China’s mega-banks are priced for total disaster 1 Sep 2022 Economic stress is trickling into the country’s four giant lenders, sitting on roughly $20 trln of assets. Yet profits are decent and buffers intact. Their policy role terrifies investors, so they trade at half book value or worse. That makes them un-investable, or rather cheap.
Thoma Bravo is teacher’s pet, for now 31 Aug 2022 The buyout firm looks to have more than tripled its investment in a school software firm partly because it sold to a strategic buyer at a very high multiple. That valuation might help explain other aggressive tech LBOs. But for Thoma, and others, it’s more likely a one-off.
Biden’s buyback tax shows who really runs America 31 Aug 2022 Companies prefer buying back shares to paying dividends, and still will after a $74 bln levy on repurchases kicks in. Although it throws grit in the wheels, the wrinkles that save a minority of investors billions of dollars in tax remain intact, as do more egregious loopholes.
Gorbachev’s bold political plan had economic flaw 31 Aug 2022 The former Soviet leader, who died aged 91, ended the Cold War and launched a liberalisation that brought the USSR to an end. But despite seeing the defects of Communism, he failed to reform Russia’s economy. The result is a country very different from the one he envisaged.
Capital Calls: Saipem’s new CEO 31 Aug 2022 Concise views on global finance: The hard-hit Italian energy services company appointed Eni veteran Alessandro Puliti as chief executive.
China’s BYD can navigate a Buffett selldown 31 Aug 2022 The Shenzhen electric-car maker’s shares fell more than 10% after the billionaire offloaded a sliver of his $7.5 bln stake. Fears of further sales are weighing on the company’s stock. But BYD is enjoying a stellar run as vertical integration and a daring move upmarket pay off.
Climate both dries and drowns case for hydropower 31 Aug 2022 The IEA and others reckon hitting net zero requires doubling the energy source’s output. But aridity from China to the Americas highlights a big vulnerability. Flood risk is even more widespread. Add environmental degradation and hydropower is often more trouble than it’s worth.
Global economy can thank U.S. consumers 30 Aug 2022 After the 2008 financial crisis, China helped prop up the world. Now, it’s the United States doing the heavy lifting. Despite lockdowns and war, shoppers are buying more foreign goods while booming visits to Europe propel travel close to the sector’s 10% global GDP contribution.
Musk blasts tech bro club at his own risk 30 Aug 2022 The Tesla boss has enlisted a whistleblower complaint in a new effort to ditch his $44 bln deal with Twitter. That complicates matters for the social network. But by dragging Silicon Valley buds into the mess, he puts future funding on the line.
Capital Calls: Uniper’s credit request 30 Aug 2022 Concise views on global finance: the German utility asks for a 4 billion euro credit line just weeks after securing a 15 billion euro bailout. But with gas demand easing and a German government levy on consumers yet to go into force, Uniper’s situation may improve.
UK tax cut drive has narrow path to avoid big mess 30 Aug 2022 Candidates to replace Prime Minister Boris Johnson are debating lowering levies by up to 30 bln pounds. Inflation may help by raising tax revenue faster than spending. But future receipts are uncertain, and a likely energy bailout will add to the burden. It’s an ill-timed gamble.
AstraZeneca’s Soriot on cures for pharma ills 30 Aug 2022 The $208 bln drugmaker’s CEO is celebrating 10 years at the helm. In this edition of the Exchange podcast, he explains why after quadrupling the company’s share price, there is more to do. He also delves into Chinese competition and the consequences of caps on U.S. drug prices.
Big American dreams mark peak China e-commerce 30 Aug 2022 Shares of Alibaba challenger Pinduoduo jumped 15% after smashing earnings expectations. It is doing well chasing down its rival but the company’s march to U.S. shores, inspired by the success of mysterious fast-fashion retailer Shein, is a telling sign of a limited runway at home.
India’s Reliance is too richly dressed to impress 30 Aug 2022 The $220 bln energy-to-retail conglomerate’s annual meeting was missing its usual wow factor. The cool market reaction underscores a new risk for boss Mukesh Ambani: shareholders are expecting a near perfect delivery on the company’s ambitious transformation plans.
Zendesk’s deal ping-pong favors caution 29 Aug 2022 Hedge fund Light Street is using Icahn-esque tactics to fight the software maker’s $10 bln LBO. It’s pitched as a way for public investors to take part in a turnaround. But financing, governance, growth, and cost uncertainty make the plans look like a pipe dream.
