FT : China’s stock market outpaces global peers as local investors pile in

China’s stock market outpaces global peers as local investors pile in
CSI 300 has rallied more than US and European indices this year, even as foreign investors stay away

Chinese investors are driving a sharp rally in the country’s stock markets, even as international investors have been deterred by years of underperformance and persistent deflationary pressures.

The mainland’s CSI 300 benchmark index traded flat in the first six months of this year but has posted double-digit gains since the end of June. It is now up 14.3 per cent so far this year, more than the main US, European and Japanese benchmarks, in local currency terms.

Easing trade tensions with the US has calmed investors’ nerves. But analysts say it is primarily low interest rates, near-record low bond yields and a lack of attractive alternatives that have driven Chinese retail and institutional investors into A-shares, traded on the country’s onshore stock markets.

“For households and institutions in China, they don’t have too much choice,” said Shujin Chen, China economist and head of China financial and property research at Jefferies. “A-shares have joined the global party.”

Stock markets in the US, Japan and Europe are trading at all-time highs as investors pile into equities, defying the warnings of many economists about the negative impact that US trade policy will have on global growth.


While still below its all-time high during China’s post-Covid boom in 2021, the rally in the CSI 300 this year is close to the 14.7 per cent gain recorded for the whole of 2024, which followed three years of losses.

Some analysts have pointed to Beijing’s campaign against deflation as a big driver of the rally. Others are more cautious, however, saying the campaign will only deliver higher earnings in some sectors.

Bush Chu, a China equity portfolio manager at Aberdeen, instead points to the amount of money flowing around China’s financial system, partly as a result of loose monetary policy aimed at tackling lacklustre growth.

“The overarching reason is easing monetary policy since last year,” said Chu. “Initially, we saw that liquidity go into the bond market. [But with] the 10-year yield dropping to an unattractive level, and with deposit rates coming down, there are fewer options.”

The moribund state of China’s real estate market, once a preferred investment choice for households, has simultaneously boosted the amount of cash looking for assets to invest in and narrowed the range of options available.

“[Households are] not borrowing to buy properties any more, so there’s plenty of excess cash in the system,” said Hao Hong, chief investment officer at Lotus Asset Management.

Despite the strong rally in A-shares, international investors have stayed largely on the sidelines. For them, the US currency’s weakness against the euro and the yen this year has delivered stronger gains in dollar terms for European and Japanese equities than for Chinese ones.

“We haven’t seen a significant impact from foreign flows,” said Vincent Che, head of equities at Ping An of China Asset Management (Hong Kong).

Domestic investors, however, have piled in. In a sign of their enthusiasm, the amount of margin trading, in which investors borrow money to buy stocks, has risen 19 per cent in the past two months to Rmb2.2tn ($308bn). That is the highest level since 2015, when Chinese state media urged retail investors to buy stocks as part of the government’s drive for economic growth — only for the rally to end in a stock market crash the following year.

But analysts said that since then, changes in stock market structure and more targeted government policies meant that the worst excesses of that bubble would not happen this time.

“It’s very different,” said Kinger Lau, chief China equity strategist at Goldman Sachs. “We are in a more moderate rally now.”


The amount of margin trading in relation to total market value, for example, is much lower than it was a decade ago.

“There’s nothing about Chinese valuations which to me look like they’re in a bubble,” said Alexander Treves, investment specialist at JPMorgan Asset Management. 

Analysts said massive co-ordinated share buying by Chinese state-owned funds and companies earlier this year had helped set the foundation for the current rally, by signalling a floor on asset prices. A policy last year mandating the country’s insurance industry to buy more equities has also supported the market.

China’s rally comes even as enduring deflation threatens to erode corporate earnings. Factory gate prices fell 3.6 per cent year on year in July and have fallen every month since October 2022.

This has prompted caution among some foreign investors, who see better opportunities for earnings growth in markets such as Japan, where bets that recent corporate governance reforms will bear fruit have pushed the Topix to record highs.

“I would much rather be focused on an earnings-driven market,” said John Woods, chief investment officer for Asia at Lombard Odier.

FT : Rolls-Royce explores small nuclear reactor unit funding options including I

Rolls-Royce explores small nuclear reactor unit funding options including IPO
The consortium led by the UK engineer is in talks to finalise a contract with the government later this year

Rolls-Royce has held exploratory talks with advisers over financing options for its small nuclear business, including an initial public offering, amid growing investor excitement about the nascent technology.

The FTSE 100 engineer was selected to build Britain’s first fleet of small modular reactors in June as part of a plan by the Labour government to make the UK a world leader in the technology. The Rolls-Royce-led SMR consortium is in talks to finalise a contract with the government later this year.

