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☆ China’s world banks are geopolitical victims
▼ + stars: | 2023-06-15 | by ( Una Galani | ) www.reuters.com time to read: +4 min

MUMBAI, June 15 (Reuters Breakingviews) - China’s “World Bank” tried in vain to carefully thread the geopolitical needle. Fairly or not, critics have lambasted China’s lending practices along the BRI as “debt trap diplomacy”. Whereas the smaller AIIB did things more the way developed countries wanted, even taking positions at odds with Beijing’s. Pickard alleged on Twitter that AIIB was an instrument of China, dominated by Communist party members who “operate like a secret police”. The AIIB said the comments by Pickard, who had served in his role since March 2022, were “baseless and disappointing”.

Persons: Bank ”, Bob Pickard, Jin Liqun, Pickard, AIIB, Chrystia Freeland, Pete Sweeney, Thomas Shum Organizations: Reuters, Bank, Infrastructure Investment Bank, Twitter, Communist Party, World Bank, Initiative, Beijing, International Monetary Fund, New Development Bank, Canadian, Communist, Department of Finance, Finance, Thomson Locations: MUMBAI, Canada, Beijing, India, France, Asia, Africa, Latin America, Argentina, Pakistan, Russia, Ukraine, China, Ottawa, Shanghai, Saudi Arabia

☆ China’s rate cut highlights stimulus stubbornness
▼ + stars: | 2023-06-14 | by ( ) www.reuters.com time to read: +2 min

In stark contrast to its peers, Chinese consumer inflation has nearly evaporated, standing at only 0.2% last month. In that context, cutting short-term borrowing costs to improve liquidity in the interbank market is the very least Beijing can do. It does suggest policymakers see credit demand weakening further, and the move will help domestic companies roll over debt. But as the small size of the latest cut suggests, this is not going to rally private sector investment or consumption much on its own. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Persons: Pete Sweeney, Una Galani, Thomas Shum Organizations: Reuters, Commodities, Twitter, Thomson Locations: TOKYO, Beijing, India, Teck

☆ Windfall taxes get a breezy airing Down Under
▼ + stars: | 2023-06-14 | by ( Antony Currie | ) www.reuters.com time to read: +3 min

MELBOURNE, June 14 (Reuters Breakingviews) - Queensland has just done global proponents of windfall taxes a favour. More than a third of the total came courtesy of three new tiers Treasurer Cameron Dick added to the levy last June after coal prices quickly quadrupled. For starters, the changes only come into effect when the price of coal is really high. Rival Whitehaven Coal’s (WHC.AX) top line grew 164% and net profit more than 400% over a similar timeframe when the coal price was close to $400 a tonne. Dick earmarked the extra fossil-fuel revenue to pay for new hospitals and a slew of renewable energy and water projects.

Persons: Australia’s, Cameron Dick, Dick, Una Galani, Thomas Shum Organizations: MELBOURNE, Reuters, Revenue, Whitehaven, Queensland, Thomson Locations: Queensland, Hope, New South Wales, South Wales

☆ Sony’s India deal episode hits fresh cliffhanger
▼ + stars: | 2023-06-13 | by ( ) www.reuters.com time to read: +2 min

MUMBAI, June 13 (Reuters Breakingviews) - Sony's (6758.T) Indian unit keeps running into fresh plot twists. The deal, in the works since late 2021, has already overcome multiple hurdles. Zee has weathered shareholder calls for a rejig of the company’s board and from creditors to declare it insolvent. After all, it is a strategic combination designed to take on Disney (DIS.N), Reliance Industries (RELI.NS), Netflix (NFLX.O) and others. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

Persons: Punit Goenka, Subhash Chandra, Goenka, Shritama Bose, Una Galani, Thomas Shum Organizations: Reuters, Zee Entertainment, Securities, Exchange Board, India, Sony, Disney, Reliance Industries, Netflix, Zee, Twitter, Brookfield, Thomson Locations: MUMBAI, London, Teck, China

☆ China IPOs are uncoupling from Wall Street too
▼ + stars: | 2023-06-12 | by ( ) www.reuters.com time to read: +2 min

Increasingly it is detaching from Wall Street too. Nonetheless, the Shanghai Stock Exchange will hold a hearing for the deal on Friday, per Refinitiv’s IFR. Syngenta is a pillar in Beijing’s strategy to shore up food security and will use the deal to pay down debt. The landmark IPO coincides with signs that Wall Street’s small position in the market is shrinking further. Syngenta’s blockbuster IPO will be an awkward new milestone for Wall Street already facing life in China’s second tier.

