Shenanigans at Tata taint India’s governance wins 1 Nov 2016 Corporate oversight is improving despite a messy spat at a conglomerate people thought represented the highest standards in the country. There is a long way to go, but investors are becoming more vocal, proxy firms are on the rise, and tycoons are on shorter leashes.
China debt-for-equity swap is half a decent idea 1 Nov 2016 The rescue plan for struggling state champions will buy them time to get their houses in order. But the deal lets lenders off the hook too easily, and hangs public money on it instead. Needed management reforms aren't mandated. Half a restructuring might turn out as bad as none.
The Exchange: Economic Dream Team Machine 31 Oct 2016 With the U.S. presidential election entering its final days, the jockeying for prime economic policy roles has begun in earnest. Who will run the Department of Treasury? Who will be the next Commerce Secretary? Politico's Ben White and Breakingviews' Gina Chon weigh in.
Carney delays Bank of England exit by bare minimum 31 Oct 2016 The governor is staying until mid-2019. That's a year longer than originally planned but two short of a full term. Facing down critics who were calling for his head confirms the central bank's independence. But the debate about its post-Brexit status has only been postponed.
Trump backers can’t have their cake and eat it too 31 Oct 2016 Peter Thiel, the VC and PayPal co-founder, is surprised by the backlash against his support for the real-estate mogul. Fund manager Anthony Scaramucci is also feeling some pressure. The candidate's business has suffered from his politics. His allies should expect some pain too.
Baker Hughes investors overly pessimistic about GE 31 Oct 2016 Shares of the oilfield-services firm tumbled after announcing a merger with GE's oil and gas unit. Shareholders get a $7.4 bln special dividend and a big stake in an industry leader. But having been burned before, Baker's owners have their reasons for discounting GE's promises.
Blackstone sews up $6.1 bln M&A crash victim 31 Oct 2016 The private-equity firm is rescuing TeamHealth after the hospital-staffing company came a cropper by choosing to buy at the top rather than sell at a hefty premium. Blackstone, which owned TeamHealth before, can patch it up and sell it again, benefiting from the hubris M&A brings.
Hexagon CEO probe adds to Swedish governance murk 31 Oct 2016 Norwegian authorities have detained the $13 bln Swedish IT company's boss, Ola Rollen, for suspected insider trading. Rollen, who denies the charges, has grown Hexagon's market cap over 50-fold. After misdeeds at the likes of Swedbank, local scandals are no longer even a shock.
CenturyLink dials up wrong deal numbers 31 Oct 2016 The strategic logic of buying Level 3, a notion that surfaced last week, looked shaky. Hefty cost savings, though, rang true. They came through in the $34 bln acquisition but are being chewed up by the premium CenturyLink is paying. Merger mania's destructive power strikes again.
Hadas: The left behind can’t blame globalisation 31 Oct 2016 Has the rise of cheap labour in poor countries harmed unskilled workers in rich lands? Sure, but it’s a new twist of an old story - technological unemployment. Even though the problems are fairly easy to solve, governments continue to fail many of the latest losers.
GE suggests bold new thinking with Baker Hughes 31 Oct 2016 The industrial behemoth is merging its energy arm with a rival to create a new public group. Synergies may justify the $7.4 bln dividend it's paying Baker shareholders. More significant is GE's implicit recognition that the sum of its parts could be more valuable than the whole.
South African U-turn on Gordhan is Pyrrhic victory 31 Oct 2016 The rand has recovered after the national prosecutor dropped fraud charges against the finance minister. Relief that Pravin Gordhan will stay on to repair the stuttering economy may be short-lived. The case has revived concern about political interference in state institutions.
Asia billionaire hunters go from predators to prey 31 Oct 2016 Fallout from Malaysia’s 1MDB fund scandal means banks must vet the region's wealthy more keenly. Tougher compliance needs come at an awkward time for Credit Suisse and Julius Baer, which have been hiring furiously. They also explain why subscale peers like ABN Amro may want out.
Britain better off if Carney stays 31 Oct 2016 The governor’s tenure has become a test of the Bank of England’s status. If he left in 2018 the decision would spook foreign investors and embolden the bank’s domestic critics. Extending his term would signal that the British government still values independent monetary policy.
Saint-Gobain loses either way in Sika fight 31 Oct 2016 The French materials group's two-year effort to sneak control of a $9 bln Swiss chemicals maker by buying a 16 pct super-voting family stake has hit a new legal setback. Saint-Gobain could keep trying or make a proper offer - but giving up would be better for its shareholders.
