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State-owned Air China, China Eastern and China Southern reported resilient revenue growth

China’s three largest state-owned airlines posted deeper losses in the first half, dragged by weak domestic pricing and high fuel costs spurred by the Middle East conflict.

Air China, China Southern Airlines 1055 -5.95%decrease; red down pointing triangle and China Eastern Airlines 670 -6.36%decrease; red down pointing triangle recently posted combined first-half net losses of about 8.17 billion yuan, equivalent to $1.21 billion, after warning in July that the total figure could be close to 9 billion yuan.

The losses were a contrast to the state-owned airlines’ first-quarter profits, which were boosted by strong demand, particularly on international routes.

Shares of China Southern fell more than 5% in Hong Kong trading Monday, while those of Air China 753 -5.16%decrease; red down pointing triangle and China Eastern shed more than 4% each.

The Chinese airlines’ latest results underscored a troubled industry, as the outbreak of the Iran war in late February disrupted air travel and heightened macroeconomic uncertainty, driving fuel prices sharply higher.

Aircraft fuel costs for the three carriers rose between 35% and 38% in the first half compared with a year earlier.

Flag carrier Air China reported a net loss of 2.29 billion ​yuan, widening from a loss of 1.80 billion yuan a year earlier.

China Eastern posted a loss of 2.18 billion yuan, versus a ⁠1.43 billion yuan loss a year earlier, while China Southern reported a loss of 3.70 billion yuan, compared with a loss of 1.53 billion yuan a ​year earlier.

China Eastern described the aviation industry’s profitability environment as “severely undermined” by the disruption of international routes and persistently elevated aviation fuel prices.

Still, China Eastern’s results were stronger than its peers’, with the highest operating margin thanks to lower domestic exposure, stronger international load factors and relatively better cost controls despite challenges from a sharp decline in flight capacity between China and Japan amid geopolitical tensions, DBS Group Research said in a note.

China’s civil aviation industry reported a 1.0% increase in passenger traffic volume for the first half to 380 million, according to the Civil Aviation Administration of China.

Despite the losses, all three carriers posted resilient revenue growth for the period, with Air China’s rising 10.5%, China Eastern’s gaining 11% and China Southern’s increasing 9.7%, driven by ​international traffic demand.

However, weak domestic pricing in a cost-sensitive market remains a key concern, as modest passenger-yield increases suggest limited scope for carriers to raise fares further without hurting demand, DBS added.

Competition from China’s high-speed rail has weighed on the domestic aviation industry in recent years due to cheaper fares.

Meanwhile, all three airlines are shifting more capacity toward international routes, which will potentially limit further increases in international yields as supply grows in the market, DBS said.

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Asset management’s M&A booms

Two new deals from Vanguard and Victory Capital last week underscored the pace of consolidation reshaping the global asset management industry, as investment groups rush to expand, writes Harriet Clarfelt.

Index-tracking fund titan Vanguard, which has $12tn in assets under management, revealed it would acquire AI-wealth platform Altruist for an undisclosed sum, pointing to the benefits of technology in helping advisers serve more clients.

Separately, Victory Capital, the Texas-based investment house that lost out in the race to buy Janus Henderson earlier this year, said on Wednesday that it would scoop up asset manager First Eagle for $7bn.

Those transactions come as a wave of consolidation ripples across the global asset management industry, with fund firms seeking scale and breadth across geographies and asset classes. Global asset management deal volumes have already reached $53.8bn year to date, the highest figure on record since at least 1995, according to data from Dealogic.

In Vanguard’s announcement on Wednesday, chief executive Salim Ramji said that “far more people could benefit from access to financial advice than the industry can serve today,” and “technology can help close that gap by enabling advisers to serve more people and serve them better, while preserving the human judgment and relationships at the centre of good financial advice”.

Victory, meanwhile, said its acquisition of New York-based First Eagle — with $222bn of assets under management — would create a $571bn fund firm, “positioning Victory Capital as one of the largest publicly traded traditional asset managers in the US”.

