The world can survive a strong dollar – for now 13 May 2024 The greenback has gained 17% against major currencies in three years. Other countries avoided repeating past crises through better fiscal policies and less foreign borrowing. But in the long run a mighty buck will put economies under stress, especially in emerging markets.
Geely’s $5 bln carve-out slows down to speed 13 May 2024 The automaker's electric-vehicle unit Zeekr rose 35% after pricing its IPO at less than half its 2023 valuation. That suggests group Chair Li Shufu has learned from his overpriced deals to take Lotus and Polestar public and found a way to coax investors wary of China risk.
China stock rally leaves Alibaba out in the cold 13 May 2024 The e-commerce giant’s shares are up less than 5% this year despite Tencent’s surging by a quarter. Boss Eddie Wu is promising stock buybacks and dividends. But investors are sceptical on Alibaba's growth prospects and whether it can unlock value after a botched restructuring.
Peloton buyout would involve both pain and gain 10 May 2024 The exercise company might struggle to get funding for an LBO given it has little cash flow. But if lenders believe a turnaround story, decent returns are possible. Plus Apple might be a ready buyer in a few years. For private equity firms, returns and exits are a welcome rarity.
Elon Musk clearly sees AI hallucinations 10 May 2024 Even though the Tesla billionaire expects the cutting-edge tech to make all jobs obsolete someday, he says he hasn’t found practical use for it in some of his businesses. It’s a reality other CEOs will soon confront, too. Humans are still learning financial lessons the hard way.
Rio Tinto may be dark horse in BHP-Anglo saga 10 May 2024 The $120 bln miner may yet crash the Big Australian’s $39 bln merger. Still, if BHP does win Anglo and Glencore is busy integrating its $7 bln Teck deal, Rio’s key mining rivals will be distracted. That may give CEO Jakob Stausholm a clearer run at the likes of First Quantum.
Economic hard landing is delayed but not cancelled 10 May 2024 It’s two years since the Federal Reserve started hiking interest rates, yet economic growth has picked up and stocks have hit new highs. There are several reasons why the US economy is less responsive to tighter monetary policy. But it cannot avoid the effects indefinitely.
Brookfield’s rose sits amid growing thorns 9 May 2024 The parent company’s $929 bln asset manager has a model rivals crave: a pure fee-earning machine with stable income. Yet it sits amid a web of listed entities and its fee structure is getting complex. As deals come to the fore, its unusual model will weigh on valuation yet again.
EQT strikes a deal for post-Covid tech hangover 9 May 2024 Despite a 75% premium, the buyout shop’s take-private of IT consultancy Perficient values it on par with peers thanks to a sagging share price. The collapse of giddy Covid-era tech valuations and deals has lingered enough for some buyers to swoop back in without overstretching.
Arm encounters the AI bubble’s ups and downs 9 May 2024 The $110 bln chip designer reported record revenue in the fourth quarter, but investors disliked a less punchy outlook. Big Tech’s AI-fuelled data centre land grab is powering Arm’s revenue and margins. But its toppy valuation means any perceived upset gets punished.
HSBC’s big pair of shoes will be hard to fill 9 May 2024 The surprise departure of boss Noel Quinn, who dramatically reshaped the firm, puts the globe-straddling bank on the spot: appoint a steward of its strategy from within, or a new thinker from outside? In this Viewsroom podcast, Breakingviews columnists debate the $170 bln choice.
BBVA’s hostile $13 bln M&A bet faces long odds 9 May 2024 Chair Carlos Torres Vila is going ahead with his all-share offer for Sabadell despite a rebuff from the smaller Spanish bank’s board. Yet Madrid firmly opposes a deal, and BBVA’s sliding stock is denting the bid’s appeal. Success seems unlikely.
Swiggy IPO serves next dish in Indian food wars 9 May 2024 The Prosus-backed delivery app is readying a $1 bln float after its private-market price tag hit $13 bln. Heady growth and its rival's rich valuation will help. But Zomato's stronger financial health ups pressure for unprofitable Swiggy to manage costs amid a looming price war.
New ASML CEO’s job is harder than it might look 9 May 2024 The $360 bln Dutch firm is the sole maker of machines that produce the most advanced chips for Intel and TSMC. New boss Christophe Fouquet effectively runs a monopoly. But he still faces risks from staff retention, China-US spats, and as-yet-opaque risks to ASML’s domination.
Reddit answers almost everything post-IPO 8 May 2024 In its first quarterly results since making a market debut, the $8 bln social-media site grew revenue 48% and swung to positive adjusted EBITDA from a loss. Boss Steve Huffman is addressing many concerns raised ahead of the listing, but the valuation remains questionable.
