India needs old-fashioned remedies for inflation 30 Jun 2008 India s inflation is partly imported but not all. Money supply has grown too rapidly, the budget deficit is excessive and real interest rates are negative. The traditional remedies that are needed will be unpopular, but the government can always blame Bernanke at the Fed.
Goldman strengthens board with Mittal 30 Jun 2008 As rival banks face a need to overhaul their shamed boards, Goldman had the luxury of broadening its knowledge base. The Indian steel magnate brings valuable Asian experience. But Goldman shouldn t stop there. The board could be slimmed down and do with more financial knowledge.
Barclays/Qataris clarification 30 Jun 2008 Barclays has pointed out that it told analysts last week that the core investors buying into its £4.5bn share issue received no differentiated disclosure above what was available to ordinary shareholders. We have accordingly clarified our view.
Taylor Wimpey kicks off UK housebuilder capital-raising spree 30 Jun 2008 The UK company is unlikely to be the last in the sector to pass the cap if house prices keep falling, most will have to write down asset values. But the deal's likely structure suggests the builders may have learned from UK banks chequered attempts to raise capital.
SAC departures signal buy-side credit pullback 30 Jun 2008 Steven Cohen s $16bn hedge fund has cut its fixed income business down to the basics. For outofwork bankers hoping hedge funds will snap them up, it s an ominous sign. With chunks of the credit markets illiquid or discredited and leverage scarce, activity is withering.
Spain needed Euro Cup win more than Germany 30 Jun 2008 Spain s victory over Germany in the final of the European Cup reverses the scores on the economic pitch. Germany has emerged from a postunification hangover, while Spain is suffering the aftereffects of a decadelong boom. The win should help lift Spain s dampened spirits.
Western financials beat out Russian stocks 30 Jun 2008 Not for everyone, maybe. Yet Russian billionaire Suleiman Kerimov seems to be swapping his domestic holdings for chunks of troubled Western banks. He is understood to be taking up a quarter of Fortis E1.5bn share issue. For him, this might well be the less risky option.
No free lunch in Peak Buffett theory 30 Jun 2008 Few things have compounded faster than the price of lunch with Warren Buffett. The winning bid in the charitable auction has risen at a 66% annual rate since 2000. The credit crunch has yet again shown the Omaha sage s investing acumen. His time is also a dwindling resource.
Mittal shows faith in customer power 30 Jun 2008 The Indian magnate s steel firm has built a 20% stake in Australia s Macarthur Coal. That looks wise. Even without a full takeover, holding sway at firms where you re a big customer has value. That might also explain Mittal s new board seat at trusted advisor, Goldman Sachs.
Bear market likely to get worse 30 Jun 2008 The Dow dipped 20% below its October high on Friday. There s probably more to come, as investors deal with the twin evils of debt and inflation. Whichever way the financial crisis plays out, stocks are likely to suffer.
Citigroup struggles with universal bank dilemma 30 Jun 2008 The US bank s plans to revamp its bonus system go to the heart of the challenge of running a global financial supermarket: how do you incentivise employees in so many very different businesses to work for the good of the group? The answer may be that you can t.
France Telecom finally finds wisdom on TeliaSonera 30 Jun 2008 Better later than never. The French operator has pulled out of an illconceived bid for the SwedishFinnish group. The target s shareholders may come to regret holding out for more, but France Telecom will be spared a costly deal that offered more problems than synergies.
B&B shareholders run out of options 27 Jun 2008 Following the withdrawal of Resolution s offer, Bradford & Bingley shareholders are left with an unpalatable choice: accept TPG s deeply unattractive offer or leave the company dangerously short of capital. No wonder the shares fell 20% on the news.
Anheuser-Busch fails to justify its resistance 27 Jun 2008 The Budweiser brewer has tried to explain its rejection of Inbev's proposal. But its goitalone plan still doesn't get close in value. Bud's hope could be that by resisting for a while it can extract a bigger dowry before succumbing to the union. But its hand isn't a strong one.
HBOS nil-paids get off to rotten start 27 Jun 2008 Not only is their starting price of roughly 10p a pittance. The underlying HBOS shares have sunk again to below the rights issue price. The underwriters are now looking at a theoretical £350m hit, using standard option pricing.
