EMEA

As rates fall, European banks can still rise

22 Jul 2024

Tight monetary policy turbocharged returns for lenders like $68 bln UniCredit. Yet lower interest rates don’t have to do the opposite. Central-bank cuts may boost loan demand and investment-banking fees, while keeping bad debt low, which should push up valuations.

Cyber meltdown points to downsides of efficiency

19 Jul 2024

A software update by $83 bln CrowdStrike grounded flights and disrupted financial markets. That’s possible because businesses work with a small number of providers, seeking lower costs. It supports rich tech valuations, but also heightens the risks of a catastrophic failure.

UK growth fix can start with pampered rich savers

19 Jul 2024

New Prime Minister Keir Starmer wants to unblock Britain’s dismal economy. One aid would be to raise revenue by cutting superfluous tax perks for wealthy savers. Another is to find a way to deploy UK savings in more growth-enhancing assets than is currently the case.

China’s EU-made EVs are in pole position – for now

19 Jul 2024

BYD and Chery are planning plants in the European Union; peers will follow. While factors like labour and energy add 25% to the cost of cars made in the bloc, tech and design mean the overall product is cheaper than Western rivals’. But Brussels could yet complicate matters.

Modern capitalism’s problem is too much prosperity

19 Jul 2024

Growth in productivity worldwide has collapsed since the 1970s. One explanation is that modern life in developed countries has become too comfortable as governments cushion the effects of economic cycles. Reviving capitalist economies may require accepting some level of hardship.

Meta stake may blur vision for Ray-Ban maker

18 Jul 2024

The $1.2 trln tech giant may buy 5% of eyewear group EssilorLuxottica. It’s a show of confidence in the companies’ smart glasses partnership. But the investment could complicate the Paris-listed firm’s governance and limit its options for working with rivals like Apple.

EQT hit carries warning for buyout-firm investors

18 Jul 2024

The $40 bln private equity group’s shares sank after it missed analysts’ forecasts. The lesson is that predicting profits from selling companies is tough. It also suggests that a recent valuation run-up for listed managers is out of whack with tricky dealmaking conditions.

Novo Nordisk obesity feast no longer a free lunch

18 Jul 2024

The $603 bln drug group’s shares have more than trebled since 2021 on the back of booming sales of weight-loss treatment Wegovy. To justify that, it will need to keep coming up with new, even better products, and fend off rivals like Pfizer. Neither looks certain.

HSBC makes right call on CEO, three months late

17 Jul 2024

Georges Elhedery, the $160 bln bank’s new boss, always looked the best available option. HSBC’s current CFO will have a job managing slower growth and tricky Chinese relations. Had the lender endorsed him in April alongside Noel Quinn’s exit, he would be on a firmer footing.

Public investment dearth is Europe’s growth killer

17 Jul 2024

Germany will spend a paltry 0.15% of GDP on new government-backed projects in 2025. Other European countries are tightening their belts for fear of having to raise taxes. But failing to invest enough in the green transition, infrastructure or defence will cripple their economies.

European boards have too little skin in the game

17 Jul 2024

Non-executive directors at big US companies get 60% of their pay in equity. That’s rare in Britain, France and Germany, where many board members own a slither of stock. Cash fees warp incentives, discourage engagement, and risk making Europe’s capital markets less competitive.

Buyout barons’ IPO castoffs trade may be repeated

16 Jul 2024

Clayton Dubilier & Rice’s $2.6 bln offer for software firm Exclusive Networks would see it scoop up a stock that has drifted since a 2021 listing. Majority-owner Permira would get a handy way to cut exposure. A long list of struggling initial offerings mean more deals may follow.

Scor investors’ bad year can still get worse

16 Jul 2024

The French insurer’s shares fell 25% on Tuesday due to troubles in its life arm. Scor’s investors could have sold to rival Covéa six years ago, at twice the current valuation. If the looming hurricane season leads to big losses in 2024, they may be obliged to pump in new equity.

European board pay requires a US-style overhaul

16 Jul 2024

Non-executive directors at UK and EU-based firms own little equity in the companies they oversee. In this Exchange podcast, Liad Meidar of the hedge fund Gatemore argues that this is a problem, while Peter Boreham of the pay consultancy Mercer explains why it’s hard to change.

Inflation teaches five lessons for the next crisis

16 Jul 2024

After taming a 9% rise in prices without breaking economies, US Fed Chair Jay Powell and other central bankers are poised to pat themselves on the back. There’s also an opportunity to improve the playbook. Among the useful takeaways: embrace taciturnity, flexibility and humility.

Burberry faces a lengthy stay in the bargain bin

15 Jul 2024

Shares in the $3.4 bln UK fashion group fell 17% after it replaced its CEO and suspended its dividend. New boss Joshua Schulman’s plan to refocus on trench coats isn’t certain to work. But Burberry fare’s waning appeal also limits the scope for a deep-pocketed acquirer like LVMH.

World polycrisis hangs on US politics

15 Jul 2024

The shocking attempted assassination of Donald Trump doesn’t just unveil the fragility of the US political environment. The globe also has much at stake in the outcome of November’s election. A victory for the former president would carry risks for Ukraine, trade and the planet.

Tariffs offer poor airbag for Europe’s carmageddon

15 Jul 2024

Volkswagen, Renault and others still have miserable valuations despite Brussels threatening China with penalties on electric-vehicle imports. The duties may not be big enough, and could even hurt Western players. Possible fixes, like rowing back on carbon targets, look tricky.

Axel Springer split could suit both parties’ needs

12 Jul 2024

Buyout firm KKR backed an 8 bln euro take-private of the media group in 2019. Now it may get the classifieds unit it likes while CEO Mathias Döpfner keeps news, the FT says. It would unpick an odd governance situation, and the German tycoon could get cash for a US media splurge.

UK gilts are ready to regain their long-lost shine

12 Jul 2024

British government bond prices are off 24% in three years due to a budget crisis, tight monetary policy and political turmoil. Yet the UK now has a fiscally austere new administration with a big majority and a central bank ready to cut borrowing costs. That could stop the rot.