Good morning

The headlines:
  1. To make an observation about a general trend, the peoples of Europe are making their opposition to austerity measures known. France has just delivered a defeat to Sarkozy in favour of Hollande (the observation that keeps being made is how Sarkozy is the first incumbent to not come first in a primary election ever); the Dutch government is falling apart, and the current PM, Mr Rutte, has just delivered the news to Queen Beatrix that she should dissolve parliament to make way for new elections; Silvio Berlusconi got thrown out of the Italian party-party; Papandreou got tossed by the Greeks, who seem to be in the mood to toss everyone else. Multiple governments have fallen. On the other hand, not Ms Merkel, who is championing the austerity cause. Of course, German austerity is a cultural cliche, so maybe it just comes natural. But sometimes I wonder if it’s not a question of alternatives. Germans have a long memory, and inflation scarred deeply after both World Wars. Austerity may not lead to economic growth, but it certainly prevents the ravages of inflation. It sounds a lot like weight-control. This German obsession with crash-dieting, or this Euro-popular obsession with strong laxatives: well, it all just leads to unattractiveness and needing to be hospitalised. The key is a solid diet plan, some exercise and plenty of roughage for regular bowel movements. Link: European Austerity Backlash
  2. Facebook has elected to list on the NASDAQ rather than the New York Stock Exchange. What difference does this make? Well, for those who may not be aware of it, the NASDAQ and the Dow Jones actually follow different exchange models. If I remember correctly, the NASDAQ operates through a system of market-makers ie. a buyer will not interact directly with a seller, but from a market-maker. The market-maker therefore acts as a go-between, and because of their placement at the center of the trade, negotiate better prices on both sides, and limit the bid-ask spread. The Dow J operates on an auction system, where buyers bid for the stock directly from sellers. Why this decision from Facebook? Part of me wants to say: because NASDAQ was the first stock exchange to start trading online… Link: Facebook to list on NASDAQ.
  3. In other Facebook news, the company is spending some listing money in advance on AOL patents. From what I can tell, there has been a bit of an auction war ongoing for AOL patents – between Microsoft and Facebook. And yet, they both want different sets of patents from the same collection being sold. So Microsoft bought them, licenced them, and is now selling Facebook the licences to use the ones it wants. Facebook is said to be paying $550 million for the licences. I realise that I’ve been a bit harsh in the past about Facebook’s reasons for listing – but I suppose that in the land of the virtual space, the holder of intellectual property is king. Maybe this is what they need all the IPO money for. Link: Facebook buys rights to intellectual property.
  4. Murray and Roberts, South Africa’s second largest construction company, has announced that its rights offer was three times oversubscribed. For those who don’t know, there is often a dirty smell attached to rights offers: they’re seen as signs of a company in distress. Which makes sense: if you need capital, going back to the original owners and asking for more money does smack of desperation. M&R are indeed struggling – they posted losses last year, and say that they’re suffering from a slow-down in construction. It’s true – South Africa may be slowing down – but then why aren’t they participating in the infrastructure boom that seems to be gripping the rest of Africa? Maybe I’ve missed something – which is probably why the rights issue was so oversubscribed. Link:  Murray and Roberts have oversubscribed rights issue.
  5. And the African Business News in brief. Link: ABN Briefs. The highlights:
    • Chinese demand for West African crude is set to rise by 16% in May.
    • Somaliland, the breakaway secessionist state from Somalia, has instituted a new law to formally create a Central Bank. Somaliland has not been recognized as an independent state internationally. But then, neither has Palestine.
    • Meyer Kahn is stepping down as Executive Chairman of SAB Miller in July. The eventual successor is Alan Clark, but Graham Mackay will take over for an interim year-long period. 
That’s all for now.
Have a good day.