China’s currency games could annoy its neighbours 25 Aug 2010 Beijing has been buying its Asian trade partners' debt to diversify its $2.4 trillion reserves. But Japan and Korea are already anxious about their currencies rising too much. Beijing could incur losses or worse, strain relations. Sticking to the dollar looks the lesser evil.
One easy cut for the UK: a 17 bln stg train set 25 Aug 2010 A new railway linking England s two biggest cities sounds like an extravagance at the best of times. But when UK public spending needs drastic pruning, such a project is totally divorced from economic reality. The government should scrap it.
BHP takeover would upset cozy potash market 25 Aug 2010 Potash Corp's size means its production can affect fertilizer prices. If BHP succeeds with its $39 bln takeover bid, it promises to run Potash mines at full capacity. That probably would help farmers, at least in the short term, and hurt highcost producers like K+S and Intrepid.
BHP shows it doesn’t need Potash Corp 25 Aug 2010 Annual results from the AngloAustralian miner aren't just a reminder of the financial firepower behind its $39 bln hostile bid for Canada's Potash Corp. They also prove BHP isn't broken and doesn't need a deal. BHP can afford to pay more. But it can also afford to walk away.
Ireland must cut to avoid becoming Greece 25 Aug 2010 Global doubledip fears and a downgrade of Ireland by S&P are increasing pressure on the euro zone periphery again. Ireland's debt is spiralling. The fiscal deficit must be cut fast. If Ireland doesn't act, it will follow Greece into crisis and test the zone's safety barriers.
Ireland’s bad bank needs full transparency 25 Aug 2010 The Irish Nationwide Building Society has dumped 591 mln euros of dud loans with Ireland's bad bank at a 72 pct haircut. There could be tidy gains on future sales. But without decent disclosure around the sale process, there's no way of knowing that taxpayers will get full value.
China may not be fertile for Potash white knight 24 Aug 2010 The Canadian fertiliser maker may hope for a Chinese suitor to top BHP Billiton's $39 bln bid. China depends on potash and may even enjoy seeing BHP fail. But there are obstacles. Bureaucracy and hostile bids don't mix, and the ghost of Chinalco's raid on Rio Tinto lingers.
Potash price crucial to how far BHP can stretch 24 Aug 2010 The miner's $39 bln bid for Potash Corp is a bet on demand for the commodity. Every $50 increase in the longterm price per tonne adds about $20 to the firm's value per share. BHP's offer reflects the current market. But if prices rocket, so too will the value of its target.
Chi-X sale need not be bad news for equity trading 24 Aug 2010 Europe's biggest lowcost share trading platform could follow rival Turquoise into the hands of one of the traditional exchanges it was meant to challenge. But it may also have piqued the interest of financial investors, which could be a better outcome for users too.
Death penalty rethink is China economic milestone 24 Aug 2010 China may scrap capital punishment for most financial crimes. The extreme penalty partly reflected the importance of maintaining trust in Chinese financial institutions. But it also showed economic immaturity, and undermined China's global standing.
Equities at tipping point as risk aversion mounts 24 Aug 2010 Japan's Nikkei index has touched a 15month low a bearish signal for global equities. Falling oil and a rising dollar are other signs of growing risk aversion. Stocks that have risen far on expectations of a smooth recovery could be about to retreat sharply.
100-year Treasuries could be tough sell 24 Aug 2010 If a U.S. railroad can issue 100year bonds, why not the U.S. Treasury? Longer maturities than the current 30year maximum would reduce refinancing needs and appeal to institutions. But investors might well demand more return for the risks than Treasury would be willing to pay.
U.S. house sales decline brings double dip closer 24 Aug 2010 The plunge in existing home sales in July owes much to the expiry of a home buyers' tax credit. But real house prices are still as high as in 2000, so their tentative recovery is vulnerable to another significant leg down. That in turn could bring a second recessionary downturn.
ECB’s softly-softly approach shows bank weakness 24 Aug 2010 Europe's stronger lenders are scaling back their dependence on central bank funding, but those from peripheral economies still need support. The European Central Bank looks set to keep providing threemonth funds into next year. But that won't make finding an exit any easier.
HSBC favours strategy over returns in South Africa 23 Aug 2010 The global bank is in exclusive talks to buy a majority stake in Nedbank. Taking over South Africa's fourthlargest lender could help it benefit from growing AfricanAsian trade. But at twice Nedbank's book value, HSBC's first postcrisis deal would carry a hefty price.
