Impossible trinity gives China a difficult choice 26 Aug 2015 Not even the People’s Republic can go on cutting interest rates, keep the yuan stable, and allow capital to flow freely. It must choose two out of three. Huge foreign exchange reserves give Beijing some room to muddle through, but not enough to reverse self-fulfilling outflows.
Indian tycoon may struggle to save Vedanta cleanup 26 Aug 2015 A slump in the shares of Anil Agarwal’s mining group has turned the premium he was offering to minority investors in cash-rich Cairn India into a big discount. Sweetening the $1.1 bln deal is tricky. But failure will leave the Vedanta with worse options to reduce debt.
China’s sensible rate cut sends dangerous signals 25 Aug 2015 The central bank has lowered interest rates by a quarter point and reduced the amount lenders must hold in reserve. It helps ease the slowdown and offsets capital outflows. But by responding to two days of stock market turmoil, policymakers run the risk of stoking moral hazard.
Alibaba still looks pricey despite selloff 25 Aug 2015 Less than a year after its $25 bln offering, the web giant’s shares have fallen below their $68 IPO price. Growth worries have afflicted all technology stocks and Chinese ones in particular. But Alibaba’s core e-commerce business is still highly valued compared with its rivals.
China slowdown presents world with triple risk 25 Aug 2015 The People’s Republic may produce less for its own use, pay less for what it consumes, and accept fewer dollars for what it exports. These threats will squeeze worldwide corporate profitability and new investment. Commodity prices and stock markets could stay jittery.
Tech’s real China syndrome victims are yet to fall 24 Aug 2015 Facebook, Apple, Amazon and Microsoft lost nearly $200 bln of value in a week. China’s woes sparked the rout, but the problem was investors’ giddy faith in growth. Public tech stocks may recover. Fantasy valuations of private firms like Uber, though, will take the bigger hit.
Investors’ self-doubt worsens equity woes 24 Aug 2015 Global equities are extending declines. Valuations can’t quite explain the depth or breadth of losses. Investors’ low conviction in past asset allocation decisions could have more to do with it. So might waning faith in policymakers riding to the rescue.
China’s ailing stocks are now contagious 24 Aug 2015 Mainland shares are tumbling again. Unlike in July, this sell-off is hurting currencies, commodities, and other Asian bourses. Two things have changed. There’s now the threat of devaluation. And bungled interventions cast doubt on China’s ability to manage markets.
Uber faces a competition pile-up in Asia 24 Aug 2015 The taxi-hailing app may be a Silicon Valley darling but it’s an underdog in China and India where tech giants are backing larger rivals. A competitor is even funding its top opponent in Southeast Asia. The anti-Uber alliance calls the group’s $51 bln valuation into question.
Equity investors succumb too willingly to gloom 21 Aug 2015 Rich-world stocks have sunk as markets take in bad Chinese economic news and sliding currencies in manufacturing powerhouses. True, slowing growth in emerging markets may hold back global activity. But indiscriminate selling suggests investors aren’t being entirely rational.
Asian capital controls are a real risk once again 21 Aug 2015 Malaysia’s prime minister has ruled out a repeat of the country’s 1998 hot money curbs. But slumping Asian currencies suggest it’s too soon to be complacent. Raising interest rates could mean deep recessions. Some politicians might decide to prevent capital from leaving instead.
China’s auto industry in lower gear, not reverse 21 Aug 2015 The world’s largest car market no longer promises super-fast growth and fat margins. The slowdown has hit both titans such as VW and locals like BAIC. Still, gloomy predictions about stagnating sales this year underplay China’s long-term potential.
Rob Cox: Tianjin deserves to be a Cuyahoga moment 20 Aug 2015 The chemical blasts that rocked China’s No. 6 city have exposed a lethal coziness between industry, government and party - and an endemic failure to put human life over economic development. Like the time an Ohio river caught fire in 1969, this feels like a wake-up call.
SoftBank’s hired gun takes high road to ownership 20 Aug 2015 Nikesh Arora will invest $483 million in the Japanese tech group, cementing his place as successor to founder Masayoshi Son. It’s a refreshing change from the complex awards handed out by many U.S. companies. It should also help the ex-Googler push through more bold investments.
Kirin pins M&A comeback hopes on risky Myanmar 20 Aug 2015 The Japanese drinks-to-pharma group is buying 55 pct of the country’s top brewer for $560 mln. It’s a welcome change from a sluggish home market. But beer’s last frontier comes with risks. Kirin is teaming up with a military-linked partner at a time of political uncertainty.
Yum adjusts Chinese flavouring, now for packaging 19 Aug 2015 The KFC parent has waved off Sam Su, the man who practically invented fast food in China. Su’s tinkering with the classic menu wasn’t enough to overcome a slew of unfortunate food scares. For a crispy golden sequel, Yum could do worse than spin off the China business altogether.
Indian e-tailer’s funds will disappear in a flash 19 Aug 2015 Online marketplace Snapdeal is raising $500 mln from investors led by Alibaba and Foxconn valuing it at $5 bln. Securing more big-name backers is a coup for the Indian start-up. But the huge discounts it offers to lure buyers and sellers means the new funds won’t last long.
China pharma buyout keeps take-private trend alive 19 Aug 2015 U.S.-listed WuXi PharmaTech has finalised a $3.5 bln takeover. Given China’s slumping stock market and slowing economy, persuading investors to put up $2 bln in fresh equity is impressive. There’s still hope for some of the two dozen other Chinese companies seeking to delist.
Bangkok attack shakes Thai economy’s last support 18 Aug 2015 The deadly bombing of a shrine will scare off tourists whose numbers were up 29 pct this year. It’s another jolt to an economy already grappling with flat exports and weak private investment. Military rulers have been slow to boost public spending. That’s making things worse.
Malaysia’s hefty oil dividend is unsustainable 18 Aug 2015 State-owned Petronas is cutting capex and costs but maintaining its payout despite falling oil prices. The group contributes about one third of Malaysia’s federal revenues. Political pressure to keep filling the troubled government’s coffers may weigh on future profitability.