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☆ China’s GDP beat looks a tad too reassuring
▼ + stars: | 2023-04-18 | 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: +3 min

The risk is the shopping recovery gets bifurcated between luxury purchases and basic needs, leaving out big-ticket middle-class items. Meanwhile, Chinese savers added another 10 trillion yuan ($1.4 trillion) to their household deposits in the first quarter, reinforcing concerns that they will keep hoarding instead of splurging. Bank loans hit an all-time high of 10.6 trillion yuan in the first quarter, yet that did not appear to translate into private investment in fixed assets, which is barely growing. In a speech in March, Cai Fang, a member of the central bank’s monetary policy committee, suggested transferring 4 trillion yuan directly to households to compensate for weak income growth. If the first quarter’s print turns out to be misleadingly rosy, China’s reopening boom could quiet down quickly.

HONG KONG, April 6 (Reuters Breakingviews) - Alibaba's (9988.HK) worth may be hiding in plain sight. The $260 billion Chinese group wants to split off faster-growing, money-losing bets like its cloud and logistics units. It accounted for 9% of Alibaba's top line in the nine months to December, nearly double five years ago. Zhang would do well to focus investor attention back onto Alibaba's commerce operations in China. That’s some 30% more than the company’s entire market value as of Wednesday.

☆ Aussie central bank fix will paper over inflation
▼ + stars: | 2023-04-04 | by ( Antony Currie | ) www.reuters.com time to read: +3 min

MELBOURNE, April 4 (Reuters Breakingviews) - Australia’s central bank is getting the builders in – literally and figuratively. The Reserve Bank of Australia’s 1960s Sydney headquarters is currently clad in scaffolding, part of what is supposed to be a two-year, A$200 million-plus ($135 million) renovation. For a central bank, the RBA is particularly quirky. Another major task for the review panel was assessing how the bank combats inflation, which hit 7.8% in the year to December. Treasurer Jim Chalmers on March 31 received the final report on the review of the country’s central bank that he unveiled last July.

☆ Edtech giant leverages up in financial expertise
▼ + stars: | 2023-04-04 | by ( ) www.reuters.com time to read: +2 min

MUMBAI, April 4 (Reuters Breakingviews) - Indian education technology giant Byju’s has a new chief financial officer. Ajay Goel, who recently left a similar role at the Mumbai-listed natural resources firm Vedanta (VDAN.NS), will now steer the debt-laden company’s finances. Prosus-backed (PRX.AS) Byju’s, meanwhile, in December sought easier terms on a year-old $1.2 billion loan private placement. That provides some breathing room, but with the company’s top line shrinking and losses mounting, the battle-hardened Goel’s start date cannot come too soon. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Alibaba hands parched dealmakers a glass half-full
▼ + stars: | 2023-03-30 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

Then New York- and Hong Kong-listed Alibaba (9988.HK) revealed it was creating six independently run businesses. That will keep dealmaking teams busy for months if, as CEO Daniel Zhang envisions, multiple listed companies emerge from the $250 billion parent. And if a breakup is good for Alibaba, they can dust off pitchbooks for its domestic rivals. Follow @AntonyMCurrie on TwitterCONTEXT NEWSAlibaba CEO Daniel Zhang said on March 29 that he hopes multiple listed companies will emerge from the group. “I hope there will be multiple listed companies emerging from the Alibaba system, and that they will continue to nurture their own sons and daughters, and cultivate more listed companies”, Zhang said, according to the South China Morning Post.

☆ Private equity finds silver lining in Asia Pacific
▼ + stars: | 2023-03-28 | by ( ) www.reuters.com time to read: +2 min

MELBOURNE, March 28 (Reuters Breakingviews) - It’s hard working in Asia-Pacific private equity these days. On Monday Brookfield Asset Management (BAM.TO) and MidOcean Energy agreed to take Australia’s Origin Energy (ORG.AX) private for A$18.7 billion ($12.5 billion). A few days earlier Toshiba’s (6502.T) board tentatively backed Japan Industrial Partners’ $15.3 billion offer. Origin’s buyers, which plan to split the business in two, had already made three offers before Origin accepted. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Bayer pumps H2O to top of climate agenda: podcast
▼ + stars: | 2023-03-21 | by ( Antony Currie | ) www.reuters.com time to read: 1 min

NEW YORK, March 21 (Reuters Breakingviews) - The UN is hosting its first confab on water security in almost 50 years as floods and droughts worsen with rising temperatures. In this Exchange podcast, Bayer executive and former member of Germany’s Green Party Matthias Berninger lays out the drugs-to-seeds maker’s remedies. Subscribe 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.