Moderna patent fight about feathers, not goose 29 Aug 2022 The $53 bln biotech firm says Pfizer’s Covid-19 vaccine uses its intellectual property. The drug may bring in $30 bln this year, so it’s potentially a giant suit. Moderna’s direct claim is probably tiny. But mRNA technology is its lifeblood and worth fighting to protect.
IT spending slowdown will program Indian shakeout 29 Aug 2022 Global corporate giants will start investing selectively on tech services as the economy slows. But providers across the industry from Infosys and Wipro are struggling to retain staff and to increase charges for more advanced work. Pandemic-induced valuations are ripe to topple.
Audit deal will leave traders with China dregs 29 Aug 2022 Beijing has conceded to U.S. demands which could let $1.5 trln of New York equities skip delisting. If the accord holds, the companies Chinese officials are likely to let cooperate will have no strategic importance. Most of the ones that stay will be very risky, boring, or both.
Powell gives markets tough medicine they needed 26 Aug 2022 The Fed chair’s Jackson Hole speech came with a blunt message: The U.S. central bank will tame inflation by hook or by crook. That’s a dose of reality for investors searching for dovishness. It’s convincing households and businesses that really matters now.
TikTok wannabes dance out of step 26 Aug 2022 Amazon is joining the race to copy the app’s popular short-video format. Influencer Kim Kardashian gave Instagram’s effort a thumbs-down. Acquisitions work best when chasing new audiences, but trustbusters have narrowed that option. Wooing users with aped features is far harder.
UK M&A machine meets a fitting end in $6 bln deal 26 Aug 2022 Software group Micro Focus International is selling itself to Canada’s OpenText. The cost-slashing logic follows the British firm’s playbook, which delivered mixed results. In spite of a hefty premium, the reasonable purchase price gives the buyer a good chance of making money.
KKR’s $14 bln Aussie deal is not quite deceased 26 Aug 2022 A consortium led by the U.S. private equity firm has made two offers for Ramsey Health Care. One has been rescinded by the buyers, the other rejected by the target, putting any deal in limbo. Yet both sides can still reach an agreement, provided KKR further opens its wallet.
It’s time to worry about Greece again 26 Aug 2022 A bugging scandal threatens Prime Minister Kyriakos Mitsotakis’ government and renewed political instability. It’s not a re-run of the Grexit crisis. But the country’s high deficit and debt are a cause for concern when interest rates and energy prices are rising, says Hugo Dixon.
Capital Calls: Electronic Arts’ M&A game 26 Aug 2022 Concise views on global finance: The publisher of the popular FIFA franchise is an attractive target but few buyers may be on the board.
China-U.S. audit deal success is a long way off 26 Aug 2022 Officials may be close to allowing Americans to inspect mainland audit files in Hong Kong, per media reports. New York-listed Alibaba and peers jumped on hopes they can remain listed. Yet a successful accord will need a level of cooperation not seen in 15 years of wrangling.
Powell’s inflationary wrong could turn out right 25 Aug 2022 The Fed chief’s upcoming speech at Jackson Hole may skew hawkish, to make up for him dismissing rising prices too readily at last year’s confab. His mistake, though, protected the U.S. economy from rate hikes that would have hurt growth. By being late, the Fed may do less harm.
Private jet crackdown is idea that could fly 25 Aug 2022 The French government is mulling clamping down on corporate flights, on both environmental and societal grounds. Whether it imposes punitive taxes or strict restrictions, the plan has few obvious downsides. It would be even more effective if other European countries hop aboard.
Cinemas’ debt horror show compels a director’s cut 25 Aug 2022 Regal owner Cineworld is prepping to file for bankruptcy. Punters are slowly returning to theatres, but studios are taking their time to release “Top Gun”-style blockbusters. With less income and rising wage costs there need to be fewer screens, and fewer operators.
Capital Calls: Amazon’s green coupons, Peloton 25 Aug 2022 Concise views on global finance: The internet giant’s promise to try green hydrogen technology is valuable to firms like Plug Power, so Amazon demands a taste. Investors in the exercise-bike maker suffer a rapid descent after dismal fourth-quarter earnings.
Nio’s affordable cars carry luxury baggage 25 Aug 2022 Founder William Li is rolling China’s $32 bln electric-vehicle maker into the mass-market. It will be tempting to hitch cheaper products with premium services like battery-swapping to win market share. A similar strategy has served him well so far, but risks driving up costs.