Financial elite go long American exceptionalism 8 May 2024 The US economy’s strength buoyed spirits at Michael Milken’s annual jamboree, where everyone from Elon Musk to Ken Griffin held court. More surprising is optimism that the streak has longer to run. It’s a bold consensus with inflation, deficit and property-loan threats lingering.
Securitization limbers up for the oddball Olympics 8 May 2024 The race is on to find esoteric assets that can be sliced, diced and sold to investors. Taco Bell receipts, IP addresses and Picassos have so far cleared the bar. While many buyers of the $150 bln-plus in unusual deals will recoup their gold, some may overstretch.
Alstom cash call is just first stop on rescue ride 8 May 2024 The indebted French train maker announced a 1 bln euro capital hike, which was smaller than it could have been thanks to funky hybrid debt. The next job for boss Henri Poupart-Lafarge is to generate cash. A fast-growing industry backdrop gives investors a reason to hop aboard.
Total’s US re-listing idea could backfire 8 May 2024 The $170 bln oil major is considering decamping to the United States to court oil-friendly investors. Yet getting included in the big stock index would mean cutting French roots, and a valuation boost looks unlikely. Staying at home may also be better for its growing power unit.
BoE cavalry will arrive too late for Rishi Sunak 8 May 2024 After a local polls rout, the UK prime minister badly needs an economic boost before this year’s national elections. But Bank of England Governor Andrew Bailey will only cut rates when inflation drops from the current 3.2%. By then, it could be too late for the government.
Sumitomo offers a glimpse of activism future 8 May 2024 The shares of the powerful $34 bln trading house surged on Warren Buffett's support. US investor Elliott is using the momentum to squeeze more value out of the company. The next big targets for pushy investors in Japan are marginal, not blatant, underperformers.
Ship IPO puts wind back in Korea Inc’s sails 8 May 2024 KKR-backed HD Hyundai Marine Solution surged more than 40% in the largest float on the bourse in two years. The successful $540 mln listing will spur some IPO momentum, and might even help the $1.8 trln stock market catch up with regional peers.
Apple has a cash problem 7 May 2024 The tech giant produces over $100 bln of excess cash a year. An event showcasing a new pencil reveals its quandary. Investing in AI ventures may be necessary but is riskier for Apple than for rivals like Microsoft. But a rush gained through stock buybacks isn’t a long-term fix.
Basketball deal will help settle TV score 7 May 2024 Comcast is trying to steal NBA rights from rival Warner Bros Discovery for its Peacock streamer and NBC network. The indebted owner of TNT and HBO is probably tempted to pass up the $2.5 bln annual cost. But with live sports so pivotal for viewership, it would be a big miss.
How investing in news can make sense 7 May 2024 The media industry has been struggling since the digital era and VC-led initiatives like BuzzFeed and Vice failed. Yet betting on independent outlets can reap decent financial rewards, Harlan Mandel, who runs a specialised impact fund, tells The Exchange podcast.
Spanish minnow upsets EU bank bosses’ M&A dreams 7 May 2024 Sabadell rejected BBVA’s 12 bln euro proposal, citing its strong standalone prospects. If the boards of other small lenders feel the same, it’s hard to see more deals. That’s a shame, particularly since UBS’s rescue of Credit Suisse is demonstrating the value of consolidation.
Europe has little to fear as ECB and Fed part ways 7 May 2024 The European Central Bank is set to cut rates before the US Federal Reserve for the first time in its history. Hardliners warn that will weaken the euro and feed inflation. But the effects are likely to be muted. Besides, a lower currency helps exports more than it hurts imports.
Cotton gins up competitive M&A spirits 7 May 2024 Louis Dreyfus and Olam have between them made five bids for Australia's Namoi Cotton. And the two commodity trading giants may yet go a few more rounds. The $120 mln deal may be a small battle, but it can set the tone for the broader market. The trick is not to get carried away.
China banks’ $900 bln buffer offers sham comfort 7 May 2024 That’s roughly how much special debt the country’s five largest lenders must raise to obey global rules for absorbing large-scale losses. It’s an improbable scenario in China’s state-controlled financial system. For the banks, extra funding costs add to a long list of headaches.
Green spending strain boosts infrastructure buyers 6 May 2024 GIP, soon to be part of BlackRock, is buying Allete, an energy firm that is set to spend over $4 bln on clean power. Listed utilities’ funding costs are rising while green upgrades demand big outlays, a tasty opportunity for infrastructure funds with $350 bln of capital.