Persons: Beijing’s, It’s, Dealogic, Xavier Niel, Pete Sweeney, Thomas Shum Organizations: Reuters, Agricultural Bank of, Shanghai Stock Exchange, HK, BOC, Citic Securities, Twitter, Brookfield, Thomson Locations: MUMBAI, Agricultural Bank of China’s, Hong Kong, China’s, Una

☆ Shipping tax could yield $100 bln climate windfall
▼ + stars: | 2023-06-12 | by ( Hugo Dixon | ) www.reuters.com time to read: +7 min

TINOS, June 12 (Reuters Breakingviews) - The shipping industry emits 2.9% of the world's greenhouse gases. Reuters Graphics Reuters GraphicsPOLLUTER PAYSThe shipping industry uses fossil fuels to power its boats. That said, industry leaders such as container giant Maersk (MAERSKb.CO) are moving into green shipping. This potentially large sum is attracting the attention of people outside the shipping industry, especially those focused on climate change. If a country refused to apply an agreed tax, the international shipping industry would effectively be unable to operate from its ports.

Persons: TINOS, Emmanuel Macron’s, Tristan Smith, Marshall, UCL’s Smith, Al Qaeda, Peter Thal Larsen, Thomas Shum Organizations: Reuters, International Maritime Organisation, United Nations, European Union, EU, Reuters Graphics Reuters, University College London, Shipping, Climate Fund, World Bank, International Chamber of Shipping, Marshall, Al, Trade Center, Thomson Locations: Paris, Danish, Marshall

But rival European battery groups are still scarce, and global carmakers have more to gain than lose. Chinese battery suppliers like Contemporary Amperex Technology (CATL), SVOLT, Envision, and most recently EVE Energy (300014.SZ), are shaking up Europe’s e-mobility supply chains. At 4.5 billion euros, investments in projects to build new plants in Europe overtook spending on mergers and acquisitions. European battery makers will struggle to compete. Given the chance, Chinese battery makers can power up Europe’s own supply chains, and its auto companies too.

Persons: CATL, It’s, Bernstein, Emmanuel Macron, Tesla, Elon, Lisa Jucca, Thomas Shum Organizations: Reuters, Volkswagen, BMW, Volvo, Technology, EVE Energy, Shanghai Putailai, Energy Technology, Mineral Intelligence, Companies, Wall Street, LG, Samsung SDI, Union, Commission, EU, United, Mercedes, Benz, Elon Musk’s, Mercator Institute for China Studies, Thomson Locations: HONG KONG, China, People’s Republic, Europe, Shanghai, People’s, Sweden, United States, EU, Hungary, Spain

HONG KONG, May 31 (Reuters Breakingviews) - Elon Musk may be China’s most popular American. State media quoted Musk saying the United States and China share “inseparable” interests and that Tesla opposes decoupling. This all provides the $638 billion Tesla with good political cover in the world’s largest automobile market. But for now Beijing and Musk are getting what they want out of the arrangement, and that means it is likely to endure. Reuters GraphicsFollow @petesweeneypro and @KatrinaHamlin on TwitterCONTEXT NEWSTesla Chief Executive Elon Musk visited China on May 30 for the first time since 2020.

Persons: Elon, Qin Gang, Musk, Xi Jinping, Elon Musk, Apple's Tim Cook, JPMorgan's Jamie Dimon, Laxman Narasimhan, Robyn Mak, Thomas Shum Organizations: Reuters, Foreign, Chinese Communist Party, Tesla’s, Twitter, CCP, SpaceX, Starbucks, Thomson Locations: HONG KONG, Beijing, Shanghai, China, Japan, Republic, India, Turkey, People’s Republic, United States, Washington

☆ Toyota governance fight gets stuck in traffic
▼ + stars: | 2023-05-30 | by ( ) www.reuters.com time to read: +2 min

MELBOURNE, May 30 (Reuters Breakingviews) - Governance campaigns against Japanese companies have a hard enough time gaining traction as it is. ValueAct Capital’s two-year campaign against Seven & i (3382.T) culminated last week with at best just a third of shareholders backing its four board candidates. Glass Lewis asserts just three of Toyota’s 10 board candidates are unaffiliated, fewer than the one-third the advisory sets as a floor. Toyota insists its board meets the Tokyo Stock Exchange’s independence standards. He should go in any event: having the former CEO of 14 years lead the board is bad governance.

☆ China thesis lurches from one lazy extreme to next
▼ + stars: | 2023-05-25 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +4 min

HONG KONG, May 25 (Reuters Breakingviews) - Foreigners that once piled into offshore Chinese equities are evacuating as confidence in the country’s economic recovery sags. The China trade has always been unbalanced towards overseas-listed Chinese consumer and internet firms, and foreigners preferred building factories, acquiring large stakes in companies and the like over portfolio trading. Even at a peak in 2021, they held barely over 8 trillion yuan ($1.1 trillion) of yuan-denominated Chinese stocks and bonds, per official data, compared to $27 trillion of American equivalents. Now the former figure has fallen below 7 trillion yuan. Major Chinese indexes in Hong Kong and New York have also slid, with the Nasdaq Golden Dragon China Index having lost around 15% in the last three months.

