TUESDAY 15 MARCH 2016 WORLD BUSINESS NEWSPAPER ASIA

Comment 3 Gideon Rachman The unravelling of Merkel

3 Janan Ganesh Osborne’s clockwork volatility
Peak charisma
& opinion
PAGE 9
3 John Thornhill In praise of money for nothing
The downside of a dynamic
chief executive — PAGE 10

Anbang drives on China’s global Briefing

i China crackdown on shadow financing

spree with $13bn Starwood bid

Beijing has launched a clampdown on the
peer-to-peer lenders it says are fuelling property
prices in the country’s biggest cities, seeking to head
off a threat to the wider economy.— PAGE 6

i Mobile tie-up data trigger UK alarm

3 Insurer aims to trump Marriott with all-cash offer 3 Rush for overseas assets gathers pace
JAMES FONTANELLA-KHAN AND
ARASH MASSOUDI — NEW YORK
LUCY HORNBY — BEIJING
Corporate China’s feverish pursuit of
foreign assets has triggered a battle for
Starwood Hotels & Resorts, after a
group led by Anbang Insurance sought
to trump Marriott with a $13bn bid for
the owner of the Sheraton chain.
Just a day after Anbang agreed a
$6.5bn purchase of US group Strategic
Hotels & Resorts, the all-cash bid is the
latest act in an aggressive global buying
spree by Chinese companies seeking
overseas assets as growth slows at home.
The bid throws into disarray Marri-
ott’s planned takeover of Starwood,
agreed in November, although the US
hotel operator said yesterday it
remained committed to closing the deal.
The bid for Starwood is the boldest yet
for Beijing-based Anbang, which has
announced at least $23bn in purchases
in 18 months, including the $2bn takeo-
ver of New York’s Waldorf Astoria hotel.
Debt-fuelled Chinese companies have
been splashing out billions of dollars on
assets globally, putting them on track
for another record year of acquisitions.
Overseas spending by Chinese buyers
this year has already reached $102bn,
according to Dealogic, just shy of last
year’s record of $106bn.
The unlisted Anbang has powerful
political connections. Wu Xiaohui, who
founded it in 2004, is married to the
granddaughter of Deng Xiaoping,
China’s former leader and architect of
its transition out of a planned economy.
Under Mr Wu, Anbang has grown rap-
idly; the size of its registered capital rose
from Rmb500m ($77m) in 2004, to
Rmb61.9bn ($9.5bn) a decade later.
Anbang has sought to emulate the
model adopted by Warren Buffett’s
Berkshire Hathaway of using insurance
premium cash to fund acquisitions.
Anbang has bought a variety of inter-
national assets, from Canadian property
to Dutch insurance, in the past two
years. The only setback was the collapse
Data have revealed that telecoms consolidation in
Austria doubled some bills, putting pressure on EU
regulators to ensure the planned O2-Three tie-up
does not have the same effect in the UK.— PAGE 17
i Ex-Anglo Irish chief appears in court
David Drumm has appeared in court in Dublin after
his extradition from the US. He faces charges linked
to the bank’s demise, which ultimately tore a €64bn
hole in the nation’s finances.— PAGE 4
i British composer Maxwell Davies dies
Peter Maxwell Davies, an enfant terrible
who became a distinguished member
of the British classical music
establishment, has died, aged 81. The
former Master of the Queen’s Music
died at home in Orkney.— PAGE 2
i Austria province in peril as deal rejected
Bondholders have rejected a deal over the former
Hypo Alpe Adria bank, leaving the southern
province of Carinthia, where it was headquartered,
facing liabilities of billions of euros.— PAGE 2
i Hong Kong retailers open Shenzhen mall
The city’s retailers have opened a mall in nearby
Shenzhen so mainland shoppers can access their
sought-after brands without having to cross into the
troubled semi-autonomous territory.— PAGE 6
i Doubters remain despite real rally
Brazil’s real has rallied as a deepened political probe
raises hopes that barriers to political change may be
overcome. But many investors say the fundamental
problems would remain.— PAGE 22; BIG READ, PAGE 7
Wu Xiaohui, of a €3.5bn bid for Portuguese lender Anbang tried to buy Starwood last
who founded Novo Banco, after political objections Chinese outbound M&A year, when the US group was undertak-
Anbang in scuppered what would have been the
$bn
ing a strategic review, according to one
Datawatch
100
2004, with first Chinese acquisition of a systemi- person familiar with the matter.
Starwood’s main cally important European bank. While Anbang appears to be building Residents of the Some 8.3m people
hotel brands Starwood, which declined to name 80 an American hotels portfolio, the busi- UK born abroad resident in the UK
Bloomberg/Alamy
the bidders, said the unsolicited bid val- nesses of Starwood and Strategic Hotels Millions 8 in 2014 were born
abroad, 13 per
ued its shares at $76 each — higher than 60 are very different. Starwood manages
the present value of Marriott’s cash and properties, most of which it does not 6 cent of the
population, with
stock offer, which was worth about own. Strategic Hotels owns properties
$63.74 after its shares fell yesterday. 40 that are managed by other hotel brands.
Non EU 4 5m born outside
the EU. The rise in
Shares in Starwood, which also owns Marriott has granted Starwood a the foreign-born
the St Regis and W Hotel brands, rose 7.5 20 waiver to discuss a deal with Anbang, 2 population in the
EU (joined 2004 and after)
per cent to $75.69 just before midday in which expires on March 17. 10 preceding years
New York. Anbang’s partners in the con- Additional reporting by Sujeet Indap in
EU (members pre-2004) 0 was split evenly
0 2004 06 08 10 12 14
sortium are JC Flowers and China’s Pri- New York between EU and
mavera Capital Group, one person 2000 05 10 16* Lex page 12 Source: ONS non-EU countries
Source: Dealogic * Year to date
involved in the bidding process said. Analysis page 14

Putin orders Syria pullout saying

forces have accomplished objectives
KATHRIN HILLE — MOSCOW indiscriminately, according to Syrian the US in brokering and monitoring the
activists, and in the early stages did not Syrian ceasefire, which Moscow has
Russian president Vladimir Putin has
target positions of Isis despite Moscow been playing up at home, Mr Putin can
ordered his armed forces to start pull-
saying its mission was to destroy the argue to a domestic audience that this
ing out of Syria today after a six-month
jihadi group. mission has been fulfilled.
campaign, saying they had largely met
Rubio faces crunch time in their objectives and it was time to focus
Speaking at a meeting with Sergei But Moscow’s announcement also
must-win Florida primary Shoigu, minister of defence, and Sergei throws a spotlight on Mr Assad. Accord-
on peace talks.
Lavrov, Russia’s foreign minister, Mr ing to Russian and foreign officials
Analysis i PAGE 4 The announcement comes as external Putin said his objectives had “overall familiar with Moscow’s Syria diplo-
powers seek common ground for turn- been fulfilled”. The Kremlin said the macy, Russia has been frustrated that
ing a tentative cessation of hostilities in Russian military would retain a pres- the Syrian president has not been more
Australia A$7.00(inc GST) the civil war into a political solution, ence in Syria for air force flights to con- flexible in accommodating efforts at a
China RMB25 efforts that have long been hampered by tinue to monitor the ceasefire and political solution of the conflict.
Hong Kong HK$30 Moscow’s support for Syria’s president ensure its implementation. Mr Putin said Russia’s announcement
India Rup195 Bashar al-Assad. For Mr Putin, Russia’s intervention in of a partial pullout would help bolster
Indonesia Rp40,000 Russia’s military intervention, which Syria has been a means to reassert Mos- the chances of political progress.
Japan ¥630(inc JCT) began in September, changed the course cow’s role as a power with a say in global The Kremlin said Mr Putin had dis-
Korea W4,500 of the Syrian conflict; before the Krem- affairs far beyond its shores. Critics of cussed the cessation of hostilities in a
Malaysia RM10.50
lin sent in its bombers, Mr Assad’s forces President Barack Obama’s policy telephone call with Mr Assad. Mr Assad
Pakistan Rupee 280
Philippines Peso 130
were losing ground to various armed towards Syria say US inaction left a stra- had expressed his hope for the soonest
Singapore S$5.50(inc GST)
rebel groups. tegic void for the Kremlin to fill. start to a political process in the country,
Taiwan NT$130 Russian air power was often deployed Following Russia’s joint efforts with it added.
Thailand Bht140
Vietnam US$4.50

Subscribe In print and online World Markets

www.ft.com/AsiaSubs
STOCK MARKETS CURRENCIES INTEREST RATES
Tel: (852) 2905 5555
Fax: (852) 2905 5590 Mar 14 prev %chg Mar 14 prev Mar 14 prev price yield chg
email: subseasia@ft.com S&P 500 2020.57 2022.19 -0.08 $ per € 1.111 1.116 € per $ 0.900 0.896 US Gov 10 yr 96.94 1.97 -0.01
Nasdaq Composite 4756.54 4748.47 0.17 $ per £ 1.432 1.439 £ per $ 0.698 0.695 UK Gov 10 yr 98.31 1.68 -0.02
© THE FINANCIAL TIMES LTD 2016 Dow Jones Ind 17242.76 17213.31 0.17 £ per € 0.775 0.775 € per £ 1.290 1.290 Ger Gov 10 yr 102.46 0.25 -0.02
No: 39,112 ★ FTSEurofirst 300 1356.49 1347.47 0.67 ¥ per $ 113.595 113.515 ¥ per € 126.170 126.671 Jpn Gov 10 yr 103.54 -0.06 0.00
Euro Stoxx 50 3090.37 3073.80 0.54 ¥ per £ 162.713 163.394 £ index 86.511 86.156 US Gov 30 yr 95.05 2.74 -0.01
Printed in London, Liverpool, Glasgow, Dublin,
FTSE 100 6174.57 6139.79 0.57 € index 87.868 88.049 $ index 102.380 102.639 Ger Gov 2 yr 102.97 -0.45 0.00
Frankfurt, Brussels, Milan, Madrid, New York,
Chicago, San Francisco, Washington DC, Orlando, FTSE All-Share 3386.05 3367.52 0.55 SFr per € 1.095 1.098 SFr per £ 1.412 1.416 price prev chg
Tokyo, Hong Kong, Singapore, Seoul, Dubai CAC 40 4506.59 4492.79 0.31 COMMODITIES Fed Funds Eff 0.38 0.34 0.04
Xetra Dax 9990.26 9831.13 1.62 Mar 14 prev %chg US 3m Bills 0.32 0.30 0.02
1 1 Nikkei 17233.75 16938.87 1.74 Oil WTI $ 37.10 38.50 -3.64 Euro Libor 3m -0.24 -0.24 0.00
Hang Seng 20435.34 20199.60 1.17 Oil Brent $ 39.50 40.39 -2.20 UK 3m 0.59 0.59 0.00
FTSE All World $ 259.06 258.68 0.15 Gold $ 1242.75 1264.75 -1.74 Prices are latest for edition Data provided by Morningstar

9 770307 176623
2 ★
Hypo Alpe Adria
Austria fails to strike deal on bank collapse
Small province that was
home to bailed-out lender
faces possible bankruptcy
RALPH ATKINS — ZÜRICH
Austria’s attempts to draw a line under a
dramatic bank failure collapsed yester-
day after bondholders rejected a deal
that would have saved one of the coun-
try’s smallest provinces from possible
bankruptcy.
The failure to secure an agreement
over the former Hypo Alpe Adria bank
is a blow for the Vienna government,
which faces years of arguments with
investors. It also leaves the southern
province of Carinthia, where Hypo had
headquarters, facing liabilities running
into billions of euros.
Hypo expanded rapidly into south-
east Europe before the financial crisis
that began in 2007, encouraged by state
Kurdish question
Turkey’s inner war comes down from the mountains
MEHUL SRIVASTAVA — ISTANBUL
In more than three decades of conflict
with the Kurdistan Workers’ party,
Turkey’s war with the violent separa-
tist movement was waged in a predicta-
ble pattern — in the warmer months
and up in the mountains that ring east-
ern Turkey.
But Sunday’s bombing in the heart of
Ankara — after a spate of terrorist
attacks stretching back to July last year
— is the latest sign things have changed.
“This is a message that they have
declared war at the heart of the Turkish
state,” said Fuat Keyman, the director of
the Istanbul Policy Centre, and a profes-
sor at Sabanci University. “They have
moved the fight to a different level,
where the cities and urban zones will be
domain for the conflict, which was dif-
ferent from the previous wars which
took place in the mountains.”
It is as yet unconfirmed who is respon-
sible for the blast, which killed 37 people
in Ankara’s main transportation hub.
Prime Minister Ahmet Davutoglu said
he was “almost certain” it was the PKK,
citing DNA analysis. The suicide
bomber may have been a young woman
involved with the PKK, one Turkish
security official said.
A similar car bomb in February,
which killed 30 people, was also blamed
on Kurdish separatists, as was one in
October that killed more than 100 peo-
ple. No group has claimed Sunday’s
bombing, and the PKK denied involve-
ment in the February attack.
If it was the PKK, the attack would
add to a winter of warfare in the coun-
try’s Kurdish south-east that has left a
combined death toll of more than 500
citizens and security officials.
The upsurge in that fighting — after a
two-and-a-half-year ceasefire broke
down last year — adds to the burden for
a nation confronting more enemies on
more fronts than at any time in recent
history. President Recep Tayyip
Erdogan has become a mortal foe of
Syria’s President Bashar al-Assad; Turk-
ish forces have attacked PKK-allied
Kurdish militants in Northern Syria;
and Isis has also stepped up its activities
in Turkey, claiming over 100 fatalities in
at least three separate attacks in less
than a year. “Normally when Turks and
MAKE A SMART INVESTMENT
Subscribe to the FT today at ft.com/subscription
FINANCIAL TIMES
59th Floor, The Center,
Central, Hong Kong.
Subscriptions and
Customer service:
Tel: +852 2905 5555, subseasia@ft.com
Advertising:
Tel: +852 2868 2863 asiaads@ft.com,
www.ftasia.net
Letters to the editor:
Fax: +44 20 7873 5938,
letters.editor@ft.com
Published by:
The Financial Times (HK) Limited, Unit 5905-5912,
59th Floor, The Center, No.99 Queen’s Road, Central,
Hong Kong.
Editor: Lionel Barber
Printed by:
Australia Spotpress Pty Ltd, 24-26 Lillian Fowler
Place, Marrickville, NSW 2204
Hong Kong Kin Ming Printing Co Ltd, 15/F BLK A, 18
Ka Yip Street, Ming Pao Industrial Centre, Chai Wan;
Representative; Angela Mackay; ISSN 1025-918X
guarantees from Carinthia, which, at
their peak, were worth €25bn — and
could still be worth as much as €11bn.
Carinthia was at the time led by Jörg
Haider, the leader of Austria’s far-right
Freedom party who died in a car crash
in 2008.
Austria was forced to nationalise
Hypo in 2009, and subsequently
pumped billions of euros into the
stricken lender.
Hans-Jörg Schelling, Austria’s finance
minister, conceded yesterday that he
had failed to secure the necessary back-
ing of two-thirds of creditors for a deal
under which senior bondholders would
have received 75 per cent of the value of
their bonds, plus accrued interested.
Holders of subordinated instruments
would have received 30 per cent, with
Carinthia contributing €1.2bn towards
the deal.
Europe overhauled the way it deals
with failed banks following the financial
The aftermath
of the Ankara
car bomb on
Sunday. Below,
relatives wait
for news of
loved ones
yesterday
Elif Sogut/Getty; Ozan
Kose/AFP
Japan Nikkei Tokyo Newspaper Printing Center, Inc.,
1-10-5, Shinonome, Koto-Ku, Tokyo 135-0062
Representative; Hiroko Hoshino; ISSN 0915-9460
South Korea Maeil Business Newspaper, 30-1, 1-Ga,
Pil-Dong, Jung-Ku, Seoul, 100-728
361_Cover.PRESS.indd 1
Singapore Singapore Press Holdings Ltd, 2 Jurong
Port Road, 619088
Representative, Anjali Mahindroo
© Copyright The Financial Times Limited 2016.
All rights reserved.
Reproduction of the contents of this newspaper
in any manner is not permitted without the
publisher’s prior consent. ‘Financial Times’ and
‘FT’ are registered trade marks of The Financial
Times Limited.
The Financial Times adheres to a self-regulation
regime under the FT Editorial Code of Practice:
www.ft.com/editorialcode
Reprints are available of any FT article with your
company logo or contact details inserted if required
(minimum order 100 copies). One-off copyright
licences for reproduction of FT articles are also
available.
For both services phone +44 20 7873 4816,
or alternatively, email syndication@ft.com
Kurds measure how bad things are, they
ask themselves if we’ve returned to the
1990s,” said Akin Unver, a professor of
International Relations at Kadir Has
University, and the author of Turkey’s
Kurdish Question. “But in the 1990s we
knew who were fighting with. Now
when an attack happens, you have to go
through 15-20 groups.”
But judging by Mr Erdogan’s rhetoric
— and retaliatory attacks on the PKK’s
NOVEMBER 7 2015
ROLLING IN THE DEEP
21/10/2015 10:51
FINANCIAL TIMES
INTERNATIONAL
crisis, with the aim of avoiding taxpay-
ers having to foot the bill.
from other Austrian provinces who
feared a possible Carinthia bankruptcy
But the wrangling over Hypo showed
how such deals can be “tangled and
could set a dangerous precedent.
“They [the provinces] want to con-
complex”, said Nicolas Véron, a senior
fellow at the Brussels-based Bruegel
tinue spending money without thinking
about the consequences. If something
goes wrong, they send the bill to the
Republic of Austria,” he said.
Creditors, including Mr Schelling this month sought to
Pimco, complained sweeten the deal for Hypo creditors by
offering them the possibility of buying
Carinthia had not taken its special zero-coupon 18-year Austrian
responsibilities seriously government bonds at 75 per cent of face
value. The so-called “Schnitzel bonds”
think-tank. “We do not have the experi- would produce a gain on maturity, tak-
ence, and the legal framework for bank ing the creditors closer to their objective
insolvencies is far from sufficiently har- of full repayment.
monised and simplified to ensure pre- But creditors, including Pimco, the US
dictability.” asset manager, and Germany’s Com-
Franz Schellhorn, director of the merzbank, complained Carinthia had
Agenda Austria think-tank, said Vienna not taken its responsibilities seriously
had shown “no great talent” for dealing or entered into proper negotiations. Fol-
with bank failures. He added that the lowing the deal’s rejection, they said
pressure was increasing on Mr Schelling legal action had been launched to force
Iraqi mountain redoubts — Kurdish sep- ‘They have
aratists remain enemy number one.
The success of the PKK’s sister organi- moved the
sation in Syria, where it has claimed a fight to a
swath of territory close to the border,
has rejuvenated and internationalised different
the outlawed group, which is classified level, where
as terrorist by the US and the EU as well
as Turkey itself. the cities
At the same time, its appeal among and urban
the young, especially those that popu-
lated a youth militia in several Kurdish zones will
majority towns, remains undented. be domain
In the south-east, the Turkish mili-
tary has responded by curfewing cities for the
and using tanks and artillery to flush out conflict’
the youth militia. Entire neighbour-
hoods have been levelled, frustrating a
local population caught between the
PKK and the Turkish state.
“Organisations like the PKK are more
flexible and adjust faster than the state
in these new conditions,” said ProfMr
Keyman, who escaped Sunday’s car
bomb by a few minutes. “The Kurdish
Obituary The contradictions surrounding Sir
Peter Maxwell Davies, who has died
aged 81, far outnumbered the consisten-
Enfant terrible cies. He was an enfant terrible who
became a distinguished member of the
who became a classical music establishment. He spent
part of the year in hermetic isolation on
Orkney but was a ubiquitous presence
member of the in the colleges, cathedrals and concert
halls of the land. Shy, commercially
establishment naive and enigmatic even to friends, he
was the most media-savvy of compos-
ers, exulting in public recognition.
But the consistencies of Maxwell Dav-
ies’s life — his unwavering commitment
to education, his loyalty to classical
Peter Maxwell Davies forms such as the symphony and string
Composer quartet and the sheer practicality of his
1934-2015
outlook — were more important. Max,
as he was known, was one of the most
prolific composers of modern times. A
trim, wizard-like figure, all dazzling
eyes, sudden gestures and mask-like
smile, he was often too hyperactive for
his own good.
Posterity is likely to shelve his pro-
duction line of symphonies and concer-
tos in favour of the punchy chamber
theatre pieces from the 1960s and
1970s, as well as his conservative late
quartets and a couple of blatant crowd-
pleasers, notably Orkney Wedding, with
Sunrise.
Born in Salford on September 8 1934,
Max succeeded against the odds. His
school headmaster tried to stop his
Carinthia to honour its commitments.
The loss of reputation to Austria from
the deal’s collapse was “now a problem
for Austrian banks, insurers and federal
states”, which would face higher financ-
ing costs as a result, warned the credi-
tors’ group, which said it held more than
€5bn of bonds in Heta, the “bad bank”
into which Hypo’s assets were trans-
ferred.
Mr Schelling had previously warned
that failure to reach a deal with creditors
could result in the insolvency of Carin-
thia, which has a population of 560,000
and an annual budget of around €2bn.
But yesterday he said he was not pre-
paring for such a scenario — if only
because there was no legal basis for an
insolvency.
Peter Kaiser, Carinthia’s governor,
said creditors had lost the chance to
agree a “responsible” solution but
insisted the province had the backing of
the Vienna treasury.
question until now was a national ques-
tion, but right now it has become a very
serious regional and global problem.”
After Sunday’s bombing, Mr Erdogan
tied the most recent violence to the
instability in the region, especially in
Syria. One Turkish official said privately
the timing of the attack, just before
peace talks in Geneva, was suspicious.
As the threats have multiplied, Tur-
key’s intelligence resources have
become split between monitoring the
war in Syria, the activities of the PKK,
the successes of the PKK’s brethren
inside Syria, and the Isis threat. The
Turkish government, for instance, had
some warning of this attack, and also of
the one in October that killed more than
100 — but not enough to thwart it.
“Turkey is now forced to fight against
not one, not two, but four enemies,” said
Soner Cagaptay, at the Washington
Institute. “To me, this looks like Turkey
walking slow motion into disaster.”
Strangers in own land page 9
musical studies, the Society for the Pro-
motion of New Music rejected his early
pieces and his professor at the Univer-
sity of Manchester frowned on his mod-
ernist leanings.
He later reflected that “it was proba-
bly an advantage to meet those horrible
people”. That streak of bloody-minded-
ness was an essential part of the Max
persona, but his achievement would
have been less significant if he had not
allied himself with two fellow students
in the 1950s, Harrison Birtwistle and
Alexander Goehr.
They formed the “Manchester
School”, now acknowledged as the most
dynamic force in postwar classical
music in the UK. In a single swipe they
smashed the cosy English consensus
that modernism was a threat to civilised
values. But if modernism had been their
only guide, they would not have made
the mark they did. The difference lay in
their discovery of medieval music, a
treasure that had been overlooked.
In plainsong and modalism, Max and
his confrères recognised a rich seam of
harmonic and structural possibilities,
flexible enough to allow notes to sound
good together, expressive enough to
communicate at gut level. By adding it
to their modernist armoury, they
helped alter the course of music.
Taking advantage of the intellectually
liberating climate of the 1960s, the Man-
chester three created a language so new
Tuesday 15 March 2016
Politics
France waters
down labour
reforms to
quell union
opposition
ANNE-SYLVAINE CHASSANY — PARIS
France’s socialist government sought
to quell union opposition to a reform
designed to inject more flexibility into
the labour market by dropping key
measures that would have benefited
smaller companies.
The jobs bill would have been the bold-
est attempt by any postwar French gov-
ernment to overhaul France’s two-tier
labour market. But it triggered a storm
of opposition from the left of the social-
ist party and the unions, threatening a
damaging rift in the centre-left barely a
year away from the next presidential
election.
Manuel Valls, prime minister, said
yesterday the jobs bill would no longer
cap the amount judges can ask employ-
ers to pay in case of wrongful dismissals.
Unpredictable and at times very high
payouts are a source of legal uncertainty
for smaller businesses, deterring them
from hiring employees on permanent
contracts. The government has also
withdrawn a provision intended to
allow small companies without union
representatives to strike deals with their
employees on working hours.
“Once again, the small French compa-
nies, those that could hire the most, are
the losers of the reforms,” said Nicolas
Lecaussin, head of Institute for
Research in Economic and Fiscal Issues,
a pro-market think-tank.
The government held firm on meas-
ures benefiting larger companies:
groups will be able to negotiate longer
working hours with their employees
and hold referendums if unions repre-
senting at least 30 per cent of the work-
ers give their consent. Multinationals
will be able to cut jobs more easily at
their French lossmaking operations —
even though a judge will be tasked to
verify the financial rationale.
“This bill shows France can reform
without fracturing itself, this bill shows
that France can move forward,” Mr Valls
said.
The concessions cap a week of consul-
tations between the government and
unions to salvage a bill that would have
been a bold attempt to reduce unem-
ployment of more than 10 per cent of
the workforce.
A first draft was praised by employ-
ers’ organisations but triggered outcry
from socialist hardliners and immediate
union opposition. Student organisa-
tions, which have helped kill reforms in
the past, joined a day of nationwide pro-
tests last week, criticising a bill they said
would make their situation even more
fragile on the job market.
Yesterday, reformist unions such as
the French Democratic Confederation
of Labour (CFDT) welcomed the draft,
boasting that the government had met
most of their demands. But Medef, the
country’s main employers’ organisa-
tion, expressed “disappointment”.
Other, more radical, unions voiced their
dissatisfaction, calling for another day
of protests and the withdrawal of the
entire bill.
Mr Valls insisted the bill would give
companies more power to negotiate ad
hoc deals on working hours, watering
down the effects of the 35 hour working
week introduced 15 years ago. “It will
give more flexibility for our companies,”
he said.
that it was shocking. Max’s Worldes Blis
was booed at its 1969 Proms premiere.
Something about the music — maybe
the seven percussionists whacking
metal scaffolding, or the almighty din
made by the rest of the supersized
orchestra — triggered a collective revul-
sion. Hundreds walked out: no one
could understand it. With the passage of
time Max’s music became less abrasive.
In 1985 he accepted a knighthood and
from 2004 to 2014 he was Master of the
Queen’s Music, but he never gave up his
leftwing political views.
After falling in love with Orkney dur-
ing a holiday in 1970, he established not
only a home there, in a windswept cot-
tage on the west of Hoy, but also a mid-
summer festival.
In 2006 he discovered that his long-
standing manager, Michael Arnold, had
misappropriated £500,000 and in 2012
he had to go to court to secure the evic-
tion of his partner, Colin Parkinson,
from the home they shared. He was
diagnosed with cancer in March 2013.
When asked by the Financial Times if
he saw himself as court jester or social
conscience, using his position to speak
out about things that concerned him, he
said he had never dared to assume he
was that important. “If I have a small
voice and people are willing to listen, I’d
be pleased. As a composer, once you are
dead, you are lucky if people remember
two tunes you’ve written.” Andrew Clark
Tuesday 15 March 2016 ★ FINANCIAL TIMES 3

GERMAN ELECTION FALLOUT

Merkel sticks to refugee policy despite poll setback

Alternative for Germany scores biggest gains for any group on the right since postwar rebirth of democracy
STEFAN WAGSTYL — BERLIN
German chancellor Angela Merkel yes-
terday pledged to stick to her refugee
policy despite the unprecedented
success of anti-immigration, rightwing
populists in regional polls.
Fending off renewed calls for a
tougher domestic response to cut huge
migrant inflows, Ms Merkel said it was
clear “that we need a European solu-
tion, and that a European solution needs
time”.
She promised, in effect, to keep bat-
tling for her EU-wide migration deal,
not least at this week’s EU-Turkey sum-
mit, where it faces considerable opposi-
tion from Germany’s EU partners.
The rightwing Alternative for Ger-
many party (AfD) on Sunday scored the
biggest gains for any rightwing grouping
since the rebirth of German democracy
after the second world war.
Feeding off widespread discontent
over immigration, the party scored 24
per cent in the depressed eastern state
of Saxony-Anhalt, and 13 per cent and
15 per cent respectively in the two pros-
perous western states of Rhineland-Pa-
latinate and Baden-Württemberg.
The swing to the AfD dashed the
hopes of Ms Merkel’s CDU of winning
back the latter two states, though the
party retained control of Saxony-An-
halt. For the Social Democrats, Ms Mer-
kel’s coalition partner, the result was
worse. The party fell behind the AfD in
both Baden-Württemberg and Saxony-
Anhalt, though it salvaged some pride
by hanging on to Rhineland-Palatinate.
Horst Seehofer, head of the CSU, sister
party to Ms Merkel’s CDU, and the chan-
cellor’s most important critic, seized on
the results as an appeal for policy
change. “It cannot be that the answer to
the people after such an election result
is: everything goes on as before,” said Mr
Seehofer. “This is a tectonic shift in the
political landscape in Germany.”
Ms Merkel hit back sharply, blaming
the setback on Mr Seehofer and other
CDU/CSU sceptics who snipe at her
approach. She said the differences
between the CDU and CSU over refugees
were “always hard to tolerate” for CDU/
CSU voters.
Ms Merkel’s leadership is not in
doubt. Would-be CDU/CSU rebels who
have plotted against her concluded ear-
lier this year that there was no credible
alternative to Ms Merkel. One of the
most frequently mentioned options,
Wolfgang Schäuble, finance minister,
who is 73, is seen as too old.
Moreover, despite the AfD’s success,
Ms Merkel can point to some election
positives.
In Baden-Württemberg, by far the
biggest of the three regions voting, the
overwhelming winner, Green regional
party chief Winfried Kretschmann,
openly backed her refugee policy.
So did Malu Dreyer, the successful
Social Democrat leader in Rhineland-
Palatinate. Their CDU challengers
flirted with the Seehofer line — and lost.
While up to a quarter of voters backed
the AfD, the great majority stuck with
their chancellor.
“There is stability in Germany,” said
Andreas Busch, politics professor at
Göttingen University.
However, Bild, the top-selling news-
paper, warned this might not last
because of the split in the CDU/CSU.
Die Welt, the conservative daily, said
in an editorial: “Things will be even
harder for Angela Merkel in the CDU.
The party is paying a high price for [her]
Defiant: Angela Merkel has turned on her CDU/CSU critics — Sean Gallup/Getty Images refugee policy.”
Much depends on whether Ms Merkel
can somehow secure an EU-wide deal
that limits refugee inflows from Turkey,
secures the union’s external borders and
sees other EU states accepting even a
modest share of migrants.
Mujtaba Rahman, EU head at Eura-
sia, the research group, believes the
election result could make this week’s
summit even more challenging for Ms
Merkel because other EU leaders, who
held back from criticising the chancellor
because of her elections, will no longer
be so considerate. “The opposition
[from Austria and others] will definitely
be louder,” he said.
Moreover, EU leaders arguing for
closing national frontiers to migrants,
as Austria has done, could draw
strength from Ms Merkel’s domestic
opposition. Others may follow the
example of Hungarian prime minister,
Viktor Orban, who cosied up to Mr See-
hofer with a trip to Bavaria seven
months ago.
The next electoral tests for Ms Merkel
come in September, when two more
regions vote.
Editorial Comment page 8
Gideon Rachman page 9

Profile. Frauke Petry

Rightwing AfD leader

finds winning formula
Condemned by critics as an
agitator, the former chemist
has revived party’s fortunes
GUY CHAZAN — BERLIN
It was, she said, a “grandiose” result,
which had delivered a “slap in the face”
to Germany’s mainstream parties.
If there was one overall winner of Sun-
day’s elections in Germany it was
Frauke Petry, leader of the Alternative
for Germany party. Created only three
years ago, the AfD is now represented in
half of Germany’s 16 regional parlia-
ments, and its anti-immigration mes-
sage is no longer one the country’s politi-
cal establishment can ignore.
It is a moment of vindication for Ms
Petry, a former chemist who took con-
trol of the AfD last July and transformed
it from a small Eurosceptic party into
the country’s most powerful anti-immi-
grant force.
“She took a party that was riven by
internal feuds and held it together so
well that it managed to enter three
Frauke Petry: has
transformed small
Eurosceptic party
into country’s most
powerful anti-
immigrant force
regional assemblies,” said Hendrik
Traeger, a political scientist at Leipzig
University.
Her critics see her as a dangerous
demagogue who has flirted with fas-
cism. In a now-infamous newspaper
interview in February she said German
border police should be able to use fire-
arms against refugees to prevent them
from crossing into the country illegally.
Some in the party hierarchy were hor-
rified. When a migrant hostel was burnt
down in the eastern town of Bautzen a
few days later, its mayor called her an
“intellectual arsonist”. But the furore
did not do the AfD any harm: in the days
that followed, its poll ratings rose.
A fast-talking 40-year-old, Ms Petry
has become a ubiquitous presence on
German TV talkshows, her short hair,
angular features and dark trouser suits
conveying an impression of crisp, effi-
cient modernity.
Yet she is more the exception than the
rule in a male-dominated party full of
disillusioned former supporters of
Angela Merkel’s Christian Democrats.
At the AfD election party in Berlin on
Sunday night, crowds of portly, middle-
aged white men in suits tucked into
Hackepeter, a local dish of raw minced
pork, and pasta salad. The only women
were journalists.
Ms Petry’s message resonates far
beyond that demographic, however. At
a press conference yesterday, she spoke
of the AfD as the only party able to bring
“social peace” to a country that was fun-
damentally split, with “overburdened
families” and an “impoverished middle
class”.
But her main message continued to be
about immigration. Germany was, said
Ms Petry, experiencing a wave of “ethnic
violence”, with no-go areas for police
and “Moroccan” organised crime in cit-
ies like Cologne. German schoolgirls
were being told to dress more modestly
so as not to offend Muslim classmates,
she said.
Like Ms Merkel, Ms Petry spent her
childhood in communist East Germany,
though she moved to the west with her
family when she was 14. She studied
chemistry at the UK’s Reading Univer-
sity and started her own company, Pur-
invest, which produces an environmen-
tally friendly polyurethane for tyres.
She was awarded Germany’s Order of
Merit in 2012 for her achievements.
In 2013, at the height of the Greek
debt crisis, she founded the AfD with
Bernd Lucke, an academic, to campaign
against Germany’s membership of the
euro. Mr Lucke left the party in 2015
after losing a power struggle to Ms Petry
and her allies.
Politically on the ropes, the party was
given a new lease on life by the refugee
crisis, an event that one colleague of Ms
Petry described as a “gift”. The more the
party spoke out against Ms Merkel’s
open-door policy on migrants, the more
its popularity rose.
Economically liberal members quit,
worried about the AfD’s shift to the
right. “There were openly xenophobic
comments on its Facebook page and a
reluctance to do anything about it,” said
one former official.
Ms Petry insists the AfD is not an anti-
foreigner party: voters, she says, are
drawn not only to its message on border
controls but also its views on reforming
the EU and changing German energy
and tax policies.
She also rejects suggestions in the
German media that the party is riven by
internal divisions. But tensions burst
into the open late last year when one of
its most rightwing officials, Björn
Höcke, spoke of Africans’ “expansion-
ist” reproductive strategies. Ms Petry
tried to force him from office but failed.
“One can’t exclude splits in a party
that is already so heterogeneous,” said
Mr Traeger. “It’s an open question as to
whether she can continue to keep the
AfD together.”

Chemist whose populists
are shaking establishment
1975 Frauke Petry born in Dresden,
East Germany.
1989 Family moves to west German
town of Bergkamen.
1995-98 Studies chemistry at the
University of Reading.
2004 Earns doctorate in chemistry in
Goettingen.
2007 Founds Purinvest, which produces
waterproof polyurethanes
for tyres.
2013 Co-founds Alternative for
Germany (AfD) and elected one of its
three leaders.
2014 Elected to the regional parliament
in Saxony.
2015 After internal power struggle is
re-elected co-leader. AfD moves to the
right.
2015 Steps down from her role at
Purinvest.
Feb 2016 Courts controversy by saying
that border police should use firearms
to prevent refugees crossing into
Germany illegally.
Mar 2016 Leads AfD to strong result in
regional elections.
4 ★ FINANCIAL TIMES Tuesday 15 March 2016

INTERNATIONAL

Rubio trails Trump in must-win Florida fight

Cuban-American senator needs to take the Sunshine State to have any realistic chance of running for the White House
DEMETRI SEVASTOPULO
BOCA RATON, FLORIDA
While Marco Rubio was winding his way
down the Florida coast in a final effort to
save his campaign when the Sunshine
State votes today, Donald Trump was
wowing fans in Boca Raton.
A song from the film Air Force One
boomed across the amphitheatre as the
property mogul conducted a theatrical
“fly-by” in his helicopter before taking
the stage just up the coast from his Mar-
a-Lago resort.
“Beautiful. Boca. We love Florida.
Great to be with you tonight. This is
incredible. It’s not far. Florida is my sec-
ond home,” Mr Trump roared to the
packed arena, before launching an
attack on his main rival in the state.
“Little Marco. He’s liddle. L.I.D.D.L.E.
Liddle, liddle, liddle Marco. You have to
brand people,” said Mr Trump, mocking
the Cuban-American senator who must
win Florida to have any plausible path
to the White House.
When Mr Rubio launched his cam-
paign, he was seen as one of the bright
hopes of the Republican party — a char-
ismatic Hispanic who could broaden the
appeal of a party long associated with
older, white men.
But as Florida and Ohio hold the first
winner-takes-all primaries today, he
looks set to follow the path of Jeb Bush,
the former establishment favourite
whose campaign was decimated by the
anti-politician mood sweeping across
America.
“I am supporting Donald Trump
because he is someone we haven’t
seen before,” said Marie Ilo, a
Hispanic woman at the Boca
Raton rally. “I like Marco
Rubio but he is not what we
need right now. It’s not what
anybody wants to hear. We want
to hear something different and
that is what we hear from
Trump.”
Mr Rubio has only won one
state — Minnesota — plus the District of
‘I like Columbia and Puerto Rico. Even his
Marco own supporters say a loss in Florida
would kill his campaign. The latest poll
Rubio puts him 24 points behind Mr Trump.
[below] but In a sign that the businessman no
longer views him as a potent threat, Mr
he is not Trump cancelled a Miami rally due to be
what we held last night, and scheduled a last-
minute event in Ohio where he is trail-
need right ing John Kasich, the Ohio governor.
now’ Standing outside the Boca event as
Trump fans faced off with protesters,
David Suazo, an electrical engineer who
was born in the Dominican Repub-
lic, said he switched affiliation
from independent to Republi-
can so he could vote for Mr
Trump. “I have three part-time
jobs. I can’t find a full-time
job,” said Mr Suazo, who lost
his job when his company
was bought out and pro-
duction moved overseas.
“When Trump says he is
going to stop American companies from
closing down and going overseas . . . I
understand as it’s the second time that
I’ve seen this happen.”
In recent weeks, the Rubio campaign
and outside supporters have launched a
massive TV advertising campaign
against Mr Trump in Florida.
The senator even urged his support-
ers in Ohio to help Mr Kasich beat Mr
Trump in the Buckeye State, partly in
the hope that Mr Kasich would return
the favour in Florida, which did not hap-
pen.
Ted Cruz, the Cuban-American Texas
senator, had vowed to campaign hard in
Florida as part of his push to make the
race a two-man fight between himself
and Mr Trump. But as Mr Rubio has
failed to rise in the polls, even Mr Cruz
stayed away — holding only one event in
recent days — so he could concentrate
elsewhere.
Inside a Rubio campaign office in
West Miami, Jorge Azzi, a Cuban-Amer-
ican computer consultant, said he was
volunteering for the first time because
Mr Rubio was “the closest that I have
seen to Ronald Reagan, very much a
conservative, very much a communica-
tor, and very optimistic and someone
that can unite so many different folks
that we have in the US”.
He said he had not given up on Mr
Rubio but recognised that he had been
damaged by the huge media attention
paid to Mr Trump and because of his
stance on immigration — the issue Mr
Trump has used to buoy his populist
D movement.
“The conservative media has taken
Donald Trump and Ted Cruz as their
darlings,” said Mr Azzi.
US election 2016
For all tonight’s “It is almost like he [Rubio] commit-
primary results, ted the original sin in the eyes of the con-
plus latest news, servative media when he tried to solve
analysis, video the immigration issue.
and multimedia “It is like the original sin, and you
ft.com/uselection need another baptism of some sort. It is
so sad.”

Democratic battle Republicans

Clinton under fire on manufacturing jobs Two states offer litmus

COURTNEY WEAVER AND
SHAWN DONNAN — WASHINGTON
Hillary Clinton has pledged to bring
manufacturing back to the US and rec-
alibrated her message on trade in the
wake of last week’s unexpected presi-
dential election defeat in Michigan, as
her campaign faces another test in an
industrial Midwest hit by economic
fears.
At appearances across Ohio, Missouri
and Illinois, Mrs Clinton has set out to
portray herself as a fierce advocate for
keeping US manufacturing jobs at
home, as well as a critic of the 12-nation
Trans-Pacific Partnership and an oppo-
nent of China’s steel-dumping prac-
tices.
During a visit to a factory in Youngs-
town, Ohio on Saturday, Mrs Clinton
said she would be “a strong supporter of
the American labour movements and
union” and called for more restrictions
on auto imports. “I have always been
committed to bringing back manufac-
turing,” she said.
On TPP, which the Obama adminis-
tration wants to pass through Congress
this year, she said: “When I saw what
test of Jewish opinion
GEOFF DYER — WASHINGTON
Presented with a prize last year for con-
tributions to US-Israel relations by The
Algemeiner, a New York Jewish news-
paper, Donald Trump won an ovation
with the kind of performance that has
become familiar in recent months.
“I want to thank my Jewish daughter — I
have a Jewish daughter!” he beamed,
referring to Ivanka, who converted on
marriage. “This was not in the plan but I
am very glad it happened.” He con-
Hillary Clinton cluded by saying: “We love Israel. We
speaks during a will fight for Israel, 100 per cent, 1,000
‘Get Out the Vote’ per cent: it will be there forever!”
event in Chicago Yet as Mr Trump tries to nail down the
yesterday Republican nomination for president,
Justin Sullivan/Getty Images
he is facing opposition from some
American Jews over issues ranging from
Super Tuesday Two Delegates up for grabs comments about the Israeli-Palestinian
conflict to his behaviour at events.
Mar 15 0 Republican 0 Democratic Republican delegate count (number) The fiercest criticism has come from
delegates delegates* Abraham Foxman, who for three dec-
Needed to win ades ran the Anti-Defamation League, a
1,237 Jewish non-governmental organisation,
and who likens Mr Trump’s campaign
uncharacteristically cautious manner.
His rivals have pounced. Marco Rubio
said at a Republican debate Mr Trump
had an “anti-Israeli policy”. Ted Cruz
said his desire to remain “neutral” was
equivalent to “the moral relativism of
Barack Obama”. The crowd at the
debate in Miami mildly booed Mr
Trump when he said “no one loves Israel
more than me”.
The other factor for many Jewish vot-
ers has been Mr Trump’s comments
about minorities — whether Mexican
“rapists” or Muslim visitors whom he
has suggested banning from the US.
Mr Trump has been endorsed by such
people as David Duke, the former Ku
Klux Klan leader whose website is filled
with rants about Jewish influence; the
Nation of Islam leader Louis Farrakhan
also commended him for rejecting “Jew-
ish money”.
At a meeting of the Republican Jewish
Coalition in December, Mr Trump
informed the audience: “You’re
not going to support me because I

was in [the agreement], it was clear to
me that there were too many loopholes,
too many opportunities for folks to be
taken advantage of.”
A day later, at a town hall in St Louis,
Missouri, she took aim at China’s dump-
ing of cheap steel, asserting that the US
would need to start taking “much more
aggressive action” to stop it. “I want the
United States government to stand up
for steel, to stand up for the companies
and the workers . . . We have to look at
how we keep a steel industry going.”
The renewed focus on manufacturing
and trade comes in the wake of Mrs Clin-
ton’s surprise loss to opponent Bernie
Sanders in Michigan, a state that both
pollsters and supporters had believed
was firmly in her grasp.
Publicly the Clinton campaign has
begun playing down Mrs Clinton’s per-
formance in the Midwest, noting that
she is still expected to take home more
delegates than Mr Sanders today thanks
to strong support in Florida and North
Carolina, which have 367 delegates
between them.
Yet privately Clinton supporters are
wondering what a loss in a key swing
state such as Ohio would mean for her in
the general election.
“If Sanders overperforms or does bet-
ter than expected [today], it will show
two things. The first is that Michigan
was not a fluke and that he can do well in
more states than anyone would have
expected,” said Jim Manley, a former
aide to senators Harry Reid and Edward
Kennedy. “More importantly, if she
loses some of the rust belt states it may
leave her weakened for the general elec-
tion matchup between her and [Donald
OHIO
ILLINOIS
69 182 66 159
MISSOURI
NORTH
52 84 CAROLINA
72 121
FLORIDA
99 246
Source: RealClear Politics
Trump, the Republican frontrunner],
because they have always been key
states for Democrats.”
The new emphasis on TPP and steel
dumping highlights the shift in the cam-
paign to industrial states where the poli-
tics of trade have been volatile for dec-
ades, and where many blue-collar vot-
ers blame trade agreements for a hol-
lowing out of the manufacturing sector
and lost jobs.
It also points to one of Mrs Clinton’s
biggest political challenges.
As secretary of state Mrs Clinton
dubbed the TPP, which includes Japan
and 10 other Pacific economies, a “gold
standard” for trade agreements, and
only came out firmly against it in Octo-
Trump
Cruz
Rubio
Kasich 63
Democratic delegate count (number)
Clinton
Sanders
* Including superdelegates, party leaders who are free to support any candidate
ber last year after negotiations were
concluded. That has led to a suspicion,
to which Mr Sanders has pointed
repeatedly, that her opposition is driven
purely by election-year politics.
“Hillary Clinton has vigorously sup-
ported almost every piece of disastrous
trade legislation this country has seen,
which has cost us millions of decent pay-
ing jobs and led to a race to the bottom,”
Mr Sanders told CNN on Sunday.
While Mrs Clinton has sought to por-
tray herself as just as big a critic of TPP
as Mr Sanders, her earlier stance may
prove to be a vulnerability beyond the
primaries. Mr Trump has put criticism
of US trade policy and the TPP at the
centre of his campaign, while Ted Cruz,
460
370
163
Needed to win
Superdelegates
(465) 2,383*
1,231
(25)
576
his main challenger, is also a sceptic.
“She is looking out at a political envi-
ronment where it’s going to be very awk-
ward for her to have people suspect that
she is the pro-trade candidate,” said
Philip Levy, a senior fellow at the Chi-
cago Council on Global Affairs. “She has
stated her opposition to the TPP. The
question is, how credible is that
stance?”
“In the modern era, Democrats have
never faced an antitrade Republican in
the general election,” said Matt Bennett,
co-founder of Third Way, the Demo-
cratic think-tank and an alumnus of Bill
Clinton’s administration. Come the gen-
eral election “it could be tough in the
industrial Midwest”.
events to Nazi rallies, where he calls on
supporters to raise their right hands and
pledge to vote for him.
“To see an audience of thousands of
people raising their hands in what looks
like the ‘Heil Hitler’ salute is about as
offensive, obnoxious and disgusting as
anything I thought I would ever witness
in the United States of America,” Mr
Foxman told The Times of Israel.
The Republican primaries reach a
crucial point today when voters go to
the polls in Florida and Ohio — two of
the states with the highest number of
Jewish voters. If Mr Trump were to lose
one or both, the controversy he has gen-
erated among Jewish groups could play
an important role.
But if Mr Trump wins both contests, it
will underline the way he has over-
turned the normal rules of campaigns.
“The statements he has made on
Israel and the Palestinians are highly
unusual for an American politician,
especially for a Republican,” says Aaron
David Miller, a former state department
official. “I joke that at times he sounds
like Hillary Clinton’s secretary of state.”
Throughout the campaign, Mr Trump
has challenged the Republican party
orthodoxy that candidates should
adhere as closely as possible to the views
of the Israeli government.
Mr Trump insists he would try to be “a
sort of neutral guy” in a negotiation
between Israel and the Palestinians. He
has also hinted he holds Israel more
responsible for the failure to achieve a
two-state solution than the Palestinians.
Although his speeches have often
been laced with bombast, Mr Trump
talks about the peace process in an
Trump’s statements on
Israel and the Palestinians
‘are highly unusual for an
American politician’
don’t want your money. You want to
control your politicians, that’s fine.”
Ira Sheskin, a professor at the Univer-
sity of Miami who has done extensive
research on Jewish voters, says that
about 6 per cent of the electorate in
Florida is Jewish, although most are
Democrats. “I suspect that the number
of Jews in Florida who will vote for
Trump is pretty minuscule,” he says.
So far the Republican establishment
has declined to pick a fight with Mr
Trump. Asked if he would endorse Mr
Trump if he won the nomination, RJC
executive director Matt Brooks said:
“We are going to have to wait and see.”
Sheldon Adelson, the casino magnate
who was the biggest Republican donor
in 2012 and who is close to Benjamin
Netanyahu, Israel’s prime minister, has
largely stayed on the sidelines this year.
Mr Trump has been able to fall back
on a history of good relations with the
Jewish community in New York. In
2004, he was the grand marshal for the
Salute Israel event, an annual parade
down Fifth Avenue. “He looks like the
sort of person who seems comfortable
around American Jews,” says Mr Miller.
He has also tried to show he has a good
relationship with Mr Netanyahu. In
2013, he made a campaign video for
him. “I am a big fan of Israel,” Mr Trump
said. “Benjamin Netanyahu, there is no
one like him. He is a winner.”

Lender collapse

Former Anglo chief appears in Dublin court to deny charges linked to Irish bank failure
VINCENT BOLAND — DUBLIN
The former chief executive of the bank
at the centre of Ireland’s financial col-
lapse appeared in a Dublin court yes-
terday after being extradited from the
US to face charges related to one of the
world’s worst banking failures.
David Drumm faces 33 charges related
to transactions carried out before Anglo
Irish Bank collapsed in 2008.
His extradition and court appearance
are seen as a significant step by the Irish
authorities to hold former executives of
Anglo to account for its collapse in 2008.
Anglo’s demise triggered the fall of
several other Irish financial institutions,
and tore a €64bn hole in the nation’s
finances. The then government was
forced to ask for a €67bn emergency
bailout from a troika of creditors led by
the International Monetary Fund. That
led to years of austerity, with steep cuts
in public spending, pensions and pay.
The Irish banking and construction
industry collapse is widely considered
one of the worst in the developed world.
It coincided with the peak of the global
financial crisis but was exacerbated by
the concentration of Irish bank lending
to a number of property developers who
fell into financial difficulties.
Mr Drumm was chief executive of
Anglo from 2005 to 2008. He arrived in
Dublin on a flight from Boston early yes-
terday, accompanied by Irish police
officers. For the past few months he had
been detained at the Plymouth County
Correctional Facility in Massachusetts.
He later appeared before the Dublin
district court on charges alleging an
attempt to prop up Anglo’s share price,
and transactions carried out to make
the bank’s financial position look better
than it was. He denies any wrongdoing.
Although his application for bail was
challenged by the Irish director of pub-
lic prosecutions on the grounds that he
represents a flight risk, Mr Drumm was
granted bail totalling €150,000. He
must also sign in at a police station and
has had to surrender his Irish passport.
Mr Drumm’s court appearance is the
latest in a series of legal cases arising
from the collapse of Anglo. Sean Fitz-
Patrick, the bank’s former chairman,
was acquitted in 2014 of all charges
related to the alleged share price-sup-
port scheme, which ultimately failed to
prevent the bank from going bankrupt.
Two other ex-Anglo executives were
found guilty in relation to the scheme.
In addition, three ex-Anglo employees
were jailed last year on charges related
to hiding accounts from the Irish tax
authorities. Other cases are pending.
Mr Drumm has been the centre of
attention of both the authorities and the
Irish public since he left Ireland for the
US in 2009 along with his family. He
sought to be declared bankrupt in the
US but his request was denied by a US
judge in Massachusetts, who described
Mr Drumm as “not remotely credible”.
Mr Drumm did not give evidence to
the Irish parliament’s official inquiry
into the collapse of Anglo and the wider
Irish crisis. The inquiry’s findings,
which essentially blamed a failure of
regulation and “group think” among
bankers, were published in January.
Anglo is being wound up. But it con-
tinues to cast a shadow over Ireland’s
attempts to consign the crisis to history.
Tuesday 15 March 2016 ★ FINANCIAL TIMES 5
6 ★ FINANCIAL TIMES Tuesday 15 March 2016

INTERNATIONAL

Property speculation Retail experiment

Beijing to crack down on ‘shadow’ lenders Mainland

Regulators fear peer-to-
peer financing is pushing
up prices in biggest cities
DON WEINLAND AND YUAN YANG
HONG KONG
Chinese authorities are seeking to crack
down on a surge of unregulated lending
that is pushing up property prices in the
country’s biggest cities, before it wreaks
damage on the wider economy.
Zhou Xiaochuan, head of the People’s
Bank of China, denounced loans for
downpayments on homes as illegal, in
comments at the weekend. Pan Gongsh-
eng, a central bank vice-president, said
regulators would act against the peer-to-
peercompaniesthatgrantsuchloans.
But many experts are worried that
property speculation in China’s four big-
gest cities has reached new highs,
largely due to such shadow financing.
Unregulated funds have ploughed bil-
lions of renminbi into the property mar-
ket in recent months.
“It reminds me of the US subprime
crisis,” said Xia Le, chief economist for
Asia at BBVA. “In the past, people buy-
ing houses paid using their own money
but now they’re using speculative
shadow finance.”
Home sales in Beijing, Shanghai,
Guangzhou and Shenzhen, China’s “first-
tier” cities, grew 14 per cent last year
compared with about 7 per cent nation-
wide. In Shenzhen, the average price per
square metre in February nearly dou-
bled compared with a year earlier.
The divergence between the first-tier
market and the rest of China was par-
tially caused by shadow funds pouring
into the market, Bank of America Mer-
rill Lynch said in a note.
The property boom in the four big cit-
Terrorism. Beach attack
ies also comes despite a series of tar-
geted government measures. In the
wake of the collapse of the US housing
market in 2008, China launched restric-
tions on mortgages to rein in the coun-
try’s then red hot property market,
‘It’s attracting a lot of
lower-quality borrowers
and people who want to
speculate on real estate’
which was part-fuelled by speculation
on borrowed money. By forcing buyers
to put up a 30 per cent downpayment
for their first homes and as much as 50
per cent for their second or third, the
government gradually brought the
overheating market to heel.
But the peer-to-peer companies —
loosely regulated financiers that match
cash from investors with borrowers
online — have helped buyers circum-
vent such controls. About 15 large peer-
to-peer money lenders with products
concentrated in Shenzhen, Beijing and
Shanghai have granted unsecured loans
that allow customers to pay deposits,
freeing them up to apply for mortgages
at banks, and so tying the formal bank-
ing system into the speculative wave.
“It’s attracting a lot of lower-quality
borrowers and of course people who
want to speculate on real estate,” said
Roger Ying, chief executive of Beijing-
based P2P platform Pandai.cn, which
does not offer downpayment loans.
Estimates from WDZJ.com, a P2P con-
sulting company, put the total amount
of P2P cash that has seeped into the sys-
tem at Rmb5bn ($770m), a fraction of
the total property market.
However, Lianjia.com, a Beijing-
based real estate company and P2P
lender shut down last week, has lent up
to Rmb3bn alone, suggesting the real
figure could be much higher.
The Rmb5bn figure also omits mort-
gages that borrowers have received
from banks after using P2P funds for
downpayments. State media estimate
that up to a third of Shenzhen’s real
estate market, with mortgages worth
more than Rmb1tn in December, is
speculative in nature.
China’s biggest cities only comprise
5-9 per cent of the country’s overall
property market, but some analysts
underline concern at the impact of the
boom on the economy as a whole. Spark
Wang at Wolters Kluwer Financial Serv-
ices in Shanghai said the P2P loans were
riskier than some of the products issued
during the US subprime crisis. P2P loans
typically mature in 90 days and carry
interest rates of up to 12 per cent.
Lex page 12
mall serves up
Hong Kong
shopping
experience
BEN BLAND — SHENZHEN
As Chinese shoppers shun Hong Kong
because of rising anti-mainland senti-
ment, the city’s retailers are hoping for
some respite with the opening of their
own mall in neighbouring Shenzhen.
The Rmb350m ($54m) HOKO mall,
built by Hong Kong’s billionaire Cheng
family, is designed to give mainland
consumers access to the foreign prod-
ucts and Hong Kong brands they crave
without the hassle of crossing the border
into the increasingly troubled semi-au-
tonomous territory.
“This is much easier than going to
Hong Kong where there are long lines at
immigration, mainland people get har-
assed on public transport and it is not
safe after the recent riot,” says Shenzhen
resident Pan Meizhu, one of many Chi-

