HSBC held back by developed-world headaches 30 Jul 2012 The bank’s earnings are strong enough to absorb a $2 billion charge for mis-selling in the UK and money-laundering in the U.S. After HSBC’s sub-prime woes, it’s another reputational stain. Yet the setback will only reinforce the bank’s strategic shift to emerging markets.
Hugo Dixon: Can Super Mario save the euro? 30 Jul 2012 Mario Draghi says the ECB’s job is to bring down sovereign bond yields if fears of a euro breakup are making them rise. It’s a highly significant statement. But the ECB boss has caused dissension within his ranks. And he’ll struggle to find the tools to be able to do as he says.
Enel squeezes its Latam minority shareholders 27 Jul 2012 The troubled Italian utility is using an $8 bln capital hike at its Chilean unit Enersis to grow in the region. While Enel’s Spanish arm Endesa kicks in assets to cover its 60 pct portion, minority holders must stump up cash. They may be powerless but the reaction speaks volumes.
Draghi bond-buying hints won’t end crisis 27 Jul 2012 A promise by the ECB president to defend the euro has triggered hopes of more bond buying, and driven down Spanish and Italian yields. Draghi’s words make more bond purchases quite likely, but anyone hoping for a game-changing crisis response may be disappointed.
Olympics feel good value, even if they aren’t 27 Jul 2012 The world may gloat at London’s mishaps. And for the over-extended UK, the economic wisdom of spending $14 billion on the Games is uncertain at best. Yet British spirits are high. Olympic investment is paying dividends, even if they aren’t strictly financial.
Barclays still in the mire despite strong half 27 Jul 2012 The scandal-hit bank’s shares surged as a 4.2 bln stg pre-tax profit beat forecasts. But the 10 pct ROE isn’t so juicy if you factor in regulatory changes and provisions to cover past sins. A replacement CEO is still months away. And now the CFO is under investigation.
Miners’ journey back to normal will be a hard slog 27 Jul 2012 The sector’s software-like margins were due a reality check. Results from Vale and Anglo American confirm it has entered a period of more challenged returns. Stubborn costs will take time to ease. After a decade-long boom, reversion to the mean will be painful.
Growth gem Ghana needs to husband its resources 26 Jul 2012 Sitting President John Atta Mills died this week, five months before the next election. Ghana’s economy is among the fastest-growing anywhere, helped by new oil output. But there’s a risk the bonanza is wasted. Mills’ successor needs discipline to achieve long-term prosperity.
Spain’s global banks are still hostage to Spanic 26 Jul 2012 Santander and BBVA have been rocks in a storm thanks to overseas profits. But they remain vulnerable. A downgrade of Spain to junk would be painful. If the banks really were quasi-supranational, the shares wouldn’t rally so much when the ECB president makes supportive noises.
Ireland gives euro zone a hint of crisis freedom 26 Jul 2012 Dublin is issuing long-term debt for the first time since the rescue of 2010. The funding is likely to be pricey. But if the deal gets sold, it will show that bailouts needn’t be forever, or end in default. With Spain and Italy on the brink, euro zone partners will be thankful.
Telefonica payouts may go on hold for longer 26 Jul 2012 The Spanish telco has finally scrapped this year’s dividends and buybacks. That’s sensible as Spain’s financial crisis deepens: the group could now cope with being shut out of the bond markets for a long stretch. But a pledge to reinstate dividends in 2013 looks optimistic.
Shell struggles with market myopia 26 Jul 2012 It was never going to be a stellar quarter after the recent fall in oil prices. But Shell’s big Q2 miss is a blow, particularly after its dividend disappointed some investors in Q1. Few oil majors look better-positioned for the future, but expectations-management needs work.
Lloyds weighed down by familiar bugbears 26 Jul 2012 Further hits from insurance misselling pushed the UK bank into the red again in the first half. But underlying trends remain sound: bad debts are falling and the margin outlook hasn’t worsened. Plus the government’s new loan support scheme may help both Lloyds and the British economy.
Greece isn’t at end game quite yet 25 Jul 2012 True, Athens will need more cash because it won’t hit its targets - and Berlin won’t want to give it more money. But nobody wants Greece to leave the euro until the “Spanic” has passed. There could be ways of squaring the circle and buying time provided Athens plays ball.
Vodafone pay endorsement should hearten CEOs 25 Jul 2012 Britain’s “shareholder spring” shouldn’t cow bosses too much. Investors remain relaxed about executives getting filthy rich - provided companies perform, of course. Look at the huge support for Vodafone, the telco whose CEO will make more than 500 times the average UK wage this year.
Deutsche Bank’s profit miss isn’t temporary hiccup 25 Jul 2012 Weak client activity and the falling euro’s impact on costs have driven the German bank to warn that Q2 net income will be only 700 mln euros, 30 pct below forecasts. These aren’t short-term headaches. And Deutsche’s capital and job-cut plans still look less punchy than peers’.
UK’s big GDP shock may herald more stimulus 25 Jul 2012 A 0.7 pct fall in GDP in the second quarter is much worse than expected. Construction accounts for half the drop. True, the figures exaggerate the pain: the Royal Jubilee, wet weather and Europe were all drags. Even so, the under-fire government may feel compelled to respond.
Could be worse is no rallying cry for Arcelor 25 Jul 2012 The Q2 results weren’t a disaster, but the steel giant sees little respite from weak demand. A 2 pct jump in ArcelorMittal’s shares suggests investors are taking comfort in a thwacked valuation, and progress reducing debt. But it would take nerves of steel to bet on a rally.
IMF gets quasi-Goldman resignation moment 24 Jul 2012 Greg Smith’s public rant triggered fresh scrutiny of the Wall Street firm even though he said nothing new. So it could be with Peter Doyle, a 20-year IMF economist. His exit blast is causing internal soul-searching. Yet no-one should be surprised to hear that the fund is flawed.
Capital flight will decide course of the "Spanic" 24 Jul 2012 Madrid can withstand the market panic until October when big bond repayments are due, provided it doesn’t spill over into the banking system. But if capital flight accelerates, policymakers will have to break their holidays and concoct a full bailout. The politics won’t be easy.