WEDNESDAY 23 MARCH 2016 WORLD BUSINESS NEWSPAPER ASIA

Andy Grove Hard road Gaming the system

The man who built Silicon Valley China’s difficult path to a new economic Ways to level the playing field for
OBITUARY, PAGE 16 and political order — MARTIN WOLF, PAGE 9 job applicants — SARAH O’CONNOR, PAGE 10

3 Jihadis claim Brussels 3 Two airport explosions 3 Police launch manhunt Briefing
attacks that kill at least 30 and blast on metro train for suspected bomber i Toshiba’s former chief questioned
Japan’s securities watchdog has questioned

Isis strikes at heart of Europe

Toshiba’s former chief executive over his alleged
role in a $1.3bn accounting scandal that has now
caught the attention of US authorities.— PAGE 13

i Abe poised to put back sales tax rise

CHRISTIAN OLIVER, JIM BRUNSDEN
AND PETER SPIEGEL — BRUSSELS
SAM JONES — LONDON
A manhunt was under way last night for
a suspected Isis bomber after co-ordi-
nated attacks in Brussels killed at least
30 people, injured hundreds of others
and brought a terrorist atrocity to a
European capital for the second time in
four months.
Two explosions ripped through the
check-in area at Brussels’ Zaventem air-
port, north-east of the EU’s capital and a
few kilometres from Nato’s headquar-
ters, shortly before 8am. A third device
at the airport failed to detonate and was
later dismantled by police.
Then a little more than an hour after
the initial attacks, another blast ripped
through a metro carriage at Maalbeek
station in the heart of the district
dominated by EU offices, killing at least
20 people. Belgian media reported
14 deaths at the airport, citing staff at
hospitals.
At least two of the detonations were
the work of suicide bombers, Belgian
authorities said yesterday evening.
Frédéric Van Leeuw, the country’s chief
federal prosecutor, said two suspects
photographed by CCTV at Zaventem
airport had very probably killed them-
selves as suicide bombers.
However, a third man caught on cam-
era alongside them, dressed in a white
jacket and a hat, was the subject of an
active manhunt.
Just days after police raids in the city
had produced an apparent break-
through in efforts to curb Belgium’s
jihadi networks, Isis’ attacks, intelli-
gence officials said, revealed an even
deeper layer of operational capability
for the terrorists in Europe than previ-
ously assessed.
The bombings came just a day after
Jan Jambon, Belgium’s interior minister,
warned that jihadis could be looking for
a way to retaliate for the arrest last week
of Salah Abdeslam, the suspected logis-
tical planner of November’s Paris terror
attacks.
A CCTV picture “This kind of attack couldn’t really be
released by organised in any less than four days and
Belgian police it would usually be weeks in the plan-
showing the ning,” said Matthew Henman, manager
suspects of IHS Jane’s Terrorism and Insurgency
AFP/Getty Images
Centre. “It’s certainly possible it was
accelerated by the arrest of Abdeslam,
but there must already have been an
Jihadis’ capabilities in Europe more
Under fire
Reports & extensive than previously thought
C Brussels terror pages 2 & 3
Comment
The bomb atrocities were an assault on
Brussels and on European values
C Editorial Comment page 8
attack plot and capability that was close
to fruition.”
Isis made a series of claims of respon-
sibility for the attacks in a phased man-
ner that experts saw as evidence of co-
ordination between the perpetrators
and Isis’s central operations in Syria.
Belgium has been on alert since many
of the perpetrators of last year’s attacks
in Paris were linked to the poor Brussels
neighbourhood of Molenbeek.
Charles Michel, Belgium’s prime min-
ister, said terrorists had carried out a
“blind, violent and cowardly” act. Addi-
tional security measures were being
rolled out across the country, he added,
including “reinforced border checks
The Japanese premier has met anti-austerity
economists Paul Krugman and Joseph Stiglitz in a
sign he will postpone a rise in consumption tax and
that he might even call a “double election”.— PAGE 4
i Zuma probe amid storm over influence
An inquiry has been announced into
whether the South African president
has violated an ethics law, following a
political storm over the alleged
influence of a powerful business
family.— PAGE 4
i Obama in rallying cry to young Cubans
The US president has called on the young people of
Cuba to “build something new” in a speech that was
the centre-point of his three-day visit to Havana in
his push to normalise ties with the island.— PAGE 6
i Paris central bank chief hits at Hollande
François Villeroy de Galhau has attacked the Paris
government over its labour market reforms, saying
President François Hollande’s concessions to unions
have threatened growth.— PAGE 4; NOTEBOOK, PAGE 8
i Judiciary in spotlight amid Brazil crisis
The deepening political crisis that sees 70 per cent
of Brazilians calling for President Dilma Rousseff’s
impeachment has turned a spotlight on a new
generation of foreign-educated judges.— PAGE 6
i Uber protest turns violent in Indonesia
President Joko Widodo has ordered a regulation
shake-up after 12,000 protesters, including taxi and
rickshaw drivers, brought Jakarta to a standstill as
they pressed for bans on ride-hailing apps.— PAGE 16
and specific restrictive measures for Datawatch
public transport”. Belgium has been put
at the highest level of terror alert.
“We are confronted by a test, a diffi- People at risk of poverty Over 71 per cent
cult test and we have to confront this or social exclusion of non-EU citizens
test united,” Mr Michel said. “It is a 2014 (%) in Belgium are at
black moment for our country.” National citizen Non EU28 citizens risk of poverty,
Brussels Airlines said the airport 0 20 40 60 against 18 per
Greece cent of Belgian
would remain closed until 6am this Belgium citizens — the
morning. Spain largest gap in
Bernard Cazeneuve, France’s interior Eurozone
Italy Europe. Non-EU
minister, said an extra 1,600 police were Portugal citizens in Belgium
being allocated to “border control” and France are worse off than
EU28
also to guard transport infrastructure. Germany in any other EU
US President Barack Obama said the UK state apart from
“prayers of the American people” were Source: Eurostat Greece
with the people of Belgium.

C Suisse and CIA-backed data group

in joint venture to foil rogue traders
KARA SCANNELL — NEW YORK discuss financial terms but said the new number of “cancel and correct” trades.
HANNAH KUCHLER — SAN FRANCISCO
company, named Signac after the The new product will analyse those out-
Credit Suisse is joining forces with French painter, was an even partnership liers and marry the data on them with
Palantir Technologies, the artificial of cash, employees and intellectual behaviour analysis, such as cell phone
intelligence company backed by the property. usage and door key-card swipes.
Doubts raised over US CIA’s venture capital arm, to use data- Palantir — whose products are “We decided that we have to monitor
hotel bids by Anbang driven behavioural analysis to root out already used by many large banks — and the behaviour of individuals,” said Lara
rogue traders and insider dealing. Credit Suisse — which developed an Warner, chief compliance and regula-
Report i PAGE 13; Lex i PAGE 12 intelligence unit of former foreign tory affairs officer at Credit Suisse.
Banks have been anxious to improve exchange traders — are betting their “When those ‘common toxic combina-
compliance and surveillance after a partnership will stand apart from the tions’ come together at an individual
Australia A$7.00(inc GST) string of trading scandals that shocked field by analysing the behaviour of level you get an early warning sign.”
China RMB25 the industry in recent years — from a individuals to better understand the big Credit Suisse is using the product to
Hong Kong HK$30 $2bn loss UBS suffered at the hands of a picture. track its nearly 1,000 traders and plans
India Rup195 rogue trader to a €4.9bn unauthorised The venture will track traders’ activi- to roll it out to cover its 4,000-plus rela-
Indonesia Rp40,000 trading loss at Société Générale. ties and try to identify aberrations both tionship managers around the world.
Japan ¥630(inc JCT) The joint venture with the Swiss bank from their own norms and from those of The joint venture, the partners hope,
Korea W4,500 is the first for Palantir, the Palo Alto- their colleagues. will in time be used by other banks.
Malaysia RM10.50
based group which counts In-Q-Tel, the Credit Suisse said the UBS and SocGen Palantir is one of the highest valued
Pakistan Rupee 280
Philippines Peso 130
CIA’s venture capital arm, among its trading scandals shared what they private technology start-ups in Silicon
Singapore S$5.50(inc GST)
earliest investors. called “toxic combinations”, including Valley, after Uber and Airbnb, raising
Taiwan NT$130 Credit Suisse and Palantir declined to trading in internal accounts and a large funds last year at a valuation of $20bn.
Thailand Bht140
Vietnam US$4.50

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9 770307 176630
2 ★ FINANCIAL TIMES Wednesday 23 March 2016

BRUSSELS TERROR

Killings point An injured woman leaves

Brussels airport after
explosions rocked the
terminal — David Crunelle/AP

to resilience
and reach of
Isis operations
Jihadis’ capabilities in Europe more
extensive than previously thought
SAM JONES — LONDON eventually finding him in the Brussels
PETER SPIEGEL — BRUSSELS
district of Molenbeek, a notorious hot-
The murder of at least 30 people in twin bed of Islamist extremism — also sug-
bomb attacks in Brussels claimed by Isis gests he had sophisticated logistical sup-
points to the resilience, reach and port from sympathisers.
sophistication of the militants’ opera- “I have been saying since the attacks
tions in Europe. on November 13 that there is a network,
Months of intense detective work into a network of individuals who know each
Belgian jihadi connections to the Paris other, who live in the same neighbour-
attacks, heightened security measures hood, they are thugs, delinquents,” said
and an antiterrorist swoop on a key sus- Françoise Schepmans, mayor of Molen-
pect in Brussels failed to prevent yester- beek, on Belgian state television at the
day’s killings. weekend.
The attacks — twin suicide bombs tar- As far back as January 2015, US intelli-
geting the check-in area at Zaventem gence began warning policymakers that
airport, and a blast striking a metro Isis appeared to be assembling a terror-
train at Maalbeek metro station in the ist network in Belgium following the dis-
heart of the EU’s bureaucratic quarter — ruption of a cell in the south-eastern
came just four days after the arrest of town of Verviers.
Salah Abdeslam — the Moroccan-born There is evidence the Verviers cell Belgium’s terrorism timeline
Isis-aligned target of Europe’s largest was directly connected to the Paris plot-
manhunt for his alleged role in the ters; Abdelhamid Abaaoud, the alleged Sept 2001 Nov 2005 2010 May 2014 June 2014 Jan 9 2015 Jan 15 Nov 13
November attack in Paris. co-ordinator of the Paris attacks who
“What we feared has come to pass,” was killed in a raid on his Saint-Denis Members of an Muriel Degauque, The Islamist group An attack on a Mehdi Two days after Fifteen people Multiple attacks
Charles Michel, Belgian prime minister, flat in the French capital, was also the international a Belgian Muslim Sharia4Belgium is Jewish museum in Nemmouche, a terrorists kill 12 are arrested in a in Paris leave 130
said yesterday as his country reeled in purported leader of the Verviers group. terrorist cell convert, blows set up, initially to Brussels on the 29 year-old people in an attack series of raids in dead. Police
shock at the killings. Since impressionable, mostly young, based in herself up in promote Islamic eve of federal, French citizen who on the satirical Belgium and identify the
radical Muslims began flocking to fight Molenbeek, Baghdad, killing law in the country. regional and spent time in Syria, French magazine France against ringleader as
in Syria’s civil war three years ago, coun- Brussels, five. She becomes It eventually European is charged with the Charlie Hebdo, suspected Abdelhamid
‘What it suggests is an terterrorism chiefs across Europe have assassinate Europe’s first recruits dozens of parliamentary Brussels museum Amedy Coulibaly, a Islamist militants Abaaoud, a
ability to co-ordinate an warned of the risk of retaliation from Ahmad Shah suicide bomber. young Muslims to elections leaves attack. He is French national, who prosecutors 27-year-old
the conflict. Massoud, a fight for Isis in three people dead believed to have kills four hostages believe were Belgian who also
attack at very short notice Thanks to Isis’s malevolent message, powerful anti- Syria. On a per and one fatally bought his in a kosher plotting to helped organise
. . . logistically complex’ and the power of social media to Taliban military capita basis, injured. weapons in the supermarket in murder police the Verviers plot.
hothouse and channel it, invigorating commander, in Belgium has more Molenbeek Paris. He later officers in the Seven attackers
The latest Isis atrocity to hit Europe networks of sympathetic radicals Afghanistan foreign fighters in district. fatally shoots a south-eastern die, but Salah
appears to have been well planned. The and disenfranchised loners on the two days before Syria than any police officer. He is town of Verviers. Abdeslam, one of
scale of the destruction at the airport periphery of Europe’s cities, the retalia- the September other EU state. also believed to three brothers
suggests Isis jihadis have access to tion has become a reality sooner than 11 attacks on have bought his involved, returns
increasingly powerful explosive devices. even the most pessimistic voices pre- the US. weapons in to Belgium.
Questions will be asked about dicted. Molenbeek. Abaaoud
whether Belgian police may have acted On Monday, France’s Centre for remains at large.
precipitously in arresting Mr Abdeslam, the Analysis of Terrorism published
prompting associates to expedite a its latest figures on the number of citi-
planned assault before they were given zens lured from the continent to fight
away. under the banner of radical jihadism:
Jan Jambon, Belgium’s interior minis- 2,030 from France, 1,600 from the UK,
ter, acknowledged this possibility last 800 from Germany and 534 from Bel-
week, telling public radio: “We know gium.
that stopping one cell can . . . push According to one senior UK intelli-
others into action. We are aware of it in gence source, close to half of those who
this case.” have travelled to Syria to fight for Isis
But the key issue is whether it was car- have made it back into Europe.
ried out by jihadis linked to Mr Faced with such a nebulous threat,
Abdeslam or was the work of a separate European security agencies are failing
Isis network unknown to intelligence badly. Even in its immediate, confused
agencies. aftermath, the Belgian attack shows
Either way, it suggests Isis’s capabili- that the operational depth of Europe’s
ties in Belgium, and possibly beyond, jihadis has once again been underesti-
are more extensive than previously mated.
thought. “It suggests there’s a base level of
“Even if this was some kind of rela- capability, expertise and training,” says
tively short-notice response to the Mr Drake. “I’d imagine there were
arrest of Salah Abdeslam, then what it explosives stored somewhere waiting to
suggests is an ability to co-ordinate an be used, for example. And there is cer-
attack at very short notice; something tainly a very high degree of communica-
not on the scale of Paris but still logisti- tions discipline.
cally pretty complex,” says John Drake, “To avoid detection on communica-
a terrorism and security expert who has tions networks in western Europe, you
followed jihadi attack planning closely are going to need to be using encryption Passengers are evacuated at Maalbeek metro station,
in Iraq. very carefully all the time, without any left. A security perimeter is erected outside the station,
That it took Belgian police four slip-ups.” above OSOSXE via Twitter/Reuters; Emmanuel Dunand/AFP/Getty Images
months to track down Mr Abdeslam — Editorial Comment page 8

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Subscribe to the FT today at ft.com/subscription Questions raised about limitations of intelligence service
JIM BRUNSDEN — BRUSSELS failure. “We have seen twice in Paris, not involved in big military operations members of an al-Qaeda cell based in
unfortunately, that we cannot avoid abroad.” Molenbeek. More recently, the country
In January last year, Belgium’s politi-
these attacks,” he told Belgium’s public In the immediate aftermath of Paris, has emerged as one of Europe’s biggest
cians were poised to further squeeze
broadcaster RTBF. the government approved a €400m suppliers of foreign fighters to Syria.
the intelligence service’s budget.
Belgium’s security chiefs have for funding boost. The money was prima- For all the criticism, Belgian authori-
NOVEMBER 7 2015

What changed their plans was a deadly years warned that their resources were rily devoted to new equipment and ties have embarked on extensive anti-
terrorist plot in the Walloon town of overstretched. Apart from money, they increasing recruits, meaning it could terrorism operations in recent years.
Verviers, which police foiled only after a are also hamstrung by linguistic divi- take months — or years — to show In late 2014, Antwerp was the scene of
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ROLLING IN THE DEEP
In the ashes of twin bomb attacks in tion among agencies difficult. known as Sharia4Belgium that they
Pil-Dong, Jung-Ku, Seoul, 100-728 Brussels killing at least 30 people yester- Their failings were laid bare after the accused of acting as a recruitment net-
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Representative, Anjali Mahindroo confront questions about whether they which 130 were killed, and it soon immune . . . partly because Syria. Its founder, Fouad Belkacem, was
have moved quickly enough to bolster became clear that Brussels’ rundown jailed for 12 years in February 2015.
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Fax: +44 20 7873 5938, publisher’s prior consent. ‘Financial Times’ and “A network like this should have been Salah Abdeslam, one of the Paris plot- also been working together in a so- also suspected of fighting in Syria.
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prevented by intelligence and security ters, appeared to be a security triumph. called joint investigation team. François Mr Ritzmann said Belgium needed not
Published by: agencies, this is exactly what their pur- Yet it also raised questions that he was Molins, the Paris public prosecutor, said only to increase its security resources but
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Reprints are available of any FT article with your specialising in security issues. “It’s “They are even less prepared than the between France and Belgium was “very from former intelligence chiefs saying
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should not be seen as an intelligence partly because unlike France, they are Northern Alliance, was killed in 2001 by gence agencies in Europe.”
Wednesday 23 March 2016 ★ FINANCIAL TIMES 3

BRUSSELS TERROR

How the attacks unfolded Diplomatic capital

Zaventem airport
Level 3 departures Pier B ‘Black day’ of panic
and paranoia, of close
Mar 18 departures
Salah Abdeslam, the main
Pier B
suspect wanted in connection
arrivals
with November’s terrorist
attacks in Paris, is arrested Mar 22, 8am local time
Two blasts at Zaventem
airport departure terminal
Area of second
explosion
Check-in desk
escapes, tragic losses,
MOLENBEEK-
SAINT-JEAN
BRUSSELS
Up to 14 killed
Entrance to
departures
Area of first
explosion stoicism and solidarity
FLEMISH
Mar 22, 9am local time BRABANT
Events prove grisly reality clearly shaken as he recounted scenes of
Bomb explodes at blood-covered travellers pouring out of
Maalbeek metro station Maalbeek
metro
Charlemagne
building
European
Commission
European
External check for EU institutions the vast hall where passengers check in
At least 20 dead
station Action used to low-level security for their flights.
Service The second attack hit at around 9am,
about an hour after the explosions in the
ALEX BARKER, CHRISTIAN OLIVER AND
Rue PETER SPIEGEL — BRUSSELS airport, as the news of that attempt
Crowne Plaza
de la Lo began to filter out. The explosion at
i
Europa Hotel It had already crossed Brian Carroll’s Maalbeek station was felt as high as the
mind that it “might not be the best idea” fourth floor of the commission agricul-
BELGIUM UN Regional Council of the to take the metro in Brussels yesterday ture department built on top of it.
Information Centre European Union morning, since he had seen news of an Acrid smoke rose through nearby
5 km for Western Europe explosion at the airport. But he still took buildings. Grim photos appeared on
100 m the risk. “What were the chances?” he Twitter of the mangled carriage left
quipped. behind. The injured began emerging on
Deaths from serious terrorist Moments later the Monsanto execu- to the busy four-lane road that bisects
attacks in western Europe tive realised he had badly miscalcu- the EU quarter, then moved nearby as a
lated. “As we were entering Maalbeek commission staff canteen became an
191 56 77 142 30** [central Brussels metro station], there impromptu ward for the walking
2000 were multiple explosions, the lights wounded.
2016 went out and the train kind of glided,” Sitting in their offices above the sta-
2005 2011 Brussels, he said. “As soon as it happened, we all tion, officials at “DG Agri” were told to
London, Utoya/Oslo, 2015
2004 Belgium went to the ground. People were crying stay away from windows, then to leave.
* Charlie Hebdo and November attacks
Madrid, UK Norway Paris,
** Final death toll unclear and screaming.” From somewhere in the crowd came a
Sources: FT research; Brussels Airport; Spain France*
After prising open the carriage doors, call to run, prompting scores of pan-
Here; Maps4News
Mr Carroll and his fellow passengers icked staff to sprint down Rue de la Loi,
emerged into the darkness to find that fearing for their lives. Those stuck in
the train had slid into Maalbeek station other buildings along the road say the
Belgium’s terrorism timeline despite a lack of power. Dozens were sound of sirens slowly gave way to an
killed and injured. eerie quiet.
Nov 14 2015 Nov 18 Nov 21 Dec 21 Jan 16 2016 Mar 15 Mar 18 Mar 22 Charles Michel, Belgium’s prime min- The events were a grisly reality check
ister, called it a “black day” for his coun- for EU institutions that lived on laugha-
The hunt for Mr Abaaoud, below, Brussels endures Belgian police Fifteen people Police raid on an Mr Abdeslam is Two bombs at try. That applied to the EU too. The bly poor security for decades; only
Abdeslam goes dies after a seven- five days of detain six people arrested in raids address in the captured alive in a Brussels airport Maalbeek explosion was a deadly attack
cold. Questions hour shootout lockdown as as part of an against suspected Brussels district of police raid in and another at to the heart of euroland: the station is
are raised over with police at his Charles Michel, investigation into Islamist militants. Forest leads to an Molenbeek. Four a metro station just moments from the European Com-
Security threats are
Belgium’s suburban Belgian prime a planned terrorist extended gun other suspects are kill at least 30. mission headquarters and some 350 undermining the political
handling of the apartment in minister, warns of attack in central battle that results arrested. The attacks metres from where the EU’s 28 heads of
security threat. Saint-Denis, a “serious and Brussels on New in the death of one Questions are come a day government gathered for a summit just
solidarity underpinning
Jan Jambon, a suburb imminent” threat Year’s Eve. suspect. The raised over how he after Mr last week. EU crowning achievements
interior minister, of Paris. of a Paris- fingerprints managed to hide Jambon warned The explosions hit the arteries of
singles out style of Mr out in Belgium for jihadis could be Europe’s diplomatic capital, the offices recently has the commission headquar-
Brussels — and attack. Abdeslam, so long. Mr looking to of its institutions, its cherished ters even bothered with guards and
particularly left, are Abdeslam tells counter-attack freedoms, its people. They could barely sealed doors.
Molenbeek — as found in the investigators he after Mr have come at a more vulnerable For two years now terrorist threats
a weak spot in apartment. was planning to Abdeslam’s moment for the 70-year-old project, have slowly seeped into the Brussels
Belgium’s strike again. arrest. Brussels which is already reeling from multiple psyche. Among them were a shooting at
security. is largely put crises. the city’s Jewish museum in 2014; a
under The political reverberations will play weeklong lockdown after the November
lockdown. out over many months. But yesterday in terrorist attacks in Paris and last week’s
Brussels was a day of panic and para- revelation that Salah Abdeslam, the
noia, of close escapes and tragic losses, lone surviving plotter in the Paris
of stoicism and solidarity. Phone net- attacks, had been hiding in Isis safe
works were overwhelmed. Roads houses scattered through the city for
closed. Flags flew at half mast. Mis- months. Yet little could prepare euro-
placed rumours of fresh attacks spread land for the reality of being targeted.
fast. It was a city on edge. Speaking at a press conference in Jor-
Simon O’Connor, a top aide to com- dan 3,000 miles away, Federica Mogh-
mission economics chief Pierre Moscov- erini, the EU’s foreign policy chief, could
ici, was heading to his flight to Rome not hold back the tears. Jean-Claude
when the two bombs at the airport went Juncker, the commission president,
off. He assumed the bang was associated tweeted that the events had “not made
with construction at the airport and us afraid. We will continue our work.”
continued to the terminal before hear- Indeed a meeting of EU ambassadors
ing the second blast, just minutes later. responsible for foreign and security pol-
An man lies injured in Brussels airport, right; forensic The normally unflappable civil serv- icy had just started when the Maalbeek
staff leave Maalbeek station, above; tributes pile up ant, a veteran of the eurozone crisis, was bomb went off, a few hundred metres
in the capital’s Place de la Bourse — Ketevan Kardava/AP; Martin down the road. In spite of orders to can-
Meissner/AP; Carl Court/Getty Images cel all such meetings, the Dutch chair
decided to “keep calm and carry on”.
It is just the start of a debate that may
reshape the politics of a union beset by
problems. A financial crisis has hit its
confidence. An exodus from Europe's
borderlands is challenging its core val-
ues. And now security threats are
undermining the political solidarity
underpinning its crowning achieve-
ments, from a single currency to free
movement.
Federica Mogherini, EU foreign “It is hard to know what we will be left
policy chief, fights tears in Jordan with,” said one senior EU official.

Transport Reaction

Security poses a challenge Populist politicians in US and Europe seize on blasts

amid high passenger volumes
TANYA POWLEY — LONDON
The bomb attacks in Brussels have
reignited calls for a rollout of full-scale
security measures across Europe’s rail
network and airports to stop further
terrorist outrages.
Armed police were yesterday deployed
to airports, train stations and border
crossings across Europe and the US, as
governments moved quickly to ramp up
security in the aftermath of the attacks.
From London to New York, security
measures were stepped up at transport
hubs, with police and the military carry-
ing out extra checks. In the UK, the gov-
ernment said it had increased its border
force at ports, as well as additional secu-
rity checks on some flights.
But the twin explosions at the depar-
ture hall of Brussels’ Zaventem airport —
said by prosecutors to be the work of sui-
cide bombers — and another at the Maal-
beek metro station in the city’s EU quar-
ter, are likely to accelerate calls for a per-
manentstrengtheninginsecuritychecks
across railterminalsandairports.
“There has to be more security as you
enter the airport, otherwise these type
of attacks are going to increase,” said
David Bentley, an airport analyst. “And
if you don’t ramp up rail security to go
with it, that’s just going to drive terror-
ists on to the railway network.”
In August, a thwarted attack on a train
between Amsterdam and Paris laid bare
the lack of security on Europe’s rail net-
work. Moroccan-born Ayoub El Khaz-
zani was able to board at Brussels’ Midi
station carrying a Kalashnikov rifle, 270
rounds of ammunition, a handgun and
petrol, before being disarmed by a group
of US passengers.
While this resulted in European min-
isters backing tighter security measures
on the region’s rail network, full-scale
security checks, complete with bare-
footed passengers padding through
metal detectors, have, to date, been
rejected due to both the cost and incon-
venience it would cause. The challenge
of policing Europe’s rail system is
immense due to the huge amounts of
people that travel on it every day.
HENRY MANCE — LONDON
DEMETRI SEVASTOPULO — WASHINGTON
Populist politicians on both sides of the
Atlantic were quick to seize on the
Brussels attacks.
“Time and time again I have been right
about terrorism. It’s time to get tough!”
said Donald Trump, the leading candi-
date for the Republican presidential
nomination. He swiftly juxtaposed the
attacks with a plea for support in yester-
day’s primaries in Arizona and Utah.
In Europe, Marine Le Pen, leader of
France’s far-right National Front,
blamed the attacks on “Islamist barba-
rism” and called for the immediate clo-
sure of the French-Belgian border.
The British anti-EU UK Independence
party linked the attacks to migration
policy, saying the killings were “a result
of Schengen free movement and lax bor-
der controls”.
For populist parties, the Brussels
attacks fit a narrative about the need for
stricter border control, and a more
aggressive approach to Muslim commu-
nities. At least 30 people were killed yes-
terday in a suicide attack at Brussels’
Zaventem airport and an explosion at
the city’s Maalbeek metro station,
which were claimed by Isis.
Ukip is particularly sensitive on the
issue ahead of a June referendum on
Britain’s membership of the EU, where
its opponents have invoked security as a
reason for voting for the status quo.
For Mr Trump, whose campaign has
been propelled by an anti-immigrant
mood in the US, the attacks enabled a
return to one of his most emotive
themes.
“I would close up our borders to peo-
ple until we figure out what is going on,”
he told Fox News. “We are taking in peo-
ple without real documentation. We
don’t know where they’re coming from
. . . they could be Isis-related.”
Mr Trump, who previously called for
a temporary ban on Muslims entering
America, said the US needed to learn
from the terror attacks in Europe.
“We don’t learn. I mean, Brussels is an
amazing example. Brussels was an abso-
lutely crime-free city, one of the most
beautiful cities in the world. And
now . . . it’s a disaster.”
Previous attempts to hype the Euro-
pean terror threat have gone down
badly with mainstream politicians.
David Cameron, UK prime minister,
said last year that a Fox News commen-
tator was a “complete idiot” for claiming
that parts of Birmingham were “no-go
areas” for non-Muslims.
Theresa May, the British home secre-
tary, warned yesterday that there was
no justification for reprisals against
Muslims.
‘Brussels was an absolutely
crime-free city, one of the
most beautiful cities. And
now . . . it’s a disaster’
When Mr Trump launched his bid for
the White House last year, he pledged to
build a wall on the US-Mexico border to
keep out “Mexican rapists”.
Although the promise was seen as a
quixotic attempt to generate attention,
his campaign has forced other Republi-
can contenders, particularly Texas sen-
ator Ted Cruz, to take a tougher stance
on securing the border and tackling
Islamist terrorism.
“Our European allies are now seeing
what comes of a toxic mix of migrants
who have been infiltrated by terrorists
and isolated, radical Muslim neighbour-
hoods,” said Mr Cruz.
The Brussels attacks came a day after
Mr Trump said in an interview that the
US should play a lesser role in Nato, a
view that underscores his stance as one
of the most isolationist Republican
frontrunners in decades.
Mr Trump yesterday called on the US
to cancel the visa-waiver programme
that allows millions of people to enter
the country every year without obtain-
ing a visa.
According to a recent poll by the
Pew Research Center, Americans
have become increasingly concerned
about terrorism following last year’s
attacks in Paris and San Bernardino,
California.
The survey found that the share of
people who thought the US government
was doing a good job protecting the
country from terrorism had fallen to 46
per cent from 72 per cent at the start of
2015.
That marked the lowest satisfaction
with counter-terrorism efforts since
the September 2001 attacks on New
York and Washington.
4 ★ FINANCIAL TIMES Wednesday 23 March 2016

INTERNATIONAL

Fiscal policy Media freedom

Abe poised to delay Japan sales tax increase Beijing issues

Talks with top economists
signal premier wants to
postpone April rise
ROBIN HARDING — TOKYO
Shinzo Abe has summoned two famous
fans of fiscal stimulus to Tokyo as he lays
the groundwork for delaying a rise in
Japan’s consumption tax.
Paul Krugman and Joseph Stiglitz —
both Nobel Prize winners and both out-
spoken in support of aggressive stimu-
lus — have met the Japanese prime min-
ister at his official residence in recent
days.
The meetings suggest Mr Abe is deter-
mined to put off a rise in consumption
tax from 8 to 10 per cent scheduled for
April 2017. He is likely to use May’s G7
summit, which he will chair, as both a
platform and an excuse for the delay.
According to political analysts in
Tokyo, Mr Abe may then call a “double
election” for both upper and lower
houses of parliament, securing a fresh
four-year electoral mandate.
“My judgment is they have already
decided to postpone the consumption
tax hike,” said Takao Toshikawa, editor
of the political newsletter, Tokyo Inside-
line.
He predicted Mr Abe would announce
the delay at his G7 press conference,
saying the gathered nations had agreed
Interview. François Villeroy de Galhau
to do what they could to support the glo-
bal economy and it was the wrong time
for Japan to raise taxes.
Professor Stiglitz, a former chief econ-
omist of the World Bank and economic
adviser to US president Bill Clinton,
spoke at Mr Abe’s new international
economy subcommittee last week. He
said there were “limits” to the impact of
monetary policy and urged Japan not to
go ahead with the tax rise scheduled for
next April.
A 2014 rise in consumption tax from
5 to 8 per cent drove Japan into recession
and derailed the recovery set in train by
Mr Abe’s stimulus policies.
Yesterday it was Professor Krugman’s
turn, with a meeting in Tokyo. Mr Abe
met Prof Krugman shortly before a sim-
ilar decision to delay consumption tax
rises in autumn 2014.
Given that their leftwing political
views are at odds with Mr Abe’s conserv-
atism, meeting both professors sends a
strong signal about where Japan’s prime
minister is heading on consumption tax.
The committee has also met Dale Jor-
genson of Harvard and Kazumasa
Iwata, a dovish former deputy governor
of the Bank of Japan and currently presi-
dent of the Japan Centre for Economic
Research.
Mr Abe’s economic programme has
suffered a number of blows this year,
with the economy shrinking in the
fourth quarter of 2015, inflation hover-
new powers
ing close to zero and a weak round of
wage rises this spring.
to restrict
Despite the BoJ’s move to negative
interest rates in late January, the yen has
foreign online
risen to trade at Y112 to the dollar,
threatening the revival of Japan’s
exports.
content
That has led to a renewed debate
about fiscal policy, with the possibility CHARLES CLOVER — BEIJING
of a spending stimulus as well as delay-
New Chinese regulations aimed at dra-
ing tax rises.
matically restricting publication of for-
Upper house elections are due this
eign internet content have introduced
summer. However, advisers to Mr Abe
a further chill to an already frigid press
have hinted that he could dissolve the
environment in the country.
more powerful lower house at the same
time, taking advantage of the continued The directives, which entered into force
unpopularity and disunity of Japan’s last week, give China’s government dra-
main opposition parties. conian powers to stop foreign compa-
nies or partly foreign-owned companies
from publishing online material unless
they have approval from the broadcast
regulator — the State Administration of
Press, Publication, Radio, Film and Tel-
evision.

French central bank chief hits at Hollande
Retreat on labour market
reforms threatens confidence
and growth, says governor
ANNE-SYLVAINE CHASSANY AND
CLAIRE JONES — PARIS
The governor of France’s central bank
has attacked the government for its
botched attempt to overhaul the labour
market, saying President François Hol-
lande’s backtracking on vital measures
has threatened growth.
François Villeroy de Galhau, who suc-
ceeded Christian Noyer at the Banque
de France last November, said officials
across the eurozone needed to build
trust through economic reforms. More
trust between Germany and other
member states would pave the way for
the economic integration that he said
was essential to improve the region’s
longer-term economic prospects.
Mr Villeroy de Galhau said the nas-
cent recovery in the French economy,
the second largest in the eurozone, was
partly due to pro-business measures,
such as €40bn in tax credits, introduced
by Mr Hollande two years ago. But a
retreat by the president, triggered by
union opposition and student protests,
had undermined businesses’ faith.
“Confidence is a key issue for entre-
preneurs,” Mr Villeroy de Galhau said
in the bank’s headquarters in Paris.
“This question is very often raised:
how can we better translate the favoura-
ble economic conditions created by the
European Central Bank’s monetary
policy and low oil prices into a sustaina-
ble recovery?
“The key for that is investment, espe-
cially corporate investment, and the key
for corporate investment is confidence.
The method used for this labour market
law didn’t help confidence.”
He added that “the status quo is not
an option” for the labour market.
The reproach directed at Mr Hol-
lande, who picked Mr Villeroy de Gal-
hau for the job, comes as the president is
battling unions and his own majority
over a bill that hands companies more
power to negotiate longer working
hours and makes lay-offs easier.
Mr Villeroy de Galhau, a former
banker at BNP Paribas, is more in line
with Mr Hollande on eurozone integra-
tion. He is pushing for the creation of a
eurozone finance ministry with sweep-
ing powers to control fiscal spending
François and “sanction” countries that refuse
Villeroy de structural reforms.
Galhau, above, “Monetary policy cannot be the only
wants a game in town,” he said. “We know there
eurozone is growing political scepticism over
finance ministry Europe. It’s why we need to make the
with sweeping economic case for more integration. It’s
powers to not a question about more Brussels. It’s
control fiscal a question about more growth and more
spending and jobs for the citizens of the eurozone.”
sanction A Brexit, which he said “wouldn’t be
recalcitrant without consequences on financial sta-
countries bility on the single financial market and
Magali Delporte
on the City”, was one more reason for
further integration of monetary union.
“Even without Brexit this need exists,
and it is also a British interest to have a
strong eurozone,” he said.
Berlin and Frankfurt have often
appeared at odds with the rest of Europe
over the policy mix, however. To suc-
ceed, France must convince Germany it
is serious about economic reforms.
Mr Villeroy de Galhau said the schism
between Berlin and the ECB should not
be overplayed, and said differences
arose from a lack of trust and not divi-
sions in ideology.
“It requires trust between the two
governments and a strong European
institution, as proposed,” he said. “It’s
less a question of [ideological differ-
ences] than of practical complementa-
rity [linking] between domestic
reforms and European co-ordination.”
The French central bank governor,
who sits on the ECB’s policymaking gov-
erning council, said this month’s stimu-
lus package was “very powerful”. The
latest round of stimulus includes auc-
tions designed to pay banks to lend and
an additional €20bn of bond buying,
taking the total amount of bonds bought
each month under the landmark quan-
titative easing package to €80bn.
The central bank will now buy high-
grade corporate debt, and has cut rates
deeper into negative territory — a policy
‘We know there is
growing scepticism
over Europe. It’s why
we need to make the
economic case for
more integration’
FRANÇOIS VILLEROY DE GALHAU
channel he said was “effective”, while
having “obvious limits”. The bank was
“not out of ammunition”, but was focus-
ing for now on implementing the meas-
ures unveiled this month.
France’s labour market reform is the
latest attempt to cut unemployment
stuck at 10 per cent of the workforce — a
goal Mr Hollande has set himself as a
precondition for seeking a second term
next year. This target is in question,
according to the governor, who esti-
mated that French growth is unlikely to
reach the government’s 1.5 per cent
forecast this year — the threshold
beyond which the eurozone’s second-
largest economy creates jobs.
The government must look at coun-
tries such as Italy, which, with half of
France’s growth, created many more pri-
vate sector jobs last year, partly through
measures liberalising the labour mar-
ket, Mr Villeroy de Galhau said.
Notebook page 8
The rules apply to words, pictures,
maps, games, animation and sound of
an “informational and thoughtful
nature”.
However, experts say there is a possi-
bility nothing may change. The direc-
tives formalise long-held powers the
government has rarely hesitated to use
in practice: the ability to block online
content. None of the foreign publishers
and foreign chambers of commerce in
Beijing that has spoken to the Financial
Times has been asked to apply to Sarft
for permission. Industry analysts say
the rules fit a new pattern: whereas for-
merly the government’s press censor-
ship was widely denied and hidden from
view, today the government is making
its powers and the limits of dissent more
explicit and public.
“Under [Chinese president] Xi Jin-
ping we have been seeing a much more
explicit approach to control,” said David
Bandurski, a researcher at the Univer-
sity of Hong Kong’s China Media
Project. “It’s as though they are not
interested in hiding or explaining or
rationalising censorship. They are in
effect saying, ‘Look, this is not allowed,
period’.”
Long surrounded by an internet
blocking apparatus known as the Great
Firewall, China’s internet is carefully fil-
tered to be free of dissenting views. To
view many foreign news sites users in
China must already install software
known as virtual private networks, or
VPNs, and many of these have begun to
be blocked as well. Despite a well publi-
cised trip to China by Mark Zuckerberg,
Facebook co-founder, last weekend,
Facebook remains blocked, as does
Google, Twitter and YouTube.
Meanwhile, a series of local censor-
ship skirmishes erupted this month
during the National People’s Congress,
the annual meeting of the rubber-stamp
legislature, which is traditionally an
especially sensitive time for the press.
On March 7, Hong Kong daily, the
South China Morning Post, was blocked
in mainland China following a critical
editorial and while it is now viewable, its
feed on Sina Weibo, China’s version of
Twitter, remains blocked.
China’s widely respected financial
journal Caixin also had a run-in with
censors this month. In an article pub-
lished on May 8 on its English-language
website, it said censors had deleted a
Chinese-language interview on the issue
of free speech. But by the following day
the English article appeared to have
been deleted as well.
“It’s a very tight and continuing to
tighten atmosphere for the press in
China,” said Mr Bandurski.
Martin Wolf page 9

