Dec.22 -- Hong Kong is back to business as usual after another tense weekend that included a police officer drawing his sidearm on protesters. No shots were fired. Bloomberg’s Stephen Engle speaks with Shery Ahn on “Bloomberg Daybreak: Asia.”
Dec.22 -- Hong Kong is back to business as usual after another tense weekend that included a police officer drawing his sidearm on protesters. No shots were fired. Bloomberg’s Stephen Engle speaks with Shery Ahn on “Bloomberg Daybreak: Asia.”
Nearly half of all oil pipelines from the Permian basin, the biggest U.S. oilfield, are expected to be empty by the end of the year, analysts and executives said. Pipeline companies went on a construction spree throughout 2018 and 2019 to handle blistering growth in U.S. crude production to a record 13 million barrels per day (bpd). Major pipeline companies are exploring ways to ship other products in those lines and considering selling stakes in operations to raise cash.
(Bloomberg) -- Abu Dhabi is accelerating plans to sell shares in some oil and gas businesses as the government seeks to deepen its financial markets and diversify its sources of funding.The state energy company, Abu Dhabi National Oil Co., is considering initial public offerings of its drilling business and a fertilizer joint venture called Fertiglobe, according to people with knowledge of the plans. The deals could raise more than $1 billion each, according to the people.Petrostates in the Persian Gulf are trying to bolster their economies after they were hit last year by coronavirus lockdowns and the crash in oil prices. They also want to diversify from fossil fuels by using money raised from their oil assets to invest in other industries.Deliberations on the potential listings are ongoing and no final decisions have been made. Adnoc may retain the businesses or look at other ways of monetizing them, the people said.Both Adnoc Drilling and Fertiglobe, a venture with Amsterdam-based OCI NV, are based in Abu Dhabi. OCI confirmed that it and Adnoc are considering an IPO of Fertiglobe. Adnoc declined to comment.$20 Billion DriveIn recent years, international and local funds have invested more than $20 billion in Adnoc assets such as pipelines and property. Last June, the company sold leasing rights over natural-gas pipelines to a consortium including Global Infrastructure Partners and Brookfield Asset Management Inc., in a deal worth $10.1 billion.Still, its sole IPO to date was the listing of its fuel-retailing unit, Abu Dhabi National Oil Co. for Distribution PJSC, in 2017.Oil-rich Abu Dhabi is the capital of the United Arab Emirates and holds most of the country’s crude deposits. The UAE is the third biggest producer in the Organization of Petroleum Exporting Countries, behind Saudi Arabia and Iraq.Neighboring Saudi Arabia -- the world’s biggest oil exporter -- has a similar strategy. It raised almost $30 billion from the IPO of state energy firm Saudi Aramco in late 2019. Last week, Aramco announced it was selling leasing rights in pipelines for $12.4 billion to a consortium led by U.S. investor EIG Global Energy Partners LLC.Reuters earlier reported the potential Adnoc IPOs.(Updates with OCI comment in fifth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Gold fell on Monday as an uptick in U.S. Treasury yields dimmed bullion's appeal, while investors awaited key U.S. inflation and retail sales data for cues on economic health. Spot gold was 0.5% down at $1,734.31 an ounce by 11:23 a.m. EDT (1523 GMT). U.S. gold futures eased 0.6% to $1,734.60.
HSBC and Huawei Technologies' Chief Financial Officer Meng Wanzhou have reached an agreement in a dispute about the publication of documents relating to U.S. fraud allegations against her, their lawyers told a Hong Kong court. The legal dispute reached the Hong Kong court last month after a British judge in February blocked the release of internal HSBC documents relating to the fraud allegations against Meng.
Further, core inflation too accelerated to more than a 2-year high, at close to 6.0% which does not offer comfort. Continued comfort on food and goods inflation as production continues to normalize should prove supportive. "Upside from crude oil prices, if any, could be offset by a likely hold or reduction in duties on petroleum products, softening of demand due to a resurgence in COVID-19 infections, and likelihood of a normal monsoon outturn (as per private weather forecasting firm AccuWeather) in 2021."
