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Financial Times – May 2, 2018

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Newspaper of the Year
WORLD BUSINESS NEWSPAPER
WEDNESDAY 2 MAY 2018
US vs
China
EUROPE
AI arms race: who will sweat the data the
hardest? — BIG READ, PAGE 7
Martin Wolf on Beijing’s incomprehension of
Trump’s trade war — COMMENT, PAGE 9
Dollar rises
sharply as Fed
debates rates
Germany’s heirs
Postwar riches have created an
‘inheritance wave’ — WORLD, PAGE 3
May 1, 2018
Briefing
$92.369
i Tech and energy buck investment trend
As of 17:30 BST
The dollar rose near its highs for the
year against a basket of major currencies yesterday as the Federal Reserve’s
policymaking Open Market Committee
gathered in Washington for today’s decision on interest rates.
Although the Fed is not expected to
tighten monetary policy at its meeting,
the strength of the US economy — which
has seen rising wages and inflation —
has pushed the dollar higher as the foreign exchange market frets over new
signs of weakness in the eurozone and
other European economies. The Fed has
jumped ahead of counterparts including
the European Central Bank and Bank of
England in tightening policy, contributing to the dollar’s recovery.
Markets pages 19 & 20
A small group of technology and energy companies
has driven a rebound in US capital expenditure,
bucking expectations that boards would distribute
most of their tax windfalls to shareholders.— PAGE 11
i Iran signatories seize on Israeli evidence
Mar 26, 2018
European signatories to the nuclear deal have said
Israeli premier Benjamin Netanyahu’s claims about
Tehran’s alleged weapons programme bolstered the
case for having an accord in the first place.— PAGE 2
$89.03
i Swiss probe PetroSaudi pair over 1MDB
Prosecutors have launched a criminal probe into
officials at the Saudi oil group in an escalation of the
scandal at Malaysia’s 1MDB state investment fund
that has dogged Najib Razak’s government.— PAGE 4
i World chess federation in bank stalemate
Dollar index Photo: FT montage; Bloomberg
Fide has been unable to find a
bank to give it an account after
UBS severed ties because
Kirsan Ilyumzhinov, the world
governing body’s president, is
subject to US sanctions.— PAGE 2
Jay Powell, Fed chairman
i New scrutiny for UK immigration policy
Europe vows not to be bullied as
bitter trade fight looms with US
3 Clock ticks on steel reprieve 3 White House raises pressure 3 Car demands rebuffed
JIM BRUNSDEN — BRUSSELS
SHAWN DONNAN — WASHINGTON
The US and Europe dug in for a bitter
trade fight after Donald Trump, US
president, gave allies only a month’s
reprieve from steel and aluminium
tariffs, with Washington demanding
concessions as Brussels vowed not to be
held to ransom.
Mr Trump’s eleventh-hour decision
to give the EU, Canada and Mexico a second 30-day reprieve from tariffs that
had been due to take effect yesterday
failed to defuse tension, with the sides at
loggerheads over how to make the
exemptions permanent.
The dispute, along with the threat of a
US-China trade war over Mr Trump’s
tariffs, has sent jitters through markets
and prompted the IMF and the Euro-
pean Central Bank to warn of a wave of
protectionism that could halt the global
recovery.
After Mr Trump’s decision to delay
the duties, France, Germany and the
European Commission stepped up calls
for permanent relief, with Brussels saying it “will not negotiate under threat”.
France said it was “ready to work” on
addressing overcapacity in the global
steel market but warned “we can only
calmly do that once we are certain to be
permanently exempted from the threat
of a unilateral increase in tariffs”.
Wilbur Ross, US commerce secretary,
said the administration did not have
“any intention to grant protracted
extensions” to the EU, telling CNBC that
allowing it to be exempt without concessions “defeats the whole purpose”.
Mr Ross insisted the White House
granted a reprieve because of “some
potentially fruitful discussions about an
overall reduction in trade tension”. The
US has suggested formal trade talks,
focusing on persuading the EU to lower
trade barriers to US cars.
Politicians in Germany, Europe’s carmaking powerhouse, have expressed
anger at the demand, with Günther Oettinger, Berlin’s European commissioner,
telling national broadcaster ZDF this
week “there is no real reason to bring an
American car from the US to Germany”.
But Berlin has emphasised the importance of suggesting options to address
the US concerns, with a spokeswoman
saying it was “of particular importance
that the EU has engaged with the US and
continues to do so”.
Wilbur Ross,
US commerce
secretary,
said the Trump
administration
had no intention
of granting
‘protracted
extensions’
to the EU
The EU is the US’s biggest goods trading partner. But Mr Trump has grumbled about the $151bn trade deficit in
goods with the EU, singling out European car tariffs, in particular, as unfair.
The US sees the steel and aluminium
tariff threat as a means of pushing for
more favourable terms. But Cecilia
Malmström, EU trade chief, has insisted
Brussels could not offer concessions to
secure exemptions from measures it
considered illegal. She has been in contact with Mr Ross but believes any talks
would have to be “mutually beneficial”.
Additional reporting by Anne-Sylvaine
Chassany in Paris, Guy Chazan in Berlin
and George Parker in London
Game of chicken page 2
Editorial Comment page 8
Martin Wolf page 9
UK proposal forces offshore centres
to lift secrecy over company ownership
HENRY MANCE AND MADISON MARRIAGE
LONDON
Brussels looks past Brexit
to sustain spending power
Report & Analysis i PAGE 3
Australia
China
Hong Kong
India
Indonesia
Japan
Korea
Malaysia
Pakistan
Philippines
Singapore
Taiwan
Thailand
Vietnam
A$7.00(inc GST)
RMB28
HK$33
Rup210
Rp42,000
¥630(inc JCT)
W4,500
RM11.50
Rupee 320
Peso 140
S$5.80(inc GST)
NT$140
Bht140
US$4.50
British overseas territories, including
the Cayman Islands and Bermuda, will
be forced to lift the veil of secrecy over
the ownership of companies based
there after the UK approved radical
new measures to tackle moneylaundering and corruption.
Caribbean territories have responded
angrily to the measures, which will force
them to make public the owners of all
their registered companies by the end of
2020, in a significant victory for financial transparency campaigners.
Robert Briant, acting chairman of BVI
Finance, which represents the British
Virgin Islands’ financial industry, said
the UK had “shot itself in the foot”. It
puts into question “the viability” of the
BVI’s financial sector, he added.
The measures were first proposed by
David Cameron, the former prime minister, five years ago amid an international wave of political anger over tax
avoidance by the rich.
But the Conservative government
only accepted the transparency measure after a group of its own MPs teamed
up with the Labour opposition to amend
the anti-money laundering bill being
debated in parliament this week.
Global Witness, a campaign group,
said the measures were “a huge win in
the fight against corruption, tax dodging
and money laundering”.
But Caribbean governments, many of
whose economies depend on financial
services and often involve low-tax
regimes, accused London of imperial
over-reach, saying the move violated
the sovereignty of their parliaments.
“We vehemently reject the idea that our
World Markets
Subscribe In print and online
www.ft.com/AsiaSubs
Tel: (852) 2905 5555
Fax: (852) 2905 5590
email: subseasia@ft.com
© THE FINANCIAL TIMES LTD 2018
No: 39,770 ★
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha
democratically elected government
should be superseded by the UK parliament,” said the BVI government.
David Burt, Bermuda’s premier and
finance minister, said it signalled “a retrograde step” for relations between the
UK and overseas territories. “We will
take necessary steps to ensure our constitution is respected,” he added.
The measures do not apply to Britain’s
crown dependencies: Jersey, Guernsey
and the Isle of Man.
The Foreign Office was originally
opposed to the measures, arguing that
imposing public registers on overseas
territories would create a “potential
constitutional conflict” with them and
“disenfranchise their elected representatives”.
But the government backed down
once it was clear the change had sufficient backing in parliament.
STOCK MARKETS
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The Home Office may have falsely accused 7,000
foreign students of faking their English proficiency
and ordered them to leave the UK, as its “hostile
environment” policy faced more scrutiny.— PAGE 3
i Moon and Li to meet Abe in Tokyo
Seoul’s presidential Blue House has said Moon
Jae-in will visit Tokyo next week, where he will brief
premiers Shinzo Abe of Japan and Li Keqiang of
China on the recent inter-Korean summit.— PAGE 4
i British cartoon pig chopped in China
Cartoon character Peppa Pig has been subjected to
curbs after Beijing, which is seeking to impose its
vision of socialist morality on the internet, reacted
to its use in memes with vulgar captions.— PAGE 4
Datawatch
Home truths
% who think prices will rise, minus %
who say they will fall
70
60
50
40
30
20
10
0
2011 13 14 15 16 17 18
Source: Ipsos Mori, Halifax
Confidence in
the UK housing
market is at its
lowest in five
years. Sentiment
on whether
average prices
will be higher or
lower in a year
was measured at
33 in April, a small
improvement on
the reading for
autumn last year
2
★
FINANCIAL TIMES
Wednesday 2 May 2018
INTERNATIONAL
Tariffs
Welfare reform
Trump plays game of chicken with Brussels
Finnish
minister
rejects
universal
basic income
Clear plan for moving
away from transatlantic
trade clash is lacking
SHAWN DONNAN — WASHINGTON
By extending until June 1 the EU’s
exemption from US steel and aluminium tariffs, Donald Trump has raised
the pressure on Brussels to find a way
out of what some fear might devolve
into a transatlantic trade war.
That does not make a deal any more
likely. US and EU officials have failed to
find a formula for an agreement and
confess that one appears distant. Officials on both sides also say privately that
the biggest hurdle may be Mr Trump,
even after charm offensives from
Emmanuel Macron and Angela Merkel.
Addressing supporters in Michigan on
Saturday, Mr Trump railed against the
EU and what he sees as barriers to keep
out US goods, particularly cars. “It is
very hard for us to sell stuff into the
European Union,” he said, pointing to
Ms Merkel’s visit. “It was put there to
take advantage of the United States,
OK? . . . Not any more. We told them
that yesterday . . . Those days are over.”
Trump administration officials liken
their trade push to how the US has handled North Korea. Mr Trump’s push for
tougher sanctions drove Pyongyang to
negotiations and the cusp of a historic
deal, they contend. In trade he is trying
to do the same, whether it be with
China, the EU or Canada and Mexico,
the US partners in the North American
Free Trade Agreement.
Whether the approach will work with
either the EU, which has prepared a list
of US products it will target in retaliation, ranging from bourbon to motorcycles, or China, which has prepared its
own tariffs, is unclear. The US remains
the largest economy, and that gives it
heft. But both China and the EU are formidable trading powers that each have
their own domestic constituencies to
keep happy as well.
With the EU, the administration has
focused on getting Brussels to agree to
quotas for reduced steel and aluminium
exports to the US as well as a broader
‘It was put there to take
advantage of the United
States, OK? . . . Not any
more. We told them that’
trade agreement that would reduce tariffs for industrial goods.
The latter is aimed largely at the car
market and reducing the gap between
the 2.5 per cent tariff the US charges on
imported passenger vehicles and the
10 per cent equivalent duty in the EU.
European officials contend the comparison is unfair as the US has higher
tariffs on light trucks. But Mr Trump
has seized on the difference, and US
officials say privately that any deal
would have to address that difference,
even as they recognise that for the EU
any such move would have to be part of
a broader negotiation.
Wilbur Ross, the US commerce secretary, said yesterday that the main objective for the Trump administration
remained protecting the US steel and
aluminium industries, which it has
argued are facing a threat from imports
that is putting US national security at
risk. But “we have made enough
progress so far that it is worth investing
another 30 days in the process”.
“It is a work in progress,” Mr Ross told
a Milken Institute conference in California. “We don’t have the definitive solution as we sit here.”
Mary Lovely, a Syracuse University
economist and trade expert, said it was
unlikely that the EU and US would be
able to reach a full trade agreement,
even on only industrial tariffs, in the
next month. But Mr Trump had shown
in the past that he is willing to accept
even minor concessions as a win, she
pointed out, and that might provide
hope to the EU.
“It really depends on the Europeans
and how far they are willing to go in this
game of chicken,” she said. “If they
really stick to their guns, the Trump
administration may accept some kind of
sop given to them . . . We might get a
deal. But [for the US] it’s not going to be
much of a deal.”
EU officials are, however, also wary of
the broader consequences of any deal
with the Trump administration.
Agreeing to quotas on steel or aluminium exports would be equivalent to
embracing the sort of “voluntary export
restraints” used heavily by the Reagan
administration and banned under
World Trade Organization rules. As a
result, European officials say they see
agreeing to anything like them as a bigger threat to the global trading system.
Editorial Comment page 8
Nuclear accord. Signatories
Europeans say
Israeli claims show
need for Iran deal
Reaction underlines division
with Washington amid fears
over Middle East instability
MEHUL SRIVASTAVA — TEL AVIV
European signatories to the Iran nuclear
deal said Benjamin Netanyahu’s claims
about Tehran’s alleged atomic weapons
programme confirmed why the accord
aimed at curbing the country’s nuclear
ambitions was needed in the first place.
Israel’s prime minister on Monday
delivered a televised speech which
claimed to provide proof about Iranian
deception in the lead-up to the 2015
accord, where Iran pledged to rein in
enrichment of nuclear fuel in exchange
for sanctions relief. The speech was
widely seen as another attempt to persuade Donald Trump to rip up the
agreement.
France, which has led European effort
to persuade Mr Trump to renew the
deal, yesterday said that while the documents provided by Mr Netanyahu
should be looked at, the claims “presented by Israel strengthen the relevance of the accord”.
UK Foreign Secretary Boris Johnson
agreed that the Israeli leader’s presentation “shows why we need the Iran
nuclear deal”, while a German government spokesman said the independent
monitoring system introduced as part of
the accord was needed “to ensure that
Iran is complying with the restrictions
on its nuclear programme”.
The European reaction to Mr Netanyahu underlines the divisions between
Europe’s governments and the US and
Israel over the accord. While sharing Mr
Trump’s concerns about Iran’s role in
regional conflicts and its ballistic missile
programme, France, the UK and Germany fear that unravelling the deal
would risk further destabilising the
Middle East, trigger an arms race, and
undermine any future accords.
But the Trump administration, which
must decide by May 12 whether to
renew the accord or let it lapse, and its
main Middle East allies from Israel,
Saudi Arabia and the United Arab Emirates, believe that the deal has emboldened the Islamic republic and caused it
to step up its meddling in Arab states.
Mike Pompeo, who recently took over
as US secretary of state, said of Mr
Netanyahu’s claims that the nuclear
deal was “built on Iran’s lies”.
Israel’s premier, who has spent years
demanding that the west take harsher
action against Tehran, had briefed Mr
Pompeo on Sunday and spoke to Mr
Trump the same day.
Mohammad Javad Zarif, Iran’s foreign
minister, who labelled Mr Netanyahu
“the boy who can’t stop crying wolf”,
yesterday said “the actions by the other
side [Israel] was to convince the US to
pull out of the nuclear accord”, while
Amir Hatami, Iran’s defence minister,
called the claims a “propaganda show”.
Tehran has always said that its
nuclear programme was for civilian
purposes only.
Mr Netanyahu’s speech came amid
heightened media speculation that Iran
and Israel were closer to a conflict in
south-west Syria. The speaker of Israel’s
parliament on Monday had to quash
social media rumours that Iran was preparing to strike Israel within the week.
The morning of Mr Netanyahu’s
address, a weapons depot or underground bunker in Syria was hit by missiles, according to local activists, leading
to the unconfirmed deaths of more than
a dozen Iranian fighters.
Israel did not claim responsibility for
the strike, but has claimed to have carried out at least 100 strikes inside Syria
since 2015. It said the attacks were necessary to keep Iran’s Lebanese proxy,
Hizbollah, from receiving sophisticated
Benjamin
Netanyahu,
Israel’s premier,
claiming on
Monday that
Iran has
continued to try
to make atomic
weapons — Jim
Hollander/EPA
weapons from Tehran, or from setting
up a permanent base from which to
strike Israel with rockets.
While neither Iran nor Syria accused
Israel of being behind Monday’s strike,
they have, with Russia, blamed Israel
for a previous air strike in April at the T4
air base in Syria when at least seven Iranian fighters were killed. It was the first
publicly known incident in which Israel
has been accused of directly targeting
Iranian forces in Syria.
Analysts said that Mr Netanyahu’s
intelligence was not new, but it added
detail to western findings that Iran had a
programme to produce nuclear weap-
‘The boy
who can’t
stop crying
wolf’
Iran’s foreign
minister on
Benjamin
Netanyahu
ons that was abandoned in 2003. “We do
not really have new information . . . but
this adds a lot of flesh to the bones of
what the International Atomic Energy
Agency’s own reports have documented,” said Emily Landau at Tel Aviv
University’s Institute for National Security Studies.
The IAEA said yesterday that outstanding issues on Iran’s nuclear programme were addressed in a report in
2015 and it considered the issue closed.
Eurasia Group, a consultancy, said Mr
Netanyahu’s presentation would “only
marginally affect US and European
decision-making” on the deal.
RICHARD MILNE
NORDIC CORRESPONDENT
Finland’s finance minister has rejected
the country’s trial of a universal basic
income as a model for welfare reform
and instead favoured measures to
make the unemployed find some work
or forfeit part of their benefits.
Petteri Orpo told the Financial Times
that Finland had to rethink its entire
welfare system as a rapidly ageing population risked undermining one of the
main parts of the Nordic social model,
which has been much admired around
the world.
“Working life has changed through
globalisation, automation. We have to
reform our society in order to activate
people to reach a higher employment
rate and to save the welfare state. This is
what I call Nordic welfare model 2.0,” he
said in the interview.
But Mr Orpo said he was not a fan of
Finland’s highly scrutinised experiment
with universal basic income, which will
not be extended when it comes to a close
at the end of the year. In the trial,
selected unemployed people were given
€560 per month in basic income without any conditions on what they needed
to do to get the money.
Finland has one of the most rapidly
ageing populations in the developed
world outside Japan and has been grappling with the potential consequences
for decades. But the Nordic country of
5m people has struggled to pass meaningful reforms due to a fragmented
political system.
The universal basic income trial has
been widely criticised for being poorly
designed, as it would be prohibitively
expensive to implement, but anecdotal
evidence from participants suggests it
has cut stress from having to deal with
bureaucracy.
Mr Orpo, the leader of the centreright National Coalition party, ahead in
polls for next year’s parliamentary elections, admitted he had not been a supporter of the trial but had “promised to
be open to the results”.
He said it would be for the next government — to be formed next April — to
decide whether to conduct other basic
income experiments.
The finance minister wants to boost
Finland’s employment rate from 71 per
cent to what he called a Nordic level of
75 per cent.
One of the government’s biggest
measures has been to introduce a socalled activation model, which forces
people receiving unemployment benefit
to do 18 hours of paid work or join a
training scheme within three months or
lose about 4.7 per cent, or €32, in the
welfare they receive.
“When we look at our economy that
is now growing, we have tens of thousands of free jobs [that cannot be filled]
and more than 200,000 unemployed
people. We have to look at the incentives
to work,” Mr Orpo said, adding that the
current system made people “passive”.
Early research from the body in
charge of social security in Finland suggested that half of the benefit recipients
caught by the activation model failed to
fulfil the criteria and forfeited some
income. Mr Orpo defended the measure
as not as harsh as in Denmark and “not a
lot of money” for people to lose.
Stalemate US sanctions threaten banking endgame for chess body
MAKE A SMART INVESTMENT
Subscribe to the FT today at FT.com/subscription
PAUL MURPHY — LONDON
WORLD BUSINESS NEWSPAPER
UK £2.70 Channel Islands £3.00; Republic of Ireland €3.00
Trump vs the Valley
A Five Star plan?
Dear Don...
Tech titans need to minimise
political risk — GILLIAN TETT, PAGE 13
Italy’s populists are trying to woo
the poor — BIG READ, PAGE 11
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
THE END
OF THE
ROAD
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
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.
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
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
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-
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
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
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
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
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
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
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7369.52
4011.01
5089.64
1.164
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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
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12256.43 12203.00 0.44
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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
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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.
Art of persuasion Mystery deepens
over disputed painting of Jane Austen
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
City watchdog sends a clear message as
banker loses job over WhatsApp boast
LAURA NOONAN — DUBLIN
JENNIFER THOMPSON — LONDON
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
FINANCIAL TIMES
59th Floor, The Center,
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HOW DRIVERLESS
TECHNOLOGY IS
CHANGING AN
AMERICAN WAY OF LIFE
i Report outlines longer NHS waiting times
3 Confidence in IT plans ‘has collapsed’
3 Fivefold rise in declarations expected
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FRIDAY 31 MARCH 2017
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STEFAN WAGSTYL — BERLIN
Living wage rise to pile
pressure on care services
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-
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© THE FINANCIAL TIMES LTD 2017
No: 39,436 ★
Printed in London, Liverpool, Glasgow, Dublin,
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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
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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 £
1.169
price
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-0.75
Mar 31
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
100.35
104.536 104.636 Ger Gov 2 yr
1.252 1.244
12312.87 12256.43 0.46
Nikkei
Hang Seng
prev
0.932 US Gov 10 yr
0.801 UK Gov 10 yr
1.164 Ger Gov 10 yr
119.180 119.476 Jpn Gov 10 yr
77.226 76.705 US Gov 30 yr
Xetra Dax
FTSE All World $
Letters to the editor
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World Markets
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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.
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-0.32 Prices are latest for edition
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A search by Fide, the world chess federation, for a bank willing to take it on as a
client has failed, leaving the global body
in financial chaos just as a power struggle rages at its top.
UBS, with which Fide banked until
the weekend, terminated its relationship with the organisation because of
the presence on a US sanctions list of
Kirsan Ilyumzhinov, the chess body’s
leader and a Russian politician close to
Russian President Vladimir Putin.
UBS had warned of its likely move in
February, and last week, Adrian Siegel,
Fide’s treasurer, wrote to presidents and
treasurers at all 189 national chess federations asking them not to send funds
to the parent body while a replacement
for UBS was sought.
A letter sent on Friday by Nigel Freeman, executive director at Fide, to Mr
Ilyumzhinov and seen by the Financial
Times explained that talks had been
held with four other Swiss banks over
the past fortnight, but none was willing
to take on Fide as a client while Mr Ilyumzhinov remained as president.
Mr Freeman also named 18 banks in
Geneva and Lausanne that refused to
meet Fide executives, while talks with
Alfa-Bank in Romania and National
Bank of Georgia came to nothing.
Referring to Mr Ilyumzhinov, the letter concluded: “I do not think you can be
serious suggesting a US bank, whilst
you, as president of Fide, are still on the
US Treasury sanctions list.”
Mr Ilyumzhinov was hit with sanctions in 2015 “for materially assisting
and acting for or on behalf of the government of Syria”. He has been president of
Fide since 1995, but has resisted
repeated calls from his boardroom colleagues for his resignation despite the
body’s mounting financial difficulties.
Fide was sent a letter by UBS headed
“Termination of business relationship
no. 0243-00342087” on February 20,
warning that the account would be
closed on Monday.
The bank had resisted requests from
the chess body to extend the closure
deadline to October, when fresh Fide
presidential elections are due.
Mr Freeman declined to comment
further on Monday.
In March, Fide said that Mr Ilyumzhinov had stepped down, but he immediately denied this, claiming that he had
been the victim of a US plot.
Then, in early April, 16 Fide board
members issued a press release calling
on Mr Ilyumzhinov to resign with
immediate effect.
Mr Ilyumzhinov was elected
the first president of Kalmykia, an
autonomous southern region in the
Russian Federation, in 1993, spending
17 years in the post. He is acknowledged
to have invested substantial sums in
chess, unifying the world championship
and seeing the number of people playing grow manyfold.
In Kalmykia, he made chess a compulsory school subject and built a spe-
Politician Kirsan Ilyumzhinov, head
of Fide, is close to Vladimir Putin
cial village, called Chess City, to host international tournaments.
He first drew attention in the late
1990s, claiming in a television interview
that he had been abducted by aliens and
had visited another planet.
He has drawn controversy, sparking
protests when he tried to schedule
the 1996 match between Gata
Kamsky and Anatoly Karpov in
Baghdad and flying to Tripoli to play
chess with Muammer Gaddafi in 2011,
just as a Nato bombing campaign was
under way.
Mr Ilyumzhinov has vowed to stand
for re-election in October, but Fide’s
deputy president, Georgios Makropoulos of Greece, has also announced his
candidacy.
A test of Mr Ilyumzhinov’s support
will come on May 9 when he is due to
seek endorsement from the Russian
Chess Federation, which has strongly
backed him in the past.
Meanwhile, the world chess championship is due to be held in London
in November, sponsored by Kaspersky
Lab, a Russian cyber security company
whose software British government
departments have been banned from
using.
★
Wednesday 2 May 2018
3
FINANCIAL TIMES
INTERNATIONAL
German inheritance wave
stokes fears over inequality
Budget
EU plans spending boost
for migrants and defence
ALEX BARKER — BRUSSELS
Family wealth perpetuates social divisions but is bedrock for the Mittelstand
Berlin: Germany is seeing a large shift of wealth from the dead to the living, with up to €400bn a year transferred through bequests and gifts — Stefanie Loos/Reuters
TOBIAS BUCK — BERLIN
Maria Weise always knew she would be
rich one day.
Her family owned land south of
Munich, and her father had spent a lifetime filling it with houses and apartment buildings. When he died, Ms
Weise inherited 13 houses and three
blocks of flats, along with an imposing
farm in the Bavarian countryside with
15 hectares of land.
“From then on, I was an heiress. I did
not have to work again,” recalled Ms
Weise. She gave up her job as a hospital
pathologist, experimented with ecological farming and raised two children.
Today, she spends much of her time and
money on social and progressive causes,
from the Alternative Nobel Prize to her
own foundation helping women in Latin
America.
“Inheriting gives you the chance to do
things and create things that other people can’t. But it also defines you in a negative way,” said Ms Weise. “People say
that all you did was to inherit, that you
never had to make an effort. But you
want to be respected for what you did,
not for what you were given.”
Stories like hers used to be rare in
Germany, a country where millions
saw their wealth wiped out by war,
displacement and inflation in 1945.
Today, however, they are told with
growing frequency.
After seven decades of political stability and economic expansion, Germany
is in the midst of a vast transfer of
wealth from the dead to the living. Precise data on inheritance flows are hard
to find, but economists agree that the
flows have risen sharply in recent years.
According to a study from the German
Institute for Economic Research (DIW)
in Berlin, up to €400bn is transferred
through bequests and gifts a year —
more than the annual government
budget, and enough to wipe out the
entire national debt in less than five
years.
The inheritance wave has triggered
hand-wringing from politicians and
commentators. Germany’s Social Democrats, for example, made higher inheritance taxes part of their election campaign platform last year, echoing similar
calls from trade unions and other
leftwing parties.
One fear is that inherited wealth is
entrenching social divisions and financial privilege at a time of growing concern about inequality. Another worry is
that it hollows out the idea of Germany
as a genuine meritocracy.
Thomas Piketty, the French economist, calculates that more than half of
total wealth in Germany today is
inherited — an estimate confirmed by
German economists. In the 1960s and
1970s, the share was just a little over
20 per cent. The rise is far more pronounced than in France and Britain,
reflecting the shift in Germany’s postwar fortunes.
“Inheritance perpetuates social inequality because it moves it from one
generation to the next,” said Jens Beckert, the director of the Max Planck Institute for the Study of Societies in
Cologne. The deeper problem, he
argued, is that wealth is already spread
very unevenly across German society.
“The top 1 per cent own one-third of
all [net] wealth, the top 10 per cent own
two-thirds while the bottom half owns
nothing. These structures are kept in
place through inheritance. Wealth stays
at the top.”
Cansel Kiziltepe, an SPD MP, voiced
similar concerns: “From a macroeconomic point of view, it is not good that
wealth is distributed so unequally. And
it is not good for social peace either. This
is a country where different social
groups have always lived together fairly
well, without gated communities and
Share of inheritance in
aggregate wealth
Per cent
80
70
UK
France
‘You want to be respected
for what you did, not for
what you were given’
Maria Weise
40
50
40
Germany
1900 20
60
30
60
80
20
00 10
Source: Economica
without fear of crime. I think we will see
more social conflict in the years ahead.”
Ms Kiziltepe advocates higher inheritance taxes as well as the reintroduction of a wealth tax. Exemptions and
allowances mean that only a small part
of total inheritance flows are taxable.
Last year, for example, the state took in
€6.8bn — a marked increase from the
year before but only a fraction of the
€300bn-€400bn estimate for total
flows made by the DIW.
However, the government budget is in
surplus, making it hard to justify a rise
in taxes even for the wealthiest part of
society. In any case, the coalition treaty
signed in March makes no mention of
tax rises.
Experts say that the biggest obstacle
towards inheritance tax reform has long
been German business, which argues
that an increase of such levies would
jeopardise the future of small and medium-sized family-owned companies. The
so-called Mittelstand has long been seen
as the bedrock of the German economy
and its representatives carry political
clout.
As a result, some of the biggest
bequests are almost entirely untouched.
Ms Weise supports higher inheritance
levies and is not alone in donating her
income to social projects.
Tom Koenigs, a prominent Green
party politician and scion of a private
banking dynasty, inherited a fortune in
the 1960s and donated it to the Vietcong
(delivering the cash to North Vietnamese embassy staff from East Berlin in
two sports bags). Mr Koenigs, 74, said he
would give it all away again today, albeit
this time to Unicef.
“I told my three children: take a look
at my bank account. There is nothing
there! No one will inherit anything,”
Language proficiency scandal
UK accused of revoking thousands of student visas in error
ROBERT WRIGHT — LONDON
The UK home affairs ministry may
have falsely accused as many as 7,000
foreign students of faking their proficiency in English and ordered them to
leave the country, with some of them
saying they were detained and made
homeless as a result.
A large majority of the students who
were accused of cheating have not been
allowed to appeal against the Home
Office decision, obtain the evidence
against them, or meet officials so the
quality of their English can be assessed.
The treatment of the foreign students,
who were in the UK legally, showed the
extent to which the “hostile environment” policy, introduced by Theresa
May, prime minister, during her time as
home secretary had taken root at the
department, according to Patrick Lewis,
an immigration barrister.
The approach — which has also been
blamed for the harassment suffered by
some members of the pre-1973 Commonwealth migrants to the UK — seeks
to make life so tough for illegal immigrants that they leave the country of
their own accord.
In a judgment on the case of one Bang-
ladeshi student, published last year, an
immigration tribunal judge said that the
Home Office’s behaviour was “so unfair
and unreasonable as to amount to an
abuse of power”.
“The highly questionable quality of
the evidence upon which these accusations have been based and the lack of
any effective judicial oversight have
given rise to some of the greatest injustices that I have encountered in over 20
years of practice,” said Mr Lewis, who
has represented several of the affected
claimants and overturned the Home
Office’s ruling in each case.
The plight of the foreign students
began after the BBC’s Panorama television programme aired an investigation
in February 2014 alleging systematic
cheating at some colleges in the Test of
English for International Communication, one of a number of tests that students can take to meet visa requirements on English proficiency.
Mrs May responded by asking Educational Testing Service, the US-based
company that ran the system, to analyse
voice files to work out if students were
using proxies to sit the tests for them.
After analysing the files, ETS said it
was confident 33,725 test takers had
used someone else to sit the test for
them. It added that it had “limited confidence” that there had been fraud in
another 22,694 cases.
By the end of 2016, when it stopped
reporting the figures, the Home Office
said it had revoked the visas of 35,870
people as a result. Most were told they
had no right to appeal and should leave
the country.
‘Conversations with those
affected have convinced
me that many were
entirely innocent’
But an immigration appeal tribunal in
2016 heard that when ETS’s voice analysis was checked with a human follow-up, the computer had been correct
in only 80 per cent of cases, meaning
that some 7,000 students had their visas
revoked in error.
The same case heard expert evidence
that it was impossible based on the
information ETS had supplied to assess
how reliable its testing was.
Subsequent cases have heard new evidence giving lower rates for errors by
the software but raising other unresolved questions, including evidence
that proxies’ voice files may have been
substituted at some centres for the files
of people who took the test legitimately.
Stephen Timms, an MP in east London, in whose constituency some of
those affected live, said overseas students had been issued with refusals, curtailments of the right to remain or
removal directions, on the basis of
“dubious allegations” by a testing company.
“Conversations with those affected
have convinced me that many were
entirely innocent,” Mr Timms said.
“Their treatment has been shameful.”
All the affected people who spoke to
the Financial Times spoke excellent
English, raising questions about why
they would need to pay a proxy. All
expressed shock at the accusation and a
determination to clear their names.
Syed Hussain, 28, said he had been
homeless at points since his visa was
revoked. “From the university library, I
was thrown to the street,” Mr Hussain
said. “My reputation is gone. [My relatives] don’t respect me at all.”
The Home Office did not immediately
respond to a request for comment.
Brussels is seeking to increase the seven-year EU budget to approximately
€1,250bn, in a bid to preserve the
union’s post-Brexit spending power
and boost funding for dealing with
migration, defence and innovation.
The European Commission budget
plan, which will be unveiled today, sets
total spending at about 1.11 per cent of
EU gross national income (GNI) from
2021-2027, according to officials familiar with the latest drafts. When certain
off-budget items are included, that rises
to 1.4 per cent.
The figures are a significant increase
on the EU’s existing commitments cap
of about 1 per cent. But the proposal is at
the lower end of the range considered by
officials planning the budget for the
union’s 27 remaining member states.
The precise details are still under
debate and might change after a commission meeting today. A commission
spokesman said no decision had been
taken as of yesterday evening.
“It looks like it won’t be as high as
expected,” said one senior EU diplomat.
Another said it was “worrying” for
central and eastern European counties
that disproportionately benefited from
past budgets.
Once unveiled, the “multiannual
financial framework” will launch one of
Brussels’ most hard-fought negotiations, played out against a broader eastwest debate about the future of the
union and the obligations of membership. Overall, the budget plans aim to
reduce spending on traditional programmes such as development and agriculture, and shift funds towards new
priorities such as defence, border control, and the digital economy. Tighter
conditions are also placed on receipt of
funds, including economic reform and
“values” such as rule of law. The commission’s opening pitch includes several
measures that attempt to assuage the
worst fears of net contributors such as
Germany, the Netherlands and Sweden.
A ceiling on payments — the best
guide to annual expenditure — will be
set at 1.08 per cent throughout the
period. Brussels has also softened its
original plans to immediately scrap all
“rebates” after the exit of Britain, which
benefited for decades from an adjustment originally secured by Margaret
Thatcher. It will now allow a five-year
phase-out of “corrections” for big contributors, according to officials.
Net-recipient countries face funding
squeezes in other areas. Günther Oettinger, EU budget commissioner, has
said agricultural and “cohesion and values” spending will fall by about 6 per
cent. Diplomats and officials also expect
a shift of funds from east to south when
criteria are released, later this month.
To the alarm of Poland and Hungary,
Brussels will unveil stricter “financial
management” rules that allow funds to
be cut off to countries where judicial
independence is under threat.
On top of about €30bn set aside for
migration and border control, the integration of immigrants will be taken into
account when distributing development
support. To protect the EU’s credit rating and boost its lending capacity, the
commission is also proposing to
increase the maximum the union can
raise from member states in a year, from
1.2 per cent to 1.29 per cent of GNI.
EU. Post-Brexit blueprint
Brussels braced for
rounds of horse-trading
Bloc’s long-term development
plans face unique obstacles this
year to keep all 27 states happy
ALEX BARKER — BRUSSELS
Confessionals. Negotiating boxes. Envelopes with offers of last-minute multimillion sweeteners. Such are the tools of
the EU’s epic haggle over its budget,
which the European Commission launches today at a pivotal time for what will
be a 27-strong union.
Although small in relative terms, the
€1tn budget of 2014-2020 makes up
only 2 per cent of Europe-wide public
spending, virtually no routine EU business is fought over with such vigour for
so long, or with such complexity.
At stake is the direction of the European project, its common budget, and
the benefits and obligations that membership brings. With every EU member
state carrying a veto, and billions of
euros riding on the wording of one or
two sentences, the talks pose a rare test
for EU leaders, who know their negotiating skill can be measured to the euro.
“It is always complicated. It always
takes longer than expected. And there is
always a lot of drama,” said an EU aide
with a ringside seat at this “multiannual
financial framework” (MFF) negotiation. “It’s amazing we ever manage it.”
While a deal is eventually done, the
political side-effects of acrimonious
budget talks can be considerable.
Charles de Gaulle’s “empty chair” crisis
of the 1960s arose from a dispute over
farm payments. Margaret Thatcher’s
battle for the UK rebate paralysed the
European project for five years. Even
the Strasbourg seat of the European Parliament partly owes its existence to a
budget side-deal to console the French.
This latest round, 2021-27, will play
out in a uniquely difficult context. Britain’s impending departure leaves a revenue hole of €10bn to €15bn in the annual budget, which seven net contributors such as Germany, the Netherlands
and Sweden are expected to cover with
higher payments. Also big budget beneficiaries such as Poland and Hungary
had so-called “cohesion funds” for development, which smoothed their first 15
years of membership. These are being
cut for the first time. Conditions such
as meeting rule-of-law standards or economic reform are now being attached.
On the past three attempts to agree a
budget, wrangling over details took
more than 20 months. Jean-Claude Juncker, commission president, wants a
deal before next year’s European elections, but it is a tall order. “Nobody is taking this [timetable] seriously,” said an
official from a net-contributor nation.
Besides injecting urgency, Mr Juncker’s main challenge is to provide a
narrative to justify genuine reform and
spending growth. Big ambitious budgets
have coincided with turning points for
the union. The so-called Delors packages in the 1980s lubricated the creation
of the single market and single currency,
while the EU’s eastward expansion gave
another spending lift in the mid-2000s.
“It will be of utmost importance to
find this common and true European
project,” wrote Peter Becker of the German SWP think-tank.
The commission’s pitch is for a “fair”
budget supporting a Europe “that protects, empowers and defends”, notably
through extra spending on defence, the
digital economy and border control.
Traditional development programmes and farm subsidies will fall from 80
to near 60 per cent of the total budget. In
a message to Poland and Hungary, upholding “values” and the rule of law are
an “essential precondition” of funding.
Mr Juncker must find leverage to corral members and the parliament
towards a deal. One commission gambit
has been to muddy statistics, ensuring
Jean-Claude
Juncker: president
of the commission
wants a deal
before next year’s
European elections
only it knows who wins financially. Veterans of previous talks recall national
diplomats spending months trying to
replicate Brussels’ unpublished models.
“Only the French and Germans ever
get close,” said one EU official of the last
budget deal. “The rest are in the dark.”
This might matter even more as Brussels revises and broadens its GDP-based
criteria for allocating about €350bn of
cohesion funds, a complex move with
far-reaching implications for the spread
of EU finance. Most of all, the commission’s clout comes from brinkmanship.
An MFF proposal must hold back sweeteners to coax members into a deal without pushing them to veto.
So while the commission’s proposal is
expected to eliminate or reduce rebates
that correct “excessive” contributions
for the Netherlands, Sweden and Germany, officials believe this will return in
final dealmaking. Similarly, “safety
nets” are expected be used to assuage
the concerns of Baltic and central European states facing a fall in net receipts.
Once a deal is in sight, officials draw
up “negotiating boxes”, sketching out an
agreement, and leaders go to “confessionals” to reveal their core demands.
With European elections looming,
some diplomats doubt a deal will be ripe
until late 2019 or even 2020, when Germany takes on the rotating presidency.
“We don’t mind if they pick up the tab,”
joked a diplomat involved.
When leaders enter the final straight,
expediency takes over, say old hands, as
in 2013, when commission officials
came with “adjustment” envelopes to
top up funding for “rural development”.
4
★
FINANCIAL TIMES
Wednesday 2 May 2018
INTERNATIONAL
Corruption scandal
Peace talks
Swiss probe PetroSaudi pair in 1MDB case
South Korea,
China and
Japan to hold
summit in
Tokyo
Move comes as Malaysian
premier’s government
seeks re-election next week
RALPH ATKINS — ZURICH
MICHAEL PEEL — BRUSSELS
Swiss prosecutors launched a criminal
probe of officials at a Saudi oil company
in an escalation of the scandal at Malaysia’s 1MDB state investment fund that
has dogged Najib Razak’s government.
The investigation into two unnamed
individuals from PetroSaudi over suspected offences including fraud, bribery
and aggravated money-laundering was
part of a long-running wider inquiry
into misappropriation of 1MDB funds,
the public prosecutor said.
The probe is the latest damaging revelation for the Malaysian prime minis-
ter’s administration from several
international investigations into alleged
misappropriation of billions of dollars
from 1MDB.
Mr Najib’s government is seeking
re-election on May 9.
The Swiss inquiry is the first officially
disclosed criminal case targeted at
employees of the Saudi company,
a little-known but well-connected
business co-founded by one of the
kingdom’s princes.
US investigators previously alleged
that $1bn of Malaysian public money
meant for a joint venture between
1MDB and PetroSaudi was siphoned off
to a Malaysian businessman.
PetroSaudi has always denied
wrongdoing.
The PetroSaudi officials under investigation were suspected of criminal mismanagement, bribery of foreign public
officials, aggravated money-laundering,
and misconduct in public office, the
Swiss prosecutor said. One of the pair
was also suspected of document forgery.
The investigation into the individuals
began in November but was not dis-
The Swiss inquiry is the
first officially disclosed
criminal case targeted at
staff of the Saudi company
closed previously for operational reasons, the prosecutor said.
PetroSaudi said it was “aware of an
ongoing investigation by the Swiss
authorities related to 1MDB” but was
not the subject of the probe. It
rejected any claims that it or any of its
officials were involved in misappropria-
tion of funds from 1MDB. PetroSaudi
would co-operate fully with any
investigating authorities.
US investigators alleged in a 2016
legal case that $1bn of 1MDB funds
earmarked for its joint venture with
PetroSaudi were misappropriated to Jho
Low, who splurged on art, parties, and a
Hollywood film.
The US asset seizure lawsuit also
claimed that $20m ended up in the bank
account of an unnamed top Malaysian
official whose description corresponds
to Mr Najib.
Both Mr Low and the Malaysian
prime minister have denied any
wrongdoing.
Mr Najib, who formerly chaired
1MDB’s advisory board, has been
engulfed by questions about the
fund since evidence emerged in 2015 of
payments of $681m into his personal
bank account. The country’s attorneygeneral said the money was a gift from
the Saudi royal family and was not
linked to 1MDB.
International banks have been fined
and officials jailed over their role in the
1MDB affair, which spawned an extensive probe in Singapore as well as the
Swiss and US investigations.
Mr Najib is near the climax of a bitter
election battle against an opposition led
by Mahathir Mohamad, his 92-year-old
predecessor and one-time mentor, who
has accused the premier of corruption.
Prosecutors in Switzerland have
stepped up efforts to counter the
country’s image as lax on international
financial scandals.
The 1MDB investigation is one of a
series of large-scale probes that include
those looking at Brazil’s Petrobras and
Fifa, football’s world governing body.
Japan. Political turmoil
Rivals circle as scandals threaten to unseat Abe
Under-fire PM’s economic
policy would be put at risk
in event of succession battle
ROBIN HARDING — TOKYO
Japanese prime minister Shinzo Abe is
trying to shore up his popularity as falling poll ratings threaten to end his tenure, opening the way for a succession
battle that could jeopardise his signature economic policy.
Nepotism scandals relating to private
schools run by Mr Abe’s associates, falsification of documents by the finance
ministry, a spat over lost records from
the Iraq war and the departure of a top
bureaucrat after sexual harassment
allegations have combined to erode
public trust in the premier.
In percentage terms, support for Mr
Abe’s government has fallen to the low
30s in polls, hurting confidence in a PM
who faces internal party elections this
year. Analysts think he can hold on for
now but further falls in polls would force
his resignation.
In a sign of growing pressure, former
premier Junichiro Koizumi, one of the
ruling Liberal Democratic party’s most
influential elder statesmen, said it
would be “difficult” for Mr Abe to serve
another term as leader.
“If all the polls fell to the mid-20s then
he’d have to quit,” said Tomoaki Iwai,
professor of politics at Nihon University
in Tokyo. “But he has time before September to recover popularity and the
business community really wants him
to stay. I don’t think he’ll quit so easily.”
Mr Abe’s rivals know overt disloyalty
will end their chances, but as the prime
minister’s grip weakens, they are plotting in back rooms and trying to position
themselves as heir apparent.
Mr Abe has not groomed a successor
who shares his conservative ideology so
the most likely candidate is seen as 60year-old Fumio Kishida, a former foreign minister who heads the party’s policy research council. From the LDP’s liberal wing, he is widely regarded as an
able minister but not a charismatic
communicator.
“We should lend an ear to a variety of
opinions and practice politics from the
bottom up,” Mr Kishida told supporters
in April, drawing an implicit but obvi-
Demonstrators hold
posters critical of
Shinzo Abe in Tokyo last
month. Possible
succession candidates
include Fumio Kishida,
top, and Shigeru Ishiba
Kentaro Takahashi/Bloomberg
‘If all the
polls fell to
the mid-20s
then he’d
have to quit’
ous contrast to Mr Abe’s top-down style.
Speaking to investors in Hong Kong last
month, Mr Kishida emphasised the
need for fiscal consolidation, saying the
Bank of Japan’s easy monetary policy
could not continue forever.
His main rival is Shigeru Ishiba,
former defence minister, who heads a
small party faction. Although his hardline views on national security are similar to the prime minister’s, he is seen as
more down to earth than the patrician
Mr Abe, with support in regional Japan.
