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Blog Profile / Reuters Breakingviews Blog


URL :http://blogs.reuters.com/columns
Filed Under:News
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Archived Since:June 19, 2011

Blog Post Archive

If only Argentine economy matched soccer success

The nation’s strong World Cup showing reflects astute management of its big fan base and valuable on-field talent. That contrasts with a 100-year record of wasting its human and natural resources. Avoiding policy own-goals could one day make Argentina an economic champion, too.

Imperial prepares $7 bln gamble

The UK tobacco group wants to acquire assets sold following a possible merger of U.S. peers Reynolds and Lorillard. Imperial may win a path to scale in America. But the positive market reaction is too sanguine about balance-sheet strain and the acquisition of low-growth assets.

Why investors were taken in by Gowex

The scandal-hit Spanish wifi provider raised many red flags. Why were they all ignored? Because more people benefit when companies flourish, and Spain needs success stories. Gotham City, Gowex’s nemesis, did everyone a service, but its work shouldn’t have been necessary.

Review: Putting a face on China’s vague ambition

Many books about China strive for a sweeping overview. Evan Osnos’ “Age of Ambition” adopts a refreshingly human perspective. Despite some inevitable gaps, his close-up portraits of people in the People’s Republic are as revealing as a torrent of statistical superlatives.

Spending hike is best part of low-key India budget

The maiden budget from Narendra Modi’s new government failed to live up to the reform hype. But a promise to do away with retrospective changes in the tax code is welcome. And while boosting spending on roads, ports and cities is a gamble, this could revive the investment cycle.

Portugal in race against time to sort out BES

Despite a recent successful rights issue, the Iberian lender is exposed to its troubled major shareholder and has a large exposure to dodgy Angolan loans. Its owners face a difficult refinancing this year. Authorities should demand full transparency and a quick restructuring.

Capital crisis making Italy SpA stronger

Italian capitalism is undergoing Darwinian selection. Companies can no longer rely on the state, age-old shareholder pacts or even Mediobanca for capital. Firms are being forced to adapt to the rules of global finance to avoid extinction. The next generation looks fit to prosper.

“Seller beware” when profiting from market calm

Volatility, gauged by indicators like VIX, is ultra-low. While it could be the calm before a storm, investors including Pimco have been selling insurance against price swings. It’s one way to make money amidst shrinking yields, but it’s also a risky bet against the unexpected.

Capital flight crackdown would hurt outside China

State television has accused Bank of China of helping clients move money abroad, prompting chatter of an official backlash. The mainland’s capital controls are famously porous. If Beijing decides to plug the leaks then overseas banks, casinos and real estate markets will suffer.

PetSmart activists barking up the right tree

Jana Partners was joined by another big shareholder in commanding the $6.8 bln dog food retailer to roll over and sell itself. Management could throw investors a bone with a bigger buyback. The better option is a deal with Petco, the rival controlled by TPG and Leonard Green.

Don’t believe predictions of low interest rates

Central bankers and economists say the official cost of money in the post-zero rate era will remain cheap by historic standards. Their prognostications rely on a theory which is unsound, unsupported by evidence and impossible to apply. Future rates are as likely to be high as low.

Close presidential race may slow Indonesia reforms

Popular Jakarta Governor Joko Widodo faces a tough challenge from ex-general Prabowo Subianto in the country’s presidential poll. While the latter’s nationalistic talk makes investors edgy, a slim win for the former could also dim hopes of strong leadership and lasting change.

Shire can get more from AbbVie

The London-listed drugmaker is pondering a fresh, $51 bln unsolicited bid from its U.S. rival. AbbVie touts shareholder support and is offering a hefty 45 pct premium. Shire’s board can probably extract one more increase in return for a recommendation.

Supercharged IPO tax spoils need splitting

KKR and Silver Lake are listing web hosting outfit GoDaddy. The use of what’s called an “Up-C” structure means the company will float with big tax deductions. IPO investors and existing owners will both benefit, but other IPOs with Up-Cs have seen more dubious arrangements.

French persist in dead-end strong-euro moaning

The Airbus CEO is the latest to complain about the strength of the single currency, echoing similar grumbles by the French prime minister a week ago. But the ECB is right: exchange rates can’t be a primary target of monetary policy.

Internet ads add up for China’s party mouthpiece

The online arm of state news agency Xinhua is planning an IPO with a near-$1 billion valuation. Booming advertising has brought it success that has eluded the Western media. Xinhuanet’s fortunes aren’t built on headlines or scoops, but a lucrative monopoly on the PRC’s PR.

Doubling down on First Data may be KKR’s best bet

The extra cash just injected into the payment processor means the $29 bln buyout has now absorbed a whopping $10 bln of equity. KKR seems, however, to have avoided the sunk cost fallacy of throwing good money after bad. A Breakingviews analysis suggests a return finally beckons.

ADM goes M&A wild – sort of

The $30 bln U.S. food giant is buying Swiss natural ingredient maker Wild Flavors for $3 bln. It’s ADM’s biggest deal, and a shift from its commodity business. A small add-on with like customers makes sense but won’t change how investors see the firm. The question is, what next?

Gowex collapse leaves egg on many faces

The Spanish wifi provider has said its CEO admitted falsifying the accounts, days after short-seller Gotham City attacked the company. Gowex’s status as a poster child for Spanish entrepreneurialism means the fallout will go beyond increased risk aversion to junior listed stocks.

Beijing Motor IPO lifts bonnet on China carmakers

The automaker hopes a Hong Kong listing will help it cash in on China’s yearning for luxury vehicles. But its own marques lose money. Earnings depend on joint ventures with foreign groups like Hyundai and part-owner Daimler. It’s a reminder that China’s car market has two speeds.

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