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Wednesday, 23 April 2014

BREAKINGVIEWS

London gives BoE an emerging economy problem

23 April 2014

Foreign capital inflows are supporting a housing bubble in London, and have helped push up sterling - even though the UK’s trade position is almost dire. An unbalanced economy is getting worse. As pre-crisis emerging markets learned, this is a problem with no easy solution.  

A shopper passes demonstrators outside clothing retailer Primark

Primark sweet spot sugars ABF’s conglomerate pill

23 April 2014

Shares in UK-based Associated British Foods leapt 8 percent as its Primark discount retailer outlined bold U.S. expansion plans. ABF’s sugar processing unit also seems to be coping with a changing regulatory regime. The shape of the whole business is odd, but seems to work. 

A pig breaks out of a swinery before being sold on a street in Zhulin county of Jiaxing, Zhejiang province March 15, 2013.

WH Group’s chopped IPO still looks unappetising

23 April 2014

The Chinese pork producer is slashing its offering to as little as $1.3 billion. But its reluctance to cut the share price won’t tempt investors turned off by the fat valuation. With an overhang of private equity shareholders and a hefty debt burden the IPO remains a tough sell.

Bill Ackman

Dawn raid makes comeback via activist drone strike

22 April 2014

Agitators usually take a stake in a company and then try to make something happen. Bill Ackman has instead teamed up with Valeant Pharmaceuticals to grab a 9.7 pct interest in $40 bln-plus Allergan, with a hostile takeover ready for deployment. It’s a potent battlefield tactic.

Keystone pipeline, Capitol, government, politics

Regulatory dithering can cost the economy dearly

22 April 2014

The U.S. government’s continued deferral on the Keystone pipeline decision is a case in point. One year’s economic benefit from the project may be $1.8 bln; if the answer is no, the energy system can be optimized another way. Win or lose, regulators need to make up their minds.

Computer chip

ARM offers a non-alarming mini-disappointment

23 April 2014

Shares in the $23 bln UK microchip designer fell 4 pct after royalty revenue for using its blueprints barely grew. But licences are strong, smartphone demand growth could return soon, and the “internet of things” is promising. The company’s high-margin model is still holding up. 

A Sinopec gas station is seen behind traffic lights in Hong Kong April 26, 2010

Sinopec retail sale is key to topping up its value

23 April 2014

The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.

A logo is seen on a Coca-Cola bottle in Zurich, February 16, 2011. REUTERS/Christian Hartmann

Coca-Cola deserves protest vote one way or another

22 April 2014

Several shareholders object to the $180 bln drinks giant’s equity pay plan. Some want the chairman and CEO jobs split. Nearly a quarter dissed top executives’ comp last year. With the stock underperforming, it’s no wonder investors are grouchy ahead of Wednesday’s annual meeting.

Texas cracker spat hides Petrobras waste at home

22 April 2014

The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.

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Features

Olaf Storbeck

Car mega-recalls put economies of scale to test

22 April 2014

GM, Toyota and VW recently found problems in 16 mln cars between them. Industry recalls are rising thanks to shorter development times and more sharing of parts and production across models. The financial benefits outweigh the risks – as long as carmakers pounce on errors early.

Martin Hutchinson, Breakingviews, Columnist

Review: Hustling helps Africa's partial success

17 April 2014

Dayo Olopade’s “The Bright Continent” describes “kanju,” the hustling, striving and rule-breaking that make modern Africa work. The canny invisible hand can outwit the dead hand of corrupt bureaucracy. Sadly kanju makes the continent a tough place to do fully organized business.

Columns

Edward Hadas: Don’t bother with share-based pay

16 April 2014

Coca-Cola’s controversial share award scheme takes a bad idea to a foolish extreme. Paying workers in their employer’s paper makes no sense. The share price has too little to do with corporate performance, and the work of any single employee has little effect on the share price.

Andy Mukherjee

India in depth: Modi may as well let states spend

15 April 2014

Empty coffers await the opposition leader who is widely tipped to be the country’s next prime minister. Instead of pursing self-defeating austerity, Narendra Modi could pass on more federal spending budget to India’s states. Their expenditure produces three times more output.