(Bloomberg) -- China ordered 34 internet corporations Tuesday to rectify their anti-competitive practices within the next month, signaling that Beijing’s scrutiny of its most powerful firms hasn’t ended with the conclusion of a probe into Alibaba Group Holding Ltd.Shares in Tencent Holdings Ltd. and Meituan extended losses after the State Administration for Market Regulation issued a stern statement emphasizing it will continue to eradicate abuses of information and market dominance among other violations. Also summoned to an ad-hoc meeting with the watchdog on Tuesday were industry leaders including TikTok owner ByteDance Ltd., search giant Baidu Inc. and JD.com Inc.Regulators warned internet companies to “heed Alibaba’s example,” reaffirming their intent to abolish forced exclusivity among other practices. The meeting -- organized jointly with the cyberspace and tax regulators -- came days after Beijing wrapped up a four-month probe into Alibaba by slapping a record $2.8 billion fine on the e-commerce giant for abuse of market dominance.The penalty was less severe than many feared and lifted a cloud of uncertainty hanging over founder Jack Ma’s internet empire. It also came after the Chinese central bank ordered an overhaul of his Ant Group Co. fintech titan.Alibaba’s shares have gained 7% since the start of the week, but its fellow Chinese internet giants have gyrated while investors digest the rapid-fire announcements and concerns grow that Beijing’s scrutiny will extend beyond Alibaba. On Tuesday, Tencent gave up early gains to finish down slightly while Meituan, video service Kuaishou Technology and JD all slid more than 3% in Hong Kong.“The base line of policies cannot the crossed, the red line of laws cannot be touched,” the market watchdog said in the statement on Tuesday.The investigation into Alibaba was one of the opening salvos in a campaign seemingly designed to curb the power of China’s internet leaders, which kicked off after Ma infamously rebuked “pawn shop” lenders, regulators who don’t get the internet, and the “old men” of the global banking community. Those comments set in motion an unprecedented regulatory offensive, including scuttling Ant’s $35 billion initial public offering.The 34 firms summoned Tuesday must now undergo complete rectification after conducting internal checks and inspections over the next month, and make a pledge to society to obey rules and laws, the antitrust watchdog said in its statement. Regulators will organize follow-up inspections and companies that continue to engage in abuses like forced exclusivity -- a practice that “flagrantly trampled and destroyed” market order -- will be dealt with severely.The regulator also highlighted abuses like acquisitions that squeeze out smaller rivals and burning through cash to grab market share in community group buying, currently the hottest e-commerce arena in China. Firms also need to address issues like counterfeiting, data leaks and tax evasion, according to the statement.“This is positive because the SAMR is giving the platforms one month to review their practices, rather than dish out fines and penalties without warning,” Bloomberg Intelligence senior analyst Vey-Sern Ling said. “They are using Alibaba as an example to deter misbehavior from the rest of the industry players. If these companies toe the line, industry competition can become healthier. ”(Updates with share action from the fifth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Global accountants KPMG said on Monday that Jon Holt has been elected by partners to head its 2.3 billion pound ($3.17 billion) UK arm, which faces a potential fine and major industry reform. Holt, head of audit since 2019, takes up the CEO job immediately until September 2025, replacing Bill Michael, who resigned after reports that he told partners to "stop moaning" about the impact of COVID-19 on their lives. "Now is the time to challenge ways of working and use what we’ve learnt during the pandemic to really drive positive action," Holt said in a statement.
A growing number of Chinese tech start-ups are cancelling plans to list on Nasdaq-style markets at home with some eyeing Hong Kong share sales instead, as regulators tighten scrutiny of IPO applicants after the halting of Ant Group's $37 billion float. Over 100 companies have voluntarily withdrawn applications to list on Shanghai's STAR Market and Shenzhen's ChiNext since Ant's termination of its initial public offering (IPO) in November, according to Reuters review of exchange filings. The unprecedented withdrawals come against the backdrop of sharply intensified grilling of listing prospects by regulators, leading to IPO delays, outright rejection or even penalties, say bankers and company executives.
(Bloomberg) -- China’s yuan is unlikely to escape its current bout of weakness, even with help from U.S. Treasury Secretary Janet Yellen.While Yellen’s decision not to name China as a currency manipulator removes a flash point, analysts say that tension between the two countries have moved to strategic issues such as technology leadership. The yuan is also weighed down by other factors including slowing capital flows and a narrowing yield spread with the dollar.“It takes away one source of pressure, but other areas of tensions with the U.S. remain,” said Dariusz Kowalczyk, chief China economist at Credit Agricole CIB. “The headline will likely provide only temporary support, given that other factors are in the driver’s seat for now.”The onshore yuan was steady at 6.5488 to the greenback in Asia afternoon trading on Tuesday.The semiannual U.S. foreign-exchange report is expected this month. Here are more views on the development:Tariffs Remain“The event doesn’t suggest any improvement in China-U.S. bilateral relationship and/or a lowering of bilateral tariffs,” said Becky Liu, head of China macro strategy at Standard Chartered Plc in Hong Kong. “It simply reflects a changed strategy of the new U.S. administration –- that is, by working with U.S. allies to contain China in joint efforts instead of dealing with China matters bilaterally.”The U.S. still has tariffs placed on China that have already kicked in and are unlikely to be lifted in the near term, said Tommy Xie, head of Greater China research at Oversea-Chinese Banking Corp. “Things are still overshadowed by the upcoming U.S. bill on strategic competition, which will be considered on April 21,” he said.Less Confrontation“The tag was announced the previous time due to political tensions even though China didn’t meet the criteria of a currency manipulator,” said Xing Zhaopeng, senior China strategist at Australia & New Zealand Banking Group Ltd. “It doesn’t make sense for the U.S. to keep challenging China on the issue of foreign exchange unilaterally, rather the U.S. is showing it prefers to address individual topics separately rather than a full-scale confrontation. The currency problem is no longer a core issue of U.S.