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Financial Times USA 4 August 2017

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WORLD BUSINESS NEWSPAPER
FRIDAY 4 AUGUST 2017
USA $2.50 Canada C$3.00
Gillian Tett
Murder in Rio
Uber’s next boss
Lawsuits are a good start in tackling
the US opioid crisis — COMMENT, PAGE 9
Crime rates are soaring in the
City of God — BIG READ, PAGE 7
What sort of leader is best to jump
into the driving seat? — PAGE 12
Rouhani vows
Iran will boost
its global role
Briefing
i Teva shares tumble after $6bn loss
The largest maker of copycat drugs has seen its
shares fall 18 per cent after reporting a $6bn loss,
slashing its dividend and saying it will not rush its
search for a chief.— PAGE 11; GILLIAN TETT, PAGE 9
Iranian supreme leader Ali Khamenei,
left, looks across at President Hassan
Rouhani at the latter’s swearing-in ceremony in Tehran yesterday following his
landslide election victory in May.
Mr Rouhani, seeking to attract foreign
investment to help boost Iran’s economy, said he would work to improve
relations with the outside world.
Iran faces mounting pressure from
the US, which imposed additional sanctions on the Islamic republic last month.
“With more self-confidence than
before . . we insist on constructive and
effective interaction with the world,”
the president said. Mr Khamenei said
Iran should stand against the US with
“determination and power”.
i Carney warns over Brexit uncertainty
The Bank of England chief has said that uncertainty
over the UK’s relationship with the EU is hurting
investment, as growth forecasts were cut back.
PAGE 2; EDITORIAL COMMENT, PAGE 8; CHRIS GILES, PAGE 9
i Czech rates rise for first time since crisis
The central bank has raised interest rates in an
effort to damp inflationary pressures, the first in
the EU to start what analysts expect to be a gradual
exit from a period of record low borrowing.— PAGE 2
i Temer victory rekindles reform hopes
Full story page 4
EPA
Wall Street watchdogs sound
alarm over risky bank lending
3 Fears over weak investor safeguards 3 Projections found to be disguising real leverage
ERIC PLATT AND ALISTAIR GRAY
NEW YORK
US regulators have joined investors in
voicing concern over risky bank
lending, warning of weak investor
protections and “aggressive” financial
projections.
The alert from the Federal Reserve,
Office of the Comptroller of the Currency and Federal Deposit Insurance
Corporation came after investors raised
red flags about lending to already highly
leveraged companies, particularly when
projections make a company appear
more creditworthy.
The misgivings follow a rally across
markets, with ultra-low yields on sovereign debt in Europe and Japan pushing
investors out of their traditional domestic markets. Their arrival, including to
US credit markets, has helped send US
stock indices to record highs and
pushed premiums on high quality corporate debt close to its post-crisis low.
The regulators warned of “ineffective
covenants, liberal repayment terms and
incremental debt provisions that allow
for increased debt, which may inhibit
deleveraging capacity”, in their regular
review of bank lending.
The report highlights regulators’
persistent scrutiny of bank business
practices, even as the industry looks
forward to a lighter touch under Donald
Trump’s administration.
There “is a weakening of covenants
across the board”, said David Daigle, a
portfolio manager with Capital Group.
“Issuers have more leverage when
spreads are as narrow as they are now.”
Private equity groups have recently
sought to take advantage of the buoyant
market conditions by stripping out
traditional bondholder covenants that
protect investors. “There is a constant
attempt to erode the quality of covenants and that’s non-stop,” said Ken
Monaghan, the head of high yield at
Amundi Smith Breeden.
Fund managers are particularly anxious about so-called add backs or
adjustments, which are designed to
make companies appear to be more
creditworthy. Adjustments include
adding expected cost savings to earnings, even though they have not yet been
realised, making a company’s debt
burden look more manageable.
The Fed and its fellow regulators
strengthened guidelines for leveraged
The study points
to regulators’
scrutiny of bank
practices, even
as the industry
looks forward to
a lighter touch
under Donald
Trump’s
administration
loan underwriting four years ago, and
they give deals a pass or non-pass rating
which is then used to build a picture of
banks’ lending activities.
“The agencies continue to see cases of
aggressive projections used to justify
pass ratings on transactions that examiners consider non-pass,” the regulators
wrote, although they said the number of
cases was “at much lower levels than in
prior periods”.
Overall, the agencies said that risks
had declined slightly but remained
“elevated”. Lending considered to be
non-pass had fallen from 10.3 per cent to
9.7 per cent of the overall shared
national credit portfolio. The portfolio
includes US and international banks’
lending facilities to more than 6,900
borrowers, totalling $4.3tn.
Box gives voice to human hopes with
approval for open outcry trading pit
NICOLE BULLOCK — NEW YORK
Score one for the humans.
Crumbling bridges struggle
to hold up Germany’s image
Germany’s reputation as a well-oiled
machine obscures the fact that many
of its roads, bridges and buildings are
in a shocking state of disrepair. One
estimate puts the infrastructure
‘investment gap’ at €126bn. Social
Democrat leader Martin Schulz has put
the issue at the heart of his campaign
for next month’s Bundestag election
but Chancellor Angela Merkel says the
main obstacle to more spending is not
lack of cash but planning bottlenecks.
Analysis i PAGE 3
Box Options Exchange, an all-electronic
equity options market, has won regulatory approval to set up an open-outcry
exchange in Chicago in stark contrast to
the trend that has sent most trades to
computers.
Venues with human traders buying
and selling in markets have been vanishing over the past decade with the
growing availability and advances of
technology. While some open outcry
remains in the options market, Box has
won the first approval for such an
exchange in years.
“In the financial markets, isn’t it very
cyclical?” said Tom Lehrkinder, a
former trading pit clerk and senior analyst at Tabb Group, the capital markets
consultancy. “We went from open-
outcry, to everybody running to electronic and speed and now back to openoutcry, in this instance.”
Box said the old-school trading style,
nearly obsolete in many markets, was
better suited to large and complex deals
than the liquidity generally available in
electronic-only markets and would
encourage participation in such trades.
“We welcome this opportunity to
bring additional competition to the
options market, which we believe will
spur further modernisation of openoutcry trading,” said Lisa Fall, president
of Box Options.
Established in 2002, Box is jointly
owned by TMX Group, which runs the
Toronto Stock Exchange, and eight
broker dealers. According to the
Options Clearing Corporation, Box had
about 2 per cent of the 313m options
contracts traded in July.
World Markets
Subscribe In print and online
www.ft.com/subsusa
Tel: 1 800 628 8088
STOCK MARKETS
For the latest news go to
www.ft.com
S&P 500
© THE FINANCIAL TIMES LTD 2017
No: 39,542 ★
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Washington DC, Orlando, Tokyo, Hong
Kong, Singapore, Seoul, Dubai, Doha
Open outcry represents a third of the
options trading volume at Nasdaq’s
Philadelphia Exchange, while NYSE has
floors for options trading in New York
and San Francisco. The Chicago Board
Options Exchange is a blend of open outcry and electronic orders. It has three
other venues that are electronic only.
Box’s proposal was criticised by some
of the biggest options market players.
In a letter to the Securities and
Exchange Commission, which ultimately approved the plan, the CBOE
said it “is a champion of trading floors
and all that they can offer the marketplace” but the Box plan “lacked innovation”, would contribute to fragmentation and would not encourage better
pricing.
Box plans to launch the trading floor
this month in the Chicago Board of
Trade building.
CURRENCIES
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Dow Jones Ind
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FTSEurofirst 300
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20029.26
20080.04
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110.065 110.390 ¥ per €
144.647 145.980 £ index
94.546
1.150
0.74 SFr per €
0.46 COMMODITIES
-0.12 Gold $
94.121 $ index
1.147 SFr per £
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0.843 US Gov 10 yr
0.756 UK Gov 10 yr
-0.24 $ per €
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77.042
98.942
1.272
52.42
52.36
1268.10
1269.60
77.210 US Gov 30 yr
98.816 Ger Gov 2 yr
1.279
Economic reform hopes have
risen in Brazil after President
Michel Temer, who was
recorded allegedly discussing
bribes, saw off a bid to put him
on trial.— PAGE 2; BIG READ, PAGE 7
i Scramble to assess Russia sanctions blow
Energy executives have warned that investments in
Russia will suffer from new US sanctions as they
scrambled to judge the impact on billions of dollars’
of projects.— PAGE 13; TONY BARBER, PAGE 9
i Ex-statistics chief’s conviction ‘a farce’
Eurozone officials have criticised the prosecution in
Athens of Andreas Georgiou, with an account by
one defence witness, seen by the FT, describing his
trial as “an intimidating preset farce”.— PAGE 3
i 8,000 Syrians transferred from Lebanon
Hizbollah and a Syrian rebel group affiliated with
al-Qaeda have sealed a deal under which nearly
8,000 militants and refugees are being transferred
from Lebanon into northern Syria.— PAGE 4
Datawatch
Wearables war
Global market shares (%)
30
Xiaomi
25
Fitbit
Apple
20
15
10
5
2016
Source: Strategy Analytics
17
Chinese tech giant
Xiaomi overtook
Apple and Fitbit in
the second
quarter to become
the biggest
supplier of
wearable
technology with
17 per cent of the
22m devices sold
★
2
FINANCIAL TIMES
Friday 4 August 2017
INTERNATIONAL
Monetary policy
Bank of England
Czech central bank blazes trail with rate rise
Brexit jitters
hold back UK
investment
and spending,
says Carney
Shift to 0.25% marks first
EU increase since crisis as
inflation gains ground
JAMES SHOTTER — WARSAW
The Czech central bank has raised interest rates for the first time since the
financial crisis, becoming the first in the
EU to start what analysts expect will be a
gradual exit from a period of record-low
borrowing costs.
At its policy meeting yesterday the
Czech National Bank voted unanimously to lift its main policy rate from
0.05 per cent to 0.25 per cent — the first
increase since 2008 and an attempt to
damp inflationary pressure from surging wages and soaring house prices.
Central banks across Europe have
driven rates to record lows in a bid to
ward off the threat of deflation and
spark recovery, after economic growth
slumped because of a financial crisis
emanating from the eurozone.
The strong recovery in the bloc this
year has reinforced expectations that
the European Central Bank will soon
start to prepare for the end of its crisisera policies and encouraged other policymakers to act to stop overheating in
their own economies.
The CNB was “the first really hawkish
central bank in Europe”, said Luis Costa,
an analyst at Citi. “This is the first
central European bank to accept the
reality of rising wages growth, closing of
output gaps and positive net export performance. The Czech National Bank’s
mentality makes all the sense in the
world to us.”
In the US, where economic recovery
started earlier, the Federal Reserve
started to raise interest rates late in
2015.
As the financial crisis unfolded, the
CNB cut its main policy rate from a peak
of 3.75 per cent in 2008 to a record low of
0.05 per cent in late 2012. The following
‘The issue of rising
wages and tight labour
markets is a problem
across the region’
year it introduced a cap on the koruna
against the euro in a bid to ward off
deflation.
However, it abandoned the cap in
April amid rising inflation and strong
economic growth, and analysts have
since been expecting it to raise rates, as
historically low levels of unemployment
US politics. Foreign cash piles
Republicans shift
focus to company
tax reforms
Current system has led to
groups hoarding huge levels of
‘locked out’ earnings overseas
BARNEY JOPSON AND SAM FLEMING
WASHINGTON
Republican attempts to make progress
on tax reform after the party’s failure on
healthcare are being undermined by a
lack of consensus on handling US companies’ offshore earnings.
The White House and Republican
lawmakers want to scrap the US practice of taxing American companies on
their worldwide earnings rather than
just domestic income, which is loathed
by multinationals and marks the US as
an odd one out globally.
But the issue is set to spark fierce lobbying and discord. Congressional aides
and independent tax experts agree
there is no problem-free way to move
the US from worldwide to domesticonly taxation, also known as a territorial
system.
The current system has resulted in
companies led by Apple and Microsoft
stockpiling hundreds of billions of dollars of “locked out” earnings overseas,
because the US’s 35 per cent corporate
tax rate only becomes payable when the
income is repatriated.
At the same time, it has inspired other
businesses such as Medtronic and
Mylan to escape the US tax net by using
so-called “inversion” deals to move
their tax addresses overseas, drawing
scorn from both Republicans and
Democrats.
Bemoaning the system of worldwide
taxation, an approach abandoned by
most of the US’s biggest trading partners
over the past 30 years, the tax chief of
one big US manufacturer said: “We
would take any other country’s system
over the US.”
While the White House, Senate and
House of Representatives are yearning
to notch up some form of legislative
achievement — and see tax as their best
hope — the most concrete part of a joint
tax announcement last week was a step
backwards on ending worldwide taxation.
Policymakers said they were ditching
a plan for a border adjusted tax, which
would have created a quasi-territorial
system by imposing a tax on imports to
the US while exempting exports.
For Republicans, offshore earnings
need to be tackled in three steps. First,
they need to work out how to treat companies’ existing offshore earnings.
Second, they need to decide how to
exempt future foreign earnings. Third,
they need to put in place defences to
ensure an end to global taxation does
not inspire an even bigger exodus of
companies from the US.
On existing earnings, Apple revealed
this week that its stash of cash and marketable securities had grown to $246bn.
The next largest in 2016 was Microsoft’s
$116bn, followed by Cisco with $62bn
and Google with $52bn, according to the
rating agency Moody’s.
Jim Carter, who was head of tax for the
Trump administration’s transition
team, says it is a “foregone conclusion”
that the earnings will be subject to some
form of mandatory one-off tax. The
Trump campaign tax plan proposed a
levy of 10 per cent, a generous giveaway
in the eyes of Democrats given the
standard 35 per cent rate.
One fight with companies will be over
whether there is a single blanket rate, or
a “bifurcated” rate with a higher tax on
cash and a lower tax on earnings that
have been invested in M&A deals or
facilities.
The tax chief at the manufacturer,
which has reinvested a big chunk of its
overseas earnings, said: “We don’t have
the option of just saying ‘we’ll write you
a cheque’. We don’t want to be forced
into a situation where we actually have
to sell assets.”
On future foreign earnings, eliminating US taxation is less simple than it
sounds. “It is not clear that a ‘perfect’ or
WORLD BUSINESS NEWSPAPER
Dear Don...
May’s first stab at the break-up
letter — ROBERT SHRIMSLEY, PAGE 12
HMRC warns
customs risks
being swamped
by Brexit surge
Lloyd’s of Brussels Insurance market
to tap new talent pool with EU base
UK £3.80; Channel Islands £3.80; Republic of Ireland €3.80
JAMES BLITZ — WHITEHALL EDITOR
A computer system acquired to collect
duties and clear imports into the UK
may not be able to handle the huge
surge in workload expected once Britain
leaves the EU, customs authorities have
admitted to MPs.
HM Revenue & Customs told a parliamentary inquiry that the new system
needed urgent action to be ready by
March 2019, when Brexit is due to be
completed, and the chair of the probe
said confidence it would be operational
in time “has collapsed”.
Setting up a digital customs system
has been at the heart of Whitehall’s
Brexit planning because of the fivefold
increase in declarations expected at
British ports when the UK leaves the EU.
About 53 per cent of British imports
come from the EU, and do not require
checks because they arrive through the
single market and customs union. But
Theresa May announced in January that
Brexit would include departure from
both trading blocs. HMRC handles 60m
declarations a year but, once outside the
customs union, the number is expected
to hit 300m.
The revelations about the system,
called Customs Declaration Service, are
likely to throw a sharper spotlight on
whether Whitehall can implement a
host of regulatory regimes — in areas
ranging from customs and immigration
to agriculture and fisheries — by the
time Britain leaves the EU.
Problems with CDS and other projects
essential to Brexit could force London to
adjust its negotiation position with the
EU, a Whitehall official said. “If running
our own customs system is proving
much harder than we anticipated, that
ought to have an impact on how we
press for certain options in Brussels.”
In a letter to Andrew Tyrie, chairman
of the Commons treasury select committee, HMRC said the timetable for
delivering CDS was “challenging but
achievable”. But, it added, CDS was “a
complex programme” that needed to be
linked to dozens of other computer systems to work properly. In November,
HMRC assigned a “green traffic light” to
CDS, indicating it would be delivered on
time. But last month, it wrote to the
committee saying the programme had
been relegated to “amber/red,” which
means there are “major risks or issues
apparent in a number ofkey areas”.
HMRC said last night: “[CDS] is on
track to be delivered by January 2019,
and it will be able to support frictionless
international trade once the UK leaves
the EU . . . Internal ratings are designed
to make sure that each project gets the
focus and resource it requires for successful delivery.”
HMRC’s letters to the select committee, which will be published today, provide no explanation for the rating
change, but some MPs believe it was
caused by Mrs May’s unexpected decision to leave the EU customs union.
THE END
OF THE
ROAD
Timetable & Great Repeal Bill page 2
Scheme to import EU laws page 3
Editorial Comment & Notebook page 12
Philip Stephens & Chris Giles page 13
JPMorgan eye options page 18
A report on how the health service can survive
more austerity has said patients will wait longer for
non-urgent operations and for A&E treatment while
some surgical procedures will be scrapped.— PAGE 4
i Emerging nations in record debt sales
Credit Suisse
engulfed in
fresh tax probe
i London tower plans break records
A survey has revealed that a
record 455 tall buildings are
planned or under construction
in London. Work began on
almost one tower a week
during 2016.— PAGE 4
Shutdown risk as border
wall bid goes over the top
Congressional Republicans seeking to
avert a US government shutdown after
April 28 have resisted Donald Trump’s
attempt to tack funds to pay for a wall
on the US-Mexico border on to
stopgap spending plans. They fear
that his planned $33bn increase in
defence and border spending could
force a federal shutdown for the first
time since 2013, as Democrats refuse
to accept the proposals.
US budget Q&A and
Trump attack over health bill i PAGE 8
The fine by the Financial Conduct
Authority highlights the increasing
problem new media pose for companies
that need to monitor and archive their
staff’s communication.
Several large investment banks have
banned employees from sending client
information over messaging services
including WhatsApp, which uses an
encryption system that cannot be
accessed without permission from the
user. Deutsche Bank last year banned
WhatsApp from work-issued Black-
For the latest news go to
www.ft.com
3 UK, France and Netherlands swoop
3 Blow for bid to clean up Swiss image
i HSBC woos transgender customers
© THE FINANCIAL TIMES LTD 2017
No: 39,435 ★
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Brussels, Milan, Madrid, New York,
Chicago, San Francisco, Washington DC, Orlando,
Tokyo, Hong Kong, Singapore, Seoul, Dubai
Dow Jones Ind
FTSEurofirst 300
Euro Stoxx 50
FTSE 100
FTSE All-Share
CAC 40
AFP
Lloyd’s of London chose Brussels over “five or six” other
cities in its decision to set up an
EU base to help deal with the
expected loss of passporting
rights after Brexit.
John Nelson, chairman of the
centuries-old insurance market, said he expected other
insurers to follow. Most of the
business written in Brussels
will be reinsured back to the
syndicates at its City of London
headquarters, pictured above.
The Belgian capital had not
been seen as the first choice for
London’s specialist insurance
groups after the UK leaves the
Berrys after discussions with regulators.
Christopher Niehaus, a former Jefferies banker, passed confidential client
information to a “personal acquaintance and a friend” using WhatsApp,
according to the FCA. The regulator said
Mr Niehaus had turned over his device
to his employer voluntarily.
The FCA said Mr Niehaus had shared
confidential information on the messaging system “on a number of occasions”
last year to “impress” people.
Several banks have banned the use of
new media from work-issued devices,
but the situation has become trickier as
banks move towards a “bring your own
device” policy. Goldman Sachs has
clamped down on its staff’s phone bills
as iPhone-loving staff spurn their workissued BlackBerrys.
Bankers at two institutions said staff
are typically trained in how to use new
prev %chg
Mar 30
2361.13 0.20 $ per €
5897.55 0.09 $ per £
20703.38 20659.32 0.21 £ per €
1500.72 1493.75 0.47 ¥ per $
EU, with Dublin and Luxembourg thought to be more likely
homes for the industry. But
Mr Nelson said the city won on
its transport links, talent pool
and “extremely good regulatory reputation”.
Lex page 14
Insurers set to follow page 18
media at work, but banks are unable to
ban people from installing apps on their
private phones.
Andrew Bodnar, a barrister at Matrix
Chambers, said the case set “a precedent
in that it shows the FCA sees these messaging apps as the same as everything
else”.
Information shared by Mr Niehaus
included the identity and details of a
client and information about a rival of
Jefferies. In one instance the banker
boasted how he might be able to pay off
his mortgage if a deal was successful.
Mr Niehaus was suspended from Jefferies and resigned before the completion of a disciplinary process.
Jefferies declined to comment while
Facebook did not respond to a request
for comment.
Additional reporting by Chloe Cornish
Lombard page 20
INTEREST RATES
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Mar 30
2365.93
1.074
1.075 € per $
0.932
5902.74
1.249
1.241 £ per $
0.801
0.859
0.866 € per £
3481.67
7369.52
4011.01
5089.64
1.164
prev
0.930 US Gov 10 yr
0.806 UK Gov 10 yr
1.155 Ger Gov 10 yr
111.295 111.035 ¥ per € 119.476 119.363 Jpn Gov 10 yr
3475.27 0.18 ¥ per £ 139.035 137.822 £ index 76.705 76.951 US Gov 30 yr
7373.72 -0.06 € index 89.046 89.372 $ index 104.636 103.930 Ger Gov 2 yr
4011.80 -0.02 SFr per € 1.069 1.072 SFr per £ 1.244 1.238
5069.04 0.41 COMMODITIES
Fed Funds Eff
Xetra Dax
12256.43 12203.00 0.44
Mar 30
Nikkei
19063.22 19217.48 -0.80 Oil WTI $
24301.09 24392.05 -0.37 Oil Brent $
297.99
297.73 0.09 Gold $
52.98
52.54
1248.80
1251.10
Hang Seng
FTSE All World $
it followed “a strategy offull client tax
The bank has unveiled a range of gender-neutral
DUNCAN
— BRUSSELS
but was still trying to
titles
such asROBINSON
“Mx”, in addition
to Mr, Mrs, Misscompliance”
or
Ms, in a move to embrace diversity and cater togather
the information about the probes.
Credit
Suisse hascustomers.
been targeted
by
HM Revenue & Customs said it had
needs
of transgender
— PAGE 20
sweeping tax investigations in the UK, launched a criminal investigation into
France and the Netherlands, setting suspected tax evasion and money launback Switzerland’s attempts to clean up dering by “a global financial institution
Datawatch
and certain ofits employees”. The UK
its image as a tax haven.
The Swiss bank said yesterday it was tax authority added: “The international
Terror
attacks inwith
western
Europe after
reach
co-operating
authorities
itsattacks
Recent
— of this investigation sends a clear
that there is no hiding place for
offices in London, Paris and Amsterdam
notably the message
2011
massacre bythose seeking to evade tax.”
were contacted
local officials
Highlighted
attack byOthers
in
prosecutors, who initiated the
“concerning client tax matters”. Anders BreivikDutch
Norway,
the
Dutch authorities said their counter- action, said they seized jewellery, paintattacks in Paris
ings and gold ingots as part of their
parts in Germany wereBrussels
also involved,
and Nice, and
the while French officials said their
probe;
while Australia’s revenue department
Norway
Brussels suicide
investigation had revealed “several
said it was investigating
a Swiss
Paris
Nice bank.
bombings — have
thousand” bank accounts opened in
The inquiries threaten to undermine
bucked the trend
efforts by the country’s banking sector
Switzerland and not declared to French
of generally low
tax authorities.
to overhaul business models and ensure
fatalities from
The Swiss attorney-general’s office
customers meet international tax
Sources: Jane’s Terrorism and Insurgency Centre terror incidents in
said it was “astonished at the way this
requirements following a US-led clampwestern Europe
down on evaders, which resulted in operation has been organised with the
deliberate exclusion of Switzerland”. It
billions of dollars in fines.
The probes risk sparking an interna- demanded a written explanation from
tional dispute after the Swiss attorney- Dutch authorities.
In 2014, Credit Suisse pleaded guilty
general’s office expressed “astonishment” that it had been left out of the in the US to an “extensive and wideactions co-ordinated by Eurojust, the ranging conspiracy” to help clients
evade tax. It agreed to fines of $2.6bn.
EU’s judicial liaison body.
Additional reporting by Laura Noonan in
Credit Suisse, whose shares fell 1.2 per
cent yesterday, identified itself as the Dublin, Caroline Binham and Vanessa
Houlder in London, and Michael Stothard
subject ofinvestigations in the Netherlands, France and the UK. The bank said in Paris
RALPH ATKINS — ZURICH
CURRENCIES
Mar 30
S&P 500
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MAGAZINE
In a stormy three-hour meeting, investors accused
managers ofhaving an entrenched secrecy culture
and cast doubt on a revival plan after Westinghouse
filed for Chapter 11 bankruptcy protection.— PAGE 16
World Markets
STOCK MARKETS
How To Spend It
Chic new lodgings
in Scotland
i Toshiba investors doubt revival plan
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Art of persuasion Mystery deepens
over disputed painting of Jane Austen
i Tillerson fails to ease Turkey tensions
The US secretary of state has failed to reconcile
tensions after talks in Ankara with President Recep
Tayyip Erdogan on issues including Syria and the
extradition of cleric Fethullah Gulen.— PAGE 9
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A boastful WhatsApp message has cost
a London investment banker his job
and a £37,000 fine in the first case of
regulators cracking down on communications over Facebook’s popular
chat app.
Censors and sensitivity
Warning: this article may be
upsetting — LIFE & ARTS
FT WEEKEND MAGAZINE
Developing countries have sold record levels of
government debt in the first quarter of this year,
taking advantage of a surge in optimism toward
emerging markets as trade booms.— PAGE 15
City watchdog sends a clear message as
banker loses job over WhatsApp boast
LAURA NOONAN — DUBLIN
JENNIFER THOMPSON — LONDON
HOW DRIVERLESS
TECHNOLOGY IS
CHANGING AN
AMERICAN WAY OF LIFE
i Report outlines longer NHS waiting times
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330 Hudson Street,
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Briefing
i US bargain-hunters fuel Europe M&A
Europe has become the big target for cross-border
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
Atlantic.— PAGE 15; CHINA CURBS HIT DEALS, PAGE 17
3 Confidence in IT plans ‘has collapsed’
3 Fivefold rise in declarations expected
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100.14
102.58
price
0.66
0.06
0.00
2.99
0.01
-0.75
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prev
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0.66
0.00
%chg US 3m Bills
1.43 Euro Libor 3m
0.78
0.78
-0.36
-0.36
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0.84 UK 3m
-0.18 Prices are latest for edition
0.34
0.34
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Data provided by Morningstar
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The lure of the exotic
Robin Lane Fox on the flair
of foreign flora — HOUSE & HOME
THE RISE
OF
ECO-GLAM
Escape
the taper
trap
How high earners can evade
a pension headache — FT MONEY
Austen’s descendants insist the Rice portrait depicts her as a girl — see magazine
Brussels takes tough stance on Brexit
with Spain handed veto over Gibraltar
About 2.3m people will benefit from
today’s increase in the national living
wage to £7.50 per hour. But the rise
will pile pressure on English councils,
which will have to pay care workers a
lot more. Some 43 per cent of care
staff — amounting to 341,000 people
aged 25 and over — earn less than the
new living wage and the increase is
expected to cost councils’ care services
£360m in the coming financial year.
Analysis i PAGE 4
The EU yesterday took a tough opening
stance in Brexit negotiations, rejecting
Britain’s plea for early trade talks and
explicitly giving Spain a veto over any
arrangements that apply to Gibraltar.
European Council president Donald
Tusk’s first draft of the guidelines,
which are an important milestone on
the road to Brexit, sought to damp Britain’s expectations by setting out a
“phased approach” to the divorce process that prioritises progress on withdrawal terms.
The decision to add the clause giving
Spain the right to veto any EU-UK trade
deals covering Gibraltar could make the
300-year territorial dispute between
Madrid and London an obstacle to
ambitious trade and airline access deals.
Gibraltar yesterday hit back at the
clause, saying the territory had “shamefully been singled out for unfavourable
treatment by the council at the behest of
Spain”. Madrid defended the draft
clause, pointing out that it only reflected
“the traditional Spanish position”.
Senior EU diplomats noted that
Mr Tusk’s text left room for negotiators
to work with in coming months. Prime
minister Theresa May’s allies insisted
that the EU negotiating stance was
largely “constructive”, with one saying it
was “within the parameters of what we
were expecting, perhaps more on the
upside”.
British officials admitted that the EU’s
insistence on a continuing role for the
European Court of Justice in any transition deal could be problematic.
Brussels sees little room for compro-
For the latest news go to
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© THE FINANCIAL TIMES LTD 2017
No: 39,436 ★
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Brussels, Milan, Madrid, New York,
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390_Cover_PRESS.indd 1
19/01/2017 13:57
mise. If Britain wants to prolong its
status within the single market after
Brexit, the guidelines state it would
require “existing regulatory, budgetary,
supervisory and enforcement instruments and structures to apply”.
Mr Tusk wants talks on future trade
to begin only once “sufficient progress”
has been made on Britain’s exit bill and
citizen rights, which Whitehall officials
believe means simultaneous talks are
possible if certain conditions are met.
Boris Johnson, the foreign secretary,
reassured European colleagues at a
Nato summit in Brussels that Mrs May
had not intended to “threaten” the EU
when she linked security co-operation
after Brexit with a trade deal.
Reports & analysis page 3
Jonathan Powell, Tim Harford &
Man in the News: David Davis page 11
Henry Mance page 12
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ALEX BARKER — BRUSSELS
GEORGE PARKER — LONDON
STEFAN WAGSTYL — BERLIN
Living wage rise to pile
pressure on care services
10%
$246bn
$116bn
The US’s
corporate tax
rate. It only
becomes payable
when income is
repatriated
Tax rate on
foreign earnings
proposed by the
Trump team
during the poll
campaign
Value of
Apple’s cash
and marketable
securities
held abroad
Value of
Microsoft’s
‘locked out’
earnings in 2016,
according to
Moody’s
pure territorial tax system exists,” said
the Tax Foundation, a think-tank.
France, Germany and Japan exempt
only 95 per cent of foreign income from
taxation, not the 100 per cent exempted
by the UK and Australia. How to measure that percentage is another potential
source of disagreement.
It remains to be seen whether Republicans will try to make a tax deal with
Democrats or go it alone.
The third challenge is to stop a move
to domestic-only taxation from backfiring by giving companies more reason to
shift themselves or profits overseas.
JOE LEAHY AND ANDRES SCHIPANI
SAO PAULO
UK £2.70 Channel Islands £3.00; Republic of Ireland €3.00
A Five Star plan?
Italy’s populists are trying to woo
the poor — BIG READ, PAGE 11
FEBRUARY 4 2017
FRIDAY 31 MARCH 2017
35%
CURRENCIES
STOCK MARKETS
Mar 31
S&P 500
Nasdaq Composite
Dow Jones Ind
FTSEurofirst 300
Euro Stoxx 50
FTSE 100
FTSE All-Share
CAC 40
prev %chg
2368.06 -0.04 $ per €
5914.34 0.07 $ per £
20689.64 20728.49 -0.19 £ per €
1503.03 1500.72 0.15 ¥ per $
Mar 31
INTEREST RATES
prev
Mar 31
2367.10
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1.074 € per $
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1.249 £ per $
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0.859 € per £
3495.59
7322.92
3990.00
5122.51
3481.58 0.40 ¥ per £
7369.52 -0.63 € index
111.430 111.295 ¥ per €
139.338 139.035 £ index
88.767 89.046 $ index
4011.01 -0.52 SFr per € 1.071
5089.64 0.65 COMMODITIES
1.069 SFr per £
yield
chg
2.41
-0.01
100.36
0.07
0.00
99.27
3.04
0.01
102.57
-0.75
1.169
12312.87 12256.43 0.46
Mar 31
Nikkei
18909.26 19063.22 -0.81 Oil WTI $
24111.59 24301.09 -0.78 Oil Brent $
297.38
298.11 -0.24 Gold $
53.35
53.13
1244.85
1248.80
50.46
price
100.35
119.180 119.476 Jpn Gov 10 yr
77.226 76.705 US Gov 30 yr
104.536 104.636 Ger Gov 2 yr
1.252 1.244
Xetra Dax
Hang Seng
prev
0.932 US Gov 10 yr
0.801 UK Gov 10 yr
1.164 Ger Gov 10 yr
prev
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99.27
price
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1.22
0.02
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%chg US 3m Bills
0.22 Euro Libor 3m
0.66
0.00
0.78
0.78
0.00
-0.36
-0.36
0.00
0.41 UK 3m
-0.32 Prices are latest for edition
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Data provided by Morningstar
© Copyright The Financial Times Limited 2017. All
rights reserved. Reproduction of the contents of this
newspaper in any manner is not permitted without
the publisher’s prior consent. ‘Financial Times’ and
‘FT’ are registered trade marks of The Financial
Times Limited.
FTSE All World $
‘We would
take any
other
country’s
system
over the US’
President Donald Trump had promised
a 15 per cent corporate rate, but even
Republicans see that as unlikely.
One idea is a so-called minimum tax
on foreign income. Sullying the purity of
a territorial system, it would require
companies to pay US tax immediately
on foreign earnings if they had not
already been taxed up to a certain level
by foreign tax collectors. Another measure focuses on the use of intellectual
property in tax avoidance by imposing a
tax on foreign income derived from IP.
Additional reporting by Tim Bradshaw in
San Francisco
GAVIN JACKSON, GEMMA TETLOW
AND MEHREEN KHAN — LONDON
Persistent uncertainty over the UK’s
future relationship with the EU is holding back business investment and
household spending, Bank of England
governor Mark Carney has warned, as
the central bank cut its growth forecasts and left interest rates unchanged.
The bank published its August inflation
report yesterday, with Mr Carney saying
Brexit-related uncertainty “weighs on
the decisions of businesses and households and holds down both demand and
supply”. He added that some companies
were already delaying decisions about
investments and entering new markets.
The central bank now expects investment in the UK to be 20 percentage
points lower in 2020 than it had forecast
before last year’s EU referendum. It also
revised down its forecast for growth this
year, from 1.9 per cent to 1.7 per cent.
Mr Carney nevertheless said interest
rates were likely to rise further over
the next two years than markets were
forecasting.
He said that with unemployment at a
40-year low and the economy unlikely
to be able to sustain pre-crisis levels of
growth in the future, the trade-off facing
members of the BoE’s rate-setting Monetary Policy Committee was changing.
The bank was “getting to the point
where we have done as much as we can”
to support employment: “We need to
ensure . . . the sustainable return of
inflation to target is achieved.”
Sterling fell against the dollar and the
euro after the BoE published the inflation report and announced that a majority of MPC members had voted to leave
interest rates unchanged at 0.25 per
cent. The committee also voted unanimously to maintain the current level of
gilt and corporate bond purchases.
MPC members Ian McCafferty and
Michael Saunders dissented from the
majority view on interest rates, favouring a quarter-point rise. They also voted
for an increase at the last meeting in
June. But chief economist Andy Haldane voted with the majority, despite
making public comments in recent
weeks indicating he might back a rise.
The BoE believed improving prospects for global growth would support
UK business investment and export
demand, which would partly offset projected greater weakness in household
incomes and uncertainty caused by the
Brexit vote. This would help rebalance
the economy away from a reliance on
consumer spending, it said.
The bank now projects growth will fall
to 1.6 per cent next year, before picking
up to 1.8 per cent in 2019. This growth
would absorb “the small degree of slack
remaining in the economy” within three
years, it said. But it repeated its insistence that this outlook is predicated on
the UK achieving a “smooth adjustment” to a new trading relationship
with the EU after Brexit in March 2019.
The MPC also voted to end the “term
funding scheme”, as originally planned,
at the end of February 2018. Philip
Hammond, chancellor of the exchequer, has agreed to underwrite an additional £15bn of lending to banks
through the scheme.
Editorial Comment page 8
Markets pages 18-20
Temer corruption victory reignites investor hopes for change
Subscribe to the FT today at FT.com/subscription
Trump vs the Valley
Greg Baker/AFP/Getty Images
how investors respond before deciding
what to do next.”
Jaromir Sindel, an analyst at Citi in
Prague, said the next move by the CNB
would be influenced by the ECB, which
is expected to decide later this year on
how to exit its €60bn-a-month stimulus
programme.
“Clearly what the ECB does about
exiting its stimulus programme will be
the decisive factor for central banks in
central Europe. But the issue of rising
wages and tight labour markets is a
problem across the region,” Mr Sindel
said.
The CNB said it expected growth to
“accelerate visibly above 3 per cent” this
year and stay slightly above that level in
the following two years.
Yesterday’s rate increase drove the
koruna up 0.7 per cent to its highest
level against the euro since 2013.
Brazil
MAKE A SMART INVESTMENT
Tech titans need to minimise
political risk — GILLIAN TETT, PAGE 13
A woman walks
past an Apple
store in Beijing
have helped drive a sustained rise in
wages while house prices have also
soared.
In June, the central bank warned that
the risks posed by banks’ mortgage
portfolios were “no longer purely hypothetical”, and said that it would increase
banks’ counter-cyclical capital requirements from next year.
Speaking at a press conference in
Prague, Jiri Rusnok, the CNB’s governor,
said the bank could raise rates further,
but that this would depend on “the
development of key indicators, not just
inflation but others as well”.
Michal Skorepa, analyst at Ceska
Sporitelna, said he expected the CNB to
take a cautious approach. “I don’t think
that they are in a [full-blown] tightening
cycle yet — rather, they are carefully
entering an era of slightly higher rates,”
he said. “I think that they will watch
The Financial Times and its journalism are subject to
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Brazilian president Michel Temer’s historic victory in Congress late on
Wednesday over an attempt to try him
for corruption will revive investor
hopes that he can push ahead with a
stalled economic reform programme,
analysts say.
But the centre-right leader of Latin
America’s biggest economy, who was
secretly taped allegedly discussing
bribes with a businessman, was not off
the hook yet, they warned, with the
public prosecutor’s office considering
more graft-related cases against him.
“This is not a personal victory for anyone but a victory for the rule of law, the
force of our institutions and of the constitution,” Mr Temer said after the vote.
He became Brazil’s first sitting president to face criminal charges after he
allegedly discussed bribes with Joesley
Batista, former chairman of meatpacker JBS.
His reform programme, aimed at
reining in a runaway budget deficit, had
looked to be on track. It included an
unpopular plan to overhaul a generous
pension system that allows workers to
retire as early as their mid-50s. But the
normally savvy backroom political
dealer, who has three times headed the
lower house of Congress, was caught offguard by the bribery accusations when
they surfaced in mid-May.
The public prosecutor’s office
indicted him in the Supreme Court for
corruption in relation to the JBS case.
Under Brazil’s constitution a sitting
president can face trial only with the
approval of two-thirds of the 513-seat
lower house of Congress.
The session on Wednesday was
marked by scuffles between opposing
legislators. The opposition also staged
protests calling for Mr Temer’s ousting.
The session concluded with 263 votes
against the trial and 227 in favour.
The president’s tally was at the upper
end of analysts’ expectations, highlighting how he might survive two other
cases in relation to JBS that the public
prosecutor’s office was expected to file
in the coming months, they said.
These were expected to include an
indictment accusing the president of
“obstruction of justice” over allegations
he conspired to buy the silence of Edu-
ardo Cunha, the jailed former head of
the lower house, over corrupt dealings
involving the pair. The other indictment
is expected to allege that Mr Temer was
the leader of a criminal organisation. He
denies wrongdoing.
But fighting these cases would burn
his political capital as he traded governMichel Temer:
Congress voted
263 to 227 against
a trial after the
president allegedly
discussed bribes
ment jobs, budget funds and backing for
legislation with coalition allies in
exchange for their support. This would
make it increasingly difficult for him to
muster the votes necessary for his
reforms, analysts warned.
“He will be strengthened after this
vote, no doubt,” said Ricardo Sennes of
Prospectiva, a São Paulo-based consultancy. But he added: “This is not a guarantee he will manage a similar result in
the coming votes, and this includes the
pension reform.”
As during the impeachment of former
leftist president Dilma Rousseff a year
ago for budgetary violations — a decision that brought Mr Temer to power —
each lawmaker gave a short speech
when delivering his or her vote in
Wednesday’s marathon session.
Some, such as Wladimir Costa, from
one of the house’s minor parties, proclaimed themselves Temer diehards.
The lawmaker even had himself photographed before the vote with the word
“Temer” apparently tattooed on his
shoulder, although some media reports
questioned whether it was real.
Other lawmakers used their vote to
try to score points with voters ahead of
elections next year by distancing themselves from the unpopular president. Only 5 per cent of those surveyed
in a recent CNI-Ibope poll ranked Mr
Temer’s government good or excellent.
Markets, however, remain optimistic
that the president can maintain economic stability, and possibly attempt
some tweaks to pensions. “The market
is betting that his continuity is a guarantee that his policies will continue. It sees
a favourable outlook from the economic
point of view,” said Mr Sennes.
FT Big Read page 7
★
Friday 4 August 2017
3
FINANCIAL TIMES
INTERNATIONAL
Cracks appear in Germany’s
cash-starved infrastructure
Bridges and roads crumble as local authorities use funds to reduce budget deficits
GUY CHAZAN — LEVERKUSEN
As you cross the bridge over the Rhine at
Leverkusen you notice something
strange. This is one of Germany’s most
critical transport corridors, near one of
its biggest industrial hubs — yet among
the thousands of vehicles that use it
every day, there are no trucks.
The bridge has been closed to heavy
goods vehicles since 2012, when cracks
were discovered in the concrete. A
replacement will be opened in 2020. But
until then, lorries will have to find other
ways across the Rhine.
Marcus Hover is the director of the
VVWL, a local transport lobby group,
but he says he is glad the bridge broke,
calling it “a wake-up call for the whole
country” and a monument to Germany’s infrastructure crisis.
To outsiders Germany can seem like a
well-oiled machine. But its reputation as
a paragon of efficiency obscures the fact
that many roads, bridges and public
buildings are in shocking disrepair.
Starved of investment for years, a lot of
infrastructure is slowly crumbling.
Yesterday the authorities were forced
to close another bridge over the Rhine
after a crack was found in a cable fixture. Normally some 100,000 vehicles a
day cross the bridge at Neuenkamp,
about 80km north of Leverkusen and
one of the most important transport
links between the Ruhr industrial belt
and the Netherlands.
Hendrik Wüst, transport minister of
North Rhine-Westphalia, worries about
economic disruption. “When a businessman in Siegerland [central Germany] can’t transport his wind turbine
or transformer to his customer because
the bridges are broken, we have a problem,” he says. “We risk losing jobs in the
fastest-growing rural areas.”
Martin Schulz, leader of the centreleft Social Democrats (SPD), has put the
infrastructure issue at the heart of his
campaign for next month’s Bundestag
election. He argues that federal,
regional and local governments should
be spending their combined €56bn
budget surplus on fixing school roofs
rather than on the tax giveaways that
Angela Merkel’s CDU is proposing.
Development bank KfW says Germany’s towns, cities and rural districts
have an “investment gap” of €126bn,
including a €34bn backlog of spending
on roads and €33bn on schools.
“For too long, Germany was focused
on balancing its budget and reducing
the deficit rather than on investment,
and over time that adds up,” says Henrik
Enderlein, vice-president of the Hertie
School of Governance in Berlin, who
helped write the SPD economic plan.
Statistics show that public investment
as a percentage of GDP fell from nearly
5 per cent in 1970 to an all-time low of
1.9 per cent in 2005. It has stabilised at
about 2 per cent. The government
insists public investment is “surging”,
with an average annual growth rate of
3.8 per cent, and will rise by about 5 per
cent a year until 2020.
But it also admits that the extra funds
made available to local authorities over
the past few years “have not triggered
much new investment”. The money is
instead used “to reduce budgetary deficits and build up surpluses”, it says.
1.9%
Percentage of
GDP accounted
for by public
investment in
2005, down from
nearly 5 per cent
in 1970
€126bn
Size of
‘investment gap’
among German
towns, cities and
rural districts.
The figure
includes a €34bn
backlog of
spending on
roads and €33bn
on schools
128,000
Number of cars
carried daily by
the Leverkusen
bridge — it also
carried 14,000
lorries — a load
it was never
designed to take
30km
Extra distance
added to the
average truck
driver’s journey
due to the bridge
closure
Smolensk tragedy
Tusk quizzed over plane crash
that killed Poland’s president
JAMES SHOTTER AND EVON HUBER
WARSAW
Donald Tusk was questioned by Polish
prosecutors yesterday as a witness in
an investigation into the 2010 Smolensk plane crash that killed then president Lech Kaczynski and numerous
other top Polish officials.
Mr Tusk, now president of the European
Council, was Polish prime minister at
the time of the tragedy, which occurred
as a plane carrying Polish dignitaries to a
memorial event in Russia crashed in
heavy fog.
