Predictions 2017

Banking whales have had their day

29 Dec 2016

A year ago, Bank of England boss Mark Carney suggested regulators had cracked the "too big to fail" bank problem. Yet new rules keep coming, and international cohesion is fading. The biggest cross-border lenders like HSBC will find it ever harder to make their cost of capital.

Tencent heads for high score in gaming M&A

29 Dec 2016

China's biggest tech company will look abroad for growth in 2017. It will probably follow its $9 bln purchase of mobile hit-maker Supercell with similar-sized deals. But these will barely move the needle. A bolder move would be to bid for U.S. heavyweight Activision Blizzard.

Diverging central banks will power dollar in 2017

28 Dec 2016

Donald Trump’s promise of increased U.S. government spending and the likelihood of tighter Fed policy contrast with continued weak growth and loose monetary conditions in the euro zone and Japan. That means the greenback is set to get stronger against most other currencies.

U.S. company cash deluge will lift only some boats

28 Dec 2016

Slashing corporate tax rates may break the dam on $2.5 trln booked overseas. The actual amount repatriated could be less than half that, however. And while CEOs and politicians talk about more jobs and factories, it's best to brace for a flood of buybacks, dividends and deals.

Maduro will survive, just, on Venezuelan tightrope

28 Dec 2016

The economy is a wreck, but the country's inept leader has probably done enough to avoid being forced from office in 2017, unless by fellow Chavistas. A bond swap and army-led food programs helped. His gutting of institutions, though, risks violence that may yet be his undoing.

Saudi’s IPO gusher will lay dormant

28 Dec 2016

A $2 trillion flotation of oil producer Aramco, once planned for 2018, is likely to slip further down Riyadh's agenda. Politics makes the IPO complicated, and recovering oil prices make it unnecessary. While Saudi's bankers may wish it otherwise, postponing is the logical choice.

Europe’s best antidote to populism is unpopularism

28 Dec 2016

Parties that promised to take on the elite had a roaring 2016. Even so, the withering of the moderate centre isn’t inevitable. In Greece the pendulum is swinging away from radical government. Liberals with sound economic policies can win – if they’re willing to make enemies.

Facebook and Google will swallow the ad world

27 Dec 2016

The two Silicon Valley titans are expected to account for nearly half the $270 bln budget for digital advertising in 2018. Even China's behemoth, Alibaba, is a distant third. Such dominance makes it harder and harder for starry-eyed startups to build sustainable businesses.

China’s central bank will lose its longtime leader

28 Dec 2016

Zhou Xiaochuan will step down in 2017, part of a wider leadership reshuffle as President Xi further consolidates power. Investors will miss the affable technocrat, who helped steer the world's second-largest economy for 15 years. Any successor will lack Zhou's market credibility.

Wal-Mart’s tortoise-like digital pace may pay off

27 Dec 2016

The plodding $218 bln retailer is slowly making strides in e-commerce. August's $3 bln purchase of Jet.com will accelerate the push to compete with Amazon in 2017. Patchy customer service and a brick-and-mortar image are some of the biggest remaining hurdles to online success.

Rate hikes will help U.S. pensions, but not enough

27 Dec 2016

If bond yields head higher, that will cut cash-strapped public retirement funds' sky-high liabilities. Weak returns and weaker-kneed politicians mean relief could be fleeting, however, especially if the economy falters. Illinois and Dallas are canaries in a $1 trln coal mine.

Trump, conservatives will clash over Ex-Im Bank

23 Dec 2016

The president-elect's "America First" industrial policy should help the agency that finances foreign purchases of U.S. goods. It has been hobbled by Republicans who deride it as corporate welfare. After the Carrier deal, a collision with free-market capitalism looks inevitable.

Harry Potter can add magic to predictive power

23 Dec 2016

As J.K. Rowling's boy wizard turns 20, it's a good time to recall how many agents and publishers rejected him. Similarly closed minds help explain why recent political upheavals have surprised many and economic forecasts are often wrong. A little more imagination goes a long way.

Driverless cars will be steered by insurers

23 Dec 2016

Who's to blame in a crash when no one's at the wheel: owner, manufacturer, software developer or someone else? And what if two collide? The industry needs answers, even as autonomous vehicles threaten to erode $200 bln a year in U.S. premiums. Expect greater clarity in 2017.

Russian sanctions will shrivel to soccer boycotts

23 Dec 2016

Pro-Kremlin leaders in Europe and the U.S. plus a rising oil price will embolden Vladimir Putin in 2017. That could lead to a rethink on sanctions and a soft response to Baltic sabre-rattling. Western protests will be limited to threatening boycotts of the 2018 World Cup.

Chinese cinema will have a rosier plot in 2017

23 Dec 2016

Ticket sales will grow at their slowest pace in a decade in 2016, to a bit more than $6 bln. Blame lousy movies, lower subsidies from online sellers, and a fraud crackdown. The picture could brighten in 2017 as a promising slate of films wins back moviegoers and investors.

Race to build will add impetus to old-world stocks

23 Dec 2016

Infrastructure is one of the few areas where Donald Trump, Angela Merkel and Theresa May will agree in 2017. Not all the numbers bandied about are as big as they sound. But it should create jobs in developed economies – and gee up long-underperforming infrastructure stocks.

Latin America’s rightward turn faces serious tests

22 Dec 2016

Several countries in the region have shunned leftist populism of late. But the pain from economic reforms in Argentina and Brazil could make voters reconsider, if it's not accompanied by growth. And Chile's consensus on fiscal prudence may unravel.

Grocery sector is ripe for big checkouts

22 Dec 2016

Pressure on traditional food retailers is relentless, and many-pronged. Customers are spending less of their budget on food and suppliers like Unilever are toying with selling direct to shoppers. Then there’s Amazon. The solution isn’t better retailers – it’s fewer of them.

Fund manager pay will be next to feel the squeeze

22 Dec 2016

Low returns, lacklustre performance and the growth of cheaper index-tracking funds are squeezing fees. That in turn means lower revenue and margins. To placate shareholders, asset managers will have to follow the example set by investment banks – and pay their people less.