China throws savers under bus full of bankers 27 Mar 2020 The government might cut interest rates on deposits, buttressing lenders’ margins as defaults rise. Ordinarily that would encourage people to invest more and hoard less. Unfortunately Beijing has deliberately made it hard to find decent returns elsewhere in the system.
Review: China’s brewing blue-collar rebellion 27 Mar 2020 Foreign investors are entranced by the Chinese middle class; the proletariat less so. In “The Myth of Chinese Capitalism”, Dexter Roberts lays out the increasing plight of the latter, to the benefit of the former. Beijing is struggling to manage this big, hidden political risk.
Cox: Virus-ebbed tide exposes the better leaders 26 Mar 2020 Politicians, central bankers and CEOs will soon be judged by their handling of the health crisis. Impressive new options who have shown courage, effectiveness and moral purpose have started to emerge. Preconceived choices – like Biden vs. Trump – are rapidly becoming passé.
Corona Capital: Ackman’s hedge, Oil stockpiles 26 Mar 2020 Concise views on the pandemic’s corporate and financial fallout, including investor Bill Ackman’s surprise reversal of fortune, and the U.S. shale oil bailout that wasn’t.
Why 150% is the new 100% for public debt/GDP 26 Mar 2020 Governments are splurging to fight the economic havoc wrought by the coronavirus. For example, France’s debt will exceed its annual output by the end of 2020. Investors may not mind as much as before: Every country is affected, and central banks are the backstops.
Chinese video-game deal is fight for extra life 26 Mar 2020 Tencent-backed iDreamSky wants to take over larger rival Leyou for $1.3 bln with CVC’s help. The suitor’s Nasdaq delisting and subsequent relisting in Hong Kong have not gone well, but owning the Warframe developer makes strategic sense. The financial logic is less compelling.
China plays chicken with property market 26 Mar 2020 Indebted developer Evergrande warned 2019 profit could drop 50%, and is slashing prices as sales tank. Rivals are in trouble, too. A real estate crash poses an unprecedented economic threat, but Beijing is maintaining curbs on speculation. That hard line risks hobbling recovery.
Viewsroom: Lives under lockdown 25 Mar 2020 From Milan to Mumbai to Manhattan, Breakingviews journalists are staying put to help stop the spread of coronavirus. Editor Rob Cox checks in with columnists in India, where 1.3 bln people are housebound; New York City, the epicenter of the U.S. crisis; and hard-hit Italy.
Bank of Japan gives lesson in perils of ETF buying 25 Mar 2020 Unrealised losses on its exchange-traded fund holdings could be as high as $27 bln. Governor Haruhiko Kuroda has reserves that would likely cover that. And in a real pinch, governments can recapitalise central banks. But that may call into question rate-setters’ independence.
Corona Capital: Bailout fees, Distressed junk 25 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: Wall Street brushes off its bailout pitchbooks. And high-yield debt suggests a deluge of defaults.
Facebook finds all Indian roads lead to Ambani 25 Mar 2020 Mark Zuckerberg is eyeing a 10% stake in Reliance Industries’ upstart telecom operator. The social network would join the likes of Saudi Aramco helping India’s richest man deleverage his oil-to-retail empire. Mukesh Ambani is building an enviable network of partners.
Korean Air drama risks ending in corporate tragedy 25 Mar 2020 Feuding siblings, white knight Delta Air Lines, and a pushy activist are all battling over the country’s top carrier. Change is overdue, but debt worth 862% of equity has left Korean Air more vulnerable than peers to a pandemic. Any victory from the proxy battle will be pyrrhic.
Corona Capital: India on lockdown 24 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: India's prime minister, Narendra Modi, tells 1.3 billion people to stay at home as the country grapples with the early stages of an outbreak.
Chancellor: Coronavirus crash is inverted bubble 24 Mar 2020 Financial manias are often described in epidemiological terms, with “contagion” leading investors to become “infected” with speculative “fever”. In a sense, the response to Covid-19 may be a mirror image where fear replaces greed and errors of pessimism replace those of optimism.
New Zealand airline rescue puts taxpayers in first 24 Mar 2020 The national carrier has received a $514 mln state lifeline that ensures its survival. A high interest rate should ensure any loan is repaid quickly, while shareholders share the pain through suspended dividends. It’s a model for other countries considering bailouts to follow.
World will be ready for some 2021 Olympic spirit 24 Mar 2020 It’s likely the Summer Games won’t go on as planned in Tokyo. Cancelling would be a defeat, but rescheduling for next year a symbol of resilience. By then, an economic recovery should hopefully be under way and global audiences will be drawn more than ever to the Olympic flame.
Corona Capital: Religious aid, Ad-spending slump 23 Mar 2020 Concise views on the pandemic’s corporate and financial fallout: U.S. Vice President Mike Pence wants Americans to donate to religious institutions to bolster community aid. But churches have their own fiscal problems. Plus: TV ad revenue look set for a pounding.
Masayoshi Son’s bold streak works in reverse too 23 Mar 2020 The acquisitive SoftBank boss plans to sell up to $41 bln of assets to retire debt and buy back the company’s deeply discounted shares. Balance sheet concerns had reached fever pitch. There are good reasons to worry, but Son is showing he has big levers and is ready to pull them.
Hong Kong signals virus battle will be a long slog 23 Mar 2020 The city has been lauded as an example of how to contain Covid-19. A second wave of infections, though, has prompted new tough measures including a tourist ban. It’s a sober reminder for the world that getting back to a post-outbreak normal will be a complicated and bumpy ride.
India Insight: Facing the pandemic on a shoestring 23 Mar 2020 As it braces for an outbreak of Covid-19, India lacks the authoritarian system that helped China cope and the advanced healthcare of Italy. India’s experience will illustrate the added struggle that poor, unruly nations face from rising disease and a straightjacketed economy.