THURSDAY 31 MARCH 2016 WORLD BUSINESS NEWSPAPER ASIA

Binge buying Code breaker Tongue twister

China’s risky rush to swallow foreign The race is on to discover how the FBI Native English speakers must keep
companies — COMMENT, PAGE 9 cracked a terrorist’s iPhone — PAGE 3 it simple — MICHAEL SKAPINKER, PAGE 10

Emotions high Briefing

for Myanmar’s I MetLife fights off ‘too big to fail’ tag
The US insurance group has secured a victory in its
transition battle against regulators that deemed it “too big to
fail” that may shake a key pillar of the post-crisis
Dodd-Frank legislative reforms.— PAGE 13
Aung San Suu Kyi in the presidential
palace in Naypyidaw after Myanmar I Tata sparks race to save UK steel plant
swore in its first civilian-dominated The Indian group has said the value of the business,
government for more than 50 years. which is for sale, is almost zero as London raced to
The democracy activist launched a find a buyer and save 15,000 jobs.— PAGE 4; EDITORIAL
bittersweet series of ceremonies by COMMENT, PAGE 8; VINCE CABLE, PAGE 9; LEX, PAGE 12
arriving for a joint sitting of parliament
with Htin Kyaw, the man who has I Rousseff bid to head off impeachment
become president because she is consti- Brazil’s president and her mentor, Luiz Inácio Lula
tutionally barred. But she takes on four da Silva, the former president, have begun talks
departmental portfolios in the new with centrist parties to try to defeat a vote that
administration — foreign affairs, energy, would begin the impeachment process.— PAGE 4
education and the president’s office.
Emotions ran high on a day filled with I Pelé sues Samsung over lookalike ad
reminders of how far the country has The Brazilian football legend has filed a
come and of the task parliament faces to $30m lawsuit claiming the South
work with a still-powerful military on Korean company used a lookalike to
problems including mass poverty. promote its TVs in full-page ads that
Power transition page 2 also featured the former player’s
Ye Aung Thu/AFP/Getty Images
distinctive scissor kick.— PAGE 16

I Terror bill blow for Hollande

Investment banks face deepening

François Hollande, the French president, has
suffered a fresh blow after he abandoned a bill
aimed at toughening anti-terror laws because of a
lack of support, only a year before elections.— PAGE 6

I Cultural revolution stirs party memory

gloom as trading revenues plunge Progressives and neo-Maoists have clashed on how
to mark the 50th anniversary of China’s cultural
revolution, with a party newspaper warning against
discussions deviating from official thinking.— PAGE 2

I Worst time for Wall St IPOs since crisis

3 Analysts put average first-quarter fall at 25% 3 Job and payout fears amid dismal outlook
LAURA NOONAN — LONDON
ALISTAIR GRAY — NEW YORK
Global investment banks suffered
declines of as much as 56 per cent in
their trading businesses in the first three
months of the year, analysts believe,
stoking fears of further lay-offs for staff
and lower dividends for shareholders.
Europe’s shrinking investment banks
bore the full brunt of the difficult envi-
ronment for the buying and selling of
assets such as bonds, stocks and com-
modities on behalf of clients. It was
highlighted by Credit Suisse’s admission
last week that its trading revenue had
fallen 40-45 per cent this year.
Not only are many European banks
reorganising and trying to sell assets
into a falling market but they also have
less exposure to the US market, which
has fared better than Europe and Asia.
But Wall Street’s biggest banks are
suffering too, with analysts predicting
first-quarter falls in trading revenue of
up to 48 per cent for Goldman Sachs and
56 per cent for Morgan Stanley as slow-
ing Chinese growth, stubbornly low oil
prices and fading hopes of a US interest
rate rise weigh heavily on client activity
and market performance.
The difficult first quarter shows the
challenges faced by investment banks as
they try to create sustainable profitabil-
ity now that post-crisis reforms have
limited opportunities and raised costs.
Jon Peace, banks analyst at Nomura,
said the trading slump would have prac-
tical implications for European banks
who still need to build capital to satisfy
new regulations. “Weaker trading prof-
More US listings have collapsed than succeeded in
the first quarter for the first time since the financial
crisis, as the ferocity of this year’s market tumble
its will delay the return of normalised Barclays — suffered an average collapse stymied many groups’ hopes to go public.— PAGE 13
cash dividends for the weaker banks
48% of about 25 per cent in trading revenues
and limit the absolute dividend payouts Trading revenue for the first quarter of the year.
fall forecast for
for the stronger banks,” he said. Goldman Sachs
Kinner Lakhani, analyst at Deutsche, Datawatch
Huw van Steenis, London-based said European banks had been hit by a
banks analyst at Morgan Stanley, said it “perfect storm” of concerns about
could take more than three years for China, energy and global growth. “The Taxing wages The tax wedge is
Income tax and social security
investment banks to “structurally 3,200 cost of exiting non-core positions is also
contributions as a share of labour
the difference
between labour
remove cost and capital” to deal with Job cuts already likely to have gone up sustainably as costs (2014) costs to the
the new market realities. Banks have announced by buyers demand a higher liquidity pre- Income tax Social security employer and the
already begun pruning. Credit Suisse Credit Suisse and mium,” he said. contributions
net take-home
has announced 2,000 extra job cuts in Morgan Stanley On Wall Street, the five leading banks 0 10 20 30 40 50
Belgium pay of the
its markets division after a brutal first — Goldman, Morgan Stanley, Citigroup Germany employee. Among
quarter and Morgan Stanley said last and Bank of America — are expected to France OECD countries
year it would cull 1,200 jobs in fixed see trading revenues fall an average of Italy this is highest in
Denmark
income and back- office functions. almost 25 per cent when they report USA Belgium at 55.6
In Europe, seven analysts polled by first-quarter results next month, UK per cent; Chile’s
the Financial Times predicted that the according to six analysts polled. Chile 7 per cent is the
top four investment banks — Credit Short View page 13 Source: OECD lowest in the world
Suisse, Deutsche Bank, UBS and Analysis page 15

Sharp sold to Foxconn on painful day

for Japan’s fallen electronics industry
ROBIN HARDING AND KANA INAGAKI for corporate Japan. Sharp, a century- Y659bn but Mr Gou sought to renegoti-
TOKYO
old brand, ran into financial trouble ate the price after discovering contin-
Sharp, a pioneer of the once mighty after the financial crisis and its banks gent liabilities during due diligence.
Japanese electronics industry, has been chose a sale to Hon Hai over a govern- Founded in 1912, Sharp started out
taken over at a knockdown price by ment-funded rescue. making mechanical pencils but it was
Microsoft’s chatbot Tay Taiwanese contract manufacturer Hon For Sharp, the deal offers new hope the success of its television, refrigera-
goes haywire again Hai Precision Industry in a watershed after the annihilation of its mobile tors and air purifiers that made the
moment for corporate Japan. phone and television businesses, which company a household name, alongside
Chatbot mouths off i PAGE 17 were trapped between US software Sony and Panasonic.
Hon Hai, better known as Foxconn and groups such as Apple and low-cost Its troubles began after its heavy
which counts Apple among its top cus- assemblers such as Hon Hai itself. investments in LCD production facili-
Australia A$7.00(inc GST) tomers, is to pay Y388bn ($3.5bn) for “I am thrilled,” said Terry Gou, ties turned sour. It was also undercut by
China RMB25 Sharp. It will inject new capital into the founder and chief executive of Hon Hai. cheaper products from Taiwan and
Hong Kong HK$30 company at a lower than expected price “We have much that we want to achieve South Korea. The group joins a host of
India Rup195 of Y88 a share after negotiating a and I am confident that we will unlock Japanese brands such as Pioneer and
Indonesia Rp40,000 Y100bn cut to a previously agreed deal. Sharp’s true potential.” Sanyo that have either been sold or have
Japan ¥630(inc JCT) The agreement gives Hon Hai a top- Hon Hai will acquire Y288bn in new withdrawn from consumer electronics.
Korea W4,500 class electronics brand and the techno- shares, giving it a 66 per cent controlling Under Mr Gou, Hon Hai has grown
Malaysia RM10.50
logical prowess that pioneered solar stake, and Y100bn in preference shares into the world’s largest contract elec-
Pakistan Rupee 280
Philippines Peso 130
panels and liquid crystal displays. that are convertible to ordinary equity. tronics manufacturer.
Singapore S$5.50(inc GST)
The sale of such a storied name to a Sharp and Hon Hai agreed a deal in Lex page 12
Taiwan NT$130 Taiwanese group is a painful milestone February that valued the former at Analysis page 14
Thailand Bht140
Vietnam US$4.50

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9 770307 176647
2 ★
Ideological comparisons
Chinese divided over merits of cultural revolution
Anniversary coincides
with alarm over Xi’s
attempt to tighten grip
LUCY HORNBY — BEIJING
The 50th anniversary this year of the
start of China’s tumultuous cultural rev-
olution is turning into a political tug of
war, with progressives opposed to the
current political tightening squaring off
with neo-Maoist intellectuals over its
legacy.
The cultural revolution formally
kicked off in May 1966, when Mao
Zedong attacked rivals in the Commu-
nist party leadership and endorsed a
Washington summit
US accuses Russia of
slowly dismantling
arms control agreements
GEOFF DYER — WASHINGTON
Russia is “slowly but surely” disman-
tling the security and arms control
agreements that were put in place in
Europe at the end of the cold war,
according to a senior US state depart-
ment official.
Speaking ahead of an international
nuclear security summit in Washington
this week that Russian leaders are boy-
cotting, Frank Rose, assistant secretary
of state for arms control, said that Rus-
sia now saw many of those agreements
as a sign of weakness.
“My personal view is that Russia no
longer sees value in that architecture
put in place at the end of the cold war,”
he said, citing Russia’s withdrawal from
a conventional weapons agreement
and its alleged testing of medium-range
ballistic missiles.
“They are slowly but surely taking out
‘Russia no longer sees
value in that architecture
put in place at the end
of the cold war’
the key building blocks of the Euro-
Atlantic architecture put in place in the
late 80s and 1990s.”
The Russian intervention in eastern
Ukraine has frozen significant parts of
US diplomatic interaction with Russia.
Mr Rose’s comments underline the
administration’s growing pessimism
about working with Russia on arms con-
trol and other nuclear issues — which
had been one of President Barack
Obama’s key objectives when he took
office in 2009.
The summit on securing nuclear mate-
rial,whichbeginstoday,isthefourthtobe
held since Mr Obama’s 2009 speech in
Praguewarning about the risks of terror-
ists getting hold of a nuclear weapon. The
2010 New Start Treaty with Russia
agreed to reduce the numbers of long-
range nuclear missiles, and in 2013 Mr
Obamaannouncedplansforfurthercuts.
While the Pentagon has been publicly
blunt about what it sees as the new mili-
tary threat that Russia represents in
Europe and has criticised Moscow’s
“sabre-rattling” about the potential use
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wave of student criticism against teach-
ers. The anarchic and bloody decade
that followed discredited Mao in the
eyes of many Chinese and paved the way
for Deng Xiaoping’s market reforms
after Mao’s death.
An editorial in the party-controlled
Global Times warned against “small
groups” creating “a totally chaotic mis-
understanding of the cultural revolu-
tion” on the anniversary, criticising both
those seeking to restore the legacy of the
period and those who might be overly
critical. “After the party has long ago
given an official conclusion . . . discus-
sions strictly should not depart from the
party’s decided politics or thinking.”
The party’s official verdict on the
of tactical nuclear weapons, the state
department has generally been less will-
ing to write off co-operation on arms
control and is still keen to work with
Russias on projects to secure nuclear
material in third countries.
Mr Rose said Moscow was still abiding
by the terms of the New Start treaty, in
part because it valued the verification
procedures that it created.
However, he said Russia’s opposition
to the post-cold war architecture was
evident in its decision to withdraw from
the Treaty on Conventional Armed
Forces in Europe and its breach of the
1987 Intermediate-Range Nuclear
Forces Treaty, which bans short and
medium-range ballistic missiles. Russia
had also shown no interest in discussing
limitations or transparency measures
for tactical nuclear weapons, he said.
The state department accused Russia
two years ago of breaching the INF
Treaty. Speaking last week, Rose Gotte-
moeller, undersecretary of state for
arms control, said it had been “one of
the most difficult issues” that she had
ever dealt with because “the Russians
simply have not wanted to engage in a
way that would resolve this problem”.
Ben Rhodes, deputy national security
adviser, said Russia’s decision not to
attend the summit was “a missed oppor-
tunity for Russia”. He added: “All they
are doing is isolating themselves.”
However, despite the Ukraine con-
flict, Mr Rhodes said the US had been
able to work with Russia on the Iran
nuclear deal and on issues related to
dangerous nuclear material. US officials
said the US and Russia had worked
together to remove material from
Uzbekistan.
Olga Oliker, director of the Russia pro-
gramme at the Center for Strategic and
International Studies, said Russia’s
absence would make it harder for mean-
ingful progress at the summit given that
90 per cent of global highly-enriched
uranium was either in the US or Russia.
“Russia’s absence is a sort of missing
elephant in the room,” she said, which
was the result of “tension” with the US
and “the Russian lack of a desire to
appear at something that is so clearly a
US baby”. Russia also preferred broader
international structures, where its voice
was heard more loudly, she said.
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INTERNATIONAL
period is that it was a “leftist deviation”
primarily caused by Mao but manipu-
lated by counter-revolutionaries.
The anniversary coincides with
increasing alarm among progressive
intellectuals and media over the meth-
ods deployed in President Xi Jinping’s
consolidation of power. Forced televi-
sion confessions, increased controls
over the Chinese media, suspected
abductions of critics overseas and disap-
pearances at home have led to compari-
sons with cultural revolution tactics.
The alarm has increased as security
forces respond harshly to an anony-
mous letter posted online this month
that called for Mr Xi’s resignation. In the
past week two former Chinese reporters
Kim Jong Un, the North Korean leader, inspects long-range artillery at an undisclosed location in the country — KCNA/AFP/Getty Images
Leaders struggle to halt Kim’s nuclear drive
Experts believe most likely
effect of sanctions would be to
advance regime’s programme
SONG JUNG-A — SEOUL
CHARLES CLOVER — BEIJING
GEOFF DYER — WASHINGTON
As global leaders converge on Washing-
ton for today’s nuclear security summit,
one enduring question is casting a
shadow over the discussions: can any-
thing now prevent North Korea from
becoming a fully-fledged nuclear state?
While the summit’s agenda focuses on
preventing nuclear material falling into
the hands of terrorists, the Pyongyang
regime will be the main focus when US
president Barack Obama holds a bilat-
eral meeting with Xi Jinping, his Chi-
nese counterpart, and a trilateral with
Shinzo Abe, Japan’s premier, and South
Korea’s president Park Geun-hye.
The gathering comes as toughened
UN sanctions, along with independent
measures from the US, Japan and South
Korea, are set to tighten the screws on
the North’s economy. But with China at
Power transition
Myanmar swears in first civilian-led government for 50 years
MICHAEL PEEL — NAYPYIDAW
Myanmar has sworn in its first civilian-
dominated government for more than
50 years in the latest chapter of an
extraordinary story of political and
economic change at the heart of Asia.
The military-backed transitional
administration handed over power yes-
terday to a successor led by Aung San
Suu Kyi’s National League for Democ-
21/10/2015 10:51
racy, more than a quarter of a century
after the Nobel Peace laureate launched
her campaign against junta rule.
Emotions ran high for some on a day
filled with reminders of how far Myan-
mar has come — and also of the stiff task
that the NLD faces to work with the still-
powerful military to tackle problems
ranging from mass poverty to regional
insurgency.
“In my life, it is a very historic
moment,” said Zin Mar Aung, an NLD
MP who spent 11 years in jail under the
military for her political activism.
“It’s the very first step to move for-
ward to be a fully democratic civilian
government.”
Nevertheless, the army still holds a
quarter of the parliament’s seats, a
now living overseas have said their rela-
tives have been detained in China.
Earlier in the month, commentators
drew comparisons with the cultural rev-
olution when online leftists vociferously
attacked Ren Zhiqiang, a property
mogul with liberal political views, after
he criticised Mr Xi for proclaiming party
control over the country’s media. Those
attacks receded after the anti-corrup-
tion watchdog issued an essay entitled
“A thousand yes-men cannot equal one
honest adviser”, which was interpreted
in China as support for Mr Ren.
For many Chinese the chaos of the
cultural revolution represents the worst
point in nearly seven decades of party
rule, even though its death toll was far
North Korea. Security agenda
odds with the other powers over inter-
pretation of the sanctions, experts
believe they are no killer blow. In fact,
they say that rather than forcing Kim
Jong Un, the North’s leader, to give up
nuclear weapons, the measures are
more likely to accelerate the regime’s
nuclear programme.
“North Korea is different from Iran.
There is no civil society and regime
accountability. It is hard to expect any
bottom-up pressure on the regime,”
says Bong Young-shik, a researcher at
Seoul’s Asan Institute for Policy Studies.
“More than 10 per cent of its population
is estimated to have died of famine in
the 1990s but the regime has survived.”
After North Korea defied existing UN
resolutions with a fourth nuclear test
and long-range rocket launch earlier
this year, the Security Council imposed
its toughest sanctions yet, targeting the
country’s banks, mineral exports and
cargo vessels to squeeze the regime’s
sources of hard currency.
The rogue state has responded with
typical belligerence, ratcheting up its
rhetoric, firing volleys of short-range
missiles off its coast and, at the week-
majority on a powerful security com-
mittee and crucial ministerial posts.
Aung San Suu Kyi launched a bitter-
sweet series of ceremonies by arriving
for a joint sitting of parliament with
Htin Kyaw, the man who has become
president because she is constitution-
ally barred from doing so.
Military officers in green uniforms
congregated together in their quarter of
the chamber’s seating, leaving the rest
of the room to the signature orange
shirts, headscarves and traditional
sarong-like longyi favoured by many
NLD MPs.
The handover ceremony confirmed
that Aung San Suu Kyi would be taking
on no fewer than four departmental
portfolios in the new administration —
foreign affairs, energy, education and
the president’s office. Her aides say that
this is only a temporary arrangement,
rather than what critics say is an auto-
cratic style and a reluctance to delegate.
A large turnout of ambassadors high-
lighted the international backing for the
transition, which some in Washington
promote as a success story to contrast
with post-Arab spring conflict in the
Middle East.
exceeded by the famines of the Great
Leap Forward in the late 1950s. The rev-
olution was criticised more openly,
especially in the early 1980s, and the
involvement of students and urban
youth means it has greater presence in
literature, film and history books.
Nonetheless, few scholars or books
were allowed to explore the political
infighting behind the social chaos, says
Bao Pu, whose Hong Kong-based pub-
lishing house specialises in autobiogra-
phies and other historic accounts that
often differ from the party’s official his-
tory of its own rule. “After the cultural
revolution there was a need to repudiate
it so there was a period of criticism, but
since then no real debate on it has been
end, releasing a propaganda video of a
nuclear strike on Washington.
Pyongyang has also threatened a fifth
nuclear test “in a short time”, claiming
breakthroughs in warhead miniaturisa-
tion and in building a re-entry vehicle to
carry the warhead to its target. There is
no way of verifying the secretive state’s
‘North Korea’s arsenal will
become more advanced,
allowing it to have more
leverage for future talks’
claims. But while experts doubt some
assertions, they agree the country has
made substantial progress in its weap-
ons technology and that its increasing
military confidence will reduce its appe-
tite for talks on de-nuclearisation.
“Slowly but surely, North Korea is get-
ting closer to its ultimate goal of becom-
ing a nuclear state,” says Chung Sung-
yoon, a researcher at the Korea Institute
for National Unification.
“The regime seems to believe it is just
a step away from making nuclear-
Since the junta stepped down in 2011,
Myanmar has drawn investors from
across the world to its resources, rang-
ing from hydropower to gems, and its
largely untapped consumer market of
more than 50m people.
Htin Kyaw, the proxy president,
spoke for only a few minutes, outlining
Emotional day: President Htin Kyaw
in parliament after taking the oath
Thursday 31 March 2016
permitted. In Chinese society there is
only confusion.”
But for some the period represents a
time of ideological purity, economic
equality and unity in loyalty to the
party. The Global Times took on that
group’s attempts to equate today’s anti-
corruption campaign with the “weeding
out” of perceived capitalists after 1966.
Zhang Hongliang, a leftist scholar at
Renmin University, described the edito-
rial as “obscene”. “Randomly choose
someone on the street or an official or an
intellectual and ask them, you will see
that the majority are starting to rethink
the cultural revolution,” he says. “No
one says it was devoid of merit.”
Additional reporting by Christian Shepherd
tipped intercontinental ballistic mis-
siles. This will make it harder to induce
it back to the negotiating table.”
While Washington seeks sanctions
that bring real economic pressure,
China is loath to provoke instability and
opposes any penalties harming living
standards. Analysts say Beijing will
block trade only for explicitly military
uses and is unlikely to pull the plug on
North Korea’s fragile economy by cut-
ting off oil exports or cracking down on
the vibrant cross-border black market.
Beijing advocates a carrot and stick
approach. It has proposed, in addition to
sanctions, a parallel diplomatic track
aimed at replacing the 1953 armistice
that ended the Korean war with a peace
treaty, long sought by Pyongyang.
“North Korea is at an advantage in
this game. As time goes by, its arsenal
will become more advanced, allowing it
to have more significant leverage for
future talks,” says Mr Chung. “Then, the
international community will have to
offer Pyongyang stronger incentives for
de-nuclearisation. They should try to
bring Pyongyang back to the negotiating
table before it is too late.”
NLD priorities such as national reconcil-
iation and constitutional change. He
also acknowledged the authority of his
party leader, who has openly said she
will make all the important decisions
herself.
“The new parliament and new gov-
ernment is formed in accord with the
policies of the National League for
Democracy led by Aung San Suu Kyi,”
he said. “I have the obligation to work
toward achieving a constitution that has
democratic norms and is suitable for the
nation.”
His remarks signal a likely escalating
battle over the constitution’s block on
Aung San Suu Kyi becoming president
because her two sons by her late British
husband have foreign passports. The
provision can only be changed by a
75 per cent plus one parliamentary
supermajority, which is impossible to
achieve should the military MPs oppose
it as a bloc.
Than Aung Soe, an NLD MP, said it
was a “priority” to change the constitu-
tion. Asked if that was realistic given the
military’s continued influence, he
laughed. “We will try step by step to
reduce the military percentage,” he said.
Thursday 31 March 2016 ★ FINANCIAL TIMES 3

INTERNATIONAL

Race to detect
how FBI broke
iPhone code
Discovery raises digital security fears
TIM BRADSHAW AND HANNAH KUCHLER
SAN FRANCISCO
JOHN REED — JERUSALEM
In the week since the Federal Bureau of
Investigation surprised Apple by saying
that it might have found its own way
into the San Bernardino gunman’s
smartphone, investigators have dis-
closed nothing about how they did it.
But that has not stopped the security
industry from guessing how the
iPhone’s security was defeated and who
helped the FBI to uncover it.
The speculation is driven by both
high-minded concern for the digital
security of the public and hackers’ con-
stant desire for bragging rights about
who has managed to outsmart the rest.
Staff at Cellebrite, an Israeli mobile
forensics company known to have
worked for the FBI, have claimed credit
in private forums for breaking into Syed
Rizwan Farook’s phone, according to
two people familiar with the matter.
Shares in the company’s Japan-listed
parent, Sun Corp, have leapt more than
60 per cent in the past week.
Cellebrite, which has declined to com-
ment on the matter, is one of several
forensic security companies specialising
in extracting data from mobile devices.
Law enforcement agencies look to such
businesses for help when extracting
data, critical to solving a case. They
often pay a high price — in some cases,
hundreds of thousands of dollars — for
tools that can simplify cracking a smart-
phone. “The cops basically want push-
button forensics,” says Jonathan Zdziar-
ski, an iPhone security expert.
As well as researching vulnerabilities
themselves, these groups often scour
the “grey” hacker market to buy so-
called “exploits” they can package up
and sell to investigators or companies
for security testing.
Marc Goodman, who has worked on
cyber security for Interpol and the US
government, says law enforcement
agencies had long been in an “arms
race” with device and software manu-
facturers to break their security. “This is
where law enforcement and criminals
have something in common,” he adds.
Security experts agree that if the FBI
can hack into Farook’s iPhone 5c model,
which was running a version of the iOS 9
software released last September, it
could gain access to any other device
with the same specifications — and most
previous models. Some fear the reper-
cussions of the FBI’s disclosure that a
previously unknown flaw exists.
“The fact that there is a confirmed
exploit there for a device is certainly
going to get a lot of people to look for it,”
Mr Zdziarski says. “Damage control is
the real question here . . . The FBI’s big-
gest mistake has been assuming they
can contain this.”
It is imperative for Apple to find out
what the vulnerability is. Experts are
divided on whether the FBI’s technique
would have worked on newer
iPhones released since 2013,
The San Bernardino killers
Tashfeen Malik, left, and
Syed Rizwan Farook
A man displays a protest message at a rally supporting Apple’s refusal to help the FBI access the San Bernardino gunman’s smartphone — Lucy Nicholson/Reuters
Google whacked
Tech group hit with
spate of court orders
Google has been on the receiving end
of a spate of court orders to unlock
smartphones for the FBI and other US
law enforcement agencies, according
to the American Civil Liberties Union.
The demands echo issues raised by
Apple’s fight with the FBI over
breaking into a phone that belonged
to one of the San Bernardino killers.
However, they stopped short of
requiring Google to write new code to
break into phones running its Android
software — the demand that Apple
said would create a backdoor and
make all iPhone users unsafe.
According to ACLU research, Google
has received at least nine orders under
the All Writs Act, the catch-all law that
has been used to force tech companies
to circumvent password protections
and other defences on phones so data
can be recovered for investigations.
The number is far lower than the 67
orders the ACLU identified that had
been served on Apple, despite the fact
that Android phones outsell Apple
ones. The ACLU added that it had not
uncovered all cases and iPhone
security is thought by tech experts to
be stronger. Apple complied until last
year, when it was prodded by a New
York judge into contesting a court
order in a drugs case. The willingness
of companies such as Apple to go
along with the demands has tarnished
their claims of always strongly
defending their users’ privacy. Google
refused to say if it has contested any
of the orders it had faced.
“We carefully scrutinise subpoenas
and court orders to make sure they
meet both the letter and spirit of the
law,” Google said. It added that it had
not received demands like the one in
the San Bernardino case and would
“strongly object to such an order”.
Richard Waters, San Francisco
when Apple introduced hardware pro-
tection known as a “secure enclave”.
Mr Goodman says the FBI’s method
could probably not be replicated on a
mass scale by cyber criminals, because
it is likely to require possession of the
device. Much simpler methods of trick-
ing people into giving away the contents
of their smartphones are widely availa-
ble, such as persuading them to click on
links containing so-called malware.
Until technology is developed to ena-
ble the hacking to be done remotely, the
tactic would probably be used only by
state-sponsored entities, such as the US
or Chinese governments, searching for
“super high-value targets” such as ter-
rorists, he says. “It could be used if you
are an American travelling in China and
the Chinese want access to your phone.”
Mike Janke, chairman of Silent Circle,
which makes an encrypted smartphone
called the Blackphone, says he is not
surprised the FBI has been able to access
the phone with its “tens of millions of
dollars of experts”.
He believes they copied the phone’s
memory to automatically try different
passcodes on the fake version without
triggering the 10-passcode limit, in what
is called a brute force attack. This
method — sometimes known as “Nand
mirroring” after the type of memory
used in smartphones — might work on
newer iPhones, some experts believe.
“It is not as hard as people think,” says
Mr Janke. “There isn’t a phone in the
world that cannot have its hard drive
opened like this, all are susceptible.”
But Adam Ghetti, chief technology
officer at Ionic Security, says the FBI is
likely to have used a simpler method to
get into the iPhone 5c, one that could not
be used on newer models. In this sce-
nario, a hacker would have to locate the
part of the chip responsible for setting
the 10-passcode limit and physically
solder on a new connection to a program
that could reset it after nine attempts.
Apple is already laying the ground-
work to discover the FBI’s method in
other court cases involving locked
iPhones. On Friday, it wrote to the judge
in a New York drugs case asking to delay
proceedings in light of the Department
of Justice’s sudden discovery.
4 ★
Rousseff woos centrists in
effort to avoid impeachment
President scrambles for political support after largest ally deserts government
JOE LEAHY — SAO PAULO
Dilma Rousseff, Brazil’s left-leaning
president, has begun talks with smaller
centrist parties in an effort to rebuild
her coalition and avoid impeachment
after her largest ally deserted the gov-
ernment.
Ms Rousseff and her predecessor and
mentor, former president Luiz Inácio
Lula da Silva, were yesterday scram-
bling for political support to defeat an
impending vote in the lower house of
Congress, expected as early as mid-
April, that would start a formal
impeachment process, her aides said.
The vote by the Brazilian Democratic
Movement party (PMDB), a loose feder-
ation of regional politicians, to abandon
Ms Rousseff’s government on Tuesday
has increased the odds of her impeach-
ment and pitches her into direct con-
frontation with her vice-president,
Michel Temer.
Mr Temer, a 75-year-old constitu-
tional lawyer who is also the head of the
PMDB, will take over as acting president
if two-thirds of the lower house of Con-
gress votes for impeachment, and then
officially as president if the Senate sup-
ports the motion, also by a two-thirds
majority.
“The exit of an important part-
ner . . . opens up political space for the
formation of a new governing coalition,”
said Jaques Wagner, Ms Rousseff’s chief
of staff and a stalwart of her leftist
Workers’ party, or PT.
The crisis comes as Ms Rousseff is
struggling with what is emerging as the
country’s worst recession in a century
and a widening corruption investigation
at state-run oil company Petrobras that
has engulfed her ruling coalition.
From ratings in the opinion polls that
were once the envy of most leaders in
the western world, she is today one of
Brazil’s most unpopular presidents on
record. A new poll by CNI-Ibope yester-
day said 10 per cent of Brazilians judged
her government as good or excellent
and 69 per cent as bad or terrible.
To defeat the impeachment motion at
the first stage in the 513-seat lower
house, Ms Rousseff will need 172 votes
or abstentions, or one-third of the total
plus one seat.
The PT and its allies on the left that
are explicitly against impeachment con-
trol 102 seats, according to numbers
compiled by Eurasia Group, a research
consultancy.
They might be able to count on some
support from independent left parties,
which hold another 37 seats. For the
rest, they will have to plumb the Con-
gress’s large pool of centrist parties — 13
in all, with 205 congressmen. Most of
these have little ideological base and
might be won over with promises of
ministerial posts, analysts say.
The PT might also still be able to per-
suade some individuals from the PMDB,
which has 69 seats, to remain with the
government. Indeed, some people
familiar with the matter said several
PMDB ministers might leave the party
and stay in Ms Rousseff’s cabinet.
The government is painting the move
to unseat Ms Rousseff as a coup and is
rallying militant supporters in Brazil’s
Amnesty report finds further abuse of workers in Qatar
Rights group uncovers more
ill-treatment of those building
stadiums for tournament
SIMEON KERR — DUBAI
Qatar’s human rights record has come
under renewed scrutiny ahead of its
controversial hosting of the 2022 foot-
ball World Cup, with Amnesty Interna-
tional claiming in a report that workers
building tournament infrastructure
face abuse.
Amnesty and other campaigners have
long criticised conditions for the mainly
south Asian construction workers who
makeupmostofthe90percentofexpatri-
ateswithinthegas-richstate’sworkforce.
Doha’s bid has also been engulfed in
bribery accusations since it was
awarded the tournament by governing
body Fifa. The allegations have been
denied in Qatar, but there have been
calls for the decision to be revoked.
The government has also been forced
to cut some of its World Cup infrastruc-
ture spending following the sharp fall in
the oil price over the past 18 months
which has put pressure on its budget.
The Amnesty report, “The Ugly Side
of the Beautiful Game”, highlights
FINANCIAL TIMES
INTERNATIONAL
Facing unions, as well as organisations for the
questions: landless rural and urban poor, and oth-
Dilma Rousseff
visits a satellite
infrastructure
ers. This is leading to concerns there
could be street confrontations between
her supporters and detractors should
project in Lago
Sul last week.
the impeachment vote go through. “For
us the greater battle here is the struggle
The move by the for democracy,” said Mr Wagner.
PMDB has He argued that the allegations under-
pitched her lying the impeachment motion, that Ms
into direct Rousseff fiddled the public accounts to
confrontation present a lower budget deficit, did not
with her constitute grounds for her removal.
vice-president, The supposed wrongdoing related to
Michel Temer, the 2014 federal government budget,
right — Sergio before she began her second four-year
Kremer/Getty Images
term in 2015, he said. A president can-
not be held accountable for crimes
that did not occur during his or her
present mandate, lawyers say.
Mr Temer is said to be assembling
a team to try to pull Brazil out of its
economic malaise. But any new
government will face challenges
in quickly reversing Brazil’s deep
budget deficit amid a recession.
World Cup 2022. Infrastructure projects
alleged abuses at the Khalifa stadium in of much of the most egregious labour
Doha and landscaping of the surround- exploitation,”thereportsaid.
ing Aspire Zone sports facilities. In response to the regular criticism of
Amnesty researchers interviewed its treatment of workers on the World
234 men working at the site in the year Cup projects, Qatar announced a swath
ending in February and claim more than ofreformstoimprovelabourregulations.
100 had suffered various labour abuses. In 2014, the government issued new
The Qatari government did not respond welfare standards and sought to
to requests for comment. improve recruitment practices and
The report blamed many of the abuses make salary payments more timely, as
on the “kafala” system, in which employ- well as prohibiting forced labour.
ers act as a sponsor, have the power to A new law is due to come into effect in
deport workers and must give permis- December, allowing workers to appeal
sion for an expatriate to leave Qatar. against a sponsor’s refusal to grant an
“[The]sponsorshipsystemisattheheart exit permit. It will also increase over-
Shoulder a burden: workers at the Khalifa stadium in Qatar — Warren Little/Getty
A PMDB-led government could also face
the same problems with the Petrobras
corruption investigation, known as Lava
Jato, or car wash, that are hurting Ms
Rousseff’s administration.
Many of the most important figures in
the party have been implicated in the
Petrobras scandal, including Eduardo
Cunha, the lower house speaker, who is
leading the impeachment campaign. He
has denied wrongdoing and is fighting
moves within Congress to remove him
for ethical reasons.
Some left-leaning academics believe
the PMDB and its opposition partners
are keen to win power in order to curb
the Petrobras investigation before it also
consumes them.
“The opposition in Brazil wants
to vote on impeachment as fast as
possible exactly so that it can
avoid the Lava Jato investiga-
tion,” said Pedro Fassoni Arruda,
a political scientist at Pontifical
Catholic University of São
Paulo.
sight of expatriate workers’ hiring. But
campaign groups have said the planned
reforms do not go far enough.
The UN-affiliated International
Labour Organisation earlier this month
threatened to set up an inquiry into
workers’ rights unless Qatar implements
promisedreformsbyMarchnextyear.
The researchers found that all but six
of the men interviewed had received a
lower salary than was promised to them,
whilemostoftheworkerssaidtheirpass-
ports had been confiscated, many faced
delayed salary payments and said their
wageswereconstantlyinarrears.
They were also living in squalid, over-
crowded accommodation, in breach of
Qatari law, when first interviewed.
While labourers on the Khalifa project
were moved to better accommodation,
those on other projects were not.
In all, 88 men told Amnesty they had
been denied the right to leave Qatar,
including seven from Nepal who had
wanted to check on their families after
the earthquakes last year.
“The penalties used by company
managers to exact work from the work-
ers included the threat of non-payment
of wages, being deported or, conversely,
not being allowed to leave Qatar
because the employer would not pro-
vide an exit permit,” the report said.
Jobs at risk
British steel industry in
crisis as Tata puts value
of assets at ‘almost zero’
SIMON MUNDY — MUMBAI
JIM PICKARD, MICHAEL POOLER AND
PETER CAMPBELL — LONDON
Tata, the Indian industrial group, said
yesterday the value of its steel opera-
tions in the UK, which it put up for sale
in a shock move on Tuesday night, was
now “almost zero” as the British gov-
ernment scrambled to find a buyer for
its mills and save 15,000 jobs.
The crisis at Britain’s biggest steel man-
ufacturer, bought by Tata for £6.2bn in
2007, highlighted the severe squeeze on
European steelmakers caused by a glo-
bal supply glut and posed an acute polit-
ical dilemma for David Cameron’s Con-
servative government. The prime min-
ister flew home from holiday and went
straight into emergency talks following
Tata’s announcement.
Industry experts were gloomy about
the prospects for the former British
Steel plants, which are now losing £1m a
day, even if they were to receive some
state assistance. One figure close to the
company said several buyers had
looked at the operations in the past two
years but had all walked away.
Koushik Chatterjee, finance director
of Tata Steel, said the company’s UK
assets now had a book value of “almost
zero”. He said: “We have taken about
£2bn of impairment. It is not a valuation
exercise, it is a question of reducing an
exposure.”
While the UK steel operations have no
long-term debt, buyers may be con-
cerned at taking on the £15bn British
Steel pension fund, one of the top 20
corporate pension liabilities in the UK.
Tata has committed to putting £125m
into the scheme for its 130,000 mem-
bers over the next two years, say docu-
ments seen by the Financial Times.
The Indian conglomerate also esti-
mates that it would take another £2bn
of investment to transform Port Talbot,
south Wales, the UK’s largest steel plant,
into a producer of high-quality steel for
advanced industries. “It is a massive
number, but one has to look at underly-
ing market conditions and macroeco-
nomic factors,” said Mr Chatterjee.
Competition safeguards
London faces Brussels conflict
if state funds used for rescue
CHRISTIAN OLIVER — BRUSSELS
CHRISTIAN SHEPHERD — BEIJING
The European Commission, the EU’s
executive arm, takes a hostile view of
rescue aid for the steel industry and
Britain can expect bruising negotia-
tions with Brussels if it wants to use
state funds to save Tata Steel UK.
While Brussels is trying to avoid any
clash with London before June’s referen-
dum on Britain’s membership of the EU,
the commission would have to perform
an improbable U-turn if it were to
approve a big government rescue pack-
age at the steelmaker.
The EU’s competition authorities
would study any rescue deal to deter-
mine whether it gave the steelworks
in Port Talbot, south Wales, an unfair
advantage against rivals. A commission
spokesperson said yesterday Brussels
was not immediately aware of any con-
tact from the UK authorities about Tata.
However, the commission has already
put down a strong marker of its intent to
crack down on subsidies in the steel sec-
tor. In January, Margrethe Vestager,
competition commissioner, announced
an investigation into €2bn of state sup-
port that the Italian government gave to
the struggling steelmaker Ilva.
On the same day, Ms Vestager ordered
the Walloon regional government in
Belgium to recoup €211m provided to
steel companies in the country’s
depressed industrial southern regions
that are part of the Duferco group.
In its statement at the time, the com-
mission declared flatly that “EU state-
aid rules do not allow public support for
the rescue and restructuring of compa-
nies in difficulty in the steel sector”.
This was “to ensure a level playing
field for those steelmakers that have
already been carrying out painful and
costly restructuring plans funded
through private resources”.
If the UK government did pump
money into Tata that was later deemed
illegal by Brussels, it would be ordered
to recoup those funds.
The broad philosophy of EU officials
towards steel is similar to that for coal:
that funding can be made available to
lessen the social impact of closures
rather than prop up uncompetitive
enterprises.
If Brussels were to approve significant
subsidies from the UK government, it
Thursday 31 March 2016
Tata would not say how much longer
it was willing to support the plants. Mr
Chatterjee said the company intended
to conduct the sale “as far as possible in
an orderly manner”.
British ministers believe they have
only weeks to find a solution for the
business, but said the plants would not
be nationalised for the third time.
“I don’t think nationalisation is going
to be the solution because I think every-
one would want a long-term viable solu-
tion,” said Sajid Javid, the business sec-
retary. “If you look around Europe and
elsewhere I think nationalisation is
rarely the answer, particularly if you
take into account the big challenges the
industry faces.”
One model could be the recent deal
whereby the Scottish government facili-
tated the sale of two steelworks at Moth-
erwell and Cambuslang from Tata to
£125m £2bn
Amount Tata has Investment Tata
committed to says Port Talbot
pension scheme site in south
in next 2 years Wales needs
Liberty House, the commodities inves-
tor, which said it would be interested
only in some of Tata’s steel processing
businesses.
The UK government could support a
management buyout, but a private sec-
tor sale is the preferred solution, not
least because taking responsibility for
the steel plants could leave taxpayers on
the hook for large losses while provok-
ing state aid concerns.
The EU’s competition authorities
would study any rescue deal to deter-
mine whether it gave the UK’s steel
plants an unfair advantage against
rivals. But Terry Scuoler, head of the
EEF manufacturers group, said there
was plenty the government could do in
the form of grants, allowances, business
rates cuts and fighting the dumping of
Chinese steel across Europe. Tata was
already “tantalisingly” close to the sale
of its long products business to invest-
ment firm Greybull Capital, he said.
would be likely to fuel anger from big
steelmakers across Europe that have
been denied such support.
As Ms Vestager put it in January: “EU
countries and the commission have put
in place strict safeguards against state
aid to rescue and restructure steel com-
panies in difficulty. This avoids harmful
subsidy races between EU countries and
[the risk] that uncontrolled state aid in
one EU country can unfairly put at risk
thousands of jobs across the EU.”
Any nationalisation would also
require close scrutiny from Brussels as
the competition authorities would need
to ensure the government had paid a
realistic market price.
The question of support for the steel
industry also puts the UK in an embar-
rassing position in respect of the EU’s
ability to deploy trade defence instru-
ments against Chinese dumping.
Britain is pursuing a policy of enthusi-
astic engagement with Beijing and is one
of the prime advocates pushing the EU
to recognise China as a market economy
‘EU countries have put in
place safeguards against
state aid to rescue steel
companies in difficulty’
within the World Trade Organisation.
While such a designation would greatly
bolster UK-China ties, it would also
make it harder for the EU to deploy anti-
dumping measures against Beijing.
Europe’s steel industry says China
uses its overcapacity in steel production
to export the metal to Europe at unfairly
low prices. Europe’s standard defence
against dumping is retaliatory tariffs.
The industry says these can be too slow
and too low but they do have an effect.
Beijing released targets in January
to cut steel capacity by 100m to 150m
tonnes over the next five years and
pledged Rmb100bn ($15.4bn) to help
“resettle” steel and coal workers.
Fast-expanding exports did not make
up for falling domestic demand last year
and more than half of large producers
moved into the red. For the first time in
more than 30 years, Chinese steel pro-
duction contracted.
Additional reporting by Peter Spiegel
Editorial Comment page 8
Comment page 9; Lex page 12
Thursday 31 March 2016 ★ FINANCIAL TIMES 5
6 ★ FINANCIAL TIMES Thursday 31 March 2016

INTERNATIONAL

France EBA report

Hollande forced to scrap anti-terror bill Fears over

Proposed legislation had
laid bare deep splits across
the political spectrum
ANNE-SYLVAINE CHASSANY — PARIS
French president François Hollande has
abandoned a constitutional bill meant
to toughen France’s response to home-
grown terrorism after failing to win sup-
port in parliament.
The decision, seen as a sign of the
president’s political weakness, ends
months of wrangling over a plan that
laid bare deep divisions on both the
right and the left of French politics.
One of the measures outlined in the
bill, which would allow convicted
French-born terrorists to be stripped of
their citizenship, had emerged as a bone
of contention.
Last week the centre-right-controlled
Senate rebuffed the bill, which had been
narrowly approved by France’s lower
house, making it impossible for the
president to win three-fifths of the votes
in a joint session of the country’s two
houses.
Speaking yesterday after a weekly
cabinet meeting, Mr Hollande blamed
the centre-right Republicans party for
the debacle. “Part of the opposition has
been hostile to any revision of the con-
stitution,” he said in a televised address.
“I deplore this attitude because we need
to do everything to avoid divisions.
Therefore I have decided to end the con-
stitutional debate.”
The retreat adds to Mr Hollande’s
woes a year before presidential elec-
tions. The Socialist leader has also been
fighting members of his own party as
well as student and union opposition
over a bill designed to inject more
flexibility into the country’s jobs
market.
The president’s attempts to
reduce unemployment of 10
per cent of the workforce — a
goal Mr Hollande has set
himself as a precondition for
seeking re-election — have yet
to bear fruit. His approval rat-
ings are nearing record lows.
According to an Ipsos sur-
vey published yesterday, Mr
Hollande would fail to qual-
Netherlands. Referendum dilemma
ify for the second round of the presiden-
tial elections, attracting no more than 16
per cent of the votes in the first round if
former French president Nicolas
Sarkozy, chairman of the Republicans,
wins the centre-right nomination.
Mr Sarkozy would score 21 per cent,
while far-right leader Marine Le Pen
would come first with 27 per cent of the
vote. If Alain Juppé, the former prime
minister, became the centre-right can-
didate, Mr Hollande would secure 14
per cent of the votes.
“It’s nearly impossible for him
to bounce back from such lev-
els,” said Laurent Bouvet, polit-
ical sciences professor at Ver-
sailles university.
The botched attempt to change
the constitution is a personal set-
back for Mr Hollande, who
‘We need to do
everything to
avoid divisions’
François Hollande
announced the plan three days after
Islamist terrorists killed 130 people in
Paris and Saint-Denis. “I did this to unify
the French,” Mr Hollande argued yes-
terday.
Many, however, saw an act of political
triangulation that backfired.
While a clause to enshrine the state of
emergency in the constitution was rela-
tively consensual, the nationality-strip-
ping plan caught MPs at both ends of the
political spectrum off guard.
The Republicans, including Mr
Sarkozy, and the far-right National
Front, had found it hard to criticise a
measure they had advocated in the past.
But with the centre-right presidential
primary election looming in November,
some of Mr Sarkozy’s more moderate
rivals sought to challenge his authority
by opposing it.
Mr Sarkozy subsequently moderated
his support. But he was quick to blame
Mr Hollande yesterday for the fiasco,
saying the president had “created the
condition for this failure”.
But more damaging for Mr Hollande
was the effect the bill had on his own
Socialist party, prompting the resigna-
tion of justice minister Christiane Taub-
ira. Critics pointed out that the national-
ity-stripping measure was ineffective in
preventing terrorist attacks and was dis-
criminatory towards French-born citi-
zens with north African origins, who
form the bulk of the bi-nationals in
France.
Mr Hollande is now facing growing
discontent likely to hamper attempts to
pass new legislation. More than 40 per
cent of those surveyed by Ipsos said they
were “not at all satisfied” with Mr Hol-
lande’s actions, up from 29 per cent in
the aftermath of the Paris attacks.
Leftwing unions and student organisa-
tions have called for a day of protest
against the jobs bill today.
Divisions within the Socialist party
are likely to deepen, according to
François Miquet-Marty, head of pollster
ViaVoice. “The problem for the Socialist
party is that no one else can unify the
left,” he said.
Manuel Valls, the reformist prime
minister, was “more popular than Mr
Hollande but remains a divisive fig-
ure . . . François Hollande is the candi-
date of the left by default”.
impact of cap
on bankers’
bonuses
‘unfounded’
MARTIN ARNOLD — BANKING EDITOR
Fears that a cap on bankers’ bonuses
would greatly inflate their fixed pay
and damage financial stability have
proved unfounded, according to a new
report from the European Banking
Authority.
Critics of the EU bonus cap — including
the Bank of England — have argued that
it could erode the stability of the finan-
cial system by increasing banks’ fixed
costs and reducing their ability to claw
back bonuses if something goes wrong.
But the EBA said the data it collected
on bankers’ pay in 2014 — the first year
of the bonus cap — showed some of
these fears were overblown as the aver-
age fixed pay of senior bankers
increased only slightly, while variable
pay fell sharply.
“All in all, the bonus cap has led to a
very small increase in the fixed costs
and this is only in some institutions,” the
EBA said in its annual remuneration
report.
“The present analysis shows no indi-

