Predictions 2022

Vulture funds will have to learn how to fly again

28 Dec 2021

Distressed debt investors are looking like the pterodactyls of finance. Defaults are low, thanks to rock-bottom interest rates. Specialists like Oaktree can push into more opaque assets like private credit or far-flung places. But new risks will favour the bigger predators.

India’s tech stock bubble is poised to deflate

28 Dec 2021

Investors will continue to afford banks and consumer firms dizzying valuations but will increasingly give their money-losing digital brethren a shorter leash. Some mix of rampant competition, slowing user growth and rising data charges will crash the party for the startup crew.

Mammoth re-engineering project begins: Germany

28 Dec 2021

Its manufacturing-led, carbon intensive economy is ill-suited to the 21st century. Chancellor Olaf Scholz and firms like Volkswagen will spend more on green and digital investment. The trick will be to plough on despite short-term supply chain problems and rising labour costs.

Morgan Stanley will frame new portrait at the helm

27 Dec 2021

James Gorman turned in better stock-price performance than most rivals over his CEO tenure. While peers like Goldman Sachs chase traditional banking customers, Gorman has set a course towards fast-growing wealth management. In 2022, he will script a graceful exit.

Big Quit sends world’s back office back offshore

24 Dec 2021

When the pandemic fades, and along with it the stigma of letting people go, the WFH revolution will embolden global employers to move jobs to low-cost centres again. While that should benefit India’s IT services providers, they’re ironically grappling with similar problems.

Climate-change money will flow freely to Plan B

24 Dec 2021

COP26’s so-so outcome makes damaging temperature rises more likely. At some point, optimal portfolios may require guns and canned food. Until then investors will lean towards shares in Syngenta, Veolia and other companies that aid adaptation to global warming not just mitigation.

ESG acronym is due for a spin-off of its initials

24 Dec 2021

Lumping environmental sustainability, social justice and corporate governance into a single bucket is a clumsy way to address three complex and distantly related challenges. Savvy executives and investors want to separate them. E, S and G will be more valuable after a breakup.

The cult of revenue is flying in thin air

23 Dec 2021

Top-line growth is the surest way to create wealth. But Wall Street has taken a good idea too far. The price-to-sales ratio for tech IPOs is at a 20-year high, even as profitability is dangerously distant. The coming year may sort the durable Amazons from the hyped-up WeWorks.

Ingredients will be the M&A flavour of the year

23 Dec 2021

Health and plant-conscious buyers are giving a new boost to additives that give products smell, taste, or extra nutrition. Companies like $39 bln DSM and $20 bln Kerry have reorganised to focus on the trend. Consumer giants demanding a fuller service will drive consolidation.

Zuckerberg has metaverse rivals who mean business

23 Dec 2021

Meta Platforms and Epic Games are trumpeting visions of an immersive, 3D internet. But even ignoring the technological challenges, consumers’ appetite for full-on virtual socialising is uncertain. The corporate world is a more manageable target – and that is Microsoft’s domain.

Ant will be best among China’s BAD bunch

23 Dec 2021

After a brutal year for tech, ByteDance, Ant and Didi will spearhead the sector’s recovery. A shaky ad market looms for the restructured TikTok owner, however, while the ride-hailing company faces rising driver costs. Jack Ma’s fintech outfit has the clearest path ahead.

Consumer giants will be in “plastivist” crosshairs

22 Dec 2021

Expected to double by 2030, plastic pollution will create financial risks for companies like Coca-Cola and PepsiCo as countries introduce more single-use bans and taxes. Emboldened by the defeat of Exxon over reducing its carbon footprint, activists will target consumer giants.

Combustion engines are carmakers’ toxic assets

22 Dec 2021

The likes of Volkswagen and GM are shifting to battery vehicles while petrol-powered rides die out. Engine units are a drag on valuations, like lenders’ ropey assets after the 2008 crisis. Hiving them off into a “bad bank” would please investors and generate much-needed savings.

Shipping giants will plot course for landbound M&A

22 Dec 2021

Soaring container fees pushed the valuations of seaborne transport companies to record highs. Those trends will reverse in tandem. Still, with sacks of cash on board, ocean-goers like Maersk can buy landlubbing logistics rivals in preparation for the next supply-chain crunch.

Qatar’s World Cup will pay Gulf-wide dividends

22 Dec 2021

After an awful lead-in, expectations for soccer’s showcase event in 2022 are low. Even so, the tiny emirate’s status will likely benefit. Provided Covid-19 is under control, the jamboree should also boost a regional economic recovery that has lagged other parts of the globe.

Toshiba clears path for big 2022 Japanese buyouts

22 Dec 2021

The $18 bln conglomerate plans to split, but a takeover bid betrayed private equity’s voracious appetite in the country. A few dozen chunky companies suit the LBO financial model, per a Breakingviews analysis. Closer inspection suggests a tempting target among them is Ricoh.

Brace for a $600 bln Chinese escape from New York

22 Dec 2021

Mainland-based companies with U.S. listings face regulatory fire from both Beijing and Washington. Retreats are accelerating, as ride-hailing outfit Didi joins the exodus mere months after its $4 bln IPO. Hong Kong offers one clear route, but there will be a wave of buyouts too.

Canada’s weed lead is running out of puff

21 Dec 2021

The country’s homegrown outfits are angling for the U.S. market, which could be worth $40 bln a year by 2026. The high after Ottawa's early legalization of cannabis is fading, however. Canadian players in the pot sector need to act soon to make the most of the remaining buzz.

Private equity will be potent Hollywood antihero

21 Dec 2021

Blackstone’s deal with Reese Witherspoon in 2021 positioned it as a challenger to video streaming services. Buyout firms have the money and talent handling skills to make it in Tinseltown. But to make the math work, their future customers need to remain in good shape too.

Riyadh will flip from No-Go to FOMO for business

21 Dec 2021

Lifestyle reasons mean bosses have long preferred Dubai to the Saudi capital as a Gulf HQ. A mix of the kingdom’s financial promise and government strong-arming means that could start to change. The city’s social scene is already slowly making it less of a punishment posting.