HSBC tax storm exposes flawed succession policy 25 Feb 2015 The UK bank’s chairman and CEO just about survived a grilling from domestic lawmakers over the Swiss tax debacle. The wrongdoing happened when Douglas Flint and Stuart Gulliver had lesser roles. But a bank that picks insiders to chair the board makes a rod for its own back.
Social trends may point to higher yields, someday 25 Feb 2015 In 2005, a Barclays strategist suggested a declining population of savers could push bond and stock prices down. A decade later, a different strategist at the same bank says the same thing. It may work out in time, but demographics have more influence on GDP than asset values.
Maersk definitively casts off conglomerate past 25 Feb 2015 The shipping giant has already streamlined and grown more open. Now it is shedding 20 pct of Danske Bank, the clearest break yet with history. Shares rose 6 pct. Transforming conglomerates can be like reorienting a super-tanker. But with focus in fashion, it’s worth the slog.
UK jail-a-banker rules will hike board pay 25 Feb 2015 That’s the likely upshot of Britain’s new regime to hold financiers accountable for wrongdoing. Regulators have stopped short of applying the rules to all non-executives, but half of most boards still risk incarceration. As a result, they will probably demand more money.
Rising migration is fuelling German economic boom 25 Feb 2015 Germany is a magnet for well-educated workers from poorer EU countries. Net migration has almost doubled since 2008 to a 20-year high. Labour mobility stabilises the euro zone economy and bolsters growth. No wonder Berlin is fiercely defending the freedom of movement principle.
London’s FTSE can extend its record-breaking run 24 Feb 2015 At long last, Europe’s big name equity index has entered new territory. Yet while the FTSE 100 is higher than ever, and is hardly risk-free, it is also attractive. It is cheaper than the leading U.S. and pan-European benchmarks and has alluring diversity.
Reforms helping Greece might hurt Syriza 24 Feb 2015 The reforms agreed by Athens are both ambitious and fuzzy. They tick some of the favoured boxes of hawks in Germany and elsewhere. But Syriza’s election pledges are in tatters. Europe may be better off - but the domestic situation in Greece has become more volatile.
Hitachi’s $2 bln deal signals Italy open for M&A 24 Feb 2015 The Japanese firm is buying Finmeccanica’s rail units. In Italy and across Europe, sales of high-end industrial assets to the Far East can be unpopular. But Hitachi is a credible buyer paying a full price. It helps too that the seller is eager to slim down and cut debt.
Lavish German pay hike helps entire euro zone 24 Feb 2015 Germany’s biggest union won a 3.4 pct pay rise, its highest in years. That should underpin a recovery in domestic demand, which the latest data shows is already rising. The country’s over-reliance on exports is fading. This is good news for the whole of the currency bloc.
Europe’s high-yield boom rewrites the rulebook 24 Feb 2015 This is a seller’s market, and one with a short history, so deal structures are less fixed than they are Stateside. Yields are already slim. Now borrowers and the buyout firms behind them are pushing bolder deal terms. That makes the risk-reward tradeoff for buyers even worse.
Spain has way to spread Bankia bill 24 Feb 2015 A high court judge has told the state-dominated lender and ex-management to set aside 800 mln euros for refunding investors in its botched 2011 IPO. Madrid deserves the most blame, and the biggest bill. Minority shareholders should cough up too, but with the amount capped.
Investor tolerance for low bond yields has limits 23 Feb 2015 Economic fundamentals can’t fully explain why U.S. and UK yields have risen sharply, decoupling from German ones. Perhaps investors are finally tiring of meagre returns. If so, planned ECB asset purchases may only cap euro zone yields, rather than driving them down much further.
Frontier markets make dangerous investment concept 23 Feb 2015 It’s probably right to think most poor countries will gradually get richer. And nations short of capital and expertise can benefit from foreigners who make serious commitments. But the “frontier” indexes have the wrong member countries and aim at an unsuitable sort of investor.
HSBC’s operating woes trump Swiss tax furore 23 Feb 2015 CEO Stuart Gulliver’s offshore accounts bring new scrutiny of past fiscal fiddles. They also raise the bar for future good behaviour. The main concern for investors, though, is the bank’s lacklustre financial performance. Even a reduced 10 percent ROE target is some way off.
Reed at $38 bln rubs up against new class of peers 23 Feb 2015 Reed Elsevier is set to report another year of metronomic financial performance. As the threat of “open access” journals fades, optimists will argue the Anglo-Dutch group now looks more like Nestle than a humble publisher. That still looks a bit of a stretch.
EU capital markets union is still just a slogan 23 Feb 2015 For non-bank finance to flow, the single market needs cross-border insolvency laws and tax incentives for investment in SMEs. Securitisation cheerleading aside, these key barriers have yet to be tackled. They will have to be if capital markets union is to get off the ground.
Hugo Dixon: Time for Alexis Tsipras to keep his nerve 21 Feb 2015 The new Greek PM has crossed a Rubicon in asking for an extension to the country’s hated bailout programme while abandoning many election promises. Tsipras should realise there is no turning back. But he can snatch victory from defeat if he embraces radical reforms with vigour.
Dividend shocker puts Lufthansa aerobatics to test 20 Feb 2015 The airline is scrapping payouts for the second time in three years - after two profit warnings and a long-running labour dispute. And new CEO Carsten Spohr has a worrying appetite for growth in a challenged industry. He needs some successes before his credibility is grounded.
FX traders will find cheap funding hard to exploit 20 Feb 2015 Carry trades should be child’s play when so many policy rates are near or even below zero. But borrowing in low-yielding currencies and buying ones with higher returns is far from easy in current market conditions. Volatility and a murky FX outlook pose the biggest dangers.
Nigeria’s currency still looks vulnerable 20 Feb 2015 The central bank wants to stabilise the naira against the dollar, after a 22 pct drop since September. But Africa’s biggest economy is beset by political strife, corruption, poor infrastructure and plunging oil exports. The former star “frontier market” is in a tight spot.