The Polish probe is looking into the
actions of Polish authorities in relation
to the crash, including how autopsies of
the victims were dealt with. An investigation in June found that some of the
victims’ coffins contained remains from
more than one person.
In an interview with Polish channel
TV Trwam ahead of the questioning,
Jaroslaw Kaczynski, twin of Lech and
the head of Poland’s ruling Law and Justice party (PiS), said Mr Tusk, who has
long been his bitter political rival, had
“reason . . . to fear”.
“I loyally said to [German chancellor
Angela] Merkel in Warsaw, that Donald
Tusk’s situation might be unstable. I
advised her to take it into account if she
supports him for the president of the
European Council,” Mr Kaczynski said,
referring to a political fight earlier this
year in which Poland tried to block Mr
Tusk’s reappointment. “This advice
wasn’t accepted . . . Polish law must be
obeyed and Donald Tusk is the
same . . . as anyone else,” he added.
Mr Tusk said after meeting the prosecutors: “I do not have a reason to be
afraid and Mr Kaczynski won’t scare
me.” He said he could not comment on
the investigation.
Speaking ahead of the meeting in
Warsaw, Roman Giertych, a lawyer representing Mr Tusk, said that it was
“obvious that the motivations of this
hearing are political”.
Mr Tusk’s appearance before prosecutors comes after he was questioned
earlier this year as a witness in a separate probe into the activities of Polish
intelligence services.
Mr Tusk’s appearance in Poland
comes amid an escalating battle
between Warsaw and Brussels over an
attempt by PiS to overhaul the country’s
legal system, which critics fear will
undermine the rule of law in the central
European country.
Last month, PiS put forward three
bills that would give politicians wideranging controls over the judiciary, provoking criticism from the EU and the US
and street protests across the country.
President Andrzej Duda vetoed two of
the bills but signed the third.
Georgiou case
Brussels criticises prosecution
of former Greek statistics chief
330
Number of
tonnes of extra
carbon dioxide
emitted due to
the extra
kilometres driven
by the lorries
Bridge of sighs: the Leverkusen
crossing is closed to lorries and a
replacement is not due to open
until 2020 — Hans Blossey /Alamy
Investment has fallen
as a share of GDP
Gross fixed capital formation
(% of GDP)
1.8
1.6
Municipal authorities 1.4
The 16 states
Federal government 1.2
1.0
0.8
0.6
1991
2000
05
10
0.4
16
Source: DIW Berlin
Some economists blame the “debt
brake”, a constitutional amendment
passed in 2009 that put a straitjacket on
state and local governments by stopping
themfromrunningstructuraldeficits.
Marcel Fratzscher, head of the DIW
think-tank in Berlin, says when times
are tough and unemployment and social
spending go up, regional governments
have found that investment is the “easiest thing to cut”. Yet when the economy
does better, Germans prefer to “give
ourselves a treat” rather than invest.
One such “treat” he cites is the expensive reform of 2014 that cut the retirement age to 63 for certain long-serving
workers and raised pensions for mothers of children born before 1992.
Mr Schulz has proposed an “investment obligation”, a reflection of the debt
brake requiring governments to spend
surplus revenues on infrastructure.
With him is the International Monetary
Fund, which wants Germany to spend
more on public infrastructure to
encourage private investment and cut
the massive current account surplus.
Ms Merkel argues that the main
obstacle is not a lack of money but planning bottlenecks. “We can’t spend the
money we have now,” she said last
month. Her CDU manifesto promises to
remove red tape, ease planning curbs
and fast-track high-priority projects.
Indeed, money is rarely the main
problem: Berlin’s new airport was supposed to open in 2011 and is still unfinished, but the main culprits have been
technical problems, poor planning and
frequent management changes.
Leverkusen’s bridge epitomises Germany infrastructure problem. Opened
in 1965, by 2012 it was carrying 128,000
cars and 14,000 lorries daily — a load it
was never designed for. Mr Hover says
the closure adds 40 minutes and 30km
to the average truck-driver’s job, so each
day 126,000 more litres of diesel are
consumed and 330 more tonnes of carbon dioxide emitted. Trucks have
halted traffic as they find alternative
routes. “I know one firm with a small
fleet of 30 vehicles that says it is costing
them €15,000 a month,” Mr Hover says.
He fears that more cracks will appear
and the bridge will shut down completely. “Then we’ll have total chaos.”
Mr Wüst says that in his region alone
about 300 bridges must be rebuilt.
Public attitudes also need to change,
say experts. Politicians are unlikely to
get elected by promising to invest in a
bridge that might collapse in 30 years if
left untended, says Mr Hover.
JIM BRUNSDEN AND ARTHUR BEESLEY
BRUSSELS
KERIN HOPE — ATHENS
Eurozone officials have warned that
the continued prosecution in Greece of
its former statistics chief is threatening
to drive a wedge between Athens and
its euro area creditors, only weeks after
the country brokered a deal on the next
stages of its €86bn bailout.
A suspended sentence handed down
this week against Andreas Georgiou has
prompted consternation among EU policymakers, reviving what many capitals
fear is a series of politically motivated
trials intended to restore the economic
reputation of previous governments.
He faces another trial on charges of
inflating the deficit after the Supreme
Court prosecutor reversed a lower
court’s decision to drop the charges.
The long-running affair is likely to be
put on the agenda of eurozone finance
ministers in September amid “concern
about the conviction across institutions”, said a diplomat.
The judicial proceedings centre on Mr
Georgiou’s time in charge of Elstat, the
independent statistics agency set up as a
condition of the first Greek bailout.
In remarks on Twitter that reflect
unease in Brussels at the conviction,
Valdis Dombrovskis, European Commission vice-president with responsibility for euro affairs, said he was follow-
ing developments with concern. It was
“important that [the] independence of
Elstat and people who do their jobs are
protected in line with the law”, he said.
The independence of national statistics offices was a “key pillar of the
proper functioning” of the euro and
“one of the main elements forming the
trust among euro area member states.
This is why it is protected in EU law. This
is why it cannot be challenged.”
In an informal, written account of Mr
Andreas Georgiou:
affair is likely to be
put on the agenda
of eurozone
finance ministers
in September
Georgiou’s trial in an Athens appeal
court, a European statistics expert
called as a defence witness described the
case as “an intimidating preset farce”.
The emailed account to EU officials,
seen by the Financial Times, lays bare
the extent of the worries within European institutions about the affair.
“It was blatantly clear no one listened
to our declarations,” the expert wrote.
The account described “open threatening behaviour” in court and a “horribly hostile” atmosphere, saying the proceedings had to be stopped for 45 minutes as people were shouting and
screaming during the expert’s evidence.
Cash shortage
Zimbabwe boosts ‘bond note’
parallel currency by $300m
Neymar deal
Record football transfer fee tests rules of financial fair play
MURAD AHMED — LONDON
When FC Barcelona inserted a €222m
buyout clause into the contract of new
signing Neymar four years ago, club
officials believed no rival could afford
such an astronomical fee.
This week, Paris Saint-Germain activated the clause, forcing the Spanish
club to allow the Brazilian player to
open talks on the most expensive transfer in football history.
Should the deal go through, it will
shake up football. The sport’s authorities are under pressure to scrutinise or
even block the transfer, which challenges the efficacy of rules aimed to ensure
clubs do not spend beyond their means.
The acquisition could signal a shift in
the power balance among Europe’s elite
clubs. Barcelona, one of the continent’s
traditional superpowers, faces the loss
of one its star players against its will.
The Spanish club’s illustrious history
could not match the raw financial clout
of PSG, owned by Qatar Sports Investments, a state-funded group.
Experts said the move also showed
how a team sport has moved towards
a superstar-centric financial model. “If
you think how football was 30 years ago,
the overwhelming majority of a team’s
money came from the local fan base,”
said Stefan Szymanski, author of Money
and Football: A Soccernomics Guide.
“The difference today is the global
reach of teams, through all forms of
media, so that the revenue-generating
potential comes from global celebrities
like Neymar, [Lionel] Messi and [Cristiano] Ronaldo.
“It’s not impossible to imagine,
bizarrely, that this transfer may even
pay off one day.”
Some are looking to challenge the
deal. Yesterday, the player’s representatives went to the Madrid
offices of La Liga, the Spanish
League, trying to pay the full
amount to complete the transfer
for Paris Saint-Germain.
La Liga said it rejected
the payment, but would
not comment on what
grounds. PSG declined
to comment, but the
club believes it can still
force the transfer.
Neymar’s record
transfer fee is set
to shake the game
Later yesterday, lawyers made the
payment directly to Barcelona, who unilaterally terminated Neymar’s contract.
The club said it would flag the transaction to Uefa, European football’s governing body, so it could “determine the disciplinary responsibilities that may arise
from this case”.
Barcelona had said the world
record fee must be “deposited in its entirety”. The unusual demand will make it
harder for PSG to adhere to rules
introduced seven years ago by
Uefa, European football’s governing body, that place curbs
on how much teams can
spend as a proportion of
income.
The so-called financial fair
play (FFP) rules were
revised in 2015, so clubs
must show that they do
not have losses of more
than €30m over a threeyear period, although
this exempts spending
on items such as stadium infrastructure and
youth development.
Javier Tebas, La Liga
president, believes the deal
would breach FFP. Yet under the rules,
PSG would not book the transfer fee up
front but would account for the deal
over the length of the contract. Reports
suggest Neymar is close to agreeing a
five-year deal worth €30m a year after
tax. As a result, Uefa said the French
side had several years to raise the revenues required to fund the acquisition,
“notably as PSG could well sell several
players for a significant amount”.
It added: “We shall therefore only
make calculations at the end and make
sure that they respect the rules.”
Daniel Geey, partner at Sheridans, a
law firm that represents football clubs,
said he would also expect PSG to raise
revenues via new commercial deals,
such as Neymar endorsements.
“These deals don’t happen too often
and this is obviously a monumental figure,” he said. “There are only a few clubs
that can afford it from a cost and revenue perspective, but PSG is one.”
The club’s hierarchy will also hope
Neymar can lead it into the latter stages
of the Champions League, Europe’s
premier club tournament, which would
provide increased prize money and
broadcasting income. PSG is yet to
appear in the competition’s semi-final.
JOSEPH COTTERILL — JOHANNESBURG
TONY HAWKINS — HARARE
Zimbabwe’s central bank has said it
will more than double the printing of
“bond notes” as a cash shortage worsens in the dollar-dependent southern
African nation.
John Mangudya, governor of the
Reserve Bank of Zimbabwe, said on
Wednesday that the parallel currency
would be printed “on a drip-feed basis”
from the end of August. Bond notes,
which were launched last year, are officially equal to US dollars in value but
trade at a discount.
A $300m boost, bringing the value of
bond notes in circulation to $500m, is
being funded with loans guaranteed
by African Export-Import Bank,
according to the central bank. Cairobased Afreximbank could not be
reached for comment.
The increase will bring the value of
bond notes in circulation to more than
half the US dollars in the country, raising fears that the notes are paving the
way for the return of the Zimbabwe dollar, which was withdrawn after hyperinflation in 2009.
Mr Mangudya blamed “wayward
market indiscipline” for a continued
drain of physical money from circulation. “Inefficient circulation of money
is significantly causing shortages of
cash in the formal economy and the
banks,” he said.
Zimbabwe’s economy has been haemorrhaging US dollars, the most commonly used of several foreign currencies
adopted since 2009. The dollars are
used to pay for imports under a trade
deficit of $1.5bn, about 9 per cent of
gross domestic product.
Years of political instability have crippled the economy, triggering a collapse
of foreign investment.
The problem has been exacerbated by
turmoil in the ruling Zanu-PF party, led
by Robert Mugabe, who at 94 has
resisted naming a successor ahead of
presidential elections due next year that
he is contesting after 37 years in power.
Zimbabweans are piling up dollars at
home, and banks have limited withdrawals to as little as $50 a day. Payments are increasingly made by mobile
phone or card.
The central bank has said there is still
about $800m in US dollars and other
foreign currencies in circulation, but
the International Monetary Fund estimates that the dollar total could be as
low as $600m.
“With its link to the US dollar increasingly tenuous and lacking a strong
anchor, confidence in the domestic
monetary system could weaken rapidly,” IMF economists said recently in a
report on Zimbabwe’s economy.
★
4
FINANCIAL TIMES
Friday 4 August 2017
INTERNATIONAL
Swearing-in
Civilian threat
Rouhani takes Iran on ‘economic revolution’
Thousands of
Syrians sent
from Lebanon
to jihadi-held
Idlib province
President strives for more
investment through
improved overseas links
NAJMEH BOZORGMEHR — TEHRAN
Iranian president Hassan Rouhani yesterday said his new government would
work to improve relations with the outside world as he seeks to attract foreign
investment to tackle high unemployment and boost the economy.
Speaking at his swearing-in, Mr Rouhani, who won a landslide victory at
May elections, said he wanted to
embark on an “economic revolution”.
“With more self-confidence than
before [after the election] . . . we insist
on constructive and effective interac-
tion with the world,” he said. His comments came as Iran faces mounting
pressure from the US, which imposed
additional sanctions on the Islamic
republic last month. Mr Rouhani has
also been battling domestic resistance
from regime hardliners who oppose his
promises to open up the country.
Ayatollah Ali Khamenei, Iran’s
supreme leader and ultimate decision
maker, endorsed Mr Rouhani’s second
term at the swearing-in ceremony. But
in a sign of the challenges the president
faces, he called on the government to
resist the US’s hostility and respect
domestic opponents.
“When we think of [expanding] international interaction, we should not forget that there are enemies who are
determined to destroy us,” Mr Khame-
nei said, citing the US. “Stand against
them with determination and power.”
Donald Trump, US president, has
threatened to unravel the landmark
nuclear deal Tehran signed with world
powers during Mr Rouhani’s first term,
and he has accused Iran of fuelling “the
fires of sectarian conflict and terror”.
The accord was the signature foreign
policy achievement of the Obama
administration and led to many western
sanctions being lifted in 2016.
Mr Rouhani, a pragmatist who won
the election on a reform agenda, has
sought to use the deal to improve relations with the west after years of isolation and lure foreign investment to help
revive the Islamic republic’s economy.
But the US’s non-nuclear sanctions have
undermined his government’s efforts to
deliver on its promises and caused
many western companies and banks to
be wary of doing business with Iran.
Regime hardliners, which include the
powerful Revolutionary Guards and the
judiciary, have accused Mr Rouhani of
negotiating a weak agreement and criticised the deal for not delivering benefits
to ordinary Iranians.
Tensions between Mr Rouhani and
hardliners escalated after his victory,
which was preceded by a bitterly fought
campaign. However, Iranian media
published a photo of a meeting of senior
guards’ commanders and Mr Rouhani
last month, which was interpreted as a
message that efforts are being made to
stem the internal battles.
Mohammad-Sadegh Javadi-Hesar, a
reformist politician, said the meeting
“was highly significant and a move
towards the de-escalation of tensions”.
He added that Mr Khamenei’s mild tone
at yesterday’s swearing-in was “possibly
reflective of some progress in that meeting of the guards and the president”.
However, the supreme leader and the
president appear to differ on how to
tackle Iran’s economic challenges as the
country grapples with youth unemployment of 26 per cent.
Mr Khamenei urged the government
to stick to a five-year development plan
that started this year and envisages Iran
attracting about $200bn in domestic
and foreign investment annually.
But Mr Rouhani’s government
believes that is unrealistic, as investors
are put off by Middle East tensions and
Tehran’s ballistic missile programme.
Gulf tension. Diplomatic crisis
Saudis and Qatar unleash media dogs of war
Doha and four regional states
that accuse it of terror ties are
in a bitter propaganda battle
AHMED AL OMRAN — RIYADH
Gulf viewers were shocked when Al Arabiya, a Saudi-owned television channel,
insultingly referred to Qatar’s emir by
his first name and described his government as “the rogue” regime.
The Gulf’s tightly controlled media
have traditionally been the epitome of
deference when it comes to reporting on
the states’ ruling monarchies and
regional politics. But Al Arabiya’s decision to drop all Sheikh Tamim bin
Hamad Al Thani’s titles underlines how
the region’s media outlets have become
core weapons in the diplomatic crisis
that pits Saudi Arabia and three Arab
allies against Qatar.
“Historically, Saudi Arabia has been
conservative but this time it seems that
the gloves are off,” said Awad al-Fayadh,
a journalist working for Saudi-owned
MBC television.
The Gulf crisis is deadlocked two
months after Saudi Arabia, the United
Arab Emirates, Bahrain and Egypt took
the extraordinary decision to cut diplomatic and transport ties with Qatar,
which they accuse of sponsoring terrorism. Doha denies the allegations and
refuses to cede to its adversaries’
demands — including that it close Al
Jazeera, its satellite television network.
Riyadh and its allies escalated the crisis
so rapidly that they have left themselves
with few realistic options than to apply
more pressure on Doha.
But the media war has continued as
the rival states have unleashed their
state-affiliated media outlets as attack
dogs to keep the propaganda battle
going, not just for domestic consumption but also as they attempt to court
support from their shared western
allies.
Stories have ranged from those
intended to back the allegations about
Qatar’s support for terrorism to the
more trivial.
Sky News Arabia, a joint venture
between an Abu Dhabi company, owned
by an Emirati royal, and the UK’s Sky,
ran a documentary last month that
claimed to reveal Doha’s links to a terrorist involved in the 9/11 attacks on the
Switched on:
a group of men
watch television
in a café in
Jeddah,
Saudi Arabia
Tim E White/Alamy
US. A story in Okaz, a Saudi daily newspaper, claimed Harrods, the London
department store owned by Qatar, was
collecting credit card information of
shoppers from the anti-Qatar bloc.
Meanwhile pro-Qatar outlets circulated dubious reports that Saudi Arabia
would punish anyone who wore FC Barcelona shirts because the Spanish team
is sponsored by Qatar Airways.
Mr Fayadh and other Saudi journalists say the media campaign against
Qatar is justified because it follows two
decades of what they described as Qatar
using its media outlets, including Al
Jazeera, to destabilise the kingdom and
the region. “Today the government realises that this battle must be fought at
least using the same tools,” he said.
Some Saudi journalists say they have
come under government pressure to
criticise Qatar.
One Saudi editor described how officials had been using a mobile phone
messaging group to send instructions to
journalists on what stories to focus on.
Media in the Gulf have always been
under the tight control of governments.
But the launch of Al Jazeera in 1996 revolutionised the region’s broadcast landscape as it reported critically about
Qatar’s peers across the Middle East.
Al Jazeera insists it has editorial independence, but Riyadh and Abu Dhabi
view its Arab language channel as a
mouthpiece for Islamist groups backed
by Doha. And Saudi Arabia and the UAE
established their own satellite channels
— Al Arabiya and Sky News Arabia — to
counter Al Jazeera’s narrative.
The initial signs that the diplomatic
crisis was about to erupt emerged in
May when Saudi and Emirati media ran
wall-to-wall coverage of controversial
comments purportedly made by Sheikh
Tamim. Their reports centred on
remarks published on Qatar’s state
news agency in which the emir purportedly praised Hamas, the Palestinian
militant group, and described Iran as an
“Islamic power”.
Doha said the site had been hacked
‘Historically,
Saudi
Arabia
has been
conservative
but this time
it seems that
the gloves
are off’
and said the comments were false. But
Riyadh and Abu Dhabi ignored Qatar’s
protestations and their affiliated media
continued to run Sheikh Tamim’s “comments” as fact, while officials rejected
Doha’s explanation as lies.
Less than two weeks later, the
embargo was announced. Saudi Arabia
then shut down the Al Jazeera bureau in
Riyadh, and it and its allies have blocked
internet access to Qatari news websites.
Doha has since accused the UAE of
being behind the hacking of its news
agency, while the Washington Post cited
unnamed US officials backing its claims.
The UAE denied it was involved.
Qatari media outlets have been firing
their own salvos against the Saudi-led
bloc, with reports on Al Jazeera describing the blockade as immature acts of
“political joyriding” by “countries that
imposed Bedouin structures on modern
state institutions”. Other reports in
Qatari media have highlighted alleged
Saudi support for jihadi groups, an accusation Riyadh rejects.
ERIKA SOLOMON — BEIRUT
Nearly 8,000 Syrian militants and refugees are being sent from a rugged border region of Lebanon into northern
Syria under a deal struck between the
Lebanese Shia force Hizbollah and a
Syrian rebel group affiliated to alQaeda, in one of the biggest population
transfers agreed between non-state
actors in Syria’s six-year war.
The Syrians are being sent in a bus convoy to part of the rebel-held north of the
country that is controlled by jihadis.
Fighting between Hizbollah and Syrian militants in Lebanon’s mountainous
border region raged for weeks until this
week’s deal. It was home to some 9,000
refugees — and also jihadis loyal to
Tahrir al-Sham, a former al-Qaeda affiliate, or to Isis. The Isis militants have
vowed to continue fighting, but Tahrir
al-Sham struck the deal with Hizbollah
to move its fighters, their families, and
thousands of refugees trapped in the
area. In return, it has returned Hizbollah prisoners and some dead bodies.
The deal, according to one Lebanese
security source, was mediated by Syrian
and Lebanese government representatives — but agreed by Hizbollah and Syrian militant groups. Such an agreement
highlights a growing trend across the
Middle East, in which state powers are
increasingly dependent on militants
loosely aligned with their interests
This deal sends 7,777 refugees and militants into northwestern Idlib province,
already packed with tens of thousands
of refugees brought through other such
deals between warring parties in Syria.
“We are worried to see this pushing all
of Assad’s opponents into one place,
controlled by Tahrir al-Sham,” said
Tareq Abdelhaq, an activist from Idlib.
The province has recently been taken
over by Tahrir al-Sham after it ousted
rivals. Trade and aid supplies are effectively under the jihadi group’s control
and risk being halted due to concerns of
supplies or funds ending in their hands.
That threatens some 2m packed into the
province who are struggling to survive.
Any international offensive in the
area could lead to a heavy civilian toll.
The most likely candidates for a campaign against the jihadis, are the US, Russia (Mr Assad’s backer) or Turkey, a rebel backer that has a border with Idlib.
One rebel commander, from Idlib but
based in Turkey, said he would like to
join an international effort to oust the
jihadis but was concerned no foreign
power had a plan for civilians, especially
given that Turkey has shut its borders.
“They have nowhere to flee,” he said.
US envoy to Syria Michael Ratney
posted a letter online on Wednesday
that seemed to suggest the area could
face an international campaign.
“Everyone should know that [Abu
Mohammed] al-Jolani and his gang bear
responsibility for the grave consequences that will befall Idlib,” he said, referring to the leader of Jabhat al-Nusra, alQaeda’s Syrian affiliate, which has become Tahrir al-Sham. The group is still
often referred to as Jabhat al-Nusra.
“In the event of the hegemony of Jabhat al-Nusra in Idlib, it would be difficult
for the US to convince international parties not to take the necessary military
measures,” Mr Ratney said.
Additional reporting by Nazih Osseiran
State-owned enterprises
China tightens rules on overseas investments
EMILY FENG — BEIJING
China’s financial regulators have further tightened oversight of foreign
investments by the country’s struggling state-owned enterprises, to try to
stem capital outflows and rein in risk.
Starting this week, China’s finance ministry will require state groups at both
national and provincial level to defend
the financial viability of overseas investments and assess their political risks
before proceeding, while also mandating stricter auditing mechanisms.
The regulations also require all state
groups to better document foreign currency transactions to assuage concerns
that overseas infrastructure investment
could mask capital outflows.
China’s leaders have encouraged the
country’s SOEs to “go out” and fund
overseas telecommunications, railroad
and construction projects as part of
$900bn in planned investments for the
country’s signature Belt and Road infrastructure initiative.
However, that has exposed the groups
to greater credit and political risk as
they sink resources into central Asia,
Southeast Asia and Africa. Analysts also
worry that the Belt and Road frenzy has
encouraged groups to approve financially risky projects.
“It’s clear Chinese regulators decided
that this sort of free-for-all shopping
spree that has been happening over the
past few years is not acceptable, and
they want to reassert the government
gatekeeper role in to the outbound flow
of investments,” said Yanmei Xie, an
‘It’s clear that regulators
decided that this sort of
free-for-all shopping
spree is not acceptable’
analyst at Beijing-based consultancy
Gavekal Dragonomics.
Weighed down by debt and overcapacity, China’s unwieldy SOEs have
struggled to catch up with private
groups in terms of profitability. In
response, authorities have merged
underperforming SOEs with stronger
ones and warned them to cut back on
non-strategic investments.
“Some investments do not meet our
industrial policy requirements for out-
ward investment,” said Zhou Xiaochuan, central bank governor, in March.
“Therefore we think a certain degree of
policy guidance is necessary.”
Regulators have long sought a greater
role in directing SOE investments. In
January, the State-owned Assets Supervision and Administration Commission
(Sasac) set out a “negative list” that outlined sectors off limits to SOE investment. The new regulations subject overseas investments to greater scrutiny.
However, that kind of heavy-handed
enforcement may not cure SOEs of their
financial woes, analysts say.
“SOEs have not been very capable of
investing in commercially profitable
projects but it’s doubtful that bureaucrats will be better equipped to make
those decisions ether,” said Ms Xie.
One of several requirements in Sasac’s
January regulations mandates that
SOEs attract third-party investors when
investing abroad.
However, China’s finance ministry
declared this week that it had found several of these partnerships for domestic
infrastructure investment to be “disguised borrowing” by local governments.
Friday 4 August 2017
★
FINANCIAL TIMES
5
★
6
FINANCIAL TIMES
Friday 4 August 2017
ARTS
Icarus
FILM
Bryan Fogel
AAAAA
Nigel
Andrews
The Emoji Movie
Anthony Leondis
AAAEE
Land of Mine
I
carus may be the best nonfiction
movie of the year. Bryan Fogel’s film
about drug use in sport was praised
at Sundance, then bought by Netflix
in a record deal for a documentary.
$4m: easy to see why. The film is a
corker. Or an un-corker — of chastising
yet cathartic truths. Though it can’t be
seen in theatres, it should be sought and
seen anyway. And anywhere.
As a Sundance reviewer rightly noted,
the film starts like Morgan Spurlock and
ends like Laura Poitras. At the beginning
Fogel is filmmaker-as-guinea-pig,
supersizing his athletic prowess to
enter an international bike race under a
performance-enhancing drugs regime
(chronicled as it goes). By mid-movie he
is in CitizenFour mode, sheltering and
interviewing real-life defector Grigory
Rodchenkov, the one-time anti-doping
chief in Russian sport.
Holed up in Shakicam City — let’s
bestow that name on Bryan and Grigori’s
succession of secret apartments and
hotel rooms, shot with handheld cameras — they blow the cover on a drug
scandal that ascends to Putin. Rodchenkov is a showboating stick of nerves
with a pot belly and greying Chaplin
’tache. In idiomatic English he says, “I
could be tossed to the bus any time.”
He could. Back in Russia he attempted
suicide. He has now left behind his children and wife, fleetingly glimpsed on
Skype. His and Fogel’s account of the
lengths to which a country went to
“game the system” makes amazing
viewing — and listening. Early summarisation by Rodchenkov: “The system in
place to test athletes . . . was bullshit.”
By most of the evidence, Icarus makes
clear, and God knows makes enthralling, it probably still is.
The Emoji Movie has been taken to
the cleaners by American critics, but I’d
have thought a light sponging quite
enough. Sony’s animated comedy about
cyber-symbols is not that bad. Nor is it
stained excessively with product placement, despite name-checks for some
well-known apps. The hero is a young
“Meh” emoji, born to be a blasé-expressioned yellow face, with a jaded-fatigue
Martin Zandvliet
AAAAE
Maudie
Aisling Walsh
AAEEE
England Is Mine
Mark Gill
AAEEE
Williams
Morgan Matthews
AAAEE
Clockwise, from above: Bryan Fogel in ‘Icarus’; Ethan Hawke and Sally Hawkins in ‘Maudie’; Jack Lowden as Morrissey in ‘England Is Mine’
The dope on drugs in sport
sigh implied for all occasions. But he
feels too many emotions. Joy, laughter,
anger . . . He cannot function properly
in his role. His mission accordingly: to fit
in with others or else make them fit in
with him.
If you’re over 50, you may not know
what an emoji is. I was in that club two
days ago. If I can chuckle now, though,
so can anyone as Meh (voice of T.J.
Miller) goes on an adventure-journey
through smartphone “levels”, right up
to the Cloud. He’s accompanied by two
fellow emojis, High-5 (James Corden),
a talking hand, and the prettily burbl-
ing Jailbreak (Anna Faris), a hacker.
Some of the gags fizzle. A few set
pieces go to pieces. Occasionally it’s as if
The Lego Movie is reaching out a long,
friendly arm to Inside Out and falling into
the chasm between. But the film is
inventive too. There’s a hilarious do-ordie password attempt scene (we’ve all
been there), and watch out for Smiler
(Maya Rudolph), the best character.
She’s an upbeat alpha female with a permanent smile and a laughter-toned
“happy” voice. She’s the kind of woman
you’ve met as a PR greeter: the kind who
will carry on smiling and spraying
charm while she tells you your hope of a
meeting/appointment/deal/whateveris
dead in the water and so are you.
Land of Mine is small but powerfully
formed. On a loose-change budget, Danish filmmaker Martin Zandvliet constructs a chilling, moving drama about
prisoners of war used as prisoners of
work. After the second world war, German captives, many teenaged, were
forced to clear mines from the west Jutland coast. 45,000 devices lurk on the
beach where young PoWs hazard life
and limb here, in a three-month labour
sentence enforced by a Nazi-hating martinet (Roland Moller).
The film goes soft once or twice — a
detumescence of nerve in a story that
has earned from history its right to
appal. (Nearly half the full number of
sapper-prisoners were killed.) But a
few sentimental lapses are small payment for the chastening, even horrifying
power that emboldens this film at
its best.
British actress Sally Hawkins’s performance in Maudie is a virtual onewoman show. She’s as poignant, expressive and zanily confined as Winnie in
Beckett’s Happy Days. Ethan Hawke,
fish-peddler husband to Hawkins’s
Maud Lewis, the faux naif Canadian
painter (1903-70), is barely more than a
heap at the bottom of a Beckett sandhill.
He talks, sort of. He rasps grouchy
orders when young Maud arrives at his
tiny wooden home to answer an ad for a
live-in cleaner. After that we get a
quirky, crusty stage-play-on-screen,
with Hawkins hogging the histrionics.
She would be great in a good film. She
does the accent, the arthritis (which
nearly crippled Maudie’s limbs and
brush-wielding hand) and the stark yet
sweet-eyed stoicism. Unlike Hawke, she
also ages. But screenwriter Sherry White
and director Aisling Walsh seem never
to have heard the word “movie”. Maudie
is cramped, talky, pedestrian even when
venturing beyond the two-room house.
When a script’s first spoken word is “Sister” — a young brother apostrophising
the young Maud — we know we’re in
Kindergarten Screenwriting Class. Gotta
let the audience know they’re siblings.
Straight off.
Soon we’re in stagy love-hate
exchanges between the new cohabitants. (The pre-conjugal scenes play like
Griffith’s 1919 Broken Blossoms gone
talkie and cod-realist.) Then it’s, let’s
shunt the plot forward into “Maudie
Gets Famous”, “Maudie’s Brother and
Others Seek a Piece of the Action”,
“Maudie Gets Ill”, etc. The film would
even do as a radio play, but for the
paintings; those and Hawkins herself,
whose Nova Scotia Norn of primitivism
is the only living, vivid thing here, even
on her deathbed.
England Is Mine is a British biopic
about the young Morrissey. The singer,
songwriter and Mancunian miserabilist
needs a Mike Leigh to do him proper
justice. Leigh would find the hope,
pathos and transcendence in this
one-time wannabe of eloquent woe,
who seems (even now in retrospect) the
least likely candidate for chart success in
rock history.
Mark Gill’s film goes through the
motions. It’s a work of lifeless competence, which may be worse than
incompetence. At least in an accident
something can catch fire. Here we
get Jack Lowden with a wig and accent;
lots of brand-recognition 1970s hit
tunes (the Morrissey/Smiths songs
weren’t released to the film); and
much sub-Monty Python stuff, ponderously directed, about the aspiring
young artist rebelling against the hard
northern parents.
British genius, and its nature, can
drive us up the wall. Williams, a documentary about the Formula 1 racing car
constructor Frank Williams, is another
Anglo-Saxon exuberance-free zone. But
it’s far more likeable in its miserabilism
than England Is Mine. To the public, Williams has always been a dour mystery
man. There seems to have been a charisma bypass in his history. But director
Morgan Matthews, digging deep, finds
something more: a family almost coming apart through the stress fractures
of emotional repression; fractures
barely less painful than those Williams
sustained physically after a near-fatal
car crash.
Williams didn’t and doesn’t “do” emotion. While the deaths rack up — of
friends, racing drivers, a wife — Williams’s daughter and business inheritor
Claire has to “do” the emotion and try to
explain to us, and learn for herself, why
daddy doesn’t.
It’s a long story. But it goes quite
quickly. You expect from Williams a
Senna or McLaren without the buzz
or brio. You get something better than
that: a probing, skilful film about the
nature, and sometimes the torture, of
being British.
Get appy: Jailbreak, Gene and Hi-5 in ‘The Emoji Movie’
Evita is pure and clear — but fails to resonate
T H E AT R E
Evita
Phoenix Theatre, London
aaaee
Ian Shuttleworth
Some musicals seem, like Bob Dylan, to
have spent much of their lifetimes on a
Never Ending Tour. This is to all intents
and purposes the same production,
albeit recast, that visited the West End
three years ago after 16 months of touring. The Phoenix, however, has less than
half the capacity of the Dominion, and
its stage is correspondingly smaller.
Once Matthew Wright’s basic set of
faux-wrought-iron-and-concrete galleries, stairways and balcony has been put
in place, there seems to be little room for
the cast to be at all demonstrative.
The blocking looks flatter even than it
needs to be, and also quite basic: people
move when they’re required to, otherwise remaining static rather than flowing organically (for where would they
flow to?).
I last saw Tim Rice and Andrew Lloyd
Webber’s musical biography of Eva
Perón in 2006. In the current revival, in
an age when politics is ever more a matter of image rather than substance,
Evita’s creation of a whole subspecies of
populist icon has much more opportunity to resonate, and yet does so much
less. Neither the personal nor the political dimensions attain any depth:
the word “disappear” is fraught with
horrific and quite terminal meaning
in an Argentine context, yet when
Evita threatens a cadre of aristocratic
ladies with it, they simply flounce offstage as if she’d said not “disappear” but,
perhaps, “bum”.
Emma Hatton has a faint echo
of Elaine Paige in the title role: her
voice on “Don’t Cry For Me Argentina”
is captivatingly pure and clear, and
within a couple of numbers she’s belting
lines out without losing any of the
clarity. The same can’t be said for Gian
Marco Schiaretti as the narrator/
observer figure Che: his mangled
pseudo-English vowels are usually intelligible but seldom listenable with a
straight face.
As Juan Perón himself, Kevin
Stephen-Jones embodies the adjective
I’d use to sum up the entire production:
efficient. It gets the material across, but
does nothing of any note with it.
To October 14, atgtickets.com
Captivating:
Emma
Hatton in
‘Evita’
Pamela Raith
Photography
★
Friday 4 August 2017
7
FINANCIAL TIMES
FT BIG READ. BRAZIL
The Rio Olympics in 2016 were designed to showcase Brazil’s achievements. A year later, the city’s
financial problems, corruption scandals and violent crime are powerful symbols of the country’s ills.
By Joe Leahy and Andres Schipani
W
hen he was a teenager,
Ivan da Silva Martins
played the role of a gang
member in City of God, a
landmark film about
crime in a Rio de Janeiro slum. Fifteen
years later, protected in a safe house in
one of the city’s hillside favelas by young
men brandishing AR-15 semi-automatic
rifles, Mr Martins’ life is imitating the
most brutal art.
Known in the local media as “Ivanzinho” or “Ivan the Terrible”, he is
wanted by police in connection with the
murder of an officer during a shootout
last month in Vidigal, a normally quiet
favela overlooking Rio’s upmarket Leblon neighbourhood.
Mr Martins, who says he feared being
executed by the police, gave himself up
to the authorities three days after
speaking to the FT, insisting that he was
innocent. “This is a fabrication, a
manipulation,” he complains, arguing
the police have wrongly portrayed him
as being the drug boss in Vidigal.
The murdered officer was the latest
victim of a new wave of violence sweeping Rio that has forced the federal government to send nearly 10,000 soldiers
to guard streets and beaches — exactly
one year after the city hosted South
America’s first Olympics.
Staged in a city surrounded by staggering natural beauty, the 2016 Olympics were designed to showcase Brazil’s
achievements. Yet the post-games reality has been the opposite. Beset by corruption, a slumping economy and a
surge in violent crime, Rio de Janeiro
has become the most striking symbol of
everything that is going wrong with
Latin America’s largest country.
A once high-flying emerging economy, Brazil is suffering its worst recession in history. A corruption scandal
centred on Petrobras, the state-owned
oil company based in Rio, has implicated much of the political elite, including President Michel Temer, who survived a vote in congress on Wednesday
on whether he should face a criminal
trial. One former governor of Rio state,
Sérgio Cabral, has already been imprisoned as a result of the scandal, which is
threatening the careers of scores of
other politicians from the state.
The country’s economic crisis has ravaged government budgets, with Rio
harder hit than most — the state government was forced to declare a state of
financial emergency last year and faces
dramatic budget shortfalls in its hospitals and schools. Political paralysis
wrought by the corruption scandals has
created a vacuum that Brazil’s criminal
gangs are rapidly trying to fill. The violence is hardening public attitudes on
law and order, analysts say, and opening
the way in next year’s elections for populist, rightwing candidates who already
have some traction in Rio.
The number of murders in Rio state
increased 10 per cent in the first six
months of the year to 2,723, while
deaths during confrontations with
police have risen 45 per cent, according
to the state security secretariat.
Although still lower compared with Rio
in the 1990s, the murder rate is rising
fast. Stray bullets from shoot-outs
between police and gangs — known as
balas perdidas — are killing ever more
innocents. In one recent incident, a bullet hit a pregnant mother, mortally
injuring her unborn baby. In another
clash, a doorman was killed by a grenade near Copacabana.
Caught in the crossfire
Military police on the streets of the
Cidade de Deus neighbourhood
in Rio de Janeiro. Below, the
under-pressure president Michel
Temer and former Rio governor
Sérgio Cabral
then popular, centrist politician who
became a close ally of Mr Lula da Silva.
One of his most high-profile initiatives
was to install a community policing initiative, called police pacification units,
or UPPs, in some of the city’s favelas.
For a time, the expanded police presence appeared to reduce armed conflict.
But promises to follow up with greater
public investment in the favelas went
unfulfilled. Social activists suspected
the UPP programme was aimed at locking down the favelas during the country’s hosting of the 2014 football World
Cup and the Olympics — and allowing
Mr Cabral to win re-election.
“I always say that the UPPs did exactly
what they were meant to do — secure
the election of Sérgio Cabral,” says
Cecília Olliveira, a Rio-based researcher
on violence who manages an app, Fogo
Cruzado, or Crossfire, that provides
real-time information on shoot-outs.
Rio’s fortunes started to shift with the
end of the commodities supercycle after
2011. Heavy public spending that had
sustained Mr Lula da Silva’s then ruling
Workers’ party and its allies, including
Mario Tama/Getty Images
Rio de Janeiro
State GDP growth
(year-on-year % growth)
Murder rate in Rio city
(per 100,000 people)
80
2
Police deaths
One result is that Rio is one of the
world’s most dangerous places to be a
police officer, with 91 killed so far this
year, according to a count by local
media. This compared with 23 officers
killed in firearm-related incidents in the
first six months of this year in the entire
US. One study by the state military
police, as regular police are known,
claims that an officer in Rio is more
likely to be killed on duty than a US soldier was in the second world war or
Vietnam.
“The public security sector is
severely, chronically underfunded, it
suffers from some weak leadership and
the police has extraordinary low morale
right now,” says Robert Muggah,
research director of the Igarapé Institute in Rio, a think-tank on security
issues
The picture could hardly have been
more different only eight years ago
when Rio won the right to stage
the 2016 Games. “The world
has recognised that the time
has come for Brazil,” a tearful former president Luiz
Inácio Lula da Silva, the
unionist who ruled the
country from 2003 to
2010, said at the
time.
Rio de Janeiro
state was governed
by Mr Cabral, a
2011 12
13
14
15
0
60
-2
40
-4
20
16
1991 95 2000 05
10
16
Sources: CEPERJ; ISP
Local politics
Downfall of ‘King of Rio’
exposes scale of graft
When Sérgio Cabral governed Rio de
Janeiro state from 2007 to 2014,
multinationals with an eye on Brazil fell
over themselves to court him.
But in June, the man once dubbed by
Veja, the weekly news magazine, as the
“King of Rio” was sentenced to 14 years
in prison on charges that he siphoned
off millions of dollars in bribes from
public works, such as the revamp of
Rio’s Maracanã stadium for the 2014
football World Cup.
Prosecutors alleged he and
his wife, who was
acquitted of direct
involvement in
corruption, spent
R$6.5m of the proceeds from the bribes
to go on a jewellery shopping binge.
They spent R$57,138 on “party dresses”
and R$226,950 at Ermenegildo Zegna,
the fashion brand. Mr Cabral’s lawyer
declined to comment.
Mr Cabral left behind a bankrupt
state riddled with corruption. Alleged
graft cost the health system R$300m,
says the Public Prosecutor’s Office, at a
time when financial pressures have led
to a lengthening in waiting times, with
some reportedly reaching four to five
years for some operations.
The corruption compounded the
impact of falling oil prices — the source
of much of the state’s revenue. Rio state
gross domestic product declined 3.7 per
cent last year despite its staging of the
Olympics. This followed an almost 2 per
cent decrease in 2015.
The state’s problems have also hit
Mr Cabral in Rio, dried up. With the
economy falling into recession and the
corruption scandal growing, Mr Lula da
Silva’s handpicked successor, Dilma
Rousseff, was impeached last year and
replaced by the vice-president, Mr
Temer, who began to cut spending.
For Rio, the hangover from the Olympics started immediately afterwards
when the huge security programme
organised for the Games was withdrawn. Shoot-outs began to rise. Mr
Cabral was accused of corruption and
jailed. The state was left virtually bankrupt, without money for health, education and especially security.
“We are facing a financial crisis without precedent in the state,” says subsecretary of command and control for
Rio’s state security secretariat, Rodrigo
Alves. He says the budget for security
has been cut by more than half compared with 2013. What remains is being
spent on police salaries.
The levels of gang violence for now
remain well below the peak in the early
1990s, but the succession of crises has
left the city lamenting the squandered
opportunity of the past decade. “We
really did become more prosperous as a
country and a city in recent years,” says
Ms Olliveira. “But we missed the chance
to build solid public policies.”
Brutal violence
These failures are on display in Cidade
de Deus, the sprawling low-income area
in Rio’s western suburbs on which City of
God was based. Doctors in the neighbourhood’s health clinic say the number
of gunshot wounds has soared 95 per
cent in the first half of this year. Many of
the victims were hit by stray bullets.
Gang infighting is becoming more
vicious. A doctor shows photographs of
a man who fell foul of the “militias” —
extortion gangs that researchers say are
the city of Rio, which is trying to plug a
budget deficit of R$3.8bn, or about 10
per cent of expenditure, through
adjustments in property tax, sales of
real estate and job cuts.
Business has been forced to step in.
Fecomércio-RJ, the retailers’
association, is sharing with the
municipality of Rio the cost of a scheme
to deploy private guards in public
spaces in the city centre, known as
Centro, and shopping areas to protect
business.
“People were afraid to go to
Centro, to work, they didn’t want to
use their mobiles on the street,” says
Orlando Diniz, president of
Fecomércio-RJ. He adds the
project has cut muggings
by 94 per cent in areas
where it has been
implemented.
formed mainly from retired or off-duty
police officers that operate in some of
Rio’s poorer areas. They tried to cut off
his hand with a machete, failed at the
first attempt, the doctor says, leaving a
huge gash on his upper forearm, before
succeeding the second time.
One woman at the clinic, Andreia
Pereira da Silva, shows the scars where a
rifle bullet passed through her left leg,
exited, and tore open her right leg when
she was caught in crossfire earlier this
year. “I was arriving at the door of my
dad’s house to make lunch for him.
There was a police operation, there was
an exchange of fire, next thing I knew I
was on the ground,” she says.
At the local police post, or UPP, one of
the glass doors bears a bullet hole.
“Whenever we go in there, they just
start shooting,” says one officer, refer-
‘We really did become
more prosperous in
recent years. But we
missed the chance to
build solid policies’
ring to the surrounding neighbourhood.
He adds that half of their patrol cars are
out of service because of budget cuts.
“There are more shoot-outs because
there is a lack of control, this is a failed
state,” says José Pereira de Oliveira Junior, founder of Afroreggae, a cultural
group that works in the favelas to rehabilitate gang members. “What country
in the world kills one police officer every
two days? What city? Only Rio.”
