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INTERNATIONAL
Ireland game-changer poised to be premier tion, and suggested Italy could vote on
the same day as Germany in September.
Voting with Berlin would make sense
for many reasons on a European level,
and would allow the new parliament to
Rightwinger Varadkar said to cated at expensive private schools. Mr set five years of economic policy with-
Coveneys patrician earnestness is prov- out losing a day, Mr Renzi told Il Mes-
have X-factor that will ensure ing a handicap on the hustings, how- saggero.
ever; Mr Varadkar appeared to have a With Democratic party lawmakers
he leads Fine Gael and nation better understanding of the mood of his due to discuss electoral reform today,
Carlow audience. He was quick-witted Mr Renzi said a German system was
VINCENT BOLAND CARLOW and spoke briefly in Irish, which his possible in theory and had some vir-
opponent neglected to do. tues. One aspect of the system is that
He is, for some, the most dynamic per- Quite what his X factor might be is parties must get at least 5 per cent of
sonality in Irish politics: the countrys difficult to pin down, however. Mr Var- votes to gain seats in parliament.
version of Emmanuel Macron, the adkar is a machine politician. He joined The move by Mr Renzi comes after
youthful, pro-European new president Fine Gaels youth wing at 17 and repre- Silvio Berlusconi, the leader of the cen-
of France. For others, he is a rightwing sented it in the European Peoples party, tre-right Forza Italia party, and Beppe
ideologue who threatens Irelands cen- the main bloc in the European Parlia- Grillo, head of the populist Five Star
trist consensus. ment. He was a local councillor before Movement, also embraced the German
Leo Varadkar, the social welfare min- becoming an MP in 2007. Even in a model in recent weeks.
ister, whose personal story and political right-of-centre party he is notably right- It alters Mr Renzis previous prefer-
message to represent hardworking wing: his most eye-catching initiative as ence for first-past-the-post single con-
people who get up early in the morn- welfare minister was a crackdown on stituencies, or a run-off between the
ing have transfixed Ireland, has welfare cheats. leading parties, which are more likely to
emerged as the favourite to become the His message that he wants to repre- deliver a clear winner and avoid a hung
next leader of Fine Gael, the centre- sent people with ambition and talent parliament.
right party that leads the Irish govern- who work hard and pay taxes has drawn Italys sluggish recovery and a contin-
ment. Following a vote in parliament, he cheers from his supporters and criti- uous inflow of migrants have fuelled the
would then become prime minister, or rise of Eurosceptic parties led by Five
taoiseach, until the next election. Star, adding to nervousness in Europe
The 38-year-old gay son of an Indian
He has the potential about the countrys political direction.
immigrant father has taken a com- to have a dramatic But Mr Renzi he stepped down as
manding lead over Simon Coveney, his prime minister last year after a referen-
only rival for the job, as both men appeal
impact on our staid but dum defeat appears to be growing
for the support of fellow MPs, local volatile political system more confident in his chances of victory
councillors and Fine Gaels 21,000 over Five Star. After falling behind the
members. These three camps make up cism from opponents. But nobody anti-establishment party this year, the
the electoral college that will select a should be too surprised by it. You have PD has regained its footing and drawn
leader on Friday to replace Enda Kenny, to be rightwing to move up in Young even in recent polls.
who is retiring after 15 years as head of Fine Gael, said Mr Whelan. Of course it will be a complicated
Fine Gael and six as prime minister. Mr Varadkar is the first openly gay election but compared to a few months
Mr Coveney is not out of the race, but Irishman to be within shouting distance ago the party is more solid. The PD
the contest is Mr Varadkars to lose: the of becoming prime minister. As such, he seemed to be drifting: now it is less so,
latter has won the backing of most of his is part of a defining moment in recent said Andrea Romano, a PD lawmaker
fellow MPs, who have a two-thirds Irish history: in 2015, the country close to Mr Renzi.
weighting in the electoral college. A new became the first in the world to legalise Without a deal on electoral reform,
generation will then take control of Fine gay marriage in a popular vote. Irish the centre-left government led by Paolo
Gael, one of the two parties the other people believe they are progressive, and Gentiloni, Mr Renzis successor as prime
is the centre-left Fianna Fail that have Strongly pro-EU: says he has drawn support from across At a hustings last Friday in rural Mr Varadkars rise reflects that. minister, would carry on until the
dominated Irish politics for nearly a Leo Varadkar, the party, which is sometimes seen as County Carlow, that broad base of sup- His supporters portray him as a natu- scheduled end of the legislature in early
century. right, at his socially and culturally conservative. His port was evident in the 600-strong audi- ral addition to the ranks of youthful, 2018.
This is all about Leo hes a game- campaign socially liberal, economically conserva- ence. Though the crowd was relatively optimistic global leaders such as Mr Both PD and Forza Italia officials cau-
changer not just in style but in sub- launch this tive and strongly pro-EU views which evenly divided between backers of the Macron and Justin Trudeau, prime min- tion that talks on a new electoral system
stance, said Noel Whelan, a political month he broadly shares with Mr Coveney two men, Mr Varadkars supporters ister of Canada. Frances Fitzgerald, dep- could struggle. Mr Renzi and Mr Berlus-
commentator. He has the potential to Clodagh Kilcoyne/Reuters appeal to the partys core supporters seemed noisier and more enthusiastic, uty prime minister and a prominent coni used to have a good relationship
have a dramatic impact on our staid but among professionals. But the party also and in thrall to the X factor he is said backer of Mr Varadkar, said: He is very and struck a deal in 2014 on political
volatile political system. hopes they can appeal to a wider elec- to possess. much a politician of European stature reforms. But their alliance ended in
Helen McEntee, one of numerous torate at the next election, which could Both men come from relatively he has always shared the values and 2015 and they have not met for more
Fine Gael MPs to back Mr Varadkar, come as early as next year. wealthy backgrounds and were edu- vision of Europe. than two years.
Putin visit
MAKE A SMART INVESTMENT
Subscribe to the FT today at FT.com/subscription Macron uses Versailles to ease tension with Moscow
FRIDAY 31 MARCH 2017 WORLD BUSINESS NEWSPAPER UK 2.70 Channel Islands 3.00; Republic of Ireland 3.00
Tensions intensified during the need to maintain the integrity of the Mr Macron defended his decision to
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
HOW DRIVERLESS
OF THE TECHNOLOGY IS
Atlantic. PAGE 15; CHINA CURBS HIT DEALS, PAGE 17
French president Emmanuel Macron French presidential election when Mr Syrian state. Mr Putin seemed to con- deny access to Russia Today and Sput-
i Emerging nations in record debt sales Warning: this article may be
FT WEEKEND MAGAZINE
FEBRUARY 4 2017
attempt to reboot troubled relations false information in an effort to help region, he said. were no journalists and spreading
Setting up a digital customs system CDS, indicating it would be delivered on
has been at the heart of Whitehalls time. But last month, it wrote to the i HSBC woos transgender customers
Brexit planning because of the fivefold committee saying the programme had The bank has unveiled a range of gender-neutral
RALPH ATKINS ZURICH it followed a strategy offull client tax
increase in declarations expected at been relegated to amber/red, which DUNCAN
titles such asROBINSON BRUSSELS
Mx, in addition to Mr, Mrs, Misscompliance
or but was still trying to
British ports when the UK leaves the EU. means there are major risks or issues Ms, in a move to embrace diversity and cater togather the information about the probes.
FINANCIAL TIMES
About 53 per cent of British imports apparent in a number ofkey areas. Credit
needs Suisse hascustomers.
of transgender been targeted by
PAGE 20 HM Revenue & Customs said it had
come from the EU, and do not require HMRC said last night: [CDS] is on sweeping tax investigations in the UK, launched a criminal investigation into
checks because they arrive through the track to be delivered by January 2019, France and the Netherlands, setting suspected tax evasion and money laun-
single market and customs union. But and it will be able to support frictionless back Switzerlands attempts to clean up dering by a global financial institution
Datawatch
with Moscow. pro-Russian far-right candidate Marine The leaders also agreed it was time for propaganda.
Theresa May announced in January that international trade once the UK leaves its image as a tax haven. and certain ofits employees. The UK
Brexit would include departure from
both trading blocs. HMRC handles 60m
declarations a year but, once outside the
customs union, the number is expected
to hit 300m.
The revelations about the system,
the EU . . . Internal ratings are designed
to make sure that each project gets the
focus and resource it requires for suc-
cessful delivery.
HMRCs letters to the select commit-
tee, which will be published today, pro- AFP
Terror attacks inwith
co-operating
were contacted
Highlighted
western
attack byOthers
Europe after
authorities
offices in London, Paris and Amsterdam
Recent
330 Hudson Street, Presidents Day, Good Friday, Memorial Day, Labor
while Australias revenue department and Nice, and the while French officials said their
probe;
likely to throw a sharper spotlight on change, but some MPs believe it was sels over five or six other business written in Brussels bourg thought to be more likely Norway Brussels suicide
said it was investigating a Swiss
Nice bank. investigation had revealed several
Le Pen. Mr Putin denied claims that There was another awkward moment
whether Whitehall can implement a caused by Mrs Mays unexpected deci- cities in its decision to set up an will be reinsured back to the homes for the industry. But Paris bombings have
host of regulatory regimes in areas sion to leave the EU customs union. EU base to help deal with the syndicates at its City of London Mr Nelson said the city won on The inquiries threaten to undermine thousand bank accounts opened in
bucked the trend
ranging from customs and immigration Timetable & Great Repeal Bill page 2 expected loss of passporting headquarters, pictured above. its transport links, talent pool efforts by the countrys banking sector Switzerland and not declared to French
of generally low
to agriculture and fisheries by the Scheme to import EU laws page 3 rights after Brexit. The Belgian capital had not and extremely good regula- to overhaul business models and ensure tax authorities.
fatalities from
time Britain leaves the EU. Editorial Comment & Notebook page 12 John Nelson, chairman of the been seen as the first choice for tory reputation. customers meet international tax The Swiss attorney-generals office
Sources: Janes Terrorism and Insurgency Centre terror incidents in
requirements following a US-led clamp- western Europesaid it was astonished at the way this
Problems with CDS and other projects Philip Stephens & Chris Giles page 13 centuries-old insurance mar- Londons specialist insurance Lex page 14
New York, NY 10013 essential to Brexit could force London to JPMorgan eye options page 18 ket, said he expected other groups after the UK leaves the Insurers set to follow page 18
billions of dollars in fines.
The opening of an exhibition to mark Russians were behind hacking. when Mr Putin praised Ms Le Pens
There have been missed
City watchdog sends a clear message as
generals office expressed astonish- In 2014, Credit Suisse pleaded guilty
ment that it had been left out of the in the US to an extensive and wide-
actions co-ordinated by Eurojust, the ranging conspiracy to help clients THE RISE
Escape OF
the taper ECO-GLAM
trap
banker loses job over WhatsApp boast
EUs judicial liaison body.
Credit Suisse, whose shares fell 1.2 per
the tricentenary of Peter the Greats trip Mr Macron is keen to reset the rela- effort to bolster Franco-Russian rela-
LAURA NOONAN DUBLIN Berrys after discussions with regulators. media at work, but banks are unable to
JENNIFER THOMPSON LONDON
opportunities with
Shutdown risk as border according to the FCA. The regulator said in that it shows the FCA sees these mes-
with Spain handed veto over Gibraltar
regulators cracking down on commu- 390_Cover_PRESS.indd 1 19/01/2017 13:57
wall bid goes over the top nications over Facebooks popular Mr Niehaus had turned over his device saging apps as the same as everything
chat app. to his employer voluntarily. else.
to Versailles provided a timely opportu- tionship with Moscow, aides say. There tions and her stance on preserving
avert a US government shutdown after The fine by the Financial Conduct confidential information on the messag- included the identity and details of a
April 28 have resisted Donald Trumps Authority highlights the increasing ing system on a number of occasions client and information about a rival of ALEX BARKER BRUSSELS ambitious trade and airline access deals. mise. If Britain wants to prolong its
attempt to tack funds to pay for a wall problem new media pose for companies last year to impress people. Jefferies. In one instance the banker GEORGE PARKER LONDON Gibraltar yesterday hit back at the status within the single market after
on the US-Mexico border on to that need to monitor and archive their Several banks have banned the use of boasted how he might be able to pay off STEFAN WAGSTYL BERLIN clause, saying the territory had shame- Brexit, the guidelines state it would
stopgap spending plans. They fear staffs communication. new media from work-issued devices, his mortgage if a deal was successful. The EU yesterday took a tough opening fully been singled out for unfavourable require existing regulatory, budgetary,
that his planned $33bn increase in Several large investment banks have but the situation has become trickier as Mr Niehaus was suspended from Jef- stance in Brexit negotiations, rejecting treatment by the council at the behest of supervisory and enforcement instru-
uscirculation@ft.com, www.ft.com/subsusa
defence and border spending could
force a federal shutdown for the first
time since 2013, as Democrats refuse
banned employees from sending client
information over messaging services
including WhatsApp, which uses an
banks move towards a bring your own
device policy. Goldman Sachs has
clamped down on its staffs phone bills
feries and resigned before the comple-
tion of a disciplinary process.
Jefferies declined to comment while
Living wage rise to pile
pressure on care services
postage paid at New York, NY and at additional
Britains plea for early trade talks and
explicitly giving Spain a veto over any
arrangements that apply to Gibraltar.
Spain. Madrid defended the draft
clause, pointing out that it only reflected
the traditional Spanish position.
ments and structures to apply.
Mr Tusk wants talks on future trade
to begin only once sufficient progress
nity for the newly elected French leader have been missed opportunities with national sovereignty to justify inviting
to accept the proposals. encryption system that cannot be as iPhone-loving staff spurn their work- Facebook did not respond to a request Senior EU diplomats noted that has been made on Britains exit bill and
to restore a demanding dialogue but Russia in the recent past, on Syria nota- her to the Kremlin during the campaign.
www.ft.com/subscribenow new living wage and the increase is The decision to add the clause giving British officials admitted that the EUs after Brexit with a trade deal.
STOCK MARKETS CURRENCIES INTEREST RATES
Tel: 0800 298 4708 expected to cost councils care services Spain the right to veto any EU-UK trade insistence on a continuing role for the Reports & analysis page 3
Mar 30 prev %chg Mar 30 prev Mar 30 prev price yield chg
Tel: +1 917 551 5040 to F.T. Publications Inc., PO Box 469, Newburgh, NY
360m in the coming financial year. deals covering Gibraltar could make the European Court of Justice in any transi- Jonathan Powell, Tim Harford &
For the latest news go to S&P 500 2365.93 2361.13 0.20 $ per 1.074 1.075 per $ 0.932 0.930 US Gov 10 yr 98.87 2.38 0.00
Analysis i PAGE 4 300-year territorial dispute between tion deal could be problematic. Man in the News: David Davis page 11
www.ft.com Nasdaq Composite 5902.74 5897.55 0.09 $ per 1.249 1.241 per $ 0.801 0.806 UK Gov 10 yr 100.46 1.21 -0.03
Madrid and London an obstacle to Brussels sees little room for compro- Henry Mance page 12
Dow Jones Ind 20703.38 20659.32 0.21 per 0.859 0.866 per 1.164 1.155 Ger Gov 10 yr 98.68 0.39 -0.01
THE FINANCIAL TIMES LTD 2017 FTSEurofirst 300 1500.72 1493.75 0.47 per $ 111.295 111.035 per 119.476 119.363 Jpn Gov 10 yr 100.45 0.06 0.00
No: 39,435 Euro Stoxx 50 3481.67 3475.27 0.18 per 139.035 137.822 index 76.705 76.951 US Gov 30 yr 100.14 2.99 0.01
Printed in London, Liverpool, Glasgow, Dublin, FTSE 100 7369.52 7373.72 -0.06 index 89.046 89.372 $ index 104.636 103.930 Ger Gov 2 yr 102.58 -0.75 0.00 Subscribe In print and online World Markets
still a dialogue with his Russian coun- bly. The idea is to keep Russia close to Macron adviser The meeting comes at a time of global
Frankfurt, Brussels, Milan, Madrid, New York, FTSE All-Share 4011.01 4011.80 -0.02 SFr per 1.069 1.072 SFr per 1.244 1.238 price prev chg
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2367.10
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0.932 US Gov 10 yr
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price
98.63
100.35
99.27
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0.33
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-0.01
0.02
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No: 39,436
Fax: +44 20 7873 5938, Copyright The Financial Times Limited 2017. All
FTSE All World $ 297.38 298.11 -0.24 Gold $ 1244.85 1248.80 -0.32 Prices are latest for edition Data provided by Morningstar
letters.editor@ft.com rights reserved. Reproduction of the contents of this Amid tensions over Ukraine, Syria before the meeting. a new round of talks with the German ing of the seven leading industrialised
Executive appointments newspaper in any manner is not permitted without and suspected Russian meddling in On Syria, the two leaders agreed to set and Ukrainian leaders on the simmer- nations in Sicily a club of which Mr
www.exec-appointments.com the publishers prior consent. Financial Times and
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Frances presidential election, Mr up a working group to better co-ordi- ing conflict in Ukraine. Putin has been excluded following his
Published by Times Limited. Macron described the talks as nate military operations and exchange The encounter seemed friendly: Mr annexation of Crimea that has
F.T. Publications Inc. 330 Hudson St, New York, extremely frank and direct. information in the fight against Islamist Macron and Mr Putin shook hands on exposed deep frictions with Mr Trump
NY 10013, USA; The Financial Times and its journalism are subject to We discussed the thorny issues, Mr terror groups, including Isis. the red carpet at the entrance of Louis and his western allies on climate, trade
Tel: +1 917-551-5000; a self-regulation regime under the FT Editorial Code
Editor: Lionel Barber of Practice: www.ft.com/editorialcode Putin said. I am convinced that the In a warning directed at the Syrian XIVs palace, drawing comparisons with and military co-operation. The rift
interests of our two countries will help leader, Mr Macron said Frances red the virile, knuckle-whitening grasp the prompted German chancellor Angela
Printed by Reprints are available of any FT article with your find solutions. line would be the use of chemical weap- French leader exerted on US president Merkel to acknowledge on Sunday that
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Tuesday 30 May 2017 FINANCIAL TIMES 3
INTERNATIONAL
INTERNATIONAL
ARTS
Reflections of
part of a collection of 10,000 works,
western and Japanese, developed in the
1920s. Eventually fire and financial
recession decimated and dispersed
Matsukatas holdings; among Matsu-
Japan in Europe
kata pieces which found their way to
Ishibashi here are the laconic, sketchy
Portrait de Manet par lui-mme, one
of only two Manet self-portraits, a lush
T
he Muse de lOrangeries surprises which make even 19th-
sumptuous summer exhi- century painting piquant and fresh. In a
bition Tokyo Paris opens rare, stunning Nature morte la tte de
with Shigeru Aokis vast cheval, painted during Gauguins brief
frieze of naked fishermen, experiment with neo-Impressionism,
some with ghoulish whitened faces, vibrant diagonal hatchings and blots
dragging home sharks, A Gift from the represent the Horse of Selene from the
Sea (1904), and ends with a black gold Elgin Marbles alongside Japanese fans
gestural waterfall Konto (1990) by and puppets. The contrasting elements
Kazuo Shiraga, who used to paint with blend in scintillating interplays of line am imagining this the sallow-skinned, late Renoir landscape Terrasse
his feet, swinging from a rope. and light, announcing twin allegiances JAPANESE narrow-eyed artist half-turned towards Cagnes, and Monets depiction of sub-
The first work is indisputably to western and eastern heritage. ART ONLINE us looks Japanese. merged trees as elegant abstractions,
Japanese; the second speaks the homo- The Gauguin shares a small gallery All these works come from Tokyos black verticals on an unstable watery
genised language of abstraction. with a lapis lazuli and peacock-blue As the British Museum launches Bridgestone Museum of Art, founded by ground Linondation Argenteuil.
Between the two hang mid-20th century orientalist watercolour fantasy featur- its major Hokusai exhibition, rubber tyre magnate Shjir Ishibashi, Ishibashi acquired other great Monets
Simon Schama reflects on the
works as enticing yet disorientating as ing a Japanese screen, La Toilette, by Japanese masters genre-defying whose Impressionist, modern and Japa- from the collections of painter Shintaro
Star Yasuis hard deco portrait of a Matisses teacher Gustave Moreau, and a genius, while FT arts editor Jan nese paintings now revisit Europe for Yamashita a cerulean Nymphas of
Japanese matron in a striped Chanel suit rugged self-portrait in uneven, loose Dalley presents a video survey of the first time since 1962. Like all good plunging steep perspective, the frag-
and jaunty red boater, Portrait of Mad- patches of colour Czanne coiff dun Hokusais influence on the west private collections, its attraction is the ment of water with mirrored sky and
ame F, and Tsuguharu Foujitas inky, chapeau mou, in which I dont think I ft.com/arts; ft.com/hokusai charm of a refined, distinctive taste: hanging willow suggesting at once
Ishibashis flair for powerful simplicity enclosure and infinity and banker
and clarity, tending towards minimal- Sanji Kuroki, who befriended the wid-
ism. Czannes Montagne Sainte- owed artist from 1918. Kurokis choice
Victoire et Chteau Noir, the Bridge- late paintings included a blistering
stones flagship piece, is an abstracted Crpuscule Venise and the tremu-
version of the celebrated motif. lous Nymphas, temps gris where
Matisses portrait of his daughter pink reflections begin to pierce the sur-
Marguerite La Jaquette raye and face of the overcast pond of water lilies:
Paul Signacs harbour watercolour flowers grown from bulbs sent from
La Rochelle, which hung in Ishibashis Japan, in Monets French garden.
living room, each leave large areas of Through pioneering Japanese collec-
white ground bare to luminous effect. tors, quick to appreciate the Nymph-
Beyond Ishibashis personal interest, eas when most French collectors in the
though, lies a broader historical story. 1920s disdained them, these works
This is a collection rooted in a century of went home to Tokyo. Returning now to
east-west correspondences, which the Orangerie, they bring the Franco-
unfold with striking resonance against Japanese exchange full circle.
the backcloth of the Orangeries monu- Ishibashi died in 1976; a decade later
mental, permanent immersive installa- Japanese enthusiasm for 19th-century
tion of Monets Nymphas. French painting transformed the mar-
Monets debt to Japan, and the popu- ket into the record-smashing global
larity across fin-de-sicle art of theatre we know today, after Japanese
japonisme motifs, have long been businessmen Yasuo Goto and Ryoei
acknowledged. Van Gogh believed all Saito bought Van Goghs Sunflowers
his work derived from the bold, flat, ($39.9m in 1987) and Dr Gachet
cropped, high colour compositions of ($82.5m in 1990).