-China relations.”“It shows that interaction between China and the U.S. is becoming more rational and more compliant with market rules, which is good for yuan in the short-term,” said Ji Tianhe, head of FXLM strategy at BNP Paribas SA in Beijing. “But it doesn’t affect the overall trend in the second and third quarters. This can be read as the currency exchange-rate issue is no longer the core issue of the Sino-U.S. conflict.”No Positive EffectTensions only add pressure on the yuan if they flare up but won’t positively influence the currency if they simmer, according to Gao Qi, a currency strategist at Scotiabank. “The yuan is likely to range-trade while following a broad dollar movement as U.S.-China tensions stay under control for now,” he said.“Meanwhile, a forming golden cross may indicate some upside potential for” USD/CNH, he said, referring to the 50-day moving average indicator rising over the 100-day moving average.Pressure From Yields“The yuan is under pressure due to the higher Treasury yields -- we have calculated that renminbi spot is the most correlated currency in the world with the level of the 10-year UST yield, and we continue to expect the yield to trend higher,” Credit Agricole’s Kowalczyk said.“The yuan is also suffering from a decline in foreign interest in Chinese bonds, and CGBs in particular. We expect foreign inflows to be much lower this and next year than what we had anticipated,” due to FTSE Russell’s decision to extend the inclusion of Chinese bonds to a three-year period from 12 months, he said.(Adds onshore yuan level in fourth paragraph and Standard Chartered’s comments in sixth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Bond traders searching for a chink in the armor of central banks are starting to look Down Under, where a likely showdown over yield-curve control is set to test the power of policy makers to contain the next wave of reflation bets.The global trading day for bonds begins in earnest in Sydney each morning, giving developments in Australia’s $600 billion sovereign debt market an out-sized impact on sentiment. It was the scene of a dramatic “flash crash” last year when the yield program was announced, illustrating the potential for turmoil.While the Reserve Bank of Australia has largely tamed markets since then, as the economy’s recovery strengthens, wagers against the RBA’s ability to keep yields lower look poised to rise.“If inflation expectations do start to un-anchor, then I think the RBA will be one of the first central banks to be tested by bond traders,” said Shaun Roache, an economist at S&P Global Ratings in Singapore. “The RBA is a canary in the coal mine for central banks as it is ahead in its labor market recovery.”The RBA brought short-sellers quickly to heel when the global bond rout emboldened them to test its grip on yield control in February. After weeks of aggressive positioning by traders, the bank nudged up the cost of speculating on rising rates and the yield on benchmark three-year bonds fell neatly back into line with its 0.1% target.But keeping the market at bay next time may prove more difficult, as vaccination campaigns gather pace in major economies and the U.S. recovery nears an “inflection point,” emboldening traders. Pressure is already apparent in Australia’s three-year swap rate, which is increasing the costs of managing interest-rate risks for corporate borrowers.If yield control fails in Australia, it may fade away as a potential option for other monetary authorities in need of more policy ammunition. Especially because yield control’s record in Japan -- the only other country to officially employ it -- is patchy.Pinning the rate of one key bond maturity has helped the Bank of Japan reduce borrowing costs in general and also allowed it to slow the pace of bond purchases. But it has come at a cost. The nation’s debt market is lambasted as dysfunctional and an economic recovery strong enough to revive inflation looks as far away as ever.Widening GapBeneath the surface, problems are building Down Under too. While the RBA has its thumb on one specific bond line, there is a large gulf between the yield on this security and those maturing slightly later. There’s also a widening gap to rates on the suite of derivatives linked to three-year yields that flow through into borrowing costs for companies and consumers.The three-year swap rate surged through February and March, rising to four times the RBA’s target for three-year bonds amid pressure from higher U.S. yields and a rebounding economy at home.Australia’s bond futures tell a similar story. The yield implied by three-year futures doubled in the two weeks to Feb. 26 and remains elevated, even after retreating from its high point.“Lack of liquidity, a central bank that’s digging its heels in -- all that, for us, means there’s going to be more volatility in Aussie rates,” said Kellie Wood, a fixed-income portfolio manager at Schroders Plc’s Australian unit. “The RBA has succeeded in terms of round one. But we are starting to see cracks,” said Wood, who expects the market to challenge the 0.1% target again.Stephen Miller, an investment consultant at GSFM, an arm of Canada’s CI Financial Corp., agrees that higher yields may arrive in Australia sooner than the RBA thinks. “It will be powerless if the U.S. curve shifts upwards and other rates markets follow,” said Miller.Not everyone is prepared to bet against the RBA.For Fidelity International’s Anthony Doyle, taking on the RBA may be a recipe for steep losses if past lessons from the European Central Bank and U.S. Federal Reserve are anything to go by.Nine years ago, then ECB President Mario Draghi vowed to do “whatever it takes” to save the euro, leading to quantitative easing and bond purchases that are still in place. The Fed said more than