This week’s biggest market-moving story did not come from the Financial Times or one of our main rivals. It was written by Lukas Hässig, a 57-year-old Zurich-based journalist behind the blog Inside Paradeplatz.
On Wednesday morning, Credit Suisse announced its third profit warning in six months, sending its shares down more than 7 per cent towards a record low.
Then Hässig published his story. He wrote that Boston-based State Street was said to be planning a SFr23bn ($23bn) takeover bid for the Swiss bank.
There was a huge swing. Credit Suisse’s shares whipsawed 12 per cent higher and ended the day as the best-performing large bank stock in the world.
“It’s crazy,” Hässig told me. “And also for me, it was an emotional thing.”
All financial journalists like market-moving scoops. It is intensely satisfying to see prices jump or plunge based on a news article you have written.
But this story was not straightforward. How you perceive it a couple of days later depends on how you rank the credulousness of everyone involved.
Among the most credulous were investors who rushed to buy Credit Suisse. Aside from the significant issues of size and culture, there would be monumental regulatory obstacles to a deal. Would Switzerland really allow one of its two global banking institutions to be bought by a foreigner? And would the US Federal Reserve allow its steady backwater bank to take on the assets and liabilities of the racy and accident-prone Zurich lender?
As reporters, investors and bankers tried to confirm the story, State Street put out a statement on Wednesday afternoon: “We are not going to respond to an earlier news report. As we’ve previously discussed, we are focused on our pending acquisition of Brown Brothers Harriman’s Investors Services business.”
This did not have the desired effect. State Street’s shares fell more than 5 per cent, with the market apparently worried by the lack of an outright denial.
On Thursday morning, Credit Suisse chief executive Thomas Gottstein was asked about the blog post at an industry conference. “We never comment on rumours,” he replied. “My father once gave me a piece of advice: for really stupid questions, you’d rather not comment at all.”
Gottstein’s remarks were at least as ambiguous as State Street’s statement but he was more successful at dispelling the takeover talk: Credit Suisse’s shares tumbled 6 per cent.
Later on Thursday, State Street felt compelled to make a more emphatic statement, saying it was “not pursuing an acquisition of, or any other business combination with, Credit Suisse. There is no basis to the continuing market rumours. Although we have a longstanding company policy of not commenting on such speculation, we feel a response to these reports is now warranted in this instance.”
There are lessons from this. First, it may be troublesome to ward off takeover talk, but it is often best to drop the subtlety. Second, markets may be more sober than last year but they are still susceptible to wild swings on unlikely news.
For his part, Hässig notes that the story was hedged. He was upfront that it was based on a single source. The headline ended with a question mark: “Will State Street buy Credit Suisse?” He says: “I declared it as a speculative story,” but concedes that “there was a price tag and there was urgency in it — that a deal could somehow be immediate”.
Was Hässig manipulated? “That’s the crucial question, I agree,” he says. “What can I say? I can only say you never know. I try not to be naive but if I had had such a thought, such a suspicion, I wouldn’t have published it, at least not in this way.”
“I’m a journalist, not a trader,” he says. “I have known this source for a couple of years. I got several informations from that source that were accurate so I believed it. I did not have any reason to think twice whether he could play a game.”