Bitcoin attention may flip its investor base 20 Nov 2013 U.S. congressional hearings confer a certain sort of legitimacy on the shadowy but high-flying virtual currency. Ardent inflationista and libertarian bitcoin backers won’t much like the arrival of rules and regulations. They could, however, inadvertently attract the masses.
Sovereign CoCos look like good financial innovation 20 Nov 2013 Banks issue loss-absorbing contingent capital, so why not sovereigns? A Bank of England proposal to make government debt extendible in bad times would render crises easier and rarer. The system would be hard to set up today, particularly in Europe, but the idea is worth backing.
Can corporate finance save the Co-op? 20 Nov 2013 The scandal-hit UK mutual’s “root and branch” review is examining all options. Co-op’s incompetence means its unwieldy roster of businesses deserves to be broken up. Yet a poison pill and justifiable affection for its model means owner-members will stomach less radical surgery.
TV industry technophobia is a bad 1980s rerun 20 Nov 2013 U.S. broadcasters have won support from sports leagues in their bid to shut down online video startup Aereo. The doomsday arguments echo those used 30 years ago in an attempt to block the VCR, after which business boomed. For a creative trade, Big Media sure lacks imagination.
ThyssenKrupp botches Brazil but moves on 20 Nov 2013 The German conglomerate has admitted that it can’t sell its ill-fated Brazilian steel mill. Hiving off the good parts of Steel Americas is now the least value-destroying option in the short term. And it will allow the group to get serious about a much-needed capital hike.
Equity optimists may fast create a crowded trade 20 Nov 2013 Many large fund managers expect developed stock markets to rise next year. They reckon that companies will ramp up capital expenditure while fiscal policies become less restrictive. The reasoning may be sound. The risk is that there’s too much money chasing the same idea.
Chinese “fixers” speak to Wall Street weakness 20 Nov 2013 Foreign banks’ practice of hiring well-connected consultants to help them get on big deals is under the spotlight. The nebulous nature of the product makes it hard to tell when a line has been crossed. The real mystery, though, is why some banks still need so much help.
China could make a go of carbon trading 20 Nov 2013 Being late to the CO2 party means China can learn from others’ mistakes - and if the market needs tweaks, it has no qualms about the odd intervention. The challenge is keeping participants honest - but anything that helps reduce China’s egregious emissions is worth a shot.
JPMorgan’s $13 bln tab masks industry challenges 19 Nov 2013 CEO Jamie Dimon will be glad to put the much-flagged legal deal behind him. But big banks’ revenue growth remains uninspiring. And fear of punishment may stifle bankers’ traditional enthusiasm for new business. That may be good for the system, but it’s bad for short-term returns.
Are resurgent solar stocks burning too bright? 19 Nov 2013 Shares in panel makers like Trina and JinkoSolar have soared this year. Recent earnings show a long-awaited return to the black now that panel prices are recovering after an 80 pct slump. Profit growth is set to shine, but stock prices look to have gone too far, too soon.
U.S. can afford to inflation-proof seniors’ income 19 Nov 2013 Senator Elizabeth Warren wants to link social security payments to older people’s living costs. With healthcare and so on, they would rise faster than basic CPI. The Obama administration wants the opposite, but Warren’s idea is fair – even if active workers have to pay for it.
DSM’s pill deal oddly blends carve-out and LBO 19 Nov 2013 The world’s top vitamin maker is merging its drug-production arm with a private equity-backed rival. The unit was a subscale distraction. But the cost benefits of the $2.6 bln tie-up are hard to fathom. And DSM cedes control of the unit without cutting its economic exposure.
Shale boom, EM growth to put refining on back foot 19 Nov 2013 Rising U.S. crude production and Asian demand are set to reshape global oil flows over the next two decades, according to the IEA. Changing trade patterns create opportunities for middlemen. But they’re bad for Western refiners, which face dwindling demand for locally produced products.
EasyJet’s growth will get harder to replicate 19 Nov 2013 The low-cost carrier is turning improved customer service into bundles of cash. The 50 pct jump in profit and the chunky special dividend marks easyJet out from peers. The shares have doubled in the past year. But future growth may be harder to win.
Hong Kong tycoons diverge in power plays 19 Nov 2013 The Kadoorie family’s CLP Holdings is buying local electricity assets from Exxon Mobil for $1.8 billion. That’s a contrast with rival Li Ka-shing who is reducing his exposure. CLP’s struggle to build an international business gives it an incentive to double down in the territory.
