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Yahoo
15 hours ago
- Business
- Yahoo
Northern Trust CEO dismisses reports of takeover talks
This story was originally published on Banking Dive. To receive daily news and insights, subscribe to our free daily Banking Dive newsletter. Northern Trust CEO Mike O'Grady on Wednesday dismissed reports that the bank had met with other institutions to discuss a potential sale. 'Contrary to recent speculation, during my tenure as CEO, we have never entertained discussions regarding the sale of the company with any financial institution, nor do we intend to,' O'Grady told analysts on a call following Northern Trust's second-quarter earnings report. 'We believe that strategy of independence is what will produce the best returns for our shareholders ultimately,' he said. The Wall Street Journal reported that Chicago-based Northern Trust had been approached by BNY to discuss a potential merger in June. Goldman Sachs also approached the firm earlier this year, according to Semafor. 'Is there any scenario in which you think M&A would make sense from a shareholder return perspective? Or do you think the uniqueness of the Northern franchise, the scale in the custody business, all of that kind of makes just M&A unattractive strategically?' Bank of America analyst Ebrahim Poonawala asked following O'Grady's commitment to independence. O'Grady said the bank is 'completely focused' on executing its strategy, and that independence will 'produce the best returns for our shareholders ultimately.' The bank has $18.1 trillion in assets under management or custody as of June 30. 'We've heard from a lot of our clients … who have said, 'We chose Northern Trust because it's a different value proposition. It's one where you are focused on trying to provide a higher level of client service, where you do have very targeted expertise in just certain segments of the market where you compete.' We believe that that differentiated value proposition is the one that's going to create the most value,' O'Grady said. 'We're an organic growth company,' he added. 'But if at times, there's something that would be attractive for us on the inorganic front to improve that value proposition, we would consider doing it, obviously, with very high standards.' Sen Elizabeth Warren, D-MA, warned BNY CEO Robin Vince this week that buying Northern Trust would be 'presumptively illegal' based on BNY's size, 'raising serious antitrust concerns and presenting risks to financial stability given the firms' dominance in important markets that serve as the plumbing of the financial system.' 'Should this potential merger move forward, the combined entity's estimated custodial services market share would exceed 30 percent, and would appear to significantly increase consolidation in this market, as measured by the Herfindahl-Hirschman Index ('HHI'), by roughly 400 points,' Warren wrote. Northern Trust's stock price was down 3% in the first hour of trading Wednesday, and Truist analysts attributed the dip to 'the emphatic denial of the company being up for sale, in contrast to news reports of suitors approaching [Northern Trust] management in recent weeks, and the pros and cons of independence drove the bulk of the analyst questioning.' As of 11 a.m. Thursday, the price has risen to $128.39, above where it was before the call. Northern Trust declined to comment beyond the earnings call comments. BNY and Goldman also declined to comment.
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Business Standard
17-07-2025
- Business
- Business Standard
Why is China losing its shipbuilding dominance: Trump or global slowdown?
The longstanding dominance of China in the global shipbuilding industry has weakened sharply in the first half of 2025. Latest industry data, as cited by the South China Morning Post, shows that Chinese shipyards — which traditionally account for the largest share of new ship orders globally — have recorded a steep fall in new business this year. According to Clarksons Research, new ship orders for Chinese shipyards plunged 68 per cent year-on-year to 26.3 million deadweight tonnes (dwt) in the first six months of 2025. This marks one of the steepest declines in recent years. In contrast, South Korea — world's second-largest shipbuilding nation — saw a relatively modest drop of 7 per cent over the same period, receiving new orders totalling 14.2 million dwt, the report said. Who is replacing China's shipbuilding dominance? Although South Korea also experienced a drop in orders, it narrowed the gap to China in relative terms. China's share of global new ship orders in the first half of 2025 fell from 75 per cent to 56 per cent year-on-year. South Korea's share rose from 14 per cent to 30 per cent over the same period. Although China still remains the largest volume player, this represents a substantial rebalancing of the global shipbuilding market. Experts included in the report suggested that Korean and Japanese shipyards have benefited from shipowners' decisions to build boats outside of China based on increased geopolitical tension. South Korea's major players, including Hyundai Heavy Industries (HHI) and Hanwha Ocean, have also increased their presence in the US market. Both companies have been bidding for contracts related to the maintenance and overhaul of US Navy vessels since 2024. In April this year, HHI signed an agreement to share technology and cooperate with Huntington Ingalls Industries, the largest military shipbuilder in the US. Are Trump's tariffs hurting Chinese shipyards? The report pointed to a combination of factors behind China's falling market share. One of the clearest drivers has been the series of measures by the Donald Trump-led US administration targeting China's shipbuilding sector. In April this year, the US imposed steep fees on ships owned, operated or built by Chinese companies entering American ports. Additional tariffs on Chinese-made equipment used in shipbuilding, including ship-to-shore cranes, have further strained Chinese shipyards' competitiveness. While these restrictions have met with resistance from industry groups, market data suggests they are beginning to have an effect. Beyond ship construction, Chinese shipyards are also losing ground in repair and maintenance services. Data shows China's share of repair work for very large crude carriers (VLCCs) fell from an average of 70 per cent between 2021 and 2024 to around 50 per cent in the first half of 2025. Is weakening global demand affecting Chinese shipbuilding? The US restrictions alone do not fully explain the shift. Analysts cited by South China Morning Post note that a cyclical decline in global shipbuilding demand is also impacting Chinese yards disproportionately. During the demand boom between 2021 and 2024, excess orders typically spilled over from capacity-limited Korean and Japanese yards to China's more flexible shipbuilders. However, with global new orders slowing in 2025, that spillover effect has diminished. Shipowners reportedly prefer Korean or Japanese-built vessels as they fetch higher resale values on the second-hand market, further compounding the downturn for Chinese shipyards. Despite the current slump, larger Chinese shipyards are expected to remain resilient. However, the outlook is less certain for smaller, private yards with weaker order books.
