Time for Lenovo to get a grip in mobile 27 May 2016 The tech giant is a trailblazer for Chinese firms going global by doing deals overseas and adopting Western governance. The ill-judged takeover of Motorola’s old mobile business is testing that reputation. Absent a quick turnaround, Lenovo’s credibility will take a real dent.
U.S. probe forces Alibaba in the right direction 26 May 2016 The Chinese e-commerce giant’s accounting is under investigation. Depending on the outcome, Alibaba may have to consolidate its loss-making logistics business. If the scrutiny helps shed light on some of the group’s many blind spots, investors will be better off.
China “super-regulator” no match for foreign peers 26 May 2016 The People’s Republic may create a more powerful financial watchdog with the teeth to prevent a repeat of last summer’s policy missteps. The new body would boost policy coordination. But the power of top party leaders and provincial officials means it will still lack real bite.
Russia’s show of financial power fails to convince 25 May 2016 Moscow is selling its debt to foreigners and lending $25 bln - 2 pct of domestic GDP - to Egypt for a nuclear plant. Such shows of financial strength are all well and good. But the debt sale isn’t quite what it seems, and lending big sums at sub-market rates is risky.
Supercell sale would mark reboot for SoftBank 24 May 2016 Chinese giants are reportedly circling the SoftBank-owned developer of mobile gaming hits like Clash of Clans. A $5 bln-plus sale would seal a good return. It would also suggest President Nikesh Arora is making SoftBank more disciplined about selling, as well as buying, assets.
Resurgent dollar could revive emerging market fear 24 May 2016 Comments by U.S. Federal Reserve officials have fuelled expectations of an earlier rate hike. That could put renewed pressure on emerging market currencies and capital flows. Fears about China’s slowdown are also due for a comeback. Investors should brace for a stormy summer.
Yum’s China split doesn’t look too tasty right now 23 May 2016 The KFC owner’s break-up plan was a sensible victory for activists. But worries about China mean this hasn’t yet done much for shareholders. With one of Yum China’s most logical partners walking away from a pre-spinoff investment, it may be even longer before value is created.
Richemont accepts new tempo for luxury watches 20 May 2016 The Cartier owner faces a drawn-out downturn in demand. April sales fell 15 percent, even compared to a terrible 2015. The Swiss group can cut costs, but the bigger problem is that luxury watch demand is less resilient than it once seemed.
Chip deals will set tone for Taiwan-China ties 20 May 2016 New president Tsai Ing-wen will soon decide whether to approve investments worth almost $1 bln by a Beijing-backed group. China’s push into semiconductors is a challenge for Taiwan’s tech-dependent economy. The outcome of the stalled deals will shape broader economic relations.
Robots are more solution than problem for China 20 May 2016 Factory jobs have lifted millions from poverty, and China is obsessed with social stability. Despite that, a huge push to upgrade via automation still makes sense. The workshop of the world is inefficient and low-tech, and the workforce is already shrinking.
BASF best leaving Monsanto seeds for the birds 19 May 2016 Bayer’s bid for the U.S. seed maker puts its German rival on the spot. Monsanto and BASF work together on research and there are few other potential merger partners. Yet the maths of a $50 bln-plus counterbid would be a stretch. BASF has sat out other big deals; it can again.
Tencent can shield itself from ad slowdown 19 May 2016 The Chinese gaming giant warned a slowing economy may clip its fast-growing advertising business. But soaring revenue from mobile games, which topped $1.3 bln in the first quarter, cushions the blow. Besides, unlike rivals Alibaba and Baidu, Tencent relies less on ad dollars.
Burberry’s cloth-cutting looks too tame 18 May 2016 The British brand plans to rip out 100 million pounds of costs after a 10 percent drop in full-year pre-tax profit. But despite speculation, there was no move to lighten the load on lead designer and Chief Executive Christopher Bailey. That may be a missed opportunity.
Labour costs drive China’s $5 bln march for robots 18 May 2016 Home appliance maker Midea is eyeing a takeover of German robot maker Kuka. Machines can replace domestic migrant workers as wages soar, and help push China up the manufacturing value chain. Government subsidies may aid the otherwise thin financial logic for the buyer.
Apple ally Didi highlights China’s tech muddle 18 May 2016 Last year China wanted firms listed abroad to return. Now some buyouts are struggling, while the $25 bln Didi is mulling a U.S. listing. Tech is China’s hottest sector. But unless it gets easier to float at home, the industry’s biggest success stories will keep looking overseas.
BOC Aviation’s Hong Kong flotation deserves to fly 18 May 2016 The plane-leasing group is taxiing towards a $1.1 bln offering. Being under Bank of China’s wing means cheaper funding and better returns than standalone rivals. Yet the premium valuation is only justified if the state-backed parent remains willing and able to act as a backstop.
Luxury gets glum postcard from Chinese tourists 17 May 2016 The high-rolling travellers on whom posh brands rely cut their spending by a fifth in April. China’s curbs on bringing goodies home may be the culprit. It’s no longer enough to say luxury is in a cyclical downturn - old ways of predicting demand are coming unstitched.
Terex turns controversial M&A fight into group hug 16 May 2016 The crane maker scrapped its merger with Finland’s Konecranes after new U.S. tax rules killed the deal’s logic. Konecranes is now just buying the ports business, the unit that raised security fears about a rival bid from China’s Zoomlion. It’s now free to buy the rest of Terex.
Money trail shows China sticking to bad habits 16 May 2016 Total credit jumped again in April, suggesting Beijing is making little progress weaning the economy off its addiction to debt. Infrastructure and property investment are still expanding quickly. Despite renewed talk of reform, growth still seems to be the main priority.
Wanda’s $6 bln reshuffle reveals China movie hype 16 May 2016 Wang Jianlin’s Chinese cinema chain is buying some of the tycoon’s assets including recently acquired Legendary Entertainment. Filings show the Hollywood studio lost $556 mln last year. Fantastical valuations fuelled by China’s box office boom are far ahead of financial reality.