Texas’s small ESG stick still packs a wallop 15 Dec 2022 Lone Star state legislators exempted Vanguard from a hearing on environmental investing because the asset manager ditched a net zero coalition. Texas’s pension fund is much smaller than ESG-friendlier California’s, but its political heft makes it hard to ignore.
ECB, BoE will fight to regain anti-inflation mojo 15 Dec 2022 The European Central Bank and the Bank of England hiked rates by 50 basis points, less than recent jumbo increases. Recession fears, and the central banks’ initial hesitancy, are making investors sceptical of a sustained tightening. Sticky inflation will prove them wrong.
Qatar has got what it wanted from the World Cup 15 Dec 2022 The Gulf state has taken more flak than it would have done had it not staged the soccer tournament, which ends on Sunday. Yet in this Viewsroom podcast, Breakingviews columnists discuss how Qatar’s largely successful event also aids a strategy to make itself globally visible.
Adidas has sneaker each side of ESG turf war 15 Dec 2022 The $24 bln group is probing claims it ignored inappropriate behaviour by Kanye West. Adidas is big in both Europe and the U.S., where investors differ on the “E” of environmental, social and governance issues. It may soon discover how much they diverge on “S” ones, too.
China reopening is mixed blessing for inflation 15 Dec 2022 The country’s exit from its “zero-Covid” policy, though hesitant, will bring Beijing back to the top economic table. That will unblock global supply chains, easing price pressures for importers. For the euro zone, however, it also means increased competition for energy resources.
India bank sale sharpens valuation rivalry 15 Dec 2022 Carlyle, Sumitomo and others may buy stakes in $7 bln state-backed lender IDBI. It’s a turnaround play still lagging rivals on earnings and tech. Wannabe owners are betting private control can close those gaps and its discount to ICICI and HDFC. That’d prompt more privatisations.
Lack of trust leaves markets at odds with the Fed 14 Dec 2022 The Federal Reserve rankled investors this year after it misjudged inflation. Markets have since ignored the central bank’s comments and bet on rate cuts in 2023. Yet the Fed continues to say it will hold rates high. The longer the two disagree, the more investors stand to lose.
Tesla has lost its fantasy premium 14 Dec 2022 The electric-vehicle leader’s valuation has halved this year. That’s still compatible with Tesla growing to rival Toyota in size. But it ascribes no value for boss Elon Musk’s futuristic ideas, such as humanoid robots and self-driving taxis. At $500 bln, Tesla is just a carmaker.
Market overhaul pits perfect against good-enough 14 Dec 2022 The SEC’s proposal to put retail stock trades to an auction would make markets fairer. It’s also complex and untested, and solves a problem most investors don’t know exists. Still, by shooting for the moon, Chair Gary Gensler may find it easier to secure more modest upgrades.
Capital Calls: Danske’s money-laundering slap 14 Dec 2022 Concise views on global finance: The Danish bank’s $2 bln penalty for processing potentially illicit payments pales in comparison with BNP Paribas’ $9 bln hit in 2014, even though the suspicious money flows may have been larger.
Takeda’s bold skin care deal shows fresh M&A itch 14 Dec 2022 The Japanese pharma giant is paying at least $4 bln for a psoriasis treatment still in trial, its biggest transaction since splashing out $62 bln on Shire in 2019. There’s a risk the drug fails, but Takeda has cash and needs new money spinners. More deals may follow.
EU angst over “Buy American” reopens old wounds 14 Dec 2022 European policymakers are in a tizzy over local subsidies in President Joe Biden’s Inflation Reduction Act. Technical tweaks may level the playing field a bit. Even so, the bill rekindles long-running disputes over who picks winners and losers in the EU – and who should pay.
Paytm needs a buyer more than a buyback 14 Dec 2022 Repurchasing stock won’t prop up the money-losing company’s cratered $4.3 bln market value. But replacing China’s Ant as its top owner could help win banking licences needed to boost earnings. India is wary about its neighbour, even without Ant in Beijing’s regulatory bad books.
China’s chip suppliers have some growing up to do 14 Dec 2022 Beijing is readying a $144 bln fiscal package aimed at supporting its equipment makers that are woefully behind Dutch and Japanese rivals like ASML. A combination of targeted subsidies and local demand will help. But catching up will be a years-long, if not decades-long, slog.
FTX sins don’t absolve its big-money enablers 13 Dec 2022 The SEC, CFTC and federal prosecutors said the crypto group’s founder Sam Bankman-Fried defrauded investors and users. But venture backers were gullible and regulators idle. Institutions can try to pin blame on just one bad actor. But they can’t ignore their own culpability.
