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May 17, 2013 2:30 pm
Markets in Japan and the US are having a rally good time. In Japan, Abenomics has proved to be a real boost to economic growth, but companies are still hesitant to invest after an underwhelming earnings season. In the US, a defensive market rally is being boosted by loose monetary policy and low interest rates, but corporate sales growth remains sluggish.
Of course companies have no option but to change and persevere. City grandee and chairman of Glencore Xstrata, Sir John Bond, was forced to step down and was replaced temporarily by former BP boss Tony Hayward. BP and other oil companies were the subjects of a European Commission probe into possible price fixing. In Brazil, Petrobras’ $11bn bond sale to meet its $237bn funding needs was the largest ever emerging markets issue. In the US, Hess agreed a compromise over board seats after dissident shareholder Elliott Management introduced the notion of bounty-hunting to corporate governance by offering $30,000 performance incentives to some board members.
Google’s share price broke through the $900 barrier as it launched a new music service. It will hope to avoid Apple’s 40 per cent share price drop after it reached the $700 level last autumn. As competition from smaller rivals increases, Hon Hai will be wishing Apple’s fortunes recover quickly. Intel has a different strategy for dealing with rivals in mobile chip making – it plans to spend them into submission. And activist investor Dan Loeb is the latest to try to make Japanese companies see financial sense, but he has little chance of succeeding in his bid to break-up Sony.
There was frenzied speculation about Vodafone’s fate after Verizon Wireless said it would pay its parent company a $3.5bn dividend. UK utility Severn Trent is likely to be taken over despite its rejection of a £5bn offer. Walmart saw a sharp decline in sales while Richemont’s chairman decided to take a one-year sabbatical after the company reported a healthy boost to profits.
HSBC announced that it would make more costs cuts that could result in up to 14,000 job losses just as the UK’s attempts to spur retail banking competition are looking like a case of one step forwards, two steps back. Commerzbank announced details of its €2.5bn fundraising on its road to rehabilitation. In China, the $1.4bn initial public offering of the country’s biggest securities broker, China Galaxy Securities, should be a winner even though the number-one spot comes with just 5 per cent of the market.
John Casey, Lex Publisher
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