Predictions 2020

Climate-bond cold shoulder gets harder to justify

10 Dec 2019

Even though green bonds perform well and can weather economic cycles better than regular issues, they’re still constrained by limited demand. Poor transparency and a comparability have been a turnoff, but a new Nasdaq tool means even that argument no longer holds much water.

Wanted: bold activist to take on Masayoshi Son

10 Dec 2019

The Japanese tycoon’s $82 bln SoftBank might be worth twice that if broken up. Son, who owns 22% of the tech conglomerate, won’t do that without a pushy investor at his back. For an activist with plenty of cash and the stomach for a fight, it could be the trade of a lifetime.

Wall Street finally gets some capital satisfaction

9 Dec 2019

The likes of JPMorgan, BofA and Goldman Sachs have barely benefited from Trump administration regulatory rollbacks. But recent repo ructions will spur the Fed to change the rules so that banks won’t have to keep as much cash in reserve. It’ll be a small but welcome relief.

Look out for Narendra Modi’s big economic surprise

9 Dec 2019

India’s prime minister is less than a year into a second term and growth is faltering. There’s a crisis of confidence. He surprised markets in good and bad ways in his first term. Investors should prepare for radical actions his government might take to jump-start India in 2020.

Hadas: Autocrats learning “just-enough” economics

4 Dec 2019

Growth may be faster and fairer in democracies, but oppressive governments aren’t threatened. Globalisation and ever-cheaper technology have made it easier to scrape out enough gains to preserve their popularity. It takes Venezuelan-scale mismanagement to foment massive unrest.

Wobbly German coalition will sap EU reform energy

2 Dec 2019

Chancellor Angela Merkel’s coalition partners, the Social Democrats, elected leaders who want to rethink the basis of the alliance. Failure to agree may lead to a minority government or early 2020 elections. That would slow progress on key projects like European banking union.

South Africa heads for year of living dangerously

29 Nov 2019

Surging debt payments are squeezing public spending. President Cyril Ramaphosa will try to shrink bloated state firms like power utility Eskom, triggering ugly showdowns with unions that may hit the economy. Failure to face them down would douse reform hopes and hurt even more.

French lottery IPO may be as good as Macron gets

21 Nov 2019

Shares in La Française des Jeux popped 18% as the state-controlled group started trading. Winnings of $2 bln endorse President Emmanuel Macron’s privatisation push. But continuing protests and a national strike will hamper plans to sell more of the $20 bln Paris airport operator.

Slack would be better off as part of a team

19 Nov 2019

Shares of the work-messaging service are down 45% since its June IPO. For all Slack’s charms, Microsoft’s alternative has nearly double the users, and is untroubled by the need to raise capital or turn a profit. Slack’s best course is to find a rich benefactor, like Salesforce.

Low bond yields wreck age-old investment credos

19 Nov 2019

Allocating 60% to equities and 40% to fixed income used to count as a balanced choice. Yet depressed debt yields mean such portfolios offer a dwindling buffer against setbacks in stocks. Investors who turn to hard-to-trade assets to diversify risks will only face other problems.

YouTube spinoff would be a must-watch

15 Nov 2019

The video service is stifled under parent Alphabet, which is valued more like Twitter than faster-growing Netflix. Sharing a stable with search engine Google hurts both in dealing with separate regulatory probes. And Alphabet’s siloed setup means it’s part way to a split already.

German fiscal rethink might backfire on euro zone

13 Nov 2019

ECB boss Christine Lagarde wants Germany and the Netherlands to spend more. Even if she gets her way, the economic benefits for others may be limited. Especially if a northern European rebound lifts the single currency and bond yields, or forces a rethink of easy monetary policy.

Cox: A Canadian breakup is back on the table

12 Nov 2019

Pent-up frustrations over economic fairness and other issues are fueling “Wexit” calls in energy-rich Alberta and breadbasket Saskatchewan. But one divide is over an issue that liberal democracies will confront with increasing frequency: how to respond to global warming.