Anglo finds satisfactory end to Chilean quarrel 23 Aug 2012 The London-listed miner has buried the hatchet with Codelco, selling Chile’s copper producer 25 pct of a disputed mine for $1.9 bln. Anglo American’s other problems will be harder to solve, but here CEO Cynthia Carroll can reasonably claim she’s protected shareholder value.
Disputes give WTO chance to prove it has cojones 23 Aug 2012 Complaints lodged with the trade body have doubled this year, including a big case against Argentina. That’s to be expected as economic woes encourage protectionism. But with Russia joining, the WTO now includes the top 30 exporters. That may lend it some much-needed influence.
Exxon aims for smarter Russia bet as rivals fold 23 Aug 2012 ConocoPhillips’ exit from a JV means its 20-year Russian adventure is all but over. BP has had to retreat from some of its forays too. While making money, neither built the kind of business they hoped for. Armed with a few lessons and its world-beating clout, Exxon may do better.
Lonmin needs to go big, or go away 23 Aug 2012 The platinum miner was stretched, financially and operationally, before last week’s deadly violence. Investment, perhaps funded by a big rights issue, is needed. It could improve conditions for workers, reduce costs, and secure a future for the company that, at present, is bleak.
Playing nice may suit Greece’s official lenders 23 Aug 2012 Athens wants to delay austerity. Its lenders won’t give it more money. Various schemes could shift the burden to the IMF and allow euro zone leaders to dispense with Parliamentary approval. Greece’s ace is that Europe needs time before it can take losses on its bailout loans.
Thais should tone down populist rhetoric 23 Aug 2012 A top official says the country’s foreign reserves are doing “nothing useful.” A swap of low-yielding U.S. Treasuries for roads and bridges sounds tempting. But the actual economics are doubtful, Thailand isn’t secure enough for the risks and the timing is terrible for investors.
Beijing insecurity creates sure corporate winners 23 Aug 2012 The government is worried about social order, so while a slowdown in public spending has hit some companies hard, providers of video surveillance and state media are doing well. When times are tough, Chinese authorities are willing to invest in maintaining stability.
Korea, Taiwan are global stimulus weather vanes 23 Aug 2012 The two export-reliant economies are suffering as global growth slows. Yet foreign investors have been snapping up their stocks to wager that China, Europe or the U.S. will respond with major stimulus measures. If they do, Asia’s exports could be among the first beneficiaries.
Carl Icahn gets a dose of his own tart medicine 22 Aug 2012 The uppity investor yanked his failed bid to buy the rest of CVR Energy. That leaves Icahn controlling a public company he can’t take private and wanted to sell - but couldn’t find a buyer. Now he has to deal with a group in some ways a bit like him: a stubborn minority.
U.S. housing watchdog wise to go long on short sales 22 Aug 2012 The federal agency that oversees mortgage behemoths Fannie and Freddie is making it easier for underwater borrowers to sell homes at current prices. That’s better than cutting the amount owed as it should enhance housing market stability without introducing moral hazard.
Brazil’s infrastructure plans look rose-tinted 22 Aug 2012 President Rousseff hopes private investors will help provide $66 bln for rail and roads over the next 20 years, boosting growth - and that’s just a start. But past state-led efforts have fallen short of expectations. Now, red tape is still a problem and financing is a challenge.
Market could overrule U.S. court on coal pollution 22 Aug 2012 An appeals panel has put the brakes on the EPA’s effort to cut emissions from coal-fired power plants. That could keep the dirtiest U.S. smoke stacks going a bit longer. But at least for now, cheap gas is doing the environmental watchdog’s work, whether judges like it or not.
Ethical economy: The false idol of free trade 22 Aug 2012 Much of the economic rhetoric around subsidies for solar power suggests that free trade is paramount. But even economists admit that free trade isn’t an absolute good. Besides, trade can never be truly free and unencumbered trade between unequal partners is often oppressive.
Spending still needed despite mine capex cull 22 Aug 2012 BHP Billiton’s decision to shelve a $20 bln Australian copper and uranium dig shows reassuring discipline. As lower returns challenge more marginal projects, investors may ask miners to shovel even more cash in their direction. The biggest miners can afford to think longer term.
Italy still vulnerable to Spanish flu 22 Aug 2012 Italy could avoid Spain’s bailout shame. Mario Monti is intent on more reforms and privatisations. If investors think that Italy is on the right track, they might view Spain’s bailout as a trigger to buy its bonds. But next year’s election remains a big question mark.