a year ago that it would buy unlimited amounts of Treasuries to keep borrowing costs at rock-bottom levels, and it’s still holding firm.Holding the Cards“I don’t think it’s ever wise to fight anyone that has a printing press,” said Doyle, a cross-asset investment specialist at Fidelity in Sydney. “The RBA as a house holds all the cards. If they want yields lower, they’ll get it.”This caution is shared by JPMorgan Asset Management’s Kerry Craig.For now, the central bank “definitely has enough dry powder,” said Craig, a strategist in Melbourne. But he is concerned that with monetary policy and markets around the world moving in sync, “you can only fight so much if U.S. rates or global rates go higher -- it’s going to drag Australian ones up.”Yet Governor Philip Lowe isn’t doing everything he could to damp doubts over the RBA’s resolve. His reluctance to make an early switch in the yield target to bonds maturing in November 2024, from ones due in April 2024, is fueling debate about how soon the policy could be wound back.Lowe said at the conclusion of the latest board meeting on April 6 that a decision would be made later this year, without being more specific. He also indicated that the RBA expected to maintain “highly supportive monetary conditions” until at least 2024, even though the number of Australians with a job has returned to pre-pandemic levels.“We don’t think they’ll extend yield-curve control” beyond the current April 2024 bond, said Wood, who warned of potential taper tantrums.Lowe’s February win against short sellers, and a slide in yields at home and abroad over recent weeks, has given the RBA space to breathe. But it’s likely only a matter of time before bond traders come back for round two.“Everybody’s watching how this is going to unfold,” said S&P’s Roache. “The RBA may not want this role, but it is taking quite a starring role I think among global central banks.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Michael Morgan, Chairman of Star Peak Energy Transition Corp. and John Carrington, CEO of Stem, Inc. IPO Edge hosted a fireside chat with Star Peak Energy Transition Corp. (NYSE: STPK) and Stem, Inc. on Monday, April 12 at 2pm EDT to discuss their pending merger. The live event featured Michael Morgan, Chairman of Star Peak […]
The listing could spur newbie investors to try cryptocurrencies.
The EU union's lending arm is reportedly readying a digital bond sale using blockchain technology.
(Bloomberg) -- Air Canada reached a deal with the Canadian government for loans and equity worth nearly C$5.9 billion ($4.7 billion), a package to help the airline get through the pandemic and restore flights to remote parts of the country. The state, which sold off its ownership interest in the 1980s, will once again own a piece of Canada’s largest airline, buying C$500 million of shares at a discount. Prime Minister Justin Trudeau’s government also negotiated warrants as part of a broad financing agreement that makes Air Canada eligible for five new credit facilities totaling C$5.38 billion, according to a company statement.In return for the money, Air Canada agreed to restrict share buybacks and dividends, keep employment at April 1 levels and follow through on a deal to buy 33 Airbus SE A220s made at a factory in Quebec. Executives won’t be allowed to earn more than C$1 million.And the airline will resume service on routes its suspended to distant locations such as Gander, Newfoundland and Yellowknife, in the country’s far north. The long-anticipated announcement will ease tensions between the industry and Trudeau’s government, which since last March has barred most foreign travelers from entering the country and recently made the rules even tougher.Air Canada repeatedly complained that its home country was the only Group of Seven member without an aid plan specifically for the aviation sector -- although the company has used federal wage subsidies available to all industries hit by the pandemic.“We wanted a good deal, not just any deal. And getting a good deal can sometimes take a little time,” Finance Minister Chrystia Freeland said at a news conference Monday evening.Air Canada also committed to paying back customers who didn’t take flights they had booked because of Covid-19. One of the credit facilities, a C$1.4 billion line, is dedicated to financing refunds.‘Solid Guarantees’ Air Canada will issue 21.6 million new shares. While the equity component is “somewhat surprising,” the package is “the money that’s needed,” said Robert Kokonis, managing director of Toronto-based aviation consulting firm AirTrav Inc.“It’s going to take a lot of aid for carriers. We’ve been through a lot. We’ve been on standby while airlines in countries around the world have received one or more aid packages,” Kokonis said. Freeland said talks are ongoing with other airlines, including WestJet Airlines Ltd., controlled by Toronto-based investment firm Onex Corp. Tour operator Transat AT Inc. also needs money and has said it’s talking to the government after a deal to be taken over by Air Canada fell apart. “Wherever and whenever the federal government provides public aid, the supported company will have to give solid guarantees, as Air Canada did, that the public interest will be respected, workers protected, and travelers’ interest defended,” Freeland said.As of March 18, government financing for the airline industry globally -- including loans and equity stakes in exchange for cash -- has totaled more than $183 billion, according to Ishka Ltd., an aviation finance and investment consultancy.Before Monday’s agreement, Canada’s most visible lifeline to the industry was a combined C$375 million in emergency loans to Sunwing Airlines Inc. and Sunwing Vacations Inc., a small vacation operator.Air Canada said it will only draw down the new credit facilities “as required”. The package includes C$2.48 billion in unsecured loans. “This program provides additional liquidity, if required, to rebuild our business to the benefit of all stakeholders and to remain a significant contributor to the Canadian economy through its recovery and for the long term,” Chief Executive Officer Michael Rousseau said in a statement.(Updates with new details, analyst quote.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Analysts expect higher inflation ahead of U.S. March CPI report despite Fed's wait and see approach.
