UBS’s growth dip cements discount to U.S. rivals 26 Jul 2022 Shares in Ralph Hamers’ $50 bln bank fell 6% after wealthy clients all but stopped investing new money in the second quarter. It’s a setback for his strategy, which rests on boosting revenue. Reversing the trend is key to earning a valuation multiple closer to Morgan Stanley’s.
Unilever’s price-hike gamble pays off, for now 26 Jul 2022 The $120 bln maker of Knorr stock cubes lifted its guidance for sales growth after beating analyst forecasts. CEO Alan Jope is getting ahead on price rises. But with 2022 profitability at the bottom of his guide range and volumes falling, he can’t afford further inflation shocks.
Capital Calls: Shopify’s mea culpa 26 Jul 2022 Concise views on global finance: A memo from the e-commerce company’s CEO spells out how they miscalculated the "new normal."
Hard tech fad leaves Chinese apps out in the cold 26 Jul 2022 Tencent-backed Soulgate is among the country's startups rushing to list in Hong Kong as investors pile into chips and robotics. Ballooning losses at the $2 bln social network will be a tough sell. For larger peers like TikTok-owner ByteDance, the clock to go public is ticking.
Walmart’s pain will be problem shared widely 26 Jul 2022 The giant grocer lost about 10%, or $35 bln, of its market value after saying it would need to slash prices as customers rethink how to spend. The decline suggests more than just a fallow year. If the mighty retailer didn’t see this coming, there’s scant hope for smaller peers.
Moelis’ crypto foray is a bottom-ticking flier 25 Jul 2022 Investment banks often launch advisory initiatives at the top of hot markets. The boutique led by Ken Moelis is instead pushing into blockchain as the market is imploding. The business looks ripe for consolidation. If Moelis culls market share, it may have cracked a new model.
Tech investors may be overvaluing moats 25 Jul 2022 Meta and Netflix valuations have been pounded, but Microsoft and Apple are holding up, relatively speaking, partly because they are less vulnerable to competitors. The trouble is the latter two are now premium compared to historical prices, and their buffers aren’t unassailable.
Capital Calls: Philips disappoints again 25 Jul 2022 Concise views on global finance: Shares in the 17 bln euro Dutch medical technology group dive after handing investors another unpleasant outlook surprise.
Europe’s $6 bln space M&A is governance Death Star 25 Jul 2022 France’s Eutelsat and Britain’s OneWeb may merge to pool the cost of new broadband satellites. It de-risks things for UK shareholders, including the state, but Eutelsat investors hate it. Reconciling the interests of two governments and financial backers looks a thankless task.
Global food crisis demands urgent Western response 25 Jul 2022 Russia’s invasion of Ukraine has pushed up food and energy costs around the globe. The most urgent problems are in poorer countries, write William Rhodes and Stuart Mackintosh. Rich nations offered insufficient help for Covid-19. International bodies can do better this time.
Evergrande gives Beijing another reason to step in 25 Jul 2022 The developer’s CEO resigned after a probe found he helped divert funds from a subsidiary. This puts a restructuring plan for $19 bln of offshore bonds at risk. Authorities grappling with a widening property crisis now have more incentive to intervene directly in Evergrande.
China gives Zurich exchange a financial panda 25 Jul 2022 Four companies from the People's Republic are seeking to raise $2.4 bln via a new link with the Swiss hub. With U.S. regulators ready to delist Chinese firms, Beijing is expanding European bourse tie-ups. As with London, there will be fanfare, but trading volumes will stay caged.
VW’s CEO ouster heralds less noise, more muddle 25 Jul 2022 The $86 bln carmaker replaced Herbert Diess with Oliver Blume. It loses a bold champion of electric vehicles, but also one prone to gaffes and weakened by union battles. The decision to keep Blume in charge of both VW and Porsche, meanwhile, muddies the latter’s looming IPO.
Berlin spreads pain in 15 bln euro Uniper bailout 22 Jul 2022 That’s how much equity and debt the government may pump into the gas importer driven to near-bankruptcy by reduced Russian supplies. Diluted shareholders, Finnish owner Fortum, and German taxpayers will share the burden. So will consumers who will pay higher prices for gas.
Russian grain deal gives food crisis a partial fix 22 Jul 2022 Moscow has agreed to lift a blockade on 20 mln tonnes of Ukrainian grain. That should reduce the scale of a Middle East food crisis, and ease prices which remain high versus 2021. Still, Russia could always renege on the new deal.