China has no liquidity problem. That’s a problem. 22 Aug 2012 Beijing has managed to keep credit and cash growing despite falling property, profit and slowing growth. That may help China avoid the kind of liquidity trap that made the U.S. recession so painful. But it could encourage the behavior that has kept Japan in a slump for so long.
Monte dei Paschi car crash has taxpayer airbag 22 Aug 2012 The Italian lender’s shares have jumped by a third in the last week. Yet investors face dilution if the bank has to pay the coupon on its recent government bailout in shares. Shareholders’ delight may reflect that taxpayers will share their pain.
South Korea can’t kick debt habit 22 Aug 2012 Loan limits for younger homebuyers have just risen by about 15 percent, thanks to a decision to let lenders estimate borrowers’ future incomes. More credit might help counter the current weakness in demand, but will only increase the stress on Korea’s over-indebted households.
Peter Thiel’s sale encapsulates Facebook folly 21 Aug 2012 The venture capitalist took the first opportunity to unload some $400 mln of shares from his initial $500,000 bet on the social network. His decision cements the idea that Facebook’s IPO was run by and for early backers. Thiel’s board seat is now a snub to new investors, too.
Muni investors shouldn’t be spooked by Buffett 21 Aug 2012 The Oracle’s decision to unwind $8.25 bln of derivatives deals is being interpreted as a bearish sign on America’s states and cities. Investors are better off keeping their own counsel on a market so broad and diverse. It’s a lesson learned from muni doomsayer Meredith Whitney.
Glencore’s stiffening resolve leaves bid on skids 21 Aug 2012 Resistance to improving the terms of the $30 bln merger with Xstrata appears to be hardening at Glencore HQ. A last-minute sweetener can’t be ruled out, but a decent half-year performance by the commodity trader makes it less likely.
Goldman still on wrong side of China’s great wall 21 Aug 2012 Eight years ago the bank hit on a clever trick to tap China’s restricted equities market. But while Goldman’s franchise thrived, its equities business hasn’t. Two Goldman vets and China novices have now been shipped in to enliven things. The best thing they can bring is patience.
China’s oil giant may need pricey Canadian boost 21 Aug 2012 CNOOC’s $15 bln tilt at Canada’s Nexen seems an expensive distraction, especially since the Chinese oil major has cut its dividend, has flat output and rising costs. Yet CNOOC needs a booster. Nexen’s drilling expertise could help it squeeze more out of its domestic business.
Soros backing could lift Manchester United 21 Aug 2012 The soccer club’s U.S. float was panned for leaving the Glazer family firmly in control - and for missing their lofty goals on value. But George Soros’s emergence as a major shareholder could lift sentiment. Despite his $20 bln fortune, Soros is not a typical trophy investor.
Malaysia might escape middle-income trap 21 Aug 2012 The government’s efforts to support the Malay majority have hollowed out the nation’s talent pool and hurt growth. Encouraged by a boost in public spending, private sector investment rose at a 25 percent rate in the second quarter. That could make faster growth self-sustaining.
Time to draw a line under India’s crony capitalism 21 Aug 2012 India’s national auditor has once again highlighted too-cheap sales of state assets. Going forward the answer is simple: auctions that are transparent and profit-maximising. The past is harder to clear up. The government and business community need to show they’re sorry.
Lawsky affair rekindles U.S. regulatory arb risk 20 Aug 2012 The crusading NY watchdog single-handedly extracted $340 mln from StanChart. That’s good politics, but goes against a pact between the feds and the state not to work at cross purposes. The danger is financial firms circumvent regulations by exploiting rivalry among overseers.
U.S. money market funds can’t have it both ways 20 Aug 2012 Lobbyists are trying to stifle reforms in the $2.7 trln industry, while the New York Fed boss has lent his support to changes the SEC chairman wants proposed. The funds can’t go on claiming ultra low risk while having no obligation to hold a buffer. Something needs to give.
Bondholders should back Brazil’s bank bail-in 20 Aug 2012 Some are crying foul over plans to impose a 50 pct haircut on creditors in seized Banco Cruzeiro. This may just be grandstanding, though there’s favoritism in the bail-in. But with no buyers for the disgraced mid-size lender, the other option is liquidation. No one wants that.
Greek lesson encourages can pay, won’t pay states 20 Aug 2012 Belize is trying to force a restructuring. The Caribbean nation is more or less solvent, but its cash is precious and its debt expensive. Foreign creditors have limited leverage, as the Greek and Argentine examples show. They can lose their shirts even if countries don’t go bust.