WEDNESDAY 9 MARCH 2016 WORLD BUSINESS NEWSPAPER ASIA

Martin Wolf Sphere of influence Living wage

Hurrah! Technology is about to The family at the heart of South Africa’s Britain’s big pay-rise gamble
disrupt finance — COMMENT, PAGE 9 cronyism scandal — BIG READ, PAGE 7 SARAH O’CONNOR, PAGE 10

Sharapova Briefing
loses sponsors i European prosecutors tighten VW screw
France has announced a probe into “aggravated
over drug test fraud” at Europe’s largest carmaker and German
prosecutors have more than doubled the number of
employees under investigation.— PAGE 13
Maria Sharapova, sport’s biggest female
brand, suffered a swift corporate back- i IMF issues call to boost global demand
lash yesterday after admitting she had The world faces a growing “risk of economic
failed a drugs test at the Australian derailment” and needs immediate action to boost
Open tennis championship in January. demand, the IMF has warned, as figures pointed to
Nike, the sportswear group, and the worst fall in Chinese exports since 2009.— PAGE 4
watchmaker TAG Heuer dropped their
sponsorship of the Russian former i Container ships approaching size limit
world number one. Porsche, the Ger- Freight experts have said that the race
man sports-car maker, said it had post- towards ever-bigger container ships
poned events with the star until further may be nearing an end since
details were released. requirements on ports infrastructure

NIKE PORSCHE TA G H E U E R
Ms Sharapova topped Forbes’ ranking would not be cost effective if they
of the world’s highest paid female ath- became bigger.— PAGE 17
letes for each of the past 11 years, receiv-
ing $20m in annual endorsements, six
times the level of her 2015 earnings
relatioonship postponing willl noot renew i Trump targets the ones he used to love
The billionaire has made some of the companies he
from tennis.
Sponsors drop Sharapova page 16
suspended activities contractt used to admire the targets of his Make America
Great Again campaign, including Apple, Mondelez,
Getty
Carrier, Komatsu and Caterpillar.— PAGE 6

i Ex-fund chief in running for Ukraine PM

US banks strengthen global grip

US-born finance minister Natalie Jaresko is in the
running for the premiership despite a breakdown in
talks as uncertainty threatens to cut the recession-
ravaged country off from financial support.— PAGE 4

as profits dwarf European rivals

i Eurozone watchdog probes Greek banks
Piraeus and Attica Bank are being investigated by
the eurozone banking watchdog in connection with
last year’s €14.4bn recapitalisation of the sector,
which was a condition of Greece’s bailout.— PAGE 6

i 2.5m Britons exceed alcohol limits

3 Top Wall St groups’ revenue twice that of competitors 3 Faster adjustment after crisis
LAURA NOONAN — LONDON
Europe’s top five investment banks are
now making less than half as much reve-
nue as the top five US operators, who
beat their European rivals on almost
every financial measure last year.
The Americans generated investment
banking and securities revenue of
$138.5bn last year — more than twice
the $60.1bn of the Europeans, analysis
by the Financial Times shows. The
cumulative US banks’ pre-tax profits of
$33.5bn dwarfed the $4.2bn in Europe
where big banks have seen their profits,
squeezed by tighter regulation and the
need to hold more capital.
The growing divergence underscores
the increasing global dominance of the
US investment banks that now top even
the league tables for investment bank-
ing fees in Europe, the Middle East and
Africa — the traditional stronghold of
Europe’s banks.
Brad Hintz, a professor at NYU Stern
and a former veteran bank analyst, said
US banks were winning because they
had adjusted faster to the shifting sands
of their industry. “No US bank clung
tenaciously to bond trading like Deut-
sche Bank,” he says. “No US bank com-
pletely reversed strategy like Barclays
and no US bank had to face Swiss capital
rules like Credit Suisse.”
The US authorities forced their banks
to restructure faster in the wake of the
financial crisis. In Europe, Credit Suisse,
Deutsche Bank and Barclays are only
now starting to catch up now.
Revenue across the combined invest-
Official figures have revealed that Britain’s fondness
for binge drinking shows no sign of abating, with
more than 2.5m people drinking more than the
ment banking and securities divisions of at Citi, said the banks doing best were weekly recommendation in one day.— PAGE 4
Deutsche, Barclays, BNP Paribas, Credit
$138.5bn also those who acted “early on” to
Suisse and UBS fell almost 8 per cent last Top US banks’ address their strategy and capital levels.
revenues —
year. Revenue at JPMorgan, Citigroup, against $60.1bn
But senior European bankers insist Datawatch
Morgan Stanley, Goldman Sachs and of the Europeans they are starting to turn things round,
Bank of America fell 0.8 per cent. even as they strip capital from their
Deutsche Bank in January reported a investment banks. “We’ve had to be Chances of UK voting The chances of
€6.8bn loss for 2015 and was forced to $33.5bn more focused than them [the Ameri- to stay in the EU the UK voting to
reassure investors about its capital buff- cans],” said Jim Amine, head of Credit remain in the EU
Cumulative US Per cent
on June 23 have
ers. Barclays, which has seen its share banks’ pre-tax Suisse’s investment bank and capital
price sink by 40 per cent since last sum- markets division. “I expect that we will 80 risen to 70 per
profit, against cent for the first
mer, recently announced it would cut its $4.2bn in Europe gain [global] share versus the American 75 time this year,
dividend by more than half this year banks.”
and next to boost its capital levels. Guy Moszkowski, New York-based 70 according to
betting market
Analysts and executives concur that banks analyst with Autonomous, said a 65 Betfair. But the
US banks were favoured by 2015’s mar- “significant recovery in European figure is still below
ket conditions, as fee income soared in macro growth and markets” could shift 60 the 80 per cent
their recovering home market while the balance of power, but “right now, it’s Jul 2015 Mar recorded last
Source: Betfair 16 summer
Europe stagnated. difficult to see the sun coming out”.
Paco Ybarra, head of Global Markets US banks surge ahead page 17

Japan’s negative interest rates backfire

amid union climbdown on pay claim
ROBIN HARDING — TOKYO effects of prolonged negative rates on benefit to the country’s economy from
households and financial institutions. lower borrowing costs and a weaker
Trade unions across Japan’s financial
The deeper rates were taken into nega- exchange rate.
sector are abandoning demands for
tive territory and the longer they stayed “Negative rates are backfiring, in this
wage rises this year in a sign that nega-
there, the greater the risk of the policy sense,” said a senior trade union official.
tive interest rates are having perverse
EU migrant pact with and unintended consequences for the
backfiring, they said. “Our real worry is that all their small
Turkey comes under fire With Japan’s financial sector employ- business customers in the regions will
Bank of Japan.
ing hundreds of thousands of workers, use the example of the megabanks as an
Reports and analysis i PAGES 2,3&8 For the first time in three years, workers the union move is a blow to the BoJ, excuse to avoid wage hikes themselves.”
at the country’s megabanks — Sumi- which is relying on higher wages to Negative rates have hit banks’ profits
tomo Mitsui, Mizuho and Bank of boost consumption and drive inflation by narrowing the margin they can earn
Australia A$7.00(inc GST) Tokyo-Mitsubishi UFJ — are not towards its 2 per cent goal. on lending. An official at one of the bank
China RMB25 requesting an increase in basic pay, The European Central Bank is unions confirmed this was the reason
Hong Kong HK$30 according to union officials and local expected to cut its deposit rate from for caution on wages, along with a gen-
India Rup195 media. minus 0.3 to minus 0.4 per cent tomor- eral slowing of banking profits and low
Indonesia Rp40,000 The move highlights the growing row. It is considering a tiered system to inflation — running at zero.
Japan ¥630(inc JCT) scepticism in Europe and Asia about the shield banks from some of the costs, as Unions at leading insurers such as
Korea W4,500 fallout from central banks’ experiments in Japan, but this could blunt the effect Tokio Marine and Sompo Japan, which
Malaysia RM10.50
with negative rates. of the policy. have also been hit by negative rates that
Pakistan Rupee 280
Philippines Peso 130
Researchers at the Bank for Interna- The union decision in Japan demon- make it harder to generate a return on
Singapore S$5.50(inc GST)
tional Settlements this week warned of strates the risk that public unease about their bond portfolios, have also decided
Taiwan NT$130 the “great uncertainty” surrounding the negative rates will offset some of the not to request rises in basic pay.
Thailand Bht140
Vietnam US$4.50

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2 ★
Brussels-Turkey accord
Merkel hatches bold migrant deal
but leaves European allies bruised
Covert talks with Ankara
result in summit surprise
for Berlin’s partners
ALEX BARKER AND PETER SPIEGEL
BRUSSELS
For a politician renowned for the cau-
tion and scientific precision she brings
to every policy debate, it was an unchar-
acteristic gamble.
Behind the backs of some of her clos-
est European allies, Angela Merkel, the
German chancellor, struck a deal with
her Turkish counterpart that could very
well end the influx of refugees washing
up on Europe’s shores — but at a very
high price, including an extra €3bn in
aid and a visa-free travel scheme.
But there are already signs her new
swashbuckling style has its costs. EU
diplomats have been left bruised and
angered by being cut out of her bilateral
dealmaking, and risk turning on her
when the deal goes before another sum-
mit next week for final approval.
Some senior officials say the disor-
derly process belies a potentially trans-
formative outcome. Others are more
downcast. “This was one of the lowest
points of my time in the EU, an indict-
ment of the way we operate and the way
we act,” said one EU ambassador.
Her own political allies at home
yesterday hinted at rebellion over the
Turkey pact.
It started with a normal, even promis-
ing EU process. On Sunday after-
noon EU ambassadors in Brussels
put the final touches to a summit
deal that Donald Tusk, European
Council president, saw as a turn-
ing point. The western Balkan
migration route would be closing
and Turkey had agreed to take
back non-Syrian migrants.
Europe’s tougher approach was
taking shape.
A few hours later, and a kilome-
tre down the road, Ms Merkel met
Ahmet Davutoglu and Mark Rutte,
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her Turkish and Dutch counterparts,
and blew that deal apart. During six
hours of talks fuelled by a 1am take-out
of Turkish pide, the trio explored a big-
ger idea to turn-back every migrant
reaching Greek islands.
Unlike Mr Tusk’s version, that came
with a higher Turkish price tag: money,
visas, and large-scale resettlement of
Syrians from Turkey to Europe. Ms
Merkel’s bet was that the deal’s arresting
potential would help her at home in
state elections next week.
In the event, only a half-deal was pos-
sible, mixing parts of the old and new
proposal and leaving details to be
Turkish
view
Erdogan
makes
political
ground
with
visa-free
travel
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FINANCIAL TIMES Wednesday 9 March 2016
INTERNATIONAL
GLOBAL INSIGHT
EUROPE
David
Gardner
Desperate EU barters
away its values to
Turkey’s strongman
T
he EU, buffeted by the migrant panic, the con-
tinuing fallout from the eurozone crises, and
the possibility of a British departure from the
union, is being pushed into an alliance with
leaders who hold its values in contempt. As it
resorts to realpolitik, it is surrendering soft power: the
attraction of an open society based on shared and codified
values of freedom.
So it is in this week’s latest attempt to make Recep
Tayyip Erdogan’s Turkey the EU bulwark holding back the
waves of refugees converging on Europe from Syria and
elsewhere. President Erdogan chose this moment, right
after talks with Donald Tusk, president of the European
Council, to show Europeans how much he respects the
freedoms underpinning their union.
While he opened with great fanfare a third bridge across
the Bosphorus, linking Europe and Asia, his courts in
effect closed the best-selling Zaman newspapers, one of
the last media groups outside government control. Police
violently dispersed protesters outside Zaman’s offices.
Freedom of assembly is as constricted as freedom of
expression in Mr Erdogan’s Turkey.
The Zaman group was taken in a forced entry by court-
appointed trustees — who are no more than government
trusties. The same happened last October with the take-
over of another media group. Both groups are linked to
former allies, now bitter rivals, of Mr Erdogan’s neo-Islam-
ist Justice and Development party (AKP).
sorted. During the process confusion Spotlight: other countries have not had time to The government explanation is that the courts are com-
reined in the corridors; presidents and Angela Merkel analyse all its interlocking parts, with bating a “parallel state” embedded in Turkey’s institutions
premiers bristled at being confronted at a press one noting: “Scrutiny will weaken ele- by Fethullah Gulen, a US-
with Turkey’s “new ideas” as they conference ments of it.” based Islamist preacher
arrived; frustrations were palpable. during the Although it was sprung on fellow lead- they accuse of trying to
Erdogan has
“People are patient,” said a top summit with ers on Monday morning, officials said mount a coup. reminded EU
adviser to the leader of a big EU country. Turkey on Berlin had been covertly working in par- The shadowy Gulenist
“There is a willingness to tolerate this Monday allel to Mr Tusk’s effort for days. During network, with cadres in
leaders that, for
for Ms Merkel because nobody wants Alain Jocard/AFP/Getty
Images
a pre-summit meeting with French the police, the judiciary him, there are no
her weakened. But she humiliated a lot President François Hollande on Friday, and the intelligence serv-
of people.” A diplomat called her meth- the German chancellor mentioned that ices, was once a prized
boundaries left
ods “brutal”, saying “it was a unilateral, Mr Tusk’s deal would not grapple with asset for Mr Erdogan. It
unco-operative approach and there will returning Syrian refugees to Turkey — provided the shock-troops the AKP government needed to
be a price for this one day”. but gave no indication she was laying defang the army, in a series of conspiracy trials in 2008-10
Such sentiments did hinder the deal’s the groundwork for a summit surprise. that ensnared secular dissidents — and anyone who had
final push. Diplomats said leaders of People who have spoken to Mr Tusk the temerity to investigate the Gulenists. While any state
acknowledge he was taken aback by Ms would try to root out such secret cells, Mr Erdogan only
Merkel’s deal with Mr Davutoglu. But started doing so after Gulenist prosecutors launched a
As Turkish negotiators left for consultancy, said: “Brussels knows the they insisted Mr Tusk was not upset — graft probe reaching into his inner circle in 2013.
Brussels on Monday to hammer out a Turkish government can open the indeed, they say his efforts made Ms Similarly, the government’s claim that it is respecting
deal over the refugees arriving in gates to a new wave of unscreened Merkel’s eleventh-hour foray possible. the independence of the judiciary is threadbare. Mr
Europe via Turkey, President Recep migrants flooding Europe.” For weeks, Mr Tusk has been pushing Erdogan closed down the 2013 corruption investigation
Tayyip Erdogan instructed them to Threats by Mr Erdogan to bus an Austria-backed plan to “close” the and purged thousands of police and hundreds of prosecu-
come back with hard cash. refugees to Greece, his private Western Balkan route, a scheme that tors. The policemen and judges who in 2014 intercepted
Led by Ahmet Davutoglu, the prime belittling of EU officials and a series of centred on sealing Greece’s border with and investigated a clandestine shipment of arms by
minister, (pictured) they not only demands were also not enough to Macedonia and convincing countries to Turkey’s main intelligence service to jihadi rebels in Syria
negotiated a doubling to €6bn of the outweigh the need for a deal. Inside the north to stop “waving through” eco- are in jail. Can Dundar and Erdem Gul, journalists who
sum the EU would pay to Turkey to Turkey, the agreement was seen as a nomic migrants. published evidence of that shipment, are charged with
cover the costs of hosting 2.7m vindication of his political acumen, and Ms Merkel had fought the plan, espionage. When the Constitutional Court released them
refugees, they also secured potentially a moral victory over Europe. largely for symbolic reasons: she has from preventive detention last week, Mr Erdogan said he
more valuable concessions, including It is the promise of visa-free travel resisted domestic pressure to cap would not recognise this “unconstitutional” ruling.
early approval of visa-free travel for that is a key political victory. Long migrant arrivals and has been engaged Turkey, a Nato ally and EU candidate member, came
Turkish citizens into the Schengen sought by Ankara, the measure will be in a bitter political war with Werner 149th in the press freedom index of Reporters without
zone and revisiting access to vital welcomed in particularly by the small Faymann, the Austrian chancellor who Borders last year, just above the Democratic Republic of
European markets. and medium-sized businesses that are has repeatedly suggested Ms Merkel Congo and Russia. In the 18 months since he ascended
The concessions were “testimony to key drivers of the Turkish economy would follow his lead. from the prime minister’s office to his new presidential
Turkey’s ability to truly and and of Mr Erdogan’s popularity. By shutting down the ability of palace, 1,845 charges of defaming Mr Erdogan — mostly on
intelligently assess the underlying Importantly, it also appeals to the migrants to move north, Mr Tusk’s allies Twitter — have been issued. Scores of columnists have
dynamics of the refugee crisis and westernised elite of Istanbul who believe they closed the window on been fired by proprietors fearful of presidential wrath.
develop a negotiating strategy on the normally disdain the president, and Ankara’s ability to negotiate — if refu- Mr Erdogan has reminded EU leaders desperate to
basis of that”, said Sinan Ulgen, a who have long chafed under the gees were stuck in Greece, Turkey’s shield their frontiers that, for him, there are no boundaries
retired Turkish diplomat now at the stringent EU visa requirements. importance would dissipate. left. The EU’s democratic club-rules come a poor second to
Carnegie Europe think-tank. Yet Ankara’s joy will be tempered by Although Ms Merkel bristled at Mr his Ankara rules. This is partly Europe’s fault. From 2008,
With European leaders, principally the knowledge that putting the deal Tusk’s rhetoric about closing the corri- Germany called into question Turkey’s bona fides as a club
Angela Merkel, Germany’s chancellor, into practice will be far from simple. As dor, it may end up being her salvation — member, seeing it as too big, too poor and, above all, too
desperate for progress on the crisis to Mr Skinner puts it: “On the surface, Mr particularly if the Turkey deal collapses. Muslim. That was when EU accession was serving as an
stem anger at home, Turkey went into Erdogan is having his cake and eating As much as the sealing of borders to the engine of constitutional reform and democratic transition.
the talks with a strong hand: the it. But everyone is aware of the south has offended her principles, it has Since then, Turkey has cut loose from its western moor-
ability to control, or not, the flow of elephant in the room: the EU will also begun to stem the influx into south- ings. The Turkey that Europe and Germany’s Angela Mer-
refugees. Anthony Skinner, director of struggle to fulfil a number of these ern Germany. That, in the end, is what kel are re-embracing is under the thumb of one man.
the London-based Maplecroft risk reciprocal measures.” Mehul Srivastava the embattled chancellor needs.
See Editorial Comment david.gardner@ft.com
Regional elections
Support for CDU’s rising star shaken in nail-biting poll battle
STEFAN WAGSTYL — MAINZ the AfD better than most: it is scoring easy target. “Julia has zigzagged over lic winemaking family, she was chosen
only 9 per cent in polls, compared with refugees,” said one local SPD official. Germany’s wine queen in 1995 and
Julia Klöckner, a rising star in Angela
over 12 per cent in Baden-Württemberg For Ms Klöckner, the stakes are high: developed a career as a wine journalist
Merkel’s CDU party, was once consid-
and 19 per cent in Saxony-Anhalt, the victory would enhance her reputation before entering politics and catapulting
ered a safe bet to win control of the
two other regions voting this Sunday. as a potential chancellor. Defeat could into the German parliament in 2002, a
NOVEMBER 7 2015
wine-growing Rhineland-Palatinate,
But that has still been sufficient to vir- push her back into a growing line of few weeks before her 30th birthday.
one of three German regions going to
tually eliminate Ms Klöckner’s once- failed would-be successors. CDU elders recognised her vote-win-
the polls this Sunday.
commanding lead over the SPD. On the campaign trail, she does not let ning potential and she was installed in
But the refugee crisis has changed eve- She has responded by trying to the strains show. She has a ready smile 2010 to lead the Rhineland-Palatinate
rything for the 43-year-old former wine harden her line on migrants while care- for voters and a quick answer to ques- party’s efforts to unseat the SPD. After
ROLLING IN THE DEEP
queen, a sort of ambassador of the wine fully avoiding any whiff of disloyalty to tions, whether about refugees, her dog coming close in 2011, she is trying again.
21/10/2015 10:51
trade. the chancellor. She has, for example, or her clothes. Ms Klöckner has long She is well ahead of her social demo-
The arrival of more than a million proposed flexible daily quotas for refu- been in the limelight. Born into a Catho- crat opponent, Malu Dreyer, in self-pro-
migrants has shaken support for Ms gee inflows to Germany. This is a step motion — the portrait on her campaign
Merkel’s party, fuelled an upsurge of beyond Ms Merkel’s “open-doors” pol- coach is many times bigger than the
anti-immigration sentiment and fed the icy but not so far as the CSU, the CDU’s modest image emblazoned on the
rise of the rightwing and populist Alter- troublesome Bavaria-based sister party, Dreyer bus. But voters seem impressed
native für Deutschland party. which has backed fixed annual limits. by the confidence Ms Dreyer, 55, has dis-
On the eve of the vote, opinion polls “There is no difference in policy played during 12 years in power, the last
suggest that Ms Klöckner is in a nail- between me and Angela Merkel. We three as the region’s chief minister.
biter and could struggle to overturn 25 have different points of focus, though,” Ms Klöckner has avoided focusing
years of social democrat-led rule. Ms Klöckner said in an interview. “The excessively on refugees because she
“Nobody knows who will win,” says chancellor cares about the national and believes this plays into the AfD’s hands.
Jürgen Falter, politics professor at the European levels most, while I have to be If she emerges heading the largest
University of Mainz, the regional capi- concerned about what the local councils party on Sunday night, she will be in a
tal. “The Merkel bonus [an electoral are saying. They are . . . carrying all the position to lead a coalition government.
boost for local candidates] has become burdens of the refugee crisis.” Even if the CDU comes second, it could
the Merkel discount.” But her subtle positioning has not still return to power alongside the SPD.
With its prosperous towns and vil- helped her in the opinion polls. And it Julia Klöckner’s chances of success But that would not count as a victory for
lages, the region has resisted the lure of has given her social democrat rivals an on Sunday are too close to call Ms Klöckner. Or for Ms Merkel.
Wednesday 9 March 2016 ★ FINANCIAL TIMES 3

INTERNATIONAL

Refugee plan is both simple and explosive Detractors

Draft EU-Turkey deal to solve crisis is broadly agreed, but faces some substantial hurdles
ALEX BARKER AND DUNCAN ROBINSON
BRUSSELS
It may be politically explosive, but the
concept behind a plan crafted by Ger-
many and Turkey to end Europe’s
migrant crisis is breathtakingly simple:
any migrant arriving on a Greek island
would be returned to Turkey.
The hope is the initiative will short-
circuit irregular migration into Greece
— currently running at some 2,000
arrivals a day — and create a more
orderly process to reach Europe.
Although the plan has been broadly
agreed, it must still overcome five politi-
cal, legalandlogisticalhurdles.
1 The legal problems
with mass returns
Rules on asylum are clear: all applica-
tions must be properly considered and
an asylum seeker should not be
returned to a country that does not offer
proper protection.
Refugee groups argue that returns to a
country that is not a full member of the
Geneva Convention, such as Turkey,
would probably be illegal. Yesterday,
Amnesty International labelled the pro-
posed deal a “death blow”.
The EU will try to ease such concerns
by having Greece declare Turkey a
“safe” third country, which, given the
state of its asylum system, is debatable.
Despite its legal ingenuity, some EU
officials believe the proposal would give
the bloc a legal basis to return only Syri-
ans to Turkey. But Dutch and German
officialsareadamantitcoversallarrivals.
In either case, the deal would struggle
to survive if it goes before Europe’s
courts, migration lawyers warn.
Berlin tested
as critics
attack move
on migration
STEFAN WAGSTYL — BERLIN
DUNCAN ROBINSON — BRUSSELS
The tentative migration pact between
the EU and Turkey has come under fire
from critics ranging from German con-
servatives to the UN refugee agency.
The CSU, the sister party to Chancellor
Angela Merkel’s CDU, pledged “massive
resistance” to one of the proposal’s key
elements — visa-free travel for Turks in
the Schengen zone.
Marcel Huber, secretary to the Bavar-
ian regional government, said the initia-
tive would face “massive resistance”
and was “not a matter for considera-
tion”. He said he was “especially
alarmed” by the resettlement plan
under which migrants crossing the Bal-
kans would be replaced by direct trans-
fers from Turkey.
Volker Kauder, the CDU/CSU parlia-
mentary leader and a close Merkel ally,
welcomed an “important intermediate
step” but said “not all of Turkey’s wishes
will now be fulfilled”.
On Ms Merkel’s left, Heiko Maas, the
SPD justice minister, warned Ankara
might put pressure on the EU to keep
quiet about human rights abuses. He
said: “We will not allow ourselves to be
blackmailed by Turkey, especially not
Migrants and European Council president Donald Deal will Cyprus and Turkey’s EU date. But the political symbolism makes about human rights.”
refugees arrive
in Piraeus near
Tusk, who has 10 days to come up with a
solution. For any plan to work, Ger- struggle if it 4 membership bid compromisedifficult,nonetheless. Filippo Grandi, the UN High Commis-
sioner for Refugees, said he was “deeply
Athens this
week, brought
many may need to lead by example. goes before Ankara wants to revive its EU member-
shiptalks by reopening severalaccession 5 Making the returns
plan work
concerned” by the outline deal. EU rules
dictate that a state must be a full mem-

2 The fraught politics of a

1:1 resettlement promise
Turkey’s price for accepting mass
returns of irregular migrants is a huge
resettlement programme. Europe
would need to open up a legal route for
asylum, which takes an equivalent
number of Syrians from Turkey. This is
an explosive concept in many EU mem-
ber states.
Angela Merkel, the German chancel-
lor, has always been keen on the idea
and, since November, her officials have
informally toyed with taking 200,000 or
300,000 refugees on a bilateral basis.
Berlin insisted, though, that could only
happen if Turkey proved irregular
migration had all but stopped.
More challenging will be convincing
any other EU country to join the cause.
A “coalition of the willing” has proved
decidedly unwilling. The Netherlands is
potentially supportive, as are a handful
of other small member states. But there
are no commitments on numbers. One
senior diplomat warned the concept
could be “a real killer” for the deal.
Ironing out these kinks will fall to
by ferry from
the Greek
islands. About
3 The tricky politics around
visas for 75m Turks
Turkish president Recep Tayyip
Europe’s
courts, say
chapters — the legal hoops a country
mustjumpthrough before itcan join.
But Cyprus and a group of other coun-
Moving people against their will is hard.
Roughly 2,000 people are landing on
Greek shores every day, leaving officials
ber of the Geneva Convention — offering
full refugee status to anyone needing it
— before it can be considered a “safe
2,000 people Erdogan prizes visa access more than lawyers tries are unwilling to open the process with a logistical and legal nightmare. third country”. Turkey, however, is only
are landing on anything else in the package, according until Turkey recognises the government Having spent up to €1,000 to make a partial member of the convention,
Greek shores to senior diplomats. It is a tangible vote- in Nicosia. This is a sensitive issue, with the trip, asylum seekers will be reluc- offering shelter to people fleeing Europe
every day winner at home. The trouble is, it is also peace talks to find a settlement on the tant to be sent back to a country they and rudimentary protections for Syri-
Orestis Panagiotou/EPA
a vote-destroyer for many EU leaders, divided island making significant head- paid — and risked — so much to leave. ans only.
who would take a beating on their right way after four decades of enmity. EU leaders should be prepared for ugly Mr Grandi said: “An asylum seeker
flank for giving 75m Muslims access to Turkey has eyed five chapters in the scenes, particularly as those being should only be returned to a third state
the Schengen passport-free zone. accessionprocess.Theoutcomeislargely returned will be aware of the questiona- if the responsibility for assessing the
France — which has presidential elec- symbolic — no member state believes ble legal grounds of this decision. particular asylum application is
tions next year — is particularly wary. Turkey is close to being a viable candi- See Editorial Comment assumed by the third country.”
The big-bang migration deal rips up a
previous agreement to look at visa liber-
alisation in the autumn. Instead, this
will be done in June and, rather than rec-
ommend mere “liberalisation”, the full
privilege of automatic Schengen visas
could be granted to Turkish citizens.
Turkey must still fulfil strict criteria
Brussels even though some EU officials think
Briefing there will be huge pressure to, in effect,
The meeting abandon their demands.
that may change
EU refugee There are also big political issues that
policy forever would be hard to finesse — not least the
ft.com/
requirement for Turkey to recognise
brusselsblog Cyprus and its Greek-Cypriot govern-
ment in Nicosia.

France

Hollande confuses and confounds party as

labour reform plan shows march to centre
ANNE-SYLVAINE CHASSANY — PARIS
After four years in the Elysée Palace,
François Hollande has become a politi-
cal puzzle: elected president after desig-
nating finance as his enemy and promis-
ing to tax the wealthy, the socialist
leader is entering the final stretch of his
term praised by employers and vilified
by unions.
The latest cause of ire in his own camp
is a planned labour reform that, if
adopted, would be the boldest attempt
by any postwar government to inject
flexibility into France’s two-tier jobs
market. The measures — which allow
for extending working hours and cap-
ping the cost of wrongful dismissals —
prompted a revolt in the socialist party
and full union opposition.
“Enough is enough!” thundered Mar-
tine Aubry, instigator of the 35-hour
maximum working week and standard-
bearer of the left.
Worse, student organisations, tradi-
tionally the shock troops of political
protest, are planning to join a day of
nationwide demonstrations today that
threaten to paralyse the country’s
schools and public transport.
The row has left political analysts baf-
fled by the president’s political strategy.
One year out from the next presidential
election, and with his popularity ratings
at rock bottom, he needs to rally the left
behind his candidacy, or risk being eas-
ily beaten into the run-off by centre-
right and far-right rivals. Yet he contin-
ues to stoke divisions within his govern-
ment and the Socialist party. It is all the
more surprising, given Mr Hollande
built his career being a malleable char-
acter ready to compromise.
“François Hollande is an enigma,”
said Philippe Marlière, political sciences
professor at University College London.
“Since 2014, he hasn’t stopped
[rattling] his own party. But he needs a
unified left to qualify for the second
round of the presidential election.”
At the heart of Mr Hollande’s political
travails is a challenge that has hung over
his presidency: how to revive a flagging
economy that has left the country with
high unemployment and persistent
public deficits in breach of EU rules.
Mr Hollande shifted towards the
political centre two years ago by
embracing supply side reforms, includ-
ing more than €40bn in tax breaks for
companies. The move was meant to
reduce unemployment, currently stuck
at 10 per cent of the workforce, which
Mr Hollande has made a precondition
for seeking a second term.
A year later the government led by
Manuel Valls, the prime minister,
bypassed rebel socialist MPs and forced
a liberalising law through parliament to
extend Sunday trading hours; it also
opened a few sectors to competition.
The left has also been enraged by a
plan to strip French-born citizens of
their nationality if they have been con-
victed of terrorism — a measure backed
by Marine Le Pen’s far-right Front
National party and by the former
François Hollande risks being beaten
into the run-off by rightwing rivals
centre-right president Nicolas Sarkozy.
At one stage this year, Mr Hollande
appeared to be tacking back to the left.
A €2bn plan to fund 500,000 training
schemes for the unemployed,
announced in January, was classic
socialist interventionism. He then
brought back into his government Jean-
Marc Ayrault, the former prime minis-
ter he had ousted to embark on his pro-
business shift. But the new labour
reform has upended assumptions.
“Maybe he truly believes in his
reforms after all, but I can’t see the polit-
ical logic of introducing such a divisive
bill a year before the elections,” said
Laurent Bouvet, a professor at Versailles
University. Mr Hollande needed every
vote on the left to make it to the second
round against Ms Le Pen, he added.
Bruno Cautrès, a professor at Sciences
Po university, suspects Mr Hollande
may have given up on the left of his
party altogether to focus on the political
centre. The president has revived old
tensions at the top of the socialist party
machine. “But socialist sympathisers
aren’t as opposed to economic reforms,”
Mr Cautrès said, pointing to the popu-
larity among centre-left voters of
Emmanuel Macron, the reformist econ-
omy minister behind Mr Hollande’s
supply-side shift.
With an approval rate of only 15 per
cent, Mr Hollande’s chances of re-
election appear dismal. But he appears
to betting that the centre-right nomina-
tion later this year will be won by Mr
Sarkozy, a divisive politician who has
been tacking to the far-right to revive
his own flagging popularity.
“Mr Hollande has no choice but to
carry on,” Professor Cautrès said.
“It’s going to be a battle for the cen-
tre,” he added. “But of course, this could
only work for him if there’s some good
news on the economic front.”
4 ★ FINANCIAL TIMES Wednesday 9 March 2016

INTERNATIONAL

Premiership Downturn risks

Ukraine finance minister in talks on top job IMF calls for

US-born former fund
manager faces competition
from parliament speaker
NEIL BUCKLEY AND ROMAN OLEARCHYK
KIEV
Natalie Jaresko, Ukraine’s US-born
finance minister, has held talks to lead a
new technocratic, reformist govern-
fund manager, who took Ukrainian
citizenship to join the government in
2014, spent last week working on a gov-
ernment and a programme, they added.
But talks stalled last week, with Mr
Poroshenko and Mr Yatseniuk appar-
ently shifting to favour making Volody-
myr Groysman, the parliament speaker,
head of the government instead.
A senior Ukrainian official, speaking
on condition of anonymity, said that Ms
partners, who would be likely to see a
technocratic government led by her as
the best guarantee of structural reforms
and efforts to fight endemic corruption.
An administration led by Mr Groys-
Jaresko has not been ruled
out as prime minister
and is ‘still in the game’
of lenders such as the International
Monetary Fund.
A third scenario could be early elec-
tions. But these are unlikely to be held
before the autumn, potentially throwing
the country into six months of political
uncertaintyandderailingreformefforts.
Mr Poroshenko and Mr Yatseniuk
both want to avoid early polls, political
insiders say, after a sharp fall in support
for them and their parties. Ukraine’s
global action
US diplomat, as premier risks playing
into Russian propaganda efforts to por-
to lift demand
tray Kiev as a puppet of Washington.
Ukraine was plunged into political
as China
crisis last month by the resignation of
Aivaras Abromavicius, the economy
minister, who claimed associates of the
exports fall
president and prime minister were try-
ing to block anti-corruption reforms. Mr SHAWN DONNAN — WASHINGTON
CHRIS GILES — LONDON
Abromavicius called for formation of a
non-political technocratic government
GABRIEL WILDAU — BEIJING

ment amid intense high-level manoeu-
vring over the country’s political future.
Ms Jaresko was offered the prime min-
ister’s position more than 10 days ago by
representatives of President Petro Poro-
shenko and Arseny Yatseniuk, the cur-
rent premier. Both offered the support of
their parliamentary parties and freedom
from interference, said people familiar
with the situation.
The American-Ukrainian former
Jaresko had not been ruled out as pre-
mier and was “still in the game”.
Uncertainty over Ukraine’s govern-
ment threatens to cut the recession-
ravaged country off from badly needed
international financial support while
fighting with Russian-backed separa-
tists in breakaway eastern regions con-
tinues to smoulder.
Ms Jaresko is highly regarded by
investors and Ukraine’s international
Iran. Power struggle
Senior Ukrainian official
man is less likely to be seen as able to
withstand pressure from powerful
vested interests, including the country’s
billionaire oligarchs, and from the presi-
dent, of whom Mr Groysman is consid-
ered a close confidant. Ms Jaresko is also
unlikely to agree to serve in such a gov-
ernment, people close to the situation
say, which could jeopardise the support
president and premier fear that their
parties could lose MPs and votes to
groups led by Yulia Tymoshenko, the
former premier, and Mikheil Saakash-
vili, the former Georgian president who
is governor of Ukraine’s Odessa region
and is forming an anti-corruption party.
The US, Ukraine’s biggest interna-
tional backer, is also thought to want to
avoid early polls. But some analysts
warn that having Ms Jaresko, a former
headed by Ms Jaresko.
While Mr Yatseniuk survived a parlia-
mentary no-confidence vote, he was left
weaker after MPs backed a motion con-
demning the government’s record and
some intherulingcoalitionpulledout.
The IMF has also in effect suspended
disbursement of the next tranche of an
$18.5bn support package until it is confi-
dent that a government capable of con-
tinuing reforms is in place.
The world faces a growing “risk of eco-
nomic derailment” and needs immedi-
ate action to boost demand, the Inter-
national Monetary Fund warned yes-
terday as new figures pointed to the
worst monthly collapse in Chinese
exports since 2009.
Speaking in Washington, David Lipton,
the IMF’s influential second-in-com-
mand, warned that the global economy
was “clearly at a delicate juncture”.
Urgent action was needed by policy-
makers around the world to respond to
slowing growth and fresh threats posed
by turmoil in commodity and financial
markets, he added.

Hardliners hinder push for investment
Centrist president will find it
difficult to pursue reforms,
despite moderates’ poll gains
NAJMEH BOZORGMEHR — TEHRAN
Iran’s moderates may have scored a big
success at the polls last month but cen-
trist president Hassan Rouhani is still
likely to find his reform agenda blocked
by hardliners.
Even though they disqualified the
majority of prominent pro-reform can-
didates, hardliners failed to retain their
parliamentary majority and moderates
won an almost equal share of the 290-
member legislative body.
Moderates could extend their control
and become the single biggest force in
the legislature if they are joined by some
of the 60 independents elected last
week, or by winners of some of the 60
seats decided in April’s runoff votes.
But hardliners, a loose grouping that
claims to be unconditionally obedient to
supreme leader Ayatollah Ali Khame-
nei, and oppose any rapprochement
with the west, still hold sway in institu-
tions including the elite Revolutionary
Guards — a military, economic and
intelligence force — and the judiciary.
Mr Khamenei supported Mr Rouhani
in negotiations over Iran’s nuclear pro-
gramme, ensuring that hardliners were
unable to sabotage the talks. But with
the deal in force and foreign investors
clamouring for business as sanctions are
lifted, the ayatollah may tilt toward his
hardline loyalists, say analysts.
“Mr Rouhani has to work very hard
on his relations with Mr Khamenei from
now on,” said one senior reformist poli-
tician. “Otherwise, he will not be able to
achieve much and hardliners will keep
sabotaging his policies, particularly on
foreign investment.”
Since Ayatollah Khamenei took office
in 1989, Iranian presidents of various
political stripes have fallen foul of the
country’s ultimate decision maker.
Pragmatist Akbar Hashemi Rafsan-
jani, in office from 1989 to 1997;
Mohammad Khatami, the popular
reformist who succeeded him; and Mah-
moud Ahmadi-Nejad, the hardline radi-
cal in power until 2013, were given free
rein in their first terms but in their sec-
ond were unable to implement policies.
But Mr Rouhani, who swept to power
in 2013, has had more difficulty imple-
menting his agenda in his first term than
An Iranian his predecessors, some analysts believe.
student holds a He was not even permitted to field
picture of members of his party, Moderation and
supreme leader Development, in last week’s vote.
Ayatollah Ali Iran’s supreme leader has not yet
Khamenei, who commented on the election results, a
may now tilt silence that could reflect his dissatisfac-
towards tion with the hardliners’ defeat.
hardliners Mr Khamenei on Monday appointed a
Raheb Homavandi/Reuters
hardline custodian to run Astan-e Qods
Razavi, a religious business foundation
which has turned into an empire with
astronomical wealth and political influ-
ence from its base in the holy city of
Mashhad. The appointment may fur-
ther embolden hardliners who already
considered the city their backyard.
The president’s efforts to attract des-
perately needed foreign investment
have also been undermined. Iran’s oil
ministry has been unable to hold a con-
ference in London to publicise its new
contract for foreign investors because
hardliners have attacked the contract as
an effort by international oil companies
to loot Iran’s natural resources.
They also attacked the government
for signing contracts worth more than
$30bn with French and Italian groups
and have promised to “scrutinise” them.
“The supreme leader will try to open
[the economy] as little as possible, let-
ting in some fresh air and capital, but he
will try to maintain the status quo by
slowing down an inevitable process [of
opening the country to investment],”
said a western businessman in Tehran.
The gravity of Iran’s economic woes,
particularly youth unemployment —
officially 25 per cent — has forced all Ira-
nian leaders to acknowledge the neces-
sity of foreign investment. The lower-
than usual turnout of low-income vot-
ers, who traditionally support hardlin-
erss, has been seen by many as a
reaction to hardship and fuelled regime
‘[Iran] will fears of unrest. Analysts believe Mr
Khamenei wants to improve the econ-
not produce omy but not at the expense of rap-
[low prochement with the US or the regime’s
revolutionary principles.
quality] But Mr Rouhani is aiming to attract
cars, $50bn in foreign investment and has
shown little sympathy for revolutionary
impose ideals of self-sufficiency in manufactur-
them on ing and agriculture. “This government
will not under any circumstances shut
people and the country’s doors in order to produce
tell them [low quality] cars at home, impose
them on people and tell them this is
this is their their only option,” he said.
only option’ Hardliners are likely to try to weaken
him before he seeks re-election next
Hassan year. Reformist Hossein Marashi said:
Rouhani “No one political current can make dra-
matic changes in the country as long as
we are not politically and socially devel-
oped enough to respect what people
demand through the ballot boxes.”
“Now is the time to decisively support
economic activity and put the global
economy on a sounder footing,” he told
the National Association for Business
Economics.
Among the “most disconcerting”
signs of trouble in the world economy
were “a sharp retrenchment in global
capital and trade flows” in the past year,
he said.
Those concerns were highlighted by
the weak trade figures out of China yes-
terday. They showed both imports and
exports falling in February as China’s
demand for commodities such as crude
oil, iron ore and copper fell and weaker
global demand dragged on exports of
manufactured goods.
In dollar terms China’s exports fell
25.4 per cent in February from a year
earlier, the worst one-month decline
since early 2009 and down from an 11.2
per cent drop in January. Imports fell
13.8 per cent, trimming losses after an
18.8 per cent fall in January.
The IMF is growing increasingly con-
cerned about the state of the global
economy because of what it sees as signs
of a further slowdown. It has said it is
likely to lower its 3.4 per cent growth
forecast for this year when it issues its
next round of predictions in April.
It is not alone. The OECD yesterday
said that leading indicators pointed to
easing growth in the UK, US, Canada,
Germany and Japan.
China’s economy has also shown signs
of slowing further this year after grow-
ing at its slowest pace in a quarter cen-
tury in 2015. At the opening of an annual
parliament meeting last Saturday, Pre-
mier Li Keqiang recommitted to a target
of 6.5 per cent average growth over the
next five years, a goal that many econo-
mists believe is unrealistic.
However, some observers have begun
to push back against the gloomy prog-
nostications for this year.
Economists at the Washington-based
Peterson Institute for International Eco-
nomics, led by former Bank of England
policymaker Adam Posen and the IMF’s
previous chief economist Olivier Blan-
chard, argued yesterday for a “reality
check”.
“The probability of another 2008
[financial crisis] is inconceivable,” Mr
Blanchard said.
But in his speech Mr Lipton argued
that the global economy was at a point
where a new downturn risked become a
self-fulfilling reality if the world failed to
act to boost demand.
Of particular concern, he said, was the
perception in financial markets “that
policymakers in many economies have
run out of ammunition or lost the
resolve to deploy it”.

