Muzzling China’s money market mania 5 May 2014 Online funds that offer rates 15 times better than demand deposits are all the rage. By shifting savings around, they can help get finance to companies that need it. But if China doesn’t set clear rules to keep money market funds in check a helpful innovation could bring trouble.
Dry spell may soon be over for Indian IPOs 5 May 2014 Proceeds from new listings were at the lowest level in more than a decade last year. Yet the stock market is up 22 pct since September on hopes of an election win by opposition leader Narendra Modi. If expectations become reality, India could see a shower of new offerings.
Lots of U.S. jobs – just not yet productive ones 2 May 2014 The 288,000 new positions in April make welcome reading. But since 2010, GDP has increased only slowly relative to employment. That means productivity growth has been weak, especially compared to the last recovery starting in 2002. That’s a problem if it persists.
Pfizer’s M&A churns out more pennies than pounds 2 May 2014 A $106 bln AstraZeneca bid would deliver savings. But drug mega-deals create little value. Pfizer could’ve bought most of the top biotech firms instead of Wyeth, its last acquisition, and had higher returns. Buying stakes in innovative companies is a preferable route to riches.
Viacom’s UK deal broadcasts hope for old-time TV 2 May 2014 Sumner Redstone’s media giant will pay $757 mln for Britain’s Channel 5. That looks rich for a shoestring free-to-air station known for reality shows and programme imports. But Viacom gets a decent platform for overseas growth. And old-school TV is a show with much further to run.
Brazilian blunders fuel a better Mexican oil plan 2 May 2014 State meddling, onerous buy-local rules and limits on foreign control slowed Brazil’s expected boom in crude. So its rival to the north has proposed looser regulation and more freedom for government-owned Pemex. The scheme faces hurdles, but it’s a recipe for boosting output.
Brazil’s "Come Back Lula" movement is misguided 2 May 2014 Populist calls for Dilma Rousseff’s predecessor to replace her in October’s presidential election reflect understandable nostalgia for the growth during his time in office. But rising commodity prices, not smart policies, made Brazil richer. Voters can’t count on those again.
Pfizer yet to land knockout blow on Astra 2 May 2014 The U.S. drugmaker upped its proposal to $106 bln, and promised to keep some of the UK group’s workforce. It does not look high enough to bring Astra to the table. Worse, Pfizer’s aggressive public tactics may only antagonise shareholders.
UK engagement with Pfizer is irresponsible 2 May 2014 British politicians and scientists want assurances that a takeover of AstraZeneca by U.S. rival Pfizer would be in the national interest. But good UK science requires more than corporate control. A rushed dialogue with a semi-hostile bidder helps neither the target nor the nation.
RBS’ worry-free quarter will be hard to repeat 2 May 2014 The state-owned UK bank’s shares soared 12 pct after first-quarter net profit trebled. But RBS only took a tenth of this year’s restructuring costs to support CEO Ross McEwan’s new strategy, and dividends remain way off. The bank has turned a corner, but there’s a long way to go.
A decade on, some EU values still look strong 2 May 2014 Eight of the 10 countries which joined the union on May 1, 2004 were former communist states. Since then both old and new members have gained, economically and culturally. The EU has proved remarkably strong. But its financial and political values look far less robust.
Review: The UK’s EU choice is safety or adventure 2 May 2014 Should the UK leave the EU? Hugo Dixon, founder of Breakingviews, answers “The In/Out Question” with a firm “no.” He is mostly persuasive, at least for the short term. But he exaggerates potential British influence inside the EU - and may be too grim about Britain’s fate outside.
Macquarie shows Wall St rivals a mirror image 2 May 2014 The Australian group’s full-year earnings rose 49 pct, fuelled by unfashionable businesses like commodity trading. Superior returns and fewer balance sheet woes justify Macquarie’s strong share price. But as the group expands overseas, it will get harder to buck the trend.
Animal spirits permeate neo-Predators’ Ball 1 May 2014 There’s always a whiff of it at Michael Milken’s annual Beverly Hills gathering of global grandees, even after the crisis and amid outrage over income inequality. This year, talk of M&A mojo and credit exuberance filled the air with an unmistakable aura of confidence.
Lazard bests rivals in M&A boom practice lap 1 May 2014 Investment bankers are increasingly confident that more deals are on the cards. They cite a recovering Europe, more corporate optimism and a recent spate of bold transactions. Lazard, though, is one of the few firms to have reaped the benefit of these trends already.
The Fed really does care about little banks too 1 May 2014 It’s easy to think no one would miss these thousands of small community institutions if they disappeared. But America’s top bank police chief, Janet Yellen, assured them she cares. Tailored regulation and still tougher rules for the bigger behemoths prove her point.
Astra has small tactical advantage over Pfizer 1 May 2014 Time can benefit bidders rather than targets – that’s why Kraft left Cadbury flailing for months. But uncertainties around regulatory clearance and Washington politics complicate the dynamics of Pfizer’s approach to AstraZeneca. The U.S. group will want a quick, recommended deal.
Ford schools U.S. firms on turnarounds, succession 1 May 2014 Alan Mulally’s almost eight years at the wheel offer a textbook case of how a company can drive itself out of the scrap yard. The automaker has also done an enviable job of paving the road for the next chief executive. It’s a story corporate America should learn from.
Exxon investors can anticipate benefits of boring 1 May 2014 The oil giant isn’t the growth machine of yore, as falling production and a 4 pct slide in first-quarter income attests. But a fourfold rise in free cash flow from capital cuts shows it still pumps out cash. While not exciting, that allows owners to pocket generous dividends.
South Africa needs neighbors’ growth rates 1 May 2014 Two decades after Nelson Mandela became president, the post-apartheid generation will vote for the first time in the May 7 election. The ANC represents his political legacy, but that’s undermined by the party’s weak economic results. Maybe the “Born Frees” can help change that.
BP could be most tempted by BG 1 May 2014 Bid speculation around BG has intensified since the recent departure of the gas giant’s CEO amid fresh operational setbacks. Bigger majors like Exxon or Shell could be interested. BP might have better reasons to buy, though there are hurdles.
Time for an FPC “Draghi moment” on UK house prices 1 May 2014 The ECB president famously eased the euro zone crisis with a pledge to do “whatever it takes.” The UK’s Financial Policy Committee has been too timid about making a similar commitment to restrain booming house prices. Its June meeting is the moment for Draghi-style boldness.
M&A-capex inversion wrongfoots stock-pickers 1 May 2014 Resurgent business investment was supposed to lift equity markets this year. The backdrop was certainly propitious: cash-rich firms and low rates. These are also ideal conditions for deals, and the beneficiaries aren’t necessarily the same.