BNP concedes on capital with U.S. bank rethink 24 Dec 2015 France’s largest bank by assets may sell its Hawaiian arm to boost its lowly 10.7 pct common equity ratio. Nixing the dividend for a year would have about the same effect. But that would be a bigger indignity for BNP Paribas, a serial acquirer playing catch-up on capital.
Britain’s exit from Europe: 28 days later 24 Dec 2015 Sometime in the future, some notes are found. Purportedly written by an adviser to David Cameron, they chronicle events in the month after the UK voted to leave the European Union. It’s a vision of banker exoduses, surprising new investors and mountains of unsold pork pies.
Virtual reality will spring to life 24 Dec 2015 Headsets from Facebook, HTC, Sony and others will help turn VR into reality in 2016. The market could generate $10 bln or more in sales within five years, provided coders create games and apps with wide appeal. Software houses, hardware makers and tech giants should all benefit.
Capital drought will spark unicorn M&A orgy 23 Dec 2015 Plentiful money has detached valuations on many hot private tech firms from reality. About a third of the 144 private startups worth at least $1 bln are valued at precisely that much. As capital dries up, selling to bigger rivals or mating with other unicorns becomes appealing.
Breakdown: U.S. song rights could use some harmony 23 Dec 2015 An obscure board has upped fees online radio’s Pandora pays performers for music. Satellite rivals owe less, and terrestrial stations nothing. Separate rates cover composers, and stars like the Beatles – now on Spotify – set their price. Lesser lights get lost in the cacophony.
Banks’ low UK tax bill hands ammo to EU exit camp 23 Dec 2015 Seven big investment banks paid just $31 mln of UK corporation tax on profit of $5.3 bln in 2014, Reuters has found. Historic losses reduced the bills, and taxes paid by employees remain chunky. But the revelations will help those agitating for Britain to quit the European Union.
Spanish bonds hide true cost of political risk 23 Dec 2015 Poll-fed uncertainty in Spain seems to have left the bond market unruffled. But that’s largely because ECB bond-buying is suppressing yields. Equity market moves suggest investors are demanding a higher cost of capital. That bodes ill for investment and growth.
Gulf states are on a collision course with tax 23 Dec 2015 Wealthy populations in Arab sheikhdoms have mostly been spared taxation. Falling oil prices make that untenable. Laws are being drafted in the UAE for new levies on companies and consumers to offset falling revenue. Other countries in the region will follow.
French telco M&A could be triumph of the smallest 23 Dec 2015 Past attempts to reduce the number of mobile operators have failed. A mooted tie-up between Orange and Bouygues may fare better, though with tough remedies. The beneficiary could be market No. 4 Iliad, which may get the chance to pick up some cheap offcuts.
Global smartphone brands face mass extinction 23 Dec 2015 The industry’s growth has slipped below 10 pct for the first time. Apple and Samsung’s high-end phones are taking most of the spoils while upstarts like China’s Xiaomi pick up first-time buyers. Loss-making brands like HTC and Sony may be forced to conclude the game is over.
Japan’s dealmakers rediscover their samurai spirit 23 Dec 2015 Acquisitions by Nomura and Panasonic cap a punchy year for outbound M&A with deals totaling a near-record $79 bln. Overseas purchases have eclipsed domestic ones for a second year. Though assets are getting pricier, Japan’s demographic decline ensures the exodus will continue.
Netflix will be recast from ally to villain 22 Dec 2015 Once derided as the “Albanian army” by Time Warner boss Jeff Bewkes, the video-streaming service is now valued at about the same $55 bln as his company. With some 69 mln subscribers globally, it may be too late for media bosses to do anything about this beast they helped create.
Chancellor: A hard year for emerging-market stocks 22 Dec 2015 Many contrarian investors say shares of companies in developing nations will outperform for years to come. In the near term, however, credit and liquidity concerns trump valuations. There are good reasons to believe the emerging bear market has further room to rampage.
Qatar price for Turkish bank reflects weaknesses 22 Dec 2015 The Gulf state’s largest lender says it will pay National Bank of Greece 2.75 bln euros for Turkey’s Finansbank. A price equivalent to around one times book value looks cheap. But business conditions have worsened. Qatar National Bank may find it hard to generate economic profit.
Big Oil morphs into Big Gas 22 Dec 2015 Energy giants like Total are already pumping more gas than oil. Companies are making a virtue out of a necessity, since gas supplies are more accessible than oil. Demand is also growing. But returns are dogged by high capital spending and cost overruns.
