THURSDAY 26 OCTOBER 2023 USA $2.50 Canada C$3.

00

World is safer now China takes Biden’s calls Are Apple’s devices as green as it claims?
EDWARD LUCE, PAGE 15 COMPANIES, PAGE 7

Mideast strife Briefing

Iran’s proxies i Trump ally’s election
breaks House deadlock
fuel anxiety Mike Johnson, an evangelical
Christian from Louisiana and
loyal Trump ally, has been
A pro-Palestinian billboard watches elected Speaker, ending weeks of
over citizens in Tehran yesterday. Iran’s paralysis and signalling a sharp
support for militant groups in Gaza, the tack to the right for Republicans
West Bank and Lebanon has sparked US in the chamber.— PAGE 4
concern over potential escalation and
attacks on its forces in the region. i Worldline rout hits peers
The US believes its deployment of Shares in the French payments
more military assets in the region has specialist have plummeted by
helped keep Iran out of the fray. But offi- nearly 60 per cent after it
cials say its proxies still pose a threat. downgraded its sales outlook and
The leader of Hizbollah met figures in said it was cutting loose some
Hamas and Palestinian Islamic Jihad in clients.— PAGE 5; LEX, PAGE 16
Lebanon yesterday, with the Tehran-
backed groups agreeing “to continue co- i Climate pessimism rises
ordination” in pursuit of a “real victory UK academic Jim Skea, new head
for the resistance in Gaza and Palestine”. of the UN climate science body,
The UN agency bringing aid to Gaza has said the chances of the world
said that it would run out of fuel in less limiting temperature rises are
than a day, threatening its capacity to lower than forecast by its 2021
help roughly 1mn displaced people. report.— PAGE 4; PILITA CLARK, PAGE 14
Reports & analysis page 3
Erdoğan comments hit stocks page 8 i Tusk makes funds push
John Sawers page 15 Poland’s likely next premier,
Abedin Taherkenareh/EPA-EFE/Shutterstock
Donald Tusk, has lobbied the EU
to unlock billions of euros frozen
over concerns with the country’s
rule of law standards, despite his

Treasury rout deters US companies not having taken office.— PAGE 2

i Deutsche Bank upbeat

Germany’s biggest lender has said
it will have capacity to increase

from borrowing as finance costs soar dividends and share buybacks

over the next two years as it
reported better than expected
third-quarter results.— PAGE 6

i Boeing to miss targets

3 High yields infect corporate debt 3 Slowest October for a decade 3 Business locked in waiting game
HARRIET CLARFELT — NEW YORK
Turmoil in government bond markets
has forced US companies to delay bor-
rowing plans, making this the slowest
October for debt issuance in more than
a decade.
US groups have raised just under
$70bn from sales of bonds and lever-
aged loans in the month to date, the qui-
etest month this year and the weakest
pace of borrowing in any October since
2011, according to data from LSEG. The
total of 50 deals is the lowest number at
this point in the month, according to
records going back 20 years.
Bankers say the sharp rise in Treasury
yields in the past month, which has fed
through to higher corporate borrowing
costs, has put off companies from tap-
ping debt markets unless they have to.
“Anyone who was thinking about
opportunistically coming into this mar-
ket is taking a step back,” said Richard
Zogheb, global head of debt capital mar-
kets at Citigroup.
The 10-year Treasury yield this week
climbed above 5 per cent for the first
time since 2007 — up from less than
4 per cent just three months ago —
driven by expectations that the Federal
This week the US
10-year Treasury
passed a 5 per cent
yield for the first
time since 2007.
Could this signal it
is time to buy into
corporate bonds?
Page 16
Reserve will keep interest rates higher
for longer.
The rise has fed through to corporate
borrowing costs. The average yield on
US investment-grade bonds now stands
at 6.3 per cent, up from 5.6 per cent in
late July, while junk bonds now yield
9.4 per cent — up from 8.4 per cent,
according to Ice BofA index data.
“[Companies are] saying, ‘Look, I get
it: rates are going to be higher for longer
but we’ve had such a dramatic move in
such a short period of time, I’d like to
watch it a little bit and make sure that
it’s here to stay’,” Zogheb said.
The decision to wait highlights how
corporate funding plans are being
directly affected by shifting expecta-
tions of Fed policy. Many businesses
stretched out the maturity of their debt
during the period of low rates after the
pandemic, and have the luxury of wait-
ing before returning to debt markets.
But others that had pushed back bond
issuance plans — particularly those with
very weak credit ratings — are likely to
struggle to wait much longer.
“There have been a number of bor-
rowers that have already delayed their
financing three or four months ago,”
said one senior debt banker. “And now
[borrowing costs have] moved against
them another [percentage point].”
Issuance was expected to ease in this
month following a strong September.
“We have a little bit of a cushion that’s
been built up,” said Matt Mish, UBS’s
head of credit strategy, adding that the
earnings season now in full swing would
typically slow borrowing.
But the rise in Treasury yields —
which have experienced some dramatic
daily swings and act as a benchmark for
borrowing rates across the economy —
has exacerbated the slowdown.
“When you have [Treasury market]
volatility, that makes it really hard for
investors to price risk,” said John Greg-
ory, head of Wells Fargo’s leveraged syn-
dicate. “So everybody just says, ‘hands
off — let’s see how this all settles out’.”
Some borrowers might view the rise
in Treasury yields as motivation to get
deals done, said Teddy Hodgson, global
co-head of Morgan Stanley’s invest-
ment-grade debt syndicate. “[They’re
saying], ‘I want to get this done as soon
as I can because yields could continue to
go higher’.”
FT View page 14
The US plane maker has warned
that it will miss its target for 737
Max deliveries this year and take
nearly $800mn in charges in its
defence business, including its
Air Force One project.— PAGE 6
i Carnival Covid censure
The cruise line has been ordered
by an Australian judge to cover
medical fees for a passenger who
contracted the disease onboard to
compensate for its “negligent”
handling of the outbreak.— PAGE 5
i Austrian death probe
An inquiry has been ordered into
the death of Christian Pilnacek, a
government official who was
suspended while being
investigated in a probe into
high-level corruption.— PAGE 2

Bankman-Fried opts to take stand in

Russians driven abroad by
war start heading for home
More than 820,000 people are thought
to have fled Russia since the full-scale
invasion of Ukraine in February last
year, many to escape the military draft.
That exodus was one of the biggest
waves of emigration since the years
after the Soviet Union’s fall. But now
some émigrés are returning, a sign of
the degree to which the Kremlin has
managed to maintain a vestige of
normality in Moscow and contain some
of the war’s economic shockwaves.
Exiles fly back i PAGE 2
high-stakes gamble at FTX fraud trial
JOE MILLER — NEW YORK
Sam Bankman-Fried intends to take
the witness stand in his criminal case
over the multibillion-dollar collapse of
crypto exchange FTX, in a high-stakes
bid to win over the New York jury that
could condemn him to life in prison.
A lawyer for the 31-year-old, who has sat
silently for three weeks as his former
colleagues testified against him, con-
firmed in a court conference yesterday
that his client would answer questions
under oath, potentially as early as today.
“Our client is also going to be testify-
ing,” Mark Cohen said, adding that the
defence could rest as soon as the end of
this week.
Bankman-Fried’s FTX exchange col-
lapsed last November, leaving an $8bn
hole in customer funds. The founder
and former chief executive is contesting
charges including wire fraud and money
laundering.
Bankman-Fried’s decision to testify
goes against the advice routinely given
to white-collar defendants, who are told
such a move is likely to backfire.
Theranos founder Elizabeth Holmes
took the stand in her criminal trial in
2021, only to be found guilty by a Cali-
fornian jury and sentenced to more than
a decade behind bars.
But Bankman-Fried has adhered to
his own legal playbook since the implo-
sion of his crypto empire.
In the months leading up to the trial,
he granted interviews to journalists and
the author Michael Lewis, contacted a
potential witness and leaked documents
to the New York Times in an alleged
attempt to intimidate Caroline Ellison,
his former colleague and girlfriend who
is co-operating with the prosecutors.
The authorities have sought to paint
Bankman-Fried as a serial liar who stole
billions of dollars from FTX customers
to make risky bets while concealing his
activities from investors. But his law-
yers have argued that their client was
acting in “good faith” and was blind-
sided by a downturn in the crypto mar-
ket and a mendacious competitor.
Over the course of the trial jurors have
been presented with evidence that
Bankman-Fried ordered colleagues to
write code that allowed his crypto trad-
ing firm Alameda Research to dip into
$10bn of FTX customer funds, even
instructing Ellison to create seven
“alternative” balance sheets that dis-
guised this arrangement from lenders.
Lawyers for Bankman-Fried indi-
cated that they could call three further
witnesses to testify in his defence.
Big Read page 13

Subscribe In print and online World Markets

STOCK MARKETS CURRENCIES GOVERNMENT BONDS
www.ft.com/subsusa
Tel: 1 800 628 8088 2FW 3UHY FKJ 3DLU 2FW 3UHY 3DLU 2FW 3UHY <LHOG  2FW 3UHY &KJ
For the latest news go to 6 3    é   é   86\U   
www.ft.com 1DVGDT&RPSRVLWH    e   e   86\U   
'RZ-RQHV,QG    eé   ée   86\U   
)76(XURILUVW    g   gé   8.\U   
© THE FINANCIAL TIMES LTD 2023 (XUR6WR[[    ge   eLQGH[   8.\U   
No: 41,464 ★ )76(    6)Ué   6)Ue   8.\U   
)76($OO6KDUH    -31\U   
Printed in London, Liverpool, Glasgow, Dublin, CRYPTO
&$&    -31\U   
Frankfurt, Milan, Madrid, New York, Chicago, San 2FW 3UHY FKJ
;HWUD'D[    -31\U   
Francisco, Tokyo, Hong Kong, Singapore, Seoul, %LWFRLQ    
1LNNHL    *(5\U   
Dubai (WKHUHXP   
+DQJ6HQJ    *(5\U   
06&,:RUOG    COMMODITIES *(5\U   
06&,(0    2FW 3UHY FKJ
06&,$&:,    2LO:7,   
)7:LOVKLUH    2LO%UHQW    3ULFHVDUHODWHVWIRUHGLWLRQ
)7:LOVKLUH    *ROG    'DWDSURYLGHGE\0RUQLQJVWDU
2 ★ FINANCIAL TIMES Thursday 26 October 2023

INTERNATIONAL

Brussels Corruption probe

Tusk lobbies for release of Polish EU funds
Opposition leader says
‘time is of the essence’ as
he awaits PM nomination
HENRY FOY — BRUSSELS
RAPHAEL MINDER — WARSAW
Donald Tusk, Poland’s likely next prime
minister, travelled to Brussels and
vowed to use all possible methods to
unlock tens of billions of euros frozen by
the EU owing to concerns over the coun-
try’s rule of law standards, despite not
having taken office yet.
Tusk is still waiting for the Polish
president to nominate him as premier
but yesterday began two days of talks
with EU leaders to fast-track the release
of funds and reverse years of soured ties
between Warsaw and the European
Commission.
“This purpose today is to rebuild the
position of my country in Europe,” he
said ahead of talks with commission
president Ursula von der Leyen and a
summit of centre-right leaders today.
“I am here as the leader of the opposi-
tion, not as the prime minister, but time
is of the essence. I had to take this initia-
tive before any final decisions are made,
because all methods, including non-
standard ones, must be used to save the
money that Poland deserves.”
At stake is more than €34bn in EU
funds earmarked for Poland but cur-
rently frozen — the result of years of
antagonism and disagreement between
Ukraine invasion. Émigrés
the commission and the rightwing
Law and Justice (PiS) party, which
Brussels holds responsible for judicial
reforms that imperil the rule of law, and
social policies that breach the EU’s regu-
lations.
Tusk’s remarks are also aimed at
putting pressure on Poland president
Andrzej Duda, who is a PiS ally and has
so far signalled no intention to speed up
the transition of power, a process that
could extend into December.
Duda has delayed an announcement
on when the next parliament will con-
vene and is expected to give PiS the first
chance to form a new government.
PiS won 35 per cent of the October 15
vote but has no obvious path to form a
ruling majority.
But EU officials have warned Tusk’s
push to unlock his country’s funds may
be harder and take longer than many
supporters hope, given the complexity
of the distrustful relationship and the
political dangers of untangling it.
Poland has not been able to tap any of
the €22.5bn in grants and €11.5bn in
loans, its share of the bloc’s pandemic
recovery fund that other countries
began spending in 2021.
Brussels has frozen Warsaw’s access
to that money pending reforms to pro-
tect the independence of judges, after it
deemed that the PiS-led government
had set up a politically motivated cham-
ber to discipline judges.
“The rhetoric around Tusk and what
he wants to do with us is completely
welcome,” said one senior commission
official involved in negotiations with
Poland. “But there’s a danger here of
expecting too much, too soon.”
Didier Reynders, the EU’s justice
commissioner, told the Financial Times
shortly after the Polish election he was
positive about Tusk’s potential “to
unlock the money” if he was able to
bring the required reforms.
But officials caution against any
moves that would make Tusk appear to
be meddling in the Polish judiciary in a
way that could be comparable to PiS’s
political over-reach and intervention-
ism. Duda could also complicate Tusk’s
planned judicial overhaul since he
wields powers over legislation and
appointments of judges.
Austria orders
investigation
into death of
official linked
to scandal
SAM JONES — BERLIN
Austrian prosecutors have ordered an
inquiry into the death of a government
official who was suspended while being
investigated as part of a probe into
high-level political corruption.
The body of Christian Pilnacek, who was
the most senior official at the ministry
of justice and an important ally of
former Austrian chancellor Sebastian
Kurz, was discovered on Friday.
Austrian media reported that he died
by suicide but police have not con-
firmed the circumstances of his death
and prosecutors ordered an autopsy on
Monday.

Russians return home after self-imposed exile
More than 800,000 have fled
since February 2022 but some
are regretting the decision
COURTNEY WEAVER — BERLIN
A week after Russia invaded Ukraine
last year, Egor Gazarov packed his bags.
A fluent English speaker who received
an MBA from Insead in Paris and spent
the first decade of his career at Boston
Consulting Group and Procter & Gam-
ble, Gazarov left for Armenia to wait out
the situation and seek career opportuni-
ties in the west or Middle East.
But less than six months later he
returned to Russia, disheartened by the
jobs available. “The job opportunities
outside the country are not as good as
they could be,” he said.
While hundreds of thousands of Rus-
sians left last year, some, such as
Gazarov, have returned, a sign of the
degree to which the Kremlin has man-
aged to maintain a vestige of normality
and contain some of the biggest eco-
nomic shockwaves from the war.
More than 820,000 have left Russia
since February 2022, said Re: Russia, a
website run by exiled academics. That
represents one of the biggest waves of
emigration since at least the early 1990s,
after the fall of the Soviet Union.
The émigrés include dissidents
opposed to the war and young profes-
sionals, such as Gazarov, who left for
economic reasons or to escape the draft.
Some departed early after the invasion,
while others left six months later, when
the Kremlin ordered a mass mobilisa-
tion of men to fight in Ukraine.
While many dissidents have stayed in
the countries to which they fled, some
young professionals are returning, after
President Vladimir Putin said the
Kremlin had no plans for another mass
mobilisation. Re: Russia said it was
“highly likely” that some of those who
had left to avoid mobilisation had
already returned.
Recent turmoil in Israel and Armenia
has further complicated matters for the
Russians who went. More than 35,000
left for Israel last year, said the Jewish
Agency for Israel, a non-profitmaking
group. Many are staying, but for those
planning to return, lawmakers in Mos-
cow have threatened a frosty reception
in prison.
Armenia, a republic in the Caucasus
Lure of home: traditionally aligned with Moscow, has
Red Square in received more Russians than any other
Moscow. Right, bar Kazakhstan and Serbia. But after
Egor Gazarov, Azerbaijan retook the Armenian en-
top, and clave of Nagorno-Karabakh last month
Nikita Kiktenko despite Russian peacekeepers there,
Dmitri Lovetsky/AP
anti-Russian sentiment has grown.
Emil Kamalov and Ivetta Sergeeva, at
the European University Institute in
Florence, have been studying the out-
flow of Russian émigrés since the inva-
sion. Respondents, they noted, were
highly educated, politically engaged and
young, compared with the overall popu-
lation. Yet more than 15 per cent of
those surveyed had returned to Russia.
“It’s definitely not an economic
migration in the classical sense,” Ser-
geeva said. “These are people who have
been very competent specialists in Rus-
sia and are now losing the money, the
status . . . For many people, the quality
of life is declining [abroad].”
In June, Putin claimed that half of the
Russians who had left since the war
broke out had already come back. Other
officials have asserted that many chose
to return because of hostility towards
Russian immigrants, citing Czech presi-
dent Petr Pavel, who called for all Rus-
sians living in the west to be “monitor-
ed” by security services. Vyacheslav
Volodin, chair of the Russian state
Duma assembly, claimed that Pavel
wanted to put Russian émigrés into
“concentration camps”.
“Official propaganda is trying its best
to make us believe that [émigrés], espe-
cially IT specialists, have returned to
Russia en masse,” said Alexandra Ark-
hipova, a Russian anthropologist. The
reality was more nuanced, she said.
“Work is very bad, visas are bad too, so
some come back and some don’t.”
Grigory, an industrial designer living
in Moscow, said he entered Kazakhstan
last September to avoid being sent to
Ukraine, after being deployed to Syria
during his mandatory military service.
He said his stay ended after a few weeks
as he and his wife could not afford the
cost of living. Being home in some ways
felt comfortable, he admitted, but not in
the most important way. “When you
can’t express your view because there’s
a likelihood . . . I’m being listened to, in
this sense it’s not safe,” he said.
Other returners said they were sur-
prised by the apparent normality in
Moscow; McDonald’s, Starbucks and
Domino’s pizza have reopened under
Russian ownership after western own-
ers left. Barbie is being shown on the big
screen in bootleg versions, despite a lack
‘Work is of official showings since its producer
pulled out of Russia. Nikita Kiktenko,
very bad, who works in financial technology, left
visas are bad Moscow for Kyrgyzstan in 2022. This
spring he returned to visit friends and
too, so some family. He thought he would stay for a
come back month, but never left. “When you’re
outside the country . . . you think that
and some the situation is very difficult, that all the
don’t’ people you know left the country,” said
Kiktenko. “But when you come back
you understand it’s not true. Life goes
on, business continues.”
Some young professionals said they
had returned to a job market with senior
vacancies and high salaries at some of
the biggest tech firms, as they replace
talent lost to emigration. One former
consultant at global group BCG, who
relocated to the firm’s office in Azerbai-
jan after it closed in Moscow, said he
returned to Yandex, Russia’s biggest
search engine, in a management role
that more than doubled his old salary.
Maria Snegovaya, at the US-based
Center for Strategic and International
Studies, said despite claiming to oppose
the regime, some had decided to stay.
“Now we see the adjustment. People are
making choices about . . .[whether]
they hate Putin so much they’re willing
to undergo some sacrifices for it, or not.”
Police arrested Pilnacek for drunk
driving on Thursday night after he
drove the wrong way down a motorway
on his way home to the Wachau wine
region outside the capital. He had
attended a dinner at a high-end Italian
restaurant in Vienna and a drinks
reception at the Hungarian embassy.
Anti-corruption prosecutors had
been looking into whether Pilnacek had
intervened in sensitive judicial cases in
order to serve the interests of politicians
and businessmen close to Kurz and his
conservative People’s party (ÖVP), as
one element of a multipronged investi-
gation into political graft under the
former chancellor.
Pilnacek was suspended from his role
of state secretary at the ministry of jus-
tice in 2021, but vigorously denied the
allegations against him.
Kurz resigned that same year in
response to the broader scandal.
Once a powerful éminence grise within
Vienna’s corridors of power — dubbed
by critics “the secret justice minister” —
Pilnacek had found himself thrust into
the public eye because of the probe.
Messages from his phones, seized as
part of the investigation, were leaked,
painting a lurid picture of his political
machinations and loyalty to the ÖVP.
Kurz is currently standing trial in
Vienna on charges of misleading a sepa-
rate special parliamentary inquiry into
corruption. On Saturday, he praised Pil-
nacek as an unparalleled jurist who had
served his country with distinction.
“Although we in Austria like to pride
ourselves on being a developed consti-
tutional state that upholds human
rights, some are treated as if we were
still living in the Middle Ages, where
people are pilloried and publicly humili-
ated,” said Kurz.
Other former senior civil servants
have also become embroiled in the cor-
ruption scandal. Thomas Schmid, a
former finance ministry official who
was head of Austrian sovereign wealth
fund ÖBAG, was forced out of office in
2021. Last year, Schmid agreed to turn
crown witness in the probe.
Christian Pilnacek: an ally of former
Austrian chancellor Sebastian Kurz

Germany

Berlin to tighten immigration rules following far right’s surge

MAKE A WISE GUY CHAZAN — BERLIN The new law comes two weeks after number of people who have been told other countries under which they would
INVESTMENT The German government plans to
regional elections that saw a big increase they have to leave Germany, usually take back their citizens and, in
in support for the far-right Alternative because their asylum request has been exchange, Berlin would provide people
Subscribe today at speed up the removal of failed asylum
for Germany. Pollsters say a key factor rejected, but still remain in the country. from those countries with legal path-
ft.com/subscribetoday seekers, in a sign of how surging sup-
in the AfD’s growing popularity is public Interior ministry officials say there are ways to come to Germany for work.
port for the far right is prompting
disquiet over the recent surge in asylum around 50,000 such people. While opinion polls show a large pro-
Chancellor Olaf Scholz’s coalition to get
seekers entering the country. Critics of the government say it is portion of voters want a crackdown on
tough on immigration.
Scholz indicated last week that his much harder to deal with such holdouts failed asylum seekers, Scholz may
FINANCIAL TIMES Good Friday, Independence Day, Thanksgiving, the “It’s clear we have to restrict irregular government was prepared to clamp than Scholz is letting on. They say repa- struggle to convince the Greens, one of
330 Hudson Street, day after Thanksgiving, Christmas Day and the day
New York, NY 10013 after Christmas Day. migration and to send back more down on immigration, telling Der triations often fail because the country the three parties in his coalition govern-
quickly the people who have no right to Spiegel news magazine that Germany of origin refuses to readmit the depor- ment. “We shouldn’t make out that the
Subscriptions and Customer Service US subscription rates, 1 year $406. Periodicals stay,” said Steffen Hebestreit, Scholz’s must start deporting failed asylum tees, and no attempt to tighten German solution to migration lies with deporta-
Tel: +1 800 628 8088 postage paid at New York, NY and at additional
uscirculation@ft.com, www.ft.com/subsusa mailing offices; Post-Master. Send address changes
spokesman. “It’s about consistency and seekers “on a significant scale”. legislation can solve that. tions,” said Jamila Schäfer, a Green MP.
Advertising to F.T. Publications Inc., PO Box 469, Newburgh, NY speed.” Scholz said Germany needed skilled The government is trying to address “Most people can’t be deported
Tel: +1 917 551 5040 12551; USPS number, 190640; ISSN# 0884-6782. Under new rules proposed yesterday, workers from abroad and remained that problem by negotiating deals with because they come from war zones like
usads@ft.com deportations will no longer have to be committed to offering asylum to those Ukraine, Syria or Afghanistan.”
Letters to the editor © Copyright The Financial Times Limited 2023.
letters.editor@ft.com All rights reserved. announced in advance, officials search- facing political persecution. But “who- The AfD also criticised the new law,
Executive appointments Reproduction of the contents of this newspaper in ing for deportees in shared accommoda- ever doesn’t belong to one of those two calling it “gesture politics”. In a state-
www.exec-appointments.com any manner is not permitted without the publisher’s tion will be allowed to enter other peo- groups can’t stay here”, he said. “That’s ment, it said Germany continued to be a
prior consent. ‘Financial Times’ and ‘FT’ are
Published by registered trade marks of The Financial Times
ple’s rooms, and the amount of time a why we are restricting irregular migra- “migration magnet” which enticed refu-
F.T. Publications Inc. Limited. The Financial Times and its journalism are person can be kept in pre-deportation tion to Germany. Too many people are gees with “high welfare benefits, unlim-
330 Hudson St, New York, subject to a self-regulation regime under the FT custody will rise from 10 to 28 days. coming here.” ited family reunifications and simplified
NY 10013, USA; Editorial Code of Practice: The legislation, which must still be Scholz’s government has recently rules on residence”.
Tel: +1 917-551-5000; www.ft.com/editorialcode
Editor: Roula Khalaf passed by the Bundestag, would also introduced checks on the borders of The opposition Christian Democrats
Reprints are available of any FT article with your make it easier to deport the members of neighbours such as Poland, and has also said the key issue was not deporting ref-
Printed by company logo or contact details inserted if required human-trafficking groups and organ- approved efforts by its individual ugees but curbing illegal immigration in
Blue Island Newspaper Printing, Harvey, IL (minimum order 100 copies). One-off copyright
Evergreen Printing Company, Bellmawr, NJ licences for reproduction of FT articles are also ised crime gangs, and give police more regions to switch from cash payments the first place. “It’s crucial to slow down
Bay Area Production Services, Fremont, CA available. powers to search through a person’s doc- for asylum seekers to benefits in kind. the unchecked influx of asylum seek-
For both services phone +44 20 7873 4816, or uments in order to ascertain their true But the law attempts to tackle a par- Waiting: asylum seekers at a Berlin ers,” said Alexander Throm, CDU
Published daily except Sundays, New Year’s Day, alternatively, email syndication@ft.com
identity and nationality. ticularly thorny issue — the huge registration centre this month spokesman on immigration.
Thursday 26 October 2023 ★ FINANCIAL TIMES 3

INTERNATIONAL

US moves to deter Iran from entering

Investment conference

conflict ahead of Israel’s Gaza invasion
Washington fears Tehran is preparing to step up attacks on American targets by using regional proxies
FELICIA SCHWARTZ AND JAMES POLITI
WASHINGTON
The US is using Israel’s delay in launch-
ing a ground offensive in Gaza to rush
defensive systems into the region amid
growing fears that Iran and its proxies
will escalate attacks on US forces and
allied interests once the invasion begins,
according to officials.
The move to stiffen its security in the
region and build up a sufficient defence
capability to deter Iran comes after a
dozen or so attacks on US troops since
October 18 that have wounded two-
dozen US personnel, officials said.
Washington is girding for more as Israel
prepares its military assault on Gaza.
The leader of Hizbollah, Hassan Nas-
rallah, met senior figures of Hamas and
Palestinian Islamic Jihad in Lebanon
yesterday. The Tehran-backed groups
“agreed to continue co-ordination” in
pursuit of a “real victory for the resist-
ance in Gaza and Palestine”.
Israel’s military said it shelled mili-
tary positions in south-west Syria over-
night in response to what it described as
rocket launches fired from the area. The
Syrian regime is also backed by Iran.
While US officials say Israel’s invasion
has been held up in part by splits within
its own ranks on strategy, Washington
has also asked questions that have help-
ed Israel’s military to refine its plans.
On Tuesday, when asked if the US was
urging Israel to delay the ground inva-
sion, President Joe Biden said: “The
Israelis are making their own decisions.”
But US officials and strategists have wel-
comed the pause, saying it has given the
US time to send air defences, extra per-
sonnel and ships in to deter Tehran as
tensions escalate. Israel has made hun-
dreds of air strikes targeting Hamas’s
leadership, weapons and command
hubs, the Israeli military said.
“It gets easier for us to deter them as
more forces flow into the theatre and
Israel gets stronger every day,” said
retired general Frank McKenzie, who
led US forces in the Middle East from
2019 to 2022. “Time is our friend here.”
The US assesses that its move to
deploy more military assets in the
region in the past two weeks, including
the arrival of two naval carrier strike
groups, has helped keep Iran out of the
fray. But officials say its proxies still
pose a significant threat to US assets.
A senior US official said: “We have
indications that there are groups in the
region that have a desire to escalate, and
that’s why we have bolstered our mili-
tary presence and communicated that
we have bolstered [it].”
Several officials said the US was par-
ticularly concerned about Lebanon-
based Hizbollah, which is backed by
Iran. Israeli forces and the militant
group, which fought a 34-day war in
2006, have exchanged cross-border
rocket fire in the past two weeks, but
both sides seem to be seeking to avoid a
full-blown conflict.
On Tuesday, a news agency close to
Iran’s Revolutionary Guards said Hiz-
bollah’s involvement in a war with Israel
was now “likely”, and could use preci-
sion-guided missiles with a range capa-
ble of striking all of Israel. Iran-backed
Shia groups have also reportedly moved
from Iraq into western Syria near the
Israeli border, alarming US officials. The
US Ain al-Asad base in western Iraq was
Firepower: the targeted by rockets earlier this week as cases actively facilitating the attacks. ‘It gets easier
USS Carney well as the Al Tanf garrison in Syria. “They don’t want to get into it with us,
intercepts Such movements mark a sign of esca- and we certainly don’t want to get into it for us to
Houthi missiles lation even before the US’s closest with them,” said Senator Jim Risch, the deter [Iran]
in the Red Sea. regional ally invades Hamas-controlled top Republican on the Senate foreign
Below, Gaza, a moment of vulnerability for the relations committee, who has received as more
Hizbollah leader US and its partners, officials said. several briefings on the conflict. forces flow
Sayyed Hassan Retired general Joseph Votel, who led Groups affiliated with Iran have tar-
Nasrallah, right, US Central Command from 2016 to geted US forces or bases in the region at into the
meets
Palestinian
2019, said: “The next opportunity that
might present itself would be a sizeable
least 12 times since October 18, accord-
ing to a US official. The USS Carney, part
theatre and
Islamic Jihad ground incursion into Gaza by the Israe- of the Eisenhower carrier strike group in Israel gets
secretary lis, as that will involve a lot of resources the Northern Red Sea, also shot down 15 stronger
general Ziyad and will put a lot of focus [there].” drones and four cruise missiles fired by
al-Nakhalah, While the White House assesses Iran-backed Houthi militants in Yemen every day’
second left, and Tehran does not want to directly con- that were headed towards Israel last
deputy leader of front the US or Israel, it expects it to con- Thursday, US officials added.
Hamas, Sheikh tinue activating regional proxies to “They’re not putting the brakes on
Saleh al-Arouri strike them. Officials have pointed out things,” the senior US official said, refer-
Aaron Lau/AFP/Getty Images,
Reuters
that as well as encouraging attacks on ring to Iran’s involvement.
US forces and bases, Iran is in some About 30,000 US forces are in the
Middle East, including 3,500 in Iraq and
Syria to assist local forces still fighting
the Islamic State. The US maintains
bases and facilities across the region,
including the Navy’s Fifth Fleet in Bah-
rain and the Al Udeid Air Base in Qatar.
US officials say they are concerned
about escalating threats to US personnel
in Iraq and Lebanon, where they have
urged non-emergency personnel to go.
The Pentagon and state department are
working on plans for a more widespread
evacuation of Americans if needed.
But Washington’s allies across the
Gulf, which rely on the US for defence,
could also be vulnerable. Tehran-
backed Houthi militias claimed a drone
attack on Abu Dhabi last year, while Iran
has also harassed vessels in the Gulf in
recent years. In 2019, the US assessed
Iran was behind a devastating attack on
Saudi Arabian oil infrastructure.
Biden on Tuesday spoke to Saudi
Crown Prince Mohammed bin Salman
and “affirmed that the United States
fully supports the defence of US part-
ners facing terrorist threats, whether
from state or non-state actors”.
The threat of Iran-US escalation
comes just weeks after the countries ex-
changed prisoners, but since the Hamas
attacks, US officials have warned
Tehran of becoming involved in Gaza.
US officials fear Washington and
Tehran are climbing a so-called escala-
tion ladder, with a high potential for
miscalculation or misunderstanding.
Votel said: “We’re one tragic incident,
one moment away from being further
up the ladder than we want to be in this
and we’ve been very cognisant of that.”
Officials assess Tehran feels it has
much to gain from publicly backing its
proxies’ actions, even if it does not
become fully engaged in a conflict.
Norman Roule, a former senior US
intelligence official, said: “These actions
reinforce Iran’s influence . . . and com-
plicate plans by moderate Arab states
for an early rapprochement with Israel.”
Additional reporting by Raya Jalabi in
Beirut
See Opinion
Saudis push
for business
as usual at
‘Davos in
the Desert’
SAMER AL-ATRUSH — RIYADH
As leaders in international finance
descended on Riyadh for Saudi
Arabia’s flagship investment confer-
ence, the conversation veered from the
future of the global economy to devel-
opments in artificial intelligence.
But there was limited public discussion
of the theme that has dominated the
Middle East for more than two weeks:
the conflict between Israel and Hamas.
The message that the kingdom, and
Crown Prince Mohammed bin Salman,
hoped to send as it hosted its annual
“Davos in the Desert” conference was
clear: it remained open for investment
and it was business as usual.
“The humanitarian situation [in
Gaza] is very, very sad but they [Saudi
Arabia] don’t want to be diverted,” said
one participant familiar with the gov-
ernment’s thinking.
As thousands of delegates, who paid
$15,000 to attend the glitzy gathering,
packed into the Ritz-Carlton hotel,
drones filming the spectacle hummed
under the arabesque domes of the
hotel’s conference centre.
“This is where the finance community
gathers once a year so, if you’re in
finance, you want to be here,” said
George Osborne, a former UK chancel-
lor of the exchequer and founding part-
ner of investment firm 9Yards Capital.
But in panel talks by business leaders
such as BlackRock’s Larry Fink and
JPMorgan chief executive Jamie Dimon,
the war between Israel and Hamas
received only passing mention.
“It’s completely separate,” one senior
banker said of the escalating conflict.
“That’s one thing and this is another.”
In a sign that the kingdom did not
want the war to overshadow its annual
showpiece event, government officials
were avoiding interviews, said two peo-
ple familiar with Riyadh’s thinking.
Yet despite the upbeat mood at Tues-
day’s conference, the Israel-Hamas war
is likely to have significant repercus-
sions for Saudi Arabia as it pushes ahead
with grand plans to develop the king-
dom and diversify its economy.
Riyadh has already put on hold talks
with the US and Israel for a three-way
deal to normalise relations with the Jew-
ish state in return for a US security pact.
If the Israel-Hamas war were to esca-
late into a broader regional conflict, it
would trigger turmoil across the Middle
East, drawing in Iranian-backed mili-
tants and reversing the regional stability
the kingdom needs to plough ahead
with the myriad megaprojects on which
it is spending tens of billions of dollars.
One of the biggest risks to Saudi Ara-
bia would be a resumption of its conflict
with Iran-aligned Houthi rebels fighting
in Yemen’s civil war.
The kingdom led an Arab coalition
that intervened in 2015 to fight the
rebels, but Prince Mohammed has
sought to extricate Saudi Arabia from
the war as he focuses on his domestic
projects, and a truce has held for 18
months.
In March, Riyadh struck a deal to re-
establish diplomatic relations with
Tehran as it sought to de-escalate
strains with its arch-rival. But tensions
have soared since Hamas’s deadly Octo-
ber 7 attack on Israel.

