THURSDAY 23 MARCH 2017 WORLD BUSINESS NEWSPAPER USA $2.50 Canada C$3.

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Mobile mavericks Backs to the wall Reality check

Telecoms competition is good for Mexico proves resilient against Teaching the young to decipher
customers JOHN GAPPER, PAGE 11 Trump challenge BIG READ, PAGE 9 fake news ROULA KHALAF, PAGE 10

1 Assailant shot dead after 1 2 killed and at least 20 hurt 1 Premier rushed to safety Briefing
fatally stabbing police officer as car ploughs into crowd as Commons locked down
i South Korean group snubs Westinghouse

Terror attack on UK parliament

Korea Electric Power has ruled out buying Toshibas
controlling stake in Westinghouse, but confirmed it
is interested in joining the NuGen consortium that
is planning to build a new UK nuclear plant. PAGE 13

i Australia rejects Chinese Silk Road push

JIM PICKARD, HELEN WARRELL
AND CAROLINE BINHAM LONDON
Britains Houses of Parliament came
under attack from a knife-wielding
assailant yesterday who ploughed a car
through throngs of people on nearby
Westminster Bridge before fatally stab-
bing a police officer.
In the largest-scale terrorist attack in
London since suicide bombers killed 52
people on public transport in July 2005,
at least four people died, including the
attacker who was shot dead by police
inside the parliament gates. At least a
further 20 people were injured, includ-
ing three police officers and three
French schoolchildren, police said.
The attack paralysed the heart of Brit-
ish government as members of parlia-
ment and hundreds of government offi-
cials were held in lockdown for hours in
the House of Commons, while prime
minister Theresa May was whisked
away to safety by car.
It was the latest in a series of terror
assaults in Europe and came exactly one
year after suicide bombers killed 32
people in Brussels. It bore similarities
with an attack in Nice last year when a
man driving a truck through crowds of
pedestrians killed 84 people.
This is a day we planned for but
hoped would never happen, sadly it is
now a reality, said Mark Rowley, acting
deputy Metropolitan Police commis-
sioner. He said police were satisfied
there was only one attacker, adding:
We will do all we can to continue to pro-
tect the people of London.
Downing Street said in a statement:
The thoughts of the prime minister
and the government are with those
killed and injured in this appalling inci-
dent, and with their families.
President Donald Trump condemned
the attack and called Mrs May to
express US support, his spokesman said
in Washington. Angela Merkel, German
chancellor, said Germany stood reso-
lutely on Britains side in the fight
against any form of terrorism. French
prime minister Bernard Cazeneuve
expressed solidarity with the UK.
Aftermath: the The attack occurred in mid-afternoon
attacker on a when a 4x4 vehicle driven by the assail-
stretcher while ant careered northwards across West-
two knives lie on minster Bridge towards Big Ben, knock-
the ground ing down pedestrians. The area is nor-
outside the mally packed with tourists.
Palace of The vehicle crashed into railings
Westminster alongside New Palace Yard, a main
after the assault entrance to the Palace of Westminster,
Stefan Rousseau/PA Wire
before the driver ran round to force his
way through the gates.
The man, said to be middle-aged,
attacked a policeman using two 7in
knives, before being shot by another
police officer.
At least one person leapt from West-
minster Bridge into the river Thames as
the vehicle mounted the pavement.
Witness Richard Tice said he saw eight
or 10 prostrate people on the
ground . . . from north to south of the
bridge, clearly injured.
MPs already in the House of Com-
mons chamber were told to remain
where they were after the attack. Other
government buildings around White-
hall were also locked down. A large area
around parliament was cordoned off
while the rescue effort continued.
Mrs May was voting in the Commons
when plain-clothed officers appeared
and asked her to leave. She was later set
to chair a meeting of the governments
Cobra emergency committee.
Parliament later announced that both
the House of Commons and the House
of Lords would sit as normal today.
Tobias Ellwood, a Foreign Office min-
ister, administered mouth-to-mouth
resuscitation in a vain bid to save the
wounded police officer as he lay on the
ground of New Palace Yard. Mr Ellwood,
a former army officer, lost his brother in
the 2002 Bali bombing.
New Palace Yard was the scene of the
car bomb assassination of Airey Neave,
then shadow Northern Ireland minister,
by Irish republican terrorists in 1979.
Ministers recently revealed that secu-
rity services had foiled 13 potential
attacks in less than four years. UK coun-
ter-terrorism units are running more
than 500 investigations at any one time.
Tawhid Tanim, a sales consultant,
was standing just outside Westminster
Station when the attack unfolded. All
of a sudden I just heard three shots
bang, bang, bang! And then people
started running.
Reports & analysis page 3
Canberra has spurned a Chinese request for
Australia to co-operate with Beijings New Silk Road
strategy that aims to develop transport links across
Asia, drawing an icy response from China. PAGE 6
i North Korea missile explodes on launch
US and South Korean defence officials have said
that North Korea failed in an attempt to test-fire
another ballistic missile yesterday after the rocket
exploded within seconds of launch. PAGE 6
i Booze and women comments stir anger
Jeroen Dijsselbloem, eurozone
finance ministers leader, has
been urged to resign after he
suggested southern Europeans
had squandered their money
on booze and women. PAGE 4
i Malaysia relents over films gay scene
Censors have given way in a stand-off over a gay
moment in Beauty and the Beast with Walt Disney
saying the film will be screened without cuts. The
government had been split on the issue. PAGE 6
i Instagram snaps up 1m advertisers
The photo app has 1m monthly active advertisers,
up fivefold from last year after it transformed the
app and harnessed Facebooks infrastructure amid
increased competition from Snap. PAGE 14
i Eisner seeks new role in English football
Former Walt Disney chief executive Michael Eisner
is in advanced talks to buy Portsmouth FC,
becoming the latest international corporate figure
to seek an investment in English football. PAGE 13
Datawatch
Life expectancy in England Life expectancy
At birth by deciles of deprivation, among the most
2013 to 2015 deprived is less
Most deprived Least Deprived than 10 years
0 20 40 60 80 shorter than for
the least deprived.
Life Female But the former
expectancy group can expect
Male
to stay healthy
only until they are
Healthy life Female just over 50,
expectancy nearly 20 years
Male less than the least
Source: ONS deprived

Wall Street nerves tested as Trump

EU warns UK of disruption
if Brexit talks break down
The EUs chief Brexit negotiator has
warned Britain it will face nuclear fuel
shortages, truck queues at ports and
disruption to air traffic if London does
not reach an accord with its partner on
leaving the bloc. Outlining his
conditions for an ambitious UK-EU
trade deal, Michel Barnier said an
orderly withdrawal must be settled
first. If we put off difficult subjects to
the end of the negotiations, we will be
heading for failure, he said.
Full story i PAGE 4
battles for backing on health reform
DEMETRI SEVASTOPULO WASHINGTON
ROBIN WIGGLESWORTH NEW YORK
Donald Trump faced the biggest battle
of his young presidency as the House of
Representatives prepared to vote
today on healthcare reform that could
endanger the broader legislative
agenda that markets had priced in.
Mr Trump and Paul Ryan, Speaker of
the House, have been furiously lobbying
Republicans to approve a plan to replace
the Obama healthcare law that the party
has long vowed to kill. But the debate
has exposed deep fissures in the party
that highlight the difficultly Mr Trump
faces as he attempts to press ahead with
an ambitious agenda, including tax
reform.
In an ominous signal for the White
House, the conservative Freedom
Caucus said 25 of its members would
vote against the healthcare plan, point-
ing to a damaging loss for the president
and the Republican leadership.
Big day for healthcare. Working
hard! Mr Trump tweeted early yester-
day as he worked to ensure that Repub-
lican defections stayed below the
threshold of 21 that would trigger a
defeat for the measure.
The US stock market continued to
trade nervously ahead of the vote, with
the S&P 500 flat in mid-afternoon after
recording its biggest post-election slide
on Tuesday, triggering falls in Asian and
European bourses.
A rally since Mr Trumps November
victory has been largely fuelled by
hopes that the new president would
unleash a blitz of economic stimulus
measures, including tax cuts, deregula-
tion and infrastructure spending.
Hardline conservatives argue that the
healthcare measure is too expensive
and does not go far enough to eliminate
the governments role in Obamacare.
But moderate Republicans worry about
forecasts that it would result in
24m Americans losing their health
insurance.
Mr Trump has warned Republicans
that voters will punish them in the 2018
congressional elections if the party fails
to follow through on its promise to abol-
ish the Obama system.
John Feehery, a former senior Repub-
lican congressional aide, said: If this
thing goes down, the stock market will
react negatively and the Trump bubble
will be burst because they will think
they are not going to get tax reform.
Rightwing rebel threat page 2
Edward Luce page 11
Global Overview pages 21
Smart Money page 22