Aussie dairy battle needs cheap debt to stack up 19 Nov 2013 Three bids in as many days have lifted the price tag for Australian dairy Warrnambool above A$500 million. Local cost savings and projections of China’s thirst for foreign milk help justify the frenzy. But the investment case also depends on low borrowing costs.
India in depth: Stock market turns schizophrenic 19 Nov 2013 A few shares popular with foreign investors are surging; the rest of the market isn’t. Will the tide of hot money reverse, or lift all boats? Rising U.S. interest rates and a sagging economy suggest the former, but investors don’t want to miss a possible change of government.
Wall Street watchdogs push luck in SAC trader case 18 Nov 2013 A manager at Steven Cohen’s hedge fund goes on trial for using dodgy fifth-hand tips to sell shares of Dell and Nvidia. That’s a legal stretch, even for NY’s esteemed federal prosecutors. The judge seems sympathetic, but their streak of insider trading convictions is in jeopardy.
Will the real Michelle Bachelet please stand up? 18 Nov 2013 After navigating Chile through the 2008 crisis she now wants another shot as president. But on education, tax and the constitution she wants to reverse factors that have allowed Chile to stand out from its neighbors. Striking a balance between business and students will be key.
Vienna offers sovereign wealth fund deal of year 18 Nov 2013 The Viennese repelled the Ottomans in 1683. Now Middle Eastern money is needed to shore up the Austrian capital’s banking jewel. After expanding in former Ottoman lands, Raiffeisen needs capital to retain its empire. A deal would represent more than historical irony, though.
Tarkett’s Russian heft could prove an IPO weakness 18 Nov 2013 The KKR-backed flooring firm aims to raise up to $837 mln in a Paris IPO. Buyers need to scratch beneath the surface. The equity story is underpinned by the firm’s strength in the CIS and Russia, where an economic slowdown is adding to well-known legal and political risks.
Derivatives detail could sink bank wind-down plans 18 Nov 2013 American and European regulators want to standardize contracts to help cross-border banks fail smoothly. If the problem isn’t fixed, investors could undermine financial stability by calling in swaps. It’s a reminder of how much work still needs to be done to end too big to fail.
Markets may underrate ECB’s propensity to act 18 Nov 2013 To judge from the firmer euro, investors needed less than two weeks to decide that the euro zone central bank’s unexpected rate cut wasn’t a sign it has become more activist. The complacency misses something: the ECB is now willing to act with a much weaker consensus.
The "Abe put" will keep Japanese equities buoyed 18 Nov 2013 Foreign investors have shown most early enthusiasm for the prime minister’s economic programme. But pension reforms and tax breaks for individuals promise more cash inflows. If momentum stalls, the central bank could step in. It all points to a continued boost for Japanese stocks.
Aberdeen’s SWIP swoop gives it much-needed hedge 18 Nov 2013 The UK asset manager is paying up to 650 mln stg in shares and cash for the Lloyds Banking Group-owned rival. A big share price jump reflects likely earnings enhancements. As importantly, Aberdeen is adding scale and breadth to its current emerging market expertise.
China’s "plenum premium" comes too soon 18 Nov 2013 Foreign investors have dived back into Chinese stocks; Hong Kong-listed shares trade at a rare premium to their onshore equivalents. Newly announced reforms strengthen the case for equities, notably insurers and brokerages, but investors are ignoring some obvious contradictions.
Hugo Dixon: Athens can capitalise on market interest 18 Nov 2013 Bottom-fishing for Greek banking assets gives the country a double opportunity: lenders can use it to clean up their balance sheets by selling non-performing loans; and the state can privatise its stakes in the banks. Both should grab the opportunity while it lasts.
Geithner smartly passes on a big bank job, barely 18 Nov 2013 After 25 years of public service former Treasury boss Tim Geithner is finally set to make some money. Not at Goldman or Citi. He’ll work for private equity titan Warburg Pincus. He didn’t bail out that industry, but rules he helped craft have benefitted LBO-land.
China fuels optimists, leaves room for pessimists 15 Nov 2013 A long-awaited blueprint for reform covers everything from relaxing the one-child policy to opening the financial sector. But instead of firm targets, “deepenings” and “perfectings” abound. It’s enough to assuage some worries, but not yet sufficient to inspire new investments.
GE finally puts Jack Welch era out to pasture 15 Nov 2013 The conglomerate is spinning off its North America retail finance business. The move helps return GE Capital to its roots lending to mid-market companies and its parent’s industrial units, spelling the end of GE’s mission creep under its ex-CEO. That’s good news for shareholders.