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☆ 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.

☆ Europe throws ignition cars a thin lifeline
▼ + stars: | 2023-03-28 | by ( Lisa Jucca | ) www.reuters.com time to read: +4 min

Bowing to pressure from automaking Germany, the European Union has agreed to exempt cars that run on carbon-neutral synthetic fuel from a ban on new combustion engine vehicles in 2035. loadingFor mass-market brands, electric cars will likely remain the cheapest option. RBC industry analysts expect electric and plug-in hybrid vehicles to make up 90% of Western European passenger vehicle sales by 2035. Yet, it will do little to stop the hollowing out of Europe’s combustion engine supply chain. The deal paves the way for EU ministers to approve the 2035 phaseout law for CO2-emitting cars on March 28.

☆ War on cow gas is stinky but necessary job in climate-change struggle
▼ + stars: | 2023-03-24 | by ( Karen Kwok | ) www.reuters.com time to read: +4 min

Yet, governments from New Zealand to Europe are zeroing in on livestock, whose burps and farts help generate 15% of global greenhouse gas emissions each year, United Nations estimates show. Cattle is a major contributor to methane emissions from agriculture, which hit 142 metric tons in 2022, triple the amount of those from the oil sector, according to the International Energy Agency. But like fossil fuels ten years ago, this will be the start of a long but necessary battle. CONTEXT NEWSEuropean Union countries agreed on March 16 to try to reduce the number of farms covered by proposed rules to cut pollution and greenhouse gas emissions from livestock. French dairy company Danone on Jan. 17 pledged to reduce methane emissions from its fresh milk supply chain by 30% by 2030 from its 2020 level.

☆ War on cow farts is stinky but necessary job
▼ + stars: | 2023-03-24 | by ( Karen Kwok | ) www.reuters.com time to read: +4 min

Yet, governments from New Zealand to Europe are zeroing in on livestock, whose burps and farts help generate 15% of global greenhouse gas emissions each year, United Nations estimates show. An industry backlash against plans to tackle the issue will teach punters to treat burgers as polluting fuel. Cattle is a major contributor to methane emissions from agriculture, which hit 142 metric tons in 2022, triple the amount of those from the oil sector, according to the International Energy Agency. But like fossil fuels ten years ago, this will be the start of a long but necessary battle. French dairy company Danone on Jan. 17 pledged to reduce methane emissions from its fresh milk supply chain by 30% by 2030 from its 2020 level.

☆ Macron is right and wrong on share buybacks
▼ + stars: | 2023-03-23 | by ( ) www.reuters.com time to read: +2 min

LONDON, March 23 (Reuters Breakingviews) - Emmanuel Macron dislikes the “cynicism” of large profitable companies engaging in massive share buyback programmes. The French president has a point that there are better ways for companies to spend their profits than to reduce their share count. Share buybacks in Europe’s largest 11 markets nearly doubled last year to 161 billion euros, according to a report by BNP Paribas (BNPP.PA), which itself is spending some 5 billion euros - or half its net profit - to acquire its own stock. And from an economic viewpoint, money spent cuddling shareholders would be better spent on investment and growth. That said, the scope for one country to regulate share buybacks in isolation – and to stop companies just paying out special dividends instead - is dubious.

☆ EU power rejig may only solve tomorrow’s problem
▼ + stars: | 2023-03-14 | by ( Lisa Jucca | ) www.reuters.com time to read: +4 min

That would have risked stifling green electricity production, which is cheaper, by culling the profit margin producers by design enjoy in the EU structure. To make Europe less dependent on volatile fossil fuel prices requires installing more green energy power. The approach is not as market-friendly as fixed-price, subsidy-free power purchase agreements, which last year only made up 1% of total power generation. The risk of a resurgence of the European energy crisis, however, is all skewed to the near term. PPAs currently only cover 1% of total European Union electricity generation, according to data provider Independent Commodity Intelligence Services.

☆ Big bank selloff rests on tiny kernel of truth
▼ + stars: | 2023-03-10 | by ( Liam Proud | ) www.reuters.com time to read: +3 min

LONDON, March 10 (Reuters Breakingviews) - The travails of Silicon Valley Bank (SIVB.O) are rippling across the global banking system, wiping billions off the market capitalisations of HSBC (HSBA.L), Deutsche Bank (DBKGn.DE) and JPMorgan (JPM.N). It’s nonetheless a useful reminder that rising interest rates bring risks as well as benefits. The trigger for the selloff seems to have been a $1.8 billion equity issue by SVB Financial, which does business as Silicon Valley Bank. Shrinking deposits saw Chief Executive Greg Becker sell down a $21 billion portfolio of Treasury and agency mortgage bonds. As interest rates rise banks are charging more for loans.

