Friday PM reads
- China Vanke Co., the last big survivor of the country’s yearslong property crunch, sent investors an innocuous-looking announcement about a $3.1 billion loan agreement with a state-owned shareholder. But the Nov. 2 statement contained a twist: Shenzhen Metro Group Co., which had given unwavering support to the developer for nearly two years, now set a cap on any further financing. It also demanded that Vanke stump up collateral for its loans — including for the $2.8 billion already drawn down. The move, which sent a signal that state officials were finally losing patience with Vanke, set off a chain reaction that ultimately pushed the company to ask for more time to pay back some of its debt. Its dollar bonds have lost more than two-thirds of their value, tumbling to as low as 20 cents on the dollar. State-owned banks have scrambled to limit their exposure. Regulators, unwilling to rescue the company, have started making plans to contain the fallout, according to people familiar with the matter. BB
- (Disney) on Thursday announced a blockbuster deal with OpenAI to invest $1 billion for an equity stake in the ChatGPT maker. As part of the deal, OpenAI will license more than 200 characters from Disney so that users can create AI-generated videos in Sora. Through the three-year licensing arrangement, fans will be able to generate videos of themselves surfing with Stitch off the shores of Hawaii or wielding a lightsaber in front of R2-D2. WSJ
- The FT is naming Huang as its person of the year because of the role he has played in this transformation. Huang has been at the centre of one of the biggest investment programmes ever conducted by the private sector — one that has both propped up the US economy and sustained a stock market boom. And he has been a driving force in the adoption of a technology that has the capacity to reshape entire industries. Nvidia is now the most valuable company in the world and, at one stage over the course of the year, it became the first to have a market capitalisation of more than $5tn (On Thursday evening, it was valued at $4.4tn). Huang himself is set to end 2025 with a net worth of more than $160bn, putting him in the ranks of the world’s 10 richest people. Even if it turns out that current valuations are inflated and the share price were to fall by a half, Nvidia would still be worth three times more than at the end of 2021. FT
- The complex schedules that tied together 2,700 daily arrivals and departures at IndiGo, India’s biggest airline, started to fray in November, when a rule mandating more rest for flight crews went into effect. Last week they unraveled completely: IndiGo canceled more than 1,000 flights in a single day and more than a million reservations in all. The answer starts with how little competition there is. IndiGo’s runaway success has allowed it to capture more than 64 percent of India’s domestic market since it was founded in 2007. Air India controls another 25 percent. NYT
- Still, if China is no longer the enemy it was thought to be just a few months ago—and the National Security Strategy does make it look as if China has been downgraded from “existential threat” to “strategic competitor,” then does China still remain “uninvestible”? Especially if it continues to outperform? Gavekal