Abenomics “really hasn’t been felt in the
regions”, Mr Ishiba said recently.
Mr Kishida and Mr Ishiba were forced
to deny any leadership plots last week
after meeting with two other LDP power
brokers for a private birthday dinner. “We’re all the same age, so of course
we discussed the kind of Japan we want
to leave behind,” Mr Ishiba said.
Internal affairs minister Seiko Noda —
who would be Japan’s first female leader
— has signalled she is likely to run. How-
ever, she lacks a political base in the
LDP. Shinjiro Koizumi, son of the
former prime minister and a rising star
in the party, is more likely to be kingmaker than candidate at the age of 37.
“If Mr Abe quits soon, the new leader
would be Mr Kishida,” said Soichiro
Tahara, a veteran commentator on Japanese politics. “If it’s soon, Mr Abe will
still hold sway, and he’s most likely to
back Mr Kishida. The longer it takes, the
more Mr Ishiba’s chances rise.”
All of the likely successors to Mr Abe
are lukewarm on Abenomics, the stimulus programme that has delivered
strong growth but failed to transform
Japan’s economy.
That would risk a jump in the yen,
hurting exports — a questionable legacy
for Mr Abe. “Abenomics is still half way,”
said Masamichi Adachi, an economist at
JPMorgan in Tokyo.
He said Bank of Japan independence
would prevent a big change in monetary
policy but potential new prime minis-
Cartoon curbs China skewers subversive Peppa Pig
GABRIEL WILDAU — SHANGHAI
A popular Chinese social media platform has curbed the use of a British
cartoon pig as part of Beijing’s efforts to
impose its vision of socialist morality on
internet culture.
More than 30,000 short videos of
Peppa Pig, shown in 180 countries and
territories, have been removed from
Douyin, a clip-sharing app, and the
#PeppaPig hashtag has been censored,
the state-run Global Times reported.
A document circulated online
appeared to be an official order from
Douyin, known in English as Tik Tok,
banning references to the character.
The original cartoons remain accessible online but Douyin’s ban targets the use of Peppa’s likeness
for purposes deemed subversive
in user-generated content.
The fad began with celebrities sharing images of themselves with Peppa-inspired fairy
cakes, plush toys, hair
accessories and temporary tattoos.
But the trend expanded
with stills from the show used
to create memes with vulgar or
sardonic captions. Netizens began referring to Peppa as shehuiren, a euphemism
for gangster.
In January, the Global Times criticised
the distortion of children’s cartoon characters, including Peppa, into “children’s
cult films” with violent and pornographic content.
The darker uses of Peppa echo a
millennial trend towards sang, which
implies despondency and has become
associated with black humour.
Under Xi Jinping, regulators have
tightened internet controls, including
a ban on Winnie the Pooh, in whose
round face and belly netizens detected a
resemblance to China’s president.
Bytedance, the internet
group behind Douyin,
curbed Peppa after Jinri
Toutiao, its news aggregation app, was suspended from
app stores for three weeks for
hosting inappropriate content.
Toutiao promised it
would hire an additional
4,000 censors after it was
criticised by the regulator. The
impact of censorship is causing
investor concerns at businesses
including Baidu, the search group.
The Douyin document listed other
banned material, including sexual
content, male transvestism, satire of
national leaders and agencies, and even
disrespect towards China’s currency.
Douyin did not reply to a request for
comment during a national holiday yesterday.
Peppa Pig cartoons have been popular
in China since they entered the market
in 2015 and have racked up more than
30bn views on the website of China Central Television, the state broadcaster,
and internet-only platforms including
Tencent Video and Baidu-backed iQiyi.
Hoping to capitalise on the Peppa fad
and possibly in anticipation of a government backlash, Sina, the media group
that operates Weibo, China’s most popular Twitter-like platform, has launched
its own cuddly pig.
Sina’s Suishoupai video platform is a
rival to Douyin, and Sina is encouraging
viewers to post images of the derivative
pig. Images and text references of Peppa
were still on Weibo yesterday, suggesting Douyin was taking a cautious
approach, given its recent troubles.
Additional reporting by Yizhen Jia
ters were unlikely to push fiscal stimulus as hard as Mr Abe.
While Mr Abe is still in control, he has
several routes to restore his popularity.
The simplest would be policy results,
such as progress on the return of Japanese citizens abducted by North Korea,
or relief from US steel tariffs.
A second option would be sacrificing
Taro Aso, his finance minister, to
answer for the document falsification
and sexual harassment at his ministry.
Mr Aso is a political power in his own
right, however, and has shown no willingness to quit for the premier’s sake.
A third route, floated by senior LDP
figures, is to call a general election and
negate all the scandals with a new public
mandate. It is less than a year since
Japan went to the polls but the opposition is still hopelessly divided and weak.
“Mr Abe can still win a majority,” said
Mr Iwai. “However, nobody in politics
wants an election, including his coalition partners in the Komeito party.”
SONG JUNG-A — SEOUL
South Korea’s President Moon Jae-in
will visit Tokyo next week for a threeway summit with the leaders of Japan
and China, with North Korea’s denuclearisation and peace settlement on
the Korean peninsula on the agenda.
The trilateral meeting on Wednesday
will be the first of its kind since 2015 and
comes after last Friday’s historic summit between the two Koreas, in which
they reaffirmed their commitment to
dismantling Pyongyang’s nuclear programme and declaring the end of the
1950-53 Korean war.
It will also be the first visit of an
incumbent South Korean leader to
Japan in six years. Mr Moon and Japan’s
prime minister, Shinzo Abe, will hold
separate talks after their trilateral meeting with Chinese premier Li Keqiang.
Mr Moon will brief Mr Abe and Mr Li
on the recent inter-Korean summit and
seek their co-operation on dealing with
North Korea, a statement from Seoul’s
presidential Blue House said yesterday.
The meeting also comes ahead of the
summit between North Korea’s
supreme leader, Kim Jong Un, and Donald Trump, US president, who has suggested the meeting will be held in May
or June.
“They will all agree on North Korea’s
denuclearisation as a goal but could differ on how. Japan wants denuclearisation in a more strict sense, while China is
likely to call for compensation for
Pyongyang at an early stage in return for
denuclearisation,” said Kim Jae-chun, a
professor at Seoul’s Sogang University.
But Mr Kim said the planned threeway talks would have more diplomatic
significance this time, as both Beijing
and Tokyo feared they might be left out
of the whirlwind of diplomacy surrounding North Korea. “They have different priorities and concerns. Tokyo is
keen to raise the issue of Japanese
abductees in North Korea while Beijing
is worried that it may lose its influence
over the peninsula if Pyongyang gets
closer to Washington through normalised ties,” said Mr Kim.
In the inter-Korean summit, the leaders said they would seek talks with
China and the US to establish permanent peace on the peninsula.
Their mutual goodwill gestures were
not isolated to rhetoric, with the two
Koreas yesterday removing loudspeakers that blared propaganda across the
heavily armed border, while the North
will on Saturday move its clocks forward half an hour to unify its timezone
with the South.
The moves came amid growing speculation that Mr Trump may meet Mr Kim
in the demilitarised zone. Mr Trump
tweeted on Monday that the Peace
House in the truce village of Panmunjom, where the inter-Korean summit
was held, would be a suitable venue.
“There’s something that I like about it
because you’re there, you’re actually
there. Where, if things work out, there’s
a great celebration to be had on the site,
not in a third-party country,” Mr Trump
told reporters at the White House.
Seoul’s Blue House also welcomed the
prospect. “Panmunjom is quite meaningful as a place to erode the divide and
establish a new milestone for peace,” a
senior presidential official said.
Smart Money page 11
Social media
Iran ends Telegram access in blow to Rouhani
MONAVAR KHALAJ — TEHRAN
Iran has banned the popular Telegram
messaging app a month after Russia
blocked the service in a blow to the
credibility of Hassan Rouhani, the
president, who had opposed the move.
The judiciary ordered internet service
providers to end access to a service used
by 40m Iranians despite pledges by the
president that social media sites would
remain open.
Access to the messaging app and to
Instagram was banned temporarily this
year in an effort to curb dissent after the
biggest anti-regime protests in a decade
in which thousands of people took to the
streets.
Iranians woke yesterday to find they
had no access to their Telegram
accounts, which many rely on for work.
Facebook and Twitter, the social media
networks, are banned in Iran but Facebook-owned WhatsApp is available.
Explaining the ban, Iran’s judiciary
said that the encrypted platform was
used by terrorists and those seeking to
“disrupt national unity” and encourage
unrest.
Mr Rouhani, however, has made it
clear he opposes banning social media
networks as he attempts to open up the
country to the outside world.
Mohammad Javad Azari Jahromi,
minister of information and communications technology in Mr Rouhani’s
government, told a semi-official student
‘No problem of the people
is solved by ban . . .
neither unemployment
nor inflation’
news agency yesterday that he
was opposed to the ban.
Gholamali Jafarzadeh, a parliamentary lawmaker, told a reform-minded
website that the Telegram ban would
widen the gap between the people and
the regime.
“Communications cannot be
blocked,” he said. “No problem of the
people is solved by ban on Telegram —
neither unemployment nor inflation
and other problems.”
The issue underscores the power
struggles in Iran as Mr Rouhani seeks to
protect his biggest international
achievement — the nuclear deal signed
with the world’s six big powers in 2015.
Donald Trump is due to announce his
next move on the nuclear accord on
May 12. Should the US president follow
through with his threat to tear up the
deal and reimpose sanctions, it would
have a profound effect on Iran’s struggling economy.
Mr Rouhani’s hardline opponents
would then argue that they were right to
oppose the deal all along.
Ahead of that deadline, Benjamin
Netanyahu, Israeli prime minister,
released files claiming that Tehran ran a
secret programme to build nuclear
weapons, a revelation that analysts said
appeared to be aimed at encouraging Mr
Trump to pull out of the nuclear accord.
Telegram has more than 200m users
worldwide. Thousands of people protested in Moscow this week against the
move to ban Telegram in Russia, throwing paper planes — a reference to the
instant messaging app’s logo — and calling on Vladimir Putin, the president, to
unblock the service.
Wednesday 2 May 2018
FINANCIAL TIMES
5
6
★
FINANCIAL TIMES
Wednesday 2 May 2018
ARTS
Fifty years into his career,
British free jazz pioneer Evan
Parker tells Mike Hobart why
the form is still going strong
A
s Evan Parker, the UK’s
greatest exponent of free
jazz, settles in for our interview, he pulls out a copy of
Christopher Ricks’s Beckett’s Dying Words. Before long we’re discussing whether there might be a similarity between the ambiguities of Beckett’s language and the multi-layered
constructions of Parker’s approach.
“In so far as sounds can have equivalence to words, then at the structural
level, if not at the level of meaning, there
might be some grist to that,” says the
Bristol-born saxophonist. “But sound is
very broad — that’s the attraction. Perhaps some of the things to do with repetition and inversion?”
Rigour tempered with humanity
might be another parallel. Parker’s
multi-faceted fluency, circular breathing and control of pitch and tone are
rooted in years of study, yet his head
isn’t stuck in the clouds. Laughing, he
describes how his oboist grandson sends
up Parker’s phonics, microtones and
multiple lines. “Some people don’t hear
them at all — they just hear a racket,” he
says. “My grandson’s impression of my
solo playing is to basically blow and wiggle his fingers. Of course, that’s what I’m
doing — but it’s all about how you blow
and how you wiggle.”
That “racket” has won Parker, 74, an
appreciative audience. On Monday, he
was named instrumentalist of the year
at the Jazz FM Awards; this coming Saturday he will perform at the Cheltenham Jazz Festival with Trance Map, a
five-piece ensemble that sets Parker
alongside electronics duo Springheel
Jack, bassist Adam Linson and Matt
Wright on laptop and turntables. “It all
looks desperately up to date on paper,”
Parker says. “Maybe it is.” It’s a project
that is helped by a comfortable onstage
understanding, he adds: “Two or three
words from me, and that’s it.”
The Cheltenham gig will explore the
aesthetics of the late British drummer
and composer Basil Kirchin, whose
experiments with found sound helped
lay the foundations of ambient music.
Kirchin made natural sounds sound like
instruments and instruments sound like
natural sounds, says Parker. With some
enough to persuade the ensemble to
perform in Berlin.
That booking helped to establish
Parker in European free jazz, and his
network continued to grow. Parker’s
work in the 1970s alongside the uncompromising British avant-garde guitarist
Derek Bailey brought him into contact
with American musicians such as
Anthony Braxton and Wadada Leo
Smith, giving him a secure foothold in
US improvised music.
Parker’s 1976 album Saxophone Solos
identified him as one of the few saxophonists able to sustain unaccompanied
improvisation for any length of time.
“I’ve got one or two quite personal
approaches,” he says, referring to the
split notes and harmonic overtones that
allow him to sustain several lines at
once. Live solo performances come
down to something more basic: the
beginning. “You’re standing there; you
have to start. So you choose a fingering,
a pattern on the instrument.”
Free jazz might be a niche within a
niche, yet it is resilient and Parker’s
date sheet is comfortably full. “I’m in
that luxurious position of ‘nothing can
‘It’s all about
how you
blow and how
you wiggle’
Free jazz is ‘a natural
place for instrumentalists
to go. They don’t want to
be told what to do’
pleasure he tells a story of fellow saxophonist Alan Barnes meeting Kirchin
some years ago: the composer played
Barnes two recordings — one of a
whooper swan, and the other of Parker
playing sax. Kirchin challenged Barnes:
“I defy you to tell me which is which.”
That is Parker’s kind of compliment.
Kirchin spent the last decades of his
life in Hull, where he died in 2005 at the
age of 77. The three-part epic that Parker
will present at Cheltenham opens with
pre-recorded birdsong, interweaves
acoustics and electronics in the middle
THE LIFE OF A SONG
Ray Charles’s 1959 hit
‘What’d I Say’
transformed R&B —
and went on to be
covered by countless
artists, from The Beatles
to Prince. Ian McCann
tells its story
ft.com/life-of-a-song
and ends with the ensemble at full tilt,
representing the port city’s more industrial aspects.
Parker first collaborated with Kirchin
long ago, on the 1971 album Worlds
Within Worlds, an innovative — and challenging — mix of found sound and free
jazz. But Parker’s interest in electronic
music had taken root earlier, when as a
youngster he saw the 1956 sci-fi movie
Forbidden Planet, the first film with an
entirely electronic soundtrack. It was
the score’s bloops and bleeps that came
to mind when, in the early 1960s, a student friend asked Parker to provide
futuristic sounds for a film project.
The drummer and founder of the
influential Spontaneous Music Ensemble, John Stevens, heard the resulting
soundtrack, and asked Parker to join his
free jazz experiments. These were held
atafter-hourssessionsattheLittleTheatre Club in London’s St Martin’s Lane. “It
was a conceptual thing — quite strange.”
The group found inspiration in the
music of Cecil Taylor, the Jimmy Giuffre
trio and others grouped loosely as New
York’s jazz avant-garde. Parker had seen
the Cecil Taylor Trio play at the Take 3
club in New York, in 1962, though at first
he refused to believe that the great pianist could be performing at such a lowly
venue. The admission deal was that you
had to buy a drink, but Parker refused
unless he actually saw his idol walk on
stage. As soon as Taylor took his seat at
the piano, the bartender demanded his
drink order, or he would be thrown out.
“I suppose it was pretty ballsy for an 18year-old. But when the music started it
was . . . ‘Aaaaaah!’” That gig, he later
said, marked him for life.
The SME’s shifting personnel soon
evolved into a core part of London’s jazz
scene. A line-up featuring Parker
recorded Karyobin for Island Records
(recently reissued) and Kirchin used the
band on his score for the 1968 Glenda
Jackson film Negatives. When the director of Berlin’s Academy of Arts came
over to see what swinging London
meant in practice, she was impressed
Phonics and
fluency:
Evan Parker
Roger Thomas
really stop me now’,” he says. “I don’t
mean world domination is on the
cards, but that I have connections everywhere; opportunities everywhere. My
cup runneth over.”
In Parker’s view, free jazz is “a natural
place for instrumentalists to go”. “They
don’t want to be told what to do other
than some polite niceties like ‘don’t play
too loud’, ‘don’t play too many notes’.”
By the time Parker arrives at Cheltenham, he will have performed in acoustic,
solo or electronic contexts in Ireland,
Europe and the US as well as guest spots
and ongoing residencies in the UK, such
as his monthly Mopomoso sessions at
London’s Vortex club.
The revolving line-ups he assembles
there, he says, are “like alchemy. I have
to imagine what would happen if I put a
drop of this with a drop of that. It’s a little
bit like test tubes — will it change colour,
evaporate immediately, explode?”
Evan Parker plays Cheltenham Jazz Festival
on May 5, cheltenhamfestivals. com/jazz
Hypnotised by a commanding voice
MUSIC
Baaba Maal
Union Chapel, London
aaaae
David Honigmann
Across town, Orchestra Baobab were
playing at the Barbican; but for fans of
Senegalese music, the hot ticket was
Baaba Maal, offering what was billed as
a solo set. Baobab tantalise with their
delicately crafted echoes of the AfroCuban 1950s, but devotees of Maal were
hoping for a return to the sound world of
his early work from the 1980s, when his
and Mansour Seck’s guitars interlocked
with telepathic closeness. His followers
admire the full-on energy of his work
with Daande Lenol, but they adore the
acoustic songs that gave his imperious
tenor full rein.
And that, more or less, is what he
delivered at the Union Chapel, to an
audience pew-bound and candlelit. This
was not quite solo — he was bolstered by
jazz bassist and composer Cheikh
Ndoye, who served up discreet washes
of sound from a laptop, plus occasional
bass ngoni and guitar — but the focus
was on Maal, sitting enthroned, his
voice as commanding in its 65th year as
it was when he was in his twenties. The
T H E AT R E
Nine Night
National Theatre (Dorfman), London
aaaee
Ian Shuttleworth
The current scandal about the British
government’s treatment of the Windrush generation of first-wave Caribbean
immigrants cannot help but form a topical background to actor Natasha Gordon’s first play as a writer. Matters of citizenship have nothing to do with the
play, but considerations pervade it of
how British or Jamaican various members of recently deceased Gloria’s family
are. Her elderly cousins, middle-aged
children and twenty-something granddaughter seldom expatiate upon the
subject, but consistently embody it.
The play takes place over the mourning period for Gloria, culminating on the
ninth night after her death in an extravagant wake to see her spirit off. Roy
Alexander Weise’s cast pull together
beautifully while also delineating their
songs ranged across his career —
“Kalaato”, a jaunty celebration of the
picaresque, was from 2016’s The Traveller, but others dated back decades.
The sombre guitar lines of “Dougua”, a
Manding lament for the death of a great
man, commemorated the late French
Afrophile Jacques Higelin. “Baayo”
acquired an interlude in which Maal, a
tireless campaigner for women and children, insisted that “we need education
for all the children all over Africa”.
The most conventional song was
“Souka Naa’yo”, with an appealing
descending chord pattern in the bass
and a middle eight that ascended effortlessly into the chorus. The Guinean song
“Makeleyo” was a hymn to the power of
the guitar to express love. “It’s getting
late,” he murmured in the stillness.
“The stars are shining. Only you and I
are left. Come and listen to me . . . ” The
audience needed no invitation.
He closed with the old favourite
“Kon’i”, Ndoye taking a feathered bass
solo. The timing had run too close
to curfew for “Wakanda”, his contribution to the film Black Panther, so with
some recorded sabar drumming and a
brief dance, he was gone. Nearly two
hours had passed in concentration close
to hypnosis.
baabamaal.tv
Imperious:
Baaba Maal
at the Union
Chapel
Robin Little/Redferns
distinct personalities. Cecilia Noble
effortlessly steals scenes as Aunt Maggie, trying to control every aspect of the
event; at the suggestion that Gloria
might have wanted to be cremated,
Maggie pronounces, “We don’ cook our
people!” The principal focus, however, is
daughter Lorraine, with Franc Ashman
keeping her under control, but sometimes only just, until the final night.
The question of identity concerns
family even more than nationality.
When half-sister Trudy arrives, she
brings with her the psychological baggage of having been left as a child in
Jamaica when Gloria came to London,
bore and raised Lorraine and Robert and
left the family sundered. Meanwhile
Robert has a portfolio of issues of his
own: ambivalence about fathering a
mixed-race child, erratically successful
property dealings and absent-father
resentments. None of these are resolved.
This may be deliberate on writer Gordon’s part, to indicate that things are
never neatly tied up in such situations.
Nevertheless, it feels untidy to have gone
to the effort of introducing and developing all these strands only to leave them
dangling in favour of a confrontation
with a character — Trudy — who doesn’t
even appear until two-thirds of the way
through the 110 minutes of action.
Those loose ends are the only serious
reservation about a play that shows
intelligence, articulacy and dramaturgical savvy on Gordon’s part and is given a
fluid and enjoyable production by Weise
and the cast of seven.
Control: Cecilia Noble as Aunt Maggie
To May 26, nationaltheatre.org.uk
★
Wednesday 2 May 2018
7
FINANCIAL TIMES
FT BIG READ. AI ARMS RACE
FT series China plans to be the world leader in AI by 2030, setting up a competition in technological
innovation with the US. The quest for dominance will come down to who makes better use of the data.
By Louise Lucas and Richard Waters
A
lgorithms trained on
mountains of Chinese data
may soon be making decisions that deeply affect the
lives of people in the US.
Take Yitu Technology, a Shanghaibased artificial intelligence start-up that
won top honours in two AI competitions
in the US last year for its facial recognition technology. The system was built
for Chinese law enforcement using data
collected by the authorities. Or as the
company boasts, it was honed on the
“world’s largest portrait system, covering more than 1.5bn people.”
Yitu is now looking for customers in
the US to put its software to work.
“There are a lot of applications for this
technology,” says Wu Shuang, who
heads its Silicon Valley research group.
It is not alone. Shenzhen-based
Malong Technologies has also trained its
image recognition algorithms on masses
of Chinese data — in its case, by analysing hundreds of thousands of photos
from fashion shows to identify trends
for clients in the garment industry. It
says it is now trialing the technology
with ecommerce companies in the US.
A “key difference in China is there are
just more people, more data, more businesses — it’s just bigger,” says chief technology officer Matt Scott, a former
Microsoft researcher who moved to
China to co-found the company. “Having access to that data in China, we can
export [the technology] around the
world.”
Algorithms like these are the
advanced guard in a battle that will go a
long way to determining economic leadership in the era of Big Data — a contest
where China is catching up quickly and
now vying with the US to be the dominant force.
The AI revolution is often thought of
in terms of robots or drones that can do
tasks once performed by humans. But
Rising competition China has made AI
one of the centrepieces of its economic
plan for the next two decades
Narrowing gap One advantage
Chinese companies have is the wealth
of data they can access about people
Valley expertise The US still has an
edge in attracting talented scientists,
many of them of Chinese origin
far bigger data sets, according to one
expert.
If China is rich in data, then it also has
the economic opportunities to exploit it
— something that has helped lure back
many haigui, or returning “sea turtles”,
like Mr Jin. AI is being harnessed in law,
where machines have replaced stenographers in more than 6,000 courts; on
the roads to manage traffic; in hospitals
to detect tumours; and in Shanghai subway stations where you can buy tickets
by talking to the machine. “AI has the
biggest opportunity in China versus any
western countries,” says Mr Rong.
Chinese executives talk about a smart
city scheme that halved the time it takes
to speed ambulances from depot to
China is catching up with
the US in AI
‘What’s the national
direction on AI and robotics
in the US? It’s nothing. It’s
missing. The government is
flailing around’
its impact will also be felt from a less visible source — the ability to sweat the
data the hardest. Machine learning systems that can find patterns by analysing
large data sets are at the cutting edge of
today’s artificial intelligence.
For some industries, deep learning —
the most advanced form of the technology — has the potential to create value
equivalent to as much as 9 per cent of a
company’s revenues, according a report
in April from McKinsey Global Institute.
That translates into trillions of dollars of
potential economic value — and the US
and China are the clear leaders.
“If you look globally, it’s a two-horse
race in AI,” says Michael Chui, a McKinsey partner who led the study.
In China, the AI boom has fed the
country’s swelling sense of self-confidence in its expanding technology base.
President Xi Jinping has made AI one of
the central pillars of the Made in China
2025 plan to transform the country’s
economy and has set a goal of being the
world leader in the technology by 2030.
At the same time, China’s advances
are also contributing to an opposite paranoia in the US that its technology
exceptionalism can no longer be taken
for granted. The Trump’s administration’s plans for a trade war with Beijing
are motivated — at least in part — by fear
of China’s advances in new technology.
“It’s clear that the US government
sees itself in a tech arms race with the
Chinese government,” says Robert Silvers, a partner at legal firm Paul Hastings and former assistant secretary for
cyber policy at the department of homeland security. “The US is taking the view
that these kinds of technologies are so
transformative that the country that
gets the lead is going to have not just economic or tech advantage but also
national security advantage.”
Defence element
One reason the contest over AI is so
charged is that it is connected with a
race to find a new military edge. As well
as answering mundane customer queries and piloting driverless cars, the
same technology can also be deployed to
synchronise drone swarms, analyse pictures taken by spy drones and control
autonomous boats.
Dominance in AI could bring a step
change in warfare, says Sean Gourley,
founder of Primer, a Silicon Valley AI
start-up whose backers include the CIA’s
venture capital arm. Technology shifts
like this can undermine military powers.
“It’s likely to be coupled with the reordering of global power. Whoever is best
at this will be in a strong position in 10
years’ time,” he says.
Russian president Vladimir Putin
found his own way to raise the rhetori-
AI funding
Q1 2012 Q2 2016
($bn)
Number of Number of
companies patents
(’000)
(’000)
20
4
40
15
3
30
10
2
20
5
1
10
0
US UK
China
0
US UK
China
0
US UK
China
Source: Goldman Sachs Global Investment Research
The fierce
battle to lead
in big data
AI-related patent publications
China
Keyword searches of title and abstract for:
Deep learning
Artificial Intelligence
Machine learning
800
600
600
500
600
400
400
400
300
200
200
200
100
0
2013 14
15
16 17
US
0
0
2013 14
15
16 17
2013 14
15
16 17
Source: CB Insights, epo.org
Collaboration
Young sector uses open
source technology
For some, artificial intelligence is a
new arena for geopolitical competition
with military overtones. But for others,
it is the first truly open source
technology, with companies and
nations alike sharing ideas to
improve the lot of humankind.
“It’s probably the best
worldwide collaboration
anyone has ever seen,”
says Kai-Fu Lee, right, who
headed up Google’s China
operations and now runs
his own venture capital firm.
Many tech companies like to
make the same argument. “We hope
we can develop AI tech and share with
all players,” Tencent chief operating
officer Ren Yuxin told a gathering of
developers last year in Chengdu.
Tencent and Google last year agreed
to cross-license patents on a range of
products and technologies.
“AI is mostly an enabler, it’s not a
nuclear weapon,” says Mr Lee. “I worry
about the cold war analogy.” He says it
is being firmly driven by universities
and tech giants rather than defence
departments and any competition is at
company rather than national level.
James Lewis at the Center for
Strategic and International Studies in
Washington agrees that the
competition “is largely commercial and
it’s largely between companies.”
Proponents of this view point to
the open-source resources
and willingness of scientists
to upload their findings
immediately rather
publish in journals.
Data are not always a
company-specific resource,
but can be bought from
providers — a classic gig
economy business that uses shoals of
workers to provide and label speech,
image and other data in a way a
computer can understand.
“There are reams and reams of
data,” says Mark Brayan, chief
executive of Appen, a Sydney-based
company. “But is it the right data? Is it
prepared and labelled in the right
way? Is it of sufficient quality?”
cal stakes over AI last year: “Whoever
becomes the leader in this sphere will
become the ruler of the world.”
According to most experts, the US still
has a clear lead. It takes three things to
be a world-class AI power: the most
advanced algorithms, specialised computing hardware, and a good supply of
the raw material that machine learning
systems depend on — data.
Last year’s Go match, where a system
built by Google subsidiary DeepMind
trounced leading player Ke Jie in the
ancient Chinese board game, was
China’s wake-up moment in AI, says one
Google executive. “Only when the Russians launched the sputnik did the US
realise how far they had come,” he says.
“China had that moment when they lost
at AlphaGo.”
That view is echoed by some in China.
“For top talents, clearly the US will still
be the main resource. I think there’s no
question of that,” says Rong Jin, head of
machine intelligence technologies at
DAMO Academy, Alibaba’s research
programme. The perception in China is
that Americans throw themselves into
fundamental research and are heavy
duty mathematicians — the disciplines
at the heart of AI — while Chinese tend
to study coding or engineering.
Yet despite those advantages, China is
rapidly narrowing the algorithm gap.
When it comes to the output of China’s
research institutions, “the statistics are
definitely rising sharply”, says Oren Etzioni, who runs the AI research institute
of Microsoft co-founder Paul Allen. He
points to other signs of China’s growing
AI capability, from the reading comprehension test earlier this year in which AI
newcomer Alibaba tied for top honours
with traditional research power Microsoft, to the strong showing of Chinese
researchers in the annual ImageNet
competition for image recognition.
On the second category of hardware
development, China has been slower to
build the sort of homegrown chip industry needed to put it on the leading edge.
That has been partly due to a series of
decisions that effectively bar the acquisition of US chip companies, which
started under the Obama administration and accelerated under President
Donald Trump.
It is in the final area — the availability
of raw data — where most experts
believe China’s AI advantage lies.
China has reams of data on its citizens
and is not afraid to use it. This is partly
due to a state that monitors everything
from birth: facial recognition is so widespread you can be picked up for jaywalking and stopped from stealing tissue at the Temple of Heaven in Beijing.
But it is also a tribute to China’s early
move online: this is a country where
people order, shop, pay and play online,
leaving massive data footprints that
enable merchants to accurately target
ads and promotions. “The density of
people is proportional to the density of
data,” says a leading Chinese machine
intelligence scientist.
Chinese attitudes to data privacy are
becoming slightly less lax, but regulations are still a million miles from
Europe, which is at the other end of the
spectrum and will introduce tough privacy rules later this month known as
General Data Protection Regulation. Yet
American companies like Facebook,
Google and Amazon also have masses of
data, says Mr Wu at Yitu.
That suggests that general-purpose AI
applications like facial recognition will
be the preserve of all “the big platforms”, regardless of their country of
origin, says James Manyika, a partner at
McKinsey. By contrast, more specialised
applications could be perfected where
the data are the richest. When it comes
to manufacturing, for instance, China is
“collecting a lot more data”, he says.
‘Overall, the Chinese tech
scene is more dynamic now,
particularly in terms of
trying out new ideas and
new products’
This data advantage could be greatest
in fields where regulation has made
access to information harder, or prevented it being collected in the first
place, according to some experts. Earlier this year, Google published promising research suggesting it could predict
the risk of heart attack by using imagerecognition software to study retinal
blood vessels. The research relied heavily on UK Biobank, a database drawing
on a detailed study of volunteers in Britain beginning in 2006.
Yet only 631 people in the Biobank
had medical conditions relevant to the
research. That made the dataset “relatively small for deep learning”,
Google said, reducing the effectiveness of the algorithm it
was able to train on the information. Chinese medical AI
researchers, by contrast, have
been able to tap into
A police officer
wears a pair of
glasses with a
facial
recognition
system in
Henan
province
patient to hospital, by dint of switching
traffic flows and traffic lights.
The smart cities scheme also offers
another point of difference with the US:
collaboration between state and private
companies on a large scale. In addition
to projects aimed at traffic management, crowd control, finding missing
children and elderly, cutting down hospital waiting times — the list goes on —
all the big tech players have joint
research labs with government.
This is part of a broader experimentation that is lacking in the US, says Mr
Wu. “Overall, the Chinese tech scene is
more dynamic right now, particularly in
terms of trying out new ideas and new
products,” he says. “People are just trying out more new things.”
That has not been lost on investors in
the US. One leading Silicon Valley venture capitalist, puts the difference in AI
opportunities bluntly: “The business is
bigger and better in China.”
This economic momentum behind AI
is closely aligned with a second powerful
force: a sense of national mission. That
has brought a hydrant of money and
clear industrial policy. This state-led
strategy is also closely aligned with
national champions Baidu, Alibaba and
Tencent — all private companies.
Washington has done much less to
promote a national agenda. “What’s the
national direction around AI and robotics [in the US]? It’s nothing. It’s missing,”
says the Silicon Valley investor. “The
government is flailing around.”
Worse, the Trump administration’s
attempts to clamp down on immigration has upset the US tech industry,
which has drawn heavily on overseas
talent — not least Indian and Chinese
engineers. The heads of AI at Apple,
Facebook and Microsoft, as well as
Google’s cloud computing division, were
all born outside the US.
“We’ve seen more and more students
choosing not to come to the US,” says Mr
Etzioni. “We’re in the process of shooting ourselves in the head.” He points to
one sign of how the talent pendulum is
swinging away from the US: Google and
Microsoft have both opened AI
research centres in China to tap the
AI workforce there.
Yet the expertise advantage
that the US has will not disappear overnight. Companies like
Yitu are moving in the opposite
direction because they
believe the US west coast
is still a magnet for many
of the world’s top engineering brains. “Half
the AI engineers in
Silicon Valley are
Chinese,” says Mr
Wu.
8
★
FINANCIAL TIMES
Letters
Wednesday 2 May 2018
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Corrections: corrections@ft.com
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The west must find ways to compete with China’s long game
WEDNESDAY 2 MAY 2018
Dealing with Trump and
his self-destructive tariffs
The EU should not agree to indefinite distortions for temporary gain
See you same time next month. After
weeks of worry about whether Donald
Trump would go ahead with his plans
to impose steel and aluminium tariffs
on trading partners, the White House
pushed back the deadline until June 1
but kept the threat alive. The US seems
confident of extracting concessions
from other countries, apparently
focusing on voluntary restraints on
exports, in return for making the temporary exemptions permanent.
For smaller countries, giving Mr
Trump what he wants for the moment
and hoping it can be undone later may
regrettably be the best option. For the
US’s major trading partners, particularly the EU, standing up to him is the
more strategically wise approach.
South Korea has shown one way: to
capitulate, but to contain the damage
as much as possible to symbolic concessions. Seoul in March agreed to
tweak the existing bilateral US-South
Korea trade deal to increase a Korean
import quota for cars made to US specifications and to phase in more slowly
cuts in US tariffs on light trucks.
Both will have limited effect in practice: US car exporters do not even fill
the existing Korean quota. Its other
compromise was more disturbing — to
limit by quota its steel exports to
the US.
Such voluntary export restraints
(VERs) were common in the 1980s.
The US used them to restrict car
imports from Japan. They were subsequently banned by World Trade
Organization law for the very good reason that they are not just highly distorting between countries concerned but
push excess capacity elsewhere in the
global economy.
It remains to be seen whether other
countries, including Australia and
Brazil, have now also agreed such
restrictions as the US seems to suggest
they have.
If so, it would be a considerable blow
to the global trading system. In that
case, it would fall to the EU to take a
lead by standing up to the US and refusing to follow suit.
If not through VERs, the Trump
administration also seems to want the
EU to give concessions through a trade
deal, perhaps a goods-only pact focusing on tariffs. While there is no harm in
talking, Brussels should resist making
permanent concessions to avoid a oneoff threat of tariffs.
Both economically and politically,
the EU needs to assert itself rather than
give in to the White House’s demands.
Despite Mr Trump’s clumsy attempts
to foster division among member
states, the EU has so far held together
and clearly stated that it will not negotiate on anything with a gun to its head.
The question is not whether the EU
should allow itself to take a hit for the
greater good. Mr Trump will not help
the US economy or its trade performance by making a basic commodity like
steel more expensive.
While he pushes for self-destructive
measures, Brussels is quietly winning
battles of trade governance one lowprofile deal at a time and exporting
its regulatory system through sheer
economic heft.
Mr Trump can complain about symbolic but minor industries such as steel.
The EU is setting regulations across
big swaths of the global economy,
from chemicals to food and increasingly to data.
Some of the smaller countries faced
with Mr Trump’s tariffs have genuine
dilemmas. A trading bloc the size of the
EU should be able to resist.
The best response to US bullying is to
ignore it as much as possible, and get on
with building a framework of alliances
and laws that will further Europe’s
interests — and those of an open global
trading system — in the future.
A win for prosecutors,
if not Hewlett-Packard
Trials are a more focused deterrent to corporate crime than fines
Try to recall the last senior executive to
be convicted in connection with a corporate crime. Over a decade ago, the
leaders of WorldCom, Tyco, and Enron
were all found guilty. Since then, examples are harder to come by. Yes, traders
have been held to account for manipulating markets, and executives have
been nabbed for insider trading, and
there was Bernard Madoff and his
Ponzi scheme. But despite a financial
crisis, a recession and billions of fines
against banks, top managements have
got away remarkably clean.
If one is prepared to consider Autonomy, the UK software company sold to
Hewlett-Packard for $11bn in 2011, a
major company, then the bosses’ luck
has run out. On Monday, the company’s former chief financial officer,
Sushovan Hussain, was convicted of 16
counts of fraud by a federal court in San
Francisco. Mr Hussain maintains his
innocence and plans to appeal.
Even if his conviction is upheld, HP’s
acquisition of Autonomy should be
remembered as one of the most poorly
thought out and incompetently executed deals of all time. Before the purchase, analysts had for years been furiously waving red flags about Autonomy’s revenue recognition practices, in
connection with treatment of service
contracts, acquisitions and sales to distributors. This issue — in particular the
question of whether some sales to
resellers were shams — was at the heart
of Mr Hussain’s trial. Meanwhile, HP
has sued Mr Hussain and Autonomy’s
former chief executive Mike Lynch in
UK courts, seeking $5bn in damages
(Mr Lynch is counter-suing).
The ample warning, and the fact that
Autonomy’s revenue collapsed almost
immediately after the company
changed ownership, indicates cursory
due diligence ahead of a deal that was
not only huge, but also put an extreme
valuation on the target company. The
error cost HP chief executive Léo
Apotheker his job, and several members of the board followed. Monday’s
verdict, if it stands, only shows that
what was suspected before the deal has
been proven true. It does not suggest
that HP was anything less than catastrophically careless.
In the UK, the Serious Fraud Office
declined to pursue allegations against
Autonomy, concluding that there was
“insufficient evidence for a realistic
prospect of conviction”. The US conviction, on every count alleged, will raise
questions about this judgment.
The SFO has only last month
received an increase in its recurring
budget, to a still-modest £53m. It is
possible that budgetary parsimony has
been a barrier to justice in this and
other cases. It must be borne in mind,
however, that prosecutors in one jurisdiction often defer to those in another
where a successful effort is more likely.
Revenue recognition rules were considered — at the time of the relevant
transactions — stricter in the US
(though if the transactions were outright shams, the niceties of accounting
rules are hardly relevant).
When the next recession comes, and
more deals and financing schemes will
surely go awry, we will see the degree to
which fines — preferred tool of regulators for the last decade — have proven
an effective deterrent to corporate
malfeasance. Whatever happens, there
is much to recommend the courtroom
option, from the higher standard of
proof to the potential finality of conclusion (however much time it may take).
Most importantly, the deterrent effect
of conviction is directed squarely at the
individual, not the company, and it is
individuals that decide to break the law
and abuse the trust of employees and
investors. If crimes have been committed, it is criminals rather than companies that most need punishing.
You are rightly critical of China’s Belt
and Road lending practices (“China
needs to act as a responsible creditor,”
April 30), but only from a western
perspective that is becoming
marginalised by rising mercantilist
powers. While Beijing is eager to show
leadership in the international trading
and financial system, it shares little
interest in the western values behind
that system. In fact, the initiative is an
effort to establish a distinctly
non-western alternative across Eurasia
for the 21st century.
China wants to secure a global
inventory of commodity resources for
its future growth — agriculture,
fisheries, energy and minerals —
insulated from outside military,
financial or cyber intervention. It has
workers it cannot fully employ at
home, excess steel, cement and
aluminium output from state-owned
plants and critical knowledge gaps in
food, water and other resource
management.
Early Belt and Road projects are
largely China-funded, often high-risk
investments aimed at addressing these
needs and projecting China’s strategic
presence into south Asia, the Middle
East, Africa and the Mediterranean.
Speculative investment in roads, highspeed rail, customs clearance and
broadband establishes Chinese product
and service standards that will give an
advantage in long-term development
for future project bidders and suppliers
throughout the regions, and an
offsetting value against future risks.
Actual risks may be far less than
many imagine. Successful projects will
increase shared prosperity; failed
projects will over time transfer land,
assets and intellectual property to
Chinese companies. Host-country
protests over jobs and debt, along with
hesitation by Chinese banks to run up
subprime debt abroad, will constrain
lending. It is hard to see much
downside to the long game China is
playing. A more relevant question is
whether the west will remain engaged
and find effective ways to compete.
Niels Erich
San Francisco, CA, US
Beijing can reform without
cost to global economy
British public service lacks Waste plastic can be a
a ‘community of aims’
valuable commodity
In his very cogent analysis of Chinese
president Xi Jinping’s challenges to fix
the economy (“Xi’s economic dream
team must be allowed to succeed”,
April 30), Eswar Prasad is clear in his
recommendations for internal reforms,
but unfortunately silent on exactly how
the costs will be shared. Many of the
structural problems, like overcapacity
in state-owned enterprises,
over-leveraging by the state-supported
corporate sector, and profligate
borrowing by provinces portend the
need for an almost classic adjustment
programme, but one that the Chinese
will be loath to undertake.
Instead they will likely try to forcibly
shift resources from declining to new
industries, following, in part, the
blueprint of the “Made in China 2025”
report that set forth explicitly the new
industries in which China wanted to
establish export supremacy. This kind
of industrial policy, if backed, as in the
past, by state capital, implicit
protection and explicit technology
activism, will have costs for the rest of
the world. The headline implies that
“allowing “ the reforms to happen is a
shared global responsibility, which it is
decidedly not.
The key admonition to the Chinese
“dream team” is to start playing by the
rules and not fix their house at the
expense of the global economy.
Danny Leipziger
Professor of International Business,
George Washington University, US
General Charles de Gaulle, reflecting
from London on the nature of the
leaders of Britain in late 1940, wrote in
his memoirs: “ . . . whether they were
members of the government, military
leaders, high officials, or personalities
from parliament, the press, or the
business world, all displayed a striking
and imposing loyalty and assurance
with regard to British interests . . .
“How often, indeed, have I savoured
the humour with which, overworked
though they were, they judged men
and events in the midsts of the drama
which was sweeping us all about as the
sea sweeps the pebbles. But there was
in each of them a devotion to the public
service, and between all of them a
community of aims, which bound them
together. The whole gave an impression
of a cohesion among those in authority
which I very often envied and
admired.”
How far away from today that seems.
Somewhat ironically, so aware was de
Gaulle of the ability of Britain’s leaders
(May 1) to effectively shape things to
their own interests that he vetoed its
membership of the European
Economic Community in 1963.
David Miles
Professor of Financial Economics,
Imperial College London SW7, UK
Garment workers still toil
for low pay in Bangladesh
Sir, Amy Kazmin’s article, “Worker
safety accord built from rubble of Rana
Plaza” (April 24), offered a valuable
summary of safety conditions in
Bangladesh’s garment industry on the
fifth anniversary of the worst-ever
apparel industry disaster. The
collaborative efforts that have
improved garment workers’ safety over
the past five years are commendable,
but no less deserving of widespread
public attention is the ongoing problem
of poverty wages among garment
workers in Bangladesh today.
The issue of low wages is often out of
the public eye and only briefly
mentioned in reporting on health and
safety conditions. A new report by the
Fair Labor Association makes clear the
urgent need for progress on wages in
Bangladesh, where garment worker
wages are the lowest in the world.
We found that among all 6,000
workers in 18 factories we studied, not
one was earning income even close to a
living wage, measured against any
existing benchmark. The average
Brexit invades
London’s local
politics
Election
Notebook
by Frederick Studemann
‘His will has been thwarted without
engaging his intellect’
worker would need an 80 per cent pay
raise to earn wages equal to even the
most conservative living wage
benchmark outlined in this report.
There were two hopeful signs in the
report suggesting strategies that
responsible business leaders might
pursue to support higher wages for
workers. FLA researchers found that
workers tend to be paid more in
factories that show strong respect for
workers’ freedom of association and
conscientious planning around orders
and production deadlines.
To foster sustainable wage reform,
there must be meaningful negotiations
at the national level, with full
representation of the views of workers
and unions. At the same time, buyers
and suppliers do not need to wait on
government action to begin working
collaboratively, as they have for health
and safety issues, on supporting higher
wages for workers whose needs are not
being met right now.
Sharon Waxman
President and Chief Executive,
Fair Labor Association,
Washington, DC, US
Mood for dancing is a sure
sign of market exuberance
I read the lead front page story this
morning about a bonanza day of deals
with mounting incredulity (“Merger
mania whips up $120bn of tie-ups in
just one day”, April 30). When you
quoted Rothschild’s Lee Lebrun saying
“but as long as the music plays, people
will keep dancing”, I shouted out “I
don’t believe it”.
Have we learnt nothing since Citi’s
Chuck Prince said almost the same
thing in July 2007 just before the
financial world started to unravel? If
the market needs a clue about where it
is going next, I’d suggest this is it.
Brian Bollen
Towcester, Northants, UK
“We want to talk about Brexit; they
want to talk about bins.” Thus the
terse summary from a friend of what
is at stake this Thursday when
England holds local elections. She
lives in south-east London, in an area
where the arrival in recent years of
artisanal coffee shops and fashionable
art galleries illustrates the
gentrification — and
internationalisation — of a district
once better-known for its more
Dickensian qualities.