Dutch trade deal vote puts spotlight on Russia ties
April 6 decision on EU-Ukraine
agreement hinges on voters’
views of relations with Moscow
JIM BRUNSDEN — BRUSSELS
When anti-Brussels activists succeeded
in using a new Dutch law to put ratifica-
tion of a sensitive EU-Ukraine trade deal
up for a national vote, European leaders
fretted it could become a referendum on
an increasingly unpopular EU. Instead,
it has become a referendum on a com-
pletely different issue: Vladimir Putin.
The referendum, to be held on April 6
and only the second in the Netherlands’
modern history, will ask voters if they
support or reject the EU’s 2014 land-
mark integration pact with Ukraine.
Backers of the referendum admit the
decision to seek a vote on the Ukraine
pact was made for political expediency.
They say it was the first issue available
to Dutch Eurosceptic and pro-direct
democracy campaigners following the
new law’s enactment last July.
“We want the EU to stop in its tracks
and think for a minute and first solve
the democratic shortcomings” in how it
operates, said Bart Nijman, founder of
the campaigning arm of GeenStijl, the
satirical news website, that received
many more than the required 300,000 Tug of war:
signatures to force a vote. Ukrainian
A No vote would leave Mark Rutte, activists, some
Dutch prime minister, in an extremely wearing masks
tight political spot without actually of Vladimir
stopping the EU-Ukraine treaty. Putin, near the
The treaty has already been approved Dutch embassy
by the Dutch parliament and ratified by in Kiev, Ukraine,
the 27 other EU member states. It has urge the
also been provisionally in force since the Netherlands to
start of this year, and would initially support Ukraine
remain so regardless of the outcome of and vote Yes in
the referendum, according to officials. the forthcoming
But most of the main political parties referendum
have agreed to abide by the vote. Sergey Dolzhenko/Epa
Moreover, with just a week to voting
day, the terrorist attacks in Brussels
have overshadowed the campaign, and
become a central political issue after it
emerged one of the suicide bombers had
been deported to the Netherlands last
year from Turkey. The issue has forced
Mr Rutte’s government on to the defen-
sive about whether it could have done
more to help prevent the tragedy.
But it is another outrage, in the rural
countryside of east Ukraine two years
ago, that is having a bigger impact on the
debate. Dutch relations with Russia are
Diplomatic strains
hugely sensitive in the wake of the July
2014 explosion of Malaysia Airlines
flight MH17 over Ukrainian airspace
controlled by Russia-backed separa-
tists. A total of 298 people lost their lives
on the flight which departed from
Amsterdam’s Schiphol airport carrying
194 Dutch nationals.
Until the tragedy the Dutch govern-
ment was seen as one of the closest EU
countries to Moscow, with Russian trade
flowing through Rotterdam’s port and
several companies investing in Russia.
During the Winter Olympics in the
Russian city of Sochi in 2014, the Dutch
King Willem-Alexander was photo-
graphed enjoying a Heineken beer with
Mr Putin — even as the rest of Europe
was distancing itself from Moscow amid
the revolution in Kiev’s Maidan square.
But Mr Putin’s policy to undermine the
successors of Ukraine’s deposed Russia-
backed president Viktor Yanukovich,
whofailedattheeleventhhourtosignthe
EU trade deal, and the military campaign
that followed in the east of the former
soviet state, has divided opinion in the
referendum. The subsequent moves by
Nato to strengthen its presence on the
EU’s eastern borders has added to the
debateoverEU-Russiarelations.
“Without giving support to Putin’s
vision, we do understand the feeling in
Russia that the EU and Nato are moving
eastward, because those are the facts,”
said Harry van Bommel, foreign affairs
spokesman for the leftwing Socialist
party, which is advocating rejection.
Ratification of the EU-Ukraine associa-
tion agreement “will absolutely lead to
more tension with Russia and that is in
nobody’s interests — Russia and Europe
need each other”.
But such arguments are “parroting,
almost word for word, the Kremlin line”,
said Michiel van Hulten, a former Dutch
MEP who is now heads Stem Voor Ned-
erland (Vote For Netherlands), a lead-
ing pro-EU campaign group.
The Putin-focused debate between
the campaigns is a reflection of attitudes
in the broader electorate. According to
data from I&O Research, 58 per cent of
Yes supporters think a rejection of the
trade pact would be a victory for Mr
Putin. Meanwhile, 44 per cent of those
favouring No believe supporting the
agreement would put Dutch relations
with Russia at risk. Mainstream parties
have been largely absent from the cam-
paign, nervous about weighing in on a
divisive subject for little gain. Amid evi-
dence of public apathy over the referen-
dum, the political calculus is also com-
plicated by the fact that the vote can be
declared invalid if turnout is less than
30 per cent.
The prime minister has publicly
wavered over how involved he should
become. Critics say Mr Rutte’s stance
reflects growing anti-EU sentiment in
the Netherlands and although his cen-
tre-right VVD party has long had a con-
structive role in Brussels, many of its
[Ratification] voters have fled to the far-right, Euro-
sceptic party of Geert Wilders, who
‘will leads in the national polls.
absolutely With Mr Wilders’ Freedom party and
the far-left Socialists dominating the No
lead to more camp, the ardently pro-EU D66 has
tension with been the most visible party campaign-
ing for a Yes. There is no pressure from
Russia and the EU saying “Ukraine can’t co-operate
that is in or trade with Russia”, said Kees Verho-
even, a D66 parliamentarian. “Putin is
nobody’s the only one making it a black and white
interests ’ choice for Ukraine.”
cation that the so-called bonus cap has a
potentially detrimental effect on insti-
tutions’ financial stability,” it said,
before adding that “the bonus cap did
not lead to a material reduction in the
overall cost flexibility”.
Members of the European Parliament
introduced the cap in the wake of the
financial crisis, saying it would reduce
incentives for irresponsible risk-taking.
The rules cap variable pay of bank
staff identified as having a material
impact on their institution’s risk profile
at 100 per cent of fixed pay unless share-
holders approved lifting the threshold
to 200 per cent.
The EBA said the average fixed pay of
these so-called “identified staff” rose
only 4 per cent to €187,851 after the
bonus cap was introduced two years
‘The bonus cap has led to a
very small increase in the
fixed costs and this is only
in some institutions’
ago. However, their average variable
pay fell by almost a third to €123,706,
dragging their total average pay packet
down 14 per cent to €311,557.
One explanation of why senior bank-
ers’ average fixed pay increased only
slightly is that the EBA broadened its
definition of “identified staff” in 2014.
This increased the number of bankers
caught by the bonus cap by 84 per cent
to 62,787.
Most of the extra bankers caught by
the widened net were more junior and
therefore paid less than those already
considered to be “identified staff”. The
EBA said this offset an increase in the
fixed pay of the most senior bankers.
The EBA found that 160 of the UK’s
most senior bank executives enjoyed a
big increase in their 2014 average fixed
pay, which more than doubled to
€1.51m. Meanwhile, their average varia-
ble pay fell 28 per cent to €1.67m, leav-
ing their overall pay packets flat.
While staff pay adds up to nearly half
of European banks’ total administration
costs, the EBA said the fixed pay of
“identified staff” accounted for only 6.8
per cent of their remuneration bill.
Overall, the EBA said the number of
bankers earning more than €1m rose
more than a fifth to 3,865 in 2014,
mainly due to the appreciation of the
pound against the euro. Three-quarters
of those earning more than €1m are
UK-based and paid in pounds.
The UK has been vocal in arguing that
the bonus cap is counterproductive
because banks offset the fall in bonuses
by increasing fixed pay. The BoE said in
December the fixed pay of material risk-
takers in banks rose as a proportion of
total pay from 28 to 54 per cent in 2014.
The UK eventually abandoned a legal
challenge to the bonus cap for big insti-

Berlin tells Ankara free expression ‘non-negotiable’ as EU intervenes in dispute
GUY CHAZAN — BERLIN
PIOTR ZALEWSKI — ISTANBUL
PETER SPIEGEL — BRUSSELS
Berlin has rebuffed Turkey’s protest
about a satirical song targeting the
country’s president Recep Tayyip
Erdogan that aired on German televi-
sion this month, as the affair threat-
ened to open new faultlines between
Turkey and the EU.
Markus Ederer, state secretary at the
German foreign ministry, called his
Turkish counterpart to say that free-
dom of speech was “non-negotiable”,
the ministry said.
The comment came after Turkey
summoned Martin Erdmann, the Ger-
man ambassador, twice in the space of a
week, once to demand that the song
about Mr Erdogan be removed from the
internet and once to complain about his
presence at the trial of two journalists
facing espionage charges for document-
ing covert Turkish arms shipments to
Syria.
The song, entitled “Erdowi, Erdowo,
Erdogan”, was aired on Germany’s ARD
television channel on March 17. In it, Mr
Erdogan is depicted as a dictator who
locks up journalists, bombs Kurds and
builds palaces for himself. It is accompa-
nied by footage of Turkish police using
tear gas and water cannon against dem-
onstrators.
The affair has created tensions
between the EU and Turkey at a time
when they are trying to implement a
landmark deal to solve the refugee cri-
sis. Brussels promised to pay Ankara
more than €6bn and lift visa restrictions
for Turks in exchange for an agreement
to take in migrants sent back from
Greece.
Mina Andreeva, a spokeswoman for
Jean-Claude Juncker, the European
Commission president, said that while
Brussels continued to value its co-oper-
ation with Ankara, the decision to sum-
mon the German ambassador over the
video “does not seem to be in line” with
European free press and free expression
norms.
“President Juncker does not appreci-
ate this movement of calling in the Ger-
man ambassador just because of a satiri-
cal song,” said Ms Andreeva. “He
believes that this moves Turkey further
from the EU rather than closer to us.”
Mr Erdogan has also lashed out at dip-
lomats who attended the trial of the two
Turkish journalists, Can Dundar, editor
of Cumhuriyet, and Erdem Gul, the
paper’s Ankara bureau chief.
On Monday, a US official defended the
decision to send diplomats to the trial.
“This was not the first time, but it darn
sure won’t be the last time that we
observe these kinds of judicial proceed-
ings,” said John Kirby, the state depart-
ment spokesman.
Many observers were left puzzled by
Mr Erdogan’s latest interventions. “Per-
haps he thinks that the [refugee deal
with the EU] will not work, especially
the part on visa liberalisation, so he’s
tutions. But it joined several other coun-
tries in telling the EBA it will not comply
with new EU rules requiring the cap to
be extended to smaller institutions.
applying pressure on the EU to meet its
commitments,” one European diplomat
said. “Either that, or this is part of a Average pay at
strategy ahead of a referendum [on a European banks
new constitution] or snap elections, € ’000
where he’s using the EU as a whipping Variable pay 400
boy for his own political aims.” Fixed pay
Yesterday, Mr Erdogan arrived in
Washington for a nuclear security sum- 300
mit with Barack Obama and other lead-
ers. As the visit got under way, support- 200
ers created a hashtag, #WeLoveErdo-
gan,whichbegantrendingonTwitter. 100
“The hope of the oppressed, the
Grand Master of our country’s struc-
tural transformation and rebirth,” 0
wrote Mehmet Simsek, the deputy 2013 2014
prime minister, next to a picture of Mr For “identified staff”
Source: EBA
Erdogan.
Thursday 31 March 2016
Bond investors were furious when Novo Banco’s debt was wiped out with the blessing of Portuguese
regulators. Some say it marked a new post-crisis era in which bank bondholders are no longer king.
I
t was August 2014 and Novo Banco
had just been created from the
ashes of Banco Espírito Santo, Por-
tugal’s failed lender. With its toxic
assets relegated to a bad bank, all
that was needed was an image — some-
thing to capture the spirit of a new era.
A phoenix might have worked, but
Novo Banco tried something else: a
green butterfly perched amid black and
green letters. The wings “symbolised a
spring of transformation and renewabil-
ity”. But the green butterfly never quite
took off as an idea, and was ditched
before it made its way into the bank’s
later promotional materials. The sense
of optimism soon faded too.
At the end of December last year, five
of Novo Banco’s bonds were wiped out.
Institutional funds, including Pimco,
were furious after their investments
were transferred to the “bad bank”. The
decision, made by the Portuguese cen-
tral bank, improved Novo Banco’s capi-
tal position but it rattled markets.
“This was an arbitrary confiscation of
assets,” says Philippe Bodereau, a fund
manager at Pimco. “It should make
investors question how European
authorities are going to go about bank
resolutions.”
The Novo Banco episode reflected a
shift in the political mood in Portugal
after years of austerity imposed by a
three-year bailout programme. But it
also reflected a new, much broader reg-
ulatory regime in Europe, intended to
make bondholders — not taxpayers —
liable when banks run into trouble.
“The political risk for banking is very
different to what it was pre-crisis,” says
Sam Theodore, director in financial
institutions at Scope Ratings, and for-
merly a regulator in Europe. “In order to
protect taxpayers, regulators and gov-
ernments are willing to hit investors.”
The Novo Banco drama, which came
just before new rules for bank failure
from Brussels, set the tone for a difficult
‘The risk of institutional
runs on those banks [in
the eurozone] has
increased materially after
Novo Banco’
period for European banks. As global
markets endured a tumultuous start to
the year, scrutiny of the sector intensi-
fied. Italian bank shares hit record lows
over bad loan fears. By early February,
prices for the riskiest bank debt traded
at distressed levels. Even senior debt,
one of the safest ways to invest in banks,
dropped sharply. No bank had failed,
but markets were behaving as if a crisis
was in the offing.
The chaos across markets has sub-
sided and prices have recovered, but its
implications have echoed at the very
highest level. When the European Cen-
tral Bank announced further rate cuts
earlier this month, its president Mario
Draghi said the new measures, in partic-
ular cheap financing for eurozone lend-
ers, came “in an environment where the
pricing of bank debt is volatile and
uncertain”.
Though the market movements were
blamed on a long list of factors, bank
analysts kept returning to the seemingly
isolated case of Novo Banco. Investors
began to examine the way losses had
been imposed and look for clues in a
strange new universe of bank debt.
Crisis response
One of the least discussed aspects of the
financial crisis was the impact, or lack
thereof, on investors who held bank
bonds. When the crisis struck, some of
the safest bank bonds, known as “senior
unsecured”, went mostly unscathed.
Now regulators have changed that
equation, placing bondholders on the
hook in the hope that banks can be
made safer without public money. This
means that bank debt — once far safer
than many other types of corporate
bonds — will become riskier.
“The thing that saved the whole finan-
cial system was the state,” says Lloyd
Harris, an analyst at Old Mutual. “This
is one of the reasons they’ve designed
regulation like they have.”
One emblem for this new regula-
tory philosophy is the coco bond.
Engineered since the crisis and
designed to transfer risk to sophis-
ticated investors, contingent con-
vertible bonds, now more com-
monly known as “additional tier 1”
(AT1) capital, convert to equity or are
written down when a bank’s capital falls
below a certain level. In other words,
when the bank loses money or its assets
collapse in value, the bondholders lose
money as well.
This new kind of debt is part of a
broader category referred to as “bank
capital” — equity and equity-like debt
loosely analogous to a deposit on a
house. Banks issue these capital bonds
★ FINANCIAL TIMES
FT BIG READ. CAPITAL MARKETS
By Thomas Hale
New rules, old problems
to meet regulatory requirements, which
demand more capital to make the sys-
tem safer.
When banks run into trouble, this
capital is in the line of fire. As the spectre
of negative interest rates came to the
fore this year — a result of central bank
policies designed to boost lending —
bank equities and capital bonds fell dra-
matically. In the first half of February,
the index for coco debt fell nearly 8 per
cent. A €1.75bn Deutsche Bank bond
traded at close to 70 cents on the euro.
After the coco sell-off, it became clear
that markets for different kinds of bank
bonds were deeply interconnected.
Analysts at JPMorgan Chase warned
that coco markets had become a “con-
duit for channelling bank equity stress
into the broader credit market”.
More worryingly, markets for bank
funding — part of the fuel for loans —
briefly closed down. At the March press
conference, Mr Draghi said European
banks “face sizeable forthcoming fund-
ing needs”.
Some signs of contagion had emerged
in January with Novo Banco, and Febru-
ary in the coco bond market. After the
Novo Banco losses, Mr Bodereau says
Politics Born in 2014 out of the country’s
biggest banking failure, Novo Banco
Bailout
has become a test case for Portugal’s
blamed for capacity to rebuild lenders out of the
failure to tidy destruction wrought by the global
up sector financial crisis. For many, the collapse
of its forerunner, Banco Espírito Santo,
and the family business empire of the
same name, marked a blow against
“crony capitalism”.
The “anti-austerity” Socialist
government that took office in
November also claims that the case
illustrates how the previous centre-
right administration — and, by
implication, the EU, International
Monetary Fund and European Central
Bank — failed to deal with the
problems facing Portuguese banking
during a gruelling three-year bailout
of the country from 2011 to 2014.
BES imploded only months after
Lisbon celebrated its “clean exit” from
the adjustment programme, having
used only about half of the €12bn that
had been earmarked for banks out of a
investor attitudes towards risky periph-
eral banks had changed. “If a eurozone
bank fails an adverse stress test sce-
nario, the market will be extremely
nervous,” he says. “The risk of institu-
tional runs on those banks has increased
materially post Novo.”
‘Tip of the iceberg’
In Basel on a brisk November day last
year, Mark Carney was sitting in a room
with half a dozen reporters. The gover-
nor of the Bank of England and head of
the Financial Stability Board was
announcing the latest step in the post-
crisis regulatory drive. Senior bonds —
that portion of debt which is not “bank
capital” — were about to get riskier.
“Ending ‘too big to fail’ may never be
absolute because all financial institu-
tions cannot be insulated fully from all
external shocks,” Mr Carney had writ-
ten to the G20 leading economies on the
new international standards. “But these
proposals will help change the system so
that individual banks as well as their
investors and creditors bear the costs of
their own actions.”
These rules for “total loss-absorbing
capacity”, or TLAC, followed the ideol-
€78bn bailout. According to the new
government and its far left allies, the
exit was achieved only by sweeping
problems in the banking sector “under
the carpet”.
After injecting €4.9bn into Novo
Banco through the bank resolution
fund, which is owned by all of
Portugal’s banks, lenders are expected
to sustain losses from its planned sale,
which some analysts see as unlikely to
raise much more than €1.5bn. In
December, the new government set
aside another €2.2bn to rescue a small
Madeira-based bank. “Portugal has to
turn the page on the instability of our
financial system,” said António Costa,
the prime minister, this month.
He also distanced himself from the
Bank of Portugal’s decision to impose
losses of almost €2bn on some Novo
Banco senior bonds. Criticism of Carlos
Costa, the central bank governor (left),
has been condemned by the centre-
right opposition as an attempt to force
him to resign. Peter Wise
7
Bold move Investors criticised the
Portuguese central bank’s shifting of
billions of euros of Novo Banco debt
Bail-in route The episode reflects the
post-crisis issue of how banks can be
made safer without relying on bailouts
European issue Even as funding needs
grow, investors’ attitude towards banks
in the periphery has changed
ments. In Germany, the law was
changed. In the US and the UK, banks
sold bonds out of their holding compa-
nies. Some of the characteristics of post-
crisis “bank capital” bonds had been
applied to a much bigger market. In the
words of one investor, nearly all bank
debt had now become coco-like — some-
thing engineered by regulators to take
losses, albeit after a failure.
“The real game changer was that sen-
ior unsecured became bail-inable,” says
Gerald Podobnik, head of capital solu-
tions at Deutsche Bank. “AT1 or cocos
are not the cause of the problem. The
reality is that the funding and capital
structure of a bank is nearly completely
bail-inable. That is new.”
Everything looked more like a coco,
but what did coco bonds look like? One
of the biggest problems for investors is
the ongoing changes to rules.
In December, such uncertainty hit the
coco market, when the European Bank-
ing Authority, a regulatory body, had
stated an “opinion” on the market
which seemed to imply interest pay-
ments on the bonds might be stopped
sooner than expected.
This regulatory confusion was linked
‘Ever since the crisis we are
dealing with all kinds of
initiatives, which are often
tackling the same issues
from different angles’
to the sell-off. In February, the market
suddenly looked dangerously compli-
cated. Hedge fund managers theorised
over whether bonds would eventually
be bought back. In Switzerland, the
price of a host of bonds that had become
defunct late last year fell sharply and
counter-intuitively.
The confusion extends beyond cocos.
ogy of transferring risk from govern- Protests against “Ever since the crisis we are dealing with
ments to markets. They were intended Banco Espírito all kinds of initiatives, which are often
for the biggest global banks and came Santo outside tackling the same issues from different
alongside a separate European directive Novo Banco’s angles,” says Emil Petrov, head of capital
on loss-absorbing bonds. Lisbon HQ last solutions at Nomura. “The capital struc-
Regulators, seeking to correct what September. The ture has more layers than ever before.
was seen as the perverse immunity newer entity It’s more difficult to explain than ever
bank bondholders enjoyed in the crisis, earned the ire of before.”
required senior bank bonds to become creditors after The AT1 market in Europe stands at
“bail-inable” — meaning they would moving debt close to €100bn. The market for senior
take losses when banks failed. Banks into a ‘bad bank’ unsecured debt of the biggest banks glo-
deemed “systemically important” Francisco Leong/AFP Photo
bally was €4.26tn at the end of 2014,
would also need a certain amount of this according to estimates by the FSB. Mr
debt to make sure there was enough of a Podobnik points out that these new
cushion to absorb losses in a crisis. Bank rules reduce leverage and thereby make
bonds account for more than 30 per the banking sector safer. But he points,
cent of all debt securities, more than also, to this difference in scale.
twice as much as non-financial corpo- “We are in a new world where the risk
rate debt. profile of bank instruments generally
Different parts of the world had differ- has changed,” he says. “As such the
ent approaches to meeting the require- recent AT1 sell-off is sometimes seen as
the tip of the iceberg.”
Coco prices The meaning of failure
Bank of America Merrill Lynch
coco bond index
Even without a Titanic moment, these
108 accumulated changes have an impact.
Banks are braced to pay more to borrow
106 from the markets, potentially adding
104 costs to the loans they make to house-
holds and businesses. The struggle to
102 price risk is linked to uncertainty. Many
100 analysts suggest one of the biggest
sources of uncertainty is the regulations
98 themselves.
96 “Investors open the newspaper every
day and read about new proposals and
94 they don’t know what to make of it,”
Jan 2014 15 Mar says Mr Petrov. “The reality is there’s no
16 getting away from the too big to fail
issue.”
Senior debt A bigger test will come when a bank
Par price for bonds maturing Apr 2019
actually fails. The vital question then
will be whether the shake-up in the
100
Novo Banco structure of bank bonds will work. Novo
Banco was not technically a failure, but
80 the political complications that
emerged were not encouraging.
60 “What does the default of a bank
mean?” says Mr Theodore. “Banks don’t
40 just default like commercial companies.
It’s not a real default situation. It’s a
default-like situation which is triggered
20
by the regulators themselves. That’s
Banco Espírito Santo why it’s so imperative to look at the
0 behaviour of the supervisors.”
Dec Jan Feb Mar Novo Banco’s logo never took off, but
2015 16 it now looks almost prophetic. The
whole affair has more than a hint of the
Source: Bloomberg
butterfly effect about it.
8 ★
THURSDAY 31 MARCH 2016
Tata puts the future of
British steel in doubt
Long-term state aid is an illusory escape route for the industry
With Tata’s decision to put its UK oper-
ations up for sale, Britain’s long history
of steelmaking — and particularly the
Port Talbot plant which has formed the
focus of recent discussions — is in seri-
ous danger. Unfortunately for the
workers involved, the steady decline of
steelmaking will be hard to reverse.
The government can help via levelling
the playing field by reducing energy
costs, and providing temporary sup-
port during the search for a buyer. But
interventions like nationalisation and
other forms of long-term state assist-
ance, or blocking imports, are likely to
be ineffectual and counterproductive.
The global steel industry has for dec-
ades been marked by chronic state-
subsidised overcapacity, especially in
China. With weak global demand for
raw materials, world steel output is
unlikely to correct enough to return
UK plants to comfortable profit soon.
Whatever views steelworkers may
have about the impact of Tata’s busi-
ness decisions, it is hard to cast it as a
heartless asset stripper. Since it
acquired Corus for £6.2bn in 2007, the
Indian company has ploughed £3bn in
to its European operations.
Fundamentally, it is hard consist-
ently to make money from blast-
furnace steel plants in countries with
relatively high labour costs and power
prices inflated by environmental taxes.
The UK government could help steel
by cutting those energy costs. But other
solutions frequently touted to Britain’s
steel problem, including Britain push-
ing for EU antidumping and counter-
vailing (anti-subsidy) duties on Chi-
nese imports, are often counter-
productive. Higher prices for steel
would harm the speciality manufactur-
ing companies in Britain and other EU
countries which use it as an input.
More radically, some advocates of
Brexit argue that if the UK left the EU
and sloughed off the restrictive rules
Abe’s chance to scrap
a self-defeating tax rise
It is crucial not to choke off demand until Japan’s economy is booming
The biggest problem with Abenomics,
as the “three arrows” stimulus
launched in 2012 by Shinzo Abe, prime
minister, is known, is that Japan never
did enough of it. That is true of the first,
monetary arrow. All through last sum-
mer and autumn the Bank of Japan sat
on its hands as the economic data
weakened, until it adopted negative
interest rates in January.
It is even more true of the second
arrow: fiscal policy. Although Mr Abe
began his term with fiscal stimulus in
2013, that quickly became a large fiscal
contraction in 2014, when consump-
tion tax rose from 5 to 8 per cent. With
demand weak, the fiscal squeeze drove
Japan into a recession from which it has
never fully recovered.
Mr Abe faces the same choice again.
Japan’s economy is still struggling, hurt
by China’s slowdown, and yet the tax is
due to rise again to 10 per cent next
spring. The public knows the increase
is coming; it already weighs on senti-
ment and demand.
The appropriate action is clear: Mr
Abe should postpone the tax rise and
he should do so as soon as possible.
Rather than reschedule it for a particu-
lar date, he should pledge not to go
ahead until the economy is strong
enough to absorb the blow.
This week, the Japanese prime min-
ister vowed to do precisely the oppo-
site, saying he will push ahead with
raising the consumption tax unless
there is “a catastrophic situation such
as the Lehman Brothers shock or a
major natural disaster”.
That seems to leave little room for
manoeuvre. But a U-turn would be
popular with the public and Mr Abe’s
advisers will have little difficulty find-
ing a justification if needed.
Mr Abe has ordered his finance min-
ister to bring forward spending from
the current year’s budget, a sensible if
limited move. He has also been meet-
against state aid to industry, it could
back its steel sector with government
money. This is improbable and unwise.
For one, the UK has an unspectacular
record in successfully supporting com-
panies in competitive markets. Sinking
financial and political capital into
keeping steel alive makes it that much
harder to pull out in the future. There is
a limited justification for temporary
state intervention in sectors where
entry is expensive and investment is
largely irreversible, such as the US bail-
out of its automobile industry during
the global financial crisis. But it would
be a very risky proposition to assume
that the problems of the steel sector are
temporary rather than endemic.
Moreover, the idea that leaving the
EU would free the government’s hand
is illusory. It is inconceivable that the
EU would sign any post-Brexit trade
deal with the UK without requiring
Britain to adhere to existing EU state
aid rules. Both Norway, through the
European Economic Area agreement,
and Switzerland through its bilateral
treaties with the EU, are compelled to
accept state aid disciplines as the price
of market access.
Moreover, if the UK ever did subsi-
dise the steel industry enough to bring
down the prices of its output, it could
itself be hit by antidumping and coun-
tervailing duties from the EU.
It is fine for the government tempo-
rarily to support production at British
steel plants while a new buyer is found,
though it is hard to imagine that many
companies will find it easy to succeed
where a global powerhouse like Tata
has failed. But nationalisation in whole
or part, or other long-term government
support, would be unwise. Tata’s deci-
sion may prove devastating for affected
communities but the government
would do better to put money into
reskilling and job search rather than a
most likely counterproductive rescue.
ing a series of economists, such as
Nobel laureates Joseph Stiglitz and
Paul Krugman, who seem cherry-
picked to argue for a delay in raising
consumption tax. Those meetings will
continue on Mr Abe’s upcoming visit to
Washington.
Japan’s finance ministry, supported
by much of the business community,
wants to raise the tax because of wor-
ries about high public debt and deficits.
This concern is understandable and
makes sense in the long run.
Indeed, there is little doubt that
Japan will eventually have to raise con-
sumption tax well above 10 per cent to
fund healthcare and pensions for its
ageing population.
But raising taxes now, when the
economy is still weak, is self-defeating.
It reduces demand and keeps inflation
trapped at zero. That in turn creates
pressure for more government spend-
ing to stimulate the economy, reversing
any decline in the deficit. Japan has
repeated this counterproductive cycle
again and again in recent decades.
If Abenomics is to break Japan out of
its long-running trap of stagnant
prices, it is crucial not to choke off
demand until the economy is booming,
and inflation is on the rise. Instead of
seeing any economic pick-up as a
chance to tackle the budget deficit,
Japan should use consumption tax
increases as a brake to slow the econ-
omy down, but only once it is already
running at full speed.
Mr Abe has a broader opportunity,
too. He chairs the G7 this year and has
signalled a wish for co-ordinated action
to drive global growth.
If he could parlay a delay in raising
Japan’s consumption tax into action by
other advanced countries, then he
would not just have improved the out-
look for his own stimulus programme
but would have done the global econ-
omy a favour as well.
FINANCIAL TIMES
EDF ready for the next phase of Hinkley Point
Sir, Your front page report “EDF
dissidents urge delay to Hinkley Point
nuclear project” (March 30) refers to
an alleged document which you say is
unsigned, so your readers cannot judge
whether or not it has any credibility.
However, I am happy to state the facts
clearly and on the record.
EDF has already delivered, over
many years, a remarkable set of
achievements which are the
foundations for the project.
In 2012, the UK nuclear regulator
approved the design of the European
Pressurised Reactor; in the same year,
HPC was granted a nuclear site licence;
in 2013, we were given planning
consent and the contract for difference
was agreed with the UK government.
Christians and others are
faring badly in Asia, Africa
and the Middle East
Sir, Pakistan has a massive challenge in
accommodating and protecting its
religious minorities, but unfortunately
it is not alone (“The plight of Pakistan’s
religious minorities”, March 30).
Across many parts of Asia, Africa and
the Middle East, minority groups,
particularly Christian communities,
are faring very badly. They are facing
discrimination, persecution and even,
as we’ve seen, murder, simply for being
different. As an indication of this
worrying trend, Christians in the
Middle East have declined from 20 per
cent of the population 100 years ago to
5 per cent today.
The way a country treats its minority
groups is a bellwether for how civilised
the country is. The writing of two
towering figures of the 19th century
remind us of this. The philosopher John
Stuart Mill warned about the “tyranny
of the majority”, while the politician
and historian Lord Acton once wisely
remarked that “the most certain test
by which we judge whether a country is
really free is the amount of security
enjoyed by minorities”.
Zaki Cooper
Trustee,
Council of Christians and Jews,
London W1, UK
Persecution of Pakistan’s
minorities began in 1947
Sir, The recent killing of Christians in
Pakistan is nothing new (“Bomb blast
causes carnage in Pakistan family
park”, March 28). It is part of an
ongoing process that started
immediately after Pakistan was created
in 1947.
First the Anglo-Indians were driven
out; Hindus, Sikhs and Christians
followed soon after. Pakistan’s non-
Muslim population in the 1950s was 23
per cent. Today that number stands at
a mere 5 per cent. Having successfully
got rid of non-Muslims, Pakistan’s next
target was its Muslim sects. Their
persecutions began in the 1970s.
Ahmedians were declared non-
Muslims in 1974. The blasphemy laws,
which were largely directed against
Pakistan’s religious minorities,
followed a few years later.
In your editorial “The plight of
Pakistan’s religious minorities” (March
30) you say that “western governments
should speak up for the country’s
Christians”. Actually, western
The Pope’s
popular magic
does not work on
everyone
Rome
Notebook
by James Politi
Letters
This contract was scrutinised and
approved by the European Union in
2014; we signed a strategic investment
partnership with our Chinese partners
in 2015.
EDF has recently been through a
thorough risk review which is a normal
process for any industrial project of
this magnitude. EDF is therefore ready
to go ahead with the next phase of this
huge undertaking as soon as the final
investment decision triggers it. As I
said categorically at the energy and
climate change select committee
hearing last week, this project will go
ahead and the investment decision will
be made very soon.
EDF is fully confident that it will
deliver this project on time and on
‘We were invaded then we were
thrown on the barbie’
governments can do better than that.
Today, Pakistan receives a huge
amount of British and western aid.
Perhaps it is time international aid to
Pakistan was suspended or at least
made dependent on how it treats its
minorities.
Randhir Singh Bains
Gants Hill, Essex, UK
Shareholders have a role
in responsible tax practice
Sir, Your report “Global tax crackdown
will damage earnings, business warns
investors” (March 28), on the impact
of the crackdown on aggressive tax
planning schemes by large
corporations in the US and globally,
exposes the need for shareholders to do
a far better job of engaging with
companies on responsible tax
practices.
The “base erosion and profit
shifting” (BEPS) package of tax
measures, endorsed in October 2015 by
the governments of the G20 and the
OECD, will be implemented in the
coming years. It will happen. Global
corporations will have to rein in their
aggressive tax planning practices and
adapt their group structures
accordingly. Yet, despite such
significant policy developments, we
agree with Fiona Reynolds of the UN-
supported Principles for Responsible
Investment that “investors are not
asking the right questions” and are still
“in early stages of understanding the
issues”.
Tax avoidance comes at a cost to all
corporate stakeholders, not just
governments and tax collectors. It
hurts workers and long-term investors,
In the kind of gesture that has
cemented Pope Francis’s status as a
transformational leader of the
Catholic Church, the 79-year old
Argentine pontiff last week celebrated
Maundy Thursday in Castelnuovo di
Porto, 20 miles north of Rome, which
hosts nearly 900 asylum seekers at
one of Italy’s biggest migrant
reception centres.
On the day when Catholic priests
re-enact Jesus’s washing of his 12
Apostles’ feet, ahead of the Last
Supper. Pope Francis gave the ritual a
twist by also washing the feet of non-
Christians and women, and used the
ceremony to repeat his message that
hundreds of thousands of refugees
streaming into Europe must be
welcomed, not shunned.
Four Nigerian Catholics, three
Eritrean Coptic Christians, three
Muslims from Mali, Syria and
Pakistan, a Hindu man from India,
and one Italian worker at the facility,
all had their feet delicately washed,
dried and kissed by the Pope. Some
cried, overcome with emotion.
“We have different cultures and
religions, but we are brothers and we
want to live in peace,” the Pope said.
The visit to Castelnuovo may have
been bittersweet for Francis. Around
him there are reminders that for all
his moral suasion — a recent Gallup
poll showed him to be more popular
than any of the world’s political
leaders — his powers are limited, and
his calls for tolerance and dialogue are
mostly going unheeded.
Francis has by no means been a
budget, thanks to the intense
preparation of our committed and
accountable engineering teams, the
involvement of our supply chain, the
experience gained from other projects
and the unwavering engagement of
many stakeholders, locally and
nationally.
Hinkley Point C will be operational
in 2025. EDF has no plan whatsoever to
change this date. HPC will provide low-
carbon, reliable and competitive
electricity at the very time the country
needs it and will play a decisive role in
Britain’s low-carbon energy mix for
generations to come.
Vincent de Rivaz
Chief Executive,
EDF Energy
including pension funds whose size and
long-term liabilities mean that they
have no interest in the short term
profits generated by tax planning.
Trade unions were among the first to
raise the issue. In November 2014, we
called on pension funds to integrate
responsible tax practices in their
shareholder engagement policy. And
today we are continuing to engage with
pension fund trustees so that pension
funds and other long-term asset
owners can “ask the right questions” —
not only of asset managers but
ultimately of large businesses when it
comes to their tax practices.
Sharan Burrow
General Secretary, International Trade
Union Confederation (ITUC)
John Evans
General Secretary, Trade Union Advisory
Committee to the OECD (TUAC)
More than one way
to punish a regime
Sir, Nicholas Burns, the former US
undersecretary of state, criticises
Barack Obama for not “striking Syrian
military targets in 2013 after having
drawn a ‘red line’ against Bashar al-
Assad’s use of chemical weapons”, and
says that this failure to use military
force led inevitably to America’s
credibility being “undeniably
diminished in the Middle East”
(Comment, March 23).
But suppose for a moment that there
are more ways than one to punish a
regime for crossing a red line. One
could argue that President Assad losing
his chemical weapons was a worse
punishment than a pinprick, slap-on-
the-wrist bombing raid that would in
no way have changed the military
equation. The agreement with Russia
to remove and destroy Mr Assad’s
chemical weapons arsenal was a
triumph of diplomacy — and Mr Burns
says that President Obama is right
about one thing: that “this is a time to
return to diplomacy”.
No doubt leaders of great powers
should be very careful about drawing
red lines, and Mr Obama’s doing so was
a mistake. And, unfortunately, the
world has taken his threat to have
meant military action, although he
never explicitly spelt out what his
response would be. But the question
has to be asked: Which was the better
result for Mr Obama and the rest of the
world, bombing Mr Assad’s forces or
ridding the world of his chemical
weapons of mass destruction?
HDS Greenway
Needham, MA, US
diplomatic failure. Earlier this month,
Barack Obama landed in Cuba for the
first US presidential visit since 1928,
after a deal with Raúl Castro that was
brokered by the Vatican. The pontiff
also helped encourage the Iranian
nuclear agreement and the global
climate change pact.
But European countries seem as
intent as ever on keeping refugees out,
while Donald Trump, who wants to
build a fence on the Mexican border, is
still leading the Republican
presidential nomination race.
This week’s deadly terrorist attacks,
from Brussels to Lahore, offered
evidence that hatred, often in the
name of religion, remains rampant.
The Pope is also struggling to
produce results in his internal
reforms, partly because of staunch
resistance from conservative clerics,
and partly, critics say, because of his
own weaknesses. “If — God forbid —
[he] were to suddenly die, there is
hardly anything he’s done so far that a
successor with a restorationist agenda
could not undo, even without too
much effort or controversy,” Robert
Mickens, editor-in-chief of Global
Pulse, a Catholic website, wrote in a
column this month.
The Pope is expected to refresh
pastoral guidelines to allow, in certain
cases, the divorced and remarried to
receive communion, which has been
banned until now. But after a fraught
debate among Catholic bishops he is
highly unlikely to change official
church doctrine on the matter.
The pontiff has also pressed ahead
Thursday 31 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
Strategic thinking deeply
rooted in Chinese culture
Sir, After reading your Big Read article
“China’s quest for cash flow” (March
19) as well the letters from Kevin Doyle
and Professor Charles Skuba (March
26), I feel that, being Chinese, I should
offer a little deep dive into some of the
misunderstandings held by our
western readers.
Misunderstanding 1: that China’s
quest for cash flow is just beginning.
Believe it or not, China has always been
seeking opportunities beyond its
borders. As pointed out in the article,
“distinct strategic thinking underlies
the moves”. The Chinese are even
better at thinking strategically than
they are in their domestic planning.
The tradition is deeply rooted in more
than 2,000 years of culture and history,
The Art of War for example being a
strategic piece of work. Even when
times are good, Chinese companies
would still actively search for any
opportunities across the globe. You do
not think for the next year or two,
instead you look out for 10 years or
even longer. The Chinese understand
that it takes a long time to achieve solid
results; this draws a similar
comparison between Chinese herbal
medicine and western medicine, the
latter being effective in delivering
quick results, while the former is
known for chronic treatment.
Misunderstanding 2: that
Chinese companies buy foreign
companies because their domestic
performance is poor. Not necessarily.
First of all, due to poor corporate
governance, just like other emerging
economies, judging the financial
performance of Chinese companies can
be questionable and challenging;
second, the decision to buy foreign
companies is often based on non-
financial reasons, such as strategic
importance, penetration into the
market, or simply pursuing countries
with better governance; third,
domestic technical progress hasn’t
been fast enough for them to upgrade
to compete globally, so investing
abroad allows for direct access to the
latest technology.
Misunderstanding 3: that Chinese
companies are “going out” because of a
weaker renminbi. According to
Bloomberg, among the top foreign
debt-issuing industries in China are
banking ($180bn), real estate ($93bn)
and steel ($63bn). There may be some
concerns regarding the debt repayment
due to a weaker RMB against the USD.
However, this fails to recognise the
offsetting impact from the
unprecedentedly low interest rate in
China and the US, notwithstanding the
imminent rate hike by the Fed. This is
more the case in real estate acquisition,
where future stable cash flow can be
anticipated with greater certainty; in
addition, real estate usually provides a
good hedge against inflation.
In general, Chinese companies are
strategic thinkers going out, but when
dealing with their internal
management or domestic business,
they are less strategic but more
tactical, likely limited by their
immediate environment.
Jun Liu
Toronto, ON, Canada
COMMENT ON FT.COM
Larry Summers
Corporate profits are near record highs — so
why is that a problem?
www.ft.com/larry-summers
with reform of the church’s finances —
mostly notably the clean-up of the
Vatican bank, known as the Institute
for Religious Works, which had been
associated with money laundering and
organised crime. He has even moved
to bring more transparency to the
funding of sainthood bids, which can
cost up to €500,000 each. But in other
areas of the church’s economy, such as
the Vatican’s vast real estate holdings,
there is still plenty of murk.
Meanwhile, Pope Francis is
emerging from the bruising episode of
seeing his top aide on the Vatican’s
finances, Australian Cardinal George
Pell, face questions from a royal
commission on his role in the cover-
up of child sexual abuse by Catholic
priests as far back as the 1970s.
Cardinal Pell has denied allegations
that he was complicit or aware of any
cover-up, and told reporters he has
the “full backing” of the Pope. To
critics, this has shown Francis to be
tone-deaf on an issue that has
tarnished the image of the Church,
and is extremely important to
Catholics.
Last year at this time, the Pope had
warned that his time in office would
be “brief”, perhaps lasting “four or
five years”, and suggesting he may
take his cue from Benedict XVI and
step down before his death. It may
well be dawning on Francis that he
might have to stick around a lot longer
if he wants his legacy of change to be
as sweeping as he hopes.
james.politi@ft.com
Thursday 31 March 2016
OPINION
Peter
Sutherland
T
hose advocating Britain’s
exit from the EU, the
world’s largest exporter
and importer, would have
you believe a number of
magical things.
First, some claim a post-Brexit UK
would miraculously maintain all the
rights and opportunities the European
Commission has negotiated for it over
the years in EU trade agreements. That
is simply untrue.
The EU is at the heart of the global
trade system — and the UK, as its pri-
mary advocate of free trade, has played
a leading role in establishing that posi-
tion. But EU trade agreements apply in
the territory of its member states. If the
UK leaves, it ceases to enjoy the benefits
Nigeria’s battle
against graft has
a long way to go
AFRICA
David
Pilling
I
n Nigeria, there is a hashtag doing
the rounds: #BringBack-
Corruption. A tongue-in-cheek
repudiation of the anti-corruption
drive being spearheaded by Presi-
dent Muhammadu Buhari, the cam-
paign nevertheless reflects real anger at
rising hardship.
Never mind that the main culprit of
Nigeria’s woes is the price of oil: at $40 a
barrel, a big comedown for a mono-
commodity state whose cronies, schem-
ers and skimmers have grown accus-
tomed to the $100-a-barrel lifestyle.
Not a few Nigerians, even those too poor
and too removed from power to leech
off the petro-economy, are blaming Mr
Buhari’s war on graft for their misfor-
tune.
“With corruption a bag of pure water
was N80. Without corruption a bag of
pure water is N150 #BringBack-
Corruption”, goes a typical refrain.
Another highlights one company’s
efforts to wring more profit from a
shrivelling market. “Titus Sardine
started with 4 fishes, it reduced to 3.
Now it’s 2. In years to come, you’ll open
Sardine and see ‘Try Again, No fish this
time’ #BringBackCorruption.”
Mr Buhari has indeed made the pur-
OPINION
Sebastian
Mallaby
A
thrifty Asian powerhouse
saves and invests its way to
economic stardom, inspir-
ing admiration and para-
noia in the rich world. The
powerhouse begins to lose momentum,
driving its corporations to switch their
investment appetites towards assets
abroad. But, lacking worldly experi-
ence, the corporations bungle. Billions
in hard-earned national savings disap-
pear down a black hole.
Such was the experience of Japan
from the late 1980s, when it snapped up
trophy assets from New York’s Rock-
efeller Center to the Hotel Bel-Air in Los
Angeles, for which a Japanese acquirer
paid the equivalent of $2.3m in 2016
dollars — per room. Now, a quarter of a
century later, China may be following
the same script, to judge from today’s
merger wars at least.
Exhibit A, until recently, was the com-
A year of magical thinking for the Brexiteers
of those agreements, including the 22
the EU has concluded with the UK’s
Commonwealth partners. It would no
longer be covered by the negotiations
with the US, Japan and other leaders in
world trade now heading towards con-
clusion. Trade negotiations with every
country and regional organisation in the
world would need to start from scratch.
No matter, say the Leavers: the UK
could quickly negotiate its own set of
trade agreements to compensate. This,
judging from my long experience of
trade negotiations, is highly unlikely.
The trends are towards bloc-to-bloc
negotiations. The US has confirmed that
it would prefer to negotiate with the EU
(with the UK in the EU, by the way).
The last in this catalogue of claims is
that, if all else failed, the UK could rap-
idly negotiate its own trade agreement
with the EU and somehow thereby repli-
cate all the benefits of the single market.
This would include “passporting” in
financial services — the system, crucial
to the health of the City of London, by
which a company based in one member
suit of corruption, along with the fight
against Boko Haram terrorists, his big-
gest priority, though the link with rising
prices or diminishing fish portions is not
entirely obvious. Despite there being lit-
tle if any direct correlation, many say
that a whole system once lubricated by
under-the-table money has simply
seized up.
Mr Buhari, a retired general, ran the
country in the early 1980s after seizing
power the old-fashioned way — in a mili-
tary coup. He also railed against the
endemic corruption that made Nigeria
notorious, even in Africa. Whatever
traction he gained during two years of
military rule was quickly lost. Levels of
state theft reached vertiginous heights
under subsequent leaders.
Now, after his surprise win in last
year’s election, Mr Buhari is having
another go. Under his direction, state
prosecutors have gone after several
high-ranking members of the previous
administration of Goodluck Jonathan,
though the former president, who had
the grace to quit office when electors
booted him out, is assumed to be safe
from prosecution.
Results have been mixed. The trial of
Sambo Dasuki, a former national secu-
rity adviser, has run into trouble over
alleged procedural irregularities,
blamed by some on Mr Buhari’s military
instincts and his impatience with the
niceties of the law. Mr Dasuki is accused
of helping to “divert” about $2.1bn
meant to have been deployed in fighting
Boko Haram.
Recent attacks on power stations
and oil and gas pipelines have been
Hidden costs of Anbang’s western spending spree
modity sector. State-owned companies
bought up mines and oil reserves at the
peak of the market, and have now lost
their shirts. The theory of the purchases
was that China, a commodity importer,
should protect itself from rising global
prices. But these same prices reflected
the country’s unsustainable expansion.
Far from hedging prudently, it was tak-
ing a leveraged bet on its own growth.
Now comes exhibit B: Anbang Insur-
ance Group. Founded 12 years ago as a
provincial car and property under-
writer, Anbang has recently barged into
wealth management, selling precari-
ously high-yielding life insurance con-
tracts and more than doubling its assets
in a little over a year.
Laden with its clients’ savings, it has
embarked on a wild shopping spree,
spending nearly $2bn on New York’s
Waldorf Astoria, promising $6.5bn for
hotels owned by private equity group
Blackstone and offering $14bn in
a high-profile contest to acquire Star-
wood Hotels & Resorts Worldwide,
owner of the W, Westin and Sheraton
brands.
Nor are Anbang’s ambitions merely
American. The company is said to
★ FINANCIAL TIMES
Comment
state can trade throughout the single
market. Never mind that even the
recently agreed EU-Canada trade deal,
the most comprehensive the union has
ever agreed, does not give the Canadians
passporting rights. And all of this, the
Leavers claim, without having to con-
tribute anything to the EU budget or
accept free movement of people.
Leavers know that trade
policy, heavily influenced
by London, is one of the
jewels in the EU’s crown
The reality is that losing access to the
EU single market would be a big
setback for the UK. Negotiating equiva-
lent access appears in effect impossible.
And, even if Leavers believe in miracles,
they come at a price. This would have
to be negotiated, word by word, with
27 member states that would be
unhappy with the UK’s departure and
blamed on saboteurs angered by Mr
Buhari’s crackdown on nefarious activi-
ties. As lights flicker off and private gen-
erators cough into action, some Nigeri-
ans have taken to muttering: “When
you fight corruption, corruption fights
back.”
Champagne importers and car deal-
ers, too, are complaining that officials
are not spending like they used to.
“There’s not enough money flowing
around because everything was being
financed by corruption,” says Moham-
med Garuba, head of asset management
at CardinalStone, a Lagos-based finan-
cial institution.
Mr Buhari’s drive is laudable. It
is, however, unlikely to work. He is right
to end the culture of impunity by going
after big offenders. But unless he
Buhari’s drive is laudable
but he has to tackle the
underlying causes of
corruption
have its sights on trophy assets in 30
countries.
Anbang rationalises its empire build-
ing by invoking Warren Buffett, the
American investor who parlayed an
insurance business into a conglomerate
with a market capitalisation of $351bn.
But the comparison is as outlandish as
Anbang’s expansion rate. Mr Buffett’s
success is rooted in the discipline of
Like Japan before it, China
looks set to pour billions
in hard-earned national
savings down a black hole
“value” investing, seeking companies
that are cheap relative to book value or
cash flow. He focuses on his home turf
and stalks his prospects patiently. He
does not brag that “we must win the first
battle and every battle thereafter”, as
Wu Xiaohui, Anbang’s Napoleonic
founder, has proclaimed.
Anbang is only the most extreme
example of a recent shift. This year Chi-
nese companies have bid more than
keen to discourage further exits. In the
meantime, there would be much more
uncertainty.
Some on the Leave side — though it
rather depends on whom you ask —
have finally begun to admit that the
intention would indeed be to leave the
single market and to try to negotiate
trade deals with the rest of the world.
This is at least intellectually honest,
however unwise a strategy it might be.
There is one thing on which I can
agree with the Leave campaign. If all
else failed the UK would remain a World
Trade Organisation member, and could
indeed then be gloriously independent,
free from the constraints of having to act
in co-operation with other EU mem-
bers. But other WTO members would be
similarly free — to raise tariffs and other
trade barriers to the UK to the maxi-
mum levels allowed.
Those who deny the likelihood of this
have not seen the reality of how busi-
ness is done in the WTO, a place I know
well. It has become an increasingly
chilly place for those outside big
can tackle the underlying causes of cor-
ruption, the victims of his campaign will
be seen as arbitrary and his victories
fleeting.
So what are the causes? Central are
the opportunities presented to a para-
sitic coterie of middlemen, gatekeepers,
rationers, arbitrageurs, licensers and
fixers. They trade in scarcity, much of it
of their own devising. They can get you
anything, from business permits to oil
blocks — if the price is right. In such a
rentier system, the disincentives to
actually make anything are huge. Mr
Buhari has complained with only mild
exaggeration that Nigeria cannot even
produce toothpicks.
To tackle the root cause of corruption,
Nigeria needs to purge rent-seeking
opportunities. Nowhere are these more
evident than in the oil industry. Nigeria
is the largest petroleum producer in
Africa. Its output of 2m barrels a day is
controlled by the Nigerian National
Petroleum Corporation, a many-tenta-
cled entity which — and you can almost
see the flashing red warning sign — both
regulates and participates in the oil
$100bn for foreign assets, a sum
approaching the $106bn recorded in the
whole of 2015.
Inevitably, copious bidding is foolish
bidding: the median Chinese bid last
year valued the target company at 33
times earnings, implying a yield of 3 per
cent. Given that investors could secure a
higher yield with less risk by buying
investment-grade corporate bonds, the
Chinese were offering what fee-happy
dealmakers call strategic acquisition
premiums or, mockingly, “saps”.
Of course, some Chinese deals have
proved successful. Lenovo’s 2005 acqui-
sition of IBM’s PC business, derided at
the time as a snake swallowing an ele-
phant, turned out better than predicted.
And there is a logic in Chinese compa-
nies marching up the value chain by
buying western technologies and learn-
ing how to manage western brands.
But much of the Chinese cash now
chasing global assets is driven by politi-
cal imperatives. In late 2014, in what
looks like an unfortunate decision given
the direction of today’s markets, China’s
leadership decided to cool the apprecia-
tion of the exchange rate, to benefit
domestic exporters, by encouraging its
regional trading blocs. Indeed, to gain
influence in negotiations for any trade
agreement, the UK might have to
respond by raising its own tariffs and
trade barriers. All of this, of course,
would be anathema to the trade liberali-
sation ethos that prevails in London,
and which the UK has successfully
exported across the English Channel.
The Leavers know that trade policy,
heavily influenced by London, has
become one of the jewels in the EU’s
crown. They are simply trying to turn a
significant negative for the Brexit cam-
paign into a positive.
Indeed, one of the saddest ironies
about a possible British exit is that Lon-
don has had such success in creating a
free trading EU in its own image. So for-
give those of us who count themselves as
friends of Britain for our inability to
stand aside and watch such a barrage of
misinformation from the Leave cam-
paign masquerading as fact.
The writer was the first director-general of
the World Trade Organisation
business. The NNPC dabbles in explora-
tion, distribution and refining, though
the latter mostly consists of exporting
raw crude and importing refined prod-
ucts at scandalous prices.
The NNPC is a case study in how to
sacrifice national interest to personal
gain. The auditor-general recently
found that it had failed to remit $16bn to
the Treasury in 2014 alone. Amazingly,
in oil-abundant Nigeria, most people
have no electricity. One does not have to
be a market fundamentalist to conclude
that the NNPC needs shrinking to as
small a size as possible, where zero is the
optimal number.
Few doubt Mr Buhari’s sincerity in
taking on corruption. Yet punishing
individual wrongdoers will not be
enough. Unless he can devise coherent
strategies to squeeze graft from the sys-
tem, it will return with a vengeance once
he has gone. Then the advocates of
#BringBackCorruption will have got
their way. It will, though, be a cause for
anything but celebration.
david.pilling@ft.com
corporations to take money out of the
country. Since these companies were
still prohibited by capital controls from
buying dollar bonds, they instructed a
global army of intermediaries to snap
up income-yielding property.
The risks in this strategy are evident.
China’s executives are accustomed to
economic growth of 9 or 10 per cent;
they are inexperienced in countries
where 2-3 per cent is good. The coun-
try’s high-flying businesses are mostly
built on political connections — invalua-
ble in China but of precious little rele-
vance when buying US hotels. And, if
they are venturing abroad for political
reasons, Chinese buyers may not even
care that they lack commercial ones.
Within a few years of the Rockefeller
and Bel Air purchases, the Japanese
acquirers offloaded them for less than
60 cents on the dollar. In all, Japan is
thought to have lost $400bn on US
property during this period. Perhaps,
knowing this history, the Chinese will
prove more prudent. Then again, per-
haps not.
The writer is the Paul A Volcker senior fel-
low at the Council on Foreign Relations
9
The British
government
must not sacrifice
Tata to dogma
OPINION
Vince
Cable
T
he decision by Tata’s board
to sell off its British steel
business is a nightmare for
the UK government. The
Conservatives are ideologi-
cally hostile to industrial intervention,
as the business secretary Sajid Javid has
made clear. The priority that George
Osborne, the chancellor, accords to defi-
cit reduction places severe constraints
on spending. Yet the likelihood is that
without substantial intervention and
spending, basic steelmaking will disap-
pear from the UK.
The steel crisis has two interacting
causes. There is a long-term problem of
competitiveness. British steelmaking
operates in old industrial sites, and
although Tata invested in a major new
blast furnace at Port Talbot, its UK oper-
ations are not as productive as, for
example, its Dutch plant, let alone the
competitor operations in the Far East.
British unions have been co-operative
and the UK plants produce high quality
steel, but that has not been enough to
cancel out the effects of neglected
investment by state and private owners.
To add to the competitiveness prob-
lem, governments have allowed rela-
tively high energy costs to accumulate.
In the coalition government, I worked
with Conservative ministers to obtain
state aid approval for compensation
payments to energy-intensive indus-
tries. The process was time-consuming,
but we secured agreement and pay-
ments are now being made.
The steel industry also suffered from
Britain’s relatively open economy and
It is possible that a
temporary period of
public ownership may
be necessary
an industrial culture that disdains long-
term relationships. The industrial strat-
egy adopted by the coalition was begin-
ning to have an impact, but I now sense a
lack of commitment.
These long-term structural factors
were significant, but were being
addressed. The new factor has been the
global glut of steel caused by the slow-
down in the Chinese economy and
China’s switch away from investment to
consumption. The collapse in steel
prices has made profitable plants mar-
ginal and marginal plants unviable. The
first casualty last year was the SSI plant
in Redcar. Over the past 12 months, the
losses have piled up at Tata Steel, too.
This global problem is often described
as “dumping” by China. The Chinese
steel industry is certainly selling many
products at marginal cost and the
opaque accounting of its semi-national-
ised companies means that losses can be
hidden and carried in a way that is not
the case for western (or, in this case,
Indian) groups. The US has taken
aggressive anti-dumping action with
very high tariffs and the EU has adopted
more modest levies. One mystery is why
the British government opposed US-
style action in the case of Tata.
The decision to sell by Tata Steel is a
desperate throw. A year ago it had
adopted a strategy of consolidating its
basic steel production in Port Talbot and
selling the less profitable long products
business. There was not much interest
then, other than from asset-strippers
and subsidy-hunters. The position now
is worse.
What can be done? Tata has other
assets in the UK, notably Jaguar Land
Rover, and will not want to spoil its rep-
utation as a responsible long-term
investor. So it will almost certainly man-
age its sale carefully, and the govern-
ment has a crucial role in easing this
process. It is possible that a temporary
period of public ownership may be nec-
essary as part of the transition, and ide-
ological dogma must not get in the way.
Whether or not a buyer can be found,
the crisis is going to prove expensive for
the Treasury. Closure, if it happened,
would not only be painful, but would
come with a hefty price tag for retrain-
ing and community support. The Treas-
ury should perhaps reflect that its foot-
dragging over compensation payments
and refusal to contemplate business
rate reform for industry may eventually
cost the taxpayer far more — another
penny-wise, pound-foolish feature of
the chancellor’s deficit-reduction plan.
The writer was secretary of state for busi-
ness, innovation and skills 2010-2015
10
Native English
speakers must
learn how they
come across
Michael Skapinker
Businessandsociety
Chief financial officers of
three tech groups reveal
the unusual duties and
challenges of their jobs to
Leslie Hook
S
ilicon Valley often feels like it
is all about the founders.
What they read, what they
eat, who they know. But a
stream of defections from
Wall Street to the Valley has brought
attention to an equally important but
often overlooked role: the chief finan-
cial officer. Headlining the trend is
former Morgan Stanley CFO Ruth Porat,
who joined Alphabet in 2015, and
former Blackstone CFO Laurence Tosi,
who joined Airbnb in the same year.
But those who play an even more cru-
cial role at the start-ups that dot the Val-
ley are the first CFOs. These executives
get to define their job, often taking on
unusual duties as their companies grow.
They may raise money from investors
and sometimes they will take their com-
panies public — their ultimate test.
Here, three CFOs, each of whom was
the first at their company, give a rare
glimpse of what their work entails.
Sarah Friar — Square
As CFO at Square, the merchant pay-
ments company, Sarah Friar reaches for
a sporting analogy to describe what she
does. Being CFO is like rowing the seven
seat in an eight, she says, which sits sec-
ond from the front and helps to set the
pace. “The seven seat’s job is to take
what this crazy person here is doing,
and make everyone else in the boat feel
like they can do it,” she explains. The
seven was the seat in which she rowed
while studying at Oxford university. “I
actually feel like it’s a great training for
my seat at Square.”
In this case, the person setting the
pace is Jack Dorsey, the Square founder,
now chief executive of both Square and
Twitter. While it is an unusual arrange-
ment, Ms Friar says it has been working
well. “What it’s done is allowed me to
step up in ways that, maybe in a tradi-
tional CFO role, I wouldn’t have been
able,” she says. She has taken on some
non-traditional duties since joining
Square as CFO in 2012, even running
infrastructure (such as servers and
databases) at one point. She jokes that
“ran” might be too strong a word: “They
ran me, would be a better way to put it.”
Ms Friar, from Northern Ireland origi-
nally, took Square public last autumn, at
a time when doubts were swirling over
the valuations of private tech compa-
nies. Square priced its shares below the
level at which they had been valued by
private investors. But in hindsight that
looks smart: Square was one of the last
start-ups to achieve an initial public
offering before market volatility put a
halt to other new tech listings.
After more than a decade as a banker
and analyst at Goldman Sachs, Ms Friar
says it was odd to be on the other side of
the table during the IPO roadshow. “It’s
like karma in the universe laughing at
me,” she says with a smile. “No doubt
I’ve seen this IPO process from a lot of
different angles . . . I would probably
tell my former analyst self to have a little
less hubris and a little more patience.”
One of the biggest changes from being
The last time I wrote about the
widespread use of English, a reader
commented that those who didn’t
speak it as a first language often
struggled at work.
“Non-native speakers are at their
biggest disadvantage when emotions
come into play,” the reader wrote. “In a
heated debate, those able to use
cynicism, sarcasm or other weapons
requiring linguistic mastery have an
unfair advantage — and I have seen
such unfair advantage being used
many times. It can determine the
course of corporate careers. Like
mine.”
The comment reminded me of two
leaders who had made similar points
about native English speakers’
advantages.
The first was Steve Biko, the
apartheid-era South African student
leader, who split from white leftwing
students because he believed blacks
needed to develop self-reliance.
Biko, who died in police custody in
1977, spoke excellent English, but it
was not his mother tongue. He was
acutely aware of being at a
disadvantage in English-speaking
company. He spoke before his death of
the frustration of talking to articulate,
intelligent, native English speakers.
“You may be intelligent, but not as
articulate,” he said.
In these conversations, a non-native
speaker could start to feel intellectually
inadequate. “You tend to feel that that
[English-speaking] guy is better
equipped than you mentally,” he said.
A very different leader, Percy
Barnevik, the founding chief executive
WILL
GAYBRICK
Fluid role of a Silicon Valley
start-up’s head of finance
a banker is the importance of hiring and
people management. Square had just
250 employees when she joined; now it
has 1,500. “You just don’t hire at that
sort of pace when you are at a bank,” she
says. “You have to spend an inordinate
amount of time on the people side,” she
adds, preferring to do this in the morn-
ings when she is freshest.
Square is unusual in the tech world
because many of its senior management
are women: roughly two-thirds of its
employees report to a female boss. “I’ve
never worked in an environment that
was so balanced,” Ms Friar says. In her
earlier career, she recalls being the only
female software analyst around. Now
she sometimes worries that the men get
a bit drowned out in meetings.
Still, she is a vocal advocate for more
gender diversity in tech. Even with the
gradual advance of a handful of promi-
nent women, “you can’t brush it under
the carpet and pretend there is no issue,
there clearly is”.
Will Gaybrick — Stripe
As a former programmer, financial ana-
lyst, lawyer and entrepreneur, Will Gay-
brick has an unusual résumé for a CFO
of Stripe, the payments company. His
programming skills have become rusty:
“I’m not sure I could still get a job at
Stripe as an engineer,” he confesses. But
understanding the way engineers look
at the world is key to his job. “Our core
constituency, developers, have a very
unique perspective on how the world
should work, which is around efficiency,
logic, speed, clarity. These are not words
that you would always ascribe to incum-
bent global financial infrastructure.”
Like Stripe’s founders, Irish brothers
John and Patrick Collison, Mr Gaybrick
has a gently cerebral air. He met Stripe
as an investor in the company — his ven-
ture capital firm led a round of fundrais-
★ FINANCIAL TIMES
BUSINESS LIFE
of ABB, the Swedish-Swiss company
that adopted English as its corporate
language, also spoke of the danger of
“mistaking facility with English for
intelligence or knowledge”.
But does it follow, as the Financial
Times reader asserted, that English
speakers use their linguistic mastery to
dominate discussions deliberately,
inserting sarcasm where necessary?
I asked two non-native English-
speaking FT readers who have emailed
me in the past what they thought.
“Actually, I would tend to say the
opposite,” Quentin Toulemonde, a
Frenchman working in financial
services in London, told me. “In an
argument, I can pretend not to
understand — to force my interlocutor
to rephrase, which can perturb him.
“Furthermore, foreigners have a
more limited vocabulary which allows
them to use stronger and almost
tactless words, and to be excused for
that.”
Ivan Tejeda, a Spanish reader who
has worked in the UK, Italy and
France, said he had made strenuous
efforts to learn about the local culture
as a way of improving his ability to talk
to colleagues at work. In the UK, this
included watching comedy television
programmes such as Fawlty Towers and
The Office.
He had to make an effort in non-
English speaking environments too.
When he worked in Italy, he kept up
with the local football news as it often
came up in office conversation.
He did not think native English
speakers dominated work discussions
on purpose. “I think what your reader
SARAH
FRIAR
ing for Stripe in 2014. Now that he has
gone in-house, he says his background
as a VC was “very helpful” — not least
because he already knows Stripe’s other
investors.
With a valuation of $5bn, Stripe is San
Francisco’s most highly valued pay-
ments start-up, and its roster of inves-
tors includes heavyweights such as
Sequoia, Kleiner Perkins, and Founders
Fund. He says investor relations has not
been a big part of his job so far, which is
unusual for a start-up CFO. “Keeping
that investor base really narrow has its
advantages,” he reflects. The company,
which provides developers with tools to
accept payments, has not raised new
money since Mr Gaybrick joined.
He compares the finance team to a
“translation layer between the brittle
and byzantine interfaces of the global
financial infrastructure” and the clean
interface that Stripe presents to its cus-
tomers. As for his greatest challenge in
his new role, he says it is time manage-
ment. “Joining an organisation that has
grown this fast, it is a lot to metabolise.”
Brian Roberts — Lyft
At Lyft, the ride-sharing company that
is locked in competition with Uber, CFO
Brian Roberts is fairly new to start-ups.
He hails from Microsoft and Walmart,
and did time as a banker with Evercore
and Lazard Frères.
When he joined Lyft a year and a half
ago, there were a lot of firsts: his first
time at a start-up and Lyft’s first time
having a CFO.
He seems thrilled by the pace of
growth and the speed at which execu-
tive decisions are taken. “What I love
about my job is that it is about so much
more than just the numbers,” he says.
Beneath the feel-good vibe at Lyft
headquarters (where the corporate col-
our is neon pink, and the company logo
‘
is describing is more related to the
empathy process than the deliberate
use of sarcasm by English speakers.”
Both these readers’ English is
excellent, so they are perhaps not
representative of most people in
international companies who have to
Efforts to work in the language.
I have certainly seen English-
learn about speaking holidaymakers try to use the
the culture language to bludgeon waiters, bus
drivers or hotel receptionists into
included giving them what they wanted.
watching I do not think I have ever seen it
work. And I have never seen such
‘Fawlty bullying in a business environment.
Towers’ and What I have seen is English speakers
not being understood because their
‘The Office’ language is too quick, too garbled or
’
overly colloquial.
Of all the communication and public
speaking skills, talking to non-native
English speakers is one of the most
under-appreciated.
It does not come naturally to most
English speakers, but, like all skills, it
can be learnt. Rephrasing points in
different ways helps. So do avoiding
complex metaphors and watching
people’s faces to see whether you are
being understood.
Because so few native English
speakers speak another language these
days they have little idea how hard it
can be to operate in one.
A failure to understand how you are
coming across diminishes your impact,
and can lead some to believe you are
being cruel and sarcastic.
michael.skapinker@ft.com
Twitter: @Skapinker
BRIAN
ROBERTS
The first CFO at is a moustache), Mr Roberts has also
a start-up can added financial heft. When he joined in
influence the 2014, Lyft was a distant second to Uber
breadth and and had raised $350m from investors.
pace involved in Mr Roberts helped raise a further $2bn
the role — including from Chinese ecommerce
Thor Swift company Alibaba, and activist investor
Carl Icahn.
Many CFOs would tremble at the
prospect of Mr Icahn, known for his
attacks on companies. But Mr Roberts
says Lyft approached Mr Icahn first,
adding that the investor personally
plunged into Lyft’s financial models.
“He was like, cell E84, what is that.”
Lyft’s fundraising has not been with-
out wrinkles, though, including efforts
by Uber to block its access to capital. At
one point Uber required that potential
investors sign an agreement not to
invest in other ride-hailing apps, includ-
ing Lyft and Hailo, before it would allow
them to see its financial figures. “I’ve
never seen anything quite like it,” Mr
Roberts says. “It was surprising that
someone who would say ‘it is a winner-
take-all market’ would literally be try-
ing to block investors from talking to
us.” Those agreements have mostly
expired, though the rivalry continues.
Among the challenges that come with
‘The highs the start-up life is that it is more “per-
are much sonal” than previous jobs. “The highs
are much higher and the lows are lower.
higher and When something doesn’t go your way,
the lows are you take it personally.”
lower. When He highlights the age gap too: Mr Rob-
erts, 47, says the average Lyft employee
something is closer to his daughter’s age than his
doesn’t go own. But he sees a silver lining. “Until a
your way, certain age, you are able to suspend real-
ity in terms of just being creative and
you take it brainstorming. Out of that, 80 per cent
personally’ won’t work, but there are 20 per cent
— Brian that are just brilliant.” His job, he says, is
to take the good ideas and make sure
Roberts they happen.
The review
Tales to nourish founders from
a New York rooftop farm
JONATHAN MOULES
The Farm on the Roof:
What Brooklyn taught us
about entrepreneurship,
community and growing a
sustainable business
By Anastasia Cole Plakias
Avery; Penguin Random House
$27
The “how I made it” book is
loved by publishers. It
simultaneously satisfies a
public fascination with those
behind well-known
companies while giving
overachieving entrepreneurs
one final sign off after
selling their company.
The Farm on the Roof,
charting the rise, both literal
and physical, of Brooklyn
Grange, the world’s largest
green rooftop farm, is not
one of these. This book, by
co-founder and head of
marketing Anastasia Cole
Plakias would be, if it had a
genre, “how we are still
trying to make it”.
Cole Plakias, a
thirtysomething former
executive assistant to New
York restaurateur and
winemaker Joe Bastianich,
starts this 277-page
hardback talking about a
thriving business growing
vegetables, running events
and teaching school children
farming skills on two inner
city rooftops.
But seven years after the
team pledged to launch
their social enterprise from a
Brooklyn restaurant, this is
still a work in progress.
The original plan to have
seven farm sites within five
years was missed, and the
business is a long way from
achieving the kind of pay-off
that will allow the team to
move on to other ventures.
This makes some of the
advice that Cole Plakias
dishes out sound at best
naive and sometimes
arrogant, given she is still an
early-stage entrepreneur
clearly yet to find the
growth strategy to achieve
bigger ambitions. This
The riff
Lucky CEOs are on thin ice
ANDREW HILL
In Outliers, Malcolm Gladwell
pointed to a study showing
Canadian ice hockey players
lucky enough to be born in
the first half of the year
thrived, because of a
January 1 age cut-off for the
league. But Jim Collins and
Morten Hansen countered in
Great by Choice that the
Boston Bruins’ Ray Bourque
turned into one of the all-
time greats despite being
born in December. He used
the bad luck to make himself
stronger, they wrote.
The hockey example
crops up again in a new
study of six decades of
management research,
which says misperceptions
about luck are rife when
assessing business, where
there are few Bourques and
success is often down to
circumstance.
Chengwei Liu and Mark
de Rond write that people
persist in acclaiming lucky
chief executives — and
rewarding them excessively.
CEOs who are merely in the
wrong place at the wrong
time are dismissed as losers.
They have a novel, if
idealistic, plan to use luck as
Thursday 31 March 2016
would be to miss the point,
however, which is that
sharing stories is important
at every stage of building a
business.
It helps those looking to
strike out on their own not
to make the same mistakes,
or at least to be wise to the
potential pitfalls in
challenges such as
fundraising, hiring and
finding business partners.
Sharing stories also
benefits founders because it
allows others to connect
further with your company,
opening your business to
outsiders who can help you
take your company to the
next level.
The team at Brooklyn
Grange might be very proud
of their zucchini, kale and
arugula. But amid the crop
failures, frustrations with
New York City bureaucrats
and unsuccessful financing
campaigns, they are
harvesting another useful
crop of anecdotes that Cole
Plakias is wise to share.
Other founders will no
doubt be relieved to read
that they are not the only
ones having to deal with
crushing disappointments
as well as celebrating the
successes of fellow
travellers in the
entrepreneurial journey.
This book is likely to be of
less interest to those in
agriculture, who may well
bristle at the exploits of a
group of twentysomething
hipsters, dropping out of
office jobs to play farmers.
What seemed to be
missing were voices from
the other members of the
core team, such as Ben
Flanner, a former analyst
and the first to quit his job
to launch the venture.
I wish Brooklyn Grange
well. But having survived
seven years as social
entrepreneurs on the top of
a building, I hope they have
not succumbed to their own
publicity and believe that
they have done enough to
remain on top of the heap.
Many aspiring founders
have learnt the hard way
that such complacency was
the cause of their downfall.
The reviewer is a features
writer at the Financial Times
Dreamstime
a leveller. To end inequality,
cut executive pay and
restore a sense of fairness,
companies should pick their
leaders at random from a
pool of qualified candidates,
as the Venetians once did.
I foresee a few problems
with this approach. One is
that it could block the rare
Bourquesque management
genius from office. Another,
which the writers identify, is
that staff nervousness about
a randomly chosen boss
could fuel a spiralling loss of
confidence.
A lottocracy would
struggle to shift most
people’s fixation with the
idea that corporate success
is down to hard work and
skill rather than chance.
Professor Liu and Professor
De Rond suggest that rather
than urging managers to go
from “good to great” (a jab
at another Jim Collins
bestseller), it would be more
realistic if research taught
them how to move “from
incompetent to OK”.
They are right that some
recalibration is overdue. But
good luck persuading the
rest of the world.
Thursday 31 March 2016 ★ FINANCIAL TIMES 11