Container ship M&A crashes into sceptical market 31 Oct 2016 A three-way Japanese merger will create a new industry heavyweight. Yet investors are ignoring the promised $1 bln of annual savings. Even aggressive consolidation plans, it seems, are not enough to convince the market that battered shipping firms can get back on an even keel.
Breakdown: Gauging the risks of a China crisis 31 Oct 2016 Debt is rising rapidly, while the links between the official banking system and shadowy institutions are growing deeper and harder to fathom. The People’s Bank of China can probably ride to the rescue in the event of a shock. But a painful credit crunch will be harder to avoid.
UBS probe neatly captures Hong Kong market dilemma 31 Oct 2016 Regulators are looking into UBS's role in local IPOs. Whatever the outcome, it epitomises a clash between lofty governance goals and too many banks chasing sometimes questionable listing candidates. Long-term, global institutions would gain from taking the high road.
Exxon reserves tap into Big Oil’s next crisis 28 Oct 2016 The black gold producer may finally have to join rivals in writing down assets whacked by low oil prices. Cost cuts did at least help Exxon, and Chevron, beat estimates. But at $50 a barrel it's a mediocre recovery. Add in climate concerns and the industry may take a $33 trln hit.
Review: UBS whistleblower sounds cautionary note 28 Oct 2016 Bradley Birkenfeld helped expose tax evasion at the Swiss bank, landing it with a big fine. He was put in jail but also collected a $104 million reward. As Wall Street braces for more penalties, his memoir outlines the perils facing whistleblowers – and those who listen to them.
U.S. economy casts a vote for free trade 28 Oct 2016 The initial estimate of third-quarter GDP indicates 2.9 pct growth, the fastest rate in two years. Exports helped offset mediocre consumer spending. Both presidential candidates have vilified trade to varying degrees. This sort of expansion illustrates the political upside.
RBS dividends depend on finding branches saviour 28 Oct 2016 The UK bank says several parties are in talks to buy its Williams & Glyn network. This millstone was responsible for a 301 mln pound charge in the third quarter. Without it, Royal Bank of Scotland’s capital base looks strong enough to weather all but the biggest legal bills.
Britain’s Brexit airbag can’t cushion everyone 28 Oct 2016 Nissan’s UK plant will get state help if its competitiveness is harmed by Britain leaving the EU. Offsetting potential tariffs is unorthodox, but feasible and not especially expensive, even if rolled out to the whole industry. But picking winners also means picking losers.
Spanish banks ready for a subdued fiesta 28 Oct 2016 Despite fair economic winds, results from Santander, BBVA and their peers showed a squeeze from low rates and competition for scarce borrowers. Yet the bottom looks near. Banks are focused on costs, lower bad loan charges and capital. All three are headed in the right direction.
Higher global bond yields have solid foundations 28 Oct 2016 The recent rise in benchmark yields is not as dramatic as last year’s surge - but far more significant. Last year market quirks played a big role. This time the drivers are expectations for higher inflation and stronger growth. These are harder for investors to brush off.
UBS ban in Hong Kong would compound terrible year 28 Oct 2016 The Swiss bank says a probe into some IPOs might put its corporate finance business in the Asian city on hiatus. UBS is struggling in Hong Kong, and has slid down the league tables. With third-quarter results showing global fees down more than rivals, this comes at a bad time.
No cure for Big Pharma’s diabetes problem 28 Oct 2016 Sanofi and Novo Nordisk’s earnings from diabetes drugs are collapsing. Financial remedies are scant. Novo is cutting costs and scraping investment, while Sanofi is buying back shares and prowling for acquisitions. At least the latter’s stock is already cheap.
Emperor Xi gets new clothes 28 Oct 2016 China's Communist Party named President Xi Jinping as its "core" leader - a title previously granted to icons like Mao and Deng. But Xi needs more than titles to implement tough reforms; he needs provincial allies and a viable vision for economic policy. He may have neither.
GE joining M&A frenzy would be no shocker 28 Oct 2016 The industrial giant is rebuffing reports it might buy $23 bln oil-services outfit Baker Hughes. But after selling some $200 bln of financial assets plus appliances and media, GE is in fighting shape for an offensive. If it can find Alstom-like targets, shareholders will gain.
Alibaba label fails to stick on courier IPO debut 28 Oct 2016 Shares of China’s ZTO Express fell 15 pct on their debut in New York. Aggressive pricing is mostly to blame. Justifying an e-commerce style premium for a logistics firm was a tough sell to begin with. ZTO lacks the margins and dominance of Jack Ma's giant to be delivered as such.