Penalty box hastens Deutsche’s Wall Street retreat 31 May 2018 Being branded “troubled” by the Federal Reserve, as the WSJ reported, is hardly the first stateside warning for the German lender. New CEO Christian Sewing already plans to slim the American business. Worried U.S. supervisors will give him a greater sense of urgency.
Gas move gives PetroChina first of several breaks 31 May 2018 China will cut some implicit subsidies for the fuel. The main winner is the $210 bln state-run giant, which as the country’s top supplier will lose less on imports. More freedom is likely to follow - benefiting investors while stoking spending in infrastructure and production.
Volcker tweak reveals Powell Fed’s cautious streak 30 May 2018 Banks hoping for an overhaul of the prop-trading ban will be disappointed by the U.S. central bank’s modest revisions. Compliance costs may fall but Jerome Powell’s team doesn’t want Wall Street to go back to its freewheeling ways. It rightly retains distaste for big risk-taking.
Vedanta’s tin ear is a problem for shareholders 30 May 2018 After deadly protests forced the closure of a plant, Chairman Anil Agarwal is blaming a foreign conspiracy. That is no way to reassure rattled investors in the Indian miner, especially given Vedanta’s controversial history. At least a new incoming CEO can set a better tone.
BT network sale has too many parties to please 29 May 2018 Infrastructure groups may be eyeing the British telco’s broadband arm. BT would need to extract a high valuation and retain control to avoid spooking pension trustees. Any buyer planning to load the business up with debt risks angering politicians eager for more investment.
China’s flabby stock market set for a workout 29 May 2018 MSCI index inclusion will inject a few billion dollars into mainland shares from June. While some money will simply track the benchmark, active investors will arrive too. That should mean that prices more closely reflect fundamentals, and bosses feel more pressure to shape up.
Nestlé would benefit from a sugar detox 28 May 2018 The Swiss food group’s CEO wants to spruce up a tired portfolio by buying and selling brands worth 10 percent of group sales, or about $9 bln. The recent Starbucks licensing deal gets him around halfway there. Offloading low-margin confectionery brands is the next logical step.
China would be wise to limit cornerstone investors 28 May 2018 Tech stars such as Alibaba could pre-sell shares to underpin listings at home, and Foxconn just did something similar for a Shanghai IPO. The practice may prevent wild stock swings, but also distorts markets. Relying too much on such backers, as Hong Kong did, would be a mistake.
U.S.-China spat poses serious hazard for WTO 25 May 2018 The two countries are sparring at the Geneva-based organisation about how the WTO should handle Beijing’s brand of state capitalism. A U.S. threat to veto the appointment of judges could paralyse the trading body’s dispute resolution mechanism – and hold the outfit to ransom.
EMI deal calls out to 1MDB bounty hunters 24 May 2018 Sony is taking control of EMI Music Publishing. The sale could mean a $420 mln payout to financier Jho Low. U.S. prosecutors allege he used funds stolen from Malaysian fund 1MDB to make the purchase. That’s a temptingly huge sum for authorities in both countries to pursue.
Canada adds to global muddle with Chinese M&A veto 24 May 2018 Ottawa blocked the $1.2 bln sale of construction company Aecon to a Beijing-backed rival on national security grounds. The controversial decision could confound trade talks between the two countries. Increasingly, mergers are getting mixed up in the wider geopolitical realm.
Rollback of Dodd-Frank won’t roll back time 23 May 2018 The first notable revision to post-crisis U.S. financial regulation is more symbol than substance. Minor tweaks aside, large banks will barely notice. Next in the crosshairs is the Volcker Rule, but even so, market changes mean the good old days aren’t coming back any time soon.
Shell investors take a narrow view of climate risk 22 May 2018 The oil major easily fought off an attempt by shareholders to turn carbon-reduction ambitions into hard targets. That prevents it being hamstrung compared with rivals. But even the relatively enlightened Shell assumes oil demand forecasts that are vulnerable to political shifts.
French telco M&A requires more than regulatory nod 22 May 2018 The sector’s supervisor has had a change of heart and is now open to dealmaking. Price wars and investments have bled operators dry. The weakest, Altice and Iliad, are the likeliest targets. But the former is too laden with debt and the latter may be cheaper in a year’s time.
UK’s tough-guy act on Russia can only go so far 21 May 2018 Britain’s delay over the renewal of Roman Abramovich’s visa comes against the backdrop of a wider clampdown on Russian oligarchs. Its sanctions on Moscow, however, contain holes. Closing them requires EU support and a readiness for the City to lose out in the crossfire.
Breakdown: EU gains new powers for Big Tech fight 21 May 2018 Europe’s new privacy rule, the GDPR, prohibits covert data gathering and allows users to have information moved or deleted. The likes of Google and Facebook may initially find it easier to comply than smaller companies. But over time they’ll face a hostile EU with new weapons.
EU’s Iran sanctions riposte is late and lame 18 May 2018 The bloc took 10 days to come up with a plan that will give its companies cover if they defy U.S. restrictions. That’s unlikely to stop businesses pulling out of the Islamic Republic. The dollar’s dominance in the financial system limits Europe’s ability to offer real protection.
Wells Fargo’s new cloud has bigger silver lining 17 May 2018 Some employees at its business-banking unit altered client documents. It’s another cultural black mark on the scandal-plagued $262 bln lender. But its handling of the incident suggests CEO Tim Sloan’s overhaul of risk management and procedures is starting to make a difference.
China’s airlines are set for a long-haul price war 17 May 2018 Beijing is freeing local carriers to raise fees at home and fight for share on international routes. State ownership endures, however, as do distorting airspace restrictions. A painful battle over fares is in the offing, and will come at foreign rivals' expense.
Caps not breakups are best cure for Big Four woes 16 May 2018 UK lawmakers suggested forcing auditors to hive off their consulting units. That might prevent conflicts but could make the companies less profitable and competitive. Imposing limits on auditors’ market share is a better way to make the sector more efficient and avoid blowups.