- Prosus (1TY TH) +2.9%
- Equinor (DNQ TH) +2%
- Maersk (DP4B TH) +1.9%
- Glencore (8GC TH) +1.9%
- Tesla Talks on Taking Stake in Glencore Ended Without Deal: FT
- Norsk Hydro (NOH1 TH) +1.7%
- Salmar (JEP TH) +1.5%
- BASF (BAS TH) +1.4%
- BASF Upgraded to Buy at Deutsche Bank as Shares Seen Too Cheap
- AstraZeneca (ZEG TH) -0.6%
- EDF (E2F TH) -0.6%
- BAT (BMT TH) -0.7%
- AB InBev (1NBA TH) -0.8%
- Safran (SEJ1 TH) -0.9%
- Safran Pauses New Plant Project Due to Energy Costs: Les Echos
- Novo Nordisk (NOVC TH) -1.3%
- Novo Nordisk Non-Deal Roadshow Set By DNB Markets for Nov. 7
- Pandora (3P7 TH) -1.5%
- Pandora’s European Distribution Center in Germany Hit by Fire
- Swedish Match (SWMC TH) -1.6%
- Fresenius SE (FRE TH) -1.9%
- Fresenius Cuts Profit Forecast as US Dialysis Unit Struggles
- Fresenius Medical (FME TH) -2.1%
- Fresenius Medical Revises Guidance After 3Q Earnings Report (1)
DAX:
- BASF (BAS TH) +1.4%
- BASF Upgraded to Buy at Deutsche Bank as Shares Seen Too Cheap
- Puma (PUM TH) +1.1%
- VW (VOW3 TH) +1.1%
- Siemens Energy (ENR TH) +1%
- Covestro (1COV TH) +1%
- Fresenius SE (FRE TH) -1.2%
- Fresenius Cuts Profit Forecast as US Dialysis Unit Struggles
- Fresenius Medical (FME TH) -1.5%
- Fresenius Medical Revises Guidance After 3Q Earnings Report (1)
MDAX:
- TAG Immobilien (TEG TH) +1.3%
- K+S (SDF TH) +1.2%
- Evonik (EVK TH) +1%
- Thyssenkrupp (TKA TH) +1%
- Varta (VAR1 TH) +1%
SDAX:
- Shop Apotheke (SAE TH) +5.9%
- Shop Apotheke 9M Revenue EU877M Vs. EU772.3M Y/y
- About You (YOU TH) +2.2%
- Instone Real Estate (INS TH) +2%
- Deutz (DEZ TH) +1.9%
- Ceconomy (CEC TH) +1.8%
- VERBIO Vereinigte (VBK TH) -0.8%
- Hensoldt (HAG TH) -1%
- DIC Asset (DIC TH) -1.1%
- Uniper (UN01 TH) -1.9%
- SGL (SGL TH) -2%
>>> Up
* ASR Nederland Raised to Overweight at Morgan Stanley
* BASF Raised to Buy at Deutsche Bank; PT 60 euros
* Centrica Raised to Buy at Jefferies; PT 90 pence
* Centrica Raised to Buy at Jefferies; PT 90 pence
* Danske Bank Raised to Buy at Handelsbanken
* DiaSorin SpA Raised to Neutral at Exane; PT 135 euros
* Drax Raised to Buy at Jefferies; PT 600 pence
* Gilead Raised to Equal-Weight at Barclays; PT $76
* ISS Raised to Neutral at Oddo BHF; PT 145 kroner
* Metso Outotec Raised to Hold at Handelsbanken
* Reckitt Raised to Hold at Jefferies; PT 5,620 pence
* Sparebanken Vest Raised to Buy at ABG; PT 98 kroner
* TrueCar Raised to Overweight at JPMorgan
>>> Down
>>> Down
* Ageas Cut to Equal-Weight at Morgan Stanley
* AMD Cut to Market Perform at BMO; PT $110
* Amgen Cut to Underweight at Barclays; PT $234
* Arjo Cut to Hold at Nordea
* Berkeley Cut to Neutral at Citi; PT 3,654 pence
* DIC Asset Cut to Reduce at Baader Helvea; PT 7.50 euros
* DIC Asset Cut to Reduce at Baader Helvea; PT 7.50 euros
* EMS-Chemie Cut to Hold at Berenberg
>>> Initiation
* HgCapital Cut to Hold at Investec
* Loomis Cut to Hold at Carnegie; PT 349 kronor(Earlier)
* LyondellBasell Cut to Equal-Weight at Barclays; PT $82
* Medcap Cut to Hold at ABG; PT 220 kronor
* Safran Cut to Neutral at Citi; PT 127 euros
* SCA Cut to Hold at Handelsbanken
* Terveystalo Cut to Hold at SEB Equities; PT 7 euros
* TietoEVRY Cut to Accumulate at Inderes; PT 28 euros
>>> Initiation
* Gjensidige Rated New Underperform at Jefferies; PT 158 kroner
* Grit Real Estate Income Rated New Buy at EFG-Hermes
* Grit Real Estate Income Rated New Buy at EFG-Hermes
* Storebrand Rated New Buy at Jefferies; PT 89 kroner
>>> Call
>>> Call
* ASR Raised, Ageas Cut Within Benelux Insurance at Morgan Stanley
* Morgan Stanley’s Wilson Sees Stock Rally Persisting as Fed Looms
* Citi Sees Some Opportunities in UK Homebuilders, Cuts Berkeley
* Centrica, Drax Upgraded at Jefferies on Cash Flow Generation
* Centrica, Drax Upgraded at Jefferies on Cash Flow Generation
