AB InBev deserves premium-strength rating 26 Feb 2014 The Budweiser brewer seems to pump as much cash as beer out of the business. Latest results suggest its key markets may be improving too. Its well-oiled M&A machinery may flatter the underlying long-term reality. But it is hard to see why investors’ taste for the stock will wane.
ITV’s makeover programme begins a tougher episode 26 Feb 2014 Full-year results show the television network’s revival since 2010. It makes more shows, relies less on ads and has less debt. Britain’s recovery has helped advertising sales rebound too. Yet the stock is pricey and ITV’s remaining turnaround goals look harder to achieve.
Austria plays catchup with new era of bail-in 26 Feb 2014 Vienna is mulling letting Hypo Alpe Adria fail after a 4.8 bln euro bailout. Bondholders should be bailed in, but most are covered by a guarantee from the local state. Haircutting them would be politically messy and a headache for Austria’s other state-supported mortgage banks.
Rudloff’s retirement is bad timing for Barclays 26 Feb 2014 The UK lender’s chairman of investment banking is retiring after a distinguished 50-year career. Hans-Joerg Rudloff transformed Credit Suisse and Barclays into European contenders on Wall Street. As Barclays forges a new path, it could use his institutional memory and vision.
Japan bond investors’ overseas trip may flop again 26 Feb 2014 The Federal Reserve’s taper talk discouraged Japanese investors from venturing abroad last year. Now wobbly emerging markets are threatening this year’s outing. That’s bad news for bondholders searching for better returns - and for the Bank of Japan’s anti-deflation campaign.
China internet Godzilla moment is in the making 26 Feb 2014 Like the nuclear waste that spawned the fictional monster, China’s peculiar conditions – from scale to censorship – have allowed tech behemoths to grow. Can they run rampage outside their home market? Tencent has a good chance; e-commerce group Alibaba may find it harder going.
More careful aim needed for U.S. insurance bazooka 25 Feb 2014 Congress is considering both flood and terrorism backstops this week. There may be a role for the feds, but not if it usurps private markets. And if lawmakers want to check Uncle Sam’s actuarial ambitions, they could start with the most sweeping: mortgage guarantees.
Outside investors in Mexico will want results soon 25 Feb 2014 Foreign direct investment nearly doubled in 2013, reaching 2.7 pct of GDP, yet the economy grew only 1.1 pct. There’s room for more offshore money, but its providers will expect growth to pick up. Keeping FDI flowing will require the government to follow through on reforms.
Spin can win at Supreme Court, but hold the fluff 25 Feb 2014 Smart packaging is often as important as solid legal points. Think campaign contributions dressed as free speech or class actions as business killers. But a U.S. patent suit target may have gone too far in calling its accuser a troll. The justices prefer truth in advertising.
Tesco trains its big gun on supermarket price war 25 Feb 2014 Britain’s biggest grocer has buried its old profit-margin ambitions. Though it will cut capex, Tesco now promises to “sharpen” prices. Scale and operational efficiency might see it maintain profitability advantages over peers. The risk is that the price war now gets bloody.
Who bails out bitcoin depositors? 25 Feb 2014 The pseudo-currency’s main exchange has disappeared from cyberspace, leaving customers at least temporarily bereft. Bitcoin’s supposed attraction is being government-free. When things go awry, users learn why conventional finance has expensive regulation and political backstops.
At least Venezuela’s unrest is simply economics 25 Feb 2014 Ukraine’s split is ethnic, Thailand’s regional and Syria’s religious. Venezuela is ethnically and religiously united and even has oil wealth. But income inequality and chaos bedevil the Latin nation. In theory, these problems can be alleviated even without political upheaval.
SolarCity needs to get the basics right 25 Feb 2014 Elon Musk’s green energy provider has a flair for pioneering new ways to fund installing solar panels. That’s helped its stock skyrocket sevenfold since its late 2012 IPO. SolarCity’s failure to get its Q4 earnings out on time, though, shows more humdrum tasks need more focus.
SFR deal would still leave loose ends at Vivendi 25 Feb 2014 A 15 bln euro sale of the French mobile unit would further reduce Vivendi’s conglomerate status. The reinvention has delighted investors but is incomplete. With a possible continuing stake in SFR, plus music, TV and Brazilian broadband, Vivendi’s raison d’etre is hard to fathom.
Italy’s Renzi has big dreams and small mandate 25 Feb 2014 The new prime minister announced ambitious reforms on a tight deadline. But his position in parliament is weaker than his sleepy predecessor’s. The promise of shock therapy may give Italy kudos in Europe. But markets need more details - and delivery - before giving him credit.
