West has some cover to ramp up Russian sanctions 24 Feb 2022 Sberbank and VTB halved after troops invaded Ukraine, suggesting Moscow’s banks and oligarchs may end up pariahs, like the Nord Stream 2 pipeline. A Russian tit-for-tat might hit European gas supplies. The one comfort is that end of winter makes it less of an immediate problem.
Putin prods planet into riskier post-pandemic funk 24 Feb 2022 The Russian president’s invasion of Ukraine exposes the limit of sanctions in deterring conflict. The soaring oil price will punch still-fragile economies as they recover from Covid-19, testing Western unity. Global markets for energy and technology face further fragmentation.
China has already won, and lost, in Ukraine 24 Feb 2022 Russia's assault embarrasses Beijing, which has perhaps inadvertently backed a foreign invasion despite its mantra of sovereign non-interference. But the war will distract the West and boost China’s leverage over a key energy supplier.
Capital Calls: Ukraine/chips, Lloyds 24 Feb 2022 Concise views on global finance: Russia’s invasion could exacerbate the semiconductor shortage; New Chief Executive Charlie Nunn wants to boost the 34 bln pound British bank’s fee income, but the bigger prize may come from rising rates.
Budweiser’s foam will be hard for ThaiBev to brew 24 Feb 2022 AB InBev’s Asian spinoff grew 2021 net profit by 76%, helped by premium pricing and a recovery in volume. The results bolster the case for its Bangkok-based rival to revive a beer IPO plan. The valuation, however, should be more sobering than Bud’s 36 times expected earnings.
Besieged Hong Kong fires loud stimulus cannon 24 Feb 2022 As daily Covid-19 infections set new records, Beijing is pressing the city to quickly curb the outbreak. But Hong Kong lacks the systems and ways required to implement China’s strict control model. The city’s $22 bln relief package attempts to balance its conflicting realities.
Goldman reminds top dogs it can do what it wants 23 Feb 2022 The Wall Street firm may confiscate stock issued to a banker who left to start a business for Walmart. Goldman has historically gone easy on employees who join big clients. But competitors are proliferating, and boss David Solomon needs a firm hand to deal with new rivals.
Canada’s trade risks go beyond bridges to America 23 Feb 2022 Trucker protests paralyzed a key border route, exposing the country’s reliance on its largest trading partner. But Canada also suffers from internal barriers between its provinces and territories. Removing those could boost the economy, if local protectionism can be overcome.
Capital Calls: Macy’s activist wins despite rebuff 23 Feb 2022 Concise views on global finance: Though the retailer rebuffed Jana Partners’ efforts to separate its e-commerce business, refocusing investors likely delivered a healthy return for the pushy shareholder.
Oil’s 1970s parallels overlook key difference 23 Feb 2022 Crude prices are nudging $100 a barrel, the highest in more than seven years. Geopolitical tensions, tight supply, and high inflation invite comparisons with 1973, when oil costs quadrupled. This time, however, OPEC is more likely to ease a crisis than exacerbate it.
New Barclays CEO has same old valuation dilemma 23 Feb 2022 C.S. Venkatakrishnan’s group trades at just two-thirds of tangible book value because investors dislike volatile investment banking. Moving resources to retail lending would make sense but may threaten trading and dealmaking. It’s the same Catch-22 old boss Jes Staley faced.
Bitcoin’s true colours shine in stampede to safety 23 Feb 2022 The cryptocurrency fell 5% as conflict in Ukraine flared, undermining the case for it to be a gold-like refuge. Even earlier, it moved too closely in synch with equities to be much use as a hedge. It comes into its own, however, as an amplifier of ups and downs in riskier assets.
China tutors brave class on corporate reinvention 23 Feb 2022 An education crackdown decimated businesses like New Oriental, which laid off 60,000 staff and reversed into a $876 mln half-year net loss. Its new ventures include e-commerce. Yet tales of extreme diversification by startups can end well in nimble corporate China.
Brookfield Aussie coal bid hits toxic smokescreens 23 Feb 2022 The asset manager and its Atlassian CEO partner’s $3.6 bln offer for AGL deserves some pushback for its scant premium and competition issues. But government scaremongering that a deal could raise energy prices throws ugly light on official resistance to the energy transition.
CalPERS offends no one with new investment chief 22 Feb 2022 That’s tough on Nicole Musicco, appointed to run the retirement fund’s nearly $500 bln of assets after an 18-month search. But it reflects politics at the California giant, not her abilities. One goal should be to nudge CalPERS toward the pension model of Musicco’s native Canada.
