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.
China debt swap could leave banks in capital hole 11 Mar 2016 A new rule will allow banks to exchange loans for equity. If used on a large scale it would ease pressure on ailing companies. But lenders would also have to recognize losses, hitting their capital ratios. As the banks’ major shareholder, Beijing will end up footing the bill.
Liquor baron is India’s bad debt poster boy 11 Mar 2016 Lenders are chasing Vijay Mallya’s $75 mln payout from distiller Diageo as they try to recover debt from his defunct airline. India’s new tough stand on errant borrowers comes too late to fix the country’s bad debt problem. But it offers hope that past mistakes won’t be repeated.
Yoox Net-A-Porter is luxury’s less well-off cousin 10 Mar 2016 Sales at the newly merged posh online clothing retailer grew by a fifth last year. It’s dominating the global market. But selling luxury online means dealing with demanding suppliers and capricious consumers. That’s a tough business, as a 4.2 pct operating margin shows.
China’s shadow-bank boom keeps zombie firms alive 10 Mar 2016 Assets in wealth management products surged 57 percent to $3.2 trln last year. The breakneck growth poses mounting risks to the wider financial system. What’s more, new data suggests a large chunk of the cash is propping up troubled sectors like coal, steel and property.
Wanda’s U.S. cinema rollup unlikely to get rewrite 9 Mar 2016 An unhappy investor thinks Chinese-controlled AMC Entertainment is underpaying for rival American theater chain Carmike. The 20 pct premium is no blockbuster, but it’s no flop either. And after a year of hawking itself, the $1.1 bln deal may be the best the company could get.
U.S. tech sanctions more risky than bank crackdown 9 Mar 2016 America has used its dominance of international finance to force foreign lenders to cut ties with enemy states. New restrictions on Chinese telecom firm ZTE extend the principle to technology. But that could have much bigger ramifications for U.S. firms.
Burberry bid would be an extravagance 8 Mar 2016 The trench-coat maker is the subject of takeover speculation but a deal, which could cost 8 bln pounds, doesn’t stack up. Its stock isn’t particularly cheap and costs are already lean. With the luxury sector deteriorating, it’s not clear a new owner could halt slowing sales.
ZTE needs a U.S. solution as soon as possible 8 Mar 2016 The Chinese network-gear giant faces a ban on using U.S. suppliers for allegedly violating sanctions on Iran. That would cripple ZTE: most of its kit and handsets rely on American components. One way or another, it urgently needs to resolve this problem.
India needs its central bank chief a bit longer 8 Mar 2016 Raghuram Rajan’s three-year term as governor of the Reserve Bank of India ends in September. Inflation has almost halved under his watch. Yet Rajan’s campaign to clean up banks’ bad debts is far from complete. Confidence will take a hit if he isn’t around to finish the job.
China hasn’t yet won fight against FX flight 7 Mar 2016 Foreign exchange reserves shrank by less than $30 bln to a still-massive $3.2 trln in February. The decline is slower than in recent months, suggesting efforts to talk up the yuan and discourage outflows are working. Long-term pressure on the currency, though, remains downward.
China’s growth fixation will scupper other goals 7 Mar 2016 The country’s leaders have reiterated their pledge to lift GDP by 6.5 percent a year until 2020. That’s slower than before, but still too high. Unrealistic targets distort the economy by delaying rebalancing and boosting debt. They also ignore the risk of external shocks.
Alibaba gambling deal stretches investors’ faith 7 Mar 2016 The e-commerce giant and its financial arm are taking control of a Hong Kong lottery firm at a deep discount. The $308 mln investment is a punt that Alibaba can help open up online betting in China. Shareholder reaction suggests Jack Ma’s name is losing some of its power.