World stocks continue to avoid Iraq effects….. US pharma company rejected by Irish takeover target… Canadian firms hoarding more cash…. And Boston firm looks to break banks monopoly on IPOs…
World Stocks High Despite Iraq
With the Iraq crisis showing no signs of waning anytime soon, the markets are largely un-phased by the unrest. World markets traded slightly off record highs on Friday, still buoyed by the Fed’s announcement earlier in the week. The violence in Iraq could see oil prices increase further by the end of the day with markets reacting accordingly. Japan’s Nikkei ended the day higher following the government’s monthly report sounded a largely positive note.
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AbbVie Rejected by Shire
Chicago based pharmaceutical company AbbVie has had its $46.3 billion takeover bid for Irish firm Shire rejected. The spin off from Abbot Laboratories had made three offers over the last few months, the latest at the end of May, but Irish eyes were not smiling on the valuation or conditions of the takeover bid. Shire’s chairwoman Susan Kilsby said that she believes the company has a ‘strong independent future’. As part of the proposal AbbVie would have become an Irish company, benefitting from favourable tax conditions in Dublin. Shire is based in the Irish capital but trades on the London stock exchange; its shares were up 13 per cent today.
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Canadian Firms Hoarding More Cash
Privately held, non-financial corporations in Canada are hoarding $630 billion of cash according to the latest figures from Statistics Canada. That’s a rise of $9 billion from the end of 2013 to the end of Q1 2014. Businesses have been criticised for not investing more to help the economic recovery and these figures will increase those calls. In 2012, Bank of Canada governor Mark Carney, now at the Bank of England, referred to this hording of cash as ‘dead money’ and called for companies to either invest it or return it to shareholders to ‘figure out’ what to do with it.
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Boston Firm Looks to Break Up Investment Banks Monopoly
Fidelity Investments of Boston held a conference yesterday, with the aim to encourage investors to choose an alternative to the traditional route to an IPO. Fidelity wants to break the monopoly of the cartel of investment banks that have a hold on public offerings and is suggesting that entrepreneurs look to online IPOs as a lower cost and more flexible route. Fidelity is one of the largest retail brokerages and wants to be able to offer more IPO shares to its customer base of 20 million but says it cannot generally get access to enough.
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IMF Calls for QE from ECB
The Eurozone inflation issue may be best tackled by quantative easing, according to the Managing Director of the International Monetary Fund. Christine Lagarde says the European Central Bank should consider the move if low inflation in the single-currency countries of Europe stays at its current low. Consumer spending in the Eurozone is well below the ECB’s 2 per cent target, at just 0.5 per cent. The Bank has resisted QE so far but says it is ready to do so if necessary. Ms Lagarde says that job creation, national debts and geopolitical unrest are the three main challenges facing the global economy.
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