* EMS-Chemie Downgraded at Berenberg as Stock ‘Too Expensive’
* Reckitt Upgraded to Hold at Jefferies Following Post-3Q Selloff
* Safran’s Recovery May Slow Down in 2023, Citi Cuts to Neutral
* Storebrand Preferred to Gjensidige in Norway Insurers: Jefferies
Asian stocks tracked Friday’s gains in the US amid optimism over corporate earnings in the region. The dollar climbed as traders positioned for another large interest rate hike by the Federal Reserve this week. An index of Asian equities climbed for the fourth time in five days on Monday. Apple Inc.’s earnings report on Friday had buoyed technology shares, helping the S&P 500 and the Nasdaq 100 notch their longest weekly rising streak since August. Tech equities in Hong Kong jumped, with gains also seen from Japan to Australia. US futures pared losses. The yen fell against most of its major peers, with economists expecting the Fed to raise rates by another 75-basis-points, widening the policy divergence with the Bank of Japan. A core gauge of US inflation accelerated in September, bolstering the case for more tightening. Meanwhile, wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments. Wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments. Wheat soared after Russia exited a key agreement to allow Ukrainian crop shipments. Brazilian assets are set to weaken on Monday after Luiz Inacio Lula da Silva won the presidential election. The extent of the market drop will depend on whether President Jair Bolsonaro will concede as a contested election would likely trigger larger losses. Oil edged lower as weak economic data from China fanned concerns about energy demand, but it was still set for the first monthly advance since May on OPEC+’s planned supply cuts. Gold headed for its seventh straight month of declines, the longest losing streak since at least the late 1960s.
Nikkei +1.65% Hang Seng +0.84% CSI -0.47% Shanghai -0.29% Shenzen +0.64%
Eur$ 0.9948 CNH 7.2917 CNY 7.2713 JPY 147.87 GBP 1.1594 CHF 0.9974 RUB 61.5239 TRY 18.6141 WTI$ 87.32 -0.66% Gold 1,642.10 -0.17% BTC 20,548.5 -0.67% ETH 1,590.45 -0.30%
S&P -0.24% Nasdaq -0.36% EuroStoxx +0.39% FTSE +0.16% Dax +0.32% SMI +0.32%
Macro :
- Saudi Net Reserves Surge Near $449 Billion, Highest Since 2020
- Twitter Frees Up Billions for Arbitrage Traders Seeking Next Win
- Twitter Frees Up Billions for Arbitrage Traders Seeking Next Win
- Goldman Sachs Now Sees Fed Rates Peaking at 5% in March
- Italy’s Meloni to Mark Shift From Draghi on Covid, Justice
- Iran’s Oil Minister Heads to Russia on Monday for Deal Talks
Keep an eye on :
Keep an eye on :
- AIR FP : Airbus Sees EVTOLs as Opportunity for LatAm ‘Last Mile’ Travel
- BARC LN : Barclays CEO Says You Won’t See Him Spinning Out Investment Bank
- BOSN SW : Bossard Board Nominates Ina Toegel for Election
- CSGN SW : Credit Suisse Is Said to Tap 20 Banks for Capital Increase
- CSGN SW : Credit Suisse’s Saudi Backer Rules Out Raising Stake for Now
- EMR US : Blackstone, Emerson Electric Strike $14 Billion Buyout Deal -- WSJ
- ENI IM : Qatar Energy Is in Lebanon Gas Partnership Talks With Eni, Total
- ENI IM : Europe Faces ‘Big Hit’ From Loss of Russia Oil, Says Italy’s Eni
- ENOG LN : Energean Started Supplying Karish Gas to Customers
- FINGB SS : Fingerprint Cards Sets Price at SEK3.02/Shr for Rights Issue
- FRE GY : Fresenius SE 3Q Adjusted Ebit Meets Estimates
- FME GY : Fresenius Medical Revises Guidance After 3Q Earnings Report
- GLEN LN : Tesla Talks on Taking Stake in Glencore Ended Without Deal: FT
- IDS LN : UK Union Delays Postal Worker Strike After Royal Mail Challenge
- ITX GY : Fashion Empires Strike Back as Costs, Investment Swallow E-Tail
- COX FP : Nicox Meets Primary Objective in Phase 3 NCX470 Glaucoma Trial
- SAF FP : Safran Pauses New Plant Project Due to Energy Costs: Les Echos