Turkey South Africa

US arrests gold trader accused of breaking Iran sanctions
MEHUL SRIVASTAVA — ISTANBUL
A flamboyant gold trader at the centre
of a bribery and sanctions-busting
scandal that nearly toppled the Turk-
ish government in 2014 has been
arrested in Miami by US authorities.
Riza Sarraf, also known as Reza Zarrab,
a 33 year-old Iranian-Turkish citizen,
became the symbol of a massive alleged
graft and influence-peddling scheme
that became public in December 2013
when Turkish prosecutors arrested him
and detained government ministers
with close ties to Recep Tayyip Erdogan,
then prime minister.
His 2013 arrest, his confessions — and
his eventual exoneration in 2014 —
revealed a worldwide scheme that
involved the transfer of billions of dol-
lars of gold to Iran, effectively circum-
venting US banking sanctions.
Mr Sarraf was also accused of giving
millions in bribes, to expedite the gold
shipments, to cabinet ministers closely
tied to Mr Erdogan. His arrest on Mon-
day will revive those accusations, but it
is unclear if it will reveal any new details
of possible corruption inside Turkey.
In 2013, Mr Erdogan called the inves-
tigation and arrest of Mr Sarraf and
members of the government an
attempted coup by the followers of
Fethullah Gulen, an outlawed cleric and
former ally of the government. Mr
Erdogan launched a purge of the Turk-
ish judiciary and police force to cleanse
it of officials involved in the investiga-
tion. Mr Erdogan praised Mr Sarraf as a
philanthropist, charges were dropped
and he was later named exporter of the
year by the government.
Mr Sarraf’s arrest came after an
indictment that accused him of using
his companies to violate sanctions
against doing business on Iran’s behalf
and defrauding the US for at least five
years. The sanctions on Iran were lifted
earlier this year.
Two weeks ago, Mr Sarraf’s one-time
business partner, Babak Zanjani, was
sentenced to death in Iran for similar
dealings that involved billions of dollars
he owed to the Iranian central bank.
Mr Sarraf’s Turkish lawyer did not
answer phone calls and his Turkish
company, Royal Holding AS, no longer
has a functioning phone line. It is
unclear whether Mr Sarraf has retained
US counsel.
When he was arrested in December
2013, Mr Sarraf denied charges of cor-
ruption but during a 15-hour interroga-
tion spoke freely about his wealth and
connections to government officials.
Mr Sarraf, who was married to a
Turkish pop star, lived in a $72m man-
sion on the Bosphorus, drove with a
police escort and gave lavish gifts,
including a $350,000 Patek Philippe
watch to a cabinet official, according to a
copy of records of that interrogation
seen by the Financial Times.
During that interrogation he also said
Riza Sarraf: faced interrogation in
2013 over gold-for-gas claims
his associates would purchase vast
quantities of gold from abroad and carry
it to Iran in hand luggage on daily flights.
This was when Iran was cut off from
international banking systems and the
gold was intended as payment for the
natural gas Iran was selling to Turkey.
According to the Turkish govern-
ment, payments would be paid into an
account at Halk Bank, a Turkish lender,
but could not be transferred to Iran
because of the sanctions.
Mr Sarraf’s vast scheme, which even-
tually swelled to nearly $12bn, accord-
ing to an interview he gave to local TV
before his 2013 arrest, allowed the Ira-
nian central bank to recover the costs of
that gas while the international commu-
nity was applying pressure on Tehran
over its nuclear programme.
Thethen-chiefexecutiveofHalkBank,
Suleyman Aslan, was detained in Turkey
in 2013, when shoeboxes full of US dol-
lars were found in his house which inves-
tigators alleged were bribes given to help
facilitate the gold-for-gas deal. Mr Aslan
had denied any wrongdoing and said the
money was meant as a donation for an
Islamic school in Macedonia. He is not a
subjectoftheUSindictment.
Watchdog to probe Zuma for
allegedly violating ethics law
KRISTA MAHR — JOHANNESBURG
South Africa’s public protector will
launch an inquiry into whether Presi-
dent Jacob Zuma has violated an ethics
law, the ombudsman said yesterday,
following a political storm over the
alleged influence of a powerful business
familyonofficialdecisions.
Thuli Madonsela, whose office is widely
respected and seen as politically inde-
pendent, took up the probe after the
opposition leader, Mmusi Maimane,
called for an investigation into whether
Mr Zuma had violated the Executive
Members’ Ethics Act in connection with
the alleged offer of a cabinet position in
exchange for influence in favour of the
Gupta family.
Were her office to conclude that Mr
Zuma violated the law, it could threaten
him. “It would be another smoking
gun,” said Mcebisi Ndletyana, a profes-
sor of political science at the University
of Johannesburg. “The outcome of this
case carries explosive implications.”
Last week, Mcebisi Jonas, sdeputy
finance minister, said he had been
offered the Treasury’s top job by mem-
bers of the Gupta family. In the wake of
Mr Jonas’s statement, other allegations
emerged of the Guptas attempting to
influence government matters. The
Guptas have denied the allegations.
During a parliamentary session last
week, Mr Zuma said none of his cabinet
ministers had been appointed by “the
Guptas or anybody else”.
On Sunday, the ruling African Nat-
ional Congress expressed its confidence
in Mr Zuma, but Gwede Mantashe, ANC
secretary-general, also said the party
had “frank and robust discussions” on
the allegations and said any “such
actionscanhavenoplaceintheANC”.
The public protector’s office did not
specify when the investigation would
begin or how long it would take, but said
that Ms Madonsela “will inform the pub-
liconceshehasdecided”.
The public protector is obliged to
investigate any complaint about the eth-
ics act lodged by a sitting member of par-
liament,theofficesaid.
Wednesday 23 March 2016 ★ FINANCIAL TIMES 5
6 ★
Corruption probe
Brazil judiciary faces stern test as divisions deepen
Judges’ powers in focus
as impeachment calls
lead to fears of a coup
SAMANTHA PEARSON — SAO PAULO
For Salete Chacon, a retired teacher
from São Paulo, the events of the past
few weeks in Brazil have been disturb-
ingly familiar.
Efforts to impeach President Dilma
Rousseff are nothing short of a coup
attempt, she says, a repetition of the
plot she fought against in 1964 that ush-
ered in a 21-year military dictatorship.
“I’ve already lived through this in the
1960s: the witch hunts, the atmosphere
of intolerance and fascism,” she says.
Although polls suggest that a majority
of Brazilians do not agree with Ms
Chacon — almost 70 per cent support
Cuban visit
Obama vows to ‘bury
last remnant of cold war’
GEOFF DYER — HAVANA
Barack Obama said his historic trip to
Havana would “bury the last remnant
of the cold war in the Americas” and
called on the young people of Cuba to
“build something new”.
Speaking in a televised address, Mr
Obama told the Cuban leader Raúl Cas-
tro, who was watching from a balcony of
the Gran Teatro in central Havana, that
he “need not fear the different voices of
the Cuban people”.
“Many suggested that I come here and
ask the people of Cuba to tear something
down,” he said, in a reference to Ronald
Reagan’s famous cold war call in Berlin
to “tear down this wall”.
“But I’m appealing to the young peo-
ple of Cuba who will lift something up,
build something new.” A generational
change was taking place there, he said.
The speech was the centre-point of
Mr Obama’s three-day visit to Havana —
the first by an American president in 88
years. It was designed to accelerate his
efforts to normalise relations with Cuba.
Mr Obama was warmly received by an
audience of 1,000 people from both
countries, although his sharper com-
ments about the country’s political sys-
tem were applauded only by the large
American delegation.
The divide over political values was
evident on Monday at an often awkward
press conference, when Mr Castro
responded to a question from an Ameri-
can reporter by denying that there were
any political prisoners in Cuba.
The Obama administration hopes
that by speaking directly to the Cuban
people the president can help pry open
some aspects of the Cuban political and
economic systems, although Mr Obama
was careful in his speech to acknowl-
edge legitimate criticisms about the US.
He said Mr Castro had long drawn
Barack Obama was warmly received
in Havana yesterday
US president offers support as Argentina embraces new direction
Leader visits a country trying
to reset its relationship with
investors and the world
BENEDICT MANDER — BUENOS AIRES
When the Argentine frigate Libertad
was impounded in Ghana four years ago
at the behest of a litigious hedge fund, it
was a national humiliation. The episode
could hardly contrast more with the
Argentine coastguard’s summary sink-
ing of a Chinese trawler fishing illegally
off Patagonian shores this month.
Much has changed in Argentina since
the centre-right Mauricio Macri became
president last December, putting an end
to 12 years of leftist rule. Nowhere is that
change more evident than in Argen-
tina’s relations with the rest of the
world, as the imminent resolution of a
the impeachment — these are not the
ramblings of a lone conspiracy theorist.
Over the weekend hundreds of thou-
sands of supporters of the ruling Work-
ers’ party (PT) took to the streets across
Brazil, many fearful of a coup and the
breakdown of democracy.
As a sweeping corruption investiga-
tion reaches the top levels of govern-
ment, threatening to divide the country
along class and racial lines, the rule of
law will be tested.
One mis-step from Sérgio Moro, the
federal judge leading the probe, or his
colleagues could validate claims of a
judiciary-backed coup, enraging swaths
of the population and sapping confi-
dence from nascent institutions.
“It is fundamental that judges appear
to be impartial to help in the process of
consolidating democracy,” says Silvio
Luiz de Almeida, a professor of the phi-
attention to economic inequality and
racial discrimination in the US. “That’s
just a sample. He has a much longer list,”
Mr Obama joked.
Yet pointing to American strengths,
he added that in the current election
“you had two Cuban Americans in the
Republican party running against the
legacy of a black man who was presi-
dent, while arguing that they’re the best
person to beat the Democratic nominee,
who will either be a woman or a demo-
cratic socialist.”
Yesterday Mr Obama was due to meet
activists and dissidents and attend a
baseball match between the Cuban
‘This is not just about
politics. This is about
family . . . about the desire
to rebuild a broken bond’
national team and the Tampa Bay Rays.
Mr Obama emphasised the two coun-
tries’ common heritage, “like two broth-
ers that have been estranged for many
years, even as we share the same blood”.
Appealing for reconciliation between
Cubans in both counties, he said exiles
in the US carry a “memory of a painful
and sometimes violent separation”.
“They love Cuba and a part of them
still consider this their true home,” he
went on. “This is not just about politics.
This is about family. This is about the
memory of a home that was lost, the
desire to rebuild a broken bond, the
hope for a better future, the hope for
return and reconciliation.”
Mr Obama’s emotional reference to
émigré Cubans drew tears from many
watchers in Miami. “It was a wonderful
speech. He hit the ball out of the park,”
said Olga Jiminez, an 80-year-old
Cuban-American.
But critics scoffed at the visit. “Obama
says Raúl Castro seeks change in Cuba.
What a fantasy!” tweeted Republican
congresswoman Ileana Ros-Lehtinen.
Others, such as Dan Le Batard, a
Cuban-American columnist for the
Miami Herald, wrote with more nuance
about his family’s distaste at the visit.
“The embargo didn’t work. I get
it . . . [But] you’ll forgive us if we aren’t
much in the mood to play ball with a dic-
tator who still has blood on his hands, no
matter how much ESPN and
Obama . . . dress it up,” he wrote.
Additional reporting by John Paul
Rathbone in Miami
decade-long legal dispute with creditors
— which triggered the Libertad’s seizure
— promises to smooth the return of
South America’s second largest country
to the global economy.
In recognition of Mr Macri’s progress
during his first 100 days in office —
which ended on Friday after a slew of
market-oriented reforms including the
elimination of currency and trade con-
trols designed to steady Argentina’s list-
ing economy — US President Barack
Obama arrives in Buenos Aires today.
The last visit by a US leader to Argen-
tina, when George W Bush attended the
Summit of the Americas in 2005, was
marred by mass popular protests
against “Yankee imperialism”. At the
time, the Latin American left was at the
height of its power as commodity prices
boomed, and US influence in the region
had waned, its attention distracted by
conflicts on the other side of the globe.
FINANCIAL TIMES
INTERNATIONAL
losophy of law at Mackenzie university
in São Paulo.
So far the judiciary has been praised
as a shining example of institutional
strength in emerging markets. The cor-
ruption probe into Petrobras is testi-
mony to the independence of a new,
largely foreign-educated generation of
judges, public prosecutors and police,
and to the efficacy of reforms, according
to analysts.
That is not to say the judiciary is apo-
litical. Passing the public test to become
a judge requires years of full-time study
— and so favours wealthier Brazilians,
who tend to be white and sympathetic to
the opposition PSDB, says Ivar Hart-
mann, a law professor in Rio de Janeiro.
Few were surprised by revelations last
week that the judge who filed an injunc-
tion against Luiz Inácio Lula da Silva’s
ministerial appointment had posted
Fans prepare for a friendly US-Cuba match at the Latinoamericano stadium in Havana yesterday, attended by Barack Obama— Alejandro Ernesto/EPA
Away game Contest highlights baseball stars’ defections
GEOFF DYER — HAVANA
Yulieski Gourriel is about the nearest
thing there is to baseball aristocracy in
Cuba. The son of a former player and
national team manager who once scored
the game-winning hit in a famous 1980
match against the US, he is considered
by many the best slugger of his genera-
tion from the baseball-mad island.
Last month he and his brother Lour-
des, also a star player, defected to the US
after sneaking out of a hotel while play-
ing in a tournament in the Dominican
Republic. They are reported to be in
Miami, trying to negotiate multimillion-
dollar deals with teams in Major League
Baseball, the richest league in the world.
About 100 leading Cuban baseball
players have left for the US in search of
lucrative contracts since the two coun-
tries began to normalise relations in
2014, leaving Cuba’s league without
mostofitsbesttalent.
Barack Obama attended an exhibition
game yesterday in Havana between the
Cuban national team and the Tampa Bay
Rays of Florida, designed to symbolise
the neighbours’ common passion — an
exerciseinbaseballdiplomacy.
Instead the match will magnify the
Macri reforms. First 100 days
But now, once influential leftist gov-
ernments in both Brazil and Venezuela
are in disarray, opening up space for Mr
Macri to assert his leadership in the
region and mend soured relations with
countries such as the US and the UK.
Marcos Peña, Mr Macri’s cabinet
chief, says that the government wants to
move on from Argentina’s “adolescent”
relations with the US.
It has lurched from what was once
called a “carnal relationship” during the
1990s, when Argentina was an enthusi-
astic follower of the “Washington Con-
sensus”, to open hostility under the
former president, Cristina Fernández de
Kirchner.
That government’s foreign minister
once angered US officials by publicly
seizing undeclared equipment from a
US air force plane that had landed in
Buenos Aires.
“Both extremes were immature,” Mr
anti-government messages on his Face-
book page.
After the PT’s 13 years in power, most
Supreme Court judges are appointees of
the ruling party, if not open supporters
of Ms Rousseff and Mr Lula da Silva.
But the judiciary can act apolitically,
Dilma Rousseff:
polls suggest that
70% of Brazilians
would support
the president’s
impeachment
says João Augusto de Castro Neves of
Eurasia Group, a political risk consul-
tancy. “The biggest proof will come
when Dilma falls and we see what hap-
pens with the investigation — my view is
that it will continue.”
The Supreme Court has fought to
dilemma the Cuban authorities face as
they re-establish ties with the US —
whether they can retain control over
their political and economic system as
they get closer to America.
“The Cuban baseball federation real-
ises that it can no longer control the fate
of its players,” says Peter Bjarkman, an
expert on Cuban baseball and author of
a forthcoming book on baseball defec-
tors. “But they do not want to go to the
other extreme and say that their system
has failed and let Major League Baseball
scoop up all the players.”
Baseball defections are not new —
MrBjarkmansaystherehavebeenabout
370 since 1980. But until recently players
often found themselves in a high-end
versionofhumantrafficking.
Instead of going straight to the US,
most defecting players went initially to a
third country to establish citizenship to
get around US legal restrictions.
However, the journey was often a pre-
carious one. Yasiel Puig, now the star
outfielder for the Los Angeles Dodgers,
tried to leave four times before he
escaped Cuba by boat. He then had to
flee smugglers who held him hostage for
more money.
Last month Bart Hernandez, a base-
Peña told the Financial Times, who says
a “new phase” is beginning in Argen-
tina’s relations with the US — and the
rest of the world — as Buenos Aires seeks
to regain the trust both of governments
and investors.
President Mauricio
Macri impressed
investors in Davos
in January with the
fast pace of his
economic reforms
“We feel that Obama’s visit is a show of
support for this process of building
trust.”
Mr Peña recognised that although
Argentina is “very underinvested”, the
government needs to assuage two major
doubts among foreign investors, who
economists say are the key to reactivat-
ing stagnant growth after many were
prove its impartiality. Justice Luiz
Edson Fachin, a PT ally who was picked
at random to rule on a decision to block
Mr Lula da Silva’s ministerial appoint-
ment, refused to take the case on Mon-
day because of his friendship with one of
the lawyers in the case.
But the fate of the judiciary largely
rests with Mr Moro, the Harvard-
trained federal judge in his early 40s
who has mobilised public opinion in
favour of his war on corruption.
Last week he released recordings of
Mr Lula da Silva’s private phone calls,
including one with Ms Rousseff that was
said to prove the ex-president was
appointed to save him from jail.
Mr Lula da Silva faces charges of
money laundering in connection to a
beachside apartment, which he denies.
Mr Moro said Brazilians had a right to
know more about those governing
ball agent, was indicted by a federal
grand jury in Miami on charges of
human trafficking for his role in bring-
ing Leonys Martin, a player for the Seat-
tle Mariners, to the US.
The charges were part of a push by US
law enforcement agencies to shut down
smuggling operations involving Cuban
baseball players.
‘They do not want to say
their system has failed and
let the US Major League
scoop up all the players’
Although defections have increased
sharply in the past year, the political rap-
prochement has encouraged discussions
between US and Cuban officials to allow
players to join the Major League without
abandoningtheircountry.
Cuba once banished players who had
defected but Mr Puig and others have
been allowed to return to the island.
Rules announced by the Obama admin-
istration last week should also make it
easier for Cubans to earn a large salary
in the US, as long as they are not subject
to a special tax at home.
scared off by the previous administra-
tion’s interventionist policies.
“First, what guarantee do they
have that the situation now is sustaina-
ble in the long term, and second, why
should things be different this time?
We are trying to take small steps all
the time to deal with those doubts,” he
said.
Susan Segal, president of the Ameri-
cas Society and Council of the Americas,
says that Mr Obama’s visit to Argentina,
which will follow on from a historic trip
to Cuba, is an “enormous statement of
confidence” in Mr Macri, especially
given that it comes so early in his presi-
dency.
“Argentina wants to normalise its
relations with the world and reinsert
itself into the global economy,” said Ms
Segal. “It is a critical moment in the his-
tory of Latin America and the leader-
ship of the hemisphere, and Macri
Wednesday 23 March 2016
them. However, for the PT and many
jurists releasing the phone call record-
ings was illegal given Ms Rousseff’s con-
stitutional protections as president. In
a similarly controversial vein, Mr Moro
thanked anti-government protesters
this month for their support.
Others have questioned Mr Moro’s
decision to detain Mr Lula da Silva this
month and accused him of bullying sus-
pects into agreeing to plea bargains.
While the PT says it is a victim of a
coup, it is actually a victim of its own
success, analysts say. If Mr Lula da Silva
is convicted, it would be the party’s
downfall but also its biggest success —
proof of the independence of the institu-
tions it helped develop. “However much
you hate Dilma, there has never been a
government where investigations can
run so freely,” says Ms Chacon.
Lex page 12
Rob Manfred, who heads the Major
League, said in Havana on Monday he
hoped to have an arrangement in place
for Cuban players by the end of the year.
Higinio Vélez, president of the Cuban
baseball federation, also says he wants
the country’s players to be able to go to
the US as long as they have “the same
rights and with the same conditions as
in other countries”.
But officials say they have not solved
the crucial issue of how the Cuban feder-
ation would be compensated for its
players going to the US.
In recent years Cuban players have
been allowed to sign lucrative contracts
with Japanese teams as long as they
return to play for the national team,
participate in Cuba’s winter league, and
hand over 20 per cent of their salary to
the federation.
However, such conditions are either
unacceptable to US teams, who do not
want their prized assets playing in the
winter, or to the US Treasury and its rule
on Cuban special taxes.
For Mr Bjarkman the defection of the
Gourriel brothers is a more telling sign
that an agreement might be hard to
reach. “They were always the loyal
ones,” he says.
[could play an important role] at a time
when his direction and ideas are impor-
tant,” she added.
The significance of Mr Macri’s presi-
dency has already been recognised
through visits to Buenos Aires by
France’s president, François Hollande,
and Italy’s prime minister, Matteo
Renzi.
Mr Macri also caused a sensation at
the World Economic Forum in Davos in
January, when investors were impressed
by the fast pace of his economic
reforms.
On Friday, the World Bank confirmed
that it would make fresh loans to Argen-
tina of up to $4bn over the next two
years. Together with Colombia, Argen-
tina is trying to become a full member of
the Organisation for Economic Co-oper-
ation and Development, alongside Chile
and Mexico, the only two countries in
the region so far to be accepted.
Wednesday 23 March 2016
The Obama administration’s plan to lower fees and commissions on retirement products has angered
retail brokers and insurers. But a surge in demand is expected for the services of the ‘robo-advisers’.
W
ith barely 300 days
remaining of his presi-
dency, Barack Obama is
fighting to push through
his last big financial
reform before he leaves office — and
once again, large sections of the indus-
try have united to try to stop him.
The administration is close to finalis-
ing proposals that will radically change
the way retirement products are sold to
Americans, introducing a new “fiduci-
ary standard” that the president says
will sweep away hidden fees, egregious
commissions and conflicts of interest
that cost savers billions of dollars a year.
But wealth managers and other retire-
ment specialists contend that a key pro-
vision — a watertight legal requirement
to put their clients’ interests first — is
simply too onerous and will leave the
poorest savers struggling to find advice.
Even before the final proposal is pub-
lished, it is clear that some of the most
lucrative products and practices will be
in jeopardy under the new standard,
with life insurance companies and retail
brokers among the likely losers. A new
breed of “robo-advisers”, which rely on
computer algorithms to generate sav-
ings advice for less than the cost of
human brokers, are among the few
sure-fire winners. As for whether the
American retirement saver wins or
loses, that depends on who you ask.
“We have millions of investors, partic-
ularly in mutual funds, depending on us
for their lifetime’s security and we
haven’t done a good enough job putting
their interests first,” says Jack Bogle,
who founded Vanguard, the fund man-
ager, and who has long campaigned for a
fiduciary standard to cover financial
advice and savings products. “Anybody
who touches other people’s money
should be deemed to be a fiduciary.”
Tightening the standard
US financial advisers have been held to a
fiduciary standard that requires them to
put their client’s interest above their
own since the Investment Advisers Act
of 1940. But many of the other profes-
sionals who dispense advice are not.
Staff at the country’s 5,100 broker-
dealer firms, plus thousands of call-cen-
tre operatives at mutual fund compa-
nies, salespeople from insurance firms
and a host of others, are only required to
recommend “suitable” products.
That leaves them free to make recom-
mendations that factor in the fees and
commissions they receive on the prod-
ucts and — the Obama administration
says — push savers into higher-cost
products that stunt the growth of their
retirement nest eggs. The administra-
tion says returns could be improved by,
on average, 1 percentage point annually
if savers were put into the best products,
rather than just “suitable” ones that
generate the highest fees — and the dif-
ference would help narrow the gulf
between what Americans are saving and
what they will need for retirement.
Not true, says the chief executive of
one of the largest networks of broker-
dealers in the US. “It will sound cute, but
my opinion is this is a solution searching
for a problem,” says Jim Weddle, man-
aging partner at Missouri-headquar-
tered Edward Jones, which has 14,400
★ FINANCIAL TIMES 7
FT BIG READ. FINANCIAL ADVICE
By Stephen Foley, Alistair Gray and Ben McLannahan
New race for the
saver’s dollar
FT montage; Dreamstime
‘It will
partners offering advice either for a fee The DoL has indicated it hopes to of litigation down the road. That will would be manageable for the compa-
or on commission. “I do not see a prob- have the new standards implemented raise costs. nies, and the disruption could lead to
sound lem. If a financial adviser or a firm regu- by the time Mr Obama leaves office in Arrangements between brokers, the opportunities to win market share.
larly does other than putting clients’ January next year, a final victory in what distributors of financial products, and That is the hope of some retail broker-
cute, but interests first, they are not in business has been a long battle with the wealth the mutual fund and life companies — ages, too. While many still operate out of
this is a very long.”
The fiduciary rule is being drawn up
management industry. The DoL ini-
tially proposed a fiduciary rule in 2010,
the manufacturers, in industry parlance
— are also having to be rewritten. Mar-
“mom and pop” shops, the largest
regional and national chains hope to
solution by the US Department of Labor, whose only to withdraw it the following year gins are expected to come under pres- cherry-pick staff and small acquisitions
responsibility for overseeing retirement after objections that it would be sure at firms that rely on commission as the industry consolidates. Stifel,
searching investment has expanded since the days unworkable as first drafted. In the del- payments and continual “distribution another Missouri-based company with
for a when employers’ defined benefit pen- uge of more than 7,000 comment letters fees” that are built into funds’ annual a large broker-dealer network, says that
sion plans were the dominant savings costs. Revenues of $2.4bn a year could if it ends up shifting clients to a fee-
problem’ vehicle. A complementary effort to be under threat from the fees built into based advice model, its revenue per
introduce a similar fiduciary standard $2.4bn $1.5tn US mutual fund sales alone, according account would actually increase.
across non-retirement savings products Portionofrevenues Salesofvariable to a Morningstar estimate. But Stifel’s chairman, Ronald Krusze-
was introduced in the Dodd-Frank Wall underthreatfrom annuityproducts There are also question marks about wski, says it is impossible to predict how
Street reform act, but is stalled at the feesbuiltinto intheUSoverthe whether many of the most complicated many clients want to pay a regular fee,
Securities and Exchange Commission. mutualfundsales pastdecade retirement products will still fit into the while those that continue to let their
The DoL’s effort is, therefore, more country’s $7tn of retirement accounts. broker take commissions could quickly
limited in scope than that introduced on the 2015 drafts, most objectors dis- Among those that may not pass muster get mired in the details of the DoL’s “best
earlier this decade in the UK, where the puted not the principle so much as the are non-traded real estate investment interest contract”, which approves some
Retail Distribution Review in effect devilish details. A final version is trusts, according to several executives, products and not others.
ended commission payments on many expected to be published within weeks. and many of the most complicated Mr Kruszewski raises the issue of
products. Under a draft of the US rule, Opponents still hope to block the pro- annuities — a concern that has been what will constitute advice in the new
published last year, such payments will posal in Congress or the courts. Paul exercising shareholders of life insurers. regime. “Simply, there are lots of com-
be allowed, but only under defined cir- Ryan, the Republican Speaker of the “Most people in the industry would plexities here; any time you try to have a
cumstances and as disclosed in a legal House of Representatives, has vowed to say they’ve never seen a bigger change rules-based regime with very detailed
“best interest contract” to be agreed
with the customer.
block the rule, although a presidential
veto limits Congressional options.
‘Most of regulations in their careers,” says Lee
Covington, the Insured Retirement
rules, they tend not to work,” he says.
Across the industry, players are reas-
Both sides look to the UK for evidence Industry players are highly likely to people Institute’s general counsel. He describes sessing all of their potential interactions
of what might happen under the new launch a legal challenge, but there is the proposals as “highly detrimental”. between financial professionals and the
regime. Edward Jones pulled out of Brit- only an outside chance that they will get have never Over the past decade $1.5tn of varia- public. Insurers are considering reshap-
ain as the RDR was in its infancy. “We
could see it coming, and we thought this
an injunction to prevent its implemen-
tation before the case is heard.
seen a ble annuities have been sold, according
to the trade body Limra. About half the
ing their annuity product range. Retail
brokers are examining whether to intro-
isn’t going to play well, and I don’t think
Preparing for change
bigger sales are estimated to be purchased duce new minimum balances for cli-
it has,” Mr Weddle says. “The account through retirement vehicles, making ents, where previously they have not
minimums [the amount a customer However reluctantly, the industry has
change of them vulnerable to the overhaul. imposed such lower wealth limits.
must have to invest before an adviser started to gird itself for upheaval. Com- regulations Proponents of the products argue that But amid the overhaul, there is one set
will take them on] have gone sky high. pliance will require advisers to take a they combine the benefits of holding an of companies that are doing little more
The DoL points to the UK as an example deeper look into a saver’s circum- in their equities mutual fund — creating the than sitting and waiting for new custom-
of where this has worked; we would dis-
agree.”
stances, and keep a better paper trail of
their work, as well as to build in the risk
careers’ potential for racy investment returns —
with protection against losses or the
ers to arrive. Robo-adviser firms such as
WealthFront and Betterment, while
investor running out of money. Critics tiny compared with the US savings mar-
say they contain some of the largest ket, are expecting to pick up customers
The UK to the statute book, there were repeated providers and technology. Yet this has upfront fees, with commissions typi- — particularly younger ones.
New ‘guidance’ regime warnings that it would lead to an “advice been slow to start, in part because cally between 7 and 9 per cent, and sur- After 3,400 of those comment letters
gap”. A 2012 survey by Fidelity and Cass potential providers are concerned render penalties for cancellation. had rolled into the DoL, most critical of
slow to scale up Business School suggested that three- about the legal distinction between Despite a decline in sales and the diffi- some or all of the new rules, Jon Stein
quarters of UK savers had insufficient advice and guidance. In response, the culty for insurers of managing annuities and Eli Broverman, Betterment’s found-
Until recently, the response of UK assets for them to be of interest to fee- recent Financial Advice Market Review in a low interest rate environment, they ers, fired off a letter of their own.
policymakers to the charge that charging advisers. recommended that the UK definition still generate big profits for several “Behind all the rhetoric is an age-old
thousands of investors were no longer The first to withdraw from advisory of advice is aligned with the EU’s. groups. For Lincoln Financial, the third- dynamic,” they wrote. “There are those
getting financial advice as a result of services were the high street banks, There have been some beneficiaries. largest listed US life insurer by assets, who are busy building innovative serv-
regulatory changes was both blunt pursued by fines for mis-selling. Private Companies with the scale to service VAs are forecast to account for almost ices to better serve consumers, and then
and withering. “The vast majority of banks and wealth managers soon jacked less well-off clients profitably have half its earnings this year. there are the rent-seeking incumbents
those people weren’t really getting up their minimum requirements for assets been able to hoover them up; assets Tremors are expected to be felt on the who are busy deploying their formida-
advice,” said Martin Wheatley, the under management. Many independent under management at Hargreaves other side of the Atlantic, too. US annui- ble resources lobbying to preserve the
former head of the Financial Conduct advisers, irked by rising liability insurance Lansdown have almost doubled to ties are among the most important status quo.”
Authority, in 2013. “They were just costs and the fact they had to pass new £58bn since the RDR. At St James’s products for several large European life Mr Bogle seized on Morningstar’s esti-
getting a sales pitch.” exams despite decades of experience, left Place, which offers an advice-based and pensions companies. Transamer- mate of annual revenue losses for the
In the six years that it took to get the industry. Regulators hoped their service, assets have grown almost 70 ica, an arm of the Dutch insurer Aegon, wealth management industry. “If pro-
the UK’s Retail Distribution Review on place would be taken by “guidance” per cent. Jonathan Eley and Paris-based Axa rank among the 10 viders lose $2.4bn, investors are $2.4bn
biggest VA providers. better off. This is not complicated,” he
The biggest as of the end of last year says.
was Jackson National Life, an arm of the
Earnings hit US life insurers braced for impact Top 10 players in individual UK-listed Prudential, which has been
EPS* dilution, 2019 (%) Percentage of total earnings retirement accounts taking market share. Barry Stowe, who
-8 -6 -4 -2 0 Impacted No impact Market share at Q2 2015 (%)
runs the Pru’s American arm, told ana-
Ameriprise by DoL** rules from DoL** rules
0 5 10 15 lysts this month that “you will have law-
Asset and wealth
Aegon
Fidelity
suits” if the overhaul “goes too far”.
Pension mangement
Prudential UK
12 8 Variable Schwab Tweaking the model Client-first? A new ‘fiduciary standard’
Provident Financial Other annuities BoA ML
7 14 Even though the rules have yet to be is seen as one of the biggest changes
Lincoln National Morgan Stanley
Corporation published, insurers are already reposi- to the industry since legislation in 1940
Vanguard
Voya Financial Individual tioning. MetLife last month agreed to
12 Wells Fargo
sell its 4,000-strong network of agents. Big business Annuities generate large
Prudential US 29 life Pershing
AIG has also sold its network of broker- profits — and fees — for the likes of
4 TD
AXA
14 Fixed dealers. Both companies have acknowl- Lincoln and Jackson Financial Life
Ameriprise
Metlife International annuities edged that the DoL reforms are part of
UBS
Allianz
Group/ the rationale for the moves. The Pru, Consolidation Groups like MetLife and
* Earnings per share ** US Department supplemental Lincoln and others have argued that AIG have already agreed to sell off
Source: Morgan Stanley of Labor even a worst-case scenario for VAs networks of agents and broker-dealers
8 ★
WEDNESDAY 23 MARCH 2016
An assault on Brussels,
and on European values
Isis terror attacks make the case for “more Europe” in security
The bomb atrocities in Brussels are a
reminder, if any were needed after last
November’s jihadi assault on Paris, of
how easy it is for terrorist cells to attack
neuralgic targets in European cities
and bring them to a standstill.
What appears to have been a double
suicide attack in the departure hall at
Zaventem airport, and an even dead-
lier bombing in a metro train at Maal-
beek station, next to several EU head-
quarters in the heart of Brussels, killed
at least 30 people and wounded around
180 more, some of them critically. The
city went into lockdown.
A claim of responsibility on an Isis
website indicates this was the work of
local cells inspired by their millenari-
anism, using the Paris model they
adapted from a jihadist attack on
Mumbai in 2008. The attacks come
after last Friday’s arrest of Salah
Abdeslam, in a Brussels suburb known
for being a jihadi nest, who was wanted
as the surviving perpetrator of the
Paris carnage. His local accomplices
may have brought forward plans to
strike Brussels for fear that his deten-
tion would lead to their detection.
Such horror calls out for firm but
measured conclusions. Europe cannot
cocoon itself from the arc of fire to its
east and south, the killing fields that
run from Iraq and Syria to Libya. That
is made obvious not just by terror
attacks but the European Union’s ina-
bility to act together to deal with the
waves of refugees from these and other
countries — a dispiriting response that
betrays the values of the union.
Brussels is not just the capital of Bel-
gium but of the EU, which is being chal-
lenged to show it has the resilience to
confront what will be a long and ugly
conflict. Isis is making the case for
“more Europe” in security.
There are obvious practical meas-
ures that need urgently to happen,
chief among them better intelligence-
China plays ball with its
development lending
The Asian Infrastructure Investment Bank has made a wise move
When China announced in 2013 that it
would create the Asian Infrastructure
Investment Bank to lend to developing
countries in the region, a common
belief held that this marked another
sad stage in the slow death of multi-
lateral co-operation.
Rather than channel its vast foreign
exchange reserves through global
agencies like the World Bank, the argu-
ment went, China was setting up its
own development bank which it could
dominate and in which other creditor
countries could participate only on
terms in effect set by Beijing.
With this week’s news that the AIIB
will undertake a joint loan with the
Asian Development Bank (ADB), this
pessimistic scenario looks mercifully
less likely. There is a strong argument
for seeing the AIIB’s creation as a move
by China towards embracing interna-
tional co-operation, not rejecting it.
By the time Beijing announced the
AIIB, it had already been hurtling rap-
idly away from multilateralism in the
field of development finance for more
than a decade. Starting in the early
2000s, China began to deploy its huge
currency reserves to lend bilaterally to
developing countries, often for infra-
structure projects in Africa, through
agencies such as the China Develop-
ment Bank and the China ExIm Bank.
Frequently, these loans were tied to
mercantile interests of Chinese compa-
nies and political backing for Beijing’s
foreign policy goals from the recipient
governments. They were, however,
largely free of the human rights and
environmental standards that have
helped to make World Bank loans
increasingly cumbersome to take out.
This featherlight-touch approach
proved a highly popular feature. By
2010, Chinese development lending
had exceeded that of the World Bank.
However, a string of projects failing
to work out, including a big loan to
sharing about jihadi networks. Bel-
gium, with multiple and overlapping
layers of government that do not talk to
each other, presents a particular prob-
lem. The federal government warned
after Mr Abdeslam’s arrest that it might
trigger an attack, but was powerless to
stop it. But there needs to be far greater
pooling of information in real time
across the EU and with its allies. After
Paris, remember, Mr Abdeslam’s car
was checked by police at the French
border with Belgium but they seem to
have had no idea who he was.
Member states need also to learn
more about minority communities and
what motivates their members. This is
not just about ostensible religious affili-
ation but the search for identity of
some Muslim youth, disaffected and
directionless but offered a deranged
superhero status by Isis and its ilk. It is
chastening to learn Mr Abdeslam, pur-
sued across the continent, was hidden
by neighbours for four months.
Above all, the EU and the west need
constantly to demonstrate the values
they defend, eschewing simplistic
bombast and knee-jerk repression. For
Donald Trump, the Republican front-
runner to contest the US presidency,
Brussels is another brick in the wall he
purports to believe will keep Muslims
and Mexicans out of the US. For Marine
Le Pen of France’s far-right Front
National, an attack on the EU capital is
an excuse to call for a Battle of Algiers-
style razzia — a vast armed police raid
— on immigrant “neighbourhoods on
the fringes of the Republic”.
Such policies undermine our open
societies, built on individual and col-
lective freedoms and religious toler-
ance. Together they would run up the
white flag of surrender. Isis and its aco-
lytes are learning how to tear apart our
civic fabric. We need to make that civil-
ity more resilient, not do their work for
them.
Ghana to develop its nascent oil indus-
try, encouraged China to supplement
its bilateral lending with a plurilateral
project in the form of the AIIB. The US
might not have liked it, and unwisely
tried to discourage other governments
such as the UK from joining the new
bank, but creating a new international
institution, even at the cost of bypass-
ing the existing ones, was on balance a
positive development.
Assuming it is confirmed and goes
ahead, the loan with the Asian Devel-
opment Bank is important both sym-
bolically and in practice. The ADB,
which has been around since 1966, has
long been seen as a Japanese fiefdom,
with Tokyo in effect appointing its head
and Washington giving it support. Nei-
ther the US nor Japan has joined the
AIIB. For Beijing in effect to co-operate
with one of its main foreign policy
rivals in the region suggests it is signal-
ling that the AIIB is not simply
intended to project Chinese interests.
Moreover, the ADB, somewhat like
the World Bank, has rules on social and
environmental protection which it says
will apply to the joint project: thus it
will allow China, at least partly, to sub-
mit itself to global norms of develop-
ment lending.
These are early days for the AIIB,
which has still to demonstrate which
rules will constrain the bulk of its activ-
ities. It is, however, all to the good that
it is sending out signals in the direction
of international co-operation.
The initial hand-wringing, particu-
larly in Washington, over the creation
of the AIIB has been excessive. China
will continue to lend bilaterally on a
huge scale, and the new bank should be
regarded as a pilot project rather than a
dominant new model. By showing
respect to the existing development
agencies, Beijing is signalling that the
AIIB is not simply the extension of
Chinese influence by other means.
FINANCIAL TIMES
EU lost moral high ground before Turkey deal
Sir, Wolfgang Münchau seems to be
unaware of his own irony when he
fears that those EU member states
that care about human rights will hate
the deal with Turkey initiated by
Angela Merkel (“The EU sells its soul
to strike a deal with Turkey”, March
21). If those critical member states
really cared so much for the human
rights of asylum seekers they could
have invited them in the past instead of
leaving them to Sweden, Germany and
Austria.
If at all, the EU lost its moral high
ground when the majority of member
states decided to turn their back on the
A single coin with
many reverse sides
Sir, Agustin Mackinlay (Letters, March
18) responds to my earlier letter on
Brazil (March 16) by claiming that
“corruption and high interest rates are
two sides of the same coin”. But just as
Brazil’s new 1 real coins have a common
obverse and 16 different reverse
designs (a selection of the sports at Rio
2016), a similar corruption pattern can
have very different credit and interest
rate outcomes.
In the latest Transparency
International Corruption Perceptions
Index, Brazil scores 38 out of a
maximum of 100, ranking it 76th out of
167 countries. That score is almost
identical to the score of 37 out of 100,
ranking Brazil 75th, in 2009. Yet,
between April 2008 and September
2009, Brazil was elevated to
investment grade status by all three
major rating agencies. In the
subsequent three years, government
bond prices rose strongly, domestic
credit growth exploded, foreign capital
inflows were so strong that a tax on
foreign purchases of Brazilian bonds
was tripled in an attempt to stem the
inflow, yet the Brazilian real continued
to strengthen. By February this year,
the three major rating agencies had all
cut Brazil’s rating to junk, the cost of
insuring against Brazil’s sovereign
default was the highest of any country
in the world apart from Venezuela and
14 per cent short-term interest rates
were needed to curb inflation and try
to stabilise the currency.
The reverse side of Brazil’s
unchanged corruption ranking has
taken on many different designs.
Paul Temperton
Tier Co Ltd,
Chalfont St Giles, Bucks, UK
A likely Brexit is easy
to comprehend
Sir, Gideon Rachman (“Brexit is
looking ever more likely”, March 22)
describes the establishment view of a
decision to vote for Brexit as “self-
evidently stupid”. He would do well to
reflect on exactly why the
“intellectually solid” but “unhelpfully
convoluted” arguments for remaining
find so little traction. The reason is not
immigration. Yes, there is an
immigration-phobic element arguing
in favour of Leave. This argument is
self-evidently phobic but it is not the
reason Brexit is likely. Brexit is likely
because UK citizens are culturally
inclined to repudiate and dissociate
from the way the EU handles itself, its
business and its problems.
Most Remainers, including your
French youth
protest against
the ghost
of Thatcher
Paris
Notebook
By Anne-Sylvaine
Chassany
Letters
refugees, and not when negotiations
with Turkey started. A mere glimpse at
a map might teach Mr Münchau the
relevance of Turkey in managing the
refugee crisis. There is no moral high
ground in doing nothing when faced
with a crisis, neither in nor out of the
EU.
Wolfgang Pointner
Vienna, Austria
Sir, Concerning the EU’s loss of the
moral high ground in its deal with
Turkey, Wolfgang Münchau writes that
Austria’s introduction of border
controls is one of the “most egregious
newspaper and its columnists and the
UK prime minister, accept the
existence of this cultural dissonance
which has, in recent weeks, been
heightened by the much-criticised
rapprochement between the EU and
Turkey over the squalid refugee deal.
Since this cultural dissonance is a
given, and since it is not going away,
even after 41 years, the fact that Brexit
is looking ever more likely is surely
“self-evidently understandable”.
Peter Geiger
Edinburgh, UK
EU bureaucracy has
not held the UK back
Sir, Gideon Rachman (March 22)
correctly notes that Brexit supporters
are (currently) winning the argument
because they deliver “simple slogans
that are easy to understand”. In fact,
one of their most popular and (dare I
say) most misleading argument is how
EU bureaucracy is holding the UK
back. Nobody doubts that EU
bureaucracy does exists. But has it
really held us back? Not really!
Let me elaborate, at the risk of
making (in Mr Rachman’s phrase) an
“unhelpfully convoluted” argument.
The World Bank reports, for as many
as 215 countries, an authoritative
regulatory quality indicator. This
measures the ability of the government
to formulate and implement sound
policies and regulations that permit
and promote private sector
development. Assuming that EU
membership has taken a bureaucratic
toll on our economy, the indicator
should have shown a deteriorating UK
position over the years. This, however,
has not been the case.
In 2004, the UK stood at the very
impressive 97th percentile. In 2014
(last year for which data are available),
we retained our impressive position. In
fact, we were ranked above the US
I met Louise — 23, nose pierced,
blond hair tied in a top knot — on
Boulevard Voltaire in central Paris on
March 9. She and four of her friends
had joined 200,000 protesters across
the country, including thousands of
students, all demanding that the
government withdraw a bill intended
to make France’s labour market
more fluid.
Exchanging jokes and sipping beer,
Louise and her friends walked past the
Bataclan concert hall, between Place
de la République and Place de la
Nation — the artery that often hosts
Parisian street demonstrations.
A band played blues standards on the
back of a truck. The crowd, dotted
with colourful flags of the country’s
unions, chanted slogans mocking
“bosses” who are “like pigs” because
“they steal from their brothers”.
Beneath the picturesque veneer,
however, the grievances of Louise and
her friends underline the angst of a
generation struggling to find a
foothold in a labour market that
leaves a majority either unemployed
or forced to move from one temporary
contract to the next.
“We’re here because there are too
many precarious jobs,” she tells me.
“It’s insecure already and this
law would just extend that to
everybody. It’s war to get a stable job
— and not even for something we’d
like to do.”
After earning a town planning
degree, she got a so-called civic service
volunteer job at an non-governmental
organisation, part of a state-aided
cases of unilateral action” and a classic
example of a beggar-thy-neighbour
policy (March 21).
In the fourth quarter of 2015,
Austria received 30,800 applications
for asylum, equivalent to an annual
rate of 1m for the UK — 50 times the
20,000 Syrian refugees David Cameron
has agreed to take over a four-year
period.
As an example of good
neighbourliness, Austria has agreed to
admit a further 127,500 asylum seekers
over the next four years.
Dr John Doherty
Vienna, Austria
which went down from the 93rd
percentile in 2004 to the 88th
percentile in 2014. We were also
ranked above Germany, which went up
slightly from the 91st percentile in
2004 to the 94th percentile in 2014.
Last but not least, let’s not forget
Norway, which we often praise as a
successful “survivor” outside the EU.
Even Norway was ranked lower than
us. Indeed, Norway stood, in 2014, at
the 92nd percentile.
So much for EU bureaucracy taking a
toll on our economy!
Prof Costas Milas
Management School,
University of Liverpool, UK
Valeant investors forgot
the first C of credit
Sir, Investors in Valeant appear to have
ignored the first of the four Cs of credit:
that is character. A pharmaceutical
company renowned for suddenly
doubling and quintupling the prices of
critical medications must at least raise
the question of character (“Valeant
shows why investors in ‘roll-ups’ need
to be cautious”, Inside Business, March
21). For serial acquirers, character
becomes even more critical, since
acquisition accounting offers such wide
latitude for disguising true earnings. If
we have learnt anything from the
global financial crisis, surely it should
be this: character matters.
Paul Drexler
Seattle, WA, US
Ministerial muddle
over sugar tax
Sir, The planned sugar tax, if it reduces
consumption, will raise £500m a year.
The EU subsidy on sugar producers
amounts to £180 per tonne. British
sugar beet farmers’ share, based on
1.3m tonnes annual sugar production,
is £243m. Apart from the moral
dilemma and political incoherence of
encouraging production of sugar from
one ministry and discouraging it from
another, this is just bad business. What
commercially realistic enterprise
would ramp up production of a
product while simultaneously taking
drastic and costly action to suppress
demand for it?
Craig Sams
Hastings, E Sussex, UK
Sir, Like Nat King Cole, a rowdy dowdy,
that’s me. As if rubbing elbows at The
Ritz with those millionaires “When I
Take My Sugar To Tea” wasn’t costly
enough already, the Palm Court is
about to get a lot more expensive.
Jonathan P Kahn
Beechhurst, NY, US
scheme that Socialist President
François Hollande extended to
350,000 volunteers aged below 25. She
earns €573 a month. Her friend,
Yohann, 25, who has a law degree, has
been looking for a job for a year.
Laure, 27, says the vast majority of her
university friends have temporary
contracts.
The scene is a familiar sight. Since
May 1968, French youth has been a
force that the powers-that-be have
learnt to fear. Student protests have
become a rite of passage. But,
recently, they have derailed reforms
that were designed to help them. In
2006, following mass protests, Jacques
Chirac, then centre-right president,
abrogated a law that created a
flexible employment contract for
those under 26.
The March 9 protests produced
results, too: a few days after Louise
and her friends took to the streets,
Prime Minister Manuel Valls
abandoned several important
pro-business measures in his jobs bill.
Louise’s anger is understandable,
says Bernard Spitz, author of
On Achève Bien les Jeunes (“They shoot
youths, don’t they?”) and previously
an adviser to Michel Rocard, a former
Socialist prime minister. A quarter of
those aged below 25 are unemployed,
compared with 10 per cent for the
whole French workforce. More than
80 per cent of new employment
contracts are temporary.
“Everything has deteriorated for
them in the past 10 years,” Mr Spitz
says. “They have three choices: accept
Wednesday 23 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
Private equity may be
trapped by the rigidity
that made it successful
Sir, Sujeet Indap (“Private equity chiefs
feel misunderstood — and
undervalued”, Inside Business, March
22) omits three critical facts. First, in
terms of historical performance, there
is every reason to feel misunderstood.
According to a 2014 Journal of Finance
study, top quartile buyout fund
outperformance relative to the S&P
500 has consistently averaged at least
20–27 per cent over a fund’s life and
more than 3 per cent annually. In the
words of legendary investor Carl
Thoma: “Private equity is about
superiorly managed and performing
companies, not being an investor. It is
about being proactive.” In that regard,
public market investors should
carefully study operational and
governance engineering measures
routinely practised by leading PE
firms.
However, there are two structural
challenges that may suggest that public
markets are right in discounting PE
firms’ expected future performance.
On the one hand, according to Bain’s
2015 Global Private Equity Report,
there is an excess of more than $1tn in
dry-powder waiting to be invested.
“Money chasing deals” is likely to erode
investment returns. There are
diseconomies. More important,
however, the question arises as to
whether the formula for success of the
past is likely to work in today’s
disruptive market environments where
operational and governance
engineering may not be enough but
business models will be disrupted.
Private equity might be trapped in the
very rigidity of its execution model that
laid the foundation for past success.
For PE to be valued “fairly and
continue generating outsized returns, it
must transform industries rather than
just focus on monetising efficiency
gains or untapped growth. The PE
industry is challenged to first reinvent
itself: become more flexible and
explorative, create unique deals as
opposed to simply outbidding on high
profile assets, and recruit a more
diverse employee base to foster
creativity and “out-of-the-box”
thinking.
Bijan Khezri
KCRI AG,
Zug, Switzerland
The one truly equal sport
Sir, I’m all for equality in sport — and
equal reward for success in any field of
endeavour — but the only truly
equivalent sport is one in which men
and women compete in the same
competition on equal terms; all credit
to equestrianism.
Caroline Evans
Tunbridge Wells, Kent, UK
Correction
c The Four Seasons hotel brand does
not belong to US company Starwood as
incorrectly stated in ‘China Inc: The
quest for cash flow’ published on
March 19.
COMMENT ON FT.COM
The Exchange
What can be done about the slow puncture in
the world economy, asks Stephen King
www.ft.com/the-exchange
it, rebel or get out of here. But they are
wrong to oppose this bill. Youths are
actually the victims of a lack of
reforms in this country.”
But 78 per cent of those aged
between 18 and 34 oppose the bill,
according to an Odoxa poll. Louise
and her friends said they resented a
system that seemed to drift towards a
“liberal Anglo-Saxon model” that they
have learnt to distrust.
“Margaret Thatcher’s ghost is back,
she is in Paris with this law,” said
Adrien, 23. “In the UK, they have
zero-hour job contracts.”
I could not help but smile as I
recognised the bias of an entire
education system — in my case, it took
years studying and working in the US
and the UK to correct it. I still
remember my reluctance
when signing my first “fire at will”
employment contract in New York.
But then, two years later, I was happy
to be able to resign with just two
weeks’ notice.
When I asked Louise and her
friends what they thought the
government should do, they
predictably suggested a grand
overhaul of capitalism. “Companies
distribute billions in dividends to their
shareholders instead of hiring people,”
Louise said. “How about we do
something about that?”
Then she turned to me: “And you —
what do you think we should do?”
Caught off guard by her expectant
look, I am suddenly not so sure.
anne-sylvaine.chassany@ft.com
Wednesday 23 March 2016
Obama has risked American credibility in the Middle East
OPINION
Nicholas
Burns
J
effrey Goldberg’s brilliantly
composed portrait of Barack
Obama’s foreign policy mind-
set in the The Atlantic is a land-
mark achievement. It also
helps to explain why the US is today a
halting and uncertain power in global
politics.
Mr Obama will leave office with
important international achievements
in place, among them the Iran deal, a
historic climate change pact and the
Asia and Europe trade agreements. He
has also conducted himself with grace
and dignity in office.
The US president was right to focus
his conversations with Mr Goldberg on
China’s struggle
for a new
normal
ECONOMICS
Martin
Wolf
W
hat is going to happen to
the Chinese economy in
the coming five years?
This is one of the most
important questions for
those interested in the world’s pros-
pects. Participating in this year’s China
Development Forum offered a fascinat-
ing window into how the country’s poli-
cymakers view the challenges ahead.
Insight came from the speeches and
papers prepared by scholars working at
the Development Research Center of
the State Council.
The country confronts four principal
challenges. The first is how to transform
its pattern growth, quantitatively and
qualitatively. The second is how to man-
age the inevitable slowdown in underly-
ing growth relatively smoothly. The
third is how to manage China’s interface
with the world economy. The last is how
to manage its domestic political evolu-
tion.
In the first place, China has accepted a
slowdown in the trend rate of growth. In
the period covered by the 13th five-year
plan (2016-2020), this is forecast to be
no lower than 6.5 per cent a year. While
that would be fast by world standards, it
would be slow by China’s, at least until
recent years (see chart).
This would, however, still deliver a
doubling of real gross domestic product
per head between 2010 and 2020. That
would be in keeping with former presi-
dent Hu Jintao’s stated goal of achieving
“moderately prosperous society” by
that date. At that point real GDP per
head, at purchasing power parity,
should be close to a third of US levels.
OPINION
Raffaello
Pantucci
I
t is still unclear exactly what Brus-
sels has faced just before Easter.
The random nature of the date and
targeting suggests a plot that may
have been brought forward, while
the scale of the attack suggests it must
have been in the pipeline for some time.
The Isis network, also linked to Novem-
ber’s Paris attacks, has claimed respon-
sibility. The bigger issue, however, is not
who is to blame for this atrocity but
rather how much Europe will warp to
address an acute terrorist threat, with
cells apparently able to launch large-
scale atrocities on an increasingly regu-
lar basis.
The first questions raised will focus on
perhaps the most difficult question in
American foreign policy: when should
presidents order the military to inter-
vene in wars beyond our borders and
when should they not? In doing so, how-
ever, he seems determined to contest
principles that recent presidents have
found vitally important in the exercise
of American power. Here is where the
emerging “Obama Doctrine” often
comes up short.
We know that American diplomacy is
most often effective when it is backed by
a strong military. This is why Mr
Obama’s defence of his decision to pull
back from striking Syrian military tar-
gets in 2013, after having drawn a “red
line” against Bashar al-Assad’s use of
chemical weapons, is so troubling. He
rejects the notion that his restraint
diminished US credibility in the region.
However much Mr Obama may
believe the old rules do not apply, it is an
ancient truth that a great power has to
A large slowdown in the headline rate
of growth does not entail a large reduc-
tion in the growth of the welfare of the
Chinese people. The headlong growth of
the recent past has been associated with
low-return investment, excess capacity,
pollution, rising inequality and under-
investment in social consumption,
notably on the environment, health and
education. It should even be possible for
China to achieve high growth in living
standards with substantially slower
GDP growth. Indeed, it might be better
to abandon the GDP growth objective
altogether, in favour of one for growth of
consumption, both public and private.
At the forum, Zhang Gaoli, the vice-
premier, emphasised plans to change
the quality of growth. He stressed the
need for a more innovative economy
and the urgency of controlling pollu-
tion. The shift to a low-carbon economy
offers a huge opportunity for economic
progress. Beyond this, the five-year plan
promises reform of the urban registra-
tion system (“hukou”), in order to
encourage permanent migration from
the countryside. The economic and
social benefits should be large.
This brings us to a closely related sec-
ond challenge. These benign long-run
changes cannot conceal the immediate
gloom. It is precisely when an economy
slows that its disequilibria are thrown
into sharpest relief. China invests close
to 45 per cent of GDP. This extraordinar-
ily high level is hard to justify as growth
slows. Furthermore, this high invest-
ment level is associated with explosively
rising debt and falling growth in total
factor productivity, a measure of techni-
cal progress. Such a path is unsustaina-
ble (see charts).
As the economy slows and growth
shifts from manufacturing and con-
struction towards services, the private
sector’s need to invest must shrink. But
investment also generates almost half of
all demand. Sustaining aggregate
demand as investment growth weakens
We face a terrorist network able to strike at will
Belgium’s response to the problem on its
home ground. Authorities might have
scored a victory by capturing Salah
Abdeslam, one of the Isis-aligned plot-
ters linked to the Paris attacks, but they
missed a network planning an atrocity
with heavy weapons and explosives.
This suggests gaps in the understanding
and surveillance of the terrorist threat.
Given that Brussels sits at the political
heart of Europe, this points to a problem
that can no longer be described as Bel-
gian alone.
While for some the atrocities in Paris
were a wake-up call, for security forces
they had been expected for a while. Ter-
rorist groups, from al-Qaeda to Isis, have
long sought to launch an attack in the
style of the 2008 Mumbai attacks, and
several plots have been disrupted or
launched from a francophone network
emanating from Brussels. The Paris
attack was the realisation of these fears
from a depressingly predictable place.
★ FINANCIAL TIMES
Comment
back up its threats if it wishes to be
respected by its friends and feared by its
adversaries.
If Mr Obama did not intend to honour
his threat, he should never have made it.
The result was inevitable — American
credibility is undeniably diminished in
A great power like
the US has to
back up its threats if it
wishes to be respected
the Middle East, while that of Vladimir
Putin’s Russia has been enhanced.
We also know that America’s vast net-
work of alliances and security partner-
ships in Europe and Asia is a key ele-
ment of its global strength. That is why
the president’s criticism of two of Amer-
ica’s closest allies, Britain and France, as
Managed decline
Demand growth (%)
Growth Final
Gross consumption
investment Net exports
2000 05 10
Sources: Haver Analytics; Conference Board; McKinsey
will be very challenging. Policymakers
have the tools to prevent a financial cri-
sis but avoiding an unexpectedly sharp
slowdown in demand (and so growth)
would be quite hard.
The temptation for policymakers is
already to restart the credit-fuelled
investment engine. That, however,
would postpone necessary adjustment
and so almost certainly create a bigger
adjustment shock down the road.
This brings us to the third challenge:
managing the country’s interface with
the world economy. The economic slow-
down of a high-saving China creates a
double challenge. One is the effect on
global demand, especially for commodi-
Beijing seems strangely
indecisive on the economy
and yet increasingly
authoritarian in politics
The networks of radicalised individu-
als with links to Isis have grown as the
group continues to hold sway on the
battlefield and send back people and
plots to their original bases in western
Europe. Given the tempo of attacks and
the ease with which the networks
appear able to acquire weapons and
Questions will be asked
about ramping up security
levels but this will bring
further inconvenience
move freely around the continent,
Europeans will ask themselves how
much longer they will face this threat. Is
this the start of a regular diet of such
atrocities or the breaking of a wave?
Given that terrorist groups have been
able to launch three big, ambitious plots
“free riders” in their prosecution of
Nato’s Libya campaign in 2011 was so
counterproductive.
Americans sometimes forget that the
US military accounts for roughly 75 per
cent of all Nato defence spending. It may
not be fair but Nato has always been a
US-led alliance. The real mistake in
Libya was Mr Obama’s decision to allow
the US to take a secondary role in an
important Nato mission for the first
time in its history.
US presidents have also learnt that it
almost never works to embarrass a
friend publicly. Mr Obama’s remarks
about the Saudi royal family were inap-
propriate. He should have directed his
darts not at America’s friends but at its
true adversaries — Iran, Hizbollah, the
Syrian government and Russia. You
should argue with your allies behind
closed doors rather than in the press.
The US is not fated to fall from grace
in the decades ahead but much will
Gloomy prospects
Supply growth (%)
Growth Capital
TFP* Labour quality
15 and quantity
10
5 5
0 0
-5
15 2000 05 10
* Total factor productivity
ties. Another, also now evident, is the
tendency for an outflow of surplus funds
to weaken the exchange rate and so
increase exports and the current
account surplus. Beijing seems pre-
pared to let foreign currency reserves
run down rather then tighten outflow
controls sharply or let the exchange rate
fall. How these pressures are resolved
will have global significance.
Fortunately, the authorities have
developed imaginative ideas for using
the surplus savings to promote develop-
ment abroad. They include the “one
belt, one road” programme for
enhanced investment in overseas trans-
port infrastructure and the creation of
the Asian Infrastructure Investment
Bank. China’s annual gross savings are
now about $5tn. Finding ways to use this
vast flow productively, at home and
abroad, will be a challenge.
Finally, the envisaged transformation
of China into a prosperous market-ori-
ented economy creates a big political
in Europe in the past year and a half, the
sense will be that we are in the thick of
this threat with no end in sight.
The choice of targets is predictable.
Terrorist groups have long fetishised
aviation as a target, both as a way of visi-
bly lashing out against the globalised
political establishment but also for the
high impact. Mass transport systems by
their very nature have to be open to the
public, which makes them tempting tar-
gets as they offer an easy opportunity to
strike at the heart of a society. Questions
will be asked about ramping up security
but this will bring costs and further
inconvenience to the daily lives of citi-
zens. Think of the ramifications of a plot
in 2006 where a cell planned to use liq-
uid bombs on a series of transatlantic
flights. Liquids are still banned on air-
craft today.
The Brussels attacks will also play
badly against the backdrop of Europe’s
migration crisis. It will not be entirely
depend on the determination of its lead-
ers. To paraphrase John F Kennedy,
America can be as big as it wants. Mr
Obama’s emphasis on what the US
should not do rather than on what it
should, suggests the limitations he has
placed on policy.
He is right about one thing, however:
this is a time to return to diplomacy. He
still has time to present a larger, more
expansive view of what America can
and should achieve in the world. It
would be reassuring, though, if the pres-
ident acknowledged that combining
diplomacy with military strength is not
a relic from an antiquated “Washington
playbook”. On the contrary, it is the sur-
est way for a great power to find success
and peace in a complicated and danger-
ous world.
The writer is a professor at Harvard’s
Kennedy School, currently on leave at Stan-
ford, and a former undersecretary of state
Unsustainable path
Debt as % of GDP
Financial
Government
15 Non-financial corporates 300
Household
10
200
100
-5 0
14 2000 05 10 15
test. Beijing must be decisive and yet
responsive to the needs of the people. At
present, it seems strangely indecisive on
the economy and yet increasingly
authoritarian on the politics.
Only a fool would consider political
instability anything but a disaster for
China and the world. Equally, the desire
of President Xi Jinping to attack corrup-
tion and so strengthen the legitimacy of
the Communist party is understanda-
ble.
It is hard, though, to believe that an
innovative and outward-looking China
can be contained indefinitely within the
straitjacket of an all-powerful party-
state. Its political institutions must
surely move beyond the “democratic
centralism” invented by Vladimir Lenin
a century ago.
The challenges are daunting. It is only
the successes of the recent past that pro-
vide confidence in those of the future.
martin.wolf@ft.com
surprising if elements close to the recent
attacks found ways of slipping into the
country alongside refugees from the
Middle East. An already tense situation
in Europe will grow more fraught, and
this will have inevitable political ramifi-
cations too.
This is the biggest problem with
which security planners will have to
contend. It is often said that the best
response to a terrorist threat is to keep
calm and carry on. This is sage advice
but in the face of a network that appears
able to strike with impunity, and a polit-
ical environment growing more toxic by
the day, it will be ever harder for secu-
rity forces and politicians to ensure that
Europe maintains its values in the face
of the terrorist threat from within.
The writer is director of international secu-
rity studies at the Royal United Services
Institute and author of ‘We Love Death As
YouLoveLife:Britain’sSuburbanTerrorists’
9
The bumpy
road to
infrastructure
investment
BUSINESS
John
Kay
T
his was to have been the
year of exit from quantita-
tive easing. Instead, 2016 is
going to be the year of nega-
tive interest rates.
For more than a decade we have been
told that the world suffers from a glut of
savings, resulting from the surpluses
of Asian countries and Germany.
The excess supply of capital exerts
downward pressure on interest rates,
in line with those supply-and-
demand diagrams from undergraduate
lectures.
There is, however, a subtle difference
between the supply-and-demand dia-
gram for apples and pears and the
equivalent diagram for savings and
investment. At a price of zero, the com-
mercial supply of apples and pears dries
up; by contrast, even at negative inter-
est rates people will go on saving
because they need to make provision for
retirement and their children.
Since the demand to save is so strong,
while consumption and investment
demand is so weak, we have reached the
point where the equilibrium interest
rate is negative. As a result the central
banks are challenging the belief that
there is a “zero lower bound” to interest
rates. Can they actually make us pay to
save?
The thesis that ultra-low interest
rates are the product of a savings glut
does not stand up to examination, how-
ever. In Britain and the US, households
are saving too little for retirement, not
too much. The prospect of low returns is
aggravating the problem that ageing
populations pose for most western
economies.
Equilibrium interest rates could be
negative only if there were no invest-
ment opportunities left that would yield
a positive rate of return. Such a claim is
obviously absurd. A moment’s thought
There is a crying need
for more airport capacity,
new homes and greater
electricity generation
identifies endless projects that would
yield a positive rate of return.
I have just paid a cab driver who apol-
ogised for the bumpy ride occasioned by
potholes. The holes will have to be
mended one day, and the longer we
wait, the greater the likely damage to
the road surface. There is undoubtedly a
positive return to fixing them right
away.
More seriously, the queue of aircraft
at Heathrow is a regular reminder that
London needs more airport capacity.
Separately, Britain has created very lit-
tle electricity generation capacity for
years and both coal and nuclear stations
are approaching the end of their life.
Housing starts in the UK in the fourth
quarter of 2015 were 31,000. There are
about 28m homes in Britain, so that at
this rate even if there was no growth in
the number of households it would take
more than 200 years to replace the
existing stock.
And this is Britain, among the most
advanced nations in terms of the quality
of its infrastructure. Most people live in
countries with a crying need for better
sanitation, better education and better
transport.
The problem is not that there is a
shortage of productive investment
opportunities that will yield rates of
return well above zero. The problem is
that we have put barriers — institu-
tional, political and economic — in the
way of making these investments.
They include the “not in my back-
yard” attitude of locals who block new
housing and airport expansion; political
procrastination over our energy needs;
obsession with taking borrowing off the
public sector balance sheet, and block-
age of the channels of intermediation
that supply funds to small and medium-
sized enterprises.
The belief that the ZLB to interest
rates is a significant obstacle to stimu-
lating demand supposes that there is a
host of projects that promises a prospec-
tive return less than zero but more than,
say, minus one half per cent. This com-
pletely misunderstands the nature of
the barriers to long-term productive
investment. We need less financial inge-
nuity and more common sense.
johnkay@johnkay.com
10 ★ FINANCIAL TIMES Wednesday 23 March 2016

