TCI defeat over J-Power pulls the plug on an era 31 Oct 2008 The famously combative hedge fund has sold its 9.9% stake back to the Japanese electricity company for a $110m loss. Its attempt to export activism to Japan always looked ambitious. The ignominious retreat signals that the heady days of hedge fund aggression are over.
Russia may have seen the worst of reserves rundown 31 Oct 2008 The Bank of Russia has lost $30bn of foreign currency reserves in a week, mostly defending the rouble. It has now spent more than $100bn since early September. But if the dollar stabilises and oil prices stop falling, it should be able to stem the flow.
BT puts itself firmly on the sick-list 31 Oct 2008 A profitwarning and the resignation of François Barrault, head of the telecom group s muchheralded services growth engine, are bad news. Costs are out of control. Add worries about how the credit crunch is hurting BT s pension fund, and investors are right to run scared.
There’s money to be made in credit clearing 31 Oct 2008 At least that s what can be gleaned from the soaring stock of IntercontinentalExchange, which added some $1.6bn of market cap after buying Clearing Corp. The logistics of credit derivatives may sound boring. But investors apparently see it as a big growth opportunity.
Coal for gadget makers this Christmas 31 Oct 2008 Everything from MP3 players to flatscreen TVs face slow sales this Christmas. At least it seems that way looking at their suppliers. The companies that make parts for expensive toys are cutting forecasts, indicating troubles for the consumer tech industry.
Barclays pays steep price for independence 31 Oct 2008 The UK bank has managed to raise capital on its own. But to turn the £7bn trick, Barclays will pay a 14% rate until 2019 for half of it, hand over inthemoney warrants and issue converts at a big discount. Shareholders might wonder if turning down the state s offer was wise.
Taxpayer revolt begins with banker witch hunt 30 Oct 2008 US lawmakers want names of bankers who earn more than $500,000 a year. It s just the start of what promises to be intense scrutiny. Bankers will need more articulate defences of what they do, and why the masses should be funding it. Not all of them will pass the test.
What do the Beatles and AC/DC have in common? 30 Oct 2008 Neither band sells music on Apple s iTunes, yet both are getting into video games. Rock gods haven t exactly moved from getting high and scoring to getting high scores. The economics of games are more compelling and create fewer piracy issues.
Exxon profit could follow oil south 30 Oct 2008 The oil giant raked in a Q3 profit of $14.8bn. With oil peaking in July and staying above $100 a barrel for most of the quarter, it s no surprise Exxon once again broke its earnings record. But lower production and falling prices could make this trend hard to sustain.
Belarus revives IMF’s reforming zeal 30 Oct 2008 The authoritarian east European country is in talks with the intergovernmental lender on a possible $2bn loan. Economic reforms and asset sales could be part of the deal. The IMF should be firm. The newfound leniency in the financial crisis need not apply to everyone.
Deutsche Bank tries to tough it out 30 Oct 2008 The German group turned a surprise profit with the help of new accounting rules, tax gains and stake sales. Deutsche also made headway on funding and leverage and held firm that it doesn t need more capital. Sceptical investors softened a bit. But Deutsche has more to prove.
Porsche’s wild ride on VW may not be such a triumph 30 Oct 2008 The luxury carmaker has made a gigantic paper profit on its stake in VW by precipitating a squeeze on shortsellers. But both the real situation and the extent of Porsche s hold over VW remain opaque. Besides looking clever, it s not clear what Porsche has achieved.
Europe’s largest mall opens in worst of times 30 Oct 2008 Any enemy of Westfield couldn t have hoped for better. The Australian developer is opening Europe s biggest shopping centre in London, just as the UK goes into recession. But the White City extravaganza won t go down without a fight. Competing retail hotspots will also suffer.
US GDP puts policymakers in a quandary 30 Oct 2008 Third quarter US GDP was down, albeit slightly, despite enormous government liquidity injections. Uncle Sam can t keep the accelerator on the floor indefinitely loose fiscal and monetary policies court inflation and debt problems. Policymakers face unpleasant choices.
Société Générale battering looks overdone 30 Oct 2008 The French bank is trading at 70% of book value. It may have to raise its core Tier 1 capital ratio to make investors more comfortable. But its exposure to eastern Europe and Russia shouldn t turn into major disasters. And SocGen's basic business remains robust.