Alcohol survey Court ruling

UK binge drinking shows no sign of drying up Poe cleared to run for Philippines presidency
MAX SEDDON
Britain’s fondness for binge drinking
shows no sign of abating, with more
than 2.5m people drinking more in one
day than the 14 units recommended
per week.
Young drinkers lead the way, with 17 per
cent of 16 to 24-year-olds exceeding the
limit, equivalent to six pints of 4 per
cent alcohol beer. A further 45 per cent
of all drinkers exceeded a third of the
limit — two pints of beer or two glasses
of wine — on their heaviest drinking day
of the week.
The data were compiled by the Office
of National Statistics in a survey that
found 58 per cent of Britons admitted to
drinking in the past week. Less than half
of young people reported drinking at all
in the past week, compared with 66 per
cent of those aged 45 to 64.
That may be because they are strug-
gling to afford it. People with incomes of
more than £40,000 a year were more
than twice as likely to drink five times or
more a week than those earning less
than £10,000.
Disparities among genders are likely
to play a part: women were less likely to
drink overall, but made up 67 per cent of
drinkers in the lowest-income group,
whereas men made up 77 per cent of the
high-earning drinkers. Young people,
who drink less as a whole, are also
under-represented in the higher-
income brackets.
Drinkers’ frequency also affected
their choice of tipple. Heavy drinkers
favoured six or more pints down the
pub, whereas the more restrained were
fonder of wine, making it the most pop-
ular drink overall.
The popularity of wine in the UK is in
part due to its status as the world’s larg-
est export market for champagne,
which it has held since 1996. Imports
went up 4.5 per cent year on year,
according to the Champagne Bureau in
separate statistics released yesterday,
three times the global growth rate.
The Bacardi Breezer and its ilk,
however, look to be on the way out, with
less than 1 per cent of people saying they
drank alcopops.
Britain’s ethnic diversity may begin to
snap the trend. London was the only
area where more than a quarter of
respondents said they were teetotal — a
result probably due to its high popula-
tion of Asian and Asian British people,
70 per cent of whom do not drink.
The capital also had the lowest rate of
people reporting drinking in the past
week — 51 per cent, against 62 per cent in
the south-west and south-east of Eng-
land. Wales and Scotland led the way in
drinking more than the weekly limit in a
day,with14and13percentrespectively.
The charity Alcohol Concern reiter-
ated its call for mandatory health warn-
ings in response to the data. “Alcohol
continues to be the leading risk factor
for deaths among both men and women
aged 15 to 49 and is linked to over 60
medical conditions including cancer,
diabetes and high blood pressure,” said
Jackie Ballard, chief executive.
AVANTIKA CHILKOTI
Grace Poe, the frontrunner in May’s
closely fought Philippines presidential
election, is eligible to run in the contest,
the country’s highest court has ruled,
following a series of attempts to bar her
from the race.
The Supreme Court yesterday decided
in favour of Ms Poe, the adopted daugh-
ter of one of the country’s best-loved
film stars, with nine justices voting for
and six against.
The ruling overturns a decision by the
election commission in December to
disqualify the fledgling politician fol-
lowing questions around nationality
and residency requirements.
Critics say that as a foundling, Ms
Poe’s true nationality is unknown. A
previous declaration when she ran for
senator in 2013 suggests Ms Poe will
have been a Philippine resident for only
nine-and-a-half years when the country
goes to the polls, falling short of the
10-years requirement.
“This decision is a victory for our
democracy because now our voters will
truly have a fair election,” said Rex
Gatchalian, spokesman for Ms Poe and
the mayor of Valenzuela, north Manila.
In one of the Philippines’ typically col-
ourful contests, Ms Poe is set to go head-
to-head against Mar Roxas, grandson of
Critics say that,
as a foundling,
frontrunner
Grace Poe’s
true nationality
is unknown
a former president; Jejomar Binay, vice-
president; Rodrigo Duterte, the crime-
busting mayor of Davao nicknamed
“Dirty Harry”; and senator Miriam San-
tiago, who is languishing in the polls.
President Benigno Aquino, who has
led the country through a period of
impressive growth, is barred from run-
ning for a second term.
Though Ms Poe has continued to
campaign across the country despite
attempts to disqualify her, the first-time
senator has seen her popularity ratings
tumble in recent months. The Supreme
Court decision is expected to provide a
big fillip to her ratings.
“With this decision, we also expect a
major bump in her numbers in the com-
ing days,” Mr Gatchalian said. “This
uncertainty was always a consideration
for many voters.”
The latest surveys by Pulse Asia, con-
ducted in February, show Ms Poe cling-
ing to the top spot with 26 per cent of
voter support, compared with 30 per
cent in January, while Mr Binay is sec-
ond with 25 per cent.
The court decision can be appealed by
Ms Poe’s opponents and the election
commission, according to Bloomberg.
The long-running debate over Ms
Poe’s citizenship echoes a similar con-
flict that marred a presidential bid by
her father, Fernando Poe Jr, who died in
2004, months after he lost to Gloria
Arroyo in the presidential election.
Wednesday 9 March 2016 ★ † FINANCIAL TIMES 5

INTERNATIONAL

Trump takes potshots at US corporate targets

Republican frontrunner has decried a range of businesses for moving activities overseas, but are his criticisms valid?
DEMETRI SEVASTOPULO AND FT
REPORTERS
Donald Trump used to love Apple prod-
ucts, Oreo cookies, and Carrier air-con-
ditioners. But as the New York property
developer has made the transition from
billionaire businessman to frontrunner
for the Republican presidential nomina-
tion, he has made some of those same
companies the target of his “Make
America Great Again” campaign.
While Mr Trump plans to build a wall
along the US-Mexico border to keep out
illegal immigrants, he has also vowed to
target US companies that move manu-
facturing overseas — whether Apple in
China or Carrier and Mondelez, the
Oreo-maker, in Mexico — via a combi-
nation of tariffs and the presidential
bully pulpit.
He has singled out a number of Amer-
ican companies on the campaign trail.
But one of his favourite targets is
Komatsu, the Japanese construction
and mining equipment manufacturer
that competes with Caterpillar in the US
and around the world.
From Iowa to Florida, Mr Trump has
bashed the company, saying a weaker
yen — which he blames on Japan’s mon-
etary policy — has forced a friend of his
to buy Komatsu instead of Caterpillar.
But as with many of Mr Trump’s state-
ments during the race, it raises more
questions than it answers. The Japanese
company actually manufactures con-
struction and mining equipment at
three factories in the US where it
employs several thousand employees.
And while Mr Trump asserts that he
would help companies such as Caterpil-
lar — which he wants to use to build the
wall — the head of the company has crit-
icised some of his policies. In his capac-
ity as the new head of the Business
Roundtable, an association of US chief
executives, Doug Oberhelman, Caterpil-
lar chief executive, has said that Mr
Trump’s threats to impose tariffs on US
companies that include Ford, would be
“very dangerous” since US multination-
als depend on open markets.
“We’re 5 per cent of the world popula-
tion. 95 per cent of our potential cus-
tomers are elsewhere. We’ve got to learn
and figure out how to deal with that,” Mr
Oberhelman.
Apple
Back in the spring of 2013, Donald
Trump’s biggest problem with Apple
was the size of its iPhones.
“I have a lot of Apple stock — and I
miss Steve Jobs,” he said in a Facebook
post. “Tim Cook must immediately
increase the size of the screen on the
iPhone,” he urged, or Apple would “lose
a lot of business” to Samsung’s larger
smartphones.
Mr Cook, Apple’s chief executive,
delivered a bigger screen in late 2014,
unlocking huge new growth for the
iPhone. But now Apple is in Mr Trump’s
sights again. He said in January he
would “get Apple to start building their
damn computers and things in this
country instead of in other countries”.
Last month, he called for a boycott of
Apple products until it complied with a
judicial order to help investigators
Companies in line of fire
Hands up: break into the iPhone used by Syed
Supporters of Rizwan Farook before he killed 14 peo-
Donald Trump ple in California in December.
photograph him Apple brought some manufacturing
at a rally on the back from China in 2013 with the high-
campaign trail priced Mac Pro, but it has struggled with
Christopher Furlong/Getty
subsequent efforts. Mr Cook told 60
Minutes, a news television programme,
in December that it was not wages but
skills that kept most of Apple’s manu-
facturing outside the US.
“China put an enormous focus on
manufacturing,” Mr Cook said, as its
schools prioritised “vocational” skills.
“You can take every tool and die maker
in the United States and probably put
them in a room that we’re currently sit-
ting in. In China, you would have to have
multiple football fields.”
Mondelez International
“Oreos, I love them, but I’ll never eat
them again.”
Mondelez International was one of
the first companies that Mr Trump lam-
D basted after launching his campaign,
accusing it at a rally last summer of
moving production overseas at the
expense of US jobs.
US election 2016 Mondelez, which makes Oreos,
The latest news, pointed out the errors in his claims —
analysis, video that its Chicago bakery was closing, it
and multimedia
was instead building a plant in Salinas,
ft.com/uselection Mexico, thus implying the end of Oreo
production in the US. Mondelez clari-
fied it was shifting nine production lines
to an existing Mexican plant it is
upgrading, which would result in the
loss of 600 jobs. It added that the Chi-
cago bakery would remain one of its
largest production sites in the US in
terms of headcount, and said Oreos
would still be made in several US plants.
Irene Rosenfeld, Mondelez chief exec-
utive, said: “My most sane message to
Mr Trump is to get your facts straight.”
Mondelez also pointed out that he has
featured in an Oreos commercial.
And not long after he hit out at Mon-
delez, comedian Stephen Colbert fea-
tured Oreos in a skit on The Late Show,
binge-eating the cookies as he mocked
the businessman. The segment has had
more than 3m hits on YouTube.
Carrier
The decision by Carrier, part of United
Technologies, to move 1,400 jobs mak-
ing air conditioning equipment from
Indianapolis to Monterrey, Mexico,
would normally have attracted little
attention. But one of the workers cap-
tured on video the moment staff were
told about the move.
The video — in which workers yelled
obscenities at an impassive manager —
has racked up 3.5m online views in less
than a month and drawn comments
from Mr Trump. “We cannot allow this
On Carrier to keep happening!” the candidate
wrote on Facebook. “It WILL NOT hap-
‘We cannot pen under my watch!”
keep Carrier responded that the closure
had been a “difficult decision”, reached
allowing following a “thorough evaluation” of its
[jobs to manufacturing operations.
However, if Carrier sought to move
move to the jobs while he was president, Mr
Mexico]. Trump has said, he would tell the com-
pany it would face a 35 per cent tax for
It WILL bringing units manufactured in Mexico
NOT into the US.
The controversy has had some imme-
happen diate effects. Carrier and UTC have had
under my to undertake to hand back to Indiana
the $1.2m tax abatement awarded as an
watch!’ incentive to keep work in the state.
Komatsu
Mr Trump likes to say that he has a
friend who “always orders Caterpillar,
and recently he ordered Komatsu trac-
tors from Japan because they’ve cut the
yen . . . to such an extent that it was
virtually impossible for Caterpillar to
compete”.
One problem: any “tractors” bought
by Mr Trump’s friend may well have
been made in America. Komatsu runs
large factories in Chattanooga, Tennes-
see; Peoria, Illinois; and Newberry,
South Carolina. When asked for more
On Apple
‘[I will get them] to
start building their
damn computers
and things in this
country instead of
in other countries’
On Mondelez
‘Oreos,
I love
them,
but I’ll
never
eat them
again’
details about what his friend was buy-
ing, Hope Hicks, spokeswoman for Mr
Trump, said: “Pass.”
Komatsu declined to comment on
anything relating to Mr Trump. How-
ever, it confirmed its basic policy is to
make some crucial components — such
as pumps for hydraulic shovels — in
Japan, while assembly takes place close
to the end market. That means the yen’s
decline from Y80 to the dollar in 2012 to
Y114 today has helped Komatsu,
although economists doubt the yen is
greatly undervalued. William Cline of
the Peterson Institute for International
Economics puts its fair value at Y108.
But the company also exports prod-
ucts from the US, including mining
equipment to countries such as Aus-
tralia, which complicates any discus-
sions about the relative impact of the
yen on US jobs.
Komatsu says its US sales peaked in
2005, fell off heavily after the Lehman
shock, and have since recovered in line
with competitors — showing more sensi-
tivity to US demand than to the yen. Yet
on top of a brutal slowdown in China,
where Komatsu’s monthly orders are
down 40-50 per cent on a year ago, the
company now finds itself cast as the vil-
lain in a new Pacific trade war.
Reporting by Tim Bradshaw, Lindsay
Whipp, Robert Wright and Robin Harding

Boxed in Clinton faces scrutiny as email scandal refuses to die Audit

ECB investigates two Greek

COURTNEY WEAVER — WASHINGTON
As Hillary Clinton turns her sights on a
probable election battle with Donald
Trump, the Democratic frontrunner
continues to be dogged by multiple
inquiries into the private email server
she set up at her home in Chappaqua,
New York.
Last week, the state department
released the final batch of 30,068 emails
that had been kept on Mrs Clinton’s
server in an effort to reaffirm her claim
that she did not mishandle confidential
information while secretary of state or
leave the US vulnerable to a security
breach.
The 52,000 pages of documents are a
window into the way Mrs Clinton con-
ducted business in one of the country’s
top offices, along with her relationship
with aides, friends and donors, and her
technological shortcomings. But overall
they leave more questions than
answers.
Did Mrs Clinton’s emails contain
classified information?
Of the thousands of emails, 22 have been
classified as “top secret”, 65 as “secret”,
and 2,028 as “confidential”. The 22 “top
secret” emails were not released, at the
behest of the Central Intelligence
Agency, while the remaining 2,093
secret and confidential emails have
been heavily redacted.
According to the Washington Post,
more than 100 of the emails that con-
tained classified information were sent
by Mrs Clinton herself using her private
server.
Mrs Clinton and aides have insisted
that any confidential information in the
emails was classified after the fact, and
has called on the state department to
release the 22 top secret ones, saying
that much of the information now
deemed classified was public informa-
tion that had been reported by US media
outlets. Mrs Clinton’s spokesman, Brian
Fallon, says the issue is not the mishan-
dling of classified information but
“overclassification run amok”.
What are the different inquiries
that Mrs Clinton is facing?
The discovery of Mrs Clinton’s private
server came out of an inquiry by the
House Select Committee on Benghazi
which had been investigating the death
of the US ambassador to Libya in a 2012
terrorist attack. As part of that inquiry,
Mrs Clinton faced 11 hours of congres-
sional questioning last autumn.
The Federal Bureau of Investigation is
conducting a probe that could be
If charges come, Mrs Clinton will probably have to quit race — Pete Marovich/Bloomberg
finished as soon as May, at which point
the US Department of Justice will decide
if there is a case to answer. Last week,
Bryan Pagliano, the Clinton aide who set
up the private server, was granted
immunity by the Department of Justice
so that he would co-operate with the
FBI’s criminal investigation after previ-
ously exercising his Fifth Amendment
rights against incriminating himself.
There is also an internal investigation
being conducted by the inspector-gen-
eral of the state department, one by the
state department’s bureau of diplomatic
security and one by the inspector-
general of the US Intelligence Commu-
nity, which is part of the Office of the
Director of National Intelligence.
What are the potential legal
ramifications?
A series of Freedom of Information Act
requests are weaving their way through
the US court system. In February a US
district judge ruled that state depart-
ment officials and aides to Mrs Clinton
should be questioned under oath about
whether Mrs Clinton’s use of a private
email server intentionally skirted open
record laws.
The ruling opens up the possibility
that top Clinton aides will be questioned
during the height of the presidential
campaign. The FBI investigation, mean-
while, is believed to be looking not just
at the use of an outside server but at the
question of whether classified and sensi-
tive information was mishandled.
For Mrs Clinton, the worst case sce-
nario would be if the FBI brought crimi-
nal charges, a move that would probably
force her to quit the race. So far, no evi-
dence that Mrs Clinton or aides shared
what they knew to be classified infor-
mation has been made public.
How could the controversy affect
Mrs Clinton’s candidacy in the
presidential election?
Bernie Sanders declared in the first
Democratic debate last year that the
country was sick of hearing about Mrs
Clinton’s “damn emails”. It was a gift for
Mrs Clinton, who has faced little ques-
tioning over the matter in the nomina-
tion battle. She is likely to face much
greater scrutiny in the general election.
After victories on Super Tuesday, Mr
Trump said he was looking forward to a
two-way contest with Mrs Clinton,
“assuming she’s allowed to run; assum-
ing she’s not arrested”.
Mrs Clinton has remained upbeat. “I
think we’re getting closer and closer to
wrapping this up,” she told the US TV
anchor John Dickerson on Sunday.
lenders over capital raisings
KERIN HOPE — ATHENS
Two of Greece’s biggest lenders are
being investigated by the eurozone’s
banking watchdog in connection with
last year’s €14.4bn recapitalisation of
the sector, which took place as a condi-
tion of the country’s latest bailout.
Piraeus Bank, Greece’s largest lender,
and Attica Bank, its fifth-largest, are
under scrutiny by the European Central
Bank’s Single Supervisory Mechanism.
The probe was launched after share-
holders in both banks privately voiced
concerns over possible irregularities in
the latest round of capital-raisings,
according to bankers involved in the
procedures. Two teams of investigators
from the SSM are due to arrive in Athens
this month.
Both banks could be forced to raise
additional capital to comply with ECB
requirements. Senior bankers involved
in the recapitalisations could also face
disciplinary action.
Following stress tests by the ECB and
Bank of Greece, the five biggest lenders
last November undertook to raise a total
of €7bn through public offerings, while
the remaining €7.4bn was covered by
the Greek state’s bank rescue fund.
But while other banks’ offerings were
comfortably oversubscribed, Piraeus
and Attica struggled to meet targets of
€1.34bn and €750m, respectively.
Faced at the last minute with a short-
fall of €500m, Piraeus prevailed on two
rival Greek banks and a family-owned
conglomerate to help plug the gap,
according to several Athens bankers.
Several Piraeus borrowers also
chipped in by converting collateral on
their loans into equity, in return for a
writedown of the same loans on favour-
able terms, the same bankers said.
Piraeus said in a statement that the
SSM would conduct a “standard audit
procedure following a complaint
launched by a shareholder that partici-
pated in the share capital increase last
November”. It said the bank “of course
welcomes any regulatory scrutiny”.
Attica Bank could face questions over
whether it benefited from illegal state
aid after the Syriza-led government
pressured managers and directors of
two state-controlled companies to take
part in its capital-raising.
The Athens water company EYDAP
invested €20m, despite opposition from
senior managers at the utility. An
extraordinary assembly of shareholders
approved the EYDAP board’s decision.
The Athens International Airport
company invested €9.9m after a foreign
minority shareholder blocked a pro-
posal by the board to participate with
more than €30m from its cash reserves.
Three months later Attica has not
been able to close the offering, which is
still €68m short of the original target.
An Attica official said the SSM would
examine the capital raising as part of an
audit of the bank. The ECB and the Bank
of Greece both declined to comment.
Additional reporting by Claire Jones
6 ★ FINANCIAL TIMES Wednesday 9 March 2016

PARIS FASHION WEEK

Egalité in exclusivity
Valentino
FASHION
Jo
Ellison
Pierpaolo Piccioli and
Maria Grazia Chiuri
loosen things up at the
house of romance
A word about the waist. For a few sea-
sons now, the waist has been an area of
fetish: belted high, just below the bust,
and carb-denyingly slender. It’s still
rather tiny — this is fashion — but lately
a number of houses have relaxed their
grip on the upper torso to allow for a bit
more freedom of movement. At Balen-
ciaga I was thrilled to see a shapely
waisted bandeau dress in black embroi-
dered velvet that neither clung nor
forced the body into a corset (as one sees
so often elsewhere). Instead of contour-
ing the stomach, it brushed against it
kindly, allowing for the fact that a
woman might want to sit down or
breathe of an evening out.
At Valentino, under the creative
supervision of Pierpaolo Piccioli and
Maria Grazia Chiuri, who have long
essayed a line in lean androgyny and an
almost prepubescent body type, the
waist was also looser to allow for greater
fluidity. The AW16 collection was
inspired by modern choreographers
Martha Graham and Merce Cunning-
ham, and the designers had melded “the
dry precision of sartorial discipline”
with “floral graciousness” to create a
collection in which nude silk jersey tops
and ballerina skirts danced with heavy
biker boots and more rigorous but light-
weight military-style coats. Silky
strappy tops were tied at the back like a
dancer’s leotard, while skinny polo-
necks in camel, flesh and grey calmed
embroideredchiffonsandvelvets.Jersey
dresses were more relaxed and drapey
(some loosely belted with ribbon just
above the hip); fine-pleat skirts brushed
the mid-calf. Some of the looks were
shiny and transparent, diamanté stud-
ded skirts seemed almost showerproof.
The last few looks were pure Valen-
tino confection; great clouds of fleshy,
Catwalking
nude tulle, some embroidered with
hearts and flowers and worn with a new
nude strappy “Rockstud” slipper, a
round-toed version of the house’s hit
shoe. Personally, I preferred the meatier
military looks in navy, worn with over-
sized shirts and purposeful cross-body
handbags. They added a shot of reality
to so much frothy, frilly romance. All in
all, it was a very satisfying pas de deux.
Chanel
Everyone had a front-
row seat at Chanel: this
is populism with a
polished accent
We live in a cultural land-
scape so coloured by populism
that he who speaks for “the peo-
ple” clamours louder than con-
sidered reason, regardless of
what he might say. In the US, the
Republican debates have
become so soured by point-
scoring that discussion of penis
size now counts as legitimate
political discourse. It’s as
depressing as it is dangerous.
Everyone needs “followers”,
and the fools are rushing in.
In fashion too, the conversa-
tion is torn between two
camps. In one are the brands
that have become obsessed with
the consumer, in the wearable
wardrobe, in readily available
product and high-tech produc-
tion. “Give them what they want.”
Other fashion houses are shrink-
ing away from the mass-produced,
retail-based culture, calling on the
language of the artisan and the art
of “slow” fashion. On Monday,
Saint Laurent presented a
couture-style show to a tiny
number of people behind shut-
tered doors (see below). At a time
when many brands are desperately
trying to broaden their reach, the
Kering-owned house reverted to an
ancient 1970s-style of presenta-
tion. Ready-to-buy? Not unless
youhaveHediSlimaneonspeeddial.
What, then, to make of the Chanel
prêt-à-porter invitation that announced
“front-row only” on hand-drawn cartes?
As at Saint Laurent, the set at the Grand
Palais was arranged with row upon row
of elegant high-backed chairs — no
benches here — in a half-mile grid of
seating that allowed everyone the best
view. Unlike at Saint Laurent, the space
accommodated thousands of clients was finished with denim trim. Strings of hats because no one does them any
and critics. “Everyone always wants a paste pearl baubles spilled around the more,” explained the designer. (Lest we
front-row seat. And very often they neck alongside the floatiest multi- forget, this multi-billion-pound fashion
complain that they can’t see the detail. I flecked black skirt; a shopper embla- house is built on the foundations of a
wanted everyone to be able to see the zoned with images of Lagerfeld’s cat milliner’s shop on rue Cambon.)
clothes, and the work that goes into Choupette was paired with silks printed Of the details Lagerfeld was so anx-
them,” said Karl Lagerfeld backstage. with Coco Chanel’s trophy camellias. ious for us to see, there were many: the
The atmosphere of exclusivity was a This wasn’t “high-low” fashion; the pencil-case clutches hung from small,
genius stroke, and among the reasons looks were emphatically bourgeois and fabric-covered bags; the leather chin
Chanel remains one of the biggest and expensive; neat skirt lengths skimmed straps that fastened with a flower clasp;
most powerful brands around. It has below the knee, cuts were chic, arms a quilted leather in palest blush; the hor-
straddled the two camps as neatly as its were covered, oftentimes in wonderful izontal laces of a tiered off-the-shoulder
interlocking Cs. Similarly, the collection leather gauntlets. For a winter collec- evening dress; or the filmy white dress
entwined rarefied and relatable materi- tion it was unusually pink and pretty. embroidered with the Chanel logo that
als: here a button-through sweatshirt Lagerfeld paired each look with a hat: an followed it; the flat knee boots, severed
was thrown around the shoulders of a assembly of flat-top bowlers (a little like in two and laced together at the ankle.
monochrome zigzag sequin dress; raw- Coco’s favoured boater but with a closer, There were 93 looks to feast on. No
edged denim skirts were worn with thicker brim) in rose-pink leather, detail overlooked. Chanel populism —
Chanel bouclés; a pinky tweed jacket denim, tweed and grey. “I wanted to do with an extra layer of polish.

