Late-payment fines release zero value 12 Aug 2013 The UK government might get tough on businesses that are slow to pay suppliers. The utopian goal is economically almost nonsensical, because it wouldn’t change the overall cost of financing. Politicians would do better to focus on keeping the banking system well capitalised.
Sterling flirts with safe-haven status 12 Aug 2013 The pound has a lot against it, including dovish central bank rhetoric, but Britain is returning to growth as the euro zone struggles. And while the U.S. may soon taper QE, the UK has already parked the policy. The cheap British currency looks like a good bet.
EU cap could reopen bank bonus wounds 12 Aug 2013 Europe’s misguided bonus cap has forced banks back to the drawing board on pay. They are sounding out investors about the least damaging way of complying with the rules. Higher base salaries are likely. But shareholders should demand tougher conditions for variable pay in return.
Prudential can put domicile issue on back burner 12 Aug 2013 The UK-based insurer is meeting cash-generation targets for its fast-growing Asian business. Ultimately it needs to decide if it should move its HQ there. But with the shares strong and potentially harmful EU reform up in the air, Pru can do without radical changes of emphasis.
Carlos Slim offers escape route to KPN investors 9 Aug 2013 America Movil, controlled by the Mexican mogul, intends to offer 7.2 bln euros to buy out the 70 pct of the Dutch telco it doesn’t own. Shares in KPN jumped to price in a deliverable deal. KPN could push Slim higher. But with all the doubts, investors who can take profits should.
Triple challenge forces Tesco’s Chinese retreat 9 Aug 2013 As Asian consumers become more prosperous, the UK group’s decision to fold its Chinese stores into a local joint venture seems odd. But old world grocery groups are grappling with low returns, stiffer competition, and web threats. Tesco’s response is disappointing but realistic.
Angry aluminium users should sue the Fed as well 9 Aug 2013 Lawsuits against JPMorgan, Glencore and Goldman allege they all artificially pumped up aluminium prices by keeping metal off the market. The ire is understandable, but some of it should be directed at central bankers. Their low rates make hoarding profitable.
Rio’s asset sale woes another case of bad timing 8 Aug 2013 The miner overpaid on acquisitions in the boom years. Now that the cycle has turned, planned sales - of a Canadian iron-ore mine, the diamonds business and some duff aluminium smelters - have stalled. The delay is not a disaster, but shows how vital timing is to miners’ returns.
Carney should worry about why Britain is different 8 Aug 2013 Forward guidance, the big idea of the new Bank of England boss, doesn’t address the UK’s biggest monetary problem - steadily higher inflation than peers. It’s hard to keep price rises down to 2 pct with the mix of weak currency, high dependence on imports and economic rigidity.
Nestle miss leaves the shares less than appetising 8 Aug 2013 The Swiss food group says it may fall short of its long-term 5 to 6 pct revenue growth target this year, after achieving only 4 pct in the first half. Investors should ask whether premium-rated Nestle is finding its diverse portfolio of business too broad to manage effectively.
Commerzbank recovery starts to convince 8 Aug 2013 Germany’s second-largest lender has delivered on its promises in the first half of 2013. Its restructuring plan remains in its infancy and for now is inflicting big charges. Complete transformation is still years away. But the investment story is getting easier to believe in.
Monte dei Paschi rescue tests Europe’s resolve 8 Aug 2013 The European Commission has been sniffy about the Italian lender’s bailout. That’s no surprise, given Brussels is toughening state-aid rules to prevent cushy bailouts. But the Commission faces a tricky balancing act between fixing MPS and causing political trauma in Italy.
Norway could make more of its huge oil fortune 8 Aug 2013 The Nordic state has the world’s largest sovereign wealth fund and one of the simplest investment strategies. Ahead of a general election, reforms are being mooted. It should review its largely passive approach, and take fewer bets on a wider variety of asset classes.
BoE guidance at risk of quick inflation knockout 7 Aug 2013 In setting a 7 pct unemployment-rate threshold for tighter policy, the UK central bank’s new Governor Mark Carney brings a de facto dual mandate. But his guidance weakens the inflation target, probably won’t hold yields down, and will have to be abandoned if prices keep rising.
Gold warns markets of an anxious September 7 Aug 2013 As in April, the yellow metal’s slide to a three-week low suggests broader troubles for markets. Better U.S. data means Fed asset purchases could be reduced in September. Less central bank cash is good for the dollar - and bad for most other global assets.
Investors, chew on this: the world wants more meat 7 Aug 2013 As the world gets richer and more urban, tastes get meatier. That places big demands on a fragile planet. But demographics and development also bring financial opportunity. The investment menu runs from fertilisers, seeds and irrigators, and now to burgers grown in the lab.
Edward Hadas: Imagine a world without debt 7 Aug 2013 Banks need to raise equity to bear possible loan losses. Why not replace loans with securities that take losses naturally? Wait, these exist today, with gainsharing and inflation protection. Shares, or something similar – call it flexi-debt – are the key to crisis-free finance.
Lab meat’s sweet spot lies in medicine, not hunger 6 Aug 2013 Growing hamburger in a vat is potentially more efficient and faster than doing so on the hoof. A demonstration in London opens up the possibilities. But the cost of lab-grown materials means they’ll make their mark in the pharma world long before they show up in restaurants.
StanChart shows not all emerging markets are equal 6 Aug 2013 The lender’s focus on developing economies has fuelled years of rapid growth. Now jitters in Southeast Asia and writedowns in South Korea are weighing on earnings, while Africa and India pick up the slack. Investors need to get used to seeing a more mixed performance.
Periphery can aspire to Irish-style stagnation 6 Aug 2013 Ireland has long been stuck with an in-and-out mild recession. Tentative green shoots are now sprouting, but Dublin’s dependence on external demand will keep the recovery slow and bumpy. Still, such relative stability is a fair aspiration for the rest of the euro zone periphery.