China takes least useful polluters to the cleaners 24 Feb 2015 A revamped law that makes it cheaper to clean up than mess up is facing its first test in the courts. Offenders now risk unlimited fines, shut-downs and jail time. It sounds encouraging, though like many of China’s reforms, it leaves room for Beijing to pick winners and losers.
HSBC’s operating woes trump Swiss tax furore 23 Feb 2015 CEO Stuart Gulliver’s offshore accounts bring new scrutiny of past fiscal fiddles. They also raise the bar for future good behaviour. The main concern for investors, though, is the bank’s lacklustre financial performance. Even a reduced 10 percent ROE target is some way off.
Japan’s inflation test: Mapping the road to 2 pct 23 Feb 2015 The central bank may yet hit its elusive goal, provided consumers spend, workers are productive and bond investors stay calm. A new Breakingviews calculator shows how much inflation Japan can expect after money-printing has ended. A 2017 sales tax hike would make the road harder.
Sony’s Walkman sayonara is step in right direction 18 Feb 2015 Spinning off the division renowned for popularizing personal electronics is the latest mini-move from boss Kazuo Hirai to revive the Japanese conglomerate. The break with tradition could have more than just symbolic value if it augurs further efforts to tackle Sony’s discount.
Malaysia can regain credibility with fund revamp 18 Feb 2015 The empire-building delays of 1Malaysia Development are over. To reduce its $12 bln of debt, the opaque energy-to-real estate sovereign vehicle will give up on new deals and bring in partners. A well-handled overhaul could restore battered investor confidence in the country.
Japan Post pays $5.1bln for global expansion stamp 18 Feb 2015 The giant postal operator has offered a 49 percent premium for Australia’s Toll Holdings, despite few obvious synergies. The acquisition delivers Japan Post an international strategy ahead of its upcoming IPO. More deals will follow as Asia’s logistics industry consolidates.
Indonesia rate flip flop shows Asia price worries 18 Feb 2015 The quarter percentage point cut in interest rates came just three months after an increase. Such jumpiness is rare, but rational. From China and India to Singapore, disinflation has taken central banks by surprise. They are now scrambling to keep real borrowing costs in check.
Commodity rout adds new stress to valuation debate 17 Feb 2015 Noble Group’s market value dropped $820 mln amid questions about the trading house’s appraisal of a $670 mln coal investment. Falling prices are forcing resources groups to rethink what assets are worth. It’s another case where accounting standards and market signals diverge.
China developers build up four storeys of trouble 17 Feb 2015 The default and restructuring of housebuilder Kaisa may have been unexpected, but China’s property developers are also showing visible signs of strain. From financial extensions to split-level sales, there are a few recurring features that give cause for concern.
China property dispute unearths debt skeletons 16 Feb 2015 Days after rattling creditors with a late interest payment, developer Kaisa has disclosed borrowings double those it reported at the end of June. It may be a tactic to force lenders into a restructuring. Still, it’s a reminder that many of the sector’s horrors remain unexcavated.
Limp Japan recovery may be immune to monetary cure 16 Feb 2015 Though the economy has dragged itself out of recession, the annualised growth rate in the last quarter of 2014 was a tepid 2.2 percent. Money-printing can further weaken the yen and boost exports. But stronger domestic demand depends on creating more full-time, well-paid jobs.
China taxi app merger shows limits of web rivalry 16 Feb 2015 The tie-up of two apps backed by Alibaba and Tencent is a rare truce in China’s apparently highly competitive tech sector. Taxi drivers won’t like it, passengers may not notice and investors should be better off. For even bitter rivals, more pricing power is irresistible.
Review: Art market’s old vices go global 13 Feb 2015 Georgina Adam’s “Big Bucks” explores how contemporary art, buoyed by billionaires’ cash, has exploded as an asset class. The financial shenanigans are breathtaking but there were plenty in, say, the 1920s, another era of the super-rich. But today, the whole world is joining in.
Loeb’s Fanuc bet may test strength of bionic arm 13 Feb 2015 The U.S. activist has bought into another Japanese company. Unlike with Sony, Dan Loeb’s hedge fund is only demanding a share buyback, not a tricky restructuring. A bigger risk to the investment case may be the challenge to Fanuc’s scary, big robots from cheaper, gentler rivals.
China web metrics add up to little for investors 13 Feb 2015 Economic indicators stop being useful as they become targets. The numbers tech companies like Alibaba and JD.com bandy around are no exception. Each defines its metrics differently, and there is much room for spin. As business models evolve, these numbers will go from confusing to irrelevant.
Activists take on passivists in HK share spat 12 Feb 2015 Hedge fund Elliott has challenged Bank of East Asia’s plan to issue a slab of stock to a friendly shareholder. Investors can theoretically stop these kinds of deal, but often don’t. The activists’ chance of success is slight, but they raise some good questions.
Baidu’s mobile success brings lasting pains 12 Feb 2015 Handheld devices make up more traffic than PC for China’s biggest search company. Yet revenue and margins have disappointed because advertisers don’t pay as much on smartphones. Baidu’s self-reinvention is necessary, but investors may not have realized how costly it would be.
Yahoo’s Alibaba spinoff attracts big discount 11 Feb 2015 The company’s plan to distribute its stake in the Chinese company hasn’t excited investors. A Breakingviews calculator suggests they are attaching a 34 pct discount to the U.S. tech firm’s Alibaba shares – assuming Yahoo’s core business is worth something. That’s too cautious.
Fake-free China might not be better off 11 Feb 2015 The People’s Republic is talking a good game on fighting counterfeit goods. Online exchanges like Alibaba’s Taobao are a handy target, and make it easier to find brand thieves. The trouble is that incentives aren’t straightforward. Stamp out fakes and there would be many losers.
Indian electoral upset could weigh on reforms 10 Feb 2015 The upstart Common Man Party has regained power in Delhi a year after its first brief rule. For now, that’s a minor embarrassment for Narendra Modi. But if his rival’s left-wing rhetoric gains national traction, the prime minister may have to rethink his pro-business policies.