☆ Water’s big moment risks getting lost in the weeds
▼ + stars: | 2023-03-20 | by ( Antony Currie | ) www.reuters.com time to read: +6 min

The latest is research published last Thursday by the Global Commission on the Economics of Water. The sum, though, is just $140 million, and the U.S. government’s International Development Finance Corporation is pouring in three-quarter of the proceeds. But there is a decent investment case for water without state or supranational support. Without them, water’s big moment risks getting lost in the weeds. Follow @AntonyMCurrie on TwitterCONTEXT NEWSThe United Nations 2023 Water Conference starts on March 22, World Water Day, in New York.

☆ Signature Bank buyer gets a crisis dividend
▼ + stars: | 2023-03-20 | by ( John Foley | ) www.reuters.com time to read: +4 min

The failure of lender Signature Bank (SBNY.O) has forced them to abandon their consolidation-skeptic principles, resulting in a sizeable crisis dividend for Signature’s new owner. Bank mergers almost never happen so quickly, and nobody knows that better than Community Bancorp boss Thomas Cangemi. A study by the St. Louis Federal Reserve found that failed bank selloffs did lessen competition, but not by much. Community Bancorp said it has taken on $13 billion in loans and $25 billion in cash as part of the deal. The FDIC has been given equity appreciation rights in New York Community Bancorp that could be worth up to $300 million.

☆ Bad news salvo gives Bank of Japan some cover
▼ + stars: | 2023-03-16 | 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: +3 min

HONG KONG, March 16 (Reuters Breakingviews) - Incoming Bank of Japan (8301.T) Governor Kazuo Ueda can breathe a sigh of relief; things aren’t going very well. Ripples from the collapse of Silicon Valley Bank have shoved down sovereign bond yields, inadvertently driving off an attack by traders who believed global inflation made rate hikes unavoidable. This year, however, spiking energy costs have pushed the core consumer index excluding fresh food over 4%, double the BOJ’s target. Consumer price inflation including energy but excluding fresh food touched 4.2% in January, a 41-year high. Core consumer inflation has now exceeded the Bank of Japan's 2% target for nine straight months.

☆ Big Oil’s old profligacy lives on Down Under
▼ + stars: | 2023-03-15 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

Throw in dividends and Santos shareholders have received a measly 6% total return during that period. Santos’ 15% return on capital employed last year puts it at the bottom of the class; BP delivered almost 25%. It looks slated to stay in the basement, with analysts projecting a sub-8% return for 2025, per Refinitiv data. The bonus is mostly tied to successful “growth projects”, which arguably encourages him to overinvest. If that happens again at next month’s annual meeting, it would, under Australian rules, allow investors to boot the entire board.

☆ Sea sails past growth vs. profitability debate
▼ + stars: | 2023-03-08 | by ( ) www.reuters.com time to read: +2 min

BENGALURU, March 8 (Reuters Breakingviews) - Singapore technology giant Sea (SE.N) on Tuesday reported its first ever quarterly profit, beating regional tech firms like GoTo (GOTO.JK) and Grab (GRAB.O) to the punch. The almost $1 billion swing from a fourth-quarter loss in 2021 to a $423 million profit in the final three months of last year is largely down to cost cuts. The company run by Forrest Li slashed sales and marketing expenses alone by $745 million, a whopping 62% drop. Whether that’s sustainable is unclear, though Li pointed out that the company had sold, closed or downsized a number of non-core operations and investments. It’s a welcome sign that upstart tech companies don’t always have to sacrifice profitability for growth.

The usually sleepy Ministry of Science and Technology will be tasked to help lead the country's efforts to reduce dependence on Western suppliers. Meanwhile, creating a National Data Bureau should streamline the myriad of regulations spanning cybersecurity, personal privacy and information transfer. The benefits of upgrading the science, technology and patent ministries are less clear. And despite China being the world's most prolific patent filer, 90% are low-value "trash", estimated one Chinese official in 2019. Other proposals from the State Council include creating a National Data Bureau to coordinate sharing and developing the country's data resources.

