Turkey’s sukuk debut looks well timed 12 Sep 2012 The government’s first Islamic bond will capitalise on Turkey’s growing economic and political ties with the Middle East. A new legal framework, and the massive shortfall of Sharia-compliant assets, suggests the sukuk will get a warm welcome, despite local secular sensitivities.
Deutsche Bank throws down gauntlet on bonuses 11 Sep 2012 The German lender’s new co-CEOs have conceded the need for higher capital and a tangibly tougher policy on pay. Being the first big universal bank to muzzle its trading arm carries risks. But Deutsche has twigged that now is an ideal time to be a first-mover on bonus reform.
Calculator: Market skeptical on Glencore-Xstrata 11 Sep 2012 Glencore’s new offer for Xstrata is recommendable, yet the companies’ shares are pricing in only a 60 pct chance of deal success. Uncertainty about the Qataris and anti-trust issues are big factors. But the chaotic course of the deal may have raised merger arbs’ risk aversion.
Ugly markdown of Burberry shares may be justified 11 Sep 2012 The British trench-coat maker’s shares dropped 20 pct after it warned on sales and profit. That reaction is harsh, but may be fair. The pressure is on worldwide, not just in China. And Burberry had enjoyed a premium valuation that now looks harder to defend.
For Italy, crisis freedom is almost within reach 11 Sep 2012 Rome is half out of the woods. The promise of aggressive ECB bond-buying has stabilised markets and brought yields down. But Italy needs to keep up with reforms amid austerity and recession. Its Achilles heel - political chaos - could drag it back into bailout territory.
Qatar aims to expand power with corporate giants 11 Sep 2012 The Gulf state has expanded its economic and political reach with direct investments through its sovereign fund. Now bankers are licking their lips anticipating an M&A wave as Qatar is set to consolidate its influence by supporting the international expansion of homegrown firms.
Santander can teach Citi the art of breaking up 10 Sep 2012 The notion of a Spanish bank instructing the rest of the world on anything may sound, well, loco at present. But Santander’s methodical IPOs of operating units, the latest due in Mexico, present a reasonable model for an undervalued colossus like Citi to consider.
Banker pay reform rests on ROE transparency 10 Sep 2012 Universal banks are still paying big bonuses, yet returns are commonly held to be inadequate. The logical reform is to judge whether return on equity exceeds the cost of equity, and only pay up if so. That would first need another seismic shift: transparency about both the R and the E.
Xstrata should accept revised Glencore pitch 10 Sep 2012 The merger is now a $35.5 bln takeover at a modest premium. The tie-up is riskier since Xstrata CEO Mick Davis would exit after six months, although Chairman John Bond would stay. Xstrata investors will want more. But it’s hard to see a realistic alternative offering better value.
Hugo Dixon: Spain and Italy mustn’t blow ECB plan 10 Sep 2012 Mario Draghi’s bond-buying scheme has bought Madrid and Rome time to stabilise their finances. But if they drag their heels, the market will sniff them out. It will then be almost impossible to come up with another scheme to rescue them - and the single currency.
Glencore-Xstrata mess makes bankers look powerless 7 Sep 2012 The deal’s basic set-up proved surprisingly vulnerable. Pay squabbles wasted weeks. A rejig has now come at a comically late stage. The tie-up’s many banks may be giving duff advice; more likely, they are bit players in Ivan Glasenberg and Mick Davis’s CEO-led production.
Who dares call Qatar dumb money now? 7 Sep 2012 If Qatar’s sovereign fund didn’t command respect before the Glencore-Xstrata saga, it certainly does now. Qatar has made Glencore boss Ivan Glasenberg budge on price. But its achievement is capped by the fact that it still hasn’t obtained a wholly acceptable proposal.
Glenstrata drama is no way to do M&A 7 Sep 2012 Ivan Glasenberg’s curveball on Glencore-Xstrata shows bad form in deal making. Halting a shareholder vote after markets opened makes Glencore’s boss look more trader than statesman CEO. A solid deal may be imminent. But the messiness of it all should give investors pause.
IMF could guide euro zone out of austerism 7 Sep 2012 The new ECB bailout-light window may involve the IMF, and the Washington-based fund’s reputation for neo-liberal fundamentalism is deterring Spain and Italy from applying. But the reality is different. The fund could help the EU soften its self-defeating austerity policies.
Draghi’s bazooka could be third-time lucky 6 Sep 2012 The ECB’s third bond-buying plan in as many years won’t please everyone; the IMF will be involved, and markets won’t get explicit yield targets. Most important, the plan is a gamble on governments keeping their promises. But the euro zone should soon have a powerful backstop.
U.S. leaders could learn from European austerity 6 Sep 2012 America is coming late to fiscal reform, following allies across the Atlantic. Noting the continent’s flubs and fixes would help either Barack Obama or Mitt Romney tackle a debt load that just surpassed $16 trln. Waiting too long may give investors time to make a new choice.
Time for a hard reset in UK directories 6 Sep 2012 Near-bust yellow-pages group hibu has one main class of debt, but multiple species of creditor. Expect a row between hedge funds and banks over how much to haircut its 2.2 bln stg of borrowings. Hibu is in existential crisis. The more aggressive its restructuring, the better.
How to stop Basel bank safety net becoming a noose 6 Sep 2012 Global regulators are racing to agree tough reforms to prevent bank funding crises. Overly loose rules won’t be trusted, but overly prescriptive ones could choke credit to the real economy. A solution is possible. But supervisors have to avoid inflating the next bubble.
Unequal competitiveness trips up Europe 6 Sep 2012 In the World Economic Forum’s competitiveness league, Switzerland remains number one, despite the strong franc. The top 10 includes north European countries, the U.S., and the UK. But Italy is at 42nd - and Greece 96th. The gap casts troubling light on the euro zone’s struggle.
Murdoch’s reformation stops with governance 5 Sep 2012 The media mogul has sensibly deployed capital as part of a big turnaround at News Corp since the phone-hacking scandal rocked his empire. But two new board nominees look like the old Murdoch at work. Investors shouldn’t so soon forget the havoc an unchecked emperor can wreak.