Month: May 2017

China’s dealmakers edge out Trump in first round

12 May 2017

American cattlemen and financiers will get more access to mainland markets in exchange for chicken imports and a potential opening for Chinese banks. It's a good start but Beijing didn't give up much. U.S. negotiators will have to push harder if they want a better bargain.

France makes life too easy for pushy bosses

12 May 2017

Vivendi, Christian Dior and Safran are all doing complex deals driven by big shareholders’ interests – and minority investors can’t do much about it. Muting dissent is meant to make French companies more nimble. It does, but at the cost of helping insiders get their way.

Macron inherits healthy economy – and will need it

12 May 2017

The French president-elect is taking over at a propitious time. Growth is picking up, unemployment has probably peaked and the budget deficit is expected to fall under the EU limit for the first time in a decade this year. That gives him some scope to sweeten unpalatable reforms.

EU could spoil Uber’s cross-country road trip

12 May 2017

Travis Kalanick’s ride-hailing service can be regulated like any other transport firm, according to an EU legal opinion. That actually changes little – many member states already do. The big difference is that it would puncture Uber’s fantasy of European single-market protections.

German bonds are caught between Mario and Macron

12 May 2017

Euro zone yields have risen in anticipation of tighter policy from ECB President Mario Draghi. But the euro zone’s fragility puts a cap on long-term rates. Changing that would require the kind of common fiscal policy imagined by new French President Emmanuel Macron.

Richemont’s downsizing is worth copying

12 May 2017

The Swiss luxury watchmaker’s full-year sales disappointed and margins are now touching financial crisis lows. At least chair Johann Rupert has recognised the need to shrink. It’s an example that others like Prada would do well to follow.

Hong Kong bourse better off without Beijing’s aid

12 May 2017

China could prop up shares before a set-piece presidential visit, a media report says. This is further evidence of Beijing's tightening grip on the city and its belief that market prices are a tool to signal good news. Exporting that attitude will dent Hong Kong's appeal.

Made-in-India market boom has an enduring quality

12 May 2017

Big inflows into domestic mutual funds amid Premier Narendra Modi's corruption crackdown are driving a structural shift in the equity market. That makes stocks less reliant on fickle foreign money. The resulting valuations look rather stretched - but may nonetheless prove sticky.

Relief offer hints at solution for Fannie, Freddie

11 May 2017

Regulator Mel Watt wants the housing-finance firms to rebuild their capital buffers to avoid fresh bailout risk. It’s a temporary band-aid while the administration ponders the firms’ legal status. Yet Trump’s Treasury should seize the idea as the basis for more-lasting reform.

Viewsroom: Comey ouster bad for business

11 May 2017

Donald Trump’s surprise firing of the FBI director could bog down policies from tax cuts to regulatory reform and even throw the rule of law into question. South Korea elects a new leader to put its own presidential scandal in the past. Plus: Coach goes shopping for Kate Spade.

Vivendi investors pay richly for Bolloré cleanup

11 May 2017

French tycoon Vincent Bolloré wants to merge the media group with ad firm Havas, both of which he controls, via a 3.9 bln euro cash offer. His holding company gets most of the premium, which is bigger than it seems. Vivendi shareholders get a stake in a less attractive company.

Bombardier clears Canadian funds for takeoff

11 May 2017

In a rare revolt, pension funds ejected the train and plane maker's executive chairman. But it took a long downward spiral and outrage over pay to prompt action. A successful siege at a family-controlled national champion should inspire action elsewhere earlier and more often.

AIG goes back to the future for new CEO

11 May 2017

The $58 bln insurer may soon hire Brian Duperreault as its next boss. He has the experience, managerial clout, investor support and fintech nous that AIG needs. He’s also white, 70 and a former Hank Greenberg acolyte. Finding the next successor is Duperreault’s main task.

Cox: Nixon nostalgia missing from stock market

11 May 2017

Trump's sacking of FBI boss Comey has sparked worries about a crisis similar to the one that forced another Republican president out of the White House in 1974. A 40 pct decline in the Dow accompanied that ordeal. Investors don't seem to think history is repeating itself.

Australia hands U.S. timely infrastructure example

11 May 2017

An investor group is paying A$7.6 bln for 50.4 pct of Endeavour Energy, a New South Wales electricity distributor. It's an "asset recycling" model that raises private capital against established operations to fund new government investment. Trump's team should take note.

