China’s messy options for ending zero-Covid 1 Dec 2022 Protests broke out across the People’s Republic this week as authorities tightened lockdowns to contain the virus. In this Viewsroom podcast, Breakingviews columnists discuss the difficulties of walking back a policy that leader Xi Jinping has convinced the country is necessary.
Blackstone mall IPO puts wealthy India on display 1 Dec 2022 Brands like Zara suffer from a dearth of quality shopping centres like those the asset manager is floating. Its portfolio boasts high occupancy rates in both posh and up-and-coming locations. Owners collect rent plus a share of revenue. That’s compelling as the rich get richer.
Taiwan’s Foxconn slowly checks into iPhone detox 1 Dec 2022 The $45 bln electronics maker’s relationship with Apple was a money-spinner. Yet even before protests disrupted Chinese production lines in November, the latter was hedging its dependence on Foxconn, denting profitability. Withdrawal will be gradual, painful and healthy.
Airbnb has promise as the quasi-immobility firm 30 Nov 2022 The $60 bln home-sharing platform will list big landlords’ apartments so tenants can sublet them out on its app. Like its regular offering, this may draw local ire. But giving old-world property giants a way to benefit from transient post-pandemic lifestyles is a neat innovation.
Inflation confusion increases odds of ECB mistake 30 Nov 2022 Euro zone prices rose a less-than-expected 10% in November, yet remained stubbornly high after stripping out fuel. That leaves central bankers in a pickle. To burnish their hawkish credentials with a sceptical market, they may keep tightening policy even as the economy falters.
Jiang Zemin made China richer and more unequal 30 Nov 2022 China embraced entrepreneurs, developed markets and alleviated poverty under former President Jiang Zemin, who has died aged 96. His pragmatism probably saved the Communist Party. But the inequality his era spawned still haunts his successors.
EU makes partial retreat in clearing crusade 30 Nov 2022 Brussels may make banks clear some euro swaps on the continent, rather than stop them using venues like London altogether. The move avoids the disruption of a blanket ban, but would still push up costs. Clearing risks are best tackled through closer regulatory cooperation.
UK banks’ Big Bang thankfully looks like big flop 30 Nov 2022 Prime Minister Rishi Sunak wants to use Brexit freedoms to boost the City’s appeal. Yet supervisors plan to introduce tougher bank capital rules than in Europe, and so-called ringfencing will remain for big lenders. That’s good: strong regulation can be a competitive advantage.
Capital Calls: DoorDash puts profit on the menu 30 Nov 2022 Concise views on global finance: The food-delivery service’s job cuts should pave the way to a stronger bottom line.
China property bailouts leave most out in the cold 30 Nov 2022 Beijing is letting homebuilders use equity financing again, and state banks extended $220 bln in new credit lines. But policymakers want to avoid propping up the whole market, so only a handful of developers passed the test. The rest face more stress – as do foreign bondholders.
Buy-now-pay-later has a case of the holiday blues 29 Nov 2022 Even though the use of credit cards has jumped, the big U.S. shopping weekend hasn’t been great for e-borrowing. With the economic outlook weakening, that isn’t terrible. The trouble is that investors in companies like Affirm are still expecting massive growth.
HSBC’s $10 bln Canada sale is ad for bank breakups 29 Nov 2022 The British lender is selling its Vancouver-based unit to Royal Bank of Canada for an eye-watering 3 times tangible book value. The buyer is paying up because it hopes to slash 55% of costs. If that’s plausible, investors should ask what else global retail banks should sell.
Musk’s Apple fight could be his Twitter legacy 29 Nov 2022 The billionaire isn’t the first to criticize the smartphone maker for taking a cut from transactions on its app store. But owning Twitter gives Elon Musk a powerful megaphone. Taking a chunk out of Apple could even be the most durable outcome of Musk’s social media foray.
Consumer spending anomalies are the new norm 29 Nov 2022 High inflation and glum sentiment are changing how people use their money. In this edition of The Exchange podcast, Brookings Institution economist Wendy Edelberg explains what shoppers are loath to give up during times of duress and why strange patterns will persist.
Capital Calls: Funky debt shock 29 Nov 2022 Concise views on global finance: Germany property group Aroundtown won’t be the last to flout bond market convention on hybrid debt.
Juventus drama calls for an Exor exit strategy 29 Nov 2022 Chair Andrea Agnelli and the rest of the soccer club’s board quit amid an accounting scandal. For top investor Exor, controlled by the Agnelli clan, it’s a chance to rethink long-held ties to the loss-making team. After a cleanup, a 2.3 bln euro price tag looks plausible.