BUSINESS LIFE

Recruiters’ use
“What is your biggest weakness?” The
first time I encountered this classic
of video games interview question I was about 20 and I
had no idea how to handle it. “I’m
really bad at turning up on time for
is a fad worth things,” I replied, which had the virtue
of being true. The interviewer,
fighting for frowning, drew a careful X on his
clipboard.
The lesson I learnt is that persuading
someone to hire you is like playing a
game: there are rules and you need to
find out what they are.
Some employers are now taking this
idea to extremes by designing games
for job candidates to play.
L’Oréal, Ernst & Young, Microsoft
and Deutsche Bank have signed up to
a smartphone app called Debut that
promises to let young people “fast-
track the recruitment process and land
answer that “biggest weakness”
question over and over again until you
found a response that did not elicit a
frown.
Thankfully, these companies are not
foolish enough to have overlooked this.
Notwithstanding the app’s hype, these
mobile games are really a marketing
tool rather than an alternative
selection process. They are a way for
employers to engage with potential job
applicants who they might not
otherwise reach.
“It’s not as if we’re struggling for
applications, but it’s about getting the
right applicants,” says Dan Richards,
EY’s head of UK recruitment. He does
not want to keep fishing for recruits in
the small and homogenous pool of
university students who go along to
recruitment fairs.
‘
criteria and replaced them with a set of
standardised online tests. Its research Let’s launch in . . .
shows that a good score on these tests
is a better predictor of professional
success than academic performance. In
Grenoble, France
the first few months of the new system,
one in 10 applicants who made it to the
Employers
are starting
interview stage would have been
ineligible to apply previously.
“Name-blind” recruitment is also
to realise gaining ground to try to combat racial
they have to bias. Academic studies in the US and
UK have shown that identical job
change how applications make more progress when
they do they have “white-sounding” names on
them. Experiments in France,
things if Germany, Sweden and the Netherlands
they want suggest that anonymous job
applications do increase the probability
more that applicants from ethnic minorities
diverse are invited for interview. Getty

roles in blue-chip companies simply by In that sense, these mobile games are The evidence is too patchy to tell Number of new start-ups a year 20-40
workforces

playing mobile games”.
At first glance, it is hard to see why
these employers thought this was a
good idea. L’Oréal’s game involves
running around a maze, jumping over
walls and collecting things. Deutsche
Bank’s requires you to roll a ball
around the corporate logo without
letting it fall off the edge. Do bankers
need good balance? Do product
designers need good reflexes?
Even if these games were testing for
the right attributes, the obvious
Sarah O'Connor problem is that they can be gamed. It
does not take a genius to set up several
Onemployment user accounts with different email
addresses, practise the games
endlessly, then log on with their real
name once they have perfected them.
It would be like having the chance to
Entrepreneurs. Stephen Hurst, Mercanta
’
indicative of an important shift taking whether their chances of a job offer Student population 65,000 (41% in science)
place in recruitment. recede again at the interview stage.
Big employers are beginning to Interviews, of course, are the final Number of jobs in software and big data 36,000
realise they have to change the way frontier in this battle to diversify
they do things if they want more recruitment. This is the stage where Known in France as the lacking skills in fields such
diverse workforces. racial discrimination can creep back in. “Capital of the Alps”, as marketing.
Deloitte, for example, has changed It is also where those candidates with Grenoble has long enjoyed Transport to and from
its application process so recruiters do polish and practice can still outgun the a reputation as a Paris is tricky: there are no
not know where the candidates went to rest. picture-postcard direct flights and the high-
school or university. It is running a Employers will have to tackle this destination flanked by speed TGV train takes three
video game trial of its own. challenge next. “Gamification” is easy breathtaking snow-capped hours to reach the capital.
Many of the biggest law firms, to dismiss as a passing fad involving mountains. But in recent
meanwhile, have signed up to use online play. Yet in its broadest sense, it years, the city of 160,000 in Show me the money:
a “contextual recruitment product” is something well worth fighting for: an south-east France that was Funding for start-ups is on
that identifies people who might not attempt to make recruitment the sort once famed for its glove hand from Grenoble Angels,
meet standard academic requirements
but have outperformed relative to their
of game where the playing field is level
and everyone knows the rules.
industry has been trying to
cut a different image: as a
a group of local business
figures who inject about
backgrounds. centre of innovation, €2m a year on average into
For its part, EY has scrapped all Sarah.Oconnor@ft.com research and start-ups. what they consider the most
academic qualifications from its entry Twitter: @sarahoconnor_ promising projects. The
The case for: Grenoble has a funds are then multiplied
well-developed ecosystem five times thanks to money
through which information available through regional
and ideas flow between and national public sector
private business, public
organisations and
backing.

universities. In 2014 it was Local heroes: Spartoo is an

Connoisseur of coffee beans

voted Europe’s second-most
innovative city in a
competition launched by the
European Commission.
The city has a well-
established scientific and
research heritage centred on
IT, energy and
biotechnology. It is France’s
most important research
centre after Paris, and the
Grenoble Innovation for
A UK pioneer of sourcing Advanced New
Technologies, or Giant, a
the best quality crops tells partnership of eight
Emiko Terazono that institutions, aims to
establish one of the world’s
consumers increasingly leading campuses in the
share his appreciation fields of higher education,
research and technology
transfer to industry.
ecommerce business selling
shoes. Founded in 2006, the
online business has raised
€45m and is present in 20
countries. Its website has
more than 14m unique
visitors each month.
Fluoptics, a spin-off from
the Laboratory of
Electronics and Information
Technologies, a unit of the
CEA French public research
organisation, develops
fluorescence imaging
technology which is used to
help surgeons locate
tumours during surgery that
might otherwise be invisible
to the naked eye.
What the locals say: Jean-

F
ew coffee drinkers know their
beans. Unlike wine, where
people can name grapes from
chardonnay to pinot noir, ask
anyone with a cup of coffee in
their hand which bean their brew is
made from and the chances they will
know are extremely low.
“There are literally hundreds of bean
varietals, like bourbon and caturra, but
most people don’t even understand the
question when they are asked to name a
bean,” says Stephen Hurst, founder of
Mercanta, one of Europe’s first high-end
coffee traders. He hopes coffee drinkers
will eventually be able to name their
bean. “It could be anything between
three to 10 years, but I really think it will
happen.”
Sitting in his office in Kingston upon
Thames, London, Mr Hurst acknowl-
edges that the high-quality — or “spe-
cialty” — coffee market is booming. As
well as having a wider choice in how
their coffee is made — cappuccino or fil-
ter, macchiato or flat white — more con-
sumers want to know where the raw
ingredient was produced and by whom.
Some are even knocking on the door
of Mercanta’s coffee school, which offers
barista courses as well as teaching how
to roast beans or run a coffee business.
Sipping a mug of black coffee, Mr
Hurst is animated and chatty, unlike
other commodity traders, who tend to
be reticent about divulging information.
Coffee drinking in Europe has come a
long way in the two decades since he set
up Mercanta, when the market for spe-
cialty coffee barely existed, says Mr
Hurst. “Hardly anybody in Europe had
any idea of what specialty coffee was.”
To ensure the quality of beans it sells,
Mercanta conducts a daily “cupping” or
tasting session. Five or six members of
staff slurp, sniff and score coffee made
with beans fresh from suppliers around
the world. “Bourbon, geisha, caturra,
mundo novo, icatu — so many variables
and terroirs that it is difficult to say
which is my favourite,” says Mr Hurst.
The idea of setting up a high-end trad-
ing company came when Mr Hurst, now
52, was on the coffee desk at Goldman
Sachs’s commodity trading arm, J Aron,
in London. There he learnt about physi-
cal coffee trading, visiting growers in
countries such as Honduras and El Sal-
vador, and dealing with exporters and
millers as well as big coffee manufactur-
ing clients such as Nestlé and Douwe
Egberts by phone and fax.
By the 1990s, the US office was regu-
larly approached by small companies
wanting little lots of the best Guatema-
lan or high-quality Rwandan beans:
“That gave me the indication that the
coffee business was changing.”
When Goldman reduced its phys-
ical coffee trading in the mid-1990s,
Bourbon, he used his redundancy money to set up
geisha, caturra, Mercanta with a business partner. How-
mundo novo, ever, he struggled to find enough small
icatu: Stephen roasters seeking quality beans. “It was
Hurst ‘cupping’ too early. I ended up searching all over
brews of coffee the world,” says Mr Hurst. Early clients
from a range of were Den Gyldne Bonne in Norway and
bean varietals Cafés el Magnifico in Barcelona as well
Charlie Bibby
as Monmouth Coffee in London. Jorgen
Linkvik, co-founder of Den Gyldne
Bonne, recalls: “I had just bought a
roasting machine from Italy and I sent
out about 100 emails to various compa-
nies dealing in coffee. Stephen was the
only one who got back to me.”
“It was all very hard going,” says Mr
Hurst, who feared for his redundancy
funds and had mortgaged his house. But
the company steadily built a reputation.
Best mentor: “My old boss from
In his own Goldman Sachs, Kevin Ryan. This guy
words was a hard driver and was extremely
vigilant about dealing with things in the
right way — with suppliers, with
Mentoring, customers and position-keeping. I don’t
networking have a futures position now, but I have a
and travel large inventory of coffee.”
Tips for networking: “I built my
business around really meeting growers,
millers and the roasters themselves at
their place of business. You can’t have a
virtual beer with someone. Get a feeling,
a reality of who, what, when and where.”
Travel tech: “I use local mobile phones
in places like Colombia for calls.
With data, I use my iPhone with a little
WiFi box that looks like a pager and
gives out a WiFi signal. It’s like carrying
around your own hotspot and I use it for
WhatsApp, email and text. I like to deal
with work when it comes in and don’t
like letting things build up.”
By focusing on long-term relationships
with growers, Mercanta has clients in 40
or so countries, with 22 employees and
annual sales of about £7.5m.
With little entrepreneurial experi-
ence, Mr Hurst admits to mistakes. For
instance, he wanted to buy high-quality
coffee directly from growers, but his
partner wanted to create a smaller ver-
sion of Goldman’s coffee trading desk.
They parted ways within two years. He
hired a graduate sales person through
an expensive agency, who soon left for
the City. Another mis-step was the loan
facility. Because Mercanta paid for the
financing whether or not it was used, it
took to “churn” trading, handling low
margin volumes just to use the loans.
“I learnt a lot from those unfortunate
experiences,” he says, the main lesson
being to focus on what the company was
about — knowledge of and access to
high-quality coffee.
By the early 2000s specialty coffee
was gaining popularity, with Mercanta
more or less the sole operator. Fielding
questions from people looking to buy
and roast beans led to the coffee school
in 2004: as before it was a slow start, but
now even competitors send staff along
for training. The years of having the spe-
cialty field to itself did not last long, as
the growing market soon attracted
rivals. The big traders, including Neu-
mann, Olam and Volcafe, set up spe-
cialty coffee divisions, while roasters
started to source beans directly from
growers. “Everybody and their uncle got
into quality coffee,” says Mr Hurst drily.
Then there are the “lifestyle” traders
and roasters who buy and sell beans as a
hobby. “The barrier to entry is low, and
when somebody starts to discount pre-
mium coffee, it’s like cut-price fashion.”
However, he believes that Mercanta’s
clients look to its relationships with
growers nurtured over two decades.
Steve Leighton, founder of Has Bean, a
UK-based online coffee retailer started
in his garage in 2003, says that when he
approached Mercanta there was no talk
of purchase volumes: “Stephen [Mr
Hurst] said ‘we want you to come and
taste the coffee’.”
Mercanta also has “boots on the
ground”, with offices and lab facilities in
coffee growing regions, and an ability to
take on the risk of buying bulk. Few nov-
ice buyers aiming to deal directly with
growers realise it usually means purch-
asing an 18,000kg container of coffee
worth about $100,000. Mercanta offers
small quantities of a minimum 300kg.
The company seeks to “decommodi-
tise” the coffee, offering a minimum 20
per cent margin over production cost to
growers, rather than a price linked to
the New York arabica benchmark. It will
not pay below $1.80 a pound, at a time
when the benchmark is about $1.30.
Mercanta’s model has caught the eye
of Ecom Agroindustrial, a big Swiss cof-
fee trader, which in 2013 took a 50 per
cent stake for an unspecified sum. Mr
Hurst says Ecom has helped increase
Mercanta’s reach in sourcing but it is not
involved in day-to-day operations or
financing. Now, spying the next stage in
coffee drinkers’ appreciation of beans,
Mr Hurst says understanding varietals
is the key. This, in turn, will help farm-
ers, as bean recognition will boost
prices. Nespresso, for example, intro-
duced a capsule made from bourbon.
Mr Hurst says coffee is currently
about where you drink it, how you drink
it, where it is from. “Until now, coffee
has been everything other than the very
bean itself,” he says. “No one who knows
wine would say ‘I like wine from France’.
It’s nonsensical for people to say ‘I like
coffee from Brazil’.”
Grenoble has a large
English-speaking
community and there is a
distinctly international
atmosphere. That is thanks
in large part to the presence
of multinational companies
such as Caterpillar, the
heavy-equipment maker,
and Hewlett-Packard, the
technology company.
The case against: The city
and its business and
research populations are
skewed heavily towards
technology, which leaves it
Innovation to watch
Emotional reactions to adverts
RICHARD NEWTON
MediaCom, the media
agency with clients that
include Procter & Gamble
and Volkswagen, recently
announced a strategic
partnership with Realeyes,
which specialises in
emotional analytics.
The move suggests that
algorithmic analysis of facial
expressions is considered
accurate enough to allow
digital measurement to
evolve from counting the
number of eyeballs to the
quality of attention.
Realeyes, a London-based
start-up, has raised $10.5m
to develop a way to help
advertisers understand what
impact their content is
having on its audience.
Advertising companies
use webcams to capture the
facial expressions of test
groups watching adverts.
Realeyes uses emotion
recognition software
Louis Brunet, who heads
Grenoble Angels,
emphasises the close-knit
connections between the
private and public sectors,
business people, university
lecturers and researchers.
“It is hard [elsewhere], to
find all of these people
working together in such
close contact,” he says of
Grenoble. “Besides that,
there are mountains, which
people always find
irresistible.”
Adam Thomson
The anonymised recordings
are analysed in the cloud by
Realeyes and a dashboard
displays the results using a
matrix of six core emotions:
happiness, surprise, sadness,
disgust, fear and confusion.
The main focus of
Realeyes’ business is testing
advertising before it airs on
TV or online. One customer,
TomTom, found that an
advert in which model
Alexandria Morgan used a
wrist-worn TomTom heart
monitor while running in just
a sports bra — to show no
chest strap was needed —
scored highly with American
men, badly with American
women and most highly with
French and Spanish women.
The reactions helped
TomTom adjust its media
plan to suit the audience.
Such detailed analysis of
audience responses is more
important as bolder and
potentially more polarising
content is demanded by
brands trying to navigate
greater use of ad-blockers
and time-shifted video
watching, says Realeyes.
“Doing that intelligently is
a win-win, with audiences
getting better ad
experiences and advertisers
better ad performance,” says
Mihkel Jaatma, chief
executive and co-founder.
Wednesday 23 March 2016 ★ FINANCIAL TIMES 11

ARTS

Honest gaze of a craftsman’s camera OPERA

Orfeo ed Euridice
Staatsoper Berlin
OPERA

The Rake’s Progress

aaaee
Paul Strand pioneered a slow, Rebecca Schmid
considered way of making
photographs, now on show in In the new production of Gluck’s Orfeo ed
Euridice, which opened Berlin’s annual
London. By Lily Le Brun Festtage event, Elysium is a sculptural
fortress of geometric shapes where
tuxedo-clad spirits reside. The scaffold-
Opera House, Helsinki
aaaee
Shirley Apthorp
A bare-breasted woman twirls two
flaming ropes, one attached to each
nipple, in counterclockwise circles. The
great thing about opera is that you never
know what awaits you.

W
hen Paul Strand was
starting out as a photog-
rapher in New York, he
would approach Alfred
Stieglitz every couple of
years for an appraisal. In 1917 Strand’s
mentor, an influential gallery owner as
well as a pioneering photographer,
finally gave the 26-year-old a firm
nod of approval. “Devoid of all flim-
flam; devoid of trickery and any ‘ism’;
devoid of any attempt to mystify an
ignorant public . . . these photographs
are the direct expression of today,”
Stieglitz wrote.
This consistent directness is clearly
conveyed in a quietly compelling retro-
spective of Strand’s work at the Victoria
and Albert Museum in London.
Throughout a career that spanned the
middle decades of the 20th century, he
displayed an unfaltering, almost naive
belief in photography as a powerful art
form. When he began taking pictures in
the 1900s, the infant medium was still
struggling for artistic validity; Stieglitz’s
Pictorialist peers were fighting the cam-
era’s corner by emphasising craftsman-
ship and affecting a consciously pain-
terly style. Strand toyed with these ideas
at first, making a few hazy, impression-
istic landscapes. But as he learnt more
about his tool, he became one of the first
to understand photography’s unique
strengths, and thus where its future lay.
From the outset he photographed a
breadth of subjects, applying the same
directness to landscapes, people and cit-
ies. His early portraits, shot surrepti-
tiously on the streets with a decoy lens,
show a hard-edged, unfliching honesty.
His subjects yawn, look shifty or bored.
They have grubby faces and stains on
their threadbare clothes.
A similarly unsentimental detach-
ment characterises his photographs and
short documentary film “Manhatta”
(1921), which depicts a flourishing,
industrial Manhattan. Railway lines,
crowded streets and construction sites
are shot from high vantage points — as
in his famous 1915 photograph “Wall
Street”, in which people appear sinis-
terly dwarfed by the hulking building
they are passing — or through physical
boundaries, as in “White Fence, Port
Kent, New York” (1916). In taking
advantage of the objectivity of the cam-
era (which he described as the “New
God” in a 1922 essay) and underplaying
his own presence, Strand lets everybody
peep through his viewfinder.
Strand did not entirely ignore the
“isms” that proliferated over the cen-
tury. In 1916, while analysing the “puz-
zling” compositions of Picasso, Cézanne
and Braque, he became one of the first
photographers to make abstract pic-
tures. Through these elegant close-ups
of still-life subjects and shadows, he
learnt “what a picture consists of, how
spaces are filled, how the whole must
have a kind of unity”.
Although he never made purely
abstract works again, his application of
those lessons to real-world subjects gave
his work a distinctively modern look.
He became even less afraid of simplicity,
understanding that a beautiful image
could be made from nuances in tone and
texture alone. The exhibition is punctu-
ated by photographs that delight in such
detail, from tangles of beach grass in
Maine to window shutters in Ghana.
The uniform format of the 200 or so
photographs in the show reveals at a
glance how a Pictorialist respect for
craftsmanship never left Strand. He dis-
missed colour as a dye without “body or
In taking advantage
of the objectivity of the
camera, Strand lets
everybody peep
through his viewfinder
texture or density”, favouring gelatin sil-
ver and platinum prints. Right up to his
death in 1976 he preferred large-format
cameras, individual glass plates instead
of rolls of film and contact printing,
which made the photograph the same
size as the negative.
Although anachronistic, these cum-
bersome methods seem to have suited
his slow, considered way of looking.
They helped imbue his pictures with a
sense of time passing, especially his
later portraits, in which the sitters stare
straight back at the camera. By the time
a shot had been set up — which could be
half an hour — the subject had normally
relaxed and could easily match the
lens’s blank stare.
Strand’s career did not progress in the
way that his promising start might have
suggested. In 1945 he was given the first
retrospective ever awarded to a photog-
rapher at the Museum of Modern Art in
New York, but after that his celebrity
began to fade. This was partly because
his fastidiousness over the quality of his
prints meant that he was uninterested
in magazine work. Nor did it help that in
1940 the FBI opened a file on his com-
munist sympathies, and by 1950 he had
abandoned the US for good.
His time abroad, however, allowed his
almost ethnographic approach to pho-
tography to develop further. Basing
himself in France, he travelled widely to
places where regional identity was com-
ing under threat. This resulted in a
number of books and a couple of films,
which are included in the exhibition but
are easily overlooked next to the sharp,
silvery reality of the prints. He hoped
that these books and films would allow
more people to see his work, and that his
carefully conceived studies of commu-
nities and their surroundings would
encourage a more sympathetic world
view among those who saw them.
These democratic ambitions were not
always realised. For example, the book
Un Paese, the outcome of five weeks
spent in the Italian village of Luzzara,
was unaffordable to many of the people
it was intended to appeal to. These trips
did produce some of his best pictures,
however. A novel could be based on the
self-conscious characters posing for
“The Family, Luzzara” (1953). And his
pictures of the Outer Hebrides from the
following year capture the rugged dig-
nity of the islands and their inhabitants.
Strand’s photographs need time. But
his respect for the complexity and char-
acter of the world around him, and his
faith in us to see it too, makes them
worthy of patient attention.
To July 3, vam.ac.uk
ing, which bears the unmistakable
stamp of its designer, Frank Gehry, is one
of few memorable moments in this more
often lugubrious staging by director and
StaatsoperintendantJürgenFlimm.
The first act, set in a nondescript
industrial space, is at once disturbing
and inert as the mourning husband
clutches Eurydice’s bridal gown and
attempts to hang himself from the ceil-
ing with a microphone cord. Cupid is a
gangster type who summons masked
conspirators and Ku Klux Klan mem-
bers to stab Orfeo after he resolves to
retrieveEurydicefromtheunderworld.
Choreography by Gail Skrela is limited
to twirling pairs of newly-weds who in
the final scene walk in circles around a
once-again alone and estranged Orfeo.
Performed without intermission, the
production uses Gluck’s original 1762
version of the score but cuts several
dance interludes and inserts an excerpt
from the later French version’s ballet in
Elysium as a melancholy postlude.
Rather than reunite with Eurydice,
Unflinching: above, Orfeo scatters ashes from his violin case
Paul Strand’s ‘Young as she disappears into the darkness
Boy, Gondeville, (lightingbyOlafFreese).
Charente, France’ Countertenor Bejun Mehta, a sea-
(1951). Below left, soned interpreter of the title role, carried
‘White Fence, Port the evening with a tireless display of tor-
Kent, New York’ (1916); tured passion and a clear, polished tim-
below right, Paul bre.SopranoAnnaProhaskawasasultry
Strand in his garden Eurydice, blending well with Mehta in
in Orgeval, France, the duet “Vieni, appaga il tuo consorte”
1974. Right: Merle despite being separated by a wall.
Silmato as Mother Soprano Nadine Sierra gave a standout
Goose in ‘The Rake’s house debut as the playful but
Progress’ sinister Cupid. The Staatskapelle
Paul Strand Archive, Aperture Foundation; Berlin provided taut, spirited
Martine Franck/Magnum Photos;
Heikki Ruuli
accompaniment under Dan-
iel Barenboim. The house
chorus, prepared by Martin
Wright, sang with
flexible phrasing and
polisheddiction.
To July 3
staatsoper-berlin.de
Helsinki’s new production of The
Rake’s Progress boasts a marvellously lav-
ish brothel scene. Dmitri Bertman’s stag-
ing for the Finnish National Opera com-
bines the cheesy aesthetic of a Tim Bur-
ton film with the cautionary eroticism of
Hieronymus Bosch. Even when their
bosoms are not burning, you get the feel-
ing that you would not want to mess with
Mother Goose’s girls.
Hartmut Schörghofer’s sets see Anne
Trulove and her father at home with a
host of garden gnomes (costumes: Erika
Turunen). The Helsinki team has found
a visual translation for Stravinsky’s
superficially simple neoclassicism; as
the tale darkens, so does the visual aes-
thetic. Rakewell’s game-of-cards reck-
oning with Nick Shadow takes place in a
sinister concrete wasteland. Though
Bertman’s production, like Stravinsky’s
music, progressively breaks away from
the faux-baroque setting, it remains a
burlesque reading of a piece that is both
more complex and more genuinely mor-
alistic than it might seem at first glance.
The emotional key to the work might
be found in the increasingly beautiful
lines that Stravinsky composed for his
key characters. Here, Helsinki scores
well, with Hanna Rantala’s sweet lyri-
cism as Anne but even more with the
assured elegance of Steve Davislim’s
Tom. The tenor’s singing has ease and
depth, sophistication and communica-
tive grace. More than anybody else
involved, Davislim seems to have
understood that Stravinsky’s neo-
classicism was just a vehicle for
expressing something he pas-
sionately wanted to say.
Norwegian conductor Eivind
Gullberg Jensen keeps his
forces well enough together
but adds neither depth nor
insight to the evening. This Rake is
a slick ride to perdition, entertain-
ing without being revelatory.
To May 6, oopperabaletti.fi

DANCE
Paul Taylor’s American
Modern Dance
Lincoln Center, New York
aaeee
Apollinaire Scherr
Single-choreographer dance troupes do
not easily survive their founders,
whether Merce Cunningham or Trisha
Brown. Without premieres, the troupe
loses impetus, audience and funding;
without a troupe, the work must depend
on the avidity of strangers. To avoid this
fate, last year the Paul Taylor ensemble
began its shift to a repertory model in
which the master’s 60 years of dances
would share the stage with predecessors
and progeny in the same humanist vein.
This season, Martha Graham is doing
the honours as godparent; the late Alvin
Ailey contributor Donald McKayle, in a
guest appearance by Dayton Contempo-
rary Dance Company, serves as Taylor’s
contemporary; and New Yorkers Larry
Keigwin and Doug Elkins represent the
present (albeit middle-aged), with
Keigwin tilting towards pop and Elkins
towards hip-hop.
A fine plan for the grandly designated
Paul Taylor’s American Modern Dance,
so why did a going-out-of-business vibe
dominate the first week? Even with
dozens of seats slashed to $10 and the
excellent Orchestra of St Luke’s in the
pit, three rings remained bare and the
rest only decently filled.
The problem is not the thoughtful
commissions and solid guest companies.
It is, first, the Taylor premieres, which
conform to the pattern of the past five
years: sketch comedy, with the emphasis
on “sketch” and little in the way of cho-
reography. Dilly Dilly matched bimbo
ranch hands with brawling cowboys.
Sullivaniana showed anonymous vaude-
villian lonely hearts chasing after love.
The nullity of the premieres would
matter less, however, if the Taylor gems
— from the choreographer’s halcyon
decades of the 1960s to the 1990s —
arrived with lustrous mystery intact.
What distinguishes the Taylor sublime
from the Taylor ridiculous is structure.
The bad dances are schematic to the
point of cliché; the great ones possess a
dramatic architecture at once transpar-
ent and ungraspable, like Bach. They
occlude enough of the reason for a
particular action — the dancers who
have dashed into the wings, say, return-
ing on hands and knees — to make you
hunger for the whole story, but they do
not hide so much that you stop believing
there is a whole.
For the work to achieve this unsettling
end, though, the dancers must also
flicker with unpredictable impulses.
Only Michael Trusnovec reliably did.
In Images, from 1977, with its shades
of Nijinsky’s Afternoon of a Faun, the
veteran trouper slipped quietly from
frieze-like stiffness to sensuous slow-
ness. Heather McGinley, Jamie Rae
Walker and Francisco Graciano
textured their steps too. But as long as
the other 12 move like rocks and lumps,
forget the future — Taylor isn’t surviving
the present.
To April 1, ptamd.org
12 ★ FINANCIAL TIMES Wednesday 23 March 2016

Little by little
Tesco’s rate of sales decline has slowed and analysts have raised
their forecasts, prompting a rally in its shares that has pushed
its valuation to pre-crisis levels

UK grocers Tesco earnings

Twitter: @FTLex Email: lex@ft.com Share prices (rebased) Net upgrades to EPS estimates
140 from one month previous (number)
10

Petrobras: Portugal’s Galp, which has exposure to 130 0 Marriott: Anbang,

some of Petrobras’s best producing
well, well wells and less political risk. -10 thank you ma’am
Over the past month the shares have 120 If Starwood Hotels shareholders were
Another year passes and still the storm doubled, yet these results will not drive -20 not overwhelmed by Marriott’s first bid
clouds hang over Petrobras, Brazil’s the clouds away. It is too early to buy. 2013 14 15 16 for their company last November, they
state oil company. Oil prices are lower 110 should be happy with how things have
and the political drama following the Tesco sales progressed since. The entrance of
“car wash” corruption scandal has US banks: 100 Four-week growth (%) 2 Anbang, the Chinese insurance group,
engulfed Brazil’s presidency. Another has prompted Marriott to lift its bid by
R$35bn (US$10bn) loss has come out sibling rivalries 0 more than one-tenth, or $1.4bn, and
of shareholders’ equity according to its 90 markedly increase the cash element.
-2
full-year result, published on Monday, The naughty child gets the scolding, Marriott shareholders should be less
a figure lifted by R$6bn in tax credits. even if goody two shoes also had a -4 delighted. To pay for the uplift, the
Optimists will point out that the hand in the cookie jar. A year ago, an 80 company has discovered another $50m
asset writedowns in these results were analyst prompted a brief furore when Jan 2016 Feb Mar -6 in annual cost savings — the fruit of
non-cash. Yet in the past two years he called for JPMorgan to break up. Its Jan 2015 Jan 2016 “extensive due diligence and joint
FT graphic Sources: Thomson Reuters Datastream; IBES; Kantar Worldpanel; Barclays
losses from impairments and chief executive Jamie Dimon integration planning” — on top of the
adjustments for overpayments have responded with a Jovian assertion of $200m it estimated previously. Yet to
erased Petrobras’s profits stretching the special power of huge, integrated Every little helps. Tesco is taking its tire of the battle to get a parking space forecasts do not foresee a return to make that $50m cover the bid increase,
back to mid-2011. The company’s debt banks. No shareholder revolt own advertising to heart. Recent at Lidl every Saturday and warm to the previous levels. Quoted peers have after tax, it has to be capitalised at a
looms larger as the equity base shrinks. materialised. It is difficult to argue with initiatives have helped steady the idea of shopping in one place. reset their dividends. Tesco is not wild multiple of 40.
Net debt fell but gearing — net debt as a the boss of what is, probably, the US’s ship and put the share price back on Initiatives such as this — and a move expected to restart payments until its Marriott may believe that if Anbang
proportion of equity plus net debt — best managed big bank. an upward trajectory. However, it will to reimburse price guarantee savings at next financial year. HSBC expects is prepared to pay up, Starwood must
jumped from 48 per cent to 60 per In contrast, Citigroup and Bank of be some time before they are the till, rather than via vouchers — are 1.5p a share for 2017 — a tenth of the be worth it. But Anbang is privately
cent. The company will be happy just America have lacked halos ever since reflected in wider margins, bigger not big headline grabbers. But they 2014 level. The company is sensibly owned. It can get away with upping the
to refinance its debts (at higher rates, their near-death experiences in 2008. profits and a return to dividends. seem to have an effect. According to cutting prices, selling assets, reducing ante. Marriott shareholders must hope
of course), never mind reducing them. They also lack strong valuations, Typical of the self-help was the Nielsen data, Tesco’s sales in the 12 overheads and trimming bloated that, if the stakes rise again, their
There are hopeful signs of greater trading well under book value. low-key launch a few weeks ago of a weeks to February 27 posted the ranges. It has closed more than 50 company has the sense to fold.
operating efficiency. Drilling times are Boosters say their “bones” resemble new own-brand range. On certain key smallest decline since the end of 2013. stores but it is less able to pursue a
down a fifth. More oil spurts from each JPMorgan’s. Each has global franchises lines, the “Everyday Value” moniker Analysts are turning more positive. “shrink to grow” strategy, as Nintendo:
new well so fewer are needed. in investment banking and corporate will be replaced by bucolic-sounding The shares are up a third so far this Morrison has done, because a greater
Combined with lower oil services lending. Citi has consumer lending brands such as Willow Farm year, level-pegging with Wm Morrison proportion of its stores are leased. more than a miillion
pricing, higher productivity means operations around the world. In the US (chicken) and Rosedene Farm (fruit and some way ahead of J Sainsbury. A rising share price without a Sceptics of Nintendo’s first smartphone
sustained declines in capital spending, both have thousands of branches. BofA and berries). This is similar branding The improvements have come at a commensurate profit recovery makes offering have just been bashed by a
which is down by over half since 2013. has a substantial wealth management to that used by discounters such as cost, though. Operating margins were for a heady valuation: Tesco’s bouncing barrel. Yesterday market
Less cash is going out. Good. business. This was meant to be when Aldi and Lidl, and pricing will match over 5 per cent in 2011. In the first half price/earnings ratio is back at 2008 researcher AppAnnie said downloads
The falling oil price means that some the two emerged from the abyss and them too. Tesco’s hope is that once it of the current year they were less than levels. Full-year results, due on April of Miitomo, the company’s chat app,
of Petrobras’s reserves have become billions in fines and settlements from is competitive on price, shoppers will 1 per cent and even the most optimistic 13, will have to live up to their billing. surpassed 1m within a week of its
uneconomical to extract — so they no various scandals at last gave way to real launch. This matches other apps
longer count as reserves at all. The earnings growth. popular in Japan such as Disney’s Tsum
current total, 10bn barrels of oil That looks quite unlikely, just at Tsum, a cutesy casual game. Nintendo
equivalent, is the lowest since 2002. present. A wobbly global economy and their current strategies. They will similar amount for increased access to more capital and freedom shares rallied nearly 10 per cent.
And where is the money to develop negative interest rates have spooked have to argue a lot harder than investment. The funds should be from the twice yearly palaver of The past year has been a wild ride.
even that? The decline in earnings — investors. Even after the recent rally, Mr Dimon did. available. While the bank is barely proving it is state-aid compliant. And Last March, Nintendo shares leapt one-
measured before interest, tax, the KBW banking index is down a profitable (income and expenses were there will be a “special share”, granting third when the company said it would
depreciation and amortisation — was tenth for the year. And this week, an both about £28m for 2014-15), it is still privileged voting rights to a body develop smartphone games. Roll
modest. However, this profit measure analyst at KBW has called for a break- The GIB: growing. It expects a 9 per cent return tasked with overriding any shift away forward to October for a slump of one-
is a terrible one for a company with up, this time of Citi. on its investments, which are from the GIB’s green purposes. fifth: a delay in the first launch. And
such high debt. Net interest costs (even The analysis is complex, as these greener on the other side proceeding at a rate of £700m a year. Green types say the state could rather than a new game starring Super
before foreign exchange adjustments) paper and pencil exercises tend to be. Returns could also be juiced with provide cheap green capital directly. Mario or Donkey Kong, the “game” was a
sum to over a third of pre-tax profits The core recommendation is that Citi Lovers of paradox will be drawn to the leverage, which is ruled out while the Public ownership could encourage glorified chat app.
since 2013. Adding back those costs sell its international consumer banks UK’s Green Investment Bank. It was GIB remains under public ownership. steadier policies too. This particular Registrations for a free app do not
cuts ebitda by at least a quarter. (some of which it has already started created to finance green infrastructure Privatisation may reveal internal government, however, is fiscally and equal revenues. Nintendo will need to
Including interest expense makes divesting), then separate its US because the private sector cares only tensions, such as the conflicting goals environmentally hawkish, negating show that it can monetise chat, which
Petrobras’s relative valuation look less consumer bank and its investment for profit; yet it is meant to show how of shareholders and environmentalists. both arguments. Having £2bn invested Tencent has proved possible. Still, the
attractive. Using historical data, its bank. The key benefit is that excess profitable green investing is. The “GIB” The latter warn of horrors such as the in the GIB has not deterred its reception bodes well for when the first
enterprise value multiple jumps from capital could be returned by the must act like a private investor or run GIB investing in shale. They fear capricious energy policy. This reduces real game comes out.
under 7 times (using ebitda) to nearly (relatively) smaller entities because afoul of EU state aid rules but without another 3i, created by the state in 1945 the number of long-term projects for
10 times (using ebtda). On the latter they would be more lightly regulated. being bolder than the ordinary punter to finance small companies, which the likes of the GIB to invest in. The
ratio, Petrobras is expensive relative to Citi and BofA — which will inevitably it cannot make an impact. after privatisation became just another incontinence of policymakers, not the Lex on the web
For notes on today’s breaking
other EM oil groups. For nearly the be the focus of break-up talk before The government wants to privatise City-minded firm. The GIB blandly greed of money makers, is the greater stories go to www.ft.com/lex
same valuation one could buy long — will both want time to prove its £2bn stake and the GIB wants a responds that privatisation will allow threat to green investment.

HIGH Today’s temperatures

1030 L Abu Dhabi Sun 27 Malta Shower 17
Amsterdam Cloudy 9 Manila Sun 34
39 OW Athens Shower 19 Melbourne Cloudy 27
1010 IGH 1 0 1 0 Bangkok Sun 36 Mexico City Fair 26
14 Barcelona Sun 17 Montreal Cloudy 3
Beij eoul
Beijing Sun 14 Moscow Fair 0
HIGH 1 0 3 0 Berlin Drizzle 7 Mumbai Sun 35
okyo
1020 12 Brussels Cloudy 9 Munich Shower 8
slama ad
Budapest Fair 12 Nairobi Sun 32
1010 36 Buenos Aires Sun 27 New York Fair 19
Delhi Chicago Rain 7 Oslo Sun 9
Kolkat LOW Copenhagen Cloudy 8 Paris Cloudy 11
aipei
35 1010 23 Dallas Fair 28 Perth Cloudy 24
mbai ong Kong Delhi Sun 34 Prague Shower 8
oi
3 Dubai Sun 27 Rio Thunder 32
Ya W Dublin Cloudy 11 Rome Fair 13
34
22 1010 M Edinburgh Cloudy 10 San Francisco Sun 18
B k Frankfurt Cloudy 10 Seoul Sun 12
Geneva Fair 12 Shanghai Fair 12
Ho i Minh City Hamburg Fair 10 Singapore Thunder 33
Colombo uala Brunei Hong Kong Thunder 23 Stockholm Sleet 5
3 4 1010
L mpu Istanbul Fair 19 Sydney Sun 26
1 Jakarta Thunder 31 Taipei Rain 20
Si apore Johannesburg Sun 22 Tokyo Fair 16
3 Karachi Sun 34 Toronto Sleet 3
Kuala Lumpur Fair 34 Vancouver Rain 11
3 Kuwait Sun 27 Venice Fair 14
Lisbon Fair 16 Vienna Fair 10
1010 London Fair 13 Washington Fair 22
Forecasts by Los Angeles Sun 24 Wellington Rain 22
Wind speed Luxembourg Cloudy 8 Yangon Sun 36
in KPH Madrid Sun 16 Zurich Shower 8

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everything! (3,5,7) Anthony Eden (6,2,5)
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Wednesday 23 March 2016 ★ 13

Looking up Reasons to Sharp DeNA Co Ltd Cathay Pacific Sterling/dollar Gold 10-yr US Tsy Xetra Dax Brent oil

be bullish on India 6.52% 6.53% 2.94% 1.2% $3 1bp 0.4% 0.4%

INSIDE BUSINESS, PAGE 14
Y129 Y1,957 HK$13.20 $1.4199 $1,246 1.91% 9,990.00 $41.72

Anbang’s US Miitomo time Analysts to reassess Nintendo as

shares rise 8% on popularity of smartphone app
Short
View
hotel-buying Roger
Blitz

spree thrown Farewell, currency wars. Hello, carry trade! Spring’s

arrival seems to have forex investors wondering if a new
currency world order, in which central banks no longer

into doubt
drive each other’s currencies to the bottom, is sprouting.
And regardless of whether that is true or not, the Federal
Reserve’s supremely dovish tone may be enough to revive
the carry trade strategy: borrowing from low interest rate
countries to buy assets where rates are higher.
That seemed inconceivable a few short weeks ago, when
3 Deals face block by China regulator raging market turmoil forced investors to take cover. Yet
conditions for carry trading now look favourable: volatility
3 Insurer eyes new offer for Starwood is low; funding currencies are more stable; and interest
rate differentials quite attractive.
Is it too good to be true? Carry trade investors nursed big
DON WEINLAND — HONG KONG left the “door open” to a fresh bid, losses from China’s sharp renminbi depreciation in
JAMES FONTANELLA-KHAN — NEW YORK
according to people close to the matter. August. Signs of a rally in emerging market FX, where the
Anbang Insurance’s $20bn hotel-buying However, the Caixin report raises the search for yield is most likely to be found, appeared to have
spree has been thrown into doubt by possibility that the CIRC could prevent faded a week ago.
reports that Chinese regulators could another counterbid by Anbang. But that was before the surprise Fed statement. Not only
block its bids for two big US chains. Starwood’s executives are keen to did chair Janet Yellen send the dollar weaker, her worries
Caixin, a respected Chinese financial close the deal with Marriott as soon as about inflation also put the Fed in dovish mode for the next
magazine, reported yesterday that the possible, people familiar with the nego- few months. Even if the market pencils in a June rate rise,
China Insurance Regulatory Commis- tiation process said. the bar to further increases this year and beyond is consid-
sion could invoke a rule that restricts Anbang’s effort to buy up assets over- erably higher.
domestic insurance companies from seas is part of an unprecedented wave of Arguments against investing in EM are weakening.
investing more than 15 per cent of their outbound investment from China. Inflation in some key markets has been kept at bay, cur-
total assets abroad. Overseas spending by Chinese buyers rent account deficits are shrinking, and FX falls have lev-
The Anbang deals had a “small proba- this year has already reached $102bn, elled off, or even reversed. A sustained weaker dollar
bility of completion”, one unnamed according to Dealogic, just $4bn shy of therefore pushes banks to review their bearish EM calls.
authority told the Chinese magazine. last year’s total of $106bn. However, investors may prefer to see more daffodils in
Anbang declined to comment. But Anbang made global headlines in the ground before they commit to EM. Brazilian politics,
people close to the insurer played down 2014 when it bought the historic Wal- such a key factor in EM confidence, makes the market
the report. One said that nothing had dorf Astoria hotel in New York for $2bn. nervous. So does scrutiny of China. As does uncertainty
materially changed for the Chinese Since then it has completed or proposed over oil’s rebound.
group, which plans to press ahead with more than $32bn in mergers and acqui- But if investors take time to summon up the courage to
last week’s $6.5bn deal for Strategic sitions. It is unlisted and does not pub- dip into EM, it may be too late. Strong US data may force
Hotels & Resorts. Anbang is also evalu- lish financial statements for the group the Fed’s hand, creating a rush for dollars. Already the
ating whether to raise its $13.2bn bid for as a whole, so its total assets are usual Fed suspects are sounding more hawkish than the
Starwood Hotels & Resorts. unknown. position agreed last week. If the carry trade is back, it will
Another person close to the dealmak- The group is known to have expanded probably not be around for long. A short spring of mild
ing said that Anbang believed that the its registered capital from Rmb12bn temperatures may yield to a very hot and sticky summer.
CIRC would become involved only if the ($1.6bn) to Rmb62bn ($9bn) in 2014, or Handy: Nintendo’s gaming foray has been downloaded more than 1m times in three days
hotel-chain purchases were funded with more than 400 per cent, as it took on 31
insurance premiums. If the chains were new investors. It is now China’s largest Carry up, volatility down
paid for another way, the deals would insurance group based on registered LEO LEWIS — TOKYO to play simple games, could no longer remain out of Deutsche Deutsche
Bank Currency Bank FX
not require the regulator’s approval. capital. However, it has gone out of its prompted analysts to reassess the market — particularly with
Shares in Nintendo surged Carry USD Volatility
Anbang has yet to say how either deal way to avoid tripping up on domestic the prospects of a company that the domestic Japanese mobile- Excess Return Index Index
8 per cent yesterday after the
would be financed and is keeping the regulation that could curtail its out- has fallen out of favour with game market valued at an esti-
company revealed that a 240 12
regulator informed, the person said. bound investment plans, experts said. investors since last summer. mated $8bn in 2015, the largest
whimsical smartphone app
Anbang had sought to gatecrash Mar- Anbang has increased its balance In spite of its history of creat- in the world. 230 10 Low volatility
widely expected to be a flop
riott International’s agreement to pur- sheet rapidly over the past few years by ing blockbusters for handheld Analysts said that Nintendo means conditions
had been downloaded more 220 8
chase Starwood but its offer was buying stakes in banks, possibly with devices and home consoles, appeared to be using Miitomo to for carry trading
than 1m times in three days.
trumped by a revised bid from Marriott the intention of expanding the 15 per Nintendo has been reluctant to build up a global membership 210 6 look favourable.
on Monday. Marriott’s offer, valuing cent of total assets that it is allowed to The surprise explosion of popu- venture into smartphone gam- for its smartphone-based My 200 4 But if it is back, it
Starwood at $13.6bn, was accepted by invest abroad, said Wei Hou, a senior larity for Miitomo, a social net- ing where it would lose the con- Nintendo club before the 2014 15 16 will not be around
the target company. analyst at Sanford C Bernstein in Hong working app that creates car- trol over hardware it has always launch of more traditional Source: Deutsche Bank for long.
Senior management at the Chinese Kong. toon avatars from its users’ cherished. games-type apps.
group is convinced that Starwood has Lex page 12 photographs and allows users But in 2015 it decided that it Lex page 12 roger.blitz@ft.com

Japanese watchdog probes Toshiba’s

ex-chief over alleged role in scandal
KANA INAGAKI AND LEO LEWIS — TOKYO that it had inflated its net profits by executive, said the US company
$1.3bn over seven years. The company believed its financial reporting was not
Japan’s securities watchdog has ques-
is axing almost 14,000 jobs and offload- under investigation.
tioned Toshiba’s former chief executive
ing businesses to bolster its finances. The penalty sought by Japan’s SESC
over his alleged role in a $1.3bn
The SESC’s move came amid revela- has been confined to a fine of Y7.37bn
accounting scandal that has now
tions last week that US authorities are ($66m), which Toshiba paid in January.
caught the attention of US authorities.
now taking a close look at Toshiba’s US The company in turn has sued five
Italian business groups on Hisao Tanaka, who stepped down as business units. Toshiba’s nuclear unit former executives including Mr Tanaka,
edge over Bolloré’s push chief executive last July, was recently Westinghouse and other subsidiaries in seeking damages of Y3.2bn.
summoned for questioning as Japan’s the US were asked to submit informa- Japanese regulators have been criti-
The latest Italian campaign of French Securities Exchange and Surveillance tion relating to its accounting practices cised by investors for being slow to spot
industrialist Vincent Bolloré (above), Commission considers whether it to the US Department of Justice and the and respond to accounting malpractices
including ousting the Telecom Italia should file a criminal complaint against Securities and Exchange Commission, by one of Japan’s largest industrial con-
chief, has caught Italy’s government former Toshiba executives, according to according to Toshiba. glomerates that date back to 2008.
and business community by surprise, people familiar with the matter. Masashi Muromachi, chief executive, Mr Tanaka could not be reached for
coming as it does at a delicate moment The pursuit of criminal charges would said on Friday that he was not aware of comment but he has previously denied
in a country hit hard by the debt crisis. be a blow for the Japanese industrial the target of the US investigation, add- giving instructions to his subordinates
Analysis iPAGE 15 group as it tries to rebuild a company ing the process was at an early stage. to cook the books. Toshiba declined to
that was tarnished by findings last year Danny Roderick, Westinghouse’s chief comment.

