ECB snared by bond-buying ambiguity 19 May 2017 European lawmakers have called for more transparency from the European Central Bank over its corporate bond purchases. The demands are flawed: the ECB discloses quite a lot and clarity can backfire. Yet it’s a reminder of the risks from central banks meddling in private credit.
Active-passive battle will end in ceasefire 19 May 2017 Index-trackers are eating into traditional investment managers' business – and could soon own half of U.S. equities held in funds. Even so, managers can find refuge in some places, like emerging-country debt. Shrinking market share may also help active investors outperform.
Singapore Airlines and Cathay fight same headwinds 19 May 2017 Singapore's disappointing results echo troubles at its Hong Kong rival. Chinese competition is hitting both. Neither has a big domestic customer base and their traditional hub role is under threat. At least the Singaporeans have a smarter-looking approach to budget travel.
Japan’s job market is more brittle than it looks 19 May 2017 Unemployment is 2.8 pct and the country is on its longest growth streak in a decade. But some can only find part-time work, unions speak for just a minority, and productivity is patchy. So wage growth is anaemic - thwarting Premier Shinzo Abe's push for more inflation.
Alpha-seekers hedge their bets on America 18 May 2017 Despite being rejected by the White House, erstwhile fund manager Anthony Scaramucci is keeping the faith in Trump and his agenda. Many billionaire investors at his Sin City shindig are shorting the trade. Their money is on making European and emerging-market returns great again.
Guest view: U.S. energy independence is flawed aim 18 May 2017 The Trump administration is making oil self-sufficiency a top priority. Pursuing such a policy, however, puts the country at risk of missing out on important benefits of being a global buyer and seller, EY energy analysts argue. Interdependence, they say, is the better option.
Cox: Time to contemplate Mike Pence-onomics 18 May 2017 There is a whiff of impeachment in the air in Washington. That may still be an unlikely outcome, but Donald Trump's flawed stewardship of the Oval Office should be inspiring risk managers to run their rules over the fiscal views of the vice president from central casting.
Elliott turns activist hose on burning Bush 18 May 2017 Medical-software firm Athenahealth trades at a big discount to rivals after expanding poorly and often missing estimates. Elliott’s 9 pct stake in the $5 bln company should allow it to douse colorful and erratic founder Jonathan Bush’s role as boss or force an outright sale.
SoftBank tests India’s taste for foreign finance 18 May 2017 The Japanese company is investing $1.4 bln into the parent of Paytm, India's top digital payments provider. The trick will be to square it with rules requiring local control of such businesses. Luckily, China's Jack Ma, an existing investor, is an expert in pushing boundaries.
Brazil’s corruption vortex engulfs reform hopes 18 May 2017 President Michel Temer has improved economic headlines, for example pushing inflation below 4.5 pct. Now he's implicated in the wider bribery scandal enveloping his government. A 10 pct drop in the stock market reflects fear that his unpopular but effective policies are on hold.
Roger Ailes reprograms TV to the end 18 May 2017 Few men shaped the modern broadcasting industry more than the former Fox News boss, dead at 77. For one thing, Ailes made conservative politics hugely profitable. His scandalous exit from the Murdoch empire last year has sparked a wider shakeup at the network he helped create.
Alibaba’s $6bln buyback disrupts financial reality 18 May 2017 Repurchasing shares will offset dilution from paying staff in equity, the Chinese e-commerce giant says. Only, buybacks don’t do that as they leave companies with less cash. Alibaba is replacing one pretence – that investors should ignore stock-based compensation – with another.
Theresa May’s manifesto leaves Brexit wiggle room 18 May 2017 Britain’s Tory party will slash migration and quit the EU without a deal if need be should it win a June 8 election. But its leader has left herself room to make Brexit very hard or relatively soft. That’s artful, but ensures adherents of one or the other will be disappointed.
SoftBank’s $100 bln fund looms over satellite deal 18 May 2017 The Japanese telco's OneWeb unit is offering creditors in rival Intelsat slightly better terms, while giving its shareholders less. Boss Masayoshi Son had to find a way to get this merger done, without making it so costly it could not be folded into his new mega-fund.
Iliad customer gain implies eventual investor pain 18 May 2017 The French telco’s first-quarter revenue rose, helped by price-cutting promotional offers. Billionaire Xavier Niel has shaken up French telecoms, but the cut-throat Italian market will be tougher. Iliad investors, who don’t get much of a dividend, may get worried if growth slows.