Some analysts and favela residents
blame police corruption for the growing
violence, while others say the economic
crisis is forcing drug traffickers to fight
for market share. One person familiar
with the drug trade says traffickers told
him they were selling 60 per cent less
cocaine because of the recession.
Gang violence has also increased
because of a dispute between two of Brazil’s dominant criminal factions — the
Primeiro Comando da Capital in São
Paulo and Comando Vermelho, based in
Rio, analysts say. The rift was blamed
for horrific prison riots across the country this year that left 130 dead.
Mr Alves of the Rio state security secretariat says the government is trying to crack
down on illegal arms imports.
These were being intercepted
at the country’s borders, on
highways leading into Rio and at
the international airport,
where assault rifles
were recently
seized on a flight
from Miami.
The wider
availability of
these heavier weapons is emboldening
gangs to attack bigger targets. Robberies
of trains, trucks and boats has rocketed
150 per cent over the past three years,
according to Igarapé, the think-tank.
“A criminal feels braver when he is
carrying a weapon of war such as a rifle,”
Mr Alves says. The law also needs to be
toughened to allow suspects of violent
crimes to be detained for longer — more
than 60 per cent are released within 24
hours, he says.
Conflicting testimony
At the favela safe house in which
Mr Martins took refuge, one of his
friends, a 29-year-old who uses an
AK-47 and a pistol adapted to fire bursts
like a machine gun, says he took part
in the firefight that left the police officer
dead.
Mr Martins has convictions for robbery and admits he has dealt drugs but
says he is not involved in crime any
more. Police in a statement maintain he
is a suspect in the Vidigal shootout and
for drug-running. But the gang member
says Mr Martins is innocent of the
policeman’s murder. It is not even clear
if he was killed by the gang or friendly
fire. “My friend [Mr Martins] was not
even there, they [the police] threw his
name to the media just because he was
on television once,” adds the man, who
refuses to be named.
The man blames corrupt policemen
seeking to steal drugs and extort money
from the gangs for the rising violence.
Rio police deny the allegations, saying
the Vidigal UPP has not received complaints about its officers’ conduct.
He is angry about the poor example
corrupt politicians are setting for his
children. “How will Brazil get ahead
if the president himself hardly took
power before he was already into corruption? You are replacing the dirty
with the unwashed,” he says. Mr Temer
denies any wrongdoing.
The one certainty, he says, is there will
be no surrender to police. “If the police
come up here full of malice, if they come
looking to make my mother cry, I’ll
make theirs cry first.”
Budget crisis Hit by lower oil prices,
Rio’s economy is in a deep recession,
which has led to spending cuts
Crime surge Having fallen sharply
since the 1990s, the number of
murders has started rising again
Corruption probe One former
governor is in jail and other leading
politicians are under investigation
★
8
FINANCIAL TIMES
Friday 4 August 2017
Letters
YouGov survey all
too obviously fits
a political agenda
FRIDAY 4 AUGUST 2017
A laudable ambition in
gene editing embryos
DNA repair can prevent disease without risk of genetic enhancement
The first successful “gene editing” of
human embryos to prevent transmission of inherited disease, announced
this week, is a landmark in biotechnology. Humanity has gained the power to
engineer its own evolution by making
genetic changes that will be passed
down through future generations.
Most scientists have rightly greeted
the achievement, by a US-based team
working with colleagues in South Korea
and China, as an experimental tour de
force. Using new technology called
Crispr, the researchers removed a
genetic mutation that causes sudden
heart failure from dozens of early
human embryos with impressive precision and efficiency — and without the
“off-target” impact on other genes that
many feared would be an unwanted
side-effect of gene editing. But much
more work will be needed to assess the
technique’s safety before anyone plans
to implant an edited embryo into a
womb.
The project’s success should inspire
governments, regulatory authorities
and medical academies around the
world to prepare more actively for clinical trials leading to genetically engineered babies. On top of thorough
safety testing, extensive regulatory and
ethical work with maximum public
involvement will be needed before this
can happen — building on the activities
of bodies, such as the Nuffield Council
on Bioethics in the UK and American
Society of Human Genetics, that are
already engaging with the subject.
If we dismiss the idea of an absolute
religious or philosophical prohibition
of any tampering with human evolution, even to prevent the most horrible
diseases, then there are several other
issues to consider.
The “slippery slope” argument —
that technology developed for good
medical reasons will inevitably be
applied for ethically more dubious pur-
poses such as producing “designer
babies” with enhanced looks, athletic
ability or intelligence — justifies strong
regulatory controls to prevent such
abuse, but is surely no reason to abandon research that aims to reduce
human suffering.
In fact there are sound scientific reasons why it would be extremely hard to
apply the technology to genetic
enhancement. One is that the desired
traits depend on many genes acting
together, most of them unknown; these
will lie far beyond the scope of DNA
editing for the foreseeable future.
Another is that the experiment published this week worked well because
each embryo carrying a defective heart
gene also had a healthy copy, which
acted as a template for the DNA repair
process. This should make Crispr editing possible in thousands of other
inherited disorders in which sufferers
have one good and one bad copy of the
gene responsible. There would be no
comparable template for genetic
enhancement.
Critics also question the need for
gene editing when pre-implantation
diagnosis (PGD), which selects healthy
IVF embryos by a DNA test, can do the
job, too. This is often true, but sometimes no healthy embryos are available
— and, even when they are, gene editing could increase the number available to implant in the womb.
A more practical barrier to embryonic gene editing may be cost and complexity. The Crispr procedure is bound
to be expensive, even after streamlining for clinical use, and PGD will still be
needed before implantation to ensure
that the DNA has been repaired. The
number of beneficiaries may be small
in the early years, but the technology’s
long-term promise is so great that society must develop a framework for its
clinical development. Producing
healthy babies is a laudable aim.
The long-term cost of
uncertainty on Brexit
Businesses are slow to invest despite a strong external environment
After a decade in which central bankers led the fightback from the global
financial crisis, Mark Carney finds
himself in a singular position. As the
Bank of England governor acknowledged yesterday, the “big, big macro
decisions” in Britain’s current environment do not lie with monetary policymakers. Everything depends on Brexit.
Given the degree of political uncertainty, the BoE’s updated economic
outlook, set out in its quarterly inflation report, is more sanguine than one
might expect. The BoE has cut its
growth forecast for this year and next,
noting that higher inflation, the product of the weak pound, will continue to
squeeze household incomes and hit
consumption. But it expects stronger
net trade and business investment to
drive a recovery in 2019, with household incomes also recovering on the
back of modest wage growth.
These forecasts assume a smooth
transition to post-Brexit trading relations with the EU. Over the past year,
Mr Carney noted, households and businesses have behaved as if they
expected “no material disruptions” to
trade or financial stability. He added
that this assumption “will be tested” as
the negotiations proceed. This was
something of an understatement, given
the incoherence in government,
including open divisions in cabinet on
how to effect any transition. A failure of
Brexit talks remains a distinct possibility and it is curious that the BoE does
not seem to include any such outcome
in its range of possibilities.
Mr Carney was candid about the
long-term damage the UK economy is
sustaining as a result of Brexit-related
uncertainty.
In all other respects, the business climate could not be more propitious. The
weak pound should help UK manufacturers take advantage of the pick-up in
global growth and the eurozone’s
recovery in particular. This strong
external environment, combined with
high profitability, low borrowing costs
and limited spare capacity, should spur
investment. Yet while exporters say
they are seeing some benefits, businesses have invested much less aggressively than usual over the past year,
given the favourable environment.
This has uncomfortable implications. The BoE expects the level of
investment in the UK economy to be 20
percentage points lower in 2020 than it
forecast before the referendum. Prolonged low investment will limit
growth in the UK’s capital stock and in
its lacklustre productivity. Given this
outlook for supply in the economy, Mr
Carney suggested, even a slight pick-up
in growth could require a tightening in
monetary policy.
Although policymakers do not seem
inclined to raise interest rates imminently — with only two dissenters to
the latest decision to leave them on
hold — the BoE signalled it could
tighten policy more than markets predict by the end of 2019.
Investors appear sceptical that these
rates rises will materialise, judging by
the slight weakening in sterling after
the Inflation Report was released. Perhaps they think the BoE merely wants
to keep the possibility of higher rates
alive, so as not to take markets by surprise when the time finally comes. Or
perhaps they think Brexit talks are
bound to be stormier than Mr Carney is
at liberty to say — so that the BoE will
end up doing more to support demand.
Politicians, however, might draw one
clear conclusion. At present, the Brexit
process is an obstacle, not an aid to the
much-needed rebalancing of Britain’s
economy from consumption to trade
and investment. The longer uncertainty persists over the shape of future
trading relations and the nature of the
transition, the higher the cost will be.
Sir, The recent survey on attitudes to
Brexit by YouGov has already been
criticised by Chatham House for the
language used to describe the results.
There are even more fundamental
reasons to be disturbed — especially
the limited scope of the questions.
There is clearly a campaign by
Remainers to focus attention on the
possibility of adverse economic
consequences of Brexit in the hope that
this will eventually change public
opinion. This survey fits all too neatly
into that agenda.
Unfortunately too many surveys in
the political arena are designed by or
on behalf of those who have clear
political agendas. Designing the survey
largely to examine a trade-off between
a favourable economic outcome by
rejecting Brexit and the alternative of
an undefined Brexit encourages the
belief that this is the choice. The
negotiators for the EU will no doubt be
greatly encouraged to exploit such
thinking and act accordingly.
Why do we never see results of
surveys investigating attitudes to
European integration and the plans for
a United States of Europe clearly
outlined by Guy Verhofstadt in his
book Europe’s Last Chance? It may be
that many who have reservations
about leaving the EU do not favour
more “political Europe”. No one can
say what the long-term economic
consequences of leaving the EU will be,
but the consequences for democratic
government had we decided to stay in
are all too clear.
John S Burton
Cheltenham, Glos, UK
Voters heard the warnings
but they still chose Brexit
Sir, Lord Taverne repeats the mantra
that “people did not vote Leave to
make us poorer” (Letters, August 2).
The UK government spent nearly
£10m distributing a booklet to 28m
households before the referendum.
You didn’t have to open it to get the
message. It was helpfully titled “Why
the government believes that voting to
remain in the EU is the best decision
for the UK”.
It warned of: increasing prices, falling
living standards, job cuts, loss of single
market access, a falling pound and so
on. A majority of voters simply decided
that the advantages (sovereignty,
control of laws and borders)
outweighed the well-rehearsed financial
disadvantages and went for Brexit.
Dr John Doherty
Vienna, Austria
While we’re about it, let’s
change the Upper House
Sir, Lord Leigh of Hurley (Letters,
August 2) considers that “the facts on
the ground to date” would imply your
expert contributors are wrong to
predict a Brexit disaster and asks if it is
time to change your experts for others
who agree with him.
Perhaps, but is it not time for us to
change the constitution of our Upper
House so that it comprises a range of
experts motivated not by party loyalty,
but by the best interests of the country
considered over years and decades,
rather than only months?
Peter Sigrist
London E17, UK
May’s moment
to deliver a hard
Brexit with a
soft landing
Notebook
by Sebastian Payne
Email: letters.editor@ft.com
Fax: +44 (0) 20 7979 7790
Include daytime telephone number and full address
Corrections: corrections@ft.com
A transportation revolution is under way
Sir, Further to Pilita Clark’s column
“The electric car revolution will leave
many behind” (July 29): the coming
changes will go much further than
simply putting batteries and electric
motors in cars in the place of fuel tanks
and internal combustion engines, and
beefing up the electricity distribution
system to cope with the recharging
load, with no sacrifice of mobility or of
our existing patterns of living, working
and moving. There will be a
transportation revolution as radical as
that brought about by the invention of
cars and trucks.
Our consumption of mobility will be
greatly cut by the changes in how we
live and interact — the dramatic
increase in telecommunications
capacity and the steep falls in cost will
see to that. Remaining needs for
physical movement will be met by
much lighter vehicles, automatically
driven, with crashes actively avoided
rather than mitigated through passive
safety designs.
We face the upsetting of a very strong
and deeply embedded industrial,
economic and social paradigm. The
quasi-military disciplines and huge
investments of the automotive
industry in its existing technologies
make it highly resistant to change and
to societal regulation. Its business
model of pouring on more products
(which bloats costs) and constantly
replacing them (which crashes prices),
behind the anti-competitive barrier of
the tied franchised dealer, cripples the
industry’s financial performance. It is
in fact very poorly equipped to deal
with the revolution.
If BMW, Apple and Tesla
merged their strengths . . .
Sir, In your August 3 edition, John
Gapper comments on the threat to the
German car industry from Tesla
(“Germany’s car industry suffers a
Tesla shock”) and Tim Bradshaw looks
at the future challenges facing Apple
(“Apple faces tests of strategy in China
and US”). Mr Bradshaw wonders
whether Apple’s long-rumoured
project to build an electric autonomous
car will be confirmed.
I have a solution: Apple, out of its
$261bn cash pile, could buy both BMW
and Tesla (each has a market cap of
about $50bn), merging their strengths.
The new company’s leading product?
The BATmobile, of course.
Paul Temperton
Chalfont St Giles, Bucks, UK
Focus on cutting business
leaders down to size
Sir, With all due respect to David
Palfreyman (Letters, August 3), he
misunderstands my argument on vicechancellors’ pay. Nowhere do I say
(Letters, August 2) that overpayment
of bankers ought to justify
overpayment of university
administrators. I merely point out that
the former is a far bigger problem than
the latter, and hence more deserving of
attention and anger. There is nothing
“silly” about the comparison.
I will indeed go further and say that
the culture of the overpaid corporate
executive is the root cause of what Mr
Palfreyman observes, of the
“proliferating cadre of costly helpers”
at the top of Oxford, Cambridge and
any other major university today. The
idea that putting a very highly paid
group of managers at the top of an
organisation will make it run better,
although generally not true in the
business world, seeps outward into
other places where it was once
unthought-of: government, charities
and above all universities. It brings
with it the related and equally wrong
idea that these organisations are best
run like businesses, with citizens or
students as no more than customers
consuming services.
This is why it does little good to
complain about vice-chancellors’ pay.
It is only attacking one symptom of the
disease. Indeed it makes matters
worse, by helping ministers to paint the
whole academy as cosseted, overpaid
and in need of some good stiff market
“Here is my first principle of foreign
policy,” William Gladstone proclaimed
in 1879, “good government at home.”
Fellow Brits, we need to be honest. We
have broken this edict, messing up
Brexit with chaos of our own creation.
In the year since voting to leave the
EU, our government has not risen to
this challenge. The failure to find a
moderate interpretation of the Leave
vote, an opaque and blasé attitude to
what lies ahead — the UK is living up
to its tradition of fudging and bodging.
In private, some of the most fervent
Brexiters fess up that it has not gone
to plan. Yet one hard fact stands in the
way of halting our present path: voters
do not seem to care. Last August, the
number of those Britons who believed
that leaving the EU was the right thing
to do was four percentage points
ahead of those who did not. Even after
all the travails of the past year, that
margin has dropped by just one point.
Those opposed to Brexit have failed
to make the case against it. Their last
hope is for a stuttering economy —
some masochistic Remainers believe
it would take a recession to convince
voters they were wrong. Even that
might not be enough. In a new YouGov
survey, 61 per cent of Leave voters
think “significant damage” to the
economy is a price worth paying for
Brexit. And 64 per cent of Remain
supporters say that such damage is a
“price worth paying to teach Leave
politicians and Leave voters a lesson”.
As the Article 50 clock is ominously
ticking this schism can make Britain
seem ungovernable. Accepting that,
The social impact will indeed be
huge, as the industry is a very big
employer. Governments have been
held in thrall to it by the fear of
job losses and have consistently
propped it up. The collapse of the
Australian automotive industry,
despite huge public subsidies over
decades — the details of which are
kept secret — is a poignant example of
what happens when you don’t ask the
hard questions.
But even the largest sectors go
through the cycle of growth and decay.
Trying to artificially delay change
hugely increases its ultimate cost and
pain.
John Wormald
Managing Partner,
Autopolis Strategy Consultants,
Chichester, W Sussex, UK
democracy all these years. The
inconvenient truth is that the flower of
liberal democracy blossoms well in a
secular but not in a religious soil.
Consider what such attempts have
produced in Iran, Gaza, Tunisia,
Turkey and Egypt — India is an
exception, but then Hinduism is quite
compatible with secularism.
Since the success of liberal
democracy appears to be positively
correlated to the decline or absence of
religion, is it not time the west got its
priority right by exporting secularism
rather than liberal democracy around
the world?
Randhir Singh Bains
Gants Hill, Essex, UK
‘He refuses to condemn Venezuela’
discipline. The private sector is not
only much less susceptible to
government pressure on pay and
governance, it is also the source of the
ever-expanding managerialism that Mr
Palfreyman rightly bemoans. That is
why cutting business leaders down to
size (and I write this a business-school
student!) is a better use of
campaigners’ time than is quibbling
over what the vice-chancellor gets.
David A McM Wilson
Jesus College, Cambridge, UK
Export secularism and
democracy may follow
Sir, Your editorial “A crucial moment
for Pakistan’s democracy” (July 31)
rightly states that Pakistan’s Supreme
Court cited articles 61 and 62 of the
Pakistani Constitution in removing
prime minister Nawaz Sharif from
office. However, it should be noted that
these articles are not secular in nature,
but are rooted in the Islamic concept of
righteous ruler, and were inserted, with
other Islamic injunctions, into the
constitution by Pakistan’s Islamist
ruler General Muhammad Zia-ul-Haq.
From its law of evidence, which
denies equal status to the testimony of
Muslim women, to its laws against
blasphemy, which penalises its nonMuslim minorities, Pakistan’s appeal to
its Islamic injunctions has long served
its non-elected leaders to mould the
political system in line with their own
preferences.
Pakistan is a deeply religious society,
which perhaps explains why it has
remained unreceptive to liberal
however, would be another failure of
leadership.
Britain has long been divided on
whether it should fully embrace
globalisation with all its consequences.
These differences will not be erased
on the day of EU exit. Our plight calls
for further pearls of Gladstonian
wisdom: “The debate should be
focused on making the best of this
chaotic situation.” Instead of relaxing
during her European holiday walks,
Theresa May is no doubt focused on
the fast-approaching moment in
which she can heed the advice of the
grand old man of Victorian politics.
The prime minister will deliver a
set-piece Brexit speech in September
designed to offer up vision and detail.
Equipped with a greater sense of her
own political mortality since losing
her parliamentary majority and a less
antagonistic team in Downing Street,
Mrs May could put an end to much of
the uncertainty around Brexit, the
silly cabinet bickering and even the
doubt about whether she will remain
in office to see it through.
Filter out the noise — and it has
been overwhelming lately — the UK’s
trajectory is clear. Follow the logic of
the referendum result — greater
control of borders, trade and
lawmaking — and the conclusion is
that Brexit must eventually mean a
clean break. No half-in, half-out
alternative can begin to satisfy what
was sold to voters. The only
outstanding question is when.
Mrs May can use her speech to
publicly confirm what much of the
Factory’s remoteness held
back a promising industry
Sir, Stephen Irish (Letters, August 1)
raises some important issues as to
whether the UK will or will not be in a
position to benefit from the rapidly
increasing global demand for advanced
batteries.
The UK was once at the forefront of
the development of lithium ion battery
technologies, especially lithium cobalt
oxide, which is used in almost all
laptops, tablets and smartphones. As
with so many other technologies, the
UK failed to derive much economic
benefit from this.
One contributory factor may be that
a government agency decided to site
production in a new factory near
Thurso, at the remote, northernmost
end of mainland UK. This may have
been of some temporary benefit to
some local workers in the area, where
production of battery cells is now
reduced to de minimis volumes for
niche military applications, but may
also have been a contributory factor to
the fact that the UK aspires to MWhs of
battery production whereas individual
lithium ion battery factories in other
countries already measure their output
in GWhs.
Those entrusted with administering
the recently announced £246m to
develop battery technologies in the UK
may wish to take note.
Roger Gill
Cradley, Herefordshire, UK
COMMENT ON FT.COM
Instant Insight
Venezuela shows how not to run a socialist
government, writes Alan Beattie
www.ft.com/instant-insight
cabinet is saying in private: the 2+2
plan — two years of talks followed by
at least two years of transition —
advocated by Philip Hammond, the
chancellor, is the only sensible route.
This might be a hard sell to some
Brexit voters, but combine it with a
cut-off date and Mrs May can deliver
certainty for business and mollify her
Brexity colleagues.
Whether you call the transition
European Economic Area or single
market membership, Norway + or -,
bespoke or off-the-shelf, the EU has
one chief aim: protecting the link
between its key four freedoms and full
single market membership. That is
not going to be broken for the sake of
the British. So Mrs May needs to
explain that she can only deliver a
hard Brexit with a soft landing.
The prime minister must also map
out the future “deep and special
partnership” she has promised with
the EU. There is a consensus in
Westminster for no trade tariffs; cooperation on security; an equivalence
deal for the City of London; and some
form of membership of EU agencies.
On the exit bill too, Britain should end
the bluffing: there is a sum to pay.
The September speech should be
anchored in realism — that would
stymie the potential political risk. Mrs
May must take some decisions that
might go against the “will of the
people” but are in their interests. It is
time for her to give Britain the
leadership it desperately needs.
sebastian.payne@ft.com
★
Friday 4 August 2017
9
FINANCIAL TIMES
Comment
Lawyers circle America’s opioid crisis
FINANCE
Gillian
Tett
T
wenty years ago Mississippi
made legal history: its
attorney-general sued
tobacco companies for
downplaying the addictive
nature of nicotine. And in 1997 the state
won $3.6bn damages, paving the way for
a massive $200bn-plus settlement in
1998 between tobacco companies and
46 states and federal authorities.
Now Mississippi is trying to repeat
this victory — this time with opioids.
Last year Jim Hood, its Democrat attorney-general, started action against a
group of pharmaceutical companies,
claiming they had concealed the addictive nature of their drugs. In June the
full-blown suit was formally filed.
This has not grabbed headlines yet,
given the psychodramas erupting in
Washington. But investors and policymakers would be foolish to ignore it.
America’s opioid crisis, which has
already ravaged communities across the
country, is fast becoming an issue of
major national economic importance.
Away from the Washington beltway,
legal action is snowballing. Ohio state
has launched a suit. So has Oklahoma,
and dozens of municipalities and cities
including Chicago. And these are based
around the same theme used against Big
Tobacco: pharma groups are accused of
mis-selling opioid products, triggering
an explosion of addiction and deaths.
The plaintiffs want massive damages to
cover the cost of treating the addiction
— again, like the tobacco saga.
Could history replay itself? Investors
seem surprisingly relaxed. One company in the crosshairs, Purdue, is privately held. But the others, such as
Endo, Depomed and Mallinckrodt, are
publicly quoted. Their shares have
underperformed the biotech index this
year, but they have not collapsed.
Meanwhile the companies insist that
there is little chance of another tobacco
style fine. In recent years some very
small scale settlements have occurred
(most recently last month in Florida.)
But pharma companies insist that it is
wrong to bracket opioids with tobacco.
After all, the former — but not latter — is
only sold with approval by the Food and
Drug Administration. And doctors, not
manufacturers, write prescriptions, further muddying the issue of liability.
Given this, it is still anyone’s guess
Investors seem relaxed but
legal action against pharma
groups could echo costs
against Big Tobacco
what might happen in court. But focusing on the legal niceties alone partly
misses the point — and the reason why
the suits are potentially significant and
welcome. If you dig into the colourful filings from the attorneys-general in Ohio
or Mississippi, what is clear is that the
pharma companies have a serious case
to answer for over marketing and methods portrayed as — at best — questiona-
ble, if not unethical. The filings cast the
federal regulators — such as the FDA —
in a dismal light, given how slow they
have been to crack down.
So, if nothing else, when the suits hit
court they should spark more scrutiny
and debate. And that is long overdue.
With every month that passes, the scale
of the opioid crisis turns more tragic and
eye-popping. More than 300,000 Americans have died of an opioid overdose
since 2000; in many states it is killing
more people than car crashes.
It has even sparked research at the
Federal Reserve. Last month, for example, Janet Yellen suggested in Senate testimony that opiod usage was both a
symptom and cause of the puzzling pattern of “declining labour force participation among prime age workers”.
But although awareness of the problem has — belatedly — risen, there is no
consensus in Washington on its causes,
how to stop it spreading or how to meet
the rising cost of treatment at a time
when the White House is trying to cut
budgets and reform healthcare. Some
Republican leaders have proposed creating a $45bn package to fight addiction.
But this is like “spitting in the ocean”, as
John Kasich, Ohio governor, says.
So for that reason alone, the legal suits
are good news. Yes, they are partly
driven by opportunistic, fee-hungry
lawyers. And, yes, it would be naive to
think that any settlements will really
plug the funding gaps for treatment or
solve the problem.
But if these cases do go through court,
it might force more transparency in the
pharmaceutical sector. It might even
spark more awareness in the corporate
C-suite about social responsibility — not
just in this one industry but elsewhere
too. And maybe it will change the wider
zeitgeist about drugs too.
After all, those 20th-century legal
wars against Big Tobacco did not just
produce a $200bn-plus settlement; the
publicity contributed to a regulatory
crackdown and cultural shift. This
needs to happen with opioids too. So all
eyes on places like Ohio, Oklahoma —
and Mississippi. And let us hope that
where the states lead, the federal agencies will eventually follow.
gillian.tett@ft.com
Why Putin
would rather
forget 1917
EUROPE
Tony
Barber
O
nce a year, the ruling
Soviet politburo ascended
Lenin’s mausoleum on Red
Square for a ceremony that
marked the November 7
1917 Bolshevik revolution’s anniversary.
Revolution Day was a public holiday,
ostensibly a festive occasion. But as they
peered at the tanks, guns, missiles and
soldiers below, the Soviet leaders were
unaccountably stony and unsmiling.
In my experience — I lived in Moscow
in the 1980s — the average Russian did
not have strong feelings about Revolution Day. It was nice to have a day off
work. But the bombastic communist
slogans that accompanied the annual
Red Square event were empty of meaning for most people, including, as the
years passed, party members.
In stark contrast, Russians felt powerful emotions on another Soviet public
holiday — Victory Day, which commemorated the defeat of Nazi Germany on
May 9 1945. This anniversary was full of
meaning for the people, communists or
not. A quarter of a century after the
Soviet Union’s demise, Victory Day is
still a public holiday and Russians still
take pride in their triumph in the second world war. This victory is a touch-
stone of their modern identity. It represents a rare episode of national unity in
a 20th century scarred by revolutions,
civil war, dictatorship, state-directed
terror, man-made famine and other
extraordinary hardships.
Russian attitudes to 1917 — the February revolution that deposed Tsar Nicholas II, and the October revolution that
brought the Bolsheviks to power — are
more ambiguous. In a survey published
in April, the Levada Centre, Russia’s
most reputable pollster, reported that
48 per cent of respondents had a very or
mostly positive view of the Bolshevik
revolution. Some 31 per cent had a very
or mostly negative view, and 21 per cent
thought it difficult to pass judgment.
The public’s mixed feelings point, on
the one hand, to an instinctive sense
that there were good and bad aspects to
1917 and, on the other, to the hesitant,
ill-defined attitude of the Russian state
under President Vladimir Putin.
Consider the tsar’s abdication in the
winter of 1917. After the collapse of communism, the Russian Orthodox Church
canonised Nicholas and his family —
largely in reaction to the way the
Romanovs met their end.
In a premeditated act of violence that
reflected the gun-toting, leather-coat
culture of early communism and the
savagery of the 1917-22 civil war, the
Bolsheviks murdered the tsar and his
family in July 1918. However, abhorring
this massacre does not prevent Russians
from grasping that the fall of tsarism
was no bad thing. It offered the prospect, in early 1917, of more freedom and
Robert
Hannigan
B
uried in the avalanche of
recent cyber attacks, there is
good news and bad. Ransomware attacks, which paralysed many organisations —
from parts of the UK’s National Health
Service to the German railway and
major manufacturers — illustrate how
acting on good threat intelligence and
sensible advice, such as updating and
patching software, can avoid major
damage. The attack was an example of
the crude new business reality: most
companies should aim to raise the cost
to attackers and make them look for victims elsewhere.
On the less positive side, the response
to such incidents reveals we are not yet
matching the scale and sophistication of
organised cyber criminal groups, particularly when nested in or directed by
acquiescent states. The first step is to
take them seriously as businesses and to
view them as the malevolent version of
disruptive competitors, rather than oldfashioned criminals. The reality is that
they often understand how the digital
economy works better than the companies they are attacking.
Thanks largely to US law enforcement, we know a lot about these criminal groups and how they operate. They
have business models, product lines and
targets that would make Harvard Business School proud. They even understand customer service and have helplines on the dark web; if the managed
cyber attack capability you have purchased does not deliver, you can, in theory, ring up and complain.
But their real strength comes from
crowdsourcing innovation and skills,
and understanding the power of data
and how to monetise it. The chief executive equivalents in these criminal
groups co-ordinate a flexible arrangement of skills, which can be scaled to
meet demand. Their malware developers can harvest the best ideas available
on the open or hidden web and adapt
ECONOMICS
Chris
Giles
rexit, we were told, will
improve Britain’s trade performance through the depreciation of sterling. It will
resolve the UK’s economic
imbalances, shifting growth from consumption to production. It will also
allow the nation to become “more global
and not more insular”. These principles
unite the otherwise warring cabinet.
The claims derive loosely from various economic principles stemming back
to David Ricardo’s early 19th-century
theory of comparative advantage, based
on the relative gains from Britain and
Portugal trading wine for cloth. To see
whether they have merit in 21st-century
reality, few comparisons could be more
apt than between the UK and Portugal.
Both countries are on the western
edge of Europe with proud naval and
trading histories. Both have had persistent problems with trade deficits in
recent decades. Both have had a difficult
decade, but domestic demand growth
has been similar in both for four years.
The big difference is currency movements. Sterling has fallen 17 per cent
since late 2015 against Britain’s trading
partners, a period in which the equivalent measure for Portugal rose 2 per
cent. With such stark exchange rate differences, it would be natural to see net
trade — exports minus imports — contributing more to Britain’s growth rate
than that in Portugal over the past year.
UK imports have become pricier and
exports more competitive.
B
The data would have Leave
supporters salivating, if
they related to Britain
rather than Portugal
social justice in a country denied both
for centuries.
Just as political elites, revolutionaries,
rank-and-file soldiers and industrial
workers were glad then to see the back
of the arch-reactionary tsar, so it is hard
to discern much nostalgia among modern Russians for the Romanovs. In the
Levada survey, 52 per cent described
the overthrow of the autocracy as “not a
very great loss”, against 34 per cent who
thought the opposite.
The Bolshevik revolution is a different matter. For many Russians,
Vladimir Lenin’s seizure of power is
inseparable from the subsequent 20
years of communist rule. This period
encompassed not only the civil war’s
horrors but the emergence of Josef Stalin’s tyranny, culminating in the deaths
Restoring order has been
the priority, in contrast
to the weak state and
disorder of the revolution
of millions in the forced collectivisation
of farms and Great Terror of the 1930s.
These agonies are etched into the history of every Russian city, town and village.
For Mr Putin, 1917 stands out as a time
of tremendous political and social disorder. The state was weak and unable to
exert control. In Mr Putin’s eyes, this
makes 1917 an inappropriate year to celebrate.
Upon assuming power in 2000, he
made it his priority to rebuild a strong
state. He sought approval by contrasting
his restoration of order with the disarray that surrounded the Soviet Union’s
disintegration and the chaotic, freewheeling years under Boris Yeltsin, Russia’s first post-communist leader.
But there is a deeper reason why 1917
is not one of Mr Putin’s favourite years.
It was a time when, for once, the Russian
masses seized the initiative. During the
cold war, many western historians
depicted the Bolshevik revolution as the
illegitimate coup of a fanatical political
sect. Extremists they certainly were, but
the Bolsheviks drew in summer and
autumn 1917 on ever wider circles of
support in Russia’s armed forces and
factories.
Ultimately, the February and October
revolutions expressed the deep-seated
discontent and radicalisation of Russian
society. They are historical hot potatoes
for Mr Putin, for whom social unrest,
political opposition and spontaneous
dissent are anathema.
The undesirable connotations of 1917
explain why, on November 7 last year,
Mr Putin arranged a parade that replicated November 7 1941. On that occasion, Soviet troops marched across Red
Square and went straight off to fight the
Nazis. With this ceremony Mr Putin
sucked the Bolshevism out of the Bolshevik revolution. He replaced it with
the nationalism of the Great Patriotic
War, as the 1941-45 conflict is known in
Russia.
One day Russia might use a Bolshevik
revolution anniversary to reflect on the
dangers of oppressive political systems.
But don’t bet on it being soon.
tony.barber@ft.com
Criminal cyber gangs are disrupters in the digital economy
OPINION
Sterling’s Brexit
fall leaves trade
far from the
sunlit uplands
them, using the tools that work best and
discarding others. They do not need to
worry about being unique — there are
plenty of victims to go round.
To scale up the launch of these
attacks, criminal groups have administrators responsible for “herding” bots,
creating their own cloud networks, harnessing their own servers and many
unwitting computers. This gives cyber
Attackers have cracked
some of the most
difficult problems for
traditional companies
criminals cheap global reach and infinitely flexible processing arrangements,
facilitated by poor cyber security
around the world.
The real core of a cyber criminal
enterprise lies with those who can navigate networks and then identify, extract
and monetise the data on them. The
intrusion specialists in criminal groups
will, once inside an organisation, survey
the network and identify likely pots of
gold.
The choices are wide, from encrypting data and ransoming it, to selling it
piecemeal. Data miners are as valuable
in the criminal world as their commercial rivals, making sense of the stolen
data by organising and reformatting for
ease of sale. Even credit card details or
passwords do not necessarily come in a
neat, publishable format. And of course
data needs stripping of anything compromising to the criminal sources. The
marketers and monetisers can then
decide which data are the most valuable
and how best to sell it, while constructing realistic ways of cashing out, a process that can take months.
In practice, successful criminal
groups have cracked some of the most
difficult problems for traditional companies: understanding which data matters, how it is stored and transmitted
across networks and, indeed, what their
own networks look like.
In the age where employees bring
their own devices into the office, most
large organisations struggle to map
their own networks, even less the com-
plex connections their supply chains
have to the wider world.
Perhaps most impressively, criminals
have approached the skills challenge in
a modern way. They recruit based on
aptitude, technical and criminal, and
are happy for people to learn on the job
and prove themselves. The roles are
fluid — operators can stray across
boundaries — and they are in constant
dialogue with each other. In short, they
look much more like successful tech disrupters than their victims.
I am not advocating a life of crime.
These groups do no not worry about the
law, still less the ethics of their work,
and their employment practices are
brutal. Criminal technology is parasitical. The good news is that, given the will,
the non-criminal world has the technological edge to defend against them.
Industry can win the arms race with
these groups. But understanding their
scale and sophistication is the way to
start.
The writer is a former director of GCHQ, a
UK government intelligence and security
organisation
But in most recent data comprising
the year to the first quarter of 2017, net
trade subtracted 0.2 percentage points
from the UK’s growth rate while adding
0.5 percentage points to Portugal’s rate.
Sterling’s slide has not helped Britain.
What about rebalancing towards production? Between January and March
this year UK output in production
industries expanded 2.3 per cent compared with a year earlier, the same rate
as the growth in services and less than in
construction. British rebalancing
towards production is notable for its
absence. In Portugal, industrial output
grew 4.8 per cent over the same period,
considerably faster than the 2.8 per cent
overall growth rate. Brexit has not given
the UK a more balanced economy.
Surely, at least, the Leave vote has
spurred UK companies to broaden their
horizons and focus exports outside the
EU? Again, no. With the depreciation
allowing exporters to raise prices,
British export values to the EU27 were
15.5 per cent higher in the year to the
first quarter, a more rapid improvement
than the 13.8 per cent growth rate to
non-EU countries. But compared with
Portugal, these figures look disappointing; over the same period its exports to
outside the EU grew 33.2 per cent with a
51.6 per cent increase in US exports.
These are the sort of numbers that
would have Brexiters salivating, if they
related to Britain rather than Portugal.
The UK is still only at the start of a
prolonged Brexit process, but the promised sunlit uplands of balanced, exportled growth are as far away as ever. There
are two lessons Portugal can teach Britain. First, you don’t need a currency
depreciation to rebalance your economy and improve your trade performance in the modern world. Second, you
don’t need to leave the EU or the single
currency area to promote exports to the
wider world.
There is a third lesson from Portugal
that Britain should consider. If the rest
of the world loses confidence in your
nation’s ability to run its economy, it
may refuse to finance a large persistent
current account deficit. When this happened to Portugal between 2008 and
2012 it had to eliminate its deficit rapidly. The vast majority of that adjustment came not from growth in exports
but a crunch in demand and depressed
living standards. Brexit is failing to
reduce the risk of a similar current
account crunch in Britain. The best you
can say of it so far is that we are fortunate that the world has not yet noticed.
chris.giles@ft.com
★
10
FINANCIAL TIMES
Friday 4 August 2017
Tesla: menu à la Musk
Orders for the new Tesla Model 3 far outstrip production capabilities, such that some prospective owners are
asking for their money back. But investors remain undeterred, with valuations approaching three-year highs.
Valuation and shares
Twitter: @FTLex Email: lex@ft.com
EV to forward ebitda*
80
the supervisory board next year, to
ensure that Mr Kaeser does not overreach himself. It would be a shame if he
ended up providing business school
professors with case studies in hubris
instead of efficacy.
Siemens:
hail, Kaeser
Opinion is divided on whether one
individual can really transform the
long-term financial performance of a
giant corporation. But few doubt that
Joe Kaeser has been good for Siemens.
Yesterday, alongside third-quarter
results, the engineering conglomerate
said that it would extend Mr Kaeser’s
contract by three years until 2021. This
is logical, given that his strategy
template runs to 2020.
Mr Kaeser was previously finance
director. He took the top job four years
ago following some boardroom
upheaval. In some respects, little
changed. For instance, the company
remained a better seller of businesses
than buyer. Under Mr Kaeser’s
predecessor, Siemens achieved a great
price for components company VDO
but overpaid for diagnostics group
Dade Behring. On his own watch, he
got €3bn for a half-share in a domestic
appliance venture, spun off Osram
Licht and rushed into Dresser Rand
just as the oil price turned. The jury is
out on more recent deals, such as
Mentor Graphics and Siemens Gamesa,
a renewables business.
Revenue growth has been sluggish
but Mr Kaeser’s cost and job cuts have
improved margins. He has managed
expectations better, mixing sweeteners
such as the upcoming IPO of its
Healthineers unit with more routine
earnings releases. Forecast upgrades
have become more common than
profit warnings. This is partly down to
better economic conditions but it also
reflects Mr Kaeser’s tendency to
underpromise and then over-deliver.
Ironically, news of another three
years was overshadowed by mixed
results. Headline profit beat forecast
partly because of a provision release,
while order intake in some divisions
slowed sharply. There was no fresh
news on a mooted train-making joint
venture with Bombardier.
One ropey set of numbers should not
obscure Mr Kaeser’s strong record.
Since his appointment, Siemens shares
have outperformed Philips, ABB and
General Electric (in euro terms) on
both a price and total return basis. He
has earned his contract extension. It
will be down to Jim Hagemann Snabe,
who replaces German industrial
grandee Gerhard Cromme as chair of
Next:
woolly jumper
Next offered up a fashion conundrum
this year. Would ordinary shoppers
looking for work clothes want to buy
“statement” shirts with gigantic cuffs
and holes cut out at the shoulder?
It turned out they would not. Who
could have guessed? The UK retailer’s
desire to emulate the catwalks
contributed to a very bad start to the
year. Fixing the issue has helped make
the second quarter a little better.
That does not mean the British high
street is now a happy place. The
fashion and homewares retailer’s latest
trading update showed total sales fell
just over 2 per cent in the three months
to the end of July compared with the
same period last year. That was in spite
of full-price sales edging up and the
directory division, which sells via
catalogues and online, doing far better
than anticipated.
The 10 per cent share price jump on
the back of falling sales therefore looks
excessive. That is until you realise the
stock is still trading 44 per cent lower
than at the end of 2015. Management’s
plan to hand back wads of cash to keep
investor spirits up in the aftermath of
the fall has been well received so far.
But a rough 8 per cent free cash flow
yield, almost all of which is returned to
shareholders, is only meaningful if the
company’s future is sustainable.
Next cannot compete with bigger, yet
more nimble, fast-fashion purveyors
such as Zara, part of Spain’s Inditex.
And it can do little about the wider
malaise of British shoppers. Restoring
long-term profitability should mean
competing harder with web-only
brands, such as Asos, which offer free
home delivery. Next’s delivery charges
look old-fashioned by comparison.
The company does not expect much
improvement in the second half of the
year, and is still expecting full-year
profit before tax to drop as much as
14 per cent. It has offered a slight
glimmer of hope by softening its worst
outlook for sales. The era of dour
CROSSWORD
No. 15,619 Set by CHALMIE
JOTTER PAD
Share price ($)
400
Deliveries and production
Units ('000)
Deliveries
Production
30
60
20
300
40
200
10
100
0
20
0
2014
15
16
*Enterprise value to forward earnings before interest, tax, depreciation and amortisation
Sources: Thomson Reuters Datastream; S&P Capital IQ
17
2014
15
16
17
If he tires of rockets and electric cars,
Elon Musk could open a restaurant.
Asked during Tesla’s quarterly
earnings about reservations for the
new Model 3 sedan, Mr Musk gave
the number, 455,000, but said it was
irrelevant. Tesla could boost orders
but not fulfil them as it can only
produce a few hundred of the cars
each week. If you’re serving
hamburgers and there’s a 90-minute
wait should you urge more people to
order, he asked, reasonably enough.
Some hungry customers, however,
are abandoning the queue. The
455,000 is net of 63,000 cancellations
— people who have signed up, paid
$1,000 for the privilege, and then
demanded refunds. More will follow.
The heavily trailed starting price of
$35,000 comes with no choice of colour
(it has to be black) and lacks the
310 mile range and luxury options,
such as a lid on the central storage
compartment, that only come with a
more expensive version.
Customers can go to rival
restaurants. True, their fare is not yet
as nutritious or cool. But, sensing
demand for greener produce, older
establishments (Nissan, Volkswagen,
BMW) are preparing new menus. The
timing and quality of those competitor
offerings is crucial to Tesla’s future.
In the meantime, Tesla must
persuade hamburger lovers to switch
to steak. The trouble is that the luxury
Model S typically costs more than
$100,000. The most deep-pocketed
and ardent virtue signallers already
have one. It has been out five years.
The mass market cannot afford it.
Yet Mr Musk says he is selling
plenty of sirloin. Deliveries of
Model S and Model X, the sport
utility vehicle, increased 53 per cent
year-on-year in the second quarter.
Shares rose 7 per cent after the
earnings. Investors are still happy to
pay highly — $64bn of enterprise
value for just $734m of earnings
before interest, tax, depreciation and
amortisation in the past 12 months.
Mr Musk deserves credit for
keeping the kitchen going and diners
relatively satisfied. He could pull it
off. But like most flashy restaurants,
the economics are unforgiving and a
few good reviews do not guarantee
longevity.
financial reports may not be over but at
least the downward trajectory has not
steepened.
worries. Investors should stop running
scared and recognise the opportunities
in property that ecommerce presents.
According to UBS, the arrival of Jeff
Bezos’s brainchild has three key effects.
First, consumer interest in online
shopping increases. On average, the
group wins 12 per cent of market share.
Second, operating margins decrease an
average of 2 per cent in five years.
Third, incumbents expand their digital
capabilities and smaller, less efficient
players go out of business.
Amazon does best where online
spending, population density and
internet penetration most closely
resemble those of the US. Australia’s
scores on these variables are closer to
the US than Canada, where Amazon’s
online share has lagged behind other
developed markets. It has more chance
of success in the small Australian
market than the large Chinese one.
It will go head to head with Alibaba
across Southeast Asia after the June
acquisition of Lazada. Its biases reveal
weaknesses that Alibaba may exploit.
The sell-off in Australian real estate
investment trusts has left the sector
undervalued. Per-capita retail space in
Australia is less than half that of the US
and retail is much more concentrated.
Aussie Reits are valued based on the
multiple of their market capitalisation
to the funds they generate from
operations. The retail sector multiple is
discounted 8 per cent compared with
the long-run Reit average.
Amazon will probably be a success
down under. But that does not mean
that its impact will be as devastating as
in the US.
Amazon in Asia:
the bias of Bezos
Amazon’s market entries are not
always as disruptive as incumbents
fear. The US online retailer launched its
express service in Singapore last week
and ran into delivery problems on the
same day.