Bank levy South America

Italy official says windfall tax hurt credibility
SILVIA SCIORILLI BORRELLI — MILAN
A senior Italian treasury official has
acknowledged this summer’s
announcement by the government
that it would impose a windfall tax on
banks was “communicated badly”.
Giorgia Meloni’s rightwing coalition
announced plans for a levy on up to 40
per cent of banks’ net interest income in
August, claiming that the surge in offi-
cial interest rates was leading to bumper
profits for the sector.
The move dented investors’ confi-
dence in the country’s lenders, with
share prices dropping sharply, partly
because of a lack of clarity on what
exactly would be taxed. The govern-
ment has since backtracked, diluting
the tax from its original form.
Economy and finance under-secre-
tary Federico Freni, a member of
finance minister Giancarlo Giorgetti’s
League party, told the Financial Times
that the market turmoil reflected “a
credibility issue”.
“Investors put their money in coun-
tries where they trust rules will not
abruptly change,” he said.
Freni is the latest member of the gov-
ernment to criticise the surprise
announcement of the windfall levy,
highlighting differing views on financial
policy within Meloni’s coalition.
Following the initial announcement,
the Italian parliament offered lenders
an olive branch, allowing them to set
aside two-and-a-half times what they
would pay as the one-off tax in reserves.
Those reserves would bolster their
capital positions and cannot be distrib-
‘Investors put their money
in countries where they
trust rules will not
abruptly change’
uted to shareholders under the law,
which was passed earlier this month.
UniCredit on Tuesday became the
first big lender to announce that it plans
to set aside €1.1bn in non-distributable
reserves, instead of paying a €400mn
one-off levy.
“The windfall tax was not a measure
that aimed to punish banks and
investors,” said Freni. “The parliamen-
tary amendments helped that measure
ultimately reach its initial goal, which
was probably communicated badly in
August.” Soaring European Central
Bank interest rates have led to a jump in
banks’ net interest income, leading to
lawmakers on both sides of politics call-
ing for a tax on such profits.
Meloni said at the time that she
took full responsibility for the levy,
which was announced by her deputy,
Matteo Salvini, who is also the League
party leader, at a late-night press
conference.
The coalition has been at odds with
other aspects of financial policy.
Another sticking point involves com-
plex proposals, tabled earlier this year
by members of Meloni’s Brothers of
Italy party, which would make it easier
for households and small businesses
who have defaulted on their debt to buy
back their loans.
Under the proposals, they would have
the option to repurchase non-perform-
ing loans made between 2015 and 2021,
even if banks have sold them on to pro-
fessional investors.
According to the proposed text, bor-
rowers in default would have to pay a
premium to buy back their loans. The
premium is 20 per cent, if recovery pro-
ceedings have not started, or 40 per cent
otherwise.
US ally Colombia signals pivot towards China
JOE DANIELS — BOGOTÁ
China and Colombia have upgraded
their relationship to a “strategic part-
nership” in a sign that Washington’s
principal ally in South America is ori-
enting itself towards Beijing.
Colombia’s first leftist president, Gus-
tavo Petro, met Chinese counterpart Xi
Jinping in Beijing yesterday on his
maiden state visit to the country.
“We [China and Colombia] have
become good friends and partners for
win-win co-operation and common
development,” Xi told Petro, according
to Chinese state broadcaster CCTV.
The signing of the “strategic partner-
ship” agreement leaves Guyana as the
sole South American country not to
have the designation from Beijing.
Petro, who took office last year, said
yesterday that better ties with Beijing
were an example of “the good relation-
ship that Colombia has to build around
an increasingly multipolar world”.
China has been seeking closer ties
with South America. In June it signed a
free trade agreement with Ecuador,
while Beijing-backed shipping company
Cosco is building a controversial mega-
port in Peru.
But gaining a foothold in Colombia —
a staunch US ally at the centre of the
American continent, with access to the
Caribbean and Pacific — is particularly
attractive to Beijing, say analysts.
“It would help with the distribution of
products and technology services,
among other Chinese interests,” said
Parsifal D’Sola at the Andrés Bello Foun-
dation, a think-tank working on Chi-
nese-Latin American links. “And given
Colombia’s historical ties to the US, it
would be a diplomatic win for China.”
Petro’s visit follows a spat with Israel
and the US over his comments likening
the treatment of Palestinians in Gaza to
that of Jews during the Holocaust.
The US and Israel condemned the
remarks. Petro then threatened to break
ties with Tel Aviv, and complained that
Colombia’s foreign policy has long been
subordinate to that of the US.
Analysts worry that Petro, who has a
reputation for impulsiveness, may lack
the poise required to navigate relations
between Washington and Beijing.
“It would take a real chess player on
the geopolitical stage to thread that nee-
dle,” said Sergio Guzmán, whose consul-
tancy Colombia Risk Analysis published
a report on Chinese-Colombian
relations this year. “But Petro’s recent
foreign policy overtures, especially the
spat with Israel, shows that he is more
impulsive than strategic.”
China and Colombia agreed 12 “co-op-
eration instruments”, including sanita-
tion protocols aiming to boost beef and
quinoa exports to China. They also
pledged collaboration on science, tech-
nology, mathematics and green energy.
Colombia is not among the 21 Latin
American countries that have joined
Beijing’s Belt and Road Initiative, which
invests in infrastructure projects in low-
and middle-income countries, but Petro
said ahead of his visit that he and Xi
would discuss the scheme.
Petro laid a wreath at the mausoleum
of Mao Zedong and met two state-
backed Chinese companies building a
controversial metro system in Bogotá.
China is Colombia’s second-largest
trade partner after the US, with exports
to the Asian power last year totalling
$7bn. China has also invested in gold
mining in Colombia, though Petro asked
Xi to import more Colombian goods.
“There is a huge deficit,” he said.
Oil is Colombia’s largest export to
China, though Petro is seeking to wean
the country off hydrocarbons.
4 ★ † FINANCIAL TIMES Thursday 26 October 2023

INTERNATIONAL

Emissions Capitol Hill

UN climate chief gloomy on global warming Trump ally

Johnson
Curbing temperature rise
to 1.5C less likely than two
years ago, fears IPCC head
ATTRACTA MOONEY — LONDON
The chances of the world limiting the
rise in global temperatures to 1.5C since
pre-industrial times are now less than
predicted in the last landmark report by
the UN’s climate science body, accord-
ing to its new head.
British academic Jim Skea, who has
taken over as chair of the UN Intergov-
ernmental Panel on Climate Change,
said the continued rise of greenhouse
gas emissions since its 2021 report had
reduced the chances of curbing global
warming.
Under the 2015 Paris Agreement,
almost 200 countries agreed to limit
global temperature rises to well below
2C — and ideally to 1.5C.
The IPCC report from two years ago
laid out scenarios that would limit
warming to 1.5C, with the likelihood of
hitting that target ranging from 33 per
cent to 50 per cent.
Carbon dioxide emissions from
energy, the biggest contributor to global
warming, continued to rise to an all-
time high last year, according to the
International Energy Agency, and are
expected to rise still further this year.
“We have not seen the emission
reductions that these scenarios [from
the past research] actually assumed. So
it must be less than 33 per cent now,”
Skea told the Financial Times.
Skea, who co-authored the definitive
IPCC report in 2018 that outlined the
stark differences in the outcomes at 1.5C
and 2C, said the 1.5C goal was not com-
Property. Demand surge
pletely out of reach but was slipping
away as emissions rose.
“It is still possible that warming will
stay below 1.5C. But with every year that
we continue emitting the kind of levels
that we are at the moment, that is
becoming less and less likely.”
‘We have not seen the
emission reductions that
these [past] scenarios
actually assumed’
Greenhouse gas emissions must fall
by almost half by 2030 to limit global
warming to 1.5C. Temperatures had
already risen by at least 1.1C, the IPCC
found. Skea said IPCC research found
there was a “more optimistic picture”
about the ability to limit temperature
rises to 2C, while noting that “every frac-
tion of a degree matters”.
The IPCC report he co-authored
found a vast difference between the con-
sequences of 1.5C and 2C of global
warming. At the higher temperatures
there would be virtually no coral reefs
left, crop yields would suffer much
larger reductions, and a much larger
proportion of the world’s population
would be exposed to extreme heat over
five years.
Skea also expressed concerns about
the extreme temperatures seen in 2023,
putting it on course to be the hottest
year since records began. “What we’re
seeing are things that were projected in
IPCC scenarios, but they appear to have
happened much more quickly than any-
body anticipated,” he said.
While an El Niño weather cycle,
which pushes up temperatures, has
begun this year and there is natural var-
iability between years, he said scientists
elected
had expressed “astonishment” at the
temperature highs witnessed so far.
US House
“Some of the numbers we are seeing
are just are just off the map,” he said.
Skea will lead the IPCC for the next
Speaker
five to seven years and will produce a
number of reports until its present cycle LAUREN FEDOR — WASHINGTON
ends in 2030. The focus of the majority
Mike Johnson, a loyal ally of Donald
of the reports is yet to be decided, but
Trump, has been elected Speaker of the
there will be one about cities.
He said the research would keep in
House of Representatives, ending
weeks of congressional paralysis and
mind the next so-called global stock-
signalling a sharp tack to the right for
take due to take place in five years, as
Republicans in the lower chamber.
countries assessed the progress they
had made on cutting emissions. In total, 220 House Republicans voted
This year’s stocktake, the first since for Johnson on the floor of the House
the Paris Agreement, has already shown yesterday. No Democrats backed his
the world is way off track on its goals to bid.
limit temperature rises. It was a show of unity for a Republican
Opinion see the Letters page party that had for more than three
weeks struggled to unite behind a candi-
date after Kevin McCarthy was ousted at
the hands of a rebellion led by Florida
congressman Matt Gaetz.
The long-running saga exposed sharp

Tokyo luxury apartment prices hit 33-year high

Japanese entrepreneurs and
foreign buyers vie for the few
developments available
DAVID KEOHANE, LEO LEWIS
AND KANA INAGAKI — TOKYO
A new wave of Japanese entrepreneurs
is vying with foreign buyers for a scarce
supply of high-end Tokyo apartments,
driving property prices in the city to lev-
els not seen since the 1980s bubble.
The price per square metre of new
flats for sale in the Japanese capital hit
¥1.62mn ($10,830) in the third quarter,
according to property consultancy
Tokyo Kantei, exceeding a peak of
¥1.4mn in 1990.
The average price of a new apartment
sold in Tokyo also hit a fresh post-
bubble high of ¥88.7mn in the first half
It would take 15 years for
an average skilled office
worker to afford a 60 sq m
flat in central Tokyo
of the year, according to the Real Estate
Economic Institute, which tracks the
property market in Japan.
“The main buyers are wealthy Japa-
nese individuals,” said an official at the
institute.
Although prices in Tokyo remain
lower than in several other major capi-
tal cities, analysts at UBS estimate that
apartments are more unaffordable to
the average person than in almost any
major city except Hong Kong.
It would take 15 years for an average
skilled office worker to afford a 60 sq m
flat in central Tokyo, compared with 11
years in London, 10 in Singapore and
eight in New York, UBS said in a recent
note to clients.
“Housing market imbalances in
Tokyo have increased from underval-
ued 20 years ago to bubble risk now”
and were decoupled from the rest of
Japan, UBS said.
A crunch in supply is part of the issue.
In 2022, the supply of condominiums
for sale in central Tokyo was just 10,800
units, according to consultancy Cush-
On the rise: man & Wakefield, the lowest point for at the real effective exchange rate at a near
a woman takes a least 20 years. 50-year low. The trend of increased pur-
photo from the Tokyo Kantei said supply had nar- chases by foreign buyers “is not likely to
Azabudai Hills, rowed again in 2023 and that demand stop any time soon”, said Mari Kumagai,
Tokyo’s tallest for top-end apartments was having a head of research at Cushman & Wake-
building. Below, disproportionate effect on average field in Japan.
a display of prices. Brokers say that only about 100
skyscrapers in Local brokers said foreign investors apartments selling for at least ¥1bn are
the city — Richard A from China and elsewhere were also on the market, with Japanese buyers to
Brooks/AFP/Getty Images
being pulled in by the cheap yen, with the fore.
“Buyers from outside [Japan] just
did not believe me when I told them
that there was no availability in a size
and price range equivalent to the high-
end properties that routinely change
hands in New York, London and other
major cities,” said Zoe Ward, chief
executive of brokerage Japan Property
Central.
Tokyo’s stock of such properties was
significantly boosted recently by the
sale of dozens of luxury apartments on
10 floors of the 330-metre Azabudai
Hills tower, the city’s tallest building.
The development’s most valuable
penthouse property sold for about
‘Buyers ¥22bn, according to people familiar
with the sale.
from Mori, the developer, confirmed that
outside most buyers so far were Japanese but
would not disclose the apartments’
[Japan] prices.
just did not One Japanese entrepreneur said that
he knew of three people — each the
believe me Japanese founder of a company that
when I has listed on the Tokyo Stock Exchange
within the past 18 months — who
told them had bought apartments in the
that there development.
“Among younger shacho [chief execu-
was no tives], the apartment is the new way of
availability’ showing your prestige,” he said. “Found-
ers used to buy land and build a big
house. Now they want an apartment in
the centre of the city.”
The Real Estate Economic Institute
said rising prices in Tokyo were also
being driven by an increase in construc-
tion and materials costs, in addition to a
“chronic shortage of labour”. Today is
“very different from the bubble era”, the
official said.
ideological divisions in the Republican
party and raised fresh questions about
Trump’s influence in Washington.
The impasse had prevented lawmak-
ers from taking up crucial legislation,
including a White House proposal for
billions of dollars in additional aid to
Israel and Ukraine.
Among Johnson’s first tasks as
Speaker will be confronting a looming
government shutdown. Lawmakers
have until mid-November to agree a
deal to continue funding the federal
government.
He was the fourth Republican
Speaker nominee since McCarthy was
removed. House majority leader Steve
Scalise, House judiciary committee
chair Jim Jordan and House majority
whip Tom Emmer all failed to rally
enough support from their own party to
seize the Speaker’s gavel.
Johnson, a conservative evangelical
representative from Louisiana, had
been bullish on his chances late on Tues-
day after he was selected as the party’s
latest nominee by a secret ballot in a
closed-door meeting.
“Democracy is messy sometimes but
it is our system. This conference that
you see, this House Republican major-
ity, is united,” Johnson said. He vowed to
“serve the people of this country” and
“restore their faith in this Congress, this
institution of government”.
Johnson has until now been a lower-
profile member of Congress than Scal-
ise, Jordan or Emmer.
An evangelical Christian, he is a hard-
line social conservative, opposing access
to abortion in nearly all cases, as well as
same-sex marriage. In Louisiana, he has
been a proponent of marriage “cove-
nant” laws, which make it more difficult
for couples to divorce.
He also this year voted against more
US aid to Ukraine.
Johnson was among the most vocal
proponents of Trump’s claims that the
2020 presidential election was rigged
against him. He led a group of more than
100 Republicans in filing an amicus
brief to the US Supreme Court in sup-
port of a Texas lawsuit that tried to over-
turn the results of the 2020 election in
four swing states: Georgia, Michigan,
Pennsylvania and Wisconsin.
In the hours after the January 6 2021
attack on the US Capitol, Johnson voted
against certifying Joe Biden’s victory.
Johnson declined to answer questions
about his stance on the 2020 election
late on Tuesday, simply saying: “Next
question.”

Special funding Presidential race

EU rapped over green energy supply register
ALICE HANCOCK — BRUSSELS
Environmental campaigners have
attacked a critical part of the EU’s plans
to make its energy supply greener, call-
ing a register of almost 150 projects
proposed for special treatment as a
“wish list” for oil and gas majors.
The Projects of Common Interest draft
document, which features 149 activities
earmarked for better access to billions
of euros of funding and prioritisation by
policymakers, was to be debated by offi-
cials from the European Commission
and EU member states late yesterday.
But while almost half of the projects
involve seemingly low-emission hydro-
gen energy, campaigners claim many of
those that made the list risk keeping
existing fossil fuel pipelines in place.
Frida Kieninger, director of EU affairs
at Food & Water Action Europe, an envi-
ronmental group, described the selec-
tion as a “wish list coming true” for the
fossil fuel industry.
“A fossil gas pipeline going from A to B
with a certain size and a certain route is
designed for transporting gas via a cer-
tain route,” she said. “It’s not necessarily
what would work for hydrogen.”
Dominic Eagleton, senior campaigner
at Global Witness, echoed her remarks,
saying subsidies could be “handed to
rich fossil fuel companies to maintain
polluting gas infrastructure”.
The document, seen by the Financial
Times, must still be signed off by the
commission, which will make a final
decision in November.
New projects are selected for PCI sta-
Subsidies could be ‘handed
to fossil fuel companies
to maintain polluting
gas infrastructure’
tus every two years. The schemes, which
are entitled to apply for a pot of €5.4bn
of EU funds, must be deemed as crucial
to the bloc’s energy security and decar-
bonisation goals.
Hydrogen energy is created through
breaking water particles apart in a proc-
ess known as electrolysis. The process
can be powered by renewable energy —
dubbed green hydrogen — or fossil fuels.
The process is seen as a crucial to
decarbonising sectors such as chemical
and steel production. But its use is con-
tested by some environmentalists who
believe it is an inefficient way to transfer
energy. They also argue it offers an
opportunity for gas companies to con-
tinue producing fossil fuels with the
promise that the infrastructure can be
used for hydrogen in future.
Ghassan Wakim, production and
export director for zero-carbon fuels at
Clean Air Task Force, said claims that
gas pipelines could be made “hydrogen
ready” were unproven.
“The material that you need to line
the pipe varies a lot between what you
need for natural gas and what you need
for hydrogen,” he said.
But Minh Khoi Le, head of hydrogen
research at Rystad Energy, a consul-
tancy, said building hydrogen pipelines
from the ground up would “take time
and cost a lot more money compared to
refurbishing existing infrastructure”.
The European Network of Transmis-
sion System Operators for Gas,
which enables the submission of
projects via its 10-year plan for network
development, said schemes had been
chosen to help meet EU hydrogen tar-
gets and “enable cross-border flows”.
The commission declined to com-
ment on the PCI list.
Additional reporting by Shotaro Tani
Bullrich backs Milei in Argentine run-off
CIARA NUGENT — BUENOS AIRES
Patricia Bullrich, the now-eliminated
presidential candidate for Argentina’s
mainstream centre-right coalition, has
endorsed radical libertarian Javier
Milei in a move crucial to making him a
viable contender in November’s run-
off.
Bullrich, a rightwing former security
minister who came third in Sunday’s
first round election with 23.8 per cent of
votes, advised her voters to back Milei,
who won 30 per cent after pledging to
slash government spending by up to 15
per cent of gross domestic product and
dollarise the economy.
Bullrich said her supporters should
vote for the eccentric economist and tel-
evision personality rather than Sergio
Massa, economy minister in Argentina’s
centre-left Peronist government, who
came out ahead in the first round with
36.7 per cent.
“To succeed, Argentina needs a
change at the roots that will protect cap-
italism and end money printing to stop
inflation,” Bullrich said at a press con-
ference yesterday.
“We cannot be neutral. We are faced
with the dilemma of change or the
mafia,” she added. Massa hails from the
moderate wing of the populist Peronist
movement, which has dominated
Argentine politics for four decades. He
has promised a unity government to sta-
bilise Argentina’s economy, despite
making unorthodox moves as minister,
including printing money to finance
spending, helping to drive annual infla-
tion above 138 per cent.
Milei is a first-term congressman who
founded his La Libertad Avanza party in
2021. During the first-round campaign
he falsely accused Bullrich of “placing
bombs in a kindergarten” in the 1970s,
when she participated in operations by a
Patricia Bullrich: ‘We are faced with
the dilemma of change or the mafia’
leftist guerrilla group in Argentina. Now
he needs to win over most of her voters
to have a chance on November 19, said
Juan Cruz Díaz, managing director of
Cefeidas Group, a political consultancy
in Buenos Aires.
“Having Bullrich’s explicit support is
very important for him, though it’s not
enough: some of her [more moderate]
voters will not be comfortable with
him.”
Bullrich made her decision after
meeting Milei and Mauricio Macri, the
former president and a co-founder of
her coalition, Juntos por el Cambio
(JxC), who stated his openness to work-
ing with Milei earlier this year.
The decision by Bullrich, who is on
the right of JxC, is expected to trigger a
rupture in the big-tent coalition, ana-
lysts said.
Founded to oppose the Peronist
movement, it includes her and Macri’s
centre-right party, PRO, traditional cen-
tre-left party Unión Cívica Radical, and
the centrist Coalición Cívica.
Some leaders from those parties,
which account for many of JxC’s elected
governors and lawmakers, have indi-
cated they will remain neutral in the
second round.
Thursday 26 October 2023 ★ FINANCIAL TIMES 5

Miracle cure An ageing, shrinking and increasingly uncompetitive Japan is praying for solid state battery deliverance y OPINION

Worldline falls Class action Court orders Carnival to pay

passenger who caught Covid on cruise ship
Porsche hits
at Brussels
60% on bleak inquiry into
Chinese EVs
outlook and PATRICIA NILSSON — FRANKFURT

German carmakers will fight any tariff

war between Brussels and Beijing, said

risk measures the chief financial officer of Porsche,

3 US and European peers share pain
3 Poor prospects in Germany cited
SARAH WHITE — PARIS
Worldline dropped nearly 60 per cent in
Paris after the French payments group
downgraded its sales outlook and said it
was clamping down on fraud in the sec-
tor by cutting off some clients.
Shares collapsed to €9.4 yesterday,
giving the company a market capitalisa-
tion of €2.7bn. The warning sparked a
rout in the payments sector, dragging
down shares in European and US peers.
One of the largest payments special-
ists, Worldline was spun out of Atos, the
French tech group, in 2014. It grew
through acquisitions including that of
Ingenico in 2020. That same year it
‘The companies have
not done a pre-emptive
adjustment of managing
expectations’
entered the CAC 40 index of French
blue-chip companies with a value
exceeding €11bn.
Worldline cited a deteriorating eco-
nomic backdrop especially in Germany,
its biggest market, with shoppers cut-
ting spending, as one of the reasons for
cutting the revenue forecast for 2023. It
now projects growth of 6-7 per cent,
from 8-10 per cent previously.
The group said it had also cut ties with
some merchants as it enforced a stricter
approach to cyber crime risks. That
raised the spectre for the sector of a
broader regulatory crackdown that
could yet yield more pain.
“We face now more challenges than
we anticipated even until very recently.
The first one is obviously the economic
slowdown in Europe . . . most particu-
larly in Germany,” said Gilles Grapinet,
chief executive.
In September, BaFin, Germany’s
financial regulator, banned Payone, a
Worldline joint venture, from taking
payments from certain customers seen
as posing high money-laundering risks.
Worldline’s warning, coming after a
lacklustre third quarter, raises the pros-
pect of a prolonged consumer spending
slowdown, analysts noted, jarring with
the company’s previously upbeat tone.
Hannes Leitner, an analyst at Jeffer-
ies, said part of the concern rippling
through the sector was the outlook had
been too bullish on the back of a post-
Covid 19 boom in consumer spending.
“We came out of the pandemic, it felt
like all this consumer behaviour would
follow though in an explosion . . . To a
certain extent that stayed but there’s a
normalisation,” Leitner said, adding
that rising inflation had stung.
“The companies have not done a pre-
emptive adjustment of managing
expectations. They were trying to take
ambitious targets and meet those tar-
gets.” Worldline’s downgrade of its sales
outlook was substantial and a “shock”,
Leitner added.
Nexi, an Italian rival, was down more
than 16 per cent in Milan, and Adyen
was close to 8 per cent lower in Amster-
dam. At the open on Wall Street, PayPal
was declining 3.8 per cent, Block 5 per
cent and Affirm almost 11 per cent.
Worldline also said its operating mar-
gins before depreciation and amortisa-
tion would drop by 1.5 percentage
points this year, when it had previously
expected a one-point increase.
Third-quarter sales missed expecta-
tions, climbing 4.8 per cent at constant
exchange rates to €1.18bn. Worldline
also scrapped long-term targets beyond
2023 in the update.
Adyen shed more than 40 per cent of
its value in August when its profits fell
short of expectations. Share prices
across the sector have failed to keep up
with those of Visa and Mastercard, the
incumbent networks, in recent years.
See Lex
A coronavirus outbreak on the Ruby Princess, above, was linked to 28 deaths and 700 infections — Dean Lewis/AAP Image
OLIVER BARNES — LONDON
NIC FILDES — SYDNEY
Carnival, the world’s biggest cruise
company, has been ordered by an
Australian judge to cover the medical
expenses of a passenger who con-
tracted Covid-19 aboard one of its
ships to compensate for its “negli-
gent” handling of the outbreak in a
landmark class-action ruling.
Justice Angus Stewart concluded that
before Carnival’s Ruby Princess cruise
ship embarked from Sydney in March
2020 the company “knew or ought to
have known about the heightened
risk of coronavirus infection on the
vessel, and its potentially lethal con-
sequences . . . yet they proceeded
regardless”.
The outbreak aboard the Ruby
Princess was linked to 28 deaths and
about 700 infections. Carnival was
found to have been “negligent and in
breach of their duty of care” towards
Susan Karpik, the lead plaintiff in the
case, for not cancelling the cruise.
“A reasonable person in [Carni-
val’s] position would have cancelled
the cruise,” the judge said.
The ruling is the first class-action
victory against a cruise operator glo-
bally, according to Shine Lawyers, the
Brisbane-based law firm representing
more than 1,000 Australian plaintiffs
in the lawsuit.
The federal judge ordered Carnival
to cover Karpik’s out-of-pocket medi-
cal expenses of $4,423.48 plus interest
but concluded that the “non-
economic loss” from her mild infec-
tion was not sufficient to require dam-
ages. Karpik, a retired nurse, had
claimed more than $360,000 in dam-
ages in part owing to the distress
caused by her husband Henry’s two-
month stay in hospital after he also
contracted Covid-19 onboard.
Other plaintiffs in the suit, which is
being funded by UK-based litigation
fund Balance Legal Capital, include
other passengers, executors acting for
passengers who died and close family
members.
Some 2,651 passengers took the 12-
day return voyage from Australia to
New Zealand.
This year, 31.5mn passengers glo-
bally will take a cruise, rebounding
above 2019 demand levels for the first
time since the pandemic, according to
projections by the Cruise Lines Inter-
national Association.
Not only did the pandemic ground
the fleets of all the major cruise opera-
tors but the industry took significant
reputational damage, as scientists
and health officials blamed it for
superspreading events.
Carnival Australia said that it was
considering the judgment in detail,
adding: “The pandemic was a difficult
time in Australia’s history, and we
understand how heartbreaking it was
for those affected.”
one of the few European brands that
does not make cars in China.
Tensions have been rising since the EU
last month announced an anti-subsidy
probe into Chinese electric vehicles,
warning that Europe was about to be
“flooded” by artificially cheap cars.
“As a strong German automotive com-
munity, we want to fight and will fight
[any new tariffs],” Lutz Meschke said on
Tuesday. He said the EU’s move was
“not very helpful” for the bloc overall,
especially for Germany, which relies
heavily on exports to China.
German carmakers derive a large
chunk of their profits in China, which
accounted for a third of BMW’s car sales
last year and almost 40 per cent of those
of Mercedes-Benz and Volkswagen.
The EU’s decision to launch an inves-
tigation was widely seen as a win for
France, whose carmakers, such as Stel-
lantis and Renault, have a far smaller
presence in China than German rivals.
Premium brands such as Porsche are
relatively rare exporters of cars to
China. Most foreign carmakers, includ-
ing parent Volkswagen’s eponymous
brand, have shifted to producing the
majority of vehicles sold in China
locally.
Porsche, which makes roughly a third
of its sales in China, said the number of
delivered cars in the country was down
12 per cent in the first nine months of
the year, compared with the same
period in 2022, as recovery in the largest
market for cars lagged.
Meschke said executives had visited
the country last week to discuss strate-
gies with dealers, explaining that a
renewed focus on “pricing rather than
volumes” had been well received by
vendors of the luxury car.
The sports car maker’s blueprint for
China included associating it with the
“transition to electrification”, with
investments in exclusive charging hubs
and community centres for Porsche
owners in big cities.
Porsche on Tuesday said revenues
rose 13 per cent to €30.1bn in the first
nine months of the year, while group
operating profit increased 9 per cent
to €5.5bn.
The Stuttgart-based company is pre-
paring to launch four models next year,
including an electric Macan.