The talks with investment houses and banks focused on future funding requirements of the business, according to two people familiar with the situation. “There is a live debate within the shareholder base,” said one of the people, noting that a listing at a high valuation would generate significant funding. 

Other members of the consortium include CEZ Group, the Czech utility, which holds a 20 per cent stake as part of a wider partnership with Rolls-Royce, the Qatar Investment Authority and BNF Resources. There were “different views” among shareholders, the person added. 

Discussions were at an early stage, with the Rolls-Royce board not in a rush to make any decision, said the other person. The UK government would be eager to ensure that any listing occurred in London, which has suffered a marked slowdown in flotations in recent years, they added.

Rolls-Royce SMR said the company was “not planning for, or in the process of launching an initial public offering”. 

Governments and investors are increasingly backing the potential of SMRs — nuclear reactors that are smaller than the gigawatt plants that have dominated the industry for decades — as a reliable source of low-carbon electricity.

UK government funding for Rolls-Royce, which is still subject to final agreements, involves support to help develop three small modular reactors amounting to almost 1.5 gigawatts of electricity capacity, enough for about 1.5mn homes.

The government has said it will pledge £2.5bn to small modular reactors during this three-year spending review period, helping to develop Rolls-Royce’s technology as well as develop sites for the reactors.

The renaissance in nuclear power has come amid the boom in power-intensive artificial intelligence and as governments worldwide seek to shore up domestic sources of energy.

Technology groups such as Amazon and Google have in recent months struck deals with SMR developers to help power the data centres needed for AI. Oklo, a nuclear start-up backed by OpenAI chief Sam Altman, is valued at more than $11bn.

Companies in the space eyeing possible IPOs include Florida-based Holtec International and Quantum Leap Energy, part of ASP Isotopes.

Quantum Leap said its decision to “pursue a US listing this year reflects both our confidence in the company’s growth trajectory and the appetite we are seeing from international investors”.

Nick Lawson, chief executive of investment group Ocean Wall, which is advising ASP Isotopes on the QLE spin-off, said he was seeing “extraordinary momentum at the intersection of nuclear technology and artificial intelligence”, which included several upcoming listings.

At least three nuclear energy developers are also seeking to raise money through mergers with special purpose acquisition companies.

Tufan Erginbilgiç, Rolls-Royce’s chief executive who has presided over a sweeping turnaround at the group since taking the helm in 2023, has become a vocal proponent of SMRs.

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The engineering group, which remains the majority shareholder in the consortium, is not expected to make a decision on whether to proceed with an IPO until after it has signed the contract with the UK government, as any valuation would depend on the commercial details.

The London-listed company said this summer that it expected the SMR business, which employs about 800 people, to be free cash flow positive and profitable by 2030. 

Rolls-Royce last year sold a 20 per cent stake in the business to CEZ Group. Although terms of the deal were not disclosed, the utility was estimated to have paid hundreds of millions of dollars for the stake.

WSJ : Spirit Airlines Files for Second Bankruptcy in a Year

Spirit Airlines Files for Second Bankruptcy in a Year
Troubled budget carrier re-enters chapter 11 process after prior reorganization failed to fix problems

Spirit Airlines has filed for bankruptcy for the second time in a year after an earlier reorganization failed to put it on stable financial ground.

The discount airline said Friday it needs to slash costs and make sweeping changes to its business as it grapples with flagging travel demand and challenges to the no-frills business model it once pioneered.

The airline will continue flying and selling tickets through the bankruptcy process. It made the chapter 11 filing in bankruptcy court in the Southern District of New York.

Spirit filed for chapter 11 last November after multiple failed attempts to merge with other airlines. It exited court protection in March after having exchanged nearly $800 million of corporate debt for equity.

Spirit didn’t renegotiate its aircraft leases during the previous process, leaving the airline stuck with high lease costs in addition to its remaining burden of more than $2 billion in debt. Spirit’s new management team, appointed as part of the previous restructuring, has determined the company needs another chapter 11 process. In addition, the buoyant travel market that was expected postbankruptcy didn’t materialize, said Robert Milton, chairman of Spirit’s board since earlier this year.

“The right thing to do is to get on with a proper restructuring, a complete revamp of the business plan, the network plan,” Milton said in an interview. “We just need to get on with fixing this airline properly and thoroughly.”

The airline is looking to shed some planes and retrench to core cities such as Fort Lauderdale, Orlando and Detroit. Other areas of focus will likely include discussing bargaining agreements with unions and addressing problems stemming from a Pratt & Whitney engine defect that has grounded dozens of planes.

Discount airlines and those that cater to leisure fliers have been struggling to compete with bigger airlines like United, Delta and American that have their own inexpensive basic economy tickets but can also lure passengers with premium perks and far-flung destinations.

