Investors struggle to find true safe havens 26 Aug 2015 Boltholes like U.S. and German bonds or the Swiss franc are benefiting less than might be expected amid equity swings and concern over a slowing China. Investors are rightly wary of once-safe assets that have moved erratically of late. The mystery is where they are going instead.
Gamblers’ $8 bln tie-up raises odds for rivals 26 Aug 2015 Paddy Power and Betfair have agreed to a possible all-share merger. The two look evenly balanced: the Irish group is big in traditional betting, its UK peer in online exchanges. Greater scale should offer some defence against industry consolidation and rising taxes.
Monsanto $46 bln Syngenta offer deserves a hearing 26 Aug 2015 The U.S. seed giant’s last cash and shares approach to its Swiss rival was rebuffed. Monsanto has offered a little more, but can’t go much higher without destroying value or relying on rosy assumptions. The pressure is on Syngenta to talk, or show investors it has a better plan.
Impossible trinity gives China a difficult choice 26 Aug 2015 Not even the People’s Republic can go on cutting interest rates, keep the yuan stable, and allow capital to flow freely. It must choose two out of three. Huge foreign exchange reserves give Beijing some room to muddle through, but not enough to reverse self-fulfilling outflows.
Indian tycoon may struggle to save Vedanta cleanup 26 Aug 2015 A slump in the shares of Anil Agarwal’s mining group has turned the premium he was offering to minority investors in cash-rich Cairn India into a big discount. Sweetening the $1.1 bln deal is tricky. But failure will leave the Vedanta with worse options to reduce debt.
China’s sensible rate cut sends dangerous signals 25 Aug 2015 The central bank has lowered interest rates by a quarter point and reduced the amount lenders must hold in reserve. It helps ease the slowdown and offsets capital outflows. But by responding to two days of stock market turmoil, policymakers run the risk of stoking moral hazard.
Yellen may relish opportunity not to communicate 25 Aug 2015 The Fed chair is skipping central bankers’ annual shindig in Jackson Hole this week. For all her institution’s professions of transparency, recent global market ructions mean nothing she might have said would have satisfied anyone. Better to wait until the FOMC meets next month.
Exelon mercifully spared winner’s curse 25 Aug 2015 Local D.C. authorities nixed the power company’s $6.8 bln takeover of rival Pepco. A bidding war against earlier failed Exelon target, PSEG, led to a price that was hard to justify. Such intervention may be a concern, but in this case one set of shareholders gets a helping hand.
Miners’ dividends are a fragile commodity 25 Aug 2015 BHP Billiton has raised its payout even as prices fall. That helps win investor support for its aggressive iron ore production strategy. Yet across the sector, funding generous payouts will become tough unless supply and demand rebalance. There is little to suggest they will.
Zurich buys protection with 5.6 bln pound RSA bid 25 Aug 2015 The Swiss insurer has made a 550 pence-per-share indicative offer for its UK peer. At that price, it could achieve a 10 pct return with fairly undemanding cost savings. Twitchy markets may help Zurich clinch a deal that both sides’ shareholders can argue is a fair result.
Alibaba still looks pricey despite selloff 25 Aug 2015 Less than a year after its $25 bln offering, the web giant’s shares have fallen below their $68 IPO price. Growth worries have afflicted all technology stocks and Chinese ones in particular. But Alibaba’s core e-commerce business is still highly valued compared with its rivals.
China slowdown presents world with triple risk 25 Aug 2015 The People’s Republic may produce less for its own use, pay less for what it consumes, and accept fewer dollars for what it exports. These threats will squeeze worldwide corporate profitability and new investment. Commodity prices and stock markets could stay jittery.
Tech’s real China syndrome victims are yet to fall 24 Aug 2015 Facebook, Apple, Amazon and Microsoft lost nearly $200 bln of value in a week. China’s woes sparked the rout, but the problem was investors’ giddy faith in growth. Public tech stocks may recover. Fantasy valuations of private firms like Uber, though, will take the bigger hit.
Oil has room to get even more irrational 24 Aug 2015 The plunge in WTI to below $40 a barrel leaves most of the U.S. shale industry unprofitable and budgets of many countries in the red. Yet cost cuts, currency devaluations and tolerance for losses keep black gold pumping. That may anchor oil at what seem like unsustainable prices.
Southern’s $12 bln deal could find true north 24 Aug 2015 The hefty 38 pct premium it’s paying for AGL looks rich for the utility sector. Though Southern isn’t giving a synergy figure, hacking out over 6 percent of costs would help justify the price. Previous mergers like Duke’s acquisition of Progress at least suggest it’s achievable.