Squirreling away savings could undermine US economy 27 Jun 2008 The example of the Scandinavian banking crisis of the early 90s suggests US economic woes may worsen. Then, a real estate bust weakened many banks. The crunch really hit though, when consumers stopped spending and started repairing their own drained balance sheets.
Don’t be fooled by chirpy Q2 deal chatter 27 Jun 2008 Equity issuance rebounded! Corporate bonds hit a record high! Strategic M&A soared! It s all part of the irrational optimism fuelling bankers. Fact is, they raised capital for each other, rushed out debt when spreads narrowed and smiled about sinking merger volume. Get real.
Arnault, Colony Capital lick their Carrefour wounds 27 Jun 2008 The French retailer s shares are in a tailspin after its turnaround plan for its French supermarkets disappointed investors. Luxury mogul Bernard Arnault and Colony Capital, a US fund, are down a combined E1.3bn on their investment. Now for some bad news: things could get worse.
Why is hostile M&A on the rise? 27 Jun 2008 Inbev and BG Group both turned warlike this week. The upsurge in muscular action is probably a consequence of the end of the credit boom. When sellers won t accept their value has fallen, hostility may be the only way to break the logjam.
LSE-Lehman trading venture is too little too late 26 Jun 2008 The London Stock Exchange and Lehman are making a late plunge into the dark liquidity pool. But competition for concealed block trades is intense, so profits may be elusive. Investors have been waiting for some time for the LSE to make a bold strategic move this isn t it.
Basel II-lite fails to reflect crunch’s lessons 26 Jun 2008 US bank watchdogs have issued a lesscomplex version of the capital accord for smaller banks to use. Its authors didn t sleep through the credit crunch entirely: they ve acknowledged that nomoneydown mortgages can be risky. But it retains its big brother s main faults.
CSX deserves its new directors 26 Jun 2008 The US railway group is stalling over the results, but it looks like at least two of the five candidates put up by activist funds TCI and 3G have been voted in. CSX is no basket case, but its attempts to stave off the funds revealed an entrenched board that needed a shakeup.
DIC shows way on sovereign wealth fund transparency 26 Jun 2008 Dubai International Capital is set to be the first from the region and the first statebacked entity to sign up to the UK private equity code of conduct. That s a smart move that will help defuse any backlash over its activities. Secretive sovereign funds should follow suit.
Fortis pulls latest U-turn on capital needs 26 Jun 2008 The BelgoDutch bank cheered investors in January with a confident claim that it didn t need cash, despite its ABN Amro splurge. Now it s raising E1.5bn of equity capital and scrapping the dividend. The aboutface further undermines confidence in a sector desperately short of it.
Bud will struggle to deliver knock-out defence 26 Jun 2008 AnheuserBusch may think it can pour scorn on Inbev s $65ashare offer. But a look at the numbers suggests that's a stretch. Still, if the US brewer engages with its Belgian predator before it's too late, it should be able to angle for an extra few dollars.
Foreigners are outsiders in German bank reshuffle 25 Jun 2008 Lloyds, Santander and ING are interested in taking over Postbank, but domestic players can afford to pay more. The German ideal would be a threeway merger with Commerz and Dresdner, but that could take longer than seller Deutsche Post is willing to wait.
Barclays’ capital raising falls short of billing 25 Jun 2008 The UK bank has nailed down £4.5bn, £500m more than anticipated. But the share issuance was expected to be at a premium or slight discount. In fact, it s an 11% discount. And though Barclays trumpeted growth plans using the funds, side deals with Sumitomo and Qatar remain fuzzy.
Qatar doesn’t look well placed to call Barclays 25 Jun 2008 The State of Qatar s £2.3bn injection into the UK bank isn t a great vote of confidence. Barclays existing investors Temasek and China Development Bank barely followed their money. Meanwhile, the QIA is sitting on a loss of 38% from three of its recent Western investments.
Credit crisis breathes new life into expired careers 25 Jun 2008 Lehman Brothers lured back a top executive who warned against rising risks in mortgages. Merrill Lynch did the same thing in December. Why not take this a step further and resurrect the careers of retired CEOs whose firms best weathered the storm?
Marshall Wace hits the growth trail 25 Jun 2008 The Londonbased hedge fund manager is setting up a Hong Kong joint venture with GaveKal, a boutique founded by financial journalist Anatole Kaletsky. With most established financial institutions in trouble, this is a smart time for hedge funds to grow their businesses.