Northern Ireland seeks to diversify job creation outside tech

the US, say data from FDI Intelligence.
INSIDE BUSINESS But more than a quarter of US invest-
ment and half the resulting employ-
EUROPE ment have been in the IT sector — lead-
ing to what Máirtín Ó Muilleoir, an
ex-NI finance minister and co-founder
Jude of a new North Ireland Growth Fund,
calls “saturation” in tech jobs.
Webber Mark O’Connell, executive chair of
trade consultancy OCO Global, says that
ern Ireland has a heritage of manufac-
turing, with once-mighty linen, rope
and tobacco industries. They are dead,
but its storied shipbuilder Harland &
Wolff is being revived.
Tina McKenzie, who runs the region’s
biggest recruitment agency, Staffline,
says that US investors should snap up
land and warehouse space.
Besides tech and professional serv-

F
or Northern Ireland, which is
promoting itself to US inves-
tors this week, the timing
could hardly have been more
opportune.
Almac, the pharmaceuticals com-
pany based in the region, announced
last Thursday that it was creating 550
new jobs as part of an expansion plan.
On the same day, hydrogen-bus man-
ufacturer Wrightbus, one of Northern
Ireland’s biggest homegrown successes,
revealed a large German order.
Taken together, these developments
send a clear message to more than 50
executives on a trade mission this week
with Joe Kennedy III, the US special eco-
nomic envoy: Northern Ireland, mark-
ing 25 years of peace this year, has some-
thing to offer companies — growth
potential, workers and unique dual
access to both the EU and the UK.
But business leaders say that the UK
region has two problems: over-reliance
on technology investment and under-
confidence on the bigger story it can
sell. This may be partly because of what
Steve Orr, chief of technology hub Cata-
lyst, calls Northern Ireland’s character-
istic “lack of bullshit”.
The US is the region’s biggest source of
foreign direct investment, supplying
45 per cent of projects in the past two
decades. A third of all FDI, and 51 per
cent of the jobs created, have come from
the region needs to pivot more to areas
such as logistics and manufacturing.
Tech will in any case not benefit
directly from a post-Brexit trade deal
that allows Northern Ireland to trade
into the EU as well as the UK because it
covers only goods.
Travelling with Kennedy are Thomas
DiNapoli, comptroller of the State of
New York, who has committed $56mn
of public pension funds to investments
in Northern Ire-
land since the 1998 The US is the region’s
Good Friday
Agreement. Also biggest source of foreign
on the trip are the direct investment,
president of Coca-
Cola as well as sen- supplying 45% of projects
ior energy, finance, in the past two decades
medical and scien-
tific investors.
For Niall Olden, managing partner at
Kernel Capital, which runs the Bank of
Ireland Kernel Capital Growth Funds
(NI), the “big gap is private sector insti-
tutional money” in the region.
Like the Republic of Ireland, North-
ern Ireland already has an enviable “in”
with the US — on display every
St Patrick’s Day, when politicians and
business leaders decamp to Washing-
ton. Highlighting how politically
invested the US is in the region,
President Joe Biden visited Belfast this
year to celebrate the 25th anniversary of
its peace deal.
But it must broaden its appeal. North-
ices, the region boasts cyber security
and life sciences industries, aerospace
and defence, and a thriving film sector,
born from its success as a location for
TV series Game of Thrones. It also makes
40 per cent of the world’s crushing and
screening machines, used in mining,
construction and recycling.
What is not in place, however, is a gov-
ernment. A 20-month-old political cri-
sis that erupted over post-Brexit trading
arrangements has yet to be resolved.
Businesses take a sanguine view, given
the stop-start nature of local politics and
the fact that the new Windsor frame-
work deal made a smooth start this
month. But O’Connell said a restored
executive would “put the turbo” into
reaping investment opportunities.
The cost of living is cheaper than in
Britain and the republic, and the North-
ern Ireland economy is growing faster
than the UK overall in the year to June
30, despite a decrease in second-quarter
output. Besides offering cost advantages
it has good schools and universities plus
a potential pool of untapped talent: the
region has the UK’s highest economic
inactivity — people neither working,
nor seeking jobs.
Of course, Northern Ireland has heard
investment hype before. But Orr at
Catalyst argues that it must now push its
chest out and “develop a bit of a
swagger”.
jude.webber@ft.com
6 ★ FINANCIAL TIMES Thursday 26 October 2023

COMPANIES & MARKETS

Banks Aerospace & defence

Deutsche flags dividends and buybacks
Third-quarter boost with
course set for best annual
revenue in seven years
OLAF STORBECK — FRANKFURT
Deutsche Bank said it would have capac-
ity to increase dividends and share buy-
backs over the next two years as it
reported better than expected third-
quarter results.
Pre-tax profit at Germany’s largest
lender rose 7 per cent year on year to
€1.7bn, beating analysts’ forecasts of
€1.6bn. It was buoyed by rising interest
rates, which helped its corporate and
private banking divisions, while invest-
ment bank revenues fell 4 per cent. Net
profit attributable to shareholders fell
8 per cent to €1bn because of a higher
tax rate, but still beat expectations.
Deutsche said it was on track for its
highest annual revenue in seven years,
at the upper end of its guidance at about
€29bn.
The lender’s shares closed up 8.4 per
cent yesterday.
The better than expected perform-
ance offers some relief after a botched
IT migration at the bank’s German retail
business caused problems for custom-
ers of its subsidiary Postbank.
Deutsche was publicly rebuked by
watchdog BaFin, which has sent a spe-
cial supervisor to monitor the problem.
Technology. Geopolitical risk
In a note to staff yesterday, chief exec-
utive Christian Sewing wrote that the
bank was “on the right track” and had
cleared “two-thirds” of the backlog
caused by the project. Sewing said that
Deutsche’s retail bank recorded “bil-
lions of euros in inflows” of client funds
in the quarter. “This shows that our cli-
ents continue to rely on us,” he said.
The investment bank’s bond trading
unit, which has been a source of profit
over the past few years, fell behind US
rivals, posting a 12 per cent drop in reve-
nue to €1.9bn, compared with an aver-
age 1.1 per cent gain at US peers. The
drop was partly offset by a sharp rise in
origination and advisory revenues,
which more than tripled to €323mn.
Deutsche’s asset management unit
DWS recorded its third consecutive
quarter of net inflows as investors
poured €1.6bn mainly into its ETF and
ESG products, increasing assets under
management by €1bn to €860bn.
DWS chief executive Stefan Hoops
told analysts that the business would
face up to €100mn of extra costs next
year because of delays to an IT migra-
tion and that the overall project may be
up to 50 per cent more expensive than
forecast. “The transformation benefits
will likely arrive later,” he said.
Deutsche’s common equity tier one
ratio rose to 13.9 per cent, well above an
internal minimum threshold of 13 per
cent. The bank said its strong balance
sheet created “the potential to free up
additional capital of around €3bn
through 2025”, compared with its previ-
ous pledge to pay out €8bn in dividends
and buybacks between 2022 and 2025.
Chief financial officer James von Mol-
tke said the bank had not yet decided
how much of the additional €3bn would
be paid out to investors.
“It’s going to take some time to see
what the new capital plan will look like,”
he said, adding that the 2024 share buy-
back was likely to be higher than previ-
ously planned. Deutsche has already
committed to a €450mn share buyback
this year and promised to raise that
amount by 50 per cent each year until
2025.
Quality lapses
force Boeing
to miss target
for deliveries
of 737 Max jets
CLAIRE BUSHEY — CHICAGO
Boeing said it would miss its target for
737 Max deliveries this year, as well as
take nearly $800mn in charges in its
defence business, including its pro-
gramme to build Air Force One.
The plane maker reported a net loss of
$1.6bn for the third quarter on $18.1bn
in revenue. Its adjusted operating loss of
$3.26 per share exceeded Wall Street’s
expectation of $3.18.
David Calhoun, chief executive, said
in a memo to employees that “despite
the challenges that came our way in the
third quarter”, Boeing remained on
track in its recovery following the Max’s

SenseTime entangled in Sino-US chip war
Onetime AI darling’s effort to
diversify is stumped by export
controls for powerful chips
ELEANOR OLCOTT — HONG KONG
SenseTime, once the darling of China’s
artificial intelligence sector, has been
pushing to diversify away from unrelia-
ble government revenues by snapping
up high-powered chips that every AI
company wants.
Its effort now seems doomed by the
latest round of US export controls pre-
venting Nvidia and rivals from selling
the powerful chips, needed to train the
latest AI systems, to Chinese customers
and their foreign subsidiaries.
Since it went public in 2021, Sense-
Time has been seeking to reduce reli-
ance on its core surveillance business,
which sells AI-powered security cam-
eras to Chinese authorities.
However, the Hong Kong-based
group’s move into data centres packed
with cutting-edge AI chips — which it
rents out to AI companies — appears
stymied by the US-China chip war.
To add to SenseTime’s problems, ana-
lysts point to investors shying away.
“No one wants to touch this space in
China,” said Andy Maynard, head of
equities at China Renaissance. Many
foreign investors could not invest in the
surveillance sector due to the Biden
administration’s move to ban some US
investment in China’s quantum com-
puting, advanced chips and artificial
intelligence. “SenseTime needs a dra-
matic catalytic event in the company to
turn its share price around.”
Shares in SenseTime have fallen more
than 75 per cent since June 2022. That
was the date, six months after its IPO,
that cornerstone investors were allowed
to sell the stock. The company — which
is yet to turn a profit — has a market cap-
italisation of $5.9bn, compared with
$16.5bn at the time of its listing.
The US last week said it was tighten-
ing rules on AI chip sales to China, in a
blow to Chinese groups that rely on buy-
ing high-performance semiconductors.
Washington’s tighter controls come as
Chinese AI groups such as SenseTime
and iFlytek are pivoting away from sur-
veillance tech, which relies heavily on
unstable revenues from cash-strapped
local governments.
When SenseTime chief Xu Li pitched
his AI business to investors two years
ago ahead of its public listing, he focused
on a future revenue stream from an AI
data centre under construction in
Shanghai, where companies could train
Washington’s their models. “We are using a radical
tighter curbs approach to reduce the price of training
come as China AI AI,” he told domestic media in 2021.
groups such as SenseTime used money from its Hong
SenseTime, led Kong listing to secure graphics process-
by Xu Li, are ing units to power the Shanghai data
seeking to pivot centre, which it rents out to AI compa-
away from nies that cannot afford to buy the chips.
surveillance tech The group had gained a supply of Nvidia
FT montage/Bloomberg
A100 GPUs ahead of the US placing
restrictions on the components for
export to China, said several people
familiar with the matter.
That made the data centre move seem
then like a good bet, said one AI investor
in China. “SenseTime was trying to find
what business it could enter to diversify
away from its surveillance business. At
the time, it didn’t seem credible, but the
data centre has turned out to be a decent
business for them.”
Today, SenseTime’s A100 chips are
prized following the explosion of AI
start-ups training large language models
to launch domestic versions of OpenAI’s
ChatGPT. But the company remains
lossmaking, reporting a net loss of
Rmb2.4bn ($330mn) with Rmb1.4bn
revenue for the first six months of this
year. And as Washington tightens
China’s access to Nvidia GPUs, Sense-
Time’s edge in this field is set to expire.
The latest controls add to the US plac-
ing the AI group on its Entity List and an
investment blacklist. The latter move
was done just before its IPO and
prompted Chinese state-backed entities
to step in as foreign investors pulled out.
To get around the controls, Sense-
Time bought advanced chips direct
through its subsidiaries that are not on
the US Entity List. The latest rules
appear to close that loophole, say ana-
lysts. “It’s the end of the road for the
data centre. SenseTime can never buy
another Nvidia chip,” said an investor.
Being cut off from Nvidia’s most
advanced chips will become an increas-
ingly existential problem not only for
SenseTime’s AI data centre but for Chi-
nese AI groups in general. “The more
GPUs, the better the model. It’s more
important than hiring PhDs. This is a
bottleneck for Chinese companies,” the
AI investor said.
Officials said last week’s fresh curbs
meant Nvidia would be barred from
selling to China its A800 and H800
GPUs, the modified versions of its more
powerful chips already banned. The
new controls will curtail China’s access
to the generations of more advanced
chips that Nvidia has announced it will
roll out over the next few years.
Adding to SenseTime’s problems, rev-
enue from its traditional business of sur-
veillance tech is falling. SenseTime
“doesn’t have good pricing power”, said
‘No one Ke Yan, head of research at DZT. Once
SenseTime had kitted out local govern-
wants to ments with the surveillance tech, “there
touch this is no recurring revenue like for other
software as a service companies. The
space. The business model is not attractive. It looks
company is like a contractor”.
SenseTime says it has “clear growth
under-loved plans” and is “confident of long-term
for reasons business prospects. We take a proactive
approach to secure our supply chain
beyond its and to ensure our business resilience”.
own doing’ SenseTime’s smart city sales, which
include its surveillance tech, fell 58 per
Andy Maynard, cent in the first half to Rmb184mn, with
China smaller and less affluent cities leading
Renaissance the decline.
SenseTime, in its first-half report,
said it was “shifting” its “strategic focus
to top-tier customers with strong credit
profiles” after some customers had diffi-
culty paying.
But even if SenseTime managed to
revive its original core surveillance busi-
ness and turn it profitable, analysts say
it would do little to prop up its stock.
Maynard said: “The number of
investors in this space is incredibly
narrow. What’s the upside of buying
this with the sanctions fear? The com-
pany is under-loved for reasons beyond
its own doing.”
Additional reporting by Hudson Lockett
in Hong Kong
grounding in 2019 after two fatal
crashes and the drop in demand for jets
during the Covid-19 pandemic. “That
said, we still have work to do,” he said.
The company will deliver between
375 and 400 Maxes in 2023. The nar-
row-body jet makes up a significant por-
tion of Boeing’s sales volume, and it had
targeted 400 to 450 deliveries before
discovering two separate quality lapses
in fuselages supplied by Kansas-based
Spirit AeroSystems.
Though aerospace manufacturers
receive the bulk of their cash when they
deliver planes, Boeing reiterated its cash
guidance. The company still plans to
generate $3bn to $5bn this year in free
‘We aren’t as far along in
this recovery as we
expected to be’
Brian West, chief financial officer
cash — the metric investors typically use
to judge the stock — but the final figure
will be at the low end of that range, said
Brian West, chief financial officer.
Peter Arment, analyst at Baird, said
that while Boeing’s results reflected
“weaker performance” in the third
quarter, the company’s reaffirmation of
free cash flow guidance “should support
a positive reaction to the stock”.
Boeing shares were up just over 1 per
cent in midday trading to $184.65.
The amount of work to fix the rear
pressure bulkhead defect on the 737 is
greater than Boeing estimated. The
company had made its quality processes
more exacting, Calhoun said, and “as a
result, we’re finding items that we need
to resolve”.
“These are not newly created defects
in the system,” he said. “Instead, thanks
to the culture we’re building, we have
identified non-conformances from the
past that we now have the rigour to find
and fix once and for all.” Boeing’s plans
to increase production remain
unchanged. It will go from building four
787s a month to five, and will reach 38
737s a month by the end of the year.
The group’s defence business
reported a $924mn loss, which Cai von
Rumohr, analyst at TD Cowen, called a
“massive” deficit. The segment has
racked up nearly $1.7bn in losses this
year, having lost $3.5bn in 2022.
The defence results were “disappoint-
ing”, West said. “We aren’t as far along
in this recovery as we expected to be at
this stage.”
Boeing lost $482mn on Air Force One
during the third quarter, driven by
higher manufacturing costs, resolving
negotiations with a supplier and staffing
a project that requires workers with spe-
cialised skills and a security clearance.
Boeing also took a $315mn charge on a
satellite contract due to increased costs.

Banks Automobiles

Santander beats forecasts in robust quarter
OWEN WALKER
EUROPEAN BANKING CORRESPONDENT
Santander’s net profit rose 20 per cent
year on year in the third quarter, as
Spain’s biggest lender became the lat-
est European bank to report strong
results thanks to record rates.
The bank said yesterday it earned
€2.9bn in net profit in the third quarter,
beating the €2.8bn expected by ana-
lysts. Net interest income, the difference
between the money lenders make on
loans and pay out on deposits, rose
16 per cent year on year.
Eurozone banks have been boosted
by the fast pace of increases by the Euro-
pean Central Bank, which has raised
rates to an all-time high of 4 per cent.
With investors betting European cen-
tral bank rates have peaked, many
regional lenders are warning that net
interest income will drop next year.
But Santander said its exposure to
Latin American markets meant per-
formance would remain strong into
next year.
“While the external environment is
increasingly uncertain, it is in these
times that the strength of our model and
our team is most evident,” said Ana
Botín, executive chair. “I am confident
that we will achieve our 2023 targets
given the positive momentum which we
also expect to carry into 2024.”
Last month, Santander announced a
39 per cent increase in its dividend and a
share buyback based on this year’s earn-
ings. Once completed, the lender will
have bought back 9 per cent of its shares
since 2021.
Shares in Spanish banks were hit on
Tuesday after Yolanda Díaz, who leads
the Sumar coalition of leftwing groups,
said she would push for an extension of
the windfall tax on banks and energy
companies as part of negotiations to
support the Socialist party of Pedro
Sánchez, acting prime minister.
The tax introduced last year was
designed to last for two years, but ana-
lysts speculated that a deal between the
left-leaning parties would affect banks
over several years.
Santander was hit with a €224mn tax
bill at the start of the year, equivalent to
10 per cent of its quarterly profits. The
next payment is due early next year.
Under Botín, Santander has been try-
ing to capitalise on its global network,
growing in areas such as wealth man-
agement and payments.
The FT reported this month that it
had set aside $250mn to expand its cor-
porate and investment bank, having
already hired more than 100 invest-
ment bankers this year.
Profits in Santander’s corporate and
investment bank rose 22 per cent in the
third quarter, while profits in its wealth
management and insurance unit rose
62 per cent against a year earlier.
Santander shares are up 18 per cent
this year compared with 7.6 per cent for
the European bank sector.
Battery maker echoes Musk’s EV sales warning
SONG JUNG-A — SEOUL
Shares of LG Energy Solution hit a year
low yesterday after the South Korean
battery producer echoed Tesla chief
Elon Musk and warned that electric-
vehicle sales were expected to slow as a
result of higher interest rates.
The downbeat outlook comes as car-
makers including Tesla, General Motors
and Ford slow their EV factory expan-
sions in expectation of weaker demand
for cars owing to higher rates increasing
financing costs and slowing economic
growth in China and Europe.
“EV demand next year could be lower
than expectations,” said LGES chief
financial officer Lee Chang-sil. “Sales
growth next year won’t be as big as this
year as the macro economic environ-
ment deteriorates and high interest
rates discourage consumer spending,
while growth slows in Europe and the
EV penetration rate in China goes up.”
Musk declared last week during
Tesla’s earnings call that he was “wor-
ried about the high interest rate envi-
ronment we’re in”.
Tesla reported net income in the third
quarter of $1.85bn, down 44 per cent
from a year before.
Shares of LGES, which supplies bat-
teries to Tesla, GM and other carmakers,
closed down 8.7 per cent at Won409,500
($303.2), the lowest in more than a year.
“Investors have been too optimistic
about EV demand growth . . . slowing
Shares in South Korea’s LG Energy
Solution tumbled to a year low
demand growth is coming sooner than
expected, especially in the high-end EV
market,” said Lee Hang-koo, executive
adviser at Korea Automotive Technol-
ogy Institute.
“The growth rate is slowing in the US
and Europe but demand will rebound in
the long term due to the environment-
friendly policies. However, they will
need to expand their low to mid-end EV
models.”
GM, LGES’s joint-venture partner in
an Ohio battery plant and two more
under construction, said on Tuesday
that it was slowing its strategy to focus
on profitability and delaying production
of several models to reduce costs.
Even so, LGES is boosting production
capacity at its wholly-owned Arizona
battery plant by a third to take advan-
tage of tax credits offered under the
Inflation Reduction Act.
It plans to produce its most sophisti-
cated batteries with a longer driving
range at the plant in two years’ time.
Thursday 26 October 2023 ★ FINANCIAL TIMES 7

COMPANIES & MARKETS

Technology

Carbon-neutral claims for latest Apple AI standards

devices under close scrutiny in Europe
Green credentials touted but environmental and consumer campaigners hit at ‘bogus’ messaging
KENZA BRYAN — LONDON
Apple faces scrutiny from European
environmental and consumer groups
over its claims that its latest devices are
carbon-neutral, a term Brussels pro-
poses to ban in marketing as misleading.
The iPhone maker last month put its
environmental credentials at the centre
of its biggest annual product launch. It
called some Apple Watch models its
“first ever carbon-neutral products”,
part of a drive to extend the classifica-
tion across all its devices by the end of
the decade.
But the US tech group’s decision to
rely on credits to cancel out the 7-12kg of
greenhouse gas emissions behind each
new Watch led to a sharp reaction from
consumer groups after a long-trailed
clampdown by the EU on greenwashing.
“Carbon-neutral claims are scientifi-
cally inaccurate and mislead consum-
ers,” Monique Goyens, director-general
of BEUC, the European consumer
organisation, said. “The EU’s recent
decision to ban carbon-neutral claims
will rightly clear the market of such
bogus messages, and Apple Watches
should be no exception.”
The debate over Apple’s claims high-
lights the problems facing companies
that are trying to follow environmen-
tally sound policies while seeking to
make marketing statements to tout
their green credentials.
Apple said its move was “a proof point
of one of the boldest climate commit-
ments in industry today”.
It said: “To achieve global climate
goals, we need immediate action to
drastically cut emissions paired with
investments in conservation and carbon
removal at scale.”
The group’s efforts as well as its
progress on recycling targets and emis-
sion cuts are in sharp contrast to, for
example, rival Samsung, which leaves
out key emission details in its 2050 net
zero target.
In the days following the Watch
launch, Brussels said that by 2026 it
would ban “neutrality” claims that were
based on the purchase of carbon credits,
which compensate for the release of
emissions by absorbing carbon dioxide
from the atmosphere.
The European parliament and council
reached an agreement in September to
ban “misleading advertisements”,
including “claims based on emissions-
offsetting schemes that a product has
neutral, reduced or positive impact on
the environment”. The accord is yet to
be formally adopted.
Climate campaigners have ques-
tioned whether tracking carbon emis-
sions provides a thorough assessment of
the environmental impact of small elec-
tronic devices such as smartwatches
and wireless earbuds, which can be diffi-
cult to repair and often end up as
e-waste.
“It’s misleading to consumers to give
the impression that buying the Watch
In the days has no impact on the climate at all,” said
following the Gilles Dufrasne, a policy officer at the
Watch launch, non-profit Carbon Market Watch,
Brussels said which is in part-funded by the EU. “It’s
that by 2026 it accounting tricks.”
would ban Independent non-profit climate
‘neutrality’ change organisations question whether
claims based on the carbon credits purchased by Apple
the purchase of at the end of each fiscal year are of a high
carbon credits enough quality to remove CO₂ perma-
Patrick T. Fallon/AFP/Getty
nently from the atmosphere.
Apple says the credits will make up
for emissions linked to the Watch’s man-
ufacturing, shipping and charging over
its lifetime, thanks to carbon absorbed
by timber plantations and reforestation
projects on land previously deforested
for cattle-ranching in Paraguay and Bra-
zil, or similar projects.
The schemes help restore native for-
est and create economic opportunities
for local communities, Apple says.
Critics have cast doubt on these plans.
Niklas Kaskeala, chair of the board at
the Compensate Foundation, a non-
profit adviser to potential buyers of car-
bon credits, said offsets based on timber
plantations such as these presented
“systemic flaws”.
He said: “Trees are turned into pulp
and cardboard or toilet paper. The car-
bon stored in these products is released
back into the atmosphere very quickly.”
Documents detailing one scheme
Apple has backed through a conserva-
tion fund show that the majority of the
newly planted trees are chopped down
to be sold as timber in little more than a
decade.
That project, called Forestal Apepu,
repurposed land in Paraguay formerly
used for soy, corn and beef production
by planting trees, mostly eucalyptus,
with up to 25 per cent left as “natural
forest”. The documents described euca-
lyptus, which is often criticised when it
is grown in “monocultures”, as suitable
for the production of “quality timber”.
About 1 per cent of the land is set aside
to regrow native species.
Apple said: “Our approach to decar-
bonising products offers a rigorous
blueprint for how businesses can do
their part, prioritising deep emissions
reductions across our value chain
before applying high-quality carbon
credits.
“We are committed to driving new
innovations to lower emissions and to
scaling nature-based carbon removal as
we accelerate progress towards 2030.”
Scientists at the UN Intergovernmen-
tal Panel on Climate Change have said
that other carbon removal techniques,
such as injecting carbon dioxide
into rocks, are generally more effective
at locking the greenhouse gas away
long-term than vegetation-based
approaches.
Apple’s Watch nonetheless shows
‘It misleads progress on its materials recycling tar-
gets, with the latest edition, for exam-
consumers ple, using only recycled cobalt in the
to give the battery and recycled aluminium in the
casing.
impression The company has cut up to 81 per cent
that buying of emissions linked to the Watch com-
pared with a 2015 baseline, and has
the Watch promised to cut 90 per cent of group-
has no level emissions from that baseline by
2050.
impact on In contrast, Samsung does not include
the climate emissions from manufacturing and con-
sumer product use — the much larger
at all. It’s part of its carbon footprint — in its 2050
accounting net zero target.
Samsung said it was evaluating its car-
tricks’ bon levels and “evolving [its] approach
to reflect the actions needed to achieve
net zero”.
Apple claims the manufacturing
process for its Watch is powered by “100
per cent clean electricity”.
Apple “matches” any electricity use
by suppliers from power grids that is
generated from fossil fuels, by investing
in what it describes as “clean energy
projects”.
However, NewClimate Institute, a
non-profit organisation, said Apple’s
“assertion” that it used only clean elec-
tricity for manufacturing was “highly
contentious, since Apple’s major suppli-
ers continue to have very low renewable
electricity shares”.
alliance selects
director amid
push to fill ‘gap’
in regulations
CRISTINA CRIDDLE AND
MADHUMITA MURGIA — LONDON
Microsoft, OpenAI, Google and
Anthropic have stepped up a united
push towards safety standards for arti-
ficial intelligence and appointed a
director as their alliance seeks to fill “a
gap” in global regulation.
The four tech groups, which this sum-
mer linked to form the Frontier Model
Forum, yesterday picked Chris Mese-
role from the Brookings Institution to be
executive director of the group.
The forum also divulged plans to
commit $10mn to an AI safety fund.
“We’re probably a little ways away
from there actually being regulation,”
Meserole, who is stepping down from
his role as an AI director at the Washing-
ton-based think-tank, said. “In the
meantime, we want to make sure that
these systems are being built as safely as
possible.”
Tech groups have coined the term
“frontier” to describe a subset of artifi-
cial intelligence with highly advanced
and unknown capabilities, including the
type that powers generative AI products
such as Open AI’s ChatGPT and Google’s
Bard. These are driven by large lan-
guage models, systems that can process
and generate vast amounts of text and
other data.
Concern has intensified over the past
few months about the potential of
increasingly powerful AI to displace
jobs, create and spread misinformation,
or eventually surpass human intelli-
gence.
Meserole asserted that the forum
would seek to “supplement or comple-
ment” any official regulation but, “in
the interim, while there’s a gap, we need
to move forward with building these
systems safely”.
Governments worldwide have called
for robust legislation to police this fast-
developing technology, with the EU’s AI
Act expected to be finalised by early
next year. The UK meanwhile is hosting
the first global summit on AI safety next
week, with political leaders and leading
tech executives invited to discuss co-
operation on issues such as national
security.
The forum will focus initially on risks
including AI’s ability to help design bio-
weapons and also to generate computer
code that could be used to facilitate
hacking of critical systems, Meserole
said.
The $10mn pot announced yesterday
includes investment from former
Google chief executive Eric Schmidt and
will go towards supporting academic
research in AI.
The group plans to use existing labs
and teams from companies to research
“red teaming” techniques — methods
that researchers use to test systems for
flaws or dangers — and develop stand-
ards for technical risk assessments and
evaluations of the technologies.
See Lex

Energy Airlines

Gunvor chief relieved to keep control in family AirAsia parent prepares for NY Spac listing
DAVID SHEPPARD — ENERGY EDITOR
Gunvor chief executive Torbjörn Törn-
qvist has said he wants to retain control
of the business within his family follow-
ing the breakdown of a potential deal
with Abu Dhabi’s state oil group.
Talks with the Abu Dhabi National Oil
Company over a sale of all or part of the
commodity trading house started last
year but unravelled in March over the
size of the deal.
Törnqvist said he was happy to keep
the independence to shape expansion
and that Gunvor’s growth over the past
three years meant finding a strategic
investor was no longer essential.
While Törnqvist turns 70 next month,
he said he was in no rush to retire and
that with his son Fredrik, 33, playing a
growing role, running the Geneva-based
trader’s London office and its renewable
energy investments, it would be “best”
for the family to retain control.
“Like many people in our family situ-
ation, if you can keep it like that, it’s
always the best.”
Törnqvist, who controls 85 per cent of
Gunvor’s shares, said its focus was now
on deploying the vast profits it has made
over the past three years as the Covid-19
crisis then Russia’s full-scale invasion of
Ukraine stoked volatility across energy
markets — and big returns for traders.
The equity value has risen to $6.1bn
from $2bn in 2019 and headcount by
200 to 1,700 in the three years, includ-
ing senior trading hires such as Benoit
Roulon. head of crude, and Jade Touzni,
who leads origination. Törnqvist said
the company’s growth meant his long-
held desire to find an external investor
had waned, as the motivation for
attracting outside money had always
been to fund expansion.
He would not comment directly on
the breakdown in talks with Adnoc,
which had once looked likely to take a
significant stake, but indicated the pros-
pect of giving up control had never sat
easily with him.
“We are a long way away from being a
small company,” he said. “Today our
concern is how best to deploy the cash
and the profits we have built up over the
years, and we are in a strong position to
invest with our balance sheet.”
Alongside looking for investments
typically sought by trading houses such
as ports, storage hubs and tankers, Gun-
vor was considering further invest-
ments in the energy transition. It
relaunched a metals trading desk this
Torbjörn Törnqvist: happy to keep
the independence to shape growth
summer given expected growth in
demand from electric vehicles.
The focus on the energy transition has
raised questions in the industry over
whether Fredrik will one day succeed
his father, although there are other sen-
ior partners who may take the top job.
Törnqvist said the company was also
exploring upstream investments in oil
and gas production for the first time.
Gunvor would not look to operate pro-
duction assets, he added, but was inter-
ested in stakes that would allow it to
secure additional oil or gas volumes.
“We can see it looks attractive,” he
said, but did not think the transition was
happening fast enough to significantly
curtail oil demand “for the foreseeable
future”.
Tensions emanating from the Israel-
Gaza crisis had added about $5 a barrel
to the price of crude, he said, with inter-
national benchmark Brent rising to near
$93 a barrel this week.
“There is clearly a fear factor in the
market . . . should this crisis spread in a
very sensitive region,” he said. “But at
the moment we don’t have any changes
in the supply. No one wants to see this
spread, and I think that includes Iran
and others in the Middle East.”
But without a significant supply dis-
ruption, he did not think demand was
strong enough to push prices above
$100 a barrel, with much of oil’s recent
strength caused by production cuts
among the Opec+ group. “Demand is
not necessarily supporting $100 oil, it’s
the actions of the cartel,” he said.
MERCEDES RUEHL — SINGAPORE
Tony Fernandes, the Malaysian tycoon
behind budget airline AirAsia, is plan-
ning to raise more than $1bn in debt
and equity for his Capital A conglomer-
ate and preparing to list some of its
businesses through a blank-cheque
company in New York.
The entrepreneur has agreed a deal with
Aetherium Acquisition, a special pur-
pose acquisition company on Nasdaq,
and plans to list several businesses
through it next year, according to two
people familiar with the deal. They
include a new business extending the
AirAsia brand to companies hoping to
start airline franchises.
AirAsia, which Fernandes bought
from the Malaysian government in 2001
for less than $1 and turned into one of
the region’s largest low-cost carriers, has
since diversified.
The Kuala Lumpur-listed group was
renamed Capital A last year to reflect its
broadening portfolio, which includes a
fintech “super app” called Move, an avi-
ation consultancy arm, logistics busi-
ness Teleport, and airline engineering
and maintenance services provider Asia
Digital Engineering.
The Spac deal would be a test of inves-
tor appetite for the AirAsia brand after
the group underwent a restructuring to
rescue its debt-laden business during
the pandemic.
As of 2021, Capital A has been classi-
fied as a distressed company by the
Malaysian government, a categorisation
known as Practice Note 17 that subjects
companies to greater regulatory scru-
tiny. It has applied to exit PN17 status.
Capital A has come under focus in the
past over its accounting practices,
liquidity constraints and debt lev-
els. While those levels have fallen since
hitting highs of more than $15bn during
the pandemic, levels are still elevated at
$5.1bn compared with its market capi-
talisation of $760mn. Capital A said
$500mn of that was bank debt, while
the rest comprised aircraft leases.
‘Capital A still has a lot of
debt, which is concerning,
but operationally things
are going quite well’
AirAsia has reactivated most of its
routes and says it is planning growth in
secondary and tertiary routes in coun-
tries such as India as tourism in Asia
rebounds. Its share price has risen by a
third so far this year.
Analysts expect the company to
report profits of $535mn this year,
higher than in 2019 before the pan-
demic began. Its engineering and logis-
tics businesses are generating profits,
and the airline business in August
recorded its fourth consecutive quar-
terly profit.
The deal with Aetherium is expected
to be finalised in early 2024, one person
said. The Spac raised $115mn in January
2022 from south-east Asian and Hong
Kong-based investors, but Capital A
may raise extra cash from an additional
private investment in public equity, a
common feature of Spacs.
Capital A has long harboured plans to
list part of its business in the US. Fern-
andes first flagged a Spac listing in an
interview with the Financial Times in
2021 but last year said he would list part
of the business by itself in New York, as
well as listing the super app.
Spacs, a backdoor way of listing a
business through a merger with an
already-listed company, were popular
during the pandemic but investors have
since soured on such deals, with many
underperforming the stock market.
The new entity will be renamed Capi-
tal A International and contain a new
AirAsia franchise business that will help
launch airlines in countries such as
Bangladesh and the Maldives. It will also
include its consulting arm and aircraft
leasing business.
“Capital A still has a lot of debt, which
is concerning, but operationally things
are going quite well. This year looks like
it will be better than the year before
Covid,” said Nirgunan Tiruchelvam, an
analyst at Aletheia Capital.
Before the Spac deal, the company is
hoping to secure more than $1bn in
new equity and debt over the next few
months, according to one of the
people. This includes a $150mn loan
from Bangkok Bank this month, a deal
agreed despite the PN17 status.
Capital A declined to comment.
Aetherium did not respond.
8 ★ FINANCIAL TIMES Thursday 26 October 2023