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2 FINANCIAL TIMES
Rightwing rebels pose main
threat to Trump presidency
Republican control in Washington has reopened old party splits in Congress
Face-off: a man wearing a Donald Trump mask joins a protest in New York on Tuesday against the presidents proposed healthcare reforms Justin Lane/EPA
BARNEY JOPSON AND COURTNEY
WEAVER WASHINGTON
Donald Trumps election win as a popu-
list with few ideological moorings
prompted some Republicans to write off
ultraconservatives as a diminished
force. But the presidents struggle to pull
rightwing lawmakers into line over
healthcare shows they have not gone
away. Instead they retain the power
more so than Democrats to scupper
his presidency.
On the cusp of the most important
vote yet of the Trump era, conservative
rebels are threatening to bring down a
bill to undo Barack Obamas healthcare
reforms today, a move that would mark
the presidents biggest setback and raise
doubts about his ability to unite Repub-
licans.
In his campaign, Mr Trump papered
over longstanding intraparty rifts by
knocking out conservative rivals such as
Ted Cruz as well as moderates like Jeb
Bush. But instead of unifying his party,
the advent of Republican control in
Washington reopened its old divisions
in Congress.
It is possible that hardcore conserva-
tives relent at the last minute. But for
now they are standing firm on their
insistence that a Trump-backed bill to
repeal Mr Obamas reforms is in fact
Obamacare-lite, a toothless non-
repeal, and an affront to their commit-
ment to small government, fiscal recti-
tude and free markets.
The bill crafted by Paul Ryan, the
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Speaker of the House of Representa- Republican leaders, Chris Collins, a
tives, is a formula for disaster, said Trump ally in the House, said hardcore
Louie Gohmert, a conservative law- conservatives had been a useful coun-
maker from Texas. I think the presi- terpoint to Mr Obama, but they dont sure on him to vote for Mr Ryans bill, it
dents being set up for failure . . . We serve a purpose any longer with Mr
cant just cave in and say: Oh, its the Trump in the White House. constituents to vote against it.
best we can do, he told a radio host. That drew a sharp rebuttal from Jus-
Its not the best we can do. tin Amash, a leading member of the The people that sent me up here sent me
To the extent that lawmakers act on rightwing Freedom Caucus, who said on
the views of their constituents, a defeat Twitter: Our colleague seems to be say-
for Mr Trump would give the White ing principles are pointless now that
House cause to worry that the president theres a Republican in the [White
is losing some voters who elected him. House]. No, now is when principles
Despite the next congressional polls
being 19 months away, electoral calcula-
tions are already at play. Republican
I think the presidents
lawmakers are being forced to decide being set up for failure . . .
whether political survival depends on
hitching themselves to what the presi-
We cant just cave in
dent wants, or speaking out when he is Louie Gohmert, Texas politician
hawking what looks to them like a dud.
Mo Brooks of Alabama is one conserv- matter most. Whether the bill, known
ative opposed to the bill and heard Mr as the American Health Care Act, passes
Trumps sales pitch for it on Tuesday, or fails today, Republicans will lose
when the president warned lawmakers either way, said Tim Jost, a healthcare
they risked losing their seats for not sup- expert at Washington and Lee Univer-
porting his repeal pledge. Mr Brooks sity and a fan of Mr Obamas reforms.
told CNN: At some point, no matter If they fail to do anything that they
how good a salesman you are, you have can call repeal, their base will be furious.
to have a good product. If they pass the AHCA or anything like
The Trump team could even respond it, millions of Americans will lose health
to failure by orchestrating primary elec- coverage and they will be punished at
tion challenges against such conserva- the polls, he said.
tives, pitting them against a new cohort The Democrats struggled with the reduce costs, then find tailored legisla-
of Trumpcare Republicans, noted Tim political consequences of health reform
Greaney, a healthcare expert at St Louis for six years and now it is the Republi-
University law school. cans turn.
Voicing a view expressed privately by Some lawmakers have made clear
Presidential ties
Ex-aides business deal adds to scrutiny of links with Moscow
HENRY FOY MOSCOW
DEMETRI SEVASTOPULO WASHINGTON
ROMAN OLEARCHYK KIEV
A business deal between Donald
Trumps former campaign chairman
NOVEMBER 7 2015
Paul Manafort and a Russian billion-
aire deepened the scrutiny of the presi-
dents relations with Moscow yester-
Published daily except Sundays, New Years Day, day, after a report that Mr Manafort
Presidents Day, Good Friday, Memorial Day, Labor
Day, Martin Luther King Day, Thanksgiving, had been hired to promote Russian
ROLLING IN THE DEEP
Christmas Day and the day after Christmas Day. president Vladimir Putins interests.
361_Cover.PRESS.indd 1 21/10/2015 10:51
US subscription rates, 1 year $406. Periodicals
postage paid at New York, NY and at additional
Mr Manafort was hired by Oleg Deri-
mailing offices; Post-Master. Send address changes paska, a billionaire industrial magnate
to F.T. Publications Inc., PO Box 469, Newburgh, NY and one of Russias richest men, to con-
12551; USPS number, 190640; ISSN# 09159460. duct activities that would greatly bene-
Copyright The Financial Times Limited 2017. All fit the Putin government, the Associ-
rights reserved. Reproduction of the contents of this ated Press reported, citing leaked docu-
newspaper in any manner is not permitted without ments.
the publishers prior consent. Financial Times and
FT are registered trade marks of The Financial
The report comes two days after
Times Limited. James Comey, head of the Federal
Bureau of Investigation, confirmed that
The Financial Times and its journalism are subject to the agency was probing ties between Mr
a self-regulation regime under the FT Editorial Code
of Practice: www.ft.com/editorialcode Trumps campaign aides and Russian
officials as part of an investigation into
Reprints are available of any FT article with your interference by Moscow in the US elec-
company logo or contact details inserted if required
(minimum order 100 copies). One-off copyright tion, which included the hacking of the
licences for reproduction of FT articles are also Democratic National Committee.
available. For both services phone +44 20 7873 4816, Mr Trump has faced scrutiny over his
or alternatively, email syndication@ft.com
relationship with Russia since he
that they are responding to the views of
constituents. Ted Yoho of Ohio said that
even if the president were putting pres-
tions about their ability to keep a frac-
would not be equal to the pressure from
President Trump cant vote for me.
up here to repeal and replace 100 per
cent the Affordable Care Act, he told
NPR radio.
Mark Meadows, the head of the Free-
dom Caucus, said he was not afraid to be
ejected for opposing the bill. Alluding to
the need to rein in insurance costs, he
wrote to supporters on Facebook: I
believe we can get there, but until [the
bill] does what we promised, Im going
to be a no even if it sends me home.
#Congress is a temporary job Ive
known that from day one.
The struggle has hurt the conserva-
tive brand in the eyes of some by making
rightwingers look like they do not care
about people in danger of losing insur-
ance under the Republican plan the
main worry of moderates.
But that perception is wrong, said
Adam Brandon, head of Freedom-
Works, a conservative group with clout
on Capitol Hill. He said the right
approach was to first pass a clean
repeal that did everything possible to
tive solutions to help any groups at risk
of losing coverage. Were not looking
for a one-size-fits-all solution.
Edward Luce page 11
launched his presidential campaign in
2015. He has confounded Democrats
and Republicans with his refusal to criti-
cise Mr Putin, which has fuelled specu-
lation about his motives.
When asked whether Mr Deripaska
had hired Mr Manafort to help promote
Mr Putins interests, a representative of
the billionaire declined to comment.
There was an agreement between Mr
Deripaska and Mr Manafort to provide
investment consulting services related
to business interests of Mr Deripaska
which now is a subject to legal claims,
the representative added.
Mr Deripaska signed a $10m annual
contract with Mr Manafort in 2006 and
the two men maintained a business rela-
tionship until at least 2009, the AP
reported. With an estimated net worth
of more than $5bn, Mr Deripaskas
sprawling conglomerate Basic Element
controls assets including Rusal, the
worlds second-largest aluminium com-
pany, aircraft and truck manufacturers,
an insurance company and five airports
in Russia.
Mr Manafort, who worked for pro-
Russian politicians in Ukraine, told the
FT last month he never had any
US politics. Wider agenda
Health division puts
other reforms at risk
Investors fear stimulus and
tax plans are under threat
from Republican infighting
SAM FLEMING WASHINGTON
ROBIN WIGGLESWORTH NEW YORK
As Donald Trump cajoled recalcitrant
Republican lawmakers to fall in line
behind his healthcare reforms this
week, the White House was well aware
that it was not just the fate of his plan to
repeal Obamacare that was at stake.
If the president and congressional
leaders cannot compel their own party
to weigh in behind their health bill a
proposal that was central to Republican
campaign platforms last year then it
would throw other elements of the
agenda into question.
The most critical to Republican pros-
pects in the 2018 midterm elections is
tax reform a potentially far-reaching
package that would revolutionise the
taxation of US companies as well as eas-
ing the burden on some individuals.
Republicans have placed healthcare
at the helm of their 2017 agenda, and
delays to the package would lead to a
backing-up of a legislative calendar that
already looked ambitious. This comes in
the crucial first 100 days in which the
president has his strongest opportunity
to push through significant reforms.
If they cant get healthcare then the
legislative agenda is pretty close to total
disarray, said Bill Gale, a senior fellow
at the Brookings think-tank. If this
doesnt go through, Republicans are
going to learn they are capable of stand-
ing up as a group to the president. That
is particularly damaging for tax reform
because you cant do tax reform without
strong presidential leadership.
With a critical vote on health looming
today, Mr Trump warned lawmakers
there would be a heavy electoral price to
pay if the party did not push through the
healthcare package. Defeat would deal a
blow to the authority of the president
and top Congressmen including Paul
Ryan, the House Speaker, raising ques-
tious and ideologically divided Republi-
can party in line.
The tax package was coming under
question even before the high-stakes
showdown over a healthcare bill that
has attracted hostile fire from both con-
servatives and moderate Republicans.
Steven Mnuchin, the Treasury secre-
tary, has said he wants to see business-
friendly reforms through by August, but
senior lawmakers including Republican
Senate leader Mitch McConnell have
said they have doubts about that time-
table. The border-adjusted tax plan, a
highly controversial measure that effec-
tively strips exports out of the tax base
while including imports alongside a
Paul Ryan: champions far-reaching corporate tax reforms
involvement with Mr Putins adminis-
tration and denied knowingly contact-
ing Russian intelligence agents during
the 2016 presidential race.
A person who worked with Mr Mana-
fort in Ukraine confirmed there was
indeed a relationship at personal and
business levels between the two men,
but added that he did not think Mr Deri-
paskas intent was to assist Mr Putin.
Asked to comment on the allegations,
a White House official said: We do not
feel its appropriate to comment on
someone who is not an employee at the
White House.
Paul Manafort: has said he had no
involvement with Putin government
Thursday 23 March 2017
reduction in the tax rate, has divided the
corporate world and provoked hostile
responses from some Republican law-
makers. Damagingly, Mr Trump has yet
to opine on whether he supports the
reform which was put forward by Mr
Ryan last summer.
His foot-dragging contrasts with the
approach on tax shown by previous
presidents including George W Bush,
who made tax reform the top priority in
2001 and signed his overhaul into law in
June of that year.
Some staffers predict the tax overhaul
will end up being watered down amid
Republican divisions. One Republican
aide said: If you think healthcare was a
mess with a handful of members push-
ing their own ideas, wait until tax
reform when 435 members jump into
the fray with their ideas about how to
reform the tax code.
As Republican divisions over health
played out on Tuesday, four of the big-
gest US equity indices suffered their big-
gest loss since before Mr Trumps elec-
tion in November as traders nervously
awaited todays healthcare vote. The
key cause was investor concerns that
the administrations broader agenda of
tax cuts, deregulation and fiscal stimu-
If they cant get healthcare
then the legislative
agenda is pretty close
to total disarray
lus which has fuelled the stock market
rally could be delayed or ultimately
even stymied, given its difficulty in
implementing its healthcare reforms.
People are now questioning whether
the Republican party is too fractured to
get its agenda passed, says Brian Jacob-
sen, a senior strategist at Wells Fargo
Funds. The president decided to priori-
tise healthcare, but I would have priori-
tised tax reform, which is the red meat
investors really want.
Some analysts argue against being too
pessimistic. The political imperative for
the Republicans to lower taxes ahead of
the 2018 midterm election is so power-
ful that the party could well end up unit-
ing around a less ambitious package
that lowers rates without opting for the
far-reaching corporate tax reforms
championed by Mr Ryan and Kevin
Brady, chairman of the House ways and
means committee.
That too will entail a White House
that finally makes its mind up on how it
wants to change the US tax system, how-
ever, and time is of the essence.
If Mr Trumps approval ratings con-
tinue to slide his ability to twist congres-
sional arms will decay, warned one
former Senate staffer. Presidential
leadership is the essential ingredient on
tax reform, he said.
J. Scott Applewhite/AP
Questions were raised about Mr Man-
aforts allegiances during the Republi-
can convention in Cleveland in 2016
after Trump aides successfully pushed
to remove language from the partys
policy platform about arming Ukraine
to help it battle Russian-backed separa-
tists in far eastern breakaway regions.
Mr Trump has asserted that any
claims about ties between his campaign
aides and Russia are more examples of
what he calls fake news. He has faced
repeated criticism related to Russia
since his inauguration. The president
was forced to fire Michael Flynn, his
first national security adviser, after the
retired general lied about the nature of
conversations he had with Sergey
Kislyak, the Russian ambassador.
Mr Flynn had previously faced criti-
cism for accepting money from RT, the
Russian state media group, and for
allowing himself to be seated beside Mr
Putin at a dinner that provided the Rus-
sian leader with a propaganda tool.
Mr Trump faced more scrutiny last
month when Jeff Sessions, his attorney-
general and close campaign adviser,
recused himself from any Russia-re-
lated investigations.
Thursday 23 March 2017 FINANCIAL TIMES 3

