EU offers vitamin pill to dying media patient 26 Aug 2016 Brussels wants to give media the right to seek compensation from search engines like Google that use online content. The intention is laudable - some publishers may be losing out. But the proposal has similarities with schemes in Germany and Spain - which haven’t worked.
Restaurant Group self-criticism bitter but healthy 26 Aug 2016 Bigger companies could learn from the UK restaurant chain’s honesty. It blamed a like-for-like sales fall of 3.9 pct on ill-thought-out menu changes, bad pricing and poor service. Closing stores helps, but stimulating demand is more important than tinkering with expansion plans.
Detractors give central bankers too much credit 26 Aug 2016 Federal Reserve Chair Janet Yellen and other rate-setters stand accused of pursuing policies that only help the rich. Yet the supposed beneficiaries complain that loose money depresses returns and distorts markets. Both sides overestimate central banks’ control over the economy.
India’s Welspun is in a tangle of its own making 26 Aug 2016 The Indian firm's shares have nearly halved since customer Target alleged Welspun passed off cheap sheets as Egyptian cotton. Markets tend to assume the worst. Fuzzy language and absence of the CEO amplify the problem. Welspun is failing at the basics of crisis communications.
Xiaomi looks increasingly like yesterday’s unicorn 26 Aug 2016 The Chinese smartphone maker was briefly the world's most valuable startup. But sales are down, rivals are circling, and now it is diluting its online-sales model. Lower growth and less attractive economics make it hard to justify a valuation anywhere near Xiaomi's $45 bln peak.
China’s big banks enjoy calm before the storm 26 Aug 2016 Net profits at CCB and BoCom are stable, as are bad-loan ratios: a pleasant surprise given the wider backdrop. This partly reflects a growing gulf in asset quality between large banks and their smaller peers. The giants are probably also putting off recognising bad debts.
All that glitters in corporate finance isn’t gold 25 Aug 2016 Shareholders went nuts when jeweler Signet paid $1.4 bln for Zales in 2014, sending its shares way above the value of future earnings from the deal. Now it's unraveling, sparking a surprise injection of costly private equity, providing a useful reminder that most mergers fail.
New planet may help Silicon Valley live its cliché 25 Aug 2016 Proxima b, the just-spotted Earth-like body in the star system nearest the sun, could be reached in 20 years by a super-fast spacecraft being financed by tech titan Yuri Milner. Making our world a better place is a startup bromide. Visiting another would deliver on the promise.
U.S. labor unions look increasingly white collar 25 Aug 2016 A ruling that lets Ivy League graduate students organize will add to the growing share of cubicle-dwellers in the union movement. Education is one of the few sectors in which membership is increasing, albeit from a low base. The blue-collar stereotype is slowly fading away.
Credit Suisse broking fail comes at unhelpful time 25 Aug 2016 Rio Tinto has dumped the Swiss bank from a two decade-long corporate broking role. The departure of two bankers close to the company, and an advisory mandate for rival Glencore may have been factors. Credit Suisse needs client stability after months of strategic uncertainty.
Trump and Farage have one big thing in common 25 Aug 2016 Brexit cheerleader Nigel Farage says Americans may defy the elite by voting for Donald Trump, as Brits did by opting to leave the EU. Farage, like Trump, was loose with facts but accurately gauged public anger. Betting markets, investors and pollsters ought to heed the lessons.
Mylan injects adrenaline into healthcare debate 25 Aug 2016 The EpiPen maker bowed to political pressure by offering discounts for its allergy treatment. The complex and opaque U.S. healthcare system may encourage high prices, but also doesn't force the likes of Mylan to jack them up. This episode does more to expose flaws than fix them.
Colombian peace may have a price before a dividend 25 Aug 2016 A deal to end 50 years of conflict with FARC comes at a difficult time. Oil output is shrinking and inflation proving stubborn. Tax reform before year-end should help but thousands of rebels also will now need jobs. Any financial benefit from the war's end could take some time.
Time for Peppa Pig’s owner to earn its chops 25 Aug 2016 ITV has pulled a 1 billion pound proposal to buy production group Entertainment One, after Peppa Pig’s owner said it was worth more. With the share price now well below the 236 pence approach, managers need a plan B. Luckily, there are ways to stack up their undervaluation claim.
Apple tax fight is two wrongs in search of a right 25 Aug 2016 A spat between the U.S. and Europe over how firms like the iPhone maker, Amazon and Starbucks pay taxes shows the worst of both sides. America meddles, and Europe moralises. At heart is an issue both sides’ citizens should support: big companies too often avoid paying their dues.