The head of Switzerland's financial regulator FINMA questioned Credit Suisse over risks in its dealings with now-insolvent finance firm Greensill Capital "months" before the bank was forced to close $10 billion of funds liked to Greensill, Swiss newspaper SonntagsZeitung reported Sunday. Alongside formal discussions on a technical level between the bank and FINMA, the watchdog's head Mark Branson personally discussed the risks with outgoing Credit Suisse Chairman Urs Rohner and Chief Executive Thomas Gottstein during a meeting on an unspecified date, the paper reported, citing information it had obtained. FINMA declined to comment.
(Bloomberg) -- Grab Holdings Inc. and Traveloka are poised to become public companies in coming months, kickstarting a coming-out party for Southeast Asia’s long-overlooked internet scene.Grab will this week unveil a listing via a U.S. blank-check company that’s drawn backers from T. Rowe Price to Temasek Holdings Pte and values the ride-hailing giant at more than $34 billion, people familiar with the matter said, in the largest-ever deal of its kind. Indonesia’s Traveloka will follow suit, listing at a valuation of about $5 billion via a special purpose acquisition company backed by billionaires Richard Li and Peter Thiel, other people with knowledge of the matter said. Terms on both deals could still change, the people said.The mega deals will front a chain of initial public offerings from the region’s most valuable startups from 2021, from Grab arch-foe Gojek and e-commerce giant Tokopedia to Singapore’s PropertyGuru. Their debuts allow investors to bet on the industry’s ascendancy in the post-Covid mobile era over the financial institutions and industrial conglomerates that have long dominated Southeast Asia’s corporate landscape. Over the longer term, market watchers expect fast-growth technology firms to dominate attention like they have in China and the U.S., overhauling a Southeast Asian roster now led by gaming and e-commerce leader Sea Ltd.“We have seen a similar trend across other more established markets, and it’s now Southeast Asia’s golden period,” said Rajive Keshup, a director at Cathay Capital, a global investment fund with $4 billion of assets under management. “We expect a lot more capital to flow into the region on the back of this mega announcement. And that is a very good leading indicator about the health of the region.”The tech industry in Southeast Asia, home to about a 10th of the world’s population and some of the fastest-growing economies like Indonesia, is overdue for recognition. The region didn’t have a single major tech company listed till Sea went public in New York in 2017. That’s despite a smartphone-using population growing at rates unmatched in much of the world, driven by economic growth and government policies that encourage investment in technology. That potential is attracting the likes of Amazon.com Inc. and Chinese majors including Tencent Holdings Ltd. and Alibaba Group Holding Ltd., who see Southeast Asia’s increasingly affluent consumers as key to their global ambitions.Interest in the region is mounting in part because of external factors. Money has flown out of China’s biggest internet names since Beijing launched a campaign to curtail Alibaba and its peers late last year. Washington-Beijing tensions, meanwhile, threaten to escalate and suppress the Asian country’s presence in America and even get Chinese firms tossed off U.S. bourses. At the same time, concerns are mounting that a bubble is forming after the worst tech selloff in half a year.More immediately however, investors are gambling on the region’s takeoff. Southeast Asia’s internet economy cooled during the pandemic but spending online should bounce back rapidly and triple to more than $300 billion by 2025, research from Google, Temasek Holdings Pte and Bain & Co. shows.“As some of these companies begin to list it could be quite transformative to capital markets, which have been dominated by traditional sectors such financials, real estate and commodities,” said Joshua Crabb, a senior money manager in Hong Kong at Robeco, which oversees $186 billion. “This has had a huge impact on the nature of the market in China over the past decade and may be just starting in ASEAN.”Read more: Southeast Asia’s Internet Economy on Verge of a Post-Covid BoomTo more quickly tap investor enthusiasm, many startups like Grab and Traveloka that remain unprofitable are considering blank-check firms -- but the influx of capital into SPACs is raising hackles among regulators from New York to Singapore, who worry that traditionally more lax disclosure and accountability requirements may burn investors. Listing through a SPAC can be completed in a matter of weeks compared with the 12 months it would take to go public in the regular way.SPAC veterans have warned that some newer entrants may be overvaluing their targets: closely held entities often lacking proper governance or operational maturity to hold stock offerings of their own. Tech firms still working on their main products, such as aerospace startup Archer Aviation Inc. and electric-vehicle maker Lucid Motors Inc., have merged with SPACs and become public companies based not on their revenue but future projections.In Southeast Asia, the rush of IPOs is driven in part by Sea’s astonishing run-up since the start of 2020, which demonstrated the enormous pent-up appetite for the region’s internet firms. The Tencent-backed gaming and online shopping leader has emerged as a stock-market sensation since its IPO. Among companies valued at $100 billion or more, the stock is the No. 1 Asian performer since the start of last year and trails only Tesla Inc. globally.Gojek and Tokopedia, Indonesia’s two most valuable tech startups, are seeking investor approval for a merger that could create the country’s largest internet company ahead of a dual IPO. Others exploring listings include Singapore’s PropertyGuru and Indonesia’s Bukalapak.