China’s wannabe Nasdaq works better on paper 30 Oct 2009 A new market for growth stocks should in theory promote innovation and help move China s capital from where it s hoarded to where it s needed. But in practice, Chinext has opened as a chaotic hive of overvaluation. It looks a step too far, too soon.
French government zigs and zags on EDF strategy 30 Oct 2009 Ten months after backing the French energy group s US strategy including a $4.5bn bid for Constellation nuclear assets the state is to support new CEO Henri Proglio s plans to exit America. France has been a terrible custodian. What better case for EDF s full privatisation?
London’s mid-market brokers face Darwinian fight 29 Oct 2009 The City s independent stockbrokers made it through the crisis pretty much intact. But that means there are still many mouths to feed. With smallcap listings thin on the ground, and trading in smaller companies in decline, the fight for survival may only just be starting.
Virgin Media turnaround could be short-lived 29 Oct 2009 Two years ago, the UK cable operator was a struggling takeover target. But a strong set of quarterly numbers reinforces its ongoing transformation. The risk for investors is that Virgin fails to act swiftly to protect the broadband network core to its claimed competitive edge.
China’s megabanks face tricky transition 29 Oct 2009 ICBC and Bank of China have made up for falling interest margins by lending 30% more this year than in the whole of 2008, boosting their Q3 earnings. But lending must slow, and the banks will need to chase fees to keep profits afloat. That may tempt them to take bigger risks.
Deutsche Bank struggles to make most of crisis 29 Oct 2009 The German giant s latest results don t reflect its supposed winner status. Deutsche may be capable of making diversifying acquisitions, but its investment bank isn t outpacing rivals. It also remains curiously stubborn on capital. Deutsche is paying the price with its valuation.
Rivals try gaining on Exxon’s prowess with costs 29 Oct 2009 The Texan major has long been the model for efficiency in the industry and still enjoys a sizeable lead. But Shell, BP and others are hoping to narrow the gap with more credible restructuring plans and stronger discipline on expenses. They have a way to go yet.
CIT should be put out of its misery 29 Oct 2009 Creditors have until midnight on Thursday to vote on the US smallbusiness lender's proposals for a debt restructuring or a prepackaged bankruptcy. But CIT has little value as an ongoing business. Creditors would probably do better if it just sells off or winds down its assets.
Happy days not quite here again yet 29 Oct 2009 US growth of 3.5% looks like a bounce into recovery. But with cash for clunkers and government spending driving the numbers, it might as well be called Government Domestic Product. This approach caused a nice, but temporary, bounce in 1933. History may repeat itself.
Greenhill pays small price for step forward 29 Oct 2009 The advisory shop is spinning off its buyout funds at a price equal to just 1% of assets. That s cheap. But it makes sense. The lumpy business made earnings difficult to predict. To rectify this, it would have needed to grow, which risked irking advisory clients.
Proglio’s plans for EDF shouldn’t include Veolia 28 Oct 2009 The incoming chairman and chief executive of EDF says he doesn't want to merge the French electricity group with Veolia, the environment services company he currently heads. But he still wants EDF to become Veolia's dominant shareholder. This is a bad idea.
Too big to fail label needs more transparency 28 Oct 2009 The US Treasury s draft financial services law provides for a new class of systemically important banks which the Fed regulates more tightly and supports financially. That list should be public, not undisclosed as proposed, and the toobigtofail playing field needs to be level.
Debt swap window may be closing 28 Oct 2009 That s especially true for opportunists like Hilton and TXU. When debt trades at a significant discount to par, borrowers can offer creditors a better than market price while still cutting their debt loads. But rebounding debt markets mean it is harder to make the numbers work.
New UKFI chief’s first task: RBS bonus policy 28 Oct 2009 UBS banker Robin Budenberg is to be investment manager for the UK's bank stakes. Top priority should be encouraging RBS to show leadership with a prudent bonus policy this year. That may make Budenberg look a political stooge. But he ll soon have the chance to prove otherwise.
Nomura vindicated on Lehman, but needs an encore 28 Oct 2009 The Japanese broker s earnings no longer hang on its homeland. Lehman is delivering, with fixedincome trading countering an otherwise weak investment bank. The crisis gave Nomura the chance to jump into another pond. But it must now compete with fish that have got stronger too.
