Yum split offers value with chance of aftertaste 20 Oct 2015 The KFC parent will hive off its troubled China business into a separate traded company - as suggested by activist Corvex. It’s logical: the two parts are effectively separate already. The catch is that the U.S. unit will still share Chinese growth risks, but without the control.
Yield and brand fuel Japan Post IPO successes 20 Oct 2015 The $12 bln deal is going well, with banking and insurance arms pricing at the top of their ranges. That says more about big dividends, low valuations and name recognition than Japan Post’s actual prospects – or the chances of a new era of widespread domestic equity ownership.
China is unreliable new best friend for Britain 19 Oct 2015 President Xi’s red-carpet reception shows Britain is hungry for Chinese investment and wants a counterweight in tense dealings with Brussels. The catch is that Chinese investment is hard to pin down and the UK has almost no leverage. Europe is the more important relationship.
China’s wise men come down to earth with a bump 19 Oct 2015 The country’s Q3 GDP grew at 6.9 pct, its slowest rate in six years. Yet the real state of China’s economy has become unreadable. Market signals suggest a worrying new truth: the country’s leaders are doing no better than might be hoped from a group of clever but fallible humans.
Alibaba bid turns Youku from horror to mystery 16 Oct 2015 The Chinese e-commerce group is offering $5.2 billion to buy the video site in which it owns a stake, at a 30 percent premium. Being absorbed into Alibaba ought to improve returns for the perpetually loss-making Youku. It should create value – not that either side is asking.
The Devil’s Dictionary of Post-Crisis Finance 16 Oct 2015 Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part two of the sequel.
Suntory and Tsingtao give cold comfort to MegaBeer 16 Oct 2015 The Japanese and Chinese beverage groups are ending a JV selling suds in the People’s Republic. Since teaming up in 2012, industry volumes have started to shrink for the first time. There’s more than just AB InBev and SABMiller to worry about in the world’s biggest beer market.
Burberry poorly dressed for luxury’s chill winds 15 Oct 2015 The British fashion label’s sales disappointed in the first half. It is highly exposed to Hong Kong and China, and scantily represented in Japan where Chinese tourists now shop. The U.S. is stormy too. Cost cuts help, but Burberry may just have its stores in the wrong places.
China rings efficiency in $34 bln telco tower deal 15 Oct 2015 The country’s three big carriers are combining their infrastructure assets in a new company to share costs. The deal is a prelude to a listing that would bring more private capital into the sector. It’s a still-rare example of state-backed companies embracing sensible reform.
Hong Kong IPOs leaning too heavily on cornerstones 15 Oct 2015 The practice of pre-selling shares to supportive investors is out of control. Distressed debt manager Huarong, for example, has pledged two-thirds of its $2.5 bln offering to big Chinese buyers. The cosy arrangement distorts pricing and undermines the concept of public markets.
Treasury Wine’s Diageo deal toasts drinking alone 14 Oct 2015 The Penfolds maker is buying the British booze group’s U.S. and UK wine operations for $600 mln. It’s the boldest step yet in the Australian company’s turnaround. With its shares near a record high, Treasury has justified rejecting buyout bids from KKR and TPG a year ago.
Chinese fund invests enough to make angels weep 14 Oct 2015 Startup and venture capital matchmaker AngelList has landed $400 mln from a Beijing-based private equity firm. Allowing investors to piggyback the early-stage picks of experienced backers is a clever model. The sum involved, however, is almost certainly too much of a good thing.
Glencore getting smaller but maybe not wiser 13 Oct 2015 The embattled commodities trader is hacking back production in a bid to reduce its debts. The latest cut could be a fifth of its copper production. Companies with strong, single-minded leaders often choose to shrink rather than change after crisis hits. That leaves them at the mercy of markets.
Indian stock market bright spot warrants caution 13 Oct 2015 The return of sizeable IPOs is another sign Indian equities are defying emerging-market gloom. The promise of reform in the world’s fastest-growing large economy has prompted foreign investors to pile in. But high valuations leave plenty of room for disappointment.
China index reveals economy of two halves 12 Oct 2015 Breakingviews’ refreshed Tea Leaf Index shows the world’s second-largest economy running at different speeds. A shift towards tech, services and consumer goods should make for more sustainable growth. But traditional drivers like heavy industry and construction remain weak.
StanChart takes bet on management incompetence 9 Oct 2015 The UK-listed emerging markets lender is to cut a quarter of its 4,000 top people, Reuters reports. Something is definitely needed to improve StanChart’s capital and returns. But this plan will only work if 1,000 high earners aren’t paying their way.
China’s campaign to stabilise yuan comes at a cost 9 Oct 2015 After the shock of August’s mini-devaluation, some calm has returned to the currency. Yet restoring stability required hefty central bank intervention and a crackdown on capital outflows. China is still a long way from letting its exchange rate be set by market forces.
Japan index: Time to prime the third arrow 9 Oct 2015 Prime Minister Shinzo Abe’s latest cabinet reshuffle has put his “Abenomics” back in the spotlight. Our index shows why he needs to give reform a fresh push. The summer ended with sluggish spending, flat prices and falling wages.
China web merger is latest sign of funding fatigue 8 Oct 2015 A mooted $15 bln tie-up between two discount shopping sites comes months after the country’s top taxi apps joined forces. Web giants like Alibaba and Tencent have poured billions into startups that connect local services to users. But subsidy wars are testing investors’ patience.
Li Ka-shing concession gives investors power boost 8 Oct 2015 The tycoon’s Cheung Kong Infrastructure unit has slightly sweetened its $12.4 bln offer for affiliate Power Assets. The move is designed to pre-empt a public showdown with minority shareholders. But it risks emboldening them to hold out for even more - and resist future deals.