Month: October 2019

Viewsroom: China-US trade deal is thin gruel

17 Oct 2019

President Donald Trump is touting the latest Sino-American talks as a real win, especially for farmers. China agreed to buy more agricultural goods like soybeans, but big issues like intellectual-property theft are still up in the air. Plus: The pros and cons of direct listings.

Guest view: Governance starts way before an IPO

17 Oct 2019

Investors have been so enamored with unicorns and high valuations that they put up with poor governance. This year’s lame IPO stable serves as a reminder, says Wei Jiang. Directors must do what’s best for the company and all shareholders, not just the party that appointed them.

DirecTV is AT&T boss’s ball and chain

17 Oct 2019

Randall Stephenson paid $67 bln in 2015 for the satellite TV firm, aiming to redefine video. The strategy hasn't panned out and now DirecTV’s worth has probably cratered. Even if the CEO could stomach the hit to his reputation, ditching the asset will be a challenge.

Opioid crisis pile-on reaches legal critical mass

17 Oct 2019

The imminent start of a key trial has precipitated $50 billion of combined settlement offers from U.S. companies. Drugmakers and distributors prefer one-off payouts to open-ended uncertainty, while localities want cash as soon as possible. That’s a recipe for deals.

BofA, Citi make the best of Wall Street wobbles

17 Oct 2019

Morgan Stanley is No. 1 in equities, Goldman in M&A and JPMorgan in debt. But with investment banking and trading under pressure this year, the two lenders often cast as supporting actors have shown better staying power. Even so, competing for top billing still looks a stretch.

Johnson’s poor Brexit deal avoids worse outcome

17 Oct 2019

The UK prime minister secured an unlikely agreement to leave the European Union, but only by carving out Northern Ireland. Winning parliamentary approval for the economically costly plan will be hard. At least the chaotic exit Johnson had threatened is off the table - for now.

Ericsson’s upbeat 5G forecasts still too cautious

17 Oct 2019

The Swedish telecom equipment maker has raised its 2020 sales targets by 10% to reflect strong demand for the superfast networks. Yet given market leader Huawei’s U.S. problems, that still looks conservative. The perennial underperformer may have turned a corner.

Nestlé shrugs off eco worries with water refresh

17 Oct 2019

The $316 bln consumer giant wants to revive a tepid growth in a business dogged by environmental concerns. Splitting the division into three locally-managed units may help the Perrier maker push new products. But any dilution of financial reporting would also mean less scrutiny.

Aussie engineer tugs too strongly on the flag

17 Oct 2019

A $5 bln oil services company wants the foreign-investment watchdog to stop a Middle Eastern investor from raising its stake. It’s an odd defence. Rules that let suitors creep up on their targets may have pushed WorleyParsons into a corner, but it sets an uncomfortable precedent.

Huawei’s China strength hides rising vulnerability

17 Oct 2019

Stronger smartphone sales at home helped revenue jump a surprising 24% year-on-year in the nine months to September. But the telecoms hardware giant has yet to feel the full impact of U.S. restrictions, set to resume next month. Slowing Chinese consumption is as big a worry.

Hong Kong’s meeker neighbour faces its own perils

17 Oct 2019

Macau, run under similar rules to the former British colony, has been untroubled by anti-government protests across the water. History and size explain its model behaviour. The result, though, is less ideal: a $55 bln casino monoculture that relies on China’s tourists and favour.

GM strike deal brings less relief than expected

16 Oct 2019

That’s because the month-long walkout didn’t hurt much. Union politics, chest-thumping by both sides and shareholder complacency prolonged talks that should have been more or less a formality. Workers suffered, but investors didn’t care much. GM got lucky with the timing.

Emerson Electric is only half as bad as Shaw says

16 Oct 2019

The $42 bln conglomerate sports crummy governance, excess fat and a retro penchant for private jets. But there are good reasons the market hasn’t bought into relative newcomer to activism D.E. Shaw’s argument that a breakup would unlock $20 bln of value.

EU’s Broadcom attack is a teaser for larger fights

16 Oct 2019

Antitrust boss Margrethe Vestager is temporarily halting some of the $114 bln chipmaker’s supply deals with customers. That’s a more responsive way to tackle Big Tech’s effect on competition than drawing up rules. The likes of Facebook and Google may soon face similar showdowns.

Ethiopia’s state telco has more than rarity value

16 Oct 2019

Prime Minister Abiy Ahmed is ending Ethio Telecom’s monopoly. A private partner will have to fund new kit, while new rival providers will squeeze super-fat margins. With 100 mln potential customers and perhaps a $5 bln valuation, it’s a big test for Ethiopian reforms.