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Business Standard
17-07-2025
- Business
- Business Standard
India Inc's profit boom has a name: It's called the Herfindahl Index
India's top companies are posting record profits. But beneath the surface of this post-pandemic boom lies a structural shift that's going unnoticed by most. It's not just operational efficiency or global tailwinds driving earnings — it's consolidation. And the most telling evidence of this power shift comes from a single number: the Herfindahl-Hirschman Index (HHI). What is the Herfindahl-Hirschman Index (HHI)? The Herfindahl-Hirschman Index, or HHI, is a widely used measure of market concentration. In simple terms, this is a way to quantify how competitive (or monopolistic) an industry is. Albert O Hirschman developed an early version of the index in the 1940s, which was later refined and popularised by Orris C Herfindahl. The tool is now commonly used by antitrust regulators, including the US Department of Justice and the Federal Trade Commission, to assess whether a market has become too dominated by a few large players. How does the HHI work? The HHI measures market concentration by squaring the market share of each firm in a sector and summing the result. The higher the score, the more control is concentrated in the hands of fewer players. The score break-up is: Score below 1,500 indicates a competitive market. Score between 1,500 and 2,500 is moderately concentrated. Score above 2,500 means the market is highly concentrated, often raising red flags for regulators. The maximum score is 10,000, which occurs when a single firm controls 100 per cent of the market (a pure monopoly). Conclusion: The more concentrated the market, the higher the HHI, and the greater the pricing power firms typically hold. Why does this index matter? A rising HHI suggests fewer firms are controlling more of the market. When one or two firms dominate, they can set prices, influence supply chains, and shape consumer options, often at the expense of competition and innovation. What's happening in India? In FY25, the average HHI across eight major Indian sectors jumped to 2,532, crossing into the 'highly concentrated' zone for the first time in over a decade. That's up from 1,980 in FY15 and 2,167 in FY20. It's not just a statistic — it's a story of India Inc's growing pricing power, shrinking competition, and rising profit margins. Which industries have the highest HHI in India? Sectors such as telecom, steel, aviation, and cement now show HHI levels at or near historic highs. In five of the eight sectors studied, including telecom, paints, steel, and two-wheelers, market concentration has reached thresholds considered 'high' by the index. Only paints and two-wheelers have seen a modest decline in concentration over the past decade. This shift has big implications. As competition fades, dominant players gain the power to raise prices and protect margins. From FY20 to FY25, while net sales for India Inc grew at a compound annual growth rate (CAGR) of 12.7 per cent, profits surged much faster: profit before tax grew at 25 per cent, and after tax at 25.7 per cent. Even in the last two years, as revenue growth slowed to 7.6 per cent, profits grew 19 per cent annually. Motilal Oswal analysts project that companies in their coverage universe will post 5 per cent sales growth, but 12 per cent Ebitda growth and 14 per cent net profit growth in FY26. Where does India Inc's power come from? As previously reported by Business Standard, the rising HHI scores are not accidental. A combination of regulatory reforms and economic shocks has steadily tilted the playing field toward bigger players, who are generally better equipped to survive and even benefit from major economic and policy challenges. That consolidation is now reflected in the numbers. For example, in aviation, just three carriers control the bulk of domestic capacity. In telecom, only two private players dominate the subscriber share. In steel and cement, a few conglomerates have gained ground through acquisitions and capacity expansion. What does it mean for Indian consumers? This leads to situations where consumers are grappling with higher prices but limited choices. This is because, as firms find themselves in concentrated markets, they can push through price increases without fear of losing market share, a phenomenon already seen with domestic flight ticket prices. In a few recent cases, the aviation ministry had to step in to control airfares. But what happens in markets that go unnoticed? This trend also explains the widening gap between profit and revenue growth, a phenomenon largely observed in FY25 and expected to persist in FY26. The bottom line is India's corporate landscape is changing. Market share is consolidating, competition is thinning, and profits are climbing. While this may look like a success story for Indian industries on the surface, the Herfindahl Index is a reminder that concentrated power can distort markets, limit consumer choice, and eventually invite regulatory scrutiny.