Hot war may get hotter through cyber battles 22 Feb 2022 Harsh Russian sanctions for invading Ukraine could cause collateral damage. As payback, Moscow may hack American energy firms and banks. U.S. agencies are shoring up cyber capabilities. But hackers only need to be lucky once, and retaliation leaves companies in the crossfire.
Minnow TV deal highlights regulatory sharks 22 Feb 2022 A fund partnering with Apollo is offering $9 bln for broadcaster Tegna. The nature of the deal and the sector’s challenges suggest antitrust shouldn’t be a problem. But a fee that ups the deal price if approval drags on shows regulatory threats abound even for innocuous mergers.
The Exchange: Why economic walls don’t work 22 Feb 2022 Presidents Donald Trump and Joe Biden both embraced barriers like tariffs as a U.S. response to technology and globalization. Former White House economic adviser Glenn Hubbard argues that such strategies will fail. But policymakers can do more to take care of those left behind.
Capital Calls: McDonald’s, Porsche 22 Feb 2022 Concise views on global finance: With a miniscule stake, activist Carl Icahn is asking for board seats at the $190 bln fast food giant over treatment of pigs; the luxury marque could be worth perhaps 85 billion euros, but may retain a complex shareholder structure.
Risk of war implies lasting Russia discount 22 Feb 2022 Groups like Sberbank plunged after President Vladimir Putin sent tanks into two Ukrainian regions, although lame European sanctions helped them recover. Even if the Kremlin leader halts his military advance, the threat of tougher penalties will linger over Russian assets.
UK insurers’ Brexit bonus carries hidden charges 22 Feb 2022 PM Boris Johnson wants to unleash an investment boom by slashing red tape for the sector. In theory, his plans could free up nearly $130 billion for green-energy projects. But regulators may impose other rules. And any added risk means insurers like L&G and Aviva raising prices.
HSBC would be unwise to fall back on the Fed 22 Feb 2022 Boss Noel Quinn reckons his mega-bank will hit its 10% return target a year early if interest rates rise as markets expect. Tighter monetary policy brings its own risks, however, and Hong Kong presents fresh problems. More self-help, including on sticky expenses, would be wise.
Vladimir Putin muscles onto central banker agendas 22 Feb 2022 Russia’s president formally ordered troops into two separatist regions of Ukraine, raising the spectre of war. As oil surges toward $100 a barrel, riskier assets are falling out of favour. Any retaliation, including sanctions, could further fuel inflationary fires.
7-Eleven clash shapes up to be Mt. Fuji moment 22 Feb 2022 Emboldened by its success in Japan, normally discreet ValueAct is publicly chiding Seven & i’s structure and governance. The $44 bln retailer has dug in after previously fending off Dan Loeb. Winning over local fund managers would help a bubbling flow of pushy investing to erupt.
Capital Calls: Worldline and Apollo’s buyout fix 21 Feb 2022 Concise views on global finance: The payments group’s sale of its terminal business to Apollo for up to 2.6 billion euros relies on preference shares to bridge the gap between buyer and seller.
Credit Suisse leak is blow to bank’s wealth appeal 21 Feb 2022 The group served human-rights abusers and sanctioned businessmen, according to reports based on client data. Most accounts have been closed, and Swiss banks are less shady than before. The risk is that rich customers no longer trust CEO Thomas Gottstein to guard their privacy.
European telco merger hopes disregard past signals 21 Feb 2022 EU watchdogs have previously blocked consolidation between mobile operators. Now executives like Vodafone boss Nick Read, urged on by activist investors and buyout firms such as KKR, are once again pushing for deals. But the case for protecting competition remains compelling.
Brookfield drafts inspired climate-deal blueprint 21 Feb 2022 The Canadian investor and Atlassian co-CEO Mike Cannon-Brookes want to buy AGL for A$5 bln and spend up to A$20 bln more to make the coal-heavy company a renewable-energy powerhouse. It’s a potent idea that others could emulate. The price to get started will be higher, however.
India Insight: Digital diplomacy builds bridges 21 Feb 2022 Open architecture underpinning the country’s booming fintech market is being adopted by Nepal and partly by Bhutan. Google also recommended it to the U.S. Fed. It’s a cheaper way to court allies than China’s Belt and Road projects. The soft power returns are valuable too.
DuPont gets the better end of a deal this time 18 Feb 2022 The chemical giant is offloading old businesses for $11 billion as it refocuses on industries like self-driving and clean energy. While the deal looks better for the seller than it does buyer Celanese, DuPont’s overall strategy adds up to an expensive bet on the future.