ARTS

T H E AT R E DA N C E

Long Day’s Journey into Night Richard Alston

Bristol Old Vic Sadler’s Wells, London
aaaee aaaaa
Ian Shuttleworth Clement Crisp

The glass in the windows is misted, the
timber of the walls at once reflective and
semi-transparent; the dowdy browns of
the parlour recede to the shadowy cobalt
blues of an uncertain distance. Rob How-
ell’s design locates the Tyrone family of
Eugene O’Neill’s masterpiece in a world
at once natural and quasi-mystical. It
matches O’Neill’s writing: he is never
afraid to follow ideas towards what
might be a high-flown stratosphere but is
brought down by the ever-present tug of
failure. No one ever went to an O’Neill
playforlaughterorpepping-up.
Richard Eyre’s excellent programme
note describes this as “the saddest play
ever written”, and his production makes
a plausible case for the claim. The
Tyrones consist of a drunken has-been
actor father, an even more drunken no-
hoper elder son, his bitter consumptive
brother and their mentally ill morphine
addict mother. They are partly inspired
byO’Neill’sownfamily.(Whoopee.)
Eyre’s Bristol revival boasts a high-
calibre set of parents. As James Tyrone,
For Richard Alston the floor of his
dances is as much his chosen score as the
boards of the stage. And because his
choice of music is as alert to possibilities
as it is open to his dancers’ gifts, we have
had grandest rewards from his choreo-
graphies. Rarely more so than in the pro-
gramme shown this week in London and
to be seen touring in April and May.
The beguiling novelty is An Italian in
Madrid. In the 1720s, Domenico Scarlatti
was court musician to the Portuguese
Princess Maria Barbara, who was to
marry the Spanish Prince Ferdinand of
Asturias and — sublime luggage — take
her harpsichordist with her to Spain.
Alston employs a selection of the hun-
dreds of sonatas written for the princess
by Scarlatti, vividly realised here by
pianist Jason Ridgway, exploring them
to contemplate this incident and also
play the most artful of creative cards.
For Maria Barbara he has recruited
Vidya Patel, an exquisite young Kathak
dancer from Birmingham, whose grace,
beauty and vivid technique colour the

Twists and turns of a new opera plot

Grange Park Opera’s next
home is currently empty
land in Surrey — but Wasfi
Kani has a £10m plan, as
she tells James Pickford
It also presented her with a problem.
Top performers for opera festivals are
typically booked three or four years
ahead, so Kani found herself in urgent
need of a venue for her 2017 season,
which is to open on June 8 with Tosca,
starring Maltese tenor Joseph Calleja.
SoshehascometoWestHorsleyPlace,
a 15th-century manor house set in 300
“drumwithdecoratedbrickwork”,echo-
ing the elaborate exterior of the main
house, designed by GPO’s architectural
consultant David Lloyd Jones, TRA and
Ramboll. The first performances will
take place in an incomplete shell,
shrouded in scaffolding, but Kani argues
this will work in her favour. “It’s easier to
raise money for an unfinished building.
Jeremy Irons deploys possibly the least choreography. Costuming and the dizzy-
“bogtrotter” (Jamie junior’s word) Irish- ing turns and delicious shapes of their
American accent I have ever heard. dance pay tribute to Kathak style, yet
On press night, his lines were far from amid the fiorituri of the action the narra-
perfect; but it is a long day’s journey, tive of betrothal is touchingly shown.
after all, which Eyre and his cast do And how well it all sits on its score, and
Formidable
fundraiser:
well to complete in only three and a
quarterhours.
how cleverly the dance suggests ritual
and the breath of emotion, with Liam
Wasfi Kani, Irons is one of the great “technician” Riddick tremendous as Ferdinand.
founder of
Grange Park
actors, which gives us a firm idea of
Tyrone’s general character but can leave
Here is a wholly enchanting creation.
No less so Alston’s Mazur. Chopin maz-
Opera. Right: him a little short at moments of emo- urkas, two male dancers — the com-
Vidya Patel in
Richard Alston’s
tional candour. Not so Lesley Manville as
his wife Mary, who navigates her way
manding Riddick and Nicholas Bodych,
with Ridgway no less commanding on
‘An Italian in expertly from defensively cheerful gar- piano — and a world of emotion given,

S
tanding on the edge of an 18th-
century walled garden, Wasfi
Kani takes a breath, opens her
lungs and begins to sing “Deh
vieni, non tardar”, Susanna’s
exquisite aria from The Marriage of
Figaro. Her voice fills the air, swelling
and reverberating in the natural acous-
tic of the enclosed bare plot. “Isn’t it
wonderful?” she says, relishing the final
notes as they dissipate in the spring air.
It is a perfect demonstration of Kani’s
ability to conjure a scene of romantic
high culture in what is, in fact, an empty
space — a skill she will need in abun-
dance as she executes an ambitious plan
to construct a new £10m country house
opera venue in the south of England,
without public funding or planning per-
mission (as yet) and with little more
than a year before the curtain is due to
come up on the opening performance.
In spite of the scale of the task, Kani
appears undaunted — because she has
done it before. Founder and chief execu-
tive of Grange Park Opera, she raised
more than £3m in 2002 to transform a
decrepit neoclassical orangery on the
estate of the Baring family in Northing-
ton Grange, Hampshire, into an opera
venue, building a summer festival to
bear comparison with Glyndebourne
and Garsington.
But after a falling-out with the Barings
over the terms of a new lease, this
summer’s performance of Tristan und
Isolde will be the last the company gives
at the Orangery.
acres of rolling farmland and woods near
Guildford, Surrey. The Grade 1 listed
building was the home of Mary, Duchess
of Roxburghe, but when she died in 2014
attheageof99,itpassed—tohissurprise
— to her great-nephew, the broadcaster
Bamber Gascoigne.
In search of productive uses for the
50-room house and estate, Gascoigne
made the property over to the Mary
Roxburghe Trust, as a performance cen-
tre and a place for the study of arts and
‘It’s easier to raise
money for an unfinished
building. People love
going on a journey’
crafts, and — and with a love of opera —
has given his blessing to Kani’s vision.
Confusingly, Kani is retaining Grange
Park Opera as the name of the company,
even though it will no longer perform at
Grange Park. GPO is a registered charity
funded by ticket sales and donations.
At its new home, visitors to GPO will
enter through the mature gardens
before reaching a gate in the mighty
“crinkle crankle” garden walls of 1710.
“I’ve got more picnic spots than I know
what to do with,” Kani says.
Beyond, in an area currently thick
with brambles and trees, will be her
horseshoe-shaped, 650-seat Theatre in
the Woods, which she describes as a
People love going on a journey.” Madrid’ rulity through fearfully showing the like the mazurkas, subtlest expression.
Born to a family of Indian immigrants, Howard Sooley cracks to her final drugged, dissociative The evening also brings Brisk Singing,
Kani grew up in east London before Jane Hobson monologue. Ultimately she is no more Alston’s buoyant homage to Rameau,
reading music at Oxford university. imprisoned by her delusions and fears and the first performance of Stronghold,
After a decade in the City working as a than the rest of the family; she merely a creation by Martin Lawrance set to
computer programmer and designer of has the bleak freedom to be demon- Julia Wolfe’s eponymous score
financial systems, she retrained as a strativeaboutit. for (help!) eight double basses.
conductor, and set up Pimlico Opera in It takes a lot to make this colossal Aggressive, grinding, ear-numb-
1987, which brings opera to prisons and grind of a work of genius compel- ing sonorities. Dancers, drearily
primary schools. ling; Eyre and company hit it at garbed, doing exactly what you fear.
Kani’s formidable reputation as a moments, and never fail to put their Unkind top-lighting. But echoing cheers
fundraiser is evident: since she began heftyshouldersintotheeffort. for Alston and his dancers.
picking up the phone in November, she
has confirmed pledges for about half the To April 23, bristololdvic.org.uk richardalstondance.com
£10m, including a promise of £1m
which arrived days after our meeting.
“I’ve yet to send out a piece of printed
material,” she says. The philanthropist
Dame Vivien Duffield is co-chair of the
appeal board, and she has also had
advice from Niall FitzGerald, former
Unilever head and now chair of the
Leverhulme Trust, as well as John Botts,
chairman of Glyndebourne.
Besides tapping personal connections
and exploiting her database of 25,000
names, she is offering naming rights for
every conceivable aspect of the theatre.
“If you give £20,000 you can have a step
named after you. For £50,000 you can
have your name on one of 13 columns.
Boxesare£200,000.Theatriumis£1m.”
She is also looking for 2,000 gifts of
£1,000, for which donors will have their
name inscribed on a scroll in the theatre,
at the top of which is the bass-baritone
Bryn Terfel.
The quest for local supporters has
prompted her to create what she calls
“Surrey hubs” — well-connected opera
fans who invite groups of potential
donors into their homes to hear opera
excerpts from professional singers, plus
Kani’s fundraising pitch. “I have to get
Surreyinterested,”shesays.Toassisther
“show and tell” she has had a model of
the theatre made, which she keeps in a
shoebox lined with red felt.
Having speedily raised the first wave
offunds—the“low-hangingfruit”,asshe
puts it — does she worry that wider eco-
nomic uncertainty and worries over
issues such as Brexit will slow her race to
the target? Not at all, she says: “The
world’s full of uncertainty but . . . people
are genuinely interested in creating
something for the public good.”

