StanChart has a credibility problem, but even worse an emerging markets problem. The latter is what investors should focus on, not on the rolling heads in the boardroom. If emerging market growth is forthcoming then the lender can easily generate enough net income - at least 5bn dollars worth, according to Canaccord Genuity - so as to maintain sufficient regulatory capital while at the same time growing its risk-weighted assets. However, should emerging markets disappoint, then a capital-call before the year is out starts to become a distinct possibility. That would be hard news for equity investors given the bank's bombed-out stock price.
Compounding that very real problem is StanChart's lack of credibility. It has decided to merge consumer and wholesale banking, instead of more directly addressing the above. In the process it has also managed to lose its seasoned finance director and its head of consumer banking. Worse even, "it is hard to believe that (as the bank suggests) a specific problem in the consumer unit - losses in Korea - had nothing to do with the changes," the Financial Times' Lex column says. Having said that, should the capital ratio dip below the 10% mark then more head s will roll, Lex adds.
Electronic components manufacturer Laird's announcements on Thursday were much more significant than might appear at first glance. The company is investing 10m dollars in a new facility for performance materials near the Vietnamese capital of Hanoi and expanding a design centre in Seoul. The firm will spend a further £5m on acquiring its network of sales representatives for its wireline business in the US, which services the main US automotive manufacturers. Beyond the approximately between £8m to £10m in exceptional items which those moves will entail the former means that Laird will now be closer to its second largest (behind Apple) customer, Samsung. The South Korean manufacturer is in the process of shifting manufacturing to Vietnam. At 15 times' this year's earnings and with a dividend pay-out approaching 4% for 2013 the stock looks like good value long-term, says The Times' Tempus.
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