Trump visit exposes Saudi Arabia’s insecurity 18 May 2017 The U.S. president is heading to Riyadh to rejuvenate an ailing alliance. Trade has suffered and America’s shale oil boom has undermined the kingdom’s status as a key energy supplier and security priority. Rather than build confidence, Trump’s trip could open old wounds.
French laundry’s $2.6 bln UK raid leaves stains 18 May 2017 Berendsen has rejected a cash-and-share bid from French rival Elis that values the British group at a 36 pct premium. The approach looks opportunistic given the weak pound and the target’s battered share price. Even so, Elis will barely cover its cost of capital.
Insurers take one step closer to intelligibility 18 May 2017 New accounting rules will force insurers to give a clearer picture of their liabilities. That should sweep aside national oddities, and stop firms using outdated assumptions that complicate comparisons. Yet while a step forward, aligning capital positions will remain a chore.
Chinese courier tagged as fragile by investors 18 May 2017 ZTO is an important player in a hot sector, Chinese e-commerce. And earnings are growing nearly 50 pct annually. Yet the shares have traded poorly since last year's New York flotation. Blame a pricey IPO, fierce competition, rising costs, and a shifting business model.
China’s confused market strategy reveals old flaws 17 May 2017 Top regulators rattled investors earlier this year with tough talk on financial risks. Now officials are trying to prop up stocks to provide a happy backdrop for showpiece political events. Even creating a proposed super-regulator cannot resolve such conflicting policy goals.
Viewsroom: CEO presidency needs boardroom pushback 17 May 2017 Donald Trump’s promise to run the government like a business is proving difficult but Congress could act like strong independent directors to rein in his wayward management. China’s ambitious Silk Road project could leave its people holding the bag. Plus: job cuts at Ford.
Wall Street waking up to Washington reality 17 May 2017 A notable dip in the S&P 500 Index represents only a minor setback for the so-called Trump rally. The dollar, however, has given back nearly all its post-election gains. Treasury yields also have retrenched. Stockholders remain too optimistic about any D.C. policy uplift.
Running government like business proves difficult 17 May 2017 Trump vowed to operate the White House as if it was a company. But the skills required in his private firm have been less transferable than for a CEO of a publicly traded one with checks and balances. An independent board, aka Congress, is the best hope for a course correction.
Britain’s joyless job boom is nothing to celebrate 17 May 2017 A record three of every four working-age Britons is employed. But prices are rising faster than wages, and a post-Brexit crackdown on immigration threatens to limit further expansions in the workforce. That makes declining productivity an even bigger cause for alarm.
Amazon is prescription for pharmacy woes 17 May 2017 The internet retailer has set its sights on the $300 bln business of selling drugs to U.S. customers. Regulation and delivery concerns are barriers. Yet these, and the inefficiency of U.S. healthcare, also promise lucrative earnings for a company happy with razor-thin margins.
Hadas: Puerto Rico, Greece and bad-faith debt 17 May 2017 Both the U.S. territory and the euro zone laggard have fine beaches, irresponsible governments and a debt crisis. The most just and helpful response to such debacles is to force reckless lenders to write off loans. That’s a hard sell. Thankfully, few sovereigns are so careless.
Euro zone bonds are taboo worth breaking 17 May 2017 Spain wants the bloc’s 19 governments to pool their debt. That idea is likely to be shunned by Germany. Yet mutualisation is happening anyway through bailouts and central bank largesse, and countries are less profligate than they were. Common bonds needn’t mean wayward spending.
Lloyds bailout bill still isn’t paid in full 17 May 2017 The UK has recouped its 20.3 bln pounds on the once-failing lender. It wouldn’t matter if it hadn’t, since rescuing Lloyds helped save the banking system. Still, just as the real returns outweigh the financial ones, so do the costs: austerity and mistrust of the industry.
British property shows signs of wear and tear 17 May 2017 British Land’s full-year earnings increased 7.4 percent and leasing activity is surprisingly strong. Tweaks to the group’s portfolio should offset Brexit pressures. Still, shorter leases, lower values and a step-up in disposals are a better indicator of what’s to come.
Private equity offers tonic Korea Inc needs 17 May 2017 State-run banks are injecting an extra $2.6 bln into Daewoo Shipbuilding but lack the expertise to fix problems. The government has finally learnt its lesson and wants private equity help with other ailing firms. The new approach will be better for patients and the public purse.