Asian tycoons give LBOs an eastern twist 5 Jun 2013 Shuanghui’s takeover of U.S. pork group Smithfield combines hefty leverage and limited cost savings. Recent deals in Thailand and Singapore have also been quasi-buyouts. As long as local banks remain flush, Asian groups will give private equity firms a run for their money.
Soho tycoon’s U.S. deal is sign of top – for China 4 Jun 2013 Zhang Xin, the new part-owner of New York’s GM Building, typifies China’s real estate elite. Her company increased earnings fivefold in as many years through timing, panache and smart accounting. Investing her wealth abroad suggests the good times at home are coming to an end.
GM Building’s $3.4 bln price tag is sign of times 3 Jun 2013 A 40 pct stake in the Apple Store-tenanted Manhattan landmark has set a new record, with a value a fifth above a 2008 transaction. A Chinese property billionaire and Brazilian bankers are the buyers. But the building has a cursed history – not just for the carmaker that built it.
Double arbitrage validates China’s pork purchase 30 May 2013 Why is Shuanghui paying $4.7 billion for U.S. producer Smithfield? Simple: imported pork is cheaper than the Chinese-reared variety, and shoppers will pay up to avoid suspect local produce. With luck, the deal will spark a change in the factors that make it so attractive.
Tea Leaf Index: China needs less shady stimulus 29 May 2013 Our index has slumped to the lowest level since August 2012. Then, a surge in “shadow bank” lending drove a property-led recovery. But real estate is already on a tear, and banks are now being reined in. Unless urbanization gets an extra push, recovery looks distant.
Europe rightly throws shade on solar tariffs plan 28 May 2013 Why would Germany and other EU countries reject punitive tariffs on Chinese solar panel makers? After all, they are the ones who suffer. But European companies in other industries producing in China have more to lose. Fairness may not prevail, but rationality should.
HK art boom rests on sketchy foundations 27 May 2013 The city’s blockbuster art fair showed it has the infrastructure and location to draw crowds of rich Asian buyers. But Hong Kong also benefits from other drivers, like cheap money and the financial controls stunting mainland China’s own art scene. Those look less sustainable.
Microsoft stages nebulous Chinese comeback 24 May 2013 The software titan has for years been stuck in a piracy trap in China - many use its products, and few pay. Cloud-based services like Windows Azure are less prone to misuse. This time there are new problems: fierce competition, and politicians that favour domestic rivals.
China-U.S. audit truce wisely avoids big issues 24 May 2013 Auditors in China can no longer claim that “state secrets” prohibit disclosure to the U.S. watchdog. That should keep Chinese companies from being banned in U.S. markets. There are open questions about sovereignty and state capitalism, but those are fights for another day.
Japanese stocks join the global risk parade 23 May 2013 The Nikkei’s 7 pct drop is an overdue correction: the index had risen by two-thirds in six months. What’s striking is that the selloff was sparked by concerns over U.S. interest rates and Chinese growth, not Abenomics. Being a haven for risk-hungry investors has its drawbacks.
Solar subsidies don’t merit costly trade war 22 May 2013 Solar panel prices are depressed, but irate Western manufacturers probably exaggerate the role of Chinese government support. While punitive EU tariffs and tit-for-tat Chinese retaliation might help profit, they would almost certainly make solar energy less competitive.
Goldman trumps HSBC in financial Chinese chequers 22 May 2013 Selling its final stake in lender ICBC leaves Goldman Sachs with an annual return on its investment of around 36 percent. HSBC, which just sold out of insurer Ping An after ten years, notched up a lesser 23 percent. The reason: the UK lender put strategic value before profit.
Alibaba’s next superlative: China’s top fee payer 20 May 2013 The e-commerce giant is already a big generator of investment banking revenue. Factor in a potential IPO, and for global banks Alibaba could be the biggest client to come out of China in a decade. In a weak market, the battle lines are already being drawn.
Danone gets China dairy deal, but not the cream 20 May 2013 The French group scrapped talks with milk producer Mengniu five years ago - just in time to avoid 2008’s melamine scandal. Since then, Mengniu has changed its supply chain and become state-owned. Danone’s new $417 million investment looks safer, but the terms look tougher.
What China can learn from Hong Kong’s war on graft 15 May 2013 Chasing a former watchdog for lavish dinners sounds trivial, but focusing on the little things is what made Hong Kong clean up. China’s leaders also pledge to root out corruption, but lack three powerful weapons: independent institutions, freedom to complain, and zero tolerance.
Galaxy’s $5.7 bln valuation looks starry-eyed 14 May 2013 The Chinese securities firm’s short-term prospects look bright if capital markets continue to open. But peer beyond the next few years’ earnings, and the case is less persuasive. Broking is a fragmented, commoditised business. Galaxy is big, but potential rivals are bigger.
Europe should cheer, not jeer, cheap Chinese solar 7 May 2013 Even if China is subsidising its domestic solar producers, the EU plan to slap big tariffs on imported panels is counter-productive. Cheap components are fuelling a solar boom. Europe may have missed the chance to become a manufacturing hub, but it should still reap big benefits.
Galaxy IPO hangs on Chinese equity market lift-off 6 May 2013 Listing the country’s biggest broker in Hong Kong while investors are shunning stocks at home may seem strange. But Galaxy is a bet that China’s markets must at some point get bigger and deeper. If share prices pick up in the meantime, it should benefit more than listed peers.
Why China’s “Minsky moment” may be a long way off 1 May 2013 The country’s rising debt and slowing economy point to the kind of financial meltdown theorized by economist Hyman Minsky. But China’s closed, state-controlled system can delay such market panics. The bigger challenge is managing social tensions arising from slower growth.
Alibaba spots pricey treasure in Weibo’s network 30 Apr 2013 The e-commerce giant has paid a punchy price for an 18 pct stake in the Chinese microblogging phenomenon. A $3 bln valuation is a lot for a business without much in the way of revenue. Alibaba may lure some Weibo users to its stores, but its thinking looks mainly defensive.