Baidu selloff understates long-term health risks 10 May 2016 Regulators have ordered China’s top search engine to rein in healthcare advertising after a scandal. That could knock as much as a fifth off earnings. Investors who have marked the shares down by 13 pct so far may be underestimating the broader impact on Baidu’s business model.
Japan’s line in sand over yen is a short-term fix 10 May 2016 Finance Minister Taro Aso has stepped up the rhetoric about currency strength. Actual intervention would probably require a further rise, plus U.S. support. That would tell speculators to back off. But the yen remains at the mercy of global events as well as domestic policy.
China could pick up more bargains in commodities 10 May 2016 The People’s Republic is warming up to the sector as global miners race to cut debt. The latest deal sees China Molybdenum snap up Freeport’s Congo copper project for $2.7 bln. At the current pace, China’s hunger for overseas mining assets could return close to peak levels.
China’s backdoor listings problem is self-made 9 May 2016 The securities regulator is studying the impact of overseas Chinese companies relisting at home via shell companies. Yet it is a self-inflicted problem. Dizzying stock market valuations and delays in reforming the IPO process are to blame. The regulator has had a hand in both.
Toshiba fluffs leadership overhaul 9 May 2016 The scandal-hit Japanese group named two new bosses. Neither is ideal: the CEO is a clean pair of hands but hails from a now non-core business. The chairman is an insider who oversaw big writedowns at the U.S. energy unit. It’s a setback to an otherwise decent effort to clean up.
Star status is Philippines’ to lose 9 May 2016 The former sick man of Asia is in rude economic health. But a motley crew are vying for votes in Monday’s election, including a Trump-like strongman and the daughter of a film star. If outgoing President Aquino’s reform drive is abandoned, foreign investors may bail out.
Sliding exports show Asia needs new engine 9 May 2016 The global trade slowdown has removed an important source of growth. Exports from Korea and India have fallen for over a year. Even China is likely to sell less to the rest of the world in 2016. Asian economies will need to rely more on domestic demand and services.
Rio Tinto goes Genghis on the copper market 6 May 2016 By expanding its $5.3 bln Oyu Tolgoi mine in Mongolia, the miner hopes to ride an upswing in demand. Under-investment in new mines and declining quality could see the market in deficit by 2020. But there’s a risk that copper goes the way of iron ore, into a damaging supply war.
India shows China the way to deal with bad debt 6 May 2016 State-backed banks in both countries have lent too much to politically connected companies that are now in trouble. While India is pushing lenders to come clean, China is still not admitting the extent of the problem. Future growth depends on a proper cleanup.
Alibaba’s strong core comes with shaky periphery 5 May 2016 The Chinese e-commerce group’s revenue soared 39 pct year on year, faster than volumes of stuff sold on its sites. Alibaba also disclosed losses on its fintech, services and logistics affiliates. Those trends can co-exist, so long as online shopping growth stays sturdy.
Mitsubishi Motors fiasco shows reforms lack oomph 5 May 2016 The carmaker’s legacy of dodgy testing is astonishing. At best, management and directors were in the dark for 25 years. The firm badly needs a stronger board and better internal controls. For all the talk of improved corporate governance, much of Japan Inc is similarly lacking.
China index: Bond boom drives rebound 5 May 2016 Breakingviews’ Tea Leaf index leapt to a 20-month high in March as stimulus kicked in. Exports and property investment grew at the fastest rate in over a year. Increased pollution points to busier factories. But by far the strongest factor was record issuance of corporate bonds.
UK deal veto would be big setback for Li Ka-shing 4 May 2016 A $15 bln takeover of Telefonica’s O2 unit was key to making the Hong Kong tycoon’s costly bet on European telecoms pay off. If CK Hutchison cannot overturn a likely EU veto, his UK telco will either have to carry on as a disruptive fourth player, or find a fallback deal.
Bets on Macau run ahead of reality 4 May 2016 Gaming revenues are falling less steeply in China’s gambling enclave, and could stabilise this year after crashing a third in 2015. But the move away from VIPs remains a work in progress. Investors in Sands China, Wynn Macau and others are getting ahead of themselves.
Australian central bank comes to miners’ aid 3 May 2016 Cutting interest rates to an all-time low of 1.75 percent will weaken the currency and help stave off deflation. Reversing the Aussie dollar’s recent rise will help make miners Down Under more competitive. That offsets the risk of further heating up the country’s housing market.
HSBC and ANZ take roundabout path to stability 3 May 2016 Choppy markets and higher bad debts knocked HSBC’s pre-tax profit by 14 pct in the first quarter. Erstwhile rival ANZ slashed its dividend after first-half earnings dropped almost a quarter. The process of making banks safer and less exciting is proving far from straightforward.
Baidu shows health is a huge flashpoint in China 3 May 2016 A dying student accused the search giant of promoting false medical information. The ensuing probe has cut $5 bln from Baidu’s market value: a big move but not an overreaction. Health scandals are highly sensitive and authorities pay close attention to outbursts of online anger.
Hong Kong retail will miss mainland money 3 May 2016 Chinese tourists are spending less, and increasingly forsaking the city altogether for Tokyo or Seoul. That is bad news for global and local brands alike, from Apple to Chow Tai Fook. Landlords will suffer too. Hong Kong could sell itself harder and open its doors a little wider.
Who cares who invented bitcoin? 2 May 2016 The whole point of the cryptocurrency and related technology is that they now live a life of their own. That makes Australian Craig Wright’s claim to be bitcoin creator Satoshi Nakamoto a curiosity at best. There is, however, a caveat related to the originator’s personal stash.
Gucci misses opportunity in "hell handbag" spat 29 Apr 2016 The Italian label wants Hong Kongers to stop burning paper versions of its $3,000 handbags at relatives’ graves. While it has a point, legally speaking, Gucci’s ire is misplaced. Wanting to spend the afterlife with a Gucci handbag is the ultimate pledge of brand loyalty.