“Grab’s listing provides a much-awaited exit for existing investors, meanwhile, providing exciting opportunities for U.S. investors to invest in Southeast Asia growth companies,” said Kerry Goh, chief investment officer at Kamet Capital Partners Pte. “This should accelerate investors’ attention and hence, more listings should be expected.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- If Deliveroo Holdings Plc’s listing was meant to hang an ‘Open For Business’ sign over the City of London, the opening day crash in the shares jarred somewhat with the message the U.K. had intended to send about post-Brexit Britain.Personally welcomed by Chancellor Rishi Sunak, the food delivery company’s initial public offering should have been a beacon to lure tech firms against competition from New York and Hong Kong, which have been winning the larger part of the business. Instead, concerns over the company’s governance and the treatment of its riders combined to produce one of the worst market debuts in City history.The ignominious flotation was a symbolic end to a quarter that saw London’s future as a financial center once again put in the spotlight. Since the U.K. left the European Union at the start of the year, London has faced a series of challenges to its pre-eminence, most notably the embarrassment of seeing Amsterdam — a city one tenth its size — take over as the No. 1 location for European share trading.London’s response has been a flurry of reviews into the fintech industry and listing rules, but the Square Mile’s hunt for a new identity remains a work-in-process. Early predictions of dramatic deregulation — the so-called Singapore-on-Thames option — have proved unfounded, perhaps no surprise given the City had an outsized role in writing many of the bloc’s financial rules. And for bankers in London, hopes for unhindered access to EU markets — via a process known as equivalence — have long gone, particularly as Brussels sees Brexit as a chance to deepen its own capital markets.100 Days of Brexit: a series on how Brexit changed Britain ‘Hostile’ EU’s Vaccine Spat With U.K. Boosts Support for Brexit Brexit Britain’s Biggest Test Might Be the Ability to Survive 100 Days of Brexit: Was It as Bad as ‘Project Fear’ Warned?The bloc is stepping up efforts to strong arm even more business from Britain. Banking giants including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have already moved some staff and assets to the continent, and the risk is many more will follow unless the U.K. overcomes the hurdles to secure beneficial terms.JPMorgan’s Chief Executive Officer Jamie Dimon said last week that the EU “has had, and will continue to have, the upper hand.” Dimon, a long-time skeptic of Brexit, also warned he could shift bankers serving EU clients out of London.“It is clear that, over time, European politicians and regulators will make many understandable demands to move functions into European jurisdictions,” he said in his annual shareholder letter. “Paris, Frankfurt, Dublin and Amsterdam will grow in importance as more financial functions are performed there.”London’s global financial status, built on centuries of tradition and supercharged by the “Big Bang” of deregulation more than three decades ago, is unlikely to be undone by Brexit. The City got some good news on Monday when cybersecurity company Darktrace Plc announced plans for an IPO that could value the business at about $3 billion to $4 billion. Its CEO, Poppy Gustafsson, called it a “historic day for the U.K.’s thriving technology sector.”But the chipping away that’s taken place in just a matter of months has yet to be replaced by a compelling vision for London’s future, despite that multi-pronged series of reviews aimed at maintaining its position. Many of the proposed changes amount to fine tuning rather than a complete tearing up of the rulebook. Speaking to Bloomberg, executives of several major banks said they don’t expect authorities to ditch inherited rules, including the bonus cap on banker pay.What they expect is what some call a “tailoring” of London’s approach, hardly the swashbuckling reforms that some imagined.Instead, banks want to eliminate some of the annoyances that came with being part of the EU, such as time-consuming and expensive trade reporting requirements, and rules that make it more difficult to raise capital from smaller investors. The hope is the efficiency shown by the U.K. in its coronavirus vaccination policy — which is far outpacing the EU rollout — can be replicated when it comes to financial services.“It’s about speed and nimbleness, rather than sweeping changes,” said William Wright, founder and chief executive officer of New Financial, a London-based think tank.Evolution not revolution also means protecting existing strengths as much as possible. However, London’s relationship with the EU was barely mentioned in last year’s Brexit trade deal, and those talks highlighted resentments and political point scoring that could frustrate any future discussions. Of the 39 areas in which the EU could find Britain financially equivalent, it has granted only two, and both are time-limited.