Saudi Aramco IPO carries big investor risks 8 Jan 2016 Saudi Arabia has whetted the appetite of potential shareholders with the prospect of listing shares in its state oil company. A sale would give investors access to 18 pct of the world’s oil reserves but little say in how the company is run. The risks could outweigh the rewards.
Brazil M&A saga will test Telecom Italia harmony 8 Jan 2016 Despite denials, speculation that the Italian telco could merge with Brazilian peer Oi is growing. Consolidation makes sense, but a deal looks tricky. A key player is Telecom Italia shareholder Vivendi, which just won board seats. If it favours a quick deal, TI management may not.
China proves fast learner of painful market lesson 7 Jan 2016 It ditched a stock-market circuit breaker days after its introduction. Quite right: the mechanism did more to stir concern about pent-up selling pressures than to calm markets. The speed with which China made this volte-face bodes well for its integration into global markets.
Epic IPO suggests Saudis feel heat of fading oil 7 Jan 2016 The kingdom may sell a stake in state-owned Aramco, the world’s largest crude producer – by far. The firm’s value could be in the trillions of dollars, dwarfing the likes of Exxon. With oil prices falling and other energy sources on the rise, there’s growing pressure to cash in.
China’s FX fall is a new market blight 7 Jan 2016 The yuan’s fall is a new ingredient in a cocktail of concerns that includes slowing growth in emerging economies, lower oil prices and geopolitical tensions. Copycat Asian currency moves would unleash a new wave of disinflation which central bankers are ill-equipped to battle.
Europe’s wait for a new big boutique will go on 7 Jan 2016 Robey Warshaw ranked 11th in European M&A last year, as a merger boom benefitted boutique advisers. To weather a down cycle, the youngish outfit could tie up with fellow newbie Zaoui & Co. But the integration risk probably outweighs the chance to create another Rothschild.
M&S chief wears downside of pay for performance 7 Jan 2016 When Marc Bolland became CEO of UK retailer Marks & Spencer in 2010, his pay package looked generous. Yet the now-departing boss has earned much less than expected. Since M&S is far from out of the woods, it’s an unusual example of a remuneration committee doing its job.
M&S CEO leaves shop well placed for 20th century 7 Jan 2016 Marc Bolland’s six years running the $10.5 bln UK retailer has left its food business shining and troublesome non-food business more efficient, even if sales are weak. In the days when M&S’s competition was basically British, that might have excited investors. Not anymore.
Bank culture just one side of a strategic trilemma 7 Jan 2016 Britain has scrapped a state probe into banking ethics. So it should – such reviews are usually a waste of time. A better way is to see bank culture, size and shareholder value as three irreconcilable sides of a triangle. Recent history suggests banks can achieve, at most, only two.
Portugal’s creditor-mugging may prompt EU copycats 7 Jan 2016 Lisbon’s decision to trash bondholders of Novo Banco rode roughshod over creditors’ claims for equal treatment. The region’s new resolution regime is meant to be clearer. Yet it too leaves room for more bad behaviour.
EU bank profit riddle has deceptively easy fix 6 Jan 2016 Bank profitability has replaced capital as the ECB’s chief regulatory concern. Since interest rates in the region are low and economic activity is slow, the easiest way to bolster earnings is widespread M&A. But neither central banks nor lenders are likely to want to play ball.
Wall Street’s pay reveal has germ of a good idea 6 Jan 2016 U.S. banks now say how many of their staff in Europe earned 1 mln euros or more in 2014. Knowing that 1,107 bankers from the top five did so is no great surprise. But JPMorgan’s policy of cancelling bonuses if long-term return targets aren’t met could make pay more defensible.
Sainsbury may have to pay more to bag Argos 6 Jan 2016 The UK grocer could buy Home Retail Group, the owner of homewares chain Argos, at the current price and make a return above 8 percent - with no growth or synergies. Cost savings could add much more. The execution risks are high, but the target is right to hold out for more.
Migrant crisis buys Germany unexpected growth 6 Jan 2016 Angela Merkel’s open door for war refugees will push government spending up by 31 bln euros over two years. Healthy public finances mean Berlin can foot the bill. In the face of sluggish global growth, the stimulus will make Germany’s relative strength more pronounced.
Sainsbury’s non-food foray smacks of desperation 5 Jan 2016 The UK supermarket has disclosed an approach for underperforming Home Retail Group. At around 1.1 bln stg it might prove a bargain acquisition, and Sainsbury’s grocery business faces acute price pressure. But homewares and electricals could just add trolley-loads of risk.
Sweden ignores Swiss lesson on FX intervention 5 Jan 2016 The Swedish central bank is talking about intervening to curb the inflation-dampening strength of the crown. Its own history and the experience of Switzerland, which spectacularly abandoned attempts to cap its currency almost exactly a year ago, augur failure.
VW’s U.S. lawsuit shows reboot is only half done 5 Jan 2016 A strongly worded government complaint has undermined Volkswagen’s progress in tackling its emissions scandal. U.S. laws are tougher than in Europe, and the German carmaker’s lobbying clout there is smaller. VW needs drastic steps to win goodwill.
Next’s best shopping days could be behind it 5 Jan 2016 Shares of Next have almost doubled since 2013 as the UK clothes shop has grown sales and refused to join the price-cutting game. Pre-Christmas sales rose just 0.4 pct, partly because of the warm winter. Yet things are set to get tougher for Next even if the weather returns to normal.
French telcos’ next call: sweet-talking consumers 5 Jan 2016 Orange and Bouygues are eyeing a tie-up that would give the French telecoms operators half the market. The state’s 23 pct stake in Orange makes the deal more likely to succeed, unless the EU intervenes. The key may be convincing customers of the long-term benefits.
Rail feud could set Italy on good governance track 4 Jan 2016 Minority shareholders in STS think Hitachi is offering them less than it effectively paid for a 40 pct stake from Finmeccanica. A decision from regulator Consob could shed light. A vote in favour of small investors would suggest Italian governance is changing for the better.