Yesterday, the group announced it
would open its first warehouse in
Melbourne. Australian real estate
trusts linked to retail properties have
declined 13 per cent since the start of
the year in part because of Amazon
ACROSS
1 Just see pet caught by witch
meet weak enemies coming
back (5,1,7,2)
9Finally state doubt about
queen’s attendant (7)
10Obsessive American inspired
by cool reaction (7)
11 Endangered animal
character’s bearing admitted
(5)
12 Money-mad rings (9)
13 Diary clear, get naked (7,2)
15 Groom about to visit prison in
Kentucky (5)
16 Country bumpkins a moat
restricts (5)
18 Bishop gets one billiards shot
to secure grand farewell (6,3)
20Hard cash doesn’t begin to
support tree-dweller (5,4)
23Prison guards use laxatives,
angering gang leaders (5)
24Time to stop how old we are
being an offence (7)
25Sailor’s resistance blocks
statesman (7)
26This actress now 60,
surprisingly (6-3,6)
DOWN
1 Cough central to a horse
disorder (5,4,6)
2Visitor heading for lawyer, not
Japan (7)
3 Instrument damage? Toss a
coin! (9)
4Made fun of teacher on the
radio (5)
5Smoke pipe in pub with
cigarette ends, changing
minds (9)
6Horse mixed drink (5)
7See Hunt squirm and go into
raptures (7)
8Solid evidence, initially, for
book with characters (5,3,7)
14 Energy regulators those
risking putting sulphur
content up (3,6)
15 Praise article on, say, backing
track in movie (9)
17 Fellow with some support for
swimmer (7)
19 Gold country round US resort
(7)
21 Still outside, like fungus (5)
22Make new version by putting
successive notes earlier (5)
Solution 15,618
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ConvaTec:
walking wounded
The attractions of the UK town of
Reading include the Oracle shopping
centre and easy access to the M4
motorway. Neither was enough to
persuade ConvaTec’s finance director
Nigel Clerkin to relocate from Dublin.
He is not the only one jumping ship
after a £4.4bn initial public offering of
the wound care and catheter group
nine months ago. Private equity
backers sold £805m of shares in June.
That disposal was fortuitous. Nordic
and Avista cut their stakes at 322p a
share, close to a high. Shares dropped
almost 7 per cent yesterday after
ConvaTec published disappointing
numbers. At 288p, the stock does not
have much further to drop to meet the
225p float price. That would register
another black mark for private equitybacked IPOs among investors
habitually suspicious of them.
ConvaTec’s half-year adjusted
operating profits were $193m, $14m
below consensus. The group said that it
had merely brought forward some
costs. That should have left full-year
forecasts — and shares — unchanged.
Instead, investors feel less certain of
the company, which also makes
colostomy bags, hitting its targets.
ConvaTec aims to lift its gross
margin, about 60 per cent at present,
by 3 percentage points by 2020.
Assuming other costs did not increase
as a proportion of rising sales, the
company could then hope to register
full-year operating profits up onequarter at about $600m.
That would represent delivery on
IPO hopes underpinned by rising
demand for chronic-care products
from a growing cohort of the elderly.
Back then, ConvaTec was priced in
relation to Coloplast, a Danish rival
with superior earnings, and Smith &
Nephew, a homelier UK rival.
At 16 times forward earnings
ConvaTec shares have begun to look
more affordable. But if the stock falls
much further, early backers can expect
ostracism from IPO investors. In
British parlance, they would be sent
not to Reading but to Coventry.
Lex on the web
For notes on today’s breaking
stories go to www.ft.com/lex
★
Friday 4 August 2017
Death of a salesman New EU
rules threaten banks’ sell-side
INSIGHT, PAGE 20
11
BAT
Next
Siemens
Euro/sterling
US light crude
10-year Bund
FTSE 100
Dollar / yen
3.1%
£50.04
9.7%
£44.01
3%
€112.50
0.8%
£0.9034
0.2%
$49.47
3bp
0.46%
0.9%
7,474.77
0.5%
¥110.14
Teva plunges 18% after $6bn loss
3 Impairment on drugmaker’s US unit 3 Dividend slashed 3 Group still seeking new chief
DAVID CROW — NEW YORK
JOHN REED — JERUSALEM
Teva’s share price tumbled 18 per cent
yesterday after the Israeli drugs group
reported a $6bn loss, slashed its dividend and said that it would not rush a
protracted search for a chief executive.
Underscoring the scale of the challenge for any new leader, the world’s
largest maker of copycat drugs took a
$6.1bn impairment charge on its US
generics business, which includes the
Allergan unit it bought last year for
about $40.5bn.
In the six months since Teva parted
ways with its chief, at least two industry
veterans — including AstraZeneca’s Pas-
cal Soriot — have turned down the job.
Jacqualyn Fouse, formerly chief operating officer at Celgene, one of the five
large-cap biotech companies, declined
the job after talks with Teva, according
to people briefed on the process.
“We will not compromise on quality
and on finding the best individual possible,” said Sol Barer, chairman of Teva,
who worked with Ms Fouse at Celgene.
The appointment of Mr Soriot had
been approved by the Teva board before
he ruled himself out. A spokesperson
for Ms Fouse declined to comment while
Mr Soriot has responded to suggestions
that he might resign from AstraZeneca
by saying he was not a “quitter”.
Mr Barer declined to put a timescale
on the hunt but said finding a new chief
executive had become his “primary sort
of personal objective” and that he was
determined to appoint someone with
“very senior-level” experience at a
global pharmaceuticals company.
He added: “I live, eat and sleep this,
and while it is always great to do this in a
rapid time, six months is not a long time
to look for a CEO. We’re very pleased in
terms [of] . . . the candidates we are
meeting with.”
Teva yesterday warned it might have
to enter negotiations with lenders over
its $35bn of debts. Its second-quarter
$6bn loss compared with a profit of
$254m in the same period a year ago.
Shares in Teva fell 18 per cent in after-
‘While it is
always great
to do this in
a rapid
time, six
months is
not a long
time to look
for a CEO’
Sol Barer,
chairman
noon trade in New York, wiping more
than $5bn from the company’s market
value. It reduced its interim dividend by
75 per cent.
Ronny Gal, analyst at Bernstein,
described the position of Teva chief as
an “extremely difficult job”, adding:
“You’re taking a company in financial
crisis with a lot of debt, which is no fun,
and you’re going to have to cut costs dramatically, which no one likes to do.”
Teva attributed its poor performance
to the declining fortunes of its US generics business and the deterioration of its
unit in Venezuela, a country in the grips
of a serious political crisis.
Additional reporting by Pan Yuk in New
York
Marque of success
BMW shrugs off
industry concerns
BMW posted stronger than expected
profits after sales of its latest models in
Europe and Asia offset a decline in the
US, writes Patrick McGee in Frankfurt.
The German carmaker said operating
margins at its automobiles unit had risen
to 9.7 per cent in the second quarter,
from 9.5 per cent last year, near the
upper end of its 8-10 per cent target. The
figure compares with 9.2 per cent at
Daimler’s Mercedes unit and 9.1 per cent
at Audi, the luxury unit of Volkswagen.
The improved margins helped BMW
post a 9.2 per cent climb in profit before
tax to €3.06bn in the quarter as revenues
climbed 3.1 per cent to €25.8bn.
Despite selling 1.22m cars across its
BMW, Mini and Rolls-Royce brands in
the first half of the year, up 5 per cent on
its record-setting result a year ago,
shares in BMW have fallen more than 10
per cent this year.
There are concerns that the current
cycle of car buying has peaked and
investors are pessimistic that carmakers
can maintain current levels of profit as
the industry is disrupted by a shift to
shared, self-driving, battery-powered
cars. German carmakers are also
fighting accusations that they colluded
on technology for decades, including
exhaust treatment systems.
Short
View
Katie
Martin
The euro crisis is over and all is well in the world. Just ask
Thomas Jordan. The Swiss National Bank chief finally has
reasons to be cheerful now that his stubbornly strong
currency is sliding, and at quite a pace. It comes two-anda-half years after the SNB stunned markets by allowing the
once tightly controlled franc to rocket higher — an event
noted in currency market folklore as one of the few occasions when traders were lost for (printable) words.
SNB officials have spent the period since then moaning
about the strength of the franc. To try to help it along, the
central bank has also amassed foreign currency reserves of
SFr694bn ($717bn) — roughly the same size as the entire
Swiss economy. Hey presto, the tide has turned at last.
Are investors finally following instructions? Not likely. It
is all about the euro getting its mojo back, with politics
(merci, Monsieur Macron) and general market sentiment
all pulling in the same direction. The allure of the haven
Swissie to foreign investors is melting and locals are
increasingly willing to put their funds to work abroad.
The franc fell against all major currencies in July. Its
neighbour the euro has rocketed more than 4 per cent
against the franc since last week. Analysts are ripping up
conservative estimates. SFr1.13 by the end of the year? Try
SFr1.17 by the fourth quarter, Oxford Economics suggests.
While Mr Jordan is not unfurling the “mission accomplished” banner just yet, some investors view it all as a sign
that big threats to global markets have passed. “Euphoria
builds over years, not months,” notes David Stubbs at
JPMorgan Asset Management, adding that currencyhedged positive bets on Swiss stocks may be in order.
The sell side is brimming with ideas for using the franc as
a so-called funding currency, to sell in favour of a range of
higher-yielding assets, like perhaps the Australian dollar.
It feels like 2007 all over again.
The big question is what the SNB will do with its francfighting war chest. It is too soon to start trimming it but, as
Neil MacKinnon at VTB Capital points out, aside from
eurozone government bonds, the SNB owns $80bn of US
equities, tilted in favour of tech stocks.
The central bank is no stranger to sending ripples
around markets. Be warned.
Sliding Swissie
Swiss franc per euro
1.08
1.10
1.12
1.14
1.16
Sep 2016
17
katie.martin@ft.com
Banned billionaire Cohen’s Point72
fund faces regulatory rejection in UK
LINDSAY FORTADO AND JOHN GAPPER
LONDON
The family office of Steven Cohen, the
billionaire banned from running a
hedge fund in the US, has run into a
regulatory roadblock in the UK.
Now that Irene Rosenfeld, the activistresistant chief executive, is set to leave
Mondelez International, investors are
asking whether the $70bn group will
become predator or prey in the fastconsolidating packaged foods and
confectionery sector.
Analysis i PAGE 12
Point72, which manages about $11bn of
Mr Cohen’s fortune, has been told in
recent months that it would not receive
regulatory approval in the UK by the
Financial Conduct Authority, said
people with knowledge of the situation.
It is unclear what Point72 is seeking
approval for, but lawyers said the main
reason family offices sought FCA
consent was to accept and manage other
investors’ money.
Family offices are allowed to trade in
the UK without FCA blessing, but must
be approved to oversee anyone else’s
money. According to regulatory lawyers, family offices may also need FCA
approval in order to implement certain
changes to the way a fund is structured.
Mr Cohen has given indications that
he may be planning to raise money for a
hedge fund launch next year. He
appeared at Salt, the annual hedge fund
conference in Las Vegas, this year, even
though he was not scheduled to speak.
He told the New York Times in an
interview last year that he was “leaning”
towards opening to outside investors.
The 61-year-old has been focused on
overseeing Point72 since his fund, SAC
Capital, was banned by the US Securities
and Exchange Commission from
managing clients’ money after admitting to trading on inside information.
Point72 said Mr Cohen had not
decided whether to reopen to manage
outside cash next year, and declined to
comment on the FCA’s position.
The notification by the FCA does not
represent a formal refusal for regulatory
approval. Instead, the regulator seeks to
give those applying an indication as to
whether or not they will be approved,
which means that official rejections are
rare. The FCA declined to comment.
Once the SEC lifts its ban on Mr Cohen
next year, Point72 would have to again
seek authorisation from the FCA
before opening to outside money in the
UK if Mr Cohen decides to reopen to
investors.
Companies / Sectors / People
Companies
3G......................................................................12
ABB..................................................................10
African Export-Import Bank...............3
Al Jazeera......................................................4
Alfa Romeo.................................................14
Alibaba....................................................10,14
Alipay.............................................................14
Allergan..........................................................11
Amazon........................................10,12,14,18
Apple.......................................................2,8,19
Asos.................................................................10
AstraZeneca................................................11
Audi..................................................................11
Autobahn Motors....................................14
BMW.......................................................8,10,11
BP......................................................................13
BT.....................................................................14
Barcelona........................................................3
BlackRock.....................................................12
Bombardier.................................................10
Box Options...................................................1
British American Tobacco.................19
BulletShares................................................12
Carvana.........................................................14
Celgene...........................................................11
Centrica.........................................................13
Chevron.........................................................13
Chicago Board Options Exchange..1
Coca-Cola.....................................................12
Coles...............................................................14
Coloplast.......................................................10
ConvaTec...............................................10,19
Dade Behring............................................10
Daimler...........................................................11
David Jones................................................14
Depomed........................................................9
Deutsche Telekom.................................14
Didi Chuxing...............................................12
Dresser Rand.............................................10
EE......................................................................14
Endo..................................................................9
Engie...............................................................13
Esure...............................................................19
Euronext......................................................20
ExxonMobil..................................................13
Facebook......................................................13
FitBit................................................................19
Flow Traders.............................................20
Gazprom........................................................13
General Electric........................................10
General Motors.........................................12
Google............................................................12
Guggenheim Partners..........................12
Hennes & Mauritz..................................14
Hershey.........................................................12
Inditex......................................................10,14
Inmarsat........................................................19
Invesco...........................................................12
JBS......................................................................2
JPMorgan.....................................................19
KCG Holdings............................................18
© The Financial Times Limited 2017
Aug
Source: Thomson Reuters Datastream
Dimas Ardian/Bloomberg
Rosenfeld exit opens way
to Mondelez questions
1.06
KfW.....................................................................3
Kraft Heinz..................................................12
Lazada...........................................................10
Lutosa.............................................................12
Lyft...................................................................12
MUFG.............................................................20
Mallinckrodt..................................................9
MarketAxess..............................................20
Marks and Spencer................................14
Mars.................................................................12
Maserati........................................................14
McCain............................................................12
Medtronic.......................................................2
Microsoft.........................................................2
Mondelez International........................12
Myer................................................................14
Mylan................................................................2
Nestlé..............................................................12
Next...........................................................10,19
Nissan............................................................10
OMV.................................................................13
Optiver..........................................................20
Osram Licht................................................10
Paris Saint-Germain.................................3
PepsiCo..........................................................12
Pershing Square.......................................12
Philips.............................................................10
Pictet Asset Management.................18
Point72............................................................11
Procter & Gamble...................................12
Purdue.............................................................9
Qatar Airways.............................................4
Qatar Sports Investments....................3
Rosneft...........................................................13
Royal Dutch Shell....................................13
SAC Capital..................................................11
SK Hynix.......................................................12
SanDisk..........................................................12
Siemens...................................................10,19
Sky.....................................................................4
Smith & Nephew.....................................10
Snopes............................................................13
Sotheby’s......................................................19
T-Mobile USA............................................14
TMX Group....................................................1
Tellurian........................................................13
Tesla......................................................8,10,12
Teva.................................................................11
Tmall...............................................................14
Top Shop.....................................................14
Toshiba..........................................................12
Tradeweb....................................................20
Transneft......................................................13
Trian Fund Management....................12
Uber.................................................................12
UniCredit.................................................12,19
Uniper.............................................................13
VDO.................................................................10
Van Geloven...............................................12
Vanguard......................................................12
Virtu Financial...........................................18
Volkswagen...........................................10,11
Western Digital.........................................12
Wintershall...................................................13
Woolworths Holdings...........................14
Wyndham Worldwide............................19
Yandex...........................................................12
Zara.................................................................14
Sectors
Automobiles....................................10,11,14
Banks...........................................1,3,12,19,20
Energy............................................................13
Financial Services................................1,20
Financials.................................4,11,12,18,20
Food & Beverage...............................12,14
Health...............................................................9
Healthcare...................................................10
Industrials....................................................10
Media..........................................................4,13
Oil & Gas.......................................................13
Pharmaceuticals....................................9,11
Property..................................................10,18
Retail...................................................10,14,18
Retail & Consumer......................12,14,18
Technology..................................9,12,13,14
Telecoms......................................................14
Travel & Leisure...................................3,12
Utilities...........................................................13
People
Ackman, Bill................................................12
Barer, Sol.......................................................11
Batista, Joesley...........................................2
Beurden, Ben van....................................13
Bezos, Jeff...................................................10
Buffett, Warren.........................................12
Cahill, John..................................................12
Clerkin, Nigel.............................................10
Cohen, Steven............................................11
Cromme, Gerhard....................................10
Dannenfeldt, Thomas...........................14
Dixon, John.................................................14
Fall, Lisa...........................................................1
Fouse, Jacqualyn......................................11
Hong, Gary..................................................14
Kaeser, Joe..................................................10
Kalanick, Travis........................................12
Miller, Alexei...............................................13
Minerd, Scott..............................................12
Molluso, Joe................................................18
Musk, Elon...................................................10
Mustier, Jean-Pierre...............................12
Peltz, Nelson..............................................12
Rose, Stuart................................................14
Rosenfeld, Irene........................................12
Sechin, Igor..................................................13
Snabe, Jim Hagemann.........................10
Soriot, Pascal..............................................11
Souki, Charif................................................13
Tokarev, Nikolai.......................................13
Van de Put, Dirk......................................12
Vernon, Tony.............................................12
Walter, Mark...............................................12
Yu, Wei..........................................................14
Week 31
The swiss franc is
sliding against the
euro as a calmer
political backdrop
in the EU weakens
the allure of the
haven currency
★
12
FINANCIAL TIMES
Friday 4 August 2017
COMPANIES
INSIDE BUSINESS
Technology
Toshiba and Western Digital in flare-up
Memory chip venture
partners at odds over
vital $1.8bn investment
LEO LEWIS AND PETER WELLS — TOKYO
Hostilities between Toshiba and Western Digital have been reignited, with the
two partners in a memory chip venture
clashing over a $1.8bn investment critical to the business.
The spat, along with a separate legal
dispute that also flared yesterday, highlights the tension between the two companies as Toshiba continues to negotiate
with outside buyers on the sale of its
prized memory chip business.
Toshiba hopes to raise at least $18bn
from that sale and is under intensifying
pressure to close it quickly to fill a
$5.3bn hole in its shareholder equity
and prevent a forced delisting from the
Tokyo Stock Exchange in early 2018.
Western Digital, itself a bidder for the
chip business, has mounted a sustained
legal challenge over the way Toshiba has
approached the sale process. It has
opposed the Japanese conglomerate’s
choice of favoured bidder, a consortium
that includes SK Hynix, a South Korean
chipmaker with which Western Digital
competes directly.
Toshiba’s announcement yesterday
that it would “unilaterally invest” in a
new generation of chip manufacturing
at the Yokkaichi plant in central Japan
followed what it said were failed negotiations to agree on a bilateral investment
with its joint venture partner.
The joint venture, which began nearly
two decades ago, started life as a series
of tie-ups between Toshiba and
SanDisk, the US flash memory maker
acquired last year by Western Digital.
Toshiba, which argues that the investment is a matter of urgency in a rapidly
evolving and competitive market, said
installation of the new manufacturing
equipment would begin as soon as
December. Western Digital said it was
“disappointed” by Toshiba’s decision to
make the investment alone, complaining that the joint venture’s terms gave it
the right to participate in the investment and that it was equally determined to push ahead with the upgrade.
In an apparent attempt to soothe tempers, Toshiba said later yesterday that,
despite the failure of earlier negotiations, it would be open to future discussions on joint investment.
But plenty of acrimony remains. Soon
Japanese
company
hopes to
raise at least
$18bn from
sale of unit,
and is under
pressure to
close deal
quickly
after Western Digital intensified its
objections to the auction process for the
memory business in June, Toshiba shut
Western Digital employees out of databases used by the joint venture.
A court order forced Toshiba briefly
to reverse that, before an appeal allowed
them to reimpose it a week later. Yesterday, in another blow to Toshiba, it was
again ordered by a California court to
allow access.
The bad blood between Toshiba and
Western Digital is among a number of
factors standing between the struggling
Japanese group and a smooth sale of its
memory business.
The depth of Toshiba’s plight came
into sharper relief this week when the
company was demoted to the second
section of the TSE to trade among startups and corporate minnows.
Food & beverage. Consolidation
Mondelez buyout talk intensifies as chief departs
Investors ask if the group will
be predator or prey in the fresh
wave of deals that is expected
ANNA NICOLAOU — NEW YORK
As Irene Rosenfeld prepares to leave
after 11 years as head of Mondelez International, investors are wondering
whether history will repeat itself with
the company being put back in play now
that a chief resistant to activist pressure
is heading for the exit.
In 2014, three months after Tony Vernon left the top job at Kraft Foods, which
split from Mondelez, the group agreed a
$100bn merger with rival Heinz. The
deal, after years of resistance to activists, came when Mr Vernon’s successor,
John Cahill, welcomed an approach by
3G, the Brazilian investment group that
has reshaped the food industry.
“People are drawing the obvious parallel to [Vernon],” says Ali Dibadj, an
analyst at Bernstein. “The consumer
industry is under a lot of pressure . . . if
you don’t produce good results, you’re
on your way out.”
Ms Rosenfeld, 64, has steered Mondelez through a shift in the sector over
the past decade, and is known for bold
bets. When Ms Rosenfeld joined Kraft as
chief in 2006, she sought to “rewire” the
company. She aimed to revive stagnant
brands, increasing the cheese content of
Kraft macaroni and cheese, and unveiling spins on stalwarts, such as Oreo’s
“cakesters”.
Ms Rosenfeld says: “We were clear
about what the outcome needed to be,
and we did not waver.”
In the UK, however, she was the focus
of outrage over the hostile takeover of
chocolate maker Cadbury in 2010. After
the deal’s completion, Kraft soon closed
a Cadbury factory despite promising not
to, triggering an outcry that prompted a
rethink on regulations covering foreign
takeovers of UK companies. Ms Rosenfeld angered critics further by snubbing
parliamentary hearings.
Her biggest bet was splitting Kraft’s
grocery arm from its faster-growing
snacks unit, Mondelez, in 2012. Since
then Ms Rosenfeld has eschewed big
deals, instead slashing costs.
“As I look at the industry now, I don’t
think as much about consolidation as I
do about the sea change that we’re seeing in consumer behaviour and the customer profile,” she says.
Ms Rosenfeld argues that Mondelez
should stay independent despite years
of pressure from activists including US
investors Nelson Peltz and Bill Ackman.
“The world has certainly evolved . . . but I don’t think the rationale
for why [Mondelez] is better as an independent business has changed much,”
she says. “Our plan was always to stay
the course.” She notes that the company
Irene Rosenfeld
has said the
$70bn snack
company
should remain
independent
— despite years
of pressure
from activists
Carl Court/AFP/Getty Images
has delivered $120bn to shareholders
thanks to a rising stock price and dividend payouts.
Investors appear to disagree. Lingering speculation that Mondelez, the
third-largest packaged food and confectionery company after Nestlé and
PepsiCo, will be the next on 3G’s shopping list has propped up the stock. Mondelez shares have been roughly flat over
the past two years despite shrinking
sales, as it struggles with slow growth
and cash-strapped but more healthconscious consumers.
Since the split from Kraft, sales at
Mondelez have declined steadily, from
Van de Put option
McCain’s ‘growth guru’
to steer turnround
Mondelez has chosen a little-known
outsider to steer the company through
the next phase of its turnround.
Dirk Van de Put, chief executive of
McCain, the private, family-owned
Canadian maker of frozen french fries,
is to succeed her.
Mr Van de Put has worked in the
consumer goods sector for more than
three decades, holding posts at CocaCola and Mars.
Ms Rosenfeld told investors Mr Van
de Put was “ambidextrous”, with a
record of “walking and chewing gum”
$35.3bn in net revenues in 2013 to
$25.9bn last year. Mondelez last year
made an unsuccessful $23bn bid for
Hershey, viewed by some as a defensive
act against the company itself being targeted for a sale.
“The question now is whether Mondelez changes strategy significantly,
particularly through acquisitions,” says
Gaurav Gupta, principal at Kotter International.
Will the $70bn company be predator
or prey in the fresh wave of consolidation expected this year? It has come
under pressure from investors in recent
years. Mr Ackman’s Pershing Square
at the same time — ie committed to
both top line and bottom line growth.
During his six-year tenure as head
of McCain, net sales rose more than
50 per cent, generating more than
75 per cent of that growth organically.
“The message is, he is a growth
guru,” says Alexia Howard, an analyst
at Bernstein.
Others speculate on whether Mr
Van de Put might drive dealmaking,
after Ms Rosenfeld failed to buy
Hershey last year.
Under his watch, McCain sold its
North American frozen pizza business
and bought majority stakes in
companies such as Lutosa, the Belgian
potato processor, and Van Geloven,
the Dutch frozen food company.
Banks
bought a $5.5bn stake in 2015, while Mr
Peltz’s Trian Fund Management, which
has waged campaigns at groups from
PepsiCo to Procter & Gamble, has 44m
shares.
Ms Rosenfeld’s history with Mr Peltz
dates to 2007, when Trian, a Kraft
shareholder, pressed her to sell underperforming cereal brands. He later
pressed her to split Kraft, and has proposed merging Mondelez with PepsiCo.
Mr Peltz won a seat on Mondelez’s board
in 2014, and a month later the company
announced a push for cost cuts through
zero-based budgeting, a strategy pursued by 3G.
Looking to persuade investors that
Mondelez could operate as efficiently as
3G’s Kraft Heinz, Ms Rosenfeld pledged
to increase margins to between 17 and
18 per cent by 2018. After 3G bought
Heinz in 2013 with Warren Buffett, the
ketchup maker’s profit margins rose 58
per cent within two years to 28 per cent.
Mondelez reported a margin of 16 per
cent in its results this week.
Mr Peltz, who has flagged concerns
about Mondelez, once complaining that
the company’s name “sounds like a disease”, praised Ms Rosenfeld this week.
“Her leadership has benefited all of the
company’s stakeholders,” he said.
Analysts at JPMorgan say the leadership change signals that Mondelez will
not be sold in the near future, while Mr
Gupta does not believe Ms Rosenfeld’s
retirement will affect the probability
“too much”.
TECHNOLOGY
Richard
Waters
Next head of Uber
must prepare for an
uncomfortable ride
A
conciliator and political influencer, a product
visionary or an operations guru?
Picking the right person to run the leaderless Uber depends on what sort of business
you think it is — and what sort it has the
potential to become. Repairing the damage from this
year’s upheavals, including a sexual harassment scandal,
barely scratches the surface. The bigger job lies in capturing a future that Uber has hardly even begun to define.
There is a tendency to see Uber as a leader in a maturing
business. According to this view, after huge growth — and
equally vast subsidies to lure riders — competition in ridehailing is moving into a more stable period. Network
effects and economies of scale have taken over.
If so, then a consolidation phase may already have set in.
Uber’s decision last year to cede its foothold in China to
local competitor Didi Chuxing sounded like the starting
gun. That was followed last month by the news that it was
folding its hand in Russia, trading its position there for a
minority stake in market leader Yandex.
The market maturity thesis leads to the conclusion that
Uber is well on the way to becoming an entrenched
monopoly in the markets where it has refocused. That
would call, in a chief executive, for a cost-cutter and dealmaker, who can turn a habitual money-loser into a sustainable business.
It would also be someone with the skills to handle regulators in a less confrontational way than predecessor
Travis Kalanick. And the company’s culture would need to
be transformed from outsider with a chip on its shoulder
to responsible market leader.
All of this presupposes that Uber, though still growing
fast, has reached a turning point. But what if nothing of the
sort is going on?
For a start, market positions in ride-hailing look far from
settled. Lyft’s rebound from also-ran is a sign that riders
and drivers like choice. Barriers to entry may not be as
high as often thought. In a city such as San Francisco, many
riders — and drivers — use both Uber and Lyft apps. And
ride-hailing is a decidedly local business, making it a constant city-by-city war of attrition.
There are also some powerful competitors who have
Some powerful
strong incentives to get into
ride-hailing and are itching people have
at taking a shot at Uber.
strong incentives
From Tesla to Google and
General Motors, almost to get into
every company that sees
ride-hailing
itself in the personal transportation business long term
believes that service plays a big part — and that starts with
an app.
Like others in this new world, Uber will have to decide
what market it is in. After starting with a black-car service
and expanding into peer-to-peer and pooled rides, it looks
like Amazon, at the point when the ecommerce company
was expanding out of its original market of books, CDs and
DVDs. It has become a category leader, but this gives little
idea of what it might be in the long term.
Food delivery. Express parcel services. Driverless — and
flying — cars. These are all in early stages of development
or on the drawing board. They point not only to the wide
range of markets, but also the steep technology challenges
and business model choices that lie ahead. One obvious
example: will Uber remain an asset-light marketplace, or
will it become a vertically integrated owner-operator of a
fleet of robot taxis?
Besides defining what Uber will become, a new chief will
have to show it can still move with the speed of a Silicon
Valley start-up. The company has been a clear innovator in
some cases — for instance, with its dynamic pricing mechanism to maximise fares. But in others, it has been a fastfollower. Peer-to-peer and shared rides were ideas first
pioneered by Lyft. Feeding the pipeline of experimentation and rapid product development is key.
All of this suggests that Uber’s next chief will not be executing on a proven business plan. After this year’s scandals, there is an urgent repair job to be done. But there is
also a real danger of harming the culture and maverick
spirit that have carried the company this far.
As a board member and key shareholder, Mr Kalanick is
still hovering in the background. That might encourage
the board to pick a complementary spirit as chief, someone with big company experience and a more conciliatory
style. But split leadership, particularly when much of the
power lies in the hands of someone without explicit executive responsibilities, is usually a recipe for disaster. If so,
there is a risk that Uber’s board will just be delaying an
inevitable choice: to replace Mr Kalanick completely — or
bring him back.
richard.waters@ft.com
Financial services
Mustier shake-up lifts UniCredit performance Invesco nears deal for Guggenheim’s ETF unit
JAMES POLITI — ROME
UniCredit reported net profit of €945m
in the second quarter, beating analysts’
expectations and bolstering an aggressive turnround effort at the Italian
bank shepherded by Jean-Pierre Mustier, who has been chief executive for
little more than a year.
The Milan-based bank, which completed a high-stakes €13bn capital raise
early in 2017, also said revenues had
increased more than forecast during the
quarter, while there had been a drop in
its portfolio of non-performing loans.
“The engine is working very well,” Mr
Mustier said on a conference call.
Shares in UniCredit rose nearly 4 per
cent in early trading to €17.29, as investors cheered the results. They closed up
7 per cent at €17.82. In a statement, Mr
Mustier said the figures “confirm the
early positive impact” of the restructuring effort. “All our teams remain
focused on the execution and the successful delivery of the plan,” he added.
UniCredit’s second-quarter performance will add to the relief in the Italian
banking sector this year. Weighed down
by bad loans accumulated during the
recession that followed the financial crisis, Italian banks emerged as the weak
link in the European financial system.
But the mood has improved this year,
after the government set aside €20bn in
taxpayer funds to inject into struggling
institutions.
Because of its size, the fate of
UniCredit is pivotal to the health of the
Italian banking system. In the second
quarter, its exposure to gross non-performing loans decreased by 4.2 per cent
to €53bn. It is now down by 30 per cent
over the past 12 months.
Meanwhile, its profitability has
improved. Analysts had predicted net
profit of €676m for the second quarter,
but the figure was nearly 40 per cent
higher. Revenues were also up slightly to
€4.9bn. Net interest income was €2.7bn,
compared with forecasts of €2.6bn.
KARA SCANNELL — NEW YORK
Invesco is in talks to buy Guggenheim
Partners’ exchange-traded fund business, according to people familiar with
the negotiations, in a move that would
bolster the Atlanta mutual fund giant’s
basket of offerings as it seeks to expand
the growing asset class.
The talks for Guggenheim’s mutual fund
and ETF business, which include a portfolio of fixed income offerings that trade
under the BulletShares name, are in
advanced stages, according to the people close to the discussions.
Guggenheim’s ETF business is estimated at more than $30bn in assets
under management. It is unclear how
much Invesco would pay for the combined retail business of mutual funds
and ETF funds.
Invesco, the world’s fourth largest
ETF manager with $125bn in assets, said
it did not comment on market rumours.
Guggenheim also said it did not comment on rumours.
The negotiations come amid infighting within Guggenheim over the
direction of its business, which was
founded by Mark Walter and whose
rapid growth and investment success
has been credited to chief investment
officer Scott Minerd.
Disputes over recent appointments
to key management positions have contributed to a drop in morale, unease
among clients and the departure of top
managers.
Global investor inflows into ETFs
have reached around $335bn so far in
2017, comfortably on track to beat
2016’s record of $390bn, according to
ETFGI, a London-based consultancy.
Investors have ploughed around
$140bn into BlackRock’s ETF business
so far this year, exceeding the annual
record of $138bn gathered over the
whole of 2016, while Vanguard, the biggest competitor to BlackRock, registered ETF inflows of around $82bn by
the end of June.
★ †
Friday 4 August 2017
13
FINANCIAL TIMES
COMPANIES
Oil & gas
Energy groups warn of Russia sanctions ‘disaster’
Move by Washington
puts projects worth
billions of dollars at risk
HENRY FOY — MOSCOW
ANDREW WARD — LONDON
International energy investments in
Russia will suffer from new US sanctions
imposed on Moscow, executives have
warned, as companies scrambled to
assess the impact on billions of dollars’
worth of projects.
On Wednesday, President Donald
Trump reluctantly signed into law
sweeping new sanctions against Moscow
in retaliation for Russia’s alleged meddling in the US election, despite strong
opposition from oil and gas companies
that fear the broad interpretation of
some of its clauses could cause unintended damage to their businesses.
“The sanctions are beginning to backfire on those who are introducing them,
which is positive,” said Igor Sechin, chief
executive of Rosneft, Russia’s largest oil
producer. “[Sanctions] are starting to
work against our American partners,”
he said, adding that Rosneft is in a position to take advantage.
An executive at a western oil group
with a large presence in Russia told the
Financial Times that the new sanctions
“could be a disaster” given its current
business in the country. “This throws
everything into confusion,” the executive said, declining to be named because
of the business sensitivity of the issue.
The sanctions bill, which had the
overwhelming support of Congress
before it reached Mr Trump’s desk, in
particular bans the providing of “goods,
services, technology, information or
support” to both the construction and
the “modernisation or repair” of Russian energy export pipelines.
That clause throws into doubt the
€4.75bn pledged by European companies Royal Dutch Shell, Engie, Wintershall, OMV and Uniper to help fund the
Nord Stream 2 gas pipeline being by
built Gazprom, the Russian state-owned
energy group, between Russia and Germany. It could also damage other
projects by international companies.
Energy companies may have to rely
on individual waivers from the White
House to continue some projects, while
a clause that states the imposition of
sanctions requires consultation with
“allies” has raised hopes that the damage could be limited.
Daniel Fried, who served as head of
US sanctions policy until February, said
the Trump administration would have
to engage with the energy companies
and “operate with some common sense”
when implementing the sanctions.
He added: “People are going to have to
act with some discretion . . . They will
need to take a deep breath.”
Royal Dutch Shell said yesterday that
it had nothing to add to comments made
last week by its chief executive Ben van
Beurden. At the time he said: “We have
to see how this bill gets implemented.
We comply with the law and with any
restraints or sanctions that are being
put upon us.”
Mr van Beurden said Shell had
authorisation from Dutch authorities to
press ahead with financing of Nord
Stream 2, but was waiting to see how the
US situation evolves. “We have commitments under that arrangement and we
are fulfilling those commitments as
much and as best as we can,” he said.
Austria’s OMV said that it was too
early for the company to draw any conclusions, and it was monitoring the situation “very carefully”.
Officials have warned that a pipeline
that carries oil to the Black Sea from
Tengiz, a project in Kazakhstan where
Chevron and ExxonMobil agreed last
year to a $37bn expansion, could also be
affected by the sanctions.
The new US measures also target
Transneft, the oil pipeline monopoly
whose vast network many international
companies rely on to carry their Russiaproduced crude to export terminals. But
the company’s chief executive, Nikolai
Tokarev, said yesterday that it did not
rely on foreign technology or financing
so the new measures would not affect
his business.
Publicly, major international oil and
gas companies operating in Russia have
said they will continue to operate as normal within the new curbs. Gazprom and
the Russian government have consistently stressed that the Nord Stream 2
pipeline will go ahead as planned. But
some western oil groups insist they can
make the new regime work, with BP
playing down the impact on its business.
Additional reporting by Ralph Atkins in
Zurich
Sources of gas by country
Europe’s appetite for gas
depends on Gazprom
Oil & gas. Energy politics
US steps up fight
with Moscow on
Europe gas supply
Added flexibility and tougher
competition spell big potential
gains for continent’s customers
DAVID SHEPPARD — LONDON
HENRY FOY — MOSCOW
When Donald Trump promised to raise
US natural gas exports in Europe in a
speech in Poland, he was cheered to the
rooftops.
Such a reaction will have troubled
executives at Gazprom, Russia’s stateowned energy group, as it marks an
escalation in the battle over gas supplies
in the prized European market.
That fight has been years in the making, with the growth of US liquefied natural gas exports set to challenge the
established supplies of the company.
It is a market that Gazprom considers
its backyard as the dominant supplier of
European gas and with its monopoly on
pipeline exports from Moscow.
At first glance, Gazprom has a strong
hand in a competition where it has
home advantage, vast reserves, low production costs, and ships its gas through
pipelines, which is much cheaper than
freezing it and loading it on to an LNG
tanker — and then having to regasify it
once it reaches its destination.
But the arrival of US gas in Europe is
also taking on a more political edge.
Fresh US sanctions against Russia
signed into law by Mr Trump on
Wednesday over alleged meddling in
the US presidential election could target
energy export pipelines that Washington fears will increase Moscow’s influence over Europe’s gas supplies.
Jason Bordoff, an ex-adviser to former
President Barack Obama, who runs
Columbia University’s Centre on Global
Energy Policy, suggests that while LNG
is normally more expensive, Gazprom
will still face painful choices as supplies
from rivals make their way to Europe.
The Russian group has to pick
between “competing on price and
defending market share” and “cutting
back on supply to keep prices high”, he
says.
If Gazprom decides to opt for the
former, which Mr Bordoff thinks the
evidence points to, then it will need to
accept it is entering a price war that may
hit revenues even if it can keep raising
sales in a region hungry for energy.
The US president’s overture to countries such as Poland chimes with the
mood among pro-Nato politicians in
central Europe, who resent Moscow’s
leverage over their gas supply with their
web of import pipelines.
Some might happily rely more on the
US for gas, even if it means paying more.
Sanctions are also complicating the
battle, particularly if they hit Gazprom’s
Nord Stream 2 pipeline to Germany,
which is under construction. That has
rattled Russian politicians who are keen
to talk up their ability as a cheap supplier of gas to Europe.
“The attempts to derail Nord Stream
2 are part of unfair competition practices by potential suppliers of LNG,
which is more expensive compared with
natural gas delivered by pipelines,” Russia’s energy minister Alexander Novak
told the Financial Times before Mr
Flammable
Smaller, landlocked countries in central
Europe are more reliant on Gazprom
Gas imports 2016 (%)
0 to 19
20 to 39
40 to 59
“Related Articles” would appear
under stories shared in the Facebook
news feed, to give people “a more complete picture of a story or topic”, the
company said.
The feature has been tested since
April and is being rolled out more
broadly.
“We’ve heard that Related Articles
helps give people more perspectives and
additional information, and helps them
determine whether the news they are
reading is misleading or false,” Facebook said.
80+
Own production
Pipeline via non-Gazprom
Pipeline via Gazprom
Imports of LNG
Germany
UK
LATVIA
DENMARK
RUSSIA
Italy
Ukraine 17.8
Romania 9.2
Germany 6.6
Italy 5.3
Denmark 4.5
Poland 3.9
Other EU 8.7
France
BELARUS
UK
GERMANY
BELGIUM
CZECH REP
SLOVAKIA
AUSTRIA
HUNGARY
FRANCE
Ukraine
POLAND
UKRAINE
Austria
Gazprom 246.8
Hungary
ITALY
CRIMEA*
SERBIA
BULGARIA
Trump signed the sanctions. “These
politically motivated economic
restrictions will ultimately make the
energy resources on the market more
expensive.”
Mr Novak’s comments highlight the
risks for some European countries, with
analysts saying the EU will need to
increase gas imports in the short term at
least. This is due to falling domestic production in countries such as the Netherlands and the UK.
Nord Stream 2 is part of Gazprom’s
response to that forecast jump in
demand. It has inked an agreement with
European energy majors including
Royal Dutch Shell, Austria’s OMV,
France’s Engie and Germany’s Uniper
and Wintershall to finance half the
€9.5bn to build the pipeline, which will
add 55bn cubic metres of annual capacity to its European flows, delivered
under the Baltic Sea.
Last month, it also began work on
doubling the capacity on its under-construction Turkish Stream pipeline, raising capacity to 30bn cubic metres in
annual shipments for Turkey and
southern Europe.
The Russian group has already
TURKEY
* Annexed by Russia, disputed by Ukraine
and the international community
Czech
Republic
Other non-EU
pipelines 53.2
Facebook will astart using “updated
machine learning”, which is able to
detect more potential fake news stories.
If a story is declared false by one of Facebook’s third-party fact-checkers, a story
debunking the hoax may appear under
the original.
The social network has rolled out a
series of measures aimed at addressing
the spread of fake news since several
false stories — such as the Pope endorsing Donald Trump — went viral on the
platform during the US presidential
election campaign.
Facebook is partnering with factcheckers such as Snopes and using signals from them and users to try to push
false stories further down the news feed.
It has tried to reduce the financial
incentives for owners of false news sites,
by cutting them off from its advertising
GREECE
Qatar 23.7
Greece
0
20 40
60
80 100
Graphic by Alan Smith Sources: BP Statistical Review of Energy 2017, Gazprom, national statistics
increased exports to Europe by an
annual 12.3 per cent in the first six
months of 2017, following a 12.5 per cent
annual increase in 2016.
Gazprom chief executive Alexei
Miller believes there is no contest in the
demand stakes.
“Our gas is enjoying increasing
demand in Europe,” he says. “Our gas
demand growth will continue.”
Gazprom officials argue that countries such as Poland will have to pay
more for ships of US LNG if they reduce
their imports of piped Russian gas.
However, the growth of LNG from the
US and producers such as Australia and
Qatar is connecting regional markets
that were previously separate, allowing
more gas to flow where it is most
needed. Supplies of the super-cooled
fuel are expected to grow almost 50 per
cent between 2015 and 2020.
This has already had the effect of partially transferring low US prices,
Centrica to ‘take or pay’
Deal structure counters
price risk for suppliers
the US total starts to creep above
those in Europe.
Many LNG deals have a fixed “take or
pay” portion for which long-term
buyers have to pay whether they need
the gas or not.
One such buyer will be Centrica,
which is due to start lifting enough LNG
from the US Gulf Coast in 2019 to
supply 1.8m UK homes.
Such sunk costs can make it more
economical to lift the gas and sell it on,
whether to customers or rival traders,
even when gas from Russia or other
suppliers is cheaper. That makes US
While it may appear difficult for US
LNG to compete on price in Europe, the
picture is more complicated than it
looks.
Americans enjoy some of the lowest
market-rate gas prices in the world
thanks to the glut created by the
shale boom.
But once the costs of liquefaction,
shipping and regasification are added,
network, and to educate users with an
alert called “Tips to Spot False News”,
shown in 14 countries.
But it has launched fewer measures to
address the problem of filter bubbles,
which emerged during the US election
when many felt they did not have access
to opposing political views, because
their friends all had similar political
allegiances.
Facebook has created “Topics to Follow” so that people can choose to see
more information about themes, rather
than choose to “like” publications that
may have a set viewpoint.
In France, ahead of the presidential
election, it introduced a feature so that
when users clicked on a question-andanswer page written by a political candidate, they were also shown the page of
the rival politician.
Pipeline
300
Poland
Slovakia
‘Gas can move where you
need it in the world. That’s
the biggest challenge for a
company like Gazprom’
Total
605.6
Netherlands 40.2
Turkey
LITHUANIA
Sources of European gas, 2016
(billion cubic metres)
EU
Production
253.8
Norway 116.6
UK 41.0
ESTONIA
Facebook stages fake news fightback
Facebook is launching a feature to
encourage its 2bn users to explore
more perspectives, as part of an effort
to address accusations that it creates a
filter bubble.
60 to 79
FINLAND
Technology
HANNAH KUCHLER — SAN FRANCISCO
Billion cubic metres, 2016
Businesses
For Sale
Business for Sale, Business Opportunities,
Business Services,
Business Wanted, Franchises
Runs Daily
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Classified Business Advertising
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depressed by shale gas production,
through to Europe and Asia.
Gazprom believes it still has advantages on price, particularly as it has
started to loosen pricing controls to
many of its main European customers.
