REIT scandal could be good test for Sarbanes-Oxley 29 Oct 2014 American Realty Capital Properties says its false financials were intentionally left uncorrected. Details are scant, but that sounds tailor-made for the Enron-inspired law. After more than a decade as an afterthought for U.S. prosecutors, the reform may have a chance to shine.
Ferrari spinoff looks great but lacks oomph 29 Oct 2014 The hottest name in sports cars is joining the spinoff bandwagon. Fiat Chrysler will sell 10 pct of Ferrari and hand the rest to investors. Fiat shares zoomed up. Yet the split is largely symbolic. Ferrari needs to stay linked to Fiat, and the cash proceeds will be limited.
Spanish banks discover downside of solidity 29 Oct 2014 EU stress tests stacked up investors’ sense that Spanish banks are in good shape. Profits are growing, driven by lower bad debts and funding costs, as shown in BBVA’s results. But with the good news already priced in, negatives like shrinking credit mean lower share prices.
Online dating beginning to show signs of age 29 Oct 2014 Internet matchmaking has lost its stigma, almost doubling the number of users over five years. But if Zoosk plans to float and IAC spin off The Match Group, they had better hurry. Free services like Tinder and OkCupid are fast attracting singles, putting industry revenue at risk.
Global tax transparency deal will be hard to copy 29 Oct 2014 The 50-country accord to share bank account data isn’t merely a breakthrough in the fight against tax evasion. It’s a rare example of successful global public policy cooperation. But such deals face powerful obstacles. Don’t expect repeats in climate change or monetary policy.
Sanofi board chaos risks derailing recovery 29 Oct 2014 The French pharma group has dumped its chief executive. Chris Viehbacher’s position may have been untenable but his exit hurts Sanofi at a fragile time. Chairman Serge Weinberg will temporarily take the CEO mantle. He needs to act fast to stabilise the governance.
Deutsche Bank’s fixed income wager yet to pay off 29 Oct 2014 The German group hasn’t yet paid all the high legal costs of past sins or satisfied future regulations. But its biggest bet is that investment banks are in a merely cyclical, not a structural, decline. Despite solid third quarter trading revenue, the case is far from proven.
France’s cable king closes in on mobile prize 29 Oct 2014 Patrick Drahi’s Numericable has launched a 4.7 bln euro rights issue to help fund the takeover of French telecoms rival SFR. The harder work will come once the cash is in. Numericable has to find 10 bln euros in promised synergies and cope with stiffer competition from Bouygues.
India in depth: Beating the emerging-market gloom 29 Oct 2014 GDP growth in China and India is too low for investors to risk their now-costly capital. This is dimming the lure of these large developing nations. Without reforms to boost returns, Prime Minister Narendra Modi’s “Make in India” campaign will face testing times.
Train merger could be China’s ticket to elite club 29 Oct 2014 Coupling together two big train-builders into a domestic monopoly sounds like a step backwards. But it would help China better compete against an oligopoly of big, rich-world rivals. For a growing superpower, that probably seems a good enough reason to bend the market norms.
Beijing’s strap-hangers put socialism to test 29 Oct 2014 Increasing the capital’s subway fares for the first time in seven years raises a development dilemma. Should China stump up for public goods like transport, or ask commuters to pay their way? Markets imply the latter, common sense says subsidise. Expect the worst of both worlds.
Facebook’s ambition only real threat to success 28 Oct 2014 The social network continues to crank out higher profit, as more users check accounts daily and advertisers get comfortable with the mobile platform. One possible danger, though, is that the company wastes capital on risky bets like artificial intelligence and virtual reality.
AT&T double-talks way into U.S. regulatory trouble 28 Oct 2014 One watchdog says the telecom giant sold “unlimited” data plans that were anything but. That may not please agencies reviewing the firm’s $67 bln DirecTV bid and rules on net neutrality and wireless spectrum. Of all companies, AT&T knows the downside of taking on Washington.
Madison Square Garden features new fight card 28 Oct 2014 Uppity investors have rattled once unthinkable cages, including $100 bln companies. Now, the family-controlled owner of the New York Knicks and Rangers may carve itself up following shareholder pressure. If such fiefdoms are vulnerable, boards will have fewer places to hide.
DuPont chief bobbles rebuttal to Peltz attack 28 Oct 2014 CEO Ellen Kullman touted the $62 bln chemical giant’s scale and research capabilities in opposing the activist’s call for a breakup. But she offered no hard numbers to counter Peltz’s claim that the company could lop off $4 bln in excess costs. That was a missed opportunity.