Noble Group founder bows out on a low

11 May 2017

Chairman Richard Elman is stepping down as the embattled commodity trader confirmed a quarterly net loss of $130 mln. An earlier profit warning had already slashed 32 pct from its shares. Despite a rights issue and a slew of other initiatives, investor confidence is shot to bits.

PPG might as well go hostile on Akzo

11 May 2017

It has little to lose by taking its $27 bln bid for the Dutch paint maker straight to shareholders. If Akzo invokes its poison pill, the deal falls away anyway. And if the U.S. suitor wins shareholder support, Akzo’s board will face enormous pressure to make the tie-up friendly.  

If Britain cools on markets, others lose too

11 May 2017

The country’s two main political parties are both promising to intervene in high household electricity prices. In energy, market forces haven’t worked as they should. Yet if Britain backs away from its instinct to be mostly hands-off, other countries lose a reason to go forward.

BT valuation gap will outlast post-scandal reset

11 May 2017

The 30 bln pound UK telco is cutting jobs and executive bonuses after an accounting mess and a profit warning tanked its shares. The moves clean up the past, but BT's future depends heavily on regulators. That should keep the incumbent trading at a discount to nimbler rivals.

Italian banks offer way to play Macron boost

11 May 2017

Both Credit Agricole and UniCredit beat first-quarter expectations and have more to come. Yet the French bank trades above tangible book value, while its Italian peer languishes. If the new president reforms both France and Europe, UniCredit’s shareholders could get more upside.

Second player in Chinese gaming goes up a level

11 May 2017

Sales at NetEase are soaring and shares have almost doubled in a year. It also scored a real coup by bagging the Chinese rights to Minecraft. Yet the $37 bln group still looks cheap next to rivals Tencent and Activision – maybe because of its heavy reliance on a few hit titles.

Volvos plus FX trading defies even Chinese logic

11 May 2017

Geely, the Chinese owner of the sensible Swedish cars, is buying into a Danish trading platform. Mainland companies are pouring money into foreign finance and Saxo Bank’s fintech knowhow has allure. It's hard to see what use Geely’s carmaking experience will be here, though.

Snap lays an egg worthy of Twitter nest

10 May 2017

The messaging app reported its first quarterly results showing a slowdown in user growth. That’s a worrisome trend since its lofty $27 bln value hinges on attracting more people. Meanwhile, rivals are co-opting features. The sheen of being the next new thing is fading fast.

Whole Foods board changes whet activists’ appetite

10 May 2017

The $12 bln organic-food purveyor is replacing more than half of its board, a step to appease Jana Partners. But the fund, with 8 percent of shares, wants a sale, and others are pounding the table. As long as Whole Foods same-store sales keep declining, they’ll stay hungry.

Time may join ranks of regretful M&A refuseniks

10 May 2017

Days after spurning takeover interest, the magazine publisher cut its dividend amid falling revenue. Some companies wisely go it alone, but many can't recoup deal-imputed value. With Time's shares trading 40 pct below one bid, it has a steep climb ahead to justify independence.

U.S. sheriff shoots own foot amid FBI skirmish

10 May 2017

The DOJ provided dubious cover for Director James Comey's dismissal, which risks undermining its moral authority overseas. U.S. prosecutors often step into cases, such as VW and FIFA, their counterparts won't. Foreign enforcers could now be more wary of providing necessary help.

Hadas: Solidarity is cure to Baumol’s cost disease

10 May 2017

William Baumol showed how differences in productivity put wage pressure on artists and other inefficient workers. The economist, who died last week, was right, but his analysis was too individualistic. The challenge is to find fair ways to share out the fruits of prosperity.

AXA takes out double hedge against U.S. and itself

10 May 2017

The French insurer is listing a minority stake in its American operations. Should the Trump administration revisit regulatory equivalence, the move will simplify a sale. In the meantime, investing a few extra billion euros might help AXA hit the upper end of its 2020 targets.

Standard Life’s honey pot is a shrinking prize

10 May 2017

Even as the asset manager merges with rival Aberdeen, its flagship GARS fund is eroding. Some 2.8 bln pounds exited in the first quarter. That makes the tie-up look less sweet for Aberdeen shareholders. Fortunately, they were already getting better than might have been expected.

TalkTalk resets Wi-Fi, but signal is still weak

10 May 2017

The UK broadband supplier cut its dividend and said it wants to get back to its low-cost roots. Competing on price to win subscribers is sensible as far as it goes, but since TalkTalk’s larger rivals offer juicy TV, mobile and internet bundles, the battle is not evenly pitched.