Credit markets will enjoy one last hurrah 26 Dec 2017 Healthy global growth will make chief executives and buyout firms more willing to take risks and keep a lid on defaults. There’s also a case for locking in cheap borrowing costs before central banks become less generous. But the next wave of blowups is building.
Ebenezer Scrooge is ripe for shareholder activism 22 Dec 2017 Companies are swerving toward more active corporate giving and better conditions for workers. Investors should be pleased, but they might also have to recalibrate their idea of what makes a good company. One activist fund in particular isn’t feeling the festive spirit.
U.S. debut restores faith in Chinese micro-lender 22 Dec 2017 LexinFintech slashed the size of its IPO and priced the deal at the low end, amid a crackdown on online lending. That was enough to get the flotation away and spark a healthy first-day rise of nearly 20 pct. The $1.7 bln firm now has a chance to grow into a higher valuation.
Hadas: Christmas presents and economic humbug 22 Dec 2017 Are gifts generous gestures or an awkward waste? Addictive materialism or open-ended exchanges of valuable tokens? Is it better just to swap envelopes of cash? Children and retailers know what Christmas means, but economists are less certain. Anthropologists have good ideas.
Xiaomi IPO could plug into Internet of Things hype 22 Dec 2017 Sales at the Chinese tech company are booming, Reuters reports, probably thanks to a turnaround in smartphones. A mooted $100 billion valuation at listing sounds aggressive, but Xiaomi might be able to position itself as the first big consumer-facing play on the connected home.
Pushy investors on board for 2018 Pacific cruise 22 Dec 2017 Campaigns at BHP and Myer could set the stage for a pick-up in Australian shareholder activism. Sydney offers enticing targets, shareholder-friendly rules and potentially supportive institutional owners. Expect to see more governance skirmishes Down Under in the coming year.
A Western money manager will turn Chinese in 2018 22 Dec 2017 While U.S. and European outfits battle competition and regulation, wealth is ballooning in China, and many firms are looking for growth. It’s the perfect recipe for a big cross-border deal, perhaps involving a name such as Franklin Templeton or Deutsche Bank's DWS unit.
Viewsroom: Saudi Aramco’s path may lead to China 21 Dec 2017 That the Hong Kong Stock Exchange will join Riyadh in hosting the world’s largest IPO is one of Breakingviews’ 2018 predictions. We also explain the method to our fortune-telling and lay out why China will win the 5G standards race and why Wall Street will learn to love bitcoin.
Capital glut will overwhelm rising disaster losses 21 Dec 2017 Hurricanes and wildfires doubled estimated catastrophe-related insurance claims to $136 bln in 2017. Reinsurers and cat-bond holders have had a bad year. A hotter planet suggests more pain. But a surfeit of investors chasing uncorrelated returns will keep the cash flooding in.
Uber for everything will arrive in 2018 21 Dec 2017 The tech industry spent 2017 awash with cash and keen to disrupt the entire global economy. But loopy ideas, on everything from juice-making to how to treat co-workers, suggest a little hubris is creeping in. Breakingviews duly offers a few investment pitches for the year ahead.
Who’s driving global growth in 2018? 21 Dec 2017 Here’s how forecast global GDP expansion breaks down for the coming year, based on World Bank estimates. Flex the individual country numbers to change their relative shares, and the overall result.
SoftBank’s ride-hailing roadmap is unreadable 21 Dec 2017 The Japanese group invested yet more in China’s Didi, as part of a $4 bln fundraising, and wants to put billions into Uber. Yet as Didi expands abroad, fresh conflict with Uber is inevitable. SoftBank may envisage a merger, but for now it is funding both sides of an arms race.
Activists are at the back door of fortress luxury 21 Dec 2017 Big family stakes allow purveyors of high-end brands to hoard cash and tolerate second-rate governance. But Elliott’s Samsung campaign shows that entrenched owners are not immune. And minority shareholder rights make names like Prada more vulnerable than they look.
Dealmakers find a fickle friend in hybrid bonds 21 Dec 2017 Companies are increasingly funding deals with hybrid bonds. Rating agencies' willingness to treat the debt as equity flatters their credit scores. And with interest rates low, investors are hungry for funky, higher-yielding securities. It’s a fertile but unstable combination.
India bids adieu to “promoter” capitalism in 2018 21 Dec 2017 The country's errant tycoons have fewer places to hide as Prime Minister Modi ushers in a new era of governance, starting with a strict insolvency code. This will send serial defaulters packing and signal a shift towards more market, creditor and shareholder-friendly forces.
Asahi’s Tsingtao misadventure has one positive 21 Dec 2017 The Japanese brewer is selling 20 percent of its Chinese counterpart for $937 mln. The near-decade-long bet has not been time and money well spent. At least the sell-off suggests Asahi has sobered up and intends to focus on investments where it can exercise meaningful control.
Chinese government debt will go global 21 Dec 2017 A major index will include Chinese government bonds in 2018, dragging foreign money into a $9 trillion market. Beijing will appreciate the foreign stamp of approval. But sovereign guarantees will give scant cover against volatility spreading outwards from corporate credit.
China will plant a tech leadership flag with 5G 21 Dec 2017 The People's Republic will set many of the standards for ultra-fast mobile broadband. That will boost Huawei, ZTE, and others at the expense of foreign outfits like Nokia. This is a foretaste of the fights ahead for dominance of emerging technologies such as AI and electric cars.
China pulls disappearing debt trick 20 Dec 2017 Beijing talked up better-quality growth and risk management in its latest annual economic preview. But reducing the country’s $30 trln debt load, last year’s “top priority,” was barely mentioned. It’s a worrying sign if China’s leaders can’t kick the country’s credit addiction.
Five possible triggers of the next market shock 20 Dec 2017 It takes a catalyst to set off a downturn and other reagents to sustain it. Breakingviews runs through a few more and less obvious elements: central-bank shocks, wayward exchange-traded funds, doubts about “crisis alpha,” unforeseen hedge-fund trouble and, yes, crypto-currencies.