Kim Jong Un could succeed where Dan Loeb failed 23 Dec 2014 While it’s unlikely the North Korean leader wants to become a new kind of activist investor – despite the generous compensation – the hacking of Sony reignites the issue of whether the Japanese conglomerate should spin off its entertainment unit as Loeb’s Third Point suggested.
Positive U.S. momentum could grow in 2015 23 Dec 2014 Jitters like recessions abroad seem unlikely to derail America’s economic recovery as late-year growth, jobs and incomes came in unusually strong. Lower gas prices and the possibility that housing ticks up make even inevitable interest rate hikes look easy to shake off.
Uber takes patent office for ride on surge pricing 23 Dec 2014 The taxi app’s claim to own the idea of upping charges in peak hours is a stretch. Like the company’s other dubious IP filings, though, this one can slow rivals, at least temporarily. That may buoy investors anticipating an IPO, but the tactic risks fueling costly patent wars.
Saudis give free-marketers dose of their medicine 23 Dec 2014 The Kingdom’s message to the United States, Russia and other higher-cost oil producers is simple. If the market sets the price, it will be far too low for comfort. The Saudis and their allies can probably bear the pain long enough for a more disciplined cartel to emerge.
Sberbank battles to keep global ambitions alive 23 Dec 2014 Russia’s biggest bank has built strong returns and international credentials. While turmoil at home hits hard, it can just about stick to its investment story for now. But if the economy really tanks, Sberbank may struggle to avoid capital remedies that make it look more Russian.
Meddling will be central banking’s new mantra 23 Dec 2014 Monetary authorities haven’t stopped being responsible for financial stability. But weak output and the threat of deflation mean they can’t raise interest rates to fulfil their mandate. That leaves macroprudential policies – meddling, in plain English – as the preferred tool.
Even a weaker Islamic State will drag on economy 23 Dec 2014 Cheap oil may now be the biggest worry for Middle Eastern economies, but the struggle against the radical group also has the potential to undermine growth. Even if IS has peaked, its ideology remains a problem, especially for Iraq and Turkey. Iran could end up gaining ground.
India’s growth spurt could be for real this time 23 Dec 2014 The country’s decade-long obsession with GDP expansion has proved costly. It stoked inflation and damaged balance sheets due to a lack of effort to boost production. By contrast, Prime Minister Narendra Modi’s reforms promise a slow buildup to a more enduring increase in output.
Acquirers can expect more M&A investor skeptics 22 Dec 2014 There’s no reason to think the $3.2 trln pace of deals will slow in 2015, but the uproarious reception from shareholders is already showing signs of subsiding. As easy pickings of squeezing costs from overlapping operations evaporate, the laws of corporate finance will prevail.
First case against algorithm could reboot U.S. law 22 Dec 2014 A market manipulation prosecution essentially turns on whether one program duped another. That makes proving criminal intent seem futuristic at best. Similar obstacles could trip up other cases where software is the de facto defendant. Judges will tackle the issue in 2015.
Wall St’s $18 bln poker game has more rounds to go 22 Dec 2014 Apollo, Blackstone, Elliott and others are feuding over Caesars. Some senior bondholders in the casino group’s biggest unit back a bankruptcy that its parent’s merger with an affiliate could fund. Others may want to wait. And junior creditors have one card left: more litigation.
Pharma toys with mutually assured destruction 22 Dec 2014 Gilead lost $20 bln in value after Express Scripts ditched its hepatitis C treatment for AbbVie’s discounted drug. It may kick off widespread price wars throughout the sector. Such tactics, though, could be a strategic disaster for all concerned.
More than Slim odds America Movil buys T-Mobile 22 Dec 2014 Carlos Slim’s telecoms empire needs to reduce its dependence on Mexico. The fourth U.S. wireless carrier is cheap, parent Deutsche Telekom doesn’t want it and there’s strategic logic to a deal. The increasingly frightful competition in U.S. telecoms may be a sticking point.
Stick with BRIC 22 Dec 2014 It’s easy to mock the idea that the four biggest emerging markets – Brazil, Russia, India and China – will reshape the world economy. But the balance is still moving their way, even with slowdowns and Russian turmoil. Markets say otherwise because they were too keen at first.
BP’s Rosneft stake exposed for what it is 22 Dec 2014 Turmoil in Russia will hurt BP’s accounts via its 20 percent stake in Rosneft, at least on paper. But in cash terms, the impact looks manageable. This is a financial holding which provides BP with limited dividend income. Any strategic value looks very long term at best.