Saint Laurent
The leanest, meanest show
in town. Hedi Slimane
presents Saint Laurent
— couture-style
Hedi Slimane presented part one of his
AW16 collection last month in LA. The
“Palladium” collection, staged before a
coterie of California actors, musicians
and pop culture demigods (Justin
Bieber rolled up on a skateboard, Lady
Gaga led the applause), combined men’s
and women’s clothing and drew on
1970s bohemia and the counterculture
spirit of hedonism that still intoxicates
West Coast hipsters today.
The clothes have been available to see
again in Paris. I visited the showroom to
see it all in more detail, and soon was
pretty intoxicated myself; lush, three-
quarter-length culottes and skirts in
leathers and heavy black velvet, all
embroidered with silver stars; a great
long suede trenchcoat; sequinned
tuxedo jackets spun with celestial
details; a houndstooth blazer in browns.
The dresses, which fell below the knee
and ballooned on the sleeve, were worn
with vast wide belts and sat high at the
neck. They were the most deliciously
wearable dresses I’ve seen this season —
long, languid, flattering. That they had
been designed by Hedi Slimane, master
of the teeny, tiny, seemed impossible. It
was all uncommonly practical.
“La Collection de Paris”, presented on
Monday to a few dozen people in the
brightly lit salons of rue de l’Université’s
Hôtel de Sénecterre (the 17th-century
mansion Slimane has been restoring
since 2013), was as rarefied and
exclusive as Palladium was populist.
Was this even part two, or the flipside of
Slimane’s creative brain?
It was shown as a couture collection,
something Slimane has been working
towards, and found full expression here.
The atmosphere was devotional. Phones
were switched to silent, and the only
sounds that accompanied the show were
the slow tread of the model’s footfall
teetering down stairwells and through
marble-tiled rooms in Slimane’s sky-
high Paris pumps, and the clipped tones
of Bénédicte de Ginestous. The “voice”
of Yves Saint Laurent couture between
1977 and 2002, when the couture house
closed, her clipped intonation
announced each look by its number and
recalled a lost era of fashion formality.
The looks were severe, skin-tight and
angular, and each model — hair slicked
back, lips glossed in Guy Bourdin-
crimson and wearing sheer black tights
— seemed to look longer and skinnier
than the one before.
Slimane’s exploration of the 1980s
returned to some of his favourite
tropes: skirts barely grazed the pubis,
belts encircled waists no bigger than a
handspan, Le Smoking trouser legs
were liquorice-stick slim. But in the
hands of the couturier the looks were
mind-boggling; crocodile-skin kimono
tops shone with attitude, embroidered
bustier dresses and tops had great
blousey ties at the shoulder; a black
leather dress, with a skein of paillette,
rose at the shoulders, like dragon wings.
The look was raw and unapologetic,
but here was craftsmanship to silence
those critics who have nagged on about
the skill in Slimane’s design. With no
soundtrack, no little cuties sitting cross-
legged on the floor, no dimly lit catwalk
to hide behind, these clothes had to
speak for themselves and, like them or
not, they spoke volumes.
The show closed with a red fur cape.
From the back it looked like a heart. For
those searching for clues as to Slimane’s
future with Saint Laurent, this was a
juicy one. Was it a love letter? A fond
farewell? The symbol of ongoing
attachment? Or a token of affection? As
of this writing, we still don’t know.
Slimane dedicated his debut couture
show to the staff — both in his studio in
LA and his ateliers in Paris and Angers
— and ducked out of the spotlight, as
per usual. His boss, François-Henri
Pinault, watched the show from a seat
upstairs. According to its annual report
released last month, Kering’s most
controversial creative helped Saint
Laurent deliver another 26 per cent
growth in sales revenues last year: a
new couture category at the house
could push the profits up further. Parts
one and two are complete. Will there be
a part three? We wait and see.
Wednesday 9 March 2016
President Jacob Zuma’s ties with members of the powerful Gupta family, whose business interests
include mining and media, are coming under fire, deepening divisions within the ruling ANC party.
A
s South Africa grapples
with arguably its deepest
economic crisis of the dem-
ocratic era, two names have
become a magnet for anger
over the direction the country is taking.
One is that of Jacob Zuma, the presi-
dent whose seven years in office have
been characterised by scandals against a
backdrop of tepid growth and mounting
concerns about corruption and crony-
ism. The other name is Gupta, a family
with close ties to Mr Zuma, who run a
multibillion-rand business empire
stretching from mining to IT and media.
In many South Africans’ minds the two
have become inextricably linked.
To detractors, theirs is a relationship
that has seen the Guptas, who are origi-
nally from the Indian state of Uttar
Pradesh, hold undue sway over govern-
ment decisions in Africa’s most industr-
ialised nation, amid allegations that
their political connections have allowed
their business to profit from favouritism
in state-related contracts.
The claim is that under Mr Zuma’s
watch, predatory networks of patronage
and cronyism are effectively looting the
state, with the phrase “state capture”
now part of the South African lexicon.
And as scrutiny on their interests and
role mounts, the Guptas are increasingly
portrayed as a symbol of the malaise
afflicting the nation.
They have been accused of overstep-
ping the mark in a range of areas, from
wielding influence over state officials
and appointments, to using their con-
‘If [the ANC] is itself in a bad
shape . . . then there are no
checks and balances. Before
you know it there’s a total
culture of patronage’
nections to win government contracts.
The allegations — none of which is
proven — have proliferated amid battles
for power inside the faction-plagued
ruling African National Congress and
the government.
“[The Guptas’] businesses are quite
opaque and difficult to pin down,” says
David Lewis, head of Corruption Watch,
a civil society group. “But [their] sole
competitive advantage seems to be their
closeness to important political lead-
ers . . . notably President Zuma and his
family.”
In separate interviews with the Finan-
cial Times, Mr Zuma and Ajay Gupta
defended their relationship, denying
the family had any influence over poli-
tics or had benefited unduly from their
relations.
“We are business people and we have
nothing to do with politics,” says Mr
Gupta, in a rare interview. The eldest of
three brothers who run the family’s
empire, he says only 1 per cent of the
more than R5bn ($325m) annual reve-
nue generated from their businesses is
derived from government contracts.
“It’s rubbish, completely rubbish,”
says Mr Gupta, in response to questions
about whether his family has influenced
ministerial appointments. “These are
all rumours and you cannot give a reply
to the rumours. You cannot justify it.”
Ministerial move
Since Mr Zuma’s decision in December
to replace his finance minister,
Nhlanhla Nene, with a little-known
backbencher, David van Rooyen, the
scrutiny on the Guptas’ role has intensi-
fied. The debacle — Mr Zuma was forced
to replace two finance ministers in four
days — triggered one of the deepest
political and economic crises in two dec-
ades, with speculation that Mr Zuma
and his allies wanted a more pliable
hand managing the state’s purse strings.
Mr Nene is said to have resisted Mr
Zuma’s plans for the government to
build nuclear plants that many believe
the country cannot afford, as well as
attempts by the board of the lossmaking
state carrier, South African Airways, to
renegotiate a deal with Airbus.
Floyd Shivambu, deputy leader of the
Economic Freedom Fighters, a breaka-
way group from the ANC, wrote at the
time that Mr Nene “was removed to
open space for the Gupta-led syndicate
to loot state resources for private
enrichment”.
It is not, however, just the opposition
that has raised questions about the
Gupta’s influence. A former senior state
official confirmed that, in 2011, the
country’s three chiefs of intelligence
agreed that the family should be investi-
gated as reports of their influence sur-
faced. But the security ministry
quashed the idea within 24 hours, the
person says. “If there’s state capture, it
goes to the heart of national security,”
the former official says. All three intelli-
gence chiefs later resigned.
Two years on from those events the
intelligence bosses’ fears seemed to be
★ FINANCIAL TIMES
FT BIG READ. SOUTH AFRICA
By Andrew England
The power of the
family business
Interests The Gupta family’s two main
Deep investment vehicles are Oakbay
Investments and Sahara Holdings.
corporate Oakbay Investments’ holdings include:
ties Mining A 60 per cent stake in JIC
Mining Services and smaller
shareholdings in Thembekile Mining,
Kebrastyle, Extriforce and Leswene
Mining and Exploration. Shiva
Uranium is owned by Oakbay
Resources & Energy, a
company listed on the
Johannesburg Stock
Exchange and controlled by
the Guptas.
Engineering Scipio Technologies,
which makes armoured personnel
carriers; VR Laser Services, a steel
manufacturer that also produces
armoured vehicles and trains.
Media Oakbay has a two-thirds stake
in TNA Media, the publisher of The
New Age newspaper (top left),
and is the majority shareholder
in Infinity Media, which
operates the ANN7 News
Channel (bottom left).
Real estate and leisure It has a
stake in Clifftop Lodge in
Welgevonden, a conservation area
in Limpopo (left); and a “number of
prime real estate holdings” in Durban,
Cape Town and other locations.
Sahara Holdings’ main interests
include Sahara Computers, its IT
group, which sponsors Durban’s
Kingsmead cricket ground (left).
Duduzane Zuma, President
Jacob Zuma’s son, has direct
or indirect holdings in several
Gupta-controlled entities.
These include Infinity Media,
the holding company for ANN7
(9.8 per cent), Sahara Holdings (5
per cent) and Westdawn Investments
(10 per cent), another Oakbay
investment vehicle which owns a stake
in VR Laser. Tegeta Exploration &
Resources, a mining firm, is 34.5 per
cent owned by the Guptas’
Oakbay Investments and 28.5
per cent owned by Duduzane’s
Mabengela Investments.
Mabengela is 45 per cent
owned by Duduzane and 25
per cent owned by Rajesh
Gupta. Duduzane and Rajesh
Gupta are listed as directors of
Islandsite 255, which has a 26 per cent
stake in Shiva Uranium.
Sources: Oakbay; company websites
borne out when a chartered aircraft car-
rying passengers from India to a Gupta
family wedding landed at Waterkloof
Air Force base in April 2013, prompting
a national scandal and raising the pro-
file of the family. A government inquiry
later said the affair was deemed a
“national security incident”, as the air
base was exclusively for the use of mili-
tary flights and heads of state. It con-
cluded that the “activities of some of the
persons involved were driven by the
undesirable practice of undue influence
and abuse of higher office”.
It reported that officials invoked the
president’s name, either directly or
referring to “Number One”, as pressure
was applied for the aircraft to be allowed
to use the air base.
A meeting of senior ANC officials in
January said the party needed to “deal
decisively with the threat of state cap-
ture”, a phenomenon where state con-
tracts are divvied up among a cabal of
politicians and businessmen.
Zweli Mkhize, a senior ANC official,
says the message was not aimed at one
group or individual, but rather as a
warning to “elected leaders to be con-
scious not to succumb to any demands
from any interest groups. I wouldn’t
personalise it on the Guptas, I would say
it’s general,” he says.
Mr Zuma insists there was no outside
influence on his decision to replace
Mr Nene with Mr Van Rooyen — a
move he reversed four days later
under ANC pressure as he reap-
pointed Pravin Gordhan as
finance minister. He defends Mr
Van Rooyen’s appointment as a
“well thought out decision”.
He is equally categorical in his
defence of his relationship with
the Guptas and their involve-
ment with his son Duduzane who
has business links to the family.
“Is there anything wrong if Dudu-
zane as a son of Jacob Zuma, in his
own right, joins companies or forms
companies with other people. What is
the problem?”
Sticking together
The Guptas trace their roots in South
Africa to 1993, when Atul Gupta, one of
the three brothers, first visited the
country. He decided to return to open a
shoe shop in Johannesburg. His broth-
ers, Rajesh and Ajay, followed and in
1997 the family — which already had
business interests in India — established
Sahara Computers.
It has since expanded its interests
across mining, property and the media,
with the launch of the pro-government
New Age newspaper in 2010 and a TV
news channel.
Ajay Gupta puts the success down to
“hardworking people” but questions
remain about where the family got the
money to expand its business empire.
Its two main holding companies, Sahara
Holdings and Oakbay Investments, gen-
erated revenue of R1.35bn and R3.6bn
respectively in the 12 months to the end
of February 2015, the Guptas say.
Main picture: Duduzane Zuma, once a trainee at
Atul Gupta, Sahara Computers, has direct or indi-
right, at an ANC rect holdings in several Gupta-control-
conference. Top led entities. These include Infinity
right, from left: Media, the holding company for the TV
Ajay Gupta, his channel ANN7, and Tegeta Exploration
brother Atul and & Resources, a mining company.
Duduzane Zuma “We realised we had a good synergy
at a briefing in and he [Duduzane] is a young man, he
Johannesburg; really worked . . . so . . . we said, ‘OK,
President Jacob let’s stick together,” Mr Gupta says.
Zuma and Atul He adds that the family “maybe” pro-
at an event in vided the younger Mr Zuma “a very
Port Elizabeth. small loan” in the form of vendor
Bottom: financing, as is common in South Africa
Nhlanhla Nene, when businesses look to bring in black
the former partners to meet targets on black partic-
finance minister ipation in the economy.
Simphiwe Nkwali/Sunday
Times/Gallo Images/Getty
Tegeta — 34.5 per cent owned by Oak-
Images; Gallo Images/City bay Investments and 28.5 per cent by
Press/Muntu Vilakazi Duduzane’s Mabengela Investments —
has been at the centre of allegations that
mining authorities pushed Glencore,
the Swiss group, into selling its lossmak-
ing Optimum coal mine to the company
last year. One person familiar with the
deal says the mining authorities used
the threat of regulatory action to pres-
sure Glencore, adding: “It was an inter-
ventionist strategy with a credible
threat from the authorities.”
The mineral resources department
and Oakbay deny the allegations. The
company says it sought, and failed, to
buy two other mines. “Despite our
perceived influence and power,
we got knocked out in the first
round in two of those [bids],” says
Nazeem Howa, chief executive of
Oakbay Investments.
The Guptas have enjoyed rela-
tions with politicians for many
years. In 2002, two years after
Ajay Gupta moved perma-
nently to South Africa, he was
appointed to the board of trus-
tees of Brand SA, South Africa’s
international promotion agency,
a position he retains.
Mr Gupta dismisses local media
reports suggesting he had links to the
mining minister or any influence in Mr
Van Rooyen’s four-day stint as finance
minister. “Maybe I saw him at one or
two places, but I don’t have any relation-
ship at all,” Mr Gupta says of Mr Van
Rooyen.
The family also denied a claim, made
to the FT, that weeks before Mr Van
Rooyen’s appointment they had asked
Mcebisi Jonas, deputy finance minister,
if he was interested in the Treasury’s top
post at a meeting at the Gupta home.
7
Treasury turmoil Investor concern over
governance rose after Nhlanhla Nene’s
sacking as finance minister last year
Power family The Guptas have stakes
in many sectors but are pilloried in local
media for their links to government
Optimum deal The sale of a mine to a
group in which Duduzane Zuma and the
Guptas hold stakes alarmed analysts
“There have been an extraordinary
number of allegations around the Gupta
family in recent weeks, several of which
have involved the finance ministry,” a
family spokesman says. “To be abso-
lutely clear: there was no meeting at all.”
The Treasury and Mr Jonas declined
to comment, neither denying nor con-
firming the existence of the meeting.
Making friends
The family first met the president, who
has been a guest at their Johannesburg
home, in the early 2000s. One of his
daughters was a director at Sahara Com-
puters, and one of his wives worked at
the Guptas’ JIC Mining Services.
“You are on the same level [you get
on] and it [the friendship] definitely
goes a little bit better than you
expected,” Mr Gupta says of his rela-
tions with Mr Zuma. “This has nothing
to do with his post . . . He is one of the
most regarded persons in the family.”
Other senior officials appear less
enamoured of the family than Mr Zuma.
Last month, Mr Gordhan, the finance
minister, chose not to take part in a
breakfast with business leaders under
the banner of the Guptas’ New Age
media group. His decision was inter-
preted as a pointed message that he did
not want to be associated with the fam-
ily’s interests.
When the meeting did finally go
ahead, without the New Age involve-
ment, Mr Gordhan warned: “There are
many parts of transacting between gov-
ernment and business which have gone
seriously wrong and if we don’t stop it,
we’re going to become a kleptocracy.”
While the focus has been on the Gup-
tas, commentators say that should not
deflect from the depth of the cronyism
and corruption blighting South Africa.
Kgalema Motlanthe, who served as
Mr Zuma’s deputy from 2009 to 2014,
says the ANC should put its foot down.
But the omens are not good.
“If it [the ANC] is itself in a bad shape,
or weak, then there are no checks and
balances. That’s how one thing just leads
to another and before you know it
there’s a total culture of patronage and
corruption,” Mr Motlanthe says.
“Depending on where you stand and
how you view the . . . gravity of the situ-
ation, then I would say we are drifting in
that direction, pretty rapidly.”
8 ★
WEDNESDAY 9 MARCH 2016
Europe’s last chance to
resolve the migrant crisis
The pact with Erdogan’s Turkey is disagreeable but unavoidable
Europe has reached a decisive moment
in the migrant crisis. Last year, 1m peo-
ple travelled to the continent from the
Middle East and beyond, many seeking
shelter from the Syrian civil war. With
that conflict still unresolved, it is possi-
ble that at least another million will fol-
low in the course of 2016. To restrict
these flows, the EU is looking to Turkey
to act as a bulwark on one of the main
migration routes, holding back future
waves of refugees. This has led the bloc
to contemplate a pact with Ankara that
is imperfect but unavoidable.
If the EU is to have any chance of tak-
ing control of this crisis, it needs to stop
about 2,000 refugees travelling daily
by sea from Turkey to Greece and then
towards Europe. Under the proposed
agreement, new migrants arriving on
Greek territory will be returned to Tur-
key, whether or not they are genuine
asylum seekers.
In exchange, the EU is offering the
Turks a list of sweeteners, including
€6bn to shelter the refugees on its terri-
tory. The bloc has guaranteed that, for
every migrant sent back to Turkey, one
will be taken from the Turkish refugee
camps and resettled in Europe.
The pact needs to be finalised by EU
leaders next week. Much about it is
unpalatable. The plan for the mass
expulsion of refugees from Greece to
Turkey is almost certainly illegal, as
the UN has been quick to point out. It is
also disturbing that, in its desperation
to strike an accord, the EU is abandon-
ing constraints that have framed its
relations with Ankara for a decade.
The EU is granting 75m Turks auto-
matic access to the Schengen passport-
free zone and is considering lifting
some bars on aspects of Turkey’s EU
accession talks. Brussels is offering
these prizes to President Recep Tayyip
Erdogan at the very moment he is
clamping down on political, judicial
and media freedoms at home.
More heat than light in
the US fracking debate
Democrats Clinton and Sanders are unrealistic about energy policy
Fracking is an ugly term for a useful
activity. Advances in hydraulic fractur-
ing, to give the technique its proper
name, sparked the US oil and gas boom
of the past decade, bringing cheaper
fuel, tens of thousands of well-paid
jobs, and even a reduction in carbon
dioxide emissions thanks to the switch
from coal to gas for power generation.
So it is troubling that the two con-
tenders for the Democratic party’s
nomination for president have been
competing over which of them is more
eager to bring fracking to an end.
Speaking in the candidates’ debate
on Sunday evening, Hillary Clinton
sketched out new requirements to be
imposed on companies seeking to use
hydraulic fracturing. Once those condi-
tions were in place, she suggested, “I do
not think there will be many places in
America where fracking will continue.”
Mr Sanders was quick to depict that as
craven equivocation. “My answer is a
lot shorter,” he said. “No, I do not sup-
port fracking.”
Stopping fracking would be a great
plan for rescuing Saudi Arabia. For the
US, though, it would be disastrous.
If elected, Mrs Clinton or Mr Sanders
would not be able to ban hydraulic
fracturing overnight. Oil and gas regu-
lation in the US is mostly handled by
the states, and attempts to extend fed-
eral authority would face challenges in
the courts. The candidates’ comments
are nevertheless concerning, because
they reflect a denial of the realities of
US energy production.
More than half of all the oil and gas
extracted in the US comes from wells in
shale and similar rocks, which need to
be fracked to be brought into produc-
tion. Banning fracking would devastate
the industry, send energy prices soar-
ing, and make the US a much larger
importer of both oil and gas.
Neither candidate offered any
worthwhile ideas about how to make
The proposal to resettle Syrians from
the Turkish refugee camps to the EU
presents a particular challenge for the
bloc’s governments. With public anxi-
ety over migration running high in all
member states, the EU’s current pro-
gramme has only resettled about 3,000
Syrians. The plan with Turkey would
see EU states required to take in tens, if
not hundreds, of thousands more.
Inevitably, many member states, nota-
bly Hungary and the UK, will refuse to
take part.
Europe’s heads of government have
some scope to fine-tune the deal. They
need to structure it to ensure that Tur-
key only receives cash if it keeps to its
promise to take back migrants from
Greece. But the EU has no choice but to
accept its central elements.
Turkey has already taken 2.5m refu-
gees from Syria, more than any other
neighbour. There is no way that
Ankara could sign a plan to take more
without a guarantee from EU govern-
ments that they, too, will shoulder the
human burden. The EU’s leaders must
also ponder what will happen if this
pact fails and the disorderly migration
from Turkey into Greece continues. As
Austria, Hungary and other states close
their southern borders, the near cer-
tainty is that Greece, an EU member,
will confront a humanitarian catastro-
phe. This would be a terrible stain on
Europe’s reputation.
The migrant crisis has presented the
EU with perhaps the greatest challenge
in its history. Regrettably, Europe’s
response has demonstrated a complete
absence of the solidarity and strategic
ambition that is demanded.
The bloc’s governments now have no
alternative but to enter into an alliance
with a Turkish president who holds
Europe’s values in contempt. The deal
on offer is disagreeable but it offers
Europe one last chance to regain the
initiative.
good the harm that a fracking ban
would do.
Mr Sanders tried some hand-waving
platitudes about wind and solar power,
ignoring the fact that until electric
vehicles take over there is no viable
substitute for oil as a transport fuel
and, until electricity storage becomes
much cheaper, gas is needed to back up
variable sources of power generation.
That the two leading candidates in
one of the two main parties in America
see being tough on fracking as a vote
winner is a testament to the lamentable
failure of the oil and gas industry to
communicate its message properly.
A poll for Gallup last year found the
US public evenly divided on the issue,
with 40 per cent supporting fracking
and the same number opposing it.
Fracking has caused environmental
problems, including water and air pol-
lution, and the industry needs to do
more to put them right. On balance,
though, the benefits have clearly out-
weighed the costs. Any future US presi-
dent should be thinking about how to
mitigate the harm done by fracking
while preserving its benefits, not look-
ing for ways to stop it.
Cynics will suspect that Mrs Clinton’s
stance is an expedient born of her aim
to attract environmentally concerned
Democrats away from Mr Sanders, and
that in office her bite would be not as
bad as her bark. She recently published
her “plan for ensuring safe and respon-
sible natural gas production”, which
praised the benefits of gas; a stance that
is clearly incompatible with a ban or
near-ban on fracking.
Still, the rhetoric matters. Energy is a
complex subject, and the public should
be able to make informed choices. By
her attack on fracking, Mrs Clinton has
given encouragement to the more
absolutist stance of Mr Sanders. Frack-
ing is not a bad word, and politicians
should not try to make it one.
FINANCIAL TIMES
My father, who dared to defend land rights
Sir, Your Big Read article, “The
billionaire’s farm” (March 2), captures
well the ramifications of the takeover
of land and natural resources on the
most marginalised communities in
Ethiopia, a destination for many of the
foreign investors. The devastating
impact is way too personal for some of
us.
Okello Akway Ochalla, mentioned in
the article, is my father. He was
kidnapped and then renditioned to
Ethiopia and has been languishing in
jail for two years, charged as a terrorist.
His crime being — having witnessed the
massacre of his people in 2003 as the
governor of Gambella, having had to
flee the country since he feared for his
own life, having been separated from
his family — my sister and I spent half
of our lives as refugees in Kenya, before
coming to the US in 2013 — that he
dared to advocate for the human rights
If Hinkley deal fails,
let’s end this privatised
energy market farce
Sir, Despite being MEP for the region in
which the new Hinkley reactors would
be built, I am not privy to the
desperate negotiations going on behind
closed doors and am left interpreting
smoke signals along with other
commentators. With the resignation of
both the project director and now the
financial director of EDF, those smoke
signals do not look good.
EDF is 85 per cent government-
owned, so French politicians and union
leaders are right at the heart of the
decision-making, with seats on the
board. Vital decisions about national
infrastructure are therefore more
accountable and more likely to serve
the public interest. In the UK the
legacy of the privatisation mania has
left the Hinkley deal shrouded in the
mist of commercial confidentiality and
totally without proper scrutiny. If, as
seems increasingly likely, the deal fails,
we will be left at risk of blackouts and
millions of pounds of wasted
investment.
In the aftermath we should demand
an end to the farce of a privatised
energy market, which has left us
insecure and enabled profiteering at
the expense of individual and business
users of electricity. And we should also
learn the lessons of our European
neighbours and introduce the sensible
policy of having union representation
on the boards of major companies.
Molly Scott Cato MEP
Green, south-west England,
European Parliament,
Brussels, Belgium
Helicopter money, but
in a more logical form
Sir, Both Lawrence Summers and
Wolfgang Münchau point to the
dangers of low inflation and say much
more needs to be done by the
authorities to boost it (“A world
stumped by stubbornly low inflation”
and “Eurozone woes demand a much
bolder response”, March 7).
Just as wage and benefits indexation
was seen as part of the cause of high
inflation wage-price spirals in the
1970s and 1980s, perhaps both formal
and informal indexation is a key
element in entrenching low
Rural spirit lives
on as French
flock to show
Paris
Notebook
by Adam Thomson
Letters
of the people of Gambella and the
Anuak community.
On March 7, a final verdict was
expected in my father’s case and yet
once again to break his spirit, the
verdict has been postponed to April 6.
The strongest evidence the court has
against my father is his own confession.
A confession obtained, as my father
explained in his closing statement,
“after being kidnapped and suffering in
detention for more than three months
without any defence lawyer and
communication with anyone”. He
added: “The defence statement was
made to look as if it was voluntarily
submitted to the court . . . at the time I
was giving the statement to the police, I
was in an environment where the
police investigator had put the pistol on
the table in front of me and I was being
tortured.”
If anyone cares to read the evidence
inflationary expectations today and
should be bypassed, but upwards
rather than downwards.
Governments could do much to
make 2 per cent inflation the expected
norm if they awarded pay rises to civil
servants, increased pensions, tax
allowances and the minimum wage
assuming a 2 per cent nominal price
increase in the year to come.
Companies would see costs increase
but sales rise as more money was put in
consumers’ pockets. The helicopter
money beloved of some would make an
appearance but in a much more logical
form.
Robert Strauss
Brussels, Belgium
Bank of England has
joined ‘Project Fear’
Sir, The Bank of England’s
announcement of its intention to flood
the banking system with cash is more
likely to cause fear than quell it.
Hitherto there has not been even the
remotest suggestion that the banking
system’s liquidity might be called into
question by a vote for Brexit, the share
prices of most UK banks having
strengthened in recent weeks.
In moving to head off an imaginary
problem, the BoE has joined the UK
prime minister’s Project Fear and, in
doing so, has undermined its
independence.
Ben Habib
Chief Executive,
First Property Group,
London SW1, UK
The annual Salon International de
l’Agriculture has been making
headlines in Paris, popping up daily
on television news channels and
billboards across the city.
It would be hard to imagine this
festival — a celebration of farm
machinery and apparently infinite
varieties of barnyard animal —
drawing much of a crowd in, say,
London. But it is one of the most
important events in the Parisian
calendar. More than 700,000 people a
year pour into the vast exhibition
space on the capital’s south-western
edge.
The show is also an obligatory stop
for any politician with ambition.
François Hollande, the president,
appeared on the first day, to be
greeted by booing farmers demanding
remedies for falling prices. He was
followed by Manuel Valls, the prime
minister; Marine Le Pen of the far-
right National Front; and Nicolas
Sarkozy, the centre-right presidential
hopeful.
For a non-French person, the
obvious question is why? The country
may be one of the EU’s biggest
agricultural producers, but the
population, as in most other
industrialised nations, stopped being
rural decades ago. Today, only about
20 per cent of people live in the
countryside compared with about 38
per cent in 1960, according to the
World Bank.
True, France’s farmers lobby hard,
and their particular brand of protest
attracts attention. This year, they
brought forward by the defence and
my father’s closing argument, it is
obvious that the crime committed by
my father is one of dissent and that he
has committed no terrorist activities.
His dissent challenges the continued
suffering of Anuak people and the theft
of natural resources such as our land,
rivers and forests, which is igniting
social and political conflict. My father
is no terrorist. A good man, a good
father and a good leader, my father is a
land rights defender!
In the light of the excellent coverage
by the FT, my sincere hope is that big
donors to Ethiopia, including the US,
the UK and the World Bank, will
reconsider the impact of this land rush
on families such as mine and urge the
Ethiopian government to release my
father.
Obok Akway Ochalla
Spokane, WA, US
Blame Bavarian lobby
for CAP extravagance
Sir, Jeff Colegrave (Letters, March 2)
blames “the most restrictive trade
agreement of all, the Common
Agricultural Policy” on the French. He
is correct to say that the Common
Agricultural Policy is protectionist but
that is mainly down to Bavaria’s
farming lobby. More efficient farmers
from France would have lived with a
less protectionist agrarian policy but
were outmanoeuvred in the original
negotiations when the inefficient
Breton farmers sided with the
Bavarians after the latter leaked the
private French negotiating stance.
The French position subsequently
collapsed so the outcome was to fix
farm support levels so that Europe’s
most high-cost farms in Bavaria could
survive which, when extended to
lower-cost farms in France and
eventually the UK, led to a surge in EU
agricultural output and an explosion in
the farm support budget.
If the UK had been involved at the
outset, it might well have bolstered the
French position and faced down the
Bavarians, resulting in a less
preposterous common agricultural
policy than the one that has devoured
most of the EU budget ever since.
Tom Maher
Director,
British Home Tutors,
London SW6, UK
Handwritten letter that
showed Reagans’ warmth
Sir, Much has already been written,
and much more has yet to be
committed to print, about the First
Lady Nancy Reagan, judging her on
what was seen, apparently, in public
and also by those with “an inside view”.
And with any assessment of the First
Lady, there is an appraisal of President
Ronald Reagan, the other half of a
formidable partnership.
My own “inside view” is the
handwritten letter that the First Lady
found time to send to my late, much
loved mother-in-law, a doctor in North
Wales; and to which President Reagan
added a footnote. I will not disclose the
letter’s content but, suffice to say, it
showed the warmth and very genuine
nature of the President and First Lady.
Kevin BE Dougall
Bracknell, Berks, UK
vandalised a government stand at the
show over falling prices of meat, milk
and grains. Previous stunts have
included dumping manure at the
doorsteps of government buildings
and smashing thousands of eggs in
town squares. But only about 5 per
cent of workers are employed in the
industry, which accounts for less than
2 per cent of the country’s gross
domestic product. This is small
change compared with French
industry or the overwhelmingly
dominant services sector.
Flanked by a magnificent Aubrac
cow (excellent reproductive qualities
and prized for its meat, according to
the sign), Peio Anduaga tries to
explain. The 26-year-old chef has
travelled hundreds of miles to the
show from his native Basque region in
the south-west.
“French people are different,” he
says. “Even if we are now urban, we
still feel a deep affinity for the land,
and all of this helps us reconnect to it
every year.”
It also helps to illustrate lessons
about the realities of life and food. I
saw, among the thousands of visitors,
many parents teaching their children
to appreciate the beauty of farm
animals — but also to appreciate the
process by which those same animals
end up covered in sauce on a plate.
Foreigners will find it hard to
stomach some aspects of the show.
British people, in particular, might
feel uncomfortable with the offhand
acknowledgment of the link between
animals and food. Meat in the UK is
Wednesday 9 March 2016
Email: letters.editor@ft.com or
Fax: +44 (0) 20 7873 5938
Include daytime telephone number and full address
Corrections: corrections@ft.com
Osborne may have in
mind another purpose
Sir, Martin Wolf appears to be too
dismissive of UK chancellor George
Osborne’s suggestion that further fiscal
tightening might be needed at this
critical juncture for the UK economy
(“Osborne’s desire to cut spending
makes little sense”, March 4). Mr Wolf
presumes that the sole purpose of fiscal
tightening is to lower the ratio of public
debt to gross domestic product rather
than to generate the additional savings
that the economy might need to reduce
its gaping external current account
deficit.
The truth of the matter is that the
UK is presently running close to the
widest external current account deficit
in the postwar period. As Bank of
England governor Mark Carney
recently reminded us, this makes the
UK uncomfortably dependent on the
kindness of strangers to finance that
deficit in the run-up to the June 23 EU
referendum. As if to underline the
dangers of such a deficit, sterling has
now declined by more than 10 per cent
against the US dollar from its 2015
peak in anticipation of that
referendum.
Conceptually there are only two ways
that an economy can reduce its
external current account deficit. Either
it must increase its savings or it must
reduce its investment. A crucial point
that Mr Wolf does not consider is that
an increase in public savings might be a
preferable way to bring better balance
in its external accounts than a
reduction in the country’s investment
rate.
Desmond Lachman
American Enterprise Institute,
Washington, DC, US
Finland needs to ease
fiscal burden on state
Sir, Finland’s poor economic
performance in recent years is
perplexing (“Austerity tests Finland’s
co-operative model”, March 7). This
country has an excellent business
environment and decent public
finances, but its gross domestic
product has fallen almost 6 per cent
from 2008.
The popular explanation is that
Finland suffers from the collapse of
Nokia. A more recent concern is that
the old collective bargaining model no
longer works. Friends and foes alike
point out that Finland has maintained
a fiscal constraint with an average
budget deficit of just over 2 per cent of
GDP, but even so its public debt has
reached 60 per cent of GDP, leaving no
fiscal space.
But perhaps the real story is missed.
Finland stands out in one regard. Its
public expenditures have surged far
more than in any other EU country
from 47 per cent of GDP in 2007 to 59
per cent of GDP in 2015. Even nearly
stagnant France has lower public
expenditure.
To be able to grow again, Finland,
and most of Europe, needs to ease the
fiscal burden on the state. This is the
issue we should discuss.
Anders Åslund
Atlantic Council,
Washington, DC, US
COMMENT ON FT.COM
Instant Insight
The savvy Maria Sharapova is aware of her
diminishing returns, writes Andrew Hill
www.ft.com/instant-insight
often packaged such that its
provenance is obliterated. Here, there
are no such qualms: a chef wielding a
long knife and a big slab of beef
enthusiastically explains the basics of
butchery to an enthralled crowd.
Right alongside, meanwhile, a queue
of children waits to pet a row of cows.
Anduaga, like many of his
countryfolk, is relaxed about the
juxtaposition. “It’s an important part
of our education, and it is handed
down through the generations,” he
says. “Parents teach their children
about food and where it comes from.
Nothing is off limits.”
I welcome this down-to-earth
approach. But I also wonder whether
it is under threat. The rise of fast food
in France has been under way for
decades now, and younger generations
happily hang out at “MacDo” at the
weekends. For the US burger chain,
like many other fast-food outlets,
France is a big market — it has more
than 1,000 locations in 2014, more
than it has in the UK.
In the meantime Fanny Bontinck,
who has come to the show from Lille
in the north of the country, is doing
her bit to keep farm-and-food
education in France alive. When I
speak to her and her two young
children, standing beside a group of
fluffy Bleu du Maine sheep at the
Salon, she says: “I appreciate these
animals, but seeing them also makes
me want to eat them.” Her kids
grinned and nodded in approval.
adam.thomson@ft.com
Wednesday 9 March 2016
Competing goals make Saudi oil policy hard to predict
OPINION
Meghan
O’Sullivan
W
hen Saudi Arabia last
month announced with
Russia and other big oil
producers a conditional
agreement to freeze
production at current levels in the face
of rock bottom prices, the decision was
seen as an indication that it was chang-
ing policy. Economics had finally
trumped geopolitics. Where Riyadh’s
earlier decision not to cut output was
seemingly spurred by geopolitical
rivalry with Iran and Russia, economic
hardship had catalysed co-operation.
It is correct to focus on both econom-
ics and geopolitics in assessing Saudi
behaviour. There is just one problem:
Good news —
fintech could
disrupt finance
ECONOMICS
Martin
Wolf
I
nformation technology has dis-
rupted the entertainment, media
and retail businesses and, most
recently, the supply of hotel rooms
and taxis. Is it going to do the same
to finance? My first response is: please.
My second response is: yes. As Bill Gates
has said, “We always overestimate the
change that will occur in the next two
years and underestimate the change
that will occur in the next 10. Don’t let
yourself be lulled into inaction.” This
advice applies to people in the business
itself, but also to policymakers.
Finance is an information business.
Indeed it already spends a higher share
of its revenues on information technol-
ogy than any other. It seems ripe for dis-
ruption by information technologies.
Consider its three essential functions:
payment; intermediation between sav-
ings and investment; and insurance. All
these activities are information-
intensive. People need to know accounts
have been settled. They need to under-
stand how their wealth is being
employed and to know that their risks
are covered. Not least, the intermediar-
ies need to understand what they are
doing.
Today, banks and insurance compa-
nies are the core financial institutions.
Banks manage payments systems, cre-
ate most of the economy’s money, are
responsible for a large proportion of
financial intermediation, are creators of
financial instruments and act as mar-
ket-makers and agents. Similarly, insur-
ance companies play the central role in
assessing and managing risks.
Why might one hope that new finan-
Industrial monuments dwarf the architecture of the digital age
OPINION
Edwin
Heathcote
T
he world’s great cities are
littered with the infrastruc-
ture of industry and
power.In their ambition
and scale, the architectural
remains of the age of industrial flourish-
ing might appear to us as distant as the
gothic cathedrals they so often resem-
ble. Yet last week’s decision to protect
and preserve a 14-storey Victorian gas
holder, familiar to cricket lovers world-
wide as the backdrop to London’s Oval
cricket ground, testifies to an enduring
affection for the grandeur of these
industrial monuments.
Encased within delicate, soaring iron
cages, the gasometer’s huge cylindrical
most people get it back to front, con-
cluding that geopolitics are the domi-
nant driver when economics are, and
vice versa.
In 2014 Saudi Arabia convinced other
Opec members to abandon efforts to
support prices by cutting output and to
prioritise instead the protection of mar-
ket share. This precipitated the dra-
matic price collapse of the past few
months. Given Russian and Iranian sup-
port for, and Saudi opposition to, Syrian
President Bashar al-Assad — and the
growing possibility of a nuclear deal
leading to the lifting of sanctions against
Iran — analysts were inclined to see the
Saudi-led decision as geopolitically
inspired. The new approach unques-
tionably created more hardship for the
kingdom’s nemeses: Iran and Russia.
But the fact that something desirable
results from an action does not neces-
sarily mean it was the cause of it. In fact,
the Saudis had little choice but to opt for
cial technology, or “Fintech” as it is
known, will transform these busi-
nesses? The answer, especially for bank-
ing, is that they are currently not done
very well. Banking seems inefficient,
costly, riddled with conflicts of interest,
prone to unethical behaviour, and, not
least, able to generate huge crises.
In a recent speech on the possibilities
for a financial revolution, Andrew Hal-
dane of the Bank of England notes that,
astonishingly, the unit cost of US finan-
cial intermediation seems to be
unchanged over a century (see chart).
Moreover, income from finance simply
rises and falls with the value of assets.
That suggests a huge amount of rent-
extraction. Additionally, 10m US house-
holds and 1.5m UK adults still have no
bank accounts. Worldwide, banks gen-
erate a staggering $1.7tn in revenue, 40
per cent of the total, from the job of
making payments. In the computer age,
settlement can still take hours or days.
On behaviour, as John Kay has writ-
ten, “parts of the financial sector
today . . . demonstrate the lowest ethi-
cal standards of any legal industry”. The
payment of vast fines seems to be
viewed as just a cost of doing business.
Finally, the post-2007 banking crises
were as big as any in the past. That their
economic impact was not still worse
than earlier was due to the willingness of
governments to bail banks out.
New technology might help change
this in at least two ways. First, it might
transform payments. One possibility is
real-time settlement via distributed
ledgers. The advantages of instantane-
ous settlement are evident. The advan-
tage of distributed ledgers, an element
in bitcoin’s “blockchain” technology, is
an improvement in the robustness of
record-keeping. Instead of centralised
accounts, the database would be shared
across a network of sites, all of which
would hold an identical copy. Such tech-
nologies might revolutionise domestic
and foreign payments. Many businesses
tanks would rise and fall like urban
lungs marking the rhythms of urban
consumption. Before the nationalisa-
tion of the industry after the second
world war there were about 1,000 com-
panies manufacturing, storing and sup-
plying their own gas, each with their
own holders on central city sites. They
defined the city skylines, rivalled only
by church steeples for height.
Power stations, warehouses, brewer-
ies and docks have proved remarkably
resilient in former industrial cities
where they have long outgrown their
original uses. Vienna converted its mas-
sive brick-clad Simmering gasometers
into housing and shops, a cinema and
concert hall. New York’s High Line has
become a popular repurposed piece of
industrial infrastructure, and the city’s
skyline is unimaginable without the old
wooden water tanks perched on top of
factories and apartment blocks. In Los
Angeles the nodding donkey oil wells
★ FINANCIAL TIMES
Comment
a market share approach in 2014. Like
others, they misjudged the depth of the
price collapse to come. Yet they under-
stood that US shale oil had created new
dynamics that limited their choices.
The Saudis faced competition from a
sector whose output could be adjusted
more swiftly in response to price fluctu-
The tentative agreement
to freeze production
was almost all about
geopolitics, not economics
ations. They suspected that if they cut
their own production to bolster price,
the shale industry would respond by
producing more, eroding any increased
Saudi revenues by pulling the price back
down. The Saudis would then be selling
less oil and at a lower price. Here, priori-
Steady intermediation
US unit cost of finance (% points)
0.25
Quality adjusted
0.20
0.15
0.10
1900 20 40 60 80 2000
FT graphic Sources: Andy Haldane/BoE; Philippon (2014), ‘Has the U.S. Finance Industry Become Less Efficient?’; Nesta (2012-14); McKinsey
are already pursuing this possibility.
A second transformation might be via
peer-to-peer lending, in which new plat-
forms disintermediate the traditional
businesses in matching savers with
investments. Such lending is growing
rapidly (see chart). The theory here is
that computerised information might
allow savers to dispense with the
(costly) services of bankers altogether.
Optimists imagine a future in which
payments, the creation of money
(unquestionably liquid and safe assets),
and intermediation would be separated.
In this case, the capacity of the banking
sector to create havoc would be reduced
and so would the perils created by the
Banking is currently
inefficient, costly
and riddled with
conflicts of interest
form a familiar welcome route into the
city. Germany’s Ruhr Valley has turned
a legacy of industrial archaeology into a
post-industrial pilgrimage.
Back in Britain, the solidity and sur-
prising elegance of our industrial infra-
structure has proved not just durable
and adaptable but also commercially
It is hard to imagine data
centres attracting the
affection felt for the
warehouse or the gas holder
valuable. The former Bankside Power
Station is now Tate Modern, long the
world’s most visited modern art
museum. Battersea Power Station, hav-
ing survived decades of dereliction, is at
the heart of a riverside redevelopment
targeted at global investors. Its four
tising market share over price made the
most economic sense. The problems
created for Tehran and Moscow were
icing, but not the cake itself.
In contrast, the tentative agreement
this year to freeze oil production was
almost all about geopolitics, not eco-
nomics. The clue is in the fine print,
which says the freeze would take effect
only if other producers, primarily Iraq
and Iran, agreed to halt their own pro-
duction increases. The really tall order
was to convince Iran, newly freed from
sanctions, to agree to this deal. Not sur-
prisingly, Iran balked.
Although to many the initiative
looked like a flop, the kingdom achieved
its goals, which were geopolitical not
economic in nature. Riyadh had the sat-
isfaction of lining up two of Tehran’s
closest allies — Russia and Venezuela —
in opposition to Iran’s position. More
important, in making the proposal
while holding out little hope that Iran
Exorbitant costs
Payment revenues to banks ($tn)
Asia-Pacific 2.5
Europe, Mid East & Africa
Latin America
2.0
North America
1.5
1.0
0.5
0
2011 2014 2019 (forecast)
state’s backstop to private institutions.
It is, however, far too early to be confi-
dent of such benefits. Indeed it is easy to
see that new record-keeping and pay-
ments systems would create huge secu-
rity issues. Similarly, opportunities for
malfeasance also exist on peer-to-peer
platforms. Indeed, these are inevitable
with transactions that rest on promises
against an inherently uncertain future.
A further potential source of transfor-
mation is via “big data”. That might
transform the quality of lending, for
example, which would be a good thing.
But the most striking effects are likely to
be in insurance. With new monitoring
devices, insurers might gain direct
knowledge of the quality of driving or of
the state of their clients’ health. Such
information might be used to motivate
improvements in behaviour. But it is
also possible to imagine improvements
in information so profound that risk
pools — the basic building blocks of
insurance — disappear. If, for example,
chimneys and art deco brick hulk,
immortalised on the cover of Pink
Floyd’s Animals LP, made it one of the
city’s favourite structures. The Baltic
Centre for Contemporary Art in Gates-
head, in England’s north-east, has
revived a massive flour mill; Tate Liver-
pool is a wonderful reimagining of the
Albert Dock as art gallery.
So what infrastructure of our own age
can match the power and presence of
these behemoths? Last month another
industrial building was listed: the
former printing works of the Financial
Times in London’s Docklands, to the
east of the City. Designed by Sir Nicholas
Grimshaw, it was completed in 1988,
allowing passers-by to look into the
100m glass façade at the presses. As the
print industry moved out of the city, the
building shifted use. It now houses
internet switching equipment. It was
the last of an era of industrial buildings
designed as urban landmarks. There are
would agree, the Saudis shifted the
blame for low oil prices. Tehran became
the new bad boy of the oil market.
Both economics and geopolitics will
shape Saudi oil policy in the days and
months ahead. Geopolitics will be the
main driver for actions that have an eco-
nomic upside only. But where econom-
ics and geopolitics point in different
directions, expect Riyadh to prioritise
the first. Faced with a gathering eco-
nomic crisis, Saudi Arabia cannot afford
expensive pot shots, even at regimes for
which it has no love. Its strategy of prior-
itising market share will probably per-
sist for a while.
But, once the market starts to turn,
and Iraq and Iran have shown their abil-
ity to bring new oil to market, produc-
tion cuts could yet return.
The writer is a professor and the director of
the geopolitics of energy project at Harvard
University’s Kennedy School
Innovation dawns
Peer-to-peer lending (£bn)
Other
Equity crowdfunding
Invoice trading
P2P consumer lending
P2P business lending
Totals
2012 2013 2014 2015
(annualised)
the insurer knew with a high level of cer-
tainty that some customers would get a
given disease, that person might
become uninsurable. In insurance,
some ignorance is bliss. At the least, the
way in which knowledge is obtained and
used could create huge social questions.
On balance, the opportunities
afforded by the application of informa-
tion technologies to our financial sys-
tem seem large. The difficulty might
rather be to ensure that the benefits
accrue this time to the public rather
than to a small number of incumbents
or even to their more dynamic replace-
ments. Finance, particularly banking,
does need a revolution. But this is one
area where policymakers cannot just
assume things will work out well. It is
because finance is so important that a
revolution is needed. But for that very
reason the revolution also requires care-
ful watching.
martin.wolf@ft.com
still elegant, high-tech factories — Fos-
ter and Partners’ McLaren Technology
Centre in southern England, for exam-
ple — but they tend to be situated out-
side the cities.
Might any of our industrial infra-
structure survive? The internet data
centres sprawled across the developed
world’s edgelands are interchangeable
with service centres and etailers’ pack-
ing sheds — metal boxes built as cheaply
as possible with no concern for appear-
ance, posterity or potential reuse. It is
hard to imagine them attracting this
kind of affection in the future. Perhaps
the offshore wind turbines will live on as
haunting marine monuments. They
certainly will not be housing art galler-
ies or luxury apartments. Which is why
we need to treasure the industrial
remains we still have. We are not build-
ing any more.
The writer is the FT’s architecture critic
9
Smart tax
moves rarely
come from the
urge to fiddle
BUSINESS
John
Kay
G
eorge Osborne has, it is
reported, abandoned plans
for root-and-branch
reform of the taxation of
pension saving and will
content himself with tinkering with
rates of relief. He will continue the
annual cycle of small, but significant,
changes to the pension tax regime
which has now run for more than a dec-
ade — the lifetime limit to the total pen-
sion savings that qualify for relief has
been lowered gradually since 2010 —
while providing more flexibility on
drawdown.
More than any other financial deci-
sion, pension saving requires consid-
ered, long-term decision-making. But
the frequency of changes in rules is such
that only a handful of specialists in pen-
sion taxation can possibly know at any
particular time which are the relevant
rules.
Building a business is another lifetime
choice. But in my lifetime, the rate of tax
on business capital gains at realisation
has been variously 18 per cent, 28 per
cent, 30 per cent, and 40 per cent. An
indexation allowance was introduced,
and then withdrawn. The scale of relief
for business assets has varied widely
and so have the definitions of such
assets. Even the best-advised small-
business founder cannot possibly know
what liabilities might be incurred when
the time comes to enjoy the fruits of suc-
cess.
The instinct to fidget is part of human
nature; just ask a small child to sit still,
or an adult to stop fiddling with the
smartphone. Or a politician to eschew
fresh initiatives. The British budgetary
system, with its powerful executive and
red box of Budget secrets, is particularly
vulnerable to the fidgety minister; the
3.0
restlessness of Gordon Brown knew few
bounds. But Mr Brown was not the only
2.0
1.0
The British budgetary
0 system is particularly
vulnerable to the
fidgety minister
culprit. Each year, all chancellors can-
vass their advisers for wheezes to be
included in the next Budget, and all
have an opportunity to ride their hobby
horses.
The bias to action is pervasive in busi-
ness and finance. The dynamic leader
storms into the C-suite, determined to
make a mark; perhaps it is time to focus
on the core business, or an opportunity
to leverage the company’s strengths by
diversifying into new markets.
Almost everyone in the lengthy chain
of financial intermediation between
saver and investee is rewarded by refer-
ence to the volume of their activity. It is
difficult to charge much for the often
sensible advice to do nothing. But there
is wisdom in the legal academic Frank
Partnoy’s elegant book Wait: The Useful
Art of Procrastination, in which he argues
that snap decisions, or those made on
“gut instinct”, are not necessarily best.
And yet. No one can have spent so
much of their life in universities, as I
have, without seeing that deferring a
decision is itself a decision, and rarely a
good one. What is needed in our tax sys-
tem — as in so many other areas of polit-
ical life — is purposive change: reforms
may well be implemented in piecemeal
fashion but should be motivated by a
sense of strategic direction.
And in our patchwork quilt of a tax
system there are many areas in more
urgent need of reform than pension sav-
ing — corporation tax immediately
comes to mind. The basic principle
underlying pension tax relief — the
opportunity to defer tax on income
diverted to retirement saving — makes
sense on grounds of both economic effi-
ciency and overall fairness.
The drive for change comes from two
sources, one foolish, the other discredit-
able. The foolish idea is that you should
aim to create the appearance of progres-
sivity, not just in the tax system as a
whole, but in every part of it — an idea
which has added much avoidable com-
plexity to the tax system in the past two
decades. And the discreditable idea is
that if you fiddle with the rules to raise
more revenue now, the consequences
will be a matter not for you but for your
successors.
johnkay@johnkay.com
10
Supermarket
shelf gamble
behind UK
minimum wage
Sarah O’Connor
Onemployment
The co-founder of the
ride-hailing start-up tells
James Crabtree about the
unfolding drama of rivalry
with the US invader
B
havish Aggarwal is generally
relaxed and cheerful but he
bristles quickly at the idea
that OlaCabs, his ride-sharing
start-up, is an Uber copycat in
India. “Our evolution was very inde-
pendent of Uber [and] very India-cen-
tric,” he says, sitting at a large wooden
conference table in the group’s Banga-
lore headquarters.
Instead, he charts Ola’s growth from
its early days as “an online travel agency
of sorts” to its current position as one of
India’s most high-profile internet busi-
nesses, marked out both by a $5bn valu-
ation and its fierce battle with Uber for
control of the country’s rapidly growing
taxi-app market.
In fact, Mr Aggarwal says his inspira-
tion for Ola came while standing outside
a stadium during New Delhi’s Common-
wealth Games in 2010. He had driven
more than 1,000 miles from Bangalore
to hand out leaflets promoting his first
venture, which sold holidays online.
“We didn’t sell a single trip, not one,”
he recalls with a grin. “But customers
used to tell me: ‘I will get a hotel and
organise my own trip but can you get me
a cab to go there?’”
Growth was gradual at first for Mr
Aggarwal and co-founder Ankit Bhati,
now chief technology officer. “When
Uber came to India [in late 2013] we
were very, very tiny. We were doing just
2,000 rides a day. And we had only
$300,000 in the bank,” he says, having
raised early funding from a handful of
Mumbai-based angel investors.
But from there its expansion acceler-
ated and continued at breakneck pace
as Ola opened in more than 100 Indian
cities, about four times as many as Uber.
British politicians do not make a habit
of saying nice things about the French
economy. So when Nick Boles, a UK
government minister, said he wanted
British businesses to be a bit more
French — at least in one respect — the
audience sat up. The object of his
admiration? The little electronic price
labels on the shelves of French
supermarkets.
Thanks to this labelling system, one
person can change all the prices in a
French supermarket with a few clicks.
Some systems can handle up to 90,000
price updates an hour. In British
supermarkets, prices are usually
printed on paper and distributed by
workers traipsing up and down the
aisles when they need to be changed.
For Mr Boles, this is poor
productivity, the “entrenched British
disease,” writ small. The average
French worker generates 15 per cent
more economic output than the
average UK worker even though they
spend less time at work. On a per-hour
basis, the gap is 31 per cent. And the
gap between the UK and most of its G7
peers is widening.
Britain’s Conservative government
has a radical plan to tackle this —
turning conventional economics on its
head. An economist would say that
higher productivity is the prerequisite
for higher wages. Extra pay can only be
justified when people are producing
more or better stuff or services. But
ministers are betting on the opposite.
From April 1, they will push up the UK
minimum wage sharply for people
aged 25 and over, in the belief that this
will force companies to boost
Entrepreneurs. Bhavish Aggarwal, Ola
Battling Uber in India
The company went on to raise about
$1.3bn from top-tier global investors
such as SoftBank, the Japanese telecoms
group, as well as Chinese taxi-app group
Didi Kuaidi, with whom Ola last year
struck a global anti-Uber alliance.
The rivalry between Ola and Uber,
and thus between Mr Aggarwal and
Uber co-founder Travis Kalanick, is
now one of the central dramas in India’s
flourishing start-up scene. Ola is holding
its own, with most estimates by analysts
showing it winning more than half of the
market, measured by rides, despite
Uber splurging $1bn in India since mid-
2015. Ola has signed up 350,000 drivers
of cabs, autorickshaws and traditional
taxis, says Mr Aggarwal.
The contrast between the brash and
outspoken Mr Kalanick and the down-
to-earth Mr Aggarwal is instructive in
other ways. In person, the Ola founder is
softly spoken and wry, with a thick
fringe of floppy black hair and boyish
looks to match his 30 years. Where Mr
Kalanick appears eager for publicity, his
Indian rival keeps a low profile, giving
press interviews rarely.
Mr Aggarwal says he had entrepre-
neurial leanings when he was growing
up in the northern Indian state of Pun-
jab. His father was a doctor, a job that
took the family briefly to live in the
north of England, before returning to
India in his early teens. He went on to
win a place at the prestigious Indian
Institute of Technology in Mumbai, and
then a job at Microsoft’s research lab in
the southern city of Bangalore, India’s
tech capital.
“Even before IIT, I always had an incli-
nation to do something, even when I was
in school,” he says. “At IIT, I tried to set
up a couple of small ideas, which went
nowhere. But I was always at
it . . . [and] I was very excited by tech-
nology.”
Having established his business, Mr
Aggarwal says he is now motivated by a
bigger goal, deeply rooted in India itself.
“We say our vision is to provide
mobility to 1bn Indians,” he says, argu-
★ FINANCIAL TIMES
BUSINESS LIFE
‘
productivity to justify the higher pay.
“Requiring a pay increase can prompt
employers to make the investments
that they otherwise do not necessarily
feel they need to make,” Mr Boles said
in a recent speech. Those French digital
price labels are exactly the sort of
investment he means.
It might work. One mooted
Can
ministers
explanation for the UK’s poor achieve
productivity, particularly since the
financial crisis, is that labour has been France’s
so cheap that companies do not feel the innovation
need to innovate or invest. Why buy a
car wash when you can hire 10 people with
with sponges? And why train those Britain’s
workers when you can hire extra pairs
of hands at little cost? low jobless
’
It is also possible that higher pay will rate?
boost productivity on its own, by
making employees less likely to quit.
But for the policy to work as the
government hopes, you have to make
some punchy assumptions. Analysis by
the Resolution Foundation, a think-
tank, shows that productivity would
have to rise 6 per cent a year until 2020
to maintain its historic relationship
with the minimum wage. Productivity
typically rose about 2 per cent a year
before the financial crisis and less than
1 per cent a year in its aftermath.
The big question is whether
companies most affected by the higher
minimum wage — typically, small ones
with thin margins in sectors such as
hospitality and retail — can achieve this
transformation. I met a woman
recently who runs three small hotels,
two of which already make a loss. Her
wage bill, by far her biggest cost, is
about to increase sharply because of
‘Technology
could allow
ing that India can become the world’s
first economy to grow rich without mass
many Indians vehicle ownership. “In the US, or in the
not to buy a car
at all’: Bhavish
west, mobility means owning your own
car,” he says. “Cities are designed
Aggarwal around spread-out suburbs, societal
customs are that kids get a car after a
certain age, and car ownership is very
high.” In India, all that is different. Car
ownership remains tiny. Roads are
jammed. And now technology, in theory
at least, could allow many Indians not to
buy a car at all.
“Is car ownership in India going to go
up? Absolutely. But will it hit more than
50 per cent, like in the west? No, nothing
close. People won’t have to. They’ll use
us,” he says. To some, the idea sounds
far-fetched but Mr Aggarwal says many
wealthier Indians are forgoing second
vehicles, or using personal drivers less,
as ride-hailing apps grow in popularity.
In future, Ola aims to develop services
for poorer customers, including urban
buses, which many Indian cities lack.
As well as taking on an internet
Home juggernaut in the shape of Uber,
front
Bhavish Aggarwal’s rise has been hit by
problems closer to home — not least
deep scepticism from his father.
A father’s “When I started off, he thought I was
view becoming a travel agent,” Mr Aggarwal
recalls of his father’s doubts, at the time
he quit his job at Microsoft to launch the
start-up that would morph into Ola.
“He said, ‘We’ve gotten you educated
from IIT Bombay, you’ve got such a
great job’ . . . And he literally didn’t
speak to me for six months after that.”
Ola’s founder eventually patched
things up at home, and now hopes that
a change in generational attitudes will
help future start-up founders avoid
similar family troubles.
“It is changing,” he says. “I think now
parents are much more accepting,
because of the successes some
entrepreneurs have had over the past
five years. But six, seven years ago it
was not so accepted.”
the minimum wage. It is not clear
where she would find the money to
invest in training or technology even if
she knew what to spend it on.
Indeed, many small businesses are
worried that it will be harder to upskill
their workers when the wage floor
rises, because it will compress their pay
structures. If entry-level workers are
on a similar salary to team leaders or
supervisors, where is the incentive to
take on the extra training and
responsibility?
If businesses struggle to boost
productivity by as much as ministers
hope, they will have to cope in other
ways, such as increasing prices or
accepting lower profit margins. Neither
would be a disaster. The biggest risk,
particularly if the UK economy
continues to slow, is if companies shed
staff or stop hiring. That might boost
overall productivity, but only because
the least productive people are not in
the workforce at all.
In that sense, France was an
unfortunate example for Mr Boles to
choose. French workers may be more
productive, but the unemployment
rate is 10 per cent, almost double that
in the UK.
The crux of the government’s great
supermarket-shelf gamble is believing
it can combine French levels of
productivity with British levels of
employment. That is a long, risky road
to take. Still, the rest of the world
would be crazy not to watch the
experiment.
sarah.o’connor@ft.com
Twitter: @sarahoconnor_
“Mobility in India is going to be differ-
ent from the west,” he says. “In America
people would look at an autorickshaw
and say: ‘This is a passing thing’. But in
India you know it will stay, because it is
fast and convenient. In Mumbai, even
Bollywood stars use autos when they are
in a hurry.”
Still, Mr Aggarwal admits that
progress towards achieving his vision
has not been easy, especially as Ola has
struggled to overcome a mix of growing
pains and regulatory wrangles. The big-
gest problem was expanding too rapidly,
and spreading himself too thin. “The
company is growing so fast and people
don’t learn things as fast,” he says. “One
more mistake most Indian internet
companies have made, including us, is
you tend to go broad before you go
deep.”
This year, Ola’s rivalry with Uber is
entering another phase, as global tech
investors grow anxious about the valua-
tions handed out to high-flying start-
ups, and ask awkward questions about
profitability. Mr Aggarwal admits that
Ola is not profitable, and declines to dis-
cuss revenues.
Some doubt that the Indian group can
withstand Uber’s financial firepower,
but Mr Aggarwal says he has plenty of
cash on hand and is turning a profit in
some of its cities. There is the possibility
of a blockbuster international flotation
too, although “definitely not” for two
years at least.
On Uber, Mr Aggarwal has mixed feel-
ings. “They are arrogant,” he says at one
point, but also seems sincere when he
repeatedly compliments his rival’s
record of innovation. Can both survive
in India? “Maybe it is possible for there
to be two,” he says, after some thought.
“But if there is just one, it will be us.”
To explain, he reaches for a transport
analogy. “The business is still growing
fast. So it’s almost like you are building
the jet plane as it is flying,” he says. “But
in the end we will do well, because trans-
port in India is different, and we know
India best.”
Let’s launch in ...
Waterloo, Canada
Population 98,000+ (Waterloo region 500,000+)
Corporation tax (for small businesses) 19.5%
Students in university Silicon Valley scheme 2,000
For decades Waterloo, a
manufacturing hub known
more recently as the home
of BlackBerry, was
overshadowed by Toronto,
its cosmopolitan neighbour.
Recently, however, this
tight-knit city, founded by
19th-century Mennonites,
has been recognised as a
hotspot for entrepreneurs.
The case for: With more
than 1,000 companies within
3km of the centre, Waterloo
claims a density of tech
start-ups per head of
population second only to
Silicon Valley. Entrepreneurs
are nurtured by the two
main higher education
institutions, the University
of Waterloo and Wilfrid
Laurier University, and are
encouraged by the strong
sense of mutual support to
stay on to launch ventures.
The cost of living is
affordable and residents
enjoy publicly funded
healthcare, good high
schools and access to
beautiful countryside.
The case against: Waterloo
lacks a record of big exits,
deals that attract capital and
support services to enable a
start-up community to grow
further. As a result, venture
capital is scarce. Canada in
general suffers from this
problem. The exit value of
Los Angeles, for example, at
about $18bn, is six times
that of Waterloo, Toronto,
Vancouver and Montreal
combined, according to
Compass, which compiles
start-up data.
One skills gap that start-
ups and backers report is
aggressive sales people, key
to fast-growing companies.
Support for start-ups: The
University of Waterloo
boasts one of the world’s
top computer science
programmes. Many students
experience working for
Innovation to watch
A cure for high drug costs
LESLIE HOOK
Lowering the cost of
healthcare is an elusive goal,
but a New York-based start-
up founded by two brothers
is trying a new approach.
They want to lower the cost
of drugs for patients in the
US with an app that finds
the best price.
This may not sound
technically sophisticated —
until you consider the
complexities of the US
healthcare system. Last
year, Americans spent about
$400bn on medication, up 8
per cent on the previous
year.
Unlike other countries, in
the US the price of a drug
can vary widely between
one patient and the next,
and one pharmacy and the
next. “There is an epidemic
of high drug prices, and it
cuts across everyone,” says
Geoffrey Chaiken, who co-
founded Blink Health along
with his brother, Matthew.
He explains that the idea
started when the brothers
noticed that they might pay
drastically different prices
for the same medication.
Wednesday 9 March 2016
Alamy
Silicon Valley companies
before they graduate
through the co-operative
internship programme,
which combines classroom
and hands-on learning. This
is complemented by
business education courses
at Wilfrid Laurier
University’s Lazaridis School
of Business and Economics,
named after BlackBerry co-
founder Mike Lazaridis.
Communitech is an
industry-led innovation
centre, responsible for kick-
starting and providing
backers for many of
Waterloo’s start-ups.
Local heroes: Research In
Motion, renamed BlackBerry
after its smartphone, and
Open Text, an enterprise
software business, put the
city on the map. BlackBerry’s
subsequent difficulties have
been double-edged since
job cuts have increased the
availability of local skills.
Eric Migicovsky set up the
forerunner of smartwatch
maker Pebble while still at
the University of Waterloo.
Other notable local
launches include Kik, an
instant messaging app for
mobile devices, video
marketing platform Vidyard
and Thalmic Labs, developer
of the Myo gesture control
armband.
Getting there: Toronto is
just over 90 minutes’ drive
away. Most air travellers use
Toronto Pearson
International Airport or
Hamilton International
Airport, which connect with
more than 180 cities across
the world.
What the locals say: Michael
Litt, Vidyard chief executive,
praises the density of tech
start-ups: “You can
practically walk up the street
and find anyone you need.”
Jonathan Moules
Reuters
“There was no transparency,
and sometimes one of us
was paying much more than
the other. We figured this
must be a problem for other
people,” Mr Chaiken says.
Blink gets discounts by
working with a middleman,
allowing Blink users the
same discounts as other
members of the network.
Patients pay on the app,
then pick up prescriptions in
person at a pharmacy; Blink
takes a commission on each
purchase.
Other discount drug apps,
such as GoodRx, connect
patients to drug coupons
but do not take in-app
payments. One limitation is
that most of Blink’s deepest
discounts are for generic
medications; name-brand
medications can still be very
expensive.
This start-up has
ambitions far beyond
medication. Eventually it
could help people access or
centralise their own medical
data. For now, though,
finding cheaper drugs is
challenge enough.
Wednesday 9 March 2016 ★ FINANCIAL TIMES 11

ARTS

Family who set the scene for the Renaissance OPERA

The work of the Vivarini front of a flowering hedge, her baby doz-
ing on her lap, with four saints standing
family of painters is either side of her. To see the figures inter-
illuminated as never before acting freely in a naturalistic landscape
wasrevolutionaryatthattime.
in an exhibition in Italy. The Naples altarpiece is a charmer on
By Rachel Spence many levels. Bartolomeo, who was prob-
ably in Padua with his brother, borrows
Mantegna’s custom of framing Mary
Iphigénie en Tauride
Hackney Empire, London
aaaee
Hugo Shirley
The operas of Gluck, though far from
favourites of opera administrations,
have been enjoying a renaissance over
the past couple of years in the UK, with
productions of his Orfeo ed Euridice
at the Royal Opera House, Scottish

F
or all but connoisseurs, the
Venetian Renaissance began
withGiovanniBelliniinthelast
decades of the 15th century
and reached its zenith with
Titian in the mid-16th century. But Bell-
ini was not born into a desert. Among his
inspirations were the Vivarini family.
This trio of Venetian painters comprised
Antonio, his younger brother
Bartolomeo and Antonio’s son Alvise —
who was Bellini’s contemporary — and
their careers spanned much of the 15th
century. They reflect an era marked by
enormous tension — political, social,
intellectual, religious — and display the
sumptuous creativity that often blos-
somsoutofculturalmaelstrom.
Now, thanks to the first show dedi-
cated to them, in the Veneto town of
Conegliano, the Vivarini oeuvre is illu-
minated as never before (“The Vivarini:
The splendour of painting between the
Gothic and the Renaissance” at the Pal-
azzo Sarcinelli). So too is Venetian art’s
transition from a medieval to a Renais-
sancesensibility.
Paterfamilias of the Vivarini was
Antonio. Born on the island of Murano
just before 1420, he was the son of a glass
master from Padua and most likely
found an apprenticeship in one of the
Venetianworkshops.
Unlike Florence, early 15th-century
Venice was no cauldron of innovation.
Instead it was struggling to emerge from
“the last, stiff half-barbaric splendours
of Byzantine decoration”, as the 19th-
centurycriticWalterPaterputit.
Lack of wealth was not the problem. In
1420, the Venetian Empire was at its
peak, but the patricians who presided
over the imperial engine were set in their
ways. Humanism had yet to kindle their
imaginations. When Donatello, the
avant-garde Tuscan sculptor, arrived in
Padua in 1443, he complained bitterly of
thelackofartisticinspiration.
Nevertheless, change was afoot.
Besides Donatello, groundbreaking Tus-
can artists who paused in the Veneto
included Masolino, who co-authored the
magnificent Carmine Chapel in Florence
with Masaccio, and Filippo Lippi, a mas-
terofplasticityandperspective.
Antonio was intrigued by these new
ideas. Commissioned in 1440 by patrons
in Parenza in Istria, his vast 10-panel
altarpiece still relies on the antiquated
custom of setting the saints in sections
against empty gold backgrounds, but
their fluid forms enjoy a naturalism that
looksforwardtotheRenaissance.
By the early 1440s, he had been joined
in his workshop by the painter Giovanni
d’Alemagna. Few scholars pretend they
can distinguish the pair’s individual
hands but the partnership was fruitful.
Particularly gorgeous are a couple of
small panels (1440-45) attributed to
both painters, which show the miseries
of Saint Apollonia. The figures are too
stiff and static to provoke emotion.
Instead, the real drama comes from the
architecture. These fantasy courtyards,
with their spiral columns, stone eagles,
swags, cherubs, crenellations and chro-
To see the figures
interacting freely in
a naturalistic landscape
was revolutionary at
that time
matic marbles, not tomentionaplethora
of exotic Levantine headdresses, betray
artists in thrall to La Serenissima’s cos-
mopolitan flavours and a burgeoning
voguefortheantique.
By 1446 the pair were in Padua work-
ing on the Ovetari chapel in the Church
of the Eremitani, alongside Andrea
Mantegna, whose sculptural figures and
daring perspectives were the most
avant-garde in northern Italy. Antonio
responded with vigour. His “Man of
Sorrows” (1449-50) portrays Christ
standing in a sarcophagus that is deliber-
ately shadowed and angled to give the
illusionofspatialdepth.
Such progressive ideas ran in tandem
with more austere tendencies. This exhi-
bition makes a welcome effort to tease
out strands in theological thought gener-
ally overlooked by art historians. A room
devoted to the era’s “new saints” displays
paintings of 15th-century hellfire-and-
brimstone preachers such as Bernardino
of Siena. Punitive, evangelical and usu-
ally anti-semitic, they wanted a return to
the roots of Christian teaching and
shunned classical humanism as sinfully
pagan. But their powerful personalities
saw numerous devotional works painted
intheirname.
Bernardino, who died in 1444 and was
already canonised by 1450, takes centre
stage in a 1458 polyptych painted for a
church dedicated to him on the Croatian
island of Rab. With his whittled cheeks
echoing the grooves of his sober grey
cowl, a blister-red copy of the Scriptures
in his hand, he epitomises the ascetic:
passionless on the outside, flaming with
righteousardourwithin.
The Rab polyptych is, we are told, the
work of Antonio and his younger brother
Bartolomeo, who was born in the 1430s.
By the 1460s, Bartolomeo is painting
alone, and his innovation was to intro-
duce the “sacred conversation” to Vene-
tian painting. But Bartolomeo took the
genre, which essentially liberates the
holy figures in an altarpiece from their
separate panels, much further than his
brother. On show here is his glorious
“Madonna and Child with Saints”
(1465). Set against a dazzling sapphire
sky, the Virgin sits on a marble throne in
with a garland of beribboned flowers.
Other nods to the Paduan include the
cherubs and vines carved on the marble
throne — a beguiling instance of pagan
stylesinfiltratingtheChristianstory.
Bartolomeo’s experimentations occur
early his career. By the 1480s he has
retreatedtoGothicism,andhislatealtar-
pieces once again confine lonely figures
within golden cages. Most likely, he was
unable to compete with the expressive
naturalism and technical proficiency of
the new generation of Venetian artists
such as Bellini and the Sicilian Antonello
daMessina.
Young Alvise has no such limitations.
On a different planet from his uncle’s
stylised saints, his St Jerome (1476-77) is
a white-bearded penitent kneeling by a
rocky outcrop in a graceful, full-frontal
pose designed to show off the classically
beautiful body of a much younger man.
Behind him, a limpid blue river mean-
ders through grassy hills, the trees, flow-
ers and watery reflections captured with
an attention to detail that tells you the
sharp-eyed Bellini and Antonello, rather
than his own family, are his true masters.
Alvise never ceased to evolve. His
Glorious: late paintings take on a classical solidity
Bartolomeo of form and inner dynamism that
Vivarini’s stamp them as thoroughly modern.
‘Madonna and The luminous, fleshy body of his
Child with “Risen Christ” (1497-98), each
Saints’ (1465). limb turning in a different
Right: Craig direction, has no trace of
Smith and the Gothic linearity that
Catherine Carby was a signature of his
in ‘Iphigénie en fatheranduncle.
Tauride’ It’s a privilege to see all three
Vivarini generations displayed
Fabio Speranza/Museo di
Capodimonte Zsu
Richard Hubert Smith with such attention. Their
journeys were, in all their
twists and turns, forward
leaps and reverse manoeu-
vres, a mirror of Venice’s own
pathtowardstheRenaissance.
To June 5, mostravivarini.it
Opera and the Buxton Festival. English
Touring Opera has chosen his later
Iphigénie en Tauride for its newest tour,
and the company is to be applauded for
doing so.
The second of the composer’s classical
operas to trace the complex history of
Agamemnon’s children, it was enor-
mously influential and is seen by many
as his finest achievement. ETO’s general
director James Conway has chosen to
present it in the original French, and his
production treats the work with serious-
ness and clarity of purpose. Anna Fleis-
chle has designed a set that is eminently
atmospheric and it is beautifully lit by
Guy Hoare.
Within that context, though, the
director encourages acting that is over-
emotive, with much sung and gesticu-
lated at too high a pitch of intensity.
Gluck described his aesthetic as aiming
for “beautiful simplicity”: his drama
and the concentrated, serious music
demand greater restraint. I was unsure,
too, about the decision to cast the god-
dess Diana, whose last-minute interven-
tion saves Orestes from king Thoas, as a
young girl — a nice idea, perhaps, but
underwhelming in the theatre.
Musically things are more than
respectable, however. Catherine
Carby manages real nobility as
Iphigenia, singing with rich tone.
Grant Doyle is in powerful
voice as Orestes, though at
his best in his more intro-
verted moments. John-Colyn
Gyeantey, as his companion
sings with sweet tenor tone, if
not always enough cleanliness of line.
Craig Smith presents Thoas with
unrelenting aggressiveness.
The ETO chorus sings with its usual
precision and power, and Martin
André draws spirited playing from
the orchestra.
englishtouringopera.org.uk

Transition:
far left, Alvise
Vivarini’s
‘Saint
Anthony of
Padua’
(c1480-81).
Left: Antonio
Vivarini’s
‘Man of
Sorrows’
(1449-50)
Fondazione Musei Civici di
Venezia; Polo Museale
dell’Emilia Romagna

Music Pop album reviews

By Ludovic Hunter-Tilney
Tiga
No Fantasy Required
Counter Records
aaaae
Techno is a humourless form
of music, its relentless
mechanistic drive stripping
human life down to the
essentials of chemical
reactions and muscle
movements. But Tiga
Sontag’s first album since
2009 is an exception.
The Canadian DJ recites arch
descriptions of hyper-
materialism (“Bugatti”) and
life advice (“3 Rules”) in a
deadpan voice, backed by
sinewy, superbly detailed
electronic music aimed four-
square at the dance floor.
Perhaps the combination will
prove annoying over time,
but at first encounter it’s
highly enjoyable.
Loretta Lynn
Full Circle
Legacy/Sony Music
aaaee
Loretta Lynn’s reputation as
a country music pioneer for
women’s rights, penning
songs about birth control
(“The Pill”) and male sexual
hypocrisy (“Rated X”),
recently took a knock when
she came out for sexist
Donald Trump as president.
But the Nashville singer, 83,
can still sing a song: witness
her dramatic rendition of
country classic “Always on
My Mind” on her new album.
Wisely, producers Patsy
Lynn Russell and John Carter
Cash don’t over-orchestrate
the music, but instead allow
her forceful vocals, just shy
of a holler, to hold centre-
stage. Covers of old
Appalachian songs look back
at her roots; she also revisits
one of her first recordings,
“Whispering Sea”. In the dire
event of a Trump
inauguration ceremony, at
least there’ll be a singer
worth hearing.
Richmond Fontaine
You Can’t Go Back if There’s
Nothing to Go Back to
El Cortez Records
aaaae
The tales of middle-aged men
hankering for escape from
dead-end jobs or humdrum
marriages here carry an extra
significance: it is Richmond
Fontaine’s last album, the
final act in a career stretching
back to 1994. Emphatic roots-
rock and Willy Vlautin’s
weathered voice make the
songs sound at once muscular
and melancholy: a good note
on which to bow out.
12 ★ FINANCIAL TIMES Wednesday 9 March 2016

Heading to purgatory?
Italian banks have been the most vigourous issuers of equity in
the eurozone. Better economic growth and a recent abatement
of bad debts have given some hope that the worst may be over