- SAE GY : Shop Apotheke 9M Revenue EU877M Vs. EU772.3M Y/y
- SANN SW : Santhera Seeks Extra Funds, Amends Highbridge Facility
- SNBN SW : SNB 9M Loss CHF142.4B
- STLR IM : Stellantis’s China Joint Venture With GAC to File for Bankruptcy
- STLA IM : Stellantis Says GAC-FCA JV to File for Bankruptcy
- TALK LN : Virgin Media O2, TalkTalk Abandon Takeover Talks, Telegraph Says
- TNXT IM : Intesa Sanpaolo to Invest EU55M in Tinexta’s Warrant Hub
- TTE FP : Qatar in Talks With TotalEnergies for Stake in Lebanon Gas Block
- TWTR US : Binance Is Creating a Team That Aims to Help Twitter With Crypto
- TWTR US : Binance Is Creating a Team That Aims to Help Twitter With Crypto
- TWTR US : Musk Tapped Perella to Guide Twitter Through Complex Financing
- WIZZ LN : Wizz Air's New Planes Drive Sustainability Strategy, ESG Outlook
- ZAL GY : Fashion Empires Strike Back as Costs, Investment Swallow E-Tail
The Truth About ‘Vegan Leather’
Leather alternatives have been boosted as eco-innovation and dismissed as mere plastic, but the truth is more complicated than that and demands clearer marketing to avoid misleading consumers.
Pangaia, Stella McCartney and Nanushka are all using different kinds of material as an alternative to leather. (Pangaia/Stella McCartney/Nanushka via Instagram)
KEY INSIGHTS
- Brands are using buzzy but vague marketing terms like “vegan leather” and “plant-based” to describe materials with vastly different properties and compositions.
- Most leather alternatives are made of plastic, but more options are becoming available that reduce and even eliminate fossil-based content.
- These materials are facing mounting scrutiny as fashion faces a greenwashing reckoning, pushing brands to be more transparent about their benefits and shortcomings.
At first glance, there is little to distinguish “materials science” start-up Pangaia’s minimalist white sneakers from the crowd of others on the market.
But in its marketing and in small black print emblazoned across its Grape Leather Sneakers the brand claims key differences: Instead of using leather or fossil fuel-based synthetics, the shoes are made from grape and plant waste, according to a recent Instagram post. Text printed on the shoe bills them as “circular in production and design.”
The sneakers are made from Vegea, an emerging leather alternative that has been used by brands including Ganni and H&M. It’s just under 30 percent plastic, according to the small print on the product’s material composition. It can only be recycled with difficulty, according to information published elsewhere on Pangaia’s website.
The material is one of dozens of fabric innovations beginning to hit the market with flamboyant billing as game-changing eco-conscious alternatives to leather, which has come under fire for its links to animal cruelty and environmentally harmful industrial agriculture.
Exactly how far they deliver on these promises can be difficult to unravel, with brands often employing buzzy but vague marketing terms like “vegan” or “plant-based” to describe materials with vastly different compositions.
At Pangaia, efforts to provide information that’s clear and digestible, but also engaging and fun involve the company’s research and development, impact and communications teams, said chief innovation officer Amanda Parkes. The aim is to strike a balance, with snappy communications layered on top of more detailed information for customers that are interested.
For instance, the brand devotes a page of its website to explaining Vegea’s composition; the fossil content is water-based polyurethane, a less chemically harsh alternative to other options on the market. To account for the recycling challenges, the material was chosen for a “low-wash and long-lasting” product, the page says.