WESTMINSTER ATTACK

Commons locked down, May whisked Security clamp

Confusion
to safety as MP battles to save officer widespread
amid fears
of explosives
Foreign Office minister Tobias Ellwood, who lost a brother to terrorism, tends to dying policeman
HENRY MANCE
Oi, you two! Bloody well move! Youre
not even passholders! shouted a door-
man at Norman Shaw Buildings, the
parliamentary offices, at two portly
businessmen.
Youre standing in front of a glass
door which is also a fire exit. Im asking
you to move, added his colleague.
Would you like to go outside where
theyre shooting?
In every security lockdown, the
authorities find themselves with those
who do not quite get it. For some people
in Westminster, the deadly afternoon
attack had not sunk in, and confusion
was widespread. Ive never seen a
panic like it . . . I had a board meeting of
a FTSE 250 company, grumbled one of
the businessmen.
I lived in Israel for three years, they
dont act like that there, said the other.
In The Adjournment, one of parlia-
ments restaurants, waiters paused after
news of the attack, then resumed serv-
ing wine, dessert and coffee.
Only about 15 minutes later did a
policeman warn one table that there
was a car outside with a direct line of
sight and that people should keep away
from the windows in case it explodes.
Eventually, a policewoman gave a
firm order to leave. When the panic
descended MPs had been heading to a

We were back in the

GEORGE PARKER, KATE ALLEN, HENRY
MANCE AND JOSHUA CHAFFIN
The 10ft iron railings, road blocks and
armed police are sometimes used by
documentary filmmakers as a meta-
phor for the distance between the peo-
ple and their rulers inside the gothic
walls of the Palace of Westminster. Yes-
terday, shortly before 2.40pm, it
became obvious why they are there.
The suspected terrorist attack ended
on the cobbles of New Palace Yard, the
front drive of the Palace of Westminster.
Theresa May had come in this way just
hours earlier for the weekly session of
prime ministers questions. The sound
of gunfire and shouting brought a swift
realisation to those inside that the build-
ing was under assault. At about 2.55pm
the session of the Commons was sus-
pended; journalists with a vantage point
from the press gallery rushed over to
view the unfolding drama.
Mrs May, who was said to have been
voting at the time of the attack, was hur-
ried away by armed officers. Grant
Shapps, a former Conservative party
chairman, said MPs in the vicinity were
told to hit the ground and get back, get
back. Anna Soubry, another Tory MP,
said she was taken with colleagues out of
the silence of the ornate Commons
library by armed officers. It was terri-
fying, she said.
Outside in the courtyard there was
panic. Paramedics ran towards the
scene as they attempted to revive two
people lying prone on the cobbles. A
smaller group surrounded the pre-
sumed assailant, with repeated
attempts at chest compression, before
he was lifted into an ambulance and
rushed away.
A larger group attended to the second
person, thought to have been a police
officer, as attempts were made to save
his life.
Tobias Ellwood, a former captain in
the Royal Green Jackets, was seen trying
to administer mouth-to-mouth resusci-
tation and apply pressure to the victims
wounds.
Mr Ellwood, a Foreign Office minister
and a popular figure at Westminster,
then bowed his head and walked away.
He has experienced the horrors of ter-
rorism before: his brother Jonathan was
a victim of the 2002 Bali attack, in which
more than 200 people were killed.
Mr Ellwood was hugged by another
onlooker, the blood on his hands and
clothes speaking to the hopelessness of
his task. The body of the police officer
was covered with a sheet.
An air ambulance that had been
scrambled to a now-deserted Parlia-
ment Square departed, leaving an eerie
silence. MPs, journalists and office
workers remained locked down for
hours as police and security officials
checked the scene.
Car drives into
pedestrians on
1 Westminster
Bridge
Portcullis
House
Vehicle
crashes
into fence
Source: FT research Image: Google
office for 10 to 15 minutes.
A policeman said they
suspected there were IEDs
vote on pensions; Michael Fabricant,
the flamboyant Conservative back-
Tory MP Outside the palaces curtain wall there eign minister, was in a taxi heading bencher, had started running across
Tobias Ellwood, was chaos on Westminster Bridge, a south across Westminster bridge and Portcullis House towards the Commons,
centre, helps popular destination for tourists taking told the Financial Times he saw injured fearing he was late.
emergency pictures of Big Ben but now a scene of people on the road. Seconds later, dozens of his colleagues
services attend carnage. I didnt see the car [that hit pedestri- were rushing the other way instructed
to the injured Tawhid Tanim, a sales consultant, ans] passing by us but I heard an impact to keep away from the glass doors and
officer; top was standing outside Westminster sta- which sounded like a minor car collision windows. Sir Julian Brazier, a Conserva-
right, injured tion, waiting to meet a friend for tea. All and lifted my gaze from my smart- tive MP with a military background, was
people are given of a sudden, I just hear three shots phone, and I saw people injured, down, sufficiently intrigued to leave the build-
assistance on bang, bang, bang! It was, I dont know, on the Tarmac and on the pavement. I ing to find out more, before seeing a
Westminster five, 10 feet away. And then people saw five people, including one who body and being ushered inside.
Bridge; officers started running, he said. seemed unconscious and one bleeding The police response left some baffled.
surround a Startled, he looked over to see a grey heavily from the head. Hundreds of people were told to go
suspect car car smashed into parliament and Some were moving and they were upstairs, then downstairs, then to a dif-
Stefan Rousseau/PA;
Toby Melville/Reuters;
what looked like a person trapped already getting help. ferent building entirely.
Luke Steele/Twitter underneath. At first I thought it was a collision but We were back in the office for 10 to 15
I could see something under the car, when I saw five people stretched out minutes. A policeman then came and
Im not sure if its a man or a woman, he over about a hundred yards, then I said they suspected there were IEDs
said. Then the police began ordering understood it must have been deliber- [improvised explosive devices], said
people to flee. People started running ate. Aziz Koc, an intern with a Labour MP.
like they lost their nuts, they were run- Mr Sikorski said the collisions took The police forces and parliament I
ning like mad, he said. place on the southern part of the bridge, dont think were prepared for anything
Radoslaw Sikorski, former Polish for- closer to St Thomas Hospital. His first like this . . . Theyll take it more seri-
thought was that the incident was a ously now. The authorities said they
N repeat of Nice, he added, referring to were following their training in evacua-
mes the 2016 attack when a lorry deliber- tion and containment. Inside is the
r Tha
Rive ately drove into crowds of people cele- safest place, said a doorman, and MPs
brating Bastille Day. who made it to the debate were locked
Three hours after the attack had in the main chamber to sit it out.
Palace of begun, nine buses stood frozen on West- Another large group of people ended
Westminster minster bridge, a cluster of ambulances up in Norman Shaw North, over-
was parked on the south bank of the whelmed by the office buildings sur-
I saw five river while at least one person received prisingly powerful central heating. Its
treatment on the north side, across the uncontrollable, said Oliver, a parlia-
people street from parliament. Helicopters cir- mentary assistant.
stretched cled overhead while a police boat Television screens showed the Com-
patrolled the Thames. Big Ben tolled in mons business had been suspended. Sir
out over the background. Julian, the MP, was left wondering
Westminster about a Over the years security at Westmin- whether it would have been better to
Abbey ster has been significantly tightened. continue regardless. Parliament must
hundred The days when police officers prided carry on, he said.
yards, then I
2 3 themselves on knowing the faces of the Outside, police moved quickly to
Man shot dead after understood inhabitants of the Westminster village clear Parliament Square and Westmin-
stabbing policeman without even asking for a security pass ster Bridge, as emergency vehicles hur-
in grounds of Palace it must are long gone. tled to the scene. Hundreds of London-
The prospect of a terrorist attack ers and tourists milling through one of
of Westminster have been always seemed more a question of the capitals busiest areas became eye-
40m
deliberate when, not if. witnesses to the attack.

