Averting bond fund runs requires only easy fixes 26 Jun 2014 These vehicles now manage $3.3 trln, double five years ago. Investors can pull their money out quickly, which means a rush for the exits could cause panic. Imposing redemption fees is one solution. Holding more cash and restricting rapid withdrawals would be more effective.
Barclays’ hit reflects investment bank fears 26 Jun 2014 Shares in the UK bank tanked 9 pct after accusations of fraud in its “dark pool.” That implies a surprisingly big $6 bln hit. Fine inflation is rampant, and Barclays could suffer reputational damage. It’s a reminder: small investment banking businesses can carry outsized risks.
Carney takes narrow view of financial stability 26 Jun 2014 The Bank of England governor had a chance to address galloping UK house prices via macroprudential tools, curbs to UK mortgage guarantee schemes, and dire warnings. All he offered was underwhelming lending rules. That is no way to protect banks in the long run.
New setback raises pressure on StanChart top team 26 Jun 2014 The emerging markets lender has warned earnings will decline for the second year running after a poor first half. The departure of another senior executive reinforces the sense that StanChart is struggling to get to grips with its problems. The share price fall looks justified.
Mortgage curbs alone can’t stop housing booms 26 Jun 2014 The Bank of England is set to use new tools to cap home loans. They can help protect lenders and borrowers from getting into trouble. But global experience shows that restricting credit alone doesn’t bring down property prices. Only new taxes, or more building, will do the trick.
Biggest risk of geopolitics is as a distraction 26 Jun 2014 Fears that war and foreign policy chaos will disrupt the global economy have insidiously crept into the minds of investors, Barclays discovered. In reality, despite deterioration in the Middle East, the global balance is broadly positive. There are bigger things to worry about.
LSE’s neat Russell buy leaves one loose end 26 Jun 2014 The UK exchange’s $2.7 bln purchase of the U.S. index provider is complementary and brings welcome new geographical reach. That justifies the market’s relaxed reaction to an accompanying $1.6 bln cash call. But Russell’s fund business doesn’t fit. Its future needs to be resolved.
AbbVie hints it can afford to pay more for Shire 25 Jun 2014 The U.S. drugmaker is marketing its $46 bln bid proposal direct to Shire investors. As bear hugs go, it’s soft. A price increase would have put more pressure on the target. AbbVie’s talk of material earnings gains in a deal implies a raise is possible – and may scare interlopers.
Edward Hadas: Housing, the ultimate momentum trade 25 Jun 2014 Supply and demand influence house prices. Monetary and lending policies are more important still. But psychology is the biggest factor. What pushes up prices most is the belief that land values can keep rising. What pushes them down is the realisation that this belief is false.
English soccer protectionism would be an own goal 25 Jun 2014 Even before England’s latest World Cup woes, its ruling body was mulling curbs on foreign players to nurture homegrown talent. That type of “import substitution” could hobble home markets. Financial subsidies for English players to play abroad would work better.
Rebalancing “Made in Germany” looks real 25 Jun 2014 Rising real wages and strong consumer confidence confirm that Europe’s biggest economy has changed gears. Gone are the days of a purely export-driven boom and poor domestic consumption. The new minimum wage will only reinforce the trend, to the benefit of the whole euro zone.
BoE boss gives market salutary lesson 25 Jun 2014 Traders find Mark Carney unreliable. That’s fair - he has changed his message more than once. But he has acquired the virtue of responding to doubtful data with policy uncertainty. That used to be standard practice for central banks. It’s time markets got used to it again.
UK hacking verdicts could embolden Murdoch 24 Jun 2014 One of Rupert Murdoch’s key lieutenants, Rebekah Brooks, has been cleared of phone hacking. Another editor was convicted of conspiracy to hack phones, and he awaits verdicts on other significant counts. For now, Murdoch can savour the symbolic resonance of the outcome.
Next stop: Siemens-Alstom train merger 24 Jun 2014 Losing the competition for Alstom’s power assets was a blessing in disguise for the German engineering group. It can now focus fully on its internal restructuring. Fixing the ailing train unit is crucial. Hiving it off to Alstom itself could well be the best solution.
Russian rally has deceptive momentum 24 Jun 2014 Moscow stocks have recouped this year’s losses as Vladimir Putin sends signals of a more conciliatory policy toward Ukraine. The annexation of Crimea is fading from investors’ memory. But Russia still has its problems, which limit its scope to outshine other emerging markets.
Syngenta can yield extra value for shareholders 24 Jun 2014 Shares leapt on a report Syngenta had held abortive talks with rival Monsanto, in the latest tax-driven push by a U.S. acquirer. There would be big antitrust obstacles. Even if no deal emerges, the bid talk should pressure the Swiss agribusiness giant to tend to its own garden.
Iraq troubles are unlikely to bring new oil crisis 24 Jun 2014 The continued violence looks like a harbinger of a sharp cutback from one of the world’s major oil producers. But the bulk of Iraq’s production is still secure. The Middle East is clearly becoming less stable, but it would take a cascade of problems to create a big price shock.
Woolworths pays too-steep ransom in Aussie battle 24 Jun 2014 The South African group is buying billionaire Solomon Lew’s stake in an Australian unit in return for his support in its $2 bln takeover of retailer David Jones. The $201 mln side deal lifts the effective takeover premium – raising the pressure on Woolworths to realise synergies.
Shire’s case for resisting AbbVie is good enough 23 Jun 2014 The UK pharma group’s target of $10 bln of sales in 2020 is aggressive but not outlandish. Meanwhile, near-term revenue is growing. That leaves AbbVie’s recent $46 bln bid proposal looking insufficiently tempting. Factor in scarcity value and Shire can afford to sit tight.
Investors beware: France will get more erratic 23 Jun 2014 Paris is to buy most of Bouygues’ stake in Alstom in an expensive concession by François Hollande to his protectionist economy minister. Weakened by his unpopularity, the president seems increasingly unable to bring cohesion to his own cabinet. It can only get worse.