Twitter: @FTLex Email: lex@ft.com European Bank Capital Raising Italian banks’ bad loans
$bn €bn
Germany Spain 200
Italy France
Vale/Fortescue: rising nearly one quarter on Monday 20 UnitedContinental:
on the back of the iron ore rally, 18
forge alliance Fortescue shares fell back on the day 150 delayed arrival
the deal was announced. Vale cannot 16
In hard times, miners need to work afford to buy Fortescue’s shares with so 14 United Continental Holding’s chief
together — but it has to be done right. much uncertainty ahead. Oscar Munoz is clearly tough. He
Yesterday, Vale of Brazil and Fortescue 12 100 returns to his job next week after a
of Australia — respectively the largest 10 heart transplant in January, having
and fourth-largest iron ore producers Petrobras: 8 taken the helm only in September.
— announced plans for a joint venture Worries about the integration of the
that will blend their ores for sale into rip tide 6 50 merger that created the company cost
China. Vale may take a stake in 4 his predecessor his job. United and
Fortescue of up to 15 per cent, to be For six years Petrobras’s shares rode a Continental joined forces in 2010 and
2
bought in the open market, and could tsunami of money that crested in 2008. UAL has struggled since. Recent
invest directly in Fortescue’s mines. The undertow since then has been 0 0 performance seemed at last to be
The marketing aspect of the deal brutal. The Brazilian state oil 2009 10 11 12 13 14 15 2012 13 14 15 catching up to rivals Delta and
makes sense. Blending should enable company’s shares have fallen 90 per FT graphic Sources: Dealogic; Thomson Reuters Datastream
American Airlines. But progress is hard
them to provide a more usable product cent. Cash flow halved in two years, to appreciate when sentiment towards
to their customers and help both to and covering costs for the so-called the entire sector is souring.
realise higher prices. It might also “car wash” corruption scandal ripped In Dante’s Inferno, money lenders are 2017 among medium-sized lenders, €34bn in equity since 2009, the most Mr Munoz’s hardiness will soon be
reduce production costs: Fortescue more holes in the explorer’s finances. consigned to the seventh circle of unimpressive even against Spain, of any eurozone country. tested again. Two firms, holding 7 per
says that the blend could use more of Petrobras responded by reeling back Hell, where they sit about trying to which scores 8 per cent. A further cut Some retail depositors have been cent of UAL, have put up a slate of six
its lower-grade ore, reducing waste at its investment plans. Oil production ward off the winds and fires whipping in the ECB’s deposit rate this week withdrawing their funds from banks directors. One is Gordon Bethune, who
its Chichester mines, for instance. Vale targets for 2020 fell by a third — good their bodies. Shareholders in Italian would depress lending margins further. perceived as weak. More worrying is ran Continental Airlines during the
would benefit from gaining access to news for bondholders but bad for banks know the feeling. The so-called Texas ratio — gross the hit to funding costs: the price of 1990s and is credited with its rescue.
volumes closer to China. As both have Petrobras’s suppliers. Oil-service News that the European Central non-performing loans divided by default insurance on the five-year The activists argue that the board has
facilities there already, capital companies have long depended on its Bank is monitoring liquidity levels at combined equity and provisions — is a bonds of Monte dei Paschi di Siena, been unresponsive and lacks relevant
expenditure is expected to be minimal. custom given the deepwater focus. several Italian lenders should come useful indicator of bank asset quality. Italy’s third-biggest bank by assets, skills (one board member is the
Vale taking a stake in Fortescue is Yet, even a doubling of the oil price, as little surprise to weary investors: On that score Italy’s mid-cap sector is a has more than doubled since the journalist Walter Isaacson). But their
less logical. The Brazilian miner has say to $70 per barrel, probably would the Italian MSCI bank index has flashing-red 97 per cent, second only to beginning of the year. Exhibit A is the company’s
been trying to sell assets to reduce its not ease Petrobras’s financial woes. It dropped 27 per cent this year, against Greece, according to Citigroup. Supporters argue the bad news is underperformance since the tie-up.
$26bn net debt pile. In January it had struggled to cover its spending before, a 15 per cent fall for the wider Provision coverage excluding the priced in. Italian banks trade at about The incumbents have the makings of
to draw on $3bn of emergency never mind the $13bn in bond European index. biggest lenders averages 43 per cent, 0.4 times tangible book value, half a reasonable defence. In 2015, the
financing as those sales have made redemptions that fall before the end of The problem is not just the number 9 percentage points lower than peers in the European average, while negative company’s operating margin roughly
slower progress than anticipated. The 2018. More importantly, Petrobras has of banks in Italy — there are more Spain. rates could help spur restructuring. A doubled, to 14 per cent. Cash flow has
company still looks stretched. CLSA improved its productivity so much that branches per person than restaurants Higher provisions will have a knock- December decrease in bad loan been strong enough both to fund a
estimates net debt to earnings before it may have contracted more offshore or pharmacies, according to RBS — on effect on capital and the prospect of volumes also chimes with better share buyback and reduce debt by a
interest, tax, depreciation and vessels and equipment than it actually but their quality. Return on equity is more rights issues. According to economic growth. Not paradise by quarter since 2010.
amortisation could be as high as needs. The company can drill and projected to be about 5 per cent in Dealogic, Italian banks have raised any means. More like purgatory. Still, its shares are down a tenth in
6 times in 2016. The broker forecasts begin pumping oil from its wells 20-30 the past year. Two obvious concerns
that Vale will realise just $2bn in per cent faster than in 2013. As a result, are capacity and efficiency. Revenue
operating cash flow, against capital Petrobras will probably need fewer per seat mile has been trending
expenditure of $6bn. Any pay outs for pieces of kit for shorter periods of time, stormy weather has not abated for the involves the exchange taking a cut of shops now sell on eBay, and banks lend downward across US carriers. UAL
last year’s dam burst at subsidiary thinks DNB. oil-services companies. the winnings, which are paid for by the through Zopa. It worked. By 2015 the projects that in the first quarter RSM
Samarco will not help. Demand for specialist vessels to Do not get dragged out to sea. losers instead. Bookmaking without amounts wagered at Betfair had grown will fall up to 8 per cent. At the same
Bulls might say that these numbers collect and store oil from offshore wells the bookie, tailor made for the era of 140 per cent and Mr Corcoran could time, worries about recession are
can quickly change. Indeed, since the has dropped 40 per cent in Petrobras’s eBay (buying without shops) and Zopa complete a merger with his former hitting travel firms (UAL has admitted
December lows, the price of iron ore latest investment plan to 2018. That Paddy Power Betfair: (lending without banks). employer on equal terms. to challenges everywhere from China
has rallied by two-thirds. Talk of could mean delays for companies such Paddy Power was more traditional, At €10bn, the equity value of the to Texas). The worry is that any benefit
Chinese stimulus propelled a jump of as SBM of the Netherlands, Japan’s stacking the deck taking the bookmaking risk and new entity is almost 40 times its from lower fuel costs will sap industry
one-fifth on Monday alone. And as the Modec and US-listed Teekay Offshore, winning market share from high street forecast net income. To justify this a lot discipline. Credit Suisse notes how the
miners have worked hard to cut costs, all of which depend heavily on In Guys and Dolls, the gangster Big Julie rivals by focusing more online and needs to go right. It might. Yesterday’s decline in the sector’s earnings
any improvement in pricing has a big their Brazilian contracts. The first was so determined to win that he kept promoting a gleefully daft brand. For a results showed sales in each business multiple — from 18 times to 9 times
impact on profitability. has nearly half its fleet contracted a pair of blank dice to hand. He knew while this beat Betfair, which struggled rising a fifth on the year. Paddy Power’s since late 2014 — tracks falling oil
Yet the sector’s outlook remains there. where the spots were, you see. to sell exchange-betting beyond a core bookmaking nous might help Betfair’s prices almost perfectly.
grim. Chinese iron ore inventories Better productivity will also mean Bookies also like to strip risk out of of experienced gamblers. This changed margins, according to Davy. The activists have a point. UAL’s
remain relatively high while steel less demand for ships to lay the pipes the gambling business. Pursuing scale in 2012 when they poached the chief Operational snafus should be avoided, problems, however, will not be solved
production is down about 4 per cent that connect the various offshore is one way. Paddy Power and Betfair operating officer of Paddy Power, given the boss already knows both by governance changes alone.
this year to date. Should steel prices production rigs and the wells. Oslo- recently completed a merger. The more Breon Corcoran. He focused on the businesses back to front.
rebound, production growth would listed Subsea 7 has the largest exposure wagers you take, the more evenly they casual punter, in part by opening Or, as the author of Guys and Dolls
probably resume, thinks Citigroup. to Petrobras; US-listed generalists, such fall. Another is to lay the bets off. “Sportsbook” — in effect, a traditional put it: “The race is not always to the Lex on the web
For notes on today’s breaking
Vale’s deal with Fortescue will not take as Halliburton and Weatherford, have Betfair pioneered the betting exchange, bookie. swift, nor the battle to the strong — but stories go to www.ft.com/lex
any capacity out of the market. After relatively little exposure to Brazil. The in effect peer-to-peer gambling. This A familiar tale of reintermediation — that’s the way to bet.”

Today’s temperatures
1030
Abu Dhabi Thunder 27 Malta Rain 14
HIGH 57 Amsterdam Fair 10 Manila Sun 31

1040 HI 1 0 0 0 Athens Shower 17 Melbourne Thunder 31

Bangkok Sun 36 Mexico City Rain 16
6 Barcelona Fair 14 Montreal Rain 11
LOW Beijin 5 Seoul 1010
Beijing Sun 6 Moscow Cloudy 5
HIGH Tokyo Berlin Sun 10 Mumbai Sun 33
7 Brussels Fair 10 Munich Sun 8
Islama ad LOW
Sha hai Budapest Fair 12 Nairobi Shower 28

H H 1020
OW HIGH Buenos Aires Cloudy 23 New York Sun 22
Delhi Chicago Rain 16 Oslo Sleet 4
Kolkata 2 Copenhagen Fair 6 Paris Rain 6
LO ipei
35 4 Dallas Shower 21 Perth Sun 36
Mumbai
L W 8 Hong Kong 27 Delhi Sun 30 Prague Fair 6
Hanoi
37 Dubai Thunder 26 Rio Fair 34
Yangon 1010 Dublin Fair 8 Rome Shower 12
34
36 Ma ila Edinburgh Shower 8 San Francisco Rain 19
Ban kok Frankfurt Sun 10 Seoul Sun 5
Geneva Fair 7 Shanghai Cloudy 7
Ho C i Minh City Hamburg Sun 9 Singapore Fair 33
12 1010
Colombo uala Brunei Hong Kong Rain 24 Stockholm Cloudy 5
32 36 L mpur Istanbul Fair 16 Sydney Sun 30
32 Jakarta Thunder 32 Taipei Rain 20
Singapore Johannesburg Shower 20 Tokyo Rain 11
33 Karachi Fair 30 Toronto Rain 16
31
Kuala Lumpur Fair 36 Vancouver Rain 10
32 Kuwait Shower 25 Venice Drizzle 10
Lisbon Cloudy 15 Vienna Fair 8
London Rain 8 Washington Sun 24
Forecasts by Los Angeles Sun 21 Wellington Fair 20
Wind speed Luxembourg Sun 7 Yangon Sun 37
in KPH Madrid Cloudy 13 Zurich Fair 7

CROSSWORD ACROSS
1 Badger changes hands in capital
6 Polls are free for a change
around North Dakota (9)
No. 15,184 Set by REDSHANK (6) 7 Hailstorm in Belgravia area
        4 Did judge, gutted, get told? (8) heard in parts of Africa (7)
9 Place where horse is docked (6) 8 Like small eyes, say, in the form
10 Polish worker crosses over in of ellipses (6)
  hair-raising style (8) 11 They need dates in 51 Harley St
12 Article describes cattle margins to get treatment (6,6)
 dropping as a result (9) 15 Answers concerning partners
 
13 Big flower in her novel (5) when letter turns up (9)
14 Bet on it endlessly and dream, 16 She feeds bouncy wee runts
going bust (3-5,6) (3,5)
17 Explain unknown round 18 Groovy artwork, old copper
 
container that sits on coffee wrapped in cotton (7)
 table (6,8) 19 In the shower he gets scrubbed,
21 US block or unfinished one making progress (2,5)
  
elsewhere? (5) 20 Old tax firm’s revolutionary

22 Brief answer to clue in eastern book (6)
river flowing west (9) 23 Nasty material’s begun getting
   24 Some possess crest, possibly seized (5)
revealing this? (8)
25 Not just dodgems etc don’t start
  (6)
26 Coaches keep time in books?
Nothing’s more witless (8) Solution 15,183
  27 Notice a knock occasionally ) 2 8 5 7 + ( 6 7 $ 7 (
interrupting this? (6) % 2 1 ( * $ :
$ ( 5 2 6 2 / 5 8 6 6 , $ 1
DOWN , 6 3 ( ( 7 1 2
1 Before 10, quietly obtain mixed / ( $ ' , 1 * 7 + , & . ( 1
blocks of colour here (8) ( . ( 5 ( / (
JOTTER PAD 2 Cold lecturer left overcoat in
<
%
, ( / ' $ 7
0
7 2 5 1 ( <
8
6
6
hospital department (7) 5 ( + ( $ 5 6 ( 5 6 & 2 5 (
, ( 5 1 8 9 1
3 Edict from the Kremlin: “Employ ' ( 5 , ' ( ' & 2 1 & ( 3 7
Ford parts” (5) * 2 8 , 2 5 5 ,
5 Saw supporter holding one, so ( 3 ,
1
6 2 ' (
8 *
$ / , % $ %
7 6 /
$
/
tradition has it (12) 6 ( 1 6 ( 2 ) 6 0 ( / /
Wednesday 9 March 2016 ★ 13

Age-old problem Japan’s family Fortescue Casino Tesco Brent oil Xetra Dax 30-yr Japan
govt bond
Gold Dollar / yen

businesses pass on to strangers 9.42% 1.64% 1.75% 2.3% 0.9% 22bp $2 0.8%
INSIDE ASIA, PAGE 14
A$2.79 €47.77 195.15p $39.92 9,692.82 0.46% $1,265 Y112.55

Prosecutors widen probes into VW Short

View
3 Fallout from emissions scandal spreads 3 France finds carmaker cheated ‘with intent’
PETER CAMPBELL — LONDON from the emissions affair. VW’s shares French government set up a commis- ior managers who were previously sus-
Roger
MICHAEL STOTHARD — PARIS closed down 4 per cent at €112.30. sion the following month to test emis- German pended by the company are now being Blitz
Analysts have estimated the emis- sions on 100 cars in France from a range prosecutors investigated by the prosecutors.
European prosecutors tightened the sions scandal could cost VW as much as of domestic and international carmak- VW said its French unit had so far
screw on Volkswagen yesterday as the $50bn in fines, lawsuits and other ers. In January it said that initial results more than “received no information or official con- Noticed anything about coverage of Mario Draghi lately?
fallout from the emissions scandal expenses. The company admitted last showed VW cars were using software to doubled the firmation about the judicial probe of The European Central Bank president is no longer “Super
spread. September that up to 11m diesel vehi- cheat during tests. Paris prosecutors” but stressed it would Mario” and seems to have mislaid his “big bazooka”.
As France announced that it had cles worldwide were fitted with soft- Nathalie Homobono, head of the number of “continue to co-operate openly and The ECB’s last meeting in December, when Mr Draghi
opened a formal probe into “aggravated ware-based defeat devices that served French agency that tackles fraud, said VW staff fully with the relevant authorities in under-delivered on promised policy easing, explains why
fraud” at Europe’s largest carmaker by to understate emissions of harmful yesterday that it had been established France”. the lustre is lost. Investors took it badly and the euro rose
sales, German prosecutors said they had nitrogen oxides in official tests. that VW cheated “with intent”. being It declined to comment on the 3 per cent — its biggest one-day rise in six years. A competi-
more than doubled the number of VW French authorities opened an investi- Separately, German prosecutors said investigated German prosecutors’ investigation. tive currency, which Mr Draghi needs to revive the euro-
staff being investigated. gation into VW on February 19 after a they had widened their inquiries to As well as recall expenses, VW is zone economy, remains elusive.
The developments came after Matth- preliminary inquiry in October last year 17 VW employees, having previously contending with lawsuits. Allianz Global Has the market learned its lesson? Probably not. Since
ias Mueller, VW’s chief executive, that found evidence of cheating, accord- investigated six workers. None is from Investors, a VW shareholder, is mid-February, the euro is down about 3 per cent but that
warned staff that the German company ing to the Paris prosecutor’s office. the company’s management board, said expected to launch a suit over the affair leaves the stage set for another dose of policy disappoint-
would suffer “substantial and painful” After US regulators revealed VW’s Klaus Ziehe, one of the prosecutors. by next Monday. ment, followed by the inevitable bounce.
damage to its reputation and finances wrongdoing on September 18, the It is unclear whether any of the 10 sen- Additional reporting by Patrick McGee How quickly things have worsened since December. Pol-
icy divergence from the US was meant to drive the euro
towards dollar parity and bolster inflation. However, while
his Federal Reserve counterpart Janet Yellen raised rates,
Mr Draghi could not keep to his side of the equation.
Market turmoil has done the euro no favours. Uncer-
United challenged tainty drives investors to havens, and the euro is one of
Bethune leads proxy them, while euro-funded carry trades have been
unwound. Meanwhile, the market blew a raspberry at the
battle to join board Bank of Japan’s negative interest rates, blunting sentiment
towards one of the ECB’s few remaining policy tools.
Quantitative easing, the policy that made Mr Draghi’s
United Airlines’ parent company faces reputation, looks spent. Sure, the euro has fallen a quarter
fresh turbulence after an investor group since mid-2014 when QE first crossed Mr Draghi’s lips. But
fronted by former Continental Airlines inflation has stalled, Germany has slipped back into defla-
chief Gordon Bethune launched a proxy tion and growth is painfully slow.
battle to join the board, writes Robert Where does that leave the euro? Higher, at $1.16 by mid-
Wright in New York. year, according to BNP Paribas. With investors less likely
Mr Bethune represents two to seek higher returns abroad in a climate of risk aversion,
shareholders, Altimeter Capital and a healthy surplus is likely to prop up the currency.
PAR Capital, that together control 7.1 per Perhaps the ECB should cut its losses and accept that a
cent of United Continental Holdings, 25 per cent euro depreciation over two years is not a bad
the airline’s parent company that was outcome. There are other threats — the migrant crisis,
formed from the merger of United and Brexit fears — so if the euro comes out of the ECB meeting
Continental in 2010. They are seeking to broadly on trend, that may have to suffice. The only way to
to place Mr Bethune and five others on get euro weakness is for the Fed to deliver a faster cycle of
United’s board. interest rate rises. Perhaps Mr Draghi should hand his
United has benefited far less than its bazooka to Ms Yellen — if he ever finds it.
rivals from the buoyant conditions over
recent years in the US aviation market
and is less profitable than American Euro against the dollar
Airlines or Delta Air Lines, its two main $ per €
peers. Brad Gerstner, chief executive of 1.4
Altimeter, said that the two ECB meeting
Mar 10 1.3
shareholders had been “greatly
ECB meeting
disappointed” with United’s “poor Dec 3
performance and bad decisions”. 1.2 The euro has lost a
United sought to head off the quarter of its value
shareholders’ action by adding three 1.1 since mid -2014,
members to its board, taking the total to but has stalled
1.0
15 — a move that Mr Gerstner labelled a over the last 12
“cynical attempt to preserve power”. 2014 15 16 months
Lex page 12 Source: Thomson Reuters Datastream
Report page 14
roger.blitz@ft.com
John Gress/Reuters

Debt markets pass milestone as bank

issues first sub-zero non-state bond
THOMAS HALE AND ELAINE MOORE Covered bonds are viewed as one of its third programme to buy such debt.
LONDON
the safest corners of debt markets Investors have complained that the cen-
A German bank has become the first because, in the event of default, buyers tral bank’s actions have distorted the
non-state borrower to issue euro have recourse both to the issuing bank market, pushing yields down.
denominated debt at a negative yield, itself and a pool of underlying assets. Covered bond purchases have formed
another milestone as the continent’s The debt instruments date back to the a part of the ECB’s broader asset pur-
financial system moves further into the 18th century and play a big role in bank chases, including sovereign quantitative
Delta Lloyd approaches world of sub-zero interest rates. funding across Europe. easing, which are designed to shrink
key vote on €650m issue Other covered bonds are trading at yields and boost the economy.
The issuance comes ahead of a Euro- negative yields in secondary markets, In government bond markets, sub-
Dutch insurer Delta Lloyd has endured pean Central Bank meeting this week but the Berlin Hyp deal marks the first zero yields account for about one quar-
a traumatic 15 months, marked by legal when the effect of negative interest rates time yields have been negative at the ter of JPMorgan’s global index. Coun-
battles with its regulator and its will be in the spotlight. point of sale. “It feels counter-intuitive,” tries including Japan, Germany, France
largest shareholders. Matters will come Berlin Hyp yesterday issued €500m said Joost Beaumont, a strategist at ABN and Poland have sold debt at negative
to a head later this month when of covered bonds with no coupon and Amro. “You invest in something and yields, “Investors who normally buy
shareholders are set to vote on a priced to yield minus 0.162 per cent, you already know the return will be government bonds are faced with much
controversial €650m rights issue. according to Bloomberg data. Investors negative. more negative yields, so for them it
Analysis i PAGE 16 are guaranteed to lose money if they The ECB has bought nearly €160bn of becomes attractive to switch to covered
hold the bonds to maturity. covered bonds since late 2014, as part of bonds,” said Mr Beaumont.

Companies / Sectors / People

Companies
3G Capital.....................................................15
Alcentra........................................................20
Alibaba.....................................................15,16
AlixPartners...............................................20
American Airlines..............................12,14
Anglo American.................................20,21
Ant Financial..............................................15
Antofagasta................................................21
Apple.................................................................5
Attica Bank...................................................5
BATS Global Markets..........................20
BHP Billiton.................................................21
BNP Paribas.............................................1,15
Bank of America...................................1,15
Bank of Tokyo-Mitsubishi UFJ..........1
Barclays......................................................1,15
Betfair ...........................................................12
Big C Supercenter..................................14
BlackBerry...................................................10
Blink Health................................................10
Bristol-Myers Squibb............................16
CBOE..............................................................20
CMA CGM....................................................17
CME.................................................................16
Casino Guichard-Perrachon..............14
ChemChina..................................................22
Chevron.........................................................17
China Citic Bank......................................22
China Development Bank..................22
China National Chemical....................22
Citigroup....................................................1,15
Close Brothers...........................................21
ConAgra Foods.........................................15
Credit Suisse...........................................1,15
Danone..........................................................14
Delphi Automotive.................................14
Delta Air Lines....................................12,14
Delta Lloyd..................................................16
Deutsche Bank.......................................1,15
Deutsche Börse........................................16
Diageo............................................................16
EDF....................................................................8
EYDAP.............................................................5
Ebay.................................................................12
Eramet...........................................................20
Evian...............................................................14
ExxonMobil..................................................17
Fortescue......................................................12
Foxconn........................................................14
GlaxoSmithKline.......................................16
Glencore..............................................7,20,21
Goldman Sachs...............................1,15,20
GoodRx..........................................................10
Google............................................................14
Grindeks........................................................14
HSBC..............................................................22
Halliburton...................................................12
Heinz...............................................................15
Hillshire..........................................................15
Honda.............................................................14
Honeywell......................................................5
Hugo Boss...................................................22
Intercontinental Exchange................16
JPMorgan..................................................1,15
JetBlue...........................................................21
Kingfisher Airlines..................................16
Kraft.................................................................15
LCH.Clearnet..............................................16
Lindt & Sprüngli......................................16
London Stock Exchange.....................16
Maersk............................................................17
Mediterranean Shipping Comp.......17
Mizuho..............................................................1
Modec.............................................................12
Mondelez International..........................5
Monte dei Paschi.....................................12
Morgan Stanley.....................................1,15
Morrison........................................................21
Muddy Waters..........................................14
Nestlé.............................................................16
Nihon M&A Center.................................14
Nike...............................................................1,14
Nikkei..............................................................17
Npower..........................................................17
Oakbay Investments................................7
Ola....................................................................10
Open Text...................................................10
PAR Capital................................................14
Paddy Power..............................................12
Pearson..........................................................17
Pebble............................................................10
Petrobras......................................................12
Pinnacle Foods..........................................15
Piraeus Bank................................................5
Porsche.......................................................1,14
RWE.................................................................17
Rio ...................................................................21
SBM..................................................................12
Sahara Holdings.........................................7
Samsung.........................................................5
Shake Shack...............................................21
Sharp..............................................................14
Sinopec..........................................................22
SoftBank........................................................15
Sompo Japan................................................1
Sony................................................................14
South African Airways...........................7
Southwest Airlines..................................21
Spirit Airlines.............................................21
Sports Direct.............................................22
State Bank of India................................16
Sumitomo Mitsui........................................1
Syngenta......................................................22
TAG Heuer...............................................1,14
TCC Group..................................................14
Teekay Offshore......................................12
Tesco...............................................................21
Thalmic Labs.............................................10
Tokio Marine.................................................1
Tyson Foods...............................................15
UBS................................................................1,15
Uber...........................................................10,15
United Airlines..........................................14
United Continental Holdings.....12,14
United Spirits.............................................16
United Technologies...............................5
Urban Outfitters.......................................21
Vale..................................................................12
Vidyard..........................................................10
Vivendi...........................................................17
Votorantim Metals.................................20
Weatherford................................................12
Worldpay......................................................21
Yahoo..............................................................15
Zopa.................................................................12
Sectors
Airlines...........................................................14
Banks............................................1,9,12,15,22
Basic Resources......................................20
Energy............................................................17
Financials..............................13,15,16,20,22
Food & Beverage...............................15,16
Healthcare...................................................10
Industrials.......................................................7
Insurance......................................................16
Media..............................................................17
Mining......................................................12,20
Oil & Gas.........................................8,9,12,17
Pharmaceuticals.......................................16
Retail & Consumer.................................14
Technology......................................10,14,15
Transport......................................................17
Travel & Leisure.............................1,12,14
Utilities.............................................................8
People
Abrahams, Clifford..................................16
Aggarwal, Bhavish..................................10
Bethune, Gordon.....................................14
Bhati, Ankit.................................................10
Block, Carson.............................................14
Buffet, Patrick..........................................20
Chaiken, Geoffrey...................................10
Connolly, Sean...........................................15
D’Hinnin, Dominique..............................17
Gerstner, Brad...........................................14
Glasenberg, Ivan.....................................20
Hasebe, Tsuyoshi....................................17
Hoek, Niek...................................................16
Jianxin, Ren................................................22
Kalanick, Travis........................................10
King, Tom.....................................................15
Kondo, Katsuyoshi..................................17
Ma, Jack........................................................15
Mallya, Vijay...............................................16
Migicovsky, Eric.......................................10
Munoz, Oscar.......................................12,14
Okada, Naotoshi.......................................17
Poe, Grace.....................................................4
Rolet, Xavier...............................................16
Roozen, Emiel............................................16
Tanner, Ernst.............................................16
Terium, Peter.............................................17
Van der Noordaa, Hans......................16
Watson, John.............................................17
Yu, David......................................................15

© The Financial Times Limited 2016 Week 10

14 ★ FINANCIAL TIMES Wednesday 9 March 2016

COMPANIES
INSIDE BUSINESS
Airlines
ASIA

Bethune starts proxy battle at United Leo

Former Continental chief
seeks to join board and
halt ‘poor performance’
ROBERT WRIGHT — NEW YORK
United Airlines’ parent company faces
renewed uncertainty after the former
chief executive of Continental Airlines
launched a proxy battle yesterday to
join the board and reverse the com-
the time Mr Munoz had been in charge
less than six weeks.
He replaced Jeff Smisek, who had
been forced to stand down during a fed-
eral investigation into allegations that
United had bestowed favours on the
former chairman of the New York and
New Jersey port authority, which owns
the area’s airports.
Mr Bethune represents two share-
holders that together control 7.1 per
cent of the stock in United Continental
During morning trading in New York
yesterday, United’s shares were down
almost 3 per cent at $56.06.
Brad Gerstner, chief executive of
Altimeter, said it and PAR had been
“greatly disappointed” with United’s
“poor performance and bad decisions”
for several years. Mr Gerstner is one of
the board candidates, as is Rodney
O’Neal, the former chief executive of
Delphi Automotive.
But on Monday United sought to head
Lewis
Altimeter and PAR published a letter
to Henry Meyer, the United chairman,
calling for “meaningful change” to
reverse “poor board governance and the
resulting many years of substantial and
Tears and emotion as
inexcusable company underperform-
ance relative to United’s competitors”.
Japan Inc’s founders
Mr Meyer responded that United had
tried to engage in a “constructive, good-
faith dialogue” with Altimeter and PAR.
pass on the mantle
‘We are The announcement of the three new
board members, and a fourth yet to be
deeply

pany’s “substantial and inexcusable
. . . underperformance”.
The action by Gordon Bethune comes
two days after Oscar Munoz, United’s
chief executive, announced that he
would return to work next Monday
after nearly five months’ absence fol-
lowing a heart attack last October. At
Sponsorship
Holdings, the parent company, which
was formed from a merger of United
and Continental in 2010.
Altimeter Capital and PAR Capital are
seeking to place Mr Bethune and five
others on the board. United is less prof-
itable than American Airlines or Delta
Air Lines, its two main US peers.
off the shareholders’ action by adding
three members to its board, taking the
total to 15 — a move Mr Gerstner called a
“cynical attempt to preserve power”.
He added: “Stockholders and employ-
ees deserve a . . . diverse board that has
the experience required to end years of
chronic underperformance.”
named, had shown United’s willingness
disappointed to make changes to its board, he said.
that [they] “We are deeply disappointed that . . .
have PAR and Altimeter have unilaterally
taken this hostile action with no con-
unilaterally cern that a proxy fight could distract the
taken this company from executing on Oscar’s
hostile action’ strategic plan,” he added.
T
he view from the boardroom of Nihon M&A
Center is a glorious urban sweep that brings in
the Bank of Japan, the twinkling waters of
Tokyo bay and the soaring Sky Tree tower.
Inside — about twice a week on average last
year and even more frequently of late — the room is a
chamber of tears. The blubbing, described by the centre’s
head, who has witnessed it on many occasions, has become
the soundtrack of Japan in the grip of change as it reworks
attitudes towards business, succession and closure.
Some 67 years since most baby boomers were born, mil-
lions of once entrepreneurial spines are stooping with age,
and the biggest generation Japan ever produced is tearfully

Brands drop Sharapova after star admits failing drugs test
BRYAN HARRIS — HONG KONG
JOHN MURRAY BROWN — LONDON
Three of Maria Sharapova’s biggest cor-
porate sponsors have suspended their
contracts with the Russian tennis star
after the former world number one
revealed she had failed a drugs test at
the Australian Open in January.
Sportswear group Nike and Swiss watch
brand TAG Heuer said they have
dropped their sponsorships, while car-
maker Porsche said it would “postpone
planned activities” with the player until
further details were released.
Ms Sharapova — the highest-paid
female athlete — announced on Monday
that she had tested positive for meldo-
nium, an endurance-enhancing drug.
“I did fail the test and take full respon-
sibility for it,” said the 28-year-old, who
stormed on to the world stage in 2004
when she won Wimbledon aged 17.
A rash of sports scandals has left
sponsors increasingly nervous about the
value of their deals with sports and indi-
vidual athletes. Last month, Fifa, world
football’s governing body, said its trou-
bles had left a $550m hole in its budget
though lost commercial opportunities.
Adidas, the sportswear group, has also
ended its sponsorship deal with the
IAAF, the world athletics body plagued
by doping scandals.
Nike alone has cancelled deals with
Oscar Pistorious, the South African Par-
alympian convicted of killing his girl-
friend, Manny Pacquiao, the Filipino
boxer who made homophobic com-
ments, Lance Armstrong, the cycling
drug cheat, and Ray Rice, the American
football player who physically abused
his wife.
Ms Sharapova said she had been tak-
ing the drug under its alternative name
mildronate for the past 10 years for
health reasons and that she had not
known the substance was banned.
Meldonium was added on January 1 to
the list of substances banned by the
International Tennis Federation, world
tennis’s governing body, following a
decision last September. The ITF said it
would suspend Ms Sharapova with
effect from Saturday March 12, pending
“determination” of the case.
Guidelines from the body call for a
four-year suspension in the event of a
positive drug test, although this can be
reduced for first-time offences or if the
player bears no fault or negligence.
Nike said it was “saddened and sur-
prised” by the news. “We have decided
to suspend our relationship with Maria
while the investigation continues,” it
said in a statement.
Ms Sharapova has long been consid-
ered sport’s biggest female brand, top-
ping Forbes’ ranking of the world’s high-
est-paid female athletes in each of the
Bad call: Ms Sharapova is the highest-paid female athlete and receives more than $20m in annual endorsements — Jean-Paul Pelissier/Reuters
Meldonium, also known as mildronate,
Q&A was developed by the Latvian Institute
of Organic Synthesis during the 1970s as
a treatment for ischemia — restricted
blood flow around the body, writes Clive
Meldonium Cookson, Science Editor.
Today meldonium is manufactured by
Drug widely Grindeks, a Latvian pharmaceutical
prescribed company, and prescribed extensively in
in Russia Russia and eastern Europe but is not
and eastern licensed in the US and western Europe.
The World Anti-Doping Agency
Europe (Wada) said it monitored meldonium on
the basis of “evidence of its use by
athletes with the intention of enhancing
performance”.
Wada decided to add the drug to its
prohibited list of metabolic modulators in
September and the ban came into effect
on 1 January 2016.
Grindeks says on its website that
mildronate is “widely used for the
treatment of different heart and vascular
diseases, as well as for the improvement
of work capacity of healthy people at
physical and mental overloads”.
Last year, researchers at Germany’s
Centre for Preventive Doping Research
in Cologne reported in the professional
journal Drug Testing and Analysis that
meldonium “demonstrates an increase in
endurance performance of athletes,
improved rehabilitation after exercise,
protection against stress, and enhanced
activations of central nervous system
functions”.
Maria Sharapova is not the only
Russian athlete to have tested positive
for meldonium this year.
Ice dancer Ekaterina Bobrova, an
Olympic gold medallist, pulled out of the
World Figure Skating Championships
after the drug was detected in her blood
while last month the cyclist Eduard
Vorganov was provisionally suspended
by the sport’s governing body, Union
Cycliste Internationale, after a test
showed traces of meldonium.
past 11 years. TAG Heuer said in a state-
ment that it had been in talks to extend
its deal with the tennis star but has now
decided “not to renew the contract”.
Porsche said: “We regret the current
news about Maria Sharapova. Until fur-
ther details emerge and we are able to
analyse the situation, we have decided
to suspend planned activities.”
She is also sponsored by Evian, owned
by French group Danone, which said:
“Evian attaches great importance to
health, integrity and to transparency,
and we will follow closely the develop-
ment of the investigation.” Avon,
another sponsor, declined to comment.
Ms Sharapova receives more than
$20m in annual endorsements — a fig-
ure that dwarfs her 2015 prize money by
a multiple of six. The deals gave the
companies image rights for billboards
and magazines, and also access to her
vast presence on social media. The ten-
nis player has more than 15m Facebook
followers and another 2m on Twitter.
looking to palm the family business off on a stranger.
This is uncharted demographic territory that will reveal
much about both where Japan’s next generation of com-
pany founders will come from and how a landmark sale of
Sharp into the hands of a Taiwanese buyer may play out.
That is where publicly listed Nihon M&A Center, along
withascrumofprivateequityhopefuls,comesin.Thecom-
pany has a rapidly swelling database of hundreds of private
Japanese companies that have expressed interest in being
sold,alongwithalonglistofpossible(Japanese)buyers.
The sense, partly induced by the reformist policies of
Abenomics, that the rules of business are shifting has
helped propel both sides of these deals through Nihon
M&A’s door. The sellers approach from all sectors — cater-
ing, brewing, construction, specialist engineering and
retail. Those most likely to find a buyer are small hospitals
and drugstores. Buyers are often larger companies looking
to consolidate in a shrinking market.
On paper, sellers have much in common. They are con-
stituents of Japan’s vast small and medium enterprise sec-
tor, which collectively employs 70 per cent of the work-
force. The average age of the company owners who
approach the centre is 67 and they are eager to sell before a
planned retirement at 70. Their children, almost univer-
sally, have not learnt the
family trade, have no wish to
take over the business and
Baby boomers are
would prefer a pile of cash to tearfully looking
the tax-related headaches of
inheriting a business.
to palm the
The sellers know they are family business
part of Japan’s grinding
acceptance of age and mar-
off on a stranger
ket reality, but they feel
there is face to be upheld. The owner of a small eel restau-
rant, masking a desperation to sell, will approach with the
pride of a booming global carmaker. Many initially pre-
tend to be potential buyers before allowing that they are
actually putting the business up for sale.
When a deal is eventually done, Nihon — which managed
to broker 450 in fiscal 2014 and expects to have completed
600 in the year ending March 31 — organises a handover
ceremony in that tear-soaked Tokyo boardroom. Mawkish
messages are read aloud by families of the seller as com-
panystampsarepressedontothecontract.
There are two important takeaways. The first is to
rememberjusthowentrepreneurialJapanis.Thesellersare
drawn from a bloc of businesspeople who rebuilt postwar
Japan with ambition and innovation. Some expanded to
becomeHondaand Sony;Nihon’slittleclientsmaynothave
done,buttheystillmasteredtheartofsurvival.
The fact their children don’t want to take over is to be
celebrated. Between 2010 and 2014, the number of new
companies registered each year in Japan rose by 21 per
cent to 106,000 — mostly younger Japanese who want to do
something other than taking over a family firm.
The second is to recognise just how wrenching are the
emotions that surround the sale of a business in a country
that has spent four decades imagining itself as a buyer.
Even with a small firm, the warm glow of a cash exit, an all-
domestic solution and a deliberately sought sense of clo-
sure, the pain is raw.
It is difficult to overstate how widely the trauma will
reverberate if Sharp this week becomes the first major Jap-
anese technology company to be sold into the foreign
hands of Taiwan’s Foxconn. Optimistically, it could be gal-
vanising: a prompt for Japan Inc to recognise that survival
is very much at stake and that lifelines lie in expanding and
buying overseas.
Even if that happens, though, somewhere within Sharp
there will surely be tears. Across the corporate world,
there will be a dread fear that a line has been crossed and
that the outside world is now free to make Japan cry.
leo.lewis@ft.com