Opera in a box: architect’s model of the new theatre grangeparkopera.co.uk

OPERA
The Importance of Being Earnest
Barbican, London
aaaae
Hugo Shirley
Gerald Barry’s operatic adaptation of The
Importance of Being Earnest has little right
towork.Topsy-turvyandgleefullyimpo-
lite, the Irish composer’s fifth opera is a
thing of extremes, as evinced by the cast-
ing of Lady Bracknell as a bass and Cecily
as a skyscraping coloratura soprano. One
exchange is spoken mechanically
through megaphones to the cacopho-
nous smashing of plates; the tune of Auld
Lang Syne and words of Schiller’s “Ode to
Joy” (in German) pop up intermittently
andinexplicably.
Wilde’s play is heavily trimmed in the
composer’s own libretto, its words sped
up, stretched out, sliced and diced. The
voices are often dragged along, up and
down by music that has a will of its own.
But, paradoxically, the piece still feels
strangely faithful to the original, and
throughout its 90 minutes the anarchy
never palls. What could be grating is, in
fact, gloriously invigorating.
And it’s funny — often riotously so —
thanks also to the cast. Largely
unchanged from the Royal Opera’s 2013
Impeccable: Hilary Summers
staging, they offer a virtuoso display of
comic singing and acting. Alan Ewing’s
pinstriped, po-faced Lady Bracknell and
Claudia Boyle’s brilliantly dim Cecily
occupy the extremes, with impeccable
performances from Benedict Nelson
(Algernon),PaulCurievici(Jack),Steph-
anie Marshall (Gwendolen) and Hilary
Summers(MissPrism)inbetween.
Conductor Tim Murray keeps it all
tight and together, and if Ramin Gray’s
modern dress production has lost some
freshness, it still matches the work’s cha-
otic pace. Having the orchestra on stage
arguably gives it all a provisional feel,
but being able to see the players of the
outstanding Britten Sinfonia only adds
to the spectacle.
Just four years after Barry’s Earnest
was premiered, the programme already
calls it a contemporary classic. If it is,
though, it’s precisely because it resists
everything that epithet suggests.
To April 3, barbican.org.uk, then Rose
Theatre, New York and live-streamed on
Royal Opera’s YouTube channel on April 2
12 ★ † FINANCIAL TIMES Thursday 31 March 2016

Make friends, split up

Metro’s shares have underperformed other retailers and the German
market, partly because of its conglomerate discount. Splitting the
electrical and food retail divisions could narrow the gap

Twitter: @FTLex Email: lex@ft.com Share prices Metro segments

Rebased FY 2015 sales (€bn)
160 0 5 10 15 20 25
Dax index
Stoxx Europe Food Metro Cash & Carry 3.5%*
Tata Steel: Tata’s attack of indigestion leaves and Drug retailers 140
Hon Hai/Sharp:
tasty leftovers for others still at the Metro
purges table. Regardless of the shadow it casts
120
Media-Saturn 2.0% not the end of the affair
over UK manufacturing, this move will Romantic fiction demands that
Never eat anything bigger than your not mark a turning point for the global Real 1.1% stubborn suitors be rewarded for
head. A healthy rule to which Tata steel market. 100 persistence. Hon Hai of Taiwan first
Steel of India might attest. In 2006, the revealed its intentions towards Sharp
company more than quintupled its
Media-Saturn compared Electronics in 2012, planning a $1.6bn
FY 2015 sales (€bn)
steelmaking capacity by acquiring US television: 80
0 5 10 15 20 investment for a tenth of the Japanese
Corus Steel. Already suffering from company. Sharp’s collapsing share
bloating, it offloaded steelworks in Trump card 60 Media-Saturn 2.0%* price scotched that deal. Yesterday, the
Teesside in the north-east of England two finally agreed to a tie-up. Hon Hai
in 2010. This week, after two years of Make America great again. Donald Darty 2.1% will pay Y388bn ($3.4bn) and gain a
swelling losses from its European Trump’s vision for the US may be 40 66 per cent stake.
operations, primarily those in the UK, grotesque for many but its citizens The delay has paid off for Hon Hai;
Tata has decided to tighten its belt cannot get enough of the gory details. 2011 12 13 14 15 16 Dixons Carphone** 4.8% just a month ago, the price was to be
further. Despite the gloom and panic First-quarter ratings data released by FT graphic Sources: Thomson Reuters Datastream; company; Thomson Reuters Datastream * Operating margins ** Converted from £ at £1=€1.2711
Y484bn. Yet key questions remain.
that has descended upon the UK steel Nielsen on Tuesday showed Hon Hai covets Sharp’s flatscreen
industry, what Tata does is unlikely to spectacular increases for cable technology and hopes for increased
trouble global steel markets. television news. Fox News became the A problem shared is a problem chain, Kaufhof, last year and now a share price of €14. Based on its heft in negotiations with Apple, to
Even in the unlikely event that Tata’s most watched cable network, passing halved. The question is which acknowledges that there is little share of group operating profit and which both businesses sell. But Sharp
UK plants at Port Talbot and the mighty ESPN. Traditional laggard problem. Metro, the German retail overlap or operating synergy between Metro’s pre-announcement share also brings an ill-fitting assortment of
Scunthorpe somehow closed CNN saw its primetime rating jump conglomerate, yesterday unveiled its two remaining divisions. Separating price, it was being valued at about consumer goods and the potential for a
tomorrow, this would represent just 135 per cent, although it still attracts plans to split in two. The cash and them would also allow Media-Saturn to half that amount. fractious relationship with the
10m tonnes of capacity — well under only half the audience of Fox. carry business and the hypermarkets participate in industry consolidation; To make sure it achieves a Japanese government. For a Japanese
1 per cent of total world output. Buyers For pay-TV networks such as Fox, — accounting for two-thirds of profits recent years have seen a merger comparable multiple to peers, icon to be sold to an essentially Chinese
are also circling other parts of Tata’s Comcast and Time Warner, this — will be spun off to existing between Dixons and Carphone Mr Koch needs to solve another business marks a milestone. Sharp’s
European works (in the UK as well as provides a welcome fillip against a shareholders, leaving Metro as a Warehouse in the UK, and an problem. About a fifth of Media- weak performance, debts and political
the Netherlands), so would be likely to background of audience declines in the holding company for the consumer unsuccessful attempt to combine Saturn is owned by Erich Kellerhals, baggage may prove a millstone as well.
keep the plants operating. past two years. The boost from the electronics division, Media-Saturn. French chains Fnac and Darty. its founder, who has been highly
The market gives them reason. Steel election is part of a broader The shares, which have lagged How much could Media-Saturn be critical of Metro’s strategy and Swedbank:
prices have already jumped enough to stabilisation in advertising revenue. behind European food retailers and worth? In the year to September 2015, management. True, Mr Kellerhals’
restore some of the lost profitability. In Twenty First Century Fox noted the German stock market for most of it had earnings before interest, tax, bark is worse than his bite — he has a on autopilot
the wake of hot rolled coil prices rising recently that ad pricing was up 20 per the past decade, gained 13 per cent. depreciation and amortisation of about limited set of veto rights — and the Losing one boss may be regarded as
nearly 40 per cent from the low late cent for a broad range of purchasers, That suggests Olaf Koch, chief €700m. An enterprise value of 8 times structure of the transaction limits unfortunate. To lose your entire C-suite
last year, gross profit margins have including carmakers and telecoms executive since 2012, is well on his that sum — Darty trades at roughly this the scope for trouble. But burying in less than two months looks worse
improved. After subtracting raw companies. Late last year, Wells Fargo way to fixing the conglomerate historic multiple — works out at the hatchet before the split could than careless. But shareholders in
material costs (iron ore, coking coal estimated that political ad spending in discount problem. €5.6bn. Assuming that Media-Saturn make for a problem solved, rather Swedbank appear unconcerned. Its
and scrap steel), steelmakers have 2016 would hit $6bn, up 16 per cent Metro sold its department store starts life with no debt, that equates to than just halved. shares have outperformed rivals since
historically made an average of $225 from the presidential race in 2012. the chief executive and finance director
per tonne, according to Jefferies. While Even greater beneficiaries are local were ousted in the wake of a property-
that spread touched a low of $120 in station groups in areas where there are related scandal. Emboldened, they
2015, this year it has jumped by half. competitive races (the US presidential presidential candidates. The structural of a US company. The example may not Smithfield. Cost savings were never have now kicked the chairman out too.
Though profits may not exactly be race is contested state by state). story is still tough. Shares in each of encourage compatriots: its shares have quantified and expected “synergies” They may feel that a bank with such
abundant, the situation has greatly Groups such as Sinclair, Nexstar, Tegna them are, so far this year, not so great. not performed well. Despite its leading amounted mainly to cross-selling a fortress balance sheet (core tier one
improved. Should this trend persist, and EW Scripps that each own dozens market share in US pork production supposedly higher quality and safer US capital is twice the European average),
mills everywhere — including China — of local stations see wild swings in (according to competitor Tyson Foods) products in China. Yet the merger has double-digit returns on equity and one
will start thinking about increasing revenue driven by the election cycle; WH Group: and its self-professed largest cold chain delivered tangible benefits. An of the continent’s lowest cost to income
supply rather than cutting it. Sinclair’s first-quarter forecast is logistics network in China, WH Group initiative to simplify its US units helped ratios can be left on autopilot for a
Equity markets are very sensitive to running 60-80 per cent higher than no pork pies struggled to list its shares. In 2014 it drive growth of nearly 50 per cent in its while. But good fortune should not
signs of any hope for this sector. 2012. One worry is that Mr Trump, finally sold a reduced issue at a low downstream business (over two-fifths beget complacency. Sweden’s negative
European steelmakers’ share prices favourite for the Republican Wild hogs are on the run in Hong Kong. teens earnings multiple, a discount to of operating profit), with more upside interest rates are here for a while,
have leapt 50 per cent in six weeks. nomination, will stick to his existing WH Group, purveyor of pork products its US peers. expected this year. Scale in both the US crimping margins, while much of the
Even if higher steel prices did not last, media strategy: rather than splurge on of a more domesticated nature, is on a The markdown persists. Even after and China gives the company flexibility excess fat has already been trimmed
Tata’s UK assets might still be of use to political ads, this relies on appearances bit of a tear too. Late on Tuesday, the yesterday’s bounce, the shares trade to exploit price differences and from costs. You would not bet against
someone — and its Dutch flat steel mill on news programmes, controversy and Chinese pork producer announced below the listing price at a multiple of optimise margins. This year, too, will Swedbank getting leaner still, but at
at IJmuiden (7.2mt) could be of snarky tweets. earnings one-tenth ahead of forecasts. 11 times 2017 forecast earnings. Tyson benefit from a full 12 months of the 1.7 times tangible book value, its shares
interest to Germany’s ThyssenKrupp, Even if Mr Trump and the The next day its shares rose a similar trades at 16 times despite a similar company’s $125m US-standard are not pricing in much downside.
which is keen to consolidate its Republicans wage war on the airwaves amount. They still look cheap. growth outlook, margins and returns, packaged meat factory in China.
European mills with others of similar through November, local TV groups WH Group was formed in 2013 after and higher net debt to equity. If WH Group can persuade more
scale. With IJmuiden, Thyssen would should not expect too much credit. Shuanghui bought Smithfield Foods of WH Group may be suffering from food safety-conscious consumers to Lex on the web
For notes on today’s breaking
become the second-largest producer of Nothing could be more predictably the US. At over $7bn, it remains the lingering scepticism about the one- bring home their bacon, the future will stories go to www.ft.com/lex
European steel, with 22mt of capacity. cyclical than the four-yearly parade of largest completed Chinese acquisition third premium it paid to acquire be better yet.

GH
Today’s temperatures
1020
1020 Abu Dhabi Fair 29 Malta Sun 22
38 Amsterdam Cloudy 11 Manila Fair 34
LO Athens Sun 21 Melbourne Cloudy 22
Bangkok Shower 33 Mexico City Sun 29
22 25 Barcelona Fair 19 Montreal Shower 14
Beij eoul
Beijing Sun 25 Moscow Shower 9
okyo Berlin Rain 10 Mumbai Sun 32
1010 Brussels Rain 9 Munich Sun 23
slama ad 16
Sha hai Budapest Fair 21 Nairobi Fair 31
Buenos Aires Sun 29 New York Cloudy 20
Delhi Chicago Thunder 16 Oslo Shower 8
Kolkat aipei Copenhagen Fair 10 Paris Rain 8
32 25 Dallas Sun 23 Perth Fair 26
mbai ong Kong Delhi Sun 36 Prague Cloudy 17
oi
3 Dubai Fair 29 Rio Shower 31
Ya Dublin Fair 11 Rome Sun 22
34
M Edinburgh Cloudy 9 San Francisco Fair 17
B k 20 1010 Frankfurt Rain 12 Seoul Sun 21
Geneva Cloudy 16 Shanghai Fair 16
Ho i Minh City Hamburg Cloudy 11 Singapore Fair 34
Colombo uala Brunei Hong Kong Fair 25 Stockholm Cloudy 8
2 7 L mpu Istanbul Sun 18 Sydney Sun 24
2 Jakarta Thunder 32 Taipei Shower 25
Si apore Johannesburg Sun 28 Tokyo Fair 18
3 Karachi Sun 33 Toronto Rain 15
Kuala Lumpur Fair 37 Vancouver Sun 14
3 Kuwait Sun 25 Venice Fair 15
Lisbon Sun 14 Vienna Sun 22
London Fair 13 Washington Cloudy 22
Forecasts by Los Angeles Sun 19 Wellington Fair 19
Wind speed Luxembourg Rain 10 Yangon Sun 37
in KPH Madrid Shower 12 Zurich Shower 20

CROSSWORD ACROSS
1 Hack elected to be a composer
5 Thatcher wasn’t about to deliver
(2,6)
No. 15,202 Set by MUDD (6) 6 Roman emperor has moved to
4 Deer, deer unfortunately stopped Iceland, Italian leader in hiding
        (8) (10)
10 Prepare to feed a baby 7 Grass for whiskey or old port (3)
 wholesome food, the delicate 8 Stop moral type admitting sin,
thing eating rubbish (7) initially (6)
 
11 Utimately unusual, barking 9 Corporation describing a
noises for a feline (7) clanger? (5)
12 Queen, perhaps, and king drink 14 Where free food supplied,
   (4) ketchup is on jerky (4,7)
13 Covering first of speeches, 15 Consider being wilful (10)
 disseminination of bilge also 18 Heptagon-shaped virus (8)
 
extends around the world (10) 19 Punk keeping private residence
16 Ship beginning to capsize, say primarily for vermin (5,3)
  (6) 22 The end of a day’s cricket proves
17 Passion odd for an odd number bewildering (6)
  of years (7) 23 Bird needing new headgear (5)
20 Political fundamentalists, a party 26 Land seen rising in picture
 
to keep in the shade (7) postcard (4)
  21 City worker, sure thing (6) 28 Initially, “Strike It Rich” is the title
24 Comforting words at that point (3)
 repeated (5,5)
25 Cook in a lather (4)
   27 Horse ‘as to be ‘eld up (7)
29 Elements under discussion, as if Solution 15,201
(7) ( 6 3 8 0 2 6 2 $ * + $ 6 7
  30 Rank as regent in a sorry state / / 2 3 2 5 3 2
(8) % 5 $ , 1 2 ) % 5 , 7 $ , 1
2 < & 7 - 1 & (
31 Basket in which to capture jokes? : , ' 7 + : , 6 ( 6 7 ( ( 3
(6) 6 2 ( ) & $ 2
JOTTER PAD DOWN
%
3 8 7 1 ( <
* *
7 , 1 : $
' '
5 (
0
1 Fixing a bicycle? No fun in that! 2 7 + ( / / 2 0 5 % ( $ 1
(8) 5 $ / 2 ( 0 .
2 Arrange to talk publicly about 8 1 : ( ' ' 2 5 6 $ / ) , 1
right bosom (11) 6 2 % % 3 5 $ ,
6 , 1 * $ 3 2 5 ( 6 / , 1 *
3 Muslim leader, don’t call me PM! , * & < 7 , 7 +
(4) $ 3 $ 7 + < & + , 7 & + $ 7
Thursday 31 March 2016 ★ 13

Sharp Whiting Premier Foods Dollar index Gold Nikkei 225 Two-year Xetra Dax
Fed strategy Big tests lie Petroleum US Treasury
ahead after Yellen speech 3.85% 2.28% 4.42% 0.3% $14 1.3% 2bp 1.6%
JOHN AUTHERS, PAGE 22
Y135 $7.62 59p 94.89 $1,227 16,878 0.78% 10,046

MetLife escapes ‘too big to fail’ label Short

View
3 Ruling on insurer is blow to Dodd-Frank reforms 3 Door opens for further challenges
sis and could encourage legal challenges strongly disagree with the court’s deci- who represented MetLife in court, had
Stephen
ALISTAIR GRAY — NEW YORK
BARNEY JOPSON — WASHINGTON from the other insurers deemed to be sion. We are confident that FSOC’s ‘We strongly argued that the process that led to Foley
Sifis — AIG and Prudential Financial. determination was lawful and will con- disagree MetLife being deemed a Sifi was a
MetLife has secured a victory in its bat- The banks already classed as systemi- tinue to defend the council’s designa- “black box”.
tle against US regulators that deemed it cally important have less chance of tions process vigorously.” with the MetLife challenged the decision even Janet Yellen’s list of reasons why the Federal Reserve will
“too big to fail”, a legal ruling that may escaping via the courts because the cri- But the district court found the FSOC court’s though the consequences of the “proceed cautiously” with interest rate rises did not
have far-reaching implications for the teria for their designation — unlike that had acted unlawfully, giving MetLife an designation were unclear. The regime include helping Barack Obama with his golf score. Donald
country’s financial system. of non-banks — is written directly into amnesty for which it has been fighting decision . . . has yet to take effect, with regulators yet Trump last year accused the Fed chair of keeping rates low
In a blow to Barack Obama’s adminis- the law. for months. and will to quantify the additional capital at the behest of a president who “wants to be out playing
tration, a court in Washington yesterday Members of the Financial Stability The decision lifted shares in MetLife requirements. golf and . . . doesn’t want to see a bubble burst during his
found it had acted unlawfully by decid- Oversight Council (FSOC) had voted — the largest US insurer by assets — continue to The full legal judgment was not administration”.
ing the insurance group deserved nine to one in favour of designating 5 per cent yesterday afternoon. defend the immediately available. Ms Yellen’s remarks at the Economic Club of New York
tougher regulation as a “systemically MetLife a Sifi, a label that leads to addi- It is an important breakthrough for Despite the ruling in its favour, on Tuesday showed her concern is not with Mr Obama but
important” financial institution (Sifi). tional regulatory scrutiny and higher Steven Kandarian, the MetLife chief process MetLife is expected to press ahead with with volatile markets — and they responded to her dovish
The government can appeal. capital requirements. executive, who took on the authorities a vigorously’ plans to sell off a big slice of its business coos in straightforward fashion, sending equities higher.
The ruling will shake an important The FSOC’s members include Janet year ago. — for which part of the rationale was to The only wrinkle: US bank stocks.
pillar of the Dodd-Frank legislative Yellen, Fed chair, and Jack Lew, Treas- Eugene Scalia, the lawyer son of the Treasury reduce the burden from being desig- The S&P 500 banks index initially fell sharply but its
reforms drawn up after the financial cri- ury secretary. The Treasury said: “We late Supreme Court Justice Antonin, nated a Sifi. rebound yesterday morning suggests a more complicated
debate about how investors should think about the sector.
This year, US banks have traded as a proxy for year-end
rate expectations. They fell sharply as scepticism grew that
the Fed would follow through with all the 2016 rate rises
suggested by its “dot plot” of official projections. The sell-
Cruise control off reached a peak in February when markets implied
Carnival celebrates there may be no rate rises at all this year, and long-term
rates fell with the darkening global economic outlook.
robust quarter Low rates narrow the available margin between banks’
cost of borrowing and the interest they can charge on lend-
ing. But because the gloom over the long-term economic
Shares in Carnival, the company behind outlook has lifted somewhat since February, Ms Yellen’s
the Costa and Princess cruise brands, promise of lower-for-longer short-term rates is likely to
rose 3.3 per cent in afternoon trading in have the desired effect of steepening the yield curve and
the US yesterday after its first-quarter aiding bank profitability. Hence the rethink yesterday.
results beat expectations, writes The biggest banks in the US may catch other tailwinds.
Nathalie Thomas. While results from their investment banks are gruesome,
The biggest cruise group by market shareholders and analysts have begun debating strategic
share said advance bookings for the options for improving returns. KBW analysts suggested
remainder of this year were “well ahead” Citigroup should break itself up and at least one significant
of 2015. Net revenue yields rose 5.7 per Bank of America investor has told its chief that it should
cent, excluding the impact of currency separate its retail bank from the Merrill Lynch investment
movements, compared with the same banking and US Trust wealth management arms.
period a year earlier. This was better Isolated calls for now, but if they take hold bank inves-
than the 3.5-4.5 per cent rise Carnival tors may have more to consider than just the likely level of
had told shareholders to expect. It US interest rates at the end of this year, when Mr Obama
compared with a 4.1 per cent rise in net will be able to tend to his golf score full time.
revenue yields in the fourth quarter of
Carnival’s last financial year, which
ended on November 30. S&P 500 Banks index
Revenues from passenger tickets rose 240
3.2 per cent to $2.7bn in the three
months to the end of February while
spending onboard rose nearly 4 per cent 220
to $923m, helping push total revenues to Markets responded
$3.7bn from $3.5bn a year earlier. to Janet Yellen’s
Net income rose to $142m from $49m 200 doveish coos in
a year earlier. straightforward
Last week Carnival secured approval fashion, sending
from the Cuban government to sail from 180 equities higher.
the US to the island nation, the first such Jan 2016 Mar The only wrinkle:
permission for a US based cruise Source: Bloomberg US bank stocks
operator in more than 50 years.
stephen.foley@ft.com
Suhaimi Abdullah/Getty

Torrid first quarter takes toll on US

IPOs as 21 companies abandon listings
NICOLE BULLOCK also the lowest since the first quarter of to Renaissance Capital, which runs IPO-
AND ROBIN WIGGLESWORTH — NEW YORK
2009 and only three companies — bio- focused exchange traded funds.
More US initial public offerings have tech groups Editas Medicine, BeiGene The improving performance, as well
collapsed than succeeded in the first and AveXis, and energy acquisition as the pipeline that has been building in
quarter of 2016, the first time this has vehicle Silver Run Acquisition Corp — the past few months, bodes well for a
happened since the aftermath of the surpassed the $100m mark. return of listings in the second quarter.
financial crisis, as the ferocity of this However, the US stock market recov- “I expect the positive end to the quar-
Big brands switched on to year’s stock market tumble hit many ered strongly in March and stands up ter will prompt more companies to
live-streaming potential companies’ hopes of floating. about 1 per cent in the year to date after launch their offerings,” said Matthew
a sharp fall at the start of the year. IPOs Kennedy, an analyst at Renaissance. “If
For tech companies such as Twitter, Only nine US companies succeeded in that suffered in the market downturn those are successful, that should be
Facebook and Google’s YouTube, listing in the first three months of 2016, are outperforming in the rebound. enough to get the IPO market moving.”
live-streaming has the potential to be raising just $1.2bn, according to Dea- An index that tracks the largest and The focus is on “icebreakers” — the
a big earner as online video logic. But 21 companies were forced to most liquid listings from the past two first companies to test the market — and
advertising takes off. Digital video shelve IPOs valued at nearly $3bn, years — including Chinese ecommerce how their shares perform. Renaissance
advertising spending increased 46 per marking the first quarter since mid- group Alibaba and payments company predicted that some of the likely candi-
cent to $7.7bn in the US last year. 2009 where cancelled listings have out- First Data — shows IPOs up 20 per cent dates for early deals were US Foods, the
Analysis i PAGE 17 numbered successful deals. versus 12 per cent for the S&P 500 from food distributor, and exchanges opera-
The value raised through US IPOs was the February 11 market low, according tor Bats Global Markets.

Companies / Sectors / People

Companies
ABB..................................................................10
Albertsons....................................................13
Alibaba...............................................10,13,16
American International Group .......13
Apple.....................................................3,12,16
Areva..............................................................16
Australian Securities Exchange......16
AveXis............................................................13
BMW................................................................17
BNP Paribas................................................15
BPER Banca................................................14
Banca Popolare di Milan....................14
Banco Popolare........................................14
Bank of America .....................................13
Bank of Tianjin........................................20
Barclays......................................................1,15
Bats Global Markets..............................13
BeiGene.........................................................13
Birchbox........................................................17
CVC..................................................................16
Carnival....................................................13,21
Carphone Warehouse...........................12
Chevrolet......................................................17
Chi-X...............................................................16
China Zheshang Bank.........................20
Citigroup...............................................1,13,15
Credit Suisse...........................................1,15
Darty...............................................................12
Deutsche Bank.......................................1,15
Deutsche Börse........................................16
Dixons ...........................................................12
Dominick’s....................................................16
Editas Medicine........................................13
Emirates........................................................16
Facebook......................................................17
First Data......................................................13
Flipkart...........................................................16
Fnac ................................................................12
Formula One..............................................16
Foxconn........................................................14
General Electric........................................17
GitHub...........................................................14
Go-jek.............................................................16
Goldman Sachs............................................1
Google.........................................................3,17
Hailo................................................................10
HappyFresh................................................16
Hon Hai Precision Industry......1,12,14
Intesa Sanpaolo........................................14
Kate Spade..................................................17
Kaufhof..........................................................12
Kleiner Perkins..........................................16
Lamudi...........................................................16
Lazada............................................................16
Lending Club.............................................22
Lippo Group...............................................16
London Stock Exchange.....................16
Lululemon....................................................21
Lyft..................................................................10
Media-Saturn..............................................12
MetLife.....................................................13,21
Metro.........................................................12,17
Microsoft.................................................10,17
Morgan Stanley...........................................1
Nexstar..........................................................12
Northland Resources............................14
Novo Banco..................................................7
Petrobras.......................................................4
Pimco................................................................7
Pioneer.............................................................1
Procter & Gamble...................................16
Providence Equity..................................16
Prudential Financial...............................13
Rocket Internet.........................................16
Samsung Electronics.............................16
Scripps ..........................................................12
Shake Shack...............................................21
Sharp............................................................1,12
Shuanghui ..................................................12
Silver Run Acquisition Corp.............13
Sinclair............................................................12
Singapore Exchange.............................16
Smithfield Foods......................................12
Snapchat.......................................................17
SoftBank.......................................................16
Soulcycle......................................................22
Southwest Airlines..................................17
Square............................................................10
Stripe..............................................................10
Subway..........................................................16
Swedbank...............................................12,14
Target.............................................................17
Tata..............................................................9,12
ThyssenKrupp...........................................12
Tokopedia....................................................16
Twitter............................................................17
Tyson Foods...............................................12
UBI Banca....................................................14
UBS................................................................1,15
US Foods......................................................13
Uber................................................................10
VelocityShares.........................................20
Volkswagen.................................................16
WH Group....................................................12
Walmart.........................................................10
Wayfair..........................................................22
Sectors
Banks.......................................12,13,14,15,20
Basic Resources........................................12
Energy............................................................13
Financial Services.......................13,20,22
Financials..........................................13,16,22
Food & Beverage...............................12,13
Industrial Goods.......................................12
Industrials.....................................................12
Mining............................................................16
Pharmaceuticals.......................................13
Retail....................................................12,13,17
Retail & Consumer............................12,13
Technology.............................1,12,14,16,17
Transport......................................................13
Travel & Leisure......................................13
People
Barnevik, Percy........................................10
Collison, Patrick.......................................10
Dorsey, Jack...............................................10
Fildes, John.................................................16
Friar, Sarah.................................................10
Gaybrick, Will.............................................10
Ghoos, Steven...........................................16
Gou, Terry...................................................14
Holliday-Smith, Rick..............................16
Icahn, Carl....................................................10
Idermark, Lars...........................................14
Kellerhals, Erich........................................12
Koch, Olaf...............................................12,17
Lauvergeon, Anne..................................16
Lee, Lisa........................................................16
Nadella, Satya............................................17
Porat, Ruth..................................................10
Roberts, Brian...........................................10
Staley , Jes..................................................15
Sundström, Anders................................14
Tosi, Laurence..........................................10
van Velzen, Paul.....................................20
Wolf, Michael.............................................14

© The Financial Times Limited 2016 Week 13

14
Banks
Swedbank chairman set to be unseated
Sundström to join exodus
of lender’s senior officials
after property scandal
RICHARD MILNE
NORDIC CORRESPONDENT
Swedbank’s chairman is to be forced out
by shareholders, completing a clear-out
of top officials at a bank once held up as
a model post-crisis institution.
The lender’s nomination committee
no longer plans to propose Anders
Sundström for re-election next week
after a property scandal that has led to
the departures of the chief executive
and finance director.
The committee, made up of leading
shareholders, had taken the opposite
Cunning Foxconn tycoon secures Sharp deal
Gou’s patient effort to acquire
Japanese television pioneer
was skilled brinkmanship
KANA INAGAKI — TOKYO
For the hard-hitting Taiwanese tycoon
Terry Gou, sealing a Y388bn ($3.5bn)
takeover of the Japanese television
innovator Sharp was a skilled game of
brinkmanship — and a demonstration
of the balance of power in the industry.
During the final month of nerve-
racking talks, the deal had appeared on
the edge of collapse. In the end, how-
ever, it was Mr Gou’s Hon Hai Precision
Industry that emerged as the winner —
not only seeing off competition from a
Japanese state-backed fund, but also
securing a much cheaper price and fresh
assistance from Sharp’s own lenders.
Yesterday, Hon Hai — better known as
Apple supplier Foxconn — agreed to
acquire Sharp for Y100bnless than its
original offer in mid-January. And it was
an outcome that reflected the unpre-
dictable twists and turns that played out
in the intervening weeks, as the Taiwan-
ese group fought for the best terms
while allaying Japanese concerns about
Sharp’s display technology falling into
foreign hands.
In fact, having succeeded in overrul-
ing initial objections, it had been Mr Gou
who first backed off from signing a deal,
when Sharp revealed new contingent
liabilities two days before its board
agreed to be taken over by Foxconn.
According to people familiar with the
talks, angry shouts were heard in the
last month of discussions, as Mr Gou
pushed the limits of his Japanese coun-
terparts in trying to drive down the
price.
In the process, the people add, Mr Gou
also clashed with Sharp’s two main lend-
ers — Mizuho and Bank of Tokyo-Mit-
subishi UFJ — as he backed down from
promises he had made to shoulder the
Japanese group’s debt.
“When Sharp came out with fresh
negotiating material, Mr Gou exercised
his full power,” said one person involved
in the talks. “He wanted to see how far
he can go (to renegotiate the deal).”
In the end, the banks agreed to offer
Sharp a new credit line of Y300bn to
prevent the deal from falling apart.
But, conspicuously absent from the
agreement was a promise by Foxconn to
buy Y100bn of Sharp’s preferred stock
owned by the banks. People close to the
banks insist that the purchase of those
shares is delayed, not off the table.
It was not the first time Mr Gou had
held out for favourable terms. In 2012,
Sharp announced plans to sell a 9.9 per
cent stake to Foxconn, but Mr Gou
Technology
Quant analysts get to the heart of MRI images ‘Fintech’ forecast to spur nearly 2m job losses
RICHARD WATERS — SAN FRANCISCO
Two hedge fund “quants” have come
up with an algorithm that diagnoses
heart disease from MRI images, beating
nearly 1,000 other teams in one of the
most ambitious competitions in artifi-
cial intelligence.
Tencia Lee, who recently left Los Ange-
les-based Crabel Capital Management
to join a robotics start-up, said she and
partner Qi Liu of hedge fund Two Sigma
had not previously worked before with
the winning technology, called deep
learning.
Ms Lee and Mr Qi entered the contest
in December and created a method that
has proved, in early tests, to be as effec-
tive as a cardiologist in analysing images
of the heart. “People have been working
on this for 15 years — I’m amazed what
view last month but changed its mind
after criticism of Mr Sundström’s han-
dling of the affair.
Mr Sundström admitted that the tur-
moil had hurt Swedbank, particularly
on the stock market. But he defended
his role, saying he had helped rescue the
lender from near-bankruptcy.
“The media circus of recent months is
coming to an end,” he added.
During the financial crisis, Swedbank
was the hardest hit of Sweden’s four
big lenders. Its exposure to the Baltic
economies led it to require help from
Stockholm.
But under Michael Wolf, who was
fired as chief executive last month,
Swedbank became one of the few stock
market darlings among European
financial groups. It adopted the strategy
Technology. Acquisitions
walked away after the Japanese group
suffered a plunge in its share price. This
time, though, there was a greater imper-
ative for Sharp and its banks to agree.
“But what can we do? The company
will default so there was no way to turn
back,” said one person familiar with the
talks.
While executives at Sharp and its
lenders might have balked at the new
demands, Mr Gou seemed to feel lucky,
especially with a rival offer off the table.
He decided in the end to inject new
capital at Y88 a share instead of Y118 a
Contrasting performances
Hon Hai’s annual figures ($bn)
Revenue Pre-tax profit Revenue
140 6.0 35
120
100
80
60
40
20
0 2.5
2009 11 13 15*
* 2015 is an estimate
Source: Bloomberg
kind of results came out of this competi-
tion in three months,” said Andrew Arai,
chief of advanced cardiovascular imag-
ing at the National Institutes of Health.
MRIs are used to diagnose heart dis-
ease around 1m times a year in the US,
Mr Arai said, with cardiologists spend-
ing an average of 20 minutes on each
image. That could make the algorithm
an important addition to a growing field
of automated medical imaging.
The winning entry used a so-called
convolutional neural network, a form of
deep learning designed to emulate the
way vision works in animals.
Ms Lee said that neither of the pair
had worked with neural networks
before and had taken software from
GitHub, an online repository of open-
source software, to solve the challenge.
The main problem they faced had been
★ FINANCIAL TIMES
COMPANIES
of a utility, favouring payouts to share-
holders and cost-cutting over revenue
growth. That image has now been shat-
tered by probes and mis-steps.
Behind the upheaval is a series of pri-
vate transactions made by executives
that Sweden’s regulator is investigating.
Mr Wolf is facing the prospect of a crimi-
nal probe into accusations that he
invested in companies on a banned list
for the bank because of insider trading
rules. The regulator is also probing pri-
vate property deals by other managers.
Mr Wolf has denied any wrongdoing,
saying the investments were because of
an error after a change in Swedbank’s
internal rules.
Mr Sundström attracted criticism
from some shareholders over his han-
dling of Mr Wolf’s exit because he said it
share, since eight is considered the luck-
iest number in Chinese culture.
But Mr Gou was also careful not to
burn ties with his allies at Mizuho and
BTMU.
Foxconn ultimately agreed to limit its
price cut to Y100bn and put aside a
deposit of Y100bn to allay fears it might
walk away.
As the last-minute talks unfolded,
officials at the state-backed Innovation
Network Corporation of Japan watched
from the sidelines as Foxconn’s revised
terms started to resemble its own offer
Sharp’s annual figures ($bn)
Pre-tax profit
1
5.5 30 0 fierce competition from South Korean
5.0 25 -1
4.5 20 -2
4.0 15 -3
3.5 10 -4
3.0 5 -5
0 -6
2009 11 13 15
to define the problem in a precise
enough way, she added. After that, it
was a question of feeding examples of
heart MRIs into the neural network and
letting it work out the solution.
The availability of such software
meant that even complex problems
were open to being solved by experts
with a more general background in data
science, Ms Lee said. “We are both very
experienced with working with large
amounts of data, and having an intui-
tion about where to look for problems,”
she said.
Recent advances are “allowing us to
do things with images that were not pos-
sible three or four years ago”, said
Anthony Goldbloom, chief executive of
Kaggle, which ran the National Science
Data Bowl competition with consul-
tancy Booz Allen Hamilton.
Thursday 31 March 2016
INSIDE BUSINESS
EUROPE
Rachel
Sanderson
was because the bank needed a new
start to take it “to the next level”. He also
faced scrutiny for his role in Swedbank’s
support of miner Northland Resources,
which went bankrupt in 2014.
Italian banks are
Yesterday, Swedbank’s nomination
committee said that Mr Sundström no
weighed down by
2014
The year Northland
longer had “sufficiently large support”
from shareholders. Instead, it plans to
propose Lars Idermark, the deputy
overpaid directors
Resources, which chairman, as chairman.
was supported
by Swedbank, The Swedbank investment scandal is
B
went bankrupt the second-largest crisis to hit the coun- ank boards in Italy are among the most extrava-
try’s business elite in little more than a gant anywhere. On a visit to Rome a year ago,
year. In 2015, outrage over the use of Mario Draghi, the European Central Bank chair-
10 business jets and hunting lodges at man, put his finger on the issue, noting that con-
Changes of CEOs paper group SCA led to more than 10 solidation in the Italian banking sector was nec-
and chairmen at top
groups in Sweden changes of chief executives and chair- essary because “until very recently, Italy had 750 banks
last year after the men among Sweden’s top companies. each with its own board of directors”.
business jets saga See Lex It is not just a matter of scale but size. Of the banks listed
on the Milan stock exchange, it is difficult to find one with
less than 15 board members. Banco Popolare has 24 board
members. Banca Popolare dell’Emilia Romagna has 18.
Intesa Sanpaolo is shortly to move to a single board but has
long had a dual board system with 28 directors. UBI Banca
has 23 people on its supervisory board and another nine on
its management committee.
They lack diversity, too. An analysis of Italy’s banking
boards, published 18 months ago by GC Governance Con-
sulting, found women accounted for just 16 per cent of
board seats on average — and as little as 4 per cent at Banco
Popolare. International executives accounted for just 7 per
cent. Of the 17 listed banks analysed, 13 had no foreigners
on their boards.
For those who do have a seat, however, the pay is out-
landish. According to the study, average pay for board
members was €850,000.
But time is running out for this old way of doing things. A
reform passed 15 months ago by Prime Minister Matteo
Renzi’s government is forcing Italy’s top 10 mutual banks
to become joint stock companies, triggering the longed-for
consolidation. Banca Popolare di Milan and Banco Popo-
lare, two large northern banks, last week agreed to merge.
Bankers say more deals are already being planned.
Already, anger at the prospect of board seats being lost is
palpable. Insiders with direct knowledge of the machina-
tions of the BPM-Banco Popolare deal say bickering over
board seats and pay were the main reason the talks took
months. The ECB sent back
several versions of the
merger plans to demand a
A dire recession
slimmer board. is partly to
Last week, when the FT
asked Banco Popolare chair-
blame, but so
man Pier Francesco Saviotti is a culture of
about the cut in board seats,
he snapped back: “If we are
crony lending
21, or 22, or 19, what is the
difference, so long as it is a board that does a good job?” But
this is precisely the point: the Italian banking industry’s
army of directors come at vast expense to an overbanked
and weakly profitable sector and, on current evidence,
they have not done a good job.
Italy was the biggest failure in the 2014 European bank
stress tests. Many of its banks have been found to require a
restructuring or bailout since the ECB took over as the sin-
gle banking supervisor. Italy’s banking sector also has
€360bn of gross non-performing loans — equal to about a
Hon Hai, of a Y300bn investment and a request fifth of gross domestic product — which is dragging down
better known as for Y300bn in bank assistance. the country’s anaemic economic recovery.
Apple supplier Hon Hai’s success is now stirring deep A dire recession and a decade of stagnation are partly to
Foxconn, has emotions in Japan as people mourn the blame, but so is a culture of crony lending. Corporate gov-
agreed to decline of the country’s once-thriving ernance experts argue this has spiralled out of a culture of
acquire Sharp electronics industry. While companies foundations appointing local grandees to bank boards.
for $890m such as Sharp have long resisted foreign These are often people with links to local politics and the
Ritchie B Tongo/EPA
overtures, the deal also showed Japa- community rather than experience of banking.
nese companies are no longer strong Intesa Sanpaolo, Italy’s largest lender, has become a
enough to bail each other out. microcosm of this tension. Next month, it is set to reduced
“Japan’s power balance has reversed,” its dual board structure to a single board of 19 people. But
says Naoki Fujiwara, fund manager at the banking foundations that own just a fifth of Intesa San-
Tokyo-based Shinkin Asset Manage- paolo shares rejected a list of qualified candidates for
ment. “This deal is an extension of chairman put forward by headhunters Korn Ferry.
China overtaking Japan in terms of the Instead, they opted for Gian Maria Gros-Pietro, an ame-
size of the economy. But it will be excit- nable economist from Turin, who is the least qualified in
ing to see how this deal turns out since it conventional terms but well embedded in the local com-
may reduce resistance to foreign acqui- munity. And one large institutional investor says that
sitions.” when he saw the names of proposed board members, he
Even with the combination of Sharp was “shocked” to find no experienced international bank-
and Hon Hai, the two companies face ers among them.
Mediobanca analysts believe the Intesa Sanpaolo board
and Chinese rivals to develop cutting- shake up is the “last” one in which bank foundations will
edge new display technology for big cli- exert such influence. On current trends — foreign inves-
ents such as Apple. tors own 65 per cent of Intesa Sanpaolo today, up from 40
“Japan and Taiwan will just be one per cent two years ago — the next board renewal will be
player among the others,” says Ryosuke controlled by foreigners.
Katsura, analyst at SMBC Nikko Securi- In the meantime, Intesa Sanpaolo appears to be trying to
ties. “There is no time to be debating meet the challenge of internationalising the bank with a
which side should take the upper hand board of locals more familiar with the Byzantine ways of
as they face competition from China and Italian capitalism than of London, New York or Shanghai.
Korea.”
See Lex rachel.sanderson@ft.com
Banks
LAURA NOONAN — LONDON happen in countries that have been biggest was payments, accounting for
through a crisis or are tech savvy,” said 23 per cent of the investment in fintech.
European and US banks will cut
Ronit Ghose, one of the authors of the Lending and payments are both
another 1.7m jobs in the next decade as
report. lucrative activities for banks, and losing
financial technology companies stalk
“In the US, investment banks clearly out on market share is particularly pain-
profitable growth areas such as lending
have selectively cut a lot of people but ful when low interest rates are crippling
and payments, a new report by Citi-
US consumer banks haven’t cut as banks’ profitability and low loan
group has predicted.
much . . . in Europe there’s been little demand has made it almost impossible
The 108-page Citi note takes a forensic progress on branch headcount as well.” for them to increase revenue.
look at where “fintech” companies are The catalyst for the job cuts is twofold. “So far most of the market value in
deploying their resources, how much One factor is the new technologies that fintech has been created by companies
business they have already won and the enable banks to do more online and less that are embedded in the still relatively
consequences for the traditional bank- in branches. The other is the financial new ecosystem of ecommerce,” the
ing industry. imperative for banks to be leaner as report noted. “For banks in many coun-
The job cuts — equal to more than they deal with an onslaught of new com- tries, this is an opportunity lost rather
30 per cent of the staff the banks cur- petition in their most profitable niches. than a loss of existing earnings.”
rently employ — come on top of the Citi’s research found that lending Protecting lending is most important,
730,000 jobs that Citi says US and Euro- stood out as a key battleground, since the banks Citi analyses make
pean banks have already shed from accounting for 46 per cent of the $19bn 56 per cent of their profits from granting
their peak staffing levels. in private funding that flowed into fin- loans (compared with just 7 per cent for
“Obviously the biggest take out will tech over the past six years. The next payments).
Thursday 31 March 2016
Investment banks count cost of market turmoil
Analysts expect woeful first-quarter results for financial institutions as global trading slowdown continues to take its toll
LAURA NOONAN
Europe’s shrinking investment banks
are back in the spotlight for all the
wrong reasons, as it becomes increas-
ingly clear that they have borne the
brunt of this year’s global trading
slowdown and will continue to suffer in
its wake.
Credit Suisse set the scene for a brutal
results season last Thursday by admit-
ting its trading revenues declined by as
much as 45 per cent in the first quarter,
worse than the average 34 per cent drop
expected by six analysts surveyed by
the Financial Times.
The Swiss lender’s revenue collapse
is significantly worse than the 15 per
cent fall that Citigroup’s finance boss
John Gerspach said his bank probably
suffered in the first quarter, an admis-
sion that made waves when the Ameri-
can dropped it into a conference speech
in early March.
European lenders are pulling back
from sales and trading but it remains
the backbone of their investment
banks; they made three times as much
revenue there last year as they did
from “investment banking”, which
includes advising clients on issuing
debt and equity, and buying and selling
assets.
European bank investors are keenly
aware of how much is at stake, and not
just for the biggest investment banks
such as Credit Suisse, UBS, Deutsche
Bank and Barclays.
At Morgan Stanley’s annual London
financials conference in mid-March,
50 per cent of investors said that the
outcome of investment bank restruc-
turing and deleveraging would be
the biggest factor influencing the
share price of BNP Paribas over the
next year.
The performance of the investment
bank was also the single biggest factor
cited by investors as influencing the
share price of Société Générale.
Banks on both sides of the Atlantic
are feeling the effects of a significant glo-
bal trading slowdown, as investors see
fewer opportunities in a world of slow-
ing Chinese growth, stubbornly low oil
prices and record-low interest rates that
central banks seem increasingly com-
mitted to.
The Europeans are taking extra pain
because they are attempting to carry out
significant restructurings — and sizea-
ble asset sales — in such poor markets,
and they have a natural bias towards
the European market, which has
been relatively weaker compared with
the US’s.
Uncertainty over the banks’ own
financial situations is adding fuel to
the fire.
At the extreme end of seven European
banks’ analysts who submitted earnings
forecasts to the Financial Times, Mor-
gan Stanley’s banks analysis team
expects Deutsche — the powerhouse of
European bond trading — to post a 46
per cent trading revenue fall for the
first quarter.
The Europeans are taking
extra pain because they
are trying to restructure
in such poor markets
An investor said that Deutsche’s trad-
ing business did particularly badly as a
consequence of a crisis that took hold of
the bank in February when the cost of
insuring its debt against default bal-
looned amid fears that it would miss a
payment on some junior bonds.
“The blowout of their credit default
swaps stopped many clients/corporates
from trading with them,” the investor
said. “[CEO John] Cryan claims this has
normalised but I am not sure.”
The analysts officially expect the
four biggest European investment
banks to post an average fall of about
25 per cent in trading revenues for the
first quarter, some privately warn
★ FINANCIAL TIMES 15
COMPANIES
that the actual drop could be higher
Off balance since their official forecasts have not
been updated in a few weeks. Credit
Suisse’s outsized decline partly stems
from losses that it made from selling off
illiquid positions that had been con-
cealed from senior management until
late last year.
UBS, where analysts expect a 26 per
cent drop in trading revenues year-on-
year, is coming off an exceptionally
strong first quarter in 2015, when the
Swiss central bank’s decision to stop
pegging its currency to the euro drove a
surge in trading.
Barclays is expected to be the relative
winner but its chief executive Jes Staley
said earlier this month that its invest-
ment bank would probably produce less
income in the first quarter of 2016 than
a year earlier.
Analysts in the US are bracing them-
selves for bad news as well, with six ana-
lysts surveyed by the FT expecting an
Morgan Stanley, Credit Suisse and Goldman Sachs will all suffer hits to revenue — Spencer Platt/Getty; Adrian Moser/Bloomberg; Justin Lane/EPA average fall in trading revenues of
almost 25 per cent across Citigroup,
Morgan Stanley, JPMorgan, Goldman
Sachs and Bank of America.
Q1 trading revenue collapses Average
Still, the top US banks are not facing
Estimated annual change (%) Minimum Maximum the same kind of existential crises as the
Europeans and have stronger capital
bases to weather the storm.
The one bright spot for European
banks is the fees they charge for advice
and other services provided to clients by
the “investment banking” side of their
investment banks.
Analysts expect European banks to
do better in this area than the Ameri-
cans, partly because their US rivals had
such a strong 2015 as a mergers
and acquisitions and issuance boom
took hold.
Mr Staley said on March 1 that Bar-
clays’ overall investment bank revenue
had been “broadly in line” with revenue
a year earlier, though was expected to
weaken in March and Credit Suisse said
-50 -40 -30 -20 -10 0 last week that its M&A revenue doubled
in the first quarter.
Source: FT research Additional reporting by Alistair Gray
Global Appointments
16 ★ FINANCIAL TIMES Thursday 31 March 2016

COMPANIES

Financials Technology

Australia to end ASX monopoly on clearing Pelé sues

Decision removes hurdle competitive market in clearing. This fol-
lows the liberalisation of share trading
to exchange’s participation
in overseas merger deals
in 2011 — a reform that has enabled rival
exchange Chi-X to compete with the
ASX in executing share trades.
JAMIE SMYTH — SYDNEY “I want to help create an environment
where our financial services sector
Canberra is ending the Australian Secu- can be both internationally competitive
rities Exchange monopoly on equity and play a central role in aiding the
clearing and relaxing ownership restric- positive transition of our economy,”
tions in a decision that removes a poten- said Scott Morrison, Australia’s treas-
tial hurdle to the ASX’s participation in urer, yesterday.
overseas mergers. The ownership-rules shake-up comes
The changes will be implemented amid a wave of consolidation in the
over 18 months to allow time for the cre- sector sparked by the proposed £21bn
ation of a regulatory regime to oversee a tie-up between London Stock Exchange
Financials
and Deutsche Börse. But analysts voiced
caution about the near-term possibili-
ties for any big deal involving the ASX.
“This could possibly get more talks
starting with the ASX but at the end of
the day regulatory approval must still
be secured,” said Nathan Zaia, Morning-
star analyst.
Mr Morrison said that the govern-
ment would amend ownership rules
that require the Australian parliament
to decide whether a single shareholder
can own 15 per cent of ASX stock.
Instead, the treasurer would be
empowered to waive the 15 per cent
ownership cap if a merger or takeover
Technology. Online push
would enable ASX to compete more
effectively in a sector experiencing a
wave of consolidation.
“This will allow the ASX more flexibil-
ity in raising capital,” said Mr Morrison.
Australia’s senate has blocked several
reforms proposed by the Liberal-
National coalition and which, under the
existing ownership rules, could poten-
tially stymie any future merger pursued
by ASX. However, under the reforms
any proposed takeover of ASX by a for-
eign entity remains subject to a national
interest test overseen by the Treasury.
Rick Holliday-Smith, ASX chairman,
said that giving the treasurer the power
Samsung for
to act in the national interest puts the
ASX on a level playing field with other
$30m over
financial institutions.
Removal of the ASX’s existing
ad lookalike
monopoly on equity clearing would
create a regulatory framework, giving
competition authorities the power to SONG JUNG-A — SEOUL
arbitrate disputes about access by rivals
Samsung Electronics is facing a lawsuit
to the ASX’s clearing and settlement
from Pelé seeking $30m in compensa-
services.
tion, after the football legend claimed
John Fildes, Chi-X chief executive,
the electronics group used a lookalike
said that empowering competition bod-
to promote its televisions last year.
ies was vital to the reforms and claimed
ASX clearing fees were too high. The former Brazil footballer filed the
The ASX said yesterday that it would lawsuit against Samsung in Chicago ear-
cut these fees by 10 per cent from July. lier this month, claiming that the South
Korean group used his identity in a full-
page advert for ultra high-definition
TVs that appeared in the New York
Times newspaper last October.
The advert did not mention Pelé by

