Bull case for SAP starts to emerge 17 Apr 2014 The $100 bln German software group is the latest big tech firm to disappoint investors. Shares fell after currency moves hit Q1 results. Yet the investment case is improving. The stock has cheapened this year, and SAP’s shift to cloud-based databases seems to be working.
Fine global monetary ideals clash with reality 17 Apr 2014 Central bankers want better bulwarks to protect emerging economies from sharp capital shifts - and to shrink the huge war chests of hard currency. The sentiments are worthy, but it looks like the high watermark of global cooperation in monetary policy passed a few years ago.
Securitisation reboot is harder than it sounds 17 Apr 2014 Central bankers, from the ECB’s Mario Draghi to the Bank of England’s Andy Haldane, want to revive securitisation - a change from regulators trying to kill it. That is a worthy goal when banks are shrinking, but it is tricky to achieve. And there is still a way to go.
Tesco promises much but delivery is doubtful 16 Apr 2014 Phil Clarke, CEO of Britain’s largest grocer, touts a “big and bold plan.” He needs one, given poor trading and intensifying competition. But his proposals are vague, and he’s been too timid before. Tesco’s beaten-up shares bounced. But investors should stay sceptical.
Credit Suisse still firing on one cylinder 16 Apr 2014 The Swiss lender’s private banking arm is pulling in more money. But a 11 pct year-on-year dip in quarterly investment banking revenue suggests Credit Suisse’s other main engine isn’t motoring. Paring back further in fixed income would be one way to get things moving.
Ukrainian rate rise is a sign of desperation 15 Apr 2014 With Russia squeezing an already feeble economy, it will be tough to avoid meltdown. A steep interest rate hike can only delay woes. Since impoverished Kiev cannot count on either citizens ready for huge sacrifices or massive Western financial support, Russia has the upper hand.
MPS rights issue rethink could have silver lining 15 Apr 2014 The Italian lender’s cash call may raise more than the 3 bln euros originally intended to meet regulatory hurdles. Monte Paschi’s shares have taken a hammering. But in the light of recent peripheral bank capital hikes, MPS could find the money and end up stronger.
Activists’ Walgreen tax push backs wrong horse 15 Apr 2014 Some shareholders want the pharmacy chain to move its HQ to Europe to cut its tax bill. That’d boost earnings, but fly in the face of popular sentiment and a growing official international consensus against the tactic. Investors would do better to put their weight behind reform.
Renzi corporate rejig blends change and continuity 15 Apr 2014 Italy’s premier has pleased markets and voters with his choice of new managers for state-controlled companies. Female chairs reflect the mood for change, while promoting internal CEOs elevates industrial logic over political meddling. Renzi has avoided a potential banana skin.
Draghi abandons threadbare G7 currency truce 15 Apr 2014 The ECB chief’s promise to ease policy if the euro rises makes him the latest to flout big developed countries’ agreement not to use exchange rates as an economic tool. Competitive devaluations are wars with few winners. But further currency conflict looks almost unavoidable.
Diageo throws money at Indian empire-building 15 Apr 2014 The UK distiller is again trying to tighten its grip on India’s United Spirits. It’s offering $1.9 bln to nearly double its stake to 54.8 pct. A sky-high multiple of 38 times EBITDA gives this offer better odds than the last. And there’s industrial logic to offset the huge price.
U.S. stalls IMF reforms at risk of own ambitions 14 Apr 2014 Finance ministers meeting in DC blasted Congress’ refusal to back more lending power for the fund and a bigger voice for the likes of China and Brazil. Harsh words alone won’t do much. But votes against Ukraine loans and other plans would inflict a high price on foot-dragging.
The rights and wrongs of high-frequency trading 14 Apr 2014 Market speed junkies are accused of behaviour akin to front-running, scalping investors, and serving no useful purpose. High-frequency traders say they provide liquidity, drive down costs for everyone, and stop investors being fleeced. Neither side has a monopoly on the truth.
Peugeot can beat its muted profit target 14 Apr 2014 Timid goals sent the French carmaker’s shares down 7 pct. While woes in Brazil and Russia will dent earnings, the new CEO seems to be trying to under-promise and over-deliver. The group is well placed for a recovery in Europe and has a plausible new strategy.
Draghi’s latest headache needs more than talk 14 Apr 2014 The IMF’s latest shindig enabled ECB officials to promise action and talk down the euro. ECB chief Mario Draghi avoided euro breakup in 2012 just by pledging to act. He’ll find it harder to sort 2014’s bogeyman, deflation, without actually deploying aggressive monetary policy.
How China is stoking London’s housing bubble 14 Apr 2014 Chinese buyers are a key new factor pushing up the UK capital’s property prices. As Beijing relaxes capital controls, the wall of money could intensify. UK politicians will need to decide whether to protect London’s global financial status, or the citizens who have to live there.
Hugo Dixon: How Greece can turn vice to virtue 14 Apr 2014 The vicious cycle of two years ago is turning virtuous – see Athens’ return to the bond market last week. More can be done to maintain momentum, especially rooting out vested interests. As ever, the weak spot is politics.
World Bank’s foreign aid target is barbarous relic 11 Apr 2014 The 0.7 percent share of GDP rich countries are pegged to donate to poor ones was set in 1970. World Bank boss Jim Kim just praised the UK for becoming one of only five to meet the goal. Such assistance is too political, though, and not the most effective way to spur development.
Flagging asset rally poses diversification dilemma 11 Apr 2014 A hunt for yield has pushed investors further out the risk spectrum, lifting stocks, bonds and credit. The result: the fortunes of many asset classes have become more intertwined again. That’s a problem for investors trying to construct a portfolio ready for tougher times.
Raiffeisen shows its eastern woes predate crisis 11 Apr 2014 The Austrian farmers’ bank saw its core Tier 1 ratio fall a percentage point in 2013 even before the recent turmoil in Ukraine. Raiffeisen is exposed to so many currencies that hedging is always a problem. Its listed subsidiary’s recent rights issue may yet prove inadequate.