On FT Alphaville this week,
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DeBeers is struggling as shoppers tone down the bling, but perhaps more significantly, it could cause trouble for Anglo American in the near future.
De Beers is a small carat in Anglo’s bejewelled crown. But the diamond miner’s financial problems are a reminder of the issues its main shareholder faces elsewhere, particularly at Anglo Platinum, also short of capital. De Beers has done much to reduce the chronic oversupply of diamonds. Yet it is hard to escape the impression that its forced bullishness is partly designed to bolster Anglo’s takeover defences.
This is surely the financial equivalent of Brits migrating to Spain.
Recall, that Spanish bank AyT issued a new multi-cedula (Spanish covered bond) on Tuesday. Now the success of the Spanish issue is being cited as a potential jump start for the UK to revive its own covered bond market. From The Cover:
“A UK covered bond is the logical consequence of AyT’s deal,” said a syndicated manager in Germany. “Looking at our client base, I find it dificult to imagine that there would be much demand, but there’s no enduring reasong why a UK covered bond couldn’t be a success if it comes with an attractive spread and is marketed reasonably, although if it would be a blow-out is a different question.”
It seems just like old times for SocGen’s (now disbanded) top-rated strategy team of James Montier and Albert Edwards at SocGen.
Montier quit SocGen last month to join US investment manager Grantham Mayo Van Otterloo & Co, just after the duo won the Thomson Extel European analysts’ award last month as the top global strategy tream. There had been an increasing divergence of views between the two – as the FT noted in its People column, “Montier was always more bullish than his other half at SocGen” – but the parting of ways was entirely amicable. Read more
From a 2008 paper written by Robert Barnes, managing director of equities at UBS, on MiFID and the growth of dark and light liquidity pools:
Smart order routing will arrive in Europe to pool, in a virtual manner, the multiple physical liquidity puddles resulting from the new venues. Order flow and new business will concentrate to those most capable in an increasingly fierce technological and commercial arms race. MiFID sets the regulatory framework encouraging competitive new entry and entrepreneurial opportunity. Realising this opportunity arises from understanding and embracing impending change to market structures.
Live markets commentary from FT.com
A Big Fat ‘Buy’ recommendation from Goldman Sachs’ Peter Oppenheimer.
From the strategist’s Strategy Matters note, dispatched to GS clients on Thursday: Read more
Because only one thing could upstage the moral terpitude of corporate-raider Gordon Gekko — the pure depravity of an evil short-selling monster of Mayfair — the sequel to Wall Street is centred around the murky world of hedge funds, and one short-selling schemer in particular.
Clearly, getting the right actor into the reprobate role would be crucial. Read more
Comment, news and analysis from Friday’s FT,
Philip Stephens: Europe in the slow lane
Debates about the future of Europe have an unreal quality about them these days. Eurosceptics — most noisily in Britain but also elsewhere — still live the old nightmare of a united states of Europe. Yet on the other side of the barricades, the pro-Europeans are more likely to be lamenting the EU’s palpable failure to claim a say in global affairs. Read more
General Motors is to press ahead with talks with Magna International and RHJ International for a stake in its Opel business, after rejecting a bid from China’s Beijing Automotive Industry Corp. GM’s announcement is the latest twist in the saga over the future of the US group’s car businesses in Europe. The Opel stake sale has become a key election-year issue in Germany and raised fears about job losses in other countries with GM plants, including the UK.
Microsoft cast doubt on hopes for a rebound in the technology sector on Thursday as it reported an unexpected slump in sales for its latest quarter. The world’s biggest software company said revenues had declined 17% amid falling demand for new PCs and servers. Net income fell 29% to $3.04bn. The news followed a spate of more positive earnings news from Apple, Intel and IBM.
Porsche’s family owners on Thursday ended months of feuding over a rescue of Germany’s debt-ridden sports carmarker by agreeing a merger with Volkswagen and ousting its chief executive Wendelin Wiedeking with a huge €50m pay-off. The merger, planned for 2011, would bring Porsche under the umbrella of Europe’s biggest car and truck empire.
US stocks soared on Thursday, with investors pushing the S&P to its highest level since early November and the Dow Jones breaking through the 9,000 mark. The rally, driven by a slew of positive US earnings reports and improving housing and jobs data, was a decisive break out of a range that had capped the market since early June. However, late results from Microsoft, Amazon and American Express weighed on afterhours trading.
Angry investors blasted the Bank of England on Thursday when it sparked a sell-off in the gilts market after one of the biggest government bond offerings of the year. In an interview published 20 minutes after the £5bn bond deal was finalised, Andrew Sentance, an external member of the Bank’s monetary policy committee, suggested that the Bank might be ready for a sustained pause in its quantitative easing programme to pump cash into the economy through government bond puchases.
Nufarm, Australia’s biggest supplier of farm chemicals, confirmed a takeover approach from China’s Sinochem, sending the shares to a more than seven-month high and valuing the company at A$2.4bn ($2bn), reports Bloomberg. Buying Nufarm would expand Sinochem’s share of the market for herbicides and pesticides, securing supplies for the world’s largest grain consumer as global demand rebounds.
Royal Bank of Scotland and Lloyds Banking Group have submitted to the European Commission restructuring proposals that may see the banks forced to sell off branches and other assets in order to qualify for state aid. Lloyds could be forced to sell its Halifax or Bank of Scotland branch network to comply with European antitrust rules and RBS is understood to have considered selling branches if the Commission were to demand significant divestments.
Pearl Group, the UK life assurer owned by financial enterpreneur Hugh Osmond, is expected to get the go-ahead for its capital restructuring on Friday from shareholders in Liberty Acquisition, the vehicle that will inject about €600m (£519m) into the company. Amsterdam-listed Liberty will count up votes on the deal to acquire a 60% stake in Pearl at an extraordinary meeting on Friday following three weeks of investor meetings.
American Express, the credit card issuer, reported an annual 84% drop in Q2 earnings per share on Thursday but expressed increased optimism for the rest of the year based on improved trends by delinquent credit card and loan holders. Amex posted Q2 earnings of $337m, compared with $653m a year ago. Capital One, which also reported results on Thursday, posted its third straight quarterly loss and said US card write-offs rose to 9.23%.
Sovereign wealth funds and multinationals from the developing world will in future take the place of western banks in financing and paying for major construction projects, according to consultant Turner & Townsend. Vince Clancy, chief executive, cited clients Bharti Airtel, the Indian mobile operator, and Qatari Diar, the SWF-owned property company, as emblematic of the trend.
Daniel Mudd, appointed this week chief executive of Fortress Investment Group, plans to spearhead an acquisition strategy that could see the hedge fund buy other financial companies including banks, money management groups and other hedge funds. Mudd, former chief executive of Fannie Mae, joins Fortress as the hedge fund industry looks for signs that investor withdrawals are beginning to slow. Fortress manages $27bn.