COMPANIES & MARKETS

Fixed income. Symbolic issuance Equities

Kokusai leaps
Investors warn Scotland would 32% in Tokyo’s
biggest IPO
pay a premium on bond sales for five years
DAVID KEOHANE AND KANA INAGAKI
TOKYO

Shares in Kokusai Electric jumped as

Small size and limited liquidity
of ‘kilts’ likely to mean higher
borrowing costs relative to UK
RAFE UDDIN AND MARY MCDOUGALL
LONDON
LUKANYO MNYANDA — EDINBURGH
The Scottish government is planning to
sell bonds for the first time, but inves-
tors warn that it would face higher bor-
rowing costs than those paid by the UK.
Proposals are still subject to due dili-
gence assessments, but the issuance,
which is designed to fund “vital infra-
structure” including affordable hous-
ing, is scheduled before the current par-
liamentary term concludes in 2026.
The plans to issue Scottish bonds, long
nicknamed “kilts”, has been character-
ised by First Minister Humza Yousaf as a
way of building credibility in a push for
independence.
“This will bring Scotland to the atten-
tion of investors across the world . . .
And it will raise our profile as a place
where investment returns can be
made,” Yousaf told attendees at his
party’s recent annual conference in
Aberdeen.
Yousaf did not say how much the Scot-
tish government would try to raise but
borrowing limits imposed by Westmin-
ster mean it will represent only a tiny
fraction of Holyrood’s overall budget.
All Scottish government debt is typi-
cally underwritten by the UK Treasury.
Assuming the bonds are structured in
the same way, investors will not be tak-
ing on extra credit risk by buying them.
But they are still likely to demand an
interest rate premium relative to the gilt
market: the tiny size of Scotland’s bond
market would make the debt tougher to
buy and sell — and limit its appeal to a
small group of investors. “It’s sensible to
assume that there would be some risk
premium over a UK gilt, to take account
of lower liquidity, a less tried and tested
issuer and potentially murkier public
finances,” said Nick Chatters, Edin-
burgh-based portfolio manager at
Aegon Asset Management.
Any premium Scotland has to pay will
partly be influenced by the credit rating
it is assigned by firms such as S&P,
Moody’s and Fitch.
A good steer are local authorities,
which are rated similarly to the UK gov-
ernment but face higher debt servicing
costs because of liquidity risk.
Lancashire county council issued
£350mn of bonds in March 2020 on the
back of an Aa3 rating from Moody’s, one
rung below the Aa2 of the UK govern-
ment at the time.
Some investors are sceptical as to
whether the Scottish government will go
ahead, given Yousaf’s announcement
comes at a time when borrowing costs
have shot up across the world.
“I’m not sure how realistic it is in the
current context of where rates and
yields are at the end of the day,” said
Scottish government
borrowing is capped and
nearing limits
£bn
Debt cap difference
Debt stock at end of year
Forecast
3
2 had ever defaulted on a bond.
1 the central government . . . have been
0 on a bond issuance,” he said.
2017 20 22 24 26 28 30
Source: Scottish government
Pilar Gomez Bravo, co-chief investment
officer for fixed income at MFS Invest-
ment Management.
“The Scottish government could do it,
but I think they would have to pay up
quite a lot — more than they think they
need to,” she added.
Benchmark UK borrowing costs have
risen substantially over the past couple
of years as the Bank of England has
raised interest rates at the fastest pace in
a generation to combat persistently high
inflation.
Ten-year gilts yields were 4.7 per cent
on October 20, having traded between
0.5 and 2.5 per cent from 2014 to 2019.
Most local authorities borrow from
the Public Works Loan Board, a part of
the Treasury, at a premium to gilts.
Occasionally, officials have opted to
go to the market directly in search of
cheaper loans.
Birmingham city council, the largest
local authority in Europe, owed about
£470mn to bondholders when it
declared bankruptcy in September.
This was about 10 per cent of its total
liabilities, but the UK government inter-
vened and a default has so far been
avoided.
In the US, cities such Detroit have
defaulted on municipal bonds. While it
is technically possible for that to happen
in Britain, so far the UK government’s
role as a backstop has prevented this
from taking place.
Medhi Fadli, senior vice-president of
public finance ratings at DBRS Morning-
star, said no local authority in Britain
“The supervision and support from
sufficient enough to avoid any default
Under legislation passed in the wake
of the 2014 independence referendum,
Debt of honour: the Scottish government is able to issue
First Minister bonds as part of wider borrowing pow-
Humza Yousaf ers introduced in 2015.
wants Scotland This decision enabled it to borrow
to issue bonds through central government at the same
as a way of rate as the Treasury via a facility known
building as the National Loans Fund.
credibility in Any bond issuance would probably
a push for be at a premium and cost the taxpayer
independence more and be dwarfed by the administra-
Andy Buchanan/AFP/Getty
tion’s £59.8bn in budgeted spending
this year.
Ministers are restricted to borrowing
a capped amount for investment each
year. They are currently limited to
£450mn in borrowing for the 2023-24
period and can only have £3bn in total
debt, though this will rise in line with
inflation each year under terms agreed
with the Treasury in August.
The Scottish government is already
forecast to reach about 80 per cent of
its debt cap by 2026, leaving little room
for further borrowing via the bond mar-
ket, according to Mairi Spowage, direc-
tor of the Fraser of Allander Institute, a
think-tank.
That means the importance of any
kilt issuance is likely to be largely sym-
bolic, rather than a significant contribu-
tor to Holyrood’s finances.
While it not certain what would hap-
pen to the bonds in the event Scotland
‘I’m not gained independence, the Scottish gov-
ernment could include an option allow-
sure how ing investors to return the debt and get
realistic it their money back.
In such a scenario, Scotland would
is in the then issue debt with a credit rating
current based on its own creditworthiness.
In the lead-up to the 2014 independ-
context ence referendum, rating agency
of where Moody’s said an independent Scotland
would be rated between A and Baa,
rates and towards the lower end of the investment
yields are’ grade spectrum.
much as 32 per cent on its stock market
debut in Tokyo yesterday, valuing the
chip equipment maker at $3.6bn and
making it Japan’s biggest initial public
offering in five years.
Kokusai was bought by US private
equity firm KKR in 2017 from Japan’s
Hitachi, which was selling non-core
assets in an effort to streamline its busi-
ness. The deal had valued Kokusai at
¥257bn ($1.7bn).
Yesterday, Kokusai raised ¥108bn
after the IPO was priced at ¥1,840 a
share, allowing KKR to reduce its stake
in the chip tool maker from 73.2 per cent
to 47.6 per cent.
As investors flooded the market with
buy orders in the first 26 minutes of
trading, Kokusai shares opened at
¥2,116, before surging as high as ¥2,436.
They closed 28 per cent above their IPO
price to finish the day at ¥2,350.
The IPO comes after valuations of
chip companies and their suppliers took
off with the technology’s strategic
importance in the supply chain high-
lighted by US efforts to restrict Chinese
access to advanced semiconductors.
However, the industry is suffering from
weakening demand in the short term.
Kazuyoshi Saito, an analyst at Iwai
‘There is strong demand
expected with large-scale
national chips projects in
the US and Europe’
Cosmo Securities, said the opening
share spike was “reasonable” consider-
ing investors hoped the market for
memory chips would recover next year.
“There is also strong demand
expected with large-scale national chips
projects in the US and Europe” as coun-
tries try to build their own semiconduc-
tor supply chains, Saito added.
Kokusai has a significant global mar-
ket share in machines that can deposit
thin films on silicon wafers, which are
then used to form electronic circuits for
the chips cut from the wafers.
The Kokusai IPO is the biggest since
SoftBank listed its telecoms unit with a
market value of ¥7.2tn in 2018 and
comes after the tech group listed chip
designer Arm in New York last month at
a valuation of more than $50bn.
The listing also comes on the back of a
broader recovery in Japan’s IPO market
with the Topix stock index trading near
a 33-year high and as the country has
surpassed China as a driver of invest-
ment banks’ revenues from equity fees
for the first time in almost 25 years.
Japan is riding a wave of interest from
foreign investors attracted by low inter-
est rates, pressure on companies to
improve valuations and investors want-
Our global ing to diversify away from China.
team gives you The IPO follows an earlier attempt by
market-moving KKR to sell the chipmaking equipment
news and views, business to US-based Applied Materials
24 hours a day in 2019. The $3.5bn deal fell apart in
ft.com/markets 2021 after it failed to gain approval from
Chinese regulators.

Banks Equities

German financial watchdog set to Turkey’s stocks tumble after Erdoğan

ease draconian growth cap on N26
OLAF STORBECK — FRANKFURT
Germany’s financial watchdog is
poised to ease a crippling growth cap
imposed on N26 two years ago when
BaFin took issue with shortcomings at
the Berlin-based online bank.
N26 founders Valentin Stalf and Max
Tayenthal told investors yesterday the
start-up expected to be allowed to
attract up to 60,000 new clients a month
soon compared with a previous limit of
50,000 disclosed in October 2021.
“While this number is slightly below
our own expectations, we recognise that
this outcome is still a big step and sign
of trust from the regulator,” Stalf and
Tayenthal told investors in an email.
BaFin’s original cap was a draconian
move for a bank that had emphasised
client growth since its founding in 2013.
It marked an escalation of a long-run-
ning row with the regulator over alleged
flaws in the bank’s internal organisation
and controls against money laundering.
The watchdog had earlier fined N26
€4.25mn for flagging a large number of
potentially suspicious transactions to
law enforcement authorities too late.
The co-founders said it was unclear
when the regulator would lift the growth
cap entirely. “We understand BaFin will
need more time to assess our improve-
ments in more depth relating to further
growth,” they wrote to investors.
The bank initially expected to over-
come the growth cap as early as last
year. In recent months, investors hoped
that BaFin would lift it by the end of the
third quarter.
People familiar with the matter said
BaFin staff signalled the regulator’s will-
ingness to partially ease the cap to
60,000 in a meeting with Stalf and Tay-
A cap of 60,000 would still amount
to a significant constraint for N26
enthal last week, adding the authority
had not yet taken a formal decision.
Compared with N26’s growth of
170,000 new clients per month in the
run-up to BaFin’s 2021 intervention, a
cap of 60,000 would still be a significant
constraint for the growth-hungry
start-up.
N26 said “any easing of the growth
restrictions is a recognition of our
progress”.
The bank said it was “confident” the
growth restrictions will be further eased
“in the coming months”. BaFin declined
to comment.
Over the past two years, the bank has
spent more than €50mn to improve its
internal controls, transaction monitor-
ing and fraud-prevention systems, say
people familiar with the matter.
With more than 8mn clients in 24
countries including Germany, France,
Spain and Italy, N26 is one of Europe’s
largest challenger banks aiming to dis-
rupt the continent’s incumbent retail
lenders.
Since it was founded in 2013, the bank
has raised $1.8bn from investors includ-
ing Peter Thiel’s Valar Ventures and
Li Ka-shing’s Horizons Ventures
steps up criticism of Israel and its allies
ADAM SAMSON — ANKARA
Turkey’s stock market tumbled
yesterday after President Recep Tayyip
Erdoğan stepped up his criticism of
Israel and its allies at a time when
Ankara is desperate to secure western
investment to fuel its economic
overhaul.
The benchmark Bist 100 index dropped
more than 7 per cent in its biggest slide
since early February, according to
FactSet data.
The steep drop triggered multiple
trading curbs, known as “circuit
breakers”, which are designed to soothe
panicky markets.
Yesterday’s stock rout came after
Erdoğan said: “Israel’s attacks on Gaza
are a situation that attests to both mur-
der and a state of mental illness, both for
those who carry them out and for those
who support them.”
The Turkish president also said
Hamas, which carried out a brutal
attack on Israel on October 7, is not a ter-
rorist organisation but rather a “group
for liberation”.
Erdoğan had initially taken a more
balanced approach to the Middle East
crisis but he has stepped up his criticism
of Israel in recent days, saying that its
strikes on Gaza were “amounting to gen-
ocide”.
He has also criticised the US for send-
ing military assets to the Middle East
and for its backing of Israel more
broadly.
The Israel-Hamas conflict has come
at a time when Turkey is attempting
The Turkish president
said Hamas is not a
terrorist organisation but
a ‘group for liberation’
to extinguish a long-running economic
crisis and lure back investors who
abandoned the market after years of
unorthodox policymaking stoked runa-
way inflation and other severe imbal-
ances.
Finance minister Mehmet Şimşek has
in recent weeks pitched to investors in
the US and Europe.
Şimşek said that improving relations
with the west was a key pillar of Tur-
key’s revamped economic programme,
which began after Erdoğan’s re-election
in May.
Turkey’s stock market began falling
yesterday as Erdoğan addressed a meet-
ing of his Justice and Development party
in parliament.
A Turkish capital markets banker
said the remarks dented sentiment and
then once the fall began, high-speed
trading firms that follow market
momentum amplified the selling pres-
sure.
The banker added that the market
had risen sharply the previous two trad-
ing days, meaning that there were fewer
“marginal buyers” ready to swoop in
when stocks fell.
The Bist 100 is still up nearly 35 per
cent this year in Turkish lira terms as
residents have rushed into stocks in an
attempt to shield their savings from
inflation running at nearly 60 per cent.
Turkey’s international assets were
more muted yesterday.
Yields on Turkey’s dollar-denomi-
nated bonds ticked slightly higher while
the cost to protect against a default
using credit default swaps was little
changed. The lira was also steady at
TL28.12 against the US dollar.
Thursday 26 October 2023 ★ FINANCIAL TIMES 9

COMPANIES & MARKETS

The day in the markets Oil’s megadeals

What you need to know
usher in an age of
3 Wall Street indices fall as Treasury
energy uncertainty
yields return towards 5%
Alphabet shares plunge on third-quarter results
3 Rise for European consumer and basic Daily share price move (% change)
materials stocks offset by Worldline dive
3 Global oil benchmark Brent gains amid
fears of wider Middle East conflict
10
David Sheppard
US stocks declined and Treasury yields
resumed their upward march yesterday 5 Markets Insight

S
as investors weighed up a flurry of
earnings from across the banking and
technology sectors. audi Arabia’s energy minister Maybe not in your lifetime, they say. Critics and supporters of Birol’s view
Wall Street’s benchmark S&P 500 lost 0 Prince Abdulaziz bin Salman Just look where the big oil groups are alike tend to gloss over the nuance,
0.9 per cent by midday in New York and thinks that the return of the putting their money. Better fire up the which is that the view only applied if
the tech-heavy Nasdaq Composite fell oil mega-deal is “testament” rigs unless you want to read about Greta governments acted to curb fossil fuel
1.8 per cent, erasing gains in the previous that “hydrocarbons are here Thunberg’s latest arrest by candlelight. demand sufficiently to cut emissions —
session. to stay”. But it might be a good idea to pause which, to date, they have not.
-5
Shares in Alphabet were on track for His view, echoed by many in the oil and think about who the messengers Unswayed, this week the IEA released
their worst day in a year after the parent sector, is why would Chevron and are. Opec energy ministers and oil exec- its annual “scenarios” for where they
of Google disappointed investors with its ExxonMobil drop $120bn-plus com- utives may not, whisper it, be entirely think oil demand is going. While trying
third-quarter earnings, but in contrast, bined on buying Hess and Pioneer if free of bias themselves. to reflect the huge uncertainty in how
Microsoft gained. -10 they thought oil demand was at risk of The opposing view is that Chevron energy markets might look in three dec-
While Microsoft’s generative artificial Aug 2022 2023 Oct heading into decline? and Exxon’s spending spree is not usher- ades’ time, it should nevertheless be a
intelligence segment beat market Source: Bloomberg
“I don’t think anybody would buy an ing in an extended oil age but instead sobering read for oil investors.
estimates, Google’s equivalent sagged, asset they will have to freeze and not reflects what might be dubbed “the new The agency says that, if governments
“raising concerns on [Alphabet’s] AI make use of it,” Prince Abdulaziz told a age of energy uncertainty”. stick with their current policies, oil
positioning,” said analysts at Bank of Paris’ CAC 40 rose 0.3 per cent and US Federal Reserve chair Jay Powell conference in Saudi Arabia on Tuesday. Building scale in the face of a ques- demand still peaks this decade thanks
America. Germany’s Dax added 0.1 per cent ahead last week suggested that higher bond Mike Wirth, Chevron’s chief execu- tionable future can be a defensive pos- to the rapid rise of electric vehicles in
The two companies are part of a group of the European Central Bank’s monetary yields meant there was less need for the tive, says he sees no imminent peak in China. But consumption won’t fall sig-
of stocks which investors have tipped to policy decision today. central bank to raise rates beyond their oil demand, painting himself as a realist nificantly — instead, largely flatlining
benefit from cutting-edge technology in The moves in equity markets came as current level when it meets at the start of among what he suggests are a growing
‘Better fire up the rigs over the next 30 years.
coming years. Treasury yields edged higher. The yield November. band of environmental ideologues. unless you want to read But in the scenario where govern-
Across the Atlantic, the region-wide on the benchmark 10-year Treasury rose “The fact that the Fed is no longer fully The International Energy Agency, the ments follow through on environmental
Stoxx Europe 600 closed flat as gains for 8 basis points to 4.92 per cent. in control of financial conditions could tilt west’s oil watchdog, is not “remotely
about Greta Thunberg’s pledges already made — but not yet fully
consumer non-cyclicals and basic Yields on Monday breached 5 per cent Powell to take a more cautious stance,” right” that all fossil fuels, including oil latest arrest by candlelight’ implemented as policy — the picture
materials were offset by a crash in the for the first time in 16 years, having been said analysts at Danske Bank. and gas, will see a peak in demand changes dramatically. Oil demand will
shares of Worldline. driven higher by a mix of strong Brent crude, the international oil before the end of this decade, according almost halve by 2050, to just 55mn bar-
The French payments group warned economic data, quantitative tightening benchmark, rose 1.4 per cent to $89.36 a to Wirth. “You can build scenarios but ture for the oil majors. The smaller inde- rels a day.
that revenues and margins would take a and concerns that interest rates are set to barrel as the military action in Gaza we live in the real world and have to allo- pendents seem happy to sell. Going one step further, in the IEA’s
hit this year from a deteriorating remain higher for longer than previously threatened to broaden into a wider cate capital to meet real world The biggest producers won’t neces- most ambitious “net zero” scenario, if
economic outlook in Europe. thought. regional conflict. George Steer demands,” he said last month. sarily be badly damaged by a decline in governments get serious about the 1.5C
Opec, which Saudi Arabia increas- demand if they can pump the barrels target, then oil demand will practically
ingly dominates, forecast two weeks ago that are needed more efficiently than collapse over the next 25 years, falling to
Markets update that, rather than peaking, oil demand their rivals. roughly a quarter of its current level.
would rise about 15 per cent between But uncertainty creates fear. And the You can, of course, believe that the
now and 2045 to reach 116mn barrels a IEA — once viewed as the gold standard IEA have got this wildly wrong. Or that
day. The group’s members accuse the in oil forecasting — has been turned on governments will grow tired of address-
US Eurozone Japan UK China Brazil IEA of having become politicised and by many devout believers in the sector. ing climate change, if their populations
Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa have claimed that it has stoked up vola- Fatih Birol, its executive director — deem it too complicated or expensive.
Level 4206.80 1731.31 31269.92 7414.34 2974.11 113418.51 tility in oil markets. who himself once worked for Opec — But within the wide ranges and uncer-
% change on day -0.96 0.14 0.67 0.33 0.40 -0.30 For an industry that has been ham- has been portrayed by some as a turn- tainty of the IEA scenarios is a glimpse
Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $ mered on all sides in recent years, from coat ever since arguing in 2021 that no into what the likely path is for the oil
Level 106.454 1.059 149.925 1.214 7.316 5.001 environmental activists to uncertain new oil and gas developments were sector. Investors should be careful about
% change on day 0.173 -0.094 0.033 -0.328 0.104 0.084 investors unsure about its long-term needed if the world wants to limit global swaggering blindly towards it.
Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond future, it is tempting to believe oil has warming to 1.5C under the Paris agree-
Yield 4.913 2.882 0.856 4.778 2.712 11.490 got its swagger back. Peak demand? ment. david.sheppard@ft.com
Basis point change on day 7.340 5.900 0.650 7.200 -1.500 5.000
World index, Commods FTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 422.22 88.68 84.00 1963.65 22.74 3584.70
% change on day -0.59 0.69 0.31 -0.47 -1.92 0.90
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.

Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index
4640 1840 7840

7680
4480 1800
7520
4320 1760 7360

| | | | | | | | |
4160 | | | | | | | | | | | | | | | | | | | |
1720 | | | | | | | | | | | | | | | | | | | | 7200 | | | | | | | | | | |

Aug 2023 Oct Aug 2023 Oct Aug 2023 Oct

Biggest movers
% US Eurozone UK
Waste Management 6.46 Dassault Systemes 8.25 Lloyds Banking 2.18
Wabtec 5.23 Deutsche Bank 6.79 Rio Tinto 1.92
Ups

Robert Half 4.56 Vopak 4.68 Bunzl 1.82

Moody's 4.46 Kone 3.48 Bae Systems 1.67
General Dynamics 4.15 Hermes Intl 3.04 Sage 1.47
%
Marketaxess Holdings -11.50 Casino Guichard -9.56 Ocado -9.38
Alphabet -9.41 Telecom Italia -4.05 Reckitt Benckiser -4.02
Downs

Alphabet -9.29 Akzo Nobel -3.52 Jd Sports Fashion -2.13

Automatic Data Processing -9.05 Kering -3.39 Segro -2.09
Fortive -7.02 Grifols -3.36 Vodafone -2.04
Prices taken at 17:00 GMT Based on the constituents of the FTSE Eurofirst 300 Eurozone
All data provided by Morningstar unless otherwise noted.

Wall Street Europe London

Near the tail-end of the S&P 500 index France’s Worldline, the payments group Heading the FTSE 100 index was lender
was Google’s parent company Alphabet, spun out of Atos in 2014, plummeted to a Lloyds, which left its 2023 guidance for
which posted a smaller than expected record low after trimming its full-year net interest margin unchanged.
profit in cloud computing. revenue outlook. Citi also gathered from the conference
That division’s operating income came Gilles Grapinet, chief executive, said the call that Lloyds “could announce larger
in at $266mn in the third quarter, missing macro environment had deteriorated, dividends and buybacks than consensus
UBS’s estimate by more than 13 per cent. particularly in Germany, leading Worldline expects” from its full-year results.
Bank of America, however, noted that to forecast 6 to 7 per cent growth in Near the bottom of the blue-chip
cloud represented just 2 per cent of organic revenue, down from 8 to 10 per benchmark was consumer goods group
Alphabet’s total profits with search and cent stated in July. Reckitt Benckiser, which expected like-
YouTube still the big drivers. Citi said expectations were already low for-like revenue to grow 3.4 per cent in
Fellow tech behemoth Microsoft rallied heading into this update but these results the third quarter, missing a consensus
after its cloud unit beat analyst estimates were “likely worse than many had estimate of 3.7 per cent.
with revenue from its Azure platform expected and will drive consensus A share buyback of up to £1bn was
rising 29 per cent during the quarter, downgrades”. “largely anticipated”, said Jefferies, which
exceeding BofA’s 25.5 per cent estimate. The news reverberated across the instead focused on Reckitt’s “softer”
Amy Hood, chief financial officer, said sector, sending peers Adyen and Nexi commitment to “margin progress” over
during the earnings call that “higher- down sharply. the medium term.
than-expected AI consumption French software group Dassault Heading the FTSE 250 index was IT
contributed to revenue growth in Azure”. Systèmes rallied on the back of lifting its service provider Bytes Technology, which
A chunky earnings miss sent full-year profit target, forecasting reported a 37.6 per cent rise in gross
MarketAxess diving to the bottom of the earnings per share of €1.19 to €1.21, up invoiced income to £1.08bn for the six
S&P 500 with the bond trading platform 1 cent per share from an earlier estimate. months ended August 31.
reporting operating income of $66.9mn in A 46 per cent jump in revenue from its Behind this performance were “some
the third quarter, almost 6 per cent below 3DExperience platform, which allows large, strategically important, contract
analysts’ estimates. customers to collaborate on projects, wins” notably with the UK National
Christopher Concannon, chief helped drive an 18 per cent rise in Health Service and HM Revenue &
executive, said the group’s “quarterly subscription revenue in the third quarter. Customs, it said.
results were impacted by unusually low French luxury group Kering retreated Cab Payments, a cross-border
levels of credit spread volatility during after reporting a 13 per cent fall in specialist, was at the bottom of the mid-
the seasonally slower summer period”. revenue to €4.46bn, driven by weaker cap index for the second consecutive
Soft results from France’s Worldline hit Gucci and Saint Laurent sales, which fell session after being ensnared by a sector-
the US payments sector, punishing 14 per cent and 16 per cent, respectively. wide rout triggered by weak results from
Affirm, Block and PayPal. Ray Douglas Ray Douglas France’s Worldline. Ray Douglas
10 ★ FINANCIAL TIMES Thursday 26 October 2023

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 $

-0.96% -1.80% -0.59% -0.094% -0.328% -0.47%

0.16% 0.33% 0.14% 0.67% 0.55% 0.033% 0.230% 0.33%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Sep 26 - - Index All World Sep 26 - Oct 25 Index All World Sep 26 - Oct 25 Index All World Sep 26 - Oct 25 Index All World Sep 26 - Oct 25 Index All World Sep 26 - Oct 25 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
19,800.61 32,678.62 2,462.97
7,625.72 15,255.87
4,273.53 31,269.92
4,206.80 7,414.34 14,832.17 2,363.17
18,969.36
Day -0.96% Month -3.00% Year 9.02% Day 0.06% Month -4.05% Year -0.52% Day 0.33% Month -2.72% Year 6.81% Day 0.08% Month -2.36% Year NaN% Day 0.67% Month -3.63% Year 15.76% Day -0.85% Month -5.78% Year 5.68%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
51,107.80 9,366.90 3,215.07
13,063.61 1,774.71
12,903.30 17,466.90
48,465.89 1,731.31 17,085.33 3,078.78
8,984.80
Day -1.80% Month -2.76% Year 15.23% Day 0.74% Month -5.26% Year 0.05% Day 0.14% Month -2.98% Year 8.77% Day 0.10% Month -5.44% Year 16.98% Day 0.55% Month -5.39% Year 12.54% Day -0.17% Month -3.88% Year 3.72%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
3,125.93 66,009.15
33,618.88 115,924.61 7,074.02 28,098.88
33,195.14 113,432.04 6,915.07 2,974.11 64,049.06
27,428.60
Day 0.16% Month -2.35% Year 4.31% Day -0.30% Month -2.15% Year -1.04% Day 0.31% Month -3.75% Year 12.78% Day -0.52% Month -4.01% Year 26.39% Day 0.40% Month -5.05% Year -2.13% Day -0.81% Month -2.98% Year 7.99%

&RXQWU\ ,QGH[ /DWHVW 3UHYLRXV &RXQWU\ ,QGH[ /DWHVW 3UHYLRXV &RXQWU\ ,QGH[ /DWHVW 3UHYLRXV &RXQWU\ ,QGH[ /DWHVW 3UHYLRXV &RXQWU\ ,QGH[ /DWHVW 3UHYLRXV &RXQWU\ ,QGH[ /DWHVW 3UHYLRXV
$UJHQWLQD 0HUYDO   &\SUXV
&6(0 3*HQ   ,WDO\ )76(,WDOLD$OO6KDUH   3KLOLSSLQHV 0DQLOD&RPS   7DLZDQ :HLJKWHG3U   &URVV%RUGHU '-*OREDO7LWDQV   
$XVWUDOLD $OO2UGLQDULHV   3; &]HFK5HSXEOLF   )76(,WDOLD0LG&DS   3RODQG :LJ   7KDLODQG %DQJNRN6(7   (XUR6WR[[ (XU  
6 3$6;   20;&&RSHQDKJHQ
'HQPDUN   )76(0,%   3RUWXJDO 36,   7XUNH\ %,67   (XURQH[W,'  
6 3$6;5HV   (*; (J\SW   -DSDQ QG6HFWLRQ   36,*HQHUDO   8$( $EX'KDEL*HQHUDO,QGH[   )76(*RRG*OREDO   
$XVWULD $7;   (VWRQLD
20;7DOOLQQ   1LNNHL   5RPDQLD %(7,QGH[   8. )7   )76($OO:RUOG   
%HOJLXP %(/   )LQODQG
20;+HOVLQNL*HQHUDO   6 37RSL[   5XVVLD 0LFH[,QGH[   )76(   )76((  
%(/0LG   &$& )UDQFH   7RSL[   57;   )76(*RRG8.   )76((XURWRS  
%UD]LO ,%RYHVSD   6%)   -RUGDQ $PPDQ6(   6DXGL$UDELD 7$'$:8/$OO6KDUH,QGH[   )76($OO6KDUH   )76(*OREDO   
&DQDGD 6 376;  
*HUPDQ\ 0'$;   .HQ\D 16(   6LQJDSRUH )76(6WUDLWV7LPHV   )76(WHFK0$5.   )76(*ROG0LQ   
6 376;&RPS   7HF'$;   .XZDLW .6;0DUNHW,QGH[   6ORYDNLD 6$;   86$ '-&RPSRVLWH   )76(/DWLEH[7RS (XU  
6 376;'LY0HW 0LQ   ;(75$'D[   /DWYLD 20;5LJD   6ORYHQLD 6%,723   '-,QGXVWULDO   )76(0XOWLQDWLRQDOV   
&KLOH 6 3&/;,*3$*HQ  *UHHFH
 $WKHQV*HQ   /LWKXDQLD 20;9LOQLXV   6RXWK$IULFD )76(-6($OO6KDUH   '-7UDQVSRUW   )76(:RUOG   
&KLQD )76($   )76($6(   /X[HPERXUJ /X[;   )76(-6(5HV   '-8WLOLWLHV   )76(XURILUVW (XU  
)76(%  +RQJ.RQJ
 +DQJ6HQJ   0DOD\VLD )76(%XUVD./&,   )76(-6(7RS   1DVGDT   )76(XURILUVW (XU  
6KDQJKDL$   +6&KLQD(QWHUSULVH   0H[LFR ,3&   6RXWK.RUHD .RVSL   1DVGDT&PS   06&,$&:,)U   
6KDQJKDL%   +6&&5HG&KLS   0RURFFR 0$6,   .RVSL   1<6(&RPS   06&,$OO:RUOG   
6KDQJKDL&RPS  +XQJDU\
 %X[   1HWKHUODQGV $(;   6SDLQ ,%(;   6 3   06&,(XURSH (XU  
6KHQ]KHQ$  ,QGLD
 %6(6HQVH[   $(;$OO6KDUH   6UL/DQND &6($OO6KDUH   :LOVKLUH   06&,3DFLILF   
6KHQ]KHQ%   1LIW\   1HZ=HDODQG 1=;   6ZHGHQ 20;6WRFNKROP   9HQH]XHOD ,%&   6 3(XUR (XU  
&RORPELD &2/&$3  ,QGRQHVLD
 -DNDUWD&RPS   1LJHULD 6($OO6KDUH   20;6WRFNKROP$6   9LHWQDP 91,   6 3(XURSH (XU  
&URDWLD &52%(;  ,UHODQG
 ,6(42YHUDOO   1RUZD\ 2VOR$OO6KDUH   6ZLW]HUODQG 60,,QGH[   6 3*OREDO   
,VUDHO 7HO$YLY   3DNLVWDQ .6(   6WR[[ (XU  
F &ORVHG X 8QDYDOLDEOHá&RUUHFWLRQƆ6XEMHFWWRRIILFLDOUHFDOFXODWLRQ)RUPRUHLQGH[FRYHUDJHSOHDVHVHHZZZIWFRPZRUOGLQGLFHV$IXOOHUYHUVLRQRIWKLVWDEOHLVDYDLODEOHRQWKHIWFRPUHVHDUFKGDWDDUFKLYH