Against such a backdrop one might
expect the usual street-level issues
thrown up by change to be top of the
agenda. But as one of the 1.1m EU
citizens living in London, my friend
has other things on her mind.
These include questions over her
own fate once the UK leaves the EU in
11 months time — and that of her
school-age children. Media reports of
EU citizens who have lived in Britain
for decades suddenly being
confronted by hostile officialdom have
jangled many nerves, even if the cases
are due to bureaucratic error rather
than policy.
The scandal over the mistreatment
of the so-called Windrush generation
of UK citizens by the immigration
authorities has not calmed matters. If
the state can mess things up so badly
with its own citizens, what hope is
there for some 3m EU nationals living
in Britain? The practicalities have yet
to be nailed down, despite claims from
the former home secretary Amber
Rudd that securing the necessary
documentation will be as easy as
Scale down for tricky
technology transitions
One question has yet to be asked in the
TSB technology fiasco (May 1): why did
TSB try to move all customers in one
go? Decades of experience with Big
Bang IT projects demonstrate that big
changes very rarely work. Today’s
approach is to go small: move a few
customers at a time.
When it comes to software
technology diseconomies of scale are
prevalent: big is more expensive and
more risky. Managing a retail bank
may well require mastery of economies
of scale but managing the technology
that bank runs on requires exactly the
opposite mindset.
Allan Kelly
London W3, UK
Respect the pedestrian
Pilita Clark will break traffic laws when
it suits her, rather than adapt her
behaviour in order to obey the law
(April 30). Has she similar advice for
those who feel they must steal to stay
alive? Can she advise me, as a
pedestrian who is daily threatened by
pavement cyclists, how to avoid injury
or worse?
Eric Chalker
Tonbridge, Kent, UK
setting up a store card at one of her
boss’s favourite shoe retailers. As my
friend puts it, what unsettles many in
her position is the “the lack of clarity,
the sense of stuff being decided over
your head while you are not
consulted”.
Thursday offers an opportunity to
at least communicate — if not resolve
— some of those concerns. It will be
the first chance for EU citizens to vote
in London since the Brexit
referendum. Depending on how
negotiations between the UK and the
rest of the EU pan out, some fear it
may well be the last.
EU citizens have the right to choose
local councillors in the UK, as well as
their MEPs. This used to be a privilege
that not all rushed to embrace. Many
EU citizens are not even aware they
can vote. Others have not registered.
And even those who are on the lists
often adopt the local customs by not
bothering to vote. This time might be
different, thanks to Brexit.
The chatter across dedicated
websites, at school gates and around
dinner party tables points to greater
political engagement among EU
nationals — the Leave vote has easily
overtaken property prices as the top
gossip topic. The parties have also
woken up to the EU vote. Having in
the past been all but dismissed as an
insignificant bloc of voters, the EU
citizenry are now courted as a
potentially decisive one. The Liberal
Democrats in particular hope to reap
electoral reward from their ardent
pro-EU stance.
Your article and engaging cartoon
(“Stop our oceans choking on a plastic
overdose”, April 22) highlight both the
issues facing our oceans and, obliquely,
point in the direction of at least part of
the solution. While many are aware of
the recycling challenges posed by
plastics, including unidentifiable or
mixed polymers, thin flexible films and
contamination, few seem to be aware
of progress in producing energy from
waste over the past 20 years. The
plastic component, which is about 10
per cent of the global mixed solid waste
stream, is often perceived as rubbish,
rather than being recognised as a
valuable commodity.
The feasibility of deriving energy
from waste, using high temperature
incineration and filtration to prevent
harmful emissions, is now well
established: the EU Packaging and
Packaging Waste Directive lists energy
recovery as a means of recycling
(where container reuse or polymer
recovery is not cost effective or
practical); in Denmark energy from
waste plants provide electricity and
heat for about 16 per cent of the
population; in the UK about 50 such
plants are in operation generating
about 2 per cent of our electricity.
Valuable byproducts from this
process include ash that can be used as
a construction aggregate; furthermore,
the presence of plastic, with its high
calorific value, within the waste stream
entails that cellulosic and other organic
waste can be burnt cleanly, rather than
being allowed to decompose in landfill
to generate methane. Taking such
factors into account, it has been
calculated that the energy-from-waste
process generates a net reduction in
carbon dioxide emissions compared
with fossil fuelled power generation.
Rudolph Kalveks
London SW7, UK
Trudeau’s deceptive display
I agree with London zookeeper Daniel
Simmonds that Justin Trudeau is more
similar to a silverback gorilla than
Donald Trump in that his displays of
leadership are more subtle (April 30).
But some conservative commentators
have accused Canada’s prime minister
of using his distinctive socks as an
irrelevant and perhaps misleading
form of display. Although bright
colours and elaborate patterns can be a
sign of genetic fitness in some male
birds, for example peacocks, there is no
evidence that this applies to leadership
qualities or political skills among
human males.
Bruce Couchman
Ottawa, ON, Canada
In Lambeth, the area of south
London where I have lived on and off
for 40-odd years, a scrap has broken
out between Labour, the Liberal
Democrats and the Greens over just
which opposition party is the better
advocate for the rights of the 37,000
EU nationals who live there. The
resulting campaign literature lurches
violently between the usual pavement
politics — pledges for a traffic
reduction scheme here, a clamp-down
on fly-tipping there — and promises to
do battle on one of the great
international issues of our day. “Send
a message” to the government on
Brexit, the leaflets urge.
“In marginal wards in marginal
boroughs where there happen to be a
lot of EU nationals, this could make a
difference,” says Tony Travers of the
London School of Economics. The
losers are likely to be Conservative. It
is “hard to imagine” any EU nationals
voting Tory, says Prof Travers, given
that the ruling party has come to be
seen as the party of Brexit. Among the
boroughs where the EU vote could
have an impact are the Conservative
flagships of Westminster, Kensington
and Chelsea, and Wandsworth.
If these were to fall — still a big if,
says Prof Travers — it would not be
without irony. A drubbing for the UK’s
governing party delivered by a
European minority voting on an
international issue in a poll dedicated
to neighbourhood issues. Whoever
said all politics is local?
frederick.studemann@ft.com
★
Wednesday 2 May 2018
9
FINANCIAL TIMES
Opinion
Carmaker’s lay-offs highlight the plight of agency workers
EMPLOYMENT
MENT
Sarah
nor
O’Connor
W
hen carmaker Jaguar
Land Rover said it
would shed about 1,000
UK workers, it opened a
window into the realities of the modern labour market. JLR is
an elite company in a high-value economic sector with a well-paid, unionised workforce. Yet the people set for the
chop were not JLR employees, though
they had been working alongside them
on the production lines, in some cases
for years. Rather, they were employed
by agencies including Manpower, which
allows JLR to adjust headcount
smoothly to match ebbs and flows in
demand.
These triangular employment relationships, where someone is employed
by one company but works in another,
have become more common. There are
roughly 800,000 agency workers in the
UK, up from about 600,000 in 2010,
according to analysis of official data by
the Resolution Foundation think-tank.
The popular notion of an agency worker
is a temp sent into a busy warehouse
over Christmas. But some employers are
now building a layer of agency staff into
their business models. An RF survey of
500 human resources managers in companies that use agency staff found that
about one-third deployed the workers
strategically rather than ad hoc.
JLR had agreed with its union Unite
that up to 10 per cent of the manufacturing workforce could be agency staff, and
those with good work records would be
offered JLR contracts when vacancies
arose. For semi-skilled people, the most
common route into JLR these days is by
working for an agency. They work an
average three years on these terms
before “conversion” to a JLR contract.
For employers, there are upsides to
this arrangement. Some may use agency
staff to undercut the pay of employees.
But in JLR’s case, new starters follow the
same pay-progression whether or not
they are agency workers; rather, the
benefit is flexibility. It is far easier to dial
down the number of agency staff than to
squeeze extra effort from agency staff. A
few years ago I interviewed workers in
an Amazon warehouse in a rundown
town where direct employees wore blue
badges and agency staff wore green. One
agency worker told me the prospect of
winning a blue badge was “dangled constantly in front of us by management in
return for meeting shift targets”.
There is also an upside for some workers. In certain roles — doctors, for example — agency staff can command higher
hourly rates while sidestepping
bureaucracy. Others like being able to
accept different short-term assignments without being tied down. For JLR,
the flexibility granted by agency staff
might have encouraged the company to
produce more cars in the UK and pay
good wages — important concerns for
Unite. As for the workers being shed,
Manpower is a reputable agency that
will try to find new assignments or pay
them something akin to redundancy.
Yet it is hard to escape the fact that
this subset of newer, often younger,
Newer, often younger,
employees are bearing a
disproportionate share of
the risk of a downturn
go through the hassle, expense and
notice periods involved in making
employees redundant.
There is also the chance to “try before
you buy”: to observe potential employees on the shop floor then pick the best.
In depressed local labour markets, the
prospect of a permanent job can
workers, through no fault of their own,
are less secure than ones who joined
before them. They are bearing a disproportionate share of the risk of a downturn in demand without being paid a
premium in return. And some of them
have now lost their roles abruptly due to
a decline in the sale of diesel cars.
This sort of insider-outsider dynamic
is notorious in countries including
France and Spain, where strong legal
protections for permanent employees
have prompted employers to hire new
staff on insecure temporary contracts.
These are not the same as agency contracts, but they can create similar divisions. Policymakers in the UK often tuttut at two-tier European labour markets, patting themselves on the back for
what they like to call Britain’s “light and
even” employment regulation.
But while those countries have a far
bigger problem, it is clear that a similar
dynamic has emerged in some British
workplaces. Even Germany — where
manufacturing workers accepted cuts
to their hours during the last downturn
to avoid lay-offs — faces the same issue
in parts of its economy. Its two largest
parties recently agreed in their coalition
treaty to “end the abuse of temporary
work” by larger employers. They plan to
limit temporary contracts that lack a
substantial justification to 18 months,
and to cap the share of such contracts at
2.5 per cent of the workforce. Germany
is right to pay attention now, before the
next downturn hits. Some of the most
pressing questions about the new world
of work revolve around risk, and who is
made to bear it.
We are in danger of allowing more risk
to be concentrated on a smaller group:
not shareholders, not established
employees, but relative newcomers,
many of whom are young. Unlike other
groups, they lack a strong voice in the
workplace and the corridors of power.
But that is no excuse to expect them to
carry the burden for the rest of us.
sarah.oconnor@ft.com
How the
Beijing elite
sees the world
Martin Wolf Economics
They perceive the poor quality of
many of the west’s elected leaders and
the instability of their economies
H
ow does the Chinese ruling
elite view the world? Over
the weekend, I participated in a dialogue
between foreign scholars
and journalists and top Chinese officials,
academics and business people, organised by the Tsinghua University Academic Center for Chinese Economic
Practice and Thinking. The discussion
was franker than any I have participated
in during the 25 years I have been visiting China. Here are seven propositions
our interlocutors made to us.
China needs strong central rule. This
idea went with the notion that China is
in important ways a divided society: one
participant even remarked that 500m
Chinese people love Deng Xiaoping’s
reforms, while 900m favour the world
view of Mao Zedong. Another pointed to
the fact that the central government
spends only 11 per cent of the total by all
levels of government and employs just 4
per cent of all civil servants. Others
emphasised that China is a developing
country with huge challenges.
The conclusion participants drew was
that the Chinese Communist party, with
some 90m members, is essential to
national unity. Yet corruption and factional infighting has threatened the
legitimacy of the party. One senior official even stated that Xi Jinping “has
saved the party, the country and the
military”. This perspective also justifies
the suspension of term limits on the
presidency, which, it was stressed, does
not mean perpetual one-man rule.
Western models are discredited. The
Chinese have developed a state system
run by a technocratic elite of highly educated bureaucrats under party control.
This is China’s age-old imperial system
in modern form. The attraction that
western-style democracy and free-market capitalism may have exercised on
this elite has now withered. They
stressed the failure of western states to
invest in their physical or human assets,
the poor quality of many of their elected
leaders and the instability of their economies. One participant added that “90
per cent of democracies created after
the fall of the Soviet Union have now
failed”. This risk is not to be run.
All this has increased confidence in
China’s unique model. Yet this does not
mean a return to a controlled economy.
On the contrary, as a participant
remarked: “We believe in the fundamental role of the market in allocating
resources. But government needs to
play a decisive role. It creates the framework for the market. The government
should promote entrepreneurship and
protect the private economy.” One
participant even insisted that the
new idea of a “core leader” could lead
to strong government and economic
freedom.
China does not want to run the world.
This sentiment was repeated. Its internal problems are, in the view of participants, too big for any such ambition. In
any case, it has no worked-out view of
what to do. But, as a senior policymaker
insisted, in the specific context of rela-
China emerges as a manufacturing power
It has become less dependent on trade ...
… and less vulnerable to US trade pressure
Manufacturing output ($bn)
US
Japan
Germany
Chinese trade in goods as a % of GDP
US/China trade - exports as a % of origin country GDP*
2000
05
China
10
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
15 17
Sources: Haver Analytic; IMF; Thomson Reuters Datastream
tions with the US, “we must co-operate,
to deal with shared problems”.
China is under attack by the US. One
participant argued that “the US has now
shot four arrows against China: over the
South China Sea, Taiwan, the Dalai
Lama and now trade”. This then is a systematic attack. Many expect this to get
worse. That is not because of what China
has done, but because Americans now
view China as a threat to US economic
and military hegemony.
US goals in the trade talks are incom-
The attraction that
democracy and free
markets exercised on
them has withered
35
30
Exports
prehensible. People closely engaged in
the trade talks are puzzled by what the
US is after. Does Donald Trump even
want a deal, they wonder, or is his aim
just conflict? In any case, top officials
say they understand and accept the
legitimacy (and value to China itself) of
demands for better protection of intellectual property. They also understand
the case for unilateral liberalisation,
including of financial services. China
would, one official suggested, like to
make the Made in China 2025 programme a “win-win for the world”. But
China’s technological upgrade is nonnegotiable. Also, how is China expected
to reduce the bilateral imbalance with
the US if the latter imposes tough controls on exports of strategically sensitive
goods and lacks the infrastructure to
ship coal or oil competitively?
10
8
20
6
15
10
Balance
05
12
25
Imports
2000
US imports from China as a % of Chinese GDP
10
5
15
17
0
4
US exports to China
as a % of US GDP
2000
05
2
10
15
17
0
*Using US trade data
China will survive these attacks. The
Chinese participants seemed reasonably confident that their country could
endure the tests to come. One noted that
China is already a huge industrial country. Its manufacturing sector is almost
as big as those of the US, Japan and Germany together. It has vast numbers of
skilled people. The economy is also less
dependent on trade than it used to be.
Furthermore, noted another, US business is highly involved with and dependent upon the Chinese economy. The
Chinese people, stressed others, are
probably better able to bear privation
than Americans. They are also
highly resistant to being bullied by US
power. Indeed, the Chinese leadership
could not ignore public opinion in
considering concessions. Whatever
happened, some insisted, China’s rise
was now unstoppable. (See charts.)
Furthermore, they noted, while China
cannot challenge US global military
dominance, that is less the case in the
western Pacific, where China is increasingly potent. In the longer run, China
will develop a “first-class” military.
This will be a testing year. China and
the US will have a complex and fraught
relationship over the long run. But, one
participant remarked, “this will be a
testing year. If it goes in the right direction, it will be fine; if it goes in the wrong
direction, it will be earth-shaking.” The
progress made over Korea, an area of
Chinese and American co-operation,
could be a harbinger of the former; friction over trade presages the latter. The
direction taken may reshape our world.
martin.wolf@ft.com
US inflation is not a cause for alarm just yet
Megan
Greene
T
he US Federal Reserve must
be chuffed these days, with
its favourite inflation metric nearly hitting its 2 per
cent target in March after
six frustrating years of falling short.
Investors have embraced the “inflation
is back” theme with gusto, driving the
yield on 10-year Treasuries above 3 per
cent last week off the back of higher
inflation expectations.
But some investors worry that surging
inflation late in the economic cycle will
prompt the Fed to raise rates more
aggressively, killing off the recovery.
Take a deep breath, everyone. The
economic recovery is not in immediate
danger of being scuppered by the Fed.
There are enough disinflationary pressures to keep the central bank from
increasing rates no more than three (or
maybe four) times this year.
The recent buzz about the return of
robust US inflation has not come out of
nowhere. Tight labour markets, fiscal
stimulus from tax reform and the recent
spending bill, and rising commodity
prices all suggest upward price
pressures should be building. The
Employment Cost Index showed the
fastest US wage growth since 2008 in the
first three months of this year. And tariffs imposed on goods from the EU and
China could eventually be passed on to
consumers as well.
But for all the excitement over accelerating inflation, we should remember
that similar personal consumption
expenditure figures were seen last January — and for much of 2016 before that.
We have been here before. The inflation
Tight labour markets and
fiscal stimulus suggest
upward price pressures
should be building
data are also being affected by statistical
quirks. Changes in cell phone plan pricing and dollar exchange rates are falling
out of the year-on-year comparison,
while one-off changes are pushing up
healthcare inflation.
Furthermore, some factors suggesting a late-cycle inflation surge may not
hold water. Nearly half of the stimulus
from the spending bill is earmarked for
defence, which does not feed into core
PCE. Despite the first-quarter rise in
employment costs, growth in average
hourly earnings has been stuck between
2.3 and 2.7 per cent for years and may
remain stubbornly low.
Back in the 1950s, most US consumption involved goods. But now it is mainly
services, particularly low-wage, lowhour sectors such as restaurants and
shops. That means new jobs tend to be
at the lower end of the pay scale. Demographics are also holding down wages as
retiring baby boomers are replaced by
younger, cheaper workers. There is a
glut of cheap labour globally as well,
which counteracts upward pressure on
wages in developed markets. Finally,
technological innovation and automation continue to contain wage inflation.
Widespread tariffs from a US-China
trade war could push up some input
costs, but this would only feed through
marginally into overall price inflation.
Tariffs would also drag on US competitiveness and growth, which would put
downward pressure on prices.
Other disinflationary forces are
apparent if you look at supply and
demand in the American economy. The
US has undergone what should be two
significant positive supply side shocks —
the tax bill, as expensing in theory
encourages investment, and deregulation — and one negative demand side
shock as the Fed removes monetary
accommodation. These developments
all put downward pressure on prices.
Finally, inflation is no longer a purely
domestic phenomenon in a globalised
world. While the US had strong figures,
Japan and the UK reported weaker
headline inflation in March, and Germany and Italy saw headline inflation
decelerate in April. One has to wonder
whether the US can buck the general
western trend, particularly if the dollar
continues to strengthen.
There are legitimate reasons to expect
inflation in the US to accelerate in the
next two years. But the American economy is hardly burning the house down,
and overheating. A slow, steady rise
should be cause for celebration — it
means this economic recovery should
still have legs.
The writer is global chief economist at
Manulife Asset Management
10
★
FINANCIAL TIMES
Wednesday 2 May 2018
US tech IPOs: signs of life
The sector led the sell-off in US stocks earlier in the year but that has not stopped a flurry of new tech
companies coming to market. The entrants are more mature than in the dotcom boom and more diverse.
But are investors too excited by the cloud?
Twitter: @FTLex Email: lex@ft.com
goodwill in 2003, make comparisons
with the past trickier. Motives for deals
have not changed. Making the most of
an all-you-can eat buffet should not be
one of them. Acquirers should begin
edging away from the food table.
M&A boom:
deal-icious
People in wealthy economies spend
large sums trying to lose weight. In the
capital markets, the forced diet follows
an eating binge during the bull run.
With equity indices near all-time
highs, company boards seem hungrier
for deals than ever. Already the total
amount announced this year has hit
$1.7tn, the most since the global
financial crisis began. Only fear will
sate this corporate gluttony.
Valuations are one danger sign. If the
buyer agrees too high a price, painful
consequences will follow years later.
Takeout ratios are at highs last seen
in 1990, says consultancy BCG, at an
average enterprise value to earnings
before interest, tax, depreciation and
amortisation of 14 times last year.
Deal valuations are higher when
struck during periods of strong global
economic expansion. Data for 19852014 show the share performance of
any group created by a deal in this
environment will be significantly lower
than if the transaction comes during a
period of weaker output.
The amount paid above the
undisturbed price of a target’s shares is
a heuristic measure of overpayment.
Here, auguries may appear less
ominous — acquisition premiums have,
in fact, contracted in recent years. Last
year, premiums fell to about 25 per
cent. However, narrowing premiums
are a recurrent feature in the later
stages of M&A booms, suggesting that
sellers are keen to offload corporate
assets while they still can.
Perhaps greater use of shares signals
a peak? Bull markets should boost the
value and thus the popularity of equity
as an acquisition currency. There is
little evidence of that. Recently
announced all-share transactions, such
as the planned $59bn all-stock
acquisition of US wireless carrier Sprint
by its larger rival T-Mobile, belie a
trend away from share-based deals.
In the US, the proportion of all-share
acquisitions has collapsed by twothirds over two decades to 14 per cent
last year, according to Dealogic.
Low borrowing rates may not explain
that. Ten-year bond yields were some 9
per cent in the 1980s merger tear, when
most deals were for cash.
Changes in merger accounting rules,
including on the amortisation of
On Monday, a hydrogen balloon lifted a
bitcoin-mining microcomputer to the
edge of space. Its descent later ended in
a field in Lithuania. It was an eyecatching publicity stunt. But some
investors might think the trajectory
depressingly apt. Bitcoin has lost half
its value since its December peak.
Yet there is still money to be made
from the cryptocurrency craze.
Witness the near fourfold rise in firstquarter revenues at UK-listed Plus500,
an online trading platform that offers
crypto-based derivatives. A blowout
quarter, said one of the company’s
brokers. Just so.
The enthusiasm reflects Plus500’s
prowess at marketing. This is not just a
matter of plastering “trade Plus500”
slogans on shirts worn by Atlético de
Madrid footballers. It is also due to
slick online marketing that pushes
down customer acquisition costs. That
resulted in adjusted operating profit
margins of 80 per cent.
But the ease with which Plus500
attracts punters poses problems. The
UK’s Financial Conduct Authority
branded cryptocurrency contracts for
differences as extremely high-risk.
Only experienced, sophisticated
investors should trade them, it thinks.
Warnings of this kind have
influenced platforms such as Google
and Twitter, which are clamping down
on marketing of crypto products. That
could make it harder for Plus500 to
win customers in the future.
Regulators are also acting. New
European rules will curb the leverage
that retail customers can use to juice
up their bets. But Plus500 notes that
about 80 per cent of its revenues come
from 20 per cent of customers. They
might escape the curbs if reclassified as
professional investors.
Investors have so far appeared
unfazed by plans for tougher rules,
although founders cashed in some
shares in March. Its stock has tripled
over the past year. Yet efforts to protect
JOTTER PAD
Funds raised ($bn)
PagSeguro Digital
iQIYI
ADT
Dropbox
Gates Industrial Corp
Americold Realty
Hudson
DocuSign
Pivotal Software
GrafTech International
120
100
80
Plus500:
bitcoining it
Largest US IPOs 2018
Funds raised ($bn)
Tech
Other
20
1995
98 2000 02 04 06 08
10
12 14 16 18
ytd
Uber
Airbnb
SpaceX
WeWork
Palantir Technologies
Pinterest
Lyft
Infor
Stripe
Vice Media
FT graphic Sources: Dealogic; CB Insights
The return of volatility, a data
privacy storm and a tech-led sell-off
on the US stock market. What an
unpromising time to go public. Yet
just as US equities got choppy, so the
long-becalmed market for tech initial
public offerings has sprung into life.
There have been 17 this year,
according to Dealogic, raising $9.8bn,
the largest amount at this point since
the height of the dotcom bubble in
2000. The similarities end there.
The resilience of the broader
market for IPOs is helped by lower
dependence on tech. In 2000, the
sector accounted for more than twothirds of IPOs. Today, it is again the
biggest slice of the S&P 500 but just
over a quarter of floats are techs.
The category is diverse. The best-
naive punters from themselves could
prove more effective than expected.
That would bring it down to earth.
Amundi: through
the looking glass
Stare into a mirror long enough, and
you may not like what you see.
Investors in listed asset managers
experience a similarly unpleasant eye
opener.
The investment case depends on
benefiting from asset growth and rising
profitability. Yet the sector is facing
challenges that shed harsh light on the
companies that fund managers work
for themselves.
Paris-listed Amundi exemplifies the
ACROSS
1 During journeys, muse on
Conservative dinosaur (11)
7 I don’t like three-quarters of novel
(3)
9 Agent bringing round gold copy,
shortly (5)
10 School member’s ginger hairstyle
(3,6)
11 Yellow flower, say, seen in black
container (9)
12 Group of women are enthralled by
leading royal (5)
13 Brothers, having fast car around,
stole aquatic craft (7)
15 Coming back, try starters in
motorway services – pea soup?
(4)
18 European flower’s pronounced
smell (4)
20 Maybe referee part of tennis
match, misapplying “let” rule (7)
23 Very clever people amend mosaic,
keeping central elements (5)
24 Pointer in animal home thinner
than the others (9)
26 Retired soprano perhaps
entertains the ancient king (9)
27 Reserved a turkey from the back
(5)
28 Deirdre regularly avoided sin (3)
29 Second person to entertain in the
large building for itinerants (5,6)
DOWN
1 French head secures drawer
maybe, alongside storage unit (8)
2 Current GP with time to treat
ordinary skin problem (8)
3 Cat returned, tucking into middle
of cheese and ham? (5)
0
1
2
3
Latest valuation ($bn)
40
0
M&A/bosses’ pay:
gold diggers of 2018
Largest US unicorns
60
CROSSWORD
No. 15,847 Set by AARDVARK
US initial public offerings
4 Fruit that’s tropical, endlessly
cooked (7)
5 Legendary Greek newsman, one
engrossed in work (7)
6 Lancashire town found, bearing
left (9)
7 Expressed approval during
relative’s dance (6)
8 Sharp mint munched in periphery
of office (2,4)
14 Where people are given time over
ad-lib, having fluffed line (3,6)
16 Serviceman once grief-stricken by
sound of animal shelter (8)
17 Appreciative, given mince and
almost bursting (8)
19 Initially read out stirring Auden
poem (7)
20 School presses rogue clubs to
withdraw from competition (7)
21 French scientist in the morning
training with engineers (6)
22 Equestrian chore involving stable
person (6)
25 Mark visiting loves Antipodean
city (5)
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known brand to go public in 2018 was
Dropbox, a cloud-storage specialist
that raised $869m in its March IPO.
The two largest deals were from
foreigners: Brazilian payments group
PagSeguro raised $2.6bn, while iQiyi, a
Chinese video-streaming company
raised $2.4bn.
The international mix is a strength.
So is the relative size and maturity of
debutantes. By this point in 2000,
there had been 123 US tech IPOs,
raising $24.6bn, Dealogic says.
Overall, in 1999 and 2000, 634 tech
companies listed in the US. There
have been only 640 in the subsequent
18-year post-bubble period. In the
bubble, the average fundraising was
$135m (or about $200m adjusted for
inflation). Today it is $580m.
When new listings are scarce,
public investors are left hungry, but
not desperate. BlueApron floated last
year at a lower than expected price.
The meal-kit company has since
bombed, falling 80 per cent.
If there is one fad that raises
concerns, it is the current mania for
cloud computing.
DocuSign, a cloud-software group,
was founded 15 years ago, is still
lossmaking and is fighting a giant
rival, Adobe Systems. Last week the
company managed to go public,
recording a 37 per cent pop on its
first day. Its $5bn market valuation is
supported by just $500m of sales.
Other unicorns can tolerate a few
bumps in the market, if that is the
reception they can expect.
dual view. It extracts above average
operating margins with a relatively low
fee structure but does so thanks only to
a scale to which rivals cannot aspire.
Born out of the merger of Crédit
Agricole and Société Générale’s asset
management units in 2010, it had a
hefty presence in France. Following last
year’s acquisition of Pioneer
Investments from UniCredit of Italy,
Amundi watches over assets of €1.45tn.
That makes it the biggest asset
manager in Europe, but also means it
looms large in the rear-view mirrors of
giant US firms such as Fidelity and
JPMorgan Asset Management.
First-quarter results yesterday were
a pretty picture. Inflows of €39.8bn
across the group’s segments and
regions pleasantly surprised the
market. Revenues and operating
income rose, while expenses fell. The
shares climbed nearly 4 per cent.
Even before this improvement,
Amundi offered one of the best
combinations of low fees and superior
operating margins among 17 listed
asset managers covered by Morgan
Stanley. Only BlackRock ranked
higher. Moreover, Amundi did this with
only a single-digit percentage of its
assets passively managed. That
suggests that the group can withstand
the structural decline of fund fees.
After years of strong share price
performance Amundi has trailed its
local market this year. That does not
reflect badly on its management.
Instead, investors should ponder
whether they need to hold asset
managers, when secular and cyclical
trends are massing against the sector.
Mike Coupe, boss of J Sainsbury, has
apologised for his singing. Not for
failing to hold a tune, but for his choice
of the ditty “We’re In the Money”,
caught by a TV microphone. This was
deemed inappropriate: the UK
retailer’s £8bn purchase of rival Asda
could result in job losses. The song,
from the film Gold Diggers of 1933, was
apt. Nothing pumps up bosses’ pay
better than a big takeover.
That should give investors pause for
thought amid the M&A surge. Research
suggests they are much less likely to
enjoy a bump in earnings than the
managers they employ.
Bids boost the income of bosses in
two ways, says Paul Guest of Surrey
and Cambridge universities. The first,
temporary, effect comes through
bonuses. Starry-eyed remuneration
committees are inclined to pay out on
any subjective performance criteria.
Acquisitive chief executives generally
get a second, recurring, reward
through a higher salary, which also lifts
payouts from incentive schemes.
Bigger companies pay bigger salaries.
Research by Prof Guest shows UK chief
executive salaries rose about 10 per
cent after buying businesses typically
smaller than their own.
Lex suspects the effect would be
stronger for larger deals. Consider
Shire. Under deal-hungry Flemming
Ornskov, the enterprise value of the
pharma group sextupled to £60bn at
the end of 2016, according to S&P.
Mr Ornskov’s total pay jumped from
$4.1m in 2014, his first full year of
service, to $21.5m in 2015. It dropped
to $5.3m in 2017 after pay revolts.
What might the Asda deal do for
Mr Coupe? Afterwards, Sainsbury’s will
be roughly the same size as Tesco.
Mr Coupe, who earned £2.4m in
2016-17 might aspire to the £4.1m
dished out to Tesco’s Dave Lewis in
2017. But he should have a care. When
takeovers go bad, plunging shares hit
bosses’ net worth. Often they lose their
jobs. The chorus girls who belted out
“We’re In the Money” in the film were
fired too. Their Broadway show failed.
Lex on the web
For notes on today’s breaking
stories go to www.ft.com/lex
11
★
Wednesday 2 May 2018
Quake warning Scandal rocks Australian
banking’s ‘four pillars’ — ANALYSIS, PAGE 13
America first Is US strength masking
signs of a wider slowdown? — MARKET INSIGHT, PAGE 20
US tax windfall feeds capex revival
3 Tech and energy groups drive 20% surge 3 Cash pile goes to investment, not shareholders
ANDREW EDGECLIFFE-JOHNSON
AND ROBIN WIGGLESWORTH — NEW YORK
A small group of technology and energy
companies has driven a rebound in capital expenditure in the US, bucking
expectations that windfalls from recent
tax legislation would be distributed to
shareholders.
Corporate America is flush with cash
after a blockbuster first-quarter earnings season and December’s deep cut in
headline corporate tax. That has driven
a better than expected 20 per cent
increase in capital spending for the
quarter so far, Credit Suisse found.
Denise Chisholm, a strategist at Fidel-
ity, said the Trump administration’s tax
cuts had triggered an overdue and
“durable recovery” in capital spending.
For now the revival appears to be concentrated in a few sectors: technology
groups have led the splurge, with Google
parent Alphabet reporting a jump in
capital spending from $2.5bn to $7.3bn,
including the cost of new offices in New
York. Energy spending has been further
spurred by the rising oil price.
The median S&P 500 company
expanded investment by a more modest
13 per cent year on year, according to
Bank of America. Credit Suisse found
that just 10 companies accounted for
two-thirds of the first-quarter increase
in capital spending, while broader surveys suggested many businesses
remained hesitant.
A poll of corporate treasurers for the
Association for Financial Professionals
found that executives who had been signalling plans to step up spending had
instead built cash reserves over the
quarter as White House threats of tariffs
against trading partners made businesses wary.
Jim Kaitz, AFP’s chief executive, said:
“The uncertainty stemming from
threats of a trade war and geopolitical
tension have concerned treasury and
finance executives.”
The US commerce department
‘Threats
of a trade
war have
concerned
treasury
and finance
executives’
Jim Kaitz,
AFP chief
reported last week that orders for nondefence capital goods, which are seen as
a gauge of business investment, unexpectedly fell in March, marking their
third decline in four months.
Analysts have been surprised to see
growth in capital spending beat the rises
in buybacks and dividends. In February
Goldman Sachs analysts estimated capital spending would rise 11 per cent this
year but that this would be outpaced by
a 23 per cent rise in buybacks.
Morgan Stanley research last week
found, however, that more companies
were planning to invest some or all of
their tax savings in the business than
were returning cash to shareholders.
Quantitative change Fed’s balance-sheet reduction set to drive markets
Quantitative tightening is gaining
momentum and looks set to become a
driver for markets in the coming months.
While the Federal Reserve maintains a
hefty balance sheet courtesy of its postcrisis period of quantitative easing, the
central bank is buying a lot fewer
Treasuries over the coming year.
After a gradual slide in the size of the
balance sheet during the past three years,
the reduction in central bank balancesheet flows being ploughed back into the
bond market is picking up.
This coincides with the US Treasury
projecting the sale of an extra $1.3tn of
debt this year to help finance tax reform
and a deteriorating budget deficit.
The recent rise above 3 per cent in the
10-year Treasury yield reflects in part the
decline of Fed buying and the prospect of
investors having to buy more paper at
auctions in the coming months.
More broadly, many investors are
focused on the path of further interest
rate tightening and will closely read this
week’s Federal Open Market Committee
statement, but the increasing pace of
balance-sheet reduction also matters.
Both equities and credit prospered
greatly from QE and so far during the
early stages of QT they remain near their
peaks for the current cycle.
This suggests a great deal of confidence
in the US economy expanding and taking
QT in its stride. Unlike past periods of
tighter policy, investors have more to
ponder than just predicting where the Fed
funds rate will halt. Michael Mackenzie
Federal Funds target rate (%)
Farbast index: Condition of
All Federal Reserve Banks Total Assets ($tn)
1.75
4.50
1.50
4.45
1.25
1.00
4.40
0.75
Companies
2,600
2,400
0.25
2,200
2,000
4.30
1,800
0
1,600
2014
15
16
17
18
FT graphic Sources: Bloomberg; Thomson Reuters
Gibson Brands has filed for bankruptcy
protection as the maker of Les Paul
electric guitars struggles with debt
from ill-fated acquisitions and tighter
regulations on rosewood imports.
The 116-year-old Nashville company is
best known for instruments — with
brands including Gibson, Epiphone and
Dobro — that have been wielded by guitar legends including Jimmy Page of Led
Zeppelin, BB King, Joan Jett, and Slash
of Guns ‘n’ Roses.
It said its liabilities were in the range
of $100m to $500m in a Chapter 11 filing
yesterday and said it had lined up
$135m of debtor-in-possession financ-
British American Tobacco................20
Bytedance......................................................4
CYGB..............................................................20
China Central Television......................4
Com’wealth Bank of Australia.........13
Contura Energy........................................14
DeepMind.......................................................7
Deutsche Bank.........................................20
DocuSign......................................................10
Dropbox........................................................10
Embraer.........................................................12
Enron................................................................8
Facebook.........................................4,7,14,15
Fiat Chrysler..............................................20
Fidelity...........................................................10
Fifa.....................................................................4
Ford................................................................20
Fukuoka Financial Group....................12
GKN..................................................................12
General Motors........................................20
Glass Lewis................................................20
Goldman Sachs...................................12,14
Google...................................................7,10,11
HNA.................................................................14
Hewlett-Packard........................................8
Huawei..........................................................20
ING....................................................................12
Iceland............................................................15
© The Financial Times Limited 2018
2,800
4.35
IQiyi.................................................................10
IZettle.............................................................12
J Sainsbury............................................10,15
JPMorgan Asset Management.......10
Jaguar Land Rover..................................9
KLX...................................................................12
Kaspersky Lab............................................2
Lidl....................................................................15
Macquarie.....................................................13
Manpower......................................................9
Marathon Petroleum.............................19
MetLife...........................................................12
Microsoft.........................................................7
Morrison........................................................15
National Australia Bank......................13
National Bank of Georgia.....................2
Netto...............................................................15
Nokia..............................................................20
PDVSA...........................................................19
PagSeguro...................................................10
Peabody Energy......................................14
PetroSaudi.....................................................4
Petrobras.......................................................4
Pfizer..............................................................20
Philips..............................................................11
Pioneer Investments.............................10
Plus500.........................................................10
Apr
2017
ing to allow it to keep operating. Gibson
said it had reached a “restructuring support agreement” between its largest
shareholders handing control to the
owners of the senior secured notes
which come due this year. They include
Silver Point Capital, Melody Capital
Partners and funds affiliated with KKR
Credit Advisors, the filing said.
The agreement will wipe out the 36
per cent stake held by Henry Juszkiewicz, the former Tony and the Tycoons
guitarist and investment banker who
took control of Gibson 32 years ago, and
the 49 per cent stake held by a limited
partnership named for David Berryman, the company’s president.
The company said its instruments
businesses were performing strongly,
generating positive cash flow. But it has
suffered from a costly attempt to diversify. In 2014 it took on debt to pay $135m
and a recurring licence fee to Philips, the
Dutch electronics group, for an audio
business. The renamed Gibson Innovations unit has become the biggest drag
on the company and will be wound
down as part of the reorganisation.
The company had also had to contend
with global regulations implemented in
2017 which slowed the trade in rosewood, a material prized by guitar aficionados. The two factors contributed to a
near halving of Gibson’s earnings before
interest, tax, depreciation and amortisation in 2017, S&P Global Ratings said,
leaving it short of ebitda covenants on
its loans.
Primer...............................................................7
RON Transatlantic..................................14
Roche.............................................................20
Royal Bank of Scotland.......................13
Safaricom.....................................................14
Severn Trent.............................................20
Shire................................................................10
Sina....................................................................4
SkyBridge Capital...................................14
SoftBank.......................................................19
Sprint........................................................10,19
Square............................................................12
Standard Life Aberdeen.....................12
Strategic Value Partners....................19
T-Mobile.................................................10,19
Telegram........................................................4
Tencent.......................................................4,7
Tesco........................................................10,15
Tesla................................................................19
Total................................................................15
Twitter.......................................................4,10
Tyco..................................................................8
UBS...............................................................2,13
UniCredit......................................................10
United Utilities.........................................20
Virgin Money............................................20
Vodacom......................................................14
Weibo...............................................................4
Wells Fargo.................................................13
Westpac.........................................................13
WhatsApp....................................................15
WorldCom......................................................8
Sectors
Aerospace & Defence...........................12
Automobiles.................................2,9,19,20
Banks.....................................................2,12,13
Basic Resources.......................................14
Energy..............................................................4
Financial Services................................4,19
Financials...........................................4,10,14
Food & Beverage....................................14
Industrial Goods.........................................2
Insurance......................................................12
Media................................................................4
Mining............................................................14
Oil & Gas.............................................4,15,19
Retail & Consumer...........................10,15
Technology........................7,8,10,12,15,20
Telecoms................................................14,19
Travel & Leisure........................................2
People
Apotheker, Léo...........................................8
Berryman, David.......................................11
Bhattacharya, Kamal.............................14
Coupe, Mike..........................................10,15
Deal, Stan.....................................................12
Geer, Jacob de..........................................12
Gilvary, Brian..............................................15
Gourley, Sean...............................................7
Grimstone, Gerry.....................................12
Hele, John....................................................12
Hussain, Shushovan................................8
Johnson, Mark...........................................13
Kandarian, Steven...................................12
Kellow, Glenn.............................................14
Koum, Jan....................................................15
Lewis, Dave................................................10
Low, Jho.........................................................4
Luciano, Juan.............................................14
Lynch, Mike...................................................8
McCallion, John.........................................12
McFarlane, John.......................................12
Meller, Craig................................................13
Murray, David............................................13
Musk, Elon...................................................19
Narev, Ian.....................................................13
Ornskov, Flemming................................10
Read, Ian......................................................20
Scaramucci, Anthony............................14
Staley, Jes....................................................12
Turner, Mike...............................................12
Zuckerberg, Mark....................................15
Week 18
2018 Apr
Source: Thomson Reuters Datastream
john.authers@ft.com
Companies / Sectors / People
1MDB.................................................................4
AMP.................................................................13
ANZ..................................................................13
Adobe Systems........................................10
Adyen.............................................................12
Aldi...................................................................15
Alfa-Bank........................................................2
Alibaba.............................................................7
Alpha Natural Resources...................14
Alphabet........................................................11
Amazon........................................................7,9
Amundi..........................................................10
Andeavor......................................................19
Apple..........................................................7,20
Arch Capital................................................12
Archer Daniels Midland.......................14
Asda...........................................................10,15
AstraZeneca..............................................20
Autonomy......................................................8
BNP Paribas................................................13
BP......................................................................15
Baidu.............................................................4,7
Barclays.........................................................12
BlackRock....................................................10
BlueApron....................................................10
Boeing............................................................12
Booker............................................................15
That investors merely shrugged when Donald Trump and
North Korean leader Kim Jong Un clashed over who had
the bigger nuclear weapon is evidence that there is more to
markets than geopolitics. But I have seldom heard the
irrelevance of geopolitics asserted with more confidence
than it was this week at the start of the Milken Institute’s
global annual conference in Beverly Hills.
Mary Callahan Erdoes, the chief executive officer of
JPMorgan Asset and Wealth Management, said that the
only geopolitical event ever to have a direct effect on markets was the Yom Kippur war between Israel and various
Arab nations in 1973, which led to an oil embargo and a
sharp increase in crude prices.
Every US invasion, and every Russian invasion, had
minimal impact, she said. The job of fund managers
remains “to listen to it and then put it on the side”, to “concentrate on fundamentals that couldn’t be stronger”.
This may be a slight exaggeration. Some geopolitical
events do have an immediate response, even if it is not
what was expected. Most recently, the 2016 US election
had an electrifying effect on markets, while the EU referendum in the UK led a record sell-off in sterling.
Looking at unambiguously negative events, the 9/11 terrorist attacks led to quite a sell-off, but the invasion of Iraq
— now regarded as possibly the worst US foreign policy
mistake since the war — prompted the beginning of a fouryear stock market rally.
So while the emphasis on geopolitics can be overdone,
the ways in which politics can shape markets is also more
subtle. Jim McCaughan, who runs Principal Global Investors, suggested that the focus of populism might yet shift to
technology.
If it turns against technology it could do so in a way that
would be defensible economically and make for very good
politics, in the form of aggressive new antitrust enforcement. The biggest FAANGs are at last being viewed as in
effect monopolies that have been allowed to buy out their
competition. Aggressive antitrust action, in the hands of a
competent politician, could be just as popular as aggressive protectionism — with the important difference that it
might well also be good economics.
0.50
ANDREW EDGECLIFFE-JOHNSON
AND PETER WELLS — NEW YORK
One of Donald Trump’s main stump
pledges was to revive US coal. But he
can take no credit for the one glimmer
of hope — a rise in exports that has
thrown a lifeline to Appalachia, the
region from Pennsylvania to Alabama
that is the US industry’s heartland.
Analysis i PAGE 14
John
Authers
NYSE Fang+ index
Gibson pulls plug on diversification as
famous guitar brand seeks protection
Exports offer spark of
hope for US coal industry
Smart
Money
The NYSE Fang+
index shows a
steady rise in the
value of such
stocks. The groups
are now being
seen as in effect
monopolies
12
★
FINANCIAL TIMES
Wednesday 2 May 2018
COMPANIES
INSIDE BUSINESS
Banks
Goldman currency unit fined $110m
Traders shared data in
chat rooms to boost profit,
two US regulators say
Goldman Sachs has been ordered by two
US regulators to pay $110m for “unsafe
and unsound” practices in its foreignexchange trading business.
According to the Federal Reserve and
the New York Department of Financial
Services, Goldman forex traders routinely shared information about client
orders on electronic chat rooms so they
could boost profits, sometimes at customers’ expense.
From 2008 to early 2013, the regulators said, Goldman traders would use
code names to swap information to fix
prices and rig bids. In one chatroom,
traders referred to certain customers as
the “fiddler”, “hat and coat” and “dodgy
aussie seller”, while another customer
was known as “satan”. In one exchange
cited by the DFS, one Goldman trader
flatters a counterpart at another bank
by saying: “I remember the old days,
your satan info was legendary.”
The Fed and the DFS yesterday both
fined the bank $55m. In its announcement, the DFS noted that a senior member of Goldman’s global forex sales division, based in London, raised concerns
in 2009 about the sharing of customer
orders. “I would like you guys to give it
some thought . . . please,” the executive
wrote in an email. “The question
stands: ‘Why do the people that you talk
to seem to give you so much clearly
improper information week after week,
month after month, and year after
year? . . . are they stupid?”
