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☆ India’s moment is obfuscated by its jobs deficit: podcast
▼ + stars: | 2023-05-30 | by ( Una Galani | ) www.reuters.com time to read: 1 min

MUMBAI, May 30 (Reuters Breakingviews) - The country is establishing itself on the global investment map. In this Exchange podcast, author and ex-IMF director Ashoka Mody talks about why executives should look at India’s underemployment problem instead of focusing on its 7% GDP growth as they size-up the opportunity. Listen to the podcastFollow @ugalani on TwitterSubscribe to Breakingviews’ podcasts, Viewsroom and The Exchange. Editing by Pranav KiranOur 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.

☆ Saudi is a BRIC in crumbling East-West money wall
▼ + stars: | 2023-05-29 | by ( ) www.reuters.com time to read: +2 min

MUMBAI, May 29 (Reuters Breakingviews) - Middle East money is the answer to plugging the growing financial gaps created in Asia by Western investment restrictions, or at least that’s the very wishful thinking of the regions’ financiers and governments. Even if the NDB might have teamed up with Saudi regardless of sanctions on Russia, any deal will be high on symbolism. It makes sense for petrodollar countries to look East given Asia’s growing oil demand. Bankers also want Middle East companies to come and list in Hong Kong as those from elsewhere stay away and economists believe Middle East funds will step up investments into China as global funds retreat. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Erdogan win sends stark note on economy and votes
▼ + stars: | 2023-05-29 | by ( Lisa Jucca | ) www.reuters.com time to read: +3 min

MILAN, May 29 (Reuters Breakingviews) - Tayyip Erdogan’s re-election in Turkey sends a sharp message to leaders around the world: politics is trumping sound economics. Official results released show the sitting strongman won 52% of ballots, implying citizens are deeply divided over his return to power. Erdogan’s victory will likely exacerbate multiple long-term money-matter headaches for the country’s more than 80 million people. Erdogan’s win also suggests the country will continue to pivot away from the West. Follow @LJucca on TwitterCONTEXT NEWSTurkish President Tayyip Erdogan secured a fresh five-year term in elections on May 28, beating challenger Kemal Kilicdaroglu.

☆ Central bankers face a balance sheet reckoning
▼ + stars: | 2023-05-26 | by ( Edward Chancellor | ) www.reuters.com time to read: +7 min

LONDON, May 26 (Reuters Breakingviews) - Central banks’ balance sheets have exploded in size since 2008. That’s not a problem, we’re told, since central banks are not bound by ordinary accounting rules. Ferguson and his colleagues examined fourteen central bank balance sheets over a period of 400 years. Central bank hawks on the other hand, are typically slow to expand their balance sheets during crises. Central banks with weak balance sheets are less credible bastions of a fiat currency.

☆ Telco tycoons’ UK bets look stuck underwater
▼ + stars: | 2023-05-25 | by ( Pamela Barbaglia | ) www.reuters.com time to read: +5 min

Set those complications aside, however, and his stake-building may have cost about 4.2 billion pounds overall since 2021. That’s according to Breakingviews calculations which use the share price from the day before each stake increase became public. The holding is now worth 3.6 billion pounds, implying a nearly 560 million pound or 13% loss. That’s mild compared with some of Vodafone’s investors. But UK consolidation would hardly move the needle as Vodafone is haggling to retain control of the merged entity.

☆ ‘Greedflation’ loosens its grip on food retailers
▼ + stars: | 2023-05-24 | by ( Aimee Donnellan | ) www.reuters.com time to read: +4 min

Big food manufacturers like Kraft Heinz (KHC.O) and Unilever (ULVR.L) are ratcheting down the price rises they have been inflicting onto supermarket chains. If food retailers can convince cash-strapped customers to skimp less and pay more, their profit margins will finally start growing. Last week, the country’s food retailers opened negotiations on prices with manufacturers like Coca-Cola (KO.N) and Unilever as food inflation surged to over 15% in March. Food manufacturers can certainly do more. Meanwhile, food inflation remained high at 19.1% in April versus 19.2% in March.