Foxconn's turnaround efforts initially paid off: by 2018, Sharp was back in the black. Moreover, analysts estimate assembling iPhones and other Apple (AAPL.O) gadgets still brings in more than half of Foxconn’s annual sales. The troubled unit was once a joint venture between Sharp, Foxconn and an entity tied to Gou. The company attributed the slump to a non-operating loss of T$19.7 billion related to its 34% stake in Japanese electronics maker Sharp. Sharp reported a 220-billion-yen ($1.6 billion) impairment loss in the quarter, mostly from buildings, machinery and goodwill relating to display businesses.

☆ Europe’s scramble to tame artificial intelligence: podcast
▼ + stars: | 2023-05-23 | by ( Karen Kwok | ) www.reuters.com time to read: 1 min

LONDON, May 23 (Reuters Breakingviews) - Brussels is a step closer to unveiling regulation for the controversial technology. In this Exchange podcast, he argues that the rules focus on the biggest risks while leaving room for innovation. Follow @karenkkwok on Twitter(The author is a Reuters Breakingviews columnist. Subscribe to Breakingviews’ podcasts, Viewsroom and The Exchange. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ G7 says “de-risking”, China hears “containment”
▼ + stars: | 2023-05-22 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +4 min

Irked by the G7 statements, Xi’s government has already called Japan’s ambassador on the carpet. To be sure, China, with a $90 billion monthly trade surplus hovering near record highs, cannot easily retaliate against its opponents. But it is not in Xi’s, or Chinese companies’, interests to sit back and let the G7 “de-risk”, and that makes the euphemism more threatening than it sounds. China firmly opposes the G7 joint statement and has complained to summit organiser Japan, the Chinese foreign ministry said on the same day. The ministry said that the G7, disregarding China's concerns, had attacked it and interfered in its internal affairs, including Taiwan.

☆ Breakingviews: Disney can play Scrooge with Florida
▼ + stars: | 2023-05-19 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +3 min

NEW YORK, May 18 (Reuters Breakingviews) - Walt Disney (DIS.N) isn’t mickey-mousing around. Disney’s threatened retreat from the state is meaningful, and it can get worse for the state’s leader, Governor Ron DeSantis. But overall, Disney is one of the largest employers in Florida, and a massive contributor to the tourism economy. Follow @thereallsl on TwitterCONTEXT NEWSWalt Disney is cancelling plans to build a nearly $1 billion corporate campus, according to an email to employees on Thursday. Disney parks chief Josh D'Amaro said "changing business conditions" prompted Disney to reconsider its 2021 plan to relocate employees.

☆ Disney can play Scrooge with Florida
▼ + stars: | 2023-05-19 | by ( Lauren Silva Laughlin | ) www.reuters.com time to read: +3 min

The return of tourists to Southeast Asia, he says, bodes well for the group’s core mobility business in the second half. The next challenge is resetting investor expectations so that beats can shine through. Lower incentives helped it to cut its adjusted operating loss to $66 million from $287 million a year ago. It also narrowed its forecast for annual adjusted operating loss to $195 million-$235 million, from a previous forecast of $275 million-$325 million. China’s Alibaba on May 18 reported revenue of 208 billion yuan ($30.1 billion) in the three months to end-March, up 2% year-on-year.

Tesla is proposing to manufacture and sell vehicles in the country, Reuters reported on Wednesday, citing a source. Import duties of as much as 100% made it difficult to gauge demand, so Tesla lobbied to reduce tariffs, rather than producing locally. Committing to a factory could work for Musk too, though justifying a Tesla-sized facility calls for fast and furious sales. When Tesla set up a Gigafactory in China in 2019, its sheer scale meant supply chains sprang up to serve it. Senior Tesla executives are in India this week to meet the government to discuss local sourcing of parts and other issues, Reuters reported on May 16.

☆ A Sony spinoff comes better late than never
▼ + stars: | 2023-05-18 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, May 18 (Reuters Breakingviews) - A long-awaited Sony (6758.T) spinoff is finally happening. The Japanese video games-to-semiconductors conglomerate may list its financial subsidiary "within the next two to three years" while retaining a 20% stake. Investors promptly bid up shares of Sony as much as 7% on the news. Partially offloading Sony Financial Services, which the company only took full control of in 2020 for $3.7 billion, makes sense. Sony stresses it is not planning any other spinoffs for now - one of them is plenty to look forward to.