Technology
Aerospace & defence
BEN MCLANNAHAN — NEW YORK
The DFS noted that the salesperson
ultimately did nothing to flag those concerns to the compliance department.
Goldman said yesterday it was
pleased to have resolved the regulators’
reviews. “We . . . appreciate their recognition that we have already taken significant steps to enhance our policies and
procedures,” the bank added.
The penalty comes several years after
other big banks on Wall Street started to
pay up to settle US probes into similar
allegations of misconduct in the forex
market.
In May 2015, Citigroup and JPMorgan
Chase — both much bigger players than
Goldman in foreign exchange — paid
several hundred million dollars each to
the Fed and the Office of the Comptroller of the Currency, while Bank of America, Barclays, BNP Paribas, Deutsche
Bank, HSBC, RBS and UBS also settled.
‘Why do the
people that
you talk to
seem to give
you so much
clearly
improper
information
. . . are they
stupid?’
Goldman
banker in 2009
The joint actions, disclosed yesterday,
are the latest blow to the fixed-income,
currencies and commodities unit within
Goldman, which has struggled to
achieve satisfactory returns amid low
liquidity and low engagement among
big clients such as hedge funds.
First-quarter returns from Goldman’s
FICC unit were brighter, the bank disclosed last month. But last year the
bank’s traders underperformed rivals
on Wall Street, prompting several senior
departures and a series of initiatives to
shake up the unit’s customer mix.
Under yesterday’s consent orders,
both regulators required Goldman to
submit a plan on ways to fix the flaws in
compliance. The DFS detailed the activities of several individuals at Goldman
in its announcement, without using
their names. None is still at the bank, a
person familiar with the situation said.
iZettle closes
in on Europe’s
biggest
fintech IPO
RICHARD MILNE
NORDIC CORRESPONDENT
iZettle is gearing up to announce its
intention to float as early next week in
what would be the largest initial public
offering by a European financial technology company.
The Swedish payments and ecommerce
group has been in talks with potential
investors and could seek a valuation of
about SKr10bn ($1.1bn) when it is
expected to launch its IPO process next
Tuesday, according to people involved
in the flotation.
IZettle is one of the fastest-growing
companies in Europe, having expanded
out of its Nordic home market into
countries including the UK, Spain,
Mexico and Brazil. It started off providing credit card readers that plug into
iPads or smartphones and were used by
everybody from shops to homeless
magazine sellers.
It has since expanded to offer a series
of tools for small businesses that sell
their products and services online,
ranging from analytics and invoicing
software to providing cash advances.
The Stockholm-based company last
week reported a 51 per cent jump in revenues to SKr966m in 2017. It narrowed
its operating loss slightly from
SKr244m a year earlier to SKr228m.
iZettle would be the first in a series of
large fintech companies in Europe to
seek a listing. Adyen, the Dutch payments group that just wrested the eBay
contract from PayPal, is eyeing an IPO
later this year. Funding Circle, the UK
fintech group, is also looking at listing in
2018.
Jacob de Geer co-founded iZettle in
2010 after his ex-wife was unable to sell
her glasses to shoppers at a trade fair
who wanted to pay with credit or debit
cards. It had a compound annual growth
rate of 103 per cent in 2013-16, according to the FT 1000 list of Europe’s fastest-growing companies.
Presenting the results last week, he
said: “I see great market potential as
there are 28 million small businesses in
our markets — many of which are tired
of being underserved by traditional
financial players and are starting to
realise how iZettle can help level the
playing field for them.”
Its main rival is Square, the US-listed
group that enjoyed a difficult flotation.
It was forced to price its IPO in 2015 at
half its previous valuation but has since
seen its shares more than quintuple.
A Boeing 787 Dreamliner is assembled in South Carolina. The group’s KLX purchase will lift its share of lucrative services — Travis Dove/Bloomberg
Boeing swoops on aircraft services group KLX
PATTI WALDMEIR — CHICAGO
HUDSON LOCKETT — HONG KONG
Boeing targeted a bigger share of the
profitable aircraft servicing market
yesterday when it agreed to buy KLX, a
US aerospace parts and services provider for $4.25bn including nearly
$1bn in debt.
The Chicago-based aerospace and
defence titan has made clear its intention to do deals in the space since it
launched its new Boeing Global Services
division last year.
Strong global demand for air travel
has left Boeing with a large backlog of
plane orders.
It has recently been trying to win a
larger share of the services sector to
boost profits. Boeing last week raised its
full-year earnings guidance, citing a
positive market outlook across its
defence and aerospace businesses.
Boeing will buy KLX in an all-cash
transaction of $63 per KLX share and
will also assume about $1bn of net debt.
The acquisition will include KLX unit
Aerospace Solutions Group, which provides aerospace fasteners, consumables
and logistics services.
Boeing will not acquire the KLX division that provides oilfield services and
rental equipment in North America as
KLX Energy Services Group.
The deal is conditional upon the successful divestment and separation of
Energy Services Group, in addition to
regulatory and shareholder approvals,
Boeing said. The company added that it
expected the deal to close by the third
quarter of 2018.
“This acquisition is the next step in
our services growth strategy, with a
clear opportunity to profitably grow our
business and better serve our customers
in a $2.6tn, 10-year services market,”
said Stan Deal, president and chief executive of Boeing Global Services.
He added that the company hoped the
deal would help it provide a “one-stopshop that will benefit our supply chain
and our various customers in a meaningful way.”
Boeing said the acquisition would be
The deal
brings a ‘onestop-shop
that will
benefit our
supply chain
and
customers in
a meaningful
way’
financed primarily with cash on hand
and supplemented with debt, and that
there was no change to the company’s
2018 guidance or capital deployment
strategy.
Jonathan Root, analyst at Moody’s,
said: “Acquisition of KLX Aerospace
operations is a scale play for Boeing’s
Global Services segment, as the company pursues its multiyear goal of tripling this segment’s revenue to $50bn.”
The deal “should allow Boeing to better optimise inventory levels through
the supply chain,” Bernstein aerospace
and defence analyst Doug Harned said
in a note after the acquisition was
announced.
The aircraft maker is thought to be
drawing close to another big deal, with
Embraer, the Brazilian aircraft maker.
The two companies have floated the
idea of a joint venture in which the US
company could take a majority stake in
Embraer’s commercial business, but
that could exclude its sensitive military
business to allay government concerns
about sovereign defence capability.
ASIA
Leo
Lewis
Japanese regulators
battle over more than
just banking merger
I
n the final trading session before this year’s Golden
Week national holiday, investors have a last chance to
place their bets on one of Japan’s most fascinating
intra-governmental punch-ups in recent memory.
Two regulators, both bristling with self-belief, clashing over the fate of two regional banks in the south-western island of Kyushu.
In fact, of course, both the Financial Services Agency
(FSA) and the Fair Trade Commission (FTC) believe that
very much more is at stake than the proposed merger of
The Eighteenth Bank and Fukuoka Financial Group, a deal
that was originally agreed in February 2016 and would give
the combined bank a rule-busting 70 per cent control over
outstanding loans in the prefecture of Nagasaki.
Both agencies sincerely and implacably believe they are
acting in the best interests of Japan as a whole — the FSA by
pushing for a merger in what are unavoidably troubled
times for regional banks, and the FTC by withholding its
approval for fear of commercial expediency steamrollering the interests of customers.
The FSA made its backing of the deal clear in a report
published back in early April. A formal decision by the
FTC is due to be made when the country returns from holiday next week; the leaks to Japanese media suggest that
the FTC is planning to reject the merger, or waive it only on
terms that make it almost insurmountably difficult for
both banks to accept.
The most likely terms are that both banks jettison large
parts of their loan portfolios in Nagasaki. To do so, noted
analyst J. Brian Waterhouse, writing on the Smartkarma
research platform, would be a Herculean task. “Getting rid
of all the good loans from your balance sheet is extremely
easy . . . getting rid of a loan portfolio composed of smalll o t l o a n s t o l a r g e ly u n l i s t e d SM E s i n a
sputtering economy is a wholly different matter.”
Customers will surely balk at having their loans refinanced by a bank with which they have no relationship
and it remains unclear who would buy the loans anyway.
The most likely outcome, say bank analysts, is that the
deal ultimately falls through, leaving the two Kyushu lenders back on the hunt for alternatives. Brokers have already
begun working out what
those might be, basing their
Both agencies
calls on the certainty that the
FSA will not take defeat lying believe they are
down, and will look to play
acting in the best
matchmaker as soon as
possible.
interests of Japan
The FSA’s case for pushing
as a whole
this and other regional bank
mergers is straightforward.
The sector is in the frontline of rural economic decline and
population shrinkage, and has struggled with years of
ultra-low interest rate policy. The Japanese Bankers
Association describes the situation as “grave”.
At the same time, the FSA has stepped in very effectively
to prevent these headwinds pushing the regional banks
into risks that would undermine stability: loans to real
estate have dropped sharply since 2017, as have the
regional banks’ purchases of foreign bonds. But the sector
still has a critical role in lending to smaller businesses.
Their ability to do this, argues the FSA, justifies mergers.
The FTC does not agree at all, believing that the problem
should be addressed by the regional banks diversifying
away from their traditional business and reducing their
reliance on lending. It sees particular peril in the Nagasaki
deal: the monopoly that would result from approving the
merger may only affect a small corner of Japan, but the
abandonment of a principle would set a disastrous precedent for the country. As the arguments on both sides have
evolved, the regulatory clash has become symbolic of the
conflicting forces at work behind prime minister Shinzo
Abe’s leadership since 2012. To a significant extent, though
more for the FSA than the FTC, the regulators have been
actively empowered by the current administration.
The FSA has come to represent the commercial pragmatism of the faded Abenomics experiment and its sometimes unexpected preparedness to slay some of Japan’s
sacred cows on that altar; the FTC exudes the instinctive
conservatism that underpins the ruling Liberal
Democratic Party.
Mr Abe may not endure much longer. Strategists at
Mizuho Securities last week formally added “Abexit” to
their list of stock market themes for coming months, making his departure by September their main scenario.
Whatever legacy he leaves, it is probably very much to
Japan’s advantage that the Nagasaki merger fight was
never a straight-up knockout.
leo.lewis@ft.com
Banks
Insurance
Barclays chairman to leave ‘when time is right’
MetLife finance chief exits after reserves fiasco
NICHOLAS MEGAW AND MARTIN ARNOLD
Barclays has started the process of
selecting a new chairman, but incumbent chair John McFarlane dismissed
speculation that he could step down
early and said he would stay in his post
for at least one more year.
Mr McFarlane told investors at Barclays’ annual meeting yesterday that he
had asked the bank’s senior independent director and nominations committee to be “fully prepared” for his eventual departure, noting that managing
succession “can be a difficult matter and
take an extended period”.
He has long been expected to step
down in 2019, but Mr McFarlane added
yesterday that he would only exit “when
the time is right”, telling shareholders
that “while some might wish so, you are
not getting rid of me yet”.
Gerry Grimstone, the chairman of
Standard Life Aberdeen and a member
of Barclays’ board, had been seen as a
favourite to replace Mr McFarlane, but
has ruled himself out of the running,
according to a person briefed on the
matter. Sir Gerry recently told the board
he was not a candidate for chairman,
allowing the 68-year-old to continue to
be part of the discussions on finding a
replacement as a member of the nominations committee.
One top 10 Barclays shareholder said
the recent appointment of former GKN
chairman Mike Turner as a nonexecutive director marked him out as a
potential successor. Mr McFarlane
described him yesterday as “a seasoned
director and chairman”, but the shareholder suggested that his lack of banking experience and the problems
encountered at GKN would make him a
“controversial” choice.
Mr McFarlane’s comments came during a dramatic annual meeting in Westminster, which was disrupted by a group
protesting against Barclays’ funding of
fossil fuel projects.
The board faced repeated questioning
from shareholders over its environmental record, as well as chief executive Jes
Staley’s attempt to unmask a whistleblower, and problems with its retail
investment platform.
Despite the complaints, more than 99
per cent of shareholder votes were cast
in favour of his reappointment.
ft.com/lombard
ALISTAIR GRAY — NEW YORK
MetLife’s chief financial officer is being
replaced with immediate effect,
months after the second-biggest US
insurer by assets warned of issues with
its reserves and financial reporting.
Just a day before MetLife is due to
publish its first-quarter financial results
today, the life and pensions group said
John Hele was leaving after six years.
The Canadian, 59, was retiring,
MetLife said.
He was replaced yesterday by the
company’s treasurer, John McCallion,
although Mr Hele will stay on as an
adviser until September.
The departure comes after the insurer
acknowledged that over a period of
about 25 years, it failed to make
hundreds of millions of dollars of pension payments to about 13,500 people.
MetLife had presumed that individuals who were entitled to the payouts
“would never respond” if the company’s
employees made only two attempts to
reach them without success.
The practice allowed executives to
boost past profits because the insurer
released funds from financial reserves
that were supposed to support the
pension payouts.
Earlier this year the company booked
a $550m charge to cover the unpaid
obligations. Then, in March, it disclosed
new problems. The company had overreserved for annuity payouts in Japan
by almost $900m.
Investors have speculated that the
episode could lead to broad manage-
ment changes at MetLife, whose chief
executive Steven Kandarian has been in
his position for seven years.
Before the missing pensions debacle,
Mr Hele had won admiration from
investors. He is a former chief financial
officer of the Dutch financial services
group ING and joined MetLife from
Arch Capital in 2012.
Under Mr Kandarian, Mr Hele helped
steer MetLife through a spin-off of its
consumer business and its successful
fight with financial regulators over its
too-big-to-fail label.
His departure comes less than a week
after MetLife disclosed that it had cut
Mr Hele’s pay, citing “performance in
managing financial matters, including
material weaknesses in internal control
over financial reporting”.
FINANCIAL TIMES
★
Wednesday 2 May 2018
13
COMPANIES
Probe reveals rip-off culture at Australian banks
Inquiry finds widespread wrongdoing, sparking criticism of policy shielding four biggest lenders from competition
JAMIE SMYTH — SYDNEY
AMP was founded 170 years ago on the
principle of providing sound advice. But
revelations at a royal commission that
the Australian financial services group
ripped off customers and lied to regulators has savaged its reputation and seen
one of the world’s most profitable banking sectors shaken to its core.
Now the bank is in the middle of a
political maelstrom that has led Craig
Meller, its chief executive, to quit following evidence that AMP misled regulators on at least 20 occasions and
charged customers fees for no service.
The inquiry is sensitive as it involves
Australia’s four biggest banks, which
control three-quarters of the domestic
market, affecting services that most of
its citizens use every day. Regulators
recently began targeting a culture of
rule-breaking, with issues ranging from
the rigging of interest rates to claims of
facilitating money laundering.
The probe comes amid global outrage
over banks’ behaviour. Wells Fargo was
recently fined $1bn in the wake of a US
probe, which found that thousands of
staff had signed up customers for services they knew nothing about to meet
sales targets. In the UK, banks have
repaid £30bn since 2011 to customers
mis-sold payment protection insurance.
Critics say Australia’s concentrated
bank sector encourages institutions to
take customers for granted, prompting
a review of the country’s “four pillars”
policy that has shielded its four biggest
banks — Commonwealth Bank of Australia, National Australia Bank, Westpac
and ANZ — from competition.
The commission looking into banks
was established by Malcolm Turnbull,
the country’s prime minister, and has
since unveiled a long record of misconduct. It has also moved markets, with
shares in Westpac slumping 4 per cent
last week when a UBS note based on
documents published by the commission suggested it had lower standards
than other banks.
What had been revealed so far
includes evidence that AMP interfered
with a supposedly independent report
prepared by law firm Clayton Utz and
sent to Australia’s corporate regulator.
AMP apologised “unreservedly” for
the misconduct. But it faces class action
lawsuits by shareholders and pressure
from institutional investors.
AMP said it is reviewing its culture,
and would “accelerate” an existing programme of customer remediation.
NAB admitted last week that its staff
falsely witnessed client forms, describing the practice as a “social norm” in the
bank. CBA, the country’s biggest bank
by assets, confessed to charging customers fees for services it never provided. It
also admitted it charged dead clients, in
at least one case for up to a decade.
“What we have heard from the royal
commission has shocked and disappointed us. We have let down our customers and our people, and we apologise,” said CBA.
CBA was already under investigation
for allegations of more than 50,000
breaches of money laundering and
counter-terrorism laws, to which the
bank has partially admitted, resulting in
the departure of chief executive Ian
Narev and a revamp of its board.
“This is panning out much worse than
they [banks] expected,” said Elizabeth
Sheedy, an expert on financial risk at
Macquarie University.
ANZ and NAB declined to comment
while Westpac was not immediately
available to comment.
In February, Australia’s Productivity
Commission, which reviews regulation,
said the four-pillars policy removed
market discipline.
The policy is contentious. Commentators praised it in the aftermath of the
2008 crisis for helping Australia’s banking system, preventing the kind of meltdown seen in the US, UK and Ireland.
Freewheeling
A Westpac branch in Melbourne. The lender’s shares slumped last week after a UBS note suggested it had lower standards than other banks — Carla Gottgens/Bloomberg
More bank accounts than people in
Australia
Number of customer accounts, by bank (m)
Australia’s adult population*
Size of Australian banks
Australian banks under pressure
Total assets (US$bn)
Westpac
Commonwealth Bank of Australia
ANZ
National Australia Bank
Share prices (rebased)
National Australia Bank
ANZ
Commonwealth Bank of Australia
Westpac
Commonwealth
Bank of
Australia
17
Westpac
13
National
Australia
Bank
9
100
ANZ
8
400
The Australian Prudential Regulation
Authority said yesterday that CBA, Australia’s biggest bank by assets, had
agreed to implement recommended
changes to improve governance,
accountability and culture.
The action follows a string of scandals,
including CBA’s failure to prevent criminals using its systems to launder tens of
millions of dollars and charging fees to
95
200
90
0
2008 09 10 11 12 13 14 15 16 17
* Australian population over 15 years old, Jun 2017
Sources: banks’ annual reports 2017; ABS; Bloomberg; Thomson Reuters Datastream
Unethical behaviour
Hearings expose catalogue
of bad financial advice
Financial planning: The commission
hearings are giving a voice to the
victims of bad advice provided by
Australia’s A$4.6bn-a-year financial
planning industry — almost half of
which is controlled by the four big
banks and AMP.
It has detailed how a nurse was left
without a home following poor advice
provided by a Westpac adviser, who
sold her expensive life insurance
policies and charged thousands of
dollars in fees. It is shining a spotlight
on multiple cases of unethical
behaviour by planners.
In one case tape recordings were
played of a phone call during which a
staff member of a financial planning
company impersonated a client to
obtain details from her pension fund. It
showed how AMP lied to the regulator
and its board interfered with a
supposedly independent legal report.
“There is an inherent conflict of
interest in having banks operate
financial advisory services,” said Mark
Johnson, a former deputy chairman of
Macquarie Bank.
Money laundering: In August,
Australia’s financial intelligence
agency Austrac dropped a bombshell
on Commonwealth Bank of Australia
when it sued the bank for more
than 50,000 breaches of money
laundering and antiterrorism laws. It
alleged drug dealers and other
criminals had used CBA’s roll out of
cash deposit machines to launder tens
of millions of dollars.
It alleges the bank failed to
adequately monitor A$625m in
transactions over three years, report
unusual transactions or monitor
suspicious customers after it became
aware of possible money laundering.
CBA admitted many of the breaches,
blaming a systems error. It has denied
some of the allegations, which may be
tested in court. The scandal also
significantly increased pressure on the
government to perform a U-turn,
prompting the current royal
commission examining the industry.
Rigging interest rates: Australia’s
corporate regulator enjoyed a rare
victory late last year when ANZ and
NAB agreed legal settlements, which
cost a combined A$100m in fines and
other charges, for rigging the
country’s benchmark interest rate.
Both lenders apologised for the
behaviour of a small group of
employees at the banks, which
attempted to engage in
“unconscionable conduct” by trading
in a manner to create an artificial price
for bank bills.
The bank bill swap rate is the
primary interest rate benchmark used
in Australian markets, similar to Libor,
to set the prices of loans and other
instruments. Westpac and CBA are
fighting allegations that they engaged
in similar behaviour.
Asic, the companies regulator, also
imposed “enforceable undertakings”
on UBS, BNP Paribas and Royal Bank
of Scotland following investigations
into misconduct related to the
benchmark rate.
Regulators tell CBA to boost capital by A$1bn
Australian regulators have ordered
Commonwealth Bank of Australia to
hold an extra A$1bn (US$754m) in capital, following a review into the bank’s
culture that found financial success
had “dulled its senses” and left it vulnerable to compliance risks.
105
600
Banks
JAMIE SMYTH
110
800
customers without providing any service. “CBA has itself identified and begun
taking steps to address many of these
issues,” said Wayne Byres, APRA chairman. “But there is much to do and a risk
that the same issues, which have led to
the need for the inquiry, undermine the
bank’s efforts to comprehensively and
effectively respond to the recommendations of the panel.”
He said the capital requirement
would remain in place until APRA’s recommendations were addressed. CBA
said the required capital adjustment
would reduce its tier one capital ratio
from 10.4 per cent to 10.1 per cent.
David Ellis, an analyst at Morningstar,
said that while the report was not good
for CBA, the outcome could have been
worse: “CBA will comfortably meet its
regulatory capital requirements of 10.5
per cent tier one equity by 2020 as it
plans to dispose of its life and global
asset management businesses, which
should raise several billion dollars.”
APRA’s review said cultural factors
lay at the heart of CBA’s shortcomings,
including a widespread sense of complacency. It also noted an insular attitude, a
reactive response to dealing with risk
and inadequate board oversight, and
concluded that CBA’s pay framework
had little sting for senior managers
when poor risk or customer outcomes
occurred.
CBA said it was a critical but fair
assessment of the issues, and it would
implement all the recommendations.
85
Jan
2017
2018 Apr
David Murray, a former chief executive of CBA and author of a government
commissioned report into the finance
sector in 2014, defended the system.
“The evidence before us was that there
was competition in the sector,” he said.
Critics say the four-pillars policy provides an implicit government guarantee
to the big four banks, which reduces
their cost of funding and limits the ability of smaller lenders to compete.
Last year, the Australian Competition
and Consumer Commission called for a
review after a paper found the market
was made up of “oligopolies” which sustained high margins.
Critics draw a direct line between lack
of competition and misconduct. “The
four-pillars policy is a featherbedded
home for lazy bankers and should be
removed,” said Pat McConnell, an honorary fellow at the Applied Financial
Centre at Macquarie University. “It is
non-competitive and has engendered a
culture of arrogance and sometimes
outright deceit.”
Justin O’Brien, a professor at Monash
University, said the banks’ strong performance had promoted “light-touch
regulation and the emergence of a banking culture which prioritises profits and
shareholders over customers”.
Regulators complain the big banks
work against them. “Among many of the
major banks, we routinely encounter a
culture of seeking to delay and frustrate
our surveillance, investigation and
enforcement work,” Greg Medcraft,
former chair of the Australian Securities
and Investments Commission, told
members of parliament last year.
Mark Johnson, a former deputy chairman of Macquarie, an Australian bank,
said regulators were unlikely to remove
the four-pillars structure but would be
forced to regulate much more carefully.
“What has shocked people the most is
the extent to which banks have become
indifferent to their customers, even all
the way through to engaging in dishonest behaviour,” said Mr Johnson. “Life
inside the banks will be pretty miserable
over the next few years.”
14
FINANCIAL TIMES
★
Wednesday 2 May 2018
COMPANIES
Financials
Scaramucci returns to SkyBridge after sale collapses
China’s HNA drops bid for
hedge fund after US raises
national security concerns
ERIC PLATT — NEW YORK
SHAWN DONNAN — WASHINGTON
Anthony Scaramucci will return to SkyBridge Capital after a deal to sell his
hedge fund business to China’s HNA
Group was scuppered by a Trump
administration panel over national
security concerns.
Mr Scaramucci is to rejoin the firm as
a co-managing partner, the role he had
before leaving in pursuit of a job in Don-
ald Trump’s White House. Mr Scaramucci was a vociferous supporter of the
president and was appointed head of
communications in the administration,
before being fired after 10 days.
The Wall Street entrepreneur and
Goldman Sachs veteran agreed to sell
SkyBridge last year to HNA and RON
Transatlantic, a holding company with
stakes in logistics and financial services
groups. The January 2017 deal valued
SkyBridge at $200m.
But the deal ran into trouble with the
Committee on Foreign Investment in
the US (Cfius). The inter-agency panel
offered a path to approval but required
certain “mitigation measures” that
‘It felt like we
were on the
wait list at a
grade school
where you
just knew you
weren’t going
to get
accepted’
Anthony
Scaramucci
HNA and SkyBridge found too onerous
to accept, according to a person with
knowledge of the deal.
After 15 months of trying to get the
takeover done, and with no certainty on
the timing of a formal approval, the two
sides pulled the deal. “It felt like we were
on the wait list at a grade school where
you just knew you weren’t going to get
accepted,” Mr Scaramucci said. “But I’m
a big boy. No whining from me.”
SkyBridge and HNA said on Monday
that they had agreed to seek withdrawal
from the Cfius review, and rescind their
merger agreement. The two are instead
planning to explore a marketing
arrangement that would see HNA dis-
tribute SkyBridge’s offerings in China.
The business operates a fund of hedge
funds, offering individuals a means of
investing indirectly in famous hedge
fund managers.
HNA has faced scrutiny from authorities in the US over its murky ownership
structure, while its mounting debt has
led it to shed assets.
The aviation-to-finance group is trying to buttress its balance sheet as
$20bn of its US dollar-denominated
debts mature this year and next.
Mr Scaramucci, who founded SkyBridge in 2005, would focus on marketing efforts and strategic planning, a person with knowledge of the plans said.
Anthony
Scaramucci: left
for White House
job but was fired
after 10 days
SkyBridge, HNA and RON Transatlantic
declined to comment. The Wall Street
Journal reported on Monday that the
sale of SkyBridge had been scuttled.
The Trump administration has
stepped up its scrutiny of Chinese acquisitions in the US this year. Cfius has
blocked several high-profile deals
including Ant Financial’s $1.2bn bid for
Dallas-based MoneyGram.
Cfius’s powers are also expected to
grow. Congress is debating legislation to
extend its national security remit to outbound investments by US companies
that involve transfers of technology.
Additional reporting by Stephen Foley in
New York
Mining. Exports boost
US coal groups fired up by overseas demand
induction furnaces had boosted activity
at blast furnaces and hence demand for
met coal, said David Lipschitz, an analyst at Macquarie.
The result has been soaring prices for
met coal worldwide, including in the US.
The S&P Global Platts US met coal price
rose from about $80 a ton at the start of
2016 to a peak of $295 a ton last year,
and even though it has since fallen back,
it is still about $180 a ton today. Met coal
production has been lucrative for US
producers and for Peabody, which
mines it in Australia.
Peabody’s first-quarter earnings, published last week, showed a clear divide:
at the Australian operations, which
principally produce met coal, earnings
before interest, tax, depreciation and
amortisation were up 23 per cent, while
at the US operations, which produce
thermal coal, they were down 28 per
cent.
Overall, the net effect was that Peabody generated record free cash flow in
the quarter of $573m. It has been able to
expand its planned share buyback programme from $500m to $1bn.
Global steel activity buoys
producers while Trump’s
policies have little impact
ED CROOKS — NEW YORK
On the campaign trail in 2016, President
Donald Trump often pledged to bring
back coal. For mineworkers, that promise remains unfulfilled. The number of
jobs in coal mining in the US is up by
only 800 since his inauguration in January 2017, and has been on a declining
trend since last October.
For some investors in the coal industry, however, the past 15 months have
been rewarding as some US coal companies have prospered — but Mr Trump’s
policies had little to do with it.
Peabody Energy, the world’s largest
private sector coal producer, entered
Chapter 11 bankruptcy protection in
2016. It returned to the stock market in
April last year, having shed $5.2bn of
debt, and its shares have subsequently
risen 17 per cent.
Alpha Natural Resources, another
leading US coal producer, filed for bankruptcy in 2015, and was subsequently
broken up, with some of its assets being
bought by a new company called Contura Energy, owned by Alpha’s lenders.
On Monday Contura and the remnants
of Alpha announced that they were
merging to reunite the business, albeit
in a greatly slimmed-down form. The
merged company, which will retain the
Contura name, is aiming to list on the
New York Stock Exchange by the end of
September.
Mr Trump’s attack on the climate policies of his predecessor Barack Obama,
including plans to withdraw from the
Paris agreement and to scrap new regulations on carbon dioxide emissions
from power generation, have apparently had little effect. The amount of
electricity generated from coal in the US
fell 2 per cent last year, and is expected
to drop by a further 3 per cent this year.
Nor do the Trump administration’s
attempts to ease the regulatory burden
on coal mining yet appear to have had a
noticeable effect. Peabody’s US operat-
‘We expect this year to be
focused on returning cash
to shareholders’
The number of jobs in coal mining in the US has risen by only 800 since Donald Trump’s inauguration in January 2017, and is now declining — Joshua Roberts/Reuters
US coal production remains
well below 2015 levels
Employment in US coal has
recovered only a little
since 2016
Weekly production (’000 tonnes)
90
Number of coal mining jobs (’000)
90
80
2013
14
15
16
17 18
80
70
70
60
60
50
50
40
2013
14
15
16
17 18
40
Source: US Bureau of Labor Statistics
ing costs per ton were up 4 per cent in
the first quarter of this year compared
with the equivalent period of 2017.
The big difference has come from a
surge in demand in international markets, for both thermal coal used in
power plants and metallurgical, or
“met” coal, which is used in blast furnaces to make steel. US exports of thermal coal more than doubled last year,
thanks to strong demand from countries including India, South Korea and
Japan.
But it is met coal that is causing the
greatest excitement, throwing a lifeline
to Appalachia, the region running from
Pennsylvania to Alabama that is the traditional heartland of the US industry.
Telecoms
“The plight of the Appalachian producers has been grim,” said Kevin Book
of ClearView Energy Partners, a
research firm. “And export demand for
met coal has been one of the few bright
spots.”
The reasons have been factors beyond
the Trump administration’s control.
Cyclone Debbie, which hit eastern Australia in March last year, caused widespread disruption to much of the country’s met coal production, and its industry has been struggling to make up the
shortfall.
Meanwhile, China has been intermittently curbing its coal production, while
its demand has grown. A crackdown on
steel production from old-fashioned
Glenn Kellow, Peabody CEO
“A lot of our focus in 2017 was on cash
retention and paying down debt,” said
Glenn Kellow, chief executive. “We
expect this year to be focused on returning cash to shareholders.”
The prospect of similarly being able to
cash in on met coal is the big attraction
in the Contura-Alpha deal. The merged
company will be the largest US met coal
supplier, and Contura expects the world
seaborne market to keep growing, from
321m tons last year to 345m tons in
2019, as worldwide steel production
continues to increase.
Ironically, Mr Book points out, one
threat to that attractive prospect might
be a cut in steel production in China and
other countries because of the tariffs on
imports imposed by Mr Trump.
Food & beverage
Kenya’s Safaricom remodels money platform with social network ADM signals rebound after
improved soyabean trading
JOHN AGLIONBY — NAIROBI
Safaricom, Kenya’s dominant telecoms
operator, is transforming its Mpesa
mobile money platform into a social
network that will integrate payments
and conversations.
Bonga, which means chat in Swahili, will
aim to “augment the social aspects that
exist within the Mpesa network”,
according to Kamal Bhattacharya, Safaricom’s chief innovation officer.
“We think there’s an intrinsic relationship between conversations and
transactions, and that fundamental
principle is what we wanted to build a
platform around,” he said.
Trading Directory
Bonga is the first product of Safaricom’s Alpha innovation incubator created past year, part of a strategy to become a more platform-based business. In
the last year it has launched Masoko, an
ecommerce platform, and is rapidly
expanding its internet fibre operations.
Safaricom is also exploring how to
monetise the massive amounts of customer data that it has accumulated
from its telecom and mobile money
operations.
Three ways that Mpesa’s 23.4m users,
some 80 per cent of the adult Kenyan
population, will be able to use Bonga are
user-to-user, user-to-business and fundraising within social groups.
“We looked at how people are engaging through Mpesa and designed the
tool to make life easier,” said Mr Bhattacharya.
Deepak Dave, a financial analyst, said
Bonga was a natural progression for
Safaricom.
“It will embed Mpesa even deeper in
the fabric of Kenyan society and make it
a core pillar of the economy,” he said.
Safaricom is adding
Bonga to its Mpesa
platform, which
accounts for 80%
of mobile money
transactions
Bonga will include end-to-end
encryption and, mindful of the data
scandal that has engulfed Facebook this
year, Mr Bhattacharya stressed that no
data would be retained.
“We’re not seeing what the text messages say, we’re not storing any messages,” he said. “The conversations will
just disappear.”
However, in a country with no data
privacy protection laws, Mr Dave said
there would probably be concerns
among some users.
Safaricom, in which the Kenyan government and South Africa’s Vodacom
each own 35 per cent, accounts for 69
per cent of the Kenyan market in terms
of mobile subscriptions, according to
data from the Communications Authority of Kenya, the regulator.
However, Mpesa accounts for 80 per
cent of mobile money transactions by
value.
Safaricom’s diversifying business
model was highlighted by its results for
the first half of the financial year,
announced in November. Outgoing
voice and SMS revenue accounted for
less than 50 per cent of its Ks109.7bn
($1.05bn) service revenue for the first
time as earnings from Mpesa and
mobile data accelerated. It is due to
announce its full-year results next
week.
Mr Bhattacharya pointed out that
Bonga was in internal testing and would
be rolled out to customers “in the next
few months”.
NEIL HUME AND EMIKO TERAZONO
LONDON
Archer Daniels Midland, one of the
world’s biggest traders of agricultural
commodities, yesterday signalled that
a long-awaited recovery in profitability
had arrived, saying its oilseeds business was likely to report more than
$1bn in earnings this year.
After several tough years in which
grains merchants have struggled to find
lucrative trading opportunities because
of bumper harvests, this year has started
on a more positive note for traders.
Argentina’s worst drought in five decades has hit production of soyabeans,
which are crushed to make feed for livestock. This in turn has boosted processing margins in the Americas as buyers
scramble to find alternative supplies.
Argentina is the world’s top exporter
of soyabean meal with about 40 per cent
market share.
“We have confidence that we could
see oilseeds achieve north of $1bn of
operating profit in 2018 . . . that’s a significant increase over about the $850m
of adjusted operating profit that we
achieved last year,” said Juan Luciano,
ADM chief executive.
He was speaking after ADM reported
first-quarter results that topped market
expectations.
The Chicago-based group posted net
income of $396m in the three months to
March, up from $340m in the same
period a year ago, boosted by a lower tax
rate and a $120m biodiesel rebate.
ADM said it had processed record volumes of soyabeans in North and South
America in the quarter as it moved to
lock in high margins. While that had not
immediately translated into higher
profits because of “negative timing
effects” of more than $100m on forward
hedges, Mr Luciano said the position
would reverse later this year.
Companies like ADM use derivatives
to lock in profits on supply deals,
although this can lead to some volatility
in earnings until the underlying contracts are completed.
Mr Luciano said he believed the turnround in the soyabean market was sustainable, citing several factors including
strong demand.
“When you had all these, plus everything that we have been doing in terms
of cost control and swing capacity in our
facilities, we feel very strongly about not
only the sustainability of this margin,
but the sustainability and improvement
of our performance in the years to
come,” he said.
Another factor that helped the
oilseeds business was the return to the
market of Brazilian farmers who had
withheld their soyabeans because of low
prices in 2017.
★
Wednesday 2 May 2018
15
FINANCIAL TIMES
COMPANIES
Technology
Oil & gas
UK lawmakers urge Zuckerberg to testify
BP dividend
hopes boosted
by recovery in
crude prices
MPs threaten Facebook
chief with summons over
questions on data leak
ALIYA RAM — LONDON
British lawmakers have threatened
Facebook chief executive Mark Zuckerberg with a formal summons to provide
evidence about the Cambridge Analytica data leak the next time he sets foot in
the UK.
The warning comes as the social network tries to manage the fallout from
revelations that the information of up to
87m users could have been accessed.
Damian Collins, chair of the UK parliamentary select committee for digital,
culture, media and sport, yesterday criticised Facebook for failing to adequately
answer questions after more than four
hours of testimony from chief technology officer Mike Schroepfer last week.
MPs do not have the power to compel
information from US tech companies.
However, if Mr Zuckerberg entered the
UK, he would fall under British law and
could be forced to provide evidence.
The committee has published a list of
almost 40 “unanswered questions” and
suggested that Mr Zuckerberg testify in
the UK by May 24.
Mr Collins said if he did not confirm
attendance before the end of next week,
parliament would issue a formal summons next time he entered the country.
“We hope that [Mark Zuckerberg]
will respond positively to our request,
but if not, the committee will resolve to
issue a formal summons for him to
appear when he is next in the UK,” Mr
Collins wrote in a letter to Rebecca Stimson, head of public policy at Facebook.
The move comes a day after Jan
Koum, the co-founder of WhatsApp and
a board member at Facebook, said he
was leaving the social network after
reportedly clashing with the company
over its approach to user privacy.
Mr Koum, who sold the messaging
platform to Facebook for $22bn in 2014,
stands to lose nearly $1bn by choosing to
leave before November this year.
Some 5.8m shares of Facebook stock,
awarded to him under a massive compensation deal when he joined the company, have yet to vest and would be forfeited on his departure.
He would still receive the shares, if he
is “involuntarily terminated without
cause or resigns for good reason”,
according to the terms of the award.
However, Mr Koum himself painted
his move as voluntary. He has already
received more than three-quarters of
the 24.9m shares covered by the 2014
stock award.
Facebook announced yesterday that
it would create a new tool to allow people to clear their history, deleting the
data the network holds on them from
other websites and apps.
The company collects data from websites which use like buttons and almost
invisible Facebook pixels to track
browsing and transaction behaviour.
In a post on Facebook, Mr Zuckerberg
said users will even be able to opt out of
having this information stored in their
account.
Facebook did not immediately
respond to a request for comment.
Additional reporting by Richard Waters
and Hannah Kuchler in San Francisco
Retail. Asda merger
Sainsbury’s move
spooks shoppers and
raises staffing fears
Residents of Yorkshire town
cited by chain’s chief executive
ponder impact of planned deal
ANDY BOUNDS — KEIGHLEY
JONATHAN ELEY — LONDON
It was J Sainsbury boss Mike Coupe who
drew national attention to the Yorkshire
town of Keighley, citing it as place where
he could see the ferocious competition
in UK food retail at a glance. If he stood
in his own store car park, he said, an
Asda, an Aldi and an Iceland all jostled
for attention against the green backdrop
of the Pennine hills.
“They are not going to keep two stores
here,” said Ian Roberts, a retired factory
worker shopping at the Keighley Sainsbury’s just across from a big Asda, after
news broke this weekend that the two
would merge. “It would be devastating
to employment in the town to lose one. I
have seen this place decline over the
‘They are not going to
keep two stores here. It
would be devastating to
employment to lose one’
years. There is nothing left. Marks and
Spencer’s closed last week.”
At least 200 people work in Sainsbury’s in Keighley and about the same
number at the Asda just across a railway
line. Another supermarket, Wm Morrison, is just a few hundred metres away.
Graham Gibbs, a former Asda executive, remarked: “There will be job
losses. It’s the only way to make the cost
savings.
Andrew McNulty was waiting for a
taxi with his partner Katie Gill, with a
trolley full of Sainsbury’s bags stuffed
with Asda products. They said they
picked different stores depending on
the offers and why they were buying. “If
this shuts we’ll go somewhere else,” he
said. “It’s not like a football team where
you have undying loyalty.”
Fraser McKevitt from consultancy
and data provider Kantar said declining
loyalty was common. “We are seeing a
substantial number of customers frequenting both retailers. Nearly 9m
households visited both Sainsbury’s and
Asda [in the 12 weeks to April 22].”
Positions Available
Lisa Bailey had travelled from Bingley, 8km away, to go to Sainsbury’s with
her two-year-old nephew. “I go to Asda
for my wine because they always seem
to have good deals. But the food is better
quality here.”
However, many Asda shoppers said
Sainsbury’s was too expensive, suggesting they will not transfer between
brands if stores are sold.
Sajjad Sadique, a chef, said: “I like the
prices here. I am a labourer and it is all I
can afford. The staff are very good and
friendly.” His mother-in-law, Azizuan
Nisa, a retired foster carer, said it had a
good range of Asian food. “They have
chapatti flour, garlic and ginger. I used
to have to go to Bradford but now I can
get it all here. I hope it does not close.”
Another pensioner, who did not want
to give her name, felt Asda, founded in
Yorkshire in the 1950s, had abandoned
the county’s traditional values of frugality and value for money. Asked about
the impact of the deal, she said: “I think
prices will go through the roof. They
always do.”
Steve Davison, chairman of the Keighley branch of the Trades Union Congress, said: “Two hundred years of economic history tell us that takeovers and
mergers leads to closures and job cuts.”
A 10 per cent price cut, promised by
Sainsbury’s and Asda bosses for after
the merger completes, would mean little to those who lose jobs among suppliers and hauliers as the bigger business
drives down payment terms, he said.
“What’s 10 per cent off your shopping
when you lose a £400-£500 a week job?
It is part of a race to the bottom in terms
and conditions for workers. Northern
towns like Keighley have had it worst.”
Nonetheless, data published yesterday give insight on the pressures propelling Asda and Sainsbury’s towards a
£7.3bn merger that will increase buying
power and scale: Germany’s discount
supermarkets Aldi and Lidl are breathing down their UK competitors’ necks.
Lidl was the fastest-growing UK
supermarket in the 12 weeks to April 22,
according to Kantar Worldpanel, with
sales rising 9.1 per cent and its market
share reaching 5.4 per cent. Its compatriot Aldi has increased sales by 7.7 per
cent and now has a 7.3 per cent market
share. Meanwhile, Sainsbury’s and Asda
both have smaller market shares compared with a year ago.
BP has floated the possibility of raising
its dividend for the first time since oil
prices crashed four years ago after
reporting a 71 per cent increase in firstquarter earnings.
The prospect of improved investor
returns from BP reflects growing confidence among the world’s largest energy
groups as they ride the recovery in oil
prices. Brent crude, the international
benchmark, is trading at about $75 a
barrel, its highest level since the collapse from above $100 a barrel in 2014.
Brian Gilvary, BP chief financial
officer, said improved market conditions, rising production and controlled
spending were opening options for
returning more cash to shareholders.
“With these oil prices, we will now see
net debt naturally start to decline and
that will give an opportunity later this
year for potential further distribution
around buybacks or a conversation with
the board around the dividend,” he told
analysts on a conference call.
In October last year BP became the
first European oil and gas group to
resume share buybacks after the downturn and others, including Total of
France, have since followed suit.
Better than expected profits from BP
brought to a close a generally strong set
of quarterly results from the oil and gas
“supermajors”, fuelled by a 25 per cent
increase in oil prices from last year to an
average $67 a barrel during the period.
‘With these oil prices, we
will now see net debt
naturally start to decline’
Brian Gilvary, BP
Crowded market: Keighley’s Asda store sits alongside a branch of Sainsbury’s — Lorne Campbell/Guzelian
Price gaps narrow
Regulator will take note of
the impact of Aldi and Lidl
Although the German discounters are
still taking market share, their growth
rates have slowed since 2014. This is
partly because supermarkets have
fought back on price. As a result, overall
annual grocery price inflation was
2 per cent, the lowest since March 2017.
“All the major supermarkets, but
particularly Tesco, have really flattened
out the market,” said Steve Dresser,
managing director of Grocery Insight.
“All the big price gaps of a few years
ago have closed.”
The pace of store openings has also
slowed. Data from Balfour ABI shows
that construction starts for discount
grocery stores peaked at 135 in 2016
before falling to 96 last year. Analysts
at Bernstein think they will be below 60
in the years 2019 and 2020.
But even at this slower pace of
expansion, the discounters would still
be adding space and sales. Aldi is
targeting 1,000 stores in the UK by
2022, up from 762 at the end of 2017.
And its pricing strategy is unchanged
even though operating profit margins
have halved over the past three years.
“From the moment they arrived in the
UK, Aldi have been very clear about
strategy. They intend to be the
cheapest at all times,” said Richard
Hyman, a consultant.
The growth of the discounters and
their role in the market will be a key
factor in any regulatory examination of
the Asda/Sainsbury’s deal. At the time
of the last big consolidation in UK food
retail — Morrison’s 2004 acquisition of
Safeway — discounters Aldi, Lidl and
Netto had a combined market share of
under 4 per cent. Their stores carried
ranges of about 500 individual lines,
See Lex
compared to the tens of thousands on
offer in mainstream supermarkets. The
Competition Commission, the regulator
at the time, effectively disregarded
them in its analysis.
It would be hard to do so now. Netto
has pulled out of the UK, but Aldi and
Lidl have a combined market share of
almost 13 per cent — above that of
Morrison’s itself. And Mr Dresser said
the standard Aldi range is now around
1,750 to 2,000 items.
Regulators agreed to the merger
of Tesco and wholesaler Booker
announced last January, having
judged the discounters as bona fide
competitors.
Although the investigation of that
deal related mainly to wholesaling
and convenience grocery stores and
has been heavily criticised in some
quarters, analysts believe it does set a
precedent for the Asda/Sainsbury deal.
Jonathan Eley
BP also had the advantage of rising
production after the start-up of seven
new oil and gasfields last year, ranging
from Oman to Trinidad, lifted output by
6 per cent to 3.7m barrels per day.