Sky-high valuations no match for earnings reality 28 Oct 2014 Investors knocked more than 10 pct, or well over $3 bln, off Twitter’s worth despite sales doubling. Blame the company’s overdone value multiples. Similar knocks to Amazon, Netflix, Pandora, Chipotle and Yelp show the danger when quarterly numbers can’t match a bullish story.
Sanofi creates toxic combination for investors 28 Oct 2014 The French drugmaker’s shares plunged after it said sales growth in diabetes drugs would stall next year. This is a vital business and the surprise slowdown is hard to decode. A reported boardroom rift just adds uncertainty. Sanofi needs to rebuild shareholder confidence.
Sweden’s bold zero rate won’t fix deflation 28 Oct 2014 While other countries mess with tiny numbers, the Swedish central bank has set its policy rate at an unequivocal zero. The boldness is striking, but the Riksbank hasn’t resolved the global mystery of inflation falling when growth is reasonable. Nor will zero reverse the trend.
Rob Cox: Zuckerberg’s Chinese lessons are scalable 28 Oct 2014 Bilingual CEOs should be the norm, not fuel for the kind of media frenzy that greeted the Facebook founder’s Q&A in Mandarin last week. Learning a foreign language doesn’t just help conquer new markets. It fosters risk-taking and new thinking, and helps eliminate biases.
StanChart still wrestling with slower-growth world 28 Oct 2014 The emerging market lender’s earnings are sliding. Weaker economies, rising expenses and bigger bad debts are all to blame. Even with extra cost-cutting, it’s too early to say when StanChart’s fortunes will improve. Until the bottom line stabilises, investors will remain wary.
BP can handle double-digit oil price 28 Oct 2014 The UK major has bumped up the dividend despite obvious headwinds of the low oil price, exposure to Russia and uncertainty over Gulf of Mexico fines. Yet cashflow is growing, it has room to cut costs and its leverage is comfortable. BP can afford to be confident.
UBS’ legal pain is beginning to look manageable 28 Oct 2014 The Swiss bank is still paying for past sins, with a 12 month extension of a U.S. non-prosecution deal and a hefty $1.9 bln addition to legal reserves in the third quarter. But the underlying businesses are now prospering. Investors can finally eye decent returns.
Lloyds’ dividend return may come sooner not later 28 Oct 2014 The UK bank’s shares show stress test strains. Lloyds’ extra $1.5 bln charge for insurance mis-selling is another drag. But a fresh restructuring plan is likely to improve earnings. And capital fears aren’t bad enough to delay the resumption of dividends much longer.
Hong Kong protests reach polite impasse 28 Oct 2014 The “umbrella movement” has lasted a month, confounding predictions of apathy, chaos, or a Beijing crackdown. A compromise on democratic reform is as distant as ever. Yet Hong Kong’s mostly civil activists have changed the city’s political geography for good.
Malaysia’s 3-way bank deal may need creative fix 28 Oct 2014 A sweetener looks needed to seal a $25 bln merger of CIMB with two smaller rivals. Yet a slump in CIMB’s shares limits its ability to improve the terms. Cutting a side deal with a state pension fund or a difficult Gulf investor increasingly looks like a plausible workaround.
Shale gas could blow up U.S. politics 27 Oct 2014 It’s playing a big part in upcoming midterm elections. Coal’s downfall is an important issue in one race that could swing the Senate Republican. Obama’s “war” on the dirty carbon is real, but so are market forces. Fracking-related jobs and manufacturing could rock future votes.
Google makes U.S. trade arbiter look patently daft 27 Oct 2014 The search giant says an International Trade Commission ban on imports of infringing items in digital form may disrupt the internet. Moreover, websites and cloud computing firms could become easier prey for patent trolls. It’s up to an appeals court to squelch ITC excesses.
Deutsche Boerse’s next CEO could learn from LSE 27 Oct 2014 The German exchange lacks the punch of the industry’s biggest players. Incoming boss Carsten Kengeter, an ex-banker like LSE chief Xavier Rolet, could ape his London rival. That would mean a bigger push into growth areas like clearing or indexes, using M&A if necessary.
Chiquita inversion slips on cash appeal 27 Oct 2014 The banana company’s shareholders voted down a stock deal to acquire Irish produce distributor Fyffes, a decision that now points to a sale to Brazilian buyers. Ailing arbs, a crackdown on tax-driven M&A and economic ructions didn’t help. The path of least uncertainty wins again.
Anglo-American alliance bears down on bankers 27 Oct 2014 UK and U.S. supervisors agree bonuses should be deferred, serial-offending firms broken up and individual misconduct industrially logged. European regulators may have other ideas. But transatlantic harmony is a step towards these ideas being solidified as post-crisis policy.