Al-Qaeda casts shadow over west Africa

Ivory Coast slaughter seen as
part of affiliate effort to assert
its relevance after rise of Isis
MAGGIE FICK
WEST AFRICA CORRESPONDENT
DAVID PILLING — LONDON
Al-Qaeda’s north African affiliate, based
in the vast expanse of the Sahara desert,
is shaking security in west Africa with
attacks that are sending an unmistaka-
ble message across the region: nowhere
is safe.
In the latest assault, on Sunday, gun-
men claiming to be members of al-
Qaeda in the Islamic Maghreb, killed at
least 18 people, including four Europe-
ans, at a beach resort in Ivory Coast, a
country that has bounced back from
civil war to achieve rapid growth and
attract significant foreign investment.
The three big recent attacks in west
Africa for which AQIM has claimed
responsibility have all been on hotels
and cafés with light or non-existent
security. Both foreigners and locals have
been targeted in countries such as
Burkina Faso and Senegal, which have
large Muslim populations but little his-
tory of extremism.
“We are seeing AQIM able to carry out
attacks even in countries in west Africa
that have not been at the forefront of
terrorist activity,” said Virginia Comolli,
an expert on security issues at the Inter-
national Institute for Strategic Studies.
“They are sending a message to the west
that we are still targeting you and that
you’re still our enemy.”
Sunday’s attack on two hotels in the
town of Grand-Bassam was similar to
the assaults claimed by AQIM in Ivory
Coast’s northern neighbours, Mali and
Burkina Faso. The timing guaranteed
the gunmen would find expatriates
enjoying a leisurely weekend lunch, just
as the assault on Burkina Faso’s capital
in January occurred when dozens of for-
eigners and locals were dining on the
open-air terrace of an Italian restaurant
on a lively boulevard.
Experts see the string of attacks as sig-
nalling AQIM’s desire to prove its con-
tinued relevance despite the rise of Isis.
Death zone: Alex Vines, head of the Africa Pro-
officials carry gramme at Chatham House, said that
away a body on AQIM and Mokhtar Belmokhtar, the
a stretcher after Algerian leader of an AQIM breakaway,
the shootings were “trying to prove their ability to
in Grand- cause violence and terror” in response
Bassam on to the growing presence of Isis in Libya.
Sunday— Sia “This has been an incentive for the
Kambou/AFP/ Getty Images
north African groups to show that they
have relevance and capability,” he said.
“It’s not just about terror, but also about
maintaining smuggling and organised
crime.”
Mr Belmokhtar, known widely as Mr
Marlboro, made a fortune smuggling
cigarettes, drugs and stolen cars, as well
as kidnapping tourists for ransom.
Although the US claimed to have killed
the one-eyed leader in an air strike in
Libya last year, experts said their work-
ing assumption was that he was still
alive. “He’s one of those guys who’s been
declared dead so many times,” said Ms
Comolli.
The palm trees lining the beach in
Grand-Bassam, on the Atlantic coast,
are 2,000km from where AQIM is
believed to be based. The group has
pushed its violent campaign ever fur-
ther, despite new efforts by west African
governments and their western backers
— France and the US — to boost co-oper-
ation against extremism and terrorism
in the region.
Experts said that Sunday’s attack was
significant because terrorism had
reached the coast, meaning that other
tourist destinations, including Ghana
and The Gambia, last year declared an
Islamic state, could also be at risk.
Normally tranquil west African capi-
tals, including Dakar, in Senegal, have
‘They are been on alert since AQIM burst back on
to the jihadi scene by attacking the
sending a Radisson Blu luxury hotel in the Malian
message to capital of Bamako last November.
Other than that attack, the killings
the west have taken place in countries without
that we are homegrown radical Islamist move-
ments and with little history of religious
still tension.
targeting That began to change when Islamists
took over a large part of northern Mali
you and following a coup in 2012.
that you’re “It’s been three years since terrorist
groups in Mali emerged,” General Pin-
still our grenoma Zagre, Burkina Faso’s army
enemy’ chief of staff, told the Financial Times
last month.
Since then, security in the Sahel and
in Libya had badly deteriorated, he said,
and “the menace of terrorism” in west
Africa had only grown.
nese shoppers attracted by the Hong
Kong-style shopping experience.
With floors named after Hong Kong
shopping districts Causeway Bay, Tsim
Sha Tsui and Mong Kok — site of an anti-
government riot last month — the mall
features some of the territory’s best-
known brands, such as the Chengs’
Chow Tai Fook, the world’s biggest listed
jeweller. Tenants also include shops sell-
ing health supplements and baby milk
formula — must-buy goods for main-
land visitors to Hong Kong who are
suspicious of products sold in China.
Chan Sai Cheong, an executive at
Chow Tai Fook, says foot traffic has been
“better than expected” since the mall
opened at the end of last year, and that
there was strong demand from Hong
Kong retailers to rent space in a second
phase scheduled to open by May.
Retailers in Hong Kong, one of the
world’s luxury goods hotspots, are fac-
ing tough times with December sales
8.5 per cent lower than the same month
last year as the number of mainland
tourists continued to shrink amid politi-
cal tensions and the relative strength of
the Hong Kong dollar.
During the Chinese new year shop-
ping period, sales at Chow Tai Fook in
Hong Kong and Macau slumped 23 per
cent year-on-year, while those of Sasa, a
leading Hong Kong cosmetics chain that
has a branch in HOKO, fell 20 per cent.
The new mall, located in the pilot
“free-trade zone” in fast-growing Shen-
zhen, is part of a Chinese government
experiment to reduce the amount of
money Chinese consumers spend over-
seas by offering tax reductions for com-
panies using ecommerce to sell
imported goods.
While some goods can be bought on
the spot, to get tax discounts on foreign
products, which can be as big as 17 per
cent for cosmetics, customers must buy
goods using the mall’s mobile app and
wait for them to be delivered.
But analysts warn that on its own, the
mall will do little to alleviate currency
outflows from China or the woes of
Hong Kong retailers.
Jessie Guo, a consumer industries
analyst at stockbroker Jefferies, says
that the HOKO mall is an interesting
experiment but that it is “small scale
compared with the huge market in
Hong Kong and the even bigger market
in the mainland”.
Additional reporting by Gloria Cheung
Notebook page 8

Flexible exchange rate Labour unrest

Egypt reforms currency policy to ease pressure China police round up protesting coal miners
HEBA SALEH — CAIRO
Egypt yesterday devalued its currency
by 13 per cent and announced it would
adopt “a flexible exchange rate” in a
significant policy change aimed at
relieving a crippling dollar shortage
that is strangling the country’s already
enfeebled economy.
The Central Bank of Egypt sold $198m
to commercial lenders at E£8.85 to the
dollar, up from E£7.73, the rate for the
past nine months. In a statement the
bank said it “will not hesitate to use all
the tools and authority at its disposal to
maintain order in the currency market
and stability in price levels in the
medium term”, suggesting there could
be further changes to the rate.
The EGX-30 Benchmark index
jumped by nearly 7 per cent on the
news, recording its biggest single day
rise since July 2013. “This is a good move
and it is overdue,” said Simon Kitchen, a
strategist for EFG-Hermes, the Cairo-
based regional investment bank. “Peo-
ple will now want to see if it is the begin-
ning of a series of reforms that can drive
economic growth rather than a tempo-
rary move to reduce pressure.”
Egypt’s foreign currency reserves
have tumbled from $36bn on the eve of
the 2011 revolution to $16.5bn at the end
of February, enough for just over three
months of import cover.
A sharp drop in tourist arrivals after
the downing by Isis of a Russian airliner
in Sinai in November exacerbated the
dollar crunch in recent months, threat-
ening the country’s ability to pay for
vital imports including medicines.
‘People will now want to
see if it is the beginning of
a series of reforms that can
drive economic growth’
Currency restrictions imposed by the
central bank to protect reserves and
rationalise their allocation have
squeezed local businesses, even forcing
General Motors to suspend production
for a week because it could not access
dollars to pay for imported parts. Sev-
eral foreign airlines complained
recently that they could not repatriate
funds back to their home countries.
Mr Kitchen said investors will be
looking to see more clarity on the cur-
rency and on other, deficit reduction
measures, such as the introduction of a
long-promised value added tax and fur-
ther reductions to the country’s costly
fuel and food subsidy regime.
“This is a great decision that will boost
the economy and the stock exchange,”
said Naguib Sawiris, the Egyptian tele-
coms tycoon who has recently acquired
Beltone Financial, a local investment
bank, and is buying another, CI Capital,
to create the country’s second-largest
investment bank in what is seen as a bet
on the country’s economic recovery.
The overvalued currency and capital
restrictions in place since 2011 have
been blamed for discouraging foreign
investment in Egypt.
Capital Economics, the London-based
Consultancy said in a note yesterday
that “the pound has a bit further to fall”
and that a level of E£9.50 to the dollar
“would help to restore external compet-
itiveness”. It added that the shift to a
more flexible rate suggested that the
currency was likely to “steadily depreci-
ate in the coming weeks”.
Commercial International Bank, the
country’s biggest private lender offered
dollars to its customers yesterday at
E£8.95.
See Lex and Markets
CHRISTIAN SHEPHERD — SHUANGYASHAN
LUCY HORNBY — BEIJING
Chinese police converged on a
depressed mining town near the Sibe-
rian border after three days of demon-
strations by thousands of unpaid coal
miners that posed the first direct chal-
lenge to Beijing’s plans to shut mines,
steel mills and other lossmaking pro-
duction.
Hundreds of police from nearby cities
cordoned off the centre of Shuang-
yashan and placed posters calling for
the capture of at least 75 “criminals”
whose faces had been photographed in
the crowds during the protests. Workers
who took part said many of the organis-
ers were rounded up on Sunday night.
The demonstrations took place dur-
ing the annual meeting of the National
People’s Congress in Beijing, which Pre-
mier Li Keqiang has used as a platform
to make the case that lay-offs and gov-
ernment funding will be needed to
address China’s crippling overhang of
unprofitable industrial capacity. Up to
6m people could lose their jobs by some
estimates, as Beijing tries to correct for
the distortions caused by an excess of
state-directed investment and subsidies
in the years since the last big restructur-
ing of the state-owned enterprises sec-
tor took place between 1998-2001.
Those people could include the
unpaid workers of Shuangyashan,
whose protest was triggered by the pro-
vincial governor’s statement last week
that their employer, Longmay Group,
had met its wage payments.
In China many lossmaking businesses
keep workers formally employed but
Premier Li Keqiang
believes lay-offs
will be needed
to address
unprofitable
industrial capacity
pay them sporadically, to meet a politi-
cal objective of maintaining low official
unemployment numbers and keeping
the newly jobless from protesting.
“Heightened labour unrest (espe-
cially from the coal and steel sectors)
could undermine the government’s
motivation to implement tougher
reforms,” Sabrin Chowdhury, Asia ana-
lyst for BMI Research, wrote yesterday.
She noted that laying off workers would
also do little to address the large debt
obligations carried by “zombie” groups.
State-owned Longmay announced
last autumn that it would lay off about
100,000 of its 240,000 workforce and
sell assets to pay debt after years of
losses on its main product, metallurgi-
cal coal used for making steel.
Its problems are not limited to declin-
ing resource prices, however. Its coal
mines are nearing depletion after dec-
ades of mining and productivity levels
are only a fraction of those reported by
other state-owned coal miners, accord-
ing to research by metals consultancy
CRU.
The population of some residential
areas in Shuangyashan has fallen by a
third in the past few years, residents
estimate, as younger workers seek a bet-
ter future elsewhere.
Longmay also serves as a caution to
those in Beijing who want to force state-
owned groups to merge, create a bigger
balance sheet and generate new loans to
pay off old debt.
It is the largest miner in its province
only because it was formed from four
state-owned miners 10 years ago, in the
last round of restructuring whose bill is
only now coming due.
Additional reporting by Luna Lin
Tuesday 15 March 2016
Amid rising calls for Dilma Rousseff ’s impeachment, markets are betting that a new government would
be more investor-friendly and revive the economy. But the president is digging in for a long fight.
W
hen federal police
knocked on the door of
Luiz Inácio Lula da Silva
at dawn with a warrant,
the gruff former presi-
dent was true to form. “The only way
you’ll get me out of here is in handcuffs,”
declared the charismatic leader, whose
profile was so great that Barack Obama,
US president, called him “the man”.
The 70-year-old founder of Brazil’s
ruling Workers’ party, or PT, who police
suspect of involvement in a vast corrup-
tion scandal at state-owned oil company
Petrobras, eventually went quietly after
a word with his lawyer. But his brief
detention on March 4, and his indict-
ment last week for money laundering in
a separate case, are unprecedented in
Brazil, where impunity for the powerful
has long been the norm.
The escalation of the corruption
investigation has opened a dangerous
chapter in the political and economic
crisis afflicting Latin America’s biggest
country. Once a star among emerging
market investors — the economy grew
at 7.5 per cent in 2010, the final year of
Mr Lula da Silva’s eight years in power —
Brazil is now struggling. It is mired in its
worst recession in 25 years. And as the
country prepares to host the Summer
Olympics in August, there are questions
about whether it will even have a sitting
president when it holds the games. With
‘Congress can do anything
but it can’t ignore public
opinion. The quicker that
society expresses itself, the
faster we will find a way out’
Mr Lula da Silva facing a possible prison
term, his anointed successor in the PT
party, Dilma Rousseff, is looking vulner-
able to an impeachment process under
way in Congress.
The depth of frustration in Brazil over
Ms Rousseff’s leadership was apparent
on Sunday as more than 1m protesters
took to the streets to call for her
impeachment and the imprisonment of
Mr Lula da Silva. The sheer size of the
protests could add pressure to Ms Rous-
seff’s coalition partner to withdraw sup-
port for her party. Brazil’s currency, the
real, jumped yesterday as investors
speculated that she will be forced from
office.
“This weekend may very well have
proved decisive for President Dilma
Rousseff’s mandate,” says Christopher
Garman, head of Brazil analysis at Eura-
sia Group. “A highly polarised environ-
ment following ex-President Lula’s
detention clearly played a key role in
generating such a large turnout. The
massive protests reinforce the odds
President Rousseff will fall even more
quickly than we had anticipated.”
Dramatic change
The sense of grievance in the streets also
reflected a broader change in fortunes.
After seemingly being able to do no
wrong in the first decade of the century,
Brazil is struggling to do anything right
in the second. It was lauded for hosting
the 2014 World Cup but its own team got
beaten 7-1 by Germany in the semi-fi-
nals. Its biggest billionaire, Eike Batista,
saw his flagship companies go bank-
rupt. Now Mr Lula da Silva, the star poli-
tician who once represented the excite-
ment and promise of the country, is at
risk of being sent to jail. To top it off, the
spread of Zika, the mosquito-borne
virus, has plunged Brazil into a public
health crisis.
A victim of its own excesses during
the commodity supercycle, Brazil
opened the fiscal taps under Mr Lula da
Silva to counter the global financial cri-
sis in 2009 — but forgot to close them
again. It stoked consumption by pump-
ing up state-bank credit and keeping
prices low.
This helped Ms Rousseff win elections
in 2010 and 2014 and allowed Mr Lula
da Silva to leave office with popularity
ratings of 83 per cent. But it has left Bra-
zil with few resources to counter the end
of the commodities boom and the fall-
out for industry and investors from the
Petrobras investigation.
In 2015, gross domestic product con-
tracted 3.8 per cent and economists
expect it to fall again this year. Inflation
is more than 10 per cent and benchmark
interest rates are 14.25 per cent — a
sharp contrast with the negative levels
in some countries. There is little confi-
dence Ms Rousseff’s weakened govern-
ment has the ability to carry out the
reforms needed to rescue the economy.
By Joe Leahy
Caught up in a scandal
In happier times: former president
Luiz Inácio Lula da Silva, who was
indicted last week, with incumbent
Dilma Rousseff at a 2012 event in São
Paulo. Below: a mock coffin for the
ruling Workers’ party is held aloft at
a protest in Porto Alegre on Sunday
Nelson Almeida/AFP/Getty; Jefferson Bernardes/AFP/Getty
Exit strategies Opponents are pursuing
impeachment and annulment of her
mandate to end Dilma Rousseff’s rule
‘The big payroll’ Salaries, pensions
and welfare payments take up about
74% of federal spending
In need of growth Without significant
reforms the debt-to-GDP ratio could
reach 84% by 2018, one economist says
★ FINANCIAL TIMES
FT BIG READ. BRAZIL
“The core of the problem is politics
because with the fiscal side the finance
minister [Nelson Barbosa] can say
whatever he wants but he needs to get it
approved in congress,” says Ilan Gold-
fajn, chief economist at Itaú Unibanco.
Widening the net
His conclusion rings true in Brasília, the
capital, whose modernist monoliths
stand as relics of the booms and busts of
the 1950s and 60s. The centre of the
storm is Lava Jato, the so-called Car
Wash investigation, in which federal
prosecutors accuse Petrobras execu-
tives of conspiring with ruling coalition
politicians to extract bribes and kick-
backs from the oil company.
Mr Lula da Silva is the most senior fig-
ure so far to be implicated in Lava Jato
and a parallel investigation. He is
accused of concealing suspected pay-
ments and favours from construction
companies, charges he denies. These
favours include allegations he has put a
beach apartment and a rural getaway in
the name of a construction company
and friends to hide his wealth. Among
the evidence are two pedal-driven float-
ing swans, or pedalinhos, belonging to his
grandchildren that were found on a lake
at the rural property, prosecutors say.
The rural getaway is officially owned
by business partners of Mr Lula da
Silva’s son. He derides the claims as an
attempt to defame him.
Aside from the allegations against Mr
Lula da Silva, Brasília is bracing for a
mooted plea bargain that Delcídio do
Amaral, the former PT senate leader, is
reported to be planning with prosecu-
tors. It contains allegations that Ms
Rousseff tried to use her position to
thwart the Petrobras investigation,
charges that could hasten her downfall
if proven. Ms Rousseff has expressed
her “indignation” at the claims.
Aécio Neves, leader of the opposition
Social Democrats (PSDB), smells blood.
“Congress can do anything but it can’t
ignore public opinion,” he says. “The
quicker that society expresses itself, the
faster we will find a way out of this.”
The opposition is pursuing two com-
plex routes to force Ms Rousseff from
office: impeachment and the annul-
ment of her mandate by the election
watchdog, the TSE. Under the impeach-
ment process, which could start as early
as next month, a congressional commit-
tee will prepare a report on which the
lower house will vote. If the house
approves the motion by two-thirds, the
senate will then launch formal impeach-
ment proceedings which would last 180
days. Ms Rousseff will be suspended
during the senate deliberations and
Michel Temer, vice-president, will take
over. She can only be impeached by a
two-thirds majority of the senate.
The impeachment process centres on
alleged manipulation of the 2014 budget
by Ms Rousseff’s first government. The
TSE action, meanwhile, concerns accu-
sations she funded her 2014 re-election
campaign with the proceeds of corrup-
tion. While impeachment is a political
process, the TSE is a judicial procedure
that will probably end up in the
Supreme Court. Both will take longer
than markets, hopeful of a more inves-
tor-friendly government, might be
expecting.
“While President Rousseff’s grip on
power has been weakened substantially,
it is still far from certain that she will be
removed from office,” said Capital Eco-
nomics in a report.
Neither Mr Lula da Silva or Ms Rouss-
eff are expected to give up easily. After
his detention, Mr Lula da Silva called for
his supporters to take to the streets. Ms
Rousseff, a former Marxist guerrilla
who was tortured by Brazil’s military
dictatorship, is no pushover either.
Asked whether she will survive until the
Rousseff mislays growth plan
Real GDP growth (annual % change)
Lula Rousseff
term term
2003 05 07 09 11 13
Sources: Thomson Reuters Datastream; Haver Analytics
Markets
Investors are bullish
on change in Brasília
The Petrobras corruption scandal and
possible impeachment of President
Dilma Rousseff are fuelling a striking
rally in Brazilian stocks, bonds, and its
currency, giving the country an
opportunity to tap international credit
markets for the first time in 18 months.
By overlooking recession, a fiscal
deficit and political unrest, investors
are betting that Brazil is on the verge
of installing a new government that
will pull its economy out of the
doldrums.
The real is up more than 10 per cent
against the dollar this year, making it
the best-performing major emerging
market currency, while the Bovespa
stock index has jumped 14 per cent. In
credit markets, dollar-denominated
Brazilian debt has provided high
returns, with yields on a 2025 bond
down by more than 130 basis points to
5.84 per cent.
end of her term in 2018, Edinho Silva,
her communications minister, says: “To
govern is to overcome challenges. She is
a fighter.”
Federal burden
No matter who leads Brazil, there is an
urgent need to restructure its public
finances. Brazil’s 1988 constitution,
which followed the end of dictatorship
in 1985, created a budgetary time bomb
in the form of unsustainable benefits,
pensions and salaries.
Government spending has grown
from 20 per cent of GDP in the 1980s to
about 35 per cent today — the size of a
European welfare state but with devel-
oping-country services and efficiency.
Brasília last year awarded welfare bene-
fits to 79m people in a population of
about 200m, analysts say.
“Normally, first you have to bake the
cake before you can split it but the con-
Big state hampers recovery
Public sector borrowing (% of GDP)
10 10
5 ident Dilma that a country with a seri-
0 Some argue Brazil’s gross debt, at 67
-5
-10
15 2003 05 07 09 11 13 15
Lower borrowing costs allowed
policymakers to issue debt on
international markets last week, the
first sale since the country lost its
investment-grade credit rating in 2015.
Healthy demand enabled Brazil to
borrow $1.5bn over 10 years at a yield
of 6.125 per cent, lower than expected.
“Brazil has severe problems but it
has dealt with worse and there is the
possibility that the country is about to
get a change of government,” says
Paul McNamara, investment director
at GAM. “We have been topping up
our position in Brazilian credit.”
One of the strongest advocates for
Brazilian assets has been Franklin
Templeton’s Michael Hasenstab,
known for his bold bets in credit other
investors will not touch, including Irish
bonds in the eurozone crisis.
Last year, as prices for Brazilian
debt were plunging, Mr Hasenstab
added to his holdings. “Overall, we
view the country as economically
strong,” the fund manager wrote to
investors. “It’s just the policy mix that
needs to be corrected.” Elaine Moore
7
stitution of 1988 was all about splitting
the cake before you have baked it,” says
Daniel Leichsenring, chief economist at
Verde Asset, an asset management firm.
The budget is riddled with constitu-
tionally mandated expenditures that
can only be changed through an amend-
ment passed by three-fifths of both
houses. What Raul Velloso, a specialist
on Brazil’s budget, calls the grande folha
or “big payroll”, consisting of salaries,
pensions and welfare payments, takes
up about 74 per cent of spending. A large
part of this is indexed to inflation
through formulas governing the mini-
mum wage. This year the minimum
wage rose 11.7 per cent even as the econ-
omy shrank. By law, public servants
cannot be sacked or their salaries cut.
Worse, the federal pension bill is ris-
ing rapidly, from about 9.5 per cent of
GDP in 2012 to a projected 19.5 per cent
in 2040 as the population ages more
rapidly than expected, says Mr Velloso.
The only way Brazil can afford this sys-
tem is through strong growth. Running
deficits is not an option because Brazil’s
high interest rates mean the cost of serv-
icing government debt is prohibitive.
8 “I think they forgot to explain to Pres-
6 ous debt problem cannot afford the risk
of letting GDP fall,” says Mr Velloso.
4 per cent of GDP, is far below that of
developed countries. But Mansueto
Almeida, an independent budget spe-
2
cialist, says Brazil’s gross debt is above
the emerging market average of 40 per
0
cent. “Depending on how you do the
maths, the debt will rise. By my reckon-
ing, it will be 84 per cent of GDP by 2018
but there are people in the market pre-
dicting it will reach 90 per cent,” Mr
Almeida said.
With fiscal problems growing in states
such as Rio de Janeiro and fears that
Petrobras and state banks will need to
be recapitalised, the situation looks
even more troubling. Seeking the help of
the International Monetary Fund is not
an option — at least not yet, argues Mr
Velloso. “The solution this time must be
a homegrown one,” he says.
The immersion in scandal of Mr Lula
da Silva, who fought for democracy
against the former military regime and
is a hero among the poor for his welfare
policies, is sad for Brazil, says Paulo Sot-
ero, director of the Brazil Institute at the
Wilson Center.
“Lula was a transformative figure,”
Mr Sotero says. But he adds that if there
is one silver lining to the crisis, it is that
corruption at the highest levels is being
punished for the first time since Brazil
was colonised.
“There is a story for the future here,”
he says. “The era of Brazilian society in
which there is impunity for corrupt peo-
ple, I think it is coming to an end.”
Additional reporting by Samantha Pearson
Real moves See Markets
8 ★
TUESDAY 15 MARCH 2016
German politics enters
an age of fragmentation
The latest regional election results point to a less stable future
Angela Merkel has emerged from Ger-
many’s regional elections bloodied but
unbowed. The weekend’s polls in three
German Länder, or federal states, were
a test for a chancellor under acute pres-
sure at home for her management of
the migrant crisis. The results do not
put her leadership in question but they
demonstrate the extent to which her
open-door policy towards refugees is
polarising German society and frag-
menting its hitherto stable political
landscape.
After a year in which more than 1m
migrants have entered Germany, the
central question at these elections was
how well the anti-refugee and anti-
establishment Alternative für Deut-
schland would fare. Its performance in
three states balloted on Sunday —
Baden-Wurttemberg, Rhineland-Pa-
latinate and Saxony-Anhalt — was the
best by any populist rightwing move-
ment since 1945. Germany has become
susceptible to a virus that has gripped
France, the Netherlands, Sweden and
Britain. Some observers have been
quick to evoke the ghosts of the 1930s,
but the historical parallel is misplaced.
Postwar Germany has overcome its
Nazi past.
Nor has the anti-immigrant right
scored an outright triumph. The AfD
remains divided and, as little as 12
months ago, appeared to be breaking
up. Germany has seen the emergence
of a number of extreme rightwing par-
ties in recent decades, but many have
subsided once immigration concerns
have been tackled.
The weekend’s results show that
public support for Ms Merkel’s
Willkommenskultur has far from disap-
peared. The Greens, who vigorously
back the policy, came first in Baden
Wurttemberg, an industrial power-
house in the south west, with more
than 30 per cent of the vote. More gen-
erally, three-quarters of voters on Sun-
Pension regulator should
press Green over BHS
Rules about responsibility for benefits should be tested in this case
The crisis at British Home Stores barely
registers on the country’s high streets.
Many years have passed since the shop-
ping public thronged the department-
store chain’s aisles and tills. But how it
plays out now matters a great deal to
the company’s 20,000 pensioners, as
well as its former owner, the retail
tycoon Sir Philip Green.
Sir Philip’s disposal of BHS a year ago
may be among his smallest transac-
tions ever. But the £1 deal allowed him
to separate his Arcadia group from a
business with profound problems. It
has, after all, taken just 12 months for
the new private owners to throw up
their hands and put BHS into a form of
insolvency proceedings. This leaves
behind a pension fund which had a def-
icit of some £225m at its last valuation
in 2014, and may be considerably
higher now.
While the future of BHS remains
unclear, the pension scheme’s fate is
certain. It will end up in the hands of
the Pension Protection Fund (PPF), a
mutual mechanism that allows Brit-
ain’s 6,000 remaining defined benefit
schemes to insure themselves against
the failure of their corporate sponsors.
This is a body which had just £23bn in
capital at its last valuation, and which
has to insure schemes with an aggre-
gate deficit of some £322bn.
To his credit, Sir Philip appears to
have acknowledged some responsibil-
ity for BHS’s pensioners. He has report-
edly (and informally) offered the Pen-
sions Regulator £40m in cash plus the
transfer of a secured £40m loan in set-
tlement — the latter being a concession
of more questionable value. This is at
least a meaningful opening shot. The
regulator however should be asking for
somewhat more.
It should do so first to test one of the
key principles behind the rules: that
past owners cannot simply walk away
from pension schemes when they get
day supported her stance on refugees
or did not have strong objections.
These elections signal that German
society, far from being overwhelmingly
hostile towards Ms Merkel’s migrant
policy, is divided. For a country whose
postwar democracy has been built on
consensus, such polarisation is a new
and uneasy experience.
It is not the only feature of the polls
that will unsettle the political establish-
ment. They also reveal how a system
dominated by three parties since the
1960s is now fragmenting. Voters
severely punished the two main parties
in the federal government’s grand coa-
lition — Ms Merkel’s Christian Demo-
crats and the centre-left Social Demo-
crats. By contrast several smaller
movements — the Greens, the liberal
FDP and the AfD — made gains. With
six parties now vying for seats at the
federal elections next year, the emer-
gence of a government able and willing
to act may become far more complex.
Now the elections are behind her, Ms
Merkel has a fresh opportunity to take
steps to bring the migrant crisis under
control. Recent events have given her a
little more time. Although she person-
ally opposes the building of fences on
Greece’s northern border to slow the
passage of refugees into Europe, they
have reduced the numbers coming into
Germany. The signing of an EU deal
with Turkey this week to slow the flow
of refugees into Europe — while far
from guaranteed — would help to con-
tain those migrant flows further.
The paradox after the regional elec-
tions is that Ms Merkel has lost ground
but not as badly as the mainstream left.
She also does not have a recognised
successor in her own party. This gives
the chancellor some time and political
space to manage the refugee crisis. The
challenge is formidable. But it is in Ger-
many’s interests — and Europe’s — that
she succeeds.
into a mess. Sir Philip might have sold
the business in good faith, but the deal
was sufficiently recent for the regulator
to have the power to demand his sup-
port in certain circumstances.
One key trigger is the enjoyment of
benefits from the proprietorship. Sir
Philip certainly had some, even though
the sale price was nominal. He took
substantial dividends out of BHS, and,
when he sold the business, he charged
some of its assets to back what had
been intercompany loans.
A second reason for the regulator to
look closely concerns the size of the
deficit. This is arguably larger than
need be because of decisions taken dur-
ing Sir Philip’s ownership. At the fund’s
last triennial review in 2012, BHS and
its trustees agreed to close its whopping
gap over a snail’s-paced 23 years.
Third, the regulator should press Sir
Philip because of the absence of alter-
natives. Little support can be expected
from BHS or its most recent owners. If
the company emerges from insolvency
it will slough off responsibility for the
pensioners. If it goes into receivership,
the regulator will salvage little if any-
thing from the collapse.
But the main reason the regulator
should not let go is that the PPF needs
the money. The PPF cannot know how
the DB schemes it has insured will fare
in coming years.
What it does know is that if its bur-
dens mount it has some very difficult
choices. Receive too many claims and
the scheme will run out of money. Yet
the alternative is to jack up charges,
which risks simply dislodging more
wobbly funds.
There is of course a risk that by pur-
suing Sir Philip, the regulator may sim-
ply forgo his offer while gaining noth-
ing in return. The risks of inaction are
on balance greater. When it comes to
the BHS fund, the regulator’s duty
must be to leave no stone unturned.
FINANCIAL TIMES
Ukraine, Malaysia — take your cue from Brazil
Sir, Your editorial “Brazil’s corruption
probe leaves no one untouched”
(March 11) rightly notes that the
unfolding corruption scandal in Brazil
is being pursued at substantial
economic cost — indeed, for example,
just one of the consequences, as Lex
has reported (“Rip tide”, March 9) is
that Petrobras has lost 90 per cent of its
market value since investigations
started. These investigations have large
public support and if, eventually, there
is a perception that justice prevails and
that no Brazilian can operate above the
law, then the longer-term economic
benefits will be significant.
The economic costs of addressing
top-level political corruption are
almost always substantial, but as we
are seeing in so many countries, the
insidious costs to the economy of the
siphoning-off of vast public resources
year after year by high-level
government officials and their cronies,
is far greater. One need look no further
in South America than at Argentina
An independent Scotland
could be viable despite its
large and increasing deficit
Sir, Your editorial “Oil’s collapse blows
a hole in Scotland’s finances” on
Scotland’s finances, and Muir Dickie’s
accompanying article “Oil prices hit
Scotland’s tax takings” (March 10) are
both objective and reasonable. The
latest official report shows that the
Scottish National party’s forecasts of
economic activity and oil revenues in
advance of the 2014 independence
referendum were wildly optimistic and
misleading. I was one of the
“scaremongers” criticised by Scottish
government ministers and officials, but
all I did was to try to comment
objectively on the forecasts and related
assumptions about world oil prices.
No objective economist could
disagree with the conclusion that
Scotland has a large and increasing
fiscal deficit. There are various
reasons for that, including the fact
that our large geographical area means
that public spending is almost
inevitably higher than the UK average.
The main reason, however, is that the
SNP government has pursued
significantly different expenditure
policies from the current and last UK
governments.
However, it must be remembered
that an independent Scotland could
undoubtedly be economically viable,
albeit with lower average incomes than
in the rest of the UK. There are many
examples of other independent
countries with lower incomes in
Europe and elsewhere in the world.
Tony Mackay
Professor of Economics,
Inverness, UK
Tinkering with taxes
creates uncertainty
Sir, I read the excellent article related
to non-doms by Harriet Agnew with
great interest (“Flight of the non-
doms?”, March 10). Taxes are
necessary to pay for any country’s
essentials such as infrastructure,
police, army, hospitals and so on. Many
argue, however, that taxes over the
past 30-40 years have risen way
beyond financing these essentials and
Pity the personal
shopper as snack
packs replace
Gucci bags
Shanghai
Notebook
by Patti Waldmeir
Letters
and Venezuela — economies with
enormous potential that are in intense
difficulties in large part because of
years of corrupt government.
Brazilian prosecutors are following
the example of their counterparts in
Guatemala who have investigated and
arrested more than 30 top politicians
on charges of corruption, including
forcing the resignation of the last
president and then arresting him. We
are seeing in Guatemala and Brazil how
the combination of sustained public
support for investigating corrupt
leaders, together with public
prosecutors of integrity backed by
honest judges, can challenge impunity.
These examples need to be widely
emulated. Your editorial is on target in
saying that Brazil-type action is
unlikely today in Russia and China,
where it is needed, but there is
potential for change and great urgency
for action in for example Ukraine and
Malaysia. The economic costs to these
nations of their failure to address years
taxpayers’ money is often wasted
(including huge administration costs)
and sometimes misappropriated with a
purpose of winning votes (subsidies on
housing, medical aid etc).
Taxes are a cost to corporations as
well as to individuals and should be
subject to competition to keep them at
a reasonable level. Tax
“harmonisation” as advocated by the
OECD and others is directly harmful as
it automatically raises the level of tax
way beyond the essential needs.
Further, most governments do not
understand that tax stability is
essential to both corporations and
individuals so that they can plan
long-term. The urge by every finance
minister (including UK chancellor
George Osborne) to tinker with taxes
is detrimental to the economy,
whatever the so-called political reason
behind it.
Uncertainty is the biggest enemy for
both corporations and individuals. It
leads to a major reduction in
investments and consumption and, in
the worst case scenario, as with the
non-doms, to people/corporations
moving to more friendly jurisdictions.
Goodbye London, welcome to Dubai,
Lisbon, Malta, Monaco, Hong Kong,
Singapore, Zürich and Geneva. Long
live tax competition!
Hakan Hillerström
Geneva, Switzerland
Heading back to Paris
for a stable family life
Sir, I would like to thank Michael
Skapinker for his column “House
prices in London must fall if the city is
still to be top” (March 3). I am 29 years
old and arrived in London from France
almost seven years ago. I started my
career as a strategy consultant and I am
now working for a private equity fund
— like tens of thousands of my
compatriots here. I got married in 2012
and I am now the father of a two-year-
old kid.
My friends who stayed in Paris told
me that the first step on the rent or
property ladder was usually the
hardest: the Parisian housing market is
narrow, landlords ask for ridiculous
guarantees when they rent to young
professionals and flatshares are often
prohibited. The situation, nonetheless,
Pity the Chinese personal shopper.
Life used to be easy for the daigou:
women, usually young, who travelled
the world to bring back foreign
bargains for the handbag-hungry
masses back home.
They’d trawl for Guccis by day, and
feed off the fat margins at night as
luxury goods were much cheaper in
European capitals than in China,
where duties, taxes and the laws of
supply and demand led to inflated
Pradas and Louis Vuittons. Buy high,
sell higher — but not quite so high as
in the luxury mall back home: that
was the daigou business model. Call it
handbag arbitrage.
The wise daigou didn’t give up her
day job since what she was doing
wasn’t strictly legal; but at the very
least she got the odd free trip to Paris
out of it.
It could never last and it hasn’t.
Beijing has tweaked taxes, some
luxury brands have tweaked prices,
and these days people are handling
their own daigou needs. With 120m
Chinese travelling overseas last year,
there are plenty who can arbitrage
their own face creams, stilettos and
whatnot. They’ve become their own
personal shoppers.
The daigou business for luxury
goods has come off the boil,
according to Bain & Co’s 2015 China
Luxury Market Study, which
estimated that the business was down
by more than a third year on year —
from Rmb55bn ($8.5bn) to Rmb75bn
($11.5bn) in 2014, to between
Rmb34bn and Rmb50bn last year.
of grand corruption are substantial.
The IMF is rightly withholding major
financial support until the government
of Ukraine demonstrates greater
seriousness in addressing graft.
Economic progress and inward
investment into Malaysia are stalled as
prime minister Najib Razak curbs
opposition and blocks investigations of
his own bank accounts and those of the
opaque finances of the multibillion-
dollar 1MDB national development
fund. Swiss and US authorities are
investigating aspects of the Malaysian
scandal.
Your editorial correctly concludes
that Brazil “can cauterise its wounds”
— yes, but right now a grave outlook
confronts Ukraine and Malaysia, which
refuse to follow Brazil’s example
despite mounting economic costs and
international pressure.
Frank Vogl
Co-founder,
Transparency International,
Washington, DC, US
seems to get simpler as they get older:
higher salaries, more confident
landlords and, for many, the possibility
to get a foot on the property ladder
when they are in their early thirties.
In London, my impression is that the
situation is reversed. On the one hand,
it is indeed easy and flexible for a
young talented professional with a job
in London to find a room — albeit most
often in a flatshare as Mr Skapinker
rightly pointed out. The situation
remains largely unchanged after
marriage — although “Double Income
No Kids” couples can afford to rent
their own studio.
On the other hand, the situation gets
increasingly complicated when you
have a kid. The school system in
London is either prohibitively
expensive or prohibitively complex
depending on the path you choose
(public or private).
I came to London with many of my
fellow students and I have since then
witnessed two waves of departures: the
first one took place three to four years
ago, when some decided that a first
experience in London of two or three
years was enough and they decided to
look for a stable family life in Paris.
The second one is happening now,
where I see married couples with
young babies deciding to pack up
because they cannot make it work
financially.
Quentin Toulemonde
London SW11, UK
It’s not a case of China cutting its
coat according to the cloth of its
slowing growth, though: mainlanders
are still spending plenty on luxury
goods. They are just doing more of
their own bargain-hunting — and
daigou are facing tighter customs
scrutiny. The weaker renminbi won’t
have helped.
So these are hard times for the
average daigou diva. But they’re a
clever lot and they’ve figured out how
to give today’s Chinese market what it
really wants from a personal shopper:
increasingly it is sanitary towels,
gummy vitamins and “waterproof
baby belly button bandages”. It must
take a lot of tampon arbitrage to make
a viable business model.
And it can’t be nearly so much fun
either: scouting for deals at Galeries
Lafayette sounds a lot more appealing
than picking through the
unmentionables bin at the local
discount pharmacy.
Catherine is a part-time Chinese
daigou living in Germany who entered
the business six months
ago. “I thought it was too late, the best
days of daigou were over,” she tells the
Financial Times. But she’s found
plenty of demand for baby products
and even snacks. “Knoppers wafers
from Germany, Japanese ‘raw’
chocolate and Russian cake —
shoppers love them,” she says.
She buys overseas and ships to
China, factoring postage and her profit
into the price. “I still have confidence
in the business because there are so
many fakes in China,” she says.
Tuesday 15 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
Italy too was rocked
to its core by corruption,
but not much changed
Sir, I read with interest your editorial
“Brazil’s corruption probe leaves no
one untouched” (March 11). I share the
sentiment, but wish to add a
cautionary tale.
Brazil is being rocked to its core by a
series of corruption scandals, the
magnitude of which exceeds those of
scandal-ridden countries such as Italy.
Therefore, it behoves us to reflect upon
what happened there and then.
In 1992 the lid was lifted on a series
of scandals which rocked Italy to its
core. The magistrates probed and
prosecuted businessmen and
politicians. Nobody seemed immune.
Some of those behind the corruption
took their own lives, and a few ended
up in jail.
For a while Italy became a republic of
judges. However, despite the ructions
nothing changed. The bribes got bigger,
and the political landscape worse. Just
two years into the campaign of “Clean
Hands” run by judges, the media
mogul Silvio Berlusconi began his
political career. He served as prime
minister from 1994 to 1995, 2001 to
2006 and 2008 to 2011. His career was
prolonged and successful all while
being racked with corruption trials. He
finally resigned in 2012 and is still a
power broker — at large.
A lot of Italians supported him on the
grounds that he did nothing worse than
any businessmen or politician in Italy.
He was just cleverer than his rivals.
This attitude is familiar — and
lamentable — in Italy, Brazil and now in
the US.
Unless the probes are properly
handled by what remains of
respectable and responsible elites,
Brazil might follow the same path.
Juan E Corradi
Professor of Sociology,
New York University, NY, US
We are as unprepared
now as we were in 1956
Sir, In 1956 many Hungarians, escaping
from Russian tanks, crossed into
Austria and what was then Yugoslavia.
The United Nations High Commission
for Refugees in Geneva was
unprepared; I was drafted in from
another part of the UN to try to keep
track of the numbers. This was very
difficult. At the beginning, many
refugees had come across without
being counted: one had to rely on
numbers received in camps and
numbers reported to have boarded
trains for other countries (mostly
Germany). Also, many “Old”
Hungarians, stranded in Austrian
camps since 1945, saw that the “New”
refugees were getting much more
attention, so they went back into
Hungary and returned to qualify as
“New”.
At one point I was required to
produce an overall figure: my best
guess was 190,000. Later information
suggested there had been double-
counting and the probable figure was
around 180,000. This is now rounded
off at 200,000 — understandable, but
not quite historically accurate. At any
rate, this Hungarian exodus was
considered very serious. Yet the
present number of Syrian refugees is
many times larger. Again, we have
been unprepared.
Michael Tracy
Genappe, Belgium
The cheapest thing Catherine
has sold in this way is infant
umbilical bandages, she says;
another personal shopper says her
cheapest item is “Japanese double
eyelid tape”.
“At first I just wanted to earn some
pocket money,” Catherine explains,
“but then my appetite for building a
career was aroused.” That was before
she realised how much work it is, and
how low the profits are, she says. She
offers selling baby formula milk, a
popular product for daigou, as an
example.
“Six cans of formula weigh 4.8kg
[the maximum that customs allows
per package]. I get Rmb198 for selling
one can of formula but I can spend
more than an hour on the packaging.
Sometimes supermarkets limit
formula sales to only one can per
purchase . . . and sometimes none is
available. Considering the time
involved and the cost, the profit is low.
I don’t plan to daigou formula in the
future.”
So Chinese personal shopping has
come down in the world, as a
profession. Arbitrage opportunities
for double eyelid tape
notwithstanding, it’s a tough world
out there in these days of daigou
slowdown.
But never underestimate the ability
of the average mainlander to create a
business opportunity, where none
existed beforehand. Today, tampons;
tomorrow, the world.
patti.waldmeir@ft.com
Tuesday 15 March 2016
Fiscal failure is Osborne’s route to Number 10
POLITICS
Janan
Ganesh
I
t is hard to know whether George
Osborne’s career is the most vola-
tile in British politics, or the most
predictable. Whenever his reputa-
tion soars and his switch from
chancellor of the exchequer to prime
minister seems a matter of exchanging
keys and pleasantries, expect a fall.
When he errs and the prize of replacing
David Cameron recedes to vanishing
point, you can set your watch by the
comeback surge. Call it clockwork vola-
tility.
The authentic Mr Osborne is not the
wizard we saw in his Budget of last July,
which instituted a higher minimum
wage, or the klutz he seems before his
next one on Wednesday, which must
restore some personal standing after
months of unforced errors.
Merkel’s power
is unravelling
across Europe
FOREIGN AFFAIRS
Gideon
Rachman
T
he fate of Angela Merkel’s
“open door” policy on refu-
gees has assumed global sig-
nificance. Nationalists from
Russia to the US are point-
ing at the German chancellor’s policies
as a symbol of the failure of an out-of-
touch liberal elite. In the most recent US
presidential debate, Donald Trump
denounced Ms Merkel, adding: “Ger-
many is a disaster right now.” Even
within the EU, many leaders, particu-
larly in the east, echo that sentiment.
As a result, this weekend’s German
regional elections were watched all over
the world for signs of an anti-Merkel
backlash. In the event, the results were
ambiguous. The chancellor’s party, the
Christian Democrats, suffered a series of
setbacks amid a surge in support for
Alternative für Deutschland, a populist
anti-immigration party.
By the standards of the rest of Europe
(or the US), German voters remained
pretty steady — and the AfD are still a
long way from power. Given that Ger-
many has received more than 1m refu-
gees in less than a year, it is remarkable
that there has not been more of a back-
lash. (When I recently asked a senior
British politician how long a Merkel-
TECHNOLOGY
John
Thornhill
W
hen Andy Stern wanted
someone to transcribe
an interview he had
recorded for a book, he
posted the job details on
upwork.com. He was pleased to receive
almost instant replies from US freelanc-
ers as well as those from as far away as
the Philippines and Sri Lanka. But
whereas US freelancers pitched
between $12.50 to $25 an hour, those
elsewhere offered $3 to $7.50.
For the former president of the Serv-
ice Employees International Union, it
was a bittersweet revelation. How could
53m freelance workers in the US ever
hope to maintain their living standards
when technology had created such a
transparent global marketplace?
That experience only hardened Mr
History, however, skimps on nuance.
He will be recorded as a success or a fail-
ure, and the judgment hinges on his cen-
tral project. He wants to eliminate Brit-
ain’s budget deficit, changing the terms
of debate into the bargain so that chan-
cellors still bend to his strictures long
after he has retired to a life of endless
Wagner. Despite worsening forecasts for
the economy, he can achieve this. It is
less obvious that he can achieve it and
still become leader of the Conservative
party.
Balancing a national budget is hard,
provocative work. This statement of the
screamingly obvious was muffled in his
first term, when relatively unconten-
tious tax rises and spending cuts were
still there to be made. He obliged. His
reward for re-election was a much more
incendiary catalogue of options.
When he tried to cut tax credits, the
reaction was too volcanic to contain.
When he investigated pension reform
for short-term revenue, older voters
shut him down. Higher petrol duties
make sense, given the oil price, but mere
logic will not save him a punishment
beating if he goes that way. He can make
style “open door” for refugees would
have lasted in the UK, he replied: “Less
than 24 hours.”)
Even in Saxony-Anhalt, the region
where the AfD did best, the anti-immi-
gration party attracted only 24 per cent
of the vote, which is far less than
France’s National Front gets in its
strongholds.
Nonetheless, the big picture is that Ms
Merkel’s political position is becoming
steadily weaker.
This time last year, the chancellor was
at the peak of her power, but her author-
ity is unravelling.
The past week has illustrated the
process. It began with Ms Merkel negoti-
ating a desperate and unstable deal
between the EU and Turkey in an effort
to stem the flow of refugees into Ger-
many. It ended with her party losing
ground in the elections.
The chancellor’s loss of authority in
both Germany and Europe are feeding
on each other. Ms Merkel’s failure to
deliver a workable EU deal on refugees
has eroded her support at home. And
now, with German voters beginning to
turn against her, the chancellor’s
authority will be further sapped at
European level.
Ms Merkel’s key partners are already
beginning to unpick the EU-Turkey
deal, with François Hollande, the
French president, casting doubt on the
idea that Turkey will swiftly gain visa-
free access to Europe.
The verbal assaults on Ms Merkel,
both at home and abroad, are likely to
intensify ahead of an EU summit this
A basic income — welfare for the digital age
Stern in his conviction that developed
countries have radically to reform their
welfare states to adapt to the technologi-
cal upheavals of the 21st century.
“We built a whole social infrastruc-
ture based on the concept of a job, and
that concept does not work any more,”
he writes in his book Raising The Floor, to
be published this year.
Instead, Mr Stern argues powerfully
for the US government to provide a uni-
versal basic income (UBI) of $1,000 a
month to every citizen. Such a guaran-
teed income, he says, could prove a
smarter way of tackling poverty than
the $1tn spent each year by 126 federal,
state, and local anti-poverty pro-
grammes. It would also boost demand in
the economy, give people more flexibil-
ity to retrain, look after children or eld-
erly parents, start businesses and revive
the promise of the American dream.
Such a proposal will strike many read-
ers as mad. But in a world in which
investors are paying some governments
for the privilege of lending them money,
it is no longer clear where the bounda-
ries of economic sanity lie. Besides, the
concept of rich societies giving poor citi-
★ FINANCIAL TIMES
Comment
further cuts to departmental spending,
but not without testing the borders of
what is technically possible.
There will be no uprising whatever he
does. Britons have met the most sus-
tained fiscal contraction of their life-
times with a grudging realism that
makes you suspect there is something to
the idea of national character. The per-
centage claiming to be affected by cuts
The UK chancellor’s best
hope of reaching budget
surplus is to put all thoughts
of leadership out of his mind
fell to less than a quarter by last
autumn. Doctorates will be written on
the failure of the anti-austerity move-
ment in these years.
But general forbearance can cloak
myriad livid losers, most of whom have
defenders in the Tory parliamentary
party, that terrace of fair-weather auste-
rians the chancellor will feel behind him
on Wednesday. There is no way of clear-
week that is meant to finalise the Tur-
key deal.
Some of the criticism is unfair. Ms
Merkel was not responsible for the Syr-
ian civil war or the resurgence of the Tal-
iban in Afghanistan. And the policies
advocated by her critics — based on
tougher frontier controls and numerical
limits to the numbers of refugees —
present serious problems of their own.
As the barriers go up along the “Bal-
kan route” to Germany, those problems
are likely to become more evident as the
treatment of refugees becomes more
brutal, and desperate people get
trapped in Greece, destabilising an
already weakened country.
Nonetheless, Ms Merkel has also
made serious mistakes. One way to
understand how she has mishandled the
Germany’s leader seems
too willing to base policy
on comforting illusions not
uncomfortable facts
zens enough money so they are no
longer poor does not strike everyone as
insane.
Supporters of basic income have a
long — and frustrated — history, dating
back to the 18th century radical Thomas
Paine. The movement burst into life in
the US in the 1960s, when liberals, such
as John Kenneth Galbraith and Martin
Luther King, emerged as vocal champi-
How can US freelancers
compete when tech has
created a transparent
global market?
ons. Some conservative thinkers too
saw it as a means of providing greater
choice. Milton Friedman backed a vari-
ant of UBI: a negative income tax in
which top-up cash payments would be
made to those below the poverty line.
In 1969 President Richard Nixon drew
up a Family Assistance Plan, offering
families with no earned income a condi-
tional income supplement of about
ing the deficit that does not expose him
to the wrath of those who lose in the
process. By contrast, no normal person
minds if it is not cleared on time. If they
did, he would not be chancellor now.
This, then, is Mr Osborne’s dilemma.
His best chance of succeeding Mr Cam-
eron is to fail in his fiscal mission. Flunk-
ing his targets — above all, the surplus
due in 2019-20 — wounds him less than
the slog of meeting them. If anything, a
softer policy conveys pragmatism in a
darkening economic milieu. Success
brings all the pain. The incentive struc-
ture facing him is maddeningly asym-
metric.
It is not even as though he can count
on a cascade of goodwill on the day the
deficit vaporises. Politicians are thinly
rewarded for the completion of personal
projects, however grand.
Edward Heath, whose commitment
of Britain to the European Economic
Community in 1973 was that rare thing,
the total achievement of a geopolitical
strategy, was gone a year later. Winning
a war of national survival did not save
Winston Churchill: victory was the
moment voters felt safe to cashier him.
refugee issue is to contrast it with her
approach to the crisis in the eurozone.
When it came to the euro, the chancel-
lor’s approach was defined by a deep
concern for public opinion in Germany,
an understanding of the threats of moral
hazard and unintended consequences,
and an ability to find the middle ground
between EU countries such as Finland
and Greece. Those qualities, combined
with Germany’s financial clout, allowed
Ms Merkel to emerge as the indispensa-
ble leader of Europe.
Faced with the refugee crisis, how-
ever, Ms Merkel adopted a very differ-
ent, and much less successful,
approach. She gambled on the tolerance
of the German public. And rather than
seeking out the European middle
ground, she took a position far to the left
of almost all the other EU countries.
As a result, the chancellor found her-
self losing support at home and unable
to rally a coalition in Europe. Her posi-
tion was made worse by the fact that she
seemed to have lost her ability to look
several moves ahead. She failed to see
how Germany’s “welcome culture”
$1,600 a year ($10,320 in 2014 money).
The proposal passed the House of Rep-
resentatives but died in the Senate.
However, the workability — and pop-
ularity — of basic income has been
shown in Alaska. Since 1982 the state
has paid a basic income to every
Alaskan, funded by oil revenues. Alaska
has one of the lowest poverty and ine-
quality rates in the US.
The UBI movement is gathering
momentum elsewhere. Switzerland is
holding a referendum on basic income
this year. The Canadian and Finnish
governments are experimenting too.
The Dutch city of Utrecht has launched
a pilot project to test its viability.
In the UK, the RSA recently published
a report modelling the costs of a basic
income of £3,692 for all citizens aged
between 25 and 65, with additional pay-
ments for children and pensioners. By
cutting overlapping welfare payments
and ensuring distributional fairness, the
RSA calculated it would cost an addi-
tional 1 per cent of gross domestic prod-
uct but would bring many benefits.
Anthony Painter, one of the authors,
argues that linking income to voter reg-
Britons want a chancellor who takes
the deficit seriously. They punish the
Labour opposition for not doing so. As
long as the deficit is there — that is, as
long as he is falling short — they see a
point to Mr Osborne. But once it goes, so
does their interest in the subject. Their
propensity to bestow prizes for services
rendered is next to nil. And any flush of
credibility he has on that day will matter
less than the enemies — the public sec-
tor workers, the middle-class welfare
claimants — he amassed to get there.
If fiscal failure helps him to Number
10, the inverse is also true. Mr Osborne’s
best hope of reaching budget surplus,
and a new normal in economic policy, is
to put all thoughts of leadership out of
his mind. The prize may still come but
he should act as though it is beyond his
control. This frees him to work on what
matters. He can make the hardest fiscal
decisions only if he accepts the kind of
unpopularity from which it is tough to
salvage a personal future in politics. He
can be prime minister or a historic chan-
cellor. He probably cannot be both.
janan.ganesh@ft.com
would spark a fresh surge of refugees.
It is a partial defence of Ms Merkel
that, last summer, she was responding,
under immense pressure, to a tragic and
fast-moving situation. But we are now
many months into the crisis and the
chancellor still seems too willing to base
her policy on comforting illusions
rather than uncomfortable facts.
In particular, the EU-Turkey deal — in
which Turkey agreed to stop the flow of
refugees in return for major concessions
from Europe — involves incredible leaps
of faith.
Why should the EU trust a govern-
ment led by a volatile authoritarian like
President Recep Tayyip Erdogan? And
why should the Turks believe that the
EU will give them visa-free access and a
smoother path to membership when so
many EU countries are clearly opposed
to these ideas?
If and when the deal collapses, Ms
Merkel’s dwindling authority will suffer
another serious blow. It cannot afford
too many more.
gideon.rachman@ft.com
istration would reinforce social solidar-
ity. “It is a very powerful tool of citizen-
ship,” he says.
Enthusiasm for UBI has spread
among Silicon Valley entrepreneurs,
who say we now have the computational
skills to model such social programmes.
Although UBI is simple in theory, there
are complex trade-offs between its
impact and affordability, as the Cato
Institute has highlighted. Sam Altman,
president of Y Combinator, a start-up
incubator, is funding a research project.
Mr Stern believes the US economy is
reaching a “Vietnam moment”. It was
only when the children of the middle
classes were drafted that public opinion
swung decisively against the war.
Globalisation has destroyed many
blue-collar jobs but technological
change is now threatening the profes-
sions. “The middle class is no longer
immune,” he says.
That makes it an opportune moment
for a full debate about the practicalities
and costs of basic income. It is an old
idea whose time may finally have come.
john.thornhill@ft.com
9
The Turks
who feel like
strangers in
their own land
OPINION
Elif
Shafak
T
hese are harrowing days for
the Turkish people. For the
third time in five months a
deadly terrorist attack has
hit Ankara, this time claim-
ing 37 victims, all civilians.
Officials have identified one of the
suspected perpetrators of Sunday’s car-
nage as a female suicide bomber belong-
ing to the outlawed Kurdish Workers
Party, or PKK, an internationally desig-
nated terrorist group. The immediate
response of President Recep Tayyip
Erdogan’s government was to send war-
planes to strike PKK camps in northern
Iraq and to declare a broadcasting ban.
There have been calls for national
unity in the face of the terrorist threat,
but these will probably come to nothing:
for Turkish society today is profoundly
polarised. Even in grief, the country
cannot come together.
Recently a man sued his wife for
insulting the president. The 40-year-old
truck driver recorded his wife on tape in
order to use it as evidence in the court-
room. “I kept on warning her,” he told
the press afterwards. “Our president is a
good person and did good things for
Turkey.” His wife has since launched
divorce proceedings.
This is not an isolated story. A recent
survey revealed that 76 per cent of
Turkish people do not wish to be neigh-
bours with someone who supports a dif-
ferent political party. Nor would they
allow their children to be friends with
the offspring of such people.
In the past, social divisions were
drawn along ideological (left v right,
secular v religious), ethnic (Kurds v
The instinct of the
government is to fan
the flames of antagonism,
not extinguish them
Turks) or faith-based (Sunni v Alevi)
lines. Today, however, the country is
divided between those who support Mr
Erdogan and those who do not.
The couple’s story is also a reminder
of how busy Turkish courts have been
recently. According to Bekir Bozdag, the
justice minister, in the past two years
more than 1,800 cases alleging insults
towards the president have been
opened. Among those put on trial are
academics, journalists, doctors, blog-
gers and even high school students.
Social media are now being monitored
closely. A former Miss Turkey, Merve
Buyuksarac, was prosecuted for criticis-
ing Mr Erdogan on Instagram, while
Twitter has announced that Turkey
tops the list of countries demanding that
posts be removed.
When Can Dundar, the well-respected
editor-in-chief of the daily Cumhuriyet,
and his Ankara bureau chief Erdem Gul
were released from prison following a
decision by the Constitutional Court,
liberals breathed a sigh of relief. But Mr
Erdogan was quick to denounce the
court’s ruling: “I am saying this very
clearly: I do not concur with the decision
and I have no respect for it.” He went on:
“This is not an acquittal, this is a release
order.” The trial continues. As this
authoritarian turn continues, the sepa-
ration of powers is withering.
In this climate, the prospects for a
peace process between the Turkish state
and the PKK are vanishingly small.
Turks and Kurds who believe in peace
and coexistence know that, for now at
least, they have lost. Meanwhile, TAK,
an offshoot of the PKK, threatens to con-
tinue the horrific attacks on civilians.
The instinct of the government is to fan
the flames of antagonism rather than
extinguish them. For example, earlier
this month the ministry of justice called
for MPs from the pro-Kurdish People’s
Democratic party (HDP) to be stripped
of their parliamentary immunity. If this
request were to be granted, democrati-
cally elected politicians would face the
threat of being put on trial. But it would
be a grave mistake to punish liberal
Kurds for the acts of blind terror com-
mitted by hawkish elements in the
name of Kurdish independence.
This is the turbulent backdrop to the
negotiations between Turkey and the
EU. In 2015, the number of Syrian refu-
gees in Turkey reached at least 2.5m. At
the same time, an increasing number of
Turkish citizens have come to feel like
refugees in their own land.
The writer is a Turkish novelist and the
author of ‘The Bastard of Istanbul’
10 ★ FINANCIAL TIMES Tuesday 15 March 2016