Retail Technology

Muddy Waters renews Casino short sell attack World Go champion limbers up for AI challenge
ADAM THOMSON — PARIS
Short seller Muddy Waters has
renewed its attack on Casino Guichard-
Perrachon, questioning the health of
the French retailer’s domestic market
and accusing it of being “evasive” with
investors.
In a report published yesterday, the US
research firm headed by Carson Block
said it was revising down its 2014 esti-
mates for Casino’s adjusted earnings
before interest, tax, depreciation and
amortisation (ebitda) for its France
retail business by 9.1 per cent, claiming
that the group inflated them via real
estate transactions.
“Without financial engineering,
Casino would continue to show medio-
cre performance in France,” Muddy
Waters said in the report.
It also said it had found evidence sug-
gesting that there were much bigger
governance and accounting problems at
Casino’s Brazilian subsidiaries Cnova
and GPA than the group had disclosed.
Muddy Waters said its evidence
“calls into question Casino’s ability to
operate its far-flung retail empire, and
its willingness to be forthright with
investors”.
Casino, which owns a string of super-
market brands and is due to report full-
year earnings today, declined to com-
ment. By lunchtime yesterday its shares
had fallen 1.9 per cent to €47.67.
The renewed pressure follows an
attack in December when Muddy
Waters described Casino as one of the
“most overvalued and misunderstood”
companies it had ever studied. The
stock plunged 10 per cent as a result.
Casino shares tumbled again in Janu-
ary after Standard & Poor’s signalled its
concerns. “The group’s profitability will
continue to be fairly weak for an
extended period of time and its debt lev-
els, primarily located at the French
operations, too high,” the rating agency
said in a report.
It placed Casino’s long-term BBB- and
short-term A3 debt ratings on credit
watch, adding that it could lower the
long-term standing “by no more than
two notches” — a move that would
downgrade its debt to “junk” status.
Since then, however, Casino said it
had agreed to sell its stake in Thailand’s
Big C Supercenter to TCC Group for
€3.1bn excluding debt in a deal reducing
its debt by €3.3bn. It fulfils most of a
commitment to sell €4bn in assets as it
seeks to cut its €6bn of net debt.
Casino shares rallied last week and,
even with yesterday’s fall, have gained
13 per cent so far this year.
SONG JUNG-A — SEOUL
The world champion of ancient Chi-
nese board game Go is confident he can
beat Google’s AlphaGo machine, ahead
of a high-profile match that could yield
a historic milestone for artificial intelli-
gence.
Lee Se-dol, the South Korean who has
been the top Go player in the world for
the past decade, predicted he would win
easily in the five-game match, which
will be played over five days starting
from today.
“It would be a computer’s victory if it
wins even one game,” Mr Lee said. “I
believe human intuition and human
senses are too advanced for artificial
intelligence to catch up. I doubt how far
AlphaGo can mimic such things.”
AlphaGo, developed by Demis Hassa-
bis and colleagues at Google DeepMind
in London, already beat Fan Hui, the
European Go champion, by five games
to zero in October — a feat that experts
had predicted would take a decade.
Mr Hassabis stressed that AlphaGo
has made many improvements since
October. That match was played behind
closed doors with the results published
in scientific journal Nature.
“I saw the record of the match with
Fan Hui and was surprised to see the
level that AlphaGo has achieved, but it is
not yet up to my level,” Mr Lee said. “I
don’t think that five months are enough
time for it to improve that much to beat
me.”
DeepMind uses games as a testing
ground for AI algorithms that could
have real-world applications. “We think
it is very efficient to develop AI algo-
rithms and test them in game settings,”
Mr Hassabis said.
He predicted that it would still take
many decades to create human-level AI
but said the match will provide a chance
for researchers to assess the learning
algorithm’s flexibility and ability to
solve complex problems that could be
applied to a range of industries.
“Ultimately, we want to use this tech-
nology for more than just playing
games,” he said. “What we hope to do is
to apply [it] to a lot of real-world prob-
lems in the future, including health-
care . . . robotics, household robots,
robots that care for the elderly and the
smart assistant on your phone.”
If Mr Lee wins, Google will pay him
$1m and if he loses the company will
give $1m to charity.
The game of Go, which dates back
more than 2,500 years, has an estimated
40m regular players worldwide and
1,000 professionals, mainly in east Asia.
Wednesday 9 March 2016
US investment banks surge ahead
European institutions renew focus on core business, where they fell back the most in 2015
LAURA NOONAN
INVESTMENT BANKING CORRESPONDENT
Europe’s top investment banks lost
ground to their US rivals on almost
every financial measure last year, but
the continent’s top banking executives
remain convinced they can deliver
growth in important areas this year.
Analysis by the Financial Times of
banks’ 2015 financial statements shows
investment banking and securities arms
of Credit Suisse (excluding its Swiss and
APAC investment bank), Deutsche
Bank, Barclays, BNP Paribas and UBS
suffered an 8 per cent fall in total reve-
nues last year, far worse than the 0.8 per
cent revenue fall at the same units of
JPMorgan, Citigroup, Morgan Stanley,
Bank of America and Goldman Sachs.
Europe’s investment banks have
entered 2016 with diminished financial
resources, but more focus. Credit Suisse,
Barclays, Deutsche and BNP are all cut-
ting costs at their investment banks and
are embarking on new, or revised, stra-
tegic plans.
They also hope to benefit from a Euro-
pean economic rebound, which could
increase investment banking fees for
them in much the same way that last
year’s US economic recovery helped
banks across the Atlantic.
And there are outside hopes that
European policymakers will implement
initiatives that recognise the impor-
tance of maintaining strong European
investment banks so the continent is not
wholly dependent on foreign operators.
An important feature of the European
banks’ strategic plans is refocusing on
core investment banking, the old-
school business of advising clients on
mergers and acquisitions and helping
them raise equity and debt. These activ-
ities are particularly in vogue because
they do not require much capital.
They are also where European banks
were weakest last year, as their revenues
fell 17 per cent versus a 0.9 per cent fall
at the US banks.
That is a far bigger difference than in
markets and securities, where Euro-
pean banks’ revenue fell almost 9 per
cent while US banks’ fell 0.8 per cent.
Paul Stefanick, head of corporate and
investment banking for the Americas at
Deutsche, says his bank can improve its
position on last year — where its global
investment banking revenue fell 6.5 per
cent. “We’ve always been five or six
[globally], but with the kind of invest-
ment we continue to make in this busi-
ness, we think at some point in the not
too distant future we could move into
the top four globally,” he says.
Deutsche’s investment plans include
growth in equity sales and research, and
hiring more bankers for the investment
bank.
Credit Suisse is also targeting invest-
ment banking growth by hiring more
‘Provocative’ change on the menu as
ConAgra chief targets trendy rivals
US group seeks to regain lost
ground through a focus on
innovation and healthy eating
LINDSAY WHIPP — CHICAGO
ConAgra Foods’ chief executive says the
company needs to be more aggressive in
keeping up with the changing consumer
tastes roiling the food industry.
“You’re either exciting or you’re bor-
ing, and if you’re boring you’re in trou-
ble,” says Sean Connolly. “So we have to
make our products more contempo-
rary, more relevant and more provoca-
tive.”
Mr Connolly also tells the Financial
Times that, while he is focused on split-
ting the food company into two separate
entities and cutting $300m in costs, he
would consider other options should
they create better value for sharehold-
ers. He declines to say if the company
has received an approach.
The industry veteran has been mak-
ing radical changes since he took the
reins nearly a year ago as he tries to
adapt to demand for healthier foods.
He has sold off an underperforming
private-label business and is splitting it
in two. The main company will com-
prise its branded packaged food opera-
tions, including Chef Boyardee and Slim
Jim, the other focusing on Lamb Wes-
ton, which supplies french fries.
The decision to split ConAgra fuelled
debate over whether Mr Connolly is pre-
paring for a combination with another
group either as buyer or seller. As chief
executive of Hillshire, he had been close
to a takeover of Pinnacle Foods before
opting to sell to Tyson Foods in 2014.
Winning streak
Last year’s US economic recovery helped the sector heavyweights; peers in Europe hope they are in for a similar rebound effect on fees this year — Alamy
European v US investment banks
Annual % change, 2015
Europe US
Investment banking and securities divisions
Revenue Pre-tax
profit
20
10
0 0
-10
-20
-71
FT graphic Sources: companies; FT research
managing directors to attract new cli-
ents. Jim Amine, chief executive of the
investment banking and capital mar-
kets division, says the bank could use
these hires to increase market share.
He has “scaled back” hiring plans
since the end of last year, citing “market
conditions” in early 2016, as China’s
economy worsened and commodity
prices fell. But the bank will “selec-
Only ‘significant recovery
in European macro growth
and markets’ could change
the balance of power
Food & beverage. New tastes
“We’re going to build two companies
that we think are going to generate a lot
of returns for shareholders, and we have
a lot of work to do to deliver that,” Mr
Connolly says, adding that the plan is to
complete the ConAgra split within a
year.
“But we’re a public company, which
means that any company can be
approached at any time. Our overarch-
ing philosophy on value creation is that
we have to continuously . . . look at dif-
ferent pathways to maximise value for
shareholders and we have to have a base
plan, a plan that’s going to create a lot of
value. If something else were to emerge
that would create more value, obviously
we have to consider it because it is our
goal to maximise value.”
The US packaged food industry is
undergoing huge change as consumers
demand healthier foods, simpler ingre-
dients and fewer artificial flavours and
additives. Meanwhile, there has been a
number of acquisitions, led by Brazilian
cost-cutting experts 3G Capital, whose
ability to slice costs via zero-based
budgeting at Heinz and at Kraft after
its merger with the ketchup maker,
has forced many companies to take
more dramatic fat-shedding initia-
tives.
ConAgra’s struggle reflects these
broader trends. Mr Connolly
says it needs to move
“aggressively” to regain rel-
evance through innova-
tion, and by
focusing on
health and well-
Sean Connolly: plans
‘to create a lot of value’
★ FINANCIAL TIMES
COMPANIES
Investment banking
Headcount Total
revenue
* Debt capital markets ** Equity capital markets
*** Fixed income, currency and commodities
tively” increase capital and hire more
bankers, Mr Amine says.
Barclays, which has been hunting for
an investment bank chief since the
departure of Tom King last week, was
one of the stronger European operators
last year, with combined investment
banking and markets revenue falling
0.2 per cent while pre-tax profits rose
almost 17 per cent.
John Langley, the UK bank’s head of
global finance and risk solutions, says he
is “cautiously optimistic,” about 2016.
“There will continue to be [market]
headwinds, but what we saw last year
and what we see regularly is that our
market share goes up when markets are
more challenging . . . Clients tend to
rely on their core banks.”
ness and positioning the brands as pre-
mium ones.
He adds that some of its brands have
“probably been undermanaged or
neglected”, highlighting changes it is
making to its Healthy Choice brand,
including simpler ingredients, a more
contemporary package and more pro-
tein content.
He says ConAgra is reviewing its exist-
ing brands to determine which ones are
drivers of sales growth, which ones are
strong cash generators that could be
used to invest in stronger brands, and
which do not contribute at either level.
“If we have other businesses that we
can’t see contributing or might be valua-
ble to somebody else, then we’ve got the
ability to take action on those.”
Cost-cutting — including zero-based
budgeting — is a big part of Mr Con-
nolly’s plan. His team has identified
$200m in savings to be taken out of sell-
ing, general and administrative costs,
including reducing procurement
expenditure, and $100m that can be
saved by weaning customers from
ineffective promotions, and spend-
ing that money on improving prod-
uct quality.
Another key element to its turn-
round is “optimising assortment”
of its brands on retailers’
shelves, such as cutting
certain package sizes
that do not sell as
quickly, reducing
costs, supply chain
complexity, working
capital and out-of-
date products.
“Assortment man-
agement is a big pri-
ority for us.”
Securities/Markets
Advisory DCM* ECM** FICC*** Equities
20
10
-10
-20
European banks Deutsche Bank, UBS, Credit Suisse, Barclays and BNP Paribas
US banks JPMorgan, Citigroup, Morgan Stanley, Goldman Sachs and Bank of America
Figures for European banks converted to dollars at average annual exchange rates
Certainly market conditions favoured JPMorgan’s investment bank had rev-
US banks last year, as the US economy enue of $33.5bn in 2015, down 3 per cent
powered ahead while Europe’s stag- year on year in absolute terms, though
nated, triggering a wave of American the bank has told investors revenue at
corporate finance activity. continuing businesses rose 1.5 per cent.
But that could turn round soon, says Experts say any changes to the estab-
Mr Stefanick at Deutsche. “The Euro- lished order will be around the fringes.
pean economy and the activity in Guy Moszkowski, a New York-based
Europe will pick up a bit more at some banks analyst with Autonomous, says a
point,” he says. “If you’re one of the lead- “significant recovery in European
ers . . . it’s still a very good business.” macro growth and markets” is the one
The Americans know they might not thing that could really change the bal-
have it all their own way in 2016. JPMor- ance of power.
gan’s Daniel Pinto, who runs the world’s “That would tend to drive a recovery
biggest investment bank by revenue, in M&A and in equities issuance — and
says rivals “are aggressively defending perhaps even in credit — in Europe,”
the businesses that remain” after leav- he says.
ing some activities. “We know we can Mr Moszkowski is not expecting such
never be complacent,” he adds. a change for a while, however.
Contracts & Tenders
15
Financials
Fresh funding
round to value
Ant at $60bn
CHARLES CLOVER — BEIJING
Ant Financial, the online payments
affiliate of Chinese ecommerce jugger-
naut Alibaba, is seeking to raise funds
at a valuation of $50bn to $60bn,
according to a person with knowledge
of the talks.
The company’s second investment
round, on the heels of one last year
that valued it at $45bn, would make it
one of the most valuable private tech-
nology companies in the world.
Uber, the San Francisco-based ride-
sharing group, raised funds at a $62bn
valuation in December.
Ant declined to comment.
The investment round is not expected
to be over until April and the person
familiar with the discussions could not
confirm the amount being sought.
Ant’s main asset is Alipay, an online
payments group that processes pay-
ments for Alibaba’s Taobao and Tmall
shopping websites. It accounts for 58 per
cent of China’s total market share in
online payments, with a gross merchan-
dise value of Rmb12.8tn (nearly $2tn),
according to a research note last month
by Credit Suisse.
Its other assets include: Sesame
Credit, an experimental rating service
that draws on Alibaba’s huge trove of
user data; MyBank, an internet lender
to small businesses; and Yue Bao, a
money-market fund, Alibaba’s first
large-scale financial product.
Altogether the company claims 400m
active annual users.
Jack Ma, Alibaba’s chairman, is Ant’s
largest stakeholder, but the ecommerce
group does not formally own shares.
David Yu, co-founder of Yunfeng Capi-
tal, Mr Ma’s private equity fund, is
another large shareholder. Mr Ma and
his associates control a majority stake,
according to Ant.
Other shareholders include an invest-
ment arm of China Development Bank
and China’s National Social Security
Fund.
Ant has said last year’s funding round
brought in about a dozen new investors,
including China’s four biggest insurance
companies — China Pacific Insurance,
People’s Insurance Company of China,
China Life Insurance and New China
Life Insurance.
Mr Ma has previously said the com-
pany has plans for an initial public offer-
ing in China but he has declined to say
when. Press reports have suggested a
likely date would be in 2017.
Alipay was the subject of a corporate
governance scandal, when in 2011 Mr
Ma removed it from Alibaba and placed
it under the direct control of himself
and associates. Alibaba settled with
Yahoo, the US internet group, and Soft-
Bank, a Japanese technology group,
which were large shareholders.
16
Financials
LSE and Deutsche Börse set sights on $7bn savings
Groups prepare ‘synergy
goals’ as they seek support
for exchange merger
PATRICK JENKINS, PHILIP STAFFORD
AND ARASH MASSOUDI — LONDON
Banks and investors will be promised up
to $7bn in efficiency savings when Deut-
sche Börse and London Stock Exchange
outline synergies and seek investor sup-
port for their planned merger.
People familiar with their plans say
the two groups will highlight the bene-
fits of allowing customers to offset
Delta Lloyd unlikely to forget early days of Solvency II
EU regulation changes come
on top of internal and external
struggles at the Dutch group
OLIVER RALPH — LONDON
Take one Dutch insurance company.
Stir in legal battles with its regulator and
its largest shareholder. Add a new man-
agement team and two cash calls. Sprin-
kle an unfamiliar capital regime on top
and the result is the predicament in
which Delta Lloyd finds itself.
After a traumatic 15 months for the
company matters are due to come to a
head this month when shareholders vote
on a €650mrightsissue.
Many of the problems have been spe-
cific to Delta Lloyd, but the insurer has
also suffered the uncertainties created
by the EU’s Solvency II capital regime.
The rules, which came into effect this
year, have forced insurers to change
their business model. Implementing
them has been a huge task for both com-
panies and regulators.
Preparation would be daunting for
any insurer, but on January 1 2015 — a
year ahead of the introduction — Delta
Lloyd had other concerns.
Hans van der Noordaa had just
started as chief executive. His predeces-
sor, Niek Hoek, had overseen a period of
rapid growth, especially in the long-
term life assurance business. Insurance
liabilities had grown from €34bn in
2008 to €46bn in 2014.
“One of the priorities was to rebuild
relations with the regulator,” says
Mr van der Noordaa. DNB, the Dutch
central bank, had taken legal action
against Delta Lloyd, accusing it of using
inside information when it changed its
interest rate hedges in 2012.
Following a court hearing in August,
Delta Lloyd paid a fine of €23m and its
chief financial officer, Emiel Roozen,
departed. Mr van der Noordaa says the
case was “very painful”.
The capital position was also a prob-
lem. “I felt Delta Lloyd was not overcapi-
talised under Solvency I and that we
should strengthen the capital base,” says
Mr van der Noordaa.
It launched a €338m rights last
March. But preparations for Solvency II
were even more difficult. Many in the
industry think the Dutch regulator took
a harsh line on Solvency II — for exam-
ple by not allowing insurers to use tran-
sitional measures in the early years.
Food & beverage
Lindt aims to hit top spot in luxury chocolate
RALPH ATKINS — ZURICH
Lindt & Sprüngli has set itself the goal
of building the largest global network
of premium chocolate shops by sales
within five years after reporting a surge
in demand for its top-of-the-range con-
fectionery in 2015.
The Swiss chocolate maker said yester-
day it wanted to overtake the privately
owned Godiva chain of shops to take the
top spot in luxury chocolate retailing by
2020. It estimates Godiva shops have
sales of between $600m and $700m a
year. Zurich-based Lindt is perhaps best
known for its gold foil-wrapped choco-
late rabbits. It opened 50 shops world-
wide in 2015, bringing the total to 325. A
similar number of Lindt outlets could be
the capital requirements of overlapping
trades that are currently housed at rival
exchanges.
Proponents of the merger have said it
would elicit $5bn to $7bn of capital sav-
ings, by “compressing” the require-
ments for trades that would otherwise
attract duplicate regulatory capital.
However, analysts at Credit Suisse
have pencilled in synergies of about
£280m, based on a pro-forma cost base
of about £1.9bn and industry averages
for cost savings.
The latest synergy goals, to be out-
lined as soon as this week by the Ger-
man and British exchange groups, will
Insurance. Capital challenge
Delta Lloyd has been hit hard by
new capital regulations because of
its high level of guaranteed business
Dutch insurers
Share prices (rebased)
140
NN Group
120
100
Aegon 80
60
Delta Lloyd
Group 40
20
Mar 2015 2016 Mar
Source: Thomson Reuters Datastream
opened this year, said Ernst Tanner,
chief executive, although he expected
annual increases to average about 20 or
25 over the longer term.
“We want to have a network that cov-
ers more or less the whole world,” Mr
Tanner said. Turnover in Lindt &
Sprüngli shops rose 20 per cent to
SFr378.5m ($382m) in 2015.
Its store-based expansion strategy
‘We want to have a
network that covers more
or less the whole world’
Ernst Tanner, chief executive
contrasts with the focus on internet
sales by Nestlé, also based in Switzer-
land, which sells Kitkat and upmarket
Cailler branded chocolates, and
recently struck a partnership with Ali-
baba, the Chinese ecommerce group.
So far Lindt has eschewed China —
where it has no shops — believing the
country has not yet developed suffi-
ciently a chocolate-consuming culture
in which it can launch its high-quality
product and retail concepts.
Elsewhere, however, Lindt has sought
★ FINANCIAL TIMES
COMPANIES
point to the $25bn in savings accom-
plished last year when LCH.Clearnet,
LSE’s clearing house, compressed
$328tn of notional interest rate deriva-
tives trades in dealers’ portfolios.
“Capital efficiencies afforded through
cross-margining will be a strong argu-
ment, which the banks will support,”
said Rich Repetto, principal at Sandler
O’Neill in New York.
The touted savings would be far in
excess of the nearest comparable serv-
ice in the market, run by CME. The Chi-
cago-based exchange estimates it has
saved customers $2.9bn by netting mar-
gin for swaps with futures in US mar-
“The DNB took the view that there
was a ‘fully loaded’ interpretation in the
Netherlands. That is one of the areas
where there is not a level playing field in
Europe,” says Mr van der Noordaa.
Delta Lloyd was hit more than many
others. “They are more sensitive to Sol-
vency II because they have written more
guaranteed business,” says Farooq
Hanif, analyst at Citigroup.
The share price dropped by a fifth in
August amid uncertainty about the cap-
ital position. It fell further later in the
year when the company admitted that
an internal model it had developed for
its capital requirements did not work
and it would have to use a standardised
model instead.
It also said it would raise up to €1bn in
a rights issue. All this at a time when the
CFO had left and his replacement,
Clifford Abrahams, had not arrived.
“I don’t think they handled the com-
munication very well,” says Mr Hanif.
“There’s a lack of faith in management.”
to emulate luxury fashion brands by
opening shops and cafés in prestige loca-
tions, especially in tourist destinations
such as Switzerland’s Zermatt ski resort.
It also operates large-scale factory and
outlet stores, and Mr Tanner said it
aimed to turn shopping for chocolate
into a retail “happening”.
“It’s activity . . . It’s the widest range
of products you have ever seen in your
life as far as chocolate is concerned,” he
told the Financial Times. “It is a week-
end activity for families.”
The retail expansion plan was
unveiled as Lindt reported a 9.4 per cent
rise in operating profits last year to
SFr518.8m. Sales were up 7.9 per cent at
SFr3.65bn.
Lindt said the improvements were
despite sluggish global economic
growth, higher raw materials prices and
the strong Swiss franc, which increased
sharply the cost of production in Swit-
zerland. Extreme summer weather in
its main markets and a late start to win-
ter had also curbed sales, it said.
Mr Tanner expressed optimism
about the outlook for 2016, saying lower
energy prices in the US meant “Ameri-
cans have more money for our prod-
ucts”. North America accounted for
43 per cent of Lindt’s turnover last year.
kets. However, it has been losing market
share to LCH in recent months as cost-
conscious banks search for savings in
the market plumbing.
It is unclear how much cost-cutting
the LSE and Deutsche Börse will prom-
ise to achieve. Some analysts have esti-
mated that up to £250m of costs could
be stripped out.
People briefed on the benefits said
these would come mostly from IT har-
monisation. Deutsche Börse plans to
give up its Xetra cash equities trading
platform as it tries to cut an estimated
annual operating budget of €60m by up
to three-quarters. However, in clearing
Nowhere is that more clearly demon-
strated than at Delta Lloyd’s largest
shareholder. Highfields Capital, a Bos-
ton-based value investor, owns more
than 9 per cent of the shares and says the
rights issue — which was last month cut
to €650m — is unnecessary. It has gone
to court to demand a delay to the fund-
raising vote, which is due on March 16.
The dispute revolves around the sol-
vency capital ratio — capital available as
a proportion of the minimum required
— which stood at 131 per cent at the end
of December, below the target range of
140to180percent.
Highfields says that range can be
reached with no extra outside money. It
points to the potential benefits from
longevity swaps, the sale of a stake in a
private bank, cash generation and the
eventual approval of Delta Lloyd’s inter-
nal model. Those measures could bring
the ratio could hit 175 per cent, it says.
It adds that even the group is in a
severe scenario, it has enough capi-
Pharmaceuticals
BMS overhauls China practices
ANDREW WARD
PHARMACEUTICALS CORRESPONDENT
Bristol-Myers Squibb has tightened
rules on the way its sales representa-
tives work with doctors in China after
a $14m settlement over bribery
allegations.
The US drugmaker said it had halted
“certain initiatives” in China when
asked to comment on reports of an
overhaul in its sales practices in the sec-
ond-largest pharmaceuticals market.
BMS agreed in October to settle
charges by the US Securities and
Exchange Commission that its majority-
owned Chinese joint venture had reaped
more than $11m in profits while violat-
ing the Foreign Corrupt Practices Act.
The company had sought to boost
prescriptions by “providing healthcare
providers in China with cash, jewellery
and other gifts, meals, travel, entertain-
ment, and sponsorships for conferences
and meetings”, according to the SEC.
Industry figures yesterday cited
reports in China that BMS had ordered a
clampdown on the use of company
expenses to entertain doctors and on
paying them to speak at conferences.
BMS would not give details of the
reforms but said: “Bristol-Myers Squibb
and settlement the German group’s
technology is expected to dominate.
It is also hoped that “revenue syner-
gies” will come from the development of
additional products and services.
The LSE has argued that London
would be the natural centre of gravity
for the combined operation. Chairman,
chief executive and finance director
roles are set to be London-based.
Little if any of London’s trading and
clearing liquidity would shift to Frank-
furt, though some of the German cen-
tre’s clearing could move to London,
one person close to the LSE suggested.
LSE investors are waiting to see
tal. But management is using “false cri-
ses and assumptions to justify this capi-
tal raise”, says Highfields.
Delta Lloyd disagrees with its share-
holder’s stance on longevity and on the
potential damage from an adverse rul-
ing from the regulator on deferred tax
assets.
The group highlights the risk from a
change in the ultimate forward rate —
an interest rate set by regulators used to
calculate very long-term liabilities. It
says a vote against the rights issue would
“put the stability of Delta Lloyd at risk”.
Many shareholders have not waited
around for the vote. Since the start of
2015, Delta Lloyd’s share price has fallen
by two-thirds. “It will take a lot for long-
term investors to go back into the
stock,” says Mr Hanif.
But he thinks the rights issue is neces-
sary, he adds. “They just don’t have a
great reputation. They can’t afford to be
weak on the one measure that people
care about.”
has voluntarily stopped certain initia-
tives in China as the company continues
to review its activities and build upon its
business model in China.”
Western drugmakers have faced
increased scrutiny of their conduct in
China since local prosecutors uncovered
“massive and systematic” bribery by
GlaxoSmithKline in 2013, leading to a
record Rmb3bn criminal fine.
Foreign drugmakers have taken steps
to tighten their compliance procedures
since the GSK scandal. But many people
involved in the Chinese market have
told the Financial Times that corruption
is still rife.
GSK has tried to clean up by cutting
the link between sales and pay for its
representatives, scrapping speaking
fees for doctors and introducing tighter
oversight of employee expenses.
The SEC settlement with BMS showed
how malpractice by multinational drug-
makers in China had created legal risks
on multiple fronts.
In addition to local penalties, authori-
ties in the US and UK have powers to
prosecute companies for corruption
committed overseas. GSK is still under
investigation by the US justice depart-
ment and the UK Serious Fraud Office
over alleged bribery in China.
Wednesday 9 March 2016
details of synergy benefits from the
Deutsche Börse merger-of-equals pro-
posal before taking a view on a potential
rival offer that may come from Inter-
continental Exchange.
That was the feedback given to Xavier
Rolet, LSE chief executive, when
more than a dozen leading investors
gathered at the group’s headquarters on
Monday.
A potential deal between Europe’s two
largest operators would provide a
bridge between London, the primary
financial hub, and the rest of the conti-
nent, irrespective of whether the UK
opts to leave the EU.
Food & beverage
Creditors ask
Indian court
to prevent
‘liquor baron’
going abroad
AMY KAZMIN — NEW DELHI
Creditors of Vijay Mallya’s now defunct
airline have petitioned India’s Supreme
Court to prevent the erstwhile liquor
baron from travelling abroad as they
battle to grab part of his $75m golden
handshake from Diageo.
The State Bank of India led a consor-
tium of at least a dozen lenders yester-
day all claiming that they should have
the “first right” to money Diageo paid
Mr Mallya to resolve a bitter boardroom
stand-off over his chairmanship of his
former company, United Spirits.
The court will hear the banks’ request
to stop Mr Mallya from travelling today,
but a spokesman for the tycoon
declined to comment on his wherea-
bouts. Like many wealthy Indians —
particularly business owners — Mr
Mallya spends less than six months a
year in India, to ensure he is not liable
for the country’s income taxes.
Diageo — which spent about £1.8bn to
take a controlling stake in United Spirits
in 2012 and 2013 — agreed last month to
pay Mr Mallya an additional $75m to
ease him out from the chairmanship, a
position he had retained even after the
sale, as one of binding conditions for
selling the company.
Mr Mallya’s relations with Diageo
deteriorated in 2014, after auditors
questioned alleged financial improprie-
ties involving transactions to other
parts of his business empire in years
preceding the sale. But the businessman
refused requests for his resignation,
until the deal reached last month.
The surprise announcement of Dia-
geo’s generous payout raised hopes
among creditors of Kingfisher Airlines,
which collapsed in 2012 under a debt
pile of more than $2bn, that they could
seize some of those funds against the
carrier’s as yet unpaid debts. An Indian
debt recovery tribunal fuelled hopes
further on Monday, ordering Diageo to
stop payments to Mr Mallya until he set-
tles the disputes with his creditors.
But it is unclear to what degree the tri-
bunal’s will can be enforced. Diageo has
already paid the first $40m tranche of
the settlement. Citing confidentiality, it
has declined to comment on whether
funds were sent to Mr Mallya in India, or
elsewhere. The $35m balance is to be
paid out in equal instalments over the
next five years, contingent on Mr
Mallya’s adherence to a “non-compete
clause” and other conditions. Diageo
said it was waiting for a copy of the tri-
bunal’s order to assess its implications.
Known for maintaining his flamboy-
ant, luxurious lifestyle even as staff at
Kingfisher Airlines went unpaid for
months, Mr Mallya is seen by many as
the embodiment of India’s old-school
business elites; owners who have lived
high off the hog, even as their compa-
nies failed to repay huge debts to the
country’s public sector banks.
This weekend, he lashed out against
the relentless public scrutiny. “I have
been most pained at being painted as an
absconder,” he said in a statement. “I
have neither the intention nor the rea-
son to abscond.”
Drinks group Diageo agreed a $75m
golden handshake to Vijay Mallya
Wednesday 9 March 2016
Oil & gas
Chevron plans more capital spending cuts
US oil group to scale back
costs and shift away from
larger-sized developments
ED CROOKS — NEW YORK
Chevron has announced further cuts to
its capital spending plans in response to
the plunge in oil prices, but said it still
expected to maintain production
growth in the next few years.
In a presentation to analysts in New
York yesterday, the second-largest US
oil group scaled back capital and explo-
ration spending from the plans it set out
in December, in an attempt to conserve
cash and limit an expected rise in its
Time called on era of ever-bigger container ships
Industry’s economics do not
support a continued race to
bulk up, a consultancy finds
ROBERT WRIGHT — NEW YORK
The race to operate ever-bigger con-
tainer ships could be sailing towards the
finishing flag after a consultancy said
that pursuing yet another big increase in
size would not be cost-efficient.
Up to now, shipping lines have found
that the larger the ship is, the cheaper it
is to carry each container. The capacity
of the biggest container ships afloat has
more than doubled since 2000.
But Drewry Shipping Consultants said
the next step-up in size would impose
such significant costs on ports that they
would outweigh the advantages of mov-
ing cargo in ever-larger vessels.
The research by Drewry comes after
lines have invested billions of dollars
since the financial crisis into new, bigger
ships, which has contributed to the
industry’s financial woes. Lines have not
only had to find hundreds of millions of
dollars to buy each ship but have suf-
fered sharp earning declines as the new
ships have created excess capacity, driv-
ing down fees per container shipped.
Denmark’s AP Møller-Maersk, whose
Maersk Line operates the world’s big-
gest container ship fleet, warned in Feb-
ruary that these factors were producing
market conditions “significantly worse”
than during the 2008-09 financial crisis.
The highest-capacity ships afloat —
Mediterranean Shipping Company’s
Oscar class, introduced last year — are
395m long, 59m wide and can carry
19,224, 20ft equivalent units (TEUs) of
containers. A 40ft container — the
most-common size — is around two
TEUs. Fifteen years ago, the biggest ves-
sels carried only around 8,000 TEUs.
Tim Power, Drewry’s managing direc-
tor, said the consultancy had modelled
the overall costs of moving containers
on several ship sizes and had found effi-
ciency savings on the biggest ships cur-
rently afloat. But it then ran a simula-
tion on a still-larger behemoth that
Media
Lagardère financial chief’s
departure raises questions
ADAM THOMSON AND
ANNE-SYLVAINE CHASSANY — PARIS
The chief financial officer of French
media group Lagardère is to leave the
French media group, raising questions
about whether it will remain an inde-
pendent company, according to people
familiar with the matter.
The term of Dominique D’Hinnin, who
is one of the company’s three co-manag-
ing partners, will not be renewed today
as the owner of titles such as Elle and
Paris Match publishes its annual results.
His departure could spark a power
struggle among the group’s remaining
executives. But it will also throw up
pressing questions about the group’s
future strategy — in particular whether
it could ultimately be broken up or sold.
Mr D’Hinnin, who was appointed CFO
in 1998, has long been seen as the right-
hand man of Arnaud Lagardère, who
took over the helm of the group in 2003
following the death of his father Jean-
Luc, the group’s founder.
Mr D’Hinnin has come to be seen as
something of a custodian of Mr Lagar-
dère senior’s legacy, advising his son on
strategy — such as the decision in 2013
to sell its 7.4 per cent stake in EADS, the
European aerospace manufacturer.
In particular, say the people, he was
considered a leading force in ensuring
that the group remained independent.
borrowings. It also signalled a strategic
shift away from the mega-projects driv-
ing its growth towards smaller-scale
developments including shale oil and
gas in the US, Canada and Argentina.
John Watson, chief executive, said
industry conditions were “tough right
now [but] we believe markets will
improve, and we’ll be well-positioned
when they do”.
He told analysts the company’s prior-
ity was to maintain the dividend, even if
that meant having to borrow more, but
it would be working in the next couple of
years to cut its cash outflows.
Chevron’s capital spending and divi-
dend payments have exceeded its cash
flows from operations in recent years,
Transport. Efficiency shift
carried 24,000 TEUs and might exceed
the 400m length and 60m breadth that
is the maximum for today’s ships.
“When you put the 24,000 vessels in,
the total system becomes slightly more
expensive,” Mr Power said. “The termi-
nal costs go up and they offset the sav-
ings that the shipping lines make.”
The research has implications for
world trade because it could mean the
steady cuts in transport costs that bigger
ships have encouraged start to run out.
The higher costs reflect a number of
factors. Many ports’ cranes can no
longer efficiently reach across vessels,
whose widths have increased faster than
their lengths. Some ports also face extra
dredging costs as the bigger vessels
require deeper water, and some face
congestion problems, with the unload-
ing of thousands of containers at a time.
Last year’s severe US west coast port
congestion has been attributed partly to
the introduction of larger vessels on
routes to unsophisticated ports.
Mr Power said the shift could spell an
end of the rush to invest in bigger vessels,
and was “great news” for the industry.
“When we don’t need to build the next
biggest size, that should make a large dif-
ference to ordering and, therefore, the
balance of supply and demand, which
couldrevitaliseprofitability,”headded.
Last week, France’s CMA CGM, opera-
tor of the third-biggest container ship
fleet, announced plans to start using
18,000 TEU ships for its services.
Meanwhile, Anders Boenaes, Maersk
Line’s head of network planning,
recently echoed that his line shared
some of Drewry’s concerns.
Mr Boenaes said it was premature to
talk about a new generation of vessels as
terminals had only just learned to cope
with ships of more than 18,000 TEUs.
“The current form — a 400m long,
approximately 60m wide steel hull —
still has a lot of potential for optimisa-
tion,” Mr Boenaes said. “The next form
would mean going to something that
without any doubt would mean a differ-
ent game, not only for ocean terminals
but also for something like the Suez
Canal to handle.”
See Lex
“He was the strong man in the com-
pany,” said one of the people. “He was
the day-to-day guy, ensuring that it
stayed together.”
Lagardère, which has four separate
divisions covering publishing, travel
retail, magazines, newspapers and radio
investments and sports and entertain-
ment, has long been seen as a poten-
tially takeover target.
With a market capitalisation of about
€3.4bn, it would also likely to be well
within the reach of several potential
buyers, including French media and
content group Vivendi, which finds
itself sitting on billions of euros in cash
following a two-year asset sale.
The name of Vincent Bolloré, Viv-
endi’s chairman, has long been linked to
a possible offer — though the group last
year said it was not in the market.
One of the obstacles to it being broken
up or sold is the group’s unusual status
as a limited partnership, which has left
Mr Lagardère with an iron grip on the
group’s ownership despite only holding
12.7 per cent of the voting rights, accord-
ing to the group’s website.
But with Mr D’Hinnin’s expected
departure, questions will be raised
about Mr Lagardère’s long-term plans.
“The business community is extremely
surprised that someone of his quality is
not reappointed,” one of the people said
of Mr D’Hinnin’s expected departure.
★ FINANCIAL TIMES
COMPANIES
with the result that its debts have been
rising sharply. Net debt almost doubled
last year from $14.6bn to $27.3bn.
Capital and exploration spending for
2017-18 is now expected to be between
$17bn and $22bn per year, down from a
plan of $20bn to $24bn per year set out
last December. It means spending is
likely to be less than half 2014’s level of
$39.8bn.
The company has been spending on a
wave of large projects, including the
$54bn Gorgon liquefied natural gas
development in north-west Australia,
which are now reaching completion.
Gorgon began producing LNG this
week, and is expected to ship its first
cargo next week. Wheatstone, another
The size of it
Big ships are getting bigger
Ships’ cargo capacity has more than doubled in the past two decades
1956: Ideal X
Breadth: 9m
Ship cargo carrying capacity
is usually measured in twenty-foot
Capacity (TEU)
equivalent units (TEU)
101
1988: APL President Truman
Breadth: 39.4m
Draught: 12.4m
Capacity (TEU)
4,340
1997: Sovereign Maersk
Breadth: 42.8m
Draught: 15m
Capacity (TEU)
8,160
2006: Emma Maersk
Breadth: 56.4m
Draught: 16m
Capacity (TEU)
14,770
2013: Maersk Mc-Kinney Møller
Breadth: 59m
Draught: 16.5m
Capacity (TEU)
2015: MSC Oscar
Breadth: 59m
Draught: 16.0m
Capacity (TEU)
FT graphic: Claire Manibog | Sources: Hofstra University, FT Research
Energy
RWE’s Npower faces job cuts
after running up €137m loss
GUY CHAZAN — BERLIN
RWE said yesterday that it saw no end
in sight to the current crisis in conven-
tional power generation in Germany, as
it reported a €137m loss at its UK arm
Npower and unveiled plans to cut more
than a fifth of the unit’s workforce.
Peter Terium, RWE chief executive, said
that with the current German wholesale
electricity price of about €20 per mega-
watt hour, coal and gas-fired power sta-
Under pressure:
RWE’s chief says
the energy sector
is facing ‘enormous
challenges’, with
falling margins
tions simply could not survive. The sec-
tor faced “enormous challenges”, with a
continuing decline in profit margins, he
said. He added: “We cannot expect any
lasting improvement in this dramatic
situation in the foreseeable future.
There is no rapid recovery of wholesale
electricity prices in sight.”
RWE is one of several large utilities in
Germany that have been squeezed by
the country’s ambitious transition away
from polluting coal and gas to renewable
energy. The shift, known as the energie-
wende, has depressed wholesale power
prices, which have fallen from about
large Australian LNG project, is sched-
uled to start up in the middle of next
year, a delay from the previous target of
late 2016. Jack/St Malo, an oil develop-
ment in the Gulf of Mexico, started pro-
duction at the end of 2014 and has been
ramping up its output.
Mr Watson said those start-ups meant
Chevron’s production next year would
be between 2.9m and 3m barrels of oil
equivalent per day, up from 2.6m b/d
last year. “We’re in a little different posi-
tion than a lot of the other companies in
our sector right now,” he added.
“We have projects that are coming on
line. And so our production is going to
be increasing as we’re taking capital
[spending] down.”
160m
275m
18,270
19,224
€60/MWh five years ago to about €20
now, and squeezed margins at tradi-
tional coal and gas-fired power stations.
Last month, RWE announced it was
scrapping its 2015 dividend after €3bn
in writedowns triggered a net loss of
€170m for last year. Yesterday, it said
operating profit at the company’s con-
ventional power division dropped 45
per cent to €543m in 2015. Its shares
closed down 4.4 per cent at €10.79.
RWE said its UK supply division’s
€137m operating loss, compared with a
€227m profit in 2014, was due to “seri-
ous process and system-related prob-
lems in residential customer billing”.
Mr Terium called the billing issues a
disaster, but said the company hoped
“to be out of the valley of tears in the UK
by 2018”.
RWE now plans to restructure the UK
business, launching a two-year recovery
programme which would lead to the loss
of 2,400 jobs from its 11,500-strong
workforce.
The parent company is also facing a
major shake-up, as it pools its renewa-
bles, grid and retail operations into a
separate unit that will be the subject of
an initial public offering later this year.
RWE is somewhat protected from the
collapse in wholesale energy prices
through its hedging strategy. The com-
pany is 90 per cent hedged for 2016 at a
price of €35/MWh.
ExxonMobil, the largest US oil com-
pany, said this month it expects its pro-
duction to be roughly flat out to the end
of the decade.
Apart from an expansion at the Ten-
giz oilfield in Kazakhstan, which Chev-
ron expects to commit to in the middle
of this year, it does not expect to give the
go-ahead to any more large new devel-
opments until their economics look
more attractive. It plans to invest in
smaller projects such as additional wells
in producing fields, and in particular in
shale in the US and elsewhere.
Mr Watson said Chevron would start
again making commitments to new
large projects when there was “a better
balance between [oil] prices and costs”.
347m
397m
400m
395m
Public Notice
Contracts & Tenders
17
Media
Nikkei reports
fall in print
advertising
while digital
figures rise
KANA INAGAKI — TOKYO
Nikkei reported a decline in print
advertising amid growth in digital sub-
scriptions, as Japan’s biggest business-
newspaper group announced its first
results since acquiring the Financial
Times in December.
The first fall in Nikkei’s print advertis-
ing revenue in four years came as Japa-
nese media companies wrestle with a
rapidly ageing population and an
increasing appetite among young read-
ers for free online content.
For the fiscal year ending December
31, the privately held, employee-owned
company said its net profit had declined
1.1 per cent from a year earlier to
Y10.15bn ($90m) because of rising costs
in retirement benefits for employees
and advertising fees. Revenue increased
1 per cent to Y303.8bn thanks to a boost
in digital subscriptions.
The results do not account for the
£844m acquisition of the FT, which was
completed in December. The purchase,
the largest international media deal by a
Japanese company, ended the FT’s
58-year ownership by Pearson, the edu-
cation company.
Naotoshi Okada, chief executive, has
‘Getting hold of online
subscribers who pay
is a challenge’ for any
Japanese media group
said the FT deal provides a “fast ticket”
for overseas expansion while helping
the Japanese group manage the shift to
digital journalism.
The group’s flagship Nikkei paper had
2.7m subscribers in January, little
changed from a year earlier. Paid sub-
scribers to the digital platform
increased to about 450,000 from
391,000 the previous year.
Yasunori Sone, a media studies pro-
fessor at Keio university, said: “Even for
Nikkei, which has a fairly successful dig-
ital strategy within the Japanese media
industry, getting hold of online sub-
scribers who pay is a challenge.”
Professor Sone said Nikkei needed to
deliver concrete results to demonstrate
synergy from the FT purchase.
The Japanese group is financing the
deal with bank loans and cash at hand,
which totalled Y91.5bn at the end of
December, down 11 per cent from the
previous year.
Nikkei, which publishes the Nikkei
225 stock index, owns a weekly paper
and magazine as well as a news wire
service, research arm and television
broadcasting companies.
In mid-February the media group
announced a shake-up of its senior
management. It said Tsuyoshi Hasebe,
senior managing director overseeing
corporate planning, would replace Kat-
suyoshi Kondo as editor-in-chief on
March 29.
18 FINANCIAL TIMES Wednesday 9 March 2016

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WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous day’s trading (%)
S&P 500 Nasdaq Composite Dow Jones Ind FTSE 100 FTSE Eurofirst 300 Nikkei Hang Seng FTSE All World $ $ per € $ per £ ¥ per $ £ per € Oil Brent $ Sep Gold $

-0.50% -0.43% -0.14% -0.92% -0.89% -0.76% -0.73% -0.55% -0.921% -0.07%
0.638% 0.070% 0.647% 0.32%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Feb 09 - Mar 08 Index All World Feb 09 - Mar 08 Index All World Feb 09 - Mar 08 Index All World Feb 09 - Mar 08 Index All World Feb 09 - Mar 08 Index All World Feb 09 - Mar 08 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
6,182.40 9,692.82
1,988.41 13,338.90
16,819.59 16,783.15 1,946.12
12,763.99 5,848.06 1,917.79
1,880.05 8,979.36
Day -0.50% Month 5.97% Year -3.81% Day -0.33% Month 6.39% Year -10.81% Day -0.92% Month 7.67% Year -11.38% Day -0.88% Month 7.95% Year -16.09% Day -0.76% Month -0.22% Year -11.53% Day -0.60% Month 1.48% Year -3.32%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
4,681.07 1,329.36 8,740.30 20,011.58 2,778.77
44,569.78
4,363.14 42,774.85 1,239.68 8,122.10 18,991.59 2,558.49

Day -0.43% Month 7.47% Year -4.84% Day -0.88% Month 4.21% Year 2.99% Day -0.89% Month 7.23% Year -15.38% Day -0.53% Month 2.83% Year -21.20% Day -0.73% Month 3.75% Year -17.18% Day -1.58% Month 5.93% Year -18.69%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
17,005.64 49,063.13 4,404.02 18,017.56
2,901.39 24,616.97 24,659.23
16,204.97 4,066.31 16,441.20 2,763.49
40,592.09
Day -0.14% Month 5.24% Year -4.49% Day -0.37% Month 20.92% Year -1.80% Day -0.86% Month 4.84% Year -11.29% Day -0.23% Month 9.59% Year -19.69% Day 0.14% Month 4.99% Year -10.48% Day 0.05% Month 0.17% Year -16.26%

Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous
Argentina Merval 13234.19 13235.96 Cyprus CSE M&P Gen 67.62 67.94 Italy FTSE Italia All-Share 19633.48 19693.00 Philippines Manila Comp 6915.51 6892.69 Taiwan Weighted Pr 8664.31 8659.55 Cross-Border DJ Global Titans ($) 225.25 225.85
Australia All Ordinaries 5169.50 5204.70 Czech RepublicPX 892.56 888.01 FTSE Italia Mid Cap 30594.28 30819.13 Poland Wig 46534.99 46843.48 Thailand Bangkok SET 1374.62 1395.75 Euro Stoxx 50 (Eur) 3002.01 3021.09
S&P/ASX 200 5108.00 5142.80 Denmark OMXC Copenahgen 20 973.05 988.00 FTSE MIB 18017.56 18059.27 Portugal PSI 20 4860.14 4928.97 Turkey BIST 100 77483.85 77191.14 Euronext 100 ID 857.78 865.19
S&P/ASX 200 Res 2604.90 2638.00 Egypt EGX 30 6261.41 6214.94 Japan 2nd Section 4283.21 4289.99 PSI General 2339.73 2369.43 UAE Abu Dhabi General Index 4585.10 4566.39 FTSE 4Good Global ($) 5139.39 5151.35
Austria ATX 2236.97 2232.72 Estonia OMX Tallinn 950.08 952.78 Nikkei 225 16783.15 16911.32 Romania BET Index 6673.90 6625.94 UK FT 30 2814.70 2827.30 FTSE All World 254.48 255.89
Belgium BEL 20 3371.19 3398.22 Finland OMX Helsinki General 7919.71 8048.83 S&P Topix 150 1107.07 1118.72 Russia Micex Index 1909.57 1878.29 FTSE 100 6125.44 6182.40 FTSE E300 1329.36 1341.32
BEL Mid 5504.85 5602.67 France CAC 40 4404.02 4442.29 Topix 1347.72 1361.90 RTX 839.23 818.25 FTSE 4Good UK 5525.27 5561.11 FTSE Eurotop 100 2624.03 2648.18
Brazil Bovespa 49063.13 49246.10 SBF 120 3472.26 3502.68 Jordan Amman SE 2133.78 2133.71 Saudi-Arabia TADAWUL All Share Index 6430.87 6387.44 FTSE All Share 3362.78 3394.68 FTSE Global 100 ($) 1249.59 1253.11
Canada S&P/TSX 60 781.93 783.08 Germany M-DAX 19406.35 19682.67 Kenya NSE 20 3941.46 3980.09 Singapore FTSE Straits Times 2778.77 2823.51 FTSE techMARK 100 3794.33 3830.40 FTSE Gold Min ($) 1345.42 1327.29
S&P/TSX Comp 13338.90 13383.60 TecDAX 1603.53 1639.85 Kuwait KSX Market Index 5284.68 5264.71 Slovakia SAX 323.30 325.97 USA DJ Composite 6025.13 6047.47 FTSE Latibex Top (Eur) 2372.90 2381.80
S&P/TSX Met & Min 435.44 465.86 XETRA Dax 9692.82 9778.93 Latvia OMX Riga 630.47 629.41 Slovenia SBI TOP 703.41 700.99 DJ Industrial 17049.40 17073.95 FTSE Multinationals ($) 1434.39 1434.83
Chile IGPA Gen 18637.12 18803.89 Greece Athens Gen 563.67 559.44 Lithuania OMX Vilnius 503.01 497.14 South Africa FTSE/JSE All Share 52247.84 52673.79 DJ Transport 7564.14 7686.02 FTSE World ($) 451.59 454.07
China FTSE A200 8021.10 8017.33 FTSE/ASE 20 154.05 152.66 Luxembourg LuxX 1414.60 1450.08 FTSE/JSE Res 20 30513.70 31713.10 DJ Utilities 641.96 636.61 FTSEurofirst 100 (Eur) 3747.13 3786.11
FTSE B35 9961.74 9954.72 Hong Kong Hang Seng 20011.58 20159.72 Malaysia FTSE Bursa KLCI 1687.86 1697.93 FTSE/JSE Top 40 46229.48 46601.06 Nasdaq 100 4301.14 4303.33 FTSEurofirst 80 (Eur) 4058.20 4087.77
Shanghai A 3036.43 3032.19 HS China Enterprise 8505.22 8626.31 Mexico IPC 44569.78 44967.16 South Korea Kospi 1946.12 1957.87 Nasdaq Cmp 4688.08 4708.25 MSCI ACWI Fr ($) 387.45 387.33
Shanghai B 358.02 357.48 HSCC Red Chip 3660.00 3700.78 Morocco MASI 9130.08 9099.16 Kospi 200 238.44 240.21 NYSE Comp 9920.43 10006.19 MSCI All World ($) 1607.63 1608.04
Shanghai Comp 2901.39 2897.34 Hungary Bux 25255.40 24911.31 Netherlands AEX 432.89 436.00 Spain IBEX 35 8740.30 8786.80 S&P 500 1991.68 2001.76 MSCI Europe (Eur) 1340.61 1344.08
Shenzhen A 1830.42 1821.03 India BSE Sensex 24659.23 24646.48 AEX All Share 660.65 666.12 Sri Lanka CSE All Share 5934.72 6057.22 Wilshire 5000 20517.28 20659.09 MSCI Pacific ($) 2196.65 2201.76
Shenzhen B 1116.52 1122.61 S&P CNX 500 6243.65 6239.35 New Zealand NZX 50 6446.72 6418.93 Sweden OMX Stockholm 30 1390.58 1397.04 Venezuela IBC 16316.09 16318.24 S&P Euro (Eur) 1350.63 1360.77
Colombia COLCAP 1307.17 1294.86 Indonesia Jakarta Comp 4811.04 4831.58 Nigeria SE All Share 25890.94 25820.10 OMX Stockholm AS 481.88 485.08 Vietnam VNI 574.71 576.20 S&P Europe 350 (Eur) 1365.71 1378.54
Croatia CROBEX 1611.80 1607.23 Ireland ISEQ Overall 6269.47 6308.57 Norway Oslo All Share 633.83 632.75 Switzerland SMI Index 7971.15 8019.13 S&P Global 1200 ($) 1770.21 1782.04
Israel Tel Aviv 100 12.54 12.57 Pakistan KSE 100 33032.85 33022.60 Stoxx 50 (Eur) 2832.35 2855.30
(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.

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

AMERICA LONDON EURO MARKETS TOKYO Mar 08 %Chg %Chg Mar 08 %Chg %Chg Mar 08 %Chg %Chg Mar 08 %Chg %Chg
ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's FTSE 100 price(p) week ytd FTSE 250 price(p) week ytd FTSE SmallCap price(p) week ytd Industry Sectors price(p) week ytd
traded m's price change traded m's price change traded m's price change traded m's price change Winners Winners Winners Winners
Facebook Class A 17.6 106.75 1.02 Rio Tinto 197.3 2026.00 -211.00 Telefonica 749.3 9.80 -0.04 Toyota Motor 782.1 5990.00 -110.00 Bhp Billiton 821.40 13.8 10.9 Evraz 94.70 37.4 30.6 Lonmin 160.50 67.5 91.6 Industrial Metals 932.67 36.7 29.9
Apple 17.1 101.43 -0.44 Glencore 190.1 139.75 -31.00 Unicredit 390.2 3.59 0.03 Softbank . 745.9 5851.00 97.00 Aberdeen Asset Management 275.70 12.0 -4.3 Amec Foster Wheeler 460.30 24.4 12.9 Ferrexpo 39.50 53.4 83.7 Oil Equipment & Services 14369.64 6.5 10.4
Amazon.com 12.6 569.26 6.46 Bhp Billiton 165.1 821.40 -55.22 Inditex 388.2 29.41 -0.29 Mitsubishi Ufj Fin,. 486.8 538.80 -14.40 Standard Chartered 480.50 11.6 -14.5 Tullow Oil 206.00 20.2 24.3 Premier Oil 51.75 33.5 6.7 Mining 8953.88 6.3 21.9
Hospira 11.8 89.95 -0.01 Bp 161.5 354.20 -11.35 Santander 379.4 4.14 0.04 Sumitomo Mitsui Fin,. 419.0 3545.00 -70.00 Admiral 1966.00 11.6 18.9 Vedanta Resources 332.70 20.1 20.9 Hochschild Mining 89.50 27.9 85.5 Industrial Engineering 7554.50 4.3 5.5
Bank Of America 11.6 13.17 -0.36 Glaxosmithkline 135.2 1400.00 21.36 Bbva 364.3 6.10 -0.07 Fanuc 345.7 18195.00 365.00 Antofagasta 536.50 9.4 14.3 Aggreko 1034.00 17.0 13.1 Petra Diamonds 115.75 19.9 32.3 Electricity 8365.90 3.2 -5.2
Alphabet Class A Common Stock 10.5 719.44 6.64 Hsbc Holdings 134.6 448.80 -1.77 Daimler Ag Na O.n. 360.3 66.98 0.00 Mizuho Fin,. 304.5 178.70 -2.30 Old Mutual 191.40 9.0 7.0 Ashmore 271.20 14.4 5.8 Fisher (james) & Sons 1140.00 19.2 -2.4 Food & Drug Retailers 2938.49 3.0 17.4
Netflix 9.5 96.98 1.49 Barclays 131.7 172.00 -1.81 Nestle N 331.7 65.27 0.00 Suzuki Motor 303.6 2831.50 -110.50 Barclays 172.00 8.7 -21.5 Ao World 182.10 12.4 16.7 Dialight 519.00 16.1 12.2 Life Insurance 7006.80 2.1 -10.5
Microsoft 9.0 52.07 1.04 Royal Dutch Shell 121.3 1659.00 -15.00 Total 331.5 42.04 -0.77 Fast Retailing Co., 278.8 34420.00 -70.00 Anglo American 530.90 8.1 77.3 Drax 271.70 11.0 12.0 Arrow Global 253.25 15.1 -4.0 Construction & Materials 4988.45 1.8 -3.7
Citigroup 6.9 41.37 -1.24 Astrazeneca 111.7 4054.50 37.02 Novartis N 329.7 65.86 0.00 Mitsui & Co., 267.1 1456.00 6.00 Glencore 139.75 7.1 54.5 Just Eat 383.00 10.6 -14.4 Rps 206.50 15.0 -12.9 Automobiles & Parts 6686.87 1.5 -7.2
Alphabet Class C Capital Stock 6.2 701.00 5.84 Royal Dutch Shell 107.7 1663.50 -10.71 Roche Gs 293.1 229.70 0.00 Ntt Docomo,. 233.5 2494.50 -47.00 Centrica 225.00 6.4 3.5 Polymetal Int 719.00 10.4 23.0 Exova 145.00 13.3 0.2 Forestry & Paper 14444.39 1.4 0.4
Tesco 195.15 6.3 30.8 Cls Holdings 1621.00 10.0 -10.9 Goodwin 1625.00 12.5 -11.7 Oil & Gas Producers 6066.83 1.2 7.1
BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's
Burberry 1462.00 6.1 20.0 Aldermore 219.70 9.9 -5.1 Blackrock Commodities ome Investment Trust 62.00 12.1 18.2 General Industrials 4474.32 1.2 1.8
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Urban Outfitters 32.96 4.80 17.05 Talktalk Telecom 252.00 13.77 5.78 Luxottica 50.40 1.55 3.17 Denki Kagaku Kogyo Kabushiki Kaisha 431.00 19.00 4.61 Worldpay 277.80 -13.3 -15.8 Entertainment One 147.30 -14.5 -11.5 Brammer 180.75 -15.5 0.4 Fixed Line Telecommunication 5244.23 -6.2 -1.7
Walgreens Boots Alliance 81.18 2.03 2.56 Burberry 1462.00 63.51 4.63 Erste Bank Ag 23.98 0.57 2.41 Ube Industries, 205.00 5.00 2.50 Persimmon 1968.00 -11.1 -2.9 Cobham 223.40 -14.2 -21.1 St. Ives 226.00 -10.9 -2.0 Household Goods 15905.35 -5.0 -3.4
Assurant 75.27 1.82 2.48 Cls Holdings 1621.00 60.00 3.84 Dnb 11.00 0.21 1.96 Komatsu 1958.50 40.50 2.11 Barratt Developments 543.00 -8.8 -13.4 Paddy Power Betfair 9450.00 -10.6 2.9 Gem Diamonds 103.00 -10.8 -21.7 Travel & Leisure 8437.19 -4.6 -6.8
Red Hat 68.49 1.56 2.33 Rank 253.20 6.60 2.68 Telecom Italia 1.00 0.02 1.63 Fanuc 18195.00 365.00 2.05 Berkeley Holdings (the) 2938.00 -8.6 -19.5 Ncc 270.10 -10.2 -10.0 Wanton 149.00 -8.3 -23.7 Software & Computer Services 1602.21 -3.9 -3.1
O'reilly Automotive 267.84 5.83 2.23 Nmc Health 908.50 22.50 2.54 Svenska Handelsbanken Ser. A 11.74 0.17 1.48 Unitika 53.00 1.00 1.92 Whitbread 3707.00 -8.4 -15.9 Dignity 2323.00 -9.9 -9.4 Chesnara 281.50 -7.9 -8.1 Food Producers 8698.19 -3.3 -1.7
Itv 230.00 -7.6 -16.6 Redrow 391.80 -9.8 -16.7 Charles Taylor 226.00 -7.8 -13.1 Media 7226.97 -3.0 -2.6
Downs Downs Downs Downs
Taylor Wimpey 173.20 -7.5 -14.7 Bellway 2359.00 -9.2 -16.8 Flybe 62.75 -7.4 -31.4 Mobile Telecommunications 4965.86 -2.4 -2.7
Chesapeake Energy 4.39 -0.84 -16.06 Glencore 139.75 -31.00 -18.16 Grifols Sa 14.99 -14.40 -48.99 Toshiba 208.30 -15.70 -7.01
Provident Fin 3102.00 -6.8 -7.9 Howden Joinery 457.30 -8.8 -13.4 Xaar 441.25 -6.2 6.0 Technology Hardware & Equip. 1218.79 -2.3 -4.6
Murphy Oil 23.10 -3.59 -13.45 Anglo American 530.90 -97.20 -15.48 Arcelormittal 4.29 -0.37 -8.02 Tokuyama 167.00 -10.00 -5.65
Bt 463.45 -6.6 -1.7 Close Brothers 1298.00 -8.3 -5.8 Bloomsbury Publishing 147.25 -5.9 -2.2 Electronic & Electrical Equip. 4204.51 -2.3 -0.9
Southwestern Energy 7.48 -1.11 -12.94 Vedanta Resources 332.70 -48.50 -12.72 Kone 40.14 -1.86 -4.43 Yaskawa Electric 1326.00 -70.00 -5.01
Carnival 3379.00 -6.1 -12.6 Cineworld 496.30 -8.3 -12.2 Majedie Investments 237.00 -5.8 -12.8 General Retailers 2853.71 -1.7 -5.0
Ensco 11.16 -1.30 -10.40 Worldpay 277.80 -33.08 -11.33 Renault 83.70 -3.80 -4.34 Thb Japan Steel Works, 375.00 -18.00 -4.58
Tui Ag 1026.00 -5.4 -15.3 St.modwen Properties 293.30 -8.2 -29.9 Uk Mail 286.50 -5.2 12.0 Industrial Transportation 2609.69 -1.4 0.5
Freeport-mcmoran 8.84 -1.03 -10.40 Antofagasta 536.50 -56.00 -9.45 A.p. M__ller - M__rsk B A/s 1226.22 -53.61 -4.19 Nsk 1067.00 -48.00 -4.30
Inmarsat 940.00 -5.0 -17.4 Bovis Homes 883.50 -8.0 -13.0 Centaur Media 54.50 -5.1 -23.0 Aerospace & Defense 4322.82 -1.3 4.3
Based on the constituents of the S&P500 and the Nasdaq 100 index Based on the constituents of the FTSE 350 index Based on the constituents of the FTSEurofirst 300 Eurozone index Based on the constituents of the Nikkei 225 index
Based on last week's performance. †Price at suspension.