Currently, the US gas price is about
$2.85 per MMBTU, a measure of energy
content in fuel. This rises above $6 after
factoring all the associated fees for shipping, liquefication and gasification,
according to Gazprom estimates. This
shipments of LNG to Europe viable.
Europe is also favoured as a
destination for excess cargoes because
it has surplus regasifaction capacity.
Centrica can take LNG imports at
the National Grid’s Isle of Grain facility
in Kent.
Russia has the ability to undercut US
LNG in Europe to protect its market
share, and could even “flood the
market with cheap gas”, says S&P
Global Platts, the energy data provider,
in a research paper. “[But] what is sure
is that US LNG is coming to Europe.”
David Sheppard
Contracts & Tenders
Algeria 14.9
Other 12.7
US 0.5
Liquefied
Natural Gas
51.8
compares with about $5 per MMBTU in
much of Europe, where Gazprom
accounts for about a third of supply.
Gazprom, which historically used oillinked prices, has also moved towards
pricing more supplies against European
gas hubs, which buyers think offer a
fairer reflection of the market.
Some European countries would like
to break the Russian stranglehold over
the market.
“LNG is a point of leverage,” says Ira
Joseph at the energy consultancy Pira.
Charif Souki, head of energy group
Tellurian, points out that LNG was not
meant to be a replacement for pipeline
supplies as it could not meet the
demands of the European market.
Instead, he thinks it provides flexibility. “Gas can now move where you need
it in the world. That’s the biggest challenge for a company like Gazprom.”
The added flexibility and increased
competition in the market may bring
down prices for European customers.
As a result, this may prove to be one USRussian battle where the winners are
customers in Europe — from utilities in
Germany to energy-intensive industries
in the UK.
★
14
FINANCIAL TIMES
Friday 4 August 2017
COMPANIES
Telecoms
Technology
Deutsche Telekom takes hit from BT stake
Alibaba to
launch luxury
car vending
machine
Fresh €1.1bn writedown
in value of its holding
undermines strong results
NIC FILDES
TELECOMS CORRESPONDENT
Deutsche Telekom has booked a fresh
€1.1bn writedown in the value of its
stake in BT, undermining solid results
from the German operator.
Deutsche Telekom took a 12 per cent
stake in BT after it agreed to sell EE, the
UK mobile phone operator, to the British business for £12.5bn in 2015. The
company took shares and a seat on the
board, and was widely believed to be
interested in taking over the whole of BT
at some point.
Orange, which owned half of EE, took
£3.4bn of its proceeds in cash and has
started to sell down its residual 4 per
cent stake in BT at a significant loss.
BT has lost almost a quarter of its
value since the start of the year, after a
complex accounting scandal in its Italian business and a slowdown in its public sector business triggered a major
profit warning in January.
It was then hit with a record £42m
fine and was forced to refund £300m to
its wholesale customers, after the UK
regulator Ofcom ruled that its Open-
reach division was guilty of a “serious
breach” of rules governing access to its
broadband network.
BT took another hit to its profits after
it said last week that it would pay Deutsche Telekom and Orange £225m to
avert potential litigation related to the
sale of EE.
Thomas Dannenfeldt, Deutsche Telekom’s chief financial officer, said: “We
are pleased we have found a consensual
solution to that retroactive matter.
From our POV that matter has no
impact on the future relations between
the two companies.”
The German group booked £180m of
those funds in the second quarter, but
that was offset by a new writedown in
the value of the BT stake, which comprised the share price and foreign
exchange rate declines in its investment. It had already booked a €2.2bn
impairment charge in the fourth quarter of last year, as the pound weakened
after the Brexit vote and BT’s share price
declined.
The UK has proved a tough territory
for Deutsche Telekom, which has
moved its focus to the US where its
T-Mobile USA network has turned into
the company’s growth engine. The
American unit now accounts for half of
the company’s revenue and more than
40 per cent of its profit. A strong per-
formance in the second quarter triggered a mild upgrade to its outlook for
the year, with earnings before interest,
taxation, depreciation and amortisation
now seen at €22.3bn, up from €22.2bn.
Revenue in the first half increased by
€2.1bn to €37.5bn, with the German
mobile market returning to growth in
the second quarter. Net debt rose by
€5bn to €55.2bn.
Stephane Beyazian, an analyst with
Raymond James, said the company had
grown faster across the board. “Growth
remains largely driven by T-Mobile USA
but we also observe encouraging turnround in German mobile, Dutch mobile
and overall Europe,” he said.
Retail. Food strategy
David Jones draws up recipe to fight Amazon
Australian store turns to
gourmet offering to lift profits
and ward off online rivals
JAMIE SMYTH — SYDNEY
It became one of Australia’s biggest
brands by selling upmarket apparel
over almost two centuries. Now David
Jones, one of the world’s oldest department store chains, is targeting Australia’s A$100bn-a-year (US$80bn)
food sector to insulate it from the
encroachment of online rivals.
The strategy is being rolled out by
John Dixon, a former Marks and Spencer executive who was appointed chief
executive of the chain by Woolworths
Holdings, the South African group that
acquired David Jones for A$2.2bn in
2014. It is investing A$100m to build a
food retail business and open a network
of convenience stores.
“There is nothing like this anywhere
in the world. It is a food revolution for
Australia,” says Mr Dixon during a tour
of a newly renovated David Jones food
hall in Sydney.
The food hall is based around a 280seat restaurant developed by celebrity
chef Neil Perry. It incorporates an oyster
bar, bakery, butcher, fishmonger and
delicatessens, offering food that can be
cooked and eaten on site or at home.
It is part of a shake-up at David Jones,
which faces a tough retail environment
and the imminent arrival of US online
behemoth Amazon in its home market.
Next month, the company will reveal its
new online shopping platform, next
year a new loyalty programme and in
2019 a A$200m upgrade to its flagship
Sydney city centre store.
Amazon confirmed yesterday that it
would open its first retail logistics warehouse in Australia in Dandenong South,
Melbourne. Australian retailers have
had a bruising year with weak consumer
confidence and poor sales, pushing a
dozen clothing retailers, including Top
Shop Australia, into administration. It
follows an influx of foreign retailers’
such as Inditex-owned Zara and Hennes
& Mauritz over recent years.
“A lot of international retailers have
seen Australia as a good place to do business over the past few years with steady
population growth, a good standard of
David Jones, best known for selling upmarket clothing, is redirecting its focus to create a ‘halo effect’ — Carla Gottgens/Bloomberg
living and 26 years of economic growth,”
says Mr Dixon.
But he warns that discretionary
spending has been hit by increased competition and uncertainty caused by volatile politics at home and abroad, concerns about the housing market and the
lowest wage growth in 20 years.
Last month, Woolworths SA said sales
growth at David Jones had slowed in the
six months to June 25 with sales in comparable stores declining 0.7 per cent, as
“falling consumer confidence resulted
in lower footfall” through stores. Myer,
its main rival, issued a profit warning in
July, which saw its share price plunge
almost 10 per cent to 73.5 cents — a
record low.
David Jones* performance
Revenue
($bn)
Ebit
($m)
2012
1.87
105.0
2013
1.85
99.5
2014
1.89
78.4
2015
1.88
106.2
2016
2.21
170.1
2017**
2.26
n.a.
* Osiris Holdings is a subsidiary of Woolworths Holdings
Ltd - the parent company of David Jones
** Estimate
Sources: company; IBISWorld
Department stores’ market
share in Australia
Per cent
Other 6.9
Wesfarmers
Limited
David
Jones*
11.6
Myer
Holdings 17.1
45.2
19.2
Woolworths
Ltd
Mr Dixon dismisses analysts’ speculation that Woolworths SA could bid for
Myer and merge it with David Jones,
saying it is busy revamping its upmarket chain. He says the food strategy will
create a “halo effect”, whereby more
shoppers will come to eat and buy groceries and end up buying clothing or
beauty products.
About half the food on sale is under
David Jones’ own label and Mr Dixon
plans to increase this to 70 per cent by
2020. He says Australia’s two big supermarkets — Coles and Woolworths,
which is not part of Woolworths SA —
have left a big gap at the premium end of
the Australian market.
“The food strategy is part of David
Jones’ move towards the premium market. This should help insulate them
from online rivals, such as Amazon,”
says Nathan Cloutman, an analyst at
IbisWorld, a market research company.
JPMorgan forecasts David Jones could
boost annual food revenues from
A$65m in 2016 to A$700m within five
years if its strategy is well executed.
Success is far from certain though.
Between 2000 and 2003 David Jones
lost more than A$100m on a failed gourmet food business. This year its Australian rival Woolworths closed its high-end
food store concept, Thomas Dux,
because of poor sales.
Mr Dixon, who led a turnround of
Marks and Spencer’s food business in
2008 under Stuart Rose, is confident of
success. He has assembled a team with
international experience to drive the
food strategy and overhaul its technology platforms. “The UK and US are a little bit further developed than Australia,
particularly in online retailing,” he says
noting online sales in Australia are 6-7
per cent of total sales, compared with
15-20 per cent in the US or UK.
The launch of a new internet sales
platform cannot come quick enough,
following confirmation that Amazon is
about to enter the Australian market.
Mr Dixon says Amazon’s likely impact
in Australia has been overhyped as the
market is different to the US.
“There was 40 per cent more department store space per capita in the US
than in Australia and there is a greater
food offering here to retain customers,”
he says. “We have learnt lessons from
the past 10-15 years in those markets.”
See Lex
LOUISE LUCAS — HONG KONG
A can of soft drink, a packet of cigarettes, a spanking new Maserati.
China’s Alibaba is raising the stakes in
vending machines, promising to make
buying a car “as easy as buying a can
of Coke”.
The mega vending machine, set for
next year, is a symbol of China consumerism and the instant-gratification
Zeitgeist.
Buyers will be able to browse cars on
smartphones, press the buy button, and
the car will be disgorged at ground level
from a vertical display tower.
Yu Wei, general manager of the automotive division on Alibaba’s Tmall
ecommerce platform, said the era of
online car shopping had arrived.
Alibaba is spearheading its retail
model across sectors, blending online
shopping with physical stores to offer
consumers more choices and collate
more data that can be looped back to
encourage them to spend more.
The company is not the first to sell
cars from a vending machine.
Singapore used-car seller Autobahn
Motors set up a 15-floor showroom in
December, dubbing it the “largest luxury car vending machine”, while
Carvana has built more modest versions
in Tennessee and Texas.
While Carvana keeps the experience
real with a machine that takes
a token mega coin, Alibaba plans
to plug its vending machines into its ecosystem, which incorporates financing
and data about the buyer’s credit
standing.
Buyers with the requisite rating from
Alibaba’s scoring system Sesame Credit
will be able to drive off in their car with a
10 per cent downpayment, and continue to make monthly instalments
through payments service Alipay.
Buyers appear to be lapping up the
concept.
Gary Hong, general manager of Autobahn Motors, said sales were up an
annual 30 per cent to about 130 luxury
vehicles following the move. He has a
classic car being sold for almost $10m.
The model reduces costs, including of
the manpower needed to store and keep
cars clean and shiny.
Once a customer selects their car, said
Mr Hong, it took just a couple of minutes for it to be shuttled down from the
tower — time spent watching an introductory video.
“The cars always appear in their best
light because of the spotlighting,” he
said. “It’s like going to a jewellery shop
or an Apple store.”
The cars are well-lit in displays in the
building-cum-vending box, and are visible from the street through floor-toceiling windows.
Chinese shoppers have already shown
themselves willing to buy cars online.
Maserati sold 100 vehicles in 18 seconds
during a flash sale on Tmall, while a similar sale saw Alfa Romeo sell 350 Giulia
Milano cars in 33 seconds, according to
Alibaba.
China has been the biggest car market
for the best part of a decade. Vending
machines, ubiquitous in Japan, are also
popular in China, where there are an
estimated 100,000.
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Friday 4 August 2017
★
FINANCIAL TIMES
15
16
FINANCIAL TIMES
Friday 4 August 2017
MARKET DATA
WORLD MARKETS AT A GLANCE
FT.COM/MARKETSDATA
Change during previous day’s trading (%)
S&P 500
Nasdaq Composite
-0.24%
-0.29%
Dow Jones Ind
FTSE 100
-0.01%
FTSE Eurofirst 300
0.85%
Nikkei
Hang Seng
-0.25%
0.12%
FTSE All World $
-0.28%
$ per €
-0.12%
0.169%
$ per £
¥ per $
-0.605%
-0.294%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS
EUROPE
Index
Jul 04 - S&P 500
All World
New York
2,471.65
2,432.54
Day -0.24%
Month 1.99%
Year 14.58%
Nasdaq Composite
Index
Jul 04 - Aug 03
S&P/TSX COMP
All World
Toronto
15,234.84
15,153.12
Day -0.20%
New York
Month 0.34%
Year 4.98%
IPC
Month 3.32%
Year 23.49%
Dow Jones Industrial
Day 0.05%
New York
Month 2.21%
Year 9.34%
Bovespa
Country
Month 3.13%
Latest
Year 12.71%
Europe
Month -1.28%
Year 12.69%
Country
Month 5.67%
Index
Year 17.16%
Latest
Previous
stock
traded m's
Tesla
28.2
Apple
20.9
Amazon.com
15.9
Nvidia
9.0
Facebook
8.6
Citigroup
6.0
Bank Of America
5.7
Boeing (the)
5.4
Automatic Data Processing
5.2
Microsoft
4.8
close
price
347.95
155.95
988.57
165.66
168.77
68.27
24.42
237.21
111.73
72.01
Day's
change
22.06
-1.19
-7.32
1.27
-0.53
-0.83
-0.18
-0.74
-3.52
-0.26
BIGGEST MOVERS
Ups
Tesla
Marathon Oil
Stericycle
Cf Industries Holdings
Kellogg
Close
price
Day's
change
Day's
chng%
347.95
12.86
81.12
30.08
70.47
22.06
0.82
5.10
1.36
3.03
6.77
6.77
6.71
4.74
4.49
Downs
Frontier Communications
Amerisourcebergen (holding
Concho Resources
Hologic
Centurylink
14.45
81.50
116.81
39.75
21.84
-2.60
-9.77
-11.85
-3.93
-1.90
-15.25
-10.70
-9.21
-8.99
-8.00
Based on the constituents of the S&P500 and the Nasdaq 100 index
-0.12%
0.53%
Madrid
Month -0.02%
All World
Seoul
2,386.85
2,388.35
Year 22.19%
Hang Seng
Index
Jul 04 - Aug 03
Kospi
20,029.26
Day -0.25%
CAC 40
10,549.10
Day 0.33%
Paris
Month 1.00%
Day -1.68%
Hong Kong
Month -0.21%
Year 18.22%
FTSE Straits Times
Singapore
3,348.80
3,211.17
25,521.97
Year 27.45%
FTSE MIB
Day -0.28%
Milan
Month 6.86%
Year 24.41%
Shanghai Composite
5,130.49
Day 0.46%
Country
Month 0.19%
Index
Cyprus
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Country
Month 3.71%
Index
Philippines
Poland
Portugal
Manila Comp
Wig
PSI 20
PSI General
BET Index
Micex Index
RTX
TADAWUL All Share Index
FTSE Straits Times
SAX
SBI TOP
FTSE/JSE All Share
FTSE/JSE Res 20
FTSE/JSE Top 40
Kospi
Kospi 200
IBEX 35
CSE All Share
OMX Stockholm 30
OMX Stockholm AS
SMI Index
Romania
Russia
Saudi-Arabia
Singapore
Slovakia
Slovenia
South Africa
South Korea
Spain
Sri Lanka
Sweden
Switzerland
Year 35.11%
Latest
Day -0.37%
Previous
7876.66
62259.96
5179.31
2865.23
8349.51
1964.46
1027.97
7109.27
3342.92
339.05
809.85
55658.94
34541.97
49224.34
2386.85
312.29
10549.10
6571.48
1562.90
565.21
9136.61
Month 3.61%
Year 17.02%
BSE Sensex
Mumbai
3,440.49
32,237.88
3,338.81
20,939.39
Day 1.02%
Year 18.54%
Day -0.18%
Shanghai
21,793.72
STOCK MARKET: BIGGEST MOVERS
AMERICA
ACTIVE STOCKS
All World
Tokyo
20,032.35
Year 19.42%
10,523.60
1,489.49
Day 0.12%
5,180.10
Day -0.38%
Gold $
27,531.01
23821.49
40667.28
21573.61
6305.38
20080.04
1321.45
1634.38
2145.19
3742.50
6842.67
998.66
628.22
1660.06
1770.61
51200.13
12209.51
525.29
796.70
7748.31
35844.00
810.08
46949.04
21798.64
5794.50
5744.20
3470.80
3228.99
3938.15
6495.37
67135.99
899.89
15265.63
763.33
25449.15
9782.42
8988.96
3440.46
333.85
3285.02
1954.81
1178.57
1478.09
1889.97
Month -2.64%
Index
Jul 04 - Aug 03
Nikkei 225
Frankfurt
Ibex 35
FTSE Italia All-Share
24038.78
CSE M&P Gen
76.82
77.12
Italy
FTSE Italia Mid Cap
40707.73
PX
1017.57
1010.59
OMXC Copenahgen 20
992.13
993.87
FTSE MIB
21793.72
EGX 30
13405.20
13419.38
Japan
2nd Section
6297.61
OMX Tallinn
1231.48
1230.40
Nikkei 225
20029.26
Austria
OMX Helsinki General
9542.09
9533.67
S&P Topix 150
1320.27
Belgium
CAC 40
5130.49
5107.25
Topix
1633.82
SBF 120
4099.87
4081.49
Jordan
Amman SE
2151.74
Brazil
Germany
M-DAX
24452.30
24431.27
Kenya
NSE 20
3741.46
Canada
TecDAX
2188.25
2173.22
Kuwait
KSX Market Index
6823.95
XETRA Dax
12142.97
12181.48
Latvia
OMX Riga
1001.10
Chile
Greece
Athens Gen
825.80
826.02
Lithuania
OMX Vilnius
629.93
China
FTSE/ASE 20
2153.90
2153.08
Luxembourg
LuxX
1663.31
Hong Kong
Hang Seng
27531.01
27607.38
Malaysia
FTSE Bursa KLCI
1771.90
HS China Enterprise
11002.20
11055.42
Mexico
IPC
51224.31
HSCC Red Chip
4264.26
4267.81
Morocco
MASI
12165.56
Hungary
Bux
36416.07
36041.13
Netherlands
AEX
525.57
India
BSE Sensex
32237.88
32476.74
AEX All Share
797.82
Nifty 500
8729.30
8786.85
New Zealand
NZX 50
7753.75
Colombia
Indonesia
Jakarta Comp
5780.58
5824.25
Nigeria
SE All Share
36720.62
Croatia
Ireland
ISEQ Overall
6647.57
6633.56
Norway
Oslo All Share
811.04
Israel
Tel Aviv 100
12.97
12.99
Pakistan
KSE 100
47084.34
(c) Closed. (u) Unavaliable. † Correction. ♥ Subject to official recalculation. For more index coverage please see www.ft.com/worldindices. A fuller version of this table is available on the ft.com research data archive.
21827.87
5786.80
5735.10
3452.40
3250.77
3949.00
6489.26
66883.68
898.80
15234.84
779.71
25328.45
9677.28
9000.71
3427.75
334.08
3272.93
1954.71
1175.83
1481.05
1886.13
All World
12,142.97
Day -0.32%
Previous
Merval
All Ordinaries
S&P/ASX 200
S&P/ASX 200 Res
ATX
BEL 20
BEL Mid
Bovespa
S&P/TSX 60
S&P/TSX Comp
S&P/TSX Div Met & Min
IGPA Gen
FTSE A200
FTSE B35
Shanghai A
Shanghai B
Shanghai Comp
Shenzhen A
Shenzhen B
COLCAP
CROBEX
Previous
12,453.68
Latest
Argentina
Australia
Index
Year 20.22%
7,411.43
Index
66,883.68
63,154.17
Day -0.01%
London
Jul 04 - Aug 03
Xetra Dax
FTSE Eurofirst 300
São Paulo
22,014.96
21,478.17
Month 1.36%
1,505.34
50,300.81
6,150.86
0.780%
51,224.31
6,344.29
Day -0.29%
All World
7,357.23
Mexico City
Oil Brent $ Sep
ASIA
Index
Jul 04 - Aug 03
FTSE 100
Day 0.85%
£ per €
Country
7872.65
62409.52
5208.33
2866.67
8299.22
1965.48
1021.42
7094.17
3348.80
336.00
818.74
55200.49
34175.28
48811.07
2427.63
317.69
10513.90
6585.53
1563.20
564.94
9122.68
Taiwan
Thailand
Turkey
UAE
UK
USA
Venezuela
Vietnam
Month 2.52%
Index
Latest
Weighted Pr
Bangkok SET
BIST 100
Abu Dhabi General Index
FT 30
FTSE 100
FTSE 4Good UK
FTSE All Share
FTSE techMARK 100
DJ Composite
DJ Industrial
DJ Transport
DJ Utilities
Nasdaq 100
Nasdaq Cmp
NYSE Comp
S&P 500
Wilshire 5000
IBC
VNI
31,245.56
Day -0.74%
Year 10.15%
Previous
10469.88
1578.25
106525.44
4608.29
3246.10
7474.77
6679.20
4095.49
4466.04
7485.62
22014.96
9175.32
730.21
5892.94
6344.29
11962.53
2471.67
25664.96
146877.84
788.49
Country
10519.27
1580.54
106147.43
4561.65
3216.10
7411.43
6634.38
4065.44
4465.37
7488.68
22016.24
9174.99
731.93
5914.23
6362.65
11979.37
2477.57
25731.93
141535.20
786.23
Month 4.26%
Index
DJ Global Titans ($)
Euro Stoxx 50 (Eur)
Euronext 100 ID
FTSE 4Good Global ($)
FTSE All World
FTSE E300
FTSE Eurotop 100
FTSE Global 100 ($)
FTSE Gold Min ($)
FTSE Latibex Top (Eur)
FTSE Multinationals ($)
FTSE World ($)
FTSEurofirst 100 (Eur)
FTSEurofirst 80 (Eur)
MSCI ACWI Fr ($)
MSCI All World ($)
MSCI Europe (Eur)
MSCI Pacific ($)
S&P Euro (Eur)
S&P Europe 350 (Eur)
S&P Global 1200 ($)
Stoxx 50 (Eur)
Cross-Border
Year 15.21%
Latest
Previous
280.91
3467.03
1001.27
6233.28
316.61
1489.49
2908.96
1545.62
1503.87
4124.20
1809.82
560.02
4207.53
4804.52
479.76
1970.29
1569.49
2671.70
1598.73
1532.95
2196.73
3092.65
281.71
3459.32
996.93
6236.66
317.00
1487.73
2905.04
1547.51
1515.40
4119.90
1807.65
560.63
4198.53
4790.75
479.73
1970.39
1572.82
2672.19
1594.29
1531.28
2198.31
3088.93
UK MARKET WINNERS AND LOSERS
LONDON
ACTIVE STOCKS
EURO MARKETS
ACTIVE STOCKS
stock
traded m's
British American Tobacco
376.7
Shire
215.7
Rio Tinto
178.2
Hsbc Holdings
166.2
Bp
137.9
Unilever
135.6
Glencore
125.6
Imperial Brands
120.0
Lloyds Banking
119.0
Astrazeneca
117.6
close
price
5004.00
4118.00
3486.50
761.20
460.60
4325.00
335.15
3305.50
66.51
4562.00
Day's
change
18.03
5.75
-14.38
-1.96
0.99
-29.67
-2.74
86.83
0.67
66.15
BIGGEST MOVERS
Ups
Next
Cobham
Tullow Oil
Carillion
Serco
Close
price
Day's
change
Day's
chng%
4401.00
145.30
180.00
57.40
115.50
287.86
8.72
10.90
2.70
3.79
7.17
6.51
6.45
5.04
3.35
Ups
Unicredit
Hugo Boss Ag Na O.n.
Ses
Raiffeisen Bank Internat. Ag
Natixis
Downs
Convatec
Inmarsat
Halfords
Fdm (holdings)
Mondi
289.30
759.00
329.70
933.50
1948.00
-21.66
-26.14
-10.67
-25.50
-51.61
-7.01
-3.32
-3.13
-2.66
-2.58
Downs
Tenaris
Evonik Industries Na O.n.
A.p. M__ller - M__rsk A A/s
A.p. M__ller - M__rsk B A/s
Beiersdorf Ag O.n.
Unicredit
Santander
Nestle N
Intesa Sanpaolo
Roche Gs
Ing Groep N.v.
Novartis N
Unilever Dr
Royal Dutch Shella
Bnp Paribas Act.a
stock
traded m's
727.7
603.7
314.7
257.9
243.6
234.7
228.9
215.3
212.7
209.4
close
price
17.82
5.76
71.81
2.90
214.66
15.67
71.60
49.06
24.14
67.22
Day's
change
1.19
0.04
0.30
0.00
0.35
-0.03
-0.35
0.26
-0.01
0.66
stock
traded m's
Toyota Motor
391.3
Softbank .
372.6
Mitsubishi
315.9
Sony
300.9
Mitsubishi Ufj Fin,.
280.4
Fuji Heavy Industries
232.9
Japan Tobacco .
232.8
Sumitomo Mitsui Fin,.
226.2
Honda Motor Co.,
209.5
Furukawa Electric Co.,
198.6
close
price
6225.00
8841.00
2535.50
4419.00
712.80
3930.00
3837.00
4278.00
3185.00
5650.00
Day's
change
-75.00
-74.00
76.50
2.00
-4.00
-66.00
-23.00
-31.00
-29.00
705.00
Close
price
Day's
change
Day's
chng%
BIGGEST MOVERS
Day's
change
Day's
chng%
17.82
71.60
20.34
24.70
6.36
1.19
2.14
0.48
0.57
0.14
7.16
3.08
2.44
2.36
2.30
Ups
Furukawa Electric Co.,
All Nippon Airways Co.,
Kikkoman
Sumitomo (sumitomo Shoji Kaisha,)
Mitsubishi
Close
price
5650.00
409.00
3615.00
1578.00
2535.50
705.00
21.10
170.00
63.00
76.50
14.26
5.44
4.93
4.16
3.11
12.04
27.68
1693.90
1786.66
90.40
-0.94
-0.89
-48.40
-40.33
-1.64
-7.24
-3.11
-2.78
-2.21
-1.78
Downs
Hitachi Zosen
Casio Computer Co.,
Sky Perfect Jsat Holdings .
Ntn
Nippon Meat Packers,.
535.00
1716.00
483.00
494.00
3160.00
-42.00
-129.00
-25.00
-20.00
-115.00
-7.28
-6.99
-4.92
-3.89
-3.51
BIGGEST MOVERS
Based on the constituents of the FTSE 350 index
TOKYO
ACTIVE STOCKS
Based on the constituents of the FTSEurofirst 300 Eurozone index
Based on the constituents of the Nikkei 225 index
FTSE 100
Winners
Next
Direct Line Insurance
Intertek
Astrazeneca
Taylor Wimpey
Admiral
Royal Dutch Shell
Old Mutual
Severn Trent
Royal Dutch Shell
Randgold Resources Ld
Associated British Foods
Aug 03
price(p)
%Chg
week
%Chg
ytd
4401.00
403.30
4639.00
4562.00
195.20
2158.00
2207.00
205.00
2268.00
2175.50
7235.00
3072.00
9.5
7.8
6.8
5.6
4.8
4.6
4.5
3.9
3.6
3.4
3.1
2.8
Losers
Ferguson
British American Tobacco
Convatec
Micro Focus Int
Standard Chartered
Mondi
Imperial Brands
Mediclinic Int
Johnson Matthey
Smurfit Kappa
Shire
Rio Tinto
4630.00
5004.00
289.30
2122.00
790.60
1948.00
3305.50
726.50
2783.00
2217.00
4118.00
3486.50
-8.5
-8.3
-6.7
-5.8
-4.5
-4.5
-4.0
-3.7
-3.4
-3.3
-3.1
Aug 03
price(p)
%Chg
week
%Chg
ytd
-13.7
9.2
33.5
2.9
27.0
18.2
-6.3
-1.3
2.1
-3.3
12.6
11.7
FTSE 250
Winners
Fdm (holdings)
Senior
Dunelm
Sports Direct Int
Cobham
Man
Tbc Bank
Card Factory
Hastings Holdings
Tullow Oil
Indivior
Cybg
933.50
264.00
638.50
394.80
145.30
167.70
1699.00
319.40
324.60
180.00
389.00
286.40
23.1
8.6
7.3
7.2
6.7
6.6
6.2
5.8
5.5
5.4
5.2
5.1
70.8
36.4
-20.9
42.0
-12.8
42.3
17.6
26.7
31.1
-42.4
32.4
1.9
FTSE SmallCap
Winners
Mccoll's Retail
Cambian
4imprint
Xp Power
Pendragon
Lonmin
Huntsworth
Treatt
Low & Bonar
Devro
Robert Walters
Independent Investment Trust
5.4
22.8
-2.2
19.1
17.1
-7.1
-5.2
-12.2
20.2
-10.2
7.3
Losers
Aa
Mitchells & Butlers
Just Eat
Rotork
Imi
Petra Diamonds
Fidessa
Kier
Carillion
Mitie
Spire Healthcare
Vedanta Resources
210.80
236.80
613.00
231.30
1181.00
92.80
2143.00
1229.00
57.40
263.40
338.40
748.00
-13.8
-13.3
-8.9
-8.3
-8.0
-6.5
-6.1
-5.6
-5.1
-4.6
-4.5
-4.3
-24.2
-6.7
4.7
-4.1
13.9
-40.3
-5.4
-10.6
-76.1
17.4
0.1
-15.0
Losers
Gulf Marine Services
Sdl
Premier Oil
Hostelworld
Nanoco
Imagination
Keller
Bloomsbury Publishing
Dialight
Tyman
Hansard Global
Equiniti
Aug 03
price(p)
%Chg
week
%Chg
ytd
43.8
75.8
-2.4
57.4
-2.0
-36.4
105.3
105.9
32.8
22.4
41.2
50.6
Industry Sectors
Winners
Oil & Gas Producers
Industrial Metals
Nonlife Insurance
General Retailers
Beverages
Food & Drug Retailers
Gas Water & Multiutilities
Electricity
Industrial Transportation
Life Insurance
Food Producers
Electronic & Electrical Equip.
7933.91
2927.03
3267.88
2526.97
19665.66
2981.82
5911.03
8282.80
3025.16
8847.09
8579.28
5947.54
4.1
3.6
2.4
2.3
2.0
2.0
1.5
1.5
1.5
1.5
1.4
1.3
-6.5
30.0
18.7
-2.5
17.6
-3.2
-2.3
-10.1
-1.0
11.7
6.6
21.3
-20.4
13.6
-23.2
25.0
-21.7
-46.5
-0.4
1.8
10.4
25.9
-23.9
40.2
Losers
Tobacco
Forestry & Paper
Industrial Engineering
Health Care Equip.& Services
Chemicals
Software & Computer Services
Construction & Materials
General Industrials
Real Estate & Investment Servic
Oil Equipment & Services
Fixed Line Telecommunication
Personal Goods
54874.46
20982.61
11496.61
8056.70
12542.81
2018.97
6574.01
6118.26
2735.39
11497.26
3614.52
37544.38
-5.7
-4.9
-3.9
-3.2
-2.4
-2.2
-1.8
-1.5
-1.0
-0.9
-0.7
-0.3
3.7
16.6
12.1
10.0
2.2
6.7
-3.7
11.0
10.6
-29.5
-13.5
28.1
Aug 03
price(p)
%Chg
week
%Chg
ytd
268.25
217.00
1720.00
2710.00
31.00
90.00
78.00
520.00
87.00
227.75
482.25
578.50
24.4
12.8
11.0
9.3
8.4
8.1
7.6
7.5
7.4
7.2
7.2
6.9
39.00
487.00
57.50
279.75
35.25
135.00
841.00
171.00
872.50
348.50
82.13
271.50
-35.0
-22.1
-7.9
-7.5
-7.2
-7.0
-5.0
-4.9
-4.8
-4.6
-4.5
-4.1
Based on last week's performance. †Price at suspension.
CURRENCIES
Aug 3
Argentina
Australia
Bahrain
Bolivia
Brazil
Canada
Chile
China
Colombia
Costa Rica
Czech Republic
Denmark
Egypt
Hong Kong
Hungary
India
Currency
Argentine Peso
Australian Dollar
Bahrainin Dinar
Bolivian Boliviano
Brazilian Real
Canadian Dollar
Chilean Peso
Chinese Yuan
Colombian Peso
Costa Rican Colon
Czech Koruna
Danish Krone
Egyptian Pound
Hong Kong Dollar
Hungarian Forint
Indian Rupee
DOLLAR
Closing
Day's
Mid
Change
17.6300
0.0750
1.2574
0.0028
0.3773
6.9100
3.1202
-0.0094
1.2557
-0.0019
650.1250
-2.6950
6.7233
0.0011
2952.9500
-12.9600
573.4800
21.9114
-0.1001
6.2619
-0.0109
17.7750
-0.0460
7.8195
0.0023
255.8296
-0.1542
63.6738
0.0492
EURO
Closing
Mid
20.9427
1.4937
0.4481
8.2084
3.7065
1.4916
772.2851
7.9866
3507.8168
681.2383
26.0286
7.4385
21.1150
9.2887
303.9006
75.6382
POUND
Day's
Closing
Day's
Change
Mid
Change
0.1277
23.1693
-0.0454
0.0061
1.6525
-0.0066
0.0008
0.4958
-0.0031
0.0152
9.0811
-0.0567
-0.0043
4.1006
-0.0380
0.0005
1.6502
-0.0128
-1.7669 854.3934
-8.8967
0.0161
8.8358
-0.0537
-8.8782 3880.7628
-41.3611
1.2601 753.6666
-4.7042
-0.0705
28.7959
-0.3121
0.0008
8.2293
-0.0658
-0.0155
23.3599
-0.2066
0.0199
10.2763
-0.0611
0.3793 336.2109
-2.3025
0.1983
83.6800
-0.4572
Aug 3
Indonesia
Israel
Japan
..One Month
..Three Month
..One Year
Kenya
Kuwait
Malaysia
Mexico
New Zealand
Nigeria
Norway
Pakistan
Peru
Philippines
Currency
Indonesian Rupiah
Israeli Shekel
Japanese Yen
Kenyan Shilling
Kuwaiti Dinar
Malaysian Ringgit
Mexican Peson
New Zealand Dollar
Nigerian Naira
Norwegian Krone
Pakistani Rupee
Peruvian Nuevo Sol
Philippine Peso
DOLLAR
Closing
Mid
13323.0000
3.5992
110.0650
110.0649
110.0645
110.0629
103.9200
0.3017
4.2810
17.8595
1.3446
364.5000
7.8951
105.3650
3.2395
50.3000
Day's
Change
-1.0000
0.0179
-0.3250
-0.3253
-0.3259
-0.3292
0.0700
-0.0002
-0.0045
-0.0615
-0.0005
-0.7500
0.0119
-0.0200
-0.0020
-0.0900
EURO
Closing
Mid
15826.4409
4.2756
130.7465
130.7465
130.7466
130.7467
123.4468
0.3584
5.0854
21.2153
1.5973
432.9904
9.3785
125.1633
3.8482
59.7515
POUND
Day's
Closing
Day's
Change
Mid
Change
28.1035 17509.0872
-110.5989
0.0291
4.7301
-0.0059
-0.1435 144.6473
-1.3326
-0.1434 144.6472
-1.3327
-0.1433 144.6471
-1.3330
-0.1431 144.6472
-1.3338
0.3113 136.5715
-0.7599
0.0004
0.3965
-0.0027
0.0041
5.6261
-0.0411
-0.0337
23.4709
-0.2278
0.0023
1.7671
-0.0117
-0.0884 479.0254
-3.9818
0.0315
10.3757
-0.0490
0.2078 138.4705
-0.8907
0.0047
4.2573
-0.0292
0.0038
66.1042
-0.5316
Aug 3
Currency
Poland
Polish Zloty
Romania
Romanian Leu
Russia
Russian Ruble
Saudi Arabia
Saudi Riyal
Singapore
Singapore Dollar
South African Rand
South Africa
South Korea
South Korean Won
Sweden
Swedish Krona
Switzerland
Swiss Franc
Taiwan
New Taiwan Dollar
Thailand
Thai Baht
Tunisia
Tunisian Dinar
Turkey
Turkish Lira
United Arab Emirates
UAE Dirham
United Kingdom
Pound Sterling
..One Month
DOLLAR
Closing
Mid
3.5766
3.8411
60.1919
3.7502
1.3588
13.3888
1128.8000
8.0897
0.9682
30.2075
33.2600
2.3908
3.5389
3.6729
0.7609
0.7610
Day's
Change
-0.0113
-0.0053
-0.5106
0.0009
0.1319
4.8500
-0.0072
0.0009
0.0055
-0.0250
-0.0032
0.0077
-0.0001
0.0047
0.0047
EURO
Closing
Mid
4.2487
4.5629
71.5021
4.4549
1.6141
15.9045
1340.9043
9.6098
1.1502
35.8836
39.5096
2.8400
4.2039
4.3631
0.9039
0.9038
POUND
Day's
Closing
Day's
Change
Mid
Change
-0.0055
4.7004
-0.0443
0.0022
5.0480
-0.0385
-0.4732
79.1041
-1.1690
0.0082
4.9285
-0.0308
0.0041
1.7857
-0.0100
0.1858
17.5955
0.0645
8.2309 1483.4676
-2.8456
0.0092
10.6315
-0.0759
0.0033
1.2725
-0.0067
0.0729
39.6987
-0.2405
0.0434
43.7102
-0.3059
0.0015
3.1419
-0.0238
0.0169
4.6508
-0.0188
0.0080
4.8270
-0.0303
0.0073
0.0073
-
Aug 3
..Three Month
..One Year
United States
..One Month
..Three Month
..One Year
Venezuela
Vietnam
European Union
..One Month
..Three Month
..One Year
Currency
United States Dollar
Venezuelan Bolivar Fuerte
Vietnamese Dong
Euro
DOLLAR
Closing
Mid
0.7613
0.7625
10.0947
22733.5000
0.8418
0.8416
0.8412
0.8394
Day's
Change
0.0047
0.0048
0.1247
3.0000
-0.0016
-0.0016
-0.0015
-0.0015
EURO
Closing
Mid
0.9037
0.9031
1.1879
1.1877
1.1873
1.1854
11.9915
27005.2039
-
POUND
Day's
Closing
Day's
Change
Mid
Change
0.0073
0.0073
0.0022
1.3142
-0.0082
-0.1345
1.3143
-0.0082
-0.1345
1.3146
-0.0082
-0.1345
1.3158
-0.0082
0.1700
13.2664
0.0820
53.4960 29876.3418
-182.5737
1.1063
-0.0090
1.1063
-0.0090
1.1062
-0.0090
1.1055
-0.0089
Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata
UK SERIES
FTSE ACTUARIES SHARE INDICES
www.ft.com/equities
Produced in conjunction with the Institute and Faculty of Actuaries
£ Strlg Day's
Euro
£ Strlg
£ Strlg
Year
Div
Aug 03 chge%
Index
Aug 02
Aug 01
ago yield% Cover
FTSE 100 (100)
7474.77
0.85 6444.77 7411.43 7423.66 6740.16 3.75 0.94
FTSE 250 (250)
19908.24
0.34 17164.95 19841.41 19863.60 17244.32 2.64 1.68
FTSE 250 ex Inv Co (206)
21326.13
0.33 18387.45 21256.53 21283.12 18507.42 2.70 1.71
FTSE 350 (350)
4149.93
0.77 3578.08 4118.40 4124.83 3717.00 3.56 1.04
FTSE 350 ex Investment Trusts (305) 4114.37
0.77 3547.43 4082.85 4089.34 3690.16 3.60 1.03
FTSE 350 Higher Yield (118)
3833.15
0.90 3304.95 3798.95 3794.76 3487.17 5.00 0.79
FTSE 350 Lower Yield (232)
4073.62
0.62 3512.29 4048.64 4066.80 3582.31 1.97 1.73
FTSE SmallCap (287)
5702.95
0.06 4917.10 5699.50 5691.25 4762.75 2.75 1.37
FTSE SmallCap ex Inv Co (154)
5048.37
0.00 4352.72 5048.24 5039.85 4209.80 2.87 1.66
FTSE All-Share (637)
4095.49
0.74 3531.15 4065.44 4071.32 3659.12 3.53 1.05
FTSE All-Share ex Inv Co (459)
4038.50
0.76 3482.00 4008.17 4014.28 3617.01 3.59 1.04
FTSE All-Share ex Multinationals (575) 1243.00
0.60
888.26 1235.54 1234.50 1108.61 3.09 1.31
FTSE Fledgling (96)
10245.60
0.26 8833.79 10219.35 10230.18 7959.93 2.94 0.93
FTSE Fledgling ex Inv Co (46)
14727.35
0.48 12697.97 14656.74 14689.26 10276.23 3.77 0.99
FTSE All-Small (383)
3968.74
0.07 3421.86 3965.97 3960.70 3302.17 2.76 1.35
FTSE All-Small ex Inv Co Index (200) 3788.92
0.02 3266.82 3788.17 3782.40 3136.83 2.90 1.63
FTSE AIM All-Share Index (800)
987.71
0.23
851.61
985.42
985.63
761.66 1.65 0.84
FTSE Sector Indices
Oil & Gas (17)
8279.75
Oil & Gas Producers (10)
7972.27
Oil Equipment Services & Distribution (7)12255.30
Basic Materials (30)
5614.93
13415.18
Chemicals (8)
Forestry & Paper (1)
22895.88
Industrial Metals & Mining (2)
3152.88
Mining (19)
15846.52
Industrials (111)
5419.17
Construction & Materials (16)
6867.40
Aerospace & Defense (9)
5462.92
General Industrials (6)
4982.76
Electronic & Electrical Equipment (10) 7530.40
Industrial Engineering (12)
12637.77
Industrial Transportation (7)
4814.53
Support Services (51)
7695.96
22151.31
Consumer Goods (42)
Automobiles & Parts (1)
7611.80
Beverages (5)
19684.37
Food Producers (10)
8608.66
Household Goods & Home Construction (16)15691.65
Leisure Goods (2)
6927.40
Personal Goods (6)
32730.80
Tobacco (2)
54874.56
Health Care (22)
9758.36
Health Care Equipment & Services (10) 8197.58
Pharmaceuticals & Biotechnology (12)13026.09
Consumer Services (93)
5017.35
Food & Drug Retailers (7)
3117.81
General Retailers (28)
2479.47
Media (22)
7707.89
Travel & Leisure (36)
9445.97
Telecommunications (6)
3458.28
Fixed Line Telecommunications (4) 3682.48
Mobile Telecommunications (2)
5028.24
Utilities (7)
8265.60
Electricity (2)
8264.00
Gas Water & Multiutilities (5)
7812.03
Financials (293)
5327.15
Banks (11)
4526.15
Nonlife Insurance (10)
3730.55
Life Insurance/Assurance (10)
8972.90
Index- Real Estate Investment & Services (19) 2751.94
Real Estate Investment Trusts (34) 2733.38
General Financial (31)
9393.41
Equity Investment Instruments (178) 9732.11
Non Financials (344)
4761.79
Technology (16)
1982.18
Software & Computer Services (12) 2251.92
Technology Hardware & Equipment (4) 1955.79
0.69
0.73
-1.03
1.17
-0.37
-2.70
1.97
1.51
0.51
1.08
1.03
0.08
0.25
0.15
-0.53
0.39
1.72
1.00
0.87
1.52
0.93
0.18
0.68
3.10
0.18
-1.15
0.36
0.76
0.97
1.58
0.63
0.48
0.93
0.38
1.18
1.04
1.06
1.04
0.32
0.09
0.17
0.55
-0.01
0.53
0.80
0.36
0.89
-0.82
-0.70
-2.02
7138.82
6873.71
10566.56
4841.21
11566.61
19740.90
2718.42
13662.92
4672.42
5921.09
4710.15
4296.15
6492.74
10896.33
4151.10
6635.48
19098.93
6562.92
16971.93
7422.42
13529.39
5972.83
28220.60
47313.02
8413.69
7067.98
11231.13
4325.98
2688.18
2137.81
6645.76
8144.35
2981.74
3175.05
4335.37
7126.62
7125.24
6735.56
4593.08
3902.46
3216.49
7736.46
2372.73
2356.73
8099.03
8391.06
4105.63
1709.05
1941.61
1686.29
8222.92
7914.36
12383.16
5549.99
13464.59
23530.57
3092.12
15610.07
5391.49
6793.71
5407.32
4978.59
7511.68
12619.00
4840.06
7665.98
21776.78
7536.60
19513.67
8479.82
15547.60
6915.18
32508.76
53224.56
9741.06
8293.13
12979.52
4979.41
3087.83
2441.02
7659.91
9401.22
3426.43
3668.42
4969.73
8180.16
8177.05
7731.66
5310.09
4522.23
3724.18
8923.61
2752.14
2719.05
9318.79
9697.23
4719.59
1998.57
2267.74
1996.08
8150.20
7840.63
12521.46
5622.24
13466.37
23495.31
3144.68
15844.66
5448.15
6881.28
5567.29
5024.23
7495.30
12777.89
4807.81
7705.65
21753.87
7588.30
19548.33
8380.80
15573.80
6905.42
32533.69
53028.28
9763.06
8292.01
13013.07
4968.70
3056.74
2414.21
7684.61
9396.87
3444.59
3701.43
4987.75
8170.13
8160.87
7723.70
5317.08
4542.76
3689.37
8920.36
2750.59
2719.63
9308.71
9695.15
4726.65
2019.91
2297.15
1972.57
7409.67
7091.49
13830.91
4129.04
12610.14
18182.71
1707.75
11319.70
4651.01
5634.51
4647.18
4005.93
6161.82
9725.25
4715.49
6804.30
20453.95
6890.34
17233.99
8486.92
13554.41
4903.91
26416.85
56511.49
10900.01
7841.80
14815.26
4639.89
2643.03
2501.18
7641.62
8132.25
3865.26
4753.15
5226.51
9249.20
9015.87
8795.66
4179.33
3238.07
3126.43
6914.34
2422.28
2693.30
7636.40
8222.72
4444.84
1976.67
2165.23
2461.50
6.25
6.28
5.15
2.23
2.32
2.48
0.41
2.23
2.27
2.17
2.20
2.56
1.70
2.11
4.15
2.21
3.08
2.73
2.44
1.96
3.14
5.33
2.64
3.68
3.58
1.25
3.89
2.74
1.37
3.14
3.16
2.64
5.36
4.66
5.68
5.06
6.04
4.81
3.40
3.89
2.89
3.45
2.55
3.55
3.15
2.34
3.58
2.33
2.28
2.90
0.48
0.49
-0.21
1.05
2.32
3.24
27.82
0.74
1.44
0.39
0.92
1.38
2.20
1.56
1.24
1.90
1.36
3.58
1.71
2.15
2.04
1.10
0.27
1.14
0.84
2.57
0.77
1.92
2.14
2.10
1.76
1.95
-0.06
1.08
-0.48
1.41
1.81
1.28
1.17
0.79
1.60
1.39
1.79
1.48
2.12
1.24
1.00
1.28
1.30
1.15
P/E
ratio
28.27
22.57
21.69
27.09
26.97
25.36
29.30
26.48
21.00
27.07
26.81
24.61
36.44
26.85
26.83
21.17
71.88
X/D
adj
175.93
314.51
343.23
92.15
92.34
114.04
54.47
92.23
82.40
90.03
90.15
24.03
172.26
247.15
64.30
61.92
7.40
Total
Return
6242.01
14482.97
15828.93
6961.97
3555.76
6737.59
4468.66
8188.51
7616.73
6946.91
3547.02
2230.85
19265.66
27007.36
7315.32
7242.57
1088.11
33.32 259.92 7666.97
32.30 251.49 7642.46
-92.39 306.86 9566.20
42.56
96.15 5743.20
18.51 220.59 12050.80
12.46 375.43 24975.97
8.83
13.01 2766.44
60.71 275.66 8483.78
30.59
72.84 5602.61
116.46 107.71 7302.16
49.45
66.31 5869.73
28.36
56.24 5662.44
26.76
75.36 6885.14
30.39 174.06 15436.74
19.39 135.28 4346.20
23.82
99.99 8018.11
23.83 427.15 16407.92
10.23 138.65 7337.18
24.04 202.35 13885.65
23.68
92.91 7442.09
15.57 335.31 11161.22
16.99 158.08 6306.60
139.44 649.53 22259.81
23.86 1304.93 35505.57
33.14 210.03 7535.91
31.02
71.49 7119.00
33.45 300.97 8967.85
19.00
89.94 4733.28
33.91
31.26 3654.68
15.17
49.54 2854.01
18.04 153.20 4781.50
19.45 167.70 8992.21
-291.53
94.42 3908.61
19.98
7.92 3327.77
-36.36 194.42 5160.36
14.00 310.94 9562.04
9.15 494.42 12302.56
16.25 249.14 9004.39
25.09 125.83 4971.95
32.38 133.69 3385.29
21.57
63.41 6590.89
20.78 210.60 8814.20
21.95
37.07 7367.89
19.04
65.11 3431.78
14.99 175.95 10821.86
34.43 139.70 5339.55
27.88 101.80 7065.55
33.44
38.34 2565.83
33.82
46.52 3081.63
30.06
12.16 2292.90
8.00
9.00
10.00
11.00
12.00
13.00
14.00
15.00
16.00 High/day Low/day
Hourly movements
FTSE 100
7392.02 7395.27 7399.28 7418.19 7424.63 7454.61 7483.96 7468.55 7474.80 7484.48 7384.41
FTSE 250
19834.79 19848.71 19882.79 19863.35 19866.07 19885.33 19915.17 19897.02 19906.51 19915.17 19810.67
FTSE SmallCap
5702.24 5701.90 5705.40 5708.28 5709.35 5711.49 5709.66 5708.93 5704.94 5712.18 5697.08
FTSE All-Share
4056.81 4058.69 4061.69 4069.37 4072.31 4086.13 4099.92 4092.55 4095.50 4099.92 4054.03
Time of FTSE 100 Day's high:12:59:45 Day's Low08:43:00 FTSE 100 2010/11 High: 7547.63(29/05/2017) Low: 7099.15(31/01/2017)
Time of FTSE All-Share Day's high:13:00:00 Day's Low08:43:00 FTSE 100 2010/11 High: 4130.15(29/05/2017) Low: 3858.26(31/01/2017)
Further information is available on http://www.ftse.com © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the
London Stock Exchange Group companies and is used by FTSE International Limited under licence. † Sector P/E ratios greater than 80 are not shown.
