A Panglossian guide to valuing Telecom Italia

November 20, 2015

Telecom Italia’s tough home market and high debt might struggle to elicit a buy from even Voltaire’s eternal optimist. Purchases from French billionaires Vincent Bollore and Xavier Niel have driven up the price. The shares could be worth more, but only with heroic assumptions.

Japan’s investor revolution is delayed, not dead

November 20, 2015

Shareholders are souring on the hope that Japan Inc. can become better-run and more profitable. That’s too gloomy. Last year’s returns on equity were humdrum and there have been big disappointments. But real change is underway and the pressure for more is huge.

Chancellor: The illusion of debt-fuelled earnings

By Edward Chancellor
November 18, 2015

Low borrowing costs enabled acquisitive drugmaker Valeant to ratchet up EPS with leverage. Earlier episodes of financial engineering - like Japan’s zaitech and the 1960s conglomerate boom - came unstuck after rates rose and stocks fell. It won’t be any different this time.

China margin finance squeeze is partial solution

November 17, 2015

Regulators have halved the amount punters can borrow to buy stocks on China’s A-share market. That’s a step towards preventing another speculative bubble. But greater transparency and acceptance of short-selling are also necessary to put equity markets on a more stable footing.

John Malone triples down on complexity

November 12, 2015

The U.S. cable TV mogul plans to turn the $13 bln Liberty Media’s shares into three tracking stocks, each with three classes. Malone is an old hand at using shadow stocks to reshape his empire, tax-free. But investors may find the legerdemain more confusing than clarifying.

China’s stock market marches to its own merry tune

November 9, 2015

Mainland stocks are up more than a fifth since the end of September. International investors are less bullish. Even after the summer’s harsh lessons, Chinese buyers still pay more attention to cheap cash and state support than slowing growth and weak corporate earnings.

Samsung shows investors it can be generous too

October 29, 2015

The South Korean group plans to buy back stock worth $10 bln and pay out up to half of its free cash flow in dividends. That will shrink its cash pile and may help the Lee family reorganise their empire. It’s a small but welcome sign that restructuring can benefit shareholders.

Hong Kong IPOs leaning too heavily on cornerstones

October 15, 2015

The practice of pre-selling shares to supportive investors is out of control. Distressed debt manager Huarong, for example, has pledged two-thirds of its $2.5 bln offering to big Chinese buyers. The cosy arrangement distorts pricing and undermines the concept of public markets.

Overseas investors fire warning at China Inc

October 5, 2015

Hong Kong shareholders rejected China Merchants Bank’s employee share scheme after the lender gave them too little information. It’s a small sign big investors are turning less tolerant of shoddy governance. Chinese companies used to silent acquiescence may be in for a surprise.

M&A running out of road on Easy Street

September 30, 2015

Since July, only four out of 10 U.S. buyers’ stocks have risen after a deal announcement. That’s a big drop from 80 pct in early 2014. Blaming volatility misses the point. Investors just aren’t convinced by increasingly bold and messy deals. The end of a merger boom may be nigh.