China’s falling art sales paint ugly picture 22 Mar 2016 The country’s art market shrank by a whopping 23 percent in 2015. A slowing economy and corruption crackdown make for cautious buyers and sluggish sales. Meanwhile, the huge quantity and dubious quality of new artworks are undermining collectors’ confidence.
In China, life insurance doesn’t last a lifetime 22 Mar 2016 Customers have piled into policies that let them cash out early while pocketing high returns. The need to attract punters is forcing insurers to buy riskier assets. Now regulators are reining in the practice. The crackdown should make the industry safer, but also less profitable.
Marriott’s Starwood deal suffers China syndrome 21 Mar 2016 To trump an interloping bid from Beijing’s Anbang, Marriott raised its offer for its hotelier rival to $13.6 bln. Even with more cost cuts, the math suggests significant value destruction. Anbang may have reasons to pay up, but Western buyers can’t be so careless of shareholders.
China’s debt mountain will get even bigger 21 Mar 2016 Total borrowing reached about 250 pct of GDP last year. The state could take some of the burden from stretched corporations and local governments. But pressure to meet unrealistic growth targets means monetary policy remains loose and overall leverage is likely to keep rising.
It’s time for Marriott to check out of Starwood 18 Mar 2016 The U.S. hotelier has 10 days to sweeten its offer after China’s Anbang won over the Westin owner with a $13.2 bln cash deal. Marriott may struggle to top that without destroying value for its shareholders. Pocketing the break fee and moving on beats a bidding war.
Review: A tycoon’s vision for Chinese consumers 18 Mar 2016 Wang Jianlin says business books are “nonsense” that entrepreneurs don’t need. His own “The Wanda Way” is no exception. Though China’s richest man explains how his overseas M&A spree serves his aim to dominate the country’s consumer market, it fails to deliver juicy details.
Li Ka-shing brings funding finesse to telco M&A 18 Mar 2016 The tycoon may sell 20 pct of his UK mobile unit to outsiders. That could raise 1 bln pounds to help buy Telefonica’s O2, on top of the 3.1 bln pounds sovereign funds are already chipping in. That would let Li complete the 9 bln pound deal with no fresh investment.
Tencent gaming and ad boom adds fuel to deal binge 18 Mar 2016 The Chinese web giant’s revenue topped $5 bln in the fourth quarter, fuelled by mobile games and explosive growth in advertising. To keep up with rivals, the group has been investing heavily in e-commerce and finance. So long as it keeps growing, Tencent can sustain the spree.
Canon’s $6 bln Toshiba deal no picture of distress 18 Mar 2016 The Japanese group is buying its scandal-hit rival’s medical equipment unit, its second big purchase in just over a year. The multiple of 42 times 2015 earnings suggests Canon’s urge to diversify from cameras and printers was even greater than Toshiba’s desire for a quick sale.
Rio Tinto new boss can end foolish price war 17 Mar 2016 Outgoing chief Sam Walsh cut costs and investment to leave the miner admirably lean. But he also boosted production, pushing down iron prices in the belief that rivals would go to the wall. They didn’t. His successor has a chance to copy the first strategy and ditch the second.
Emissions reach encouraging pre-peak peak 16 Mar 2016 Pollution from energy production has levelled out. The IEA says that the U.S. and China burning less coal has helped to win a battle in the global fight against climate change. But to win the war on emissions, India must be persuaded to rein in its use of the dirty fuel.
The bright side of India’s bad-debt witch hunt 16 Mar 2016 Liquor baron Vijay Mallya’s exploits have triggered wider scrutiny of the country’s tycoons and those who enabled their excessive lending. Auditor Grant Thornton is the latest target. Though the sudden frenzy seems arbitrary, the result may be a faster cleanup of balance sheets.
China insurance boom shows need for quality assets 16 Mar 2016 Ping An’s net profit grew 38 percent last year as the country’s middle class rushed to buy protection. Rapid inflows put extra pressure on insurers to secure decent returns. As domestic asset quality deteriorates, it’s little wonder insurers are increasingly shopping overseas.
Sony-Michael Jackson deal augurs earnings thriller 15 Mar 2016 The Japanese giant will pay the pop singer’s estate $750 mln for its share of their joint venture which owns rights to tunes from Taylor Swift to the Beatles. Sony can then reap all the benefits of the fast-growing streaming market – especially the more profitable older tracks.
China’s soccer field of dreams lacks paying fans 15 Mar 2016 Tycoons and corporate giants are spending hundreds of millions of dollars on local clubs and foreign players. Media groups are bidding up the value of broadcasting rights. To be viable, though, China’s leagues need to attract lots of paying viewers. That’s hardly an open goal.
Japan index: Modest beginnings for the new year 15 Mar 2016 Our Abenomics Index rose slightly in January compared with the year-end, creeping closer to a 15-year high. Gains in manufacturing production and a slight uptick in loans, consumption and wages helped. But falling stocks and consumer prices were still a drag.
Anbang’s U.S. hotel block bookings getting pricey 14 Mar 2016 The Chinese insurer is in a hurry, leading a $13 bln offer for Starwood on top of a $6.5 bln deal to buy Strategic Hotels from Blackstone and its $2 bln purchase of the Waldorf Astoria in 2014. It’s hard to see how they all meet Anbang Chairman Wu Xiaohui’s own financial targets.
Hotel spree sates China’s taste for overseas glitz 14 Mar 2016 Foreign hotels are becoming corporate China’s trophy assets of choice. Buyers want to reduce their exposure to a slowing domestic market and capture the growing flow of overseas tourist dollars. Anbang Insurance’s mooted $6.5 bln takeover of Strategic Hotels won’t be the last.
China $5 bln property swap is constructive reform 14 Mar 2016 CITIC is selling residential real estate on the mainland at a decent 1.6 times book value to focus on commercial development. In return, it gets shares and assets from China Overseas Land. It’s a sign Beijing is getting serious about making giant state-owned firms more efficient.
Vanke’s white knight is a grey outline 14 Mar 2016 The Chinese developer could sell a stake to Shenzhen’s metro operator in return for assets worth as much as $9 bln. There may be commercial logic to a union that would help Vanke see off a possible hostile suitor. But details are scarce. Shareholder celebrations look premature.