A further six new projects are due on
stream this year, including Egypt and
Azerbaijan, as part of renewed expansion after the long period of retrenchment that followed the Deepwater Horizon oil spill in the Gulf of Mexico.
Fines and compensation payments
from the 2010 disaster cost BP a further
$1.6bn during the quarter and are
expected to top $3bn over the full year
as the final 300 compensation claims,
out of almost 400,000 settled so far,
work their way towards resolution.
These costs, together with $120m in
share buybacks, caused a slight rise in
net debt during the quarter to $40bn,
representing a gearing ratio of 28.1 per
cent. However, Mr Gilvary said debt
would gradually fall over the rest of the
year as cash flow improved.
He said the financial burden from
Deepwater Horizon was on a downward
curve from $5.2bn of payouts last year,
with further falls expected to $2bn in
2019 and $1bn a year after that until
2032. The disaster has cost BP more
than $65bn to date.
Jon Rigby, analyst at UBS, called BP’s
results a “good quality earnings beat”.
Underlying replacement cost profits,
the measure tracked most closely by
analysts, were $2.6bn, up from $1.5bn in
the same period last year, and well
above analysts’ consensus forecast for
$2.2bn. Operating cash flow, excluding
Deepwater Horizon-related payments,
was $5.4bn, an increase of $1bn from
last year.
ft.com/lombard
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16
FINANCIAL TIMES
Wednesday 2 May 2018
★
Wednesday 2 May 2018
17
FINANCIAL TIMES
MARKET DATA
WORLD MARKETS AT A GLANCE
FT.COM/MARKETSDATA
Change during previous day’s trading (%)
S&P 500
Nasdaq Composite
-0.68%
Dow Jones Ind
-0.27%
FTSE 100
-1.27%
FTSE Eurofirst 300
Nikkei
-0.08%
0.15%
Hang Seng
0.18%
1.74%
FTSE All World $
$ per €
$ per £
-0.49%
-0.745%
-1.235%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS
EUROPE
Index
Apr 02 - S&P 500
All World
New York
2,629.93
2,581.88
Day -0.68%
Month -0.38%
Month -0.22%
IPC
Year 16.54%
Dow Jones Industrial
23,856.72
Day -1.27%
Month -0.94%
Country
Index
Year 14.02%
Year -0.03%
Day 0.15%
Mexico City
Month 8.62%
Year 4.37%
FTSE Eurofirst 300
Month 4.84%
Year -1.83%
Bovespa
São Paulo
Month 4.02%
Year -0.45%
CAC 40
Latest
Previous
Country
Month 6.84%
stock
traded m's
34.2
30.6
14.7
12.1
8.8
8.5
7.6
7.4
7.1
6.6
close
price
1562.41
167.09
170.76
93.52
307.64
46.64
34.70
29.68
101.67
1020.07
Day's
change
-3.72
1.83
-1.24
0.00
-4.82
0.66
-1.91
-0.25
5.12
1.49
Ups
Qorvo
Ipg Photonics
Abbvie
Fidelity National Information Services
Edwards Lifesciences
Close
price
Day's
change
Day's
chng%
71.97
226.13
101.67
98.94
131.48
4.57
13.10
5.12
3.97
4.12
6.78
6.15
5.30
4.18
3.23
Downs
Tapestry
Seagate Technology
Mattel
Acuity Brands
Hanesbrands
47.06
52.64
13.82
111.87
17.28
-6.71
-5.25
-0.99
-7.90
-1.19
-12.48
-9.07
-6.66
-6.60
-6.44
Amazon.com
Apple
Facebook
Microsoft
Netflix
Micron Technology
Pfizer
Bank Of America
Abbvie
Alphabet
BIGGEST MOVERS
Based on the constituents of the S&P500
-0.63%
Cyprus
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Index
Apr 02 - May 01
Kospi
All World
Seoul
2,515.38
2,444.16
Madrid
Month 4.91%
Year 17.25%
Hang Seng
Day 0.92%
Hong Kong
Month 3.24%
Year 14.05%
FTSE Straits Times
Singapore
3,613.93
30,808.45
Month 3.96%
Year -6.86%
FTSE MIB
Day 1.74%
Milan
Month 2.38%
3,427.97
Year 25.16%
Shanghai Composite
Day 1.03%
Shanghai
Month 5.42%
Year 13.81%
BSE Sensex
Mumbai
35,160.36
23,979.37
Year 4.81%
Index
All World
Tokyo
30,790.83
Day 0.56%
3,163.18
3,082.23
Day 0.22%
Country
Month 7.00%
Index
Philippines
Poland
Portugal
Saudi-Arabia
Singapore
Slovakia
Slovenia
South Africa
South Korea
Spain
Sri Lanka
Sweden
Switzerland
Year 16.35%
Latest
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
STOCK MARKET: BIGGEST MOVERS
AMERICA
ACTIVE STOCKS
0.570%
Index
Day 0.18%
22,331.36
Day 0.68%
-0.77%
22,508.03
Year NaN%
Ibex 35
Paris
26198.14
43126.94
23927.61
7045.08
22467.87
1429.92
1777.23
2181.20
3705.36
6603.51
1039.22
703.09
1623.00
1863.47
48284.61
13056.86
554.94
820.57
8443.58
40777.67
977.03
45542.78
29487.82
6071.60
5982.70
4217.20
3477.34
3912.91
7208.17
86444.66
921.43
15607.88
922.07
28582.26
9797.22
8988.96
3220.32
317.80
3074.96
1851.58
1080.17
1566.45
1796.21
Index
Year 31.67%
Month 0.32%
5,520.50
FTSE Italia All-Share
26255.00
CSE M&P Gen
68.46
68.68
Italy
FTSE Italia Mid Cap
43208.11
PX
1115.93
1124.16
OMXC Copenahgen 20
976.20
971.17
FTSE MIB
23979.37
EGX 30
18295.57
18303.43
Japan
2nd Section
7073.57
OMX Tallinn
1253.16
1251.70
Nikkei 225
22508.03
Austria
OMX Helsinki General
10005.69
9979.24
S&P Topix 150
1427.76
Belgium
CAC 40
5520.50
5483.18
Topix
1774.18
SBF 120
4402.50
4377.84
Jordan
Amman SE
2191.52
Brazil
Germany
M-DAX
25967.06
25859.49
Kenya
NSE 20
3723.30
Canada
TecDAX
2625.60
2625.96
Kuwait
KSX Market Index
6633.44
XETRA Dax
12612.11
12580.87
Latvia
OMX Riga
1039.17
Chile
Greece
Athens Gen
858.22
849.26
Lithuania
OMX Vilnius
706.23
China
FTSE/ASE 20
2213.55
2193.04
Luxembourg
LuxX
1620.97
Hong Kong
Hang Seng
30808.45
30280.67
Malaysia
FTSE Bursa KLCI
1870.37
HS China Enterprise
12331.39
12066.58
Mexico
IPC
48358.16
HSCC Red Chip
4540.64
4465.10
Morocco
MASI
13028.01
Hungary
Bux
38295.72
38265.35
Netherlands
AEX
555.73
India
BSE Sensex
35160.36
34969.70
AEX All Share
821.46
Nifty 500
9496.50
9443.65
New Zealand
NZX 50
8435.97
Colombia
Indonesia
Jakarta Comp
5994.60
6308.15
Nigeria
SE All Share
41244.89
Croatia
Ireland
ISEQ Overall
6797.37
6805.19
Norway
Oslo All Share
974.24
Israel
Tel Aviv 125
1337.65
1331.40
Pakistan
KSE 100
45488.86
(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.
30006.35
6100.00
6015.20
4236.70
3468.47
3910.30
7256.64
86115.50
919.72
15571.16
916.60
28699.31
9786.54
9000.71
3227.92
318.89
3082.23
1857.60
1077.76
1565.56
1809.60
Country
Month 0.88%
Gold $
9,980.60
5,130.44
Day -0.38%
Oil Brent $ Sep
21,454.30
Day 0.25%
Europe
86,115.50
85,365.56
12,612.11
9,600.40
Day -0.08%
0.297%
Apr 02 - May 01
Nikkei 225
Frankfurt
1,510.85
1,452.31
46,124.85
Day 0.15%
All World
12,096.73
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
Month 1.32%
Index
Apr 02 - Apr 30
Xetra Dax
7,520.36
Latest
Argentina
Australia
Latest
London
48,358.16
New York
23,644.19
All World
7,056.61
New York
6,870.12
Day -0.27%
Toronto
£ per €
ASIA
Index
Apr 02 - May 01
FTSE 100
15,571.16
Day -0.24%
7,047.12
All World
15,213.45
Year 10.35%
Nasdaq Composite
Index
Apr 02 - Apr 30
S&P/TSX COMP
¥ per $
Day 0.24%
Previous
7819.25
59932.46
5512.29
3094.08
8713.14
2285.53
1153.96
8208.87
3613.93
330.17
841.75
58252.12
37932.63
51419.22
2515.38
323.56
9980.60
6533.94
1570.71
577.45
8886.26
Country
7721.02
59567.47
5527.69
3102.11
8780.22
2285.76
1164.09
8224.94
3577.21
330.17
841.28
57453.04
37624.05
50684.22
2492.40
320.80
9925.40
6531.06
1580.78
579.38
8843.02
Taiwan
Thailand
Turkey
UAE
UK
USA
Venezuela
Vietnam
Month -1.64%
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
32,968.68
Day 0.55%
Year -1.87%
Previous
10657.88
1780.11
116840.94
4669.52
3230.50
7520.36
6779.28
4135.31
4570.35
8061.37
23856.72
10360.75
707.08
6594.71
7047.12
12405.49
2629.93
27343.52
22217.09
1050.26
Country
10553.43
1778.02
116315.98
4697.23
3216.20
7509.30
6762.75
4127.68
4533.80
8134.21
24163.15
10423.57
707.01
6605.57
7066.27
12515.36
2648.05
27520.95
22380.01
1044.86
Month 6.65%
Index
Cross-Border
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)
Year 17.52%
Latest
Previous
295.31
3536.08
1063.55
6478.68
335.40
1510.85
2918.02
1649.45
1443.84
4543.60
1938.67
592.13
4320.10
4959.22
509.69
2086.51
1603.48
2851.91
1656.86
1554.52
2318.44
3084.85
297.27
3536.52
1059.94
6496.40
337.05
1512.03
2921.52
1657.08
1469.72
4544.90
1947.28
595.20
4327.42
4959.22
511.31
2096.05
1600.09
2849.81
1657.01
1555.55
2333.22
3087.66
UK MARKET WINNERS AND LOSERS
LONDON
ACTIVE STOCKS
EURO MARKETS
ACTIVE STOCKS
stock
traded m's
Bp
251.5
Rolls-royce Holdings
216.0
Sainsbury (j)
190.2
Rio Tinto
160.5
Astrazeneca
150.6
British American Tobacco
132.6
Lloyds Banking
121.1
Burberry
115.1
Glencore
102.1
Sky
101.9
close
price
547.70
839.00
314.50
3914.50
5213.00
3900.00
64.34
1842.00
346.95
1380.00
Day's
change
9.70
-1.00
5.50
-31.50
110.00
-99.00
-0.32
18.50
-3.75
2.00
BIGGEST MOVERS
Ups
Virgin Money Holdings (uk)
Spectris
Just Eat
Bunzl
Ocado
Close
price
Day's
change
Day's
chng%
296.70
2809.00
805.40
2179.00
555.40
18.00
119.00
31.60
68.00
17.00
6.46
4.42
4.08
3.22
3.16
Ups
Vivendi
Tenaris
Safran
Ericsson, Telefonab. L M Ser. B
Publicise Sa
Downs
Charter Court Fin Services
Centamin
Ferrexpo
Contourglobal
Inmarsat
288.45
149.60
225.00
244.00
361.80
-26.15
-7.15
-10.10
-10.00
-14.30
-8.31
-4.56
-4.30
-3.94
-3.80
Downs
Skandinaviska Enskilda Banken Ser. A
Getinge Ab Ser. B
Thyssenkrupp Ag O.n.
Sandvik Ab
Merck Kgaa O.n.
Based on the constituents of the FTSE 350 index
Santander
Inditex
Dt.telekom Ag Na
Novartis N
Nestle N
Total
Roche Gs
Sanofi
Unilever Dr
Allianz Se Na O.n.
TOKYO
ACTIVE STOCKS
stock
traded m's
1892.9
518.6
416.9
328.1
323.5
299.0
254.2
249.4
243.4
242.1
close
price
5.37
25.78
14.50
64.13
64.36
52.33
184.66
65.79
47.45
196.46
Day's
change
0.06
0.42
-0.04
0.23
0.25
0.23
1.92
0.63
0.50
1.96
stock
close
traded m's
price
Softbank .
855.8 8557.00
Sony
840.3 5073.00
Mitsubishi Ufj Fin,.
639.2
711.60
Fanuc
366.6 23990.00
Sumitomo Mitsui Fin,.
362.8 4487.00
Takeda Pharmaceutical
321.8 4594.00
Hitachi,
307.0
850.30
Fast Retailing Co.,
294.0 49040.00
Yahoo Japan
270.3
385.00
Tokyo Electron
263.2 20780.00
Day's
change
56.00
-327.00
-21.60
430.00
-63.00
-27.00
48.70
830.00
-65.00
-275.00
Close
price
Day's
change
Day's
chng%
BIGGEST MOVERS
21.89
15.57
97.46
6.36
62.00
0.55
0.36
2.22
0.14
1.26
2.58
2.37
2.33
2.28
2.07
7.81
7.73
21.60
14.20
81.22
-0.37
-0.24
-0.50
-0.32
-1.60
-4.54
-2.97
-2.26
-2.22
-1.93
BIGGEST MOVERS
Based on the constituents of the FTSEurofirst 300 Eurozone index
Ups
Okuma
Tokuyama
West Japan Railway
Hitachi,
Sojitz
Close
price
Day's
change
Day's
chng%
6790.00
3485.00
8256.00
850.30
379.00
520.00
220.00
506.00
48.70
18.00
8.29
6.74
6.53
6.08
4.99
Downs
Yahoo Japan
Toto
Mitsui Eng & Shipbuilding Co.,
Sony
Seiko Epson
385.00
5480.00
1681.00
5073.00
1950.00
-65.00
-730.00
-199.00
-327.00
-105.00
-14.44
-11.76
-10.59
-6.06
-5.11
Based on the constituents of the Nikkei 225 index
FTSE 100
Winners
Sainsbury (j)
Wpp
Evraz
Imperial Brands
Rentokil Initial
Just Eat
Itv
Severn Trent
United Utilities
Dcc
Pearson
Diageo
May 01
price(p)
%Chg
week
%Chg
ytd
314.50
1268.00
452.60
2614.00
312.00
805.40
154.10
1989.00
755.20
7105.00
831.40
2606.00
18.2
13.6
9.5
9.4
7.3
7.1
6.6
6.5
6.5
6.4
5.8
5.7
Losers
Glencore
Barclays
Ashtead
Croda Int
Lloyds Banking
Legal & General
Fresnillo
Micro Focus Int
Anglo American
Bhp Billiton
Kingfisher
Royal Bank Of Scotland
346.95
205.50
2028.00
4488.00
64.34
271.00
1245.00
1264.50
1703.40
1518.80
296.30
269.80
-10.1
-4.6
-4.1
-2.8
-2.7
-2.6
-2.5
-2.5
-2.5
-2.5
-2.2
-2.1
May 01
price(p)
%Chg
week
%Chg
ytd
31.8
3.3
3.6
13.8
4.8
3.3
-3.2
-7.4
-5.5
-0.8
1.4
0.2
FTSE SmallCap
Winners
Luceco
Gulf Marine Services
Nanoco
Paypoint
Stock Spirits
Stv
F&c Private Equity Trust
U And I
Ao World
S&U
Hg Capital Trust
Tr Eur Growth Trust
76.00
38.00
44.20
886.00
273.00
340.00
383.50
220.00
154.00
2610.00
1922.50
1084.00
18.8
11.1
10.0
8.0
6.6
6.3
5.4
5.5
5.0
4.8
5.5
3.8
-6.5
-5.7
-4.3
-25.7
-2.8
10.9
-15.8
-6.7
-29.8
-29.1
1.1
1.8
Losers
Morgan Sindall
Communisis
Carclo
Enquest
Mothercare
Int Personal Finance
Dialight
Medica
Xp Power
Sabre Insurance
Phoenix Spree Deutschland
Petra Diamonds
1300.00
60.80
98.20
35.85
18.39
241.80
502.00
120.80
3510.00
260.00
361.00
67.45
-3.7
-5.0
-3.7
-3.6
-1.8
-5.1
-3.1
-3.4
-3.0
-1.1
-3.0
-5.5
May 01
price(p)
%Chg
week
%Chg
ytd
30.4
-5.1
27.6
-17.2
1.5
3.7
-8.2
-7.0
-7.5
-5.1
13.2
-2.7
FTSE 250
Winners
On The Beach
Cls Holdings
Euromoney Institutional Investor
Spectris
Pantheon Int
Tr Property Investment Trust
Genesis Emerging Markets Fund Ld
Pershing Square Holdings Ltd
Ssp
British Empire Trust
Polar Capital Technology Trust
Fidelity China Special Situations
630.00
249.50
1314.00
2809.00
1960.00
408.00
703.00
945.00
666.10
719.00
1150.00
242.00
6.8
5.1
4.0
5.3
3.2
3.0
1.9
2.6
5.1
2.3
2.1
1.9
-12.0
1.1
3.2
1.9
-5.0
0.3
-13.2
-49.2
6.8
-0.7
-13.7
-2.7
Losers
Contourglobal
Games Workshop
Iwg
Ferrexpo
Bgeo
Tullow Oil
Clarkson
Metro Bank
Renewi
Provident Fin
Genus
Tbc Bank
244.00
2390.00
244.00
225.00
3444.00
227.30
2420.00
3366.00
72.30
647.60
2514.00
1780.00
-6.9
-6.3
-5.4
-6.6
-5.3
-4.8
-4.7
-4.3
-4.6
-5.2
-3.9
-3.9
May 01
price(p)
%Chg
week
%Chg
ytd
-31.2
-15.7
72.0
-3.8
0.7
3.0
13.6
13.9
43.1
11.3
8.3
-9.5
Industry Sectors
Winners
Gas Water & Multiutilities
Tobacco
Industrial Metals
Beverages
Media
Electricity
Personal Goods
Construction & Materials
Food Producers
Travel & Leisure
Household Goods
Real Estate & Investment Servic
5041.81
42903.40
4404.89
20845.76
7787.25
8144.67
35711.26
6484.77
7445.96
10057.19
16332.63
2899.48
5.9
5.3
5.2
5.0
4.9
4.3
3.7
3.2
3.2
2.7
2.4
2.3
-2.4
14.2
-4.2
3.1
5.4
-1.6
-1.1
-1.4
-0.8
-9.5
-6.5
-21.4
21.1
-72.1
19.5
-7.0
-40.2
1.7
-3.7
-6.7
-18.0
Losers
Mining
Forestry & Paper
Mobile Telecommunications
Automobiles & Parts
Software & Computer Services
Industrial Engineering
Chemicals
Aerospace & Defense
Banks
Oil & Gas Producers
General Industrials
Industrial Transportation
17927.30
21908.94
4605.14
10352.65
1811.19
12789.86
14849.13
5026.12
4440.78
9320.42
6791.15
3587.63
-4.2
-0.9
-0.9
-0.8
-0.4
-0.4
-0.3
-0.2
0.1
0.1
0.3
0.4
-4.2
5.2
39.0
2.5
5.1
2.9
-3.9
3.1
6.3
7.8
Based on last week's performance. †Price at suspension.
CURRENCIES
May 1
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
Mid
20.5295
1.3370
0.3770
6.9100
3.5070
1.2901
613.7500
6.3449
2808.3500
565.4750
21.4325
6.2142
17.7630
7.8488
261.9251
66.7400
Day's
Change
0.0145
0.0122
0.0193
0.0082
2.0300
-0.5400
0.3000
0.2891
0.0475
0.1390
0.0005
2.4482
-
EURO
POUND
Closing
Day's
Closing
Day's
Mid
Change
Mid
Change
24.6139
-0.1722
27.9089
-0.3475
1.6030
0.0024
1.8176
-0.0071
0.4520
-0.0035
0.5125
-0.0067
8.2848
-0.0639
9.3938
-0.1237
4.2047
-0.0091
4.7676
-0.0362
1.5468
-0.0021
1.7538
-0.0119
735.8583
-3.2196 834.3643
-8.1905
7.6072
-0.0586
8.6256
-0.1136
3367.0850 -26.6063 3817.8198
-51.0159
677.9788
-4.8636 768.7367
-9.7091
25.6966
0.1512
29.1365
0.0145
7.4505
0.0000
8.4479
-0.0457
21.2970
0.0038
24.1480
-0.1265
9.4104
-0.0719
10.6701
-0.1397
314.0362
0.5372 356.0748
-1.3167
80.0182
-0.6168
90.7299
-1.1947
May 1
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
13912.5000
3.6106
109.7500
109.7498
109.7493
109.7469
100.3000
0.3012
3.9235
18.8610
1.4292
359.5000
8.0937
115.5700
3.2584
51.7495
Day's
Change
0.0127
0.3250
0.3246
0.3236
0.3188
0.0400
0.0002
0.0788
0.0099
-0.5000
0.0826
0.0121
-
EURO
POUND
Closing
Day's
Closing
Day's
Mid
Change
Mid
Change
16680.4558 -128.5834 18913.4238
-249.0239
4.3289
-0.0180
4.9084
-0.0471
131.5853
-0.6216 149.2000
-1.5169
131.5853
-0.6216 149.1999
-1.5171
131.5854
-0.6214 149.1997
-1.5175
131.5855
-0.6211 149.1999
-1.5186
120.2551
-0.8786 136.3531
-1.7403
0.3611
-0.0025
0.4095
-0.0051
4.7041
-0.0363
5.3338
-0.0702
22.6135
-0.0790
25.6406
-0.2290
1.7135
-0.0012
1.9429
-0.0119
431.0242
-3.9266 488.7233
-7.1240
9.7040
0.0251
11.0031
-0.0310
138.5632
-1.0681 157.1120
-2.0688
3.9067
-0.0154
4.4296
-0.0416
62.0453
-0.4783
70.3510
-0.9263
May 1
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
3.5679
3.8953
63.4925
3.7503
1.3339
12.6425
1068.0500
8.8549
0.9959
29.5865
31.5600
2.4580
4.1000
3.6732
0.7356
0.7358
Day's
Change
0.0641
0.0369
0.5169
0.0099
0.1587
0.1119
0.0060
0.0137
0.0348
0.0096
0.0096
EURO
Closing
Mid
4.2777
4.6703
76.1246
4.4964
1.5993
15.1578
1280.5435
10.6166
1.1940
35.4729
37.8390
2.9470
4.9157
4.4039
0.8819
0.8819
POUND
Day's
Closing
Day's
Change
Mid
Change
0.0445
4.8503
0.0244
0.0086
5.2955
-0.0188
0.0377
86.3151
-0.4247
-0.0347
5.0983
-0.0671
-0.0004
1.8134
-0.0103
0.0750
17.1869
-0.0077
-9.8708 1451.9638
-19.1188
0.0533
12.0378
-0.0045
-0.0020
1.3539
-0.0096
-0.2734
40.2215
-0.5296
-0.2917
42.9043
-0.5649
-0.0061
3.3415
-0.0251
0.0041
5.5738
-0.0255
-0.0339
4.9935
-0.0658
0.0048
0.0048
-
May 1
..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
Day's
Mid
Change
0.7362
0.0096
0.7381
0.0096
66870.0000
105.0000
22763.5000
0.8341
0.0064
0.8338
0.0064
0.8332
0.0064
0.8303
0.0064
EURO
POUND
Closing
Day's
Closing
Day's
Mid
Change
Mid
Change
0.8817
0.0048
0.8808
0.0048
1.1990
-0.0092
1.3595
-0.0179
1.1987
-0.1784
1.3596
-0.0179
1.1981
-0.1784
1.3601
-0.0179
1.1952
-0.1784
1.3620
-0.0179
80174.0882 -491.1447 90906.6192 -1052.3908
27292.4274 -210.3985 30945.9560
-407.5105
1.1339
-0.0061
1.1338
-0.0061
1.1336
-0.0061
1.1327
-0.0061
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
P/E
May 01 chge%
Index
Apr 30
Apr 27
ago yield% Cover
ratio
FTSE 100 (100)
7520.36
0.15 6645.57 7509.30 7502.21 7250.05 3.90 1.89 13.53
FTSE 250 (250)
20348.32
0.31 17981.36 20285.05 20271.63 19805.29 2.70 2.45 15.14
FTSE 250 ex Inv Co (198)
21898.58
0.36 19351.29 21819.34 21813.21 21280.04 2.79 1.95 18.39
FTSE 350 (350)
4186.61
0.17 3699.61 4179.29 4175.55 4042.94 3.70 1.96 13.78
FTSE 350 ex Investment Trusts (297) 4150.76
0.18 3667.94 4143.44 4139.92 4008.83 3.75 1.89 14.14
FTSE 350 Higher Yield (109)
3847.97
0.12 3400.36 3843.36 3837.74 3723.36 4.94 1.63 12.44
FTSE 350 Lower Yield (241)
4131.92
0.24 3651.28 4122.21 4121.08 3984.18 2.34 2.74 15.62
FTSE SmallCap (283)
5888.97
0.45 5203.95 5862.71 5855.21 5568.50 3.13 2.83 11.32
FTSE SmallCap ex Inv Co (155)
5143.98
0.60 4545.62 5113.45 5119.79 4982.63 3.09 1.49 21.67
FTSE All-Share (633)
4135.31
0.18 3654.29 4127.68 4123.92 3990.16 3.68 1.99 13.67
FTSE All-Share ex Inv Co (452)
4074.99
0.19 3600.98 4067.45 4064.17 3935.83 3.73 1.88 14.25
FTSE All-Share ex Multinationals (566) 1267.55
0.20
928.36 1265.04 1263.40 1224.65 3.31 1.85 16.32
FTSE Fledgling (93)
10862.67
0.16 9599.10 10845.53 10804.50 9798.25 2.73 2.76 13.26
FTSE Fledgling ex Inv Co (46)
15683.21
0.21 13858.91 15650.80 15574.57 13722.98 3.18 -0.64 -49.01
FTSE All-Small (376)
4103.51
0.43 3626.18 4085.79 4080.06 3871.21 3.11 2.82 11.41
FTSE All-Small ex Inv Co (201)
3867.21
0.58 3417.37 3844.80 3848.72 3731.51 3.09 1.42 22.86
FTSE AIM All-Share (814)
1054.29
0.17
931.65 1052.52 1050.00
967.38 1.28 1.18 66.51
X/D
adj
107.02
174.97
191.92
55.54
55.83
62.28
41.69
53.92
42.30
54.23
54.38
14.19
80.38
108.14
37.22
31.62
4.58
Total
Return
6473.04
15094.42
16579.78
7225.95
3691.94
7023.91
4616.31
8626.99
7915.73
7214.39
3682.89
2329.26
20782.93
29318.53
7716.00
7539.51
1172.97
FTSE Sector Indices
Oil & Gas (14)
9712.12
Oil & Gas Producers (9)
9362.38
Oil Equipment Services & Distribution (5)13579.26
Basic Materials (30)
6139.20
15814.96
Chemicals (9)
Forestry & Paper (1)
23906.68
Industrial Metals & Mining (2)
4744.77
Mining (18)
17130.16
Industrials (108)
5510.40
Construction & Materials (15)
6806.14
Aerospace & Defense (9)
5234.15
General Industrials (7)
5509.22
Electronic & Electrical Equipment (11) 8211.99
Industrial Engineering (13)
14139.46
Industrial Transportation (6)
5677.26
Support Services (47)
7643.62
19792.55
Consumer Goods (42)
Automobiles & Parts (1)
10405.70
Beverages (5)
20923.61
Food Producers (12)
7572.30
Household Goods & Home Construction (15)13655.14
Leisure Goods (2)
9001.44
Personal Goods (5)
31131.74
Tobacco (2)
42903.48
10030.41
Health Care (22)
Health Care Equipment & Services (10) 8370.58
Pharmaceuticals & Biotechnology (12)13401.02
Consumer Services (93)
5252.08
Food & Drug Retailers (6)
3885.67
General Retailers (28)
2390.98
Media (22)
7892.82
Travel & Leisure (37)
9852.59
Telecommunications (6)
3026.22
Fixed Line Telecommunications (4) 2899.28
Mobile Telecommunications (2)
4598.17
Utilities (8)
7275.07
Electricity (3)
8126.18
Gas Water & Multiutilities (5)
6663.27
Financials (295)
5326.57
Banks (11)
4385.60
Nonlife Insurance (10)
3714.74
Life Insurance/Assurance (9)
9189.89
Real Estate Investment & Services (19) 2860.30
Real Estate Investment Trusts (34) 2855.88
General Financial (31)
9503.41
Equity Investment Instruments (181) 9976.01
Non Financials (338)
4825.46
Technology (15)
1819.32
Software & Computer Services (12) 2027.95
Technology Hardware & Equipment (3) 2490.60
120.39
114.02
312.40
138.63
81.20
0.00
173.38
437.14
47.15
97.79
63.95
60.19
11.28
164.48
46.93
38.01
243.61
181.68
178.29
8.44
260.88
157.83
205.48
633.02
154.89
68.90
219.82
45.54
2.83
3.04
92.78
115.99
1.46
0.00
3.07
41.11
169.04
6.62
88.63
83.31
56.20
226.03
19.23
43.42
111.20
82.36
57.04
18.79
21.71
14.60
9385.00
9368.20
10955.25
6524.75
14374.81
26299.70
4569.09
9561.87
5798.73
7407.25
5736.08
6442.30
7572.95
17615.87
5246.44
8068.29
15070.88
10314.79
15108.95
6616.14
10020.38
8577.17
21480.35
28787.24
7997.98
7371.25
9550.81
5042.42
4587.41
2789.86
4994.50
9572.99
3522.17
2753.34
4815.26
8580.37
12378.30
7819.61
5110.49
3373.13
6743.92
9385.51
7797.43
3694.76
11205.96
5571.55
7365.47
2382.38
2806.35
2958.08
0.37
0.38
0.11
-0.88
0.32
0.39
-1.95
-1.07
0.56
0.33
0.38
0.57
2.01
0.40
0.71
0.57
-0.57
-3.03
0.74
0.20
-0.26
-0.27
-0.19
-1.87
1.10
0.61
1.16
0.49
0.12
-0.47
0.65
0.85
-0.88
-1.56
-0.62
0.57
0.08
0.72
0.30
0.15
0.44
0.84
-0.21
0.16
0.34
0.17
0.14
0.46
0.55
-0.51
8582.39
8273.33
11999.69
5425.08
13975.33
21125.80
4192.85
15137.55
4869.42
6014.44
4625.30
4868.38
7256.76
12494.73
5016.87
6754.49
17490.24
9195.28
18489.73
6691.48
12066.74
7954.37
27510.43
37912.85
8863.65
7396.90
11842.19
4641.15
3433.68
2112.86
6974.71
8706.51
2674.20
2562.03
4063.30
6428.82
7180.93
5888.19
4706.97
3875.45
3282.63
8120.90
2527.58
2523.68
8397.95
8815.58
4264.15
1607.69
1792.05
2200.89
9676.17
9327.22
13564.22
6193.89
15765.24
23812.65
4839.01
17314.99
5479.80
6783.80
5214.57
5478.25
8050.31
14082.96
5636.98
7600.51
19906.94
10730.87
20770.26
7556.96
13690.33
9026.05
31191.06
43720.37
9921.37
8319.67
13246.78
5226.67
3880.87
2402.26
7841.82
9769.68
3053.23
2945.32
4626.72
7234.05
8119.34
6615.59
5310.76
4379.07
3698.36
9113.54
2866.27
2851.23
9471.36
9958.81
4818.53
1810.97
2016.95
2503.29
9667.42
9318.68
13560.03
6270.64
15865.83
23859.67
4776.15
17558.86
5487.20
6759.95
5222.12
5504.71
8025.62
14111.32
5638.46
7622.34
19894.10
10486.99
20575.54
7590.87
13663.87
9094.23
31021.88
44027.02
9936.19
8318.32
13269.51
5177.24
3823.25
2396.23
7693.52
9736.74
3039.05
2930.87
4605.72
7240.63
8135.23
6619.40
5295.42
4361.96
3718.38
9081.61
2846.56
2843.26
9465.82
9927.80
4817.64
1825.44
2033.27
2520.39
7913.36
7550.68
16227.95
5095.41
13988.39
23965.45
2447.73
14083.22
5432.16
7297.84
5376.07
4856.21
7543.34
13053.01
4852.58
7642.69
22007.01
8354.42
18099.67
8328.54
15088.71
5782.39
30490.41
59024.18
10176.04
8169.29
13663.89
5068.06
3140.29
2604.05
7900.47
9287.10
3213.62
3566.71
4582.90
8548.56
8240.74
8152.65
4997.08
4126.63
3367.69
8387.00
2756.84
2799.60
8891.46
9418.52
4703.47
2045.76
2342.18
1864.42
5.10 0.84 23.23
5.13 0.85 22.90
3.61 0.36 77.44
3.95 2.18 11.60
1.93 2.20 23.53
2.44 3.48 11.78
8.17 1.85
6.61
4.19 2.16 11.06
2.38 2.30 18.33
2.33 0.70 61.44
2.38 5.64
7.45
2.72 1.28 28.71
1.63 2.17 28.32
1.90 1.95 27.02
3.70 1.49 18.20
2.37 1.99 21.23
3.58 4.67
5.98
0.45 0.00
0.00
2.40 1.94 21.48
2.25 2.47 18.00
4.24 2.22 10.61
5.56 1.14 15.82
2.94 3.29 10.35
4.41 7.77
2.92
3.41 1.06 27.68
1.47 2.47 27.57
3.67 0.98 27.69
2.58 2.17 17.88
1.10 2.93 30.88
3.33 1.83 16.45
2.68 2.57 14.54
2.70 1.93 19.12
6.20 0.18 91.12
6.21 1.04 15.47
6.20 -0.16 -100.46
5.75 1.54 11.26
6.26 1.38 11.60
5.59 1.60 11.16
3.52 2.02 14.04
3.99 1.27 19.68
3.06 1.74 18.82
3.70 1.47 18.41
2.41 2.52 16.47
3.76 2.39 11.12
3.28 2.10 14.49
2.49 5.47
7.34
3.73 1.98 13.54
2.78 0.98 36.49
2.85 0.90 38.97
2.01 2.37 20.99
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
7517.63 7519.87 7528.58 7539.76 7542.74 7540.81 7539.96 7529.43 7518.08 7548.91 7508.96
FTSE 250
20285.21 20378.24 20351.84 20391.72 20412.08 20393.76 20378.66 20381.11 20383.25 20414.75 20284.77
FTSE SmallCap
5867.64 5869.81 5876.67 5882.31 5888.64 5887.00 5886.13 5886.21 5887.81 5890.00 5866.31
FTSE All-Share
4131.48 4135.59 4138.74 4145.12 4147.26 4145.77 4144.88 4140.32 4135.43 4149.60 4130.74
Time of FTSE 100 Day's high:11:29:45 Day's Low15:06:45 FTSE 100 2010/11 High: 7778.64(12/01/2018) Low: 6888.69(26/03/2018)
Time of FTSE All-Share Day's high:10:51:00 Day's Low15:07:00 FTSE 100 2010/11 High: 4268.89(12/01/2018) Low: 3810.81(26/03/2018)
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
May 01
Apr 30
Apr 27
Apr 26
Apr 25 Yr Ago
High
Low Year to date percentage changes
FT 30
3230.50 3216.20 3188.00 3159.60 3167.50
0.00 3377.70 2974.50 Automobiles & Parts
40.13
FT 30 Div Yield
1.94
1.95
1.98
2.01
2.01
0.00
3.93
2.74 Tech Hardware & Eq
34.93
P/E Ratio net
23.00
22.88
22.56
22.25
22.23
0.00
19.44
14.26 Industrial Metals &
15.19
FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35
Food & Drug Retailer
12.16
FT 30 hourly changes
Health Care Eq & Srv
7.45
8
9
10
11
12
13
14
15
16
High
Low Industrial Transport
6.83
3216.2 3232.7 3237.6 3243.3 3241.6 3238.8 3234.6 3230.1 3228.4 3244.5 3216.2 Chemicals
5.36
FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30
Electricity
5.35
Forestry & Paper
5.13
Health Care
4.43
Pharmace & Biotech
4.04
2.85
Apr 30 Apr 27 Mnth Ago
May 01 Apr 30 Mnth Ago Oil & Gas Producers
Aerospace & Defense
2.84
Australia
91.26
91.33
91.16 Sweden
72.35
72.72
74.27 Oil & Gas
2.79
Canada
90.69
90.34
89.80 Switzerland
148.47 148.46 150.86 Industrial Eng
2.62
Denmark
111.21 111.13 110.82 UK
79.48
79.47
79.76 Nonlife Insurance
0.91
Japan
136.75 137.10 139.55 USA
98.48
98.39
96.92 Media
0.26
New Zealand
114.34 114.42 115.10 Euro
95.92
95.91
95.85
Norway
87.48
87.79
87.36
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
Consumer Services
Life Insurance
Financial Services
Oil Equipment & Serv
Industrials
Electronic & Elec Eq
Real Est Invest & Tr
Basic Materials
FTSE SmallCap Index
Utilities
Real Est Invest & Se
Construct & Material
Equity Invest Instr
Mining
Personal Goods
Financials
FTSE 250 Index
FTSE All{HY-}Share Index
+or-
NON FINANCIALS Index
Travel & Leisure
FTSE 100 Index
Gas Water & Multi
Support Services
General Retailers
Banks
Beverages
Fixed Line Telecomms
Leisure Goods
Food Producers
Telecommunications
Mobile Telecomms
Consumer Goods
Household Goods & Ho
Tobacco
Technology
Software & Comp Serv
-2.36
-2.39
-2.41
-3.18
-3.29
-3.47
-4.36
-5.66
-8.50
-8.90
-9.57
-10.18
-10.83
-11.03
-12.41
-19.21
-20.71
-23.46
FTSE GLOBAL EQUITY INDEX SERIES
Apr 30
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
7848 578.17
1450 507.68
1727 782.90
4671 823.49
3177 337.05
2599 595.20
7526 599.83
5982 524.76
6521 589.36
7179 595.05
2137 539.89
5698 568.28
921 497.13
242 383.73
320 641.32
714 913.04
283 566.83
394 832.47
1402 852.04
677 378.45
1460 275.58
193 397.38
316 672.53
818 749.50
509 169.65
535 743.25
457 961.96
1492 615.96
992 585.79
2150 807.00
529 766.81
511 987.78
1110 836.59
125 376.29
242 973.40
239 750.57
322 367.92
1866 653.22
1477 454.51
669 457.11
3192 7023.77
1046 11268.87
3177 405.34
562 341.42
147 404.87
Day
%
-0.3
-0.3
-0.4
-0.4
-0.3
-0.4
-0.3
0.2
-0.3
-0.4
-0.4
-0.4
-0.4
0.1
-0.2
-0.1
-0.8
-0.7
-0.7
-0.8
0.1
-0.3
-0.3
-0.3
-0.3
1.0
1.1
1.0
1.0
0.6
0.6
0.4
0.9
-1.1
-0.8
0.5
-0.1
-0.8
0.0
0.1
-0.3
-0.9
-0.4
-0.1
0.0
Mth
%
0.7
0.8
0.8
0.5
0.8
0.8
0.5
1.3
0.7
0.5
1.0
0.9
1.0
2.3
1.8
1.7
0.4
0.4
0.3
0.4
1.9
0.6
1.1
0.4
0.7
1.0
0.5
0.1
0.9
-1.0
-1.0
-1.1
-0.7
-5.1
-1.6
-0.7
4.2
0.3
1.9
2.5
1.5
0.7
0.8
2.0
8.2
YTD
Total
%
retn
-0.6 837.53
-0.8 755.15
-0.3 1073.74
-0.4 1091.74
-0.7 515.99
-0.7 1223.61
-0.7 855.02
-0.5 816.94
-0.8 861.67
-0.9 845.55
-0.7 788.87
-0.7 819.94
-0.8 737.94
-0.6 659.22
0.5 980.20
0.5 1349.60
-1.2 784.28
-0.8 1069.65
-0.9 1062.12
-1.1 535.72
-0.2 462.02
0.5 524.53
1.6 848.98
0.7 979.69
0.7 251.08
-0.2 1189.76
-1.4 1476.44
-0.1 928.68
-0.4 996.03
0.0 1226.27
0.1 1173.65
-0.4 1491.58
-0.2 1218.17
-3.4 603.86
4.9 1533.59
-4.3 1202.75
-0.5 636.09
-0.8 876.04
-0.4 752.47
1.8 758.21
-0.8 9484.18
-2.3 15049.93
-0.1 573.72
0.9 530.84
3.5 670.39
YTD Gr Div Apr 30
No of
US $
Day
Mth
YTD
Total
YTD Gr Div
% Yield Sectors
stocks indices
%
%
%
retn
% Yield
0.1
2.3 Oil & Gas Producers
110 394.52
-0.1
-0.1
4.8 667.57
5.8
3.4
0.1
2.4 Oil Equipment & Services
28 299.89
0.1
0.1
-4.7 445.60
-3.7
3.7
0.4
2.1 Basic Materials
260 530.30
-0.6
-0.6
-2.7 826.40
-1.8
2.7
0.1
1.8 Chemicals
121 774.67
-0.6
-0.6
-3.9 1207.37
-3.3
2.4
0.1
2.4 Forestry & Paper
16 332.85
-0.6
-0.6
8.0 579.78
9.7
2.7
0.2
2.4 Industrial Metals & Mining
69 472.75
0.4
0.4
-3.1 732.82
-2.3
2.7
0.1
2.2 Mining
54 645.23
-1.4
-1.4
-1.7 1014.14
0.2
3.4
0.5
2.8 Industrials
570 404.91
-0.5
-0.5
-2.5 592.65
-1.7
2.0
0.0
2.4 Construction & Materials
115 541.09
0.2
0.2
-2.7 826.51
-2.0
2.0
-0.2
2.3 Aerospace & Defense
27 813.60
-0.8
-0.8
5.8 1178.03
6.5
1.8
0.1
2.4 General Industrials
59 220.05
-1.0
-1.0
-8.3 349.01
-7.5
2.5
0.1
2.3 Electronic & Electrical Equipment
74 451.60
-0.3
-0.3
-2.1 602.73
-1.7
1.6
0.0
2.4 Industrial Engineering
106 804.58
-0.5
-0.5
-6.9 1164.86
-5.8
2.1
0.9
3.4 Industrial Transportation
106 704.22
-0.6
-0.6
-1.8 1031.94
-1.1
2.2
1.6
2.7 Support Services
83 385.12
-0.5
-0.5
0.5 538.61
1.2
1.7
1.5
2.4 Consumer Goods
443 487.34
-0.2
-0.2
-4.4 735.88
-3.5
2.5
-0.6
2.1 Automobiles & Parts
107 437.89
-0.4
-0.4
-2.7 640.20
-1.7
2.6
-0.3
1.7 Beverages
45 641.59
-0.4
-0.4
-4.7 982.17
-4.0
2.6
-0.5
1.6 Food Producers
111 591.97
-0.5
-0.5
-6.5 918.15
-5.3
2.4
-0.5
2.0 Household Goods & Home Construction
49 403.69
-0.8
-0.8 -14.3 606.26 -13.2
3.0
1.0
2.9 Leisure Goods
34 248.96
0.6
0.6
4.0 331.95
4.5
1.4
84 803.83
0.2
0.2
6.5 1142.71
7.2
1.8
1.5
2.0 Personal Goods
2.5
1.6 Tobacco
13 1137.12
-0.5
-0.5 -19.3 2422.86 -18.4
4.6
1.6
1.7 Health Care
195 499.35
-0.9
-0.9
-0.7 730.78
0.1
2.1
75 922.93
-1.0
-1.0
5.0 1083.99
5.3
1.0
1.7
1.9 Health Care Equipment & Services
0.3
2.6 Pharmaceuticals & Biotechnology
120 341.77
-0.9
-0.9
-3.2 524.88
-2.2
2.6
-0.8
2.8 Consumer Services
395 485.69
0.0
0.0
2.6 656.81
3.1
1.5
0.4
2.4 Food & Drug Retailers
59 289.98
-0.5
-0.5
-0.9 411.69
0.0
2.2
0.1
2.7 General Retailers
129 755.84
-0.3
-0.3
9.2 992.37
9.6
1.1
0.5
2.6 Media
78 318.18
0.4
0.4
-7.2 431.76
-6.6
1.8
0.6
2.5 Travel & Leisure
129 487.59
0.6
0.6
1.8 667.85
2.4
1.7
0.3
3.0 Telecommunication
92 158.10
-1.0
-1.0
-4.8 305.70
-3.5
4.5
0.2
2.4 Fixed Line Telecommuniations
39 125.61
-1.5
-1.5
-7.0 269.21
-5.2
5.2
-2.9
4.3 Mobile Telecommunications
53 178.22
-0.4
-0.4
-2.1 306.70
-1.5
3.6
6.1
2.7 Utilities
167 275.91
0.0
0.0
0.0 549.89
0.9
3.7
110 302.56
-0.1
-0.1
0.0 596.31
1.1
3.6
-2.9
3.2 Electricity
57 290.28
0.1
0.1
-0.2 593.73
0.7
3.9
0.9
3.8 Gas Water & Multiutilities
713 255.87
-0.1
-0.1
-1.0 427.46
0.0
2.9
-0.2
1.9 Financials
245 227.83
-0.1
-0.1
-1.8 410.23
-0.6
3.4
1.0
3.2 Banks
74 272.24
-0.8
-0.8
0.0 401.77
0.9
2.2
2.8
2.9 Nonlife Insurance
53 246.82
0.3
0.3
-2.2 403.47
-1.1
2.9
0.2
3.0 Life Insurance
153 315.87
0.0
0.0
2.8 441.24
3.4
1.8
-1.6
2.4 Financial Services
195 274.16
-0.4
-0.4
2.2 339.34
2.6
1.4
0.7
2.2 Technology
96 477.94
-0.7
-0.7
3.2 561.11
3.4
0.8
2.0
2.7 Software & Computer Services
4.4
3.4 Technology Hardware & Equipment
99 203.81
0.0
0.0
1.0 263.79
1.5
2.0
Alternative Energy
9 104.24
0.9
0.9
8.2 142.69
9.2
1.6
Real Estate Investment & Services