Spirit has been retooling its offering to appeal to higher-end consumers willing to pay extra for a more comfortable flying experience—efforts the carrier said it plans to expand as it reduces costs across its businesses.

Spirit’s bankruptcy could provide another opening for a merger with Frontier—one of the industry’s longest-running will-they-or-won’t-they sagas. Milton and Spirit Chief Executive Dave Davis met earlier this week with Bill Franke, Frontier’s chairman, to discuss Spirit’s plans and the state of the industry broadly.

Frontier has pursued a deal with Spirit several times, including making a last-ditch offer to buy it in January while Spirit was going through chapter 11.

Frontier, which earlier this week announced a slew of new routes aimed at picking up Spirit customers, declined to comment Friday.

Its shares rose 19% after the close of trading. Shares of other airlines also climbed as Spirit, which once undercut rivals’ prices and pressured competitors to lower fares, signaled plans to scale back.

Milton said a deal with Frontier still makes logical sense, but Spirit has had inquiries from other airlines. He said Spirit has the right executive team in place, and that by going through the bankruptcy process now it can gain an advantage, whether it remains on its own or combines with another carrier.

“If you’re smart, get on with it, do it with a sharp knife and not a blunt instrument, you come out in a far better position,” he said.

WSJ : Bipartisan Proposal Would Ban Stock Trading by Lawmakers

Bipartisan Proposal Would Ban Stock Trading by Lawmakers
Measure would give members of Congress 180 days to sell off individual stocks

WASHINGTON—A group of House lawmakers from across the political spectrum has agreed on a proposal that would ban members of Congress from trading individual stocks, which proponents said marks the first realistic shot at reining in the practice in more than a decade.

The bipartisan bill, set to be unveiled next week, gives lawmakers and their family members a period of 180 days from enactment to sell off individual stocks they own, including ones held in blind trusts, according to a copy of the text viewed by The Wall Street Journal. Future lawmakers would have 90 days after being sworn in to sell off their stocks, according to the proposal.

Lawmakers who don’t comply would face fines equal to 10% of the value of the investment and would be forced to give up any profit they received, according to the 10-page proposal. The measure has several exceptions, including stock given to spouses and dependent children as part of their employment compensation, according to the bill’s text.

The proposal was negotiated by Rep. Seth Magaziner (D., R.I.). Talks included conservative Reps. Chip Roy (R., Texas) and Tim Burchett (R., Tenn.), and progressives such as Reps. Alexandria Ocasio-Cortez (D., N.Y.) and Pramila Jayapal (D., Wash.).

Momentum has grown in recent months to limit stock trades by members of Congress and their family members. Tariff-related stock-market fluctuations have put a spotlight on trades by lawmakers. Proponents have said new restrictions could help restore trust in Congress.

Speaker Mike Johnson (R., La.) said earlier this year that he supports a ban on trading, but he hasn’t thrown his weight behind any particular proposal. Treasury Secretary Scott Bessent said recently he is willing to start pushing for an individual stock trading ban. “People shouldn’t come to Washington to get rich,” he said. “It brings down trust in the system.”

President Trump has said he is “conceptually” open to further restrictions.

Lawmakers in 2012 passed the Stock Act mandating more disclosures and explicitly outlawing trading on nonpublic information. But they have struggled to ban trading outright despite broad support for such a move in Congress and among voters.

Opponents to new stock-trading restrictions pointed out that insider trading is already illegal. Securities and Exchange Commission officials, along with the Justice Department, can investigate suspicious trades. Others said forcing lawmakers to comply with more onerous requirements and the taxes and other costs associated with selling off individual stocks places an unnecessary burden on them.

Only a third of House lawmakers and slightly less than half of senators traded individual stocks or held them as assets while in office last year, according to an analysis of financial-disclosure filings. It is more common for lawmakers to hold investments in traditional mutual funds, which invest money across a spectrum of stocks. Those funds wouldn’t be affected by the proposed trading ban.

Members of Congress have said they routinely get access to information, including from senior government officials during classified briefings, which could provide insight into where the stock market is headed. Lawmakers negotiate legislation that could affect publicly traded companies, and work with committee staff to call in top executives for oversight hearings.

“We absolutely have access to insider information here. There is no question about it,” Rep. Brian Fitzpatrick (R., Pa.), a moderate involved in the negotiations, said in an interview earlier this year. “So to not acknowledge that, I think, is very dishonest.”

WSJ : Cutting-Edge AI Was Supposed to Get Cheaper. It’s More Expensive Than Ever

Cutting-Edge AI Was Supposed to Get Cheaper. It’s More Expensive Than Ever.
With models doing more ‘thinking,’ the small companies that buy AI from the giants to create apps and services are feeling the pinch

As artificial intelligence got smarter, it was supposed to become too cheap to meter. It’s proving to be anything but.

