BHP admits dividend pledges and mining don’t mix 23 Feb 2016 The world’s largest miner slashed its interim dividend 74 pct and followed rival Rio in scrapping a “progressive” policy. About time. Promising payouts will only ever go up is daft in such a cyclical sector. Consistency matters less than safeguarding the balance sheet.
Unusual truce holds water in Aussie ports fracas 23 Feb 2016 Rival bidders Brookfield and Qube are mulling a joint $6.5 bln breakup of Asciano, the rail and container-terminals operator. It’s rare for M&A adversaries to make peace. But an armistice would sidestep competition and funding problems while ensuring no-one is left empty-handed.
HSBC shares weighed down by fear of future 22 Feb 2016 The global bank hiked its dividend even as 2015 pre-tax profit fell 7 pct. HSBC thinks it can raise returns even as its balance sheet shrinks. But investors remain worried about negative rates, cheap oil and China’s slowdown. An 8 percent yield shows they can’t both be right.
China’s new securities chief faces old constraints 22 Feb 2016 Top regulator Xiao Gang has taken the blame for his fumbling efforts to prop up stocks, but he was only following orders. His replacement, former AgBank chairman Liu Shiyu, is unlikely to enjoy any more independence. China’s pledge to heed market forces remains on hold.
Wage restraint hurts Japan’s battle with deflation 22 Feb 2016 Japanese bosses reckon the world is too uncertain for wages to rise much this year. Oddly, the country’s unions basically agree – despite a robust labour market. This is another setback to Prime Minister Shinzo Abe’s efforts to stoke inflation, consumption, and economic growth.
Health woes show limits of Alibaba’s Midas touch 22 Feb 2016 A unit of the Chinese e-commerce giant has suffered a run-in with mainland regulators. Though shares in Hong Kong-listed Ali Health soared when Alibaba invested last year, reality has proved less exciting. It’s a reminder that even Jack Ma can’t cure investors’ loss of faith.
China web finance craze sows confusion and risk 19 Feb 2016 Web giants, insurance groups and even China’s top taxi app are piling into online finance. Fast-growing services like payments and wealth management are attracting big valuations. But competition is fierce, and investors have little way to judge which business models are viable.
HNA’s $6 bln Ingram bid has weird Chinese logic 18 Feb 2016 There’s no clear rationale for the conglomerate to buy a U.S. electronics distributor and leave its management and business untouched. But like other recent outbound Chinese deals, the acquisition gives HNA diversification, political capital, and a hedge against the sliding yuan.
Australian infrastructure party is getting crowded 18 Feb 2016 The $6 bln-plus bid battle for port and rail operator Asciano has become heated, drawing in backers from Canada, China and Qatar. No wonder: borrowing is cheap and demand for infrastructure investments outstrips supply. This bodes well for future Australian state sell-offs.
M&A with Chinese characteristics comes up short 17 Feb 2016 Fosun’s takeover of Phoenix unraveled. Fairchild snubbed a $2.4 bln offer from China Resources. Terex investors are shrugging at Zoomlion. From possible CFIUS blocks to bosses going missing, Chinese buyers bring added risks only partly papered over by higher premiums.
China’s new M&A players haunted by past failures 17 Feb 2016 Most of the country’s large foreign takeovers have fared poorly. Bets on oil, mining and finance were victims of bad timing. More recent deals like ChemChina’s $44 bln takeover of Syngenta look less cyclical. But integration, management and debt still pose big challenges.
Japan index: Losing momentum 17 Feb 2016 Our index held near a 15-year high in December, underscoring Japan’s turnaround under Shinzo Abe. But this looks increasingly fragile: recent annual gains are among the weakest since the PM took power. Manufacturing and housing are weakening. And market turmoil is a new threat.
Baltic Dry’s economic compass looks wet 16 Feb 2016 The indexed cost of shipping grains and minerals has hit record lows. While its prescience in 2008 may renew fears of a sharp global slowdown, the Baltic Dry has become a far less reliable health indicator. China’s troubles are partly to blame for the fall, but so are too many ships.
Chinese banks start new year with old bad habits 16 Feb 2016 Lenders dished out $385 bln in new loans in January as the authorities pumped cash into the slowing economy. Fresh credit can stimulate spending and help companies repay overseas borrowings. But adding to the overall debt pile only makes the eventual cleanup even more painful.
SoftBank’s buyback offers only symptomatic relief 16 Feb 2016 Boss Masayoshi Son is understandably irked by the discount investors apply to the Japanese group’s holdings. Buying back stock worth $4.4 bln signals confidence. But it doesn’t make SoftBank less of a leveraged conglomerate, or address worries about key assets Alibaba and Sprint.
UK Faustian pact with banks has a grim logic 15 Feb 2016 HSBC’s unsurprising decision to stay domiciled in London rounds off nine months of the UK softening its approach to banks. There are reasons to find this new tone uncomfortable. But that is a moot point so long as the banking sector supplies 7 pct of UK income tax revenue.
HSBC’s choice for status quo risks pleasing nobody 15 Feb 2016 After a 10-month flirtation, the lender is staying put in London. Britain has become more bank-friendly, and HSBC’s former Hong Kong home less certain. Moving its HQ would have been costly and complex. Yet the public rumination could leave both cities feeling short-changed.
Baidu video buyout comes with multiple warnings 15 Feb 2016 The CEO of China’s top search engine is involved in a $2.8 bln bid for the company’s streaming site. Offloading the loss-making unit will boost margins, but selling to the boss raises conflicts of interest. Without more detail, investors cannot judge whether the offer is fair.
Unruly markets could derail Abenomics 12 Feb 2016 A weak yen and buoyant stocks were key to Japanese Prime Minister Shinzo Abe’s fight against deflation. A flight from risk has reversed those gains and overwhelmed the Bank of Japan’s surprise shift to negative interest rates. The turmoil threatens Abe’s whole economic project.
Lagarde faces quadruple challenge at IMF 11 Feb 2016 Christine Lagarde’s second term at the helm of the international lender will be no more relaxed than the first. Low oil prices are pushing some energy-producing nations to the brink, markets are in turmoil, and she has unfinished business in Greece. Then there’s China.