Year: 2004

Will there be a January effect in 2005?

31 Dec 2004

Most stock market inefficiencies disappear as they become common knowledge. But not yet this one, which observably dates back to 1926. However the effect tends to reverse when small or low quality companies rally in the year s closing quarter as happened in 2004.

Gazprom merger ties itself in knots

30 Dec 2004

The Kremlin s plans to renationalise the Russian oil industry have hit a local snag. Meanwhile, Deutsche Bank is curiously trying to stop a US court from interfering. Weirdness is begetting further weirdness.

State firms to dominate oil markets in 2005

30 Dec 2004

In the 1990s, $30 a barrel proved a ceiling for oil prices. Now it looks like a floor. But the biggest beneficiaries of higher oil prices are likely to be stateowned oil companies rather than western oil majors.

Pharma closes out annus horribilis

30 Dec 2004

And with three major rulings awaited in 2005, sentiment could sour further. £90bn was wiped off the market capitalisation of the top ten firms in 2004, making it one of the worst years ever for drugs stocks.

Ukraine’s troubles not over yet

29 Dec 2004

Yuschenko s presidential victory brings the country closer to a Europeanstyle democracy. The Russians will watch with interest and fear. But Putin can afford to wait and see. Ukraine s deep divisions and stunted economy will not be easy to run. The opposition victory in the Boxing Day election was a blow to President Putin. But the Russian president can afford to play it long. Ukraine remains deeply divided and its economy is weak. Further instability is likely.

Tsunami’s true cost measured not in dollars

29 Dec 2004

Poverty explains both the overwhelming humanitarian cost of the tsunami and the relatively limited financial impact. This makes it all the more imperative that western nations provide generous aid.

Partying like it’s 1999

24 Dec 2004

Failed business models of the sort last seen in the late 1990s are getting a new hearing in the UK stock market. The latest is Ocado, the lossmaking grocery delivery group, which is murmuring about floating.

Britain mirrors US imbalances

24 Dec 2004

The country s deficit in goods and services is running at 3.6% of GDP. Its foreign income is decreasing. And manufacturing is in decline. The UK may be following the US in building prosperity through borrowing in which case sterling could follow the dollar downwards.

Expect more retail M&A in 2005

24 Dec 2004

But with so much capital still looking for a home, private equity investors will keep pouncing on every opportunity. Many of the obvious candidates have already been taken out.

KBC in E21bn merger with parent

24 Dec 2004

The Belgian bank's merger with Almanij addresses the problem of KBC s previously measly freefloat. Controlling shareholders initially resisted the deal because they face dilution, but they were won over by the potential for value creation.

Merrill Lynch is cleared of sexism

23 Dec 2004

Investment banks have shelled out millions in settlement of sexual discrimination claims. Merrill's win over a former employee's £7.5m claim could mark the high water mark for such cases.

Getronics attempts PinkRoccade stitch-up

23 Dec 2004

The Dutch IT services group warns its E350m bid could be threatened if PinkRoccade opens its books to rivals. Considering there's at least one matching bid waiting in the wings, PinkRoccade shareholders shouldn t stand for this.

Putin shows his roots over re-nationalisation

23 Dec 2004

The Russian premier's attitude to markets comes straight from Lenin and the oligarchs. And their idea of a normal market is pretty cruel. There is a rough justice in renationalisation. And rough tends to beget rougher.

US share rally is puzzling and dangerous

23 Dec 2004

Rates are rising, the economy is slowing, profits seem to be peaking and an already expensive market climbs 10% in two months. The gap will eventually close, but in which direction? A market fall is more likely than an economic improvement.

Fiat wants $3bn to cancel GM put – report

23 Dec 2004

On the face of it, the Italian group seems to have a strong hand. GM could potentially lose more than $3bn if forced to buy out Fiat Auto. But things may not be so simple. In reality, Fiat is talking tough as its options are limited.