“We know grape leather isn’t perfect and we try to be very clear on the website,” said Parkes. “We are trying to be as correct as possible, but in fashion everyone’s also asking for the one liner.”
Carefully crafting these messages is increasingly important as the materials space becomes more crowded and shoppers look for better information to understand the environmental impact of their purchases. Regulators are also stepping up scrutiny of marketing claims that could mislead consumers and brands need to find ways to more clearly differentiate their products at a time when leather alternatives run the gamut from 100 percent plastic to fully bio-based.
The landscape has become so confusing that nonprofit Textile Exchange has recommended brands stop describing any materials that aren’t derived from animal skins as “leather” to avoid conflating fossil-based synthetics and newer plant-based alternatives.
“It’s a brand new space. It’s very rogue right now, everyones out doing their own thing,” said Sydney Gladman, chief scientific officer at next-generation materials consultancy Material Innovation Initiative (MII). “It’s a huge challenge to figure out how to [communicate] effectively… brands don’t really know how to sell [these new materials] while being transparent and truthful.”
What’s ‘Vegan Leather’ Really Made Of?
The majority of leather alternatives currently on the market are simply variations on conventional plastic. That includes Gen-Z’s first “It” Bag, Telfar’s popular “Bushwick Birkin,” made from a blend of polyester and polyurethane to make it more affordable. It’s also true of many products made by high-end brands like Stella McCartney, who helped rebrand fossil-based synthetics as luxurious vegan materials when she launched her label with a commitment to use no leather in 2001. Plastic still features in McCartney’s faux leather collections, but the brand is seeking out other options.
The most readily available alternatives to fossil-based synthetics are “plant-based” materials that typically blend agricultural waste, food crops or other plants with polyurethane for strength and performance. There’s limited regulation of the space and the term “plant-based” can cover materials like Vegea, which is said to have upwards of 70 percent bio-content, as well as materials with next to none.
A lot of companies “effectively create pleather by another name,” said Allbirds CEO Tim Brown. The San Francisco-based shoe company spent years looking for a plastic-free leather alternative for its sneakers. Last year it invested $2 million in Natural Fiber Welding, an Illinois-based material science company that says its leather alternative Mirum contains only natural ingredients. It’s one of vanishingly few fossil-free options currently available.
Allbirds launched its first shoes using Mirum in September. Ralph Lauren has also invested in the company and other brand partners include Pangaia and Stella McCartney.
Mushroom-based materials, perhaps the most hotly hyped family of leather alternatives, are only just making the leap from research lab to retail. This summer, Stella McCartney launched a capsule of 100 half-moon-shaped mini satchels made of Mylo, one of a number of brands to test drive the material created by California-based material innovation company Bolt Threads. Balenciaga will start selling a dramatic full length coat made of Ephea, an alternative created by Italian biotech company Sqim, at the end of the month.
But while materials made from mycelium, the branching root structure of fungi, have attracted hundreds of millions of dollars in investment and high-profile brand partnerships, the number of products available are still very limited.
Even within the category there are variations between the materials and their properties. For instance, Mylo is a mix of mycelium and plant-based fibre with a water-based polyurethane finish. Ephea is pure mycelium stabilised using green chemistry.
Even more futuristic materials grown or fermented in labs have yet to make it to market in a meaningful way. And adding to the complexity, leather itself is often coated in plastic.
When you “talk to marketing teams they are struggling to grasp how to talk about it to customers,” said Suzanne Lee, CEO and founder of consultancy Biofabricate. “It’s very unsophisticated… there needs to be a little bit more of a nuance.”
Beyond Buzzwords
For brands and innovators, moving beyond a reliance on simplistic buzzwords like “vegan leather” and “plant-based” is becoming increasingly pressing and increasingly fraught.
While the industry is facing a wide-ranging reckoning on greenwashing, there is no standardised way to measure sustainability, or even a clear definition of what the term really means. Leather is a particularly spicy issue: leather goods are a massive financial engine for the industry with a hefty environmental impact, but fossil-based ingredients and chemical processes needed to make most possible replacements competitive on price, performance and durability come with their own environmental footprint. Data to untangle the complex trade offs is sparse and the appropriate metrics hotly debated.
“Just that idea of ‘better,’ it’s woolly,” said Biofabricate’s Lee. “What we don’t need is another generation of materials that in another 10 years we discover are no better… or have unforeseen impacts, either in the way they degrade or in use.”