Private equity’s pay boom may have peaked 29 Nov 2022 The average European buyout partner has 20 mln euros of outstanding carried interest in their current fund, reckons Heidrick & Struggles, up a quarter from 2021. Junior wages soared. Yet a possible fundraising slowdown and layoffs elsewhere in finance will slow the gravy train.
China decoupling takes one step forward, one back 29 Nov 2022 Wealthy nations want to cut their reliance on the country’s factories and consumers. That’s happening in goods like electronics and auto parts, but trade and investment trends show the opposite in electric vehicles and other areas. The world is as dependent on China as before.
Venezuelan oil offers little to U.S. or Chevron 28 Nov 2022 The Biden administration eased sanctions, allowing the $355 bln fossil fuel giant to access reserves. But decrepit fields mean exports could be under 1% of U.S. demand, and the dirty fuel has limited appeal. Plus Chevron is printing money and doesn’t need Venezuelan oil.
Capital Calls: Transatlantic chemicals deal 28 Nov 2022 Concise views on global finance: A potential acquisition of Univar by $10 bln German chemical distributor Brenntag makes sense, but investors may fear a bidding war.
Big Pharma will muscle in on obesity gold rush 28 Nov 2022 Novo Nordisk and Eli Lilly’s weight loss drugs are swelling their valuations, and give them a lead in a potentially $50 bln market. Yet rivals like Pfizer are not far behind, and others can snap up biotechs like Altimmune. An increasingly crowded sector may lead to lower returns.
China Covid ills go from bad to chronically worse 28 Nov 2022 Nationwide protests will pressure Beijing to ease strict lockdowns. Yet officials have dragged their feet for the past two years: some 27 mln elderly are unjabbed and they face a shortage of hospital beds. These failures are quickly narrowing China’s reopening options.
Protests leave China facing a terrible trilemma 28 Nov 2022 Officials’ muddled response to spiking Covid cases has set off unrest spanning cities and social classes. The government, having wasted over two years declaring victory, must now deal with political instability, contain disease and salvage growth. There is no easy way out.
How to design a formula to pay for climate loss 28 Nov 2022 COP27 saw countries agree to a “loss and damage” fund to help states bear the effects of climate change. But it didn’t say how it would work. Hugo Dixon proposes a formula which encourages countries to cut carbon emissions by pinning the cost on the biggest polluters.
Gulf’s World Cup love-in has uncertain shelf life 25 Nov 2022 Egypt and Turkey used the tournament to smooth over old differences, and ex-rivals Saudi Arabia and Qatar are getting along. Riyadh may even use its new oil heft to put $5 bln in cash-strapped Ankara’s central bank. The risk is new tensions, perhaps over Iran, upend the goodwill.
Oatly’s best turnaround recipe is dollops of cash 25 Nov 2022 Shares in the $950 mln faux-milk maker are down 80% this year, and revenue growth is slowing. CEO Toni Petersson will struggle to stop burning cash, and has ruled out selling the company. That means a looming capital hike may have to be much bigger than he currently thinks.
Tycoons school banks in Indian retailer debt mess 25 Nov 2022 Thirteen suitors are queuing up to buy Future Retail out of bankruptcy, boding well for creditors’ prospects of resolving $3 bln of claims. Despite new rules, the saga has benefited Mukesh Ambani’s Reliance at the expense of lenders. Big business still has the upper hand.
Crypto winter highlights gold’s warming qualities 25 Nov 2022 The collapse of the FTX cryptocurrency exchange has institutional investors fleeing and regulators closing in. True believers argue their vision of decentralised digital money still holds. In a less dystopian world, the yellow metal may have more appeal, says Edward Chancellor.
FTX collapse consigns crypto to fringes of finance 24 Nov 2022 Sam Bankman-Fried’s failed crypto exchange is a huge blow to the ailing sector. In this Viewsroom podcast, Breakingviews columnists discuss how firewalls helped protect banks, how the saga will embolden regulators, and what the future looks like for digital currencies.
Gucci designer’s exit boosts Kering’s M&A urgency 24 Nov 2022 Alessandro Michele’s departure from the bling group’s top label puts CEO François-Henri Pinault on the spot. Finding a new creative star will be hard, and he needs more brands to cut his $71 bln firm’s reliance on Gucci. A recent miss on Tom Ford also weakens his dealmaking hand.