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Blog Profile / Reuters Breakingviews Blog


URL :http://blogs.reuters.com/columns
Filed Under:News
Posts on Regator:3268
Posts / Week:17
Archived Since:June 19, 2011

Blog Post Archive

AirAsia’s minority structure clouds crash impact

The Malaysian carrier owns just 49 percent of the tragedy-hit Indonesian unit. Accounting rules partly insulate the parent from profit fluctuations. But a shared brand, intercompany loans, and leasing agreements mean the woes of its minority partners aren’t neatly contained.

A double-speak guide to modern markets

As the market perpetually shifts, so do the rhetorical stylings its players use to talk their way out of problems. The past year saw above-average creativity when it came to saying one thing and meaning another. Breakingviews offers up 10 euphemisms we’d like to see disappear.

Water woes could open taps on corporate risk

Two-thirds of the world’s biggest companies are worried about access to water. But few are well prepared for problems. That should change as ways to track and address concerns grow. And if bosses don’t take the initiative, activist investors may force them to.

Centre-left may have UK election edge

Britain’s three main parties are weak. Its two nationalist groups are stronger. The economy might help the in-power Tories – or give voters confidence to swing left. If they also want public spending, a new Breakingviews calculator suggests a Labour-led coalition could win sway.

Property default rattles China debt neighbourhood

Developer Kaisa hasn’t repaid a loan that came due, even though it is not obviously strapped for cash. Lender HSBC may yet work out a deal. But given Chinese groups’ dependence on foreign capital markets, such apparently irrational behaviour ought to have investors on alert.

Animal spirits and crisis ghosts will shape 2015

Breakingviews’ annual compendium of financial and economic predictions for the year ahead is out. From the UK election to IBM via the global economy and geopolitics, our columnists offer insightful, entertaining, provocative and – we hope – profitable ideas for the year ahead.

Crude slump will stoke European oil and gas M&A

The sharp drop in the price of Brent might make it harder to get deals done in the short term. But if the downturn persists, financial distress will put some small players in play. Larger, more defensive mergers, designed to create value by sharing costs, are also possible.

Current account is key Africa factor in 2015

Rapid African growth is likely to continue. But too much spending and borrowing has led many countries into trade deficits. As lenders become more discriminating, the state of the balance of payments, along with freedom from Ebola, will become keys to continued growth.

Review: Two centuries of trust, frauds and finance

Ian Klaus’ entertaining account of 19th century financial deceptions carries a serious lesson. As financial markets became more sophisticated, trust had to be built on stronger and more objective supports. The implication: honesty can always win out, but not without hard work.

Europe returns to Franco-German axis of neurosis

A prolonged economic slump highlights Europe’s core problem: a crisis in the French-German partnership. Populist parties are rising and the UK could leave the EU. Although many countries still want to join, it’s up to Paris and Berlin to make the case for a rejuvenated Europe.

China index: Ending the year without a bang

Breakingviews’ alternative growth gauge slowed slightly in November. In contrast to the same period last year, measures like residential property investment and export growth dragged. Shrinking steel production, rail freight and truck sales set the scene for a quiet year-end.

Japan’s cash helicopter may be first to take off

Quantitative easing is reaching its limits, but 2 percent inflation remains a distant goal. The Bank of Japan’s next step might be the ultimate stimulus: a cash gift to households. A “helicopter drop” would open a new front in the global fight against deflationary stagnation.

Vienna offers a model for stable foreign policy

The 1815 Congress of Vienna ended the Napoleonic Wars, and its participants worked together over the next decade to prevent destabilizing regime change. This principle could have reversed many bad intervention decisions over the last 40 years. Its lessons are worth studying.

IBM turnaround requires atypical activist fix

Big Blue’s strategy of cost cuts and debt-fueled buybacks is no longer working – but the tech giant keeps trying. A tarnished balance sheet, lean staffing and a history of disposals rule out typical activist wheezes. Prodding the company to invest in its business could pay off.

Banks will make asset managers pay for regulation

Persistently low returns are spurring investment banks to re-price products like repo financing and prime broking. In 2015, expect firms to get serious about passing on the pain of capital and liquidity rules. Higher costs could in turn force some money managers to consolidate.

China rail merger reveals topsy-turvy reform logic

The People’s Republic is re-creating its domestic train-building monopoly to boost competitiveness abroad. State-backed CSR will buy almost identical CNR for $14.4 bln. Synergies may take time to realise but the new giant should be able to turn up the heat on foreign rivals.

Wearable tech will go from novelty to necessity

Activity trackers like Jawbone and Fitbit gather vast quantities of deeply personal data. Consumers aren’t always keen to overshare. But healthcare and insurance companies are finding ways to make it worth their while. Geeky gadgets could soon become too useful to ignore.

Shake Shack IPO disappoints in taste test

Celebrity restaurateur Danny Meyer’s global chain of burger joints is serving up some of the uncommon fixings found in new tech stocks. Two classes of shares and creative financial metrics are unappetizing. At least the bottom line offers a sweet refreshment to wash it all down.

Accounting fraud is ripe for fresh scrutiny

Dodgy numbers will replace insider trading as U.S. watchdogs’ preferred prey in 2015. New auditing and analytics arms give the SEC a head start, even if SarbOx reforms make cases harder to track down. With the likes of SAC chastened, it makes sense to refocus on the next Enron.

UK faces risk of cold-weather blackouts

Britain’s electricity system is ageing and the mix of generating technology is changing. Both factors increase the danger of power cuts at peak times. Contingency plans include paying companies to accept temporary grid outages. New capacity can’t come soon enough.

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