☆ Strongmen are riskier the more they stay in power
▼ + stars: | 2023-05-22 | by ( Hugo Dixon | ) www.reuters.com time to read: +7 min

The longer authoritarian leaders stay in power, the greater the risk they will make decisions that damage their economies. For example, the Turkish stock market rose nine-fold in dollar terms during Erdogan’s first decade in charge. Similarly, the Russian stock market rose five-fold in dollar terms during Putin's first 14 years in the Kremlin. Xi’s zero-Covid policy meant the Chinese economy had a bad year in 2022 when the rest of the world was rebounding. In the last nine years, the stock market has lost nearly 20% of its value in dollar terms.

☆ AI boom could expose investors’ natural stupidity
▼ + stars: | 2023-05-19 | by ( Felix Martin | ) www.reuters.com time to read: +7 min

Indeed, enthusiasm about AI has become the one ray of light piercing the stock market gloom created by the record-breaking rise in U.S. interest rates. It’s a good moment for investors to be especially alert to the tendency of natural stupidity to drive stock market valuations to unrealistic – and therefore ultimately unprofitable – extremes. However, the most important lessons of behavioural economics relate to a more fundamental question: Will the new generation of AI do what it promises? Behavioural economics offers some cautionary tales for such attempts to apply AI in the wild. For example, stock market returns can be affected by a small number of rare but extreme movements in share prices.

☆ Britain inches towards right chipmaking niche
▼ + stars: | 2023-05-19 | by ( ) www.reuters.com time to read: +2 min

LONDON, May 19 (Reuters Breakingviews) - Prime Minister Rishi Sunak is taking a small step in the right direction. After much hesitation, Britain announced on Friday it would invest 1 billion pounds in its domestic semiconductor industry, with a focus on chip designs. Britain plays a relatively insignificant role in chip manufacturing, which is dominated by Taiwanese giant Taiwan Semiconductor Manufacturing Company (TSMC) (2330.TW). With over 110 semiconductor design firms, Britain can probably claim to be Europe’s leader in the segment. Under Sunak’s plan, Britain will invest 200 million pounds by 2025, with the full 1 billion pounds achieved over the next decade.

☆ Mediobanca dips toe into tech M&A shark tank
▼ + stars: | 2023-05-18 | by ( ) www.reuters.com time to read: +2 min

Mediobanca (MDBI.MI), the 8.5-billion-euro financial group run by veteran CEO Alberto Nagel, said on Thursday it had agreed to buy London-based Arma Partners, an advisory boutique that specializes in technology deals. With revenue in excess of $100 million, or about 90 million euros, Arma should add more than 10% to Mediobanca’s annual net fees and commission of 850 million euros. The French boutique’s contribution, although a record, stood at 63 million euros in the financial year that ended in June 2022. Buying Arma allows Mediobanca to gain expertise in growing areas like cloud services, software and cybersecurity, which are outside the Italian bank’s core strengths. Star banker Erik Maris left Mediobanca a year after Nagel clinched the purchase of a 66% stake in the boutique.

☆ Sea’s rising tide gets a harsh reality check
▼ + stars: | 2023-05-17 | by ( ) www.reuters.com time to read: +2 min

SINGAPORE, May 17 (Reuters Breakingviews) - Sea (SE.N) was sailing strong. The $41 billion Southeast Asian internet giant retreated from overseas markets, slashed marketing spend, and shed thousands of jobs. Still, that wasn’t enough for the company to meet earnings estimates on Tuesday. Li is assuring the market that the company he built – once valued at over $200 billion -- is more self-sufficient. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

HONG KONG, May 16 (Reuters Breakingviews) - Investing in China need not be too stressful, provided you avoid investing in Chinese companies. A spending pop in the transport, food and beverage and hospitality sectors helped lift first-quarter GDP to 4.5%. But that data was flattered by comparison to a grim 2022, and April data on imports, inflation and bank loans all disappointed. While Beijing’s crackdowns on domestic technology companies and property developers have eased, other risks are rising. Separately, quarterly revenue at Alibaba is expected to rise 3% year-on-year to 211 billion yuan ($30.5 billion) in the three months to March, according to the average analyst forecast on Refinitiv.

