EMEA

Pricey stocks overlook the world’s troubles

19 May 2024

Trade tension between the US and China will dampen growth, while rising defence spending means higher taxes and lower profits. Equity markets, now at record highs on both sides of the Atlantic, aren’t cheap. Add in these headwinds and investors have more downside than upside.

Ping An wrestles with its HSBC dilemma

17 May 2024

The bank's top owner may reduce its 8% stake a year after its breakup bid failed. It's a fair move given the recent bumper returns and looming succession and growth issues. But HSBC's dividends and arguable undervaluation suggest Ping An won't trim its outsized holding too much.

Private credit wonder drug works in limited dose

17 May 2024

The quantity of loans channelled directly to companies by funds has exploded to more than $2 trln. The economic benefits of diversified lending just about make up for the risks. The challenge is making sure financial innovation does not starve banks to death.

Czech tycoon gets a red-letter day, second class

16 May 2024

Daniel Kretinsky hiked his offer for the owner of Royal Mail to $4.4 bln. The board is minded to accept, even though International Distributions Services may be worth more. Yet IDS shares trade far below the bid, suggesting the UK government may find a way to block the deal.

Wood Group is parable for takeover-wary UK boards

16 May 2024

Shares in the energy-services group have languished since Apollo ditched a $2 bln proposed bid last year. The board is struggling to get a new suitor to match the old price. With UK firms facing record takeover interest, it’s a reminder that cash premiums are often hard to beat.

Gulf buyer is best hope to revive De Beers sparkle

16 May 2024

Anglo American wants to offload its diamonds group. Hit by cheaper lab-grown gems and falling demand, De Beers will struggle to attract a luxury buyer. A rich Middle East suitor looks the most plausible way to avoid a sale at well below its $7.6 bln book value, or a mere spinoff.

AI will help treat Big Pharma’s looming illness

15 May 2024

Drug discovery is a long and costly process with success rates below 10%. Caps on prices and shorter patent periods in the US will also make life harder for the likes of Pfizer, AstraZeneca and rivals. Despite patchy results, betting on machines may be the best hope of a cure.

Bank treasurers hold keys to an investor mystery

15 May 2024

Executives who manage lenders’ exposure to interest-rate swings are more important than ever. But it’s tough for shareholders to pick their way through the complex hedging programmes of $570 bln JPMorgan and its peers, adding volatility to their share prices.

Anglo breakup gives investors a free option on M&A

14 May 2024

The $40 bln miner plans to offload coal, diamond, nickel and platinum assets to help fend off takeover interest from BHP. The standalone strategy may be worth more to shareholders than what its Australian suitor proposed. Yet if it flops, a future takeover might be even easier.

China tests EU resolve on export trade fight

14 May 2024

France’s Emmanuel Macron got little to show from President Xi Jinping’s European tour this month. In this Exchange podcast, MERICS expert Grzegorz Stec explains the difficulty of managing ties with Beijing and why balancing risk and business opportunity is so tricky.

ECB risks tripping over euro zone’s green shoots

14 May 2024

Europe’s economy is showing signs of life. Services are expanding faster than in the US. If consumers start spending, GDP could grow by more than the 0.6% forecast by the European Central Bank. That, though, would make it hard for policymakers to embark on a series of rate cuts.

BHP-Anglo impasse more about structure than price

13 May 2024

Anglo American spurned an improved $43 bln bid from its Australian rival. A key obstacle is that BHP wants its target’s investors to bear the risks attached to spinning off unwanted South African units. CEO Mike Henry can remove it by making an offer for the whole company.

Oil groups’ AGM rebels may lose even if they win

13 May 2024

Shell’s annual shareholder meeting will be a showdown between CEO Wael Sawan’s climate strategy and an activist group’s emission reduction proposal. Investors are unlikely to turn against the UK oil major. But the results may be disappointing even if they do force change.

Putin war economy plans require a reality check

13 May 2024

The Russian president named an economist as defence minister after setting multi-year targets to boost industrial production in a state of near autarchy. Vladimir Putin’s view of a country that would become the world’s fourth richest while mired in a long conflict is far-fetched.

The world can survive a strong dollar – for now

13 May 2024

The greenback has gained 17% against major currencies in three years. Other countries avoided repeating past crises through better fiscal policies and less foreign borrowing. But in the long run a mighty buck will put economies under stress, especially in emerging markets.

Rio Tinto may be dark horse in BHP-Anglo saga

10 May 2024

The $120 bln miner may yet crash the Big Australian’s $39 bln merger. Still, if BHP does win Anglo and Glencore is busy integrating its $7 bln Teck deal, Rio’s key mining rivals will be distracted. That may give CEO Jakob Stausholm a clearer run at the likes of First Quantum.

Arm encounters the AI bubble’s ups and downs

9 May 2024

The $110 bln chip designer reported record revenue in the fourth quarter, but investors disliked a less punchy outlook. Big Tech’s AI-fuelled data centre land grab is powering Arm’s revenue and margins. But its toppy valuation means any perceived upset gets punished.

HSBC’s big pair of shoes will be hard to fill

9 May 2024

The surprise departure of boss Noel Quinn, who dramatically reshaped the firm, puts the globe-straddling bank on the spot: appoint a steward of its strategy from within, or a new thinker from outside? In this Viewsroom podcast, Breakingviews columnists debate the $170 bln choice.

BBVA’s hostile $13 bln M&A bet faces long odds

9 May 2024

Chair Carlos Torres Vila is going ahead with his all-share offer for Sabadell despite a rebuff from the smaller Spanish bank’s board. Yet Madrid firmly opposes a deal, and BBVA’s sliding stock is denting the bid’s appeal. Success seems unlikely.

New ASML CEO’s job is harder than it might look

9 May 2024

The $360 bln Dutch firm is the sole maker of machines that produce the most advanced chips for Intel and TSMC. New boss Christophe Fouquet effectively runs a monopoly. But he still faces risks from staff retention, China-US spats, and as-yet-opaque risks to ASML’s domination.