Tag: Business and finance

HAVING failed to get Rupert Murdoch’s attention before, Brian Roberts, chief executive of Comcast, certainly has it now. On February 27th the American pay-television giant said it would make a £22.1bn ($30.7bn) offer for Sky, the European satellite broadcaster, potentially disrupting Disney’s agreed $66bn purchase of much of 21st Century Fox.

The surprise announcement comes as Fox, which owns 39% of Sky, is trying to get regulatory approval in Britain for its own purchase of the remaining 61% of the satellite broadcaster, which it would then hand over to Disney after shareholders and regulators approve that deal (perhaps by the end of this year). By putting himself in the middle of that complex transaction, with an all-cash offer 16% richer than that of Fox, Mr Roberts is causing people to wonder what his goal is. He had tried to outbid Disney for Fox’s assets in the autumn, but gave up due to a lack of engagement from Mr Murdoch. He may now only be after Sky, or he may intend to make a still bigger hostile bid to top…Continue reading

REAL interest rates in the developed world have been low ever since the financial crisis of 2008-09 (see chart). The global economy might have struggled to recover had that not been the case; higher rates would have caused many more companies and homeowners to default.

Central banks are now starting to push rates slightly higher. And according to a new paper* from Bain, a management consultancy, the trend towards robotics will push them higher still—at least for a decade. That could be a shock for the financial markets.

Bain estimates that by 2030 American companies will have invested as much as $8trn in automation. As companies scramble to borrow money in order to buy machinery and robots, the resulting investment boom will drive up rates.

Automation will boost productivity, which has grown sluggishly in recent years. This slowdown may have been caused by the shift from manufacturing to services, where productivity gains are harder to achieve. Between 1993 and 2014, the American…Continue reading

BRAZIL and Russia, the third- and fourth-biggest emerging economies, have much in common beyond their size. Each boasts annual GDP per person of around $10,000, which depends more than either would like on natural riches. After commodity prices tumbled in 2014, their economies shrank and their currencies sank. Their central banks have fought hard against the ensuing inflation, driving it below 3%. That has allowed both to cut interest rates, contributing to modest economic recoveries.

But their fiscal fortunes have diverged. Brazil’s credit rating was cut by Fitch on February 18th, making its sovereign bonds even “junkier” (ie, more speculative). Russia’s rating, by contrast, was raised a few days later by S&P Global, which became the second agency to rate Russian sovereign debt as “investment grade”.

That might seem an odd description for a country embroiled in two wars and encumbered by sanctions. But Russia’s upgrade is not hard to justify. Though its approach to geopolitics is adventurous, its approach to…Continue reading

FOR Charles Li, Alibaba was the one that got away. The head of the Hong Kong stock exchange (HKEX) courted the Chinese e-commerce giant when it sought a venue for its listing five years ago, but he could not push through rule changes wanted by Alibaba to keep control of the company in its leaders’ hands. It opted instead for an initial public offering (IPO) in New York. “Losing one or two listing candidates is not a big deal for Hong Kong,” he wrote at the time. “But losing a generation of companies from China’s new economy is.” Since then he has been determined to make the next big catch.

It is finally within his grasp. After a debate that has trundled on for several years HKEX is, in the coming weeks, poised to allow companies to issue shares with different voting rights. Known as dual-class shares, these give founders the ability to control their firms, even as minority owners. This should make Hong Kong the favoured destination for the next wave of Chinese tech firms to go public, from Xiaomi, a smartphone maker, to Ant Financial,…Continue reading

WATCHING money drain from your bank account has never been so much fun. On WhatsApp, a messaging service ubiquitous in India, sending rupees is now as easy as posting a selfie. Set-up is a breeze, because all Indian banks have been corralled onto a common payment platform on which anyone, from Google and Samsung to local payment firms and banks themselves, can build their own user interface. Money zips instantly from one bank account to the other, without any need to set up a pesky digital wallet or download some new app. At least outside China, there is no simpler way to shift money today.