CURRENCIES
DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND
Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's
Mar 08 Currency Mid Change Mid Change Mid Change Mar 08 Currency Mid Change Mid Change Mid Change Mar 08 Currency Mid Change Mid Change Mid Change Mar 08 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 15.4450 0.0288 17.0721 0.1398 21.9427 0.0455 Indonesia Indonesian Rupiah 13143.0000 55.5000 14527.6410 153.0300 18672.2185 82.7848 Poland Polish Zloty 3.9156 -0.0234 4.3281 0.0017 5.5628 -0.0321 ..Three Month 0.7039 -0.0002 0.7778 0.0048 - -
Australia Australian Dollar 1.3439 0.0045 1.4855 0.0144 1.9093 0.0068 Israel Israeli Shekel 3.9035 -0.0129 4.3147 0.0132 5.5457 -0.0171 Romania Romanian Leu 4.0405 -0.0217 4.4662 0.0044 5.7403 -0.0297 ..One Year 0.7044 -0.0002 0.7772 0.0048 - -
Bahrain Bahrainin Dinar 0.3771 -0.0001 0.4168 0.0026 0.5357 0.0000 Japan Japanese Yen 112.4750 -1.0450 124.3244 -0.3599 159.7929 -1.4503 Russia Russian Ruble 72.8975 1.2162 80.5773 1.8465 103.5652 1.7496 United States United States Dollar - - 1.1054 0.0070 1.4207 0.0003
Bolivia Bolivian Boliviano 6.8400 - 7.5606 0.0479 9.7176 0.0021 ..One Month 112.4749 -1.0453 124.3243 -0.3599 159.7927 -1.4506 Saudi Arabia Saudi Riyal 3.7505 0.0000 4.1456 0.0263 5.3283 0.0012 ..One Month - - 1.1052 -0.3150 1.4207 0.0003
Brazil Brazilian Real 3.7922 0.0220 4.1917 0.0507 5.3875 0.0324 ..Three Month 112.4747 -1.0456 124.3244 -0.3598 159.7925 -1.4511 Singapore Singapore Dollar 1.3847 0.0059 1.5306 0.0161 1.9672 0.0087 ..Three Month - - 1.1050 -0.3150 1.4207 0.0003
Canada Canadian Dollar 1.3407 0.0110 1.4819 0.0215 1.9047 0.0160 ..One Year 112.4733 -1.0485 124.3242 -0.3601 159.7927 -1.4524 South Africa South African Rand 15.4359 0.1354 17.0621 0.2568 21.9297 0.1970 ..One Year - - 1.1038 -0.3150 1.4212 0.0003
Chile Chilean Peso 683.9750 4.1700 756.0325 9.3714 971.7211 6.1301 Kenya Kenyan Shilling 101.6000 0.1500 112.3037 0.8765 144.3428 0.2438 South Korea South Korean Won 1206.7500 5.2000 1333.8824 14.1648 1714.4260 7.7515 Venezuela Venezuelan Bolivar Fuerte 6.3053 0.0198 6.9695 0.0659 8.9578 0.0300
China Chinese Yuan 6.5054 -0.0097 7.1908 0.0349 9.2422 -0.0118 Kuwait Kuwaiti Dinar 0.3006 -0.0004 0.3322 0.0017 0.4270 -0.0004 Sweden Swedish Krona 8.4702 -0.0186 9.3625 0.0389 12.0336 -0.0239 Vietnam Vietnamese Dong 22300.0000 5.0000 24649.3628 161.7058 31681.5623 13.8453
Colombia Colombian Peso 3174.2250 51.9150 3508.6328 79.2564 4509.6113 74.6990 Malaysia Malaysian Ringgit 4.1193 0.0217 4.5532 0.0527 5.8522 0.0321 Switzerland Swiss Franc 0.9917 -0.0067 1.0962 -0.0004 1.4090 -0.0091 European Union Euro 0.9047 -0.0058 - - 1.2853 -0.0079
Costa Rica Costa Rican Colon 534.5200 0.0900 590.8322 3.8432 759.3908 0.2896 Mexico Mexican Peson 17.9123 0.1572 19.7993 0.2981 25.4479 0.2287 Taiwan New Taiwan Dollar 32.7845 0.0670 36.2384 0.3032 46.5768 0.1051 ..One Month 0.9046 -0.0058 - - 1.2852 -0.0079
Czech Republic Czech Koruna 24.4674 -0.1696 27.0451 -0.0148 34.7608 -0.2334 New Zealand New Zealand Dollar 1.4795 0.0097 1.6354 0.0210 2.1019 0.0142 Thailand Thai Baht 35.4250 -0.0225 39.1571 0.2234 50.3282 -0.0212 ..Three Month 0.9044 -0.0058 - - 1.2851 -0.0079
Denmark Danish Krone 6.7507 -0.0414 7.4619 0.0018 9.5908 -0.0568 Nigeria Nigerian Naira 199.0500 -0.2000 220.0201 1.1747 282.7897 -0.2238 Tunisia Tunisian Dinar 2.0296 -0.0090 2.2434 0.0043 2.8834 -0.0122 ..One Year 0.9031 -0.0058 - - 1.2844 -0.0079
Egypt Egyptian Pound 7.8268 0.0193 8.6514 0.0760 11.1195 0.0298 Norway Norwegian Krone 8.5364 0.0263 9.4357 0.0887 12.1276 0.0400 Turkey Turkish Lira 2.9101 -0.0062 3.2166 0.0136 4.1343 -0.0079
Hong Kong Hong Kong Dollar 7.7676 0.0020 8.5859 0.0566 11.0353 0.0052 Pakistan Pakistani Rupee 104.7250 0.0200 115.7579 0.7556 148.7825 0.0601 United Arab Emirates UAE Dirham 3.6730 0.0001 4.0600 0.0258 5.2182 0.0012
Hungary Hungarian Forint 280.8568 -1.3347 310.4453 0.5014 399.0123 -1.8109 Peru Peruvian Nuevo Sol 3.4689 0.0089 3.8344 0.0341 4.9283 0.0137 United Kingdom Pound Sterling 0.7039 -0.0002 0.7780 0.0048 - -
India Indian Rupee 67.3850 0.2200 74.4841 0.7137 95.7336 0.3329 Philippines Philippine Peso 46.9400 0.0200 51.8852 0.3508 66.6875 0.0426 ..One Month 0.7039 -0.0002 0.7780 0.0048 - -
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 FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
Produced in conjunction with the Institute and Faculty of Actuaries Mar 08 Mar 07 Mar 04 Mar 03 Mar 02 Yr Ago High Low Year to date percentage changes Closing Day's Closing Day's
£ Strlg Day's Euro £ Strlg £ Strlg Year Div P/E X/D Total FT 30 2814.70 2827.30 2847.40 2828.40 2832.00 0.00 2875.90 2547.10 Mining 31.36 Nonlife Insurance 1.23 FTSE SmallCap Index -2.71 FTSE 100 Price Change FTSE 100 Price Change
Mar 08 chge% Index Mar 07 Mar 04 ago yield% Cover ratio adj Return FT 30 Div Yield 1.79 1.79 1.77 1.79 1.79 0.00 3.93 2.74 Basic Materials 24.46 Electronic & Elec Eq 0.95 FTSE 250 Index -2.86 3I Group PLC 426.00 -11.20 Land Securities Group PLC 1045 4.00
FTSE 100 (100) 6125.44 -0.92 6149.19 6182.40 6199.43 6876.47 4.19 0.89 26.71 50.54 4840.29 P/E Ratio net 24.88 24.95 25.19 24.93 24.94 0.00 19.44 14.26 Industrial Metals & 24.07 Gas Water & Multi -0.07 Support Services -3.42 Aberdeen Asset Management PLC 275.70 -5.50 Legal & General Group PLC 233.80 -3.60
FTSE 250 (250) 16654.03 -1.05 16718.62 16831.43 16931.19 17167.07 2.70 1.91 19.40 34.54 11615.73 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Food & Drug Retailer 17.26 Fixed Line Telecomms -0.21 Construct & Material -3.48 Admiral Group PLC 1966 2.00 Lloyds Banking Group PLC 70.63 -2.12
FTSE 250 ex Inv Co (208) 18125.26 -1.10 18195.55 18326.31 18441.86 18615.48 2.72 2.01 18.31 29.53 12884.90 FT 30 hourly changes Oil Equipment & Serv 14.85 Tech Hardware & Eq -0.36 Equity Invest Instr -3.76 Anglo American PLC 530.90 -97.20 London Stock Exchange Group PLC 2832 -4.00
FTSE 350 (350) 3413.02 -0.94 3426.25 3445.56 3456.95 3776.66 3.93 1.02 25.07 24.50 5429.93 8 9 10 11 12 13 14 15 16 High Low Oil & Gas 9.56 Industrials -0.45 General Retailers -3.88 Antofagasta PLC 536.50 -56.00 Marks And Spencer Group PLC 418.40 -5.10
FTSE 350 ex Investment Trusts (308) 3391.34 -0.95 3404.49 3423.81 3435.12 3756.35 3.96 1.01 24.94 24.52 2778.23 2827.3 2806.3 2806.8 2810.6 2811.5 2824.9 2826.9 2817.1 2808.5 2830.5 2804.0 Oil & Gas Producers 9.34 FTSE 100 Index -0.69 Health Care Eq & Srv -3.93 Arm Holdings PLC 986.00 -20.00 Merlin Entertainments PLC 445.00 -3.00
FTSE 350 Higher Yield (106) 3134.44 -1.26 3146.60 3174.38 3176.51 3616.17 5.63 0.64 27.80 37.49 5139.70 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Leisure Goods 8.44 Technology -0.78 Automobiles & Parts -4.83 Ashtead Group PLC 861.50 -34.50 Mondi PLC 1341 -11.00
FTSE 350 Lower Yield (244) 3366.89 -0.60 3379.94 3387.21 3408.21 3568.73 2.08 2.12 22.64 6.80 3571.16 Personal Goods 6.86 Food Producers -0.88 Electricity -5.12 Associated British Foods PLC 3321 -22.00 National Grid PLC 948.80 8.30
FTSE SmallCap (286) 4482.32 -0.80 4499.71 4518.61 4509.27 4553.80 2.96 1.37 24.60 18.56 6171.24 Aerospace & Defense 6.21 Telecommunications -0.88 Travel & Leisure -5.19
FTSE SmallCap ex Inv Co (152) 4098.71 -0.88 4114.61 4135.20 4122.67 4013.75 2.89 1.79 19.28 12.40 5919.07 FX: EFFECTIVE INDICES Tobacco 5.68 Utilities -1.12 Financial Services -5.19
Astrazeneca PLC 4054.5 38.00 Next PLC 6650 95.00
Aviva PLC 459.60 -2.30 Old Mutual PLC 191.40 -0.70
FTSE All-Share (636) 3362.78 -0.94 3375.82 3394.68 3405.27 3710.08 3.90 1.02 25.05 23.78 5411.49 Industrial Eng 5.52 FTSE All{HY-}Share Index -1.13 Health Care -7.71
Mar 07 Mar 04 Mnth Ago Mar 08 Mar 07 Mnth Ago Babcock International Group PLC 948.00 -2.00 Pearson PLC 874.00 7.00
FTSE All-Share ex Inv Co (460) 3327.81 -0.95 3340.72 3359.63 3370.31 3677.29 3.94 1.02 24.80 23.79 2771.10 Consumer Goods 2.64 Mobile Telecomms -1.33 Pharmace & Biotech -8.15 Bae Systems PLC 496.70 -3.80 Persimmon PLC 1968 -26.00
FTSE All-Share ex Multinationals (572) 1127.69 -0.85 938.27 1137.38 1143.04 1205.31 2.99 1.52 21.97 2.34 1926.45 Australia 93.02 92.36 88.94 Sweden 79.22 79.20 78.71 Industrial Transport 2.15 Software & Comp Serv -1.47 Real Est Invest & Tr -8.84 Barclays PLC 172.00 -1.70 Provident Financial PLC 3102 -96.00
FTSE Fledgling (99) 7483.63 -0.47 7512.65 7518.95 7503.13 7195.77 2.58 0.20 193.69 27.23 13535.24 Canada 88.21 87.77 84.71 Switzerland 157.60 158.19 156.94 Beverages 1.98 Consumer Services -1.92 Financials -9.27 Barratt Developments PLC 543.00 -8.00 Prudential PLC 1326.5 -
FTSE Fledgling ex Inv Co (49) 10414.72 -0.39 10455.11 10455.40 10389.87 9050.52 2.69 -0.87 -42.95 28.69 18308.33 Denmark 106.33 106.40 106.88 UK 86.31 86.28 87.81 NON FINANCIALS Index 1.80 Household Goods & Ho -1.96 Life Insurance -10.07 Berkeley Group Holdings (The) PLC 2938 -90.00 Randgold Resources LD 6295 -120.00
FTSE All-Small (385) 3107.63 -0.79 3119.68 3132.25 3125.78 3149.24 2.94 1.32 25.74 12.79 5493.47 Japan 135.64 135.23 131.15 USA 103.18 103.30 104.60 Forestry & Paper 1.50 Chemicals -2.49 Banks -12.97 Bhp Billiton PLC 821.40 -76.40 Reckitt Benckiser Group PLC 6470 34.00
FTSE All-Small ex Inv Co Index (201) 3059.10 -0.86 3070.97 3085.74 3075.99 2979.61 2.89 1.69 20.45 9.23 5597.35 New Zealand 113.30 113.27 111.92 Euro 87.20 87.35 88.31 Media -2.52 Real Est Invest & Se -13.58 BP PLC 354.20 -11.35 RELX PLC 1228 4.00
FTSE AIM All-Share Index (840) 700.03 -0.55 702.75 703.88 702.49 715.94 1.55 0.64 100.63 1.14 754.65 Norway 86.00 85.70 84.65
British American Tobacco PLC 4012.5 4.00 Rexam PLC 614.50 -1.50
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. British Land Company PLC 677.00 3.00 Rio Tinto PLC 2026 -211.00
Oil & Gas (17) 6423.86 -1.74 6448.78 6537.61 6562.32 7573.87 6.84 -0.19 -75.11 110.54 5479.32 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Bt Group PLC 463.45 -2.25 Rolls-Royce Holdings PLC 706.50 -15.00
Oil & Gas Producers (10) 6100.59 -1.66 6124.24 6203.45 6226.89 7180.47 6.91 -0.24 -61.35 108.98 5383.90 Bunzl PLC 1955 3.00 Royal Bank Of Scotland Group PLC 230.00 -0.30
Oil Equipment Services & Distribution (7)15021.13 -3.81 15079.38 15615.66 15674.80 18654.61 5.07 1.26 15.64 0.00 11047.42 FTSE GLOBAL EQUITY INDEX SERIES Burberry Group PLC 1462 91.00 Royal Dutch Shell PLC 1663.5 -14.00
Basic Materials (28) 3215.10 -9.16 3227.57 3539.41 3412.80 4803.35 6.33 0.18 89.05 32.05 3188.40 Capita PLC 1029 10.00 Royal Dutch Shell PLC 1659 -15.00
Chemicals (7) 11098.78 -1.03 11141.82 11213.94 11227.45 12280.76 2.59 2.12 18.16 61.01 9595.81 Mar 08 No of US $ Day Mth YTD Total
YTD Gr Div Mar 08 No of US $ Day Mth YTD Total YTD Gr Div Carnival PLC 3379 -41.00 Royal Mail PLC 450.10 -4.00
Forestry & Paper (1) 15761.48 -0.81 15822.61 15890.77 15914.28 15749.73 2.29 4.06 10.76 0.00 16372.60 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Centrica PLC 225.00 -0.60 Rsa Insurance Group PLC 438.20 -1.40
Industrial Metals & Mining (2) 977.46 -3.30 981.25 1010.82 907.61 1878.67 1.18 -18.64 -4.55 0.00 853.01 FTSE Global All Cap 7713 437.90 0.1 6.0 -2.9 601.45
-2.5 2.6 Oil & Gas 163 318.38 1.7 1.7 4.4 490.25 5.2 3.9 Coca-Cola Hbc AG 1390 -11.00 Sabmiller PLC 4223.5 8.00
Mining (18) 8628.13 -10.78 8661.59 9670.37 9259.09 13733.52 7.18 0.01 1005.75 97.63 4487.53 FTSE Global All Cap 7080 452.21 0.2 6.3 -2.5 610.33
-2.1 2.5 Oil & Gas Producers 115 296.80 1.7 1.7 4.0 465.32 4.8 4.0 Compass Group PLC 1217 -3.00 Sage Group PLC 587.50 -9.50
FTSE Global Large Cap 1415 386.14 0.0 5.5 -3.1 542.79
-2.7 2.8 Oil Equipment & Services 39 296.95 2.0 2.0 7.0 416.57 7.6 3.7 Crh PLC 1922 21.00 Sainsbury (J) PLC 266.90 -3.60
Industrials (119) 4278.22 -0.91 4294.81 4317.35 4345.60 4657.30 2.60 1.37 28.05 1.83 4253.05
Construction & Materials (14) 5174.70 0.63 5194.76 5142.34 5187.45 4796.12 2.27 -0.75 -59.09 0.00 5287.76 FTSE Global Mid Cap 1633 589.20 0.2 6.7 -2.1 771.50
-1.9 2.2 Basic Materials 261 363.18 1.4 1.4 3.4 533.87 3.7 3.3 Dcc PLC 5610 -40.00 Schroders PLC 2639 -12.00
Aerospace & Defense (9) 4474.62 -1.32 4491.97 4534.48 4576.09 5466.44 2.55 1.56 25.07 1.48 4627.42 FTSE Global Small Cap 4665 612.38 0.5 8.2 -2.4 778.54
-2.1 2.1 Chemicals 122 567.66 0.5 0.5 -4.1 836.03 -3.9 2.7 Diageo PLC 1866.5 7.50 Severn Trent PLC 2088 -
General Industrials (6) 3635.12 0.17 3649.22 3628.95 3654.77 3620.59 3.14 1.53 20.80 0.00 3957.46 FTSE All-World 3048 255.89 0.0 5.7 -3.0 370.88
-2.6 2.7 Forestry & Paper 16 191.61 -0.5 -0.5 -2.3 308.86 -1.9 3.6 Direct Line Insurance Group PLC 392.00 -3.40 Shire PLC 3794 28.00
Electronic & Electrical Equipment (10) 5344.48 -1.35 5365.21 5417.65 5425.45 5282.87 2.31 1.84 23.55 2.85 4735.62 FTSE World 2531 454.07 0.0 5.7 -2.9 883.75
-2.5 2.7 Industrial Metals & Mining 67 285.63 2.4 2.4 11.0 421.00 11.1 3.0 Dixons Carphone PLC 431.10 - Sky PLC 1007 -7.00
Industrial Engineering (14) 7922.39 -1.76 7953.12 8064.61 8067.63 9830.65 3.79 1.10 23.91 10.28 9289.95 FTSE Global All Cap ex UNITED KINGDOM In 7390 450.74 0.1 6.1 -2.8 610.34
-2.4 2.5 Mining 56 415.03 3.7 3.7 28.3 612.44 29.2 5.1 Easyjet PLC 1536 3.00 Smith & Nephew PLC 1142 4.00
Industrial Transportation (8) 3911.18 -2.08 3926.35 3994.08 4020.50 4123.54 3.88 0.87 29.56 0.00 3290.36 FTSE Global All Cap ex USA 5726 402.19 0.0 4.7 -3.6 585.82
-3.3 3.2 Industrials 533 296.32 0.0 0.0 -1.0 413.33 -0.6 2.4 Experian PLC 1193 -9.00 Smiths Group PLC 1040 -7.00
Support Services (58) 6338.29 -1.01 6362.87 6403.26 6442.46 6784.65 2.40 1.78 23.45 3.49 6364.00 FTSE Global All Cap ex JAPAN 6452 447.46 0.2 6.3 -2.5 620.18
-2.1 2.7 Construction & Materials 109 418.64 0.2 0.2 -0.1 609.67 0.0 2.2 Fresnillo PLC 917.00 -34.50 Sports Direct International PLC 400.20 -2.90
FTSE Developed 2096 412.60 0.0 5.4 -3.3 571.17
-2.9 2.6 Aerospace & Defense 27 488.95 -0.7 -0.7 -3.5 676.69 -3.0 2.4 Gkn PLC 286.00 -4.70 Sse PLC 1435 5.00
Consumer Goods (40) 18682.92 0.18 18755.37 18650.22 18784.85 17398.30 2.85 1.89 18.64 73.67 13232.56
FTSE Developed All Cap 5704 433.01 0.0 5.8 -3.2 592.85
-2.8 2.6 General Industrials 56 216.67 -0.3 -0.3 -0.1 326.18 0.7 2.7 Glaxosmithkline PLC 1400 25.00 St. James's Place PLC 880.00 -8.00
Automobiles & Parts (1) 6721.13 -1.62 6747.20 6831.59 6897.39 8431.97 2.97 1.33 25.26 0.00 6181.02
FTSE Developed Large Cap 914 381.08 -0.1 5.2 -3.5 534.90
-3.0 2.7 Electronic & Electrical Equipment 69 302.36 -0.2 -0.2 -4.4 388.08 -4.3 2.0 Glencore PLC 139.75 -31.00 Standard Chartered PLC 480.50 -1.25
Beverages (6) 15693.42 0.24 15754.28 15656.04 15733.18 15009.12 2.47 1.70 23.82 96.90 10756.00
FTSE Developed Europe Large Cap 219 311.68 -0.4 3.1 -5.6 494.17
-5.0 3.8 Industrial Engineering 104 544.60 0.7 0.7 1.6 746.29 1.8 2.7 Hammerson PLC 548.00 -0.50 Standard Life PLC 353.70 -3.00
Food Producers (10) 8760.45 -0.87 8794.43 8837.36 8839.21 8166.40 1.87 1.41 37.94 6.04 7336.26
FTSE Developed Europe Mid Cap 301 483.57 -0.6 3.2 -5.7 693.82
-5.5 2.7 Industrial Transportation 96 498.93 0.7 0.7 0.8 694.22 1.1 2.5 Hargreaves Lansdown PLC 1227 -33.00 Taylor Wimpey PLC 173.20 -2.70
Household Goods & Home Construction (13)13312.96 -0.33 13364.59 13356.89 13514.15 11785.47 2.21 2.78 16.33 1.97 9057.74
FTSE Dev Europe Small Cap 716 687.57 -0.5 3.9 -6.0 960.30
-5.9 2.4 Support Services 72 270.61 -0.3 -0.3 -1.9 362.08 -1.8 2.0 Hikma Pharmaceuticals PLC 1738 -42.00 Tesco PLC 195.15 3.35
Leisure Goods (2) 5674.78 -3.44 5696.79 5877.01 5940.49 5175.43 4.22 1.32 17.92 0.00 4806.19
FTSE North America Large Cap 316 427.14 0.1 6.3 -2.1 564.89
-1.7 2.3 Consumer Goods 422 407.63 -0.6 -0.6 -2.1 581.13 -1.9 2.5 HSBC Holdings PLC 448.80 -1.55 Travis Perkins PLC 1790 -5.00
Personal Goods (6) 24224.74 1.49 24318.69 23869.49 24035.08 23316.03 2.73 3.05 12.00 150.56 15732.04
FTSE North America Mid Cap 391 636.64 0.5 9.1 -0.6 788.46
-0.3 1.8 Automobiles & Parts 103 345.08 -0.4 -0.4 -9.6 471.96 -9.5 2.9 Imperial Brands PLC 3673 12.50 Tui AG 1026 -4.00
Tobacco (2) 48383.03 0.18 48570.67 48297.41 48655.54 44172.39 3.77 1.36 19.48 207.72 29616.84
FTSE North America Small Cap 1508 634.78 0.9 10.7 -1.1 764.62
-0.8 1.8 Beverages 48 563.68 -0.7 -0.7 -1.4 815.60 -1.1 2.5 Inmarsat PLC 940.00 12.00 Unilever PLC 3110 23.00
Health Care (19) 8856.54 1.14 8890.89 8757.05 8757.14 9862.69 3.98 0.51 48.95 146.29 6563.84
FTSE North America 707 285.92 0.2 6.7 -1.9 387.43
-1.5 2.2 Food Producers 106 556.16 -0.3 -0.3 -0.5 815.50 -0.3 2.2 Intercontinental Hotels Group PLC 2676 -8.00 United Utilities Group PLC 900.50 -8.00
Health Care Equipment & Services (7) 7111.11 0.68 7138.69 7062.97 7085.47 6726.09 1.59 1.72 36.46 1.60 6030.62
FTSE Developed ex North America 1389 214.47 -0.3 3.5 -5.4 335.32
-5.0 3.2 Household Goods & Home Construction 47 399.82 -0.8 -0.8 -0.4 567.84 0.0 2.3 International Consolidated Airlines Group S.A. 532.00 -8.00 Vodafone Group PLC 217.65 -0.65
Pharmaceuticals & Biotechnology (12)11903.60 1.19 11949.77 11763.79 11759.60 13474.48 4.25 0.46 50.96 218.91 7850.42
FTSE Japan Large Cap 177 302.56 -0.9 2.5 -7.7 378.60
-7.7 2.2 Leisure Goods 28 126.67 0.2 0.2 -3.9 163.19 -3.9 1.5 Intertek Group PLC 3060 -52.00 Whitbread PLC 3707 -15.00
Consumer Services (96) 4774.07 -0.42 4792.58 4794.07 4819.71 5006.26 2.45 1.61 25.35 15.45 4323.82 FTSE Japan Mid Cap 303 466.74 -0.4 2.4 -5.0 564.22
-5.0 1.7 Personal Goods 79 599.38 -0.7 -0.7 0.3 814.74 0.6 2.0
Food & Drug Retailers (7) 3063.39 -0.21 3075.27 3069.71 3059.88 3499.51 1.74 -1.49 -38.39 0.00 3503.01 Intu Properties PLC 297.20 -1.50 Wolseley PLC 3762 -80.00
FTSE Global wi JAPAN Small Cap 781 495.53 -0.3 2.9 -5.9 618.56
-5.8 2.0 Tobacco 11 1278.05 -0.9 -0.9 5.0 2500.97 5.2 3.7 Itv PLC 230.00 -3.90 Worldpay Group PLC 277.80 -14.10
General Retailers (32) 2798.05 -0.03 2808.90 2798.75 2827.15 3004.91 2.60 2.31 16.64 2.42 3069.64
FTSE Japan 480 126.61 -0.8 2.5 2.1 Health Care
-7.1 178.02
-7.1 172 426.78 0.6 0.6 -6.9 598.10 -6.3 2.0 Johnson Matthey PLC 2572 -39.00 Wpp PLC 1547 -1.00
Media (22) 7311.81 -0.29 7340.16 7333.24 7324.12 7520.79 2.80 1.83 19.53 1.47 4317.67
FTSE Asia Pacific Large Cap ex Japan 530 527.69 0.6 6.4 -2.5 791.92
-2.1 3.4 Health Care Equipment & Services 60 639.53 0.2 0.2 -1.6 733.73 -1.5 1.0 Kingfisher PLC 344.20 -0.60
Travel & Leisure (35) 8233.09 -0.80 8265.02 8299.39 8388.53 8394.36 2.29 1.68 26.03 66.99 7566.26
FTSE Asia Pacific Mid Cap ex Japan 430 738.82 0.7 7.1 -1.1 1069.09
-0.8 3.0 Pharmaceuticals & Biotechnology 112 318.06 0.7 0.7 -8.6 464.00 -7.9 2.4
Telecommunications (7) 3908.96 -0.26 3924.12 3919.25 3963.27 3879.77 4.18 0.15 158.75 0.00 4096.02 FTSE Asia Pacific Small Cap ex Japan 1420 488.24 0.4 5.1 -2.2 696.57
-2.0 2.9 Consumer Services 385 379.06 -0.4 -0.4 -2.7 493.97 -2.4 1.8
Fixed Line Telecommunications (5) 5327.53 -0.36 5348.19 5346.99 5394.31 5208.53 2.91 1.64 20.93 0.00 4620.31
Mobile Telecommunications (2) 4958.34 -0.19 4977.57 4967.85 5031.92 4971.24 5.07 -0.45 -44.18 0.00 4637.39
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
960
2009
419.50
574.65
0.6
0.5
6.5
8.0
-2.3 669.12
-2.0 3.4 Food & Drug Retailers
0.6 820.84
0.8 3.2 General Retailers
53 295.81
121 508.57
-0.1
-0.5
-0.1
-0.5
-1.3 401.30
-4.6 646.32
-0.9
-4.3
1.9
1.6
UK STOCK MARKET TRADING DATA
Utilities (7) 8311.66 0.31 8343.89 8286.03 8305.59 8252.37 4.88 2.09 9.81 33.42 8888.46 FTSE Emerging Large Cap 501 541.38 0.5 8.2 0.5 778.01
0.7 3.3 Media 87 285.77 0.0 0.0 -1.2 373.13 -0.9 2.0 Mar 08 Mar 07 Mar 04 Mar 03 Mar 02 Yr Ago
Electricity (2) 8346.90 0.24 8379.27 8326.58 8337.89 9070.61 6.06 1.22 13.50 145.17 11310.62 FTSE Emerging Mid Cap 451 730.65 0.8 8.6 2.9 1039.17
3.1 2.9 Travel & Leisure 124 372.27 -0.7 -0.7 -2.4 490.24 -2.0 1.8 SEAQ Bargains 5576.00 6019.00 6019.00 6019.00 4773.00 4915.00
Gas Water & Multiutilities (5) 7847.27 0.33 7877.71 7821.81 7842.22 7606.55 4.59 2.37 9.19 5.49 8395.97 FTSE Emerging Small Cap 1057 606.78 0.4 6.0 -1.4 835.34
-1.3 3.1 Telecommunication 92 162.45 -0.1 -0.1 3.2 287.18 3.7 4.1 Order Book Turnover (m) 37.17 37.12 37.12 37.12 48.40 -
Financials (284) 4092.64 -0.85 4108.51 4127.64 4148.78 4869.20 4.09 1.62 15.08 32.95 3603.31 FTSE Emerging Europe 99 287.80 1.4 10.0 7.8 422.92
7.8 4.1 Fixed Line Telecommuniations 44 141.36 0.2 0.2 6.6 274.14 7.5 4.4 Order Book Bargains 998581.00 1024763.00 1024763.00 1024763.00 1050845.00 -
Banks (9) 3224.96 -1.09 3237.47 3260.35 3280.81 4291.56 5.27 0.86 21.98 51.02 2258.09 FTSE Latin America All Cap 245 663.25 -0.1 15.9 10.8 984.39
11.3 3.3 Mobile Telecommunications 48 161.96 -0.5 -0.5 -1.7 258.52 -1.7 3.6 Order Book Shares Traded (m) 1741.00 1757.00 1757.00 1757.00 1557.00 -
Nonlife Insurance (10) 2826.85 -0.42 2837.81 2838.87 2869.60 2402.16 2.71 2.44 15.09 15.57 4777.63 FTSE Middle East and Africa All Cap 217 631.40 1.3 7.6 2.9 Utilities
2.1 943.25
2.3 163 244.52 -0.1 -0.1 3.1 450.42 3.6 3.9 Total Equity Turnover (£m) 2969.96 4303.80 4303.80 4303.80 3086.19 -
Life Insurance/Assurance (11) 7104.57 -0.53 7132.12 7142.43 7140.65 8688.45 4.27 1.59 14.72 0.21 6522.27 FTSE Global wi UNITED KINGDOM All Cap In 323 313.13 -0.4 3.7 -4.8 498.57
-4.1 3.9 Electricity 112 269.03 -0.1 -0.1 3.9 490.61 4.6 3.7 Total Mkt Bargains 1102134.00 1162106.00 1162106.00 1162106.00 1166104.00 -
Index- Real Estate Investment & Services (21) 2648.52 -0.62 2658.79 2665.16 2665.34 2898.83 2.42 5.49 7.51 7.02 6826.68 FTSE Global wi USA All Cap 1987 489.90 0.2 7.1 2.1 Gas Water & Multiutilities
-2.3 630.43
-1.9 51 255.70 -0.1 -0.1 1.5 482.51 2.0 4.3 Total Shares Traded (m) 8160.00 6796.00 6796.00 6796.00 6810.00 -
Real Estate Investment Trusts (25) 2653.17 -0.11 2663.46 2656.03 2692.64 2955.02 3.35 5.94 5.03 8.31 3144.88 FTSE Europe All Cap 1395 361.19 -0.4 3.4 -5.3 554.56
-4.8 3.5 Financials 674 186.06 -0.1 -0.1 -7.3 290.21 -6.9 3.2 † Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable.
General Financial (32) 7496.38 -1.51 7525.45 7610.97 7664.87 8068.64 3.11 2.14 15.04 38.11 8177.18 FTSE Eurobloc All Cap 633 336.46 -0.7 3.0 -6.2 521.20
-6.0 3.2 Banks 244 161.92 0.0 0.0 -9.3 269.36 -8.8 3.8 (c) Market closed.
Equity Investment Instruments (176) 7349.15 -0.75 7377.66 7404.47 7416.66 7778.21 2.76 1.08 33.53 38.10 3885.30 FTSE RAFI All World 3000 2998 5307.04 0.2 6.2 -2.2 6715.05
-1.8 3.2 Nonlife Insurance 70 207.19 -0.2 -0.2 -3.4 288.93 -3.2 2.5
Non Financials (352) 4005.81 -0.97 4021.35 4045.01 4055.02 4307.41 3.83 0.82 31.83 27.06 5649.24 FTSE RAFI US 1000 993 8768.92 0.4 7.0 2.6 Life Insurance
-0.8 11142.26
-0.3 51 176.24 0.2 0.2 -11.1 268.38 -10.8 3.3
Technology (19) 1398.02 -1.51 1403.45 1419.41 1430.35 1374.54 1.48 1.88 35.98 5.01 1754.93 FTSE EDHEC-Risk Efficient All-World 3048 310.80 0.1 5.9 -1.5 418.92
-1.2 2.4 Financial Services 141 204.98 -0.6 -0.6 -7.8 273.92 -7.5 2.2 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Software & Computer Services (13) 1788.57 -1.06 1795.50 1807.77 1819.05 1435.27 2.05 1.78 27.31 12.84 2362.48 FTSE EDHEC-Risk Efficient Developed Europe 520 267.00 -0.5 2.7 -4.4 390.49
-4.2 2.8 Technology 183 167.84 -0.5 -0.5 -3.7 200.88 -3.4 1.8 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Technology Hardware & Equipment (6) 1541.88 -1.88 1547.86 1571.49 1585.56 1760.00 0.99 2.04 49.39 0.93 1770.97 Software & Computer Services 85 295.37 -0.9 -0.9 -4.8 339.82 -4.5 1.1 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment 98 123.29 0.0 0.0 -2.4 151.94 -2.0 2.6 liable for any loss arising from the reliance on or use of the listed information.
Hourly movements 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day 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/ For all queries e-mail ft.reader.enquiries@morningstar.com
FTSE 100 6124.33 6118.80 6125.18 6128.64 6130.20 6161.41 6166.06 6138.49 6103.02 6174.50 6102.17 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
FTSE 250 16735.65 16744.26 16701.37 16681.92 16652.23 16740.04 16739.40 16684.49 16640.97 16758.63 16640.36 (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
Data provided by Morningstar | www.morningstar.co.uk
FTSE SmallCap 4513.29 4512.62 4507.03 4502.06 4497.34 4499.73 4493.18 4486.04 4479.47 4513.39 4478.81
FTSE All-Share 3365.87 3363.72 3364.92 3365.65 3365.18 3381.90 3383.75 3369.63 3352.45 3387.88 3352.45 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
Time of FTSE 100 Day's high:13:44:30 Day's Low15:59:45 FTSE 100 2010/11 High: 6242.32(01/01/2016) Low: 5536.97(11/02/2016) Group companies and is used by FTSE International Limited under licence.
Time of FTSE All-Share Day's high:13:44:00 Day's Low16:00:00 FTSE 100 2010/11 High: 3444.26(01/01/2016) Low: 3046.53(11/02/2016)
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 UK COMPANY RESULTS UK RECENT EQUITY ISSUES

Amount Latest Company Turnover Pre-tax EPS(p) Div(p) Pay day Total Issue Issue Stock Close Mkt
Issue paid renun. closing Allergy Therapeutics Int 28.959 28.183 1.303 7.413 0.19 1.62 - - - - - date price(p) Sector code Stock price(p) +/- High Low Cap (£m)
price up date High Low Stock Price p +or- Anpario Pre 23.322 23.449 3.616 3.076 18.99 17.18 5 4.5 Jul 29 5 4.5 02/12 20.00 AIM CGP Cogenpower PLC 20.50 -0.20 23.00 20.00 1028.4
There are currently no rights offers by any companies listed on the LSE. Brammer Pre 717.3 723.6 13.5 17.7 7.3 9.2 7.1 7.1 Jul 3 10.7 10.7 02/02 180.00 CYBG CYBG PLC 201.25 -7.01 210.00 179.00 176962.2
Close Brothers Group Int 324.3 311.1 108.7 106.2 59.7 64.5 19 18 Apr 20 54.5 50.5
CLS Holdings Pre 99 82.2 151.2 236.8 305.7 449 - - - - -
Craneware Int 23.117 21.573 6.143 5.254 0.172 0.149 - 9.806 - 12.1 21.4
Dialight Pre 161.4 159.8 3.9L 15.5 6.4L 29.4 - 9.8 - - 15
Equiniti Group Pre 369 - 71.7L - 93L - 0.68 - May 10 0.68 -
Esure Group Pre 654.1 570.5 134 103.3 29.3 19.8 - 6.3 - 11.7 9.9
Forbidden Technologies Pre 0.709 0.689 2.635L 3.626L 1.94L 2.72L - - - - -
Foreign & Colonial Investment Trust Pre 197.166 234.326 8.42 6.69 2.7 2.7 May 3 5 4.9
Foxtons Group Pre 149.788 143.908 41.049 42.148 12.3 11.9 3.34 3.17 May 26 11.24 4.94
John Laing Group Pre 161.2 206.6 97.5 120.4 30 40.1 3.2 - May 20 6.9 -
Worldpay Group Pre 981.7 - 19.1 - 1.8L - - - - - -

Figures in £m. Earnings shown basic. Figures in light text are for corresponding period year earlier. §Placing price. *Intoduction. ‡When issued. Annual report/prospectus available at www.ft.com/ir
For more information on dividend payments visit www.ft.com/marketsdata For a full explanation of all the other symbols please refer to London Share Service notes.
Wednesday 9 March 2016 FINANCIAL TIMES 19