☆ Kakao can end K-pop saga with near-$1 bln mic drop
▼ + stars: | 2023-03-07 | by ( ) www.reuters.com time to read: +2 min

Kakao and its entertainment arm are eyeing a 35% stake in SM via a tender offer worth $962 million. If Kakao succeeds, the company, which has the backing of SM's management, would become the label's top shareholder. Kakao Entertainment in January raised $930 million from investors including GIC in Singapore and Saudi Arabia's Public Investment Fund. The envisioned partnership between Kakao, Kakao Entertainment and SM would cover global distribution, production and more for music and other content. Following Kakao's offer, SM Shares rallied 14% to 148,400 won ($114); they have nearly doubled since the start of the year.

☆ TPG starts a dicey dance with death Down Under
▼ + stars: | 2023-03-07 | by ( Antony Currie | ) www.reuters.com time to read: +3 min

Little wonder, then, that TPG is taking advantage of Australia’s InvoCare (IVC.AX) recently losing market share, and earnings, by offering shareholders A$1.8 billion ($1.5 billion) on Tuesday. But the private equity firm run by Jon Winkelried has started a dicey dance with death. At 5%, for example, annual interest payments on the new debt would be almost $50 million – a third of InvoCare’s expected EBITDA next year. Follow @AntonyMCurrie on TwitterCONTEXT NEWSTPG Global, a fund run by U.S. private equity firm TPG, on March 7 made a non-binding, indicative offer for InvoCare which values the Australian funeral-services company’s enterprise at almost A$2.2 billion ($1.5 billion). The private equity firm had the previous day bought an almost 18% stake in the company from a variety of investors at A$12.65 a share.

☆ Adani contrarian is a win for Hindenburg, too
▼ + stars: | 2023-03-03 | by ( Una Galani | ) www.reuters.com time to read: +6 min

GQG Partners is snapping up shares in four of the Indian tycoon’s nine core companies, including the flagship Adani Enterprises (ADEL.NS), along with Adani Green Energy (ADNA.NS), Adani Ports and Special Economic Zone (APSE.NS) and Adani Transmission (ADAI.NS). The mogul was trying to do just that last month with a $2.5 billion Adani Enterprise share sale before it was scuppered by Hindenburg’s sortie. Barring something truly exceptional, the scars of Hindenburg’s successful attack on Adani will linger for a while. GQG bought shares in Adani Ports and Special Economic Zone, Adani Green Energy, Adani Transmission and Adani Enterprises from entities owned by the Adani family. Adani has dismissed the allegations outlined in U.S. fund Hindenburg Research’s Jan. 24 report.

☆ Tesla prepares for its next production hell
▼ + stars: | 2023-03-02 | by ( Jonathan Guilford | ) www.reuters.com time to read: +3 min

Demand woes are already threatening Tesla’s breakneck growth: cars delivered to customers have run below production of late, spurring the company to cut prices. Most promising was a presentation showing manufacturing and battery improvements reducing the cost of a “next gen vehicle” by 50%. A mere $5,000 in absolute gross profit, though, would leave little room for research and development and other operating expenses, which ran to $4,545 per car delivered last quarter. Still, Musk pulled off the seemingly impossible before when ramping up the Model 3, a messy slog he dubbed “production hell” at the time. After an opening presentation focused on the broad viability of transitioning the world to sustainable energy, Musk and fellow executives outlined goals to streamline production, reduce manufacturing costs by half and scale up energy storage products.

☆ BHP investors aren’t seeing the wood for the trees
▼ + stars: | 2023-02-21 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

Granted, BHP’s earnings of $6.5 billion for the six months to the end of December missed estimates by some 7%. BHP’s investors are missing a bit of the wood for the trees. Iron age: Miners are rallying as iron ore prices riseFollow @AntonyMCurrie on Twitter(The author is a Reuters Breakingviews columnist. The company attributed the drop to lower prices for iron ore and copper. BHP is paying a dividend of 90 cents a share for the period, down from $1.50 a share a year earlier.

