Predictions 2019

Private equity returns will drop a digit

19 Dec 2018

Buyouts have tended to target – and achieve – an annualized harvest of at least 15 percent. It’s hard to see recent deals, with high valuations and creative treatment of earnings, matching that. Assume a modest drop in the market and mild slowdown, and 15 looks more like five.

China’s three mobile carriers will become two

19 Dec 2018

As 5G investments ramp up next year, the country’s carriers will face mounting bills. That might make 2019 the year that the two smaller players, China Unicom and China Telecom, finally join forces. It would mean less competition, but officials have bigger prizes in mind.

Shinzo Abe will strike accord with Donald Trump

19 Dec 2018

With some 5 mln autoworkers to protect from tariff pain, Japan’s prime minister will have little choice but to sign a bilateral U.S. trade deal. Expect the new NAFTA’s anti-China clause to feature. Seeking warmer relations with Tokyo, Beijing is apt to look the other way.

The 2019 stock market reversal: how it happened

18 Dec 2018

Few people would have disagreed at the beginning of the year that the nine-year-long bull market was reaching its end phase. That didn’t diminish the shock when stocks began to plunge in earnest. Breakingviews lays out a fictional account of how the good times came to an end.

Goldman Sachs will spend 2019 in velvet handcuffs

18 Dec 2018

New boss David Solomon starts the year with a mission to grow, lots of ambition and a crosstown rival that has steadily upped its game. A big deal – say, buying an asset manager – could help Solomon vault ahead of Morgan Stanley. That’s if the 1MDB scandal doesn’t bind his hands.

Indian unicorns will feast on richer pastures

18 Dec 2018

Saffron tech startups are going global. Restaurant search firm Zomato, ride-hailing firm Ola and hotel-rooms aggregator Oyo lead the charge overseas. A complex home market will provide for successes in far-flung lands and, crucially, plump the bottom line to win at home too.

Facebook might be the JPMorgan of the tech world

17 Dec 2018

Mark Zuckerberg’s social network faces more Washington pain in 2019. But tougher internet regulation could increase the burden on rivals, as Dodd-Frank financial rules did to small lenders. Facebook may emerge stronger, like Jamie Dimon’s bank after its time in the hot seat.

Canada faces off against vampire squid to south

17 Dec 2018

U.S. tax cuts and protectionism are going to suck the life out of the Canadian economy. Prime Minister Justin Trudeau has two options: join the fiscal race to the bottom, or address the reasons Canada was already falling behind its neighbor. Looming elections add to the urgency.

SoftBank writedown will cloud Son’s way forward

17 Dec 2018

The group and its $97 bln Vision Fund paid toppy prices for the likes of ARM and WeWork. With tech valuations and growth under pressure, CEO Masayoshi Son may have to mark down some valuations in 2019. Financial backers and fund staff could struggle to maintain the momentum.

Didi will seize the wheel of a Chinese carmaker

17 Dec 2018

The $56 bln ride-hailing firm has tied up with the likes of Toyota to develop vehicles and services, as lines between tech firms and auto manufacturers blur. Boss Cheng Wei, inspired by falling valuations in China’s car sector, will deploy Didi's $12 bln cash pile to buy a brand.

China’s economic slouch will rattle cult of Xi

17 Dec 2018

Growth will keep slowing toward 6 pct amid a muddled plan to spark private investment while protecting state dinosaurs. That might embolden subdued Beijing reformers to push back against President Xi Jinping. Expect more defaults, fewer tech crackdowns and faster market opening.

Trump can get what he wants from Saudi in 2019

14 Dec 2018

As the year closes, oil prices have fallen to well below highs that riled the U.S. president. The risk is OPEC supply cuts and sanctions on Iran will send them back up. Yet scope to influence the kingdom on output – as well as its behaviour in the region - gives him a hedge.

Chinese startups will get thrown an M&A lifeline

14 Dec 2018

Regulatory tightening and skittish investors mean many tech seedlings will struggle to raise funds in 2019. With Tencent less active, it’s a buyer’s market for the likes of Alibaba, SoftBank and Xiaomi. Enterprise tech, AI and electric cars will make for vulnerable targets.

Glasenberg successor will run a different Glencore

13 Dec 2018

The commodities giant’s combative boss says he will retire in 3 to 5 years. It’s unclear who will replace him, even after a recent reshuffle. With a U.S. subpoena and other woes weighing heavily on the stock, Ivan Glasenberg may yet be tempted to consider a much bolder overhaul.

Memo to Theresa May: How to save Brexit as well

12 Dec 2018

The prime minister has survived a confidence vote from her party. But her deal to leave the European Union remains in a critical state. Downing Street aides have a bold rescue plan: call a second Brexit referendum. Breakingviews has obtained a copy of their make-believe advice.

Climate change on carbon is coming to Wall Street

12 Dec 2018

Extreme weather and wildfires underscore the threat of rising greenhouse-gas emissions. White House obstructionism at the global climate conference isn’t helping. But 2019 will bring more investor activism, broader funding options, better data and more realistic carbon prices.

Vincent Bolloré will break up Vivendi

12 Dec 2018

The 66-year-old tycoon is smarting from a drubbing by Elliott in Italy, and his media group suffers from a huge conglomerate discount. A partial sale of Universal Music may help. But dismantling the whole group would release $10 bln in value, and keep potential activists at bay.

Activism anxiety will grip French establishment

12 Dec 2018

Between the state and raiders like Vincent Bolloré, France is no stranger to meddling investors. But this year some blue-chips will face cage rattling. Pernod is just the start. The likes of Saint-Gobain, Danone, Renault - and even Bolloré’s Vivendi - are no longer off-limits.

China-U.S. trade war will get a lot more personal

12 Dec 2018

Washington and Beijing’s tariff truce is looking fragile. The arrest of tech giant Huawei's CFO on U.S. behest complicates matters. Detention is a common business negotiation tactic in China, as a Canadian ex-diplomat just found out. U.S. executives have good cause to worry.

General Electric can go from bad to worse in 2019

11 Dec 2018

The industrial group led by Larry Culp is mostly being propped up by its aviation arm as its power business sucks wind and its finance unit consumes cash. The risk is that cyclical, financial and competitive headwinds kick the strongest leg of the stool out from shareholders.