☆ Ukraine rebuilding would be small wager for Europe
▼ + stars: | 2023-05-16 | by ( Pierre Briancon | ) www.reuters.com time to read: +6 min

The irony is that effort had started when Russian President Vladimir Putin annexed Crimea in 2014, thus ensuring that Ukraine would firmly aspire to belong to Europe. The war inflicted severe damage on Ukraine, with GDP down 30% last year according to the International Monetary Fund. Rebuilding Ukraine will require help, expertise and guidance – and a lot of time and money. And the United States, Japan and multilateral organisations such as the IMF will continue to flank Europe in its efforts to rebuild Ukraine. Nevertheless, it is in Europe’s interest to play a major part in Ukraine’s reconstruction before the country is accepted as a formal candidate member of the EU.

☆ Ukraine banks’ robust health masks big challenges
▼ + stars: | 2023-05-11 | by ( Pierre Briancon | ) www.reuters.com time to read: +8 min

Across the banking sector, deposits are as abundant as they’ve ever been, and the country’s lenders have found ways to remain profitable. The National Bank of Ukraine, the country’s central bank, deserves plaudits for both its preparations before the war and after it began. NPLs crept up to 38% of total sector loans as of January 1 this year, according to the central bank. It has the equivalent of $4.8 billion in non-performing loans, a staggering 67.5% of its loan portfolio, according to central bank numbers. The fact that Ukraine’s banks not only still exist but are thriving is an achievement in itself.

☆ Rebuilding Ukraine depends on luring private money
▼ + stars: | 2023-05-10 | by ( Pierre Briancon | ) www.reuters.com time to read: +7 min

KYIV, May 10 (Reuters Breakingviews) - Oleksandr Gryban is already thinking of the moment when Ukraine can build again. But the real challenge is to convince sceptical private investors both at home and abroad that Ukraine is a good destination for their cash. Investors can take solace that the team tasked with rebuilding Ukraine has proven competent and resourceful. There is a bull case for private investment in Ukraine. The other factor that might lure private capital involves Ukraine helping itself, by completing reforms initiated in the last few years.

☆ Swedish drugmaker finds alluring poison pill
▼ + stars: | 2023-05-10 | by ( ) www.reuters.com time to read: +2 min

LONDON, May 10 (Reuters Breakingviews) - Sweden’s rare disease drug maker is experiencing unfortunate deal side effects. On Wednesday, shares in Swedish Orphan Biovitrum (SOBI) (SOBIV.ST) fell 15% after it announced a plan to buy CTI BioPharma (CTIC.O), a specialist in rare blood cancers, for $1.7 billion. The Anglo-Swedish drugmaker refused to tender its shares amid a squabble over the U.S. rights for a respiratory drug. But SOBI’s new deal, which will be funded by a rights issue backed by main shareholder Investor AB (INVEb.ST), suggests Oelkers has support for a solo future. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ French sports deal reveals rare retail bright spot
▼ + stars: | 2023-05-09 | by ( ) www.reuters.com time to read: +2 min

LONDON, May 9 (Reuters Breakingviews) - Retreat is the most common strategy of top retail chief executives. On Tuesday, the near-$11 billion British purveyor of sportswear splashed out 520 million euros ($571 million) on French sneaker seller Courir. Regis Schultz, JD’s French boss, is planning to spend more of the company’s 1-billion-pound ($1.3 billion) cash pile on further international expansion. Sales of exercise equipment, gym wear and running shoes are set to double to $1 trillion by 2030, according to Straits Research. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ The end of cheap credit could hurry Japanese M&A
▼ + stars: | 2023-05-02 | by ( ) www.reuters.com time to read: +2 min

Diversifying abroad looks attractive to many Japanese companies given weak home markets. The country's third-largest drugmaker by sales is paying a modest-looking 22% premium to Iveric's share price before the announcement. Analysts at Jefferies reckon those sales could top $85 million in its first year and peak at $2.4 billion annually by 2034. Regardless, even Warren Buffett has taken advantage of Japanese rates to funds deals inside Japan; domestic corporations looking abroad will as well. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Cellnex may flip from buyer to seller with new CEO
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

LONDON, April 28 (Reuters Breakingviews) - Cellnex's (CLNX.MC) decision to pick former Telecom Italia (TLIT.MI) CEO Marco Patuano as its new boss increases the odds of seeing the 27 billion euro mobile phone tower operator returning to the M&A negotiating table – as a seller. The appointment ends months of boardroom infighting that culminated with the departure of former Chairman Bertrand Kan on April 4. He is a former CEO of the Benettons' holding company Edizione and previously led Telecom Italia between 2013 and 2016. His track record of carving out the former monopoly's mobile tower business INWIT may be significant. But while tackling the company's turnaround, Patuano may also be lured into takeover negotiations with heavyweight investors as industry consolidation is underway.

