Branson exits US mobile venture with a whimper 28 Jul 2009 The entrepreneur is selling Virgin Mobile to Sprint at 37% of its IPO price a mediocre result. Meanwhile, Abu Dhabi is ponying up money for his loopy spaceship venture and his Aussie airline plans a rights issue. Investors seem enthusiastic, but Branson hasn't always delivered.
Momentum investing distorts markets 28 Jul 2009 Speculators are accused of amplifying swings in commodity prices. Highfrequency traders might be doing the same to stock prices. The defence of these momentum investors is that they add to market liquidity. But when too many traders chase the crowd, the market mechanism fails.
Kingman times exit from UKFI cleverly 28 Jul 2009 The UK civil servant who gained renown as the fund manager of the government s bank stakes is to step down. Kingman will be a hot commodity in the private sector. But with the bank stakes yet to be reprivatised, he leaves before he can be properly judged in his current role.
Savings drive record emerging market bond volume 28 Jul 2009 Firsthalf issuance was the most ever, belying forecasts earlier this year of widespread capital shortages. Chinese and corporate issuers dominated. Companies in countries with big savings pools did the most business showing the advantages of thrift.
Fresh policies could reinvigorate Japan 28 Jul 2009 The opposition DPJ, leading in the polls, would reorient Japan s government spending from infrastructure to cash payments to individuals. That wouldn t boost growth directly, but would increase imports and open up the economy. The new approach could be worth trying.
Risanamento can’t blame market for E2.8bn problem 28 Jul 2009 The Italian developer is set to refinance that much debt to avoid becoming the crisis s biggest Italian casualty. A nearly20% decline in property sales has hurt, but an Italian fondness for cosy relations between banks and entrepreneurs probably let it take too many risks.
GE Capital doesn’t deserve special treatment 28 Jul 2009 The conglomerate s finance arm says it s critical to the US economy, better than a bank, has adequate loanloss reserves and doesn t need more capital. Yet it s fighting plans to further regulate its $650bn balance sheet because it's too big to fail. Something doesn t compute.
Tui problems bigger than Hapag-Lloyd financing 28 Jul 2009 The German group s 43%owned shipping unit is set for a E330m liquidity injection. But Tui itself generates little cash and may be in a precarious position. With Hapag in serious trouble, Tui is relying heavily on its travel subsidiary for cash to repay its debts.
Ericsson looks smart to lock up Nortel assets 28 Jul 2009 A decade ago, the Swedish telecom group and Finnish rival Nokia were the biggest opponents of the wireless CDMA telecom standard. So why did Ericsson trump Nokia to buy Nortel s declining CDMA business? Turns out, controlling the past may be a way to control the future.
Lawmaker holiday trumps Obama’s financial reforms 28 Jul 2009 The US Congress is about to hit the beach, leaving the president s ambitious agenda hanging. That s probably good remaking the banking world is not a task to be rushed. And Obama needs to get it right the first time.
Deutsche Bank pays for nifty crisis management 28 Jul 2009 The German lender cut risk, grew revenue and harvested investment gains in Q2. But its results were dented by provisions on billions of assets reclassified during the crisis. Deutsche could have taken bigger writedowns last year. Instead, it is paying a deferred tax on recovery.
Rio Tinto stuck at Chinese road-block 28 Jul 2009 It s hard to negotiate with a government that has arrested four of your employees. That s where the miner stands. It can t settle iron ore contracts with its largest customer, which is statecontrolled. Nor can it be sure of approval for a tieup with BHP that would raise $5.8bn.
Delphi denouement puts creditors back in charge 28 Jul 2009 The US government s handson role in the car sector shortchanged creditors of bankrupt Chrysler and GM. In the Delphi case creditors had more clout, and they seem to have prevailed. It looks like the fair outcome. Now the challenge is to make the parts maker profitable.
Prop traders should welcome tougher FSA tests 27 Jul 2009 The UK watchdog wants bank traders who take big risks to be individually regulated, and possibly interviewed, before being let loose on the markets. The move may be just pointless boxticking. But there could be gains for all if the plan legitimises this controversial business.
US housing rebounds, but won’t lead recovery 27 Jul 2009 New home sales, existing home sales and housing starts all rose in June. But housing starts are still far below previous cyclical lows, and sales levels are boosted by fiscal and monetary subsidies. These seem to have brought a bottom, but won t end housing s bear market.