109 374.05
0.9
0.9
1.6 634.69
2.3
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
-0.05
-0.13
-0.13
-0.17
-0.18
-0.55
-0.67
-0.74
-0.96
-1.28
-1.51
-1.56
-1.72
-1.91
-1.96
-2.19
-2.19
-2.32
FTSE 100 SUMMARY
Company
Altus Strategies
Altyn
BP
Cellcast
Concepta
Connect Group
Curzon Energy
Edinburgh Dragon Trust
EVR Holdings
Hemogenyx Pharmaceuticals
Ingenious Entertainment VCT 1
Ingenious Entertainment VCT 2
Management Consulting Group
Nasstar
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
Bae Systems PLC
Barclays PLC
Barratt Developments PLC
Berkeley Group Holdings (The) 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
Crh PLC
Croda International PLC
Dcc PLC
Diageo PLC
Direct Line Insurance Group PLC
Easyjet PLC
Evraz PLC
Experian PLC
Ferguson PLC
Fresnillo PLC
G4S PLC
Glaxosmithkline PLC
Glencore PLC
Halma 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
Just Eat PLC
Kingfisher PLC
Land Securities Group PLC
Legal & General Group PLC
Lloyds Banking Group PLC
941.00
2005
1703.4
959.20
2028
2700
5213
536.20
612.20
205.50
564.60
4108
1518.8
547.70
3900
673.00
245.00
2179
1842
4706
154.45
2475
1571
2583
4488
7105
2606
376.30
1614.5
452.60
1691
5556
1245
260.00
1467.8
346.95
1240
1768
729.10
2614
748.20
4624
641.20
4913
154.10
3301
805.40
296.30
989.50
271.00
64.34
-0.60
12.00
-6.00
-13.20
-5.00
-4.00
110.00
7.20
1.20
-1.75
6.60
36.00
-25.20
9.70
-99.00
0.60
-4.45
68.00
18.50
-19.00
0.65
31.00
11.00
2.00
27.00
105.00
17.00
2.00
24.50
-5.60
24.00
-24.00
-30.00
1.10
6.40
-3.75
17.00
-21.50
3.70
9.50
9.20
35.00
11.00
12.00
2.45
7.00
31.60
-7.50
1.10
1.00
-0.32
Closing Day's
Price Change
London Stock Exchange Group PLC
Marks And Spencer Group PLC
Mediclinic International PLC
Melrose Industries PLC
Micro Focus International PLC
Mondi PLC
Morrison (Wm) Supermarkets PLC
National Grid PLC
Next PLC
Nmc Health PLC
Old Mutual PLC
Paddy Power Betfair PLC
Pearson PLC
Persimmon 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
Smith (Ds) PLC
Smiths Group PLC
Smurfit Kappa Group PLC
Sse PLC
St. James's Place PLC
Standard Chartered PLC
Standard Life Aberdeen PLC
Taylor Wimpey PLC
Tesco PLC
Tui AG
Unilever PLC
United Utilities Group PLC
Vodafone Group PLC
Whitbread PLC
Wpp PLC
4355
284.90
682.00
229.00
1264.5
2034
239.80
846.00
5214
3600
252.00
7255
831.40
2746
1891
5906
5623
1561
312.00
3914.5
839.00
269.80
2595
2522
585.00
657.40
636.40
314.50
3331
478.60
646.00
1989
3903.5
1380
1404
528.00
1610
3094
1383
1150.5
769.30
363.10
192.80
235.00
1651.5
4062.5
755.20
210.50
4331
1268
55.00
-2.80
11.00
1.00
11.50
8.00
-3.30
3.20
-42.00
32.00
0.40
75.00
-2.40
31.00
16.50
38.00
-79.00
6.50
5.00
-31.50
-1.00
-0.40
-6.50
-9.00
3.80
1.20
5.50
30.00
4.00
-0.20
49.00
37.50
2.00
8.00
5.60
12.50
2.00
14.00
2.30
-2.20
1.05
-0.90
6.00
-15.00
12.00
-1.10
50.00
20.50
UK STOCK MARKET TRADING DATA
May 01
Apr 30
Apr 27
Apr 26
Apr 25
Yr Ago
Order Book Turnover (m)
420.95
484.10
484.10
484.10
255.26
62.51
Order Book Bargains
611965.00 921261.00 921261.00 921261.00 1011339.00 1055173.00
Order Book Shares Traded (m)
1572.00
1608.00
1608.00
1608.00
1815.00
1869.00
Total Equity Turnover (£m)
9848.30
7151.59
7151.59
7151.59
9180.86
6318.02
Total Mkt Bargains
680709.00 1039334.00 1039334.00 1039334.00 1150703.00 1185416.00
Total Shares Traded (m)
4311.00
5100.00
5100.00
5100.00
5208.00
5045.00
† 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
Pre
Pre
1st
Pre
Pre
Int
Pre
Int
Pre
Pre
Pre
Pre
Pre
Pre
Turnover
0.000
15.867
21.649
68172.000 55863.000
12.072
11.970
0.000
0.108
766.500 793.300
0.000
0.000
0.000
0.176L
0.176L
35.103
24.501
0.000
0.000
0.676L
0.676L
45.193
18.748
Pre-tax
1.862L
1.917L
3911.000
0.652L
2.450L
9.500
1.833L
30.204
6.232L
2.362L
0.281L
0.281L
26.283L
1.223L
6.078L
2115.000
0.652
0.246L
16.500
55.830
2.637L
0.471L
0.928L
0.928L
40.769L
1.771L
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)
1.840L
0.001L
0.124
0.800L
2.000L
0.700L
0.030L
15.820
0.610L
0.900L
7.987L
7.987L
6.150L
0.200L
0.003L
0.074
0.800
3.150L
5.900
29.300
0.440L
0.324L
26.378L
26.378L
0.011L
0.300L
Div(p)
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
9.67700
0.00000
0.00000
3.10000
0.00000
0.00000
0.00000
0.00000
0.00000
0.00000
0.05200
Pay day
-
Total
0.000
0.000
9.700
0.000
0.000
6.700
0.000
3.300
0.000
0.000
15.000
15.000
0.000
0.000
0.000
0.000
0.000
9.600
3.200
0.000
0.000
1.600
0.000
0.000
0.052
Issue
date
04/30
04/16
04/04
03/29
03/26
03/23
Issue
price(p)
100.00
2.99
170.00
15.00
100.00
100.00
Sector
AIM
AIM
AIM
AIM
Stock
code
KRM
CAS
SBIZ
POLX
SOHC
USA
Stock
KRM22 PLC
Crusader Resources Ltd
SimplyBiz Group (The) PLC
Polarean Imaging PLC
Triple Point Social Housing REIT PLC
Baillie Gifford US Growth Trust PLC
§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)
143.00
3.05
161.25
15.50
101.50
103.70
+/13.00
0.00
0.00
0.00
0.50
0.50
High
145.00
3.20
165.00
17.00
101.50
105.00
Low
100.00
3.00
155.00
15.00
100.00
99.60
Mkt
Cap (£m)
1761.8
1143.4
12330.9
1137.8
4821.3
18043.8
18
★
FINANCIAL TIMES
Wednesday 2 May 2018
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
27.47
31.25
73.17
168.95
29.45
3.20
43.57
29.05
27.74
0.63
0.30
1.35
-1.41
0.50
0.02
-0.20
0.41
-0.12
32.95
32.16
87.69
172.05
34.09
4.52
45.02
35.30
28.00
82.72
72.40
0.53
-0.40
110.10
78.80
81.24
62.94
4.15 24.79 169226.02
3.91 11.85 36616.16
23.33
31.90
19.20
44.10
24.63
48.67
0.15
-0.63
0.25
-0.78
0.11
0.32
24.56
36.80
28.25
45.81
24.80
49.15
17.66
22.81
18.55
30.28
12.47
25.00
2.48
1.95
4.16
4.69
2.45
47.38
10.49
12.01
10.47
38.22
10.38
54.37
97.35
78.56
50.32
230.20
111.81
46.10
97.47
39.38
34.39
39.27
24.14
25.78
97.31
48.96
51.44
72.04
54.82
23.51
-0.12
-0.16
-0.36
-0.57
-4.08
-0.02
-0.22
-1.70
0.49
0.16
-0.66
-0.09
-0.05
-0.33
-0.14
-0.19
-0.07
0.38
0.33
62.90
105.55
85.50
57.04
240.40
124.37
47.00
108.64
57.35
37.35
42.25
27.77
26.41
108.52
49.89
62.12
76.65
65.18
30.56
53.00
88.63
73.31
46.71
189.57
103.84
35.90
90.84
37.36
32.27
33.43
22.62
20.68
90.13
36.09
49.21
61.50
50.28
12.78
5.46
3.73
3.97
1.44
0.98
4.62
2.47
1.68
6.34
4.42
1.66
3.51
6.36
3.68
2.71
3.48
3.35
4.72
-
16.90 37844.02
13.58 48480.4
11.53 72978.78
36.42 38686.98
13.53 25529.66
10.40 38519.91
21.95 43802.67
14.20 55793.9
23.07 52032.6
15.32 26353.55
65.43 25083.27
23.81 37108.07
43.67 16841.05
12.74 108846.77
17.66 62198.71
20.45 28292.66
13.22 103044.85
15.45 37645.93
2.66 6354.65
4.46
0.14
4.30
0.10
6.46
0.09
1.51
0.04
9.10
0.16
3.95
0.05
9.33
0.39
6.31
0.29
8.32
0.24
32.70
0.90
5.66
0.14
22.50
0.60
34.60
1.90
75.20
0.55
34.95
0.40
7.40
0.11
16.43
0.13
5.71
0.03
19.46 -0.54
5.10 -0.05
8.39
0.03
11.18
0.26
6.67
0.12
6.98
0.17
8.29
0.09
0.05 10.75
0.19
10.80
0.32
38.50
0.50
5.22
0.12
2.08 -0.02
6.98
0.20
16.11 662.53 -15.70
1.58 36.95
1.85
5.79
0.05
77.55
0.75
10.85 -0.57
6.36 -0.01
31.93
0.36
0.18 -0.01
11.61
0.04
7.67 -0.02
2.01
0.01
5.02
4.96
7.13
1.78
11.26
4.76
11.46
6.89
9.39
42.85
6.82
28.20
39.50
89.60
42.40
9.35
22.35
9.29
25.75
7.05
10.96
13.24
8.11
8.82
10.48
0.20
14.70
13.58
44.59
6.25
3.17
7.64
19.98
799.06
1.90
57.85
6.66
98.85
15.24
9.00
37.66
0.34
14.02
7.80
4.09
3.40
3.57
5.47
1.22
7.70
3.46
7.74
5.25
5.91
19.00
4.69
21.10
19.66
69.65
27.60
7.16
15.57
5.06
16.38
4.98
8.02
9.20
6.32
6.46
7.77
0.04
9.91
10.28
25.25
4.55
2.03
4.83
15.20
398.00
1.50
33.90
4.72
42.65
8.54
6.19
26.70
0.17
11.16
5.40
1.99
4.66 6.27 17468.26
4.77 6.26 45815.81
5.16 5.79 28818.61
1.35 15.23
38.28
2.57 6.13 5133.64
3.04 5.46 6381.21
2.08 6.98
2468.3
1.69 7.69 3382.74
4.10 7.06 254868.81
2.94 10.44
5478.8
4.65 5.49 10732.72
1.28 16.42 21332.96
2.62 10.14 20239.58
3.88 11.32 196190.96
2.45 17.58 12359.02
4.73 4.47
6537.6
1.13 21.51 12698.03
- 310.79 17365.99
2.89 7.00 8426.89
- 109.70 14759.11
2.51 8.16 39313.73
69.32 43587.64
1.61 23.70 4446.38
3.69 15.37 3887.49
2.92 9.62 19424.36
-0.94
83.46
1.85 23.06
7371.2
2.48 11.89 4691.91
1.03 36.65 47979.04
6.82 42.55 3126.32
78.04 7224.77
4.09 7.20 77192.02
3.66 5.99 48374.84
1.00 31.38 131171.32
3.24 14.14
43.29
1.57 17.41 4868.64
1.02 39.79 15565.5
1.64 12.66 73590.85
1.45 8.40 28930.26
1.30 13.90 9622.85
5.06 11.02 57889.76
13.99
203.37
1.28 6.45 51424.83
4.24 13.78 24934.03
-2.74 3814.99
217.80
10035
294.65
259.50
14260
354.80
214.10
8902
260.20
4.16 9.48 32834.65
1.34-146.08 16246.17
2.60 19.01 93056.15
2.40
79.00
2.85
26.11 8.85 12.26 59558.34
22.06 5.07 26.40 75068.14
71.09 8.80 12.55 96311.65
119.01 1.09 36.23 57167.7
28.01 10.21 12.50 59978.13
3.05 14.54 9.52 28465.89
39.52 7.68 31.17 36949.73
27.60 9.83 11.92 74382.5
24.45 4.55 22.59 27248.98
105168.9
30731.36
14956.23
41796.54
52558.31
39492.22
Stock
Price Day Chg
Finland (€)
Nokia
4.98
0.03
5.96
3.81
SampoA♦
44.75 -0.16 48.92 43.10
France (€)
Airbus Grpe
97.40
0.47 99.97 68.42
AirLiquide
108.05
0.75 111.60 91.64
AXA
23.72
0.18 27.69 20.94
BNP Parib
63.98
0.41 69.17 58.33
ChristianDior 349.10
0.80 350.60 230.30
Cred Agr
13.64 -0.04 15.68 12.92
Danone
67.09
0.09 72.13 62.52
EDF
11.65
0.07 12.48
7.67
Engie SA
14.55
0.12 15.16 12.17
Esslr Intl
113.05
0.75 122.15 100.60
Hermes Intl
535.80
1.60 535.80 415.70
LOreal
198.85
1.95 199.30 170.30
LVMH
289.30
4.90 289.30 211.90
Orange
15.12
0.08 15.80 13.32
PernodRic
137.55 -0.35 141.90 112.10
Renault
89.84
0.68 100.80 73.71
Safran
97.46
2.22 97.48 74.97
Sanofi
65.79
0.63 92.97 62.88
Sant Gbn
43.50 -0.21 52.40 41.80
Schneider
75.28
0.66 76.34 64.88
SFR Group
34.50 34.56 21.87
SocGen
45.46
0.12 52.26 41.89
Total
52.33
0.23 52.33 42.23
UnibailR
198.90
1.55 238.15 177.35
Vinci
83.10
0.34 88.80 72.77
Vivendi
21.89
0.55 24.87 17.90
Germany (€)
Allianz
196.46
1.96 206.85 167.75
BASF
86.32
0.25 98.80 78.97
Bayer
99.28
1.15 123.90 88.81
BMW
92.47
0.97 97.50 77.07
Continental♦ 221.20 -2.20 257.40 186.55
Daimler
65.50 -0.14 76.48 59.01
Deut Bank
11.37 -0.07 17.69 10.82
Deut Tlkm
14.50 -0.05 18.15 12.72
DeutsPost
36.10
0.02 41.36 31.18
E.ON
9.07
0.18 10.81
7.01
Fresenius Med
84.28
0.40 93.82 76.42
Fresenius SE
63.34
0.96 80.07 58.96
HenkelKgaA
98.75
0.65 114.60 94.75
Linde
178.80 -0.35 199.40 157.50
MuenchRkv
189.95
0.10 200.30 166.60
SAP
92.42
0.40 100.70 82.05
Siemens
105.64
0.16 133.50 99.78
Volkswgn
169.40
0.20 191.80 128.05
Hong Kong (HK$)
AIA
70.70
1.70 72.10 53.55
BOC Hold
40.85
1.80 42.15 32.05
Ch OSLnd&Inv
26.55
0.80 32.20 21.50
ChngKng
68.05
1.05 75.30 55.00
Citic Ltd
12.04
0.20 12.80 10.70
Citic Secs
19.36
0.98 22.95 15.46
CK Hutchison
93.10
0.50 108.90 90.25
CNOOC
13.16 -0.04 13.40
8.45
HangSeng
199.60
4.00 201.60 157.00
HK Exc&Clr♦ 257.20
4.80 306.00 188.50
MTR
44.25
0.30 50.00 40.55
SandsCh
45.75
1.50 49.35 33.25
SHK Props
126.80
4.00 139.60 112.50
Tencent
391.00
2.60 476.60 241.80
India (Rs)
Bhartiartl
409.55 564.80 336.50
HDFC Bk
1944.3 2015 1522.6
Hind Unilevr 1508.9 1513.55 922.60
HsngDevFin 1883.25 1986.05 1503.45
ICICI Bk
284.20 365.70 246.59
Infosys
1199.5 1221.05 860.00
ITC
281.45 354.80 250.00
L&T
1400.9 1470 1107.53
OilNatGas
180.55 212.85 155.20
RelianceIn
963.30 1011 647.55
SBI NewA
246.40 351.30 232.35
SunPhrmInds 528.40 656.95 432.70
Tata Cons
3532.1 3560 2268.5
Indonesia (Rp)
Bk Cent Asia
22100 -900.00 24700 16800
Israel (ILS)
TevaPha
63.50
2.00 118.50 38.20
Italy (€)
Enel
5.27
0.02
5.59
4.37
ENI
16.20
0.04 16.20 12.94
Generali
16.74
0.11 17.13 13.65
IntSPaolo
3.16
0.00
3.23
2.50
Luxottica
51.76
0.40 55.60 45.32
Unicred
17.97
0.07 18.34 14.98
FT 500: TOP 20
Week
change change %
151.50
13.6
10.31
11.3
11.68
11.0
13.08
9.6
225.50
9.4
32.00
9.1
0.41
8.5
7.52
8.4
13.65
8.3
0.47
8.0
2.55
8.0
11.76
8.0
60.30
7.6
0.62
7.1
102.32
7.0
132.00
7.0
11.07
6.9
0.45
6.9
0.57
6.7
4.20
6.3
Month
change %
-98.88
7.61
5.98
19.68
-98.92
22.01
-0.95
13.35
8.17
15.99
7.62
3.40
10.49
18.70
7.95
12.71
6.79
4.33
12.90
8.19
INTEREST RATES: OFFICIAL
Rate
Fed Funds
Prime
Discount
Repo
Repo
O'night Call
Libor Target
Current
1.50-1.75
4.75
2.25
0.00
0.50
0.00-0.10
-1.25-0.25
May 01 (Libor: Apr 30)
US$ Libor
Euro Libor
£ Libor
Swiss Fr Libor
Yen Libor
Euro Euribor
Sterling CDs
US$ CDs
Euro CDs
P/E MCap m
Stock
26.01 91148.46
20.45 55944.69
10.17 69520.83
10.70 96608.81
27.82 76134.71
8.89 46886.04
23.76 54366.38
11.75 41205.14
31.95 42810.51
31.29 29930.27
48.57 68340.53
28.98 134972.3
28.08 176544.63
24.49 48577.66
22.17 44109.73
4.75 32098.99
15.55 52243.76
21.72 99851.73
15.30 29091.33
21.54 52293.99
-23.02 17905.81
14.19 44369.69
18.59 167492.91
8.04 24008.28
16.72 59432.79
22.15 34382.83
3.85
3.50
2.74
3.81
1.93
4.99
1.68
4.17
2.93
2.33
1.15
0.99
1.63
2.08
4.52
1.34
3.43
1.19
11.97 103699.31
12.97 95056.8
26.44 102123.42
7.00 66741.59
14.73 53043.33
6.61 84015.96
-21.31 28164.58
19.46 82748.67
16.68 53181.24
4.90 23941.18
20.13 31133.97
19.36 42130.52
16.95 30758.99
23.50 39816.19
88.84 34056.1
26.49 136127.34
13.99 107658.92
7.26 59933.59
1.29
2.93
3.09
2.36
2.92
2.22
2.99
2.83
3.28
1.82
2.47
4.47
3.31
0.17
17.36 108776.22
14.84 55031.11
6.44 37063.95
8.25 32059.98
8.13 44627.37
16.78 5620.16
10.01 45761.79
19.85 74865.3
18.96 48622.79
41.80 40630.57
15.35 33876.58
28.84 47091.17
6.64 46804.99
42.49 473449.32
0.26 85.74 24530.05
0.60 29.42 75656.26
1.24 64.29 48937.03
1.02 18.72 47303.63
0.88 16.28 27373.25
2.43 16.34 39254.73
1.74 29.42 51466.85
2.13 25.56 29417.16
4.65 9.99 34717.37
0.61 15.45 91438.03
1.12-701.69 32949.04
0.71 57.05 18996.14
1.45 25.20 101310.38
-
-
38772.84
4.90 -1.07 17951.82
3.43
5.00
4.78
5.66
1.78
-
21.85
17.03
12.48
7.86
26.52
6.39
52 Week
High
Low
Japan (¥)
AstellasPh
1609.5
4.00
1637 1331.5
Bridgestne
4553 -36.00
5605
4353
Canon
3781 -9.00
4472
3623
CntJpRwy
21890 -80.00 22070 17525
Denso
5684 -72.00
7218
4597
EastJpRwy
10685 195.00 11615
9470
Fanuc
23990 430.00 33450 20805
FastRetail
49040 830.00 51580 30000
Fuji Hvy Ind
3722 43.00
4297
3400
Hitachi
850.30 48.70 944.20 621.70
HondaMtr
3730 -37.00
4151
3000
JapanTob
2885.5 -51.00
4243 2784.5
KDDI
2928.5 -8.50
3260 2551.5
Keyence
67480 510.00 72400 45440
MitsbCp
3052 25.00
3318 2208.5
MitsubEst
2024 21.50 2278.5
1682
MitsubishiEle 1601.5 -79.00
2179 1524.5
MitsuiFud
2848.5 37.00
2984 2274.5
MitUFJFin
711.60 -21.60 894.40 645.20
Mizuho Fin
196.20 -2.20 220.70 185.40
Murata Mfg
14135 285.00 17910 13680
NipponTT
5240 35.00
5905
4545
Nissan Mt
1151.5 1197 1054.5
Nomura
621.30 -10.80 756.50 567.70
Nppn Stl
2400 15.00
3132
2228
NTTDCMo
2769 -66.00 2907.5 2501.5
Panasonic
1614.5 -17.50
1800
1310
Seven & I
4810
5.00
4891
4234
ShnEtsuCh
10995 -10.00 13175
9478
Softbank
8557 56.00 10550
7546
Sony
5073 -327.00
5738
3830
SumitomoF
4487 -63.00
5333
3952
Takeda Ph
4594 -27.00
6693
4398
TokioMarine
5195 23.00
5517
4192
Toyota
7195 14.00
7806
5768
Mexico (Mex$)
AmerMvl
17.31 -0.09 18.44 14.13
FEMSA UBD 180.78
2.18 189.49 158.17
WalMrtMex
51.97 -0.25 52.95 41.00
Netherlands (€)
Altice
7.94
0.14 23.43
6.44
ASML Hld♦
157.50 -1.75 175.25 112.60
Heineken♦
87.30 -0.12 91.42 79.60
ING♦
13.98
0.09 16.69 13.19
Unilever
47.45
0.50 52.31 42.13
Norway (Kr)
DNB♦
150.55
0.80 164.30 134.50
Statoil
205.50 -0.20 207.40 135.80
Telenor
177.80
0.05 191.70 131.00
Qatar (QR)
QatarNtBk
151.00
0.79 159.00 115.01
Russia (RUB)
Gzprm neft
145.93
1.63 151.65 111.46
Lukoil
4156.5 -22.00
4243
2601
MmcNrlskNckl
10814 -135.00 11970
7677
Novatek
770.00
3.90 787.00 590.20
Rosneft
383.00
2.00 388.25 281.65
Sberbank
226.99
2.19 285.00 136.20
Surgutneftegas
29.44 -0.11 31.35 24.09
Saudi Arabia (SR)
AlRajhiBnk
84.10
0.40 85.60 61.00
Natnlcombnk
67.30
0.20 68.60 38.00
SaudiBasic
114.60 -3.40 123.80 94.75
SaudiTelec♦
82.70
0.30 86.00 65.10
Singapore (S$)
DBS
30.84
0.84 30.98 19.45
JardnMt US$♦
60.73
0.27 68.11 59.73
JardnStr US$♦
38.00
0.35 46.48 37.39
OCBC
13.80
0.15 13.94
9.88
SingTel
3.52
0.03
4.00
3.30
UOB♦■
30.14
0.70 30.37 22.04
South Africa (R)
Firstrand
66.96
1.23 77.25 46.42
MTN Grp
125.24
2.93 140.00 109.05
Naspers N
3059.44 64.44 4142.99
2465
South Korea (KRW)
HyundMobis 248000 1500 289500 212000
KoreaElePwr
37450 1000.00 45850 30600
SK Hynix
84500-2600.00 91500 53400
SmsungEl
2650000 43000 2876000 2211000
Spain (€)
BBVA
6.73
0.04
7.93
6.21
BcoSantdr♦
5.37
0.06
6.25
5.11
CaixaBnk
4.04
0.01
4.51
3.72
Iberdrola
6.42
0.05
7.30
5.71
Inditex
25.78
0.42 36.90 23.00
Repsol
15.85
0.05 16.30 13.28
Telefonica
8.43
0.04 10.55
7.45
0.35 -18.92 33870.13
5.16 10.63 29961.21
1.40
2.44
4.90
4.24
0.87
4.42
2.56
4.78
5.91
1.34
0.70
1.68
1.47
4.35
1.49
3.55
1.56
4.55
2.93
2.71
4.86
4.54
5.13
2.63
1.85
Price Day Chg
64708.68
71131.11
31587.9
60493.67
30333.59
48430.78
Yld
2.13
3.23
3.88
0.63
2.15
1.24
1.94
0.70
3.79
1.61
2.55
4.75
3.01
0.09
3.11
1.11
1.96
1.24
2.50
3.74
1.66
2.52
4.29
3.15
3.06
3.18
1.52
1.84
1.11
0.50
0.43
3.41
3.84
2.87
2.86
P/E MCap m
18.46 30339.6
12.40 31592.48
17.33 45949.53
10.94 41087.38
14.28 41125.16
14.35 37546.51
27.71 44604.79
39.69 47397.29
12.81 26085.4
13.82 37447.79
6.54 61563.8
13.46 52583.14
12.89 69035.58
74768.36
10.22 44217.91
29.21
25651
13.08 31332.52
30.02 25731.87
38.13 90125.42
15.29 45389.07
20.55 29013.32
12.35 100092.08
5.58 44283.87
8.81 20626.39
9.51 20781.51
14.59 95427.67
25.37 36086.16
25.36 38849.99
22.38 43289.41
6.18 85816.41
12.50 58544.13
11.63 57827.86
19.41 33264.67
19.34 35407.62
9.16 213915.88
1.78 31.06 41379.1
1.49 6.62 20801.55
1.17 28.66 48315.53
0.77
1.58
4.78
2.98
-17.05
31.70
25.45
9.80
21.81
14316.52
81329.12
60754.19
65652.47
98303.49
3.91 11.95 30609.5
3.52 18.00 85643.04
4.53 55.34 33323.67
2.14 10.83 38305.43
6.19
8.51
6.74
1.02
1.75
2.97
2.29
3.48
7.63
12.49
12.06
20.53
6.12
11.70
54857.21
56138.62
27173.46
37124.76
64455.15
77808.21
16701.19
3.66
3.18
3.58
4.92
15.28 36440.9
13.97 35890.94
17.20 91673.88
16.02 44103.72
2.05
2.50
0.78
2.62
4.99
2.33
18.19
6.02
5.32
14.12
10.18
15.18
59277.13
44105.8
42093.22
43287.78
43090.69
37794.6
3.58 15.13
30088
5.65 28.17 18903.45
0.18 30.07 107503.11
1.41 14.94 22603.13
5.00 8.59 22509.76
1.19 5.59 57596.74
1.73 10.74 318547.08
4.53
3.92
3.26
2.79
1.94
5.20
4.80
13.86
13.18
14.25
13.26
23.86
11.45
14.88
54217.65
104750.1
29188.88
49908.92
97075.29
29806.16
52901.18
Last
1.00
4.75
0.75
0.05
0.25
0.00
-0.75--0.25
Mnth Ago
1.25-1.50
4.5
2
0.00
0.50
0.00--0.10
-1.25--0.25
Year Ago
0.75-1.50
4
1.50
0.00
0.25
0.00--0.10
-1.25--0.25
Day
-0.001
0.000
-0.001
Change
Week
0.001
0.001
-0.001
Month
0.002
0.000
-0.005
-0.005
0.002
0.001
0.000
0.000
0.000
One
month
1.90932
-0.40086
0.51446
-0.78870
-0.04783
-0.37100
0.50000
1.95000
-0.44500
Three
month
2.36294
-0.35571
0.71034
-0.72820
-0.03033
-0.32900
0.69000
2.29000
-0.40500
Six
month
2.51175
-0.31686
0.80938
-0.64900
0.02270
-0.26900
0.83500
2.43500
-0.34500
One
year
2.77004
-0.24400
0.97350
-0.51840
0.11900
-0.18900
Short
term
-0.50 -0.35
7 Days
One
Three
Six
One
May 01
notice
month
month
month
year
Euro
-0.50 -0.35 -0.62 -0.37 -0.48 -0.33 -0.42 -0.27 -0.43 -0.18
Sterling
0.45 0.55 0.45 0.55 0.64 0.74 0.76 0.91 0.92 1.07
Swiss Franc
Canadian Dollar
US Dollar
1.75 1.85 1.82 1.92 2.04 2.14 2.28 2.38 2.51 2.61 2.76 2.86
Japanese Yen
-0.85 -0.55 -0.55 -0.25 -0.10 0.20 -0.05 0.25 -0.05 0.25 -0.05 0.35
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†
May
67.92
Brent Crude Oil‡
73.61
RBOB Gasoline†
May
2.11
Heating Oil†
May
1.62
Natural Gas†
May
2.79
Ethanol♦
Uranium†
May
18.10
Carbon Emissions‡
Diesel†
Unleaded (95R)
Base Metals (♠ LME 3 Months)
Aluminium
2231.50
Aluminium Alloy
1925.00
Copper
6745.00
Lead
2319.00
Nickel
13675.00
Tin
21190.00
Zinc
3075.50
Precious Metals (PM London Fix)
Gold
1313.20
Silver (US cents)
1638.00
Platinum
905.00
Palladium
963.00
Bulk Commodities
Iron Ore (Platts)
65.35
Iron Ore (The Steel Index)
76.55
GlobalCOAL RB Index
98.25
Baltic Dry Index
1327.00
www.ft.com/commodities
Change
-0.53
-0.96
-0.02
0.00
0.03
0.00
-18.50
-30.00
-76.50
6.00
0.00
0.00
-44.50
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
TR/CC CRB TR
M Lynch MLCX Ex. Rtn
UBS Bberg CMCI TR
0.40 LEBA EUA Carbon
-1.30 LEBA CER Carbon
0.80 LEBA UK Power
-14.00
-8.30
-15.00
-6.00
-20.00
Jun
May
May
Price*
393.75
510.75
1035.50
392.10
1894.00
2811.00
1800.00
120.40
325.60
11.79
84.08
154.40
105.88
139.85
66.53
Change
1.50
-4.75
-3.00
1.00
51.00
0.00
86.00
0.00
-3.40
-0.14
-0.35
0.00
0.00
-2.53
0.00
Apr 30
472.66
89.42
205.87
231.14
15.74
14.04
0.20
1115.00
% Chg
Month
4.33
2.24
3.31
-9.84
2.55
27.29
11.11
-24.41
% Chg
Year
23.45
6.45
-33.05
178.57
-20.00
18.62
May
May
May
May
May
May
May
May
May
May
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♦ 312.30
0.10
Ericsson
67.20
1.50
H&M
149.82
1.24
Investor
383.10 -0.40
Nordea Bk
89.38 -1.36
SEB
82.50 -3.92
SvnskaHn
98.00 -1.30
Swedbank
190.95 -1.65
Telia Co
43.18 -0.08
Volvo
149.20 -2.55
Switzerland (SFr)
ABB
23.24
0.21
CredSuisse
16.80 -0.04
Nestle
76.98
0.30
Novartis
76.70
0.28
Richemont
94.56
0.62
Roche
220.85
2.30
Swiss Re
94.66 -0.18
Swisscom
477.00
3.60
Syngent
463.00 -6.70
UBS
16.77
0.17
Zurich Fin
317.60
0.10
Taiwan (NT$)
Chunghwa Telecom 113.00 Formosa PetChem 121.50
2.50
HonHaiPrc
82.90
1.40
MediaTek
340.00
0.50
TaiwanSem
227.00
3.50
Thailand (THB)
PTT Explor
56.50 United Arab Emirates (Dhs)
Emirtestele
17.15 -0.20
United Kingdom (p)
AscBrFd
2700 -4.00
AstraZen
5213 110.00
Aviva♦
536.20
7.20
Barclays
205.50 -1.75
BP
547.70
9.70
BrAmTob
3900 -99.00
BSkyB
1380
2.00
BT
245.00 -4.45
Compass
1571 11.00
Diageo
2606 17.00
GlaxoSmh
1467.8
6.40
Glencore
346.95 -3.75
HSBC
729.10
3.70
Imperial Brands
2614
9.50
LlydsBkg♦
64.34 -0.32
Natl Grid
846.00
3.20
Prudential♦
1891 16.50
RBS
269.80 -0.40
ReckittB♦
5623 -79.00
RELX♦
1561
6.50
RioTinto
3914.5 -31.50
RollsRoyce
839.00 -1.00
RylDShlA
2522 -9.00
Shire
3903.5 37.50
StandCh♦
769.30
2.30
Tesco
235.00 -0.90
Vodafone
210.50 -1.10
WPP
1268 20.50
United States of America ($)
21stC Fox A
36.20 -0.36
3M
192.39 -2.00
AbbottLb♦
58.25
0.12
Abbvie♦
101.67
5.12
Accenture♦
150.50 -0.70
Adobe
221.20 -0.40
AEP
69.68 -0.30
Aetna
179.12
0.07
Aflac
45.08 -0.49
AirProd♦
160.01 -2.28
Alexion
118.19
0.56
Allegran
151.43 -2.22
Allstate
96.78 -1.04
Alphabet
1020.07
1.49
Altria
56.01 -0.11
Amazon
1562.41 -3.72
AmerAir
42.85 -0.08
AmerExpr♦
97.47 -1.28
AmerIntGrp
55.67 -0.34
AmerTower
134.89 -1.47
Amgen
168.06 -6.42
Anadarko
66.49 -0.83
Anthem
235.63 -0.36
Aon Cp
141.53 -0.94
Apple
167.09
1.83
ArcherDan
45.50
0.12
52 Week
High
Low
Yld
P/E MCap m
339.70
67.54
229.60
425.60
115.70
109.00
129.70
226.30
43.46
171.30
260.40
43.75
117.10
348.00
84.02
82.12
92.84
177.15
35.42
131.60
2.31
1.62
6.86
3.16
7.77
7.25
5.55
7.52
6.37
2.40
20.70
-5.75
15.56
4.89
11.15
10.17
10.99
10.15
14.87
13.17
27.24
18.81
86.40
88.30
94.88
273.00
98.80
530.60
471.20
19.77
321.80
20.97
12.91
73.00
74.22
76.95
212.45
81.65
434.20
360.50
15.23
271.60
3.31
4.16
3.09
3.78
2.00
3.84
5.41
4.77
3.58
22.39 50901.88
-39.61 43366.22
32.08 242018.46
23.14 202759.86
27.08 49863.95
21.27 156744.08
11.05 33416.66
15.22 24961.64
41.32 42748.26
60.05 65292.93
15.83 48557.9
115.00
127.00
122.50
374.50
266.00
101.50
101.00
79.50
206.00
195.50
4.38
5.00
5.49
2.38
3.09
22.84 29628.09
14.25 39119.31
10.35 48554.26
21.71 18148.53
17.22 198948.77
59.50
36.50 31.41
18.85
15.75
3387
2386
5520
4260
550.00 482.20
220.10 177.30
550.10
4.80
5643.6
3553
1402 893.42
318.01 216.40
1765.92 1396.5
2735.5 2232.98
1724.5 1236.4
416.90 270.00
798.60 637.03
3791.5
2298
73.58 62.20
1174.36 733.00
1992.5
1692
304.20 239.60
8110.43
5255
1784
1399
4226.56 2882.5
994.50 800.20
2579.5
1996
5021 2940.5
864.20 688.60
242.70 165.35
239.65 190.10
1762
1074
39.14
259.77
64.60
125.86
165.58
233.17
78.07
194.40
46.19
175.17
149.34
256.80
105.36
1198
77.79
1638.1
59.08
102.96
67.30
155.28
201.23
68.18
267.95
152.78
183.50
46.25
24.81
191.44
42.88
64.61
119.10
130.82
63.32
134.57
36.41
140.01
96.18
142.81
81.19
915.31
54.23
927.00
40.65
75.97
52.42
125.24
152.16
39.96
174.96
119.49
142.20
38.59
13938.62
23614.89
25030.06
19958.37
41402.82
20476.56
21397.05
24723.38
21385.47
28130.86
1.23
5113.46
4.75 17.01 40605.32
1.40
3.91
4.00
1.46
5.39
5.59
5.90
2.14
2.39
5.45
1.49
5.16
6.12
4.20
5.40
2.38
2.87
2.40
4.39
0.55
5.55
0.58
6.25
4.46
17.81 29058.58
29.75 89751.05
35.51 29254.07
60.44 47670.7
43.33 148398.09
2.13 121605.7
29.18 32249.54
15.22 33046.48
22.03 35123.52
20.47 88038.58
47.35 98131.14
11.73 68036.02
20.55 198194.21
17.76 33892.09
13.40 63037.64
17.02 38666.42
20.33 66511.98
42.83 43888.86
11.85 53830.86
19.15 44119.27
10.88 71373.94
3.67 21212.99
21.87 289747.18
11.33 48477.46
44.66 34478.64
41.96 31200.51
-76.57 76331.09
9.34 21825.04
1.00 16.83 38155.12
2.46 24.14 114415.86
1.83 289.81 101723.95
2.53 30.66 161318.49
1.67 26.81 101189.13
59.78 108934.44
3.45 17.87 34319.04
0.98 31.38 58596.65
1.94 7.77 35133.82
2.39 33.81 35073.18
59.70 26297.35
1.86 -12.57 49606.5
1.54 11.52 34176.84
44.60 304650.23
4.56 10.50 105997.77
- 252.80 758123.37
0.94 10.93 20060.34
1.38 32.66 83859.5
2.31 -8.47 50269.06
1.95 50.27 59566.79
2.75 62.17 111206.31
0.30 -77.84 35405.07
1.15 16.34 60132.6
1.00 92.05 34657.2
1.48 17.07 847829.52
2.83 16.23 25425.91
Stock
52 Week
High
Low
Price Day Chg
AT&T
32.48 -0.23 39.80 32.47
AutomData
117.37 -0.71 125.24 95.50
Avago Tech
227.69 -1.73 285.68 219.91
BakerHu
57.68
3.17 68.59 43.09
BankAm
29.68 -0.25 33.05 22.07
Baxter
70.35
0.85 72.58 55.34
BB & T
52.36 -0.44 56.31 41.17
BectonDick
232.00
0.13 248.39 177.64
BerkshHat 289909.08 -740.92 326350 242180
Biogen
273.29 -0.31 370.57 244.28
BkNYMeln
53.84 -0.67 58.99 46.06
BlackRock
512.60 -8.90 594.52 377.85
Boeing
328.44 -5.12 371.60 175.47
BrisMySq
51.98 -0.15 70.05 50.56
CapOne
88.83 -1.79 106.50 76.05
CardinalHlth
63.01 -1.17 80.37 54.66
Carnival
63.23
0.17 72.70 59.68
Caterpillar♦
141.06 -3.30 173.24 97.74
CBS
48.63 -0.57 68.75 48.53
Celgene
86.63 -0.47 147.17 84.25
CharlesSch
55.26 -0.42 58.11 37.63
Charter Comms 275.67
4.38 408.83 250.10
Chevron Corp 123.69 -1.42 133.88 102.55
Chubb
134.79 -0.88 157.50 131.14
Cigna
172.29
0.47 227.13 155.32
Cisco
43.96 -0.34 46.16 30.36
Citigroup
67.56 -0.72 80.70 58.93
CME Grp
155.84 -1.84 171.71 114.88
Coca-Cola
42.36 -0.85 48.62 41.91
Cognizant
81.60 -0.22 85.10 60.16
ColgtPlm♦
64.79 -0.44 77.91 64.67
Comcast
31.30 -0.09 44.00 31.21
ConocPhil
64.77 -0.73 67.30 42.27
Corning
26.76 -0.26 35.10 26.31
Costco
194.82 -2.34 199.88 150.00
CrownCstl
100.60 -0.27 114.97 93.14
CSX
59.37 -0.02 61.50 47.99
CVS♦
68.82 -1.01 84.00 60.14
Danaher
100.41
0.09 104.82 78.97
Deere
133.67 -1.66 175.26 109.79
Delphi
47.79 -0.62 60.39 31.83
Delta
52.06 -0.16 60.79 44.59
Devon Energy
35.95 -0.38 45.16 28.79
DiscFinServ
70.29 -0.96 81.93 57.50
Disney
98.99 -1.34 115.61 96.20
DominRes
66.38 -0.18 85.30 63.88
DowChem
66.65
1.75
DukeEner
80.15 -0.01 91.80 72.93
Eaton
73.03 -2.00 89.85 69.82
eBay
37.54 -0.35 46.99 32.99
Ecolab
144.71 -0.06 150.46 125.05
Emerson
66.42
0.01 74.45 56.77
EOG Res
116.66 -1.51 119.71 81.99
EquityResTP
61.65 -0.06 70.46 54.97
Exelon
40.37
0.69 42.67 33.30
ExpScripts
74.78 -0.92 85.07 55.80
ExxonMb
76.50 -1.25 89.30 72.16
Facebook
170.76 -1.24 195.32 144.42
Fedex
245.41 -1.80 274.66 186.00
FordMtr♦
11.19 -0.05 13.48 10.14
Franklin
33.08 -0.56 47.65 32.41
GenDyn♦
196.20 -5.11 230.00 190.31
GenElectric
13.90 -0.18 29.47 12.73
GenMills
43.39 -0.36 60.69 43.18
GenMotors
36.21 -0.53 46.76 31.92
GileadSci
71.99 -0.24 89.54 63.76
GoldmSchs
234.29 -4.04 275.31 209.62
Halliburton
51.92 -1.07 57.86 38.18
HCA Hold
94.85 -0.89 106.84 71.18
Hew-Pack
21.59
0.10 24.75 17.10
HiltonWwde
79.14
0.30 88.11 58.90
HomeDep
182.03 -2.77 207.61 144.25
Honywell
143.07 -1.61 165.13 129.00
HumanaInc
293.97 -0.21 299.85 220.80
IBM
143.81 -1.16 171.13 139.13
IllinoisTool
140.68 -1.34 179.07 133.90
Illumina
240.69 -0.24 256.64 167.98
Intcntl Exch
72.07 -0.39 76.30 57.91
Intel
52.45
0.83 55.79 33.23
Intuit
185.99
1.20 188.56 124.22
John&John
125.30 -1.19 148.32 122.15
JohnsonCn
34.74
0.87 44.37 32.89
JPMrgnCh
107.66 -1.12 119.33 81.64
Kimb-Clark
102.76 -0.78 134.30 97.10
KinderM
15.89
0.07 21.25 14.69
Kraft Heinz
55.52 -0.87 93.88 55.30
Kroger
24.64 -0.55 31.45 19.69
L Brands
34.02 -0.89 63.10 34.02
LasVegasSd
73.94
0.61 79.84 56.33
LibertyGbl
29.55 -0.59 39.73 28.17
Lilly (E)
78.98 -2.09 89.09 73.69
BONDS: HIGH YIELD & EMERGING MARKET
Close
Prev
price
price
PTT Explor
56.50
56.50
GenDyn
196.20
201.31
LibertyGbl
29.55
30.14
Marathon Ptl
71.69
74.91
Glencore
346.95
350.70
Northrop
310.63
322.04
eBay
37.54
37.88
CapOne
88.83
90.62
Fanuc
23990.00 23560.00
Charter Comms
275.67
271.29
Raytheon
200.91
204.94
Volvo
149.20
151.75
Lockheed
309.22
320.84
AT&T
32.48
32.70
TE Connect
91.06
91.75
Deut Bank
11.37
11.44
MitsubishiEle
1601.50
1680.50
Pfizer
34.70
36.61
SouthCpr
51.19
52.81
AmerAir
42.85
42.93
Based on the FT Global 500 companies in local currency
Day
change change %
0.00
0.00
-5.11
-2.54
-0.59
-1.96
-3.22
-4.30
-3.75
-1.07
-11.41
-3.54
-0.35
-0.91
-1.79
-1.98
430.00
1.83
4.38
1.61
-4.03
-1.97
-2.55
-1.68
-11.62
-3.62
-0.23
-0.69
-0.69
-0.75
-0.07
-0.61
-79.00
-4.70
-1.91
-5.22
-1.62
-3.07
-0.08
-0.19
Week
change change %
-515.50
-90.1
-25.82
-11.6
-3.70
-11.1
-8.09
-10.1
-38.95
-10.1
-30.89
-9.0
-3.65
-8.9
-8.59
-8.8
-2260.00
-8.6
-25.61
-8.5
-17.89
-8.2
-13.20
-8.1
-27.27
-8.1
-2.53
-7.2
-6.68
-6.8
-0.81
-6.7
-112.50
-6.6
-2.36
-6.4
-3.46
-6.3
-2.84
-6.2
Month
change %
3.10
-11.10
-5.53
-1.83
-99.02
-10.74
-6.64
-7.10
-10.88
-11.40
-6.66
-2.00
-8.21
-8.79
-8.77
-2.74
-5.73
-2.20
-5.43
-17.42
BOND INDICES
Since
22-03-2018
22-03-2018
22-03-2018
16-03-2016
02-11-2017
01-02-2016
15-01-2015
INTEREST RATES: MARKET
Over
night
1.70369
-0.44057
0.47405
Yld
FT 500: BOTTOM 20
Day
change change %
20.50
1.64
5.12
5.30
0.56
0.48
1.24
0.83
9.50
0.36
2.00
0.52
0.12
2.35
2.22
2.33
-0.35
-0.20
0.29
4.82
1.90
5.81
3.22
2.06
48.70
6.08
0.39
4.36
-3.72
-0.24
21.50
1.07
-1.24
-0.72
0.17
2.50
0.16
1.79
0.85
1.22
Close
Prev
price
price
WPP
1268.00
1247.50
Abbvie
101.67
96.55
Alexion
118.19
117.63
H&M
149.82
148.58
Imperial Brands
2614.00
2604.50
Rosneft
383.00
381.00
Hunng Pwr
5.22
5.10
Safran
97.46
95.24
Linde
178.80
179.15
Ch Rail Gp
6.31
6.02
ChinaMBank
34.60
32.70
SimonProp
159.56
156.34
Hitachi
850.30
801.60
Ch Rail Cons
9.33
8.94
Amazon
1562.41
1566.13
MitsubEst
2024.00
2002.50
Facebook
170.76
172.00
CSR
6.98
6.81
Ch Coms Cons
9.10
8.94
Baxter
70.35
69.50
Based on the FT Global 500 companies in local currency
May 01
US
US
US
Euro
UK
Japan
Switzerland
52 Week
High
Low
08/21
High Yield Euro
Astaldi S.p.A
12/20
Emerging US$
Peru
Mexico
Brazil
Colombia
Poland
Turkey
Turkey
Peru
Russia
Brazil
03/19
09/22
01/23
03/23
03/23
03/23
03/27
08/27
06/28
02/47
Bid
yield
Mth's Spread
chge
vs
yield
US
Ratings
M*
F*
Bid
price
7.63
B+
WR
BB
102.94
6.60
-0.04
-0.07
-
7.13
CCC+
-
B
81.19
16.34
-0.10
-0.15
-
7.13
8.00
2.63
2.63
3.00
3.25
6.00
4.13
12.75
5.63
BBB+
BBB+
BBBBBBBB+
BBB+
BBBBB-
A3
A3
Ba2
Baa2
A2
Ba2
Ba2
A3
Ba1
Ba2
BBB+
BBB+
BBBBB
ABB+
BB+
BBB+
BBBBB-
104.40
121.00
94.15
94.60
98.35
92.25
101.26
102.75
161.62
94.10
2.60
2.88
4.01
3.85
3.37
5.06
5.82
3.77
4.95
6.06
0.21
-0.02
0.04
0.00
0.02
0.00
0.00
-0.03
0.02
0.35
0.21
0.25
0.16
0.15
0.17
0.22
0.40
0.22
0.34
0.11
1.24
1.08
0.60
2.29
3.07
0.83
2.01
-
Emerging Euro
Mexico
02/20
5.50
BBB+
A3
BBB+ 109.79
0.04
0.02
0.03
-2.40
Brazil
04/21
2.88
BBBa2
BB- 106.01
0.78
0.00
-0.05
Mexico
04/23
2.75
BBB+
A3
BBB+ 108.35
1.02
0.00
-0.14
-1.75
Bulgaria
03/28
3.00
BBBBaa2
BBB 111.75
1.70
0.00
0.02
-1.24
Interactive Data Pricing and Reference Data LLC, an ICE Data Services company. US $ denominated bonds NY close; all
other London close. *S - Standard & Poor’s, M - Moody’s, F - Fitch.
