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Tuesday, 21 October 2014

BREAKINGVIEWS

Christophe de Margerie Chairman and CEO of Total addresses delegates during the annual meeting of WEF in Davos January 24, 2013.

Total's Margerie may need two successors

21 October 2014

The death of the French oil group’s chairman and CEO in a plane crash deprives the company and the industry of a flamboyant leader. It poses a challenge for succession planning at Total at a critical time. A solution could be to separate the jobs of corporate figurehead and CEO.

A pedestrian is reflected in the display of a foreign exchange office in central Sydney

FX business now shares equities' harsh economics

21 October 2014

That’s why recently resurgent volatility in currency markets won’t restore investment banks’ revenue. Blame a secular shift in FX, and the rise of electronic trading.

A Chinese national flag flutters at a construction site for a new residence complex in Beijing November 4, 2013. REUTERS/Kim Kyung-Hoon

China grasps nettle on colossal housing overhang

21 October 2014

Property investment is slowing sharply, dragging GDP and commodity prices with it. So far, China’s planners have mostly stood by. Letting market forces operate could bring financial disruption. But unwinding the massive oversupply of hastily-built housing has to start somewhere.

A logo of Apple is seen in this September 23, 2014 illustration photo in Sarajevo.

Apple's new, new things overshadowed by old thing

20 October 2014

The drumbeat for innovation banged on till the watch and payments technology finally appeared. In the meantime, it was iPhones that spurred better than expected revenue of $42 bln, accounting for 56 pct of the total. Apple’s one-trick pony will do until the herd picks up speed.

U.S. mortgage watchdog risks subprime repeat

20 October 2014

New rules on federal guarantees clarify lending criteria. They also cut required down payments to 3 percent. That invites another wave of underwater borrowers. Sure, home ownership is down from its peak. But focusing on that, rather than prudence, helped inflate the last bubble.

A Denver Broncos player wears Reebok boots before competing against the Dallas Cowboys in their NFL football game in Denver October 4, 2009.

Adidas can't afford to be sentimental about Reebok

20 October 2014

The German sports group is reportedly set to receive a $2.2 bln offer for the unit. Having overpaid for Reebok in 2006, Adidas has since turned it round and may be loath to sell. But Reebok has little strategic use. Fiduciary duty demands a cold appraisal of its financial value.

A man speaks on his phone on a sunny morning as he walks past the columns of the Bank of England in the City of London, May 19, 2014.

BoE IT payments glitch raises serious questions

20 October 2014

The central bank says a malfunction has led to backlogs in settling large payments, of the sort made by home-movers. The BoE is hard on retail banks for such failings. Its systems are meant to be “fault tolerant.” Even if the fallout is limited, an investigation shouldn’t be.

The entrance of Monte Dei Paschi bank headquarters is pictured in Siena January 24, 2013.

Monte dei Paschi in EU bank stress test purgatory

21 October 2014

The Italian bank’s shares have tanked on fears it will fail this week’s EU stress tests, even though it has a sizeable buffer against losses. Second-guessing the upcoming results is a difficult task. But investors may also wonder where the new capital could come from.

A girl holds a Hong Kong national flag in Hong Kong.

Hong Kong tycoons can be part of protest solution

21 October 2014

The city’s business leaders have outsize influence over local politics. Relaxing their grip on special corporate votes would be a symbolic gesture to pro-democracy activists – and may help preserve the stability that has served tycoons, and their investors, so well for so long.

REUTERS/Aly Song

Two useful AbbVie inversions to pay for failed one

20 October 2014

Turning tail on the $54 bln Shire deal exposes the U.S. drugmaker’s folly chasing a lower tax bill. Investors facing a $1.6 bln break fee should push for other AbbVie flips: boss Richard Gonzalez’s compensation and the company’s governance in the form of an independent chairman.

The dome of the Capitol is reflected in a puddle in Washington.

U.S. Senate shift may give Wall St glimmer of hope

20 October 2014

Most polls suggest Republicans will take control of Congress in November’s election. Their possible slim majority won’t mean much for lawmaking. But chairing banking committees and the confirmation process could reduce some of the pressure on the financial sector.

Signage with the logo of Spanish construction company "Fomento de Construcciones y Contratas" (FCC) is seen next to an unfinished hospital in Ronda, near Malaga, southern Spain, January 15, 2014.

Spanish heiress’ pain is builder FCC’s gain

20 October 2014

The Spanish group plans a 1 billion euro capital hike to pay down debt. That will massively dilute Esther Koplowitz’s majority stake after she refinances her own 1 billion euro debt. FCC can attract new investors, provided the price is right and markets agree. 

An IBM Central Processor Unit is seen on a Hard Disk Drive controller in Kiev

IBM keeps earnings bug hardwired in system

20 October 2014

Investors zapped $13 bln off Big Blue’s value after the firm ditched its 2015 goal of making $20 a share and had to pay to get rid of its chip business. That’s not the worst of it. What’s worrying is that CEO Ginni Rometty is sticking with the same plan that has sent sales lower.

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Features

Opus Dei pulls few strings in Spanish business

17 October 2014

The Madrid beatification of an early leader of the Catholic group gathered a big crowd and high-powered sponsors. Critics say Opus has undue influence in its homeland. But its clout has declined in modernising Spain. Still, a strong work ethic creates professional opportunities. 

Review: The worst of both Mao and markets

17 October 2014

Nicholas Lardy’s new book describes a China in which the state is retreating. He has the numbers to demonstrate the private sector’s steady gains, but official statistics are deeply misleading. In the PRC, the public-private line is blurred by the triumph of crony capitalism.

Columns

Hugo Dixon

Hugo Dixon: Markets right to worry about euro zone

20 October 2014

The epicentre of last week’s fright was the 18-nation currency bloc, whose three big economies – Germany, France and Italy – are in their own ways stuck. There is a grand bargain sketched out by Mario Draghi that might shift the malaise. But it won’t materialise soon, if at all.

Edward Hadas

Edward Hadas: Surge pricing and the just economy

15 October 2014

Car service Uber raises its prices to balance supply and demand when drivers are reluctant and customers are eager. That works, but the method has an anti-social edge. For the common good, it’s better to start with just prices and add allocation by patience, need or merit.