China’s wise men come down to earth with a bump 19 Oct 2015 The country’s Q3 GDP grew at 6.9 pct, its slowest rate in six years. Yet the real state of China’s economy has become unreadable. Market signals suggest a worrying new truth: the country’s leaders are doing no better than might be hoped from a group of clever but fallible humans.
Alibaba bid turns Youku from horror to mystery 16 Oct 2015 The Chinese e-commerce group is offering $5.2 billion to buy the video site in which it owns a stake, at a 30 percent premium. Being absorbed into Alibaba ought to improve returns for the perpetually loss-making Youku. It should create value – not that either side is asking.
The Devil’s Dictionary of Post-Crisis Finance 16 Oct 2015 Ambrose Bierce wrote “The Devil’s Dictionary” a century ago, ranging acerbically across government, commerce and life. Breakingviews’ original re-use of the form for finance – in 2007, when the crisis was barely beginning – is no longer adequate. Herewith part two of the sequel.
Suntory and Tsingtao give cold comfort to MegaBeer 16 Oct 2015 The Japanese and Chinese beverage groups are ending a JV selling suds in the People’s Republic. Since teaming up in 2012, industry volumes have started to shrink for the first time. There’s more than just AB InBev and SABMiller to worry about in the world’s biggest beer market.
China rings efficiency in $34 bln telco tower deal 15 Oct 2015 The country’s three big carriers are combining their infrastructure assets in a new company to share costs. The deal is a prelude to a listing that would bring more private capital into the sector. It’s a still-rare example of state-backed companies embracing sensible reform.
Hong Kong IPOs leaning too heavily on cornerstones 15 Oct 2015 The practice of pre-selling shares to supportive investors is out of control. Distressed debt manager Huarong, for example, has pledged two-thirds of its $2.5 bln offering to big Chinese buyers. The cosy arrangement distorts pricing and undermines the concept of public markets.
Chinese fund invests enough to make angels weep 14 Oct 2015 Startup and venture capital matchmaker AngelList has landed $400 mln from a Beijing-based private equity firm. Allowing investors to piggyback the early-stage picks of experienced backers is a clever model. The sum involved, however, is almost certainly too much of a good thing.
China index reveals economy of two halves 12 Oct 2015 Breakingviews’ refreshed Tea Leaf Index shows the world’s second-largest economy running at different speeds. A shift towards tech, services and consumer goods should make for more sustainable growth. But traditional drivers like heavy industry and construction remain weak.
China’s campaign to stabilise yuan comes at a cost 9 Oct 2015 After the shock of August’s mini-devaluation, some calm has returned to the currency. Yet restoring stability required hefty central bank intervention and a crackdown on capital outflows. China is still a long way from letting its exchange rate be set by market forces.
China web merger is latest sign of funding fatigue 8 Oct 2015 A mooted $15 bln tie-up between two discount shopping sites comes months after the country’s top taxi apps joined forces. Web giants like Alibaba and Tencent have poured billions into startups that connect local services to users. But subsidy wars are testing investors’ patience.
Yum’s China indigestion strengthens spinoff case 7 Oct 2015 The U.S. fast-food giant reported surprisingly slow third-quarter growth, due mainly to weak Chinese demand. That cut the stock price a fifth, and may derail Middle Kingdom expansion. Operations there have big upside, though, and liberating them now should top the company’s menu.
Overseas investors fire warning at China Inc 5 Oct 2015 Hong Kong shareholders rejected China Merchants Bank’s employee share scheme after the lender gave them too little information. It’s a small sign big investors are turning less tolerant of shoddy governance. Chinese companies used to silent acquiescence may be in for a surprise.
Alibaba delivery arm is a financial blind spot 2 Oct 2015 The Chinese e-commerce group is a minority investor in the business that arranges delivery of billions of its packages. Yet Alibaba has spent over $6.3 bln on logistics-related deals in the past three years. Even if the investments make strategic sense, shareholders are in the dark.
Western Digital deal may thread U.S.-China needle 30 Sep 2015 The data storage company’s sale of $3.8 bln of stock to China’s Tsinghua exchanges a minority interest at a premium price for a seat on the board. Politics make selling control tough, but this kind of arrangement may help smooth Western Digital’s path in Chinese markets.
China criticism makes even Li Ka-shing defensive 30 Sep 2015 The Hong Kong tycoon has rejected accusations that he is turning his back on the mainland. Yet the fact he felt the need to issue a defence shows the hostile terrain now facing business leaders in China. Shrill allegations of treachery will only make them less willing to invest.
Alibaba Indian e-commerce scramble risks conflict 30 Sep 2015 The Chinese giant is investing at least $500 mln in Paytm, India’s top mobile wallet and wannabe marketplace. Alibaba already owns a stake in archrival Snapdeal. It’s odd for competing firms to share strategic investors. Consolidation may be the best way to manage the tension.
Yahoo’s Alibaba spinoff troubles may outlast boss 29 Sep 2015 Marissa Mayer plans to complete the internet firm’s separation from the Chinese e-commerce company. Resolving tax issues may take years, though, if authorities challenge the deal. With Yahoo’s business stagnant and competition rising, the CEO may be gone before wrangling ends.
Li Ka-shing’s power deal is at risk of a jolt 29 Sep 2015 The tycoon’s Cheung Kong Infrastructure unit wants to buy cash-rich affiliate Power Assets for $11.6 bln in stock. Investors have the motive and the means to push for better terms. But they need to believe the rewards of a sweetened offer outweigh the risks of Li walking away.
Cameron, China and the missing pig semen 25 Sep 2015 The People’s Republic’s taste for hog DNA was touted as a 45 million pound win for UK trade back in 2013. Two years later, the results have fallen woefully short. Trade and investment are real, but the more important stuff happens when politicians get out of the way.
Modi offers Silicon Valley the welcome Xi won’t 25 Sep 2015 The Indian leader is visiting California days after his Chinese counterpart met U.S. tech bosses. Though India’s economy is smaller and harder to navigate, the door is open. For foreign players, India’s promised growth may outweigh China’s giant but hard-to-reach opportunity.