Political reality holds back Russian dreams

22 Dec 2004

The setback in Ukraine and the destruction of Yukos are sign of a dysfunctional government. Oil revenues are not changing the culture. Putin wants to centralise, and is not concerned about foreign interests. Investors have few reasons to be confident.

Tiscali receives unsolicited CCC+ rating

22 Dec 2004

It isn t clear why credit ratings agency Fitch has taken the unusual step of rating the Italian ISP without being asked to do so. All the same, the very low credit rating is a blow for Tiscali, which badly needs to raise fresh funds.

Help wanted at Fannie Mae

22 Dec 2004

No rightthinking person would want to run the US housing finance giant. What would their strategy be? Shrinking it risks a housing collapse. But growing it risks a financial meltdown. Its objectives can't be squared.

European Court rules against Microsoft

22 Dec 2004

The software giant has been ordered to comply with EU antitrust penalties even though its appeal has still to be heard. The case has now dragged on for five years, which shows how illequipped the courts are to keep pace with technological antitrust disputes.

UK is no longer European fiscal role model

21 Dec 2004

Faster UK growth has not been enough to avoid the eurozone problem of deficit creep. The government hasn't reined in its urge to spend. It's hard to believe that Brown will really cut spending on the eve of an election, so he will rely mostly on wishful thinking.

Morgan Stanley makes better balanced earnings

21 Dec 2004

The group's banking earnings rose faster than its trading income fell a graceful end to the year after last quarter's bondmarket burp. But to continue rebalancing its revenue mix, the US bank must revive momentum in underwriting and do better in M&A.

Pharma could even gain from regulatory clampdown

21 Dec 2004

The average drug firm spends as much as CocaCola or Unilever on selling, general and administrative costs. This is far too much. A clampdown on advertising and marketing could lift the drugs industry out of a zerosum game.

Will the UK lose out if foreigners run the LSE?

21 Dec 2004

Some fear that UK firms may see their cost of equity rise if the LSE becomes the satellite of a German or French parent. It's true that the UK has a remarkable equity culture. But the LSE is the beneficiary, not the engineer, of this.

SEC chief faces grumble campaign

20 Dec 2004

The business lobby is pushing hard for President Bush to replace SEC boss William Donaldson with a more pliant sort. The complaints are misguided. The problem is not the SEC or its boss, but the new laws they are asked to enforce.

Exelon deal highlights opportunity

20 Dec 2004

Mergers in the heavily regulated US electric utility industry are risky, politically fraught and difficult to execute. But as Exelon s $12bnplus takeover of PSEG suggests, those acquirers willing to face the challenge may reap substantial rewards.

MyTravel agrees restructuring with bondholders

20 Dec 2004

Both sides have decided that it's in their interests to come to a compromise rather than engage in further litigation. That's understandable. Yet it is a fudge that leaves the legal status of subordinated debt unclear.

Yukos show-auction lacks only confessions

20 Dec 2004

The pantomime sale of Yugansk is an instructive farce. The Russian government is showing that it won't be deflected by outside pressure. This drama is not yet a tragedy. The oligarchs have mostly left the country and energy exports continue. It could easily get worse.

PinkRoccade shows Dutch M&A still rigged

20 Dec 2004

The Dutch IT services company has ignored the wishes of shareholders by recommending the lower of two rival bids. This shows the Dutch takeover code is rigged against hostile bids. Without further reform, corporate governance will remain a murky affair.

Osmond’s life deal shows creative financing

19 Dec 2004

The leisure entrepreneur is thought to be putting £700m of debt on a closed life fund even though its shortterm cashflows are paltry. By successfully applying leverage to this deal, Osmond may have pioneered a new financing trick within the UK life industry.

Big sacrifices asked of Lazard partners in IPO

19 Dec 2004

Wasserstein may get DavidWeill off his back with the $850m IPO, but he s not endearing himself to the working partners. He is promising to dramatically slash their pay and keep it that way to make the firm profitable and attractive to investors.