Baidu reinvention needs a roadmap to profit 28 Jul 2015 The Chinese search engine giant has begun to explain its big bets on “online-to-offline” services. There’s promise, but competition is fierce and subsidies are rife. Investors have cut $15 bln from Baidu’s market cap in 2015. They need a clearer idea of where it is headed in O2O.
Starbucks serves up a tepid brew in Johannesburg 27 Jul 2015 The coffee giant has been blitzing China, but its move into South Africa is more cautious. Although the country offers a growing middle class, GDP growth is slowing. And too few Africans can afford the “Starbucks experience” for rapid expansion across the continent.
China worries start now for Visa and MasterCard 27 Jul 2015 The People’s Republic will open its $7 trln bank card payment market to outsiders. Yet Visa and MasterCard, whose shares have risen since the decision, face an entrenched incumbent and online rivals like Alibaba. The hype from getting market access looks premature.
Cement spat is hostile M&A, Chinese-style 27 Jul 2015 The struggle over the $2.7 billion Shanshui chucks lots of Hong Kong corporate finance quirks into the mixer. Dilutive share issue? Check. A long trading halt, lawsuits, and unstable junk bonds? Ditto. It’s a fresh reminder of the risks of investing alongside powerful founders.
Rob Cox: FT is to Nikkei as Jim Beam is to Suntory 24 Jul 2015 Outside Japan, the $1.3 bln purchase of the salmon-hued newspaper is hard to fathom. The finances may never stack up. From a Japanese perspective, the calculus is different. In a shrinking market, without a product that travels internationally, deals like this are existential.
Financial logic in $1.3 bln FT buy is paper thin 23 Jul 2015 Japanese media group Nikkei is taking a bold step with its purchase of the Financial Times. The price equates to 35 times adjusted operating income. Sure, Nikkei gets a bucketload of kudos. But the tag is around three times higher than the multiple enjoyed by quoted media peers.
South Korea might need stronger medicine than QE 23 Jul 2015 The slowest quarterly GDP growth in six years points to a malaise deeper than a virus outbreak. A weaker currency can help with faltering exports, but it won’t free households from a debt trap. A bold cocktail of tax breaks, rebates and money-printing might be more effective.
Green bonds struggle to justify the hype 23 Jul 2015 China’s first eco-friendly bonds push this year’s issuance close to $20 bln. The market has grown fast. But definitions are fuzzy, returns are humdrum, and it’s not clear what problem this solves for corporate issuers, most of whom could sell conventional debt at similar rates.
Samsung clan could call on mobile unit next 22 Jul 2015 Investors may wonder how Samsung Electronics fits into the plans of the Lee family behind the South Korean chaebol. A rejig of the $180 bln smartphone giant could spur higher dividends. But the Lees’ recent win against Elliott suggest independent shareholders may suffer first.
India in depth: Steel yourself for China risk 22 Jul 2015 A sudden drop in Chinese demand could send that country’s output flooding onto world markets, turning India’s struggling steelmakers into zombies. Banks in the smaller economy need to give excess domestic capacity a quick burial by refusing to throw good money after bad.
Chicago toll road owners may avoid highway to hell 21 Jul 2015 Macquarie and Ferrovial are shopping the fee-charging U.S. turnpike, a decade after buying it for $1.8 bln. The high debt and low earnings mean it’ll take a big valuation multiple to recoup the investment. Recent infrastructure deals suggest they could get one.
Toshiba crisis tightens the screws on Japan Inc 21 Jul 2015 A probe found $1.2 bln of phantom profits at the electronics giant. Corporate reforms mean firms in Japan are already under huge pressure to show they are better-run and more profitable. Now they will have to work even harder to prove that overhauls are not just cosmetic.
China fatigued by debt as flexible yuan turns 10 21 Jul 2015 The world’s economic growth engine abandoned the dollar peg a decade ago. Beijing may have given up on a cheap yuan, but its pro-market resolve is in doubt. And while the People’s Republic’s debt-creating trade surplus has shrunk, domestic leverage is rising at a worrying pace.
Breakdown: What’s driving China’s latest web boom? 20 Jul 2015 The newest buzzword is O2O, or “online to offline”. Baidu, Alibaba and Tencent are racing to connect half a billion smartphone users to local services, from taxis to takeaways. There’s huge growth – but this is an expensive battle. Breakingviews offers a download.
Samsung win is bittersweet for ruling Lee family 17 Jul 2015 A $9 bln intergroup merger was narrowly passed, despite opposition led by Elliott. That helps the family’s succession planning. But the U.S. activist may fight on. And the spat shows South Korea’s largest conglomerate is vulnerable to restive shareholders as it restructures.
UBS gets Strong Buy for riling touchy Indian bank 17 Jul 2015 India’s Yes Bank lambasted the Swiss lender and complained to regulators about a report on loan approvals to potentially wobbly firms. Whether or not every word was right, the note was thought-provoking. The over-the-top reaction will be sadly familiar to many analysts globally.
Chinese tourists leave luxury brands flat-footed 17 Jul 2015 Burberry is the latest label to discover the cost of tracking China’s globetrotters. Hong Kong is losing its appeal as a shopping mecca for mainlanders, leaving brands with spare stores and profit-busting rents. Following luxury’s most prized customers calls for nimbleness.
China’s rout may disrupt online finance pioneers 16 Jul 2015 Regulators have targeted Hundsun, an $8 bln trading-tech firm backed by Alibaba founder Jack Ma, over the market crash. Internet finance in China flourished in legal grey areas. If official attitudes are hardening, it will be riskier and pricier for Ma and peers to innovate.
Edward Hadas: Greece, China and financial failure 15 Jul 2015 Not noticing how loans were distorting the Greek economy led to a crisis. In China, the financial system’s ability to create illusory wealth is causing bother. The authorities are lost everywhere. They would do better if they treated finance as an unruly servant of the economy.
China GDP surprise leaves central bank on the hook 15 Jul 2015 Quarterly growth hit a surprisingly strong 7 pct and the bean-counters say expansion is “ready to pick up.” That’s too hopeful given stubborn disinflation and other signs of wariness among companies and consumers. Stock markets have rebounded, but interest rates must still fall.