Business this week
《经济学人》2018年10月27日 刊
Stockmarkets had another rocky week. The NASDAQ index recorded its biggest one-day decline in more than seven years and the Dow Jones Industrial Average fell below the level at which it started the year. A co-ordinated confidence-boosting effort by senior government officials in China pledging support for markets helped its stockmarkets chalk up their biggest single-day gains in almost three years. But the positive sentiment soon evaporated.
The tiger’s tail
China’s economy grew by 6.5% in the third quarter, year on year. That was the slowest pace since early 2009, in the depth of the financial crisis. The figure does not yet fully reflect the trade war with America, because the largest portion of tariffs imposed on Chinese exports came into effect only in late September. More penalties are due to be implemented in January.
Deutsche Bank released disappointing quarterly earnings. The German bank recorded sharp declines in sales and trading revenue compared with the same three months last year, a contrast to the increased income reported by American investment banks. Net profit fell by 65%, to €229m ($266m). Christian Sewing, who took over as chief executive in April, insisted that the bank would make its first annual profit since 2014.
The state of New York filed a lawsuit against ExxonMobil, claiming that it misled investors about the risk that regulations on climate change posed to its business. The suit alleges that the oil company “built a façade to deceive” how it measured the risk and frequently did not apply the “proxy cost” of carbon, which accounts for expected future events, to its decisions.
A judge in California slashed the amount in total damages—from $289m to $78m—awarded by a jury to a school groundsman who claims his cancer was caused by Roundup, a weedkiller made by Monsanto. But the judge refused to order a retrial, a blow to Bayer, the German chemical conglomerate that took over Monsanto this year. Bayer’s share price swooned after the ruling. It is to appeal against the decision.
PR offensive
Facebook appointed Sir Nick Clegg as its new head of global affairs. The former British deputy prime minister said he wanted “to build bridges between politics and tech”, which will involve a lot of shuffling between Silicon Valley, Washington and Brussels. Some hope he has better luck in the job than as leader of the Liberal Democrats, who saw their support collapse after he reneged on a promise not to increase university tuition fees.
Hoping it can overcome a costly industrial dispute that has helped wipe 40% off its market value this year, Air France- klm signed a pay deal with three-quarters of its staff, which meets a threshold for the agreement to become binding and implemented. Although the main pilots’ union withheld its support, the deal is a significant success for Ben Smith, the airline’s new Canadian chief executive.
Also hit by a wave of strikes this year, Ryanair said its pre-tax profit fell by 9% in the six months to September 30th, to €1.3bn ($1.5bn). Europe’s biggest low-cost airline has had to contend with the rising price of oil. Despite heavy hedging, its fuel costs were up by a fifth.
Tesla reported a surprise, and rare, quarterly profit, of $312m. The electric-car maker also pleased its dogged investors by improving its cashflow, which bolsters its argument that it doesn’t need to turn to the markets to raise funds. Its Model 3 was the best-selling car in America by revenue and the fifth by volume. With its usual gift for understatement, Tesla described the quarter as “truly historic”.
For the defence
at&t lost a further 346,000 video subscribers in the latest quarter. The migration of satellite-TV customers to online-streaming broadcasters, such as Netflix, was the rationale behind AT&T’s takeover of Time Warner (since rebranded as WarnerMedia). That business reported a rise in sales in the quarter to $8.2bn, boosted by blockbuster films such as “Crazy Rich Asians”.
In its first big deal since Mike Manley took over as chief executive after the death of Sergio Marchionne, Fiat Chrysler Automobiles said it was selling Magneti Marelli, its components subsidiary, to Calsonic Kansei for €6.2bn ($7.1bn). Calsonic is owned by KKR, a private-equity firm.
Dyson, a British manufacturer best known for its cordless vacuum-cleaners, selected Singapore as the site for a new factory in its expansion into electric vehicles. The company stressed that its choice had nothing to do with Brexit. Sir James Dyson, the company’s founder and a strong supporter of Brexit, once described the idea that no one would trade with Britain once it left the EU as “absolute cobblers”.
Oct 27th 2018
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