Long arm of U.S. law doesn’t extend to cyberspace 20 May 2014 Credit Suisse’s guilty plea and $2.5 billion fine for helping tax dodgers shows Uncle Sam’s hold over finance is strong even beyond its borders. Yet hacking accusations against Chinese military personnel have produced only defiance. It’s a sign of the limits to U.S. legal power.
Alibaba tries out role of the noble monopolist 20 May 2014 The retailing group effectively owns Chinese online shoppers. Its payment affiliate is the biggest game in town. Both are attractions for the upcoming IPO. As China’s monopoly regime matures, Alibaba’s challenge will be showing its dominance helps the market rather than restricts it.
Ecuador winning bond market forgiveness too easily 19 May 2014 Low inflation, scant supply and an improving economy may be driving appetite for a planned $700 mln offering. But the country defaulted on $3.2 bln of debt only six years ago. While absolution – or amnesia – may be good for deadbeat regimes, it raises global financial risk.
Graft case may yet test Hong Kong’s top developer 16 May 2014 The Kwok brothers are on trial in one of the city’s biggest corruption cases. Sun Hung Kai Properties’ business has held up since the arrest of its co-chairmen in 2012, but the group’s shares have lost their premium rating. The verdict will determine the scandal’s true cost.
Two deals Alibaba could strike in America 15 May 2014 Yahoo’s holdings in the Chinese e-commerce giant and Yahoo Japan are valuable, but selling them brings tax pain. IPO hopeful Alibaba wants to reduce foreign internet groups’ stakes. Buying Yahoo could reduce both problems. Industrial logic, though, suggests an eBay deal instead.
CITIC goes slowly on reform with $5.1 bln placing 15 May 2014 The Chinese group’s Hong Kong subsidiary will sell shares to 15 investors as part of a union with its state-owned parent. That allows CITIC to keep its stock market listing. Yet most of the buyers are also backed by the government. A deep overhaul of state firms looks a way off.
Tencent shows China’s online giants can coexist 15 May 2014 Growth in mobile gaming revenue tripled in just three months. It’s a small part of the group’s overall business, but the most important as users switch to handheld devices. While Alibaba rules mobile shopping, there’s enough to go round, and justify Tencent’s premium valuation.
China’s online shoppers more mobile than they look 14 May 2014 Alibaba sold $37 bln of goods via handsets in 2013. That suggests the market is 60 pct larger than estimated by go-to data provider iResearch. Tech metrics are always slippery. But if mobile commerce really quadrupled in 2013, prospects for internet players are due a rethink.
GSK case no cure for Chinese corruption 14 May 2014 Graft charges against three of the British drugmaker’s senior China executives suggest a top-down culture of bribery. What they really show is a broken healthcare system and a government many foreign groups don’t know how to handle. On both fronts, it’s still business as usual.
Macau casino stocks have further to fall 14 May 2014 A crackdown on the use of China UnionPay cards in the gambling enclave is the latest scare for investors. Restrictions on cash transfers will dent growth. Though casino stocks are down 19 pct since early March, earnings multiples still don’t leave much room for disappointment.
China again faces finance’s unsolved problem 14 May 2014 Despite many attempts, nobody knows how to reverse financial excess without severe economic damage. Debts either cause trouble right away or spur more bad behaviour after rescues. China’s state has advantages, which were displayed in a 1998 rescue. Next time could be different.
China’s other e-commerce giant is priced to go 13 May 2014 JD.com sorely lags Alibaba in online retail, and its mooted $23 billion IPO valuation reflects that. But it doesn’t factor in greater mobile market share from an alliance with Tencent, or the potential for making a decent profit. Either would leave the shares with room to rise.
Delays breach Great Wall’s premium auto ambitions 12 May 2014 Investors wiped $2.3 billion from the Chinese automaker’s market value after it indefinitely postponed the launch of its H8 model. Given modest sales estimates, that seems excessive. What’s really at stake is whether Great Wall has what it takes to be a global brand after all.
China’s central bank tames unruly internet finance 12 May 2014 Authorities are reining in the banking ambitions of the country’s web giants. News of potential curbs on online payments and funds has alarmed investors. But by providing some much-needed order in web finance, China’s central bank seems to be endorsing rather than killing it.
Alibaba finance arm better out than in for IPO 9 May 2014 Alipay is crucial to Alibaba’s success, yet isn’t part of the soon-to-be listed Chinese e-commerce group. Founder Jack Ma caused outrage when he whisked Alipay away in 2011. But with hindsight, the current arms-length arrangement might be better for future Alibaba shareholders.
Pfizer unlikely to avoid China anti-trust therapy 8 May 2014 The chance to vet a $106 bln deal for drug-maker AstraZeneca looks too good to pass up. Watchdog MOFCOM is keen to stand up for local consumers. It’s no bogeyman: decisions are slow but mostly well-reasoned. Pfizer might improve its chances by getting Astra’s board on-side.
Alibaba’s IPO filing has strategy-shaped hole 8 May 2014 The Chinese e-commerce giant’s disclosures make little sense of its recent investments. A near-monopoly and fat margins give Alibaba leeway with new investors, but the worry is that having other people’s money to spend isn’t conducive to discipline.
Alibaba’s big reveal: high growth, odd governance 7 May 2014 The Chinese e-commerce giant’s IPO filing shows it processed $248 bln of goods in 2013, yet squeezed just a third as much revenue from sellers as eBay. Both numbers should continue to grow. The catch is that new investors have little say: the founders are keeping firm control.
China could reform its way into a housing slump 6 May 2014 Prices are sliding; homebuyers are getting wiser. Sales fell by almost a third during the May holidays. It creates a dilemma: financial repression helped blow up the bubble; without it there may be a pop. Still, the case for interest-rate reform is too strong to turn back now.
Mini-me tech bubble is mere shadow of 2000 excess 5 May 2014 The run-up may have paused, but dozens of companies are in line to float, hubris is rampant, oddball metrics abound, and revenue-free startups are still worth fortunes. Even nerd culture has become hip. The latest internet boom is as absurd as the last, but it’s far smaller.