Nelson Peltz’s Trian Fund Management, together with investors led by venture firm General Catalyst, ultimately won the bidding war for Janus Henderson this year, with an $8bn all-cash offer, after Victory unexpectedly swooped in earlier with a rival proposal.

Victory’s latest deal combines $4.4bn in cash and $2bn in newly issued shares, with Victory also taking on $575mn of First Eagle bonds expiring in 2032. That is well above the roughly $4bn that First Eagle’s private equity owners Genstar had paid. That deal had only closed about a year ago.

When it dropped out of the bidding war for Janus Henderson in late March, Victory said its “acquisition strategy has not changed”.

Woodford collapse still confounds investors

A decade ago, before any problems set in, Neil Woodford had near-deity status. The then much-feted fund manager only worked miracles, with investors clamouring to entrust their capital to a man once referred to as the UK’s answer to Warren Buffett.

Today, many of those same investors still seek answers as to how their money disappeared so quickly following the extraordinary collapse of Woodford’s flagship fund in 2019, writes Chris Newlands. 

“He is an arrogant, egotistical man who has never properly taken responsibility for his misbehaviour,” says Ian Duffield, who lost more than £100,000 after the closure of the Woodford Equity Income Fund, which once held a staggering £10bn of assets.

Blame has been apportioned, however. A year ago this month the financial regulator fined Woodford and his former investment company, Woodford Investment Management, a combined £46mn, concluding that he held a “defective and narrow understanding of his responsibilities”.

Many reasons have been cited for the fund’s failure, from a succession of badly performing stock choices, most significantly in online estate agency Purplebricks and construction company Kier, to the withdrawal of a £250mn investment mandate from Kent county council.

But perhaps the trigger for the downfall, as flagged by Duffield, was Woodford’s over-reliance on large, illiquid assets: investments that could not be sold when investors started demanding their money back.

Woodford, meanwhile, got rich. According to figures filed with Companies House, Woodford and his business partner Craig Newman took £111.5mn out of Woodford Investment Management as dividends in the five years to March 2019.

Gina Miller, a campaigner and investment manager, says: “Woodford was fined £5.9mn personally by the FCA and yet he and his business partner paid themselves £20mn in dividends in the 12 months to March 2019 alone, while the fund was heading for the rocks. The fine was far too lenient.” 

Woodford declined to comment for this article.

Jane Street’s growing pains

Jane Street, the Wall Street quant trader, has had some fantastically successful years, generating billions of dollars of trading revenue. But last year set a new high as revenue nearly doubled to $40bn from 2024, itself a two-bagger on 2023. This year the situation looks a tad different.

Jane Street had invested heavily in Situational Awareness; a former employee at Jane Street works at the AI-focused fund; and it was exposed to many of the same AI-linked stocks that Leopold Aschenbrenner, the founder of Situational, had bought, including Sandisk, Nebius and Bloom Energy, write Jill R Shah and Joshua Franklin. 

But the bets soured, leading Jane Street to lose money over a month for the first time in a decade. The stake in Aschenbrenner’s fund and positions in AI stocks were the main factors behind a massive $15bn loss in trading revenues, after a bruising sell-off in the sector during July. 

The loss was a stunning reversal for a firm whose returns had become the envy of Wall Street. It also made clear just how far the secretive company has evolved from its roots as a nimble market maker and arbitrage trader, profiting from tiny differentials in asset prices over fractions of a second.

Today, it is one of the largest financial institutions in the US and it takes massive bets over longer horizons, increasing the risk to its balance sheet, lenders and regulators, who keep a close eye on outfits the size of Jane Street for the market dislocations they could cause.

The FT spoke to more than a dozen current and former employees, as well as analysts and other Wall Street firms familiar with Jane Street’s evolution. Jane Street itself declined to comment.

