Comment, analysis and other offerings from Monday’s FT,
Tony Jackson: Ageing baby boomers are the problem
This is not the best of times, you might think, to start a career as a fund manager. Everything looks dodgy – bonds, equities, alternative investments, the lot. The temptation is to see this as a mere run of bad luck: first the banking crisis, then Greece and so forth. Arguably, though, these are not causes but results. Behind them lie deeper problems, one of which is the ageing of the baby-boomers – an issue which is now creeping back.
Lina Saigol: Chinese companies take their gloves off
For years, “softly softly” was the approach taken by Chinese companies making investments in western groups. Now the gloves are coming off and they are taking a much more combative stance. This is what Wanhua Industrial Group appears to have done with BorsodChem, the indebted Hungarian chemicals group it has been seeking to take control by use of unusually aggressive M&A tactics.
Analysis: Europe, a meeting of minds
When Infineon faced a shareholder rebellion earlier this year, a look at its share register would have provided the German chipmaker with a bracing reminder of the new reality in European capitalism. None of its 10 largest investors was German, writes the FT’s Richard Milne. In a shift that represents perhaps the single most important change in European capitalism in the past decade, domestic owners of companies are being replaced by foreigners. That in turn is having a profound effect on how European companies are run and how they behave.
Wolfgang Münchau: Outlaw naked credit default swaps
I generally do not like to propose bans. But I cannot understand why we still allow trade in credit default swaps without ownership of the underlying securities. Especially in the eurozone, currently subject to a series of speculative attacks, a generalised ban on so-called naked CDSs should be a no-brainer.
Andrew Scott: US and UK can handle decades of debt
One way the financial crisis of 2007-08 will have a lasting impact on the economy is that government debt will remain high for decades, writes Scott, professor of economics at London Business School. High debt is seen as a serious problem – as Adam Smith warned more than two centuries ago: “The practice of funding has gradually enfeebled any state which has adopted it”. The difficulty with this alarmist view is that economics does not tell us what is a “high” level of debt.
Lex: The mandarin from the Pru
Has really so little changed?, asks Lex. UK insurance company Prudential is on Monday expected to announce the purchase of AIA, the Asian assets of state-owned AIG , forestalling a planned Hong Kong IPO. With the ringing of crisis alarm bells barely fading from earshot, financial institutions are once again grabbing ever greater size. If a deal is embraced by the Pru’s shareholders, expect more insurance consolidation to follow. MetLife is already in talks to buy Alico from AIG for $15bn. Bigger will be seen as better, once again.
Money-Supply: Robin Harding – Rhetorical inflation in Japan
Japan’s finance minister, Naoto Kan, wants to escape the country’s persistent deflation by the end of the year, writes the FT’s Robin Harding. People get excited when Mr Kan says things like this because, with current policy, there is almost no chance prices in Japan will rise any time soon. Logically, his words imply a policy shift, as they did when he appeared to call for a formal inflation target of 1 per cent a couple of weeks ago. The trouble is there is little sign of such a shift. It would be amazing if a finance minister said anything else, but until his rhetoric actually refers to doing something, the Bank of Japan will just yawn and carry on.
EnergySource: Shell and Nigeria – tensions in a difficult marriage
“Marriage,” said George Bernard Shaw, “is an alliance entered into by a man who can’t sleep with the window shut, and a woman who can’t sleep with the window open.” So it often seems with Nigeria and Royal Dutch Shell, whose relationship began in earnest in the swamps around the mouths of the River Niger in 1956, writes the FT’s Tom Burgis.
FTfm, video: Why hedge funds are moving into Ucits
John McCann, managing director at Trinity Fund Administration, discusses why hedge funds are moving increasingly into the regulated Ucits (new EU directives known as ‘Undertakings for Collective Investments in Transferable Securities’ ) environment, despite the downside of higher costs and lower returns.