Biomaterials experts are pushing for more transparency and clearer definitions to address criticisms that risk hobbling and discrediting the emerging sector, including minimum requirements for bio-content and standardised frameworks to measure and report environmental impact.
In the meantime, fuzzy marketing terms have made it easy for critics to dismiss the whole universe of leather alternatives as simply plastic. Some brands will no longer even look at a new innovation unless it can claim it’s fossil free, experts say.
“I’ve never seen an industry so zero to 100,” said MII’s Gladman. “A lot of it comes down to, ‘we have seen this as an emotional hotspot. Plastic is a no go. We can’t market it.’ But innovation will need a little time to catch up.”
A Plastic-Free Future?
When former Jimmy Choo design director Alfredo Piferi launched his luxury footwear label in 2020 with a view to create vegan and climate-friendly party shoes, he quickly discovered he’d set himself a monumental challenge. Simply finding materials that met his quality standards was hard. Supply was limited and expensive.
“I want to do everything in mushroom leather, but then I’d be looking at shoes in black and white,” said Piferi, gesturing to a wall punctuated by pale pink pumps and scarlet boots. “It’s a challenge of working with what exists.”
Faced with a similar challenge, Hungarian brand Nanushka created its own option, Okobor, a roughly 50/50 blend of recycled polyester and polyurethane.
“We have tried and are constantly trying all those materials and monitoring the market for the newest innovations,” said co-founder and CEO Peter Baldaszti, adding that so far, nothing the team has tried could compete with the softness of Okobor. “We are willing to go above and beyond, but sustainability credentials shouldn’t be prioritised above the desirability of the product,” Baldaszti said.
Even as new materials begin to scale, brands and consumers still face complex tradeoffs between performance, price, availability and impact when considering what material to buy – ones brands should make clearer in the way they position and market products.
“It’s important to lean on the facts of what a material is, rather than making big bold claims about the fact it’s here to save the world,” said Lauren Bartley, head of responsibility at Ganni.
The buzzy Danish brand is working to eliminate leather from its collections by 2023, part of a bigger goal to halve its greenhouse gas emissions by 2027 (leather was the single biggest contributor to the brand’s overall carbon footprint in 2021, according to Ganni’s analysis). So far, it’s launched products using Vegea and Mylo and is experimenting with a number of others.
“There’s really no perfect solution for us,” said Bartley.
Twitter is planning to start charging $20 per month for verification
And if the employees building it don’t meet their deadline, they’ll be fired by Elon Musk.
Now that he owns Twitter, Elon Musk has given employees their first ultimatum: Meet his deadline to introduce paid verification on Twitter or pack up and leave.
The directive is to change Twitter Blue, the company’s optional, $4.99 a month subscription that unlocks additional features, into a more expensive subscription that also verifies users, according to people familiar with the matter and internal correspondence seen by The Verge. Twitter is currently planning to charge $19.99 for the new Twitter Blue subscription. Under the current plan, verified users would have 90 days to subscribe or lose their blue checkmark. Employees working on the project were told on Sunday that they need to meet a deadline of November 7th to launch the feature or they will be fired.
Musk has been clear in the months leading up to his acquisition that he wanted to revamp how Twitter verifies accounts and handles bots. On Sunday, he tweeted: “The whole verification process is being revamped right now.”
Platformer’s Casey Newton first reported that Twitter was considering charging for verification. A spokesperson for Twitter didn’t respond to a request for comment by press time.
Even though he is barely three days into being “Chief Twit,” Musk has moved quickly to make changes at Twitter, first by changing its homepage for logged out users. With the help of Tesla engineers he has brought into Twitter as advisors, he’s also planning mass layoffs aimed at middle managers and engineers who haven’t recently contributed to the code base. Those cuts are expected to begin this week with managers already creating lists of employees to cut. Employees tasked with executing projects of Musk’s since he took control Thursday evening have been working late into the night and over the weekend.
The Twitter Blue subscription launched widely almost a year ago as a way to view ad-free articles from some publishers and make other tweaks to the app, such as a different color home screen icon. In the few quarters that Twitter reported earnings as a public company after that debut, advertising remained the vast majority of its revenue. Musk is keen on growing subscriptions to become half of the company’s overall revenue.
Newly Discovered Skyscraper-Sized Asteroid To Pass Earth On Halloween
A newly discovered asteroid, known as 2022 RM4, is expected to pass Earth at 52,500 mph, or about 68 times the speed of sound, late Halloween night or early Tuesday, reported USA Today.