Companies / Sectors / People

Companies
3i........................................................................12
AIG......................................................................7
Abengoa.......................................................14
Advent International.............................16
Aldi...................................................................12
American Airlines....................................21
Amgen............................................................21
Anbang.....................................................12,13
Anchorage..................................................20
Apple..............................................14,15,16,21
Asian Development Bank....................8
Attachmate..................................................17
BMG.................................................................14
Bain Capital.................................................16
Bank of America.........................12,20,22
Barclays.........................................................21
Bertelsmann...............................................14
BlackRock....................................................20
Bouygues......................................................17
Cairn Energy..............................................14
Capita..............................................................21
Carnival..........................................................21
Cassa Depositi e Prestiti....................15
Caterpillar....................................................10
Citigroup.................................................12,22
Compaq Computer.................................16
Credit Suisse.................................................1
Danone...........................................................17
Deloitte..........................................................10
Delta Air Lines..........................................21
Deutsche Bank.........................................10
Deutsche Telekom..................................15
Disney.............................................................12
Ecom Agroindustrial.............................10
Ernst & Young..........................................10
ExIm Bank......................................................8
Facebook..................................................4,14
Fairchild Semiconductor.....................16
Fluoptics.......................................................10
FremantleMedia.......................................14
GPIF.................................................................16
Galp..................................................................12
General Electric .......................................17
Glencore........................................................14
Go-jek.............................................................16
Goldman Sachs..................................14,20
Google..............................................................4
Grab.................................................................16
Gruner + Jahr............................................14
Gunvor...........................................................14
Hargreaves Lansdown...........................7
Hewlett-Packard......................................10
Hong Kong Stock Exchange............17
Hotchalk.......................................................14
Huawei...........................................................17
Hyatt Hotels...............................................21
IBM...................................................................16
Imagination Technologies..................21
Intel..................................................................16
Italo..................................................................15
JPMorgan.....................................................12
Jackson National Life.............................7
Jaguar Land Rover................................14
Kimberly-Clark...........................................21
Kuwait Investment Authority..........22
LVMH..............................................................17
Lidl....................................................................12
Lincoln Financial........................................7
Los Angeles Dodgers.............................6
Lumber Liquidators...............................21
L’Oréal...........................................................10
Managed Account Advisors............20
Marriott....................................................12,13
MediaCom....................................................10
Mediaset........................................................15
Mediobanca.................................................15
Mercanta......................................................10
Merlin..............................................................21
MetLife.............................................................7
Micro Focus.................................................17
Microsoft.................................................10,16
Morgan Stanley.......................................20
Morgan Stanley Smith Barney.......20
Morrison........................................................12
Nasdaq...........................................................17
Neumann......................................................10
New York Stock Exchange................17
Nintendo..................................................12,13
Noble Group...............................................14
Norinchukin.................................................16
Oak Hill Advisors...................................20
Olam................................................................10
Orange...........................................................15
Palantir Technologies.............................1
Pandora.........................................................15
Pearson.........................................................14
Penguin Random House.....................14
Petrobras..................................................6,12
Priceline.........................................................21
Procter & Gamble...................................10
Proxinvest....................................................17
RTL..................................................................14
Realeyes.......................................................10
Relias Learning.........................................14
Royal Bank of Scotland .....................16
Royal Dutch Shell...................................14
Russell Reynolds Associates............17
Sainsbury......................................................12
Seattle Mariners.........................................6
Serena Software.......................................17
Société Générale.........................................1
Spartoo..........................................................10
Sports Direct..............................................21
Spotify............................................................15
St James’s Place........................................7
Starwood Hotels.................................12,13
State Street................................................20
Stifel..................................................................7
Strategic Hotels.......................................13
Tampa Bay Rays.......................................6
Tata.................................................................14
Telecom Italia............................................15
Tencent.........................................................12
Tesco...............................................................12
Tetley Tea...................................................14
Thomas Cook.............................................21
Toshiba..........................................................13
Trafigura.......................................................14
Tui.....................................................................21
Twitter.............................................................4
UBS.....................................................................1
Uber.................................................................16
Udacity..........................................................14
United Continental.................................21
Valeant.........................................................20
Vanguard.....................................................20
Veolia..............................................................17
Vitol.................................................................14
Vivendi...........................................................15
Vodafone......................................................14
Volcafe...........................................................10
Volkswagen................................................10
Warburg Pincus........................................16
Wells Fargo................................................20
Wind................................................................15
Worldpay......................................................16
Wyndham Worldwide............................21
Wynn Resorts............................................21
YouTube.............................................4,14,15
ZTE...................................................................17
Zheshang Bank.........................................17
Sectors
Banks........................................................1,8,12
Energy............................................................14
Financial Services...................................20
Financials..................12,16,16,17,20,21,22
Food & Beverage..............................10,17
Industrials.....................................................17
Media.....................................................4,12,15
Oil & Gas..........................................12,20,22
Personal & Household Goods.........17
Pharmaceuticals......................................20
Retail & Consumer..................................12
Technology......................................13,16,17
Telecoms.................................................15,17
Travel & Leisure.............................6,12,13
Utilities...........................................................17
People
Acito, Chris.................................................20
Ashley, Mike...............................................21
Berlusconi, Silvio......................................15
Bolloré, Vincent........................................15
Cattaneo, Flavio.......................................15
Dimon, Jamie..............................................12
Gaymard, Clara.........................................17
Grove, Andy................................................16
Hurst, Stephen.........................................10
Ibarra, Maximo..........................................15
Jaatma, Mihkel..........................................10
Jobs, Steve..................................................16
Kotak, Uday................................................14
Loosemore, Kevin....................................17
Makarim, Nadiem....................................16
Mitani, Takahiro.......................................16
Moore, Gordon..........................................16
Muromachi, Masashi..............................13
Noyce, Robert............................................16
Obermann, René......................................15
Patuano, Marco.........................................15
Rabe, Thomas...........................................14
Sanglé-Ferrière, Marc............................17
Shanghvi, Dilip..........................................14
Takahashi, Norihiro................................16
Tanaka, Hisao............................................13
Taylor, Ian....................................................14
Timchenko, Gennady............................14
Törnqvist, Torbjörn...............................14
Zuckerberg, Mark......................................4

© The Financial Times Limited 2016 Week 12

14 ★ FINANCIAL TIMES Wednesday 23 March 2016

COMPANIES
INSIDE BUSINESS
Oil & gas
ASIA

Oil rout lifts Vitol and Gunvor earnings James

Traders report net income
of more than $1.2bn in
wake of crude supply glut
DAVID SHEPPARD AND NEIL HUME
Two of the world’s biggest independent
oil traders emerged as winners from the
oil price crash yesterday by reporting
some of their best profits to date.
Vitol and Gunvor, two private compa-
from cash-strapped crude producers.
The results from the two companies
illustrate how fleet-footed traders have
prospered during the oil price rout,
which has put severe pressure on the
budgets of countries that export crude,
and forced listed energy companies to
delay or cancel projects worth hundreds
of billions of dollars.
Glencore, Noble Group and Trafigura
have also reported strong results from
oil trading last year.
While Vitol did not outline its full year
profit for 2015, figures obtained by the
Financial Times show the company gen-
erated net income of $1.25bn in the nine
months to September 30 — one of its
strongest results.
Ian Taylor, Vitol’s chief executive,
said last month that the company’s net
profit for 2015 would be higher than the
$1.35bn recorded for 2014.
Mr Taylor urged caution however,
saying the low oil price was raising con-
Crabtree
where it once had a market-leading
position, handling about one-third of
the country’s seaborne oil exports.
“We’ve seen an increase in volumes,
an increase in earnings from trading,
Case is strong for new
and continued geographic diversifica-
tion,” said Torbjörn Törnqvist, Gunvor’s
bullishness in India’s
13%
chief executive and majority share-
holder. “We’re very well-positioned to
operate in current market conditions.”
corporate sector
The increase in Gunvor’s retreat from Russia has
Vitol’s oil shipments accelerated since 2014 when the US
to a record 6m

nies that between them shipped almost
10 per cent of the world’s oil last year,
each reported net income of more than
$1.2bn for 2015.
The supply glut that caused oil
prices to plunge opened up profitable
arbitrage and storage opportunities
for Vitol and Gunvor, as well as chances
to pick up discounted crude
Vitol’s oil shipments rose 13 per cent cerns about the creditworthiness of
to a record 6m barrels of oil per day in trading partners.
2015, as it became the biggest trader of Gunvor, meanwhile, reported a
rising crude exports from Iraqi Kurdis- record $1.25bn of net income for 2015 —
tan. boosted by asset sales in Russia and
Shipments of 6m b/d would be favourable market conditions for its
enough to meet the daily oil needs of trading arm and refineries.
France, Germany, Switzerland and the It came as Gunvor refocused its busi-
UK combined. ness, selling assets in Russia last year,
Media. Growth push
imposed sanctions on Gennady Tim-
barrels per day
last year chenko, its Russian co-founder, for his
alleged ties to President Vladimir Putin.
Gunvor has always strongly denied any
6m b/d links to Mr Putin or the Kremlin.
Vitol’s 2015 Mr Timchenko sold his 43 per cent
shipments, enough
to meet daily needs stake in Gunvor to Mr Törnqvist before
of France, Germany, US sanctions in March 2014, allowing
Switzerland and UK the company to continue trading freely.
W
hatever happened to the India bulls? Ram-
pant during the mid-2000s stock market
boom, these Indian business optimists
seem all but extinct. In their place, inves-
tors preach a gospel of weary caution,
bruised by a decade of anaemic commercial performance.
This is hardly surprising. Corporate India remains sub-
dued, even though confidence in India’s economy has
perked up since its growth rate overtook China’s and other
big emerging economies by staying above 7 per cent. Com-
pany earnings have been lacklustre for years. Equity mar-
kets go up, only to come back down again. Many old-style
conglomerates, once a dominant force, are struggling with
leverage. Bank balance sheets sag under bad loans.
Worse, lenders and politicians alike seem powerless to

Bertelsmann on hunt for big acquisitions
German publisher is planning
deals of up to €1.3bn a year as
it steps up digital expansion
GUY CHAZAN — BERLIN
Bertelsmann says it will spend up to
€1.3bn a year until 2020 on acquisi-
tions, as Europe’s largest media group
looks to accelerate its shift from tradi-
tional publishing to digital video and
online education.
Thomas Rabe, chief executive, told
the Financial Times the company would
increase its stake in Penguin Random
House, if co-owner Pearson exercises its
option to sell its 47 per cent share in the
company next year.
Bertelsmann would also build out the
digital businesses of RTL, the European
broadcaster it controls, and of Gruner +
Jahr, publisher of magazines such as
Stern and Geo. Mr Rabe also said it
would raise its stakes in e-learning com-
panies Hotchalk and Udacity over the
longer term.
Mr Rabe also wants to expand Relias
Learning, the US provider of online
healthcare education, into the UK,
where it would offer training to National
Mr Rabe insists that
linear TV ‘continues to
be the only media that
has mass reach’
Health Service staff. The company is
targeting €1bn in revenues from its edu-
cation arm in the medium term.
“We have the potential to invest
€1bn-€1.3bn every year . . . without
raising more debt than would be healthy
for the company long-term,” Mr Rabe
says in an interview at the company’s
Berlin office.
But he acknowledges that the planned
spending is contingent on future profits.
“Clearly the requirement is that we
maintain a very high level of profitabil-
ity and cash generation, because these
long term are the only sources of fund-
ing [we have] as a private company,” he
says.
Since taking the helm of the group in
2012, Mr Rabe has sought to reinvent it
as a digitally focused new media com-
pany, while also scaling up its publishing
business.
It is a bold departure for a venerable
institution that was founded by Carl
Bertelsmann as a publisher of hymn
books in 1835 and has for decades been
controlled by a single family, the Mohns.
Bertelsmann On Mr Rabe’s watch, Bertelsmann
plans to build shut down its German book club — a
out Gruner + potent symbol of the more traditional
Jahr, publisher part of its business. It merged Random
of magazines House, its book division, with Penguin
such as Stern to create the world’s biggest publisher
and Geo, as well by sales. It took full control of BMG, the
as boosting its music rights company.
online offerings The company has also made big for-
— Krisztian Bocsi/Bloomberg
ays into digital. RTL has spent hundreds
of millions of euros buying multichan-
nel networks such as StyleHaul, home of
British blogger Zoella, and Canada’s
Broadband TV, one of the largest net-
works on YouTube. It also acquired a
stake in digital advertising marketplace
SpotXchange in 2014.
Mr Rabe admits Bertelsmann’s
YouTube networks are still operating at
a loss. But he believes that will change as
revenue from product placement,
ecommerce and merchandising begin to
flow in.
Either way, it is essential, he said, to
keep up with the shift in TV consump-
tion habits towards apps and on-
demand viewing.
“It’s absolutely essential that our
broadcasters are present in the non-lin-
ear space — catch-up services, mul-
tichannel networks and on Facebook,
YouTube and other platforms for short-
form video,” he says.
As digital video grows, some analysts
see the future of “linear” TV — broad-
casting in real time — as increasingly
uncertain. The company has been hit by
one effect of the trend: FremantleMedia,
RTL’s production arm, has seen a decline
in audiences and earnings for American
Idol, its once dominant reality-TV pro-
gramme.
RTL has searched for new formulas,
such as Deutschland 83, a spy story set in
the cold war that has enjoyed interna-
tional success, including in the US. But
viewing figures in its home German
market have been underwhelming.
Mr Rabe insists that linear TV “con-
tinues to be the only media that has
mass reach and the ability to build a
brand campaign for advertisers”.
That is reflected in RTL’s results for
2015. The company’s digital revenues
increased 72 per cent to more than
€500m but that represents just 8 per
cent of its total revenues for the year, of
€6bn.
Bertelsmann’s results show some
progress. The company reported yester-
day full-year earnings before interest,
tax, depreciation and amortisation from
continuing operations up 4.7 per cent to
€2.5bn, the highest level since 2006.
Revenues were up 2.8 per cent at €17bn.
The company says it expects to reach
€20bn in revenues by 2020, though the
timing depends on investments, acqui-
sitions and market dynamics.
Meanwhile, Mr Rabe says Bertels-
mann had been approached by a “large
number” of institutional investors and
family officers interested in taking a
stake in Penguin Random House once
Pearson quits. Bertelsmann itself would
seek to increase its share of the com-
pany to 70-75 per cent.
The company is a “very attractive
asset” that is cash-generative and paying
a “significant dividend” to shareholders.
“Publishingis pretty sexy,” hesays.
reclaim assets from delinquent, indebted tycoons, with the
ostentatious brewer and airline mogul Vijay Mallya — who
left India all of a sudden for London earlier this month —
only the most egregious example.
Less controversial industrialists, meanwhile, are sitting
on their hands. Private sector investment has tanked. It is
as if corporate India is suffering a collective collapse of
nerve. Given the troubles of the past 10 years, this is under-
standable. But it also seems misplaced. In fact, the case for
a new India bullishness is strong.
Start with the basics. India’s corporate sector is diversi-
fied. Compared with most emerging markets, it does not
rely excessively on any single industry, or commodity.
Compared with China, it has better-governed, more west-
ern-style blue-chips, albeit clustered in sectors such as
pharmaceuticals and consumer goods.
There is also a changing of the guard, as once-dominant
family-owned business houses are eclipsed by new compe-
tition. Some of this comes from foreigners, but more
important are aggressive first-generation entrepreneurs,
such as billionaire banker
Uday Kotak and pharmaceu-
ticals tycoon Dilip Shanghvi.
Much greater
India’s tech sector is espe- reforming zeal
cially compelling. Bangalore,
the IT capital, has shed its
is needed from
image as a mere outsourcing Mr Modi if India
centre. Now it hums with
innovative start-ups. Global
is to succeed
companies, from Royal
Dutch Shell to Goldman Sachs, are pouring funds into new
facilities there, taking advantage of its strengths in
research and new technology.
None of this is to underplay India’s challenges. A more
muscular, export-focused manufacturing sector is clearly
needed. Cleaning up the mess left by Mr Mallya and his ilk
will take time. India’s problems of corruption are also far
from behind it — especially at the state and local level.
Still, the last decade of ruinous lending and borrowing is
unlikely to be repeated. Prime minister Narendra Modi
also deserves credit for ending most of the larceny in New
Delhi that so tarred the country’s reputation under its last
government. One billionaire industrialist, speaking on
condition of anonymity, puts it thus: “I no longer fear wak-
ing up to learn about a regulation which mysteriously
damages my companies, but happens to help my competi-
tors.” Other sectors notorious for tawdry practices, such as
liquor or natural resources, are being cleaned up, as well.
This has global implications. For foreign investors, India
remains a tricky market, as the regulatory wrangles of
Cairn Energy and Vodafone show. Now, India’s red tape
should get at least a little less onerous, as Mr Modi tries to
curb his country’s worst bureaucratic excesses.
Indian companies have good prospects abroad, too. In
the mid-2000s, the likes of Tata went global in a big rush,
snapping up assets in western economies, from Jaguar
Land Rover to Tetley Tea. But, over the next few years, a
new moment of Indian international expansion is likely,
albeit one in which companies will focus their efforts not
on the west, but in low-cost economies in Asia and Africa,
where business conditions often mirror those at home.
Some economists argue the “Indo-African” rim will, over
time, supplant its Pacific equivalent at the heart of global
trade growth, with Indian companies at the fore.
All this is no cause for hubris. Much greater reforming
zeal is needed from Mr Modi if India is to succeed. Tycoons
must also be persuaded not to slip back into the comforta-
ble crony capitalism of old. But if this is avoided, there are
good reasons to be sanguine about Asia’s second largest
emerging economy. Those India bulls may look extinct —
but don’t be surprised if they reappear soon enough.
james.crabtree@ft.com

Technology Energy

FBI offered back door into gunman’s iPhone
TIM BRADSHAW — SAN FRANCISCO
US authorities believe they may have
found a way to unlock the San Ber-
nardino gunman’s iPhone without
Apple’s help, prompting the cancella-
tion of court proceedings scheduled for
yesterday.
The government said on Monday after-
noon that an unnamed “outside party”
had come forward with a way to circum-
vent Apple’s security software at the
weekend. The development could end
the fraught legal stand-off between US
authorities and the world’s most valua-
ble company.
FBI investigators have spent months
trying to gain access to an iPhone 5c
used by Syed Rizwan Farook before he
and his wife Tashfeen Malik killed 14
people in southern California last
December.
The Department of Justice obtained a
court order in mid-February to force
Apple to write software to ensure the
iPhone did not erase its contents as
investigators attempted to guess its
passcode. The FBI has said the device
may contain information that will lead
to other terrorists or prevent attacks.
Apple has resisted the demand that it
build what Tim Cook, chief executive,
has called a “back door”, triggering an
increasingly bitter row with the govern-
ment. The first court hearing since the
order was issued had been scheduled for
1pm yesterday.
In its original request for that order,
the government said the “assistance
sought can only be provided by Apple”
which had the “exclusive technical
means” it required.
On Monday afternoon, however, the
government filed a motion asking for an
indefinite postponement after receiving
an offer of help prompted by the “world-
wide publicity and attention” the case
has attracted.
A law enforcement official said the
offer came from outside the US govern-
ment but declined to elaborate on who
was providing it or the new way to gain
access to the iPhone.
“On Sunday, March 20, 2016, an out-
side party demonstrated to the FBI a
possible method for unlocking Farook’s
iPhone,” the government’s lawyers
wrote. “Testing is required to determine
whether it is a viable method that will
not compromise data on Farook’s
iPhone. If the method is viable, it should
eliminate the need for the assistance
from Apple set forth in the All Writs Act
Order in this case.”
The government must file a status
report by April 5.
Abengoa secures €137m in emergency loans
ALISTAIR DAWBER — MADRID
Abengoa, the struggling Spanish
renewable energy group, raised €137m
in emergency loans yesterday ahead of
a court hearing that it hopes will give it
more time to persuade investors to
agree to restructuring proposals.
Abengoa has been negotiating ways to
cut its borrowings for months as it strug-
gles to avoid bankruptcy. In the interim,
it has stretched to the extent that it had
to delay paying staff wages last month.
It has until Sunday to convince credi-
tors holding 60 per cent of its debt to
agree to a seven-month standstill, which
would give it more breathing space.
If a judge in its home city of Seville is
satisfied at a scheduled hearing on Mon-
day that the company has sufficient
support, the court may be persuaded to
grant Abengoa extra time. It needs
backing from 75 per cent of creditors for
its full-scale restructuring plan, and
about 40 per cent have already given
their approval.
Yesterday’s capital raising was evi-
dence, a source close to the company
said, that lenders are supportive. The
money, provided by several funds, will
be used for working capital, specifically
to pay suppliers and its workers’ salaries
in March.
“Nobody wants this company to
go bankrupt, and the backing from
existing lenders is a clear indication
‘Nobody wants this
company to go bankrupt
and the backing . . . is [an]
indication it has support’
that it has support,” the source said.
The company declined to comment,
but it is expected to get the backing of
the 60 per cent of lenders it needs for the
standstill. “They have had indications
that they already have the 60 per cent of
support they need for Monday’s hear-
ing,” the source said.
Under the restructuring proposals,
Abengoa, which has €9.4bn of corporate
debt, would receive between €1.5bn and
€1.8bn in fresh liquidity. In return,
those lenders would receive 55 per cent
of the equity in the company. Existing
creditors, who face a 70 per cent haircut
as part of the deal, would get 35 per cent
of the shares in compensation. The
shareholding of the founding family will
fall to 5 per cent. Last week, Moody’s
said a failure to reach an agreement by
March 28 “would highly likely lead to a
formal insolvency process”.
Wednesday 23 March 2016
Telecom Italia left guessing after Bolloré moves
Vivendi and its
biggest shareholder
stoke national angst
by ramping up stake
in operator and
ousting its chief
RACHEL SANDERSON — MILAN
ADAM THOMSON — PARIS
For the best part of a year, French indus-
trialist Vincent Bolloré and his Vivendi
group have spent a lot of time focused
on Telecom Italia, ramping up their
stake in the group and leaving its execu-
tives fearful as to when they would push
for changes at the company.
That moment came this week as Mr
Bolloré and Vivendi, the Paris-based
media and content group, ousted
Marco Patuano, Telecom Italia’s chief
executive.
The move has injected renewed
urgency into a question that has long
spooked not only the close-knit world of
Italian business but even the govern-
ment itself: what is Mr Bolloré up to?
The French businessman, who
started his empire by rescuing the fami-
ly-owned mill that manufactured paper
for cigarettes and bibles, has long had an
Italian presence. He joined the board of
Mediobanca, the Milanese investment
bank that once sat at the centre of a web
of shareholdings criss-crossing Italy’s
financial system, in 1991.
Alongside Telecom Italia, he has
opened another front via Mediaset, the
business of Silvio Berlusconi, the former
prime minister.
Mr Berlusconi, who has barely been
seen in public in Italy in the past year,
has ruled out a sale but has admitted he
is in talks over a possible content deal.
“Vivendi has a vision for the future of
Europe, and it is possible we shall find
means to collaborate,” Mr Berlusconi
told radio show Rtl 102.5 on Monday.
Mr Bolloré’s latest Italian campaign
has caught the government and busi-
ness community by surprise — not least
because it comes at a delicate moment
in a country battered and weakened by
the eurozone debt crisis.
Capturing the national angst, Mas-
simo Mucchetti, a former journalist
turned politician who chairs Italy’s
industry committee, has called for the
state to nationalise Telecom Italia’s net-
work to protect it from foreign control.
Italian officials privately admit frus-
tration at Mr Bolloré’s creeping takeover
of Telecom Italia without paying a take-
over premium. Discussions have even
taken place about the Cassa Depositi e
Prestiti, a fund owned by the Italian
Treasury, taking a stake in the group,
according to people with direct knowl-
edge of the talks.
Vivendi, which owns 24.9 per cent of
Telecom Italia and occupies four of its 17
board seats, is unfazed: people familiar
with the French group’s thinking say
that Mr Patuano had to go.
“The plan he was pushing was com-
pletely disconnected from Vivendi’s
ambition for the company,” said one of
the people. “When you sit down to write
a new chapter, you need an author and
Patuano didn’t want to write.” The per-
son added that there were multiple
Media
US music streaming revenues surge
past digital downloads for first time
SHANNON BOND — NEW YORK
Music streaming services have dis-
placed digital downloads as the largest
source of revenue in the industry’s big-
gest market, according to new data
from the Recording Industry Associa-
tion of America (RIAA).
US revenues from streaming providers
such as Spotify, Apple Music and Pan-
dora grew 29 per cent in 2015 to
$2.41bn, accounting for 34.3 per cent of
total industry revenues. It was the first
time total streaming revenues passed
$2bn as every segment of the market
grew.
That ended the decade-long reign of
digital downloads, which have been in
decline for years. In 2015, download rev-
enue fell 10 per cent to $2.3bn, equiva-
lent to 34 per cent of industry sales.
Sales of physical formats also slipped
10 per cent to $2bn, making up 28.8 per
cent of total revenue. Another strong
year for vinyl LP sales — up 32 per cent
to $416m, the highest level since 1988 —
could not offset a 17 per cent drop in
sales of CDs.
Across the US music industry, retail
sales rose 0.9 per cent to $7bn.
“The music industry is now a digital
business, deriving more than 70 per
Industrialist’s interests
Vincent Bolloré’s wide reach*
Stake
Italy
24.9%
Vivendi owns a 24.9%
stake in Telecom Italia
1.6%
France
38.7%
France
Italy
FT graphic Source: FT research * Selected investments
problems, starting with Telecom Italia’s
poor performance and the inability to
lift the top line. “When you think about
what has happened in the telecoms sec-
tor over the past 20 years, you can only
say that Telecom Italia has stepped back
rather than grown.”
The company’s strategy in Brazil was
also a sore point. Last month, Mr Patu-
ano highlighted challenging conditions
in the recession-hit country — where
Telecom Italia owns the second-biggest
24.9% €3.5bn
Vivendi’s stake in Sum the group
Telecom Italia. It spent in recent
also occupies four months building
board seats up its stake
cent of its revenues from a wide array of
digital platforms and formats. The share
of revenues from those digital formats
surpasses that of any other creative
industry,” said Cary Sherman, chairman
and chief executive of RIAA.
As streaming becomes the dominant
form of digital music consumption, paid
subscription services are the largest and
fastest-growing part of the market, with
an extra boost last year from new serv-
ices including Apple Music and Tidal,
the artist-owned service led by hip hop
musician Jay Z.
The number of paying subscribers to
streaming services jumped 40 per cent
to 10.8m last year, generating more than
Drake was one of the top five most
popular artists on Spotify last year
★ FINANCIAL TIMES 15
COMPANIES
But getting long-term value out of
lossmaking Telecom Italia is no simple
task. It has lower revenue per employee
than other European operators. The
14.5% 21.4%
company also needs huge investment in
its domestic market.
The group has a new three-year plan
to boost Italian capital expenditure to
€12bn from now until 2018, but analysts
say that this is a fraction of the invest-
ment its fixed-line network requires.
Only 7.6 per cent of its broadband cus-
France tomers are on fibre lines compared with
19 per cent at Orange and Deutsche Tel-
ekom’s 35 per cent.
9.6% Bankers suggest that Mr Bolloré’s
intention may be to put in place a chief
executive who will sell Telecom Italia’s
Brazilian business to release cash. Nuno
Bolloré Matias of Haitong Research suggests
that a new management could push for a
Other sale to “reduce leverage and concen-
trate its efforts on a domestic turn-
Vincent Bolloré, head of French round”.
Industrial group Bolloré However, the collapse in the Brazilian
Photo: AFP/Getty
Officials admit frustration
at Mr Bolloré’s creeping
France
takeover without paying
a takeover premium
economy has made any potential sale
60% less appealing.
Charles Bedouelle, an Exane BNP
Paribas analyst, wrote this week: “We
are convinced that Bolloré/Vivendi is
exactly the type of shareholder TI needs
to navigate through investment, growth
and debt deleveraging.”
Given Mr Bolloré’s reputation as a
superlative trader, industry insiders do
not rule out the possibility that his ulti-
7.9% 0.1% mate aim may be entirely different.
Bankers point out that should Orange
seek to buy Telecom Italia — the French
France telecoms company has mentioned the
group more than once, and such an out-
come supported by some in the Italian
government — Mr Bolloré would
Mediobanca become a core shareholder of the
owns a 13% merged group giving him additional
stake in Generali clout back in France.
Italy Whatever his ultimate intention, Mr
Bolloré for now appears more than
happy to keep Italy guessing.
operator — as weighing heavily on the
group.
The person familiar with Vivendi’s
thinking said the French group had lost
confidence that he had a convincing
strategy to turn the situation round.
René Obermann, former chief execu-
tive of Deutsche Telekom, and Maximo
Ibarra of Wind telecoms group, are
understood to be potential replace-
ments. Meanwhile, people close to Tele-
com Italia have tipped Flavio Cattaneo,
former chief executive of Italian state
broadcaster RAI who is chief executive
of high-speed train group Italo.
Vivendi sees Telecom Italia as a
vital element in its aim to build a Euro-
pean content and media powerhouse,
with France, Italy and Spain as its
foundation.
Mr Bolloré’s group has spent more
than €3.5bn in recent months building
its initial stake — even though Telecom
Italia shares are down sharply from
when Vivendi began increasing its
stake. “Vivendi doesn’t care about what
the share price is today,” said the person.
“It is a long-term investor.”
$1bn in revenue for the first time, the
RIAA said. The top five most popular
artists on Spotify last year were Drake,
The Weekend, Kanye West, Ed Sheeran
and Eminem.
Spotify, one of the leading streaming
music companies, hit 28m paying global
subscribers in 2015 and is closing in on
30m. Apple Music passed 10m subscrib-
ers in the six months since its June
launch. But the shift to streaming has
also stoked tension between artists and
music companies, with big stars includ-
ing Taylor Swift and Adele withholding
their work from some services.
“The consumption of music is sky-
rocketing, but revenues for creators
have not kept pace,” Mr Sherman said.
He noted that on-demand ad-sup-
ported services such as YouTube saw
streams more than double in 2015 from
the year before — but the revenue they
generated grew just 31 per cent.
“This is why we, and so many of our
music community brethren, feel that
some technology giants have been
enriching themselves at the expense of
the people who actually create the
music,” he said. “Reforms are necessary
to level the playing field and ensure that
the entire music community derives the
full and fair value of our work.”
16 ★ FINANCIAL TIMES Wednesday 23 March 2016

COMPANIES

Technology

Indonesia to clamp down on taxi apps after protests

Operators such as Uber Some 12,000 protesters, including transport regulations, which do not describing the taxi apps as “innova- The conflicts began last year when the 35 per cent in the past year to Rp6,400.
taxi and autorickshaw drivers, flooded cover ride-hailing apps. tions” that were “needed by the people”. Organisation of Land Transportation Groups from Malaysia-based Grab to
and Grab face shake-up on to the streets of the capital, brandish- “It was just unimaginable that the Competition in the industry has Owners, a Jakarta-based association, Go-jek, the ride-hailing app for motor-
of industry regulation ing Indonesian flags and banners calling progress of technology would be this grown heated since Uber launched in filed a complaint claiming Uber and its cycles, spoke out against the violence,
for the ride-hailing businesses to be fast,” he said. “Banning these apps will Jakarta in 2014, driving down taxi fares app rivals should be deemed illegal. imploring drivers that use their plat-
AVANTIKA CHILKOTI AND banned. Television footage and social not solve the problem.” in congested cities such as Jakarta. Critics say the US group should secure forms not to take part in the protests.
TAUFAN HIDAYAT— JAKARTA media images showed mobs attacking Mr Panjaitan said that new tech a taxi licence and pay taxes. However, “When there was terror act, we
taxis that chose not to take part in the groups in the sector should be registered Uber insists it complies with local regu- helped evacuate people,” Go-jek
Indonesia’s President Joko Widodo has protests. Officials say some 83 people as “legal entities” in the country, have
‘When Jakarta was hit by lations and will only pay taxes once it is founder, Nadiem Makarim, wrote in a
ordered a shake-up of regulations were arrested. “proper permits” and pay tax. the floods, we were there registered as a foreign investor. letter to drivers. “When Jakarta was hit
covering the taxi industry after violent Luhut Panjaitan, co-ordinating min- Yesterday’s protests follow months of Blue Bird, a local family-run taxi by the floods, we were there for the com-
protests against ride-hailing apps such ister for political, legal and security policy flip-flop on the issue. In Decem-
for the community’ operator, pledged to offer passengers munity. That good name shouldn’t be
as Uber and Grab yesterday brought affairs, told reporters that ministers ber, the president rolled back a pro- Nadiem Makarim, Go-jek founder free rides today following the disrup- tainted by violence.”
Jakarta to a standstill. would meet today to review existing posed ban on ride-hailing services, tion. Shares in the business have fallen Uber declined to comment.

Obituary Pioneer who turned Intel into a giant of the PC era

Financials

Japan’s ‘largest
hedge fund’
Andy Grove
Former chairman of Intel
appoints new
1936-2016
president
Andy Grove, who died on Monday at 79,
was not one of the technology industry’s LEO LEWIS — TOKYO
household names. But the chemical
The $1.2tn Japanese Government Pen-
engineer who turned Intel from a bril-
sion Investment Fund has named a new
liant science project into the first indus-
president as the once ultra-conserva-
trial giant of the personal computing era
tive state savings manager faces
has long been guaranteed a revered
mounting pressure for transparency
place in Silicon Valley lore.
and continues a historic shift into risk
Grove, who joined Intel in 1968, rose
assets.
to become chief executive at the peak of
its PC industry power, from 1987-98, The world’s largest pension fund named
and served as chairman until 2004. as its new head Norihiro Takahashi — at
He did as much as almost anyone to 58, a career-long executive involved in
shape the computing world that has asset management at the Norinchukin
emerged over the past half century — agricultural bank, and since last June
and, in the process, to define the busi- president of a private leasing company.
ness culture that has taken such a pow- After the GPIF itself, Norinchukin is
erful grip on modern management one of the country’s largest institutional
thinking. investors whose decades of overseas
His personal idiosyncrasies, insecuri- investment and speculation on Wall
ties and passions coalesced into a pow- Street have caused many to refer to it as
erful brew. They included an iconoclas- “Japan’s largest hedge fund”.
tic disregard for the normal conventions The GPIF’s rebalancing of the risk
of business and a win-at-all-costs deter- profile in its portfolio, meanwhile,
mination; a relentless addiction to pre- remains politically sensitive as the
emptive corporate reinvention and the administration of prime minister
merits of moving fast; a taste for gutsy, Shinzo Abe prepares to fight an upper
bet-the-farm risks; and an eye for the house election expected in the summer.
kind of industry domination that new Silicon Valley legend: Andy “The crucial time for PM Abe may
digital technologies made possible. Grove rose to become chief come much earlier than July,” wrote
“Many of the senior statesmen in the executive at the peak of JPMorgan strategist Tohru Sasaki in a
Valley worked for him, many of the Intel’s PC industry power and note to investors where he argued that
[venture capitalists] worked for him,” later served as chairman the government has a strong incentive
says David Yoffie, an Intel director Alain BUU/Gamma-Rapho via Getty
to support the stock market.
from the late 1980s and a professor at “The GPIF is likely to suffer signifi-
Harvard Business School. “In some cant unrealised losses in their portfolio.
sense, his career was the story of Silicon Grove was one of the great business more successful you are, the more peo- pany unassailable economies of scale ers Gordon Moore and Robert Noyce, it Bad news [for the Abe administration]
Valley.” communicators, despite a thick accent ple want a chunk of your business and and cement its lead. was his ability to get things done that is that the official investment results of
Grove was the classic outsider who that remained with him and a hearing then another chunk and then another IBM, at the time its biggest customer made him invaluable. GPIF is likely to be released . . . just
found himself in the computing world impediment from early in life. until there is nothing left.” Many man- and the originator of the PC, was against He had followed a postgraduate before the upper house election.”
that came to life in the 1960s. He was He also translated his thinking into agers may sense this truism. Few have the move. But Grove remained firm and degree at the University of California, Many remain critical of the effort to
born András Gróf in Hungary on Sep- some of the most influential manage- the guts to do something about it. the rapid emergence of a new industry, Berkeley with a job as a research scien- coax the GPIF into riskier investment
tember 2 1936. His father was con- ment books of the late 20th century. The paranoia was not just for show. “I led by Compaq Computer, provided a tist at Fairchild Semiconductor, Silicon strategies. Earlier this month, the fund
scripted into a Jewish labour battalion One — Only the Paranoid Survive — sat in many, many meetings with Andy ready market. IBM’s grip on the com- Valley’s original chipmaker. But he reported a $42bn gain for the October to
during the second world war while he became a mantra not just for Grove but while he looked at the worst outcome, puting world was broken and Intel — came into his own as an operational gen- December 2015 period: a welcome gain,
and his mother moved around Hungary for the whole of Silicon Valley, where the and what could possibly go wrong,” says along with Microsoft — had turned itself ius, turning the cottage industry that but one unlikely to be repeated in the
to avoid detention and the fate that threat of being disrupted by the next Mr Yoffie. He adds that it was this into one of the tech industry’s dominant was chipmaking into one of the most current quarter where Japanese shares
befell many Hungarian Jews who were new upstart engendered persistent refusal to rest on past success — and the monopolists. demanding of high-tech sectors. have fallen more than 11 per cent since
rounded up and sent to Auschwitz. anxiety. ability to see how the various pieces of Grove showed a similar determina- As with Steve Jobs at Apple, Grove’s the start of January.
It was after the Hungarian uprising of As he wrote in the opening lines: “The the business world would fall into place tion when, assailed by competition from rages became famous, and his treat- Effective from April 1, Mr Takahashi
1956 was brutally suppressed by the — that enabled Grove to take the pre- Japan, he decided to abandon memory ment of subordinates could be vicious. will replace Takahiro Mitani, 67, who
Soviet Union that Grove fled the coun- emptive actions needed to put Intel at chips, the company’s original business, But the tempers never undermined his navigated the GPIF through the reforms
try, escaping by foot into Austria and
‘He had a talent for the top of its industry. to bet everything on microprocessors. drive. “He had a talent for pushing peo- of the post-2012 “Abenomics” era, the
then a new life in the US. pushing people harder Perhaps the most significant was But if he got the big strategic decisions ple harder than they had ever been attempts by the Bank of Japan to end
He never went back. Instead, arriving Grove’s determination to make Intel the right, Grove was as well known for a pushed before — and for making people deflation, and the most radical changes
in Silicon Valley at the start of the 1960s,
than they had ever sole source for the new PC microproces- relentless attention to detail and a mer- want to please him,” says Mr Yoffie. “He in the fund’s history.
he was catapulted into a future that he been pushed before’ sors, rather than just one of several sup- cilessly demanding management style. was such a hard man to please.” The most striking among those
helped to invent. pliers — a move that was to give the com- Hired as Intel’s first employee by found- Richard Waters changes was the reduction in the fund’s
allocation of domestic bond investment
from 67 per cent in 2012 to below 38 per
cent as of December 2015.
Public Notice Contracts & Tenders Financials The balance of domestic shares in the
portfolio has doubled to 23.4 per cent

Advent drops ‘hurdle’ rate with $13bn fund
JOSEPH COTTERILL — LONDON
Advent International, the global pri-
vate equity group, has taken the unu-
sual step of raising its latest $13bn buy-
out fund without offering minimum
returns to backers.
The move, which will allow Advent to
keep more of the profits it makes on
deals, follows an increasing trend in the
buyout industry to drop so-called “hur-
dle” rates as pension funds and other
institutional investors clamour to place
more of their assets in the biggest and
Businesses For Sale best funds.
The Boston and London-based group
said yesterday that it had hit its target
for the new fund, which will invest glo-
bally, after six months in the market.
“We had a high demand from our
existing [investors],” said James Brock-
lebank, an Advent managing partner.
More than nine-tenths of Advent’s
current backers invested in the new
vehicle, which was oversubscribed with
$20bn of demand. “A number of inves-
tors are looking to concentrate their
firepower in a few top-performing
funds,” Mr Brocklebank said.
Business for Sale, Business Opportunities, Business Services,
Business Wanted, Franchises
Investors in most private equity funds
Runs Daily usually receive a preferred return of 8
......................................................................................................................................................................................................................................................................... per cent on deals, before fund managers
Classified Business Advertising can begin earning carried interest, their
UK: +44 20 7873 4000 | Email: acs.emea@ft.com
20 per cent share of the profits.
These hurdles are meant to reward
investors for sticking with buyout funds
over several years, and to ensure man-
agers work to outperform the public
markets.
Some managers and investors think 8
per cent is a relic of times when base
interest rates were much higher, and
that there are other ways than hurdle
rates to ensure a manager does not take
an overly large share of profits.
“If they are really good, [managers]
should be charging more carry, while
keeping a hurdle rate,” said Ludovic
Phalippou, an associate professor of
finance at Oxford’s Saïd Business
School. “Twenty per cent over zero is
not something people should be com-
fortable with.”
Despite the median hurdle rate of 8
per cent in funds raised as of September
last year, the mean was 6.2 per cent ver-
Advent led the largest IPO in the UK
in years when it listed Worldpay
since Mr Abe became prime minister
and launched an economic revival pro-
gramme whose aims include boosting
individual investment in stocks.
sus 7.7 per cent in 2012, reflecting the In a recent note to investors, Yujiro
rise of vehicles with no hurdle, accord- Goto, an FX strategist at Nomura, said
ing to the data provider Preqin. global market turmoil earlier in the year
Some established houses such as War- had been negative for the GPIF portfolio
burg Pincus have never used hurdle and estimated that the share of riskier
rates, but they have been in a minority assets had fallen. The domestic bond
and it has been rare for groups to change share, he added, was probably back
policy between funds. Warburg above 40 per cent now, as foreign and
declined to comment. Past Advent domestic equity shares have declined.
funds have used an 8 per cent hurdle. The search for a successor to Mr
Advent declined to comment on the Mitani has not been straightforward.
terms of its latest fundraising. The lack His five-year term was due to expire at
of a hurdle was disclosed last year to the end of March last year, and he made
potential investors, including docu- little secret of his wish to retire at that
ments prepared for New Jersey state
pension fund managers.
time. He stayed on for an additional
year, however, arguing it would be “irre-
The group has earned a reputation for sponsible” to step down while the hunt
success with turnrounds of unloved for a successor was still on.
businesses often carved out of larger
companies.
Last year, alongside Bain Capital,
Advent led the largest initial public Legal Notices
offering in the UK in several years when
it listed Worldpay, the payment system
they bought together from Royal Bank
of Scotland in 2010.
Across more than 180 investments it
has realised since opening for business
in 1989, Advent had tripled investors’
money as of the middle of last year. A
fund raised in 2005 had returned 2.4
times, among the best of funds from that
year, according to investment reports by
US pension funds.
Wednesday 23 March 2016 ★ FINANCIAL TIMES 17

COMPANIES

Financials Technology

Hong Kong prices first $1bn float for 2016
Zheshang Bank raises The New York Stock Exchange has
not seen a single listing so far this year —
$1.7bn after slowest start
for global IPOs since crisis
its second longest drought on record
after the period following the collapse of
Lehman Brothers in September 2008.
JENNIFER HUGHES — HONG KONG The Hong Kong Stock Exchange has
raised $3.5bn in total so far this year,
Hong Kong has priced the first public putting it ahead of London with $1.8bn
float in the world to raise more than and Nasdaq with $1.2bn.
$1bn in 2016, marking the slowest start But bankers cautioned against read-
to a year for initial public offerings since ing too much into the 2016 success of
the financial crisis in 2009. Hong Kong. Most of the capital raised
Hong Kong is top of the global rank- has been for Chinese regional bank
ings after China’s Zheshang Bank yester- offerings — a sector that often relies on
day raised $1.7bn from its IPO. mainland support more than interest
So far IPOs globally have raised from international investors.
$12.8bn, according to Dealogic — one- Rising bad debts have pushed China’s
third of last year’s total by this point — as banks to seek capital in recent years.
January’s market turmoil rattled inves- Three regional banks listed in Decem-
tor nerves. ber, raising a combined $2.3bn, and, in
CAC 40 index. Gender balance
addition to the Zheshang offering, Bank
of Tianjin this week priced its IPO at
$948m.
Both the Zheshang and Tianjin deals
priced near the low end of their ranges
and both also allotted more than half
their total books to so-called corner-
stones — investors that accept six-
month lock-ups in return for large
stakes.
“[Cornerstone] deals are fairly binary
and often not distributed widely, since if
they’re held tightly, marginal demand
can lift the shares after IPO,” said one
banker.
Cornerstones used to be a means of
attracting interest by attaching mar-
quee names to a prospectus. More
recently, however, many Chinese list-
ings in Hong Kong, particularly state-
owned groups, have relied on what
bankers have dubbed “friends and fam-
ily” such as fellow state owned ener-
prises, to bolster IPO order books.
Bankers are, however, hopeful that
the recent market rally may help stabi-
lise investor appetite, or at least provide
the setting for what one Hong Kong spe-
cialist called “windows of opportunity”
in the coming months.
Since mid-February, the S&P 500 has
gained 12 per cent. The Hang Seng China
Bankers are hopeful
that the recent market
rally may help stabilise
investor appetite
Enterprises index — a closely watched
gauge of mainland-based Hong Kong
blue-chips — has added 16 per cent,
although its level of 8,900 leaves it short
of the 10,000 that equity specialists use
as a rough gauge of strong risk appetite.
Hong Kong’s less flexible IPO rules
make listing in volatile markets harder
than in New York, its perennial rival for
the global capital raising crown. Unlike
the US, where companies can price deals
outside of their stated price ranges,
Hong Kong listings must stick within the
guidance they have given.
They also face a gap of five days
between pricing and trading, which
risks sapping first-day demand.
New York listings price one day and
trade the next, potentially generating
demand.
ZTE to give
details on Iran
sales as US
eases ban
CHARLES CLOVER — BEIJING
SHAWN DONNAN — WASHINGTON
ZTE the Chinese telecoms equipment
maker, has agreed to provide informa-
tion about sales to North Korea and
Iran and enact internal reforms in
return for a temporary lifting of US
sanctions imposed this month, accord-
ing to a senior US official.
The sanctions, announced on March 8,
in effect banned US companies from
supplying one of China’s highest-profile
technology companies. After Huawei,
ZTE is China’s largest exporter of tele-
coms infrastructure, and it is the third-
largest seller of Android smartphones
in the US.
The ban was imposed after an investi-
gation by the commerce department

French boards step up race to appoint top women found this month that ZTE had
“planned and organised a scheme to
establish, control and use a series of
‘detached’ [or shell] companies to illic-
itly re-export controlled items to Iran in
violation of US export control laws”.
Headhunters are increasingly But following weeks of discussions,
the department said yesterday it had
looking abroad to fulfil legal agreed to suspend the sanctions until
quotas as deadline approaches June 30 in return for commitments by
ZTE to disclose the full extent of its sales
to Iran and North Korea and to under-
ADAM THOMSON — PARIS
take internal reforms to comply with
France’s traditionally male-dominated US laws.
companies are scrambling to appoint A senior commerce official told the
women to their boards in time to hit Financial Times ZTE was still the sub-
ambitious legal quotas on female repre- ject of an investigation and could face
sentation by next year’s deadline. further consequences ranging from
Women account for 28 of the 44 board administrative sanctions to a full-brown
appointments that the members of the Justice Department investigation,
CAC 40 index have so far proposed for which could result in criminal charges
approval at their general meetings this against the company and some of its
year, according to proxy adviser Proxin- executives.
vest. “I’m not ruling anything out,” the
But competition for strong candidates official said. “Our action shows no com-
is fierce: Clara Gaymard, who was until pany is too big for sanctions if it flouts
last month the head of General Electric our rules.”
in France, accounts for three of the 28 The agreement does not remove ZTE
appointments, at Danone, LVMH and from the US list of prohibited compa-
Bouygues. She already sits on Veolia’s nies. Instead officials have given it a
board. temporary licence that allows US com-
And in a clear sign that France’s most panies to do business with it. The licence
prominent companies are looking fur- will expire on June 30 unless it is
ther afield, more than half of this year’s extended by US authorities.
female appointees are foreign. According to the order, it will be
A 2011 law requires the CAC 40 renewed only if US officials determine
boards to have women account for at that ZTE and subsidiary ZTE Kangxun
least 40 per cent of their members by are delivering on their promises in a
“timely” fashion and “otherwise co-op-
erating” with the US.
‘If you are a man and you ZTE Kangxun, according to the com-
are looking for a board merce department, facilitated the sup-
ply of US technology to Iran by buying
position in France, well, US equipment and providing it to a Chi-
you are out of luck’ nese intermediary for re-export.
Beijing 8-Star and ZTE Parsian, two
other entities connected to ZTE, remain
next year. The boards are collectively at Steep climb: Companies failing to meet the mini- said Brigitte Lemercier of NB Lemercier 28 Headhunters warn that it will be even on the sanctions list.
about 35 per cent at present. French mum quota by next year will not be & Associés. “We went everywhere.” Number of women harder for companies in other countries Under the measures announced on
But headhunters say competition for companies say allowed to make changes at board level About 30 per cent of all board mem- among 44 board if and when they move to increase the March 8, US manufacturers will be
female non-executive board members is they are finding that do not contribute to meeting the bers of the country’s biggest companies appointments ranks of female board members. banned from selling components to
intensifying as the deadline gets nearer. it harder to target. French business has been ahead are now non-French. proposed this year “It is an advantage to be the first ZTE. In addition foreign manufacturers
“There’s a scarcity of obvious candi- recruit suitable of some European competitors on this “We will have to be a little bit more mover,” Mr Sanglé-Ferrière said. will be prohibited from selling it prod-
dates,” Marc Sanglé-Ferrière, country non-executive issue. creative,” she said. “It is going to require 40% “France is at the forefront of this revolu- ucts containing a significant number of
head of Russell Reynolds Associates in board members According to Russell Reynolds Associ- finding talents that are not so obvious.” Proportion of
tion, and it has really started to change US-made parts.
Paris, told the Financial Times. “This as many strong ates, 30 per cent of board members at Mr Sanglé-Ferrière said solutions would women required on the landscape.” The Chinese company has been in dis-
year is defining and it’s difficult to find candidates have the country’s leading companies in 2014 probably come not only from abroad French boards by Ms Lemercier of NB Lemercier & cussions to lift the bans, which analysts
senior female leaders because many of been snapped were female, compared with 25 per cent but also non-traditional sources such as next year Associés agrees. She also argues that the have said could impose a heavy cost on
them have already been recruited.” up — Simon at leading UK companies and 19 per cent government and academia. effect of women in the boardroom is the company.
“It’s getting harder,” said Lorraine Dawson/Bloomberg
at Germany’s blue-chip companies. One consequence of the shortfall is twofold. First, she said, they take the “ZTE has been working with relevant
Kron du Luart of Eric Salmon & Part- Just 8 per cent of French board mem- pressure on the low salaries — about role very seriously, and second, they US government departments on investi-
ners. “All the board-member recruit- bers were female in 2006. €60,000 a year — that board posts typi- influence the behaviour of the men. gations, maintaining constant commu-
ment we have done recently has been But headhunters say that increasingly cally command. “This year, for the first “In France, we always say that when nication with relevant departments and
women. If you are a man and you are they have had to look beyond France’s time, I met women asking me the ques- women are in a meeting, the men act is committed to fully address and
looking for a board position in France, borders to meet the looming quotas. tion about salaries,” Mr Sanglé-Ferrière more intelligently. And I believe that,” resolve any concerns,” the company
well, you are out of luck.” “We went looking all over the world,” said. “It is starting to matter.” she added. said this month.

