Year: 2017

Nestlé can ignore all Dan Loeb’s ideas bar one

3 Jul 2017

Of the four demands activist Third Point put to the Swiss giant’s board, just one is worth pursuing. Share buybacks, selling divisions and a sale of Nestlé’s L’Oreal stake wouldn’t obviously juice up the share price. Old-fashioned margin improvement holds the most promise.

Theresa May’s dilemma is Mark Carney’s opportunity

3 Jul 2017

The British Prime Minister is under growing pressure to loosen fiscal policy. Higher wages for public sector workers would worsen the deficit. But boosting growth would give the Bank of England chief more freedom to fight inflation. Necessity may force May to do the right thing.

Qatar standoff spells end of Gulf cooperation

3 Jul 2017

Saudi Arabia has granted the sheikhdom two more days to comply with its demands. Failure to reach a deal could escalate the dispute, hitting regional economies and investors in equal measure. But even if both sides back down, plans for greater economic collaboration are on hold.

Overhaul pits taxman against Indian ingenuity

3 Jul 2017

The rollout of a nationwide goods and services levy has been surprisingly smooth. The real prize would be shrinking the informal economy. Yet citizens have circumvented Prime Minister Modi's previous big reforms. That makes it too soon to hail GST a success.

Naspers’ addiction to Tencent is unhealthy

3 Jul 2017

The South African group is worth $28 bln less than its stake in the Chinese gaming giant. Naspers boss Bob van Dijk rules out a spinoff, but that would be the best fix. Unfortunately for would-be activists, supervoting shares make it hard for outsiders to apply pressure.

Next stop for Chinese bonds is credible ratings

3 Jul 2017

A new Bond Connect lets foreign fund managers buy into the mainland’s $9 trln market from Hong Kong. The easier access is welcome and should speed up China’s inclusion in key indexes. But big inflows, especially into corporate bonds, will require more plausible credit ratings.

U.S. water doesn’t let Trump dampen the mood

30 Jun 2017

Industry bigwigs in New Orleans extolled an all-in approach to managing H2O, with one exception. They ignored White House plans to curtail clean-water rules to focus on fixing aging systems. Securing the needed $5 trln is urgent, but limiting federal control could be costly too.

Amazon deal can help Nike get back on track

30 Jun 2017

The $96 bln sportswear maker confirmed it will sell its sneakers on Amazon after years on the sidelines. Though still the dominant brand, it has been losing share mainly to Adidas. The initiative, coupled with its own direct-to-consumer push, could make Nike a pacesetter again.

U.S. steel war invites needless collateral damage

30 Jun 2017

With overcapacity on the upcoming G20 agenda, the White House is mulling a 20 pct tariff on imports. That'd be risky for the auto and construction industries. A similar 2002 levy under President Bush led to 200,000 job losses. There are smarter ways to address market distortions.

Review: What really creates the value of money

30 Jun 2017

Christine Desan’s “Making Money” is not only a fine monetary history of England. The 2014 book is relevant today. It shows cash and governments go together, the gold standard was a misnomer and central banking is political. And we should stop outsourcing money-creation to banks.

Colombia faces peace paradox as FARC rebels disarm

30 Jun 2017

Ending five decades of civil war will lift the Andean nation's economy in the long run, but place additional burdens on tight government finances in the meantime if peace is to prosper. Encouragingly, murders are down and tourism up, but it could all still go wrong.

Spectre of old normal gives investors a fright

30 Jun 2017

Financial markets have grown used to sluggish growth, low inflation and rock-bottom interest rates. Now the hint of tighter global monetary policy has pushed up yields and knocked stocks. Though better economic prospects are welcome, a shift will be painful for investors.

Altice discount a dubious buying opportunity

30 Jun 2017

A float of its U.S. arm has made the Dutch telco’s discount to the sum of its parts more visible. It’s a good time to invest in the parent if founder Patrick Drahi can succeed at running it more as an integrated group. Limited synergies and questionable governance raise doubts.

Rocket cleans its plate in Delivery Hero IPO

30 Jun 2017

Floating its food delivery offspring for 1 bln euros is a much needed success for the German tech investor. It sold the maximum number of shares at the top end of the price range. The only snag is that there’s not a great amount left on the table for outside investors.

Hong Kong’s Enigma crash reinforces small-cap fear

30 Jun 2017

The city’s junior board has tumbled, led by a cluster of firms that an influential activist has dubbed "The Enigma Network". Investors were already souring on the low end of the market. Authorities ought to clean house before pushing to attract yet more small-cap listings.