Japanese prints. Monet felt similarly: Ishibashis heirs took an alternative
invited to exhibit in Tokyo, he replied, route, expanding the Bridgestone with
with the admiration I have for Japanese postwar works amplifying east-west
art, I am wondering what would be the dialogue. Hisao Domotos packed red
point of showing my poor efforts there. and black rectangles Solution de
An engagement with Hokusai defines Clockwise from top left: Saint- Continuit no 9 and Wou-Ki Zaus
his earliest work: he could never have Mamms et les coteaux de la Celle slippery, subtle abstraction 07.06.85
painted the buoyant 1860s masterpiece matin de juin (1884) by Alfred typify purchases of the last two decades.
Terrasse Saint-Adresse without the Sisley; Jardin potager au jardin de So does a starry work by the westerner
formal design, flat surface and elevated Maubuisson, Pontoise (1878) by who influenced them both, Paul Klees
viewpoint of Gohyaku Rakan-ji Camille Pissarro; Czanne coiff rough/refined pattern in oil and sand,
Sazai- do Temple from Thirty-six dun chapeau mou (c1890-94) by Island, formerly owned by Daniel-
Views of Mount Fuji as model. Paul Czanne; Nature morte la Henry Kahnweiler, then Mies van der
Less well-known is the cultural jour- tte de cheval (1886) by Paul Rohe. All contribute to a top-flight, mul-
ney in the opposite direction. Ishibashi Gauguin; ventail noir (1908-09) tifaceted show, inviting us to reconsider
began as a collector of yga painting: by Takeji Fujishima the familiar through the unfamiliar, and
fusion works employing western styles Bridgestone Museum of Art, Ishibashi Foundation the global through the personal.
for mostly Japanese subjects. A pair of
tall gold-backed screens featuring To August 21, musee-orangerie.fr
In an echo of the subprime housing crash that triggered the financial crisis, delinquencies of US car loans
are rising amid allegations of mis-selling and concerns over the bundling of debt from the $1.2tn market.
By Ben McLannahan
K
athy Boluch was in a bit of a
state when she visited her
local used-car dealership in
Quincy, Massachusetts. The
rear of her Volvo had been hit
by a drunk driver and her insurer was
badgering her to buy another vehicle so Fast growth Total auto loans
she could return the rental car it had outstanding hit $1.17tn at the end of the
given her. But her low credit score and first quarter, up 70 per cent since 2010
irregular income disqualified her from
every loan available until the guys out Brakes applied Some big banks have
the back called Santander. cut car lending amid fears that buyers
Within a couple of hours she was driv- have taken on too much debt
ing off in an $18,000 Chevrolet sport
utility vehicle, financed with a $16,000 Bank pain A combination of higher
loan from Santander Consumer USA, defaults and lower recovery rates on
the auto-loans division of Spains biggest the cars could be damaging for lenders
bank. To clinch the deal, the salesman
suggested that Ms Boluch, a freelance
copywriter, help out the dealership with
promotions. He even listed her as an were right. Of the 11 loans Santander
employee on the loan application. Consumer examined in 2013, just one
But the work never came. Five years stated income was accurate and another
on, Ms Boluch, 60, is still paying $350 a three could not be verified. Of the seven
month to bring down an outstanding that were inflated, the smallest over-
balance of about $10,000. Meantime, statement was $45,324 a year.
she has spent another $7,000 on repairs Outrageous, said Maura Healey,
to a terrible car that would now fetch attorney-general of Massachusetts, as
about $750 in a sale. she handed out the fine. The company
I was basically putty in their hands, had continued to buy loans from the
totally swept off my rational sensible unnamed dealer even after the fraud
self, drawn into this vortex, she says. was detected.
Ms Boluchs story which helped Ms Healey drew parallels to earlier
trigger an investigation by the state home-loan cases featuring Goldman
attorney-general and a $22m fine in Sachs, Royal Bank of Scotland and
March for Santander Consumer is just Countrywide, among others. After
one of many from a seven-year boom in years of combating abuses from sub-
car loans that has strong echoes of the prime mortgage lenders, these practices
pre-crisis mortgage frenzy. are unfortunately familiar, she said.
Used car glut
What we should have The big banks have been throttling back
learnt from the last crisis and assuring investors that the prob-
lems can be contained. Wells Fargos
was that we can prevent $5.5bn of auto-loan originations during
needless repossessions. the first quarter were down 29 per cent
from a year earlier.
But we didnt Last month, Franklin Codel, head of
consumer lending, said Wells had been
In both cases, big banks and finance taking prudent steps to manage
companies relaxed underwriting stand- industry stresses within its $61.5bn
ards to keep up with rampant competi- portfolio.
tion. Investors snapped up whatever JPMorgan Chase has slammed on the
high-yielding products investment brakes too, adding $8bn of loans and
banks could come up with. And con- leases during the quarter, down 17 per
sumers signed up to big loans on the cent. According to Gordon Smith, head
assumption that if they had trouble pay- of the banks consumer banking divi-
ing them off, they could always just sell
the asset.
Just as with mortgages, the car loan
I was basically putty
business has grown rapidly. Total auto Buyers look at
in their hands, totally
loans outstanding came to $1.17tn at the
end of the first quarter of this year,
new cars at a swept off my rational
Ford dealership
according to the New York Federal
Reserve, up almost 70 per cent since a
in Glendale, sensible self, drawn
post-crisis trough in 2010. That has
California Kevork
Djansezian/Getty Images into this vortex
helped push total household debt to
$12.7tn, surpassing the 2008 peak. sion, the share of subprime loans within
Letters
Email: letters.editor@ft.com
Fax: +44 (0) 20 7979 7790
Include daytime telephone number and full address
Corrections: corrections@ft.com
This is not the time to August 2015 (The Big Read, December
30, 2016).
These two strands should be linked,
five years of programmes. Their work
is central to the Greek economic
reform efforts. It was based on
statistics compiled by Mr Georgiou and
his colleagues at Elstat were accurate
and that they were produced and
Geoffrey Woglom
Amherst, MA, US
For a full list of signatories, go to
diminish the Treasury but to date have not been. The European standards for statistical data disseminated using appropriate ft.com/letters
Brexit settlement must than they received in public spending UK aid must be preserved
Britain needs a strong chancellor with the power to kill off bad ideas (May 24).
support British business This is an alarming figure. It is and rigorously spent
With little more than a week to go to decision to replace Mr Hammond, Sir, I am writing in response to the disgracefully low. Sir, We warmly welcome the main
the UK election, civil servants are would be suspect. Mrs May has made it article Frustrated business leaders Londoners have succeeded in political parties promise to uphold our
weighing the implications of a likely clear that the economy will not be her seek to rebuild ties with No 10 (May redefining, to their own advantage, the commitment to international aid. We
Conservative victory for their own overriding priority. Her wish to control 29). As the leading body for small and rights of property owners, and have know from our work the extraordinary,
departments. Treasury officials have the details of policy has already led her medium-sized enterprises in the UK, used these powers to restrict new life-saving impact of UK aid.
more cause for concern than most. Ear- to take some poor decisions most we have enjoyed improving housing. Non-Londoners have been We also welcome the promises made
lier this month, Theresa May pointedly recently on the funding of social care relationships with all parties. Our work unable to move and participate in the to ensure the UKs aid budget has
refused to confirm whether Philip on advice from too small and tightknit led to good government decisions for productive and well-paid London maximum impact. No one is keener
Hammond would keep his job if she a circle of aides. A further tightening of help on business rates for small firms economy. than us to see UK aid spent effectively
wins. Her equivocation, following a No 10s grip would not be reassuring. and to stop a National Insurance tax Londoners may gloat over their when lives are at stake, we must be
series of bruising run-ins between No The problem now is not that the hike on the self-employed. housing wealth, but it has been rigorous about every penny.
10 and No 11, has fuelled rumours that Treasury is too strong or the chancellor The Federation of Small Businesses acquired at very severe cost to the rest The Conservative party has proposed
she might replace him with a more pli- too meddlesome. The department has been listened to, both by those in of the UK. a review of the OECD-governed rules
ant chancellor, trim his powers or increasingly looks sidelined. Mr Ham- power, and also those who seek to be. How large a cost? A recent study on aid spending. These rules are
even break up his department. Any mond has signalled that he intends to Whoever wins on June 8, we do not relating to the US suggests that neither perfect nor frozen in time, but
such move would be a serious mistake. refrain from policy gimmicks and focus want to see the return of a big business economic growth there, over recent I keep having that dream where I they do provide a robust framework for
It is not that the Treasury deserves to on the core task of managing the public advisory group dominated by FTSE decades, has been halved by think I can fly ensuring that development assistance
be inviolate. Its broad remit and politi- finances. But on the crucial issue of 100 executives, which excluded the restrictions on housing supply. The puts people living in poverty first.
cal clout are unusual: many other Brexit, he is struggling to assert his interest of 5.5m small businesses. damage on this side of the Atlantic has We are very concerned about the
countries split financial and economic influence. The Treasury warned of the I agree with the CBI that the benefits surely been on a similar scale. Stylistic turgidity hit a rival suggestion that this country should
policy into separate ministries. There costs of leaving the single market and of business and the next government If so, the tiny subsidy is an entirely institution decades ago apply new aid rules unilaterally if
are good reasons to question its customs union, and of the self-defeat- working together are clear therefore, inadequate response to the damage agreement is not reached on any
extraordinary concentration of power ing nature of the net migration target, we are calling for a proper partnership that Londons Nimbyism has inflicted Sir, The Paul Romer story (May 26) proposed changes. This step could
and the way it has historically used its but lost the argument. between government and business on the rest of the United Kingdom. takes me back to the mid-1980s when I weaken the vital independent scrutiny
budgetary and economic roles to dic- Given the difficult trade-offs Brexit small, medium and large to deliver Ian Hirst was a member of a team of economists and standard setting role played by the
tate policy to other departments. will require, and the choices it entails, it an ambitious agenda for jobs and Emeritus Professor of Finance, at the UN department of economic and Paris-based OECD, and heighten the
There are also good grounds to ques- is vital to have a strong chancellor who growth and a pro-business Brexit for Heriot-Watt University, social affairs putting out the annual risk of misuse of aid.
tion its record of economic manage- can voice the concerns of business and trade, talent and transition. Edinburgh EH14, UK World Economic Survey. The survey As a nation we are rightly proud of
ment from its failure to moderate the advocate the needs of the economy. It is Mike Cherry far predates the World Development our global leadership in development,
Lawson boom of the 1980s, to its reli- equally important to have a depart- National Chairman, Federation of Small Funding woes persist but Report and is the oldest document of a record we have built through a
ance on light touch regulation in the ment that can make the case as the Businesses its kind. The turgidity that you determination to seek international co-
run-up to the financial crisis. More cul- Treasury consistently has for compe- London SW1, UK nuclear has a role to play mention had perhaps already crept in operation and a resolute focus on the
pable, perhaps, is an institutional bias tition and openness to foreign invest- Sir, It is ironic that just as growing it and the arrival of competitors from worlds poorest people.
towards short-term control of spend- ment and skilled migration. Deficit of expertise holds numbers of environmental scientists other international organisations, like A truly global Britain is one that
ing that has starved Britain of long- Rather than undermining Mr Ham- and others have come to see the role the UN Conference on Trade and builds consensus with friends and allies
term investment in infrastructure. mond, as Mrs May did by reversing a the ministry back fission can play in providing both Development, was beginning to take about how to make the world a more
However, prime ministers have key element of his spring Budget, or Sir, With the latest public sector figures reliable and low carbon electricity the shine off the report in public eyes. peaceful and prosperous place.
toyed for decades with proposals to dismembering his department, the showing the UK deficit rising faster supplies, the Financial Times (The In came Goran Ohlin, the Swedish Amy Agnew
split the Treasury whether by creat- prime minister should back him up. than expected, the government now nuclear option is vanishing, May 27) economist, at the head of the Europe Director, Global Citizen
ing a ministry for economic affairs, or After all, the Treasury has one other more than ever needs a Treasury fit for should claim nobody outside the department. He soon began to fuss Christine Allen
by handing oversight of public spend- function that is nonetheless important purpose. (Treasury fears post- nuclear industry now thinks the future about the English being written for the Director of Policy & Public Affairs,
ing to No 10. This would be the worst for being unofficial killing off bad Election break up, May 26). In our of electricity generation is nuclear survey. With his red pencil at the ready Christian Aid
possible time to attempt such a reform. ideas that pose a threat to the economy. 2016 report A Modern Finance fission. James Hansen, Tom Wigley, he read every sentence we wrote, Chris Bain
Upheaval at the heart of Whitehall is There is no lack of well-intentioned but Ministry, we assessed whether the Ken Caldeira, George Monbiot, Mike mercilessly using it to strike out Director, CAFOD
the last thing Britain needs, given the ill-conceived ideas circulating at Treasury was fit for the challenges of Shellenberger, Stephen Tindale . . . bloated or winding sentences, often Tanya Barron
enormous strain Brexit will place on present and the stakes have never been the 21st century. It is certainly clear As the disaster of the German replacing them with simple ones, Chief Executive, Plan International UK
the entire machinery of government. higher. This is not the time to diminish that compared with the private sector, Energiewende unfolds greenhouse gas sometimes turning pages authored Tamsyn Barton
What is more, the prime ministers the chancellor or water down the the Treasury is under-resourced in emissions up four years in five, major even by the most senior economists Chief Executive, Bond
motives for any restructuring, or for a Treasurys influence. terms of its financial management boost for brown coal and the into a battlefield. Perhaps most Rose Caldwell
expertise and systems. Without inherent implausibility of 100 per cent importantly, he had copies made of Executive Director, Concern Worldwide
reforms, tackling the deficit, being renewables (or anywhere close) George Orwells seminal 1946 essay. UK
effective in spending taxpayers money becomes more obvious, there are Politics and the English Language, and For a full list of signatories, go to:
and informing political decision- many who would like to see a re-run of made it required reading for us. ft.com./letters
making with reliable information will the dash for nuclear of 1975-1995 We heard it said that the readability
Comment
The myth that voters have chosen to be poorer Irans banks face
reform to aid
POLITICS
year, his government was scrabbling
around for economic growth wherever
The Tories plan to replace immigra-
tion and European single-market mem-
controls and trade with Europe or,
forced to choose, favour the trade. The
because of diminished growth in the
capital. Would they console themselves post-sanctions
Janan
Ganesh
it could find some, its electoral pros-
pects hinged to tenths of a percentage
point in the quarterly data.
bership with an industrial strategy that
will not produce results, if at all, until
well into the next decade. They are
British did not brave the costs to vote for
exit. They just did not believe there
were costs. None of this suggests that
that at least their country was less glo-
balised and that Londoners had some of
the strut knocked out of them? Or would
recovery
A post-economic world, where voters relaxed about the lag because they buyers remorse about exit is imminent, they become angrier? This is not a hard
look past the material to nobler priori- believe that voters are willing to pay for but politicians who count on a new pub- question.
ties, is always in the offing. A smart poli- the society they want that Britain can lic tolerance of economic pain to get Mrs May and Mr Corbyn will deny
tician should assume that the offing is be poorer but happier, like an exhausted through the coming years are foolish indifference to growth and claim what OPINION
W
hen he ran to be US where it will stay. The thought occurs bond trader who quits to brew artisanal and should fear signs of a slowdown. they want is a fairer version of it. But the
president in 1968, Rob- because traces of that Kennedy-Cam- ales in Devon. It is fashionable to wave away GDP British will not happily weather a rough Naysan
ert Kennedy questioned eron naivete is it a trust-fund thing? talk as an abstraction for elites who, in period on the way, especially if it is Rafati
whether gross national survives in Britains general election the sin of the times, dont geddit. But attributable to government policies.
product could measure campaign. If anything, public anger those decimal-point movements trans- Any post-material consciousness is still
H
American greatness while it counted Neither Theresa May, the Conserva- late into wage rises given or withheld, confined to a sect. It is the politics of the aving secured a comforta-
napalm, cigarette advertisements, envi- tive prime minister, nor Jeremy Corbyn, stems from the crash, investments that generate returns or do retired asset owner and the too-rich-to- ble re-election victory,
ronmental ruin, special locks for our
doors and the jails for people who break
her Labour opponent, answer to eco-
nomic imperatives. Both interpret the
a slow recovery and not, public services that are funded or
start to creak. There was no populist
care bohemian. Everyone else the
average-earner, the welfare claimant,
Irans president Hassan
Rouhani will almost cer-
them. He sensed the loftier needs of a public anger of recent years as a cry for growth that is too weak momentum in, say, 2007, not even in the millionaire investor is hair-trigger tainly make the Iranian
rich but troubled nation. Within a dec- something more than the soulless quest the deindustrialised towns that seethe sensitive to fluctuations in GDP and the economy a priority. If the nuclear agree-
ade, slow growth and extreme inflation for 2.5-ish per cent annual output In that belief lies the eventual rout of now. Growth was unequal but there was way prices relate to wages. The poorer- ment reached with six major world
put paid to such high-mindedness and expansion, damn the human conse- this generation of leaders. There is no enough of it to keep unproductive parts but-happier thesis has it the wrong way powers in 2015 was the prize achieve-
gifted the west to free-marketers until, quences. Mrs May wants a more famil- evidence that voters are ready to bear a of the realm in state largesse. As official around. If anything, public anger stems ment of his first term as president, the
well, now. iar nation, a more British Britain. Mr cost to live in their own version of Eden. data exposed last week, the UK is a from the crash and a recovery of historic challenge of the next four years is to con-
When he became Britains prime min- Corbyn wants a more equal and state- Last year, a large majority told surveys patchwork of deficit-running regions slowness from growth that is too weak vert the lifting of international sanc-
ister in 2010, David Cameron said there controlled one. Both offset policies that they would not pay a single pound to cut that are subsidised by London and its rather than a will to transcend growth tions into jobs, investment and growth.
was more to life than gross domestic risk immediate damage to the economy European immigration. A similar per- surrounds. Imagine if voters in those altogether. Since the nuclear deal came into
product and offered wellbeing as an with policies that might restructure it centage still either assume there is no areas receive less generous transfer pay- effect, Iran has raised its oil exports and
alternative metric of success. Within a over time. choice to be made between migration ments and inferior public services janan.ganesh@ft.com lowered inflation. But one of the
laments from Tehran is the reluctance
of foreign banks to follow international
oil companies, aircraft makers and car
Daniel Pudles
manufacturers, which have begun to dip
Merkel, Trump
their toes in Iranian waters.
This, Iranian officials maintain, is out
of fear of Washington. Some US sanc-
tions remain in place and its authorities
have determinedly pursued violations
to the tune of billions of dollars. The
the west
interviewer last autumn.
But putting the blame for Tehrans
banking problems on US enforcement
fails to tell the whole story. Interna-
tional banks have their own reasons to
be cautious, and Irans institutions have
many problems, although these are
being recognised and slowly redressed.
Merkel has also behaved irresponsibly Iran hopes to shed its place on the
FOREIGN AFFAIRS making a statement that threatens to Financial Action Task Forces blacklist,
widen a dangerous rift in the Atlantic designating the country as parlous terri-
Gideon alliance into a permanent breach.
Rachman The case against Mr Trump is easiest
to make. His performance in Europe
was disastrous. In a speech to Nato, the
The Revolutionary Guard
US president failed to reaffirm Article 5, may not take kindly to
the alliances mutual defence clause. having their business
D
onald Trumps first visit to This was not an accidental oversight
Europe was awkward. Its and sent a clear message that Americas interests scrutinised
aftermath has been explo- commitment to the defence of Europe
sive. Speaking at an election can no longer be taken for granted. was crass. But his argument that it is Fourth, Ms Merkel was unwise and about modern Germany is that, more tory. Last June, the Paris-based money
rally in Munich, shortly That, in turn, risks encouraging Russia unsustainable for the US to account for unfair to bracket the UK with Trumps than any other country I can think of, it laundering and terrorism financing
after the US president had returned to to test Natos defences. almost 75 per cent of Nato defence America. In the climate change discus- has thought hard about the lessons of watchdog acknowledged that Tehran
Washington, Angela Merkel came close At a G7 summit, Mr Trump stood spending is correct and was also made sions, Britain sided with the EU not history, and learnt them with thorough- was taking sufficient steps to have coun-
to announcing the death of the western alone in his failure to endorse the Paris by Robert Gates, defence secretary for the US. Similarly, the government of ness and humility. So it is baffling that a ter-measures suspended for a year. Ira-
alliance. climate accord. And he was also widely President Obama. Given that Germany Theresa May has been at pains to stress German leader could stand in a beer- nian officials are keen to win over FATF
The German chancellor warned that: quoted as calling Germany bad, very has been freeriding on American Britains commitment to Nato. tent in Bavaria and announce a separa- and are bullish about their chances of
The times in which we can fully count bad for the sin of selling too many cars military spending, it is a little cheeky However, if Ms Merkels government tion from Britain and the US while getting a clean bill of health when the
on others are somewhat over, as I have in the US. to blame the US for being an unreliable pursues the Brexit negotiations in the bracketing those two countries with task force convenes next month. That,
experienced in the past few days. We Faced with all this, and with Brexit ally. current confrontational spirit Russia. The historical resonances however, could trigger internal push-
Europeans must really take our destiny Britain, Ms Merkel may feel that she is Third, by implying that the western demanding that the UK commit to should be chilling. back by hardliners. The Revolutionary
in our own hands. Of course we need to merely stating the obvious in suggesting alliance is now coming apart, Ms Merkel vast upfront payments, before even None of this is meant to suggest that Guard, for example, may not take
have friendly relations with the US and that Germany can no longer count on its has compounded the error that Mr discussing a trade deal she risks Ms Merkel is on the same moral and kindly to having the books on their con-
with the UK and with other neighbours, American and British allies. Nonethe- Trump made when he failed to endorse creating a self-fulfilling prophecy and a political level as Mr Trump. The US siderable business interests scrutinised.
including Russia. But we have to fight less, her speech was a blunder for at Article 5. lasting antagonism between Britain and president has repeatedly displayed con- International observers and Iranian
for our own future ourselves. least five reasons. Both events will have encouraged the the EU. tempt for core western values from officials alike acknowledge that the
Ms Merkels remarks swiftly made First, it is a mistake to allow four Russian government in its hope of It is hard to see how the UK can be freedom of the press to the prohibition state of Irans banks leaves much to be
headlines. Richard Haass, who as presi- months of the Trump presidency to breaking up the western alliance. That, expected to see the same countries as on torture and the support of democra- desired; in February, the executive
dent of the Council on Foreign Relations throw into doubt a Transatlantic alli- in turn, makes Europes security situa- adversaries in the Brexit negotiations cies around the world. board of the International Monetary
is the doyen of the US foreign-policy ance that has kept the peace in Europe tion more dangerous. and allies in the Nato context. So a really As a result, some have even pro- Fund noted an urgent need for finan-
establishment, tweeted: Merkel saying for 70 years. It may come to that. But it is hard Brexit could indeed raise questions claimed that the German chancellor is cial sector reforms. The scale of the
Europe cannot rely on others & needs to also possible that Mr Trump is an aber- about Britains commitment to Nato now the true leader of the western challenge was highlighted in a 2016 poll
take matters into its own hands is a
watershed & what US has sought to
ration and will soon be out of office.