According to NASA's Center for Near Earth Object Studies, 2022 RM4 has an estimated diameter of 1,083-2,428 feet, or about the size of Dubai's Burj Khalifa, the world's tallest skyscraper.
The asteroid will pass surprisingly close to Earth -- at about six times the Earth-Moon distance -- or about 143 million miles. NASA's Jet Propulsion Laboratory has classified it as a Near Earth Object (NEO) and a potentially hazardous asteroid (PHA).
"This is very close for an asteroid this size," tweeted amateur astronomer Tony Dunn.
USA Today said astronomers at the Panoramic Survey Telescope and Rapid Response System in Haleakala, Hawaii, discovered 2022 RM4 on Sept. 12.
The asteroid will be close enough to Earth that astronomers can record footage of it passing using telescopes.
NASA said Earth faces no immediate danger from 2022 RM4. But in the future, Earth could face a possible apocalyptic asteroid collision with other NEOs. To prevent this, the space agency is preparing to strengthen planetary defenses.
In late September, the space agency successfully slammed a spacecraft into a non-hazardous asteroid Dimorphos and knocked it off course. The future of safeguarding Earth from asteroids could come from NASA and other space agencies catapulting suicide spacecraft into NEOs.
Blackstone, Emerson Electric Strike $14 Billion Buyout Deal
Industrial company to sell 55% stake in climate-technologies business to investment firm
Emerson Electric Co. EMR 1.76% is selling a majority stake in its climate-technologies business to Blackstone Inc. BX 0.68% in a transformational deal for the industrial company that would value the unit at $14 billion including debt and mark the biggest private-equity buyout in months at a time when such activity has been choked off by market volatility.
The deal, expected to be announced Monday, would give Blackstone a 55% stake in the unit, which sells compressors and other HVAC products and services used in commercial and residential heating and cooling as well as cold storage, executives from both companies said. Emerson would retain a 45% stake.
Blackstone and its co-investors would contribute $4.4 billion in equity toward the deal, which would be supplemented by $5.5 billion of debt financing. Equity that Emerson is rolling over along with a $2.25 billion seller note would account for the remainder of the price tag.
In a typical market, banks would provide the debt financing, carving it up and selling it off to a number of buyers. Banks currently aren’t offering such so-called syndicated financing, however, as they grapple with a glut of debt from big buyouts struck before the stock market tumbled earlier this year.
Instead, Blackstone had to place the debt itself, selling it off to an assortment of direct lenders and others in a process that took the better part of a month, the executives said. It is a process the firm has undergone before during times of market illiquidity, most recently in the aftermath of the 2008-09 financial crisis, though never with a deal of this size.
Joseph Baratta, global head of private equity at Blackstone, said its ability to get the deal done illustrates the firm’s competitive advantage as a trusted counterparty for an array of lenders.
“I think it will take at least six months for the credit market to normalize, and we will continue to transact in this market,” he said. “We like to invest in these moments. This is when you can do interesting things.”
An investment behemoth with $951 billion in assets across real estate, private equity, credit and hedge funds, Blackstone might be unique in its ability to break the financing logjam that has kept a lid on big-deal activity in recent months. Jonathan Gray, the firm’s president, hinted this month on a conference call with analysts that it was working on creative solutions for putting together debt packages for coming transactions.
“If anyone can get a financing done somewhere, it’s us, and I think you’ll see some examples of that in the not-too-distant future,” he said.
Bloomberg reported this month that Emerson was in talks with Blackstone about a deal involving its commercial and residential business.
Blackstone said it believes the business it is buying would benefit from a shift to more energy-efficient heating and cooling technologies as businesses and consumers upgrade their systems to be more climate friendly and cost-effective.
The unit, which comprises the majority of Emerson’s commercial-and-residential solutions business, had about $5 billion in sales during fiscal 2022, which ended in September, and 18,000 employees. The majority of its sales are in the Americas.
Emerson opted to keep its professional-tools products from the division and roll them into its growing automation business.
The deal is the latest in a string of divestitures by St. Louis-based Emerson, which has been focused on streamlining its business and expanding its technology and automation offerings under Chief Executive Lal Karsanbhai.
The industrial-technology company, which has a market value of about $50 billion, recently said it would sell its food-waste-disposal business InSinkErator to Whirlpool Corp. In March, it announced an agreement to sell its Therm-O-Disc sensing- and protection-technology business to One Rock Capital Partners.