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

$0(5,&$ /21'21 (8520$5.(76 72.<2 2FW &KJ &KJ 2FW &KJ &KJ 2FW &KJ &KJ 2FW &KJ &KJ
$&7,9(672&.6 VWRFN FORVH 'D\ V $&7,9(672&.6 VWRFN FORVH 'D\ V $&7,9(672&.6 VWRFN FORVH 'D\ V $&7,9(672&.6 VWRFN FORVH 'D\ V )76( SULFH S ZHHN \WG )76( SULFH S ZHHN \WG )76(6PDOO&DS SULFH S ZHHN \WG ,QGXVWU\6HFWRUV SULFH S ZHHN \WG
WUDGHGP V SULFH FKDQJH WUDGHGP V SULFH FKDQJH WUDGHGP V SULFH FKDQJH WUDGHGP V SULFH FKDQJH :LQQHUV :LQQHUV :LQQHUV :LQQHUV
7HVOD    5HFNLWW%HQFNLVHU    5RFKH*V    1LGHF    /RQGRQ6WRFN([FKDQJH    3OXV/WG    'IV)XUQLWXUH    *HQHUDO)LQDQFLDO   
0LFURVRIW    5LR7LQWR    1HVWOH1    0LWVXELVKL8IM)LQ    &RQYDWHF    .HOOHU    6PLWKV1HZV    (OHFWULFLW\   
1YLGLD    6KHOO    8QLFUHGLW    .DZDVDNL.LVHQ.DLVKD    %DH6\VWHPV    ,QGLYLRU    +ROO\ZRRG%RZO    %HYHUDJHV   
$OSKDEHW    $VWUD]HQHFD    6DQWDQGHU    7RN\R(OHFWURQ    (QGHDYRXU0LQLQJ    LPSULQW    &W3ULYDWH(TXLW\7UXVW    *DV:DWHU 0XOWLXWLOLWLHVLQGH[   
$OSKDEHW    %S    ,QGLWH[    7R\RWD0RWRU    $GPLUDO    $M%HOO    7D\ORU0DULWLPH,QYHVWPHQWV    $HURVSDFH 'HIHQVH   
$PD]RQFRP    8QLOHYHU    1RYDUWLV1    )DVW5HWDLOLQJ&R    6VH    %DUU DJ    0DQFKHVWHU /RQGRQ,QYHVWPHQW7UXVW    1RQOLIH,QVXUDQFH   
$SSOH    *OHQFRUH    /RQ]D1    6RIWEDQN    5LR7LQWR    +LSJQRVLV6RQJV)XQG    2U\[,QW*URZWK)XQG/WG    *HQHUDO5HWDLOHUV   
0HWD3ODWIRUPV    $QJOR$PHULFDQ    $VPO+ROGLQJ    0LWVXELVKL    6HYHUQ7UHQW    )RUHVLJKW6RODU)XQG    )R[WRQV    3KDUPDFHXWLFDOV %LRWHFK   
$GYDQFHG0LFUR'HYLFHV    5HO[    $G\HQ    6XPLWRPR0LWVXL)LQ    'LDJHR    $XFWLRQ7HFKQRORJ\    1E*OREDO0RQWKO\,QFRPH)XQG    )RRG3URGXFHUV   
7KHUPR)LVKHU6FLHQWLILF    /OR\GV%DQNLQJ    'VY$V    $GYDQWHVW    &RFDFROD+EF$J    1H[WHQHUJ\6RODU)XQG    7ULSOH3RLQW6RFLDO+RXVLQJ5HLW    3HUVRQDO*RRGV   
8QLWHG8WLOLWLHV    3HQQRQ    $EUGQ'LYHUVLILHG,QFRPH$QG*URZWK    0LQLQJ   
%,**(67029(56 &ORVH 'D\ V 'D\ V %,**(67029(56 &ORVH 'D\ V 'D\ V %,**(67029(56 &ORVH 'D\ V 'D\ V %,**(67029(56 &ORVH 'D\ V 'D\ V
0HOURVH,QGXVWULHV    %ULWYLF    3HQGUDJRQ    0HGLD   
SULFH FKDQJH FKQJ SULFH FKDQJH FKQJ SULFH FKDQJH FKQJ SULFH FKDQJH FKQJ
8SV 8SV 8SV 8SV /RVHUV /RVHUV /RVHUV /RVHUV
:DVWH0DQDJHPHQW    %\WHV7HFKQRORJ\    'DVVDXOW6\VWHPHV    ,KL    5HQWRNLO,QLWLDO    &DE3D\PHQWV+ROGLQJV    2[IRUG%LRPHGLFD    5HDO(VWDWH ,QYHVWPHQW6HUYLF   
:DEWHF    1RUWK$WODQWLF6PDOOHU&RPSDQLHV,QYHVWPHQW7UXVW    $WODV&RSFR$E6HU%    6FUHHQ+ROGLQJV&R/WG    5LJKWPRYH    &HUHV3RZHU+ROGLQJV    6XSHUGU\    6XSSRUW6HUYLFHV   
5REHUW+DOI    &RDWV    +HUPHV,QWO    .DZDVDNL+HDY\,QGXVWULHV    %DUFOD\V    (QHUJHDQ    5HFRUG    $XWRPRELOHV 3DUWV   
0RRG\ V    +LSJQRVLV6RQJV)XQG    $WODV&RSFR$E6HU$    $GYDQWHVW    ([SHULDQ    6RIWFDW    6SHHG\+LUH    %DQNV   
*HQHUDO'\QDPLFV    /OR\GV%DQNLQJ    6DQWDQGHU    1LSSRQ6KHHW*ODVV    1DWZHVW    &ORVH%URWKHUV    (QTXHVW    0RELOH7HOHFRPPXQLFDWLRQV   
2FDGR    3HWV$W+RPH    &LW\2I/RQGRQ,QYHVWPHQW    5HDO(VWDWH,QYHVWPHQW7UXVWV   
'RZQV 'RZQV 'RZQV 'RZQV
6W-DPHV V3ODFH    5HQLVKDZ    :DUHKRXVH5HLW    /LIH,QVXUDQFH   
0DUNHWD[HVV+ROGLQJV    &DE3D\PHQWV+ROGLQJV    'VY$V    1LGHF   
+DUJUHDYHV/DQVGRZQ    9LVWU\    3RG3RLQW+ROGLQJV    (OHFWURQLF (OHFWULFDO(TXLS   
$OSKDEHW    2FDGR    $G\HQ    0LWVXELVKL0RWRUV   
6FKURGHUV    'RZODLV    5DQN    6RIWZDUH &RPSXWHU6HUYLFHV   
$OSKDEHW    7DUJHW+HDOWKFDUH5HLW    6DUWRULXV6WHG%LR    0   
%W    (VVHQWUD    &DSLWD    *HQHUDO,QGXVWULDOV   
$XWRPDWLF'DWD3URFHVVLQJ    &HUHV3RZHU+ROGLQJV    /RQ]D1    ,VX]X0RWRUV   
6PXUILW.DSSD    &OV+ROGLQJV    6HUDSKLP6SDFH,QYHVWPHQW7UXVW    2LO *DV3URGXFHUV   
)RUWLYH    )XWXUH    .HULQJ    )XUXNDZD(OHFWULF&R   
$QJOR$PHULFDQ    +DPPHUVRQ    3HWUD'LDPRQGV    +RXVHKROG*RRGV   
%DVHGRQWKHFRQVWLWXHQWVRIWKH6 3 %DVHGRQWKHFRQVWLWXHQWVRIWKH)76(LQGH[ %DVHGRQWKHFRQVWLWXHQWVRIWKH)76(XURILUVW(XUR]RQHLQGH[ %DVHGRQWKHFRQVWLWXHQWVRIWKH1LNNHLLQGH[
%DVHGRQODVWZHHN VSHUIRUPDQFH‚3ULFHDWVXVSHQVLRQ

CURRENCIES
'2//$5 (852 3281' '2//$5 (852 3281' '2//$5 (852 3281' '2//$5 (852 3281'
&ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V &ORVLQJ 'D\ V
2FW &XUUHQF\ 0LG &KDQJH 0LG &KDQJH 0LG &KDQJH 2FW &XUUHQF\ 0LG &KDQJH 0LG &KDQJH 0LG &KDQJH 2FW &XUUHQF\ 0LG &KDQJH 0LG &KDQJH 0LG &KDQJH 2FW &XUUHQF\ 0LG &KDQJH 0LG &KDQJH 0LG &KDQJH
$UJHQWLQD $UJHQWLQH3HVR       ,QGRQHVLD ,QGRQHVLDQ5XSLDK       3RODQG 3ROLVK=ORW\       7KUHH0RQWK      
$XVWUDOLD $XVWUDOLDQ'ROODU       ,VUDHO ,VUDHOL6KHNHO       5RPDQLD 5RPDQLDQ/HX       2QH<HDU      
%DKUDLQ %DKUDLQLQ'LQDU       -DSDQ -DSDQHVH<HQ       5XVVLD 5XVVLDQ5XEOH       8QLWHG6WDWHV 8QLWHG6WDWHV'ROODU      
%ROLYLD %ROLYLDQ%ROLYLDQR       2QH0RQWK       6DXGL$UDELD 6DXGL5L\DO       2QH0RQWK      
%UD]LO %UD]LOLDQ5HDO       7KUHH0RQWK       6LQJDSRUH 6LQJDSRUH'ROODU       7KUHH0RQWK      
&DQDGD &DQDGLDQ'ROODU       2QH<HDU       6RXWK$IULFD 6RXWK$IULFDQ5DQG       2QH<HDU      
&KLOH &KLOHDQ3HVR       .HQ\D .HQ\DQ6KLOOLQJ       6RXWK.RUHD 6RXWK.RUHDQ:RQ       9LHWQDP 9LHWQDPHVH'RQJ      
&KLQD &KLQHVH<XDQ       .XZDLW .XZDLWL'LQDU       6ZHGHQ 6ZHGLVK.URQD       (XURSHDQ8QLRQ (XUR      
&RORPELD &RORPELDQ3HVR       0DOD\VLD 0DOD\VLDQ5LQJJLW       6ZLW]HUODQG 6ZLVV)UDQF       2QH0RQWK      
&RVWD5LFD &RVWD5LFDQ&RORQ       0H[LFR 0H[LFDQ3HVR       7DLZDQ 1HZ7DLZDQ'ROODU       7KUHH0RQWK      
&]HFK5HSXEOLF &]HFK.RUXQD       1HZ=HDODQG 1HZ=HDODQG'ROODU       7KDLODQG 7KDL%DKW       2QH<HDU      
'HQPDUN 'DQLVK.URQH       1LJHULD 1LJHULDQ1DLUD       7XQLVLD 7XQLVLDQ'LQDU      
(J\SW (J\SWLDQ3RXQG       1RUZD\ 1RUZHJLDQ.URQH       7XUNH\ 7XUNLVK/LUD      
+RQJ.RQJ +RQJ.RQJ'ROODU       3DNLVWDQ 3DNLVWDQL5XSHH       8QLWHG$UDE(PLUDWHV 8$('LUKDP      
+XQJDU\ +XQJDULDQ)RULQW       3HUX 3HUXYLDQ1XHYR6RO       8QLWHG.LQJGRP 3RXQG6WHUOLQJ      
,QGLD ,QGLDQ5XSHH       3KLOLSSLQHV 3KLOLSSLQH3HVR       2QH0RQWK      
5DWHVDUHGHULYHGIURP:05HXWHUV6SRW5DWHVDQG0RUQLQJ6WDU ODWHVWUDWHVDWWLPHRISURGXFWLRQ 6RPHYDOXHVDUHURXQGHG&XUUHQF\UHGHQRPLQDWHGE\7KHH[FKDQJHUDWHVSULQWHGLQWKLVWDEOHDUHDOVRDYDLODEOHDWZZZ)7FRPPDUNHWVGDWD
UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
3URGXFHGLQFRQMXQFWLRQZLWKWKH,QVWLWXWHDQG)DFXOW\RI$FWXDULHV 2FW 2FW 2FW 2FW 2FW <U$JR +LJK /RZ <HDUWRGDWHSHUFHQWDJHFKDQJHV &ORVLQJ 'D\ V &ORVLQJ 'D\ V
e6WUOJ 'D\ V (XUR e6WUOJ e6WUOJ <HDU 'LY 3( ;' 7RWDO )7         $HURVSDFH 'HIHQVH  8WLOLWLHV  $XWRPRELOHV 3DUWV  )76( 3ULFH &KDQJH )76( 3ULFH &KDQJH
2FW FKJH ,QGH[ 2FW 2FW DJR \LHOG &RYHU UDWLR DGM 5HWXUQ )7'LY<LHOG         6RIWZDUH &RPS6HUY  %HYHUDJHV  5HDO(VW,QYHVW 6H  ,*URXS3/&   ,QWHUWHN*URXS3/&  
)76(             3(5DWLRQHW         /HLVXUH*RRGV  )76(,QGH[  &RQVXPHU*RRGV  $GPLUDO*URXS3/&   -G6SRUWV)DVKLRQ3/&  
)76(             )7KRXUO\FKDQJHV 2LO *DV3URGXFHUV  +RXVHKROG*RRGV +R  (OHFWURQLF (OHF(T  $LUWHO$IULFD3/&   .LQJILVKHU3/&  
)76(H[,QY&R                      +LJK /RZ 2LO *DV  121),1$1&,$/6,QGH[  (OHFWULFLW\  $QJOR$PHULFDQ3/&   /DQG6HFXULWLHV*URXS3/&  
)76(                        0HGLD  )76($OO^+<`6KDUH,QGH[  )76(,QGH[  $QWRIDJDVWD3/&   /HJDO *HQHUDO*URXS3/&  
)76(H[,QYHVWPHQW7UXVWV             )7FRQVWLWXHQWVDQGUHFHQWDGGLWLRQVGHOHWLRQVFDQEHIRXQGDWZZZIWFRPIW )RRG 'UXJ5HWDLOHU  3KDUPDFH %LRWHFK  7HOHFRPPXQLFDWLRQV  $VKWHDG*URXS3/&   /OR\GV%DQNLQJ*URXS3/&  
)76(+LJKHU<LHOG             )RRG3URGXFHUV  2LO(TXLSPHQW 6HUY  %HYHUDJHV  $VVRFLDWHG%ULWLVK)RRGV3/&   /RQGRQ6WRFN([FKDQJH*URXS3/&  
)76(/RZHU<LHOG             FT WILSHIRE 5000 INDEX SERIES *HQHUDO5HWDLOHUV  +HDOWK&DUH  0RELOH7HOHFRPPV  $VWUD]HQHFD3/&   0 *3/&  
)76(6PDOO&DS             &RQVWUXFW 0DWHULDO  )LQDQFLDOV  +HDOWK&DUH(T 6UY  $XWR7UDGHU*URXS3/&   0DUNV$QG6SHQFHU*URXS3/&  
)76(6PDOO&DSH[,QY&R             2FW 2FW &RQVXPHU6HUYLFHV  )L[HG/LQH7HOHFRPPV  5HDO(VW,QYHVW 7U  $YLYD3/&   0HOURVH,QGXVWULHV3/&  
)76($OO6KDUH            
)76($OO6KDUHH[,QY&R             )7:LOVKLUH  )7:LOVKLUH0LG&DS  %DQNV  3HUVRQDO*RRGV  ,QGXVWULDO0HWDOV  % 0(XURSHDQ9DOXH5HWDLO6$   0RQGL3/&  
)7:LOVKLUH  )7:LOVKLUH6PDOO&DS  7HFKQRORJ\  ,QGXVWULDO(QJ  0LQLQJ  %DH6\VWHPV3/&   1DWLRQDO*ULG3/&  
)76($OO6KDUHH[0XOWLQDWLRQDOV            
)76()OHGJOLQJ             )7:LOVKLUH0HJD&DS  )7:LOVKLUH0LFUR&DS  7UDYHO /HLVXUH  ,QGXVWULDO7UDQVSRUW  %DVLF0DWHULDOV  %DUFOD\V3/&   1DWZHVW*URXS3/&  
)7:LOVKLUH/DUJH&DS  ,QGXVWULDOV  1RQOLIH,QVXUDQFH  /LIH,QVXUDQFH  %DUUDWW'HYHORSPHQWV3/&   1H[W3/&  
)76()OHGJOLQJH[,QY&R             *DV:DWHU 0XOWL  )76(6PDOO&DS,QGH[  7REDFFR 
6RXUFH:LOVKLUH:LOVKLUH$GYLVRUV//& :LOVKLUH LVDQLQYHVWPHQWDGYLVRUUHJLVWHUHGZLWKWKH6(&)XUWKHU %HD]OH\3/&   2FDGR*URXS3/&  
)76($OO6PDOO             )LQDQFLDO6HUYLFHV  6XSSRUW6HUYLFHV  &KHPLFDOV 
LQIRUPDWLRQLVDYDLODEOHDWKWWSVZZZZLOVKLUHFRPVROXWLRQVLQGH[HV:LOVKLUHpLVDUHJLVWHUHGVHUYLFH %HUNHOH\*URXS+ROGLQJV 7KH 3/&   3HDUVRQ3/&  
)76($OO6PDOOH[,QY&R             (TXLW\,QYHVW,QVWU  7HFK+DUGZDUH (T 
PDUN&RS\ULJKWk:LOVKLUH$OOULJKWVUHVHUYHG %33/&   3HUVKLQJ6TXDUH+ROGLQJV/7'  
)76($,0$OO6KDUH            
%ULWLVK$PHULFDQ7REDFFR3/&   3KRHQL[*URXS+ROGLQJV3/&  
)76($OO6KDUH7HFKQRORJ\            
%W*URXS3/&   3UXGHQWLDO3/&  
)76($OO6KDUH7HOHFRPPXQLFDWLRQV             FTSE GLOBAL EQUITY INDEX SERIES %XQ]O3/&   5HFNLWW%HQFNLVHU*URXS3/&  
)76($OO6KDUH+HDOWK&DUH            
2FW 1RRI 86 'D\ 0WK <7' 7RWDO
<7' *U'LY 2FW 1RRI 86 'D\ 0WK <7' 7RWDO <7' *U'LY %XUEHUU\*URXS3/&   5HO[3/&  
)76($OO6KDUH)LQDQFLDOV            
5HJLRQV FRXQWULHV VWRFNV LQGLFHV    UHWQ
 <LHOG 6HFWRUV VWRFNV LQGLFHV    UHWQ  <LHOG &HQWULFD3/&   5HQWRNLO,QLWLDO3/&  
)76($OO6KDUH5HDO(VWDWH            
)76(*OREDO$OO&DS      
  2LO(TXLSPHQW 6HUYLFHV         &RFD&ROD+EF$*   5LJKWPRYH3/&  
)76($OO6KDUH&RQVXPHU'LVFUHWLRQDU\            
)76(*OREDO$OO&DS      
  %DVLF0DWHULDOV         &RPSDVV*URXS3/&   5LR7LQWR3/&  
)76($OO6KDUH&RQVXPHU6WDSOHV            
)76(*OREDO/DUJH&DS      
  &KHPLFDOV         &RQYDWHF*URXS3/&   5ROOV5R\FH+ROGLQJV3/&  
)76($OO6KDUH,QGXVWULDOV            
)76(*OREDO0LG&DS      
  )RUHVWU\ 3DSHU         &URGD,QWHUQDWLRQDO3/&   5V*URXS3/&  
)76($OO6KDUH%DVLF0DWHULDOV            
)76(*OREDO6PDOO&DS      
  ,QGXVWULDO0HWDOV 0LQLQJ         'FF3/&   6DJH*URXS3/&  
)76($OO6KDUH(QHUJ\            
)76($OO:RUOG       0LQLQJ         'HFKUD3KDUPDFHXWLFDOV3/&   6DLQVEXU\ - 3/&  
)76($OO6KDUH8WLOLWLHV            
)76(:RUOG      
  ,QGXVWULDOV         'LDJHR3/&   6FKURGHUV3/&  
)76($OO6KDUH6RIWZDUHDQG&RPSXWHU6HUYLFHV            
)76(*OREDO$OO&DSH[81,7('.,1*'20,Q      
  &RQVWUXFWLRQ 0DWHULDOV         'LSORPD3/&   6FRWWLVK0RUWJDJH,QYHVWPHQW7UXVW3/&  
)76($OO6KDUH7HFKQRORJ\+DUGZDUHDQG(TXLSPHQW            
)76(*OREDO$OO&DSH[86$       $HURVSDFH 'HIHQVH         (QGHDYRXU0LQLQJ3/&   6HJUR3/&  
)76($OO6KDUH7HOHFRPPXQLFDWLRQV(TXLSPHQW            
)76(*OREDO$OO&DSH[-$3$1      
  *HQHUDO,QGXVWULDOV         (QWDLQ3/&   6HYHUQ7UHQW3/&  
)76($OO6KDUH7HOHFRPPXQLFDWLRQV6HUYLFH3URYLGHUV            
)76(*OREDO$OO&DSH[(XUR]RQH      
  (OHFWURQLF (OHFWULFDO(TXLSPHQW         ([SHULDQ3/&   6KHOO3/&  
)76($OO6KDUH+HDOWK&DUH3URYLGHUV            
)76('HYHORSHG      
  ,QGXVWULDO(QJLQHHULQJ         ) &,QYHVWPHQW7UXVW3/&   6PLWK 1HSKHZ3/&  
)76($OO6KDUH0HGLFDO(TXLSPHQWDQG6HUYLFHV            
)76('HYHORSHG$OO&DS      
  ,QGXVWULDO7UDQVSRUWDWLRQ         )OXWWHU(QWHUWDLQPHQW3/&   6PLWK 'V 3/&  
)76($OO6KDUH3KDUPDFHXWLFDOVDQG%LRWHFKQRORJ\            
)76('HYHORSHG/DUJH&DS      
  6XSSRUW6HUYLFHV         )UDVHUV*URXS3/&   6PLWKV*URXS3/&  
)76($OO6KDUH%DQNV            
)76('HYHORSHG(XURSH/DUJH&DS       &RQVXPHU*RRGV         )UHVQLOOR3/&   6PXUILW.DSSD*URXS3/&  
)76($OO6KDUH)LQDQFHDQG&UHGLW6HUYLFHV            
)76('HYHORSHG(XURSH0LG&DS       $XWRPRELOHV 3DUWV         *OD[RVPLWKNOLQH3/&   6SLUD[6DUFR(QJLQHHULQJ3/&  
)76($OO6KDUH,QYHVWPHQW%DQNLQJDQG%URNHUDJH6HUYLFHV            
)76('HY(XURSH6PDOO&DS      
  %HYHUDJHV         *OHQFRUH3/&   6VH3/&  
)76($OO6KDUH&ORVHG(QG,QYHVWPHQWV            
)76(1RUWK$PHULFD/DUJH&DS      
  )RRG3URGXFHUV         +DOHRQ3/&   6W-DPHV V3ODFH3/&  
)76($OO6KDUH/LIH,QVXUDQFH            
)76(1RUWK$PHULFD0LG&DS      
  +RXVHKROG*RRGV +RPH&RQVWUXFWLRQ         +DOPD3/&   6WDQGDUG&KDUWHUHG3/&  
)76($OO6KDUH1RQOLIH,QVXUDQFH            
)76(1RUWK$PHULFD6PDOO&DS      
  /HLVXUH*RRGV         +DUJUHDYHV/DQVGRZQ3/&   7D\ORU:LPSH\3/&  
)76($OO6KDUH5HDO(VWDWH,QYHVWPHQWDQG6HUYLFHV            
)76(1RUWK$PHULFD       3HUVRQDO*RRGV         +LNPD3KDUPDFHXWLFDOV3/&   7HVFR3/&  
)76($OO6KDUH5HDO(VWDWH,QYHVWPHQW7UXVWV            
)76('HYHORSHGH[1RUWK$PHULFD       7REDFFR         +RZGHQ-RLQHU\*URXS3/&   8QLOHYHU3/&  
)76($OO6KDUH$XWRPRELOHVDQG3DUWV            
)76(-DSDQ/DUJH&DS       +HDOWK&DUH         +6%&+ROGLQJV3/&   8QLWH*URXS3/&  
)76($OO6KDUH&RQVXPHU6HUYLFHV            
)76(-DSDQ0LG&DS       +HDOWK&DUH(TXLSPHQW 6HUYLFHV         ,PL3/&   8QLWHG8WLOLWLHV*URXS3/&  
)76($OO6KDUH+RXVHKROG*RRGVDQG+RPH&RQVWUXFWLRQ            
)76(*OREDOZL-$3$16PDOO&DS       3KDUPDFHXWLFDOV %LRWHFKQRORJ\         ,PSHULDO%UDQGV3/&   9RGDIRQH*URXS3/&  
)76($OO6KDUH/HLVXUH*RRGV            
)76(-DSDQ       &RQVXPHU6HUYLFHV         ,QIRUPD3/&   :HLU*URXS3/&  
)76($OO6KDUH3HUVRQDO*RRGV            
)76($VLD3DFLILF/DUJH&DSH[-DSDQ      
  )RRG 'UXJ5HWDLOHUV         ,QWHUFRQWLQHQWDO+RWHOV*URXS3/&   :KLWEUHDG3/&  
)76($OO6KDUH0HGLD            
)76($VLD3DFLILF0LG&DSH[-DSDQ      
  *HQHUDO5HWDLOHUV         ,QWHUQDWLRQDO&RQVROLGDWHG$LUOLQHV*URXS6$   :SS3/&  
)76($OO6KDUH5HWDLOHUV            
)76($OO6KDUH7UDYHODQG/HLVXUH             )76($VLD3DFLILF6PDOO&DSH[-DSDQ       0HGLD        
)76($VLD3DFLILF([-DSDQ      
  7UDYHO /HLVXUH        
)76($OO6KDUH%HYHUDJHV 
)76($OO6KDUH)RRG3URGXFHUV 


     
     


  
   )76((PHUJLQJ$OO&DS      
  7HOHFRPPXQLFDWLRQ         UK STOCK MARKET TRADING DATA
)76($OO6KDUH7REDFFR             )76((PHUJLQJ/DUJH&DS      
  )L[HG/LQH7HOHFRPPXQLDWLRQV         2FW 2FW 2FW 2FW 2FW <U$JR
)76($OO6KDUH&RQVWUXFWLRQDQG0DWHULDOV             )76((PHUJLQJ0LG&DS      
  0RELOH7HOHFRPPXQLFDWLRQV         2UGHU%RRN7XUQRYHU P      
)76($OO6KDUH$HURVSDFHDQG'HIHQVH             )76((PHUJLQJ6PDOO&DS      
  8WLOLWLHV         2UGHU%RRN%DUJDLQV      
)76($OO6KDUH(OHFWURQLFDQG(OHFWULFDO(TXLSPHQW             )76((PHUJLQJ(XURSH       (OHFWULFLW\         2UGHU%RRN6KDUHV7UDGHG P      
)76($OO6KDUH*HQHUDO,QGXVWULDOV             )76(/DWLQ$PHULFD$OO&DS      
  *DV:DWHU 0XOWLXWLOLWLHV         7RWDO(TXLW\7XUQRYHU eP      
)76($OO6KDUH,QGXVWULDO(QJLQHHULQJ             )76(0LGGOH(DVWDQG$IULFD$OO&DS      
  )LQDQFLDOV         7RWDO0NW%DUJDLQV      
)76($OO6KDUH,QGXVWULDO6XSSRUW6HUYLFHV             )76(*OREDOZL81,7('.,1*'20$OO&DS,Q       %DQNV         7RWDO6KDUHV7UDGHG P      
)76($OO6KDUH,QGXVWULDO7UDQVSRUWDWLRQ             )76(*OREDOZL86$$OO&DS      
  1RQOLIH,QVXUDQFH         ‚([FOXGLQJLQWUDPDUNHWDQGRYHUVHDVWXUQRYHU 8.RQO\WRWDODWSPÁ8.SOXVLQWUDPDUNHWWXUQRYHU X 8QDYDOLDEOH
)76($OO6KDUH,QGXVWULDO0DWHULDOV             )76((XURSH$OO&DS       /LIH,QVXUDQFH         F 0DUNHWFORVHG
)76($OO6KDUH,QGXVWULDO0HWDOVDQG0LQLQJ             )76((XUR]RQH$OO&DS       )LQDQFLDO6HUYLFHV        
)76($OO6KDUH3UHFLRXV0HWDOVDQG0LQLQJ             )76(('+(&5LVN(IILFLHQW$OO:RUOG       7HFKQRORJ\        
)76($OO6KDUH&KHPLFDOV             )76(('+(&5LVN(IILFLHQW'HYHORSHG(XURSH       6RIWZDUH &RPSXWHU6HUYLFHV         $OOGDWDSURYLGHGE\0RUQLQJVWDUXQOHVVRWKHUZLVHQRWHG$OOHOHPHQWVOLVWHGDUHLQGLFDWLYHDQGEHOLHYHG
)76($OO6KDUH2LO*DVDQG&RDO             2LO *DV       7HFKQRORJ\+DUGZDUH (TXLSPHQW         DFFXUDWHDWWKHWLPHRISXEOLFDWLRQ1RRIIHULVPDGHE\0RUQLQJVWDURUWKH)77KH)7GRHVQRWZDUUDQWQRU
2LO *DV3URGXFHUV       $OWHUQDWLYH(QHUJ\         JXDUDQWHHWKDWWKHLQIRUPDWLRQLVUHOLDEOHRUFRPSOHWH7KH)7GRHVQRWDFFHSWUHVSRQVLELOLW\DQGZLOOQRWEH
)76(6HFWRU,QGLFHV 5HDO(VWDWH,QYHVWPHQW 6HUYLFHV        
1RQ)LQDQFLDOV             OLDEOHIRUDQ\ORVVDULVLQJIURPWKHUHOLDQFHRQRUXVHRIWKHOLVWHGLQIRUPDWLRQ
5HDO(VWDWH,QYHVWPHQW7UXVWV        
)RUDOOTXHULHVHPDLOIWUHDGHUHQTXLULHV#PRUQLQJVWDUFRP
)76(*OREDO/DUJH&DS        
+RXUO\PRYHPHQWV          +LJKGD\ /RZGD\ 7KH)76(*OREDO(TXLW\6HULHVODXQFKHGLQFRQWDLQVWKH)76(*OREDO6PDOO&DS,QGLFHVDQGEURDGHU)76(*OREDO$OO&DS,QGLFHV ODUJHPLGVPDOOFDS DVZHOODVWKHHQKDQFHG)76($OO:RUOGLQGH[6HULHV ODUJH
)76(            PLGFDS SOHDVHVHHKWWSVUHVHDUFKIWVHUXVVHOOFRP3URGXFWVLQGLFHV+RPHLQGH[ILOWHUJHLV"LQGH[1DPH *(,6$& FXUUHQF\ 86' UWQ &$3 VHJPHQW JOREDOGHYHORSHGÙHPHUJLQJ7KHWUDGHQDPHV)XQGDPHQWDO,QGH[p 'DWDSURYLGHGE\0RUQLQJVWDU_ZZZPRUQLQJVWDUFRXN
)76(            DQG5$),pDUHUHJLVWHUHGWUDGHPDUNVDQGWKHSDWHQWHGDQGSDWHQWSHQGLQJSURSULHWDU\LQWHOOHFWXDOSURSHUW\RI5HVHDUFK$IILOLDWHV//& 863DWHQW1RV3DWHQW3HQGLQJ3XEO
)76(6PDOO&DS            1RV86$86$86$86$:2:2$:2(31DQG+. ß('+(&ŒßLVDWUDGHPDUN
)76($OO6KDUH            RI('+(&%XVLQHVV6FKRRO$VRI-DQXDU\QG)76(LVEDVLQJLWVVHFWRULQGLFHVRQWKH,QGXVWULDO&ODVVLILFDWLRQ%HQFKPDUNSOHDVHVHHZZZIWVHFRPLFE)RUFRQVWLWXHQWFKDQJHVDQGRWKHULQIRUPDWLRQDERXW)76(
7LPHRI)76('D\ VKLJK'D\ V/RZ)76(+LJK  /RZ  SOHDVHVHHZZZIWVHFRPk)76(,QWHUQDWLRQDO/LPLWHG$OO5LJKWVUHVHUYHGß)76(pßLVDWUDGHPDUNRIWKH/RQGRQ6WRFN([FKDQJH*URXSFRPSDQLHVDQGLVXVHGE\)76(,QWHUQDWLRQDO/LPLWHGXQGHUOLFHQFH
7LPHRI)76($OO6KDUH'D\ VKLJK'D\ V/RZ)76(+LJK  /RZ 
)XUWKHULQIRUPDWLRQLVDYDLODEOHRQKWWSZZZIWVHFRPk)76(,QWHUQDWLRQDO/LPLWHG$OO5LJKWVUHVHUYHGß)76(pßLVDWUDGHPDUNRIWKH
/RQGRQ6WRFN([FKDQJH*URXSFRPSDQLHVDQGLVXVHGE\)76(,QWHUQDWLRQDO/LPLWHGXQGHUOLFHQFHá6HFWRU3(UDWLRVJUHDWHUWKDQDUHQRWVKRZQ
)RUFKDQJHVWR)76()OHGJOLQJ,QGH[FRQVWLWXHQWVSOHDVHUHIHUWRZZZIWVHFRPLQGH[FKDQJHVâ9DOXHVDUHQHJDWLYH

