Breakingviews

London’s FTSE can extend its record-breaking run

February 24, 2015

At long last, Europe’s big name equity index has entered new territory. Yet while the FTSE 100 is higher than ever, and is hardly risk-free, it is also attractive. It is cheaper than the leading U.S. and pan-European benchmarks and has alluring diversity.

StanChart equities closure is overdue but welcome

January 8, 2015

The emerging markets bank has pulled the plug on its share trading and underwriting arm, cutting 200 jobs. It’s a rational but still-rare step for a business that suffers from chronic overcapacity. Rivals will feel extra pressure to justify their decision to soldier on.

Valeant’s activist deal too clever by half

November 18, 2014

The $45 bln drug company’s tilt at Allergan alongside Bill Ackman’s Pershing Square leaves it with just a modest windfall to show for a seven-month campaign that risked legally questionable tactics. Valeant boss Michael Pearson’s M&A experiment is not one to repeat.

FX business now shares equities’ harsh economics

October 21, 2014

That’s why recently resurgent volatility in currency markets won’t restore investment banks’ revenue. Blame a secular shift in FX, and the rise of electronic trading.

Netflix stock horror follows familiar script

October 16, 2014

The film and TV streaming service lost $7 billion of market value after it signed up fewer new subscribers than expected. Even for one of the most-shorted and volatile stocks, a 25 percent decline is notable. And yet investors have seen this movie many times before.

Euro zone periphery trade is running out of gas

March 20, 2014

Investors keen on a recovery story have been piling into assets in Spain, Italy, Portugal and Greece. Some periphery assets now look expensive. Further gains need two conditions to be satisfied – politicians enacting more reforms and companies growing profits.

Market adjustment is not over yet

March 17, 2014

Gold’s rise to a six-month high indicates rising fear and coincides with a retreat to assets seen as safe, including the yen and bonds. Emerging market woes may now hit developed markets more keenly. But the Fed seems intent on tapering, which will eventually be bad for gold too.

Investors take note: low inflation isn’t deflation

February 27, 2014

The theory says that bonds benefit and stocks suffer during deflation. In the real world, disinflation has yet to turn into persistent price declines. Sluggish price rises are no bar to equities doing quite well, as long as there is GDP growth. It’s too early to write off stocks.

IPO flops will come back to haunt Li Ka-shing

February 5, 2014

The tycoon’s HK Electric utility is trading 5 pct below its offer price and is the third spinoff in a row to lose money for investors. Li’s reputation as a canny trader is well deserved. But that will make it harder to get a premium valuation for his retail business, A.S. Watson.

Equity optimists may fast create a crowded trade

November 20, 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.