China-U.S. shift will end Cold War peace dividend 22 Dec 2014 The PRC’s military outlays may match Uncle Sam’s in 15 years, while U.S. policy paired with Russian aggression could force up EU spending. Western defense firms face more competition, but added demand. Governments may have to choose between just rearming and an all-out arms race.
High-yield boom enters hold-your-nose territory 22 Dec 2014 With defaults and interest rates low, junk bond sales have broken records. Central banks won’t stop the party in 2015. So investors will keep chasing yield, despite a market sell-off, a few blow-ups and rising corporate indebtedness. That will store up trouble.
China will make 2015 year of missed opportunities 22 Dec 2014 Foreign investors hope for a more open, balanced China. Its leaders have other ideas. They favour reforms that minimise financial instability, punish bad eggs, and nurture national champions. President Xi Jinping’s popularity quest will raise tensions with the rest of the world.
Activists may take the Pepsi, and Coke, challenge 19 Dec 2014 Thanks to stagnant sales the world’s top soda makers – with $300 bln of combined market cap – already attracted agitators in 2014. Now Pepsi is risking a proxy fight over billionaire Nelson Peltz’s break-up plan. Coke, too, may face a radical shake-up if it can’t reignite growth.
Research reform starts here for Europe’s investors 19 Dec 2014 Regulators are to unbundle charges for financial analysis and trading in Europe. Greater transparency is welcome. But buyside and sellside alike will be cheered that asset managers can still charge research to clients. Determining value for money may be tricky for end-investors.
ECB sours QE plans to keep Germany sweet 19 Dec 2014 The central bank will buy sovereign debt – but each national government may have to set aside provisions in line with their own risks, Reuters says. It may secure German approval. But it would also weaken quantitative easing, and highlight a fragmenting euro zone.
Review: An Icelandic tycoon’s sorry saga 19 Dec 2014 Thor Bjorgolfsson embodies Iceland’s volcanic rise and fall. He made a fortune in post-Soviet Europe, lost a bank in 2008 and caused Deutsche Bank years of grief with Actavis. This deal junkie’s memoir is self-critical in parts - but unlikely to win many new friends in Reykjavik.
Roche double blow increases dealmaking pressure 19 Dec 2014 The pharma group has suffered two big drug failures. The setback over Alzheimer’s is no shock—the disease has been a money loser for big pharma. A second knock in Roche’s core cancer franchise hurts more. The failures will increase pressure on Roche to deploy excess cash.
Deutsche strategy rejig may presage CEO succession 19 Dec 2014 The German bank is set to review its direction in 2015. Its bet on capital markets remains unproven. Likely regulatory settlements in the coming months could raise further doubts. Recent executive moves suggest Deutsche is keeping options open for strategy and leadership change.
Tycoon graft trial shows HK law worth fighting for 19 Dec 2014 A former official and a property mogul have been found guilty of charges relating to misconduct in public office. The transparency, unpredictability and lack of a neat ending make it very different from similar cases in mainland China. That’s just the way rule of law should be.
Edward Hadas: Dubai the global microcosm 19 Dec 2014 The emirate is rightly seen as extraordinary for its rapid growth in population and wealth. But it also brings into sharp focus the global inequality of income, the materialism of modern economies and the trend to trust an all-knowing, all-powerful government.
China needs history’s biggest spring clean 19 Dec 2014 Reforms targeting reckless lending, homebuilding and graft have stopped the mess getting worse. Behaviour won’t really change until China deals with its backlog of bad debts, empty houses and dirty secrets. This would be a good year to sweep the skeletons from the closet.
Thai Union sets right flavour for Asian food M&A 19 Dec 2014 When little-known Asian buyers pounce on foreign companies, the resulting deals are often overpriced or lacking in strategy. The $1.5 bln Thai purchase of U.S. tinned seafood company Bumble Bee swims against the tide. Thai Union’s focused, low-key approach has lessons for others.
Goodbye tech conglomerates, hello "ecosystems" 19 Dec 2014 Companies have been using that word to justify building internet-based empires out of a mish-mash of assets with hard-to-identify synergies. Asian players like China’s Alibaba and Japan’s Softbank are amongst biggest fans of this unhelpful jargon.
Dry powder may explode in buyout barons’ faces 18 Dec 2014 Everything is going up in private equity except deal volume. Acquisition multiples are at a record high, as is competition from corporate buyers. For big firms such as Apollo and Blackstone, $1.5 trln of purchasing power may be tough to deploy without cratering returns.