The Big View

Ukraine loan is matter of politics and accounting

25 Mar 2024

Lending the country $300 bln backed by its claim for war damages against Russia has several benefits compared to rival ideas for unlocking support. Kyiv’s allies would still need to find the cash, though. Here is how they could navigate the political and financial obstacles.

Middle East AI dream depends on luring brainpower

22 Mar 2024

An abundance of cheap energy to power data centres gives artificial intelligence startups reason to consider the Gulf. But to become a force in AI, Saudi Arabia and the UAE will have to design their own advanced chips. Attracting talent to the region will require more than money.

Japanese investors becoming the life of the party

21 Mar 2024

ValueAct, Elliott and Berkshire Hathaway have deployed some $16 bln to uncover value in Tokyo-listed stocks. They’re receiving warmer welcomes than raider T. Boone Pickens did in 1989. Even better, the US trio’s success is helping inspire local funds to sustain the momentum.

China’s automakers try turning Japanese

20 Mar 2024

Efforts to block Chinese auto exports are inspiring BYD and rivals to set up factories overseas. Their journey is reminiscent of Toyota and Nissan’s drive into the US and Europe. But Washington and Beijing’s fraught ties and new tech portend a different ending to this road trip.

Mexican wave of nearshoring firms is all at sea

19 Mar 2024

The country’s proximity to the US could make it a preferred destination as multinationals move away from Asia. Companies like Merck and Tesla are building factories there but, so far, manufacturing is not growing. With relocations costs soaring, an economic boom looks elusive.

Only an oil slump can stop Vladimir Putin

18 Mar 2024

To keep pumping money into his Ukraine war, the newly re-elected president will have to squeeze Russians. Nobody can prevent him from further unpopular measures. A sharp drop in oil revenue might force him to change course, but that is hard and risky for the West to bring about.

Credit Suisse carcass feeds many hungry mouths

15 Mar 2024

In the year since it collapsed, competitors have carved up the Swiss bank’s employees and clients. UBS grabbed most of the spoils, but Santander, Deutsche Bank and others have also moved in. Lasting benefits, though, depend on survivors showing restraint when activity picks up.

Buyout shops take risky exit to bypass deal crash

14 Mar 2024

A lack of M&A and IPOs has left private equity portfolios with $3 trln of companies, many past their sell-by dates. As a result, firms are increasingly cashing out backers while keeping assets. There are guardrails on the structures now, but they could easily spin out of control.

Rescuing a bank is like making a fine soufflé

13 Mar 2024

Steven Mnuchin’s $1 bln swoop on New York Community Bank may be more challenging than his rehabilitation of mortgage lender IndyMac in 2009, but the returns could be ample. Bank rescues have many ingredients. Timing, skill and luck separate those that rise from those that sag.

EU’s spending snags spoil joint borrowing success

12 Mar 2024

Europe’s 800 bln euro stimulus plan is stuck. The bonds that finance it sell like hotcakes, but so far it has paid out only 225 bln euros as countries struggle with projects. Unless the bloc can show it can use the money it raises from investors, it will lose much-needed funds.

Europe will struggle to unite if Ukraine loses

11 Mar 2024

Jean Monnet, one of the European Union’s founders, predicted it ‘will be forged in crises’. Russian success in Ukraine could be the wake-up call the bloc needs to forge closer security ties. But it could also fragment under the strain. All the more reason to ramp up support now.

Nickel rout is energy-transition warning for West

8 Mar 2024

Prices of the battery metal have halved in a year, leaving many mines unprofitable or mothballed. Indonesia’s China-backed industry now dominates. Piecemeal aid and a green premium push are unlikely to alter that. Absent smart planning, copper and lithium are vulnerable, too.

A year on, SVB’s killer is still at large

7 Mar 2024

Twelve months after Silicon Valley Bank’s demise, investors worry more about real estate than flighty depositors. The disjointed system that enabled a crisis remains intact, though, with patchy oversight, incomplete safety nets and ambiguity over who loses if a lender fails.

Swarming investor gnats circle too widely

6 Mar 2024

New US rules have started helping smaller fund managers make a mark. They’re increasingly needling boards and stinging CEOs. When they flit around bigger targets such as Disney and Crown Castle, however, they’re easily swatted away and become a nuisance for larger activists.

Japan faces a reckoning with its zombie companies

5 Mar 2024

Big firms are ready for the onset of higher wages and the end of negative rates. Smaller rivals, which employ 60% of workers, risk being crushed. One in six already struggles to cover interest payments. If too many fail, they can derail confidence and the economic recovery. 

China’s financial clout will be hard to reverse

4 Mar 2024

Exports from the People’s Republic upended the world economy. Its $4.3 trln hoard of foreign assets is doing the same for global finance. As with trade, winding back the clock will not work. Multilateral problems require multilateral solutions.

European telcos’ new deal hopes face reality check

1 Mar 2024

Executives gathered in Barcelona this week to plead for lighter regulation, cheaper spectrum and some financial help. Policymakers are unlikely to agree. Deutsche Telekom, Telefónica and others will have to convince investors that future growth requires more investment today.

Banks’ hot new trade could burn others, for once

29 Feb 2024

So-called synthetic risk transfers offer a Houdini-like way of loosening capital handcuffs. While best suited to the biggest lenders, it could also help smaller rivals burdened by shaky real-estate bets. The danger to banks is minimal; investors need to read the small print.

Shenzhen offers glimpse of China’s housing future

28 Feb 2024

The tech hub’s plan to put 60% of its 18 mln residents in subsidised homes answers President Xi Jinping’s call for a “new development model” prioritising affordability. The state is reclaiming a lead role in the property market of the world’s second-largest economy, at huge cost.

A plot twist threatens Jay Powell’s artful script

27 Feb 2024

Higher borrowing costs are helping achieve the Fed’s 2% inflation target without a recession, but US wages and consumer spending tell a different tale. The upward price pressure augurs elevated interest rates for longer. To ensure a happy ending may require revising the story.