BUSINESS LIFE

The perils of
I used to say that the reign of the
imperial corporate leader ended at
appointing a around the turn of the century, after
the Enron scandal. But his demise
always looked exaggerated.
charismatic Boards remain prone to capture by
charisma. Investors are still lulled into
chief executive betting on the animal spirits of
executives who think big. Journalists
‘
The long-term health of any business couture collection. Mr Toledano
is better entrusted to lower-profile approves the budget; Mr Simons makes Art of persuasion
stewards, though, practising what
Christian Stadler of Warwick Business
School calls “intelligent conservatism”.
the show a hit.
Chief executives themselves largely
dismiss the exciting-boring distinction. World Speech Day: clarity of
In studying the enduring success of
long-established companies, he looked,
Bill McDermott, chief executive of
software group SAP, says the reaction
thought and the spoken word
for example, at how AEG fell behind
Siemens in the 1960s, when the arch-
Trump
supporters
elicited by leaders from the people
around them is more important than
SAM LEITH

pursue their hunt for the newsiest and
liveliest corporate characters.
When a gamble on gung-ho leaders
goes wrong, the business world still
occasionally echoes to the crash of an
ego toppling off its plinth. The latest to
teeter is diamond-ear-studded beer
and aviation tycoon Vijay Mallya, once
rivals were racing to profit from
Germany’s economic boom.
Unlike his counterparts at Siemens,
AEG chief executive Hans Heyne
pushed through reform and
restructuring too hastily. His abrasive
style drove out senior managers,
leaving a cowed group of lieutenants
the mould they fit: “If you don’t have a
beware: it is compelling vision and a winning
hard to strategy it doesn’t matter what style of
leadership you employ”.
change Still, the chance that electing an
from self- exciting leader may yield a gigantic
return keeps tempting directors and
centred to investors to hubris-prone full-charisma

dubbed “King of the Good Times”. He
has been accused of fleeing India to
escape creditors of his collapsed
Kingfisher Airlines — accusations he
has strongly denied.
Donald Trump’s surge to the brink of
US presidential nomination is further
evidence of how leaders with stage
presence will always be able to sway
opinion and rally support.
The survival of such leaders is
natural. Despite the virtues of flatter
corporate structures and self-managed
teams, men and women in charge need
Andrew Hill to have enough self-confidence and
social skill to influence others. High
Onmanagement office will “always prove attractive to
narcissists”, former Shell and Barclays
executive Matt Nixon writes in Pariahs,
a valuable guide to how scandals
develop and how to avoid them.
Acts of hubris occur when extreme
personalities meet trigger conditions,
he writes, including “the requirement
to present oneself as a strong leader”.
Scheherazade Daneshkhu
samples strawberry iced
doggy treats, now on the
menu with wheatgrass,
quinoa and wild venison
who were nicknamed Heyne’s
Würstchen, or Heyne’s “little sausages”.
Steady-as-they-go leaders are
perfectly able to shift innovative and
attractive products. When it comes to
what you are selling, “you’re either
exciting or you’re boring, and if you’re
boring you’re in trouble”, Sean
Connolly of ConAgra Foods said last
week. He is on a drive to make
ConAgra’s food “more contemporary,
more provocative”.
Even in creative industries, such as
media or fashion, grey leaders can pick
colourful front people — the opposite of
“little sausages” — to make the movies
and design the frocks. There is a great
moment in Dior and I, a fly-on-the-wall
documentary, when Christian Dior’s
chief executive Sidney Toledano is
filmed anxiously asking about the
potential cost of creative director Raf
Simons’ extravagant plan to line the
walls of a Paris townhouse with real
flowers to showcase his first haute
’
self-effacing CEOs. Their instinct is half-right.
A 2007 study identified narcissistic
leaders, partly by measuring the size of
the photos they chose for their annual
reports and counting how often they
used the word “I” in interviews. These
leaders achieved more big wins than
less self-obsessed counterparts — but
they also ran up heavier losses.
Even if boards can bear this level of
volatility, there is one other important
risk — one that supporters of Mr
Trump should beware. Once embarked
on an imperial approach, it is hard for
ego-driven leaders to reverse course.
“It’s one thing to be boring yourself
and to surround yourself with
superstars,” says Prof Stadler. “But it’s
another thing to change your
personality from self-centred [to self-
effacing]. I would say that’s almost
impossible.”
andrew.hill@ft.com
Twitter: @andrewtghill
Can you smell something
different in the air? Does the
weather seem fresher and
the sky a shade more
bright? If so, the only
explanation is that today is
the first ever World Speech
Day.
About time too, those of
us who take an interest in
the persuasive arts will
think. After all, World Book
Day has been going for 21
years, and World Tripe Day
has been celebrated since
2013. I like tripe as much as
the next man, but
speechmaking should surely
have been ahead in the
queue for international
recognition.
The celebration has been
created by a professional
speech writer, Simon Gibson,
with the emphasis of this
first event on “unexpected
voices” — ordinary people,
especially young ones, from
all over the world. Given that
most of us tend to think of
Great Speeches as being
delivered by well-
established western orators
— be they toga-clad Roman
senators or faces later to be
hewn into Mount Rushmore
— this is an intriguing
choice.
But it is also, perhaps,
consonant with the way that
digital media have tended to
enfranchise marginal voices.
Getty
democracy is hosting an
open-air event at the
university of Athens; and the
birthplace of Jesus is also
seeing some action, with an
event at the Collège des
Frères in Bethlehem.
The National Speech and
Debate Association — the
largest and oldest such
body in the US — is also on
board.
“Ultimately,” says Mr
Gibson, “it’s about hoping
that we’ll get unusual ideas.
We believe that you release
people’s ideas best in asking
them to make a speech. In
the act of speaking, ideas
crystallise.”
That is a reminder — and
useful to anyone who uses
persuasion either aloud or in
writing — that ideas are
closely connected with the
form of their expression. To
adapt William Carlos
Williams’s poetic mandate of
“no ideas but in things”, you
could offer a rhetorical
equivalent: “No ideas but in
words.” You discover exactly
what you’re going to say in
the process of saying it.
Likewise bound up with
the form of expression is the
impact of those ideas.
Demosthenes, Gandhi,
Churchill, John F Kennedy,
Martin Luther King, Donald
Trump . . . Time and again,
the course of history has

L
ily was a year old when she
developed a chronic itchy The day’s celebrations have been changed by the right
skin allergy. Then she refused been organised from the speech at the right time. Not
to eat, and Henrietta Morri- ground up. Anyone, something you can say of
son — as any alarmed parent anywhere in the world could tripe.
might do — took matters in hand. sign up — and, although a Even if you are not joining
“I thought it must be to do with her theme of “thoughts for a in one of World Speech
food, so I stopped buying at the super- better world” has been Day’s public events, at least
market and cooked from scratch myself suggested, the format that give yourself the pleasure of
for her. I was amazed — after two weeks, events take, be they rereading a favourite speech
she was completely better,” she said. recitations, discussions or or two in private.
Lily is not a child but a dog. The original speeches, is left Most important, do so
12-year-old terrier is the name behind open. aloud. Emails and tweets are
Lily’s Kitchen, a craft pet food business The events are being all very well but it does to
that grew out of Ms Morrison’s kitchen aggregated on remember where persuasion
into annual sales of £12m. worldspeechday.com, which has its deepest roots: the
Just as craft beer and artisanal food will also link to live- spoken word. And March 15
have shaken up multinational brewers streaming footage via the is as good a day as any

Craft producers of gourmet

and packaged food companies in a con- broadcast platform rings.tv. other.
sumer backlash against Big Food, a pro- At least 170 events are
liferation of terrier-like pet food start- taking place worldwide, artofpersuasion@ft.com
ups is snapping at the ankles of the dom- including in Syria, Borneo,
inant manufacturers, Nestlé of Switzer- Indonesia, Singapore, The writer is the author of

treats stalk Big Pet Food

land and Mars of the US, in the $70bn
global pet food industry.
Despite prices much higher than
mainstream pet food, sales of Lily’s
Kitchen’s tastefully illustrated cans
have doubled each year since its launch
in 2008, which was targeted at foodie
pet owners. Coronation Chicken
includes cranberries and apricots sea-
soned with turmeric; an Eat Your
Greens gluten-free snack bar is made
with apples, kale, wheatgrass and mint,
while Breakfast Crunch describes itself
as the world’s first doggy granola. For
cats, there is organic salmon with herbs,
or chicken parfait with flaxseed oil.
David Jago, Mintel analyst, says pet
food calling itself natural, an indistinct
term, and pet treats are “a real growth
hotspot”. He says: “Consumers are
increasingly looking for more human-
style food, as a way of pampering their
pets as they might their children. So,
you’re seeing products talking about the
quality and sourcing of ingredients, the
lack of fillers and cereals, and so on.”
Lily’s Kitchen says it does not use ren-
dering, when animal parts are heated to
separate the fat, or artificial preserva-
tives, colours or sweeteners. No wheat,
corn or soya. “We use only wholesome
meats, herbs — flowers and leaves, fruit
and vegetables,” says Ms Morrison.
“People want to know where their food
is coming from and [prefer] that it’s not
a giant, faceless organisation.”
Nestlé, which owns the Felix and
Purina brands, and Mars, producer of
Whiskas and Pedigree, control 47 per
cent of global pet food sales, according
to Euromonitor. In recent years, they
have been investing heavily in the top
end of the business.
Poul Weihrauch, Mars’ head of global
petcare, says: “The role our animals
play in our lives is important, so we
spend a significant amount of money on
getting quality food for them. There is a
trend towards premium products.”
Mars spent $2.9bn in 2014 to buy
most of the petcare business of Procter
& Gamble, acquiring the Iams, Eukan-
uba and Natura brands. Last year,
Nestlé bought Merrick Pet Care. Its
A trend towards takeover by a multinational provoked
premium online fury from fans of the natural and
products: the organic company, founded at a Texas
Mars pet food family ranch.
research Larger companies are getting in on
centre in the act. Hill’s Pet Nutrition, part of Col-
Leicestershire gate-Palmolive, last year launched its
Charlie Bibby
Crafted range, which includes braised
salmon with quinoa. The US company
said it had been inspired by “the
expanding trend in human food
towards less processed, small batch pro-
duction, exemplified by the growing
popularity of craft beers and artisanal
cookies and coffees”.
Mr Jago says there appears to be no
imminent threat to the dominance of
Meet the pets the multinationals but that smaller
Scheherazade companies are providing the initiative
Daneshkhu visits for organic or gluten-free pet diets. “As
Europe’s largest
pet nutrition we’ve seen with human food, entrepre-
research centre neurial start-up companies are formu-
lating products for the local market.
ft.com/pet-food
They’re able to do that largely because
Pets are becoming child substitutes in
Part of many countries, with nine out of 10 pet
the family owners saying they regard their animals
as part of the family, according to Gfk,
the market research company.
Obesity is In Japan, there are more pets
biggest pet than children, while in Germany,
three-quarters of owners say they treat
diet issue their pet as they would a child, according
to Mintel.
A quarter of owners blow-dry their
pets’ hair after a bath; a similar number
have had their pets professionally
photographed and half give their pets
presents at Christmas, says Gfk.
Katya Witham, analyst at Mintel, says:
“Pets have become a substitute for
human companionship. With pet
humanisation on the rise, more
consumers are demanding pet food that
of online sales and the proliferation of
retail channels,” he explains.
Marie Sawle, a nutritionist (both pet
and human) launched her Billy+Margot
pet treats business in Surrey, England,
four years ago with an investment from
Dragons’ Den, the television show.
She takes a tub out of a freezer in her
office, lifts a lid illustrated with a dog
paw and proffers the contents. It tastes
like strawberry ice cream and is made
with strawberries, aloe vera and flax-
seed oil. These non-dairy “iced treats”
are for cooling dogs down. There are no
artificial sweeteners, artificial flavour-
ings, preservatives or colourings. The
label is printed using vegetable oil, in
case a dog chews the tub.
The range of treats, named after her
two black labradors, also includes
Christmas crackers that pull open with-
out a bang, spilling out air-dried wild
Scottish venison or a deer antler. They
cost £5.95.
goes beyond providing adequate
nutrition.”
In Germany, 65 per cent of owners say
they would like to see more all-natural
pet foods.
Sean Wensley, president of the British
Veterinary Association, welcomes the
affection but sees a downside to some of
the indulgence: “We are struggling with a
pet obesity epidemic. It is leading to
other problems — heart disease,
arthritis, cancer.”
A third of dogs and a quarter of cats in
the UK are overweight, as people
overfeed their pets and give them less
exercise.
As humanising trends go, that mirrors
the experience of the adult population in
the UK, where a quarter of adults are
classified as obese.
Billy+Margot sales have doubled
annually since launch. “People look at
the label and decide they’d rather pay
£2.50 for one of our tins than 50p for a
tin of jelly and reconstituted meat,” says
Ms Sawle.
Fur has been flying over some claims.
Blue Buffalo, the natural pet food com-
pany, and Nestlé have been locked in a
legal dogfight since 2014 over ingredi-
ents and advertising.
The Connecticut-based pet food com-
pany, now the world’s sixth-largest after
doubling sales over five years, according
to Euromonitor, at one point accused
Nestlé of an “inability to compete suc-
cessfully with natural pet foods”.
Blue Buffalo, which has sued a former
ingredients supplier over what it called
“misconduct”, in December paid $32m
to settle class action consumer lawsuits.
But is natural, or craft pet food, as
good for animals as producers claim?
Opinions vary as much as for human
food. Sean Wensley, president of the
British Veterinary Association, will only
caution that pets “aren’t little people in
furry animal suits but a specific spe-
cies”. He adds: “This includes the need
for a diet containing the correct quan-
tity and type of nutrients. There are
many all-formulated pet foods that do
that.”
Nestlé and Mars have the research
budgets to emphasise a science-based
approach, including foods for specific
breeds and ailments. Nestlé Purina’s
Just Right range lets owners customise
recipes, then delivers them with their
dog’s name and photo on the bag.
Bernard Meunier, head at Nestlé of
Europe, Middle East and Africa pet care,
believes that craft — unlike in beer —
will not fragment the industry. He says:
“It requires a lot of scientific knowledge,
research and development capabilities
to develop and market pet food.”
Kyrgyzstan, Pakistan and
Mongolia. The birthplace of
Great place to meet
Choupinette, Singapore
Where 607 Bukit Timah Road
Plug sockets/WiFi No
Open 8am-7pm; Sun until 6pm; closed Mon
Quaint is not a word often
associated with Singapore
— the city’s shopping
districts are briskly efficient
at parting you from your
money; its architecture soars
rather than seduces — but it
is the only word appropriate
for Choupinette, a pretty
slice of French chic in Asia.
It is a short hop from the
central business district in a
cab, but a world away in
spirit. There is little space
between the wrought-iron
chairs and wooden tables,
and no WiFi — the owner
disapproves, preferring her
guests to chat instead.
If you look for a power
point for your laptop, you
will find one of the attentive
staff offering to plug it in
behind the counter instead;
so you can get on with the
serious business of eating
the eggs benedict and
‘You Talkin’ to Me?’ Rhetoric
from Aristotle to Obama
Espresso S$5.50 ($3.90)
Privacy AAAEE
talking to your companion.
By the look of your fellow
diners, this is not a place for
business people to do deals
— it is where fashionable
young Singaporeans come
with friends, where parents
have coffee, where families
brunch on a Saturday.
There are plenty of places
to get a coffee in Singapore;
there is a Starbucks nearly
everywhere in the city
centre, while a cup of sweet
and milky kopi is considered
obligatory with your dish of
laksa at a hawker’s stall. For
a formal encounter on a
weekday, one of the city’s
grand hotels is a safer bet.
But Choupinette —
meaning “sweetie-pie” — is
the perfect place for a wind-
down breakfast on the day
you head out of town.
Jeevan Vasagar
Tuesday 15 March 2016 ★ FINANCIAL TIMES 11

ARTS

Triumphant night Luce

T H E AT R E

at the human zoo

Southwark Playhouse, London
aaaee
Ian Shuttleworth

There’s a sub-genre of plays, mostly

OPERA
Elysium
Oslo Opera House
aaaae
Shirley Apthorp
In a world where technology has
enabled humanity to eradicate disease,
ageing and death, 40 unmodified
humans are kept in an island zoo.
Occasionally, they are required to
perform Beethoven’s Fidelio; this goes
horribly wrong.
This is the setting for Rolf Wallin’s
Elysium, a sci-fi opera given its world pre-
miere in Oslo on Saturday. Wallin’s
music has always explored the perme-
able border between man and technol-
ogy, and Mark Ravenhill’s libretto is the
perfect opportunity for the composer to
tackle transhumanism’s more murky
ethical conundrums while extending his
musical language.
Elysium succeeds not least because it
is a well-structured drama, and Wallin
has no qualms about bowing to
operatic convention when it helps. It
is abundantly clear that the Norwegian
National Opera has lavished love
and care on the production. David
Pountney’s elaborate staging is
visually impressive.
Ravenhill’s libretto tells the story of
two women: the Wife (Lina Johnson),
who yearns for escape and immortality,
and the Woman (Eli Kristin Hanssveen),
a transhuman who rips out her chip in a
bid to become human. The two briefly
become lovers, and the Woman puts in a
stint with the Wife’s brutal Husband
(Ketil Hugaas) and child (Aksel Johan-
nes Skramstad Rykkvin) before Coraig,
leader of the transhumans, arrives to put
anend to everything.
The evening’s greatest success is Wal-
lin’s musical language. You hear both
humanity (arching, lyrical vocal lines)
and the encroaching digital world (won-
derfully visceral bodies of electronically
enhanced sound and arsenals of percus-
sion). Transhumans no longer need
words, since they can transfer data via
their implanted chips, so unless they
are communicating with humans, they
sing in short burstsofcoloratura.
Wallin’s orchestral and electronic
sound-world is emotional and engaging
without ever lapsing into kitsch, even
when he is quoting Beethoven. Very few
composers can manage musical nostal-
gia without a significant cringe factor,
but Wallin retains his own quirky lan-
guage throughout, both original and
highly communicative.
Theendingisambiguous.Coraigoffers
the remaining humans a choice between
“singularity” (a new, bodiless existence
in a utopic cyber-world) or annihilation.
All but the Husband accept, but are they
really uploaded, ormerelyexecuted?
Musically, the evening is first-rate,
with wonderful playing from the opera
orchestra under Baldur Brönnimann
and uniformly fine singing from the
principals. The boy soprano Rykkvin is
freakishly good, with a musical assur-
ance and richness of tone that are almost
superhuman.
Pountney’s staging is sometimes too
explicit. Leslie Travers has produced
illuminated body-stockings for the
transhumans that are at once dazzling
and remorselessly unflattering — a
little more abstraction would have
beenafinething.Butinall,theeveningis
a triumph for Oslo.
To April 2, operaen.no
MUSIC
Shye Ben Tzur, Jonny Greenwood
and The Rajasthan Express
Barbican, London
aaaae
David Cheal
Sometimes music does nothing more
complicated than make you feel good
about the world. Tonight was one of
those occasions. Perhaps the musicians
behind last year’s Junun — Israeli
Digital divide: composer Shye Ben Tzur, English com-
Ketil Hugaas poser and Radiohead guitarist Jonny
and Nils Harald Greenwood, and India’s Rajasthan
Sødal in Express ensemble — had higher pur-
‘Elysium’. Below poses in mind when they gathered at the
right: Mel Mehrangarh Fort in Jodhpur to record
Giedroyc and the album (there’s a Paul Thomas
Martins Anderson documentary of the ses-
Imhangbe in sions): at one point tonight Ben Tzur,
‘Luce’ the project’s mastermind, talked
Erik Bert; Ollie King about dancing “to God, with God, for
God”. The result, though, for those
perhaps less spiritually inclined than
Ben Tzur and the Sufi-rooted Rajasthan
Express players, was uncomplicated
exuberance.
At the heart of it all was the percus-
sion: the exhilarating rhythms rattled
out by three drummers, seated and tur-
baned, using sticks and hands on dholak
and nagara drums. Three brass players
added raucous blasts, trumpeter Aamir
Damami injecting squirty embellish-
ments that at times sounded more
South American than north Indian.
Meanwhile the “drone” came from a
harmonium and from the guitars of
frontman Ben Tzur, in a knee-length
Rajasthani tunic, and Greenwood,
standing discreetly at the back in
trousers and T-shirt.
Vocals, mostly in the form of circular,
repeated chants and refrains, came
from Ben Tzur, qawwali singer Zaki
Nizami and others in the ensemble.
Occasionally Greenwood switched to
bass to add sinew to the sound. A hand-
ful of tracks, such as “Junun”, were given
an undercurrent of pulsing electronic
beats. But this was not really a cross-
cultural experiment: this music was
firmly rooted in northern India.
Less impressive was the amplifica-
tion: right from the start, it was too loud,
with the volume whacked up to levels
more appropriate for a death-metal
band. It was wearying to the ears. Res-
pite came in the form of gentler pieces
such as “Kalandar”, with Ben Tzur on
flute: free-floating, undulating and mel-
lifluous. The album also features strings
and female singers, both absent here;
both would have added range and
texture to the sound.
But still, with the band in
full flow, drummers clattering,
brass parping, singers implor-
ing, this was music that
transported the listener, not
just to the state of Rajasthan
but to a state of mesmeric
bliss. Perhaps that’s what
Ben Tzur means by “dancing
with God”.
junun.co.uk
American, that serve as lacerating
indictments of the limits and inherent
weaknesses of liberalism. Bruce Norris’s
Clybourne Park is probably the most
famous recent example, and the
grandma of the pack is David Mamet’s
Oleanna.JCLee’sLuceisanothersuch.
The title character is a 17-year-old
African from an unspecified war zone
who was adopted 10 years earlier by a
whiteAmericancoupleandisnowposter
boy for pretty much every cause going in
his high school: in terms of his ethnicity,
troubled background, and sporting and
academicachievement,Luceisgold.
So when he begins to behave at
odds with everyone’s perfect expecta-
tions of him, their responses snowball
into growing tension and distrust. His
teacher cares more about his value as an
exemplar than as an individual, his
mother offers unconditional love even
when that means brushing aside valid
questions, and his father is the classic
conflictedliberal.
It’s potentially fertile ground, but it
becomes harder to accept Lee’s argu-
ments about (as director Simon Dor-
mandy puts it) “the bad bargains we
make with our children” when the child
in question is part-Machiavel, part-
Mephisto. Luce himself all but makes an
explicit link between his own name and
thatofLucifer.
Nevertheless, Dormandy’s production
keeps the necessary tight lid on such
matters. Martins Imhangbe is inscrut-
able as Luce, and comedian and TV
presenter Mel Giedroyc as his mother
Amy knows how to play the humour
but knows also that it is a minor strain
in her character. The staging is mini-
mal but for a reflective screen on
the back wall which confronts
the audience with their own
responses and has just a hint
of one-way mirror about it, as
if both the characters and we
ourselves are under observa-
tion by some unseen and
unknownparties.
To April 2
southwarkplayhouse.co.uk

Baryshnikov attempts to set poetry in motion

Catching a
THEATRE shadow:
Mikhail
Brodsky/Baryshnikov Baryshnikov
Baryshnikov Arts Center, New York in ‘Brodsky/
aaaee Baryshnikov’
Stephanie Berger

Max McGuinness

Poetry does not readily lend itself to

physical representation. This “unpopu-
lar art”, as WH Auden put it, cannot be
“hung as a status-trophy by rising exec-
utives […] but stubbornly still insists
upon being read or ignored.”
That stubbornness permeates the
work of Auden’s Russian protégé Joseph
Brodsky. His poems are intensely intro-
spective and, though not exactly cryptic,
seldom tell a recognisable story. Adapt-
ing them for the stage is like trying to
catch a shadow.
In Brodsky/Baryshnikov, originally
performed last October in Riga,
director Alvis Hermanis and Mikhail
Baryshnikov resolve to let the poems
speak for themselves. For about 90
minutes, Baryshnikov moves in and
out of a crumbling late-Tsarist-era con-
servatory (of the kind still found in
St Petersburg) alternately reading and
reciting Brodsky’s poetry in Russian
(with English surtitles), or listening to
recordings of his work made by the poet
himself. From time to time, Barysh-
nikov performs a bit of expressionistic
choreography.
The result is less a work of theatre
than a quasi-religious homage to the
poet, who died in 1996 at the age of 55.
And like most religious experiences, this
one is largely ineffable. Baryshnikov
does seem to be going through a lot out
there. The problem is we don’t get to see
much of it. There is a sublime moment
when he chases, then mimics an imagi-
nary butterfly during a recitation of
Brodsky’s “The Butterfly”. But a satisfy-
ing synthesis between word and action
otherwise tends to be elusive.
Towards the end of the piece, Barysh-
nikov starts painting the windows of
the conservatory with whitewash — a
ponderously literal way of illustrating
Brodsky’s simile “as though someone
had poured whitewash into milk”.
In the 1970s, Brodsky and Barysh-
nikov both went into exile in the US,
where they became close friends who
would go drinking and chat about girls
and books in Lower Manhattan. Some
reminiscences about those conversa-
tions might have added an extra dimen-
sion to Brodsky/Baryshnikov.
When read in Brodsky’s own rich
nasal voice, his poems do convey a sense
of hypnotic emptiness and melancholia
here. But, notwithstanding Barysh-
nikov’s inherent magnetism, this adap-
tation never invests that material with
real dramatic energy.
To March 19, bacnyc.org

multimedia Winterreise that unites bari- projected on textured surfaces, Ken-

CLAS SICAL MUSIC
Winterreise
Taube Atrium Theater, San Francisco
aaaae
Allan Ulrich
A fervent wish of outgoing San Fran-
cisco Opera general director David
Gockley became reality this month with
the opening of the Taube Atrium
Theater, one component of the com-
pany’s new Diane B. Wilsey Center for
Opera. The site provides a centre for
most of the opera’s ancillary activities.
But it also delivers the modest perform-
ance venue of Gockley’s dreams. The
space is intimate (299 seats), flexible
and acoustically blessed, thanks to the
electronic wizardry of Meyer Sound,
which has converted an intractable hall
into a vibrant sonic environment.
The opera company promises great
adventures in its new, experimental SF
Opera Lab. It was inaugurated last week
with the West Coast premiere of the
tone Matthias Goerne, pianist Markus
Hinterhäuser and South African artist
William Kentridge. An often thrilling if
sometimes baffling traversal of Schu-
bert’s final song cycle, it seduced eye
and ear for 80 uninterrupted minutes.
The collaboration approaches an
ideal blend of sight and sound, in which
neither dominates. For his 24 films,
Commanding: Matthias Goerne
tridge recycled his mostly monochrome
animations from past projects. The
films are not literal representations of
the imagery of Müller’s verse (though
the crow does reappear in silhouette),
but reinterpretations of the Schubert
settings. A steampunk contraption
accompanies “Die Post”, for example,
and images disintegrate and reform
throughout. The experience is as
immersive as Lieder ever get.
However, a formidable musician such
as Goerne provides a thrilling counter-
point to the visuals. The singer inter-
prets the verse in a manner imbued
both with hope and ruefulness,
although he has been technically more
commanding on earlier visits; too many
of his utterances seemed blustery rather
than dramatic. But Goerne remains
commanding and his wrenching traver-
sals of “Frühlingstraum” and “Letzte
Hoffnung” attested to his mastery. Hin-
terhäuser’s pianism yielded modest rev-
elations in its carefully etched details.
sfopera.com
12 ★ FINANCIAL TIMES Tuesday 15 March 2016

Draghi’s uncontrolled experiment

Over a long horizon, falling rates appear to be associated with weak bank share prices, but this
reflects how both are a consequence of a weaker economy. Thursday’s market action showed how
investors bid up bank prices when monetary stimulus is greater than expected, and vice versa

Longer view Shorter view

Twitter: @FTLex Email: lex@ft.com
BNP Paribas share price (rebased) 2020 German FTSE Eurofirst 300 $ per €
Deutsche Bank share price (rebased) government Banks index
bond yield (%)
Starwood: along with its sliding share price. After 120 450 1.12 China property:
years of struggling for profit growth, 0.20
big Anbang theory Starwood owners can benefit either getting it together
from an all-cash buyout or a renewed 100 0 1.11 China’s state-owned enterprises are not
About to buy a package of fancy hotels? bidding war. Who runs or owns the known for their focus: the temptation
440
Best to find someone to run them. Over hotels will be somebody else’s problem. -0.20 to get into any profitable business has
the weekend, news broke that Chinese 80 usually proven too great. Property has
insurance group turned property titan -0.40 1.10 been a case in point, with shippers to
Anbang was to acquire Strategic Hotels Ageas/Fortis: steelmakers getting involved.
& Resorts, the owner of 16 luxury -0.60 430 Focus is returning. Yesterday, Hong
properties, for $6.5bn. That one step forward 60 1.09 Kong-listed SOEs Citic Limited and
transaction, yet to be formally -0.80 China Overseas Land and Investment
announced, comes just three months The past is never dead, it’s not even announced details of a property-asset
after Strategic had been bought by the past, wrote the American novelist 40 -1.00 420 1.08 reshuffle. In a deal worth nearly $5bn,
Blackstone Group for $6bn. If William Faulkner. Ageas hopes to be an Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Mar 10 2016
Citic will sell its residential property
8:00 16:30
Blackstone had funded this with exception to this rule, even if it has to projects to developer Coli in return for
2015 2016
one-third equity, its annualised return pay over the odds to bury its own past. FT graphic Sources: Bloomberg; Thomson Reuters Datastream new shares and Coli’s commercial real
on the buyout would be 100 per cent. Yesterday Belgium’s largest insurer estate assets.
Then yesterday, Starwood Hotels & announced a €1.2bn settlement of For 1.6 times 2015 book value, versus
Resorts announced that a new party claims relating to alleged On most days, central banks are not If this is not easier policy, it is hard to matters are expectations about the its own valuation of 1.4 times, Coli will
(later identified as an investor group miscommunications over its solvency “the only game in town”. Usually, see what is. The long-term relationship entire course of policy, not just the add 50 per cent to its land bank in top
led by Anbang) had expressed interest and subprime mortgage exposure in markets are roiled by so many forces between rates and monetary stance is events of the day. As argued by tier cities, such as Beijing and
in buying it, despite an already the run-up to the financial crisis in that to disentangle cause from effect not straightforward — higher cash former Minneapolis Fed governor Shenzhen, where land is increasingly
announced deal to be acquired by rival 2008. Analysts had expected anywhere is art, not science, and often sheer growth eventually puts upward Narayana Kocherlakota, Mr Draghi scarce. Citic, for its part, offloads the
Marriott International. Starwood, between €500m and €1bn. quackery. Last Thursday provided an pressure on rates — but in the short might have enjoyed more results by development burden but maintains an
known for its Westin, Sheraton, St After a €290m contribution from its exception. When the European term every indicator flashed “easy”. doing less but threatening more. interest in the upside through its one-
Regis and W brands, operates under a own insurers, the settlement will cost Central Bank sets policy, for many Then, at 15.00, Mr Draghi provided Another is that banks’ aversion to tenth stake in Coli. Not perfect focus,
very different strategy to Strategic. It Ageas, which emerged from the markets this is all that matters. For the exact opposite just by moving his negative rates must come with perhaps, but a good way to encourage
owns fewer and fewer of the hotels that nationalised rump of Belgian-Dutch the economist, such days are golden, lips. Playing down the prospect of caveats, given how their shares further rationalisation in the sector.
bear its brand names. bank Fortis, about €1bn. It will knock for they allow theories to be tested. further rate cuts, he let markets fear reacted to the threat of monetary
The big US hotel groups — Starwood, 20 percentage points off its solvency On Thursday, ECB president Mario that this may be as good as it gets. The easing being curtailed. What banks’ China property:
Marriott, Hilton — decided some time ratio (a measure of surplus capital Draghi launched two policies in two euro soared by three cents, bond yields investors clearly want is easier policy,
ago that their most prized asset was not expressed as a percentage of the hours. First, at 13.45 CET, came a rose to finish up on the day, and which over the long run lifts grand designs
land but their brands and operating minimum amount required). Even so, stimulus much greater than lenders such as Deutsche Bank gave up economic activity, raises market China’s property blue-chips have been
expertise. By selling off hotel at 192 per cent, the total will remain expected: more asset purchases, a all of their equity gains. rates off the floor and boosts banking busy. In the second of two deals
properties and then charging fees to respectable compared with peers. credit boost, a further cut in policy What lessons are there? One is the margins. Should Mr Draghi’s lips outlined yesterday, Hong Kong and
manage them (Strategic even has a The offer agreed with litigants covers rates. The euro dropped a cent, power of speech. ECB actions were indicate real determination to keep Shenzhen-listed developer China
property managed by Starwood’s nine-tenths of outstanding claims. The equities rose (banks in particular) impressive, yet words alone were the pedal to the metal, bank shares Vanke said that it would buy projects
Westin), these groups have vastly financial blow will be softened by the and government debt yields fell. enough to overwhelm these. What will be an unambiguous buy. from Shenzhen Metro, an unlisted
simplified their balance sheets and pending sale of Ageas’s Hong Kong state-owned enterprise which develops
improved returns on capital. Strategic business, acquired in 2007 for €666m, the city’s metro lines, for $6bn-$9bn.
played to its own strengths; before the to JD Capital for €1.2bn. Full terms have not been disclosed,
Blackstone buyout, it was structured as Ageas had €1.3bn of net cash at its Laying the past to rest will cost plenty Yesterday, the central bank, despite should help boost foreign direct but the deal looks canny. Vanke is in
a Reit. It paid out most of its cash flow latest annual results, but shareholders — but will be worth it if Ageas can now repeated denials, finally devalued the investment, offsetting a current the midst of a control battle with an
as dividends, avoided corporate taxes expecting returns of cash should keep plan ahead with greater clarity. currency to E£8.85 per US dollar, account deficit likely to have finished “unwelcome” major shareholder,
and enjoyed a low cost of capital. their hopes in check. A substantial closing much of that difference. While last year at nearly 4 per cent of gross Baoneng group. If Vanke issues new
For hotel brands, the game has portion of the proceeds is likely to go a weaker currency could lift inflation domestic product — nearly double that shares to fund most of the purchase, as
become all about consolidation. With towards the purchase of a 25 per cent Egypt: above the current 10 per cent, the of 2012. Hesitant multinational it has intimated, Shenzhen Metro could
more rooms under management, stake in Ageas’s Belgian insurance black market had discounted what was corporations are more likely to invest end up with one-fifth of the enlarged
groups have greater clout against business held by BNP Paribas; the valued devaluation coming, meaning that merchants had at the newly reduced official exchange share capital, Credit Suisse estimates.
online travel agencies, whose fees eat French bank has an option to sell in likely incorporated the change into rate. Better economic activity should This would dilute Baoneng’s stake,
into their margins. 2018. The stake was valued at just over Egypt’s political revolution is history. consumer prices. Shares soared 7 per boost the likes of Commercial putting more of the company in
Starwood’s growth and profitability €1bn at the end of last year. The country now needs an economic cent after the official announcement. International Bank, which offers a 25 friendly shareholders’ hands.
had stalled before its proposed sale to The settlement also allows one. The collapse of tourist arrivals — Next steps will be crucial. New per cent return on equity priced at The market liked the plan: Vanke’s H
Marriott. Various rivals who could management to focus on its purchase down by half year on year in January — central bank governor Tarek Amer will seven times forward earnings. shares rose 10 per cent. The company
extract synergies were circling it. What of Axa’s business in Portugal, potential has hurt. Tourist spending is a key need to back this currency policy Egyptian industry is starved of hard says that it is in talks for other deals. A
benefits Anbang can realise from both acquisitions in Belgium, and its fast- source of foreign exchange. The Central change with higher interest rates when currency to import foreign capital lack of available prime land in China is
owning and operating are less clear. growing business in China; the last one Bank of Egypt pretended it could prop the bank’s Monetary Policy Committee goods. Even General Motors, with a spurring consolidation. Expect more.
But as long as its financing is solid, its accounts for over a fifth of gross up an increasingly ailing currency. A meets on Thursday. This might draw quarter of the car market, had to halt
goals will not concern Starwood inflows. gap of more than 25 per cent had much-needed foreign currency into the production there recently as it could
shareholders. The Anbang bid is $76.00 The past weighed heavily. Ageas’s opened between the country’s official country. Brokers EFG Hermes expect not fund its parts supplies. The Lex on the web
For notes on today’s breaking
in cash; Marriott’s bid, virtually all in shares had fallen by 14 per cent this rate for the Egyptian pound and that in at least a 50 basis point rise. devaluation is sensible; Egypt’s central stories go to www.ft.com/lex
stock, had deteriorated from $72 to $65 year; Dutch rival Aegon has lost only 3. the black market. Enhancing central bank credibility bank must now build on this gesture.

1000 Today’s temperatures

1020 OW
Abu Dhabi Sun 32 Malta Fair 17
44
Amsterdam Cloudy 10 Manila Fair 29
HIGH 1010 9 9 0 Athens Cloudy 12 Melbourne Cloudy 24

13
LOW Bangkok Sun 36 Mexico City Sun 27
1000 Barcelona Fair 15 Montreal Rain 6
1020 LOW Beijing eoul
10 Beijing Fair 13 Moscow Fair -1
HIGH Tokyo Berlin Cloudy 7 Mumbai Sun 31
12 Brussels Cloudy 8 Munich Snow 3
slamabad 1010
Sha ghai Budapest Sleet 4 Nairobi Sun 30
1020 Buenos Aires Sun 31 New York Cloudy 12
Delhi Chicago Rain 15 Oslo Fair 10
Kolkata 17 Copenhagen Fair 8 Paris Sun 12
LOW 38 Taipei
33 17 Dallas Sun 28 Perth Fair 32
2 Hong Kong Delhi Sun 29 Prague Cloudy 4
Mumbai Hanoi
36 Dubai Sun 29 Rio Fair 31
Yangon Dublin Fair 10 Rome Fair 14
32
15 36 Ma ila Edinburgh Cloudy 9 San Francisco Sun 17
Bangkok 1010 Frankfurt Cloudy 8 Seoul Sun 10
34 Geneva Fair 11 Shanghai Fair 12
Ho Chi Minh City Hamburg Fair 8 Singapore Fair 32
Colombo Kuala Brunei Hong Kong Cloudy 17 Stockholm Cloudy 7
32 34 Lumpur Istanbul Cloudy 8 Sydney Rain 24
3 31 Jakarta Thunder 33 Taipei Cloudy 17
Singapore Johannesburg Drizzle 23 Tokyo Sun 13
32
LOW 32 Karachi Sun 31 Toronto Rain 9
Kuala Lumpur Shower 34 Vancouver Shower 9
32 Kuwait Shower 27 Venice Fair 10
Lisbon Shower 16 Vienna Sleet 5
London Cloudy 11 Washington Cloudy 16
Forecasts by Los Angeles Sun 23 Wellington Rain 21
Wind speed Luxembourg Fair 8 Yangon Sun 36
in KPH Madrid Fair 16 Zurich Sleet 6

CROSSWORD
No. 15,189 Set by GAFF
        60 years on, 30 acrosss 1 across DOWN
problem results in 7 solutions 1 Slightly gaping from a shock (4)

being entered incorrectly in the 2 Made long,long face about extra
  grid. (6,3)
ACROSS 3 Lines from The Frost Report (5)
1 Hope Portia’s in a play (10) 4 Visitor to ancient city is prime
 
6 Do little turn over (4) target (7)
10 Scarcely is Middle England 5 Ring deters wanton magnetism
 gripped by obscure author (5) (7)
11 Speed of sound punishes planes 7 Academic has alternative organ
   
(9) supplier (5)
12 Abandoned the German extract 8 Dieters eat frantically in festal
Gaff’s forgotten (8) season (10)
  
13 Brief Peter Sellers appearance 9 Queen Mary was not
(5) unpunished (4,4)
15 Humming a rondo variation 14 Skeleton’s inside Spooner’s
    takes time (7) grouse burial mound (4,6)

17 Stepped back, admitting race is 16 Smeared rear of Old Etonian
suspended (7) liberally (8)
  19 Town we back in gallant way (7) 18 Head of Apple deliriously happy
21 Lower heads before crossing (7) restriction of reading text works
22 Take place of a very soft lining (9)
  layer (5) 20 Fatal mistake by the lady (7)
24 Test county that’s cut addition 21 Upliftingly broadcast work Gaff
to rent (8) markets (7)
27 Tonic, of course? (9) 23 Plugs featuring faulty leads
JOTTER PAD 28 Dodge back-stabber (5) discharge kettles (5)
29 Maybe well-made goal (4) 25 Always central to false verdict
30 Woman from W1 missing a show (5)
(2,4,4) 26 Hear victim’s appeal (4)
Solution to Saturday’s prize puzzle on Saturday March 26
Solution to yesterday’s prize puzzle on Monday March 28
Winners’ names will be printed in Weekend FT
Tuesday 15 March 2016 ★ 13

Asset managers Why the SEC Dai-ichi Life Tencent Glencore Brent oil Euro / dollar Xetra Dax US 10-yr Tsy Nikkei 225

should stand up to the bullies 8.63% 3.51% 4.4% 2.3% 0.5% 1.6% 2bp 1.7%
PATRICK JENKINS, PAGE 14
Y1,497.5 HK$153.3 147.9p $39.45 $1.1091 9,990.26 1.95% 17,233

UBS reopens ‘coco’ bond market Short

View
3 First Europe sale this year 3 Issue shows demand persists 3 Orders of almost $8bn drawn
THOMAS HALE — LONDON models. Some AT1 bonds traded close to The nascent market, which in Europe tracking coco bonds is up by more than
Leo
70 cents on the euro and the market for has grown to almost €100bn, is part of a 10 per cent since its lows in mid- Lewis
UBS has sold Europe’s first “coco” bond new issuance remained closed. regulatory drive to transfer the risk of February, while a Deutsche Bank AT1
since January, reopening a crucial mar- The UBS sale shows that demand still banking failure to markets. bond that was in the spotlight during the
ket for the continent’s banks after a exists for the asset class, which was Investors said that the ECB’s interven- sell-off has gained almost 9 per cent over Tokyo officials recently bombarded coach drivers with a
sharp sell-off earlier this year raised crafted to make banks safer but has tion last week was a crucial factor in the ‘It’s been the past week, and jumped sharply after “better parking manners” leaflet campaign: a fussy push
questions over the future role of the recently faced scrutiny over its role in a reopening of the market, pointing to very the ECB meeting. to spare the capital from supposed road-clogging by for-
asset class. broader sell-off of bank shares and president Mario Draghi’s references to Alongside concerns over banking eign tourists. But will it be the traffic wardens or the Bank
The $1.5bn additional tier one (AT1) bonds. bank bonds in his press conference. volatile, business models and the impact of nega- of Japan that clears the streets first?
bond drew orders of almost $8bn, and The bond, which is written down “The ECB explains a lot of these mar- to put it tive rates, the AT1 market has been The congestion peril may be exaggerated, but the under-
comes days after the European Central when the bank’s capital ratio falls to a ket movements,” said Filippo Alloatti, a plagued by regulatory uncertainty — in lying numbers are not. Japan’s inbound tourism boomed
Bank revealed new measures to support certain level, pays investors a coupon of senior credit analyst at Hermes. mildly. particular over the point at which cou- last year, with the visitor tally reaching just shy of the 20m
banks in a world of falling interest rates. 6.875 per cent. “After the ECB meeting, all of a sud- Some pons on the bonds are halted. mark. A quarter of them were from mainland China —
European AT1 bonds — the riskiest Additional tier one bonds (AT1), also den there was no seller. The vast major- “It’s been very volatile, to put it more than double their ranks in 2014. Analysts at Nomura
class of debt sold by banks — fell sharply referred to as contingent convertible or ity of investors wanted to buy.” concerns mildly. Some concerns are still there,” predict another 22 per cent gain in overall tourist numbers
in February, along with financial stocks, “coco” bonds, are issued by banks to Prices for the bonds have recovered are still said Mr Alloatti. this year and see the annual total surpassing 30m by the
amid concerns over the effect of nega- meet regulatory requirements and take most of their losses since the depths of Appetite for energy bonds page 14 time the Tokyo Olympics open in 2020.
tive interest rates on banks’ business losses when the bank runs into trouble. the sell-off in February. The main index there’ Smart Money page 22 Tourist spending is also rising. It jumped 71 per cent in
2015 and, at Y3.5tn ($31bn), ranked in value alongside
some of Japan’s famous export industries: auto parts, steel
products and electronic components. Brokers, citing bene-
fits for retail, transport, and property sectors, heavily
pitch the tourism story in their efforts to convince reluc-
Fresh approach tant global fund managers to pile back into Japan’s stock
market, which is down 10.8 per cent since January 1.
Apollo in $1.3bn The fly in the ointment is the yen, and the tendency of
more bullish observers to underestimate the price sensi-
US grocer deal tivity of Chinese shoppers. At Y120 per dollar, a Cartier
watch was cheaper in Tokyo than in Seoul or Hong Kong.
According to sales staff in Tokyo’s Ginza district, the maths
still work at current levels of Y113 per dollar, but would
Apollo Global Management has agreed a start to fall apart if the yen heads much higher.
$1.36bn deal for US gourmet grocer The Since the BoJ’s negative rates announcement in January,
Fresh Market in the buyout firm’s third the yen has flatly defied the governor’s gambit and
takeover of a public company in just strengthened. Some now expect it to break Y110 per dollar
over a month, writes Joseph Cotterill. over the next couple of months. After three years of sup-
Yesterday’s $28.50 a share cash offer porting Abenomics with its weakness, the yen’s fundamen-
for Fresh Market follows Apollo’s $1.1bn tals changed last year, argue JPMorgan analysts. Retained
and $15bn buyouts respectively of corporate earnings abroad are being repatriated, and
Apollo Education and home security investment trusts that bought a record Y17tn overseas
maker ADT, which were both assets last year are expected to start unwinding some of
announced last month. that. The BoJ’s policy meeting ends on Tuesday, and very
The pace of Apollo’s dealmaking has few economists expect it to move. Currency markets are
contrasted with choppy markets this on a hair-trigger, but so too are Mr and Mrs Zhang of
year for high-yield financing of Guangzhou, currently planning where to go this summer.
leveraged buyouts, with some large
loans from last year still stuck on banks’
books. Japan foreign tourist arrivals
Apollo said it had fully committed Million
debt financing for the deal, which will 25
include $525m of equity from its funds
20
plus the rollover of a 9.8 per cent stake by
Ray Berry, Fresh Market’s founder and 15
chairman, and his son Brett Berry. Japan’s 2015
“We are delighted about this 10 inbound tourism
transaction with The Fresh Market, hit almost 20m.
which was one of the early pioneers in 5 Analysts predict
small-box grocery, offering unique, 2003 05 10 16 the total to pass
delicious and healthy food with a keen Forecast 30m by the 2020
Source: Japan National Tourism Organisation
focus on perishables,” said Andrew S. Tokyo Olympics.
Jhawar, a senior partner at Apollo.
leo.lewis@ft.com
Rosa Irene Betancourt/Alamy

Finding that US drug prices ‘doubled’

in 5 years threatens to fuel backlash
DAVID CROW — NEW YORK ners, Hillary Clinton and Donald after years of relatively small increases.”
Trump, pledging a crackdown. Fears that the candidates will follow
The average price of branded prescrip-
Mrs Clinton has released a campaign through on their promises with action
tion drugs in the US has doubled in the
advertisement targeting Valeant, the on drug prices have contributed to a
past five years, according to the coun-
Canadian drugmaker that has gained a sharp sell-off in pharmaceuticals and
try’s largest pharmacy group, in a find-
reputation for sharp price hikes. “I’m biotech stocks. The Nasdaq biotech
ing that threatens to fuel the political
going after them,” she says in the ad. Mr index has lost about a third of its value
backlash against high prices.
Industrivärden’s chief Trump has said that Medicare, the gov- since September, when Mrs Clinton
shakes up Swedish groups Express Scripts, a “pharmacy benefits ernment-funded health programme for pledged to tackle price “gouging”.
manager” that negotiates with drug- retirees, should be allowed to negotiate Express Scripts blamed the soaring
Helena Stjernholm, the new chief makers on behalf of health insurers and drug prices. He says that would save the cost of medicines on a class of drug that
executive of Industrivärden, the employers, said the average wholesale government $300bn a year, although is loosely known as “specialty medica-
investment company at the heart of price of branded medicines, which are that number is fiercely contested. tions” — high-priced drugs that treat
Sweden’s corporate-jet scandal, is protected by patents, rose 16 per cent “Drug manufacturers have become a complex conditions such as rheumatoid
shaking up boardrooms at several of last year and is up 98 per cent since 2011. punching bag on the right,” said John arthritis and cancer. Conversely, the
the country’s leading industrial The figures help illustrate why drug Rother, president of the National Coali- average price of generic medicines —
businesses to avoid similar mishaps. costs have become a persistent theme in tion on Healthcare, which campaigns copycat versions of drugs that have lost
Analysis i PAGE 17 the election campaign, with both the for lower prices. “The politicisation of patent protection — fell roughly 20 per
Democratic and Republican frontrun- drug prices comes as costs have surged cent last year, the company said.

Companies / Sectors / People

Companies
ABN Amro...................................................16
AbbVie...........................................................13
Admiral..........................................................21
Aegon.............................................................12
Ageas........................................................12,16
Airbus.............................................................15
Alibaba...........................................................14
Anadarko Petroleum.............................14
Anbang............................................1,12,14,16
Andreessen Horowitz...........................16
Anglo Irish Bank........................................4
Apache...........................................................14
Apollo..............................................................13
Apple..............................................................14
Arcadia.............................................................8
BHS....................................................................8
BNP Paribas.......................................1,12,16
Bank of America......................................21
Baoneng..................................................12,16
Barclays............................................................1
Bear Stearns...............................................14
Beltone Financial.......................................6
BlackRock.....................................................14
Blackstone..............................................12,14
Blue Buffalo................................................10
Boeing............................................................15
BuzzFeed......................................................16
CI Capital........................................................6
Cartier.............................................................13
Chevron.........................................................21
China Life.....................................................14
China Overseas Land......................12,14
China Sonangol........................................16
Chipotle.........................................................21
Chow Tai Fook...........................................6
Christian Dior............................................10
Citic Limited.........................................12,14
Citic Securities..........................................14
Citigroup.................................................14,21
Colgate-Palmolive...................................10
Coli....................................................................12
Commercial International Bank...6,12
ConAgra Foods........................................10
ConocoPhillips...........................................14
Credit Suisse.................................................1
Dassault Aviation....................................15
Deutsche Bank.......................................1,12
Diamond Offshore...................................21
Ericsson.........................................................17
Express Scripts.........................................13
ExxonMobil............................................14,21
Fortis.........................................................12,16
Fosun..............................................................14
Fresh Market..............................................13
GW Pharmaceuticals..............................21
Galeries Lafayette....................................8
General Electric........................................15
General Motors.....................................6,12
Gilead..............................................................13
Glencore........................................................21
Goldman Sachs.........................................14
Greenland Group.....................................14
Gucci.................................................................8
HSBC......................................................1,14,16
Handelsbanken.........................................17
Hilton..............................................................12
Honest Dollar............................................14
Hongqiao......................................................17
Hyatt..................................................................1
Hypo Alpe Adria........................................2
IBM...................................................................14
Ica......................................................................17
Industrivärden...........................................17
InterContinental Hotels.......................21
International Airlines Group.............15
Kingfisher Airlines..................................10
Ladbrokes....................................................21
Lending Club.............................................14
Lianjia.com.....................................................6
Longmay Group.........................................6
Louis Vuitton...............................................8
Marriott............................................................1
Marriott International.....................12,14
Mars................................................................10
Merrick Pet Care.....................................10
NBCUniversal.............................................16
Nestlé.............................................................10
O2......................................................................17
Pepsi................................................................16
Perry Capital..............................................22
Petrobras....................................................7,8
Ping An.........................................................14
Prada................................................................8
Procter & Gamble...................................10
Queensway Group..................................16
Rolls-Royce..................................................15
SAP..................................................................10
SCA...................................................................17
SSAB................................................................17
Safran.............................................................15
Sandvik..........................................................17
Schlumberger.............................................21
Sequoia Capital........................................16
Shenzhen Metro.................................12,16
Skanska..........................................................17
Snecma..........................................................15
Stagecoach..................................................21
Starwood Hotels.............................1,12,14
Tesco Mobile..............................................17
Third Avenue.............................................14
Three...............................................................17
UBS..................................................................13
Unilever.........................................................16
Vale.................................................................22
Valeant...........................................................13
Vanguard.....................................................14
Vanke........................................................12,16
Vnesheconombank....................................1
Volvo...............................................................17
William Hill...................................................21
YPF..................................................................14
Zhongwang.................................................17
Zodiac Aerospace....................................15
Sectors
Aerospace & Defence...........................15
Banks...................................1,2,4,12,13,14,16
Financial Services...................................22
Financials...............................13,14,16,17,22
Industrials...............................................15,17
Insurance.................................................12,16
Media..............................................................16
Mining..............................................................6
Oil & Gas............................................7,14,20
Personal & Household Goods.....8,10
Pharmaceuticals.......................................13
Property.........................................6,12,14,16
Retail.............................................................6,8
Telecoms.......................................................17
Travel & Leisure.............................1,12,14
People
Adelson, Sheldon......................................4
Batista, Eike..................................................7
Berry, Ray.....................................................13
Burdock, Jeffrey.......................................14
Connolly, Sean..........................................10
De Smet, Bart............................................16
Drumm, David.............................................4
Fung, Veronica..........................................16
Goguen, Michael......................................16
Green, Sir Philip.........................................8
Hurley, William..........................................14
Lundberg, Fredrik...................................17
Madoff, Bernard.......................................14
Mallya, Vijay...............................................10
McDermott, Bill........................................10
Nixon, Matt.................................................10
Pa, Sam..........................................................16
Pandit, Vikram..........................................14
Peretti, Jonah............................................16
Petitcolin, Philippe..................................15
Sawiris, Naguib...........................................6
Shkreli, Martin...........................................13
Stjernholm, Helena.................................17
Toledano, Sidney....................................10
Trionow, Jan...............................................17
Wang, Shi.....................................................16
Weihrauch, Poul.......................................10
Wu, Xiaohui.................................................14
Yellen, Janet...............................................21
Zhang, Bo.....................................................17

© The Financial Times Limited 2016 Week 11

14 ★ FINANCIAL TIMES Tuesday 15 March 2016

COMPANIES
INSIDE BUSINESS
Financials
FINANCE

Goldman buys pensions ‘robo’ adviser Patrick

Start-up aims to simplify
the setting up of savings
accounts for retirement
BEN MCLANNAHAN — NEW YORK
Goldman Sachs has made a move into
the fast-growing world of “robo” invest-
ment, buying Honest Dollar, a start-up
which aims to make it quicker and sim-
pler to set up savings accounts for retire-
guard, the fund manager with $3.3tn in
assets.
Honest Dollar declines to provide
numbers on how many users it has, but
says it is targeting the roughly 45m
Americans — freelancers and small-
business owners — who do not have
access to employer-sponsored retire-
ment plans.
The size of the acquisition, made
through Goldman’s investment man-
agement division, was undisclosed.
the newcomers. Goldman, which prides
itself on its vast team of software engi-
neers, has mostly bought or built, last
year launching an internal venture to
challenge the likes of Lending Club in
loans to consumers and small busi-
nesses. It is also a driving force behind
Symphony, a big consortium of finan-
cial services firms aiming to unseat
Bloomberg from its dominant position
in messaging.
“Honest Dollar has created a simple
Jenkins
and Symbiot before founding his own
design firm, Chaotic Moon Studios, in
2010. He left the company — which was
sold to Accenture last year — in 2014 to
co-found Honest Dollar.
SEC should stand up
He launched his latest venture about
a year ago in Austin at South by South-
to asset management
west, an annual set of film, interactive
media, and music festivals and confer-
ences. By then he had raised $3m of seed
bullies on liquidity risk
funding, including a personal invest-
ment from Vikram Pandit, the former

ment.
Goldman’s new business is distinct
from firms such as Wealthfront and Bet-
terment, the biggest automated invest-
ment companies, which manage pots of
cash according to customers’ stated
goals and risk appetites. Honest Dollar,
launched a year ago in Austin, Texas,
does not select portfolios itself but
charges a per-month, per-user fee for
setting up and maintaining retirement
accounts which are managed by Van-
“We’re trying something very new solution to a complex retirement sav-
and innovative, and we love the valida- ings problem,” said Timothy O’Neill and
tion [from Goldman],” said William Eric Lane, co-heads of Goldman’s
Hurley, Honest Dollar’s chief executive. investment management division, in a
“Goldman did an incredible amount of statement. “Together, we have the
work, putting in the effort of under- potential to help millions of people
standing what we are.” achieve their investing goals.”
A recent surge of private investment Mr Hurley, 44, who prefers to go by
in financial technology companies has the name “Whurley”, pursued a career
prompted the biggest banks in the US to as a bassist in a funk band before a seri-
consider whether they would rather ous car accident sparked an interest in
buy, build or partner to keep pace with computing. He worked at Apple, IBM
Insurance. Takeover tussle
T
chief executive of Citigroup. he title of the Securities and Exchange Com-
45m Honest Dollar, which now has 30 staff, mission’s autumn consultation document on
Americans without will stay in Austin and operate as part of fund management — “Proposed Rule: Open-
access to employer- Goldman’s investment management End Fund Liquidity Risk Management Pro-
sponsored
retirement plans
division. grams” — hardly hints at firebrand stuff. And,
“As a software person, this is my first in the ensuing 415 pages of often technocratic proposals,
foray into financial services, but Gold- the regulator suggests some sensible mechanisms to miti-
$3.3tn man has a 100-plus year history and a gate the fast-growing risks in the fast-growing asset man-
Assets with lot of the brightest minds in this space,” agement industry.
Vanguard, which will
manage retirement said Mr Hurley. “So far we’ve built this But this could be a big moment for the SEC after a decade
accounts set up by on our own; imagine what we can do of decreasing relevance and blows to its reputation. Pre-
Honest Dollar with access to that data.” crisis, it missed the warning signals before the collapses of
both Bear Stearns and Bernard Madoff’s Ponzi scheme.
Post-crisis, it brought embarrassingly few charges against
senior Wall Street executives. It has struggled for credibil-
ity ever since, sidelined by more aggressive authorities.
It seems the asset management industry knows this. A
quick glance through the 79 responses filed during the

