Month: October 2016

Unshackled May is best bet for Brexit

19 Oct 2016

High Court claimants say the government owes parliament a say before triggering EU exit. The risk is that MPs use a vote to restrict Theresa May's options and weaken her hand. Proponents of a "soft Brexit" might end up with a more agreeable deal if the government goes in hard.

Italy’s flawed hero needs more than Obama backing

19 Oct 2016

Prime Minister Matteo Renzi's reforms have been praised by the outgoing U.S. president. Yet polls suggest he may soon lose an important constitutional referendum. That would be a shame: Renzi has made mistakes, but his reforms are needed, and a divided Italy needs his dynamism.

Web-shy Germany has an edge in grocery wars

19 Oct 2016

Europe's three key food markets are challenged. Carrefour reported 0.1 pct nine-month sales growth in France, while profit margins have halved for UK grocers in five years. For now, the unique structure of Germany's grocery sector, and its qualms about online, provide a buffer.

China’s doped economy is low on happy pills

19 Oct 2016

China has notched up three successive quarters of eerily consistent GDP growth, but the results were medicated by housing speculation, government spending and the Fed's rate caution. That may have tranquilized investors, but as painkillers wear off, the economy's legs will wobble.

Aussie gambling deal faces better odds as takeover

19 Oct 2016

Betting group Tabcorp is buying larger rival Tatts for almost $5 bln in stock and cash. The set-up makes more sense than last year's aborted merger, and the combined group would be better placed to take on foreign bookies. The real gamble is with antitrust regulators.

Indian online-travel M&A could use a roadmap

19 Oct 2016

Shares in U.S. listed MakeMyTrip jumped 50 pct on the back of a $1.5 bln merger with ibibo, a private rival backed by Naspers. That is despite the pair offering almost no details. It shows how desperate investors are to see a reduction in competition and a path to profitability.

Yahoo’s stripped-down earnings miss the point

18 Oct 2016

The internet group's Q3 numbers were uninspiring. The big issue, though, is whether a huge data breach will unsettle the $4.8 bln sale of its core units to Verizon. Yahoo has ducked the usual Q&A, so investors for now have only the cellphone giant's negative assessment to go on.

Hershey shakeup is chance to melt independence

17 Oct 2016

Fresh from spurning a $25 bln bid from Mondelez, the U.S. confectioner's CEO and lead director are leaving. The board of the controlling Hershey Trust also faces upheaval imposed by local officials. Willy Wonka-like, the chocolate factory just might try some pure imagination.

Guest view: Trump giving bankruptcy a bad rap

17 Oct 2016

Amid other nastiness, the presidential campaign has led to a broad brush falsely equating bankruptcy with failure, argue two Morrison Foerster restructuring partners. In fact, the process often allows companies that fall on hard times to regroup, rise up and keep fighting.

UK watchdog falls for its own league-table spin

18 Oct 2016

The Financial Conduct Authority has identified some dodgy IPO practices. But after 18 months of work, it's lacking concrete solutions while still griping about how banks use league tables. The carefully tailored rankings fool no one, and the FCA should focus its effort elsewhere.

Trump spins halfway decent revolving-door ideas

18 Oct 2016

The White House hopeful wants tougher rules on lobbying by government officials, including longer wait times. Trump's plan, however, skips the issue of foxes guarding henhouses. There's also the matter of "ethics reform," however sensible, from a candidate so feckless with facts.

Goldman Sachs charts frustrating path back to top

18 Oct 2016

Trading, share buybacks and operating leverage all helped the investment bank to its best showing in a year-and-a-half. It took big investment gains and a lower tax rate to beat its cost of capital. That's too unreliable to justify Goldman's stock heading back above book value.

Inflation is next nerve-jangler for investors

18 Oct 2016

After years of undershooting price targets, some rate-setters, including Mark Carney in Britain, are now talking about tolerating overshoots. Equity winners will vary depending on whether inflation is of the good or bad variety. But global bonds are losers either way.

William Hill’s second fold raises the ante

18 Oct 2016

The $3.3 bln UK bookmaker called off a merger with Canada's Amaya after activist fund Parvus objected. That follows the decision to spurn a takeover bid from rivals 888 and Rank. With deal partners falling, revenue shrinking and no CEO, William Hill is playing a bad hand alone.

RBS’s Russian goof sets tone for UK state meddling

18 Oct 2016

The UK lender is reviewing a decision to stop banking a supplier of Russian broadcaster RT. It could just be a business matter, but RBS’s 73 pct state holding makes it seem political. If a post-EU Britain is heading for more use of subsidies, such confusion will recur.

