China’s rate caution is conscious uncoupling 23 Mar 2020 The central bank is holding lending benchmarks steady as global peers slash. Bad debts and capital flight risk make big fiscal and monetary moves more dangerous than in 2009. That pushes the burden for stimulus to the government. Either way, structural imbalances will get exacerbated.
Hong Kong is ripe for more tycoon-led buyouts 23 Mar 2020 The Fung clan wants to take Li & Fung private. Online retail, the trade war and Covid-19 have battered the supply-chain group, making a $1.4 bln valuation look generous. As such opportunistic deals gather pace, investors in the Asian hub may start to demand more of buyers.
Corona Capital: Dining bonds 20 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: Restaurant industry cooks up a unique form of funding to help alleviate revenue wipeout.
Corporate bailouts should be quick, big and wide 20 Mar 2020 From large airlines to small restaurants, companies are pleading for state support to cope with plunging revenue. Governments can help by swiftly offering a cheap loan to any business that wants it. It’s the best way to prevent a severe downturn from becoming a prolonged slump.
Tortuous Japanese hotel deal takes viral twist 20 Mar 2020 Unizo is backing a sweetened $1.9 bln bid from Lone Star that matches Blackstone’s price. Top owner Elliott is ready to accept, eight months into the bidding war. Fresh Covid-19 volatility may accelerate an endgame, but also calls into question the frontrunner’s takeover plan.
Trade war truce sabotaged by virus battle 20 Mar 2020 Removing tariffs could provide an estimated $170 bln boost to the ailing global economy, yet any rollbacks hardly seem imminent. The White House just slapped fresh duties on Airbus. Relations with China are also worsening. Such intransigence only makes a bad situation worse.
Next G7 headache is a disorderly currency market 19 Mar 2020 The dollar is surging amid a dash for cash. Exchange rate swings are verging on the sort of unruly moves that policymakers say they dislike. Public expressions of displeasure can be the first line of defence. If these don’t work, official sales of the U.S. currency may be needed.
Emerging markets dollar lifeboat leakier than 2008 19 Mar 2020 Capital is heading out of Indonesia, Turkey and other emerging economies faster than in the financial crisis. Like then, the Fed should set up dollar swap lines with some of their central banks, and the IMF should boost reserves. But even these fixes might not stem the torrent.
Chinese travel site charts course out of virus fog 19 Mar 2020 As most of the world hunkers down in place, $12 bln Trip reckons it may be through the worst of it. First-quarter sales are expected to halve, but boss Jane Sun also sees a rebound at home where the epidemic may be ebbing. It offers a glimmer of hope in a sea of economic gloom.
Cheap gas drives auto industry to distraction 19 Mar 2020 With crude oil futures near $26 a barrel, drivers might lose enthusiasm for electric vehicles if governments put support on hold and let pump prices free-fall. But the push away from hydrocarbons is about more than petrol costs. Carmakers are ill-advised to let investment slide.
Virus likely to be a tale of three phases 18 Mar 2020 History and science suggest a serious hit – to the economy and health – lasting months, and varying depending on testing and behavioral changes. Flare-ups and uncertainty will continue until a vaccine is widespread in a year or more. After that, Covid-19 may just be another flu.
China’s news war risks collateral economic harm 18 Mar 2020 Beijing is expelling American reporters from major newspapers in retaliation for U.S. actions. The move could repel foreign investors, already inclined to discount chirpy, censored local financial reporting. And it aggravates the fake news bubble enveloping President Xi.
JD certifies that old buyback habits die hard 18 Mar 2020 The Chinese e-commerce giant unveiled a $2 bln share repurchase plan amid a global crash. A possible second listing in Hong Kong may explain it, and JD is at least using cash on hand. Corporate obsession with such financial engineering probably will be pandemic-proof.
South Korea’s boy band IPO may be peak K-pop 18 Mar 2020 Big Hit Entertainment, the label behind global phenom BTS, is eyeing a public market debut. Revenue hit $474 mln last year, but its fortunes depend on one act in a hit-driven business. With the coronavirus now eating into concert sales, a premium valuation sounds out of tune.
Supply chain insurance pain will hasten defaults 17 Mar 2020 The premium that businesses around the world pay for indemnity against unpaid invoices has jumped by as much as 10% since the beginning of the year. And some are struggling to get any cover at all. That’s a recipe for a temporary cash crunch to cause bankruptcies more quickly.
Siren call of trading halts is entirely resistible 17 Mar 2020 The virus prompted the Philippines to shutter its bourse; U.S. SEC chief Jay Clayton says such moves are unnecessary. There are tempting reasons to temporarily freeze markets, which New York and others have done before. But the costs of closures exceed their fleeting benefits.
Japan Inc set for stint on government dole 17 Mar 2020 The central bank will loan to banks at 0%, accepting corporate debt as collateral. The hope is that companies, propped up by cheap credit, will refrain from layoffs as growth contracts. The risk is that, true to form, they take the money and do little that helps.
CEOs finally have a licence to cite “uncertainty” 17 Mar 2020 Despite being paid to deal with doubt, bosses abuse the term as an excuse for poor performance or to criticise disliked policy. Covid-19 is the real deal, though, making it truly hard to read supply, demand and government action. It’ll be a 2020 buzzword alongside “coronavirus”.
China’s virus recovery hubris is misplaced 16 Mar 2020 Retail sales and investment plunged in January and February, the first contractions on record. Export markets will seize up next. It’s a preview of pain ahead for others. But by stubbornly sticking to its 6% growth target, Beijing is storing up more market distortions.
Lockdowns mean heartburn for meal-delivery market 16 Mar 2020 The $123 bln sector, which includes Uber and Meituan, may sound like a winner as the coronavirus keeps diners indoors. Yet the key office-lunch market is collapsing, and panic buying has filled home kitchens with groceries. Paying sick drivers will add to the financial strain.