“I think there’s a lot of Europeans that want to have a bite of the golden goose,” said Fraser Thorne, chief executive officer of Edison Institutional Services Ltd, a London-based financial advisory firm.Read More: Listen to the Latest Stephanomics Podcast on 100 Days of Brexit How Brexit Is Changing the City of London, One Piece at a TimeOne minor positive for the City in 2021 was that the U.K. and the EU agreed a framework for talks late last month, and in a rare Brexit development, it was done on deadline. But realistically even that Memorandum of Understanding amounts to very little, and the sense is that no significant access to EU financial markets is on the cards anytime soon.Brussels has made no secret of its desire to become less reliant on U.K.-based financial services. Seen from outside Britain, Europe’s lack of a major global financial center within its own borders is a matter of political and strategic concern, and one that policy makers want to rectify.In the U.K., even some of the more mild-mannered British public servants are being more forthright about the need to protect London against an increasingly aggressive EU. At the Bank of England, Governor Andrew Bailey used a Parliament hearing to, unprompted, bluntly deliver a message: The U.K. would “resist very firmly” any EU attempt to force relocations.Any post-Brexit identity for the City will also be forged by the new business it attracts, as much as what remains in place.Sunak and his Treasury minister, John Glen, have spent the past few months trying to sell the benefits that London can offer outside a more rigid EU system.“If they get it right, London will remain an incredibly strong force,” said Alasdair Haynes, CEO at Aquis Exchange Plc. “But if they argue and there's a lot of bickering and we can't move swiftly and there's political interference then actually London is probably in the most precarious place it has ever been.”Officials are making a big play for the U.K. to build on its position as a hub for financial innovation, cultivating a growing ecosystem of fintech businesses spanning everything from consumer-facing businesses attempting to steal retail customers from the big lenders through to niche firms supplying specialized technology services to investment banks.Iana Vidal, head of government relations and policy at Innovate Finance, the lobby group for the U.K. fintech industry, says Britain could steal a march on the rest of Europe by moving faster to help mold the regulatory structure for the nascent sector.“We want to have a first-mover advantage,” she said. “You could potentially gain a head start over your competition in Europe.”That’s an opportunity acknowledged by Brexit critic Dimon, who said London “still has the opportunity to adapt and reinvent itself, particularly as the digital landscape continues to revolutionize financial services.”But in the short-term he’s pessimistic, warning that Brexit “cannot possibly be a positive” for the U.K. economy.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Evergrande is falling further behind the vast majority of its largest peers in meeting stricter Chinese borrowing limits, raising refinancing risks for the country’s most indebted developer.China Evergrande Group remained in breach of all key measures for debt levels at the end of last year, even as almost half of the country’s 66 major developers met them, up from 14 six months earlier, according to data compiled by Bloomberg. Of those largest real estate companies, only four violated all three metrics.With China’s property sector accounting for about 29% of economic output, regulators are determined to rein in its risk, introducing so-called “three red lines” that cap borrowing. That’s prompted developers to cut leverage, spin off non-core assets and even bolster balance sheets by raising equity for affiliates.The “deleveraging progress is happening faster than the market expected, driven by a combination of intention to meet regulatory requirements and a tighter financing environment,” said Nomura International Hong Kong Ltd. analyst Iris Chen. “The greater improvement developers make on the three-red-line metrics, the less hurdles they might face when negotiating with financial institutions.”Despite the new rules only applying to a small number of companies, most Chinese developers have embraced them, according to China International Capital Corp. analysts.Underscoring the urgency for regulators, China’s property developers are behind a record wave of corporate bond defaults this year, accounting for 27% of last quarter’s $15 billion missed payments, data compiled by Bloomberg show.As companies work toward improving their metrics, analysts warn that some might be window dressing financial statements.“A material increase of minority interests can boost developers’ equity base,” said Nomura’s Chen. “This can be an easier way to lower the net gearing ratio than actually decreasing the net debt.”Evergrande’s goal of cutting about $100 billion in debt partly hinges on aggressive equity fundraising for its non-core businesses, Bloomberg Intelligence analysts said. Its long-term rating was affirmed by S&P at B+, with an outlook to stable from negative. The total amount of bonds and loans outstanding reached 199 billion yuan ($30 billion) as of Monday.Evergrande and Guangzhou R&F Properties Co. were the only two major firms that didn’t show any material improvement, both in breach of all three metrics. The data tracks the 66 companies that reported full-year earnings last year among China’s largest 100 listed developers. Representatives for the companies didn’t respond to requests for comments.Policy makers have set a deadline for mid-2023 to meet the requirements, giving companies a three-year transition period, Evergrande President Xia Haijun said on an earnings call last month. The company is trying to reach the targets by the end of next year, Xia said.Evergrande may be able to access the kungfu bond market, where Chinese companies sell dollar-denominated bonds offshore, Bloomberg Intelligence credit analyst Daniel Fan wrote in a note Tuesday. Evergrande hasn’t raised any dollar notes since January 2020, according to Bloomberg data.R&F’s Chairman Li Sze Lim said he’s confident that the firm will meet net-debt-to-equity metric by this year and reach full compliance by the end of next year, local media quoted him saying on an earnings call.