Didi’s vertical integration strategy distracts 9 Jun 2022 The ride-hailing giant may buy a stake in Sinomach’s electric vehicle unit. Didi’s $5 bln cash pile, plus its data and technology, could revive the struggling state firm, which until recently focused on importing cars, not making them. It can’t help rebuild Didi’s core business.
New York hybrid working woe, Toshiba’s options 9 Jun 2022 The work from home revolution looks here to stay with nearly 80% of surveyed employers accepting it as the new norm. In this Viewsroom podcast, Breakingviews columnists discuss how this will be painful for office landlords. Plus, the $22 bln Japanese company’s mysterious future.
Boots deal will add to Reliance’s retail black box 9 Jun 2022 The Indian conglomerate submitted a binding bid for Walgreens’ UK pharmacy chain in a consortium with Apollo. It’s a big pivot for Mukesh Ambani. Opacity around his retail expansion and a determination to win at all costs are a worry. Bulking up will make things worse.
Crypto smackdown does more harm than good 8 Jun 2022 The SEC wants firms that safeguard digital assets to mark that risk on their balance sheets. That means certain lenders may have to hold more capital against crypto. Though guardrails are useful, the measure could shut out banks like Goldman and incentivize more shadowy businesses.
EU women-on-boards plan only scratches the surface 8 Jun 2022 The bloc wants listed companies to reserve 40% of non-executive director roles for females. That’s lame, when 60% of graduates are women. And groups with diverse boards tend to deliver higher returns. It’s time for the EU to set a target for full gender parity in the boardroom.
Capital Calls: Fertilizer woes plant seed of doubt 8 Jun 2022 Concise views on global finance: Scotts Miracle-Gro’s profit warning nods to wide effect of commodities price surge.
Europe’s energy subsidies help Putin and pollution 8 Jun 2022 EU leaders are trying to cushion the blow of rocketing energy bills. But keeping a lid on gas prices encourages consumption, which enriches Russia and hinders decarbonisation. Better focus public support on poorer households, and push harder on energy efficiency.
ECB’s farewell to QE may prove premature 8 Jun 2022 The European Central Bank may on Thursday confirm plans to end its 3 trln euro asset purchase programme and raise rates in July. Weaker economies’ borrowing costs are already soaring. A mere hint that bond-buying could resume if yields jump may not be enough to keep markets calm.
Starbucks has talked itself into a China corner 8 Jun 2022 The $91 bln coffee maker’s “second home market” routinely disappoints, and lockdowns aren’t helping. At this point, it’s not obvious a spinoff would create value. The better path would be to slow expansion and focus on profit, but it’d be a tough move after overselling growth.
Chinese movie industry screens business tragedy 8 Jun 2022 Box office takings touched a 10-year low during the recent holiday weekend. While China overtook the U.S. market during the pandemic, in absolute terms it’s contracting, a trend reflected in share prices for companies like IMAX China. The damage could be permanent.
Target joins the growing bad forecasters’ club 7 Jun 2022 The U.S. retailer should be an expert in what shoppers want. Instead, it’s saddled with an excess of unsold goods, as is rival Walmart. They’re not alone: Banks also misjudged customers’ behavior. But it’s better to be stuck with too much cash than unwanted TVs and toasters.
Apple’s reveal party glosses over bigger shifts 7 Jun 2022 The iPhone maker’s developer conference can bring major product drops. This year’s announcements, like buy-now-pay-later and medication tracking features, barely move the needle. What will, though, is Apple’s quiet creep into advertising, percolating beneath the surface.
LME’s best hope is to pay up, then shape up 7 Jun 2022 Elliott Management is suing the London Metal Exchange for voided nickel trades. If it wins its judicial review, the LME could take a flood of further legal blows. Its Hong Kong owner’s best defence may be to pre-emptively compensate angry traders, whilst rebooting governance.
Capital Calls: China and Australian coal 7 Jun 2022 Concise views on global finance: Chinese coal miner Yankuang Energy may have to increase its offer to Yancoal Australia’s minority shareholders.
Wounded PM leaves UK economy in painful limbo 7 Jun 2022 Boris Johnson remains in office even though 41% of his party’s lawmakers voted to oust him. His fragile position, and probable attempts to win back public support, will add to existing economic uncertainty. It’s another reason for companies and investors to look elsewhere.
