Target gets one thing right on CEO shelf life 7 Sep 2022 The retailer’s decision to scrap its retirement policy and keep Brian Cornell a few years longer makes sense: Target’s shares have tripled under his watch. But even great leaders can outstay their welcome. A better defense against staleness would be to focus on tenure, not age.
Tough love is best fix for energy cash crunch 7 Sep 2022 Utilities and power traders face a $1.5 trln surge in collateral demands due to swings in gas futures. The answer could be bailouts, halts in trading and collateral tweaks. Yet radical changes may increase risk. And government help, if properly priced, needn’t be a freebie.
Ping An’s HSBC campaign fails the financial test 7 Sep 2022 The Chinese insurer has doubled down on its call for the $123 bln bank to spin off its Asian unit. Doing so would put cross-border revenue at risk and raise funding costs. To make it worthwhile, the business would have to snag a premium to most regional peers. That’s unlikely.
Capital Calls: Richemont’s activist spat 7 Sep 2022 Concise views on global finance: Shareholders at the Cartier owner rejected investor Bluebell’s attempt to install former Bulgari CEO Francesco Trapani on the board.
Hong Kong seeks VIP cure for strategic ills 7 Sep 2022 Central bank boss Eddie Yue wants to lure global financiers to the city's November confab, but they’re unlikely to agree without quarantine waivers. That risks local ire, but Yue has little choice. Hong Kong is losing ground. If the elite can’t come, opportunity may go elsewhere.
Trump SPAC vote is common problem writ bigly 6 Sep 2022 Retail shareholders rarely cast ballots, even when it’s in their interest. Take the merger of Donald Trump’s media firm with a listed shell company: Investors are opting, by inaction, to swap stock trading at $25 for $10 in cash. The effects of inertia reach beyond Mar-a-Lago.
CVS swallows iffy $8 bln supplement to bulk up 6 Sep 2022 The pharmacy chain and Aetna health insurer owner is buying Signify to help control patients and costs with more services. The extra market power and profit are promising, but trustbusters could have a bad diagnosis of the deal. And paying nearly 30 times EBITDA is unhealthy.
Capital Calls: Porsche’s bold IPO 6 Sep 2022 Concise views on global finance: German carmaker Volkswagen is pushing ahead with its plan to list the luxury brand, despite torrid markets.
EU has ways to learn to live with less gas 6 Sep 2022 The closure of a key Russian pipeline leaves Europe facing a 20% shortfall in fuel supply. Measures to cut demand like lower temperatures in homes and incentives for companies to use less energy may soften the blow. More gas-dependent nations like Italy must now work harder.
Singapore deal offers template for offloading coal 6 Sep 2022 Banks’ aversion to fossil fuels makes it hard for companies to sell dirty assets. So Temasek-backed Sembcorp is financing its own $1.5 bln Indian disposal with an interest rate that falls if emissions do and guaranteeing loans. It’s a more responsible way to get the job done.
KPMG’s China blast from past has broader warning 6 Sep 2022 The auditor is being sued in Hong Kong by liquidators of a U.S.-listed mainland firm that collapsed in 2012. It’s a reminder to investors, including those facing defaulted developers like Kaisa, of the obstacles and time taken in recouping money from troubled Chinese companies.
China’s nuclear outlook is sunny and windy 6 Sep 2022 A hydropower crisis in drought-hit Sichuan province has some calling for more reactors to hit clean targets, but building plants in arid regions will be tricky. It’s easiest to double down on renewables now while pushing research into less water-intensive atomic energy.
Trussonomics may freak out the markets 5 Sep 2022 If the UK’s new prime minister was only planning big energy subsidies, investors might not worry too much. But Liz Truss is also planning tax cuts – and may pick fights with both the Bank of England and European Union. If so, the pound could be clobbered, says Hugo Dixon.
Capital Calls: UBS fintech U-turn, UK housebuilder 5 Sep 2022 Concise views on global finance: CEO Ralph Hamers cancels the $1.4 bln acquisition of robo-adviser Wealthfront; Countryside Partnerships accepts a 1.3 bln pound offer from UK rival Vistry just three months after rejecting a higher bid.
Putin shoves Europe over the energy rubicon 5 Sep 2022 By shutting the Nord Stream 1 pipeline, the Russian president has ensured the continent faces sustained high power costs. States have so far stopped short of drastic market interventions. All are now wising up to the need to freeze prices, ration demand, and tax windfall profits.
