Draghi could use euro calm for IMF-style mea culpa 6 Jun 2013 The central bank chief wisely avoided rate cuts or extraordinary measures. But he dodged the biggest storm in Europe right now, the IMF’s criticism of the Greek bailout. The ECB has a lot to be proud of, but reflection could teach useful lessons. It’s a good time to take stock.
How lucky SNS wasn’t based in Nicosia 6 Jun 2013 The Dutch bank has at last released its 2012 results, months after it was nationalised. Had SNS been headquarted in Cyprus, its hideous property losses might have warranted a depositor haircut. Bail-in’s champion, Jeroen Dijsselbloem, was much less gung-ho in his own back yard.
Springer Science IPO: subscription needs research 6 Jun 2013 The academic publisher might raise 760 mln euros from a Frankfurt debut. Steady growth and high margins are appealing, but the rise of cheaper “open source” publications could prove hard to manage. To judge from the performance of Reed Elsevier shares, investors aren’t worried.
Kleinwort Benson owner should shake up board 6 Jun 2013 Hedge funds urging change at RHJ have lengthened the charge sheet. Poor market judgment has been added to limp performance and excess costs. RHJ hasn’t delivered a convincing response. Moves to refresh the board deserve support.
Japanese equities retain long-term value 6 Jun 2013 Tokyo’s stock market has had a rough few weeks. The Nikkei 225 index is down 17 percent since May 22 after rising 80 percent in six months. Much depends on the success of Abenomics. But valuation benchmarks suggest Japanese shares are pausing for breath, not running out of steam.
Obama and Xi should consider Confucian diplomacy 6 Jun 2013 If the emperor merely faces south, the sage argued, the rest falls into place. The U.S. and Chinese leaders could do the same when they meet in California. Issues like hacking and trade should resolve over time through mutual self-interest. For now, inaction is the best policy.
Austerity gets a beating with IMF’s mea culpa 5 Jun 2013 The fund is admitting it miscalculated the effects of aggressive fiscal belt-tightening on the Greek economy. As a result, the IMF will be more reluctant to impose pain on citizens of crisis-afflicted nations. That probably means more sacrifice in the future for creditors.
Apple patent case exposes trade arbiter’s flaws 5 Jun 2013 A ban on U.S. imports of older iPhones is a big win for rival Samsung — and yet another example of the International Trade Commission being too quick to block products on dubious grounds. President Obama plans to tighten ITC standards. He could start by nixing the Apple ruling.
New SEC chairman makes headway over predecessor 5 Jun 2013 Mary Jo White is pushing ahead on money market reforms, a challenge that Mary Schapiro was forced to punt to other U.S. agencies. The move gives White some credibility in Washington – something she’ll need if she wants to focus on nabbing Wall Street’s real miscreants.
Banking versus car sales: spot the difference 5 Jun 2013 Uncharitably, it could be said both trades are about making as much money as possible as a middleman. Wall Street and City types happen to wear finer threads and earn more lucre. Now ex-Barclays big shot Roger Jenkins is hoping to bridge the gap by snapping up luxury dealerships.
Man Group needs to address stock volatility 5 Jun 2013 If hedge funds are meant to deliver uncorrelated returns, why is Man’s share price so unstable? The latest tumble comes after its main fund was blown off course. Perhaps more diversification would help. Otherwise, the ups and downs suggest Man is worth more in private hands.
Euro zone greets new member of Baltic fan club 5 Jun 2013 EU authorities say Latvia can join the euro next year. That is a welcome, if unsuprising development. The Baltic country has undergone a serious adjustment and stands to gain from joining the bloc. Three years after Estonia joined, the euro zone could do with a confidence boost.
Berlin’s Spanish SME charity sensible and good PR 5 Jun 2013 A plan to channel cheap German funds to Spanish SMEs could ease funding constraints for small companies in the periphery. But the programme is small, and Germany isn’t taking on much risk. The programme is a win-win for both Germany and Spain, but it’s not a game-changer.
Porsche conviction is a bit better than nothing 5 Jun 2013 The mild criminal judgment against Porsche’s former CFO, for deliberately misrepresenting the carmaker’s financial woes in credit negotiations, shows German legal authorities are making some progress in bringing boardroom criminals to justice. A bigger test is coming soon.
Dell’s board neatly paints investors into corner 5 Jun 2013 The special committee has shown persuasively why shareholders should back the $24.4 bln buyout by Silver Lake and Michael Dell and why Carl Icahn’s rival offer fell short. But majoring on how badly the company is doing is a hostage to fortune if the deal does get voted down.