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

$PRXQW /DWHVW &RPSDQ\ 7XUQRYHU 3UHWD[ (36 S 'LY S 3D\GD\ 7RWDO ,VVXH ,VVXH 6WRFN &ORVH 0NW
,VVXH SDLG UHQXQ FORVLQJ %\WHV7HFKQRORJ\*URXS ,QW         'HF   GDWH SULFH S 6HFWRU FRGH 6WRFN SULFH S  +LJK /RZ &DS eP
SULFH XS GDWH +LJK /RZ 6WRFN 3ULFHS RU &ORXGEUHDN'LVFRYHU\ 3UH   / / / /     
7KHUHDUHFXUUHQWO\QRULJKWVRIIHUVE\DQ\FRPSDQLHVOLVWHGRQWKH/6( )'7HFKQRORJLHV ,QW   /  /      
)LVNH 3UH           
*DWWDFD 3UH    /  /   'HF  
+LGRQJ(VWDWH ,QW           
/HHGV*URXS 3UH   / /       
/OR\GV%DQNLQJ*URXS UG           
/OR\GV%DQNLQJ*URXS 3UH           
2QHLUR(QHUJ\ ,QW   / / /     
6F6*URXS 3UH         'HF  
6RIWFDW 3UH         'HF  
9LUJLQ:LQHV8. 3UH   /  /      
:LOGFDW3HWUROHXP 3UH   / / / /     

Figures in £m. Earnings shown basic. Figures in light text are for corresponding period year earlier. †Placing price. *Intoduction. ÁWhen issued. Annual report/prospectus available at www.ft.com/ir
For more information on dividend payments visit www.ft.com/marketsdata For a full explanation of all the other symbols please refer to London Share Service notes.
Thursday 26 October 2023 ★ FINANCIAL TIMES 11

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

:HHN :HHN :HHN :HHN :HHN :HHN
6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP 6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP 6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP 6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP 6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP 6WRFN 3ULFH 'D\&KJ +LJK /RZ <OG 3( 0&DSP
$XVWUDOLD $ )LQODQG é 'HQVR        5LFKHPRQW        %ULVWRO0\HUV        /LQGH       
$1=%DQN        1RNLD        (DVW-S5Z\        5RFKH        %URDGFRP        /RFNKHHG       
%+3*URXS        6DPSR$        )DQXF        6ZLVV5H        &DGHQFH'HVLJQ        /RZHVƇ       
&PZ%N$X        )UDQFH é )DVW5HWDLO        6ZLVVFRP        &DS2QH        /\RQGHOO       
&6/        $LUEXV*USH        )XML+Y\,QG        8%6        &DUGLQDO+OWK        0DUDWKRQ3WO       
1DW$XV%N        $LU/LTXLGH        +LWDFKL        =XULFK)LQ        &DUQLYDO        0DUVK 0       
7HOVWUD        $;$        +RQGD0WU        7DLZDQ 17 &DWHUSLOODU        0DVWHU&DUG       
:HVIDUPHUV        %133DULE        -DSDQ7RE        &KXQJKZD7HOHFRP        &HQWHQH&RUS        0F'RQDOG V       
:HVWSDF%DQN        &KULVWLDQ'LRU        .'',        )RUPRVD3HW&KHP        &KDUOHV6FK        0F.HVVRQ       
:RROZRUWKV        &UHG$JU        .H\HQFH        +RQ+DL3UF        &KDUWHU&RPPV        0HGWURQLF       
%HOJLXP é 'DQRQH        0LWVE&S        0HGLD7HN        &KHYURQ&RUS        0HUFN       
$Q%VK,Q%Y        (')        0LWVXE(VW        7DLZDQ6HP        &KLSRWOH0H[LF        0HWD       
.%&*US        (QJLH6$        0LWVXELVKL(OH        &KXEE        0HWOLIH       
7KDLODQG 7+%
(VVLORU/X[RWWLFD        0LWVXL)XG        &LJQD        0LFURVRIW      
%UD]LO 5 377([SORU       
+HUPHV,QWO        0LW8)-)LQ        &LQWDV&RUS        0QVWU%YUJ       
$PEHY        8QLWHG$UDE(PLUDWHV 'KV
/2UHDO        0L]XKR)LQ        &LVFR        0RQGHOH],QW       
%UDGHVFR        (PLUWHVWHOH       
/90+        0XUDWD0IJ        &LWLJURXS        0RQVDQWR       
&LHOR       
2UDQJH        1LSSRQ77        8QLWHG.LQJGRP S &0(*US        0RUJDQ6WO\       
,WDX+OG)LQ       
3HUQRG5LF        1LVVDQ0W        $QJOR$PHULFDQ        &RFD&ROD        1HWIOL[       
3HWUREUDV       
5HQDXOW        1RPXUD        $VF%U)G        &RJQL]DQW        1H[W(UD(       
9DOH       
6DIUDQ        1SSQ6WO        $VWUD=HQ        &ROJW3OPƇ        1LNH       
&DQDGD & 3DQDVRQLF        $YLYD        &RPFDVW        1RUIRON6       
6DQRIL       
%DXVFK+OWK        6HYHQ ,        %DUFOD\V        &RQRF3KLO        1RUWKURS       
6DQW*EQ       
%&(        6KQ(WVX&K        %3        &RQVWHOODWLRQ       1;3       
6FKQHLGHU       
%N0RQWUO        6RIWEDQN        %U$P7RE        &RUQLQJ        2FFLG3HW       
6RF*HQ       
%N1YD6Ƈ        6RQ\        %7        &RUWHYD        2UDFOHƇ       
7RWDO       
%URRNILHOG        6XPLWRPR)        &RPSDVV        &RUWHYD        3HSVLFR       
8QLEDLO5       
&DQDG3F5        7DNHGD3K        'LDJHR        &RVWFR        3HUULJR       
9LQFL       
&DQ,PSƇ        7RNLR0DULQH        *OD[R6PK        &URZQ&VWO        3IL]HU       
9LYHQGL       
&DQ1DW5V        7R\RWD        *OHQFRUH        &6;        3KLOOLSV       
&DQ1DW5\        *HUPDQ\ é
0H[LFR 0H[ +6%&        &96        3KLO0RUULV       
(QEULGJH        $OOLDQ]       
$PHU0YO        ,PSHULDO%UDQGV        'DQDKHUƇ        31&)LQ       
*W:HV/LI        %$6)       
)(06$8%'        -DUGLQH0DWKHV        'HHUHƇ        33*,QGV       
,PS2LO        %D\HU       
:DO0UW0H[        /O\GV%NJ        'HOWD        3URFW*PEO       
0DQXOLIH        %0:       
/6(*URXS        'HYRQ(QHUJ\        3UXGQWO       
1XWULHQ        &RQWLQHQWDO        1HWKHUODQGV é
1DWO*ULG        'LJLWDO5HDOW\        3XEO6WRU       
5\O%N&Ƈ        'HXW%DQN        $60/+OG       
1DWZHVW*URXS        'LVF)LQ6HUY        4XDOFRPP       
6+23        'HXW7ONP        +HLQHNHQ       
3UXGHQWLDO        'LVQH\        5D\WKHRQ       
6XQFRU(Q        'HXWV3RVW        ,1*       
5HFNLWW%        'ROODU*HQHUDO        5HJHQ3KDUP       
7KP5HXW        (21        8QLOHYHU       
5(/;        'RPLQ5HV        6 3*OREDO       
7QWR'RPƇ        )UHVHQLXV0HG        1RUZD\ .U 5LR7LQWR        'XNH(QHU        6DOHVIRUFH       
7UQ&DQ        )UHVHQLXV6(        '1%        5ROOV5R\FH        'X3RQW        6FKOPEUJ       
+HQNHO.JD$        (TXLQRU       
&KLQD +. 6KHOO3/&        (DWRQ        6HPSUD(QHUJ\       
/LQGH        7HOHQRU       
$JULF%N&K        6WDQG&K        H%D\        6KUZLQ:LOO       
0HUFHGHV%HQ]       
%N&KLQD        4DWDU 45 7HVFR        (FRODE        6LPRQ3URS       
0XHQFK5NY       
%NRI&RPP        4DWDU1W%N        8QLOHYHU        (GZDUGV/LIHVF        6RXWK&SU       
6$3       
%2(7HFK        6DXGL$UDELD 65 9RGDIRQH        (OHYDQFH        6WDUEXFNV       
6LHPHQV       
&K&RPV&RQV        $O5DMKL%QN        :33        (OL/LOO\        6WDWH6W       
9RONVZJQ       
&K(YUEUJKW        1DWQOFRPEQN        8QLWHG6WDWHVRI$PHULFD  (PHUVRQ        6WU\NHU       
&K5DLO&RQV        +RQJ.RQJ +. (2*5HV        6\FKURQ\)LQ       
6DXGL%DVLF        VW&)R[$       
&K5DLO*S        $,$        (TXLQL[        70RELOH86       
6DXGL7HOHF        0       
&K&RQVW%N        %2&+ROG        (TXLW\5HV73        7DUJHW       
6LQJDSRUH 6 $EERWW/E       
&KLQD9DQNH        &K26/QG ,QY        ([HORQ        7(&RQQHFW       
'%6        $EEYLHƇ       
&KLQD&LWLF        &KQJ.QJ        ([[RQ0E        7HVOD0WUV       
-DUGQ0W86        $FFHQWXUH       
&KLQD/LIH        &LWLF/WGƇ        )HGH[        7H[DV,QVWU       
2&%&        $FWLYLVLRQ%OL       
&KLQD0%DQN        &LWLF6HFV        )LGHOLW\1,6        7KH7UYHOHUV       
6LQJ7HO        $GREH       
&KLQD0RE        &.+XWFKLVRQ        )LVHUY        7KUPR)VKU       
82%        $GYDQFHG0LFUR       
&KLQD3F,QV        &122&        )RUG0WU        7-;&RV       
$(3       
&K0LQVKHQJ        +DQJ6HQJ        6RXWK$IULFD 5 )UDQNOLQ        7UXLVW)LQDQFLDO&RUS       
$IODF       
&K0UFK6HFV        +.([F &OU        )LUVWUDQG        *HQ'\Q        7ZLWWHU       
$LU3URG       
&KQD8WG&RPV        075        071*US        *HQ(OHFWULF        8QLRQ3DF       
$OOVWDWH       
&K6KHQ(J\        6DQGV&K        1DVSHUV1       *HQ0LOOV        836       
$OSKDEHW       
&K6KSEOGQJ        6+.3URSV        6RXWK.RUHD .5: *HQ0RWRUV        86%DQFRUS       
$OWULD       
&K6W&RQ(QJ        7HQFHQW        +\XQG0RELV        *LOHDG6FL        8WG+OWKFUH       
$PD]RQ      
&K8QF+.        ,QGLD 5V .RUHD(OH3ZU        $PHU$LU        *ROGP6FKV        9DOHUR(QJ\       
&11&,QWO        %KDUWLDUWO        6.+\QL[        $PHU([SU        +DOOLEXUWRQ        9HUL]RQƇ       
&65        +')&%N        6PVXQJ(O        $PHU,QW*US        +&$+ROG        9HUWH[3KDUP       
'DTLQ        +LQG8QLOHYU        6SDLQ é $PHU7RZHU        +HZ3DFN        9)&S       
*XRVHQ6HF        +VQJ'HY)LQ        %%9$        $PJHQ        +LOWRQ:RUOGZL        9LVD,QF       
+DLWRQJ6HFV        ,&,&,%N        %FR6DQWGU        $PSKHQRO&RUS        +LOWRQ:ZGH        :DOJUHHQ       
+QJ]K+LN9'7        ,QIRV\V        &DL[D%QN        $QDORJ'HYLFHV        +RPH'HS        :DO0DUW6WR       
+XQQJ3ZU        ,7&        ,EHUGUROD        $RQ&S        +RQ\ZHOO        :DOW'LVQH\       
,0%DRWRX6WO        / 7        ,QGLWH[        $SSOH       +XPDQD,QFƇ        :DVWH0DQDJH       
,Q &P%N&K        2LO1DW*DV        5HSVRO        $SSOLHG0DWHUL        ,%0        :HOOV)DUJR       
,QGVWUO%N        5HOLDQFH,Q        7HOHIRQLFD        $SWLY        ,'(;;/DERUDWR        :LOOLDPV&RV       
.ZHLFKRZ        6%,1HZ$        6ZHGHQ 6.U $UFKHU'DQ        ,OOLQRLV7RRO        :RUNGD\       
0LGHD        6XQ3KUP,QGV        $WODV&SFR%        $7 7        ,OOXPLQD        <XP%UQGV       
1HZ&K/LIH,QV        7DWD&RQV        (ULFVVRQ        $XWRGHVN        ,QWFQWO([FK        =RHWLV       
3HWUR&KLQDƇ        ,VUDHO ,/6 + 0        $XWRP'DWD        ,QWHO       =RRP       
3LQJ$Q,QV        7HYD3KD        ,QYHVWRU        $XWR=RQH        ,QWXLW        9HQH]XHOD 9()
3QJ$Q%QN        1RUGHD%N        $YDJR7HFK        -RKQ -RKQ        %FRGH9Q]OD       
,WDO\ é
3ZU&RQV&RUS        6(%        %DNHU+X        -RKQVRQ&Q        %FR3URYQFO       
(QHO       
6DLF0WU        6YQVND+Q        %DQNRI1<        -30UJQ&K       
(1,       
6KHQZDQ+RQJ        6ZHGEDQN        %DQN$P        .LPE&ODUN        &ORVLQJSULFHVDQGKLJKV ORZVDUHLQWUDGHGFXUUHQF\ ZLWKYDULDWLRQVIRUWKDW
*HQHUDOL       
6KJ3GJ%N        7HOLD&R        %D[WHU        .LQGHU0        FRXQWU\LQGLFDWHGE\VWRFN PDUNHWFDSLWDOLVDWLRQLVLQ86'+LJKV ORZVDUH
,QW63DROR       
6LQRSHF&RUS        9ROYR        %HFWRQ'LFN        ./$&RUS        EDVHGRQLQWUDGD\WUDGLQJRYHUDUROOLQJZHHNSHULRG
8QLFUHG       
6LQRSHF2LO        %HUNVK+DW       .UDIW+HLQ]        ƇH[GLYLGHQG
-DSDQ g 6ZLW]HUODQG 6)U .URJHU       
'HQPDUN NU
$VWHOODV3K        $%%       
%LRJHQ        ŶH[FDSLWDOUHGLVWULEXWLRQ
'DQVNH%N        %ODFN5RFN        /DV9HJDV6G        SULFHDWWLPHRIVXVSHQVLRQ
%ULGJHVWQH        &UHG6XLVVH        /LEHUW\*EO       
0ROOHU0UVN        %RHLQJ       
&DQRQ        1HVWOH        /LOO\ (       
1RYR%        %RRNLQJ+ROGLQJV       
&QW-S5Z\        1RYDUWLV       

FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE
&ORVH 3UHY 'D\ :HHN 0RQWK &ORVH 3UHY 'D\ :HHN 0RQWK 'D\ V 0WK V 6SUHDG 'D\ V 0WK V 6SUHDG
SULFH SULFH FKDQJH FKDQJH FKDQJH FKDQJH FKDQJH SULFH SULFH FKDQJH FKDQJH FKDQJH FKDQJH FKDQJH 5HG 5DWLQJV %LG %LG FKJH FKJH YV 5HG 5DWLQJV %LG %LG FKJH FKJH YV
1HWIOL[        &K8QF+.        2FW GDWH &RXSRQ 6 0 ) SULFH \LHOG \LHOG \LHOG 86 2FW GDWH &RXSRQ 6 0 ) SULFH \LHOG \LHOG \LHOG 86
9HUL]RQ        &KLQD/LIH        +LJK<LHOG86 86
/DV9HJDV6G        'LVF)LQ6HUY        +&$,QF   %% %D %%      )OHHW%RVWRQ)LQDQFLDO&RUS   %%% %DD $     
3HUQRG5LF        %DUFOD\V        +LJK<LHOG(XUR 7KH*ROGPDQ6DFKV*URXS,QF   %%% $ $     
$7 7        $XWRP'DWD        $OGHVD)LQDQFLDO6HUYLFHV6$     %      1DWLRQV%DQN&RUS   %%% %DD $     
5D\WKHRQ        7HVOD0WUV        *7(//&   %%% %DD $     
+HUPHV,QWO        &KQD8WG&RPV        (PHUJLQJ86 8QLWHG8WLOLWLHV3/&   %%% %DD $     
1H[W(UD(        '1%        3HUX   %%% $ %%%      %DUFOD\V%DQNSOF   $ $ $     
*HQ(OHFWULF        3XEO6WRU        &RORPELD    %DD %%%     
%UD]LO    %D %%      (XUR
/2UHDO        6(%        (OHFWULFLWHGH)UDQFH (')   $ $ $     
+QJ]K+LN9'7        9RONVZJQ        3RODQG    $ $     
0H[LFR    %DD %%%      7KH*ROGPDQ6DFKV*URXS,QF   %%% $ $     
&RFD&ROD        5HQDXOW        7KH*ROGPDQ6DFKV*URXS,QF   %%% $ $     
:DVWH0DQDJH        1DWZHVW*URXS        7XUNH\    %D %%     
7XUNH\    % %%      )LQODQG   $$ $D $$     
(VVLORU/X[RWWLFD        1XWULHQ       
3HUX   %%% $ %%%      <HQ
*HQ0LOOV        7KUPR)VKU       
5XVVLD    %DD %%%      0H[LFR    %DD %%%     
0RQGHOH],QW        $OSKDEHW       
+HLQHNHQ        +DOOLEXUWRQ        %UD]LO    %D %%      e6WHUOLQJ
/6(*URXS        &DQ,PS        (PHUJLQJ(XUR LQQRJ\)LQ%9   %%% %DD $     
'ROODU*HQHUDO        6ZHGEDQN        %UD]LO   %% %D %%      LQQRJ\)LQ%9   %%% %DD $     
&QW-S5Z\        +DQJ6HQJ        0H[LFR   %%% $ %%%      ,QWHUDFWLYH'DWD3ULFLQJDQG5HIHUHQFH'DWD//&DQ,&('DWD6HUYLFHVFRPSDQ\86GHQRPLQDWHGERQGV1<FORVHDOORWKHU/RQGRQ
0H[LFR    %DD %%%      FORVH 66WDQGDUG 3RRUÜV00RRG\ÜV))LWFK
%DVHGRQWKH)7*OREDOFRPSDQLHVLQORFDOFXUUHQF\ %DVHGRQWKH)7*OREDOFRPSDQLHVLQORFDOFXUUHQF\
%XOJDULD   %%% %DD %%%     
,QWHUDFWLYH'DWD3ULFLQJDQG5HIHUHQFH'DWD//&DQ,&('DWD6HUYLFHVFRPSDQ\86GHQRPLQDWHGERQGV1<FORVHDOO
RWKHU/RQGRQFORVH 66WDQGDUG 3RRUÜV00RRG\ÜV))LWFK

INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET
2FW 5DWH &XUUHQW 6LQFH /DVW 'D\ V 0RQWK V <HDU 5HWXUQ 5HWXUQ 2FW 'D\&KQJ 3UHY ZNKLJK ZNORZ 5HG &KDQJHLQ<LHOG :HHN $PQW
86 )HG)XQGV    ,QGH[ FKDQJH FKDQJH FKDQJH PRQWK \HDU 9,;      2FW 3ULFHe <LHOG 'D\ :HHN 0RQWK <HDU +LJK /RZ eP
86 3ULPH    0DUNLW,%R[[ 9;'              
86 'LVFRXQW    $%)3DQ$VLDXQKHGJHG       9;1              
(XUR 5HSR    &RUSRUDWHV e       9'$;      7USF          
8. 5HSR    &RUSRUDWHV é       ‚&%2(9,;6 3LQGH[2SWLRQV9RODWLOLW\9;''-,$,QGH[2SWLRQV9RODWLOLW\9;11$6'$4,QGH[2SWLRQV9RODWLOLW\ 7USF          
-DSDQ 2 QLJKW&DOO    (XUR]RQH6RY é       Á'HXWVFKH%RUVH9'$;'$;,QGH[2SWLRQV9RODWLOLW\ 7USF          
6ZLW]HUODQG /LERU7DUJHW    *LOWV e       7USF          
2YHUDOO e       BONDS: BENCHMARK GOVERNMENT 7USF          
INTEREST RATES: MARKET 2YHUDOO é       5HG %LG %LG 'D\FKJ :NFKJ 0RQWK <HDU 7USF          
2YHU &KDQJH 2QH 7KUHH 6L[ 2QH )76( 'DWH &RXSRQ 3ULFH <LHOG \LHOG \LHOG FKJ\OG FKJ\OG 7USF          
2FW /LERU2FW QLJKW 'D\ :HHN 0RQWK PRQWK PRQWK PRQWK \HDU 6WHUOLQJ&RUSRUDWH e       $XVWUDOLD        7USF          
86/LERU         (XUR&RUSRUDWH é               7USF          
(XUR/LERU         (XUR(PHUJLQJ0NWV é               7USF          
e/LERU         (XUR]RQH*RYW%RQG       $XVWULD         *LOWVEHQFKPDUNV QRQUXPSXQGDWHGVWRFNV&ORVLQJPLGSULFHLQSRXQGVSHUeQRPLQDORIVWRFN
6ZLVV)U/LERU             
&5(',7,1',&(6 'D\ V :HHN V 0RQWK V 6HULHV 6HULHV
<HQ/LERU
(XUR(XULERU










,QGH[ FKDQJH FKDQJH FKDQJH KLJK ORZ
%HOJLXP         GILTS: UK FTSE ACTUARIES INDICES
       
6WHUOLQJ&'V     0DUNLWL7UD[[ 3ULFH,QGLFHV 'D\ V 7RWDO 5HWXUQ 5HWXUQ
&DQDGD        
86&'V     &URVVRYHU<       )L[HG&RXSRQ 2FW FKJ 5HWXUQ PRQWK \HDU <LHOG
       
(XUR&'V     (XURSH<       8SWR<HDUV      
       
-DSDQ<       <HDUV      
6KRUW 'D\V 2QH 7KUHH 6L[ 2QH 'HQPDUN        
6HQLRU)LQDQFLDOV<       <HDUV      
2FW WHUP QRWLFH PRQWK PRQWK PRQWK \HDU        
0DUNLW&'; )LQODQG         <HDUV      
(XUR             2YHU<HDUV      
(PHUJLQJ0DUNHWV<              
6WHUOLQJ         $OOVWRFNV      
1WK$PHU+LJK<OG<       )UDQFH        
86'ROODU            
1WK$PHU,QY*UDGH<              
-DSDQHVH<HQ             'D\ V 0RQWK <HDU V 7RWDO 5HWXUQ 5HWXUQ
:HEVLWHVPDUNLWFRPIWVHFRP$OOLQGLFHVVKRZQDUHXQKHGJHG&XUUHQFLHVDUHVKRZQLQEUDFNHWVDIWHUWKHLQGH[QDPHV *HUPDQ\        
/LERUUDWHVFRPHIURP,&( VHHZZZWKHLFHFRP DQGDUHIL[HGDWDP8.WLPH2WKHUGDWDVRXUFHV86(XUR &'V ,QGH[/LQNHG 2FW FKJ FKJ FKJ 5HWXUQ PRQWK \HDU
7XOOHWW3UHERQ6'586'LVFRXQW,0)(21,$(&%6ZLVV/LERU61%(8521,$521,$ 621,$:0%$        
8SWR<HDUV       
*UHHFH        2YHU\HDUV       
        \HDUV       
,UHODQG        2YHU\HDUV       
        $OOVWRFNV       
       
,WDO\         <LHOG,QGLFHV 2FW 2FW <UDJR 2FW 2FW <UDJR
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED         <UV    <UV   
        <UV    <UV   
(QHUJ\ 3ULFH &KDQJH $JULFXOWXUDO &DWWOH)XWXUHV 3ULFH &KDQJH 3ULFH <LHOG 0RQWK 9DOXH 1RRI
-DSDQ         <UV   
&UXGH2LO‚ 'HF   &RUQƇ 'HF   2FW 2FW 3UHY UHWXUQ VWRFN 0DUNHW VWRFNV
       
%UHQW&UXGH2LOÁ   :KHDWƇ 'HF   &DQ        
        LQIODWLRQ LQIODWLRQ
5%2%*DVROLQH‚ 'HF   6R\EHDQVƇ 1RY   )U        
1HWKHUODQGV         5HDO\LHOG 2FW 'XU\UV 3UHYLRXV <UDJR 2FW 'XU\UV 3UHYLRXV <UDJR
1DWXUDO*DV‚ 1RY   6R\EHDQV0HDOƇ 'HF   6ZH        
        8SWR\UV        
%DVH0HWDOV Ƅ/0(0RQWKV &RFRD ,&(/LIIH ? 'HF   8.        
$OXPLQLXP   &RFRD ,&(86 Ɔ 'HF   1HZ=HDODQG         2YHU\UV        
      
