Beijing spreads tension with Tomorrow selloff 6 Jul 2017 Authorities are compelling Tomorrow Holdings, owned by a missing Chinese billionaire, to sell insurance and banking units, Reuters says. It is not clear if this is about politics, crime or systemic risk. Still, it is a worrying template for other conglomerates also under scrutiny.
SoftBank’s stalled Indian sale defies logic 6 Jul 2017 Indian e-commerce firm Snapdeal rejected a $850 mln bid from rival Flipkart. That's well below a peak valuation of $6.5 bln, so backers like the Japanese firm will suffer. But buyers are scarce, and the price will only go down. Holding out for a unicorn-style $1 bln is a mistake.
Hadas: Currency flexibility is overrated 5 Jul 2017 The pound’s post-referendum drop has done little to enhance Britain’s balance of payments. No surprise there – in developed economies, exchange rates are a relatively minor factor in trade relations. Fixed currencies have more benefits than costs, as the resurgent euro shows.
Beijing’s reversal on credit scores is ominous 5 Jul 2017 China's central bank no longer wants to let private outfits like Alibaba assess consumer creditworthiness, Reuters says. That’s doubly unwelcome. Borrowers need better credit scoring. And this will concentrate even more power in the state’s Orwellian “social credit” system.
Tencent’s e-books require some Hollywood stardust 5 Jul 2017 The tech giant’s publishing arm may raise up to $800 mln in a Hong Kong listing. Catering to bookworms isn’t very lucrative, even if more readers are paying for electronic literature. The real payoff will lie in turning stories into blockbuster films, video games and merchandise.
Tencent is no match against Beijing’s bureaucrats 4 Jul 2017 Government criticism levelled at the gaming giant's lucrative but addictive mobile hit wiped $14 bln off its market value. Tencent is moving to placate Beijing by limiting game time for kids. But if regulators crack down further on popular titles, appeasement could be costly.
Lotte’s Malaysia IPO has bad chemical reaction 4 Jul 2017 The South Korean conglomerate is raising $877 mln through a cut-down IPO of its petrochemical unit. It still ranks as Malaysia's biggest listing since the 1MDB crisis. But a chunky valuation discount to peers suggests toxic air around the issuer and destination is yet to clear.
Refiner uses crude tactics in Japanese M&A tussle 4 Jul 2017 Idemitsu’s bosses are trying to clinch a merger with a rival, over objections from Idemitsu’s own founding family. Diluting the family through a $1.2 bln share sale is a value-destructive workaround. The move reflects corporate Japan’s disdain for investor rights.
Shanghai Tang sale pushes against M&A current 4 Jul 2017 An Italian textile maker has purchased the China-inspired fashion brand from luxury giant Richemont. The deal is at odds with the image of wealthy mainland buyers snapping up cash-strapped European brands. But Shanghai Tang was never very Chinese, and that's the problem.
Beijing-Trump relations enter dangerous phase 4 Jul 2017 Chinese and U.S. leaders misread each other. Beijing overinvested in a few relationships, while it ran up the trade surplus and failed to rein in North Korea. Trump's team is now pushing back with sanctions, tariff threats and military moves. The risks of a trade war are rising.
Overhaul pits taxman against Indian ingenuity 3 Jul 2017 The rollout of a nationwide goods and services levy has been surprisingly smooth. The real prize would be shrinking the informal economy. Yet citizens have circumvented Prime Minister Modi's previous big reforms. That makes it too soon to hail GST a success.
Naspers’ addiction to Tencent is unhealthy 3 Jul 2017 The South African group is worth $28 bln less than its stake in the Chinese gaming giant. Naspers boss Bob van Dijk rules out a spinoff, but that would be the best fix. Unfortunately for would-be activists, supervoting shares make it hard for outsiders to apply pressure.
Next stop for Chinese bonds is credible ratings 3 Jul 2017 A new Bond Connect lets foreign fund managers buy into the mainland’s $9 trln market from Hong Kong. The easier access is welcome and should speed up China’s inclusion in key indexes. But big inflows, especially into corporate bonds, will require more plausible credit ratings.
Spectre of old normal gives investors a fright 30 Jun 2017 Financial markets have grown used to sluggish growth, low inflation and rock-bottom interest rates. Now the hint of tighter global monetary policy has pushed up yields and knocked stocks. Though better economic prospects are welcome, a shift will be painful for investors.
Hong Kong’s Enigma crash reinforces small-cap fear 30 Jun 2017 The city’s junior board has tumbled, led by a cluster of firms that an influential activist has dubbed "The Enigma Network". Investors were already souring on the low end of the market. Authorities ought to clean house before pushing to attract yet more small-cap listings.
Green bonds could help build new Silk Road 30 Jun 2017 Investors have yet to warm to the Belt and Road, China’s huge infrastructure plan. Beijing’s new development bank, the AIIB, could help by issuing green bonds to fund railways and ports. But if the projects’ environmental credentials are weak, the lender’s reputation will suffer.
Alibaba readies for showdown in Southeast Asia 29 Jun 2017 The Chinese giant spent another $1 bln to tighten its grip on regional arm Lazada. The extra control could be useful as Alibaba confronts local upstarts, domestic peer JD, and possibly Amazon in the future. All will face formidable challenges, from logistics to payments.
Video offers thinning ray of hope for LeEco 29 Jun 2017 Worsening cash problems have pushed the Chinese tech conglomerate to focus increasingly on smart televisions and online streaming, as it sells other assets. Even if mounting financial and legal woes are surmounted, squeezing more profit out of Chinese television will be tricky.
Foreign banks get U.S. stress-test cheat sheet 28 Jun 2017 America's top banks passed the Fed’s annual checkup, including the so-called qualitative portion that has tripped them up before. International players like Barclays and Deutsche Bank will have to take the exam next year. Their U.S. rivals have given them a road map to follow.
Ransomware reveals tech challenges past and future 28 Jun 2017 The Petya cyber attack spread from Ukraine to 65 countries, infecting software that could have been patched. Human error enables hacking of today's IT setups, making prank emails that deceived bank bosses alarming, too. The cloud reduces that danger – but introduces others.