India GDP growth is one-third statistical illusion 5 Jun 2015 Official data have become utterly unreliable. A Breakingviews analysis of corporate and consumer behaviour suggests growth is now closer to 5 percent than the 7.5 percent claimed by the authorities. Investors are quite right to be upset by half-hearted monetary easing.
Rakuten cashes in on investors’ M&A optimism 5 Jun 2015 Its shares riding high, the Japanese group is raising $1.5 bln of equity to reduce acquisition-related debt. Investors have been supportive of Rakuten buying assets from messaging apps to airline stakes. This raises pressure to show the strategy can eventually generate returns.
SoftBank’s $1 bln Korean deal needs to travel well 4 Jun 2015 The Japanese giant has added a stake in South Korea’s Coupang to its portfolio. It’s a big bet on a young company in a relatively small country. The online retailer is leading the shift to mobile shopping. SoftBank may need to export its expertise to justify the investment.
Alibaba fluffs first rule of being a movie villain 4 Jun 2015 The Chinese group’s film-making unit is raising $1.6 bln of equity, diluting shareholders and effectively leaving it a loss-making cash shell. On-screen bad guys who torture the hero usually give a lengthy account of their plans. Investors in Alibaba Pictures don’t even get that.
Elite FX club is better with China in than out 3 Jun 2015 Adding the yuan to the IMF’s reserve currency basket this year would be an easy win. It’s a big symbol for China but costs little for other constituents. Moreover, officially designating China as a lynchpin of the world’s financial system may convince it to act the part.
Focus Media sets tone for China’s shifting market 3 Jun 2015 The Chinese advertising firm’s reverse listing in Shenzhen values it at $7.4 bln, twice what it was delisted for in New York two years ago. Dizzying valuations have reduced the appeal of foreign markets. For those with a taste for financial engineering, the door is now ajar.
Chinese insurer’s ascent raises known unknowns 3 Jun 2015 Anbang Insurance is vying to add Portugal’s Novo Banco to trophies including New York’s Waldorf Astoria. The group’s prodigious expansion raises questions about its backers and the health of China’s financial system. Whether its targets’ regulators are up to the task is unclear.
Rob Cox: If FIFA were a country it would be Russia 2 Jun 2015 The soccer federation run by Sepp Blatter and the Russian one headed by Vladimir Putin operate as baroque patronage systems, their bosses doling out favors from the center. Power derives from keeping constituents both fragmented and well heeled.
Samsung succession game puts investors to the test 2 Jun 2015 Shareholders in Samsung C&T have good reason to resist a $9.2 bln takeover by the South Korean group’s holding company. Opposition might delay a potentially lucrative wider restructuring. But it would warn the founding Lee family against further mistreating independent investors.
Toyota’s new hybrids should have stayed in the lab 2 Jun 2015 The carmaker wants to lure more long-term retail investors. Hence its new “Model AA” securities: untradeable convertibles with, oddly, voting rights. They will do little for the company and disadvantage ordinary shareholders. Better hope Japan Inc. doesn’t follow Toyota’s lead.
Molycorp unearths definition of a commodity 1 Jun 2015 The rare-elements miner missed an interest payment, which could herald a descent into bankruptcy protection. Since peaking at $6 bln in 2011, Molycorp’s market value has collapsed 99 pct. It’s a classic case of investors confusing a demand surge, tight supply and real scarcity.
Jack Ma turns Reorient into free-money factory 1 Jun 2015 The Alibaba founder’s fund is among investors taking control of the Hong Kong investment firm. Though their plans are vague, the shares promptly soared, handing the new owners a $5 billion-plus paper gain. It’s another example of Ma’s involvement creating value from thin air.
China’s pricey new headache: fairly valued yuan 1 Jun 2015 The International Monetary Fund says the currency is no longer undervalued. That could be worrying, if true. The yuan was a third below its fair value in 2005. The gap disappearing means the People’s Republic has lost too much competitiveness, too soon. Deflation is a real risk.
BYD’s electric dream is even racier than Tesla’s 29 May 2015 The Chinese group is selling nearly $2 bln of new equity to make more batteries and design more cars. Like Elon Musk’s company, this is a bet on a bright electric future, with added China hype. Even with Warren Buffett on board, BYD looks a longer shot than its U.S. rival.
Slowdown set to escalate China smartphone wars 29 May 2015 The world’s largest handset market will grow just 3 pct this year, down from 20 pct in 2014. Yet unlike mature Western countries, market shares in China are far from settled. Apple and local upstart Xiaomi have a narrow lead, but the fight for loyal customers is just beginning.
Yen slide will encounter little political friction 28 May 2015 Some Japanese officials sound ambivalent about their currency falling to 12-year lows against the dollar. But the drop isn’t unruly, and the economic pros probably outweigh the cons. Aided and abetted by monetary policy, traders can easily push the yen down further.
Hope yet for creditors in China property-bond saga 28 May 2015 Defaulting developer Kaisa has lost white-knight bidder Sunac. That leaves foreign bondholders dealing with the company’s discredited chairman. However, China’s real estate market is recovering. The Shenzhen-based company may even be able to hammer together a better deal.
Gold deposits can cushion India’s current account 28 May 2015 A proposal to let banks offer interest on gold deposits could lure some of the country’s hoard of yellow metal into the financial system. Turkey has shown such schemes can work. Even if Indians only partly kick their gold habit, it could meaningfully cut the nation’s import bill.
Britain could offer China ultimate FX sacrifice 27 May 2015 The IMF is likely to recognise China’s global clout with a place in its pseudo-currency. The UK, which is courting the rising power, no longer merits a place in the SDR basket. It could offer its place to Beijing. Currency obscurity would be a fair price for enduring gratitude.
China’s margin trading boom nears its limits 27 May 2015 Investors have pumped up mainland stock markets with more than $300 bln of borrowed money, prompting brokers to scramble for extra capital. But leverage is already high, while the number of eligible new customers is finite. Securities firms need more durable sources of income.