Brussels anniversary

After Nice, Berlin and London, lone rampages look like pattern for future
SAM JONES
DEFENCE AND SECURITY EDITOR
Yesterdays terror attack in Westmin-
ster fits an increasingly familiar
pattern.
An attacker, using a car to mow down
pedestrians and a knife to assault police,
went on a deadly rampage at the heart of
one of Europes great cities, seizing
headlines and putting terrorism centre-
screen once more.
By late afternoon, no claim of respon-
sibility for the attack had been made.
But social media and messaging chan-
nels used by Isis were predictably awash
with crowing celebrations of the deed
soon after news of it broke.
It was a year to the day since Isiss
attack in Brussels, in which three co-or-
dinated suicide bombings killed 32 and
wounded hundreds more. Isis has
shown a particular fondness for anni-
versaries in the past.
In the months since Brussels and the
European security clampdown that fol-
lowed, the jihadis have also exhorted
and guided their followers to undertake
exactly this kind of assault.
The Westminster incident recalls
those claimed by the group in Berlin last
December and Nice last June. In those
circumstances, lone attackers, without
active support networks to easily arm or
train them, drove trucks into crowded
gatherings of civilians.
Such attacks may be the pattern for
the future.
In London, the response from the
security forces was swift. Parliament is
heavily policed: the attack lasted
moments before police gunfire stopped
it. Scotland Yards restructured coun-
ter-terrorism response forces were put
to their first real-life test. Armed teams
were on the scene quickly.
Reassurance from such a response
can only go so far. A marauding assault
such as that in Paris, with multiple
attackers on a less heavily defended site
or a location in a crowded area less
easily reached by police forces, such as
Londons West End may have been far
harder to contain.
Urban countermeasures such as con-
crete bollards around sensitive build-
ings or public areas to prevent vehicle
attacks have limits too. Public thor-
oughfares such as Westminister bridge,
by their nature, cannot be made
invulnerable.
As Isis comes under more and more
territorial pressure in its heartlands in
Syria and Iraq, its incentives to strike
out against the civilian populations of its
adversaries will only increase. Spectac-
ular bomb and gun attacks will probably
remain the jihadis goal, but opportun-
ism will probably be the more dominant
factor, say security officials. Simpler
attacks, as those in Nice, Berlin and now
As Isis comes under more
pressure in its heartlands,
incentives to hit civilians
in the west will increase
London show, need not be less deadly.
Details of Isiss attack model that have
become clearer to law enforcement
agencies investigating the spate of atroc-
ities in Europe and the US in recent
months bear out such expectations.
Isis has a multi-layered approach to
planning attacks abroad, say western
intelligence officials. It calls upon both
trained operatives returnee fighters
from its ranks in Syria and Iraq and
radical or vulnerable individuals who
may never have actually joined the net-
work or met others in it.
Authority to organise attacks is
devolved to key lieutenants in its plan-
ing department. Many are Europeans.
They run networks of direct, often
skilled and trained acquaintances in
Europe who aim to promote Paris-style
attacks. They may also dispatch individ-
uals to carry them out, as appeared to be
the case with the Sousse beach massa-
cre. And they also seek to recruit and
link digitally with networks or individu-
als of radicals who they may not directly
know or may never have met in real life
guiding and training them online.
It is like a game of chess says one
European security official: Some are
just pawns. Some are more powerful
small groups maybe and some have
even more flexibility and resources.
Until now, Britain has taken succour
from its natural advantages in the wests
fight against Isis.
The countrys borders and tight gun
laws make larger scale,
co-ordinated attacks harder to pull off.
Security forces also have a long and
bloody history of handling them.
But in the new model of digitally-
mediated terror, and with a greater
number of radical persons of interest to
keep tabs on than at any time before,
nowhere can claim to be completely
immune.
There will be terrorist attacks in this
country, the chief of MI5, Britains
domestic security service warned in a
November interview last year. The
threat level is severe and that means
likely.
4 FINANCIAL TIMES
Future of Europe
Barnier lays out perils of Brexit talks failure
Top negotiator predicts
air traffic disruption and
shortage of nuclear fuel
ALEX BARKER AND JIM BRUNSDEN
BRUSSELS
Britain will face nuclear fuel shortages,
truck queues at Dover and serious dis-
ruption to air traffic if Brexit talks fail,
the EUs chief negotiator has warned as
he outlined conditions for an ambi-
tious UK-EU trade deal.
In a wide-ranging speech ahead of
Article 50 exit talks, Michel Barnier
warned Britain it must agree principles
for an orderly withdrawal before trade
talks, including its financial dues and
Eurovision
Kiev bars
Russia singer
Ukraine has banned Russias entry to
the annual Eurovision Song Contest
over the singers illegal trip to the
disputed Crimean peninsula.
Julia Samoylova will not be
permitted to travel to the contest in
Kiev in May because she had
violated Ukrainian legislation by
entering Crimea without permission.
Russia invaded and annexed the
peninsula in 2014. The annexation
has not been recognised by the
international community and is
disputed by Ukraine.
Ms Samoylova, 27, who uses a
wheelchair, sang at the opening of
the 2014 Paralympic Games in Sochi,
Russia, right.
Eurovision said it was deeply
disappointed at Kievs decision,
which it said went against the spirit
of the contest and . . . inclusivity.
Ukraine won last years contest
with a politically charged song that
recounted Joseph Stalins forced
deportation of Crimean Tatars during
the second world war. Roman
Olearchyk, Kiev; Max Seddon, Moscow
EU expansion dreams face reality check
As Brexit nears and after years
of tumult, there is no mood to
spread the blocs frontiers
ARTHUR BEESLEY BRUSSELS
European leaders will pledge in Rome
on Saturday to keep the door open for
prospective member states when they
mark the 60th anniversary of the EUs
founding treaty. But the rhetoric does
little to hide the reality: an enlargement
policy that made a six-country coal and
steel community into a 28-nation colos-
sus is stalled.
The EUs expansion was one of its his-
toric achievements, helping to banish
the ghosts of war, fascism and commu-
nism as waves of enlargement drew 22
countries to join the founders. Yet this
policy is not just at a standstill: the sum-
mit comes days before Britain triggers
the first departure from the EU.
After years of tumult in the bloc and
its restive hinterland, there is no mood
to widen the EUs frontiers. Buffeted by
Dijsselbloem outburst
Eurogroup dealmaker pressed to quit after booze and women comments
FT REPORTERS
Jeroen Dijsselbloem, a euro area deal-
maker, is facing calls to resign after he
suggested that southern European
countries had squandered their money
on booze and women.
The Dutch finance minister was already
under pressure after his party was
crushed in last weeks Dutch election.
This had raised questions over whether
he would retain his position as minister
and be able to see out his term as presi-
dent of the eurogroup of eurozone
finance ministers, a role that places him
at the heart of talks on fiscal policy and
bailouts.
Following the Dutch vote, Mr Dijssel-
bloem told a German newspaper his
views on bailout aid. In stressing the
responsibilities that come with being in
the rights of 4m UK and EU migrants.
Speaking shortly after yesterdays terror
incident in central London, Mr Barnier
expressed his solidarity with the UK
over the serious events unfolding in
London.
Mr Barnier, while endorsing UK
prime minister Theresa Mays call for a
bold and ambitious free-trade agree-
ment, insisted that ambition must also
maintain a level playing field on tax,
labour law and consumer rights.
The sooner we agree on the princi-
ples of an orderly withdrawal, the
sooner we can start preparing this
future relationship, he said. On the
other hand if we do not address these
uncertainties and put off difficult sub-
jects to the end of the negotiations, we
Treaty of Rome. 60th anniversary
Brexit, attacked by populists and strug-
gling to overcome the legacies of the
debt and migrant crises, the blocs lead-
ers face a large enough challenge, even
without the growing internal divisions
over migration, money and democratic
standards that have further dimmed
enthusiasm to let in new member states.
In a way you can say that the EU suf-
fers from the classic symptoms of over-
stretch, said Josef Janning of the Euro-
pean Council on Foreign Relations.
Other forces stand in the way of
enlargement. Escalating divisions
between Europe and Turkey have
pushed its delayed membership bid to a
point at which talks might be scrapped
altogether. Membership also remains a
distant prospect for western Balkan
countries such as Montenegro and Ser-
bia, amid rising ethnic tension.
Enlargement hardly featured in Jean-
Claude Junckers recently drafted mas-
ter plan to rally Europe after Brexit,
which said further accessions were
unlikely in the short term.
Following the Iron Curtains collapse
more than 25 years ago, the strategic
a currency union, Mr Dijsselbloem said
that northern Europe had shown soli-
darity with the south during the crisis,
but that solidarity comes with duties.
I cannot spend all my money on
booze and women and beg for help aft-
erwards, he said, adding this applied on
a personal, national and European level.
The comments have been seized on
by politicians across southern Europe,
including Portugals prime minister
Antnio Costa, as an offensive stereo-
typing of nations that bore the brunt of
the euro areas sovereign debt crisis.
Mr Costa yesterday called for Mr Dijs-
selbloems resignation, saying Europe
will only be credible as a common
project when he has stepped down and
made a clear apology to the countries
and peoples who were deeply offended
by his comments.
INTERNATIONAL
will be heading for failure. Mr Barnier
did not completely rule out the possibil-
ity of agreeing a free-trade deal in time
for Britains exit one of Londons key
demands. However, he said the new
partnership would take time and that
transition arrangements might be nec-
essary.
Brushing aside one of Mrs Mays red
lines over the future role of European
judges, Mr Barnier explicitly stated the
EUs demand that interim measures
will be within the framework of Euro-
pean law and the European Court of
Justice. Such a transition could not allow
Britain to pick and chose access to areas
of the single market.
In one of the most provocative parts of
his address, Mr Barnier tackled head-on
rationale for enlargement was clear. The
EUs peaceful growth to encompass vir-
tually the entire European continent
marked a triumph for liberal western
democracy and open markets.
But the increasing size of the bloc,
particularly after 2004, had conse-
quences for its day-to-day business. The
average wealth of newer states was
In a way you can say
that the EU suffers from
the classic symptoms
of overstretch
lower, which has led to tensions over
money and budgets, while decision-
making became even more unwieldy.
Nor has recent experience of what EU
bureaucrats call convergence been
universally positive. A decade after
Romania and Bulgaria joined, they still
lag behind the wider bloc; at least some
of the reluctance to expand reflects
concern in western Europe about cor-
ruption in Romania and economic
Describing the comments as abso-
lutely unacceptable and very danger-
ous, he said that they showed another
face of populism, expressed by people
dressed in sheeps clothing and mak- do it in a sports bar back home, not in his
Jeroen
Dijsselbloem:
views on bailout
aid led to protests
from southern
European countries
ing comments that were racist, xeno-
phobic and sexist.
Carlo Calenda, Italys economic devel-
opment minister, said: Without heart-
felt, clear, formal and public apologies,
his ability to remain in the job should be
questioned.
Former Italian prime minister Matteo
Mrs Mays assertion that no deal is bet-
ter than a bad deal, setting out a bleak
vision of the serious consequences
from leaving without agreement.
More than 4m British citizens in the
EU and European citizens in the UK
faced with complete uncertainty about
their rights and their future; the reintro-
duction of binding customs controls,
which will inevitably slow down trade
and lead to queues of trucks at Dover;
serious disruption to air traffic; an over-
night suspension in the movement of
nuclear materials to the UK, he said.
A no-deal scenario is not our goal. We
want an agreement. We want to suc-
ceed.
Although Mr Barnier was uncompro-
mising on the need for Britain to settle
underdevelopment in Bulgaria.
Contentious moves to weaken the rule
of law in Poland and Hungary have also
stirred anxiety in Brussels about
whether those countries have com-
pleted the transition to liberal political
standards. If we admit that the rule of
law is not the axis, the foundation, on
which both the EU and the member
states work, we are finished, said Jean-
Claude Piris, head of the EU Councils
legal service from 1988 to 2010.
And after the EU struggled with divi-
sions caused by the eurozone debt crisis
the Mediterranean migrants crisis of
2015 has created an east-west schism, as
newer member states resisted a com-
pulsory scheme to accept displaced peo-
ple.
Such arguments lie behind scepticism
in newer member states about a drive to
make more use of multi-speed deci-
sion-making in the bloc.
Angela Merkel of Germany and other
western leaders believe the bloc should
move towards further integration at dif-
ferent speeds as with the single cur-
rency but eastern countries fear
Renzi also called on Mr Dijsselbloem to
resign. On Facebook yesterday, he said
the sooner he resigns, the better.
If he wants to offend Italy, he should
institutional role, Mr Renzi added.
Other politicians calling on Mr Dijs-
selbloem to consider his position in-
clude Portugals minister for foreign
affairs, Augusto Santos Silva. Gianni Pit-
tella, head of the European Parliaments
socialist group, the second biggest group
(which Mr Dijsselbloems Labour party
belongs to) is formally calling on him to
resign.
At the eurogroup on Monday, Mr Dij-
sselbloem won plaudits from his fellow
finance ministers, who made clear they
were in no rush to see him depart. His
mandate as president runs until January
2018, and it is almost inconceivable that
its accounts, he avoided putting a figure
on any exit payment, or explaining in
more detail what principles for a with-
drawal would need to be agreed.
When a country leaves the union,
there is no punishment, Mr Barnier
said. There is no price to pay to leave.
But we must settle the accounts. We will
not ask the British to pay a single euro
for something they have not agreed to as
a member.
The European Commission is also
keen to show it will be constructive and
ambitious in its handling of trade talks,
once the basics of a divorce are worked
out. We agree with Theresa May in her
call for a bold and ambitious free-trade
agreement. Yes to ambition! Mr
Barnier said.
Ekaterina Lyzlova/AP
they would lose European funds.
Membership talks are officially open
with five countries: Albania, the former
Yugoslav Republic of Macedonia, Mon-
tenegro, Serbia and Turkey.
Ankaras membership bid has been
under way since 2005. It has long been
recognised that the accession talks are
going nowhere, even before a failed mil-
itary coup that led President Recep
Tayyip Erdogan to purge tens of thou-
sands of alleged coup plotters from the
military and civil service.
In the western Balkans, where EU
concern over Russian and Turkish influ-
ence has been growing, European lead-
ers are trying to regain the political initi-
ative, reaffirming unequivocal support
for the regions European perspective.
The worry is that the lack of an
explicit EU membership prospect is
itself a source of instability.
By the EUs reckoning it will be well
into the 2020s before any other country
joins the club.
The door may officially be open, but
the wait in the antechamber is likely to
be long and painful.
his party will form part of the new Dutch
government, let alone that he will keep
the finance ministry.
Luis de Guindos, Spanish economy
minister, who battled Mr Dijsselbloem
for the eurogroup post, said yesterday:
The declarations seem unfortunate to
me in terms of form and substance.