Second, the US president actually
The German leader particularly if the US is also pulling back
from the western alliance.
world. That title was bestowed prema-
turely. The sad reality is that Ms Merkel
that revealed Iranians saw banks as the
most corrupt institutions in the country.
avoid since WW2. had a valid point to make about the displayed an The final flaw in Ms Merkels seems to have little interest in fighting to Proposals for a banking reform bill are
It is easy and appropriate to blame
President Trump for this state of affairs.
failure of most European countries to
meet Nato targets on military expendi-
uncharacteristic deafness approach is that it displayed an unchar-
acteristic deafness to the echoes of his-
save the western alliance. under consideration by both the cabinet
and Irans parliament, with the hope of
But despite her cautious phrasing, Ms ture. Mr Trumps behaviour in Europe to the echoes of history tory. One of the truly impressive things gideon.rachman@ft.com introducing it this summer. Even so,
there will be no quick fix.
Even if Tehran manages to get a
favourable FATF review and also begins
to overhaul its banks, top-tier compa-
Competition is not for losers even in the digital era nies may still find Iran too much of a
gamble. The Trump administration is
reviewing US policy on Iran generally,
and the nuclear deal specifically. If the
nuclear deal survives the assessment,
the least innovative periods in modern are likely to be tossed around or margin- spirit is perhaps summed up by Peter Facebook, Apple, Amazon, Netflix and the strong likelihood of further punitive
TECH NOLOGY history. alised in this entrepreneurial mael- Thiel, the tech investor, who declared Google have a combined stock market measures against the Islamic Republic
According to research from the Eco- strom. The public conversation may that: Competition is for losers. valuation of $2.4tn, bigger than Frances by the US over terrorism, missiles and
John nomic Innovation Group, a Washington- be about sharing wealth, as much as cre- But Europe, which has long grown CAC 40 or Germanys Dax. other concerns may well curb the appe-
Thornhill based think-tank, dynamism is in
retreat and the rate of new business for-
ating it. That partly explains why so
many tech entrepreneurs have come
used to a low-growth economy, appears
more familiar with the Decay story. The
Ariel Ezrachi, an Oxford law profes-
sor, argues that policymakers have to
tites of foreign institutions.
Last week, for example, the Senate
mation in the US has been declining. round to the idea of a universal basic EU certainly believes in a far more activ- recognise that new dynamics of compe- foreign relations committee resound-
Since the great recession of 2008, more income. ist competition policy. It recently tition are at play. ingly voted in favour of The Countering
firms have died than have been born. But the lessons are clearly very differ- slapped a 110m fine on Facebook for Increasingly, competition in the dig- Irans Destabilising Activities Act, and in
T
wo very different and seem- That lack of new competition has cre- ent if we believe the second story. In that breaking its promises not to share user ital era is between tech company Saudi Arabia this month President Don-
ingly contradictory tales ated the golden age of the corporate data following its acquisition of What- monopolies that have access to massive ald Trump lambasted Iran as the
are told about the economy: incumbent, rather than the insurgent. sApp in 2014. data sets and vast computing power, regime that is responsible for so much
call them the Disrupt and
Decay schools of storytell-
There has been a marked concentration
of market power in many industries and
To the US, European At a conference last week for the
Oxford Centre for Competition Law and
creating formidable barriers to entry.
The narrative pushed by some com-
instability in the region. The prospect
of US secretary of state Rex Tillerson
ing. The first says that we are living regions. As a result, corporate profits regulators appear like lion Policy, there was a lively debate about panies is not the least convincing or meeting bankers to encourage forays to
through an era of unprecedented, dis-
ruptive change. I heard that story cubed
have risen to a record 9.4 per cent of
output.
tamers dealing with the how far competition policy should be
rethought for our digital age. Should it
credible, says Prof Ezrachi. No one
wants to see competition agencies inter-
the Islamic Republic, as his predecessor
did, seems unlikely any time soon.
on a recent visit to Silicon Valley, where Which story we collectively believe EUs tech kittens be further broadened to encompass vene for the sake of it. But neither do we President Rouhani has acknowledged
entrepreneurs enthused about the has big implications for economic and concepts of privacy, discriminatory want them to go to sleep as a result of that for Irans economy to flourish, his
effect of applying artificial intelligence social policy. If we accept the first tale undynamic world we should be a lot pricing and national data security? intellectual or regulatory capture. country needs constructive interaction
in different industries. I try to resist then there is no need to worry much more concerned about creating incen- Should it even tackle those who seek to Competition policy has long been with the world. Strengthening Irans
hyperbole, one investor told me. But about competition. If we truly stand on tives for greater innovation and be far game the online advertising market and viewed predominantly as a tool to pro- banking at home and taking steps to
I think AI will be as transformational the cusp of revolutionary technological more interventionist in tackling market attract revenue-generating clicks by mote economic efficiency. But it make the country a less risky proposi-
as fire. change, then the market should do it all dominance. peddling fake news? remains a political and social construct. tion abroad is a necessity. It may not
The Decay storytellers counter that for us. Competition is just a click away, To generalise heroically, the Disrupt From the US perspective, European As such it must be reinvented to match prove sufficient.
the real problem is a lack of innovation as the saying goes. story appears to prevail in the US, with regulators appear like lion tamers deal- the needs of our times, whichever eco-
rather than a surfeit of it. Contrary to In this world, the main focus of policy the administration of President Donald ing with kittens. The European players nomic story you believe. The writer holds a fellowship for interna-
West Coast mythmaking, developed should be how to mitigate social risk. Trump seemingly committed to a win- in the digital economy do not amount to tional relations and security at the US Insti-
economies are living through one of Whole regions, and groups of people, ner-takes-all economic model. That much. The five US platform companies, john.thornhill@ft.com tute of Peace
10 FINANCIAL TIMES Tuesday 30 May 2017
CROSSWORD
No. 15,562 Set by SAYANG
ACROSS DOWN
1, 4 Aha! Malay a basis for my 1 Display health food (8)
domain tongue (6,8) 2 Look among two farm animals
9 Every river is an attraction (6) for 3-D image (8)
10 Mysterious drugs to upset 3 Rambler way in front and
Morecambe (8) more off-beat (8)
11 Enjoyed touching tail of 5 Give guarantee when certain
charming mermaid? (6) (6)
12 SS in pursuit of George and 6 Notice a dry object (6)
Charlotte (8) 7 The way to bemuse setter (6)
13 No contest for free run (3) 8 Zolas charge (6)
14 Small bed for Buffy, perhaps 12 Threads for crashing out (7)
(6) 15 Spirit captured back live from
17 Manage a donkey almost in a Uranus (3)
frenzy (3,4) 16 No.1 crackpot (3)
21 Accident involving a knife (6) 18 GPS, a monk reorientated for
25 Many hours for Doris (3) some villages (8)
26 No orisons needed for 19 Present time singer (8)
meritoriousness presented to 20 A swimmer a newspaper
one honourably discharged turned to jelly (4-4)
(8) 22 No rot in arboretum
27 Clamour at college, sound of cultivating tropical hard wood
pride (6) (6)
28 Report of shot at home (8) 23 Extremist to booze a lot of
29 Remove from power (6) bottles (6)
30 Rt Hon mixed up in a French 24 One-dimensional king
JOTTER PAD move to topple (8) accepting only the popular (6)
31 Shylock, perhaps, firm in old 25 Fruit for desperate character
city (6) who embraced spoonbender
(6)
Solution to Saturdays prize puzzle on Saturday June 10
Solution to yesterdays prize puzzle on Monday June 12
Winners names will be printed in Weekend FT
Tuesday 30 May 2017 11
FTSE MIB Adidas Brent crude Dollar index UniCredit Sterling/dollar Euro / dollar Volkswagen
Revealed preference Unicorn
investors lose the class war 2% 0.4% 0.8% 0.1% 4.34% 0.3% 0.5%
SUJEET INDAP, PAGE 12
20,783 172.80 $52.57 97.36 15.87 $1.2845 $1.1180 137.30
COMPANIES
INSIDE BUSINESS
Banks
FINANCE
appearance in court
Those who do not accept will have to
find funding for the action to continue.
If they cannot do this, the court case,
RBS, which will pay out about 200m
if all claimants accept 82p per share, did
not respond to requests for comment on
representing
shareholders
said it would
considered.
Those risks included the possibility it
could lose the trial, the chance that RBS
Venture capitalists
OLIVER RALPH LONDON scheduled to start on 7 June, is unlikely
to go ahead.
the settlement.
The offer was raised from 43p to 82p
accept per share
200m
would launch an appeal, uncertainty
over the amount that a court would
should pay more heed
Fred Goodwin, the former chief execu-
tive of Royal Bank of Scotland, is likely
to escape a potentially embarrassing
The legal costs of fighting the trial
would run to millions of pounds
including 25m for RBSs defence costs,
earlier this month after discussions
between the two sides, but the investor
group had been aiming for a figure of up
Sum the lender
would have
award, and the costs of going ahead.
The claim is presently being funded
by a substantial claimant in the action,
to the common good
to pay out if
court appearance after the bank which the claimants could become lia- to 234p per share. Most investors paid all claimants the group said in its letter.
reached a legal settlement in principle ble to pay if they lose the case. 200p per share in the rights issue. accepted the deal That claimant has decided to accept
B
with a shareholder action group. The case relates to the months leading In a letter to members, the action the offer and they are no longer willing y 2014, Good Technology had reached mythic
The group, representing about 9,000 up to the 2008 bailout of the bank. group said: We understand that accept- to fund the action. That means that unicorn status: a tech start-up with valuation
RBS shareholders, said yesterday it The shareholders allege that RBS, ing an offer of slightly below the previ- there is currently no available funding exceeding $1bn and a wealth of options about
would accept 82p per share from the under Mr Goodwins watch, misled ously advised range of damages, being to fund the legal and other costs to take how investors, management and employees
bank. Its members include institutional them about the banks health ahead of a 92p per share and 234p per share, may the matter to trial. could cash in. But just a few months later, the
investors, private shareholders and 12bn rights issue during the financial be surprising to some claimants. Additional reporting by Jane Croft venture capitalists on the mobile software companys
board were suddenly feuding about whether it should sell
itself or list on a public stock exchange. Tensions increased
so much that directors resorted to insults.
This guy is a certified nut job, said Bandel Carano, a
Interview. Kasper Rorsted representative of Oak Investment Partners on the Good
board, in an email written in April 2015. His derisive diag-
Adidas chief still has to earn his stripes nosis was directed at a fellow Good director and investor,
Russell Planitzer of Lazard Technology Partners.
The tension between Goods owners was debilitating and
by the summer of 2016 the company was facing a cash
crunch. Good was acquired by BlackBerry that September,
but at a valuation of only $425m. Employees who held
Growth is rapid but operating common stock received just 44 cents for each of their
margin remains half Nikes shares, even though Good stock had been valued at more
than $3 in private share transactions just weeks earlier.
and a US turnround is vital A Delaware corporate law court is due to examine the
circumstances of Goods implosion in early June. The eco-
JAMES SHOTTER HERZOGENAURACH nomic interests of its VC owners were represented by vari-
ous classes of preferred stock securities senior to com-
Kasper Rorsted has hit the ground run- mon stock. The board is accused of improperly putting its
ning. Since taking over as chief execu- narrow interests ahead of its duty to common sharehold-
tive of Adidas last October, the Danish ers, leading to the BlackBerry transaction. The VCs reject
manager has ratcheted up the German the charges.
sportswear makers financial targets, But the rest of Silicon Valley is watching. Unicorn valua-
put its ice hockey business up for sale, tions have begun to plateau. The VCs who invest in start-
and finally sold off its underperforming ups such as Good may soon be making similarly treacher-
golf business. ous decisions about how layers of preferred stockholders
In combination with rapid growth must treat each other and common stock owners.
Adidass net earnings increased by VCs are special not only because they gain exclusive
almost a third in the first quarter, hav- access to hot start-ups. They also invest in an advantaged
ing risen 59 per cent last year Mr way. Rather than taking basic common stock like manage-
Rorsteds first steps have enthused ment and employees, they usually purchase preferred
investors: the groups shares have more stock. This limits their potential losses, as it comes with a
than doubled since his appointment was liquidation preference. Thus, if the company is sold, pre-
announced in January last year, and ear- ferred stockholders receive their initial investment back
lier this month hit an all-time high. before any payout to com-
Despite his quick start, Mr Rorsted is mon shareholders. However,
determined not to get carried away. preferred stockholders still
Preferred stock
He says: We have one good year share in potential gains with was thought to
behind us. But one good year does very common investors if the sale
little for [our] 2020 [targets]. You need price exceeds their liquida-
be privileged . . .
to do more than have a good start. tion preference. A nice deal if This is now being
Indeed, for all the investor euphoria, you can get it.
the second biggest sportswear group is a This structure becomes
trimmed back
work in progress. Its operating margin problematic when groups
last year was barely half that of its bigger raise multiple rounds of venture capital. In each round, the
rival, Nike. Improving this will be one of firms buy in at different prices, have different expecta-
the main metrics on which Mr Rorsted tions of returns, and want their money back at different
is judged. times. At Good, common shareholder plaintiffs assert that
Analysts say it is vital to turn round early VC backers such as Oak wanted to swing for the
business in North America the biggest fences that is, they wanted an IPO where they could reap
sports market and the one where Adidas Kasper Rorsted shift towards more comfortable sporty Boosting Adidass online sales is the Its about changing how we operate, big gains over several years. Later investors such as Lazard
most lags behind Nike and adapt to has made solid footwear is also a permanent change, other big challenge. Mr Rorsteds deci- and making sure that we drive consum- sought to sell Good as quickly as possible because their
consumers increasing penchant for progress net rather than a fad, he argues. sion to lift the groups 2020 sales target ers to our website, says Mr Rorsted. firms needed immediate liquidity, plaintiffs allege.
shopping online. earnings rose by If you go to a US airport and look at from 22bn to near 26bn was based in The other big question is the future of Another email from Mr Carano written in July 2015
They clearly have to get the US right: almost a third in what people are wearing . . . this is a part on his belief that Adidas can quad- Adidass underperforming Reebok fit- appears to illustrate the differing motives introduced by
in the rest of their markets they have an the first quarter change in how you dress. I believe very ruple its online sales to 4bn by 2020, ness brand, which was bought by Mr preferred stock terms: Oak is completely indifferent
average share of around 15 per cent, and but boosting strongly that the vast majority of people rather than merely doubling them, as Hainer in 2005, and which many inves- between a $250m and $450m sale price, it said.
in the US they have less than 10, so there online sales is a wearing these shoes actually dont want Mr Hainer had envisaged. tors would like Adidas to sell. The Good case resembles a landmark 2013 decision in
is a big opportunity there to make up large challenge to go back, he says. The group has been building data Buying Reebok was a mistake which the Delaware court. A venture-backed company called
ground, says John Guy, an analyst at Krisztian Bocsi/Bloomberg I had a meeting with a prime minis- tools that allow it to decide in real time distracted Adidas for many years, says Trados was sold hastily and the proceeds were so scant
MainFirst. ter on Sunday night, and I was wearing a how to sell its wares and at what price Ingo Speich, a portfolio manager at that only preferred stockholders were paid. This ruling
And their online business is where suit and black shoes like these, gestur- with greater precision. And it is increas- Union Investment, one of Adidass top could portend trouble for Goods VCs as it held that board
the margins are highest, so if they can ing to his Adidas trainers. And it was ingly targeting advertising towards 15 shareholders. members are to act in the best interests of common share-
really drive this, that will help them not like people said you cant wear that. mobile devices. Now it seems to be under control, but holders and then bear the daunting burden of proving
with their overall margin targets. there is a lot to be said for Adidas focus- their good faith at trial.
In the US, Adidas is already making ing on its core brand instead. If Rorsted A similar issue arose in an April ruling in Delaware.
strides. It has regained the number two Adidas cant fix Reebok soon, then they should Here, common shareholders accused a company control-
spot it lost in 2014. Share price () Nike and Adidas operating profit margin (%) get rid of it. led by a private equity firm of liquidating assets in a way
But the surge has been driven by two 200 14 Mr Rorsted expects Reeboks turn- that favoured the firms preferred stock over common
factors that are unlikely to last for ever: round to be complete within four years. shareholders. The court suggested that a company may
a marketing splurge initiated by Mr 180 Nike But he concedes that he could consider even be required to violate the preferred stock terms if
12
Rorsteds predecessor, Herbert Hainer; offloading it sooner if we completely such a breach maximises value for the common stock.
and the popularity of lifestyle brands 160 miss what were trying to do. Preferred stock was thought to be something that was
such as Adidass Stan Smith trainers, 10 He says: If we have an asset that con- privileged because it came with rights. That idea is now
whose sales have surged amid a trend 140 sistently misses all its targets, then of being trimmed back, said Michael Kendall, a lawyer at the
Adidas
for retro styles. 8 course we will draw conclusions with corporate law firm Goodwin. The heightened litigation
120
Mr Rorsted acknowledges that follow- that asset. risk he noted suddenly gives common shareholders new
ing the lifestyle trend has caused trouble 100 6 But I want to be specific: that applies leverage in M&A negotiations. A better balance between
for rivals such as Puma but says that to everything. The moment you say in a the interests of elite VC/PE investors and common share-
Adidas is not betting the farm, point- 80 4 company that anything is sacred, that is holders would bring more sanity and fairness to the pri-
ing out that athleisure products account Jan 2016 2017 May 2007 08 09 10 11 12 13 14 15 16 the beginning of the end, because that vate dealmaking marketplace.
for 30 per cent of Adidass sales, versus means that you give someone a free
70 per cent for its sports products. The Sources: Thomson Reuters Datastream; Bloomberg ride. sujeet.indap@ft.com
COMPANIES
fuels concern
over damage
to BA brand
Move to cut UK jobs by outsourcing
IT systems to India comes under focus
TANYA POWLEY people who run the individual airlines.
TRANSPORT CORRESPONDENT Policy and strategic direction is set fairly
firmly from Willie, says one city ana-
Just three weeks ago, Willie Walsh, chief lyst, who wanted to remain anonymous.
executive of International Airlines While Mr Walsh has refused to com-
Group, the owner of British Airways, ment on last weekends public relations
abruptly dismissed concerns that the disaster, Alex Cruz, BAs chief executive,
group had seen any negative impact waited until the third day of chaos to Willie Walsh, left, chief executive of International Airlines Group, and Alex Cruz, chief executive of British Airways FT montage. Getty Images; Bloomberg
from recent cost-cutting at the UK flag give his first interview, previously pre-
carrier. ferring to use in-house videos posted on IAG: Key moments over past year
We are clearly doing something right the BA website to address passengers Share price (pence) May 5 2017 Enjoys
because more and more customers are and the media. In the interview with the 600 record first quarter as 600
flying with us, said Mr Walsh at the BBC on Monday, he denied cost-cutting Jun 2016 Issues demand picks up
groups first-quarter results, pointing to had anything to do with its IT problems. profit warning
a growth in passengers flying with BA in Mr Cruz was hired by IAG last April,
April. from its sister low-cost airline Vueling,
However, following three days of with a mandate to make BA more cost Aug 2016 BA halves business
chaos after IT problems left more than efficient. In the space of a year, this has class-only flights from London
500 City airport to New York 500
75,000 passengers stranded at Heath- seen jobs outsourced, a new dispute
row and Gatwick, the topic of Mr Walshs with cabin staff over money, and remov- May 27 Global
laser-sharp focus on costs has once ing free food and drinks for economy computer outage
again come under the spotlight. passengers flying around Europe. May 2016 Qatar grounds BA flights
Slasher Walsh, as he became known Mr Cruz has previously denied accu- raises stake to
during his time as chief executive at sations that he is trying to Ryanair-ise 400 15 per cent 400
Irish airline Aer Lingus, has made a BA. However, at IAGs capital markets
name for turning round ailing airlines. day last November he said: When we
During his time as chief executive of look at economy, we are looking at a Nov 2016 Cuts
BA, where he headed up the group from commodity product, without a doubt. profit target
Sep 2016 BA to
2005 to 2011, Mr Walsh set about slash- BA staff seem unimpressed. Accord- charge for meals in
ing the cost base, firing managers and ing to Glassdoor, which collates short-haul economy
facing down unions. After creating IAG employee reviews, BA scores a low 2.8 300 300
through the merger of BA and Iberia, out of 5 ranking overall. In comparison, May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
the Spanish airline received the same French flag carrier Air France, which
Source: Thomson Reuters Datastream 2016 17
attention as Mr Walsh focused on turn- has been embroiled in long-running
ing what was formerly a chronic loss- labour disputes, scores 3.4, while low-
maker to a profitable airline by 2015. cost rival easyJet has a rating of 4.1. Only
Willies phenomenal strength is in Ryanair, out of the major European car- ish Airways, a former BA pilot told
cost management in terms of the busi- riers, scores lower, with a rating of 2.4. the FT.
nesses he has run, says John Strickland, One cabin crew member told the Branding experts warn that airlines
a London-based aviation analyst. Financial Times that staff felt upset by need to tread a careful balance between
While this has helped IAGs financial the lack of visibility of management, focusing on costs and investing in the
performance, aviation insiders are con- and poor communication, throughout brand. Most CEOs of airlines have
cerned that a squeeze on costs is damag- the disaster. An internal memo sent by come out of the operations side. Their
ing BAs strong brand. Its decision to Mr Cruz on Sunday, in which he tried to whole life is about how to squeeze an
slash 700 jobs in the UK by outsourcing stop staff from talking publicly about extra mile out of a gallon of jet fuel, says
the airlines IT systems to Tata Consul- the problems over the weekend, has fur- Allan Adamson, founder of BrandSim-
tancy Services in India has come under ther compounded ill feeling. At first I ple. Its a different headset to think
particular focus although BA has thought it was a joke. It has provoked about what am I going to do to make the
denied that this was to blame for the more anger from staff, she says. customer in seat 9C happy so that they
glitch. However, aviation insiders say the are going to tell people to fly BA. The
He drives the business quite aggres- ultimate responsibility lies with Mr first one is much easier because you can
sively. I dont think theres very much Walsh. It is down to Willie because hes do it on a spreadsheet.
