EasyJet can finally close valuation gap on Ryanair 18 Nov 2014 Europe’s second-largest no-frills carrier has set the tone in the sector in recent years. Better customer service on cheap flights propelled a 13 pct rise in earnings. A weak euro may hurt, but the strategy is solid. A 10 pct discount to Ryanair is hard to justify.
EU helps New York beat London in hot art market 13 Nov 2014 Works by Warhol, Koons and Twombly helped Christie’s sell a record $853 mln at its latest contemporary art sale in New York. Sotheby’s traded a less spectacular $344 mln a day earlier. London, though, is far behind in the sizzling sector. European regulations are partly to blame.
Ultra-dovish Carney still looks too bullish 12 Nov 2014 The Bank of England could hardly be less keen to raise rates. But the forecast by Governor Mark Carney that it will take three years for inflation to rise to the 2 percent target is based on implausibly fast growth. The timeframe for tighter money will keep being pushed back.
FX fines are wake-up call on self-policing 12 Nov 2014 The $3.4 bln settlement for five banks works out on average at 20 pct higher than Libor – because the firms failed to mend their ways. Regulators are seeking yet tougher internal controls. Banks have a last chance to show they can treat clients fairly.
Sainsbury ends UK retail denial on property 12 Nov 2014 The UK grocer is taking a 628 mln stg charge on some stores and projects. That’s tiny on an estate worth 12 bln stg. But it recognises reality: eking profit from old-style shops is getting harder. Bigger steps may be taken on property values across the sector, notably at Tesco.
How to benchmark banks’ FX fines 11 Nov 2014 The banking industry is poised for a broad settlement for rigging currency markets. Prosecutors want to be harsh but fair, while banks want to put their problems behind them. The balance will be set with an eye on the $560 mln bank average for Libor-fixing, excluding DoJ fines.
Vodafone reinvention gathers pace 11 Nov 2014 Strong results lifted shares in the $87 bln mobile operator. Rocketing data demand, up 80 pct on last year, endorses a $30 bln stg splurge on networks. With the fall in like-for-like sales moderating to 1.5 pct, a return to top-line growth looks in sight.
Debt market sends muddied signal on deflation risk 10 Nov 2014 Bonds with longer maturities usually compensate investors for a host of uncertainties, including unexpected inflation. But this term premium has shrunk, even turning negative for U.S. and German debt. This has as much to do with loose global monetary policy as with “lowflation.”
Qatari bid highlights Canary Wharf’s potential 7 Nov 2014 Songbird, the majority owner of Canary Wharf Group, has rebuffed a 2.2 bln stg approach from the emirate’s sovereign fund. Eventual success or failure hinges on a few big shareholders. Either way, the interest reflects the east London financial district’s bright prospects.
Cable M&A wave washes over the Caribbean 6 Nov 2014 Cable & Wireless Communications is buying Barbados-based Columbus Intl for $3 bln with debt. As with many European cable deals, the high price must be offset with cost savings and growth. CWC shares dived. That’s not all down to a big share placing in a smallish stock.
Immigration economics looks in wrong direction 6 Nov 2014 A new study finds recent UK immigrants have helped government finances. The answer is clearly right, but the question may be wrong. No fiscal snapshot can give a clear picture of the future economic effect of a doubling of the immigrant share in the workforce in just 15 years.
Marks & Spencer fashions a handsome step forward 5 Nov 2014 Marks is sparking at last. News that the UK retailer is making more profit per pound of revenue pushed shares up smartly. But delivering sustained sales growth will be tricky. The challenge is hardest in clothes given M&S’s fusty image and intense competition on the high street.
Virgin Galactic business model could still work 4 Nov 2014 After Friday’s fatal crash, Virgin will need to make new investments in its space programme. The start date for paid flights has been deferred. But if the safety issues can be overcome, the project might yet stack up commercially.
Emerging bidders still hungry for Western food 3 Nov 2014 Yildiz, a group backed by Turkey’s richest man, is buying Britain’s United Biscuits for a reported 2 bln pounds. It’s a striking instance of an emerging markets buyer bulking up in the West. Sellers Blackstone and PAI will be relieved to have cleared UB out of their cupboard.
HSBC illustrates the burden of being a global bank 3 Nov 2014 New fines and rising compliance costs weighed on the lender’s third-quarter earnings, offsetting the gain from higher revenue and lower bad debts. HSBC reckons that the benefits of scale outweigh the costs. It’s an argument that other banks will find harder to make.
Hugo Dixon: Cameron mustn’t say “quotas” 3 Nov 2014 The UK prime minister is agonising over whether to impose quotas on EU immigrants. But it wouldn’t be possible to do this without quitting the 28-country bloc. Allies at home and abroad should put pressure on Cameron not to make such a move. They need to act fast.
BoE leverage rule is complex, kind and incomplete 31 Oct 2014 UK bank shares rallied after the regulator published requirements for equity-to-assets of up to 4.95 pct, but not until 2019. The BoE’s move to peg gross leverage to risk-weighted thresholds should prevent arbitrage, but fails the simplicity test. It is also a work in progress.
New Shell chairman has a tough job on his hands 30 Oct 2014 Charles Holliday arrives at the Anglo-Dutch major as oil prices slump towards $85 a barrel. After a dismal 2013, Shell is making good progress. But while Holliday has sound experience at DuPont and Bank of America, he will need to learn the tricks of his new trade quickly.
Shell pipeline IPO blowout heralds more shrinkage 30 Oct 2014 The $230 bln oil giant’s tax-advantaged U.S. pipeline spinoff popped 46 pct on its debut on Wednesday. With an enterprise value of $4.6 bln, it trades on eight times the valuation ratio its parent gets. That kind of uplift makes it a no-brainer for Shell to offload more assets.
Barclays rebirth hinges on leverage ratio clarity 30 Oct 2014 The UK lender has beaten consensus despite enduring a ropey quarter for the investment bank and taking a 500 mln stg provision for forex issues. But it needs regulators not to fast-track leverage targets, as happened last year. Good news will make its revamp look more secure.