UK retail fails to weather the patently obvious 30 Sep 2014 Clothes shop Next says Britain has had an unseasonably warm September. Who knew? Shares across the sector took fright at the ramifications for earnings. Investors may be venting other fears, maybe of a price war. Still, the reaction reveals a bizarrely inefficient market.
Repel Bramson’s Electra boarding party 30 Sep 2014 The New York raider wants seats on the board of the London-listed private equity trust. He also reckons he can double Electra’s value. But if Edward Bramson really can whistle up an extra 1 bln stg, he can afford to pay a premium for full control.
Vindication is bitter for Royal Mail privatisation 29 Sep 2014 The froth is off. Forget the 87 pct pop: a year after its frenzied IPO, shares in the UK postal service hover 20 pct above its float price. That feels about right. The snag for the state and its bankers is that it will be fiendishly difficult to shift the unsold stake.
Hugo Dixon: UK faces unpalatable election choice 29 Sep 2014 The Labour opposition has a somewhat anti-business agenda, while the Conservatives want to hold a referendum on Britain’s EU membership. Next May’s election contest isn’t quite a choice between the devil and the deep blue sea, but it’s not a good one.
Sainsbury should heed market message on dividend 26 Sep 2014 The UK grocer’s shares are down 27 pct since May and yield over 6 pct. The group faces the same competitive threats as dividend-slashing Tesco. A small drop in sales, coupled with margin compression, would make Sainsbury’s payout unsustainable. Management has cover to make a cut.
Power to borrow is vital for proper UK devolution 26 Sep 2014 Prime Minister David Cameron plans to devolve more tax and spending to Scotland after it voted to stay in the United Kingdom. For the process to be really meaningful, though, the Scots must be free to issue debt. That’s risky, but there are ways to limit the dangers.
Financial fall raises Gherkin’s symbolic status 25 Sep 2014 Receivers are shopping London’s pickle-shaped edifice for $1 bln. Bankruptcy can’t undo its effect on the skyline. Now, though, the glass-sided Gherkin also will reflect back to City bankers and traders an ill-advised currency hedge, a lasting monument to the dangers of avarice.
Guest view: EU must hold firm on opening markets 25 Sep 2014 European legislation to free up the derivatives trading and clearing industry may face stiff resistance. Policymakers need to be resolute if they want to deliver a truly open market in financial services, say the CEOs of the London Stock Exchange and clearing house LCH.Clearnet.
Tesco needs to lighten the debt load 24 Sep 2014 Britain’s biggest retailer is overrun with strategic and operational problems. And it must keep investing despite a weak balance sheet. A rights issue is impossible for now due to a lack of trust in the numbers. That leaves holding the dividend down and making disposals.
Tax clampdown could deter half-baked pharma M&A 23 Sep 2014 The U.S. attack on companies relocating to avoid taxes will calm pharma’s M&A binge. Deals like AbbVie’s purchase of Shire may survive on strategic logic. Pure tax-driven combinations, like Mylan/Abbott, look tricky. That lessens AstraZeneca’s vulnerability to a bid from Pfizer.
UK torn between populism and fiscal reality 23 Sep 2014 The Scottish referendum has stirred discontent around the UK. With an election months away, the pressure is on politicians to make populist gestures. Yet the UK’s large fiscal deficit shows the need for serious reform. The risk now is of unaffordable promises.
Tesco takeover looks less and less crazy 22 Sep 2014 Shares tumbled after Tesco admitted overstating first-half guidance. The idea of a merger, buyout or breakup of Britain’s top retailer was until recently unthinkable. It still looks unlikely. But Tesco’s shrunken market cap of $27 bln should have suitors running the numbers.
Tesco chairman approaches his sell-by date 22 Sep 2014 The UK retailer’s warning that guidance was overstated by 250 mln stg reflects a serious controls failing. Chair Richard Broadbent recently delivered a new CEO, but has been slow to fix the board. His own lack of retail experience is starting to look like a drawback.
Hugo Dixon: Now on to the Brexit referendum 22 Sep 2014 With the Scots voting to stay part of the UK, attention will turn to the next potential referendum: on whether Britain will remain in the EU. There are comparisons and contrasts between the two votes, as well as lessons to be learned.
GSK graft case raises risk for executives in China 19 Sep 2014 The drugmaker is paying a 297 mln stg fine for bribing non-government officials in China. That sets a floor for penalties in future probes. But the suspended sentences for five executives also send a warning that pain in such cases falls on individuals just as much as companies.
Federal UK is easier to promise than to deliver 19 Sep 2014 After the Scottish rejection of independence, the UK prime minister pledged a speedy devolution of more powers. Giving regions greater control of taxes and spending sounds sensible. But the politics and practicalities of knotty issues like devolving borrowing powers will be daunting.
Scots’ no to independence still leaves UK in limbo 19 Sep 2014 The roughly 55:45 vote against secession in a landmark referendum reduces many risks: financial instability, a UK exit from Europe and a sharp fall in trade. But the bribe to No-voters of more devolved powers creates other dangers – including a weakening of the union.
EasyJet’s divi policy imposes useful constraint 18 Sep 2014 The budget airline has said it will now distribute 40 percent of earnings, up from one-third. That’s brave given aviation’s inherent cyclicality and the need to spend on aircraft. Still, it’s a welcome step. Management has credibility and the move will enforce discipline.
Scottish Yes vote would test BoE reticence 18 Sep 2014 Big Scottish banks have already moved to calm depositors by outlining plans to redomicile if Scotland chooses independence. But the BoE’s ability to ease market jitters after a Yes vote will be constrained, as it would risk being seen to prejudice UK divorce proceedings.
Edward Hadas: The economic lessons from Scotland 17 Sep 2014 However the independence referendum turns out, the arguments from both sides reveal some hard truths. Governments are at the centre of modern economies. But their freedom is limited, since no nation is an island. And the toughest challenge is managing the financial system.