VOLATILITY INDICES
Index
Day's
change
Month's
change
Year
change
Return
1 month
Return
1 year
Markit IBoxx
ABF Pan-Asia unhedged
Corporates( £)
Corporates($)
Corporates(€)
Eurozone Sov(€)
Gilts( £)
Global Inflation-Lkd
Markit iBoxx £ Non-Gilts
Overall ($)
Overall( £)
Overall(€)
Treasuries ($)
192.88
341.71
270.81
225.69
235.28
320.66
267.62
336.27
233.89
322.26
230.45
219.76
0.27
0.22
0.21
0.03
-0.07
0.36
0.04
0.23
0.20
0.32
-0.03
0.22
-0.63
0.05
-0.96
0.03
-0.36
-1.04
-2.15
-0.09
-0.96
-0.75
-0.25
-0.98
1.29
-1.43
-3.16
-0.38
1.03
-0.83
-0.45
-1.24
-2.49
-0.95
0.48
-2.18
-0.61
0.07
-0.96
0.04
-0.35
-1.02
-1.97
-0.07
-0.96
-0.74
-0.24
-0.98
7.28
0.92
-3.16
1.21
2.19
-0.80
4.61
0.61
-2.49
-0.39
1.61
-2.18
FTSE
Sterling Corporate (£)
Euro Corporate (€)
Euro Emerging Mkts (€)
Eurozone Govt Bond
113.38
105.98
595.10
111.66
0.10
0.01
-0.36
-0.14
-
-
-0.28
-0.08
-2.54
-0.49
-3.65
-1.20
-25.66
-0.22
Index
Day's
change
Week's
change
Month's
change
Series
high
Series
low
273.73
55.25
51.14
58.94
3.51
0.95
-0.03
1.87
-2.06
-0.26
-0.25
1.96
-9.42
-4.43
1.21
-6.58
295.64
62.10
52.96
68.89
267.18
52.58
49.41
55.32
CREDIT INDICES
Markit iTraxx
Crossover 5Y
Europe 5Y
Japan 5Y
Senior Financials 5Y
Markit CDX
Emerging Markets 5Y
142.89
2.31
2.36
0.03
148.67
132.91
Nth Amer High Yld 5Y
338.92
1.37
-6.49
-30.25
370.10
331.23
Nth Amer Inv Grade 5Y
60.73
0.65
-0.87
-6.89
69.04
59.27
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names.
BONDS: INDEX-LINKED
Price
Month
Value
No of
Yield
Apr 30
Apr 30
Prev
return
stock
Market
stocks
Can 4.25%' 21
114.01
0.313
0.329
0.20
5.18
76182.59
8
Fr 2.25%' 20
110.31
-2.202
-2.202
0.22
20.31 250714.31
16
Swe 0.25%' 22
114.76
-2.062
-2.074
0.51
31.71 244959.75
8
UK 2.5%' 20
361.84
-3.698
-3.650
0.11
6.58 648332.29
28
UK 2.5%' 24
359.25
-1.735
-1.698
0.12
6.82 648332.29
28
UK 2%' 35
265.05
-1.539
-1.500
-1.38
9.08 648332.29
28
US 0.625%' 21
100.57
0.445
0.456
-0.13
35.84 1267797.50
39
US 3.625%' 28
127.20
0.781
0.456
-0.10
16.78 1267797.50
39
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
Bid
Yield
Spread Spread
vs
vs
Bund T-Bonds
Australia
2.79
2.30 -0.15 Italy
Austria
0.60
0.10 -2.34 Japan
Belgium
0.70
0.20 -2.24 Netherlands
Canada
2.30
1.80 -0.64 Norway
Denmark
0.58
0.08 -2.36 Portugal
Finland
0.67
0.17 -2.27 Spain
France
0.79
0.29 -2.15 Switzerland
Germany
0.50
0.00 -2.44 United Kingdom
Greece
3.83
3.34
0.89 United States
Ireland
1.12
0.63 -1.82
Interactive Data Pricing and Reference Data LLC, an ICE Data Services company.
Bid
Yield
1.69
0.03
0.59
1.21
0.02
1.45
2.94
Spread Spread
vs
vs
Bund T-Bonds
1.19
-0.46
0.09
0.71
-0.48
0.96
2.44
-1.25
-2.91
-2.35
-1.73
-2.92
-1.49
0.00
P/E MCap m
Stock
6.10 6.79 199446.27
2.00 30.18 52026.56
2.02 13.15 93524.12
0.56-197.51 24541.87
1.32 18.93 303397.87
0.87 53.85 37996.06
2.42 19.02 40702.6
1.27 183.22 61768.25
10.56 216952.59
22.81 57666.36
1.61 14.40 54246.31
1.96 16.87 82174.07
1.74 24.34 191342.08
3.04 84.79 84961.67
1.81 23.51 43196.88
2.93 10.92 19828.11
2.65 17.56 33787.09
2.21 111.40 84346.79
1.49 15.03 16685.67
23.68 65160.97
0.58 34.15 74500.89
8.05 65461.55
3.51 25.38 236366.64
2.10 16.38 62788.63
0.02 19.55
41845
2.52-148.32 211753.98
1.43 -22.86 172962.79
1.70 12.99 53049.36
3.51 156.12 180644.2
0.55 32.09 47809.31
2.47 28.28 56517.66
2.02 6.56 144238.1
1.64 -92.07 76077.39
2.33 -40.35 22220.14
1.01 29.43 85490.97
3.90 99.11 41731.15
1.32 9.86 51969.74
2.92 10.62 70025.81
0.56 28.55 70143.69
1.72 31.78 43281.43
14.81 4242.08
2.08 10.85 36518.89
0.67 21.04 18861.11
1.86 12.90 24851.06
1.64 13.97 148848.84
4.59 13.99 43310.39
81542.6
4.38 18.25 57858.71
3.30 10.88 31994.67
- -39.32 37308.97
1.06 28.07 41726.86
2.91 25.52 42162.74
0.58 26.03 67503.89
3.28 37.64 23513.37
3.26 10.12 38951.7
9.61 41991.3
4.02 16.44 324038.01
31.52 409585.99
0.76 15.18 65575.95
5.39 5.86 43798.8
2.52 27.90 17870.09
1.68 20.42 58277.96
6.08 -20.33 120657.4
4.43 11.76 24736.51
4.22 163.78 51035.89
2.90 20.41 94304.58
1.24 25.88 88802.9
1.39-101.30 45437.79
15.86 33407.84
2.38 9.90 35429.05
0.76 20.45 23774.99
1.87 26.12 209831.94
1.91 63.63 106863.25
0.65 17.40 40593.49
4.12 23.31 132008.43
2.04 28.80 47720.94
48.68 35381.43
1.12 16.95 41869.2
2.06 26.23 244417
0.75 53.45 47634.1
2.66 265.28 336134.75
2.92 21.47 32168.27
1.98 16.98 367165.85
3.69 20.83 35897.06
3.161581.67 35054.48
4.44 6.17 63279.72
1.90 12.33 21044.98
6.74 10.41 9484.87
3.97 20.78 58345.56
- -12.84 6492.82
2.65-413.65 86301.48
52 Week
High
Low
Price Day Chg
Yld
P/E MCap m
Lockheed
309.22 -11.62 363.00 266.01 2.42 46.34 88291.43
Lowes♦
81.37 -1.06 108.98 70.76 1.86 20.81 67192.6
Lyondell
103.98 -1.75 121.95 78.01 3.43 8.43 40933.85
Marathon Ptl
71.69 -3.22 83.27 49.30 2.13 10.65 34009.08
Marsh&M♦
81.09 -0.41 86.54 72.96 1.77 28.12 41218.6
MasterCard♦ 177.42 -0.85 183.73 115.55 0.37 48.37 184028.24
McDonald's
162.60 -4.84 178.70 139.84 2.37 25.40 127817.83
McKesson
154.73 -1.48 178.86 134.25 0.81 7.01 31926.88
Medtronic
80.68
0.55 89.72 76.41 2.14 41.37 109351.53
Merck
57.11 -1.76 66.41 52.83 3.33 65.32 153934.64
Metlife
47.07 -0.61 55.91 43.38 3.42 10.34 47941.71
Microsoft
93.52 97.90 67.14 1.71 75.66 718532.63
Mnstr Bvrg
54.47 -0.53 70.22 44.35 38.17 30646.95
MondelezInt
38.76 -0.74 47.23 38.74 2.13 20.19 57490.05
Monsanto
125.36 -0.01 126.80 114.19 1.70 22.81 55319.36
MorganStly
51.15 -0.47 59.38 40.43 1.77 16.53 90737.46
MylanNV
38.78
0.02 47.82 29.39 29.68 20796.97
Netflix
307.64 -4.82 338.82 144.25 - 244.90 133726.91
NextEraE
163.69 -0.23 165.15 132.78 2.41 14.31 77167.08
Nike
67.05 -1.34 70.25 50.35 1.12 62.92 86004.61
NorfolkS
141.97 -1.50 157.15 111.21 1.73 3.80 40112.47
Northrop
310.63 -11.41 360.88 243.39 1.26 26.95 54168.95
NXP
103.86 -1.04 125.93 100.23 17.80 35935.86
Occid Pet
76.06 -1.20 78.11 57.20 4.04 44.52 58197.21
Oracle
45.56 -0.11 53.48 43.60 1.65 53.69 185990.18
Pepsico
99.08 -1.86 122.51 98.91 3.21 29.17 140480.46
Perrigo
78.17
0.03 95.93 63.68 0.82 92.60 11012.19
Pfizer
34.70 -1.91 39.43 31.67 3.71 9.81 206564.41
Phillips66
111.03 -0.28 113.32 75.85 2.47 11.22 51776.08
PhilMorris
81.13 -0.87 123.55 80.48 5.23 20.81 126114.45
PNCFin♦
144.12 -1.49 163.59 115.66 1.81 13.84 67965.56
PPG Inds
105.24 -0.64 122.07 100.45 1.62 19.68 26238.73
Praxair
151.60 -0.92 166.95 122.90 2.09 34.92 43529.91
Priceline
1905.64 -1.38 2067.99 1612.41 39.47 92937.2
ProctGmbl
71.79 -0.55 94.67 71.70 3.83 19.00 180531.65
Prudntl
105.02 -1.30 127.14 97.88 2.87 5.85 44305.96
PublStor
204.23
2.45 219.93 180.48 3.94 30.20 35552.42
Qualcomm
50.32 -0.69 69.28 48.56 4.47 -17.63 74605.55
Raytheon♦
200.91 -4.03 229.75 154.01 1.60 28.81 57711.4
Regen Pharm 294.23 -9.45 543.55 294.11 28.32 31173.62
ReynoldsAm
65.40 -1.49
S&P Global
189.30
0.70 197.76 134.12 0.87 32.59 47571.09
Salesforce
121.13
0.14 128.87 83.55 - 745.31 88578.47
Schlmbrg
67.59 -0.97 80.35 61.02 2.97 -62.28 93621.15
Sempra Energy 111.59 -0.21 122.98 100.63 2.96 109.94 29449.03
Shrwin-Will
365.06 -2.60 435.15 326.68 0.94 19.01 34149.79
SimonProp
159.56
3.22 173.02 145.78 4.50 25.44 49473.68
SouthCpr
51.19 -1.62 58.09 32.63 1.16 54.19 39571.33
Starbucks
57.85
0.28 64.87 52.58 1.82 19.00 81313.96
StateSt
97.64 -2.14 114.27 79.28 1.65 18.54 35919.31
Stryker
169.22 -0.20 172.99 132.44 1.04 62.83 63138.17
Sychrony Fin
32.86 -0.31 40.59 26.01 1.71 13.51 24801.3
Target
71.23 -1.37 78.70 48.56 3.27 14.01 38378.44
TE Connect
91.06 -0.69 108.23 73.01 1.73 26.42 31883.66
Tesla Mtrs
294.55
0.65 389.61 244.59 - -24.78 49755.37
TexasInstr
101.67
0.24 120.75 75.92 2.10 28.02 99952.37
TheTrvelers
129.81 -1.79 150.55 113.76 2.19 17.62 35082.62
ThrmoFshr
208.96 -1.39 226.44 165.75 0.29 37.13 84069.01
TimeWrnr
94.27 -0.53 103.89 85.88 1.72 14.13 73749.25
TJX Cos
82.85 -2.00 87.24 66.44 1.08 21.45 51940.98
T-MobileUS
59.30 -1.22 68.88 54.60 11.35 50342.34
UnionPac
132.39 -1.24 143.05 101.06 1.88 9.86 101972.86
UPS B
112.63 -0.87 135.53 101.45 2.96 19.98 77520.25
USBancorp
49.95 -0.50 58.50 49.03 2.33 14.16
82459
UtdHlthcre
235.65 -0.75 250.79 166.65 1.23 21.87 226477.75
UtdTech
117.84 -2.31 139.24 109.10 2.32 20.57 94279.01
ValeroEngy
110.17 -0.76 113.32 60.69 2.55 11.97 47474.71
Verizon
48.59 -0.76 54.77 42.80 4.83 6.57 198233.25
VertexPharm 151.15 -2.01 178.25 113.66 - 144.62 38524.96
VF Cp
79.41 -1.46 84.38 51.22 2.18 44.14 31501.86
Viacom
29.71 -0.45 44.12 22.13 2.71 5.91 10485.47
Visa Inc
126.06 -0.82 127.90 91.14 0.55 41.67 227238.85
Walgreen
64.94 -1.51 86.87 61.74 2.39 16.45 64398.76
WalMartSto
86.63 -1.83 109.98 73.13 2.25 27.63 255776.17
WellsFargo
51.70 -0.26 66.31 49.27 2.99 12.55 252094
Williams Cos
25.73 33.67 24.00 4.69 9.77 21294.21
Yum!Brnds
86.20 -0.90 88.07 65.59 1.40 22.75 28308.08
Venezuela (VEF)
Bco de Vnzla
45000 500.00 50000 599.99 24.75 3321.23
Bco Provncl 3000000 3000000
8500 - 149.13 6546.15
Mrcntl Srvcs 5000000-1000000.00 6000000 23000 0.00 533.68 6160.09
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
BONDS: GLOBAL INVESTMENT GRADE
Day's
chge
yield
S*
Red
date Coupon
May 01
High Yield US$
Qwest Capital Funding, Inc.
Yld
May 01
Day Chng
Prev
52 wk high
52 wk low
VIX
16.64
0.71
15.93
50.30
8.56
VXD
18.00
0.36
17.64
40.09
3.93
VXN
21.46
0.40
21.06
38.11
11.36
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.
BONDS: BENCHMARK GOVERNMENT
Red
Bid
Bid Day chg Wk chg Month
Year
Date Coupon
Price
Yield
yield
yield chg yld chg yld
Australia
11/20
1.75 99.05
2.14
-0.04
-0.09
0.07
0.22
11/28
2.75 99.60
2.79
-0.05
-0.10
0.17
0.07
Austria
10/19
0.25 101.12
-0.51
0.01
0.00
0.07
0.04
07/27
6.25 150.47
0.60
0.00
-0.06
0.07
0.15
Belgium
09/20
2.10 105.81
-0.37
0.00
-0.02
0.02
0.06
06/27
0.80 100.92
0.70
0.00
-0.06
0.06
-0.08
Canada
02/20
1.25 98.97
1.85
-0.01
-0.03
0.07
06/28
2.00 97.31
2.30
-0.02
-0.07
0.19
Denmark
11/20
0.25 101.78
-0.44
0.00
-0.03
0.01
11/27
0.50 99.26
0.58
0.00
-0.05
0.04
0.01
Finland
09/20
0.38 101.91
-0.43
0.00
-0.03
0.00
0.02
09/27
0.50 98.46
0.67
-0.01
-0.05
0.07
France
11/20
0.25 101.70
-0.41
-0.01
-0.03
-0.01
-0.02
05/23
1.75 108.59
0.05
0.00
-0.04
0.05
-0.03
05/28
0.75 99.60
0.79
0.00
-0.05
0.07
Germany
10/20
0.25 101.88
-0.51
0.00
-0.03
0.04
0.10
08/23
2.00 110.67
-0.02
-0.01
-0.05
0.06
0.20
08/27
0.50 100.02
0.50
-0.01
-0.07
0.06
08/48
1.25 100.27
1.24
0.01
-0.05
0.08
Greece
01/28
3.75 99.32
3.83
-0.08
-0.20
-0.47
Ireland
10/20
5.00 113.31
-0.37
-0.01
-0.03
0.08
-0.09
05/30
2.40 114.32
1.12
0.00
-0.03
0.07
-0.18
Italy
06/20
0.35 101.11
-0.17
0.02
-0.01
0.03
-0.60
08/22
0.90 101.84
0.46
0.04
-0.01
-0.01
08/27
2.05 103.07
1.69
0.05
0.00
0.00
03/48
3.45 111.89
2.86
0.04
0.00
Japan
11/19
0.10 100.36
-0.14
-0.01
-0.01
0.00
09/22
0.10 100.88
-0.10
0.00
-0.01
0.00
09/27
0.10 100.61
0.03
0.00
0.00
0.01
09/47
0.80 101.58
0.74
0.00
0.01
0.00
Netherlands
01/20
0.25 101.47
-0.61
0.00
-0.02
0.03
0.04
07/27
0.75 101.42
0.59
0.00
-0.06
0.07
0.05
New Zealand
04/20
3.00 102.11
1.90
-0.03
-0.07
0.02
-0.41
Norway
05/19
4.50 103.87
0.80
0.03
-0.01
0.00
0.14
Portugal
06/20
4.80 110.57
-0.18
0.01
-0.03
0.04
-0.88
Spain
07/20
1.15 103.17
-0.26
0.01
-0.01
0.05
-0.20
10/27
1.45 102.16
1.21
0.02
-0.04
0.12
Sweden
11/26
1.00 104.00
0.52
-0.01
-0.07
0.02
-0.06
Switzerland
07/20
2.25 106.65
-0.77
0.00
0.01
0.10
0.00
06/27
3.25 129.52
0.02
0.01
-0.05
0.03
0.12
United Kingdom
07/20
2.00 102.69
0.78
-0.03
-0.07
-0.05
0.59
07/23
0.75 98.14
1.12
-0.03
-0.07
0.01
07/27
1.25 98.26
1.45
-0.03
-0.11
0.06
0.30
07/47
1.50 92.63
1.83
-0.03
-0.10
0.12
0.11
United States
11/19
1.75 98.93
2.44
0.01
0.01
0.18
10/22
2.00 96.76
2.77
-0.01
-0.03
0.22
11/27
2.25 94.29
2.94
-0.02
-0.04
0.19
11/47
2.75 93.30
3.10
-0.03
-0.05
0.13
Interactive Data Pricing and Reference Data LLC, an ICE Data Services company.
May 01
US$
SunTrust Banks Inc.
FleetBoston Financial Corp.
SunTrust Banks Inc.
FleetBoston Financial Corp.
United Utilities PLC
United Utilities PLC
Euro
Barclays plc
AT&T Inc.
AT&T Inc.
Electricite de France (EDF)
Yen
Poland
£ Sterling
Cooperatieve Rabobank U.A.
innogy Fin B.V.
Red
date Coupon
S*
Ratings
M*
F*
Bid
price
Bid
yield
Day's
chge
yield
Mth's Spread
chge
vs
yield
US
01/28
01/28
01/28
01/28
08/28
08/28
6.00
6.88
6.00
6.88
6.88
6.88
BBB+
BBB+
BBB+
BBB+
BBB
BBB
Baa1
Baa2
Baa1
Baa2
Baa1
Baa1
AAAAAA-
109.74
115.76
109.74
115.76
117.18
117.18
4.74
4.82
4.74
4.82
4.74
4.74
-0.02
-0.01
-0.02
-0.01
-0.02
-0.02
0.20
0.25
0.20
0.25
0.33
0.33
1.80
1.88
1.80
1.88
1.80
1.80
08/29
12/29
12/29
04/30
2.29
2.60
2.60
4.63
BBB
BBB+
BBB+
A-
Baa3
Baa1
Baa1
A3
A
AAA-
91.63
103.84
103.84
128.46
3.19
2.21
2.21
1.94
0.00
-0.01
-0.01
-0.01
-0.01
0.06
0.06
0.01
0.25
-0.73
-0.73
-1.00
11/27
2.50
-
A2
A-
109.55
1.42
-0.02
-0.01
-1.53
05/29
06/30
4.63
6.25
BBB+
BBB
Baa1
Baa2
A
A-
112.62
132.10
3.25
3.04
0.01
-0.03
0.00
0.01
0.31
0.10
Interactive Data Pricing and Reference Data LLC, an ICE Data Services company. US $ denominated bonds NY close; all other London
close. *S - Standard & Poor’s, M - Moody’s, F - Fitch.
GILTS: UK CASH MARKET
Red
52 Week
Change in Yield
Price £
Yield
Day
Week
Month
Year
High
Low
Tr 1.25pc '18
100.17
0.50
0.00
-16.67
11.11 1566.67 104.19 100.00
Tr 4.5pc '19
103.28
0.61
0.00
-15.28
-4.69 1933.33 108.22 103.24
Tr 4.75pc '20
107.42
0.70
-1.41
-12.50
-6.67 677.78 113.20 107.25
Tr 1.5pc '21
101.83
0.82
0.00
-10.87
-6.82 228.00 104.73 101.42
Tr 4pc '22
111.76
0.88
-1.12
-11.11
-2.22 166.67 117.77 111.31
Tr 5pc '25
124.99
1.19
-1.65
-9.85
2.59
54.55 132.93 124.02
Tr 1.25pc '27
98.40
1.44
-0.69
-8.28
2.86
25.22 102.29
96.41
Tr 4.25pc '32
132.35
1.67
-0.60
-6.70
4.38
14.38 139.13 129.40
Tr 4.25pc '36
138.28
1.74
-1.14
-6.95
4.82
6.75 144.09 134.34
Tr 4.5pc '42
153.01
1.82
-0.55
-6.19
5.81
5.20 159.30 147.31
Tr 3.75pc '52
151.68
1.74
-0.57
-6.45
6.75
6.10 159.09 144.61
Tr 4pc '60
171.01
1.64
-0.61
-6.82
7.19
5.13 179.15 162.07
Gilts benchmarks & non-rump undated stocks. Closing mid-price in pounds per £100 nominal of stock.
May 01
Amnt
£m
34.84
36.35
33.31
32.46
37.95
35.08
23.45
35.44
29.76
26.64
23.59
23.61
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 %
0.01
0.10
0.14
0.11
0.16
0.10
May 01
92.96
179.25
210.64
186.49
334.60
177.91
May 01
308.53
701.14
472.24
899.48
634.08
May 01
1.00
1.48
1.75
Day's
chg %
0.02
0.65
0.22
0.79
0.59
Apr 30
1.01
1.49
1.76
Yr ago
0.35
1.11
1.59
Total
Return
2410.37
3446.56
4200.20
3631.87
5166.97
3565.79
Month
chg %
-0.24
-1.68
0.01
-2.25
-1.55
20 Yrs
45 Yrs
Year's
chg %
-2.25
-3.95
-2.41
-4.46
-3.83
Return
1 month
0.15
-0.08
-0.43
-0.20
-1.53
-0.67
Total
Return
2452.39
5241.04
3678.64
6571.50
4813.36
May 01
1.84
1.62
Return
1 year
-0.98
-1.53
-1.11
-1.41
0.30
-0.49
Yield
0.83
1.26
1.60
1.41
1.74
1.63
Return
1 month
0.22
-1.68
0.01
-2.25
-1.51
Return
1 year
-0.85
-3.44
-1.38
-4.13
-3.25
Apr 30
1.85
1.63
inflation 0%
inflation 5%
May 01
Dur yrs Previous
Yr ago
May 01
Dur yrs Previous
Real yield
Up to 5 yrs
-1.85
2.92
-1.84
-2.60
-2.29
2.94
-2.29
Over 5 yrs
-1.54
24.44
-1.52
-1.76
-1.57
24.52
-1.54
5-15 yrs
-1.60
9.14
-1.57
-1.99
-1.71
9.16
-1.69
Over 15 yrs
-1.54
29.60
-1.51
-1.74
-1.56
29.64
-1.53
All stocks
-1.55
22.52
-1.52
-1.77
-1.58
22.63
-1.55
See FTSE website for more details www.ftse.com/products/indices/gilts
©2018 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
1.77
1.58
Yr ago
-3.30
-1.78
-2.11
-1.76
-1.79
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, its suppliers, or the FT. Neither the FT, nor
Morningstar’s suppliers, warrant or guarantee that the information is reliable or complete. Neither the FT nor
Morningstar’s suppliers accept responsibility and will not be liable for any loss arising from the reliance on the
use of the listed information. For all queries e-mail ft.reader.enquiries@morningstar.com
Data provided by Morningstar | www.morningstar.co.uk
★
Wednesday 2 May 2018
19
FINANCIAL TIMES
MARKETS & INVESTING
Tail risk
Analysis. Commodities
Marathon bets
against a race to
an oil-free future
Five factors driving crude’s rally
and where it will go next
DAVID SHEPPARD
If Elon Musk believes the
adage that “as California
goes, so goes the nation”,
then the founder of Palo
Alto-based Tesla may have cast a
weather eye over the mega-deal
between Marathon Petroleum and
Andeavor.
The $36bn transaction, the 11th
largest in oil market history, will make
Marathon the biggest oil processor in
the US once it absorbs Andeavor’s
largely west coast-based refineries.
But it comes at a time when Mr
Musk and his contemporaries are
trying to remake the Golden State as a
test-bed for an electric vehicle future,
with the aim of relegating the internal
combustion engine and its reliance on
fossil fuels to an afterthought behind
long-range batteries.
California already had six EVs per
1,000 people in 2016, a ratio that will
have risen since then, compared with
just 0.7 in Texas.
The Marathon-Andeavor deal is a
wager against some of the loftier
claims of Mr Musk’s vision, with “oldeconomy” companies believing they
still have a thing or two to teach Silicon
Valley tech stars about oil’s future.
Marathon is betting that California
will continue to need a steady source
of gasoline and diesel long into the
future, with cars accounting for only a
third of oil demand globally.
Freight, petrochemicals, aviation and
shipping comprise the rest and will not
be so easily electrified.
“It’s essentially a bet, in part, that the
Californian market will not electrify as
easily as the politics and culture of the
state might suggest,” said Alan Gelder,
head of refining at energy consultancy
Wood Mackenzie.
IHS Markit believes electric vehicles
cut only about 50,000 barrels a day of
oil demand last year out of a near100m b/d market.
Even if rapid EV adoption does start
to cut into oil demand in developed
countries, Marathon is also betting
other markets will open up. It believes
its expanded refinery system will be
well-positioned when the global
shipping fleet largely switches to lower
sulphur diesel in 2020, rather than the
poorer quality product it burns now.
US refined fuel exports to Latin
America have also risen rapidly as
growing populations strain often
dilapidated domestic refineries.
So while Mr Musk may have kickstarted the mainstreaming of EVs on
the west coast, refiners such as
Marathon are still California dreaming.
Brent crude’s long journey back to $75 a barrel
80
Jun 2017
Oil begins sustained uptrend as
demand accelerates, output cuts
draw down stocks
Past week
Oil hits $75 a barrel for
the first time since 2014
70
Jan 1 2017
Opec and Russia begin
co-ordinated production cuts
60
Jan 20 2016
Oil hits a 13-year low
of $27.10 a barrel
50
40
Nov 2017
US crude oil production
surpasses 10m b/d
Feb 2018
Venezuela oil production
drops to 30-year low
30
20
2016
17
18
Source: Thomson Reuters Datastream
Geopolitics, hedge funds
and Opec will all play a role
in the oil price’s direction
DAVID SHEPPARD
Oil prices have risen as high as $75 a barrel for the first time in four years. But
what has driven the rally and will it continue? Here are the five areas to watch:
Supply and demand
The simplest reason for the rise in prices
is that markets have tightened markedly over the past 18 months. Inventories of crude that had built up during the
2014-16 glut have largely been worked
off because of strong demand driven by
a booming global economy and supply
cuts by Opec and Russia.
The International Energy Agency said
last week that Opec could soon declare
“mission accomplished” if it were targeting reducing global oil inventories
back in line with the five-year average.
Some believe that underestimates
how tight the market is as demand has
soared by more than 5m b/d, or more
than 5 per cent, in the past three years,
with global oil consumption expected to
top 100m b/d for the first time later this
year.
That means higher inventories should
be required to provide the same number
of days’ cover for oil refineries.
Opec and Russia
So if oil inventories are back to near normal levels will Opec and Russia look to
end their supply cuts, which have
removed at least 1.8m b/d from the market since the start of 2017?
Most traders and analysts think not.
While Moscow has expressed greater
concern about the impact of $70+ oil on
stimulating rival supplies such as US
shale, it seems content for now to stick
with Opec.
Khalid al-Falih, Saudi energy minister, has spoken of the need to stimulate
greater investment in new supplies.
“There’s been no sign from Opec
that they want to cap this rally,” said
Bill Farren-Price at Petroleum Policy
Intelligence.
Geopolitical risks
The oil market watches closely for risks
of supply disruptions that could upend
the delicate balance of supply and
demand. When supplies are tight, this
can take on an outsized importance.
The most immediate risk is the real
possibility of Donald Trump, US president, withdrawing from the Iran
nuclear deal and reimposing sanctions
on its oil exports. He will make a decision this month and Emmanuel
Macron, France’s president, has said
that he expects the US to do so.
Oil prices spiked late on Monday after
Israel said it had “new and conclusive
proof” that Iran had been hiding
nuclear weapons activity, with traders
betting it increased the odds Mr Trump
would reimpose sanctions on Tehran.
Second is Venezuela, where oil output
has already fallen by at least 500,000
barrels a day because of the economic
and political crisis in the country, with
little sign that the state oil company
PDVSA will be able to reverse the trend.
There is also a risk of additional US
sanctions on the government of Nicolás
Maduro after elections this month.
Third is the conflict between Opec
kingpin Saudi Arabia and Houthi rebels
in Yemen. The Houthis, who enjoy support from Iran — a fellow Opec member
and Saudi Arabia’s chief rival in the
region — have stepped up attacks targeting Saudi Arabia’s oil infrastructure in
what is seen as an attempt to disrupt the
lifeblood of its economy.
With Houthi-fired missiles also aimed
at Riyadh, the chance of either a supply
disruption or a flare-up of tension
between Saudi Arabia and Iran is real.
Finally Libya, where oil output has
recovered to about 1m b/d, remains
highly unstable seven years after its civil
war broke out.
All these scenarios have helped keep a
bid under oil prices, with one senior oil
analyst warning that geopolitical risks
were as high as he could remember.
“This is an incredibly bullish set-up
where we have Iran sanctions being
revisited, Venezuela elections on May
20 and the situation in Yemen and
Libya,” said Gary Ross, head of global oil
at S&P Global Platts and founder of Pira
Energy. “The risk of an asymmetrical
supply disruption materialising now is
even greater than it was during the Arab
Spring.”
Hedge funds
Hedge funds and other speculators have
been attracted to oil this year but only
partly because of the geopolitical risks.
Investors were already heavily long,
having built up a record position.
While a big speculative position is
normally a warning sign that the market
has become unbalanced, increasing the
risk of a sell-off if traders take profits en
masse, that has not yet happened.
The reason, bankers said, is that
much of the money coming into oil was
longer-term cash trying to play in socalled “late cycle” assets such as commodities, which tend to do well after a
prolonged period of economic growth.
The argument is that while equities
may have become overextended after
being in an uptrend since 2009, commodities do best late in the economic
cycle when surging growth tests the ability of supply to meet demand.
Hedge funds are also reaping the benefits of a shift in the market structure
caused by tightening supplies, which is
causing spot contracts to trade above
those for future delivery. That lets
investors earn a regular yield by rolling
contracts forward each month.
US shale
‘There’s
been no
sign from
Opec that
they want
to cap this
rally’
Bill
Farren-Price
US shale is outstripping expectations for
growth, with total US output expected
to expand by roughly 10 per cent, or
1.4m b/d this year.
US producers are also generating free
cash flow because of higher prices. But it
has not been enough to derail the rally,
with higher output largely absorbed by
rising demand.
“Shale oil economics are no longer
the most important price-setting factor,” said Paul Horsnell at Standard
Chartered.
Infrastructure constraints in the Permian basin are also making it difficult to
get barrels from west Texas to refineries, storage tanks or the coast for export.
FastFT
Our global
team gives you
market-moving
news and views,
24 hours a day
ft.com/fastft
Still filling: Marathon believes
that there is life in oil yet
Capital markets
Capital markets
Distressed debt specialist SVP raises $3bn
for fund amid worries over interest rates
Sprint bondholders on edge as focus turns
to risk of DoJ quashing T-Mobile takeover
ROBIN WIGGLESWORTH — NEW YORK
Strategic Value Partners, one of Wall
Street’s “distressed debt” specialists,
has raised almost $3bn for a new fund
as some investors grow more nervous
about the scale of corporate indebtedness and effect of rising interest rates.
Demand for the new fund surpassed
SVP’s expectations and, at $2.85bn, is
twice the size of its last vehicle, lifting
the Connecticut-based hedge fund’s
assets under management to $8.3bn.
Distressed debt investors typically
pounce on the loans and bonds of troubled borrowers, betting either that
prices have fallen too far or attempt to
take over ownership through a restructuring process.
In the wake of the financial crisis the
strategy has been challenged as low
interest rates and central bank bondbuying has helped many feeble companies raise fresh financing and avoid failure. As a result, distressed debt funds
are sitting on about $83bn of uncommitted “dry powder”, according to Preqin.
Victor Khosla, SVP’s founder, stressed
that its fourth fund was not linked to
expectations that a downturn is looming for corporate debt, but as a “vote of
confidence” in the company’s results.
The main hedge fund has returned
nearly 10 per cent annualised since its
inception in 2002, according to investor
documents.
“We invest across cycles,” he told the
Financial Times. “We tend to lean in
after a crash, but we try to invest fairly
steadily. People have been calling for
another downturn since 2009, but it
doesn’t feel like the economy is going to
turn over this year, or even 2019.”
The fund has already made its first
investments, including the Texas State
Highway 130 toll road and another toll
road in Portugal.
“We see a lot of opportunities in infrastructure,” Mr Khosla said. “Toll roads
Victor Khosla says fund is looking
at infrastructure opportunities
aren’t quite recession-proof, but they’re
pretty close.”
Nonetheless, some investors and analysts are growing concerned at the corporate borrowing binge encouraged by
low interest rates. US companies have
issued more than $1tn of bonds every
year since 2009, and last year sold a
record $1.7tn.
If graded purely on their indebtedness, 28 per cent of investment-grade
companies would now actually be rated
“junk”, according to Morgan Stanley,
and issuance of “leveraged loans” by
lowly-rated, riskier companies hit a
record $500bn last year.
Some fear that this debt splurge will
end badly, with the Federal Reserve now
raising interest rates. The US central
bank has raised its target rate six times
since late-2015, and is expected to lift
rates at least two times more this year,
lifting average yields of US investment
grade and junk bonds to 3.97 per cent
and 6.3 per cent respectively.
Jim Reid, head of credit strategy at
Deutsche Bank, thinks that defaults will
probably not begin to rise until 2020,
but Adam Richmond, Morgan Stanley’s
credit strategist, thinks that “cracks”
will start to appear in the corporate debt
market later this year, before a fullblown downturn in 2019.
ALEXANDRA SCAGGS
The risk that regulators quash the
$59bn tie-up between US wireless providers T-Mobile USA and Sprint has led
to volatile trading in the latter’s bonds
and left debt investors on edge.
Sprint bonds initially rallied when news
of the takeover by T-Mobile emerged on
expectations the combined company
would have a stronger balance sheet.
But they reversed course as legal
experts questioned whether the US
Department of Justice would approve a
deal that would leave the mobile market
dominated by just three operators.
Yield on its $4bn of 2023 notes, for
example, dropped from 6.8 per cent to
6.1 per cent late last week and then
climbed to 6.3 per cent this week. Price
moves of T-Mobile’s bonds were mostly
subdued in comparison.
“Ultimately it’s going to be a much
improved credit profile [for the combined company]. The question is, will
the regulators approve it?” asked
George Goudelias, head of leveraged
finance with Seix Investment Advisors.
“And that’s where it’s a little trickier.”
Sprint, which is majority owned by
Japan’s SoftBank and has struggled to
compete against Verizon and AT&T, is
one of the biggest borrowers in the US
high-yield market with $28bn of debt.
That makes it the single biggest constituent in the ICE BofAML US High Yield
index, making up more than 2 per cent
of the benchmark. Meanwhile, with
$11bn of high-yield debt, T-Mobile USA
accounts for about 0.9 per cent of the
index. The bonds of both companies are
among the most heavily traded highyield exchange traded funds.
Jonathan Atkin, an analyst at RBC,
put the probability of the takeover being
approved at below 50 per cent. The DoJ
The DoJ is likely to
‘want to maintain a fourplayer market to preserve
competitive behaviour’
is likely to “want to maintain a fourplayer market to preserve competitive
behaviour”, he noted. The companies’
previous attempt to combine in 2014
was blocked.
The DoJ is currently challenging
AT&T’s proposed acquisition of TimeWarner in court, and last month the
White House blocked a deal between
chipmakers Qualcomm and Broadcom.
Rating agency Moody’s said secured
debt issued by the new company could
achieve an investment-grade rating,
underlining the benefits for T-Mobile
USA bondholders if the deal happens.
While Moody’s maintained its junk
rating for T-Mobile USA, executives said
they were committed to achieving
investment-grade ratings “long term”.
“Sprint really needs this deal to go
through,” said Scott Roberts, head of the
high-yield team at asset manager
Invesco. “The company does have valuable assets, but they’re more valuable in
someone else’s hands.”
Even if the merger were blocked, Mr
Roberts said Sprint might still have
options.
“People would have to figure out
whether there is some other strategic
initiative the firm can embark on to
have a competitive offering in the 5G
space,” he said. “That’s not clear yet, but
it could involve a tie-up with one of the
cable companies.”
Yet if the transaction were to go
through, there could be one sting in the
deal for bondholders. T-Mobile said
it intended to refinance “all or a portion” of the $19bn one-year secured
bridge facility and an $8bn unsecured
bridge facility it was using to fund the
deal by potentially selling more notes.
That would put an extra $27bn of T-Mobile USA debt on to the market.
20
★
Wednesday 2 May 2018
Investors face tough summer
adjusting as 10-year yields of
US and global rivals diverge
The day in the markets
What you need to know
3 Dollar index turns positive for 2018
3 10-year Treasury yield back near 3%
3 Investors await Fed policy statement
3 US stocks dip as oil falls and earnings
disappoint
Dollar's ascent pushes gold towards 2018 low
$ per troy ounce
1,360
There was no stopping the dollar’s ascent
yesterday with the currency turning
positive for the year against a basket of
peers, as participants looked past a soft
report on US manufacturing and focused
on interest rate differentials and central
bank policy divergence.
The dollar index pushed above the
92.12 level at which it ended 2017 and
climbed to within a whisker of this year’s
intraday peak of 92.64.
The euro fell below $1.20 to its lowest
point since early January and sterling
tested $1.36, while the greenback also
recorded strong gains against a number
of emerging market currencies.
The yield on the 10-year US Treasury
note crept back towards 3 per cent and
the two-year yield topped 2.5 per cent
ahead of the conclusion of the Federal
Reserve’s May policy meeting today.
“The Fed is unlikely to make any policy
changes at this week’s FOMC meeting,”
said Andrew Hunter at Capital
Economics. “But with signs that
underlying inflationary pressures are
continuing to build, officials may use the
post-meeting statement to hint that they
will step up the pace of tightening over
the rest of this year.”
1,350
1,340
1,330
1,320
1,310
1,300
Jan
2018
May
Source: Thomson Reuters Datastream
The Institute for Supply Management’s
headline US manufacturing index eased
to a nine-month low, although most
economists remained sanguine about the
outlook for the sector.
James Knightley at ING said that, while
manufacturing growth had slowed
slightly overall, it appeared to be more
broadly based.
“This means the Fed can have the
confidence to continue with its gradual
policy tightening, especially with inflation
pressures building in the economy, as
highlighted by the prices-paid
component [of the ISM survey] rising to
its highest level since April 2011,” he said.
The dollar’s strength unsettled
commodity markets with Brent oil pulling
back from the $75-a-barrel mark and gold
heading for its lowest close of 2018.
Energy stocks were a big drag on the
main US equity indices while broader
sentiment on Wall Street was hit by some
disappointing corporate earnings reports.
Participants were keenly awaiting Apple’s
results, due for release after the close.