☆ Shein's ambitions are a bit of a stretch
▼ + stars: | 2023-02-20 | by ( ) www.reuters.com time to read: +2 min

Shein’s top-line growth slowed from 57% in 2021 to 45% last year; the company expects that to continue, with its 2025 target implying average annual expansion of 37%. Meanwhile, Shein's projected 13% profit margin dwarfs that of web retailers like China's JD.com (9618.HK). The $118 billion PDD (PDD.O) recently rolled out its Temu shopping service; it is now the most downloaded app in the United States. Using the same 2.4 times forecast 2025 sales multiple the Inditex enterprise trades on, Shein's valuation could top $140 billion. 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, Feb 17 (Reuters Breakingviews) - The disappearance of Bao Fan is a chilling dampener on the reopening of the world's second largest economy. China Renaissance was valued at $2.3 billion in its own IPO in 2018 when it was ranked second on China tech deals per Dealogic. Entities including China International Capital Corp (3908.HK) and Citic Securities (600030.SS), also have to grapple with President Xi Jinping’s common-prosperity campaign, making it unclear whether these firms’ erstwhile generosity will resume when advisory activity picks up. It also noted that in September Chinese authorities took Cong Lin, the bank’s president and chairman of its Hong Kong securities unit, into custody. Column by Yawen Chen in Hong Kong and Una Galani in Mumbai.

☆ Central banks' inflation fall-guy lives Down Under
▼ + stars: | 2023-02-16 | by ( Antony Currie | ) www.reuters.com time to read: +4 min

MELBOURNE, Feb 16 (Reuters Breakingviews) - If any central bank governor was to feel the heat from the past year’s multiple interest-rate increases, the smart money might have been on the U.S. Federal Reserve’s Jerome Powell. Fast forward and Philip Lowe, governor at the Reserve Bank of Australia, looks most exposed. It would be unfair for Lowe to be the fall guy for central banks’ general inflation failure. The head of the central bank made his comments in front of the Senate Economics Legislation Committee. When questioned about his future at the bank, Lowe said he intended to serve out his seven-year term as governor, which ends in September.

The $108 billion group’s sheer size means it benefits from exceptional economies of scale in an immature industry. Last year, it tripled both production and sales of pure electric and hybrid cars to nearly 2 million vehicles. That is equivalent to roughly a quarter of EVs purchased in China in 2022. The group makes batteries too, accounting for almost a quarter of China’s total sales last year, Jefferies estimates. Overall passenger car sales, including electric vehicles and fossil-fueled models, slumped 38% in January, reversing a 2.4% gain in the previous month.

☆ Bank of Japan’s new governor starts on back foot
▼ + stars: | 2023-02-14 | 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: +3 min

HONG KONG, Feb 14 (Reuters Breakingviews) - Academic Kazuo Ueda faces a rocky time as the new governor of the Bank of Japan (8301.T). He is stepping down just as his signature yield curve control (YCC) policy is becoming increasingly unsustainable as domestic inflation rises. The Nikkei news service reported that officials had approached Deputy Governor Masayoshi Amamiya and were rebuffed. It seems likely Ueda will have to modify or abandon YCC given how much damage it is doing to the bond market and the BOJ’s balance sheet. Follow @petesweeneypro on TwitterloadingCONTEXT NEWSJapan's government on Feb. 14 named academic Kazuo Ueda as its pick to become the next governor of the country’s central bank.

☆ Gold miner unearths risky M&A seam
▼ + stars: | 2023-02-06 | by ( Antony Currie | ) www.reuters.com time to read: +3 min

That’s precisely what Newmont (NEM.N) boss Tom Palmer has just done, offering $17 billion in stock for Australian gold excavator Newcrest Mining (NCM.AX). At present Newmont is offering a 22% premium to the target’s undisturbed share price, after Newcrest rejected an earlier 17% boost. What Canada’s Barrick Gold (ABX.TO) does in response is the main question. It is the world’s largest gold miner, which at $40 billion sports a market capitalisation 25% higher than Barrick’s. Agnico Eagle Mines (AEM.TO), the $24 billion third-largest miner of the ore, may want to dig in, too.

☆ India’s Vodafone rescue has strings attached
▼ + stars: | 2023-02-06 | by ( ) www.reuters.com time to read: +2 min

MUMBAI, Feb 6 (Reuters Breakingviews) - New Delhi has finally come good on its promise to convert Vodafone Idea’s (VODA.NS) dues worth $2 billion into an equity stake. The state’s move, which dialed up a 10% gain in Vodafone Idea’s stock, could ease the company’s pressures elsewhere. A recently extended repayment schedule for $194 million of cash owed to American Tower (AMT.N) should bolster its chances, too. India’s Telecommunications Minister Ashwini Vaishnaw said on Friday that concomitant with the swap is a “firm commitment” of fresh capital from the Aditya Birla group, Vodafone Idea’s second-largest shareholder. For a group that has often expressed a wish to exit the telecom business, the bailout must feel like a Pyrrhic victory.

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