Scottish secession boxed in by dodgy debt dynamics 25 Feb 2014 An independent Scotland would find it difficult to adopt either the pound or the euro, after snubs from London and Brussels. A brand new currency would be logical, but risky. Whatever the option, assuming their share of UK debt will leave the Scots with little wiggle room.
Weibo IPO plan stretches financial logic 25 Feb 2014 Listing a $500 million stake in China’s version of Twitter looks like a response to sky-high tech valuations. But investors can already buy shares in parent Sina, whose value is mostly made up of Weibo already. They should be skeptical about the idea that two plus two is five.
Emerging market fitness plan: Diet, workout, pill 25 Feb 2014 Developing economies are health cheats. They deny addiction to hot money until capital starts fleeing and currencies begin to tumble. But what can policymakers do differently when capital is on its way in – rather than out? Here’s a step-by-step checklist for staying in shape.
Sturdier Fed only so effective as meltdown averter 25 Feb 2014 The central bank’s 2008 records reveal a board honestly debating the worsening crisis, but ultimately acting too late. The Fed now has more powers, like stress-testing banks. These should give more insight earlier on. They will only go so far to overcome doubt and indecision.
Icahn’s eBay rant also targets Silicon Valley club 24 Feb 2014 The activist is taking aim at board conflicts at the online auctioneer as he agitates for a spinoff of PayPal. It’s true that VC honcho Marc Andreessen, for one, is omnipresent in tech and hasn’t proved a great director at HP. But Icahn is taking on a culture bigger than eBay’s.
All-you-can-eat democracy may sicken shareholders 24 Feb 2014 An activist wants investors in $7 bln U.S. restaurant group Darden to be allowed a vote on a spinoff of Red Lobster. It’s a big step from giving all owners a say on governance matters to second-guessing strategic ones. Too much direct intervention could do more harm than good.
Uncle Sam’s bullying slaps costly tax on justice 24 Feb 2014 BDO Seidman’s ex-CEO beat evasion charges but is broke because the accountant stopped footing his legal bills. In trying to recoup costs, he now alleges that the firm cut him off on a pretext under pressure from prosecutors. Enforcement can be tough without ruining targets.
Facebook stock is not so different from bitcoin 24 Feb 2014 Both are currencies that can be used for certain purposes, but not everything. They depend on networks of people but are not backed by a government. And their worth reflects demand, which is based on murky fundamentals. The trick is to monetize them while they still have value.
Uniting UK mobile and electrical stores rings true 24 Feb 2014 A $6 bln merger is being discussed by Carphone Warehouse and Dixons, Britain’s largest mobile and electrical retailers. Investors quickly added $350 mln to the duo’s stock valuations. That reflects real potential to cut costs, cross-sell, and win better terms from hardware giants.
Exxon CEO’s Nimby-ism threatens his shareholders 24 Feb 2014 Rex Tillerson hands ammunition to anti-frackers by seeking to block a water tower to supply drillers near his opulent home. Buying $31 bln shale explorer XTO was the big bet of his tenure. Exxon may now struggle to convince the public to accept hydro-fracturing’s side effects.
VW’s $9 bln Scania bid puts own investors second 24 Feb 2014 The German automotive group is offering a 53 pct premium to the Swedish truck maker’s minority owners. Cost savings cover the gap on paper but will take up to 15 years to materialise. And VW investors must stump up $2.7 bln while seeing little short-term benefit.
Ukraine, the bailout Europe cannot shirk 24 Feb 2014 After triggering the end of the Yanukovich regime, the EU has a responsibility to help with Ukraine’s dire economy. It won’t provide all the needed $20 bln, but it can give the IMF political cover, while calming Russian anger. The ultimate goal has to be for Kiev to join the EU.
HSBC’s future growth will come at rivals’ expense 24 Feb 2014 Earnings grew in 2013, but the bank missed consensus estimates and warned that emerging markets would be volatile. With rates low and economies sluggish, HSBC must grow by taking market share. That will test CEO Stuart Gulliver’s progress in making the bank more joined up.
Markets at risk from new split in global economy 24 Feb 2014 “Decoupling” has turned upside down. Soft Chinese manufacturing, a weaker yuan, rising Indian interest rates and political unrest look ominous for emerging economies. Meanwhile U.S. data reassures and even the euro zone is a bit better. The mix looks bad for asset prices.
Hugo Dixon: ECB faces severest stress test 24 Feb 2014 A lot is riding on the cleanup of euro zone lenders, which is being overseen by the bloc’s central bank. Progress so far is encouraging. But clarity is needed on a few more things to ensure that banks get a proper scrubbing and can therefore support an economic recovery.