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.
China pulls its punches with Qualcomm settlement 10 Feb 2015 Antitrust watchdogs slapped a $975 mln fine on the U.S. chipmaker and forced it to lower patent fees. That’s helpful for local smartphone makers. Yet the outcome doesn’t explicitly curb Qualcomm’s dominance. Big as China is, it can’t yet afford to shut out foreign technology.
Japan index: Deflationary gloom is taking hold 10 Feb 2015 The Breakingviews Abenomics Index stalled in December. While year-end bonuses lifted salaries and a weak yen helped widen the current account surplus, consumer spending remained anaemic. Drooping inflation expectations suggest growing risk of a prolonged funk.
SEC gets tough on auditors and soft on China 9 Feb 2015 Accounting firms will find it harder to keep paperwork on suspected Chinese fraudsters from the U.S. watchdog. Those that don’t try to help could face temporary bans. Yet the new approach leaves China plenty of scope to nix investigations. Investors are only a little better off.
Chinese nepotism not Wall Street’s problem to fix 9 Feb 2015 U.S. regulators are poring over investment banks’ decisions to hire mainland officials’ offspring. Yet despite the country’s ongoing corruption crackdown, there’s little sign that China shares their concern. Privileged sons and daughters will continue to get prime positions.
China developer rescue more grey knight than white 6 Feb 2015 The purchase of 49 percent of defaulted property group Kaisa by rival Sunac gives offshore bondholders hope of getting their money back. For the wider sector, though, it’s only a problem deferred. While Kaisa may have been saved, there are only so many brave buyers to go around.
Review: A cautionary tale for China media moguls 6 Feb 2015 The tragicomic true story of Mark Kitto’s doomed magazine empire may be a blast from the past, but is nonetheless relevant today. China’s wannabe media magnates – both foreign and homegrown – still walk a tightrope between the overbearing state and their commercial aspirations.
China on defensive in battle of monetary signals 5 Feb 2015 The central bank has freed up around $100 billion of lending power and could do more if needed. Warning signs like a sharply weakening yuan, rising foreign-currency debts and capital outflows suggest it may have to. China’s policymakers are struggling to keep up.
World’s swelling debt calls for radical surgery 5 Feb 2015 Despite promises to deleverage, global borrowing has increased by $57 trillion since 2007, according to McKinsey. It’s hard to see economies growing their way back to prudence. Shrinking the pile will require borrowers to seek relief – and some creditors to cancel their claims.
Watch the small print in Qualcomm’s China fight 4 Feb 2015 Antitrust regulators are putting together a case against the U.S. chipmaker. If it’s found guilty, a big fine would grab the headlines. But forcing Qualcomm to lower patent fees, or banning the company from linking royalties to chip sales, could do greater financial damage.
China index: Trouble at home 4 Feb 2015 Breakingviews’ monthly index shows the economy suffering, and residential property plays a big role. Housing investment fell nearly 3 percent in December – the first drop in more than a decade. That was despite key indicators like exports and lending holding up well last quarter.