strategic or directional freedom of the the one who has led the direction of Brit- See Lex
Automobiles
Technology
COMPANIES
Automobiles. Hyundai
Businesses
For Sale
MARKET DATA
S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
7,547.63 2,352.97
2,415.82 19,682.57
2,388.77 15,506.47 15,430.88 12,628.95
7,288.72 19,079.33
12,438.01 2,205.44
Day 0.03% Month 1.14% Year 15.56% Day 0.09% Month -1.00% Year 9.40% Day 0.40% Month 3.60% Year 20.52% Day 0.21% Month 0.08% Year NaN% Day -0.02% Month 2.53% Year 16.92% Day -0.10% Month 6.69% Year 19.49%
Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
6,210.19 25,701.63
49,440.96 49,597.21 1,536.99 10,884.00 3,214.55
6,048.94 1,519.34 10,715.80 24,578.43 3,173.76
Day 0.08% Month 3.07% Year 26.87% Day -0.18% Month 0.66% Year 7.51% Day -0.03% Month 1.19% Year 11.98% Day -0.19% Month 1.57% Year 19.51% Day 0.24% Month 4.41% Year 24.91% Day -0.15% Month 1.23% Year 14.70%
Dow Jones Industrial New York Bovespa So Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
31,109.28
21,080.28 3,288.93
20,981.33 64,676.55 5,332.47 3,257.06
63,687.37 20,783.82
5,267.33 20,597.34 30,029.74
Day -0.01% Month 0.40% Year 18.09% Day -0.62% Month -2.63% Year 29.83% Day -0.08% Month 1.24% Year 18.11% Day -2.01% Month 0.85% Year 14.28% Day 0.08% Month -0.78% Year 10.48% Day 0.26% Month 3.98% Year 16.72%
Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous
Argentina Merval 22536.91 22141.71 Cyprus CSE M&P Gen 77.09 77.42 Italy FTSE Italia All-Share 23024.74 23469.55 Philippines Manila Comp 7886.03 7867.49 Taiwan Weighted Pr 10101.95 10108.49 Cross-Border DJ Global Titans ($) 274.72 274.80
Australia All Ordinaries 5747.70 5792.10 Czech Republic
PX 1012.90 1016.24 FTSE Italia Mid Cap 40092.59 40552.35 Poland Wig 60742.91 60907.75 Thailand Bangkok SET 1568.17 1569.27 Euro Stoxx 50 (Eur) 3578.46 3579.02
S&P/ASX 200 5707.10 5751.70 Denmark OMXC Copenahgen 20 983.05 988.26 FTSE MIB 20783.82 21210.57 Portugal PSI 20 5226.48 5226.58 Turkey BIST 100 97533.28 97712.94 Euronext 100 ID 1026.46 1028.06
S&P/ASX 200 Res 3367.70 3391.80 Egypt EGX 30 13205.11 13094.42 Japan 2nd Section 5964.36 5956.35 PSI General 2884.38 2879.54 UAE Abu Dhabi General Index 4496.38 4516.84 FTSE 4Good Global ($) 6077.47 6078.08
Austria ATX 3184.45 3209.58 Estonia OMX Tallinn 1116.80 1122.13 Nikkei 225 19682.57 19686.84 Romania BET Index 8676.40 8647.49 UK FT 30 3367.40 3359.20 FTSE All World 306.94 307.05
Belgium BEL 20 3893.48 3900.93 Finland OMX Helsinki General 9739.58 9759.57 S&P Topix 150 1271.62 1271.32 Russia Micex Index 1940.32 1934.25 FTSE 100 7547.63 7517.71 FTSE E300 1536.99 1537.41
BEL Mid 6703.99 6700.11 France CAC 40 5332.47 5336.64 Topix 1570.21 1569.42 RTX 1082.22 1073.04 FTSE 4Good UK 6693.63 6675.26 FTSE Eurotop 100 3016.81 3016.18
Brazil Bovespa 63687.37 64085.41 SBF 120 4245.47 4249.12 Jordan Amman SE 2156.24 2156.36 Saudi-Arabia TADAWUL All Share Index 6783.39 6871.72 FTSE All Share 4130.15 4114.68 FTSE Global 100 ($) 1507.95 1507.87
Canada S&P/TSX 60 910.16 Germany
909.27 M-DAX 25282.30 25208.33 Kenya NSE 20 3442.38 3410.89 Singapore FTSE Straits Times 3214.55 3219.42 FTSE techMARK 100 4673.33 4647.66 FTSE Gold Min ($) 1512.73 1503.02
S&P/TSX Comp 15430.88 15416.93 TecDAX 2275.91 2275.43 Kuwait KSX Market Index 6649.66 6687.53 Slovakia SAX 308.12 308.55 USA DJ Composite 7288.05 7286.01 FTSE Latibex Top (Eur) 3965.80 3944.00
S&P/TSX Div Met & Min 708.06 702.43 XETRA Dax 12628.95 12602.18 Latvia OMX Riga 848.12 835.33 Slovenia SBI TOP 789.05 791.12 DJ Industrial 21080.28 21082.95 FTSE Multinationals ($) 1762.36 1763.55
Chile IGPA Gen 24475.90 24515.14
Greece Athens Gen 777.19 778.35 Lithuania OMX Vilnius 584.89 583.80 South Africa FTSE/JSE All Share 53944.22 53996.14 DJ Transport 9176.20 9163.84 FTSE World ($) 543.34 543.59
China FTSE A200 9019.42 9028.96 FTSE/ASE 20 2068.21 2077.55 Luxembourg LuxX 1743.91 1744.16 FTSE/JSE Res 20 31253.22 31037.03 DJ Utilities 720.22 720.30 FTSEurofirst 100 (Eur) 4354.88 4349.38
FTSE B35 9000.71 8988.96
Hong Kong Hang Seng 25701.63 25639.27 Malaysia FTSE Bursa KLCI 1764.89 1772.30 FTSE/JSE Top 40 47533.50 47535.43 Nasdaq 100 5788.36 5778.37 FTSEurofirst 80 (Eur) 4915.56 4921.84
Shanghai A 3257.06 3254.35 HS China Enterprise 10619.34 10579.67 Mexico IPC 49597.21 49688.27 South Korea Kospi 2352.97 2355.30 Nasdaq Cmp 6210.19 6205.26 MSCI ACWI Fr ($) 464.50 464.88
Shanghai B 320.83 320.37 HSCC Red Chip 4078.50 4056.22 Morocco MASI 11592.31 11566.48 Kospi 200 306.52 306.96 NYSE Comp 11631.87 11639.30 MSCI All World ($) 1912.21 1914.59
Shanghai Comp 3110.06 3107.46
Hungary Bux 34138.11 34358.93 Netherlands AEX 527.73 528.03 Spain IBEX 35 10884.00 10904.20 S&P 500 2415.82 2415.07 MSCI Europe (Eur) 1600.03 1599.56
Shenzhen A 1893.24 1895.13
India BSE Sensex 31109.28 31028.21 AEX All Share 802.23 802.42 Sri Lanka CSE All Share 6679.46 6697.86 Wilshire 5000 25107.11 25105.23 MSCI Pacific ($) 2536.54 2541.07
Shenzhen B 1086.47 1084.98 Nifty 500 8299.50 8331.85 New Zealand NZX 50 7412.74 7441.57 Sweden OMX Stockholm 30 1631.91 1635.77 Venezuela IBC 73959.10 72689.66 S&P Euro (Eur) 1637.86 1640.41
Colombia COLCAP 1448.93 1444.39
Indonesia Jakarta Comp 5712.33 5716.82 Nigeria SE All Share 29064.52 28467.61 OMX Stockholm AS 585.10 586.77 Vietnam VNI 746.25 743.41 S&P Europe 350 (Eur) 1581.57 1582.44
Croatia CROBEX 1853.42 1862.07
Ireland ISEQ Overall 6972.30 6973.83 Norway Oslo All Share 789.60 790.15 Switzerland SMI Index 9031.96 9042.03 S&P Global 1200 ($) 2130.25 2130.84
Israel Tel Aviv 100 13.02 12.99 Pakistan KSE 100 52138.90 52636.87 Stoxx 50 (Eur) 3232.42 3228.26
(c) Closed. (u) Unavaliable. Correction. Subject to official recalculation. For more index coverage please see www.ft.com/worldindices. A fuller version of this table is available on the ft.com research data archive.
CURRENCIES
DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND
Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's
May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 15.9900 -0.0201 17.8721 -0.0337 20.5345 0.0568 Indonesia Indonesian Rupiah 13322.0000 27.0000 14890.0814 20.8784 17108.2301 103.2493 Poland Polish Zloty 3.7438 0.0056 4.1844 0.0036 4.8078 0.0265 ..Three Month 0.7790 -0.0031 0.8702 -0.0041 - -
Australia Australian Dollar 1.3436 0.0005 1.5018 -0.0003 1.7255 0.0076 Israel Israeli Shekel 3.5617 -0.0144 3.9809 -0.0187 4.5739 -0.0001 Romania Romanian Leu 4.0851 0.0078 4.5659 0.0059 5.2461 0.0310 ..One Year 0.7802 -0.0031 0.8696 -0.0041 - -
Bahrain Bahrainin Dinar 0.3772 0.0001 0.4216 -0.0001 0.4844 0.0021 Japan Japanese Yen 111.2900 0.0450 124.3895 -0.0276 142.9195 0.6316 Russia Russian Ruble 56.4800 -0.3838 63.1280 -0.4687 72.5321 -0.1995 United States United States Dollar - - 1.1177 -0.0007 1.2842 0.0052
Bolivia Bolivian Boliviano 6.9100 - 7.7233 -0.0048 8.8739 0.0356 ..One Month 111.2899 0.0447 124.3895 -0.0275 142.9195 0.6315 Saudi Arabia Saudi Riyal 3.7504 0.0001 4.1918 -0.0025 4.8163 0.0195 ..One Month - - 1.1175 -0.1613 1.2843 0.0052
Brazil Brazilian Real 3.2704 0.0163 3.6553 0.0159 4.1999 0.0377 ..Three Month 111.2895 0.0441 124.3895 -0.0274 142.9193 0.6312 Singapore Singapore Dollar 1.3854 0.0033 1.5485 0.0027 1.7791 0.0114 ..Three Month - - 1.1172 -0.1613 1.2846 0.0052
Canada Canadian Dollar 1.3439 -0.0015 1.5020 -0.0026 1.7258 0.0051 ..One Year 111.2880 0.0409 124.3897 -0.0272 142.9195 0.6305 South Africa South African Rand 12.9800 0.1175 14.5078 0.1223 16.6690 0.2172 ..One Year - - 1.1154 -0.1613 1.2857 0.0052
Chile Chilean Peso 673.9500 4.3350 753.2777 4.3765 865.4921 9.0207 Kenya Kenyan Shilling 103.3500 0.0400 115.5149 -0.0276 132.7229 0.5842 South Korea South Korean Won 1121.7000 0.9000 1253.7305 0.2214 1440.4963 6.9365 Venezuela Venezuelan Bolivar Fuerte 10.1401 0.1701 11.3336 0.1831 13.0219 0.2698
China Chinese Yuan 6.8610 - 7.6686 -0.0048 8.8110 0.0354 Kuwait Kuwaiti Dinar 0.3037 0.0001 0.3394 -0.0002 0.3900 0.0016 Sweden Swedish Krona 8.6962 0.0099 9.7198 0.0049 11.1677 0.0575 Vietnam Vietnamese Dong 22741.0000 13.5000 25417.8052 -0.7753 29204.2428 134.5599
Colombia Colombian Peso 2911.5000 -3.8750 3254.1999 -6.3727 3738.9719 10.0594 Malaysia Malaysian Ringgit 4.2760 0.0075 4.7793 0.0054 5.4913 0.0316 Switzerland Swiss Franc 0.9762 0.0019 1.0912 0.0015 1.2537 0.0075 European Union Euro 0.8947 0.0006 - - 1.1490 0.0053
Costa Rica Costa Rican Colon 580.6550 -7.4350 649.0014 -8.7218 745.6819 -6.5149 Mexico Mexican Peson 18.5133 0.0435 20.6924 0.0357 23.7749 0.1511 Taiwan New Taiwan Dollar 30.1050 - 33.6485 -0.0211 38.6611 0.1553 ..One Month 0.8945 0.0006 - - 1.1489 0.0053
Czech Republic Czech Koruna 23.6911 0.0457 26.4797 0.0345 30.4243 0.1806 New Zealand New Zealand Dollar 1.4133 -0.0054 1.5797 -0.0070 1.8150 0.0004 Thailand Thai Baht 34.1305 0.0950 38.1479 0.0824 43.8307 0.2975 ..Three Month 0.8941 0.0006 - - 1.1488 0.0053
Denmark Danish Krone 6.6560 0.0018 7.4394 -0.0027 8.5476 0.0366 Nigeria Nigerian Naira 314.7500 - 351.7978 -0.2203 404.2045 1.6234 Tunisia Tunisian Dinar 2.4339 -0.0010 2.7203 -0.0028 3.1256 0.0113 ..One Year 0.8924 0.0006 - - 1.1482 0.0053
Egypt Egyptian Pound 18.1135 0.0320 20.2456 0.0231 23.2615 0.1344 Norway Norwegian Krone 8.4095 0.0218 9.3993 0.0185 10.7995 0.0713 Turkey Turkish Lira 3.5792 0.0008 4.0004 -0.0016 4.5964 0.0195
Hong Kong Hong Kong Dollar 7.7948 0.0017 8.7123 -0.0036 10.0101 0.0423 Pakistan Pakistani Rupee 104.8350 - 117.1747 -0.0734 134.6300 0.5407 United Arab Emirates UAE Dirham 3.6731 0.0000 4.1054 -0.0025 4.7170 0.0190
Hungary Hungarian Forint 275.6465 0.5705 308.0916 0.4450 353.9874 2.1513 Peru Peruvian Nuevo Sol 3.2810 0.0080 3.6672 0.0067 4.2135 0.0272 United Kingdom Pound Sterling 0.7787 -0.0031 0.8703 -0.0041 - -
India Indian Rupee 64.4900 0.0600 72.0808 0.0220 82.8186 0.4094 Philippines Philippine Peso 49.8200 0.0600 55.6841 0.0322 63.9792 0.3337 ..One Month 0.7788 -0.0031 0.8703 -0.0041 - -
Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata
UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
Produced in conjunction with the Institute and Faculty of Actuaries May 26 May 25 May 24 May 23 May 22 Yr Ago High Low Year to date percentage changes Closing Day's Closing Day's
Strlg Day's Euro Strlg Strlg Year Div P/E X/D Total FT 30 3367.40 3359.20 3358.40 3338.30 3339.80 0.00 3366.30 3060.90 Personal Goods 22.76 FTSE 250 Index 9.60 General Retailers 4.41 FTSE 100 Price Change FTSE 100 Price Change
May 29 chge% Index May 25 May 24 ago yield% Cover ratio adj Return FT 30 Div Yield 1.47 1.48 1.48 1.49 1.49 0.00 3.93 2.74 Electronic & Elec Eq 19.50 Real Est Invest & Se 9.31 Banks 4.38 3I Group PLC 868.50 -3.00 London Stock Exchange Group PLC 3391 -9.00
FTSE 100 (100) 7547.63 0.40 6727.86 7517.71 7514.90 6270.79 3.66 0.91 30.04 139.74 6272.33 P/E Ratio net 30.36 30.11 30.05 29.85 29.90 0.00 19.44 14.26 Forestry & Paper 18.85 FTSE SmallCap Index 8.82 Utilities 3.80 Admiral Group PLC 2006 -10.00 Marks And Spencer Group PLC 386.30 -3.00
FTSE 250 (250) 20024.92 0.29 17849.94 19967.58 19950.52 17232.26 2.64 1.69 22.46 231.82 14506.76 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Household Goods & Ho 16.88 Equity Invest Instr 8.63 Construct & Material 3.29 Anglo American PLC 1052.5 -5.00 Mediclinic International PLC 816.00 7.50
FTSE 250 ex Inv Co (207) 21466.09 0.22 19134.57 21418.01 21410.16 18743.30 2.68 1.72 21.73 256.03 15866.98 FT 30 hourly changes Consumer Goods 14.26 Health Care 8.46 Real Est Invest & Tr 3.04 Antofagasta PLC 824.50 -1.00 Merlin Entertainments PLC 518.50 1.00
FTSE 350 (350) 4187.61 0.38 3732.78 4171.80 4169.89 3500.46 3.48 1.01 28.39 72.54 6991.93 8 9 10 11 12 13 14 15 16 High Low Aerospace & Defense 13.45 Chemicals 8.19 Basic Materials 3.00 Ashtead Group PLC 1570 12.00 Micro Focus International PLC 2418 8.00
FTSE 350 ex Investment Trusts (306) 4152.99 0.37 3701.92 4137.74 4136.30 3477.18 3.51 1.00 28.33 72.88 3572.12 3359.2 3357.6 3355.1 3355.2 3357.3 3354.3 3365.7 3367.8 3366.3 3368.8 3352.9 Tobacco 13.10 Pharmace & Biotech 8.02 Leisure Goods 2.44 Associated British Foods PLC 2950 -19.00 Mondi PLC 2011 3.00
FTSE 350 Higher Yield (122) 3891.63 0.46 3468.95 3873.81 3875.44 3197.95 4.73 0.74 28.66 91.83 6800.86 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Industrial Eng 12.82 Nonlife Insurance 7.68 Mining 1.80 Astrazeneca PLC 5227 18.00 Morrison (Wm) Supermarkets PLC 247.40 2.00
FTSE 350 Lower Yield (228) 4083.10 0.28 3639.62 4071.58 4065.49 3472.68 2.00 1.78 28.08 40.23 4463.27 Software & Comp Serv 12.42 Automobiles & Parts 6.57 Telecommunications 1.18 Aviva PLC 526.50 -4.50 National Grid PLC 1091 6.50
FTSE SmallCap (278) 5661.48 0.29 5046.56 5644.88 5647.41 4577.56 2.69 1.20 30.82 61.66 8084.89 Financial Services 12.37 Financials 6.17 Media 0.20
FTSE SmallCap ex Inv Co (147) 5043.67 0.15 4495.86 5035.94 5051.24 4174.13 2.81 1.51 23.45 54.02 7566.19 FX: EFFECTIVE INDICES Health Care Eq & Srv 12.10 Gas Water & Multi 5.85 Food & Drug Retailer -2.25
Babcock International Group PLC 941.50 -9.00 Next PLC 4384 -18.00
Bae Systems PLC 665.50 9.50 Old Mutual PLC 196.60 1.40
FTSE All-Share (628) 4130.15 0.38 3681.55 4114.68 4112.93 3448.45 3.45 1.02 28.47 70.58 6972.34 Travel & Leisure 10.53 FTSE All{HY-}Share Index 5.54 Electricity -3.69
May 25 May 24 Mnth Ago May 26 May 25 Mnth Ago Barclays PLC 211.65 -2.40 Paddy Power Betfair PLC 8315 15.00
FTSE All-Share ex Inv Co (453) 4075.50 0.36 3632.84 4060.70 4059.57 3411.61 3.50 1.01 28.21 70.97 3562.49 Support Services 10.37 Life Insurance 5.39 Oil Equipment & Serv -5.50 Barratt Developments PLC 601.00 -6.00 Pearson PLC 699.00 9.00
FTSE All-Share ex Multinationals (568) 1252.82 -0.05 925.58 1253.43 1251.56 1163.96 2.95 1.29 26.34 14.88 2231.83 Australia 92.83 92.93 94.37 Sweden 77.10 77.05 77.29 Technology 10.09 NON FINANCIALS Index 5.32 Industrial Metals & -5.76 Bhp Billiton PLC 1205 -4.50 Persimmon PLC 2443 -19.00
FTSE Fledgling (94) 9887.69 0.15 8813.75 9872.49 9853.40 7667.86 2.50 1.79 22.36 103.30 18465.07 Canada 87.23 87.25 87.09 Switzerland 160.65 160.28 160.57 Industrials 9.99 Food Producers 5.08 Oil & Gas -7.02 BP PLC 474.55 1.45 Provident Financial PLC 3091 -41.00
FTSE Fledgling ex Inv Co (45) 13757.25 -0.03 12263.02 13761.41 13739.97 10438.37 2.89 2.90 11.93 152.50 25058.27 Denmark 108.72 108.66 107.81 UK 78.10 78.29 78.49 Beverages 9.91 Industrial Transport 5.00 Oil & Gas Producers -7.07 British American Tobacco PLC 5591 96.00 Prudential PLC 1749 6.50
