Thailand risks becoming a de-emerging market 21 May 2010 The Thai economy is fragile and heavily dependent on tourism and foreign investment. As a consequence, the current conflict brings huge risks to both sides, while even the political losers will benefit economically from fair and peaceful elections.
Abbott’s Indian drugs deal fields three big problems 21 May 2010 Big Pharma s most important drugs are losing patent protection, growth in developed markets has slowed to a crawl, and much of its cash is trapped overseas. Abbott s $3.7 bln purchase of Piramal Healthcare s generics arm offers a partial response.
Time to end UK’s private equity tax break 21 May 2010 The new government plans to raise capital gains tax to help plug the UK deficit. Private equity fears its cherished carried interest will get caught in the net. But pleas for special treatment and threats of an exodus of buyout chiefs ring hollow. The tax break is hard to defend.
U.S. nuclear hopes choked by low emission costs 20 May 2010 The latest efforts to get people building nuclear power plants involve a hodgepodge of subsidies. But these won't overcome the cost advantages of fossil fuels especially with gas prices so low. Unless, that is, America adopts an unexpectedly beefy levy on greenhouse gases.
U.S. reforms will nick, not nuke, big banks 20 May 2010 The end of the Senate s debate over financial reform came just in time for Wall Street. The bill got tougher as the talk dragged on. But it could have been worse. While banks future activities and profitability may get pinched, their core business model appears intact.
Pessimism over Pfizer reaching crescendo 20 May 2010 The loss of patent protection on its blockbuster Lipitor in Canada is the first small wave of a coming typhoon of diminished sales over the next five years. But Pfizer has battened down and investors have factored in most of the carnage. This looks like an opportunity.
Japan would do better without Hatoyama 20 May 2010 The unpopular prime minister has alienated investors and failed to grasp the nettle on Japan's outsized debt. If he stays in place until July's elections, he risks losing control of the upper house. That would deprive Japan of a chance to wean itself off its toohigh borrowings.
Dubai World offer puts restructuring deal in sight 20 May 2010 The troubled holding firm has revised its $23.5 bln debt plan. Dubai isn't putting in more money, but will allow lenders to choose security today or cash later. With holders of 60 pct of bank debt on board, Dubai is close to the threshold it needs to force through the deal.
Euro’s slide may give U.S. more rope to hang itself 20 May 2010 Haven status in a market storm sounds good for the U.S. but could make it less safe. Sure, it bolsters the dollar s standing and delivers the perk of cheap financing. But for a nation that desperately needs to kick its borrowing habit, the weak euro could be a bad influence.
France tempted by foolish balanced-budget rule 20 May 2010 Nicolas Sarkozy, the French president, wants to enshrine fiscal discipline in the constitution albeit with a lot of caveats. Following Germany's reform earlier this year may sound alluring, but such rules lack longterm credibility. Budgets must reflect political choices.
Euro zone needs Estonian policy as well as Estonia 20 May 2010 When the crisis struck in 2008, Estonia adopted tough fiscal policy in the face of sharply contracting GDP and a deep balanceofpayments deficit. The country is now on track to join the troubled euro. It seems other EU states could usefully hire Estonian finance ministers.
National Grid cash call catches market off-guard 20 May 2010 The UK energy distributor is generating cash, cutting debt and raising the dividend. It is also tapping shareholders for 3.2 billion pounds. The company has ambitious spending plans, which it describes as lowrisk and sustainable. But it's not obvious why it needs more equity.
Euro zone should confront D word 20 May 2010 Angela Merkel has some barmy ideas, such as unilateral short selling bans, but her call for a euro zone sovereign insolvency mechanism sounds sensible. For some European politicians, default is anathema. But there are good reasons to put a mechanism in place.
Europe forces global recalculation 20 May 2010 The euro zone's defensive moves have so far exacerbated market panic. Investors are getting burnt. The U.S. and Asia will have to carry global growth and may now have scope to keep rates low for longer. But markets still need reassurance the euro zone isn't about to crumble.
Sovereign funds see appeal in U.S. natural gas 20 May 2010 Chinese and Korean investment funds may buy into U.S. gas operator Chesapeake. So far gas from shale has proved a technological rather than financial success. But with a longterm outlook and shortterm downside protection, the sovereign wealth funds may be playing it right.