Contracts & Tenders

Technology

Micro Focus in $540m move for Serena

MURAD AHMED — EUROPEAN
TECHNOLOGY CORRESPONDENT
Micro Focus is set to buy Serena Soft-
ware in a move worth $540m, as the
Positions British technology group continues to
pursue big deals across the Atlantic.
Available The UK-listed company yesterday
announced that the purchase would be
funded partly through its existing cash
resources, extended credit facilities and
a new share placing that will raise a fur-
ther £150m.
Micro Focus is a rare example of a
large UK tech group that is willing to
engage in big transactions in order to
purchase US groups. In 2014, the com-
pany bought US rival Attachmate, in an
all-share transaction that at the time
valued the combined entity at $2.35bn.
A restructuring following the merger
was completed last year.
Kevin Loosemore, executive chair-
man of Micro Focus, said it had been
FT APPOINTMENTS
“tracking Serena for a number of years”,
adding: “This acquisition is wholly
.............................................................................................................................
Classified Appointments Advertising aligned with our strategy and further
UK: +44 20 7873 4909
US: +1 212 641 4909 strengthens our existing customer and
ASIA: +852 2905 5528 partner offers.”
Micro Focus, which is based in south-
east England, helps large companies
test, maintain and upgrade old IT sys-
tems — a particular problem for sectors
such as financial services, where regula-
tory requirements and history of merg-
ers can leave groups juggling multiple
legacy systems.
Serena, a private company whose
main shareholders include private
equity group HGGC, has headquarters
in San Mateo, California, but is mainly
run through offices in Oregon and St
Albans, in Bedfordshire, England.
It is described as a legacy infrastruc-
ture software group[ providing software
that can track and monitor changes
made to software applications in devel-
opment.
For the latest period where audited
results are available, in the year ending
‘This is in keeping with the
strategy of buying old tech
and then driving the
organisation model better’
January 31 2015, Serena reported reve-
nues of $176.2m and pre-tax profits of
$30.3m.
Unaudited results for the year to Janu-
ary 31 2016 show revenues of about
$162m, although no guidance was pro-
vided on pre-tax profits.
Micro Focus reported revenues of
$809.1m and pre-tax profits of $91.4m
for the year to April 30 2015. The com-
pany said it was “maintaining its guid-
ance for the full year that revenues on a
constant currency basis will decline by
between 2 per cent and 4 per cent when
compared to the prior period”.
George O’Connor, analyst at Panmure
Gordon, said he had “some reservations
on the price paid”, but approved of the
likely deal as Serena had “high levels of
recurring maintenance revenue” and
“this is entirely in keeping with the
Micro Focus strategy of buying old tech
and then driving the organisation model
better”.
Micro Focus said its £150m share
placing would be underwritten by
Numis Securities, with additional debt
and equity finance being arranged by
Barclays, HSBC and Numis.
18 ★ FINANCIAL TIMES Wednesday 23 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 $

-0.12% -0.08% -0.266% -1.250% -1.46%

0.21% 0.48% 0.12% 0.13% 1.94% 0.15% 0.184% 1.023% 0.61%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
2,055.99 13,535.51 9,990.00 17,048.55
6,184.58 1,996.81
9,573.59
1,945.50 12,845.63 5,950.23 1,916.36
15,967.17
Day 0.21% Month 7.18% Year -2.50% Day -0.19% Month 5.30% Year -9.47% Day 0.13% Month 2.56% Year -11.82% Day 0.42% Month 0.57% Year NaN% Day 1.94% Month 6.77% Year -12.84% Day 0.35% Month 4.20% Year -1.98%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
4,832.10 8,992.00 20,666.75 2,880.65
45,417.23 1,338.20
1,306.30 8,387.00 19,464.09
4,570.61 43,375.31 2,660.65
Day 0.48% Month 7.24% Year -3.89% Day -0.14% Month 4.27% Year 3.27% Day -0.12% Month 2.33% Year -17.02% Day -0.32% Month 9.74% Year -21.26% Day -0.08% Month 7.16% Year -15.21% Day 0.00% Month 8.42% Year -15.58%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
50,855.03 25,330.49
17,645.30 18,698.82
4,431.97 2,999.36
4,298.70 2,927.18
17,504.58 23,697.22
16,620.66 43,210.33
Day 0.12% Month 7.61% Year -2.69% Day -0.62% Month 22.47% Year -2.09% Day 0.09% Month 4.95% Year -12.88% Day 0.01% Month 6.82% Year -19.32% Day -0.64% Month 4.87% Year -17.08% Day 0.18% Month 7.11% Year -10.37%

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 12818.85 12937.97 Cyprus
CSE M&P Gen 67.65 68.26 Italy FTSE Italia All-Share 20352.23 20351.44 Philippines Manila Comp 7342.03 7376.41 Taiwan Weighted Pr 8785.68 8812.70 Cross-Border DJ Global Titans ($) 231.92 231.47
Australia All Ordinaries 5230.80 5224.90 Czech Republic
PX 901.14 908.44 FTSE Italia Mid Cap 31445.88 31466.92 Poland Wig 47977.23 48051.62 Thailand Bangkok SET 1397.20 1393.63 Euro Stoxx 50 (Eur) 3047.43 3048.77
S&P/ASX 200 5166.60 5166.60 OMXC Copenahgen 20
Denmark 950.03 946.69 FTSE MIB 18698.82 18696.93 Portugal PSI 20 5193.38 5189.63 Turkey BIST 100 83402.73 82943.44 Euronext 100 ID 871.19 870.84
S&P/ASX 200 Res 2566.20 2575.90 Egypt
EGX 30 7465.86 7485.69 Japan 2nd Section 4347.03 4310.98 PSI General 2498.12 2499.55 UAE Abu Dhabi General Index 4388.68 4354.83 FTSE 4Good Global ($) 5263.68 5268.89
Austria ATX 2292.29 2298.77 Estonia
OMX Tallinn 966.60 963.33 Nikkei 225 17048.55 16724.81 Romania BET Index 6782.14 6790.40 UK FT 30 2845.60 2846.30 FTSE All World 262.53 262.14
Belgium BEL 20 3424.92 3419.14 Finland
OMX Helsinki General 8121.27 8144.27 S&P Topix 150 1121.02 1100.23 Russia Micex Index 1903.47 1904.50 FTSE 100 6192.74 6184.58 FTSE E300 1338.20 1339.86
BEL Mid 5559.05 5591.81 France
CAC 40 4431.97 4427.80 Topix 1369.93 1345.05 RTX 889.02 883.60 FTSE 4Good UK 5581.29 5576.17 FTSE Eurotop 100 2626.33 2631.48
Brazil Bovespa 50855.03 51171.55 SBF 120 3505.68 3503.10 Jordan Amman SE 2123.76 2131.34 Saudi-Arabia TADAWUL All Share Index 6481.68 6486.11 FTSE All Share 3402.24 3396.95 FTSE Global 100 ($) 1284.06 1282.81
Canada S&P/TSX 60 793.90 Germany
795.43 M-DAX 20187.97 20109.97 Kenya NSE 20 3957.06 3946.19 Singapore FTSE Straits Times 2880.65 2880.69 FTSE techMARK 100 3844.00 3800.90 FTSE Gold Min ($) 1377.78 1386.94
S&P/TSX Comp 13535.51 13561.09 TecDAX 1603.22 1594.79 Kuwait KSX Market Index 5251.80 5255.54 Slovakia SAX 323.78 323.42 USA DJ Composite 6271.48 6272.96 FTSE Latibex Top (Eur) 2602.00 2575.10
S&P/TSX Met & Min 491.03 489.07 XETRA Dax 9990.00 9948.64 Latvia OMX Riga 617.26 620.38 Slovenia SBI TOP 714.46 712.39 DJ Industrial 17645.30 17623.87 FTSE Multinationals ($) 1467.66 1467.69
Chile IGPA Gen 19365.42 19419.63
Greece Athens Gen 544.30 541.70 Lithuania OMX Vilnius 504.30 503.29 South Africa FTSE/JSE All Share 53392.86 53824.28 DJ Transport 8043.25 8075.38 FTSE World ($) 465.66 464.92
China FTSE A200 8293.36 8356.66 FTSE/ASE 20 147.89 147.36 Luxembourg LuxX 1372.82 1384.48 FTSE/JSE Res 20 30175.79 30511.70 DJ Utilities 657.83 657.01 FTSEurofirst 100 (Eur) 3768.95 3780.38
FTSE B35 10200.30 10231.24
Hong Kong Hang Seng 20666.75 20684.15 Malaysia FTSE Bursa KLCI 1724.75 1718.36 FTSE/JSE Top 40 47319.37 47812.41 Nasdaq 100 4446.90 4426.98 FTSEurofirst 80 (Eur) 4129.73 4126.50
Shanghai A 3138.89 3159.28 HS China Enterprise 8900.19 8928.65 Mexico IPC 45417.23 45482.39 South Korea Kospi 1996.81 1989.76 Nasdaq Cmp 4832.10 4808.87 MSCI ACWI Fr ($) 396.92 397.21
Shanghai B 372.13 373.31 HSCC Red Chip 3729.23 3730.51 Morocco MASI 9409.94 9297.13 Kospi 200 245.41 244.28 NYSE Comp 10223.46 10219.69 MSCI All World ($) 1643.68 1645.57
Shanghai Comp 2999.36 3018.80
Hungary Bux 25878.61 25832.37 Netherlands AEX 443.12 443.83 Spain IBEX 35 8992.00 9021.00 S&P 500 2055.99 2051.60 MSCI Europe (Eur) 1342.33 1344.54
Shenzhen A 1967.11 1972.96
India BSE Sensex 25330.49 25285.37 AEX All Share 676.01 677.04 Sri Lanka CSE All Share 6088.57 6088.57 Wilshire 5000 21162.65 21109.92 MSCI Pacific ($) 2216.30 2222.52
Shenzhen B 1131.54 1133.92 S&P CNX 500 6418.30 6418.30 New Zealand NZX 50 6664.25 6641.94 Sweden OMX Stockholm 30 1382.44 1377.56 Venezuela IBC 14951.28 14946.96 S&P Euro (Eur) 1378.58 1377.04
Colombia COLCAP 1309.81 1295.89
Indonesia Jakarta Comp 4856.11 4885.16 Nigeria SE All Share 25902.95 25694.79 OMX Stockholm AS 483.88 482.31 Vietnam VNI 570.91 572.27 S&P Europe 350 (Eur) 1373.56 1375.42
Croatia CROBEX 1630.46 1635.74
Ireland ISEQ Overall 6178.95 6181.21 Norway Oslo All Share 639.22 638.36 Switzerland SMI Index 7853.07 7849.57 S&P Global 1200 ($) 1824.67 1821.20
Israel Tel Aviv 100 12.78 12.77 Pakistan KSE 100 32928.30 32928.30 Stoxx 50 (Eur) 2822.81 2833.31
(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 22 %Chg %Chg Mar 22 %Chg %Chg Mar 22 %Chg %Chg Mar 22 %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 19.7 106.69 0.78 Glaxosmithkline 228.5 1397.00 12.50 Bbva 747.0 6.26 -0.04 Toyota Motor 748.7 6098.00 210.00 Anglo American 553.30 13.5 84.8 Allied Minds 450.50 26.6 11.8 Enquest 19.75 36.2 2.2 Mining 9220.38 7.4 25.6
Hospira 11.8 89.95 -0.01 Hsbc Holdings 174.2 447.90 0.48 Novartis N 468.7 65.34 0.00 Softbank . 434.8 5632.00 12.00 Glencore 159.85 12.5 75.1 Onesavings Bank 308.50 21.1 -12.8 Goodwin 2017.50 31.8 9.2 Industrial Transportation 2755.74 4.7 5.8
Amazon.com 11.4 562.76 8.78 Vodafone 147.0 218.15 -0.84 Nestle N 375.3 65.57 0.00 Sumitomo Mitsui Fin,. 368.5 3609.00 22.00 Fresnillo 994.00 8.6 40.4 Clarkson 2275.00 17.1 -1.2 Sportech 60.25 19.4 3.4 Chemicals 10745.74 4.7 -0.2
Facebook Class A 10.7 112.49 0.64 Reckitt Benckiser 135.2 6641.00 -17.23 Roche Gs 360.0 217.23 0.00 Mitsubishi Ufj Fin,. 348.5 553.00 5.30 Ashtead 878.50 7.3 -21.7 Tullow Oil 224.00 16.6 35.2 Imagination 195.00 19.0 44.6 Industrial Engineering 7914.26 4.6 10.4
Pfizer 6.7 30.52 0.45 Astrazeneca 124.6 3915.00 13.50 Santander 282.2 4.17 -0.07 Mizuho Fin,. 295.0 179.10 -0.40 Bhp Billiton 816.70 7.0 7.4 Weir 1135.00 11.0 12.9 Lsl Property Services 305.00 14.7 7.0 Food & Drug Retailers 3034.51 3.9 21.1
The Priceline 6.4 1315.30 -35.22 Shire 124.3 3942.00 76.33 Daimler Ag Na O.n. 260.2 66.68 0.00 Sony 265.8 2937.00 1.00 Standard Chartered 494.70 6.6 -12.3 Bgeo 2030.00 10.9 6.6 Johnston Press 47.00 14.5 -5.7 Oil & Gas Producers 6215.81 3.8 9.8
Bank Of America 6.3 13.81 -0.03 Bp 120.3 360.75 3.76 Total 233.3 41.38 0.05 Kddi 232.2 3118.00 119.50 Tesco 201.65 6.0 34.9 Nmc Health 1055.00 10.9 25.5 Enterprise Inns 89.00 14.1 -20.0 Oil Equipment & Services 14567.38 3.6 12.1
Netflix 6.2 99.97 -1.09 Royal Dutch Shell 109.2 1704.00 -6.16 Unicredit 231.4 3.73 0.00 Nippon Telegraph And Telephone 218.3 4972.00 157.00 Johnson Matthey 2676.00 5.3 -4.9 Synthomer 353.50 10.5 10.2 Speedy Hire 38.50 13.1 -7.2 Industrial Metals 859.79 3.4 19.3
Microsoft 5.5 54.15 0.29 British American Tobacco 104.4 3983.00 7.00 Bayer Ag Na 229.6 102.50 0.00 Ntt Docomo,. 196.3 2613.50 81.50 Bp 360.75 5.3 1.7 Kaz Minerals 186.90 10.1 82.8 Kainos 217.00 11.9 -16.4 Automobiles & Parts 6775.71 3.0 -5.8
Starwood Hotels & Resorts Worldwide 5.4 83.57 -0.62 Sabmiller 98.1 4253.00 16.25 Sanofi 224.6 71.16 0.33 Nissan Motor Co., 190.8 1082.00 21.00 St. James's Place 940.00 4.4 -6.7 Ocado 296.30 9.6 -2.6 Equiniti 160.00 10.9 -12.1 Technology Hardware & Equip. 1253.26 2.6 -1.9
Randgold Resources Ld 6535.00 4.4 57.5 Acacia Mining 277.70 9.1 54.3 Tribal 48.25 9.7 98.2 Life Insurance 7208.84 2.5 -7.9
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
Pearson 913.00 4.3 24.0 Renishaw 2029.00 8.7 7.9 Charles Taylor 271.50 9.1 3.8 Nonlife Insurance 2510.53 2.4 1.9
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Endo Int 30.67 1.83 6.35 Ig Holdings 803.00 47.50 6.29 Svenska Handelsbanken Ab 12.69 1.28 11.23 Dena Co., 1957.00 120.00 6.53 Tui Ag 975.00 -6.8 -19.5 Thomas Cook 88.55 -12.8 -26.9 Trinity Mirror 133.00 -9.8 -19.9 Tobacco 48611.08 -2.1 5.7
Staples 10.29 0.60 6.14 Allied Minds 450.50 18.90 4.41 Renault 88.07 2.56 2.99 Dainippon Screen Mfg.co., 815.00 46.00 5.98 Worldpay 277.00 -4.6 -10.2 Home Retail 166.50 -7.9 67.0 Centaur Media 54.00 -9.2 -23.7 Forestry & Paper 14379.76 -1.8 -0.1
Biomarin Pharmaceuticals 82.91 4.72 6.04 Bellway 2554.00 81.00 3.28 Vivendi 19.31 0.55 2.91 Kajima 727.00 33.00 4.76 Antofagasta 497.70 -4.0 5.0 Barr (a.g.) 515.50 -6.9 -3.3 Lakehouse 49.50 -8.1 -47.2 Fixed Line Telecommunication 5057.79 -1.6 -4.9
Western Digital 51.39 2.10 4.25 Woodford Patient Capital Trust 91.55 2.70 3.05 Safran 61.85 1.06 1.74 Toshiba 208.80 8.80 4.40 Barclays 157.20 -3.9 -28.2 Euromoney Institutional Investor 876.50 -6.8 -11.9 Ferrexpo 30.75 -6.8 43.0 Personal Goods 27476.36 -1.2 6.3
The Sherwin-williams 282.82 9.53 3.49 Johnson Matthey 2676.00 77.00 2.96 Michelin 90.19 1.20 1.35 Kyowa Hakko Kirin Co., 1771.00 72.00 4.24 British American Tobacco 3983.00 -3.5 5.6 Brown (n) 341.40 -5.4 10.4 Lamprell 96.75 -6.5 -2.8 Mobile Telecommunications 4972.91 -0.7 -2.7
Mondi 1335.00 -3.0 -1.3 Cls Holdings 1497.00 -5.0 -17.7 Game Digital 126.50 -6.3 4.5 Pharmaceuticals & Biotech. 11929.36 -0.7 -7.6
Downs Downs Downs Downs
Diageo 1876.00 -2.7 -0.6 St.modwen Properties 307.80 -4.9 -25.8 Lms Capital 67.00 -5.8 -8.8 Banks 3213.89 -0.5 -15.8
Transocean 10.07 -0.46 -4.37 Sports Direct Int 379.20 -44.60 -10.52 Grifols Sa 14.99 -14.40 -48.99 Sharp 129.00 -9.00 -6.52
Astrazeneca 3915.00 -2.7 -15.2 Moneysupermarket.com 328.00 -4.5 -10.6 Liontrust Asset Management 254.00 -5.3 -8.1 Beverages 15773.74 -0.5 2.3
Royal Caribbean Cruises 76.03 -2.20 -2.81 Thomas Cook 88.55 -3.95 -4.27 Accor 37.48 -1.50 -3.85 Pioneer 268.00 -6.00 -2.19
Capita 1023.00 -2.3 -15.3 Millennium & Copthorne Hotels 402.80 -4.1 -13.1 Dw Catalyst Fund 1025.00 -4.7 -8.2 General Retailers 2837.87 -0.5 -5.5
Ensco 11.02 -0.32 -2.78 Evraz 87.30 -3.70 -4.07 Adp 108.40 -3.20 -2.87 Yamato Holdings Co., 2339.00 -47.50 -1.99
Bt 444.60 -2.1 -5.7 Hansteen Holdings 104.60 -4.0 -9.1 Premier Farnell 115.50 -4.5 17.9 Electricity 8497.61 -0.2 -3.6
Pepco Holdings 21.37 -0.60 -2.74 Euromoney Institutional Investor 876.50 -28.50 -3.15 Ryanair Holdings 13.32 -0.36 -2.63 Sumitomo Heavy Industries, 489.00 -7.00 -1.41
Vodafone 218.15 -1.7 -2.2 Lookers 160.50 -3.4 -13.8 Polar Cap Glbl Health Gwth& Tst 160.00 -4.5 -6.2 Travel & Leisure 8413.28 0.0 -7.1
Tripadvisor 63.98 -1.73 -2.63 Tui Ag 975.00 -28.00 -2.79 Arcelormittal 3.80 -0.10 -2.51 Suzuki Motor 2981.00 -37.00 -1.23
Babcock Int 946.00 -1.7 -7.5 Sports Direct Int 379.20 -3.4 -34.3 Blackrock Frontiers Investment Trust 103.00 -4.4 -0.5 Real Estate & Investment Servic 2674.53 0.2 -12.8
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 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 14.3050 -0.1950 16.0595 -0.2668 20.3366 -0.5447 Indonesia Indonesian Rupiah 13180.0000 32.5000 14796.5329 -6.8778 18737.3289 -196.2917 Poland Polish Zloty 3.7931 0.0103 4.2583 -0.0009 5.3924 -0.0551 ..Three Month 0.7035 0.0090 0.7895 0.0078 - -
Australia Australian Dollar 1.3115 -0.0052 1.4723 -0.0102 1.8645 -0.0317 Israel Israeli Shekel 3.8428 -0.0085 4.3141 -0.0222 5.4630 -0.0831 Romania Romanian Leu 3.9819 0.0130 4.4703 0.0016 5.6609 -0.0547 ..One Year 0.7038 0.0090 0.7888 0.0078 - -
Bahrain Bahrainin Dinar 0.3771 - 0.4233 -0.0012 0.5360 -0.0070 Japan Japanese Yen 111.8200 0.2050 125.5347 -0.1381 158.9685 -1.7674 Russia Russian Ruble 67.3763 -0.5112 75.6400 -0.7979 95.7852 -1.9790 United States United States Dollar - - 1.1226 -0.0033 1.4216 -0.0184
Bolivia Bolivian Boliviano 6.8300 - 7.6677 -0.0225 9.7098 -0.1260 ..One Month 111.8199 0.2047 125.5346 -0.1381 158.9683 -1.7678 Saudi Arabia Saudi Riyal 3.7502 - 4.2102 -0.0124 5.3315 -0.0692 ..One Month - - 1.1225 -0.3174 1.4217 -0.0184
Brazil Brazilian Real 3.5876 -0.0224 4.0276 -0.0371 5.1002 -0.0985 ..Three Month 111.8197 0.2044 125.5347 -0.1381 158.9681 -1.7682 Singapore Singapore Dollar 1.3615 0.0030 1.5285 -0.0011 1.9356 -0.0208 ..Three Month - - 1.1223 -0.3174 1.4217 -0.0184
Canada Canadian Dollar 1.3053 -0.0014 1.4654 -0.0059 1.8557 -0.0261 ..One Year 111.8184 0.2018 125.5346 -0.1383 158.9683 -1.7695 South Africa South African Rand 15.2039 0.0414 17.0687 -0.0035 21.6146 -0.2208 ..One Year - - 1.1211 -0.3174 1.4221 -0.0184
Chile Chilean Peso 675.0000 -2.5700 757.7884 -5.1206 959.6111 -16.1522 Kenya Kenyan Shilling 101.5500 0.0500 114.0051 -0.2787 144.3682 -1.8012 South Korea South Korean Won 1154.1000 -9.3500 1295.6498 -14.3352 1640.7217 -34.7538 Venezuela Venezuelan Bolivar Fuerte 6.3053 0.0198 7.0786 0.0014 8.9638 -0.0879
China Chinese Yuan 6.4927 0.0069 7.2890 -0.0137 9.2303 -0.1098 Kuwait Kuwaiti Dinar 0.3013 0.0003 0.3382 -0.0007 0.4283 -0.0051 Sweden Swedish Krona 8.2223 0.0033 9.2308 -0.0235 11.6892 -0.1470 Vietnam Vietnamese Dong 22300.0000 14.5000 25035.1117 -57.2281 31702.7550 -390.4952
Colombia Colombian Peso 3049.0100 -23.9900 3422.9695 -37.0717 4334.6131 -90.7904 Malaysia Malaysian Ringgit 4.0080 -0.0495 4.4996 -0.0690 5.6980 -0.1452 Switzerland Swiss Franc 0.9706 0.0028 1.0896 0.0000 1.3798 -0.0139 European Union Euro 0.8908 0.0026 - - 1.2663 -0.0127
Costa Rica Costa Rican Colon 533.9500 0.0600 599.4387 -1.6940 759.0879 -9.7629 Mexico Mexican Peson 17.3306 -0.0645 19.4561 -0.1297 24.6379 -0.4125 Taiwan New Taiwan Dollar 32.3900 -0.0255 36.3626 -0.1356 46.0471 -0.6342 ..One Month 0.8906 0.0026 - - 1.2663 -0.0127
Czech Republic Czech Koruna 24.0850 0.0799 27.0390 0.0106 34.2403 -0.3291 New Zealand New Zealand Dollar 1.4795 0.0008 1.6610 -0.0040 2.1033 -0.0262 Thailand Thai Baht 34.9200 0.0300 39.2029 -0.0814 49.6439 -0.6009 ..Three Month 0.8904 0.0026 - - 1.2661 -0.0127
Denmark Danish Krone 6.6397 0.0195 7.4541 0.0001 9.4394 -0.0943 Nigeria Nigerian Naira 199.0500 - 223.4634 -0.6567 282.9786 -3.6717 Tunisia Tunisian Dinar 2.0174 0.0068 2.2648 0.0011 2.8680 -0.0273 ..One Year 0.8892 0.0026 - - 1.2655 -0.0127
Egypt Egyptian Pound 8.8797 0.0199 9.9688 -0.0069 12.6238 -0.1351 Norway Norwegian Krone 8.4042 0.0068 9.4350 -0.0201 11.9479 -0.1452 Turkey Turkish Lira 2.8680 0.0091 3.2197 0.0007 4.0772 -0.0399
Hong Kong Hong Kong Dollar 7.7533 0.0000 8.7042 -0.0256 11.0224 -0.1431 Pakistan Pakistani Rupee 104.7250 -0.0200 117.5695 -0.3680 148.8819 -1.9606 United Arab Emirates UAE Dirham 3.6730 0.0001 4.1235 -0.0120 5.2217 -0.0676
Hungary Hungarian Forint 277.5176 1.2042 311.5549 0.4403 394.5317 -3.3850 Peru Peruvian Nuevo Sol 3.4085 0.0200 3.8266 0.0113 4.8457 -0.0341 United Kingdom Pound Sterling 0.7034 0.0090 0.7897 0.0078 - -
India Indian Rupee 66.7350 0.2550 74.9200 0.0669 94.8735 -0.8638 Philippines Philippine Peso 46.2475 -0.1075 51.9197 -0.2736 65.7476 -1.0079 ..One Month 0.7034 0.0090 0.7896 0.0078 - -
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 22 Mar 21 Mar 18 Mar 17 Mar 16 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 2848.10 2845.60 2846.30 2838.60 2838.30 0.00 2875.90 2547.10 Mining 27.03 Nonlife Insurance 1.47 Mobile Telecomms -3.01 FTSE 100 Price Change FTSE 100 Price Change
Mar 22 chge% Index Mar 21 Mar 18 ago yield% Cover ratio adj Return FT 30 Div Yield 1.76 1.76 1.77 1.76 1.76 0.00 3.93 2.74 Industrial Metals & 24.90 Utilities 1.22 FTSE 250 Index -3.03 3I Group PLC 457.50 9.20 Legal & General Group PLC 239.10 -1.60
FTSE 100 (100) 6192.74 0.13 6118.96 6184.58 6189.64 7037.67 4.02 0.97 25.57 64.10 4904.25 P/E Ratio net 25.37 25.32 25.27 25.37 25.36 0.00 19.44 14.26 Basic Materials 20.88 Electronic & Elec Eq 0.44 Support Services -3.22 Admiral Group PLC 1932 14.00 Lloyds Banking Group PLC 69.36 -0.43
FTSE 250 (250) 16903.93 0.24 16702.56 16862.83 16901.32 17551.23 2.68 2.17 17.20 51.21 11801.83 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Food & Drug Retailer 18.23 Household Goods & Ho 0.22 Equity Invest Instr -3.63 Anglo American PLC 553.30 3.80 London Stock Exchange Group PLC 2860 37.00
FTSE 250 ex Inv Co (208) 18403.16 0.25 18183.93 18357.53 18411.37 19015.05 2.69 2.32 16.04 48.06 13095.84 FT 30 hourly changes Oil Equipment & Serv 11.11 Industrials 0.00 Telecommunications -3.68 Antofagasta PLC 497.70 2.00 Marks And Spencer Group PLC 408.20 -4.00
FTSE 350 (350) 3452.90 0.15 3411.77 3447.69 3451.38 3864.52 3.79 1.12 23.61 31.33 5504.34 8 9 10 11 12 13 14 15 16 High Low Oil & Gas 9.42 Software & Comp Serv -0.09 General Retailers -4.19 Arm Holdings PLC 1016 7.00 Mediclinic International PLC 865.00 8.00
FTSE 350 ex Investment Trusts (308) 3430.88 0.15 3390.01 3425.75 3429.65 3843.32 3.82 1.12 23.46 31.40 2816.31 2845.6 2818.2 2830.1 2827.1 2824.5 2831 2835.3 2840.9 2838 2848.1 2801.2 Oil & Gas Producers 9.33 Food Producers -0.15 Financial Services -4.48 Ashtead Group PLC 878.50 6.00 Merlin Entertainments PLC 451.20 -7.40
FTSE 350 Higher Yield (106) 3169.45 0.18 3131.69 3163.88 3167.98 3717.88 5.39 0.73 25.32 45.35 5210.05 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Industrial Eng 9.09 Media -0.28 Fixed Line Telecomms -4.64 Associated British Foods PLC 3430 19.00 Mondi PLC 1335 12.00
FTSE 350 Lower Yield (244) 3408.14 0.12 3367.54 3403.92 3406.71 3634.14 2.06 2.21 21.98 11.69 3620.17 Personal Goods 6.42 Technology -0.58 Health Care Eq & Srv -5.02 Astrazeneca PLC 3915 13.50 Morrison (Wm) Supermarkets PLC 202.80 2.60
FTSE SmallCap (291) 4541.00 0.29 4486.91 4527.90 4545.44 4631.07 2.93 1.26 27.10 22.73 6257.83 Tobacco 5.69 FTSE 100 Index -0.84 Automobiles & Parts -5.12
FTSE SmallCap ex Inv Co (157) 4157.23 0.33 4107.71 4143.57 4159.39 4055.28 2.86 1.58 22.21 16.38 6009.39 FX: EFFECTIVE INDICES Leisure Goods 5.22 Tech Hardware & Eq -1.17 Travel & Leisure -6.39
Aviva PLC 475.70 0.50 National Grid PLC 973.90 -5.70
Babcock International Group PLC 946.00 5.50 Next PLC 6595 -45.00
FTSE All-Share (641) 3402.24 0.16 3361.71 3396.95 3400.91 3795.61 3.76 1.12 23.71 30.39 5485.71 Industrial Transport 5.03 FTSE All{HY-}Share Index -1.26 Real Est Invest & Tr -6.68
Mar 21 Mar 18 Mnth Ago Mar 22 Mar 21 Mnth Ago Bae Systems PLC 498.80 1.20 Old Mutual PLC 196.80 3.70
FTSE All-Share ex Inv Co (465) 3366.78 0.15 3326.67 3361.63 3365.64 3761.58 3.80 1.12 23.43 30.47 2809.16 Aerospace & Defense 4.50 Forestry & Paper -1.65 Life Insurance -6.83 Barclays PLC 157.20 -3.30 Paddy Power Betfair PLC 9240 215.00
FTSE All-Share ex Multinationals (575) 1139.43 0.03 933.13 1139.11 1141.96 1230.54 2.98 1.59 21.02 4.15 1949.61 Australia 93.46 93.49 88.22 Sweden 80.22 80.06 78.96 Consumer Goods 3.09 Consumer Services -1.68 Health Care -8.60 Barratt Developments PLC 572.00 3.50 Pearson PLC 913.00 7.00
FTSE Fledgling (99) 7623.17 0.28 7532.35 7601.84 7611.64 7390.64 2.56 0.40 97.07 33.69 13799.48 Canada 89.43 89.95 84.65 Switzerland 159.24 158.71 157.40 Gas Water & Multi 2.26 FTSE SmallCap Index -1.93 Pharmace & Biotech -9.01 Berkeley Group Holdings (The) PLC 3197 6.00 Persimmon PLC 2076 -3.00
FTSE Fledgling ex Inv Co (49) 10715.02 0.52 10587.37 10659.84 10713.06 9465.19 2.66 -0.35 -107.54 40.23 18856.93 Denmark 106.70 106.70 106.73 UK 85.91 86.41 86.40 Beverages 1.97 Construct & Material -2.19 Financials -9.20 Bhp Billiton PLC 816.70 -2.80 Provident Financial PLC 3026 65.00
FTSE All-Small (390) 3149.18 0.29 3111.67 3140.11 3151.87 3204.26 2.91 1.22 28.11 15.67 5572.07 Japan 136.50 136.56 136.32 USA 101.17 100.78 103.65 NON FINANCIALS Index 1.61 Chemicals -2.47 Real Est Invest & Se -12.00 BP PLC 360.75 4.55 Prudential PLC 1355.5 -15.00
FTSE All-Small ex Inv Co Index (206) 3104.54 0.34 3067.55 3094.11 3106.07 3015.43 2.85 1.51 23.30 12.21 5686.00 New Zealand 110.98 111.47 110.29 Euro 88.08 88.06 87.95 Electricity -2.75 Banks -15.15 British American Tobacco PLC 3983 7.00 Randgold Resources LD 6535 100.00
FTSE AIM All-Share Index (841) 709.04 0.42 700.59 706.05 706.65 716.17 1.53 0.60 107.90 1.45 764.69 Norway 85.25 85.62 84.66
British Land Company PLC 700.50 -5.50 Reckitt Benckiser Group PLC 6641 -5.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Bt Group PLC 444.60 -4.65 RELX PLC 1278 16.00
Oil & Gas (17) 6576.09 0.49 6497.75 6544.06 6553.69 7682.18 6.69 0.23 64.17 110.54 5609.16 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Bunzl PLC 1982 6.00 Rexam PLC 629.00 5.00
Oil & Gas Producers (10) 6249.52 0.50 6175.07 6218.71 6226.39 7267.85 6.75 0.20 74.07 108.98 5515.34 Burberry Group PLC 1345 1.00 Rio Tinto PLC 1993 -21.00
Oil Equipment Services & Distribution (7)15098.23 0.33 14918.37 15048.33 15164.84 19963.87 5.05 1.40 14.13 0.00 11104.12 FTSE GLOBAL EQUITY INDEX SERIES Capita PLC 1023 -24.00 Rolls-Royce Holdings PLC 694.50 -8.00
Basic Materials (28) 3301.50 0.13 3262.17 3297.26 3314.63 4899.95 5.06 0.26 77.42 41.24 3283.47 Carnival PLC 3456 -56.00 Royal Bank Of Scotland Group PLC 233.40 -2.10
Chemicals (7) 11476.82 1.67 11340.10 11288.25 11229.29 12513.55 2.51 2.13 18.74 61.01 9922.66 Mar 22 No of US $ Day Mth YTD Total
YTD Gr Div Mar 22 No of US $ Day Mth YTD Total YTD Gr Div Centrica PLC 226.00 -0.80 Royal Dutch Shell PLC 1704 -1.00
Forestry & Paper (1) 15690.96 0.91 15504.04 15549.92 15420.63 15749.73 2.30 4.06 10.72 0.00 16299.35 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Coca-Cola Hbc AG 1444 2.00 Royal Dutch Shell PLC 1702 4.50
Industrial Metals & Mining (2) 885.72 -4.12 875.17 923.79 913.64 1953.66 1.30 0.27 286.00 0.00 772.96 FTSE Global All Cap 7740 448.28 -0.1 7.6 -0.6 616.34
-0.1 2.6 FTSE EDHEC-Risk Efficient Developed Europe 531 274.61 -0.5 -0.5 -1.7 402.13 -1.3 2.7 Compass Group PLC 1220 -5.00 Royal Mail PLC 473.80 -0.20
Mining (18) 8873.35 -0.13 8767.65 8884.62 8953.51 14019.80 5.64 0.03 517.06 127.71 4631.23 FTSE Global All Cap 7079 462.39 0.3 7.3 -0.3 624.68
0.2 2.5 Oil & Gas 154 323.70 -0.7 -0.7 6.1 499.24 7.1 3.8 Crh PLC 1950 22.00 Rsa Insurance Group PLC 474.10 5.60
FTSE Global Large Cap 1428 395.38 -0.1 7.1 -0.8 556.38
-0.3 2.7 Oil & Gas Producers 111 303.21 -0.8 -0.8 6.3 476.13 7.3 4.0 Dcc PLC 5985 100.00 Sabmiller PLC 4253 18.50
Industrials (120) 4354.35 0.26 4302.48 4343.01 4365.18 4730.26 2.54 1.43 27.46 9.11 4336.09
Construction & Materials (14) 5266.00 0.84 5203.27 5222.26 5256.36 5005.59 2.31 0.04 1064.19 65.28 5449.84 FTSE Global Mid Cap 1647 605.02 -0.2 8.6 0.5 792.82
0.8 2.2 Oil Equipment & Services 33 294.73 -0.2 -0.2 6.2 414.20 7.0 3.5 Diageo PLC 1876 8.50 Sage Group PLC 619.50 7.50
Aerospace & Defense (9) 4439.35 -0.34 4386.47 4454.34 4502.47 5478.05 2.57 1.56 24.91 1.48 4590.95 FTSE Global Small Cap 4665 623.50 -0.2 9.1 -0.6 793.47
-0.3 2.1 Basic Materials 255 371.02 -0.1 -0.1 5.6 546.24 6.1 3.1 Direct Line Insurance Group PLC 380.20 3.40 Sainsbury (J) PLC 280.00 3.50
General Industrials (6) 3779.89 0.13 3734.86 3774.88 3769.38 3687.17 3.02 1.57 21.12 0.72 4115.88 FTSE All-World 3075 262.14 -0.1 7.4 -0.6 380.32
-0.1 2.6 Chemicals 124 586.26 0.2 0.2 -0.9 864.06 -0.6 2.7 Dixons Carphone PLC 431.30 -6.70 Schroders PLC 2726 1.00
Electronic & Electrical Equipment (10) 5482.34 1.70 5417.03 5390.56 5397.99 5548.54 2.25 1.88 23.53 6.22 4860.85 FTSE World 2550 464.92 -0.1 7.3 -0.6 905.78
-0.1 2.6 Forestry & Paper 16 199.32 0.4 0.4 1.7 321.29 2.0 3.5 Easyjet PLC 1504 3.00 Severn Trent PLC 2145 -17.00
Industrial Engineering (14) 8349.95 0.87 8250.48 8278.09 8340.27 9878.48 3.59 1.15 24.20 10.89 9792.06 FTSE Global All Cap ex UNITED KINGDOM In 7416 461.73 0.0 7.8 -0.4 625.82
0.1 2.5 Industrial Metals & Mining 62 293.89 -0.6 -0.6 14.2 433.26 14.4 3.0 Experian PLC 1205 3.00 Shire PLC 3942 100.00
Industrial Transportation (8) 4122.14 -0.10 4073.04 4126.47 4133.81 4285.64 3.69 0.87 31.20 0.00 3467.83 FTSE Global All Cap ex USA 5774 412.10 -0.3 7.8 -1.2 601.03
-0.7 3.1 Mining 53 406.95 -0.7 -0.7 25.8 603.66 27.3 4.2 Fresnillo PLC 994.00 13.50 Sky PLC 1013 -3.00
Support Services (59) 6443.41 0.21 6366.65 6429.75 6455.33 6874.37 2.32 1.74 24.77 7.08 6473.17 FTSE Global All Cap ex JAPAN 6473 458.88 -0.1 7.8 0.0 636.73
0.5 2.6 Industrials 538 305.20 -0.1 -0.1 2.0 426.04 2.5 2.3 Gkn PLC 289.80 0.70 Smith & Nephew PLC 1127 12.00
FTSE Global All Cap ex Eurozone 7093 462.19 0.0 7.6 -0.4 624.46
0.1 2.5 Construction & Materials 111 433.30 -0.4 -0.4 3.4 631.89 3.7 2.2 Glaxosmithkline PLC 1397 12.50 Sse PLC 1458 -10.00
Consumer Goods (41) 18903.16 0.20 18677.97 18865.35 18866.80 17528.79 2.83 1.88 18.82 181.71 13464.85
FTSE Developed 2102 422.07 -0.1 7.0 -1.1 584.89
-0.6 2.6 Aerospace & Defense 26 506.96 0.0 0.0 0.1 701.62 0.6 2.3 Glencore PLC 159.85 -0.05 St. James's Place PLC 940.00 -0.50
Automobiles & Parts (1) 6810.43 0.24 6729.30 6793.98 6876.24 8631.72 2.93 1.33 25.60 0.00 6263.15
FTSE Developed All Cap 5696 442.68 -0.1 7.2 -1.0 606.71
-0.5 2.5 General Industrials 55 224.46 0.0 0.0 3.5 338.09 4.4 2.6 Hammerson PLC 572.00 -3.00 Standard Chartered PLC 494.70 6.15
Beverages (6) 15795.62 0.41 15607.45 15730.90 15731.55 15165.79 2.45 1.70 24.09 96.90 10826.05
FTSE Developed Large Cap 902 389.59 -0.1 6.7 -1.3 547.46
-0.7 2.7 Electronic & Electrical Equipment 70 307.75 -0.1 -0.1 -2.7 395.11 -2.6 2.0 Hargreaves Lansdown PLC 1309 -1.00 Standard Life PLC 360.10 -9.20
Food Producers (10) 8929.54 0.36 8823.16 8897.76 8904.47 8077.72 1.84 1.41 38.67 6.04 7477.86
FTSE Developed Europe Large Cap 223 318.54 -0.5 5.8 -3.5 506.13
-2.7 3.7 Industrial Engineering 104 553.79 -0.1 -0.1 3.3 759.72 3.7 2.7 HSBC Holdings PLC 447.90 -1.10 Taylor Wimpey PLC 188.20 1.20
Household Goods & Home Construction (14)13895.05 0.25 13729.52 13860.34 13814.72 12098.76 2.11 2.82 16.83 8.12 9458.09
FTSE Developed Europe Mid Cap 308 500.58 -0.6 6.8 -2.4 718.66
-2.1 2.7 Industrial Transportation 98 520.26 -0.2 -0.2 5.1 724.51 5.5 2.4 Imperial Brands PLC 3784 -11.00 Tesco PLC 201.65 4.20
Leisure Goods (2) 5734.72 -0.60 5666.40 5769.47 5763.90 5204.83 4.16 1.32 18.25 0.00 4856.95
FTSE Dev Europe Small Cap 698 707.04 -0.9 7.0 -3.3 988.80
-3.1 2.6 Support Services 74 276.99 0.1 0.1 0.4 370.99 0.6 2.0 Informa PLC 696.50 11.00 Travis Perkins PLC 1796 -3.00
Personal Goods (6) 23922.46 0.06 23637.48 23907.58 23936.54 23795.61 2.77 3.06 11.82 150.56 15535.73
FTSE North America Large Cap 293 437.71 0.1 6.9 0.3 579.34
0.8 2.3 Consumer Goods 425 417.46 -0.1 -0.1 0.2 596.08 0.6 2.5 Inmarsat PLC 930.00 6.00 Tui AG 975.00 -28.00
Tobacco (2) 48611.16 0.02 48032.07 48600.40 48659.36 43704.58 3.82 1.34 19.58 1063.92 30277.51
FTSE North America Mid Cap 395 652.96 0.0 9.7 2.0 809.31
2.4 1.9 Automobiles & Parts 104 348.66 -0.1 -0.1 -8.7 477.34 -8.5 2.9 Intercontinental Hotels Group PLC 2769 -46.00 Unilever PLC 3102.5 2.50
Health Care (20) 8805.30 0.93 8700.41 8723.80 8672.98 10479.63 4.01 0.54 45.93 151.28 6529.55
FTSE North America Small Cap 1494 642.65 -0.1 9.9 0.2 774.78
0.5 1.8 Beverages 48 580.89 -0.1 -0.1 1.6 842.28 2.1 2.5 International Consolidated Airlines Group S.A. 549.50 -8.50 United Utilities Group PLC 913.00 -8.50
Health Care Equipment & Services (8) 7019.12 0.75 6935.50 6966.78 7004.91 6998.43 1.60 1.85 33.63 1.60 5952.61
FTSE North America 688 293.03 0.1 7.3 0.6 397.39
1.1 2.2 Food Producers 104 567.43 -0.3 -0.3 1.6 832.48 1.8 2.3 Intertek Group PLC 3126 13.00 Vodafone Group PLC 218.15 1.20
Pharmaceuticals & Biotechnology (12)11844.60 0.96 11703.50 11732.53 11648.98 14343.37 4.29 0.49 47.93 226.40 7816.42
FTSE Developed ex North America 1414 218.77 -0.4 6.4 -3.5 342.53
-3.0 3.2 Household Goods & Home Construction 49 411.63 0.0 0.0 2.5 584.70 3.0 2.3 Intu Properties PLC 317.10 -2.30 Whitbread PLC 3906 -42.00
Consumer Services (96) 4830.93 0.07 4773.38 4827.51 4831.90 5111.64 2.41 1.75 23.78 15.84 4375.69 FTSE Japan Large Cap 176 302.49 -0.2 4.7 -7.7 378.51
-7.7 2.3 Leisure Goods 31 132.99 -0.4 -0.4 0.8 171.32 0.9 1.4
Food & Drug Retailers (7) 3164.17 1.79 3126.48 3108.61 3085.06 3551.48 1.69 0.22 264.85 0.00 3618.25 Itv PLC 242.50 1.60 Wolseley PLC 3928 64.00
FTSE Japan Mid Cap 307 468.06 -0.2 4.9 -4.8 565.84
-4.7 1.8 Personal Goods 78 615.71 -0.2 -0.2 3.0 837.18 3.4 2.0 Johnson Matthey PLC 2676 77.00 Worldpay Group PLC 277.00 0.10
General Retailers (32) 2783.21 -0.75 2750.06 2804.18 2818.02 3018.75 2.61 2.35 16.30 2.42 3053.37
FTSE Global wi JAPAN Small Cap 784 510.41 -0.2 8.5 -3.0 637.14
-2.9 2.0 Tobacco 11 1303.37 -0.1 -0.1 7.1 2570.26 8.1 3.7 Kingfisher PLC 350.60 0.10 WPP PLC 1595 11.00
Media (22) 7549.17 0.80 7459.24 7489.46 7492.30 7703.20 2.68 1.79 20.80 1.47 4457.84
FTSE Japan 483 126.66 -0.2 4.7 -7.1 178.10
-7.1 2.2 Health Care 178 422.49 0.4 0.4 -7.8 592.84 -7.1 2.1 Land Securities Group PLC 1080 -18.00
Travel & Leisure (35) 8215.28 -0.63 8117.42 8267.77 8282.66 8644.07 2.29 1.69 25.96 68.84 7551.60
FTSE Asia Pacific Large Cap ex Japan 551 545.14 0.1 9.9 0.8 819.02
1.2 3.3 Health Care Equipment & Services 64 645.94 -0.4 -0.4 -0.6 741.86 -0.4 1.0
Telecommunications (7) 3855.26 -0.02 3809.34 3856.08 3851.36 4011.03 4.24 0.15 156.57 0.00 4039.75 FTSE Asia Pacific Mid Cap ex Japan 423 761.10 0.2 9.8 1.9 1103.52
2.4 3.1 Pharmaceuticals & Biotechnology 114 312.67 0.7 0.7 -10.1 456.76 -9.3 2.5
Fixed Line Telecommunications (5) 5138.59 -0.87 5077.37 5183.87 5154.85 5341.52 3.01 1.64 20.19 0.00 4456.45
Mobile Telecommunications (2) 4965.38 0.56 4906.23 4937.75 4946.42 5167.11 5.06 -0.45 -44.24 0.00 4643.97
FTSE Asia Pacific Small Cap ex Japan
FTSE Asia Pacific Ex Japan
1439
974
498.84
433.22
0.1
0.1
8.1
9.9
-0.1 712.76
0.3
0.9 691.85
1.3
2.8 Consumer Services
3.3 Food & Drug Retailers
391 388.94
55 302.83
-0.1
-0.3
-0.1
-0.3
-0.2 507.22
1.0 410.88
0.2
1.4
1.8
1.9
UK STOCK MARKET TRADING DATA
Utilities (7) 8481.89 -0.61 8380.85 8534.12 8501.84 8525.31 4.79 1.33 15.64 33.42 9070.51 FTSE Emerging All Cap 2044 596.81 0.4 11.8 4.5 853.34
4.7 3.1 General Retailers 122 520.22 0.0 0.0 -2.4 662.07 -2.0 1.6 Mar 22 Mar 21 Mar 18 Mar 17 Mar 16 Yr Ago
Electricity (2) 8478.32 -0.43 8377.32 8515.14 8546.43 9307.36 5.97 1.20 13.95 145.17 11488.69 FTSE Emerging Large Cap 526 563.18 0.3 12.3 4.6 810.16
4.8 3.1 Media 86 293.22 -0.2 -0.2 1.4 382.97 1.7 2.0 SEAQ Bargains 6853.00 5758.00 5758.00 5758.00 6595.00 3.00
Gas Water & Multiutilities (5) 8017.44 -0.66 7921.93 8070.47 8024.83 7873.13 4.49 1.38 16.13 5.49 8578.04 FTSE Emerging Mid Cap 447 759.55 0.5 11.8 7.0 1081.30
7.3 3.1 Travel & Leisure 128 384.41 -0.1 -0.1 0.8 506.52 1.2 1.8 Order Book Turnover (m) 63.36 - - - - -
Financials (285) 4131.39 -0.19 4082.17 4139.25 4152.03 4991.52 3.91 1.71 14.93 42.66 3646.07 FTSE Emerging Small Cap 1071 622.14 0.5 8.2 1.1 857.38
1.3 3.0 Telecommunication 92 166.40 0.1 0.1 5.7 294.34 6.2 4.0 Order Book Bargains 869328.00 1.00 1.00 1.00 - 10300.00
Banks (9) 3173.39 -0.52 3135.58 3189.84 3198.55 4354.63 4.94 1.01 19.95 61.28 2229.12 FTSE Emerging Europe 111 307.91 -0.4 18.6 15.3 452.48
15.4 3.9 Fixed Line Telecommuniations 43 145.03 0.3 0.3 9.4 281.44 10.4 4.3 Order Book Shares Traded (m) 1279.00 0.00 0.00 0.00 - 2.00
Nonlife Insurance (10) 2891.72 0.61 2857.28 2874.14 2876.36 2465.75 2.74 2.38 15.30 38.14 4926.41 FTSE Latin America All Cap 239 700.12 0.1 22.2 17.0 1040.02
17.6 3.2 Mobile Telecommunications 49 165.52 -0.3 -0.3 0.5 264.30 0.5 3.6 Total Equity Turnover (£m) 3672.50 0.01 0.01 0.01 0.62 0.41
Life Insurance/Assurance (11) 7312.01 -0.47 7224.90 7346.89 7398.17 8969.11 4.15 1.56 15.49 0.21 6712.70 FTSE Middle East and Africa All Cap 223 651.31 0.1 10.1 5.3 975.41
5.8 2.9 Utilities 165 252.37 -0.2 -0.2 6.4 465.37 7.1 3.9 Total Mkt Bargains 980255.00 16.00 16.00 16.00 27.00 10371.00
Index- Real Estate Investment & Services (21) 2703.68 -0.27 2671.48 2710.94 2714.23 2966.64 2.43 5.36 7.67 12.37 6983.02 FTSE Global wi UNITED KINGDOM All Cap In 324 317.60 -0.9 5.1 -3.4 506.70
-2.5 3.9 Electricity 113 277.68 -0.1 -0.1 7.2 507.12 8.1 3.6 Total Shares Traded (m) 5857.00 0.00 0.00 0.00 0.00 3.00
Real Estate Investment Trusts (26) 2745.55 -0.83 2712.85 2768.52 2756.45 3067.17 3.27 5.88 5.20 21.83 3270.85 FTSE Global wi USA All Cap 1966 501.10 0.1 7.4 0.0 645.37
0.5 2.1 Gas Water & Multiutilities 52 263.92 -0.4 -0.4 4.8 498.12 5.3 4.3 † Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable.
General Financial (32) 7734.42 1.02 7642.28 7656.10 7722.03 8394.97 3.04 2.12 15.52 48.28 8448.26 FTSE Europe All Cap 1416 370.70 -0.6 6.4 -2.8 570.15
-2.1 3.4 Financials 689 191.51 -0.2 -0.2 -4.6 299.08 -4.1 3.2 (c) Market closed.
Equity Investment Instruments (176) 7439.86 0.22 7351.23 7423.21 7427.28 7985.89 2.77 1.06 34.04 44.52 3936.67 FTSE Eurozone All Cap 647 349.52 -0.5 7.7 -2.6 541.76
-2.3 3.2 Banks 245 166.02 -0.3 -0.3 -7.0 276.68 -6.3 3.7
Non Financials (356) 4055.72 0.27 4007.41 4044.92 4047.14 4403.64 3.71 0.92 29.22 34.41 5730.06 FTSE RAFI All World 3000 3051 5429.87 -0.3 8.6 0.1 6877.47
0.6 3.4 Nonlife Insurance 68 213.64 -0.2 -0.2 -0.4 298.28 -0.1 2.5
Technology (20) 1448.91 1.23 1431.65 1431.31 1433.20 1385.90 1.42 1.85 38.08 5.15 1819.00 FTSE RAFI US 1000 1009 8975.04 0.0 8.0 2.5 Life Insurance
1.5 11414.61
2.1 50 183.02 -0.2 -0.2 -7.7 278.76 -7.3 3.2 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Software & Computer Services (14) 1867.56 1.69 1845.31 1836.53 1844.49 1447.99 1.94 1.74 29.63 13.23 2467.35 FTSE EDHEC-Risk Efficient All-World 3075 318.22 -0.1 7.5 0.9 429.41
1.3 2.3 Financial Services 150 211.06 0.1 0.1 -5.1 282.22 -4.7 2.2 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) 1587.73 0.83 1568.82 1574.70 1572.62 1773.89 0.97 2.03 50.91 0.93 1823.63 Technology 188 175.43 0.2 0.2 0.7 210.00 1.0 1.8 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Software & Computer Services 90 311.72 0.4 0.4 0.5 358.63 0.8 1.1 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 6145.44 6141.30 6156.72 6149.95 6138.99 6154.58 6174.45 6181.82 6174.36 6192.74 6111.88 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 16841.27 16762.11 16847.71 16856.40 16828.04 16855.81 16853.16 16879.00 16860.66 16903.93 16732.44 (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 4529.66 4517.27 4521.92 4525.53 4528.08 4531.67 4534.13 4540.14 4538.71 4542.68 4516.12
FTSE All-Share 3379.09 3374.31 3384.05 3381.46 3375.78 3383.63 3392.34 3396.72 3392.67 3402.24 3361.00 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:16:35:29 Day's Low08:31:00 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:16:35:29 Day's Low08:31:00 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 Augean Pre 61.005 54.993 2.524 5.925 1.6 4.92 0.65 0.5 Jun 10 0.65 0.5 date price(p) Sector code Stock price(p) +/- High Low Cap (£m)
price up date High Low Stock Price p +or- Baillie Gifford Japan Trust (The) Int - 0.641 - 1.04 - - - - - - 03/17 185.00 AIM YU/ Yu Group PLC 200.50 1.50 203.00 190.00 2817.8
22p Nil 18-04-16 Tribal Group PLC Bellway Int 1084.9 831.2 226.6 158.9 148.7 103.5 34 25 Jul 1 86 61 02/12 20.00 AIM CGP Cogenpower PLC 20.50 0.00 23.00 20.00 1028.4
Billington Holdings Pre 56.748 45.103 3.11 1.922 21.1 12.5 6 3 Jul 1 12 3
Churchill Mining Int - - 1.859L 1.056L 0.014L 0.009L - - - - -
Clarke (T) Pre 242.4 207.9 3.5 0.8L 0.13 1.58L 2.6 2.6 May 13 3.1 3.1
Gamma Communications Pre 191.8 173.2 22.6 11.5 20.4 10.6 4.4 3.95 Jun 23 6.6 3.95
Gfinity Int 0.624 0.145 1.878L 1.392L 2L 3L - - - - -
Gulf Marine Services Pre 219.713 196.554 77.081 80.369 0.214 0.221 1.778 1.65 May 16 2.4 2.3
Haydale Graphene Industries Int 0.325 0.388 2.014L 1.574L 16L 14L - - - - -
Hydrogen Group Pre 122.765 169.43 6.196L 0.385 27.52L 0.42L - 3.1 - - 4.6
Jimmy Choo Pre 317.855 299.67 22.114 8.299L 5.1 11.6L - - - - -
SVG Capital Pre 91.861 110.477 4.5 9.2L - - - - -
Woodford Patient Capital Trust Pre - 16.049L - 0.25 - 0.16 - Jun 10 0.16 -

