European telecoms will dial up more deals 15 Dec 2014 Investors have brightened as M&A has swept the sector. Thanks to BT, Britain is up next. More mergers could follow in France, Italy and Belgium. What’s not to like? Well, windfalls from big cross-border deals looks distant and valuations already price in most of the good news.
Technip’s M&A ambitions need firmer foundations 15 Dec 2014 The French oil services company has dropped plans to buy rival CGG. Relieved shareholders pushed the thwarted bidder’s shares up 7 pct: scepticism about pairing an engineer with a marine surveyor was rife. Technip still wants to diversify. It will have to make a better case.
Hugo Dixon: Greece still several steps from chaos 15 Dec 2014 Athens has entered a period of political instability, which could lead to an election won by Syriza. This radical left group’s policies could prompt Greece’s exit from the euro if fully implemented. But this is unlikely, as Syriza will struggle to execute its plan.
Equities torn between oil and finance 12 Dec 2014 The falling oil price should stimulate consumer spending which remains tepid across the globe. But equity investors seem more interested in the bad side effects and the prospect of higher U.S. rates. In a financially sick world, the caution makes good sense.
Gucci gets new chief, bag search continues 12 Dec 2014 French luxury group Kering is replacing the couple at the head of its flagship brand. Gucci has struggled amid soul searching that has stretched across the sector. With the appointment of new CEO Marco Bizzarri, it is admitting that its problems weren’t all caused by the slump.
Edward Hadas: Making money safe 12 Dec 2014 Money is guaranteed by governments but is largely created by banks as a by-product of lending. It’s an inefficient and risky accident of history. More active supervision is required. States should take control of money creation. There needs to be less debt financing.
More Porsche than Prada: Why Ferrari’s worth $7bln 11 Dec 2014 Fiat will float the iconic sports car brand in 2015 and wants investors to see it as a luxury goods company rather than a carmaker. That’s a stretch. Building Ferraris takes more capital and R&D than handbags and shoes. Margins - and multiples - are lower for a reason.
Draghi’s blanks make sovereign bazooka inevitable 11 Dec 2014 Euro zone banks drew just 130 billion euros of four-year loans from the ECB. The modest take-up makes sovereign purchases more likely: the ECB will need to buy sovereign debt to reach its stated balance sheet target. While QE is increasingly priced in, the challenges aren’t.
Carney the showman risks stage-managed policy 11 Dec 2014 The BoE governor wants monetary policy to be more transparent. So the central bank will publish transcripts of rate-setting committee meetings after eight years. A pre-meeting will stay secret. That’s where the real debate will happen, ahead of a performance for the record.
Gold’s rally won’t outlast tectonic rate shift 11 Dec 2014 The yellow metal is up as tumbling oil prices and a rising dollar destabilise many financial markets. Euro zone fears and Russian gold buying have also helped. But U.S. rate rises will create major shifts in the financial world. Gold is set for a bad 2015.
Fiat tries to make convertible a mandatory buy 11 Dec 2014 Mandatory convertible bonds – debt securities that become equity – aren’t to everyone’s taste. Fiat has priced its $2.5 bln issue to sell. Investors get a high coupon and access to the carmaker’s Ferrari IPO. That compensates for the bond’s low rating and deferrable interest.
Inditex shows retailers how to shop 11 Dec 2014 The Zara parent is enjoying a strong start to the winter season. Some retailers blame poor sales on poor weather. The Inditex business model means it can respond quickly to shoppers’ needs and tastes. Its shares are pricey. But that’s because there’s clear growth potential.
Airbus investors are caught in crosswinds 11 Dec 2014 The aircraft maker disappointed investors with a lacklustre 2016 outlook, mainly due to big R&D outlays and increasing costs of producing new planes. Yet medium-term prospects look good and a sale of the $5 bln Dassault stake could bridge temporary shortfalls.
FCA boss has lucky escape in briefing fiasco 10 Dec 2014 Martin Wheatley keeps his job but loses his bonus after the UK regulator botched a media briefing on insurance in March. The report into the debacle sets out his weak response to the unfolding crisis. If he wasn’t doing a good job otherwise, he would have paid a higher price.
Politics outweighed German unification economics 10 Dec 2014 Karl Otto Poehl, who died on Dec. 9, quit as president of Germany’s central bank in 1991. He thought his government’s reunification plans were unsound. His fears were justified and his steeliness admirable. But the economics proved less important than the politics.
French reform bill more talk than walk 10 Dec 2014 Economy Minister Emmanuel Macron wants to show Europe that France is finally getting serious about reform. But his limited plan to deregulate some services faces fierce opposition from within the ruling socialist camp. What Macron is demonstrating is how tough his job is.
Erste first to show risks in new bank hybrids 10 Dec 2014 The Austrian lender’s bonds have slumped after it cancelled coupons on its debt. It’s an oddity of local accounting, but shows the dangers in new bail-inable hybrid bonds where coupons can be stopped after one-off losses. The market is struggling to digest the risks.
Volkswagen can turn investors round 10 Dec 2014 Shareholders don’t really trust Europe’s largest carmaker. That may change in 2015, as hot new cars boost sales and cost-cutting takes hold. If boss Ferdinand Piech throws in higher dividends too, that could seal the deal – and narrow the valuation gap with BMW and Daimler.
Economist aura helps Bloomberg in financial times 9 Dec 2014 Replacing Matt Winkler, the top editor at Mike Bloomberg’s media empire, with the British weekly’s John Micklethwait ends an era. As well as portending the biggest internal shakeup in 25 years, the move could mean there’s a bigger chance of Bloomberg snapping up the pink-hued FT.
UK retail property values look ever more exposed 9 Dec 2014 Another profit warning from Tesco has drawn attention to Britons’ changing shopping habits. In grocery, it’s all about discounts, online and convenience. That calls into question the big retailers’ property valuations – especially those with super-large stores.