Money‚ Markets & Macroeconomics

Fingers crossed Davos Man gets it wrong again

27 May 2022

Gloomy delegates at the Swiss conference worried about a prolonged conflict in Ukraine, Covid-19 lockdowns in China, and runaway food and energy prices. But in 2020 they failed to foresee the global pandemic. This time, an incorrect forecast might be good news for the planet.

Subdued Alibaba strikes fitting new tone

27 May 2022

New finance chief Toby Xu's focus on cost cuts and better-than-expected sales growth powered a 15% stock rally. The regulatory-thwacked e-commerce group is taking control where it can but exercising discipline on the bottom line in a slowing Chinese economy invites trouble too.

New Toshiba board’s work extends beyond Toshiba

27 May 2022

The embattled $19 bln conglomerate nominated a Houlihan Lokey banker to be chair and directors from pushy investors Elliott and Farallon. The main job now is to end a tortuous saga with a sale. Success would help show Japan’s supine shareholders how dogged engagement pays off.

Beijing’s stimulus ignores elephant in the room

27 May 2022

Premier Li Keqiang sounded the economic alarm and urged officials to step up tax cuts and spending. Yet pandemic controls are stressing struggling local governments. Without relaxing zero-Covid policies, all efforts to help China hit its 5.5% growth target look futile.

UK windfall tax has reasonable hierarchy of pain

26 May 2022

Finance minister Rishi Sunak is funding a $19 bln fiscal support plan with a $6 bln raid on North Sea oil. The levy is gentle on companies who invest, and harsh on those with big tax assets from past losses. But high energy prices mean a further thwack to utilities may follow.

How sanctions against Russia could backfire

26 May 2022

The threat of financial punishment did not prevent President Vladimir Putin from invading Ukraine. History shows that economic penalties can stoke conflict by pushing countries to be more self-sufficient, Edward Chancellor writes. Investors risk being stuck with stranded assets.

Renault split requires very careful driving

26 May 2022

The $7.7 bln French carmaker may separate its electric and fossil fuel units. That could boost a lagging valuation and open the door to fresh capital, but would also increase costs and complexity. It’s a risky manoeuvre, but CEO Luca de Meo has few other options.

Seizing oligarch assets is a slippery slope

26 May 2022

The EU hopes to confiscate $31 bln of yachts and villas from blacklisted billionaires. Washington is mulling similar steps. However wrong Russia’s invasion of Ukraine may be, short-circuiting the criminal process to seize property risks weakening trust in Western rule of law.

UAE’s $20 bln chemical IPO is pricey for a reason

26 May 2022

ADNOC and Borealis’ joint venture Borouge is to be Abu Dhabi’s largest listing. The company is priced at a premium to rivals like BASF and SABIC, at a time when higher shipping costs are starting to bite. Yet the group’s cash and dividend profile support a princely valuation.

Twin crises will help Asian debt funds thrive

26 May 2022

Covid-19 and war in Ukraine are curbing the risk appetite of banks that already neglect all but the region’s best borrowers. The situation opens the door for funds like KKR’s new one. A pan-regional approach also learns from previous missteps in India.

China’s real estate renovation is too cosmetic

26 May 2022

The central bank joined wider efforts to help the property sector by cutting five-year lending rates to 4.45%. Banks remain sceptical of developers however, and bonds are trading at distressed prices. Lack of faith in the industry’s foundations make it harder to build a recovery.

Unicorns’ hard times point to M&A stampede

25 May 2022

Of the 2,300 private firms with valuations above $1 bln in the past decade, one-third managed to go public. Volatile markets now make that door inaccessible. As investors seek proof in their paths to profit, combining forces with rivals is the least-bad option.

Global stability partly hangs on Saudi reinvention

25 May 2022

The kingdom’s efforts to shape its image go so far as branding a café at Davos bearing the crown prince’s name. Worldwide demand for oil and gas amid the Ukraine war gives Saudi extra power and a chance to realign itself politically. There’s much more work to do.

U.S. sanctions give Russia default it doesn’t need

25 May 2022

The Treasury won’t let Moscow pay U.S. bondholders, tipping it into default. The move further isolates Vladimir Putin but will have minimal impact. It’s a surreal twist given Russia can still pay its debts, while battlefield foe Ukraine urgently needs relief but isn’t getting it.

Russia fossil fuel embargo has an inexorable logic

25 May 2022

Western allies are discussing buyer-imposed caps or tariffs to shrink Russia’s oil and gas revenues. But the measures would keep money flowing to Moscow, and could trigger the abrupt end of Russian imports they are meant to delay. Better to jump straight to an embargo now.

Capital Calls: Airbnb, Prudential, Glencore

25 May 2022

Concise views on global finance: The $68 bln vacation-booking platform will shut its Chinese business; the insurer appoints a new CEO – finally; the commodities giant has a $10 bln reason to keep its nose clean, after a $1.5 bln settlement for corruption allegations.

Alibaba’s overseas growth push faces European test

25 May 2022

The $223 bln Chinese e-commerce giant hopes to offset sluggish growth at home by expanding in the region via its Southeast Asian offshoot, Lazada. But with a European market share of less than 5%, and entrenched rivals like Amazon, Alibaba may struggle to justify the investment.

BoE pours cold water on bank global-warming panic

24 May 2022

The watchdog’s stress test showed UK lenders can weather a chaotic climate switch without a capital hit. For bank CEOs copping flak for funding polluters, it’s a let-off. The other lesson is that governments will get little help from financial regulators in greening the economy.

Debt-market chaos makes bank deposits great again

24 May 2022

Rising rates and volatility are a problem for fintech upstarts, like Affirm, which rely on wholesale markets to fund loans. Old-school lenders, flush with cheaper deposits, don’t face the same funding pressure. It gives banks a window to strike back.

Capital Calls: Didi delists from the NYSE

24 May 2022

Concise views on global finance: Shareholders have voted to remove the beleaguered ride-hailing service from the Big Board. One way to play the company now is as a risky bet on which road Beijing’s regulators decide to take.