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Yuan devaluation raises currency war anxiety

11 Aug 2015

China’s central bank weakened its currency by almost 2 pct against the U.S. dollar in what it called a “one-time correction.” A deflating mainland economy may justify further depreciation. That would put pressure on other countries, raising the risk of tit-for-tat moves.

Buffett’s $37 bln Castparts deal lacks precision

10 Aug 2015

The Oracle’s Berkshire Hathaway is paying 19 times earnings for aircraft components maker Precision Castparts. The acquisition fits Buffett’s mold, but also coincides with cyclical highs in plane orders, stock valuations and M&A. Even for a long-term investor, the timing is odd.

Greece still deserves its place in the euro

10 Aug 2015

While Greece may get a bailout, the recent crisis cast doubt over its place in the euro. Ejecting Athens from the single currency would make sense if it is exceptionally bad, incapable of reform, and its exit made the euro zone stronger. None of those arguments are clearly true. 

Allianz takes Pimco’s fall from grace in stride

7 Aug 2015

With assets under management and profit falling, the German insurer’s Pimco arm is still reeling from boss Bill Gross’ acrimonious exit. But Allianz can ride it out. Its insurance division and a growing in-house asset manager mean it can stick to full-year targets. 

Singapore at 50 ought to loosen up

7 Aug 2015

Pragmatic policy and hard work helped the city-state attain a level of prosperity unimaginable five decades ago. Future success depends on dialling back state capitalism and paternalism, and spawning more entrepreneurs. Few will bet against Singapore continuing to defy the odds.

Zurich can justify a swoop on RSA

6 Aug 2015

The Swiss insurer released disappointing results but thinks its UK peer remains a good fit. Zurich’s hurdle rate for investment is around 10 percent. Offering 600p a share for RSA, a 36 pct premium, should allow that without synergy assumptions being too ambitious.

Malaysia mess puts Goldman Sachs in the hot seat

6 Aug 2015

The Wall Street firm raised lots of money very quickly for state-backed 1MDB. Though the deals earned Goldman outsized fees, a brewing political scandal involving the fund leaves the bank exposed and raises questions about its processes for vetting reputational risk.

StanChart CEO’s bad numbers don’t disappoint

5 Aug 2015

New boss Bill Winters used first-half results to raise the emerging market bank’s bad debt provisions and halve its dividend. A 5 pct return on equity shows the scale of the challenge. After two months in charge, the CEO has quickly got to grips with StanChart’s biggest problems.

Credit Agricole gets nasty reminder of ECB’s teeth

4 Aug 2015

The French bank’s shares slumped 9 pct after it cited Frankfurt’s opposition to a planned structural rejig. While peer BPCE enacted a similar overhaul in 2013, that predates the ECB’s new supervisory remit. Credit Agricole could have done with being less presumptuous.

Timing looks right for RBS state selldown

3 Aug 2015

Cutting its 79 pct stake in the lender would leave the UK with a paper loss, yet focusing on the exact in-price is unhelpful. Better to sell than hold on for a recovery in price that may never come. Besides, the good vibes that come from less state ownership should limit losses.  

BNP Paribas’ M&A machine spits out growth and risk

31 Jul 2015

France’s top bank by assets cranked out resurgent second-quarter earnings of 2.6 bln euros. Three takeovers in 2014 are delivering results. Yet dealmaking sprawl has tripped up rivals in the past. It might be a good time for the Belgian state to trim its 10 pct stake.

Numbers add up to HSBC leaving London

31 Jul 2015

The global bank is reviewing its head office location based on 11 criteria such as economic importance, transparency and tax. A ranking based on data compiled by Breakingviews shows Singapore, Hong Kong and even Toronto are more attractive than HSBC’s current home base.

New seasoning brings out blandness of U.S. growth

30 Jul 2015

First-quarter GDP oddities have been addressed, but the basic message of the 2.3 pct pace of Q2 expansion is steady but unspectacular growth. There’s no excuse for the Fed to wait for more. The stable trend also ought to curb fiscal prognostications from presidential hopefuls.

Deutsche Bank smart on growth, shabby on costs

30 Jul 2015

Germany’s biggest bank grew capital buffers and revenue briskly in the second quarter. But expenses devoured 85 pct of the top line – the same as a year ago. New co-CEO John Cryan needs to pull Deutsche out of some of the 60-plus countries it aims to be in, and cut headcount.

Malaysian crisis could do lasting financial damage

30 Jul 2015

Prime Minister Najib Razak’s sacking of his deputy opens the door to a protracted power struggle. The economy can ill-afford it. Fading consumer and investor confidence and a slumping currency could mean a long period of high interest rates, anaemic growth and soured loans.

Novartis spinoff is neat cure for Big Pharma ills

29 Jul 2015

The $275 bln Swiss pharma group is injecting three drugs-in-development into a new entity backed by UK investors. Venture capital markets can be better at valuing and nurturing small drugs than Big Pharma shareholders. With biotech markets hot, there’s room for copycat deals.

Barclays’ new crash diet needs markets to be kind

29 Jul 2015

The UK bank wants to cut up to 8 pct more in costs, while shedding legacy assets fast. Given Barclays’ new expense target is expressed as around 55 pct of the top line, more revenue would help. Both that and a helpful environment for deleveraging are far from assured.

Twitter’s mealy-mouthed strategy is hard to follow

29 Jul 2015

Interim boss Jack Dorsey said the micro-blogging site isn’t satisfied with just a 66 pct increase in Q2 revenue. His prescription for what ails Twitter, however, is cryptic. Companies that can’t express goals clearly, especially ones seeking a CEO, reduce chances for success.

Ford shows why Marchionne’s M&A drive is stalling

28 Jul 2015

The U.S. carmaker revved up its best quarter since 2000, with a record showing in North America. Boss Mark Fields sounded optimistic, too. That makes it easy for Ford to ignore the Fiat Chrysler CEO’s pleas for industry consolidation – even if tie-ups make sense longer term.

Zurich should look hard before it leaps at RSA

28 Jul 2015

The Swiss insurer wants to invest free capital rather than give it back to shareholders. UK-based RSA, at 5 bln stg, is an attainable target. But Zurich Insurance might first examine the disastrous 1996 deal that created the company formerly known as Royal & Sun Alliance.