Mr de Guindos also made clear that he
was still looking for a sign of contrition
from the eurogroup chief.
A spokesperson for Mr Dijsselbloem
said that the comment did not refer to a
specific group of countries. He added
that the message was for all eurozone
countries that solidarity comes with
obligations.
Reporting by Jim Brunsden in Brussels,
Peter Wise in Lisbon, James Politi in Rome,
Mehreen Khan in London and Tobias Buck
in Madrid
Thursday 23 March 2017
Financial system
Doubts grow
over eurozone
banking
supervisors
performance
CLAIRE JONES FRANKFURT
JIM BRUNSDEN BRUSSELS
When the EU created a supervisor to
police the eurozones biggest banks at
the end of 2014, it was billed as vital to
protect a financial system teetering
from the sovereign debt crisis.
Two years on, the eurozone might be
creeping back to health, but doubt still
surrounds whether the new Frankfurt-
based body, the Single Supervisory
Mechanism, has done enough to tackle
persistent failings in parts of the regions
banking sector.
In purely operational terms, they
have had a good start, said Nicolas
Vron, a senior fellow at Bruegel, a
think-tank.
Its demonstrable that they have
been tougher and fairer than their pred-
ecessors at the national level. But there
is a big gap between saying that and say-
ing they are being tough enough.
The eurozones financial sector is
still saddled with non-performing loans
of 920bn, or 6.5 per cent of all borrow-
ing. For the new supervisor, which
directly supervises the regions largest
lenders, Italys banks have become the
most important immediate reputa-
tional test.
They harbour about 270bn of non-
performing loans, while there is still no
clear restructuring plan for Monte dei
Paschi di Siena (MPS), the countrys
third-largest lender, which needs
government help to shore up its balance
sheet after failing to attract private
support.
Danile Nouy, head of the SSM, an
arm of the European Central Bank, is set
The SSMs performance
certainly leaves quite some
room for improvement
Markus Ferber, German politician
to face a grilling on the state of Italys
banks when she appears before the
European Parliaments economic and
monetary affairs committee today.
The SSMs performance certainly
leaves quite some room for improve-
ment, said Markus Ferber, a member of
German leader Angela Merkels CDU/
CSU alliance in parliament.
We see a big problem with non-per-
forming loans in Italy. This has been
going on for quite some time and neither
the SSM nor national regulators have
done much about it.
Ms Nouy has urged patience, empha-
sising that the supervisor and Europes
banks have to deal with problems that
developed long before the current sys-
tem was in place.
We are definitely willing to use our
powers, Ms Nouy told the Financial
Times. But we have to be fair. As super-
visors, we have to demonstrate we are
developing the issues with proportion-
ate action.
MPS is the most pressing issue. Since
the turn of the year the SSM, the Euro-
pean Commission and Italian authori-
ties have failed to come up with a firm
restructuring plan for the bank.
That has disappointed critics, who in
December were encouraged by signs
that supervisors were prepared to get
tough on MPS when the SSM rejected
the banks calls for more time to find pri-
vate capital.
Some European lawmakers insist the
supervisor should force MPS, the
worlds oldest bank, to close.
What happens with the bank was a
test case of the new supervisor, said
Philippe Lamberts, head of the Euro-
pean Parliaments green group and one
of the key architects of Europes post-
crisis financial reforms.
He said the SSM was compromised by
its links with the ECB, whose governing
council has to sign off on its decisions.
Theres an inherent conflict of inter-
est between the mission of the central
bank, which is financial stability, and
the mission of the cop of the banks, the
police, who have just to make sure that
the laws are being respected and fol-
lowed, Mr Lamberts said.
Problems with SSM personnel have
also been identified by the European
Court of Auditors, a body that probes EU
institutions finances.
It pointed to an over-reliance for on-
site visits on supervisors from national
regulators and central banks whose
staff numbers have barely changed
despite the creation of the SSM
and said this also risked conflicts of
interest.
The SSM works together with
national regulators. It is always an SSM
official that heads joint supervisory
teams but its 1,450 staff are dwarfed in
number by supervisors working for
national bodies.
Insight see Markets
Thursday 23 March 2017 FINANCIAL TIMES 5
6 FINANCIAL TIMES
China initiative
Australia rebuffs formal Silk Road ties
Canberra fears aligning
infrastructure fund would
damage relations with US
JAMIE SMYTH SYDNEY
Australia has rejected a Chinese push
for a formal alignment of Canberras
A$5bn state infrastructure fund with
Beijings New Silk Road strategy, over
concerns that it could damage relations
with the US at a time when it is asking
Washington to do more in the region.
The Chinese initiative, also known as
One Belt, One Road, envisages investing
$4tn in port, road and rail projects over-
seas and Beijing has been pressing
Asia-Pacific economies to sign up to its
vision.
But Canberra has confirmed there
will be no agreement over the Northern
Chinese territory. Semi-autonomy
Leadership poll
raises tensions
in Hong Kong
Victor will encounter citizens
fearing loss of freedoms and
Beijing frustrated by activists
BEN BLAND HONG KONG
Two-and-a-half years ago, Nathan Law
took to the streets of Hong Kong with
tens of thousands of other students,
demanding Beijing give them the right
to vote for the leader of their own city
government.
This Sunday, Mr Law will have that
opportunity, but not in the way he
envisaged during the Umbrella Revo-
lution protests.
After he was voted on to the citys
Legislative Council in September, the
23-year-old automatically became a
member of the 1,194-person committee
that will choose Hong Kongs next chief
executive, at a time of deep uncertainty
for the semi-autonomous Chinese terri-
tory. But he did not give up his fight for
democracy.
I am boycotting the election, says
Mr Law, the youngest person elected to
the council. It is pretty much control-
led by the Beijing government and I
dont want to give credibility to an
undemocratic system.
The choice of chief executive is the lat-
est pressure point facing a city that has
become ever more polarised since the
failure of the 2014 demonstrations to
secure full democracy from Beijing.
A lot of people, particularly young
people, dont feel that the government is
working according to their interests,
says John Tsang, the former finance sec-
retary and the most popular with the
general public of the three candidates
running for chief executive. We need to
rebuild so we can regenerate some hope
in the community.
Amid growing anger toward Beijing
and outgoing chief executive CY Leung,
the Chinese government has stepped up
its intervention in Hong Kongs affairs,
prompting a further backlash and the
emergence of an independence move-
Nuclear programme
N Korea fails in attempt to test another missile Manila cries foul over China plans for outcrop
BRYAN HARRIS SEOUL
North Korea failed in an attempt to
test-fire another ballistic missile yes-
terday, with the projectile exploding
within seconds of launch, according to
US and South Korean defence officials.
The launch comes amid growing con-
frontation between the reclusive nation
and the US. While visiting South Korea
last week, Rex Tillerson, US secretary of
state, made clear that Washington was
considering all options, including mili-
tary strikes, to halt Pyongyangs nuclear
and ballistic weapons programmes.
North Korea fired one missile from
an area near the Wonsan air base this
morning, but it is presumed to have
failed, said South Koreas defence min-
istry in a brief statement.
US officials added that the rocket
appeared to have been launched from
Gangwon province, in the south-east of
North Korea, but did not specify the
type of projectile. Concerns are mount-
ing that Pyongyang will soon test an
intercontinental ballistic missile capa-
ble of reaching the US, a move likely to
spark a strong response from Washing-
Australia Infrastructure Facility during
a trip to Australia this week by Chinese
premier Li Keqiang.
No formal memorandum on this
issue will be signed during the visit,
said one Australian official.
Mr Lis trip comes at a tricky time in
Sino-Australian relations. Canberra is
pressing Washington to bolster its pres-
ence in the region and taking a tougher
line on inward investment from China,
recently blocking two high-profile take-
overs.
Last week Julie Bishop, Australias for-
eign minister, urged the Trump admin-
istration to expand the US role in Asia to
ensure stability and peace. While non-
democracies such as China can thrive
when participating in the present sys-
tem, an essential pillar of our preferred
order is democratic community, she
said in a speech in Singapore.
ment that has caused consternation in
Beijing.
Hong Kongs next leader will have to
navigate between a population that
fears losing its unique identity and
freedoms being eroded by Beijing and a
Chinese government that is frustrated
with what it sees as a city held back by a
hard core of troublemakers.
But he or she will arrive in office ham-
strung by a selection process that is ulti-
mately controlled by Beijing.
Carrie Lam, a career civil servant and
the former number two in Mr Leungs
government, is the frontrunner, with
the backing of nearly 600 pro-Beijing
loyalists on the election committee.
Whoever wins more than 600 votes in
Sundays secret ballot will be elected,
with a further round of voting between
the top two candidates if no one secures
more than that.
Nearly 900 of the 1,194 electors are
pro-Beijing loyalists from Hong Kongs
political establishment, business lobby
groups and social organisations.
Politicians say that representatives of
the Chinese government have been lob-
bying the electors behind the scenes to
support Ms Lam, although Beijing has
said nothing publicly.
If it fails to get its way, Beijing still has
the power to reject the candidate pro-
posed by the committee.
Despite his public support, Mr Tsang
describes himself as an outsider
because of the level of establishment
backing for Ms Lam.
A poll sponsored by the South China
Morning Post, Hong Kongs main Eng-
lish language newspaper, found that Mr
Tsang was backed by 47 per cent of the
wider population, compared with 30
per cent for Ms Lam and 10 per cent for
Woo Kwok-hing, a retired judge and the
third candidate.
But two-thirds of those surveyed said
that Ms Lam had the best chance of win-
ning.
A western diplomat who knows Ms
Lam describes her as a steely adminis-
trator who wants to do the right thing
for Hong Kong but says she has been
ton. Since the beginning of the year,
North Korea has test-fired medium-
range ballistic missiles, including three
last month that landed within Japans
exclusive economic zone.
On Sunday, it tested a high-thrust
rocket engine in what South Korean mil-
itary officials called a meaningful
North Korea fired one
missile from an area near
the Wonsan air base, but it
is presumed to have failed
advance of its weapons programme.
The sabre-rattling has been linked to
joint US-South Korea military drills in
the region that Pyongyang has
described as the most undisguised
nuclear war manoeuvres.
As part of the drills, the US has
deployed an aircraft carrier and a nucle-
ar-powered submarine, the presence of
which have further infuriated
Pyongyang. The situation on the Korean
peninsula has emerged as one of US
President Donald Trumps most press-
INTERNATIONAL
That drew an icy response from Bei-
jing. In the future we hope friends in
the US and Japan. But when the UK and
several other western nations broke
various fields in Australia can . . . aban-
don you win, I lose and ideological prej-
ranks and signed up to the AIIB, Can-
berra joined them.
udices, Zheng Zeguang, Chinas deputy
foreign minister, told reporters.
There is a view in the defence/secu-
rity community in Canberra that
initiatives like the AIIB and One Belt,
One Road are a way to extend Chinese
There is a view . . . that influence at the expense of the US, said
initiatives like One Belt, Geoff Raby, a former Australian ambas-
sador to China, who runs a consultancy
One Road are a way to advising Chinese and Australian busi-
extend Chinese influence nesses. He said Australia-China rela-
tions had gone adrift, with Canberra
The debate over whether Australia increasingly taking an idealist approach
should align its state infrastructure fund to relations focused on values, rather
with One Belt, One Road bears similari- than a more pragmatic approach aimed
ties to Canberras hesitation over joining at boosting economic ties with its largest
the Asian Infrastructure Investment trading partner.
Bank. In 2014, Australia initially Australian companies have expressed
decided not to join the Chinese-led mul- an interest in getting involved in the
tilateral lender following lobbying by New Silk Road plan and business lead-
taken aback by the public anger at her Pro-democracy
close relationship to Beijing. legislator
Lam Cheuk-ting, a pro-democracy Nathan Law,
member of the Legislative Council and a centre, attends
supporter of Mr Tsang, calls Ms Lam a an election
hardliner who is not a good listener, forum between
especially when someone criticises her. the three
Her decision in December to build a candidates for
$450m Beijing-backed museum with- Hong Kongs
out public consultation sparked a bitter chief executive,
backlash. left, from top,
Ms Lam has since undermined her Carrie Lam,
campaign with gaffes that have shown John Tsang and
her as aloof. Woo Kwok-hing
At a photocall on the metro system, Jerome Favre/EPA
she did not know how to use a travel
card to get past the entry gate. She later
admitted publicly that, after living for
years in a government residence, she
did not know where to buy toilet paper.
Ministerial protest
ing foreign policy challenges. Following MICHAEL PEEL BANGKOK
his inauguration, the White House com-
Fears of a Chinese plan to build a radar
menced a review of its policy towards
station on a disputed ocean outcrop
North Korea. The results of this review
have laid bare tensions in the Philip-
are expected soon, although hopes of
pine government over President Rod-
the president striking a grand bargain
rigo Dutertes campaign to woo Beijing.
with Kim Jong Un, North Koreas
supreme leader, look slim. Enrique Manalo, the new foreign secre-
In Seoul, Mr Tillerson declared an end tary, said yesterday his country had
to the US policy of strategic patience, sought clarification from China over the
which aimed to topple the Kim regime purported plans. On Tuesday, the jus-
through a long game of sanctions and tice minister Vitaliano Aguirre warned
cyber attacks. Barring a tilt towards mil- that Manila would formally protest
itary action, it now appears likely that against the proposal, which was an-
the Trump administration will seek to nounced by a regional Chinese official
strengthen its sanctions policy. but has since been denied by Beijing.
A more stringent sanctions regime The rhetoric from Philippine cabinet
might include a secondary boycott of ministers is tougher than the presidents
Chinese companies doing business with initial comments that his country could
North Korea a move likely to hit Bei- not stop China from pressing ahead with
jing-Washington ties or a greater plans to build an environmental moni-
focus on cutting Pyongyang off from glo- toring station on Scarborough Shoal.
bal finance. Mr Dutertes diplomatic tilt towards
Swift, the Brussels-based interna- Beijing from Manilas traditional ally
tional system that supports most of the Washington has been a key plank of his
worlds financial transactions, last week foreign policy and has shifted the secu-
severed North Koreas remaining links rity balance of Asias contested seas.
to its services. Boo Chanco, a columnist at the Philip-
Editorial Comment page 10 pine Star newspaper, said Mr Duterte
ers have set up a One Belt, One Road
advisory group to facilitate this. Govern-
ment officials in the Northern Territory
have also sought to align the region with
Chinas plans, describing official Chi-
nese overtures first made by President
Xi Jinping on a visit to Australia in 2014
as a great opportunity for Darwin as a
hub servicing the New Silk Road.
But Chinese assertiveness in the
South China Sea, where it has laid claim
to a vital trade route and lucrative fish-
eries area, has made Australia wary of
its regional ambitions. Canberra
recently tightened scrutiny of foreign
takeovers following the purchase of
