Archive

Reuters blog archive

from Breakingviews:

SoftBank’s Alibaba stake both blessing and burden

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

SoftBank’s investment in Alibaba must be one of the most successful of all time. Billionaire chief Masayoshi Son injected just $20 million into the Chinese e-commerce giant in 2000. Today, the 36.7 percent shareholding accounts for a large chunk of Japanese group’s market value. As Alibaba heads toward an initial public offering, however, Son’s investment blessing may become a burden.

The owner of online shopping sites Taobao and the Alipay electronic payment system is still a private company. Based on its limited financial disclosures, Breakingviews estimates it is worth around $113 billion. That values SoftBank’s stake at $41 billion, or 38 percent of the Japanese group’s total sum of the parts, according to a new Breakingviews calculator.

Calculator: How important is Alibaba to SoftBank?

Many of SoftBank’s other businesses are already listed. Its 80 percent stake in U.S. mobile carrier Sprint is currently valued at $26.5 billion. Softbank’s 42.5 percent shareholding in Yahoo Japan is worth $15.3 billion. Other stakes in mobile games maker GungHo, Supercell, and handset maker Brightstar add up to $7 billion, based on market values or recent purchase prices.

from Counterparties:

MORNING BID-All the metal in China

Without a lot of fanfare, the U.S. equity market has worked its way back to a few points of all-time highs, as concerns over emerging markets (largely related to Ukraine) have magnified, as have worries over China's struggling growth.

That's once again produced the "best house in a bad neighborhood" effect for the U.S. stock market; bond yields remain range-bound in the 2.70 to 2.75 percent area, the 10-year still reflects a value that doesn't suggest economic acceleration or worries over massive slowing either.

from Anatole Kaletsky:

The case against a Chinese financial crisis

A severe slowdown in China is viewed as among the greatest risks facing the world economy this year, and Thursday’s dismal news on Chinese manufacturing output exacerbated these fears. But the really important news from Beijing pointed in the opposite direction: Bank lending in China, instead of slowing dramatically as many economists had expected, accelerated in January to its fastest growth in four years.

This means China is unlikely to act as a brake on the global economy in the months ahead -- despite the recent weak manufacturing figures. It also suggests that predictions of a credit crunch or financial crisis in China will likely prove wrong -- or at least premature.

from Breakingviews:

Fear and loathing in China’s trust industry

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s trust sector is the financial system’s enfant terrible. It’s a 10.9 trillion yuan ($1.8 trillion) industry built on taking short-term funding and channeling it into longer-term investments. That mismatch has already led some trust products to unravel, and more will follow. What causes concern isn’t so much trusts failing as them being foolishly rescued.

from Breakingviews:

China copper IPO seeks gold in financial recycling

By Una Galani

The author is a Reuters Breakingviews columnist.  The opinions expressed are her own.

Financial recycling is putting a gold polish on the initial public offering of a Chinese copper company. Just 15 months after it quit the New York Stock Exchange, China Metal Resources Utilization is set to go public in Hong Kong at 10 times its last market value. It’s the first of a large group of unloved stocks to perform the “Chinese flip”, exploiting the valuation gap between U.S. and Hong Kong exchanges.

from Breakingviews:

From soccer pitch, lessons on Chinese tycoon risks

By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Chinese investors are setting their sights on trophy assets in the West, and soccer teams look like fair game. The case of English football club Birmingham City, whose main shareholder and former president just sold a stake to an obscure Chinese company, offers a cautionary tale. Big personalities make risky shareholders, but China brings extra anxieties.

from Breakingviews:

Alibaba tests the limits of non-bank banking

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Alibaba isn’t a bank. But for customers it’s getting hard to tell the difference. Users of China’s dominant e-commerce website can now deposit funds, make investments, take out loans and even give out gifts of virtual cash. In taking on China’s lenders, Alibaba and its online rivals may be taking on bank-like risk.

from Breakingviews:

Alibaba tests the limits of non-bank banking

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Alibaba isn’t a bank. But for customers it’s getting hard to tell the difference. Users of China’s dominant e-commerce website can now deposit funds, make investments, take out loans and even give out gifts of virtual cash. In taking on China’s lenders, Alibaba and its online rivals may be taking on bank-like risk.

from Ian Bremmer:

Is the China-Japan relationship ‘at its worst’?

At the Munich Security Conference last month, Chinese Vice Foreign Minister Fu Ying said the China-Japan relationship is “at its worst.” But that’s not the most colorful statement explaining, and contributing to, China-Japan tensions of late.

At Davos, a member of the Chinese delegation referred to Shinzo Abe and Kim Jong Un as “troublemakers,” lumping the Japanese prime minister together with the volatile young leader of a regime shunned by the international community. Abe, in turn, painted China as militaristic and overly aggressive, explaining how -- like Germany and Britain on the cusp of World War One -- China and Japan are economically integrated, but strategically divorced. Even J.K. Rowling has played her part in recent weeks, with China’s and Japan’s ambassadors to Britain each referring to the other country as a villain from Harry Potter.

from Breakingviews:

Alibaba’s $1.6 bln map deal fuels online land grab

By Robyn Mak and John Foley 

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Alibaba’s purchase of AutoNavi is a land-grab, in two senses. The Chinese e-commerce group has offered a premium price to buy out the 72 percent of the U.S.-listed mapping company it doesn’t already own, valuing the whole thing at $1.6 billion. There’s a compelling competitive reason for Alibaba to get deeper into online maps, but what’s hard to locate is the financial rationale.

  •