Capital flight will decide course of the "Spanic" 24 Jul 2012 Madrid can withstand the market panic until October when big bond repayments are due, provided it doesn’t spill over into the banking system. But if capital flight accelerates, policymakers will have to break their holidays and concoct a full bailout. The politics won’t be easy.
CNOOC’s state control is a paper tiger 24 Jul 2012 The bidder for Canada’s Nexen is the smallest and most Western looking of China’s three oil majors. Moreover, lines of power between China’s oil producers and politicians run both ways. CNOOC may have a gusher of governance anomalies, but foreign regulators have little to fear.
BP finally gains leverage in Russian divorce 24 Jul 2012 The UK major’s estranged oligarch partners in TNK-BP have thwarted its ambitions in Russia. But BP now says Rosneft could buy its 50 pct stake. That would upset the other owners, who would lose influence. After months of stumbles, BP at last has a chance to regain the initiative.
Man Group’s new resolve is welcome 24 Jul 2012 Market weakness and own goals have hurt the listed hedge-fund manager. Long-suffering shareholders should greet $100 mln of new cost cuts as evidence that Man really is dealing with its problems. But the future remains murky - hence the huge spread in earnings forecasts.
Egypt’s new PM is a big disappointment 24 Jul 2012 Muslim Brotherhood President Mohamed Mursi has appointed a little-known water minister to the top spot. That confirms that nobody qualified to fix Egypt’s finances wanted the job amidst a power struggle with the army. It’s another setback on the long road to recovery.
Do-it-yourself law firm IPO looks a bit too feisty 24 Jul 2012 Bankers are valuing LegalZoom at a whopping 40 times last year’s earnings. That’s justifiable if the U.S. online legal site can turn impressive revenue growth into consistent earnings. But rising competition and potential lawsuits are just two of the company’s biggest risks.
Normalised Barclays could offer substantial upside 24 Jul 2012 The British bank’s leaders have been ousted and its reputation among regulators, politicians and customers, is ragged. Getting back on an even keel will be a struggle. But with the shares trading at a 38 percent discount to its global rivals, there’s scope for some striking gains.
China Inc not letting politics get in way of M&A 24 Jul 2012 A once-a-decade changing of the Communist Party’s top guard was supposed to hold back the ambitions of state enterprises, at least temporarily. But CNOOC has now kicked off a hefty $15 bln outbound takeover. Maybe, seen from Beijing, there’s no such thing as a bad energy deal.
Baidu suggests China’s SMEs surprisingly resilient 24 Jul 2012 Small companies were the main reason the search engine’s earnings jumped 70 percent in the second quarter. New manufacturing data too suggests SMEs aren’t so distressed. Easier credit might have played a role, but fear over the plight of Chinese small businesses seems overdone.
Syria exposes neighbours’ economic vulnerability 24 Jul 2012 While Turkey and Iraq will watch events over the border nervously, they have little direct economic exposure to Syria. But as pressure grows on the Assad regime, Jordan and Lebanon are feeling a financial impact that is weighing on growth.
Malaysia’s IPO bonanza may be deceptive 24 Jul 2012 With IHH and Felda, Kuala Lumpur boasts this year’s two biggest deals after Facebook. And more are coming, including the world’s biggest condom maker. But idiosyncrasies of the market, an export-reliant economy and fractious pre-election politicking should give investors pause.
BarCap shrinkage can’t wait for new CEO 23 Jul 2012 The strategic commitment to investment banking ultimately will be a matter for new management at rudderless Barclays. But the residual top brass is already implementing a plan to identify parts of BarCap that may need paring. It could be just the start of bigger cuts to come.
CNOOC has work cut out to justify Nexen premium 23 Jul 2012 At $17.9 bln, the Chinese oil giant is valuing its Canadian rival’s enterprise at almost 4.5 times estimated 2012 EBITDA. That’s on par with Nexen’s peers even though it has been trading at a big discount. For CNOOC to get its money’s worth will require a major turnaround.
Peru’s Humala looks tough yet pro-market a year in 23 Jul 2012 The once-feared leftist president has shown a heavy hand to social unrest. But Humala’s sensible economic policies have fueled 5 pct GDP growth and a solid equity market. He has also sided with foreign investors against mining protesters. Far from Chavez, he may be the new Lula.
Risk appetite set for brutally hot Spain vacation 23 Jul 2012 Distress in Spanish regions and new fears for Greece have broken the markets’ summer calm. Italy’s spreads have overtaken Ireland’s. Until external support for Spain is clarified, stocks, commodities and the euro may pay. Yet again, the dollar, yen and safe-haven bonds will win.