Darwin port by the Chinese company
Landbridge a transaction that
alarmed Washington because of the
nearby presence of a US army base.
Additional reporting by Charles Clover in
Beijing
Ms Lam has acknowledged that
divided opinions in our society now are
holding us back but her pledges to reu-
nite the city have convinced few Hong
Kongers.
Mr Law, who is one of four pro-
democracy legislators the government
is trying to remove from the council
with a legal challenge, faced off against
Ms Lam when she held talks with the
student leaders during the Umbrella
Revolution.
He is gloomy about the prospects for
her leadership, arguing that only full
democracy can provide future chief
executives with the popular mandate
they need to govern effectively.
Polarisation and political suppres-
sion will continue just as under CY
Leung, he says.
was now politically compelled to press
Manilas case over the shoal, which has
long poisoned relations with China.
Mr Duterte has bent over backwards
in the hope that diplomacy will eventu-
ally result in China not doing any-
thing . . . drastic in the Panatag Shoal,
Mr Chanco said, referring to the outcrop
Mr Duterte has bent over
backwards in the hope that
diplomacy will result in
China not doing anything
by its Filipino name. The report about
the planned building leaves him no
choice but to file that protest.
Mr Manalo, who became foreign sec-
retary this month, said Manila had ask-
ed China to explain its plans. He dec-
lined to confirm or deny a statement by
Mr Aguirre that the Philippines would
complain to Beijing.
Confusion deepened later yesterday
as Beijing denied the plan and said
China placed great importance on
relations with the Philippines.
Thursday 23 March 2017
Film censorship
Malaysia
relents over
Disneys gay
Beauty and
the Beast
JEEVAN VASAGAR SINGAPORE
Censors in Malaysia have given way in a
stand-off over a gay moment in
Beauty and the Beast, with Walt Disney
announcing that the film will be
screened without cuts.
Disney originally withdrew the musical
rather than submit to censorship in
Malaysia, where sex between men is ille-
gal and media that portrays homosexu-
ality positively are censored.
We are pleased to announce that Dis-
neys Beauty and the Beast has now been
approved to be released in Malaysia
with no cuts, with a PG13 rating, Disney
said in a statement. Cinema chains in
the country said the film would be
released uncut on March 30.
Homosexuality is a contentious issue
in Southeast Asia, where gay communi-
ties are lobbying for greater acceptance
while conservative campaigners have
fought back in defence of more tradi-
tional social values.
The Malaysian authorities had earlier
criticised Disneys refusal to back down,
insisting on their right to demand
changes to suit the countrys cultural
norms.
Nur Jazlan Mohamed, the deputy
home minister, said at the weekend the
government would not allow the film to
be screened uncut because the ele-
ments portrayed in the movie could
influence us. However, the government
was split on the issue, with Nazri Aziz,
the tourism and culture minister,
describing the decision as ridiculous
and arguing that the movie was unlikely
to shape anyones sexuality.
Malaysias Film Appeal Committee, a
separate official body with the power to
overturn the censors decision, had been
due to watch the film on Tuesday.
The live-action adaptation of the 1991
animated musical features a gay charac-
ter for the first time in Disneys history.
Malaysian censors grew concerned
when they became aware of an inter-
view in which Bill Condon, the director,
told Attitude magazine that LeFou, the
manservant, had affectionate feelings
for Gaston, the villain.
Censors sought to cut about four min-
utes and 38 seconds from the film,
including a scene in which LeFou hugs
Gaston, according to Abdul Halim
Abdul Hamid, chairman of the Malay-
sian film censorship board.
If we let these scenes pass, people
will wonder if Malaysia recognises
LGBT, Mr Abdul Halim told the New
Straits Times.
Beauty and the Beast made $350m
worldwide in its opening weekend,
according to ComScore, the US audience
measurement company, including an
estimated $170m in North America and
$44.8m in China.
Disney is to screen Beauty and the
Beast without any cuts in Malaysia
The Philippine justice ministry did
not immediately respond to a request
for details about the proposed com-
plaint. The plan for preparatory work
on the radar facility was announced last
week by a Chinese mayor with responsi-
bility for the disputed outcrop.
Mr Duterte himself has played down
the row, saying at the weekend that it
would be pointless to go to war with Bei-
jing over it. A presidential spokesman
has since stressed that the Philippines is
not giving up its claims and our entitle-
ments over Scarborough Shoal.
The outcrop has been a source of
argument between the Philippines and
China since an effort at detente broke
down under the previous government in
Manila in 2012. Relations between the
two plunged further when the Philip-
pines mounted a case at the interna-
tional court in The Hague against Bei-
jings South China Sea claims. The court
ruled in Manilas favour last July.
Mr Duterte appeared to distance him-
self from the judgment during a land-
mark trip to China in October, when he
branded it just a piece of paper with
four corners.
Thursday 23 March 2017
Hong Kong art scene comes of age
Art Basels fifth edition opens
with strong sales, as the pool
of serious Chinese collectors
grows. Rachel Spence reports
I
n 2008, the first edition of Hong
Kong Art Fair drew fewer than
20,000 visitors. Today it draws
about 70,000. Now in its fifth edi-
tion under the management of Art
Basel which bought a majority stake
in Asian Art Fairs Ltd, owners of the fair,
in 2011 the events growth maps the
burgeoning engagement of the Asia
Pacific region with international con-
temporary art. That this year only 50
per cent of the 242 exhibitors hail from
that part of the world testifies to the
fairs lucrative potential.
In the first hours of Tuesdays VIP
preview, dealers hopes were justified.
Londons Sadie Coles reported the big-
The audience are at a
completely different level
now. They really know
what they are looking at
gest coup: an abstract oil painting by
Rudolf Stingl in red and silver oil and
enamel was snapped up for US$1.2m.
Coles also sold a trio of brightly painted
stone sculptures by Ugo Rondinone
(US$75,000-US$150,000 each), as well
a graphically charged canvas by Borna
Sammak and a collage painting by
Laura Owens.
Coles believes her commitment to the
fair, where she has been exhibiting for
six years, is paying off. Trust is a big
thing here, she replies when asked why
she has got off the blocks so fast. Once
people know you here they really want
to do business with you.
Following a model of discretion
With private sales rising, a
report reveals the increasing
difficulty of assessing the scale
of the market. By Jan Dalley
T
he market in art is famously
opaque. Not only is it unreg-
ulated, but the known
unknowns multiply as the
only certain elements
public auction sales decline and
untraceable private sales rise. Tradi-
tions range from discretion to oyster-
like secrecy, from privacy to paranoia.
The apparent brashness of art fairs only
veils a continuation of these traditions
of keeping mum about transactions and
prices: it is up to the dealers whether or
not they disclose prices, and the identity
of buyers is almost always closely
guarded. Fact-checking? Forget it.
Other transactions are even more
invisible, as they can take place through
any form of intermediary or none at
all. The only firm figures on which econ-
omists can base their surveys of the art
market are therefore public auction
sales. But this sector is in steep decline,
according to the first Art Basel and UBS
Global Art Market Report, authored by
Dr Clare McAndrew of Art Economics
and published yesterday. Last year saw
an overall drop of 26 per cent in auction
house sales, relative to 2015, and in the
US the fall was even more pronounced.
It was at the higher end of the market
that the sharpest decline made itself
felt: sales above the US$1m mark fell by
34 per cent, while those at the very top
end fell by a mighty 53 per cent.
This is a powerful change in buying
habits, where it hits hardest. It is only
because of a partly compensating rise in
private sales that the report settles on an
overall 11 per cent fall in the the total
value of the market, year on year:
McAndrew puts the figure at
US$56.6bn, against US$63bn in 2015.
The same three national markets con-
tinue to dominate, clocking up 81 per
cent of the total between them: the US,
the UK and China. All are down: the
US total fell by 16 per cent, the UK by
12 and China by just 2. Given the
Her words are echoed by another
London dealer Timothy Taylor. Its
working for me because they know me,
he observes, adding that business has
been boosted by his decision to facilitate
five museum shows of US abstract mas-
ter Sean Scully in mainland China.
A gestural painting by Brooklyn-based
Eddie Martinez sold for US$25,000,
while a stunning matrix in deep reds,
greens and blues by Scully is bought
over the phone for an unnamed price
while we talk. Both buyers are Chinese.
Having last participated in 2015, Tay-
lor says that the Hong Kong audience
are at a completely different level now.
Top: David
Salles
Lunchtime
(2016) sold
through
Thaddeus
Ropac for
US$300,000;
Left: Sean
Scullys Wall
Pale Green
(2016) sold for
an unnamed
price at
Timothy Taylor
disproportionate auction decline in the
US, China emerges as the market leader
for auction sales.
The giant decline in public auction
sales elsewhere shows that the wealthi-
est buyers have become very shy of
showing their hand in public. The pri-
vacy secrecy, even of private sales
suits the sellers, too, just as much as the
buyers. Auction houses are seeing a very
high rate (in some areas, around 50 per
cent) of buy-ins that is, works that
did not reach their reserve price and
therefore remained unsold. That is too
risky for many sellers: one of the great
problems of art as an asset is its
The apparent brashness
of art fairs only veils a
continuation of the
traditions of secrecy
illiquidity, and the uncertainty of an
auction sale only exacerbates that.
Private sales by the auction houses
now account for some 16 per cent of
their turnover. Even so, they have been
overtaken by dealers as the leading sell-
ers of art: 57 per cent of the total is in
their hands, and of that some 41 per cent
is via the art fairs.
The third main way of buying and
selling art today, ie online, is still just a
fraction of the picture: online sales are
Last year saw an overall drop of 26 per cent in auction house sales Carl Court/Getty
FINANCIAL TIMES 7
HONG KONG ART WEEK
Fresh prints
Rachel Spence on a display of exquisite works on paper
W
hether you are at sional works into cyanotype prints
Art Basels fairs in (US$25,000-US$38,000) that take
Miami, Hong Kong on a near-abstract fluidity.
or Basel itself, the British conceptual artist Ryan
booth of STPI Gander, who spent a month at
(Singapore Tyler Print Institute) STPI in 2014, describes the experi-
stands out thanks to its array of ence as absolutely amazing. Its a
exquisite works on paper. The not- bit like Willy Wonkas chocolate
for-profit organisation is the only factory for artists. You can do
gallery, commercial or otherwise, whatever you want, and there are
from Singapore to exhibit at all skills and techniques there that
three fairs. dont exist anywhere else.
Describing itself as a global As well as learning screen print-
leader in contemporary art prac- ing and papermaking techniques,
tice with print and paper, STPI Gander also printed directly from
offers studio time and technical rare stones from STPIs 700-strong
expertise to artists without experi- collection. Normally youd cut
ence in this specialised genre. The into them to make a print but they
sales made at fairs sustain a pro- were so idiosyncratic I couldnt
gramme that has hosted artists resist, he recalls.
including Shirazeh Houshiary, Among Ganders works at STPIs
Jason Martin and Richard Deacon. Hong Kong booth is a photograph,
Art Basels brand works really drained to a sepia-pink hue, of him
well for us as it allows us to reach lurking behind a vase of flowers in
buyers beyond Asia, although
thats still where we do best,
an office. The prints peculiar
chromatic tones, corrected using
explains STPI director Emi Eu. the traditional CYMB (cyan, yel-
Among its most fruitful collabo- low, magenta, black) process,
rations is that with Korean-born reflect the world as the acutely col-
artist Do Ho Suh, best known for
large-scale fabric sculptures. At
our-blind Gander sees it. Both are
priced at about 20,000.
STPI Do Ho Suh transforms As so often, my work was more
smaller everyday items, such as about the process of making than
The Chinese really know what they are viewed through holes cut into a booth keyboards and fire extinguishers, about something outside itself, he
looking at these days. Theres no chit- testified to his words. into objects of desire (US$6,000- observes. And with such interest-
chat though, he continues. [The buy- The growing appetite means that gal- US$25,000) by wrapping them in ing processes available at STPI,
ers here say] lets get on with it. lerists have an opportunity to place their imitation archival paper and col- who can blame him?
Thaddeus Ropac, who presides over artists in really interesting collections, ouring them in pastels. He also
galleries in Salzburg and Paris and will as Amna Naqvi of Karachi-based gallery translates these three-dimen- stpi.com.sg
open a London space in May, believes Gandhara-Art puts it. Naqvi has sold the
that the most exciting new markets lie first works by Pakistani artists, Imran
in Malaysia and Taiwan. There are a Qureshi and Aisha Khalid, to M+, the
handful of serious collectors [in those long-awaited public art museum still
countries] planning private museums. under construction in the West Kowloon
So far he has sold a Gilbert and George Cultural District of Hong Kong.
piece for 125,000, a lyrical painting of Naqvi is also guarding one of the fairs
four disembodied female legs by Georg most tempting acquisitions: a suite of
Baselitz for 36,000, a Tony Cragg ethereal poems and beguiling ink draw-
sculpture for 65,000 and a David Salle ings by Fazal Rivi priced at just
painting for US$300,000. Yet he US$1,100 each. Two have already sold.
remembers the days when most visitors Given the increasingly discerning and
had never heard of Baselitz. adventurous nature of this market, the
Local dealers have experienced the others may soon follow.
change first hand. When Lorenz Hel-
bling opened ShanghART, the first con- Art Basel Hong Kong, March 23-25
temporary gallery in Shanghai in 1996, artbasel.com/hong-kong From Do Ho Suhs Cyanotype series (2016), produced at STPI
it was like a gift shop in a hotel. Today,
he has just opened a 2,000 sq metre
showcase for Chinese contemporary
titans such as Zeng Fanzhi and Yu You-
han, who joined his stable as virtually
unknown rebels.
Helbling has sold work by all his
exhibited artists at the fair. You can
bring more challenging work now, and
really push the edges, he says. The mes-
merising and defiantly uncommercial
allure of a light projection by Geng Jianyi
estimated at US$4.9bn in 2016, with a
4.4 per cent rise from the previous year.
Though once predicted as a revolution-
in-waiting, online art sales appear to be
a boom that hasnt yet happened.
Of the art that is still selling, the post-
war and contemporary categories domi-
nate the figures, with 52 per cent by
value. Yet the downwards trend is in
operation here as well: the sector is 18
per cent down. One small ray of light is
that Old Masters have crept up 5 per
cent in total sales year on year.
It is a sobering report, in many ways.
The art industry, if one can call it that,
employs some 3m people around the
world, and more women than men
quite apart from its urgent necessity as a
civilising force. But the difficulty in
making a true assessment of its scale
and worth persists and has been
thrown into vivid relief by the publica-
tion of a second market report this year.
Claire McAndrew used to produce her
report for The European Fine Art Fair
(Tefaf) in Maastricht; when last year
she announced her move to Art Basel,
Tefaf commissioned Professor Rachel
Pownall to create another report for
them. This was published in January,
and it estimated the total global value of
the art market for 2016 at just US$43bn.
Even though both economists agree that
their methodologies were slightly differ-
ent, such a variation only underlines the
extreme difficulty of drawing up accu-
rate figures.
8 FINANCIAL TIMES Thursday 23 March 2017