Jon Corzine finally finds his knife 20 May 2010 The exGoldman boss and New Jersey governor is slashing costs at unprofitable brokerage MF Global just two months after taking charge. Such decisive action while running the Garden State might have avoided an $11 bln budget deficit and Corzine s unceremonious boot from office.
U.S. deflation threat not yet fully neutralized 19 May 2010 The drop in U.S. CPI in April gives the Federal Reserve cover for keeping interest rates low. And even if it s a blip, the lowest annual rise in core CPI in more than 40 years could put deflation fears recently forgotten back in investors minds.
Apollo stands fighting chance in trash bash 19 May 2010 Buyout firms should be at a disadvantage to strategic acquirers at this point of the cycle. So the emergence of Georgia Pacific and Rank as bidders for $6 bln Hefty bag maker Pactiv would normally cow Apollo. But in this case, Leon Black s shop may be able to compete.
Ten percent rule for U.S. stocks looks too narrow 19 May 2010 The flash crash in U.S. stock markets scared regulators and stock exchanges. Revamping marketwide circuitbreakers makes sense, but putting narrow limits on individual stocks may be overkill. The goal should be to stop crashes, not interfere with legitimate trade.
New optimism of the rich may be leading indicator 19 May 2010 Wall Street titans see surprisingly robust business and think interest rates are too low. A top hedgie calls the recovery Vshaped. And Whole Foods lifts guidance even as WalMart languishes. Either the rich really are different or the economy is stronger than the Fed lets on.
Santander shouldn’t get too greedy in America 19 May 2010 The Spanish bank has talked to M&T Bank about a merger with its U.S. arm, Sovereign. This would be a clever way to gain critical mass and reap savings without depleting capital. But just because Santander got a bargain for Sovereign in the panic doesn t mean it ll get one now.
German shorts ban compromises EU regulatory effort 19 May 2010 EU commissioner Michel Barnier had resisted pressure from France and Germany for swift bans on naked CDS. Germany's solo ban has regrettably undermined his efforts at thoughtful regulation, as others may feel compelled to follow suit. Barnier's leadership skills face a test.
Shorting ban knocks trust in German financials 19 May 2010 The ban on naked shortselling of the country's ten largest banks and insurers has triggered a selloff. Firstquarter results suggest German financials are in decent shape, while the EU bailout also helped. But Berlin's move raises fears it knows something the market doesn't.
China and U.S. even further apart on big issues 19 May 2010 Commerce Secretary Gary Locke has wisely focused on uncontroversial cleanenergy exports in his first trade mission to China. But on China's currency and trade, the two nations are far apart. Thanks to the euro crisis, the consensus that seemed likely in April now looks doubtful.
Merkel should avoid channeling Dick Fuld 19 May 2010 The German chancellor has vowed that Greece will not be Europe s Lehman Brothers. Yet her country s pointless shortsale restrictions are eerily redolent of the paranoid campaign Lehman s CEO waged from his 7th Avenue aerie. Fighting the market won t solve Europe s woes.
Short-selling ban delivers only pyrrhic victories 19 May 2010 Traders have found simple ways of circumventing the unilateral curbs imposed by Germany on some shares, CDS and government bonds. But the restrictions have certainly made investors fearful. What little remained of the feelgood factor from the EU bailout has been squandered.
BC Partners fund extension is far from auspicious 19 May 2010 The UK private equity group has won more time from investors to deploy the proceeds of its latest fund. Its struggle shows that private equity is running short of suitable targets, and begs the question why anyone should subscribe for the 6 bln euro fund BC plans for September.
U.S. elections show distaste for party lines 19 May 2010 Get ready for more upsets. Tuesday's primary and special election results show voters impatient with Washington on the economy and tired of both major party establishments. Congressional incumbents up for a vote in November's midterms should watch their backs.
BNP Paribas dips toe in shark-infested waters 18 May 2010 The French bank is buying New York boutique advisory firm Hill Street Capital. Rivals have lost arms and legs making similar moves just look at Wasserstein Perella acquirer Dresdner. At least BNP is starting small. That should minimize any risks if the deal doesn t work out.
Vodafone divi is small consolation for India woes 18 May 2010 The telco giant has softened a 2.3 bln pounds writedown in India with a pledge to lift the annual dividend by 7 pct for three years. But the raised payout isn't that impressive against peers. And it is poor compensation for the mounting problems in Vodafone's key growth market.