Anbang moves to sink rival’s Starwood deal
Chinese group launches talks
to overturn Marriott’s offer
for owner of Sheraton chain
ARASH MASSOUDI, JOHN MURRAY
BROWN AND JAMES FONTANELLA-KHAN
When Marriott International swooped
in last November to trump a smaller
rival’s offer for Starwood Hotels and
Resorts, the last-minute upset was set to
create the world’s largest hotel company
by rooms.
But if a group led by Chinese insurer
Anbang has its way, those plans will not
only unravel but also establish a new
challenger in the global lodging industry
with ambitions to grow rapidly through
acquisitions.
Yesterday, Starwood revealed that it
had begun talks with an unnamed group
— later confirmed as a consortium led
by Anbang — that has offered almost
$13bn for the owner of the Sheraton, W
Hotels and St Regis chains.
The all-cash bid from the Chinese
group is worth $76 a share, Starwood
Over the past 18 months,
Anbang has spent
more than $23bn to
accumulate global assets
said, adding that it remained committed Sheraton’s
to its already agreed deal with Marriott. Huzhou hot
However, the US company noted the spring resort in
value of Marriott’s cash-and-stock offer China’s Zhejiang
had fallen to $63.74, driven by a fall in province.
the group’s stock price since November. Anbang’s offer
For Anbang, which started as a car for parent
insurance business 12 years ago, a Star- Starwood is
wood takeover would be the climax of a worth $76 a
rapid transformation into a diversified share, compared
investment group. Over the past 18 with Marriott’s
months, Anbang has spent more than $63.74 agreed
$23bn — without counting its offer for deal — Alamy
Starwood — to accumulate a sprawling
list of global assets that span financial
services, real estate and lodging.
Led by Wu Xiaohui, its politically con-
nected chairman, Anbang has used the
income from its growing insurance busi-
ness to fund its overseas ambitions. It
had assets worth more than Rmb800bn
($123bn) as of February last year.
Mr Wu is married to the granddaugh-
ter of Deng Xiaoping, China’s former
leader and the architect of the country’s
transition out of a planned economy,
and Anbang has an opaque ownership
structure that includes associations
with other prominent families. The
company has also demonstrated what
The Economist has called an “unusually
good” ability to navigate China’s com-
plex bureaucracy.
Analysts have questioned the com-
pany’s aggressive approach to M&A,
saying Anbang risks undermining the
profitability of its core business as it
gambles on a string of high-risk invest-
ments in other areas.
Growth expectations are being fuelled
by China’s low rate of insurance pene-
tration, giving providers room to catch
up with western peers. Premiums were
only 3 per cent of China’s gross domestic
product in 2014, compared with 7 per
cent in the US and 11 per cent in Japan,
according to Swiss Re.
However, in China’s life insurance
market, Anbang is dwarfed by listed
rivals China Life and Ping An, with a
market share of just 4 per cent.
To help manage its buying spree, the
company has hired experienced invest-
ment bankers — following a pattern
among Chinese companies with an
appetite for overseas assets, including
Alibaba and Fosun. By bringing talent
in-house, several Chinese groups have
been able to avoid using global invest-
ment banks for many of their deals.
As it has grown, the company’s con-
nections have extended beyond China.
One of those has been with US alterna-
tive asset manager Blackstone, a rela-
tionship that has proved critical to
Anbang’s expansion into lodging.
In late 2014, Blackstone sold New
York’s landmark Waldorf Astoria hotel
to Anbang for nearly $2bn and last
weekend agreed a $6.5bn sale of 16
prime US hotels to the Chinese group.
After the Waldorf deal, Mr Wu
appeared at Harvard University to
declare his “win-win” approach to busi-
ness between the US and China. He also
highlighted his budding friendship with
Blackstone’s chairman and chief execu-
tive Stephen Schwarzman, as well as its
head of real estate Jonathan Gray.
In that 2015 speech, Mr Wu said
of Mr Gray: “I trust him deeply because
he keeps his word. He is like a
cheque book. As soon as a cheque is
written, you can count on cashing it
and he doesn’t waste any time.”
Mr Wu was also not wasting any time
by immediately setting his sights on
Starwood. A regulatory filing on the
company’s deal with Marriott reveals
that an overseas company, identified as
Anbang by a person familiar with the
matter, made an non-binding offer to
acquire Starwood last year. The
approach lacked financing details, this
person said, and Starwood was con-
cerned about Anbang’s ability to close
the deal. Those concerns persist,
explaining Starwood’s decision to
restate its support for Marriott’s offer.
This time, however, Anbang has
enlisted support from investors includ-
ing China’s Primavera Capital and JC
Flowers & Co, the private equity outfit of
US billionaire J Christopher Flowers.
Mr Wu is now going head-to-head for
Starwood with Marriott, a company
deeply connected to America’s business
establishment. If he succeeds, it will
mark China’s biggest upset ever in a for-
eign takeover battle.
Additional reporting by Lucy Hornby
See Lex
SEC’s consultation period reads a bit like a stream of online
bullying. Some even accuse the SEC of attacking the very
essence of American free markets.
Jeffrey Burdock, principal of Cove Street Capital, waxes
poetic about the iniquity of it. “Liquidity,” he writes, “is as
ephemeral as youth or clouds — it cannot be mandated to a
‘level’.” BlackRock, the world’s biggest asset manager, is
less lyrical but just as willing to take issue with many of the
SEC’s ideas: it submitted a 44-page response document.
Vanguard, the number two US fund manager, takes a
similar line. Last week, it raised the stakes, joining a roster
of financial groups that appeared to blame the SEC’s poor
regulation of stock exchanges for the risk that exists in the
system — and the market chaos in equity markets last
summer.
Why such hostility? The SEC’s consultation paper covers
a range of ideas, but two of its principal proposals are espe-
cially contentious.
First, it suggests that asset managers should boost their
liquidity buffers through the creation of pools of cash and
assets that can be made liquid within three days. It also
stipulates that illiquid assets should be limited to 15 per
cent of a fund. These are controversial measures both in
principle, because they
restrict investment freedom,
and in practice, because they
Most responses
threaten a fund’s ability to have come from a
track, or beat, its bench-
mark.
hostile industry
Second, the SEC suggests desperate to
investment funds should be
subject to “swing pricing”.
avoid more rules
This is akin to a facility
already operative in Europe, whereby large sales orders
may be subject to an exceptional discount price relative to
the fund’s net asset value, to ensure remaining investors
are not harmed by the exit. Opponents say this idea is fun-
damentally unfair.
So what will the SEC end up doing? The wording of the
consultation paper is sometimes diffident and unsure, per-
petuating the impression of an emasculated regulator.
That, combined with the fact that the vast majority of the
responses have come from a hostile industry desperate to
avoid further regulation, may mean that little comes of
this potentially important exercise.
Other initiatives to address liquidity risk in asset man-
agement have proved to be slow-moving or ineffectual.
The collapse and liquidation late last year of one high-yield
bond fund, Third Avenue’s Focused Credit Fund, was an
early warning signal but it has been brushed aside by
peers.
Among the few positive consultation paper responses
was one from the Systemic Risk Council, a body made up of
ex-policymakers, now chaired by Sir Paul Tucker, the
former Bank of England deputy governor.
Last week, Sir Paul, now based at Harvard, was in Lon-
don to spread the word that regulators must not allow
themselves to be pushed around. This stands in contrast to
bank regulation, where policymakers have cracked down
on capital, liquidity and conduct with little pushback from
once powerful lobbyists. In asset management, the lobby-
ists still hold sway.
The SEC would do well to resist the pressure. This is a
defining opportunity for it to address one of the biggest
financial risks the world now faces. Given diminished mar-
ket liquidity, and the range of pending economic shocks,
this vast industry clearly has the power to spread mayhem
fast. Coming up with a set of mitigating rules could not
only burnish a tarnished SEC; it could help stave off
another financial crisis.
patrick.jenkins@ft.com

Oil & gas Property

Anadarko highlights energy bonds demand
ERIC PLATT — NEW YORK
Investors are showing signs of regain-
ing their appetite for energy compa-
nies’ bonds following the recent rally in
oil prices.
Orders for a bond offering from Anad-
arko Petroleum, the US oil producer,
exceeded $20bn yesterday, covering
underwriter books more than six times,
according to three sources familiar with
the transaction.
Anadarko, which last year made an
unsuccessful takeover approach to
Apache, another US producer, will use
the proceeds from the $3bn offering to
refinance debt that matures later this
year and next.
The plunge in the price of Brent crude
to a 13-year low of $27 per barrel in Janu-
ary slowed new debt offerings by energy
companies. But Brent has rebounded
about 45 per cent since then, and this
has restored market access for groups
with the best credit ratings.
ExxonMobil and ConocoPhillips,
rated triple A and single A respectively
by Standard & Poor’s, have both com-
pleted multibillion-dollar bond offer-
ings in the past two weeks.
The strong showings for those bonds
buoyed confidence that demand would
materialise for the sale by Anadarko,
despite it having split ratings among the
three major credit agencies.
Moody’s, which downgraded Anad-
arko to junk status last month, warned
the company faced “substantially lower
forecasted cash flow genera-
tion . . . high debt levels relative to cash
flow and Moody’s expectation of some
production declines caused by reduced
capital investment”.
Standard & Poor’s and Fitch both
maintain investment grade ratings on
the company’s debt.
Anadarko is expected to sell new 10-
year debt with a yield of roughly 5.6 per
cent, or roughly 362.5 basis points above
the benchmark Treasury. That marked
an improvement from initial price talk
of 412.5 basis points yesterday, but
remained wide of 10-year paper sold by
Anadarko in 2014 that currently yields
5.39 per cent.
The company will also sell new five
and 30-year bonds in the transaction led
by Bank of America Merrill Lynch, Bar-
clays and Mizuho, according to a person
familiar with the matter.
Citic agrees China’s largest real estate tie-up
DON WEINLAND — HONG KONG
Citic Limited, the flag-bearer for
China’s state-controlled corporate sec-
tor, sold off nearly $5bn in assets to
China Overseas Land & Investment
yesterday in what was the mainland’s
largest property M&A deal to date.
The agreement was also a bellwether for
looming consolidation in China’s prop-
erty market, people familiar with the
deal said.
Coli agreed to pay $4.8bn for Citic’s
residential property assets, while Citic
will buy 1.1bn new shares from Coli
worth HK$29.7bn ($3.7bn), according to
filings on the Hong Kong Stock
Exchange.
By selling the residential property
assets to Coli, then taking an 11 per cent
stake in the developer, Citic was able to
move its notoriously slow-returning res-
idential business to a more efficient
operator but retain indirect exposure to
those assets, analysts noted.
“This was a landmark transaction for
real estate in China,” said a person close
to the deal. “It’s definitely a sign of con-
solidation.”
The person said there would probably
be more large deals arising from both
the state-owned and private real estate
sector.
So far, China’s property sector has not
seen large deals that have brought
together assets from major players in
the market. Before yesterday’s deal,
China’s largest onshore M&A had been a
$500m acquisition by Greenland Group.
The disposal by Citic, the Hong Kong-
listed conglomerate, fell short of inves-
tors’ expectations that it would sell off
more of its mainland property assets.
As a result, the company’s share price
closed down 2.6 per cent after climbing
more than 9 per cent on Friday when
rumours of a much larger deal circu-
lated.
Citic said it would retain its commer-
cial property assets and focus on devel-
oping what it called “large integrated
projects”. Its core assets are in the finan-
cial, energy and mining sectors.
“It’s the streamlining of the com-
pany’s investment portfolio,” said Louis
Tse, the director of Hong Kong-based
VC brokerage.
HSBC was the financial adviser for
Coli and Citic Securities acted as adviser
to Citic Limited.
Tuesday 15 March 2016
Safran sharpens focus on aerospace and defence
Growth-minded chief looks to
slim down security division
as he targets acquisitions
MICHAEL STOTHARD — PARIS
PEGGY HOLLINGER — LONDON
The chief executive of Safran is seeking
to focus the French company on its aer-
ospace and defence divisions, as he
looks to slim down its security unit
through disposals.
Philippe Petitcolin is to consider
acquisitions to beef up Safran’s aero-
space division, which has a joint venture
with General Electric that dominates
the supply of engines for short-haul pas-
senger jets, but he is also planning to sell
chunks of the security business.
“I want to show there is life for Safran
outside engines for narrow-body
planes . . . We are looking for growth
and opportunities,” says Mr Petitcolin in
an interview with the Financial Times.
The 64-year-old engineer — who took
over the top role at Safran last April —
says that he has spent the past 10
months looking at the company’s three
core divisions: aerospace, defence and
security.
In aerospace, where Safran generated
82 per cent of its revenue in 2015, and
has benefited from a boom in orders for
passenger jets over the past five years,
Mr Petitcolin sees chances for expan-
sion. Safran will look at “any kind of
opportunities” in jet engines that take it
beyond its main product for short to
medium-haul passenger jets.
To this end, he will consider partner-
ships with other companies to make
engines for business and regional jets.
He says Safran could collaborate with
GE or another engine maker, and does
not rule out Rolls-Royce.
Mr Petitcolin also says Safran is look-
ing for opportunities for growth in the
aircraft equipment market, where the
company makes landing gear and
nacelles, among other things.
“If there is a nice opportunity we are
open for an acquisition in the aerospace
equipment world,” he adds.
★ †
Interview. Philippe Petitcolin
Safran’s joint Safran’s shares fell more than 6 per
venture with GE, cent to €55.52 yesterday after the com-
CFM, is starting pany’s plans were presented to analysts.
production of One possible acquisition target could
the Leap jet be France’s Zodiac Aerospace, a leading
engine for use supplier of aircraft seats, which Safran
on Boeing’s 737 expressed an interest in buying in 2010,
aircraft — Jason but Mr Petitcolin will not say if he is
Redmond/AFP/Getty Images
looking at the company.
Snecma, the brand under which
Safran sells engines for military as well
as regional jets, will disappear. The
whole company will be rebranded
Safran.
Safran’s defence division — which
contributed 7 per cent of the company’s
FINANCIAL TIMES
COMPANIES
revenue last year and makes drones,
among other things — will remain part
of the company because it has a “good
niche”.
But Mr Petitcolin is proposing to dis-
pose of parts of Safran’s security unit,
which generated 11 per cent of the com-
pany’s revenue in 2015.
He says an airport security scanner
business is “to be sold”, and other parts
of the unit are also on the block, he adds.
Safran has struggled to find synergies
between its security businesses, which
also include expertise in biometric tech-
nology.
And while Safran has been able to
transfer people between its aerospace
and defence divisions, Mr Petitcolin
says similar sharing of talent has not
been possible with the security busi-
ness.
He acknowledges, however, that his
key job over the coming years is not stra-
tegic, but industrial — the manufactur-
ing of a new jet engine.
Safran’s joint venture with GE, called
CFM International, produces the
CFM56, the world’s best-selling jet
engine used on Boeing’s short-haul 737
aircraft as well as some of Airbus’s
equivalent, the A320.
CFM is this year starting production
15
of a more fuel-efficient engine called the
Leap that will be the exclusive product
on an updated version of the 737. It will
also go on some of the upgraded A320
models.
CFM has five years to raise output to
2,000 Leap engines a year, presenting a
significant risk for the company and its
customers.
“The transition [from the CFM56] to
the Leap is the main challenge for
Safran,” says Mr Petitcolin, who adds he
is “confident” that the transition can be
done successfully.
Safran will need to avoid the kind of
issue that it had on its Silvercrest engine,
which is due to power Dassault Avia-
tion’s Falcon 5X business jet. It suffered
delays, and Safran recorded a €654m
charge in its 2015 results.
Any delays with the Leap engine
could have an impact on Airbus and
‘I want to show
there is life for Safran
outside engines for
narrow-body planes’
Boeing, which are grappling with the
task of increasing production of their
most popular aircraft.
Safran makes some money from sell-
ing engines, but like many aerospace
suppliers, much of the group’s profits
come from lucrative after market serv-
ice contracts.
82% This model is being challenged, how-
Proportion of
ever. Willie Walsh, chief executive of
Safran revenue International Airlines Group, parent of
generated from British Airways, last year expressed
aerospace last year concern that limited competition might
be keeping prices for maintenance serv-
€654m ices high.
Charge recorded Mr Petitcolin says the European Com-
in 2015 results mission has written to Safran asking for
over Silvercrest information as part of a preliminary
engine delays inquiry into whether airlines are being
forced to enter anti-competitive main-
tenance contracts.
“We received some questions. We will
co-operate of course with the Europe-
ans,” he adds.
16
Banks
HSBC freezes accounts linked to China’s Pa
Tycoon behind deals in
corrupt parts of Africa
was under US sanctions
TOM BURGIS
HSBC has frozen more than $87m in
accounts linked to a Chinese tycoon
behind several multibillion-dollar deals
in Africa, while it investigates allega-
tions of “serious financial crimes”.
Accounts controlled by Sam Pa and
his business associate Veronica Fung
were blocked by the bank a year ago, but
its internal investigation is still going,
BuzzFeed’s Peretti finds a natural home on mobile
More than 70% of the site’s
millennial-friendly content is
viewed on phones and tablets
DANIEL THOMAS — BARCELONA
SHANNON BOND — NEW YORK
Jonah Peretti is an hour late, slowed
down by the traffic that is clogging the
roads at Mobile World Congress, the
world’s biggest telecoms trade show that
would not have registered with the
founder of BuzzFeed a few years ago.
But the media company’s millennial-
friendly video snippets, listicles and Gif-
filled content that go viral have found
their natural home on mobile phones
and tablet devices.
Like most of the biggest media web-
sites, BuzzFeed reaches the majority of
its audience over mobile devices. The
company says that more than 70 per
cent of its content is viewed on mobile
devices, with more than 200m monthly
unique users visiting its website.
Mr Peretti says the site’s readers used
to be constrained to office hours and
would idly avoid working by emailing
each other amusing clickbait. He calls
this the “bored-at-work network”.
The growth of smartphones has made
BuzzFeed “prime time”, says Mr Peretti,
competing for the same eyeballs as the
television set in the corner of the living
room. The “bored-on-the-sofa net-
work” has become its new target.
“Now our prime time is the same as
primetime television is in the evenings
and the majority is happening on
mobile. Mobile is just a much better
platform for social content than desktop
was,” he says.
“Anytime people are bored or have an
in-between moment, they look at their
phone[s]. Social platforms like Buzz-
Feed are monetising their commercial
breaks.”
Many publications have looked to
reverse the inexorable decline in print
revenues by using Buzzfeed’s website as
inspiration, leading to copycat lists, pic-
tures of pets and exuberant headlines.
But Mr Peretti says that many news
websites, which rely on clumsy, slow-
loading banner ads designed for desk-
top machines, will struggle and have not
gone far enough in embracing mobile
channels. They “are feeling almost the
way newspapers felt”, he says.
“The thing that a lot of companies are
Financials
Sequoia partner exits amid sex abuse claims
HANNAH KUCHLER — SAN FRANCISCO
A partner at one of Silicon Valley’s top
venture capital firms has left the com-
pany after a civil lawsuit claimed he
had been responsible for years of sex-
ual abuse of a woman.
Michael Goguen, a partner at Sequoia
Capital for almost 20 years, denies the
charges filed by Amber Laurel Baptiste,
who alleges that he sexually, physically
and emotionally abused her for 13 years.
In the lawsuit filed in San Mateo
County Court, Ms Baptiste claims that
Mr Goguen breached a contract where
The Property Market
court documents have revealed. Last
week, a Hong Kong judge declined Mr
Pa and Ms Fung’s request that he order
HSBC to release the funds, which are
“extremely substantial”, according to
the ruling. One account alone contains
$87m, the documents show
Mr Pa has built a network of interests
in oil, minerals and infrastructure by
cultivating regimes regarded as among
the world’s most repressive and corrupt,
from Angola to North Korea — often
blazing a trail for Chinese state-owned
groups. His commercial empire, known
as the Queensway Group after the Hong
Kong address of its headquarters, has
Media. Monetising eyeballs
BuzzFeed founder Jonah Peretti says many news websites, which rely on banner ads for desktops, have not gone far enough in embracing mobile Camera Press
investing in as their digital solution now
is starting to feel like a legacy product
and so there’s going to be a need to really
update,” he says. “That’s going to put
some pressure on the banner advertis-
ing-driven, website-driven digital
extensions of, say, print publications.”
News providers will need to extend
their brands into apps — their own as
well as third-party platforms such as
Facebook.
Traditional outlets have begun to
embrace this model. In the past year,
many media groups have joined news
portals on Apple, Facebook and Google
‘Social platforms
like BuzzFeed are
monetising [people’s]
commercial breaks’
he agreed to pay her $40m in compen-
sation for the abuse.
She said he only paid her $10m and is
suing Mr Goguen for enforcement of
their previous agreement and compen-
satory damages.
Sequoia said in a statement that the
firm first learnt of the claims on Thurs-
day. “We understand that these allega-
tions of serious improprieties are
unproven and unrelated to Sequoia,” a
spokesman said.
“Nevertheless, we came to the deci-
sion that Mike’s departure was the
appropriate course of action.”
★ FINANCIAL TIMES
COMPANIES
amassed assets including the former
JPMorgan building opposite the New
York Stock Exchange.
In a 2014 Financial Times investiga-
tion, people who have had dealings with
Mr Pa — who goes by at least seven dif-
ferent names — claimed he had close
ties to the Chinese intelligence services.
However, last October, Mr Pa was
detained in Beijing as part of President
Xi Jinping’s campaign against corrup-
tion. It remains unclear whether he is
still in detention. He did not respond to
requests for comment. Ms Fung could
not be reached for comment.
HSBC told the court that it froze the
to make their sites more readable on
mobiles. Snapchat, the messaging site,
has also struck deals with publishers to
produce content and help it go viral.
Beyond spreading the reach of con-
tent, Mr Peretti says using apps and
other platforms has also meant Buzz-
Feed is “not right in the cross hairs” of
ad blocking.
BuzzFeed has also been a pioneer in
“native advertising”, whereby brands
pay for the media owner to produce con-
tent or attach their names to popular
posts.
Some media observers and the Adver-
tising Standards Authority, Britain’s
advertising watchdog, have been critical
of BuzzFeed for not making it suffi-
ciently clear to readers which content is
sponsored and which is its journalism.
The company has also come under
fire for deleting posts critical of some of
its advertisers including Pepsi and Uni-
lever, raising questions about the influ-
Mr Goguen serves on the boards of
start-ups in which Sequoia has invested
including life sciences company Cell-
works and cyber security company
Security Scorecard. Sequoia is replacing
him on these boards, according to a per-
son familiar with the matter. It is not
known if Mr Goguen received a sever-
ance payment.
In a post on LinkedIn, the networking
website, he wrote that he was leaving to
focus on “clearing my name and vigor-
ously pursuing justice” and would be fil-
ing detailed evidence against Ms Bap-
tiste yesterday, alleging extortion.
Ms Baptiste alleges she first met Mr
Goguen at a strip club in Texas and that
she submitted to his “constant sexual
abuse” because he promised to help her
break free from human traffickers who
had first brought her to the US.
She claims he gave her a sexually
transmitted disease and forced her to
drink alcohol and take drugs. She also
claims that in one incident, his abuse led
to her needing emergency medical aid.
Mr Goguen said that he had a long
relationship with Ms Baptiste that
ended badly. He said he had messages
from Ms Baptiste showing that she pur-
sued him “romantically”, and praising
his “kind and compassionate interac-
tions and treatment of her”.
accounts and began an investigation in
March 2015 after learning that Wash-
ington had placed Mr Pa under sanc-
tions. In April 2014, the US said Mr Pa
had cut “illicit diamond deals” in Robert
Mugabe’s Zimbabwe. Mr Pa has denied
the allegations.
The bank told the court it was trying
to establish whether its US employees
would be committing a crime by con-
ducting transactions with Mr Pa. It
added that its investigation had wid-
ened to examine allegations of “serious
financial crimes including corruption
involving foreign governments”.
The bank said it was “ unable to com-
ence its commercial department has
over its editorial content.
Mr Peretti insists that native ads are
an important part of the mix of content
where they add value — or at least do not
impede viewers.
After gaining reach with its viral cat
videos and lists, more recently the com-
pany has been looking to provide harder
hitting news, investigations and inter-
views. It has hired senior journalists
from mainstream news organisations
including the former deputy editor of
the Guardian to lead its UK operations.
“It is rare that news is a better busi-
ness than entertainment,” he admits.
“Entertainment tends to reach more
people [but] news is probably the high-
est-leverage way of having impact on
the world.”
This mix will be important for the
future of the company as it tries to
become a more established media
group, with backing from prominent
Property
China Vanke lines up Shenzhen Metro deal
PATTI WALDMEIR — SHANGHAI
China Vanke, the property developer
enmeshed in a high-profile takeover
battle, said it planned to acquire a stake
worth an estimated Rmb40bn-
Rmb60bn ($6.2bn-$9.3bn) in Shen-
zhen Metro as part of a long-promised
restructuring.
The Shenzhen-based home builder —
China’s largest by sales — announced the
deal in a statement to the Shenzhen
stock exchange on Sunday night. At the
same time, it reported that 2015 net
profit attributable to shareholders rose
15 per cent over the previous year to
Rmb18.1bn, while revenues increased
34 per cent to Rmb195.5bn.
“Urbanisation in China is far from
over,” Vanke said. “We saw a general
rebound in the transaction amount in
major cities in 2015; we saw a rapid
upsurge in property prices in certain cit-
ies; and we even saw land prices in indi-
vidual cities rise to an astounding level.”
Vanke added: “Yet we should not
neglect the fact that many more cities
were still in the process of clearing their
dwelling stock.”
Vanke, one of China’s best-known cor-
porate brands, also said it had signed a
memorandum of understanding with
Shenzhen Metro Group to take a stake in
ment on an ongoing legal matter”.
Queensway Group’s most prominent
company, a joint venture with Angola’s
state oil group called China Sonangol,
said the frozen accounts were Mr Pa and
Ms Fung’s “personal” facilities and
HSBC’s decision would therefore not
affect its business.
Mr Pa and Ms Fung had asked the
Hong Kong judge to give summary judg-
ment that HSBC was in breach of its con-
tractual obligations to them as deposi-
tors, and order the bank to release the
funds. He declined to do so but did not
rule on the merits of the matter. A full
trial could follow.
investors including venture capital firm
Andreessen Horowitz. Mr Peretti would
not confirm reports that put Buzzfeed’s
valuation at $1.5bn following a recent
fundraising round, which included
investment from NBCUniversal.
He also declines to comment on
reports that it has missed its revenue
growth targets.
Mr Peretti says the group does not
need to fundraise imminently, but adds
that an initial public offering would be
“one of a few options that we’d have” in
future.
“It’s not like a feather in my cap or
something that I would necessarily want
but could be the right path for the com-
pany,” he says.
A successful flotation would be, in
BuzzFeed parlance, quite the “win” for
Buzzfeed’s sophisticated model of data-
driven advertising as the company
moves beyond just serving freshman
pranks to bored workers.
the urban transit company, and would
fund the acquisition mainly by selling
new shares to Shenzhen Metro with any
shortfall to be covered in cash.
The size of the share sale and the stake
to be acquired have yet to be decided
and no formal deal has yet been signed,
Vanke said in its statement to the stock
exchange. “This co-operation is a major
breakthrough for Vanke’s asset restruc-
turing,’’ Vanke said on its official
WeChat account on Sunday. Shenzhen
Vanke said the
Shenzhen rail
system can be
expanded to carry
91 per cent of
public transport
Metro is profitable and has strategic
synergies with the developer, it added.
Announcing the group’s annual
results yesterday, Sun Jia, Vanke vice-
president, emphasised the “enormous
opportunities” for rail transit in the
urbanisation of Chinese cities.
Vanke said Shenzhen’s rail transit sys-
tem, which bears 28 per cent of the load
of public transport, could be expanded
to bear 91 per cent, to match Tokyo.
The transaction is pending approval
from the board and shareholders, and
Tuesday 15 March 2016
Insurance
Ageas agrees
€1.2bn payout
to former
shareholders
in failed Fortis
OLIVER RALPH
The insurance company formed out of
the rump of collapsed financial group
Fortis will pay €1.2bn to the bank’s
former shareholders, in one of the larg-
est European securities settlements.
Ageas, the Belgian insurer created from
what was left of the bank, reached
the compensation deal with investor
groups more than eight years after the
financial crisis.
Fortis collapsed after it bought part of
ABN Amro in 2007 and had to be res-
cued by the Belgian, Dutch and Luxem-
bourg governments. The banking oper-
ations were sold to BNP Paribas, leaving
Ageas to focus on insurance. The insur-
ance group also retained responsibility
for crisis-period claims against Fortis.
Anyone who owned Fortis shares
between February 2007 and October
2008 will be able to claim under the
agreement. That could amount to tens
of thousands of people. But priority will
be given to those who bought shares in
three particular periods and those who
actively instigated the legal action.
“There is no perfect solution for every
person and organisation,” Bart de Smet,
chief executive of Ageas, said. He hoped
the agreement would conclude the
‘Lifting uncertainty caused
by the legal action can only
lead to a more transparent
valuation for Ageas’
issue. “Lifting the uncertainty caused by
the legal action can only lead to a more
transparent valuation for Ageas.”
Ageas has not admitted any wrongdo-
ing, but the settlement refers to three
allegations of miscommunication by
Fortis management. They cover the
bank’s subprime exposure in 2007; the
solvency of the group after the ABN
Amro deal in mid-2008; and its commu-
nication with the Benelux governments
in September and October 2008.
Paul Koster of VEB, the Dutch inves-
tors’ group that brought the action, said:
“This is an important step for the
tens of thousands of shareholders
that we represent. The settlement
might seem complex, but we endeav-
oured to achieve a balanced result for all
shareholders.”
The company and the investor groups
were applying to the Dutch courts to
make the deal binding on all sharehold-
ers. That means it will probably be
another 18 months before any of the
shareholders receives compensation.
The settlement will be partly funded
by a €290m deal with Fortis’s insurers,
which had been contesting their liability
for claims in separate proceedings.
Ageas plans to take an €889m charge
in the first quarter of the year to cover
the deals announced yesterday.
“There is a reassuring message from
Ageas management and the four repre-
sentative bodies,” KBW analyst William
Hawkins wrote. “This agreement covers
90 per cent of shareholders currently
involved in litigation against Ageas.”
See Lex
Vanke’s Shenzhen-traded shares are
suspended. The company is scheduled
to hold an extraordinary shareholder
meeting on Thursday on its plan to keep
its Shenzhen shares halted until com-
pletion of the asset restructuring plan.
Vanke said in December that it was
planning a share sale, possibly as part of
its defence in a battle for control with its
largest shareholder, the privately held
Chinese insurer Baoneng Group.
Sunday’s announcement broke three
months of silence by Vanke, which sus-
pended trading in its shares in Hong
Kong in December saying it was working
on “an asset restructuring”. Shares
resumed trading in January and closed
up 10 per cent at HK$20.15 yesterday.
Baoneng has in recent months built a
stake in Vanke that made it the devel-
oper’s biggest shareholder. Wang Shi,
Vanke’s chairman, has attacked the
stakebuilding as something that could
“ruin” his company’s brand.
The battle has also drawn in acquisi-
tive mainland insurer Anbang, which
raised its shareholding in Vanke from
4.5 per cent to 7 per cent late last year.
Vanke has said it would welcome
Anbang as an investor.
Additional reporting by Yuan Yang in Hong
Kong and Jackie Cai in Beijing
See Lex
Tuesday 15 March 2016 ★ FINANCIAL TIMES 17

COMPANIES

Investment group at heart of jet scandal Red flags Telecoms

shakes up boards at Swedish businesses shadow

over bills
Industrivärden
wants to avoid the
concentration of
authority that
investors criticised
RICHARD MILNE — STOCKHOLM
The investment company at the heart of
Sweden’s corporate-jet scandal is shak-
ing up boardrooms at several of the
country’s leading industrial businesses
to avoid similar mishaps.
Industrivärden, a holding company
with controlling stakes in the likes of
truckmaker Volvo, Handelsbanken and
telecoms group Ericsson, came under
heavy scrutiny after its former chief
executive and chairman were caught up
in a scandal about the use of corporate
jets by family members.
Helena Stjernholm, the new chief
executive of Industrivärden, in an inter-
view with the Financial Times, says the
group had taken a lot of time picking
new directors for the boards of its eight
holdings to avoid the previous concen-
tration of power many outside investors
had criticised.
Asked what the lessons of the scandal
are, she says: “What is very clear, which
can be seen in the proposals for the
AGMs, is that a lot of new people will be
added to the board of directors in the
portfolio companies. This is a very con-
scious decision. We want to expand the
network.”
The scandal shook Industrivärden
‘A lot of new people will be
added. This is a conscious
decision. We want to
expand the network’
Helena Stjernholm, chief executive
and led to questions about the Swedish
model of active ownership. The revela-
tions of extensive use of SCA’s business
jet, the paper company partially owned
by Industrivärden, by executives, part-
ners and children shocked egalitarian
Sweden.
It also led to the ousting of the two
men at the top of Industrivärden and its
group of companies: Sverker Martin-
Löf, who was chairman of Indus-
trivärden, SCA and steelmaker SSAB as
well as vice-chairman of Han-
delsbanken and Ericsson, and Anders
Nyren, chief executive of Indus-
trivärden and chairman of Han-
delsbanken.
Ms Stjernholm was recruited from
private equity in the autumn and
declined to discuss events before she
joined Industrivärden, other than to say
“it has been a difficult year”.
She has said that she would be “impa-
tient” with the group’s holdings after
concerns from some outside sharehold-
ers that too-cosy relationships had
caused weak performance in some
companies.
“It’s a fantastic asset we have that we
are evergreen or very long term,” she
says. “Even if markets go up or down, we
can stay for the very long term. At the
same time, it’s key that just because
you’re so long-term you can’t sit back
and relax . . . We have to be on our toes
as owners.”
Another area where the chief execu-
tive cannot afford to relax is dealing
with intense scrutiny.
Ms Stjernholm, who was head of the
Lessons learnt
SSAB
17.7%
Skanska
24.5%
$0.6bn
$0.8bn
ICA Gruppen $0.8bn
10.5%
Ericsson
As at Dec 2015
FT graphic Source: Industrivärden 15.2%
20% Stockholm office at IK Investment Part-
Votes commanded ners, a Nordic-focused private equity
in Industrivärden group, says the public scrutiny — espe-
by Fredrik cially after the corporate-jet scandal —
Lundberg, its new has been the biggest challenge.
chairman, who is
the biggest single She says: “We had a discussion this
shareholder morning on a company we are looking
at. That is what I have done for many
30% years, and this is very comfortable for
me. The ways you look at the market,
Upper end of the
kind of stake where are the competitors, what do we
Industrivärden think about the future. That is my home
might take in turf.
companies worth “The biggest change — except for
SKr3bn-SKr10bn in learning to cope with being listed — is
any sector
being more of a public person.”
Her face has been plastered on the
covers of newspapers and magazines all
keen to know how she might shake up
one of Sweden’s most venerable holding
companies which, together with the
rival Wallenberg family investment
vehicle, controls more than half of
Stockholm’s stock exchange by market
capitalisation.
At the heart of the interest is her rela-
tionship with the new chairman of
Industrivärden, Fredrik Lundberg. Mr
Lundberg is the biggest single share-
holder of Industrivärden with 20 per
cent of the votes, and was accused by his
predecessor of using the jet scandal to
unleash a “power grab” and “coup”.
A senior Swedish business executive
says: “She is new to listed companies, so
the crucial question will be how much
room does Lundberg give her and how
much he tries to do himself.”
Ms Stjernholm herself gives little
away, saying simply that her relation-
O2 merger
Share of
ownership by votes
Handelsbanken CHRISTIAN OLIVER — BRUSSELS
DANIEL THOMAS — LONDON
10.3%
Telecoms consolidation in Austria
Market value
almost doubled some consumers’
smartphone bills in 2013 and 2014,
according to newly released data that
$2.6bn heap pressure on EU regulators to
ensure that a landmark merger does
not have the same effect in Britain.
EU competition authorities must decide
next month whether to approve the
SCA £10.5bn acquisition of O 2 by
29.6% Hutchison’s Three. Telecoms compa-
nies say they are locked in talks with
Brussels over possible remedies to
$0.2bn assuage the European Commission’s
concerns about the number of UK oper-
$2.1bn ators dropping from four to three.
Brussels is particularly concerned
because the merged entity would con-
trol more than 40 per cent of the mar-
ket. So Hutchison is offering 30 per cent
of its network capacity to rivals and to
divest O2’s 50 per cent stake in Tesco
Mobile, the Financial Times has learnt.
Such 4-to-3 deals are one of the big-
gest challenges facing Margrethe
Vestager, EU competition commis-
sioner. Companies argue that increased
scale is vital to upgrade infrastructure,
$1.4bn but she has warned that reduced com-
petition risks triggering higher prices.
Volvo
Yesterday’s data from Austrian com-
21.3% petition and telecoms authorities show
that existing customers faced average
price rises of 14 per cent to 20 per cent in
$1.3bn the two years after the commission
approved the 4-to-3 deal between
Hutchison’s H3G Austria and Orange
Austria in late 2012.
Vienna’s telecoms regulator esti-
mated that smartphone bills in 2013
and 2014 were 50 per cent to 90 per cent
higher. Traditional phone users, with-
Sandvik out data services, received bills 20 per
cent to 31 per cent higher.
11.8% The figures show how such deals can
affect consumers and flags up the
ship with her chairman “works well” Industrivärden SKr3bn ($359m) and SKr10bn in any importance of getting the timing right
with a “very clear” separation of tasks. chief Helena sector. on remedies. Phone bills did not fall
But Industrivärden’s structure com- Stjernholm, She also suggests that being seen as a until the remedies took effect in 2015
plicates matters. Its main shareholding below, says the long-term owner does not mean Indus- and new mobile operators entered the
is in Handelsbanken, one of Sweden’s company has trivärden cannot sell some of its hold- market. At that point, Hutchison said
biggest banks. But Handelsbanken in taken much ings. prices fell to pre-merger levels.
turn — through various foundations as time picking “This impatience is balancing the long Hutchison said that those remedies
well as directly — owns nearly a third of new directors term with more the short term,” she had proved highly effective.
Industrivärden. Some outside investors for the boards says. “[Prices] are now 10 per cent below
have called for that cross-holding to be of its eight “That doesn’t mean we need to sell all 2011 levels as competition in the coun-
unwound as it blurs the line of responsi- holdings the companies. Yes, we might sell a com- try has intensified. Both reports clearly
bility as to who controls whom among pany or two over time but we have no indicate that competition on the Aus-
the two companies. hurry and we will do it for the right rea- trian market is intense and the agreed
Ms Stjernholm is reluctant to be sons.” remedies work, but that they might take
drawn into the debate, merely noting One company that some bankers in time to deliver results,” said Jan Tri-
that Industrivärden has no plans to sell Stockholm see as a potential divestment onow, chief executive of H3G Austria.
out of the bank, which is one of the best is Ericsson, the only holding Indus- Austrian authorities cautioned that
performing lenders in Europe since the trivärden shares with the Wallenberg some retail prices were still above pre-
financial crisis thanks to its conserva- family. But Ms Stjernholm refuses to be merger levels.
tive approach. drawn on the matter, other than to say EU officials say they have learnt the
But Industrivärden’s new chief execu- that Ericsson holds a very strong posi- lessons of Austria and are now seeking
tive is looking to shake up the group in tion in the telecoms equipment indus- to ensure that remedies are effective
other ways. Given her background, try. from the outset of any approved deal.
many had expected her to look at In an attempt to improve its balance In her early telecoms cases, Ms
unlisted companies, but she says the sheet, Industrivärden decided to cut its Vestager offered signs that she favoured
group’s strength remains in owning dividend last month and reduce its tar- remedies that brought a new market
stakes of listed groups. geted range for net debt as a proportion entrant. Last May, she cleared Orange’s
Instead — partly due to opportunities of assets to 0-10 per cent from its cur- €3.4bn acquisition of Jazztel, the Span-
and partly because of the weak state of rent 15 per cent. ish cable group, but demanded that
Industrivärden’s balance sheet — it will “If you want to be a good and active Orange make concessions to allow a new
look at smaller, less well-known busi- owner, you need to have a good bal- participant to enter the Spanish market.
nesses to go alongside its current hold- ance sheet,” she says. By contrast, she was on track to stop a
ings of eight Swedish heavyweights “We don’t want to get stuck if we Danish telecoms merger, where it did
including retailer Ica, construction would need to inject fresh not seem credible to build up a new
group Skanska, and engineering com- equity, either if the company competitor. That deal collapsed in Sep-
pany Sandvik. wants to do a proactive tember after it became clear that it was
Ms Stjernholm says the company add-on acquisition or if it is set to be blocked in Brussels.
could buy up to 30 per cent of the in trouble. Financial flexi- Ms Vestager’s tough line on 4-to-3
capital — more than usual — in com- bility is something we are acquisitions is in stark contrast to her
panies worth between about focused on.” predecessor, Joaquín Almunia.

Legal Notices Contracts & Tenders

Industrials

Hongqiao defies global aluminium downturn

YUAN YANG — HONG KONG
LUCY HORNBY — BEIJING
The world’s largest aluminium pro-
ducer expects to increase its capacity
this year, in spite of a global glut that
has depressed utilisation rates and
weighed on prices for the lightweight
metal.
China Hongqiao, the world’s largest alu-
minium producer by capacity, yester-
day said it planned to increase capacity
from 5.19m tonnes at the end of last year
to 6m tonnes by the end of 2016,
depending on market conditions.
Zhang Bo, chief executive, said: “If
demand is good, we will stick with the
plan. If not, we can slow down new
capacity expansion or even suspend it.”
The group added it would spend up to
Rmb15bn ($2.3bn) in expanding capac-
ity and retrofitting coal-fired power
plants to meet China’s stricter emissions
requirements.
Better known in the industry as Shan-
dong Weiqiao Aluminium & Electricity,
Hongqiao reported 2015 sales up 39 per
cent year on year to 4.12m tonnes, in
spite of production cuts at the end of the
year as aluminium margins deterio-
rated.
Fuelled by cheap power and the need
to keep producing in order to repay
loans, Chinese aluminium smelters
have flooded international markets,
forcing western producers to cut output
and leading to dumping allegations in
the US.
China now accounts for more than
half of the world’s production, and its
debt-laden smelters’ ability to continue
producing is the main factor affecting
when the global supply glut will tighten.
The lightweight
metal is trading at
$1,550 per tonne,
having recovered
from a seven-year
low late last year
The lightweight metal is trading at
$1,550 per tonne, having recovered
from a seven-year low late last year.
Hongqiao is one of several Chinese
smelters that have set up a company to
buy excess inventory, which has helped
bolster prices but done little to solve the
underlying oversupply in the industry.
Chinese exporters, led by aluminium
Businesses
extrusion producer Zhongwang, have
also attracted short-sellers suspicious of
their reported margins. Hongqiao’s
For Sale
reported margin fell from 26 per cent in
2014 to 20 per cent last year, and Mr
Zhang said he expected margins to stay
stable this year.
Hong Kong-listed Hongqiao reported
a 31 per cent drop in net profit to Business for Sale, Business Opportunities,
Rmb3.65bn, in spite of a 22 per cent rise Business Services,
in revenues. Gross current liabilities Business Wanted, Franchises
soared from Rmb28bn to Rmb42bn, Runs Daily
.............................................................................................................................
and the group booked Rmb1bn in for- Classified Business Advertising
eign exchange losses. UK: +44 20 7873 4000 | Email:
China Hongqiao shares closed up 0.4 acs.emea@ft.com
per cent at HK$4.90 yesterday.
18 FINANCIAL TIMES Tuesday 15 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 $

-0.08% -0.448% -0.486% -2.57% -1.74%

No change
0.17% 0.17% 0.57% 0.67% 1.74% 1.17% 0.15% 0.070%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Feb 15 - Mar 14 Index All World Feb 15 - Mar 14 Index All World Feb 15 - Mar 14 Index All World Feb 15 - Mar 14 Index All World Feb 15 - Mar 14 Index All World Feb 15 - Mar 14 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
6,139.79 17,233.75
2,020.57 13,462.15 9,990.26 1,972.27
1,829.08 12,087.44 5,536.97 14,952.61 1,835.28
8,967.51
Day -0.08% Month 8.39% Year -1.56% Day -0.44% Month 8.76% Year -8.59% Day 0.57% Month 8.13% Year -8.44% Day 1.62% Month 2.16% Year NaN% Day 1.74% Month 15.26% Year -10.49% Day 0.04% Month 7.46% Year -0.68%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
4,756.54 1,356.49 9,142.70 20,435.34 2,847.06
44,626.94
4,266.84 1,232.09 7,920.80 18,319.58 2,539.95
42,416.44
Day 0.17% Month 9.69% Year -2.34% Day -0.24% Month 5.22% Year 1.42% Day 0.67% Month 10.08% Year -14.10% Day 0.57% Month 15.43% Year -17.14% Day 1.17% Month 11.55% Year -14.22% Day 0.64% Month 12.09% Year -15.34%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
49,464.62 4,506.59 18,981.77
17,242.76 24,804.28
2,859.50
3,995.06 2,763.49
15,660.18 39,808.05 16,514.87 22,951.83
Day 0.17% Month 7.99% Year -2.81% Day -0.35% Month 24.30% Year 1.82% Day 0.31% Month 12.80% Year -10.06% Day -0.03% Month 14.94% Year -16.43% Day 1.75% Month 3.47% Year -15.22% Day 0.35% Month 7.91% Year -12.98%

