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from Breakingviews:
Why Alibaba could be China’s next $100bln IPO
by John Foley
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Could Alibaba be China’s next $100 billion stock market listing? The Hangzhou-based e-commerce giant continues to be coy over when it will take the plunge. But sooner or later founder Jack Ma will need to offer some kind of exit for his backers, not to mention employees, and an initial public offering is the most likely solution. Now is a good time to start asking how the company should be valued.
Alibaba’s main business is selling. Its Tmall online stores provide a shop front for brands like Nike and Unilever, while Taobao is focused on consumer-to-consumer trade. The closest U.S. peers might be Amazon and eBay. Sadly for valuation purposes, there’s no perfect match: unlike Amazon, Alibaba doesn’t hold inventory or manage warehouses, and unlike eBay, it gets most of its revenue from advertising, not charging users.
Meanwhile, its range of services gets ever wider, and potentially harder to value. As well as accounting for the majority of China’s e-commerce, a market worth $204 billion last year according to the China Internet Network Information Centre, Alibaba now has a mobile operating system, offers trade financing to vendors and may even start offering consumer loans. The company’s chief strategist says it aims to be “the world’s biggest data sharing platform”.
from Photographers Blog:
Muscle men of China
Shaoxing, China
By Carlos Barria
Feng Qing Ji, 69, and his younger brother Yu, 61, look at themselves in a mirror. Li tries to help Yu with his pose. He tells him to straighten his back.
They are not in a park, hanging around with other Chinese seniors, who typically meet up to play Mahjong or dance. They are covered in oil and wearing tiny speedos as they prepare for an amateur bodybuilder competition in Shaoxing, Zhejiang province.
from Breakingviews:
“Schwarzman scholarships” have many beneficiaries
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Steve Schwarzman is giving something back - to China. The Blackstone founder is contributing his name, and $100 million of his private wealth, to kick-start a scholarship programme at Beijing’s Tsinghua University. The programme may not be entirely philanthropic: China lost much more investing in his buyout firm’s initial public offering. But there will still be many beneficiaries if the scheme helps Western and Chinese elites understand each other better.
from Global Investing:
Weekly Radar: Second-guessing Japan flows as global growth slows
Figuring out what was driving pretty violent market moves this week was trickier than usual – and that says something about how much the herd has scattered this year, with ‘risk on-risk off’ correlations having weakened sharply. Just as everyone puzzled over a potential "wall of money" from Japan after the BOJ’s aggressive reflation efforts, the bottom seemed to fall out of gold, energy and broader commodity markets – dragging both equity markets and, unusually, peripheral euro zone bond yields lower in the process. As dangerous as it may be to seek an overriding narrative these days, you could possibly tie all up these moves under the BOJ banner – something along these lines: the threat of a further yen losses pushes an already pumped-up US dollar ever higher across the board and undermines dollar-denominated commodities, which have already been hampered by what looks like yet another lull in global demand. Developed market equities, whose Q1 surge had been reined in by several weeks of disappointing economic data and an iffy start to the Q1 earnings season, were then hit further by a lunge in heavy cap mining and energy stocks. The commodities hit may also help explain the persistent underperformance of emerging markets this year. What's more the lift to Italian and Spanish government bonds comes partly from an assumption any Japanese money exit will seek U.S. and European government bonds and relatively higher-yielding euro government paper may be favoured by some over the paltry returns in the core ‘safe havens’ of Treasuries or bunds. The confidence to reach for yield has clearly risen over the past six months as wider systemic fears have receded – something underlined in dramatic style this week by a huge lunge in gold, now lost almost 20 percent in the year to date.
While all that logic may be plausible, there have been dozens of other reasons floating around for the seemingly erratic twists and turns of the week.
from Breakingviews:
Radical career move: become a Chinese citizen
By Peter Thal Larsen
(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)
Here’s a radical career choice for investment bankers: become a Chinese citizen. American-born Marshall Nicholson has swapped his U.S. citizenship for a Hong Kong passport. Though the move is largely for family reasons, it will also go down well with clients on the mainland. For Western financiers seeking a local edge, it’s the ultimate display of commitment.
from Global Investing:
Amid yen weakness, some Asian winners
Asian equity markets tend to be casualties of weak yen. That has generally been the case this time too, especially for South Korea.
Data from our cousins at Lipper offers some evidence to ponder, with net outflows from Korean equity funds at close to $700 million in the first three months of the year. That's the equivalent of about 4 percent of the total assets held by those funds. The picture was more stark for Taiwan funds, for whom a similar net outflow equated to almost 10 percent of total AuM. Look more broadly though and the picture blurs; Asia ex-Japan equity funds have seen net inflows of more than $3 billion in the first three months of the year, according to Lipper data.
from Full Focus:
On the banks of North Korea
The Yalu River provides a unique vantage point for photographers to glimpse life in the secretive North Korean state.
from Global Investing:
There’s cash in that trash
There's cash in that trash.
Analysts at Bank of America/Merrill Lynch are expounding opportunities to profit from the burgeoning waste disposal industry, which it estimates at $1 trillion at present but says could double within the next decade. They have compiled a list of more than 80 companies which may benefit most from the push for recycling waste, generating energy from biomass and building facilities to process or reduce waste. It's an industry that is likely to grow exponentially as incomes rise, especially in emerging economies, BofA/ML says in a note:
We believe that the global dynamics of waste volumes mean that waste management offers numerous opportunities for those with exposure to the value chain. We see opportunities across waste management, industrial treatment, waste-to-energy, wastewater & sewage,...recycling, and sustainable packaging among other areas.
from John Lloyd:
North Korea’s known unknowns
As Donald Rumsfeld used to say, there are known unknowns. Two of them are confronting the world today, and both stem from the Korean peninsula.
One: What will North Korean leader Kim Jong-un do now? He’s ordered missiles to be ramped up, fired a gun on TV, watched missiles shoot down dummy planes and told his military they were cleared for an attack on South Korea and the United States. He said “a sea of fire” would engulf his enemies if they dared to provoke him. Earlier this week, South Korea’s Unification Minister, Ryoo Kihi-Jae, said “there are signs” that a fourth nuclear test is being prepared at the Punggye-ri test site. What is the next move?
from Global Investing:
Emerging markets’ export problem
Taiwan's forecast-beating export data today came as a pleasant surprise amid the general emerging markets economic gloom. In a raft of developing countries, from South Korea to Brazil, from Malaysia to the Czech Republic, export data has disappointed. HSBC's monthly PMI index showed this month that recovery remains subdued.
With Europe still in the doldrums, this is not totally unsurprising. But economists are growing increasingly concerned because the lack of export growth coindides with a nascent U.S. recovery. Clearly EM is failing to ride the US coattails.