$OXPLQLXP$OOR\   &RIIHH 5REXVWD ? 1RY           \UV        
8.        
&RSSHU   &RIIHH $UDELFD Ɔ 'HF   1RUZD\         2YHU\UV        
86        
/HDG   :KLWH6XJDU?   3RODQG        $OOVWRFNV        
86        
1LFNHO   6XJDUƆ           6HH)76(ZHEVLWHIRUPRUHGHWDLOVZZZIWVHFRPSURGXFWVLQGLFHVJLOWV
5HSUHVHQWDWLYHVWRFNVIURPHDFKPDMRUPDUNHW6RXUFH0HULOO/\QFK*OREDO%RQG,QGLFHVá/RFDOFXUUHQFLHVâ7RWDOPDUNHW
7LQ   &RWWRQƆ 'HF           k7UDGHZHE0DUNHWV//&$OOULJKWVUHVHUYHG7KH7UDGHZHE)76(
YDOXH,QOLQHZLWKPDUNHWFRQYHQWLRQIRU8.*LOWVLQIODWLRQIDFWRULVDSSOLHGWRSULFHIRURWKHUPDUNHWVLWLVDSSOLHGWRSDU
=LQF   2UDQJH-XLFHƆ 1RY   3RUWXJDO         *LOW&ORVLQJ3ULFHVLQIRUPDWLRQFRQWDLQHGKHUHLQLVSURSULHWDU\WR
DPRXQW
3UHFLRXV0HWDOV 30/RQGRQ)L[ /LYH&DWWOHƅ 'HF   6SDLQ        7UDGHZHEPD\QRWEHFRSLHGRUUHGLVWULEXWHGLVQRWZDUUDQWHGWREH
*ROG   )HHGHU&DWWOHƅ 0D\   BONDS: TEN YEAR GOVT SPREADS         DFFXUDWHFRPSOHWHRUWLPHO\DQGGRHVQRWFRQVWLWXWHLQYHVWPHQWDGYLFH
6LOYHU 86FHQWV   /HDQ+RJVƅ 'HF           7UDGHZHELVQRWUHVSRQVLEOHIRUDQ\ORVVRUGDPDJHWKDWPLJKWUHVXOWIURPWKHXVHRIWKLVLQIRUPDWLRQ
3ODWLQXP   6SUHDG 6SUHDG 6SUHDG 6SUHDG 6ZHGHQ        
3DOODGLXP   &KJ &KJ %LG YV YV %LG YV YV         $OOGDWDSURYLGHGE\0RUQLQJVWDUXQOHVVRWKHUZLVHQRWHG$OOHOHPHQWVOLVWHGDUHLQGLFDWLYHDQGEHOLHYHGDFFXUDWH
%XON&RPPRGLWLHV 2FW 0RQWK <HDU <LHOG %XQG 7%RQGV <LHOG %XQG 7%RQGV 6ZLW]HUODQG         DWWKHWLPHRISXEOLFDWLRQ1RRIIHULVPDGHE\0RUQLQJVWDULWVVXSSOLHUVRUWKH)71HLWKHUWKH)7QRU
,URQ2UH   6 3*6&,6SW            0RUQLQJVWDUÜVVXSSOLHUVZDUUDQWRUJXDUDQWHHWKDWWKHLQIRUPDWLRQLVUHOLDEOHRUFRPSOHWH1HLWKHUWKH)7QRU
$XVWUDOLD    1HWKHUODQGV   
%DOWLF'U\,QGH[   '-8%66SRW    $XVWULD    1HZ=HDODQG    8QLWHG.LQJGRP        0RUQLQJVWDUÜVVXSSOLHUVDFFHSWUHVSRQVLELOLW\DQGZLOOQRWEHOLDEOHIRUDQ\ORVVDULVLQJIURPWKHUHOLDQFHRQWKH
5LFKDUGV%D\,&()XWXUHV   75&&&5%75    &DQDGD    1RUZD\            XVHRIWKHOLVWHGLQIRUPDWLRQ)RUDOOTXHULHVHPDLOIWUHDGHUHQTXLULHV#PRUQLQJVWDUFRP
/(%$(8$&DUERQ    'HQPDUN    3RUWXJDO           
/(%$8.3RZHU    )LQODQG    6SDLQ    8QLWHG6WDWHV        'DWDSURYLGHGE\0RUQLQJVWDU_ZZZPRUQLQJVWDUFRXN
Sources: ‚ NYMEX, Á ECX/ICE, Ƈ CBOT, ? ICE Liffe, Ɔ ICE Futures, ƅ CME, Ƅ LME/London Metal Exchange.* Latest prices, $ *HUPDQ\    6ZHGHQ           
unless otherwise stated. ,WDO\    6ZLW]HUODQG           
-DSDQ    8QLWHG6WDWHV           
,QWHUDFWLYH'DWD3ULFLQJDQG5HIHUHQFH'DWD//&DQ,&('DWD6HUYLFHVFRPSDQ\ ,QWHUDFWLYH'DWD3ULFLQJDQG5HIHUHQFH'DWD//&DQ,&('DWD6HUYLFHVFRPSDQ\
12
Remarkable story
of an ordinary life
THEATRE
Sarah
Hemming
“I’m not interesting,” says the small
white-haired woman as she steps on to
the Lyttelton stage. “I’m an old lady.
What’s interesting about me?”Alexan-
der Zeldin begs to differ. In his beautiful
new play The Confessions, he traces the
contours of an ordinary life — inspired
by that of his own mother, whose jour-
ney took her from Australia to Oxford
and through the turbulent social
changes of the late 20th century. It’s
more than interesting.
Zeldin is known for his Inequalities
trilogy — Beyond Caring; Love; Faith,
Hope and Charity — superb works that
used painstaking low-key naturalism to
express the experience of people living
through austerity. What marked them
out was their compassionate depiction
of dignity and care in the face of hard-
ship: I will never forget the man in Love
tenderly washing his elderly mother’s
hair in the kitchen sink of their tempo-
rary accommodation.
The Confessions (on European tour)
emerges as a cousin to those works: a
different approach but underpinned by
the same humanity. During lockdown,
Zeldin talked for hours to his mother,
piecing together the turning points in
her life. From that he has crafted a
piece that honours those women, born
during the war, who experienced first-
hand the struggle for self-definition and
equality. Not that Alice (Amelda
Brown), a frank, self-deprecating
woman, would think of it like that.
We watch that life unfold. The
younger Alice (Eryn Jean Norvill) is
shepherded into a brittle 1950s mar-
riage to Graham, who soon becomes
controlling. Escaping that to attend uni-
versity in Melbourne, she encounters
the snake-pit of academic rivalry, the
grisly realities of chauvinism and snob-
bery disguised as liberalism.
There are some very funny scenes
here — a toe-curling university lecture
rings all too true. But then there is the
central event of the show: a shocking
sexual assault. Both this, and Alice’s
eventual response, are superbly han-
dled — not graphic, but emotionally
devastating. Again it’s the truth of what
people carry with them that comes
through. And when Alice finally finds
her life partner — Jacob, an Austrian
Jewish man with his own scarred history
— you feel like cheering.
It could be sentimental. It isn’t. It’s
funny, tough and moving. Directing,
Zeldin treads a careful line, playing
‘The Confessions’
could be sentimental.
It isn’t. It’s funny, tough
and moving
truth against artifice. The stage account
is studded with repetitions and con-
trasts. Dining tables become key set-
tings: the one in Alice’s childhood home
at which her aspirations are clipped; the
one she shares with her domineering
husband; the one over which she admits
her feelings to Jacob. Stagehands push
sets around; characters bring on props
— it’s clear that this is Zeldin’s theatrical
version of lives lived.
But, crucially, the performances feel
completely truthful. Joe Bannister is
excellent as two differently abusive
men, Pamela Rabe plays Alice’s conven-
tional mother but also a ferocious femi-
nist, Brian Lipson is immensely touch-
ing as Jacob. Norvill quietly invests the
young Alice with a growing clarity,
watched over judiciously by Brown.
★ FINANCIAL TIMES
ARTS
Top: Eryn Jean Norvill, And Lilit Lesser plays Zeldin’s onstage
foreground, in ‘The representative — a truculent, demand-
Confessions’. Above: Giles ing teenager. It’s a confession from him
Terera in ‘Clyde’s’ as much as anything.
Christophe Raynaud de Lage; Marc Brenner
To November 4, nationaltheatre.org.uk
Alice is among several characters on the
London stage battling against the con-
fines into which life has pegged them. In
Clyde’s, a lowly truck-stop diner in
backwater Pennsylvania, Rafael, Letitia
and Jason are trying to put their prison
past behind them. In a soulless kitchen
(designed in brilliantly drab detail by
Frankie Bradshaw) they slap together
sandwiches for hungry drivers they
never see, ruled over by Clyde, a woman
who could give a kitchen devil a run for
its money (Gbemisola Ikumelo, spectac-
ularly scary). One step out of line, she
warns them, and they will be back in the
gutter. But their guru-like mentor, Mon-
trellous, has other ideas. He feeds them
notions of perfect sandwiches: dream
combinations garnished with hope.
In a sense Lynn Nottage’s gorgeous,
warm-hearted play picks up from her
Pulitzer-winning Sweat: again we’re with
characters sidelined by society. One —
Jason — even features in both. Again
racial, social and sexual tensions course
through; again there’s a deep political
City-building taken to new heights
GAMING
Cities: Skylines II
PC
aaaee
Chris Allnutt
Most town planners don’t have the ben-
efit of starting from scratch when it
comes to laying out their settlements.
They must deal with hundreds of years
of other people’s work, plus all kinds of
tedious geographical and legal restric-
tions. Not so in Cities: Skylines II. When
you load into one of the city-building
game’s maps, you’ll find a short stretch
of road, a few trees and little else. It is
up to you to create a thriving city
from nothing.
So what do you do with a blank can-
vas, with the benefit of space and hind-
sight and modern technology at your
disposal? Surely you create a city that
doesn’t rely on the car, one that’s filled
with pedestrianised areas, green space
and public transport, powered by wind
turbines and hydroelectric dams, with
efficient public services around every
corner? Well, good luck. Even if you
manage to plan all of that out, account-
ing for an ever-increasing population
with myriad needs and wants, you’ll
probably find that your metropolis is
financially unsustainable.
Because it’s all very well creating a city
in which everyone is happy, but it’s
another thing entirely making it pay for
itself. Cities: Skylines II will punish you
for attempting to run before you can
walk. I spent several hundred thousand
dollars — half of my city’s revenue at the
time — on a very lovely rail network
linking two different islands. I was
subtext. But Clyde’s has its own mix of
mysticism and mischief. Both Clyde and
Montrellous have an otherworldly qual-
ity to them. Frequently we wonder
where this kitchen — a curious liminal
space sandwiched between hope and
despair — really is.
Lynette Linton’s joyous staging keeps
us on that knife-edge, sprinkling surreal
moments into the action. Metaphors
that could land heavily are delivered
with a pinch of salt, especially by Giles
Terera, whose superb depiction of the
mysterious Montrellous is perfectly
pitched. We’re never quite sure if we
believe his stories, yet he holds everyone
in his spell as he composes culinary
masterpieces and coaxes his charges
towards self-belief. A sandwich, he says,
invites “invention and collaboration”.
Following his guidance, Nottage
assembles a handful of damaged char-
acters who meld together into a perfect
combination. That journey is beauti-
fully traced by Linton, who has a gift for
bringing characters to life in a way that
makes it hard to part with them. Here,
she has a terrific cast. Patrick Gibson’s
Jason, as angry and miserable as a
delighted with it, all the more so given
you can zoom in to watch individual
trains doing their rounds. Then I looked
at the statistics: since opening, it had
recorded a total of one passenger.
You’ll spend a lot of time looking at
numbers in the game’s many menus,
where you’ll find a vast amount of infor-
mation available. There are more than
50 types of road, for example, and every
service you provide to the city can be
quantified in different ways: you can
examine the profitability of the busi-
nesses, land value, the availability of
labour, noise pollution, the average cost
of a hotel room, the number of people
currently in prison. It’s overwhelming
and often fiddly, but satisfyingly nerdy
once you get to grips with it. If the last
city-building game you played was
1989’s SimCity, then Cities: Skylines II will
make you feel like a bona-fide mayor
(and perhaps their statistician too).
Of course, the goal shouldn’t just be to
create a functional, financially sound
Players can install infrastructure and transport links in ‘Cities: Skylines II’
Thursday 26 October 2023
The Confessions
National Theatre (Lyttelton), London
AAAAE
Clyde’s
Donmar Warehouse, London
AAAAE
Portia Coughlan
Almeida Theatre, London
AAAEE
clenched fist, slowly melts; Sebastian
Orozco’s impetuous, loveable Rafael
finds his feet; Ronke Adékoluejo’s
vibrant, defensive Letitia learns to trust.
She is outstanding and this is a glorious,
funny and touching production of a play
that argues fiercely for rehabilitation,
redemption and hope.
To December 2, donmarwarehouse.com
Portia Coughlan is not for moving
on. Or, at least, she can’t. In Marina
Carr’s 1996 play she lives, nominally, in
the Irish midlands. But in reality, she’s
displaced by grief — haunted by the
drowning of her twin brother 15 years
previously. Their 30th birthday has
brought matters to a head: by 10am
she’s already well down a bottle of
brandy, snapping at her mild-mannered
husband (Chris Walley), ignoring her
children and treating gift-bearing visi-
tors with indifference.
Carr’s play has taken on contempo-
rary classic status. A no-holds-barred
depiction of despair and a brutal take-
down of small-town Ireland, it’s a Greek
tragedy wrapped up in brooding Irish
gothic and peppered with pitch-black
comedy. Sordid revelations tumble out
amid drab soft furnishings and sticky
bar tables. The only thing flowing more
freely than the booze is the vitriol, no
one more practised at it than Portia’s
vicious grandmother (Sorcha Cusack,
splendidly malevolent).
Slinking through the middle of it all is
Alison Oliver’s Portia, a woman so
drenched with self-loathing, she’s
barely there. Oliver’s performance, sul-
len, snarling and raw as bleeding steak,
admirably rejects pity. Alex Eales’s set,
for Carrie Cracknell’s atmospheric pro-
duction, taps into her state of mind, slic-
ing open the living room wall to reveal
the rocky banks of the Belmont River to
which she is drawn repeatedly. It’s a
grim, unyielding watch: savagely funny
in places; brutally bleak overall.
To November 18, almeida.co.uk
Chris Walley
and Alison
Oliver in ‘Portia
Coughlan’
Marc Brenner
settlement whose citizens lead fulfilling
lives upwind from the city’s heavy
industry; no, the real art ought to be
achieving all that and also building
somewhere with charm and character.
But here the game is found wanting:
architecture and building styles are too
limited, so whatever the landscape,
your cities take on an identikit feel.
Even peripheral details, such as the
game’s radio stations and Twitter-style
feedback from citizens, feel half-baked
and repetitive.
It’s been eight years since the original
Cities: Skylines was released, and its suc-
cessor is certainly bigger and more
ambitious. But scale alone is not
enough, and what ought to have been
an opportunity to challenge players
to build a truly modern city from
scratch ends up, curiously, feeling a little
old-fashioned.
Available on PlayStation 5 and Xbox Series
X/S in 2024, paradoxinteractive.com
Thursday 26 October 2023
After days of prosecution evidence, including testimony from erstwhile colleagues and
Can SBF argue his way out of trouble?
E ‘In reality, he
arly last summer, Adam
Yedidia took Sam Bankman-
Fried to one side after a game
of paddle tennis. In the
shadow of a hut in the
grounds of the Bahamian penthouse
they and others shared, he asked the
crypto tycoon: “Are we OK?”
Yedidia told a New York court this
month he was worried that FTX, the
crypto exchange that Bankman-Fried
had co-founded was in financial trouble.
He recounted his friend’s reply: “We
were bulletproof last year, but we’re not
bulletproof this year.”
FTX collapsed a few months later,
sending shockwaves through the
cryptocurrency industry. US prosecu-
tors hope this chat, which they have
taken to calling the “bulletproof conver-
sation”, will help to show Bankman-
Fried knew about, and concealed, an
$8bn cash shortfall for months.
Until November 2022, FTX appeared
to be one of the most successful fintech
companies in history. The crypto
exchange, where customers could trade
various cryptocurrencies, was valued at
$40bn after just three years in exist-
ence, making its 30-year-old co-founder
and chief executive a billionaire.
Bankman-Fried oversaw both the
exchange and Alameda Research, a pri-
vate trading firm, with a tiny group of
close associates in their late 20s and
early 30s. Most of them lived together in
the $30mn Bahamas penthouse, with an
orchid-shaped pool and ocean views.
This penthouse clique has had a
strange reunion in court over the past
three weeks. Most of them have not
been in the same room since the chaotic
events of last autumn, when a leak of
financial data caused a stampede to
withdraw money from FTX. But there
was insufficient money to meet the
requests — only an $8bn hole where cus-
tomer deposits should have been.
US prosecutors allege the shortfall
arose because FTX had transferred or
lent billions of dollars of its customers’
money to Alameda, which spent it on
crypto investments, venture capital,
political donations, celebrity marketing
and real estate. They claim Bankman-
Fried defrauded his lenders, investors
and customers.
Bankman-Fried admits that money
flowed from FTX to Alameda, but has
pleaded not guilty to fraud, claiming the
disaster was a result of poor bookkeep-
ing and risk management,
The former crypto kingpin, his trade-
mark curly hair shorn by a fellow
inmate at a New York jail, has spent the
first 12 days of the trial sitting hunched
and impassive at the defence table as
longtime friends testified against him.
Caroline Ellison, Bankman-Fried’s ex-
girlfriend and Alameda’s former chief
executive officer, along with FTX co-
founder Gary Wang and director of engi-
neering Nishad Singh have all pleaded
guilty to fraud and other offences.
Bankman-Fried faces life in prison if
convicted. But the trial has wider signifi-
cance for the largely unregulated world
of cryptoasset trading. It represents a
crucial test for efforts by US law enforce-
ment to exert their authority over
★ FINANCIAL TIMES
FT BIG READ. CRYPTOCURRENCIES
friends, Sam Bankman-Fried has opted to take the stand in his own defence.
By Joshua Oliver
trading businesses domiciled offshore.
Hilary Allen, a professor of law at the
was taking American University, says that while
[the] money the industry has often “weaponised
technobabble” to claim it falls outside
and national regulation, this case is intended
spending it to show that there “actually is someone
you can hold accountable”.
on himself ’ The trial resumes today after a week-
Thane Rehn, long intermission, and yesterday his
assistant US
attorney
legal team confirmed that Bankman-
Fried will testify — raising the question
of whether crypto’s most captivating
advocate can explain away the docu-
mentary evidence and the damning tes-
timony of some of his key lieutenants.
Old friends turn
The 12-person jury and its six back-up
jurors includes two conductors on New
York’s Metro North commuter railway
and a former Salomon Brothers invest-
ment banker. They have sat through
presentations of internal spreadsheets,
chat messages and tweets along with
hours of testimony as the prosecution
set out the bulk of its case.
All 12 will have to agree to convict or
acquit. If one or more dissents, the ulti-
‘He was a mate result is a mistrial. The govern-
ment would then have to decide
math nerd whether to bring the whole case again.
who didn’t The key issue is whether Bankman-
Fried had criminal intent. Prosecutors
drink or have focused on conversations and doc-
party’ uments that they hope will convince the
Mark Cohen, lead jury that the FTX founder was aware of,
defence attorney orchestrated and lied about the diver-
sion of funds to Alameda for years.
Yedidia, one of the lower-profile
roommates at the Bahamas penthouse,
was a surprise choice as the first prose-
cution witness. One of Bankman-Fried’s
best friends at MIT and a senior coder at
FTX, he testified under an immunity
order that precludes him from being
charged based on his evidence, provid-
ing it is truthful. That affords defence
attorneys less scope to attack his credi-
bility compared to Ellison, Wang and
Singh, who are co-operating with prose-
cutors in the hope of lighter sentences.
He said he knew that customer depos-
its went to Alameda but assumed the
trading firm just held the money for
safekeeping because it had an easier
time getting bank accounts than FTX.
Through work on the exchange’s settle-
ment system, in June 2022, Yedidia
learned that Alameda owed about $8bn
in FTX customers’ hard-currency
FTX’s crypto token plunged in value
$ per FTT
80
FTX collapses and
enters insolvency
60
40
20
0 had left Alameda technically insolvent.
2021 22 23
Source: CoinMarketCap
deposits to the exchange. “It seemed
like a lot of money,” Yedidia said, his
concern leading to the “bulletproof con-
versation”. He asked how long it would
be “until we’re bulletproof again?”
Bankman-Fried said it could be six
months to three years.
Yedidia said he has since become a
high school maths teacher. The return
to normal life will not be so easy for the
other three key prosecution witnesses.
Co-founder Gary Wang, infamous at
FTX for barely speaking to his col-
leagues, was highly talkative on the wit-
ness stand, testifying that secret, unique
privileges for Alameda were baked into
FTX’s code as far back as its launch in
2019. Ultimately, the trading firm was
exempt from FTX’s normal automatic
liquidation system and able “to with-
draw unlimited amounts of money”.
Initially, he recalled Bankman-Fried
saying Alameda could borrow from FTX
as long as it was “less than FTX’s total
trading revenue was at the time”. If
Alameda borrowed more, Wang said,
the only source of further funds at that
time was to dip into customers’ money.
The $30mn
penthouse in the
Bahamas where
Bankman-Fried and
many of the key
witnesses lived
By late 2019 or early 2020, Wang said he
noticed Alameda had done just that.
Wang said Bankman-Fried then told
him to incorporate the value of
Alameda’s holdings of FTT, a cryptocur-
rency that FTX had itself created, into
his calculation. If Alameda had enough
crypto assets to pay back its borrowing
from FTX, Bankman-Fried reasoned
that was OK. “I trusted his judgment,”
Wang told the court.
As the crypto boom picked up in 2020
and 2021, and FTT’s price rose from
about $3 to more than $70, Alameda’s
FTT stash gave it enormous headroom
for borrowing from FTX while still being
able to pay back its loans on demand.
But critics say the use of volatile
crypto tokens meant Alameda’s finan-
cial strength was illusory. Allen, of the
American University, describes the
token as “the fulcrum” that facilitated
the alleged fraud. One of the govern-
ment’s expert witnesses called up a pic-
ture of a $100 bill to illustrate the differ-
ence between fiat currency and crypto.
Ellison explained how using FTT as
collateral gave Alameda access to bil-
lions in borrowings of cash and crypto
assets from external lenders, up to a
peak equivalent to $15bn by late 2021.
She added it was “somewhat mislead-
ing” to include FTT on Alameda’s bal-
ance sheet since it could not be sold in
quantity without undermining its price.
The reversal of crypto markets in the
spring of 2022 threatened to expose
what prosecutors claim was Bankman-
Fried’s magical thinking about FTT. By
mid-June, Ellison feared falling prices
Bankman-Fried thought the numbers
must be wrong.
He called Wang, who recalculated and
spotted an error that made Alameda’s
situation look worse than it was. He
recorded its true net balance on FTX in a
spreadsheet, labelling it “Gary’s
number”. Including the roughly $8bn in
customers’ cash and its other positions,
Alameda owed FTX $11bn.
The inner circle then held a meeting.
Yedidia recalled watching Wang, Bank-
man-Fried, Ellison and Singh filing into
a conference room in the Bahamas
office, where Wang said Bankman-Fried
reviewed the spreadsheet showing the
$11bn debt. That sum was more than all
the revenue FTX had ever made and all
the equity it had raised, combined.
Alameda’s outside lenders wanted
their loans repaid, but that money was
either locked up in illiquid investments
or had been spent. Wang described how
Bankman-Fried told Ellison she could
pay back the external creditors. “He
turned to Caroline and said: Alameda
can go ahead and return the borrows.”
For prosecutors, this is perhaps the
most crucial moment. Knowing that
Alameda must be dipping into FTX cus-
tomer funds in order to repay external
creditors, Bankman-Fried ordered it to
carry on. Ellison said she and Bankman-
Fried then worked together on seven
different balance sheets in order to con-
ceal the outsized borrowing from FTX.
The defence response
Bankman-Fried was arrested in the
Bahamas penthouse in January and
later appeared, handcuffed, on the tar-
mac of Nassau airport before being
extradited to the US. Ahead of his deten-
tion, he gave a flurry of media inter-
views that provided prosecutors with a
sketch of his likely defence.
He blamed “huge management fail-
ures” and “massive oversights” in book-
keeping and risk management for the
leakage of funds to Alameda, which left
FTX unable to pay back customers.
He said he had only “fully realised”
the exchange’s position in late autumn
of 2022 and never knowingly lied.
Bankman-Fried appeared to allude to
this in a Financial Times interview in
December. “I do remember there were
some discussions around Alameda’s
positions,” he said at the time. “I don’t
remember numbers from those. I don’t
remember numbers being said, I’m not
sure they weren’t. I think Alameda did
some recounting then, or some check-
ing in on the health of its position.”
If he does take the stand, prosecutors
will try to show that the gaps in Bank-
man-Fried’s memory are both selective
and deceptive. The trial may yet hinge
on what was said inside that conference
room — and the fact that the three other
people present will contradict him
makes his testimony a difficult task.
However, not all elements of the pros-
ecution narrative line up neatly. Singh
said he left the crucial June meeting still
thinking things were OK and did not
realise customer funds were being
raided until September. Under cross-ex-
amination, he said that after the June
meeting he “suspected there was wrong-
doing . . . [but] took cues from people
around me and didn’t pursue it further”.
In Singh’s telling, the penny dropped
13
Key players in in September 2022 amid a debate about
the rise and fall whether Alameda should be shut down.
of FTX: from Ellison said it was impossible because
left, Nishad the trading firm couldn’t repay its debts
Singh, Gary to FTX. The same evening Singh said he
Wang, Sam confronted Bankman-Fried on the
Bankman-Fried, penthouse balcony. Pressed on
Adam Yedidia Alameda’s inability to pay back what it
and Caroline owed, in effect, to FTX’s customers,
Ellison Bankman-Fried said: “Right. That. We
Bloomberg/AP are a little short on deliverables.”
He told Singh he hoped the exchange
could grow its way out of trouble, earn-
ing enough to re-fill the gap, or raise
money from new equity investors.
Between September and November he
tried to tap investors, including Saudi
wealth funds, without apparently telling
them why he needed the money.
Bankman-Fried’s public image and
personality have also featured heavily
in the case. Prosecutors have already
made full use of his prolific tweets and
interviews, from FTX’s earliest days to
its final week, and called on witnesses to
explain how they are false.
They have also sought to cast doubt
over the loveable oddball image he liked
to project. Witnesses said Bankman-
Fried rarely slept on a beanbag, despite
making much of it in media profiles, and
chose to drive a modest Toyota Corolla
because it was “better for his image”.
Assistant US attorney Thane Rehn
said Bankman-Fried’s persona and
business empire was “built on lies” and
that “in reality, he was taking [the]
money and spending it on himself”.
But Mark Cohen, the lead defence
lawyer, argued the portrayal of his client
as a greedy criminal mastermind verged
on caricature. Instead, Bankman-Fried
was a hard-working entrepreneur who
eschewed personal luxuries, Cohen said
in his opening arguments, “a math nerd
who didn’t drink or party.” He made
mistakes in his rush to grow the com-
pany, but Alameda’s privileges “were
done for reasonable purposes at the
time” and far from secret.
Cohen also tried to prime the jury to
doubt the penthouse witnesses. “Ask
yourselves [ . . .] are they pointing to
out-of-context or ambiguous state-
ments that now they are saying led to
black-and-white conclusions?” But his
often halting cross-examination of the
prosecution witnesses has so far failed
to significantly dent their credibility.
“When the co-operating witnesses
multiply, the points just don’t land as
well,” says Sarah Paul, a former prosecu-
$40bn tor and partner at Evershed Sutherland,
Valuation of FTX at adding that it was hard to cross-exam-
its peak, making ine Ellison because she may have come
Bankman-Fried a across as a sympathetic witness.
billionaire With the government case largely
intact at the end of the trial’s first act, it
appears Bankman-Fried has accepted
$8bn that he is the only person who can offer
The approximate a counter-narrative to the prosecution’s
cash shortfall within portrayal of greed, secrets and lies.
FTX at the time of
its collapse
Paul, speaking before Bankman-
Fried’s decision to take the stand, said
doing so could be a counsel of despera-
$1.17 tion, given how overwhelming the pros-
Current price of ecution’s case appears to be. “It may be
FTT, the FTX crypto his last hope,” she said. “Maybe he is
token. It peaked at able to persuade at least one juror that
over $70 in 2021
he did not have criminal intent.”
14 ★ FINANCIAL TIMES Thursday 26 October 2023

The FT View
Turbulent times for the US Treasury market
High yields and volatility
stress the need for vigilance
and fiscal discipline
Like shoppers, investors are often prone
to the so-called left-digit bias — the ten-
dency to place more emphasis on the
leftmost digit of a price. Indeed, when
the 10-year US Treasury bond yield — a
benchmark used to price assets in
America and across the world — surged
from the high fours to 5.02 per cent on
Monday, it caused a stir in financial
markets. Yields have now swung back,
but still hover at post-global financial
crisis highs.
Breaching the 5 per cent barrier for
the first time since 2007 is a marker of
how tight financial conditions are
becoming in the US Federal Reserve’s
rate-raising cycle, and the growing
squeeze ahead for the US economy. The
10-year Treasury yield has risen more
ft.com/opinion than 3 percentage points in the past two
years. The high volatility and speed of
the sell-off in recent weeks, at a time
when liquidity in Treasury markets
“remained challenged”, according to a
Fed report last week, is concerning too.
There are several drivers behind the
recent jump in 10-year yields, which are
up from 4.6 per cent in mid-October.
First, investors have cottoned on to the
Fed’s “higher for longer” narrative on
rates, particularly as strong economic
data has backed up its rhetoric. Second,
the “term premium”, or the additional
yield investors need to compensate for
holding long-term bonds, has probably
risen, according to analysts.
The US government’s widening deficit
has driven higher bond issuance, while
rising spending needs and political tur-
moil are raising expectations for future
Treasury supply too. But demand has
fallen, particularly with the Fed shrink-
ing its Treasury holdings via quantita-
tive tightening. Belief that the underly-
ing interest rate could be higher in the
long term is also growing. This is push-
ing up yields, but uncertainty also
remains high. While 10-year yields have
been on an upward trend, intraday
swings are common.
Elevated yields could exacerbate fis-
cal concerns, with spending on interest
payments rising. Mortgages and corpo-
rate bonds, which are linked to long-
term Treasury yields, will become cost-
lier. Stock valuations could be strained.
Together, this raises the chance of a
deeper and longer economic slowdown,
which could pull down yields. Market
skittishness poses its own risks, particu-
larly when Treasury liquidity remains
below historic norms. The risk of sharp
yield movements could threaten insti-
tutions holding large bond losses, and
stoke distressed Treasury sales.
The volatility is an inevitable conse-
quence of investors trying to price
Treasuries amid heightened uncer-
tainty and following years of the Fed’s
bond-buying. The lack of clarity on the
economic outlook means a clear narra-
tive to anchor yields is far off. Policy-
The uncertainty makers ought to be alive to the risks of
is an inevitable something snapping in financial mar-
kets, and can also help to bring stability.
consequence of
For the Fed, higher Treasury yields
investors trying will obviate the need for further rate
to price rises at next week’s rate-setting meet-
Treasuries amid ing. Outlining a clear vision for the econ-
heightened omy will, however, be difficult. Jay Pow-
uncertainty and ell, the Fed chair, should at least be
measured in his communications to
following years avoid adding to the jitters. Monitoring
of the Fed’s Treasury market liquidity, and efforts to
bond-buying enhance it, will also remain important.
Above all, the US needs to display fis-
cal prudence. The deficit is projected to
balloon. Higher debt issuance in a mar-
ket short of buyers will keep upward
pressure on yields. Paralysis in the US
Congress does not help. High rates,
allied with lax fiscal policy and political
chaos, are a recipe for a vicious cycle of
rising government yields — as Britain
can attest from its turmoil a year ago.
But if the US has its own Liz Truss
moment, the damage will not be con-
tained to its shores.

Opinion Environment Email: letters.editor@ft.com

Letters Include daytime telephone number and full address

Corrections: corrections@ft.com
If you are not satisfied with the FT’s response to your complaint, you can appeal

Why Britain is so bad at to the FT Editorial Complaints Commissioner: complaints.commissioner@ft.com

introducing heat pumps Put the onus on employers to end class bias in recruitment
Andy Carter Nick Bent (“Class and the City: why
social mobility is good for business”,
Opinion, October 17) makes some
cogent points — and I am one of those
who very much wish to make progress
to eradicate the longstanding bias in
recruitment arrangements that those
from a working-class background
suffer. But I am afraid that simply
asking such candidates to baldly state
their background in this way on the job
application form (in answer to the
question “what was the occupation of
your family’s main earner when you
were 14”, as recommended by the
Sutton Trust) will not work.
The reason I say this is that although
it may suit the purposes of a social
scientist — a different kettle of fish —
most job applicants would intuitively
see such a question as off-putting — not
presenting a picture of “fitting in” that
they would wish to create.
Indeed, I don’t think that the best
brains of the Social Mobility
Commission and the Sutton Trust — in
advocating such mandatory disclosure
— have the intuition to resolve this
dilemma. For example, would they
disclose their own class backgrounds?
Moreover, if it is to be accepted that
these prejudices and related
stereotypes need to be dealt with, a
bigger challenge is to change the
mindset of the employers themselves.
So perhaps the best we can do is to
begin with an Employers Code —
whereby, when making appointments,
at professional level such employers
would subscribe to the need to mirror
the class background of the UK
population as a whole. The social
scientists would then be able to sample
the results and publish them — with
any commentary they found timely.
Lord Lea of Crondall
Assistant General Secretary, TUC 1979-99
Crondall, Hampshire, UK

developed a large gas network after
Pilita discovering North Sea gas, plus an
effective gas industry lobby.
Clark In 2006, change beckoned. The then
Labour government revealed plans for
all new homes to be built to a “zero
Airbus collaboration was Growth is possible without Why Goldman boss quit as
what saved UK aerospace debt — just look at Sweden a DJ to focus on the day job
The article describing the current state The FT (“US poised to power ahead of Though Goldman Sach chief executive
of public and private research and Europe for years”, Report, October 20) David Solomon was passionate about
development in the civil aerospace
sector (Report, October 23) provides a
argues that “the generous government
support has helped drive a recovery in
his art (“Solomon pulls plug on DJ side
hustle to focus on tough gig as
fine insight into the challenges facing
the industry over the coming years.
US consumer spending, one of the
prime reasons why growth in the
Goldman chief”, Report, October 18),
and donated the proceeds he made as a
Getting to this state was a long country has been so strong”. DJ, this is a cautionary tale on what not

N
ot that long ago, if you had
told journalists across the
world they would soon be
writing thousands of
words about a boxy metal
contraption called a heat pump, few
would have believed you.
And yet today they are doing just
that, as government efforts to cut
carbon emissions have thrust these
unglamorous home heating gadgets
into the limelight.
Because heat pumps run on electric-
ity, which is relatively easy to decar-
bonise, they have become an impor-
tant net zero tool for buildings, the
running of which accounts for a quar-
ter of global energy-related emissions.
That’s put them at the centre of bruis-
ing debates over the pace and cost of
greener heating.
But this week brought another
reminder that, when it comes to
carbon” standard by 2016, meaning
annual net carbon emissions from
energy use would have to be zero.
But in 2015, a Conservative govern-
ment abruptly scrapped the standard
on the grounds it would slow the rate
of home building.
That was a hammer blow for heat
pump industry hopes that the stand-
ard would kindle the supply chains,
trade skills and market certainty
needed.
A subsequent Conservative govern-
ment unveiled a “future homes stand-
ard” in 2019 to end fossil fuel heating
systems in new-build properties, but
not until 2025.
As a result, year after year, more and
more new homes were connected to
the gas grid, even as subsidies to
replace gas boilers with heat pumps in
existing homes were increased.
Small wonder that only 72,000
pumps were fitted last year, well short
of the target that former leader Boris
struggle. A post-1946 history of
commercial failure, abetted by some
poor government policies, had left the
British civil aircraft industry in a very
poor shape. European collaboration on
the Airbus proved its salvation.
The national investment in Airbus
wing technology at Broughton in north
Wales began in the early 1960s. On two
occasions, the British government
nearly scuppered UK involvement in
the programme, almost threatening the
survival of Airbus as a whole.
Support for R&D, as opposed to
specific projects, was an even harder
road to travel. In the 1990s, a very
modest budget was threatened with
cuts and possible termination.
The breakthrough came with
Labour’s government-industry
“aerospace innovation and growth
team” study, and report in the 2000s.
This outlined a long term programme
to boost civil aerospace research
activity. Its findings were carried
forward by the Cameron coalition to
great effect.
This has left the UK with at least one
world class manufacturing capability.
Professor Keith Hayward
Fellow, Royal Aeronautical Society
Fellow, French Air and Space Academy
London SW20, UK
But it is possible to grow without
excessive stimulus and accumulation
of sovereign debt. Sweden has
outgrown the US while decreasing the
sovereign debt burden. The Swedish
economy is expected to have expanded
60 per cent in real terms since 2000
until the end of this year, compared
with 55 per cent for the US economy
and 30 per cent for the euro area.
During the same period, gross
sovereign debt has decreased from 50
per cent to 32 per cent of gross
domestic product in Sweden, while it
has grown from 53 per cent to 123 per
cent in the US — a delta sensitivity
measure of almost 90 percentage
points that is expected to grow to over
100 percentage points by 2028,
according to IMF estimates.
Marcus Svedberg
Chief Economist, Folksam
Stockholm, Sweden
to do as the head of an institution.
There is nothing wrong with chief
executives cultivating a hobby. Hobbies
can serve as sources of energy or
creativity, directly contributing to their
effectiveness as leaders and problem
solvers. Yet, caution must be exercised
to ensure it is not distracting attention
from the primary responsibilities for
which the person has been hired.
When at the helm of a prominent
organisation, every action is subjected
to intense scrutiny. It is also important
to remember that there are individuals,
both among employees and the press,
who actively look for opportunities to
expose any questionable conduct.
The significance of optics amplifies
when business performance falls short
of anticipated outcomes.
Debashis Sarkar
Managing Partner, Proliferator Advisory
& Consulting, Mumbai, India

