Yum Brands China split short on crispy goodness 6 May 2015 Activists have turned the hotlamp on the KFC parent’s China arm. It could be worth $20 bln if diners forget past safety scandals, a Breakingviews calculator shows. To justify more, Yum must expand rapidly, but pitching into China’s poorest cities brings risk as well as revenue.
HSBC revival overshadowed by existential questions 5 May 2015 Better investment banking revenue and fewer bad loans boosted the $194 bln bank’s quarterly results. That’s a welcome respite from the Swiss tax furore. Still, long-term fortunes rest on decisions about its shape, head office location and UK business. None will be resolved soon.
Indian retail union is marriage of convenience 5 May 2015 After parting ways with Wal-Mart, Sunil Mittal is folding Bharti’s retail operations into larger rival Future Retail. The former gets a big partner and the latter reduces its debt load. The enlarged group also gains a stronger footing amid India’s shifting shopping habits.
China’s investment bank wannabes face long march 5 May 2015 Haitong Securities plans to hire hundreds of international bankers. Citic is touting its Asian network. Cross-border capital flows and pumped-up valuations help the push. But even if Chinese firms avoid previous upstarts’ mistakes, the challenges are big and the rewards distant.
Oil boss switch leaves China’s comfort zone intact 5 May 2015 New chairmen at Sinopec, CNPC and CNOOC are likely to be a bit more than civil servants, but a lot less than strategic leaders. A dispassionate shareholder might prefer chiefs who can innovate and wield the axe. The reality is that such dramatic reforms come from higher up.
India’s aborted central bank plan has few mourners 4 May 2015 The government has withdrawn a proposal to curb the Reserve Bank of India’s sway over the bond market. It’s a welcome retreat. Retrospective taxes on foreign investors have already dented confidence. Clipping the wings of a well-functioning regulator would have caused more alarm.
Inflation stages a small comeback 1 May 2015 Oil prices have rebounded 47 pct, U.S. wages are picking up and euro zone prices have stopped falling. The worst of this cycle’s disinflationary pressure is probably over. But an oil glut and an ageing world will temper inflation, even if GDP growth speeds up.
Review: Hank Paulson’s kiss-and-don’t-tell China guide 1 May 2015 The former U.S. Treasury secretary paints a world where noble Chinese officials beg straight-talking American bankers to help get their finances in order. Some things have changed. What hasn’t is that contacts are everything, and that killer details are always left unspoken.
Bombardier may be the little Canadian that can 30 Apr 2015 The manufacturer is mulling selling a majority stake in its rail unit to a Chinese rival. Political objections are likely: even home-improvement chains are off limits to foreigners. Using the proceeds to keep its aviation business flying, though, may keep critics in the hangar.
Banks are designated drivers at China market party 30 Apr 2015 Bad debt levels are rising and earnings at the biggest lenders barely grew in the first quarter. Soon, they may be summoned to help clean up government debts, fund China’s global ambitions and sacrifice their margins to save the economy. Investors’ sober view is the right one.
Abu Dhabi’s $2.4bln hotel JV shows HK is still hot 30 Apr 2015 Tycoon Cheng Yu-tung’s offspring are shaking up property group New World Development. The sale of three top hotels to a joint venture with the Gulf sovereign fund shows that, despite falling visitor numbers and the slowdown in China, Hong Kong is still an attractive destination.
Insider case exposes U.S.-China conduct chasm 30 Apr 2015 Regulators froze the assets of two Beijing residents who made $2 mln trading ahead of a deal involving Nasdaq-listed 58.com. Such apparently basic scams are fairly rare in the United States. From insider trading to bribery, American rules and Chinese practice continue to clash.
Abe’s Capitol Hill speech needs ideas for backyard 29 Apr 2015 Shinzo Abe’s address to Congress will highlight Japan’s strategic and financial relationship with the United States. But the mooted trade deal offers limited economic benefits. Managing the rivalry with China and fostering cordiality with India can make Japan a more vital ally.
Focus Media’s Chinese homecoming is hard to repeat 29 Apr 2015 The advertising firm is preparing to list in Shanghai two years after it left the U.S. stock market. High valuations will tempt other Chinese companies with overseas listings to return home. For many, though, the costs and legal complexities make switching more hope than reality.
Huge Apple payouts play catch-up with China growth 28 Apr 2015 The $760 bln iPhone behemoth is adding $50 bln more to its buyback plans. Quarterly numbers, though, show the Middle Kingdom overtaking Europe as Apple’s second-biggest market after 71 pct growth. CEO Tim Cook is in danger of taking more fire for returning cash too slowly.
China SOE fusion could topple cult of competition 28 Apr 2015 A mooted $569 bln merger between Sinopec and PetroChina looks a step back for reform and efficiency. But competition between state-backed firms isn’t always helpful. A more demanding shareholder, pricing power and superior regulators could be better spurs to improve performance.
Tokyo Electron flop shows limits of M&A diplomacy 27 Apr 2015 Applied Materials’ $12.8 bln all-share takeover of the Japanese firm broke taboos in a country that is wary of foreign buyers. But after 19 months, U.S. regulators scuppered the tie-up. Investors will hope it doesn’t discourage other Japanese groups from considering bold deals.
China frothy markets churn up funding opportunity 27 Apr 2015 Companies are using rising prices to raise equity capital. Buoyant stocks have also made regulators more relaxed about new supply. For a country that has gorged on corporate debt, more equity sounds like a good thing. If investors were more discerning, it really would be.
India retirees’ stocks push lacks Japan’s zeal 27 Apr 2015 The $125 billion Employees’ Provident Fund is making its maiden foray into equity. The planned 5 percent allocation to stocks doesn’t pack the punch of Japanese pension funds’ recent portfolio shift. But a bolder switch will require overcoming unions’ mistrust of markets.
China’s cyber crackdown: A guide for the perplexed 24 Apr 2015 The People’s Republic is squeezing technology companies. New banking rules and counter-terrorism legislation could make it harder for foreign groups to operate in the expanding market. Is security just an excuse to protect domestic players? Breakingviews cracks the code.