Developers who buy AI by the barrel, for apps that do things like make software or analyze documents, are discovering their bills are higher than expected—and growing.

What’s driving up costs? The latest AI models are doing more “thinking,” especially when used for deep research, AI agents and coding. So while the price of a unit of AI, known as a token, continues to drop, the number of tokens needed to accomplish many tasks is skyrocketing.

It’s the opposite of what many analysts and experts predicted even a few months ago. That has set off a new debate in the tech world about who the AI winners and losers will be.

“The arms race for who can make the smartest thing has resulted in a race for who can make the most expensive thing,” says Theo Browne, chief executive of T3 Chat.

Browne should know. His service allows people to access dozens of different AI models in one place. He can calculate, across thousands of user queries, his relative costs for the various models.

Penny wise, pound-foolish
Remember, AI training and AI inference are different. Training those huge models continues to demand ever more costly processing, delivered by those AI supercomputers you’ve probably heard about. But getting answers out of existing models—inference—should be getting cheaper fast.

Sure enough, the cost of inference is going down by a factor of 10 every year, says Ben Cottier, a former AI engineer who is now a researcher at Epoch AI, a not-for-profit research organization that has received funding from OpenAI in the past.

Despite that drop in cost per token, what’s driving up costs for many AI applications is so-called reasoning. Many new forms of AI re-run queries to double-check their answers, fan out to the web to gather extra intel, even write their own little programs to calculate things, all before returning with an answer that can be as short as a sentence. And AI agents will carry out a lengthy series of actions based on user prompts, potentially taking minutes or even hours.

As a result, they deliver meaningfully better responses, but can spend a lot more tokens in the process. Also, when you give them a hard problem, they may just keep going until they get the answer, or fail trying.

Here are approximate amounts of tokens needed for tasks at different levels, based on a variety of sources:

• Basic chatbot Q&A: 50 to 500 tokens

• Short document summary: 200 to 6,000 tokens

• Basic code assistance: 500 to 2,000 tokens

• Writing complex code: 20,000 to 100,000+ tokens

• Legal document analysis: 75,000 to 250,000+ tokens

• Multi-step agent workflow: 100,000 to one million+ tokens

Hence the debate: If new AI systems that use orders of magnitude more tokens just to answer a single request are driving much of the spike in demand for AI infrastructure, who will ultimately foot the bill?

Ivan Zhao, chief executive officer of productivity software company Notion, says that two years ago, his business had margins of around 90%, typical of cloud-based software companies. Now, around 10 percentage points of that profit go to the AI companies that underpin Notion’s latest offerings.

The challenges are similar—but potentially more dire—for companies that use AI to write code for developers. These “vibecoding” startups, including Cursor and Replit, have recently adjusted their pricing. Some users of Cursor have, under the new plan, found themselves burning through a month’s worth of credits in just a few days. That’s led some to complain or switch to competitors.

And when Replit updated its pricing model with something it calls “effort-based pricing,” in which more complicated requests could cost more, the world’s complaint box, Reddit, filled up with posts by users declaring they were abandoning the vibecoding app.

Despite protests from a noisy minority of users, “we didn’t see any significant churn or slowdown in revenue after updating the pricing model,” says Replit CEO Amjad Masad. The company’s plan for enterprise customers can still command margins of 80% to 90%, he adds.

Some consolidation in the AI industry is inevitable. Hot markets eventually slow down, says Martin Casado, a general partner at venture-capital firm Andreessen Horowitz. But the fact that some AI startups are sacrificing profits in the short term to expand their customer bases isn’t evidence that they are at risk, he adds.

Casado sits on the boards of several of the AI startups now burning investor cash to rapidly expand, including Cursor. He says some of the companies he sits on the boards of are already pursuing healthy margins. For others, it makes sense to “just go for distribution,” he adds. Cursor didn’t respond to requests for comment.

One solution: dumber AI
The big companies creating cutting-edge AI models can, at least for now, afford to collectively spend more than $100 billion a year building out infrastructure to train and deliver AI. That includes well-funded startups OpenAI and Anthropic, as well as companies like Google and Meta that redirect profits in other lines of business to their AI ventures.

For all of that investment to pay off, businesses and individuals will eventually have to spend big on these AI-powered services and products. There is an alternative, says Browne: Consumers could just use cheaper, less-powerful models that require fewer resources.

For T3, his many-model AI chatbot, Browne is beginning to explore ways to encourage this behavior. Most consumers are using AI chatbots for things that don’t require the most resource-intensive models, and could be nudged toward “dumber” AIs, he says.

This fits the profile of the average ChatGPT user. OpenAI’s CFO said in October that three-quarters of the company’s revenue came from regular Joes and Janes paying $20 a month. That means just a quarter of the company’s revenue comes from businesses and startups paying to use its models in their own processes and products.