CNOOC pulls out stops to make Nexen bid palatable 23 Jul 2012 The Chinese oil giant is paying $15.1 bln for the Canadian producer, a whopping 61 pct premium. The deal also comes with sweeteners to placate protectionists, including CNOOC promises of a secondary HQ in Calgary and a listing in Toronto. It will be hard for Ottawa to say no.
Investment banking job cull is long overdue 23 Jul 2012 Faced with slumping income and tough regulation, the industry is bracing for another round of cuts. That won’t be easy: to make savings, banks will have to ditch business lines or redesign structures. But with shareholders antsy and no rebound in sight, they have little choice.
UK better on diagnosis than cure for equity myopia 23 Jul 2012 Economist John Kay is with the zeitgeist in lambasting short-termism in UK stock markets. But his government-sponsored report on the problem advocates smallish changes to effect a major cultural shift. Without a big idea, keeping up the pressure for reform could prove tricky.
Hugo Dixon: Confidence tricks for the euro zone 23 Jul 2012 The euro’s crisis of confidence operates at multiple levels. Businesses, bankers, citizens and politicians are losing faith in both the economy and the whole project. That creates multiple vicious spirals, centred on Spain and Italy. But there’s a way to escape the vortex.
Can Citic avoid the investment bank buyer’s curse? 23 Jul 2012 The Chinese securities firm is paying $1.3 bln for Credit Agricole’s CLSA. Avoiding another Dresdner/Wasserstein, Nomura/Lehman or Credit Suisse/DLJ would be hard for any bank - much less one controlled by Beijing. Arm’s length management alone is unlikely to make this deal different.
EU seals fate of Spanish savings banks 23 Jul 2012 As part of the country’s bailout, the euro zone wants Spain’s cajas to cede control of their banking arms. Even Caixabank - the great survivor - will eventually look more like its commercial rivals. The purge will be good for the financial sector, and for corporate Spain.
Don’t rule out a future SGX bid for LSE 23 Jul 2012 Singapore’s bourse denies holding deal talks with the London Stock Exchange. That’s no surprise: most recent stock-exchange M&A has failed, and the LSE is mid-way through an important move into clearing. Still, an eventual $5.7 bln offer could make financial and strategic sense.
Anil Ambani under pressure after IPO flop 23 Jul 2012 Reliance Communications’ shelving of a $1 bln listing for its undersea cable assets is an embarrassing setback for its majority owner. And it heaps even further pressure on the badly indebted Indian telco. With Anil’s brother sitting on a cash pile, is it time to phone a friend?
Manila is pillar of Southeast Asian strength 23 Jul 2012 Upgraded forecasts from the World Bank and IMF vindicate investor enthusiasm for an economy once known as Asia’s sick man. With Philippine markets roaring, President Aquino is loosening his belt to boost infrastructure and offset slowing global growth. He can afford to do more.
GE’s carve-up efforts remain half-hearted 20 Jul 2012 The $210 bln conglomerate is hacking its energy arm into three after doing the same with another division in 2010. Cost savings would be worth only some $300 mln. Maybe CEO Jeff Immelt, who has presided over a halving of GE’s share value, will warm to a breakup on a bigger scale.
Yahoo pays up for dream of CEO stardust 20 Jul 2012 The fading search firm hopes Marissa Mayer is the ticket to a turnaround. After churning through several CEOs, it’s easy to see why the Google hotshot snagged a $70 mln pay deal. But as J.C. Penney with its ex-Apple boss shows, there are no magic fixes for deep problems.
U.S. Dodd-Frank Act hits the terrible twos 20 Jul 2012 The landmark financial regulation’s second birthday marks a new phase as some of its most important rules soon take effect. The Act’s usual opponents will keep plotting infanticide. But smothering the boisterous toddler won’t be easy politically or logistically.
Chevron doubles down on Chavez staying power 20 Jul 2012 Venezuela’s bond yields have gyrated with investors’ changing views of the strongman’s cancer survival odds. But Chevron’s $2 bln loan to the state oil giant is a clear bet on Chavez’s re-election and survival. His shadow may darken the nation’s economic outlook for a while yet.
Review: The trappings of global money 20 Jul 2012 The world’s financial system is trapped inside its own inadequacies, says Robert Pringle. Freedom will come with the birth of a common monetary unit of account, based on the value of global equity markets. The prescription is bold, but imperfect and unrealistic.
Repsol making the best of a bad situation 20 Jul 2012 The Spanish oil major is shedding non-essential assets and striking clever financing deals in the wake of the YPF fiasco. Selling cash-cow liquefied natural gas assets could raise up to 3 bln euros to plow into upstream growth. It’s not a bad response to tricky circumstances.