“Meeting the three red lines is a matter of survival for Chinese developers,” said Ma Dong, a partner at Beijing-based fund BG Capital Management. “Under ever stricter property curbs, only by meeting these metrics can a developer secure its refinancing.”Of the three metrics, developers showed the biggest improvement in the ratio of their cash to short-term debt. The number of companies breaching the liquidity gauge shrank 64% from half a year earlier, data compiled by Bloomberg show.Large developers including Sunac China Holdings Ltd. and China Jinmao Holdings Group lengthened their debt maturities and cut borrowings due within a year, according to S&P Global Ratings. Spending less on land purchases, an easy way to boost cash, also helped.Many firms still struggled with their liabilities-to-assets ratio, with 30 remaining non-compliant. Improvement for this metric could mean companies have to substantially increase earnings and boost equity, which is more difficult than improving the other two metrics, S&P Global Ratings analysts wrote in a note last week.The number of developers breaching a 100% ceiling of net debt to equity, a gauge of leverage, halved from six months earlier, according to data compiled by Bloomberg.(Updates with comments from Bloomberg Intelligence analyst)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
(Bloomberg) -- Abu Dhabi sovereign wealth fund Mubadala Investment Co. said it’s “close” to an initial public offering of Emirates Global Aluminium PJSC as it studies other major deals including a role in a consortium investing in Saudi Aramco’s oil pipelines.“We’ve been thinking about this for a couple of years and waiting for the right time for that business to be IPO’d,” Chief Executive Officer Khaldoon Al Mubarak said on Monday when asked about EGA, the Middle East’s biggest producer of aluminum. “We’re very close now.”Coming off its busiest year ever, the $232 billion fund has shown little sign of slowing down in 2021, striking deals ranging from purchasing a Brazilian refinery to investing in convertible bonds of messaging app Telegram.EGA, which is equally owned by Mubadala and Investment Corp. of Dubai, has smelters in Abu Dhabi and Dubai and a bauxite mine in Guinea. Its revenue in 2020 was $5.1 billion and it made earnings before interest, tax, depreciation and amortization of $1.1 billion.The company had planned an IPO in 2018 or 2019 but it was pulled after then-U.S. President Donald Trump imposed tariffs on aluminum imports from the United Arab Emirates. His successor Joe Biden said in February that he would keep the U.S. restrictions in place, reversing Trump’s last-minute move to grant the UAE relief from the duties.“We will decide, obviously, when the appropriate market conditions are there, but the company is certainly in a very strong position and I think is well placed for an IPO,” Al Mubarak said during a virtual conference.EIG TalksMubadala is meanwhile considering other deals. It hasn’t yet decided whether to join a group led by EIG Global Energy Partners LLC that agreed on a $12.4 billion deal with Aramco.The wealth fund has teams studying the opportunity and looking at possible returns on investing in neighboring Saudi Arabia, according to Al Mubarak. It’s previously said that it was in talks with EIG.According to an announcement last Friday, the investors will buy 49% of Aramco Oil Pipelines Co., a recently-formed entity with rights to 25 years of tariff payments for crude shipped through the Saudi Arabian firm’s network. Aramco will own the rest of the shares and retain full ownership of the pipelines themselves.Read more: Mubadala Discusses GlobalFoundries IPO at $20 Billion Value Mubadala has also made no decision about a share sale of its wholly-owned chipmaker GlobalFoundries, according to Al Mubarak. Earlier this month, Bloomberg reported that the wealth fund had started preparations for a U.S. IPO that could value the business at about $20 billion.“GlobalFoundries is a strong, well-run business,” Al Mubarak said. “We have not taken a view or a decision yet.”India PushAfter an initial pause after the pandemic first hit, the wealth fund doubled down and invested more in 2020 than in any previous year, the CEO said.India emerged as one key destination for Mubadala’s money, with its investments there in 2020 eclipsing the combined total of the preceding 19 years, Al Mubarak said.The wealth fund invested $1.2 billion in Reliance Industries Ltd.’s digital upstart Jio Platforms Ltd. in 2020, a deal that gave Mubadala a 1.85% stake in the venture.“Clearly, we were underweight in terms of India” and “over the last many years we didn’t invest as much as we should,” the CEO said. “That’s changing, and as far as we’re concerned in Mubadala, we’re certainly giving it a very particular focus.”(Updates with details on EGA in fourth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.