Wasserstein bequeaths a solid House of Lazard 28 Oct 2009 The Wall Street firm s thirdquarter earnings show its three main businesses firing on all cylinders. That's a fitting sendoff for Lazard s late chief and a sound base for whoever takes over. But that doesn t mean his successor can sit back comfortably.
Asia growth reflects and exacerbates imbalances 28 Oct 2009 China and Korea are showing an incipient export recovery. The revival in trade may partly reflect excess global liquidity, and partly the immaturity of China s consumer economy. Whatever the causes, returning Asian trade surpluses should be a concern.
US stuck with cash-guzzling GMAC 28 Oct 2009 Private investors have shunned the former GM finance arm. Given GMAC s role propping up Detroit's car sales, the government will probably plug the gap currently some $5.6bn. It's part of the much bigger Motown rescue. But it's a reminder that bailouts are a slippery slope.
European financials catch up with reality 28 Oct 2009 Tumbling bank share prices following ING s EUencouraged breakup may seem overblown. The Dutch bancassurer wanted to split itself up anyway. But bailedout bank shares were frothy, while bank subordinated debt was trading at a discount to par. A correction was overdue.
BP shows worst may be over for Big Oil 27 Oct 2009 The 47% drop in the oil giant s Q3 earnings was less than feared, thanks to impressive cost control. BP is promising further efficiency gains by the yearend. Longterm strategic issues persist. But for now, BP is reaping the benefits of past investments and a stronger oil price.
Modern finance, not free markets, created crisis 27 Oct 2009 George Soros new foundation will seek an alternative to market fundamentalism . But the false assumptions in modern financial theory abetted by laxity in monetary policy and government meddling in housing should get most blame for the crash of 2008.
RBS should prepare to sell its investment bank 27 Oct 2009 The casino arm of the statecontrolled UK lender is doing roaring trade. But the absurdity of a bank 70% owned by taxpayers competing on bonuses won t end any time soon. And profitability will dip as spreads normalise. A quick sale now would be tough. But RBS should get planning.
New boss aids UBS’ chances of selling Paine Webber 27 Oct 2009 Former Thundering Herd wrangler Bob McCann arrives with impressive credentials but a big challenge. Even he isn t expecting more than modest profitability. That might be sufficient to ensure independence, or a sale, of the broker even if McCann says it s not the goal.
Heineken in Mexican standoff – with itself 27 Oct 2009 The Dutch brewer probably can t finance Femsa's $7.5bnplus price tag with debt alone. To buy its Mexican partner, the familycontrolled brewer would need to issue equity. Rob Cox and Aliza Rosenbaum show how it can do so without the family losing control or spending a euro.
Yell £4bn refinancing plan deserves lender backing 27 Oct 2009 The UK directories group needs 95% creditor support for a deal to extend maturities and tweak covenants on its debt pile, alongside a £500m rights issue. Yell s business model may be challenged, but the new debt structure seems manageable and the alternatives look worse.
Lloyds’ capital wizardry could yield rich rewards 27 Oct 2009 The UK bank appears to need £25bn to exit the state s loanloss insurance scheme, but a rights issue could probably provide only half that. Swapping hybrid debt for convertibles would plug the gap, while diluting the government s stake. But such a plan won t be easy to execute.
China’s fight against market bullies has far to go 27 Oct 2009 Individual customers are taking on China s biggest domestic firms, but the antitrust regime has been more visible in shackling foreigners like CocaCola, ABInbev and GM when they bid for Chinese assets. The halfbaked regulatory framework risks preserving a stodgy state sector.
Germany needs cuts after losing US engine 26 Oct 2009 The new government is thinking of slashing taxes despite a worsening budgetary position. The approach is right. The Germans need to spend, as US consumers aren t. The way to make the tax cuts affordable is to trim big government.
RBS smartly seeks to limit cost of state insurance 26 Oct 2009 The UK bank has tentatively signed up for expensive state insurance that it now might not need. Unlike rival Lloyds, there s no prospect of statecontrolled RBS cancelling the policy outright. But it seems to have devised some sensible ways of making the scheme cheaper.
Asia gains as trade recovers faster than finance 26 Oct 2009 New GDP data from South Korea indicate a vigorous recovery, and economic fundamentals support the case. The trade crash a year ago hurt Asian economies more than, say, the US but now seems to have done less longterm damage than Western financial crisis.