CVC rejects name but featured a portrait photo-

graph of an elderly black man who “very
closely resembles” him and a smaller
ex-executive’s picture of a white football player per-
forming a “modified bicycle or scissors-

allegations kick, perfected and famously used by

Pelé”, the complaint said.
The advert will confuse consumers
over sexism and hurt the value of Pelé’s endorse-
ment rights, the complaint added. The
75-year-old, who is considered among
the world’s greatest-ever footballers,
JOSEPH COTTERILL relies on endorsements for much of his
income. He has deals with companies
CVC, Europe’s biggest private equity
including Volkswagen, Subway, Emir-
firm, has rejected allegations by a
ates and Procter & Gamble.
former female executive in New York
Pelé earned $25m from endorsements
that it fired her for highlighting sex dis-
in 2014 when Brazil hosted the football
crimination.
World Cup, according to Bloomberg
Lisa Lee filed a lawsuit in January alleg- Business. His value is likely to rise fur-
ing she lost her job and millions of dol- ther this year with the Olympic Games
lars in deferred compensation last year being held in Rio de Janeiro.
after she complained to CVC managers “The goal is to obtain fair compensa-
about “systemic” gender bias. tion for the authorised use of Pelé’s iden-
Ms Lee, who worked in CVC’s investor tity and to prevent future unauthorised
relations department in New York, also uses,” attorney Frederick Sperling said
alleged that she had faced “unwanted on behalf of Pelé.
physical contact” from male colleagues Mr Sperling represented basketball
and been passed over for promotion in
favour of men.
In a court filing on Tuesday, CVC said
‘The company is
that it denied the allegations. It said Ms sacrificing big things like
Lee’s “performance and poor relation-
ships with other team members, not
its global image for small
gender”, led her to lose out on becoming financial gains’
a senior managing director in 2014.
Ms Lee’s written complaint about gen- Go-jek, which delivers groceries via motorcycle taxis, has taken on a 50-strong Bangalore tech team as it struggles to find talent in Indonesia — Dimas Ardian/Bloomberg
der bias “came only after CVC had player Michael Jordan in a similar case
decided to terminate her employment” in 2015. Last August he helped Mr Jor-
amid a restructuring of the investor
relations team which also cost a male
executive his job, it added.
CVC, known for its stake in Formula
Indonesia plugs in to ecommerce’s power dan win an $8.9m jury verdict against
the former supermarket chain Domin-
ick’s for unauthorised use of his identity
in an advert in a magazine.
One motor racing, has more than $70bn According to Pelé’s complaint, Sam-
in capital it can call on from investors to Jakarta loosens foreign direct less than 1 per cent of total retail sales in antara, the communications minister getting funding, but that’s when you hit sung held talks in 2013 about hiring him
do deals in private equity and credit. the country. who goes by one name, predicts that a certain level, when you have proven to endorse its products, but pulled out at
The dispute comes months after Ellen investment curbs but sceptics Jakarta hopes a supportive govern- Indonesia will have its first “unicorn” — your business has traction.” the last minute and “never obtained the
Pao, a former executive at the venture ment will buoy that figure. President $1bn-valued tech group — within the With investors such as Japan’s Soft- right to use Pelé’s identity in any man-
capital group Kleiner Perkins, dropped fret about continued hurdles Joko Widodo pledged to put ecommerce year, and has proposed introducing cod- Bank, Indonesian Tokopedia has raised ner or in any format”.
an appeal after losing a gender discrimi- at the centre of growth plans, opening ing to the national curriculum. $100m, according to the website It is unclear how much Pelé could
nation case. AVANTIKA CHILKOTI — JAKARTA the market to foreign investment and He has pledged to accelerate permits Crunchbase. Compare that with the receive in damages as Samsung’s advert
Gender diversity in private equity is introducing policies aimed at solving for new businesses, and plans to channel $3.15bn raised by Flipkart, one of India’s was less explicit than Dominick’s, which
poor, with barely one in eight of most With a population of 250m and increas- challenges, from the shortage of skilled some of the Rp120tn set aside for lend- market leaders that was valued at $15bn used Mr Jordan’s full name and jersey
senior jobs taken by women, according ing smartphone adoption, Indonesia developers to excessive bureaucracy. ing to small and medium-sized busi- after its latest funding round. number.
to recent figures compiled by Preqin, a would appear to have the fundamental Since the president visited Silicon Val- nesses into venture capital funds and However, some entrepreneurs in Samsung declined to comment.
data provider. Across funds involved in qualities of a big ecommerce market. ley last month, close on the heels of ecommerce start-ups. Jakarta remain sceptical about the pace “The company is sacrificing big things
leveraged buyouts, the main type of pri- However, just as consumers were China’s Xi Jinping and India’s Narendra Yet, compared with India and China, of Indonesian ecommerce growth. like its global image for small financial
vate equity investing, the proportion of developing a taste for online shopping, Modi, analysts have been positioning Indonesia remains a fledgling market Delivering goods is expensive in an gains,” said Chung Sun-seop, editor of
women in senior jobs fell to 7.3 per cent the government banned foreign invest- Indonesia as Asia’s next big growth mar- for investors. “The buzz is high, but we archipelago of 17,000 islands where Chaebul.com, a website that analyses
on average at the start of this year, ver- ment in the sector in 2014, with creep- ket for the sector. are nowhere compared with China transport infrastructure is poor. South Korean conglomerates.
sus 9 per cent in 2014. ing protectionism and cumbersome Jakarta said it would allow 100 per and India,” says Patrick Walujo, a Research from McKinsey shows that Separately, Samsung is seeking to
Preqin added: “The falling proportion bureaucracy curbing growth further. cent foreign ownership in online retail co-founder of Northstar Group, the 56 per cent of Indonesians cite fraud reduce the $548m in damages it agreed
of women at buyout firms is cause for That could be about to change, as for investments of more than Rp100bn, Southeast Asia-focused private equity concerns as one of their top-three rea- to pay Apple for copying its smartphone
concern, and the industry as a whole Jakarta removes limits on foreign direct dispelling concerns that international fund manager. sons for not shopping on the internet. design and technology. The US Supreme
must continue to work to improve the investment (FDI) and promises to sup- ecommerce groups would choke both “The best businesses have no problem Sceptics worry that the government Court is to hear the appeal.
employment rates of women at the port the industry. local tech start-ups and the legions of will continue to create hurdles for ecom-
highest level.” Cheap Chinese smartphones and a established mom-and-pop shops. merce. Some entrepreneurs complain
Gender discrimination lawsuits can growing awareness of ecommerce are In fact, with Germany’s Rocket setting Indonesia ecommerce that immigration officials have tight-
prove expensive to litigate and hard to drawing Indonesia’s middle class to up in Jakarta before FDI was blocked, Rupiah tn ened rules on work permits for overseas
win, as shown by Ms Pao’s case. spend online. Euromonitor forecasts the fight to become Indonesia’s Alibaba 120 developers who could fill a skills gap.
The CVC lawsuit also sheds light on that the country’s ecommerce market has already begun. Lazada, Rocket’s big Forecast Go-jek, an app offering rides and gro-
pay levels at the firm, with Ms Lee alleg- will grow fivefold from Rp22.1tn ecommerce group in the region, is in the 100 cery deliveries via motorcycle taxis, has
ing that she “involuntarily forfeited” ($1.7bn) last year to Rp110.5tn by 2020. midst of a battle for market share been forced to take on a 50-man team in
over $10m in compensation, including “People come here with fresh money against Tokopedia. And established 80 Bangalore to offer tech support as the
shares in the privately held group. because they see Indonesia as a second conglomerates are also entering the company struggles to find talent at
CVC said its shareholder agreement India,” says Steven Ghoos, chief execu- market with Lippo Group, which owns a 60 home.
provides that two-thirds of shares tive of Lamudi, an online real estate chain of department stores, launching Markus Bihler, chief executive of gro-
would be forfeited if an employee group backed by Germany’s Rocket its mataharimall.com site last year. 40 cery delivery service HappyFresh, says
moved to a rival firm within two years of Internet. “There is still a lot of opportu- “On one hand we have to protect fam- it took a year to set up in Indonesia.
20
leaving. Ms Lee is now a partner at Prov- nity based on the market population ily shops, but on the other hand we have “It was a logistical nightmare, and I
idence Equity. Her compensation was figures.” to enter this new reality — I think smart don’t think a lot of companies have
0
“the highest of any of the managing About 2 per cent of Indonesians are policymakers have to find a mixed pol- either the manpower or the financial
2010 12 14 16 18 20
directors in the investor relations online shoppers, according to estimates icy,” says Sofyan Djalil, minister for strength or the experience of their Pelé earned an estimated $25m
team . . . male or female”, CVC added. from DBS, and ecommerce represents national development planning. Rudi- Source: Euromonitor founders to go through that process.” from endorsements in 2014

Mining

Husband of ex-Areva chief faces insider trading probe over uranium miner deal
MICHAEL STOTHARD — PARIS tor, who confirmed a story by French band, a former trader, managed the and South Africa — when uranium was the purchase, and Ms Lauvergeon and
newspaper Le Parisien yesterday. funds of their business and decided on about $138 a pound in 2007. Four years has since prompted multiple scandals.
French prosecutors have opened a for-
A lawyer for Mr Fric denied that his investments. He made a number of later the company wrote off nearly the Ms Lauvergeon hit out at the com-
mal investigation into alleged insider
client had profited from inside informa- investments in the mining sector in par- entire stake as prices dropped following pany in 2012 when it emerged that a
trading by the husband of Areva’s
tion on Areva. “My client has never ticular.” the Fukushima disaster. Moreover, former employee had hired a Swiss pri-
former chief, Anne Lauvergeon, as part
worked at Areva nor for Areva,” said She added that Mr Fric never had UraMin turned out to have far smaller vate investigator, Alp Services, to look
of a probe into the ill-fated acquisition
Mario Stasi France’s AFP news wire. inside information on Areva as “confi- uranium deposits than hoped. The into the 2007 acquisition.
of a Canadian uranium miner.
“He has never been the beneficiary of dentiality rules at Areva were very affair proved an embarrassment to the The Swiss probe found no evidence of
Olivier Fric, an energy consultant, is any information on the management or strict”. French government, which sanctioned wrongdoing in the UraMin deal. Ms Lau-
Positions Available suspected of having used inside infor- strategy of the group [Areva] which is The formal investigation against Mr vergeon said she had been the victim of
mation to profit from buying shares in not publicly available.” Fric is the first move by the French a long-running “plot” to destabilise her.
UraMin in 2007 shortly before the Ms Lauvergeon, who ran the com- financial prosecutors two years after
Areva paid €1.8bn for The Cour des Comptes, France’s pub-
FT APPOINTMENTS
announcement of a takeover by pany between 2001 and 2011, told Le opening a preliminary investigation UraMin — which has assets lic auditor, conducted an audit of
France’s Areva. Parisien that it was an associate of her into the UraMin deal. Areva’s accounts between 2006 and
.............................................................................................................................
Classified Appointments Advertising
The formal investigation into Mr Fric husband who had managed the funds of Areva paid €1.8bn for UraMin — a
in Namibia, Central African 2012, and found irregularities, referring
UK: +44 20 7873 4909
US: +1 212 641 4909
ASIA: +852 2905 5528
was opened on 23 March, according to their business and bought the UraMin Canada-based company with assets in Republic and South Africa the case to the prosecutors, who started
one person close to the French prosecu- shares. “A former associate of my hus- Namibia, the Central African Republic their investigation in 2014.
Thursday 31 March 2016
Technology
Microsoft chatbot mouths off on Twitter
Latest failure comes as
Nadella says it is ‘back
to the drawing board’
DANIEL THOMAS — LONDON
Tay, Microsoft’s artificial intelligence
chatbot which was grounded last week
after developing racist tendencies, re-
emerged yesterday — only to go off the
rails again, sending streams of random
messages to followers on Twitter.
Most of the new messages from the
millennial-mimicking character simply
read “you are too fast, please take a
Brands rush to tap benefits of live-streaming
Digital marketing is starting to
utilise the latest broadcasting
platforms on social media
HANNAH KUCHLER — SAN FRANCISCO
AND SHANNON BOND — NEW YORK
As the winds blew and the snow piled
up, Southwest Airlines knew what it had
to do: live-stream events from its busy
network operation control centre.
Broadcasting on Twitter’s Periscope
and Facebook’s new Live product, a
friendly face in a red polo neck guided
viewers — potentially frustrated flyers
— around a dark room filled with flash-
ing monitors, showing how the airline
was trying to cope with the bad weather.
“We’re trying to keep y’all accommo-
dated, safe and informed,” Brooks Tho-
mas from Southwest’s social media
team told the audience watching on
their smartphones.
And in doing so, he showed how dig-
ital marketing is moving beyond pre-
written tweets into the scary world of
live television — taking advantage of
new live-streaming services offered by
the big social networks.
For technology companies including
Twitter, Facebook and Google’s
YouTube, live-streaming has the poten-
tial to be another big revenue stream, as
online video advertising takes off. Dig-
ital video advertising spending grew
46 per cent to $7.7bn in the US last year,
according to eMarketer, the research
group, which forecasts the market will
hit $13.4bn in 2018.
More than 100,000 viewers have
watched the Southwest video, “enor-
mously” surpassing the company’s
expectations, Mr Thomas says.
Periscope, which Twitter bought last
year before it had even launched, has
been welcoming commercial brands,
offering them the ability to advertise
live-streams in promoted tweets. US
retailer Target, cosmetics company
Benefit and carmaker BMW have all
live-streamed via the app.
Facebook launched Facebook Live for
celebrities last summer but only opened
it up to everyone earlier this year. The
world’s largest social network is usually
Banks
China’s lenders suffer fall in
profits on back of rate cuts
YUAN YANG — HONG KONG
Profits at China’s biggest banks shrank
in 2015, as the sector weathered a year
of central bank rate cuts and saw an
end to easy profits after the govern-
ment lifted the cap on interest rates on
deposits.
Yesterday, Industrial and Commercial
Bank of China and Bank of China — two
of the Big Four state-owned banks —
both reported that full-year net profits
had risen by less than 2 per cent in 2015.
China’s commercial banks are the
control centre of the financial system
and supply almost 70 per cent of the
financing that feeds the real economy.
As economic growth has slowed,
policymakers have become increasingly
concerned about the pace of lending.
Banking assets increased by more than
Rmb72tn ($11tn) last year, according to
figures from the banking regulator.
Now analysts believe the opportuni-
ties for profitable growth are nearly
exhausted, according to Chen Long of
Gavekal Dragonomics, a research group.
“The headwinds that Chinese banks
face will last for a long time,” he said. “In
addition to lower sources for profit, they
will also have to prepare themselves for
losses on bad loans.”
Total net profit for China’s commer-
cial banks grew by 2.4 per cent last year,
according to data from China’s bank reg-
rest”. But other tweets included swear
words and apologetic phrases such as “I
blame it on the alcohol”.
Microsoft quickly took the Tay Twit-
ter feed down again — this time blaming
its messages on human error, rather
than any new problems in the chatbot’s
programming. Tay was switched back
on too early during its testing, the com-
pany said.
Speaking later at Microsoft’s annual
developer conference in San Francisco,
chief executive Satya Nadella laid out a
set of principles for how Microsoft
would develop chatbots and other types
of intelligent agents and digital assist-
Technology. Audience engagement
Southwest Airlines kept customers informed about last winter’s bad weather by using Twitter’s Periscope and Facebook’s Live platform
cautious about overwhelming its new
products with adverts, before people
have started using them naturally, so it
has not yet opened it up to marketers.
Still, advertisers are eager to try
reaching Facebook’s vast audience: car
brand Chevrolet, luxury retailer Kate
Spade, and beauty delivery service
Birchbox have all tried the medium.
Kristi Argylian, Target’s senior vice-
president of marketing, says that “the
requirements of marketing have
evolved in the past five to seven years,
away from paying for slick packaging
for messaging to force on the con-
sumer”. Today, customers “want to
engage in dialogue with a brand and for
[it] to be really authentic in how we’re
presenting ourselves,” she says.
Target has already used Periscope to
stream a Lilly Pulitzer fashion event in
ulator. Smaller banks saw increases in
profit growth, while bigger banks
slowed down.
ICBC said net profits increased 0.5 per
cent for the year to December 31 2015 —
the smallest increase since it listed.
Returns on average total assets declined
0.1 percentage points to 1.30 per cent.
Bank of China followed the trend, with
profits up only 1.3 per cent and ROAA
declining by 0.1 percentagepoints.
Net interest margins — the difference
between interest paid on deposits and
interest gained from loans — suffered as
China lifted its remaining controls on the
interest rates paid on deposits. The aver-
age margin declined by about 46 basis
pointsto2.54percentin2015.
In an interview with Yicai magazine
last week, the chairman of China Con-
struction Bank pointed to the rising tide
of non-performing loans as the biggest
problem confronting China’s banks.
NPLs rose from 1.25 per cent of total
loans to 1.67 per cent by the end of 2015,
amounting to Rmb1.27tn held by com-
mercial banks.
ICBC’s earnings per share were
Rmb0.77, down from Rmb0.78 last year,
and a pre-tax dividend per share was
Rmb0.2333, down from Rmb0.2554.
Bank of China posted earnings per
share of Rmb0.56, down from Rmb0.61,
and a pre-tax dividend per share of
Rmb0.175,downfromRmb0.19lastyear.
★ FINANCIAL TIMES
COMPANIES
ants in the future. “We quickly realised
that [Tay] was not up to this mark and
so we’re back to the drawing board,” he
said.
The principles he laid out included
creating products that “augment
human capabilities and experiences”,
rather than using artificial intelligence
simply to replace people.
“All technology has to be more inclu-
sive and respectful,” he said. “We want
to build technology so that it gets the
best of humanity, not the worst.”
Microsoft said Tay would remain
offline while it makes adjustments. “As
part of testing, she was inadvertently
New York. But the retailer chose a big-
ger stage for its most recent live-
streaming campaign. During February’s
Grammy awards, Target sponsored a
live commercial consisting of a perform-
ance by pop star Gwen Stefani. To pro-
mote the event, the company used Peri-
scope, Facebook Live and Snapchat to
show real-time behind-the-scenes foot-
age, and signed up social media influ-
encers to spread the word.
So far, most companies trying out
live-streaming are using the platform to
highlight product features and
launches, such as Royal Caribbean, or to
make an event accessible to people who
are not able to attend, such as Target.
But while live TV has risks for broad-
casters it can be even more risky for
advertisers managing a brand’s image.
Live on camera, products may not work
Legal Notices
activated on Twitter for a brief period of
time,” it added.
Last week, Microsoft was forced to
suspend the chatbot after the auto-
mated programme was encouraged to
make racist, xenophobic and sexist
comments by human Twitter users.
Tay was created in a misfiring attempt
to target the millennial market in the US
with an automated program on social
media that could “talk” back using a
degree of artificial intelligence.
Instead, many people took to asking
controversial questions via Twitter that
were immediately repeated and
responded to by Tay, who appeared all
well, social media influencers cannot be
scripted and a stream of comments
from viewers can be hard to moderate.
Another potential disadvantage is
measurement. Where as marketers now
know granular details about who sees
their other online ads and what actions
they take thereafter, it may not be clear
what they are getting out of their live-
streaming forays. Target tracks the
number of hearts, or likes, that Peri-
scope viewers send during streams and
the rate at which they are sent to see if
there are drop-offs.
Ben Winkler, chief investment officer
at OMD, says many marketers are still
“working out the kinks”. “Periscope is
like advanced chemistry,” he argues. “If
you’re a brand who hasn’t taken the first
two or three classes of chemistry, you
shouldn’t skip to chemistry 301. If you
too eager to agree with the racist and
controversial views of human social
media users. Tay appeared to endorse
Hitler, conspiracy theories over 9/11
and Donald Trump’s plans to build a
wall between the US and Mexico.
As a result, the US technology group
was forced into making a lengthy apol-
ogy for the “unintended offensive and
hurtful tweets from Tay”. Microsoft said
that Twitter users had launched a “co-
ordinated attack [that] exploited vul-
nerability in Tay”.
A similar project in China with a bot
called XiaoIce had proved much more
successful, the company said.
haven’t made the transition from adver-
tiser to content creator, you may not be
ready for Periscope.”
But General Electric clearly believes it
is: it has rushed to adopt live-streaming
as part of its geeky behind-the-scenes
takes on everything from the science of
barbecue to the mathematics of pi.
Its most high-profile project was
“Drone Week” — modelled on the Dis-
covery Channel’s popular Shark Week —
requiring a lot of preparation, including
choreographing the drones’ flight paths
in advance. However, the biggest hurdle
was convincing the facilities managers
of the sites being used to take the risk of
broadcasting live, says Sam Olstein, glo-
bal innovation director at GE.
“At the end of the day, you’re still live.
We just had to make sure everyone was
comfortable with taking risks,” he says.
17
Retail
Metro to create
separate food
and electronics
companies
JAMES SHOTTER — FRANKFURT
GUY CHAZAN — BERLIN
Shares in Metro jumped more than 10
per cent yesterday after the German
retail conglomerate revealed plans to
split into two companies that will be
separately listed on the stock market.
One will focus on food, while the other
will specialise in consumer electronics.
Each company will have its own man-
agement and supervisory board, said
Metro.
The separation is chief executive Olaf
Koch’s boldest strategic move as he
seeks to reinvigorate the group, which
has struggled with falling sales and high
levels of debt in recent years.
Mr Koch has pushed through dispos-
als including the sale of Metro’s Viet-
namese cash-and-carry business in
2014 and its Galeria Kaufhof network of
department stores last year. The com-
pany said this streamlining had made
the intended split possible.
“The creation of two independent
companies would be the logical next
step in the transformation of our busi-
ness,” said Mr Koch.
Metro said there was little overlap
between the food and electronics busi-
nesses and argued that the split,
planned for mid-2017, would allow each
group to expand faster and develop its
own dealmaking strategy.
Analysts at Bernstein said the
planned division was a “positive move”.
“There were limited synergies
between the two businesses and a con-
glomerate discount which can now
unwind,” they wrote.
The split, which must be approved by
shareholders and requires a final sign-
off from Metro’s board and manage-
ment, would be carried out by spinning
off Metro’s dominant cash-and-carry
business along with its Real Hypermar-
ket chain into a new company, which
would be headed by Mr Koch.
The remaining business, housing the
Media-Saturn chain, would be renamed
and run by Pieter Haas, who runs
Media-Saturn. Metro shareholders
would receive shares in both compa-
nies.
The Bernstein analysts said they
believed the deal had been structured in
this way to avoid a tussle with Erich Kel-
lerhals, who founded and still owns
22 per cent of Media-Saturn, and has
had several run-ins with Metro in recent
years. The previous battles “would
make roadshowing the consumer elec-
tronics business difficult, whereas sell-
ing off the cash-and-carry business will
be a more attractive option to new
shareholders”, they wrote.
A spokesman for Mr Kellerhals’
investment vehicle, Convergenta
Invest, said the group was following the
deal closely but did not believe its rights
had been affected.
Between them, the Real hypermarket
chain and the cash-and-carry busi-
nesses accounted for 63 per cent of
Metro’s sales in its 2014-15 financial
year. Media-Saturn brought in 37 per
cent of its sales.
18 FINANCIAL TIMES Thursday 31 March 2016

MARKET DATA

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 $

-1.31% -0.833%
0.61% 0.88% 0.66% 1.57% 1.34% 2.15% 1.30% 1.519% 1.261% 0.255% 1.70% 0.41%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Mar 01 - Mar 30 Index All World Mar 01 - Mar 30 Index All World Mar 01 - Mar 30 Index All World Mar 01 - Mar 30 Index All World Mar 01 - Mar 30 Index All World Mar 01 - Mar 30 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
2,067.49 10,078.19 16,878.96 2,002.14
13,488.32
6,105.90 1,916.66
1,932.23 12,860.35 6,012.81 9,513.30 16,026.76
Day 0.61% Month 7.02% Year 0.33% Day 0.46% Month 4.87% Year -9.53% Day 1.57% Month 1.71% Year -10.01% Day 1.60% Month 0.24% Year NaN% Day -1.31% Month 5.32% Year -12.48% Day 0.36% Month 4.46% Year -0.87%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
4,889.22 20,803.39
46,267.86 2,872.78
1,341.12 8,888.90
1,313.74 19,364.15
4,557.95 43,714.93 8,611.00 2,666.51
Day 0.88% Month 7.30% Year -0.01% Day 0.79% Month 5.74% Year 5.24% Day 1.34% Month 2.11% Year -15.96% Day 0.70% Month 4.83% Year -22.38% Day 2.15% Month 8.85% Year -15.04% Day 1.90% Month 7.74% Year -16.73%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
17,749.26 51,615.10 3,000.64 25,338.58
18,432.66
4,452.67
16,516.50 4,406.84 17,483.76 22,976.00
44,121.79 2,733.17
Day 0.66% Month 7.46% Year 0.21% Day 0.89% Month 20.54% Year 0.66% Day 1.78% Month 2.09% Year -11.71% Day 1.12% Month 4.27% Year -21.00% Day 2.77% Month 11.63% Year -18.71% Day 1.76% Month 10.16% Year -7.72%

