Breakingviews

Diageo’s India splash won’t get Kingfisher flying

By Andy Mukherjee

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Diageo’s $2.1 billion acquisition of United Spirits has helped India’s largest liquor company and its chairman Vijay Mallya. But hopes that Kingfisher Airlines will fly again simply because the grounded carrier’s flamboyant founder has raised some cash look overoptimistic.

Lonmin doesn’t have to surrender to Xstrata – yet

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Xstrata has long been considered a private equity house in miner’s clothing. Now it’s taking on the role of activist investor, too. The miner owns 25 percent of struggling platinum producer Lonmin, and is being far from supportive in its role as a lead shareholder. Lonmin says Xstrata will back the company’s $817 million emergency rights issue but only if it gets to hand-pick a new chief executive and other top managers. Lonmin is rejecting those demands and for now, it can afford to.

Russian economy could lose in state energy grab

By Kevin Allison

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

It may be tempting to view Vladimir Putin’s drive to reassert state control over Russia’s energy sector as comeuppance for the oligarchs who benefited from the looting of the country’s natural resources in the 1990s. But restructuring the industry around two national champions, Gazprom and Rosneft, is ultimately bad for competition. International oil companies may benefit from greater opportunities to bring their expertise to Russia, but investors ogling opportunities in the shifting landscape should apply a hefty Kremlin discount.

Sandy fiasco reveals investor-customer disconnect

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hurricane Sandy revealed a massive disconnect between the shareholders of electric utilities and their customers. The storm that caused up to $50 billion of damage across the American East Coast left 8 million people without power – and extra ornery. Politicians are hopping mad, too. Yet the market values of the region’s three listed monopolies barely took a hit. That may be rational today, but in the long term cannot last.

VW relaunches mandatory convertible market

By Neil Unmack

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Volkswagen is dusting off a sexy financing model. The German carmaker’s 2.5 billion euro mandatory convertible bond is the first from a European corporate since 2009. For issuers looking to protect their credit rating, the route could be more widely followed.

HSBC still aiming at its moving targets

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Stuart Gulliver is sticking to his targets. That makes him stick out. While many bank chiefs have scaled back their financial ambitions, HSBC’s chief executive is persisting with the goals he set for the lender 18 months ago. But if one-off charges for UK mis-selling and U.S. money-laundering keep repeating, HSBC may yet need to lower its sights.

Japan risks consumer electronics death spiral

By Peter Thal Larsen

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

“We are among the losers in consumer electronics.” That frank assessment by Panasonic president Kazuhiro Tsuga sums up the state of Japan’s once world-beating electronics industry. The economy is partly to blame for slumping demand for Japanese gadgets, but so are rivals like Apple and Samsung. The worry is that the financial squeeze undermines product development, leaving Japan ever further behind.

Barclays needs a decisive UBS-style strategy shift

By George Hay and Dominic Elliott

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Barclays needs a decisive, UBS-style change of direction. While rivals like Deutsche Bank and Credit Suisse saw revenue in fixed income, currencies and commodities spike in the third quarter, Barclays’ normally strong FICC business underperformed. Worse, the results also included two fresh regulatory probes. It shows why new chief executive Antony Jenkins should consider changes as radical in tone as UBS’s root-and-branch restructuring.

UBS euphoria overdone

By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Investors are taking a rosy view of UBS’s ability to execute a radical strategy to hack back its investment bank. The Swiss wealth manager’s market capitalisation is up 4.4 billion Swiss francs ($5 billion) since the plan emerged. While UBS deserves applause, it may be getting too much credit up front.

Three reasons China’s banks deserve their derating

By John Foley

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s banks enjoy valuations most Western rivals would kill for. But compared with the earnings they are throwing off, their share prices look miserly. The country’s seven biggest banks trade at an average of 1.2 times their most recently reported book value, according to Reuters Eikon, despite aggregate returns on equity above 20 percent. Five years ago, lesser returns allowed them to command multiples above 4.5 times book. Though the derating is harsh, it’s justified.