 50% greater than today. If Morgan Stanley can get there without lowering fees, the $170 bln Wall Street bank’s share price could be 50% higher too. It’s a fitting pre-retirement goal.
Biden’s antitrust cops turn dealmaking into improv 19 Jan 2022 U.S. watchdogs, swamped by 2021’s $5.8 trln of deals, want to rewrite the merger rule book. Plans to swap a defined framework for an amorphous “holistic” view of possible harms could make deals rarer and more expensive, even if courts that truly decide their fate aren’t on board.
Imperfect UK energy fix would still kill two birds 19 Jan 2022 Finance minister Rishi Sunak faces pressure to help consumers with high power bills without busting the budget. The least-bad plan would spread energy costs over some years. By curbing price pressures, he will also limit inflation-linked bond payouts and public sector pay hikes.
GSK’s consumer promise will be hard to live up to 19 Jan 2022 The drugmaker’s CEO Emma Walmsley rebuffed Unilever’s 50 bln pound bid for its personal health unit. Yet her plan to spin the division off would need rosy sales growth and a premium valuation to trump the Marmite maker’s offer. It’s a risk some investors may be prepared to take.
Christine Lagarde will win rate rise timing tussle 19 Jan 2022 Money markets imply the European Central Bank will hike twice this year, even though its boss says policy tightening is unlikely in 2022. She will have to work hard to convince markets, but reason is on her side. Wage pressures are less evident in the euro zone than in America.
Capital Calls: Activist investors, P&G, Rivian 19 Jan 2022 Concise views on global finance: Underperforming UK stocks lure cage-rattling shareholders to London; sickness and germaphobia boost the $380 bln company’s earnings: And Ford Motors and Amazon.com book big gains on investments in the electric carmaker as its stock tumbles.
Gaming M&A frenzy gives Europe extra powers 19 Jan 2022 U.S. giants have launched $82 bln worth of deals in a week. Creators like Ubisoft and CD Projekt may not fit Take-Two’s mobile-at-all-costs model. But Microsoft’s tilt at Activision awards bonus points to cloud gaming and original content. That plays into European gamers’ hands.
China plays lonely game of Covid whack-a-hamster 19 Jan 2022 As Hong Kong culls 2,000 of the rodents, Beijing is blaming overseas mail for spreading Omicron. Dogged devotion to Covid-zero and the resulting disruptions are becoming increasingly farcical, and costly, as the rest of the world learns to live with the virus.
Alibaba’s U.S. cloud probe has big silver lining 19 Jan 2022 Washington is examining whether the $350 bln Chinese e-commerce giant’s data-storage business poses a risk to national security. That could hobble the unit’s global ambitions. But shareholders, at least, have little to worry about yet: They already ascribe almost no value to it.
Sony brings a knife to global video-games gunfight 19 Jan 2022 Investors erased 10% of its market value after Microsoft's $69 bln swoop for Activision. The Japanese group may lose access to some content but that looks manageable for now. The bigger worry is that Sony is no match against its far-larger rival as gamers look beyond consoles.
Peninsula Hotel owner checks in for expensive stay 19 Jan 2022 Hong Kong’s Kadoorie family paid almost twice market rate to add 12% to its controlling stake in the 156 year-old chain with luxury hotels from Paris to Tokyo. With shares trading at a third of net asset value, it suggests some post-pandemic tourism plays have yet to be booked.
Microsoft’s Activision deal has on virtual goggles 18 Jan 2022 The software giant is paying $69 bln for the gaming firm, a 45% premium, though less than Activision’s value a year ago. It’s a good fit and gives Activision shareholders a way to cash out. But it is likely to catch the eyes of watchdogs, who have mostly let Microsoft skate by.
The Fed is lowballing the path of interest rates 18 Jan 2022 Pundits love to guess when Chair Jay Powell will tighten monetary policy. But that matters less than where rates end up. Most Fed officials think this so-called terminal rate is around 2.5%. Given higher inflation, that’s probably too low. Markets are starting to realise that.
Goldman Sachs goes back to the balance sheet 18 Jan 2022 The Wall Street firm’s trading and advisory fees hit a record in 2021, but momentum is fading. Goldman’s newer banking arm, which lends to consumers via credit cards and installment loans, should pick up as interest rates rise. But with lots of rivals, growth isn't coming cheap.
Larry Fink’s pragmatism is awkward but lucrative 18 Jan 2022 The BlackRock CEO rejected criticisms that stakeholder capitalism is “woke”, while backing natural gas. The danger for Fink is that he occupies a no man’s land position on culture war hot topics. His consolation is that $10 trln of assets suggest investors are down with that.
Capital Calls: Dan Loeb’s gadfly circles again 18 Jan 2022 Concise views on global finance: The U.S. activist’s activists up the ante with call for independent director.
How António Horta-Osório can bounce back (again) 18 Jan 2022 The tennis-loving Credit Suisse chair resigned after flouting quarantine rules. He’s survived a past personal scandal and is one of a small number of Europeans with a strong track record of running a big bank. Breakingviews imagines some advice from an optimistic headhunter.
Demographic flatline will test China’s generosity 18 Jan 2022 The population may have peaked in 2021, far earlier than expected. Beijing might prefer to continue to tackle root causes including high living costs, but a desire to prop up the economy in a key political year makes less disruptive, clumsy fixes like cash subsidies practical.