Mark Zuckerberg will split Meta, take the ‘verse 21 Dec 2022 The Facebook founder’s belief in the promise of a virtual world is failing to sway investors. He may control the company, but capital flight is a problem. The solution will be to break off his pet project and find someone else to run and rebuild the social media empire.
Divided America will unite under economic duress 21 Dec 2022 A split U.S. government in 2023 will mean gridlock on topics like social spending and clean energy. But to continue operating, Congress must lift the ceiling on government debt. To do that, moderates will unite Democrats and Republicans against a common enemy: inflation.
Capital Calls: ADNOC chemicals push 21 Dec 2022 Concise views on global finance: The Abu Dhabi National Oil Company seeks to sharpen its focus on petrochemicals by buying a 25% stake in $16 bln Austrian oil group OMV.
Euro crisis shield is stuck in hedge fund mode 21 Dec 2022 The European Stability Mechanism, set up to help troubled euro countries, aspires to be the bloc’s debt manager. But member states’ distrust of perceived German control and stigma around its aid make this unlikely. Managing old bailout loans is the fund’s best hope.
How Ana Botín can defeat the Santander sceptics 21 Dec 2022 The Spanish bank suffers from a lower valuation, relative to its return on tangible equity, than rivals. If its executive chair can keep costs low and show the group is worth more than the sum of its parts, that might change. If not, it’s time to sell assets, starting in the U.S..
Vietnam’s Elon Musk challenger turns heads in 2023 21 Dec 2022 Le Thi Thu Thuy is steering VinFast onto Western roads to race the entrepreneur’s premium marque, Tesla. She’ll have to convince investors in its New York IPO to look past niggles at its powerful parent. It’s a complex route, and puts the former Lehman banker in the spotlight.
Quiet quitting China will start with the Chinese 21 Dec 2022 Western companies have had a hard time dealing with Beijing’s zero-Covid policy, rising labour costs and U.S. tariffs. But uprooting and finding suppliers elsewhere is tough. Local partners could help by building factories elsewhere, like Tesla’s suppliers are doing in Mexico.
New shareholder ballots win vote of confidence 20 Dec 2022 In the first election under rules enabling votes for both company and dissident board nominees, investors at $5 bln apartment owner Aimco chose a split ticket. Victory for one of activist Jonathan Litt’s two candidates augurs more compromise – and power for proxy firms like ISS.
Capital Calls: Brenntag M&A gambit 20 Dec 2022 Concise views on global finance: The $9 bln German chemicals group’s talks with U.S. peer Univar have left it stuck with an activist
Goldman’s job cuts will be a problem shared 20 Dec 2022 The division that houses Marcus generates little return on its $16 bln of equity. Slashing too much in consumer and wealth would be counterproductive, however. Shareholders mostly subsidize the business; now, unlucky investment banking staff will shoulder some of the burden, too.
Netflix will be next on Microsoft’s shopping list 20 Dec 2022 The video-streaming service is expanding into gaming as the software titan fights for Activision Blizzard. Ever-bigger deals, including LinkedIn and Nuance, have been a staple of boss Satya Nadella’s tenure. And there’s logic behind fortifying its Xbox even more.
Buyout barons will court the panicking masses 20 Dec 2022 KKR and rivals may have maxed out with traditional backers like pension plans for now. Blackstone’s $236 bln in private-wealth assets shows a fresh source: the common rich. The disarray at its flagship retail fund exposes the risks, but managers will chase the lure of new money.
EU pulls its punches on making polluters pay 20 Dec 2022 The bloc has expanded its emission trading system, but will allow heavy industry to enjoy free permits until 2034. Protecting European companies hit by high energy costs is understandable. Yet the freebies risks undermining a new carbon tariff, and the EU’s own green goal.
Big Pharma will find right formula for M&A binge 20 Dec 2022 Pfizer, AstraZeneca and peers have nearly half a trillion dollars of firepower to deploy on deals in 2023. Looming loss of exclusivity on key drugs gives them little choice. Luckily targets like Ascendis or Incyte are trading on depressed valuations, and less likely to resist.
Economic chaos will break Orbán’s strongman spirit 20 Dec 2022 The Hungarian leader needs EU funds to prop up his country’s struggling economy. With inflation at 20% and the forint in free fall, social unrest is brewing. Backing down on civil rights restrictions and tackling corruption would be a small price to pay for the EU’s support.
