China’s pharma shake-up wins healthy endorsement 11 Jun 2019 Drugmaker Hansoh is valued at $10 bln after pricing shares at the top of the range in its Hong Kong IPO, backed by high quality investors. It looks like an early beneficiary of Beijing’s radical price reforms which favour diversified giants and will knock out low-quality rivals.
Anbang’s Dutch cast-off hopes for third time lucky 10 Jun 2019 Apollo-backed Athora is paying the defunct Chinese group 2.5 bln euros for insurer Vivat, its third owner in five years. The sale spares the blushes of the Dutch regulator for approving the previous sale. The new Bermuda-based owner is not risk-free but looks relatively safer.
Hong Kong risks its future as global business hub 10 Jun 2019 New rules allowing extradition to the mainland prompted massive protests on Sunday. If Chief Executive Carrie Lam ignores the message, foreign governments may retract trade agreements and reconsider their relationship with the territory. That would hurt both Hong Kong and China.
India Insight: Not enough water for 1.3 bln people 10 Jun 2019 Maharashtra boasts one-tenth of the country’s population and the biggest economy of any state, but it is parched. Beyond the capital, Mumbai, a cattle camp offers a window into India’s struggle with water. Skewed incentives need to be reset, and more, to avert a stirring crisis.
Review: Rockonomics nicely reflects the real world 7 Jun 2019 Alan Krueger’s posthumous work on the finances of rock and roll functions in equal parts as a basic industry primer, a textbook on broader economic concepts and a guidebook for musicians wanting to start a band. It’s also a window, if an imperfect one, into the author’s soul.
Sanctions victims compare scars in St Petersburg 7 Jun 2019 Vladimir Putin is casting his annual economic forum as a haven for countries and companies targeted by the U.S. government. Chinese President Xi Jinping’s attendance is a coup. But any broader alliance between the targets of Washington’s displeasure remains in its infancy.
Indians kept waiting for benefits of low inflation 6 Jun 2019 Narendra Modi won at the ballot despite farmers hurting from sluggish price rises. To help goose a cooling economy, the RBI has cut rates a third time in four months, to 5.75%, in its first post-election meeting. It’ll only help if banks start passing lower costs onto borrowers.
Rare earths expose the trouble with next-gen M&A 6 Jun 2019 Beijing's threat to squeeze sales of the minerals has boosted $1.3 bln Lynas, one of few non-Chinese producers. That’s a blow for suitor Wesfarmers. It's also a reminder of how limited targets and opaque prices have challenged corporate heavyweights looking to tap new metals.
Viewsroom: Hong Kong’s scary extradition idea 6 Jun 2019 The territory's government, under pressure from Beijing, is trying to ram through a rule change that would allow suspects to be transferred to mainland courts. Foreign executives have cause to be worried. Plus: Steve Bannon wants to ban Chinese IPOs from New York.
Canada is caught in America’s trade-war crossfire 5 Jun 2019 President Donald Trump’s threat to impose tariffs on Mexico puts at risk the new version of the three-way NAFTA trade deal. Canada’s arrest of Huawei’s CFO at America’s request upset China. And its uranium exports may now face levies, too. Ottawa can’t catch a break.
Hadas: Shaky assumption underpins debt demand 5 Jun 2019 Investors are rushing into high-grade bonds even though long-term yields are falling. Real returns will be acceptable if disinflation persists. But that’s a big if. More active use of fiscal policy or worsening trade frictions could reverse a trend that’s lasted nearly 40 years.
Beijing needs to pick a bank bailout message 5 Jun 2019 Regulators downplayed their decision to take over troubled Baoshang Bank, just as another small lender with over $100 bln in assets said auditor EY quit. Officials can rescue banks, or not, but history shows they need to be clear about their reasoning when markets are anxious.
Thrice-ditched Aussie telco has its work cut out 5 Jun 2019 Swedish fund EQT has dropped its toppy $2.3 bln bid for Vocus after due diligence. Shares dropped 20%. It’s the third financial buyer to walk since 2017. It casts doubt on the target’s efforts to integrate deals. New boss Kevin Russell has to find a way to dial up confidence.
Chinese vocational school IPO taps job anxiety 5 Jun 2019 China East Education has raised $625 mln in Hong Kong, valuing it at $3.1 bln. Beijing’s push to retrain millions of laid-off workers could boost its bottom line, but the market is fragmented, and earnings are volatile. This price implies very optimistic growth expectations.
China’s censors expose a truth about corporate JVs 4 Jun 2019 Reuters’ 30th anniversary coverage of Tiananmen was blocked by Blackstone-backed partner Refinitiv in China amid pressure from Beijing. The $20 bln data provider’s priorities deviate from those of the news publisher. It’s a prime example of how partnerships can be strained.
Aussie rate cut demands fiscal backup 4 Jun 2019 The RBA trimmed its benchmark interest rate to a record low 1.25% from 1.5%. Another chop is expected, which would bring closer the limits of conventional monetary policy. It puts the onus on Scott Morrison’s government to loosen purse strings and avoid mistakes made elsewhere.
South Korean infighting hobbles recovery plan 4 Jun 2019 Revised GDP showed the export-dependent economy shrank more than expected amid a U.S.-China trade spat. The central bank, stuck between anaemic inflation and a plummeting currency, has dithered. A rate cut might help, but political squabbles are short-changing fiscal stimulus.
Beijing tries the patience of Tiananmen’s children 4 Jun 2019 After crushing student protests in 1989, the government promised prosperity in exchange for compliance. Wages have soared, but so has inequality. Now President Xi is calling on youth to shoulder bad debts and trade war costs. Their disaffection is as big a risk as revolution.
Pricey Japan is best game in town for U.S. casinos 4 Jun 2019 Operators like Las Vegas Sands and MGM have vowed to spend $10 bln each developing new resorts, and may pledge more. A tough rule book makes the country particularly attractive to Americans, given compliance risks in other emerging markets. But a bidding war will reduce returns.
Southeast Asia offers some emerging market shelter 3 Jun 2019 Trade friction and a stronger dollar have dented asset prices in Indonesia and its neighbours. But election distractions are over and central banks have scope to help growth. Most helpfully, investors trust policymakers here more than peers in countries like Turkey or Argentina.