FTSE All-Small (372) 3934.37 0.29 3507.04 3923.11 3924.40 3174.16 2.68 1.23 30.24 42.76 7212.15 Japan 137.59 137.51 141.68 USA 103.18 103.33 103.93 Mobile Telecomms 9.90 FTSE 100 Index 4.59 Tech Hardware & Eq -9.13 British Land Company PLC 631.50 0.50 Randgold Resources LD 7200 105.00
FTSE All-Small ex Inv Co Index (192) 3775.84 0.15 3365.73 3770.31 3781.11 3113.45 2.82 1.57 22.61 40.50 7176.05 New Zealand 117.46 117.03 117.06 Euro 91.16 91.03 88.98 Consumer Services 4.54 Fixed Line Telecomms -13.85 Bt Group PLC 313.80 0.40 Reckitt Benckiser Group PLC 7869 72.00
FTSE AIM All-Share Index (800) 991.38 0.23 883.71 989.10 987.44 735.84 1.58 0.74 84.83 5.41 1089.92 Norway 88.02 87.76 87.64
Bunzl PLC 2437 -3.00 RELX PLC 1654 18.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Burberry Group PLC 1778 5.00 Rentokil Initial PLC 264.70 1.80
Oil & Gas (16) 8285.25 0.26 7385.35 8263.99 8342.50 6499.44 6.25 0.40 39.71 259.92 7672.06 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Carnival PLC 4935 59.00 Rio Tinto PLC 3190 24.50
Oil & Gas Producers (9) 7955.19 0.26 7091.15 7934.67 7990.82 6200.20 6.29 0.41 38.29 251.49 7626.10 Centrica PLC 203.20 -2.50 Rolls-Royce Holdings PLC 873.00 21.50
Oil Equipment Services & Distribution (7)13733.68 0.20 12242.01 13706.48 15097.67 13418.04 4.58 -0.22 -99.84 306.86 10720.18 FTSE GLOBAL EQUITY INDEX SERIES Coca-Cola Hbc AG 2269 -2.00 Royal Bank Of Scotland Group PLC 261.60 -4.40
Basic Materials (28) 5181.44 0.40 4618.66 5160.68 5179.08 3235.73 2.41 1.09 38.07 90.92 5294.43 Compass Group PLC 1643 23.00 Royal Dutch Shell PLC 2166.5 5.50
Chemicals (7) 14457.55 1.20 12887.26 14285.82 14322.02 11619.22 2.10 1.89 25.17 95.63 12870.51 May 26 No of US $ Day Mth YTD Total
YTD Gr Div May 26 No of US $ Day Mth YTD Total YTD Gr Div Convatec Group PLC 325.00 4.00 Royal Dutch Shell PLC 2118 6.50
Forestry & Paper (1) 23636.35 0.15 21069.11 23601.09 23554.07 15973.05 2.40 3.36 12.42 375.43 25783.72 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Crh PLC 2790 16.00 Royal Mail PLC 438.90 0.80
Industrial Metals & Mining (2) 2402.46 -1.32 2141.52 2434.51 2364.38 1158.83 0.54 21.48 8.60 13.01 2108.00 FTSE Global All Cap 7724 525.86 -0.1 1.6 11.0 9.8 746.43
2.3 Oil & Gas Producers 108 329.59 -0.3 -0.3 -6.2 540.87 -4.8 3.8 Croda International PLC 3962 21.00 Rsa Insurance Group PLC 620.00 -1.50
Mining (18) 14323.76 0.34 12768.00 14275.13 14337.27 8616.88 2.46 0.84 48.37 273.28 7667.34 FTSE Global Large Cap 1442 463.09 -0.1 1.9 11.410.1 674.19
2.5 Oil Equipment & Services 28 313.32 -0.2 -0.2 -10.4 454.91 -9.5 3.2 Dcc PLC 7290 -120.00 Sage Group PLC 713.50 -0.50
FTSE Global Mid Cap 1644 708.93 -0.2 1.1 11.110.0 954.99
2.0 Basic Materials 259 457.80 -0.1 -0.1 8.5 697.62 9.9 2.4 Diageo PLC 2337 12.50 Sainsbury (J) PLC 281.70 3.10
Industrials (112) 5491.36 0.71 4894.92 5452.71 5456.37 4435.27 2.23 0.84 53.26 57.73 5661.56
Construction & Materials (15) 7115.80 0.47 6342.92 7082.83 7101.81 5483.05 2.16 0.39 120.32 101.80 7560.05 FTSE Global Small Cap 4638 739.92 -0.2 0.2 8.57.7 964.86
1.9 Chemicals 123 696.65 0.0 0.0 10.5 1067.11 12.0 2.5 Direct Line Insurance Group PLC 345.40 -3.60 Schroders PLC 3165 -4.00
Aerospace & Defense (9) 5632.24 1.77 5020.50 5534.37 5508.75 4147.58 2.13 -2.18 -21.55 63.69 6048.73 FTSE All-World 3086 307.05 -0.1 1.8 11.310.1 460.37
2.4 Forestry & Paper 15 267.54 0.1 0.1 12.3 455.10 14.9 2.9 Easyjet PLC 1386 6.00 Scottish Mortgage Investment Trust PLC 400.00 6.50
General Industrials (5) 4852.59 0.82 4325.54 4812.95 4808.64 3782.14 2.71 1.20 30.84 56.24 5514.52 FTSE World 2543 543.59 -0.1 1.8 11.2 9.9 1094.51
2.4 Industrial Metals & Mining 68 378.15 0.0 0.0 4.4 572.59 5.3 2.1 Experian PLC 1641 -5.00 Severn Trent PLC 2534 -10.00
Electronic & Electrical Equipment (10) 7537.26 0.63 6718.61 7490.17 7459.26 5405.79 1.68 1.91 31.26 53.21 6870.86 FTSE Global All Cap ex UNITED KINGDOM In 7396 544.75 0.0 1.5 10.9 9.8 761.50
2.3 Mining 53 539.17 -0.5 -0.5 5.1 819.18 6.8 2.3 Fresnillo PLC 1581 5.00 Shire PLC 4651.5 -86.50
Industrial Engineering (12) 12939.36 2.07 11533.96 12677.38 12675.20 8619.09 2.06 1.42 34.19 171.69 15802.28 FTSE Global All Cap ex USA 5827 477.17 -0.2 2.4 14.012.3 724.99
2.8 Industrials 547 369.56 -0.1 -0.1 11.5 531.35 12.7 2.1 Gkn PLC 354.50 5.10 Sky PLC 997.00 -4.00
Industrial Transportation (7) 5086.00 0.55 4533.59 5058.00 4997.42 4497.04 3.83 1.25 20.89 52.62 4515.01 FTSE Global All Cap ex JAPAN 6437 538.32 -0.1 1.5 11.2 9.9 771.17
2.4 Construction & Materials 113 517.40 -0.1 -0.1 12.3 777.75 13.6 2.0 Glaxosmithkline PLC 1643.5 25.50 Smith & Nephew PLC 1351 9.00
Support Services (54) 7719.03 0.19 6880.64 7704.41 7734.59 6717.56 2.15 1.81 25.66 69.69 8010.55 FTSE Global All Cap ex Eurozone 7075 541.17 -0.1 1.3 10.1 9.0 753.35
2.3 Aerospace & Defense 26 653.89 0.3 0.3 15.7 931.47 16.9 2.0 Glencore PLC 292.50 1.10 Smiths Group PLC 1582 2.00
FTSE Developed 2102 493.13 -0.1 1.7 10.9 9.6 706.04
2.4 General Industrials 57 245.47 -0.1 -0.1 4.3 380.91 5.5 2.5 Hammerson PLC 581.00 1.00 Smurfit Kappa Group PLC 2178 21.00
Consumer Goods (38) 23032.67 0.77 20531.00 22856.14 22721.87 19189.07 2.76 1.84 19.71 339.50 16994.21
FTSE Developed All Cap 5667 518.13 -0.1 1.5 10.6 9.3 732.91
2.3 Electronic & Electrical Equipment 71 403.52 -0.1 -0.1 17.4 531.21 18.2 1.6 Hargreaves Lansdown PLC 1390 -15.00 Sse PLC 1519 -17.00
Automobiles & Parts (1) 8330.91 1.46 7426.06 8211.06 8220.46 6425.03 2.50 1.89 21.15 138.65 8030.35
FTSE Developed Large Cap 917 454.97 -0.1 1.8 11.0 9.6 661.35
2.5 Industrial Engineering 102 723.04 -0.1 -0.1 14.8 1026.31 16.2 2.0 Hikma Pharmaceuticals PLC 1692 27.00 St. James's Place PLC 1172 -5.00
Beverages (5) 18806.66 0.41 16763.99 18729.51 18723.82 15834.77 2.53 1.53 25.83 175.38 13247.33
FTSE Developed Europe Large Cap 227 362.69 -0.5 3.5 16.213.6 606.96
3.3 Industrial Transportation 99 628.02 0.2 0.2 11.5 903.09 12.7 2.2 HSBC Holdings PLC 675.00 6.00 Standard Chartered PLC 733.50 5.50
Food Producers (8) 8570.33 -0.79 7639.48 8638.27 8755.67 8322.72 1.89 2.05 25.76 9.11 7336.47
FTSE Developed Europe Mid Cap 314 580.85 -0.5 3.6 19.917.9 869.94
2.5 Support Services 79 323.43 -0.4 -0.4 9.6 444.87 10.5 1.8 Imperial Brands PLC 3680.5 23.00 Standard Life PLC 383.90 -4.80
Household Goods & Home Construction (15)15927.76 0.19 14197.79 15897.53 15822.85 14453.14 2.34 2.52 16.93 212.12 11241.62
FTSE Dev Europe Small Cap 709 823.49 -0.4 4.0 20.418.7 1194.05
2.4 Consumer Goods 430 476.70 0.1 0.1 14.0 703.66 15.3 2.4 Informa PLC 688.50 38.00 Taylor Wimpey PLC 199.70 -0.90
Leisure Goods (1) 5765.41 -1.16 5139.21 5833.34 5926.74 5369.72 3.76 1.34 19.92 104.95 5202.84
FTSE North America Large Cap 295 516.65 0.1 1.3 9.08.0 702.00
2.1 Automobiles & Parts 105 386.05 0.0 0.0 4.9 551.34 6.5 2.7 Intercontinental Hotels Group PLC 4357 5.00 Tesco PLC 186.80 0.05
Personal Goods (6) 32638.74 0.83 29093.72 32369.01 31966.42 23666.75 2.54 3.04 12.96 376.77 22009.53
FTSE North America Mid Cap 387 761.53 -0.1 -0.2 6.76.1 963.29
1.7 Beverages 45 630.55 0.0 0.0 14.3 941.77 15.3 2.5 International Consolidated Airlines Group S.A. 614.00 -2.00 Tui AG 1169 6.00
Tobacco (2) 61335.40 1.46 54673.53 60452.30 59890.08 50440.88 3.35 1.24 24.19 1304.93 39685.94
FTSE North America Small Cap 1433 774.65 -0.1 -1.2 4.33.8 952.04
1.6 Food Producers 107 623.73 0.2 0.2 9.6 947.75 11.2 2.2 Intertek Group PLC 4295 -19.00 Unilever PLC 4310.5 41.00
Health Care (21) 10702.05 0.43 9539.65 10656.10 10691.35 9198.10 3.28 0.72 42.49 208.49 8263.50
FTSE North America 682 345.15 0.0 1.0 8.67.7 480.01
2.0 Household Goods & Home Construction 49 453.14 0.0 0.0 12.1 664.05 13.5 2.3 Intu Properties PLC 269.70 1.20 United Utilities Group PLC 1035 -19.00
Health Care Equipment & Services (9) 8512.75 0.64 7588.15 8458.88 8411.32 7263.84 1.26 2.44 32.61 60.36 7383.13
FTSE Developed ex North America 1420 252.32 -0.3 2.8 14.712.8 412.87
2.9 Leisure Goods 31 212.60 0.4 0.4 32.9 279.34 33.8 1.3 Itv PLC 200.20 1.20 Vodafone Group PLC 230.20 2.10
Pharmaceuticals & Biotechnology (12)14386.26 0.41 12823.71 14328.05 14390.92 12386.20 3.53 0.64 44.10 300.97 9904.26
FTSE Japan Large Cap 180 349.07 0.0 1.9 8.2 2.1 Personal Goods
7.1 451.24 81 685.64 0.0 0.0 18.6 957.83 19.6 1.9 Johnson Matthey PLC 3175 80.00 Whitbread PLC 4242 -6.00
Consumer Services (94) 5209.60 0.57 4643.77 5180.26 5163.18 4771.13 2.52 1.99 19.88 62.50 4888.14 FTSE Japan Mid Cap 313 570.36 -0.1 2.8 11.310.4 708.03
1.7 Tobacco 12 1521.18 0.4 0.4 20.1 3122.93 21.5 3.3
Food & Drug Retailers (7) 3221.65 0.36 2871.73 3210.03 3180.49 2861.57 1.30 2.26 34.20 22.81 3766.11 Kingfisher PLC 328.30 -2.70 Wolseley PLC 4988 76.00
FTSE Global wi JAPAN Small Cap 794 622.16 -0.3 3.7 12.611.5 799.56
1.9 Health Care 181 469.78 -0.2 -0.2 11.1 675.92 12.4 2.0 Land Securities Group PLC 1075 4.00 Worldpay Group PLC 317.50 -3.50
General Retailers (30) 2626.34 -0.45 2341.08 2638.33 2641.95 2758.36 2.98 2.00 16.81 21.52 2989.34
FTSE Japan 493 147.93 0.0 2.1 8.9 2.0 Health Care Equipment & Services
7.8 214.60 68 799.05 -0.1 -0.1 16.1 929.85 16.6 1.0 Legal & General Group PLC 250.30 -1.80 WPP PLC 1737 26.00
Media (21) 8077.04 0.97 7199.77 7999.20 7979.45 7393.47 2.87 1.82 19.14 95.38 4973.88
FTSE Asia Pacific Large Cap ex Japan 548 657.22 0.0 2.1 17.015.9 1025.19
2.8 Pharmaceuticals & Biotechnology 113 333.75 -0.3 -0.3 9.1 502.21 10.7 2.5 Lloyds Banking Group PLC 71.74 -1.36
Travel & Leisure (36) 9672.05 0.74 8621.53 9600.68 9559.48 8374.40 2.40 2.12 19.69 146.27 9186.68
FTSE Asia Pacific Mid Cap ex Japan 412 877.30 -0.2 1.2 16.115.3 1311.50
2.6 Consumer Services 383 441.18 0.2 0.2 11.8 587.96 12.6 1.6
Telecommunications (6) 3532.78 0.69 3149.07 3508.61 3492.12 3991.72 5.01 -0.01 -1348.7 4.42 3889.64 FTSE Asia Pacific Small Cap ex Japan 1449 543.91 0.0 0.2 12.611.9 800.56
2.5 Food & Drug Retailers 55 292.38 0.2 0.2 3.4 406.72 4.4 2.0
9
Fixed Line Telecommunications (4) 3691.51 0.15 3290.56 3686.05 3719.09 5217.15 4.74 1.20 17.63 0.00 3328.13
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
960 519.72
2057 716.84
0.0
0.3
2.0
1.8
16.9
15.3
15.9 861.08
2.8 General Retailers
14.5 1061.31
2.8 Media
120 611.67
79 336.86
0.0
0.6
0.0
0.6
12.3 793.40
10.8 449.99
13.1
11.4
1.5
1.6
UK STOCK MARKET TRADING DATA
Mobile Telecommunications (2) 5179.55 0.93 4616.98 5131.91 5076.74 5207.24 5.12 -0.51 -38.46 9.33 5124.99 FTSE Emerging Large Cap 525 678.96 0.3 2.4 15.614.7 1012.03
2.8 Travel & Leisure 129 446.57 0.0 0.0 17.3 602.15 18.3 1.7 May 26 May 25 May 24 May 23 May 22 Yr Ago
Utilities (7) 9144.69 -0.34 8151.45 9176.00 9163.48 8728.40 4.62 1.64 13.22 83.90 10305.53 FTSE Emerging Mid Cap 459 898.22 0.1 -0.4 14.012.9 1322.36
2.8 Telecommunication 94 165.05 0.0 0.0 2.5 306.45 3.9 4.1 SEAQ Bargains 5233.00 5202.00 5202.00 5058.00 6262.00 5629.00
Electricity (2) 8953.85 -1.06 7981.33 9049.67 9073.93 9024.36 5.49 2.02 9.03 149.05 12793.71 FTSE Emerging Small Cap 1073 740.69 0.2 0.1 15.014.3 1053.54
2.6 Fixed Line Telecommuniations 43 133.94 -0.1 -0.1 -4.7 274.09 -2.9 4.8 Order Book Turnover (m) 193.26 193.78 193.78 139.89 454.55 244.59
Gas Water & Multiutilities (5) 8689.85 -0.16 7746.01 8703.40 8682.43 8179.17 4.40 1.51 15.00 63.82 9798.37 FTSE Emerging Europe 114 352.99 -1.4 -0.7 5.95.0 544.20
4.0 Mobile Telecommunications 51 181.15 0.2 0.2 13.4 301.58 14.2 3.3 Order Book Bargains 1020479.00 1020304.00 1020304.00 950568.00 976389.00 941036.00
Financials (290) 5110.78 -0.02 4555.68 5111.70 5100.00 4240.33 3.54 1.04 27.05 101.66 4748.02 FTSE Latin America All Cap 230 850.28 1.4 -0.7 12.210.7 1308.01
2.8 Utilities 167 273.97 -0.2 -0.2 11.1 529.91 12.8 3.7 Order Book Shares Traded (m) 1709.00 1702.00 1702.00 1275.00 1511.00 1341.00
Banks (12) 4287.29 -0.07 3821.63 4290.10 4288.69 3337.03 4.11 0.62 38.92 107.82 3188.26 FTSE Middle East and Africa All Cap 242 722.88 0.1 3.7 11.6 3.0 Electricity
9.9 1125.82 109 300.32 -0.1 -0.1 10.4 574.11 12.0 3.7 Total Equity Turnover (m) 8747.73 8690.30 8690.30 8386.30 9870.73 8343.18
Nonlife Insurance (10) 3412.63 -0.37 3041.97 3425.33 3420.78 2930.92 3.15 1.69 18.77 60.87 6025.10 FTSE Global wi UNITED KINGDOM All Cap In 328 342.48 -0.8 2.7 12.0 3.5 Gas Water & Multiutilities
10.0 572.56 58 288.41 -0.4 -0.4 12.4 573.09 14.2 3.6 Total Mkt Bargains 1152592.00 1152315.00 1152315.00 1060320.00 1108477.00 1077384.00
Life Insurance/Assurance (10) 8461.32 -0.18 7542.30 8476.26 8458.86 7237.84 3.66 1.26 21.70 210.60 8311.67 FTSE Global wi USA All Cap 1897 594.38 0.0 0.8 8.4 1.9 Financials
7.6 783.97 698 227.82 -0.2 -0.2 6.8 371.14 8.3 2.9 Total Shares Traded (m) 4815.00 4794.00 4794.00 3976.00 4546.00 3746.00
Index- Real Estate Investment & Services (20) 2765.92 -0.19 2465.51 2771.23 2752.12 2776.39 2.47 1.86 21.74 31.00 7388.86 FTSE Europe All Cap 1441 424.48 -0.5 3.4 16.8 3.1 Banks
14.5 685.42 248 204.14 -0.3 -0.3 6.0 357.07 7.7 3.3 Excluding intra-market and overseas turnover. *UK only total at 6pm. UK plus intra-market turnover. (u) Unavaliable.
Real Estate Investment Trusts (31) 2740.49 0.11 2442.83 2737.35 2746.80 2892.02 3.55 1.19 23.60 44.78 3415.10 FTSE Eurozone All Cap 649 416.15 -0.3 3.9 19.8 2.9 Nonlife Insurance
17.5 677.58 68 246.00 -0.1 -0.1 6.1 357.24 7.8 2.3 (c) Market closed.
General Financial (32) 9067.41 -0.49 8082.56 9112.02 9004.67 7710.26 3.23 2.11 14.68 108.34 10369.12 FTSE RAFI All World 3000 3043 6404.66 -0.2 0.9 8.7 3.0 Life Insurance
7.3 8436.41 52 215.07 -0.4 -0.4 7.4 342.58 8.9 3.0
Equity Investment Instruments (175) 9662.48 0.64 8613.00 9600.81 9564.89 7591.20 2.37 1.17 36.24 93.60 5276.07 FTSE RAFI US 1000 1001 10428.27 0.0 -0.5 3.7 2.4 Financial Services
2.8 13640.85 147 260.63 0.0 0.0 8.2 358.12 9.1 1.9
Non Financials (338) 4888.90 0.51 4357.90 4863.93 4865.04 4094.16 3.42 1.01 29.00 78.79 7219.49 FTSE EDHEC-Risk Efficient All-World 3086 370.23 -0.1 1.7 11.7 2.1 Technology
10.6 514.22 182 234.71 0.0 0.0 20.9 287.11 21.7 1.5 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Technology (16) 2070.60 0.42 1845.71 2061.89 2056.47 1422.29 2.17 1.30 35.35 26.90 2664.94 FTSE EDHEC-Risk Efficient Developed Europe 541 314.03 -0.4 3.9 19.2 2.5 Software & Computer Services
17.3 478.58 89 403.20 0.1 0.1 21.2 470.34 21.8 0.9 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Software & Computer Services (12) 2367.49 0.38 2110.35 2358.59 2348.85 1896.23 2.10 1.48 32.27 32.21 3219.34 Oil & Gas 145 350.59 -0.3 -1.8 -6.6 563.80
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Technology Hardware & Equipment (4) 1912.61 0.90 1704.88 1895.51 1920.65 1511.44 2.97 0.00-7369.18 12.16 2242.28 Alternative Energy 9 111.38 -0.4 -0.4 21.2 150.01 21.6 1.6 liable for any loss arising from the reliance on or use of the listed information.