Handelsbanken partly untangles knotty problems 25 Aug 2016 The Swedish lender has sold its 6.8 pct stake in Industrivarden, distancing itself from the conglomerate’s corporate jet scandal. This also boosts its capital, ahead of potentially punitive reforms. But Handelsbanken’s new boss still needs to prove he is his own man.
Emerging market fans get South Africa wake-up call 25 Aug 2016 The rand has slumped since Finance Minister Pravin Gordhan was ordered to report to a special police unit. Falling stocks and bonds are a timely reality check for money managers who have been lured back to emerging markets. An indiscriminate hunt for yield generally ends badly.
Iconoclasts needed to topple central bank targets 25 Aug 2016 A reboot of global monetary policymaking is the best thing that could emerge from rate-setters’ annual Jackson Hole shindig. An overhaul is pressing as reality upends more and more economic orthodoxies. Ditching simplistic and discredited inflation targets would be a good start.
Jimmy Choo works hard to get just an inch 25 Aug 2016 The luxury shoemaker’s sales grew 9.2 percent in the first half and operating profitability improved. Its shares still trade at a discount to peers, hit by Brexit worries and exposure to one product. Despite good growth prospects, investors remain reluctant to toe the line.
PPP flop hammers home China’s crowding out crisis 25 Aug 2016 Public-private partnerships on projects worth $285 bln were supposed to help cut costs and ease local government debt. Yet over 90 percent of funding is coming from state firms, a new report has found. It hammers home the extent to which state capital is crowding out the private sector.
Hong Kong’s cornerstone problem goes postal 25 Aug 2016 Postal Savings Bank of China may sell as much as 80 pct of its $8 bln share offering to cornerstone investors. One unlikely ally, a big state shipbuilder, is already down for $2 bln. This is fresh evidence, on an epic scale, of how Hong Kong's IPO crown is thoroughly undeserved.
U.S. pension funding boost is temporary reprieve 24 Aug 2016 New figures show a $1.1 trln funding gap for 50 states narrowed in 2014 as high returns boosted assets. Investments have struggled since, though, and assumptions about long-term returns are still too rosy. Even the better-funded pension pots may fall short as bills come due.
EpiPen probe may give Mylan allergic reaction 24 Aug 2016 Three U.S. senators are slamming the $24 bln drug firm for jacking up the cost of its anaphylaxis treatment more than fivefold since 2008. An investigation could limit Mylan's pricing power on the product that has provided much of its growth and spread to the firm's other drugs.
Best reason to keep Viacom’s interim boss: breakup 24 Aug 2016 The $17 bln media firm named Tom Dooley as interim CEO. It's a strange move given his deep ties to ousted boss Philippe Dauman and his strategy. But while that makes him an odd choice to revive Viacom's fortunes he may know how to get the best value for its various assets.
Chile’s Bachelet faces her own Rousseffian crises 24 Aug 2016 The leftist leader's woes look like a breeze next to those of her impeached coreligionist in Brazil. Chile's corruption scandal, economic slowdown and rising pension crisis are small in comparison, but bad news for the copper producer's status as a bulwark of regional stability.
Glencore’s risk-taking culture dies hard 24 Aug 2016 The world’s third-largest mining group deserves credit for selling assets, cutting debt and managing costs, but confidence in its strategy remains fragile. A $395 million coal hedging loss isn’t encouraging. Glencore is facing a trade-off between growth and security.
Banks’ own bitcoin is in the gift of central banks 24 Aug 2016 UBS has corralled four firms to help it develop a digital bitcoin-like currency so as to slash settlement times. Unlike the libertarian cryptocurrency, this approach depends resolutely on central bank approval. And while it may reduce risk, the benefits could also be a pipedream.
WPP shoos away grey swans 24 Aug 2016 The ad giant posted a strong increase in sales in the second quarter, driven by growth in Europe. Sources of uncertainty like Britain’s exit from the EU are a risk for the industry. But WPP’s scale and spread makes it resilient, at least to risks than can be foreseen.
UK housing crisis jars with builders’ fat returns 24 Aug 2016 In a normal market, Persimmon’s 36 pct return on capital would get competed away. Instead, sclerotic planning and smaller rivals’ limited access to finance act as barriers to entry. Builders’ fat returns could be vulnerable if the new UK government decides to take bold action.
Beauty of selfie-app IPO is only skin deep 24 Aug 2016 Millions of young Chinese use Meitu to airbrush pictures, whitening their skin or applying virtual makeup. But the company is basically a small smartphone business made up to look like a big Internet player. A $700 mln Hong Kong IPO should be seen through a sceptical lens.