U.S.-China tech war may split progress in two 16 May 2019 Nationalism has sparked Washington and Beijing to begin separating their tech sectors, on supposed security grounds. Economics promises to prolong the struggle. Clustering, scale and technical prowess mean both sides can succeed in areas like 5G even if the outcome isn’t optimal.
Walmart is a test of broader tariff harm 16 May 2019 The retailer reported U.S. sales rose 3.4%, yet momentum could wane once higher border levies on another $200 bln of imports from China kick in. Walmart may not be the most exposed business, but Americans shopping at its more than 5,300 stores will feel it in their pockets.
Washington and Beijing push tech chasm wider 16 May 2019 President Trump has launched an aggressive assault on telecom giant Huawei, as China moves to strengthen cybersecurity rules. The moves will further divide the sector and complicate trade negotiations. A costly technology cold war looks here to stay.
Facebook eyes new path around China’s great wall 15 May 2019 Blocked from operating there directly, the social network is considering alternatives including minority stakes in local tech firms. Politicians in Beijing and DC may not like it. Still, Yahoo’s investment in e-commerce giant Alibaba sets a highly profitable template.
Tencent deserves its premium over Alibaba 15 May 2019 China’s tech titans face slower growth in their respective strongholds of video games and e-commerce. As they fight it out in finance, Alibaba's $150 bln affiliate, Ant, is winning. Tencent's chat app, though, gives it an overall edge that justifies a higher earnings multiple.
Coal bears marks of Beijing’s policy smudges 15 May 2019 China is moving away from the smoke stack, but imports of the black stuff rose 14% in April. That’s deceptive: it’s a fuel caught in transition, between demand for blue skies and blue-collar jobs. Domestic supply will rise, but long-term, foreign purchases are likely to fall.
Trade row adds to headaches for next Foxconn boss 15 May 2019 The iPhone assembler’s quarterly profit fell a worse-than-expected 18%, as tech demand cools. A U.S.-China spat is escalating too. Founder Terry Gou has sought to diversify away from Apple for years, in part by scrambling up the value chain. His successor will need to climb faster.
Trump’s tariffs put yuan shorters back in the game 14 May 2019 China's currency is nearing 7 per dollar, as U.S. duties hit $200 bln of goods. That may cushion the pain but encourages capital flight, hampering efforts to gin up a flagging economy. Beijing could well tighten controls on overseas investment and debt repayment to compensate.
Recess ends for China’s private-school startups 14 May 2019 Companies like $19 bln tutoring giant TAL have long benefited from foreign enthusiasm for Chinese education plays. Share performance, however, has been inconsistent. Demographic challenges, plus fresh policy headwinds in Beijing and Washington, put growth at risk.
JD’s profit strength hides shopper fatigue 10 May 2019 After an impressive first quarter, China's $40 bln web retailer is on track for its first annual net profit. But customer growth has flatlined. That suggests damage from nemesis Alibaba catching up in logistics, and upstarts like Pinduoduo adapting faster to new consumer trends.
Trade flows will reveal the true cost of tariffs 10 May 2019 Washington has hiked duties on $200 bln of Chinese goods, after what officials say was a push by Beijing to renege on promises. Both sides intimate their economies can survive a blow that may only slightly dent GDP. Supply chains and the like, though, will show long-term losses.
Budweiser’s Hong Kong IPO may pop open more M&A 10 May 2019 AB InBev has filed documents to float its Asian business. It will fetch a higher valuation multiple than its parent, and could be worth some $60 bln, helping to pay down some debt. The shares also give deal junkie boss Carlos Brito a currency to shop for more.
American markets are great again for Chinese IPOs 9 May 2019 A near-record number of Chinese firms went public on U.S. exchanges in 2018. Luckin Coffee is among those continuing the trend this year. It contrasts with sharp drops in Chinese investment amid a trade war and other strains. But the healthy pipeline faces a new Shanghai rival.
HNA’s Hong Kong spat is a sign of worse to come 9 May 2019 The indebted Chinese conglomerate is stuck in a bizarre boardroom brawl at Hong Kong Airlines. The sight could lead buyers to demand steeper discounts as HNA unwinds a $50 bln acquisition spree. Creditors like China Development Bank have cause to be anxious.
Private equity could choke on Imperial cigar sale 8 May 2019 Imperial Brands could raise 1 bln pounds from a unit that makes premium stogies. Its rapid growth means a buyout group could earn decent returns at that price. Yet concerns over cancer could irk their investors, and complicate an exit. A Chinese peer may be a more logical owner.
China’s Luckin Coffee roasts a rich IPO 7 May 2019 The chain is seeking to raise up to $590 mln as it races to overtake Starbucks. Luckin is growing fast, but burning cash to do so. Although its strategy diverges from that of its Seattle rival, on a comparative revenue-per-store basis the implied $4 bln valuation is high.
U.S.-China tension will outlast Twitter trade spat 6 May 2019 Global markets fell after Donald Trump tweeted that he’d increase tariffs on Chinese goods. Even if trade talks get back on track, other U.S. moves will damage relations. They include curbs on investment from, and tech sales to, the PRC as well as an enforcement push.
China loses leverage in battle against debt 6 May 2019 Hours after Donald Trump threatened to raise tariffs on Chinese goods, the central bank made another $40 bln available for small mainland firms to borrow. Prior easing moves helped stocks and housing more than the productive economy. This delicate balancing act looks wobbly.
Trump tariff threats shake trade deal foundations 6 May 2019 The U.S. president says he will soon hike duties on $200 bln of Chinese goods. It may well be a negotiating ploy, but has rattled markets anyway, just as both economies have steadied. Such bursts of frustration are worrying, and may make it harder for an eventual pact to stick.
Alibaba’s custom font plays to tech type 3 May 2019 The Chinese e-commerce titan designed Alibaba Sans to push its brand and improve legibility. Text is becoming as personalised in tech-land as accounting metrics. Apple, Netflix and Uber have bespoke characters, too. The bar on visual vanity projects has been raised.