Figures in £m. Earnings shown basic. Figures in light text are for corresponding period year earlier. §Placing price. *Intoduction. ‡When issued. Annual report/prospectus available at www.ft.com/ir
For more information on dividend payments visit www.ft.com/marketsdata For a full explanation of all the other symbols please refer to London Share Service notes.
Wednesday 23 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 38.85 -0.08 39.26 30.97 4.69 17.04 239033.32 Lockheed♦ 221.71 0.45 227.91 181.91 2.68 20.06 67571.56
ANZ 25.44 -0.43 37.25 21.86 8.79 11.44 56594.63 Nokia 5.44 0.05 7.87 4.91 2.40 -40.10 35235.21 AstellasPh 1545 48.50 2033 1476 1.86 20.19 30698.6 AtlasCpcoB 186.80 1.60 270.00 162.60 3.02 20.65 8865.27 AutomData♦ 88.83 -0.18 90.67 64.29 2.17 30.14 40635.38 Lowes 75.44 0.22 78.13 62.62 1.24 25.87 69035.49
BHPBilltn♦ 17.90 -0.27 33.35 14.06 11.71 23.12 43835.41 SampoA 42.70 -0.28 49.40 36.76 4.26 15.47 26787.27 Bridgestne 4128 97.00 5182 3561 2.55 13.66 30016.87 Ericsson 80.45 0.60 120.00 70.65 3.89 26.75 29776.73 Avago Tech♦ 155.02 2.13 155.61 100.00 1.06 30.69 60527.24 Lyondell 86.37 0.17 107.32 69.10 3.40 9.33 37327.04
CmwBkAu♦ 76.91 -0.23 96.69 70.07 7.16 15.91 100136.69 France (€) Canon 3356 -3.00 4539 2977.5 4.18 19.09 40029.6 H&M 270.30 1.00 362.00 259.80 3.23 23.13 48018.15 BakerHu♦ 46.55 -0.49 70.45 37.58 1.41 -10.75 20382.1 Marathon Ptl 38.84 0.42 60.38 29.24 2.83 7.65 20556.94
CSL 101.67 1.17 108.68 85.40 1.49 26.63 35889.58 Airbus Grpe 61.25 0.37 68.50 49.96 1.83 19.19 54008.49 CntJpRwy 20080 395.00 24770 18255 0.54 14.51 36992.31 Investor 290.10 -0.90 363.40 256.80 2.85 15.31 16070.44 BankAm♦ 13.81 -0.03 18.48 10.99 1.40 11.15 142597.58 Marsh&M 60.00 0.23 60.22 50.81 1.90 20.87 31273.63
NatAusBk 27.77 -0.42 39.71 23.82 8.74 13.15 55991.07 AirLiquide 99.00 0.63 123.95 90.77 2.40 20.80 38257.98 Denso 4469 157.00 6548 3879 2.47 15.15 35332.71 Nordea Bk♦ 80.80 -0.75 114.60 77.25 6.61 10.31 39798.59 Baxter♦ 40.82 0.77 43.44 32.18 3.00 58.77 22361.39 MasterCard 92.12 -0.23 101.76 74.61 0.70 28.52 100363.1
Telstra♦ 5.26 0.07 6.53 4.98 7.62 16.50 49033.93 AXA 21.29 -0.42 26.02 18.80 4.00 11.37 58025.88 EastJpRwy 10195 288.00 12815 9191 1.10 19.16 35785.52 SEB 88.45 0.70 111.50 75.95 4.94 11.99 23343.61 BB & T 34.54 -0.09 41.90 29.95 2.93 14.02 26957.45 McDonald's 124.17 0.36 124.83 87.50 2.67 26.85 111952.65
Wesfarmers♦ 41.77 0.20 45.00 36.65 6.30 20.75 35866.72 BNP Parib 45.12 -0.08 61.00 37.00 3.10 9.42 63127.33 Fanuc 17745 395.00 28575 15300 3.91 20.88 32681.49 SvnskaHn♦■ 107.90 - 421.50 95.85 3.63 13.79 24563.28 BectonDick♦ 149.56 0.39 157.50 128.87 1.59 47.85 31679.28 McGraw Hill 96.75 0.55 108.79 78.55 1.32 23.83 25685.12
Westpc 32.43 -0.09 40.07 27.69 7.00 15.51 82486.34 ChristianDior 156.65 -1.65 195.35 140.80 1.80 13.19 31959.07 FastRetail 35660 540.00 61970 30720 0.84 47.56 33827.46 Swedbank 180.10 -1.00 223.90 150.80 5.80 13.88 24795.28 BerkshHat 214510 1209.95223011.49 186900 - 15.17 173161.48 McKesson♦ 157.39 0.53 243.61 148.29 0.64 17.09 35977.3
Woolworths♦ 22.07 0.20 29.91 20.50 8.28-282.11 21387.74 Cred Agr 10.07 -0.04 14.49 7.59 3.24 23.06 29837.8 Fuji Hvy Ind 3953 75.00 5223 3411 2.47 8.41 27675.45 TeliaSonera 43.24 0.34 55.85 37.04 6.38 14.03 22771.35 Biogen 260.94 4.89 474.00 242.07 - 17.63 57060.46 Medtronic♦ 74.33 -0.50 79.50 55.54 1.95 43.63 104139.54
Belgium (€) Danone 62.41 -0.34 67.74 51.73 2.24 31.83 45888.86 Hitachi 534.80 13.40 858.00 431.00 2.01 10.61 23116.96 Volvo 87.90 1.10 120.50 72.20 3.14 20.40 17349.92 BkNYMeln 38.01 -0.12 45.45 32.20 1.73 14.57 40898.77 Merck♦ 53.39 0.59 61.70 45.69 3.27 35.40 148171.06
AnBshInBv 108.70 1.15 124.20 87.73 3.09 25.51 196257.01 EDF 10.42 -0.26 23.56 9.13 10.77 6.11 22451.01 HondaMtr 3096 38.00 4499 2726 2.55 11.97 50153.65 Switzerland (SFr) BlackRock♦ 341.95 -0.03 380.82 275.00 2.46 17.92 56041.88 Metlife 44.21 -0.30 58.23 35.00 3.22 10.03 48483.64
KBC Grp 46.70 -0.02 66.00 44.15 4.00 8.26 21919.36 Engie SA 13.70 -0.04 19.73 13.05 6.55 40.99 37455.41 JapanTob 4592 30.00 4850 3551 1.95 22.77 82132 ABB 18.78 0.02 22.16 15.94 - 23.06 44787.64 Boeing 135.60 -0.26 155.50 102.10 2.59 18.89 89837.04 Microsoft 54.15 0.29 56.85 39.72 2.30 39.94 432505.56
Esslr Intl 107.45 -0.55 125.15 95.01 0.89 32.94 26113.45 KDDI 3118 119.50 8385 2519 1.73 18.30 75033.07 CredSuisse 14.32 -0.22 28.94 12.23 4.48 7.21 28878.7 BrisMySq 63.08 0.38 70.87 51.82 2.28 70.16 105309.48 Mnstr Bvrg 135.13 0.61 160.50 113.08 - 49.35 27420.15
Brazil (R$)
Hermes Intl 311.35 -2.90 365.55 281.20 0.85 39.24 36900.41 Keyence 60230 1640 70100 50500 0.30 33.79 32749.95 Nestle 70.65 -0.80 77.00 65.70 2.92 16.68 232083.73 CapOne 70.67 -0.14 92.10 58.49 2.05 10.47 37269.94 MondelezInt 40.67 -0.03 48.58 34.63 1.52 9.50 63797.62
Ambev 18.57 -0.16 20.46 15.99 2.31 27.10 81357.99
LOreal 154.55 -1.85 181.30 140.40 1.63 28.36 97680.69 MitsbCp 2050 14.00 2837 1565 2.41 11.30 29150.94 Novartis 72.35 1.15 103.20 69.05 3.53 26.83 199547.13 CardinalHlth 81.84 0.99 91.91 74.73 1.77 20.67 26952.28 Monsanto 90.49 -0.82 123.82 81.22 2.10 25.24 39847.76
Bradesco 30.65 -0.60 37.78 17.90 2.69 12.61 21566.73
LVMH 148.75 -1.80 176.60 130.75 1.93 14.63 84662.72 MitsubEst 2184.5 52.50 2975 1970 0.62 61.28 27162.6 Richemont 62.60 -1.10 87.55 61.75 2.38 21.67 33667.01 Carnival 48.56 -1.22 55.77 40.52 2.14 22.80 28055.28 MorganStly 25.84 -0.10 41.04 21.16 2.05 9.21 50609.42
Cielo♦ 35.82 0.72 49.30 28.03 1.68 21.94 18837.58
Nmrcble-SFR 36.46 -0.80 57.35 27.05 - -48.04 17935.71 MitsubishiEle 1188.5 23.00 1718 947.00 2.04 11.76 22821.94 Roche 237.10 0.40 283.90 231.70 3.16 24.66 171623.34 Caterpillar 75.58 -0.31 89.62 56.36 3.75 22.42 44011.89 MylanNV 46.22 0.76 76.69 37.59 - 28.12 22728.55
ItauHldFin 27.28 -0.89 35.93 21.49 3.97 7.19 23169.94
Orange 15.62 0.11 16.98 12.21 3.45 45.80 46435.41 MitsuiFud 2790.5 40.00 3879 2260.5 0.90 24.67 24741.29 Swiss Re 90.20 - 99.75 76.85 4.69 7.96 34450.61 CBS♦ 54.27 0.25 63.95 38.51 1.07 19.60 22891.85 Netflix 99.97 -1.09 133.27 58.46 - 368.84 42795.28
Petrobras 10.34 0.09 16.26 5.67 - -4.58 21450.57
PernodRic 101.55 -0.15 117.75 88.00 1.65 30.18 30259.4 MitUFJFin 553.00 5.30 936.80 431.90 2.92 5.95 70071.36 Swisscom 522.00 1.00 580.50 452.70 3.94 21.24 27859.69 Celgene 103.62 2.48 140.72 92.98 - 55.32 80995.14 NextEraE 117.59 0.02 118.88 93.74 2.53 20.12 54152.11
Vale 15.45 0.30 27.89 8.60 13.39 -7.65 13855.01
Renault 88.07 2.56 100.25 59.59 1.94 10.61 29238.58 Mizuho Fin 179.10 -0.40 280.40 149.30 3.88 6.84 39945.29 Syngent 396.70 -0.80 435.20 288.50 2.76 29.18 37988.4 CharlesSch 28.45 0.17 35.72 21.51 0.81 28.70 37568.88 Nike♦ 65.13 0.41 68.20 47.25 1.04 33.52 87918.77
Canada (C$) Murata Mfg 14395 320.00 22220 11610 1.25 15.98 28999.01 ChevrnTx 96.50 0.06 112.20 69.58 4.28 40.90 181724.58 NorfolkS 84.97 0.93 109.79 64.51 2.68 17.16 25337.94
Safran 61.85 1.06 72.45 48.87 1.87 -65.26 28956.81 UBS 16.37 -0.02 22.57 15.01 4.28 10.67 64931.72
BCE♦ 58.40 0.03 59.85 51.56 4.04 21.64 38834.02 NipponTT 4972 157.00 5419 3626 1.71 17.44 93214.75 Chubb 120.83 -0.56 134.49 94.35 2.12 14.54 39170.88 Northrop 195.10 0.92 195.47 152.31 1.53 19.48 35302.02
Sanofi 71.16 0.33 101.10 66.44 3.74 22.83 104309.16 Zurich Fin 225.60 -1.00 334.60 194.70 - 19.53 34966.25
BkMontrl 78.99 -0.05 80.76 64.01 3.86 12.70 38926.86 Nissan Mt 1082 21.00 1350 923.30 3.11 8.85 43743.66 Cigna♦ 139.17 1.02 170.68 123.54 0.03 17.65 35662.78 NXP 82.93 0.18 114.00 61.61 - 14.09 28694.02
Sant Gbn 37.97 0.28 44.84 31.47 1.47 28.39 23908.19 Taiwan (NT$)
BkNvaS 63.59 -0.07 67.44 51.17 4.03 12.09 58584.99 Nomura 521.10 11.30 909.20 442.80 3.96 9.23 17813.79 Cisco 28.28 0.09 29.90 22.46 2.98 13.98 142308.39 Occid Pet♦ 69.71 -0.96 82.03 58.22 4.11 -6.79 53243.03
Schneider 55.77 0.25 75.29 45.32 3.21 24.29 36789.73 Chunghwa Telecom 109.00 1.00 109.00 93.10 4.11 23.08 26105.67
Brookfield♦ 44.96 -0.01 48.64 37.70 1.25 13.11 33979.56 Nppn Stl 2202 7.50 3505 1773.5 2.65 10.53 18714.07 Citigroup 43.59 -0.01 60.95 34.52 0.35 8.34 128207.94 Oracle 41.64 0.03 45.24 33.13 1.47 20.13 172800.38
SocGen 35.18 -0.20 48.77 26.61 3.18 8.39 31842.28 Formosa PetChem 94.50 3.70 94.50 63.90 0.86 20.01 27792.66
CanadPcR♦ 172.00 -4.43 241.73 140.02 0.74 22.60 20163.74 NTTDCMo 2613.5 81.50 2888 1961 2.40 21.77 95494.22 CME Grp♦ 95.53 -0.27 100.87 81.87 2.02 26.84 32328.57 Pepsico♦ 101.12 -0.42 103.44 76.48 2.64 28.56 147765.39
Total 41.38 0.05 50.30 35.21 5.60 21.82 114001.3 HonHaiPrc 84.30 -0.20 99.70 72.70 3.96 9.52 40701.15
CanImp 98.27 -0.19 102.90 82.19 4.18 11.70 29751.38 Panasonic 1017 -7.00 1853.5 799.00 1.34 154.90 22310.45 Coca-Cola♦ 45.68 0.01 45.91 36.56 2.79 28.38 197749.81 Perrigo 133.48 2.21 215.73 122.62 0.34 140.87 19114.64
UnibailR 247.65 -1.85 259.00 212.05 3.62 11.40 27457.84 MediaTek 248.00 -9.00 453.00 193.50 8.19 13.16 12033.12
CanNatRs♦ 36.18 0.59 42.46 21.27 2.31 100.66 30342.17 Seven & I 4758 38.00 5998 4370 1.35 28.70 37718.58 Cognizant 59.18 -0.34 69.80 51.22 - 23.18 36047.75 Pfizer 30.52 0.45 36.46 28.25 3.54 28.51 188739.95
Vinci 65.07 0.13 66.44 50.08 2.57 19.02 43051.07 TaiwanSem 158.50 -1.50 160.00 112.50 2.62 14.64 126890.06
CanNatRy♦ 80.22 -1.30 85.88 66.62 1.35 20.67 48329.75 ShnEtsuCh 6010 9.00 8215 5160 1.57 19.69 23224.48 ColgtPlm 69.69 -0.75 70.87 50.84 2.08 47.49 62210.48 Phillips66 90.81 1.12 94.12 69.79 2.32 12.18 47898.63
Vivendi 19.31 0.55 24.83 16.30 9.67 40.56 29657.4
Enbridge 49.95 0.40 66.14 40.03 3.38-1377.56 35368.43 Softbank 5632 12.00 7827 4133 0.64 13.53 60473.25 Thailand (THB) Comcast 59.97 0.13 64.99 50.01 1.61 19.18 125607.72 PhilMorris♦ 96.80 -0.77 99.33 75.27 4.03 22.70 149976.83
GtWesLif 35.53 -0.07 37.70 30.42 3.33 14.16 27038.8 Germany (€) PTT Explor♦ 288.00 1.00 370.00 197.00 3.58 44.08 23557.1
Sony 2937 1.00 3970 2199 0.69 30.47 33158.43 ConocPhil 42.37 -0.21 69.72 31.05 6.69 -12.27 52377.91 PNCFin 86.43 0.23 100.52 77.67 2.24 12.08 43310.52
ImpOil 44.97 0.16 55.37 37.25 0.98 37.61 29201.35 Allianz 145.35 0.25 170.15 126.55 4.40 10.70 74571.93
SumitomoF 3609 22.00 5770 2819.5 3.85 9.87 45638.76 United Arab Emirates (Dhs) Corning♦ 20.35 0.18 23.64 15.42 2.28 22.83 22379.78 PPG Inds 109.92 1.03 118.69 82.93 1.24 22.17 29321.7
Manulife 18.75 -0.27 24.20 15.32 3.21 19.71 28325.99 BASF 67.31 0.37 97.22 56.01 3.88 16.66 69405.33
Takeda Ph 5394 133.00 6609 5010 2.99 -42.19 38119.83 Emirtestele 18.10 0.25 19.05 10.50 3.89 19.52 38960.27 Costco 153.36 -0.58 169.73 117.03 1.06 28.79 67330.42 Praxair 112.54 -0.42 124.99 95.60 2.45 21.80 32103.85
Potash 23.87 -0.90 41.82 20.65 7.86 12.50 15309.14 Bayer 103.70 1.20 146.45 91.08 2.03 22.82 96272.23
TokioMarine 3897 74.00 5504 3310 2.47 15.31 26400.22 United Kingdom (p) CrownCstl♦ 86.16 0.24 88.46 75.71 3.74 62.03 28756.07 Priceline 1315.3 -35.22 1476.52 954.02 - 27.58 65260.46
RylBkC 75.00 -0.32 81.53 64.52 3.87 12.14 85418.94 BMW 81.38 0.18 118.85 66.00 3.33 8.99 54999.01
Toyota 6098 210.00 8783 5703 3.31 9.22 182034.59 AscBrFd 3430 19.00 3606 2705.75 0.99 48.07 38603.98 CSX 26.47 -0.19 37.67 21.33 2.55 13.73 25494.58 ProctGmbl 82.96 -0.36 85.11 65.02 3.06 27.90 224370.76
Suncor En♦ 36.38 0.07 40.93 27.32 2.84 -29.09 43485.93 Continental 196.20 0.05 231.90 171.30 1.55 15.80 44054.08
Mexico (Mex$) AstraZen 3915 13.50 4931.68 3746 4.88 25.84 70363.98 CVS 102.61 0.87 113.65 81.37 1.32 23.03 112716.14 Prudntl 74.25 -0.30 92.60 57.19 3.17 6.33 33115.5
ThmReut 51.75 0.09 55.92 47.25 3.26 25.72 30191.15 Daimler 66.95 0.27 92.70 57.01 3.42 9.11 80410.46
AmerMvl 12.98 -0.14 17.17 10.87 1.85 40.22 31470.64 Aviva 475.70 0.50 574.50 400.10 3.80 12.45 27380.8 Danaher♦ 95.09 0.39 97.62 81.25 0.55 26.86 65338.09 PublStor♦ 263.68 -0.58 271.81 182.08 2.38 45.04 45655.71
TntoDom 55.48 -0.20 56.48 47.75 3.42 13.89 78687.8 Deut Bank 16.71 -0.21 33.42 13.03 4.19 -3.54 25866.7
FEMSA UBD 162.66 -0.70 176.84 133.52 0.65 33.03 33584.3 Barclays♦ 157.20 -3.30 289.90 147.75 4.13 -80.95 37566.71 Deere 82.31 -0.41 98.23 70.16 2.92 14.95 25954.46 Qualcomm♦ 52.14 -0.07 71.90 42.24 3.44 17.99 77943.43
TrnCan 49.13 0.69 58.12 40.58 3.84 -30.99 26434.79 Deut Tlkm 15.66 -0.09 17.63 13.39 2.98 23.47 80962.28
WalMrtMex 40.85 -0.95 47.44 35.50 1.27 32.59 41160.03 BP♦ 360.75 4.55 487.50 252.55 7.66 -15.03 94806.5 Delphi 73.17 0.81 90.57 55.59 1.32 18.32 20207.54 Raytheon 124.30 0.74 129.99 95.32 2.08 19.09 37165.45
ValeantPh 41.23 3.33 347.84 32.35 - 19.24 10777.07 DeutsPost 24.53 0.15 31.19 19.55 - 21.98 33397.53
BrAmTob♦ 3983 7.00 4149 3231.5 3.77 17.30 105560.45 Delta 49.40 -0.72 52.77 34.61 0.88 9.10 38458.33 Regen Pharm 379.75 8.71 605.93 348.96 - 71.33 39066.82
E.ON 8.24 -0.07 14.85 7.08 1.59 -2.45 18506.03 Netherlands (€)
China (HK$) BSkyB 1013 -3.00 1180 953.50 3.24 27.74 24755.78 Devon Energy 28.13 0.11 70.48 18.07 3.29 -0.82 12411.4 ReynoldsAm♦ 50.27 -0.47 52.54 33.71 2.67 20.28 71752.45
Fresenius Med 76.28 0.29 83.17 63.10 0.96 26.30 26231.42 Altice 16.72 -0.19 47.73 9.98 - 320.61 15410.08
AgricBkCh 2.83 - 4.55 2.50 7.47 4.49 11219.98 BT 444.60 -4.65 502.60 404.00 2.56 16.75 62953.2 DiscFinServ 50.31 -0.10 60.57 42.86 2.07 10.17 20838.68 Salesforce 73.04 0.79 82.90 52.60 - -1016.76 49002.54
Fresenius SE 61.96 0.27 70.00 51.01 0.66 26.80 37961.29 ASML Hld 87.60 0.97 104.85 70.25 0.75 29.27 42615.68
Bk China 3.19 - 5.68 2.83 6.92 4.97 34405.55 Compass 1220 -5.00 1298 963.00 2.25 23.37 28514.92 Disney 98.26 -0.20 122.08 86.25 1.34 19.04 160318.08 Schlmbrg♦ 74.11 -0.78 95.13 59.60 2.60 47.14 92876.68
HenkelKgaA 84.80 0.01 99.44 75.76 1.42 20.54 24732.74 Heineken 78.09 -0.48 85.90 64.54 1.41 25.34 50496.82
BkofComm 5.04 -0.06 8.61 4.24 6.23 4.89 22759.46 Diageo♦ 1876 8.50 1979.5 1592.5 3.01 19.09 67117.99 DominRes 73.25 -0.38 76.59 64.54 3.41 23.73 43687.71 Sempra Energy♦ 102.82 0.68 112.33 86.72 2.63 19.83 25624.36
Linde 128.50 0.70 194.75 113.50 2.29 22.29 26793.95 ING 11.24 -0.07 16.00 9.19 2.99 8.73 48832.21
BOE Tech 1.68 -0.13 4.78 1.20 2.15 25.15 43.11 GlaxoSmh♦■ 1397 12.50 1645 1227.5 5.73 8.11 96727.52 DowChem 51.43 -0.11 57.10 35.11 3.23 9.01 57453.09 Shrwin-Will 282.82 9.53 294.35 218.27 0.91 26.27 26076.8
MuenchRkv 180.90 0.30 206.50 156.00 4.00 10.35 33883.89 Unilever 39.14 -0.32 42.84 32.86 2.84 24.38 75345.99
Ch Coms Cons 8.26 - 17.00 5.77 2.38 8.40 4716.88 Glencore 159.85 -0.05 318.46 66.67 7.64 -6.32 32712.05 DukeEner 79.43 -0.09 80.40 65.50 3.93 20.49 54677.86 SimonProp 202.36 -0.64 208.14 170.99 2.88 35.68 63704.27
SAP 71.07 0.37 75.75 53.91 1.44 29.50 98018.3 Norway (Kr)
Ch Evrbrght 3.65 - 5.65 3.07 5.92 5.06 3233.59 HSBC♦ 447.90 -1.10 674.57 420.15 7.68 10.25 125353.85 DuPont 64.25 -0.33 75.72 47.11 2.58 31.87 56304.77 SouthCpr 28.44 0.22 33.31 21.55 1.15 31.82 22004.23
Siemens 92.71 0.72 104.20 77.91 3.32 15.77 88468.71 DNB 102.20 -0.10 143.00 90.10 3.44 7.91 19807.02
Ch Rail Cons 8.73 -0.19 17.70 6.72 2.00 8.03 2337.87 Imperial Brands♦ 3784 -11.00 3848.5 2921 3.49 21.39 51573.93 Eaton 63.63 -0.05 73.82 46.19 3.34 15.57 29143 Starbucks 59.45 0.35 64.00 42.05 1.10 37.80 87873.05
Volkswgn 133.55 4.05 245.30 95.00 3.35 11.37 44242.77 Statoil 134.20 0.70 161.70 97.25 4.91 -12.42 50916.67
Ch Rail Gp 5.64 -0.06 12.30 4.21 1.61 9.97 3060.62 LlydsBkg 69.36 -0.43 89.35 55.84 2.16 91.87 70378.07 eBay 24.23 -0.11 29.83 21.52 - 15.70 28560.03 StateSt 59.64 -0.30 81.26 50.73 2.13 13.84 24063.91
ChConstBk 4.94 -0.03 7.98 4.31 7.08 4.69 153181.9 Hong Kong (HK$) Telenor 136.40 0.10 186.10 116.80 2.58 36.07 24368.48 Ecolab♦ 110.81 1.83 122.48 98.62 1.17 34.55 32537.89 Stryker 104.81 -0.05 105.59 86.68 1.30 28.76 39114.23
Natl Grid 973.90 -5.70 992.50 806.40 4.40 16.97 51850.68
China Vanke 18.84 -0.22 24.10 15.52 3.09 9.98 3195.27 AIA 42.55 -0.30 58.20 36.85 0.95 21.04 66121.58 Qatar (QR) EMC 26.44 -0.04 28.77 22.66 1.68 27.03 51479.93 Sychrony Fin 28.60 -0.20 36.40 23.74 - 11.19 23843.34
Prudential 1355.5 -15.00 1761.5 1045.99 2.72 13.80 49575.16
ChinaCitic 4.90 0.01 7.40 4.00 - 4.86 9405.38 BOC Hold 22.55 -0.25 33.70 18.82 4.49 10.19 30750.51 QatarNtBk 141.00 - 169.00 122.50 4.27 10.90 27092.62 Emerson 55.33 0.34 62.75 41.25 3.29 15.08 35583.6 Target 82.25 0.05 85.81 66.46 2.63 15.63 49348.53
RBS 233.40 -2.10 370.00 215.90 - -10.47 38573.77
ChinaLife 19.50 0.22 41.00 16.12 2.35 12.44 18715.08 Ch OSLnd&Inv 25.15 -0.35 34.05 20.45 1.98 7.66 31985.75 EOG Res 76.28 0.32 101.36 57.15 0.85 -9.54 41945.33 TE Connect 61.94 0.13 73.56 51.70 1.99 23.09 23175.9
Russia (RUB) ReckittB 6641 -5.00 6782 5403 2.09 28.22 66654.7
ChinaMBank 16.50 -0.08 26.85 12.72 4.72 6.21 9770.08 ChngKng 49.60 2.10 77.55 38.20 - 11.56 24691.6 EquityResTP♦ 72.83 0.31 82.53 61.90 2.93 31.99 26593.26 Telsa Mtrs 238.73 0.41 286.65 141.05 - -35.71 31525.15
Gzprm neft 149.62 -0.28 158.70 122.75 4.64 12.91 52570.82 RELX 1278 16.00 1286 988.50 2.07 26.97 36999.1
ChinaMob 83.80 -0.60 118.00 79.00 3.14 13.95 221306.6 Citic Ltd 11.84 0.04 16.40 10.02 1.64 6.18 44423.74 Exelon 35.10 0.22 35.12 25.09 3.41 14.32 32351.49 TexasInstr 57.11 0.09 59.67 43.49 2.36 20.98 57410.27
Lukoil 2740 -44.50 2850.1 2040.1 6.12 25.16 34589.96 RioTinto♦ 1993 -21.00 3072 1557 7.71 -61.89 38939.25
ChinaPcIns 28.05 -0.40 47.10 23.70 2.01 14.51 10040.59 Citic Secs 18.46 -0.04 40.50 12.82 1.78 8.73 6948.36 ExpScripts 67.60 -1.75 94.61 65.55 - 19.69 45156.57 TheTrvelers♦ 116.72 0.69 116.78 95.21 1.97 11.13 34429.76
MmcNrlskNckl 9440 50.00 11284 7840 17.07 11.97 22171.55 RollsRoyce 694.50 -8.00 1061 497.00 2.03 155.02 18154.03
ChMinsheng 7.28 -0.11 11.88 6.13 2.95 4.97 6510.35 CK Hutchison 102.40 2.40 174.90 91.80 3.23 4.47 50976.17 ExxonMb 84.69 1.07 90.09 66.55 3.28 22.81 351696.96 ThrmoFshr♦ 139.02 -0.62 143.65 117.10 0.42 29.23 55086.35
Novatek 616.20 3.70 650.00 410.80 9.17 58.26 27768.99 RylDShlA♦ 1702 4.50 2122 1256 7.56 82.72 101858.41
ChMrchSecs RMB 18.36 -0.81 40.00 13.45 4.04 10.13 13582.16 CNOOC 9.04 0.07 13.78 6.41 5.68 8.65 52057.15 Facebook 112.49 0.64 117.59 72.00 - 90.69 258157.79 TimeWrnr 73.43 1.29 91.34 55.53 1.84 16.62 58017.08
Rosneft 318.05 5.05 322.75 214.80 2.49 8.90 50028.7 SABMill 4253 18.50 4264 2773 1.75 35.23 98016.78
Chna Utd Coms RMB 4.48 -0.04 10.74 3.86 1.45 28.37 14625.86 HangSeng♦■ 133.60 -0.60 162.10 121.10 4.04 9.63 32943.88 Fedex♦ 163.39 -1.15 185.19 119.71 0.59 45.31 43857.76 TimeWrnrC 204.91 0.58 204.97 145.44 1.77 33.28 58044.93
Sberbank 111.49 -0.58 114.19 60.57 0.39 12.46 35720.79 Shire♦ 3942 100.00 5870 3423 0.39 25.77 33211.39
ChShenEgy 12.72 -0.30 22.50 10.12 6.66 9.32 5575.71 HK Exc&Clr 186.20 0.80 311.40 160.10 2.64 29.59 29023.89 FordMtr 13.62 -0.05 16.74 10.44 4.25 7.66 53251.21 TJX Cos 78.08 0.23 78.46 63.53 0.91 25.85 52276.83
Surgutneftegas 39.80 0.90 41.16 30.31 - 1.56 21103.7 StandCh 494.70 6.15 1166 373.40 9.07 -8.53 23056.11
ChShpbldng RMB 7.47 0.57 20.19 5.66 0.49-476.05 20660.87 MTR 38.00 0.15 40.00 33.10 2.50 15.44 28718.2 Franklin 39.16 0.11 54.04 31.00 1.55 12.98 23208.02 T-MobileUS 37.21 -0.15 43.43 31.19 - 46.80 30360.67
Saudi Arabia (SR) Tesco 201.65 4.20 252.52 137.00 0.58 -2.90 23338.45
ChStConEng RMB 5.85 - 12.52 4.88 2.82 7.82 26939.95 SandsCh 30.35 -0.45 39.15 20.75 5.93 18.28 31587.67 GenDyn 135.86 1.08 153.76 121.61 1.91 15.51 41663.83 UnionPac♦ 82.47 -1.51 116.00 67.06 2.57 15.58 69803.79
AlRajhiBnk 54.02 0.08 69.00 44.70 2.23 12.78 23407.43 Vodafone 218.15 1.20 258.00 197.70 5.14 -40.85 82364.31
ChUncHK 9.92 -0.02 16.00 7.87 2.34 22.29 30639.33 SHK Props 94.65 -0.40 137.60 79.00 2.29 9.53 35321.84 GenElectric♦ 31.23 0.14 31.49 19.37 2.84 190.43 289929.14 UPS B 105.23 0.08 107.32 87.30 2.68 20.41 72624.24
Natnlcombnk 42.15 -0.55 72.75 36.60 1.78 10.19 22478.8 WPP 1595 11.00 1616 1273 2.39 16.48 29358.73
CNNC Intl RMB 7.80 0.23 14.38 4.07 - 22.89 4674.45 Tencent 159.50 1.40 171.00 124.00 0.21 47.07 193463.27 GenMills 60.95 -0.36 62.07 47.43 2.68 26.66 36161.42 USBancorp 41.45 0.07 46.26 37.07 2.35 13.58 71953.72
SaudiBasic 78.40 -0.31 110.50 59.50 6.15 10.61 62716.65 United States of America ($)
CSR 8.02 -0.02 20.70 6.61 - 18.86 4521.43 India (Rs) GenMotors♦ 31.98 -0.11 39.00 24.62 4.16 5.61 49385.15 UtdHlthcre 128.61 1.87 128.66 95.00 1.41 22.18 122266.18
SaudiTelec 69.47 0.22 73.25 52.75 5.55 15.57 37048.7 21stC Fox A♦ 28.10 0.13 35.85 22.66 1.03 24.13 31456.46
Daqin RMB 6.99 -0.07 15.15 6.41 6.58 7.68 16005.44 Bhartiartl 350.90 -2.75 452.45 282.30 0.62 26.47 21018.77 GileadSci♦ 93.73 1.06 123.37 81.89 1.33 8.16 128114.45 UtdTech 99.14 -0.03 120.18 83.39 2.49 22.69 82953.4
Singapore (S$) 3M 165.18 0.34 167.70 134.00 2.39 22.58 99940.21
Gree Elec Apl 0.20 0.00 0.45 0.13 - -2.35 349.10 HDFC Bk 1053.85 8.25 1128 928.00 0.74 23.99 39914.85 GoldmSchs♦ 154.44 -1.85 218.77 139.05 1.59 13.19 65874.25 ValeroEngy 66.41 0.56 73.88 51.68 2.47 8.62 31238.78
DBS 15.55 -0.20 21.50 13.01 3.47 13.10 28612.04 AbbottLb 40.99 0.23 51.74 36.00 2.26 24.71 60388.18
GuosenSec RMB 16.45 -0.63 34.94 13.28 1.17 10.40 5561.43 Hind Unilevr 870.15 -9.50 950.95 766.40 1.58 42.27 28214.47 Halliburton♦ 36.09 -0.29 50.20 27.64 1.92 -47.97 30977.56 Verizon 53.32 -0.13 53.85 38.06 4.03 12.65 217196.83
JardnMt US$♦ 57.40 0.72 63.86 45.00 2.28 14.77 40316.08 Abbvie 57.06 1.05 71.60 45.45 3.41 18.83 91937.25
HaitongSecs 13.24 -0.08 27.90 10.00 2.19 8.64 5822.42 HsngDevFin 1168.1 16.85 1386.75 1011.45 1.25 20.42 27652.94 HCA Hold 77.19 1.67 95.49 43.91 - 16.04 30549.36 VertexPharm 86.51 2.49 143.45 75.90 - -38.83 21315.37
JardnStr US$♦ 30.12 0.95 35.78 25.24 0.81 11.81 33525.03 Accenture 108.24 0.08 109.86 88.18 1.85 25.48 87264.73
Hngzh HikVDT RMB 31.77 -0.63 56.48 23.72 1.21 23.58 15441.48 ICICI Bk 233.60 -1.25 338.00 180.75 2.04 11.02 20351.78 Hew-Pack♦ 12.28 0.07 16.16 8.91 5.19 5.02 21203.36 VF Cp 65.61 -0.89 77.40 52.21 1.96 23.86 27849.8
OCBC 9.16 0.06 10.92 7.41 3.53 11.32 27666.42 Adobe 93.07 0.57 98.00 71.27 - 79.39 46648.01
Hunng Pwr 6.82 -0.19 11.90 5.63 6.44 6.82 4134.6 Infosys 1189.95 -4.95 2275 932.65 3.33 20.95 40754.81 HiltonWwde♦ 22.16 -0.25 31.60 16.16 0.61 16.18 21891.28 Viacom♦ 41.00 0.04 73.52 30.11 3.60 9.12 14204.71
SingTel 3.86 - 4.57 3.38 4.20 17.22 45200.91 AEP 65.01 0.21 65.68 52.29 3.19 18.77 31905.59
IM Baotou Stl RMB 3.02 -0.04 7.50 2.66 - -40.29 7322.25 ITC 323.15 -8.30 359.80 268.00 1.90 26.37 38935.45 HomeDep♦ 131.11 0.10 135.47 92.17 1.57 26.70 166237.87 Visa Inc 73.39 -0.38 81.01 60.00 0.66 27.77 140845.02
UOB 18.90 -0.12 25.05 16.80 4.04 10.82 22311.98 Aetna 112.27 0.86 134.40 92.42 0.86 17.17 38239.16
In&CmBkCh 4.31 -0.01 7.10 3.72 6.89 4.88 48248.81 L&T 1237.3 9.15 1888 1016.05 1.18 23.61 17270.08 Honywell 113.02 0.34 113.12 87.00 1.83 19.40 86046.11 Walgreen 83.23 -0.32 97.30 71.50 1.58 21.43 89784.1
Aflac 63.66 0.38 66.53 51.41 2.39 11.29 26676.11
IndstrlBk RMB 15.50 -0.03 21.42 11.90 3.52 6.17 45483.64 OilNatGas 216.10 -0.55 343.20 187.75 4.37 9.88 27704.22 South Africa (R) HumanaInc 184.43 0.70 219.79 155.24 0.60 22.65 27483.35 WalMartSto 68.12 0.15 83.90 56.30 2.64 15.86 218096.96
AirProd 142.40 1.71 154.55 114.64 2.19 24.39 30708.61
Kweichow RMB 234.49 2.51 290.00 166.20 1.79 19.11 45368.78 RelianceIn 1047.85 10.55 1089.75 796.45 0.93 11.91 50875.16 Firstrand 47.95 0.05 58.47 34.08 4.14 12.70 17691.2 IBM 148.55 -0.08 176.30 116.90 3.25 11.32 142738.86 WellsFargo 50.49 -0.18 58.77 44.50 2.82 12.70 255358.53
Alexion 134.45 3.39 208.88 124.16 - 208.47 30290.42
Midea 1.94 0.04 2.68 1.65 4.66 13.50 53.81 SBI NewA 197.50 0.70 305.00 148.25 1.72 9.86 22973.71 MTN Grp 147.00 1.00 250.00 109.56 9.59 7.79 17843.28 IllinoisTool 102.29 0.54 102.40 78.79 1.95 20.67 37209.72 Williams Cos♦ 17.30 -0.05 61.38 10.22 13.66 -23.60 12976.14
Allegran 282.00 7.67 340.34 237.50 - -34.64 111425.23
New Ch Life Ins 26.85 -0.25 56.55 22.00 0.90 7.89 3581.17 SunPhrmInds 844.60 8.15 1200.8 704.00 0.35 53.70 30458.87 Naspers N 2163.42 -10.58 2270 1521.98 0.22 65.88 62307.07 Illumina 156.70 1.57 242.37 130.00 - 52.47 23041.36 Yahoo 35.48 0.01 46.17 26.15 - -7.92 33588.14
Allstate♦ 67.16 0.32 72.51 54.12 1.72 13.78 25406.66
PetroChina 5.32 0.01 11.04 4.16 3.44 19.73 14477.22 Tata Cons 2473.1 26.85 2770 2115 1.57 23.17 73021.14 South Korea (KRW) Intcntl Exch♦ 236.91 -0.19 268.89 220.28 1.18 21.56 28165.68 Yum!Brnds 79.00 -0.43 95.90 64.58 2.06 28.06 32288.21
Alphabet 762.80 0.64 810.35 529.00 - 34.63 223184.35
PingAnIns 37.40 -0.05 62.90 30.50 2.12 10.90 35925.47 Indonesia (Rp) HyundMobis♦ 260000 8500 272000 185500 1.28 15.30 21929.99 Intel 32.41 0.07 35.59 24.87 2.86 14.40 153104.84 Venezuela (VEF)
Altria♦ 61.13 -0.59 63.15 47.31 3.42 23.76 119688.37
PngAnBnk RMB 10.72 -0.08 17.50 9.30 1.57 7.13 19489.56 Bk Cent Asia 13650 -125.00 15600 11000 1.03 20.25 25534.21 KoreaElePwr 59200 -900.00 61200 40800 0.77 3.40 32929.79 Intuit 102.35 0.34 109.21 79.63 1.08 51.25 26285.65 Bco de Vnzla 127.00 18.95 143.95 39.00 - - 34310.08
Amazon 562.76 8.78 696.44 365.65 - 466.95 264971.06
Pwr Cons Corp RMB 6.69 -0.12 20.00 5.60 1.43 13.73 3400.29 SK Hynix 30200 650.00 51700 25800 1.57 5.70 18488.51 John&John 107.25 -0.03 108.35 81.79 2.65 20.30 295832.44 Bco Provncl 3900 - 4400 1190 2.20 2.91 1750.21
Israel (ILS) AmerAir 42.99 -0.48 55.93 34.10 0.90 4.03 25923.74
SaicMtr RMB 19.87 -0.08 29.18 14.00 6.27 7.93 33742.2 SmsungEl 1269000 2000 1494000 1033000 1.48 10.18 159512.16 JohnsonCn♦ 38.46 -0.37 54.52 33.62 2.68 18.64 24927.89 Mrcntl Srvcs 5250 - 6200 1900 0.15 40.53 23100.52
TevaPha 208.50 -0.70 275.90 206.40 2.42 30.43 55298.92 AmerExpr 60.74 -0.47 83.54 50.27 1.79 12.48 58556.12
ShenwanHong 0.14 0.00 0.41 0.12 - -2.33 46.43 Spain (€) JPMrgnCh 60.51 0.05 70.61 50.07 2.74 10.45 222087.73
Italy (€) AmerIntGrp♦ 53.94 0.37 64.93 50.20 1.45 33.89 62001.24
ShgPdgBk RMB 18.15 0.09 20.12 11.91 4.00 7.15 52144.85 Kimb-Clark♦ 133.44 -1.82 136.61 103.04 2.54 49.94 48127.78 Closing prices and highs & lows are in traded currency (with variations for that
Enel 3.91 -0.01 4.50 3.33 3.34 69.77 41234.38 BBVA 6.26 -0.04 9.77 5.24 2.38 17.06 44757.95 AmerTower 100.08 -0.26 104.12 83.07 1.74 73.78 42423.67
Sinopec Corp 4.82 -0.01 7.79 3.86 4.78 23.88 15860.94 KinderM 18.51 0.15 44.71 11.20 10.06 185.34 41294.94 country indicated by stock), market capitalisation is in USD. Highs & lows are
ENI 13.80 0.07 17.66 10.93 6.49 -19.40 56302.83 BcoSantdr 4.17 -0.07 7.17 3.31 11.10 8.59 67574.36 Amgen 150.74 3.73 181.81 130.09 2.02 17.25 113370.2
Sinopec Oil RMB 5.16 0.06 14.23 4.71 - -155.29 1417.29 Kraft Heinz♦ 76.58 -0.01 81.20 61.42 2.14-233.51 93059.21 based on intraday trading over a rolling 52 week period.
Generali 13.32 -0.17 18.70 10.90 4.20 10.89 23281 CaixaBnk 2.78 - 4.53 2.37 4.02 21.59 18202.65 Anadarko♦ 48.11 -0.50 95.94 28.16 2.17 -3.79 24824.02
Denmark (kr) Iberdrola 5.98 -0.06 6.71 5.66 0.47 16.66 42947.2 Kroger 38.25 0.12 42.75 27.32 0.92 20.46 37283.15 ♦ ex-dividend
IntSPaolo 2.52 0.00 3.65 2.12 2.60 16.55 44796.8 Anthem♦ 140.52 0.52 173.59 115.63 1.72 15.53 36725.15
DanskeBk 184.30 -0.60 218.00 168.30 2.78 14.90 27996.34 Inditex 30.05 0.17 35.38 26.00 1.21 36.44 105124.67 L Brands 86.48 -0.29 101.11 75.11 2.32 20.45 24826.68 ■ ex-capital redistribution
Luxottica 48.90 0.02 67.80 47.56 1.37 31.82 26552.23 Aon Cp 101.87 0.28 104.70 83.83 1.09 21.64 27903.91
MollerMrsk 9000 50.00 16450 7355 3.09 37.98 14426.14 Repsol 10.41 -0.05 18.75 7.95 8.52 -13.02 16849.8 LasVegasSd♦ 53.28 0.01 59.90 34.88 4.71 22.41 42341.32 # price at time of suspension
Unicred 3.69 -0.04 6.61 2.77 3.03 12.38 24782.59 Apple 106.69 0.78 134.54 92.00 1.84 11.78 591523.84
NovoB♦ 361.80 1.30 415.00 305.10 1.29 30.36 112389.11 Telefonica 9.99 -0.01 14.31 8.48 6.96 535.26 55803.77 LibertyGbl 37.88 -0.22 58.66 30.65 - -30.68 9576.28
ArcherDan 37.91 -0.26 53.31 29.86 2.85 13.20 22512.07
Lilly (E) 71.93 1.68 92.85 67.88 2.68 33.00 79563.96

