Fixed income trading goes from bad to worse 19 Dec 2013 Revenue from rates, credit, currencies and commodities was down 18 pct in 2013. The effects of scandals, new rules and central bank policy could lop off at least as much again in the next 12 months. Recent changes at investment banks mean some will suffer more than others.
Sochi showcases sub-zero Russian investment appeal 19 Dec 2013 The most expensive Olympics in the games’ history will be a window for Russia’s corruption and economic degradation. Investors will be reminded that Vladimir Putin is not a man to do business with.
Translation tech will put a new accent on growth 19 Dec 2013 The mythical “universal speech translator” is close to being realised. Even if a truly perfect device remains years away, anything that erodes language barriers could boost global trade, tourism and investment. One day, watch out for wearable devices that also read body language.
Can General Electric keep the activists at bay? 18 Dec 2013 If the gates at Apple, Microsoft and P&G can be rattled, complacency just isn’t an option for a $270 bln conglomerate. While GE’s strategy looks more coherent than ever, it still has soft targets for uppity investors: its finance arm and long-standing leader Jeff Immelt.
Meet China’s private corporate giants in waiting 18 Dec 2013 Squaring off with state-owned companies and national champions demands grit and efficiency. Xiaomi, Spring Airlines and Great Wall Motor are three whose labours may be starting to pay off. Strong products, helpful reforms and fearsome ambition make them worth watching in 2014.
Globalisation’s demise is greatly exaggerated 17 Dec 2013 Sceptics warn an iron law of economics has been broken. A long-standing link between global GDP growth and world trade appears to have weakened since the 2008 crisis. But a closer look shows the recession that followed can explain most of the trade slowdown.
Business investment is miscast as panacea 17 Dec 2013 Will companies invest more in the coming year? Equity bulls are relying on hikes in capital expenditure to boost shares while policymakers are hoping it will help growth, employment and productivity. Capex could well pick up yet still manage to disappoint.
Shale energy deficit will hit Europe hard 17 Dec 2013 American companies have a big advantage over European counterparts: abundant, cheap gas. Fracking is more difficult in Europe and requires a step-change in public perception. Cheaper energy could provide the old continent with the fillip it needs. But it’s a pipedream.
China web giants take the fight offline in 2014 17 Dec 2013 Chinese tech firms are leaving their comfort zones to win consumers. TV shows, logistics and electronics are all part of the arsenal for companies like Tencent, Baidu and Alibaba. These forays are as disruptive as they are risky, particularly for the sector’s high margins.
U.S. and China will set global growth pace in 2014 16 Dec 2013 America produces a quarter of world GDP, China less than a tenth. But between them they will generate almost half the growth in global output next year. With Europe in the doldrums, Japan recovering and emerging markets subdued, the planet heavily depends on its twin engines.
Animal health carve-ups to come two by two 13 Dec 2013 The business is pharma’s secret cash cow: R&D costs are lower, scrutiny’s gentler and growth faster than human care. Shareholder pressure is forcing firms from Novartis to Merck to explore sales, JVs or IPOs. The risk of seller’s remorse means buyers may have to pay top dollar.
Quality, not capacity, is key for European IPOs 10 Dec 2013 Europe’s new issues market is healthy for the first time in years. Investors have spare cash, the economic gloom is lifting and recent deals have traded up. That bodes well. But quality control is becoming paramount. A few shoddy or over-priced debuts could change everything.
Fading reform hopes take gun shares with them 10 Dec 2013 As the chances of new firearms legislation dissipate a year after the Sandy Hook school shooting, so too should the anxieties that propelled gun sales and the stocks of Smith & Wesson and Sturm, Ruger. Short sellers already have their sights set on a downturn.
Narendra Modi could be India’s Shinzo Abe 10 Dec 2013 The opposition politician is the favourite to become prime minister in next year’s polls. His victory would give Indian assets a big boost and signal revived growth, just like it did for his Japanese counterpart. Structural reforms, though, will remain difficult for both leaders.
Detroit case revs up bankruptcy option for others 3 Dec 2013 Court approval of Motown’s filing may force bondholders, insurers and pensioners to share restructuring pain. The ruling also confirms bankruptcy as a credible choice for even the biggest cities. That could give shaky municipalities a needed kick to get their finances in order.
Equity optimists may fast create a crowded trade 20 Nov 2013 Many large fund managers expect developed stock markets to rise next year. They reckon that companies will ramp up capital expenditure while fiscal policies become less restrictive. The reasoning may be sound. The risk is that there’s too much money chasing the same idea.
Vienna offers sovereign wealth fund deal of year 18 Nov 2013 The Viennese repelled the Ottomans in 1683. Now Middle Eastern money is needed to shore up the Austrian capital’s banking jewel. After expanding in former Ottoman lands, Raiffeisen needs capital to retain its empire. A deal would represent more than historical irony, though.
The "Abe put" will keep Japanese equities buoyed 18 Nov 2013 Foreign investors have shown most early enthusiasm for the prime minister’s economic programme. But pension reforms and tax breaks for individuals promise more cash inflows. If momentum stalls, the central bank could step in. It all points to a continued boost for Japanese stocks.
Rehab needed for U.S. 30-year mortgage habit 11 Nov 2013 America’s standard home loan format only really works well with stable interest rates. Floating-rate mortgages make more sense, especially when rates shoot up. But neither borrowers nor regulators seem fond of them. These obstacles risk a shock to the recovering housing market.
Asia’s inflation challenge – not enough of it 11 Nov 2013 Credit-fuelled domestic demand is not pushing up prices. Exports are weak, so producers are dumping surpluses locally at low prices. Also, rising Asian currencies have made imports cheaper. Tepid inflation increases the real cost of debt, which may slow investment.