For changes to FTSE Fledgling Index constituents please refer to www.ftse.com/indexchanges. ‡ Values are negative.
UK RIGHTS OFFERS
Amount
Latest
Issue
paid
renun.
price
up
date
High
Low
Stock
There are currently no rights offers by any companies listed on the LSE.
FT 30 INDEX
FTSE SECTORS: LEADERS & LAGGARDS
Aug 03 Aug 02 Aug 01
Jul 31
Jul 28 Yr Ago
High
Low Year to date percentage changes
FT 30
3246.10 3216.10 3217.40 3191.10 3189.70
0.00 3391.10 3060.90 Personal Goods
27.53
FT 30 Div Yield
1.77
1.79
1.78
1.57
1.57
0.00
3.93
2.74 Industrial Metals &
24.31
P/E Ratio net
25.26
24.97
25.00
28.33
28.44
0.00
19.44
14.26 Leisure Goods
23.38
FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35
Forestry & Paper
20.23
FT 30 hourly changes
Electronic & Elec Eq
19.90
8
9
10
11
12
13
14
15
16
High
Low Beverages
16.60
3216.1 3217.6 3218 3220.7 3224.1 3233.4 3246 3243.3 3248.8 3250.3 3212.1 Financial Services
15.59
FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30
Nonlife Insurance
15.12
Household Goods & Ho
14.85
Industrial Eng
14.20
Aerospace & Defense
13.06
12.12
Aug 02 Aug 01 Mnth Ago
Aug 03 Aug 02 Mnth Ago Health Care Eq & Srv
Consumer Goods
11.46
Australia
96.75
96.90
94.75 Sweden
79.27
79.34
78.47 Mining
11.13
Canada
92.64
93.32
90.16 Switzerland
154.37 155.04 160.95 Basic Materials
10.80
Denmark
109.74 109.57 109.12 UK
77.04
77.21
77.48 Equity Invest Instr
10.56
Japan
136.27 136.66 135.90 USA
98.94
98.82 101.76 FTSE SmallCap Index
10.27
New Zealand
120.37 121.22 121.13 Euro
94.55
94.12
92.17
Norway
88.97
88.99
86.40
Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100.
Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk
FX: EFFECTIVE INDICES
Mobile Telecomms
Financials
Real Est Invest & Se
Banks
Travel & Leisure
Support Services
FTSE 250 Index
Industrials
Software & Comp Serv
Life Insurance
Technology
FTSE All{HY-}Share Index
Food Producers
Tobacco
FTSE 100 Index
Chemicals
NON FINANCIALS Index
Real Est Invest & Tr
+or-
Telecommunications
Consumer Services
Industrial Transport
Construct & Material
Health Care
Tech Hardware & Eq
Pharmace & Biotech
Automobiles & Parts
Media
Gas Water & Multi
General Retailers
Food & Drug Retailer
Utilities
Oil & Gas Producers
Oil & Gas
Electricity
Fixed Line Telecomms
Oil Equipment & Serv
1.00
0.69
-0.21
-0.44
-1.16
-1.21
-2.72
-2.86
-3.29
-4.73
-5.54
-6.09
-6.18
-9.74
-10.18
-11.57
-14.23
-24.87
FTSE GLOBAL EQUITY INDEX SERIES
Aug 2
Regions & countries
FTSE Global All Cap
FTSE Global Large Cap
FTSE Global Mid Cap
FTSE Global Small Cap
FTSE All-World
FTSE World
FTSE Global All Cap ex UNITED KINGDOM In
FTSE Global All Cap ex USA
FTSE Global All Cap ex JAPAN
FTSE Global All Cap ex Eurozone
FTSE Developed
FTSE Developed All Cap
FTSE Developed Large Cap
FTSE Developed Europe Large Cap
FTSE Developed Europe Mid Cap
FTSE Dev Europe Small Cap
FTSE North America Large Cap
FTSE North America Mid Cap
FTSE North America Small Cap
FTSE North America
FTSE Developed ex North America
FTSE Japan Large Cap
FTSE Japan Mid Cap
FTSE Global wi JAPAN Small Cap
FTSE Japan
FTSE Asia Pacific Large Cap ex Japan
FTSE Asia Pacific Mid Cap ex Japan
FTSE Asia Pacific Small Cap ex Japan
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
FTSE Emerging Large Cap
FTSE Emerging Mid Cap
FTSE Emerging Small Cap
FTSE Emerging Europe
FTSE Latin America All Cap
FTSE Middle East and Africa All Cap
FTSE Global wi UNITED KINGDOM All Cap In
FTSE Global wi USA All Cap
FTSE Europe All Cap
FTSE Eurozone All Cap
FTSE RAFI All World 3000
FTSE RAFI US 1000
FTSE EDHEC-Risk Efficient All-World
FTSE EDHEC-Risk Efficient Developed Europe
Oil & Gas
No of
US $
stocks indices
7723 542.83
1440 478.39
1649 729.68
4634 763.25
3089 317.00
2542 560.63
7398 562.88
5834 496.30
6438 554.96
7073 558.52
2099 508.46
5661 534.18
911 469.36
226 371.42
316 601.99
706 859.13
290 531.77
387 776.50
1430 792.53
677 354.68
1422 261.48
180 364.70
313 599.20
792 662.91
493 154.74
550 695.35
414 915.38
1450 563.37
964 549.08
2062 748.96
529 710.25
461 931.56
1072 773.73
115 358.64
235 913.12
241 711.92
325 348.19
1889 609.32
1441 436.32
650 430.31
3031 6628.49
995 10682.15
3089 380.06
542 322.34
146 353.58
Day
%
0.0
0.1
-0.2
-0.4
0.0
0.0
0.0
0.0
0.0
0.0
0.0
-0.1
0.1
0.0
0.1
0.2
0.1
-0.4
-0.8
0.0
0.0
0.2
0.0
0.4
0.1
0.1
0.0
0.2
0.1
0.3
0.3
0.2
0.4
0.2
0.0
-0.3
-0.2
-0.1
0.0
0.0
0.0
-0.1
-0.1
0.0
0.1
Mth
%
3.0
3.2
2.8
2.1
3.1
3.0
3.0
4.1
3.0
2.8
2.9
2.8
2.9
3.5
5.0
5.2
2.5
1.5
0.9
2.3
3.7
3.0
3.3
3.9
3.1
5.0
2.9
2.6
4.8
5.5
6.0
4.2
3.7
4.2
9.2
3.9
3.4
2.0
3.9
4.8
3.4
1.7
2.6
3.9
4.2
YTD
Total
%
retn
13.3 773.60
13.7 699.36
13.3 986.47
11.1 998.94
13.6 477.20
13.3 1132.78
13.4 790.01
16.8 757.97
13.3 798.39
12.5 780.50
13.1 730.22
12.7 757.94
13.1 684.34
16.3 623.73
22.2 905.60
23.8 1251.15
11.2 724.83
8.1 985.11
6.2 976.82
10.7 494.79
16.9 429.14
11.9 472.07
16.0 744.39
18.8 852.66
12.8 224.74
22.7 1095.40
20.3 1380.02
15.9 836.22
22.4 918.58
19.6 1123.71
20.0 1073.90
17.1 1384.59
19.4 1112.34
6.7 566.78
18.9 1409.26
8.2 1112.23
11.8 584.26
10.3 806.04
17.7 707.64
21.5 704.38
11.0 8775.87
5.3 14021.98
13.5 529.82
20.4 493.17
-5.8 570.58
YTD Gr Div Aug 2
No of
US $
Day
Mth
YTD
Total
YTD Gr Div
% Yield Sectors
stocks indices
%
%
%
retn
% Yield
15.0
2.3 Oil & Gas Producers
109 332.15
0.1
0.1
-5.5 547.58
-3.6
3.8
15.6
2.5 Oil Equipment & Services
28 317.89
0.1
0.1
-9.1 460.50
-8.4
3.3
14.7
2.0 Basic Materials
259 486.67
-0.2
-0.2
15.3 744.87
17.4
2.4
12.3
1.9 Chemicals
122 724.13
0.0
0.0
14.9 1114.91
17.0
2.5
15.4
2.4 Forestry & Paper
16 273.89
-0.7
-0.7
15.0 466.20
17.7
3.3
15.0
2.4 Industrial Metals & Mining
70 425.65
-0.1
-0.1
17.5 648.47
19.3
2.3
15.1
2.3 Mining
51 588.47
-1.0
-1.0
14.7 895.68
16.7
2.1
19.2
2.8 Industrials
547 382.78
0.2
0.2
15.5 551.98
17.1
2.0
15.1
2.4 Construction & Materials
115 530.01
-0.1
-0.1
15.1 799.31
16.8
2.0
14.0
2.3 Aerospace & Defense
26 693.65
-0.1
-0.1
22.8 990.57
24.3
2.0
14.7
2.4 General Industrials
57 243.13
0.4
0.4
3.3 378.34
4.8
2.5
14.4
2.3 Electronic & Electrical Equipment
71 434.37
1.5
1.5
26.4 575.12
27.9
1.6
14.8
2.4 Industrial Engineering
101 754.74
0.4
0.4
19.8 1073.29
21.5
2.0
19.4
3.4 Industrial Transportation
99 645.05
0.4
0.4
14.5 930.08
16.1
2.2
24.8
2.6 Support Services
78 338.44
-0.5
-0.5
14.6 466.61
15.9
1.8
26.2
2.4 Consumer Goods
428 481.47
0.1
0.1
15.1 713.42
16.9
2.4
12.5
2.1 Automobiles & Parts
105 396.86
0.1
0.1
7.9 569.16
9.9
2.7
9.2
1.7 Beverages
46 641.42
-0.1
-0.1
16.2 962.62
17.8
2.5
7.1
1.6 Food Producers
107 612.43
0.3
0.3
7.6 932.54
9.4
2.3
11.9
2.0 Household Goods & Home Construction
49 464.95
-0.2
-0.2
15.0 684.76
17.0
2.4
19.2
2.9 Leisure Goods
31 225.53
0.4
0.4
41.0 296.77
42.2
1.3
79 710.22
0.1
0.1
22.8 995.09
24.3
1.9
13.2
2.0 Personal Goods
17.1
1.6 Tobacco
11 1396.63
-0.3
-0.3
10.2 2886.30
12.3
3.6
20.1
1.8 Health Care
183 484.67
-0.1
-0.1
14.6 698.93
16.2
2.0
68 817.76
-0.2
-0.2
18.9 953.68
19.6
1.1
14.0
1.9 Health Care Equipment & Services
25.0
2.8 Pharmaceuticals & Biotechnology
115 345.50
-0.1
-0.1
12.9 521.10
14.8
2.4
22.2
2.7 Consumer Services
384 442.35
-0.3
-0.3
12.1 591.11
13.3
1.7
17.6
2.6 Food & Drug Retailers
56 292.29
-0.3
-0.3
3.4 408.17
4.8
2.0
24.7
2.8 General Retailers
122 605.68
-0.1
-0.1
11.2 787.17
12.2
1.5
22.1
2.8 Media
79 342.12
-0.9
-0.9
12.5 458.70
13.6
1.6
22.7
2.8 Travel & Leisure
127 451.16
0.1
0.1
18.5 609.76
19.8
1.7
19.4
2.8 Telecommunication
94 167.08
-0.5
-0.5
3.7 314.24
6.6
4.1
21.4
2.6 Fixed Line Telecommuniations
43 136.88
-0.9
-0.9
-2.7 283.42
0.4
4.6
10.2
4.0 Mobile Telecommunications
51 181.18
0.1
0.1
13.4 305.93
15.8
3.4
20.9
2.8 Utilities
167 278.65
0.2
0.2
13.0 542.72
15.6
3.5
109 305.72
0.3
0.3
12.4 588.52
14.9
3.5
10.2
3.1 Electricity
58 292.91
-0.1
-0.1
14.1 586.04
16.8
3.7
14.3
3.6 Gas Water & Multiutilities
699 243.80
0.0
0.0
14.3 399.31
16.6
2.9
11.5
1.9 Financials
247 218.76
-0.2
-0.2
13.6 385.24
16.2
3.3
20.6
3.2 Banks
68 264.45
0.6
0.6
14.0 384.72
16.1
2.2
24.5
3.0 Nonlife Insurance
52 236.54
-0.1
-0.1
18.1 378.72
20.4
2.8
13.1
2.9 Life Insurance
150 281.13
0.0
0.0
16.7 387.50
18.1
1.9
6.6
2.4 Financial Services
182 239.73
0.5
0.5
23.5 294.06
24.7
1.5
15.1
2.2 Technology
88 412.86
-0.5
-0.5
24.1 481.91
24.8
0.9
22.8
2.6 Software & Computer Services
-4.1
3.7 Technology Hardware & Equipment
94 180.80
1.7
1.7
22.8 231.04
24.6
2.1
Alternative Energy
9 109.28
0.0
0.0
18.9 148.03
19.9
1.7
Real Estate Investment & Services
106 343.22
0.2
0.2
24.3 573.13
26.6
2.4
The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/
mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index® and RAFI® are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC
(US Patent Nos. 7,620,577; 7,747,502; 7,778,905; 7,792,719; Patent Pending Publ. Nos. US-2006-0149645-A1, US-2007-0055598-A1, US-2008-0288416-A1, US-2010- 0063942-A1, WO 2005/076812, WO 2007/078399 A2,
WO 2008/118372, EPN 1733352, and HK1099110). ”EDHEC™” is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the London Stock Exchange
Group companies and is used by FTSE International Limited under licence.
UK COMPANY RESULTS
closing
Price p
9.84
9.80
9.54
9.33
9.20
9.18
9.13
9.11
9.09
9.06
7.91
4.36
3.76
3.25
3.16
2.59
2.48
2.28
FTSE 100 SUMMARY
Company
Aviva
Bailey (C H)
Byotrol
Cobham
Communisis
ConvaTec Group
Esure Group
Ferrexpo
Fundsmith Emerging Equities Trust
Impax Environmental Markets
Inmarsat
London Stock Exchange Group
Mondi
Serco Group
FTSE 100
Closing Day's
Price Change FTSE 100
3I Group PLC
Admiral Group PLC
Anglo American PLC
Antofagasta PLC
Ashtead Group PLC
Associated British Foods PLC
Astrazeneca PLC
Aviva PLC
Babcock International Group PLC
Bae Systems PLC
Barclays PLC
Barratt Developments PLC
Bhp Billiton PLC
BP PLC
British American Tobacco PLC
British Land Company PLC
Bt Group PLC
Bunzl PLC
Burberry Group PLC
Carnival PLC
Centrica PLC
Coca-Cola Hbc AG
Compass Group PLC
Convatec Group PLC
Crh PLC
Croda International PLC
Dcc PLC
Diageo PLC
Direct Line Insurance Group PLC
Easyjet PLC
Experian PLC
Ferguson PLC
Fresnillo PLC
G4S PLC
Gkn PLC
Glaxosmithkline PLC
Glencore PLC
Hammerson PLC
Hargreaves Lansdown PLC
HSBC Holdings PLC
Imperial Brands PLC
Informa PLC
Intercontinental Hotels Group PLC
International Consolidated Airlines Group S.A.
Intertek Group PLC
Itv PLC
Johnson Matthey PLC
Kingfisher PLC
Land Securities Group PLC
Legal & General Group PLC
Lloyds Banking Group PLC
949.00
2158
1254.5
944.00
1637
3072
4562
538.50
851.00
589.50
208.50
618.00
1357.5
460.60
5004
616.50
313.90
2290
1768
5155
202.40
2305
1616
289.30
2670
3707
6955
2456.5
403.30
1263
1527
4630
1509
332.40
323.90
1528
335.15
576.50
1383
761.20
3305.5
707.50
4300
607.50
4639
176.00
2783
306.30
1026
273.10
66.51
2.00
15.00
27.00
13.50
20.00
61.00
62.00
0.50
-9.50
-1.00
0.80
9.50
1.30
150.00
3.50
1.00
6.00
36.00
50.00
0.20
16.00
9.00
-19.70
45.00
-35.00
65.00
21.00
6.80
7.00
12.00
76.00
-5.00
-1.10
3.20
11.00
2.75
2.00
11.00
-3.40
100.50
5.50
31.00
11.00
34.00
0.20
-4.00
4.00
14.00
2.60
0.95
Closing Day's
Price Change
London Stock Exchange Group PLC
Marks And Spencer Group PLC
Mediclinic International PLC
Merlin Entertainments PLC
Micro Focus International PLC
Mondi PLC
Morrison (Wm) Supermarkets PLC
National Grid PLC
Next PLC
Old Mutual PLC
Paddy Power Betfair PLC
Pearson PLC
Persimmon PLC
Provident Financial PLC
Prudential PLC
Randgold Resources LD
Reckitt Benckiser Group PLC
Relx PLC
Rentokil Initial PLC
Rio Tinto PLC
Rolls-Royce Holdings PLC
Royal Bank Of Scotland Group PLC
Royal Dutch Shell PLC
Royal Dutch Shell PLC
Royal Mail PLC
Rsa Insurance Group PLC
Sage Group PLC
Sainsbury (J) PLC
Schroders PLC
Scottish Mortgage Investment Trust PLC
Segro PLC
Severn Trent PLC
Shire PLC
Sky PLC
Smith & Nephew PLC
Smiths Group PLC
Smurfit Kappa Group PLC
Sse PLC
St. James's Place PLC
Standard Chartered PLC
Standard Life PLC
Taylor Wimpey PLC
Tesco PLC
Tui AG
Unilever PLC
United Utilities Group PLC
Vodafone Group PLC
Whitbread PLC
Worldpay Group PLC
Wpp PLC
3880
329.20
726.50
462.80
2122
1948
248.20
958.00
4401
205.00
7845
669.00
2566
2093
1855.5
7235
7456
1663
290.80
3486.5
955.00
256.20
2207
2175.5
401.60
648.50
680.00
252.30
3466
415.00
534.00
2268
4118
969.00
1325
1542
2217
1400
1222
790.60
446.00
195.20
180.00
1232
4325
911.00
224.00
3866
370.00
1569
111.00
4.00
-4.00
-2.80
-58.00
-54.00
3.00
12.10
388.00
2.00
-30.00
10.50
31.00
-19.00
7.50
240.00
69.00
7.00
0.80
83.50
12.00
5.30
22.00
17.00
1.50
-5.50
3.00
2.50
6.00
7.30
4.00
28.00
-82.00
5.00
11.00
-43.00
15.00
2.00
-4.40
5.90
2.60
1.80
6.00
21.50
13.00
3.25
16.00
-0.50
21.00
UK STOCK MARKET TRADING DATA
Aug 03
Aug 02
Aug 01
Jul 31
Jul 28
Yr Ago
SEAQ Bargains
5597.00
9328.00
7525.00
8554.00
8554.00
8554.00
Order Book Turnover (m)
226.94
236.66
306.11
347.77
347.77
347.77
Order Book Bargains
1071519.00 1009899.00 1010214.00 1065963.00 1065963.00 1065963.00
Order Book Shares Traded (m)
1568.00
1386.00
1610.00
1452.00
1452.00
1452.00
Total Equity Turnover (£m)
8238.40
7816.01
9353.07
9629.67
9629.67
9629.67
Total Mkt Bargains
1194667.00 1144515.00 1149802.00 1196627.00 1196627.00 1196627.00
Total Shares Traded (m)
4461.00
4496.00
4994.00
5166.00
5166.00
5166.00
† Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable.
(c) Market closed.
All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
liable for any loss arising from the reliance on or use of the listed information.
For all queries e-mail ft.reader.enquiries@morningstar.com
Data provided by Morningstar | www.morningstar.co.uk
UK RECENT EQUITY ISSUES
Int
Pre
Pre
Int
Int
Int
Int
Int
Int
Int
Int
Int
Int
Int
Turnover
27422
24226
5.105
6.126
2.648
3.127
916.7
1003.3
185.959 174.942
831.3
306.4
364.3
591.049 457.921
688.2
946
3582
1508.2
629
786
3312
1493.2
Pre-tax
875
0.408
0.091L
14.3
4.998
45.5
45.1
240.955
22.306
39.059
61.8
277
462
14.1
337
0.399L
0.533L
38.4L
4.41
31.2
91.974
21.886
64.798
154.4
164
482
58.1
Figures in £m. Earnings shown basic. Figures in light text are for corresponding period year earlier.
For more information on dividend payments visit www.ft.com/marketsdata
EPS(p)
14.9
4.47
0.03L
0.8
1.85
0.01
8.7
0.367
3.85
2.21
0.08
44.1
0.723
1.68L
2.5
5.6L
0.21L
1.6L
1.62
7.4
0.132
0.11L
1.32
0.27
10.4L
0.75
4.27
Div(p)
Pay day
7.42 Nov 17
8.4
- 1.76408
0.81 Oct 13
0.89
- Oct 20
1.0606
3 Oct 13
4.1
Sep 8
3.3
21.62 20.824 Oct 20
12 Sep 19
14.4
19.1 19.287 Sep 19
-
8.4
0.89
1.0606
4.1
3.3
21.62
14.4
19.1
-
Total
7.42
7.735
0.81
3
20.824
12
19.287
-
Issue
date
07/28
07/25
07/25
07/25
07/13
07/11
07/11
06/29
06/26
Issue
price(p)
161.00
55.00
1.00
55.00
64.00
185.00
185.00
5.00
7.25
Sector
AIM
AIM
Stock
code
QUIZ
ARE
AIM
AIM
AIM
AIM
AIM
AIM
I3E
ANG
NEXS
NEXS
JAN
TXP
Stock
QUIZ PLC
Arena Events Group PLC
Greencoat Renewables PLC
i3 Energy PLC
Angling Direct PLC
Nexus Infrastructure PLC
Nexus Infrastructure PLC
Jangada Mines PLC
Touchstone Exploration Inc
§Placing price. *Intoduction. ‡When issued. Annual report/prospectus available at www.ft.com/ir
For a full explanation of all the other symbols please refer to London Share Service notes.
Close
price(p)
196.50
60.50
0.00
29.50
87.00
188.50
188.50
5.13
9.00
+/-2.50
-1.50
0.00
-0.50
-1.00
-1.50
-1.50
-0.13
0.25
High
204.28
575.00
1.07
45.00
97.50
191.98
191.98
6.75
9.68
Low
180.00
55.00
1.02
28.63
65.00
185.00
185.00
5.00
7.25
Mkt
Cap (£m)
24411.4
6935.7
0.0
757.9
3724.7
7185.2
7185.2
1012.3
928.2
17
FINANCIAL TIMES
Friday 4 August 2017
MARKET DATA
FT500: THE WORLD'S LARGEST COMPANIES
Stock
Australia (A$)
ANZ
BHPBilltn
CmwBkAu
CSL
NatAusBk
Telstra
Wesfarmers
Westpc
Woolworths
Belgium (€)
AnBshInBv
KBC Grp
Brazil (R$)
Ambev
Bradesco
Cielo♦
ItauHldFin
Petrobras
Vale
Canada (C$)
BCE
BkMontrl♦
BkNvaS
Brookfield
CanadPcR
CanImp
CanNatRs
CanNatRy
Enbridge
GtWesLif
ImpOil
Manulife
Potash
RylBkC♦
Suncor En
ThmReut
TntoDom
TrnCan
ValeantPh
China (HK$)
AgricBkCh
Bk China♦
BkofComm
BOE Tech
Ch Coms Cons♦
Ch Evrbrght♦
Ch Rail Cons
Ch Rail Gp♦
ChConstBk
China Vanke♦
ChinaCitic
ChinaLife♦
ChinaMBank
ChinaMob
ChinaPcIns
ChMinsheng
ChMrchSecs RMB
Chna Utd Coms RMB
ChShenEgy♦■
ChShpbldng RMB
ChStConEng RMB
ChUncHK
CNNC Intl RMB
CSR♦
Daqin RMB
Gree Elec Apl
GuosenSec RMB
HaitongSecs
Hngzh HikVDT RMB
Hunng Pwr♦
IM Baotou Stl RMB
In&CmBkCh
IndstrlBk RMB
Kweichow RMB
Midea
New Ch Life Ins♦
PetroChina
PingAnIns♦
PngAnBnk RMB
Pwr Cons Corp RMB
SaicMtr RMB
ShenwanHong
ShgPdgBk RMB
Sinopec Corp
Sinopec Oil RMB
Denmark (kr)
DanskeBk
MollerMrsk
NovoB
52 Week
High
Low
Price Day Chg
Yld
P/E MCap m
29.58
25.64
83.97
127.00
29.87
4.09
40.48
31.71
26.97
-0.06
-0.11
-0.26
-0.48
0.02
-0.02
-0.05
0.02
32.95
27.95
87.74
145.00
34.09
5.77
46.06
35.39
27.72
25.12 7.79 14.95 69102.46
19.09 2.26 41.23 65491.04
69.22 6.58 17.23 115522.65
91.62 1.50 38.19 45750.64
25.14 9.22 12.66 63794.78
4.00 10.48 14.65 38686.16
39.52 6.36 80.02 36502.48
28.56 8.54 14.15 85602.17
22.23 3.95 13.42 27764.19
101.25
69.85
1.05
-0.09
119.60
70.98
92.13
45.48
-
19.31
30.25
23.96
34.21
13.86
30.78
-0.09
-0.35
-0.78
0.05
-0.17
-0.33
20.09
31.13
30.27
36.38
19.72
37.28
15.79
24.01
20.36
26.43
12.47
16.16
3.65
1.97
1.97
4.28
0.51
59.01
94.96
78.10
48.63
195.83
108.69
40.10
100.67
52.41
35.64
36.53
25.78
22.51
94.03
41.05
59.95
64.35
64.56
19.76
-0.41
-0.17
-0.08
-0.07
-2.16
0.36
1.51
-0.31
-0.11
0.13
-0.27
-0.13
0.16
-0.09
-0.10
0.20
-0.12
-0.12
-0.86
63.38
104.15
82.30
53.08
218.78
120.83
46.74
108.64
59.19
37.79
48.72
26.07
26.62
99.90
44.90
62.83
71.31
65.24
42.25
56.80
81.62
65.09
42.71
184.78
97.52
35.90
80.11
49.61
30.83
35.15
16.87
19.98
78.24
33.84
52.01
55.78
57.36
11.20
3.72
3.95
5.90
1.37
10.34
3.82
10.30
6.15
6.59
22.85
5.14
25.15
26.45
83.70
36.40
7.95
18.08
7.47
20.10
6.21
10.01
11.64
7.63
7.05
8.74
0.07
14.19
13.14
28.69
5.26
2.92
5.62
17.74
477.22
1.61
53.30
5.01
59.05
11.01
7.95
29.08
0.24
13.08
5.90
3.22
0.02
-0.02
-0.06
-0.04
-0.04
-0.03
0.03
-0.10
-0.04
-0.20
-0.75
0.70
-0.60
-0.12
-0.12
-0.30
-0.18
0.26
-0.06
0.01
0.01
-0.27
-0.16
-0.93
-0.05
0.03
0.07
-0.34
-5.62
-0.05
-1.80
-0.01
-0.45
-0.14
-0.07
-1.00
-0.01
-0.36
-0.05
0.05
3.80
4.08
6.44
1.98
11.74
4.06
11.98
7.71
6.71
24.20
5.50
26.20
27.40
99.30
38.35
9.48
20.09
8.05
20.80
8.14
11.45
12.10
8.11
7.99
9.34
0.25
18.94
15.24
40.16
6.25
2.99
5.64
18.52
487.96
1.87
56.10
6.38
60.75
11.34
9.00
32.84
0.35
14.02
6.57
4.45
2.87 5.35 5.67 14623.69
3.22 5.34 6.13 42241.79
5.27 5.46 5.56 26417.5
1.30 1.57 17.50
34.86
8.09 2.23 8.50 5854.66
3.38 5.95 5.09 3355.58
8.61 1.76 8.41 2734.96
5.55 1.69 9.84 3309.11
5.25 4.96 5.94 202616.5
17.40 3.75 10.15 3842.56
4.69 4.94 5.07 9782.64
17.24 2.00 30.57 23933.35
16.66 3.13 8.80 15529.14
80.00 3.29 13.17 219171.21
26.35 3.32 22.87 12919.19
7.33 4.15 5.05 7049.37
15.57 2.27 18.56 13186.83
4.06 0.79 548.98 23550.69
13.42 1.90 11.05 8736.09
5.87 - 147.65 16959.75
5.79 2.05 10.06 44264.82
8.02 1.76 212.51 35647.62
6.59 1.21 24.72 4800.06
6.66 2.56 15.56 3940.95
6.08 5.28 15.50 19326.23
0.04 -2.27
127.37
12.39 4.34 23.46 4632.83
12.28 4.14 14.89 5729.54
22.61 1.40 32.38 30970.21
4.58 10.69 7.85 3161.85
1.96 - 155.89 9571.69
4.38 4.99 6.12 62380.62
14.99 3.53 6.11 50271.31
287.56 1.43 31.17 89164.96
1.50 6.66 21.14
44.28
27.55 27.58 7048.82
4.72 1.11 28.00 13518.28
36.00 1.12 13.68 56241.72
8.54 1.19 8.39 27704.73
5.70 0.99 16.23 11351.62
20.93 4.79 9.77 47688.44
0.16 -3.94
269.87
11.16 2.82 6.90 54675.03
5.18 2.84 10.37 19250.66
3.02 -2.82 1349.78
253.50
0.60
13290 -300.00
267.10
1.20
259.50
14260
371.80
176.40
8590
218.20
-
Stock
97271.76
29612.86
20862.4
36748.66
33059.53
31736.76
4.64 18.12 42306.67
3.42 12.80 49310.26
3.54 13.29 74521.43
1.44 29.72 38288.84
1.01 19.69 22856.24
4.23 9.71 37757.46
2.43 311.73 38798.85
1.51 21.06 60442.09
4.10 48.59 68405.62
3.90 13.66 28099.43
1.63 12.06 24562.2
2.92 16.70 40597.66
4.69 36.29 15059.61
3.31 13.71 109162.98
2.91 25.43 54383.9
3.01 30.49 34223.21
3.26 13.63 94675.13
3.61 64.07 44786.57
-3.68 5465.67
3.36 12.44 37925.82
3.33 -22.19 21352.13
2.69 18.43 83713.42
FT 500: TOP 20
Week
change change %
0.03
62.2
0.40
15.9
22.28
12.8
32.00
12.4
515.00
10.6
3.50
7.0
7.00
6.9
2.30
6.7
103.30
6.3
150.50
6.3
1.14
6.0
13.70
5.9
9.30
5.6
310.00
5.5
237.00
5.5
4.06
5.3
8.40
5.2
448.00
5.2
0.87
5.1
18.27
5.0
Month
change %
-59.44
33.33
12.92
11.71
13.52
34.26
10.71
14.11
7.54
7.43
15.65
3.19
7.84
4.24
-11.56
3.56
15.22
10.27
4.95
17.18
INTEREST RATES: OFFICIAL
Rate
Fed Funds
Prime
Discount
Repo
Repo
O'night Call
Libor Target
Current
0.50-0.75
4.25
0.75
0.00
0.25
0.00-0.00
0.00-0.25
Aug 03 (Libor: Aug 02)
US$ Libor
Euro Libor
£ Libor
Swiss Fr Libor
Yen Libor
Euro Euribor
Sterling CDs
US$ CDs
Euro CDs
P/E MCap m
Stock
Japan (¥)
AstellasPh
1406.5
2.00
1735 1331.5
Bridgestne
4741 25.00
4936
3306
Canon
3875 -8.00
3967
2808
CntJpRwy
18065 50.00 19835 16305
Denso
5383 31.00
5414
3767
EastJpRwy
10410 -50.00 11290
8388
Fanuc
22690 -200.00 23670 16520
FastRetail
33380 80.00 44370 31010
Fuji Hvy Ind
3930 -66.00
5016
3500
Hitachi
743.60
2.80 763.30 441.10
HondaMtr
3185 -29.00
3675 2693.5
JapanTob
3837 -23.00
4243
3607
KDDI
3005 11.00
3292 2745.5
Keyence
52120 -940.00 53180 35075
MitsbCp
2535.5 76.50 2705.5
1877
MitsubEst
2018
3.00
2443
1806
MitsubishiEle 1746.5 -7.50
1802
1155
MitsuiFud
2564 -2.00 2863.5 2031.5
MitUFJFin
712.80 -4.00 778.80 492.00
Mizuho Fin
194.40
0.10 225.30 159.30
Murata Mfg
17845 15.00 17910 12135
NipponTT
5434 -5.00
5500
4156
Nissan Mt
1091 -2.50
1220 944.00
Nomura
652.00 -2.60 784.00 415.00
Nppn Stl
2709 -16.00
2912
1836
NTTDCMo
2600
1.00
2804
2361
Panasonic
1512 16.50
1578 931.50
Seven & I
4479 -3.00
4902
4148
ShnEtsuCh
10190 -120.00 10855
6782
Softbank
8841 -74.00
9521
5736
Sony
4419
2.00
4616
2930
SumitomoF
4278 -31.00
4768
3126
Takeda Ph
5950 50.00
5951
4321
TokioMarine
4719 -6.00
5441
3667
Toyota
6225 -75.00
7215
5492
Mexico (Mex$)
AmerMvl
15.87 16.00 10.67
FEMSA UBD 178.78
0.04 184.10 28.35
WalMrtMex
42.93
0.18 45.00 34.70
Netherlands (€)
Altice
21.12
0.24 23.43 12.78
ASML Hld
128.30
1.25 133.45 89.20
Heineken
87.37
0.36 89.71 67.47
ING
15.67 -0.04 16.00
9.73
Unilever♦
49.07
0.26 51.31 36.22
Norway (Kr)
DNB
152.00
0.40 157.40 91.30
Statoil
149.40
0.20 163.50 123.90
Telenor
159.10
1.40 159.80 122.50
Qatar (QR)
QatarNtBk
138.90
1.30 173.00 121.70
Russia (RUB)
Gzprm neft
119.52
0.43 160.62 111.46
Lukoil
2932 -6.00
3582
2601
MmcNrlskNckl
9094 -48.00 11199
7677
Novatek
616.30 -5.10 800.70 598.00
Rosneft
317.55 -4.45 425.70 291.00
Sberbank
169.95
0.05 185.34 134.27
Surgutneftegas
27.54 -0.03 32.87 24.09
Saudi Arabia (SR)
AlRajhiBnk
62.00 71.70 48.60
Natnlcombnk
49.90
0.35 58.00 32.00
SaudiBasic♦
98.70
1.40 105.40 76.00
SaudiTelec♦
72.90 -1.30 78.90 51.00
Singapore (S$)
DBS
22.08 -0.11 22.25 14.72
JardnMt US$
63.80
0.84 67.27 52.90
JardnStr US$
41.34 -0.39 43.78 30.24
OCBC♦
11.32 -0.11 11.49
8.27
SingTel♦
3.82 -0.02
4.33
3.59
UOB
24.31 -0.01 24.60 17.51
South Africa (R)
Firstrand
53.09
1.03 54.46 43.38
MTN Grp
116.73 -2.52 138.39 104.76
Naspers N
2825.06 -24.94 2939.97 1925.98
South Korea (KRW)
HyundMobis 250500 3500 293500 212000
KoreaElePwr
44200 63600 40050
SK Hynix
65500-2500.00 73000 32900
SmsungEl♦ 2389000-61000.00 2566000 1456000
Spain (€)
BBVA
7.82
0.07
7.89
4.76
BcoSantdr♦
5.76
0.04
6.25
3.40
CaixaBnk
4.44
0.01
4.48
2.08
Iberdrola
6.78
0.02
7.30
5.53
Inditex
33.68 -0.07 36.90 29.83
Repsol
14.41
0.02 15.22 10.81
Telefonica
9.49 -0.03 10.63
7.61
2.75 -58.23 38199.87
4.36 16.54 30966.27
-
-
-
3.81 13.47 97987.94
3.40 17.89 87939.68
2.23 19.94 104372.91
3.81 7.47 56765.55
1.88 14.15 44832.78
5.28 6.66 75959.45
- -19.82 37514.31
3.35 273.97 87981.37
2.39 16.95 48547.8
5.55 -7.21
22285
1.20 19.25 28389.42
0.75 23.92 45696.31
2.75 22.69 32404.27
2.23 26.36 35532.93
4.55 10.64 31217.06
1.22 31.40 128137.05
2.91 17.62 116675.41
1.47 8.35 45688.66
1.26 21.36 94962.73
3.34 15.99 53070.39
3.07 6.80 37200.47
2.36 12.00 30735.87
2.71 9.78 44122.07
3.62 15.28 6187.88
2.56 11.83 53527.84
4.34 733.19 49903.8
3.47 19.78 43056.17
2.36 43.31 35848.01
2.50 24.38 34924.81
5.97 28.22 36753.72
3.38 8.54 45260.65
0.15 53.02 374844.77
0.32 54.36
0.62 31.35
1.45 54.75
0.98 25.69
1.58 18.11
2.61 16.14
1.59 32.31
1.03 26.60
4.61 10.07
15.35
0.89 940.23
0.20 17.26
2.16 18.96
26631.04
71986.11
39768.46
43447.55
29782.09
35496.48
53747.94
25832.78
33396.31
84268.48
40744.66
19437.86
74842.83
0.98 20.87 34697.98
4.431535.09 32852.69
4.79 19.34
5.61 158.52
4.29 12.72
4.57 24.84
1.74 28.82
3.19 -1.88
52 Week
High
Low
Price Day Chg
59660.52
58280.27
29406.12
54635.7
27750.22
47114.4
Yld
P/E MCap m
2.51 13.08 26437.1
3.07 13.36 35024.02
3.84 22.07 46957.1
0.78 8.72 33810.84
2.31 15.89 38835.88
1.30 14.05 36475.48
1.81 33.19 42066.95
1.03 34.63 32169.52
3.80 10.35 27464.32
1.81 14.58 32654.93
3.00 8.97 52418.12
3.52 17.35 69722.44
2.94 13.06 70636.23
0.11 57584.08
3.28 8.81 36629.63
1.03 26.28 25501.77
1.60 17.15 34071.58
1.38 18.53 23095.57
2.62 46.77 90845.74
3.82 14.32 44843.95
1.28 23.42 36523.59
2.29 13.39 103500.73
4.36 6.58 41837.08
3.18 9.57 21012.38
2.30 17.64
23390
3.05 15.32 92117.04
1.72 22.65 33698.43
2.04 44.87 36072.99
1.22 23.78 40005.15
0.52 10.90 88410.83
0.45 419.47 50762.95
3.48 8.73 54976.5
3.14 39.19 42747.93
3.08 12.52 32285.66
3.50 10.01 184546.95
1.76 26.11 39584.31
1.39 168.22 179096.67
1.30 25.90 41973.02
-
-
-
3.58 14.59 31358.56
4.85 -23.38 62197.48
4.67-128.24 30257.19
2.32 10.24 35233.98
7.41
7.16
8.21
2.32
3.88
1.22
-
2.57
8.23
15.68
10.63
17.73
6.48
-11.20
47007.31
41431.68
23908.27
31088.49
55912.06
60950.1
16342.86
3.70
1.27
5.16
5.59
11.68
10.06
17.69
16.19
26865.59
26612.26
78956.85
38878.44
2.78
2.42
0.75
3.18
4.68
2.94
13.01
8.98
8.32
12.72
15.63
12.74
41529.96
46132.74
45790.89
34854.16
45906.16
29687.65
4.43 11.93 22243.13
9.63 -77.85 16428.02
0.19 29.97 92478.24
1.48 10.83 21602.27
4.75 4.63 25137.15
0.97 10.63 42243.23
1.58 12.85 274642.92
3.62
3.48
2.35
4.03
1.38
4.12
5.53
14.12 61924.8
12.89 99742.34
23.37 31512.31
17.29 50873.62
34.80 124692.73
13.56 26145.46
19.94 56792.13
Last
1.00
3.75
0.75
0.05
0.25
0.00
0.00-0.75
Mnth Ago
0.50-0.75
3.50
1.00
0.05
0.50
0.00-0.10
-1.25--0.25
Year Ago
0.25-0.50
3.50
0.75
0.05
0.50
0.00-0.10
0-0.25
Day
0.002
0.000
0.002
Change
Week
-0.003
0.000
0.003
Month
-0.001
-0.002
0.001
0.000
-0.004
-0.002
0.000
0.000
0.000
One
month
1.23056
-0.40000
0.25450
-0.78340
-0.03443
-0.37300
0.20000
1.19000
-0.43500
Three
month
1.31278
-0.37729
0.28806
-0.72560
-0.01707
-0.33100
0.28000
1.27000
-0.39500
Six
month
1.45167
-0.29900
0.42588
-0.64760
0.00886
-0.27300
0.42500
1.39000
-0.31500
One
year
1.72567
-0.18829
0.63350
-0.49920
0.11143
-0.15300
Short
term
-0.50 -0.35
7 Days
One
Three
Six
One
Aug 03
notice
month
month
month
year
Euro
-0.50 -0.35 -0.51 -0.36 -0.47 -0.32 -0.39 -0.24 -0.38 -0.13
Sterling
0.15 0.25 0.15 0.25 0.23 0.33 0.35 0.50 0.48 0.63
Swiss Franc
Canadian Dollar
US Dollar
1.23 1.33 1.17 1.27 1.23 1.33 1.29 1.39 1.40 1.50 1.72 1.82
Japanese Yen
-0.10 0.10 -0.10 0.10 -0.15 0.15 -0.15 0.15 -0.15 0.15 -0.10 0.20
Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs:
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA.
