NYSE-Deutsche Boerse shares spoils unevenly 10 Feb 2011 NYSE shareholders will own only 40 pct of a combined NYSEDeutsche Boerse tieup, and their man gets to be the boss. They also get a premium. The Germans may not be getting the biggest slug of the synergies, but with $3 bln of value creation, at least there's lots to go round.
Brazil can ill afford to join U.S. China-bashing 9 Feb 2011 Washington wants Brazil to join the call for China to strengthen the yuan. Yet the Latam economy's problems, including its strong currency, are not China's fault. There is little to gain from taking on its largest customer and investor. If anything, Brazil should blame the U.S.
Desperate bribes deepen Egypt’s financial mess 8 Feb 2011 The 15 pct hike in publicsector pay buys the support of a small section of the population and further pushes up the deficit. It also comes on top of costly pledges to tackle high food prices. With financing costs rising, it's another big strain on the public purse.
China tightens too little and rather late 8 Feb 2011 The second rate hike in six weeks is a move in the right direction, but does little to address the causes of China's overheated economy. It won't bind loanhappy banks, tame rebounding exports, or encourage savers to hoard cash. These tiny moves serve only as a gesture of intent.
How should the euro zone boost competitiveness? 7 Feb 2011 A FrancoGerman initiative looks like it contains some good points notably on pension reform even though it was too rigid for most other countries meeting at Friday's summit. But other ideas need to be injected too, especially more competition.
Why Geithner is right to go easy on China 7 Feb 2011 The U.S. Treasury Secretary didn't call China a currency manipulator in his new report to Congress. Doing so might have hurt trade, and added an antiAmerican edge to China's upcoming leadership change. Better to sit tight: China has reason enough to let the yuan strengthen.
Neglected twilight bonds flicker with value 4 Feb 2011 Corporate bonds lurking in the twilight zone around the investment grade/junk threshold are often shunned, typically because pension fund mandates are too much like straitjackets. Demand weakness should create pricing anomalies and a potential arbitrage.
Tightening needed in unstable, but growing, world 4 Feb 2011 Oil and commodity prices risk spiking. The primary cause is global growth, with political unrest another upward influence. Data shows the U.S. economy is warming up. Stagflationary fears are off the mark: the global economy is awash with money, and rates need to shift up soon.
Zapatero should hang onto reformist zeal 4 Feb 2011 The Spanish prime minister has made important strides in the past few weeks in pushing through economic reforms, including pensions. This may soothe markets' fears for now. But Spain still needs to tackle the major problems of slow growth and a 20 pct unemployment rate.
If the UK needs a boost, taxes should be cut 3 Feb 2011 How bad must it get for the UK to change tack on the economy? Only if there are three quarters of negative GDP and if unemployment pushes 9.5 percent. But if if new stimulus does become unavoidable, it would be better to cut taxes than abandon cuts to public spending.
Spain’s big banks may be over the worst – for now 3 Feb 2011 BBVA and Santander were pummelled by falling margins at home in 2010. The deposit war is easing, bad loans are stabilising, and overseas operations remain strong. But the banks are still held to ransom by Spain's sovereign crisis, which has eased, but isn't over yet.
France hopes debt brake will help it skirt crisis 3 Feb 2011 The French government wants to change the constitution to restrict budget deficits. Emulating Germany should help persuade other EU countries to follow suit. But the main aim is to convince markets that France, now one the most profligate euro zone members, is on the right track.
Egypt’s financial system faces a moment of truth 3 Feb 2011 The country's banks and stock exchange are preparing to reopen after being closed for a week. The government and the banks have the resources to withstand a shortterm panic. But capital flight and a sustained bank run could turn Egypt's political crisis into an economic one.
Moscow bourse merger is needed but not sufficient 2 Feb 2011 The tieup of Russia's MICEX and RTS exchanges is driven by the Kremlin's dream of turning Moscow into a global financial centre. Although the deal should deliver significant benefits, the government's broader ambitions need help more from better laws and a local investor base.
Egypt stocks will struggle regardless of outcome 1 Feb 2011 Whatever the political result, it is hard to see Egyptian shares bouncing back to levels seen before the protests. Simply to undo the damage, the country will have to prove it is a better place to invest than it was before. Turkey might be the most encouraging model.
Asia should prepare for life after cheap money 1 Feb 2011 Exportdriven economies have long benefited from and helped to create hot money inflows. But as the world rebalances, rates should rise, and finance is likely to get more expensive. Asia urgently needs capital markets that can finance development in an era of costlier funds.
Middle East contagion raises geopolitical risks 1 Feb 2011 There is an upside scenario if the Arab world can transition to democracy. But with unrest closing in on Saudi Arabia and Israel maybe losing its few friends in the region, there is also danger. So long as it's uncertain how things will end up, global markets will be volatile.
30-year loans could be euro crisis game-changer 31 Jan 2011 Very longterm loans for Greece and Ireland could significantly ease pressure on Europe's indebted countries, particularly if combined with lower interest rates. This is still only an idea but it is significant that it is being pushed by Axel Weber, the Bundesbank boss.
Europe needs more than a big fat Greek debt rejig 31 Jan 2011 Europe seems ready at last to tackle excessive Greek and Irish debt. But the crisis isn't over. Buybacks, and an extension of loan maturity, will lighten the burden although Greece may need more relief. The Portuguese case also needs to be tackled swiftly.
Economy will test future Egyptian government 28 Jan 2011 A change of the political guard won't trigger a major financial crisis if the country can quickly establish a new government. But the exodus of foreign funds should remind Egypt's leaders new or old that only economic reforms will help them retain investors' confidence.