Predictions 2021 – Breakingviews

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Urge to purge 2020 from memory should be resisted

4 Jan 2021

Nearly everything that could go wrong did. The pandemic threw plans – and predictions – out the window. As the world emerges and maybe slingshots into a Roaring Twenties rebound, old appetites will return. But the divisions Covid-19 exposed in our societies can't be forgotten.

“Big Four” U.S. airlines will go down to three

4 Jan 2021

Stricken travel is worsening carriers’ positions. They’ve already slimmed staff, and restructuring is next. But U.S. taxpayers are invested in them succeeding, and have already benefitted from a long descent in ticket prices. A merger stamped by the government is on the horizon.

Central banks’ debt monsters will need taming

31 Dec 2020

Authorities fought the pandemic by slashing rates and buying bonds, at the expense of pumping up credit further. In 2021, watchdogs can make amends by limiting banks’ exposure to toppy buyouts and shining a brighter light on private loans. They can also skewer credit ratings.

Trade feuds will take on a new, green hue

31 Dec 2020

Slapping tariffs on countries out of the blue isn’t Joe Biden’s style. But the U.S. president-elect may place more emphasis on environmental standards in commerce negotiations. While that would rile Beijing, America will have European backers if Biden chooses to take a stand.

Africa’s debt chickens return to restive roost

31 Dec 2020

Even before Covid-19, the continent faced a reckoning. Low commodity prices remove a major growth pillar, while mounting leverage rules out more foreign borrowing. With budgets and citizens under pressure from Angola to Zimbabwe, Africa Rising looks more like Africa Uprising.

Viewsroom: Predictions and prescriptions (Part 2)

31 Dec 2020

A Joe Biden-Xi Jinping reset will be unsatisfying; China’s economic revival will frustrate critics; Southeast Asia will be the next tech hot spot; HSBC will retreat from America; and Hong Kong’s exchange will rethink deals. Pete Sweeney, Jennifer Hughes and Robyn Mak discuss.

China’s gravy train will bypass Wall Street

31 Dec 2020

Foreign banks pocketed about a third of the $6.5 bln in fees paid by Chinese companies to sell shares in 2020. U.S. animosity will lead to fewer New York listings, however. And even as Goldman and others push further onto the mainland, the work there is tougher and reaps less.

When bonuses are paid, cue the great trader exodus

30 Dec 2020

Wall Street’s desk-bound buyers and sellers had a bumper year, powering the bottom lines of commercial and investment banks amid the pandemic. They’ve also gotten a taste of life off the floor. Watch many of them take the money and run, surf, climb, or whatever.

Deposits will become a growing liability for banks

30 Dec 2020

Converting savings into loans is the bedrock of banking. Yet near-zero interest rates and a pandemic-induced deposit surge are squeezing revenue. Some lenders will charge customers to look after their cash. Upstarts will decide regulated deposit-taking is not worth the hassle.

Generational wealth gap warrants post-Covid reset

30 Dec 2020

Young people had a shrinking share of housing and equity riches even before the pandemic, which hurt them further by boosting unemployment and state debt. Shifting the tax burden to wealth, rather than income, would help. So would the radical option of millennial cash handouts.

UK’s duty-free golden goose will become albatross

30 Dec 2020

The government’s plan to end tax rebates for inbound tourists was part of its EU horse-trading. But it’s a needless hit to ailing retailers’ Asian custom. Instead of raising revenue in 2021, it will just become a symbol of the UK’s Brexit-era capacity for reckless self-harm.

BlackRock stretch goal: real shareholder democracy

29 Dec 2020

The $8 trln asset manager votes on behalf of millions of small investors. Rather than telling companies how to handle gun safety or climate change, BlackRock might do better to pass the decision to the ultimate owners. That calls for investment in new technology, and new habits.

U.S. is promised land for online gambling

29 Dec 2020

Wagers will be a welcome source of tax dollars across Covid-scarred America, where the potential market for web-based sports betting could be worth up to $23 bln. As watchdogs ease rules in 2021, sites such as Flutter’s FanDuel and casino groups like Caesars and MGM will get lucky.

Look out Europe: a SPAC craze is around the corner

29 Dec 2020

Such listings have been big in America but rare across the pond, where they have a bad rap. But a dearth of typical IPOs will keep investors keen. French rainmakers Xavier Niel and Matthieu Pigasse have broken the ice. Andrea Orcel, Ivan Glasenberg and others should take note.

Landlords’ post-virus refit will leave scars

29 Dec 2020

Remote working and a boom in e-commerce will force property owners to embrace a makeover. If Amazon and co buy defunct malls and offices become flats, asset values in the $33 trln market could recover. But even post-revamp they will be worth less than five years ago.

Stock rewards for all would be valued virus legacy

29 Dec 2020

Woolworths pared manager bonuses so that over 100,000 employees could get a little slice of equity in the Aussie supermarket chain. More companies should follow suit. What’s good for Silicon Valley and Wall Street is good for everyone, starting with frontline pandemic workers.

A Biden-Xi reboot will be frosty but mostly honest

29 Dec 2020

The two leaders have scant tinder with which to warm frozen ties in 2021. China-bashing is a bipartisan sport in America. Xi let nationalist trolls capture his diplomatic corps. But with status quo delusions stripped away, stabilising the economic relationship is within reach.

Next London, New York mayors can breathe easier

28 Dec 2020

Fuggedaboutit. That’s what the world’s two top finance centers would love to do with Covid-19. With budgetary, property and transport wounds to heal, it won’t be so easy as 2021 arrives. But after mayoral polls respectively in May and November, urban buzz should start returning.

Default wave will hit the little guy hardest

28 Dec 2020

Covid-19 has saddled companies with debts. Big groups with reserves and access to capital now look like they can ride it out. Smaller outfits won't stay afloat so easily: think local coffee shops vs. Starbucks. Governments need to get creative to help the worst-hit businesses.

Yuan internationalisation season re-opens

28 Dec 2020

The threat of U.S. dollar sanctions on Chinese banks has thrown the lacklustre use of its currency for overseas trade and investment into harsh relief. A recovering economy and rallying renminbi clear the way for reformers to liberalise further, if conservatives let them.