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FTSE 250 19960.92 20010.59 19979.45 19984.41 20000.70 19982.71 20024.89 20040.06 20015.45 20050.52 19960.92
FTSE SmallCap 5644.40 5650.47 5648.19 5647.68 5647.90 5650.33 5651.25 5654.37 5654.04 5661.48 5644.40 WO 2008/118372, EPN 1733352, and HK1099110). EDHEC is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
FTSE All-Share 4114.75 4122.05 4118.70 4118.46 4119.75 4115.23 4129.72 4130.87 4130.58 4132.64 4114.30 www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the London Stock Exchange
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Time of FTSE All-Share Day's high:14:12:00 Day's Low07:25:00 FTSE 100 2010/11 High: 4114.68(25/05/2017) Low: 3858.26(31/01/2017)
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Tuesday 30 May 2017 FINANCIAL TIMES 17
MARKET DATA
FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE
Close Prev Day Week Month Close Prev Day Week Month Day's Mth's Spread Day's Mth's Spread
price price change change % change change % change % price price change change % change change % change % Red Ratings Bid Bid chge chge vs Red Ratings Bid Bid chge chge vs
Surgutneftegas 30.69 29.71 0.98 3.30 3.44 12.6 9.94 SunPhrmInds 502.60 502.60 0.00 0.00 -150.55 -23.0 -21.71 May 26 date Coupon S* M* F* price yield yield yield US May 26 date Coupon S* M* F* price yield yield yield US
Intuit 138.56 138.36 0.20 0.14 13.18 10.5 19.64 ShgPdgBk 12.84 12.93 -0.09 -0.70 -2.18 -14.5 -14.68 High Yield US$ US$
ITC 315.85 315.85 0.00 0.00 29.65 10.4 13.62 Alexion 97.70 98.50 -0.80 -0.81 -16.14 -14.2 -19.08 Navient Corporation 03/20 8.00 BB- Ba3 BB 110.12 4.20 -0.02 -1.35 2.93 Citigroup Inc. 01/28 6.63 BBB+ Baa1 A 121.50 4.15 -0.02 -0.04 1.90
ChinaMBank 23.55 23.70 -0.15 -0.63 2.10 9.8 16.58 SBI NewA 284.00 284.00 0.00 0.00 -24.00 -7.8 -1.98 High Yield Euro SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 110.63 4.77 -0.02 0.06 2.52
ChUncHK 11.34 11.18 0.16 1.43 1.00 9.7 12.95 Devon Energy 35.82 35.73 0.09 0.25 -2.57 -6.7 -11.75 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 120.95 4.43 -0.02 -0.11 2.18
PingAnIns 50.35 50.00 0.35 0.70 4.05 8.7 14.95 ValeantPh 17.22 17.25 -0.03 -0.17 -1.12 -6.1 36.13 NationsBank Corp. 03/28 6.80 BBB Baa3 A- 121.22 4.36 -0.02 -0.08 2.11
MediaTek 229.50 228.50 1.00 0.44 17.00 8.0 6.74 Novatek 645.20 658.20 -13.00 -1.98 -39.20 -5.7 -7.10 Emerging US$ GTE Corporation 04/28 6.94 BBB+ Baa2 A- 125.37 4.07 -0.02 -0.08 1.82
NorfolkS 122.33 119.77 2.56 2.14 9.06 8.0 3.83 Unicred 15.87 16.59 -0.72 -4.34 -0.91 -5.4 6.22 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 United Utilities PLC 08/28 6.88 BBB- Baa1 A- 120.34 4.59 -0.02 -0.24 2.34
AmerAir 48.74 48.02 0.72 1.50 3.52 7.8 5.04 CanNatRs 39.77 40.00 -0.23 -0.58 -2.24 -5.3 -8.53 Brazil 01/18 8.00 BB Ba2 BB 102.89 3.45 0.47 0.16 2.18
Peru 03/19 7.13 BBB+ A3 BBB+ 109.93 1.61 -0.01 -0.20 0.34 Euro
CSX 53.96 53.79 0.17 0.32 3.58 7.1 6.24 ENI 14.28 14.31 -0.03 -0.21 -0.74 -4.9 0.07 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 103.98 2.23 -0.02 0.17 -
Charter Comms 337.44 333.76 3.68 1.10 21.66 6.9 -2.30 BakerHu 55.45 54.84 0.61 1.11 -2.77 -4.8 -6.74 Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84
Brazil 01/22 12.50 BB Ba2 BB 111.99 9.28 0.02 -0.16 7.49 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 104.41 2.19 -0.07 0.11 -
SK Hynix 57900.00 57100.00 800.00 1.40 3700.00 6.8 7.22 ConocPhil 45.35 45.05 0.30 0.67 -2.13 -4.5 -6.19 Citigroup Inc. 02/30 4.25 BBB Baa3 A- 117.32 2.30 -0.02 0.04 -
Mnstr Bvrg 50.90 50.76 0.14 0.28 3.21 6.7 12.84 Lowes 80.91 81.33 -0.42 -0.52 -3.68 -4.4 -5.07 Poland 03/23 3.00 BBB+ A2 A- 100.90 2.85 -0.03 -0.20 1.06
Colombia 03/23 2.63 BBB Baa2 BBB 97.22 3.18 -0.03 -0.11 1.39 HBOS plc 03/30 4.50 BBB- Baa2 A- 116.87 2.49 -0.02 -0.24 -
China Vanke 20.75 20.35 0.40 1.97 1.29 6.6 5.12 IntSPaolo 2.57 2.62 -0.05 -2.06 -0.12 -4.3 -3.96
Turkey 03/23 3.25 - Ba1 BB+ 80.87 7.35 0.06 0.14 5.56 Yen
Hind Unilevr 1072.25 1072.25 0.00 0.00 64.25 6.4 14.69 Halliburton 45.76 45.41 0.35 0.77 -2.02 -4.2 -2.62
Russia 05/26 4.75 - - BBB- 105.58 4.05 -0.02 -0.03 1.80 Enagas Transportes, S.A.U. 09/39 3.23 A- Baa2 A- 106.57 2.85 0.00 0.01 -
Ch Evrbrght 3.68 3.68 0.00 0.00 0.22 6.4 0.82 Shire 4651.50 4738.00 -86.50 -1.83 -200.50 -4.1 1.10
IndstrlBk 16.50 16.57 -0.07 -0.42 0.91 5.8 7.35 Generali 14.06 14.35 -0.29 -2.02 -0.56 -3.8 -3.23 Turkey 03/27 6.00 - Ba1 BB+ 106.81 5.17 -0.02 -0.03 2.92 Sterling
Hunng Pwr 6.17 5.84 0.33 5.65 0.34 5.8 14.90 NatAusBk 29.27 29.73 -0.46 -1.55 -1.11 -3.7 -13.91 Emerging Euro Electricite de France (EDF) 05/28 6.25 A A3 A- 135.01 2.56 -0.03 -0.19 0.31
Ch OSLnd&Inv 23.65 23.30 0.35 1.50 1.25 5.6 4.65 Daimler 65.44 65.38 0.06 0.09 -2.30 -3.4 -3.40 Brazil 02/15 7.38 BBB- Baa2 BBB 111.75 0.73 0.00 0.00 0.09 HSBC Holdings plc 08/28 2.63 A A1 AA- 101.46 2.47 -0.03 -0.31 0.22
ChinaLife 25.60 25.35 0.25 0.99 1.35 5.6 8.25 Deut Bank 16.43 16.49 -0.06 -0.36 -0.56 -3.3 -3.27 Mexico 02/20 5.50 BBB+ A3 BBB+ 113.90 0.36 -0.01 -0.07 -0.92 Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poors, M -
Mexico 04/23 2.75 BBB+ A3 BBB+ 108.00 1.33 -0.01 -0.04 -0.46 Moodys, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 03/28 3.00 BB+ Baa2 BBB- 108.58 2.10 -0.02 -0.02 -0.15
Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other
London close. *S - Standard & Poors, M - Moodys, F - Fitch.
INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET
May 26 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return May 26 Day Chng Prev 52 wk high 52 wk low Red Change in Yield 52 Week Amnt
US Fed Funds 0.50-0.75 14-12-2016 1.00 0.50-0.75 0.25-0.50 Index change change change 1 month 1 year VIX 9.81 -0.18 9.99 26.72 9.56 May 26 Price Yield Day Week Month Year High Low m
US Prime 4.00 16-12-2008 3.75 3.50 3.50 Markit IBoxx VXD 9.60 -0.32 9.92 23.69 3.59 Tr 8.75pc '17 102.10 0.01 0.00 0.00 -200.00 -97.44 105.16 100.00 11.14
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 181.71 0.08 1.06 4.90 0.80 0.64 VXN 12.26 -0.32 12.58 27.10 9.75 Tr 5pc '18 103.78 0.10 11.11 25.00 233.33 -66.67 108.38 103.78 35.24
Euro Repo 0.00 10-09-2014 0.05 0.05 0.05 Corporates( ) 343.37 0.24 1.41 4.01 1.59 11.04 VDAX - - - - - Tr 4.5pc '19 107.85 0.07 0.00 16.67 133.33 -84.44 111.97 107.85 36.35
UK Repo 0.25 05-03-2009 0.25 0.50 0.50 Corporates($) 271.45 0.05 0.75 3.11 0.75 3.11 CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.75pc '20 112.94 0.08 -11.11 -11.11 0.00 -87.88 117.02 112.94 33.31
Japan O'night Call 0.00-0.00 05-10-2010 0.00 0.00-0.10 0.00-0.10 Corporates() 223.44 0.13 0.20 0.98 0.46 2.65 Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 1.5pc '21 104.64 0.22 -8.33 -12.00 -12.00 -75.28 106.04 102.64 32.46
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov() 231.47 0.24 0.53 -0.52 0.79 -0.59 Tr 4pc '22 117.56 0.29 -14.71 -17.14 -9.38 -68.82 121.31 116.43 37.95
Gilts( ) 325.82 0.23 0.79 2.75 0.92 7.46 BONDS: BENCHMARK GOVERNMENT Tr 5pc '25 132.35 0.71 -6.58 -6.58 -5.33 -45.38 138.11 129.09 35.08
INTEREST RATES: MARKET Global Inflation-Lkd 259.18 0.01 0.65 4.86 1.37 3.84 Red Bid Bid Day chg Wk chg Month Year Tr 1.25pc '27 101.55 1.09 -5.22 -6.03 -3.54 -31.45 138.26 99.31 5.43
Over Change One Three Six One Markit iBoxx Non-Gilts 338.18 0.22 1.18 3.62 1.33 9.60 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '32 138.52 1.40 -2.78 -4.11 -3.45 -27.84 148.92 131.34 35.44
May 26 (Libor: May 25) night Day Week Month month month month year Overall ($) 236.23 0.05 0.48 2.29 0.48 2.29 Australia 10/19 2.75 102.62 1.63 -0.02 -0.06 -0.11 0.01 Tr 4.25pc '36 143.62 1.56 -2.50 -3.70 -4.29 -26.42 155.77 133.98 29.76
US$ Libor 0.93000 0.000 0.002 0.001 1.04467 1.20178 1.41378 1.72122 Overall( ) 326.45 0.23 0.91 3.01 1.04 8.08 11/28 2.75 101.95 2.55 -0.02 -0.07 -0.18 0.00 Tr 4.5pc '42 158.85 1.66 -2.35 -3.49 -4.05 -24.89 174.65 145.64 26.64
Euro Libor -0.43000 -0.006 -0.004 0.000 -0.39857 -0.36929 -0.28500 -0.15543 Overall() 227.66 0.19 0.38 -0.16 0.60 0.09 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 3.75pc '52 158.57 1.57 -2.48 -3.68 -4.27 -25.94 177.28 140.85 23.59
Libor 0.22375 0.000 0.000 0.000 0.25263 0.29963 0.44138 0.63813 Treasuries ($) 223.04 0.06 0.33 1.79 0.33 1.79 04/27 0.50 98.99 0.61 -0.03 -0.04 0.02 0.00 Tr 4pc '60 178.41 1.50 -2.60 -3.85 -4.46 -27.18 201.27 155.52 23.21
Swiss Fr Libor 0.000 -0.78540 -0.72960 -0.66180 -0.48960 FTSE Belgium 06/18 0.75 100.87 -0.11 0.00 0.00 0.00 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per 100 nominal of stock. Red yield: Gross redemption yield.
Yen Libor -0.002 -0.01629 -0.01529 0.02300 0.12500 Sterling Corporate () 118.74 0.31 - - 1.03 5.44 06/27 0.80 101.10 0.69 -0.04 -0.07 -0.10 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Euro Euribor 0.003 -0.37100 -0.32900 -0.25400 -0.13000 Euro Corporate () 107.44 0.19 - - 0.17 -0.65 Canada 08/19 0.75 100.02 0.74 -0.01 0.03 0.00 0.00
Sterling CDs
US$ CDs
0.000
0.000
0.20000
0.97000
0.28000
1.13000
0.42500
1.31000
Euro Emerging Mkts () 797.74 3.45 - - -0.52 -8.70 06/27 1.00 95.98 1.43 -0.03 -0.04 -0.11 0.00 GILTS: UK FTSE ACTUARIES INDICES
Eurozone Govt Bond 112.35 0.03 - - 0.42 -3.19 Denmark 11/20 0.25 102.18 -0.37 0.00 0.00 0.00 0.00
Euro CDs 0.000 -0.43500 -0.39500 -0.29500 11/27 0.50 98.35 0.66 -0.01 0.03 0.07 0.00 Price Indices Day's Total Return Return
CREDIT INDICES Day's Week's Month's Series Series Fixed Coupon May 26 chg % Return 1 month 1 year Yield
Short 7 Days One Three Six One Index change change change high low Finland 09/19 1.75 100.46 1.55 0.00 0.00 0.00 0.21
07/28 2.75 115.37 1.45 0.00 0.00 0.00 0.00 1 Up to 5 Years 96.70 0.03 2435.91 0.09 1.57 0.17
May 26 term notice month month month year Markit iTraxx 2 5 - 10 Years 186.69 0.19 3517.80 0.52 4.70 0.69
Euro -0.50 -0.35 -0.50 -0.35 -0.51 -0.36 -0.47 -0.32 -0.37 -0.22 -0.36 -0.11 Crossover 5Y 369.26 -12.07 35.21 40.34 390.04 288.69 France - - - - - - -
3 10 - 15 Years 218.49 0.30 4282.02 0.75 7.20 1.14
Sterling 0.15 0.25 0.15 0.25 0.23 0.33 0.35 0.50 0.47 0.62 Europe 5Y 85.00 -1.98 7.21 7.01 90.43 67.59 11/20 0.25 102.42 -0.44 0.00 0.00 0.00 0.00
4 5 - 15 Years 194.21 0.23 3706.57 0.60 5.48 0.89
Swiss Franc - - - - - - - - - - - - Japan 5Y 70.05 -2.51 2.21 -0.87 93.03 64.22 10/22 2.25 112.83 -0.11 0.00 0.00 0.00 0.00
5 Over 15 Years 346.65 0.41 5242.96 1.61 12.93 1.58
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 111.86 -3.89 10.86 12.50 121.66 80.36 05/27 1.00 102.27 0.76 -0.03 -0.05 -0.08 0.00
7 All stocks 184.73 0.24 3617.31 0.88 7.21 1.38
US Dollar 0.90 1.00 0.95 1.05 1.00 1.10 1.10 1.20 1.25 1.35 1.50 1.60 Germany 10/19 0.25 102.21 -0.67 0.00 0.00 0.00 0.00
Markit CDX 08/23 2.00 113.78 -0.20 0.00 0.00 0.00 0.00
Japanese Yen -0.10 0.10 -0.15 0.05 -0.20 0.10 -0.15 0.15 -0.15 0.15 -0.10 0.20 Day's Month Year's Total Return Return
Emerging Markets 5Y 198.09 -3.26 -11.46 -11.68 218.09 197.56 02/27 0.25 99.22 0.33 -0.03 -0.04 0.01 0.00
Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs: Index Linked May 26 chg % chg % chg % Return 1 month 1 year
Nth Amer High Yld 5Y 328.29 0.17 -17.13 -10.17 353.95 327.35 08/46 2.50 133.25 1.15 -0.04 -0.05 0.05 0.30
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. 1 Up to 5 Years 315.17 0.02 -0.12 1.97 2475.12 0.10 3.87
Nth Amer Inv Grade 5Y 63.53 0.28 -4.09 -3.35 69.24 62.53 Greece 04/19 4.75 98.46 5.63 -0.08 0.13 -0.60 -1.40
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 2 Over 5 years 730.52 -0.30 1.04 23.87 5438.46 1.16 24.53
02/27 3.00 84.59 5.91 -0.05 0.29 -0.35 -1.26 3 5-15 years 484.94 0.31 0.36 10.93 3746.22 0.57 12.11
Ireland 10/19 5.90 115.33 -0.47 0.00 0.00 0.00 0.00 4 Over 15 years 941.79 -0.49 1.26 28.79 6862.39 1.35 29.24
05/26 1.00 101.90 0.78 -0.03 -0.04 -0.06 0.01 5 All stocks 659.70 -0.27 0.95 21.37 4984.18 1.07 22.16
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/19 0.05 99.86 0.11 0.01 0.01 -0.15 0.00
11/21 0.35 98.83 0.62 0.01 0.01 -0.17 0.00 Yield Indices May 26 May 25 Yr ago May 26 May 25 Yr ago
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/27 2.20 101.01 2.10 -0.02 -0.03 -0.18 0.00 5 Yrs 0.31 0.33 0.80 20 Yrs 1.69 1.71 2.18
Crude Oil Jun 49.79 0.00 Corn Jul 373.75 0.00 Apr 21 Apr 21 Prev return stock Market stocks
03/47 2.70 91.11 3.19 0.00 -0.06 -0.16 0.61 10 Yrs 1.04 1.07 1.52 45 Yrs 1.49 1.51 2.08
Brent Crude Oil 52.42 0.24 Wheat Jul 438.75 0.00 Can 4.25%' 21 121.46 -0.361 -0.372 0.29 5.18 75355.91 7
Japan 05/19 0.10 100.53 -0.17 0.00 0.00 0.00 0.00 15 Yrs 1.51 1.53 1.99
RBOB Gasoline May 1.64 0.00 Soybeans Jul 926.00 0.00 Fr 2.25%' 20 112.37 -1.431 -1.458 0.13 20.31 222459.38 16
03/22 0.10 101.08 -0.12 0.00 0.00 0.00 0.00
Heating Oil Jun 1.58 0.00 Soybeans Meal Jul 301.30 0.00 Swe 0.25%' 22 114.09 -1.848 -1.830 0.17 30.03 229025.37 7
03/27 0.10 100.61 0.04 -0.01 0.00 0.02 0.00 inflation 0% inflation 5%
Natural Gas Jun 3.23 -0.07 Cocoa (ICE Liffe)X Jul 1499.00 0.00 UK 2.5%' 20 373.10 -2.880 -2.849 0.27 6.58 653041.71 27
03/47 0.80 100.12 0.80 -0.02 0.00 0.01 0.00 Real yield May 26 Dur yrs Previous Yr ago May 26 Dur yrs Previous Yr ago
Ethanol - - Cocoa (ICE US) Jul 1914.00 0.00 UK 2.5%' 24 371.80 -2.205 -2.162 0.74 6.82 653041.71 27
Netherlands 01/20 0.25 102.35 -0.63 0.00 0.00 0.00 0.00 Up to 5 yrs -2.49 1.97 -2.47 -1.25 -3.24 1.97 -3.24 -1.89
Uranium Jun 18.10 0.00 Coffee(Robusta)X Jul 1983.00 0.00 UK 2%' 35 273.88 -1.791 -1.774 1.49 9.08 653041.71 27
07/27 0.75 102.07 0.54 -0.04 -0.03 -0.01 0.00 Over 5 yrs -1.75 24.76 -1.76 -0.94 -1.78 24.84 -1.79 -0.97
Carbon Emissions - - Coffee (Arabica) Jul 131.05 0.00 US 0.625%' 21 103.72 -0.249 -0.260 0.21 35.84 1253376.13 38
White SugarX 438.30 0.00 New Zealand 04/20 3.00 102.51 2.10 -0.01 -0.03 -0.20 -0.03 5-15 yrs -2.00 8.47 -1.96 -0.93 -2.12 8.48 -2.09 -1.06
Diesel - - US 3.625%' 28 133.26 0.507 -0.260 0.58 16.78 1253376.13 38
Sugar 11 15.37 0.00 04/27 4.50 114.49 2.81 -0.04 -0.03 -0.24 0.20 Over 15 yrs -1.73 29.81 -1.75 -0.94 -1.75 29.85 -1.77 -0.96
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices Local currencies. Total market
Norway 05/19 4.50 107.75 0.55 0.00 -0.02 -0.11 -0.08 All stocks -1.76 23.05 -1.77 -0.94 -1.79 23.16 -1.80 -0.98
Base Metals ( LME 3 Months) Cotton Jul 77.15 0.00 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
Aluminium 1952.00 -8.00 Orange Juice Jul 139.00 0.00 02/27 1.75 102.14 1.51 -0.01 -0.01 -0.12 0.00 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
amount.
Aluminium Alloy 1670.00 -10.00 Palm Oil - - Portugal 06/19 4.75 109.26 0.20 -0.06 -0.08 -0.17 -0.79
Copper 5662.00 -67.50 Live Cattle Jun 122.63 0.00 BONDS: TEN YEAR GOVT SPREADS 04/27 4.13 108.29 3.13 -0.05 -0.04 -0.40 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 2123.00 30.00 Feeder Cattle Aug 147.20 -4.03 Spain 01/19 0.25 100.85 -0.25 0.00 0.00 0.00 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Nickel 9085.00 40.00 Lean Hogs Jun 81.88 0.00 Spread Spread Spread Spread 04/27 1.50 99.76 1.53 -0.05 -0.03 -0.11 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Tin 20325.00 -125.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.45 1.42 -0.01 -0.01 0.00 0.26 loss arising from the reliance on or use of the listed information. For all queries e-mail
Zinc 2644.50 10.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 11/26 1.00 104.49 0.51 -0.01 0.00 -0.06 -0.28 ft.reader.enquiries@morningstar.com
Precious Metals (PM London Fix) May 25 Month Year Australia 2.55 2.22 0.30 Italy 2.10 1.77 -0.15 Switzerland 07/20 2.25 109.56 -0.78 0.00 0.00 0.00 0.00
Gold 1265.05 8.10 S&P GSCI Spt 385.50 0.53 4.03 Austria 0.61 0.28 -1.64 Japan 0.04 -0.29 -2.21 05/26 1.25 113.13 -0.20 0.00 0.00 0.00 0.00 Data provided by Morningstar | www.morningstar.co.uk
Silver (US cents) 1729.00 14.00 DJ UBS Spot 84.01 -0.03 -1.39 Belgium 0.69 0.35 -1.56 Netherlands 0.54 0.21 -1.71 United Kingdom 07/19 1.75 103.58 0.08 -0.02 -0.03 0.01 -0.55
Platinum 961.00 11.00 R/J CRB TR 183.68 0.24 -1.44 Canada 1.43 1.10 -0.82 Norway 1.51 1.18 -0.74 07/22 0.50 100.20 0.46 -0.02 -0.06 -0.05 0.00
Palladium 780.00 13.00 M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Denmark 0.66 0.33 -1.59 Portugal 3.13 2.80 0.88 07/27 1.25 101.51 1.09 -0.03 -0.08 -0.07 0.00
Bulk Commodities UBS Bberg CMCI TR 13.68 -0.48 2.92 Finland 1.45 1.11 -0.81 Spain 1.53 1.19 -0.72 07/47 1.50 96.31 1.66 0.00 -0.06 -0.06 0.00
Iron Ore (Platts) 57.80 -0.20 LEBA EUA Carbon 5.04 0.00 -13.55 France 0.76 0.43 -1.49 Switzerland -0.20 -0.53 -2.45 United States 03/19 1.25 99.96 1.27 0.00 -0.01 0.02 0.00
Iron Ore (The Steel Index) 57.80 0.00 LEBA CER Carbon 0.23 -8.00 -42.50 Germany 0.33 0.00 -1.92 United Kingdom 1.09 0.76 -1.16 04/22 1.88 100.40 1.79 -0.01 0.01 -0.02 0.00
GlobalCOAL RB Index 72.75 -0.25 LEBA UK Power 1755.00 36.05 50.00 Greece 5.91 5.58 3.66 United States 2.25 1.92 0.00 05/27 2.38 101.11 2.25 -0.01 0.01 0.00 0.00
Baltic Dry Index 912.00 -6.00 Ireland 0.78 0.45 -1.47 05/47 3.00 101.73 2.91 -0.01 0.02 0.00 0.00
Sources: NYMEX, ECX/ICE, CBOT, X ICE Liffe, ICE Futures, CME, LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information Data provided by SIX Financial Information
unless otherwise stated.