Investors’ self-doubt worsens equity woes 24 Aug 2015 Global equities are extending declines. Valuations can’t quite explain the depth or breadth of losses. Investors’ low conviction in past asset allocation decisions could have more to do with it. So might waning faith in policymakers riding to the rescue.
Credit doomsayers offer confusion not foresight 24 Aug 2015 Investors were selling corporate bonds before the latest global stock market slide. That could be an echo of the 2008 financial crisis, when equities ignored warnings in credit markets. The message, though, is mixed. Credit pros aren’t reliably prescient Cassandras.
China’s ailing stocks are now contagious 24 Aug 2015 Mainland shares are tumbling again. Unlike in July, this sell-off is hurting currencies, commodities, and other Asian bourses. Two things have changed. There’s now the threat of devaluation. And bungled interventions cast doubt on China’s ability to manage markets.
Uber faces a competition pile-up in Asia 24 Aug 2015 The taxi-hailing app may be a Silicon Valley darling but it’s an underdog in China and India where tech giants are backing larger rivals. A competitor is even funding its top opponent in Southeast Asia. The anti-Uber alliance calls the group’s $51 bln valuation into question.
Guest view: Urgent action needed on bank culture 21 Aug 2015 Converging pressures from regulators and shareholders have reached a level where bank CEOs know they must do more to restore traditional solid values to the industry, argues William Rhodes, a former Citi executive and co-chair of the G30’s steering committee on banking reform.
Internet spared FIFA-like governance risks, for now 21 Aug 2015 Uncle Sam is delaying the transfer of control over domain names to an international watchdog. Waiting makes sense. Soccer-style power-grabs and graft could infect cyberspace unless the as-yet-unidentified replacement for the non-profit ICANN is representative and accountable.
Effluent packs economic and environmental punch 21 Aug 2015 Fracker Pioneer National is about to start using treated sewage in its wells. United Airlines may use animal waste as fuel. Recycling feces is now efficient enough to produce both energy and drinking water. This new spin on natural gas offers benefits for the land and air, too.
ABN Amro’s IPO could prove sweetly timed 21 Aug 2015 The Dutch bank’s second-quarter earnings doubled to 600 mln euros, justifying state zeal for a reprivatisation. ABN’s first sale may end up a third below the government’s in-price, like the UK’s selloff of RBS. But with the domestic economy firing, pressing ahead makes sense.
Equity investors succumb too willingly to gloom 21 Aug 2015 Rich-world stocks have sunk as markets take in bad Chinese economic news and sliding currencies in manufacturing powerhouses. True, slowing growth in emerging markets may hold back global activity. But indiscriminate selling suggests investors aren’t being entirely rational.
Glaxo sale comes with cheeky earnings side effect 21 Aug 2015 UK pharmaceutical firm GlaxoSmithKline is selling a multiple sclerosis drug to Novartis for up to $1 bln. It’s a logical move and Glaxo gets a good price. The quirk: it will include proceeds from the one-off as part of underlying revenue. Pharma investors need to watch their core.
Asian capital controls are a real risk once again 21 Aug 2015 Malaysia’s prime minister has ruled out a repeat of the country’s 1998 hot money curbs. But slumping Asian currencies suggest it’s too soon to be complacent. Raising interest rates could mean deep recessions. Some politicians might decide to prevent capital from leaving instead.
China’s auto industry in lower gear, not reverse 21 Aug 2015 The world’s largest car market no longer promises super-fast growth and fat margins. The slowdown has hit both titans such as VW and locals like BAIC. Still, gloomy predictions about stagnating sales this year underplay China’s long-term potential.
Valeant pops risky $1 bln libido pill 20 Aug 2015 The acquisitive drug firm is buying Sprout, the maker of just-approved “female Viagra.” Valeant will have gotten a bargain if it can crank out billions in annual sales. Snag is, the drug isn’t very effective, it has bad side effects, and regulatory restrictions may crimp sales.
Greek elections no cause for great worry 20 Aug 2015 Alexis Tsipras is likely to win a mandate for his U-turn in accepting a tough bailout programme and re-emerge as leader of a more moderate government. The main problem is there will now be a one-month hiatus when little will be done.
Rob Cox: Tianjin deserves to be a Cuyahoga moment 20 Aug 2015 The chemical blasts that rocked China’s No. 6 city have exposed a lethal coziness between industry, government and party - and an endemic failure to put human life over economic development. Like the time an Ohio river caught fire in 1969, this feels like a wake-up call.