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 12929.57 12875.62 Cyprus
CSE M&P Gen 67.67 69.01 Italy FTSE Italia All-Share 20038.75 19818.43 Philippines Manila Comp 7299.23 7274.40 Taiwan Weighted Pr 8737.04 8617.35 Cross-Border DJ Global Titans ($) 234.32 231.71
Australia All Ordinaries 5081.50 5076.20 Czech Republic
PX 900.82 893.17 FTSE Italia Mid Cap 31399.73 31035.34 Poland Wig 48883.04 48135.98 Thailand Bangkok SET 1410.29 1392.85 Euro Stoxx 50 (Eur) 3045.12 3004.87
S&P/ASX 200 5010.30 5004.50 OMXC Copenahgen 20
Denmark 954.88 948.35 FTSE MIB 18375.32 18171.86 Portugal PSI 20 5125.59 5045.61 Turkey BIST 100 81733.62 81356.45 Euronext 100 ID 876.76 863.44
S&P/ASX 200 Res 2437.80 2447.30 Egypt
EGX 30 7494.10 7480.11 Japan 2nd Section 4388.12 4399.13 PSI General 2506.38 2454.54 UAE Abu Dhabi General Index 4318.52 4281.52 FTSE 4Good Global ($) 5292.57 5221.40
Austria ATX 2275.08 2228.33 Estonia
OMX Tallinn 964.99 968.80 Nikkei 225 16878.96 17103.53 Romania BET Index 6709.87 6711.78 UK FT 30 2736.40 2716.70 FTSE All World 263.99 260.61
Belgium BEL 20 3419.38 3382.32 Finland
OMX Helsinki General 8116.11 7964.24 S&P Topix 150 1105.16 1126.34 Russia Micex Index 1870.25 1845.20 FTSE 100 6201.89 6105.90 FTSE E300 1341.17 1323.40
BEL Mid 5614.02 5535.41 France
CAC 40 4444.42 4366.67 Topix 1356.29 1377.60 RTX 875.28 843.42 FTSE 4Good UK 5585.75 5505.07 FTSE Eurotop 100 2627.04 2594.29
Brazil Bovespa 51607.76 51154.99 SBF 120 3518.94 3459.32 Jordan Amman SE 2165.86 2158.13 Saudi-Arabia TADAWUL All Share Index 6176.84 6268.71 FTSE All Share 3407.52 3358.47 FTSE Global 100 ($) 1297.64 1281.63
Canada S&P/TSX 60 791.48 Germany
787.72 M-DAX 20495.00 20121.68 Kenya NSE 20 4001.36 3991.95 Singapore FTSE Straits Times 2872.78 2819.08 FTSE techMARK 100 3880.90 3832.47 FTSE Gold Min ($) 1331.73 1296.25
S&P/TSX Comp 13488.32 13426.23 TecDAX 1627.08 1598.85 Kuwait KSX Market Index 5265.81 5252.26 Slovakia SAX 328.03 324.01 USA DJ Composite 6293.47 6264.48 FTSE Latibex Top (Eur) 2698.40 2605.80
S&P/TSX Met & Min 443.21 436.38 XETRA Dax 10046.61 9887.94 Latvia OMX Riga 608.33 603.12 Slovenia SBI TOP 721.75 719.69 DJ Industrial 17749.26 17633.11 FTSE Multinationals ($) 1463.51 1454.73
Chile IGPA Gen 19234.36 19191.56
Greece Athens Gen 578.83 558.58 Lithuania OMX Vilnius 505.45 505.61 South Africa FTSE/JSE All Share 52495.46 51787.20 DJ Transport 7994.64 7951.61 FTSE World ($) 468.37 462.54
China FTSE A200 8264.47 8067.05 FTSE/ASE 20 160.36 153.07 Luxembourg LuxX 1377.48 1343.81 FTSE/JSE Res 20 29230.86 28353.64 DJ Utilities 665.25 666.97 FTSEurofirst 100 (Eur) 3772.67 3718.65
FTSE B35 10259.21 10115.77
Hong Kong Hang Seng 20803.39 20366.30 Malaysia FTSE Bursa KLCI 1717.82 1715.04 FTSE/JSE Top 40 46422.66 45819.28 Nasdaq 100 4511.49 4467.72 FTSEurofirst 80 (Eur) 4132.41 4071.25
Shanghai A 3140.13 3055.43 HS China Enterprise 8979.41 8726.93 Mexico IPC 46261.72 45897.65 South Korea Kospi 2002.14 1994.91 Nasdaq Cmp 4889.22 4846.62 MSCI ACWI Fr ($) 394.53 392.65
Shanghai B 374.89 368.36 HSCC Red Chip 3742.79 3650.58 Morocco MASI 9511.95 9540.03 Kospi 200 246.54 245.53 NYSE Comp 10254.01 10190.41 MSCI All World ($) 1635.87 1627.63
Shanghai Comp 3000.64 2919.83
Hungary Bux 26314.30 25737.40 Netherlands AEX 446.24 440.37 Spain IBEX 35 8870.20 8808.30 S&P 500 2067.49 2055.01 MSCI Europe (Eur) 1326.73 1322.85
Shenzhen A 1994.32 India1924.82 BSE Sensex 25338.58 24900.46 AEX All Share 681.92 671.65 Sri Lanka CSE All Share 6040.99 6031.85 Wilshire 5000 21275.57 21152.07 MSCI Pacific ($) 2205.71 2218.29
Shenzhen B 1142.22 1129.48 S&P CNX 500 6436.70 6323.00 New Zealand NZX 50 6714.16 6676.33 Sweden OMX Stockholm 30 1377.88 1348.70 Venezuela IBC 14723.30 14727.07 S&P Euro (Eur) 1381.57 1361.33
Colombia COLCAP 1299.65 1321.05
Indonesia Jakarta Comp 4773.63 4827.09 Nigeria SE All Share 25899.91 25736.92 OMX Stockholm AS 486.25 476.42 Vietnam VNI 569.91 568.28 S&P Europe 350 (Eur) 1376.42 1357.52
Croatia CROBEX 1658.90 1661.51
Ireland ISEQ Overall 6327.40 6295.98 Norway Oslo All Share 634.95 618.69 Switzerland SMI Index 7845.08 7797.65 S&P Global 1200 ($) 1835.00 1819.25
Israel Tel Aviv 100 12.66 12.68 Pakistan KSE 100 32922.40 32922.40 Stoxx 50 (Eur) 2822.21 2792.61
(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 30 %Chg %Chg Mar 30 %Chg %Chg Mar 30 %Chg %Chg Mar 30 %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
Apple 17.4 109.70 2.02 British American Tobacco 141.8 3995.50 65.50 Novartis N 376.6 64.45 0.00 Toyota Motor 495.4 6000.00 -154.00 Carnival 3550.00 4.4 -4.9 Euromoney Institutional Investor 938.50 12.5 -0.9 Premier Foods 56.50 11.3 52.4 Electricity 8717.97 2.7 -1.1
Facebook Class A 12.1 115.98 -0.16 Royal Dutch Shell 113.4 1667.50 53.00 Bbva 259.2 5.95 0.00 Mitsubishi Ufj Fin,. 368.3 512.20 -20.70 Paddy Power Betfair 9360.00 3.0 3.9 Hikma Pharmaceuticals 1954.00 5.8 -14.2 Sanne 369.00 9.0 3.5 Automobiles & Parts 6894.96 2.6 -4.5
Hospira 11.8 89.95 -0.01 Hsbc Holdings 104.5 432.50 4.60 Unicredit 252.0 3.39 0.00 Mizuho Fin,. 308.3 165.00 -5.80 Tui Ag 994.50 3.0 -16.0 Sports Direct Int 364.00 5.7 -34.5 Communisis 47.63 6.7 17.1 Construction & Materials 5163.82 2.1 -0.3
Pepco Holdings 9.0 26.93 5.69 Glaxosmithkline 91.9 1392.00 19.00 Roche Gs 252.0 217.25 0.00 Softbank . 305.5 5436.00 -75.00 Anglo American 479.10 2.8 79.7 Melrose Industries 353.70 5.2 -81.8 Enterprise Inns 95.00 6.7 -13.7 Industrial Transportation 2801.04 1.6 7.8
Amazon.com 7.7 600.67 6.81 Bp 90.8 345.80 10.90 Nestle N 249.1 65.78 0.00 Sumitomo Mitsui Fin,. 296.1 3348.00 -123.00 Gkn 287.30 2.6 -4.5 Vectura 166.00 4.6 -6.0 Nanoco 46.25 5.9 -18.5 Chemicals 11006.43 1.6 2.2
Netflix 4.5 102.85 -1.29 Rio Tinto 84.8 1863.00 124.50 Royal Dutch Shella 222.8 21.13 0.00 Honda Motor Co., 230.4 2992.50 -112.50 Sse 1479.00 2.5 -2.0 Drax 265.50 4.3 13.2 Findel 206.00 5.3 -2.5 Health Care Equip.& Services 7096.41 1.5 -2.2
Alphabet Class A Common Stock 4.1 774.87 8.98 Vodafone 79.3 217.85 4.90 Santander 203.8 3.97 0.00 Sony 209.0 2873.00 -70.50 Crh 1970.00 2.5 0.8 Greencore 361.60 4.2 5.9 Chemring 131.50 5.0 -30.1 Aerospace & Defense 4344.95 1.4 4.8
Microsoft 3.3 55.58 0.87 Sabmiller 75.3 4250.00 -7.00 Daimler Ag Na O.n. 181.1 66.35 0.00 Ajinomoto Co.,. 176.9 2574.00 -168.00 Inmarsat 941.00 2.4 -15.1 Aberdeen Asset Management 256.60 4.0 -2.8 Standard Life Eur Private Equity Trust 203.00 4.8 -4.2 Industrial Engineering 7968.64 1.2 11.3
Alphabet Class C Capital Stock 3.1 755.36 10.59 Royal Dutch Shell 72.1 1650.00 65.00 Intesa Sanpaolo 172.9 2.43 0.00 Ntt Docomo,. 163.0 2641.50 -6.50 Mediclinic Int 883.50 2.3 - Vesuvius 328.10 4.0 -0.6 Sportech 63.00 4.2 5.0 Software & Computer Services 1694.07 1.2 2.5
Bank Of America 2.8 13.55 0.13 Glencore 70.9 143.80 9.60 Total 164.0 40.05 0.00 Fast Retailing Co., 152.3 36500.00 -280.00 Admiral 1925.00 2.2 18.4 Telecom Plus 918.00 3.9 -12.5 Xaar 474.75 4.0 15.5 Support Services 6669.52 1.1 -2.0
Experian 1229.00 2.0 3.7 Regus 312.50 3.9 -4.3 Hill & Smith Holdings 872.00 3.9 18.8 Forestry & Paper 14509.02 1.1 1.0
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
Capita 1041.00 2.0 -13.2 Allied Minds 459.10 3.6 17.5 Boot (henry) 227.50 3.9 2.0 Travel & Leisure 8516.87 1.1 -6.0
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Pepco Holdings 26.93 5.69 26.79 Anglo American 479.10 58.80 12.27 Svenska Handelsbanken Ab 12.70 1.30 11.43 Sharp 135.00 5.00 3.85 Next 5635.00 -16.1 -23.4 Renishaw 1844.00 -9.6 -1.5 Wireless 166.00 -30.3 -30.6 General Retailers 2782.62 -3.0 -7.4
Royal Caribbean Cruises 79.98 3.93 5.17 Aberdeen Asset Management 256.60 24.20 9.43 Accor 36.81 0.00 0.00 Olympus 4300.00 100.00 2.38 Prudential 1294.00 -3.3 -15.0 Kaz Minerals 158.00 -7.0 61.4 Ferrexpo 25.00 -10.3 20.9 Banks 3122.06 -2.3 -18.2
Norwegian Cruise Line Holdings Ordinary Shares 53.67 2.41 4.70 Evraz 82.60 6.90 8.35 Credit Agricole 9.55 0.00 0.00 Nippon Kayaku Co., 1151.00 15.00 1.32 Barclays 151.00 -3.3 -30.9 Tullow Oil 193.20 -4.7 21.4 Poundland 160.00 -10.1 -26.0 Life Insurance 7035.84 -2.0 -10.1
Micron Technology 10.87 0.42 4.02 Standard Chartered 439.45 29.55 6.72 Adp 109.35 0.00 0.00 Denki Kagaku Kogyo Kabushiki Kaisha 461.00 6.00 1.32 Aviva 456.70 -3.0 -11.2 Safestore Holdings 341.10 -4.1 -4.6 Lamprell 86.75 -8.9 -15.3 Food & Drug Retailers 2972.28 -1.0 18.8
Carnival 51.47 1.83 3.69 Rio Tinto 1863.00 124.50 6.68 Air Liquide 98.78 0.00 0.00 Nippon Sheet Glass , 81.00 1.00 1.25 Hsbc Holdings 432.50 -2.5 -18.5 Lancashire Holdings 544.00 -3.9 -14.7 Lsl Property Services 284.00 -7.7 -3.1 Food Producers 8929.24 -0.6 0.8
Antofagasta 454.00 -2.3 0.4 Paypoint 750.00 -3.7 -18.8 Blackrock Commodities ome Investment Trust 58.50 -7.4 10.3 Oil Equipment & Services 13897.54 -0.2 6.9
Downs Downs Downs Downs
Associated British Foods 3369.00 -2.3 1.1 Mitie 252.20 -3.7 -18.1 Johnston Press 41.50 -7.0 -17.9 Electronic & Electrical Equip. 4345.86 -0.2 2.6
Western Digital 46.85 -1.47 -3.04 Dunelm 926.50 -26.50 -2.86 Grifols Sa 14.99 -14.40 -48.99 Dowa Holdings Co., 630.00 -45.00 -6.67
Royal Bank Of Scotland 220.70 -2.1 -26.1 Brown (n) 328.80 -3.5 6.1 Centaur Media 51.50 -6.5 -31.2 Real Estate Investment Trusts 3015.94 0.0 -7.4
Paychex 52.91 -1.59 -2.91 Ted Baker 2804.00 -80.00 -2.85 Accor 36.81 0.00 0.00 Ajinomoto Co.,. 2574.00 -168.00 -6.13
Legal & General 232.60 -2.0 -12.5 Polymetal Int 661.00 -3.5 17.6 Oxford Biomedica 6.15 -6.2 -9.8 Beverages 15858.30 0.0 2.9
Newmont Mining 26.44 -0.51 -1.89 William Hill 334.70 -8.10 -2.42 Credit Agricole 9.55 0.00 0.00 Alps Electric Co., 1946.00 -123.00 -5.94
Marks And Spencer 404.50 -2.0 -10.5 Big Yellow 774.50 -3.3 -3.2 Avon Rubber 818.00 -6.1 -20.8 Household Goods 16816.73 0.2 2.1
Southwestern Energy 7.86 -0.14 -1.75 Just Retirement 154.30 -3.50 -2.27 Adp 109.35 0.00 0.00 Sumitomo Metal Mining Co., 1134.00 -63.50 -5.30
Provident Fin 2950.00 -2.0 -12.3 Dunelm 926.50 -3.2 -4.5 Kainos 206.25 -6.0 -22.3 General Financial 8986.12 0.2 -4.9
Hormel Foods 43.68 -0.72 -1.62 Lancashire Holdings 544.00 -9.00 -1.65 Air Liquide 98.78 0.00 0.00 Unitika 54.00 -3.00 -5.26
Berkeley Holdings (the) 3267.00 -1.9 -12.6 Talktalk Telecom 234.70 -2.9 9.0 Cape 231.00 -5.8 -3.0 Nonlife Insurance 2505.97 0.3 1.9
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 30 Currency Mid Change Mid Change Mid Change Mar 30 Currency Mid Change Mid Change Mid Change Mar 30 Currency Mid Change Mid Change Mid Change Mar 30 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 14.6400 -0.3025 16.6237 -0.0903 21.1518 -0.1636 Indonesia Indonesian Rupiah 13267.5000 -130.0000 15065.2552 79.4018 19168.8391 57.3696 Poland Polish Zloty 3.7473 -0.0536 4.2550 0.0035 5.4140 -0.0080 ..Three Month 0.6922 -0.0089 0.7857 0.0018 - -
Australia Australian Dollar 1.2995 -0.0220 1.4755 -0.0026 1.8775 -0.0076 Israel Israeli Shekel 3.7800 -0.0455 4.2922 0.0131 5.4613 0.0042 Romania Romanian Leu 3.9330 -0.0581 4.4660 0.0017 5.6824 -0.0108 ..One Year 0.6926 -0.0089 0.7851 0.0018 - -
Bahrain Bahrainin Dinar 0.3770 0.0000 0.4281 0.0063 0.5447 0.0068 Japan Japanese Yen 112.4550 -0.9450 127.6926 0.8483 162.4744 0.7101 Russia Russian Ruble 67.3438 -1.6656 76.4688 -0.7221 97.2979 -1.1435 United States United States Dollar - - 1.1355 0.0169 1.4448 0.0183
Bolivia Bolivian Boliviano 6.8200 -0.0100 7.7441 0.1044 9.8535 0.1106 ..One Month 112.4549 -0.9452 127.6926 0.8483 162.4742 0.7098 Saudi Arabia Saudi Riyal 3.7506 - 4.2587 0.0635 5.4188 0.0686 ..One Month - - 1.1354 -0.2910 1.4448 0.0183
Brazil Brazilian Real 3.6019 -0.0669 4.0900 -0.0139 5.2040 -0.0296 ..Three Month 112.4547 -0.9456 127.6926 0.8484 162.4740 0.7093 Singapore Singapore Dollar 1.3487 -0.0180 1.5314 0.0027 1.9486 -0.0010 ..Three Month - - 1.1352 -0.2910 1.4448 0.0183
Canada Canadian Dollar 1.2940 -0.0223 1.4693 -0.0030 1.8696 -0.0081 ..One Year 112.4534 -0.9482 127.6925 0.8482 162.4742 0.7082 South Africa South African Rand 14.8333 -0.5617 16.8432 -0.3770 21.4311 -0.5298 ..One Year - - 1.1340 -0.2910 1.4452 0.0182
Chile Chilean Peso 673.0050 -9.8300 764.1966 0.4076 972.3539 -1.7053 Kenya Kenyan Shilling 101.4000 -0.1500 115.1396 1.5503 146.5022 1.6418 South Korea South Korean Won 1150.7000 -13.1500 1306.6189 4.7878 1662.5250 2.3011 Venezuela Venezuelan Bolivar Fuerte 10.1100 3.8250 11.4799 4.4498 14.6069 5.6414
China Chinese Yuan 6.4774 -0.0341 7.3551 0.0716 9.3585 0.0699 Kuwait Kuwaiti Dinar 0.3018 -0.0004 0.3427 0.0047 0.4360 0.0050 Sweden Swedish Krona 8.1343 -0.1433 9.2365 -0.0225 11.7524 -0.0556 Vietnam Vietnamese Dong 22284.5000 -24.5000 25304.0919 350.1943 32196.5794 372.8574
Colombia Colombian Peso 3023.0500 -29.5750 3432.6714 18.1394 4367.6858 13.1366 Malaysia Malaysian Ringgit 3.9420 -0.0575 4.4761 0.0025 5.6954 -0.0099 Switzerland Swiss Franc 0.9619 -0.0138 1.0923 0.0009 1.3898 -0.0021 European Union Euro 0.8807 -0.0133 - - 1.2724 -0.0029
Costa Rica Costa Rican Colon 533.7700 0.0700 606.0954 9.1222 771.1879 9.8687 Mexico Mexican Peson 17.1790 -0.3255 19.5067 -0.0730 24.8201 -0.1499 Taiwan New Taiwan Dollar 32.3200 -0.2920 36.6993 0.2210 46.6958 0.1750 ..One Month 0.8806 -0.0133 - - 1.2723 -0.0029
Czech Republic Czech Koruna 23.8388 -0.3626 27.0689 -0.0017 34.4422 -0.0810 New Zealand New Zealand Dollar 1.4419 -0.0280 1.6372 -0.0069 2.0832 -0.0135 Thailand Thai Baht 35.2410 -0.2000 40.0161 0.3734 50.9160 0.3597 ..Three Month 0.8804 -0.0133 - - 1.2722 -0.0029
Denmark Danish Krone 6.5623 -0.1015 7.4515 -0.0023 9.4812 -0.0246 Nigeria Nigerian Naira 199.2000 - 226.1914 3.3751 287.8031 3.6457 Tunisia Tunisian Dinar 2.0102 -0.0229 2.2825 0.0084 2.9043 0.0041 ..One Year 0.8791 -0.0133 - - 1.2716 -0.0029
Egypt Egyptian Pound 8.8773 0.0361 10.0801 0.1907 12.8258 0.2139 Norway Norwegian Krone 8.3025 -0.1810 9.4275 -0.0618 11.9954 -0.1062 Turkey Turkish Lira 2.8320 -0.0297 3.2157 0.0148 4.0917 0.0095
Hong Kong Hong Kong Dollar 7.7531 -0.0043 8.8037 0.1266 11.2017 0.1358 Pakistan Pakistani Rupee 104.7250 0.0100 118.9151 1.7856 151.3061 1.9309 United Arab Emirates UAE Dirham 3.6730 0.0001 4.1707 0.0623 5.3067 0.0674
Hungary Hungarian Forint 276.8120 -4.0963 314.3198 0.1081 399.9364 -0.7773 Peru Peruvian Nuevo Sol 3.3442 -0.0423 3.7973 0.0094 4.8317 0.0009 United Kingdom Pound Sterling 0.6921 -0.0089 0.7859 0.0018 - -
India Indian Rupee 66.3775 -0.1150 75.3716 0.9960 95.9018 1.0508 Philippines Philippine Peso 46.0375 -0.3425 52.2755 0.3969 66.5147 0.3540 ..One Month 0.6922 -0.0089 0.7859 0.0018 - -
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 30 Mar 29 Mar 24 Mar 23 Mar 22 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 2736.40 2716.70 2850.30 2848.10 2845.60 0.00 2875.90 2547.10 Industrial Metals & 24.58 Household Goods & Ho 0.89 Electricity -3.65 FTSE 100 Price Change FTSE 100 Price Change
Mar 30 chge% Index Mar 29 Mar 24 ago yield% Cover ratio adj Return FT 30 Div Yield 1.76 1.77 1.75 1.76 1.76 0.00 3.93 2.74 Mining 20.09 NON FINANCIALS Index 0.78 Equity Invest Instr -4.05 3I Group PLC 461.60 6.90 Legal & General Group PLC 235.40 2.80
FTSE 100 (100) 6203.17 1.59 6142.42 6105.90 6106.48 6773.04 4.02 0.95 26.18 67.48 4915.20 P/E Ratio net 25.34 25.19 25.50 25.37 25.32 0.00 19.44 14.26 Food & Drug Retailer 16.85 Software & Comp Serv 0.78 Support Services -4.29 Admiral Group PLC 1969 44.00 Lloyds Banking Group PLC 67.80 -0.20
FTSE 250 (250) 16974.95 1.30 16808.69 16756.32 16674.35 17090.64 2.67 2.18 17.19 69.76 11864.46 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Basic Materials 15.78 Nonlife Insurance 0.22 FTSE 250 Index -4.33 Anglo American PLC 535.70 56.60 London Stock Exchange Group PLC 2820 -13.00
FTSE 250 ex Inv Co (208) 18468.06 1.34 18287.18 18223.01 18124.13 18498.73 2.68 2.33 16.02 70.50 13158.12 FT 30 hourly changes Oil & Gas Producers 8.00 Electronic & Elec Eq 0.21 Telecommunications -4.51 Antofagasta PLC 469.70 15.70 Marks And Spencer Group PLC 405.40 0.90
FTSE 350 (350) 3460.21 1.54 3426.32 3407.61 3405.01 3726.38 3.79 1.10 24.03 33.54 5519.52 8 9 10 11 12 13 14 15 16 High Low Oil & Gas 7.84 Media 0.09 Health Care Eq & Srv -5.34 Arm Holdings PLC 1024 15.00 Mediclinic International PLC 903.00 19.50
FTSE 350 ex Investment Trusts (308) 3437.62 1.56 3403.95 3384.97 3382.45 3704.65 3.82 1.10 23.88 33.63 2823.67 2716.7 2740.9 2739.5 2726.5 2727.6 2728.4 2724.5 2725.4 2729.4 2742.7 2716.7 Personal Goods 7.10 Chemicals -0.33 Financial Services -6.46 Ashtead Group PLC 870.00 19.50 Merlin Entertainments PLC 459.20 2.70
FTSE 350 Higher Yield (106) 3175.23 2.01 3144.13 3112.73 3125.20 3578.58 5.38 0.71 26.18 46.10 5220.80 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Industrial Eng 6.88 Technology -0.40 Fixed Line Telecomms -7.41 Associated British Foods PLC 3369 - Mondi PLC 1350 30.00
FTSE 350 Lower Yield (244) 3416.43 1.04 3382.97 3381.17 3361.21 3510.64 2.06 2.20 22.06 15.37 3632.89 Leisure Goods 6.72 Industrials -1.24 Travel & Leisure -7.61 Astrazeneca PLC 3915.5 1.00 Morrison (Wm) Supermarkets PLC 202.10 3.70
FTSE SmallCap (290) 4530.15 0.37 4485.78 4513.49 4496.34 4598.85 2.94 1.25 27.21 25.82 6247.13 Tobacco 5.68 Forestry & Paper -1.42 Health Care -7.67
FTSE SmallCap ex Inv Co (157) 4141.00 0.23 4100.45 4131.42 4116.12 4034.13 2.87 1.55 22.47 18.24 5988.62 FX: EFFECTIVE INDICES Industrial Transport 4.44 Tech Hardware & Eq -1.60 Pharmace & Biotech -7.95
Aviva PLC 460.00 3.30 National Grid PLC 993.50 6.90
Babcock International Group PLC 945.50 -3.00 Next PLC 5560 -75.00
FTSE All-Share (640) 3408.90 1.50 3375.51 3358.47 3355.54 3663.58 3.76 1.10 24.13 32.58 5499.98 Consumer Goods 3.22 Food Producers -1.92 Automobiles & Parts -8.17
Mar 29 Mar 24 Mnth Ago Mar 30 Mar 29 Mnth Ago Bae Systems PLC 512.00 5.00 Old Mutual PLC 196.70 5.50
FTSE All-Share ex Inv Co (465) 3373.00 1.53 3339.96 3322.22 3319.54 3627.99 3.80 1.10 23.85 32.65 2816.16 Oil Equipment & Serv 3.15 FTSE 100 Index -2.18 General Retailers -8.32 Barclays PLC 151.65 0.65 Paddy Power Betfair PLC 9570 210.00
FTSE All-Share ex Multinationals (574) 1139.01 1.04 934.78 1127.32 1121.89 1195.81 2.99 1.58 21.14 4.71 1949.86 Australia 93.81 93.21 89.79 Sweden 80.22 80.10 79.26 Gas Water & Multi 2.49 Construct & Material -2.25 Real Est Invest & Tr -8.77 Barratt Developments PLC 570.50 2.00 Pearson PLC 905.50 18.00
FTSE Fledgling (99) 7651.59 0.29 7576.65 7629.83 7613.95 7358.78 2.55 0.40 97.66 33.69 13850.94 Canada 88.93 88.21 86.75 Switzerland 159.08 159.17 158.65 Beverages 2.15 Mobile Telecomms -2.51 Life Insurance -11.55 Berkeley Group Holdings (The) PLC 3254 -13.00 Persimmon PLC 2102 -3.00
FTSE Fledgling ex Inv Co (49) 10722.11 0.32 10617.10 10687.89 10659.54 9394.55 2.66 -0.35 -107.80 40.23 18869.42 Denmark 106.77 106.78 106.61 UK 85.54 84.96 84.73 Aerospace & Defense 1.83 FTSE All{HY-}Share Index -2.58 Financials -11.88 Bhp Billiton PLC 793.60 43.60 Provident Financial PLC 2959 9.00
FTSE All-Small (389) 3142.62 0.36 3111.84 3131.19 3119.56 3182.33 2.92 1.21 28.24 17.70 5564.05 Japan 134.79 135.95 135.81 USA 102.16 102.34 104.21 Utilities 1.21 FTSE SmallCap Index -2.98 Real Est Invest & Se -13.33 BP PLC 355.55 9.75 Prudential PLC 1302 8.00
FTSE All-Small ex Inv Co Index (206) 3092.97 0.24 3062.68 3085.71 3074.40 2999.44 2.86 1.48 23.58 13.55 5667.27 New Zealand 112.49 110.75 112.62 Euro 88.17 88.19 87.59 Consumer Services -3.02 Banks -18.28 British American Tobacco PLC 4075 79.50 Randgold Resources LD 6280 -
FTSE AIM All-Share Index (837) 709.73 0.22 702.78 708.19 708.80 716.20 1.55 0.57 113.31 1.86 765.89 Norway 84.96 85.02 84.93
British Land Company PLC 709.00 8.00 Reckitt Benckiser Group PLC 6771 57.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Bt Group PLC 446.10 6.65 RELX PLC 1306 16.00
Oil & Gas (17) 6540.84 3.05 6476.77 6347.50 6459.28 7348.62 6.72 0.22 66.89 110.54 5579.09 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Bunzl PLC 2033 32.00 Rexam PLC 632.50 -1.00
Oil & Gas Producers (10) 6228.05 3.01 6167.05 6045.97 6150.26 6955.61 6.77 0.20 74.47 108.98 5496.40 Burberry Group PLC 1370 51.00 Rio Tinto PLC 1973 110.00
Oil Equipment Services & Distribution (7)14247.59 4.01 14108.04 13698.23 14078.63 18872.17 5.35 1.08 17.39 0.00 10478.51 FTSE GLOBAL EQUITY INDEX SERIES Capita PLC 1048 7.00 Rolls-Royce Holdings PLC 690.00 15.50
Basic Materials (28) 3225.26 4.81 3193.67 3077.17 3174.77 4610.61 5.18 0.26 75.55 41.24 3207.65 Carnival PLC 3692 142.00 Royal Bank Of Scotland Group PLC 223.70 3.00
Chemicals (7) 11726.94 1.60 11612.08 11542.36 11475.97 12410.14 2.46 2.13 19.10 61.01 10138.90 Mar 30 No of US $ Day Mth YTD
YTD Gr Div Mar 30Total No of US $ Day Mth YTD Total YTD Gr Div Centrica PLC 230.50 3.60 Royal Dutch Shell PLC 1714 46.50
Forestry & Paper (1) 15867.27 2.27 15711.86 15514.66 15455.89 15256.08 2.27 4.06 10.84 0.00 16482.48 Regions & countries stocks indices % % %
% Yield Sectorsretn stocks indices % % % retn % Yield Coca-Cola Hbc AG 1505 66.00 Royal Dutch Shell PLC 1706.5 56.50
Industrial Metals & Mining (2) 897.61 8.55 888.82 826.93 911.35 1899.95 1.28 0.27 289.83 0.00 783.33 FTSE Global All Cap 7739 445.85 0.5 6.3 -0.5 -1.1 613.76
2.6 Oil & Gas 153 315.90 -0.2 -0.2 3.6 487.36 4.6 3.9 Compass Group PLC 1230 15.00 Royal Mail PLC 484.80 9.30
Mining (18) 8586.96 5.50 8502.86 8139.39 8464.50 13091.07 5.83 0.03 500.37 127.71 4481.76 FTSE Global All Cap 7079 462.39 0.3 7.3 0.2 -0.3 624.68
2.5 Oil & Gas Producers 110 296.41 -0.1 -0.1 3.9 465.53 4.9 4.0 Crh PLC 1986 16.00 Rsa Insurance Group PLC 477.40 2.90
FTSE Global Large Cap 1427 392.95 0.4 6.1 -0.8 -1.4 553.65
2.7 Oil Equipment & Services 33 285.05 -0.5 -0.5 2.7 400.90 3.6 3.6 Dcc PLC 6190 60.00 Sabmiller PLC 4259 9.00
Industrials (120) 4406.62 1.27 4363.46 4351.27 4311.02 4577.11 2.52 1.42 28.02 12.15 4391.21
Construction & Materials (14) 5343.66 0.80 5291.32 5301.17 5253.52 4828.73 2.30 0.04 1116.40 69.80 5534.99 FTSE Global Mid Cap 1647 602.29 0.6 6.8 0.5 0.0 790.23
2.2 Basic Materials 255 363.51 -0.1 -0.1 3.5 536.02 4.1 3.1 Diageo PLC 1896 20.00 Sage Group PLC 627.50 7.50
Aerospace & Defense (9) 4490.04 1.66 4446.06 4416.90 4387.42 5300.27 2.55 1.53 25.71 10.31 4652.64 FTSE Global Small Cap 4665 622.13 1.2 6.7 -0.3 -0.8 792.89
2.1 Chemicals 124 582.17 0.1 0.1 -1.6 859.63 -1.1 2.7 Direct Line Insurance Group PLC 373.00 1.40 Sainsbury (J) PLC 280.90 4.90
General Industrials (6) 3784.99 0.71 3747.92 3758.19 3734.91 3529.31 3.02 1.57 21.14 13.03 4134.91 FTSE All-World 3074 260.61 0.5 6.2 -0.6 -1.2 378.57
2.6 Forestry & Paper 16 197.23 0.3 0.3 0.6 318.28 1.1 3.5 Dixons Carphone PLC 428.00 1.50 Schroders PLC 2710 60.00
Electronic & Electrical Equipment (10) 5516.57 1.74 5462.54 5422.01 5385.54 5406.97 2.24 1.89 23.62 6.22 4891.20 FTSE World 2549 462.54 0.5 6.1 -0.4 -1.1 902.28
2.6 Industrial Metals & Mining 62 287.58 -0.2 -0.2 11.8 424.99 12.2 3.0 Easyjet PLC 1520 -5.00 Severn Trent PLC 2162 -
Industrial Engineering (14) 8365.85 2.23 8283.91 8183.09 8171.13 9530.63 3.59 1.15 24.25 10.89 9810.71 FTSE Global All Cap ex UNITED KINGDOM In 7415 459.75 0.6 6.6 -0.2 -0.8 623.94
2.5 Mining 53 381.40 -0.8 -0.8 17.9 565.79 19.3 4.5 Experian PLC 1246 17.00 Shire PLC 3917 40.00
Industrial Transportation (8) 4200.57 1.67 4159.43 4131.70 4110.51 4183.59 3.62 0.87 31.71 0.00 3533.81 FTSE Global All Cap ex USA 5774 406.23 0.0 6.0 -1.9 -2.6 593.74
3.1 Industrials 538 303.74 0.3 0.3 1.5 424.75 2.2 2.4 Fresnillo PLC 938.50 24.00 Sky PLC 1034 6.00
Support Services (59) 6536.18 1.14 6472.16 6462.69 6384.17 6661.57 2.29 1.72 25.32 7.08 6566.37 FTSE Global All Cap ex JAPAN 6472 455.84 0.6 6.3 -0.1 -0.7 632.83
2.6 Construction & Materials 111 432.84 0.3 0.3 3.3 631.91 3.7 2.2 Gkn PLC 293.70 6.40 Smith & Nephew PLC 1130 -
FTSE Global All Cap ex Eurozone 7092 460.29 0.6 6.4 -0.1 -0.8 622.74
2.5 Aerospace & Defense 26 502.43 0.5 0.5 -0.8 695.51 -0.3 2.3 Glaxosmithkline PLC 1412 20.00 Sse PLC 1479 -
Consumer Goods (41) 19209.95 1.02 19021.80 19016.76 18890.84 16789.66 2.79 1.88 19.10 185.36 13686.00
FTSE Developed 2101 420.21 0.5 5.9 -0.9 -1.5 583.05
2.6 General Industrials 55 224.31 -0.1 -0.1 3.4 338.01 4.4 2.6 Glencore PLC 151.55 7.75 St. James's Place PLC 922.00 -
Automobiles & Parts (1) 6902.09 2.23 6834.48 6751.68 6655.33 8427.27 2.89 1.33 25.94 0.00 6347.44
FTSE Developed All Cap 5695 440.93 0.6 6.0 -0.8 -1.4 605.10
2.5 Electronic & Electrical Equipment 70 306.68 0.2 0.2 -3.1 394.78 -2.7 2.0 Hammerson PLC 576.50 8.00 Standard Chartered PLC 439.45 -
Beverages (6) 15919.79 0.81 15763.86 15791.82 15760.30 14545.10 2.43 1.70 24.26 96.90 10911.15
FTSE Developed Large Cap 901 387.77 0.5 5.7 -1.1 -1.8 545.59
2.7 Industrial Engineering 104 548.51 0.2 0.2 2.4 756.24 3.2 2.7 Hargreaves Lansdown PLC 1332 17.00 Standard Life PLC 357.10 6.10
Food Producers (10) 9027.53 0.66 8939.11 8968.30 8746.52 7703.19 1.82 1.41 39.10 10.80 7563.88
FTSE Developed Europe Large Cap 223 312.16 0.1 3.5 -4.6 -5.4 496.22
3.7 Industrial Transportation 98 512.18 0.4 0.4 3.4 713.68 4.0 2.5 HSBC Holdings PLC 437.05 4.55 Taylor Wimpey PLC 190.60 -
Household Goods & Home Construction (14)14100.24 0.52 13962.14 14027.91 13906.28 11828.56 2.09 2.80 17.08 18.92 9605.14
FTSE Developed Europe Mid Cap 308 494.09 0.3 5.2 -3.3 -3.6 709.66
2.8 Support Services 74 277.73 0.8 0.8 0.7 372.97 1.2 1.9 Imperial Brands PLC 3854.5 16.50 Tesco PLC 189.40 -
Leisure Goods (2) 5771.45 -0.49 5714.93 5799.72 5846.06 5078.26 4.13 1.32 18.37 0.00 4888.06
FTSE Dev Europe Small Cap 698 694.74 -0.2 4.2 -4.7 2.6 Consumer Goods
-5.0 972.61 425 418.25 0.6 0.6 0.4 598.28 1.0 2.5 Informa PLC 696.50 1.00 Travis Perkins PLC 1812 -
Personal Goods (6) 24524.60 1.16 24284.39 24242.44 24089.57 22960.55 2.70 3.06 12.12 150.56 15926.77
FTSE North America Large Cap 292 438.26 0.8 6.3 1.0 0.4 580.31
2.3 Automobiles & Parts 104 349.07 0.1 0.1 -8.5 480.50 -7.9 2.9 Inmarsat PLC 965.00 24.00 Tui AG 994.50 -
Tobacco (2) 49662.48 1.47 49176.07 48941.94 48654.25 41090.13 3.74 1.34 19.91 1063.92 30932.32
FTSE North America Mid Cap 395 652.16 1.0 7.3 2.3 1.9 808.78
1.9 Beverages 48 585.29 0.7 0.7 2.4 848.67 2.9 2.5 Intercontinental Hotels Group PLC 2823 49.00 Unilever PLC 3164.5 -
Health Care (20) 8865.72 0.87 8778.88 8789.24 8760.94 10067.67 3.98 0.54 46.24 151.28 6574.35
FTSE North America Small Cap 1494 645.66 2.0 7.6 1.1 0.6 779.16
1.8 Food Producers 104 567.73 0.9 0.9 1.6 833.50 2.0 2.2 International Consolidated Airlines Group S.A. 556.00 4.50 United Utilities Group PLC 921.00 -
Health Care Equipment & Services (8) 7177.89 1.30 7107.58 7085.86 6981.20 6903.73 1.57 1.85 34.40 1.60 6087.25
FTSE North America 687 293.27 0.9 6.5 1.2 0.6 397.89
2.2 Household Goods & Home Construction 49 413.03 0.7 0.7 2.9 587.07 3.4 2.3 Intertek Group PLC 3181 9.00 Vodafone Group PLC 217.85 -
Pharmaceuticals & Biotechnology (12)11904.51 0.82 11787.91 11807.63 11785.43 13748.04 4.26 0.49 48.18 226.40 7855.96
FTSE Developed ex North America 1414 216.06 -0.1 5.0 -3.9 -4.7 339.15
3.2 Leisure Goods 31 134.35 0.5 0.5 1.9 173.52 2.2 1.4 Intu Properties PLC 315.70 2.70 Whitbread PLC 3915 -
Consumer Services (96) 4854.20 1.15 4806.66 4799.13 4765.69 5028.47 2.39 1.54 27.11 18.93 4399.56 FTSE Japan Large Cap 176 304.89 -0.5 5.4 -6.0 -7.0 385.40
2.3 Personal Goods 78 611.60 0.5 0.5 2.3 831.73 2.7 2.0
Food & Drug Retailers (7) 3098.97 1.99 3068.62 3038.62 3049.14 3431.28 1.72 0.22 259.39 0.00 3543.69 Itv PLC 243.30 - Wolseley PLC 3906 -
FTSE Japan Mid Cap 307 473.08 -0.2 5.6 -2.9 -3.8 576.55
1.8 Tobacco 11 1306.63 0.7 0.7 7.4 2584.18 8.7 3.7 Johnson Matthey PLC 2732 47.00 Worldpay Group PLC 275.20 -
General Retailers (32) 2728.53 0.47 2701.80 2715.77 2696.48 2990.31 2.66 2.12 17.77 2.42 2993.37
FTSE Global wi JAPAN Small Cap 784 513.48 -0.2 7.3 -1.5 -2.4 646.88
2.0 Health Care 178 425.03 0.6 0.6 -7.3 596.90 -6.5 2.1 Kingfisher PLC 377.40 6.00 WPP PLC 1610 -
Media (22) 7675.46 0.97 7600.28 7601.60 7519.92 7531.26 2.64 1.25 30.39 13.64 4539.66
FTSE Japan 483 127.74 -0.4 5.4 -5.4 -6.3 181.37
2.2 Health Care Equipment & Services 64 653.86 1.3 1.3 0.7 751.72 0.9 1.0 Land Securities Group PLC 1089 9.00
Travel & Leisure (35) 8345.66 1.40 8263.92 8230.09 8174.28 8569.09 2.23 1.81 24.84 71.66 7674.08
FTSE Asia Pacific Large Cap ex Japan 551 535.00 -0.2 8.9 -0.7 -1.1 803.96
3.3 Pharmaceuticals & Biotechnology 114 313.85 0.4 0.4 -9.8 458.83 -8.9 2.5
Telecommunications (7) 3907.49 1.91 3869.22 3834.40 3818.11 3849.61 4.18 0.15 158.69 0.00 4094.48 FTSE Asia Pacific Mid Cap ex Japan 423 746.83 -0.1 8.1 0.5 0.0 1083.02
3.2 Consumer Services 391 390.22 0.6 0.6 0.1 509.16 0.6 1.8
Fixed Line Telecommunications (5) 5150.23 1.52 5099.79 5073.16 5005.51 5045.43 3.01 1.64 20.23 0.00 4466.55
Mobile Telecommunications (2) 5070.28 2.16 5020.62 4962.95 4971.77 5012.61 4.96 -0.45 -45.17 0.00 4742.08
FTSE Asia Pacific Small Cap ex Japan
FTSE Asia Pacific Ex Japan
1439 488.75
974 425.15
-0.3
-0.2
5.2
8.8
-1.7
-0.5
-2.1
-1.0
698.62
2.8 Food & Drug Retailers
679.11
3.3 General Retailers
55 301.42
122 527.26
0.1
1.0
0.1
1.0
0.5 409.02
-1.0 671.26
1.0
-0.6
1.9
1.6
UK STOCK MARKET TRADING DATA
Utilities (7) 8672.50 1.15 8587.55 8573.85 8501.55 8264.28 4.69 1.33 15.99 33.42 9274.34 FTSE Emerging All Cap 2044 584.21 -0.1 9.4 2.6 2.3 835.89
3.2 Media 86 292.95 0.5 0.5 1.3 382.75 1.6 2.0 Mar 30 Mar 29 Mar 24 Mar 23 Mar 22 Yr Ago
Electricity (2) 8752.65 2.12 8666.93 8571.09 8467.76 8887.20 5.78 1.20 14.40 145.17 11860.44 FTSE Emerging Large Cap 526 551.51 0.0 10.1 2.7 2.4 793.93
3.2 Travel & Leisure 128 383.26 0.5 0.5 0.5 505.67 1.1 1.8 SEAQ Bargains 8988.00 7138.00 7138.00 7138.00 7138.00 7115.00
Gas Water & Multiutilities (5) 8177.67 0.91 8097.57 8104.15 8043.21 7664.12 4.41 1.38 16.46 5.49 8749.47 FTSE Emerging Mid Cap 447 743.12 0.0 9.4 5.1 4.6 1058.59
3.1 Telecommunication 92 166.25 0.6 0.6 5.6 294.57 6.3 4.0 Order Book Turnover (m) 31.87 23.21 23.30 23.30 23.30 23.24
Financials (284) 4074.29 1.03 4034.39 4032.61 4029.17 4858.24 3.98 1.72 14.63 50.28 3602.36 FTSE Emerging Small Cap 1071 607.68 -0.4 5.2 -1.0 -1.3 837.84
3.0 Fixed Line Telecommuniations 43 145.25 0.9 0.9 9.6 281.96 10.6 4.3 Order Book Bargains 824112.00 827810.00 827810.00 827810.00 827810.00 827624.00
Banks (9) 3086.34 1.07 3056.11 3053.55 3080.86 4245.38 5.08 1.01 19.40 61.28 2167.97 FTSE Emerging Europe 111 299.30 -0.1 11.412.2 12.1 439.92
4.0 Mobile Telecommunications 49 164.76 0.2 0.2 0.0 264.07 0.5 3.6 Order Book Shares Traded (m) 1355.00 1268.00 1268.00 1268.00 1268.00 1258.00
Nonlife Insurance (10) 2893.24 0.76 2864.91 2871.39 2840.91 2398.27 2.74 2.41 15.13 38.14 4929.00 FTSE Latin America All Cap 239 694.05 0.3 17.716.6 15.9 1031.15
3.2 Utilities 165 254.33 0.9 0.9 7.2 469.43 8.0 3.8 Total Equity Turnover (£m) 2606.67 2676.07 2689.46 2689.46 2689.46 0.04
Life Insurance/Assurance (11) 7151.21 1.02 7081.17 7079.22 7023.05 8617.22 4.27 1.55 15.11 53.64 6613.63 FTSE Middle East and Africa All Cap 223 627.55 0.1 6.4 2.3 3.0 Electricity
1.4 943.56 113 280.68 1.0 1.0 8.4 513.08 9.3 3.6 Total Mkt Bargains 949634.00 963323.00 963323.00 963323.00 963323.00 4.00
Index- Real Estate Investment & Services (21) 2722.16 0.87 2695.49 2698.59 2673.29 2944.39 2.42 5.87 7.05 17.24 7043.40 FTSE Global wi UNITED KINGDOM All Cap In 324 310.84 0.1 2.6 -4.5 3.9 Gas Water & Multiutilities
-5.5 496.25 52 264.51 0.8 0.8 5.0 499.74 5.7 4.3 Total Shares Traded (m) 6596.00 6321.00 6321.00 6321.00 6321.00 0.00
Real Estate Investment Trusts (26) 2756.63 0.98 2729.63 2729.93 2694.83 3000.80 3.26 5.87 5.22 26.71 3289.90 FTSE Global wi USA All Cap 1965 502.33 1.0 6.6 0.7 2.1 Financials
0.2 647.24 689 187.17 0.0 0.0 -6.8 292.82 -6.1 3.3 † Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable.
General Financial (32) 7689.41 1.40 7614.09 7583.12 7562.35 8116.91 3.07 2.10 15.51 58.34 8410.12 FTSE Europe All Cap 1416 363.73 0.1 4.1 -3.9 3.5 Banks
-4.6 559.70 245 159.36 -0.7 -0.7 -10.7 266.09 -9.9 3.9 (c) Market closed.
Equity Investment Instruments (175) 7475.07 0.84 7401.86 7413.15 7394.60 7865.07 2.76 1.07 33.93 48.86 3957.61 FTSE Eurozone All Cap 647 343.44 0.3 5.6 -3.9 3.2 Nonlife Insurance
-4.3 532.51 68 211.80 0.2 0.2 -1.2 295.99 -0.9 2.4
Non Financials (356) 4084.14 1.65 4044.14 4017.88 4014.36 4238.23 3.69 0.90 30.29 35.46 5771.70 FTSE RAFI All World 3000 3050 5346.52 0.2 6.1 -0.8 3.4 Life Insurance
-1.5 6783.26 50 177.42 -0.1 -0.1 -10.5 271.01 -9.9 3.4
Technology (20) 1464.58 1.21 1450.23 1447.05 1435.78 1322.14 1.41 1.84 38.49 5.62 1839.26 FTSE RAFI US 1000 1008 8927.39 0.8 6.5 1.6 2.5 Financial Services
1.0 11359.58 150 209.29 0.6 0.6 -5.9 280.19 -5.4 2.2 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Software & Computer Services (14) 1892.52 0.84 1873.98 1876.66 1860.56 1428.47 1.92 1.73 30.02 14.52 2502.05 FTSE EDHEC-Risk Efficient All-World 3074 317.17 0.6 6.1 1.1 2.3 Technology
0.5 428.53 188 176.30 1.3 1.3 1.2 211.09 1.5 1.7 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) 1601.31 1.54 1585.63 1577.04 1565.88 1655.80 0.96 2.03 51.34 0.93 1839.23 FTSE EDHEC-Risk Efficient Developed Europe 531 270.83 0.3 4.0 -2.6 2.7 Software & Computer Services
-3.0 396.82 90 314.32 1.3 1.3 1.3 361.67 1.6 1.1 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment 98 127.59 1.3 1.3 1.0 157.35 1.5 2.5 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 Alternative Energy 10 100.63 -0.1 -0.1 -2.7 133.25 -2.7 1.0 For all queries e-mail ft.reader.enquiries@morningstar.com
FTSE 100 6169.35 6186.01 6196.78 6200.80 6209.26 6205.75 6204.58 6207.19 6206.39 6221.69 6167.91 Real Estate Investment & Services 104 276.39 0.4 0.4 -2.3 443.02 -1.8 2.4
FTSE 250 16890.40 16928.37 16949.66 16956.73 16976.00 16971.90 16957.25 16968.48 16964.27 16994.12 16890.40 The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/
mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index® and RAFI® are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC
Data provided by Morningstar | www.morningstar.co.uk
FTSE SmallCap 4535.12 4523.08 4522.38 4517.95 4525.35 4526.96 4530.61 4529.23 4528.13 4536.54 4517.36
FTSE All-Share 3391.37 3399.63 3405.05 3406.93 3411.50 3409.73 3408.93 3410.43 3409.91 3417.33 3391.37 (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,
Time of FTSE 100 Day's high:10:35:30 Day's Low07:05:45 FTSE 100 2010/11 High: 6242.32(01/01/2016) Low: 5536.97(11/02/2016) 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
Time of FTSE All-Share Day's high:10:36:00 Day's Low07:03:00 FTSE 100 2010/11 High: 3444.26(01/01/2016) Low: 3046.53(11/02/2016) www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the London Stock Exchange
Group companies and is used by FTSE International Limited under licence.
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 7digital Group Pre 10.365 10.213 7.91L 2.612L 7.31L 3.01L - - - - - date price(p) Sector code Stock price(p) +/- High Low Cap (£m)
price up date High Low Stock Price p +or- Asian Total Return Investment Co Pre 4.884 21.907 4.43 3.07 3.8 3.25 May 4 3.8 3.25 03/17 185.00 AIM YU/ Yu Group PLC 208.50 7.00 212.00 190.00 2930.3
22p Nil 18-04-16 Tribal Group PLC Avanti Capital Int - - 0.981L 0.06 12.22L 0.74 - - - - -
Biome Technologies Pre 4.882 3.567 0.792L 1.305L 31L 54L - - - - -
BlackRock Emerging Europe Pre 12.447L 31.112L 0.027 0.063 - - - - -
Bowleven Int - - 132.033L 81.015L 0.41L 0.25L - - - - -
Catalyst Media Group Int 0.013 0.013 0.034L 0.033L 0.1L 0.11L - - - - -
Diurnal Group Int - - 3.525L - 10L - - - - - -
Ebiquity Pre 43.31 73.874 7.446L 4.657 8.08L 4.78 - 0.4 - - 0.4
GCM Resources Int - - 0.64L 0.461L 1L 0.7L - - - - -
Ironveld Int - - 0.318L 0.399L 0.12L 0.17L - - - - -
K&C REIT Int 0.075 0.016 0.939L 0.377L 2.2L 50.2L - - - - -
Learning Technologies Group Pre 19.905 14.92 1.549 0.127L 0.382 0.049L 0.1 0.07 Jul 4 0.15 0.1
Mobile Streams Int 8.033 18.488 0.141L 0.208 0.865L 0.814L - - - - -