Chinese property crisis drives derivative rethink 7 Jun 2022 Beijing has helped some private developers with bond issues by letting them offer protection via tools like credit risk mitigation warrants. So far it’s symbolic and over-reliant on reluctant state banks. If private money can be wooed, however, the market could finally take off.
Casino SPAC is for hardened gamblers only 7 Jun 2022 A legal battle over Okada Manila resort turned physical when its ousted boss seized the property last week. That could scupper its $2.7 bln deal with a U.S. blank-cheque firm. But unfriendly politicians, dubious financial reports and more stack the odds against investors, too.
Terms don’t kill deals, people do 6 Jun 2022 Thoma Bravo and Anaplan have renegotiated their transaction. Elon Musk officially threatened to back out of his $44 bln buyout of Twitter. Nervous markets make mergers less likely to close. The strength of agreements matters less than the fortitude of directors hashing out deals.
New York has a towering hybrid work problem 6 Jun 2022 Only four in 10 Manhattan-based workers are in the office on any given day, and vacancy rates are twice the historical average. Some big tenants are downsizing. If hybrid work trends stick, landlords already wrestling with inflation could wind up with 40% fewer desk-jockeys.
Hydrogen IPO finds rare pocket of market optimism 6 Jun 2022 Italy’s De Nora, which makes components to produce a green variety of the gas, is seeking a June listing. That’s bold after choppy markets deflated other high-flying upstarts. Tapping into Europe’s drive to end its fossil-fuel dependency will help pump up a 5 bln euro valuation.
EU banks’ fading growth hopes imply more cost cuts 6 Jun 2022 After more than a decade of austerity, lenders like BNP and Deutsche are now betting on rising revenue to deliver adequate shareholder returns. A lacklustre economy could scupper that. To hit their targets, banks may have to slice into technology budgets and branch networks.
Guest view: Global hunger fight means no biofuel 6 Jun 2022 Food supplies have shifted rapidly from surplus to shortage. Sarasin’s Henry Boucher argues Western governments have a way to stop prices spiralling further. It entails prioritising food over fuel, and scrapping states’ biofuel mandates.
Capital Calls: JetBlue makes winning Spirit hurt 6 Jun 2022 Concise views on global finance: The hostile bidder has offered cash up-front for Spirit shareholders, which could force current suitor Frontier to make costly concessions.
Toshiba’s big vision may have micro timetable 6 Jun 2022 New boss Taro Shimada wants to de-silo the $19 bln group and focus on data to lift soggy margins. A top line target of 5% growth – levels not met in a decade-plus – underscores the ambition. Yet with a sale process underway, his plans may remain just part of an iterative process.
Tesla’s pole position is a blessing, then a curse 3 Jun 2022 Boss Elon Musk wants to cut 10% of the $735 bln automaker’s workforce, even as peers ramp investments. Tesla, unencumbered by a gas-guzzler business, outmaneuvered older rivals to dominate EVs. But not having a legacy business to fall back on means it is more vulnerable, too.
Tech convertible boom was a tax on the gullible 3 Jun 2022 Fast-growing firms including Affirm, DraftKings and MicroStrategy issued $100 bln of zero-coupon convertible debt over the past couple of years. Holders get no interest, taking instead an option that’s now in many cases near worthless. Some may not even recoup their principal.
GM draws target on Tesla with EV price cut 2 Jun 2022 Elon Musk’s carmaker stepped back from an ultra-low cost vehicle. But with GM slashing the price on its Bolt, the Detroit automaker has made a big move. Now GM can use its low sticker price to grab market share. It has little to lose – except for cash, which eventually runs out.
Big four breakup plan, America’s big spenders 2 Jun 2022 EY is considering splitting its audit unit from its fast-growing consulting practice. In this Viewsroom podcast, Breakingviews columnists debate a possible $60 bln valuation and why the plan may create few winners. Also, inflation is creating a murky economic picture stateside.
Glencore rebuff sets up less noxious coal deal 2 Jun 2022 The trader calls a Chinese offer for the 38% of Aussie miner Yancoal it doesn’t own “unacceptable”. That’s an understatement. It’s a deeply discounted deal offering payment via a convertible bond. Political risk looms large too, but Yankuang has to make the financials less toxic.
Global cracks complicate West’s energy transition 2 Jun 2022 Modern civilisation is built on fossil fuels. If past shifts are a guide, switching to renewable energy will take decades, says Edward Chancellor. Conflict with Russia and tensions with China make this harder. The West faces a choice between decarbonisation or deglobalisation.