Edward Hadas: Bond markets and failed theory 5 Jun 2013 If the recent rise in yields shows investors rebelling against pathetically low returns, then so far they are asking only to be flayed with a smaller whip. But the episode makes clear that monetary policy is now an economic hazard. Blame the crazy idea of a natural interest rate.
Investment freeze darkens German economic prowess 5 Jun 2013 Europe’s strongest economy has been suffering from falling investment for six quarters in a row. That unexpected trend isn’t due to cyclical factors alone. If it isn’t reversed, it could endanger Germany’s medium-term growth prospects.
Inflation arises from popping EM asset bubbles 5 Jun 2013 Mere talk about Fed tapering has been enough to reverse the previous flood of foreign money into emerging market bonds and stocks. As these bubbly assets deflate, currencies are falling in Turkey, Brazil and Mexico. That will push up inflation and cut into growth.
Asian tycoons give LBOs an eastern twist 5 Jun 2013 Shuanghui’s takeover of U.S. pork group Smithfield combines hefty leverage and limited cost savings. Recent deals in Thailand and Singapore have also been quasi-buyouts. As long as local banks remain flush, Asian groups will give private equity firms a run for their money.
Abe’s income target needs more than domestic boost 5 Jun 2013 Japan’s prime minister wants to lift income per head by 3 percent a year for a decade. But his strategy is all about expanding domestic output, a tall order given the country’s shrinking workforce. Policies to boost Japan’s income from overseas assets need to be part of the mix.
Carlyle backer follows Apollo’s lead for exit 4 Jun 2013 The giant California pension fund Calpers is offloading its 4 pct stake in the buyout firm run by David Rubenstein. After a 12-year run, redeploying capital makes sense. With Apollo’s Leon Black in full-blown harvesting mode, it also may pay to go with the industry flow.
Brazilian airline IPO requires sky-high optimism 4 Jun 2013 David Neeleman, JetBlue’s founder, is taking public his latest creation, Azul. Based on its U.S. cousin’s valuation, it’s worthless. Potential shareholders need to assume Azul keeps climbing fast and encounters no economic or operational turbulence to justify jumping on board.
Congress can foster innovation by hunting trolls 4 Jun 2013 Intellectual property suits by rent-seeking patent holders are rising. Many of these cases are wasteful and discourage invention. Courts have reined in some abuses. And Obama wants to make it harder to hide behind shell companies. It’s time for legislators to play their part.
Could UBS resurrect partnership investment banking? 4 Jun 2013 Knight Vinke’s push for UBS to split wealth management from investment banking is too ambitious to happen anytime soon. But the idea of selling the investment bank to its staff has merit in theory. To work in practice it would require time, luck and possibly more capital.
New U.S. systemic tags better late than never 4 Jun 2013 AIG and GE Capital are among the non-bank firms designated systemically risky by the financial stability uber-regulator. These are no-brainers for the SIFI moniker. Trouble is, five years on watchdogs are still bogged down in the last crisis rather than looking out for the next.
Cave-in at home may harden Gazprom resolve abroad 4 Jun 2013 The Russian group has dropped a requirement that its domestic clients pay for the gas they don’t use. That may encourage more European customers to demand the same treatment. But as Gazprom becomes more reliant on overseas profit, it will be less inclined to compromise.
German double bill could make sense for Vodafone 4 Jun 2013 The UK-based mobile group is said to be eyeing Kabel Deutschland again, for a 10 bln euro-plus takeover. Buying the German cable-TV provider might bolster Vodafone more than a recent broadband alliance with Deutsche Telekom. It is a shame the target is so expensive.
UK should stop dithering over Co-op 4 Jun 2013 Regulators still haven’t nailed down how much capital the mutual lender needs. Despite a savage downgrade and shuttering new corporate lending, the need to sustain competition in UK banking should guarantee Co-op’s future. But that doesn’t mean it could withstand deposit flight.
Bond jitters shouldn’t delay Japan pension reform 4 Jun 2013 Asking state funds to buy fewer government bonds when the central bank is struggling to control yields may look an own goal. But juicier returns should reduce the taxpayer’s exposure to future shortfalls. Besides more money moving out of Japan will help keep the yen weak.
Soho tycoon’s U.S. deal is sign of top – for China 4 Jun 2013 Zhang Xin, the new part-owner of New York’s GM Building, typifies China’s real estate elite. Her company increased earnings fivefold in as many years through timing, panache and smart accounting. Investing her wealth abroad suggests the good times at home are coming to an end.