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 12715.13 13051.54 Cyprus CSE M&P Gen 69.36 68.47 Italy FTSE Italia All-Share 20615.21 20585.20 Philippines Manila Comp 7112.89 7098.64 Taiwan Weighted Pr 8747.90 8706.14 Cross-Border DJ Global Titans ($) 228.79 228.63
Australia All Ordinaries 5242.40 5224.80 Czech Republic
PX 913.94 907.56 FTSE Italia Mid Cap 31473.28 31079.32 Poland Wig 47255.34 47182.13 Thailand Bangkok SET 1394.27 1393.41 Euro Stoxx 50 (Eur) 3090.37 3073.80
S&P/ASX 200 5185.50 5166.40 Denmark OMXC Copenahgen 20 987.59 974.23 FTSE MIB 18981.77 18987.75 Portugal PSI 20 5080.87 5003.42 Turkey BIST 100 79380.18 79024.69 Euronext 100 ID 878.53 874.66
S&P/ASX 200 Res 2561.30 2556.20 Egypt EGX 30 6563.83 6563.65 Japan 2nd Section 4351.32 4308.94 PSI General 2435.86 2406.34 UAE Abu Dhabi General Index 4498.57 4462.00 FTSE 4Good Global ($) 5228.87 5223.73
Austria ATX 2323.53 2284.02 Estonia OMX Tallinn 956.24 956.21 Nikkei 225 17233.75 16938.87 Romania BET Index 6660.80 6607.09 UK FT 30 2810.50 2762.00 FTSE All World 259.06 258.68
Belgium BEL 20 3446.87 3425.80 Finland OMX Helsinki General 8161.77 8012.40 S&P Topix 150 1132.71 1115.98 Russia Micex Index 1865.31 1876.54 FTSE 100 6174.57 6139.79 FTSE E300 1356.49 1347.47
BEL Mid 5615.42 5549.98 France CAC 40 4506.59 4492.79 Topix 1379.95 1359.32 RTX 830.54 845.59 FTSE 4Good UK 5570.84 5538.25 FTSE Eurotop 100 2670.12 2655.18
Brazil Bovespa 49464.62 49638.68 SBF 120 3555.08 3540.22 Jordan Amman SE 2123.51 2122.56 Saudi-Arabia TADAWUL All Share Index 6288.30 6369.31 FTSE All Share 3386.05 3367.52 FTSE Global 100 ($) 1270.57 1269.60
Canada S&P/TSX 60 791.73 Germany
794.08 M-DAX 20054.56 19815.05 Kenya NSE 20 3953.13 3958.82 Singapore FTSE Straits Times 2847.06 2828.86 FTSE techMARK 100 3782.89 3765.02 FTSE Gold Min ($) 1344.28 1351.02
S&P/TSX Comp 13462.15 13522.00 TecDAX 1644.78 1618.53 Kuwait KSX Market Index 5240.19 5288.54 Slovakia SAX 322.47 324.63 USA DJ Composite 6097.00 6093.65 FTSE Latibex Top (Eur) 2448.60 2466.20
S&P/TSX Met & Min 448.58 452.08 XETRA Dax 9990.26 9831.13 Latvia OMX Riga 636.83 634.97 Slovenia SBI TOP 717.39 711.87 DJ Industrial 17242.76 17213.31 FTSE Multinationals ($) 1449.30 1424.36
Chile IGPA Gen 18851.86 18815.73
Greece Athens Gen 566.20 564.12 Lithuania OMX Vilnius 502.70 501.01 South Africa FTSE/JSE All Share 52471.72 51739.83 DJ Transport 7686.14 7693.09 FTSE World ($) 459.77 459.22
China FTSE A200 7900.80 7801.58 FTSE/ASE 20 154.60 154.63 Luxembourg LuxX 1456.76 1439.11 FTSE/JSE Res 20 30293.24 29869.59 DJ Utilities 646.64 647.14 FTSEurofirst 100 (Eur) 3822.67 3801.58
FTSE B35 9962.92 9814.53
Hong Kong Hang Seng 20435.34 20199.60 Malaysia FTSE Bursa KLCI 1700.31 1696.54 FTSE/JSE Top 40 46555.55 45761.25 Nasdaq 100 4373.28 4361.83 FTSEurofirst 80 (Eur) 4179.24 4149.38
Shanghai A 2992.38 2940.94 HS China Enterprise 8686.27 8561.37 Mexico IPC 44626.94 44735.50 South Korea Kospi 1972.27 1971.41 Nasdaq Cmp 4756.54 4748.47 MSCI ACWI Fr ($) 391.75 384.94
Shanghai B 358.64 351.44 HSCC Red Chip 3710.58 3694.44 Morocco MASI 9192.11 9195.76 Kospi 200 242.15 241.97 NYSE Comp 10079.98 10104.19 MSCI All World ($) 1626.17 1597.09
Shanghai Comp 2859.50 2810.31
Hungary Bux 25608.69 25254.65 Netherlands AEX 444.08 441.75 Spain IBEX 35 9142.70 9090.60 S&P 500 2020.57 2022.19 MSCI Europe (Eur) 1346.88 1315.25
Shenzhen A 1825.02 1762.06
India BSE Sensex 24804.28 24717.99 AEX All Share 676.63 673.21 Sri Lanka CSE All Share 5979.43 6019.95 Wilshire 5000 20785.08 20802.97 MSCI Pacific ($) 2201.28 2184.41
Shenzhen B 1100.80 1084.78 S&P CNX 500 6282.70 6258.45 New Zealand NZX 50 6566.83 6515.41 Sweden OMX Stockholm 30 1424.19 1418.39 Venezuela IBC 15891.18 16122.71 S&P Euro (Eur) 1392.04 1382.01
Colombia COLCAP 1302.71 1299.45
Indonesia Jakarta Comp 4793.20 4811.04 Nigeria SE All Share 25988.40 25923.77 OMX Stockholm AS 492.47 490.21 Vietnam VNI 577.98 577.26 S&P Europe 350 (Eur) 1392.50 1383.41
Croatia CROBEX 1615.90 1613.45
Ireland ISEQ Overall 6305.56 6341.75 Norway Oslo All Share 636.97 632.73 Switzerland SMI Index 8018.36 7998.43 S&P Global 1200 ($) 1803.46 1801.19
Israel Tel Aviv 100 12.79 12.70 Pakistan KSE 100 32738.56 32738.56 Stoxx 50 (Eur) 2879.77 2864.88
(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 14 %Chg %Chg Mar 14 %Chg %Chg Mar 14 %Chg %Chg Mar 14 %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 15.2 102.63 0.37 Bp 120.2 345.45 -2.02 Intesa Sanpaolo 525.9 2.73 0.00 Mitsubishi Ufj Fin,. 680.6 578.40 24.10 Whitbread 3932.00 5.1 -11.2 Cairn Energy 196.80 14.8 24.5 Lakehouse 54.00 25.0 -46.2 General Industrials 4587.94 2.8 4.4
Hospira 11.8 89.95 -0.01 Hsbc Holdings 117.7 452.55 0.54 Santander 484.2 4.51 0.06 Toyota Motor 512.1 6200.00 60.00 Hammerson 577.00 4.7 -4.3 Savills 737.50 11.1 -16.8 Hill & Smith Holdings 863.00 16.8 16.4 Real Estate Investment Trusts 2993.48 2.7 -8.1
Starwood Hotels & Resorts Worldwide 11.7 75.83 5.41 Glencore 110.0 147.90 6.41 Unicredit 372.5 4.05 0.00 Sumitomo Mitsui Fin,. 445.0 3720.00 85.00 Aviva 482.70 4.5 -6.5 Nmc Health 967.50 9.7 15.6 Exillon Energy 79.38 8.7 -25.6 Construction & Materials 5086.43 2.7 -1.7
Facebook Class A 11.1 110.01 0.60 Astrazeneca 107.4 4052.00 31.12 Bbva 352.8 6.54 0.03 Softbank . 380.0 5905.00 110.00 Intercontinental Hotels 2850.00 4.4 5.4 Marshalls 334.40 8.7 0.3 Charles Taylor 255.00 8.5 -1.9 Household Goods 16374.57 2.5 -0.7
Amazon.com 9.7 575.60 5.99 Shire 107.1 3830.00 8.14 Daimler Ag Na O.n. 303.3 65.09 0.00 Mizuho Fin,. 330.0 185.20 2.50 Dcc 5860.00 4.1 3.9 Entertainment One 156.50 6.2 -6.3 Chesnara 305.25 8.4 -8.9 Electricity 8557.66 2.4 -2.9
Netflix 7.7 98.18 0.52 Imperial Brands 102.7 3752.00 -0.50 Total 275.9 42.08 -0.27 Fast Retailing Co., 300.0 36390.00 1800.00 Taylor Wimpey 183.00 4.0 -9.9 Smith (ds) 410.80 5.9 3.2 Vitec (the) 578.50 7.7 -4.3 Tobacco 49441.57 2.3 7.3
Bank Of America 7.1 13.62 -0.17 Glaxosmithkline 99.9 1410.00 13.19 Inditex 269.6 29.85 0.24 Sony 269.5 2798.50 46.00 Intu Properties 310.60 4.0 -2.1 Auto Trader 380.00 5.8 -14.5 Lavendon 148.75 6.8 0.6 Life Insurance 7184.48 2.0 -8.2
Microsoft 6.4 53.29 0.22 Royal Dutch Shell 97.0 1675.50 -14.73 Telefonica 268.4 10.16 -0.02 Japan Tobacco . 199.4 4585.00 -61.00 British Land 699.00 3.8 -11.0 Renishaw 1857.00 5.1 -1.2 Centaur Media 59.50 6.6 -14.5 Real Estate & Investment Servic 2676.66 1.9 -12.9
Procter & Gamble 5.6 80.95 -0.80 Rio Tinto 96.9 2001.50 1.50 Bnp Paribas Act.a 266.9 47.75 -0.95 Nippon Telegraph And Telephone 187.5 4844.00 -7.00 Land Securities 1076.00 3.4 -8.6 John Laing 223.40 4.7 6.4 Mj Gleeson 577.00 6.1 8.1 Gas Water & Multiutilities 6019.57 1.6 1.3
Gilead Sciences 5.6 90.97 1.32 British American Tobacco 88.8 4101.00 22.61 Nestle N 265.7 65.35 0.00 Kddi 175.4 3015.00 -2.00 Smiths 1079.00 3.1 14.8 Uk Commercial Property Trust Ld 83.20 4.7 -2.4 Fdm (holdings) 510.00 6.0 -2.4 Media 7369.05 1.6 -0.7
Rsa Insurance 451.70 2.9 6.1 Euromoney Institutional Investor 950.00 4.6 -4.5 Stv 440.00 5.9 -12.6 Pharmaceuticals & Biotech. 12045.92 1.6 -6.7
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
Reckitt Benckiser 6637.00 2.9 5.4 St.modwen Properties 313.20 4.5 -24.5 Shanks 85.75 5.6 -11.4 Beverages 15789.39 0.9 2.4
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Starwood Hotels & Resorts Worldwide 75.83 5.41 7.68 Aberdeen Asset Management 289.20 18.90 6.99 Accor 39.17 1.17 3.08 Thb Dai-ichi Life Insurance , 1497.50 119.00 8.63 Anglo American 546.50 -14.0 80.3 Wh Smith 1798.00 -78.3 -78.6 Brammer 165.00 -24.0 -9.4 Mining 9019.74 -10.3 22.8
Tripadvisor 67.24 3.54 5.56 Nmc Health 967.50 62.50 6.88 Carrefour 24.51 0.66 2.77 Pioneer 275.00 18.00 7.00 Glencore 147.90 -13.3 63.7 Restaurant 400.00 -24.8 -41.4 Cambian 65.75 -19.6 -53.0 Industrial Metals 911.99 -5.0 26.0
Freeport-mcmoran 10.05 0.50 5.24 St.modwen Properties 313.20 16.10 5.42 Arcelormittal 4.84 0.12 2.52 Fast Retailing Co., 36390.00 1800.00 5.20 Rio Tinto 2001.50 -10.5 1.1 Vedanta Resources 328.50 -13.8 19.4 Ferrexpo 35.50 -18.4 65.1 Aerospace & Defense 4256.45 -3.0 2.6
The Mosaic 29.88 1.18 4.09 Renishaw 1857.00 91.00 5.15 Alstom 22.40 0.53 2.40 Ms&ad Insurance Holdings,. 3216.00 155.00 5.06 Ashtead 815.00 -10.0 -28.0 G4s 187.00 -12.2 -17.1 Tribal 44.63 -15.1 87.5 Oil Equipment & Services 14581.83 -2.5 12.3
Williams Companies 16.66 0.65 4.06 Anglo American 546.50 24.32 4.72 Mapfre 2.05 0.05 2.30 T&d Holdings, . 1173.50 54.00 4.82 Antofagasta 537.50 -9.9 13.8 Acacia Mining 255.60 -11.5 42.0 Lonmin 164.75 -12.3 97.4 Automobiles & Parts 6640.11 -2.2 -7.8
Bhp Billiton 816.20 -9.1 7.4 Onesavings Bank 245.90 -10.8 -26.6 Carpetright 325.50 -10.6 -32.7 Oil & Gas Producers 6049.69 -2.0 6.8
Downs Downs Downs Downs
Direct Line Insurance 366.60 -7.3 -10.0 Ladbrokes 114.80 -7.8 -1.6 Gem Diamonds 99.00 -8.3 -24.7 Industrial Transportation 2623.20 -1.8 0.9
Chesapeake Energy 4.42 -0.28 -5.96 Stagecoach 258.60 -14.80 -5.41 Grifols Sa 14.99 -14.40 -48.99 Nippon Kayaku Co., 1115.00 -101.00 -8.31
Provident Fin 3000.00 -6.2 -10.9 Ncc 253.90 -7.4 -15.4 Petra Diamonds 108.50 -8.2 26.7 Technology Hardware & Equip. 1222.95 -1.7 -4.2
Southwestern Energy 7.56 -0.44 -5.50 Acacia Mining 255.60 -10.00 -3.77 Safran 55.52 -3.71 -6.26 Tokyo Dome 483.00 -28.00 -5.48
Rolls-royce Holdings 681.50 -5.6 18.5 Shawbrook 284.30 -7.0 -18.8 Raven Russia Ltd 30.75 -8.2 -24.1 Banks 3251.29 -1.6 -14.9
Baker Hughes 44.05 -1.74 -3.80 Provident Fin 3000.00 -94.00 -3.04 Bnp Paribas Act.a 47.75 -0.95 -1.95 Japan Tobacco . 4585.00 -61.00 -1.31
Bp 345.45 -5.2 -2.2 Poundland 160.90 -6.8 -22.2 Kaz Minerals 174.75 -7.3 70.9 Chemicals 10352.86 -1.4 -3.9
Dentsply Sirona 61.17 -2.32 -3.65 Ao World 175.10 -4.90 -2.72 Natixis 5.02 -0.06 -1.16 Sharp 155.00 -2.00 -1.27
Barclays 163.25 -4.6 -24.3 Mitchells & Butlers 272.90 -6.8 -20.9 Flybe 63.25 -7.0 -30.9 Nonlife Insurance 2431.54 -1.4 -1.1
Tesoro 85.68 -3.18 -3.58 Ladbrokes 114.80 -3.18 -2.63 Vi 64.60 -0.75 -1.15 Tokyo Gas Co., 511.30 -4.50 -0.87
Admiral 1876.00 -4.5 13.1 Aldermore 211.80 -6.7 -9.0 Hunting 383.00 -6.6 25.4 Fixed Line Telecommunication 5219.35 -0.9 -2.0
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 14 Currency Mid Change Mid Change Mid Change Mar 14 Currency Mid Change Mid Change Mid Change Mar 14 Currency Mid Change Mid Change Mid Change Mar 14 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 14.9105 -0.2045 16.5611 -0.3056 21.3578 -0.3989 Indonesia Indonesian Rupiah 13060.0000 -10.0000 14505.8089 -78.9769 18707.1489 -105.9337 Poland Polish Zloty 3.8556 0.0062 4.2824 -0.0131 5.5227 -0.0181 ..Three Month 0.6982 0.0034 0.7752 0.0002 - -
Australia Australian Dollar 1.3309 0.0066 1.4782 0.0005 1.9063 0.0002 Israel Israeli Shekel 3.8890 0.0125 4.3195 -0.0063 5.5706 -0.0093 Romania Romanian Leu 4.0226 0.0178 4.4679 -0.0010 5.7620 -0.0026 ..One Year 0.6986 0.0034 0.7746 0.0002 - -
Bahrain Bahrainin Dinar 0.3771 0.0000 0.4188 -0.0019 0.5401 -0.0026 Japan Japanese Yen 113.5950 0.0800 126.1704 -0.5007 162.7132 -0.6812 Russia Russian Ruble 70.8050 0.7588 78.6434 0.4790 101.4209 0.5958 United States United States Dollar - - 1.1107 -0.0052 1.4324 -0.0070
Bolivia Bolivian Boliviano 6.8400 - 7.5972 -0.0355 9.7976 -0.0479 ..One Month 113.5949 0.0798 126.1704 -0.5007 162.7131 -0.6815 Saudi Arabia Saudi Riyal 3.7502 -0.0003 4.1654 -0.0198 5.3718 -0.0267 ..One Month - - 1.1106 -0.3287 1.4324 -0.0070
Brazil Brazilian Real 3.6260 0.0060 4.0274 -0.0121 5.1939 -0.0168 ..Three Month 113.5947 0.0794 126.1704 -0.5006 162.7129 -0.6820 Singapore Singapore Dollar 1.3765 0.0042 1.5289 -0.0024 1.9717 -0.0035 ..Three Month - - 1.1104 -0.3287 1.4324 -0.0070
Canada Canadian Dollar 1.3291 0.0048 1.4762 -0.0015 1.9038 -0.0024 ..One Year 113.5933 0.0766 126.1703 -0.5009 162.7131 -0.6833 South Africa South African Rand 15.5598 0.3228 17.2823 0.2794 22.2878 0.3555 ..One Year - - 1.1091 -0.3287 1.4329 -0.0070
Chile Chilean Peso 682.4850 -1.3200 758.0387 -5.0173 977.5902 -6.6843 Kenya Kenyan Shilling 101.5000 0.0500 112.7364 -0.4713 145.3884 -0.6396 South Korea South Korean Won 1186.1500 -7.0500 1317.4614 -14.0270 1699.0390 -18.4628 Venezuela Venezuelan Bolivar Fuerte 6.3050 0.0195 7.0030 -0.0110 9.0313 -0.0161
China Chinese Yuan 6.4952 -0.0038 7.2142 -0.0380 9.3037 -0.0510 Kuwait Kuwaiti Dinar 0.3008 0.0002 0.3341 -0.0014 0.4309 -0.0019 Sweden Swedish Krona 8.3321 -0.0130 9.2546 -0.0577 11.9350 -0.0770 Vietnam Vietnamese Dong 22295.0000 8.0000 24763.2019 -106.8521 31935.4138 -144.7610
Colombia Colombian Peso 3178.7200 8.0700 3530.6172 -7.5025 4553.1929 -10.6664 Malaysia Malaysian Ringgit 4.1040 0.0155 4.5583 -0.0040 5.8786 -0.0065 Switzerland Swiss Franc 0.9857 0.0020 1.0949 -0.0029 1.4120 -0.0040 European Union Euro 0.9003 0.0042 - - 1.2896 -0.0003
Costa Rica Costa Rican Colon 534.0800 0.0100 593.2047 -2.7624 765.0151 -3.7296 Mexico Mexican Peson 17.7758 0.0596 19.7436 -0.0258 25.4619 -0.0388 Taiwan New Taiwan Dollar 32.7630 -0.0520 36.3900 -0.2282 46.9297 -0.3045 ..One Month 0.9002 0.0042 - - 1.2896 -0.0003
Czech Republic Czech Koruna 24.3509 0.1036 27.0466 -0.0109 34.8801 -0.0216 New Zealand New Zealand Dollar 1.4948 0.0108 1.6602 0.0042 2.1411 0.0050 Thailand Thai Baht 35.0825 -0.0725 38.9663 -0.2631 50.2521 -0.3503 ..Three Month 0.9000 0.0042 - - 1.2894 -0.0003
Denmark Danish Krone 6.7141 0.0299 7.4574 -0.0015 9.6173 -0.0040 Nigeria Nigerian Naira 199.0500 - 221.0856 -1.0337 285.1188 -1.3954 Tunisia Tunisian Dinar 2.0228 0.0065 2.2467 -0.0033 2.8974 -0.0048 ..One Year 0.8988 0.0042 - - 1.2888 -0.0003
Egypt Egyptian Pound 8.9506 1.2969 9.9415 1.4007 12.8208 1.8040 Norway Norwegian Krone 8.4719 0.0369 9.4098 -0.0028 12.1351 -0.0063 Turkey Turkish Lira 2.8766 0.0020 3.1950 -0.0127 4.1204 -0.0173
Hong Kong Hong Kong Dollar 7.7576 -0.0021 8.6164 -0.0426 11.1120 -0.0573 Pakistan Pakistani Rupee 104.6250 -0.0400 116.2074 -0.5880 149.8646 -0.7910 United Arab Emirates UAE Dirham 3.6731 0.0000 4.0797 -0.0190 5.2613 -0.0257
Hungary Hungarian Forint 278.9323 0.7442 309.8111 -0.6181 399.5420 -0.8842 Peru Peruvian Nuevo Sol 3.3715 -0.0106 3.7447 -0.0293 4.8293 -0.0388 United Kingdom Pound Sterling 0.6981 0.0034 0.7754 0.0002 - -
India Indian Rupee 67.1075 -0.0025 74.5366 -0.3513 96.1246 -0.4740 Philippines Philippine Peso 46.5850 -0.0275 51.7421 -0.2726 66.7283 -0.3662 ..One Month 0.6981 0.0034 0.7753 0.0002 - -
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 14 Mar 11 Mar 10 Mar 09 Mar 08 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 2826.40 2810.50 2762.00 2814.80 2814.70 0.00 2875.90 2547.10 Industrial Metals & 24.61 Forestry & Paper 0.00 Tech Hardware & Eq -3.29 FTSE 100 Price Change FTSE 100 Price Change
Mar 14 chge% Index Mar 11 Mar 10 ago yield% Cover ratio adj Return FT 30 Div Yield 1.77 1.78 1.81 1.78 1.79 0.00 3.93 2.74 Mining 21.54 Industrial Transport -0.12 Electricity -3.41 3I Group PLC 439.80 1.90 Land Securities Group PLC 1076 25.00
FTSE 100 (100) 6174.57 0.57 6203.58 6139.79 6036.70 6740.58 4.07 1.02 24.14 55.93 4883.39 P/E Ratio net 25.27 25.04 24.64 25.07 24.88 0.00 19.44 14.26 Food & Drug Retailer 16.53 Electronic & Elec Eq -0.77 Equity Invest Instr -4.41 Aberdeen Asset Management PLC 289.20 18.90 Legal & General Group PLC 243.60 1.50
FTSE 250 (250) 16693.10 0.59 16771.54 16595.25 16385.16 17109.47 2.71 2.02 18.33 44.27 11649.80 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Basic Materials 16.28 Nonlife Insurance -0.89 FTSE 250 Index -4.79 Admiral Group PLC 1876 -39.00 Lloyds Banking Group PLC 70.31 0.16
FTSE 250 ex Inv Co (208) 18167.59 0.65 18252.96 18050.67 17817.54 18556.37 2.73 2.13 17.20 40.52 12922.85 FT 30 hourly changes Oil Equipment & Serv 11.72 Food Producers -1.36 Health Care Eq & Srv -4.89 Anglo American PLC 546.50 30.90 London Stock Exchange Group PLC 2900 31.00
FTSE 350 (350) 3437.03 0.57 3453.18 3417.53 3362.59 3712.03 3.83 1.14 22.88 27.32 5472.65 8 9 10 11 12 13 14 15 16 High Low Oil & Gas 7.30 FTSE 100 Index -1.64 Chemicals -4.98 Antofagasta PLC 537.50 13.50 Marks And Spencer Group PLC 408.80 10.70
FTSE 350 ex Investment Trusts (308) 3415.57 0.58 3431.62 3395.91 3340.91 3691.08 3.86 1.14 22.73 27.36 2800.42 2810.5 2825.4 2825.3 2830.6 2833.6 2825.2 2824 2829 2825.5 2837.9 2810.5 Oil & Gas Producers 7.12 Media -1.68 Support Services -5.34 Arm Holdings PLC 989.00 6.00 Merlin Entertainments PLC 458.10 6.20
FTSE 350 Higher Yield (106) 3157.25 0.44 3172.08 3143.43 3091.32 3531.07 5.45 0.78 23.56 38.68 5179.05 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Tobacco 6.96 Industrials -2.16 General Retailers -6.37 Ashtead Group PLC 815.00 30.00 Mondi PLC 1345 11.00
FTSE 350 Lower Yield (244) 3389.69 0.71 3405.62 3365.66 3313.40 3531.06 2.07 2.17 22.18 11.24 3600.09 Personal Goods 6.35 FTSE All{HY-}Share Index -2.23 Financial Services -6.70 Associated British Foods PLC 3370 16.00 National Grid PLC 967.50 2.00
FTSE SmallCap (286) 4498.80 -0.01 4519.94 4499.28 4458.23 4537.01 2.95 1.38 24.51 21.18 6197.54 Leisure Goods 5.03 Household Goods & Ho -2.46 Health Care -7.05
FTSE SmallCap ex Inv Co (152) 4108.34 -0.01 4127.65 4108.57 4069.92 3978.58 2.90 1.81 19.11 15.27 5937.13 FX: EFFECTIVE INDICES Industrial Eng 4.75 Construct & Material -2.53 Travel & Leisure -7.23
Astrazeneca PLC 4052 8.50 Next PLC 6690 125.00
Aviva PLC 482.70 -12.70 Old Mutual PLC 189.00 7.00
FTSE All-Share (636) 3386.05 0.55 3401.96 3367.52 3314.20 3648.24 3.80 1.15 22.93 26.54 5453.39 Consumer Goods 2.74 Fixed Line Telecomms -2.56 Pharmace & Biotech -7.30
Mar 11 Mar 10 Mnth Ago Mar 14 Mar 11 Mnth Ago Babcock International Group PLC 955.00 5.50 Pearson PLC 877.50 5.50
FTSE All-Share ex Inv Co (460) 3351.27 0.57 3367.02 3332.36 3278.83 3613.97 3.85 1.15 22.65 26.57 2792.97 Aerospace & Defense 2.32 Telecommunications -2.85 Life Insurance -7.86 Bae Systems PLC 497.50 1.00 Persimmon PLC 2034 44.00
FTSE All-Share ex Multinationals (572) 1135.10 0.60 945.21 1128.37 1109.27 1193.24 2.98 1.58 21.32 3.73 1941.49 Australia 93.68 92.54 88.28 Sweden 79.59 79.43 78.38 Beverages 1.88 FTSE SmallCap Index -2.92 Real Est Invest & Tr -9.13 Barclays PLC 163.25 -2.75 Provident Financial PLC 3000 -94.00
FTSE Fledgling (99) 7557.84 0.10 7593.35 7550.59 7500.05 7195.17 2.58 0.20 195.17 32.00 13678.16 Canada 88.41 87.86 84.12 Switzerland 157.93 157.47 158.46 Gas Water & Multi 1.33 Software & Comp Serv -2.98 Automobiles & Parts -9.34 Barratt Developments PLC 556.50 12.50 Prudential PLC 1346 -12.50
FTSE Fledgling ex Inv Co (49) 10619.59 0.12 10669.50 10607.08 10479.99 9096.18 2.68 -0.85 -43.79 37.18 18683.64 Denmark 106.59 106.73 106.97 UK 86.51 86.16 87.27 NON FINANCIALS Index 0.59 Mobile Telecomms -3.05 Financials -10.04 Berkeley Group Holdings (The) PLC 3100 122.00 Randgold Resources LD 6200 -125.00
FTSE All-Small (385) 3120.04 -0.01 3134.70 3120.20 3092.12 3138.18 2.93 1.33 25.66 14.62 5518.64 Japan 134.77 135.12 133.88 USA 102.38 102.64 103.84 Utilities 0.34 Consumer Services -3.05 Real Est Invest & Se -13.41 Bhp Billiton PLC 816.20 0.40 Reckitt Benckiser Group PLC 6637 108.00
FTSE All-Small ex Inv Co Index (201) 3068.39 0.00 3082.81 3068.40 3039.22 2955.41 2.89 1.71 20.28 11.38 5618.28 New Zealand 111.52 110.52 111.62 Euro 87.87 88.05 88.35 Technology -3.06 Banks -15.01 BP PLC 345.45 -2.95 RELX PLC 1255 8.00
FTSE AIM All-Share Index (838) 713.00 1.50 716.35 702.46 697.64 717.83 1.53 0.56 116.93 1.29 768.79 Norway 85.73 84.81 84.40
British American Tobacco PLC 4101 24.50 Rexam PLC 618.00 6.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. British Land Company PLC 699.00 9.00 Rio Tinto PLC 2001.5 1.50
Oil & Gas (17) 6407.79 -0.30 6437.90 6426.89 6314.21 7050.61 6.86 0.24 59.63 110.54 5465.60 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Bt Group PLC 462.00 2.95 Rolls-Royce Holdings PLC 681.50 -4.50
Oil & Gas Producers (10) 6082.02 -0.30 6110.60 6100.02 5990.93 6682.51 6.93 0.21 68.15 108.98 5367.52 Bunzl PLC 1990 15.00 Royal Bank Of Scotland Group PLC 231.20 1.60
Oil Equipment Services & Distribution (7)15193.44 -0.35 15264.84 15247.50 15116.57 17494.78 5.01 1.40 14.24 0.00 11174.15 FTSE GLOBAL EQUITY INDEX SERIES Burberry Group PLC 1398 20.00 Royal Dutch Shell PLC 1675.5 -1.00
Basic Materials (28) 3231.02 1.33 3246.20 3188.58 3119.29 4531.29 5.65 0.22 82.17 39.82 3211.91 Capita PLC 1044 7.00 Royal Dutch Shell PLC 1666.5 -2.50
Chemicals (7) 11064.90 1.14 11116.90 10940.33 10835.07 12154.98 2.60 2.12 18.11 61.01 9566.52 Mar 14 No of US $ Day Mth YTD Total
YTD Gr Div Mar 14 No of US $ Day Mth YTD Total YTD Gr Div Carnival PLC 3477 67.00 Royal Mail PLC 452.00 0.20
Forestry & Paper (1) 15808.50 0.82 15882.79 15679.21 15444.14 15749.73 2.28 4.06 10.80 0.00 16421.44 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Centrica PLC 227.50 -2.30 Rsa Insurance Group PLC 451.70 -1.90
Industrial Metals & Mining (2) 947.31 3.93 951.76 911.51 895.96 1856.38 1.22 -22.17 -3.71 0.00 826.71 FTSE Global All Cap 7711 442.24 1.8 11.0 -1.9 607.71
-1.5 2.6 Oil & Gas 163 317.55 2.2 2.2 4.1 489.33 5.0 3.9 Coca-Cola Hbc AG 1408 12.00 Sabmiller PLC 4230 10.00
Mining (18) 8684.39 1.38 8725.20 8566.54 8360.85 12846.60 6.34 0.04 406.31 123.06 4530.07 FTSE Global All Cap 7078 455.69 1.6 10.9 -1.8 615.35
-1.3 2.5 Oil & Gas Producers 115 296.66 2.0 2.0 4.0 465.34 4.8 4.0 Compass Group PLC 1215 -1.00 Sage Group PLC 596.00 9.50
FTSE Global Large Cap 1415 390.41 1.7 10.5 -2.1 549.09
-1.6 2.8 Oil Equipment & Services 39 293.02 3.2 3.2 5.6 411.75 6.4 3.7 Crh PLC 1955 15.00 Sainsbury (J) PLC 280.60 7.30
Industrials (119) 4300.78 0.70 4320.99 4270.98 4199.60 4650.77 2.60 1.35 28.57 7.77 4281.43
Construction & Materials (14) 5266.21 0.53 5290.96 5238.54 5052.54 4920.67 2.31 -0.71 -60.75 63.93 5448.65 FTSE Global Mid Cap 1632 595.17 1.9 12.2 -1.1 779.61
-0.8 2.1 Basic Materials 261 361.43 1.8 1.8 2.9 531.71 3.2 3.2 Dcc PLC 5860 125.00 Schroders PLC 2703 5.00
Aerospace & Defense (9) 4405.86 -0.05 4426.56 4408.14 4375.19 5426.73 2.59 1.56 24.69 1.48 4556.31 FTSE Global Small Cap 4664 613.72 1.8 12.8 -2.1 780.63
-1.9 2.1 Chemicals 122 573.11 2.0 2.0 -3.1 844.24 -2.9 2.7 Diageo PLC 1889 16.00 Severn Trent PLC 2064 1.00
General Industrials (6) 3724.59 1.27 3742.09 3677.87 3614.59 3593.09 3.07 1.53 21.31 0.72 4055.66 FTSE All-World 3047 258.68 1.7 10.8 -1.9 375.11
-1.5 2.7 Forestry & Paper 16 191.97 1.6 1.6 -2.1 309.45 -1.7 3.6 Direct Line Insurance Group PLC 366.60 0.10 Shire PLC 3830 52.00
Electronic & Electrical Equipment (10) 5393.83 1.15 5419.18 5332.71 5275.90 5486.03 2.29 1.87 23.40 6.22 4782.37 FTSE World 2530 459.22 1.8 10.8 -1.8 894.24
-1.3 2.6 Industrial Metals & Mining 67 284.46 1.8 1.8 10.6 419.36 10.7 3.0 Dixons Carphone PLC 431.00 7.40 Sky PLC 1017 10.00
Industrial Engineering (14) 8068.55 0.75 8106.46 8008.32 7839.27 9741.07 3.72 1.14 23.50 10.28 9461.34 FTSE Global All Cap ex UNITED KINGDOM In 7388 455.36 1.7 11.1 -1.8 616.89
-1.4 2.5 Mining 56 394.71 1.4 1.4 22.0 584.20 23.2 4.7 Easyjet PLC 1544 23.00 Smith & Nephew PLC 1126 5.00
Industrial Transportation (8) 3942.71 0.30 3961.24 3931.07 3860.12 4157.44 3.85 0.87 29.80 0.00 3316.88 FTSE Global All Cap ex USA 5726 406.85 1.8 10.8 -2.5 592.83
-2.1 3.1 Industrials 533 297.86 1.6 1.6 -0.4 415.68 0.0 2.4 Experian PLC 1215 9.00 Smiths Group PLC 1079 22.00
Support Services (58) 6372.31 0.92 6402.26 6314.39 6214.84 6741.99 2.39 1.73 24.27 3.49 6398.16 FTSE Global All Cap ex JAPAN 6450 452.38 1.9 11.5 -1.4 627.35
-1.0 2.6 Construction & Materials 109 425.42 2.2 2.2 1.5 620.20 1.8 2.2 Fresnillo PLC 925.00 -4.50 Sports Direct International PLC 389.40 -0.90
FTSE Developed 2095 417.32 1.8 10.6 -2.2 578.02
-1.7 2.6 Aerospace & Defense 27 491.87 1.5 1.5 -2.9 680.74 -2.4 2.4 Gkn PLC 284.00 4.40 Sse PLC 1470 8.00
Consumer Goods (40) 18953.87 0.81 19042.94 18802.24 18560.89 17146.76 2.81 1.88 18.91 75.44 13425.73
FTSE Developed All Cap 5702 437.49 1.8 10.9 -2.2 599.30
-1.8 2.5 General Industrials 56 218.50 1.5 1.5 0.7 328.99 1.6 2.7 Glaxosmithkline PLC 1410 12.00 St. James's Place PLC 903.50 9.50
Automobiles & Parts (1) 6674.13 1.57 6705.50 6570.73 6417.98 8664.62 2.99 1.33 25.09 0.00 6137.80
FTSE Developed Large Cap 914 385.52 1.8 10.3 -2.3 541.45
-1.8 2.7 Electronic & Electrical Equipment 69 301.54 1.1 1.1 -4.7 387.06 -4.6 2.0 Glencore PLC 147.90 6.20 Standard Chartered PLC 483.55 15.75
Beverages (6) 15810.43 0.59 15884.73 15717.53 15612.57 14700.32 2.45 1.70 24.00 96.90 10836.20
FTSE Developed Europe Large Cap 219 317.98 2.7 10.9 -3.7 504.36
-3.0 3.7 Industrial Engineering 104 541.57 1.2 1.2 1.1 742.91 1.4 2.7 Hammerson PLC 577.00 9.00 Standard Life PLC 362.10 -2.30
Food Producers (10) 8825.94 0.33 8867.42 8797.04 8687.94 8005.31 1.86 1.41 38.22 6.04 7391.10
FTSE Developed Europe Mid Cap 301 492.09 2.7 10.9 -4.0 706.16
-3.8 2.7 Industrial Transportation 96 502.57 2.1 2.1 1.5 699.71 1.9 2.5 Hargreaves Lansdown PLC 1286 13.00 Taylor Wimpey PLC 183.00 5.30
Household Goods & Home Construction (13)13701.12 1.91 13765.51 13444.76 13260.85 11801.30 2.15 2.76 16.80 8.12 9326.09
FTSE Dev Europe Small Cap 716 695.28 2.2 11.1 -5.0 971.53
-4.8 2.4 Support Services 72 272.45 1.6 1.6 -1.2 364.68 -1.1 2.0 Hikma Pharmaceuticals PLC 1736 16.00 Tesco PLC 193.15 0.95
Leisure Goods (2) 5691.79 -1.07 5718.54 5753.62 5667.51 5134.50 4.20 1.32 17.98 0.00 4820.59
FTSE North America Large Cap 316 431.54 1.6 10.5 -1.1 571.08
-0.6 2.3 Consumer Goods 421 411.93 1.0 1.0 -1.1 587.76 -0.8 2.5 HSBC Holdings PLC 452.55 1.20 Travis Perkins PLC 1789 9.00
Personal Goods (6) 24078.85 0.66 24192.01 23920.62 23763.53 23381.99 2.75 3.05 11.93 150.56 15637.30
FTSE North America Mid Cap 390 642.95 2.0 14.4 0.4 796.69
0.8 1.8 Automobiles & Parts 103 343.65 1.6 1.6 -10.0 470.43 -9.8 2.9 Imperial Brands PLC 3752 -0.50 Tui AG 1045 10.00
Tobacco (2) 49441.66 0.40 49674.01 49243.23 48280.76 42925.64 3.69 1.36 19.91 207.72 30264.86
FTSE North America Small Cap 1507 633.91 2.0 15.0 -1.2 763.97
-0.9 1.8 Beverages 48 574.55 0.7 0.7 0.5 832.94 1.0 2.5 Inmarsat PLC 924.50 6.00 Unilever PLC 3110.5 14.50
Health Care (19) 8882.95 0.71 8924.70 8820.30 8767.62 10103.39 3.98 0.53 47.51 151.28 6587.13
FTSE North America 706 288.85 1.7 11.2 -0.9 391.64
-0.4 2.2 Food Producers 105 563.83 1.1 1.1 0.9 826.88 1.1 2.3 Intercontinental Hotels Group PLC 2850 124.00 United Utilities Group PLC 904.00 7.00
Health Care Equipment & Services (7) 7037.22 0.32 7070.29 7014.86 6986.75 6751.34 1.61 1.73 35.90 1.60 5967.95
FTSE Developed ex North America 1389 217.33 2.0 9.8 -4.1 339.92
-3.7 3.2 Household Goods & Home Construction 47 401.05 0.8 0.8 -0.1 569.67 0.3 2.3 International Consolidated Airlines Group S.A. 541.50 0.50 Vodafone Group PLC 219.60 2.25
Pharmaceuticals & Biotechnology (12)11957.36 0.75 12013.56 11867.78 11794.25 13827.63 4.25 0.48 49.31 226.40 7890.84
FTSE Japan Large Cap 177 301.90 0.4 6.1 -7.9 377.77
-7.9 2.3 Leisure Goods 28 128.93 1.5 1.5 -2.2 166.10 -2.1 1.4 Intertek Group PLC 3097 35.00 Whitbread PLC 3932 135.00
Consumer Services (96) 4807.19 0.90 4829.78 4764.24 4700.31 4999.79 2.43 1.76 23.41 15.75 4354.10 FTSE Japan Mid Cap 303 464.08 0.3 4.9 -5.6 561.02
-5.5 1.7 Personal Goods 79 607.56 1.2 1.2 1.7 825.86 2.0 2.0
Food & Drug Retailers (7) 3067.26 0.87 3081.67 3040.71 2976.82 3417.79 1.74 0.22 255.86 0.00 3507.43 Intu Properties PLC 310.60 5.90 Wolseley PLC 3810 57.00
FTSE Global wi JAPAN Small Cap 781 496.27 0.5 5.5 -5.7 619.49
-5.6 2.0 Tobacco 11 1301.14 0.1 0.1 6.9 2552.96 7.3 3.7 Itv PLC 239.20 4.80 Worldpay Group PLC 287.70 3.10
General Retailers (32) 2799.43 1.65 2812.59 2753.90 2747.02 2952.96 2.60 2.32 16.62 2.42 3071.16
FTSE Japan 480 126.24 0.4 5.8 -7.4 177.50
-7.4 2.1 Health Care 172 430.78 1.6 1.6 -6.0 604.10 -5.4 2.0 Johnson Matthey PLC 2578 38.00 Wpp PLC 1575 10.00
Media (22) 7451.31 0.87 7486.33 7387.19 7267.61 7530.08 2.74 1.84 19.79 1.47 4400.05
FTSE Asia Pacific Large Cap ex Japan 530 531.13 1.3 10.6 -1.8 797.56
-1.5 3.4 Health Care Equipment & Services 60 651.35 1.9 1.9 0.3 748.08 0.4 1.0 Kingfisher PLC 350.50 8.20
Travel & Leisure (35) 8251.21 0.53 8289.99 8207.74 8086.91 8508.40 2.29 1.68 26.02 68.38 7584.20
FTSE Asia Pacific Mid Cap ex Japan 430 744.81 0.9 10.7 -0.3 1078.87
0.1 3.0 Pharmaceuticals & Biotechnology 112 320.05 1.5 1.5 -8.0 467.14 -7.2 2.4
Telecommunications (7) 3918.48 0.88 3936.89 3884.27 3812.74 3877.94 4.17 0.15 159.14 0.00 4105.99 FTSE Asia Pacific Small Cap ex Japan 1420 490.62 0.8 8.5 -1.7 700.42
-1.4 2.9 Consumer Services 385 383.39 1.5 1.5 -1.6 499.91 -1.3 1.8
Fixed Line Telecommunications (5) 5303.86 0.69 5328.78 5267.29 5188.75 5189.87 2.92 1.64 20.84 0.00 4599.78
Mobile Telecommunications (2) 4994.20 1.01 5017.67 4944.27 4841.25 4979.30 5.04 -0.45 -44.50 0.00 4670.92
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
960
2009
422.31
577.51
1.2
1.2
10.7
12.5
-1.6 674.04
-1.3
1.1 825.08
1.3
3.3 Food & Drug Retailers
3.2 General Retailers
53 301.36
121 516.60
1.7
1.2
1.7
1.2
0.5 408.86
-3.0 657.39
0.9
-2.7
1.9
1.6
UK STOCK MARKET TRADING DATA
Utilities (7) 8441.37 0.15 8481.04 8428.53 8337.31 8025.91 4.81 2.09 9.96 33.42 9027.18 FTSE Emerging Large Cap 501 543.97 1.3 13.2 1.0 781.86
1.2 3.3 Media 87 286.34 1.7 1.7 -1.0 373.97 -0.7 2.0 Mar 14 Mar 11 Mar 10 Mar 09 Mar 08 Yr Ago
Electricity (2) 8538.23 0.58 8578.35 8488.62 8387.78 8727.98 5.93 1.22 13.81 145.17 11569.87 FTSE Emerging Mid Cap 451 735.13 1.0 12.0 3.5 1045.74
3.8 2.9 Travel & Leisure 124 376.21 1.7 1.7 -1.4 495.54 -1.0 1.8 SEAQ Bargains 6428.00 5749.00 5749.00 6112.00 6824.00 5576.00
Gas Water & Multiutilities (5) 7955.48 0.04 7992.87 7951.93 7867.96 7420.03 4.53 2.37 9.31 5.49 8511.74 FTSE Emerging Small Cap 1057 609.76 0.7 8.7 -1.0 839.81
-0.8 3.1 Telecommunication 92 165.02 1.4 1.4 4.8 291.87 5.3 4.0 Order Book Turnover (m) 37.37 36.67 36.67 45.75 - -
Financials (284) 4124.04 0.25 4143.42 4113.56 4027.45 4811.71 3.91 1.71 14.93 41.01 3638.14 FTSE Emerging Europe 99 293.84 1.4 19.2 10.0 431.79
10.1 4.1 Fixed Line Telecommuniations 44 143.58 1.2 1.2 8.3 278.57 9.2 4.4 Order Book Bargains 827433.00 842064.00 842064.00 1108240.00 9622.00 5.00
Banks (9) 3210.32 0.20 3225.41 3203.82 3138.39 4182.93 4.88 1.01 20.18 61.28 2255.06 FTSE Latin America All Cap 245 677.65 1.4 23.9 13.2 1005.84
13.8 3.4 Mobile Telecommunications 48 164.57 1.7 1.7 -0.1 262.78 0.0 3.6 Order Book Shares Traded (m) 1198.00 1324.00 1324.00 1676.00 51.00 0.00
Nonlife Insurance (10) 2800.04 -0.33 2813.19 2809.36 2737.99 2397.55 2.83 2.38 14.83 38.14 4770.21 FTSE Middle East and Africa All Cap 217 632.93 1.1 12.6 2.3 946.01
2.6 2.9 Utilities 163 248.33 0.9 0.9 4.7 457.82 5.3 3.9 Total Equity Turnover (£m) 3195.79 0.04 0.04 0.00 - 0.07
Life Insurance/Assurance (11) 7286.29 -0.41 7320.53 7316.47 7079.53 8649.53 4.16 1.54 15.57 0.21 6689.09 FTSE Global wi UNITED KINGDOM All Cap In 323 314.70 2.3 10.5 -4.3 501.50
-3.5 3.9 Electricity 112 273.10 0.5 0.5 5.5 498.59 6.3 3.7 Total Mkt Bargains 952619.00 3.00 3.00 5.00 9622.00 24.00
Index- Real Estate Investment & Services (21) 2702.45 1.19 2715.15 2670.76 2634.25 2902.91 2.42 5.40 7.65 12.37 6979.82 FTSE Global wi USA All Cap 1985 494.02 1.7 11.3 -1.4 636.12
-1.0 2.1 Gas Water & Multiutilities 51 259.92 1.5 1.5 3.2 490.57 3.7 4.3 Total Shares Traded (m) 5991.00 0.00 0.00 0.00 51.00 0.00
Real Estate Investment Trusts (25) 2723.55 1.47 2736.35 2684.00 2626.16 2943.18 3.28 5.93 5.14 13.59 3234.80 FTSE Europe All Cap 1395 368.04 2.6 11.2 -3.5 565.26
-3.0 3.4 Financials 674 189.22 2.6 2.6 -5.7 295.23 -5.3 3.2 † Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable.
General Financial (32) 7604.33 0.82 7640.07 7542.42 7409.68 8070.00 3.08 2.13 15.24 44.30 8301.81 FTSE Eurobloc All Cap 633 346.68 3.3 12.1 -3.4 537.13
-3.1 3.2 Banks 244 165.08 2.9 2.9 -7.5 274.72 -7.0 3.7 (c) Market closed.
Equity Investment Instruments (176) 7375.52 0.12 7410.18 7366.77 7292.48 7764.94 2.74 1.09 33.65 41.36 3900.97 FTSE RAFI All World 3000 2996 5363.42 1.9 12.3 -1.2 6790.04
-0.7 3.2 Nonlife Insurance 70 211.31 2.4 2.4 -1.5 295.00 -1.2 2.5
Non Financials (352) 4032.55 0.65 4051.50 4006.68 3949.84 4228.42 3.77 0.96 27.72 28.87 5689.50 FTSE RAFI US 1000 991 8838.71 1.6 11.6 0.0 11239.65
0.5 2.6 Life Insurance 51 179.61 2.9 2.9 -9.4 273.56 -9.1 3.3
Technology (19) 1407.78 0.73 1414.39 1397.56 1382.48 1374.58 1.47 1.87 36.29 5.15 1767.35 FTSE EDHEC-Risk Efficient All-World 3047 313.83 1.6 11.0 -0.5 423.25
-0.2 2.4 Financial Services 141 206.59 2.3 2.3 -7.1 276.11 -6.8 2.2 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Software & Computer Services (13) 1809.71 1.04 1818.22 1791.17 1779.48 1425.11 2.03 1.77 27.71 13.23 2390.93 FTSE EDHEC-Risk Efficient Developed Europe 520 271.54 2.4 9.6 -2.8 397.25
-2.5 2.8 Technology 183 170.84 1.6 1.6 -2.0 204.49 -1.6 1.8 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Technology Hardware & Equipment (6) 1546.25 0.47 1553.51 1539.01 1516.78 1767.88 0.99 2.04 49.53 0.93 1775.98 Software & Computer Services 85 302.98 1.8 1.8 -2.3 348.58 -2.1 1.1 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment 98 124.41 1.4 1.4 -1.6 153.33 -1.1 2.6 liable for any loss arising from the reliance on or use of the listed information.
Hourly movements 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/ For all queries e-mail ft.reader.enquiries@morningstar.com
FTSE 100 6146.60 6163.65 6166.08 6175.93 6172.11 6154.34 6157.82 6172.42 6169.93 6197.67 6146.60 mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index® and RAFI® are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC
FTSE 250 16637.02 16675.56 16667.45 16690.32 16698.03 16689.03 16683.41 16702.87 16692.58 16733.26 16637.02 (US Patent Nos. 7,620,577; 7,747,502; 7,778,905; 7,792,719; Patent Pending Publ. Nos. US-2006-0149645-A1, US-2007-0055598-A1, US-2008-0288416-A1, US-2010- 0063942-A1, WO 2005/076812, WO 2007/078399 A2,
WO 2008/118372, EPN 1733352, and HK1099110). ”EDHEC™” is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
Data provided by Morningstar | www.morningstar.co.uk
FTSE SmallCap 4498.67 4507.44 4509.23 4509.26 4508.02 4507.32 4506.18 4504.67 4502.79 4511.34 4498.67
FTSE All-Share 3371.90 3380.90 3381.73 3386.82 3385.38 3377.27 3378.58 3385.59 3384.10 3397.37 3371.90 www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the London Stock Exchange
Time of FTSE 100 Day's high:08:26:30 Day's Low08:03:00 FTSE 100 2010/11 High: 6242.32(01/01/2016) Low: 5536.97(11/02/2016) Group companies and is used by FTSE International Limited under licence.
Time of FTSE All-Share Day's high:08:27:00 Day's Low08:03:00 FTSE 100 2010/11 High: 3444.26(01/01/2016) Low: 3046.53(11/02/2016)
Further information is available on http://www.ftse.com © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the
London Stock Exchange Group companies and is used by FTSE International Limited under licence. † Sector P/E ratios greater than 80 are not shown.
For changes to FTSE Fledgling Index constituents please refer to www.ftse.com/indexchanges. ‡ Values are negative.

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

Amount Latest Company Turnover Pre-tax EPS(p) Div(p) Pay day Total Issue Issue Stock Close Mkt
Issue paid renun. closing Ascential Pre 319.1 312.7 8.4 5.4L 4 4.9 - - - - - date price(p) Sector code Stock price(p) +/- High Low Cap (£m)
price up date High Low Stock Price p +or- Fevertree Drinks Pre 59.253 34.691 16.761 2.521 11.57 1.54 2.3 0.3 May 6 3.08 1.08 02/12 20.00 AIM CGP Cogenpower PLC 20.50 0.00 23.00 20.00 1028.4
There are currently no rights offers by any companies listed on the LSE. Fidelity European Values Pre 51.857 34.281 3.37 3.67 3.33 3.1 May 20 3.33 3.1 02/02 180.00 CYBG CYBG PLC 206.50 -1.50 210.25 179.00 181578.6
Frenkel Topping Group Pre 6.31 5.693 1.285 1.569 1.64 2.27 0.6975 0.54 Jun 10 0.888 0.71
Goals Soccer Centres Pre 33.013 34.659 6.181L 6.756 10.4L 8.9 - 1.325 - - 2
Kellan Group (The) Pre 24.864 22.963 0.426 0.055L 0.13 0.02L - - - - -
Murray International Trust Pre 92.128L 39.13 45.7 40.8 15 15 May 18 25.5 25
NMC Health Pre 880.87 643.931 85.357 77.534 0.443 0.412 9.185 8.405 Jun 20 9.2 8.4
Real Estate Investors Pre 8.381 8.016 12.244 6.009 7.46 4.05 1 0.75 Apr 29 2 1.5
Sterling Energy Pre 5.031 15.991 15.95L 12.318L 0.073L 0.056L - - - - -

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.
Tuesday 15 March 2016 FINANCIAL TIMES 19

