Teaming up with Merkel foes weakens Cameron’s hand 13 Jun 2014 The Tories will join forces in the European Parliament with Germany’s anti-euro party - Angela Merkel’s domestic foe. David Cameron’s hopes that Berlin could be an ally in his drive to reshape the EU to his liking already looked a bit delusional. They now lie in tatters.
Forex is weakest link in UK market abuse crackdown 12 Jun 2014 Chancellor George Osborne is attacking manipulation of currencies, interest rates, and other assets. Wrongdoers face jail. The moves are sensible and other EU countries plan something similar. But there’s a big problem: still no global rules to tell FX traders what is acceptable.
Racy debt makes the AA’s IPO a high-octane bet 12 Jun 2014 The British roadside recovery firm is floating at an enterprise value of 4.3 bln stg. Buyers could get a bargain, but they need to be comfortable with life in the fast lane. Private equity sellers have left the AA towing abnormally large debt.
UK wage puzzle suits BoE doves’ agenda 11 Jun 2014 No one fully understands why falling UK joblessness isn’t leading to faster pay increases. Open EU borders and delayed retirements might be an explanation. Either way, glacial wage inflation gives the Bank of England an excuse to keep rates low for longer than the market expects.
A London roadmap for regulating $18 bln Uber 10 Jun 2014 Cabbies are to protest in the UK capital. The online cab firm’s fresh valuation shows how much may be at stake. But Uber’s lower fares are welcome, and black cabs have other privileges. London has a chance to balance Uber’s consumer benefits and its disruptive impact.
UK spoils Europe’s $29 bln IPO boom 9 Jun 2014 Is buying new issues worth it? Across Europe, yes. This year’s top IPOs have returned an index-beating 14 pct. But while London has raised the most cash, its flotation frenzy has dented the overall performance of the region’s new share sales. No wonder investors have grown picky.
Hugo Dixon: Six solutions for the UK housing crisis 9 Jun 2014 Britain’s main economic problem is that the supply of homes isn’t rising nearly as fast as demand. The main solution isn’t to build new homes on greenfield sites. Rather, it is to use existing housing stock much more effectively and build new houses in cities, especially London.
Reality yet to cut into ASOS valuation 5 Jun 2014 A profit warning lopped nearly a third off shares in the UK online fashion retailer. ASOS’s higher-margin foreign sales have been hit by a strong pound. But the revision implies a similar fall in profit. So ASOS’s shares are still tottering on an uncomfortably high multiple.
Tesco CEO must win price war to survive 4 Jun 2014 A conscious effort to gain market share with lower prices partly explains poor first-quarter revenue at Tesco, the UK-based supermarket. There is some evidence the strategy is working. Still, CEO Phil Clarke has a great deal to do and little time to prove himself.
UK housing bounce obscures a credit-lite recovery 3 Jun 2014 Fears of a finance-driven binge are misplaced. Mortgage lending is low and the government’s foolish Help to Buy scheme is small. Lending to corporates is falling. The UK has little credit, arguably too much foreign capital, and weak exports. Sustainability is in question.
IHG is a one-star candidate for M&A activism 3 Jun 2014 Bill Ackman protégé Mick McGuire is targeting the $10 bln hotels group. He wants IHG to sell to a bigger rival. Consolidation makes sense. But IHG is expensive, suitors like Starwood aren’t keen, and the group has fewer weaknesses than the typical activist target.
UK’s duff credit easing is still a model for ECB 30 May 2014 The Bank of England’s Funding for Lending scheme isn’t boosting bank credit. A rumoured ECB version will likewise fail to spur a massive wave of lending if demand is weak. But a round of credit easing that cuts elevated peripheral bank funding costs would still be worth a try.
FCA’s Hannam win makes dealmaking that bit harder 29 May 2014 Former JPMorgan rainmaker Ian Hannam comprehensively failed to overturn a finding he committed “market abuse.” This vindicates the UK watchdog’s zero-tolerance stance. Handling inside information is already risky and complex. This ruling makes things a little bit trickier.
The morning after Scotland votes for independence 29 May 2014 Most analysts have assumed Scots vote No in September’s referendum, but Yes-voters are gaining ground. If they prevail, critical questions that are currently completely up in the air will need to be answered rapidly. The most pressing one will be: who bails out Scottish banks?
Smith & Nephew returns to M&A spotlight 28 May 2014 The British medtech firm’s shares jumped on a report of bid interest from Stryker. The U.S. rival ruled out bidding for six months. But the market looks keen on a takeover of S&N, the subject of perennial bid talk. There could be synergies, scale and tax benefits.
Scottish independence is loser in data fight 28 May 2014 Campaigners for an independent Scotland project a separate country would be better off. The no campaign disagrees. No surprises there. The case from London is stronger, but the economics aren’t clear-cut enough to make a no vote on Sept. 18 a no-brainer.
Glaxo wrestles with its past 28 May 2014 A UK Serious Fraud Office investigation into the pharma group has knocked almost $2 bln off its market value. Fines in China are well flagged, but the scale of SFO’s concern is unclear, as is the cost of staying ethical in future. Investors are still betting on a benign outcome.
P2P looks more enticing than Lloyds’ TSB 27 May 2014 Hedge fund Marshall Wace is offering immediate returns of up to 15 pct for investors in its new peer-to-peer lending vehicle. Lloyds’ soon-to-be listed TSB retail bank offers single-digit returns now and no dividends until 2018. To secure interest, a hefty discount is warranted.
Failed bid would leave Astra under pressure 26 May 2014 Pfizer looks foolish for the way it handled a $119 bln offer for the UK drugmaker. But its shares have barely suffered. Astra remains independent and yet it is now under more scrutiny. Some of its shareholders welcomed a possible takeover - and could again.
Barclays sets gold standard in bad culture – again 23 May 2014 The UK bank has been fined 26 mln stg for rigging gold reference prices. One of its traders legged over a client with a false sell order just a day after the bank’s Libor settlement. Barclays may be trying to change, but incidents like this show how far it has to go.