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Tuesday, 29 July 2014

Stocks and Funds

A man walks past Deutsche Bank offices in London

Deutsche/UBS: there’s life in EU bond trading yet

29 July 2014

The two banks and Credit Suisse outperformed Wall Street in second-quarter debt trading. That bucks a trend that has seen U.S. rivals take market share. Of the two, Deutsche Bank looks better placed to gain from any sustained bounce back in fixed income. 


Renault is showing a healthy turn of speed

29 July 2014

Demand is weakening in developing countries and there are some cashflow concerns. But the French car manufacturer is adding market share in Europe, its cost control is relentless, and profit margins are rising. Renault is well placed to move up through the global field of automakers. 

Nomura trading prowess demands fuller explanation

29 July 2014

The Japanese investment bank’s fixed-income arm is unfazed by broader gloom. Revenue increased 7 pct in the latest quarter. The lack of an old, bad trading book probably helps. It’s hard to tell, though, just how Nomura outflanked rivals, and thus whether success is sustainable.

U.S. corporate capex may be as good as it gets

28 July 2014

Profits are at record levels, yet capital outlays are only middling as a fraction of GDP. Even that’s an improvement. Capacity isn’t yet stretched, so a surge in investment is unlikely. Besides, bosses know that, right or wrong, stock buybacks and mergers impress investors more.

Bids and Buyouts

Dollar Tree

Discounters' $20 bln deal may spark M&A price war

28 July 2014

Dollar Tree has found more than enough savings to cover the 23 pct premium to be paid to Carl Icahn and other Family Dollar investors. As a percentage of revenue, though, the synergies are relatively low. That may leave room for sector giant Dollar General to lob in a bid.

A nurse prepares a vaccine shot at a hospital.

Reckitt pharma spinoff looks like a cold turkey

28 July 2014

The UK group is kicking its Suboxone habit. It plans to demerge its prescription drugs unit whose lead product is a heroin substitute. Reckitt is open to a trade sale and that might be more remunerative, but revenue and profit declines mean valuations could be thin either way.  

Zillow and Trulia fire up online real estate boom

28 July 2014

The two listing services’ $3.5 bln merger won’t produce many cost savings. But the deal promises to reduce competition and squeeze prices higher, creating the potential for even faster growth. With only a tiny slice of the ad market, online real estate may not be tapped out.

A microphone of Sky Sport TV station is seen before the German Bundesliga first division soccer match between Bayern Munich and Hoffenheim in Munich March 10, 2012.

Sky Europe transforms BSkyB investment case

25 July 2014

The UK satellite group is paying its 39 pct shareholder Fox 4.9 bln stg for sister Sky outfits in Germany and Italy. The businesses are close already and the price looks reasonable. Sky Europe promises scale, growth, and cost savings. But leverage will soar and cash returns shrivel.

Money and Markets

Chinese banknotes are seen at a vendor's cash box at a market in Beijing February 14, 2014.

China online funds’ yield hunt piles on risk

29 July 2014

Money market funds like the one linked to Alibaba are buying longer-term assets to bolster yields. That could create a crunch if savers realise their assets aren’t as safe as cash. Freeing up bank deposit rates would remove the distortion that fueled the boom in the first place.

Argentine opportunity cost is reason to cut deal

28 July 2014

Another default arguably might not make things immediately worse. But it would set back recent efforts to curry favor with international financiers. With maybe $300 bln needed to develop shale oil and gas alone, swallowing national pride and ponying up $15 bln look worth it.


Korea recklessly dices with property bubble

29 July 2014

Seoul has loosened limits on mortgage borrowing to rescue GDP growth. The real problem, though, is two years of below-target inflation. That has hurt consumption by keeping the real value of household debt too high. Bold monetary easing might be more helpful.

Freed Russian former oil tycoon Mikhail Khodorkovsky reacts during his news conference in the Museum Haus am Checkpoint Charlie in Berlin, December 22, 2013.

Yukos ruling casts Russia further into the cold

28 July 2014

The Hague’s arbitration court ordered Russia to pay $50 bln to the expropriated oil group’s former shareholders. Moscow will appeal, but could lose again. It will then have to either blow a hole in public finances or ignore the penalty – and spend years in debtors’ hell.