Comment, analysis and other offerings from Thursday’s FT,
John Gapper: A Diamond in a rough business
The appointment of Bob Diamond as the next chief executive of Barclays, and a reshuffle at the top of HSBC that could lead to the ascension of Stuart Gulliver, also an investment banker, show how things have changed, writes the FT’s Gapper. Investment bankers have not only bounced back from the 2008 financial crisis but are more powerful than ever.
Lex: Bank capital explained
Tier 1 equity; core tier 1 equity; common equity; tangible common equity – too many ways to count bank capital are carelessly thrown around, notes Lex. Problems are amplified by a lack of agreed standards while banks choose definitions that show themselves in the best light. The Basel Committee on Banking Supervision is supposedly days away from deciding new rules. A clear understanding of bank capital, therefore, is essential.
Analysis: Obesity is a financial issue
As New York officials mark the first anniversary of an aggressive health campaign called “Don’t drink yourself fat” by stepping up their advertising, one group is not offering its congratulations: the soft drinks industry, writes Andrew Jack. New York’s action is among initiatives being taken by public bodies in the US and around the world, driven by growing international recognition of the need to tackle one of the world’s most troubling ill-health trends: obesity.
The Short View: Emerging market growth may not deliver returns
One common investment fallacy is to think that just because a company or country is growing fast, it is bound to deliver strong returns, write Short View’s James Mackintosh. The other half of any investment decision has to be valuation; if everyone can see the growth, strong returns will be history. In the case of emerging markets, they are certainly growing fast. But for investors, the question is not whether economies such as China or Brazil have better prospects than Europe or the US. The question is whether this is already priced in.
William Hague and Alexander Stubb: Turkey can be a boon to Brussels
When EU foreign ministers meet in Brussels this weekend, we will both be calling for our counterparts to recognise Turkey’s increasing role and influence on the world stage, write Hague, UK foreign secretary, and Stubbs, Finnish foreign minister. The UK and Finland support Turkey’s goal of becoming a member of the EU. But its accession process is moving slowly. We believe the EU should not wait until Turkey joins to benefit from the strength of its relationships. But only by having a seat at the table will Turkey be able to contribute fully to the security and prosperity of the EU’s member states.
Gavyn Davies: The puzzling success of trend-following investment strategies
Andrew Haldane is an economist at the Bank of England who writes some of the most interesting stuff available on the (mis)behaviour of the financial sector, including his recent speech on Patience and Finance, writes Davies. This argues that patience (or long-sightedness) is an economic virtue, the exercise of which should lead to faster GDP growth, higher returns to fund managers, and a sounder financial system. However, the most fascinating part of his speech seemed to contradict this conclusion. This is an assessment of investment strategies which are based on momentum in asset prices, rather than long term economic fundamentals. Momentum wins the race hands down.
BeyondBrics: Goldman predicts – onward and upward for emerging markets
Long-term forecasts are always fun, writes BeyondBrics’ Stefan Wagstyl. As long as the authors pick a date that is far enough away, few readers are likely to hold them to account. And so it was with Wednesday’s 20-year forecast for emerging markets from Goldman Sachs.
Energy Weekly, podcast: BP investigations and smart meters
In this week’s podcast, FT reporters examine the legal implications for BP’s internal investigations into its Macondo oil spill disaster; they are also joined by Steve Cunningham, chief executive of metering company Landis + GYR, who tells Fiona Harvey, the FT’s environment correspondent, all about smart grids and smart meters.