☆ Sumitomo triples down on Jefferies at right time
▼ + stars: | 2023-04-28 | by ( Antony Currie | ) www.reuters.com time to read: +3 min

MELBOURNE, April 28 (Reuters Breakingviews) - Jun Ohta may have preferred to catch a bigger Wall Street fish. But the CEO of Japan’s Sumitomo Mitsui Financial Group (8316.T) is expanding his relationship with relative minnow Jefferies (JEF.N) at an opportune moment. The $56 billion SMFG also intends to increase its ownership of the $7.6 billion company run by Richard Handler to 15% by purchasing ordinary shares that it will convert into preferred stock. Slumping deal flow after what Jefferies called an “off-the-charts” 2021 prompted its earnings to more than halve last year. SMFG will buy common stock on the open market and then convert it into non-voting preferred stock.

☆ BOJ’s new governor has relaxed debut
▼ + stars: | 2023-04-28 | by ( ) www.reuters.com time to read: +2 min

What once looked solely like temporary “cost-push” hikes engendered by volatile energy and food prices are starting to look more entrenched. Instead Ueda kept YCC in place and tweaked the forward guidance to remove reference to pandemic-related risks. The BOJ predicts inflation will fall back below 2% soon and plans a policy review over the next year or so. That suggests the BOJ is more worried about weak growth – it expects 1.4% this fiscal year - than inflation. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

HONG KONG, April 26 (Reuters Breakingviews) - If Japan is the next Macau, $16 billion MGM Resorts International (MGM.N) may be the only winner left at the table. After years of debate and delays, Japan has finally given approval for a resort in Osaka. But as diversifying from China becomes a popular mantra, this big bet looks smarter than it once did. The 1.08 trillion yen ($8.1 billion) resort is set to open in 2029. U.S. casino operator MGM Resorts International and local partner Orix will each own a 40% stake in the company set up to manage the complex.

☆ Credit Suisse’s corpse drags on Nomura
▼ + stars: | 2023-04-26 | by ( ) www.reuters.com time to read: +2 min

Like peers, it is feeling the pain of the Silicon Valley Bank crisis and Credit Suisse’s (CSGN.S) collapse. And Nomura (8604.T), as with Goldman Sachs (GS.N), is ill-positioned to benefit from rising lending rates as much as commercial banks are; both investment-banking firms posted a 5% decline in net revenue in the most recent quarter. Wholesale revenue, dragged down by a 20% decline in investment banking, contracted for the quarter but remained up 10% for the year. Retail and investment management contracted compared to the prior quarter; that could be more than just seasonal if the global economy stays rickety. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ SoftBank-Alibaba sale looks awkward for Prosus
▼ + stars: | 2023-04-13 | by ( Liam Proud | ) www.reuters.com time to read: +4 min

LONDON, April 13 (Reuters Breakingviews) - SoftBank Group (9984.T) and Prosus (PRX.AS) are two very different beasts. Prosus owned about 27% of the internet titan on Wednesday, based on Refinitiv data and the company’s portfolio tracker. Prosus and van Dijk, however, have a rock-solid balance sheet with more cash than debt, and no particular need to exit Tencent in a hurry. That’s down from its peak last year, when the share price was considerably less than half the company’s net asset value per share. Prosus, the Amsterdam-listed technology investor, on April 11 said it would deposit 96 million Tencent shares into the Hong Kong Central Clearing and Settlement System, a precursor to selling them.

☆ Rich countries and India should cut a climate pact
▼ + stars: | 2023-04-10 | by ( Hugo Dixon | ) www.reuters.com time to read: +6 min

Emissions from the world’s most populous country are only 7% of greenhouse gases but are growing fast while those produced by rich countries have largely peaked. To do so, it will need policies that incentivise green investment, including accelerating its plans for carbon pricing. Rich countries can also help, even at a time when their budgets are stretched. India could then be much more ambitious in its transition plan and the G7 and other rich countries could mobilise funds, focussing on key bottlenecks. But if the central government comes up with a solution, rich countries could help fund it.

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