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Archived Since:June 19, 2011

Blog Post Archive

Hudson’s Bay wangles way back to Teutonic roots

The Canadian owner of U.S. store Saks – once an English company headed by a German – has the best of a $3 bln deal to buy Cologne-based retailer Kaufhof. Offloading real estate will help it finance the trade. It also gives Hudson’s Bay a cushion against old world risks.

Subject financial fiefs to modern Magna Carta

Companies in the 21st century can learn from 13th century England. Overmighty, overpaid CEOs are the new King Johns. They are held to account, sort of, by the barons of fund management. What’s needed is more respect for finance’s neglected yeomanry: ordinary savers.

Greece and creditors are not really far apart

The brink keeps getting closer, but there’s agreement on broad principles. The fight is over 2 bln euros, 1 pct of Greek GDP and 0.02 pct of euro zone GDP. The damage from failure is many times larger. A deal can be done - if only politics and pride can be overcome.

Hugo Dixon: How a Greek debt deal could work

Athens has struggled to get its euro zone creditors to talk about debt relief. That’s because it is not the most urgent issue. But if the negotiators resolve the immediate crisis, debt relief should come onto the table. Then they will need creative ideas. Here’s one.

How to tell if Japan’s shareholder love-in is real

Japan Inc. faces unprecedented pressure to get leaner, better-run, and more profitable. Real success means higher returns on equity. First comes a tough AGM season that could embarrass the likes of Sony and Sharp. Then expect more buybacks, stake sales, activism and M&A.

REIT gambit gives Sears $2.6 bln more to burn

The flailing U.S. retailer wants shareholders to exercise rights to capitalize a real estate unit which will buy 235 stores. The REIT may be a decent bet, and the proceeds will buy Sears boss Eddie Lampert time. The danger is that the hollowed-out merchant will waste the cash.

Review: Inequality part deux is a better start

François Bourguignon’s book explores a paradox: a welcome decline in the global gap between rich and poor and a potentially worrying increase within countries. The French economist sketches the facts more succinctly than Thomas Piketty and also admirably allows for uncertainty.

Can countries rebrand themselves like companies?

A Lazard-WPP partnership to create “nation branding programs” raises the question. It’s one thing for a cheese or booze maker to become Mondelez or Diageo, quite another for despotic regimes or broken economies to simply rename themselves. Our columnists take a stab at a few.

Zimbabwe’s 15-digit money woe is mercifully rare

The African nation is paying one U.S. dollar for every 35,000,000,000,000,000 of its old scrapped scrip. Zimbabwe is a byword for monetary disaster but the outcome is unusual. It shows it takes truly exceptional incompetence to create hyperinflation.

Return to China tough for American orphan stocks

Soaring home markets are prompting Chinese companies to delist from U.S. exchanges. The likes of social network Renren and data centre group 21Vianet may hope for higher valuations in China. But rigid rules make mainland listings harder. Only the unloved will attempt the journey.

Rupert Murdoch’s step back propels dynasty forward

The octogenarian mogul is starting to hand off the Fox media empire to his two sons. Ceding the CEO title to James and making Lachlan an executive chairman should rile non-Murdoch shareholders, who routinely snub the brothers. Chase Carey’s exit crowns the royal succession.

Forget ethics, carbon divestment looks profitable

Norway’s state fund and insurer AXA are ditching carbon-rich companies. The rhetoric may be ideological, but the economic case against coal and legacy utilities is strong. They face tough challenges, even if political action against climate change remains lacklustre.

Hardball Samsung move sets up chaebol reform test

Samsung C&T has sold a 6 pct stake to a friendly party to neuter opponents of its $10 bln merger with the South Korean conglomerate’s holding company. Official reaction to the underhand maneouvre will show whether the country really wants to rein in its large corporations.

Tokio Marine learning lessons in value destruction

The 38 pct premium the Japanese insurer is paying in its $7.5 bln purchase of HCC is only half as absurd as in its two previous U.S. deals. Those extravagant forays should give it scope to cut costs. By slicing 15 pct of HCC’s overhead it might even finally make a deal stack up.

Edward Hadas: Central banks can save the world

The monetary authorities made a hash of things last decade, as they did in the 1920s, 1930s and 1960s. They still have a three-fold problem. Central banks fundamentally misunderstand financial markets, debt and currencies. With new ideas, their record could improve.

UK blithely signs up to Germany’s worst idea

Chancellor George Osborne is to enshrine budget surpluses in state legislation. For a nation with low interest rates and sagging productivity, aping German deficit-phobia is nuts. But plain thinking wins votes because the public has learned to mistrust the wisdom of economists.

MSCI lets fund managers ignore China a bit longer

The index compiler says China’s $10 trln stock markets aren’t quite ready for global benchmarks. That’s a relief for investors worried about inflated mainland valuations. But inclusion is only a matter of time. Being underweight will soon be a matter of choice, not inertia.

Rob Cox: Russia sanctions’ unintended consequences

Russian cheese production is booming. So are Putin’s approval ratings. Relations with China have never been better. Free-market entrepreneurs are being financially squeezed while the Kremlin and its banks coddle state-owned enterprises. This can’t be what the West hoped for.

HSBC continues to wind back the clock

Four years since he started pruning the bank, CEO Stuart Gulliver is cutting risk-weighted assets by a quarter and shedding 50,000 employees. HSBC is returning to its roots as an Asia-focussed trade lender, though investors will have to wait almost three years to feel the effect.

Tesco’s South Korean unit stacks up for a buyout

A disposal for around $6 bln would do much to fix the British grocer’s strained balance sheet. Tesco might not miss the Korean earnings that much either. It’s hard to see trade buyers bidding up the price. But it presents a rare opportunity for private equity in Asia.

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