Risks loom large over Iran’s economic reawakening 22 Dec 2015 The IMF reckons Iran’s economy will outperform the rest of the world in 2016 if sanctions are removed. More oil exports will help. But the commercial infrastructure requires major repairs. Fractious relations with Gulf neighbours add to the case for investment caution.
Ambani’s $15 bln bet will upend Indian telecoms 22 Dec 2015 Mukesh Ambani is not shy of a fight. So the tycoon’s re-entry into mobile is a scary prospect for incumbents like Bharti and Vodafone. India is already a tough market and now a brutal price war looms. Rivals will hope Ambani’s own investors stop him from doing too much damage.
China will stop ignoring Facebook’s friend request 22 Dec 2015 The People’s Republic has blocked access to the $300 bln social network since 2009. Boss Mark Zuckerberg is eager to leap the Great Firewall. LinkedIn and Apple have shown China’s censors that foreign groups can play by local rules. Finding a local partner should seal the deal.
Star Wars awakens new hope for Disney returns 21 Dec 2015 The latest adventure from a galaxy far, far away raked in a record $238 mln in North America and $517 mln overall on its opening weekend. Based on returns for other movies, the power of the Force could make Lucasfilm worth almost $20 bln - five times what Disney paid.
Levy exit leaves Rousseff stronger, Brazil weaker 21 Dec 2015 The market-approved technocrat brought in to fix the ailing economy lasted less than a year. His replacement is closer to the president’s former free-spending guise. The shuffle reduces the chances of Rousseff being impeached, leaving her in a better place than her country.
Theranos’ wounded credibility hobbles all unicorns 21 Dec 2015 The blood-analysis company faces new charges of finagling with its herpes test, a product essential to its success. Unless the firm wins vindication from independent experts, the damage may be too serious to fix. That harms similar startups, whose survival depends on trust.
Chinese corruption drive may thin out M&A bidders 21 Dec 2015 Fosun’s decision to drop its bid for private bank BHF Kleinwort Benson may be unrelated to the brief disappearance of its boss. But corporate predators from China account for 7 pct of global cross-border takeovers. A crackdown on graft could lead to less competition for deals.
Argentina and Elliott give peace a chance in 2016 21 Dec 2015 There may never be a better time for Latin America’s No. 3 economy and the hedge fund to end a 14-year spat over defaulted bonds. New President Macri needs access to global debt markets; another defiant Peronist could succeed him if he fails. Stalemate is looking pointless.
Spanish election is vote for malaise 21 Dec 2015 The ruling conservatives won the general election but fell short of outright victory. Other than a difficult grand coalition, there is no obvious alliance that would add up to a majority in Parliament. The uncertainty bodes ill for Spanish regulated stocks.
Europe’s bank pay rules are dispiriting 21 Dec 2015 Regulators want the region’s bonus cap to apply to all lenders. There’s a token concession: small banks and fund managers they own may get waivers for variable compensation that’s deferred or paid in shares. But firms presenting no systemic risk will have less cost flexibility.
Portugal pays high price for past banking sins 21 Dec 2015 Its taxpayers will stump up 3 bln euros, or 1.7 pct of GDP, to wind down troubled lender Banif. The move follows a flawed 2013 rescue. The new plan resolves the issue. But it also shows Portugal’s economic weakness and the difficulty of making creditors pay for bank failures.
Dixon: EU could fall apart without flexibility 21 Dec 2015 Brussels’ knee-jerk reaction to crises is to ask for more power. Its latest series of problems has fuelled right-wing populism, which feeds off the idea that the EU already has too much influence. Unless the bloc adopts more decentralised solutions, it could unravel.
China’s P2P purge will boost Lufax and Ant 21 Dec 2015 Authorities are cracking down on a sector that houses two of the world’s most valuable financial startups, with ties to Ping An and Alibaba respectively. Peer-to-peer lending has seen explosive growth and little oversight. Driving out the cowboys should benefit the big two.
U.S., Chinese unicorns will bolt in opposite ways 21 Dec 2015 Silicon Valley firms worth $1 bln-plus in private markets have taken hits in the public eye of late: think payments firm Square or messaging app Snapchat. The PRC’s unicorns also face scepticism. Yet as U.S. startups shy away from IPOs, the Chinese species may run for them.
Even Facebook can’t make distance disappear 18 Dec 2015 The social network is virtual, but in the real world it’s paying staff $10,000 to live near its campus. Silicon Valley draws strength from bringing smart people together to cross-pollinate ideas. A downside is having to keep pace with rising real estate costs and commuting times.