☆ India’s airline turbulence will be felt abroad
▼ + stars: | 2023-05-17 | by ( Shritama Bose | ) www.reuters.com time to read: +4 min

India’s Go First has gone into bankruptcy – the country’s second airline to do so since 2019. Its subsequent public and messy spat with engine suppliers and lessors will have ripple effects across the industry and abroad. Go, the country’s third largest airline with a 7% market share, blames Raytheon Technologies-backed (RTX.N) Pratt & Whitney’s “faulty” engines. A global industry association, Aviation Working Group, has put India on a watchlist for violating global conventions on repossession of airplanes. The trouble at Go may not put them off but it promises some extra turbulence ahead.

☆ Vietnam’s Tesla debuts with wrong kind of power
▼ + stars: | 2023-05-15 | by ( Anshuman Daga | ) www.reuters.com time to read: +3 min

Vietnam’s richest man is taking his electric-vehicle company, VinFast, public at a punchy valuation through a merger with casino mogul Lawrence Ho’s special-purpose acquisition company. The tie-up with Black Spade Acquisition Co (BSAQ.N) means VinFast doesn’t have to wait for the market for initial public offerings to improve to make its debut. The SPAC deal values VinFast at 42 times its sales in 2022, a stunning seven times Tesla’s (TSLA.O) multiple and more than twice the multiple of Lucid (LCID.O). But despite the big eye-catching U.S. debut, existing investors will own 99% of the company after the deal. The merger values the Tesla challenger’s equity at $23 billion, not including the $169 million of Black Spade’s cash, and its enterprise including debt at about $27 billion.

☆ Newmont’s $19 bln gold deal lacks investor sparkle
▼ + stars: | 2023-05-15 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, May 15 (Reuters Breakingviews) - Newmont (NEM.N) boss Tom Palmer has finally dug out a deal with rival Newcrest Mining (NCM.AX). After months of discussions the two sides on Sunday agreed to an all-share transaction that values the Australian target’s enterprise at A$28.8 billion ($19.3 bln). The logic is that absorbing Newcrest will boost the Canadian buyer’s output of gold and copper. In return, the U.S. group is paying a punchy 27% premium to its prey’s stock price before their merger haggling went public. That implies an after-tax return on Newmont’s investment of around 7%, roughly in line with its cost of capital.

☆ Ambani’s finance listing will measure disruption
▼ + stars: | 2023-05-11 | by ( Shritama Bose | ) www.reuters.com time to read: +3 min

Back in 2019 the boss of $200 billion Reliance Industries (RELI.NS) had pledged to spin out its giant retail and digital units. He has since lured big strategic and financial investors including Meta (META.O), Alphabet’s (GOOGL.O) Google and KKR (KKR.N)into those businesses. Jio Financial could be listed as soon as September. The entity will be renamed Jio Financial Services. Jio Financial will list as soon as September, a person familiar with the situation told Breakingviews.

☆ ValueAct loses its temper in 7-Eleven
▼ + stars: | 2023-05-10 | by ( Pete Sweeney | Thomson Reuters | Asia Economics Editor Pete Sweeney Joined Reuters Breakingviews In Hong Kong In September Previously He Served As Reuters' Chief Correspondent For China Economy | ) www.reuters.com time to read: +4 min

HONG KONG, May 10 (Reuters Breakingviews) - ValueAct Capital’s chief Mason Morfit prefers to chide undervalued conglomerates behind closed doors. In its latest 151-page presentation, ValueAct took its case directly to shareholders, the second time it has seen fit to do so in its history. That highlights the U.S. fund’s frustration from its two-year long campaign calling for Seven & i to spin off its 7-Eleven convenience stores, among other things. That implies a standalone 7-Eleven could be worth 10 trillion yen, roughly a quarter more than its parent today. He may have a point, and in truth ValueAct has far more experience turning around technology companies than food retailers.

☆ Credit Suisse debacle raises oversight question: podcast
▼ + stars: | 2023-05-09 | by ( Lisa Jucca | ) www.reuters.com time to read: 1 min

ZURICH, May 9 (Reuters Breakingviews) - Swiss authorities hailed the state-backed rescue of the stricken lender by UBS as a commercial solution that will be light on domestic taxpayers. Banking professor and former SNB official Urs Birchler tells The Exchange podcast why the quick fix is far from ideal. Listen to the podcastFollow @LJucca on TwitterSubscribe to Breakingviews’ podcasts, Viewsroom and The Exchange. Editing by Thomas ShumOur Standards: The Thomson Reuters Trust Principles. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Geopolitics is shrinking India’s risk premium
▼ + stars: | 2023-05-09 | by ( Una Galani | ) www.reuters.com time to read: +7 min

They are lured by a country whose potential as an alternative investment destination to China increasingly outweighs the local challenges of doing business. India’s $3 trillion economy is forecast to grow by 6.5% this fiscal year, continuing to outpace the rest of the world. Executives and investors also see a business-friendly government that is likely to remain in power for the next half-decade. Morgan Stanley analysts and strategists expect India to become the world’s third-largest economy and stock market before the end of the decade. The India risk premium is rapidly disappearing.

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