18 Tuesday 30 May 2017
side-effects if we keep
Feb 23
Guo Shuqing 5800
appointed as
DON WEINLAND HONG KONG CBRC* chair
A
cure-all. This is what passive investing repre- has already taken several shots at stem- 2016
sents to its growing band of proponents. The ming the rapid growth of off-balance- *China Banking Regulatory Commission
funds, we are told, will rid the market of toxic sheet lending at banks since taking con- Chinas shadow banking
elements and restore it to health. trol in February. The central bank has
It is a persuasive argument. Poorly per- also tightened liquidity in the financial
sector continues to grow
forming and expensive active managers have lingered too system, sparking angst earlier this year. Total assets Total assets as a
(Rmb tn) % of all banking
long, eroding returns for investors. Yet index-tracking The regulator issued a flurry of rules system assets
products are no miracle remedy. They are like antibiotics: to discourage banks from using bor- 80 30
valuable in moderation, but likely to do more harm than rowed money to invest in bonds. The
good should their use become widespread. sell-off that followed pushed yields to 60
25
Indeed, if passive equity funds were to continue their two-year highs and even led to a rarely 40
growth trajectory, they would own all listed stocks by seen inversion of the yield curve. 20
20
2030. That could threaten the free-market economy. The moves have also dented the share
To see why, look at the workings of index investing and prices of Chinese banks among the 0 15
the structure of the passive fund industry. worlds largest by market capitalisation 2012 13 14 15 16
Sources: Bloomberg; Moodys
Under index-tracking, shares with large weightings in wiping out about $38bn in share- Shanghais Pudong financial district. The crackdown also clouds the issue for bonds Carlos Barria/Reuters
the major indices attract more capital irrespective of their holder value in a two-month stretch.
underlying performance. In a system in which passive Its been very clear . . . that regula- sion plateaued at the end of last year, the have also been curbed. The leaders of of capital, Mr Xia said. Asset managers
funds monopolise flows, the price of a security ceases to tors want to stamp out some of this first quarter of 2017 witnessed a resur- Chinas top three financial regulators and trust companies are already start-
function as a gauge of a firms underlying prospects. This [shadow banking] activity. During that gence in entrusted loans and trust prod- are now Xi appointees. Rules issued by ing to unwind some of their businesses.
distorts the cost of equity and the price of credit. time theres been lots of inquiries from ucts, two pillar instruments used in the CBRC this month will force banks to Wealth management products have
In such conditions, serious misallocations of capital investors and some concern on what shadow banking. Last week, in an unex- be more transparent about wealth man- been exceptionally popular among
would become the norm, creating asset bubbles on the one that will look like, said the Asia head of pected move, Moodys cut Chinas credit agement products, which are often banks and their customers. These have
hand and leaving innovative groups starved of funds on a global banks securities unit. rating for the first time in 25 years, high- channelled to borrowers through asset given banks a loosely regulated and
the other. That would not be good for productivity or The CSI 300 bank index fell nearly 10 lighting economic and financial risks. management companies or trusts. highly lucrative channel for using funds
growth. Likely to make matters much worse is the concen- per cent in the weeks after Guo Shuqing, The curbs to shadow lending are part Rumours that Mr Guo may unleash a that would otherwise be simple depos-
tration in the market. The industry is an oligopoly: three a respected Beijing technocrat, was of a much larger shift in how President sweeping campaign to clean up the its. Because the instruments are off bal-
groups control almost three-quarters of passively-man- appointed to head the China Banking Xi Jinping controls Chinas financial sec- channels that are used to structure ance sheet, institutions can use them to
aged investment in stocks. Regulatory Commission (CBRC) in Feb- tor, said Kevin Lai, chief economist for products, namely asset managers, have ramp up their lending. New credit hit a
Drawing on seemingly lim- ruary, although it has recovered some- Asia ex-Japan at Daiwa Capital Markets. been rocking markets, said Xia Le, chief record high in January, mostly due to
itless economies of scale,
Governance what following a central bank liquidity
The moves Mr Xi has been working to uproot economist for Asia at BBVA. He added lending by non-bank institutions.
these powerhouses have been standards and injection in early May. Individual stocks by Beijing imbalances in the financial system that that several large banks have started to Foresea Life Insurance, one of Chinas
able to amass assets by slash- of lenders known to engage heavily in have allowed some individuals to grow restrain standard long-term lending in biggest insurers, this month said it
ing costs. The more assets
competitive shadow banking, such as China Ever-
are part of extremely wealthy, Mr Lai said. preparation for reforms that could expected Rmb60bn ($8.7bn) in
they gather, the more they can forces risk bright Bank and China Minsheng Bank, a larger shift Those changes include the departure require extra liquidity. redemptions in wealth management
cut fees and continue expan- have suffered during the period. of Shang Fulin as CBRC head and replac- Im aware of some bank managers products this year, and warned of the
sion, in contrast to active
erosion Shadow banking expanded by about
in how Xi ing him with Mr Guo, followed by that have stopped giving longer-term possibility of mass defaults. But Chinas
managers, whose room for 20 per cent in 2016 to Rmb64.5tn, fol- controls the putting the chairman of Chinas insur- loans because they think there is a possi- central bank is battling to rein in issu-
manoeuvre is constrained by liquidity and therefore size. lowing several years of much higher ance regulator, Xiang Junbo, under bility they will need to move off-bal- ance of these instruments, fearing that a
As demand for index products grows, a greater propor- growth, according to rating agency
financial investigation in April. Wealth manage- ance-sheet loans on to the balance sheet rise in defaults would create panic, and
tion of listed groups will fall under the control of the three Moodys. While the industrys expan- sector ment sold through insurance groups a type of bail-in that could require lots possibly destabilise the banking system.
largest groups. These firms own close to 20 per cent of US
large-cap companies. Taking the commoditisation of the
asset management industry to its logical conclusion, entire
industries could end up being swallowed by the big three. Global overview
What happens when a small group of passive sharehold-
ers control most or all of the companies in a given indus-
try? Two developments are likely.
The first is a weakening of governance standards.
Talk of early election
The second is an erosion of competitive forces, where
the overlapping holdings of the dominant passive share-
hits Italian financials
holders create conditions for oligopolistic corporate prac-
tices. Studies have found that competition has diminished
where shareholdings are concentrated among a small MICHAEL HUNTER LONDON record closing high on Friday
group of mostly passive investors, hurting consumers. for Wall Streets S&P 500.
In the US airline sector, in which the biggest groups are A sharp fall on Italys main Crude prices bounced
owned by the same large, predominantly passive institu- equities index, sparked by around yesterday following a
tional money managers, competition between carriers has talk of early election in week of big moves as Opec
dwindled, causing a spike in fares. the country, stood out in members agreed last Thurs-
In US banking, researchers find a strong link between otherwise steady European day to extend production
accumulation of bank shares by a small group of index markets. cuts to March of next year to
fund groups and a rise in deposit account servicing fees. Matteo Renzi, the countrys address a global supply glut.
Other industries appear vulnerable to a passive annexa- former prime minister and Brent crude, the interna-
tion: those that are very capital-intensive or quite concen- leader of the governing Dem- tional benchmark, was up
trated, such as utilities, energy and telecoms. ocratic Party, said in a week- 0.8 per cent at $52.57 a barrel
Passive dominance will not happen overnight. Yet left end interview that holding a late in the European day,
unchecked, growth of index-trackers has the potential to national poll in September, having been down by a simi-
erode the market-based economy, one industry at a time. at the same time as German lar margin in Asian trade.
There is a geopolitical dimension. If the passive giants elections, made sense from a West Texas Intermediate fol-
end up owning large parts of the capital market, they will European perspective. lowed the same pattern, to
have a big say on the composition of indices. Effectively His words were enough to rise 0.9 per cent at $50.26. It
able to decide which country or company should be unnerve investors in Italian spent time under $50 during
included or excluded, they would wield great influence assets. Milans FTSE MIB was the Asian session.
over international capital flows. Note BlackRocks call for the biggest faller in the Frances CAC 40 fell 0.1 per
China to be included in MSCIs global equity indices. Some region by a significant mar- cent, while Germanys Xetra
might see that as an excessive concentration of power. gin. It lost 2 per cent, while Dax 30 rose 0.2 per cent.
None of this relieves the pressure on active managers to the international Euro Stoxx Export stocks were among
perform and offer better value to their clients. Nor does it 600 was flat. the biggest fallers with
deny the utility of passive investment. Index products Italys relatively steep fall Volkswagen down 0.6 per
offer benefits to investors. The problem is that if the was led by financial stocks, cent in Frankfurt and Miche-
majority of us embrace them, index-trackers threaten to with Unione di Banche Ital- lin was 0.8 per cent weaker in
sabotage the economic system. If passive funds are over- iane, Banco BPM and Paris as the euro remained
used, they will create more problems than they solve. UniCredit down about 4 per immune to the Italian wor-
cent each. Mediobanca and ries.
Renaud de Planta is chairman of Pictet Asset Management and Finecobank fell by 3 per cent The shared currency was
managing partner of the Pictet Group each. flat at $1.1180, leaving it near
The losses for the Italian to the seven-month high
stock index were also nota- above $1.12 it reached last
bly broad, with only two week.
stocks rising. Mediaset The pound regained 0.3
More comment and data on ft.com gained 1 per cent, as did per cent to $1.2845, after
Brembo, the brake maker. stumbling 1.1 per cent on Fri-
Italys elections are not due day as polls in the lead-up to
Y Fast FT Our global economies, headed until May 2018, and only the next months general elec-
team gives you market- by Brazil, Russia, India countrys president has the tion showed the Conserva-
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24 hours a day, five days ft.com/beyondbrics ment. Labour.
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Y Podcast The Hard
Y Alphaville Our Currency podcast takes a Renzis words were quoted per cent and Hong Kongs
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Join Paul Murphy and the global currency gero, the countrys stocks cent ahead of a public holi-
Bryce Elder for the daily market. ft.com/podcasts were the standout movers day today.
Markets Live session at throughout the session. Mainland Chinas markets
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set momentum from another Wells in Hong Kong
FT SPECIAL REPORT
Reuters
6 |2 FTReports
| FTReports FINANCIAL TIMES
FINANCIAL Tuesday
TIMES 30 30
Tuesday May 2017
May 2017 FINANCIAL TIMES
FINANCIAL Tuesday
TIMES 30 30
Tuesday May 2017
May 2017 FTReports
FTReports| 3| 7
New
NewTrade
TradeRoutes
RoutesArab
ArabWorld
World New
NewTrade
TradeRoutes
RoutesArab
ArabWorld
World
EU accord Shipping Ports operator aims to co-ordinate expansion with Chinas plans for One Belt, One Road, writes Simeon Kerr
monarch sealed deals worth $65bn, We are further diversifying our Arab world are driven by China,
Morocco capitalises
US and China offeron opens
including schemes to develop refiner- economy and attracting more invest- which is also financing major infra-
ies and petrochemicals plants. China, ment, he added.
an increasingly important destina-
structure projects in the wider Mid-
The Dubai International Financial dle East, Africa and South Asia
early
new lead
tradein potential
renewables door for
Jordan
DP World tion for Saudi crude, has balanced its Centre (DIFC), the citys financial region, says Essa Kazim, the DIFCs
interests within the conflicts of the free zone, is seeking to place itself at governor. Facilitating trade and
Middle East, maintaining close rela- the centre of a so-called south-south investment across the south-south
tions with Riyadhs enemy, Tehran. trade corridor formed by emerging corridor remains a priority for DIFC.
The kings visit to China part of economies trading with one another, Mr Kazim says the UAE as a whole
Energy Nations
expertise counts Market access
hitches lift an Asian tour that included Japan and rather than with countries in the is interested in reaping potential ben-
Indonesia would have been west.
watched closely by other Gulf coun-
efits from Chinas One Belt, One Road
The DIFC said it had 1,648 active project an initiative seeking to re-
tries who are exploring deeper trad- registered companies in 2016, up establish historic land and maritime
ing relationships with China. from 1,445 in 2015. This included a 10 routes from China through Asia and
T
Diplomacy he effects of the oil price with the US and China. Saudi Arabia,
crash of 2014 are still the regions largest economy, needs to In the United Arab Emirates, per cent rise in the number of regu- Africa to Europe.
inTrump
sub-Saharan
market,
Siona
withJenkins
while
visit seals
writes
deals worth $380bn
Saudi Arabia,
Chinas
reverberating around
the Middle East. A dec-
ade of plenty, when oil
prices were high, has been replaced
foster a recovery after two years of
slashing expenditure to cover gaping
budget deficits. The private sector
has been too reliant on state spending
Refugee deal comes
with trade benefits,
writes John Reed Opportunity: refugees at a
camp in Jordan
on the new Dubais main trading partner with lated financial companies.
13 per cent of trade is China, fol-
The Agricultural Bank of China,
About 11 per cent of the DIFCs one of Chinas largest lenders, opened
lowed by India with 7.4 per cent and companies are from Asia, a propor- in the DIFC in 2013, with an onshore
the US with 6.7 per cent.
Dubai is looking towards China in
branch handling renminbi clearing.
Zhao Huan, president of ABC, said
thinksnew
by two years of fiscal crisis and the and the kingdom is keen to open up
Karim
links,
developed
el-Alami
Silk Road fosters
Since finishing
says
university
years ago, the young Moroccan
south-south
engineer and a friendtrade
softwareSimeon
big.
two
have
that uses Kerr
region continues to feel the pain. In
the oil-rich Gulf states, for example,
growth is expected to slow to 0.9 per
cent this year, compared with 2 per
cent in 2016, as exporters trim output
new avenues for investment and
trade.
This month, Donald Trump chose
Saudi Arabia for his first overseas
visit since taking office and agreed
At a conference in London last services and created friction
year, Jordan made a deal with with locals over scarce jobs.
international donors: it would Jordans unemployment rate
issue tens of thousands of work in 2016 stood at 15 per cent.
permits to Syrian refugees in The war in Syria has also
Silk Road the hope of facilitating new trading
routes from the worlds second-larg- A number of growing
est economy through Asia, the Mid- trade routes through
dle East andthe
Making connections: Africa
firstinto Europe.
freight trainThe
from UK to China sets off from London Gateway
the developing strategic partnership
between the UAE and China, along
with the increasing internationalisa-
tion of
emirates successful free zones Dubai into the Arab world make a new and greater contribu-
the renminbi,
Isabel was
Infantes/AFP/Getty helping ABC
Images
artificial intelligence to man- return for aid from and most brought havoc to Jordans tra- which offer termi-
preferential terms for are tion to bilateral tradesystems
and co-opera-
W
in a bid to support flagging oil prices. deals worth as much as $380bn hen China manufacturing in cheaper DP Worlds container ments at Gwadar in Pakistan
driven by China assets, have and infra-
age renewable energy costs. Economists see hopeful signs of including an $110bn arms deal. importantly, easier market ditional trading routes, closing held its One locations at home, such as nals handled businesses that establish
64m twenty-foot leadoperations
to that port becoming a tion. structure that have made
Their company, Elum Energy, recovery, however. In its most recent Under the agreements, Saudi Ara- access to the EU. the borders and hastening B e l t , O n e Urumqi in north-west China, equivalentthere units(TEU)
have attracted a broad range hub, says
last transshipment He saidthem Dubaia had an important
success, says Mr
will start deploying the soft- outlook for the region, the IMF bia will buy US goods, including for The scheme
pledge to assemble to provide
150 Lockheed Its amanufacturers searchgreets
deal: Donald Trump for new Mr Trumps visit. RoadSaudi Arabias
summit Saudiafield
and further Arabia is also turning
in Myanmar, to the
year, of companies,
compared with capacityfrom Simon
industrial to head
Kitchen, tionofthat is forecast to rise. Last year, role to play
macro Kitchen.and noted that it was
ware in telecoms towers expects non-oil growth in the Gulf to the oil industry, and invest $20bn into international
Martin Blackhawk help to
helicopters in Jordan,
the KingexportSalmanmarkets
on hisin the EU.
recent trip economic and social reformear-
in Beijing process east asand
Indonesia it Cambodia.
seeks to diversify of its 85m
eco- TEU.
mediaItand technology.
hopes to strategy research about 60 per cent
at Cairo- Weofwill thework
centres
withattracting more Chinese being
But Gwadar, enterprises
outside
around Morocco this summer. rise to 3 per cent in 2017 against 2 per a US infrastructure fund managed by kingdom. which has been burdened with to SaudiA year after the London con-
Arabia known as 2030
lier this month Vision would
it used boost These
the nomic areas
base away from traditional
are mush- expand capacity Wetoare moving
100m TEUswiftly
basedtowards a growth
investment bankcame
EFG from emerging markets and financial institutions
the Gulf, is in to a come
very for
good
They are considering exports cent last year. Saudi Arabia and the Blackstone. Saudi Arabia is also look- a large population
Both governments will openof Syrian
their EPA ference on the Jordan com- capital
eventflows
as aninto the kingdom
opportunity not and reliance
rooming andon western
will allies.
produce post-oil UAE,
for by 2020, dependent said Sheikh
on market Hermes.Hamdan institutions. the Chinese to make investment and business.
location, The UAE,
and if Pakistan can
and are in talks with operators UAE, in particular, are looking to bol- ing for capital flows into its own econ- refugees, is dubbed
doors, wide, Khalid al-Falih, the the Jor- pact, Jordan says it has issued ease business
only for foreign
to announce investors,
lavish new he EuropeWhen Kingwest,
and the SalmanMrbin
binAbdul Aziz, bin Mohammed al-Maktoum,
demand. Jebel Ali port andAJebel
number
Ali ofour
growing
portstradeready
routes he said, get is inthe a pivotal
incentivesposition on it
right,
in a number of countries of ster this growth by enhancing trade omy and the deals included a $6bn danminister
Saudi energy compact. saidItduring
was wel- some 49,000 work permits for added.
financing plans, but also to Sulayem visited China in March, the Saudi
says. With plansDubais crown in
to expand prince,
Free recently. flowingprime
Zone, DP Worlds through Dubai and into the Chinas new shouldmaritime
thrive, trade routes.
he adds.
sub-Saharan Africa. comed in the EU, which is keen Syrians. allay regional countries con- One Belt, One Roads mari- Latin America, Russia and
My hope is to deploy our to institute measures that Every application of a Syr- cerns that the global trade time routes link China to Africa, DP Worlds focus on
software in every solar storage might help to stem the flow of ian refugee gets accepted strategy would benefit China Southeast Asia, India, and, via international markets is help-
[unit] that is launched in refugees to Europe. because of agreements with at their expense. the Maldives, to Africa and on ing to mitigate a slowdown in
Africa in the next five years, Big ambitions: Morocco is home to one of the largest solar power plants Youssef Boudlal/Reuters Jordan, meanwhile, wants to Inside
Those misgivings have not to Europe through the Red Sea. its domestic activity.
says Mr Alami. explore the benefits of the EUs troubled Sultan Ahmed bin Land connections include Currency fluctuations,
He and his business partner, Sub-Saharan Africa have no lending arm of the World nesses compete for contracts offer to lower the threshold on Sulayem, chief executive of DP the main trans-Eurasian route weaker world economic
Cyril Colin, are well placed to access to electricity and some Bank. The Moroccans have a in the renewables market. rules of origin, effectively Influx has been a Egypt
World. Heaims to profit
sees Chinas massive via Kazakhstan. Morocco growth capitalises on oil
and the fall in crude
succeed. They are part of a energy experts are hoping that comparative advantage in We have a big chance in lowering tariffs that the EU from trafficof hotspot
reimagining ancient Silk Other rail networkslead link in renewables
prices have combined to make
small band of entrepreneurs the region could leapfrog tradi- terms of sharing expertise and Morocco right now, says charges on a range of Jordani- burden and created Road trade
Plans areroutes
advancingas a business
to China to Iran and the Gulf, Itsasexpertise
business conditions
will paymore offdiffi-
that has spotted an opportu- tional electricity generation experience with other parts of Mohamed Bernannou, chief an-made goods. friction with locals opportunity that could help well as to Pakistan by way of cult.
nity in a new but growing field infrastructure with renewa- Africa, he adds. executive of the Moroccan Cli- Amman hopes this would turn Suez Canal into an
ameliorate the effects of slow- Afghanistan.
as it targets markets in
Volumes at its Jebel Ali deep
of energy storage for renewa- bles. A subsidiary of Moroccos mate Innovation Centre provide an inducement for over scarce jobs industrial hub growth. The rail routes are expected
ing global economic sub-Saharan Africa
port, the largest marine termi-
bles. Morocco appears well national utility, the Office (MCIC), created in 2014 to European companies to invest The
Page 4 Chinese horizon is to compete with air cargo,Page with6 nal in the Middle East, fell by
Moroccos government is placed to help. It has more National de lElectricit, with develop green technology in Jordans 18 industrial zones changing, says Mr bin the sea routes used for lower- about 5 per cent in 2016, as
keen to support them. The than 20 trade agreements with funding from IFC, won a con- industry and entrepreneur- and development areas the EU, says Abdullah EUSulayem,
accord one opens
of Dubais most value bulk trade. We are on DP Gulf
World governments
hitchesspending lift
country is fossil-fuel poor and African countries. Casablanca, cession to bring power to rural ship. He says conditions in where factories manufacture Alhares, marketing and sales senior officials. all those routes, Mr bin cuts bit into regional trade. DP
has won attention for its suc- the countrys commercial cap- Senegal back in 2010. Morocco can replicate those goods for export. With new department head of Sigma, a door for Jordan
DP World has, for example, Sulayem says. onWorld
newsays Silkit Road
expects this
cess in developing renewable ital, is establishing itself as a Moroccan companies have found in many sub-Saharan jobs being created, Jordan detergent company. Refugee deal
just seen off the first direct Ports operator
DP World has about 20 ter- years volumes at the port to be
energy. In 2009, 1.7 per cent of hub for investment in Africa. begun to expand south with African countries, giving local hopes Syrian refugees will be a The harder part, for Jordan, freight train
comes withfrom trade the UK to minals poised to take advan- stable. plans to grow on
its electricity came from Moroccan banks and insur- European partners. French companies a competitive edge source of surplus labour rather has been attracting investors China. The train left in April on tage of One Belt, One Road. Among its overseas projects,
renewable sources. By 2012, ance companies and the energy giant Engie, which built over those from other parts of than competition with native who want to export to the EU. benefits
its
fort hthe China trade
r e e - w e e k These include six in South Asia DP World is advising on the
this had risen to 32 per cent national airline, Royal Air Moroccos Tarfaya wind farm the world. You have extreme Jordanians for scarce jobs. Of the work permits given to kingdom
journey from DP Worlds and four in China, as well as Khorgos Eastern Gate termi- routes
and is projected to be 42 per Maroc, have a strong presence Africas largest with local heat, you have dust. You are The idea of trying to turn Syrians over the past year, says London
Page 6 Gateway, at the mouth others operating in Thailand, nal near Page 7the Chinese border
cent by 2020 and 52 per cent across the continent. Rabat, company Nareva Holding, last working with a local popula- the challenge of refugees into Mr Fakhoury, only a few hun- of the river Thames, to Vietnam, South Korea and with Kazakhstan, an impor-
by 2030. Last year Morocco the seat of national govern- year announced a partnership tion that may not be able to an economic opportunity is dred, not more are inside the Yiwu in eastern China, laden Indonesia. tant point on rail routes link-
opened the worlds biggest agreement to jointly develop look after the maintenance. based on the protracted nature industrial zones where Jordan Contributors
with British products ranging ing China to Europe. Trains
concentrated solar power 5GW-6GW of power genera- The innovation is not in, for of the crisis, says Imad wants to see jobs created. from whisky to pharmaceuti- have to stop there where the
plant, Noor 1, and hosted the tion and energy services example, a photovoltaic Fakhoury, Jordans minister of If this Jordan compact is cals.Jenkins
Siona Steven Bird former Soviet Union meets
UNs COP 22 climate change The innovation is in Ivory Coast, Senegal, Ghana, technical adaptations that can operation. Its based on our Mr Fakhoury.itWe
projects in countries including panel, he adds. Its in small planning and international co- unbalanced, will crash, says DPand
Writer World
editor,aims to co-ordi-
FT Curation Designer China as the rail gauge
summit. need a win- nate its global network with changes.