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Business Standard
17-07-2025
- Business
- Business Standard
Why is China losing its shipbuilding dominance? Trump or global slowdown?
The longstanding dominance of China in the global shipbuilding industry has weakened sharply in the first half of 2025. Latest industry data, as cited by the South China Morning Post, shows that Chinese shipyards — which traditionally account for the largest share of new ship orders globally — have recorded a steep fall in new business this year. According to Clarksons Research, new ship orders for Chinese shipyards plunged 68 per cent year-on-year to 26.3 million deadweight tonnes (dwt) in the first six months of 2025. This marks one of the steepest declines in recent years. In contrast, South Korea — world's second-largest shipbuilding nation — saw a relatively modest drop of 7 per cent over the same period, receiving new orders totalling 14.2 million dwt, the report said. Who is replacing China's shipbuilding dominance? Although South Korea also experienced a drop in orders, it narrowed the gap to China in relative terms. China's share of global new ship orders in the first half of 2025 fell from 75 per cent to 56 per cent year-on-year. South Korea's share rose from 14 per cent to 30 per cent over the same period. Although China still remains the largest volume player, this represents a substantial rebalancing of the global shipbuilding market. Experts included in the report suggested that Korean and Japanese shipyards have benefited from shipowners' decisions to build boats outside of China based on increased geopolitical tension. South Korea's major players, including Hyundai Heavy Industries (HHI) and Hanwha Ocean, have also increased their presence in the US market. Both companies have been bidding for contracts related to the maintenance and overhaul of US Navy vessels since 2024. In April this year, HHI signed an agreement to share technology and cooperate with Huntington Ingalls Industries, the largest military shipbuilder in the US. Are Trump's tariffs hurting Chinese shipyards? The report pointed to a combination of factors behind China's falling market share. One of the clearest drivers has been the series of measures by the Donald Trump-led US administration targeting China's shipbuilding sector. In April this year, the US imposed steep fees on ships owned, operated or built by Chinese companies entering American ports. Additional tariffs on Chinese-made equipment used in shipbuilding, including ship-to-shore cranes, have further strained Chinese shipyards' competitiveness. While these restrictions have met with resistance from industry groups, market data suggests they are beginning to have an effect. Beyond ship construction, Chinese shipyards are also losing ground in repair and maintenance services. Data shows China's share of repair work for very large crude carriers (VLCCs) fell from an average of 70 per cent between 2021 and 2024 to around 50 per cent in the first half of 2025. Is weakening global demand affecting Chinese shipbuilding? The US restrictions alone do not fully explain the shift. Analysts cited by South China Morning Post note that a cyclical decline in global shipbuilding demand is also impacting Chinese yards disproportionately. During the demand boom between 2021 and 2024, excess orders typically spilled over from capacity-limited Korean and Japanese yards to China's more flexible shipbuilders. However, with global new orders slowing in 2025, that spillover effect has diminished. Shipowners reportedly prefer Korean or Japanese-built vessels as they fetch higher resale values on the second-hand market, further compounding the downturn for Chinese shipyards. Despite the current slump, larger Chinese shipyards are expected to remain resilient. However, the outlook is less certain for smaller, private yards with weaker order books. What lies ahead for global shipbuilding? Chinese-built vessels still comprise 23 per cent of the total global fleet currently in service, Clarksons' data shows. But with US restrictions intensifying and South Korea deepening shipbuilding cooperation with Washington, industry analysts suggest that China's shipyards may face prolonged pressure.
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Business Standard
16-07-2025
- Business
- Business Standard
Corporate margins, earnings soar as mkt concentration rises across sectors
The market concentration as measured by Herfindahl-Hirschman Index (HHI) was higher in six out of eight sectors in FY25 compared to that in FY15 and FY20 premium Mumbai Listen to This Article Corporate India has exhibited strong pricing power in recent years, resulting in a steady rise in profit margins across many sectors despite fluctuations in raw material and energy prices, and a persistent slowdown in revenue growth. The margin expansion has been most pronounced in the post-pandemic period. This improvement in corporate margins has coincided with a steady rise in market concentration in key domestic sectors, as larger players have captured greater market share, either through mergers and acquisitions or through organic growth. Market concentration, as measured by the Herfindahl-Hirschman Index (HHI), was higher in six of eight sectors in FY25