Green bonds could help build new Silk Road

30 Jun 2017

Investors have yet to warm to the Belt and Road, China’s huge infrastructure plan. Beijing’s new development bank, the AIIB, could help by issuing green bonds to fund railways and ports. But if the projects’ environmental credentials are weak, the lender’s reputation will suffer.

Viewsroom: Blue Apron’s debut leaves bad taste

29 Jun 2017

The meal-kit delivery firm had an unappetizing IPO, barely opening above its much-reduced price of $10 a share. Investors are starting to wise up to fluffy concoctions with little meat. The more discerning environment will make it difficult for half-baked companies with high risk.

Dow boss gets in way of own ambitious deal

29 Jun 2017

Andrew Liveris wanted the $150 bln union with DuPont, now under way. But Glenview Capital dislikes the recent extension of his tenure. Like Dan Loeb's Third Point, the investor also wants tweaks to the post-merger breakup plan. The Dow CEO is stuck between his job and his vision.

FDA moves signal storm warning for pharma

29 Jun 2017

New commissioner Scott Gottlieb is wasting no time combating high prices. The U.S. agency will expedite reviews of generic-drug applications to promote competition. The changes will batter the likes of Valeant and Cardinal Health, and cast a cloud over branded drug makers.

Walgreens salvages mild boost from intense effort

29 Jun 2017

After antitrust pushback on acquiring the whole of Rite Aid, the U.S. drugstore is buying over 2,000 of its rival's stores for $5.2 billion. For CEO Stefano Pessina, doing about half the deal with half the benefits is something – but it's a modest return on 20 months' work.

Having aced stress test Citi now needs a strategy

29 Jun 2017

The $188 bln U.S. bank doubled its dividend and boosted its share buyback by $15.6 bln after clearing the Fed exam. CEO Mike Corbat has been laser-focused on returning capital and appeasing watchdogs. Spurring growth to match bigger investor payouts is a trickier challenge.

Murdoch’s Sky bid promises lack credibility

29 Jun 2017

Regulators say a bid by 21st Century Fox for control of pay-TV firm Sky may give the mogul’s family too much power over UK news. The government could approve the deal if it accepts remedies such as a separate editorial board. Murdoch’s history of meddling makes this unconvincing.

Draghi’s taper tizzy is sign of dangers to come

29 Jun 2017

Comments by ECB chief Mario Draghi drove up bond yields and the euro, despite later protestations that markets had misread him. The ado owes more to investor complacency than fuzzy talk. It highlights traders’ twitchiness and the challenges in withdrawing ultra-loose policy.

Lessons from Europe’s tricky trio of bank rescues

29 Jun 2017

Creditors saved Britain’s Co-operative Bank, Spain’s Popular was sold, and two Italian lenders received a bailout. Though circumstances differ, the common theme is that regulators remain wary of winding down troubled banks. New capital rules will eventually make the task easier.

Visma goes viral for private equity owners

29 Jun 2017

KKR is bowing out of the Norwegian software group, with a 22 pct annual return. The buyer, HgCapital, was the seller when KKR bought in 2010. All have done well, because the company’s value has increased ninefold to $5.3 bln. The hard part will be securing an exit at that price.

Staples’ $6.9 bln buyout could end in the shredder

29 Jun 2017

Private equity firm Sycamore is paying an 18 pct premium for the office supplies retailer whose revenue is falling. Even with generous assumptions, the buyout hardly passes return hurdles. Sycamore will need to flex superhuman turnaround muscles for this deal to pay off.

Alibaba readies for showdown in Southeast Asia

29 Jun 2017

The Chinese giant spent another $1 bln to tighten its grip on regional arm Lazada. The extra control could be useful as Alibaba confronts local upstarts, domestic peer JD, and possibly Amazon in the future. All will face formidable challenges, from logistics to payments.

Video offers thinning ray of hope for LeEco

29 Jun 2017

Worsening cash problems have pushed the Chinese tech conglomerate to focus increasingly on smart televisions and online streaming, as it sells other assets. Even if mounting financial and legal woes are surmounted, squeezing more profit out of Chinese television will be tricky.

Foreign banks get U.S. stress-test cheat sheet

28 Jun 2017

America's top banks passed the Fed’s annual checkup, including the so-called qualitative portion that has tripped them up before. International players like Barclays and Deutsche Bank will have to take the exam next year. Their U.S. rivals have given them a road map to follow.

UGGs could be cozy fit for buyout barons

28 Jun 2017

A pushy investor in $2.2 bln Deckers, owner of the trendy sheepskin-lined boots, issued an odd ultimatum to the board: sell the company or face a fight at the ballot. The numbers may stack up for private equity. It's a question of whether valuation and retail risk are too high.