- Top GloveURGE TO MERGE. Qatar has joined the Gulf bank consolidation party. The $2 billion Al Khalij Commercial Bank said on Thursday it would hook upwith $9 billion Masraf Al Rayan to create one of the Emirate’s largest lenders, with $47 billion in assets. That’s small fry compared with the $274 billion of assets held by $48 billion market leader Qatar National Bank, but the deal exemplifies some of the region’s typical themes.
GAUNTLET THROWN. Malaysia’s Top Glove was an investor darling last year as pandemic demand for rubber handwear surged, but the company now faces backlash over governance issues. BlackRock said on Wednesday it voted againstreappointing six directors and would not support other board members over “severe shortcomings” in efforts to improve labour conditions. Covid-19 outbreaks last year infected 5,000 workers living in crowded dormitories - Malaysia’s biggest cluster.
The stern blast from the world’s biggest investor is the latest blow to Top Glove’s shares, down 39% from an October high as investors switched attention to post-pandemic recovery trades. A recently announced dividend hike had halted the slide, but BlackRock’s highlighting of safety issues harks back to 2018, when Top Glove was placed on a United Nations watchlist over suspected use of forced labour and excessive working hours. Strong earnings may not counter this reputational hit.
SEMI APPEALING. Franco-Italian semiconductor group STMicroelectronics is chipping away at its discount to higher-rated European peers. Shares in the $37 billion company, whose largest investor is an entity controlled by the French and Italian governments, rose by 4% on Friday after Chief Executive Jean-Marc Chery releasedan impromptu fourth-quarter sales update. Revenue was $3.2 billion, compared with previous expectations of $3 billion.
The first takeaway is that chip demand is holding up very well despite the economic damage of Covid-19: STM’s quarterly revenue in the same period a year earlier was just $2.75 billion. The second lesson is that investors may have to reassess the discount they assign to Chery’s group. STM is valued at 24 times 2022 earnings, using median Refinitiv forecasts, compared with 28 on average for peers Infineon Technologies and ASM International.
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