Microsoft cloud business holds up

This is an audio transcript of the FT News Briefing podcast episode: ‘Microsoft cloud business holds up’

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, January 25th, and this is your FT News Briefing.

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Microsoft earnings were saved by the cloud. Credit Suisse is getting more investment from the Middle East. And New Zealand has a new prime minister.

Nic Fildes
He doesn’t quite have the star power that Jacinda Ardern did, but Hipkins known as more of a sort of Mr Fix It.

Marc Filippino
I’m Marc Filippino and here’s the news you need to start your day.

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Microsoft’s cloud computing business slowed in the last quarter again, but it held up better than expected. The company was out with quarterly earnings yesterday. Results from its critical Azure Cloud business helped shares pop in after-hours trading. Microsoft is the first of the big US tech companies to report earnings this year. The good news from its cloud business made investors think, hey, maybe other cloud businesses can weather this slowing economy, too. So another big cloud provider, Amazon, saw its shares rally more than 3 per cent in after-hours trading on Tuesday.

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Qatar’s government has doubled its stake in Credit Suisse. The Qatar Investment Authority is now the second-biggest shareholder after the Saudi National Bank. The FT’s Owen Walker has more on why Gulf countries are so keen on Credit Suisse and other European lenders.

Owen Walker
Well, it’s a western bank and there’s a lot of money in the Gulf at the minute. We’ve had this boom in the energy markets. And so the coffers of those sovereign wealth funds have really been bolstered. So they’ve got a lot of money and they are looking at where they can spend that money. And there’s a lot of financial institutions in the west, which have been courting them and trying to receive investment. So that’s one side. And why Credit Suisse? Well, firstly, Credit Suisse needs investment. So that’s been an obvious target. And actually, despite all the problems that, you know, you and I have talked about surrounding the bank, it still has got a good name in certain areas like wealth management and is still quite popular as a kind of storied western institution now.

Marc Filippino
And we should mention that all this investment from Gulf states and Middle Eastern funds are pouring in at a time when western investors are backing out. What’s going on here?

Owen Walker
So at the moment, what you’re seeing is Credit Suisse share price is down something like 70 per cent over the past year. And if you go further back, I mean, it’s a 10th of probably where it was a decade ago. US investors who have been long-term investors in Credit Suisse maybe finally giving up and finally thinking now is the time to to kind of really cut our losses. Credit Suisse itself is looking at the Middle East as an area of growth. So they can quote those individuals, private bank customers, but also the institutional wealth from the sovereign wealth funds to be invested in the business. So they’re very much pivoting, I think, the strategy towards the Middle East in a way from more traditional markets such as North America and maybe even mainland Europe.

Marc Filippino
Owen Walker is the FT’s European banking correspondent. Thank you, Owen.

Owen Walker
Great. Thanks very much.

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Marc Filippino
In a huge about face, Germany yesterday said it will send its leopard tanks to Ukraine. This was first reported by German media. Up until now, Chancellor Olaf Schulz has been resisting the call to send tanks to Ukraine. It would be a major move in western efforts to back Ukraine in the war against Russia.

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New Zealand’s education Minister, Chris Hipkins, was sworn in on Wednesday as the country’s prime minister. Hipkins will serve as the interim prime minister until elections are held in October. He replaces Jacinda Ardern, who stepped down last week. Ardern became a global figure when she took office as the world’s youngest female leader. Her charisma and tough coronavirus pandemic policies added to her spotlight. Her replacement is also young but has a very different image. Here’s the FT’s Nic Fildes.

Nic Fildes
It goes without saying, you know, he doesn’t quite have the star power that Jacinda Ardern did, especially internationally. Hipkins is known as more of a sort of Mr. Fix It character in the background. He did lead the government’s pandemic response. He’s known as Chippy. Chris Hipkins. So, you know, and he’s sort of known for dressing down quite a lot. There’s some footage of him going around on the internet — after Jacinda Ardern resigned — of him and his cap and sunglasses wandering around like a like an everyman. And that’s kind of what he is known for.

Marc Filippino
So Nick, Ardern stepped down as there were signs that her ruling Labour party was falling out of favour. What are Hipkins’ biggest hurdles to get Labour back on the public’s good side?

Nic Fildes
Well, Chris Hipkins has immediately said he wants to return the Labour government to focusing on bread and butter issues. And what he’s referring to there is the fact that New Zealand has been suffering from very high inflation, falling house prices, very fast rising interest rates, and this has created a cost of living crisis, especially after the Ukraine invasion, when things like petrol have really skyrocketed. In a country like New Zealand, that’s having a pretty big impact on the economic situation for many New Zealanders. That is what has created a disconnect between what was a very popular government and where we are now. A lot of middle New Zealanders were very much focused on those domestic economic issues. Bread and butter, cost of living issues. Whereas the Ardern government had committed to making fairly sweeping reforms, which perhaps were charming with an electorate that had started to focus on different things.

Marc Filippino
So Nick, has Hipkins hinted at any specific plans?

Nic Fildes
He hasn’t revealed his hand yet but he’s hinted very strongly that some of those big reforms, things like the merger of the states, TV and radio companies, potentially a very radical plan to uproot the water infrastructure system and the way it’s governed may be put on the back burner. But he probably will try and do this in a in a way that won’t scare the horses too much. This is still a Labour government. He was obviously a key member of Ardern’s government on things like Covid and more recently, policing. It’s probably going to be a refocus rather than a complete abandonment of what was previously being pursued.

Marc Filippino
Nick Fildes is the FT’s Australia and Pacific Correspondent.

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In China, coronavirus is ripping through the population, but Beijing shows no signs of returning to its harsh zero-Covid lockdown policies. Here’s the FT’s James Kynge.

James Kynge
The hope is in Beijing that the virus will spread through the population very quickly and within, who knows exactly how long, but a couple of months maybe, most people will have had the virus. Then it can move to, from an economic perspective, what it regards as stage two.

Marc Filippino
And stage two, James says, means getting back to normal. Chinese policymakers are hoping for an economic and diplomatic reset.

James Kynge
It wants a reset not only of its economic fortunes but also of its diplomatic fortunes. Because during the Covid period, there was some really disastrous hits to China’s reputation in the world. And China really wants now to try to rehabilitate that. Boosting its economy is definitely part of the plan, because Chinese officials know only too well that one of its main attractions to the world’s biggest companies is the profits that those companies can make in the Chinese economy.

Marc Filippino
That’s our global China editor, James Kynge on the FT’s Behind the Money podcast. This week’s episode is about China’s economic and diplomatic hopes post-Covid. The episode is out today. We’ll have a link to that in our show notes.

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You can read more on all of these stories at FT.com This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.