Mob delivers grisly lesson in Chinese economics 27 Jul 2009 Worker unrest is risk number one. That has to be Beijing s conclusion from the reported killing of a steel boss by a 30,000strong crowd. With unemployment higher than the official rate of 4.3%, jobs lost from a stronger currency look more dangerous than irritated foreigners.
Citi’s new shareholders need a bluffer’s guide 27 Jul 2009 US taxpayers will soon own a third of the beleaguered megabank's shares. It's a complex beast, so Breakingviews.com's Antony Currie has drafted a welcome notecumprimer that Dick Parsons, the Citi chairman, might want to send to the bank s 148m new shareholders.
Ryanair land grab comes at a cost 27 Jul 2009 The European budget airline has to slash ticket prices to fill up its planes. But Ryanair is still solidly profitable while rivals are bleeding cash. As long as the company can afford its growth plans, investors should be willing to put up with some lower profits.
Vodafone hangs on in there 24 Jul 2009 The mobile giant s organic revenue fell 2% in the first quarter. But that s not bad in a midst of a recession. With a low valuation, good cash generation and a 6.5% dividend yield, the shares have room to recover further.
Why would anyone sit on a state-controlled board? 24 Jul 2009 The US and UK governments are trying to identify expert, untarnished directors for banks, carmakers and other companies in which they own big stakes Citi, GM and RBS, to name a few. It s not so easy to find people who tick the boxes and are willing to do the job.
BoE faces QE dilemma 23 Jul 2009 One member of the monetary policy committee has been criticised for suggesting the programme of printing new money may be put on hold. That won t help the government sell gilts but that s hardly the BoE s job. As for QE itself, it doesn t seem to be working.
Reeling Cerberus struggles for sound footing 23 Jul 2009 The buyout firm suffered badly on Chrysler. Aside from owning battered US car finance businesses, it has troubles in Japan. Its apparent interest in a safebutunexciting $3bn pharma deal could be an effort to put its stumbles behind it. But they won't be so easily forgotten.
VW-Porsche truce doesn’t solve governance problem 23 Jul 2009 An agreement seems to be at hand in the two German carmakers longrunning family feud. The forced exit of Porsche s boss will let the larger VW take over Porsche's car business. New outside investors will help Porsche, but won t be enough to create a clear corporate structure.
Derivatives are largely an insiders’ game 23 Jul 2009 Five big banks account for 80% of the total derivatives held by 100 large US companies, a new report says. That could be bad news for those trying to stave off greater regulation, because it undermines the idea that derivatives are crucial to the health of corporate America.
Stars aligning for IPO revival in Europe 23 Jul 2009 Investors are warming up to risk and bankers are pitching IPOs furiously. It all points to a return of IPOs late this year. But bankers salivating for an avalanche of new issues might be disappointed.
Turkey’s bluff pays short-term dividends 23 Jul 2009 Many investors were horrified six months ago when Turkey backed away from talks with the IMF. But the country has averted economic disaster without the fund s help. Still, unemployment is high and exports are weak. The economy will stay vulnerable for some time.
Amazon spends about $1bn on clever apparel push 23 Jul 2009 The internet retailing giant has snapped up Zappos.com a firm best known for selling shoes on the web. Few think of Amazon as a place to buy clothing. So buying fast growing Zappos and keeping the brand may be the best way forward in the $220bn US market.
US corporate profit surprises may not last 23 Jul 2009 A third of the way through the US reporting season, secondquarter earnings look far better than expected thanks to cost and inventory cuts. But those are relatively quick, easy fixes. Longer term, profits depend on economic growth and rising sales. Those will come more slowly.
Ford still needs to accelerate restructuring 23 Jul 2009 The Motown carmaker has already made progress, which shows in its Q2 earnings. And it has been winning market share. But Chrysler and GM are back in contention and streamlined by bankruptcy. To compete longer term, Ford needs to slash its debt and the sooner, the better.
Asian recovery could be unfettered by bank woes 23 Jul 2009 The ADB expects emerging east Asia to recover quickly in 2010. That sounds reasonable. Trade has bounced and domestic growth remains strong. The region's manufacturingoriented economies with modest budget deficits may now fare better than the centres of financial meltdown.