“When you start seeing the kind of revenue these guys are putting up, the only way that’s possible is when your holding period extends as well as the size,” says Larry Tabb, head of market structure research at Bloomberg Intelligence. “The problem with that is your clarity on the future declines.”

Its tilt into large and lengthy wagers and its headlong embrace of the AI trade, including the Aschenbrenner investment, comes as the firm has achieved fearsome scale, according to Paul Rowady, director of research for Alphacution.

“You’re trading slower. You have bigger positions, they absorb more capital,” he adds. “It’s a different animal.”

SB Energy’s agreement deepens its financial ties with the artificial-intelligence company in an effort to build out projects

SB Energy offered OpenAI a major perk to land it as a data-center tenant ahead of the SoftBank 9434 0.59%increase; green up pointing triangle-backed company’s initial public offering.

OpenAI was issued warrants worth an estimated $5.5 billion in SB Energy—a company it previously invested in, according to draft IPO documents reviewed by The Wall Street Journal.

SB Energy is expected to make its IPO filing public as soon as this week. The company, which is majority-owned by Masayoshi Son’s SoftBank, is working with bankers on an IPO as soon as next month, aiming to raise between $5 billion and $7 billion, the Journal has reported. The terms aren’t yet final and could change.

The draft IPO documents provide the first detailed look at the financial ties between SB Energy and the companies supporting its ambitious expansion into AI infrastructure, namely parent company SoftBank and OpenAI. They also illustrate the interconnectedness of major AI players that has come to define the boom.

SB Energy’s base of data center customers currently consists of firms that are also its investors.

SoftBank and OpenAI are the planned tenants in three SB Energy data centers, the documents show. A fourth, 900-megawatt site in Scurry County, Texas, doesn’t have a customer yet. (Parent company SoftBank also serves as one of OpenAI’s major investors.)

SB Energy is hoping to convince investors that it can build data centers—and secure the enormous amount of power they need—faster than traditional developers. For now, however, it doesn’t have any data centers in operation and has 800 megawatts of computing capacity under construction, according to the documents.

The company has contracts with customers for nearly nine gigawatts of computing capacity, which it says is among the largest power pipelines of any U.S. data-center developer, according to the documents. The vast majority of that capacity is expected to come from its southern Ohio campus, which hasn’t been built yet. That campus would rely on a planned nearby natural gas-fired power plant.

SB Energy doesn’t generate revenue from its data center segment but is planning to report that its contracted backlog in that unit is more than $400 billion.

The firm’s revenue primarily comes from its renewable power unit, which focuses on developing solar and battery systems. It generated around $140 million in revenue during the first half of 2026, up 66% from the same period a year earlier, the documents show.

Its net loss increased to $3.2 billion from around $250 million in the first half of 2025, largely driven by changes in the estimated value of its warrant liabilities, the documents show. OpenAI’s warrants were valued at $3.6 billion when they were first awarded in January, but increased to $5.5 billion at the end of June, according to the documents.

OpenAI invested $500 million in SB Energy earlier this year. It is expected to own a single-digit percentage of SB Energy shares following the IPO, the documents said. After the IPO, tranches of warrants in SB Energy would vest based on the company reaching certain market-value milestones.

SB Energy, in turn, has committed to purchase at least $50 million of OpenAI software and services through 2028, including ChatGPT Enterprise, according to the documents.

SB Energy warned in the filing that it is substantially dependent on OpenAI and could be materially harmed if the AI company’s financial condition deteriorates.

Earlier this month, OpenAI signed 17 separate leases covering about eight gigawatts of computing capacity at SB Energy’s largest project in southern Ohio, which is supported by 10 gigawatts of power.

SB Energy also warned investors in its draft filing that its ability to finance the Ohio data center project depends significantly on Nvidia’s agreement to provide a residual value guarantee.

Nvidia also has an equity stake in SB Energy. The draft filing shows the chip maker committed $3 billion to SB Energy through two private transactions tied to SB Energy’s IPO, including one that allows the chip maker to acquire shares at a 10% discount to the public offering price.