Gloves come off in India’s digital content wars 5 Sep 2022 Disney bid $3 bln for ICC cricket rights then sub-licensed part of the package to rival Zee, raising the stakes for the latter to clear competition concern over its planned merger with Sony India. The surprise pincer move puts Mukesh Ambani’s Reliance on the backfoot.
Hong Kong developers’ China edge has limits 5 Sep 2022 The Asian hub’s tycoons including New World’s Adrian Cheng are eyeing prospects in the People’s Republic as rivals struggle. Conservative balance sheets will help. Yet that prudence also damps total returns to levels that stronger mainland peers have consistently beaten.
Nelson Peltz makes himself accidental role model 2 Sep 2022 A listed fund managed by the agitator will wind down, after a fight by activists. The decision should let investors exit with an above-market return. Peltz may not like handing back cash, but it could strengthen his hand next time he wants another company to do likewise.
D.C. will do just fine even if America doesn’t 2 Sep 2022 With Congress finely balanced, the value of political influence has risen. Nearly $4 bln of lobbying money poured into the U.S. capital in 2021. Companies like Meta Platforms are spending more even as they cut elsewhere. That makes Washington recession-proof – at least for some.
Starbucks CEO brings warm skills to hot problems 2 Sep 2022 The $98 bln coffee chain named Reckitt boss Laxman Narasimhan as its next leader. He’s expected to deliver more and faster Frappuccinos with a restless workforce and rising costs. Narasimhan’s track record is promising. But with Howard Schultz still around, he is under the gun.
Capital Calls: Lululemon stretches inventory logic 2 Sep 2022 Concise views on global finance: The $41 bln company raised annual profit and revenue forecasts, but is a little too relaxed about its growing stockpiles of yoga gear.
Shell’s next boss looks a shoo-in 2 Sep 2022 The $192 bln energy group’s veteran CEO Ben van Beurden is likely to depart next year. Shell’s heads of oil drilling, refining, and finance all merit consideration. But gas and renewables boss Wael Sawan, who holds the key to Shell’s future revenue growth, is the logical choice.
ECB has reasons to avoid a panicky hike 2 Sep 2022 The European Central Bank looks set to jack up interest rates next week. Persistent inflation warrants some monetary tightening. But too sharp an increase would exacerbate the chances of a recession, at a time when rising debt gives governments less room to fight back.
China’s test kit stock bubble loses air 2 Sep 2022 Officials have tested citizens for Covid-19 nearly 12 billion times, blowing up sales at firms like Daan Gene, where profit popped 130% in the first half. But rising capacity, price caps and payment delays are making investors anxious. This corporate welfare party is winding down.
Illumina deals FTC a painful glancing blow 1 Sep 2022 Competition hawk Lina Khan’s agency lost a bid to unwind DNA tester Illumina’s $7 bln purchase of Grail. There could be appeals, and Europe may still bust up the deal. But a rebuke from the FTC’s own judge shows the Biden administration’s antitrust push rests on shaky ground.
Capital Calls: Crypto fans, Disney’s magic bundle 1 Sep 2022 Concise views on global finance: MicroStrategy founder Michael Saylor is enthusiastic about bitcoin, and its “freedom and self-sovereignty”. A lawsuit over his alleged tax avoidance shows digital limits. Meanwhile, Disney looks to channel the synergistic Force.
Pension funds are going too long on U.S. politics 1 Sep 2022 A new Texas investment blacklist that includes BlackRock is more symbolic than a real threat. But the anti-ESG push by states is putting pressure on retirement outfits as they grapple with falling markets. Politicians’ short-term whims are a bad match for long-term funds.
CEOs, not proxy cards, are what fuel activists 1 Sep 2022 A change to the way investors vote for U.S. company directors has kicked in, and more activism is likely. Boards facing the end of easy funding, burned-out workforces, and falling valuations are exposed. Still, gadflies' gripes will only resonate if CEOs aren’t doing their jobs.
Chinese audits, Vaccine wars, UK tax cuts 1 Sep 2022 Beijing will let companies submit to U.S. audit requirements. In this Viewsroom podcast, Breakingviews columnists argue only weak firms will comply. Also, Pfizer and Moderna’s legal battle is unlikely to create a winner, and Britain’s prime ministerial hopefuls debate handouts.
CEO exit gives Reckitt suitors a narrow window 1 Sep 2022 Shares in the $55 bln Durex condom maker fell amid Laxman Narasimhan’s sudden departure. Naysayers can cite Reckitt’s half-done rejig and inflation risks. Yet with a valuation lagging the likes of Colgate Palmolive, a bidder could point to other positives to justify a swoop.