HSBC needs a strategy for open-ended QE 7 May 2013 Low interest rates are a drag on the lender’s large deposit base, while economic malaise has depressed loan demand. With no pickup in sight, returns depend on cost-cutting and weeding out underperformers. HSBC must use its forthcoming strategy update to show it has more to do.
It’s about good governance, not Jamie 7 May 2013 Another proxy adviser is urging JPMorgan shareholders to vote to split the chairman and CEO roles. Forcing it a year ago, right after the Whale trade erupted, would have been a punitive attack on Jamie Dimon’s stewardship. Now, it’s just a matter of implementing board best practice.
Paul who? Anonymity marks out an exceptional boss 7 May 2013 The chief executive of Diageo, the Johnnie Walker drinks company, is retiring after 13 years at the helm. Shares did nothing on the day. The true scale of Paul Walsh’s achievement will become clear if the departure still goes virtually unnoticed in the medium to long term.
Europe should cheer, not jeer, cheap Chinese solar 7 May 2013 Even if China is subsidising its domestic solar producers, the EU plan to slap big tariffs on imported panels is counter-productive. Cheap components are fuelling a solar boom. Europe may have missed the chance to become a manufacturing hub, but it should still reap big benefits.
BofA’s MBIA settlement more than pays for itself 7 May 2013 Agreeing to resolve disputes over losses from old toxic sludge cheered shareholders on both sides. BofA is forking out $1.7 bln, but added $6.9 bln of market value. MBIA scored $900 mln of extra equity on top of BofA’s check. Leaving the crisis behind can still yield dividends.
Lufthansa governance farce marks new low point 7 May 2013 Europe’s largest airline was hit by turbulence of its own making on the eve of its AGM. Former CEO and nominated chairman Wolfgang Mayrhuber initially dropped his candidacy - then changed his mind again. The bizarre flip-flops tarnish the new chairman and the company.
SocGen’s cost-cut encore hints at wider revival 7 May 2013 The French bank has found another 900 mln euros of flab to work off after shifting 550 mln in the last year. For some institutions, that might look like despair. But Societe Generale’s Q1 results outdid those of bigger rival BNP Paribas, implying room for shares to rise.
Turkey can profit from Islamic banking 7 May 2013 Existing players are small, but the Islamist government is promoting sharia-compliant entities. The motivation is more pragmatic than religious. By overcoming local secular sensitivities, Turkey can tap more capital from its own heartlands, as well as from the Gulf and Asia.
Hong Kong dockers’ pay sets tone for future strife 7 May 2013 Port workers have ended a month-long strike and accepted a 9.8 pct pay rise - half their original demand. Yet the conflict highlighted Hong Kong’s growing inequality and rising living costs. As China’s economy slows and shifts, dockers and employers will be increasingly at odds.
Kenyan mobile banking innovation is hard to export 7 May 2013 Vodafone’s Indian arm is launching a local version of the service that has been a hit in Kenya. The government’s push to broaden access to banking services means the plan is well-timed. But financial regulations and fierce competition stand in the way of widespread adoption.
BMC deal shows how activist playbook brings profit 6 May 2013 Elliott Management has pushed another tech firm into a sale - this time BMC for $6.9 bln. The 2 pct headline premium seems tiny. But the stock is up more than 30 pct since Elliott began agitating. Success followed careful target selection and persistence with Plan A - and Plan B.
NAFTA veteran is trade-friendly choice to run WTO 6 May 2013 The two men vying to replace Pascal Lamy are both Latin American. But Roberto Azevedo has spent 15 years fighting Brazil’s protectionist corner, while Mexican Herminio Blanco negotiated NAFTA and has 13 years of private sector experience. He looks the likelier free-trader.
Galaxy IPO hangs on Chinese equity market lift-off 6 May 2013 Listing the country’s biggest broker in Hong Kong while investors are shunning stocks at home may seem strange. But Galaxy is a bet that China’s markets must at some point get bigger and deeper. If share prices pick up in the meantime, it should benefit more than listed peers.
Malaysia poll offers only short-term relief 6 May 2013 The ruling coalition managed to cling to power in the country’s general election. That reduces the risk of near-term policy reversals. But the poll also showed a widening racial divide, which doesn’t bode well for the economy. Investors will be more relieved than happy.
Hugo Dixon: How to respond to UKIP’s surge 6 May 2013 Britain’s Conservative party will be tempted to move to the right on immigration and Europe to prevent more defections to the UK Independence Party after last week’s local elections. Business should urge it to stay in the centre.