And the difference in price between good-enough AI and cutting-edge AI isn’t small.

The cheapest AI models, including OpenAI’s new GPT-5 Nano, now cost around 10 cents per million tokens. Compare that with OpenAI’s full-fledged GPT-5, which costs about $3.44 per million tokens, when using an industry-standard weighted average for usage patterns, says Cottier.

While rate limits and dumber AI could help some of these AI-using startups for a while, it puts them in a bind. Price hikes will drive customers away. And the really big players, which own their own monster models, can lose money while serving their customers directly. In late June, Google offered its own code-writing tool to developers, completely free of charge.

Which raises a thorny question about the state of the AI boom: How long can it last if the giants are competing with their own customers?

FT : Donald Trump moves to scrap $4.9bn in already allocated US foreign aid

Donald Trump moves to scrap $4.9bn in already allocated US foreign aid
US president makes new effort to assert power over Congress with bid to cut ‘woke’ funding

Donald Trump has ordered the cancellation of $4.9bn in foreign aid spending already approved by Congress, making use of an obscure legal mechanism in an effort to bypass lawmakers and assert his authority.

The president wrote to House Speaker Mike Johnson on Thursday night informing him of the rescission of funds earmarked for development assistance, peacekeeping and international organisations.

“The Trump administration is committed to getting America’s fiscal house in order by cutting government spending that is woke, weaponised and wasteful,” the White House said in a statement on Friday.

The move to claw back funds already approved by Congress is the latest step by the administration to test the limits on presidential authority. It comes as Trump looks to extend his influence over the Federal Reserve, taking the unprecedented step this week of attempting to sack a governor.

It marks the first time in 50 years that a president has sought to use executive powers under the Impoundment Control Act to deploy a so-called pocket rescission to circumvent lawmakers on Capitol Hill.

Congress can take up to 45 days to consider a rescission request from the president. But by issuing the directive with less than that amount of time until the end of the fiscal year on September 30, the White House is betting it can lock up the funds before they can be spent.

Trump’s directive drew swift criticism from Democrats and his fellow Republicans in Congress, who argued it was an illegal attempt to circumvent lawmakers’ constitutional control over spending. 

“Any effort to rescind appropriated funds without congressional approval is a clear violation of the law,” said Susan Collins, Republican chair of the Senate Committee on Appropriations on Friday. 

Patty Murray, the top Democrat on the committee, blasted what she said was an attempt by the White House “to do an end run around Congress”.

“No lawmaker should accept this absurd, illegal ploy to steal their constitutional power to determine how taxpayer dollars get spent,” she said. 

Trump’s directive would lock up $3.2bn in development assistance funding that the administration described as “endless handouts that allow recipient governments to eschew responsibilities to their own citizens”.

It would also slash $393mn in funding for US peacekeeping missions and $521mn in previously allocated contributions to international organisations, including the World Trade Organization, the International Labour Organization, the OECD and Unesco.

Secretary of state Marco Rubio said on Friday that the spending “violates the president’s America First priorities”.

“None of these programmes are in America’s interest, which is why the president is taking decisive action to put America and Americans first,” he wrote on X.

The non-partisan Government Accountability Office has previously said that pocket rescissions were against the law. Russell Vought, director of the White House Office of Management and Budget, considered deploying the measure during Trump’s first term, before deciding not to proceed.

The move is likely to inflame tensions between Republicans and Democrats in Congress, increasing the risk of a government shutdown if a funding package for the next fiscal year cannot be agreed by October 1.

“With this illegal power grab, Donald Trump and Russell Vought are driving us towards a government shutdown,” said Brendan Boyle, the top Democrat on the House Budget Committee.

FT : John Malone held talks with Rupert Murdoch over Warner Bros-Fox merger

John Malone held talks with Rupert Murdoch over Warner Bros-Fox merger
‘Cable cowboy’ reveals talks as he reorganises media empire and prepares to give most of his $10bn fortune to good causes

John Malone held talks last summer with Rupert Murdoch over merging Warner Bros Discovery with Fox, with the US “cable cowboy” highlighting the difficulty of one company owning both Warner’s CNN and Fox News as one reason the talks did not progress.

Malone, Warner’s chair emeritus and an adviser to the company, revealed in an interview with the Financial Times that he and Murdoch, his fellow chair emeritus at Fox, had “serious discussions about merging Fox into Time Warner, into Discovery” at the Sun Valley conference in July 2024.

The deal “probably would have happened if we thought that Fox News and CNN could live under one umbrella,” Malone said.  

In his autobiography, set to be published next week, Malone charts the formation of his sprawling business empire — from the creation of a cable giant at TCI and helping launch pay-TV in the US, to his stakes today in Warner, and in Formula 1 and Live Nation via Liberty Media.

