Cameron has work cut out to sustain relief rally 8 May 2015 UK stocks and bonds, and the pound, have jumped on the Conservatives’ surprise election success. That’s to be expected given fears of a messy outcome. But the result leaves open questions on EU membership and Scotland. Such uncertainties could hold back investment and growth.
Li Ka-shing adds funding flair to telco turnaround 8 May 2015 The Hong Kong tycoon’s sale of a third of his British mobile division for 2.8 bln pounds raises funds for the purchase of Telefonica’s O2, without ceding control. Throw in debt and the tycoon will be able to buy a business worth more than 9 billion pounds with barely any cash.
U.S. interloper likely to win IT server tussle 7 May 2015 Things are hot in the air-conditioned data-centre business. Equinix is eyeing a $3.5 bln bid for Telecity that would kill the UK outfit’s all-stock purchase of Interxion. It’s hard to see Interxion biting back. Telecity owners are being offered 28 times 2015 earnings.
Glaxo smartly bucks the breakup trend 6 May 2015 The British drugmaker scrapped a flotation of its HIV unit and slashed a planned cash return. That’s unfashionable in an era of spinoffs and shareholder payouts. GlaxoSmithKline, though, needs diversity and financial firepower while it tends to the core pharmaceutical business.
UK poll has fat-tail chance of outright Labour win 6 May 2015 A messy left-leaning outcome remains the base case. But tweaking Breakingviews’ election calculator to reflect weaker-than-expected voter support for Scottish nationalists suggests the odds on a majority for Ed Miliband aren’t all that long. At least policy would be predictable.
Sainsbury sets battlefield tempo for UK grocers 6 May 2015 The price war at British supermarkets is entering a new phase. Big-picture strategic shifts and financial redeployments are giving way to grind. The 3 pct operating margin for the year to March at the 5 bln pound Sainsbury may define what is now realistic across the industry.
Hugo Dixon: UK politics is failing the trust test 4 May 2015 In the run-up to the May 7 election, the public has lambasted leaders of the established parties for breaking promises and lack of candour. While the critique is healthy, Britain has yet to give birth to leaders who score high on integrity. This is needed, not just in the UK.
Lloyds revival makes retail offer unnecessary 1 May 2015 The state-owned UK lender avoided new legal charges as underlying pre-tax profit rose 21 pct. Improved capital implies decent dividends. The government may think retail investors should share the upside. But banks are leveraged, cyclical investments better sold to institutions.
Downstream cushions Shell while it waits for BG 30 Apr 2015 Like BP and Total, profit from refining and marketing limited pain from low oil prices for the Anglo-Dutch major. Short term, it will struggle. But there is value to be had from the $70 billion tie-up with BG. The deal synergies could well be higher than advertised.
Britain’s Tories take prize for fiscal folly 30 Apr 2015 The big parties’ electoral manifestos all contain ill-advised pledges that look dubiously costed. Given they aim to cut the deficit more, the Conservatives’ silence on how to do so is more striking. Promising to freeze taxes in the next parliament is the silliest ruse yet.
Edward Hadas: UK housing and the fear of greatness 29 Apr 2015 London urgently needs to be rebuilt and expanded, but none of the leading candidates in the upcoming election promises to do much about the problem. This, like costly U.S. healthcare and high European unemployment, is a rich democracy inertia trap. Affluence retards boldness.
Barclays cost restraint adds to heat on Deutsche 29 Apr 2015 The UK bank’s hefty first-quarter provision implies it may be hit with an FX fine of as much as $3 bln. And ring-fencing costs remain an unknown quantity. But Barclays is making progress on expenses, and its targeted returns look higher than those of main rival Deutsche Bank.
Ready-reckoning the markets post-UK election 29 Apr 2015 Next week’s British general election is unlikely to produce a clear winner. But a government will eventually be formed, even if it takes a second vote. Different medium-term trends will emerge after the inevitable short-run volatility in sterling, gilts and UK-listed stocks.
BP and Total find downstream respite 28 Apr 2015 Strong results in refining and marketing limited the profit fall at the two European majors. With the oil price down, the gains are especially welcome. But downstream overcapacity will bite in the medium term, while upstream businesses remain hostage to the oil market.
Economy can neither make nor break UK elections 28 Apr 2015 Britain’s quarterly growth rate has halved to 0.3 percent. The figure will become a political football days before a tight election. But it is not high enough for the ruling Conservatives to inspire voters with their economic track record and too high for rivals to damn them.
Elliott comes out ahead in Alliance Trust truce 28 Apr 2015 Two of the three directors proposed by the U.S. activist will join the Scottish firm’s board. Meanwhile Alliance CEO Katherine Garrett-Cox avoids a humiliating defeat and gets a year to fix performance. Both sides compromised - but Elliott, and outside investors, do better.
Capgemini reboots with big bet on North America 27 Apr 2015 The once-cautious French group is bidding $4 bln for private equity-backed IGATE. The friendly deal is at a pricey 22 times 2015 earnings. Still, the boldness could pay off. The IT services giant gets a faster-growing, higher-margin business, heft stateside, and tax benefits too.
HSBC exit from London is far from clear-cut 24 Apr 2015 The UK-based emerging markets bank says it is looking at where it should best be headquartered. The regulatory, economic and reputational costs of being in London have clearly risen. But HSBC’s realistic alternatives – Hong Kong and Shanghai – both carry major risks.
Labour to gain from "follow the money" UK voting 24 Apr 2015 People vote with their wallets. The governing Conservative coalition may earn credit for presiding over five years of low interest rates and a strongish pound. But a Breakingviews calculator suggests a weaker record on growth, house prices and stocks could swing votes to Labour.
AstraZeneca’s reliance on one-offs is unsettling 24 Apr 2015 The pharma group managed to beat expectations in Q1 despite wrestling with patent expiries. One-off disposals of $309 million helped boost operating profit to $1.8 billion. Raising funds makes sense at a time when Astra is challenged, but investors shouldn’t rely on them.