Chinese shares offer perverse safe haven 4 Mar 2020 U.S. equities fell and gold jumped following the big Fed cut. China’s benchmark stock index, however, has improved a world-beating 11% over the last month as local monetary stimulus eclipses weak business activity. That fondness for looser money creates a counterintuitive hedge.
Hong Kong property tycoon builds model buyout 28 Feb 2020 Peter Woo wants to take his $19 bln Wheelock empire private using cash and shares in subsidiaries. He’s shrewd to pull the plug on the discounted, thinly traded holding company while an epidemic threatens valuations. The 52% premium is fair, and a pleasant surprise for investors.
Viewsroom: Hong Kong in the time of Covid-19 27 Feb 2020 Small businesses are hurting, while bankers sit idle and families struggle with school closures and other containment efforts. Despite having only some 80 coronavirus cases, life – as well as retail, tourism and real estate – feels noticeably different in the Asian financial hub.
Budweiser gets a bitter taste of breakups 27 Feb 2020 Covid-19 may cost AB InBev’s Asia spinoff $170 mln in EBITDA from China for January and February. That’s some $3 bln of implied enterprise value, before factoring in the rest of the year or the region. There’s a price to pay for sprawl, but a narrower focus brings its own risks.
Hong Kong applies Band-Aids to virus-related ills 26 Feb 2020 The city rolled out a $15 bln support package as it lurches into recession. Employers get more than workers, but there are handouts for all. It’s a move in the right direction for a notoriously tight-fisted government. It may soon need stronger financial medicine, however.
HSBC investors are a step ahead of the interim CEO 18 Feb 2020 Noel Quinn is aiming for a return on tangible equity of up to 12% in 2022. He plans to get there by axing $4.5 bln in costs and better allocating capital. For all the upheaval, the shares already imply a similar level of profitability. The main risk now will be missing the mark.
Chinese panic is more contagious than coronavirus 7 Feb 2020 Shoppers are aggressively hoarding rice, toilet paper and vegetables, and sealing off their gated apartment complexes. That suggests they think things will get a lot worse before they get better. Such anxiety may become self-fulfilling; economic malaise can outlive an epidemic.
Hong Kong’s new banks will move fast, break things 3 Feb 2020 The city’s first digital-only bank, backed by insurer ZhongAn, is paying around 6% deposit interest. Similar promotions may come from newbies backed by Ant, Xiaomi, and others. The aggressive entrance suggests incumbents may lose revenue share fast to rich upstarts.
Virus tests Hong Kong market’s resistance 29 Jan 2020 A full-blown epidemic would rock what is already the year’s worst-performing major exchange index following a fresh 3% fall. Though a protest-related tourism tumble may prove a blessing in disguise, anti-Beijing public sentiment is also complicating the health response.
Moody’s Hong Kong downgrade flunks Carrie Lam 21 Jan 2020 The credit agency cut the city’s rating, citing the leader’s feeble response to months of unrest. It’s a terse rejection of her stimulus plan, but Moody’s also indicted wider institutional inertia. That suggests economic revival will be difficult, whether Lam stays or not.
Lazy days are over for buyout barons in China 16 Jan 2020 Dealmakers were gloomy at an annual forum in Hong Kong after a disappointing year. Private equity can no longer rely on minority stakes in a booming economy to juice returns. Tech bets are mostly off. The next batch of funds will work hard on traditional, unloved businesses.
Hong Kong’s luxury icon sells new retail model 15 Jan 2020 Chow Tai Fook plans to close up to 15 of its local stores. The $11 bln jeweller’s decision comes at a moment of calm after months of protests and before a key shopping holiday. That suggests a recovery is distant. Tapping mainland shoppers elsewhere is the new way forward.
Hong Kong bourse boss trusts in awkward necessity 10 Jan 2020 Charles Li has seen HKEX earnings plunge on political unrest as Beijing mulls alternative venues. Yet Li is confident China’s market inefficiencies will leave it dependent on Hong Kong’s financial plumbing in the end. The exchange’s reviving share price suggests investors agree.
Viewsroom: Hong Kong’s uncertain 2020 9 Jan 2020 Political unrest continues to roil the financial hub. For investors, though, it’s mostly business as usual as markets take protests in their stride. As Beijing replaces its top representative in the city, and makes other changes, that uneasy balance may be hard to sustain.
Hong Kong poised to reclaim IPO crown 6 Jan 2020 It has been a decade since the Asian financial hub beat the Big Apple in new equity issuance. Violent protests are a challenge, but Alibaba provided some reassurance. The U.S. backlash against China and a stable of mainland unicorns will help make Hong Kong No. 1 again in 2020.
HSBC’s Hong Kong headache looks like its worst 3 Jan 2020 Demonstrators vandalized bank branches after police froze a protest-related account. HSBC earns over half its profit in the former British territory, so boycott threats and the current recession are big risks. With Beijing on his back, interim CEO Noel Quinn has few good options.
Trade wars are holding cross-border M&A hostage 31 Dec 2019 Global deals exceeded $3.8 trln in 2019, but takeovers where buyer and seller are in different countries fell by a quarter. Geopolitical tensions make any big transaction a potential target. Spats between the United States, China and the EU look set to keep weighing on activity.
Best of Breakingviews: What you read most in 2019 31 Dec 2019 Deals dominated the most-clicked stories for the year, while spats over everything from cars to comedy classic “Friends” made it into the top ten list. Graphics and a punk politico punched above their weight too. But an Indian tycoon and GE’s surprise whistleblower beat them all.
Beijing will dilute Hong Kong with Shenzhen 27 Dec 2019 Protests in the former British colony endanger China’s gateway to international markets. Past attempts to turn neighbouring Shenzhen into a rival financial hub have been half-hearted. Now Beijing has reason to press harder, especially with bold reform to capital controls.
Gaming’s strongest opponent will be regulation 23 Dec 2019 New Microsoft and Sony consoles come out in 2020. Apple and Google want to be the Netflix of online play, and game makers like Activision Blizzard, Epic and EA hold a strong hand. But tighter scrutiny of gambling-style digital prizes will temper the $130 bln industry’s growth.