Trading in Europe was limited by holidays
in a number of centres. Dave Shellock
Markets update
US
Stocks
S&P 500
Level
2629.93
% change on day
-0.68
Currency
$ index (DXY)
Level
92.217
% change on day
0.409
Govt. bonds
10-year Treasury
Yield
2.967
Basis point change on day
1.970
World index, Commods FTSE All-World
Level
335.40
% change on day
-0.49
Eurozone
Eurofirst 300
1510.85
-0.08
$ per €
1.199
-0.745
10-year Bund
0.557
0.000
Oil - Brent
73.61
-1.29
Japan
Nikkei 225
22508.03
0.18
Yen per $
109.750
0.297
10-year JGB
0.035
-1.600
Oil - WTI
67.71
-1.08
UK
FTSE100
7520.36
0.15
$ per £
1.360
-1.235
10-year Gilt
1.403
-1.400
Gold
1313.20
-0.63
China
Shanghai Comp
3082.23
0.24
Rmb per $
6.345
0.000
10-year bond
3.653
0.000
Silver
16.38
-0.91
Brazil
Bovespa
86115.50
-0.38
Real per $
3.507
0.553
10-year bond
9.639
-1.900
Metals (LMEX)
3299.70
0.35
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.
Main equity markets
S&P 500 index
Eurofirst 300 index
2800
1520
7680
2720
1480
7360
2640
1440
7040
2560
| | |
Mar
|
|
|
|
|
| | |
2018
|
|
|
|
|
|
| | |
May
1400
| | |
Mar
|
|
|
|
|
| | |
2018
|
|
|
|
|
|
| | |
May
6720
FTSE 100 index
| | |
Mar
|
|
|
|
|
| | |
2018
|
|
|
|
|
|
| | |
May
Biggest movers
Ups
%
US
Qorvo
Ipg Photonics
Abbvie
Fidelity National Information Services
Edwards Lifesciences
Eurozone
6.78
6.15
5.30
4.18
3.23
Vivendi
Tenaris
Safran
Ericsson
Publicise
UK
2.58
2.37
2.33
2.28
2.07
Just Eat
Bunzl
Severn Trent
Astrazeneca
Bp
4.08
3.22
2.53
2.16
1.80
British American Tobacco
Kingfisher
Fresnillo
Bt
Bhp Billiton
-2.48
-2.47
-2.35
-1.78
-1.63
Downs
%
Tapestry
Seagate Technology
Mattel
Acuity Brands
Hanesbrands
Michael Mackenzie
Markets Insight
-12.48
-9.07
-6.66
-6.60
-6.44
Prices taken at 17:00 GMT
Skandinaviska Enskilda Banken
Getinge
Thyssenkrupp
Sandvik
Merck
-4.54
-2.97
-2.26
-2.22
-1.93
Based on the constituents of the FTSE Eurofirst 300 Eurozone
All data provided by Morningstar unless otherwise noted.
Wall Street
Eurozone
London
US automakers struggled yesterday
following mixed sales reports.
Ford and Fiat Chrysler, two of the three
biggest Detroit automakers, reported
stronger than expected April US newvehicle sales as consumer demand
appeared to be holding up in the face of
higher petrol prices and interest rates.
Fiat Chrysler sales came in stronger
than expected, up 4.5 per cent at 184,149,
thanks largely to strong Jeep sales
despite higher petrol prices that might
depress demand for larger vehicles that
use more fuel. Ford US new-vehicle sales
fell 4.7 per cent for the month to 204,651,
less than analysts had predicted, based
partly on the fact that April this year had
two fewer selling days than the same
month a year ago.
Ford dipped 0.44 per cent, while Fiat
Chrysler was down 1.08 per cent.
“The continued decline in sedan sales
is obviously weighing heavily on many of
the large [original equipment
manufacturers],” noted Michelle Krebs,
analyst at Auto Trader.
General Motors, the biggest Detroit
carmaker, stopped reporting monthly US
sales as of April, making it harder to get
an overall picture of US demand from
monthly sales statistics. However, it fell
too, by 1.39 per cent. Patti Waldmeir
Major European markets were closed for
May Day yesterday. But on a year-to-date
basis, Nokia leads the blue-chip Euro
Stoxx 50 risers, up 28 per cent, although
the Finnish handset and telecoms
company has yet to reclaim ground after
a steep share price fall in late 2018.
While Nokia last week reported an
underwhelming first quarter with net
sales of €4.9bn flat on a constant
currency basis thanks to lower numbers
in North America, its management
forecast “solid full-year results” for 2018.
JPMorgan analysts think Nokia’s
networks business is set to get a boost
from 5G,. “Unless there is major share loss
between now and year-end, we think
Nokia will be the leading 5G player in the
market in 2018 and 19 given that Huawei
does not supply early moving telcos in
US, Japan or Korea.”
At the opposite end of the Stoxx 50 is
Deutsche Bank, down 31 per cent year to
date. The lender said last week that it
would scale back its US operations. But it
took another hit on Monday, when
investor advisory group Glass Lewis
urged shareholders to consider pushing
for a new supervisory board chairman.
Chloe Cornish
(Biggest movers data panel above includes
Monday moves of yesterday’s shut bourses)
British American Tobacco was the FTSE
100’s sharpest faller after Piper Jaffray
analysts turned cautious. BAT’s US
cigarette sales growth is slowing and its
Glo tobacco pipe has lost momentum in
Japan, which calls into question the nearterm payback from the £500m it will
spend on rolling out next-generation
products this year, the broker said.
Sterling weakness underpinned the
wider UK market.
Severn Trent and United Utilities
gained on upgrades to “outperform” from
Credit Suisse, which argued that
misplaced fears about renationalisation
had left the water utilities looking cheap.
Vague theories about a bid approach
helped lift AstraZeneca, with US website
Streetinsider naming Roche or Pfizer as
potential buyers. However, Pfizer chief
Ian Read said after the results that the
group “doesn’t need a transformative
deal, nor do I see one at appropriate
values right now in the marketplace”.
Virgin Money jumped to the top of the
FTSE 250 gainers after a trading update
from the challenger bank showed deposit
growth outpacing net loans and
impairments under control. Virgin has
been widely speculated to be a takeover
target for a peer such as CYGB, the
Clydesdale bank owner. Bryce Elder
N
othing gets the market
pulse racing like the US
Treasury 10-year note yield
poppingabove3percent for
the first time in four years.
A fiscal shot for the economy via tax
reform, a tightening jobs market combined with a substantial increase in Federal borrowing means it’s hardly surprising that Treasury yields are rising.
Stronger expectations for growth and
inflation warrant recognition via a
revised policy statement from Federal
Reserve officials when they conclude
their latest meeting today.
But while US yields are set to rise further, a different story has quietly
emerged among other global bond
benchmarks. Eurozone and UK 10-year
benchmarks remain adrift of peaks
reached in February.
More troubling for the global economy and investment portfolios is how
bond yields in China have notably
dropped in recent months, suggesting
an economy feeling the pinch from a
tighter grip on liquidity by authorities.
And, the backdrop of a sustained
cycle of global growth has taken a
knock. Central banks in Sweden, Canada, the UK and Australia have tempered talking more hawkishly about the
direction of future policy. With global
data outside the US arriving below expectations, some such as Chris Watling at
Longview Economics argue “we had
synchronised growth and now the global industrial cycle is rolling over”.
If recent economic weakness is not a
temporary pause, many investors face a
tough summer adjusting to a new divergence between the US and global rivals.
Investor expectations of a weak dollar, a
firming eurozone recovery and sustained growth across emerging markets
have long held sway across portfolios.
The risk of a pronounced portfolio
shakeout looms as the dollar continues
rising and as doubts grow over the prospects for industrial and cyclical companies, excluding energy, and red flags
flutter more briskly across emerging
markets.
JPMorgan’s emerging markets currency index fell 3.2 per cent in April, its
worst monthly loss since November
2016. Beyond a bruising month for the
Russian rouble courtesy of further sanctions from the US, currencies for the
likes of Brazil, Mexico and South Africa
have also suffered. And in the case of
Turkey and Argentina, central banks
have been forced to raise interest rates
to support their currencies.
The likely poster child for EM bullishness for this cycle was the huge demand
for Argentina’s 100-year bond sale in
2017. The price for that paper has fallen
below 90 cents.
A less certain global backdrop will
hardly deter the Fed from its present
course of steady policy tightening.
Indeed, there is a risk that they push a
little harder, particularly should fiscal
stimulus and higher oil prices push
inflation measures higher.
At least two and more likely three rate
increases beckon this year, while the
reduction in the size of the central
US charges ahead while
other benchmarks falter
10-year yields (%)
China
US
Jan
2018
Source: Thomson Reuters
UK
Germany
Apr
5
4
3
2
1
0
bank’s balance sheet will also gather
pace. As the Fed’s quantitative tightening intensifies, the reduction in financial
system liquidity alongside a stronger
dollar will tighten financial conditions.
That will hardly help a global economy that appears to have peaked, let
alone alleviate badly positioned portfolios. At some point and perhaps sooner
than many think, the question of the
Fed reaching for the pause button will
gain traction.
“This is a world that has too much
debt, and against such a structurally
deflationary backdrop it can’t take too
much tightening,” says Mr Watling, who
adds “as we get to 2019, we think the Fed
will pause as there are large risks”.
Indeed, the International Monetary
Fund recently sounded the alarm over a
global debt of $164tn, of which half is
held by the US, Japan and China, and
which has eclipsed the peak of the financial crisis a decade ago.
Years of aggressive monetary policy
and quantitative easing have only
encouraged more debt, with US companies playing a starring role. A greater
concern is that rock-bottom interest
rates in large countries has spurred a
credit boom across emerging markets.
Non-performing loans in China and
Europe are high, posing a big risk to
financial stability.
“The endgame is more fragile public
and private balance sheets, which are
vulnerable to a tightening in financial
conditions,’’ notes Alberto Gallo of Algebris Investments. “Our base case scenario is now one of a hawkish Federal
Reserve hurting the recovery through a
global tightening of financial conditions,
before other central banks have time to
normalise their policy’’.
michael.mackenzie@ft.com
FT SPECIAL REPORT
Investing in the Arab World
Wednesday May 2 2018
www.ft.com/reports | @ftreports
Saudi Arabia: The social liberalisation that forms part of the crown prince’s Vision 2030 programme is opening up new investment channels into sectors such as
cinema. Film fans in the kingdom were last month able to visit a movie theatre for the first time in more than three decades. See story on page 2 — Ahmed Yosri/dpa/Alamy
Transition offers untapped growth
Inside Saudi reform and Aramco, Pages 2 & 8 3 Syria’s unlikely coders, Page 4 3 Will Egypt’s tough reforms pay off? Page 7
2 | FTReports
FINANCIAL TIMES Wednesday 2 May 2018
FTReports | 3
FINANCIAL TIMES Wednesday 2 May 2018
Investing in the Arab World
Investing in the Arab World
Crown prince envisions
a transformed future
Saudi Arabia
Ruler hopes overseas
charm offensive will
aid the kingdom’s
pivot away from oil,
writes Simeon Kerr
D
uring March,
Saudi Arabia’s
crown prince
criss-crossed halls
of power and corporate headquarters in the
UK, the US and France, promoting the kingdom as an
investment destination and
political partner to its oldest
western allies.
Mohammed bin Salman
sealed billions of dollars worth
of arms purchases despite criticism of the Saudi-led war in
Yemen that has killed more
than 10,000 civilians. Addressing both government and business leaders, he also used the
trip to outline a vision for
social change in the kingdom
and an economic future rid of
its reliance on oil revenues.
Flitting between wearing
traditional flowing robes and
western business dress, the 32year-old included meetings
with bankers in New York and
west coast tech leaders on his
itinerary.
The month-long tour was his
first since wresting the mantle
of crown prince from his
cousin last year. It aimed to
reboot his relations with the
global business community
after the world was shocked by
his corruption crackdown in
November on hundreds of
princes, businessmen and
ministers.
While the government
maintains the exercise was
needed to root out graft, others
saw it as a consolidation of his
political power.
The Saudi ruler needs capital inflows to assist his reform
programme, investing in sectors such as mining, retail and
manufacturing. He seeks to
tackle rampant youth unemployment while ushering more
women into the workforce.
“The sweeping changes in
Saudi Arabia are breathtaking
in scope,” says Tarek Fadlallah, chief executive of Nomura
Asset Management Middle
East. He adds: “The optics of
the international charm offensive by the crown prince have
excited a global audience
about the pace of reform in the
kingdom.”
Highlighting his social
changes, Saudi Arabia’s sovereign wealth fund — the Public
Investment Fund (PIF) —
which has been tasked with
investing in transformative
projects, signed deals with the
Chinese-owned US cinema
chain AMC Entertainment to
open the first cinemas in the
kingdom for more than three
decades. The PIF also unveiled
a grandiose scheme for solar
power investment with Japan’s
SoftBank, one of the kingdom’s
most significant new investors.
Mr Fadlallah warns that it is
difficult to attach a numerical
value to such developments or
accurately model any economic or financial impact.
“Lost in the optimistic noise
are the considerable fiscal difficulties that remain across the
Gulf, along with bureaucratic
challenges, deteriorating
credit standings and rising
interest rates,” he says.
The Saudi economy, which
has been slowing since the oil
price crash of 2014, slipped
into a recession last year, com-
New image: the crown
prince shares his vision
on a March visit to the US
Bandar Algaloud /Anadolu/Getty Images
‘Lost in the
optimistic noise are
the fiscal difficulties
that remain’
pounding very weak growth in
the non-oil sector in 2016.
Foreign direct investment in
Saudi Arabia fell to $7.5bn in
2016, statistics from the
United Nations Conference
on Trade and Development
show, from $8.1bn in 2015,
well below the $18.2bn
average before the global
financial crisis.
Deep austerity measures
Leisure finds the limelight
as strict rules are relaxed
Society
Saudi liberalisation opens
investment channels in
tourism and cinema,
writes Ahmed Al Omran
Each spring in the sleepy city of Taif,
which rests on fertile mountains in
the western part of Saudi Arabia,
members of the Kamal family return
from nearby towns to help run a small
factory that produces perfumes from
local roses.
These efforts form part of the
annual Taif rose festival, which is
organised by the local government
and attracts thousands of tourists,
including pilgrims who stop at the
factory shop to buy gifts.
“This year is better than previous
ones,” says Bader al-Kamal, a
member of the family that has run the
factory for eight generations. “We
have many more pilgrims and tourists than usual,” he adds, surveying
a storage room full of bright pink
petals.
As crown prince Mohammed bin
Salman moves to diversify the Saudi
economy away from its dependence
on oil revenues, companies from
home and abroad are jostling for
opportunities in newly unlocked sectors such as tourism and leisure. They
will be central to attracting foreign
investment and creating jobs for the
kingdom’s young population.
While the country received 18m
visitors last year, the majority of them
came for the Muslim pilgrimages of
hajj and umrah. The Saudi commission for tourism and national heritage
said last month that it had submitted
work on new rules for tourist visas to
the government for approval.
Prince Sultan bin Salman, president of the commission and halfbrother of the crown prince, says he
expects approval to be granted soon.
“I wish I can tell you tomorrow but
we are waiting for higher authorities
to give us the green light,” he adds.
“We are more eager than anybody
else because for people it’s a new
economy and tourists will definitely
put [money] into the economy.”
Beyond tourism, other sectors are
witnessing a flurry of activity as
authorities push ahead with a social
liberalisation agenda deemed essential to the success of the reforms.
Since shortly after the government
announced in September that it
would lift the ban on women driving,
auto manufacturers and distributors
have been courting female drivers
through advertisements and marketing campaigns, even though the issuing of licenses will not start until June.
Yet they might struggle to reach
female customers because many of
the auto companies, as well as their
advertising agencies, do not have
Saudi women on their staff, says
Ghassan al-Khaldi, a strategic planner at Dubai-based BPG Bates, a communications agency.
“The challenge I see to [auto]
brands and agencies is a challenge
that all other brands face. I look at
their ads and I think: whoever did this
ad doesn’t know Saudi Arabia.” They
really do not “get it” adds Mr Khaldi,
have improved fiscal stability
at the expense of economic
growth, prompting the IMF to
encourage the government to
moderate the pace of spending
cuts. Private sector confidence
has taken a further knock with
the incarceration of dozens of
prominent businessmen in the
crown prince’s anti-corruption
drive.
Many are pushing on,
Showtime:
visitors arrive
at an invitationonly screening
of ‘Black
Panther’ in
Riyadh
AP Photo/Amr Nabil
who has experience of working on
campaigns in the region for companies such as Ford and Volkswagen.
The entertainment industry has
piqued the interest of both local and
international investors keen to take
advantage of the loosening of restrictions on recreational activities.
In March, the kingdom approved
licensing regulations for cinemas,
which opened the door for AMC
Entertainment, the Chinese-owned
group, to launch the first commercial
cinema on Saudi soil in April, ending
a ban that had lasted more than three
decades.
AMC signed the agreement with
Saudi Arabia’s sovereign wealth fund
earlier this year and announced the
deal during the crown prince’s visit to
Los Angeles, where he met executives
from Walt Disney and other Hollywood studios.
Dalian Wanda-controlled AMC
plans to open up to 40 cinemas in 15
cities in the kingdom over the next
‘It is going
to be like
the gold
rush that
took place
in San
Francisco’
however, says Alex Kyriakidis,
Marriott International’s managing director for the Middle
East and Africa, who oversees
hotel brands including the
Ritz-Carlton. He says Marriott
still sees “unabated” demand
for new hotels funded by local
partners, as tourism plays a
central role in the crown
prince’s economic reform
agenda.
five years. It aims to have between 50
and 100 cinemas in operation in 25
cities by 2030.
Other companies are similarly
poised to take advantage of a rare
opportunity for growth at a time
when consumers elsewhere are moving to online platforms like Netflix to
watch movies.
These include Vue International of
the UK, which has signed a deal with
Riyadh-based Abdulmohsen alHokair Group to open 30 cinemas in
the kingdom within three years. In
the same time span, Imax of Canada,
plans to open up to 20 theaters in
Saudi Arabia.
A Saudi official says the cinema
market is expected to reach 80bn riyals ($21.3bn) over the next 10 years.
“It is going to be like the gold rush
that took place in San Francisco,” says
Abdulaziz al-Muzaini, co-founder of
local animation studio Myrkott.
Eager not to be left on the sidelines,
his company recently signed a distribution deal with Dubai-based Vox
Cinemas.
The latter runs 29 cinema complexes and 294 screens across the
Middle East and north Africa, and
plans to invest $533m in 600 cinema
screens in Saudi Arabia between now
and 2023.
The government anticipates that
more than 350 cinemas with over
2,500 screens will be open by 2030.
Saudi household spending on culture
and entertainment is expected to rise
Marriott, the largest operator in the kingdom with 23
hotels in Saudi Arabia, has 29
more scheduled to be built by
2022, translating into 6,000
more rooms.
Mr Kyriakidis is also
planning an expansion drive
aiming to bring on another
10,000 rooms over the next
five years.
He sees “Saudisation” —
increasing quota requirements
for the employment of nationals — as one of the biggest tasks
facing overseas companies.
For decades, many Saudis
have regarded hospitality as
an unbecoming career, preferring to work for the state or the
energy industry.
“If the government is hoping
to achieve a vision of travel
and tourism to create a chunk
of growth, then it has to change
this perception among the
youth,” says Mr Kyriakidis.
For its part, Marriott has
seen hopeful signs. It has
been training nationals and
finding that especially women
are keen to work in hospitality,
even below management level.
Another area of focus is the
from 2.9 per cent of income to 6 per
cent by that year.
Mr Muzaini said he is optimistic
about the growth outlook in the
entertainment sector, even if reasons
to be cautious remain. “There are
unknowns,” he says. “The Saudi market has many variables that makes
you somehow uncertain.”
Among them are concerns about
censorship and fear of a backlash by
conservative elements of a traditional
society, which may feel alienated as
the government continues its push to
dilute the influence of clerics.
“Entertainment in Saudi Arabia is
more than just fun and games,” Kristin Smith Diwan, a senior resident
scholar at the Arab Gulf States Institute in Washington, wrote in March.
“It is a tool for opening the economy
and courting a key demographic,
depriving the once allied religious
movements and religious establishment of their hold over the public.”
About half of Saudi Arabia’s population is estimated to be aged under
25 and officials insist that society is
ready for change.
Prince Sultan downplays fears of a
backlash as the kingdom prepares to
open up for foreign investment and
tourists. Every citizen has a right “to
express themselves”, he says. “We’ve
always been a country that is destined
to be open and to continually
develop,” he adds. “We cannot
afford[to] nor we can stop moving
forward and developing.”
stock market, which is being
opened up to foreign investors
and generating global interest.
T h e Ta d a w u l s t o c k
exchange in Riyadh has introduced reforms to bring it in
line with international norms.
The FTSE Russell index will
by the end of next year include
Saudi Arabia in its emerging
markets index. This is
expected to prompt $3.5bn of
inflows, according to State
Street Global Advisors, once
passive funds that track the
index include Saudi stocks in
their portfolios.
The Tadawul could be
included in the larger MSCI
index by next year. On inclusion, Saudi Arabia would form
2.4 per cent of the index. Altaf
Kassam, regional head of strategy and research at State
Street Global Advisors,
expects as much as $40bn in
emerging markets funds to
flow into the Saudi market in
the years following inclusion in
the MSCI index.
“Saudi is a whole other
dimension in terms of size and
importance,” he says. “It is
going to make a big splash.”
Inside
A hostile backdrop
for Syria start-ups
Creative coders find
ways to innovate
and flourish
Pages 4&5
Egypt’s tough
measures pay off
US multinationals
are poised to
expand their
investments
Tunisia Push to
turn political gain
into prosperity
The fragile
democracy needs
to lure investors
to help create jobs
Change in the wind
for Lebanon
Severe power
shortages
have
forced
leaders to
look at green
energy
Saudi Aramco
A litmus test for
kingdom’s vision
The destiny of
world’s biggest IPO
and domestic
stock exchange
reforms are
entwined
Pages 4&5
Page 6
Page 7
Page 8
4 | FTReports
FINANCIAL TIMES Wednesday 2 May 2018
FTReports | 5
FINANCIAL TIMES Wednesday 2 May 2018
Investing in the Arab World
Investing in the Arab World
Start-ups nurture signs of
life against hostile backdrop
Syria Despite the country’s
civil war and brain drain,
software developers are
making a go of it, reports
Chloe Cornish
A
long with a number of student colleagues, Zeina Khalili, a 25-year-old
Syrian computer science graduate,
had an idea she hoped was going to
change her life.
“We wanted to write a scientific paper and get a
scholarship to get out of here,” says Ms Khalili,
speaking by phone from Damascus. A year and a
half later, the idea for an Arabic language chatbot
has become a start-up and Ms Khalili is, somewhat
reluctantly, still in Syria’s capital.
Seven years of bitter civil war have killed an estimated half a million people and taken their toll on
Syria’s youth. Millions of young people, thousands
of whom studied computer science, have left the
country. Unemployment has more than tripled,
from 15 per cent in 2011 to as high as 53 per cent in
2015, according to the Syrian Centre for Policy
Research.
Some coders like Ms Khalili, who comes from the
southern city of Dera’a where the civil war began,
are just managing to eke out a living. Few programmers stayed in Syria, says Ms Khalili, who studied at
Damascus university’s computer science faculty
and specialised in artificial intelligence. “When you
can get much better chances abroad, why stay?
That is always the question.”
At the same time, the exodus of talent has
spawned some opportunities for those who have
remained, says Ms Khalili. “There are no competitors in Syria.”
Meanwhile, Damascus, which in the fractured
nation is the power base of the ruling regime of
Bashar al-Assad, is stable enough for commerce to
continue. “It is a war zone but people still wake up
every day, to go to work, to make money,” says Ms
Khalili. “We still want to live.”
Ms Khalili is a co-founder of Mujib, the start-up
based on the student-designed chatbot, which they
are marketing to small businesses. The chatbot can
answer simple questions (in Arabic, mujib means
responder) posted by potential customers on
Mawaddah Kallah, founder of Mindzone, spotted an Arabic language gap in the market for online courses — Omar Sanadiki for the FT
Tough measures yield results for the most populous Arab nation
Egypt
Economic indicators
show reforms are
starting to pay off,
writes Heba Saleh
In a recent television advertisement, Egypt’s investment
ministry promotes official
claims of the speedy delivery
of services offered to investors
at its new gleaming centres in
Cairo and elsewhere.
The ad shows a group of
businessmen expecting to be
given a full display of the
country’s notorious bureaucracy. Instead of having to
stand endlessly in queues,
however, they are invited by a
polite official to relax with a
cup of coffee until their paperwork has been completed.
“This is five-star service,”
marvels one of them.
Alongside tough measures
to stabilise an economy
scarred by years of turmoil
after the 2011 revolution,
Egypt wants to revive local
and foreign investment to
help create jobs for the
700,000 new people who
enter the workforce each year.
Eighteen months after the
start of a reform programme
agreed with the IMF, businessmen and analysts argue that
harsh actions, such as devaluing the Egyptian pound and
slashing energy subsidies, are
now paying off.
They expect investment to
take off as economic indicators improve and international business looks with
interest towards the Arab
world’s most populous nation.
As part of the IMF deal for a
$12bn loan, in November 2016
Egypt floated its currency. It
quickly lost half its value
against the dollar, delivering a
price shock to a country that
relies heavily on imports.
Inflation hit more than 30 per
cent in July 2017. It had fallen
to 13.3 per cent in March this
year, however, and is expected
to decline further.
The budget deficit is
expected to narrow to 8.4 per
cent of gross domestic product
next year, from 9.8 per cent in
the fiscal year to end June.
Natural gas discoveries such
as the giant Zohr field, which
came on stream this year, and
government investments in
infrastructure have ended the
power problems bedevilling
industry in recent years. A
A female
petrol station
employee fills
up a car in
Cairo: most
FDI into Egypt
has been for
oil and gas,
which creates
few jobs for
nationals
Reuters/Mohamed Abd El
Ghany
new bankruptcy law — long
demanded by investors — was
adopted in January. The government also plans to sell
stakes in several state-owned
companies before the end of
2018.
Tarek Tawfik, head of the
American Chamber of Commerce in Egypt, says foreign
investors have been waiting
to see if the “reforms are sustainable and politically viable”. He adds that “US multinationals are gearing up to
expand their investments
after they ensure that reforms
will continue”.
Most foreign direct investment has been in oil and gas,
Facebook. Despite the backdrop of war, overheads
are low, says Ms Khalili. “You won’t get that much
money, but you won’t spend much.”
The fledgling business generates $500 a month,
equivalent to one doctor or engineer’s salary, she
estimates. The co-founders keep costs down by living with their families and taking additional freelance work.
Mujib won $10,000 in a national entrepreneurship competition, a princely sum in Syria, which it
spent on equipment. Now it wants to expand its
team. “We don’t want to live the drama of a
start-up,” says Ms Khalili. The team works in the
ICT Incubator, a non-profit run by the state-backed
Syrian Computer Society, which it shares with
seven other start-ups.
One of the incubator’s youngest participants is
19-year-old business student Mawaddah Kallah.
She and her co-founders spotted an Arabic language gap in the market for online courses, which
many Syrian students rely on to supplement their
education. Nearly 5,000 students have used their
Mindzone platform, which offers free courses on
subjects including coding and photography.
Like many tech start-ups, Mindzone has wrestled
with converting a good idea into profit. “We started
like a not-for-profit. Then we found out it can’t
work like that,” recalls Ms Kallah, who grew up in
Damascus. The company has now developed a plan
to offer sponsorship opportunities within the
courses to companies.
Tech start-ups in Syria, of course, face problems
that their peers elsewhere, on the US west coast, for
example, might hardly imagine. “We don’t have an
and some in renewable
energy. Though vital sectors,
they produce few jobs for
nationals.
Bankers say investors are
starting to look more closely
at healthcare, consumer
goods, textiles and manufacturing. These offer a domestic
market of about 98m people
and export potential following
the devaluation.
Mohamed Abu Basha, head
of macroeconomic analysis at
EFG Hermes, the regional
investment bank, says investors typically view “reform
fatigue” as a risk, but he
argues that “there is no reason
for such worries because
‘US multinationals
are gearing up to
expand their
investments’
reforms that are coming are of
less magnitude than the ones
already implemented”. Mr
Abu Basha notes that high
inflation since the devaluation
pushed down demand, which
has only recently started to
pick up.
“It takes time for demand to
recover after macro adjustments like the one Egypt went
through, so it is natural we are
not seeing a lot of FDI now,” he
says. “Starting next year, we
will see a pick-up of FDI as
demand rebounds.”
As inflation soared, the central bank raised interest rates
in 2017 by 7 percentage points
to about 20 per cent, making
credit prohibitive for Egyptian
companies.
Now that inflation is falling,
however, interest rates have
started to decline.
“Since August we have been
seeing a recovery for Egyptian
companies,” says a senior
Egyptian banker. “Factories
were working [at] half capacity after the devaluation, but
now it is 60-65 per cent and
increasing every month.
“Based on this I do not think
companies will do massive
investment now,” he adds.
“But by year end, with
[demand] rising and interest
rates coming down, it will create a favourable perfect
storm.”
Egypt still has to cut
bureaucracy, improve access
to land for new projects and
ensure fair competition, analysts and businessmen say. A
concern for some of them has
been competition with the
military, which has expanded
its involvement in the economy since Abdel Fattah alSisi, himself a former military
man, became president in
2014.
Mr Sisi has relied on army
companies to drive investment at a time when the government has been in disarray
and the private sector reluctant to invest. The military’s
role remains a concern “but it
has been blown out of proportion,” the banker says. It is
“not big enough to disrupt
the market” and “there are
still huge profit margins to
be made” by the private
sector.
The IMF is still not quite so
convinced. Without mentioning the military, it warned in a
recent report that the large
role of the state “limits the fiscal space for productive
investments” and “marginalises the private sector”.
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Reporter
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Heba Saleh
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Oil and gas correspondent
Maxine Kelly
Commissioning editor
Steven Bird
Designer
Alan Knox
Picture editor
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ecosystem that helps us build our start-up,” sighs
Anas al-Sabe, a 24-year-old Damascene entrepreneur trying to launch an online grocery delivery
service. “We struggle in every stage that outside
Syria they don’t even think of.”
The stream of venture capital funding supporting
new tech businesses in Syria is largely dry. Internet
access is patchy. Trickier still, international sanctions against the Assad regime make it difficult for
Syrian businesses to receive payments, so entrepreneurs frequently commute to neighbouring Lebanon to collect money. Beirut also has the closest
functioning airport.
Little wonder there is a tech start-up offering a
way out. LiBeiroot is a ride-sharing platform for the
route between Damascus and Beirut, a 115km trip
almost always taken by taxi. The app helps drivers
fill cars and riders find the cheapest trips.
Amr Kahhaleh, brought up in Damascus but now
working as a software engineer for Apple in California, built LiBeiroot’s first iteration, hiring and training local developers.
The app was rough and ready when it launched in
June 2017, admits Mr Kahhaleh. “But as a start-up
you kind of want to move fast and do something
that works for the people.”
In the talent search for LiBeiroot, Mr Kahhaleh
found that about a third of qualified applicants for
software engineering jobs were women, the figure
rising to 40 per cent for graphic design positions
and more than half for jobs in marketing. By way of
some explanation, he notes that many male software developers have left Syria to avoid military
conscription.
6 | FTReports
FINANCIAL TIMES Wednesday 2 May 2018
Investing in the Arab World
Lebanon urged to think greener
Energy With
power cuts the
norm, recent
wind deals signify
progress, writes
Alexander Dziadosz
L
ebanon has more
than 300 sunny
days a year, windswept mountains
and a chronic
undersupply of power. You
might think therefore it would
be racing to develop a vibrant
solar and wind energy market.
Yet the country of about 4m
people lags behind others in
the region, such as Egypt and
Jordan, which have rushed to
exploit their natural advantages with solar projects that
dwarf Lebanon’s largest.
The Beirut River Solar Snake
forms part of a wider
government project to
deliver 200MW from
solar farms by 2020
50 km
Mediterranean
Sea
AKKAR
LEBANON
Joseph Eid/AFP/Getty Images
Beirut
SYRIA
Clean power backers
note example of
regional neighbours
ISRAEL
Renewable energy advocates hope that might soon
change. This year, three companies were granted licences
to build Lebanon’s first wind
farms, potentially opening the
way to large-scale private
investment in an industry long
dominated by a dysfunctional
state utility — Electricité du
Liban (EDL) — and a vast
informal network of generator
companies that fill daily gaps
in power supply.
“This is a big game changer,”
said Pierre El Khoury, general
director of the Lebanese
Center for Energy Conservation (LCEC), the government’s
renewable energy agency.
“This is the first time EDL has
bought electricity from the
private sector in this way.”
Lebanon has struggled with
chronic power cuts ever since
the 1975-90 civil war, which
devastated its infrastructure.
Political divisions, bureaucracy, corruption and conflicts
such as a 2006 Israeli bombing
campaign and the civil war in
neighbouring Syria have
undermined efforts to fix the
grid.
Today, Lebanon’s power gap
is estimated at about 1GW.
This translates into cuts of at
least three hours a day in the
capital Beirut and as many as
12 hours daily elsewhere.
While on paper EDL holds a
monopoly on power generation, in practice the government has tolerated the thousands of private diesel generators that have sprouted up to
fill the gap. Their discontented
customers refer to their networks as “generator mafias”.
As well as being costly and
polluting, these companies
have skewed the market’s economics. Leon Kradjian, managing director of Solarleb, a
solar energy company in Beirut, says customers are often
hard pushed to make large
investments in solar installations given the generator bills
they have to pay.
He recalls watching the generator market expand rapidly
in the decade since setting up
his own business selling solar
water heaters in the wake of
the 2006 Israeli bombardment, which led to even more
frequent power outages.
“They’ve made billions — not
just millions — billions of dollars,” Mr Kradjian says.
The wind farm deals
approved this year, known as
power purchase agreements,
are meant to be a step towards
fostering cleaner, less chaotic
private sector contributions to
the country’s power supply.
The deals involve three companies: Lebanon Wind Power,
Hawa Akkar and Sustainable
Akkar. They aim to build wind
farms in the northern Akkar
region with a combined capacity of 200MW by 2020.
The government is planning
to launch a number of similar
projects in solar and wind in
the coming years, Mr Khoury
says. In the next few weeks,
LCEC will select 12 bids for
solar farms with a combined
capacity of 180MW. The aim is
to have these, too, built by
2020.
The country also plans to
add 400MW of wind farms
and 300MW of solar farms
with battery storage capacity
by 2025, Mr Khoury says. Total
investments in renewables are
likely to exceed $1.5bn by
2025, with about 80 per cent of
that coming from the private
sector, he adds.
Such targets mark a big step
forward for Lebanon, whose
largest solar projects to date
have a relatively low output
Neighbouring Jordan is
ahead on solar capacity
compared with some others in
the region. Jordan has hundreds of megawatts in the
pipeline. Egypt is building a
solar park, the capacity of
which could reach 2GW.
Clean energy advocates say
Lebanon should be thinking
bigger than it is. Some have
mooted the idea of a collection
of solar farms with a total
capacity roughly equal to the
country’s 1GW power gap.
“We have much, much bigger potential for renewable
energy in Lebanon,” says Ali
Ahmad, an energy policy specialist at the American University of Beirut’s Issam Fares
Institute.
“If you look at what neighbouring countries are doing
with renewables and you look
at us, we are far behind.”
Mr Ahmad points to the lack
of a regulatory body to co-ordinate and monitor power generation by private companies
as a factor holding up energy
development.
Lebanon also still faces deep
political divisions that have
hindered public services from
roads to rubbish collection for
years. It spent more than two
years without a president
before its main political blocs
were able to agree on Michel
Aoun in 2016.
Resolving the power supply
gap is vital for the broader
economy, says Nassib Ghobril,
chief economist at Lebanon’s
Byblos Bank. Providing 24hour electricity would be a
boon for businesses and a step
towards scaling back electricity subsidies estimated to cost
the government about $2bn a
year.
“The private sector can and
should be involved in the production of electricity in Lebanon,” Mr Ghobril says. “That’s
a key part of the solution.”
FTReports | 7
FINANCIAL TIMES Wednesday 2 May 2018
Investing in the Arab World
Tunisia The democratic success story still needs to lure foreign investment and create jobs, writes Heba Saleh
Political
gains yet
to bring
prosperity
Tunisia is often held up as having made the only successful
democratic transition in the
Arab world. After three tumultuous years in the wake of its
2011 revolution, Islamist and
secular political forces managed to reach a compromise
that continues to underpin
political stability in the North
African state.
Among the Arab countries
that experienced uprisings in
2011, it is the only one to have
been spared a slide into violent
chaos or the resurgence of the
type of dictatorship experienced elsewhere in the region.
Even so, widespread protests against austerity this year
served as a reminder that
Tunisia has been unable to
turn this political progress into
economic prosperity and job
creation. Growth was modest
at 2.3 per cent in 2017, though
the government aims for 3 per
cent this year with better harvests, a rise in exports and
increased investment.
Analysts say wide-ranging
reforms are needed to improve
the climate for business and
attract investment at the level
needed to reduce unemployment, especially among the
young and in the impoverished interior of the country.
In recent years, foreign direct
investment has hovered at
about $900m annually.
In April, the IMF urged
Tunisia to reduce energy subsidies and raise the retirement
age to curb the budget deficit.
Youssef Chahed, prime minister, said there was a need to
move fast on reforms, including the austerity measures. But
the government finds itself
squeezed between the
demands of the IMF and the
powerful Tunisian General
Labour Union, which has
promised to fight the proposed
cuts. In addition, protesters
demanding jobs have repeatedly blocked phosphate mines
in recent years, impeding
exports of a vital source of foreign currency for the country.
Riccardo Fabiani, an economic analyst covering Tunisia, says it needs a new industrial policy to attract foreign
investment in manufacturing
but the government “has no
clarity about what to do next”.
“Basically they have lost
their way because of pressure
from the IMF and World Bank,
and the needs of the population, so they find themselves
constantly firefighting.”
Tunisia has an offshore system, in which export-oriented
companies enjoy big incentives such as tax breaks, and an
onshore system for industries
aimed at the domestic market,
which are often heavily protected from competition and
are inefficient.
According to Mr Fabiani,
similar incentives offered by
Morocco and Egypt have
reduced the lure of Tunisia’s
offshore system to foreign
investors. As such, it has been
unable to “provide educated
Tunisians with the jobs they
‘We could do more if
there was more
freedom to innovate’
Ziad Oueslati, AfricInvest
want and to increase the country’s share of global wealth”.
On the ease of doing business, the information service
Trading Economics indicates
that Tunisia slipped from 77th
out of 190 countries worldwide
in 2016, to 88th in 2017.
Tunisia FDI 2013-17
Capital expenditure ($bn)
0
20
40
60
80
100
Egypt
Saudi Arabia
Tunisia
Lebanon
Syria 47m
Tunisia lending is weighed down by defaulters
Proportion of loans that are non-performing (%)
0
Lamia Fourati, chief strategy officer at Onetech Group, a
private industrial conglomerate making car cables and electronic parts, says while her
company has grown, negative
perceptions of the country are
impeding foreign investment.
“Unfortunately we are having a difficult time to bring foreign investors, because of a
very bad image,” adds Ms
Fourati, who also serves on the
board of the American Chamber of Commerce in Tunisia.
The perception abroad is that
“there is no stability, there is a
new government every 18
months and problems with
terrorism.”
The real problems, she says,
are bureaucracy, a lack of certainty about the tax regime
and poor logistics, with only
one port carrying out exports,
and which is vulnerable to
strikes by labour unions.
Similar concerns are raised
by Ziad Oueslati, co-founder of
AfricInvest, a private equity
firm. He says Tunisia has
become “a hostage” to trade
union activity, and argues for
the reduction of bureaucratic
barriers that protect oligopolies in markets such as port
management, distribution and
financial services. The government should address nonperforming loans in banks, he
says, and loosen restrictions to
allow companies to invest
abroad and grow beyond the
small Tunisian market.
Nonetheless, Mr Oueslati
and AfricInvest are bullish.
“We continue to invest and we
believe Tunisia is the right
platform from which to go to
other markets. We have had a
lot of success but I am frustrated to see that we could do
much more if there was more
freedom to innovate and more
flexibility in regulations.”
A demonstrator from
Tunisia’s ‘Fech Nestannew’
youth movement attends a
protest outside the
parliament building in Tunis
in January against the high
cost of living
Yassine Gaidi/Anadolu Agency/Getty Images
2
4
6
8
10
12
14
16
18
Italy
Portugal
Tunisia
India
EU
Spain
OECD
Poland
Slovak Rep.
France
Brazil
Turkey
Indonesia
South Africa
Mexico
Chile
China
South Korea
Sources: fDi Markets; OECD
Q2 2017 or latest
8 | FTReports
FINANCIAL TIMES Wednesday 2 May 2018
Investing in the Arab World
A successful
listing
on the
domestic
Tadawul
exchange
will depend
on the
kingdom’s
ability to
lure foreign
funds
Saudi Arabia’s economic growth
Annual % change
Oil
Non-oil
15
10
5
Abdulrahman
Abdullah/Bloomberg
0
-5
2014
2015
2016
2017
Source: Thomson Reuters Datastream
Saudi grand vision faces IPO test
Saudi Aramco
What is set to be
world’s biggest
listing depends on
foreign capital,
writes Anjli Raval
S
audi Arabia is counting on overseas
investors to make a
success of Saudi Aramco’s listing, adding
fresh urgency to the kingdom’s
plan to open up its stock
exchange to foreign funds.
Saudi officials are looking to
raise $100bn by selling 5 per
cent of the state energy giant,
which they believe could be
worth $2tn. The execution of
what is set to be the world’s
biggest ever IPO is drawing
close scrutiny, however, and
the fortunes of both company
and stock exchange appear
increasingly entwined.
While Saudi Arabia has said
it will list on the domestic Tadawul exchange, the kingdom’s
willingness and preparedness
for a simultaneous or sequential listing abroad — such as in
London, New York or Hong
Kong — are in doubt.
Saudi Arabia is even
exploring alternative options,
including a private sale, as the
difficulty of executing a foreign
listing has become
more apparent.
As such, the success
of a domestic listing will
depend on the kingdom’s ability to lure foreign capital. To
achieve even a small portion of
that $100bn, the Tadawul
needs to open up to foreign
investment quickly and build
confidence in Saudi economic
reforms. It will act as a litmus
test for whether global investors are to buy into the country’s radical plan to diversify
away from oil under Saudi
crown prince Mohammed bin
Salman.
As officials weigh their
options on the IPO’s structure,
Khalid Al Hussan (pictured
below), chief executive of the
Tadawul, is lobbying for the
exchange to be the sole venue
for the listing and is making
the preparations to facilitate a
listing of this size.
Some officials argue a Saudionly listing would boost the
kingdom’s capital market and
give ordinary Saudis a share of
their nation’s vast oil
resources. “We are doing whatever it takes to satisfy such a
unique listing,” Mr Hussan
said in New York during a visit
by the crown prince in March.
Though Mr Hussan stressed
that the Tadawul was ready for
the listing, there are concerns
that its size might overwhelm
the exchange — especially if
there was no foreign counterparty to take on a portion of
the shares.
The Tadawul’s $466bn market capitalisation is dwarfed
by the London Stock
Exchange’s $3.6tn
and the New
York Stock
Exchange at
$19.6tn.
Saudi Arabia has already
enacted reforms
to better align
with international
standards and to attract capital from abroad. These range
from adopting new corporate
governance rules that enhance
the rights of shareholders, to
allowing foreign investors to
participate in local IPOs.
As a result of changes like
these, the FTSE Russell index
said in March that it would
include Saudi Arabia in its
emerging market index. A
similar decision in relation to
the MSCI’s EM index is
expected later this year. This
means billions of dollars of
additional capital from passive
funds could be directed into
the local market, potentially
improving liquidity and capacity. But passive funds will
only enter Saudi Arabia
once the index upgrades take
effect.
FTSE Russell will stagger the
inclusion of Saudi equities
from March 2019 through to
the end of the year. The kingdom had initially targeted
2018 for the Saudi Aramco listing, which now seems more
likely to slip into 2019.
Some analysts argue that the
improvements the kingdom
has made to its financial
plumbing will not alone be
enough to drive the foreign
funds needed to boost Saudi
equities’ performance and
make the Saudi Aramco IPO a
success. “An upgrade doesn’t
necessarily mean more
inflows,” says Rachel Ziemba,
strategist at Alpha Z Advisors.
“Success of the broader reform
agenda is key,” she adds, referring to Saudi Arabia’s strategy
to diversify its economy away
from its hydrocarbon riches
and create a more robust private sector.
Mohammed El-Kuwaiz,
chairman of Saudi Arabia’s
Capital Market Authority, says
boosting the number of investable stocks will help. The IPO
is expected to pave the way for
a stream of others. “The more
offerings you have the more
open you are to the global
investor base,” he adds.
Yet for all the improvements
the Tadawul has made, it still
‘We are doing
whatever it takes
to satisfy such a
unique listing’
cannot compete fully with the
world’s biggest exchanges.
Hasnain Malik, head of
equity research at Exotix Capital, says exchanges such as the
LSE “have greater liquidity,
accessible free float for foreigners and more stringent
transparency requirements on
listed companies’ disclosure”.
Still, Mr Hussan argued in
New York that the FTSE Russell upgrade was “just the
beginning” and “proof of the
confidence and attractiveness” of the Saudi market.
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