New Shell boss inherits (relatively) cushy job 30 Oct 2008 The oil and gas company has come a long way since its 2004 reserves debacle. It will soon start harvesting a big pipeline of complex projects. The challenge for incoming chief executive Peter Voser is to manage these on a tight budget. It should come naturally to a finance man.
Candy brothers dodge first of many bullets 30 Oct 2008 The luxury apartment developers have moved to limit the damage from partnering with Icelandic banks on two schemes. Their Qatari backers on the huge Chelsea Barracks project in London are more secure. But the brothers still have to shift a lot of luxury flats in a bad market.
Lufthansa finally gets British Midland 29 Oct 2008 This might look like a bad deal for the German airline, since it has bought a 50% stake in the UK airline as part of a put option agreed in the heady year of 1999. Valuations have since plummeted. But BMI s valuable Heathrow slots mean Lufthansa is unlikely to lose money.
Hungary’s bailout rewards bad policy 29 Oct 2008 Its $25bn rescue is three times the country s payments deficit. It allows an overspending overindebted government to perpetuate itself, prolonging Hungary s economic sluggishness. A smaller loan, conditional on an immediate election, would produce better results.
Goldman’s brass ring harder to finger 29 Oct 2008 The firm anointed 94 staff to its partnership ranks. That s one in 430 employees down from one in 290 two years ago. With the crunch hitting and the firm becoming a bank, the spoils may not be so plentiful. Maybe that s why it s become so much harder to join the inner circle.
Downturn splits retail wheat from chaff 29 Oct 2008 Some retailers seem to be able to do well in adversity. Take Spain s Inditex, owner of Zara, or UK discount clothes merchant Primark, which is still adding to core sales. Their gains will make tough times tougher for the less nimble such as M&S or El Cortes Ingles.
Basing loans on CDS a huge risk for some borrowers 29 Oct 2008 After being forced to make risky loans at low rates during the credit boom, banks are now dictating terms. Their latest twist is the use of credit default swap spreads to price credit lines. That may help get funds flowing. But some borrowers will tap those funds at their peril.
VW frenzy will cause collateral damage 29 Oct 2008 The doubling in the German carmaker s share price has distorted Germany s DAX index. That wreaks havoc for anyone who has shorted the index or whose performance is measured against it. The proposed moves to fix the problem may not help and could even make things worse.
Kremlin launches save-an-oligarch week 29 Oct 2008 Mikhail Fridman and Oleg Deripaska should be able to refinance foreign loans, thanks to the Russian government s recentlyopened $50bn facility. The Russian government wants to keep creditors from taking major stakes in strategic companies. Western banks are happy to oblige.
Risky finance: AIG 29 Oct 2008 AIG offers a case study on how an ambitious regulator was taken in by what it hoped would be a national champion. Nicholas Dunbar reports.
Fed rate cut addresses wrong problem 29 Oct 2008 Its halfpoint rate cut does not address the leverage and credit issues in the banking system. Indeed, by penalizing savers it worsens the economy s supply/demand imbalance for funding. The cut doesn t solve shortterm problems and worsens longterm inflation worries.
BG may be better off with second best 28 Oct 2008 The UK gas firm has pounced on smaller Australian gas producer Queensland Gas for $3.1bn after it lost out to Conoco for Origin, the bigger prize. But BG´s second option isn t necessarily second best: it has less downstream, and leaves BG less financially stretched.
UK financial stability still a distant prospect 28 Oct 2008 The Bank of England s semiannual stability report is grim enough. It worries about the £737bn of wholesale funding, possible hedge fund liquidations and troubled emerging markets. For the next edition: a tumbling currency in a country that relies on foreign funding.
GE’s Pollyanna ratings fail to convince 28 Oct 2008 The conglomerate enjoys tripleA ratings but markets don t seem to care. Its debt trades at low investment grade levels and its credit default swaps are in junk territory. That s partly due to technical factors. But it also shows how irrelevant ratings have become.
Death of the newspaper not such a taboo 28 Oct 2008 The acclaimed Christian Science Monitor s giving up the daily ghost sounds like an industry death rattle. Changing media habits, consumer tastes and now the credit crunch have left many papers on the brink of insolvency. Some will disappear.