After more than 50 years at the vanguard of dealmaking, the 84-year-old is still exploring deals for various parts of his empire, the proceeds of which he said will underpin plans to give most of his $10bn wealth to philanthropic causes after he and his wife pass away.

With little sign that his renowned “urge to merge” — as he puts it in his book — is fading, Malone signalled an openness to a future deal involving Formula 1, owned by Liberty Media.

As for Fox Broadcasting, separate to the news division, Malone said “a deal would potentially give Warner’s US sports position a huge strengthening” if Murdoch, whom he counts as a friend, were open to selling.

Other people close to the discussion last summer said Warner chief executive David Zaslav and News Corp chair Lachlan Murdoch were also present. Fox insiders downplayed the significance, saying a possible deal was raised but not pursued.

Malone supports a proposed split of Warner, in which he owns a 0.7 per cent stake, into two publicly traded companies: a Warner Bros focused on its studios, film, and streaming, and a Discovery Global holding its traditional cable networks.

The deal would unwind a merger that has led to significant shareholder losses. The combined company’s shares have halved, wiping about $30bn off its market capitalisation, as Americans ditch cable TV in favour of streaming.

“Because it was a deal between two heavily regulated companies, there was no real opportunity to do due diligence,” Malone said.

“When we acquired Warner . . . we didn’t see the deterioration. We knew it was a transformation, but we didn’t know that we would start in [such a] hole . . . have I taken a personal financial beating up til now? I can afford it, I guess.”

With HBO’s best shows being brought back to its own streaming service, HBO Max, Malone sees a brighter future for the separated companies, saying Zaslav will have a “clean shot” with a streaming company boasting the “best studio on the planet [and] the biggest library on the planet”.

“Am I glad that we did it? Maybe in the end, it will work out,” Malone said of the merger. “Who knows, big tech might step up and take us out.”

Malone, who retains a seat at the top table of the rapidly changing media industry, is predicting a fresh wave of mergers. As well as big tech swooping on the traditional US media groups he had a hand in building, Malone expects consolidation among “sub-scale” streaming services, especially those owned by legacy media groups.

While he believes “exclusive, high-quality entertainment content” gives legacy media a valuable edge, he said big tech will increasingly “outbid everybody for sports . . . we know that it moves customers [and] it sells advertising”.

The scale of the threat from big tech means consolidation between legacy media was also conceivable, Malone added, pointing to the “possibility of consolidation of a Disney and a Warner, or a Disney and a Paramount or an NBC Universal with a Warner”.

A restructuring of Liberty Media — in which Malone is chair and the shareholder with the most voting rights — means its 30 per cent stake in Live Nation will be separated into a newly formed company this autumn.

The paperwork for the split has been filed, Malone said, which would leave Liberty Media holding motorsports Formula 1, MotoGP, and various smaller private assets. This follows several other spin-offs, including the Atlanta Braves baseball team and SiriusXM, a satellite radio operator.

The simplified structure would make it easier for Malone to pursue a deal involving Formula 1, for which Liberty has already received approaches.

TKO, the group behind Ultimate Fighting Championship and World Wrestling Entertainment that is run by Ari Emanuel, has been speculated as a potential partner. Malone said that “obviously Ari would love to have that discussion” and added that a combination of this sort could create “a lot of synergies”.

“Everything will be spun off, and then let’s see what new things we can create,” Malone said, adding that GCI — an Alaska-based telecoms company in which he will retain a shareholding — “perhaps could be a vehicle to do something with”.

Malone was instrumental in creating modern broadband infrastructure. He rolled up scores of networks and pushed for upgrades in the 1980s so that they could carry hundreds of cable TV channels, and then upgraded them again for high-speed internet, which ultimately paved the way for Netflix and others to upend the media industry.

Now, he is reorganising some broadband assets by merging holding company Liberty Broadband, in which he is a shareholder, with Charter Communications. The deal is scheduled to complete when Charter finalises its own $34.5bn merger with Cox Communications.

The listed telecoms holding group, Liberty Global, which owns stakes in operators including Virgin Media O2 in the UK, is also slimming down and spinning off assets.

Despite his close bonds with contemporaries such as Murdoch, Ted Turner and Barry Diller, Malone describes in his book, Born to be Wired, how he sometimes found it difficult forming personal relationships over the course of his swashbuckling 50-year career.

Parts of the book read like a “thank you” letter to those who advised and mentored him, notably Bob Magness, who brought him in to rescue TCI, his US cable company, in the 1970s. Malone eventually sold TCI to AT&T for $48bn in 1999. He also seeks to credit the managers under him who had a “helluva” job making his ideas work: “I could come up with ideas faster than anybody could execute.”