WhatsApp’s offering is being rolled out gradually. The number of transactions routed through the United Payments Interface (UPI), the system on which WhatsApp and the rest are riding, has soared from almost nothing in early 2017 to over 150m a month in January. On current trends, UPI transfers will overtake cash withdrawals from banks within weeks. Some 665bn rupees ($10.2bn) will have shifted hands—or…Continue reading

BOSSES have always sought control over how workers do their jobs. Whatever subtlety there once was to this art, technology is now obliterating. In February Amazon received patents for a wristband apparently intended to shepherd labourers in its warehouses through their jobs with maximum efficiency. The device, were Amazon to produce and use it, could collect detailed information about each worker’s whereabouts and movements, and strategically vibrate in order to guide their actions. Using such technology seems an obvious step for firms seeking to maximise productivity. Whether workers should welcome the trend, or fear it, is harder to say.

Workplace discipline came into its own during the Industrial Revolution. As production came to depend ever more on expensive capital equipment, bosses, not keen to see that equipment sitting idle, curtailed their workers’ freedom, demanding they work during set hours, in co-ordination with other employees, at a pace dictated by the firm. Technology creates new…Continue reading

FOR all the controversy that the National Rifle Association (NRA), America’s gun lobby, arouses, Americans of all political stripes have tended to regard it as nearly unassailable. The NRA and its 5m members have therefore been valued customers for companies, too. But after the latest school shooting, at Marjory Stoneman Douglas High School in Florida on February 14th, that has started to change. Not only has the political discussion shifted, but corporate America has reacted.

Snubs from big business began just a week after the shooting. On February 22nd First National Bank of Omaha, a bank, said “customer feedback” prompted it to stop issuing NRA-branded credit cards. Angry customers and riled-up activists, students from Marjory Stoneman Douglas foremost among them, have pushed a campaign to #BoycottNRA on Twitter, piling pressure on companies. In the span of just a few days, several firms ended their discounts for NRA members, including Delta and United, two airlines; MetLife, an insurer;…Continue reading

AMONG investors it is fashionable to say that China’s state-owned enterprises (SOEs) do not matter much any more and that entrepreneurs now power the world’s second-largest economy. But China’s SOEs are still hard to avoid. They account for 40% of its stockmarket and a third of its investment, and they dominate heavy industry. On the global stage, SOEs’ appetites sway commodity prices and many are expanding abroad.

These empires of men and machines account for 45 cents of every dollar of debt in China, so their health determines whether the country’s financial system will escape a crisis or blow up. And SOEs have become a loaded gun on the negotiating table between China and America. Treasury officials argue that China has broken the promises it made upon joining the World Trade Organisation in 2001 about further liberalising its economy. According to one negotiator, it is “abusing the system” by subsidising SOEs which in turn rig markets, dump cheap exports abroad and deter foreign…Continue reading

GERMAN carmakers have much in common with the self-confident roadhogs who favour their vehicles. The cars they produce, with sleek design, doors that close with a satisfying thunk and roomy interiors swagged with leather and technology, are the dominant force at the upper end of the car market worldwide. At home, too, they are the purring engine of the economy; carmaking is by far Germany’s biggest industrial sector.

But cars are changing. Electric power and autonomous vehicles will alter radically the way they are used (see special report). The difficulty in adapting threatens not only future revenues and profits at the big three—Daimler, BMW and Volkswagen (VW)–but also Germany’s status as a mean economic machine.

For now they are ahead. Brands built on unmatched quality mean four-fifths of the world’s premium cars have…Continue reading

Terminal velocity

“WHEN it comes to the meaning of life, we will all return to zero one day.” So philosophised Wu Xiaohui, a Chinese tycoon, as he reflected on his success in 2015. Little did he realise how soon his words would be proved true. He founded his firm, Anbang, as a small car-insurance company just over a decade ago. By 2017 it ranked among the world’s biggest insurers, with some $300bn of assets, including stakes in hotels and financial firms in America, Europe and Asia. But then, even more vertiginous than its ascent, came its fall. On February 23rd China’s government said it had taken over Anbang and would prosecute Mr Wu for economic crimes.

Rarely in corporate history has a giant grown and collapsed so quickly. But Anbang’s tale is also interesting for what it reveals about China’s economic landscape. It is the clearest demonstration that regulators are serious about defusing debt risks that have built up in recent years. And it reveals the murky…Continue reading