Mr. Karsanbhai said Emerson will collect roughly $18 billion in proceeds from three divestitures this year. He added that Emerson has embarked on a plan to become more of a pure-play automation business, and to create a portfolio that is more cohesive.
It began this transformation with the merger of two of its software businesses with Aspen Technology Inc. AZPN 2.02% in a roughly $11 billion deal announced a year ago. Emerson has since made a number of technology-focused acquisitions for the business.
“We are aligning to where the growth is,” Mr. Karsanbhai said. “Historically for Emerson the underlying growth was 1 to 1.5%, and now it has an underlying growth potential of 4 to 7%.”
Emerson plans on Monday to report its fourth-quarter and full-year earnings, which were originally scheduled for Nov. 2. The chief executive said he would announce four additional segments the company will focus its investments on, including via mergers and acquisitions, at its investor day on Nov. 29.
The deal is a bright spot in a relatively quiet period for M&A. Deal activity has fallen sharply in the U.S. so far this year, down more than 40%, according to Dealogic.
Centerview Partners LLC and Goldman Sachs Group Inc. GS 1.38% are advising Emerson, while Davis Polk & Wardwell is its legal counsel. Barclays BCS -1.00% PLC is lead financial adviser to Blackstone, with Guggenheim Securities and Evercore Inc. Simpson Thacher & Bartlett LLP is Blackstone’s legal counsel.
Amundi sounds the alarm on hidden leverage
Could ‘something break’ in 2023?
Things fall apart; the centre cannot hold; Mere anarchy is loosed upon the world. — WB Yeats, 1919 (and fund managers, 2022)
As the dust has settled on the wild gyrations in the gilts markets, investors are starting to think about what else can go wrong.
Vincent Mortier, chief investment officer at Amundi, Europe’s largest asset manager has warned that the tremors in the UK pensions market should be a “wake-up call” to investors and regulators about the dangers of hidden leverage in the financial system.
He reckons that the recent turmoil unleashed by the UK government’s “mini” Budget was “a reminder that shadow banking is a reality. I don’t believe that anyone before the crisis had any idea of the magnitude of this shadow banking in the pension fund industry.”
Leverage in the overall financial system, says Mortier, “is in multiple places that are difficult to track”.
Increased capital requirements imposed on banks to make them safer following the financial crisis. That made sense. The problem is, a lot of risk appears to have shifted to less regulated parts of the financial system, namely asset managers, insurance companies and pension funds.
Investors have fuelled the shift by pouring money into alternative strategies such as private credit as they searched for yield in a low interest rate environment. In 2000, non-banks held $51tn of financial assets, compared with banks’ $58tn, according to the Financial Stability Board. Its latest data showed non-banks hold $227tn in financial assets at the end of 2020, outstripping banks at $180tn.
Mortier said that the shift in leverage from banks to non-banks has made it very difficult for regulators to get a true picture of the risks. “It’s much more difficult than in 2007, when leverage was predominantly in the banks,” he said. “The issue is that we don’t know exactly where it is. When you can’t measure something it’s difficult to act upon it.”
Meanwhile across the Atlantic, some nasty currents are swirling in the $23.5tn world of American government bonds, writes my colleague Gillian Tett in New York.
A JPMorgan index of Treasury market liquidity has deteriorated to the lows seen in March 2020. A separate Bloomberg index suggests the situation could be even worse. Meanwhile the Ice-BofA Move index of implied Treasury market volatility is also hovering near March 2020 levels, while buyer demand at auctions is weakening. More striking still, these trends recently prompted Janet Yellen, US Treasury secretary, to take the rare step of admitting in public that she is “worried about a loss of adequate liquidity in the market”.
These strains are not new. But now that interest rates are rising fast in response to sky-high inflation, investors fret that big moves in bonds could set off more landmines, writes markets editor Katie Martin.
Max Kettner, chief multi-asset strategist at HSBC, sums up why it is a mounting concern that “something breaks” in 2023:
“Given the record amount of tightening of financial conditions, the risk of an accident in financial markets has greatly increased. Whether it’s the recent turmoil in the UK, the relentless weakening of the yen, deteriorating liquidity on credit and even rates markets, defaults in emerging markets, or indeed something we’re completely missing — the list has become longer in recent months.”
India’s ban on Chinese video games proves to be a double-edged sword
Heavy-handed approach drives domestic success, but executives worry foreign publishers now afraid to invest in country
It is the year 2500. The Indus Valley civilisation, which started on the Indian subcontinent more than 5,000 years earlier, is so advanced it has migrated to another universe where it has thrived for millennia, undisturbed by outsiders.