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
ChShpbldng 7.47 6.90 0.57 8.26 1.15 18.2 13.70 ValeantPh 37.90 37.90 0.00 0.00 -7.24 -16.0 -60.64 Mar 22 date Coupon S* M* F* price yield yield yield US Mar 22 date Coupon S* M* F* price yield yield yield US
Devon Energy 28.13 28.02 0.11 0.37 4.04 16.7 38.67 Nordea Bk 81.55 81.55 0.00 0.00 -8.80 -9.7 -6.24 High Yield US$ US$
Petrobras 10.25 10.25 0.00 0.00 1.34 15.0 39.68 H&M 269.30 269.30 0.00 0.00 -24.00 -8.2 -5.88 Navient Corporation 06/18 8.45 BB- Ba3 BB 107.44 4.93 0.00 -1.55 4.08 Halliburton Company 02/27 6.75 A A2 A- 122.92 4.15 0.00 -0.50 2.24
Citic Secs 18.46 18.50 -0.04 -0.22 2.32 14.4 21.61 SvnskaHn 107.90 107.90 0.00 0.00 -8.80 -7.5 -4.62 High Yield Euro Cummins Inc. 02/27 6.75 A+ A2 A 124.64 3.98 0.00 -0.28 2.08
Fedex 163.39 164.54 -1.15 -0.70 20.32 14.2 20.65 NovoB 360.50 360.50 0.00 0.00 -25.50 -6.6 4.08 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - Korea Electric Power Corporation 08/27 6.75 AA- Aa2 AA- 102.59 6.53 0.00 -0.08 4.62
Glencore 159.85 159.90 -0.05 -0.03 19.00 13.5 19.64 China Vanke 18.84 19.06 -0.22 -1.15 -1.31 -6.5 9.66 SouthTrust Bank 12/27 6.57 A Aa3 A+ 121.32 4.28 0.00 -0.07 2.38
Vale 15.15 15.15 0.00 0.00 1.67 12.4 17.50 Deut Bank 16.92 16.92 0.00 0.00 -1.14 -6.3 -7.45 Emerging US$ SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 112.55 4.66 0.00 -0.18 -
ChMrchSecs 18.36 19.17 -0.81 -4.23 1.99 12.2 21.27 DanskeBk 184.90 184.90 0.00 0.00 -10.00 -5.1 -3.40 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 117.83 4.93 0.00 0.51 -
GuosenSec 16.45 17.08 -0.63 -3.69 1.75 11.9 10.11 DNB 102.30 102.30 0.00 0.00 -5.40 -5.0 1.19 Brazil 01/18 8.00 BB+ Ba2 BB+ 106.04 4.50 0.04 -0.63 3.65
Russia 07/18 11.00 BB+ Ba1 BBB- 117.68 3.10 0.00 -0.17 2.25 Euro
Firstrand 47.95 47.90 0.05 0.10 4.94 11.5 4.60 Unicred 3.73 3.73 0.00 0.00 -0.20 -5.0 8.02 Electricite de France (EDF) 03/27 4.13 A+ A1 A 122.21 1.91 0.00 0.00 0.00
Bradesco 31.25 31.25 0.00 0.00 3.21 11.4 34.56 IntSPaolo 2.52 2.52 0.00 0.00 -0.13 -5.0 4.66 Peru 03/19 7.13 BBB+ A3 BBB+ 114.87 2.03 0.00 -0.36 1.18
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- 100.16 2.61 0.00 -0.43 0.70
Telsa Mtrs 238.73 238.32 0.41 0.17 20.39 9.3 34.21 MediaTek 248.00 257.00 -9.00 -3.50 -12.00 -4.6 12.47 BHP Billiton Fin Ltd 09/27 3.25 A+ A3 A+ 112.08 2.06 0.00 -0.69 0.15
Emerson 55.33 54.99 0.34 0.62 4.54 8.9 12.22 LVMH 148.75 150.55 -1.80 -1.20 -7.10 -4.6 -4.43 Brazil 01/21 7.88 BB+ Ba2 BB+ 100.97 4.70 0.00 -1.25 3.33
Colombia 07/21 4.38 BBB Baa2 BBB 104.43 3.48 0.00 -0.82 2.11 TeliaSonera 09/27 3.00 A- A3 A- 112.14 1.82 0.00 0.00 -0.09
SBI NewA 197.50 196.80 0.70 0.36 15.75 8.7 19.92 BOE Tech 1.68 1.81 -0.13 -7.18 -0.08 -4.5 -13.85
Poland 03/22 5.00 A- A2 A- 111.95 2.84 0.00 0.00 1.47 Yen
CNNC Intl 7.80 7.57 0.23 3.04 0.61 8.5 7.88 Woolworths 22.07 21.87 0.20 0.91 -1.03 -4.5 -3.83
Turkey 09/22 6.25 - Baa3 BBB- 110.81 4.37 0.00 -0.46 3.00 Wal-Mart Stores, Inc. 07/15 0.94 NR WR NR 100.00 0.31 0.00 0.00 -
Formosa PetChem 94.50 90.80 3.70 4.07 7.00 8.0 13.86 ChristianDior 156.65 158.30 -1.65 -1.04 -7.25 -4.4 -5.92
Hngzh HikVDT 31.77 32.40 -0.63 -1.94 2.35 8.0 21.03 Esslr Intl 107.45 108.00 -0.55 -0.51 -4.90 -4.4 -1.78 Turkey 04/26 4.25 - Baa3 BBB- 96.97 4.68 0.00 -0.48 2.78 £ Sterling
Hew-Pack 12.28 12.21 0.07 0.57 0.88 7.7 14.93 KBC Grp 46.70 46.72 -0.02 -0.04 -2.07 -4.2 -1.12 Emerging Euro IPIC GMTN Limited 03/26 6.88 AA Aa2 AA 122.65 4.11 0.06 0.12 1.82
ShgPdgBk 18.15 18.06 0.09 0.50 1.29 7.7 -1.63 Orange 15.62 15.51 0.11 0.68 -0.69 -4.2 -4.38 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
NorfolkS 84.97 84.04 0.93 1.11 5.97 7.6 11.85 Sanofi 71.16 70.83 0.33 0.47 -3.03 -4.1 -0.03 Mexico 07/17 4.25 BBB+ A3 BBB+ 111.13 1.50 0.00 0.00 0.64 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 0.68 Moody’s, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 09/25 5.75 BB+ - BBB- 116.63 3.70 0.00 -0.50 1.79
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 22 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return Mar 22 Day Chng Prev 52 wk high 52 wk low Red Change in Yield 52 Week Amnt
US Fed Funds 0.25-0.50 16-12-2015 1.00 0.25-0.50 0.00-0.25 Index change change change 1 month 1 year VIX 13.80 0.01 13.79 53.29 10.88 Mar 22 Price £ Yield Day Week Month Year High Low £m
US Prime 3.50 16-12-2008 3.50 3.50 3.50 Markit IBoxx VXD 13.51 0.10 13.41 56.32 7.76 Tr 4pc '16 101.63 0.42 0.00 5.00 13.51 20.00 102.23 100.00 0.35
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 182.10 0.52 3.88 5.09 3.64 3.00 VXN 16.94 -0.23 17.17 46.72 12.06 Tr 1.75pc '17 101.10 0.42 -4.55 -6.67 31.25 5.00 102.48 101.09 0.29
Euro Repo 0.05 10-09-2014 0.05 0.05 0.05 Corporates( £) 302.04 0.08 2.47 2.33 3.36 -0.17 VDAX 20.17 -0.14 20.31 32.55 - Tr 5pc '18 109.15 0.31 -3.13 -13.89 29.17 -49.18 112.88 109.08 0.35
UK Repo 0.50 05-03-2009 0.50 0.50 0.50 Corporates($) 255.82 0.43 1.59 2.55 1.59 2.55 † CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.5pc '19 111.89 0.45 -4.26 -11.76 12.50 -46.43 114.29 111.04 0.36
Japan O'night Call 0.00-0.00 05-10-2010 0.03 0.00-0.10 0.00-0.10 Corporates(€) 215.49 0.07 0.97 1.99 1.54 -0.05 ‡ Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 4.75pc '20 116.08 0.63 -3.08 -11.27 6.78 -38.24 118.06 114.45 0.33
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov(€) 231.89 0.09 -0.03 2.92 0.81 0.61 Tr 1.5pc '21 103.03 0.86 -2.27 -9.47 3.61 -25.86 141.03 99.91 0.20
Gilts( £) 300.82 -0.01 -0.46 4.87 0.25 3.72 BONDS: BENCHMARK GOVERNMENT Tr 4pc '22 117.83 0.92 -2.13 -8.00 5.75 -26.40 119.14 113.65 0.38
INTEREST RATES: MARKET Global Inflation-Lkd 248.27 1.35 3.08 4.17 2.76 2.91 Red Bid Bid Day chg Wk chg Month Year Tr 5pc '25 130.82 1.34 -1.47 -5.63 5.51 -11.84 132.97 124.47 0.35
Over Change One Three Six One Markit iBoxx £ Non-Gilts 302.64 0.05 1.47 2.61 2.27 0.36 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '27 127.84 1.63 -1.21 -3.55 3.82 -6.32 130.43 119.79 0.31
Mar 22 (Libor: Mar 21) night Day Week Month month month month year Overall ($) 230.71 0.30 0.15 2.53 0.15 2.53 Australia 10/18 3.25 103.12 2.00 0.02 -0.04 0.21 0.18 Tr 4.25pc '32 131.28 1.98 -1.00 -2.46 2.06 -1.98 134.41 121.93 0.35
US$ Libor 0.37430 0.000 0.002 0.004 0.43180 0.62460 0.89815 1.21365 Overall( £) 298.63 0.01 0.11 4.20 0.84 2.70 11/27 2.75 99.99 2.75 0.01 -0.05 0.17 0.00 Tr 4.25pc '36 133.73 2.16 -0.46 -1.37 1.41 0.00 137.18 123.52 0.28
Euro Libor -0.38757 -0.001 -0.100 0.000 -0.32914 -0.24857 -0.13529 -0.01400 Overall(€) 226.22 0.08 0.10 2.51 0.81 0.44 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 4.5pc '42 144.42 2.27 -0.44 -0.87 0.44 0.44 148.39 132.20 0.26
£ Libor 0.48000 0.000 -0.001 0.000 0.51069 0.58844 0.74850 1.01775 Treasuries ($) 222.42 0.24 -0.60 2.59 -0.60 2.59 10/26 0.75 101.68 0.59 -0.01 -0.11 -0.05 0.00 Tr 3.75pc '52 138.47 2.21 -0.45 0.00 0.00 -3.49 142.78 121.95 0.23
Swiss Fr Libor 0.000 -0.77900 -0.73120 -0.65760 -0.54100 FTSE Belgium 06/18 0.75 101.79 -0.06 0.00 0.00 0.00 0.00 Tr 4pc '60 152.45 2.15 -0.46 -0.46 0.00 -5.29 157.42 131.72 0.22
Yen Libor -0.011 -0.08271 -0.01129 0.01900 0.11071 Sterling Corporate (£) 111.69 0.16 - - 1.90 -4.73 06/26 1.00 103.95 0.60 -0.02 -0.11 -0.06 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per £ 100 nominal of stock. Red yield: Gross redemption yield.
Euro Euribor -0.004 -0.32600 -0.23800 -0.13100 -0.00200 Euro Corporate (€) 107.86 0.07 - - 1.34 -2.84 Canada 11/17 0.25 99.43 0.61 0.04 0.03 0.14 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Sterling CDs 0.000 0.50000 0.60000 0.77500 Euro Emerging Mkts (€) 826.66 -19.59 - - 4.69 -22.62 06/26 1.50 100.97 1.40 -0.01 -0.04 0.16 0.00
US$ CDs
Euro CDs
0.000
0.000
0.43000
-0.37500
0.59000
-0.26500
0.87000
-0.17500
Eurozone Govt Bond 116.19 0.03 - - 0.53 -2.65 Denmark 11/18 0.25 101.62 -0.36 0.00 0.00 0.00 0.00 GILTS: UK FTSE ACTUARIES INDICES
CREDIT INDICES Day's Week's Month's Series Series 11/25 1.75 112.09 0.46 -0.01 -0.16 -0.04 0.18
Price Indices Day's Total Return Return
Short 7 Days One Three Six One Index change change change high low Finland 05/18 1.00 99.67 1.16 0.00 -0.10 0.12 0.00
Fixed Coupon Mar 22 chg % Return 1 month 1 year Yield
Mar 22 term notice month month month year Markit iTraxx 04/26 0.50 99.75 0.53 0.00 -0.10 0.00 0.00
1 Up to 5 Years 98.19 0.05 2396.67 -0.09 1.66 0.59
Euro -0.45 -0.35 -0.45 -0.35 -0.45 -0.30 -0.34 -0.19 -0.25 -0.10 -0.08 0.07 Crossover 5Y 301.11 - - - 304.80 299.25 France 05/19 1.00 104.17 -0.31 0.00 0.00 0.00 0.00
2 5 - 10 Years 182.87 0.15 3350.62 -0.25 3.13 1.17
Sterling - - - - 0.45 0.55 0.55 0.65 0.70 0.85 0.93 1.08 Europe 5Y 72.90 - - - 73.62 72.32 11/20 0.25 101.94 -0.16 0.00 0.00 0.00 0.00
3 10 - 15 Years 212.97 0.20 3966.68 -0.48 2.83 1.73
Swiss Franc - - - - - - - - - - - - Japan 5Y - - - - - - 05/26 0.50 99.44 0.56 -0.01 -0.12 0.00 0.00
4 5 - 15 Years 190.09 0.16 3499.63 -0.32 3.17 1.40
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 88.39 - - - 89.25 87.69 05/45 3.25 142.44 1.45 -0.02 -0.17 -0.04 0.35
5 Over 15 Years 312.06 0.24 4564.42 -0.03 3.18 2.20
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 -0.46 0.00 0.00 0.00 0.00
Markit CDX 7 All stocks 176.68 0.16 3346.25 -0.14 2.65 1.92
Japanese Yen -0.70 -0.45 -0.60 -0.30 -0.55 -0.25 -0.35 -0.05 -0.25 0.05 -0.15 0.15 10/20 0.25 102.77 -0.35 0.00 0.00 0.00 0.00
Emerging Markets 5Y 280.59 0.00 0.00 0.00 280.59 280.59 02/26 0.50 102.80 0.21 -0.02 -0.11 0.03 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 425.30 -5.21 -17.40 -119.08 589.69 416.39 08/46 2.50 142.06 0.91 -0.04 -0.15 0.05 0.25
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. Index Linked Mar 22 chg % chg % chg % Return 1 month 1 year
Nth Amer Inv Grade 5Y 77.52 0.00 0.00 0.00 77.52 77.52 Greece 07/17 3.38 92.50 9.69 0.39 2.00 -1.10 -11.60
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 1 Up to 5 Years 309.95 0.04 0.33 -0.80 2377.97 0.33 0.65
02/26 3.00 67.14 8.66 0.11 0.06 -1.74 -2.68 2 Over 5 years 592.95 0.45 2.42 0.80 4384.32 2.48 1.55
Ireland 10/17 5.50 109.23 -0.36 0.00 0.00 0.00 0.00 3 5-15 years 437.57 0.20 0.95 -0.57 3336.92 0.97 0.73
05/26 1.00 101.60 0.83 -0.01 -0.06 -0.17 0.00 4 Over 15 years 736.52 0.55 3.01 1.47 5341.60 3.07 2.01
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/18 0.30 100.70 0.03 -0.01 -0.04 -0.10 0.00 5 All stocks 546.29 0.39 2.13 0.60 4092.67 2.17 1.46
11/20 0.65 101.63 0.29 0.00 -0.06 -0.22 0.00
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/26 1.60 102.87 1.30 -0.01 -0.12 0.00 0.00 Yield Indices Mar 22 Mar 21 Yr ago Mar 22 Mar 21 Yr ago
Crude Oil† Apr 41.07 -0.61 Corn♦ May 370.25 1.00 Mar 21 Mar 21 Prev return stock Market stocks
03/47 2.70 106.22 2.43 -0.01 -0.16 -0.26 0.00 5 Yrs 0.78 0.80 1.00 20 Yrs 2.23 2.24 2.18
Brent Crude Oil‡ 41.72 0.26 Wheat♦ May 468.00 2.00 Can 4.25%' 21 127.26 -0.468 -0.487 0.17 5.18 71549.44 7
Japan 03/18 0.10 100.63 -0.22 0.00 0.00 0.00 0.00 10 Yrs 1.53 1.55 1.60 45 Yrs 2.17 2.19 2.30
RBOB Gasoline† Mar 1.46 0.00 Soybeans♦ May 906.00 4.25 Fr 2.25%' 20 114.36 -0.972 -0.968 0.13 20.31 220078.99 14
04/21 0.05 101.04 -0.16 0.00 0.00 0.00 0.00 15 Yrs 2.02 2.03 1.97
Heating Oil† Mar 1.24 0.00 Soybeans Meal♦ May 269.70 1.10 Swe 0.25%' 22 110.37 -1.233 -1.232 0.72 30.77 228750.49 7
03/26 0.10 102.02 -0.10 0.00 0.00 0.00 0.00
Natural Gas† Mar 1.86 0.05 Cocoa (ICE Liffe)X May 2235.00 -1.00 UK 2.5%' 20 361.17 -1.632 -1.669 0.43 6.58 511323.80 26
03/46 0.80 110.17 0.42 -0.05 -0.31 0.00 0.00 inflation 0% inflation 5%
Ethanol♦ - - Cocoa (ICE US)♥ May 3058.00 -23.00 UK 2.5%' 24 342.90 -1.082 -1.134 0.03 6.82 511323.80 26
Netherlands 04/17 0.50 101.04 -0.48 0.00 0.00 0.00 0.00 Real yield Mar 22 Dur yrs Previous Yr ago Mar 22 Dur yrs Previous Yr ago
Uranium† Mar 29.00 0.00 Coffee(Robusta)X May 1490.00 35.00 UK 2%' 35 235.70 -0.930 -0.958 0.87 9.08 511323.80 26
07/25 0.25 99.55 0.30 -0.02 -0.11 -0.02 0.00 Up to 5 yrs -1.21 2.15 -1.33 -1.29 -1.95 2.17 -1.95 -1.84
Carbon Emissions‡ - - Coffee (Arabica)♥ May 133.45 2.20 US 0.625%' 21 104.14 -0.151 -0.145 0.71 35.84 1153026.35 37
White SugarX 464.50 6.20 New Zealand 03/19 5.00 108.22 2.13 0.00 -0.06 -0.24 -0.98 Over 5 yrs -0.97 23.80 -0.97 -0.94 -1.00 23.90 -0.99 -0.97
Diesel† - - US 3.625%' 28 135.92 0.545 -0.145 0.57 16.78 1153026.35 37
Sugar 11♥ 16.28 -0.02 04/27 4.50 113.86 3.02 0.00 -0.10 -0.02 -0.32 5-15 yrs -0.96 9.43 -0.98 -1.01 -1.09 9.44 -1.07 -1.11
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market
Norway 05/19 4.50 112.67 0.45 0.02 -0.08 -0.12 -0.45 Over 15 yrs -0.97 29.35 -0.97 -0.93 -0.99 29.40 -0.98 -0.95
Base Metals (♠ LME 3 Months) Cotton♥ May 57.77 -0.36 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
02/26 1.50 102.30 1.25 -0.01 -0.13 -0.18 0.00 All stocks -0.97 20.81 -0.97 -0.95 -1.02 20.95 -1.00 -0.98
Aluminium 1500.00 -12.50 Orange Juice♥ May 128.40 0.45 amount.
Aluminium Alloy 1590.00 0.00 Palm Oil♣ - - Portugal 06/19 4.75 111.29 1.16 0.00 -0.01 -0.38 0.40 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
Copper 5064.00 16.00 Live Cattle♣ Apr 138.18 0.00 BONDS: TEN YEAR GOVT SPREADS 02/26 3.30 103.52 2.89 0.00 -0.03 0.00 0.00
Spain 04/18 0.25 100.42 0.05 0.00 0.00 -0.07 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 1815.00 -17.00 Feeder Cattle♣ Apr 157.70 -3.50
Nickel 8830.00 80.00 Lean Hogs♣ Apr 69.25 0.00 Spread Spread Spread Spread 04/26 1.95 104.03 1.52 0.00 -0.07 -0.19 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Tin 17000.00 125.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.87 1.06 0.00 -0.16 0.01 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Zinc 1868.50 4.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 05/25 2.50 117.51 0.53 -0.02 -0.12 0.00 0.12 loss arising from the reliance on or use of the listed information. For all queries e-mail
Precious Metals (PM London Fix) Mar 21 Month Year Australia 2.75 2.54 0.84 Italy 1.30 1.09 -0.60 Switzerland 05/19 3.00 112.67 -0.96 0.00 0.00 0.00 0.00 ft.reader.enquiries@morningstar.com
Gold 1252.50 7.60 S&P GSCI Spt 337.05 14.69 -15.39 Austria 0.59 0.38 -1.32 Japan -0.10 -0.31 -2.01 05/26 1.25 116.41 -0.33 0.00 0.00 0.00 0.00
Silver (US cents) 1589.00 8.00 DJ UBS Spot 81.13 7.95 -18.55 Belgium 0.60 0.39 -1.30 Netherlands 0.30 0.09 -1.61 United Kingdom 07/18 1.25 101.79 0.48 -0.02 -0.06 0.04 -0.28 Data provided by Morningstar | www.morningstar.co.uk
Platinum 991.00 13.00 R/J CRB TR 177.44 10.72 -17.38 Canada 1.40 1.18 -0.51 Norway 1.25 1.04 -0.65 01/21 1.50 102.98 0.87 -0.02 -0.10 0.02 0.00
Palladium 605.00 5.00 Rogers RICIX TR 2071.54 - - Denmark 0.46 0.25 -1.44 Portugal 2.89 2.67 0.98 07/26 1.50 99.23 1.58 -0.02 -0.08 0.02 0.00
Bulk Commodities M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Finland 0.53 0.32 -1.38 Spain 1.52 1.30 -0.39 12/46 4.25 143.25 2.28 -0.01 -0.01 -0.01 0.01
Iron Ore (Platts) 58.00 -0.50 UBS Bberg CMCI TR 12.54 10.70 -18.52 France 0.56 0.34 -1.35 Switzerland -0.33 -0.55 -2.24 United States 01/18 0.75 99.81 0.85 -0.01 -0.12 0.11 0.00
Iron Ore (The Steel Index) 57.90 -0.10 LEBA EUA Carbon 5.01 -0.99 -26.32 Germany 0.21 0.00 -1.69 United Kingdom 1.58 1.37 -0.32 02/21 1.13 98.82 1.37 0.00 -0.12 0.00 0.00
GlobalCOAL RB Index 55.00 0.00 LEBA CER Carbon 0.36 0.00 -12.20 Greece 8.66 8.44 6.75 United States 1.91 1.69 0.00 02/26 1.63 97.48 1.91 -0.01 -0.07 0.18 0.00
Baltic Dry Index 398.00 0.00 LEBA UK Power 2284.00 2.88 12.40 Ireland 0.83 0.62 -1.07 02/46 2.50 95.95 2.70 -0.02 -0.03 0.12 0.00
Sources: † NYMEX, ‡ ECX/ICE, ♦ CBOT, X ICE Liffe, ♥ ICE Futures, ♣ CME, ♠ LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information & Tullett Prebon Information Data provided by SIX Financial Information & Tullett Prebon Information
unless otherwise stated.
20 ★ FINANCIAL TIMES Wednesday 23 March 2016

MARKETS & INVESTING

Commodities
FT explainer

Pension funds and insurers

transform the ETF landscape
The booming exchange
traded fund industry, in
which investors can buy
shares that track an
underlying basket of
securities, shows few signs
of slowing. Institutional
investors play a prominent
role, attracted by the
lower costs and flexibility
of the product.
Large pools of capital
controlled by big investors
including pension funds
and insurers, which were
once directed into mutual
funds, are increasingly
being placed into ETFs.
Between 2007 and 2015,
$410bn left US domestic
equity mutual funds while
US index domestic equity
ETFs attracted $730bn in
new capital, according to
the Investment Company
Institute.
How large is the
institutional presence?
The US ETF industry
amounted to $621bn in
2007, according to ETFGI,
a research company, with
$370bn attributed to
institutional investors.
At the end of 2014
institutional investors
accounted for $1.16tn, with
the overall industry
growing a similar amount
to more than $2tn.
Sebastian Mercado, a
strategist at Deutsche
Bank, says official data
may miss some foreign
investors that are not
required to report holdings
to US authorities.
How are they using ETFs?
Providers say the range of
ways institutional investors
are using ETFs is growing.
$1.16tn
Institutional investors’
share of the $2tn US
ETF industry at the
end of 2014
Some investors like the
ease with which the
products can be sold,
ensuring a ready amount
of cash to meet any
demand from clients to
redeem their holdings.
Selling mutual funds can
take longer, and in the
case of bonds markets are
often illiquid and can prove
difficult to exit when
volatility is rising.
Other investors use
ETFs as a low-cost
alternative to options and
derivatives to hedge risks.
Greater financial regulation
has increased the cost of
trading derivatives for
banks and investors.
Institutional ETF use grows over time
Per cent
Retail
Institutional
2000 02 04 06
Sources: Deutsche Bank; FactSet; Bloomberg Finance LP
Hedge funds, which tend
to be at the cutting edge
of trading trends, have
also expanded into more
asset classes than other
investors, especially
commodities.
Pension funds have
remained predominantly
in equities, while insurers
— which are relatively new
to ETFs — are focusing on
fixed-income ETFs.
Some investors are
using ETFs as a more
strategic, long-term
investment, according to
a survey by Greenwich
Associates this year.
Of the US insurance
companies surveyed,
the number using ETFs
to invest reserve assets
has increased from 6 per
cent in 2013 to 71 per cent
last year.
Which are the big fish?
Investment advisers,
such as BlackRock Fund
Advisors. Brokers, led
by the likes of Morgan
Stanley, come in second,
followed by private
banking and wealth
management.
The top five institutional
players in ETFs are: Merrill
Lynch; Pierce, Fenner &
Smith, a subsidiary of Bank
of America; Morgan
Stanley Smith Barney;
Goldman Sachs Private
Banking; Wells Fargo
Advisors; and Managed
Account Advisors.
A lot of this has to do
with the way entities are
classified. For example,
BlackRock Fund Advisors
and BlackRock Financial
Management both feature
in the top 20 of investment
advisers that use ETFs but
no BlackRock name is
listed among the top 20
mutual fund users.
Which issuers do the
various investor classes
favour?
Preference for an issuer
tends to depend on an
investor’s intentions,
according to Mr Mercado.
Hedge funds and
brokers seem to like State
Street’s SPDR ETFs
because of their liquidity.
One of these, SPY, which
tracks the S&P 500, is the
largest ETF in the world.
Investment advisers
tend to be more strategic
in their allocations, so
fees and tracking of the
underlying assets become
more important, favouring
Vanguard, says Mr
Mercado.
Joe Rennison, New York
and Gavin Jackson, London
80
70
60
50
40
30
20
08 10 12 14 15
Saudis to freeze oil output without Iran
Gulf kingdom ready for
deal with other producers
as Tehran holds out
ANJLI RAVAL
OIL AND GAS CORRESPONDENT
Saudi Arabia is prepared to sign up to an
oil output freeze next month even with-
out Iran taking part, a senior Opec dele-
gate said, paving the way for a deal
among big producers.
Some of the world’s largest oil players
will meet in Doha on April 17 to discuss
restraining output. It follows a provi-
sional agreement reached in February
by Saudi Arabia, Russia, Qatar and Ven-
ezuela to freeze production at January
levels.
“There is agreement from many
countries to go along with a freeze, why
Soyabeans buoyed as palm oil output withers
El Niño weather phenomenon
impedes production and lifts
demand for alternative options
EMIKO TERAZONO
The soyabean market, hitherto in the
doldrums because of plentiful supplies,
has come back to life thanks to oil —
though not the sort that comes out of
the ground.
The El Niño weather phenomenon
has continued to exert its influence and
has affected the production of palm oil,
boosting prices.
This, in turn, has buoyed soyabeans,
which are processed into oil — mainly
used for cooking — as well as meal, a
high-protein feed for livestock.
“The soyabean market is taking bull-
ish cues from palm oil despite the weak
meal situation,” says Kona Haque, head
of research at ED&F Man, the trader of
agricultural commodities.
With roughly 20 per cent of a bushel
of soyabeans turned into oil and 80 per
cent into soya meal, the soyabean price
tends to be driven by the supply and
demand of feed crops, including corn
and wheat. High inventories and
bumper harvests in soyabeans and
grains have weighed on the market.
However, the 45 per cent jump in
palm oil prices since their 2015 low in
August to 2,685 ringgit a tonne in Kuala
Lumpur has ignited the soya oil market,
which in turn has supported soyabeans.
Since the start of the year, soya oil has
rallied 10 per cent to 33.64 cents a
pound, while soyabeans are up 4 per
cent, above $9 a bushel.
The palm oil rally comes as output in
Indonesia and Malaysia, the two leading
producers, have been hit by last year’s
dry weather conditions.
January production in Malaysia
dropped 19 per cent from the previous
month, to 1.13m tonnes — an 11-month
low, and the lowest production in Janu-
ary in four years.
Dorab Mistry, veteran oilseeds ana-
lyst and director at Godrej Industries, an
Indian chemicals manufacturer, fore-
casts Indonesian and Malaysian produc-
tion will fall about 4 per cent in 2016 —
Indonesia dropping from 32m tonnes to
31m and Malaysia from 20m to 19m.
The tightness in the palm oil market
has led to importers switching to
cheaper alternatives.
“The world is awash with soyabeans,
but people are switching from palm oil
to soya oil and stocking up,” says Mr
Mistry. For example, import volumes
make it contingent on Iran,” said the general, said at a news conference in
15 orative element has helped the price.”
delegate. The comments contrast with Vienna on Monday: “Maybe in the Hedge funds and other speculators
those from Gulf officials last month future they will join the group. They The number of have increased their bets on a higher oil
Opec and non-Opec
which suggested any deal was condi- [Iran] have some conditions about their countries that have price in the past few weeks. Their com-
tional on Iran, Saudi Arabia’s Opec rival, production.” agreed to support bined net long positions in Nymex and
taking part alongside other big producer About 15 Opec and non-Opec coun- an oil freeze ICE WTI are now at 172m barrels, from
countries. tries — accounting for two-thirds of glo- just 35m barrels on January 12.
Iran has sought to increase produc- bal oil output — have so far supported an $41.72 The delegate predicted higher oil
tion and exports after the lifting of sanc- oil freeze, Qatar’s energy minister prices by the end of the year, as excess
Price of a barrel of
tions against its oil industry in January. Mohammed Bin Saleh Al-Sada said last Brent crude supplies fall. A sense of urgency among
Iranian officials have shown no willing- week. yesterday, up 54% all producers to improve the economic
ness to back any deal that would result A provisional deal has helped to sup- since 2016’s low of situation has been a catalyst to better
in restricting its own output. port prices and reverse negative market $27.10 in January engagement between producers, he
Questions have been raised among sentiment towards oil. Brent crude was added.
Gulf delegates about the country’s abil- at $41.72 yesterday afternoon, up 54 per He said that Russia, was now “taking a
ity to ramp up output, suggesting this cent since hitting a 2016 intraday low of leading role” in engaging with other
could be one reason for compliance $27.10 a barrel in January. Opec producers. The country’s relation-
even without Iran. “Look at what it [the move towards ship with Saudi Arabia had improved.
“Despite all the bragging, we have the oil freeze] did to change the psyche Although a production freeze at January
yet to see what Iran can do,” said the of the market,” said the delegate. “Now levels was most likely, the delegate said,
delegate. the market can see people are gathering, he left the door open for more discus-
Abdalla El-Badri, Opec’s secretary- people are communicating. This collab- sion on which marker would be used.
Analysis. Commodities
Palm oil buoys soyabeans
Prices (rebased)
140
Palm oil
130
120
110
Soyabeans
100
90
Sep 2015 2016 Mar
Malaysian palm oil
production
M tonnes
2.0
1.8
1.6
1.4
1.2
1.0
2014 15 16
Sources: Malaysian Palm Oil Council;
Thomson Reuters Datastream
Soyabeans are for India, a leading palm oil consumer, With the soyabean harvest in Argen- against 3m in the same period last
up 4% since the have risen 25 per cent over the past four tina and Brazil under way, the high year. “Exports of [soya] byproducts
start of the year, years, but quadrupled for soya oil. level of exports could start eroding this from Argentina are expected to be
fuelled by a 45% With both countries experiencing year’s gains. “The crops are massive, the very strong in the months to come. I’m
rise in palm oil rainfall over the past few weeks, many currencies are weak and exports are optimistic.”
prices since analysts say palm oil production will very, very strong,” says Mr Vogel. Elsewhere, the market is also focused
their 2015 low recover from the middle of the year and Prices are especially susceptible to on the Prospective Plantings report
Daniel Acker/Bloomberg
weigh on the price, and also the price of overseas sales from Argentina, where from the US Department of Agriculture,
other oilseeds. the new government reduced its export a survey of this year’s US plantings
Stefan Vogel, head of agricultural tax by 5 percentage points to 30 per released at the end of the month.
commodity markets research at cent. Guillermo Rossi, grains and Further ahead, farmers and traders
Rabobank, says the rally in soya oil oilseeds analyst at the Rosario board of will keep a close eye on weather prob-
prices may be overdone. “[The futures trade in Argentina, says that soyabean lems in the US. After a strong El Niño, La
price] for the second half of the year and production this year is forecast to be Niña tends to follow.
early next year of about 34 cents a between 58m and 60m tonnes, slightly The latter phenomenon tends to bring
pound is too high,” he says. lower than last year’s 61.4m. dryness to the US midwest, and was
However, until production rises from However, with farmers holding on to behind the drought that wrought havoc
about July, many see palm oil prices their crops for security, inventories of on the US grain market in 2012.
continuing to strengthen. soyabeans and soya meal remain at US meteorology agency NOAA is fore-
Mr Mistry adds: “Prices will rise at record levels. casting a 50 per cent chance of La Niña
least another 10 to 15 per cent, they will “Argentina was by far the number- developing this year.
almost certainly hit 3,000 ringgit, and one exporter of soyabean meal and oil For analysts and investors, it may be
may go higher than that.” during recent months,” says Mr Rossi, too early to call. Mr Vogel says: “People
The question is how long palm oil will with soya meal shipments of 5.55m are referring to the year of 2012, but
drive soyabean prices. tonnes during January and February, there isn’t any proof yet.”

Capital markets Currencies

CLO managers stay calm on Valeant exposure Sterling pares month’s gains on Brexit worries
JOE RENNISON
AND ERIC PLATT — NEW YORK
Investors in bonds backed by risky
loans remain broadly positive on
deals that include the debt of besieged
pharmaceutical company Valeant,
despite this week’s warning from rating
agency Moody’s.
The New York agency cautioned that
roughly a third of the group’s loans had
been packaged into collateralised loan
obligations, securities in which loans
are pooled together into bonds and sold
to investors.
Moody’s estimated $3.4bn worth of
loans had been purchased by CLOs,
including those managed by hedge
funds Anchorage and Apollo, as well as
Oak Hill Advisors and Silvermine,
which are among the largest exposed.
“In aggregate, there is a risk because it
is such a widely held name,” said Chris
Acito, chief executive of Gapstow Capi-
tal Partners. “That said, the most recent
loan pricing I’ve seen indicates that the
market doesn’t view this loan as a dis-
tressed name.”
Moody’s said that 696 of the roughly
800 CLOs it rates contain Valeant debt.
The average exposure across all
CLOs to Valeant is 1.1 per cent, with
the highest concentration held by an
Apollo-managed CLO at 4.7 per cent.
Valeant raised the prospect of default-
ing on its debt last week, disclosing a
covenant breach as a result of a delayed
regulatory filing, culminating in the res-
ignation of its chief executive Michael
Pearson on Monday. Valeant’s loans
have plunged to about 93 cents on the
dollar this year, according to Moody’s.
However, many investors and manag-
ers remain relaxed. As Valeant consults
with holders of its debt to try to negoti-
ate new terms, managers will have a
large incentive not to allow the com-
pany to default, said Maggie Wang, a
strategist at Citi.
While some investors have backed
away, unwilling to face the risk of hold-
ing Valeant loans, others have used the
sell-off to add to positions in an attempt
to build up reserve collateral.
“Some managers are adding risk,” Ms
Wang said. “Investors generally feel the
stock has been volatile but the loans are
covered. It’s not a bad decision so long as
it doesn’t default and keeps paying.”
Apollo, Anchorage and Oak Hill
declined to comment. Silvermine failed
to respond to a request for comment at
the time of going to press.
Moody’s has already downgraded
Valeant from Ba3 to B1 and has the com-
pany on review for a further downgrade.
ROGER BLITZ
The pound dropped yesterday as senti-
ment towards the UK turned negative,
reflecting a combination of internal
government problems, Brexit worries
and a troubling rating agency report on
last week’s Budget.
A decline of 1 per cent took the pound to
just above $1.42, making it the 25th day
this year it has moved half a per cent
or more. Over the equivalent number of
days last year, sterling moved by at least
this amount on 18 occasions.
The pound’s fluctuations have been
one of the features of currency trading
this year and the decline yesterday
eroded the 4.5 per cent recovery sterling
has enjoyed since the end of last month
when it registered a seven-year low.
Brexit has been the consensus reason
to explain much of the decline of 7.6 per
cent from six months ago. While polls
continue to show the Remain camp
ahead, market reaction this week
reflects developments that have put
prime minister David Cameron’s cam-
paign to keep Britain in the EU on the
defensive.
His government has been knocked
by adverse reaction to chancellor
George Osborne’s Budget, which forced
a retreat on proposed disability cuts and
prompted the resignation of Euroscep-
tic minister Iain Duncan Smith. Moody’s
added to the government’s woes by
calling the chancellor’s revised gross
domestic product expectations and rise
in debt forecasts “credit negative”.
Brexit continues to dominate the
market’s attention, however, with some
Forex commentators concluding that
the Brussels terror attacks yesterday
would keep the Leave campaign’s focus
on immigration and border controls at
the heart of the referendum debate.
Richard Cochinos at Citigroup said it
would be “very difficult for investors to
view the attacks as separate from the
Brexit probabilities and the UK”.
The countdown to the referendum
date is about to hit the three-month
mark, increasing the likelihood of inves-
tors buying options insurance to cover
their sterling exposure.
Implied volatility on 90-day options
for the sterling and US dollar cross rate
has climbed steadily over the past week,
and is near the highest level since last
April during the run-up to the UK gen-
eral election.
Many investors have not yet taken
out insurance, said Marc Chandler at
Brown Brothers Harriman, and the
three-month countdown means “more
investors should be expected to act”.
Wednesday 23 March 2016 ★ FINANCIAL TIMES 21

MARKETS & INVESTING

Global overview
TRADING POST Markets update
Jamie
Chisholm
Investors cautious over stocks as S&P 500 index
Change on day 0.19%

crude price lacks clear direction

The week started with Wall Street
struggling to extend its latest rally. For
investors the question is: will this be
the pause that refreshes or the crest
before a fresh downwave?
On a technical level, the bullish
case is that by the open yesterday
the S&P 500 remained well above
its 200-day moving average of 2,018.
Bond yields are still supportive
too. About 50 per cent of S&P 500
constituents offer a bigger yield
than the benchmark Treasury.
In addition investors can resist
taking profits in equity portfolios
because option insurance is quite
cheap. The CBOE Vix index, which
measures this cost, closed on Monday
at 13.8, its lowest in four months.
However, there is another way of
looking at this. A Vix at such meagre
levels can point to a market that is
overly sanguine and not adequately
braced for negativity.
Another potentially bearish factor is
that the S&P’s 14-day relative strength
index finished on Monday at 69.5, just
shy of the 70 level that marks the
entrance into “overbought” territory.
Things are a bit stretched.
A further issue exercising some
investors is the first-quarter earnings
season that starts next month.
It is thought one reason that the
stock market’s early-year swoon was
so hefty was that corporations were
in the “quiet period” before earnings
announcements, during which they are
not allowed to buy their own stock.
If you believe buybacks are an
important support for the market,
then this may be a looming problem.
jamie.chisholm@ft.com
S&P 500
200-day
moving 2100
average
2000
1900
Index
1800
Sep 2015 2016 Mar
Source: Thomson Reuters Datastream
Attacks in Belgium have
limited effect after initial
sell-off in European
equities, but analysts warn
of build-up of anxiety
DAVE SHELLOCK
Stock markets on both sides of the
Atlantic maintained their cautious tone
following recent strong gains, as oil
prices lacked a clear trend and partici-
pants remained wary about the outlook
for US interest rates.
News of the bomb attacks in Brussels
initially prompted a sell-off in European
equities and gains for “havens” such as
gold and German government bonds.
But the bulk of those moves unravelled
as investors adopted a more measured
stance.
The pan-European Stoxx 600 equity
index, for example, ended less than 0.2
per cent lower after falling nearly 1.6 per
cent at one stage — with travel and lei-
sure stocks bearing the brunt of that
selling. The Xetra Dax in Frankfurt and
London’s FTSE 100 both finished
slightly higher, while Belgian stocks
slipped just 0.1 per cent.
And on Wall Street, the S&P 500
turned an opening dip into a 0.2 per cent
gain to 2,054 by early afternoon in New
York — putting it on course for yet
another closing high for the year.
Meanwhile, gold was up just $3, or 0.3
per cent, at $1,246 an ounce, having ear-
lier touched $1,259; while the yield on
the 10-year German Bund — which
moves inversely to its price — bounced
off a low of 0.18 per cent to finish 2 basis
points lower at 0.21 per cent. The yen
reversed an early rise against the dollar.
“One of the most notable shifts in mar-
ket dynamics in recent years has been
the declining impact of geopolitical
events on sentiment,” said Simon Der-
rick, chief market strategist at BNY
In search of the bear: FT.com/video
John Authers looks at evidence that the US is leaving a brief,
brutal bear market while the world remains in a longer one
Mellon. “This was reflected again today.”
Anthony Karydakis, chief economic
strategist at Miller Tabak, offered a note
of caution. “While any such single event
can be brushed aside in fairly short
order by market participants, the
potential exists that, if replicated, it can
produce a quiet build-up of anxiety and
uncertainty which can affect consumer
attitudes and spending in some of the
continent’s major economies over the
coming months,” he said.
“The calculus can change materially
for the worse though, if, firstly, today’s
Brussels attacks trigger a broad-based
set of measures involving restrictions in
free cross-border trade and movements
of people within the EU — with
Daniel Roland/AFP/Getty
implications for economic activity for
the next quarter or more; and secondly,
another such terrorist act takes place in
the coming weeks in another part of
Europe.”
Some analysts highlighted a sustained
fall for sterling after the bombings, sug-
gesting the attacks had bolstered the
campaign for Britain to leave the EU.
The pound’s latest bout of weakness
also coincided with a warning from
rating agency Moody’s that the UK’s
latest Budget had been “credit negative”
for the country, and with the release of
inflation data that confirmed the weak-
ness of underlying price pressures in the
economy.
Sterling was down 1.1 per cent against
2050
2000
1950
1900
Feb 2016 Mar
the dollar at $1.4208 — although this US equities The S&P 500 was heading
was still some way from its seven-year towards another 2016 closing high as
low of $1.3833 hit in February. The the bomb attacks in Brussels failed to
pound was also down 0.8 per cent versus derail Wall Street’s recovery from the
the euro at €1.2672. steep sell-off seen earlier this year
The dollar extended its broad
rebound following the sharp sell-off FTSE 100 index
after last week’s dovish policy statement Change on day 0.13%
from the Federal Reserve. 6200
The dollar index, a measure of the cur- 6100
rency against a basket of its peers, was up 6000
another 0.4 per cent at 95.66, after its 5900
five-monthlowof94.58onFriday. 5800
The euro was off 0.3 per cent at Feb 2016 Mar
$1.1209, finding little support from
mildly positive “flash” purchasing man- UK equities The FTSE 100 staged an
agers’ surveys in the eurozone and from impressive recovery from an early
German business sentiment data. sell-off that pushed the blue-chip
The dollar was up 0.1 per cent against index down 1.2 per cent to its lowest
the yen at Y112.08. level since March 11
More hawkish comments by Fed offi-
cials on Monday — suggesting interest Eurofirst 300 index
rates could be raised as soon as April —
Change on day 0.12%
provided a counterweight to the central 1350
bank’s statement, although analysts
remained sceptical. 1300
“It clearly doesn’t matter what a cen-
trist [San Francisco Fed president Wil-
1250
liams] and a slightly leaning dove
Feb 2016 Mar
[Atlanta Fed president Lockhart]
think,” said Tom Porcelli, chief US econ- European equities Travel and leisure
omist at RBC Capital Markets. stocks came under pressure after
“[Fed chair Janet] Yellen has made it bomb attacks in Brussels left more
abundantly clear this is a Fed not gov- than 30 dead, although the wider
erned by its dual mandate but rather by market pared initial losses
a multi-variable mandate that extends
well beyond the tenets of US employ-
ment and US inflation. Indeed, for the Nikkei 225 index
time being, events outside of our bor- (’000) Change on day 1.94%
17.5
ders are dictating the course of policy.”
The yield on the 10-year US Treasury 17.0
was down 1bp at 1.91 per cent after an 16.5
earlier drop to 1.88 per cent.
16.0
Oil prices offered only limited direc-
tion to the wider market as Brent crude Feb 2016 Mar
rose 0.4 per cent to $41.72 a barrel but Japanese equities The Nikkei rose
US West Texas Intermediate slipped 0.2 sharply as the market reopened after
per cent to $41.45. Monday’s holiday, with the mood
Copper ended unchanged in London supported by early yen weakness
at $5,065 a tonne.