☆ Female entrepreneurs’ glass ceiling is intact
▼ + stars: | 2023-03-08 | by ( Lisa Jucca | ) www.reuters.com time to read: +4 min

MILAN, March 8 (Reuters Breakingviews) - The glass ceiling that holds back female entrepreneurs remains intact. Yet despite representing 40% of new business founders in the United States, female entrepreneurs capture only a fraction of available venture capital cash. A tendency by venture capital funds to shun female entrepreneurs risks hobbling their contribution to the global economy. Helping female entrepreneurs to rise to the top will be beneficial to women and to the world. In 2021, female entrepreneurs made up 40% of total in the United States, data from the Kauffman Foundation shows.

☆ 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.

☆ Germany’s electricity headache has an M&A cure
▼ + stars: | 2023-03-06 | by ( George Hay | ) www.reuters.com time to read: +4 min

Sorting out a rickety power grid is an especially pressing issue in Germany, but luckily Scholz also has the means to act. Cutting carbon emissions means powering more cars and homes through zero-carbon electricity rather than fossil fuels. It has to transport electricity all the way from wind turbines in the northern regions to its southern industrial heartland, which means the power network is often overloaded. The German power network is also unusually complex. Germany’s historic dependence on Russian gas deepened its energy crisis last year, and underscored the risks of relying on foreign-owned critical assets.

☆ 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.

☆ UniCredit finds costly fix for faulty CEO pay
▼ + stars: | 2023-03-02 | by ( ) www.reuters.com time to read: +2 min

UniCredit shares are up 75% over the last twelve months, against 22% for the STOXX Europe 600 Banks Index. To give Orcel an incentive to beat his goals again, and to keep the pay-conscious dealmaker happy, UniCredit tweaked the package. It hiked his fixed pay to 3.25 million euros but changed the way the bonus will be allocated. If Orcel hits new and more challenging targets he will earn a bonus of 4.25 million euros, lower than last year’s payout, paid all in stock. But if he overshoots again, he could get up to 9.75 million euros.

The Euronext (ENX.PA) chief executive’s decision to withdraw a preliminary 5.5 billion euro offer for investment platform Allfunds (ALLFG.AS) may turn out to be a lucky escape. An alternative deal will however require the 7.5 billion euro exchange operator to build a more valuable M&A currency first. The funds platform could have helped investors that already buy shares on Euronext to access a broader range of products. Meanwhile, Allfunds’ shares may fall if it continues to struggle. Euronext shares were up over 4% at 72.34 euros, as of 0953 GMT.

☆ UK housebuilders face slow and painful refurb
▼ + stars: | 2023-03-01 | by ( ) www.reuters.com time to read: +2 min

LONDON, March 1 (Reuters Breakingviews) - UK housebuilding is facing a bleak future. In previous slowdowns, the UK’s Conservative Party bailed out the sector with packages like Help to Buy, which subsidized mortgages to help buyers. After Wednesday’s 9% share price decline, it’s share price is now worth less than half of what it was before the outbreak of Covid-19. With little help on the horizon, UK housebuilders face a slow and painful rebuild. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ AXA’s fling with Monte Paschi ends on high note
▼ + stars: | 2023-02-28 | by ( ) www.reuters.com time to read: +2 min

With its 200-million-euro investment in Banca Monte dei Paschi di Siena (BMPS.MI), the French insurer was one of the largest backers of a crucial 2.5-billion-euro capital increase that the hard-beaten lender secured in November. For AXA, supporting the cash call was instrumental to protect its existing insurance distribution partnership with Monte Paschi. The French insurer said on Tuesday it had sold 100 million shares, nearly 8% of Monte Paschi’s total, at 2.33 euros each, pocketing 233 million euros. That’s a 17% gain from the 200 million euros it invested in the cash call. Monte Paschi’s recent strong share-price performance has in any case more to do with the improved economic outlook in Europe and rising interest rates than with any merit of its own.

☆ Why the dollar keeps winning in the global economy
▼ + stars: | 2023-02-28 | by ( Francesco Guerrera | ) www.reuters.com time to read: +7 min

The outsized role played by the United States in capital markets, trade and debt reinforces the status quo. Unless the global economy undergoes a complete overhaul, the dollar will remain on top. America may have never “run on Dunkin’”, as the donut-maker’s slogan claimed, but the global economy runs on the dollar. The United States has spurred the search for alternatives by wielding its currency as a weapon against its adversaries. The greenback’s function as the lubricant of global economic activity has another important effect: a stronger dollar curbs global trade.

☆ BASF picks right time to share pain with investors
▼ + stars: | 2023-02-24 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 24 (Reuters Breakingviews) - BASF (BASFn.DE) continues to provide the best metaphor for the German economy. The group will cut 2% of its workforce in a 550 million euros cost-cutting effort that includes plant closures. Investors who might have cheered the news sent the stock tanking by 6% as BASF boss Martin Brudermüller is also suspending a 3 billion euros share buyback. Politically that may have allowed the group to maintain its dividend at a planned 3.40 euros a share. The closure of one of two ammonia plants in the company’s stronghold of Ludwigshafen was expected - a Belgian plant in Antwerp can supply the global market.