U.S. hits Turkey where it hurts with bank charges

16 Oct 2019

The Justice Department accused Halkbank of helping evade sanctions against Iran. A big fine would erode the state-owned lender’s already weak capital position. Ankara can act to contain the damage but a ban on shorting bank shares signals the government sees systemic risk.

Blackstone makes like a sea urchin in Japan

16 Oct 2019

The buyout shop wants to take over hotelier Unizo for $1.6 bln using an entity named after the local delicacy. Like the animal, the bid for the reluctant target is spiky. The deal also has a squishy appeal, with a rich premium for shareholders and tasty morsels for employees.

Hong Kong’s best hope: billionaires’ self-interest

16 Oct 2019

Chief Executive Carrie Lam promised to tackle the severe inequality that has fuelled unrest. Instead, she offered a mish-mash of underwhelming measures. Her political capital shredded, the city’s powerful tycoons could do worse than step in to take matters into their own hands.

China’s eco-friendly debt can be a shade greener

16 Oct 2019

Beijing's rules for its pioneering $40 bln green bond market are still too pliable: a refiner last week issued a note to pay for a petrochemical complex. A central bank review now underway offers a chance to boost credibility by pushing guidelines closer to international norms.

Greed and gloom sink KKR’s Aussie lender IPO

16 Oct 2019

The U.S. buyout firm and other investors scrapped a second attempt to list Latitude after buyers rejected a $2.1 bln valuation. Even after a price cut, the discount to big banks was too modest. Debt-laden households, struggling with flat wages and precarious jobs, hardly helped.

Breakdown: Direct listings are an acquired taste

15 Oct 2019

More non-IPOs are coming after Spotify and Slack – including maybe Airbnb. Some venture capitalists and bankers are touting them. It’s a better way to match buyers and sellers than IPOs. But they don’t fit the bill for startups needing capital or those with dictatorial founders.

Pemex debt riddle stumps Mexican president

15 Oct 2019

The IMF has panned the isolationist approach AMLO, as he's known, is taking. His budget relies on the state oil giant producing cash, but Pemex needs all the pesos and dollars it can get to boost production and reduce $102 bln of debt. Without private investment, it can't add up.

Facebook would be wise to just give up on politics

15 Oct 2019

Over the past 90 days, political ads brought in less than 1% of forecast Q3 sales. But after presidential hopeful Elizabeth Warren showed up Facebook’s patchy vetting, they continue to garner way more in the way of negative vibes. Mark Zuckerberg can afford to exit the category.

New Wells boss taking on even bigger fixer-upper

15 Oct 2019

Charlie Scharf doesn’t just have a problem culture to fix and regulators to appease, as the $220 bln bank’s latest results suggest. Strip out $1.6 bln in litigation costs and other one-offs, and higher expenses and falling interest income leave Wells a shell of its former self.

Dimon’s fortress is sturdier than Solomon’s mines

15 Oct 2019

JPMorgan’s earnings grew, while the WeWork debacle helped send Goldman Sachs’s lower. The Wall Street firms have different challenges. Jamie Dimon’s relies on interest income, which suffers as rates fall. David Solomon’s is more exposed to volatile markets and bad investments.

IMF crystal ball is cloudiest on what matters most

15 Oct 2019

The international lender cut its growth predictions for this year and next. Issues like trade wars and Brexit make it hard to forecast how some of the most advanced economies will perform. If there are stumbles, these are also the countries least likely to heed IMF advice.

Wirecard is becoming uninvestable

15 Oct 2019

The $15 bln payments group’s share price fell 19% after the FT said it overstated sales. The company disputes the claims. Persistent volatility makes life hard for short-term traders. Long-term investors may be put off as the latest allegations involve a bigger chunk of revenue.

AMS has tricky route out of M&A cul-de-sac

15 Oct 2019

The Austrian sensor maker has no good options after its failed bid for lighting group Osram. But German regulators have given it a least-bad exit via a sneaky loophole. It’s not perfect but is better than selling down its Osram stock at a loss or ditching its strategic ambitions.

Total’s Indian deal offers only a soft premium

15 Oct 2019

The French energy giant’s bid for part-control of Adani Gas is worth a measly 9% over the pre-deal price. That won’t entice public investors, allowing Total to buy a 37% stake from the namesake family. At least having a foreign partner may provide a governance uplift in value.

Hong Kong seeks new traffic cop for wonky market

15 Oct 2019

Ashley Alder made the best of a middling job as chief securities regulator. He made progress fighting shoddy IPOs, though failed to stop dual-voting share structures. His successor could tackle the SFC’s slow enforcement, but will still be stuck between powerful vested interests.