ARTS

breakbeats of Heaven and

POP
Emeli Sand
Brixton Academy, London
aaaee
Bernadette McNulty
Big voices have become an
obsession on TV talent
shows. From The X Factor to
The Voice, judges will leap to
attention if a singer reveals a
lung-busting capacity to
raise the roof. Emeli Sand
avoided this route, emerging
from Simon Cowells version
of Tin Pan Alley as a song-
writer, penning hits for his
protgs such as Susan Boyle
and Leona Lewis.
But it was Sands belting
voice that marked her out for
the spotlight and it was this
sound that dominated a show
marking her return after a
four-year hiatus. To begin
with, a gauzy curtain covered
the stage like a confessional
box so you could only hear
Sands singing, rising in
intensity through new song
Lavish: An American in Paris, choreographed by Christopher Wheeldon Johan Persson Selah like a plane acceler-
ating down the runway.
the country-twang of Ten-
derly, the tempo slowed.
The ensuing slew of ballads
exposed Sands Achilles
heel while she powers up a
song quickly to impressive
altitudes with a tank full of
sincerity, there is no devia-
tion from the flight path once
she is up there. And, as with a
long-haul schlep, it is this
lack of dynamic range that
can made Sand seem dull.
The 30-year-old was trying
honestly to sing out her
hearts woes on new tracks
such as Give Me Something
and Breathing Underwa-
ter, but the formula of trem-
ulous, foggy opening verses
followed by the full hairdryer
of impassioned, relentless
pleading, diminished their
emotional impact. It took
brief guest appearances from
her guitarist, Mike Davies,
duetting with Sand on See
Beneath Your Beautiful, and
poet ine Zion on the sensual
swing of Garden, to reani-
mate the evening. They
proved that personality and
nuance can win out over
technical force.

A dance to the music of freedom On her first album Sand

THEATR E
An American in Paris
Dominion Theatre, London
aaaaa
Sarah Hemming
Its got a plot as cheesy as Brie and several
characters as thin as tulle but, pouf!, who
cares? Its also got rhythm, lashings of gor-
geous Gershwin melody and, above all,
Christopher Wheeldons witty choreogra-
phy. This lavish musical, reworked for the
stage by Wheeldon (who also directs) from
the 1951 film starring Gene Kelly and Leslie
Caron, is such a tonic it should be available
on prescription.
Craig Lucass script introduces some
shadow, reminding us that this is a story set
in postwar Paris with the trauma of occu-
pation still hanging in the air, though you
would be hard pressed to make a case for it
as penetrating drama: psychological
details and a back-story about the Resist-
ance struggle to make an impact. No,
where the show scores is in capturing a
dizzy sense of freedom and hope.
At its heart is a story of boy-meets-girl
or in this case, boys-meet-girl, as not only
ex-GI and would-be artist Jerry, but also his
budding composer friend Adam and wan-
nabe singer Henri are all in thrall to aspir-
ing ballet dancer Lise and its told here
with insouciant charm.
Bob Crowleys painterly set sends us
whirling through the streets of Paris, with
59 Productions video designs referencing
both Jerrys sketches and French artists a
touch of Renoir there, an echo of Degas
there to suggest a city rediscovering
itself and support a theme of budding,
postwar creativity. But its the dance that is
the real draw, with Wheeldon working the
choreography into the storytelling and
showed a willingness to com-
promise, dropping her first
name Adele and tidying away
her early forays into rap and
Long Live the Angels has
failed, so far, to repeat
Sands 2012 commercial
successes, the terrain she
returned to for a climax of
dance for more upbeat gospel Next to Me, Clown and
characterisation: hesitant then expan- during which Jerry mixes pirouettes and tunes. But last years Long her London Olympics closing
sively lyrical for Lise; by turns nonchalant jets with the sort of umbrella-twirling Live the Angels exposed sad- ceremony moment, Read
and dazzling for Jerry. And Leanne Cope tricks native to tap routines. Dance der emotional terrain in the All About It. It was a safe
and Robert Fairchild are utterly beguiling expresses characters hopes and feelings, wake of her divorce. So once landing, but it might be time
as the young lovers, her gentle grace with Henris bumbling cabaret appearance the curtain fell, after a jubi- for Sand to refuel.
matched by his cheeky, nimble footwork transformed, as he imagines it, into a daz- lant start, with Sand hop-
and exuberant leaps. zling spectacle. And it comes into its own ping around to the rolling emelisande.com
Its delightful to see ballet used mischie- with the final ballet, when Lise, inspired by
vously, as in a ridiculous flirty number Jerry, finds her feet (as it were) and the two
soar and swoop across the stage.
Theres a nice, wry performance from
David Seadon-Young as Adam, a touching
THE LIFE one from Haydn Oakley as Henri and a
OF A SONG deal of poise from Jane Asher as Henris
starchy mother and Zo Rainey as
Dolly Partons 9 to 5 absurdly wealthy American art-lover
went from the
movies to the White Milo Davenport.
House to a muddy Some of the Gershwin classics are crow-
field in Glastonbury. barred in, but no matter: you leave this
Harriet Fitch Little show with fidgety feet.
traces its journey
ft.com/ Booking to October 31
life-of-a-song anamericaninparisthemusical.co.uk Force: Emeli Sand at Brixton Academy Samir Hussein/Getty Images