COMMODITIES
Energy
Price*
Crude Oil†
Aug
49.78
Brent Crude Oil‡
52.42
RBOB Gasoline†
Aug
1.64
Heating Oil†
Aug
1.59
Natural Gas†
Aug
2.83
Ethanol♦
Uranium†
Aug
18.10
Carbon Emissions‡
Diesel†
Unleaded (95R)
Base Metals (♠ LME 3 Months)
Aluminium
1910.50
Aluminium Alloy
1625.00
Copper
6339.50
Lead
2356.50
Nickel
10310.00
Tin
20645.00
Zinc
2803.00
Precious Metals (PM London Fix)
Gold
1268.10
Silver (US cents)
1647.00
Platinum
940.00
Palladium
900.00
Bulk Commodities
Iron Ore (Platts)
73.35
Iron Ore (The Steel Index)
72.20
GlobalCOAL RB Index
85.00
Baltic Dry Index
1023.00
www.ft.com/commodities
Change
0.26
0.14
0.00
0.00
0.02
0.00
-15.50
-10.00
-14.50
-4.00
-35.00
65.00
-3.00
Agricultural & Cattle Futures
Corn♦
Wheat♦
Soybeans♦
Soybeans Meal♦
Cocoa (ICE Liffe)X
Cocoa (ICE US)♥
Coffee(Robusta)X
Coffee (Arabica)♥
White SugarX
Sugar 11♥
Cotton♥
Orange Juice♥
Palm Oil♣
Live Cattle♣
Feeder Cattle♣
Lean Hogs♣
S&P GSCI Spt
DJ UBS Spot
R/J CRB TR
M Lynch MLCX Ex. Rtn
UBS Bberg CMCI TR
0.40 LEBA EUA Carbon
0.10 LEBA CER Carbon
-0.10 LEBA UK Power
30.00
-1.50
-20.00
-1.00
6.00
Aug
Aug
Aug
Price*
362.25
458.50
953.50
305.50
1595.00
2054.00
2144.00
141.10
390.10
14.74
71.23
133.05
114.85
150.65
82.15
Change
-2.25
-2.75
-11.50
-3.10
17.00
-13.00
-2.00
0.45
-9.30
-0.12
-0.62
-0.95
0.00
1.03
0.00
Aug 02
385.73
83.64
183.68
231.14
14.00
5.04
0.20
2269.00
% Chg
Month
3.62
1.30
4.05
-9.84
3.59
0.00
0.00
59.23
% Chg
Year
16.63
1.15
3.11
-33.05
-13.55
-48.72
-26.09
Sep
Sep
Aug
Aug
Sep
Sep
Sep
Sep
Oct
Sep
Sources: † NYMEX, ‡ ECX/ICE, ♦ CBOT, X ICE Liffe, ♥ ICE Futures, ♣ CME, ♠ LME/London Metal Exchange.* Latest prices, $
unless otherwise stated.
Stock
Price Day Chg
Sweden (SKr)
AtlasCpcoB
264.70
2.10
Ericsson
51.35 -0.15
H&M
222.80 -2.00
Investor
387.70 -1.10
Nordea Bk
102.70 -0.30
SEB
103.40 -0.40
SvnskaHn
120.90
0.10
Swedbank
212.80
0.30
Telia Co
38.31
0.03
Volvo
138.70
0.40
Switzerland (SFr)
ABB
22.76 -0.04
CredSuisse
14.96
0.04
Nestle
82.60
0.35
Novartis
82.35 -0.40
Richemont
84.35
1.25
Roche
246.90
0.40
Swiss Re
94.95
0.25
Swisscom
479.20
1.60
Syngent
463.00 -6.70
UBS
16.94
0.02
Zurich Fin
298.60 -0.10
Taiwan (NT$)
Chunghwa Telecom♦ 102.00 Formosa PetChem 104.50 -1.50
HonHaiPrc♦
119.00
0.50
MediaTek
291.00 -9.00
TaiwanSem
213.50 -2.50
Thailand (THB)
PTT Explor
380.00 -1.00
United Arab Emirates (Dhs)
Emirtestele
18.65
0.15
United Kingdom (p)
AscBrFd
3072 61.00
AstraZen
4562 62.00
Aviva
538.50
0.50
Barclays
208.50
0.80
BP
460.60
1.30
BrAmTob
5004 150.00
BSkyB
969.00 BT
313.90
1.00
Compass
1616
9.00
Diageo
2456.5 21.00
GlaxoSmh
1528 11.00
Glencore
335.15
2.75
HSBC♦
761.20 -3.40
Imperial Brands 3305.5 100.50
LlydsBkg
66.51
0.95
Natl Grid♦
958.00 12.10
Prudential
1855.5
7.50
RBS
256.20
5.30
ReckittB
7456 69.00
RELX♦
1663
7.00
RioTinto
3486.5 83.50
RollsRoyce
955.00 12.00
RylDShlA
2175.5 17.00
Shire
4118 -82.00
StandCh
790.60 -4.40
Tesco
180.00
1.80
Vodafone♦
224.00
3.25
WPP
1569 21.00
United States of America ($)
21stC Fox A
28.94
0.25
3M
206.39
0.98
AbbottLb♦
49.01 -0.23
Abbvie♦
70.60 -0.11
Accenture
129.61
0.99
Adobe
146.97 -0.16
AEP
70.79 -0.15
Aetna
157.44
2.70
Aflac
81.18
0.02
AirProd
147.20 -0.91
Alexion
136.82 -1.15
Allegran
249.89 -0.29
Allstate
93.85 -0.31
Alphabet
943.45 -4.19
Altria
65.91
0.36
Amazon
988.57 -7.32
AmerAir
50.57
0.12
AmerExpr♦
85.77
0.47
AmerIntGrp
65.56 -0.34
AmerTower
137.62 -0.35
Amgen
174.11 -0.35
Anadarko
44.04 -0.62
Anthem
189.84
0.89
Aon Cp♦
138.67 -0.56
Apple
155.95 -1.19
ArcherDan
43.04
0.55
AT&T
38.31
0.04
52 Week
High
Low
Yld
P/E MCap m
309.30
64.95
279.90
425.60
115.70
109.00
136.30
234.00
40.33
152.00
212.10
43.19
199.60
282.50
73.80
72.05
101.00
176.70
33.93
86.50
2.40
1.89
2.09
2.46
5.91
5.16
4.01
5.91
9.94
2.27
21.18
-12.60
20.34
4.22
12.50
13.51
15.10
12.26
10.93
16.10
12768.13
19502.15
40228.4
21829.01
51414.46
27736.34
28528.54
29777.29
20505.64
28085.47
24.89
15.74
86.00
84.35
85.90
273.00
98.50
488.00
471.20
17.49
299.70
19.72
10.24
71.45
67.40
65.60
218.30
86.30
426.80
360.50
15.11
227.50
6.54
4.62
2.76
3.24
2.02
3.32
5.16
9.33
6.08
22.56 50965.21
-17.75 39491.81
29.64 265493.86
30.68 222563.57
36.20 45474.52
21.89 179150.77
9.39 34268.52
15.15 25637.48
41.32 42748.26
16.08 67389.18
13.57 46669.92
117.00
119.00
122.50
303.00
218.50
99.50
89.30
76.30
203.00
171.50
5.63
4.00
2.91
3.96
2.94
19.73 26194.11
10.83 32954.2
13.32 68265.18
16.74 15238.84
14.93 183270.23
430.00
311.00
4.28
9.26 32633.62
20.00
17.10
4.59 17.08 44157.94
3183
2335
5520
3996
570.50 381.50
267.32 145.25
521.20 408.63
5643.6 2879.89
1050 747.50
412.95 277.44
1765.92 1350.96
2479
1946
1745.56 1446.5
347.00 171.50
772.00 491.11
4154 3112.5
73.58 50.68
1220.29 921.20
1871
1290
271.00 168.20
8110.43
6496
1728
1273
3718.5 2253.5
994.50 635.00
2295.5
1791
5377
4025
860.00 581.10
219.40 153.00
240.10 186.50
1928.07
1531
1.20 22.10 31961.61
4.67 19.43 75886.27
3.99 35.66 28626.75
1.44 15.92 46678.23
6.97 51.70 119124.24
3.12 20.08 122610.92
3.46 26.55 21890.96
4.60 19.50 41090.02
2.04 23.09 34926.89
2.41 25.72 81271.42
5.24 38.78 98755.21
- -82.83 63402.21
5.12 98.88 200575.11
4.70 31.13 41647.2
3.83 31.67 62723.23
4.95 18.33 43174.34
2.12 24.74 63055.25
-5.23 39986.45
2.05 24.99 68879.13
1.96 29.80
3.41 16.87 63127.18
0.48 -25.60 23094.86
6.66 28.84 127990.47
0.59 109.56 49125.75
- 1711.26 34193.71
- 222.22 19368.54
5.37 -33.45 78375.53
3.08 14.53 26279.22
32.60
214.57
51.13
75.04
129.89
150.40
72.97
160.99
81.45
150.45
145.42
256.80
94.31
1008.61
77.79
1083.31
54.48
86.28
67.47
139.50
184.21
73.33
194.94
141.31
159.75
47.88
43.48
1.31 16.79 30454.56
2.24 23.26 123166.77
2.24 52.39 85037.01
3.50 17.40 112362.76
1.90 22.57 86078.42
50.30 72515.83
3.41 47.10 34814.92
0.67 46.52 52222.85
2.17 12.56 32216.01
2.49 23.39 32083.32
58.54 30535.25
0.29 -22.41 83837.17
1.52 15.16 33913.6
30.37 281190.48
3.75 8.62 126444.35
- 177.14 474888.78
0.83 11.65 24628.06
1.51 17.26 75814.51
2.05 103.97 60453.98
1.76 54.41 59063.4
2.51 15.73 127043.67
0.46 -11.31 24678.17
1.44 17.52 49849.08
1.00 26.39 36341.25
1.54 17.29 813098.35
2.98 17.35 24212.04
5.32 17.87 235529.88
23.33
163.85
37.38
55.06
108.83
95.65
57.89
104.59
66.50
129.00
96.18
184.50
66.55
743.59
60.01
710.10
33.00
59.50
56.80
99.72
133.64
42.58
114.85
107.19
102.53
40.22
35.81
Stock
52 Week
High
Low
Price Day Chg
AutomData
Avago Tech
BakerHu
BankAm
Baxter
BB & T
BectonDick
BerkshHat
Biogen
BkNYMeln♦
BlackRock
Boeing
BrisMySq
CapOne♦
CardinalHlth
Carnival
Caterpillar♦
CBS
Celgene
CharlesSch
Charter Comms
Chevron Corp
Chubb
Cigna
Cisco
Citigroup♦
CME Grp
Coca-Cola
Cognizant
ColgtPlm♦
Comcast
ConocPhil♦
Corning
Costco
CrownCstl
CSX
CVS
Danaher
Deere
Delphi
Delta
Devon Energy
DiscFinServ
Disney
DominRes
DowChem♦
DukeEner
DuPont♦
Eaton♦
eBay
Ecolab
Emerson
EOG Res
EquityResTP
Exelon
ExpScripts
ExxonMb
Facebook
Fedex
FordMtr♦
Franklin
GenDyn
GenElectric
GenMills
GenMotors
GileadSci
GoldmSchs
Halliburton
HCA Hold
Hew-Pack
HiltonWwde
HomeDep
Honywell
HumanaInc
IBM
IllinoisTool
Illumina
Intcntl Exch
Intel♦
Intuit
John&John
JohnsonCn
JPMrgnCh
Kimb-Clark
KinderM♦
Kraft Heinz
Kroger
L Brands
LasVegasSd
LibertyGbl
Lilly (E)
111.73 -3.52 121.77 85.48
248.98 -4.38 258.49 158.75
57.68
3.17 68.59 43.09
24.42 -0.18 25.80 14.10
59.40 -0.10 63.14 43.13
47.76 -0.17 49.88 36.45
197.62 -3.31 206.63 161.29
267000 270.00 267001 213030
286.04 -1.96 303.81 244.28
53.72 -0.19 54.59 38.68
425.50 -0.05 442.84 336.84
237.21 -0.74 246.49 126.31
55.53
0.30 75.62 46.01
85.14 -0.17 96.92 66.00
68.54 -2.45 84.90 62.70
67.42 -0.08 68.29 44.11
113.41
0.32 114.90 79.93
65.07
0.26 70.10 48.88
135.61
0.76 139.00 96.93
42.64 -0.38 44.10 27.87
385.17 -0.37 399.95 233.00
109.80 -0.66 119.00 97.53
149.56
0.64 149.60 121.48
175.54
0.80 177.24 115.03
31.53
0.01 34.60 29.12
68.27 -0.83 69.65 42.86
124.76
0.60 127.96 98.95
45.88
0.29 46.43 39.88
69.41
0.89 70.49 45.44
71.76
0.14 77.27 63.43
39.79 -0.22 42.18 30.02
45.54 -0.08 53.17 39.00
29.35 -0.42 32.17 22.07
157.62 -3.67 183.18 142.11
100.82 -0.99 104.68 79.38
48.79
0.65 55.48 27.68
79.07 -0.68 98.44 69.30
81.19 -0.09 88.01 75.71
128.99
0.01 129.54 76.73
92.56
1.54 93.43 60.50
50.24
0.23 55.75 35.84
33.25 -0.15 50.69 28.79
60.62 -0.16 74.33 53.91
108.98
0.31 116.10 90.32
78.20
0.34 81.65 69.51
63.40 -0.90 67.50 51.57
85.73 -0.01 87.75 72.34
81.22 -1.10 86.36 66.02
73.16 -0.95 81.63 59.07
35.75 -0.15 37.48 27.28
132.65 -0.25 134.89 110.65
60.51 -0.49 64.37 49.22
89.48 -2.84 109.37 79.67
67.48 -0.28 68.83 58.28
38.23 -0.19 38.78 29.82
62.56
0.58 77.61 57.80
80.75
0.15 93.22 78.27
168.77 -0.53 175.49 113.55
208.98 -0.53 219.99 158.20
10.98 -0.02 13.27 10.67
43.83 -0.11 47.65 33.02
197.95 -0.10 205.90 146.82
25.60
0.08 32.38 25.26
56.22
0.15 71.96 53.24
34.92
0.10 38.55 29.91
75.33 -0.51 82.10 63.76
225.82 -0.45 255.15 156.18
42.36 -0.49 58.78 40.12
79.25
0.27 91.03 67.00
19.21
0.11 19.58 13.55
62.08
0.10 67.79 46.09
151.17
0.67 160.86 119.20
138.64 -0.08 138.89 105.25
246.30
5.21 248.56 163.50
145.03
0.58 182.79 143.64
140.41 -1.36 150.29 111.50
196.61 -1.24 198.47 119.37
65.00 -2.02 67.48 52.27
36.22 -0.43 38.45 33.23
136.99
0.46 143.81 103.22
132.42
0.26 137.08 109.32
38.93 -0.44 46.17 38.38
92.39 -0.73 94.51 63.65
122.06
0.70 136.21 111.30
20.26 -0.08 23.36 18.31
87.19
0.32 97.77 79.69
24.08 -0.55 36.44 20.46
42.49 -1.82 79.67 41.85
60.64
0.10 66.22 49.09
34.42
0.05 37.69 28.17
81.84
0.02 86.72 64.18
BONDS: HIGH YIELD & EMERGING MARKET
Close
Prev
price
price
SunPhrmInds
515.85
515.85
Altria
65.91
65.55
CardinalHlth
68.54
70.99
Esslr Intl
105.45
106.20
MylanNV
35.02
36.92
Luxottica
48.17
48.42
ValeantPh
19.76
20.62
L Brands
42.49
44.31
Regen Pharm
470.84
476.82
Cielo
23.96
24.74
Anadarko
44.04
44.66
Renault
75.47
75.89
Eaton
73.16
74.10
EOG Res
89.48
92.32
Perrigo
69.26
72.13
Starbucks
55.93
55.43
BrAmTob
5004.00
4854.00
StandCh
790.60
795.00
Amazon
988.57
995.89
Shire
4118.00
4200.00
Based on the FT Global 500 companies in local currency
Day
change change %
0.00
0.00
0.36
0.54
-2.45
-3.45
-0.75
-0.71
-1.90
-5.15
-0.25
-0.52
-0.86
-4.17
-1.82
-4.11
-5.98
-1.25
-0.78
-3.15
-0.62
-1.39
-0.42
-0.55
-0.95
-1.28
-2.84
-3.08
-2.88
-3.99
0.50
0.89
150.00
3.09
-4.40
-0.55
-7.32
-0.74
-82.00
-1.95
Week
change change %
-63.65
-11.0
-8.05
-10.9
-8.06
-10.5
-10.95
-9.4
-3.47
-9.0
-4.28
-8.2
-1.73
-8.1
-3.48
-7.6
-37.57
-7.4
-1.83
-7.1
-3.28
-6.9
-5.57
-6.9
-5.34
-6.8
-6.50
-6.8
-4.66
-6.3
-3.57
-6.0
-318.00
-6.0
-48.60
-5.8
-57.43
-5.5
-233.00
-5.4
Month's
change
Year
change
Return
1 month
Return
1 year
Month
change %
-7.17
-11.55
-12.52
-6.60
-10.19
-6.56
-12.29
-23.39
-3.54
-2.24
-4.30
-6.54
-6.66
-2.81
-8.74
-3.99
-6.95
0.60
3.75
-0.64
BOND INDICES
Since
14-12-2016
16-12-2008
16-12-2015
10-09-2014
05-03-2009
05-10-2010
15-01-2015
INTEREST RATES: MARKET
Over
night
1.17722
-0.42900
0.22375
Yld
FT 500: BOTTOM 20
Day
change change %
0.01
7.35
0.03
1.04
-1.24
-0.63
-9.00
-3.00
31.00
0.58
-1.80
-3.27
1.00
0.93
-0.60
-1.62
0.00
0.00
76.50
3.11
-0.30
-1.47
5.21
2.16
-0.10
-0.06
50.00
0.85
62.00
1.38
0.02
0.02
0.05
0.03
-48.00
-0.53
1.19
7.16
-0.37
-0.10
Close
Prev
price
price
Gree Elec Apl
0.07
0.07
IM Baotou Stl
2.92
2.89
Illumina
196.61
197.85
MediaTek
291.00
300.00
Denso
5383.00
5352.00
New Ch Life Ins
53.30
55.10
CK Hutchison
108.50
107.50
ChinaPcIns
36.40
37.00
HsngDevFin
1736.75
1736.75
MitsbCp
2535.50
2459.00
ChShenEgy
20.10
20.40
HumanaInc
246.30
241.09
HangSeng
176.10
176.20
Takeda Ph
5950.00
5900.00
AstraZen
4562.00
4500.00
Aflac
81.18
81.16
Sberbank
169.95
169.90
MmcNrlskNckl
9094.00
9142.00
Unicred
17.82
16.63
Charter Comms
385.17
385.54
Based on the FT Global 500 companies in local currency
Aug 03
US
US
US
Euro
UK
Japan
Switzerland
52 Week
High
Low
Finland (€)
Nokia
5.51
0.01
5.96
3.66
SampoA
46.65 -0.04 47.46 35.93
France (€)
Airbus Grpe
71.28
0.27 77.25 49.51
AirLiquide
104.25
0.55 115.25 90.02
AXA
25.21 -0.10 25.80 16.94
BNP Parib
67.22
0.66 68.40 41.36
ChristianDior 251.95
5.40 257.95 151.05
Cred Agr
14.82
0.02 15.12
7.67
Danone
64.68
1.23 70.53 57.66
EDF
8.64
0.04 12.14
7.33
Engie SA
13.65
0.01 14.95 10.77
Esslr Intl
105.45 -0.75 122.15 93.41
Hermes Intl
440.70
7.85 468.30 349.00
LOreal
175.10
0.15 197.15 156.50
LVMH
219.00
3.95 239.65 145.75
Orange
14.30
0.07 15.80 13.04
PernodRic
117.30
0.15 124.45 95.73
Renault
75.47 -0.42 90.76 69.12
Safran
79.60
0.29 83.88 59.42
Sanofi
80.42
0.40 92.97 66.72
Sant Gbn
47.65
0.32 52.40 37.04
Schneider
67.37 -0.02 74.50 57.82
SFR Group
31.86
0.38 32.78 19.51
SocGen
48.73
0.58 52.26 29.23
Total
43.57 -0.07 49.50 40.53
UnibailR
214.05
0.35 250.55 203.10
Vinci
75.56
0.88 80.43 49.93
Vivendi
20.12
0.10 20.82 15.96
Germany (€)
Allianz
183.50 -0.10 184.35 122.65
BASF
80.60 -0.11 94.32 68.42
Bayer
106.25
0.05 123.90 86.03
BMW
79.38
0.52 91.76 72.02
Continental
188.70 -0.80 210.35 158.20
Daimler
59.77 -0.03 73.23 58.01
Deut Bank
15.28
0.14 19.97
9.90
Deut Tlkm
15.56
0.02 18.15 14.06
DeutsPost
33.68 -0.09 34.31 26.96
E.ON
8.52 -0.01
9.45
5.99
Fresenius Med
77.79 -0.47 89.22 70.69
Fresenius SE
69.50 -0.82 80.07 63.62
HenkelKgaA 105.00 -1.35 114.60 92.38
Linde
161.05 179.70 126.00
MuenchRkv
176.55
0.80 189.40 140.90
SAP
91.45
0.56 96.38 66.19
Siemens
120.35 -0.20 133.50 87.75
Volkswgn
135.75 -0.45 157.40 116.05
Hong Kong (HK$)
AIA
61.50 -0.10 62.15 42.65
BOC Hold
39.25 -0.60 40.15 25.35
Ch OSLnd&Inv
26.55 -0.30 27.85 20.15
ChngKng
65.00 -0.05 65.40 46.50
Citic Ltd
11.86
0.08 12.78 10.66
Citic Secs♦
16.58 -0.12 19.16 15.36
CK Hutchison 108.50
1.00 108.90 87.00
CNOOC
8.74 -0.01 10.88
8.45
HangSeng
176.10 -0.10 177.00 133.00
HK Exc&Clr
227.60 -2.20 233.20 177.60
MTR
45.50 -0.05 50.00 37.20
SandsCh
35.60 39.30 29.05
SHK Props
122.20
0.80 124.10 96.50
Tencent
308.60 -4.00 317.80 179.60
India (Rs)
Bhartiartl
424.20 431.60 283.05
HDFC Bk
1779.95 1809.15
1158
Hind Unilevr 1169.9 1195.05 781.95
HsngDevFin 1736.75 1799.9 1183.15
ICICI Bk
295.70 314.45 215.14
Infosys
984.00 1095 901.00
ITC
281.40 354.80 222.00
L&T
1174.75 1222.63 863.40
OilNatGas
165.70 211.80 145.33
RelianceIn
1650.1 1664.8 930.00
SBI NewA
300.55 315.30 223.20
SunPhrmInds 515.85 854.95 492.65
Tata Cons
2489.45 2744.8 2051.9
Indonesia (Rp)
Bk Cent Asia
18750 -175.00 19000 13950
Israel (ILS)
TevaPha
115.20
0.30 208.60 99.40
Italy (€)
Enel
4.94
0.06
5.00
3.57
ENI
13.50 -0.03 15.92 12.18
Generali
15.85
0.02 16.00 10.50
IntSPaolo
2.90 2.95
1.80
Luxottica
48.17 -0.25 56.90 39.92
Unicred
17.82
1.19 30.80 11.93
-
26.67
10.49
15.70
9.23
-17.61
8.02
Price Day Chg
Bid
yield
Mth's Spread
chge
vs
yield
US
Aug 03
High Yield US$
Navient Corporation
S*
F*
Bid
price
03/20
8.00
B+
Ba3
BB
110.62
3.76
-0.01
0.32
2.40
High Yield Euro
Kazkommerts Intl BV
02/17
6.88
B
Caa1
B
97.50
-
0.00
0.00
-
Emerging US$
Mexico
Peru
Peru
Brazil
Brazil
Poland
Colombia
Turkey
Russia
Turkey
09/16
03/19
03/19
01/20
01/22
03/22
03/23
03/23
05/26
03/27
11.40
7.13
7.13
12.75
12.50
5.00
2.63
3.25
4.75
6.00
BBB+
BBB+
BBB+
BB
BB
BBB+
BBB
-
A3
A3
A3
Ba2
Ba2
A2
Baa2
Ba1
Ba1
BBB+
BBB+
BBB+
BB
BB
ABBB
BB+
BBBBB+
106.80
109.35
114.01
121.50
114.25
108.31
97.88
84.67
104.98
108.32
1.49
1.57
2.60
3.48
8.61
3.05
3.06
6.55
4.11
4.96
0.03
0.00
0.00
-0.03
-0.01
-0.03
-0.02
0.00
-0.02
-0.02
0.01
0.00
0.20
0.00
0.00
0.00
-0.13
-0.31
-0.22
-0.46
0.44
0.21
0.84
2.12
6.80
1.24
1.25
4.74
1.87
2.72
Emerging Euro
Brazil
02/15
7.38
BBBBaa2
BBB 111.75
0.73
0.00
0.00
0.09
Mexico
02/20
5.50
BBB+
A3
BBB+ 112.50
0.52
-0.01
0.00
-0.84
Mexico
04/23
2.75
BBB+
A3
BBB+ 108.00
1.29
-0.01
-0.10
-0.52
Bulgaria
03/28
3.00
BB+
Baa2
BBB- 110.04
1.94
0.00
-0.15
-0.30
Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other
London close. *S - Standard & Poor’s, M - Moody’s, F - Fitch.
VOLATILITY INDICES
Index
Day's
change
Markit IBoxx
ABF Pan-Asia unhedged
Corporates( £)
Corporates($)
Corporates(€)
Eurozone Sov(€)
Gilts( £)
Global Inflation-Lkd
Markit iBoxx £ Non-Gilts
Overall ($)
Overall( £)
Overall(€)
Treasuries ($)
184.43
341.85
275.99
225.04
231.78
319.03
260.11
336.23
238.52
321.08
228.08
224.38
-0.07
-0.17
0.27
0.07
0.06
-0.36
0.28
-0.17
0.25
-0.30
0.06
0.25
-0.15
0.02
0.27
0.31
0.44
-0.03
0.28
0.00
0.25
-0.02
0.38
0.25
6.48
3.55
4.84
1.70
-0.39
0.61
5.24
3.02
3.28
1.31
0.02
2.40
0.96
0.83
0.27
1.10
0.68
0.29
1.69
0.67
0.25
0.40
0.66
0.25
-1.86
3.23
4.84
0.86
-2.98
-1.66
2.21
2.51
3.28
-0.45
-1.99
2.40
FTSE
Sterling Corporate (£)
Euro Corporate (€)
Euro Emerging Mkts (€)
Eurozone Govt Bond
117.73
107.26
798.95
112.14
0.28
0.12
-0.95
0.21
-
-
0.70
0.72
2.40
0.57
-1.68
-3.39
-2.75
-5.51
Index
Day's
change
Week's
change
Month's
change
Series
high
Series
low
369.26
85.00
70.05
111.86
-12.07
-1.98
-2.51
-3.89
35.21
7.21
2.21
10.86
40.34
7.01
-0.87
12.50
390.04
90.43
93.03
121.66
288.69
67.59
64.22
80.36
BONDS: BENCHMARK GOVERNMENT
Austria
Belgium
CREDIT INDICES
Markit iTraxx
Crossover 5Y
Europe 5Y
Japan 5Y
Senior Financials 5Y
Markit CDX
Emerging Markets 5Y
198.09
-3.26
-11.46
-11.68
218.09
197.56
Nth Amer High Yld 5Y
328.29
0.17
-17.13
-10.17
353.95
327.35
Nth Amer Inv Grade 5Y
63.53
0.28
-4.09
-3.35
69.24
62.53
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names.
Denmark
Finland
France
Germany
Greece
Ireland
Italy
BONDS: INDEX-LINKED
Price
Month
Value
No of
Yield
Prev
return
stock
Market
stocks
Can 4.25%' 21
Fr 2.25%' 20
Swe 0.25%' 22
UK 2.5%' 20
UK 2.5%' 24
UK 2%' 35
US 0.625%' 21
US 3.625%' 28
Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market
value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
amount.
BONDS: TEN YEAR GOVT SPREADS
Spread Spread
Bid
vs
vs
Yield Bund T-Bonds
Australia
2.74
Austria
0.65
Belgium
0.74
Canada
1.91
Denmark
0.59
Finland
0.71
France
0.72
Germany
0.45
Greece
5.32
Ireland
0.73
Data provided by SIX Financial Information
Canada
2.29
0.20
0.29
1.45
0.13
0.26
0.27
0.00
4.86
0.28
0.50
-1.59
-1.50
-0.33
-1.65
-1.53
-1.52
-1.79
3.08
-1.51
Netherlands
New Zealand
Norway
Portugal
Spain
Spread Spread
Bid
vs
vs
Yield Bund T-Bonds
Italy
Japan
Netherlands
Norway
Portugal
Spain
Switzerland
United Kingdom
United States
Japan
1.99
0.07
0.57
1.61
2.82
1.55
-0.01
1.20
2.24
1.54
-0.38
0.12
1.16
2.37
1.10
-0.47
0.74
1.79
-0.25
-2.17
-1.67
-0.63
0.58
-0.69
-2.25
-1.04
0.00
Sweden
Switzerland
United Kingdom
United States
Data provided by SIX Financial Information
Stock
2.07 27.47 49989.16
1.24-500.21 101233.43
1.17 -21.23 24541.87
1.18 14.25 240501.92
0.92 16.72 32293.95
2.54 17.61 38594.5
1.48 31.23 44673.07
18.53 205298.97
18.55 60477.94
1.45 15.73 55862.19
2.31 19.89 68784.58
2.08 27.80 140210.89
2.82 20.03 91056.92
1.90 12.23 41181.59
2.75 15.56 21650.75
2.19 17.71 36181.36
2.85-431.63 66816.3
1.11 17.20 23969.06
41.63 106097.7
0.71 28.77 57015.35
19.95 99329.08
4.12 68.28 208023.24
1.94 13.94 69833.37
0.02 22.30 44939.53
3.45 15.76 157651.72
0.82 13.02 186003.54
2.07 25.69 42391.96
3.25 30.74 195670.83
24.02 40882.27
2.28 24.65 63209.22
1.50 19.81 187169.3
2.29 -14.20 55413.78
2.00 13.19 26508.44
1.19 26.88 69183.72
3.83 81.99 40959.72
1.53 25.25 44560.54
2.36 15.71 80556.15
0.66 25.72 56401.87
1.89 22.88 41259.01
1.32 20.48 24795.95
1.63 9.81 36375.28
0.76 31.96 17479.53
2.00 10.35 22571.98
1.44 18.07 170540.52
3.84 20.84 49186.69
2.94 25.79 77566.41
4.16 20.92 60001.01
1.97 25.93 70483.2
3.24 16.58 32539.34
5.39 38263.78
1.14 29.84 38474.52
3.32 22.49 38994.27
0.76-180.49 51670.06
3.14 27.92 24775.62
3.52 17.32 35404.68
10.86 36131.47
3.90 32.01 342138
37.32 400041.12
0.78 18.54 56059.1
5.53 11.42 42831.92
1.80 14.11 24444.05
1.66 18.34 59276.97
3.86 22.77 221671.99
3.48 19.94 32444.54
4.40 5.42 50880.9
2.69 7.58 98441.6
1.21 11.45 88889.71
1.72-271.09 36920.78
10.26 29077.19
2.72 12.95 32328.45
1.17 67.44 20127.11
1.99 22.28 180732.04
1.91 20.77 105445.31
0.54 23.72 35544.77
4.06 11.36 135159.3
1.87 22.45 48504.78
37.79 28705.06
1.15 23.88 38484.33
2.94 13.66 170174.29
0.98 38.53 35099.16
2.54 21.18 356717.38
2.92 -20.24 36520.57
2.21 13.54 328225.78
3.13 20.14 43124.15
2.50 64.58 45234.02
2.86 29.52 106159.33
1.96 14.28 21608.1
5.74 11.04 12187.97
5.01 25.09 48043.13
14.76 8163.03
2.63 37.62 90104.94
52 Week
High
Low
Price Day Chg
Lockheed
293.95
Lowes♦
78.29
Lyondell
88.91
Marathon Ptl
55.86
Marsh&M♦
78.54
MasterCard♦ 130.13
McDonald's
154.80
McKesson
154.96
Medtronic
83.39
Merck
63.43
Metlife♦
53.89
Microsoft
72.01
Mnstr Bvrg
53.41
MondelezInt
43.91
Monsanto
117.88
MorganStly♦
47.44
MylanNV
35.02
Netflix
179.44
NextEraE
147.04
Nike
60.10
NorfolkS♦
113.64
Northrop
266.31
NXP
110.83
Occid Pet
61.59
Oracle
50.08
Pepsico
116.51
Perrigo
69.26
Pfizer♦
33.55
Phillips66
85.93
PhilMorris
115.18
PNCFin♦
130.43
PPG Inds
104.45
Praxair
130.52
Priceline
2014.92
ProctGmbl♦
91.51
Prudntl
112.33
PublStor
200.95
Qualcomm
52.94
Raytheon
173.24
Regen Pharm 470.84
ReynoldsAm
65.40
S&P Global
152.00
Salesforce
89.92
Schlmbrg
68.82
Sempra Energy 115.45
Shrwin-Will
333.30
SimonProp
162.85
SouthCpr
39.49
Starbucks
55.93
StateSt
94.16
Stryker
145.72
Sychrony Fin♦
30.22
Target
57.25
TE Connect
79.63
Tesla Mtrs
347.95
TexasInstr♦
81.12
TheTrvelers
129.26
ThrmoFshr
175.65
TimeWrnr
102.70
TJX Cos
69.56
T-MobileUS
63.76
UnionPac
102.93
UPS B
110.91
USBancorp
52.60
UtdHlthcre
193.94
UtdTech
120.42
ValeroEngy
68.21
Verizon
48.40
VertexPharm 153.80
VF Cp
63.25
Viacom
34.73
Visa Inc
100.75
Walgreen
80.82
WalMartSto
80.98
WellsFargo♦
53.37
Williams Cos
31.20
Yahoo
Yum!Brnds♦
74.56
Venezuela (VEF)
Bco de Vnzla
1179
Bco Provncl
24000
Mrcntl Srvcs
60000
Yld
P/E MCap m
-0.75 294.84 228.50
0.43 86.25 64.87
0.54 97.64 71.55
-0.34 56.81 38.37
-0.10 81.00 62.33
-0.48 132.20 94.41
-1.79 159.98 110.33
-4.65 197.08 114.53
0.19 89.72 69.35
-0.01 66.80 57.18
-1.19 58.09 38.87
-0.26 74.42 55.61
0.37 55.50 40.64
-0.19 47.23 40.50
0.02 118.97 97.35
0.11 48.04 27.95
-1.90 50.40 33.60
-1.30 191.50 91.82
0.30 147.54 110.49
0.31 60.53 49.01
1.77 125.31 86.88
-0.52 267.01 206.69
-0.05 111.22 80.13
0.22 78.48 57.20
0.31 51.85 37.62
0.90 118.24 98.50
-2.88 99.14 65.47
0.63 35.95 29.83
-0.74 88.87 75.14
0.72 123.55 86.78
-0.25 131.83 82.17
-1.76 113.67 89.64
-0.08 138.69 114.43
-6.45 2043.95 1336.03
0.47 92.00 81.18
-2.90 115.26 72.25
-1.27 234.63 192.15
-0.23 71.62 51.05
-0.55 173.95 132.89
-5.98 543.55 325.35
-1.49
-0.02 158.35 107.21
0.03 92.13 66.43
-0.31 87.84 64.15
0.41 117.97 92.95
-3.77 362.57 239.48
1.48 223.07 150.15
0.10 39.94 24.90
0.50 64.87 50.84
-0.06 96.26 65.31
0.58 148.84 106.48
0.31 38.06 26.01
0.45 79.33 48.56
-1.01 85.20 58.00
22.06 386.99 178.19
-0.19 84.65 66.30
0.53 129.91 103.45
-0.79 182.87 139.07
0.18 103.34 74.27
-0.95 83.64 66.66
0.13 68.88 44.35
0.60 115.15 87.06
-0.36 120.44 102.12
-0.40 56.61 41.47
0.94 194.96 132.39
0.07 124.79 97.62
-0.29 71.40 51.17
0.19 54.83 42.80
-3.75 167.86 71.46
0.50 65.20 48.05
0.64 46.72 32.68
-0.53 101.28 75.17
-0.21 88.00 75.18
0.45 81.76 65.28
-0.25 59.99 43.55
-0.44 32.69 23.83
-2.06 76.62 59.57
2.45 22.91 84654.91
1.82 24.16 66090.86
4.02 9.64 35190.93
2.63 23.45 28976.67
1.82 20.99 40253.7
0.66 32.33 136529.71
2.48 26.02 126172.86
0.73 7.01 32581.97
2.10 28.41 113329.23
3.08 38.44 173491.48
3.12 -84.52 57982.04
2.19 30.18 555915.66
40.98 30326.83
1.77 37.64 66623.68
1.87 25.12 51787.4
1.66 13.35 87751.81
32.99 18770.08
- 216.29 77473.17
2.55 16.65 68996.22
1.19 23.71 78860.1
2.20 18.61 32748.99
1.41 20.11 46363.05
19.07 38347.5
5.17 -84.93 47090.59
1.30 22.26 207144.35
2.66 24.35 166086.23
0.90 -2.77 9930.98
3.82 26.83 200221.18
3.05 25.43 43954.12
3.65 25.19 178896.21
1.74 16.37 63115.26
1.55 36.22 26789.31
2.45 23.34 37331.89
43.29 99018.24
3.08 24.32 234047.29
2.67 10.83 48189.57
3.93 28.33 34966.55
4.13 20.05 78144.45
1.79 23.68 50282.74
54.17 49145.88
1.03 17.28
39064
- 465.90 64041.02
3.05 -45.47 95282.95
2.81 18.91 28958.49
1.06 24.83 31133.61
4.29 26.49 50840.83
0.61 32.12 30526.42
1.69 26.34 80750.69
1.65 16.81 35426.36
1.15 32.15 54508.5
1.36 10.97 24035.03
4.19 11.79 31582.54
1.95 13.43 28139.98
- -72.13 57154.29
2.28 20.53 80821.79
2.14 12.76 35668.91
0.36 30.44 68717.78
1.65 18.51 79647.7
1.52 19.45 44743.79
26.82 52987.57
2.36 18.73 82383.62
3.00 26.92 76388.07
2.19 15.16 88637.47
1.35 23.63 186887.71
2.30 17.76 96188.22
3.85 14.20 11930.72
4.99 15.40 197441.48
- 209.06 38775.88
2.63 21.96 25328.9
3.03 10.94 12233.63
0.64 37.02 184309.03
1.89 20.05 86485.2
2.52 18.12 244114.14
2.99 12.70 266706.86
4.51-989.61 25779.77
2.44 26.18 25964.06
4000
25.37
0.05 74.67
1179
24000
60000
95.00
2200
4800
1532.16
922.10
1301.58
Closing prices and highs & lows are in traded currency (with variations for that
country indicated by stock), market capitalisation is in USD. Highs & lows are
based on intraday trading over a rolling 52 week period.
♦ ex-dividend
■ ex-capital redistribution
# price at time of suspension
Aug 03
US$
SunTrust Banks, Inc.
FleetBoston Financial Corp.
NationsBank Corp.
Oklahoma Gas & Electric Co.
Dover Corporation
United Utilities PLC
Euro
AT&T Inc.
AT&T Inc.
Citigroup Inc.
HBOS plc
Yen
Enagas Transportes, S.A.U.
£ Sterling
Electricite de France (EDF)
HSBC Holdings plc
Red
date Coupon
Ratings
M*
Bid
yield
Day's
chge
yield
Mth's Spread
chge
vs
yield
US
F*
Bid
price
01/28
01/28
03/28
04/28
06/28
08/28
6.00
6.88
6.80
6.50
6.65
6.88
BBB+
BBB
BBB
AABBB+
Baa1
Baa3
Baa3
A1
A3
Baa1
AAAA+
AA-
111.73
120.96
119.34
121.90
123.62
121.23
4.63
4.40
4.54
4.00
3.98
4.47
-0.02
-0.02
-0.02
-0.02
-0.02
-0.02
0.18
-0.06
0.14
-0.03
-0.03
-0.21
2.39
2.16
2.30
1.77
1.74
2.23
12/29
12/29
02/30
03/30
2.60
2.60
4.25
4.50
BBB+
BBB+
BBB
BBB-
Baa1
Baa1
Baa3
Baa2
AAAA-
104.90
104.55
117.68
117.85
2.18
2.18
2.28
2.41
-0.02
0.00
0.00
0.00
0.00
-0.25
-0.08
-0.24
-
09/39
3.23
A-
Baa2
A-
106.57
2.85
0.00
0.01
-
05/28
08/28
6.25
2.63
AA
A3
A1
AAA-
133.48
101.90
2.65
2.43
-0.03
-0.03
-0.14
-0.23
0.41
0.19
S*
Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poor’s, M Moody’s, F - Fitch.
GILTS: UK CASH MARKET
Aug 03
Day Chng
Prev
52 wk high
52 wk low
VIX
10.17
-0.11
10.28
23.01
8.84
VXD
10.44
-0.21
10.65
23.23
3.59
VXN
14.69
0.08
14.61
23.35
9.75
VDAX
† CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility.
‡ Deutsche Borse. VDAX: DAX Index Options Volatility.
