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.
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.
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.
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.
BP finally gains leverage in Russian divorce 24 Jul 2012 The UK major’s estranged oligarch partners in TNK-BP have thwarted its ambitions in Russia. But BP now says Rosneft could buy its 50 pct stake. That would upset the other owners, who would lose influence. After months of stumbles, BP at last has a chance to regain the initiative.
Man Group’s new resolve is welcome 24 Jul 2012 Market weakness and own goals have hurt the listed hedge-fund manager. Long-suffering shareholders should greet $100 mln of new cost cuts as evidence that Man really is dealing with its problems. But the future remains murky - hence the huge spread in earnings forecasts.
Normalised Barclays could offer substantial upside 24 Jul 2012 The British bank’s leaders have been ousted and its reputation among regulators, politicians and customers, is ragged. Getting back on an even keel will be a struggle. But with the shares trading at a 38 percent discount to its global rivals, there’s scope for some striking gains.
BarCap shrinkage can’t wait for new CEO 23 Jul 2012 The strategic commitment to investment banking ultimately will be a matter for new management at rudderless Barclays. But the residual top brass is already implementing a plan to identify parts of BarCap that may need paring. It could be just the start of bigger cuts to come.
UK better on diagnosis than cure for equity myopia 23 Jul 2012 Economist John Kay is with the zeitgeist in lambasting short-termism in UK stock markets. But his government-sponsored report on the problem advocates smallish changes to effect a major cultural shift. Without a big idea, keeping up the pressure for reform could prove tricky.
Don’t rule out a future SGX bid for LSE 23 Jul 2012 Singapore’s bourse denies holding deal talks with the London Stock Exchange. That’s no surprise: most recent stock-exchange M&A has failed, and the LSE is mid-way through an important move into clearing. Still, an eventual $5.7 bln offer could make financial and strategic sense.
Lloyds settles for cut-price branches sale 19 Jul 2012 The UK lender will sell 632 branches to Britain’s biggest mutual for about 750 mln stg. That’s about half the original asking price, and less than half the sum comes upfront. But the tag reflects depressed values for listed banks. And at least this is off Lloyds’ to-do list.
Money-laundering probe puts HSBC in penalty box 17 Jul 2012 U.S. Senate revelations of the bank’s “pervasively polluted” approach to handling suspect cash have tarnished its status as a crisis survivor. Beefing up compliance is a smart response. But with a criminal investigation and big fine looming, HSBC can’t afford any more mistakes.
City of London watchdogs roughed up over Libor 17 Jul 2012 The Bank of England governor and the FSA chairman each took a blow in the latest parliamentary hearings into the rate-fixing scandal. But MPs still failed to ask a key question. The central bank’s Court may need to take over the role of inquisitor.
Libor jailbirds would be hollow symbols 16 Jul 2012 Rate-rigging sentences might assuage public lust for Wall Street scalps. But U.S. prosecutors have missed big on financial-crisis villains. Al Capone was nailed for tax evasion. Libor convictions would also miss the point - and might only get real banksters’ distant cousins.
Hugo Dixon: Who will watch the Bank of England? 16 Jul 2012 The central bank’s current governor is already the most powerful unelected person in Britain. Witness the way he dispatched Barclays’ CEO. His successor will have even greater powers. It’s vital for democracy that this authority is exercised effectively, transparently and fairly.
New broom wouldn’t be quick fix for G4S 16 Jul 2012 The outsourcer’s chairman admits the CEO may have to go following the Olympics security fiasco. But the affair may expose deeper flaws in its model, and could prompt the UK to withhold new business. With a rescue bid unlikely, repairing the value destroyed will be a slog.
Cove game could end with a knockout 16 Jul 2012 The five-month battle for Mozambique gas explorer Cove Energy is coming to a head. Big new finds have increased the stakes in the bidding war between Shell and Thailand’s PTT. PTT’s May offer of $1.9 billion is the highest on the table. But the UK major can almost certainly top it.
Scottish soccer’s own goal sets example for banks 13 Jul 2012 Glasgow’s Rangers soccer club wasn’t too big to fail - the Scottish Premier League ejected it for reckless financial behaviour. The authorities must now choose how far down to relegate the side. Like financial regulators, they should fight hard against moral hazard.
Dentsu bet on UK ad men is mad dash for survival 13 Jul 2012 That explains why investors only lightly punished Japan’s ad giant for overpaying to buy Aegis. With Dentsu’s home market shrinking and a chance to earn 5 pct on its cash abroad the deal may not look so terrible - but only if Dentsu can keep its new Don Drapers from jumping ship.