BREAKINGVIEWS

New Covid-19 variant raises risk of recovery limbo

26 Nov 2021

Britain and others have revived travel bans on South Africa amid a new viral mutation. Countries with low vaccination rates are most vulnerable. But if the virus evades vaccines, new lockdowns may be necessary at a time when governments and central banks have depleted firepower.

UK energy shakeout will hit price comparison sites

26 Nov 2021

Britain is pumping $2.3 bln into collapsed gas and electricity provider Bulb, the latest in a string of bankruptcies. The clear-out should mean a healthier array of UK energy suppliers. But having fewer operators will hurt the firms that make their money from customers switching.

SenseTime IPO could help HSBC gain recognition

26 Nov 2021

It’s the only Western lead adviser on the AI dragon’s mooted $2 bln Hong Kong market debut. The issuer’s spot on a U.S. blacklist adds a degree of difficulty to the large Chinese stock sale. That makes it an especially bold way to showcase renewed investment banking ambitions.

Succession mess turns Orange into governance lemon

25 Nov 2021

The $30 bln French phone firm is seeking a new chairman and CEO after incumbent Stéphane Richard received a criminal conviction. A previous trial in 2019 should have prodded the board to line up a replacement. Splitting the top jobs is a first step to smoother future transitions.

Pinduoduo’s strategy sows further seeds of doubt

25 Nov 2021

The Chinese e-commerce company rocketed to relevance by single-mindedly challenging Alibaba. Following policy crackdowns and rising costs, it’s expected to swing back to a quarterly operating loss. New boss Chen Lei would benefit from looking beyond farming for additional growth.

Japan Inc swallows Shinsei’s bitter poison pill

25 Nov 2021

Despite backing from proxy advisory firms, the $4 bln bank is dropping its defence plan. Without support from Tokyo as a big owner to block it, SBI can now lift its stake to 48% and effective control. It’s a stark reminder of how exposed the country’s minority shareholders are.

Airline investors weigh up more pandemic baggage

24 Nov 2021

U.S. travelers may log their busiest day since the pandemic during Thanksgiving. In Europe, government clampdowns may crimp winter travel. And airlines on both sides still have to contend with what happens in China, which could knock some wind out of valuations.

Chobani founder seeks frothy IPO cream

24 Nov 2021

An Oatly-like valuation for the Greek-yogurt maker could make boss Hamdi Ulukaya’s stake worth $8 bln. Valued like Danone, he would be worth about a quarter of that. A valuation closer to the latter is reasonable, but Ulukaya can’t be blamed for reaching for a yogurt substitute.

New German coalition has old problem with spending

24 Nov 2021

The three parties that will form the next government want to invest more in green and digital projects while respecting strict debt limits. Cutting budget subsidies and using off-balance-sheet vehicles may help. But the plans fall far too short of big-spending peers like America.

KKR has wiggle room to sweeten Telecom Italia bid

24 Nov 2021

The U.S. private equity group will need to raise its 33 bln euro offer for the Italian telco to win over investors Vivendi and CDP. It’s already the largest buyout in European history. But KKR has ways to fund the deal without overloading Telecom Italia with debt.

BBVA’s Turkey M&A logic beats currency chaos

24 Nov 2021

Just before the lira’s plunge, the Spanish bank offered to buy the 50% it doesn’t own of local lender Garanti. The crisis will push up bad debt and squeeze lending margins. But the target’s low valuation and the inefficiency of only owning half give BBVA reason enough to proceed.

Foreigners will get the best buzz off German weed

24 Nov 2021

Berlin is preparing to light up its recreational cannabis market. With potential sales taxes and savings of 5 bln euros a year, the move could give the economy added puff. But German players may at first have to play second fiddle to Canadians that dominate the medicinal market.

Jamie Dimon sets his bank up to be China punchline

24 Nov 2021

JPMorgan’s boss was looking for chuckles when he said he’d wager that his employer would outlast the country’s Communist Party. Beijing is unlikely to appreciate the humour. As UBS and others can attest, the business blowback from perceived slights is often no laughing matter.