Australia
P/E MCap m
BONDS: GLOBAL INVESTMENT GRADE
Day's
chge
yield
Ratings
M*
Red
date Coupon
Yld
Red
Date Coupon
10/19
2.75
11/28
2.75
10/19
0.25
04/27
0.50
09/19
3.00
06/27
0.80
08/19
0.75
06/27
1.00
11/20
0.25
11/27
0.50
09/19
1.75
07/28
2.75
11/20
0.25
10/22
2.25
05/27
1.00
10/19
0.25
08/23
2.00
08/27
0.50
08/46
2.50
04/19
4.75
02/27
3.00
10/19
5.90
05/26
1.00
10/19
0.05
11/21
0.35
06/27
2.20
03/47
2.70
07/19
0.10
06/22
0.10
06/27
0.10
06/47
0.80
01/20
0.25
07/27
0.75
04/20
3.00
04/27
4.50
05/19
4.50
02/27
1.75
06/20
4.80
04/27
4.13
01/19
0.25
10/27
1.45
10/18
1.00
11/26
1.00
07/20
2.25
06/27
3.25
07/19
1.75
07/23
0.75
07/27
1.25
07/47
1.50
06/19
1.25
06/22
1.75
05/27
2.38
05/47
3.00
Bid
Price
102.06
100.09
101.74
98.96
107.66
100.55
99.01
91.92
102.19
99.14
100.38
121.79
102.19
112.15
102.62
102.05
112.90
100.46
132.01
102.62
87.89
114.04
102.28
100.20
99.29
101.97
92.07
100.42
100.80
100.29
98.35
102.13
101.72
102.47
112.90
106.91
101.19
113.00
110.87
100.90
99.03
99.45
103.02
108.65
132.75
102.99
99.92
100.50
93.20
99.80
99.73
101.19
103.60
Bid Day chg Wk chg Month
Year
Yield
yield
yield chg yld chg yld
1.79
-0.02
-0.03
-0.06
0.35
2.74
-0.03
-0.03
-0.02
0.00
-0.52
0.00
0.00
0.00
0.00
0.65
0.00
-0.02
0.00
0.00
-0.55
0.00
0.00
0.00
0.00
0.74
-0.03
-0.07
-0.18
0.00
1.26
0.00
-0.04
0.07
0.00
1.91
-0.03
-0.09
0.08
0.00
-0.41
0.00
0.00
0.00
0.00
0.59
-0.02
-0.07
-0.16
0.00
1.57
-0.01
-0.02
-0.09
0.46
0.71
0.00
-0.01
0.00
0.00
-0.41
0.00
0.00
0.00
0.00
-0.07
0.00
0.00
0.00
0.00
0.72
-0.03
-0.08
-0.20
0.00
-0.68
0.00
0.00
0.00
0.00
-0.13
0.00
0.00
0.00
0.00
0.45
-0.03
-0.09
0.00
0.00
1.19
-0.04
-0.12
-0.15
0.75
1.79
-0.09
-0.08
-1.81
-7.33
5.32
0.04
0.20
0.01
-2.95
-0.44
0.00
0.00
0.00
0.00
0.73
-0.04
-0.10
-0.22
0.26
-0.04
0.00
0.00
0.00
0.00
0.52
-0.02
-0.04
-0.19
0.00
1.99
-0.02
-0.11
-0.28
0.00
3.14
-0.01
-0.10
-0.26
0.95
-0.12
0.00
0.00
0.00
0.00
-0.06
0.00
0.00
0.00
0.00
0.07
0.00
0.00
-0.03
0.00
0.86
-0.02
0.00
-0.02
0.00
-0.61
0.00
0.00
0.00
0.00
0.57
-0.03
-0.07
-0.18
0.00
2.05
-0.02
-0.07
-0.21
0.22
2.96
-0.03
-0.02
-0.02
0.76
0.60
-0.01
0.01
-0.02
0.12
1.61
-0.02
-0.02
-0.05
0.00
0.23
0.00
-0.01
-0.06
-1.18
2.82
0.00
-0.12
-0.21
0.00
-0.35
0.00
0.00
0.00
0.00
1.55
0.00
0.00
0.00
0.00
1.48
0.00
-0.01
-0.06
0.58
0.66
-0.02
0.02
-0.03
0.52
-0.68
0.00
0.00
0.00
0.00
-0.01
0.00
0.00
0.00
0.00
0.22
-0.07
-0.04
-0.14
0.00
0.76
0.00
0.02
0.00
0.00
1.20
-0.09
-0.06
-0.19
0.00
1.79
-0.07
-0.05
-0.15
0.00
1.36
0.00
0.00
-0.04
0.00
1.81
-0.02
-0.03
-0.13
0.00
2.24
-0.03
-0.06
-0.13
0.00
2.82
-0.03
-0.09
-0.08
0.00
Red
52 Week
Change in Yield
Aug 03
Price £
Yield
Day
Week
Month
Year
High
Low
Tr 8.75pc '17
100.50
0.06
-25.00
-14.29
-45.45
-66.67 105.16 100.00
Tr 5pc '18
102.84
0.20
-20.00
-13.04
-35.48
53.85 107.85 102.83
Tr 4.5pc '19
106.82
0.21
-19.23
-4.55
-36.36 133.33 111.62 106.74
Tr 4.75pc '20
111.80
0.19
-17.39
-5.00
-45.71
0.00 117.02 111.65
Tr 1.5pc '21
104.03
0.33
-15.38
-2.94
-31.25
-5.71 106.04 103.47
Tr 4pc '22
116.32
0.41
-14.58
-4.65
-26.79
10.81 121.31 115.73
Tr 5pc '25
130.67
0.82
-8.89
-4.65
-15.46
15.49 138.11 129.09
Tr 1.25pc '27
100.47
1.20
-6.25
-4.00
-10.45
23.71 138.26
98.71
Tr 4.25pc '32
136.16
1.52
-4.40
-3.18
-6.17
16.92 148.92 131.34
Tr 4.25pc '36
140.74
1.69
-3.98
-2.87
-5.59
14.97 155.77 134.98
Tr 4.5pc '42
154.66
1.80
-3.74
-2.70
-4.76
13.21 174.65 147.41
Tr 3.75pc '52
152.86
1.73
-3.35
-2.81
-4.42
14.57 177.28 143.66
Tr 4pc '60
171.26
1.66
-2.92
-2.35
-4.05
14.48 201.27 160.01
Gilts benchmarks & non-rump undated stocks. Closing mid-price in pounds per £100 nominal of stock.
Amnt
£m
11.14
35.24
36.35
33.31
32.46
37.95
35.08
13.04
35.44
29.76
26.64
23.59
23.21
GILTS: UK FTSE ACTUARIES INDICES
Price Indices
Fixed Coupon
1 Up to 5 Years
2 5 - 10 Years
3 10 - 15 Years
4 5 - 15 Years
5 Over 15 Years
7 All stocks
Index Linked
1 Up to 5 Years
2 Over 5 years
3 5-15 years
4 Over 15 years
5 All stocks
Yield Indices
5 Yrs
10 Yrs
15 Yrs
Day's
chg %
0.14
0.53
0.77
0.63
1.22
0.70
Aug 03
96.25
185.50
216.01
192.53
336.41
181.79
Aug 03
314.36
696.18
476.97
888.21
630.94
Aug 03
0.45
1.18
1.64
Day's
chg %
0.07
1.22
0.51
1.46
1.13
Aug 02
0.53
1.26
1.71
Yr ago
0.28
0.91
1.38
Total
Return
2430.26
3499.63
4234.73
3677.60
5110.77
3569.64
Month
chg %
0.15
-0.08
-0.02
-0.11
-0.06
20 Yrs
45 Yrs
Year's
chg %
0.62
6.20
3.01
7.34
5.71
Return
1 month
0.36
1.06
1.24
1.14
1.79
1.14
Total
Return
2468.82
5187.89
3695.39
6474.10
4771.18
Aug 03
1.82
1.65
Return
1 year
0.19
0.13
-0.82
-0.29
-2.45
-1.02
Yield
0.31
0.85
1.36
1.13
1.73
1.52
Return
1 month
0.15
0.01
0.27
-0.08
0.03
Return
1 year
2.08
6.75
4.09
7.72
6.34
Aug 02
1.88
1.70
inflation 0%
inflation 5%
Aug 03
Dur yrs Previous
Yr ago
Aug 03
Dur yrs Previous
Real yield
Up to 5 yrs
-2.26
1.79
-2.22
-1.93
-3.05
1.79
-3.01
Over 5 yrs
-1.55
24.29
-1.50
-1.36
-1.57
24.37
-1.52
5-15 yrs
-1.80
8.30
-1.74
-1.54
-1.92
8.31
-1.86
Over 15 yrs
-1.52
29.45
-1.47
-1.34
-1.54
29.49
-1.49
All stocks
-1.55
22.54
-1.50
-1.37
-1.58
22.65
-1.53
See FTSE website for more details www.ftse.com/products/indices/gilts
©2017 Tradeweb Markets LLC. All rights reserved. The Tradeweb FTSE
Gilt Closing Prices information contained herein is proprietary to
Tradeweb; may not be copied or re-distributed; is not warranted to be
accurate, complete or timely; and does not constitute investment advice.
Tradeweb is not responsible for any loss or damage that might result from the use of this information.
Yr ago
1.58
1.47
Yr ago
-2.45
-1.39
-1.66
-1.36
-1.40
All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
loss arising from the reliance on or use of the listed information. For all queries e-mail
ft.reader.enquiries@morningstar.com
Data provided by Morningstar | www.morningstar.co.uk
★
18
FINANCIAL TIMES
Friday 4 August 2017
MARKETS & INVESTING
Capital markets
Capital markets
Debt investors turn against retail sector
Consumer confidence across
emerging markets on a high
Consumer confidence
across emerging markets
has risen to its highest
level since 1993, according
to a proprietary index
operated by Pictet Asset
Management, a Swiss
investment house.
The measure, which
aggregates data from
25 countries, has jumped
since the turn of the year,
suggesting that a modest
rise in consumption and
broader economic growth
in emerging markets have
further to run.
The Pictet data are more
upbeat still than the
buoyant sentiment
readings coming from the
developed world. In the US,
the Conference Board’s
Consumer Confidence
index has this year risen to
its highest level since
2000, while last Friday
the European Commission
said that its Economic
Sentiment Indicator had hit
its highest level since
August 2007.
Patrick Zweifel, chief
economist at Pictet AM,
Russia’s economy,
which is recovering
from a recession, has
seen a strong rise in
consumer confidence
in the past 12 months
says that while he can
“pretty much understand”
the strong rise in his EM
sentiment indicator since a
trough in April 2016, the
high absolute level of the
index is harder to explain.
Likewise William
Jackson, senior emerging
market economist at
Capital Economics, a
consultancy, says while
consumer sentiment across
central and eastern Europe
has risen to multiyear
highs off the back of
declining unemployment
and surging wage growth
and that there are signs
that retail sales growth is
picking up more broadly,
especially in Brazil and
Russia “where things have
been very difficult in recent
years”, he is surprised that
the headline reading is
above the levels seen
immediately before the
global financial crisis.
Nevertheless, Pictet’s
consumer confidence index
hit 109.1 in May, higher than
a reading of 102.6 in
January, and comfortably
ahead of the pre-crisis
peak of 105.9, seen in
December 2007.
Since the index was first
formulated in 1989, it has
been higher only once, in
Upbeat
EM consumer
confidence
110
September to December
1993.
The index is based on
raw data from national
statistics offices,
aggregated and weighted
by purchasing power
parity-adjusted gross
domestic product, using
Pictet’s estimate of fair
value for exchange rates.
This latter adjustment
reduces the weighting of
China and India, although
Mr Zweifel says China still
has a large weighting.
Perhaps unsurprisingly,
Brazil and Russia, two
countries recovering from
recessions, have seen some
of the strongest rises in
consumer confidence in
the past 12 months.
However, the pair are
sandwiched by China.
where economic growth,
although firming, has not
risen dramatically.
Mr Zweifel partially
attributes the rise in
Chinese sentiment to
improving labour market
conditions, with real wages
rising and the employment
component of China’s
purchasing managers’
indices, alongside other
measures, pointing to
employment growth.
Exchange rate
uncertainty also has “a big
impact on consumer
behaviour” in China, he
says. Last year, the
market for one-year
non-deliverable forward
contracts in the renminbi
pointed to a 4-5 per cent
decline in the Chinese
currency against the dollar
over the coming 12 months.
Now the priced-in
decline is “down to virtually
nothing”, something Mr
Zweifel says matters a lot
to ordinary Chinese people.
“It’s on the front page of
newspapers, people study
the NDFs,” he says.
In contrast, Mexico has
seen the largest fall in
confidence since this time
last year, despite the
unemployment rate having
fallen to an 11-year low of
3.3 per cent.
Mr Zweifel says his
analysis suggests that
unemployment is not a
factor that typically drives
a country’s consumer
confidence reading.
Instead, he believes the
glum Mexican mood is
related to declining real
wages, thanks to a pick-up
in inflation resulting from
the peso’s sell-off in the
aftermath of the election of
Donald Trump.
Alongside changes in
real wages, he says the key
factors driving sentiment
across emerging markets
are changes in the inflation
rate and stock market
performance — the MSCI
EM equity index is up 23.4
per cent so far this year.
Steve Johnson
EM private consumption
(annual % change)
10
8
100
6
4
90
2
80
1990
95
2000
05
Source: Pictet Asset Management
10
17
0
Lower demand for loans
on malls raises risks for
those needing to refinance
JOE RENNISON — NEW YORK
The inclusion of loans to bricks-andmortar retailers in commercial mortgage-backed securities has halved since
2010, as investors cool over providing
financing for an industry under siege
from ecommerce.
The retail sector has accounted for an
average of just over 24 per cent of the
loans underlying newly issued CMBS
assessed this year by the credit rating
agency Fitch. That is down from 31.4 per
cent last year and 51.5 per cent in 2010.
Figures from S&P Global, another rating
agency, illustrate the same trend.
The drop reflects an assessment that
retail mortgages in CMBS have lost their
allure for asset managers and hedge
funds, as the rise of ecommerce and
changing consumer spending habits
have upended traditional retailers. This
has shifted the focus on to the creditworthiness of ailing US regional malls,
which suffer a loss of rental income
when big-name tenants depart.
“The entire investor community is
definitely more conscious of retail exposure and the quality of that retail exposure,” said Darren King, a portfolio
manager at Semper Capital. “There are
fewer secondary- and tertiary-quality
assets appearing in CMBS because of
those concerns.”
The struggles of bricks-and-mortar
retail is raising the stakes for borrowers
as a wave of retail loans come due
for refinancing, with banks less likely
to advance a new mortgage if demand
from investors in the CMBS market has
declined.
“You used to be able to kick the can
down the road,” said Mr King. “The can
is now at the end of the road.”
With many retail loans maturing and
fresh issuance dwindling, the outstanding stock of retail loans in existing CMBS
is also falling sharply, said Karina
Estrella, a research analyst at Trepp.
The value of retail sector loans in CMBS
stands at $103bn, according to Trepp
data, down from $193bn in 2010.
The ambition and frequent success
Amazon has had in expanding its online
operations deeper into the retail sector
has intensified the competition for
many traditional retailers.
As retail concentration has
declined, mortgages on office
properties have increased as a proportion of CMBS, which also partly reflects
24%
Retail’s share of
loans underlying
new CMBS this
year, down from
51.5% in 2010
$103
bn
Value of retail
sector loans in
CMBS this year,
down from
$193bn in 2010
investor demand. Offices comprise
43.3 per cent of the CMBS transactions
rated by Fitch so far in 2017, up from
28.7 per cent in 2016.
Following the election of Donald
Trump in November, expectations of a
stronger US economy prompted analysts to forecast the need for more office
space as the economy strengthened.
But Tracy Chen, head of structured
credit at Brandywine Global Investment Management, said the prices of
office-backed loans had begun to falter,
following a combination of tepid economic data and the US administration’s
struggles to pass stimulative economic
policies.
“Office exposure has been increased
to compensate the decline in retail. But
business needs for space have reduced,”
she said. “You have multiple sectors to
worry about.”
Analysis. Capital markets
Maturing bond flows are Europe’s ‘silent stimulus’
ECB plan to recycle proceeds
from debt promises to alleviate
effects of policy tightening
Germany will make up the
largest proportion of ECB
reinvestments
Reinvestment as share of
€60bn-a-month purchase rate (%)
Germany
Spain
France
Netherlands
Italy
Finland
MEHREEN KHAN
Global investors are preoccupied by
speculation about the European Central
Bank’s tapering plans, but another
strand in its more than two-year experiment with bond buying is starting to
garner attention.
Under its quantitative easing policy,
the ECB in March began reinvesting
all the money from the maturing debt
on its €4.2tn balance sheet back into
the eurozone bond market. This will
accelerate in the coming months as
more of the central bank’s portfolio of
bonds mature.
Such reinvestment flows will top
€120bn next year, according to an estimate from Nordea, the Nordic bank.
The monetary authority will therefore
retain a hefty presence in eurozone debt
markets years after the formal end of
its QE.
Its buying will keep a lid on bond
yields, and low borrowing costs will
remain an important source of support
for the economy, equities and riskier
types of debt.
“Reinvestment is the silent stimulus
measure that should not be underestimated by markets,” says Piet Christiansen, rates strategist at Nordea.
The ECB’s reinvestment scheme follows in the footsteps of QE programmes
in the US and UK, where long-term
Treasury and gilt yields remain low.
After halting purchases in October
2014, the Federal Reserve continued
reinvesting proceeds from debt maturing on its $4.5tn balance sheet, and only
recently appears close to scaling back
this type of buying.
However, there are important differences between the eurozone and US
central banks in how the recycling of
bonds will work. The most striking difference is the lack of detail from the ECB
on where the money will go. Officially
the central bank has said only that reinvestment will be carried out in a “flexible manner”. Maturing bonds will be
redeemed and reinvested “in the month
they fall due or in the following months
if needed”.
Investors remain in the dark on
whether proceeds from maturing corporate bonds will be pumped back into
the same asset class or switched into
sovereign bonds. What is more, whether
maturing German government bonds
are recycled back into Bunds of the
same maturity is an open question.
Louis Harreau, rates strategist at
Crédit Agricole, expects eurozone policymakers to remain tight-lipped on the
details to gain “enough flexibility to be
able to respond” to economic condi-
40
30
20
10
2018
20
22
24
0
26
Bonds in the ECB's portfolio
maturing in December 2017
$bn
Others
Supras
Netherlands
Italy
France
Spain
Germany
300
250
200
150
100
50
0
2017 20 22 24 26 28 30 32 34 >34
Sources: Nordea Markets; ECB; Bloomberg;
Crédit Agricole CIB
Going with the
flow: ECB
policymakers in
Frankfurt are
taking a lead on
reinvestment
from their
counterparts in
Washington
and London
Jasper Juinen/Bloomberg
tions. “We don’t have much precision on
the way the ECB will conduct its reinvestment,” he says.
One consequence of the lack of information is that the issue has fallen off
the radar of bond investors that remain
fixated on the likelihood of the ECB signalling a further tapering of monthly
bond purchases this year, adds Mr
Christiansen.
“The market is probably not aware of
the degree of reinvestment coming . . .
which will be sizeable,” he says.
When Mario Draghi unveiled the reinvestment scheme in December 2015 the
ECB president said it would ensure “the
conditions of quite abundant liquidity
and high excess liquidity will continue
for a long, long time”.
Maturing bond flows are intended to
keep monetary conditions in the eurozone accommodative even as the ECB
begins to trim its net purchases. The
amount has already been reduced from
€80bn to €60bn a month in April, and
markets expect a formal tapering
announcement in September or October this year.
Reinvestment flows will peak at about
€212bn in 2019 and then again in 2023,
according to estimates from Crédit Agri-
cole. By this point markets expect the
ECB to be well into tightening cycle,
with net bond-buying having petered
out by the end of 2018.
For investors that want to know
which eurozone assets will benefit
most from this perennial stimulus,
there are clues.
The ECB is likely to stick to its “capital
key” rules, where the proportion of gov-
‘The market is probably
not aware of the degree
of reinvestment coming,
which will be sizeable’
ernment debt purchased is in line with
the size of the member state economy,
analysts say. Germany would thus
secure the biggest share of reinvestment
flows, with about a third of the total.
Nordea puts the recycled cash heading
into Bunds at €42bn in 2018.
“Core eurozone countries like Germany and the Netherlands will benefit
disproportionately, damping the effect
of tapering,” says Kim Liu, fixed income
strategist at ABN Amro.
He expects an initial surge in Bund
yields around the ECB’s formal tapering
announcement, only for yields to ease
back during 2018.
Reinvestment plans will quickly hit
supply constraints, according to several
strategists, as the central bank scrambles to buy high-quality assets that are
already in short supply.
Crédit Agricole estimates that the
ECB will hold a third of all outstanding
German bonds on its balance sheet by
the end of its QE programme in 2018 —
hitting its self-imposed limit of 33 per
cent for each issuer.
“Scarcity is already biting,” says Mr
Harreau. “The ECB will find it difficult
to keep reinvesting within these constraints.”
Policymakers could be forced to
buy debt issued by supranational institutions such as the European Stability
Mechanism, the eurozone’s bailout
fund, or the European Investment
Bank.
Investors will do well to take heed of
Mr Draghi’s assurances that an exit from
emergency-era stimulus measures will
be steady and gradual. As in the US,
monetary stimulus in the eurozone will
resonate for markets well beyond the
formal end of QE.
Equities
Virtu shuts London prop trading unit of KCG because ‘numbers did not add up’
PHILIP STAFFORD — LONDON
NICOLE BULLOCK — NEW YORK
Virtu Financial is closing the London
proprietary trading businesses of KCG
Holdings following its $1.4bn takeover
of its rival. It will, however, retain a team
in the City to build customer business.
The New York group said it was committed to keeping an operation in the
UK capital but said it would run two
businesses in Europe as part of a
restructuring of KCG. The decision is
not related to Brexit.
The purchase of KCG turned Virtu into
one of the biggest participants in the US
equity market with about one trade in
five. Part of the logic behind the deal was
to achieve savings at a time when the
industry has been under pressure from
rising costs and lowprofitability.
Virtu’s market-making business will
continue to be based in Dublin, while
London will house KCG’s more clientfacing business, ending rumours that
the UK office might close.
“The foundation of KCG’s European
business is a great client franchise cou-
pled with the upside potential that Mifid
II will bring,” Joe Molluso, Virtu’s chief
financial officer told the Financial
Times, referencing the European markets legislation that will toughen rules
around ensuring customers get the best
available price for a deal. “However, the
numbers [at KCG] just did not add up.”
He said the European businesses was
running with annual losses of about
$30-$40m.
“We are on schedule to shut down
the unprofitable prop trading businesses that were largely duplicative of
Virtu intends to retain a team in
the City to build customer business
Virtu’s while focusing the business on
delivering better products to clients by
combining Virtu’s technology and trading acumen with the existing franchise,” he said.
In the US KCG is best known for trading equities for large institutions, especially orders collected from retail customers. In Europe, where retail investors have a smaller presence, KCG targeted business that had been
outsourced by local banks struggling
with rising compliance and IT costs.
But the subdued volatility across
financial markets hurt profits and KCG
was unable to persuade enough customers to use its systems. Revenues at KCG’s
international business, which was in
large part its European unit, fell from
£189m in 2014 to $103m in 2016, and it
accrued losses of about $30m.
Virtu declined to comment on headcount. Analysts are expected to press
the company for details on lay-offs next
week when it reports its first results
since the deal closed. KCG employed
more than 900 people globally, more
than six times as many as Virtu.
★
Friday 4 August 2017
19
FINANCIAL TIMES
MARKETS & INVESTING
TRADING POST
Michael
Hunter
Goldilocks’ particular taste in porridge
has given investors one of their most
enduring metaphors. The fairytale
character’s demands for a breakfast
that is neither too hot nor too cold has
often been used to describe a market
that also looks just right.
According to JPMorgan’s latest
asset allocation strategy overhaul,
strong earnings and a lingering lack of
inflation amount to “better-thangoldilocks” conditions, also supported
by what it calls “at least some
probability” for US tax reform.
But the US bank warns that while
the sweet spot can last a little longer,
“without any signs of improved
productivity growth, the odds remain
that inflation will come eventually”.
Such a development could also
coincide with monetary policy
normalisation at the Federal Reserve
and the European Central Bank, and
the dangers of taper tantrums that can
track reduced stimulus spending.
“In this world, equities have further
upside but bonds are in danger,” warns
the US bank’s Jan Loeys.
At the same time as keeping an
overweight position in equities but
moving it nearer cycle averages, and
cutting exposure to bonds, Mr Loeys
advocates “a small underweight”
position for commodities.
“We also find that buying S&P 500
puts conditional on gold [prices] falling
is attractively priced as a taper
tantrum hedge,” he says.
After all, don’t forget the end of the
Goldilocks fairytale. Having enjoyed
breakfast, she ends up running for her
life, pursued by three enraged bears.
michael.hunter@ft.com
S&P 500 and gold
$ per troy ounce
S&P 500 index
2400
2200
2000
1800
Jan 2016
Source: Bloomberg
XAU currency
1400
1300
1200
1100
1000
2017 Aug
Global overview
Risk-off tone prevails ahead of
US non-farm payrolls numbers
London shares jump
as BoE provides dovish
blow to sterling, while
crude stays in sight of
recent 2-month highs
DAVE SHELLOCK
Global markets displayed a broadly
“risk-off” bias ahead of the release of US
non-farm payrolls data with Wall Street
showing signs of fatigue after its recent
steady ascent as participants favoured
Treasuries, Bunds and the yen.
The dollar had a choppy session as a
soft US service sector report unsettled
participants ahead of the jobs figures,
while UK assets provided a big focus
after the Bank of England left interest
rates unchanged and cut its forecast for
GDP growth this year.
Oil prices had another volatile session
in the wake of data on Wednesday that
showed US crude inventories falling
below levels seen at this time last year.
By midday in New York, the S&P 500
index was down 0.2 per cent at 2,472.
The US equity benchmark ended the
previous session within a whisker of the
record close it set last week.
The Dow Jones Industrial Average,
meanwhile, was flat but still above the
22,000 milestone it surpassed on
Wednesday. It hit an intraday record of
22,040.67 in early trade.
The technology-heavy Nasdaq Composite index was 0.2 per cent lower with
Apple down 0.5 per cent after hitting a
record high during the previous day.
The pan-European Stoxx 600 index
eked out a gain of less than 0.1 per cent,
while the Xetra Dax in Frankfurt shed
0.2 per cent.
But equity bulls were firmly in charge
in London with the FTSE 100 rising 0.9
per cent after the Bank of England’s latest policy decision provided a dovish
disappointment for sterling.
Sotheby’s
Bryce Elder
British American Tobacco was the FTSE
100’s main support yesterday as a
weaker pound powered the London
market sharply higher.
BAT rallied 3.1 per cent to £50.04,
its highest level since the US Food and
Drug Administration said last month
it could cut nicotine in cigarettes to
non-addictive levels. JPMorgan
Cazenove argued that concerns about
The BoE’s Monetary Policy Committee voted 6-2 to maintain the policy status quo — compared with 5-3 at the June
meeting — and lowered its forecast for
2017 GDP growth to 1.7 per cent from 1.9
per cent.
“The slightly more cautious growth
projections, dichotomy of MPC views
and lack of coherent policy bias means
that the bar for a 2017 policy move still
remains pretty high,” said Viraj Patel,
FX strategist at ING.
“We continue to see a credible BoE
rate hike debate being more of a 2018
story.”
The yield on the 10-year UK gilt fell a
hefty 7 basis points to 1.16 per cent while
the pound was down 0.7 per cent against
Earnings missed analyst expectations
of $1.48 a share, with David Schick at
Consumer Edge Research noting that
the miss could be attributed to “lower
auction commission margins” than
analysts had modelled for.
Sotheby’s said it expected
“meaningful improvement” in those
margins in the fourth quarter.
Revenues were 5 per cent higher
than a year ago to $314.9m, driven by
stronger inventory sales, just shy of
estimates.
US stocks broadly retreated from
record highs even as the Dow Jones
Industrial Average hovered above the
22,000 level. By lunchtime in New York
the S&P 500 was down 0.2 per cent to
FDA regulation have been excessive.
“Bigger picture, we do not see the
FDA’s landmark decision as a frontal
attack on the industry [ . . . ] but rather
an attempt to accelerate the switch to
novel nicotine products”, JPMorgan
said. “Bottom line, the FDA’s unique
science-based approach provides a
backstop for potential policy errors
while we continue to believe the tobacco
sector will be even more attractive post
[next generation product] conversion.”
BAT will be the fastest-growing
member of Europe’s large-cap staples
sector next year thanks to Glo, its
smokeless tobacco brand, JPMorgan
forecast. Meanwhile, its highly
profitable Reynolds unit in the US can
keep taking market share and squeezing
prices higher, which means BAT’s free
cash flow has the potential to double by
2020, forecast the broker, which put a
£56.10 price target on BAT shares.
A retreat for sterling from an 11month high helped lift the wider market
as the FTSE 100 added 0.9 per cent, up
63.34 points to 7,474.77.
Next led the blue-chip risers, up 9.7
per cent to £44.01, after its half-year
results showed an unexpected
improvement in full-price sales.
Medical device maker ConvaTec
dropped 6.4 per cent to 289.3p after
higher than expected costs and
disappointing sales of wound care
products meant its interim results
missed forecasts.
Guidance from the management on
wholesalers clearing stockpiles “is likely
to provide temporary comfort to a
nervous investment community post
results, which were the second
consecutive quarterly consensus miss”,
said Morgan Stanley.
“However, such confidence puts
pressure on the management team to
deliver on both organic sales growth
acceleration and on margin execution in
the second half. This is likely to provide
a stock overhang until the year-end
result.”
Esure was 4.3 per cent weaker at
282.4p even after its interim earnings
came with narrowed rather than
improved 2017 guidance. Earnings from
the car insurer matched forecasts.
Satellite operator Inmarsat fell 3.7 per
cent to 759p. Though its second-quarter
results beat expectations, that reflected
a one-off, confidential government
contract that had not previously been
disclosed. Underlying revenue
disappointed with Maritime, Inmarsat’s
largest unit, contracting 5 per cent.
Jan
2017
Aug
60
50
40
30
Source: Thomson Reuters Datastream
Day's
Indices
S & P 500
Close
change
2471.65
-5.92
DJ Industrials
22014.96
-1.28
Nasdaq Comp
6344.29
-18.36
Russell 2000
1204.70
-8.35
10.17
-0.11
US 10 yr Treas Bd
2.24
-0.03
US 2 yr Treas Bd
1.36
-
Mamta Badkar
London
BAT rally and
weaker pound
puff up FTSE 100
Michael Nagle/Bloomberg
Contagious investor confidence: FT.com
Low volatility encourages risk-taking. The FT’s Dan McCrum
says confidence is infectious and most of the world has it
2,472.34, the Dow was flat at 22,019.76,
while the technology-heavy Nasdaq
Composite had dropped 0.3 per cent to
6,345.83.
Fitbit surged more than 15 per cent to
$5.85 and was on course for its biggest
one-day rise since 2015, after the maker
of fitness trackers said its secondquarter sales had fallen less than feared
and indicated that its smartwatch
would be available ahead of the holiday
season, alleviating concerns about a
launch delay.
Revenue was nearly 40 per cent lower
than a year ago at $353.3m, but that was
a shallower drop than analysts had built
into forecasts for revenue of $341.2m.
Adjusting for one-off items, the EPS
loss of 8 cents was narrower than the
15 cents analysts had estimated.
Investors welcomed remarks by
James Park, chief executive, that Fitbit’s
smartwatch — which will feature more
precise GPS tracking, a music player
and biometric sensors — would “drive a
strong second half”.
Wyndham Worldwide rose after it
said it would spin off its hotel business
and consolidate its timeshare
businesses to create two separate
publicly traded companies. The shares
rose more than 1 per cent to $104.29.
The names of the two companies have
not been finalised and Wyndham said it
would explore options for its European
rental brands. The plan is subject to
board approval but does not require a
shareholder vote.
VIX
Sotheby’s fell yesterday after secondquarter profits slid as higher agency
commissions and fees were offset by
increased investment in technology and
specialist expertise as the auctioneer
attempts to drive growth.
The 273-year-old group, which
notched a record close of $57.70 in late
July, fell as much as 7.3 per cent before
trading 5.5 per cent lower at $52.67. Its
year-to-date gains are about 32 per cent.
Net income of $76.9m was 14 per cent
lower than the $12.1m recorded during
the period last year.
Earnings per share slid 6 per cent to
$1.43, from $1.52 last time, as the
number of outstanding shares declined
following buybacks.
S&P 500 index
Change on day
Jul
Share price ($)
Wall Street
Sotheby’s sinks amid
mixed appraisal of
auction commissions
Markets update
the dollar at $1.3129 and the euro gained
0.9 per cent to a nine-month high of
£0.9043.
“While the immediate fallout for the
pound should be contained given the
limited scope for the UK rate curve to
flatten further, we continue to see nearterm downside risks,” Mr Patel said.
“The BoE’s patient policy approach
means that sterling can be bucketed
into those currencies vulnerable to
being sold under the theme of monetary
policy divergence.”
Meanwhile, the euro was up 0.2 per
cent against the dollar at $1.1880 — having briefly traded above $1.19 on
Wednesday for the first time since January 2015. The US currency was down 0.2
per cent versus a weighted basket of
peers and close to the 15-month low it
hit on Wednesday.
The Institute for Supply Management’s non-manufacturing index fell to
an 11-month low of 53.9 in July from 57.4
— a much bigger fall than expected.
“The weakness was fairly broadbased,” noted Andrew Hunter at Capital
Economics.
“The employment index ‘only’ fell to
53.6, from 55.8, which leaves it loosely
consistent, on past form, with private
services payrolls rising at a reasonably
healthy rate of around 160,000 in July.
“That does, however, point to some
downside risks to our forecast that overall non-farm payrolls increased by
200,000 last month.”
The Japanese yen outperformed most
of its G10 peers — reflecting the broadly
cautious mood across the markets. The
dollar was down 0.5 per cent at ¥110.12,
the euro was 0.3 per cent lower at
¥130.82 and sterling was down a hefty
1.2 per cent at ¥144.72.
Highly rated government bonds were
mostly stronger with the yield on the 10year US Treasury — which moves
inversely to its price — down 2 basis
points at 2.24 per cent and that on the
10-year German bond slipping 3bp to
0.46 per cent.
The weaker dollar and lower bond
yields offered some support to gold with
the metal up $2 at $1,268 an ounce.
Oil prices stayed in sight of recent
two-month highs but turned increasingly choppy as the session wore on.
Brent, the international crude benchmark, was up 0.7 per cent at $52.73 a
barrel, although West Texas Intermediate, the main US contract, was down 0.5
per cent at $49.36.
Figures from the Energy Information
Administration on Wednesday showed
commercial crude inventories falling
1.5m barrels last week to 481.9m, below
where they were a year earlier — indicating a tightening US market.
0.25%
2017
Aug
2480
2460
2440
2420
2400
US equities The Dow Jones Industrial
Average managed to hold above the
22,000 level but the S&P 500 and
Nasdaq Composite slipped as tech
stocks came under fresh pressure
FTSE 100 index
Change on day
Jul
0.85%
7500
7450
7400
7350
7300
2017
Aug
UK equities The FTSE 100 closed at
its highest for a week as exporters
were lifted by a sharp retreat for the
pound after the Bank of England left
interest rates unchanged
Eurofirst 300 index
Change on day
Jul
2017
0.12%
1520
1510
1500
1490
1480
Aug
European equities Siemens fell 3.1 per
cent after it said it would delay listing
its healthcare unit, although UniCredit
leapt 7.2 per cent after reporting its
best quarterly profit in nearly a decade
Nikkei 225 index
(’000) Change on day
0.25%
20.2
20.1
20.0
19.9
Jul
2017
Aug
Japanese equities Profit-taking in the
tech sector after Wednesday’s Appleinspired gains weighed on the Nikkei,
with Advantest falling 2.9 per cent
★
20
Friday 4 August 2017
Analysis. Capital markets
INSIGHT
Brexit shadow lingers over UK rates outlook
Dan
McCrum
Mifid II promises
bankers a revival of
‘Death of a Salesman’
A
good rule of thumb in finance for anyone
seeking Porsches and private schools is to get
as close to the money as possible. At investment banks jobs talking to important clients
are prized, and polished salespeople used to
thrive as the face of an institution. Not for nothing is it
known as the sell-side.
Yet the ranks of salespeople on trading floors have been
severely thinned in recent years, as markets have changed
and technology intervened.
Electronic trading has replaced personal interaction,
instant messages have usurped phone calls. Recruiters and
bankers estimate that staff numbers on the typical London
sales desk have more than halved since 2008.
What threatens to kill off the salesman for good, however, is a change in European regulation scheduled to
arrive in little more than 150 days. Mifid II is a directive
designed to increase transparency and reduce conflicts of
interest between fund managers and brokers.
Much comment has focused on the effect on research
departments of rules governing how asset managers pay
for banks’ services. But profound changes coming to trading floors around the world have received less attention.
From January an asset manager will still be able to pay
for services through trading commissions, in effect using
small amounts of client capital to reward a bank for suggesting which stocks or bonds to buy.
However, fund managers will have to price each service
they receive, and show how
research contributes to better
The European
investment decisions, ruling
out inducement.
rules are
Banks will have to identify
intended to
which services count as
research, and provide clients stamp out
with an unbundled breakinducements
down of the cost of research,
execution and other advisory
services.
Notice what is missing. How many people are going to
stick their hand up and say, ‘Yes, we really have to write a
cheque for my salesperson’?
It is not as if the sell-side will need to find a new name;
the business of selling ideas will remain. It’s just that the
sales job is no longer close to the money. This starts to look
a lot more like someone flogging research subscriptions
than an all-purpose — and valuable — concierge.
Change has yet to arrive in part because banks and brokers have been engaged in a game of chicken. In equities
they are still working out what the price of research should
be, and the model for providing it.
One way could be to carry on as before, covering as many
stocks as possible, using young analysts to do so cheaply.
Poaching of well-regarded and expensive old hands has
returned, however, so high value for high prices may be the
answer. The Financial Times reported this week that star
analysts’ time might be priced at $5,000 an hour for an
in-person meeting.
Decisions have to be made, and the point is that the consequences will soon be felt across the Atlantic as well. Big
investment banks have global research platforms and a
global client base, which is a selling point for access.
Insights are available from strategists, analysts and economists in every part of an interconnected world.
Imagine, however, trying to tell an asset manager with
staff in London and Boston that the European price for
access is a fraction of that in the US, when this is paid with
investor’s money. The fund manager’s US compliance
officer says that looks like a lawsuit waiting to happen. Her
European counterpart sees an inducement to trade —
exactly what Mifid II is designed to stamp out.
Or try to set a high price for fund managers with no
European operations, which works until someone in Boston crosses the street to a new job and lets those fund managers in on the European price.
Tools, processes and procedures are being developed to
put a price on every interaction between an asset manager
and an investment bank. The idea that they will be used
only in the service of European rules is fanciful.
As Arthur Miller wrote of Willy Loman, his washed-up
salesman: “He’s a man way out there in the blue, riding on
a smile and a shoeshine. And when they start not smiling
back — that’s an earthquake.”
dan.mccrum@ft.com
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Divorce plan uncertainty
has put BoE to the back of
the policy-tightening queue
10-year gilt yield
Per cent
3.0
2.5
2.0
THOMAS HALE
While investors try to calibrate which
central bank will tighten next, uncertainty over the UK’s divorce negotiations with the EU has pushed the Bank
of England towards the back of the pack.
A weaker pound and a two-year gilt
yield dipping below the BoE’s base rate
of 0.25 per cent were the immediate
market reaction on Wednesday after the
central bank kept rates unchanged and
cut its growth forecasts for the UK.
Sterling and gilts were swept up in the
reverberations across markets in late
June when a gathering of central bankers in the Portuguese resort of Sintra
had investors anticipating a co-ordinated move towards less easy policy.
But the mood has changed for traders
looking at UK markets. “If you go back
six weeks ago, the market was having to
price a risk of a rate hike this year,” says
Thomas Sartain, fund manager at
Schroders. “That probability had gone
up quite significantly.
“As the data’s come out a bit
softer . . . those odds have gone down —
hence the reaction today.”
Expectations for the first 25 basis
point rate rise have been pushed back to
December of 2018, according to analysts
at RBC Capital Markets. Before the Monetary Policy Committee’s meeting this
week, August had been pencilled in.
The challenge for investors is how to
interpret the BoE’s latest message. Aside
from the question of when a rate rise
may occur, a big complication is the role
of Brexit, which Mark Carney, BoE governor, pointed to repeatedly in his meeting as having weakened the pound and
increased inflation.
“We have been operating in exceptional circumstances,” he said at a press
conference after the release of the quarterly inflation report. “We will be for
1.5
1.0
2012 13
The company, owned by
Thomson Reuters and 11 of
the biggest investment
banks, said yesterday it had
submitted an application to
the Dutch regulator to establish a fully regulated entity
within the EU.
For the past two decades
dozens of trading venues for
bonds and shares have used
their London operation as a
passport to enter markets in
Europe. The move by
Tradeweb, which has its
headquarters in New York,
underlines how many of
them are enacting plans to
ensure they retain access to
the EU in the event the UK
leaves without any transitional arrangements in place.
“There is uncertainty now
and we don’t know what is
going to happen, but 2019
will come quicker than people realise,” said Enrico
Bruni, head of Europe and
Asia at Tradeweb. “We need
to manage the uncertainty
today.”
Tradeweb has become one
of the world’s largest electronic venues for over-thecounter markets, with
around half its European
business coming from outside Britain. Although it will
remain in London, where it
employs around 180 people,
it is also creating a separate
business for the EU.
Amsterdam scored highest
in its requirements of an EU
base, Mr Bruni said, pointing
to a regulator that under-
16 17
0.5
Monthly change (£bn)
20
10
0
2013
14
15
16
17
-10
Sources: Thomson Reuters Datastream;
Bank of England
The odds of a
BoE rate rise
this year have
lengthened
while the
consensus
elsewhere has
shifted towards
‘normalisation’
Simon Dawson/Bloomberg
Amsterdam chosen as
Tradeweb’s EU base
Tradeweb, the US fixed
income and derivatives
trading venue, has followed
rival MarketAxess in turning to Amsterdam as its new
base from which to access
EU markets after Britain
leaves the trading bloc.
15
Gilts held by overseas
investors
Capital markets
PHILIP STAFFORD
14
stood trading businesses, a
stable legal structure, transport links and its position at
the centre of the continent.
Many financial services
companies have opted to
locate their post-Brexit EU
operations in Dublin or
Frankfurt, but the Dutch city
is emerging as a viable alternative. Over the past two
weeks MarketAxess, the
largest US corporate bond
trading venue, and Japanese
bank MUFG have also chosen
Amsterdam.
It has a long history as a
trading centre, and is home
today to some of the industry’s oldest and biggest highfrequency traders such as
Optiver, IMC and Flow Traders. ICE Clear Netherlands,
the clearing house, will also
be beefed up next year when
it takes the derivatives and
commodities business of
Euronext.
Other London-based venues are set to make their
decisions on a post-Brexit
hub in the EU in coming
months, either by expanding
businesses at existing offices
in Europe or seeking regulatory approval to set up
entirely new entities.
Tradeweb will also establish a trade reporting hub for
companies, banks and institutional investors to report
over-the-counter market
data in Amsterdam. From
January, new markets rules
will set tougher standards
relating to the quality of
transaction data for fixed
income, derivatives and
exchange-traded markets.
Improvements in the trading data will be the responsibility of the regulated venue,
and many are worried they
will have to maintain parallel
reporting in the EU after
Brexit.
some time, because of the extraordinary nature of the Brexit process.”
Investors in UK government and corporate bonds have benefited from the
BoE’s response to Brexit, when it cut the
main interest rate to its record-low level
of 0.25 per cent. Additional purchases of
gilts helped pull yields lower and
boosted prices. The BoE also bought
£10bn of corporate bonds, igniting a
strong performance for the sector.
More than a year on from the vote,
there is a sense in which Brexit is continuing to support sterling fixed-income
markets by encouraging caution among
policymakers.
“Ordinarily you’d expect US and UK
economies to be relatively co-ordinated
in terms of where they are in the economic cycle,” said David Hollis, multiasset portfolio manager at Allianz. “The
key with the UK is Brexit is clearly an
uncertainty, and that’s why they’re not
necessarily in a hurry to raise rates.”
The process of leaving the EU has
severely weakened the pound against
the euro. Sterling fell to its lowest level
against the euro in nine months yesterday. In turn the two-year gilt dropped to
0.21 per cent, extending a decline from
its post-referendum peak of 0.35 per
cent in late June.
Neil Mellor, senior currency strategist
at BNY Mellon, noted after the meeting
that the currency was due a hit after
June’s meeting, when the MPC split 5:3
in favour of holding rates. This week the
split was 6:2. “Ahead of the report, we
felt that the pound was living on borrowed time,” he said.
The June vote had “probably constituted ‘peak-hawk’ [for] the MPC in
2017”, he added.
Yet the BoE’s language was not
straightforwardly dovish. “If the economy follows a path broadly consistent
with the August central projections,
then monetary policy could need to
be tightened by a somewhat greater
extent over the forecast period than the
path implied by the yield curve underlying the August projections,” its statement read.
Analysts at RBC Capital Markets said
the market was “not sure” about the
MPC’s conclusion on rates, arguing that
investors were “put more “weight on the
weaker near-term outlook” than on
more optimistic aspects of the forecast.
Marc Chandler, head currency strategist at Brown Brothers Harriman,
pointed out that the BoE was forecasting
a smooth exit from the EU.
The UK, grappling with leaving the
EU, seems distant from broader shifts in
monetary policy.
Any “premature rate hike” presented
“the overwhelming risk” for the BoE,
said Ben Edwards, fixed income manager at BlackRock. “A ‘normalisation’ of
policy on this side of the Atlantic seems
very far off indeed”.
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