While Malone misses the “instant gratification” of making decisions as a chief executive, he says he is happy not to have to deal with an “army of lawyers and regulators” anymore.

Malone is watching the Murdoch family’s succession battle closely. Rupert’s attempt to change his family trust to give control to his eldest son, Lachlan, was blocked by a court in Nevada in December.

He says it would be “very disruptive” if Rupert’s other son, James, ended up controlling Fox News. “I know Rupert would hate the thought,” he said, pointing to a threat to the network’s centre-right political position under the younger Murdoch son.

Malone will not be handing his remaining businesses to his children. Instead, he plans to give most of his $10bn wealth, roughly half of which is made up of real estate, to charitable causes, such as medical research, education and preserving some of his vast land holdings as public open space.

However, as he rearranges his sprawling empire, some assets he will not countenance selling. One is the Atlanta Braves, in which he says he would never sell his stake as long as his friend and Braves fan Ted Turner is alive. “It’s not about money on those kind of things. This is about relationships and history.”

Another asset with protected status is Malone’s Castlemartin Estate in County Kildare, Ireland, which includes a stud farm and restored medieval church.

When Mark Zuckerberg, who built his social media empire off the back of the high-speed broadband networks Malone pushed to create, offered to buy the estate earlier this year, Malone gave him the cold shoulder.

“I told him no, sorry Mark,” smiles Malone. “He said: “I hear it’s the prettiest place in Ireland”. And I said: “Maybe in the world, but it ain’t for sale.”

Barrons : Luxury blingflation creates opportunity for cheaper challengers

Luxury blingflation creates opportunity for cheaper challengers
Second-tier brands and retailers are starting to stretch their tendrils upwards

The best things in life may be priceless. But over the past few years some of them have become extortionate. As the luxury industry has created its own kind of high-end inflation, price rises have left some customers behind. That has created an opportunity for upwardly mobile brands, even mass-market challengers.

After a series of sharp price increases, luxury’s unaffordability has turned from a feature to a bug. Sales declined 1 per cent in the last quarter, according to Bernstein, with those at industry bellwether LVMH falling by 4 per cent, and at troubled Gucci-parent Kering by 15 per cent.

But second-tier brands seem to be stepping in. Burberry, for instance, is retrenching after a failed attempt to go even more upmarket — and investors have rewarded it with a share price bounce of more than 90 per cent in a year. Those reluctant to spend more than £6,000 to bag themselves a Louis Vuitton Capucines can opt for niche leather goods producers such as Polène and DeMellier.

It is not just new luxury brands that are stepping in. Retailers such as Zara owner Inditex, with a broader customer base, can also stretch their tendrils upwards.


Zara has been investing in larger, glitzier stores, offering some higher-priced products, including a £700 leopard print jacket from last year’s collaboration with model Kate Moss. Its average selling price per item is already higher than its usual competitors — $34 compared with $26 at fast-fashion retailer H&M and $14 at Shein, according to McKinsey analysis.

Unusually for a mass-market retailer, Zara also manages to project an aura of scarcity. Since it makes a large proportion of its own goods, it can rapidly revise its offering. A Bernstein analysis found that over four weeks it changed about 40 per cent of its online collection, twice as much as H&M. In practice, if consumers see a product they like, there’s extra reason to snap it up sharpish, which gives Zara extra pricing power.

None of this suggests that Zara is going to go all-out luxe. But it does add an extra layer to its equity story. Already, Inditex grows faster than rival H&M, and has over twice the ebitda margin. That comes with a market capitalisation equivalent to 22 times forward earnings, a discount of less than 10 per cent to LVMH. Upward mobility provides a fetching trim.

Barrons : Aptiv Is Breaking Up—and Investors Should Buy the Stock

Aptiv Is Breaking Up—and Investors Should Buy the Stock
Shares have sunk because it is perceived as an auto-parts supplier, but the planned Aptiv spinoffs have growth potential.

Auto-parts supplier Aptiv is splitting up into two companies, one selling safety and software solutions, the other supplying electrical distribution systems.

Breaking up will allow both companies to better allocate capital to growth opportunities. It also could unlock shareholder value as investors assign higher multiples to non-automotive industrial businesses that demonstrate growth and margin improvement.

The company’s recent performance has been strong, with a feared slowdown in automotive production not materializing. That has Wall Street analysts increasing 2025 and 2026 earnings estimates.

If you break it up, they will come. That’s the bet auto-parts supplier Aptiv is making—and investors should consider going along for the ride.

Aptiv hasn’t had an easy time of it in recent years. The company began life as Delphi Automotive, the auto-parts business that was spun out of General Motors in 1999, before declaring bankruptcy in 2005, crushed by a combination of high labor costs, high debt, and an underfunded pension. After a restructuring, Delphi spun off Aptiv in 2017, with the former keeping the powertrain technologies such as fuel injectors, valve actuators, and sensors, and the latter taking the higher-growth businesses such as vehicle electrification and safety.