Inflation shows up at wrong time for Mark Carney

18 Oct 2016

UK consumer prices are rising at their fastest pace in nearly two years. It should be a proud moment for the Bank of England chief, who has been struggling to achieve exactly this. Unfortunately, the pound’s fall is going to give him a bit too much of what he wanted.

Saudi bonds put Riyadh first and investors last

18 Oct 2016

The world's largest crude oil exporter is selling $15 bln of bonds. Demand will be strong even though Saudi is offering few insights into oil policy, regional strategy or the fiscal outlook. If the kingdom struggles to wean itself off oil, investors can expect bruising treatment.

Burberry shares priced a size too big

18 Oct 2016

The UK luxury label said sales in its home market grew over 30 percent as tourists cashed in on the weak pound. Demand in the U.S. is deteriorating, however. Burberry is tackling its problems head on, but there are few green shoots yet to justify a recent rally in the shares.

Alibaba courier aims high with New York IPO

18 Oct 2016

Chinese logistics group ZTO Express wants to raise up to $1.3 bln through a New York flotation. Sales are soaring, thanks to the e-commerce boom. But rival couriers are also scaling up. ZTO lacks the market dominance or margins to justify an Alibaba-style premium valuation.

Perks power Japan’s $4 bln rail listing

18 Oct 2016

Rail operator JR Kyushu has bagged a top price for its Tokyo debut. As in the selloff of Japan Post, familiarity and fat dividends help. So does a local tradition of non-cash goodies for retail investors, which upgrades their effective yield here from standard to first-class.

Netflix investors stuck on the wrong channel

17 Oct 2016

The video-streaming service's stock jumped 20 pct after it beat its own subscriber estimates, having missed them by a mile in the summer. Meanwhile, shareholders are ignoring the cash burn doubling to $500 mln and warnings that costs will creep up. Their exuberance is irrational.

Visa swipes smoothly to reveal new CEO

17 Oct 2016

Charlie Scharf is leaving the $195 bln payments firm and, after a search, director and former Amex executive Al Kelly will take over. It's a fast-changing industry, but with high returns and relatively little regulatory intrusion running Visa is close to the dream job in finance.

Mexico puts climate finance on emerging-market map

17 Oct 2016

Some $50 trln globally is needed for clean-energy projects to meet the Paris accord's goals. Developing countries often have a harder time than the West finding funding. But recent successful deals in Mexico, fueled in part by investors' hunt for yield, suggest that's changing.

Peru lights less populist path for Latin America

17 Oct 2016

New President Pedro Pablo Kuczynski combines business nous with patrician polish, a mashup of Argentina's and Brazil's leaders. Unlike them, though, he inherited a copper-fueled economy that leads the region in growth, giving him leeway for reforms and the fight against poverty.

Broken IPO market calls for tax reboot

17 Oct 2016

The number and value of new listings globally are down almost a fifth and a third respectively this year, after falling for decades. The low-growth, low-rate environment is partly to blame. Putting equities and bonds on a more equal tax footing would help redress the balance.

Sterling provides spark for Abu Dhabi gas deal

17 Oct 2016

The sovereign fund is paying a higher valuation for a Scottish gas network stake than a comparable deal by Asian tycoon Li Ka-shing. Stable returns attract cash-rich investors. But a bigger boost might come from an eventual reversal of the pound’s post-Brexit decline.

Caterpillar CEO exit looks like preemptive strike

17 Oct 2016

Doug Oberhelman will retire as boss of the $51 bln earth-moving equipment maker next year. Cat will also split the CEO and chairman jobs. It looks like a calculated attempt to get in front of would-be activist investors after bad deals and poor performance damaged credibility.

BofA takes step toward still improbable goal

17 Oct 2016

The lender with $2.2 trln of assets is alone among big peers in boosting earnings last quarter - the best pre-tax showing in a decade. CEO Brian Moynihan is making progress. Yet absent big interest-rate hikes or stock buybacks, a decent return on equity remains a long way off.

Bernie Sanders tweets new market-pricing reality

17 Oct 2016

The U.S. senator sent shares of leukemia drug maker Ariad tumbling after he knocked its price increases. Statements by UK Prime Minister Theresa May and other officials also have affected a range of valuations. Investors will need to adjust to this direct kind of political risk.

Mistrust in elections harder to fix than markets

17 Oct 2016

Donald Trump is claiming that the U.S. presidential vote will be rigged. History shows almost no fraud, but some of his supporters are buying it. Fears of market manipulation can be countered with rule tweaks and more active watchdogs. Restoring trust in ballots may be tougher.