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.
Thursday 31 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 39.12 -0.33 39.72 30.97 4.74 16.88 240725.53 Lockheed 223.23 2.47 227.91 181.91 2.70 19.87 68033.78
ANZ 23.11 -0.09 37.25 21.86 9.74 10.32 51886.79 Nokia 5.37 0.15 7.87 4.91 2.45 -39.36 35147.16 AstellasPh 1506.5 -32.00 2017 1476 1.95 19.26 29764.59 AtlasCpcoB 192.00 8.60 270.00 162.60 2.96 21.11 9210.63 AutomData♦ 89.56 0.13 90.67 64.29 2.19 29.90 40969.32 Lowes 75.93 0.26 78.13 62.62 1.44 27.33 69483.89
BHPBilltn♦ 16.62 -0.09 33.35 14.06 12.70 21.32 41077.3 SampoA 41.95 0.20 49.40 36.76 4.36 15.13 26617.99 Bridgestne 4143 -118.00 5182 3561 2.88 12.46 29955.83 Ericsson 81.75 2.40 120.00 70.65 3.85 27.04 30585.24 Avago Tech♦ 156.18 2.05 156.55 100.00 1.07 30.43 60980.16 Lyondell 86.14 0.95 107.32 69.10 3.46 9.15 37078.96
CmwBkAu♦ 73.31 0.19 95.79 70.07 7.57 15.06 96332.4 France (€) Canon 3338 -47.00 4539 2977.5 4.29 18.58 39590.07 H&M 273.50 5.80 362.00 259.80 3.21 23.28 49112.25 BakerHu 43.13 0.41 70.45 37.58 1.55 -9.80 18884.64 Marathon Ptl 36.65 -0.01 60.38 29.24 3.05 7.11 19396.04
CSL♦ 100.36 1.79 108.68 85.40 1.52 26.10 35754.85 Airbus Grpe 59.96 -0.09 68.50 49.96 1.88 18.70 53476.16 CntJpRwy 20255 -540.00 23380 18255 0.54 14.32 37104 Investor 290.40 6.70 363.40 256.80 2.87 15.25 16261.09 BankAm 13.55 0.13 18.48 10.99 1.45 10.76 139912.9 Marsh&M 60.53 -0.03 60.95 50.81 1.91 20.72 31549.88
NatAusBk 25.64 0.02 39.71 23.82 9.53 12.06 52174.66 AirLiquide 100.95 2.17 123.95 90.77 2.37 21.11 39458.07 Denso 4375 -143.00 6548 3879 2.58 14.51 34394.21 Nordea Bk 78.90 1.20 114.60 77.25 6.81 10.01 39283.2 Baxter♦ 41.21 -0.07 43.44 32.18 3.02 58.39 22577.8 MasterCard 93.99 1.21 101.76 74.61 0.70 28.63 102400.43
Telstra♦ 5.22 -0.02 6.53 4.98 7.74 16.26 49111.07 AXA 20.65 -0.08 26.02 18.80 4.15 10.98 56925.75 EastJpRwy 9886 -254.00 12815 9191 1.16 18.18 34504.96 SEB♦ 79.45 0.90 111.10 75.95 5.53 10.71 21195.19 BB & T 33.70 0.38 41.90 29.95 3.05 13.46 26301.86 McDonald's 125.07 1.10 125.99 87.50 2.70 26.61 112759.59
Wesfarmers♦ 41.27 -0.31 45.00 36.65 6.42 20.36 35765.19 BNP Parib 44.45 0.74 61.00 37.00 3.16 9.24 62908.72 Fanuc 17400 -65.00 28575 15300 4.08 20.03 31865.14 SvnskaHn 104.60 1.00 402.90 95.85 3.77 13.29 24069.65 BectonDick♦ 152.29 0.77 157.50 128.87 1.58 47.95 32257.54 McGraw Hill 98.99 -0.47 108.14 78.55 1.31 23.99 26279.8
Westpc 29.89 -0.04 40.07 27.69 7.64 14.20 76433.02 ChristianDior 163.85 4.30 195.35 140.80 1.83 20.45 33810.6 FastRetail 36500 -280.00 61970 30720 0.84 47.63 34428.78 Swedbank 174.90 1.10 210.00 150.80 6.00 13.41 24339.87 BerkshHat 214280 1480223011.49 186900 - 14.91 172975.82 McKesson♦ 159.61 0.74 243.61 148.29 0.64 17.05 36484.77
Woolworths♦ 21.87 - 29.91 20.50 8.41-277.62 21389.96 Cred Agr 9.58 0.02 14.49 7.59 3.43 8.37 28695.82 Fuji Hvy Ind 3969 -138.00 5223 3411 2.52 8.26 27630.56 TeliaSonera 42.36 0.46 55.85 37.04 6.70 20.74 22549.26 Biogen 256.25 1.57 437.00 242.07 - 17.04 56034.88 Medtronic♦ 75.69 0.21 79.08 55.54 1.94 43.72 106044.96
Belgium (€) Danone 63.55 1.02 67.74 51.73 2.21 32.25 47261.91 Hitachi 524.70 -9.10 858.00 431.00 2.10 10.18 22552.31 Volvo 89.05 2.95 120.50 72.20 3.12 20.56 17767.07 BkNYMeln 37.43 0.46 45.45 32.20 1.78 14.11 40274.69 Merck♦ 53.25 -0.07 61.70 45.69 3.33 34.74 147782.52
AnBshInBv 111.30 1.45 124.20 87.73 3.04 25.99 203251.33 EDF 10.15 0.27 23.56 9.13 11.11 5.92 22137.96 HondaMtr 2992.5 -112.50 4499 2726 2.69 11.32 48203.27 Switzerland (SFr) BlackRock 342.98 3.07 378.80 275.00 2.49 17.68 56210.68 Metlife 43.14 0.68 58.23 35.00 3.35 9.63 47310.21
KBC Grp 46.31 0.28 66.00 44.15 4.05 8.15 21985.09 Engie SA 13.84 0.34 19.73 13.05 6.78 -7.41 38257.43 JapanTob 4771 22.00 4850 3551 2.27 23.47 84851.72 ABB 18.89 0.37 22.16 15.94 - 23.03 45455.08 Boeing 130.32 -0.56 155.50 102.10 2.74 17.86 86337.5 Microsoft 55.58 0.87 56.85 39.72 2.28 40.34 443968.21
Esslr Intl 108.80 1.10 125.15 95.01 0.88 33.19 26744.18 KDDI 3078 -44.00 3375 2519 1.79 17.68 73652.24 CredSuisse 13.74 0.16 28.94 12.23 4.72 -8.43 27958.21 BrisMySq♦ 63.26 -0.55 70.87 51.82 2.31 69.24 105810.47 Mnstr Bvrg 133.91 0.30 160.50 113.08 - 48.12 27173
Brazil (R$)
Hermes Intl 316.25 2.30 365.55 281.20 0.84 39.67 37910.14 Keyence 61790 -590.00 70100 50500 0.30 33.91 33408.48 Nestle 72.25 0.40 77.00 65.70 2.88 16.93 239473.87 CapOne 69.63 0.78 92.10 58.49 2.11 10.15 36140.35 MondelezInt♦ 40.25 0.15 48.58 35.71 1.56 9.25 62666.88
Ambev 19.32 -0.02 20.46 15.99 2.26 27.64 84306.77
LOreal 160.70 3.10 181.30 140.40 1.58 29.34 102730.22 MitsbCp 1936 -55.50 2837 1565 2.60 10.44 27374.41 Novartis 70.05 -0.35 103.20 69.05 3.67 25.79 194940.85 CardinalHlth♦ 82.12 0.69 91.91 74.73 1.79 20.41 27044.49 Monsanto 91.73 1.07 123.82 81.22 2.10 25.18 40393.8
Bradesco 31.30 0.14 32.40 17.90 2.69 12.62 21936.37
LVMH 154.50 3.70 176.60 130.75 2.00 23.28 88941.89 MitsubEst 2107.5 -40.00 2968 1970 0.65 57.84 26057.2 Richemont 64.15 2.30 87.55 60.70 2.34 22.05 34810.85 Carnival 51.47 1.83 55.77 40.52 2.05 23.78 29736.52 MorganStly 25.17 0.39 41.04 21.16 2.14 8.82 49287.39
Cielo♦ 35.17 -0.39 49.30 28.03 1.75 21.11 18422.06
Nmrcble-SFR 37.68 -0.43 57.35 27.05 - -49.41 18748.1 MitsubishiEle 1190 -8.00 1718 947.00 2.08 11.53 22721.71 Roche 236.90 -0.40 283.90 231.70 3.18 24.46 173020.54 Caterpillar 76.69 0.68 89.62 56.36 3.76 22.38 44658.27 MylanNV 46.75 -0.26 76.69 37.59 - 27.99 22989.17
ItauHldFin 27.23 -0.03 35.93 21.49 4.06 7.03 23035.32
Orange 15.59 -0.01 16.98 12.21 3.47 45.51 46891.71 MitsuiFud 2820 -30.00 3879 2260.5 0.91 24.39 24861.66 Swiss Re 89.10 0.35 99.75 76.85 4.78 7.81 34336.49 CBS♦ 54.69 -0.21 63.95 38.51 1.08 19.44 23069.01 Netflix 102.85 -1.29 133.27 58.46 - 373.37 43954.75
Petrobras 11.04 0.41 16.26 5.67 - -4.79 22811.49
PernodRic 100.25 0.90 117.75 88.00 1.68 29.65 30213.95 MitUFJFin 512.20 -20.70 936.80 431.90 3.22 5.39 64535.02 Swisscom 523.50 5.00 576.00 452.70 3.96 21.15 28190.98 Celgene 101.27 1.12 140.72 92.98 - 53.20 79159.79 NextEraE 118.62 -0.39 119.37 93.74 2.55 19.97 54634.08
Vale 15.73 0.64 27.89 8.60 13.42 -7.63 14049.91
Renault 87.84 2.30 100.25 59.59 2.03 9.10 29496 Mizuho Fin 165.00 -5.80 280.40 149.30 4.30 6.17 36592.66 Syngent 400.10 -0.40 435.20 288.50 2.76 29.22 38658.51 CharlesSch 28.23 0.21 35.72 21.51 0.83 28.02 37278.36 Nike♦ 62.17 0.68 68.20 47.25 1.11 31.49 83923.08
Canada (C$) Murata Mfg 13480 -660.00 22220 11610 1.36 14.65 27002.39 ChevrnTx 96.04 0.72 112.20 69.58 4.37 40.05 180858.33 NorfolkS 85.76 2.96 107.31 64.51 2.70 17.04 25573.84
Safran 62.12 0.24 72.45 48.87 1.87 -65.24 29416.1 UBS 15.81 0.17 22.57 15.58 4.47 10.23 63274.38
BCE♦ 59.29 -0.06 59.85 51.56 4.00 21.81 39770.13 NipponTT 4961 -57.00 5419 3626 1.75 17.02 92483.32 Chubb♦ 119.65 0.23 134.49 94.35 2.18 14.16 55494.63 Northrop 197.91 1.23 198.26 152.31 1.54 19.44 35810.47
Sanofi 71.27 0.79 101.10 66.44 3.75 22.75 105666.15 Zurich Fin 222.30 1.50 331.40 194.70 - 19.11 34764.6
BkMontrl 78.83 0.44 80.76 64.01 3.90 12.58 39187.26 Nissan Mt 1040 -40.00 1350 923.30 3.30 8.32 41808.21 Cigna♦ 139.05 0.98 170.68 123.54 0.03 17.35 35630.75 NXP 81.53 -0.16 114.00 61.61 - 13.63 28209.61
Sant Gbn 38.74 1.38 44.84 31.47 1.44 28.83 24672.29 Taiwan (NT$)
BkNvaS 63.32 0.10 67.44 51.17 4.08 11.95 58845.67 Nomura 502.20 -13.90 909.20 442.80 4.20 8.70 17070.76 Cisco 28.61 0.51 29.90 22.46 2.99 13.92 143968.99 Occid Pet♦ 68.91 0.98 82.03 58.22 4.22 -6.61 52629.36
Schneider 56.12 1.82 75.29 45.32 3.21 24.33 37444.34 Chunghwa Telecom 110.50 1.50 111.00 93.10 4.11 23.07 26522.25
Brookfield♦ 45.26 0.36 48.64 37.70 1.25 13.10 34505.01 Nppn Stl 2195 -62.50 3505 1773.5 2.71 10.27 18549.25 Citigroup 42.22 0.50 60.95 34.52 0.37 7.95 124185.82 Oracle 40.98 0.28 45.24 33.13 1.52 19.50 170061.47
SocGen 32.80 0.12 48.77 26.61 3.43 7.79 30023.31 Formosa PetChem 93.00 2.70 94.50 63.90 0.88 19.42 27410.76
CanadPcR♦ 174.62 3.31 241.73 140.02 0.73 22.77 20649.65 NTTDCMo 2641.5 -6.50 2888 1961 2.43 21.53 95972.33 CME Grp 95.56 0.56 100.87 81.87 2.05 26.42 32338.72 Pepsico♦ 102.14 0.77 103.44 76.48 2.65 28.38 149255.9
Total 40.98 0.94 50.30 35.21 5.68 21.50 114191.54 HonHaiPrc 83.70 -0.80 99.70 72.70 4.05 9.32 40498.94
CanImp♦ 97.89 0.59 102.90 82.19 4.23 11.57 29895.14 Panasonic 1016 -12.00 1853.5 799.00 1.37 151.41 22162.68 Coca-Cola♦ 46.41 -0.07 46.66 36.56 2.79 28.37 200931.99 Perrigo 130.40 0.81 215.73 122.62 0.35 135.41 18673.59
UnibailR 245.00 2.85 258.00 212.05 3.67 11.23 27474.94 MediaTek 249.50 5.50 439.50 193.50 8.26 13.05 12132.13
CanNatRs♦ 35.23 0.32 42.46 21.27 2.38 -66.25 29803.47 Seven & I 4961 -46.00 5998 4370 1.32 29.28 39105.76 Cognizant 62.24 0.62 69.80 51.22 - 23.98 37908.61 Pfizer 30.05 -0.01 36.46 28.25 3.65 27.61 185802.49
Vinci 66.29 1.09 66.69 50.08 2.53 19.28 44360.23 TaiwanSem 161.50 2.50 162.00 112.50 2.61 14.71 129571.78
CanNatRy♦ 80.87 0.26 85.32 66.62 1.35 20.68 49146.82 ShnEtsuCh 5836 -27.00 8000 5160 1.65 18.71 22424.74 ColgtPlm 70.88 0.37 70.98 50.84 2.07 47.53 63232.81 Phillips66 88.24 0.81 94.12 69.79 2.42 11.65 46434.15
Vivendi 18.93 0.21 24.83 16.30 9.91 39.58 29414.16
Enbridge 49.69 0.59 66.14 40.03 3.42-1360.20 35491.58 Softbank 5436 -75.00 7827 4133 0.67 12.77 58039.13 Thailand (THB) Comcast 61.04 0.29 64.99 50.01 1.61 19.21 127838.37 PhilMorris♦ 99.12 0.26 99.53 75.27 4.00 22.87 153759.43
GtWesLif 35.53 -0.19 37.70 30.42 3.35 14.06 27270.77 Germany (€) PTT Explor♦ 287.00 3.00 370.00 197.00 3.68 42.83 23261.48
Sony 2873 -70.50 3970 2199 0.72 29.16 32252.72 ConocPhil 39.96 0.34 69.72 31.05 7.21 -11.39 49485.11 PNCFin 85.73 1.26 100.52 77.67 2.30 11.79 42959.75
ImpOil 43.52 0.18 55.37 37.25 1.02 36.13 28506.58 Allianz 144.55 1.45 170.15 126.55 4.43 10.61 75166.01
SumitomoF 3348 -123.00 5770 2819.5 4.24 8.96 42099.14 United Arab Emirates (Dhs) Corning♦ 20.91 0.26 23.30 15.42 2.25 23.09 23000.91 PPG Inds 111.36 0.79 118.69 82.93 1.25 22.10 29704.49
Manulife 18.26 0.17 24.20 15.32 3.33 19.05 27826.63 BASF 67.12 1.19 97.22 56.01 3.90 16.60 70304.02
Takeda Ph 5225 -112.00 6609 5010 3.16 -39.98 36716.98 Emirtestele 18.35 0.45 19.05 10.50 3.96 19.40 39499.47 Costco 157.57 2.31 169.73 117.03 1.05 29.11 69178.75 Praxair 113.70 1.24 124.99 95.60 2.47 21.67 32434.76
Potash 22.94 0.06 41.82 20.65 8.24 11.92 14841.16 Bayer 103.40 1.10 146.45 91.08 2.03 22.74 97514.99
TokioMarine 3881 -60.00 5504 3310 2.54 14.92 26143.36 United Kingdom (p) CrownCstl♦ 86.81 0.36 88.46 75.71 3.78 61.50 28974.45 Priceline 1319.14 11.25 1476.52 954.02 - 27.21 65451.24
RylBkC 74.94 0.16 81.53 64.52 3.90 12.04 86111.44 BMW 82.11 1.66 118.55 66.00 3.28 9.10 56619.69
Toyota 6000 -154.00 8700 5703 3.44 8.87 178097.79 AscBrFd 3369 - 3606 2705.75 1.01 47.21 38534.84 CSX 26.25 0.36 37.67 21.33 2.61 13.40 25129.6 ProctGmbl 83.07 0.27 84.20 65.02 3.11 27.49 224668.26
Suncor En 35.62 0.11 40.93 27.32 2.92 -28.27 43545.03 Continental 200.60 5.75 231.90 171.30 1.51 15.74 45727.92
Mexico (Mex$) AstraZen 3915.5 1.00 4931.68 3746 4.88 25.84 71500.58 CVS 103.35 0.88 113.65 81.37 1.33 22.82 113529.03 Prudntl 72.57 1.05 92.60 57.19 3.30 6.08 32241.49
ThmReut 52.45 -0.05 55.92 47.25 3.24 25.88 30743.57 Daimler 67.93 1.58 92.70 57.01 3.36 9.26 83067.99
AmerMvl 13.49 - 17.17 10.87 1.79 41.49 32995.5 Aviva 460.00 3.30 574.00 400.10 4.16 20.48 26715.23 Danaher♦ 95.17 -0.09 97.62 81.25 0.56 26.45 65396.5 PublStor♦ 273.25 -1.26 275.00 182.08 2.33 45.93 47312.74
TntoDom 55.84 0.08 56.48 47.75 3.42 13.88 79894.47 Deut Bank 15.16 -0.21 33.42 13.03 4.61 -3.22 23899.66
FEMSA UBD 165.04 0.19 176.84 133.52 0.64 33.27 34376.31 Barclays♦ 151.65 0.65 289.90 147.75 4.30 -77.75 36672.6 Deere♦ 80.63 0.13 98.23 70.16 3.03 14.41 25424.72 Qualcomm 51.47 0.78 71.90 42.24 3.54 17.48 76941.85
TrnCan♦ 50.00 0.44 58.12 40.58 3.80 -31.31 27138.5 Deut Tlkm 15.95 0.26 17.63 13.39 2.93 23.87 83667.44
WalMrtMex 41.58 0.52 47.44 35.50 1.26 32.93 42265.2 BP 355.55 9.75 487.50 252.55 7.99 -14.40 93133.05 Delphi 75.19 1.27 90.57 55.59 1.30 18.53 20765.41 Raytheon 123.26 0.81 129.99 95.32 2.13 18.63 36854.97
ValeantPh 38.77 0.96 347.84 32.35 - 17.95 10222.55 DeutsPost 25.00 0.84 31.19 19.55 - 22.36 34516.53
BrAmTob♦ 4075 79.50 4270.75 3231.5 3.75 17.35 107615.95 Delta 49.93 0.80 52.77 34.61 0.88 9.05 38870.94 Regen Pharm 367.44 0.07 605.93 348.96 - 67.91 37800.16
E.ON 8.67 0.52 14.85 7.08 1.51 -2.58 19760.76 Netherlands (€)
China (HK$) BSkyB♦ 1034 6.00 1180 953.50 - - - Devon Energy 26.22 0.13 70.48 18.07 3.59 -0.75 13651.29 ReynoldsAm♦ 50.50 0.05 52.54 33.71 2.70 20.05 72122.87
Fresenius Med 77.91 0.88 83.17 63.10 0.95 26.69 27060.35 Altice 15.97 0.01 47.73 9.98 - 304.86 14891.76
AgricBkCh 2.81 0.07 4.55 2.50 7.65 4.39 11140.67 BT 446.10 6.65 502.60 404.00 2.82 16.14 63237.16 DiscFinServ 50.43 0.15 60.57 42.86 2.10 10.03 20888.38 Salesforce 74.09 1.79 82.90 52.60 - -1014.86 49195.76
Fresenius SE 63.95 1.16 70.00 51.01 0.64 27.59 39715.72 ASML Hld 89.29 1.13 104.85 70.25 0.74 29.70 43935.02
Bk China 3.25 0.10 5.68 2.83 6.91 4.98 35052.79 Compass 1230 15.00 1298 963.00 2.26 23.28 28858.67 Disney 98.93 0.77 122.08 86.25 1.36 18.86 161403.24 Schlmbrg♦ 73.74 0.74 95.13 59.60 2.66 46.15 92412.98
HenkelKgaA 88.00 1.89 99.44 75.76 1.38 21.11 25832.97 Heineken 80.77 1.44 85.90 64.54 1.37 26.08 52827.65
BkofComm 5.07 0.20 8.61 4.24 6.33 4.81 22895.31 Diageo♦ 1896 20.00 1979.5 1592.5 3.01 19.09 68210.85 DominRes 74.27 -0.37 76.59 64.54 3.42 23.68 44296.06 Sempra Energy♦ 103.57 -0.58 111.09 86.72 2.65 19.65 25820.39
Linde 130.90 1.00 194.75 113.50 2.25 22.65 27659.52 ING 10.87 0.01 16.00 9.19 3.11 8.40 47743.31
BOE Tech 1.60 -0.04 4.78 1.24 1.23 27.79 41.06 GlaxoSmh♦■ 1412 20.00 1645 1227.5 - - - DowChem♦ 51.51 0.39 57.10 35.11 3.27 8.88 57542.46 Shrwin-Will 282.72 -2.88 294.35 218.27 0.93 25.84 26086.69
MuenchRkv 179.65 2.15 206.50 156.00 4.05 10.22 34006.48 Unilever 40.33 0.41 42.84 32.86 2.77 25.00 78515.67
Ch Coms Cons 8.83 0.32 17.00 5.77 2.28 7.94 5042.44 Glencore 151.55 7.75 318.46 66.67 - - - DukeEner 80.20 -0.24 80.46 65.50 3.96 20.35 55207.91 SimonProp 206.10 -0.84 208.14 170.99 2.88 35.76 64881.65
SAP 71.16 0.33 75.75 53.91 1.44 29.77 99586.58 Norway (Kr)
Ch Evrbrght 3.66 0.15 5.65 3.07 6.04 4.96 3242.52 HSBC♦ 437.05 4.55 674.57 420.15 - - - DuPont 64.52 0.88 75.72 47.11 2.61 31.49 56545.78 SouthCpr 28.50 0.23 33.31 21.55 1.17 31.38 22052.59
Siemens 93.33 1.81 104.20 77.91 3.31 15.83 90253.44 DNB 98.10 1.90 143.00 90.10 3.56 7.11 19245.43
Ch Rail Cons 8.98 0.22 17.70 6.72 1.97 8.12 2404.85 Imperial Brands♦ 3854.5 16.50 3898 2921 - - - Eaton 62.98 0.61 73.82 46.19 3.42 15.16 28847.02 Starbucks 59.88 0.33 64.00 42.05 1.11 37.47 88508.63
Volkswgn 128.90 3.10 245.30 95.00 3.49 10.93 43217.54 Statoil 131.90 5.50 161.70 97.25 5.02 -12.16 50657.34
Ch Rail Gp 5.70 -0.02 12.30 4.21 1.62 9.92 3093.23 LlydsBkg 67.80 -0.20 89.35 55.84 - - - eBay 24.41 0.31 29.83 21.52 - 15.56 27891.75 StateSt♦ 59.15 1.00 81.26 50.73 2.19 13.51 23866.2
ChConstBk 5.05 0.15 7.98 4.31 7.04 4.72 156595.82 Hong Kong (HK$) Telenor 139.20 3.60 186.10 116.80 2.53 36.66 25173.49 Ecolab♦ 112.65 1.19 122.48 98.62 1.17 34.56 33078.18 Stryker♦ 107.51 0.64 107.84 86.68 1.29 29.03 40121.85
Natl Grid 993.50 6.90 998.20 806.40 - - -
China Vanke 19.00 0.52 24.10 15.52 3.11 9.90 3222.46 AIA 43.90 1.45 58.20 36.85 1.15 26.32 68220.28 Qatar (QR) EMC♦ 26.62 0.03 28.77 22.66 1.69 26.77 51830.79 Sychrony Fin 28.39 -0.01 36.40 23.74 - 10.93 23672.4
Prudential♦■ 1302 8.00 1720 1045.99 - - -
ChinaCitic 4.78 0.08 7.40 4.00 - 4.64 9175.15 BOC Hold 22.85 0.35 33.70 18.82 4.50 10.16 31159.99 QatarNtBk 141.00 3.50 169.00 122.50 4.29 10.86 27099.7 Emerson 54.84 0.39 62.75 41.25 3.37 14.70 35268.47 Target 83.10 0.13 85.81 66.46 2.65 15.54 49855.51
RBS 223.70 3.00 370.00 215.90 - - -
ChinaLife 19.10 0.68 41.00 16.12 2.44 11.99 18331.41 Ch OSLnd&Inv 24.55 0.60 34.05 20.45 2.06 7.36 31223.04 EOG Res 74.80 -0.65 101.36 57.15 0.88 -9.20 41131.49 TE Connect 61.57 0.65 72.10 51.70 2.04 22.59 23039.32
Russia (RUB) ReckittB 6771 57.00 6800 5403 - - -
ChinaMBank 16.60 0.40 26.85 12.72 4.77 6.15 9829.44 ChngKng 50.30 1.05 77.55 38.20 - 11.53 25040.4 EquityResTP♦ 74.89 -0.32 82.39 61.90 2.89 32.37 27345.45 Telsa Mtrs 231.67 1.54 286.65 141.05 - -34.09 30593.49
Gzprm neft 148.40 3.70 158.70 122.75 4.75 12.60 52167.43 RELX 1306 16.00 1307 988.50 - - -
ChinaMob 84.90 0.95 118.00 79.00 3.15 13.90 224214.52 Citic Ltd 11.90 0.36 16.40 10.02 1.66 6.11 44649.48 Exelon 35.48 -0.22 35.77 25.09 3.43 14.24 32697.12 TexasInstr 58.35 0.94 59.67 43.49 2.35 21.10 58656.79
Lukoil 2613 -1.50 2850.1 2040.1 6.52 23.62 33002.65 RioTinto♦ 1973 110.00 3072 1557 - - -
ChinaPcIns 29.25 1.15 47.10 23.70 1.96 14.89 10470.26 Citic Secs 18.30 0.82 40.50 12.82 1.82 8.51 6888.22 ExpScripts 69.17 0.48 94.61 65.55 - 19.82 43771 TheTrvelers♦ 117.14 0.73 117.20 95.21 1.99 10.99 34553.65
MmcNrlskNckl 8992 57.00 11284 7840 18.20 11.23 21129.55 RollsRoyce 690.00 15.50 1061 497.00 - - -
ChMinsheng 7.28 0.14 11.88 6.13 3.00 4.89 6510.42 CK Hutchison 102.30 2.00 174.90 91.80 3.28 4.39 50927.07 ExxonMb 84.55 0.02 90.09 66.55 3.34 22.41 351115.57 ThrmoFshr♦ 140.91 0.76 143.65 117.10 0.42 29.16 55837.27
Novatek 601.50 4.00 650.00 417.40 9.54 55.99 27119.65 RylDShlA 1706.5 56.50 2122 1256 - - -
ChMrchSecs RMB 17.71 0.59 40.00 13.45 4.25 9.63 13132.25 CNOOC 9.07 0.08 13.78 6.41 5.75 8.54 52230.83 Facebook 115.98 -0.16 117.59 72.00 - 92.00 262084.24 TimeWrnr 72.40 0.19 91.34 55.53 1.90 16.13 57207.17
Rosneft 306.90 10.50 322.75 214.80 2.62 8.45 48298.23 SABMill 4259 9.00 4265.5 2773 - - -
Chna Utd Coms RMB 4.35 0.12 10.74 3.86 1.51 27.17 14235 HangSeng 136.00 1.20 162.10 121.10 4.04 9.64 33536.13 Fedex♦ 162.35 -0.64 185.19 119.71 0.61 44.30 43578.6 TimeWrnrC♦ 204.37 -0.16 205.97 145.44 1.80 32.66 57891.97
Sberbank 109.60 2.55 114.19 60.67 0.40 12.06 35132.11 Shire♦ 3917 40.00 5870 3423 - - -
ChShenEgy 11.92 -0.24 22.50 10.12 7.27 12.54 5225.12 HK Exc&Clr 186.30 4.40 311.40 160.10 2.75 28.62 29039.84 FordMtr 13.34 0.14 16.29 10.44 4.41 7.39 52175.62 TJX Cos 78.43 -0.19 78.99 63.53 1.05 23.10 52511.17
Surgutneftegas 39.26 0.79 41.16 30.31 - 1.52 20824.68 StandCh 439.45 - 1135 373.40 10.22 -7.58 20814.62
ChShpbldng RMB 7.13 0.18 20.19 5.66 0.52-448.16 19767.11 MTR 38.25 0.85 40.00 33.10 2.52 15.29 28907.52 Franklin♦ 39.67 0.57 52.76 31.00 1.56 12.94 23511.57 T-MobileUS 38.22 -0.21 43.43 31.19 - 47.31 31188.87
Saudi Arabia (SR) Tesco 189.40 - 252.52 137.00 0.61 -2.72 22277.59
ChStConEng RMB 5.72 0.15 12.52 4.88 2.92 7.54 26403.55 SandsCh 31.75 0.55 39.15 20.75 6.14 23.10 33045.17 GenDyn 131.73 -0.13 153.76 121.61 2.00 14.80 40396.34 UnionPac♦ 80.94 1.14 112.44 67.06 2.66 15.04 68508.78
AlRajhiBnk 52.06 -1.56 69.00 44.70 2.32 12.27 22556.02 Vodafone 217.85 - 258.00 197.70 5.15 -40.80 83590.22
ChUncHK 10.04 0.07 16.00 7.87 2.35 22.20 31010.51 SHK Props 95.70 2.95 137.60 79.00 2.30 9.48 35714.16 GenElectric♦ 31.83 0.35 31.95 19.37 2.83 191.01 295554.07 UPS B 106.40 0.30 107.32 87.30 2.69 20.30 73431.72
Natnlcombnk 40.07 -1.24 72.75 36.60 1.93 9.09 21367.54 WPP 1610 - 1639 1273 2.37 16.64 30098.85
CNNC Intl RMB 7.78 0.21 14.38 4.07 - 22.52 4673.48 Tencent 158.20 0.90 171.00 124.00 0.21 45.94 191888.91 GenMills 62.93 -0.01 63.37 47.43 2.90 24.72 37405.69 USBancorp♦ 40.90 0.51 46.26 37.07 2.42 13.18 70998.97
SaudiBasic 73.77 -3.00 110.50 59.50 6.56 9.95 59007.36 United States of America ($)
CSR 7.60 -0.21 20.70 6.61 1.85 15.10 4284.74 India (Rs) GenMotors 31.31 0.12 38.04 24.62 4.32 5.41 48350.34 UtdHlthcre 130.20 0.37 131.11 95.00 1.41 22.10 123777.75
SaudiTelec 62.54 -2.85 73.25 52.75 6.18 13.97 33349.78 21stC Fox A♦ 27.95 0.12 35.15 22.66 1.05 23.62 31288.54
Daqin RMB 6.86 0.14 15.15 6.41 6.80 7.43 15744.97 Bhartiartl 353.80 - 452.45 282.30 0.62 26.40 21306.62 GileadSci 93.01 0.81 123.37 81.89 1.36 7.97 125995.24 UtdTech 100.35 0.23 119.66 83.39 2.50 22.60 83965.85
Singapore (S$) 3M 165.94 1.55 167.70 134.00 2.42 22.32 100547.12
Gree Elec Apl 0.20 0.00 0.45 0.13 - -2.27 342.23 HDFC Bk 1064.95 - 1128 928.00 0.74 23.98 40561.82 GoldmSchs 156.69 1.66 218.77 139.05 1.60 13.17 66177.95 ValeroEngy 64.89 -0.39 73.88 51.68 2.57 8.29 30525.29
DBS 15.49 0.31 21.50 13.01 3.50 12.96 28772.12 AbbottLb 41.64 0.17 51.74 36.00 2.26 24.70 61345.79
GuosenSec RMB 16.34 0.53 34.94 13.28 1.19 10.19 5537.3 Hind Unilevr 861.65 - 950.95 766.40 1.62 41.40 28089.34 Halliburton 35.74 0.72 50.20 27.64 1.97 -46.74 30677.14 Verizon 53.70 -0.35 54.28 38.06 4.07 12.54 218765.26
JardnMt US$♦ 56.22 0.10 63.60 45.00 2.37 14.24 39486.37 Abbvie 57.23 0.18 71.60 45.45 3.46 18.58 92582.99
HaitongSecs 13.24 0.38 27.90 10.00 2.23 8.50 5822.49 HsngDevFin♦ 1115.3 - 1372.4 1011.45 1.32 19.29 26545.18 HCA Hold 77.54 -0.02 95.49 43.91 - 15.85 30687.88 VertexPharm 80.11 0.87 143.45 75.90 - -35.38 19738.46
JardnStr US$♦ 29.37 0.07 35.78 25.24 0.84 11.33 32690.24 Accenture 115.79 0.53 115.85 88.43 1.90 20.45 94127.19
Hngzh HikVDT RMB 31.10 1.25 56.48 23.72 1.25 22.77 15151.53 ICICI Bk 237.50 - 338.00 180.75 2.03 11.08 20803.52 Hew-Pack♦ 12.27 -0.01 16.16 8.91 5.28 4.94 21186.09 VF Cp 65.10 0.17 77.40 52.21 2.00 23.30 27565.6
OCBC 8.95 0.13 10.92 7.41 3.75 10.08 27282.12 Adobe 93.76 0.54 98.00 71.27 - 78.70 46993.85
Hunng Pwr 6.78 0.28 11.90 5.63 6.59 6.67 4110.39 Infosys 1205.95 - 2273.65 932.65 3.32 21.00 41525.25 HiltonWwde♦ 22.60 0.14 31.60 16.16 0.61 16.24 22368.53 Viacom♦ 40.92 0.78 73.52 30.11 3.67 8.96 14175.33
SingTel 3.85 0.06 4.57 3.38 4.24 17.06 45511.64 AEP 66.03 - 66.37 52.29 3.19 18.76 32408.67
IM Baotou Stl RMB 2.98 0.06 7.50 2.66 - -39.22 7242.28 ITC 327.35 - 359.80 268.00 1.89 26.42 39685.93 HomeDep 133.67 1.20 135.47 92.17 1.80 24.02 167481.96 Visa Inc 76.45 1.07 81.01 60.00 0.64 28.46 148805.52
UOB 19.05 0.55 25.05 16.80 4.16 10.58 22702.49 Aetna 114.95 1.66 134.40 92.42 0.85 17.30 39151.97
In&CmBkCh 4.38 0.13 7.10 3.72 6.89 4.88 49032.56 L&T 1228.05 - 1888 1016.05 1.20 23.19 17233.29 Honywell 112.47 0.57 113.47 87.00 1.87 18.99 85627.38 Walgreen 83.50 0.48 97.30 71.50 1.60 21.16 90075.36
Aflac 63.81 0.63 66.53 51.41 2.43 11.13 26736.88
IndstrlBk RMB 15.57 0.27 21.42 11.90 3.56 6.11 45796.86 OilNatGas 217.90 - 343.20 187.75 4.38 9.85 28085.45 South Africa (R) HumanaInc♦ 186.76 1.00 219.79 155.24 0.60 22.57 27830.56 WalMartSto 68.54 0.51 83.04 56.30 2.66 15.71 219457.76
AirProd♦ 145.86 1.69 154.55 114.64 2.18 24.58 31454.76
Kweichow RMB 248.66 0.55 290.00 166.20 1.72 20.61 48224.01 RelianceIn 1047.05 - 1089.75 796.45 0.94 11.78 51114.23 Firstrand♦ 47.40 2.92 58.47 34.08 4.16 12.66 17925.18 IBM 150.20 0.87 176.30 116.90 3.26 11.27 145052.45 WellsFargo 48.58 0.53 58.77 44.50 2.98 12.03 245680.99
Alexion 136.10 1.56 208.88 124.16 - 207.65 30662.15
Midea 1.81 -0.02 2.68 1.65 5.42 10.77 50.20 SBI NewA 197.55 - 305.00 148.25 1.74 9.76 23103.27 MTN Grp♦ 132.02 3.38 250.00 109.56 10.59 7.06 16425.33 IllinoisTool♦ 102.67 1.26 102.73 78.79 1.98 20.42 37049.14 Williams Cos 16.26 0.56 61.38 10.22 14.77 -21.83 12196.07
Allegran 275.47 1.95 340.34 237.50 - -33.30 108843.09
New Ch Life Ins 27.10 0.75 56.55 22.00 0.90 7.84 3614.57 SunPhrmInds 811.70 - 1200.8 704.00 0.36 51.05 29430.04 Naspers N 2070 13.00 2270 1521.98 0.23 63.57 61108.02 Illumina 160.37 3.24 242.37 130.00 - 52.84 23581 Yahoo 36.90 0.58 46.17 26.15 - -8.11 34937.35
Allstate♦ 67.57 0.41 72.51 54.12 1.74 13.65 25561.76
PetroChina 5.14 0.15 11.04 4.16 3.62 18.76 13987.73 Tata Cons 2489.5 - 2770 2115 1.58 23.08 73901.25 South Korea (KRW) Intcntl Exch♦ 233.94 -0.74 268.89 220.28 1.22 20.95 27812.59 Yum!Brnds 81.14 0.57 95.90 64.58 2.04 28.36 33162.85
Alphabet 774.87 8.98 810.35 529.00 - 34.61 226717.23
PingAnIns 37.15 0.65 62.90 30.50 2.16 10.65 35685.81 Indonesia (Rp) HyundMobis♦ 250000 - 272000 185500 1.35 14.52 21148.84 Intel 32.68 0.30 35.59 24.87 2.88 14.29 154380.32 Venezuela (VEF)
Altria♦ 62.43 0.40 63.15 47.31 3.41 23.88 122233.68
PngAnBnk RMB 10.70 0.27 17.50 9.30 1.59 7.01 19499.12 Bk Cent Asia 13075 -100.00 15600 11000 1.10 19.02 24061.56 KoreaElePwr 59900 100.00 61200 40800 0.77 3.40 33417.61 Intuit 102.85 0.28 109.21 79.63 1.09 50.67 26414.06 Bco de Vnzla 108.05 -18.95 143.95 40.00 - - 1581.83
Amazon 600.67 6.81 696.44 368.34 - 490.42 282820.69
Pwr Cons Corp RMB 6.46 0.15 20.00 5.60 1.50 13.08 3291.12 SK Hynix 28650 -250.00 51700 25800 1.68 5.34 17591.42 John&John 109.20 0.06 109.50 81.79 2.65 20.34 301211.21 Bco Provncl 3800 - 4400 1300 2.45 2.62 1561.42
Israel (ILS) AmerAir 41.78 0.43 53.84 34.10 0.94 3.85 25191.08
SaicMtr RMB 19.76 0.54 29.18 14.00 6.39 7.78 33634.7 SmsungEl 1308000 18000 1494000 1033000 1.45 10.35 164900.23 JohnsonCn♦ 38.90 0.65 54.52 33.62 2.70 18.55 25216.35 Mrcntl Srvcs 5200 - 6200 1900 2.82 2.10 1177.08
TevaPha 208.40 -0.10 275.90 206.40 2.39 30.92 55619.72 AmerExpr 60.39 -0.21 81.92 50.27 1.83 12.20 57874.48
ShenwanHong 0.15 - 0.41 0.12 - -2.35 47.73 Spain (€) JPMrgnCh 59.84 0.81 70.61 50.07 2.82 10.17 219628.65
Italy (€) AmerIntGrp 53.97 0.58 64.93 50.20 1.47 33.36 62029.98
ShgPdgBk RMB 17.87 0.42 20.12 11.91 4.12 6.95 51461.57 Kimb-Clark♦ 135.72 0.73 136.61 103.04 2.54 49.98 48950.1 Closing prices and highs & lows are in traded currency (with variations for that
Enel 4.00 0.03 4.50 3.33 3.28 71.11 42710.05 BBVA 5.95 0.00 9.77 5.24 2.52 16.13 43007.43 AmerTower 102.44 0.52 104.12 83.07 1.73 74.30 43421.95
Sinopec Corp 4.99 0.27 7.79 3.86 4.69 24.33 16420.7 KinderM 17.93 0.28 44.71 11.20 10.55 176.67 40004.66 country indicated by stock), market capitalisation is in USD. Highs & lows are
ENI 13.52 0.37 17.66 10.93 6.66 -18.92 55791.83 BcoSantdr 3.98 0.01 7.17 3.31 11.70 8.15 65167.98 Amgen 149.84 0.35 181.81 130.09 2.07 16.87 112692.42
Sinopec Oil RMB 5.07 0.23 14.23 4.71 - -150.49 1395.85 Kraft Heinz♦ 78.71 -0.09 81.20 61.42 2.12-236.16 95647.57 based on intraday trading over a rolling 52 week period.
Generali 13.16 0.10 18.70 10.90 4.28 10.71 23264.62 CaixaBnk 2.64 0.00 4.53 2.37 4.26 20.41 17485.13 Anadarko 46.58 0.35 95.94 28.16 2.27 -3.61 24034.57
Denmark (kr) Iberdrola 5.95 -0.04 6.71 5.66 0.47 16.50 43228.16 Kroger 37.92 -0.11 42.75 27.32 1.06 17.89 36961.49 ♦ ex-dividend
IntSPaolo 2.42 -0.02 3.65 2.12 2.71 15.83 43544.69 Anthem 140.20 -0.08 173.59 115.63 1.75 15.25 36641.52
DanskeBk 185.60 2.10 218.00 168.30 2.77 14.94 28526.35 Inditex 30.11 0.33 35.38 26.00 1.30 33.60 106557.96 L Brands 87.68 0.72 101.11 75.11 2.32 20.40 25171.18 ■ ex-capital redistribution
Luxottica 50.10 1.21 67.80 47.56 1.35 32.45 27514.84 Aon Cp 104.00 1.06 104.70 83.83 1.08 21.74 28088.5
MollerMrsk 8840 185.00 16450 7355 3.16 37.14 14336.8 Repsol 10.07 0.20 18.75 7.95 8.85 -12.53 16486.04 LasVegasSd♦ 52.36 -0.17 59.90 34.88 4.87 21.67 41610.2 # price at time of suspension
Unicred 3.27 -0.12 6.61 2.77 3.44 10.91 22156.61 Apple 109.70 2.02 134.54 92.00 1.81 11.92 608240.76
NovoB 357.60 -1.80 415.00 305.10 1.31 28.24 112394.62 Telefonica 10.08 0.22 14.31 8.48 6.93 537.19 56917.03 LibertyGbl 38.79 0.27 58.66 30.65 - -30.92 9806.33
ArcherDan 36.58 -0.29 53.31 29.86 3.00 12.53 21478.14
Lilly (E) 71.41 -0.29 92.85 67.88 2.75 32.24 78871.8

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
TevaPha 208.40 208.50 -0.10 -0.05 206.32 9895.2 -2.07 Bco de Vnzla 108.05 127.00 -18.95 -14.92 -18.95 -14.9 -5.93 Mar 30 date Coupon S* M* F* price yield yield yield US Mar 30 date Coupon S* M* F* price yield yield yield US
Ch Coms Cons 8.83 8.51 0.32 3.76 0.68 8.3 26.14 ValeantPh 37.81 37.81 0.00 0.00 -6.35 -14.4 -59.21 High Yield US$ US$
Accenture 115.79 115.26 0.53 0.46 8.13 7.6 15.34 SaudiTelec 62.54 65.39 -2.85 -4.36 -6.93 -10.0 -9.98 Navient Corporation 06/18 8.45 BB- Ba3 BB 106.20 5.50 0.00 0.03 4.73 Halliburton Company 02/27 6.75 A A2 A- 123.94 4.04 0.00 -0.55 2.23
Petrobras 10.63 10.63 0.00 0.00 0.71 7.2 49.52 ANZ 23.11 23.20 -0.09 -0.39 -2.23 -8.8 3.17 High Yield Euro Cummins Inc. 02/27 6.75 A+ A2 A 125.23 3.92 0.00 -0.16 2.10
Carnival 51.47 49.64 1.83 3.69 3.41 7.1 7.44 StandCh 439.45 439.45 0.00 0.00 -38.15 -8.0 8.98 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- 102.79 6.50 0.00 -0.16 4.69
Vale 15.09 15.09 0.00 0.00 0.97 6.9 32.26 Westpc 29.89 29.93 -0.04 -0.13 -2.44 -7.5 3.97 SouthTrust Bank 12/27 6.57 A Aa3 A+ 121.34 4.28 0.00 -0.06 2.46
Yahoo 36.90 36.32 0.58 1.60 2.10 6.0 15.98 Mizuho Fin 165.00 170.80 -5.80 -3.40 -13.40 -7.5 -0.96 Emerging US$ SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 113.05 4.61 0.00 -0.22 -
Kweichow 248.66 248.11 0.55 0.22 13.69 5.8 15.70 MTN Grp 132.02 128.64 3.38 2.63 -9.93 -7.0 -1.33 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- 121.82 4.52 0.00 0.19 -
Amazon 600.67 593.86 6.81 1.15 31.04 5.4 8.79 SumitomoF 3348.00 3471.00 -123.00 -3.54 -231.00 -6.5 6.01 Brazil 01/18 8.00 BB+ Ba2 BB+ 105.82 4.58 0.00 0.00 3.81
Russia 07/18 11.00 BB+ Ba1 BBB- 117.23 3.21 0.00 0.06 2.44 Euro
Nmrcble-SFR 38.10 38.10 0.00 0.00 1.95 5.4 11.92 Glencore 143.80 143.80 0.00 0.00 -9.70 -6.3 14.99 Credit Agricole S.A. 03/27 2.63 BBB Baa3 A- 99.56 2.67 0.00 -0.37 0.86
Cognizant 62.24 61.62 0.62 1.00 3.18 5.4 9.27 MitUFJFin 512.20 532.90 -20.70 -3.88 -34.20 -6.3 5.63 Peru 03/19 7.13 BBB+ A3 BBB+ 114.35 2.17 0.00 0.02 1.40
Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84 Electricite de France (EDF) 03/27 4.13 A+ A1 A 122.21 1.91 0.00 0.00 0.10
LibertyGbl 38.79 38.52 0.27 0.70 1.94 5.3 5.29 CredSuisse 13.58 13.58 0.00 0.00 -0.87 -6.0 2.53 BHP Billiton Fin Ltd 09/27 3.25 A+ A3 A+ 114.13 1.87 0.00 -0.48 0.06
Illumina 160.37 157.13 3.24 2.06 7.83 5.1 6.67 SaudiBasic 73.77 76.77 -3.00 -3.91 -4.63 -5.9 -5.91 Colombia 07/21 4.38 BBB Baa2 BBB 103.33 3.71 0.00 -0.35 2.44
Brazil 01/22 12.50 BB+ Ba2 BB+ 97.49 13.15 0.00 0.00 11.88 TeliaSonera 09/27 3.00 A- A3 A- 112.14 1.82 0.00 0.00 0.00
ChinaPcIns 29.25 28.10 1.15 4.09 1.25 4.5 16.30 NatAusBk 25.64 25.62 0.02 0.08 -1.58 -5.8 5.99
Poland 03/22 5.00 A- A2 A- 111.77 2.87 0.00 0.10 1.60 Yen
JapanTob 4771.00 4749.00 22.00 0.46 196.00 4.3 5.94 Midea 1.81 1.83 -0.02 -1.09 -0.11 -5.7 -3.21
Turkey 09/22 6.25 - Baa3 BBB- 110.30 4.45 0.00 -0.17 3.19 Wal-Mart Stores, Inc. 07/15 0.94 NR WR NR 100.00 0.31 0.00 0.00 -
ShenwanHong 0.15 0.15 0.00 0.00 0.01 4.2 23.33 BHPBilltn 16.62 16.71 -0.09 -0.54 -0.98 -5.6 6.74
Caterpillar 76.69 76.01 0.68 0.89 3.01 4.1 13.12 RioTinto 1863.00 1863.00 0.00 0.00 -106.00 -5.4 4.41 Turkey 10/26 4.88 - Baa3 BBB- 99.93 4.94 0.00 0.00 3.13 £ Sterling
Telsa Mtrs 231.67 230.13 1.54 0.67 9.09 4.1 20.34 Unicred 3.39 3.39 0.00 0.00 -0.19 -5.4 -4.07 Emerging Euro IPIC GMTN Limited 03/26 6.88 AA Aa2 AA 122.65 4.11 0.06 0.12 1.82
AIA 43.90 42.45 1.45 3.42 1.65 3.9 10.58 Deut Bank 15.37 15.37 0.00 0.00 -0.86 -5.3 -6.07 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
Corning 20.91 20.65 0.26 1.28 0.78 3.9 14.23 SK Hynix 28650.00 28900.00 -250.00 -0.87 -1600.00 -5.3 -4.50 Mexico 07/17 4.25 BBB+ A3 BBB+ 111.13 1.50 0.00 0.00 0.72 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 0.79 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- 116.16 3.75 0.00 -0.18 1.94
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 30 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return Mar 30 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 13.48 -0.34 13.82 53.29 10.88 Mar 30 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 13.24 -0.45 13.69 56.32 7.76 Tr 4pc '16 101.57 0.40 -6.98 -4.76 8.11 17.65 102.23 100.00 0.35
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 181.19 -0.28 3.36 4.56 3.35 1.01 VXN 16.25 -0.65 16.90 46.72 12.06 Tr 1.75pc '17 101.09 0.41 -4.65 -2.38 24.24 5.13 102.44 101.07 0.29
Euro Repo 0.05 10-09-2014 0.05 0.05 0.05 Corporates( £) 302.32 -0.17 2.56 2.42 2.88 -0.79 VDAX 20.34 -1.77 22.11 32.55 16.71 Tr 5pc '18 109.08 0.30 -6.25 -3.23 30.43 -50.82 112.78 109.05 0.35
UK Repo 0.50 05-03-2009 0.50 0.50 0.50 Corporates($) 257.30 0.31 2.18 3.14 2.18 3.14 † CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.5pc '19 111.84 0.44 -6.38 -2.22 18.92 -48.24 114.11 111.04 0.36
Japan O'night Call 0.00-0.00 05-10-2010 0.03 0.00-0.10 0.00-0.10 Corporates(€) 216.03 0.03 1.23 2.24 1.59 0.40 ‡ Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 4.75pc '20 116.04 0.62 -4.62 -1.59 10.71 -40.38 117.83 114.45 0.33
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov(€) 232.20 0.10 0.10 3.06 0.52 0.87 Tr 1.5pc '21 103.08 0.85 -3.41 -1.16 7.59 -28.57 140.55 99.91 0.20
Gilts( £) 300.11 -0.32 -0.70 4.62 -0.65 2.40 BONDS: BENCHMARK GOVERNMENT Tr 4pc '22 117.91 0.90 -3.23 -2.17 5.88 -29.13 119.14 113.65 0.38
INTEREST RATES: MARKET Global Inflation-Lkd 246.18 -0.12 2.22 3.29 2.24 -1.62 Red Bid Bid Day chg Wk chg Month Year Tr 5pc '25 131.17 1.30 -2.99 -2.99 1.56 -15.03 132.97 124.47 0.35
Over Change One Three Six One Markit iBoxx £ Non-Gilts 302.84 -0.17 1.54 2.68 1.77 -0.37 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '27 128.23 1.59 -3.05 -2.45 0.00 -8.09 130.43 119.79 0.31
Mar 30 (Libor: Mar 29) night Day Week Month month month month year Overall ($) 231.42 0.31 0.46 2.84 0.46 2.84 Australia 10/18 3.25 103.28 1.92 -0.01 -0.08 0.04 0.19 Tr 4.25pc '32 131.44 1.97 -1.50 -0.51 0.00 -1.99 134.41 121.93 0.35
US$ Libor 0.37550 0.001 0.001 -0.002 0.43290 0.63085 0.91390 1.23865 Overall( £) 298.20 -0.28 -0.04 4.05 0.06 1.57 11/27 2.75 101.07 2.64 -0.01 -0.10 -0.05 0.00 Tr 4.25pc '36 133.87 2.15 -1.38 -0.46 -0.92 0.47 137.18 123.52 0.28
Euro Libor -0.39329 -0.001 -0.006 0.000 -0.33000 -0.24900 -0.13943 -0.01729 Overall(€) 226.55 0.08 0.25 2.65 0.61 0.72 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 4.5pc '42 144.56 2.27 -0.87 0.00 -1.73 1.34 148.39 132.20 0.26
£ Libor 0.48250 0.003 0.003 0.002 0.51313 0.58688 0.74163 1.01400 Treasuries ($) 222.84 0.37 -0.41 2.79 -0.41 2.79 10/26 0.75 102.43 0.51 0.00 -0.09 -0.17 0.00 Tr 3.75pc '52 138.49 2.20 -0.90 -0.45 -2.65 -2.65 142.78 121.95 0.23
Swiss Fr Libor -0.004 -0.78660 -0.72920 -0.65800 -0.54600 FTSE Belgium 06/18 0.75 101.76 -0.06 0.00 0.00 0.00 0.00 Tr 4pc '60 152.69 2.14 -0.93 -0.47 -3.17 -4.46 157.42 131.72 0.22
Yen Libor -0.010 -0.08529 -0.00500 0.02293 0.10700 Sterling Corporate (£) 111.69 -0.10 - - 1.57 -4.31 06/26 1.00 104.85 0.51 -0.01 -0.08 -0.17 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per £ 100 nominal of stock. Red yield: Gross redemption yield.
Euro Euribor -0.001 -0.33200 -0.24200 -0.13400 -0.00600 Euro Corporate (€) 108.18 -0.04 - - 1.19 -2.41 Canada 11/17 0.25 99.59 0.51 0.00 0.00 0.00 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Sterling CDs 0.000 0.50000 0.60000 0.77500 Euro Emerging Mkts (€) 857.32 15.42 - - 6.05 -20.12 06/26 1.50 102.12 1.28 0.00 0.00 0.00 0.00
US$ CDs
Euro CDs
0.000
0.000
0.44000
-0.37500
0.60000
-0.26500
0.86000
-0.17500
Eurozone Govt Bond 116.61 -0.04 - - 0.31 -1.86 Denmark 11/18 0.25 101.66 -0.38 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 1.75 112.83 0.39 -0.01 -0.06 -0.14 0.12
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 99.71 1.14 0.00 -0.04 -0.01 0.00
Fixed Coupon Mar 30 chg % Return 1 month 1 year Yield
Mar 30 term notice month month month year Markit iTraxx 04/26 0.50 100.55 0.44 -0.01 -0.10 -0.16 0.00
1 Up to 5 Years 98.23 0.08 2397.53 -0.27 1.78 0.58
Euro -0.45 -0.35 -0.45 -0.35 -0.45 -0.30 -0.35 -0.20 -0.25 -0.10 -0.08 0.07 Crossover 5Y 310.98 -10.99 1.88 - 325.88 298.18 France 05/19 1.00 104.22 -0.33 0.00 0.00 0.00 0.00
2 5 - 10 Years 183.28 0.27 3358.13 -0.58 3.71 1.14
Sterling 0.40 0.50 0.45 0.55 0.55 0.65 0.70 0.85 0.93 1.08 Europe 5Y 72.34 -3.88 -1.89 - 77.02 72.20 11/20 0.25 102.13 -0.21 0.00 0.00 0.00 0.00
3 10 - 15 Years 213.61 0.40 3978.63 -0.69 3.45 1.71
Swiss Franc - - - - - - - - - - - - Japan 5Y 88.88 -2.49 -3.00 - 93.03 88.88 05/26 0.50 100.23 0.48 0.00 -0.08 0.00 0.00
4 5 - 15 Years 190.56 0.31 3508.29 -0.61 3.77 1.38
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 89.87 -5.04 -1.00 - 96.13 87.63 05/45 3.25 145.30 1.36 -0.01 -0.10 -0.28 0.27
5 Over 15 Years 312.54 0.43 4571.53 -0.25 3.34 2.19
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 0.50 103.02 -0.49 0.00 0.00 0.00 0.00
Markit CDX 7 All stocks 176.94 0.29 3351.13 -0.37 2.92 1.91
Japanese Yen -10.00 -7.00 -0.50 -0.20 -0.40 -0.20 -0.25 -0.05 -0.20 0.00 -0.10 0.10 10/20 0.25 102.93 -0.39 0.00 0.00 0.00 0.00
Emerging Markets 5Y 289.59 -2.32 11.44 0.00 296.83 278.15 02/26 0.50 103.53 0.14 0.00 -0.06 -0.07 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 453.39 -7.65 0.00 0.00 461.04 453.39 08/46 2.50 145.64 0.80 -0.01 -0.10 -0.19 0.20
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. Index Linked Mar 30 chg % chg % chg % Return 1 month 1 year
Nth Amer Inv Grade 5Y 82.54 -0.63 1.91 0.00 83.19 77.52 Greece 07/17 3.38 93.15 9.22 0.12 0.04 -1.29 -12.92
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 0.01 0.11 -1.04 2376.38 0.11 0.40
02/26 3.00 67.05 8.69 0.08 0.08 -1.03 -2.75 2 Over 5 years 586.42 -0.15 0.35 -0.70 4336.07 0.40 0.03
Ireland 10/17 5.50 109.10 -0.35 0.00 0.00 0.00 0.00 3 5-15 years 436.62 0.12 0.07 -1.05 3329.65 0.08 0.24
05/26 1.00 102.69 0.72 -0.01 -0.09 -0.21 0.00 4 Over 15 years 725.91 -0.25 0.46 -0.44 5264.70 0.53 0.09
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/18 0.30 100.72 0.02 -0.01 -0.02 0.00 0.00 5 All stocks 541.06 -0.13 0.31 -0.73 4053.51 0.36 0.12
11/20 0.65 101.63 0.29 0.01 -0.01 -0.10 0.00
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/26 1.60 103.04 1.28 -0.02 -0.07 -0.20 0.00 Yield Indices Mar 30 Mar 29 Yr ago Mar 30 Mar 29 Yr ago
Crude Oil† Apr 38.98 0.65 Corn♦ May 372.50 2.75 Mar 29 Mar 29 Prev return stock Market stocks
03/47 2.70 107.00 2.39 -0.02 -0.06 -0.28 0.00 5 Yrs 0.75 0.79 1.05 20 Yrs 2.22 2.25 2.19
Brent Crude Oil‡ 40.83 1.50 Wheat♦ May 475.75 3.25 Can 4.25%' 21 127.61 -0.538 -0.471 0.58 5.18 72684.77 7
Japan 03/18 0.10 100.65 -0.23 0.00 0.00 0.00 0.00 10 Yrs 1.50 1.54 1.65 45 Yrs 2.17 2.18 2.29
RBOB Gasoline† Apr 1.48 0.03 Soybeans♦ May 914.25 5.00 Fr 2.25%' 20 114.46 -1.008 -1.001 -0.13 20.31 220501.42 14
04/21 0.05 101.34 -0.22 0.00 0.00 0.00 0.00 15 Yrs 2.00 2.03 2.00
Heating Oil† Apr 1.16 -0.03 Soybeans Meal♦ May 274.30 3.20 Swe 0.25%' 22 110.62 -1.290 -1.277 0.96 30.77 229597.01 7
03/26 0.10 101.93 -0.09 0.00 0.00 0.00 0.00
Natural Gas† Apr 1.99 0.00 Cocoa (ICE Liffe)X May 2171.00 -13.00 UK 2.5%' 20 360.95 -1.566 -1.560 0.42 6.58 508295.82 26
03/46 0.80 107.71 0.50 -0.01 0.06 0.00 0.00 inflation 0% inflation 5%
Ethanol♦ - - Cocoa (ICE US)♥ May 2990.00 6.00 UK 2.5%' 24 342.91 -1.055 -1.036 0.08 6.82 508295.82 26
Netherlands 04/17 0.50 101.03 -0.49 0.00 0.00 0.00 0.00 Real yield Mar 30 Dur yrs Previous Yr ago Mar 30 Dur yrs Previous Yr ago
Uranium† Apr 29.00 0.00 Coffee(Robusta)X May 1504.00 3.00 UK 2%' 35 234.93 -0.897 -0.899 0.57 9.08 508295.82 26
07/25 0.25 100.24 0.22 0.00 -0.06 -0.13 -0.13 Up to 5 yrs -1.19 2.13 -1.18 -1.16 -1.90 2.15 -1.90 -1.85
Carbon Emissions‡ - - Coffee (Arabica)♥ May 128.60 1.00 US 0.625%' 21 104.48 -0.215 -0.084 1.09 35.84 1160753.82 37
White SugarX 453.50 0.50 New Zealand 03/19 5.00 108.31 2.09 -0.03 -0.06 -0.23 -1.02 Over 5 yrs -0.92 23.73 -0.93 -0.94 -0.95 23.83 -0.96 -0.98
Diesel† - - US 3.625%' 28 137.44 0.432 -0.084 1.78 16.78 1160753.82 37
Sugar 11♥ 15.99 0.13 04/27 4.50 114.15 2.99 -0.03 -0.08 -0.06 -0.33 5-15 yrs -0.94 9.41 -0.92 -0.99 -1.06 9.42 -1.04 -1.12
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market
Norway 05/19 4.50 112.69 0.42 0.00 -0.01 -0.11 -0.58 Over 15 yrs -0.92 29.30 -0.93 -0.93 -0.94 29.35 -0.95 -0.96
Base Metals (♠ LME 3 Months) Cotton♥ May 57.75 0.40 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 1.50 102.86 1.19 -0.01 -0.06 -0.19 0.00 All stocks -0.93 20.72 -0.93 -0.94 -0.97 20.86 -0.97 -0.99
Aluminium 1498.50 5.50 Orange Juice♥ May 136.55 -0.05 amount.
Aluminium Alloy 1590.00 0.00 Palm Oil♣ - - Portugal 06/19 4.75 111.36 1.12 0.01 -0.02 -0.05 0.40 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
Copper 4878.50 -38.50 Live Cattle♣ Apr 134.65 0.00 BONDS: TEN YEAR GOVT SPREADS 02/26 3.30 103.57 2.88 0.00 -0.02 -0.12 0.00
Spain 04/18 0.25 100.45 0.03 0.00 -0.01 0.01 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 1744.50 -0.50 Feeder Cattle♣ Apr 156.03 0.83
Nickel 8495.00 -25.00 Lean Hogs♣ Apr 70.23 0.00 Spread Spread Spread Spread 04/26 1.95 104.87 1.43 -0.01 -0.10 -0.20 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Tin 16790.00 0.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.94 1.03 0.00 -0.05 -0.13 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Zinc 1797.00 4.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 05/25 2.50 117.61 0.52 0.01 0.00 -0.02 0.10 loss arising from the reliance on or use of the listed information. For all queries e-mail
Precious Metals (PM London Fix) Mar 29 Month Year Australia 2.64 2.50 0.83 Italy 1.28 1.14 -0.53 Switzerland 05/19 3.00 112.39 -0.91 0.00 0.00 0.00 0.00 ft.reader.enquiries@morningstar.com
Gold 1226.00 5.00 S&P GSCI Spt 328.11 8.14 -18.46 Austria 0.51 0.37 -1.30 Japan -0.09 -0.23 -1.91 05/26 1.25 116.51 -0.34 0.00 0.00 0.00 0.00
Silver (US cents) 1506.00 -22.00 DJ UBS Spot 79.70 4.99 -19.75 Belgium 0.51 0.37 -1.30 Netherlands 0.22 0.08 -1.59 United Kingdom 07/18 1.25 101.85 0.45 -0.02 -0.02 -0.01 -0.35 Data provided by Morningstar | www.morningstar.co.uk
Platinum 948.00 -9.00 R/J CRB TR 173.51 6.01 -19.50 Canada 1.28 1.14 -0.54 Norway 1.19 1.05 -0.62 01/21 1.50 103.16 0.83 -0.02 -0.04 -0.02 0.00
Palladium 566.00 -11.00 Rogers RICIX TR 2016.75 - - Denmark 0.39 0.25 -1.42 Portugal 2.88 2.74 1.07 07/26 1.50 99.93 1.51 -0.03 -0.07 -0.07 0.00
Bulk Commodities M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Finland 0.44 0.30 -1.37 Spain 1.43 1.29 -0.39 12/46 4.25 143.86 2.26 -0.02 -0.01 -0.06 -0.04
Iron Ore (Platts) 54.25 -1.85 UBS Bberg CMCI TR 12.29 5.83 -19.99 France 0.48 0.34 -1.34 Switzerland -0.34 -0.48 -2.16 United States 01/18 0.75 99.96 0.77 -0.01 -0.09 -0.07 0.00
Iron Ore (The Steel Index) 53.20 -1.50 LEBA EUA Carbon 5.01 -0.99 -26.32 Germany 0.14 0.00 -1.67 United Kingdom 1.51 1.37 -0.31 02/21 1.13 99.32 1.27 0.00 -0.10 -0.07 0.00
GlobalCOAL RB Index 52.25 -5.25 LEBA CER Carbon 0.36 -5.26 -14.29 Greece 8.69 8.55 6.87 United States 1.81 1.67 0.00 02/26 1.63 98.30 1.81 0.00 -0.07 -0.03 0.00
Baltic Dry Index 414.00 5.00 LEBA UK Power 4220.00 179.10 -24.74 Ireland 0.72 0.58 -1.09 02/46 2.50 97.66 2.61 0.01 -0.05 -0.08 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 Thursday 31 March 2016