Wall Street
Travel groups rattled
as terrorist bombs in
Brussels fuel concern
Adam Samson
Travel-related stocks were shaken
yesterday after the terror attacks in
Brussels sparked concerns about
demand ahead of the summer season.
At least 30 people were killed after
two bombs went off in the city’s airport
and another hit a metro station.
The S&P 500 airlines index fell 2.5 per
cent, before recovering to a decline of
1.5 per cent. Airline stocks frequently
drop on the back of terrorist events
amid worries that travellers will be
concerned and avoid taking trips.
American Airlines declined 1.8 per
cent to $42.70, United Continental
fell 1.1 per cent to $60.50 and Delta Air
Lines dropped 1.9 per cent to $49.15.
All three large US carriers operate
flights to Brussels, according to the
airport’s website.
Elsewhere in the sector, Carnival,
S&P 500 Airlines index that has taken a powerful blow from the
government’s corruption crackdown Trading Directory
310
and a broader economic slowdown in
the country. Wynn shares rose 2.1 per
305 cent to $94.68, bringing their year-to-
date rally to 36.8 per cent.
300 Lumber Liquidators’ shares also
21
Source: Bloomberg
Mar 2016 22 climbed after the company said it had
reached a settlement with a California
Day's regulator relating to sales of a certain
Indices
S & P 500
Close
2055.99
change
4.39
laminate flooring. The review was
completed with “no formal finding
DJ Industrials
Nasdaq Comp
17645.30
4832.10
21.43
23.23
of violation or admission of
wrongdoing”, the company said.
Russell 2000 1204.70 -8.35 As part of the agreement, however, it
VIX 13.80 0.01
will pay California Air Resources Board
US 10 yr Treas Bd 1.91 -0.01
a fine of $2.5m, and “implement a series
US 2 yr Treas Bd 0.85 -0.01
of voluntary compliance procedures”
to ensure its flooring products comply
with the regulator’s standards.
a cruise-ship operator, fell 3.2 per cent Investors appeared to be relieved with
to $48.17 and Priceline, a travel booking the news that the inquiry has ended.
service, dropped 3 per cent to $1,310.24. The shares jumped 12.7 per cent to
Hotel stocks fell as well: Wyndham $13.55, although they are still down 22
Worldwide declined 1.9 per cent to per cent for 2016.
$75.61, while Hyatt Hotels fell 1.8 per In midday trading, the S&P 500 was
cent to $48.94. largely unchanged at 2,052, the Dow
Wynn Resorts, which runs casinos, Jones Industrial Average was also
bucked the trend after Morgan essentially flat at 17,621.9 and the
Stanley upgraded the company from Nasdaq Composite rose 0.2 per cent
“equal-weight” to “overweight”. to 4,820.2.
Wynn may go from a “double-digit The S&P 500 healthcare sector was
ebitda decliner to double-digit grower the standout performer yesterday,
in the next six months”, said Morgan jumping 0.8 per cent. Within the
analyst Thomas Allen, referring to group, biotechnology stocks posted
the measure of profits called earnings particularly large price gains. Amgen
before interest, taxes, depreciation rose 2.4 per cent to $150.58.
and amortisation. Meanwhile, consumer staples posted
He added that the brand might also the biggest falls. Kimberly-Clark, the
benefit from a stabilisation in Macau, maker of Kleenex tissues, slipped 1.3
a Chinese territory known for gambling per cent to $133.49.

London
Capita slides on worries
over growth prospects
Bryce Elder
Capita was a faller yesterday after its
growth strategy faced fresh scrutiny.
Stifel downgraded the services provider
to “sell”. Organic growth had slipped,
the broker said, with a slowdown in its
bid pipeline making the 2016 target of
4 per cent growth vulnerable.
Earnings visibility had suffered as
public services customers increasingly
used framework agreements, which did
not guarantee a level of work for Capita,
Stifel said.
Acquisitions — 140 in the past decade
— had made the outsourcing group
opaque without creating clear long-
term value, the broker said.
Yet management was moving from a
UK growth strategy to chase larger deals
with overseas exposure, which created
execution risks, Stifel told clients.
Capita closed 2.3 per cent lower at
£10.23 in a flat wider market. The FTSE
100 rose 8.16 points to 6,192.74.
Travel and tourism led the fallers in
response to bomb attacks in Brussels.
Tui slid 2.8 per cent to 975p, Merlin fell
1.6 per cent to 451.2p and Thomas Cook
lost 4.3 per cent to 88.6p.
Elsewhere Barclays faded 2.1 per cent
to 157.2p after HSBC cut the bank off its
“buy” list. Management’s decision this
month to cut the dividend more than
50 per cent had clouded the
restructuring story and while the value
release from ditching non-core
businesses would be considerable,
nothing looked imminent, HSBC said.
Goldman Sachs also cut forecasts for
Barclays in a note predicting a lean
quarter for the investment banks. While
Barclays’ bias towards rates and
currencies should make it more robust
than peers, its setting of a higher capital
target this month was “a clear setback”,
Goldman said.
Sports Direct slumped 10.5 per cent
to 379.2p after Mike Ashley, its founder,
said: “We are in trouble.”
A January profit warning had implied
that underlying profit for the year
would be flat at worst against the
previous year’s result of £380m.
Imagination Technologies closed up
5.4 per cent at 195p, having gained as
much as 20 per cent after a website
reported that Apple was in “advanced
talks” to buy the chip designer.
Apple issued a statement in the late
afternoon saying: “We had some
discussions with Imagination but we do
not plan to make an offer for the
company at this time.”
Takeover Panel rules mean Apple is
barred from bidding for six months,
unless circumstances change.
Investors have speculated that
Imagination might also be a target for
MediaTek of Taiwan.
22 ★ Wednesday 23 March 2016

INSIGHT Analysis. Capital markets

Henny
Sender
Bond investors look to eurozone periphery
With much of the region in Facing outwards
negative territory, yields in
Effects of reduced oil Italy and Spain are attractive
Forecast 2016 government bond issuance
€bn*
German and Italian debt
30-year government bond yields

fund activity spread ELAINE MOORE

0
Gross Net of redemptions
50 100 150
Italy
2.5

far beyond the Gulf Seventeen years after Europe bound

itself together with a single currency,
Germany
2.0

1.5
the region remains starkly divided France
between a wealthy, economically stable
Germany 1.0

B
ader Al Sa’ad, head of the Kuwait Investment north and a deeply indebted south. Italy
Authority, is not spending much time these While Germany enjoys a current
days assessing new investments. Instead he is account surplus and record low unem- 0.5
Spain
advising his government as it moves to establish ployment, Spain and Italy have deficits Feb 18 2016 Mar 21
a debt management office. that exceed the EU threshold and young Netherlands
Circumstances have changed in the Gulf, bringing a host people stuck in a twilight without jobs, Euro
of ripple effects. A while ago the biggest headache for the savings or homes of their own. Belgium Totals Against the dollar (€ per $)
1.14
region’s sovereign wealth funds was finding safe and profit- In financial markets the same divi- 1.13
able homes for swelling oil revenues. But these days many sions are visible in the widely different Austria
are fortunate if they do not have to liquidate holdings at rates governments pay to borrow. Ger- 1.12
the request of cash-strapped governments. many’s benchmark 10-year borrowing Finland €744bn €212 1.11
Kuwait is among the best managed of the Gulf SWFs, rate is 0.23 per cent a year. The equiva- bn 1.10
which means it is under less pressure to sell. Rather, it is lent rate in Italy is 1.26 per cent and in Ireland
1.09
simply putting out less new money. Spain 1.44 per cent.
But should low oil prices continue, the strain on these Yet credit investors are betting that Portugal 1.08
hitherto deep-pocketed investment companies will inten- debt markets in the southern periphery 1 Mar 2016 22
sify. That will bring both downward pressure on the prices are about to move in lockstep with the FT graphic Sources: JPMorgan Chase; Thomson Reuters Datastream * Forecasts for conventional bonds, excludes those linked to inflation
of some assets that has little to do with fundamentals, and rest of the region to provide one of the
more attractive valuations for new money coming in. best returns available this year.
Moreover most governments in the region will probably “The potential for reward in peripher- ‘There is a teed to end up with less money than expanding its bond-buying by €20bn a centage of Europe’s bond market might
prefer to run down their reserves than to see their curren- ies is high,” says Nick Gartside, head of when they started. month and adding corporate bonds to trade at negative yields in the future and
cies lose value, according to analysts. That is another rea- global fixed income at JPMorgan Asset need for Gross supply of new sovereign bonds the mix of debt it will buy. It also intro- the impact on assets across the region.
son these giant pools of money are going to have less to put Management, which has said Italian and positive in the eurozone is expected to be ducing ultra-cheap loans for banks, to While some investors believe they can
to work globally. Spanish bonds are among the few assets yields, and €744bn this year, down from €790bn encourage lending. still profit from negative yielding debt
“Global liquidity will shrink because global liquidity that offer the potential for 5 per cent last year. Once redemptions are taken The move has aided a recovery in glo- by selling the bonds on at a higher price
basically means dollar liquidity, and all the Gulf Co-opera- returns this year. the ECB is a into account, ECB bond buying is bal credit markets that has turned or betting on a currency move, others
tion Council [countries] and Saudi Arabia need dollars,” “I don’t see why the spread between powerful expected to exceed net issuance, putting round a rocky start to the year, pushing cannot accept the rates on offer.
says Mohamad Al Hajj, a macro strategist for EFG Hermes German and Italian or Spanish bonds buyer in further pressure on yields. bond prices up and yields down and Insurers need the steady incomes that
UAE in Dubai. shouldn’t halve this year. There is a For a positive yield investors are left encouraging Turkey and other coun- bonds provide but obligations to policy-
Much depends on the direc- need for positive yields and the ECB is the room’ with two options: buy longer-dated tries, and companies such as AB InBev holders prevent them from accepting
tion of oil prices, but it is safe
These giant a powerful buyer in the room. Plus debt, or debt issued by countries with to fire up borrowing plans. negative-yielding bonds — so they are
to say that, barring a huge dis- pools of money there’s an imbalance between supply shakier debt profiles in the south. A further boost was provided when forced to look at peripheral debt.
ruption of supplies, the days and demand.” Laurence Mutkin, global head of rates Peter Praet, an ECB board member, said “Insurers are going to keep driving the
of $100 oil are unlikely to
are going to have Thanks to the introduction of nega- strategy for BNP Paribas, says: “The rates had not yet reached the “physical spreads down,” says Mr Mutkin.
return in the near future. less to put to tive interest rates by central banks in European Central Bank isn’t the only lower bound”. Mark Dowding of BlueBay Asset Man-
Qatar has been quietly sell- Japan, Europe, Sweden, Finland, Den- game in town but it dominates other fac- In mid-February, at the height of mar- agement warns that although the risks
ing commitments to private
work globally mark and Switzerland, a third of the tors. And the more global debt turns ket volatility, the spread between Italian undermining markets at the start of the
equity funds and public existing eurozone government bond negative, the more investors have to 10-year bonds and German Bunds was year have receded, many could easily
shares, according to people familiar with the matter. Oth- market trades with a negative yield. reach for yield.” 150 basis points. On Friday, after Mr resurface. The latest reversal, he says,
ers say selling from Saudi Arabia was the reason the Japa- That means investors who buy bonds This month, the ECB opted to expand Praet’s comments, the spread was should serve to demonstrate how
nese market dropped early in the year. The Saudis are also and hold them to maturity are guaran- its quantitative easing, cutting rates, 100bp as investors considered what per- quickly things can change.
liquidating their managed accounts with many banks.
The reduced SWF presence will be felt more strongly in
asset classes that have especially long time horizons, such
as private equity and infrastructure. Equities
In addition, after the global financial crisis in 2008,
much of the rescue money that helped stabilise shaky
financial groups in the US came from the KIA and other
funds, which provided billions of dollars to Citigroup
Wall Street’s ‘fear gauge’
and what has since become the Merrill Lynch arm of Bank
of America.
nears mid-August low
The scaling back of oil fund investment comes as other
SWFs also record a drop in inflows. Because of weak
exports and slowing domestic economies sovereign funds NICOLE BULLOCK AND ADAM strategist at the Global Mar-
and other deep pools of money in Asia have less money to SAMSON — NEW YORK kets Advisory Group.
invest globally. That means pension funds in countries Wall Street’s “fear gauge” It is possible the optimism
from Canada to Korea will have more opportunities. has fallen sharply as inves- will carry through to the end
But managers at some of these funds say they are still tors anticipate the present of the first quarter, allowing
waiting, convinced that if they are patient there will be rebound can propel the investors to avoid what had
even more bargains in the coming months. S&P 500 higher and close looked even a few weeks ago
It may be that low oil prices will be the catalyst for struc- out the first quarter on a like a losing start to the year.
tural reform in the emirates, making their capital markets winning note. Nicholas Colas, chief mar-
much more attractive for foreign investors. Saudi Arabia ket strategist at Convergex,
opened its stock market to outsiders just as oil prices The CBOE Vix index, a said: “The Vix may have
started to slide, and for the first half of last year foreigners widely followed barometer come down too far, too fast.
were net sellers. of implied volatility, was But with the end of the quar-
However, meaningful reform and privatisation could hovering below a reading of ter just seven trading days
bring overseas investors back (though some listings have 15 yesterday, near its lowest away, that’s a good recipe for
been delayed because the prices are seen as too low, Mr level since mid-August when a quarter-end melt up for
Hajj points out). China devalued its currency, risk assets. After that, all bets
New taxes, asset sales at home, reduced subsidies and sparking a period of financial are off.”
people being encouraged to join the private sector rather turmoil. The long-term aver- Investors are uneasy about
than seek the security of a government sinecure have age for Vix is 20, and read- the outlook from April based
become the order of the day. ings below that level tend to on expectations for slow
Kuwait is introducing a corporate tax, a change that the suggest greater optimism economic growth, a tough
United Arab Emirates could also adopt. Qatar plans to among investors. first-quarter earnings season
introduce private-public partnerships to ease its govern- “Capital markets are basi- and an uncertain US general
ment finances. cally unwinding earlier fears election. “Real equity posi-
In straitened circumstances there is more of a debate of a global economic reces- tions still hinge on growth,”
about the way the region has invested — generally sending sion,” said Michael Under- said Mr Underhill. “We are
money to managers sitting in London and New York with hill, a portfolio manager at going to have fits and starts
only a portion of it returning home. That debate has sud- RidgeWorth Investments. because we are going to have
denly come to matter more. The reversal in the Vix a high volatility, low-GDP
from its peak reading of 28 in growth environment. A low
henny.sender@ft.com February comes as the S&P Vix reading is transitory.”
500 has staged an impressive For the first quarter, Wall
rally of more than 12 per cent Street analysts’ forecasts
from last month’s closing were for a drop of 8.4 per cent
low, when investors were in year on year earnings per
alarmed by global economic share, the fourth consecutive
More comment and data on ft.com and financial uncertainty. fall, according to FactSet.
The S&P stands 0.5 per cent Expectations worsened as
higher for the year. the quarter progressed. At
Y Fast FT Our global economies, headed Risk appetite has snapped the start of the year, analysts
team gives you market- by Brazil, Russia, India back in recent weeks with expected slight profit
moving news and views, and China. $7bn of fresh cash flowing growth.
24 hours a day, five days ft.com/beyondbrics into exchange traded funds Other issues that weighed
a week. ft.com/fastft that buy US equities, accord- on investor sentiment earlier
Y Podcast The Hard
Y Alphaville Our Currency podcast takes a ing to XTF.com, a research this year have not disap-
irreverent financial blog. look at what is driving firm specialising in exchange peared entirely, threatening
Join Paul Murphy and the global currency traded products. another bout of “risk off”
Bryce Elder for the daily market. ft.com/podcasts Credit markets, too, have selling.
Markets Live session at rebounded with risk premia “Some of the issues that
Y Lex Video Analysis for junk bonds easing nota- caused the nightmares of the
11am. ft.com/alphaville
and opinion from the bly as the sector has also last seven months seem
Y beyondbrics News and team on the hot issues attracted investor inflows. more stable — crude oil
comment from more affecting companies and “Investors have become prices, for example — but
than 40 emerging markets. ft.com/lexvideo very comfortable,” said others . . . remain as ques-
Peter Kenny, senior market tion marks,” added Mr Colas.

Morocco Industry & Services
Wednesday March 23 2016
Crafts
Home to more than
400,000 artisans
PAGE 2
Wine
Vineyards produce
35m bottles a year
PAGE 3
Banks look south for
sub-Saharan expansion
Finance Morocco’s three
biggest lenders account
for two-thirds of the
domestic market and
are growing abroad,
writes Siona Jenkins
O
n a busy Casablanca side
street, the muffled sound
of hammering can be
heard behind an unre-
markable shop front, its
newly installed logo shrouded in plastic
above a plate glass door.
This will soon be a branch of
Morocco’s newest retail lender, CFG
Bank. Younes Benjelloun, its chief exec-
utive, is hoping to attract customers
with a combination of good service and
real-time online banking.
“We’re targeting tens of thousands,
maybe 50,000 customers,” he says. “It’s
tiny by percentage [of the domestic
market] but in terms of revenues it rep-
resents more.”
CFG is indeed tiny by the standards of
Morocco’s banking industry, which is
widely described by analysts as one of
the best developed in Africa and
includes some of the continent’s biggest
banks. There are 19 banks in total, with
assets equivalent to 126 per cent of the
country’s GDP in 2013, according to the
IMF. But just three — Attijariwafa Bank
(AWB), Groupe Banque Centrale Popu-
laire (BCP) and Banque Marocaine du
Commerce Extérieur (BMCE) — control
two-thirds of the market.
Such market concentration is risky,
say analysts, though most acknowledge
that strong regulation by the central
bank has so far contained this risk. “If
you have 65 per cent of the banking
assets concentrated in three banks,
there is a big contagion risk. In general
it’s not a good thing,” says Olivier Panis,
senior analyst at Moody’s.
The sector, which has grown steadily
over the past decade, is well capitalised,
according to the IMF. Deposits account
for two-thirds of banks’ liabilities, while
consumer credit is growing. Financial
inclusion has jumped, with around 60
per cent of the population now using
bank services.
Mr Benjelloun is optimistic that the
sector offers opportunities for small
Finance minister Mohamed Boussaid
retail players like his own CFG. But for
the bigger banks, which traditionally
lend to large corporations, profitability
has become a challenge, particularly as
growth has remained sluggish in
Europe.
“There is a structural situation of low
credit demand simply because the
banking industry is very big compared
to the economy,” says Ismail Douiri, del-
egate director-general of AWB, the
country’s biggest bank.
Mr Douiri says AWB is looking to
rebalance its portfolio of lending by tar-
geting the growth of smaller loans with
higher yields. “WeW currently produce
around €700m a year of new loans to
very small enterprises and this is an area
where they were totally unserved,” he
adds.
Many businesses, however, complain
that access to capital for small and
medium sized enterprises remains very
limited.
“We are concerned by financing,
especially of SMEs, which do not have
enough capital,” Mohamed Boussaid,
the economy and finance minister, tells
the FT.
As credit growth has slowed at home,
the big three banks have sought profit in
sub-Saharan Africa. They have
expanded rapidly over the past decade,
mostly by acquiring other banking
groups.
Moroccan banks are now present in
22 African countries and around 17 per
cent of their foreign activity is on the
continent.
“These countries represent a real
FT SPECIAL REPORT
www.ft.com/reports | @ftreports
Solar energy
Power plant to provide
INSIDE 510MW of capacity
Port is central PAGE 4
to global
ambitions
PAGE 2
Cars
329m light vehicles
built a year by 2020
PAGE 2
growth potential given the level of bank-
ing penetration, which remains one of
the weakest in the world,” says Hassan
el-Basri, head of risk at BCP, which in
2012 acquired control of Atlantic Finan-
cial Group of the Ivory Coast, giving it a
presence in seven sub-Saharan African
countries.
The push south has coincided with a
broader attempt to diversify the econ-
omy away from its reliance on Europe.
“Europe will always remain a primary
partner for Morocco,” says Mr Boussaid,
but Africa “is now seen as the future in
terms of growth and economic poten-
tial”.
The strength of the banking sector
contrasts with the weakness of
Morocco’s equities market. The stock
market has lost more than 20 per cent of
its value over the past five years. In 2013
the Casablanca stock exchange was
downgraded by MSCI from emerging to
frontier market status.
Karim Hajji, head of the stock
exchange, tells the FT that insufficient
liquidity was one of the reasons for the
downgrade, and that it continues to be
the market’s biggest challenge. “Liquid-
ity has consistently been an issue and
more so since 2008, because individual
investors deserted the market after [sig-
nificant] losses,” he says.
Mr Hajji argues there is a silver lining
to the relegation from the emerging
market index. He points out that
Morocco was competing with much
larger economies — including China,
Brazil and India — whereas now it is one
of the top five performing markets on
the frontier index. “It is better to be a big
fish in a small pond than a small fish in a
sea,” he says.
Officials hope eventually to regain
emerging market status and are imple-
menting significant reforms that
include boosting the independence of
the regulator, strengthening listing
requirements, establishing an SME
index and developing new financial
instruments with a view to attracting
foreign investors.
“The important thing to remember is
that Casablanca is a gateway to Africa.
You already have many Moroccan com-
panies, which are well-established in
west Africa and are branching out in to
some English-speaking African coun-
tries,” says Mr Hajji. “Buying Moroccan
shares allows you to play Africa through
a very stable country.”
2 ★ FINANCIAL TIMES Wednesday 23 March 2016

Morocco Industry & Services

Exports Maritime and free trade complex aims to extend role as transshipment hub and offer incentives for overseas producers, writes Heba Saleh

Carmakers
Tanger-Med container port
Moroccan automotive
light vehicles 329
production
drive northern Units (’000)

manufacturing
provides bridge to Europe A special train takes cars assembled in
Renault’s factory in northern Morocco
to Tanger-Med port, half an hour away.
43

E
ven on a cloudy winter day,
the coast of southern Spain
and the Rock of Gibraltar are
clearly visible from
Morocco’s Tanger-Med port,
beyond the large cranes and rows of new
Renault vehicles awaiting export.
Barely nine miles separate the port, at
Morocco’s northern tip, from the Euro-
pean mainland across one of the world’s
busiest sea routes, connecting the Medi-
terranean to the Atlantic.
The Tanger-Med port, which has been
operating since 2007, capitalises on its
strategic location on the Strait of Gibral-
tar in two ways.
First, it acts as a transshipment hub —
a port where containers are transferred
between vessels before travelling to
other destinations. Second, it forms part
of the Tanger-Med complex that
includes four export-orientated free-
trade zones, where customs duties are
not imposed.
These zones are designed to attract
investment to Morocco’s industries and
services, and to create jobs.
With 20 per cent of the world’s mari-
time traffic passing through the sea
lane, the container port has allowed
Morocco to grab a slice of the growing
transshipment market. The port han-
dled about 3m 20-foot equivalent units
(TEU) of cargo in 2015. Port officials say
this should rise to 8.2m TEU in 2018
once Tanger-Med 2, the second phase of
the project, is complete. This would
make the port the largest transship-
ment hub in the Mediterranean and
Africa. In addition, the port includes a
ferry terminal that handled 250,000
trucks last year.
Tanger-Med is the linchpin of
Morocco’s policy of industrial develop-
ment.
By capitalising on Morocco’s proxim-
ity to Europe and the low cost of local
labour, the port has attracted hundreds
of foreign companies manufacturing
goods for export to Europe from its
free-trade zones. These are mainly in
the automotive, aeronautics and textile
Grand designs: France’s president François Hollande and King Mohammed VI assess a model of the port – Alain Jocard/AFP/Getty
sectors. Renault has set up the largest
car factory in Africa, with the capacity
to produce 340,000 vehicles a year.
“The entire platform has generated
60,000 jobs in the zones plus the port,”
says Mehdi Tazi Riffi, president of the
Tangier Mediterranean Special Agency.
“The real purpose is to generate eco-
nomic activity, which is why the same
entity is in charge of building infrastruc-
ture [and] running the port authority
and the industrial clusters.”
He says total turnover of the 700 com-
panies working in Tanger-Med’s five
industrial zones reached €5bn in 2015.
The zones, four of which qualify as free-
trade sites dedicated to production for
export, occupy 1,200 hectares and are
dotted around the Tangier area in
northern Morocco.
Rail links and highways connect them
to the port. There are another 3,000
hectares available for development, Mr
Riffi adds.
“We have 80 [automotive] companies
that make parts for big manufacturers
such as BMW, Mercedes and Peugeot,”
he says. “It takes two to three days for
parts like steering wheels or seats to get
to most European capitals from here.
Likewise, textiles are exported by truck
directly to logistics warehouses around
Europe. The main trend, however, is in
automotive, which is growing at a
quicker pace because the Renault fac-
tory is here.”
Rachid Houari, director of the port,
says that before it opened, a container
travelling from Casablanca — then
Mococco’s biggest port — to the Ameri-
cas would have taken 20 days because it
would have needed to go to another
transshipment hub elsewhere in the
Mediterranean.
“Now it only takes 10 days,” he says.
“And we are becoming a hub for trans-
shipment for west Africa because we
have weekly links to 37 ports in 21 coun-
tries there.”
When Tanger-Med 2 opens, he says,
the port that is currently ranked 43rd in
the world by capacity will be among the
top 20. Despite the slowdown in global
trade, Mr Houari says the port is in a
good location to grow.
“There are 100,000 ships going
through the Strait of Gibraltar every
year and most need to do transship-
ment,” he says. “We are in an excellent
position because sailing here requires
no deviation.”
Michel Donner, senior adviser at
Drewry Shipping Consultants, says Tan-
ger-Med was built when the world econ-
omy was booming and there was a high
growth in maritime trade.
But even with the slowdown in global
growth, changes in the shipping busi-
ness are likely to work in its favour.
Shipping lines are building bigger ves-
sels of up to 18,000 TEU capacity to take
advantage of economies of scale and
cheaper fuel.
“These ships cannot go in every port,
so . . . this trend will increase the vol-
ume of transshipment [globally],” says
Mr Donner. “It is a very different indus-
try now.”
It is then a short trip on a car carrier to
the European markets where they are
sold.
The plant, which produced 229,000
cars in 2015, up from 174,000 the year
before, is the largest car factory in Africa
with capacity to produce 340,000
vehicles annually. The bulk of its output
is destined for Spain, France and
Germany.
“We are in a perfect location at the
gates of Europe,” says Jean-François Gal,
director of the Renault factory.
For Morocco, the benefits of Renault’s
€1.6bn investment in the factory go far
beyond the 7,100 jobs it has created. The
plant started production in 2012. It has
served as a catalyst for the government’s
plans to develop an automotive sector
that benefits from the country’s
proximity to European markets and
cheap labour costs: Moroccan car
workers earn about a third of their
European peers.
The Renault plant, along with a range
of tax and other incentives offered in
Morocco’s free trade zones, has also
attracted foreign makers of car parts.
Some 150 automotive-related
manufacturers are based in Morocco,
according to Hakim Abdelmoumen,
president of the Moroccan Association
for Automotive Industry and Trade.
Some supply the Renault plant but
others produce solely for export to
Europe and elsewhere.
The expanding automotive industry,
with its widening supply chain, has also
convinced PSA Peugeot Citroën, the
French carmaker, to open a plant in
Kenitra on Morocco’s Atlantic coast.
This will be completed in 2019, with an
initial capacity to produce 90,000
vehicles annually, rising within three
years to 200,000, which will be made
mainly for export to African markets.
Mr Abdelmoumen says most
international companies that built
plants in Morocco have added to them.
“Sumitomo, Yazaki and Valeo are all
huge automotive companies that tested
Morocco with a plant and they are now
2010 2020
As % of France light vehicles production
2% 16%
2010 2020
Source: IHS
accelerating investment,” he says.
Tajeddine Bennis, director of Snop
Tanger, a French maker of body parts
for Renault that started production in
Morocco in 2011, says turnover has
grown faster than he had expected.
“We reckoned it would be in the order
of €30m a year, but we reached €50m
last year,” he says. “We were worried
about the quality of the local workforce,
but our strategy of training youth from
local schools has yielded better results
than we expected.”
Snop Tanger employs 420 Moroccan
workers and exports 30 per cent of its
production to Renault plants in
Colombia, Brazil, India and South
Africa. The rest of its output goes to the
Moroccan plant.
The automotive sector is
aiming to create 90,000
jobs by 2020
With total automotive exports
reaching €4.8bn in value last year, the
sector is seen as one of Morocco’s big
success stories.
Mr Abdelmoumen says the sector is
aiming to create 90,000 jobs by 2020 in
addition to the 100,000 that already
exist.
As part of this, the country’s ministry
of industry is supporting automotive-
related manufacturing in four specific
areas: batteries; seats and interiors;
cables and wiring; stamping and metal
parts.
One aim is to increase the proportion
of locally produced components in
exported cars from 40 per cent to 65 per
cent by the end of the decade.

Traditional craftwork combines with business acumen

Artisanship
Formal training tries to help
craftsmen reach global
markets, writes Siona Jenkins
Joubi Hamroud is proud of his shop in
Marrakesh’s labyrinthine souk. The
space is crammed with brass and metal
lamps that come to life as he flicks on a
switch.
Like his father and grandfather before
him, Mr Hamroud specialises in metal
work. “This one took about three
months to make,” he says, pointing to an
enormous polished brass lantern.
Morocco has a rich tradition of arti-
sanship that dates back centuries. It has
long been renowned for its workman-
ship in the Middle East and north Africa.
More recently the country’s flourishing
tourist industry has helped spread that
reputation further afield.
But the work of Mr Hamroud and his
fellow craftsmen is more than just a cul-
tural tradition. More than 400,000 peo-
ple worked as artisans in Morocco in
2014, according to government figures.
The sector had a turnover of 21.8bn
dirham ($2.2bn), up 7.5 per cent on the
previous year, and there is a small but
growing export market, which was
worth 415m dirham in 2014.
Craftwork is an important source of
jobs in a country with high unemploy-
ment, which stands at 9.3 per cent over-
all, but 40 per cent for urban youth,
according to the World Bank. Sustaining
the industry’s future is an economic, as
well as a cultural, necessity.
Fearing that skills could die out, King
Mohammed VI set up l’Académie des
Arts Traditionnels in 2012 to teach tra-
ditional craftsmanship. Abdessamad
Haddadi, its director of studies, says
that last year there were 800 applicants
for 108 places on the three-year course,
which combines academic and practical
instruction.
“This is the only institute in the
country that gives training to a recog-
nised academic level, Mr Haddadi says.
“The course also includes a very impor-
tant segment on management, market-
ing, entrepreneurship. The sector needs
people who can manage a business.”
Most artisans have no formal train-
ing, however, and skills are passed down
through families and communities.
These men and women produce a wide
range of products across the country,
including leather goods, carpets, wood-
carvings, textiles and ceramics.
‘To survive, “Morocco has so many different
it needs handicrafts that they always touch
someone somewhere,” says Laetitia
to be Trouillet, who makes leather bags in
modernised Marrakesh under her Lalla brand. A
French designer who has been in the
and adapt country for 15 years, she says Morocco
to current has benefited in recent decades from its
proximity to Europe and its appeal to
trends’ the fashion industry, which has allowed
Fatima a cross-fertilisation of design and arti-
Marouane sanship.
But while she thinks the attractive-
ness of Moroccan craftsmanship will
endure, she acknowledges that it could
be threatened in the future if skills are
no longer transferred across genera-
tions as more young people are drawn
into other jobs.
The government agrees. “Our arti-
sanal heritage is extremely important.
It is part of our identity as Moroc-
cans,” says Fatima Marouane, min-
ister for artisan affairs, social
economy and solidarity. “But
to survive it needs to be mod-
ernised and to adapt to cur-
rent trends, and we need to
export.”
The ministry is putting in
place a strategy that it hopes
will improve the way artisans
work and increase their
incomes while keeping old
traditions alive. This includes
setting up more than 50 cen-
tres around the country
where artisans can train,
work, display and sell their
Handmade: products. Part of this training involves
carpets on literacy classes, as many artisans, par-
display in ticularly in rural areas, are illiterate.
Marrakesh Ms Marouane says she wants to
Romaine Lancaster increase exports and is looking to the
“huge” US market. Her ministry has
launched a partnership with two Ameri-
can design schools that it hopes
will help it develop a better
understanding of how to meet
demand abroad.
A government agency, La
Maison de l’Artisanat, pro-
motes handicraft exports and
organises fairs in Morocco
and abroad to showcase
the products.
“We’re not looking at
putting an entire Moroc-
can bedroom into the US,
but we’re looking at
putting a Moroccan car-
pet or pot into an Ameri-
can bedroom,” says Adel
Ibnoutalib, Ms Mar-
ouane’s chief of staff.
Wednesday 23 March 2016 ★ FINANCIAL TIMES 3

Morocco Industry & Services

Production vine:
Morocco’s winemakers
are enjoying a revival
Age fotostock/Alamy

Contributors
Heba Saleh
North Africa correspondent

Siona Jenkins
Middle East and Africa news editor

Ursula Lindsey
Freelance writer

Owen Walker

Atlas seeks place on winemaking map Commissioning editor

Steven Bird
Designer

vineyards were nationalised, aban-
Growing interest in doned or uprooted. Then, in the 1990s,
production is tempered King Hassan II, who had studied in Bor-
deaux, invited French experts and
by alcohol’s stigma in investors to Morocco to revive the
the Muslim country, industry. He also granted 1,100 hectares
to Brahim Zniber, the industrialist who
writes Ursula Lindsey founded and then expanded the Celliers
de Meknès winery, which owns Château
There are eight vineyards operating
in the country today. The sector pro-
duces an estimated 35m bottles a year
and employs up to 20,000 people.
Due to the country’s varied climate, it
produces a wide range of grapes and
wines, several of which have won inter-
national awards in recent years. Some of
the best regarded are Syrocco, a Syrah
production, says Mr Gesincourt, while
maintaining high standards and a tradi-
tional touch. His ambition is to develop
his vineyards “in an ecological and rea-
sonable manner”.
In Morocco, grapes are handpicked
and because of the good climate, there is
little need to use herbicides or other
chemicals.
Marjane, stopped selling alcohol in
2014. Last autumn the municipality of
Alan Knox
Picture editor
Casablanca cancelled what would have
been the country’s first beer festival.
Nevertheless, local winemakers say
Christopher Campbell
Graphic artist
demand is constant and there is a grow-
ing interest in higher-quality wines. Cel- Valentina Romei
liers de Meknès has created the coun- Statistical researcher
try’s first appellation d’origine contrôlée

T
he Château Roslane vine-
yard spreads across the
sunny, temperate plains at
the foot of Morocco’s Atlas
Mountains. Winemaking is
a centuries-old tradition here. The
nearby ruins of the Roman city of Volu-
bilis are adorned with depictions of Bac-
chus, the Roman god of wine.
In the late 19th century, French colo-
nists planted vineyards across the coun-
try. By the 1950s Morocco was the
world’s third-largest wine-exporting
country.
But after independence in 1956,
Roslane and is the largest wine producer
in the country.
“Mr Zniber was the first to fight to
keep wine in Morocco,” says Josselin
Desprez de Gesincourt, wine marketing
manager and buyer for the group.
That battle appears to have been won
as the industry is again well established
and growing. Morocco is the second-
largest exporter of wine on the conti-
nent after South Africa. But its export
volumes — 52,000 hectolitres compared
with South Africa’s 4m, according to the
International Organisation of Vine and
Wine — remain low.
from the Domaine des Ouled Thaleb;
Terres Blanches from La Ferme Rouge, a
sauvignon, chardonnay and viognier
blend; and Château Roslane, the Celliers
de Meknès signature.
Château Roslane was built in 1948,
but the facility was recently renovated
with state-of-the art equipment includ-
ing laboratories, cooling cisterns and a
bottling plant. The historic cellar has
been expanded to hold 3,000 oak bar-
rels which, like much of the equipment
and know-how, are imported from
France.
The challenge is to industrialise
Winemaking has flourished dis-
creetly in the past 20 years despite being
frowned upon by religious conserva-
tives. In theory all sales of alcohol to
Muslims are prohibited.
In practice, though, the vast majority
of the wine produced in Morocco is sold
at local bars, restaurants and supermar-
kets.
But a stigma surrounds the industry.
There are no road signs indicating the
way to Château Roslane. The business is
heavily taxed and does not benefit from
government promotion. One of the
country’s big supermarket chains,
(AOC), which designates an officially
recognised region and particular pro-
duction standards, Les Coteaux de
L’Atlas.
Another vineyard, La Ferme Rouge,
has also just registered its own AOC, Les
Côtes de Rommani.
Many Moroccan vineyards aim to
raise their profile in the international
market. The Celliers de Meknès exports
5 per cent of its production. “My chal-
lenge is to increase this,” says Mr Gesin-
court, who adds that he is targeting wine
drinkers in Europe as well as markets in
the US, Asia and Russia.
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Less reliance on volatile farming

Agriculture Moroccan agricultural production
Efforts are being made to Real annual % change % of total value added

limit the disruptiveness of 80 24

chronic droughts, writes 60 22
Ursula Lindsey
40 20

The recent drought in Morocco has
highlighted how vulnerable the coun-
try’s agriculture is to unpredictable
weather patterns.
In January King Mohammed VI called
on mosques across the country to organ-
ise prayers for rain. The government
announced an emergency plan to pro-
tect crops, flocks of livestock and water
resources with a budget of more than
5bn dirham ($510m).
Since then, rains have finally fallen.
But it has been too little too late, espe-
cially for the country’s wheat growers.
The country will have to double its
wheat imports to meet demand.
While farming represents a declining
share of Morocco’s overall economy, it
remains critical to the fortunes of many
citizens.
An estimated 9m Moroccans living in
rural areas rely on farming to make up
some part of their livelihoods. In 2014,
agriculture accounted for nearly 15 per
cent of Morocco’s gross domestic prod-
uct and accounted for 40 per cent of its
employment.
The sector continues to offer profita-
ble investment opportunities for foreign
investors, says Philippe Marchadour, a
director of Biolandes, which grows
orange blossoms and roses for European
perfume companies.
Morocco is an obvious destination for
a wide range of growers because it
enjoys several distinct climatic zones,
explains Mr Marchadour. “You have the
Mediterranean, the Atlantic, the sea-
side, the mountains,” he says. “You can
grow bananas and you can grow pears.
There is a great range. Europe is just
next door, and produce can be trans-
ported by truck. There is an abundance
of labour.”
But water scarcity is a key constraint
and only around 15 per cent of
Morocco’s fields are irrigated. “Chronic
drought is endemic in Morocco. It has
been a political issue for centuries as
well as a social and economic one,” says
Karen Rignall, an academic who studies
Moroccan agriculture. Years of drought
are feared by the authorities as times of
potential unrest.
A French colonial official’s observa-
tion that “in Morocco, to govern is to
rain” is still quoted frequently.
20
0 16
-20
-40
-60
1986 88 90 92 94 96
Source: Thomson Reuters Datastream, World Bank
To bolster the agriculture, the
country’s authorities have launched
ambitious plans over the past decade to
enhance output, with mixed results.
The Maroc Vert — or Green Morocco
— plan was launched in 2008, backed
with funding of 147bn dirham through
to 2020. The plan gives generous subsi-
dies for the development of modern,
commercial agriculture.
It focuses on products such as olive
oil, tomatoes and citrus fruits — which
are some of the country’s main exports
— as well as sugar, sunflowers and
wheat, which are heavily consumed
domestically. It also emphasises niche
local products such as argan oil, saffron,
honey and roses for perfumes.
An estimated 75 per cent of the coun-
try’s agriculturally productive land is
held by small farmers in fragmented
plots to which they often hold no official
title. Yields are very low, both because
they depend on rain and because many
small farmers, who are often illiterate,
typically do not use modern methods.
The Maroc Vert plan encourages a sys-
tem aimed at establishing production
on a large scale in which investors con-
tract with many small farmers to pro-
duce particular crops, providing them
with subsidised seeds and equipment.
This system of aggregated cultivation
also encourages small farmers to use
more productive techniques and to
switch from growing wheat to growing
crops that are more resistant to climatic
fluctuations, such as olive and almond
trees. But it is unclear how much success
these initiatives have had.
The programme has increased pro-
duction of some crops, with olive pro-
duction nearly doubling. The value of
Morocco’s agriculture rose to 118bn
dirham ($12bn) in 2015, compared to
75bn dirham in 2008.
B u t e x p o r t s h ave n o t m e t
18
14
12
10
98 2000 02 04 06 08 10 12 14
expectations. Despite a trade agreement
with the EU, Morocco faces competition
from countries such as Turkey, Egypt
and South Africa. In December the
European Court invalidated the agricul-
ture part of the deal because it extends
into the disputed territory of Western
Sahara. EU officials have appealed
against the ruling and say trade will not
be affected until a final decision is made.
Omar Laafoura, a young Moroccan
businessman, invested in agriculture a
few years ago. He benefited from the
Maroc Vert plan, which subsidised his
installation of drip irrigation systems in
his tomato and melon farms outside
Marrakesh. He says this allowed him to
reduce water consumption by half. On
the way to his farm, he drives through
land where authorities recently planted
drought-resistant cactus pear trees.
“The government has realised that
water is a shared resource,” says Mr Laa-
foura, who adds that state policy is
encouraging farmers to “manage what
[they] have, look for waste, increase
productivity”.
But critics of the government’s agri-
cultural policies say the focus is over-
whelmingly on productivity, at the
expense of all else. The vast majority of
the country’s water goes to a few crops
with export potential. “There is no tak-
ing into account of natural resource
preservation or of food security,” says
economist Najib Akesbi, a professor at
the Hassan II Institute of Agronomy and
Veterinary Science. “Unreasonably gen-
erous” subsidies available under the
Maroc Vert plan have benefited agribus-
iness but not helped Moroccan farming
cope with environmental risks, Akesbi
argues.
These include climate change, which
experts predict could produce more fre-
quent and lengthy droughts across
north Africa.
4 ★ FINANCIAL TIMES Wednesday 23 March 2016

Morocco Industry & Services

Solar reflects energy ambitions Outsourcing

for investors,” says Obeid Amrane, a
Renewables board member of Masen, Morocco’s
Country aims to renewable energy agency.
Mr Amrane and other officials say
generate more than half that part of Noor’s mission is to provide
of its power from work for the country’s solar industry.
They point out that around a third of the
sustainable sources, construction work for Noor 1 was car-
finds Siona Jenkins ried out by domestic companies.
However, this was largely in the form
Policymakers hope to
tackle slowing growth
in back-office services
Kinza Malih, an employee at a call-
centre in Casablanca, Morocco’s
economic capital, puts on headphones
and prepares to call a list of people
whom she describes as “VIP clients” in
France.
Identifying herself as “Caterine” — a
name intended to be familiar to French
clients who do not know that she is

W
hen production offi-
cially began at the
world’s biggest concen-
trated solar power plant
at Ouarzazate in south-
ern Morocco in February, the country
was widely celebrated for its achieve-
ment.
Called Noor 1 after the Arabic word
for light, the concentrated solar power
(CSP) plant is designed to deliver 160
megawatts of electricity at peak output.
It is the first of three stages in a project
expected to provide 510MW of generat-
ing capacity by 2018.
Unlike photovoltaic technology, CSP
uses the sun to heat fluid, which powers
turbines that can supply electricity at
night. This gives more constant power
to the grid. The complex will save 13m
tons of carbon emissions over 25 years.
Morocco has set itself ambitious
renewable energy targets. A previous
goal of generating 32 per cent of its
power from renewable sources by 2020
— which is likely to be comfortably
exceeded — was extended late last year
to a target of 52 per cent by 2030.
An important spin-off from this drive
is the establishment of a local renewa-
bles industry. Officials say they want to
establish Morocco as a hub for renewa-
ble energy, develop industrial capacity
in the sector and even begin exporting
energy in the coming decades.
“Industrial integration is one of the
big points of our energy strategy,” says
Said Mouline, general director of the
National Agency for the Development of
Renewable Energy and Energy Effi-
ciency. “It is not to just to import tech-
nology and to install it here. It is to have
step-by-step industrial integration for
all sectors linked to renewables or
energy efficiency.”
But aligning all the elements neces-
sary to develop a local industry is a chal-
lenge, particularly in the solar sector.
The sheer scale of Moroccan renewable
ambitions is proving tough for local
industry.
Until Noor, solar energy was used in
off-grid on a small scale for uses such as
powering agricultural pumps. The large
size of tenders for Noor 1 were well
beyond the capacity of the country’s
embryonic solar industry to deliver.
“[The development of] local industry
remains just a hope for now because the
programme is very ambitious,” says
Ahmed Squalli, president of Amisole, a
‘Developing Moroccan renewable energy industry
association.
local Morocco’s energy officials counter
industry that the ambitious targets and large-
scale projects are as much about visibil-
remains just ity for investors as they are about fast-
a hope tracking the development of renewa-
bles.
because the “With all this visibility for the pro-
programme gramme we have created the conditions
for investors to know that Morocco has
is very the firm intention of going through with
ambitious’ this programme . . . that we are here
and for a long time with a line of projects
of civil works, steel manufacturing and
commissioning, rather than delivery of
technology. Local companies say the
structure of the tenders made it difficult
for them to bid not just because of their
scale, but also because of the involve-
ment of multilateral financing bodies —
such as the World Bank — which were
reluctant to give preferential treatment
to local industries.
Another hurdle has been the need for
bidders to have a proven record of expe-
rience in other large-scale projects. Jet
Energy, an engineering and construc-
tion company based in Rabat that
makes solar units, found itself excluded
from larger tenders because of these
terms, says Ismail Tadlaoui, its business
development manager.
“We manufacture solar panel mod-
ules but we cannot use them [to tender]
Close to the sun: because you need a record — for exam-
Ouarzazate is ple 200MW installed somewhere in the
home to the world,” he says. “It’s only large interna-
world’s largest tional companies that can compete.”
concentrated Companies say one way to encourage
solar power the solar industry would be to open the
plant grid to more modest renewable energy
Fadel Senna/AFP/Getty
Images
sources. An amendment to Morocco’s
2009 renewables law is under consider-
ation. Companies and officials say it will
expand the market for local businesses
by making small-scale projects possible.
Many hope that the next UN summit on
climate change, COP 22, taking place in
Marrakesh in November, will serve as a
catalyst for its approval.
Insufficient finance is another obsta-
cle that the companies cite as holding
back their growth. There is minimal
funding available for business or indi-
viduals that want to install photovolta-
ics, stifling the development of a market
that could help local industry build its
capacity. “For me everything starts
from the market,” says Mr Squalli of
Amisole. “The market has to be here
and then we can develop.”
calling from Morocco — she responds
to queries such as over the delivery
date of a sofa or refund on a jacket
ordered from French online retailer
Showroomprive.
“Even when I finish my studies I will
go on working at the call-centre,” says
Ms Malih, who is aiming to secure a
masters degree in economics. She
earns around $600 a month from her
job at Outsourcia, a Moroccan
business that employs 800 people. It
provides a range of call-centre, e-
commerce and other back-office
services to major French companies
such as Total, the oil company,
Carrefour, the supermarket chain, and
Orange’s Moroccan affiliate, Méditel.
Outsourcia is part of the kingdom’s
growing outsourcing sector, which
grew from 300 employees in 1999 to
70,000 now. Last year it reached
$780m in revenue. Segments of the
Moroccan outsourcing market, which
mainly caters to French companies, are
seen as saturated. Annual growth of
the industry dropped to around 5 per
cent last year, after hitting 15 per cent
in 2011. But officials and industry
insiders say rising demand for more
sophisticated services, such as
business process outsourcing, will
allow them to attract new clients.
Youssef Chraibi, president of
Outsourcia and head of the Moroccan
Association for Customer Relations,
says there are two major trends
limiting growth in the call-centre
business.
First, competition between French
telecoms operators, which account for
half the market in Morocco, has led to
cost cutting and in some cases
customer care moving online from
phone-based helplines. Second,
Moroccan back-office service
providers face competition from
cheaper service providers in other
francophone African countries.
The main hurdles, he says, are that
French companies are still not very
accustomed to outsourcing their back-
office process. Laws that protect jobs
in France are sometimes a barrier, and
in Morocco there is a dearth of some
of the skills that are needed.
Mamoune Bouhdoud, Morocco’s
deputy minister of industry,
acknowledges the challenges. He says
the government is about to sign an
agreement with private operators
offering support to the sector for it to
grow and create more jobs.
“We will have more engineers, more
legal people, more IT people,” he says.
“It’s a huge opportunity for Morocco.”
GFI Informatique, a French provider
of IT services, launched an affiliate in
Morocco in 2003 that employs 240
local engineers. It offers IT
outsourcing for clients such as BNP
Paribas, Thales, La Poste and Yves
Rocher, a French cosmetics group.
Saloua Karkri-Belkeziz, president of
GFI Maroc, says Morocco has political
stability and enough well-trained
young people to allow it to capture
15-20 per cent of the French market in
IT services if backed by proper
marketing, training and legal reform.
Ms Karkri-Belkeziz notes that
Morocco has already achieved its aim
of training 10,000 engineers, but that
the country needs more.
“We also need more competitive
prices for telecoms,” she says, adding
that this is part of a plan being
discussed by the government and
private sector companies that is due
to be signed by April.
“We should act on our competitive
advantage to [keep] the companies we
have here and attract new ones.”
Heba Saleh

Renewable energy is the largest recipient of greenfield foreign direct investment

2011-15 ($m)
Alternative/renewable
undefined 15876
13108 energy Automotive OEM Business Others
2,930 2,686 services 2,768
1,169

Real estate Hotels and tourism Automotive Financial

2,796 843 components services
558 463

Metals Chemicals Aerospace

792 444 427

Source: fDI Markets