Scramble for gas assets pushes dealmaking to decade high

Spending on US projects has soared as national oil companies and traders add to the rush for gas assets

Soaring demand for natural gas among energy majors and investors has pushed dealmaking to its highest level in more than a decade, with buyers competing over the limited number of global assets available.

More than $32bn was spent on buying gas production projects in the first six months of the year, the highest level in over a decade, according to industry consultants Wood Mackenzie.

The frenzy combined with the conflict in the Middle East has also pushed up the valuations of gas assets in other regions such as North and South America, as investors push majors to add upstream output and the Gulf’s national oil companies try to invest outside their home markets.

This year gas-focused upstream deals have been struck at an average premium of 21 per cent to Wood Mackenzie’s own valuations, the highest since 2013.

The biggest deal by far in the first half of 2026 was Shell’s acquisition of Canadian shale producer ARC Resources for $16.4bn, its largest since buying BG a decade ago.

The appeal of gas assets has been reinforced by the structural outlook for global energy.

The International Energy Agency expects gas demand growth to outstrip oil if current policies continue. In a scenario in which governments commit to tougher climate policies, the IEA said gas demand would stop rising in 2035 but remain above current levels for decades.

The US-Iran war had also helped boost the case for gas investments, said Greig Aitken, director of corporate and M&A research at Wood Mackenzie. More buyers had entered the sector “which has intensified competition and inevitably leads to more robust pricing assumptions, betting that the demand outlook keeps supporting it”, he said.

The Middle East’s biggest oil producers had already started looking for gas assets outside the region in an effort to diversify their portfolios before the conflict began.

XRG, the overseas investment arm of Abu Dhabi’s Adnoc, has gas assets in Texas, Mozambique and Turkmenistan and signed deals to add projects in Azerbaijan, Argentina and Venezuela. XRG intends to invest tens of billions of dollars building its US gas business.

The US is also central to Saudi Aramco’s international gas growth plans. It agreed to invest in Texas’s Port Arthur LNG project and gained a foothold in several international LNG projects through its stake in MidOcean Energy, an LNG company created by EIG.

Japanese companies have been particularly heavy investors in US shale because they need LNG to meet their energy requirements and want to exert greater control over the resources they rely on.

Together, Japanese groups hold 36 per cent of production at the Haynesville shale basin, which stretches from east Texas to north-west Louisiana, according to Wood Mackenzie.

Commodity trader Gunvor has made a series of bets on US gas, most recently entering talks to buy more than $1bn of gas-producing assets in the Haynesville basin. A spokesperson for Gunvor declined to comment.

In terms of overall spending, the US gas sector is booming. About $30bn was spent developing unconventional gas resources in North America in the first half of the year, triple the three-year average, said Wood Mackenzie.

The US-Iran war has increased demand for North American liquefied natural gas as rival producer Qatar has endured six months of threats to ships carrying its LNG through the Strait of Hormuz and a cut to capacity after Iranian missile attacks on export infrastructure.

Coupled with rising demand from importers in Europe and Asia ahead of the peak winter demand season, this has raised the price of LNG cargoes from the US to its highest level in nearly four years.

LNG from the US Gulf Coast was valued at $21.98 per million British thermal units on Thursday, according to Spark Commodities. This was 4.4 per cent higher than the previous week and its highest valuation since December 2022.

LNG prices are tracking European hub prices closely. The European benchmark surged to over €70 per megawatt hour on Friday for only the second time in the US-Iran conflict.

But while war in the Middle East is raising demand for gas supplies elsewhere, over the long term it may dent consumption if prices stay high for too long, as this may deter price-sensitive buyers. Appetite for producing assets could fall as a result.

“We’re starting to see certain countries — in Asia in particular — where governments are being a bit more conservative with their ambitions on expanding their reliance on gas and maybe pivoting more towards renewables or even slowing down the phaseout of coal-fired plants,” said Livia Gallarati, global head of gas at Energy Aspects.