Shareholder spring still cloudy in Paris 16 May 2014 French cable maker Nexans finally split its chairman and CEO roles, giving in to demands of minority investors. But the current boss they wanted to sack will remain chair. The French state, a large shareholder, missed a chance to promote good governance.
Zara needs e-commerce push to become truly global 16 May 2014 Inditex, the world’s biggest retailer, was late to the internet, but it stands to gain more than rivals. Its model is naturally suited to online and should boost growth. E-commerce sales can also provide valuable data to choose store locations in tough markets, like the U.S.
Asia can give the West a bubble-popping lecture 16 May 2014 Regulators in Asia have been developing tools to smooth economic cycles for years. Yet the debate over “macroprudential” policy in the U.S. and Europe largely ignores this experience. Western regulators haven’t overcome the intellectual myopia that led them into the crisis.
Where should AstraZeneca shares be trading? 15 May 2014 The right price for the UK pharma group’s stock can be seen as the weighted average of two possible outcomes – a $100 bln-plus sale to Pfizer or a standalone future. A new Breakingviews calculator shows why the market seems to think a transaction will probably happen.
U.S. mega-fines threaten BNP more than Credit Suisse 15 May 2014 The French bank faces a $3 bln penalty for allegedly violating U.S. sanctions, while its Swiss peer could be fined $2 bln for claims it helped Americans evade tax. CS would wind up with a lower capital ratio. But BNP’s expansionist strategy would be more extensively derailed.
Bond bears’ ordeal will only get worse 15 May 2014 There is more pain in store for investors who have bet on falling bond prices. With the ECB likely to ease and the Fed and BoE unexpectedly dovish, higher rates are a way off. The result is an epic search for yield. Resistance looks futile, but surrender will amplify the trend.
Good German growth covers up bad economic policies 15 May 2014 Higher domestic consumption and investment boosted Germany’s GDP in the first quarter, a reminder that the old export-led growth model is giving way to something more helpful for Europe. But current strength allows Berlin to get away with policies that will hurt in the long term.
France plays to type with unneeded takeover decree 15 May 2014 The extension of the French government’s powers to oppose unwanted takeovers by foreign firms simply codifies current practices, but it won’t enhance the country’s reputation as a place to do business. With growth stalling, Paris has more important economic challenges.
UK pay revolts point to demand for reality checks 15 May 2014 New laws gave investors in UK firms like ITV more say on pay. Shareholder protests have since spiked. Yet bosses are being punished even when pay has moved in line with performance. The message to boards is that they should apply common sense - whatever the pay plan prescribes.
What Lagarde should’ve told Smith College’s grads 14 May 2014 The fund’s boss wimped out of speaking at the women’s college’s commencement after a petition accused the IMF of supporting “patriarchal systems.” That critique is old hat. Lagarde’s IMF has fostered social spending and female rights. Here’s what she ought to have said.
BoE’s low-rates enthusiasm makes sense for now 14 May 2014 Investors think the UK is almost ready for higher rates but Mark Carney disagrees. The BoE governor still sees slack and thinks his Financial Policy Committee can tackle housing excess. He will try to delay a rise as long as he can. It’s a risky call, but probably right.
Pimco outflows are wakeup call for Allianz 14 May 2014 The bond fund saw 22 bln euros of net outflows in Q1. Controversy over the role of founder Bill Gross is arguably a big factor. Allianz, Pimco’s parent, suggests it can take the trials in its stride. But its hands-off approach is becoming increasingly hard to justify.
GSK case no cure for Chinese corruption 14 May 2014 Graft charges against three of the British drugmaker’s senior China executives suggest a top-down culture of bribery. What they really show is a broken healthcare system and a government many foreign groups don’t know how to handle. On both fronts, it’s still business as usual.
QE forces investors to applaud M&A 14 May 2014 Nowadays, bidders’ shares rise on news of a deal. The reverse used to be true. Equity market enthusiasm reflects relief that cash piles are finally being used. But unless M&A has become less risky, weaker balance sheets and value-destructive bids augur ill for credit quality.
AstraZeneca saga reverts to UK takeover playbook 13 May 2014 Pfizer’s bosses were cast as villains in a grilling by lawmakers, while Astra’s played unpretentious scientists. Public antipathy raises the risks for the U.S. group of going hostile. With Astra’s CEO outlining the form of acceptable bid, Pfizer knows where it needs to convince.
Rob Cox: The worry now is a brewing M&A bubble 13 May 2014 The corporate urge to merge has gone into global hyper-drive. Activity has surged as investors egg companies on and bid up the shares of acquirers well beyond mathematical prudence. When new metrics to justify the irrational are trotted out, it’s time to exercise caution.
Markets better renew flagging faith in Draghi 13 May 2014 Financial markets are more convinced by Mario Draghi’s hint of a June easing after reports the Bundesbank could support the move. Traders who are still ruling out a deposit rate cut may want to reconsider if they don’t want to be caught on the wrong side of the ECB.
Investors underrate ThyssenKrupp’s steel woes 13 May 2014 The German industrialist’s restructuring is gaining ground. Investors have responded with enthusiasm to a stronger balance sheet, rising earnings and a better outlook. But the lacklustre steel unit remains a big drag. There are no quick fixes.
LSE’s tilt at Russell is a long shot 13 May 2014 London Stock Exchange is in talks to buy the Seattle-based compiler of small-cap stock indexes for a reported $3 bln. Pushing deeper into data makes sense. Yet LSE must face down rival bidders and sceptical shareholders. It also needs a plan for Russell’s asset-management arm.
Edward Hadas: AstraZeneca is no one’s property 13 May 2014 Like any big company, the UK drugmaker is a human organisation with many social roles and responsibilities. The property model doesn’t really fit. Investors can lobby for their interests in a proposed $106 bln Pfizer takeover. The board and politicians should listen but not obey.