Comment, analysts and other offerings from Monday’s FT,
Wolfgang Munchau: Don’t believe talk about European
solvency
While the Europeans are celebrating the end of the financial crisis, something strange is happening in the bond markets, writes the FT’s Munchau. The gap in the yields between the 10-year bonds of peripheral eurozone countries and Germany has been growing at an alarming rate, and is now close to the levels just before the EU decided to set up its bail-out fund in May. This gives rise to the immediate question of whether some countries would be able to remain solvent under such a scenario.
BeyondBrics: Petrobras, just the beginning?
Petrobras has revealed the details of its proposed share issue later this month, set to raise as much as R$55bn ($32bn) from minority shareholders in a much-needed boost to its chances of fulfilling its ambitious $224bn capital expenditure plan for 2010 to 2014. Yet, writes the FT’s Jonathan Wheatley, it could easily find itself soon returning to the capital markets for more.
Tony Jackson: Analysts need to escape corporate bear-hug
How times change, to be sure, writes the FT’s Jackson, noting: “When I trained as an analyst 30-odd years ago, one of the job’s basic functions was to impose consistency on the vagaries of corporate reporting. Now, it is increasingly the other way round”. A neat illustration came in the form of last week’s news that SABMiller, the UK-based brewer, has devised a template for brokers’ analysts to set out detailed assumptions in forecasting the company’s earnings. The logic for companies is apparent. So, he warns, is the danger for analysts.
Lex: Carrefour
Companies spending by the bucket-load to expand into emerging markets should take a sideways glance at Carrefour, advises Lex. The French retailer was a pioneer, opening its first store in Asia in 1989. It planted flags all over the globe and became the world’s second biggest supermarket chain by sales, after Walmart. But recently it has been changing tack. Last year it left Russia just months after arriving and has now begun to auction off stores in south-east Asia.
News analysis: Mutuals seek means to adapt and survive
Mutually owned banks across Europe are having to adapt fast to a changing business environment and tougher regulations in the wake of the financial crisis, writes the FT’s banking editor Patrick Jenkins. Although most avoided the mistakes made by commercial banks during the crisis, now more than ever the concept of mutuals is being questioned, amid intensifying pressure on the sustainable profitability and capital strength of all banks.
Editorial comment: Food security
A second food crisis in as many years is a wake-up call. At a meeting in the Italian town of L’Aquila last year, the leaders of the G8 pledged to enhance global food security to prevent a repetition of the 2007-08 shortages. Last week’s extension of Russia’s grain ban and eruption of food riots in Mozambique shows how much needs to be done to meet this goal.
Analysis: Tata’s search for an heir
Eight years ago, corporate India was vexed by one question: who would replace Ratan Tata, chairman of the country’s biggest conglomerate, due to retire when he turned 65 that December after 11 years in post?, writes the FT’s Joe Leahy. After his leadership was extended and re-extended since then, Mr Tata is scheduled to retire – yet again – in two years. But this time things look different. The group formally announced last month it had set up a special committee to look for a successor.
Clive Crook: Democrats face a drubbing
Two months before the US midterm elections, Democrats are bracing themselves, writes the FT’s Crook. Recent economic indicators have been grim and the poll numbers have been worse. A “wave election” like the rout of 1994 that reset the Clinton presidency is all but taken for granted. Healthcare reform was a historic initiative, but the Democratic base is signalling it cannot be bothered to turn out in November. As Oscar Wilde observed about the death of Little Nell, you would need a heart of stone not to laugh.
Lucy Kellaway: Twitter is no way to manage a smelly mess
The political satirist Armando Iannucci recently stopped off at a Starbucks on his way to Snowdonia, writes the FT’s Kellaway. As he likes to record his thoughts on Twitter, he dispatched this message to his 80,000 followers: “Still surprised that, despite their market dominance, Starbucks haven’t eliminated the slight smell of lavatory you get as you enter.” Within minutes, Darcy Willson-Rymer, the UK head of Starbucks, had replied asking which store he visited. Social media experts will say this is a perfect example of how companies should reply to customers on Twitter; to me, it doesn’t seem like a good example of anything.
Undercover Economist: What about the pay rise?
Companies are always on the lookout for cheap ways to reward their employees, and what could be cheaper than a grandiose title or a purely symbolic “employee of the month” award?, asks the FT’s Tim Harford. Pomposity in senior titles is paralleled by largely symbolic awards in the lower ranks. Such awards involve little or no cash element, so an obvious question is, do they work?