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

52 Week 52 Week 52 Week 52 Week 52 Week 52 Week
Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m
Australia (A$) Finland (€) Japan (¥) Sweden (SKr) AT&T 38.26 -0.10 38.55 30.97 4.80 16.66 235433.51 Lockheed♦ 216.82 -0.23 227.91 181.91 2.76 19.47 66235.77
ANZ 25.75 0.33 37.25 21.86 8.87 11.33 56450.53 Nokia 5.46 0.08 7.87 4.91 2.44 -39.52 34988.45 AstellasPh 1532 2.50 2033 1476 1.92 19.56 29964.64 AtlasCpcoB 192.00 2.80 270.00 162.60 1.47 17.77 8991.92 AutomData♦ 87.09 -0.18 90.67 64.29 2.23 29.33 39839.42 Lowes 72.80 0.68 78.13 62.62 1.30 24.78 66619.62
BHPBilltn♦ 17.74 0.13 33.35 14.06 12.08 22.41 42811.3 SampoA 42.85 0.47 49.40 36.76 4.32 14.98 26595.34 Bridgestne 4151 15.00 5182 3561 2.59 13.42 29712.47 Ericsson 79.05 0.35 120.00 70.65 4.04 25.75 28872.81 Avago Tech 147.54 -1.28 150.50 100.00 0.97 32.14 57606.69 Lyondell 86.23 -1.25 107.32 69.10 3.43 9.24 37268.65
CmwBkAu♦ 76.86 0.49 96.69 70.07 7.33 15.55 98615.08 France (€) Canon 3379 16.00 4539 2977.5 4.25 18.78 39674.17 H&M 293.30 3.70 362.00 259.80 3.04 24.58 51417.12 BakerHu♦ 44.05 -1.74 70.45 37.58 1.50 -10.09 19287.46 Marathon Ptl 36.73 -0.99 60.38 29.24 3.02 7.18 19438.52
CSL 103.59 0.01 108.68 85.40 1.49 26.54 36027.72 Airbus Grpe 60.41 0.28 68.50 49.96 1.89 17.56 52700.4 CntJpRwy 19620 155.00 24800 18255 0.56 13.85 35580.09 Investor 293.20 2.00 363.40 256.80 2.88 15.16 16028.03 BankAm♦ 13.62 -0.17 18.48 10.99 1.43 10.91 140635.09 Marsh&M 58.82 0.08 59.99 50.81 1.95 20.31 30657.27
NatAusBk 28.31 0.39 39.71 23.82 8.77 13.12 56113.53 AirLiquide 99.50 0.18 123.95 90.77 2.44 20.53 38041.77 Denso 4558 51.00 6548 3879 2.48 15.10 35473.27 Nordea Bk 90.35 -0.45 115.50 77.25 6.04 11.29 43915.82 Baxter♦ 40.54 0.06 43.44 32.18 3.04 57.94 22210.72 MasterCard 88.61 0.03 101.76 74.61 0.73 27.22 96539.02
Telstra♦ 5.28 0.12 6.53 4.98 7.77 16.20 48503.94 AXA 21.62 -0.02 26.02 18.80 4.02 11.33 58254.07 EastJpRwy 10000 139.00 12815 9191 1.15 18.37 34552.58 SEB 89.35 -0.40 111.50 75.95 4.99 11.86 23270.25 BB & T 34.39 -0.06 41.90 29.95 2.97 13.85 26839.72 McDonald's♦ 122.85 1.30 124.83 87.50 2.72 26.36 110762.53
Wesfarmers♦ 41.50 -0.29 45.00 36.65 6.48 20.16 35116.24 BNP Parib 47.75 -0.95 61.00 37.00 2.99 9.79 66103.42 Fanuc 18425 330.00 28575 15300 3.85 21.18 33403.63 SvnskaHn 116.70 -0.60 421.50 95.85 3.43 14.60 26216.34 BectonDick♦ 150.79 1.01 157.50 128.87 1.59 47.89 31939.81 McGraw Hill 94.28 -0.85 109.13 78.55 1.36 23.04 25012.48
Westpc 32.88 0.14 40.07 27.69 7.06 15.38 82413.69 ChristianDior 168.40 1.75 195.35 140.80 1.71 13.93 33990.69 FastRetail 36390 1800 61970 30720 0.84 47.42 33980.55 Swedbank 186.20 -0.40 223.90 150.80 5.73 14.06 25297.12 BerkshHat 210360-1240.00223011.49 186900 - 14.77 169931.12 McKesson♦ 165.17 -1.23 243.61 148.29 0.61 17.80 37755.71
Woolworths♦ 23.10 -0.24 29.91 20.50 8.09-288.79 22060.08 Cred Agr 10.60 -0.07 14.49 7.59 3.14 23.83 31074.01 Fuji Hvy Ind 4111 61.00 5223 3411 2.43 8.54 28331.89 TeliaSonera 42.36 -0.14 55.85 37.04 6.65 13.47 22013.8 Biogen 259.63 -0.11 480.18 242.07 - 17.41 56774 Medtronic 77.40 0.05 79.50 55.54 1.89 45.10 108440.75
Belgium (€) Danone 63.88 0.01 67.74 51.73 2.15 46.16 46469.94 Hitachi 535.30 15.80 858.00 431.00 2.06 10.37 22777.02 Volvo 88.50 0.05 120.50 72.20 3.18 20.12 17238.05 BkNYMeln 37.53 -0.22 45.45 32.20 1.76 14.27 41018.51 Merck♦ 53.09 -0.11 61.70 45.69 3.31 34.94 147338.48
AnBshInBv 105.85 0.45 124.20 87.73 2.79 24.44 189077.81 EDF 10.27 -0.01 23.56 9.13 11.13 5.91 21892.23 HondaMtr 3165 15.00 4499 2726 2.55 11.96 50470.27 Switzerland (SFr) BlackRock♦ 337.32 -2.33 380.99 275.00 2.51 17.54 55300.86 Metlife 43.90 -0.35 58.23 35.00 3.27 9.88 48143.68
KBC Grp 49.53 -0.50 66.00 44.15 3.84 8.60 22997.97 Engie SA 14.12 0.09 19.73 13.05 6.47 41.48 38192.92 JapanTob 4585 -61.00 4850 3551 2.00 22.22 80725.38 ABB 18.25 -0.09 22.16 15.94 - 21.90 42854.74 Boeing 126.61 1.98 155.99 102.10 2.79 17.51 83879.61 Microsoft 53.29 0.22 56.85 39.72 2.35 39.02 425675.89
Esslr Intl 113.05 1.15 125.15 95.01 0.82 43.21 27179.37 KDDI 3015 -2.00 8550 2519 1.83 17.29 71420.71 CredSuisse 15.49 -0.01 28.94 12.23 4.24 7.63 30758.1 BrisMySq 64.22 -0.74 70.87 51.82 2.25 70.89 107212.66 Mnstr Bvrg 131.73 -2.13 160.50 113.08 - 47.75 26730.63
Brazil (R$)
Hermes Intl 328.50 1.70 365.55 281.20 0.82 40.65 38518.71 Keyence 60280 1450 70100 50500 0.30 33.04 32264.97 Nestle 71.60 0.05 77.00 65.70 2.95 16.52 231589.59 CapOne 70.03 -1.00 92.10 58.49 2.08 10.29 36932.42 MondelezInt 42.17 -0.19 48.58 33.97 1.47 9.77 66158.75
Ambev 18.10 -0.12 20.46 15.99 7.85 26.01 78458.09
LOreal 157.90 1.65 181.30 140.40 1.56 32.94 98736.1 MitsbCp 2079.5 5.50 2837 1565 2.43 11.20 29108.36 Novartis 73.00 0.10 103.20 69.05 3.58 26.46 198245.49 CardinalHlth 83.73 -0.15 91.91 74.73 1.75 20.99 27574.71 Monsanto 89.59 -1.36 123.82 81.22 2.13 24.80 39451.44
Bradesco♦ 30.16 0.27 37.80 17.90 2.79 12.19 20996.93
LVMH 159.50 2.05 176.60 130.75 1.83 15.40 89815.24 MitsubEst 2194.5 44.50 2975 1970 0.63 60.14 26860.57 Richemont 66.85 0.40 87.55 62.25 2.28 22.61 35400.15 Carnival 48.02 0.11 55.77 40.52 2.18 22.37 27743.3 MorganStly 25.93 -0.08 41.04 21.16 2.06 9.17 50775.9
Cielo♦ 33.31 -0.46 49.30 28.03 1.84 20.03 17331.83
Nmrcble-SFR 37.40 1.04 57.35 27.05 - -48.40 18204.85 MitsubishiEle 1205.5 12.00 1718 947.00 2.06 11.66 22786.66 Roche 247.80 1.80 283.90 238.00 3.09 25.18 176611.76 Caterpillar 72.80 - 89.62 56.36 3.92 21.43 42393.03 MylanNV 47.41 -1.19 76.69 37.59 - 28.63 23313.73
ItauHldFin 28.08 0.10 35.93 21.49 3.93 7.27 23596.49
Orange 16.45 - 16.98 12.21 3.33 47.37 48383.27 MitsuiFud 2852 111.00 3879 2260.5 0.90 24.63 24891.44 Swiss Re 89.40 - 99.75 76.85 4.71 37.38 33620.29 CBS♦ 53.73 0.61 63.95 38.51 1.09 19.26 22664.07 Netflix 98.18 0.52 133.27 58.46 - 359.52 42029.01
Petrobras 9.55 -0.54 16.26 5.67 - -4.15 19601.64
PernodRic 102.45 1.30 117.75 88.00 1.67 29.90 30202.75 MitUFJFin 578.40 24.10 936.80 431.90 2.86 6.08 72144.54 Swisscom 517.50 -1.00 580.50 452.70 4.07 20.58 27195.03 Celgene 100.57 -1.28 140.72 92.98 - 53.29 78612 NextEraE♦ 115.60 -0.22 116.98 93.74 2.59 19.63 53237.95
Vale 13.58 -0.29 27.89 8.60 15.51 -6.60 12048.92
Renault 84.22 1.79 100.25 59.59 2.06 9.96 27662.89 Mizuho Fin 185.20 2.50 280.40 149.30 3.84 6.91 40579.83 Syngent 403.50 -2.50 435.20 288.50 2.78 29.00 38045.72 CharlesSch 27.80 -0.40 35.72 21.51 0.84 27.83 36710.54 Nike♦ 60.57 0.49 68.20 47.25 1.13 30.94 81763.24
Canada (C$) Murata Mfg 14600 275.00 22220 11610 1.26 15.84 28952.4 ChevrnTx 94.72 0.14 112.20 69.58 4.39 39.84 178372.56 NorfolkS 79.23 0.22 111.76 64.51 2.89 15.88 23626.28
Safran 55.52 -3.71 72.45 48.87 2.12 -57.53 25716.66 UBS 16.68 0.10 22.57 15.01 4.29 10.81 65144.5
BCE♦ 57.92 0.28 59.85 51.56 4.17 20.92 37759.34 NipponTT 4844 -7.00 5419 3626 1.80 16.60 89395.96 Chubb 119.99 0.04 134.49 94.35 2.15 14.33 38898.53 Northrop♦ 188.79 -1.10 194.80 152.31 1.60 18.70 34159.73
Sanofi 74.96 1.00 101.10 66.44 3.61 23.61 108710.17 Zurich Fin 228.10 - 334.60 194.70 - 19.30 34810.38
BkMontrl 78.23 -0.01 80.76 64.01 4.00 12.26 37861.98 Nissan Mt 1113 16.50 1350 923.30 3.09 8.90 44293.83 Cigna♦ 145.04 0.42 170.68 121.02 0.03 18.26 37096.35 NXP 78.32 0.22 114.00 61.61 - 13.21 27097.21
Sant Gbn 38.04 0.14 44.84 31.47 1.49 27.93 23697.4 Taiwan (NT$)
BkNvaS 62.22 -0.05 67.44 51.17 4.23 11.53 56296.34 Nomura 537.50 9.50 909.20 442.80 3.93 9.30 18087.3 Cisco 27.70 -0.16 29.90 22.46 3.06 13.59 139389.76 Occid Pet♦ 69.21 -0.74 82.03 58.22 4.17 -6.69 52865.73
Schneider 55.69 0.27 75.29 45.32 3.15 21.08 36346.05 Chunghwa Telecom 106.00 - 106.50 93.10 4.31 22.02 25098.13
Brookfield♦ 43.82 0.08 48.64 37.70 1.32 12.46 32524.94 Nppn Stl 2303 54.50 3505 1773.5 2.59 10.76 19266.61 Citigroup 42.63 -0.36 60.95 34.52 0.36 8.09 125678.36 Oracle 38.73 -0.22 45.24 33.13 1.40 19.57 162713.25
SocGen 36.58 -0.21 48.77 26.61 3.12 8.57 32757.16 Formosa PetChem 87.50 -0.10 90.20 63.90 0.91 40.68 25440.98
CanadPcR 175.41 0.70 245.05 140.02 0.74 22.46 20195.27 NTTDCMo 2565.5 -14.00 2888 1961 2.50 20.88 92275.61 CME Grp♦ 96.33 1.74 100.87 81.87 2.02 26.86 32599.3 Pepsico♦ 100.83 -0.48 103.44 76.48 2.66 28.26 145740.97
Total 42.08 -0.27 50.30 35.21 5.61 121.37 114696.25 HonHaiPrc 84.00 0.80 99.70 72.70 4.05 9.31 40094.54
CanImp 97.32 0.33 102.90 82.19 4.33 11.30 28936.16 Panasonic 1010.5 28.10 1853.5 799.00 1.38 150.37 21821.48 Coca-Cola♦ 45.29 0.09 45.42 36.56 2.83 27.93 196082.95 Perrigo♦ 140.19 4.19 215.73 122.62 0.32 146.84 20524.11
UnibailR 246.95 3.30 259.00 212.05 3.55 13.79 27079.39 MediaTek 260.00 19.00 453.00 193.50 7.96 13.54 12471.74
CanNatRs 35.94 -0.17 42.46 21.27 2.39 97.46 29601.16 Seven & I 4826 146.00 5998 4370 1.36 28.44 37659.83 Cognizant 57.91 0.94 69.80 51.22 - 22.51 35274.17 Pfizer 30.16 -0.35 36.46 28.25 3.61 27.95 186482.74
Vinci 64.60 -0.75 66.44 50.08 2.63 18.54 42285.33 TaiwanSem 156.00 1.00 157.50 112.50 2.71 14.14 123466.73
CanNatRy♦ 80.13 0.25 88.62 66.62 1.39 20.12 47411.06 ShnEtsuCh 6133 140.00 8237 5160 1.57 19.63 23329.46 ColgtPlm 68.26 -0.11 70.65 50.84 2.14 46.17 60938.33 Phillips66 86.15 -0.28 94.12 69.79 2.46 11.47 45440.67
Vivendi 19.15 0.10 24.83 16.30 9.93-233.96 29106.24
Enbridge 49.94 -1.29 66.14 40.03 3.46-1342.46 34728.13 Softbank 5905 110.00 7827 4133 0.62 13.85 62413.83 Thailand (THB) Comcast 59.19 0.03 64.99 50.01 1.64 18.79 123974 PhilMorris 96.42 -0.07 97.15 75.27 4.07 22.44 149388.08
GtWesLif 35.46 0.08 37.70 30.42 3.42 13.78 26502.3 Germany (€) PTT Explor♦ 276.00 -5.00 370.00 197.00 3.78 41.73 22470.99
Sony 2798.5 46.00 3970 2199 0.74 28.37 31100.38 ConocPhil 40.30 -0.22 69.72 31.05 7.09 -11.58 49818.97 PNCFin 85.90 -0.50 100.52 77.67 2.27 11.92 43044.94
ImpOil 44.38 -0.02 55.37 37.25 1.02 36.18 28302.2 Allianz 146.25 1.60 170.15 126.55 4.45 10.89 74235.28
SumitomoF 3720 85.00 5770 2819.5 3.82 9.94 46307.38 United Arab Emirates (Dhs) Corning♦ 19.40 -0.06 23.86 15.42 2.41 21.60 21583.48 PPG Inds 104.97 -0.04 118.69 82.93 1.31 21.01 28001.26
Manulife♦ 18.87 -0.01 24.20 15.32 3.28 19.33 27996.81 BASF 65.50 1.09 97.22 56.01 4.06 15.92 66820.34
Takeda Ph 5471 27.00 6609 5010 3.02 -41.81 38059.26 Emirtestele 18.25 0.55 19.05 10.50 3.89 19.53 39282.61 Costco 152.93 0.22 169.73 117.03 1.08 28.49 67141.63 Praxair♦ 110.47 -0.64 125.73 95.60 2.52 21.24 31465.85
Potash 24.16 - 42.86 20.65 7.97 12.33 15207.4 Bayer 100.25 2.29 146.45 91.08 2.13 21.66 92079.03
TokioMarine 4068 109.00 5504 3310 2.43 15.61 27128.04 United Kingdom (p) CrownCstl 84.84 -0.94 88.46 75.71 3.83 60.62 28317.16 Priceline 1339.08 12.21 1476.52 954.02 - 27.86 66440.59
RylBkC 74.47 0.22 81.53 64.52 4.00 11.75 83296.54 BMW 80.23 1.51 123.75 66.00 3.44 9.85 53644.86
Toyota 6200 60.00 8783 5703 3.33 9.16 182187.47 AscBrFd 3370 16.00 3606 2705.75 1.01 47.22 38215.55 CSX♦ 26.12 0.02 37.67 21.33 2.60 13.45 25157.48 ProctGmbl 80.95 -0.80 85.11 65.02 3.16 27.02 218934.58
Suncor En♦ 34.43 -0.19 40.93 27.32 3.08 -26.84 40418.08 Continental 194.25 3.00 234.25 171.30 1.59 15.36 43152.13
Mexico (Mex$) AstraZen♦ 4052 8.50 4931.68 3746 4.71 26.74 73377.06 CVS 101.09 0.73 113.65 81.37 1.35 22.52 111046.44 Prudntl♦ 73.12 -0.43 92.60 57.19 3.24 6.18 32611.52
ThmReut♦ 50.87 0.65 55.92 47.25 3.40 24.65 29146.32 Daimler 66.28 1.19 96.07 57.01 3.51 8.86 78758.7
AmerMvl 13.34 -0.12 17.17 10.87 1.86 39.99 31533.25 Aviva 482.70 -12.70 574.50 400.10 3.75 12.63 27993.86 Danaher 91.52 0.91 97.62 81.25 0.57 25.66 62888.38 PublStor♦ 258.91 2.09 259.56 182.08 2.44 43.90 44861.17
TntoDom 55.09 -0.06 56.48 47.75 3.53 13.45 76735.51 Deut Bank 18.53 0.19 33.42 13.03 3.85 -3.85 28387.29
FEMSA UBD 165.00 1.31 176.84 133.52 0.66 32.43 33214.21 Barclays♦ 163.25 -2.75 289.90 147.75 3.98 -84.06 39307.52 Deere 82.14 -0.81 98.23 70.16 2.95 14.81 25900.86 Qualcomm♦ 52.13 -0.09 71.90 42.24 3.47 17.86 77928.48
TrnCan 47.12 -0.47 58.12 40.58 4.10 -28.97 24899.3 Deut Tlkm 15.97 0.14 17.63 13.39 2.98 23.50 81686.95
WalMrtMex 40.94 -0.93 47.44 35.50 1.31 31.60 40217.6 BP♦ 345.45 -2.95 487.50 252.55 8.00 -14.39 91472.2 Delphi 69.93 -0.35 90.57 55.59 1.39 17.38 19312.74 Raytheon 122.42 -0.29 129.99 95.32 2.13 18.66 36603.34
ValeantPh 89.44 -2.68 347.84 79.92 - 40.67 22959.99 DeutsPost 23.84 0.32 31.19 19.55 - 20.98 32105.99
BrAmTob 4101 24.50 4105.5 3231.5 3.61 19.04 109509.78 Delta 47.92 0.23 52.77 34.61 0.91 8.76 37306.13 Regen Pharm 372.60 -4.52 605.93 350.26 - 69.46 38330.99
E.ON 8.59 0.26 14.85 7.08 1.55 -2.51 19084.76 Netherlands (€)
China (HK$) BSkyB 1017 10.00 1180 953.50 3.23 27.85 25041.52 Devon Energy 24.67 -0.11 70.48 18.07 3.78 -0.71 10886.73 ReynoldsAm♦ 50.84 -0.24 52.54 33.71 2.66 20.36 72566.03
Fresenius Med 77.72 1.73 83.17 63.10 0.96 26.31 26442.23 Altice 16.05 0.12 47.73 9.98 - 302.29 14639.55
AgricBkCh 2.77 0.05 4.55 2.50 7.70 4.36 10975.91 BT 462.00 2.95 502.60 404.00 2.47 17.41 65922.04 DiscFinServ 48.46 -0.73 60.57 42.86 2.17 9.72 20070.11 Salesforce 72.08 0.45 82.90 52.60 - -995.87 48358.47
Fresenius SE 62.87 0.72 70.00 51.01 0.67 28.82 38108.96 ASML Hld 87.46 0.51 104.85 70.25 0.76 28.70 42094.85
Bk China 3.15 0.04 5.68 2.83 7.07 4.87 33954.83 Compass 1215 -1.00 1298 963.00 2.26 23.28 28614.77 Disney 98.94 1.00 122.08 86.25 1.35 19.02 161427.39 Schlmbrg♦ 73.65 -1.35 95.13 59.60 2.64 46.49 92300.19
HenkelKgaA 84.97 1.05 99.44 75.76 1.44 20.21 24518.63 Heineken 77.51 -0.52 85.90 64.54 1.45 24.69 49588.45
BkofComm 4.92 0.09 8.61 4.24 6.43 4.74 22205.22 Diageo♦ 1889 16.00 1979.5 1592.5 2.99 19.22 68094.23 DominRes♦ 72.31 0.09 76.59 64.54 3.48 23.25 43127.08 Sempra Energy 99.67 0.21 112.90 86.72 2.73 19.08 24839.34
Linde 132.95 1.65 195.55 113.50 2.25 22.65 27426.86 ING 11.77 -0.04 16.00 9.19 2.91 8.97 50590.68
BOE Tech 1.76 -0.04 4.78 1.18 2.07 26.14 45.14 GlaxoSmh♦■ 1410 12.00 1645 1227.5 5.67 6.98 98366.01 DowChem 50.60 -0.02 57.10 35.11 3.30 8.80 56525.89 Shrwin-Will 285.00 0.17 294.35 218.27 0.91 26.28 26277.8
MuenchRkv 185.70 1.05 206.50 156.00 3.97 10.53 34412.85 Unilever 39.76 0.14 42.84 32.86 2.85 24.32 75725.1
Ch Coms Cons 8.11 0.01 17.00 5.77 2.44 8.18 4628.64 Glencore 147.90 6.20 318.46 66.67 8.26 -5.85 30495.55 DukeEner♦ 77.48 -0.28 80.10 65.50 4.06 19.83 53335.52 SimonProp 198.58 -2.73 208.14 170.99 2.96 34.75 62514.3
SAP 71.07 1.10 75.75 53.91 1.47 28.97 96975.32 Norway (Kr)
Ch Evrbrght 3.49 0.03 5.65 3.07 6.25 4.80 3090.11 HSBC♦ 452.55 1.20 674.57 420.15 7.60 10.35 127613.26 DuPont 63.50 -0.33 76.61 47.11 2.63 31.26 55651.84 SouthCpr 27.01 0.16 33.31 21.55 1.22 29.99 20897.83
Siemens 91.17 2.04 106.35 77.91 3.44 15.23 86073.44 DNB 107.70 0.90 143.00 90.10 3.31 8.21 20706.28
Ch Rail Cons 8.53 -0.16 17.70 6.72 2.06 7.78 2283.03 Imperial Brands♦ 3752 -0.50 3831 3460.5 3.52 21.21 51524.54 Eaton♦ 60.40 0.27 73.82 46.19 3.54 14.67 27665.29 Starbucks 58.51 0.92 64.00 42.05 1.13 36.92 86476.24
Volkswgn 132.40 1.95 254.50 95.00 3.45 11.07 43395.08 Statoil 130.60 1.10 161.70 97.25 5.18 -11.89 49155.13
Ch Rail Gp 5.62 0.03 12.30 4.21 1.63 9.86 3048.04 LlydsBkg 70.31 0.16 89.35 55.84 2.13 93.13 71881.92 eBay 24.17 0.15 29.83 21.52 - 15.54 28489.3 StateSt 57.84 -0.11 81.26 50.73 2.22 13.32 23337.64
ChConstBk 4.88 0.08 7.98 4.31 7.23 4.60 151236.92 Hong Kong (HK$) Telenor 136.80 -0.70 186.10 116.80 2.61 106.84 24244.79 Ecolab♦ 103.43 -2.93 122.48 98.62 1.26 32.01 30615.47 Stryker 104.99 -0.01 105.51 86.68 1.31 28.60 39159.4
Natl Grid 967.50 2.00 992.50 806.40 4.43 16.86 51899.51
China Vanke 20.15 1.83 24.10 15.52 2.89 12.00 3415.53 AIA 42.65 -0.35 58.20 36.85 0.96 20.92 66239.77 Qatar (QR) EMC 26.26 0.02 28.77 22.66 1.70 26.64 51119.73 Sychrony Fin 28.38 -0.44 36.40 23.74 - 11.02 23664.06
Prudential 1346 -12.50 1761.5 1045.99 2.74 13.70 49600.04
ChinaCitic 4.74 0.07 7.40 4.00 - 4.67 9093.15 BOC Hold 21.55 0.10 33.70 18.82 4.74 9.66 29370.34 QatarNtBk 139.00 1.20 169.00 122.50 4.37 10.66 26708.7 Emerson 51.27 0.01 62.75 41.25 3.57 13.86 32969.33 Target 81.95 0.08 85.81 66.46 2.66 15.46 50485.43
RBS 231.20 1.60 370.00 215.90 - -10.37 38499.13
ChinaLife 18.38 0.48 41.00 16.12 2.51 11.63 17630.3 Ch OSLnd&Inv 26.20 0.45 34.05 20.45 1.91 7.92 33302.44 EOG Res 75.04 -0.14 101.36 57.15 0.87 -9.31 41263.25 TE Connect 59.34 -0.38 73.73 51.70 2.10 21.96 22204.86
Russia (RUB) ReckittB 6637 108.00 6782 5403 2.09 28.20 67154.3
ChinaMBank 15.96 0.46 26.85 12.72 4.92 5.96 9445.04 ChngKng 47.65 2.20 77.55 38.20 - 11.01 23707.54 EquityResTP 72.22 -0.69 82.53 61.90 2.97 31.49 26368.7 Telsa Mtrs 214.65 7.15 286.65 141.05 - -31.86 28345.88
Gzprm neft 143.20 -1.10 158.70 122.75 5.13 11.67 47878.73 RELX 1255 8.00 1279 988.50 2.10 26.49 36603.48
ChinaMob 86.15 0.65 118.00 79.00 3.08 14.22 227385.15 Citic Ltd 12.00 -0.32 16.40 10.02 1.63 6.22 44998.86 Exelon 34.66 -0.07 34.98 25.09 3.48 14.04 31884.59 TexasInstr 55.47 -0.59 59.67 43.49 2.45 20.23 55761.65
Lukoil 2658.5 -10.50 2850.1 2040.1 6.68 23.06 31935.91 RioTinto♦ 2001.5 1.50 3072 1557 7.68 -62.16 39401.09
ChinaPcIns 26.75 0.55 47.10 23.70 2.13 13.72 9569.87 Citic Secs 16.14 0.08 40.50 12.82 2.05 7.57 6071.7 ExpScripts 71.10 0.82 94.61 65.55 - 20.55 47498.07 TheTrvelers♦ 112.46 -1.18 116.48 95.21 2.06 10.64 33173.15
MmcNrlskNckl 9150 -71.00 11284 7840 14.98 11.11 20449.77 RollsRoyce 681.50 -4.50 1061 497.00 2.07 152.12 17948.94
ChMinsheng 7.13 - 11.88 6.13 3.04 4.83 6372.65 CK Hutchison 99.10 -0.05 174.90 91.80 3.36 4.29 49305.74 ExxonMb 82.31 0.12 90.09 66.55 3.40 22.00 341813.4 ThrmoFshr♦ 139.64 -0.58 143.65 117.10 0.42 29.15 55334.02
Novatek 624.00 -0.40 650.00 410.80 9.58 55.72 26758.78 RylDShlA♦ 1666.5 -2.50 2122 1256 7.72 81.00 100488.17
ChMrchSecs RMB 16.37 0.17 40.00 13.45 4.57 8.96 12105.35 CNOOC 9.08 -0.10 13.78 6.41 5.70 8.62 52258.51 Facebook 110.01 0.60 117.59 72.00 - 88.02 252466.33 TimeWrnr♦ 70.62 0.20 91.34 55.53 1.93 15.87 55800.7
Rosneft 301.05 -0.55 304.40 214.80 2.78 7.95 45061.54 SABMill 4230 10.00 4240 2773 1.76 35.04 98216.69
Chna Utd Coms RMB 4.30 0.06 10.74 3.86 1.51 30.25 14032.78 HangSeng♦■ 132.50 1.10 162.10 121.10 4.11 9.47 32654.31 Fedex♦ 144.00 -0.42 185.19 119.71 0.59 38.61 39688.6 TimeWrnrC 195.53 -0.38 196.00 145.44 1.86 31.52 55387.86
Sberbank 109.26 - 110.70 60.57 0.42 11.53 33311.04 Shire♦ 3830 52.00 5870 3423 0.40 25.03 32511.84
ChShenEgy 12.88 0.32 22.50 10.12 6.63 9.36 5642.7 HK Exc&Clr 175.50 2.70 311.40 160.10 2.82 27.66 27340.69 FordMtr 13.25 -0.05 16.74 10.44 4.40 7.40 51637.77 TJX Cos 75.94 0.45 76.93 63.53 0.94 24.95 50844.04
Surgutneftegas 40.25 -0.06 41.16 30.31 - 1.49 20306.3 StandCh 483.55 15.75 1166 373.40 9.28 -8.34 22706.9
ChShpbldng RMB 6.32 0.22 20.19 5.66 0.58-399.59 17473.53 MTR 37.35 1.00 40.00 33.10 2.56 15.05 28211.12 Franklin 37.99 -0.37 54.04 31.00 1.61 12.50 22514.62 T-MobileUS 36.90 -0.86 43.43 31.19 - 46.06 30107.7
Saudi Arabia (SR) Tesco 193.15 0.95 252.52 137.00 0.60 -2.78 22523.77
ChStConEng RMB 5.60 0.12 12.52 4.88 2.97 7.43 25778.95 SandsCh 29.10 0.40 39.15 20.75 6.23 17.39 30269.69 GenDyn 134.89 -0.63 153.76 121.61 1.94 15.29 41972.62 UnionPac♦ 80.88 -0.38 118.66 67.06 2.64 15.16 68457.99
AlRajhiBnk 52.25 -0.10 69.00 44.70 2.32 12.27 22640.46 Vodafone 219.60 2.25 258.00 197.70 5.11 -41.12 83538.96
ChUncHK 9.34 0.24 16.00 7.87 2.51 20.82 28831.81 SHK Props♦ 94.85 1.40 137.60 79.00 2.31 9.48 35376.64 GenElectric♦ 30.31 -0.03 31.49 19.37 2.95 183.46 282810.71 UPS B 101.16 0.34 107.32 87.30 2.81 19.47 69818.67
Natnlcombnk 41.30 -0.38 72.75 36.60 1.83 9.91 22025.5 WPP 1575 10.00 1616 1273 2.43 16.28 29209.86
CNNC Intl RMB 7.19 0.12 14.38 4.07 - 20.93 4307.22 Tencent 153.30 5.20 171.00 124.00 0.22 44.88 185838.82 GenMills 60.78 -0.28 61.26 47.43 2.71 26.39 36063.52 USBancorp 40.34 -0.12 46.26 37.07 2.43 13.12 70026.85
SaudiBasic 75.26 -1.57 110.50 59.50 6.45 10.11 60204.78 United States of America ($)
CSR 8.17 0.15 20.70 6.61 - 19.06 4603.43 India (Rs) GenMotors♦ 31.27 0.01 39.00 24.62 4.29 5.45 48296.28 UtdHlthcre♦ 125.62 0.52 126.21 95.00 1.45 21.50 119418.91
SaudiTelec 68.75 - 73.25 52.75 5.65 15.29 36664.72 21stC Fox A♦ 27.83 -0.09 35.85 22.66 1.05 23.72 31154.21
Daqin RMB 6.84 0.11 15.15 6.41 6.78 7.45 15656.07 Bhartiartl 340.75 - 452.45 282.30 0.64 25.37 20297.48 GileadSci♦ 90.97 1.32 123.37 81.89 1.38 7.86 124341.95 UtdTech 97.22 0.47 121.60 83.39 2.56 22.08 81346.88
Singapore (S$) 3M 162.22 0.34 167.70 134.00 2.46 22.01 98149.29
Gree Elec Apl 0.20 - 0.45 0.13 - -2.32 347.22 HDFC Bk 1027.55 - 1128 928.00 0.77 23.09 38699.25 GoldmSchs♦ 153.49 -0.45 218.77 139.05 1.61 13.01 65469.04 ValeroEngy 63.89 -1.48 73.88 51.68 2.59 8.23 30053.39
DBS 15.38 0.14 21.50 13.01 3.57 12.72 27931.84 AbbottLb 40.38 0.01 51.74 36.00 2.31 24.16 59489.51
GuosenSec RMB 14.70 0.50 34.94 13.28 1.31 9.22 4967.88 Hind Unilevr 857.15 - 972.80 766.40 1.63 41.09 27638.67 Halliburton♦ 35.52 -0.61 50.20 27.64 1.97 -46.85 30484.02 Verizon 52.37 -0.16 52.96 38.06 4.14 12.34 213347.05
JardnMt US$ 54.41 0.27 63.86 45.00 2.43 13.90 38215.99 Abbvie 57.25 -0.48 71.60 45.45 3.43 18.75 92243.39
HaitongSecs 12.42 0.28 27.90 10.00 2.36 8.04 5458.75 HsngDevFin 1158.7 - 1386.75 1011.45 1.28 19.99 27269.33 HCA Hold 74.83 -0.12 95.49 43.91 - 15.43 29704.4 VertexPharm 85.38 -0.88 143.45 78.51 - -38.03 21036.95
JardnStr US$ 28.50 -0.23 35.78 25.24 0.86 11.09 31721.89 Accenture 106.45 0.77 109.86 86.40 1.90 24.87 85822.47
Hngzh HikVDT RMB 29.42 0.72 56.48 23.72 1.31 21.66 14293.78 ICICI Bk 221.65 - 346.00 180.75 2.18 10.32 19202.01 Hew-Pack♦ 11.47 -0.23 16.16 8.91 5.60 4.65 19804.76 VF Cp♦ 65.92 -0.43 77.40 52.21 1.96 23.80 27981.39
OCBC 8.95 0.15 10.92 7.41 3.68 10.86 26741.89 Adobe 87.31 1.31 96.42 71.27 - 73.92 43761.02
Hunng Pwr 6.83 0.09 11.90 5.63 6.48 6.77 4138.36 Infosys 1141.2 - 2282 932.65 3.52 19.83 38868.21 HiltonWwde 21.32 0.06 31.60 16.16 0.64 15.45 21061.46 Viacom♦ 39.91 0.62 73.52 30.11 3.73 8.81 13827.07
SingTel 3.80 0.02 4.57 3.38 4.34 16.64 44013.29 AEP 64.00 -0.23 64.69 52.29 3.26 18.34 31412.31
IM Baotou Stl RMB 2.96 0.06 7.50 2.66 - -39.18 7173.96 ITC 325.05 - 359.80 268.00 1.91 26.18 38946.94 HomeDep♦ 129.24 0.78 135.47 92.17 1.61 26.12 163860.97 Visa Inc 71.25 -0.38 81.01 60.00 0.68 26.75 136738.08
UOB 18.79 0.14 25.05 16.80 4.14 10.56 21940.39 Aetna 113.95 0.48 134.40 92.42 0.85 17.30 38811.37
In&CmBkCh 4.23 0.08 7.10 3.72 7.08 4.75 47326.19 L&T 1184.2 - 1888 1016.05 1.25 22.31 16437.16 Honywell 109.14 0.11 111.86 87.00 1.91 18.59 83092.13 Walgreen 81.73 0.32 97.30 71.50 1.62 20.89 88165.98
Aflac 61.70 -0.57 66.53 51.41 2.49 10.86 25914.09
IndstrlBk RMB 14.99 -0.18 21.42 11.90 3.67 5.92 43970.13 OilNatGas 208.25 - 343.20 187.75 4.60 9.39 26549.65 South Africa (R) HumanaInc 186.12 -0.79 219.79 155.24 0.60 22.68 27735.19 WalMartSto 67.38 0.21 83.90 56.30 2.68 15.57 215743.25
AirProd 136.53 0.06 155.79 114.64 2.31 23.21 29442.74
Kweichow RMB 224.57 -3.48 290.00 166.20 1.88 18.16 43432.74 RelianceIn 1019.75 - 1089.75 796.45 0.97 11.44 49236.02 Firstrand 43.75 -0.01 58.47 34.08 5.07 9.47 15772.42 IBM 142.80 0.44 176.30 116.90 3.40 10.80 137213.79 WellsFargo 49.79 -0.28 58.77 44.50 2.88 12.43 252769.51
Alexion 136.16 -3.11 208.88 130.51 - 209.53 30675.67
Midea 1.91 -0.01 2.68 1.65 4.77 13.18 52.94 SBI NewA 181.75 - 305.00 148.25 1.90 8.96 21024.24 MTN Grp 144.94 -0.09 250.00 109.56 10.03 7.45 17190.88 IllinoisTool 98.35 0.18 100.14 78.79 2.05 19.73 35776.51 Williams Cos♦ 16.66 0.65 61.38 10.22 14.29 -22.56 12496.09
Allegran 293.80 -5.18 340.34 237.50 - -35.82 115959.15
New Ch Life Ins 25.00 0.75 56.55 22.00 0.97 7.29 3332.56 SunPhrmInds 862.20 - 1200.8 704.00 0.34 54.10 30920.98 Naspers N 1995.39 56.43 2270 1521.98 0.25 58.93 56153.48 Illumina 154.83 -3.76 242.37 130.00 - 51.45 22760.01 Yahoo 33.73 -0.08 46.17 26.15 - -7.48 31935.95
Allstate♦ 64.62 -0.90 72.51 54.12 1.80 13.16 24445.77
PetroChina 5.39 -0.03 11.04 4.16 3.42 19.83 14659.52 Tata Cons 2355 - 2770 2115 1.67 21.78 69148.13 South Korea (KRW) Intcntl Exch♦ 236.53 0.54 268.89 220.28 1.19 21.37 28120.51 Yum!Brnds 76.97 -0.80 95.90 64.58 2.13 27.14 31458.53
Alphabet 751.40 6.53 810.35 529.00 - 33.85 219848.87
PingAnIns 35.30 0.55 62.90 30.50 2.25 9.82 33889.31 Indonesia (Rp) HyundMobis♦ 249000-4000.00 272000 185500 1.38 14.15 20434.7 Intel 31.54 -0.22 35.59 24.87 2.96 13.91 148994.96 Venezuela (VEF)
Altria♦ 61.88 -0.13 63.15 47.31 3.41 23.87 121156.82
PngAnBnk RMB 10.26 0.10 17.50 9.30 1.65 6.77 18646.04 Bk Cent Asia 13400 - 15600 11000 0.93 22.20 25272.62 KoreaElePwr 58800 600.00 61200 40800 0.80 3.27 31823.54 Intuit 99.45 -0.51 109.21 79.63 1.12 49.42 25540.87 Bco de Vnzla 108.05 -26.95 143.95 39.00 - - 29190.56
Amazon 575.60 5.99 696.44 365.65 - 474.02 271016.68
Pwr Cons Corp RMB 6.41 0.11 20.00 5.60 1.51 13.05 3256.7 SK Hynix 30350 -350.00 51700 25800 1.62 5.53 18078.29 John&John 107.80 0.09 108.30 81.79 2.66 20.25 297445.12 Bco Provncl 4000 -100.00 4400 1190 0.12 53.15 31948.88
Israel (ILS) AmerAir 42.47 - 56.05 34.10 0.92 3.95 25610.18
SaicMtr RMB 19.40 -0.14 29.18 14.00 6.47 7.68 32931.38 SmsungEl 1255000 6000 1510000 1033000 1.55 9.72 153489.88 JohnsonCn♦ 37.57 0.11 54.52 33.62 2.77 18.07 24354.13 Mrcntl Srvcs 5600 -200.00 6200 1700 0.14 43.59 24640.56
TevaPha 229.80 -0.10 275.90 212.00 2.21 33.34 60550.38 AmerExpr 59.47 0.01 83.54 50.27 1.85 12.12 57331.78
ShenwanHong 0.14 -0.01 0.41 0.12 - -2.31 46.41 Spain (€) JPMrgnCh 59.05 -0.29 70.61 50.07 2.83 10.12 216729.14
Italy (€) AmerIntGrp♦ 52.60 -0.29 64.93 50.20 1.50 32.80 60465.46
ShgPdgBk RMB 16.86 -0.11 20.12 11.91 4.34 6.59 48419.93 Kimb-Clark♦ 134.49 1.34 134.76 103.04 2.54 49.96 48536.5 Closing prices and highs & lows are in traded currency (with variations for that
Enel 3.90 -0.01 4.50 3.33 3.41 68.40 40733 BBVA 6.55 0.03 9.77 5.24 2.32 17.51 46282.96 AmerTower 97.86 -0.60 104.12 83.07 1.80 71.60 41482.61
Sinopec Corp 4.88 -0.07 7.79 3.86 4.76 23.99 16049.48 KinderM 18.71 0.09 44.71 11.20 10.03 185.94 41741.25 country indicated by stock), market capitalisation is in USD. Highs & lows are
ENI 13.39 0.07 17.66 10.93 6.81 -18.49 54048.77 BcoSantdr 4.51 0.06 7.17 3.31 10.44 9.13 72370.5 Amgen 144.82 0.25 181.81 130.09 2.12 16.45 108917.82
Sinopec Oil RMB 4.96 0.14 14.23 4.71 - -148.09 1361.82 Kraft Heinz 77.26 0.31 81.20 61.42 2.14-233.82 93885.54 based on intraday trading over a rolling 52 week period.
Generali 13.78 -0.12 18.70 10.90 4.14 11.73 23828.72 CaixaBnk 2.88 0.01 4.53 2.37 3.96 21.91 18610.5 Anadarko♦ 46.90 0.61 95.94 28.16 2.24 -3.66 23845.77
Denmark (kr) Iberdrola 6.09 -0.03 6.71 5.66 0.47 16.65 43250.49 Kroger 38.37 -0.27 42.75 27.32 0.92 20.37 37400.11 ♦ ex-dividend
IntSPaolo 2.68 -0.06 3.65 2.12 2.48 16.22 47173.67 Anthem♦ 144.45 1.35 173.59 115.63 1.68 15.85 37752.26
DanskeBk 194.90 1.10 218.00 168.30 2.68 15.47 29278.69 Inditex 29.86 0.25 35.38 26.00 1.24 35.56 103348.37 L Brands 86.59 0.27 101.11 75.11 1.97 23.48 25062.12 ■ ex-capital redistribution
Luxottica 50.65 0.05 67.80 48.00 1.35 32.37 27209.82 Aon Cp 100.21 -0.27 104.70 83.83 1.12 21.13 27449.21
MollerMrsk 9010 5.00 16450 7355 3.15 37.32 14282.24 Repsol 10.60 0.05 18.75 7.95 8.52 -13.02 16974.78 LasVegasSd 52.71 1.13 59.90 34.88 4.79 22.00 41888.35 # price at time of suspension
Unicred 4.00 -0.05 6.61 2.77 2.85 13.18 26577.66 Apple 102.63 0.37 134.54 92.00 1.92 11.24 569040.55
NovoB 386.00 7.00 415.00 305.10 1.23 31.79 118578.76 Telefonica 10.16 -0.02 14.31 8.48 6.97 534.48 56143.88 LibertyGbl 36.64 0.57 58.66 30.65 - -29.45 9262.8
ArcherDan 36.82 0.22 53.31 29.86 2.96 12.72 21867.34
Lilly (E) 73.89 -0.76 92.85 68.54 2.63 33.64 81729.25

FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE
Close Prev Day Week Month Close Prev Day Week Month Day's Mth's Spread Day's Mth's Spread
price price change change % change change % change % price price change change % change change % change % Red Ratings Bid Bid chge chge vs Red Ratings Bid Bid chge chge vs
ShenwanHong 0.14 0.15 -0.01 -3.36 0.02 18.0 4.35 Vale 13.87 13.87 0.00 0.00 -3.71 -21.1 32.78 Mar 14 date Coupon S* M* F* price yield yield yield US Mar 14 date Coupon S* M* F* price yield yield yield US
Altice 16.05 15.94 0.12 0.72 2.42 17.8 41.16 Glencore 147.90 141.70 6.20 4.38 -22.85 -13.4 50.42 High Yield US$ US$
Unicred 4.05 4.05 0.00 0.00 0.49 13.9 21.64 Williams Cos 16.66 16.01 0.65 4.06 -2.40 -12.6 23.98 Navient Corporation 06/18 8.45 BB- Ba3 BB 106.37 5.47 -0.01 -2.12 4.52 Halliburton Company 02/27 6.75 A A2 A- 119.45 4.52 0.00 -0.12 2.55
Nmrcble-SFR 37.40 36.37 1.04 2.85 3.78 11.2 24.67 Sinopec Oil 4.96 4.82 0.14 2.90 -0.70 -12.4 -21.52 High Yield Euro Korea Electric Power Corporation 08/27 6.75 AA- Aa2 AA- 101.61 6.65 0.00 0.08 4.68
IntSPaolo 2.73 2.73 0.00 0.00 0.27 11.0 11.77 Firstrand 43.75 43.76 -0.01 -0.02 -5.51 -11.2 -1.46 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - SouthTrust Bank 12/27 6.57 A Aa3 A+ 120.59 4.36 0.00 0.08 2.39
BcoSantdr 4.51 4.45 0.06 1.39 0.41 10.0 29.64 RioTinto 2001.50 2000.00 1.50 0.08 -235.50 -10.5 8.34 SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 111.11 4.82 0.00 -0.01 -
Generali 13.90 13.90 0.00 0.00 1.16 9.1 23.59 Alexion 136.16 139.27 -3.11 -2.23 -13.44 -9.0 -3.60 Emerging US$ FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 122.42 4.47 0.00 0.29 -
CaixaBnk 2.88 2.87 0.01 0.38 0.24 9.0 16.24 Regen Pharm 372.60 377.12 -4.52 -1.20 -35.68 -8.7 -1.63 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 E.I. du Pont de Nemours and Company 01/28 6.50 A- A3 A 121.56 4.22 0.00 -0.09 -
China Vanke 20.15 18.32 1.83 9.99 1.63 8.8 27.53 ShgPdgBk 16.86 16.97 -0.11 -0.65 -1.59 -8.6 -8.27 Brazil 01/18 8.00 BB+ Ba2 BB+ 105.88 4.64 0.00 0.00 3.70
Russia 07/18 11.00 BB+ Ba1 BBB- 117.88 3.09 -0.01 -0.39 2.14 Euro
CSR 8.17 8.02 0.15 1.87 0.66 8.8 21.58 BOE Tech 1.76 1.80 -0.04 -2.22 -0.14 -7.4 -6.42 Electricite de France (EDF) 03/27 4.13 A+ A1 A 121.71 1.92 0.00 -0.08 -0.05
Perrigo 140.19 136.00 4.19 3.08 11.11 8.6 1.13 VertexPharm 85.38 86.26 -0.88 -1.02 -5.57 -6.1 2.61 Peru 03/19 7.13 BBB+ A3 BBB+ 114.74 2.11 0.00 -0.45 1.16
Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84 Credit Agricole S.A. 03/27 2.63 BBB Baa3 A- 97.54 2.89 0.00 -0.67 0.92
Anthem 144.45 143.10 1.35 0.94 11.25 8.4 18.90 Barclays 163.25 166.00 -2.75 -1.66 -10.45 -6.0 5.42 BHP Billiton Fin Ltd 09/27 3.25 A+ A3 A+ 110.07 2.25 0.00 -0.62 0.28
MediaTek 260.00 241.00 19.00 7.88 20.00 8.3 30.00 Kweichow 224.57 228.05 -3.48 -1.53 -14.21 -6.0 10.15 Brazil 01/21 7.88 BB+ Ba2 BB+ 99.45 5.06 -0.01 0.00 3.59
Colombia 07/21 4.38 BBB Baa2 BBB 102.83 3.82 -0.01 -0.81 2.34 B.A.T. Netherlands Fin B.V. (Re - British American Tobacco) 03/29 3.13 A- A3 A- 112.96 1.98 0.00 -0.06 -
Bradesco 29.89 29.89 0.00 0.00 2.22 8.0 45.34 Safran 55.52 59.23 -3.71 -6.26 -3.33 -5.7 9.92
Poland 03/22 5.00 A- A2 A- 111.87 2.86 0.00 -0.05 1.38 Yen
SvnskaHn 117.30 117.30 0.00 0.00 8.70 8.0 12.16 MollerMrsk 9005.00 9005.00 0.00 0.00 -535.00 -5.6 13.49
Turkey 09/22 6.25 - Baa3 BBB- 110.06 4.51 -0.01 -0.26 3.03 Wal-Mart Stores, Inc. 07/15 0.94 NR WR NR 100.00 0.31 0.00 0.00 -
Sony 2798.50 2752.50 46.00 1.67 206.00 7.9 23.99 RollsRoyce 681.50 686.00 -4.50 -0.66 -40.00 -5.5 12.43
Cred Agr 10.60 10.67 -0.07 -0.66 0.74 7.5 32.62 BP 345.45 348.40 -2.95 -0.85 -20.10 -5.5 4.17 Turkey 04/26 4.25 - Baa3 BBB- 95.55 4.87 0.00 -0.20 2.90 £ Sterling
Ch Rail Cons 8.53 8.69 -0.16 -1.84 0.56 7.0 24.53 BakerHu 44.05 45.79 -1.74 -3.80 -2.53 -5.4 10.44 Emerging Euro IPIC GMTN Limited 03/26 6.88 AA Aa2 AA 122.65 4.11 0.06 0.12 1.82
Ch Coms Cons 8.11 8.10 0.01 0.12 0.53 7.0 29.76 JardnStr US$ 28.50 28.73 -0.23 -0.80 -1.53 -5.1 2.08 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
Enel 3.91 3.91 0.00 0.00 0.25 6.8 10.23 Ambev 18.22 18.22 0.00 0.00 -0.95 -5.0 1.06 Mexico 07/17 4.25 BBB+ A3 BBB+ 111.13 1.50 0.00 0.00 0.55 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 0.58 Moody’s, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 09/25 5.75 BB+ - BBB- 115.62 3.82 0.00 -0.63 1.85
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 14 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return Mar 14 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 16.88 0.38 16.50 53.29 10.88 Mar 14 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 15.98 -0.39 16.37 56.32 7.04 Tr 4pc '16 101.72 0.40 0.00 -2.44 8.11 2.56 102.23 100.00 0.35
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 179.51 0.35 2.40 3.59 1.43 1.76 VXN 19.57 -0.08 19.65 46.72 11.15 Tr 1.75pc '17 101.10 0.46 -2.13 15.00 31.43 -11.54 102.48 101.09 0.29
Euro Repo 0.05 10-09-2014 0.05 0.05 0.05 Corporates( £) 297.74 0.43 1.01 0.87 0.90 -0.45 VDAX 21.29 -0.79 22.08 32.55 - Tr 5pc '18 109.10 0.38 -2.56 31.03 35.71 -51.90 112.88 109.08 0.35
UK Repo 0.50 05-03-2009 0.50 0.50 0.50 Corporates($) 253.05 0.06 0.49 1.44 0.49 1.44 † CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.5pc '19 111.68 0.54 -3.57 25.58 20.00 -48.08 114.29 111.04 0.36
Japan O'night Call 0.00-0.00 05-10-2010 0.03 0.00-0.10 0.00-0.10 Corporates(€) 214.62 0.70 0.57 1.58 1.39 -0.82 ‡ Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 4.75pc '20 115.67 0.75 -1.32 20.97 20.97 -39.02 118.06 114.45 0.33
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov(€) 230.84 0.50 -0.48 2.46 0.63 -0.38 Tr 1.5pc '21 102.43 0.99 -1.98 13.79 16.47 -28.26 141.03 99.91 0.20
Gilts( £) 298.03 -0.39 -1.39 3.90 -2.36 5.07 BONDS: BENCHMARK GOVERNMENT Tr 4pc '22 117.19 1.03 -1.90 11.96 15.73 -29.45 119.14 113.65 0.38
INTEREST RATES: MARKET Global Inflation-Lkd 244.53 0.31 1.53 2.60 -0.32 0.99 Red Bid Bid Day chg Wk chg Month Year Tr 5pc '25 129.91 1.44 -2.04 5.88 11.63 -17.24 132.97 124.47 0.35
Over Change One Three Six One Markit iBoxx £ Non-Gilts 299.00 0.19 0.26 1.38 -0.02 0.42 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '27 126.95 1.71 -1.72 3.64 9.62 -12.76 130.43 119.79 0.31
Mar 14 (Libor: Mar 11) night Day Week Month month month month year Overall ($) 229.49 -0.09 -0.38 1.99 -0.38 1.99 Australia 10/18 3.25 102.92 2.09 0.05 0.11 0.23 0.00 Tr 4.25pc '32 130.51 2.03 -1.93 0.50 5.73 -9.78 134.41 121.93 0.35
US$ Libor 0.37250 0.000 0.252 0.000 0.43620 0.63385 0.90550 1.22450 Overall( £) 295.62 -0.21 -0.90 3.15 -1.68 3.65 11/27 2.75 99.06 2.85 0.02 0.09 0.15 0.00 Tr 4.25pc '36 133.03 2.20 -1.35 0.00 4.76 -7.95 137.18 123.52 0.28
Euro Libor -0.28786 0.000 -0.006 0.000 -0.30100 -0.23571 -0.12371 -0.00543 Overall(€) 225.29 0.46 -0.31 2.09 0.60 -0.35 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 4.5pc '42 143.99 2.29 -1.72 -1.29 2.69 -7.29 148.39 132.20 0.26
£ Libor 0.48125 0.000 0.001 0.000 0.50819 0.59063 0.74788 1.01713 Treasuries ($) 221.83 -0.18 -0.87 2.32 -0.87 2.32 10/26 0.75 101.15 0.64 -0.03 -0.04 0.00 0.00 Tr 3.75pc '52 138.09 2.22 -1.77 -2.20 2.30 -11.55 142.78 121.95 0.23
Swiss Fr Libor 0.000 -0.81260 -0.75620 -0.68600 -0.57300 FTSE Belgium 06/18 0.75 101.83 -0.07 0.00 0.00 0.00 0.00 Tr 4pc '60 151.96 2.16 -2.26 -2.26 2.37 -13.25 157.42 131.72 0.22
Yen Libor 0.000 -0.02843 0.00100 0.01407 0.10357 Sterling Corporate (£) 110.95 0.76 - - 0.84 -4.21 06/26 1.00 103.56 0.64 -0.03 -0.03 -0.11 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per £ 100 nominal of stock. Red yield: Gross redemption yield.
Euro Euribor -0.006 -0.30100 -0.22500 -0.13100 -0.00900 Euro Corporate (€) 107.53 0.39 - - 1.42 -3.28 Canada 11/17 0.25 99.43 0.60 0.00 0.00 0.00 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Sterling CDs 0.000 0.50000 0.60000 0.77500 Euro Emerging Mkts (€) 885.86 30.48 - - 20.54 -18.09 06/26 1.50 100.28 1.47 0.00 0.00 0.00 0.00
US$ CDs
Euro CDs
0.000
-0.030
0.44000
-0.35500
0.60000
-0.26500
0.85000
-0.17500
Eurozone Govt Bond 115.81 0.23 - - 0.86 -2.92 Denmark 11/18 0.25 101.41 -0.28 0.00 0.00 0.00 0.00 GILTS: UK FTSE ACTUARIES INDICES
CREDIT INDICES Day's Week's Month's Series Series 11/25 1.75 111.02 0.57 -0.01 0.03 0.02 0.00
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 99.49 1.24 0.00 0.05 0.24 0.00
Fixed Coupon Mar 14 chg % Return 1 month 1 year Yield
Mar 14 term notice month month month year Markit iTraxx 04/26 0.50 99.40 0.56 -0.04 -0.01 0.00 0.00
1 Up to 5 Years 97.93 0.05 2390.29 -0.23 1.74 0.69
Euro -0.35 -0.25 -0.45 -0.35 -0.43 -0.28 -0.34 -0.19 -0.25 -0.10 -0.08 0.07 Crossover 5Y 315.59 3.09 -54.10 -148.70 491.39 280.05 France 05/19 1.00 104.21 -0.31 0.00 0.00 0.00 0.00
2 5 - 10 Years 181.57 0.16 3326.67 -0.72 3.48 1.28
Sterling - - - - 0.45 0.55 0.55 0.65 0.70 0.85 0.93 1.08 Europe 5Y 72.11 3.75 -18.17 -46.36 125.93 66.65 11/20 0.25 101.95 -0.16 0.00 0.00 0.00 0.00
3 10 - 15 Years 211.44 0.36 3938.29 -1.06 3.94 1.80
Swiss Franc - - - - - - - - - - - - Japan 5Y 76.17 -6.47 -11.11 -30.78 107.91 65.01 05/26 0.50 99.04 0.60 -0.03 -0.04 0.00 0.00
4 5 - 15 Years 188.73 0.22 3474.61 -0.82 3.67 1.49
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 77.44 2.10 -20.91 -49.48 140.51 65.28 05/45 3.25 139.82 1.54 -0.03 -0.08 -0.07 0.00
5 Over 15 Years 310.76 0.77 4545.44 -0.68 5.96 2.22
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 0.50 102.95 -0.45 0.00 0.00 0.00 0.00
Markit CDX 7 All stocks 175.87 0.39 3330.94 -0.59 3.92 1.96
Japanese Yen -0.15 -0.05 -0.15 -0.05 -0.30 0.00 -0.20 0.10 -0.10 0.10 -0.05 0.15 10/20 0.25 102.72 -0.34 0.00 0.00 0.00 0.00
Emerging Markets 5Y 319.03 -13.80 -20.46 -77.67 413.92 299.17 02/26 0.50 102.42 0.25 -0.02 0.03 0.01 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 436.04 -26.01 -39.64 -136.15 589.69 416.39 08/46 2.50 139.49 0.99 -0.03 -0.02 0.06 0.00
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. Index Linked Mar 14 chg % chg % chg % Return 1 month 1 year
Nth Amer Inv Grade 5Y 82.91 -7.93 -12.60 -38.92 124.57 75.52 Greece 07/17 3.38 95.92 6.65 -0.51 -3.17 -7.34 0.00
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 1 Up to 5 Years 309.63 0.08 0.15 -0.51 2375.47 0.15 0.94
02/26 3.00 67.37 8.60 -0.06 -0.79 -2.48 0.00 2 Over 5 years 592.00 0.37 0.29 7.29 4377.28 0.34 8.09
Ireland 10/17 5.50 109.39 -0.38 0.00 0.00 0.00 0.00 3 5-15 years 436.22 0.26 0.27 1.59 3326.59 0.29 2.92
05/26 1.00 101.68 0.83 -0.04 -0.09 -0.16 0.00 4 Over 15 years 735.76 0.41 0.29 9.89 5336.08 0.35 10.47
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/18 0.30 100.78 0.00 0.00 0.00 0.00 0.00 5 All stocks 545.45 0.33 0.27 6.42 4086.41 0.32 7.32
11/20 0.65 101.56 0.31 -0.01 -0.07 -0.26 0.00
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/26 1.60 102.44 1.35 -0.02 -0.15 0.00 0.00 Yield Indices Mar 14 Mar 11 Yr ago Mar 14 Mar 11 Yr ago
Crude Oil† Mar 37.55 -0.99 Corn♦ May 366.75 2.50 Mar 11 Mar 11 Prev return stock Market stocks
03/47 2.70 103.51 2.55 -0.01 -0.11 -0.23 0.00 5 Yrs 0.90 0.92 1.13 20 Yrs 2.26 2.29 2.35
Brent Crude Oil‡ 39.50 -0.93 Wheat♦ May 475.25 -1.00 Can 4.25%' 21 126.79 -0.377 -0.406 -0.37 5.18 70550.02 7
Japan 02/18 0.10 100.52 -0.17 0.00 0.00 0.00 0.00 10 Yrs 1.62 1.65 1.77 45 Yrs 2.18 2.23 2.46
RBOB Gasoline† Mar 1.42 -0.03 Soybeans♦ May 892.75 -1.50 Fr 2.25%' 20 114.15 -0.910 -0.867 0.38 20.31 219989.23 14
03/21 0.05 100.92 -0.13 0.00 0.00 0.00 0.00 15 Yrs 2.06 2.10 2.14
Heating Oil† Mar 1.22 0.10 Soybeans Meal♦ May 271.60 -1.50 Swe 0.25%' 22 109.58 -1.093 -1.113 0.00 30.77 227044.60 7
12/25 0.30 103.49 -0.06 0.00 0.00 0.00 0.00
Natural Gas† Mar 1.79 -0.02 Cocoa (ICE Liffe)X May 2255.00 33.00 UK 2.5%' 20 360.00 -1.544 -1.569 0.05 6.58 511039.65 26
12/45 1.40 117.52 0.69 -0.05 -0.01 -0.47 0.00 inflation 0% inflation 5%
Ethanol♦ - - Cocoa (ICE US)♥ May 3060.00 9.00 UK 2.5%' 24 341.89 -1.044 -1.068 -0.31 6.82 511039.65 26
Netherlands 04/17 0.50 101.04 -0.46 0.00 0.00 0.00 0.00 Real yield Mar 14 Dur yrs Previous Yr ago Mar 14 Dur yrs Previous Yr ago
Uranium† Mar 29.00 -7.75 Coffee(Robusta)X Mar 1381.00 0.00 UK 2%' 35 234.77 -0.908 -0.925 0.44 9.08 511039.65 26
07/25 0.25 99.14 0.34 -0.04 -0.01 -0.04 0.00 Up to 5 yrs -1.29 2.17 -1.25 -1.12 -1.95 2.19 -1.92 -1.70
Carbon Emissions‡ - - Coffee (Arabica)♥ May 126.00 0.00 US 0.625%' 21 103.02 0.060 0.061 -0.45 35.84 1137140.20 37
White SugarX 438.60 6.20 New Zealand 03/19 5.00 108.16 2.17 0.03 -0.17 -0.35 0.00 Over 5 yrs -0.98 23.84 -0.97 -0.66 -1.00 23.92 -0.99 -0.69
Diesel† - - US 3.625%' 28 133.85 0.701 0.061 -1.07 16.78 1137140.20 37
Sugar 11♥ 15.27 0.06 04/27 4.50 113.52 3.05 0.05 -0.04 -0.02 0.00 5-15 yrs -0.97 9.45 -0.94 -0.74 -1.07 9.46 -1.04 -0.85
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market
Norway 05/19 4.50 112.51 0.52 -0.01 0.00 -0.05 0.00 Over 15 yrs -0.98 29.38 -0.97 -0.65 -0.99 29.42 -0.98 -0.67
Base Metals (♠ LME 3 Months) Cotton♥ May 57.39 0.24 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 1.50 100.88 1.40 -0.01 0.02 0.00 0.00 All stocks -0.99 20.85 -0.97 -0.67 -1.02 20.97 -1.00 -0.70
Aluminium 1540.50 -22.50 Orange Juice♥ May 123.00 1.35 amount.
Aluminium Alloy 1590.00 0.00 Palm Oil♣ - - Portugal 06/19 4.75 111.39 1.15 -0.02 -0.02 -0.45 0.00 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
Copper 4946.50 -2.00 Live Cattle♣ Apr 137.70 -2.08 BONDS: TEN YEAR GOVT SPREADS 02/26 3.30 103.16 2.93 0.00 -0.17 0.00 0.00
Spain 04/18 0.25 100.47 0.03 0.02 0.01 -0.11 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 1834.00 -9.00 Feeder Cattle♣ Mar 162.30 0.83
Nickel 8660.00 -110.00 Lean Hogs♣ Apr 72.20 0.30 Spread Spread Spread Spread 04/26 1.95 103.73 1.55 -0.01 -0.11 -0.23 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Tin 16885.00 110.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.51 1.20 0.00 -0.02 0.19 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Zinc 1780.50 -21.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 05/25 2.50 116.85 0.60 -0.01 0.06 0.09 0.00 loss arising from the reliance on or use of the listed information. For all queries e-mail
Precious Metals (PM London Fix) Mar 11 Month Year Australia 2.85 2.59 0.88 Italy 1.35 1.10 -0.62 Switzerland 05/19 3.00 112.67 -0.94 0.00 0.00 0.00 0.00 ft.reader.enquiries@morningstar.com
Gold 1242.75 -22.00 S&P GSCI Spt 327.37 11.07 -16.71 Austria 0.64 0.39 -1.33 Japan -0.06 -0.31 -2.02 05/26 1.25 115.88 -0.28 0.00 0.00 0.00 0.00
Silver (US cents) 1560.00 10.00 DJ UBS Spot 79.41 5.31 -18.59 Belgium 0.64 0.39 -1.33 Netherlands 0.34 0.09 -1.63 United Kingdom 07/18 1.25 101.61 0.56 0.00 0.09 0.09 0.00 Data provided by Morningstar | www.morningstar.co.uk
Platinum 963.00 -11.00 R/J CRB TR 173.02 7.56 -18.07 Canada 1.47 1.22 -0.50 Norway 1.40 1.15 -0.57 01/21 1.50 102.38 1.00 -0.01 0.12 0.13 0.00
Palladium 567.00 -9.00 Rogers RICIX TR 2021.71 - - Denmark 0.57 0.32 -1.40 Portugal 2.93 2.68 0.96 07/26 1.50 98.27 1.68 -0.02 0.09 0.00 0.00
Bulk Commodities M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Finland 0.56 0.31 -1.41 Spain 1.55 1.30 -0.42 12/46 4.25 142.55 2.31 -0.02 -0.02 0.06 0.00
Iron Ore (Platts) 55.00 -1.20 UBS Bberg CMCI TR 12.22 7.66 -19.37 France 0.60 0.35 -1.37 Switzerland -0.28 -0.54 -2.25 United States 01/18 0.75 99.64 0.94 -0.01 0.04 0.00 0.00
Iron Ore (The Steel Index) 55.50 -0.60 LEBA EUA Carbon 5.01 -0.99 -26.32 Germany 0.25 0.00 -1.72 United Kingdom 1.68 1.43 -0.29 02/21 1.13 98.32 1.48 -0.02 0.07 0.00 0.00
GlobalCOAL RB Index 58.00 1.00 LEBA CER Carbon 0.36 0.00 -12.20 Greece 8.60 8.35 6.63 United States 1.97 1.72 0.00 02/26 1.63 96.91 1.97 -0.01 0.07 0.00 0.00
Baltic Dry Index 393.00 5.00 LEBA UK Power 2480.00 52.15 -8.22 Ireland 0.83 0.57 -1.14 02/46 2.50 95.03 2.74 -0.01 0.04 0.00 0.00
Sources: † NYMEX, ‡ ECX/ICE, ♦ CBOT, X ICE Liffe, ♥ ICE Futures, ♣ CME, ♠ LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information & Tullett Prebon Information Data provided by SIX Financial Information & Tullett Prebon Information
unless otherwise stated.
20 ★ FINANCIAL TIMES Tuesday 15 March 2016

MARKETS & INVESTING

INSIGHT Equities

James
de Bunsen Eurozone’s recovery trails S&P 500
Region’s companies need per cent. The S&P 500 is roughly 1 per decouple.” Much depends on European
5.7% while the US market enjoyed a first
cent lower for the year, while transport companies delivering better earnings weekly inflow for the year. US funds
earnings growth as well as stocks, seen as a barometer of the econ- growth and confounding bearish expec- Slide in the Euro buying stocks counted nearly $4bn of
Stoxx 600 index
Pitfalls of commodity ECB move to boost shares omy, are in positive territory for 2016.
“Investors will be buying Europe ver-
sus the US only against the backdrop of
tations among analysts and investors.
Entering 2016, analysts were expect-
ing stronger earnings from European
for the year inflows in the week to March 9, breaking
nine consecutive weeks of redemptions
that had drained more than $55bn from
exchange traded ROCHELLE TOPLENSKY AND JOEL LEWIN
LONDON
stable or improving US risk appetite,”
said Mislav Matejka at JPMorgan.
companies, providing a tailwind for val-
uations at the expense of US shares.
1 %
S&P 500’s fall in
the corresponding
portfolios, according to EPFR.
Others question whether the euro-

product investing An enthusiastic response from euro-

zone equities following the latest easing
from the European Central Bank still
leaves the region trailing the US S&P
500, a performance divergence that few
A weaker euro, seen boosting foreign
revenues of European companies, is a
missing source of support for senti-
ment. The single currency has appreci-
ated against the US dollar this year as
Lately, more European companies have
failed to beat earnings-per-share fore-
casts than exceed estimates, a situation
period zone economy can gain momentum
solely through aggressive ECB easing.
Max Anderl at UBS Asset Manage-
that previously occurred during 2008. ment said structural reforms were
“The sheer reality is that after the required as ECB stimulus measures pro-

A
recent email I received promoted a WTI crude
oil three-times leverage daily exchange
traded product. While I question the need to
leverage your risk three times, I do think com-
modities are beginning to look interesting.
The Bloomberg commodity index peaked in June 2008,
and having shed two-thirds of its value, it is currently near
levels not seen since 1999. Arguably some markets are
moving from oversupply into equilibrium and the demand
picture is not actually too bad, notwithstanding China’s
retrenchment. Early signs of stabilisation can be seen in
several indices spanning the London Metal Exchange to
the Commodity Research Bureau Rind.
All this could be good news for commodity producers
and investors, but it has always been difficult to invest effi-
ciently in this asset class.
For clarification, commodity equities are just that —
equities. While earnings are inextricably linked to under-
lying commodity spot prices, there are many other factors
that influence a company’s stock price. So where do you go
for the pure commodity play? In this area few actively
managed funds still exist given the losses since 2008. Euro-
pean regulation has also made it more difficult to invest in
commodities in a regulated fund and there are few survi-
vors in the hedge fund world.
On the passive side, ETF providers have somewhat filled
the void, launching low-cost vehicles linked to the per-
formance of individual commodities, such as gold, copper
or wheat, as well as more diversified indices. Like other
ETPs, trading is simple and costs fairly low, but many
investors are unaware of what they are getting when they
own such a strategy.
Precious metal ETPs are straightforward because they
own the underlying physical commodities. By way of illus-
tration, if I had $50m to invest it would buy me around a
tonne of gold, but for iron ore I
would get 1m tonnes. The
storage implications for the
Investors should
latter are considerable, hence take a view on
why bulk commodity ETPs
invest in futures not the phys-
the futures
ical assets. curve as well as
To ensure the closest return
profile to the physical spot
the spot price
price, and maintain continu-
ity of investment, ETPs buy the futures contract that is
closest to expiry and, to avoid taking physical delivery of
the underlying goods, they must roll these contracts
monthly (ie sell this month’s future before expiry and buy
next month’s), and this is where spot and futures returns
start to differ.
The futures curve, which is what you see when you plot
each month’s contract against its price, is often upward
sloping (“contango”). This is due to various reasons
including anticipated inflation, interest rate expectations,
supply/demand factors and storage costs. Curves in con-
tango mean the passive ETP investor is selling low and
buying high every month as futures are rolled.
The reverse occurs if the futures curve flips the other
way (“backwardation”), which happens when consumers
pay a premium to take immediate delivery of the physical
goods and which is often caused by a perceived shortage of
supply.
However, many commodity markets remain in surplus
due to too much supply. This can be seen in the return dif-
ferential between the oil spot price and the ETP that is sup-
posed to track it over 2015. The WTI Crude Oil spot price
fell 30.5 per cent but the popular London-listed WTI Oil
ETPs left investors 45.7 per cent worse off over the same
period due primarily to the futures roll costs.
This is why investors should take a view on the futures
curve as well as the spot price when buying bulk commod-
ity ETPs. And if the curve is upward sloping it probably
means the best trades will be those that anticipate short,
sharp upward moves in spot prices so that the negative roll
costs don’t offset those returns over time — or compound
losses if the call happens to be wrong.
Beyond having some gold in our portfolios for hedging
purposes, we have avoided commodities for some time. A
great trade for us, however, has been to take advantage of
these steep futures curves and mainly involves taking the
other side of the trade that all the passive investors are in.
It is akin to owning unlimited storage space and watching
volumes and storage rates going up and up.
James de Bunsen is multi-asset fund manager at Henderson
Global Investors
analysts predicted for 2016.
The ECB stimulus efforts notably
boosted banks, and the region’s share
markets — led by Italy and Spain — have
risen sharply this month, helping to nar-
row this year’s difference from the US.
The broad Euro Stoxx 600 index
remains 5.7 per cent lower for the year
and in US dollar terms has dropped 3.6
US interest rate cycle stuck in low gear
Federal Reserve outlook
constrained by modest growth
and inflationary pressure
DAN MCCRUM AND ERIC PLATT
In the quiet moments before the new
year arrived Bob Michele, head of fixed
income for JPMorgan Asset Manage-
ment, sucked his pencil and tried to
imagine what might count as a realistic
surprise in the market for debt sold by
the US government.
The Federal Reserve had just raised
interest rates for the first time in almost
a decade, to half a per cent from close to
zero. The US economy was recovering,
unemployment was falling and con-
sumer price inflation was stirring: all
indicators that, once upon a time, would
suggest the cost to borrow money was
likely to rise.
Yet when it came to long-term Treas-
ury bonds, Mr Michele was sceptical as
he believed the current economic cycle
was different, and for a variety of rea-
sons.
“The Fed is raising rates to normalise
markets and to stop penalising savers.
There is little growth and inflationary
pressure on the horizon for them to lean
into. Ultimately, markets will begin to
flatten the government yield curve
around where they believe the terminal
Fed funds rate is for this cycle,” he
advised clients.
Without a Fed Funds target rate
above 2 per cent, he argued “30 years
yields at 2.5 per cent are too high”, add-
ing a prediction that the yield on 10 year
debt would settle at 1.5 per cent.
The coupon on such bonds is fixed at
the point of issue, so it rises in value as
the interest rate available in the market
falls, and global government bonds
went on to experience their biggest such
rise since at least 1993.
But only to the middle of February.
The past month has witnessed some-
thing of a partial reversal, which pro-
vides the market with context for the
Fed meeting this week.
“The market did overplay [US reces-
sion], but given the data you saw in the
first couple of months, it’s not unreason-
able that a lot of people had a recession
trajectory,” says John Silvia, economist
for Wells Fargo.
“But retail sales, jobless claims, the
stock market are all doing better. That’s
what markets do, they emphasise data
and sometimes you get two to three
numbers in a row and people are off to
the races.”
investors have lowered expectations of kind of earnings downgrades we’ve vided only a brief respite.
Federal Reserve interest rate rises. seen, the consensus is barely expecting He added: “You need to find demand,
“The idea that the European economy more growth than in the US,” said Mr you need to reduce overcapacity in a
can accelerate on its own is a fantasy,” Medecin. “The idea that Europe is bet- deflationary environment. To some
said Jean Medecin at Carmignac Ges- ter positioned at this point of the cycle extent some of these [ECB] measures
tion. “Half of eurozone earnings come has become a very consensual call, and a actually make it more difficult to reduce
from overseas, it is one of the most open very consensual call is a dangerous call.” capacity because they are keeping zom-
economies in the world. There is no For the past five weeks, investors have bie companies alive.”
such thing as Europe being able to pulled money out of eurozone equities, Additional reporting by Eric Platt
Analysis. Policy prospects
Dec 2016 Fed Funds rate
implied by futures markets
Per cent
1.0
0.8
0.6
0.4
0.2
Dec 2015 2016 Mar
Ten years of the 10-year
Treasury yield
Per cent
6
5
4
3
2
1
2006 08 10 12 14 16
Source: Thomson Reuters Datastream
The majority of So the question is less about what the stark between the upswing in domestic package of measures which includes
52 economists central bank is doing — a Financial activity and inflation and the perceived paying banks to lend and buying corpo-
polled by the FT Times poll of economists found vulnerabilities in foreign economies and rate bonds.
predicted two near unanimous prediction of inaction asset markets that the choice will tell There may be enough concern that
further Fed rate on rates this week — but more one of you where they stand.” the so called “dot plot” of future esti-
increases this where it is going when its peers abroad Focus inside the US, and there are mates of interest rates by FOMC mem-
year — Andrew are forced to take ever more novel meas- numbers approaching the 2 per cent bers are lowered.
Harrer/Bloomberg
ures. rate of inflation targeted by the Fed. The “I would be surprised if the dots
For instance, the majority of those 52 annualised core rate of inflation fol- don’t come down. There is an immedi-
economists polled predicted two fur- lowed by the central bank currently ate problem, what will you do with the
ther Fed rate increases this year. The runs at 1.7 per cent, and is up from 1.4 end of 2017 and 2018, and otherwise
position of traders and investors, as per cent in 2015. the slope will be very steep,” says Mr
judged by the futures markets, implies “There has been a slight acceleration, Silvia.
just one further movement. flicker is a good word,” says Maury Har- A lower horizon for rates would repre-
Steven Englander, head of foreign ris, economist for UBS. sent a return to the theme of the past
exchange strategy for Citi, draws a con- Last September the Fed was suffi- five years, if not the past 20 — ever-
trast between the Fed’s official dual ciently concerned about the rest of the lower long-term interest rates, and a
mandate, which gives it responsibility world to delay raising rates. flattening of fixed income yield curves.
for the levels of employment and infla- During 2016, recent demand for safe Mr Michele also points to demand
tion, and its “additional de facto domes- assets has been prompted by worldwide from the country which recently sold
tic and international financial tranquil- fretting about the wider state of eco- 10-year debt at a sub-zero interest rate,
ity mandates”. nomic growth. after decades of stimulus. “You realise
Mr Englander adds: “The Fed would Japan’s central bank has pushed its that anything with a yield of over 1 or 2
never admit to anything beyond the first short-term policy rate below zero. per cent is going to become attractive to
two mandates, but the contrast is so Europe’s last week announced a fresh Japanese investors,” he says.