Twitter and Snap could be M&A birds of a feather 22 Jul 2022 Both social networks are luring new users, but each is too small to go to the mat with Alphabet or Meta over advertisers, who will get more discerning as the economy slows. With both companies similarly valued, a merger has merit – if Twitter can tie up loose ends with Elon Musk.
Gary Gensler has set the SEC on a perilous path 22 Jul 2022 The chair of the U.S. securities regulator has swamped companies with proposals, cut public comment periods and circumvented processes. That makes him more productive than other watchdogs. But after Gensler, it will be easier for future SEC bosses to play fast and loose too.
Review: Lex Greensill epitomised post-2008 finance 22 Jul 2022 The Australian’s firm was one of many loosely regulated shadow banks that sprang up after the last crisis. Duncan Mavin’s “The Pyramid of Lies” explains how Greensill duped big lenders, investors and politicians. As interest rates rise, he’s unlikely to be the last failure.
Russia’s macro health hides chronic deficiencies 22 Jul 2022 Oil and gas exports and lower imports mean the rouble is strong, and GDP hasn’t yet collapsed. But longer term, Moscow needs to aid inflation-hit consumers, and help sanctions-hit firms fill the gap left by departing Western rivals. Graft and a brain drain will make that hard.
Capital Calls: LVMH succession, Swedish Match 22 Jul 2022 Concise views on global finance: Bernard Arnault insures the luxury group against future family feuds; the oral tobacco company’s results will embolden deal resisters.
Santos throws down M&A cost-cutting gauntlet 22 Jul 2022 The $17 bln fossil-gas giant took just six months to deliver promised savings from acquiring Oil Search. That handily beats the 18-month timeframe advocated by McKinsey, and embarrasses ANZ’s six-year timetable for its Suncorp deal. CEO Kevin Gallagher has raised the synergy bar.
Amazon’s M&A random walk wanders into healthcare 21 Jul 2022 The internet giant’s biggest deals are a curious mix: Whole Foods grocery stores, the MGM film studio, and now a $3.5 bln chain of doctors’ offices. It’s not obvious they will change the $1.3 trln group’s future. But they fit founder Jeff Bezos’s love of messy experimentation.
ECB plays with fire while unspooling its hose 21 Jul 2022 President Christine Lagarde hiked interest rates by 0.5%, double the amount she flagged last month, and unveiled a vague tool to control euro zone bond yields. If monetary tightening hastens an economic slowdown, the central bank will need its new powers sooner rather than later.
Ukraine needs hard cash more than debt relief 21 Jul 2022 The war-torn country needs $9 bln a month to cover its costs. Its central bank is running out of reserves. A bond payment freeze will help, but only at the margin. Western allies need to launch a coordinated aid effort to keep the country afloat.
Fintech crash is an M&A opportunity for bold banks 21 Jul 2022 Financial technology groups like $8 bln Affirm, Klarna and Robinhood have plunged in value. Heavy losses and obstinate founders make them tough takeover targets. But lenders like Goldman Sachs could in theory run them more profitably – and boost their own growth in the process.
China’s multi-layered property crisis explained 21 Jul 2022 Homeowners in the world’s second-largest economy are refusing to pay mortgages on unbuilt homes. In this Viewsroom podcast, Breakingviews columnists describe how government deleveraging policy destabilised the sector – and President Xi Jinping’s unpalatable options for fixing it.
Real estate will defeat Beijing, again 21 Jul 2022 The campaign against property speculators was a good idea at a bad time. As with prior attempts, Chinese officials bit off more than the economy can chew. With buyers in open revolt and growth below 1%, capitulation is inevitable. The longer it takes, the more abject it will be.
Tesla investors bet on recovery and fantasy 20 Jul 2022 The electric-car leader’s 10% quarterly fall in sales reflects factory woes shared by other carmakers too. Yet with a market capitalization of $770 bln, Tesla is valued like none of its peers. The stock is buoyed by promises of a bigger revolution up boss Elon Musk’s sleeve.
Italy puts itself in a lonely, risky limbo 20 Jul 2022 Prime Minister Mario Draghi lost backing from key coalition parties in a confidence vote, likely prompting elections. The lack of a reform-minded government will hurt growth just as Italy faces a gas crisis. It also imperils its access to ECB bond buying and European Covid funds.
Climate fight can take heart from an old oil maxim 20 Jul 2022 Sages say high crude prices are their own cure. Similarly, hot weather now may avoid worse warming in future, if baking conditions at home make the West honour its pledge to finance developing states’ climate change struggle. That might get stalled net-zero plans back on track.