Fiat-Chrysler can steer past bump in the road 7 Aug 2014 Fiat’s falling share price complicates its Chrysler merger. CEO Sergio Marchionne’s grand plan to unify the Italian carmaker and its American subsidiary will survive, but Fiat-Chrysler’s U.S. float may be delayed. The Fiat drop also presents a trading opportunity for the brave.
VW fights symptoms not root of profit woes 31 Jul 2014 Volkswagen is embarking on a 5 bln euro efficiency scheme. Tackling bloated costs and poor margins at the core brand is long overdue. But the group is shying away from addressing the real causes of the malaise. It is too complex, overly centralised, and badly governed.
Renault is showing a healthy turn of speed 29 Jul 2014 Demand is weakening in developing countries and there are some cashflow concerns. But the French car manufacturer is adding market share in Europe, its cost control is relentless, and profit margins are rising. Renault is well placed to move up through the global field of automakers.
VW tilt at Fiat would be a bad idea 17 Jul 2014 Shares in Fiat are climbing on a German media report of a possible bid from Volkswagen for all or part of the $13 bln Italian carmaker. VW has enough on its plate. It’s hard to see the benefit of adopting Fiat’s problems. The logic of Fiat selling its Chrysler unit is weak too.
China’s subway splurge only half on right track 26 Jun 2014 Building more tube lines is a good idea. Asking international investors to fund them is not. Beijing’s $190 mln subway bond may be an exception. But given the positive externalities, urban transport is one thing China needn’t be coy about funding from the public purse.
China may get less than it bargains for from UK 18 Jun 2014 Britain’s $23.5 bln package of Chinese trade and investment comes with unspoken terms: keep quiet on politics, and don’t expect reciprocity. That’s not such a bad deal. Rule of law means Chinese money buys less influence in the UK than it would back home. China may be getting more rambunctious, but openness is still the best response.
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.
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.
Scania holdouts risk overplaying their hand 24 Apr 2014 Some minority investors oppose Volkswagen’s $9 bln bid for the rest of the Swedish truckmaker. But saying “nej” is risky. VW has effectively tied its hands, making a sweetener unlikely. The premium is already generous. If the buyout fails, Scania’s shares could fall steeply.
Panama Canal heading towards silly global failure 6 Feb 2014 A dispute over cost overruns could stop the 70 pct complete expansion of the Panama Canal. That’s ludicrous. American ports have already invested to take the bigger ships the wider canal will allow. With arbitration stalled, it’s time for a strong mediator to step in.
Panama Canal can and should avoid project meltdown 28 Jan 2014 Work has slowed down to a crawl over a cost overrun dispute. Both sides have a strong incentive to fix the problem. The key question is how to finance the remaining costs while an arbitrator decides who owes what. Any solution is likely to pile more risk on the contractors.
Brazil infrastructure drive risks running aground 23 Dec 2013 President Dilma Rousseff’s $100 bln plan to spruce up rickety roads and ports only partly makes up for years of neglect. And a looming credit downgrade makes this the priciest time to splurge. Without a shift in Brazil’s savings rate, any investment boom will be short lived.
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.
FirstGroup’s Greyhound activist gets it half-right 11 Dec 2013 Tom Sandell is right that First has cheap stock and a bad track record. It should also take any good offer for Greyhound buses. But his proposed spin-off of other U.S. units looks less useful. The onus is now on First to defend its existing routemap for value creation.
Alibaba dips cautious toe into logistics 10 Dec 2013 Investing in white-goods maker Haier is a new direction for the e-commerce group, whose high margins come partly from eschewing hard assets like unsold goods, trucks and warehouses. But e-commerce hinges on timely delivery – which explains Alibaba stepping down from its pedestal.
Elon Musk puts the believable hype in Hyperloop 13 Aug 2013 Even if the Tesla and SpaceX entrepreneur isn’t the real brains behind a vacuum-style train, his personal brand championing the idea gives it a fresh chance for success. Musk’s Hyperloop may also cost a fraction of a standard transit line. That significantly enhances its appeal.
Obama’s corporate tax plan lacks solid foundation 30 Jul 2013 The U.S. president wants to end a congressional impasse by rewriting the tax code and using new proceeds to fix roads and bridges. Both ideas make sense; combining them doesn’t. Politically, it probably won’t work. Economically, better ways exist to fund infrastructure projects.
Mexico’s infrastructure blitz needs another flank 17 Jul 2013 President Peña Nieto expects some $300 bln of public and private funds to be spent on roads, broadband and the like through 2018. Such sums, however, could easily exacerbate corruption, deficits and waste. To get bang for the buck will require big investments in law and order.
HS2 train decision must wait for Heathrow 2015 4 Jul 2013 The HS2 high-speed rail project is under fire as cost estimates mount. But that is not the only problem with this massive project. A financial commitment now would pre-empt the 2015 report on airport strategy. Better to wait and not box the country into keeping the Heathrow hub.
UK must beware losing austerity on the train 25 Jun 2013 The austerity-minded British Chancellor will announce more spending cuts on Wednesday. Some infrastructure projects will sweeten the pill - and may help growth. But it’s risky to spend big on rail without first deciding on an airport hub. Care is needed on capital spending, too.