But an international criminal syndicate has set its sights on its home, sending mercenaries from around the universe to compete for its precious natural wealth — all while annihilating each other with an array of weapons that make AK-47s and grenades look like child’s play.
Such is the set up for Indus, an upcoming game from Indian studio SuperGaming. The “battle royale” title, in which online players fight to the death, is replete with motifs from Indian culture, from the Taj Mahal to the Hindu Ramayana poem. It presents “an optimistic India through the lens of sci-fi”, said Rishi Alwani, one of the writers.
Since 2020, New Delhi has banned a series of wildly popular battle royale games as part of a bruising crackdown on Chinese tech on national security grounds. Games from Tencent, Singapore’s Sea and Krafton of South Korea have all been restricted over alleged China-related security concerns.
In their absence, studios and investors are turning to a new crop of locally made shooter games like Indus to try to fill the void. But critics said that the government’s unpredictable, heavy handed approach is holding back the sector.
“The only positive I see from the games getting banned is that Indian studios have started developing battle royale,” Anurag Khurana, a veteran executive and founder of esports company Penta, said.
“The biggest negative thing is that the foreign publishers are afraid to make investments in India — they don’t know whether their game might get banned.”
Redseer Strategy Consultants estimates that 450mn Indians played at least one game last year and valued the industry at more than $2bn — though much of that comes from games involving real money, such as online rummy or fantasy sports.
Before its most popular game was banned, Krafton had invested $100mn in India. Meanwhile, SuperGaming last year raised $5.5mn in Series A funding from a handful of foreign funds. Yet executives said the uncertainty means investment in the sector continues to lag.
Gaming in India took off after 2016, when a telecom industry price war dramatically brought down mobile data prices. With computers and consoles unaffordable to most Indians, the industry is heavily geared towards smartphone games. This left Chinese companies well placed to grow, thanks to games optimised for low-cost handsets.
Deteriorating relations between New Delhi and Beijing, after a deadly clash on their Himalayan border in mid-2020, sparked a wide-ranging crackdown on Chinese tech, with hundreds of apps including TikTok and Tencent’s popular PlayerUnknown’s Battlegrounds (PUBG) banned on grounds that their harvesting of Indian user data posed a national security threat.
That was followed this February by a ban on Free Fire, which according to analytics provider data.ai was the second-most downloaded game in India, prompting an immediate 20 per cent drop in parent company Sea’s US-listed shares. In July, India ordered app stores to take down Battlegrounds Mobile India, a relaunched version of PUBG published by Krafton, which had said the game had attracted 100mn users.
While authorities did not explain why they targeted Sea or Krafton, neither of which are Chinese, both count Tencent, China’s second-most valuable company by market capitalisation, as an investor. Ranjana Adhikari, a partner at Induslaw in Mumbai, said their games appeared to be restricted on similar grounds to PUBG in 2020.
The companies have denied that their data collection represents a security concern. Krafton’s chief financial officer Bae Dong-Geun said on an earnings call in August that the company would “closely co-operate with the authorities” to bring back BGMI.
The loss of three beloved games in as many years has left many Indian gamers distraught. “Really comes as a shocker,” Naman Mathur, a 26-year-old esports star known as MortaL, tweeted after BGMI was removed from app stores. “People who HOPED, will remain hopeless.”
“Esports players really got screwed,” Penta’s CEO Khurana said. “They can’t switch from one battle royale to another battle royale overnight . . . If you ask [cricketer] Virat Kohli to play football, it won’t work.”
SuperGaming and other Indian developers hope that their new generation of “made in India” games will help fill the void, and that the use of Indian themes will resonate more with players.
“We’re trying to make bigger, more ambitious games for an audience that cares and matters,” Alwani said. “Where’s the Indian equivalent of a Zynga, Ubisoft or [Electronics Arts]? They don’t exist. The first step is to let people know that games are made here.”
Vishal Gondal, whose nCore Games is developing a Battle Royale shooter FAU-G (a play on the Hindi word for soldier), acknowledged that turning India into a world-class gaming hub will take time. “The real power would only be seen in the next few years,” he said.
India is now preparing new gaming regulations that Adhikari says should bring more clarity to the industry.
But in the meantime, many gamers are still hoping that BGMI and the others will be relaunched after addressing security concerns.
“The Indian gamer isn’t going to stop playing games because these games were banned,” said Ashwin Suresh, founder of Krafton-backed live game streaming platform Loco, adding: “I think the games will be back.”