Hollywood’s latest siren call comes from Brad Pitt 13 Dec 2022 KKR-backed French studio Mediawan, co-founded by dealmaker Matthieu Pigasse, is buying a stake in the film star’s Plan B production firm. Many previous attempts to plant foreign flags in Tinseltown have gone awry. This script promises to be more “Moneyball” than “The Big Short.”
King Dollar is not ready to abdicate 13 Dec 2022 The greenback had its worst month in 12 years in November, raising market expectations of a peak. That looks premature. The currency is overvalued but remains a safe haven. It’s also supported by tight monetary policy, fund flows into the United States and a lack of alternatives.
Capital Calls: Nuclear fusion, U.S. inflation 13 Dec 2022 Concise views on global finance: The scientific breakthrough in potentially limitless power is exciting, but to make it commercially viable will be equally challenging; Consumer prices rose 0.1% in November, and there could be more good news to come once shelter data catches up.
ECB will have to stay laggard in bond-buying exit 13 Dec 2022 The central bank will explain how it will cut its 5 trln euro bond pile on Thursday. Frankfurt’s stimulus reduction plans are behind the Fed and the BoE. It should not rush to catch up. Markets are calm but rising rates and a surge in issuance raise the risk of a tantrum.
Betting against the Bank of Japan 13 Dec 2022 Investors are closely watching for signs that Tokyo might finally start winding down its ultra-low interest rates as inflation rises. In this Exchange episode, Pete Sweeney chats with Sayuri Shirai, former BOJ policy board member, about whether and how Japan might adjust.
China property gets $650 mln vote of no confidence 13 Dec 2022 Controlling shareholder Yang Huiyan is shedding 7% of Country Garden's services arm, a first. She doesn’t seem to need the money given state support for the developer, and it’s an odd time to sell. It suggests deep scepticism about Beijing’s real estate rescue package.
Sam Bankman-Fried lacks cover of systemic risk 13 Dec 2022 The former boss of bankrupt crypto firm FTX has been arrested. That hasn’t happened to financial hall-of-shamers that are more mainstream. The decentralised nature of crypto makes isolating people easier. The more complex the institution or blow-up, the harder it is to pin blame.
Chinese equities need time to exit lockdown 13 Dec 2022 Local bourses have rallied somewhat as Beijing eases pandemic controls. In the long run, ending policies that depress consumption and investment will boost earnings at listed Chinese firms. The wild card is how the real estate rescue package impacts appetite for stocks.
Amgen’s $28 bln deal is a reasonable gamble 12 Dec 2022 The $150 bln biotech company is buying smaller peer Horizon after the target’s big drug suddenly stalled. Horizon’s shares look expensive if growth remains derailed. But there’s a good chance, based on past deals, it will resume. If so, Amgen looks calculated and opportunistic.
Anti-ESG movement has investment case 12 Dec 2022 American coal firms are generating so much cash that at current rates, it equals their market value, including debt, in under two years. Oil firms like Exxon could earn back their value in five. Even if recession squeezes profit and decarbonization looms, valuations are too low.
Capital Calls: Lucky LBOs, Byron Trott 12 Dec 2022 Concise views on global finance: Coupa Software, a business that tracks expenses has a message for investors weighing its sale to Thoma Bravo: it is doing terribly. Byron Trott’s BDT is taking grill-maker Weber private again for $3.7 bln, a discount to last year’s IPO valuation.
Danish $22 bln enzyme M&A is costly bet on growth 12 Dec 2022 Novozymes will absorb smaller domestic rival Chr. Hansen. The 38% premium dwarfs expected synergies from the deal. And Novo Holdings, the biggest shareholder in both groups, will retain majority voting rights. Novozymes investors look to be paying too much for future growth.
Democracy remains vulnerable despite a good year 12 Dec 2022 Autocrats like Xi Jinping and Vladimir Putin have suffered setbacks. So have demagogues like Donald Trump. But the tough economic outlook presents further challenges for democratic systems. So does the fact that many people feel their lives have little meaning, says Hugo Dixon.
Hong Kong IPOs go back to a less luminous future 12 Dec 2022 Bankers and officials see the end of China’s Covid-19 restrictions as crucial to reviving the hub’s once-booming IPO market. That understates the city’s challenges. After vying for the hottest listings, the way investors and companies traverse the gateway to China is changing.
Guest view: Protecting Earth’s underground heroes 12 Dec 2022 Construction, erosion and agriculture undermine biodiversity and hamper the fight against climate change, with potentially disastrous economic consequences. Yet conservation efforts fail to include tiny subterranean organisms, write Toby Kiers and Mark Tercek. That’s a mistake.