Michael Kors IPO cut from same cloth as Prada’s 6 Dec 2011 The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.
Pharma center of gravity shifts eastward 6 Dec 2011 Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.
Olympus’ ex-CEO no shoo-in for post-scandal return 6 Dec 2011 Michael Woodford wants his job back at the Japanese group now that those accused of covering up investment losses have left the board that fired him. But the same board hired him, and he only ran the company for six months. Olympus shareholders should make sure to look around.
India shuts up shop 5 Dec 2011 What seemed like a turning point last week, when the Indian government announced it would allow foreign investment in retailing, now looks to have become an embarrassing U-turn by the beleaguered Indian government. India can’t afford to continue tarnishing its brand.
Bagehot to cenbanks: liquidity needn’t be cheap 30 Nov 2011 The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.
Central banks take on market fears 30 Nov 2011 A six-nation coordinated move to make cheaper dollars available globally seems aimed initially at European banks. Like it or not, it shows a willingness to do what private investors won’t. If politicians show similar unity, they could win the standoff with markets over the euro.
China’s rich splash out despite slower growth 30 Nov 2011 Macro data is weakening but art auctions and handbag sales are still going gangbusters. The disconnect is disconcerting. When growth is rapid, conspicuous consumption looks like progress. Now it suggests waste. The callous rich could become targets of political and popular ire.
Myanmar forms centre of economic love triangle 30 Nov 2011 A visit from Hillary Clinton marks the end of Myanmar’s pariah status, but there is much work to be done before the country can offer investors sustainable returns. With the United States, China and India all jockeying for position, capital flows may come too quickly.
Australia still vulnerable despite triple-A crown 29 Nov 2011 Investors love the low official debt, high yields and strong exports to China. A Fitch upgrade makes Australia one of 14 nations with top marks from all three rating agencies. But there’s kryptonite: indebted households and reliance on foreign investors and high commodity prices.
China could gain from helping Europe via IMF 28 Nov 2011 Rescuing the euro zone is a tough sell for a still-poor nation. But like Saudi 35 years ago, China could parlay some of its $3.2 trln of reserves into greater international clout through the IMF. It would be saving a big export market and a reserve diversifier into the bargain.
BRIC success shows the power of a good idea 28 Nov 2011 Goldman’s Jim O’Neill invented the acronym for the leading emerging markets 10 years ago. What started as a good economic theme became a state of mind – the embodiment of a global power shift. So far, so good, but at least one BRIC is likely to disappoint in the next decade.
M&A gives no reprieve for China’s global lawyers 25 Nov 2011 Mallesons of Australia plans to merge with King & Wood, a Chinese rival. It sounds harmonious, but won’t do much to change the fact that foreign counsels get short shrift in the People’s Republic. When the WTO let China in, it largely forgot lawyers. Their prospects look bleak.
China won’t be Asia’s importer of last resort 25 Nov 2011 Slower manufacturing in the second-largest economy is bad news for other Asian exporters like Japan and Korea. They’re counting on China as U.S. and European demand ebbs. But at least a fifth of China’s imports go to making exports, so China may not prove the hedge they hope.
Beijing’s big bazooka packs diminishing punch 24 Nov 2011 Chinese banks may soon have their lending capacity relaxed, freeing them to juice up the economy. But another 4 trillion yuan of stimulus might add just 2 percent to GDP – assuming banks could find willing borrowers. China doesn’t need to lend more, but more wisely.
Tata keeps things in the family 23 Nov 2011 Cyrus Mistry’s appointment as Ratan Tata’s successor continues the habit of dynastic succession in Indian companies. That may not be such a bad thing. But Mistry can promote outside talent by stepping back from the chairmanships of Tata Steel and Tata Motors.
PCCW spinoff can’t unwind tycoon discount 23 Nov 2011 Richard Li’s conglomerate snagged a generous $3.8 bln price tag for its Hong Kong telecom business, thanks to a promise of fat dividends. But the spinoff exposes an inconvenient truth: the mogul’s own holding company is valued at almost 40 percent less than the sum of its parts.
Asia’s half-hearted reform exposed by Western woes 23 Nov 2011 Eastern economies are grappling with slowing exports and receding investment from Western partners. It didn’t have to be this way. Asian economies failed to use boom years to uproot their outmoded development model. Making those changes now promises to be doubly painful.
Chinese accounting paranoia finds new victim 22 Nov 2011 Focus Media’s stock fell 40 percent after it was accused of overstating assets by the same short-seller that targeted Sino-Forest in June. This time the target is a bigger name, and the claims more far-reaching. Fast growth and powerful insiders make Chinese firms easy targets.
Wen paves way for yuan depreciation 21 Nov 2011 China’s premier said the currency should be more flexible “in either direction”. The idea of devaluation might sound strange, but the Chinese trade surplus is shrinking and inflation is cutting into the yuan’s real value. This could be a good time to let the market decide.
China’s own "Little Greeces" should help themselves 18 Nov 2011 Shanghai became the first local government to sell bonds this week. Provinces like Hainan, which has debts of almost 100 percent of GDP, cannot easily go down that route. Beijing might not come to the rescue, so they need help themselves with austerity and asset sales.