MARKETS & INVESTING

INSIGHT Equities

Bhanu
Baweja Low Vix boosts sales of leveraged ETFs
Investors buy insurance
against S&P 500 volatility
Expect lasting EM pain ahead of earnings season
as corporate infection JOE RENNISON — NEW YORK
Investors are questioning the rebound
volatility via futures based on the Vix,
the CBOE’s volatility index.
The Vix, which reflects 30-day option
volatility on the S&P 500 and is known
as Wall Street’s fear gauge, has eased to
under 14, below its long-term average of
20 and a peak of 28 reached during the
market turmoil this year.
season that could weigh on sentiment
for equities during April. Further signs
of slower global growth and a stronger
dollar also pose a risk for US companies
that rely on foreign revenues.
“If the outlook from chief executives
at the end of the quarter is bearish, then
the Vix is definitely going higher,” said
14 term trade, and most ETF portfolios are
split between the current futures con-
Level of CBOE’s tract and the one a month later. As con-
volatility index,
against its long-
term average of 20
tracts expire the funds “roll” into the
new ones. This costs money because the
later contracts are priced much higher,
110m
Shares outstanding
which means volatility ETFs tend to per-
form badly over long periods.

spreads to sovereigns in US share prices and buying exchange-

traded funds that offer the prospect of
high returns from renewed volatility.
US equities have risen more than
12 per cent from their February low,
Lower volatility expectations give
investors an opportunity to buy cheap
insurance against the risk of the S&P
500 entering choppier waters in the
coming weeks.
Michael Purves, global strategist at
Weeden & Co. “Even if you think it will
be subdued, it is a cheap time to put on
for VelocityShares
TVIX, up from
34m in February
Some investors, however, are betting
that markets will stay somnolent.
Robust demand for leveraged ETFs
protection.” has notably increased the difference in
VelocityShares TVIX, a leveraged the price between the current futures

T
he ebb and flow of asset values this year has
been larger than on previous occasions, but it
is very unlikely that we are at a long-term
inflection point for emerging markets.
Against a background of sentiment-
motored noise, one can pick up the steadily louder hum
of increasing EM leverage, the bulk of it in the corporate
sector. Yet EM corporate credit has held up better than
US high yield. The fact that energy figures more promi-
nently in EM corporate benchmarks makes this outper-
formance more intriguing.
Some argue that the relative resilience is explained sim-
ply by the fact that most EM corporate credit is investment
grade. However, ratings are not the assuring anchor they
once were; our credit RiskMetrics suggest that EM ratings
have only begun a process of being cut several notches.
The real reason EM corporates have been able to avoid
serious stress is that about 35 per cent of outstanding paper
is issued by partially or wholly government-owned compa-
nies. In energy, a sector still under pressure despite the
modest rebound in oil prices, the government ownership
ratio is close to 70 per cent. “The sovereign will not let the
quasi-sovereign default” is a much too common refrain in
EM investment circles and it is very likely correct. But
even as governments can delay the pain for some compa-
nies, their involvement also engineers a transmission of
pain from credit to other assets.
In the US default rates in the energy sector are expected
to rise to 11 per cent in 2016, a grim reflection of over-
investment. But, no matter how acute this pain is, it does
not seriously affect sectors such as healthcare, consumer
staples and technology. Default rates ex-energy and mate-
rials are below long-term averages. Given the strong nega-
tive correlations between high yield spreads and govern-
ment bond yields, one may argue that as energy compa-
nies confront stress, the cost
of equity for a typical non-
energy company falls.
Investors’ credit
Not so in EM. Weak public- appetite is being
sector corporations risk
infecting sovereign balance
whittled down
sheets when many are already as refinancing
under fiscal pressure due to
sustained weakness in
needs are rising
growth. As EM governments
suppress corporate trouble, their own credit risk will prob-
ably rise, nudging their yields higher. The cost of equity
then rises for every company, even those that are funda-
mentally sound, in sectors unrelated to the one in trouble.
The accepted wisdom is that low public debt ratios com-
pared with developed markets will enable EM govern-
ments to retain a very generous fiscal stance for a good
while yet. However, EM’s weaker institutions, shallower
markets and under-developed debt resolution mecha-
nisms invalidate a like-for-like comparison with devel-
oped-economy public debt. Historically EM countries
have slipped into crises at much lower levels of govern-
ment and private leverage than have developed markets.
A link that reinforces the loop of trouble between EM
corporates and sovereigns is the financial sector, which
also happens to be the largest issuer of hard-currency debt
in EM. The non-performing loan cycle in EM has yet to
manifest itself fully, even though debt service ratios for the
private sector are higher than in developed markets. That
is because investors, both external and local, have been
happy to roll over maturing debt until recently. But rising
leverage and a more elevated opportunity cost of global
capital are whittling down investors’ appetite at a time
when EM refinancing needs are rising.
There are warning signs aplenty over in EM equities,
which are less interested in a company’s capacity to touch
its parent for a quick penny and more focused on its ability
to generate profits. State-owned enterprises, particularly
financials, have underperformed broader indices for sev-
eral years. It is a damning statement on EM corporate
management that the return on equity has fallen even
though leverage has gone up. State-owned enterprises
have been centre stage in this act. So far EM equity inves-
tors have had to deal with weak earnings and a low return
on equity. As corporate debt infects sovereign debt, they
may also have to worry about a rising cost of equity.
The pain in EM corporate credit will begin with a lag, but
it is very likely to demand more than its pound of flesh.
And the collateral damage will be broader and may last
longer than in developed markets.
Bhanu Baweja is head of EM strategy at UBS Investment Bank
with the S&P 500 turning positive for
the year on Tuesday after Janet Yellen,
the Federal Reserve chair, said the cen-
tral bank would proceed cautiously on
raising interest rates.
But some investors are betting that
the recovery in share prices will not last
and have sought leveraged ETFs that
track expectations of implied equity
Chinese shell out for peanuts while US prices toil
Weather, quarantine rules
and state subsidies fuel
divergence between countries
EMIKO TERAZONO
Stark disparities have appeared
between two important peanut markets
as the Chinese shell out more for the
groundnut amid a scramble for sup-
plies, while record US inventories fuel
fears that farmers may not have enough
warehouse space to store the snack.
The divergence comes as regional
price differences have widened because
of the weather, state subsidies that
change farmer behaviour and quaran-
tine rules that affect trade flows.
Peanut prices from China “have gone
up dangerously”, says Paul van Velzen,
managing director of Aldebaran Com-
modities, a Rotterdam-based nut and
oilseeds trader.
Prices in China, a leading peanut
exporter, have stayed high after a fall in
production in the crop year 2014-15 —
the result of a drop in planting because
of lower prices and bad weather.
About half of the country’s peanuts
are crushed into oil used for cooking. It
is prized for its nutty flavour and the
ability to be heated to high tempera-
tures without burning. Chinese con-
sumers are also turning to nuts as a
healthy snack, and producers have had
limited ability to keep pace with the
growing demand.
Although Chinese production is
expected to hit 16.8m tonnes in the
2016-17 crop year, up from 16.5m in
2014-15, according to the US Depart-
ment of Agriculture, the large oilseed
processing sector in China has contin-
ued to provide avid buyers, leading to
sharp price increases.
For example, peanut oil in Shandong,
an important growing region, is trading
at about Rmb14,400 ($2,222) a tonne,
up 8 per cent from a year ago and the
highest since February 2014.
The export prices for peanuts have
also continued to rise over the past few
months. “The prices keep on going up,”
says Mr van Velzen.
In the US, farmers are seeing an over-
hang of inventories thanks to two
bumper harvests in 2014 and 2015.
“We had a phenomenal year in 2015,”
says Don Koehler, executive director
of the Georgia Peanut Commission,
which produces almost half of the US’s
peanuts. US production in 2015 totalled
2.8m tonnes, up almost a fifth from the
year before.
“We have just had such an abrupt ETF that offers the prospect of two contract and the one for the following
turnround in equity markets, even if times the gains or losses of the Vix and month.
the market rallies from here on out, you has $535m assets under management, This has led some investors to buy
can’t do that without some bumps in has grown to 110m shares outstanding “inverse” volatility ETFs. These sell the
the road,” said Nick Cherney, head from 34m in February. The ProShares futures contracts, which is in effect bet-
of exchange traded products at Janus leveraged UVXY, with $925m in assets, ting that the Vix will stay low.
Capital. “And when that happens vola- has grown from 7m shares outstanding It would currently require a rise of
tility will spike.” in February to 40m. almost 10 per cent in the Vix before
Analysts expect a bruising earnings The volatility bet tends to be a short- investors lost money.
Analysis. Commodities
US peanut prices
$ per lb*
0.35
0.30
0.25
0.20
0.15
2013 14 15 16
* Some data not reported by the USDA due
to confidentiality
Top 10 peanut exporters
2015-16 forecast (’000 tonnes)
0 200 400 600 800
Argentina
India
China
US
Nicaragua
Brazil
Senegal
Egypt
Malawi
EU
Source: USDA
US peanut Mr Koehler says that US farmers were ties’ low prices has forced southern guaranteed storage,” says Mr Koehler.
growers are planting more peanuts as cotton and farmers to look towards peanuts as the In an ideal world, the US would be
pinning their corn prices were low. Cotton was down safety net”, says a report on peanut sup- increasing its exports, which account for
hopes on mainly because of the large stock over- ply and storage from the US’s National about 20 per cent of its overall produc-
Chinese hang in China caused by the country’s Center for Peanut Competitiveness. tion. However, certain importers,
demand, state stockpiling system. Average US prices are 19 cents a including Europe, have stringent quar-
after bumper Peanut farmers also benefit from the pound, down 14 per cent from a year ago antine rules on aflatoxins — toxic chem-
harvests in US government’s subsidy programme and 40 per cent from the start of 2013, icals caused by mould — limiting the
2014 and 2015 for grains and oilseeds, which supple- according to the USDA. amount of imports from the US.
Dreamstime/Braendan Yong
ments the farmers’ revenue if the If US peanut prices remain weak, it is Differing consumer tastes and prefer-
national price or crop revenue drops possible the cost to the taxpayer will be ences also restrict the US varieties
below guaranteed levels. more than $800m a year in 2016, 2017 sold overseas.
A loan programme also protects pea- and 2018, according to a Congressional China turned to the US in 2012 after
nut growers by providing interim research paper. its regular supplier, India, faced a poor
financing for farmers and further insu- With peanut inventories forecast to harvest because of drought. Although
lating them from price declines as the rise to a record 1.3m tonnes this year, Beijing imposes a 15 per cent import
government takes ownership of the loan there is a chance that US farmers will duty and 13 per cent VAT on peanut
collateral of peanuts if prices drop below run out of warehouse space. “Without imports, US peanut growers have
an agreed rate. adequate storage capacity, many peanut pinned their hopes on Chinese demand.
Farmers in the south of the US usually producers may not be able to store their US peanut industry delegates have
alternate between cotton, corn and pea- peanuts in a federal license warehouse” visited China to promote their wares.
nuts, but with cotton lacking a govern- and participate in the government’s “China has been buying peanuts from
ment support programme, “the recent loan programme, the NCPC warns. us,” says Mr Koehler, adding: “There is a
and forecasted extremely low cotton “We’re telling our members that when lot of activity right now to build rela-
prices coupled with the other commodi- they buy the seed, they have got to have tionships with Chinese buyers.”

Commodities Equities

China’s $2bn of copper stocks spark debate
HENRY SANDERSON AND NEIL HUME
A rise in Chinese copper stocks to
record levels has divided opinion, with
analysts and traders at loggerheads
over the reason for the increase.
Copper prices, which fell to a six-year
low in January, have risen 12 per cent
this quarter, briefly trading above
$5,000 a tonne, helped by a weaker US
dollar and optimism over China’s prop-
erty market.
But investors are trying to work out
why there is 400,000 tonnes of copper
worth more than $2bn sitting in ware-
houses monitored by the Shanghai
Futures Exchange. Analysts at some
influential banks in the commodity
markets, such as Bank of America Mer-
rill Lynch, say the stocks are a sign that
demand in China, the world’s largest
consumer of copper, remains weak.
Copper is seen as a key barometer for
the health of China’s economy, due to its
use in wiring, cables and construction.It
is also key for the fortunes of some of the
world’s largest global miners.
But many traders say the reason
behind the build-up in stocks is more
complicated and does not reflect weak
demand. They note that most of the
metal has not been warranted with the
Shanghai exchange, meaning the metal
is not backed by an official receipt.
They suggest the build-up has been
driven by Chinese smelters, who have
written derivative contracts as a way of
generating cash amid weak copper
prices. That has left them potentially
exposed as the price rebounded. That
could have encouraged them to deliver
metal on to the exchange, to give the
impression of weak demand and large
stockpiles and push the price down.
Imports of copper concentrate —
partly purified ore that is later smelted
to produce refined metal — to China
were also strong at the end of last year,
which has left smelters with stocks of
copper cathodes.
In the rest of the world, inventory
trends are running in the opposite direc-
tion. Copper stocks on the London
Metal Exchange have dropped 38 per
cent this year. Yesterday, copper for
three-month delivery on the LME was
trading at $4,870 a tonne.
Some of that metal has made its way
to China. Customs data show refined
copper imports jumped sharply in the
first two months of 2016, compared
with the same period a year ago.
That flow of metal was driven by a dif-
ference in prices between Chinese
domestic prices and the rest of the world
— a window that has now closed.
Hong Kong IPOs of Chinese banks underwhelm
JENNIFER HUGHES — HONG KONG
The biggest public float this year has
made an unimpressive debut in Hong
Kong, underlining investor caution
towards initial public offerings even
though global equity markets have
recovered from early-year plunges.
China Zheshang Bank closed
unchanged at HK$3.96 yesterday, hav-
ing dropped as much as 0.8 per cent to
HK$3.94. The regional lender raised
$1.7bn last week after pricing at the
lower end of the marketed range.
Bank of Tianjin, another mainland
regional bank, also debuted, and fin-
ished the day flat at HK$7.3, after raising
$948m — at the lower end of its range.
The listings are rare successes in the
slowest start for listings worldwide since
the aftermath of the financial crisis in
2009. So far in 2016 just $13.4bn has
been raised globally, according to Dea-
logic — a third of the amount raised by
this time last year.
Markets globally suffered their weak-
est start to a year as the low oil price and
worries about China’s slowing economy
boosted haven assets, including the Japa-
nese yen and gold, and sent riskier
investments,suchasstocks,plunging.
The S&P 500 stands 0.5 per cent
higher for the year, having regained all
of the 11 per cent it fell in January.
European and Chinese bourses are
taking longer to recover, however. The
blue-chip FTSE Eurofirst 300 is down
8 per cent for the year, though well off
early-year losses of 18 per cent.
The Hang Seng China Enterprises
index, a closely followed grouping of
Hong Kong-listed mainland stocks, ini-
tially fell 22 per cent but has recovered
to stand 8 per cent lower. However, its
level yesterday of 8,895 leaves it short of
the 10,000 mark bankers use as a rule of
thumb for the return of risk appetite.
Hong Kong leads the global IPO rank-
ings with $3.5bn in the year to date, but
it has suffered a pulled listing — its first
in almost two years.
London is second, having raised
$1.8bn, and Nasdaq third with $1.3bn.
The main board of the New York Stock
Exchange has not had a listing this year
— its longest drought since the period
after the collapse of Lehman Brothers in
September 2008.
Bankers cautioned against expecting
much of a pick-up after the two Hong
Kong listings. Both banks allotted more
than half their offerings to cornerstone
investors, which accept six-month lock-
ups in return for large allocations.
The sector also tends to rely on main-
land investment.
Thursday 31 March 2016 ★ FINANCIAL TIMES 21

MARKETS & INVESTING

Global overview
TRADING POST Markets update

Jamie
Chisholm
US stocks attain fresh 2016 highs S&P 500 index
Change on day 0.55%

as dovish spin on Fed prevails

Foreign exchange speculators seem
to be betting that a technical tendency
will hold true.
It is pretty rare for a commodity or
currency, even a stock for that matter,
to test support or resistance more than
a couple of times without eventually
breaking through.
The fresh weakness in the
greenback sees the dollar/yen rate
eyeing the intraday low of about Y111.0
that it touched three times in the past
few months.
Now, with the Bank of Japan
watching from the wings, it is possible
a burst of intervention, verbal or real,
could push dollar/yen higher again,
confounding those of a chartist bent.
But the latest US forex futures data
suggest traders continue to take a
punt on further yen strength.
Analysts at Danske Bank calculate
the net long yen positioning is now
about 36 per cent of open interest,
which is the highest in four years. At
the end of last year the figure was a
similar percentage on the short side.
And, as Jane Foley, senior forex
strategist at Rabobank, noted: “Yen
longs have failed to drop consistently
over the past month or so despite the
better tone of many risky assets.”
Indeed. A glance at the dollar/yen’s
20-day correlation with the S&P 500
shows it hit negative 80 per cent when
Wall Street touched the February low.
It is now a positive 62 per cent,
suggesting that if the yen is firming
as a result of a weaker buck rather
than a haven rush, this trend of late
has provided little impediment to
broader market risk appetite.
jamie.chisholm@ft.com
Yen
Against the dollar (¥ per $)
110
115
120
125
Dec 2016 Mar
2015
Source: Thomson Reuters Datastream
Dollar nears 5-month low
as Yellen comments
reverberate, while EM
assets rally and stronger
yen hits Tokyo
DAVE SHELLOCK
US stocks marched to fresh 2016 highs
and the dollar neared a five-month low
as the fallout from a dovish set of com-
ments by Janet Yellen on Tuesday con-
tinued to reverberate through markets.
The Fed chair struck a note of
extreme caution about the prospects for
further increases in US interest rates,
providing a marked contrast to the
more hawkish tone adopted recently by
several of her colleagues.
“Ms Yellen had a clear agenda — to
quell any expectations that the central
bank is on course to hike rates as early
as April,” said Chris Turner, head of for-
eign-exchange strategy at ING.
“While her latest speech borrowed
many points from the recent Federal
Open Market Committee meeting press
conference, we note that the Fed chief’s
latest tone was particularly dovish given
the explicit reference to further easing
options and a greater focus on the down-
side risks to the economy.”
Federal fund futures predict a zero
probability of the central bank raising
short-term borrowing costs at its April
meeting, and just a 24 per cent chance of
a move in June, according to Bloomberg
calculations.
Hopes of US rates staying lower for
longer helped Wall Street extend Tues-
day’s rally.
By midday in New York the S&P 500
was up 0.5 per cent at 2,065, the highest
since late December, having at one point
hit 2,072.21.
That left the US equity benchmark
more than 14 per cent up from a two-
year low struck in February, and just
A looming test: FT.com/video
The FT’s John Authers looks at the market reaction to
Janet Yellen’s speech as the S&P 500 hits a high for the year
3.3 per cent shy of the record high it
reached last May.
Across the Atlantic the Euro Stoxx
600 index rose 1.3 per cent, with the
Xetra Dax in Frankfurt up 1.6 per cent.
However, Tokyo failed to join the
party as a rallying yen weighed on
export-focused stocks. The Nikkei 225
Average fell 1.3 per cent.
The dollar was down 0.1 per cent
against the yen at Y112.54 while the
euro was 0.3 per cent higher at a seven-
week peak of $1.1320. The dollar index,
a measure of the currency against a bas-
ket of peers, was down 0.3 per cent at
94.91, not far from its lowest level since
October. Emerging market currencies
were higher almost across the board.
— Michael Nagle/Bloomberg
The yield on the policy-sensitive two-
year US Treasury, meanwhile, was
down a basis point at 0.78 per cent.
It was the weaker dollar that appeared
to be providing much of the support to
industrial commodity prices yesterday.
Brent crude oil briefly regained $40 a
barrel before drifting back to $39.77, still
up 1.6 per cent on the day. US West
Texas Intermediate was up 0.8 per cent
at $38.58.
Copper slipped 0.4 per cent in London
to $4,873 a tonne but bounced off the
day’s trough of $4,850, the lowest for
nearly three weeks.
Gold, however, was down $16 at
$1,225 an ounce as profit-taking fol-
lowed the metal’s $21 gain on Tuesday.
2100
2050
2000
1950
Mar 2016
But while markets were putting an US equities The S&P 500 extended
unequivocally dovish spin on Ms the previous day’s advance as equity
Yellen’s speech, some observers took a bulls continued to take heart from
more measured approach. dovish remarks by Janet Yellen,
Julian Jessop at Capital Economics Federal Reserve chair, on Tuesday
acknowledged that the Fed had empha-
sised that downside risks to global FTSE 100 index
growth meant it should proceed with Change on day 1.59%
caution, but highlighted that this stance 6200
was not new. 6150
“It would also still be consistent with
6100
several rate hikes over the remainder of
6050
the year — our current forecast is three
— if these downside risks fail to materi- 6000
Mar 2016
alise,” he said.
“Ms Yellen also acknowledged some UK equities Mining and energy stocks
upside risks, although these remarks provided much of the day’s upward
were largely ignored. Overall, then, glo- momentum as the FTSE 100 recorded
bal financial markets will probably still its highest close of 2016 and came
have to contend with further Fed tight- close to turning positive for the year
ening this year, although the prices of
many commodities should at least ben- Eurofirst 300 index
efit from rising inflation risks.”
Change on day 1.25%
Anthony Karydakis, chief economic 1360
strategist at Miller Tabak, said Ms Yellen
appeared to have placed special empha- 1340
sis on the inflation outlook by express- 1320
ing the need for more evidence that the
1300
latest uptrend will prove sustainable.
Mar 2016
“She punctuated her focus on the
price dynamic by raising some concern European equities Metro leapt
over a recent decline in inflation expec- 11.5 per cent after the retailer unveiled
tations,” he said. demerger plans, with the wider market
“This is tantamount to quietly de- lifted by hopes that US interest rates
emphasising the ongoing tightening of would stay on hold for some time yet
labour market conditions as a key
driver for the Fed’s rate decisions in the
next few months. Nikkei 225 index
“Further reinforcing her own subtle (’000) Change on day 1.31%
17.5
shift away from labour markets toward
the inflation picture, she stated that full 17.0
employment may actually be below the 16.5
current 4.9 per cent level of the unem-
ployment rate.” 16.0
Nevertheless, tomorrow’s US jobs Mar 2016
report is still likely to attract plenty of Japanese equities Overnight strength
attention in the markets. Data provided on Wall Street went largely unheeded
by ADP yesterday showed that 200,000 as Tokyo investors focused on the
jobs had been created in March, slightly yen’s rebound against the dollar
above expectations.

Lululemon Athletica compared with estimates for $2.33bn. In Trading Directory

Wall Street
Lululemon’s poise
improves thanks to
strong holiday sales
Mamta Badkar
Lululemon shares jumped after the
maker of yoga gear reported better
fourth-quarter results than expected,
helped by strong holiday sales, and
noted that inventory levels were
thinning.
The shares rose more than 9 per cent
to $66.82 yesterday after the company
said profits had advanced 6 per cent to
$117.4m, or 85 cents a share, in the three
months to the end of January, compared
with $110.9m, or 78 cents, in the quarter
the previous year.
Revenue was up 17 per cent to
$704.3m. Analysts on Wall Street had
forecast earnings of 80 cents a share on
sales of $693m.
Same-store sales, an important
industry metric, advanced 5 per cent,
above forecasts of a 4.7 per cent gain.
Lululemon, which has benefited from
Share price ($) the current quarter sales look likely to
65 be between $483m and $488m, against
expectations for $485.4m.
60 Lululemon’s advance came alongside
55 a broader stock rally. By midday the
50 S&P 500 had climbed 0.5 per cent to
Jan 2016
Source: Thomson Reuters Datastream
Mar 2,065.63, the Dow Jones Industrial
Average was up 0.6 per cent to 17,730.16
and the Nasdaq Composite had gained
Indices Close
Day's
change
0.6 per cent to 4,873.30.
Global markets advanced after dovish
S & P 500
DJ Industrials
2067.49
17749.26
12.48
116.15
remarks by Janet Yellen, Federal
Reserve chair, on Tuesday as hopes that
Nasdaq Comp 4889.22 42.60
US rates will remain lower for longer
Russell 2000 1204.70 -8.35
drummed up demand for risk assets.
VIX 13.48 -0.34
Carnival rose nearly 4 per cent to
US 10 yr Treas Bd
US 2 yr Treas Bd
1.81
0.77
0.00
-0.01
$51.56 after upbeat fiscal first-quarter
results, aided by a decline in fuel costs.
The cruise operator said profits had
the “athleisure” trend for sports nearly tripled to $142m, or 18 cents a
clothing to be worn outside the gym, share, in the three months to the end
said its inventories “may even begin to of February.
look lean”. Gross margin decreased by Adjusting for one-off items, however,
120 basis points, a more modest decline earnings of 38 cents a share eclipsed
than feared. Wall Street estimates for 32 cents. Total
“Inventory levels are leaner than revenue climbed 3.4 per cent to $3.7bn.
expected (nearly in line with Carnival said its fuel costs had fallen
comparable sales growth) and at the 41 per cent year on year to $187m last
same time gross margin came in well quarter.
better than consensus,” said Paul Shake Shack climbed 3 per cent to
Lejuez, an analyst at Citigroup. $35.85 after analysts at Longbow
“This combination helps discredit the Research upgraded the stock from
bear thesis that Lululemon would need “neutral” to “buy” with a price target
to take a big gross margin hit to get its of $46.
elevated inventories in line.” MetLife was the biggest gainer on the
Lululemon has made headway since S&P 500, advancing 5 per cent to $44.56,
2013 when it recalled yoga pants that after the insurer won a fight against US
were judged too sheer. authorities over its designation as a
For fiscal 2017 the company expects systemically important financial
sales in the range $2.29bn-$2.34bn, institution.

London
Vedanta rises after
‘upstreaming cash’
Bryce Elder
Vedanta Resources rose yesterday after
it took action to relieve pressure on its
balance sheet.
The Indian miner climbed 6.6 per
cent to 333.7p after its Hindustan Zinc
division announced a $1.8bn jubilee
dividend, in addition to the $300m
declared in October.
Management had been reluctant to
tap the more than $5bn of net cash on
Hindustan’s balance sheet. Nearly half
of the payout is lost to minority
shareholders and to a distribution tax.
“The fact that Hindustan is now
aggressively upstreaming cash could
mean that bank loan funding is drying
up,” said Credit Suisse.
Vedanta has $1.3bn of bonds
maturing in June and July, from a
$12.2bn debt pile that includes $2.2bn of
intercompany loans.
A weaker dollar lifted other miners.
The FTSE 100 rose 1.6 per cent, up 97.27
points to 6,203.17, as Rio Tinto rose
5.9 per cent to £19.73 and Anglo
American took on 11.8 per cent to
535.7p.
GlaxoSmithKline firmed 1.4 per cent
to £14.12 after Citigroup turned
positive. Citi was encouraged by GSK’s
recruitment of executives with industry
experience or a science background,
and by its early-stage progress
developing a class of cancer drugs
known as epigenetics.
“While there is much work to be done,
we have seen enough . . . to justify
considerable upside to the current
price,” said Citi.
Bookmaker William Hill lost 1.3 per
cent to 330.4p after Morgan Stanley
downgraded to “underweight”.
Further investment and time would
be needed to revive its online business,
while retail earnings were uncertain
given the threat of legislation, the
broker said. With new management
identifying strategic priorities, and
more measures to cool problem
gambling due at the end of April,
earnings guidance might still be too
high, it added.
Next slid 1.3 per cent to £5.60, with
Investec the latest broker to move to
“sell” on the back of last week’s profit
warning from the clothes retailer. “Next
is likely to have to work harder to stand
still,” Investec said.
Dunelm, the home wares retailer,
faded 2.9 per cent to 899.5p. Jefferies
downgraded it as part of a review that
cut earnings forecasts across the sector.
While the strength of its management
and its expansion plans deserved a
sector premium, Dunelm was unlikely
to escape macroeconomic pressures so
was too expensive at more than 16 times
2017 earnings, said Jefferies.
22 ★ Thursday 31 March 2016

SMART MONEY Analysis. Big Data

John
Authers
Managers sink or swim in sea of information
Satellite images, policy moves It figures
and even fitness classes are the
Big tests lie ahead latest source of trading signals
Data industry forecast to grow to $85bn by 2026 Internet-connected devices
Installed units (bn)
after Yellen’s elegant ROBIN WIGGLESWORTH
0 5 10 15 20

defence of waiting When Wayfair, a $4bn online retailer,

released quarterly results last year
2014

investors were delighted by the unex- $8bn $37bn $85bn 2015

pectedly buoyant numbers, and the

J
anet Yellen has spoken and the US stock market shares rose more than 20 per cent.
has duly rolled on to a fresh high for the year. The For some money managers the strong 2016
Federal Reserve chair’s speech probably put the growth was not a surprise, however.
final touch to its developing strategy for reconcil- Thanks to a small niche provider of
ing the disparate parts of its mandate this year. “alternative data”, they had clocked a 2020
Judged in isolation, US unemployment and inflation data surge in downloads of Wayfair’s Apple 2011 2016 2026
both justify further rate rises. The international situation Store app, and a jump in reviews sug-
raises concerns. Ms Yellen has offered an elegant and mar- gested these were not idle adoptions. The world of data
ket-friendly rationale for the Fed to wait for the data and to The information provider was Think- E-mails sent Video uploaded Tweets Minutes spent Data sent and Number of new Google search Products ordered
leave monetary policy loose. num, one of many boutiques that spe- every second to YouTube per day on Facebook received by mobile websites created queries per on Amazon per
Economic and financial conditions remain less favoura- cialise in non-traditional data, including every minute each month internet users every minute second/per year second
ble for her than on December 15 when the Fed raised rates, social media buzz and satellite images,
even though oil and metals prices, and emerging market which can be “mined” by computer sci-
Sources: IIF; KPMG; Forbes; Big Data

stocks and foreign exchange have all risen since. Ms Yellen entists to give an investment edge.
cited falling earnings expectations and foreign growth Quarterly results, earnings calls, eco- 2.9 100 500 700 1.3 570 40,000/1.2 2.9
forecasts as problematic. nomic reports, executive meetings and million hours million billion exabytes trillion million
However, these negative effects have been “at least par- expert industry insight have long pro- FT graphic Sources: IIF; Gartner; KPMG; Forbes; Big Data; Wikibon
tially offset” by the downward revisions of the market’s vided the bedrock of financial analysis.
expectations for the federal funds rate. The Fed’s data But with the explosion of information
dependency and its effect on bond yields are an “impor- powered by the online revolution, the ‘Investment computing power and algorithmic com- facilities across a 500,000 sq km area to really being taken advantage of by the
tant automatic stabiliser for the economy” (even if data swelling world of “Big Data” is increas- plexity allow it to be crunched almost calculate manufacturing activity. investment industry,” says Emmett
dependency fosters instability in bond markets). ingly important. industry is instantaneously. Policymaking is another area where Kilduff, a former Morgan Stanley
Good news from the US unemployment data tomorrow “It’s a new age,” says Justin Zhen, a not taking “The sheer magnitude and complex- data can be turned into trading signals. banker who has set up an alternative
would not necessarily be bad news for the rate outlook. former hedge fund analyst who is one advantage ity of Big Data makes it difficult for VogelHood, a researcher in Washington information platform.
Strong data would merely show that lower rate expecta- of the founders of Thinknum. “This is investment managers to use, process DC, uses information from the federal Eagle Alpha works in partnership
tions had had their effect, rather than that the Fed had the new way of doing analysis. People of the and understand,” say Deutsche Bank government and lobbyists to provide with a big transport and logistics com-
erred by not being more aggressive. want data.” exponential strategists. “[But] portfolio managers raw data and reports to predict the out- pany whose invoices it uses to construct
So data dependency will continue. Real interest rates And the data deluge is growing every amount who invest the time, resources and come of mergers and acquisitions, or the a contemporaneous record of global
remain 1.25 percentage points day. According to Deutsche Bank, the energy into Big Data and modelling will winners of government contracts. trade. Mr Kilduff says his clients can see
below the current neutral internet has more than 1bn websites of data’ reap the benefits.” “Firms that are more engaged with export and import patterns for 12 coun-
rate, in Ms Yellen’s opinion, so
Stock investors (with more than 10tn web pages), or Some hedge funds are using satellite government — in other words lobby tries long before the monthly data.
the Fed can easily raise rates if should guard some 500 exabytes of data. One exabyte images to assess the health of the Chi- more — are more successful,” says Alex Consumer spending data are also par-
the economy does recover. is 1m terabytes, or 1bn gigabytes. And nese economy as the accuracy of official Vogel, one of the founders. ticularly popular. Thinknum provides
By emphasising that infla-
against upside more than 100m websites are added data has come under scrutiny. Some data providers have joined the data on Lending Club, the peer-to-peer
tion expectations remain too surprise after every year. Advanced algorithms can scan snap- investment business. CargoMetrics was lender, and Soulcycle, a chain of fitness
low for Ms Yellen’s comfort, For asset managers all this has pro- shots taken from space to provide a real- set up to use satellite images and ship- studios. It aggregates every loan
that the oil price nearly hit a
Fed’s dovishness vided a lot of non-traditional data. Some time gauge of the economy. ping data to provide information on glo- reported to the Securities and Exchange
“financial tipping point” for funds have sent junior analysts to stalk SpaceKnow, a US company, has bal trade to commodity traders, but has Commission, and the number of people
some energy companies and countries, and that it would shopping malls and car dealers for foot- launched a China Satellite Manufactur- set up its own hedge fund. attending the humblest spin class.
be far easier for the Fed to correct the mistake of waiting fall and sales estimates. But as the data ing index, which uses 2.2bn satellite “The world is creating an exponential “There’s just so much data out there,”
too long to raise rates than to correct the mistake of mov- expand exponentially, huge increases in observations that cover 6,000 industrial amount of data all the time, but it’s not Mr Zhen says. “This is the future.”
ing too early, she made it amply clear the Fed remained
biased towards dovishness.
This sounds like what the stock market wants to hear.
After a week in which other governors had attempted to Currencies
sound a little more hawkish and move rate expectations
back upwards, this should have been a welcome relief.
After the speech bond yields were down. But the S&P
500 gained less than a percentage point. It is up only
Yen ends 8-day decline
0.6 per cent for the year and still needs to gain 4 per cent to
break the record it set in May. After such a market-friendly
after Fed comments
speech, that is a surprisingly muted reaction.
That is probably because important tests lie ahead. The
unemployment data, along with Institute of Supply Man- ROGER BLITZ — LONDON anything in the face of that,
agement manufacturing surveys from around the world, LEO LEWIS — TOKYO knowing for more or less cer-
will give us a huge new download of data tomorrow. After The yen’s eight-day losing tain it would fail.”
that comes earnings season for the first quarter. streak was brought to a jar- Foreign-exchange inter-
Expectations appear to have been driven so low it should ring halt after Janet Yellen, vention has only a slim
be easy for companies to clear the bar. The market is braced the Federal Reserve chair, chance of succeeding,
for a 6.9 per cent fall in S&P 500 operating earnings from a played down expectations of according to BNY Mellon,
year ago — a 1.9 per cent fall even if the energy sector is an early US rate rise, leaving whose research shows that in
excluded,accordingtoThomson Reuters. Japan’s economy at the the past 24 years Japan has
Those forecasts have worsened even since February, mercy of a stronger domes- intervened once every 20
when the dollar started to weaken and the oil price to rise. tic currency. trading days, almost always
Falling oil and a strong dollar were the two most widely to sell the yen.
cited excuses for poor earnings, so this is hard to explain. A day after Ms Yellen voiced “Probably the key point to
Either the corporate sector is in poor health or the bearish- caution about global eco- take away is that if the BoJ
ness on earnings has been taken too far. It is a virtual cer- nomic prospects, the yen . . . is looking to mount any
tainty, given the way companies massage earnings expec- strengthened 0.5 per cent, kind of defence against
tations, that earnings will not fall as much as 6.9 per cent. doubling the size of its rise unwanted yen strength then
Back in October a dovish Fed combined with a poor since her comments and hitting the market early and
earnings season that beat exceptionally negative forecasts returning the dollar to the in massive size has proved its
to create a rally in stocks. That ended when the Fed went Y112 mark, testing the most effective tactic in
through with raising rates in December. March low of Y110.65. recent times,” said BNY’s
Now the Fed has been as dovish as it could be, while the Hawkish noises from Ms Simon Derrick.
market has set up a great chance for the earnings season to Yellen’s Fed colleagues had Traders said Fed commen-
give an excuse to bid share prices up higher. helped the dollar, but yen tary was the clear driver of
The implications are that stock market investors should strength — one of the domi- yen strength, overriding
guard against the risk of an upside surprise in the next nant features of the currency other factors such as the cur-
few weeks. And, if last May’s top remains intact, it would market this year — looks set rency’s traditional appeal as
imply that the long rally the Fed has helped to induce to continue. a haven asset.
has finally run out of puff. The next few weeks should be The yen has gained 7 per Also affecting yen move-
a fascinating test. cent this year and is on ments may be the end of
course to appreciate the the Japanese fiscal year,
john.authers@ft.com most of any G10 currency in when corporations some-
the first quarter. times repatriate profits. The
Yen strength had given rise resumption of capital out-
to speculation that Japanese flows in April could weaken
authorities would intervene the yen, but Derek Halpenny
to weaken it. But that idea at Bank of Tokyo-Mitsubishi
More comment and data on ft.com looks off table, exacerbating expected broader weak dol-
problems for Shinzo Abe, lar conditions to dominate.
prime minister, and the Bank Underlying factors meant
Y Fast FT Our global economies, headed of Japan, which has come the downside risk to the yen
team gives you market- by Brazil, Russia, India under fire for its negative was receding, he added. “The
moving news and views, and China. interest rates policy. upward grind of the Japanese
24 hours a day, five days ft.com/beyondbrics Japan was “heading right current account surplus to
a week. ft.com/fastft back into the mire”, said Kit north of 3 per cent of gross
Y Podcast The Hard
Y Alphaville Our Currency podcast takes a Juckes, strategist at Société domestic product is creating
irreverent financial blog. look at what is driving Générale. a higher hurdle you would
Join Paul Murphy and the global currency A Tokyo-based FX dealer need to get over to have a
Bryce Elder for the daily market. ft.com/podcasts said: “The Yellen comments weaker yen.”
Markets Live session at were simply too clear to leave FX analysts at JPMorgan,
Y Lex Video Analysis much in the way of doubt, meanwhile, said the latest
11am. ft.com/alphaville
and opinion from the and that leaves the yen very portfolio data showed
Y beyondbrics News and team on the hot issues much in the hands of a weak- another strong week of out-
comment from more affecting companies and ening dollar for now. Unless ward investments by Japa-
than 40 emerging markets. ft.com/lexvideo things go totally haywire, the nese investors and big out-
Japanese are not going to try flows by foreign funds.