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

52 Week 52 Week 52 Week 52 Week 52 Week 52 Week
Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m
Australia (A$) Finland (€) Japan (¥) Sweden (SKr) AT&T 38.34 0.21 38.35 30.97 4.75 16.83 235925.79 Lockheed♦ 215.78 -0.06 227.91 181.91 2.75 19.53 65918.06
ANZ 24.98 -0.50 37.25 21.86 9.16 10.97 54230.29 Nokia 5.38 -0.22 7.87 4.91 2.46 -39.07 34309.67 AstellasPh 1568.5 -13.50 2033 1476 1.84 20.39 30984.04 AtlasCpcoB 189.10 -4.50 270.00 162.60 1.50 17.36 8711.77 AutomData 85.93 -0.16 90.67 64.29 2.24 29.17 39308.78 Lowes 71.64 0.87 78.13 62.62 1.31 24.59 65558.09
BHPBilltn 18.21 -0.34 33.35 14.06 11.79 22.97 43518.45 SampoA 41.22 -0.18 49.40 36.76 4.48 14.46 25460.36 Bridgestne 4146 -50.00 5182 3561 2.55 13.65 29972.19 Ericsson 78.30 -0.70 120.00 70.65 4.11 25.29 28132.74 Avago Tech 140.41 -3.10 150.50 100.00 1.02 30.84 38821.9 Lyondell♦ 81.17 -3.07 107.32 69.10 3.61 8.77 35081.72
CmwBkAu♦ 75.45 -1.44 96.69 70.07 7.48 15.24 95865.23 France (€) Canon 3297 -33.00 4539 2977.5 4.27 18.66 39096.85 H&M 288.50 -2.30 362.00 259.80 3.12 23.98 49751.35 BakerHu♦ 44.70 -1.88 70.45 37.58 1.47 -10.33 19572.77 Marathon Ptl♦ 35.57 -1.29 60.38 29.24 3.09 7.01 18824.62
CSL 102.43 -0.72 108.68 85.40 1.51 26.20 35278.09 Airbus Grpe 60.61 -0.87 68.50 49.96 1.88 17.68 52615.16 CntJpRwy 19405 60.00 24800 18255 0.56 13.95 35540.61 Investor 286.20 -2.20 363.40 256.80 2.98 14.68 15390.38 BankAm♦ 13.14 -0.39 18.48 10.99 1.47 10.62 135714.93 Marsh&M 58.02 0.33 59.99 50.81 1.96 20.20 30241.6
NatAusBk 26.85 -0.38 39.71 23.82 9.26 12.42 52702.47 AirLiquide 98.60 -0.03 123.95 90.77 2.35 21.21 37516 Denso 4398 -132.00 6548 3879 2.52 14.84 34568.87 Nordea Bk 86.90 -0.10 115.50 77.25 6.33 10.77 41550.48 Baxter♦ 39.78 -0.04 43.44 32.18 3.08 57.32 21796.48 MasterCard 87.45 -0.85 101.76 74.61 0.74 27.09 95275.22
Telstra♦ 5.10 -0.03 6.53 4.98 8.05 15.62 46395.14 AXA 20.70 -0.36 26.02 18.80 4.18 10.89 55519.23 EastJpRwy 9724 -136.00 12815 9191 1.16 18.19 33933.5 SEB 84.70 -0.20 111.50 75.95 5.31 11.15 21699.67 BB & T 33.72 -0.63 41.90 29.95 3.00 13.69 26316.82 McDonald's♦ 118.85 1.70 124.83 87.50 2.79 25.71 107156.1
Wesfarmers♦ 40.86 0.34 45.00 36.65 6.59 19.82 34238.69 BNP Parib 45.66 0.03 61.00 37.00 3.11 8.36 62905.47 Fanuc 18195 365.00 28575 15300 3.83 21.30 33315.12 SvnskaHn 110.20 1.90 421.50 95.85 3.58 15.17 24352.65 BectonDick♦ 147.84 -0.18 157.50 128.87 1.60 47.34 31314.96 McGraw Hill♦ 94.05 -0.09 109.13 78.55 1.35 23.18 24951.47
Westpc 31.81 -0.31 40.07 27.69 7.30 14.86 78956.93 ChristianDior 165.00 0.60 195.35 140.80 1.74 13.69 33143.91 FastRetail 34420 -70.00 61970 30720 0.88 45.67 32461.04 Swedbank 174.70 1.40 223.90 150.80 6.15 13.08 23347.9 BerkshHat 208000 -500.00223011.49 186900 - 14.72 168024.69 McKesson♦ 158.88 -4.16 243.61 148.29 0.63 17.26 36317.9
Woolworths♦ 23.00 -0.02 30.02 20.50 8.14-287.09 21751.12 Cred Agr 9.80 -0.06 14.49 7.59 3.38 22.12 28602.02 Fuji Hvy Ind 3990 -19.00 5223 3411 2.46 8.44 27771.81 TeliaSonera 41.33 0.52 55.85 37.04 6.88 13.03 21128.48 Biogen 264.21 -5.32 480.18 242.07 - 17.87 57774.43 Medtronic 75.59 -0.42 79.50 55.54 1.67 47.03 106291.31
Belgium (€) Danone 63.27 -0.41 67.74 51.73 2.16 45.87 45804.38 Hitachi 513.20 -4.50 858.00 431.00 2.11 10.13 22054.08 Volvo 87.35 -1.45 120.50 72.20 3.25 19.70 16736.76 BkNYMeln 37.47 -0.70 45.45 32.20 1.75 14.37 40952.93 Merck 52.73 0.09 61.70 45.69 3.31 34.99 146342.16
AnBshInBv 104.30 -1.30 124.20 87.73 2.82 24.17 185411.2 EDF 9.94 -0.18 23.56 9.13 11.45 5.74 21105.42 HondaMtr 3140 -30.00 4499 2726 2.53 12.08 50570.21 Switzerland (SFr) BlackRock♦ 319.57 -7.16 380.99 275.00 2.63 16.75 52390.84 Metlife♦ 41.60 -1.25 58.23 35.00 3.42 9.44 45621.34
KBC Grp 48.24 -0.58 66.00 44.15 3.93 8.40 22293.29 Engie SA 13.78 -0.23 19.73 13.05 6.61 40.62 37093.63 JapanTob 4673 49.00 4850 3551 1.92 23.06 83094.02 ABB 18.16 -0.27 22.16 15.94 - 21.84 42385.43 Boeing 121.41 -1.49 155.99 102.10 2.89 16.93 80434.59 Microsoft♦ 51.78 0.75 56.85 39.72 2.40 38.22 413614.14
Esslr Intl 111.20 0.30 125.15 95.01 0.84 42.64 26605.75 KDDI 2871.5 10.50 8550 2519 1.88 16.77 68698.77 CredSuisse 15.02 -0.38 28.94 12.23 4.36 7.41 29644.41 BrisMySq 66.30 -0.20 70.87 51.82 2.17 73.79 110676.79 Mnstr Bvrg 129.74 1.75 160.50 113.08 - 47.41 26326.82
Brazil (R$)
Hermes Intl 322.60 1.45 365.55 281.20 0.83 40.06 37644.6 Keyence 58630-1330.00 70100 50500 0.31 32.72 31694.3 Nestle 71.25 -0.30 77.00 65.70 2.96 16.47 229063.26 CapOne 68.72 -0.80 92.10 58.49 2.10 10.18 36241.55 MondelezInt 41.73 - 48.58 33.97 1.48 9.75 65468.46
Ambev 18.95 -0.22 20.46 15.99 7.78 26.25 78543.6
LOreal 154.80 0.90 181.30 140.40 1.59 32.40 96331.15 MitsbCp 2041.5 -19.00 2837 1565 2.43 11.20 28861.01 Novartis 72.00 -0.20 103.20 69.05 3.62 26.15 194346.85 CardinalHlth 83.46 -0.69 91.91 74.73 1.74 21.09 27485.79 Monsanto 88.62 0.14 123.82 81.22 2.14 24.73 39024.3
Bradesco♦ 28.48 0.81 37.80 17.90 3.06 11.09 18958.61
LVMH 154.80 0.15 176.60 130.75 1.88 15.00 86748.56 MitsubEst 2189.5 26.00 2975 1970 0.62 61.10 27066.23 Richemont 67.70 0.70 87.55 62.25 2.25 22.95 35633.37 Carnival♦ 47.03 -0.02 55.77 40.52 2.21 22.09 27171.33 MorganStly 25.38 -0.71 41.04 21.16 2.09 9.05 49708.48
Cielo 35.35 0.35 49.30 28.03 1.80 20.49 17587.4
Nmrcble-SFR 33.45 -0.17 59.98 27.05 - -43.43 16203.68 MitsubishiEle 1173 -26.00 1718 947.00 2.07 11.55 22393.12 Roche 250.80 -1.00 283.90 238.00 3.05 25.54 177668.49 Caterpillar 72.24 -2.53 89.62 56.36 3.92 21.44 42066.93 MylanNV 45.05 -1.09 76.69 37.59 - 27.43 22153.2
ItauHldFin 26.71 0.47 35.93 21.49 4.28 6.67 21461.83
Orange 15.72 -0.05 16.98 12.21 3.48 45.43 46027.35 MitsuiFud 2768.5 13.00 3879 2260.5 0.91 24.34 24403.29 Swiss Re 88.90 -0.85 99.75 76.85 4.73 37.25 33230 CBS 51.14 -0.87 63.95 38.51 1.13 18.48 21569.46 Netflix 97.80 2.31 133.27 58.46 - 361.08 41866.34
Petrobras 9.67 -0.24 16.26 5.67 - -4.05 18978.26
PernodRic 98.64 -0.17 117.75 88.00 1.73 28.89 28939.4 MitUFJFin 538.80 -14.40 936.80 431.90 3.01 5.77 67874.48 Swisscom 506.50 5.00 580.50 452.70 4.15 20.19 26455.95 Celgene 103.82 -0.43 140.72 92.98 - 55.46 81152.33 NextEraE♦ 115.47 1.02 116.98 93.74 2.57 19.77 53175.78
Vale 15.36 -2.22 27.89 8.60 14.22 -7.20 13031.13
Renault 83.70 -3.80 100.25 59.59 2.07 9.93 27359.6 Mizuho Fin 178.70 -2.30 280.40 149.30 3.91 6.79 39545.64 Syngent 407.70 1.70 435.20 288.50 2.74 29.37 38209.17 CharlesSch 26.67 -0.86 35.72 21.51 0.87 26.92 35218.35 Nike♦ 60.37 1.12 68.20 47.25 1.13 31.09 81486.51
Canada (C$) Murata Mfg 14380 -270.00 22220 11610 1.25 15.89 28800.09 ChevrnTx♦ 88.49 -2.18 112.20 69.58 4.66 37.53 166640.5 NorfolkS♦ 77.94 -1.79 111.76 64.51 2.92 15.75 23240.11
Safran 59.00 0.15 72.45 48.87 1.99 -61.34 27196.88 UBS 16.25 -0.30 22.57 15.01 4.39 10.55 63081.15
BCE 58.46 0.89 59.30 51.56 4.12 20.47 37781.63 NipponTT 4672 -42.00 5419 3592.5 1.83 16.30 87080.29 Chubb 116.93 -0.42 134.49 94.35 2.19 14.08 37906.54 Northrop♦ 187.19 0.51 194.80 152.31 1.60 18.70 33870.76
Sanofi 72.46 0.10 101.10 66.44 3.73 19.14 104578.12 Zurich Fin 223.80 -1.70 334.60 194.70 - 11.74 33947.53
BkMontrl 77.11 0.79 80.76 64.01 4.06 12.08 36997.02 Nissan Mt 1091 -29.50 1350 923.30 3.10 8.88 43850.62 Cigna 140.34 -0.13 170.68 119.81 0.03 17.81 35894.24 NXP 75.72 -1.26 114.00 61.61 - 12.88 26199.34
Sant Gbn 37.18 -0.07 44.84 31.47 1.52 27.39 23049.96 Taiwan (NT$)
BkNvaS 61.02 0.49 67.44 51.17 4.20 11.56 54732.9 Nomura 524.00 -11.10 909.20 442.80 3.96 9.23 17808.59 Cisco 26.96 -0.18 29.90 22.46 3.12 13.34 135665.99 Occid Pet♦ 66.64 -2.96 82.03 58.22 4.30 -6.50 50902.65
Schneider 56.01 -0.70 75.29 45.32 3.12 21.27 36378.73 Chunghwa Telecom 105.00 -1.00 106.00 93.10 4.32 21.98 24845.01
Brookfield♦ 42.58 0.35 48.64 37.70 1.36 12.10 31331.12 Nppn Stl 2193 -0.50 3505 1773.5 2.67 10.43 18529.05 Citigroup 41.47 -1.14 60.95 34.52 0.37 7.94 122258.54 Oracle 38.25 -0.11 45.24 33.13 1.41 19.48 160696.67
SocGen 34.56 0.07 48.77 26.61 3.29 10.04 30794.65 Formosa PetChem 88.00 -1.20 90.20 63.90 0.90 41.23 25569.58
CanadPcR 172.00 -2.86 245.05 140.02 0.76 20.42 19631.33 NTTDCMo 2494.5 -47.00 2888 1961 2.53 20.67 90615.31 CME Grp♦ 92.97 -0.61 100.87 81.87 2.07 26.14 31462.23 Pepsico♦ 99.49 0.24 103.44 76.48 2.68 28.11 143804.11
Total 42.04 -0.77 50.30 35.21 5.60 121.66 114034.99 HonHaiPrc 83.00 1.40 99.70 72.70 4.07 9.27 39591.14
CanImp 94.56 0.53 102.90 82.19 4.46 10.97 27872.27 Panasonic 992.00 -28.00 1853.5 799.00 1.38 150.32 21635.29 Coca-Cola 44.21 0.20 44.29 36.56 2.88 27.48 191407.1 Perrigo♦ 129.06 -0.02 215.73 122.62 0.35 136.29 18894.65
UnibailR 232.40 -2.25 259.00 212.05 3.76 13.02 25361.09 MediaTek 235.00 - 467.00 193.50 8.74 12.33 11265.15
CanNatRs 33.90 -0.79 42.46 21.27 2.53 91.88 27679.39 Seven & I 4445 -41.00 5998 4370 1.45 26.67 35032.09 Cognizant 56.18 -0.82 69.80 51.22 - 22.02 34220.39 Pfizer 29.53 -0.26 36.46 28.25 3.66 27.60 182645.48
Vinci 63.27 -0.43 64.66 50.08 2.68 18.22 41215.16 TaiwanSem 152.00 - 155.00 112.50 2.76 13.88 120222.06
CanNatRy♦ 79.92 0.17 88.62 66.62 1.39 20.06 46877.67 ShnEtsuCh 5992 -97.00 8249 5160 1.58 19.53 23020.08 ColgtPlm 67.86 0.29 70.65 50.84 2.13 46.27 60581.24 Phillips66 85.67 -1.74 94.12 69.79 2.45 11.50 45187.49
Vivendi 18.83 -0.17 24.83 16.30 10.06-230.82 28481.94
Enbridge 50.35 0.35 66.14 40.03 3.44-1352.83 34710.3 Softbank 5851 97.00 7827 4133 0.62 13.98 62458.89 Thailand (THB) Comcast 58.64 -0.32 64.99 50.01 1.64 18.77 122822.02 PhilMorris 94.54 0.64 94.91 75.27 4.12 22.18 146467.56
GtWesLif 35.09 0.22 37.70 30.42 3.46 13.63 25998.85 Germany (€) PTT Explor♦ 281.00 -5.00 370.00 197.00 3.71 42.43 22656.88
Sony 2569.5 -45.00 3970 2199 0.79 26.52 28839.8 ConocPhil 39.47 -1.93 69.72 31.05 7.18 -11.44 48795.39 PNCFin 85.82 -1.14 100.52 77.67 2.26 12.00 43004.85
ImpOil 44.36 -0.28 55.37 37.25 1.02 36.15 28044.67 Allianz 140.80 -0.30 170.15 126.55 4.61 10.52 71124.47
SumitomoF 3545 -70.00 5770 2819.5 3.94 9.64 44568.37 United Arab Emirates (Dhs) Corning♦ 19.34 -0.23 24.14 15.42 2.39 21.71 21522.27 PPG Inds♦ 102.20 -1.17 118.69 82.93 1.33 20.63 27263.45
Manulife♦ 18.29 -0.21 24.20 15.32 3.38 18.73 26901.25 BASF 63.69 0.13 97.22 56.01 4.16 15.53 64660.73
Takeda Ph 5447 -37.00 6624 5010 2.98 -42.38 38269.63 Emirtestele 18.85 - 19.05 10.50 3.20 21.76 40574.63 Costco 149.75 1.58 169.73 117.03 0.98 29.74 65856.65 Praxair♦ 107.60 -0.99 126.81 95.60 2.56 20.86 30648.37
Potash 24.66 -0.18 42.86 20.65 7.81 12.58 15387.83 Bayer 97.60 -0.65 146.45 91.08 2.18 21.16 89213
TokioMarine 3955 -57.00 5504 3310 2.45 15.46 26637.11 United Kingdom (p) CrownCstl 85.83 -0.44 88.46 75.71 3.76 61.84 28647.59 Priceline 1287.13 -4.30 1476.52 954.02 - 27.00 63863.01
RylBkC 72.37 0.15 81.53 64.52 4.11 11.42 80247.25 BMW 80.02 -1.85 123.75 66.00 3.43 9.86 53246.59
Toyota 5990 -110.00 8783 5703 3.39 9.01 177769.33 AscBrFd 3321 -22.00 3606 2705.75 1.02 46.54 37352.25 CSX♦ 25.00 -0.54 37.67 21.33 2.70 12.97 24078.85 ProctGmbl 83.56 0.46 85.11 65.02 3.04 28.12 225979.98
Suncor En♦ 34.21 -0.37 40.93 27.32 3.10 -26.65 39812.35 Continental 194.45 -3.15 234.25 171.30 1.58 15.43 42988.39
Mexico (Mex$) AstraZen♦ 4054.5 38.00 4931.68 3746 4.58 45.80 72822.55 CVS 99.39 0.97 113.65 81.37 1.36 22.32 109179 Prudntl♦ 70.12 -2.01 92.60 57.19 3.35 5.98 31273.52
ThmReut♦ 49.72 0.46 55.92 47.25 3.38 15.71 28240.93 Daimler 65.05 -1.93 96.07 57.01 3.57 8.72 76924.61
AmerMvl 13.31 0.03 17.17 10.87 1.86 24.52 31222.74 Aviva 459.60 -2.30 574.50 400.10 3.94 12.03 26436.43 Danaher 89.34 -0.90 97.62 81.25 0.58 25.26 61390.38 PublStor 250.64 0.07 257.98 182.08 2.50 42.84 43428.24
TntoDom 54.48 0.23 56.48 47.75 3.57 13.29 75229.26 Deut Bank 17.37 -0.38 33.42 13.03 4.09 -6.01 26474.35
FEMSA UBD 162.80 -1.54 176.84 133.52 0.67 32.01 32521.6 Barclays 172.00 -1.70 289.90 147.75 3.78 -72.85 41076.06 Deere 83.93 -1.75 98.23 70.16 2.86 15.26 26465.29 Qualcomm♦ 53.02 -0.28 74.09 42.24 3.38 18.31 79258.93
TrnCan 49.77 0.35 58.12 40.58 3.89 -30.59 26072.07 Deut Tlkm 15.30 -0.08 17.63 13.39 3.10 22.60 77907.1
WalMrtMex 42.25 -0.76 47.44 35.50 1.27 32.63 41188.14 BP♦ 354.20 -11.35 487.50 252.55 7.60 -12.94 93022.98 Delphi 68.99 -1.60 90.57 55.59 1.40 17.29 19147.05 Raytheon 123.08 0.58 129.99 95.32 2.10 18.92 36800.67
ValeantPh 85.70 -1.45 347.84 79.92 - 38.95 21809.55 DeutsPost 23.30 0.73 31.19 19.55 - 20.57 31234.08
BrAmTob 4012.5 4.00 4090.5 3231.5 3.69 18.63 106271.28 Delta♦ 46.55 -1.84 52.77 34.61 0.93 8.58 36239.58 Regen Pharm 400.00 -8.28 605.93 350.26 - 75.18 41149.75
E.ON 8.33 -0.23 14.85 7.08 1.59 -1.90 18424.35 Netherlands (€)
China (HK$) BSkyB 1007 -7.00 1180 953.50 3.26 27.57 24592.74 Devon Energy 22.29 -1.90 70.48 18.07 4.15 -0.65 9836.45 ReynoldsAm♦ 51.19 -0.13 52.25 33.71 2.62 20.66 73065.6
Fresenius Med 75.97 0.30 83.17 63.10 0.98 25.80 25722.27 Altice 13.66 0.03 47.73 9.98 - 258.05 12394.99
AgricBkCh 2.72 -0.05 4.55 2.50 7.79 4.31 10763.81 BT 463.45 -2.25 502.60 404.00 2.46 17.46 65597.15 DiscFinServ 48.29 -0.39 60.57 42.86 2.16 9.77 20001.77 Salesforce 70.72 0.23 82.90 52.60 - -573.15 46958.08
Fresenius SE 60.11 0.55 70.00 51.01 0.69 27.65 36260.37 ASML Hld 85.68 -1.00 104.85 70.25 0.77 28.21 41039.38
Bk China 3.10 -0.05 5.68 2.83 7.13 4.83 33373.65 Compass 1217 -3.00 1298 963.00 2.26 23.31 28429.26 Disney 98.20 -1.19 122.08 86.25 1.34 19.04 160220.19 Schlmbrg♦ 73.41 -2.75 95.13 59.60 2.63 46.72 91999.42
HenkelKgaA 83.99 -0.01 99.44 75.76 1.45 20.04 24119.04 Heineken 75.88 0.15 85.90 64.54 1.47 24.26 48311.66
BkofComm 4.76 -0.08 8.61 4.24 6.60 4.62 21455.62 Diageo♦ 1866.5 7.50 1979.5 1592.5 3.02 18.99 66736.89 DominRes♦ 71.54 0.32 76.59 64.54 3.49 23.19 42667.84 Sempra Energy 98.29 0.89 112.90 86.72 2.75 18.97 24495.42
Linde 130.50 -2.30 195.55 113.50 2.29 22.45 26791.7 ING 11.17 -0.06 16.00 9.19 3.05 8.54 47780.34
BOE Tech 1.90 0.03 4.78 1.17 1.91 28.41 48.67 GlaxoSmh♦■ 1400 25.00 1645 1227.5 5.71 6.93 96870.52 DowChem 48.86 -0.90 57.10 35.11 3.39 8.57 54582.11 Shrwin-Will♦ 276.57 0.29 294.35 218.27 0.93 25.71 25519.23
MuenchRkv 178.70 0.70 206.50 156.00 4.11 10.16 32956.06 Unilever♦ 39.77 0.05 42.84 32.86 2.84 24.41 75369.62
Ch Coms Cons 8.02 0.14 17.00 5.77 2.45 8.15 4571.39 Glencore 139.75 -31.00 318.46 66.67 8.19-325.00 28579.61 DukeEner♦ 76.99 0.74 80.10 65.50 4.06 19.87 52998.22 SimonProp 197.44 -2.21 208.14 170.99 2.95 34.84 62155.42
SAP 69.38 -0.19 75.75 53.91 1.50 28.38 94213.07 Norway (Kr)
Ch Evrbrght 3.47 -0.02 5.65 3.07 6.24 4.81 3068.47 HSBC♦ 448.80 -1.55 674.57 420.15 7.66 10.27 125521.98 DuPont♦ 62.78 -1.94 76.61 47.11 2.64 31.16 55016.45 SouthCpr 25.93 -1.02 33.31 21.55 1.26 29.03 20062.22
Siemens 88.70 -0.58 106.35 77.91 3.52 14.87 83337.94 DNB 103.50 1.70 143.00 90.10 3.45 7.89 19748.57
Ch Rail Cons 8.25 -0.04 17.70 6.72 2.12 7.58 2205.25 Imperial Brands♦ 3673 12.50 3831 3460.5 3.60 20.76 50027.63 Eaton♦ 58.02 -1.00 73.82 46.19 3.65 14.21 26575.17 Starbucks 58.03 0.03 64.00 42.05 1.13 36.93 85774.14
Volkswgn 130.30 -5.45 254.50 95.00 3.49 10.93 42500.97 Statoil 133.00 -0.50 161.70 97.25 5.08 -12.11 49680.49
Ch Rail Gp 5.34 -0.04 12.30 4.21 1.70 9.43 2892.5 LlydsBkg 70.63 -2.12 89.35 55.84 2.12 42.12 71700.46 eBay 24.27 0.01 29.83 21.52 - 15.74 28607.17 StateSt 57.28 -1.22 81.26 50.73 2.22 13.30 23111.68
ChConstBk 4.81 -0.06 7.98 4.31 7.28 4.56 148876.02 Hong Kong (HK$) Telenor 135.20 -0.30 186.10 116.80 2.64 35.22 23780.32 Ecolab 105.20 -0.76 122.48 98.62 1.23 32.83 31139.4 Stryker 102.97 0.13 105.34 86.68 1.32 28.28 38405.98
Natl Grid 948.80 8.30 992.50 806.40 4.52 16.54 50480.61
China Vanke 18.16 -0.10 24.10 15.52 3.19 10.89 3074.27 AIA 41.40 -0.30 58.20 36.85 0.98 20.45 64216.13 Qatar (QR) EMC 26.30 -0.20 28.77 22.66 1.69 26.90 51207.35 Sychrony Fin 28.09 -0.43 36.40 23.74 - 11.00 23422.25
Prudential 1326.5 - 1761.5 1045.99 2.78 13.50 48482.14
ChinaCitic 4.65 -0.09 7.40 4.00 - 4.61 8909.06 BOC Hold 21.30 -0.10 33.70 18.82 4.76 9.61 28992.47 QatarNtBk 139.00 -0.60 169.00 122.50 4.33 10.75 26709.06 Emerson♦ 50.93 -0.98 62.75 41.25 3.57 13.89 32753.89 Target♦ 81.18 0.36 85.81 66.46 2.40 19.75 50011.07
RBS 230.00 -0.30 376.90 215.90 - -10.31 37986.46
ChinaLife 17.80 -0.24 41.00 16.12 2.58 11.34 17052.05 Ch OSLnd&Inv 24.80 -0.55 34.05 20.45 2.01 7.55 31482.57 EOG Res 72.98 -2.49 101.36 57.15 0.88 -9.13 40130.49 TE Connect♦ 59.39 -1.21 73.73 51.70 2.08 22.16 22223.57
Russia (RUB) ReckittB 6470 34.00 6782 5403 2.15 27.49 64951.35
ChinaMBank 16.06 -0.54 26.85 12.72 4.86 6.04 9492.06 ChngKng 45.80 -0.25 77.55 38.20 - 10.66 22757.94 EquityResTP■ 71.65 -0.01 82.53 61.90 2.97 31.50 26162.4 Telsa Mtrs 204.36 -0.93 286.65 141.05 - -30.59 26987.03
Gzprm neft 150.15 3.99 158.70 122.75 4.91 12.18 49588.67 RELX 1228 4.00 1279 988.50 2.12 28.36 35607.05
ChinaMob 84.80 0.15 118.00 79.00 3.10 14.10 223535.15 Citic Ltd 11.84 0.02 16.40 10.02 1.64 6.18 44342 Exelon♦ 34.18 0.26 34.98 25.09 3.50 13.95 31438.43 TexasInstr 54.73 -0.77 59.67 43.49 2.47 20.12 55012.73
Lukoil 2840 65.00 2850.1 2040.1 6.27 24.53 33699.18 RioTinto♦ 2026 -211.00 3072 1557 7.58 -62.92 39557.58
ChinaPcIns 25.60 -0.85 47.10 23.70 2.21 13.22 9146.72 Citic Secs 16.24 -0.20 40.50 12.82 2.02 7.67 6101.49 ExpScripts 69.01 -1.85 94.61 65.55 - 20.11 46098.51 TheTrvelers♦ 111.15 1.35 116.48 95.21 2.06 10.60 32786.73
MmcNrlskNckl 9494 194.00 11284 7840 14.50 11.49 20959.21 RollsRoyce 706.50 -15.00 1061 497.00 2.00 157.70 18455.37
ChMinsheng 7.06 -0.07 11.88 6.13 3.05 4.81 6302 CK Hutchison 97.10 -1.05 174.90 91.80 3.41 4.23 48248.77 ExxonMb♦ 83.09 -1.37 90.09 66.55 3.34 22.40 345052.96 ThrmoFshr 139.43 -2.13 143.65 117.10 0.41 29.34 55248.82
Novatek 639.60 13.90 650.00 410.80 9.39 56.89 27092.47 RylDShlA♦ 1659 -15.00 2122 1256 7.57 100.28 99218.75
ChMrchSecs RMB 16.59 0.38 40.00 13.45 4.48 9.14 12248.82 CNOOC 9.26 0.02 13.78 6.41 5.55 8.85 53226.02 Facebook 107.05 1.32 117.59 72.00 - 86.36 245678.82 TimeWrnr♦ 68.57 -1.00 91.34 55.53 1.97 15.53 54180.88
Rosneft 301.00 -1.25 304.40 214.80 2.79 7.92 44503.34 SABMill 4223.5 8.00 4228.07 2773 1.76 34.99 97262.22
Chna Utd Coms RMB 4.35 -0.01 10.74 3.86 1.49 30.80 14173.74 HangSeng♦■ 130.40 -0.80 162.10 121.10 4.15 9.39 32095.61 Fedex 143.36 -1.72 185.19 119.71 0.59 38.76 39512.2 TimeWrnrC 195.18 -0.05 195.74 145.44 1.85 31.72 55288.71
Sberbank 109.47 0.48 110.70 60.57 0.42 11.51 32967.16 Shire 3794 28.00 5870 3423 0.41 24.80 31943.15
ChShenEgy 12.58 -0.28 22.50 10.12 6.74 9.20 5504.21 HK Exc&Clr 172.20 -0.90 311.40 160.10 2.86 27.33 26792.22 FordMtr 13.26 -0.37 16.74 10.44 4.36 7.46 51676.75 TJX Cos 75.78 0.41 76.93 63.53 0.93 25.10 50736.92
Surgutneftegas 40.65 0.57 40.65 30.31 - 1.50 20257.35 StandCh 480.50 -1.25 1166 373.40 9.34 -8.29 22379.36
ChShpbldng RMB 6.50 -0.10 20.19 5.66 0.56-413.71 17942.95 MTR 36.00 - 40.00 33.10 2.64 14.61 27156.65 Franklin 37.90 -0.55 54.04 31.00 1.60 12.57 22461.28 T-MobileUS 38.99 0.35 43.43 31.19 - 49.08 31817.3
Saudi Arabia (SR) Tesco 195.15 3.35 252.52 137.00 0.59 -2.81 22571.07
ChStConEng RMB 5.59 -0.01 12.52 4.88 2.95 7.46 25692.54 SandsCh 27.50 -1.05 39.15 20.75 6.55 16.55 28568.74 GenDyn 131.69 -0.64 153.76 121.61 1.97 15.05 40976.93 UnionPac♦ 78.74 -2.71 118.66 67.06 2.69 14.88 66646.67
AlRajhiBnk 53.28 0.19 69.00 44.70 2.26 12.61 23084.93 Vodafone 217.65 -0.65 258.00 197.70 5.16 -40.76 82120.77
ChUncHK 9.09 -0.05 16.00 7.87 2.56 20.40 28024.07 SHK Props 93.70 -0.90 137.60 79.00 2.32 9.43 34902.97 GenElectric♦ 30.07 -0.22 31.49 19.37 2.95 183.51 280571.36 UPS B♦ 101.10 -0.20 107.32 87.30 2.78 19.62 69777.26
Natnlcombnk 42.90 0.21 72.75 36.60 1.75 10.37 22876.94 WPP 1547 -1.00 1616 1273 2.47 15.99 28456.2
CNNC Intl RMB 7.25 -0.04 14.38 4.07 - 21.25 4336.36 Tencent 146.30 -0.20 171.00 124.00 0.23 43.12 177125.83 GenMills 59.89 0.27 60.24 47.43 2.73 26.22 35535.44 USBancorp 39.90 -0.87 46.26 37.07 2.44 13.08 69318.9
SaudiBasic 77.06 0.65 110.50 59.50 6.25 10.44 61639.77 United States of America ($)
CSR 7.39 -0.11 20.70 6.61 - 17.36 4158.59 India (Rs) GenMotors 30.64 -0.95 39.00 24.62 4.34 5.38 47323.25 UtdHlthcre 122.00 0.24 126.21 95.00 1.48 21.05 115982.23
SaudiTelec 68.02 0.20 73.25 52.75 5.66 15.26 36272.5 21stC Fox A♦ 27.42 -0.48 35.85 22.66 1.05 23.56 30695.24
Daqin RMB 6.92 -0.05 15.15 6.41 6.66 7.59 15814.25 Bhartiartl 331.50 2.25 452.45 282.30 0.66 24.78 19665.17 GileadSci 89.91 0.26 123.37 81.89 1.38 7.84 122896.51 UtdTech♦ 96.93 0.01 122.19 83.39 2.55 22.20 81104.23
Singapore (S$) 3M♦ 160.40 -0.17 167.70 134.00 2.46 21.94 97048.13
Gree Elec Apl 0.19 -0.01 0.45 0.13 - -2.27 336.44 HDFC Bk 1014.15 -6.40 1128 928.00 0.77 22.88 38037.3 GoldmSchs♦ 152.79 -2.57 218.77 139.05 1.61 13.06 65168.33 ValeroEngy 62.87 -0.38 73.88 51.68 2.61 8.16 29573.59
DBS 15.12 -0.26 21.50 13.01 3.62 12.53 27297.02 AbbottLb 39.34 0.16 51.74 36.00 2.35 23.73 57957.33
GuosenSec RMB 14.76 -0.11 34.94 13.28 1.30 9.32 4980.33 Hind Unilevr 826.25 -22.50 981.00 766.40 1.68 39.77 26532.58 Halliburton♦ 34.54 -1.30 50.20 27.64 2.01 -45.94 29647.13 Verizon 52.61 0.40 52.65 38.06 4.09 12.49 214324.77
JardnMt US$ 53.89 -0.51 65.98 45.00 2.43 13.88 37850.76 Abbvie 56.01 -0.39 71.60 45.45 3.48 18.49 90245.45
HaitongSecs 12.00 -0.30 27.90 10.00 2.42 7.82 5267.41 HsngDevFin 1146.45 17.45 1402.15 1011.45 1.28 19.86 26869.92 HCA Hold 72.45 -0.49 95.49 43.91 - 15.07 28759.64 VertexPharm 87.27 -3.68 143.45 78.51 - -39.19 21502.63
JardnStr US$ 28.86 -0.26 35.78 25.24 0.85 11.32 32122.59 Accenture 102.27 -0.13 109.86 86.40 1.96 24.09 82454.48
Hngzh HikVDT RMB 29.65 -0.24 56.48 23.72 1.29 21.98 14382.93 ICICI Bk 216.85 -3.65 349.90 180.75 2.22 10.14 18706.98 Hew-Pack♦ 11.05 -0.26 16.16 8.91 5.76 4.52 19079.57 VF Cp♦ 65.55 -0.32 77.40 52.21 1.96 23.86 27824.34
OCBC 8.64 -0.08 10.92 7.41 3.81 10.51 25664.11 Adobe 85.45 0.34 96.42 71.27 - 72.93 42826.4
Hunng Pwr 6.54 -0.12 11.90 5.63 6.73 6.53 3957.53 Infosys 1163.45 -7.20 2298.75 932.65 3.44 20.30 39462.84 HiltonWwde 21.20 -0.36 31.60 16.16 0.64 15.49 20942.92 Viacom 39.15 -0.92 73.52 30.11 3.77 8.72 13563.77
SingTel 3.72 -0.03 4.57 3.38 4.43 16.33 42831.58 AEP♦ 63.75 0.51 63.92 52.29 3.25 18.42 31289.61
IM Baotou Stl RMB 3.11 -0.03 7.50 2.66 - -41.44 7525.63 ITC 320.25 5.05 359.80 268.00 1.93 25.90 38213.79 HomeDep♦ 127.70 2.22 135.47 92.17 1.61 26.02 161908.44 Visa Inc 71.24 -0.70 81.01 60.00 0.68 26.97 136718.89
UOB 18.17 -0.21 25.05 16.80 4.27 9.91 21090.81 Aetna 108.23 -1.47 134.40 92.42 0.89 16.56 36863.14
In&CmBkCh 4.11 -0.02 7.10 3.72 7.24 4.65 45924.47 L&T 1187.45 -5.75 1888 1016.05 1.24 22.46 16414.4 Honywell♦ 107.17 -0.30 111.86 87.00 1.93 18.41 82448.34 Walgreen♦ 81.17 2.02 97.30 71.50 1.62 20.92 87561.88
Aflac 60.01 -0.54 66.53 51.41 2.54 10.65 25204.28
IndstrlBk RMB 15.31 0.19 21.42 11.90 3.57 6.09 44838.34 OilNatGas 201.85 1.15 343.20 187.75 4.72 9.14 25627.71 South Africa (R) HumanaInc 182.96 -1.29 219.79 155.24 0.61 22.48 27133.59 WalMartSto 67.93 0.04 83.90 56.30 2.64 15.83 217504.61
AirProd 133.48 -1.52 155.79 114.64 2.34 22.88 28785.01
Kweichow RMB 229.21 -4.43 290.00 166.20 1.83 18.66 44260.64 RelianceIn 1027 20.60 1089.75 796.45 0.96 11.57 49374.67 Firstrand 45.60 -3.66 58.47 34.08 4.79 10.03 16571.27 IBM♦ 138.91 -1.24 176.30 116.90 3.47 10.60 134149.38 WellsFargo 49.13 -0.94 58.77 44.50 2.89 12.37 249418.88
Alexion 142.28 -7.32 208.88 130.51 - 220.76 32054.45
Midea 1.90 -0.05 2.68 1.65 4.76 13.20 52.60 SBI NewA 183.35 -5.05 305.00 148.25 1.87 9.07 21121.97 MTN Grp 148.00 0.18 250.00 109.56 9.66 7.73 17694.66 IllinoisTool 96.99 -0.79 100.14 78.79 2.06 19.61 35281.75 Williams Cos 17.94 -1.12 61.38 10.22 13.16 -24.49 13456.18
Allegran 287.34 -1.05 340.34 237.50 - -35.32 113409.47
New Ch Life Ins 24.60 -0.40 56.55 22.00 0.98 7.22 3275.04 SunPhrmInds 858.60 1.80 1200.8 704.00 0.34 54.10 30665.07 Naspers N 1963.26 -0.74 2270 1521.98 0.25 58.92 55692.59 Illumina 154.56 -7.07 242.37 130.00 - 51.79 22719.59 Yahoo 33.15 -0.82 46.17 26.15 - -7.41 31382.07
Allstate♦ 64.78 -0.25 72.51 54.12 1.79 13.30 24506.3
PetroChina 5.36 -0.05 11.04 4.16 3.42 19.86 14559.3 Tata Cons 2354.3 -3.25 2770.7 2115 1.67 21.86 68842.89 South Korea (KRW) Intcntl Exch 233.09 -1.19 268.89 220.28 1.20 21.23 27711.53 Yum!Brnds 77.29 -0.76 95.90 64.58 2.11 27.47 31589.31
Alphabet 722.00 9.20 810.35 529.00 - 32.80 211246.85
PingAnIns 34.90 -0.70 62.90 30.50 2.26 9.77 33462.34 Indonesia (Rp) HyundMobis♦ 250000-4000.00 272000 185500 1.15 13.21 20166.53 Intel 30.67 -0.28 35.59 24.87 3.02 13.63 144861.46 Venezuela (VEF)
Altria 62.18 0.37 63.08 47.31 3.36 24.18 121744.4
PngAnBnk RMB 10.28 -0.06 17.50 9.30 1.62 6.81 18653.12 Bk Cent Asia 13400 -175.00 15600 11000 0.93 22.23 25137.02 KoreaElePwr 55900 -900.00 61200 40800 0.85 3.08 29737.55 Intuit 99.93 0.55 109.21 79.63 1.10 50.07 25664.14 Bco de Vnzla 135.00 5.00 143.95 36.95 - - 36471.34
Amazon 566.64 3.84 696.44 365.65 - 470.49 266797.93
Pwr Cons Corp RMB 6.47 - 20.00 5.60 1.48 13.26 3282.05 SK Hynix 30500-1400.00 51700 25800 1.63 5.51 17857.51 John&John 106.50 -0.24 107.41 81.79 2.67 20.17 293871.75 Bco Provncl 4290 190.00 4400 1150 0.11 57.77 34265.18
Israel (ILS) AmerAir 40.97 -1.16 56.05 34.10 0.94 3.84 24705.65
SaicMtr RMB 19.74 0.21 29.18 14.00 6.32 7.87 33455.98 SmsungEl 1192000-31000.00 1510000 1033000 1.64 9.15 143296.17 JohnsonCn 36.91 -0.76 54.52 33.62 2.79 17.90 23926.36 Mrcntl Srvcs 6000 - 6200 1600 0.13 47.33 26400.6
TevaPha♦ 217.90 -0.70 275.90 212.00 2.33 31.71 56831.36 AmerExpr 59.51 0.51 83.54 50.27 1.83 12.23 57370.34
ShenwanHong 0.17 0.05 0.41 0.12 - -2.76 55.03 Spain (€) JPMrgnCh 59.03 -0.91 70.61 50.07 2.81 10.20 216655.74
Italy (€) AmerIntGrp 52.19 -0.47 64.93 50.20 1.50 32.81 59989.7
ShgPdgBk RMB 18.45 - 20.12 11.91 3.94 7.26 52903.3 Kimb-Clark♦ 133.81 2.22 133.97 103.04 2.54 50.12 48291.99 Closing prices and highs & lows are in traded currency (with variations for that
Enel 3.68 0.01 4.50 3.33 3.61 64.69 38208.38 BBVA 6.10 -0.07 9.77 5.24 2.49 16.36 42900.09 AmerTower 95.12 -0.48 104.12 83.07 1.83 70.17 40321.14
Sinopec Corp 4.87 -0.05 7.79 3.86 4.74 24.10 15996.16 KinderM 18.03 -0.76 44.71 11.20 10.32 180.71 40234.95 country indicated by stock), market capitalisation is in USD. Highs & lows are
ENI 13.25 -0.34 17.66 10.93 6.86 -18.36 53225.91 BcoSantdr 4.14 0.04 7.17 3.31 11.34 8.41 66102.33 Amgen 146.33 -0.98 181.81 130.09 2.08 16.76 110051.6
Sinopec Oil RMB 5.55 -0.16 14.23 5.41 - -166.81 1521.43 Kraft Heinz 76.59 0.09 81.20 61.42 0.67 -53.54 93071.37 based on intraday trading over a rolling 52 week period.
Generali 12.87 0.13 19.21 10.90 4.42 10.99 22147.88 CaixaBnk 2.64 0.00 4.53 2.37 4.31 20.14 16969.42 Anadarko♦ 42.30 -2.80 95.94 28.16 2.46 -3.33 21506.95
Denmark (kr) Iberdrola 5.82 0.02 6.71 5.66 0.49 15.97 41154.06 Kroger 37.65 0.60 42.75 27.32 0.93 20.15 36698.31 ♦ ex-dividend
IntSPaolo 2.49 0.02 3.65 2.12 2.67 15.11 43580.53 Anthem♦ 133.34 0.79 173.59 115.63 1.81 14.75 34848.65
DanskeBk 189.10 -1.60 218.00 168.30 2.75 15.05 28253.16 Inditex 29.41 -0.29 35.38 26.00 1.26 35.15 101317.28 L Brands 86.31 0.42 101.11 75.11 1.96 23.60 24981.08 ■ ex-capital redistribution
Luxottica 50.40 1.55 67.80 48.00 1.35 32.32 26944.69 Aon Cp 99.34 0.20 104.70 83.83 1.12 21.12 27210.9
MollerMrsk 9180 -370.00 16450 7355 3.08 38.13 14472.71 Repsol 10.61 -0.32 18.75 7.95 8.48 -13.07 16908.9 LasVegasSd 49.21 -1.62 59.90 34.88 5.09 20.71 39106.92 # price at time of suspension
Unicred 3.59 0.03 6.61 2.77 3.17 11.85 23652.64 Apple 101.44 -0.43 134.54 92.00 1.93 11.21 562442.5
NovoB 381.90 -5.10 415.00 305.10 1.24 31.54 116682.32 Telefonica 9.80 -0.04 14.31 8.48 7.20 517.49 53915.54 LibertyGbl 36.41 -0.94 58.66 30.65 - -29.51 9204.65
ArcherDan 35.99 -1.16 53.31 29.86 3.00 12.54 21371.43
Lilly (E)♦ 74.00 0.60 92.85 68.41 2.61 33.97 81850.92

FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE
Close Prev Day Week Month Close Prev Day Week Month Day's Mth's Spread Day's Mth's Spread
price price change change % change change % change % price price change change % change change % change % Red Ratings Bid Bid chge chge vs Red Ratings Bid Bid chge chge vs
ShenwanHong 0.17 0.13 0.05 35.71 0.05 42.5 23.91 Luxottica 48.85 48.85 0.00 0.00 -4.90 -9.1 2.69 Mar 08 date Coupon S* M* F* price yield yield yield US Mar 08 date Coupon S* M* F* price yield yield yield US
Vale 17.58 17.58 0.00 0.00 4.77 37.2 50.44 JardnMt US$ 53.89 54.40 -0.51 -0.94 -4.33 -7.4 0.35 High Yield US$ US$
Petrobras 9.91 9.91 0.00 0.00 2.34 30.9 51.33 Kroger 37.65 37.05 0.60 1.62 -2.97 -7.3 2.28 Navient Corporation 06/18 8.45 BB- Ba3 BB 106.72 5.33 0.00 -2.38 4.46 Halliburton Company 02/27 6.75 A A2 A- 119.06 4.57 0.00 -0.17 2.74
CanNatRs 34.69 34.69 0.00 0.00 5.90 20.5 16.08 OilNatGas 201.85 200.70 1.15 0.57 -14.20 -6.6 -8.23 High Yield Euro Cummins Inc. 02/27 6.75 A+ A2 A 123.49 4.11 0.00 -0.12 2.29
ChMrchSecs 16.59 16.21 0.38 2.34 2.62 18.8 13.71 BT 463.45 465.70 -2.25 -0.48 -32.55 -6.6 1.90 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - Korea Electric Power Corporation 08/27 6.75 AA- Aa2 AA- 101.48 6.67 0.00 0.08 4.85
SBI NewA 183.35 188.40 -5.05 -2.68 27.45 17.6 9.01 Sinopec Oil 5.55 5.71 -0.16 -2.80 -0.37 -6.3 -12.18 SouthTrust Bank 12/27 6.57 A Aa3 A+ 120.37 4.38 0.00 0.02 2.56
ICICI Bk 216.85 220.50 -3.65 -1.66 32.05 17.3 3.56 Alexion 142.28 149.60 -7.32 -4.89 -8.55 -5.7 2.23 Emerging US$ SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 110.90 4.84 0.00 0.10 -
BHPBilltn 18.21 18.55 -0.34 -1.83 2.64 17.0 12.41 NTTDCMo 2494.50 2541.50 -47.00 -1.85 -147.00 -5.6 -10.35 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 122.76 4.44 0.00 0.01 -
CNOOC 9.26 9.24 0.02 0.22 1.30 16.3 17.66 Occid Pet 66.64 69.60 -2.96 -4.25 -3.81 -5.4 0.74 Brazil 01/18 8.00 BB+ Ba2 BB+ 105.94 4.62 0.00 -0.90 3.76
Russia 07/18 11.00 BB+ Ba1 BBB- 117.86 3.12 0.00 -0.40 2.26 Euro
Bradesco 27.67 27.67 0.00 0.00 3.82 16.0 36.45 Delta 46.55 48.39 -1.84 -3.80 -2.35 -4.8 14.01 Electricite de France (EDF) 03/27 4.13 A+ A1 A 122.21 1.91 0.00 0.00 0.09
Devon Energy 22.29 24.19 -1.90 -7.85 3.07 16.0 -5.93 KoreaElePwr 55900.00 56800.00 -900.00 -1.58 -2800.00 -4.8 6.88 Peru 03/19 7.13 BBB+ A3 BBB+ 114.72 2.14 0.00 -0.45 1.28
Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84 Credit Agricole S.A. 03/27 2.63 BBB Baa3 A- 97.01 2.95 0.00 -0.46 1.13
ChShenEgy 12.58 12.86 -0.28 -2.18 1.66 15.2 10.54 Fresenius SE 59.56 59.56 0.00 0.00 -2.98 -4.8 -3.89 BHP Billiton Fin Ltd 09/27 3.25 A+ A3 A+ 109.47 2.31 0.00 -0.65 0.48
ChngKng 45.80 46.05 -0.25 -0.54 6.00 15.1 13.93 GenDyn 131.69 132.33 -0.64 -0.48 -6.55 -4.7 -0.46 Brazil 01/21 7.88 BB+ Ba2 BB+ 98.65 5.20 -0.02 -0.83 3.85
Colombia 07/21 4.38 BBB Baa2 BBB 102.40 3.91 0.00 -0.73 2.57 B.A.T. Netherlands Fin B.V. (Re - British American Tobacco) 03/29 3.13 A- A3 A- 113.03 1.98 0.00 -0.09 -
Ch Coms Cons 8.02 7.88 0.14 1.78 1.02 14.6 19.35 BSkyB 1007.00 1014.00 -7.00 -0.69 -49.00 -4.6 2.92
Poland 03/22 5.00 A- A2 A- 112.22 2.81 0.00 -0.14 1.46 Yen
ConocPhil 39.47 41.40 -1.93 -4.66 5.01 14.5 14.67 Compass 1217.00 1220.00 -3.00 -0.25 -59.00 -4.6 2.09
Turkey 09/22 6.25 - Baa3 BBB- 109.32 4.64 0.00 -0.09 3.29 Wal-Mart Stores, Inc. 07/15 0.94 NR WR NR 100.00 0.31 0.00 0.00 -
IM Baotou Stl 3.11 3.14 -0.03 -0.96 0.36 13.1 9.51 Visa Inc 71.24 71.94 -0.70 -0.97 -3.40 -4.6 5.06
MitsbCp 2041.50 2060.50 -19.00 -0.92 234.50 13.0 9.41 Monsanto 88.62 88.48 0.14 0.16 -3.87 -4.2 -2.93 Turkey 04/26 4.25 - Baa3 BBB- 94.62 4.99 0.00 -0.08 3.17 £ Sterling
Sinopec Corp 4.87 4.92 -0.05 -1.02 0.54 12.5 11.19 Altice 13.66 13.63 0.03 0.18 -0.60 -4.2 15.43 Emerging Euro IPIC GMTN Limited 03/26 6.88 AA Aa2 AA 122.65 4.11 0.06 0.12 1.82
Nppn Stl 2193.00 2193.50 -0.50 -0.02 243.00 12.5 3.86 Nike 60.37 59.25 1.12 1.88 -2.56 -4.1 9.78 Brazil 02/15 7.38 BBB- Baa2 BBB 111.75 0.73 0.00 0.00 0.09 B.A.T. Intl Fin plc (Re - British American Tobacco) 09/26 4.00 A- A3 A- 104.67 3.47 0.06 0.29 1.18
Ch Evrbrght 3.47 3.49 -0.02 -0.57 0.38 12.3 4.20 CntJpRwy 19405.00 19345.00 60.00 0.31 -810.00 -4.0 -12.39 Mexico 07/17 4.25 BBB+ A3 BBB+ 111.13 1.50 0.00 0.00 0.63 Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poor’s, M -
Mexico 02/20 5.50 BBB+ A3 BBB+ 121.63 2.06 0.00 0.00 0.72 Moody’s, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 09/25 5.75 BB+ - BBB- 115.08 3.89 0.00 -0.27 2.06
Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other
London close. *S - Standard & Poor’s, M - Moody’s, F - Fitch.

INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET
Mar 08 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return Mar 08 Day Chng Prev 52 wk high 52 wk low Red Change in Yield 52 Week Amnt
US Fed Funds 0.25-0.50 16-12-2015 1.00 0.25-0.50 0.00-0.25 Index change change change 1 month 1 year VIX 18.12 0.77 17.35 53.29 10.88 Mar 08 Price £ Yield Day Week Month Year High Low £m
US Prime 3.50 16-12-2008 3.50 3.50 3.50 Markit IBoxx VXD 17.37 0.38 16.99 56.32 7.04 Tr 4pc '16 101.78 0.39 -4.88 0.00 11.43 -2.50 102.23 100.00 0.35
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 178.58 0.39 1.87 3.05 1.76 -0.18 VXN 21.88 0.27 21.61 46.72 11.15 Tr 1.75pc '17 101.20 0.37 -7.50 8.82 32.14 -41.27 102.48 101.18 0.29
Euro Repo 0.05 10-09-2014 0.05 0.05 0.05 Corporates( £) 295.20 0.17 0.15 0.01 0.30 -0.51 VDAX 24.32 1.25 23.07 32.55 - Tr 5pc '18 109.44 0.25 -13.79 4.17 13.64 -73.40 112.88 109.34 0.35
UK Repo 0.50 05-03-2009 0.50 0.50 0.50 Corporates($) 251.88 -0.04 0.02 0.97 0.02 0.97 † CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.5pc '19 112.25 0.38 -11.63 5.56 -5.00 -68.60 114.29 111.04 0.36
Japan O'night Call 0.00-0.00 05-10-2010 0.03 0.00-0.10 0.00-0.10 Corporates(€) 213.73 0.11 0.15 1.15 0.81 -0.88 ‡ Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 4.75pc '20 116.51 0.56 -9.68 3.70 -5.08 -60.28 118.06 114.45 0.33
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov(€) 230.41 0.09 -0.67 2.27 0.49 1.01 Tr 1.5pc '21 103.35 0.80 -8.05 2.56 -4.76 -49.04 141.03 99.91 0.20
Gilts( £) 299.23 0.00 -0.99 4.31 0.62 6.76 BONDS: BENCHMARK GOVERNMENT Tr 4pc '22 118.45 0.84 -8.70 2.44 -5.62 -49.70 119.14 113.65 0.38
INTEREST RATES: MARKET Global Inflation-Lkd 242.94 -0.06 0.87 1.93 -0.71 -1.12 Red Bid Bid Day chg Wk chg Month Year Tr 5pc '25 131.77 1.25 -8.09 -1.57 -3.10 -36.22 132.97 124.47 0.35
Over Change One Three Six One Markit iBoxx £ Non-Gilts 297.77 0.14 -0.16 0.96 0.26 0.81 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '27 129.01 1.54 -6.67 -1.91 -1.28 -28.70 130.43 119.79 0.31
Mar 08 (Libor: Mar 07) night Day Week Month month month month year Overall ($) 229.36 -0.19 -0.44 1.93 -0.44 1.93 Australia 10/18 3.25 103.28 1.96 -0.02 0.19 0.20 -0.04 Tr 4.25pc '32 132.68 1.90 -5.94 -2.56 -0.52 -21.81 134.41 121.93 0.35
US$ Libor 0.37200 0.000 -0.003 0.003 0.44050 0.63610 0.90065 1.21225 Overall( £) 296.09 0.04 -0.75 3.31 0.52 4.93 11/27 2.75 100.42 2.71 -0.05 0.12 0.10 0.00 Tr 4.25pc '36 135.38 2.08 -5.45 -2.80 -0.48 -19.07 137.18 123.52 0.28
Euro Libor -0.28643 0.000 -0.004 -0.001 -0.28571 -0.23514 -0.13229 -0.02186 Overall(€) 224.98 0.09 -0.45 1.95 0.52 0.71 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 4.5pc '42 146.61 2.19 -5.60 -3.95 -0.90 -17.36 148.39 132.20 0.26
£ Libor 0.48125 0.000 0.000 0.001 0.50913 0.58469 0.73913 1.00400 Treasuries ($) 222.14 -0.30 -0.73 2.47 -0.73 2.47 10/25 1.20 106.95 0.46 -0.06 0.00 -0.11 0.00 Tr 3.75pc '52 140.85 2.13 -6.17 -4.48 -0.93 -20.22 142.78 121.95 0.22
Swiss Fr Libor 0.000 -0.82820 -0.80000 -0.75560 -0.66700 FTSE Belgium 06/18 0.75 101.83 -0.07 0.00 0.00 0.00 0.00 Tr 4pc '60 155.18 2.08 -5.88 -3.70 -1.42 -21.51 157.42 131.72 0.22
Yen Libor 0.004 -0.04229 -0.01029 0.00364 0.09543 Sterling Corporate (£) 110.77 1.05 - - 0.13 -2.87 06/26 1.00 103.78 0.62 -0.05 -0.01 -0.15 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per £ 100 nominal of stock. Red yield: Gross redemption yield.
Euro Euribor -0.004 -0.28500 -0.21600 -0.13600 -0.02400 Euro Corporate (€) 106.95 0.17 - - 0.62 -3.65 Canada 11/17 0.25 99.57 0.51 -0.03 -0.02 0.16 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Sterling CDs 0.000 0.50000 0.60000 0.77500 Euro Emerging Mkts (€) 827.66 -3.60 - - 9.11 -23.58 06/26 1.50 101.80 1.31 -0.08 -0.04 0.14 0.00
US$ CDs
Euro CDs
0.000
0.000
0.42000
-0.32500
0.58000
-0.25500
0.83000
-0.17500
Eurozone Govt Bond 115.74 0.24 - - 0.63 -1.87 Denmark 11/18 0.25 101.56 -0.33 0.00 0.00 0.00 0.00 GILTS: UK FTSE ACTUARIES INDICES
CREDIT INDICES Day's Week's Month's Series Series 11/25 1.75 111.72 0.51 -0.04 0.03 -0.03 0.18
Price Indices Day's Total Return Return
Short 7 Days One Three Six One Index change change change high low Finland 05/18 1.00 99.59 1.19 0.00 0.07 0.21 0.00
Fixed Coupon Mar 08 chg % Return 1 month 1 year Yield
Mar 08 term notice month month month year Markit iTraxx 04/26 0.50 99.74 0.53 -0.04 0.00 0.00 0.00
1 Up to 5 Years 98.33 0.13 2400.11 0.08 2.71 0.53
Euro -0.35 -0.25 -0.35 -0.25 -0.40 -0.25 -0.33 -0.18 -0.25 -0.10 -0.11 0.04 Crossover 5Y 379.32 9.63 -10.63 -43.48 491.39 280.05 France 05/19 1.00 104.41 -0.36 0.00 0.00 0.00 0.00
2 5 - 10 Years 183.74 0.61 3366.40 0.34 6.52 1.09
Sterling - - - - 0.45 0.55 0.55 0.65 0.70 0.85 0.93 1.08 Europe 5Y 91.90 1.62 -3.58 -18.16 125.93 68.39 11/20 0.25 102.27 -0.23 0.00 0.00 0.00 0.00
3 10 - 15 Years 214.72 1.13 3999.29 0.28 8.21 1.65
Swiss Franc - - - - - - - - - - - - Japan 5Y 85.85 -1.43 -10.21 -6.96 107.91 65.01 05/26 0.50 99.19 0.58 -0.05 0.00 0.00 0.00
4 5 - 15 Years 191.19 0.76 3519.82 0.32 6.98 1.32
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 102.01 3.66 -1.31 -17.97 140.51 65.28 05/45 3.25 139.28 1.56 -0.06 0.01 -0.05 0.23
5 Over 15 Years 316.51 2.44 4629.63 0.60 12.17 2.12
US Dollar 0.35 0.45 0.35 0.45 0.35 0.45 0.55 0.65 0.80 0.90 1.15 1.25 Germany 04/19 0.50 103.28 -0.55 0.00 0.00 0.00 0.00
Markit CDX 7 All stocks 178.06 1.23 3372.47 0.35 7.59 1.84
Japanese Yen -0.15 0.00 -0.15 0.00 -0.40 -0.20 -0.25 -0.05 -0.10 0.10 -0.05 0.15 10/20 0.25 103.17 -0.43 0.00 0.00 0.00 0.00
Emerging Markets 5Y 338.29 -1.20 -29.38 -50.62 413.92 299.17 02/26 0.50 103.10 0.18 -0.04 0.04 -0.05 0.00
Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs: Day's Month Year's Total Return Return
Nth Amer High Yld 5Y 472.08 -3.60 -51.67 -100.00 589.69 416.39 08/46 2.50 140.36 0.96 -0.05 0.06 0.05 0.07
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. Index Linked Mar 08 chg % chg % chg % Return 1 month 1 year
Nth Amer Inv Grade 5Y 94.30 -1.21 -13.69 -26.21 124.57 75.52 Greece 07/17 3.38 93.30 8.82 -1.00 -2.42 -5.88 -6.73
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 1 Up to 5 Years 309.75 0.00 -0.09 -0.59 2376.39 -0.09 0.86
02/26 3.00 64.03 9.26 -0.13 -0.72 -1.37 -0.76 2 Over 5 years 595.63 2.11 -0.04 11.26 4401.84 -0.04 12.09
Ireland 10/17 5.50 109.46 -0.36 0.00 0.00 0.00 0.00 3 5-15 years 438.29 0.51 0.15 2.85 3341.82 0.15 4.20
05/26 1.00 101.25 0.87 -0.05 -0.02 -0.22 0.00 4 Over 15 years 740.66 2.74 -0.13 15.16 5368.13 -0.13 15.77
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/18 0.30 100.82 -0.01 0.00 0.00 0.00 0.00 5 All stocks 548.36 1.81 -0.05 9.88 4106.36 -0.05 10.82
11/20 0.65 101.35 0.36 -0.02 -0.01 -0.26 0.00
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/26 1.60 101.36 1.46 -0.04 0.02 0.00 0.00 Yield Indices Mar 08 Mar 07 Yr ago Mar 08 Mar 07 Yr ago
Crude Oil† Mar 38.02 0.12 Corn♦ May 357.50 -1.25 Mar 07 Mar 07 Prev return stock Market stocks
03/47 2.70 100.91 2.67 0.01 0.11 -0.18 0.00 5 Yrs 0.70 0.78 1.38 20 Yrs 2.15 2.27 2.56
Brent Crude Oil‡ 39.90 -0.82 Wheat♦ May 459.75 -1.75 Can 4.25%' 21 127.29 -0.445 -0.457 -0.04 5.18 70771.26 7
Japan 02/18 0.10 100.67 -0.24 0.00 0.00 0.00 0.00 10 Yrs 1.44 1.55 2.01 45 Yrs 2.10 2.23 2.66
RBOB Gasoline† Mar 1.41 0.02 Soybeans♦ May 878.25 -2.00 Fr 2.25%' 20 114.16 -0.905 -0.841 0.56 20.31 219394.41 14
03/21 0.05 101.12 -0.17 0.00 0.00 0.00 0.00 15 Yrs 1.93 2.04 2.37
Heating Oil† Mar 1.22 0.06 Soybeans Meal♦ May 269.00 -1.60 Swe 0.25%' 22 109.47 -1.068 -1.053 -0.10 30.77 227520.20 7
12/25 0.30 104.08 -0.11 0.00 0.00 0.00 0.00
Natural Gas† Mar 1.72 0.00 Cocoa (ICE Liffe)X May 2186.00 -20.00 UK 2.5%' 20 360.86 -1.602 -1.580 0.26 6.58 505635.73 26
12/45 1.40 123.94 0.48 -0.22 -0.33 -0.58 0.00 inflation 0% inflation 5%
Ethanol♦ - - Cocoa (ICE US)♥ May 3004.00 10.00 UK 2.5%' 24 342.76 -1.077 -1.055 -0.08 6.82 505635.73 26
Netherlands 04/17 0.50 101.11 -0.50 0.00 0.00 0.00 0.00 Real yield Mar 08 Dur yrs Previous Yr ago Mar 08 Dur yrs Previous Yr ago
Uranium† Mar 36.75 0.00 Coffee(Robusta)X Mar 1371.00 11.00 UK 2%' 35 233.37 -0.872 -0.866 -0.18 9.08 505635.73 26
07/25 0.25 99.49 0.31 -0.05 0.01 -0.10 0.00 Up to 5 yrs -1.30 2.19 -1.30 -1.16 -1.99 2.21 -2.00 -1.78
Carbon Emissions‡ - - Coffee (Arabica)♥ Mar 119.50 1.05 US 0.625%' 21 103.15 0.036 0.004 -0.35 35.84 1139582.23 37
White SugarX 426.50 5.80 New Zealand 03/19 5.00 107.81 2.30 -0.04 0.01 -0.20 -0.99 Over 5 yrs -1.00 23.90 -0.92 -0.52 -1.03 23.98 -0.94 -0.56
Diesel† - - US 3.625%' 28 134.46 0.658 0.004 -0.68 16.78 1139582.23 37
Sugar 11♥ 14.68 0.03 04/27 4.50 113.51 3.06 -0.04 0.05 0.01 -0.46 5-15 yrs -1.02 9.47 -0.96 -0.65 -1.12 9.48 -1.07 -0.77
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market
Norway 05/19 4.50 112.63 0.51 -0.01 0.00 -0.05 -0.51 Over 15 yrs -1.00 29.44 -0.91 -0.51 -1.02 29.49 -0.93 -0.53
Base Metals (♠ LME 3 Months) Cotton♥ May 56.69 -0.65 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
02/26 1.50 101.17 1.37 -0.01 0.03 0.00 0.00 All stocks -1.01 20.91 -0.92 -0.53 -1.04 21.04 -0.96 -0.57
Aluminium 1582.50 -15.50 Orange Juice♥ 124.15 0.00 amount.
Aluminium Alloy 1600.00 0.00 Palm Oil♣ - - Portugal 06/19 4.75 111.12 1.25 0.07 0.06 -0.08 0.57 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
Copper 4904.50 -102.50 Live Cattle♣ Apr 135.93 0.00 BONDS: TEN YEAR GOVT SPREADS 02/26 3.30 101.74 3.09 0.00 0.08 0.00 0.00
Spain 04/18 0.25 100.52 0.00 -0.01 0.00 -0.12 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 1830.00 -33.50 Feeder Cattle♣ Mar 157.90 -0.43
Nickel 8960.00 -410.00 Lean Hogs♣ Apr 70.15 0.00 Spread Spread Spread Spread 04/26 1.95 102.91 1.64 -0.03 0.05 -0.23 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Tin 16825.00 -455.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.47 1.22 0.00 0.11 0.24 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Zinc 1788.50 -25.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 05/25 2.50 118.00 0.49 -0.05 0.01 0.03 -0.30 loss arising from the reliance on or use of the listed information. For all queries e-mail
Precious Metals (PM London Fix) Mar 07 Month Year Australia 2.71 2.52 0.89 Italy 1.46 1.28 -0.36 Switzerland 05/19 3.00 113.12 -1.05 0.00 0.00 0.00 0.00 ft.reader.enquiries@morningstar.com
Gold 1267.00 -0.90 S&P GSCI Spt 321.17 10.19 -21.96 Austria 0.46 0.27 -1.36 Japan -0.11 -0.30 -1.93 05/26 1.25 117.23 -0.40 0.00 0.00 0.00 0.00
Silver (US cents) 1566.00 0.00 DJ UBS Spot 78.50 3.86 -22.09 Belgium 0.62 0.44 -1.20 Netherlands 0.31 0.12 -1.52 United Kingdom 07/18 1.25 101.91 0.44 -0.03 0.01 0.00 -0.67 Data provided by Morningstar | www.morningstar.co.uk
Platinum 1005.00 3.00 R/J CRB TR 170.51 4.94 -22.74 Canada 1.31 1.13 -0.51 Norway 1.37 1.19 -0.45 01/21 1.50 103.23 0.82 -0.06 0.03 -0.03 0.00
Palladium 575.00 4.00 Rogers RICIX TR 2027.53 - - Denmark 0.51 0.32 -1.31 Portugal 3.09 2.91 1.27 07/26 1.50 100.01 1.50 -0.09 -0.02 0.00 0.00
Bulk Commodities M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Finland 0.53 0.35 -1.29 Spain 1.64 1.45 -0.19 12/46 4.25 145.34 2.21 -0.12 -0.09 -0.01 -0.45
Iron Ore (Platts) 62.00 -2.20 UBS Bberg CMCI TR 12.13 5.89 -22.67 France 0.58 0.40 -1.24 Switzerland -0.40 -0.58 -2.22 United States 01/18 0.75 99.79 0.86 -0.04 0.02 0.16 0.00
Iron Ore (The Steel Index) 63.30 0.70 LEBA EUA Carbon 5.06 0.00 -25.59 Germany 0.18 0.00 -1.64 United Kingdom 1.50 1.32 -0.32 02/21 1.13 98.96 1.34 -0.07 0.03 0.00 0.00
GlobalCOAL RB Index 53.75 0.15 LEBA CER Carbon 0.36 -5.26 -10.00 Greece 9.26 9.08 7.44 United States 1.82 1.64 0.00 02/26 1.63 98.22 1.82 -0.08 0.00 0.00 0.00
Baltic Dry Index 366.00 12.00 LEBA UK Power 3524.00 17.47 22.19 Ireland 0.87 0.69 -0.95 02/46 2.50 97.55 2.62 -0.09 -0.08 0.00 0.00
Sources: † NYMEX, ‡ ECX/ICE, ♦ CBOT, X ICE Liffe, ♥ ICE Futures, ♣ CME, ♠ LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information & Tullett Prebon Information Data provided by SIX Financial Information & Tullett Prebon Information
unless otherwise stated.
20 FINANCIAL TIMES Wednesday 9 March 2016

MARKETS & INVESTING

Capital markets
Commodities

Rally in prices is unlikely to

last, says Goldman Sachs
The most influential bank
in commodity markets
believes the recent rally is
unlikely to last and prices
will reverse unless there is
a sustained improvement
in demand led by China,
the world’s biggest
consumer of raw materials,
writes Neil Hume.
In a series of reports
published yesterday,
Goldman Sachs said the
20-month commodity rout
had further to run and
prices needed to stay lower
for longer to rebalance
markets that are still
groaning under the weight
of plentiful supplies.
“Demand hasn’t really
changed, [so] it takes lower
prices to push and keep
supply below demand to
create a deficit,” said
Jeffrey Currie, Goldman’s
head of commodities
research.
Goldman has been
consistently negative on
commodity prices during
the past 18-months, with
Mr Currie forecasting that
$20
Level to which oil prices
per barrel could fall,
according to Goldman’s
Jeffrey Currie
oil prices could fall to $20 a
barrel. Brent, the
international benchmark,
hit $27 a barrel in January,
down from the $100 it
averaged between 2010
and 2014.
Mr Currie said the recent
bounce, which took oil
prices back to $40 on
Monday, would ultimately
prove “self defeating”
because it threw a lifeline
to the cash-strapped
producers that were in a
desperate battle for
survival.
“It would reverse the
supply curtailments that
are expected to rebalance
the markets in the second
half of 2016,” he said.
US oil production has
started to decline in the
face of lower prices,
though companies may
keep output going if the
price recovers further,
probably damping the
extent of any rally.
On iron ore, which
posted its biggest one-day
gain on record on Monday,
with a jump of 20 per cent,
Mr Currie said the surge
was the result of a short-
term rise in Chinese steel
prices. Mills that have shut
down during the rout may
need to restart temporarily
ahead of the peak
construction season.
Iron ore
$ per tonne*
Jan 2015
* 63% China delivery price
Source: Thomson Reuters Datastream
“The physical shortfall in
steel supply can be filled
easily and the subsequent
deterioration in steel
margins is likely to put iron
ore prices under renewed
pressure,” he said.
Goldman has also
maintained its bearish view
on gold, which has risen to
20 per cent this year,
making the metal one of
the best performing
commodities so far in 2016.
As fears about US
economic growth fade and
the US dollar recovers, the
bank expects gold to
come under pressure. Its
12-month target price for
the precious metal is
$1,000 a troy ounce,
compared with a current
quote of $1,273.
The Walls Street bank
reserved its most bearish
comments, however, for
industrial metals, advising
investors in another report
to take positions betting
against aluminium and
copper prices, which it
forecasts as falling 18-20
per cent during the next
year.
“Overall we find that the
likelihood of a sustained
improvement in Chinese
demand during 2016-17 is
low, and we remain
strongly of the view that
the structural bear market
drives that have
contributed to metals
declining 20 per cent over
the past year and 50 per
cent over the past five
years remain intact,” said
Goldman analyst Max
Layton.
Copper, aluminium and
zinc have all rallied by
between 10 and 25 per
cent since January, when
they hit their lowest levels
since the financial crisis.
This in turn has fuelled a
recovery in mining stocks,
with shares in Glencore
and Anglo American
almost doubling since
the beginning of the year
after being the worst
performers on the FTSE
100 in 2015.
Meanwhile, hedge
funds have largely
switched from betting
against the oil price at
the start of the year to
positioning themselves for
further gains, regulatory
data show.
Officials from Saudi
Arabia are due to meet
their Russian counterparts
in the coming weeks to see
if the world’s top two oil
exporters can lead other
producers to freeze output,
as many have seen their
national budgets squeezed
by the price collapse.
75
70
65
60
55
50
45
40
2016 Mar
Asset managers in leveraged loans push
Banks face competition
from institutional lenders
seeking yield for clients
THOMAS HALE
Institutional investment companies are
encroaching on territory traditionally
dominated by banks, expanding their
presence in a key corner of Europe’s
financing market.
Mid-market leveraged loans, which
typically include loans ranging from
€20m to €300m to heavily indebted
companies and private equity groups,
play a significant role in financing cor-
porate activity and dealmaking across
Europe. Banks have long been leading
providers of such loans, but are facing
increased competition.
There are now more than 50 non-
Metals revival is not copper-bottomed
What still needs to happen is
for supply to come down
across the sector, say analysts
HENRY SANDERSON
The stunning rally in iron ore and
mining stocks has turned commodity-
related pessimism into a bout of opti-
mism overnight.
But there are still reasons for caution
before relegating low commodity prices
to history. The rise in Chinese steel
prices has driven a record 19 per cent
increase in iron ore prices this week. But
analysts see few signs that steel demand
from the world’s largest consumer of the
metal will pick up soon.
Instead, what still needs to happen is
for supply to come down in all metals
markets. That process, especially in
China where the government is set to
reassign 500,000 steel jobs, is likely to
be slow. Steel is expected to remain
oversupplied “permanently”, even if the
cutbacks happen, according to Bank of
America Merrill Lynch.
“Steel prices have been very driven by
the sentiment around cutbacks, but let’s
see the reality,” says Julian Kettle, head
of metals at Wood Mackenzie. “It’s all
predicated on promises.”
China’s National People’s Congress set
its economic targets for the year at the
weekend. But while the country’s mone-
tary policy is set to be more accommo-
dative, fixed asset investment growth is
due to increase 10.5 per cent, a similar
rate to last year.
“We don’t forecast infrastructure-
based stimulus or a construction recov-
ery, which might cause demand to leap,
so we expect supply [for steel] will over-
whelm demand by the second half of
2016,” says Matthew Hope, an analyst at
Credit Suisse.
Copper, another metal heavily tied to
China’s economy, has rallied 15 per cent
since its January low.
While the Switzerland-based miner
and producer Glencore says that its cop-
per order book is strong in China, it is
uncertain how much of that reflects real
demand.
Many analysts believe much of the
imported metal is simply being ware-
housed as part of complex trades that
exploit small discrepancies in prices
between China and the rest of the world.
“Overall, we find that the likelihood of
a sustained improvement in Chinese
demand during 2016-17 is low,” says
Goldman Sachs.
The bank, which has been persist-
bank lenders — asset managers that act — has also pushed asset managers into
50 funds that are looking for a good rate of
on behalf of pension funds and insur- corporate lending, in an effort to pro- return, especially for the risk they are
ance companies — active in this market, vide clients with higher returns. Asset Non-bank lenders taking.”
active in mid-market
according to a report by AlixPartners managers have launched so-called for leveraged He added that the core “direct lend-
based on a survey of European banks “direct lending” platforms to compete. loans, up from 10 ing” market is yielding mid to high
and institutions. A decade ago that fig- “We sometimes meet funds who told a decade ago single-digit returns annually.
ure was below 10, said the consultancy. us two years [ago] they didn’t want to go Banks still drive most European mid-
In recent years non-banks have been into the mid-market space, but now do €300 m
market leveraged debt, a market that is
exploring new opportunities in Europe, so,” said Mr Brouwer. difficult to quantify because many of the
Typical upper level
as traditional banks grapple with the There are signs this growth is shifting for a mid-market deals are private. AlixPartners esti-
legacy of the financial crisis and costly to markets for larger loans. Alcentra, an leveraged loan to mated that banks represented two-
new regulation. asset management company that man- a heavily indebted thirds of all deal participations they
“The principal catalyst has been the ages €3.5bn as part of a direct lending group tracked in 2015.
financial crisis in 2008,” said Jacco Brou- fund, said it had recently underwritten a AlixPartners said the six largest non-
wer, head of debt advisory at AlixPart- deal for €150m and had been banks surveyed had increased the
ners. “Most of the banks had huge bal- approached for a €300m deal, which number of deals worked on by more
ance sheet problems and pretty much would be its largest ever. than a third on average in the past year.
stopped lending except to existing cus- “When it comes to longer-term capi- Non-banks have gained market share
tomers.” tal, there is a shift in the market to insti- elsewhere in Europe. In the Nether-
The search for yield in an era of tutional investors,” said Graeme lands, funds backed by institutional
record-low interest rates — which has Delaney-Smith, head of European direct money have taken a significant chunk of
prompted fears over bank profitability lending at Alcentra. “We have pension the market for mortgage origination.
Analysis. Commodities
Commodities bounce back
Rebased
140
Copper ($ per metric tonne)
Iron ore ($ per metric tonne) 130
Nickel ($ per metric tonne)
Steel price index China
120
110
100
90
80
Jan 2016 Mar
Mining equities rebound
Share prices (rebased)
250
Rio Tinto
Anglo American 200
BHP Billiton
Glencore
150
100
50
Jan 2016 Mar
Source: Thomson Reuters Datastream
Half of global ently negative on commodities demand, slowing down output. Founded in 1880 ambo project in the north of the island
nickel producers expects copper to drop back to $4,000 after a French graduate student discov- of $4bn, one of the biggest the company
are still a tonne by the end of this year. ered nickel on New Caledonia, Eramet’s has taken in its history.
estimated to be Copper still needs another 350,000 nickel subsidiary Société Le Nickel Ivan Glasenberg, Glencore’s chief,
making losses at tonnes cut back this year to balance the dominates production on the island. says the company will make a decision
current prices, market, according to Wood Mackenzie. Patrick Buffet, the company’s chief on the Koniambo plant in June.
while Glencore It doesn’t expect a peak in supply until executive, recently revealed that the Even if Glencore exits it could still be
is uncertain how about 2019. nickel business is losing about €20m run by the other partner Société Minière
much of its In terms of nickel, a metal used in per month. du Sud Pacifique SMSP, a subsidiary of
copper order stainless steel, half of global producers However, in February the French the northern province’s financing arm,
book for China are still estimated to be making losses at prime minister Manuel Valls said say analysts.
reflects real current prices, which have risen 20 per France would support the nickel sector While it might take time, cuts are
demand cent from their nadir last month. on New Caledonia. likely to materialise eventually. There
Vincent Du/Reuters
So far cuts have been limited to China, The territory is due to hold a referen- are signs that costs for miners may not
where nickel pig iron producers are esti- dum in 2018, where it will vote on be able to be cut any lower.
mated to have reduced production, and whether to remain governed by France. Energy prices are unlikely to go lower
Latin America, where Brazilian miner “I think the social and political stabil- and it is possible the strength of the US
Votorantim Metals suspended two ity of New Caledonia is dependent on at dollar has reached its limit, says Mr Ket-
nickel operations. least a few of them (nickel projects),” tle.
Remaining projects will not be easy to says Jim Lennon, a consultant for Mac- “The miners have done a pretty good
stop. New Caledonia, a former Napo- quarie. “I would imagine they are wait- job at stripping out costs and there isn’t
leonic penal colony controlled by ing, hoping, that some other people will a huge amount left there. We’ve seen the
France, is responsible for about 9 per take it on the chin.” lows (in metal prices) unless we see the
cent of the world’s nickel production This month Glencore revealed that it dollar appreciate significantly further.”
and demonstrates the complexities of had booked an impairment on its Koni- See Lex

Trading room Capital markets

BATS launches electronic rival to CBOE’s Vix Japanese bond yields tumble to record lows
PHILIP STAFFORD
BATS Global Markets has launched
a volatility index to compete with
CBOE’s widely used Vix, in an attempt
to capitalise on cracks in the market
plumbing exposed by wild swings
last August.
The New York company yesterday
announced that it had started trading an
electronic-based options index it is call-
ing SPYIX, pronounced “Spikes”.
It hopes the index will be an upgrade
from trading floor-based indices such as
ones run by Chicago’s CBOE. The two
will compete for share in the competi-
tive US options market.
The Vix, sometimes referred to as
Wall Street’s “fear gauge”, was thrown
into the spotlight by frenzied price
moves that hit Wall Street on August 24.
Concerns about an economic slow-
down in China spilled out into a volatile
morning in US equity markets and
thinly traded exchange traded prod-
ucts. Nearly 1,300 products were sus-
pended after sharp moves.
US regulators focused on market con-
trols and links between trading patterns
on equities and futures markets, and
how ETPs traded at the start of the day.
Some market participants blamed
delays in receiving prices on S&P 500
index options from the traders in pits in
Chicago, which prevented accurate Vix
prices from being calculated.
Option contracts provide investors
with the ability to pay an insurance-like
premium that can protect their portfo-
lios against changes in asset prices
within a defined period.
But cheaper technology and changing
market dynamics are increasing the
popularity of electronic options trading.
BATS’ options index will measure
30-day volatility in the SPDR S&P 500
exchange traded fund, known as the
SPY, which tracks the US blue-chip
stock index.
The SPYIX will be calculated against
popular electronically traded SPY
options. It was developed in conjunction
with T3Index, an Australian company.
Tony Barchetto, head of corporate
development at BATS, said the gauge
was designed to reflect modern elec-
tronic options trading.
“In the wake of recent events, the
SPYIX is BATS’ response to the market’s
demand for a more rigorous and
dependable volatility gauge,” he said.
Some high-frequency market makers
have said their computers sometimes
struggle to compute options prices
when comparative prices move quickly.
www.ft.com/tradingroom
LEO LEWIS
Longer dated Japanese government
bond yields declined to new depths yes-
terday, with the seven-, 10-, and 30-
year benchmark yields all setting
record lows.
While new lows for the JGB market are
not unusual after the Bank of Japan cut
interest rates below zero last month, a
closely watched, Y800bn 30-year auc-
tion of new debt was unexpectedly
strong — a reminder of the new scarcity
of yield in one of the world’s leading sov-
ereign bond markets. JGBs with maturi-
ties out to 11 years are currently trading
with negative yields.
The search for yield also encouraged
Japanese investors to buy record
amounts of foreign long-term debt secu-
rities last month.
Data released by Japan’s Ministry of
Finance yesterday revealed life assur-
ance companies on balance purchased
Y1tn ($10bn) worth of foreign long-
term securities in February, their
biggest monthly purchase since April
2008.
Japan’s banks appear to have been
hardest hit by the central bank’s nega-
tive interest rate policy (NIRP): regional
banks have been forced to make hasty
changes to their strategies and having
previously been only modest perform-
ers in the 20-, and 30-year JGB markets
are now turning into buyers.
Dealers who described the dip in 30-
year yields as “a really unhealthy sign
for the market”, pointed out that Japan
is approaching the end of its financial
year on March 31.
The yield on the 30-year Japanese
government bond, which moves
inversely to price, fell 22.2 basis points
to a record low of 0.458 per cent yester-
day, its biggest one-day slide since 2013.
Dealers described pension funds and
life assurance companies performing
“a desperate grasp for yield in a broken
market”.
A London-based broker said: “Every-
one needs some yield regardless of dura-
tion and this was the liquidity event to
strap it on.”
The rally in the 30-year JGBs, coupled
with unsettling elements of the revised
GDP data release and another day of
declines in Tokyo stocks prompted ral-
lies for shorter-dated JGBs.
The buying pressure saw the bench-
mark 10-year note, which had already
dipped into negative territory last
month, falling 3.5bp to another record
low of minus 0.085 per cent. The yields
on the 20-year and seven-year JGBs
also declined.
Wednesday 9 March 2016 FINANCIAL TIMES 21

MARKETS & INVESTING

Global overview
TRADING POST Markets update
Change on day
Jamie
Chisholm
S&P 500’s run halted and havens 12pt semibold S&P 500 index
9.6pt regular Change on day
for 1,2,3
0.58%

gain as China outlook fears return

The scramble for yield continues.
After a sturdy auction of 30-year
Japanese government bonds
yesterday, equivalent duration
secondary market JGB yields plunged
to a record low of less than half a
percentage point.
Such a move makes other highly
rated countries’ bonds relatively more
attractive. By mid-session the same
day, the 30-year yields of US and
German debt were down about half a
dozen basis points a piece, to 2.64 per
cent and 0.96 per cent, respectively.
Ten-year bonds fell by several basis
points too but this still left the yield
spread between benchmark US and
German paper at about 167bp in
favour of the former.
It is possible this differential will
increase if European Central Bank
president Mario Draghi beats
expectations tomorrow with an
expected additional stimulus.
But TD Securities reckons that,
should the spread widen to about
180bp-190bp, it might be wise to bet
on it tightening again.
“Over time, we would expect
investors to move from Bunds into
higher-yielding Treasuries,” says the
broker, adding US assets would benefit
from traders building dollar exposure.
“When Bunds sold off on taper
tantrum fears, the spread compressed
from 184bp in April 2015 to 146bp in
June 2015. It was a similar situation
after the December disappointment
from the ECB where the spread
tightened from 171bp in early
December to 164bp by the end of
December,” TDS notes.
jamie.chisholm@ft.com
US 10-year government
bond yield
Spread over bunds 2.0
1.8
1.6
1.4
1.2
Mar 2015 2016 Mar
Source: Thomson Reuters Datastream
Risk-averse mood bolsters
yen and core government
bonds while strong rallies
for commodities and
equities are snuffed out
DAVE SHELLOCK
Concerns over the outlook for China’s
economy returned to cast a shadow
over global markets, snuffing out strong
rallies for equities and commodities and
bolstering “havens” such as core gov-
ernment bonds and the yen.
By midday in New York the S&P 500
was down 0.6 per cent at 1,989, bringing
a five-session run of gains to a halt. Nev-
ertheless the US equity benchmark was
still up 9.9 per cent from a two-year
intraday low on February 11.
Across the Atlantic the Euro Stoxx
600 index shed 1 per cent, trimming
the rebound from its 2016 low to 11.5 per
cent. The Xetra Dax in Frankfurt fell
0.9 per cent to 9,692.
“The air is proving thin for the S&P
500 bulls above the 2,000 level and
gains in Germany’s Dax are contained
below an important technical level at
about 9,900,” said Piotr Matys, strategist
at Rabobank.
In Asia the Nikkei 225 in Tokyo ended
the session 0.8 per cent lower while the
Shanghai Composite index edged up
0.1 per cent, even after Chinese trade
data showed a 25.4 per cent drop in
exports last month from a year earlier,
in dollar terms — the biggest single-
month decline since 2009 — after an
11.2 per cent fall in January.
Imports slid 13.8 per cent in the year
to February, following the previous
month’s 18.8 per cent drop.
“While seasonal factors including cal-
endar effects due to China’s lunar new
year — being one week later this year —
weakened February exports, the extent
of the decline remains a concern,” said
Waiting for Draghi: FT.com/video
The FT’s Dan McCrum and Elaine Moore discuss market
expectations for the ECB announcement tomorrow
Hans Redeker, head of global FX strat-
egy at Morgan Stanley.
“Korean exports declining by 18.8 per
cent in January and 12.2 per cent in Feb-
ruary indicated that global demand for
Asia ex-Japan exports has remained
sluggish.”
But Danae Kyriakopoulou, senior
economist at the Centre for Economics
and Business Research, took a less pessi-
mistic view, highlighting a huge jump in
Chinese exports in February last year.
“It is no surprise that this created a
rather distorted base for this year’s
export figures,” she said.
“This suggests it is too early to draw
any meaningful conclusions about the
picture for trade in China. March figures
Yves Herman/Reuters
will be key in determining whether
weak performance in February, and to
an extent in January too, was a seasonal
blip or part of the quarterly trend.”
Ms Kyriakopoulou said some impor-
tant measures had been announced at
the National People’s Congress on
how China would achieve its revised
growth targets. The congress is set to
continue until March 16.
“Overall, we would say that the devel-
opments in this year’s NPC set the scene
for a cyclical upturn in the Chinese
economy this year,” she said.
Goldman Sachs said the rally in com-
modity prices would go into reverse
unless there was a sustained improve-
ment in demand, led by China.
2000
1950
1900
1850
1800
Feb 2016 Mar
“Demand hasn’t really changed . . . It US equities The S&P 500 was heading
takes lower prices to push and keep sup- for its first decline in six sessions as
ply below demand to create a deficit,” energy and basic materials stocks were
the investment bank said yesterday. put under pressure by steep falls for
“Energy needs lower prices to main- crude oil and base metals prices
tain financial stress to finish the rebal-
ancing process; otherwise, an oil price FTSE 100 index
rally will prove self-defeating as it did Change on day 0.92%
last spring.” 6200
Brent crude, the international bench- 6000
mark, which had rallied more than 5800
50 per cent from a 12-year low reached 5600
on January 20, was down 1.9 per cent at
5400
$40.07 a barrel. US West Texas Interme- Feb 2016 Mar
diate was 3.2 per cent lower at $36.70.
It was a grim session for base metals, UK equities Glencore tumbled 18.2 per
too, with copper down 2.6 per cent in cent and Anglo American shed 15.5 per
London at $4.868, its worst day in four cent as mining stocks came under
months. heavy selling pressure from a weak set
The metal hit a four-month high of Chinese trade figures
above $5,000 last week, while nickel fell
8.3 per cent at $8,600. Eurofirst 300 index
Deterioration in risk appetite left US
Change on day 0.89%
and German government bond prices 1350
sharply higher. The yield on the 10-year
US Treasury was down 8 basis points at 1300
1.82 per cent while that on the equiva- 1250
lent-maturity German Bund fell 4bp to
1200
0.18 per cent.
Feb 2016 Mar
“It looks like the corrective rally in the
markets we have been looking for has European equities Resources stocks
begun today, sparked by an incredible across the region were weighed down
move in Japanese bonds following by fresh uncertainty over the outlook
strong auction demand for 30-year Jap- for Chinese growth, following the
anese government bonds,” said John release of some unsettling trade data
Briggs, US rates strategist at RBS.
The yield on Japanese 30-year paper
tumbled 22bp to a record low of 0.46 per Nikkei 225 index
cent, according to Reuters data. (’000) Change on day 0.76%
17.0
Another beneficiary of market uncer-
tainty was the yen, with the dollar down
16.0
0.8 per cent against the Japanese cur-
rency at Y112.52.
The euro meanwhile was off 0.7 per 15.0
Feb 2016 Mar
cent at Y124.10 ahead of tomorrow’s
European Central Bank policy decision. Japanese equities Weaker export
During choppy session for gold, how- stocks led the market lower as the yen
ever, the metal — a traditional “haven” gained ground, leaving the Nikkei at its
— gave back an early rise to trade $1 lowest for nearly a week
lower at $1,266 an ounce.

JetBlue Airlines dropping 0.7 per cent to 1,988.66. Trading Directory

Wall Street
Downbeat assessment
sinks JetBlue and
rattles airline sector
Richard Blackden
A downbeat assessment of the first
quarter from JetBlue, one of the US’s
largest low-cost carriers, proved enough
to sink its shares and rattle the rest of
the airline sector.
JetBlue’s stock fell 7.1 per cent to
$20.37 after the carrier said a measure of
revenue generated per seat mile was
down as much as 10.5 per cent in
February from a year earlier.
Weakness on its Latin American
routes explains some of the drop,
JetBlue warned, while the extra capacity
it and rivals have added also should
shoulder some of the blame.
Industry analysts have warned a
buoyant backdrop for the industry may
have led airlines to add too many seats
on too many routes.
Although JetBlue signalled the
revenue measure was improving this
Share price ($) The Dow Jones Industrial Average, a
23 smaller gauge of just 30 stocks,
22 weakened 0.3 per cent to 17,014.16.
21 After a testing first month-and-a-half of
20 the year, the US stock market has rallied
19 strongly over the past three weeks.
Feb 2016
Source: Thomson Reuters Datastream
Mar Airlines were not the only shares out
of favour.
Day's Shares of Shake Shack, the burger
Indices
S & P 500
Close
1988.41
change
-13.35
chain whose giddy success took it from a
single cart in New York’s Madison
DJ Industrials
Nasdaq Comp
17005.64
4681.07
-68.31
-27.18
Square Park to an initial public offering
in January, 2015, tumbled on signs that
Russell 2000 1204.70 -8.35 its growth is slowing.
VIX 18.12 0.77
While the chain reported same-store
US 10 yr Treas Bd 1.82 -0.08
sales of 11 per cent, surpassing Wall
US 2 yr Treas Bd 0.86 -0.04
Street’s forecasts of a 7.3 per cent
advance, the quarterly performance
marked a slowdown from the 17.1 per
quarter, it will still be down between 7 cent growth recorded in the previous
per cent and 8 per cent. Its low-cost quarter.
rivals retreated, too, with Spirit Airlines Despite yesterday’s drop, investors
dropping 5.7 per cent to $46.86 and who bought at the flotation have
Southwest Airlines declining 1.3 per captured a gain of almost 80 per cent.
cent to $40.96. Restaurants is an area in which US
A robust recovery in demand in the consumers are still happy to spend and
US, alongside smaller fuel bills, has the S&P 500 Restaurants Index has
offered tailwinds for both airlines and outperformed the broader stock market
their investors in recent years. over the past 12 months.
The NYSE Arca airline index, a broad There was brighter news, though,
gauge of the performance of the sector, from a different corner of the US retail
clocked a stellar run of gains between sector. Shares in Urban Outfitters, the
2012 and 2014, climbing more than 30 company that owns its namesake chain
per cent each year. as well as Anthropologie, surged 16 per
However, that stalled in 2015, as the cent to $32.94 after delivering better
index swooned 16 per cent. It fell 3.5 per than expected profits last quarter.
cent yesterday. The company earned $73m, or 61
The weakness in the airline sector cents a share, in the quarter to the end of
came on a lacklustre day for the wider January. That comfortably topped Wall
US stock market, with the S&P 500 Street forecasts of 56 cents a share.

London
Tesco buoyed by signs
of margin stability
Bryce Elder
Tesco hit a five-month high yesterday
on growing confidence that its sales and
profit margins have stabilised.
Monthly industry data from Kantar
Worldpanel showed Tesco’s sales
decline and market share loss slowing.
The data suggest that “good trading
reported over Christmas was far from a
one-off,” said Barclays.
Tesco’s cash sales were down 0.8 per
cent over 12 weeks, which analysts read
as a flat performance once store
closures were excluded, while a market
share loss of 0.21 percentage points was
its smallest decline since January 2015
Meanwhile, both Macquarie and
Bernstein advised buying Tesco shares
ahead of full-year results next month.
Tesco closed 1.7 per cent higher at
195.2p after Macquarie raised its target
price to 250p.
Sector peer Wm Morrison was down
3.3 per cent to 202.5p ahead of results
due tomorrow. Kantar data showed
Morrison’s underperforming the
grocery market, with the biggest loss of
market share since October 2014.
Profit-taking among the miners
dragged the wider market lower. The
FTSE 100 ended down 0.9 per cent, off
56.96 points to 6,125.44.
The trigger came from Chinese
commodities trade data in February,
which softened across the board, and
from brokers including Goldman Sachs
and Citigroup which argued that while
share prices have recovered, metals
demand had not.
Anglo American dropped 15.5 per
cent to 530.9p, while BHP Billiton lost
8.5 per cent to 821.4p, Antofagasta
fell 9.5 per cent to 536.5p and Rio
Tinto lost 9.4 per cent to £20.26. FTSE’s
large-cap mining index had hit a five-
month high on Monday, having surged
70 per cent from its mid-January low.
Glencore tumbled 18.2 per cent to
139.8p, with JPMorgan Cazenove cutting
the stock from its Analyst Focus List.
The shares remain attractively valued
but the catalysts to drive a re-rating are
mostly played, it argued.
Separately, Glencore said two people
had died and five were missing after a
wall collapsed at its Katanga copper and
cobalt mine in the Democratic Republic
of Congo.
Worldpay dropped 4.8 per cent to
277.8p after its maiden results showed
its US arm struggling even more than
expected, which meant earnings only
matched market expectations and 2016
forecasts were drifting lower on
investment costs.
Close Brothers was down 6.2 per cent
to £12.98 after in-line interim results.
Panmure Gordon cut the merchant
bank off its “buy” list.
22 Wednesday 9 March 2016

INSIGHT Analysis. Capital markets

Henny
Sender
Signs of ECB monetary policy fatigue set in
Hints of more stimulus Risk worries
measures at tomorrow’s
National service meeting fail to stir investors
10-year bond spreads over Bunds
Rise since Dec 3 2015, date of last ECB meeting
Eurozone inflation expectations
5y5y inflation swap (%)
fails to whip China’s ELAINE MOORE AND DAN MCCRUM
89 Basis points 1.8
banks into shape The European Central Bank electrified
financial markets 12 months ago by Dec 3 date of last ECB meeting
launching a landmark quantitative eas- 1.7
ing programme to support the eurozone

O
n Leap Year day China National Chemical economy. One year and one under-
Corporation put out a brief announcement to whelming programme expansion later,
say HSBC and China Citic Bank would lead a those markets are showing signs of 1.6
three-month $15bn bridge loan to finance its monetary policy fatigue.
$43bn purchase of Swiss-based Syngenta (as The ECB is expected to announce
well as another $5bn to refinance the debt of its target). additional stimulus tomorrow, follow-
China Citic Bank is one of the smaller of the mainland’s ing months of heavy-handed hints from 1.5
33 Basis points
listed state owned banks, and was not the obvious candi- its president Mario Draghi that the cen-
date for such a huge, high-profile transaction. tral bank is poised to do more to achieve 27 Basis points
Citic people have quietly let it be known that one of its its inflation target of close to 2 per cent. 1.4
top executives is close to Ren Jianxin, the chairman of Yet the prospect of additional bond
ChemChina. The two met over dinner in Beijing in January buying and a further interest rate cut
to agree to underwrite the financing. No matter. The mar- has not pushed yields in Europe’s bond
kets had their own interpretation of the transaction. markets to new lows and euro area infla- 1.3
Citic Group had been subject to scrutiny from regulators tion forecasts for a period of five years,
and the disciplinary committee for possible violations by five years in the future (the 5y5y break- Spain Italy Portugal Dec Jan Feb Mar
two of the group’s principal arms, its bank and its securi- even inflation), is still below target at 2015 2016
FT graphic Sources: Thomson Reuters Datastream; Bloomberg
ties firm. The fact that Citic is leading the fundraising just 1.5 per cent.
shows either that the investigation is over, with no negative Investors say memories of the previ-
fallout, or that the group can repent for its possible alleged ous ECB meeting are still fresh enough Investors are to each other overnight — show markets The diverse outlook about what is going the continent’s lenders. Were he not to
transgressions by doing a high-risk deal for which it may or to curb exuberance. are pricing in at least a 10 basis point cut to happen depends on what asset is cut deposit rates, stock markets might
may not be lucratively paid. In December, policymakers extended discussing a to this rate, which would be a historic being looked at.” react badly but it would at least prevent
As with so much that transpires in China, there is a polit- QE by six months, increased its size and variety of low. Investors are discussing a variety of further damage to bank profits, the
ical dimension. Moreover, every financial transaction cut interest rates deeper into negative trades related “As far as the front end is concerned, trades related to what they think the argument goes. A two-tiered interest
seems to have political and strategic overtones. But it is territory but still disappointed markets there is not too much disagreement,” ECB might or might not do this week. rate policy, as used by Japan, could
hard to decipher the significance and determine whether expecting more, resulting in a sell-off. to what they says Abhishek Singhania, European One idea is that action could be taken instead be beneficial.
developments in the banking world mark a step forward or “Investors got their hands burnt last think the rates strategist at Deutsche Bank. “But to benefit the countries on Europe’s However, credit analysts at such
backward in financial system reform. time,” says James McCann, UK and ECB might or beyond that, there is confusion and sub- periphery, such as Italy and Spain, by banks as the Royal Bank of Canada and
ChemChina’s bid for Syn- Europe economist at Standard Life. jective judgment.” changing the mix of debt securities BNP Paribas warn there is still a signifi-
genta, China’s single largest “There is broad consensus the ECB will might not do Demand for so-called core European bought by the central banks. This could cant risk that easing measures will fall
outbound acquisition, was
Every financial ease. What is less clear is the magni- this week government bonds has pushed yields narrow the gap between the cost of bor- short of market expectations leading to
clearly strategic. At the same transaction tude.” down this year but the spread between rowing for, say, Germany and Italy. a disorderly sell-off.
time, China’s desire for the ABN Amro believes the deterioration bond yields in Germany and countries Some also speculate more dramatic “It will depend on communication,”
deal to be seen as commercial
seems to have in the outlook for economic growth and at the southern periphery has measures by the central bank, such as said Patrick Jacq, senior strategist at
rather than government strategic inflation makes the case for a 20 basis increased, suggesting investors have not buying corporate bonds or making sen- BNP Paribas. “Markets consider a 10
directed was the reason that a point deposit rate cut to minus 0.5 per let QE blind them to differences in risk. ior bank debt eligible for ECB financing. basis point cut a done deal and further
policy bank — one operating
overtones cent, coupled with a €10bn monthly “If you look at core yields as a meas- One broader trade is simply to buy cuts later on. The ECB may not deliver,
in support of Beijing’s objec- increase in QE and an extension of the ure of QE, you’d think a lot was being bank stocks or bonds, on the basis that but if Draghi says the reason is a more
tives — did not lead the financing, says a Hong Kong fund programme to June 2017. priced in,” says Mr Singhania. “But if whatever Mr Draghi chooses to do, his solid economic background, then the
manager with close relations with the mainland acquirer. Euro Overnight Index Average rates you look at peripheral spreads, you overriding concern will be to avoid any disappointment may not be as signifi-
That same February day, by way of contrast, China — the rate at which banks provide loans would say not much is being priced in. action that undermines confidence in cant.”
Development Bank, a policy bank, signed a term sheet for
(another) $10bn loan to Brazil’s cash strapped Petrobras.
The first loan, agreed in 2009, was backed by future oil
exports to Sinopec at market prices. Equities
“It is another example of China recycling its foreign
reserves to shore up its long-term supply of raw materials.
It is possible that Chinese financial institutions become
more active across emerging markets in providing cash
European stocks take
poor industries with financing in exchange for a secure
long-term supply of raw materials,” noted WR Eric Ollom
a hit as earnings slide
of Citigroup investment research in New York.
China’s banks are clearly caught in the crossfire of the
party’s desire to support growth in the short term by chan- JOEL LEWIN leaving the market in Febru-
nelling credit to flagging state-owned enterprises as the ary, and $1.31bn so far in
latter continue to churn out low quality products that European companies have March, according to Markit.
nobody at home particularly wants (or will pay for) and its experienced their worst “European corporates are
desire over time to shrink their role in the economy and earnings season since the trapped in a profits reces-
move to a more services-led consumer economy. financial crisis, dragging the sion,” said Matthew Bailey,
The ratio of credit to GDP continues to rise (and is now region’s stock markets fur- credit strategist at JPMorgan.
more than twice the GDP growth rate, Barclays analysts ther behind the UK and US, “There are still too many
calculate). That expansion in credit brings with it hidden contradicting the consensus economic and political risks
problem debts as the banks roll over their loans to those that European equities out there to be comfortable
who cannot repay them in the name of social stability. would race ahead in 2016. going long.”
China’s loosening reserve requirements are part of a gen- As the curtain comes down The stronger euro has hurt
eral easing of monetary policy (stopping just short of big on the fourth-quarter earn- exporters’ competitiveness
rate cuts that could put more pressure on the weakening ings season, more European while bank earnings have
renminbi) that means the problem will only get worse. companies have fallen short been eroded by negative
There will inevitably be more bad loans and more defaults. of earnings per share fore- interest rates.
Yet that sort of national service as policy trumps profita- casts than beaten them for Retailers have suffered
bility is only one of the downsides around the banks. To the first time since 2008. from a lack of pricing power
compensate for the lack of profitability of such loans made That has prompted ana- and suffered the worst earn-
in the name of national service, many banks are taking a lysts to slash full-year EPS ings season among European
lot more risk with other transactions and other clients. growth forecasts to their low- companies, according to
One activity has been to take founders’ equity in their est level since 2009. UBS, with a large proportion
public companies as collateral for loans for other, dicier Estimates of 2016 EPS for falling short of forecasts.
transactions. When the projects go wrong, the shares that companies in the Euro Stoxx There have been profit warn-
once were safe collateral prove to be far less valuable than 600 are 2.9 per cent, down ings from German fashion
the size of the loans. Small wonder many hedge funds con- from an estimate of 6.9 per group Hugo Boss, London-
sider the banks the best proxy for a negative view on cent a month ago. listed Bonmarché and UK
China. It is not a good time to be a bank in China. The gov- “The analysts have finally sports retailer Sports Direct.
ernment owes the banks for national service — but official been spooked, they’ve capit- Meanwhile, companies are
gratitude might not go far enough. ulated now,” said Karen buying back their own bonds
Olney, a strategist at UBS. at the fastest rate in at least
henny.sender@ft.com This marks a dramatic eight years, which under-
shift from buoyant analyst scores “the absence of better
predictions for European investment opportunities”,
equities at the end of 2015 said Barnaby Martin, a credit
and underscores the chal- strategist at Bank of America
lenges faced by the European Merrill Lynch.
More comment and data on ft.com Central Bank ahead of its pol- Bond buybacks in Europe
icy meeting tomorrow. increased 21 per cent in 2015
Instead of outperforming to $21.8bn, according to BofA
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