Commodities Currencies

Crude falls back below $40 on Iran output vow Egypt move throws spotlight on devaluations
NEIL HUME AND DAVID SHEPPARD
Oil slipped below $40 a barrel yester-
day after Iran said that it would raise
output before joining talks on a pro-
duction freeze and a pipeline carrying
crude from Iraqi Kurdistan to Turkey
reopened.
Brent, the international oil marker, has
rebounded almost 45 per cent from a 13-
year low near $27 a barrel in January,
helping to spur a wider rally in com-
modity markets.
The recovery came as major produc-
ers started work on a plan to freeze out-
put and supply disruptions removed
more than 800,000 barrels a day of pro-
duction from the market.
But many analysts believe the
advance has gone too far too fast and are
tipping the price to fall back, with sup-
ply still expected to outstrip demand for
most of 2016. Yesterday, Brent fell as
much as 3.5 per cent to $38.82 a barrel,
while West Texas Intermediate, the US
oil benchmark, was down 4.5 per cent to
$36.69 a barrel.
Opec’s biggest producer Saudi Arabia
and Russia agreed last month to freeze
oil output at January levels, but only if
other large producers such as Iran and
Iraq agreed to do the same.
Speaking on Sunday, Iran’s oil minis-
ter Bijan Zanganeh said the country
would join discussions only after its own
output, which has been hit hard by
western sanctions, reached 4m b/d.
“They should leave us alone as long as
Iran’s crude oil has not reached 4m.
We will accompany them afterwards,”
Mr Zanganeh was quoted as saying.
Iran pumped 3.22m b/d in February,
in the first full month freed of nuclear
sanctions, according to the Interna-
tional Energy Agency. Exports rose to
1.4m b/d but are still well below the
2.5m b/d Iran was selling before 2011.
In a sign that other producers may be
prepared to grant Iran a waiver or tem-
porary exemption, Russia’s oil minister
Alexander Novak said Iran’s position
was “completely reasonable” after talks
in Tehran yesterday.
Also pressuring oil prices was news
that oil had started to flow through the
Iraq-Turkey pipeline, reconnecting oil-
fields in Kurdistan with global markets.
Outages affecting Iraqi Kurdistan,
Nigeria and the United Arab Emirates
have helped support the oil market in
recent weeks.
Opec’s output averaged 32.3m barrels
a day in February, according to second-
ary sources in the group’s monthly oil
market report, down from 32.5m in the
previous month.
KATIE MARTIN AND ROGER BLITZ
Egypt abandoned its longstanding
struggle to hold the value of its cur-
rency against the dollar, a shift
that could prompt other countries to
also undertake foreign exchange
devaluations.
The Central Bank of Egypt said yester-
day that it would adopt a flexible
exchange rate after devaluing the pound
13 per cent against the dollar.
The currency market expects other
central banks to follow Egypt and seek
greater policy flexibility, with Nigeria
among those seen undertaking a deval-
uation to alleviate economic pressures.
Nicolás Maduro, Venezuela’s presi-
dent, last month devalued his country’s
bolívar 37 per cent in an attempt to
boost its ailing economy.
Luis Costa, an analyst at Citigroup in
London, said Egypt’s “bold” devalua-
tion could prove a model for other coun-
tries such as Nigeria.
“These countries can’t put off an
adjustment in their currency any more.
I know it can be painful, and we know
there will be pressure on inflation, but a
liberalised FX policy is the right way to
go,” Mr Costa said.
Nigeria heads a list of countries with
currency pegs or strict currency
regimes that may loosen their exchange
rate policies.
Pressure on commodity prices last
year forced Kazakhstan and Azerbaijan
to abandon their currency pegs, as the
strain on their reserves to maintain a
stable exchange rate became too great.
Saudi Arabia, Bahrain and Oman are
seen as vulnerable to devaluation,
though the commodity rally may relieve
that pressure in the short term.
“It’s helped some of those central
banks still trying to maintain those
pegs,” said Piotr Matys, emerging mar-
ket foreign exchange strategist at
Rabobank. “But it still feels like a short-
term squeeze rather than a sustainable
rebound in the oil price.”
One currency showing early signs of
stability following adoption of a weaker
currency regime is the rouble. But Mr
Matys said other countries might not be
able to manage the adverse public reac-
tion to the soaring inflation that follows
devaluation.
“There are lots of central banks under
political pressure to maintain these
pegs,” he said. “No one to challenge
[Russia’s] President Putin, and he got
away with [devaluation] fairly
unscathed, but I don’t think other politi-
cians would escape protests.”
See Lex
Tuesday 15 March 2016 ★ FINANCIAL TIMES 21

MARKETS & INVESTING

Global overview
TRADING POST Markets update
Change on day
Jamie
Chisholm
Wall Street cautious ahead of 12pt semibold S&P 500 index
9.6pt regular Change on day
for 1,2,3
0.08%

central banks’ policy meetings

The Bank of Japan is today expected
to maintain its negative interest rate
policy, or NIRP, matching the strategy
of peers in the eurozone, Switzerland,
Sweden and Denmark.
But, asks Citi, what do negative
interest rates mean for stock markets?
To measure this, the bank has a
NIRP equity index, which buys into a
stock market when the central bank
cuts policy rates into negative
territory. It includes the countries
above, weighted by market cap.
Citi has also created a NIRP foreign
exchange index, which buys into the
trade-weighted FX index of each
country as rates go negative.
It found: “The equity market seems
to take its lead from the FX markets. If
negative rates are successful in
weakening the country’s currency, then
the equity market tends to perform
well (in local terms at least).
“But if the currency appreciates
despite negative rates, as occurred
earlier this year, then the equity
market tends to weaken.”
But the problem with FX as the
transmission mechanism for NIRP is
that “as rates head into negative
territory, monetary policy becomes a
zero-sum game” with currency
markets seen taking profits away from
companies listed in one stock market
and handing them to another.
This is one reason why, with the yen
expected to deteriorate less as BoJ
NIRP loses its FX potency, Citi has cut
the country’s stock market from
“overweight” to “neutral”.
Still, NIRP will continue to broadly
suppress yields in the bond markets.
jamie.chisholm@ft.com
Stocks and the yen
Nikkei 225 index Yen per $
(’000)
20 125
18 120
16 115
14 110
Mar 2015 Mar
Source: Thomson Reuters Datastream 2016
European equities prove
buoyant, unlike US
counterparts, while oil
prices come under
renewed pressure
DAVE SHELLOCK
US stocks started the week on a hesitant
note as oil prices came under pressure
and caution prevailed ahead of a series
of central bank policy meetings this
week.
European equities, by contrast,
appeared to take renewed support from
the comprehensive programme of stim-
ulus measures unveiled last week by the
European Central Bank.
Indeed, the pan-European Stoxx 600
index rose 0.7 per cent to its highest
close for more than two months, while
the Xetra Dax in Frankfurt gained
1.6 per cent to 9,990, having briefly
nosed back above 10,000 for the first
time since mid-January.
Across the Atlantic, however, the S&P
500 was down 0.1 per cent at 2,020 in
early afternoon trade, after ending last
week at its highest point of the year and
above its 200-day moving average —
and just 1.1 per cent down from where it
finished 2015.
The US equity benchmark has rallied
more than 11 per cent since hitting a
two-and-a-half year low on February 11
as participants took a more constructive
view of the outlook for the global econ-
omy, the banking sector, and oil prices.
“Having been excessively spooked by
concerns on the global economy during
the first weeks of 2016, market senti-
ment has more recently improved,” said
Michala Marcussen, global head of eco-
nomics at Société Générale.
“The weaker than expected financial
conditions have, however, taken a toll
on the real economy, and we have low-
ered our global growth forecasts for
Commodities are ‘through the worst’: ft.com/video
The FT’s James Wilson discusses current trends with Neil
Gregson, manager of JPMorgan’s natural resources fund
2016 and 2017,” she added. “Our base-
line scenario is one of an uneasy balanc-
ing act between economic fundamen-
tals and financial markets, with already
overburdened central banks at the
heart of the story.”
Economists at Morgan Stanley, mean-
while, believe the risk of a global reces-
sion has increased and now attach a 30
per cent probability to it.
“However, solid consumer spending,
subdued oil prices and expansionary
monetary policy argue against a reces-
sion materialising,” they argued.
“With monetary stimulus likely
becoming less effective, fiscal policy and
structural reforms gain importance for
shaping the macro outlook.”
Udit Kulshrestha/Bloomberg
Nevertheless, it will be global mone-
tary policy that hogs the headlines this
week as central bank meetings take
place in Japan, the US and the UK — as
well as Switzerland, Norway, South
Africa and Russia, among others.
From a market perspective, the US
Federal Reserve will no doubt take cen-
tre stage. While few expect another
interest rate rise just yet, Janet Yellen,
who chairs the Fed, and the Federal
Open Market Committee faced a “deli-
cate” balancing act, said Marc Ostwald
at ADM Investor Services.
“They need to balance the message
that the April FOMC meeting is ‘live’ in
terms of a rate move and the likelihood
that the ‘dot plot’ [interest rate
2050
2000
1950
1900
1850
Feb 2016 Mar
forecasts] will have a median of three rate US equities Wall Street bulls paused
hikes for 2016, against a desire to sound a for breath after the S&P 500 ended
cautious note on the economic outlook, last week at its highest level of the
while acknowledging that underlying year, with the energy and financial
trends remain relatively healthy, so as not sectors leading the way lower
toreignitethemarketvolatilityseeninthe
firstsixweeksof2016. FTSE 100 index
“Eminently the fact that markets Change on day 0.57%
only discount a 20 per cent chance of a 6200
rate hike in April, and a 43 per cent 6100
probability of a June move, highlights 6000
that this delicate balancing act will be no 5900
easy task.”
5800
The yield on the policy-sensitive two- Feb 2016 Mar
year US Treasury note was flat at
0.96 per cent, while the 10-year yield UK equities Mining stocks got an early
was 3 basis points lower at 1.95 per cent. boost from well-received Chinese
The 10-year German Bund yield was economic data although the energy
steady at 0.28 per cent while the euro sector was undermined by a sharp
continued to retreat from a four-week retreat for crude oil prices
high above $1.12 struck in the volatile
aftermath of the ECB’s latest policy Eurofirst 300 index
announcement. The single currency
Change on day 0.67%
was down 0.5 per cent at $1.1094, a
1350
move that helped the dollar index — a
gauge of its value against a basket of
1300
peers — rise 0.4 per cent.
In turn, that helped push the gold
1250
price down $5 to $1,243 an ounce. It hit a
Feb 2016 Mar
13-month closing high of $1,271 on
Thursday. European equities Carmakers rose
Oil prices, meanwhile, remained a key after some positive broker comment
focus in the markets as Brent crude on the prospects for the sector,
slipped back below $40 a barrel after helping the Xetra Dax in Frankfurt
Iran said it would raise production briefly regain the 10,000 level
before joining talks on an output freeze.
“It will be increasingly difficult for the
oil price to move from $40 a barrel to Nikkei 225 index
$50 as there are an accelerating number (’000) Change on day 1.74%
17.5
of shale oil activities which become 17.0
profitable as the oil price moves through
16.5
this price span,” said Bjarne Schieldrop,
16.0
chief commodities analyst at SEB.
Brent was down 2.4 per cent at $39.43, 15.5
after touching a three-month peak of Feb 2016 Mar
$41.48 last week. However, it remains Japanese equities The Nikkei rose for
more than 40 per cent up from a 12-year a third day — closing at its highest in a
intraday low hit on January 20. month — ahead of the conclusion of a
US West Texas Intermediate was two-day Bank of Japan policy meeting
down 3.5 per cent at $37.14.

Wall Street
Energy sector retreats as
benchmark crude price
slides more than 4%
Adam Samson
The energy sector retreated yesterday
after four straight weekly advances as
the price of US crude oil declined more
than 4 per cent.
The S&P 500 energy sector, a gauge
of large US energy companies, was the
worst performer out of the main groups
yesterday, dropping 1.1 per cent by
midday. The sector has risen over the
past few weeks as the price of crude has
climbed from a low of under $30 a barrel
last month.
West Texas Intermediate, the US
benchmark, dropped 4.4 per cent to
$36.79 a barrel yesterday, while Brent
crude, the international marker, fell
2.9 per cent to $39.22.
Dennis DeBusschere, head of
portfolio strategy at Evercore ISI, said
bearish sentiment was sparked by
comments from Iran’s oil minister,
S&P 500 Energy Sector
11 Mar 2016
Source: Thomson Reuters Datastream
14
Indices
S & P 500
Close
2020.57
change
DJ Industrials
Nasdaq Comp
17242.76
4756.54
Russell 2000 1204.70
VIX 16.88
US 10 yr Treas Bd 1.97
US 2 yr Treas Bd 0.94
hinting that the Middle Eastern country
may not participate in a production
freeze pitched by Saudi Arabia, Russia
and other producers.
Oil and gas drillers were among the
worst performers. Diamond Offshore,
which operates deepwater rigs, dropped
5.7 per cent to $21.48. Oilfield services
companies also faced heavy selling.
Schlumberger, the biggest company in
the group, fell 2.3 per cent to $73.26.
The oil majors were spared the worst
of the selling. Chevron dipped 0.7 per
cent to $93.91, while ExxonMobil ticked
up 0.2 per cent to $82.31.
The financial sector also came under
selling pressure as investors await a
two-day Federal Reserve policy meeting
that concludes tomorrow.
Economists broadly expect that
the central bank will keep policy
steady after raising borrowing costs Trading Directory
in December.
465 However, expectations have
increased recently that the Fed may
460 raise rates at least once this year as
volatility in the financial markets has
455 eased substantially.
The S&P 500 bank group has surged
14 per cent since bottoming on February
Day's 11. However, it declined 0.8 per cent
-1.62
yesterday ahead of the Fed meeting.
Bank of America, the second-biggest
29.45
8.08
US bank by assets, fell 1.4 per cent to
$13.60 a share. Citigroup slid 1.2 per
-8.35 cent to $42.46.
0.38
Elsewhere, shares of Chipotle, the
-0.01
US burrito chain, bounced back after
-0.01
sliding 4 per cent last week. The
company closed a Massachusetts
restaurant after three workers
became ill, suffering from symptoms
associated with Norovirus.
The company’s food safety woes
have put pressure on its stock price in
recent months.
However, the restaurant in question
has since reopened after local health
regulators said they were “satisfied”
that Chipotle had properly sanitised
the fast-food outlet. The stock rose 2.2
per cent to $518.95, but is still down 23.6
per cent over the past 12 months.
In midday trading, the S&P 500 fell
0.1 per cent to 2,019.8, the Dow Jones
Industrial Average rose 0.1 per cent to
1,237.2 and the Nasdaq Composite
advanced 0.1 per cent to 4,753.5.
The consumer discretionary and
technology sectors posted the biggest
gains and analysts said uncertainty
ahead of the Fed meeting looms.

London
Bookies fall ahead of
feared Budget tax rise
Bryce Elder
Bookmakers were under pressure on
fears that tomorrow’s Budget will
deliver another tax hike for the sector.
“There are concerns that government
may announce a review of online
advertising, which could hit the online
gaming sector hard,” said Canaccord
Genuity. “At present, most digital
advertising in sector is channelled
offshore, thereby avoiding 20 per cent
VAT.” Ladbrokes dropped 5.1 per cent to
114.8p, William Hill was off 2.3 per cent
to 370p. Charging VAT based on the
location of the punters rather than the
domicile of the website would cut 2017
earnings for Ladbrokes and William Hill
by 8 per cent and 4 per cent
respectively, Canaccord forecast.
Investors also expected roulette
machines to be targeted by the Budget.
The machine gaming duty rose last
March from 20 per cent of total net
takings to 25 per cent, but is still lower
than in most European countries where
effective rates of between 30 per cent
and 50 per cent are the norm, said
Morgan Stanley. Every 5 per cent
increase to the duty would cut William
Hill’s earnings by 8 per cent, and for
Ladbrokes by 24 per cent ahead of its
merger with Coral, the broker forecast.
A wider market rally lifted the FTSE
by 0.6 per cent or 34.78 points to
6,174.57. Miners such as Glencore, up
4.4 per cent to 147.9p, led the FTSE
gainers on relatively thin volume.
InterContinental Hotels rose 4.5 per
cent to £28.50 in response to news that
its US peer Starwood Hotels was a
takeover target for a consortium led by
Chinese insurer Anbang. Starwood
continued to recommend a previously
announced merger with Marriott,
which has long been rumoured as a
potential bidder for InterContinental.
Insurer Admiral lost 2 per cent to
£18.76 after both Merrill Lynch and
HSBC advised taking profit. Merrill,
downgrading to “underperform”, told
clients it struggled to justify Admiral’s
valuation of 18 times forward earnings.
Stagecoach lost 5.4 per cent to 258.6p
on an HSBC downgrade to “reduce”.
A trading update a fortnight ago was
“less than convincing” for Stagecoach’s
rail business, said HSBC. Its East Coast
rail route had been secured on
“aggressive” terms but was showing
signs of weakness after only a year, so
while Stagecoach’s valuation currently
looks undemanding there is a risk to
consensus forecasts, HSBC argued.
GW Pharmaceuticals soared 139.7 per
cent to 519p after releasing positive
top-line results from a pivotal trial of its
Epidiolex seizure drug for treating
Dravet Syndrome, a rare type of
childhood epilepsy.
22 ★ Tuesday 15 March 2016

SMART MONEY Analysis. Currencies

Stephen
Foley
Hopes for political change at heart of real rally
If new regime does not emerge, Brazil’s bumpy ride
confidence behind Brazil’s
Draghi’s drastic action bounce will falter, say some
Real against the dollar (R$ per $)

2.5 Mar 4 Ex-president 2.5

raises attractiveness ROGER BLITZ — LONDON
Lula Inácio Lula da
Silva detained in
connection with
of US corporate bonds SAMANTHA PEARSON — SAO PAULO
A deep recession, downgrades from rat-
ing agencies, spiralling unemployment,
money-laundering
charges
a large fiscal deficit, political turmoil — 3.0 3.0
the list of Brazil’s problems is long and Mar 3 Government

T
he bazooka that Mario Draghi fired last week seemingly unsolvable. Dec 18 President Dilma Rousseff announces Brazil
will have an impact far beyond European So why are currency investors show- (left) replaces pro-austerity GDP contracted
shores. By including corporate bonds in the ing a liking for Brazil’s real? finance minister Joaquim Levy, 3.8% in 2015
European Central Bank’s quantitative easing At face value, the country’s parlous causing real to tumble
3.5 3.5
programme for the first time, the bank’s presi- state looks as bad as it did in 2015, when
dent reduced interest rates not just on eurozone debt but its currency plummeted by a third
on blue-chip corporate bonds in the US. against the dollar, hitting a record weak
His intervention gives another fillip to the US invest- point in September, with a single US dol-
ment-grade corporate bond market. It has also been lar fetching as many as R$4.25. Gloom
boosted in the past few weeks because the recession fear engulfed the first three weeks of 2016, as 4.0 Sep 24 Real hits 4.0
that gripped markets at the start of the year has subsided. the real fell more than 5 per cent. all-time low of R$4.25
An issue for investors is whether they should go with the Yet it has strengthened 10.8 per cent as economic and
flow and stash away some corporate bonds themselves. in the past month, and hovers around political crisis deepens Jan 8 Brazil records 10.7% inflation rate
Some hedge funds, such as Perry Capital, have been pub- R$3.60 to the dollar, with the status of for 2015, overshooting central bank target
licising their bearish stance on the investment-grade mar- best performer in the emerging markets 4.5 by more than 4 percentage points 4.5
ket, and ne’er a day goes by without discussion of a loom- currency landscape. Forecasting Brazil’s Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar
ing liquidity crisis in fixed income. But it may be worth set- economy is a hazardous business, given Source: Thomson Reuters Datastream
2015 16
ting aside the doomiest predictions. the daily diet of grim news, but most
Mr Draghi is not buying US bonds, of course, but by driv- forex strategists have come to the view
ing down rates in the eurozone, he will make US corporate that the real has stabilised. A Rousseff have raised hopes among investors that ment or a change in government. “In with the current level and would inter-
debt relatively more attractive to yield-hungry investors. What has caused this? Worries about the barriers to political change may be theory, my target is R$3.5 or R$3.6 for vene to prevent too much more appreci-
Also, a decent slug of the US corporate bond market com- the US economy and expectations of a impeachment overcome sooner than expected. the dollar — I don’t see a possibility of it ation. A weaker real would put pressure
prises European multinationals issuing bonds in dollars, more moderate rate rise cycle than the would be no The real leapt 3.3 per cent in response, strengthening much more than this,” he on inflation, a stronger currency would
and if the ECB is buying the rest of their debt, that makes Federal Reserve envisaged have given a panacea and and bonds and stocks also jumped. says. “If nothing happens we could go hurt exporters. The EM rally will be
these companies’ US issues look safer. (About 5 per cent of fillip to several EM currencies. So has an Ahead of Sunday’s demonstrations by back to R$4 but the chance of a political hard to sustain, says Mr Kinsella. At
JPMorgan’s main US corporate bond index is made up of improved balance of payments outlook ‘we could see anti-government protesters, the real rupture seems greater every day.” best, the bias in coming months is for
issuers whose other bonds are eligible for ECB purchase, in a number of EM countries, including optimism was at its highest level since August. Even a seismic political shift offers further real weakness, albeit not as
the investment bank estimated last week.) Brazil, even if the trigger is a collapse in fade sharply’ Jefferson Luiz Rugik, head of the Cor- only a brief respite for the real. Any new severe as feared at the start of 2016.
All this comes on top of the imports rather than a boost to exports. reparti brokerage in São Paulo, says: government would confront the same More bearish is Daniel Tenengauzer,
more generalised glow that “You see a relatively benign environ- Christian “Everything that is against the current high inflation, unemployment and stag- head of EM at RBC Capital Markets. The
bond markets typically get
The consensus ment,” says Commerzbank’s head of Lawrence, government and President Dilma nant economy, says Mr Rugik. end of political arm-wrestling in Brasília
when a central bank assures is that the Fed EM, Peter Kinsella. Rabobank [Rousseff] is favourable for the A presidential impeachment is no is wishful thinking, he says, the funda-
them it has got their backs. Growing signs of a bottoming in com- real . . . it raises the possibility that we panacea to Brazil’s problems, says mentals remain dire, and the path of
Longer-term questions for
will again lower modities prices have also helped to would have another government with Christian Lawrence at Rabobank. Given least resistance is to print money, which
US corporate bond investors forecasts on the steady Brazil’s currency. more credibility.” how the real has ridden the wave of the keeps inflation higher for longer.
are whether rising interest In recent weeks, however, the big cat- Of course, if that doesn’t materialise EM rally, “we could see recent optimism That would take the real back towards
rates from the Federal
pace of rate rises alyst for the real’s rally has come from and political paralysis continues, the fade sharply and a return to the moves R$4.30 against the dollar and it would
Reserve will erode the value of the political sphere. The detention of real rally is likely to fizzle out. For now, we saw at the start of the year.” “then close the year above R$5.00”, says
their holdings or whether deteriorating credit quality will former president Luiz Inácio Lula da says Fernando Goes, analyst at Clear If 2016 ends with the real where it is Mr Tenengauzer. In other words, there
lead to a broad market sell-off — and whether the risks of Silva, and its implications for his pro- brokerage in São Paulo, the market is now, that may suit the Brazilian central are doubts that this real rally is for real.
either are adequately reflected in prices. tégé, the current leader, Dilma Rousseff, pricing in the possibility of impeach- bank. Most people believe it is happy See The Big Read & Letters
These questions are finely balanced. There has been a
record $290bn of investment-grade bond issuance in the
US so far this year, says Dealogic, which might suggest
investor enthusiasm, but it has been concentrated in fewer Capital markets
issuers of higher quality.
The consensus is that the Fed will again lower its predic-
tions on the pace of future rate rises (its so-called blue
dots) at its meeting this week, and despite recent investor
ECB effect persists in
sanguinity, risks to the economy are real. Even if the econ-
omy stays strong, bond portfolios have more to lose from
eurozone credit scene
sharply rising rates than from higher rates per se, and
sharp moves seem very far from the Fed’s plan.
More pertinent may be credit quality concerns. A net GAVIN JACKSON rating agency Moody’s, said
7 per cent of US investment-grade corporate bonds were the ECB programme will pro-
Eurozone credit markets
downgraded last year, the first negative year since 2010, vide a modest benefit to the
were consolidating yester-
and 2016 has already surpassed that figure, less than three creditworthiness of invest-
day, after a pronounced rally
months in (it is 9 per cent, according to JPMorgan, but the ment-grade companies as
in the wake of the European
bulk of that has been in the energy sector). they would pay less to service
Central Bank’s announce-
Bottom line: corporate bonds still look decent value. In their debts, but said: “Inter-
ment that it will start buying
the volatile start to 2016, when investors fretted that the est rates are already pretty
corporate bonds.
US economy was sputtering and that China would drag the favourable, they have never
global economy lower, the extra yield on corporate bonds The addition of investment- been so favourable for
versus Treasuries was more than 200 basis points, a pre- grade debt to the ECB’s quan- investment grade.”
mium not demanded since the worst of the eurozone crisis titative easing list of asset Most of the concerns about
in summer 2012. The March rally has reduced that spread purchases has triggered defaults and the correct pric-
to 188bp on the BofA Merrill Lynch US corporate master a substantial improvement ing of risk are in junk bond
index, but it remains high for non-recessionary times. in eurozone credit markets. markets with companies
For that spread to gap out much further, indicating a In recent months, con- exposed to falls in commod-
sell-off that hits bond portfolios, not only would an eco- cerns connected to global ity prices, he added.
nomic slowdown have to hit but liquidity would have to be growth, China’s economy Other areas of the credit
substantially impaired. A repeat of the credit crunch can- and falling commodity prices market have rallied as inves-
not be ruled out, and given the absence of investment bank led investors to demand tors look towards other
proprietary trading desks, post-Wall Street reform, some higher compensation for sources of yield as interest
would say it is more likely. the risk inherent in lending rates on investment-grade
Still, there is a voracious desire on the part of traditional to companies. bonds are held down by ECB
long-term bond investors, such as pension funds and Ahead of the ECB becom- buying.
insurers, to be able to buy higher-yielding investment- ing a regular buyer of corpo- The Markit iTraxx cross-
grade securities to match their liabilities to an ageing pop- rate debt starting in April, over index, which tracks
ulation. This is a structural demand centre potentially risk premiums, or the spread credit default swaps for junk
more powerful in the long run than even central banks, investors demand to hold bonds, saw spreads fall 18
which ought to give comfort to other investors who want to riskier paper over govern- per cent after the ECB’s
follow Mr Draghi into the corporate bond market. ment yields, has tightened. announcement while the
A closely watched basket subordinated financials
stephen.foley@ft.com of credit insurance against index, which tracks CDS on
the risk of default by Euro- riskier forms of bank debt,
pean companies has eased to fell by the same amount.
its cheapest level since late One contributing factor to
last year, reflecting sharply the sharpness of the rally in
higher prices for corporate corporate debt could be that
More comment and data on ft.com debt, which move inversely some investors have been
to yield. covering short positions, said
Markit’s European iTraxx Zoso Davies, a credit strate-
Y Fast FT Our global economies, headed index, which tracks the cost gist at Barclays.
team gives you market- by Brazil, Russia, India of buying credit default Shorting a bond involves
moving news and views, and China. swaps on euro-denominated borrowing it from another
24 hours a day, five days ft.com/beyondbrics investment-grade bonds, has investor and selling it in the
a week. ft.com/fastft eased by a quarter since last hope you can buy it back
Y Podcast The Hard
Y Alphaville Our Currency podcast takes a week’s ECB policy meeting. from the market cheaper at a
irreverent financial blog. look at what is driving Yesterday, the cost of later date. Short sellers may
Join Paul Murphy and the global currency credit insurance turned find it harder to close out
Bryce Elder for the daily market. ft.com/podcasts higher, with some in the mar- these positions with the ECB
Markets Live session at ket questioning whether the holding on to a substantial
Y Lex Video Analysis bullish trend has further amount of the supply.
11am. ft.com/alphaville
and opinion from the room to run given such a dra- Some fear that the ECB
Y beyondbrics News and team on the hot issues matic narrowing in the past programme will replicate the
comment from more affecting companies and two days of trading. type of dysfunction experi-
than 40 emerging markets. ft.com/lexvideo Jean-Michel Carayon, a enced in other areas of the
senior vice-president with debt market.

Tuesday March 15 2016
Investors braced for tide to turn
Fund managers are
prepared for a possible
spell of post-peak jitters,
reports Judith Evans
G
lobal real estate has
enjoyed two plentiful years
— attracting $700bn in
direct investment in 2015
and slightly more the year
before, not far from the record $758bn
achieved in 2007, according to the Chi-
cago-based estate agency JLL.
But 2016 began with equity and bond
markets in turmoil, while prices for
buildings in key office centres such as
London and New York have been com-
ing off record highs. That left the indus-
try with one question to answer: has the
market peaked?
“The bloom has come off the rose a bit
in terms of real estate valuations,” says
Jon Zehner, global head of client capital
group at LaSalle Investment Manage-
ment, one of the world’s largest real
estate fund managers. “The prime mar-
ket in gateway cities needed to stabilise
— it was getting too hot. This could be an
appropriate correction. A period of
more stable values and maybe a little
less passion in the market is what we’re
envisioning for the year.”
Elisabeth Troni, global real estate
strategist at Aberdeen Asset Manage-
ment, says the company’s indicators
show “late cycle risks” and it predicts
that values will fall in 2016, with the UK
market “flat to declining”. But she adds:
“We’re not foreseeing a crash.”
A crucial question is the direction of
investor appetite. A wave of institu-
tional capital has surged into real estate
over the past two years, driven by the
search for returns.
That capital has increasingly crossed
borders and continents: 20 per cent of
real estate deals in 2015 were cross-bor-
der, according to Savills. It has also
helped to push values up for income-
generating “alternative” real estate,
such as student accommodation.
Yet according to research late last year
by Hodes Weill, the real estate advisers,
and Cornell University, institutions
remain “significantly underinvested” in
property, by an average 110 basis points
compared to their own targets.
Property investments are still able to
offer more income than other asset
classes, which is one of their key selling
Elite cities need to cultivate creative spaces
COMMENT
Ben
Rogers
The London I grew up in 30 years ago
felt like a city on the way down. It had
lost an empire and many of its key
trades, most obviously shipping and
manufacturing, were in decline.
In the 1960s London’s docklands had
never been busier but by the early 1980s
they had collapsed.
London of course was not the only
western city struggling with
deindustrialisation. Indeed, with its
large business sector, its renowned
universities, many professions,
government institutions and great
tourist attractions, the city was more
resilient than most.
Slowly London and many other
western urban centres learned how to
navigate their way to the post-industrial
age. While the precise route differed
from one place to another, the basic
approach was similar. Instead of shoring
up declining trades, cities found that
their future lay in attracting and
retaining the stars of the new service
economy — highly skilled young
professionals and entrepreneurs,
“knowledge workers” and “creatives”.
This involved city authorities tackling
crime and investing in transport,
schools, the public realm and culture.
Many post-industrial cities now find
themselves in a position almost
unimaginable only a couple of decades
ago: they risk falling victim to their own
success. Their economies and their
populations have expanded fast and
inequality and living costs have shot up-
La Défense: the French capital’s business district continues to attract foreign investment interest — Dreamstime
points. Even US offices, one of the most
highly priced sectors in the world, offer
a 370 basis point premium over yields
from 10-year government bonds,
according to figures from Green Street
Advisors.
Axa Investment Managers has just
raised €500m for a new core real estate
fund and has ambitions to expand the
vehicle to €5bn. Its launch was driven
by growing allocations from pension
funds, especially in the Nordics and
Benelux region, says Isabelle Scemama,
global head of real asset finance.
On the other hand, says Mr Zehner at
LaSalle, drops in bond and equity values
mean some institutions in the UK, US
and Australia are reducing their prop-
erty holdings this year to stay within
fixed allocation boundaries.
As the oil price remains low and
Hipster chic: the buzz of post-industrial cities needs nurturing — Christopher Furlong/Getty
with them. City leaders no longer worry
about attracting young talent but how to
stop it from being squeezed out.
London is a case in point. The UK’s
capital has long depended on its appeal
to artists and innovators. They have
been vital to its success. London’s world-
conquering creative industries — its
music, film, theatre, publishing, gallery,
design and advertising activities — are
nourished by an endless stream of
talented and mainly young people.
David Bowie was once a young singer
from south London called David Jones.
The capital’s strengths in scientific
research and digital innovation are fed
by academics and tech entrepreneurs in
their 20s and 30s. London has a great, if
somewhat under-appreciated history of
social and civic innovation — this is the
city that gave the world Save the
Children, Amnesty International and
Band Aid — and this too has been fuelled
by youthful talent.
That said, London is much less
FT SPECIAL REPORT
FT Property
www.ft.com/reports | @ftreports
China’s markets weak, an important
question is whether the Middle Eastern
sovereign wealth funds and Asian cor-
porates that have been snapping up big-
ticket assets will remain active.
So far, the signals are mixed. The Abu
Dhabi Investment Authority, the
world’s second-largest sovereign wealth
fund, acquired the planned Tour Alto
office development in Paris’s La Défense
business district in February, a sign of
continued activity in the market.
However, Walter Boettcher, director
of research and forecasting at Colliers,
the estate agency, says: “There are clear
signs that continued low oil prices will
impact oil sovereign strategies, espe-
cially when combined with other mar-
ket events.”
Malaysian funds have been selling
overseas real estate assets over the past
welcoming to the creative class than it
once was. The threats to London’s sense
of buzz are various. They include
characterless development,
overzealous licensing and policing of
nightspots, an increasingly restrictive
visa system and cuts to public funding of
arts and culture. By far the biggest
problem is the sheer price of living in the
city. A third of London’s music venues
have closed since 2007. The 2014 Artists
Workplace study predicted that, on
present trends, London will lose 30 per
cent of artist studios before 2020.
Housing is incredibly expensive.
According to the office of the city’s
mayor, most London artists make less
than £10,000 a year from their work,
when the average house price is
£500,000. No wonder newspapers are
full of stories of young Londoners
moving to Brighton, Bristol, Barcelona
and Berlin.
London is not the only city facing this
problem. Paris, once a byword for
year to repatriate capital as their home
country suffers from the oil slump.
Within east Asia, market turmoil does
not so far appear to have hurt demand
for real estate: investment volumes into
Chinese, Hong Kong and Taiwanese
property were up 47 per cent, 66 per
cent and 18 per cent respectively in 2015
from a year earlier, according to JLL.
Chinese investment into Europe mean-
while appears to be on the increase, says
Mr Boettcher — though Asian investors
are switching their focus to continental
Europe from the highly-priced UK.
“A lot of the money coming out of
China to invest in real estate is not insti-
tutional. It’s corporates or ultra-high-
net-worth [individuals],” says Mr Zeh-
ner. “The volatility and depreciation in
the renminbi have actually seemed to
encourage them to invest outside of
artistic creativity, has suffered from a
reputation of being a safe, over-
regulated and air-conditioned city for
more than a decade. New Yorkers worry
about gentrification and the loss of
urban vitality in almost exactly the
same terms that Londoners do and
there has been a much discussed exodus
of New York artists to Los Angeles.
Just as it took cities a long time to
work out a route out of industrial
decline, so it will take a time to come up
with a recipe for preserving the buzz
and vitality that post-industrial cities
need if they are to flourish.
In the past young innovators have
flocked to old rundown areas, with lots
of character and cheap rents. As they
become developed, we will have to find
ways of creating new development that
works in the same way.
City leaders will have to get a lot more
enterprising about protecting and
nourishing late night culture — Paris has
followed Amsterdam in appointing a
night mayor. London is doing the same.
Philanthropists and public funding
bodies will need to work together to
preserve local cultural centres and
artists studios.
The best developers are beginning to
understand the value they get from
investing in the public realm but they
will need to learn to see the value of
other cultural assets. The most
expensive cities will have to explore if
and how to extend subsidised housing to
creative workers.
Munira Mirza, London’s deputy
mayor for the arts, puts its nicely.
“Culture is to London what the sun is to
Spain.” Not even the most powerful city
leader can do much about the local
weather. But our cities will have to learn
how to keep culture shining.
Ben Rogers is founder of the Centre for
London think-tank
Inside
E-commerce drives
warehouse boom
Returns on sheds leased
to online retailers are
China — they are looking for stability,
diversification and more stable curren- the envy of the sector
cies, at least for now.” Page 2
Agents expect significant new flows
from Japan. There Japan Post Bank — Italian renaissance
which has a $500bn investment fund — Overseas investors are
has said it aims to divert more cash into
global risk assets including real estate. falling back in love with
Milan and cities beyond
At least two other major Japanese insti-
tutions are also looking to expand their Page 3
overseas property holdings, said Rich-
ard DiVall, head of cross-border capital Manhattan
markets for Europe, Middle East and
Africa at Colliers. projects
Investors’ first concern remains the Apartments
level of demand for buildings on the aimed at
ground. In developed markets, banks’
unwillingness to lend for speculative New York’s
development has led to much tighter ultra rich are
supply than in the last cycle, say ana- falling out of
lysts, as well as less financial risk.
They point to a bright spot in Aus-
favour
tralia, where real estate on the country’s Page 4
east coast has suffered less than
expected from the commodities slump. Towering ambitions
“The office markets and labour markets Skyscraper projects
have surprised repeatedly in recent
months. The markets had been prepar- too often fail to express
ing for a downturn but they have been a city’s spirits, says
positively surprised on net income Edwin Heathcote
growth,” says Ms Troni of Aberdeen
Page 5
Asset Management.
Private equity investors are mean-
while turning their attention to Italy, Work, rest and play
where the government is moving to A new wave of ventures
improve private investors’ opportuni-
ties to profitably access non-performing offering shared office
real estate loans, while economic recov- space is catching
ery there has also drawn the attention of investors’ eyes
sovereign wealth funds, which have Page 6
been buying up Milan property.
For “higher-octane returns”, La Salle
is looking to the US and Asia, seeing Peer-to-peer
opportunities for bargains driven by
distressed sellers bitten by Chinese eco- lending
nomic and market turbulence. The UK
On a broader scale, demographics are start-up
driving up interest in residential prop- aiming to
erty. This segment’s share of overall
investment in the property market has turn the
almost doubled to 18 per cent since the mortgage
downturn, according to Savills. market on
Homes for millennials in developed
economies and the middle class in its head
emerging countries are seen as profita- Page 6
ble plays on long-term trends, as are the
warehouse sites that cater for their
online shopping. City limits
In the shorter term, Mr Boettcher Returns can be made
argues “it is too soon to declare an end to beyond the obvious top-
the bull market” in commercial prop- ranked urban hot spots
erty. From New York to Shanghai, inves-
tors will be hoping he is right. Page 7
2 ★
E-commerce sheds acquire a seductive allure
Logistics Growth in
returns on warehouses
have slowed but remain
the envy of rival sectors,
writes Aliya Ram
T
he steady transformation of
distribution warehouses
into one of Europe’s hottest
asset classes is the Cin-
derella story of investment
in the property sector.
The once unglamorous industrial
“shed” has been catapulted by e-com-
merce into a must-have item on prop-
erty portfolios. Now, as traditional retail
and office landlords look on jealously,
investors want to know if the shoe will
continue to fit.
Between 2009 and 2015, the capital
value of distribution warehouses grew
at almost double the rate of retail prop-
erty — at 34.6 per cent over the period,
compared with 18.8 per cent, according
to MSCI Global. Investors such as Logi-
cor, Tritax Big Box and LondonMetric
have flocked to capitalise on the trend
by buying up swaths of land for large
warehouses.
As motorways choke up with delivery
trucks, however, data from last year
indicate that demand could moderate.
“At the moment [the] economic growth
we have in Europe is consumer-led,”
says Neil Blake, head of European
research and forecasting for CBRE, the
property advisers. “Logistics space is
eating up industrial space and if we have
a recession things might look quite dif-
ferent.”
Growth in the capital value of UK
warehouses slowed to 25.3 per cent last
year according to MSCI, though was still
ahead of retail property which grew by
12 per cent.
Guy Gueirard, director of logistics
at property advisers JLL, says
take-up from warehouse tenants also
fell 12 per cent in 2015 to 19.5m sq ft
after exceptionally strong demand in
2014.
He says certain sites such as smaller
warehouses on the edges of cities con-
tinue to benefit from high demand from
retailers determined to improve the dis-
tributive efficiency of their online and
bricks-and-mortar retailing operations.
“If there is one thing that we are spend-
ing a lot of time on it is city logistics,”
says Mr Gueirard.
Data from Gerald Eve, the property
consultants, show that the average size
of sheds built speculatively across Brit-
ain — namely, without particular ten-
ants in mind — fell to 155,396 sq ft in
2015. That compares with 197,000 sq ft
in 2007 ahead of the global financial
crash. The company predicts that the
gap between supply and demand for
lower quality warehouses will continue
to attract institutional investors. It
warns, however, that the lower end of
the market could soften.
George Underwood, partner at Gerald
Eve, adds that warehouses with existing
tenancy arrangements will be more
attractive to investors than unoccupied,
speculative developments.
FINANCIAL TIMES
FT Property
Retail jungle: “Online retail is driving demand for
Amazon staff high-quality space to ever-higher levels
walking the and, put simply, there’s not enough sup-
floors at a ply to go around,” he says.
warehouse in “There’s also anecdotal evidence that
Germany the investment committees of institu-
Sean Gallup/Getty Images tional buyers are increasingly comforta-
ble with — indeed, have a growing pref-
erence for — occupiers who are taking
space to service e-commerce operations
specifically . . . and are targeting assets
with such occupiers in place.”
Last year Tritax, the most acquisitive
investor logistics property in the UK of
2015, let properties to such online stal-
warts as Ocado, the grocery group which
took a 30 year lease on a warehouse in
Erith, and B&Q which took a 16.5 year
lease in Worksop.
The sector is also attracting the atten-
tion of equity investors. When Tritax
issued shares last month, demand
exceeded expectations and its board of
directors expanded the issue from
£100m to £200m.
James Dunlop, partner at Tritax, says
the profile of investors in the largest
warehousing units differs from those
that buy smaller out-of-town ware-
houses because of the high valuations
involved. “You need quite deep pockets
to invest in big boxes so they’re mostly
‘This asset owned by the institutions. Big box costs
everything from £30m to £130m . . . a
class lot of foreign investors find that type of
generates investment attractive.”
Mr Dunlop adds that institutional
predictable investors from Malaysia, Singapore,
cash flows South Korea and Norway have shown
particular interest in large UK ware-
without houses, which allow retailers to make
recurring distribution more efficient.
In 2013, Tritax Big Box Reit bought
capital Marks and Spencer’s Castle Donnington
expenditure’ distribution centre for £82.7m, but Mr
Dunlop says the landscape is changing
Tuesday 15 March 2016
as pure-play online retailers enter the
scene.
Last year, Amazon rented more than 5
per cent of all new logistics space in the
UK, according to estimates from Gerald
Eve. For every £1bn spent online, retail-
ers require 930,000 sq ft of warehouse
space. With Britons estimated to spend
more than £18bn online by 2019, this
could mean almost 17m sq ft of ware-
house space will spring up around the
country.
Andrew Jones, chief executive of Lon-
donMetric, which buys both retail and
warehouse property, says Amazon’s
arrival was very significant for online
delivery. He says retailers have realised
they have to rebalance their real estate
portfolios to take account of the shift to
e-commerce, which will mean “less
shops and more sheds” and enhance the
appeal of assets in the logistics sector.
Mo Barzegar, chief executive of rival
Logicor, which has been backed by pri-
vate equity group Blackstone, agrees.
Amazon’s speed of delivery has put
pressure on other retailers to rent ware-
houses on the fringes of cities in order to
reach customers more quickly. “People
have realised that this asset class gener-
ates predictable, recurring cash flows
without recurring capital expenditure,”
Mr Barzegar says. “With retail [prop-
erty] you have to gut and refit the space
but with warehouses you just clean the
floor and rent it out.”
However, with leases that usually last
more than a decade, investments have
to be made carefully so that properties
are still able to be let in the distant
future. “There is a lot of opportunity for
us to grow but it has to be very careful
and strategic and accretive to our cur-
rent portfolio,” Mr Barzegar says.
About 20 per cent of Logicor’s portfo-
lio last year was occupied for e-com-
merce reasons, compared with a portfo-
lio average of 12 per cent, according to
Gerald Eve.
Logicor is looking further afield to
mainland Europe, where online shop-
ping is growing in large economies such
as France and Germany. Logicor esti-
mates, however, that Europe still only
has 9bn sq ft of warehouse space, com-
pared with 13bn sq ft in the US. “We are
undersupplied for the customers we
provide,” Mr Barzegar says.
Tuesday 15 March 2016
Italian rebound offers
a taste of la dolce vita
Commercial space
After a period of crisis,
the country is enjoying a
renaissance of sorts
among investors,
reports James Politi
W
hen China’s Fosun
group acquired the
former headquarters of
UniCredit, the Italian
bank, in central Milan
last year, it was the latest in a wave of
foreign investment in the eurozone’s
third-largest economy.
The €345m deal was also the largest
single asset transaction in Italian com-
mercial property for all of 2015. Fosun,
led by Guo Guangchang — who has been
nicknamed China’s “Warren Buffett” —
hopes to turn the property in piazza
Cordusio into retail outlets and luxury
flats. It enjoys the advantage of being
only a short walk from Milan’s land-
mark Piazza del Duomo.
The UniCredit deal came against a
backdrop of improving conditions in the
Italian commercial property market.
These have been boosted by Italy’s
return to growth last year, after a deeply
damaging triple-dip recession.
Meanwhile, two Italian real estate
investment trusts, Coima Res and the
De Agostini group’s Idea Res, are prepar-
ing to float on the Milan stock exchange.
Paolo Bellacosa, head of capital mar-
kets in Italy for property advisers CBRE,
says the market for commercial prop-
erty acquisitions has “progressively
improved in terms of investors’ interest
and transaction volumes”, reaching
€7.5bn last year.
Mr Bellacosa warns, however, that the
flow of deals could be “tightening” this
year. “Vendors are more reluctant to sell
or overestimate the pricing expecta-
tions,” he says.
Nevertheless, where there are to be
★ FINANCIAL TIMES
deals, CBRE’s most recent investor sur-
vey found that the majority are likely to
occur in retail, hotels and offices. Some
50 per cent of respondents wanted to
focus their investments in Milan. Italy’s
second-largest city has been experienc-
ing a revival in recent years, partly
because of last year’s successful Expo.
Rome, Italy’s capital and largest city,
lags behind. It has been dogged by cor-
ruption scandals and the early resigna-
tion of its mayor last year. Just 26 per
cent of investors surveyed by CBRE
expressed an interest in investing in the
city. Florence and Venice, however,
appear to be increasingly appetising to
commercial property investors. Many
surveyed indicated an interest in these
smaller cities, which draw millions of
tourists every year.
Mr Bellacosa says the Italian market is
“still too small” and wishes that it could
become “larger, more liquid and more
Reformist: Matteo Renzi, Italy’s PM
3
FT Property
similar to other EU countries”. Size,
however, is not the only problem, he
suggests. “The market is very polarised
between a few super core transactions
and a vast majority of distressed situa-
tions.”
Financing transactions may also be
difficult given that Italian banks have
been experiencing turmoil in recent
months, including a sharp drop in share
prices and growing concerns about the
banks’ large pile of non-performing
loans.
This is bound to have a knock-on
effect as far as their willingness to offer
new credit is concerned, especially for
higher risk deals.
Italy has seen an improvement on the
residential property front. In a recent
report, analysts at UniCredit cited data
from Italy’s tax agency that showed a
10.8 per cent increase in sales in the
third quarter of 2015, compared with
the same period a year earlier.
“Supply still exceeds demand, but it’s
evident that the process of normalisa-
tion of the market is occurring, with a
partial absorption of the stock of unsold
homes,” the UniCredit report said. “The
dynamic of slightly declining prices is a
precursor to a recovery of the sector,” it
added.
Part of the improvement in the resi- 0.8 per cent, according to Istat, the Retail therapy negative spillover effect on the property
dential market has been driven by low national statistical agency. Most econo- in Milan market.
interest rates, which have led to a rise in mists are expecting an acceleration to Flavio Lo Scalzo /Reuters Nomisma, an economic think-tank
mortgages. According to a recent survey more than 1 per cent in 2016. based in Bologna, stated in a recent
by Intesa Sanpaolo, Italy’s second-larg- Many investors are still confident in report: “Although there is no doubt that
est bank after UniCredit, mortgages the reformist political agenda being the Italian real estate market has left
were up by 0.8 per cent by the end of last pursued by centre-left prime minister behind the heavy crisis that character-
year compared with 2014. Matteo Renzi. At the same time, how- ised its dynamic for about seven years, it
“The recovery of financing for fami- ever, there have recently been some is still problematic to define its pros-
lies to buy homes is continuing, sus- signs suggesting problems ahead for the As crisis pects over the medium term.
tained by the strong growth of gross recovery driven by global macroeco- But for now, the deals continue. Early
[mortgage] issuance, and especially the nomic concerns over the impact of fall- recedes, the this month, UniCredit announced the
success of fixed-rate deals, which from ing growth rates in emerging econo- prospects sale of three more buildings to a Morgan
the middle of 2015 have overtaken those mies. In Italy domestic unemployment Stanley real estate fund for more than
with a variable-rate,” the Intesa San- remains at 11.5 per cent, after having for Italian €200m. This transaction — code-
paolo report said. declined for most of last year, and indus- real estate named “the great beauty” — involved
Ultimately, though, the fate of Italian trial production activity appears weak. property in Rome along the famed via
property investments will rest on the This year’s stock market decline and still remain Veneto avenue, which has always been
extent of Italy’s economic recovery. the loss of investor — and public — confi- unclear associated with film-maker Federico
In 2015, the Italian economy grew by dence in Italian banks could also have a Fellini ‘s 1960s classic La Dolce Vita.
4 ★
Demand slackens for
Manhattan projects
Luxury developments
Fall in demand and
excess supply are
threatening returns,
writes Anna Nicolaou
A
24-foot aquarium, an in-
house hydrotherapy spa,
and panoramic views
stretching to the Atlantic
Ocean — these are a few of
the amenities available to buyers of
mega-priced homes in the opulent
“super tall” skyscrapers popping up
across New York’s skyline.
Developers across the city have piled
into luxury projects, looking to capture
what had seemed to be relentless
demand from foreign billionaires seek-
ing bunkers for their money. The build-
ing boom has been dominated by lux-
ury: more than 80 per cent of new US
“multifamily” units — or apartment
towers — built in the past two years have
commanded rents in the top fifth of the
overall market, according to CoStar, a
property research group.
Demand for the priciest property,
however, has dried up as the weakening
of the rouble and Asian currencies,
along with the plunging oil price,
have sliced the purchasing power of for-
eign elites from China, Russia and the
Middle East. This has left chunks of
glitzy property vacant as more units
come to market.
Sales of these ultra luxury homes
have slowed since the buying frenzy of
2013 and 2014. In Manhattan, 71 homes
sold for between $10m and $20m
in 2015, down from 100 in 2014, accord-
ing to property information company
RealtyTrac. Some 39 homes sold
for more than $20m, compared with
50 the year before. Similar trends are
playing out in Miami and Los Angeles —
other cities which have led the US
housing recovery thanks to foreign
investment.
“There is no question that developers
are worried”, says Michael Stoler of
Madison Realty Capital, a property
investor. Banks are “very cautious” and
not looking to finance these deals unless
purchasers commit a lot of equity.
At prices of $10m and above, global
investors dominate buying, which
makes demand more vulnerable to
swings in confidence in the world econ-
omy. Sales in Manhattan for more mod-
estly priced luxury homes — $5m to
$10m — rose from 182 in 2013 to 226 in
2015. In total, 336 homes sold for $5m or
more on the island last year, while
nearly 12,000 sold for under $5m.
A “billionaires row” had emerged
after the crisis, as developers built a
stretch of skinny skyscrapers along Cen-
tral Park. This was to meet demand
from Chinese and Russian buyers seek-
ing second or third homes that are often
left vacant for parts of the year.
The jump in global investor demand
in 2014 “appears to have been fully
served” by supply, says Alan Lightfeldt
of property website StreetEasy. The
median sales price of luxury Manhattan
homes fell for seven consecutive
months to December 2015. Mr Light-
feldt forecasts Manhattan’s luxury mar-
ket will return to a “sustainable growth
rate after the party of 2014”.
Steven Roth of Vornado, the New
‘Everyone had this herd
mentality, and then you get
a glut . . . A lot of those
projects have stalled now’
York property company, warned nearly
a year ago that luxury apartments were
at risk of being overbuilt.
With its ridged sides intended to
resemble a cascading waterfall, 157
West 57th Street had spearheaded the
luxury building boom. But after half the
property’s units sold in its first six
months — one with a record price tag of
$100.5m — sales have “slowed consider-
ably”, says Andrew Gerringer of luxury
FINANCIAL TIMES
FT Property
property specialists The Marketing
Directors.
“Everyone had this herd mentality,
and then you get a glut,” Mr Gerringer
adds. “A lot of those projects have stalled
now.”
The 157 West 57th Street building is
80 per cent sold, although sales in 2015
have been slower after demand peaked
in 2013 and 2014, says Gary Barnett,
president of Extell, the tower’s devel-
oper. “Obviously the super luxury mar-
ket has slowed down in New York. But
there’s still demand out there. It’s a
question of people taking more time and
getting through the noise of more sup-
ply coming,” Mr Barnett says.
Many buyers of property at such
prices have been anonymous, hiding
their identity behind limited liability
companies. The US Treasury last month
launched an investigation into all-cash
buyers of luxury property in New York
and Miami, where at least a third of
property purchases worth more than
$2m are carried out in the name of such
companies.
Developers are backing these high-
flying projects with bigger investments
than in previous building booms, says
Mr Gerringer. They are putting in 30 to
50 per cent in equity for a project, he
adds, compared with 5 to 10 per cent in
2008. This leaves them more vulnerable
to falls in the market: “Someone will
probably go bust, but it’s too early to
tell,” he says.
The types of lenders for these deals
have changed in this property cycle.
Before 2008 much of the financing came
from big banks. In the post-Dodd Frank
era, banks have pulled back. Hedge
funds and private equity have stepped
in to replace them, says Stuart Saft, a
property lawyer at Holland & Knight.
Developers have rejigged some of
their plans, says Mr Saft, and cut down
on larger four-bedroom apartments in
favour of two or three-bedroom units
with lower price tags.
This is just part of the property cycle,
Mr Saft adds. “At some point a hot real
estate cycle is going to slow.”
Tuesday 15 March 2016
Superskinny condominiums
The very height of luxury
A new generation of supertall, skinny skyscrapers is
slicing up the New York skyline, a visible product of
the luxury property boom as developers have
scrambled to build the “biggest, baddest” towers to
meet demand from foreign billionaires.
In the past five years, 51 co-called supertall towers
— defined as buildings stretching above 984 feet —
have been built across New York, Asia and the
Middle East. This “astonishing rate” of construction
compares with just 50 supertalls built over the
previous eight decades, as luxury property has
“transitioned into a post-recessionary boom”,
according to the Council on Tall Buildings and Urban
Habitat (CTBUH).
As New York recovered from the financial crash,
wealthy Chinese and Russians stormed back into the
city’s property market as a means of storing their
money, pushing up demand for luxury residential
apartments. Soaring land prices made making it
practical to buy smaller plots and secure air rights to
build up. Advances in engineering have made it
easier to construct super tall, super thin towers.
This provoked a flurry of plans for buildings of
unprecedented height and price, as developers raced
against each other to break records. “Developers are
somewhat ego-driven. It’s human nature,” says
Andrew Gerringer of New York-based property
agents The Marketing Directors.
Standing at 1,005ft, 157 West 57th Street — known
as the “billionaire building” — became New York’s
tallest residential tower when it opened in 2014. It
was the first of a stretch of ultra luxury towers that
went up along so-called billionaires row on the
southern border of Central Park. But a year later
One57 was usurped by 432 Park Avenue, which at
1,396ft became the 100th supertall tower and the
tallest residential building in the western
hemisphere.
The new breed of skyscrapers has prompted
something of a backlash from planners and New
York residents. The towers cast shadows over
Central Park and some locals feel the “grossly tall”
structures ruin the skyline, says Eddie Shapiro,
president of Nest Seekers, a property broker. As the
city grapples with a dearth of affordable housing,
some people see these trophy skyscrapers as the
embodiment of New York inequality.
There are 18 to 27 more super tall towers expected
to be completed this year across the globe and 144
more under construction, according to the CTBUH. In
New York more supertalls are in the works for the
next few years: 217 West 57th Street at 1,775ft, 111
West 57th Street at 1,428ft and 53 West 53rd Street
at 1,050ft. But as the global economy and foreign
demand have slowed, comments Mr Shapiro, some of
these projects will “probably get pushed to the next
cycle”.
Anna Nicolaou
Way up high: 157 West 57th Street
Tuesday 15 March 2016
Urban horizons Tower projects often fail to express
the spirit of cities, argues Edwin Heathcote
Quest for sky
high returns
grates on the
mind and eye
T
he skyline used to belong to
God. The spires and domes
which punctured the hori-
zons rose upwards in
acknowledgment of a
higher purpose.
Then came the brick chimneys of
industry and their plumes of smoke.
Then the monuments of civic identity —
the Statue of Liberty, Nelson’s Column,
the Eiffel Tower as the power shifted to
the cities grown wealthy. These were in
turn followed by the skyscrapers as the
real influence moved to the corpora-
tions and banks which built them. The
skyline has always revealed who owns
the city, where the real power lies and to
whom — or what — the citizens look up.
That is why the most recent shift in
our skylines demands to be noticed.
Anyone visiting New York and looking
up will see the city’s skyline radically
changing. A new typology has emerged
— the skinnyscraper — the ultra-slen-
der, uber-extruded tower whose spirit-
ual home is the edge of Central Park.
These attenuated fingers casting their
anorexic shadows on to the grass
are beginning to exert a real impact on
Manhattan’s horizon. Rafael Viñoly’s
96-storey 432 Park Avenue kicked the
new era off. Shop Architects’ tapering,
★ FINANCIAL TIMES
astonishingly slender 111 W57th is pro-
viding the next instalment. The latter
will rise to above the height of the
Empire State Building. Jean Nouvel’s
MoMA tower and Adrian Smith + Gor-
don Gill’s Nordstrom Tower are to come.
Both will dominate Manhattan’s new
horizon.
What is so striking about this new
kind of skyscraper is its use — these are
condo towers, often with only a single
apartment to each floor and 360 degree
views of the city. Perhaps that is why the
shock has been so visceral — they
appear to represent a de facto privatisa-
tion of the skyline.
The scale is not quite the same in Lon-
don but here, too, the skyline is being
punctuated by dozens of apartment
towers. You could argue that in London,
even though the towers are shorter, the
effect is yet more pronounced. This is
still low-rise city and each tower exerts a
powerful impact.
The Shard and the Walkie Talkie now
poke their way into the city’s most sur-
prising views. The Shard’s developer,
Irvine Sellar, recently went back to the
drawing board with plans by the same
architect, Renzo Piano, for another
super-tall tower.
Dubbed the “Paddington Pole” this
FT Property
lanky cylinder would have radically
changed the west London skyline — and
it is a testament to the wealth and power
in the west of the city that the plans are
being revised when the Shard, in less-
well-off Southwark, seemed to glide
through.
The furore over the Piano project in
Paddington seemed to indicate a turn-
ing point in London just as the concern
over the shadows being cast over Cen-
tral Park did in New York. London could
face a future of over 200 new towers of
20 storeys or more appearing on its sky-
line over the next few years, while even
New York’s resolutely high-rise profile is
being dominated by the new super-
skinny, super-tall skyscrapers.
Fifty years ago in London the build-
ings that were poking their heads above
the horizon tended to be either the
architecture of the welfare state — social
housing towers, government offices or
even hospitals. The Brutalist concrete
Guys and St Thomas’s Hospital tower
was the tallest in south London in the
70s. Now its neighbour the Shard has
made it almost invisible.
There were occasional spectacular
office blocks like Centre Point, now itself
being converted to residential, and
hotels but even the most striking
Central London’s structures — take the Post Office Tower
‘cheesegrater’ — were public buildings.
tower next to In New York the skyline had been
St Paul’s dominated by the corporations which
cathedral fed the economic boom time of the post-
Oli Scarff/Getty Images war years: Lever House, the Seagram
Building, the Pan Am Building, the
AT&T Tower. These were works by the
greatest architects of the age built to
express the city’s economy as the centre
of capital.
In both cities on either side of the
Atlantic, the skyline could also be read
as a graph of social and economic con-
cerns, an ECG illustrating the pulse of
the streets below.
Now the pattern has been disrupted.
Some of the towers are undeniably pow-
erful buildings, well-designed, often
quite elegant but they are also huge.
The new The towers of today express little of
buildings the spirit of the cities above which
they loom; rather they act as extruded
too billboards for real estate as an asset
perfectly class.
The resentment against these new
capture the buildings — even when they might be
pricing out fine architecture — is that they too
perfectly capture the pricing out of
of ordinary ordinary citizens from the centres of
citizens their respective cities. But perhaps
worse than that, the sale of the bulk of
5
these hyper-luxurious high-rise condos
to foreign investors, buy-to-leavers and
absentee landlords expresses the glo-
balisation of property, the effects of
which have been much like the globali-
sation of industry — the export of profits
and the loss of benefits for the city.
New York, at least, with its high prop-
erty taxes, manages to capture some of
the value back for the city but London,
fails in even this most basic respect.
Peter Rees, one-time chief planner for
the City of London, called these proper-
ties “safe-deposit boxes in the sky”, an
eloquent encapsulation of the alienation
of this real estate from the real city that
lies below it.
If this new generation of towers is to
be integrated into the city, both physi-
cally and psychologically to become
part of the streets which they cast in
shadow, this problem will need to be
addressed.
If it is not, the consequence will be a
new architecturally-imposed class sys-
tem and a picture of inequality
inscribed in the skyline in the most
graphic way imaginable.
It will leave citizens feeling like tour-
ists in their own cities, gawping up at the
homes of the wealthy blacking out the
sky where once there was sun.
6 ★ FINANCIAL TIMES Tuesday 15 March 2016