☆ Miners’ bets on the future of coal are diverging
▼ + stars: | 2023-02-23 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 23 (Reuters Breakingviews) - Investors have a common understanding that coal is the dirtiest energy source. UK-listed Anglo American’s (AAL.L) earnings on Thursday showed EBITDA in the $50 billion group’s metallurgical coal division tripled to over $2.7 billion in 2022. With “met coal” constituting a fifth of Anglo’s overall EBITDA, investors may wonder whether boss Duncan Wanblad will follow Teck’s step. That’s probably because even though met coal generates three times more carbon than thermal coal, used to generate electricity, it’s still expensive to produce steel at scale in a sustainable way without using a coal-guzzling blast furnace. Anglo’s experiences hiving off its own thermal coal business, meanwhile, may not encourage Wanblad to repeat the trick.

☆ UAE gas IPO’s $50 bln valuation looks like a floor
▼ + stars: | 2023-02-22 | by ( Karen Kwok | ) www.reuters.com time to read: +3 min

LONDON, Feb 22 (Reuters Breakingviews) - The United Arab Emirates’ bumper gas listing inevitably invites comparisons with Saudi Aramco (2222.SE). As with the five other subsidiaries which ADNOC has listed, including its distribution arm and Borouge (BOROUGE.AD), ADNOC Gas comes with juicy shareholder payouts. While ADNOC Gas benefits from a 25-year agreement with its parent to provide gas for its needs, ADNOC takes a share of the resulting profit. That said, with over two thirds of its gas serving local customers who contribute one-third of its operating profit after tax, ADNOC Gas earnings are arguably more predictable. ADNOC Gas envisages an equity valuation of at least $50 billion, people familiar with the situation told Reuters Breakingviews.

☆ Hotels share revival shrugs off two crises
▼ + stars: | 2023-02-21 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 21 (Reuters Breakingviews) - Hotel groups are in restoration mode. Chief Executive Keith Barr reckons the year ahead will continue to see strong demand, boosted by China’s re-opening. In 2019, the People’s Republic accounted for around 10% of the hotel market, and its citizens spent over $250 billion on international tourism, according to the World Tourism Organisation. Yet Covid-19 may still hurt spending in the Middle kingdom, and geopolitical tensions may lead to fewer Chinese people travelling. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

☆ Buffett TSMC's U-turn spotlights chips' siren call
▼ + stars: | 2023-02-16 | by ( ) www.reuters.com time to read: +2 min

HONG KONG, Feb 16 (Reuters Breakingviews) - A lot can change in three months, especially in the world of semiconductor investing. Warren Buffett's Berkshire Hathaway (BRKa.N) inexplicably sold most of its $4.1 billion holding in Taiwan Semiconductor Manufacturing (2330.TW), a position only disclosed in November. For TSMC, Berkshire probably pocketed a 9% return, Reuters reported citing analyst estimates, having held the stake for roughly three months. He may be right about TSMC, which boasts a monopoly in advanced chipmaking and superior profitability - the "moats" Buffett prizes so highly. Moat or no moat, the outlook for chips is getting dicey.

☆ 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.

☆ U.S.-China rewarming trade is half-full of hot air
▼ + stars: | 2023-02-03 | 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

Enter a literal ball of hot air in the form of a Chinese spy balloon that the United States military is tracking in its home skies. The balloon’s brazen appearance augurs ill for Secretary of State Antony Blinken’s expected visit to Beijing next week. However, it is important to put the balloon in the context of Beijing’s habitual good cop, bad cop negotiating routine. In financial terms, Beijing still largely has its good-cop hat on. U.S. investors may fret about Chinese eyes in the sky, but in financial terms they have more to fear from the flaming gas jets in their own legislature.

☆ Vodafone travails require more than caretaker CEO
▼ + stars: | 2023-02-01 | by ( ) www.reuters.com time to read: +2 min

LONDON, Feb 1 (Reuters Breakingviews) - Vodafone (VOD.L) needs more than an interim chief executive to dig itself out of its current funk. Sales fell 1.8% in Germany in the quarter ending December, which accounts for more than 30% of the group’s overall revenue. Della Valle is accelerating the group’s 1 billion euros cost-cutting plan, and implementing her predecessor’s decisions. But an interim CEO cannot take strategic decisions, such as whether or not to sell the Italian unit eyed by France’s Iliad - whose owner Xavier Niel has taken a 2.5% stake in Vodafone. Vodafone needs a permanent CEO.

☆ Sick Britain no longer needs Dr Bailey’s medicine
▼ + stars: | 2023-02-01 | by ( Francesco Guerrera | ) www.reuters.com time to read: +3 min

However, such monetary tightening increasingly looks at odds with Britain’s dire economic conditions. Bank of England hawks can point to key indicators that are still running hot, such as inflation, economic output and wages. Yet those gauges are backward-looking and will cool down this year as a recession and past rate hikes hit consumers and firms. The effects of rate hikes take time to show up in the numbers. The rate-setting Monetary Policy Committee of the BoE split three ways in December when the central bank sanctioned a 50-basis-point increase.

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