The private sector comes to U.S. economy’s rescue 3 May 2013 Enterprises added 176,000 jobs in April, and the private sector grew by 4 pct in the first quarter. Higher payroll taxes, tight state budgets and sequestration downsizing aren’t preventing employment gains. America’s form of austerity by stealth looks to be working.
PepsiCo resistance against activists looks futile 3 May 2013 Investors with a hankering for breakups have taken stakes in the $128 bln snacks and drinks giant. A split in the businesses would be straight out of their standard playbooks. And Nelson Peltz’s success at Cadbury and interest in food biggie Mondelez suggest bigger ambitions.
Healthcare study reveals risks of blind spending 3 May 2013 The trillions of dollars America plans for insuring the poor may not improve health, new research shows. The study’s merits aside, its scrutiny of Medicaid costs and benefits offers a model for making policy. Most programs would profit from a thorough look before Congress leaps.
Review: Errors key to global warming trajectory 3 May 2013 Rupert Darwall’s book shows politicians locked us into global warming belief before scientists had evidence for it. Then a self-perpetuating U.N. bureaucracy and conflicted scientists manufactured evidence to order. The results have been toxic.
RBS needs to make the case for freedom 3 May 2013 One-off charges receded in the UK bank’s first quarter, although core operations struggled. The results will gee the government to start selling down its dominant stake in 2014. But the bank has to show why a quick sale - at a loss - is good economics as well as good politics.
BNP’s European crisis scars could be lasting 3 May 2013 France’s largest bank has shown that its universal model has built-in safety nets. Euro zone woes tripped up investment banking in Q1, yet BNP Paribas’s retail business marched on. With Europe’s troubles far from over, losses in trading market share may prove hard to reverse.
Welcome to the era of perpetual private equity 3 May 2013 The $1.3 billion sale of Allflex, an animal-ID firm, is just the latest “secondary” deal between two private equity firms. No wonder: private ownership makes sense for many businesses. And this asset class is so big now that alternative owners are not always available.
Fiat will find out if it pays to be different 3 May 2013 The Italian carmaker is trying to swim against the dismal tide in the European market. While struggling peers are closing down plants, Fiat adamantly refuses to reduce production capacity. The risky strategy relies on Chrysler’s strength. So far it seems to be working.
Ailing South Korea needs monetary remedy 3 May 2013 A weak Japanese yen is hurting Korean firms’ earnings, while anaemic global demand crimps export volumes. Debt-laden households hold out little hope for the economy. The central bank’s reluctance to cut interest rates and head off deflation risk may turn out to be a blunder.
Deals and buybacks portend cheerier Buffett powwow 2 May 2013 Last year’s Omaha gathering soured over a tepid share price and controversial tax plan. But Berkshire’s recent acquisitions and stock repurchases should brighten the mood this weekend. Shares are on the rebound, giving followers of the newly tweeting Oracle reason to boast.
President’s pragmatism paying dividends for Peru 2 May 2013 Ollanta Humala’s social programs and support for indigenous peoples please his supporters, but he has also welcomed foreign investment and may be rolling back an expensive mining consultation law. The strategy has critics, but could keep Peru on an enviable growth trajectory.
ECB sticks to caution with minimum rate cut 2 May 2013 The euro zone’s central bank did as little as expected, a 25 basis point drop in its main rate, to 0.5 percent. A lack of unanimity suggests it won’t cut more soon, or start any bold initiatives. The ECB looks too divided to wage a tougher fight against a sinking economy.
Salmon mega-deal is hard to swallow at this price 2 May 2013 M&A is reshaping the seafood industry. Fresh from another deal, the world’s largest fish farmer wants to gobble up a second smaller rival. At $1.7 billion, however, Marine Harvest’s hostile bid for Cermaq looks low. The Norwegian predator may need to offer more.
Google shooting blanks in smartphone patent wars 2 May 2013 Buying Motorola and its cache of inventions was meant to shield the search giant’s Android operating system from legal attack. But authorities are defusing the patent arsenal, saying the underlying technology must be shared on fair terms. Google’s losses are innovation’s gain.
UBS is ill-judged target for shareholder activism 2 May 2013 Knight Vinke wants the Swiss bank to split investment banking and wealth management. It’s odd timing from an activist whose record includes a failed tilt at HSBC. No one would create a bank like UBS from scratch. But a breakup isn’t viable. UBS’s current strategy looks right.