Mustapha Bakkoury, head tailoring the product and Cameroon. tailor the product so that it is philosophy that this can hap- win for the Jordanian econ- Chinas
Simeon Kerrprojected $900bn Alan Knox In a similar way to how the
of the Moroccan Agency for so that it is suited for executive Bruno Bensasson, chief suited for local needs. pen if it complements Jorda- omy, donors and Syrian refu- investment
Gulf for the One Belt,
correspondent Picture editor Jebel Ali Free Zone trade
Solar Energy (Masen), which of Engie Africa, says Mr Alamis company nian job creation and does not gees. One Road project. area helped transform Dubai
is responsible for renewables local needs that Morocco has specific received MCIC support. In his displace it. According to Mr Fakhoury, JohnWe
Reedwill work with the intocontact:
For advertising details, an entrepot for global
development in the country, strengths thanks to its strong talks with companies in As of May 1, Jordan had just one company hiring refu- Chinesebureau
Jerusalem to prepare
chief our ports Mark Carwardine, +44 trade,
(0)20 DP
7873 World
4880 andhopes
told the FT in 2015 that the institutional and diplomatic Nigeria, Ghana and Congo, he 659,000 Syrians officially reg- gees has managed to crack the t o b e r e a d y, M r b i n mark.carwardine, orthat
Larrythe Khorgos
Kenney, agreement
+44 (0)20
state was looking to do more ment, hopes that the nascent relations with countries such has found that Moroccos expe- istered as refugees with the EU market and is exporting Sulayem
Heba Saleh says. They need to will build a new
7873 4835 and larry.kenney@ft.com, Dubai at
or your
than just reduce reliance on renewables sector can build on as Senegal or Ivory Coast. So it rience in building up its own UN, and a total of more than goods to Cyprus and Spain. build
Cairo thousands of kilometres
correspondent Chinas border with Kaza-
usual FT representative.
fossil fuels and reduce emis- these ties. made sense, he says, to work renewables capacity is a big 1m Syrians living within its However, he adds, its just the of rail network to make it khstan.
sions: We are working to cre- Targeting African markets with Nareva. advantage. borders, including those who beginning. work.Wazir
Burhan All editorial content inHowever,
this report some observers
is produced by
ate the conditions for future makes sense within the Moroccan experts hope that Morocco is not exactly the are not officially registered. The UK, Dutch and Wagewriter
Freelance costs in China are spi- think
the FT. Our advertisers haveDPno
World couldover
influence suffer
or if
exports, he said. Moroccan economy, says partnerships with companies same as Ivory Coast or Senegal, Most of the Syrians are not German governments are ralling by 20 per cent a year, certain terminals on Chinas
prior sight of the articles.
To do this, the Moroccan Dana Younger, chief renewa- like Engie, coupled with a but its issues are similar. You living in refugee camps, but offering Jordan assistance in says DP World, which has four new Silk Road become too suc-
government is looking south. ble energy specialist at the requirement for domestic con- cannot imagine these prob- cheek-by-jowl with Jordanians getting its goods ready to joint ventures in the country. cessful. at: ft.com/reports
All FT Reports are available
According to 2014 figures, International Finance Corpo- tent in Moroccan energy lems and issues if you are in in cities and towns. The influx export and matching them SuchBoyde
Emma cost rises are pushing Bei- Sultan Ahmed bin Sulayem: There are risks to Jebel Alis
two-thirds of the population in ration, the private sector projects, will help local busi- Europe or in America. has been a burden on local with buyers. jing to locateeditor
Commissioning export-oriented DP World chief Follow us on Twittergrowth
executive should the develop-
@ftreports
4 | FTReports FINANCIAL TIMES Tuesday 30 May 2017
Al Arish port
E G Y P T
its waterway Qantara
West
East Ismailia
A
s it struggles to revive its Another ambition is to provide
economy and create logistical services such as bunkering Al Tor port
more jobs, Egypt is seek- and transshipment to some of the
ing to take further 17,000 vessels that use the canal Adabyia port
advantage of its strategic every year. If you can grab the atten-
Gulf of
EGYPT
location between Africa, Asia and tion of a good percentage of these ves-
50 km Suez
Europe. sels and provide some value-added Ain Sokhna
The Suez Canal Economic Zone, services you make a huge amount of Source: SCZone Image: Google
Sokhna port
launched in 2015, has plans to create money, says Ahmed Darwish,
an industrial and logistics hub sur- former chairman of the zone.
rounding the Suez Canal, the vital The SCEZ will be helped by the and issue permits with minimum leased 23m sq m of land for $15bn creating medium and light industries,
shipping route connecting the Red reforms undertaken to secure a loan delays. It is customs free and allows worth of investment in projects that such as textiles and pharmaceuticals.
Sea and the Mediterranean. from the International Monetary repatriation of profits. are due to be built over the next five But some investors say transport is
The most important feature of the Fund. These include the flotation, Work is under way to expand and years. Clients include Siemens and inadequate and that, apart from Port
zone is its geographical location on an and subsequent sharp devaluation, of develop the zones ports so they can General Electric, as well as such Said, the regions biggest city, canal
international trade route, says the Egyptian pound, which has made handle bigger vessels and accommo- industrial developers as the ASEC- zone towns have small populations.
Mohab Mamish, the SCEZ chairman the country more attractive to foreign date activities such as transshipment, Capital alliance, which includes Alaa Arafa, of Arafa Holding, one of
who also heads the Suez Canal investors. The IMF recently agreed to prominent Saudi, UAE, Egyptian, and Egypts biggest garment exporters
Authority that runs the waterway. He disburse the second tranche of a Lebanese companies. says proximity to labour is more
adds that 10 per cent of global trade $12bn loan. The SCEZ is in talks with a consor- important than being near a port: It
goes through the Suez Canal. However, business people and ana-
Ten per cent of global tium comprising Toyota, Japanese is no good building a factory then
Egypt hopes to attract foreign lysts still want to see an improvement trade goes through shipping group NYK and Bollor, the transporting people to work in it.
investors into export-oriented indus- in Egypts labyrinthine bureaucracy. French transport and logistics com- Wael Ziada, head of investment
tries in the special zone which It is ranked 122 out of 190 countries in
the Suez Canal pany, for a roll on roll off ferry termi- company Zilla Capital, says that the
encompasses ports on the Red Sea the World Bank ease of doing busi- nal at East Port Said, part of the zone. zones success depends on whether
and the Mediterranean and to ness rankings. with the facilities to handle, store and There are also negotiations with the managers will be responsive to inves-
exploit Egypts trade agreements with In an effort to avoid that bureauc- repackage cargo. Tunnels are being Port of Singapore and French ship- tors needs. It will need patience
African, Arab and European coun- racy and attract investment, the zone dug under the canal to improve con- ping group CMA CGM for an East Port and planning, he says, to avert the
tries. These increase access to a mar- has been established as an independ- nectivity between its two banks. Said container terminal. pitfalls which often mar economic
ket of more than a billion people. ent entity able to register companies Officials say they have already The SCEZ also hopes to attract job- management in Egypt.
projects everywhere from The Middle East has consultancy and defence.
Turkey Iraq to Saudi Arabia. The been very important to us in Last year, 18 Turkish
Infrastructure long-term strategy is terms of trade and export, companies signed an
investment when Syria opens says Necmettin Kaymaz, agreement with Saudi
investment is up, which would create a land chief project director of Ispat, Aramco that will allow
key to plans bridge from Turkey to Syria,
Jordan, Saudi Arabia and the
adding that Turkey looked
to the Middle East when
them to bid for the oil
giants projects for the
for expansion rest of the Gulf, says Steven demand from other trading first time.
Cook, senior fellow at the partners declined as a Turkish companies such as
Council on Foreign Relations, result of the financial crisis. Tekfen Construction, Tav
As oil-rich nations in the a US-based think-tank. Trade with the Middle Construction and Gama are
Arab world pick up the pace Turkish trade with the East has accelerated in already building oil refineries
of modernisation building region has grown recent years, Mr Kaymaz and pipelines, motorways,
new airports, roads and consistently since 2002, says. reservoirs, road networks
refineries the region according to figures from the But it has largely been one and a new airport terminal
continues to draw interest Investment Support and way, mainly due to the fall in building in different projects
from Turkish companies, Promotion Agency of Turkey the price of oil. The UAEs across the region.
which are winning (Ispat). Exports to Saudi investment in Turkey, for Ispat says that in the five
construction tenders and Arabia soared from $555m in example, fell from $1.6bn in years to the end of 2016,
finding new markets for 2002 to $3.2bn in 2016; 2005 to $38m in 2016, Ispat Turkish contractors had won
Turkish goods and services. exports to the United Arab figures show. $48.3bn in Arab region
For the Turks, it is Emirates have also grown Turkish trade with the infrastructure and
important to be heavily from $457m in 2002 to Middle East is focused on construction projects.
involved in big infrastructure $5.4bn in 2016. infrastructure, technical Burhan Wazir
6 | FTReports FINANCIAL TIMES Tuesday 30 May 2017
EU accord
Morocco capitalises on opens
early lead in renewables door for
Jordan
Energy Nations
Market access
expertise counts
in sub-Saharan Refugee deal comes
market, writes with trade benefits,
Opportunity: refugees at a
Siona Jenkins writes John Reed camp in Jordan
Karim el-Alami thinks big. At a conference in London last services and created friction
Since finishing university two year, Jordan made a deal with with locals over scarce jobs.
years ago, the young Moroccan international donors: it would Jordans unemployment rate
engineer and a friend have issue tens of thousands of work in 2016 stood at 15 per cent.
developed software that uses permits to Syrian refugees in The war in Syria has also
artificial intelligence to man- return for aid from and most brought havoc to Jordans tra-
age renewable energy costs. importantly, easier market ditional trading routes, closing
Their company, Elum Energy, access to the EU. the borders and hastening
will start deploying the soft- The scheme to provide manufacturers search for new
ware in telecoms towers international help to Jordan, export markets in the EU.
around Morocco this summer. which has been burdened with A year after the London con-
They are considering exports a large population of Syrian ference on the Jordan com-
and are in talks with operators refugees, is dubbed the Jor- pact, Jordan says it has issued
in a number of countries of dan compact. It was wel- some 49,000 work permits for
sub-Saharan Africa. comed in the EU, which is keen Syrians.
My hope is to deploy our to institute measures that Every application of a Syr-
software in every solar storage might help to stem the flow of ian refugee gets accepted
[unit] that is launched in refugees to Europe. because of agreements with
Africa in the next five years, Big ambitions: Morocco is home to one of the largest solar power plants Youssef Boudlal/Reuters Jordan, meanwhile, wants to
says Mr Alami. explore the benefits of the EUs
He and his business partner, Sub-Saharan Africa have no lending arm of the World nesses compete for contracts offer to lower the threshold on
Cyril Colin, are well placed to access to electricity and some Bank. The Moroccans have a in the renewables market. rules of origin, effectively Influx has been a
succeed. They are part of a energy experts are hoping that comparative advantage in We have a big chance in lowering tariffs that the EU
small band of entrepreneurs the region could leapfrog tradi- terms of sharing expertise and Morocco right now, says charges on a range of Jordani- burden and created
that has spotted an opportu- tional electricity generation experience with other parts of Mohamed Bernannou, chief an-made goods. friction with locals
nity in a new but growing field infrastructure with renewa- Africa, he adds. executive of the Moroccan Cli- Amman hopes this would
of energy storage for renewa- bles. A subsidiary of Moroccos mate Innovation Centre provide an inducement for over scarce jobs
bles. Morocco appears well national utility, the Office (MCIC), created in 2014 to European companies to invest
Moroccos government is placed to help. It has more National de lElectricit, with develop green technology in Jordans 18 industrial zones
keen to support them. The than 20 trade agreements with funding from IFC, won a con- industry and entrepreneur- and development areas the EU, says Abdullah
country is fossil-fuel poor and African countries. Casablanca, cession to bring power to rural ship. He says conditions in where factories manufacture Alhares, marketing and sales
has won attention for its suc- the countrys commercial cap- Senegal back in 2010. Morocco can replicate those goods for export. With new department head of Sigma, a
cess in developing renewable ital, is establishing itself as a Moroccan companies have found in many sub-Saharan jobs being created, Jordan detergent company.
energy. In 2009, 1.7 per cent of hub for investment in Africa. begun to expand south with African countries, giving local hopes Syrian refugees will be a The harder part, for Jordan,
its electricity came from Moroccan banks and insur- European partners. French companies a competitive edge source of surplus labour rather has been attracting investors
renewable sources. By 2012, ance companies and the energy giant Engie, which built over those from other parts of than competition with native who want to export to the EU.
this had risen to 32 per cent national airline, Royal Air Moroccos Tarfaya wind farm the world. You have extreme Jordanians for scarce jobs. Of the work permits given to
and is projected to be 42 per Maroc, have a strong presence Africas largest with local heat, you have dust. You are The idea of trying to turn Syrians over the past year, says
cent by 2020 and 52 per cent across the continent. Rabat, company Nareva Holding, last working with a local popula- the challenge of refugees into Mr Fakhoury, only a few hun-
by 2030. Last year Morocco the seat of national govern- year announced a partnership tion that may not be able to an economic opportunity is dred, not more are inside the
opened the worlds biggest agreement to jointly develop look after the maintenance. based on the protracted nature industrial zones where Jordan
concentrated solar power 5GW-6GW of power genera- The innovation is not in, for of the crisis, says Imad wants to see jobs created.
plant, Noor 1, and hosted the tion and energy services example, a photovoltaic Fakhoury, Jordans minister of If this Jordan compact is
UNs COP 22 climate change The innovation is in projects in countries including panel, he adds. Its in small planning and international co- unbalanced, it will crash, says
summit. Ivory Coast, Senegal, Ghana, technical adaptations that can operation. Its based on our Mr Fakhoury. We need a win-
Mustapha Bakkoury, head tailoring the product and Cameroon. tailor the product so that it is philosophy that this can hap- win for the Jordanian econ-
of the Moroccan Agency for so that it is suited for Bruno Bensasson, chief suited for local needs. pen if it complements Jorda- omy, donors and Syrian refu-
Solar Energy (Masen), which executive of Engie Africa, says Mr Alamis company nian job creation and does not gees.
is responsible for renewables local needs that Morocco has specific received MCIC support. In his displace it. According to Mr Fakhoury,
development in the country, strengths thanks to its strong talks with companies in As of May 1, Jordan had just one company hiring refu-
told the FT in 2015 that the institutional and diplomatic Nigeria, Ghana and Congo, he 659,000 Syrians officially reg- gees has managed to crack the
state was looking to do more ment, hopes that the nascent relations with countries such has found that Moroccos expe- istered as refugees with the EU market and is exporting
than just reduce reliance on renewables sector can build on as Senegal or Ivory Coast. So it rience in building up its own UN, and a total of more than goods to Cyprus and Spain.
fossil fuels and reduce emis- these ties. made sense, he says, to work renewables capacity is a big 1m Syrians living within its However, he adds, its just the
sions: We are working to cre- Targeting African markets with Nareva. advantage. borders, including those who beginning.
ate the conditions for future makes sense within the Moroccan experts hope that Morocco is not exactly the are not officially registered. The UK, Dutch and
exports, he said. Moroccan economy, says partnerships with companies same as Ivory Coast or Senegal, Most of the Syrians are not German governments are
To do this, the Moroccan Dana Younger, chief renewa- like Engie, coupled with a but its issues are similar. You living in refugee camps, but offering Jordan assistance in
government is looking south. ble energy specialist at the requirement for domestic con- cannot imagine these prob- cheek-by-jowl with Jordanians getting its goods ready to
According to 2014 figures, International Finance Corpo- tent in Moroccan energy lems and issues if you are in in cities and towns. The influx export and matching them
two-thirds of the population in ration, the private sector projects, will help local busi- Europe or in America. has been a burden on local with buyers.
FINANCIAL TIMES Tuesday 30 May 2017 FTReports | 7
Shipping Ports operator aims to co-ordinate expansion with Chinas plans for One Belt, One Road, writes Simeon Kerr
DP World
hitches lift
on the new
Silk Road Making connections: the first freight train from UK to China sets off from London Gateway Isabel Infantes/AFP/Getty Images
W
hen China manufacturing in cheaper DP Worlds container termi- ments at Gwadar in Pakistan assets, have systems and infra-
held its One locations at home, such as nals handled 64m twenty-foot lead to that port becoming a structure that have made
Belt, One Urumqi in north-west China, equivalent units (TEU) last transshipment hub, says them a success, says Mr
Road summit and further afield in Myanmar, year, compared with capacity Simon Kitchen, head of macro Kitchen.
in Beijing ear- Indonesia and Cambodia. of 85m TEU. It hopes to strategy research at Cairo- We will work with But Gwadar, being outside
lier this month it used the These areas are mush- expand capacity to 100m TEU based investment bank EFG the Gulf, is in a very good
event as an opportunity not rooming and will produce for by 2020, dependent on market Hermes. the Chinese to make location, and if Pakistan can
only to announce lavish new Europe and the west, Mr bin demand. Jebel Ali port and Jebel Ali our ports ready get the incentives right, it
financing plans, but also to Sulayem says. With plans to expand in Free Zone, DP Worlds prime should thrive, he adds.
allay regional countries con- One Belt, One Roads mari- Latin America, Russia and
cerns that the global trade time routes link China to Africa, DP Worlds focus on
strategy would benefit China Southeast Asia, India, and, via international markets is help-
at their expense. the Maldives, to Africa and on ing to mitigate a slowdown in
Those misgivings have not to Europe through the Red Sea. its domestic activity.
troubled Sultan Ahmed bin Land connections include Currency fluctuations,
Sulayem, chief executive of DP the main trans-Eurasian route weaker world economic
World. He sees Chinas massive via Kazakhstan. growth and the fall in crude oil
reimagining of ancient Silk Other rail networks link prices have combined to make
Road trade routes as a business China to Iran and the Gulf, as business conditions more diffi-
opportunity that could help well as to Pakistan by way of cult.
ameliorate the effects of slow- Afghanistan. Volumes at its Jebel Ali deep
ing global economic growth. The rail routes are expected port, the largest marine termi-
The Chinese horizon is to compete with air cargo, with nal in the Middle East, fell by
changing, says Mr bin the sea routes used for lower- about 5 per cent in 2016, as
Sulayem, one of Dubais most value bulk trade. We are on Gulf governments spending
senior officials. all those routes, Mr bin cuts bit into regional trade. DP
DP World has, for example, Sulayem says. World says it expects this
just seen off the first direct DP World has about 20 ter- years volumes at the port to be
freight train from the UK to minals poised to take advan- stable.
China. The train left in April on tage of One Belt, One Road. Among its overseas projects,
its three-week These include six in South Asia DP World is advising on the
journey from DP Worlds and four in China, as well as Khorgos Eastern Gate termi-
London Gateway, at the mouth others operating in Thailand, nal near the Chinese border
of the river Thames, to Vietnam, South Korea and with Kazakhstan, an impor-
Yiwu in eastern China, laden Indonesia. tant point on rail routes link-
with British products ranging ing China to Europe. Trains
from whisky to pharmaceuti- have to stop there where the
cals. former Soviet Union meets
DP World aims to co-ordi- China as the rail gauge
nate its global network with changes.
Chinas projected $900bn In a similar way to how the
investment for the One Belt, Jebel Ali Free Zone trade
One Road project. area helped transform Dubai
We will work with the into an entrepot for global
Chinese to prepare our ports trade, DP World hopes
t o b e r e a d y, M r b i n that the Khorgos agreement
Sulayem says. They need to will build a new Dubai at
build thousands of kilometres Chinas border with Kaza-
of rail network to make it khstan.
work. However, some observers
Wage costs in China are spi- think DP World could suffer if
ralling by 20 per cent a year, certain terminals on Chinas
says DP World, which has four new Silk Road become too suc-
joint ventures in the country. cessful.
Such cost rises are pushing Bei- Sultan Ahmed bin Sulayem: There are risks to Jebel Alis
jing to locate export-oriented DP World chief executive growth should the develop-