Elite FX club is better with China in than out 3 Jun 2015 Adding the yuan to the IMF’s reserve currency basket this year would be an easy win. It’s a big symbol for China but costs little for other constituents. Moreover, officially designating China as a lynchpin of the world’s financial system may convince it to act the part.
Bundesbank squeezed by euro’s design flaws 3 Jun 2015 The ECB’s quantitative easing rules reflect the incomplete unity of the single currency. They’re forcing the German central bank to buy more of its government’s bonds than the market can easily provide. In May, the mix of maturities purchased probably added unwanted volatility.
Focus Media sets tone for China’s shifting market 3 Jun 2015 The Chinese advertising firm’s reverse listing in Shenzhen values it at $7.4 bln, twice what it was delisted for in New York two years ago. Dizzying valuations have reduced the appeal of foreign markets. For those with a taste for financial engineering, the door is now ajar.
Chinese insurer’s ascent raises known unknowns 3 Jun 2015 Anbang Insurance is vying to add Portugal’s Novo Banco to trophies including New York’s Waldorf Astoria. The group’s prodigious expansion raises questions about its backers and the health of China’s financial system. Whether its targets’ regulators are up to the task is unclear.
Match-fit FIFA would give players, fans more ball 2 Jun 2015 Sepp Blatter has resigned as the besmirched president of soccer’s governing body. Needed reform is now unavoidable. FIFA’s best strategy would be to embrace it by enfranchising the beneficial owners of the sport: the players and the fans. It would also usher in better governance.
Apollo strains to heed LBO mission control 2 Jun 2015 Leon Black’s private equity shop is paying a headline valuation of 9.4 times EBITDA for specialty chemicals maker OM Group. Side deals will lower the multiple but Apollo’s avowed discipline looks tough in a pricey market. It’s a small buyout that illustrates a bigger industry problem.
Hedgies’ Safeway victory puts boards on notice 2 Jun 2015 Cerberus-owned Albertsons has to give three investors 27 pct more than it paid for its rival. The speedy resolution of this appraisal rights case should embolden those suing Safeway’s board for failing to get the best deal – and remind directors that their necks are on the line.
Supreme Court gives risky home loans a welcome mat 2 Jun 2015 The U.S. justices say second mortgages survive borrower bankruptcies – even when a first lien exceeds a property’s value. That shelters the kind of lending that helped inflate the housing bubble. Banks need incentives to offer credit carefully, not raise the roof like it’s 2006.
Rob Cox: If FIFA were a country it would be Russia 2 Jun 2015 The soccer federation run by Sepp Blatter and the Russian one headed by Vladimir Putin operate as baroque patronage systems, their bosses doling out favors from the center. Power derives from keeping constituents both fragmented and well heeled.
Euro zone prices give Draghi reason to crow 2 Jun 2015 Prices in the single currency zone are rising a tiny bit. That is welcome news for European Central Bank President Mario Draghi even if he doesn’t deserve much credit, and even though producer prices are still very weak. But the ECB’s fight against disinflation isn’t done yet.
PartnerRe debt quirks may hinder Agnelli advances 2 Jun 2015 A deal by the Italians’ Exor vehicle could blow up the reinsurer’s credit ratings, the target claims. That’s debatable, but Bermudan law and other technicalities make PartnerRe’s preferred shareholders a key voting constituency. Some may find downgrade fears hard to ignore.
Immigration is crucial to euro zone’s fortunes 2 Jun 2015 The flow of people into the single currency area could account for most of the region’s GDP growth over the next few years. Migration magnifies trends. The slower flow of new workers made the recession worse. A speed-up could turn a tepid recovery into a surprisingly strong one.
Samsung succession game puts investors to the test 2 Jun 2015 Shareholders in Samsung C&T have good reason to resist a $9.2 bln takeover by the South Korean group’s holding company. Opposition might delay a potentially lucrative wider restructuring. But it would warn the founding Lee family against further mistreating independent investors.
Toyota’s new hybrids should have stayed in the lab 2 Jun 2015 The carmaker wants to lure more long-term retail investors. Hence its new “Model AA” securities: untradeable convertibles with, oddly, voting rights. They will do little for the company and disadvantage ordinary shareholders. Better hope Japan Inc. doesn’t follow Toyota’s lead.
Corporate divorce expenses matter beyond activism 1 Jun 2015 Acquisitive CEOs talk a lot more about deal synergies than costs. Warren Buffett once said he had never heard the word “dis-synergies” mentioned but had witnessed plenty. Managers under pressure to split companies may similarly overstate the negatives, but they’re still real.
Molycorp unearths definition of a commodity 1 Jun 2015 The rare-elements miner missed an interest payment, which could herald a descent into bankruptcy protection. Since peaking at $6 bln in 2011, Molycorp’s market value has collapsed 99 pct. It’s a classic case of investors confusing a demand surge, tight supply and real scarcity.
Why the oil price will fall again 1 Jun 2015 Most industry observers expect a slow climb from the current levels. But global supply is rising, as U.S. shale drillers cut costs fast and Saudi Arabia and others go for volume. With non-U.S. shale on the horizon, $65 a barrel for Brent looks more like a ceiling than a floor.
Playtech could find trading tougher than gaming 1 Jun 2015 Israeli billionaire Teddy Sagi’s company has bid $700 mln for Plus500, the trading platform hit by a watchdog-mandated freeze on accounts. Playtech could flog online smarts to retail brokers - as it has in the gaming sector. But there may be fewer big players in need of advice.
Intel chips in for elusive post-M&A pricing power 1 Jun 2015 Its $17 bln swoop on Altera is the third big semiconductor deal of late. The six participants’ market caps have jumped by up to $35 bln. Cost cuts account for well under half that. The rest may reflect hopes that the acquirers can work magic on their top lines. That’s optimistic.
Hugo Dixon: Greek ultimatum is a bad idea 1 Jun 2015 Some say the euro zone and IMF should present Greece with a take-it-or-leave-it offer, set a deadline, and threaten to cut off its banks if it doesn’t agree. This could play into the hands of Greek nationalists who would argue that foreigners were again bullying Athens.
Renzi’s reform agenda rattled but still on course 1 Jun 2015 The Italian prime minister’s modest showing in regional elections weakens his hand and shows growing dissent at his domestic programme. But Matteo Renzi still has momentum and the economy is recovering. If the latter persists, he has a limited window to force change.
Jack Ma turns Reorient into free-money factory 1 Jun 2015 The Alibaba founder’s fund is among investors taking control of the Hong Kong investment firm. Though their plans are vague, the shares promptly soared, handing the new owners a $5 billion-plus paper gain. It’s another example of Ma’s involvement creating value from thin air.
China’s pricey new headache: fairly valued yuan 1 Jun 2015 The International Monetary Fund says the currency is no longer undervalued. That could be worrying, if true. The yuan was a third below its fair value in 2005. The gap disappearing means the People’s Republic has lost too much competitiveness, too soon. Deflation is a real risk.