M&S puts right kind of banker in the hot seat 23 Aug 2010 Investment bankers do deals; company chairmen run businesses. Robert Swannell, a career banker, looks set to make the switch, and to the UK's biggest clothes retailer, too. Bankers have a mixed record as chairmen, but he would be a welcome relief from the hyperactive Stuart Rose.
Further stimulus is not what Japan needs 23 Aug 2010 Surpassed by China as the world's No.2 economy, some Japanese politicians want another fiscal boost and a weaker yen. But more spending has limited benefit and adds to the deficit. Perhaps only a crisis will force Japan to discover and address the profound causes of its malaise.
Power to shift if U.S. gas revolution goes global 23 Aug 2010 Shale drilling innovations changed the natural gas game in America. They could do the same elsewhere perhaps undercutting Russian titan Gazprom and the $100 billion trade in liquefied natural gas on which the likes of Exxon and Shell increasingly rely.
It looks safe to go back in film finance waters 23 Aug 2010 During the boom, Hollywood s sharks chewed up swarms of hedge funds and other investors. But the ensuing bloodbath left studio executives scarred too. Bankrolling blockbusters still isn t for the squeamish, but the industry s better economics may warrant a toedip.
HP’s deal mojo unrestrained by l’affaire Hurd 23 Aug 2010 Any bankers worried that the tech group s appetite for M&A might wane after the CEO s ignominious departure can breathe easier. If HP s $1.6 bln bid for 3PAR is anything to go by, its ardor may even have intensified. It s paying a big premium to bust up an agreed deal with Dell.
Aussie election stalemate leaves miners in dark 23 Aug 2010 The country's economic health means a hung parliament shouldn't frighten markets. The biggest bargaining chip in the battle to court independent lawmakers could be the fate of the proposed supertax on miners' profits. Sadly, the levy may not survive the political horsetrading.
August’s M&A heat may not bring Wall Street rain 20 Aug 2010 Bankers must be salivating at the prospect of more cashrich firms like BHP and Intel joining this month s surprising deal boom. But the economic uncertainty could just as easily leave many boards hoarding their war chests. And previous summer scorchers have led to cold spells.
Peru faces choice of near-neighbors’ policies 20 Aug 2010 The Andean country has enjoyed standout economic growth in 2010, but this may not last. In next April s election, it will choose between resourcesled growth like Chile, state expansion like Argentina or full state control like Venezuela. Peruvians votes will really matter.
KNOC’s $2.9 bln Dana bid is hostile in name only 20 Aug 2010 The Korean oil group has run out of patience with the UK firm and launched a rare unsolicited bid by a stateowned firm. With almost 50 pct of shareholders supporting the 18poundashare offer, KNOC should snatch its prize even if Dana pursues its own M&A ambitions.
U.S. energy gives Wall Street a little extra fuel 20 Aug 2010 Over half of global oil and gas M&A volume this year has involved a U.S. target the highest level in a decade. As home to deepsea drilling and shaleextraction pioneers, U.S. demand could still grow. With deal fees hard to come by, that's good news for one set of rainmakers.
Spain lulled into false sense of security 20 Aug 2010 The government appears to be slightly backpedalling on its austerity measures. Despite successful recent debt auctions, this seems naïve. Investors are still nervous of sovereign risk, and Spain cannot afford too many missteps.
BHP’s Kloppers learns from past failures 20 Aug 2010 The mining chief's last big attempted deal with Rio Tinto fell flat. That raises the stakes for his $39 bln bid for Potash Corp. BHP's latest target involves less regulatory risk and should not offend customers as much. Yet the hostile tone suggests familiar tactics.
Banks get cold feet over football funding 20 Aug 2010 New rules from the sport's governing bodies in England and Europe are forcing clubs to rein in on debt. Banks that help finance player transfers are also considering pulling out. If lenders limit their support to cheering their teams, football's longterm health will improve.
Surprise Intel $7.7 bln security deal is a gamble 19 Aug 2010 Mobile gadgets are the chip industry's future, and Intel has fallen behind. It is betting that combining McAfee's security software with its hardware will give it a leg up. Perhaps. But investors who knocked down Intel's shares are rightly skeptical the chipmaker can pull it off.
European airlines risk sabotaging own recovery 19 Aug 2010 Most of Europe's legacy carriers are adding capacity despite the stillfragile market. The growth will almost certainly reduce ticket prices, just when they are rising again. More caution is warranted from this most cyclical of industries but is unlikely.