The Big View

Fintechs’ IPO valuations can look beyond Nubank

24 Oct 2024

The $70 bln Brazilian lender is seen as a benchmark for unlisted rivals. But Nubank’s focus on interest income, and the idiosyncrasies of its home market, make it look rather different to the likes of Revolut. Bankers prepping neobank IPOs may gain from looking at other peers.

How to harvest cash crops amid a retail drought

23 Oct 2024

Shopkeepers worldwide are wrestling with fickle customers, clunky logistics and more. Tractor Supply, a $32 bln chain that sells everything from chicken feed to overalls, has defied the trends with lush returns on par with Apple and Netflix. There are seeds for peers to sow.

China can help itself with a stronger stock market

22 Oct 2024

President Xi Jinping wants companies worth some $11 trln to deliver better returns. Boosting long-term value would reassure anxious savers and help bring down government debt. Taming volatility, though, will require Beijing to cede some control.

Swiss finish would take shine off UBS’s M&A gift

21 Oct 2024

The bank’s $3.8 bln takeover of Credit Suisse was described as the 'deal of the century'. But $19 bln of extra capital charges so far, and another looming hit from local regulators, will lower the returns. The next time a bank rescues a rival, it may push for even sweeter terms.

Inflation is not dead, it’s just resting

18 Oct 2024

Annual price increases are returning to the subdued 2% level targeted by many central banks. Official interest rates are falling too. Yet there’s a long history of policymakers prematurely celebrating the end of inflation. The experience of the 1970s offers a cautionary tale.

China’s woes make Plaza Accord 2.0 less outlandish

16 Oct 2024

If Donald Trump becomes US President, he wants a weak dollar and taxes on Chinese imports. He may use the threat of tariffs to get Beijing to boost the yuan, an echo of the 1985 Plaza Accord. A strong currency hurts growth, but a trade war could be worse for President Xi Jinping.

EU champions’ hope will slam into hard M&A reality

16 Oct 2024

Brussels bigwigs, like new antitrust boss Teresa Ribera, want to create US-style corporate giants. Yet possible options, like a 160-bln-euro Orange-Deutsche Telekom deal, make no industrial sense. The risk is that even if politicians get on board, shareholders won’t.

Putin’s economic resilience rests on war addiction

15 Oct 2024

Sanctions and the fall in oil prices have hit the Russian economy. But growth has outpaced expectations since the 2022 Ukraine invasion thanks to high military spending, now at more than 6% of GDP. The reliance on ongoing conflict hides President Vladimir Putin’s vulnerability.

Old theories offer new insight into global rivalry

14 Oct 2024

The geographer Halfold Mackinder in 1904 proposed that future strife would revolve around control of Eurasia. Though the modern world is very different, it’s one way to understand conflicts in Ukraine and the Middle East and the showdown between the United States and China.

What Masayoshi Son can teach us about investing

11 Oct 2024

The Japanese tech tycoon backed future giants like China’s Alibaba as well as spectacular flops like office-sharing startup WeWork. A new biography likens him to a high-stakes gambler. But Son’s chequered career also reveals some of the skills of a successful venture capitalist.

Direct lenders’ golden moment is over

10 Oct 2024

The core of private credit that’s focused on buyout debt surged after the pandemic, spurring the industry to $850 bln in assets. Yet with public markets roaring, returns will fall. Rather than replacing Wall Street banks, private players like Ares will have to cooperate instead.

Hey team: Weaker hiring means back to the office

8 Oct 2024

About 100 mln people in North America and Europe now work remotely at least some days. More CEOs, like Amazon’s Andy Jassy, want to end the practice altogether. The tension is upsetting staff and spurring defections, but a rise in joblessness would shift power back to employers.

Ireland spins global tax mess into $28 bln of gold

8 Oct 2024

Dublin expects a 2024 budget surplus worth 8% of gross national income, thanks to the presence of US companies lured by low levies. It’s evidence that profit shifting lives on despite a landmark OECD deal. The good news for Ireland is that there’s little chance of that changing.

AI sparks only dim odds of nuclear chain reaction

7 Oct 2024

Plans to reopen a Three Mile Island plant have created buzz about an atomic energy comeback. For $1.6 bln, however, Constellation’s site would power just one big data center. The economics may someday compete with solar, but it will take coordination as hard to manage as fission.

China and India reveal emerging market mistakes

3 Oct 2024

Investors often assume stocks in developing countries track economic growth, while valuations are a guide to future returns. The diverging path of Chinese and Indian equities over the past decade shows the flaws in this approach. Better to pay attention to capital efficiency.

Big Tech farms out AI power build, keeps the risk

3 Oct 2024

Microsoft’s 10.5 GW electricity deal with Brookfield typifies a trend towards mega supply pacts. Given the huge capex bill for data centres, third-party power makes sense. But if artificial intelligence flops, so-called hyperscalers may be left with a lot of electrons to flog.

AI’s next feat will be its descent from the cloud

2 Oct 2024

Tech giants hoping to spend $1 trln on data centres are struggling to secure power supplies and space. That bolsters the case for smaller artificial intelligence models that can run on devices, not a remote platform. Phone and laptop makers from Apple to Lenovo stand to benefit.

Drink giants’ risky new plan: quantity not quality

1 Oct 2024

Liquor makers like $80 bln Diageo until recently focused on ‘premiumisation’, where customers consume less alcohol but pay up for fancy brands. With punters feeling the pinch, that strategy looks dicey. Yet flogging more cheap booze is optically awkward and financially painful.

How US foreign policy could produce better results

30 Sep 2024

With conflict raging in Lebanon, Gaza and Ukraine, it is easy to paint pessimistic scenarios for the globe. But there is a more positive outcome where the United States works with other countries to solve common problems. Kamala Harris might just do that if she becomes president.

Commerzbank fight is stress test for EU bank union

27 Sep 2024

Regulators spent years trying to level the playing field for euro zone banks. That should clear the way for UniCredit CEO Andrea Orcel’s mooted bid for the $20 bln German lender. If Chancellor Olaf Scholz thwarts the Italian group, new barriers may soon spring up elsewhere.