Sino-Australian DNA sequenced by virus-test deal 11 May 2020 Fortescue’s chairman helped broker a controversial Canberra purchase of 10 mln Covid-19 kits from Chinese genomics giant BGI. It adds to diplomatic tensions over Huawei and the pandemic’s origins. And yet over $150 bln of bilateral trade probably will endure, and maybe even grow.
Deal sabotage offers Trump potent trade weapon 10 May 2020 The U.S. president is weighing tariffs to punish Beijing for Covid-19. Thwarting regional trade deals China hopes to sign this year would sting harder, as would buttressing the TPP pact. But that would require buttering up alienated allies, which is not Trump’s forte.
Corona Capital: SPAC reversal, Italy, Toilet paper 8 May 2020 Concise views on the pandemic’s corporate and financial fallout: Dan Loeb’s blank-check company tries to nix a deal; Italians warily get back to work; Australian TP panic subsides.
Nomura plays it too safe during downturn 8 May 2020 The Japanese bank posted a quarterly loss of $325 mln as slumping markets dented its asset management unit. Nor did its trading desk produce the sort of bump enjoyed by rivals like Morgan Stanley. New boss Kentaro Okuda has some work to do in restoring Nomura’s killer instincts.
Luckin pileup crashes into China’s car lot 8 May 2020 The coffee chain scandal hit shares in Car Inc, a rental firm chaired by Luckin founder Lu Zhengyao. Lu also leads Ucar, whose banks could dump a slug of Car Inc pledged as collateral, triggering a change of control and dragging in Warburg Pincus. It’s a lesson in key-man risk.
China’s soft power will be hardened by the virus 8 May 2020 Even before Covid-19 emerged in Wuhan, partners were rethinking economic and diplomatic ties. Rising foreign criticism is sharpening attitudes in China. And Western disarray is emboldening Beijing. Restraining China’s influence will be the geopolitical struggle of the decade.
Corona Capital: Payments M&A brawl, Endeavor 7 May 2020 Concise views on the pandemic’s corporate and financial fallout: Payments firm Wex’s attempt to ditch a double deal for two UK rivals will face legal pushback and perhaps Elliott Management’s ire. Talent agency Endeavor’s 2018 Epic Games investment is starting to come in handy.
Supply chains’ tectonic shift will get viral jolt 7 May 2020 Tariffs, automation and climate change had businesses rethinking how best to secure their goods even before Covid-19. The pandemic has highlighted global supply chains’ vulnerability to lockdowns. Countries and companies alike will increasingly set their sights nearer home.
Hong Kong bourse walks fine line on CEO succession 7 May 2020 Boss Charles Li plans to step down by October 2021. Ample lead time helps HKEX shareholders and should ensure a clean handover, but he also risks becoming a long-term lame duck. Finding someone equally able to balance the interests of Beijing and foreign investors will be tough.
China’s big banks socially distance from economy 7 May 2020 ICBC and its hulking peers grew their bottom lines even as GDP plunged. They’re paying dividends, and some even reduced loan loss buffers. Such rude health suggests they haven’t extended sufficient credit to private businesses in need, which may capture Beijing’s attention.
Hong Kong’s reeling companies need a quicker fix 7 May 2020 Local businesses have been battered by Covid-19 and months of protests, but the city still lacks a regime to give them breathing room while they nurse themselves back to health. A mooted Chapter 11-style system will take too long to implement, but other options are available.
New normal will demand new gold-standard portfolio 6 May 2020 Parking 60% in equities and 40% in fixed income is the traditional balanced approach. That’s off kilter if bonds are going to offer less and less income and are sometimes almost as volatile as shares. The solution may be to hold more stocks and cash, and possibly gold, too.
Corona Capital: Beyond Meat, Facebook, Natixis 6 May 2020 Concise views on the pandemic’s corporate and financial fallout: Beyond Meat’s stock burn, Facebook installs an oversight board, Natixis’s bad news-good news situation.
Indian tax hikes are perverse economic necessity 6 May 2020 Governments worldwide are handing out cash to prop up demand as lockdowns crush revenue. New Delhi, however, is raising taxes to contain deficits, upping levies on petrol as states slap charges on booze. India’s fiscal anxiety is acute, but others may follow after the crisis.
Cloud IPO is fresh air for U.S. China listings 6 May 2020 Lei Jun is eyeing a healthy $3.6 bln valuation for his cloud venture. The Xiaomi founder makes for a tried and tested boss for Kingsoft, a strong rival to Alibaba and Tencent. In the wake of the Luckin scandal and Covid-19, it looks as good as any Chinese company in New York can.
Hong Kong’s jobless rate understates harsh reality 6 May 2020 The 4.2% figure is implausibly low given the protests and the pandemic. With U.S. unemployment expected to reach 20%, the Asian financial hub’s distorting omissions of many classes of workers are left exposed. Restaurant receipts and retail sales hint at the true economic damage.
Corona Capital: Apple bonds, DuPont’s priorities 5 May 2020 Concise views on the pandemic’s corporate and financial fallout: Cash-rich Apple capitalizes on the Fed’s largesse to raise $8.5 billion in cheap debt; DuPont looks past massive demand for PPE materials to a tough second quarter.
Virus state aid needs taper to avoid tantrum 5 May 2020 As governments lift restrictions, they face tough choices about weaning companies and workers off public support. Different industries require different timetables. Withdrawals should also be phased. The state can’t help indefinitely, but a sudden break would be too big a shock.
Deal squawkers spread their remorseful wings 5 May 2020 A flock of buyers is citing Covid-19 to wriggle out of acquisitions. Legal flaps may determine the fates for targets Moss Bros, Delphi, Metlifecare and a Bed Bath & Beyond business. Despite some questionable arguments, negotiating power favours the yellow-bellied birds of prey.
Virus offers Pakistan grim bargaining opportunity 5 May 2020 Debt payments suck up the largest chunk of its budget. Islamabad’s $8 bln crisis support package is measly, yet will push the fiscal deficit to 10% of GDP. Pakistan needs more than repayment deferral from creditors, especially China. And it’s better positioned to ask than most.