Aptiv was a great stock through 2021, benefiting from investor excitement for electric vehicles. But when the EV boom went bust, so did Aptiv’s stock—it dropped 55% from a late-2021 peak of almost $180 to a recent $79.88.

The problem isn’t earnings. Aptiv is expected to earn $7.48 this year, according to FactSet, up from $2.61 in 2021, a compound annual growth rate of 30%.

Instead, the problem is one of perception. At its peak, shares of Aptiv fetched about 36 times forward earnings, but once investors decided it was just an auto-part supplier again, its valuation slumped to 10 times. To change the perception problem, Aptiv plans to split into two companies: one that will focus on its slower-growing electrical-distribution-systems business, the other on faster-growing safety and software. If all goes well, the spin, which is scheduled to wrap up during the first quarter of 2026, should allow both parts of the company to succeed—and investors to profit.

“Aptiv’s bold spinoff isn’t just a corporate shuffle, it’s a strategic shift,” says spinoff specialist and Edge Research founder Jim Osman.

It isn’t hard to see why management is pursuing a breakup. The EDS business had annual sales in 2024 of $8.3 billion, with profit margins of 9.5% on earnings before interest, taxes, depreciation, and amortization, or Ebitda. Safety & software, meanwhile, had sales of $12.2 billion with Ebitda margins of 18.8%—and the potential to reach customers outside the auto business. “The [Delphi] spin was about making Aptiv a better automotive supplier,” writes Baird analyst Luke Junk. “This is more orienting the company toward higher return opportunities overall.”

The new Aptiv, or RemainCo in Wall Street jargon, will sell sensors, software, and electronics that enable higher levels of autonomous functions and electronic communication for cars, planes, and other machines. It is also looking to expand beyond autos with strategic acquisitions—a transformation that has already begun. Aptiv bought communications software provider Wind River in 2022.

If all goes well, it will begin to look more like industrial companies such as TE Connectivity and Amphenol, which fetch 16 times earnings and 22 times estimated 2025 Ebitda, respectively. Aptiv isn’t either of those companies, of course; TE and Amphenol benefit from high growth in artificial-intelligence data center spending. Post-spin, about 25% of Aptiv’s business will be nonautomotive, estimates Junk. The numbers for TE and Amphenol are about 55% and 80%, respectively. But Aptiv could trade like Sensata, a maker of sensors and electrical components for the car, aerospace, construction, and manufacturing industries. It trades for about nine times estimated Ebitda, one and a half points above Aptiv’s 7.5. Sensata gets 45% of its business from nonautomotive companies.

There’s room for improvement in the EDS business, as well. For starters, the outlook for automotive suppliers is better than feared, says RBC Capital Markets analyst Tom Narayan, with a tariff-induced slowdown not visible in the numbers. That means stronger production from auto makers and more parts for auto suppliers. The independent EDS business should be able to boost margins from high-single digits to low-double digits using a combination of automation and changes to its manufacturing base.

Finally, there is consolidation. EDS will “have buyers,” adds Narayan, with other suppliers looking for ways to grow while lowering costs. He has an Outperform rating and $92 price target on Aptiv stock, up 15% from recent levels.


But there’s reason to be more optimistic. Getting an automotive-like multiple on the electric business and a Sensata-like valuation on the RemainCo means Aptiv shares could hit $100, up about 25% from recent levels. The biggest risk is that investors continue to view both spinoffs as car companies, which would cause the stock to fall back toward $70, or about 15% below Tuesday’s close.

But a well-managed spin has the potential to create value—especially where none was seen. Fuel-systems provider Phinia was supposed to face challenges after its 2023 spin from BorgWarner amid the transition to battery-powered personal transportation, says Osman. Shares have roughly doubled over the past two years, while BorgWarner stock has gained about 30%. When General Electric split up in 2024, GE Aerospace was supposed to be the hotter stock, and while it has doubled since the spin, shares of GE Vernova, which were thought to have a tougher road, quadrupled.

Ultimately, the success or failure of the spin will depend on management’s execution and the fickleness of the markets. But with Aptiv’s history, we like our chances.

The Technical View
Aptiv stock’s rally started during the week ended May 6, when shares jumped 10%, breaking a series of lower highs dating back to the fourth quarter of 2024. Aptiv has shown excellent follow through after bouncing off a double bottom and breaking through resistance at $72.53. Now, the 50-week moving average is starting to slope higher, suggesting that this turnaround is real. There’s a good chance the stock will hit $100 by the end of the year. If the stock breaks below $69, consider selling. — Doug Busch