The Economist - USA (2020-02-15)

8 The EconomistFebruary 15th 2020
The world this week Business

SoftBankreportedonlya tiny

operatingprofitof¥2.6bn

($24m)forthelatestquarter

becauseofmorelossesatits

VisionFundforstartups,

whichhascomeunderscruti-

nyaftera numberofpoor

investments,mostnotablyin

WeWork.Thedropinearnings

comesafterElliott,anactivist

hedgefundknownforits

combativepushforchangeat

thecompaniesit investsin,

pressedtheJapaneseconglom-

eratetoundertakea $20bn

sharebuy-back.Son

Masayoshi,SoftBank’sboss,

tooka conciliatoryapproachto

Elliott’sintervention,saying

“Wearethankfulthatsucha

distinguishedinvestorhas

joinedusasa friend.”

Thedaybeforeit releasedits

earnings,SoftBankhadsome

goodnewswhena federal

judgeruledinfavourof

t-Mobile’stakeoverofSprint.

SoftBank,whichisSprint’s

parentcompany,sawitsshare

pricesoarby12%afterthe

acquisitioncleareditslast

hurdle.Butmediareports

suggestthatDeutscheTele-

kom,theparentcompanyof

t-Mobile,mightseekbetter

termsbecauseSprint’sfi-

nancialpositionhasweakened

sincethedealwasannounced

inApril2018.

Thiam to go

Tidjane Thiamwas ousted as

chief executive of Credit

Suisse, following last year’s

revelations that the Swiss bank

had conducted surveillance on

two former executives. With a

plot worthy of a spy novel, the

bank’s former chief operating

officer hired private detectives

to trail the executives. One

monitoring episode was even

dubbed “Operation Küsnacht”

after the rich suburb in which

it was carried out. Mr Thiam

insists he was unaware of the

spying. He was supported by

investors, but that was not

enough to save his job. The

bank, meanwhile, reported a

69% rise in annual net profit.

Barclayssaid that its chief

executive, Jes Staley, was being

investigated by regulators

about his past links to Jeffrey

Epstein, a deceased financier

who trafficked under-age girls

for sex. Mr Staley says he has

had no contact with Epstein

since taking the reins at the

bank in December 2015. The

board expressed confidence in

Mr Staley, who has been “suffi-

ciently transparent”.

Amid continuing tension

between staff and manage-

ment, Google’shead of human

resources said she was leaving

the role to spend more time

with her family. Google has

warned its employees to tone

down their sometimes public

opposition to its dealings, such

as a censored search engine in

China and defence work.

Britishgdpwasflatinthe

final quarter of 2019 compared

with the previous three

months. Year on year, the

economy grew by just 1.1%, the

weakest by that measure since

the start of 2018. A lack of capi-

tal investment was a major

drag on the economy in the

fourth quarter, a factor that

also had a negative impact in

the previous two quarters.

Turkey’s banking regulator

intervened to prop up the lira

during a bout of volatile trad-

ing, tightening the restrictions

on foreign-exchange swaps

and other forex transactions

between Turkish and foreign

banks that were imposed in

August 2018 during a run on

the currency. The regulator’s

intervention did little to boost

the lira, which still traded at

nine-month lows of above six

to the dollar.

In a move that would create

China’s first global carmaker,

Geelyannounced that it

intends to merge with Volvo,

which its chairman, Li Shufu,

bought in 2010 but is run as a

separate operation. The com-

bined company would list in

Hong Kong. By integrating the

two marques, Mr Li who has

investments in several other

carmakers and mobility firms,

may be seeking to create a

multibrand corporate model

similar to that of Volkswagen.

Weighed down by fines associ-

ated with emissions-cheating

software Daimler’s annual net

profit plummeted by 64% to

€2.7bn ($3bn), its worst perfor-

mance in a decade despite

record sales of Mercedes-Benz

cars. Daimler is also struggling

with the industry’s shift to

electric cars.

The International Energy

Agency found that, “defying

expectations”, global energy-

related carbon-dioxide emis-

sionsdidn’t grow last year,

even though the world econ-

omy grew by 2.9%. Emissions

actually fell in America by

2.9%, in the euby 5% and in

Japan by 4%. But emissions

were up in developing coun-

tries, thanks to their use of

coal, with Asia responsible for

the vast bulk of the increase.

The environmental profit

With his feet firmly under the

table as the new chief exec-

utive of bp, Bernard Looney set

out a target for the energy

company to achieve net zero

carbon-dioxide emissions by

2050 and to push for carbon

pricing. bpassured investors it

could do this without hurting

the bottom line, or “perform-

ing while transforming” as it

put it, but was vague about the

role of fossil fuels in its new-

found battle against climate

change. More details are prom-

ised in September.

Britain’s GDP

% change

Source:ONS

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