Various administrations
have taken a muddled,
contradictory approach
towards these machines
switching to heat pumps, few coun-
tries offer a bleaker case study in what
not to do than Britain.
On Monday, Rishi Sunak’s govern-
ment issued a statement confirming
that, thanks to “one of the most gener-
ous schemes in Europe”, homeowners
could get a £7,500 subsidy that could
make heat pumps cheaper than a gas
boiler. This is the same government
that just five weeks ago sent a chill
through the heat pump industry by
loosening targets for a shift away from
fossil fuel heating.
It’s further evidence of the mud-
dled, contradictory approach that suc-
cessive administrations have taken
towards these machines.
And it helps to explain why UK heat
pump sales last year were a puny 1.9
per 1,000 households, putting the
country a distant last behind 20 other
European nations ranked by the Euro-
pean Heat Pump Association.
Everyone from top-performing Fin-
land (with 69 sales per 1,000 homes)
to mid-ranking France (20) and Ire-
land (10) did better.
The frustrating thing is, it didn’t
have to be like this.
To begin with, the UK lost the plot
on encouraging fossil-free heating in
newly built homes.
These measures were critical for a
country that, unlike many others, had
A
Johnson’s government set for 600,000
annual installations by 2028.
The UK has also dithered on
another big heat pump barrier: rela-
OUTLOOK thens is my city. I have
been living here for most
new stores open, coffee shops and
restaurants taking over deserted
Parthenon. In Plaka, my
neighbourhood, my local hardware
tively high electricity prices.
GR EECE of the past 16 years, and spaces and the city refinding its store has become yet another
Heat pumps are vastly more effi- like all long-term groove. In 2019, Athens welcomed restaurant for tourists, and a car
cient than gas boilers. They can pro- relationships, it is one in 17.8mn international arrivals. But rental agency has replaced the clothes
duce three to four times as much heat which I have fallen in and out of love. since then, with a break during the shop on the corner. I also battle daily
energy per kilowatt hour of electricity The Acropolis and the historic centre pandemic, the shift towards tourism with taxi drivers, minivans and
used. But that advantage evaporates
when electricity is three times more
Athens’ tourist have attracted visitors for centuries,
but more recently, an uncontrollable
has accelerated, without a plan to
protect residents.
double-decker buses parked illegally
outside my house, creating traffic
expensive than gas, which it often has
been in the UK.
That is partly because of policies
trade is a tourism boom has started to disrupt
daily life.
Things were very different when I
Five new hotels have opened in the
past four years in a narrow street off
Syntagma Square, which was
mayhem. Music from bars plays
loudly until the early hours. Coffee
shops and restaurants sprawl across
that actively increase the price of elec-
tricity relative to gas. As much as 12
growing first moved in 2007 to a stone’s throw
from the Acropolis Museum, which
previously home to small shops and
restaurants. “Most investments in
the pavement, forcing pedestrians to
squeeze between tables where people
per cent of electricity bills have been
made up of environmental and social
levies recently, compared with 3 per
headache for had not yet opened its doors. It was a
sleepy neighbourhood with ample
parking, fruit stalls and neighbours I
Athens have to do with hotels,” says
writer Nikos Vatopoulos, who leads
walking tours of the city. “As positive
are trying to enjoy their lunch. Add
the electric bicycles rented by tourists,
and you can imagine the chaos.
cent of gas bills. Efforts to narrow this
gap have been mooted for years but
residents knew by name. I could barely hear
any noises at night. Back then, it felt
as this is for the economic turnover, it
is equally worrying for the future of
Short-term holiday lets have not
only destroyed neighbourhoods but
have yet to materialise. like tourists were only shyly trickling Athens, which seems discouraging for also fuelled a housing crisis, as
Likewise, the UK still lacks enough in, and I welcomed them, feeling my the centre’s residents.” apartments are increasingly used for
of the big one-stop shops and agencies city had previously been passed over In the first nine months of this year profitable leases. Unlike local
that have emerged from Ireland to the as just a necessary stop on the way to there were 14.9mn arrivals from authorities in Amsterdam and New
US state of Maine to help homeowners an Aegean island. When Airbnb first abroad: an increase of more than 7 per York, which have moved to restrict
navigate the baffling mix of heat pump appeared in Greece, I eagerly listed cent on the same period in 2019. What Airbnb rentals, Greece has focused on
grants and installation options. my apartment, acting as a free used to be just a summer takeover has taxing landlords who own multiple
Also, it has a workforce that is very concierge so my guests could spread across the calendar: arrivals in homes on short-term lets.
good at installing the gas boilers popu- experience the spots I loved. January and February this year were Change may be coming, however.
lar in the UK that typically cost Two years later, when the economic double those in 2022. What Haris Doukas, the new mayor of
£2,500-£3,000 to buy and fit, but is crisis hit, the city centre bore the signs differentiates Athens from other Athens, elected this month, has
less accustomed to heat pumps, which of a country in decay. Weekly strikes capitals is that tourists flock to a promised to tackle the problems of
can be more complex and far more opposing austerity measures relatively small area. “It’s not only tourism. Much hinges on whether he
costly. paralysed the centre. Often they were that arrivals have increased delivers. The danger, Dretta warns, is
None of these problems are insur- accompanied by demonstrations that significantly, but tourists are found that growing discontentment among
mountable. The solutions are known would turn violent. Many shop owners concentrated in a small radius around Athenians will filter through to
and tested. A G7 country like the UK moved elsewhere. Real estate prices the Acropolis,” says Ioanna Dretta, visitors. “Tourism is an extension of
has the resources to implement them. plummeted, and visitors declined. In president of Marketing Greece, an the life of locals,” she says. “We can’t
One day, it might finally get a govern- 2012, international arrivals in Athens NGO supporting Greek tourism. have happy tourists if we don’t have
ment with the will and acuity to put airport were barely 8.4mn. The landmarks of my daily life are happy residents”.
them in place. But as the country left the decade- now eroding, and I feel as if I am living
by Eleni Varvitsioti long crisis behind, I was happy to see in the dirty backyard of the eleni.varvitsioti@ft.com
pilita.clark@ft.com
Thursday 26 October 2023
Japan prays for a solid-state battery miracle
ASIA
Leo
Lewis
J
ust a few hours into the 2023
Japan Mobility Show, Honda’s
chief executive had said he
wanted to see the company’s
logo in outer space. The head of
Lexus had promised luxury cars with a
sense of smell. The president of Subaru,
from a great nebula of dry ice, had
unveiled a conceptual flying car which
may, eventually, fly.
The signs of stress are less subtle than
they used to be. Too much talk of the
future reveals a chasm in the present,
and as such Japan’s biggest automotive
trade show acts as a gauge of how hard
the country’s once unstoppable carmak-
ers are ready to fight for survival.
Increasingly it looks like an industry
waiting for a miracle.
The trillion-dollar question is
Biden’s shift
on China will
be unsung
GEOPOLITICS
Edward
Luce
F
or several nerve-jangling
months this year, US-China
relations threatened to spiral
out of control. The odds are
that the giants will relapse into
high tension, or worse. In the meantime
they are becoming quietly reac-
quainted. It is hard to put a value on a
dialogue that is unlikely to yield big
breakthroughs. All you can do is imag-
ine the alternative. In today’s Middle
East, America’s ability to talk to China
could be the difference between a
regional war and its absence.
The White House’s most urgent
request to Wang Yi, China’s foreign min-
ister, who arrives in Washington today,
will be to restrain Iran. Should Hizbol-
lah, Tehran’s proxy army, open a second
battle front in Israel, the chances of one
of the two US aircraft carriers in the
region striking Iran will rise. Were China
still refusing to take America’s calls — as
was the case five months ago — that risk
would be greater. It remains far too high
as it is. There can be no downside to
spelling out face-to-face to Wang the
costs of a spiralling conflagration.
Joe Biden will get little credit for
putting US-China relations on a less per-
ilous footing. That is partly because it
Israel must know that destroying Hamas is beyond its reach
John
Sawers
I
n the Yom Kippur war, 50 years ago
this month, the attacking armies
from Egypt and Syria had a clear
goal — to recover some of their ter-
ritory and their dignity from the
defeat by Israel six years earlier. Had
Jordan’s King Hussein sent his forces
into the conflict, Israel’s very existence
could have been at stake. Israel faced a
fight to defend itself.
The brutal Hamas assault on October
7 had a different purpose. Through
attacks like these, terrorist organisa-
tions want three things: to instil fear, to
draw attention to their cause and to pro-
voke overreaction. Terrorism alone
doesn’t undermine an established state.
Israel has every right to respond. Now
the immediate rage has passed, prime
minister Benjamin Netanyahu and his
war cabinet are thinking through their
options more carefully. We should
whether solid-state batteries — a tech-
nology that promises greater range and
safety than lithium-ion ones, and which
Toyota has indicated it is near to mass
producing — can be that miracle.
Although particularly visible at the
Tokyo show this week — an event not
held since 2019 — the underlying crisis
is not the Japanese carmakers’ alone.
The global legacy auto industry, of
which Japan’s manufacturers comprise
a still immensely powerful and success-
ful segment, can see dangerous, historic
and fundamental transformation
ahead. They see it in the way cars are
propelled, how they are built and the
still unknowable role these rolling dig-
ital platforms will play in people’s lives.
Electric vehicles, of one type or
another, look very much like the van-
guard of that transformation and the
upheaval around them is provably fer-
tile ground for newcomers. Japanese
carmakers, meanwhile, have collec-
tively spent the past few years allowing
themselves to appear ever further back
from the evolutionary front line on EVs.
Toyota particularly so, given its long
global supremacy as both innovator and
generates few headlines. Three US
cabinet secretaries — the US secretaries
of state, Treasury and commerce — have
been to China since mid-June. None
yielded swooning deliverables. Yet
these were three more visits than in
Biden’s previous two and a half years
combined. Wang’s trip will be the first
visit to Washington by a Chinese foreign
minister since before the pandemic. It is
likelyto pave the way for Xi Jinping’s
attendance at the Apec summit in San
Francisco next month — the first trip to
the US by China’s president in almost
seven years.
Biden’s record has also been uneven.
America’s shooting down in February of
the Chinese spy balloon was a gift to car-
icaturists of America’s tendency to
inflate threats. Biden could also have
stopped Nancy Pelosi, America’s outgo-
ing Democratic speaker, from visiting
Taiwan a year ago. Her trip needlessly
stoked Chinese paranoia that the US was
reconsidering its “One China” stance.
The only upside was to Pelosi’s domestic
brand. Yet the chief blame for the freeze
in bilateral relations belonged to China.
Two things have given China pause to
reconsider since then.
The first is that China’s much-
expected pandemic rebound has not
happened. Its economic doldrums are
largely homemade. Having subjected
the Chinese to periodic bouts of what
felt like house arrest, Xi abruptly
switched from zero-Covid to double
Covid. It is one thing to stifle people’s
freedom of movement in a larger cause.
It is another to pivot to herd immunity
expect search and destroy missions
inside Gaza City to take down as much of
Hamas’s military as they can and to try
to rescue hostages. But Israel’s security
chiefs know the goal of destroying
Hamas is probably beyond their
reach. Hamas has a political base and
extensive external support from Iran.
Urban warfare is tough. We witnessed
in Aleppo and Mariupol whole cities
being flattened to defeat a dug-in
force. Retaking Mosul from Isis took
US-led forces nine months and cost
thousands of civilian deaths. Israel
doesn’t have that time: its military
knows it will be up against demands for
an early ceasefire.
The second challenge will be, what
comes after? The priority after a major
terror attack is to prevent a repeat. I
understand that one option Israelis are
considering is to seal off the whole Gaza
Strip with a double barrier, a new one
some distance inside Gaza territory in
addition to the current border wall, and
to close all the crossings into Israel.
But that leaves the question of who
will administer Gaza and its citi-
zens. Israel has no appetite to occupy it
★ FINANCIAL TIMES
Opinion
competitor. Whatever the calculation
behind its EV foot-dragging — it contin-
ues to believe that hybrids will have a
critical role in the vehicle mix around
the world — its laggard status on this is
striking. The unflattering contrast with
Tesla is obvious; the threat represented
by China’s rapidly emerging legion of
aggressively expansionist EV makers is
probably the more unsettling.
Few things define the
country’s hopes for the
future as neatly as this
single technology
And this is the disquiet into which the
Japan Mobility Show — known for dec-
ades as the Tokyo Motor Show, but now
retuned for worthier ESG times — has
set up shop. In the relative absence of
non-Japanese exhibitors, it has become
the showcase of an auto industry des-
perately hoping that 100 per cent of its
skills and experience will be relevant in
this new world of upstarts and usurpers,
without explanation. The lockdowns
triggered the country’s angriest disaf-
fection in years and damped the econ-
omy’s animal spirits. Investors detest
few things more than uncertainty. Xi’s
economic ineptitude has been hard to
overstate. The same applies to his abil-
ity to frighten China’s neighbours.
The second change has thus been the
speed with which the US has tightened
its latticework of Asia-Pacific ties. Biden
has re-established defence co-operation
with the Philippines, launched a strate-
gic partnership with Vietnam, encour-
aged Japan to double its defence spend-
ing, brokered a South Korea-Japan rap-
prochement at Camp David, and turned
the Quad group with India, Australia
and Japan into a feature of the land-
scape. There is also the 2021 Aukus
It is doubtful the US
president’s efforts will
add a single point to his
mediocre approval rating
again. The West Bank’s Palestinian
Authority can’t ride in on the back of
Israeli tanks. Egypt, understandably,
refuses to absorb 2mn refugees, a step
that would serve the agenda of some
hard-right Israelis who want to drive
Palestinians out of their homes.
Some international administration of
Gaza is called for. The UN has done this
before in Namibia, Cambodia, Bosnia
As military action steps up,
we should keep in mind
the longer-term goal
of stabilising Gaza
and East Timor. The US did it in Iraq
after their ill-fated invasion. Mistakes
were made, but in each case an adminis-
tration kept the country going and an
international military force held the
ring so a new government with local
support could emerge.
In Gaza, the challenges would be
huge. Any such presence would have to
be led by Arab countries such as Egypt,
but is increasingly resigned to the idea
that the ratio might be far lower.
In that resignation, there is an unfa-
miliar decline in outward confidence.
Japanese companies are certainly now
building and designing EVs, but are
doing so in a way that makes them look,
in late 2023, more like challengers in a
new industry than incumbents in one
they have dominated for decades. That
positioning may have suited Japan a half
century ago when its then scrappier car-
makers were unseating US and Euro-
pean rivals; it is not clear they are as
suited in their more stately present.
But Toyota has an alternative narra-
tive. It has not been on the back foot at
all as Tesla and others have advanced
and land-grabbed, but biding its time. It
has been allowing the early days of the
EV market to establish standards on
pricing, range, charging time and relia-
bility that it believes it can comfortably
surpass. It envisages, in other words, a
leap from laggard to leader on EVs. The
fact that Toyota holds investment
stakes in Subaru, Mazda, Suzuki and
Isuzu suggests that, if successful, it may
carry those others with it.
nuclear submarine deal with Australia
and the UK. None of these alone is
game-changing. Collectively, they send
a clear message.
All this has taken place against down-
ward revisions to China’s economic
potential. The near universal expecta-
tion that China would soon overtake the
US keeps being postponed by a decade
or so. The new consensus that China is
stuck in a middle-income trap may be as
overblown as the old one that world
domination was around the corner.
Nobody knows. The important point is
that China has at least temporarily lost
that swagger about its ultimate destiny.
All of which adds up to a greater readi-
ness to talk.
Biden should be credited for exploit-
ing these openings. It is doubtful his
efforts will add a single point to his
mediocre approval ratings. Again, how-
ever, it is worth comparing to the alter-
native. Were China’s military still refus-
ing to take America’s calls, the risk level
in today’s hair trigger world would be
far higher. That would add to global oil
prices and subtract from Biden’s domes-
Morocco and Saudi Arabia that would
be acceptable to Israel and have stand-
ing with the people of Gaza. Others like
Pakistan, Indonesia and the Gulf States
could contribute. A UN-approved
administration would require a Security
Council mandate, and Russia and China
would sign up only if this was an Arab-
led initiative. An alternative would be
an Arab League mandate, but that alone
may not carry the necessary authority.
Meanwhile, Israel faces severe threats
from Iran and its proxies, especially
Hizbollah in Lebanon. The current cri-
sis may expand to embroil the wider
region, though both Tehran and Hizbol-
lah have talked tough while behaving
with caution. Rocket exchanges across
the Israel-Lebanon border have stepped
up dangerously but neither side will
want to open a new front.
Iran will go on supporting Hamas and
Hizbollah, and proxies in Iraq, Syria and
Yemen too, as long as it pursues an ide-
ology of Islamic revolution. Change of
some sort is coming, however: the
Supreme Leader, Ayatollah Khamenei,
is 84 and the regime is preparing for a
transfer of power with no agreed succes-
During this time-biding, runs the nar-
rative, Toyota has been developing the
solid-state battery that will make the
laggard-to-leader leap possible, and is
close to being able to mass produce the
miracle. For all the doubts still swirling
around this, investors clearly relish the
story and are prepared to take the bet
that it will work out. Toyota’s strategi-
cally timed progress updates on solid-
state batteries have sent its shares to
multi-decade highs, driving them up 47
per cent this year alone.
Without ever being an overt feature of
Toyota or anyone else’s exhibit, the sol-
id-state narrative was a powerful pres-
ence at the Japan Mobility Show. Few
things define the country’s hopes for the
future as neatly as this technology and
everything it could potentially carry
with it, especially in an industry as cen-
tral to the nation’s sense of itself as cars.
Ageing, shrinking and decreasingly
competitive, Japan has left itself in need
of a steady drip of technological mira-
cles. It needs solid-state batteries more
than anyone will admit.
leo.lewis@ft.com
Ellie Foreman-Peck
tic ratings. As Biden’s national security
adviser, Jake Sullivan, this week pointed
out: “High-level and repeated interac-
tion is crucial to clear up mispercep-
tion . . . and to arrest downward spirals
that could erupt into a major crisis.”
Nothing fundamental has changed
about US-China rivalry. Chinese vessels
and aircraft continue to intimidate oth-
ers in its vicinity. America is tightening
curbs on outward investments to China,
and further restricting Chinese invest-
ments in the US. Xi could cross the line
by supplying Russia with military
materiel in its war on Ukraine. With
some reason, Xi continues to think that
America wants to keep China down. The
more they can converse, however, the
lower the existential risk. By my count,
Sullivan has spent about 20 hours talk-
ing to Wang in Vienna and Malta during
the past few months, which is as much
time as a patient might spend with their
therapist. It is harder to read bad faith
into your adversary when they are
objecting civilly to you in private.
edward.luce@ft.com
sor in sight. It’s fantasy to think that a
liberal figure might emerge. But as we
have seen with Mikhail Gorbachev in
the Soviet Union and Deng Xiaoping in
China, new autocratic leaders can
upend established policies, especially
when the economy is crying out for it.
The Middle East is already changing
for the better — an evolution which
Hamas’s assault is trying to
reverse. Israel is becoming an accepted
part of the region with closer ties to the
Gulf. After making a series of mistakes
in his early years, Saudi Crown Prince
Mohammed bin Salman is now trans-
forming Saudi Arabia. He has also cut
funding for Wahhabi mosques around
the world which removes one driver of
extremism.
As military action steps up, the awful
humanitarian crisis in Gaza deepens
and we face the risk of violence from
misguided groups in our own countries,
we must keep in mind the longer-term
goals of stabilising Gaza and finding a
path to an enduring solution.
The writer is former chief of MI6 and UK
ambassador to the UN
15
‘Official’ UK
labour data is
becoming a
nonsense
ECONOMICS
Chris
Giles
T
he UK’s official measure of
unemployment stood at 4.2
per cent in the three
months between June and
August this year. The defi-
nition is precise. It means that of the
population aged 16 or above who are
either working or actively seeking
employment and ready to start in the
next two weeks, 4.2 per cent did not
have a job.
A longstanding problem with this offi-
cial definition is that it does not accord
with most people’s view that you are
unemployed if you are of working age
and do not have a job. That should make
us think about how we regard unem-
ployment. But the more immediate cri-
sis is that the official figure is probably
nonsense.
Should we be pleased that the latest
official unemployment rate is down
from 4.3 per cent in the previous official
publication? Should we worry that the
latest rate is 0.2 percentage points
higher than it was three months ago? Or
should we feel relief that the latest vin-
tage of data was better than the previous
one when the quarterly rise in unem-
ployment was measured at 0.5 percent-
age points?
The answer is we have no idea what
we should feel because we cannot have
confidence in any of these official fig-
ures, even though they come from the
august Office for National Statistics.
The survey that traditionally under-
pins the main labour market data has
seen its response rate decline from
The ONS cannot currently
tell us with any certainty
whether the jobs market is
loosening or tightening
almost 50 per cent a decade ago to 15 per
cent this year. So bad is the data that the
ONS stripped the figures of the
“national statistics” kite mark on Tues-
day this week, but due to the weird way
the law prescribes these things, the fig-
ures are still “official statistics”.
The data crisis is deeply problematic
for economic policy. The ONS cannot
currently tell us with any certainty
whether the labour market is loosening
or tightening, so the Bank of England
will have more difficulty than usual in
setting interest rates. It cannot tell us
whether the UK really has been an inter-
national outlier after the pandemic in
seeing a sharp rise in the number of sick
people not seeking work, potentially
highlighting the damaging economic
effects of high NHS waiting lists. It can-
not provide any guidance on whether
tax changes have caused a collapse in
the self-employed.
It cannot do these basic tasks because
its figures might well be rubbish.
It was obvious to me last month that
the unemployment data could not be
trusted. But instead of abjectly apologis-
ing for a problem it has known about
since early 2021 when Michael O’Con-
nor and Jonathan Portes first high-
lighted strange figures coming from the
labour force survey, the ONS published
an upbeat blog on Tuesday. According
to the UK’s statistical agency, we should
be pleased it is “transitioning to better
methods of data collection fit for the
digital age”. That was extraordinary.
Voters should demand a solid under-
pinning of fact to guide political dis-
course. Ministers have a right to be furi-
ous that the UK labour market figures
are chopping and changing and might
well paint an unnecessarily negative
picture of the economy, just as the previ-
ous vintage of gross domestic product
figures did. But they should also feel a
little ashamed that the international
reputation of the statistics is deteriorat-
ing and that is partly down to a lack of
funding for a very small and cheap gov-
ernment department.
Money is not everything, however,
and it is for the ONS and its regulator the
UK Statistics Authority to stop covering
up the horrors in our labour market
data and state clearly what all close
watchers of the data know.
Right now in the UK, we do not know
what is happening to unemployment,
labour force participation and the for-
tunes of different groups in the jobs
market. In important respects, our eco-
nomic policymakers are flying blind.
chris.giles@ft.com
16 ★ FINANCIAL TIMES Thursday 26 October 2023

Equity valuations: not-so laggardly London

The UK stock market has traded at a widening discount to peers since the Brexit vote in 2016. Falling equity
investments by the UK savings industry are one reason. Some UK stocks with higher returns on capital are
valued above US counterparts.

Twitter: @FTLex
Payments/Worldline:
rough reckoning
Digital-payment companies are sorely
in need of a new narrative.
As Worldline’s disastrous profit
warning highlights, their last one — a
tale of secular growth, consolidation
and network benefits — no longer
inspires belief. The Paris-listed stock
halved in value. That hair-trigger
reaction embodied a massive loss of
faith rather than a purely arithmetical
reaction to bad numbers.
Worldline missed a shooting gallery
of targets. Growth for the year might
reach 6-7 per cent, from 10 per cent
expected previously. Operating profits
will be about 12 per cent lower for the
full year. Other payments stocks
dropped in response. Adyen, already
down sharply after a profits warning in
the summer, fell 10 per cent more.
Italy’s Nexi, boosted by recent takeover
talk, lost as much as one-fifth.
The sales pitch for stocks such as
Worldline focused on rapid growth in
digital payments. A spike in pandemic-
induced online shopping sent
valuations for processors soaring.
The sector has two parts.
Consolidators have aimed to build bulk
through takeovers, such as Worldine’s
€7.8bn purchase of Ingenico. Fintechs
like Block, Stripe and Adyen have
sought to disrupt the payments
establishment. The growth story of
both groups is fragmenting amid
economic shocks. Worldline blamed
softer sentiment, particularly in
Germany, for its poor performance.
The secular issue is that entrants are
pushing down prices. There is less
differentiation in services than
optimists suppose. Capacity may
become commoditised in the way
telecom bandwidth has. Through
that lens, takeovers by consolidators
would look destructive rather than
transformative. The market is writing
down the value of the deals, informed
by an $18bn hit taken by FIS on
Worldpay, acquired for $43bn in 2019.
While there is still plenty of room for
growth, with about half of European
payments settled through banks, these
too are under pressure to lower fees. A
digital euro — or Lagardecoin, as
christened by Lex — would also put
pressure on the sector.
Companies that have built scale —
witness Worldline’s €400bn of
processed transactions — have high
margins and something of a moat. But,
unlike physical networks, moats for
tech infrastructure can be vaulted by
the next wave of innovators.
Margins can only go one way: down.
Microsoft:
cloud surfing
Generative artificial intelligence is a
data-intensive business. The quickest
and easiest way to scale up processing
power is via cloud computing.
That is very good news for Microsoft,
the second-largest vendor of cloud
services. On Tuesday, Microsoft
demonstrated how strong demand for
computer power has become. Revenue
in the Intelligent Cloud unit increased
19 per cent in the three months to
September 30, aided by a cloud
partnership with Oracle.
For a company with a market
capitalisation of $2.5tn to expand the
largest segment of its business at this
pace is noteworthy. Compare it with
Alphabet, where Google Search
revenue rose 11 per cent in the last
quarter; or Apple, where iPhone sales
are growing at 2.5 per cent.
Rapid cloud expansion meant that
Microsoft disproved projections of
slowing growth. Even better,
investment in generative AI start-up
OpenAI, home of ChatGPT, has allowed
it to add AI to its services while at the
same time slowing R&D spending. This
rose less than 1 per cent in the quarter.
If companies want to integrate
OpenAI’s tools, they can do so via
Microsoft’s cloud computing platform
Azure. OpenAI has also enabled
Microsoft to build AI assistance into
products such as Word and Excel.
Before AI, one of Microsoft’s biggest
bets was in gaming. After a nearly
two-year fight, its $75bn deal to buy
Activision Blizzard has been approved
by US and UK regulators. But the deal
was born in a different time and now
garners far less interest. It will eat up
a large portion of Microsoft’s $144bn
in cash, equivalents and short-term
investments, too. So would a nearly
$29bn bill for back taxes that has
been demanded by US authorities.
Still, high cash generation will fast
replenish the total. Free cash flow rose
22 per cent to $21bn in the last quarter.
In the trillion-dollar group club, only
Valuations and returns for selected UK
and US peers
Return on capital Price/earnings ratio UK companies
Catering Engineering
25
20
15
10
5 jumped. Earlier this week the US 10-
0 cent yield for the first time since 2007.
Aramark Renishaw
Compass Sysco Nvent
Group Corp
FT graphic Source: UBS * Median figures from 2016-2022
The London stock market is not what
it was. Listings are scarce, successful
listings scarcer. Chest-beaters blame
the post-Brexit economy, red tape,
and yield-hungry fund managers.
These factors have supposedly
lumbered London with a large
structural valuation discount. That
has a challenger in James Arnold, a
UBS banker. Analysis by his strategic
insights team suggests City declinism
has been inspired by comparing
British apples with US pears.
The UK market broadly trades at a
depressed price-to-earnings ratio.
Before the referendum, it traded in
line with the average at about 15
times forward earnings. If you
stripped the US out, there was even a
small premium.
Amazon trades at a higher price to
earnings multiple than Microsoft.
Cloud expansion merits that position.
CME:
the age of uncertainty
From the US regional banking
meltdown to the wars in Ukraine and
the Middle East, 2023 has been a year
of lurching from one crisis to another.
For CME Group, a US futures and
options exchange, economic and
geopolitical uncertainties have been a
boon. Traders betting on the direction
of the Federal Reserve’s monetary
policy have lit a fire under CME’s
interest rates futures markets.
Revenue at the largest derivatives
Ownership of UK
equities
Per cent
Insurance companies
Pension funds
Consumer Rest of the world Other
chemicals
Croda Ecolab
Ashland
1990 2000
Source: ONS
Since 2016, the standing of the UK
has progressively deteriorated. The
discount hit a record of 40 per cent
against world stocks at the end of last
year. The gap was 20 per cent against
the world ex-US. The UK now trades on
10 times forward earnings. Arnold says
such comparisons are not like for like.
His team paired 60 UK blue-chips
with US peers they judged closest in
type. Pairs included caterers Compass
and Aramark, and engineers Renishaw
and Nvent. UBS found that the British
stocks were either in line with US peers
or higher in two-fifths of the cases. A
big chunk of discount evaporated
simply through the exclusion of a
handful of US tech groups such as Meta
and Amazon. These have no peers in
the UK or anywhere else.
exchange in the US rose 9 per cent year
on year to $1.3bn in the third quarter.
Net income was 10 per cent higher.
The increase in revenue was driven
by strong demand for CME’s interest
rate futures. Volume rose 6 per cent
from a year earlier to nearly 11mn
contracts. Within this, average daily
volume for Treasury futures was up
18 per cent.
Terry Duffy, head of the trading
behemoth, is upbeat. CME shares are
having a strong run. The stock is up 28
per cent this year and trading on 24
times forward earnings. That is far
higher than rival US operators like
Intercontinental Exchange and
Nasdaq. It even tops the London Stock
Exchange Group’s 23 times multiple.
LSEG has diversified heavily into
data and analytics. The CME remains
UK discount has widened
since Brexit
Price as a ratio of forward earnings
20
100
MSCI All World
80 index
15
60 MSCI All World
ex-US index
40 10
MSCI UK index
20
0 5
2010 2020 2015 18 20 22 24
Source: LSEG
The remaining difference points to
a slim UK structural discount. This
reflects higher US returns on capital,
a function in turn of lower taxes and
a bigger domestic market.
A cynic might say you can support
any thesis you like with handpicked
data. Even so, UBS deserves credit for
challenging accepted wisdom. The
latter often turns out to be wrong
Arnold believes an inflection point
is near. Only a sliver of UK defined-
benefit pension money is still
invested in UK stocks.
Defined contributions and other
alternative retirement savings should
start mounting up. That should
support broad market valuations,
as well as the kind derived from
like-for-like comparisons.
focused on trading. Clearing and
transactional revenue account for more
than 80 per cent of the group’s total.
Income is volatile, with volumes for
particular hedges surging and
slumping from quarter to quarter.
Despite strong demand for interest
rates and energy futures, total trading
volume at CME during the third
quarter was flat year-on-year and
lower than the second quarter.
Average rate per contract, an
indicator of operating margins, also
declined on a quarter-on-quarter basis,
following three consecutive quarters of
gains.
When interest rate expectations
finally appear to start normalising,
investors should take a cue from the
CME’s customers and hedge their bets
accordingly.
High-yield bonds:
spread the news
For at least a year, market strategists
have told investors to pile into fixed
income securities. That has generally
been bad advice. Central banks,
including the US Federal Reserve, have
lifted short-term rates, depressing
bond prices. Long-term rates have also
year Treasury briefly passed a 5 per
Could this represent a high-water
mark, signalling that it is the right time
to buy into corporate bonds? Analysts
at Citigroup forecast that high-yield
bonds will return 7-9 per cent annually
on average over the next five years.
This is far better than recent results in
the era of easy money.
Citi noted that the “yield to worst”
(the implied return calculated to the
first call date) for the FTSE High Yield
index touched 9.63 per cent last week.
That is a benchmark that has almost
never been seen in the past two
decades, outside the financial crisis.
The analysis also shows that realised
high-yield bond returns typically trail
point-in-time peak yields by about 2 to
3 percentage points over five and 10
year horizons, respectively. That
return calculation relative to peak
yields factors in defaults and falling
interest rates. The latter decrease
reinvestment returns of cash coupons.
On the flip side, lower interest rates
increase the trading price of bonds
should they be sold prior to maturity.
Junk-bond yields have been inching
up, tracking the rise in Treasuries and
investment-grade debt. Spreads — the
difference between Treasuries and
high-yield bond yields — have stayed
in line with historical averages at about
4 to 5 percentage points.
There is an overriding question. Will
a weakening economy make it tough
for companies to refinance debt or pay
interest, pushing up defaults? In this
event, spreads would widen over base
interest rates that are already
historically high.
In that case, advice to jump into
fixed income will once again have been
premature.
Lex on the web
For notes on today’s stories
go to www.ft.com/lex

CROSSWORD
No 17,558 Set by HAMILTON
        ACROSS

 9 He’s great when it comes to knocking

things into shape! (10,5)
10 Handy therapy for first responders;
evidently it’s kicking in (5)
  11 Retribution for Cockney’s hat, said
tasteless thing (3,3,3)
12 Girl, 10, finds exit that could lead to
deck (5,4)
   
14 Animal hunger in central Sahara (5)
16 Pensions trustee charged with
arrogance (15)
   19 Ladies’ man in final French city... (5)
21 ...where one is spontaneous; that’s
extraordinary (9)
23 Experimental glassware for analysis by
    part of London Transport? (4,5)
25 Searching Ottawa to find a bar (5)
26 Fluffy Finnish rugs made for decorating
the home (4,11)
  
DOWN

1 Polish army corps rise for the last daily

 exam (5,5)
2 Charge for languages group on Tuesday
(6)
3 More vino ordered for one who’ll eat
anything (8)
4 It bites; bite back (4)
5 Peak concern as Spike loses time (10)
JOTTER PAD 6 Not least, schoolmates regrouped for
slow dance (6)
7 Sweater one considered, so to speak
Solution 17,557 (2,2,4)
8 Bond problem for host (4)
) 5 $ 1 & , 0 3 2 6 ( 6
13 Has more books around 2nd June, and
5 0 + 1 5 8 (
the 4th in particular (10)
1 , 6 , $ 1 6 : ( 5 % $ & .
15 Out St Basil, revealed as having
6 * 3 ( / 6 7
totalitarian views (10)
1 , & 2 / $ & 5 8 & , ) , ;
17 Mules, for your information, made
$ 7 7 ' ' 2
, 1 7 ( 5 , 2 5 ' ( 6 , * 1
ready to be mixed up (8)
; ( (
18 Don’t move, especially when drunk!
$ 1 7 , ' ( 3 5 ( 6 6 $ 1 7
(3,5)
/ 5 , ( 6 2
20 Tell Barry’s finally able to be working
/ , . ( + ( / / 7 + 5 $ & ( at levitating! (6)
( 0 6 / $ 8 $ 22 Stand-in is somewhat more
, 1 7 ( 5 1 0 ( 1 7 0 , 1 ; gentlemanly (6)
You can now solve our crosswords 23 Work engagement ends with question
( 6 2 1 ( 3 ' in the FT crossword app at
( ; 7 , 1 & 7 6 $ < 6 2 (4)
ft.com/crosswordapp
24 Almost broke cover (4)*