Bank of Japan yields to bond market force 20 Dec 2022 Christmas came early for yen bulls after Governor Haruhiko Kuroda softened his policy of controlling 10-year sovereign bond prices. Though the shift is half-hearted, it’s nevertheless a surrender. As Japan moves on from the era of ultra-cheap money, greater volatility is assured.
Apple finds a happy home in India 20 Dec 2022 IPhone makers Foxconn, Pegatron and Wistron are ramping up factories: $30 bln of official handouts help to make India an attractive place to set up. Trade tensions between Beijing and Washington only speed up a shift that will place India at the core of Apple’s supply chain.
Hypersonic defense deal covers most of its bases 19 Dec 2022 Aerojet Rocketdyne’s $4.7 bln sale comes after U.S. trustbusters used the last effort to target the industry’s consolidation. L3Harris should be a safer buyer and there’s extra security like a hefty reverse break fee. Feisty regulators and investors may yet pose threats, however.
Intrepid bankers will find Boutique Blvd jam-packed 19 Dec 2022 Slower periods of M&A often inspire rainmakers to hang up their own shingles. Independent shops already pocket 36% of a $35 bln fee pool, up from 14% two decades ago. The cutthroat deal advice business leaves less room to muscle in on the likes of Blair Effron and Simon Robey.
Central bankers will shift inflation goalposts 19 Dec 2022 The Federal Reserve, ECB and others insist they’re determined to get price increases back down to 2% a year. Though the target is arbitrary, changing it is tricky. But stubborn inflation means monetary authorities will have to find ways to tolerate rising prices for longer.
UAE will look to a world beyond OPEC 19 Dec 2022 The United Arab Emirates suffers from the oil cartel’s output restrictions. Distancing itself from the club would boost revenue and potentially attract more Western capital. President Mohammed bin Zayed al-Nahyan has a good moment to do so when he hosts the COP28 climate meet.
Polycrisis may lead to polycentric world order 19 Dec 2022 The United States is still top dog. But to contain China, it will need to listen to allies, take account of other powers and avoid throwing its weight around. Such “polycentrism” is the best chance to create order in a world struggling with multiple crises, says Hugo Dixon.
China’s reassuring growth talk comes cheap 19 Dec 2022 Policymakers said they will boost consumption, buttress property and support the private sector at a key meeting. The message is positive, repetitive and insufficient. A chaotic Covid outbreak, record job losses and fiscal stress demand concrete measures, preferably cash.
Traders will anxiously watch the Bank of Japan 19 Dec 2022 Governor Haruhiko Kuroda’s retirement and rising inflation may prompt the central bank to revisit ultra-low interest rates. Gyrating bond yields could force domestic investors to dump some of their $6 trln in overseas assets. Though a panic looks unlikely, rebalancing is certain.
Chip dilemma will buy Beijing precious time 19 Dec 2022 America is pushing Asian and European allies to stifle semiconductor progress in China. But antagonising the $466 bln market will be costly for South Korea's Samsung and Dutch ASML as global demand slows. Their hesitancy to fully embrace the blockade will benefit Beijing.
Who will be Wall Street’s un-American idol? 16 Dec 2022 BNP Paribas wants to grab a larger share of the U.S. market for deals and trading. So do Deutsche Bank and Barclays. This time, the goal isn’t to resculpt banking’s Mount Rushmore, but to slow the Americans’ march in Europe. It’s a plan shareholders ought to be able to get behind.
Capital Calls: Satellites deal, EU gas price cap 16 Dec 2022 Concise views on global finance: Private equity firm Advent is paying a 129% premium for Maxar, indicating that the volatile, costly satellite construction business could soar away from public markets; the EU is edging towards a controversial cap for gas future contracts.
Bond-buying scars will open European can of worms 16 Dec 2022 The ECB faces large losses if it keeps hiking interest rates, because of higher payments to banks on 3.9 trln euros of reserves amassed through asset purchases. National central banks will pick up the tab. And governments will bicker on how to share the pain.
China’s U.S. audit capitulation is rare win-win 16 Dec 2022 Beijing has let American audit watchdogs inspect its New York-listed firms, the first concession of a years-long spat. In return, over $1 trln worth of equities, including Alibaba, can keep access to U.S. markets under stricter enforcement. China is better off losing this battle.
A solo Ticketmaster might attract financial fans 15 Dec 2022 Drums are beating to break up $17 bln Live Nation after it flubbed ticket sales for Taylor Swift and Bad Bunny. Lawmakers reckon a 2010 merger with Ticketmaster made the company too powerful. Setting aside legal and regulatory questions, there’s an investment case for a split.