FT Property

Let the good Peer-to-peer pioneer

targets mortgages
times roll for Lending
ings Account (Isa). That will allow UK
savers to place peer-to-peer loans in the

co-working The founder of LendInvest

has big ambitions to shake
up UK property lending,
writes Hugo Greenhalgh
tax-free wrapper from April.
“We would like to be authorised and
ready for this year’s Isa season,” says Mr
Faes, “but, as all the platforms are find-
ing out, the FCA [the Financial Conduct
Authority, the UK financial services

office ventures With any new start-up it is difficult to

distinguish ambition from hubris.
Either way, Christian Faes has big plans
for LendInvest, a company he co-
founded in May 2013 with business
Flexible offices Shared workspace providers are partner, Ian Thomas.
“I think we can be the biggest mort-
enjoying a boom in demand, reports Judith Evans Work, rest and play: a WeWork office environment gage lender in the country,” he says.
“But it’s going to take us a number of
watchdog] is being extremely thorough
in terms of the authorisation process.
“Even if we are authorised and ready
to go, it’s not a story for the next couple
of months,” he adds. “It’s more for the
next four to five years.”
The launch of the Isa confers much-
needed credibility to an industry that
has come under fire. In February, Lord
Turner, former chairman of the Finan-
cial Services Authority, the FCA’s prede-

T
he walls are exposed brick,
Apple laptops ubiquitous,
the drinks ordered via iPad,
the outfits casual. There
may be faux-industrial
lighting or leather sofas; there will most
likely be talk of a creative community.
From San Francisco to Berlin and
from Nairobi to Bangkok, the scene is an
increasingly familiar one: an office in
which companies — especially small
technology firms — share ideas and flat
white coffees along with a workspace.
Corporations such as Visa and Veri-
zon have succumbed to the lure of the
flexible office, which accounts for 8 per
cent of newly occupied global office
space, according to research produced
last year by estate agency Cushman &
Wakefield.
That has benefited both traditional
serviced office providers such as Lon-
don-listed Regus, which increased its
global network by a fifth to more than
2,700 locations last year, and newer
rivals such as New York-based WeWork,
which raised money in 2015 based on an
implied valuation of $10bn.
In Shanghai, where the concept is
newer, there are more than 100 co-
working spaces. “It’s all part of the shar-
ing economy. It’s digital shaking up the
workplace,” says Mark Dixon, founder
of Regus. “We’ve been doing this for a
long, long time — more than 25 years —
but it’s really now that we’re seeing very
strong growth.”
Serviced offices and co-working are
the descendants of the 1980s “business
centre” which boasted immediate
access to a desktop computer, telephone
and fax machine. Providers boosted
their income with additional charges for
those services. But the latest equiva-
lents thrives on the opposite phenome-
non — the fact that workers with laptops
and mobiles can set up anywhere.
Cushman & Wakefield traces today’s
co-working boom back to the financial
crisis, which robbed large numbers of
skilled workers of their jobs, forcing
them into freelance work or becoming
“unexpected entrepreneurs”. It all
fuelled demand for shared spaces.
Those spaces then grew in popularity
with the resurgence of the tech industry.
Some offices have
unlimited beer on tap and a
weekly ‘happy hour’
There is also a more prosaic driver:
awareness of how efficiently office space
is used. Spaces in traditional offices are
in use on average for only 50 per cent of
the working week, say property advisers
CBRE. Companies, therefore, may be
tempted to place some staff in flexible
spaces that, while more expensive day-
to-day, can be expanded or shrunk at
will.
A question that splits providers is
whether the traditional serviced office
such as those offered by Regus and Aus-
tralian-listed rival Servcorp is funda-
mentally different from the co-working
space like WeWork, whose central sell-
ing point is its people.
WeWork argues it offers “much more
in addition to the space”. Its 55 offices
are designed around communal lounges
and “pantries” with unlimited beer on
tap. One of its selling points is a weekly
“happy hour”, while events include
talks by the likes of Richard Branson.
Eugen Miropolski, director of its
European business, says: “You become
part of the WeWork community.”
Ken Raisbeck, of CBRE, agrees. While
serviced offices are “fundamentally
focused on financials”, co-working
“brings individuals together for com-
mon purpose”, he says. Regus, however,
believes this it simply a question of
branding. It launched its Spaces brand
in 2015, seeking to attract creative
workers. Spaces operates in “exactly the
same market segment” as WeWork and
is growing fast, says Mr Dixon.
Both serviced offices and co-working
spaces face the same central risk — the
danger that leases taken out by occupi-
ers, which can be as short as one month,
will not cover the much longer commit-
ments providers sign with landlords.
If demand falls, providers cannot
quickly escape their own leasing com-
mitments. “The long leases versus the
short rent remains a classic worry in this
space,” says John Lutzius, managing
director at Green Street Advisors.
That difference was one reason for a
series of insolvencies that followed the
1990s heyday of serviced offices. Regus’s
US arm filed for bankruptcy protection
in 2003 and it was forced to sell more
than half of its UK business. Another
casualty was HQ Global Workspaces,
which was eventually bought by Regus.
Regus has sought to mitigate this risk
by entering into profit-sharing partner-
ships with landlords. WeWork has also
signed some profit-sharing deals,
although it has drawn scepticism from
the property industry by taking out a
series of major leases at a time when
office rents in its biggest markets are at
record highs.
WeWork insists a downturn could
improve its business. “There could be
even more demand. Companies will be
more reluctant to sign a three or five or
10 year lease,” says Mr Miropolski.
The sector is attracting more players
— such as Second Home in London and
NeueHouse in New York, which seeks to
foster an atmosphere similar to that of a
private members’ club. Longer estab-
lished ventures such as The Office
Group are taking spaces in landmark
buildings.
As long as the good times continue,
space exists for all. “The market is grow-
ing rapidly and we are growing rapidly
within it,” Mr Dixon says.
years to get there — and it’s not neces-
sarily a race. That’s not the real test of
how good the business is.”
His business model has been to
attract investors and then lend out
money on a short-term basis to property
professionals, not first-time buyers.
Typically over a three-year period, the
average loan size has been about
£500,000-£600,000, something Lend-
Invest is keen to reduce as it looks for a
more mainstream market. On the other
side of the business, the company’s cus-
tomers invest an average of £60,000
which can be advanced as loans.
Last year the co-founders attracted
their first outside investor. Beijing Kun-
lun, a Chinese-listed technology com-
pany, took a 20 per cent stake in the
company which valued it at £110m.
It was a decision driven not so much
by financial need, explains Mr Faes.
“The principal [Zhou Yahui] is a tech
entrepreneur,” he says. “He’s been
hugely successful and is very experi-
enced in growing a fast-growth tech
business.” The new backer, therefore,
can offer practical guidance as well as
financial clout to his property lending
venture, he argues.
When LendInvest first launched three
years ago, peer-to-peers lenders were a
relative novelty in the UK. Now, the
market is looking increasingly crowded
— and is likely to become more so in the
UK following changes in rules which
create a new category of Individual Sav-
cessor, criticised the peer-to-peer loans
industry, warning of possible “big
losses” which could “make the worst
bankers look like absolute lending gen-
iuses”.
Harsh words, and Mr Faes does not
dismiss them lightly. He sees some
merit in their content — if not the deliv-
ery. “If you look at the thrust of his com-
ments I wouldn’t say that we wholly dis-
agree,” he says.
Next on his agenda is expansion into
various Commonwealth countries. And
then there are ambitions to buy an
“offline lender” — a traditional bricks
and mortar mortgage lender. “[We are
looking for] one that has experience
originating credit, but doesn’t have the
technology, perhaps is perceived as a
Christian Faes,
co-founder of
mortgage-lending
venture
LendInvest
dying brand or just doesn’t have a
brand,” explains Mr Faes.
For the peer-to-peer proponent, the
ultimate test is whether LendInvest is
still around in 10 years’ time. The ven-
ture’s success will depend on continuing
to ensure “borrowers have a good rela-
tionship with the business” while also
ensuring those committing their funds
remain happy, he says.
Tuesday 15 March 2016
Second-tier cities rival capital returns
Urban rankings
Less renowned
destinations are
catching the eye of
real estate fund
managers, says Peter Bill
L
ast year the high prices
demanded of property inves-
tors in the world’s “super cit-
ies” of London, New York,
Tokyo and Paris drove global
fund managers towards a second rung of
merely excellent cities such as Berlin,
Beijing and Seattle.
Commercial property investment
leapt 65 per cent to $30bn in this group
of lower-tier destinations. By contrast
total spending in 2015 across the world’s
top four super cities fell by 10 per cent to
$128bn compared with the previous
year, according to latest figures from
JLL, the international property agency.
Though super cities may command
the weight of investment in commercial
real estate, they do not necessarily all
offer the best returns. Anticipating
swings in returns available across the
many dozens of less obvious and
unfashionable urban destinations is also
part of the task faced by an elite group of
global fund managers. It is relatively
easy to identify a solid core of favoured
locations in the US and Europe. Deliver-
ing a shopping list of winning locations
to property investors has become more
challenging in Asia, however, as regional
economic uncertainty has risen.
Alastair Hughes, chief executive of
JLL’s Asia Pacific division, argues that
Bangalore, Manila and Shenzhen
remain good investment bets. “Each has
large, young and fast growing popula-
tions,” he says.
Shenzhen has become China’s Silicon
Valley while Manila’s appeal is growing
as it experiences the beginnings of an
outsourcing boom. For its part, Banga-
lore has already become a world leader
of IT outsourcing.
Europe offers an increasing range of
less obvious attractive destinations.
Nine of JLL’s dozen favourite spots in
Europe are not prime global locations.
Aside from Paris and London, Istanbul,
★ FINANCIAL TIMES 7
FT Property
argues. “We can still buy secondary Contributors
Direct commercial real estate volumes property with a 2 per cent yield pre-
2015 ($m) mium over prime.”
The opportunity to steadily build a Judith Evans
portfolio of assets in this secondary Property correspondent
market, when compared with the
stop-go market conditions that exist in Aliya Ram
many prestige locations, is akin to Consumer industries reporter
11 2 20
“starting a 100 metre race 20 metres up
the track,” he says. “Usain Bolt might James Politi
19 3 26 25
Rome correspondent
12 29 6 1
8 22 beat you, but few others will.” Fidelity
13 18 27 30 21
4 15 14
9 5 produced returns of 14 per cent in 2015
23 7
24 from a £450m UK fund invested in reso- Anna Nicolaou
10 lutely un-prime spots like Bourne- New York digital editor
mouth and Gatwick.
17
Andrew Angeli, head of UK strategy at Edwin Heathcote
CBRE Global Investors, backs the trend Architecture and design critic
towards looking beyond super cities.
“Last year 60 per cent of our £1.4bn Peter Bill
investment in the UK was spent outside Freelance property writer
the capital,” he says.
16
28 Among deals struck by CBRE was a Hugo Greenhalgh
£130m investment for three office Wealth correspondent
buildings in Birmingham on behalf of a
1 New York 53,049 11 Seattle 10,276 21 Seoul 6,572 German investor, with rents expected to Ben Rogers
yield a return of just under 6 per cent. Freelance writer and policy adviser
2 London 39,383 12 San Francisco 9,412 22 Beijing 6,440
“But we don’t necessarily just go for big-
3 Paris 20,128 13 San Jose 8,943 23 San Diego 6,305 ger cities” says Mr Angeli, whose com-
4 Los Angeles 18,871 14 Atlanta 7,512 24 Miami 5,953 pany ultimately manages $89bn of
assets worldwide. “We like Slough and
5 Tokyo 15,783 15 Dallas 7,234 25 Munich 5,769 Milton Keynes,” he says. “We are also Michael Kavanagh and Helen Barrett
6 Chicago 14,156 16 Sydney 7,221 26 Frankfurt 5,628 happy to consider alternate property Commissioning editors
sectors offering long term income,
7 Shanghai 13,958 17 Singapore 6,980 27 Madrid 5,269
including roadside properties in less Steven Bird
8 Boston 12,772 18 Phoenix 6,943 28 Melbourne 5,087 salubrious locations.” Designer
9 Washington, DC 12,701 19 Toronto 6,807 29 Denver 4,885 Leading fund managers including
Blackstone, Starwood, Lone Star and Alan Knox
10 Hong Kong 11,981 20 Berlin 6,757 30 Milan 4,798 Brookfield and CBRE Global Investors Picture editor
FT graphic Source: JLL tend to have the best intelligence net-
works in the sector. But relying on the Graham Parrish
Dublin, Edinburgh and Manchester fea- The research produced by agents aimed good time to be selling . . . but we’re still size and reputation of investment insti- Graphic artist
ture in this list. “There is increasing rec- at justifying their strategies to investors here to buy in Europe.” His views count. tutions is no guarantee of returns in a
ognition that success is no longer purely provides a useful “map” of the invest- Blackstone, ranked the world’s biggest sector also subject to large risks. For details of the advertising and
about size but involves a capacity to ment world. But it is also often used real estate fund manager, has $94bn of Ian Marcus, former head of real estate sponsorship opportunities in print, digital
adapt,” concludes the JLL report, which internally as a “first filter” by fund man- property assets under management and at Credit Suisse and now adviser to East- and events, please contact:
is scheduled to appear on March 15 at agers as a stress test on their own sophis- a purse filled with billions more. dil Secured and Wells Fargo Securities, Lyn Thompson +44 (0) 20 7873 4967,
the same time as the MIPIM trade show ticated risk models. Neil Cable, who runs Fidelity’s €1bn recalls the lead-up to the last crisis. lyn.thompson@ft.com
in Cannes. A series of sales of commercial prop- European real estate fund, also argues Between 2004 and 2007, “we all fell into or your usual Financial Times
Property fund managers spend much erty in London, New York, Hong Kong the case for a more measured approach the same trap: management by Excel”, representative.
time and expense at this annual assem- and Tokyo in 2015 indicate the warning to investing in prime locations. he says. “No one really bothered to go
bly of industry leaders on the French lights may already have been blinking One factor is that more prestigious out and look at the real estate.”
Riviera, both aboard yachts and ashore, “sell” for fund managers who control locations often offer constrained time It pays to visit. Before committing, All editorial content in this report is
promoting investment strategies and large portfolios of assets in prime cities windows within business cycles to prof- investors need to know about who they produced by the FT. Our advertisers have
attempting to grab the attention of the for at least a year. itably acquire assets, he argues, when will be doing business with — particu- no influence over or prior sight of the
world’s biggest pension, life and sover- Anthony Myers, Blackstone’s head of compared with the more consistent larly if cities operate as political fief- articles.
eign wealth funds. real estate in Europe, appeared to be returns available in lower ranked desti- doms. Who “owns the city” can influ-
The running of global funds generates hedging his bets when he said in Paris nations. “There are only two years in ten ence investor sentiment says Rosemary All FT Reports are available at:
billions of dollars a year in gross fees. last month: “For stabilised assets, it’s a when it makes sense to buy prime,” he Feenan, global research director at JLL. ft.com/reports
8 FINANCIAL TIMES Tuesday 15 March 2016
 FT SPECIAL REPORT

Doing Business in
The North of England
Tuesday March 15 2016 www.ft.com/reports | @ftreports

Inside
New focus on powerhouse potential Must do better
Despite highlights, the
northern economy is not
Can infrastructure and cutting times from Manchester and Liv-
erpooltoLondonbelowtwohours.
living up to its promise
economic masterplans The government has agreed to fund a
Page 2

transform the region, feasibility study into a 30-mile road tun-

nel under the Pennine hills to connect Investment hopes rest
asks Andrew Bounds Manchester and Sheffield, now linked by on eastern premise
a single carriageway road that closes in Visit by
high winds or snow. The tunnel would
China’s

T
he North of England is
dreaming big again. One of
theworld’slongestroadtun-
nels, its fastest rail lines and
a research institute dedi-
cated to its most exciting new material,
graphene, are planned or taking shape.
Its resurgence has drawn investors from
around the globe. China’s President Xi
Jinping became the latest to witness this
witha visit toManchesterlastautumn.
The north’s economic output, by gross
value added, was £304bn in 2014, which
would make it the 10th largest economy
in the EU were it a country. It is home to
15.1m people and features many of the
UK’s largest cities. Manchester, Liver-
pool, Sheffield, Leeds, Newcastle and
Bradford have illustrious pasts as global
commercial andmanufacturing hubs.
The assets that helped the north
become a global force the 19th century:
energy, water, scientific excellence, fast
communications and industriousness
are being rediscovered. But progress is
patchy. Some of those assets — coal, ship-
yards, plentiful unskilled labour — are
no longer required and a painful adjust-
ment continues. Despite efforts to
change the economy, with some success.
health outcomes, employment, earnings
and life expectancy are on average lower
inthe norththanintheUKasa whole.
Looking ahead: Manchester’s National Graphene Institute says the material could be used for smart contact lenses
The government wants to connect the
north’s cities economically to create a
single labour market to attract a young,
more qualified workforce. George
Osborne, the UK chancellor, has named
this effort the“NorthernPowerhouse”.
Along with investment in infrastruc-
ture, science and culture, he promised
devolution — handing power and money
to areas that agree to elect mayors for
overarchingcombinedauthorities.
Sir Howard Bernstein, chief executive
of Manchester city council and a promi-
nent figure in the effort, says: “This is a
national priority. We have to have more
than one engine of national growth. The
south-east is overheating.”
A recent big step has been the creation
of a single transport body with £200m
funding to run itself and develop pan-
Northern smart ticketing. Transport for
the North (TfN) is also working to halve
journey times between big cities. It is
quicker to travel by rail from London to
Paris than from Liverpool to Hull, a
journey less than half the distance.
The first step could be an improved
Manchester-Leeds rail line. By 2033, a
new dedicated line could connect with
the north-south high speed rail line, cut-
ting journey times from Leeds and Man-
chester to London to a little over an hour
The £56bn HS2 still needs final parlia-
mentary approval but has cross-party
support. A western branch through Bir-
mingham should reach Crewe by 2027,
relievepressureontheM62motorway.
TfN’s rail plans would take freight president
from two of the UK’s busiest ports, the stresses
Humber and Liverpool, off the road.
They would also improve access to Man- role of
chester airport, the UK’s third biggest, foreign
with 25m passengers a year and will money
spend£1bnover10yearsonarevamp. Page 2
John Cridland, the chairman of TfN,
said the proposals require a “leap of
faith” by government. He wants money ‘Time to move from
to be earmarked from 2020. The CBI,
which represents big employers and was planning to delivery’
once headed by Mr Cridland, has also CBI director-general
thrownitsweightbehindtheplans. Carolyn Fairbairn calls
Lord O’Neill, chief commercial secre-
tary to the Treasury, is charged with for concrete progress
delivering that growth but recently Page 3
warned progress should be measured in
years,notmonths. Anywhere but London
Tom Riordan, chief executive of
Leeds city council, says the region can- New money flows in
not wait. “The Northern Powerhouse as investors flee
needs very clear substance in the next spiralling property
few months. We need our transport plan
backed by government.” prices in the capital
Many local politicians and media are Page 3
sceptical, accusing government of more
words than action. However, pan-north-
ern bodies are springing up as rivalries
give way to co-operation. They include
Tech North, which aims to stimulate the
Continued on page 3

Universities and unicorns

drive digital development
Technology
Education, entrepreneurs
and big-name companies are
creating a strong ecosystem,
writes Andrew Bounds
Look up in London and you will see the
north’s tech scene. Billboards feature
models for Boohoo.com, the Manches-
ter online retailer, or announce that you
can have a washing machine delivered
tomorrow by AO World, the white goods
online delivery service from Bolton.
Turn on the television and there are
adverts for On the Beach, the listed
travel agent.
The UK is adopting digital technology
much faster than many European
countries, and the north is increasingly
grabbing its share. Some of the UK’s
biggest tech businesses, such as Sage,
the software group, and The Hut, the
online retailer with a turnover of
£335m, are in the north. Manchester,
Leeds, Sheffield and the north-east are
building significant tech hubs.
Tech North, a government agency set
up last year to promote the sector, says
there are nearly 300,000 digital jobs in
the region, with companies accounting
for almost £10bn in economic value.
The average salary is £45,000. Greater
Manchester was the biggest single hub,
with 52,000 jobs and £2.2bn in output,
boosted by the recent move of more
than 2,000 BBC staff to Salford.
GP Bullhound, the investment bank,
says the north now has 11 unicorns
(start-ups valued at more than $1bn),
more than Sweden and Germany.
Hugh Campbell, partner at its Man-
chester office, said that the region’s suc-
cess was attracting investors used to
looking only at London. “We need to do
a better job telling them what is here,”
he says. Mr Campbell points to recent
deals involving US investors. US private
equity fund JMI Equity in December
paid £32m for a minority stake in
Avecto, a Manchester based cyber secu-
rity business.
GP Bullhound in March calculated
that the north’s fastest-growing 50 tech
businesses (including Scotland) almost
doubled revenues in 2015 to £1.12bn.
Ubisoft — the world’s third-largest
publisher of video games — is investing
heavily in Newcastle, creating 100 jobs
Game on: ‘Assassin’s Creed’, made by
Ubisoft, now investing in Newcastle
by setting up a customer contact base in
the city last year. Ubisoft’s Reflections
games studio has moved into new
premises as it hopes to attract gradu-
ates from Newcastle University, a world
leader in computing science research.
Newcastle is particularly strong in
software development, technical sup-
port, gaming and creative services,
employing more than 27,000 people. It
has won £10m funding for a University
Technical College to train 14- to 18-year-
olds in digital skills. The city is also home
to Ignite, a tech accelerator programme
that has now openedinLondon.
Charlie Hoult, chairman of Dynamo
North East, a network of technology
entrepreneurs, says the region was home
to several “new unicorns” and digital
technology was spreadingfast.
‘We need to do a better job
telling investors what’s here’
Hugh Campbell, GP Bullhound
“It’s driving the service and educa-
tion sectors too: property developers,
skills training, recruiters, lawyers and
universities,” he says
Liverpool has long had a strong gam-
ing industry and 30,000 people are
employed in the creative and digital
industries. Recent analysis by Amion
Consulting found that the city’s creative
and digital economy is responsible for
almost 6 per cent of all jobs, a higher
proportion than in Manchester.
The government has also invested
£11m in four start-up hubs in the region.
Small companies can access EU-
backed funding. The north-east has a
£160m fund, while the other regions
have a combined £400m Northern
Powerhouse Investment Fund.
Universities are collaborating with
companies on a series of government-
funded projects. In Manchester there is
the £61m National Graphene Institute,
the £235m Sir Henry Royce Institute
for Advanced Materials Research and
Innovation, with six satellite centres
including Sheffield, Leeds and Liver-
pool. Newcastle has the £40m National
Centre for Ageing Science and Innova-
tion and Liverpool the £68m Materials
Innovation Factory, developed with
Unilever. Sheffield has built the Factory
of the Future, which can be reconfig-
ured to make different components.
Stuart Marks, a tech entrepreneur
who runs tech incubators for John Lewis,
the retailer, and others, says the north is
on the up but needs better links to Lon-
don and Silicon Valley. He sold Itis, a
traffic information business, in 2012,
andisinvestinginstart-ups.
“The north is being taken very seri-
ously. I don’t think the government is
paying lip service,” he says. “But it is up
tolocalpeopletoturnthisintoareality.
However, unless companies are
“doing some lifechanging thing”, he
suggests they may need to establish a
London base if they are to attract the
biggest investors such as Google, which
will want to integrate businesses.
“I don’t think London has access to
the best ideas. London has the ability to
accelerate the growth of companies
through some big fundraisings,” he says.
Servelec, the Sheffield-based software
provider, floated in 2013. The business
makes and controls monitoring systems
for safety critical industries and software
for the health and social care sector. It
provides electronic patient record and
administration systems and originally
grewoutofthecity’ssteelindustry.
Alan Stubbs, chief executive, says the
city had helped the business grow. “It is
where our roots are and has been very
supportive. We get a lot of our graduates
from the university. We use local advis-
ers. You do not need an EC1 or Mayfair
address. Manchester, Sheffield and
Leeds have all the capability you need to
create really good businesses.”
2 ★
Rich potential
undermined
by entrenched
weaknesses
Economy The region remains in the south’s shadow
despite strength in growth sectors. By Chris Tighe
O
n one point, at least, there
is unanimity across the UK
political divide about the
economy of the north of
England — it is not reach-
ing its potential.
Historical trends, the centralised
nature of the UK economy, the welfare
state, the decline of heavy manufactur-
ing — all have been offered as explana-
tions for the underperformance of the
north compared with the UK overall.
London dominates the UK’s image
abroad. No English city is even a quarter
of the capital’s size. Yet if it were a single
entity, thenorthofEngland’s economy —
worth £304bn — would rank as the EU’s
10th-largest.
The north-west, Yorkshire and Hum-
berside and the north-east are the birth-
places and bases for innovative and
growing businesses in the vanguard of
some of the UK’s most important growth
sectors. Strengths include science and
health, digital and technology, energy
andadvancedmanufacturing.
Research published last month by the
Enterprise Research Centre found the
number of high-growth companies —
“gazelle” businesses with 10 or more
employees that have increased their
workforce by 20 per cent over three
years — was growing twice as fast out-
side London, although the capital still
has the highest proportion in the UK.
Leeds and Liverpool were among the
gazelle hotspots.
Investors see potential in the north.
Investec, the South African bank,
opened its first investment banking
office outside London last year in Leeds.
Dan Sheahan, who heads it, says: “A lot
of private equity deals have been in the
north. We felt there was a gap in the
market for a full-service investment
bank for mid-market entrepreneurs.”
The north’s 29 universities are centres
of collaboration between science and
industry. The region has a strong cul-
tural and tourism offering and areas of
outstanding natural beauty.
Yet despite this, the gap in gross value
added (GVA, a measure of output)
between the north and the rest of the UK
is substantial and stubborn. The Treas-
‘We still have 125 digital
job vacancies to fill, and it is
becoming harder to do so’
ury estimates that if the northern econ-
omy grew in line with the UK’s from 2013
to 2030, this would be worth £44bn in
real terms to the north.
In 2014, GVA per-head growth in each
of the three northern regions lagged
behind the UK’s 3.6 per cent average. On
a base of UK GVA per head of 100, the
figure for the north-east is 74, for York-
shire and the Humber 80.7 and for the
north-west 85.4.
FINANCIAL TIMES
Doing Business in the North of England
The north’s economy
rivals London’s in size ...
Gross value added, 2014 (£bn)
0
London
100 200 300
North*
South-east
East of England
Scotland
South-west
West Midlands
East Midlands
Wales
Northern Ireland
Source: ONS * North-west, north-east, Yorkshire and Humberside
The north-east’s GVA, England’s low-
est per head regionally, was £18,216;
London’s was £42,666.
Meanwhile, the recent Rebalancing
report from EY, the professional serv-
ices firm, forecast that London’s 2015
GVA growth would be 3.4 per cent, with
the south-east, south-west and east set
to outstrip the UK’s 2.3 per cent overall.
London’s outperformance, it projected,
will continue through to 2018.
The north’s business community cites
deficiencies in transport infrastructure,
government under-investment in con-
nectivity and skill shortages as factors
inhibiting growth. Richard Flint, chief
executive of Sky Bet, a Leeds-based
online gambling company that employs
800, says: “Having recruited 360 people
in just nine months we still have around
125 digital job vacancies to fill and it’s
becoming harder and harder to do so.”
A recent UBS regional policy report
found deep-seated imbalances, and in
some respects systemic, with policy
overall “barely acting to offset the natu-
ral drift of business activity towards the
south”. Divergencies, the bank says, go
backasfar asthelateVictorianera.
The Trades Union Congress partly
blames government cuts since 2010. The
north, it says, has been hardest hit by
spending cuts, with the net loss of almost
400,000public-sectorjobsintheUK.
Latest official data show rising
employment across most of the north,
but unemployment in the north-east
... but the gap in
output is widening
Gross value added per head (£ ’000)
40
30
London
20
UK
North*
10
1997 2000 05 10 14
and Yorkshire and the Humber remains
abovetheUK5.1percentaverage.
Wider trends are a challenge. The fall
in oil prices has hit the oil and gas and
subsea sector. Manufacturing and steel-
making are under pressure. Uncertainty
over the outcome of the EU referendum
also means a potentially choppy time
for the region’s exporters in sectors such
as automotives and chemicals.
The north has great economic con-
trasts. A new report from the Joseph
Rowntree Foundation, the social
research charity, lists among the UK’s
“top 12” struggling cities, three within
Greater Manchester: Rochdale (1), Bol-
ton (3) and Wigan (12). Yet Manchester
is increasingly vaunted as the trailblazer
and focus for Chancellor George
Osborne’s“NorthernPowerhouse”.
Northern reaction to this concept, and
to the offer of a degree of devolution, has
ranged from enthusiasm to deep scepti-
cism. But at the least, the initiatives chal-
lengethenorthtoseizetheopportunity.
Lee Perkins, UK and Ireland manag-
ing director of Sage — one of the north’s
great indigenous success stories, a glo-
bal business software company head-
quartered in Newcastle — says there is
cause for optimism.
“Not only can north-east businesses
keep up with competitors around the
UK, I believe we can leapfrog them,” he
says. “There has been an increase in
confidence. Now, we need to work
together and believe in ourselves.”
Chinese state visit highlighted
importance of foreign money
Investment
Signs of interest from China
are raising hopes of further
economic stimulus from
the east, writes Chris Tighe
For most overseas football fans, a visit to
a UK stadium is a matter of personal
enjoyment. But when the Chinese presi-
dent calls in, as he did at Manchester
City’s ground last October, much more is
at stake.
This soft diplomacy, during President
Xi Jinping’s state visit to the UK, illus-
trates the importance the north has long
attached to cultivating inward invest-
ment as a way to develop its economy.
Not long after the visit, a Chinese con-
sortium bought a 13 per cent stake in
Manchester City. Then local rival Man-
chester United — reportedly football fan
Mr Xi’s favourite team — became the
first UK club to launch a dedicated 24-
hour television channel in China.
The excitement aroused by China’s
potential as an investor echoes the
enthusiasm which greeted Japan’s inter-
est in the UK in the 1980s as a spring-
board into the European market. If the
north and China build a similar rapport
it could be mutually very productive.
Nissan’s 1984 choice of Sunderland as
a carmaking location shows what can
result. From a £50m assembly plant, it
grew into the UK’s biggest carmaking
site, a £3.67bn investment employing
6,800 people.
Now the north-east’s largest private
employer, at its Sunderland site Nissan
makes mass-market family cars, as well
as the new Infiniti premium brand and
the electric Leaf. In 2017, it moves into
driverless vehicle technology. Also in
the north-east, Hitachi Rail Europe’s
new £82m County Durham trainmak-
ing plant is a further example of the
fruitful link with Japan.
In 2014, the UK extended its lead as
the top destination for foreign direct
investment in Europe, again securing a
record number of projects (887),
increased market share and more FDI
jobs than any other European country,
according to the Attractiveness Survey
from EY, the professional services firm.
The top investors by project number
were the US, then France, Germany,
Japan, China and India.
Within the English regions, Yorkshire
Devolution delivers
powers and disputes
Politics
As mayoral campaigning
begins, some say authorities’
gains come at too high a
price, writes Andrew Bounds
The place: the Advanced Manufacturing
Park, Rotherham, a former coke works
closed after the 1984-85 miners strike
and now home to Boeing and Rolls-
Royce. The date: October 2 2015. The
event: the signing of a devolution deal
that handed some £900m of govern-
ment spending to local authorities and
introduced an elected mayor. The prin-
cipals: George Osborne, Conservative
chancellor, and Sir Stephen Houghton,
LabourleaderofBarnsleycouncil.
Mr Osborne, the Londoner who is MP
for Tatton, near Manchester, is an
unlikely champion of the north, parts of
which never forgave the party for mass
unemployment in the 1980s. The chan-
cellor said such a deal would have been
“unthinkable”afewyearsago.
Sir Stephen, also chair of the Sheffield
city region combined authority, said:
“For the first time . . . we are being given
the opportunity to take control of our
ownfutureandtomakeourownplans.”
Mr Osborne’s offer to reverse the UK’s
long history of centralisation has been
seized by Labour leaders in the regions
even as he cuts their grant income by up
to 30 per cent. Labour’s national leader-
ship has branded the deals a “con” that
devolves responsibility for cuts.
Local leaders have agreed to collabo-
rate across physical and political bound-
aries. Greater Manchester combined
authority, the devolution pioneer, has
10 authorities run by three parties.
Six areas in the UK have formed com-
bined authorities, five of which have
struck devolution deals giving more
control of transport, investment, skills
training and other areas.
Combined authorities must have an
elected mayor and this has deterred
some areas. Leeds city region, the largest
economy, has been held back as Tory
authorities elsewhere in Yorkshire want
Guest: Manchester City chairman Khaldoon Al Mubarak meets President Xi
saw the biggest increase in projects — up
145 per cent — including six in software.
Leeds was a particular focus, with 15
inward investment projects.
“Yorkshire recorded its highest
number of project successes since 1998,
at 49 projects, accounting for 5.54 per
cent of the UK total [in 2014],” notes EY,
which conducts annual analysis of
inward investment. It has yet to publish
data for 2015.
The start in June of flights by Hainan
Airlines from Manchester airport to Bei-
jing, the first year-round direct sched-
uled flights to mainland China from a UK
airport outside London, will keep a spot-
light on China. Meanwhile, a wave of stu-
dent housing schemes through northern
university cities, sometimes interna-
tionally funded and often housing many
overseas students, is a further sign of the
impactofglobalspendingonthenorth.
Spreading the word:
UKTI’s Catherine Raines
says more must be
done to showcase
northern strengths
The current importance of European
funding was underlined by the signing in
February of a £100m European Invest-
ment Bank loan for capital investment,
including student housing, by Newcastle
University. This was part of £432m of
new EIB loan-funded education and
energyinvestmentinthenorth.
The government’s abolition in 2012 of
England’s eight regional development
Tuesday 15 March 2016
to be included in the deal. Overlapping
responsibilities and doubts over mayors’
powershavehinderedotherdeals.
Others without a strong central city
find it hard to get agreement. Lancashire
has yet to submit a devolution bid. Jenni-
fer Mein, Labour leader of Lancashire
county council, admits it is behind but
adds: “There is no Northern Powerhouse
without Lancashire.” It accounts for 10
per cent of the region’s 1.4m population
and its £23bn economy includes one of
the world’s biggest aerospace clusters,
basedaroundBAESystems.
Another concern is that there may be
little public support for mayors. “The
danger is there is a low turnout and the
chancellor decides it has all been a flop
and drops the [Powerhouse] idea,” says
EdCox,oftheIPPRNorththink-tank.
Labour is favourite in all the contests.
In Manchester, former MP and interim
mayor Tony Lloyd will run. Ivan Lewis,
another MP, is the only other to declare
a candidacy. In Liverpool, Joe Anderson,
mayor of the city, is set to run for the
wider city region. He says he has the
clout to take big decisions and attract
big investors.
The most fascinating contest could be
the north-east. Jeremy Middleton, a
businessman, is looking for the Con-
servative nomination. Mr Middleton,
who sits on the North East Local Enter-
prise Partnership board, says the north-
east gets a “raw deal”.
George Osborne
said October’s
devolution deal
would have been
‘unthinkable’ a
few years ago
Ged Fitzgerald, chief executive of Liv-
erpool city council, says a united voice
can win transport and skills investment.
“These decisions happen by default to
favour London and the south east. We
have suffered from that. We have not
beenabletoorganiseourselves.”
Some argue a regional government is
needed. Labour’s Lord Prescott has said:
“The north fails to punch its weight
because it lacks one strong voice and an
authoritythatputsthenorthfirst.”
agencies outside London, which had
inward investment as a key role, caused
concern in the north. Some RDAs had
promoted their areas energetically by
setting up overseas offices. Inward
investment is now handled initially by
UK Trade & Investment (UKTI), a gov-
ernment body.
Figures from fDi Markets, a data serv-
ice, show foreign direct investment into
the north in 2015 rising strongly but
more slowly than in the UK overall.
There was £4.4bn of FDI in the north,
the most since 2008 and 23 per cent up
on 2014. The UK figure rose 43 per cent.
The north’s share of FDI fell from 14.7
percentin2014to12.6percent.
For many years, EY’s Attractiveness
Survey of the UK’s appeal to FDI has
suggested that investors see London
and south-east England as by far the
most appealing parts of the UK in which
to establish operations. The Midlands
and Scotland have somewhat closed the
gap. Regions outside the south-east
score much more highly among exist-
ing investors than newcomers, suggest-
ing that, once there, inward investors
appreciate their strengths.
Catherine Raines, UKTI’s chief execu-
tive, told a recent business conference in
Manchester that many investors do not
look beyond London and a better job of
showcasing the north is required.
“We need to get serious about spread-
ing investment throughout the UK,” she
said. “UKTI is going to be staging events
and missions overseas to present the
Northern Powerhouse. This is led by the
north, not led by Whitehall.”
Tuesday 15 March 2016 ★ FINANCIAL TIMES 3

Doing Business in the North of England

Cities’ promise attracts
wave of investment
Square, as well as a rush to build institu-
Property Northern tionally-funded housing blocks for pri-
conurbations are vate rental. There are three such devel-
opments under way and another eight
drawing private money expected to begin this year, according to
for offices and flats, JLL, the estate agency.
More new homes were started in
writes Judith Evans Leeds in 2015 than at any point in the
past nine years, according to Deloitte,
New focus
on plans for
powerhouse
Continued from page 1
digital sector, and The Northern Health
Science Alliance, linking health provid-
businesses currently seeking 20,000 sq ersandacademics.
ft or more of office space in northern Rearch universities in the N8 group
England than at any time since 2008, have long collaborated. “We have uni-
says Tim Cameron-Jones, head of the versities working together to deliver
north at Cushman & Wakefield. investment and growth. It is the North-
Leeds and Manchester have suc-
ceeded in attracting private sector-
ern Powerhouse in action,” says Peter
Simpson,itsresearchdirector.
funded developments and in enabling Catherine Raines, chief executive of
speculative building, but other cities in UKTI, the body that promotes trade and

I
an Simpson, an architect, recalls
how only 400 people lived in Man-
chester city centre in 1996, at the
time of the bombing by the IRA of
the Arndale shopping centre.
Now the city centre is home to 20,000
people, but Mr Simpson believes “we
should be pushing 200,000”.
The billions of pounds of property
investment that have flowed into Man-
chesteroverthepasttwoyearsmeanthis
vision may not be so far-fetched. Tower
cranes now bristle across the city’s cen-
tre as new office and residential build-
ingsspring fromformerindustrial soil.
Manchester attracted £2.3bn of com-
mercial property investment in 2014
and 2015, say Cushman & Wakefield,
the property agents — more than any
other English city outside London.
Next was Liverpool with £979m, fol-
lowed by Leeds with £958m and New-
castle with £842m. The cities are
expected to benefit further from rising
prices in London, which are pushing
property investors to look further
afield, some of them for the first time.
Mr Simpson, who was instrumental in
Manchester’s regeneration after the
1996s bombing, sees the latest wave of
property development as a catalyst for
further population growth.
“What’s really important in the north-
ern cities in particular is that we need
more people,” he says. “London doesn’t
need any more people — its infrastruc-
ture is struggling to cope. In a city like
Manchester we are getting the infra-
structure in place to encourage an
increase in the population.”
Projects under construction in Man-
chester include office complexes such as
One Spinningfields and Two St Peter’s
the professional services firm. The pop-
ulation of Liverpool’s city centre grew in
the past decade for the first time since
the second world war.
Bill Hughes, head of real assets at
Legal & General Investment Manage-
ment — which bought a 50 per cent
stake in Salford’s Media City and com-
mitted £162m to a Leeds regeneration
project last year — says there are “sev-
eral cities in the region with untapped
potential, that have been underinvested
for years”. But he adds, “you can only
make sense of these opportunities if you
are in for the long term and willing to
invest at scale.”
Economic recovery has helped to spur
development, as has infrastructure put
in place with public sector money after
the financial crisis, such as tram lines.
Some investors are in part betting on
the lure of northern cities for Londoners
and London businesses as they tire of
the capital’s high rents. Manchester
‘We need more
people’: architect
Ian Simpson says
Manchester city
centre should be
‘pushing 200,000’
scored a major coup last year with the
arrival of Freshfields, the law firm,
which opened an office in the city for the
first time and by the end of the year
announced it was leasing 80,000 sq ft in
a new development, with room to
expand if needed.
Such moves remain comparatively
rare, with companies such as PwC strug-
gling to fill graduate roles in regional
offices, but there are still more
the region, such as Sheffield, rely on
public sector underwriting to make
projects appealing to commercial devel-
opers, says Mr Cameron-Jones.
Even Manchester’s property invest-
ment total is dwarfed by the capital’s
£43.1bn in the past two years, illustrat-
ingthescaleofthechallengeinproviding
acounterbalancetothelureofLondon.
Miles Gibson, head of UK research at
CBRE, the property services company,
says: “International investment into
the UK is heavily skewed towards Lon-
don; overseas property investors in par-
ticular often don’t know the regional
markets as well.
“Often all they know about these
markets is the name of the football
team. But increasingly investors are
asking ‘Where else can we put our
money? We like Britain — what have
you got?’”
The Port of Liverpool building, a cele-
brated Grade II-listed Edwardian office
space, was sold last year to a Middle
Eastern family office in search of
“returns significantly better than in
London”, says Mr Cameron-Jones.
The property industry has given a
cautious welcome to government-led
initiatives to promote the region, such
as the High Speed 2 rail line — due to
reach Leeds, Sheffield and Manchester
by 2033 — and devolution initiatives
such as allowing local councils to keep
proceeds from business rates.
For Mr Simpson, who is also involved
in big London projects such as the con-
version of Battersea Power Station,
there are advantages to working on
development projects in the north
beyond the aim of rebalancing the UK
economy away from the capital.
Rising market: flats under “Projects in London take much longer
construction in Salford and there’s an immediate reaction at
Alamy local government level to change — ‘we
have enough people, we’re quite happy
as we are’. There’s also a challenge with
the lack of joined-up thinking between
‘Where else can we put our the boroughs,” Mr Simpson says.
“But in a city like Manchester you feel
money? We like Britain — that change is embraced. People are
what have you got?’ holding out their hands and welcoming
that investment.”
investment, said a united north “gives
us the scale to present the opportunity”.
It has a “pitch book” of £24bn worth of
projects aimed at foreign investors.
Businesses have embraced the con-
cept. Kevin McCabe, of Scarborough
Group, a Sheffield-based property
developer, is investing hundreds of mil-
lions in the region with Chinese and Sin-
gaporean investors. “We have borrowed
the branding,” he admits, holding up a
brochure entitled Northern Power-
house Developments. It works.”
NorthEdge, a private equity fund that
invests almost entirely in the north, just
raised £300m in four months from
around the world. “They can invest glo-
bally and they are looking to deploy cap-
ital in the north of England,” says Grant
Berry, managing partner.
The traffic is not all one way. The
north-east is the only UK region with a
consistentlypositiveexportsurplus.
But Jon Turton, a partner at KPMG,
the professional services firm, says the
north faces a demographic challenge as
it has lost ambitious graduates to Lon-
don. Its cities need to differentiate them-
selvestoattractinvestors.
“They are all doing basically the same
thing. They should pick a few sectors
where they are world-leading, and focus
onthose,”hesays.
Callcredit, the world’s second-biggest
consumer credit bureau, is based in
Leeds. Mike Gordon, chief executive,
says Leeds is similar to Boston — but the
US city’s transport is better. It lost staff
from Sheffield who did not want to com-
mute to Leeds 50km away. “We need
better infrastructure. I would love the
Northern Powerhouse to work. I believe
thatifyoubuildit,theywillcome.”

‘Now is the time to move

from planning to delivery’
OPINION
Carolyn
Fairbairn
In the west lies Liverpool, the “New
York of Europe” during times of
Empire, whose docks and wharves once
exported goods from mills bordering
the Pennines. Today it still home to a
bustling shipping business. To the east,
on the shores of the North Sea, lies
Newcastle. Shipbuilding flourished here
too, and in 1850, as the city expanded, a
railway station opened. It remains one
of Britain’s busiest. Elsewhere, Durham,
York, Leeds, Sheffield and Manchester
form a chain of Northern lights
brightening the region’s future.
Like the pioneers of the past,
Transport for the North (TfN), the
body charged with connecting the
towns and cities of the north, knows
great transport links can fast-track a
region to prosperity. But politicians will
need to show courage by investing in
the roads and rail that will transform
the future. Now is the time to move
from planning to delivery. Connecting
east and west across the Pennines
should be one of the top priorities.
A second priority is building the skills
and talent needed for growth.
Companies’ success rests on access to
people with the right skills. Here the
story could and should be better. The
chief inspector of education, Sir
Michael Wilshaw, has warned of the
education challenges in Manchester
and Liverpool. “The Northern
Powerhouse will splutter and die if their
youngsters lack the skills to sustain it,”
he said. He is right to raise this, and
business has a vital role to play.
The CBI and the Royal Society have
been working with businesses and
teachers over the past year to develop
practical steps to help improve links
between classrooms and boardrooms.
Encouraging interest in sciences,
technology, engineering and
mathematics is not new, but it is vital
to the UK’s long-term prosperity and
international competitiveness.
In February I attended the launch of
Business North, a group supported by
the CBI and involving senior industry
leaders across northern England. Its
aim is to provide ideas, challenge and
support for the Government’s Northern
Powerhouse agenda.
Visiting our members across the
region that day, I met executives of a
Leeds-based financial information
company which had just established a
base in eastern Europe. The company
was struggling to find skills so it
approached the local universities and
defined the course it wanted. It was up
We have among the widest
regional disparities in
Europe. We can change this
and running within a year. There is no
reason why we cannot create the
flexibility in industry and education to
train our young people for the future.
The north of England starts with
many advantages. It has outstanding
universities with world-class teaching
and strong ties to local communities
and businesses. We can make more of
them by supporting bodies such as
Innovate UK, which runs Knowledge
Transfer Partnerships, a successful but
too little-known scheme to transfer
innovation and stimulate business-
relevant research and training. An
example is the manufacturer BE Wedge
Holdings, a group of galvanising
businesses with a growing international
presence which completed two
Knowledge Transfer Partnerships with
Sheffield University, focusing on
performance and energy efficiency.
In the north-east, Durham University
has created joint research teams with
Procter & Gamble, the consumer goods
company, to solve specific problems.
Private funding has since helped to
attract investment from other sources.
Given that the government’s research
and development spend is the lowest of
the G8, it is critical that these examples
become the norm rather the exception.
Unlocking growth outside London is
one of my top priorities for the CBI. It is
an extraordinary opportunity. The UK
has among the widest regional
disparities in Europe. We can change
this by focusing on the foundations of
infrastructure, skills and the right
climate for innovation. London is a
great city but now is the time to spread
growth beyond the capital through
resolve, commitment and enterprise.
The government’s focus on growth
across the UK is very welcome.
Whether or not the title Northern
Powerhouse wins friends, its aims are
the right ones: better transport and
education and more opportunities for
companies outside the south-east. With
the right actions and a view to the long
term, the future is promising.
Carolyn Fairbairn is CBI director-general.

Contributors
Andrew Bounds Chris Tighe For advertising details, contact:
Northern correspondent, enterprise editor North-east correspondent Phillip Dodson +44 1672 563 635,
phillip.dodson@ft.com, or your usual FT
Judith Evans Jerry Andrews representative.
Property correspondent Commissioning editor
All editorial content in this report is
Carolyn Fairbairn Michael Crabtree, produced by the FT. Our advertisers have
Director-general, CBI Alan Knox no influence over or prior sight of articles.
Picture editors
Brian Groom All FT Reports are available at:
Freelance journalist, former FT Steven Bird ft.com/reports
UK business and employment editor Designer Follow us on Twitter @ftreports
4 ★
Going back to my northern roots A smart formula of
Quality of life
Brian Groom returned
to live in the region after
40 years. How was the
reality after decades of
observing from afar?
C
oming back to live in
northern England after 40
years, what did I find
outside my door? Brass
bands. Not just one or two
but dozens of them parading through
my village of Greenfield in one of the
world’s most prestigious competitions.
You may think it the ultimate
northern cliché but the Saddleworth
and district brass band contests, held
every Whit Friday since 1884, are a
serious business. More than 120 bands
from Britain and abroad compete in 11
villages in the Pennines, on the border
between Lancashire and Yorkshire.
Last year Black Dyke was declared
overall winner but then disqualified in
one contest for missing its slot,
allowing Fairey Band to take the title.
This is not a scene from the film
Brassed Off, it is a joyful celebration of
talent and community spirit. Brass
bands form part of a living northern
tradition of music that embraces
choral societies alongside professional
outfits such as Leeds-based Opera
North, the Royal Liverpool
Philharmonic, Manchester’s Hallé
Orchestra and Gateshead-based Royal
Northern Sinfonia.
Other stereotypes, often perpetuated
by northerners, are a blight on
perceptions of the north and may even
damage its prospects, undermining its
appeal abroad and elsewhere in the
UK. Some parts have problems but the
region is far from a post-industrial
wasteland. As a place to live and work,
the north has cities that have
transformed themselves, bewitching
landscapes including half of England’s
national parks, beautiful cathedral
cities, an increasingly international
outlook and a varied cultural scene.
The novelist Philip Hensher (born in
London, raised in Sheffield) summed
up the stereotype of the difference
Beyond cliché: brass band contests, here in Brian Groom’s village of Greenfield, are still part of a rich cultural scene — Getty
between life in the north and in the
south: “one warm, neighbourly,
friendly, emotionally open and hugger-
mugger, creating pop musicians and
comedians; the other fenced off, cold,
withdrawn, detached, creating novelists
and string quartets”.
That is a caricature. Perceptions have
been much influenced, he suggested, by
ITV’s long-running soap opera
Coronation Street, with its confected
inner-city Salford working-class
community. That is not much like life in
the Yorkshire Dales, nor Newcastle,
Carlisle, the South Yorkshire
conurbations, Cumbria, York,
Harrogate, rural Lancashire or Leeds.
Returning to the north after so long, I
was reminded that there is as much
variety socially and culturally as in the
landscape. It is not a single place.
Northerners do not talk much about
“the north” except in distinction to the
south. People identify with their town
or city, though there is some affinity
with historic counties such as
Lancashire and Yorkshire.
Life here can be stimulating.
FINANCIAL TIMES
Doing Business in the North of England
Saddleworth, the area to which I have
moved, is on the edge of the Peak
District national park but only half an
hour from the centre of Manchester. It
has three historical societies, play-
reading and theatrical groups, concerts
and festivals.
Many places are similarly lively, I
have found, though in some areas
museums are threatened with closure
as a result of spending cuts. You may
have to travel further than in London
to find what you want, but there is a
fair amount of choice. Hull, once
dubbed “England’s most poetic city”
(it was home to the likes of Andrew
Marvell and Philip Larkin), will be UK
City of Culture in 2017.
Northern cities now offer a growing
range of professional jobs and cheaper
property than in the south. There are
good schools in the state and private
sectors. Ofsted, the regulator, has
criticised poor performance by
secondary schools in the north,
particularly around Liverpool and
Manchester. That is a serious issue,
though it mainly affects deprived areas.
Among leisure activities, sport is a
popular feature. Hills are thronged each
weekend with cyclists. The north boasts
leading football, cricket and rugby
clubs. It may not dominate football as it
did in the industrial age but it accounts
for six of 20 Premier League clubs and
10 of 24 in the Sky Bet Championship.
Manchester United, Manchester City
and Liverpool are among the world’s 10
richest football clubs.
Tourism is increasing. The
government has created a £10m fund
for tourism bodies to promote
attractions abroad. Yorkshire had the
UK’s biggest increase in visits in 2014,
followed by Scotland and north-east
England. Manchester was the third
most visited city in UK after London
and Edinburgh. Liverpool was sixth.
What strikes me most is the revival
of city centres, notably Manchester,
Leeds, Newcastle and Liverpool.
Hardly anyone lived in the centre of
Manchester when I left in 1976; now
nearly 20,000 do. More must be done
to spread the revival to poorer areas,
but there is cause for hope.
ancient and modern
Case study Thomas Swan & Co
The chemicals company
has stayed loyal to its
Consett roots yet is at the
scientific cutting edge,
says Chris Tighe
Thomas Swan & Co has characteristics
shared by many northern businesses —
but if more emulated it, the north’s
economy would arguably be stronger.
Like many long-established northern
enterprises, the performance and speci-
alitychemicalscompanyisafamilybusi-
ness with long timeframes and a dislike
of debt. Owned by the founder’s grand-
son, Tom Swan, now chairman, it is run
day-to-day by his son, Harry. Founded in
Consett in 1926, it has stayed loyal to the
CountyDurhamtown.
The company commands employee
loyalty too; the workforce took a 20 per
cent pay cut in the 2008-2009 recession.
It now employs 160 and exports 75 per
cent of turnover, £24.2m in 2014-2015,
to some 80 countries. It made £2.3m
pre-tax profit last year. Each year it
ploughs back 8 per cent of turnover into
researchanddevelopment.
Harry Swan, managing director, says
he is committed to business-led innova-
tion, working with universities and gov-
ernment-backed Innovate UK, where he
is a board member.
The company initially made a chemi-
cal agent to help bitumen stick to the
stone used by founder Tommy Swan in
his road-laying business. Today, its range
spans products used in tyres, and graph-
ene, the superstrong, highly conductive,
flexible“wondermaterial”.
Thomas Swan & Co is a pioneer in
graphene manufacturing process devel-
opment but is also working on other 2D
materials, which Mr Swan thinks may
be even more exciting, such as boron
nitride, a non-carbon material with a
range of scientific applications.
The company makes a range of addi-
tives, resins and active pharmaceutical
ingredients for multinational clients,
offers custom manufacture in a new
Tuesday 15 March 2016
£2m plant and has an advanced materi-
als division serving new and emerging
markets with products from printable
electronics, memory devices and energy
storage to advanced coating systems.
An early investor in carbon nanotube
technologies for industrial applications,
using a process developed with Cam-
bridge university, it is also working on
graphene with Trinity College, Dublin,
backed by four Innovate UK govern-
ment grants and its own investment. It
expects its graphene business to break
into profit next year, with the capacity
to manufacture 10 tonnes annually.
“Successfully harnessing and com-
mercialising innovation is the key to the
future success of the UK economy,” says
Harry Swan. The UK, he believes, cur-
rently lacks a clear vision of where it can
become world class. “You could say; we
will become the world’s R&D lab.”
In the 1980s and 1990s, the business
diversified by investing in early stage
companies in other scientific areas but in
2006 Mr Swan saw the start of a swing
back from China to UK manufacturing
The UK could
decide that ‘We will
be the world’s
R&D lab,’ suggests
managing director
Harry Swan
and decided to focus investment on core
activities. “We can make more money
outofthisbusiness,”hesays.
Mr Swan believes the north-east can
shift from once-dominant big compa-
nies towards smaller innovative, high-
tech businesses and today he is due to
give his first lecture as Newcastle uni-
versity’s latest David Goldman Visiting
Professor of Innovation and Enterprise.
Although the north-east has a large
chemicals and process industry cluster
in Teesside, and other strong compa-
nies, all but three of 27 Durham Univer-
sity chemistry undergraduates who
recently visited Thomas Swan saw their
future in London, probably in the City.
This must change, says Mr Swan. “We
have got to get to the stage where they
see opportunity locally so they don’t
drift down to the south.”