Brilliance in a thousand tiny gestures

T H E AT R E
Love in Idleness
Menier Chocolate Factory, London
aaaaa
Suzi Feay
The curtain (thin gauze, on which a war-
time newsreel has been playing) sweeps
back to reveal Olivia, slinky in cream
satin PJs and an apricot dressing gown,
cooing and shrieking down the tele-
phone as she arranges a dinner party in
her tasteful Westminster abode. Her
cut-glass charm reels in both the Chan-
cellor of the Exchequer and a famous
novelist. Victory! You wouldnt think
there was a war on.
But socialite squeals turn to a scream
of shock and joy as she learns that her
son has returned after four years in Can-
ada, dispatched for his safety at the age
of 13? 14? Olivias not entirely sure; fig-
ures arent her strong suit. And so play-
wright Terence Rattigan sets in motion
an effortless farce concerning Olivias
desire to conceal from her little boy
the fact that she is in effect the mistress
of a married man a millionaire
adviser to Churchills government, no
less. It turns out that the elegant flat and
solidly moneyed lifestyle we assume are
Olivias by birthright are a flimsy faade.
She has in fact reinvented herself and
Eve Best in the lead role expertly con-
veys the pain and inauthenticity that
this involves. The play changes from ele-
gant drawing-room comedy to bedsit
drama, and though the latter half is
slightly less convincing than the first,
Rattigans skill in suggesting the emo-
tional depths that lie beneath the seem-
ingly conventional fluff is remarkable.
Son Michael (Edward Bluemel), all tou-
sled hair and thousand-yard stare, is a
po-faced, green-as-grass anti-fascist
who takes an immediate dislike to his
mothers lover, Sir John Fletcher
(Anthony Head), who in turn has a sud-
den flash of insight: Michael is playing
Hamlet to Olivias Gertrude, which
leaves Sir John in a perilous position.
The play is a reconstruction by direc-
tor Trevor Nunn from both Rattigans
original and the depoliticised version
that premiered in 1944 in the West End.
The slightly sour worldview proposed
is that theres no idealistic leftwing
principle that cant be undermined by
15,000 a year, but Michaels passionate
speech about the obscenity of the idle
few clutching fortunes while the many
starve still cuts to the bone. Under
Olivias daffiness, meanwhile, lies an
emotional intelligence that extends
everywhere except her own heart.
The brilliant Best, with a thousand
tiny gestures, fleeting expressions and
tones, gives the already sparkling dia-
logue a coruscating force. Head is less
focused (perhaps displaying first-night
nerves) but still touching as stiff, har-
ried Sir John. And Helen George as Lady
Fletcher brings a glamorous comedic
charge to her scenes, particularly the
delectable wife-mistress showdown in
which small talk becomes a form of duel
to the (social) death.
To April 29, menierchocolatefactory.com
Effortless:
Eve Best and
Anthony
Head in
Love in
Idleness
Alastair Muir

OPERA
Faramondo
Royal College of Music, London
aaaee
Richard Fairman
In the distant days when Handels
operas were largely unknown, the Han-
del Opera Society dutifully introduced
the London public to one a year. The
organisation ceased activities in 1984 as
the Handel revival gathered strength,
but there are still rarities out there.
Faramondo is one of them.
The task of keeping the composers
lesser works in the public eye has
fallen to the London Handel Festival.
Faramondo is this years opera, kicking
off a month-long programme that
ends with the oratorio Joseph and his
Brethren at Handels own church, St
Georges, Hanover Square, in late April.
In Handels day Faramondo lasted all
of six performances. It is not hard to see
why. The plot is the usual confused tan-
gle of love affairs and muddled identi-
ties, sorted out in the nick of time by an
unexpected revelation at the end. It
takes a clear eye to see a way through all
this twaddle.
As in the brilliant Partenope currently
running at English National Opera,
the answer is to drop the opera down
in a particularly vivid and atmospheric
place and time. William Relton, the
director of Faramondo, has chosen
the Soho gangland world of the 1960s
and that works a treat. Gustavo, king
of the fourth-century Cimbrians in
Handels version, becomes the owner
of a seedy nightclub. Outside, rivals
for the love of his star cabaret singer
lurk in dark alleys, backed up by gangs
of leather-jacketed thugs wielding
flick-knives. There is a palpable
undercurrent of danger, but also black
humour on the side.
The young singers of the Royal College
of Music are lucky to step into such
strong, tailor-made characterisations.
There are two alternate casts. Both the
standard of voices and grasp of Hande-
lian style were mixed at this perform-
ance, but Kamilla Dunstans Faramondo
has the flair and vocal energy to give the
opera its focus. Ashlyn Tymms pro-
vided glamour and a voice with colour
and depth to the clubs star act, Rosi-
monda. Julien Van Mellaerts made a
brutish Gustavo and Tom Scott-Cowell a
suitably cocky, glue-sniffing Gernando.
Orchestral playing was excellent under
the always lively Laurence Cummings.
Here is a good opportunity to catch Fara-
mondo before it disappears for another
century or two.
To March 25
london-handel-festival.com
Thursday 23 March 2017
Its economy is built on trade with its closest neighbour. That is now threatened by the White Houses
protectionist rhetoric and proposed tax policy. So what explains rising confidence south of the border?
S
cott McDonough was working
on a deal to invest in Mexicos
biggest pet shop chain when
Donald Trumps election vic-
tory threatened to smash the
North American free trade pact that has
revolutionised the country as a destina-
tion for foreign cash.
There was some reflection at the
time about the big picture, admits Mr
McDonough, managing director of Alta
Growth Capital. The worst-case scenario
was a trade war that would have a signif-
icant impact on the economy.
But he says youve got to have faith
that disrupting a $580bn annual bilat-
eral trade relationship would have too
dire a consequence on business and jobs
on both sides of the border. Mr
McDonough closed the deal, his fourth
in Mexico last year.
Within a month, that optimism
appeared misplaced. The peso plunged
to a historic low and seemed to be on a
one-way ticket south. Ford scrapped a
$1.6bn factory, under pressure from the
new US president. So dour was the
mood that a senior Mexican govern-
ment official confided that big restau-
rant group Alsea had cancelled two-
thirds of its planned investment.
That turned out to be a false alarm
the group, which operates Burger King,
Starbucks and other chains, has in fact
confirmed more than $230m in invest-
ment, up 40 per cent on last year. Others
Inflation continuing to
move up tells us that
businesses feel
confident that demand
is holding up
have followed suit. Walmart, Mexicos
largest retailer, is boosting spending by a
fifth this year to some $860m, betting on
tough times sending shoppers to its
price-conscious stores. But the officials
comment was telling: behind the public
bravado, the government was steeling
itself for Mr Trump to confirm Mexi-
cans darkest fears.
Forward planning, either in the presi-
dential palace or the boardroom, is
tricky when your next-door neighbour,
top trading partner and accomplice in
deeply intertwined manufacturing sup-
ply chains has threatened to blow your
world apart.
It is hard to overstate the impact on
Mexico if Mr Trump were to make good
on his threat to walk away from the
North American Free Trade Agree-
ment. As Chris Wilson, deputy director
at the Wilson Centers Mexico Institute
think-tank, says in a new report, since
Naftas inception in 1994, Mexicos
annual foreign direct investment
inflows have averaged 2.6 per cent of
gross domestic product; during the 22
years pre-Nafta, the average was 1 per
cent. Bilateral trade in goods and serv-
ices has risen sixfold.
As Mr Trumps flurries of tweets
strained diplomatic relations and prom-
ised to repatriate jobs, impose a big
border tax and charge Mexico for his
planned wall, gloom hung in the air. The
mood recalled the anxiety in parts of the
UK after the Brexit vote as it contem-
plated the prospect of a major break
with its own biggest trading partner.
Better than expected fourth-quarter
growth, helped by a buoyant services
sector, felt like the last shred of upbeat
news Mexico could expect in a while.
But gradually, uncertainty became
the new normal. Mexicans began to
exhale. Officials found a way, finally, to
stem the pesos fall via a successful hedg-
ing programme that will save the central
bank from having to dip into reserves to
shore up the currency. Wilbur Ross, US
commerce secretary, talked about a
sensible Nafta deal and even Mr
Trumps hawkish top trade adviser,
Peter Navarro, described Mexico as part
of a North American manufacturing
powerhouse in stark contrast to the
conflicting and often hostile comments
about Nafta that Mexico had become
used to hearing.
That all helped the peso, which had
crashed 14 per cent on US election night
in November. It has firmed to a post-
election high of around 19 to the dollar,
after hitting 22 in January.
Its too early to crack open the cham-
pagne and say theres no problem with
Nafta, says Alberto Bernal, chief
emerging market and global strategist
at XP Securities. Indeed, contradictions
from within the Trump team includ-
ing over whether talks will start within a
couple of months or not until later this
year, and whether the trilateral Nafta
will be updated or replaced by two bilat-
eral deals with Mexico and Canada
make it hard to read the mood.
Yet the relief in Mexico is palpable.
You can feel the tension easing, says
Pablo Charvel, head of the Mexican
Association of Industrial Parks, which
By Jude Webber
$580bn
Annual bilateral
trade between Mexico
and the US
Adjusting to the new normal
Manufacturing output in Mexico
(above left) hit a near two-year high
in February, but tension remains
over Donald Trumps promise to
build a wall between the two
countries (above right) FT montage: Pedro
Pardo/AFP/Getty Images; Gregory Bull/AP Photo
Theres a lot of volatility
and uncertainty, but if
and when this situation is
resolved . . . Mexico can
bounce back
The Mexican economy
Year-on-year change in gross
domestic product (%)
2012 13 14 15
Sources: Thomson Reuters Datastream; FDI Markets
Avocados and Super Bowls
Mexico seeks marriage
guidance over US split
Chumel Torres, a Mexican social media
sensation with his satirical Pulse of the
Republic show, posted an agony aunt-
style video on the potential demise of
the North American Free Trade
Agreement. The US has always done
whatever it wants with Mexico and we,
like a downtrodden and mistreated
woman, keep running after it, he said
in the gossipy tone of teenage girls
swapping relationship advice. Maybe
its time to . . . tell the US . . . I love
your Super Bowl like you love my
FINANCIAL TIMES
FT BIG READ. MEXICO
80%
Of Mexican exports, from
corn and dairy products
to car parts, go to the US
groups 250 complexes that are home to
about 2,500 companies. We were
seeing red lights before. Now theyre
yellow.
Consumer confidence
Huset, in Mexico Citys trendy Roma
district, is a relative newcomer to the
capitals already highly competitive res-
taurant scene. Yet on a recent rainy
weekday night it was buzzing. No sign of
an economy on the skids, despite the
uncertainty and the fact that inflation,
which leapt to a seven-year high of 4.86
per cent last month, is expected to accel-
erate to 5.48 per cent by year-end.
It certainly doesnt feel like the econ-
omy is slowing sharply or going into
recession, says Alonso Cervera, chief
Latin America economist at Credit
Suisse. In fact, inflation continuing to
move up tells us that businesses feel
confident about passing higher prices
on to consumers demand is holding.
Domestic demand has driven growth
in the past two years, but consumer con-
fidence took a huge knock after the
cash-strapped government increased
petrol prices by up to 20 per cent on
New Year's Day as it moved to end subsi-
dies. That also fuelled inflation and
interest rate rises the central bank has
Trading partners: US and Mexico Foreign direct investment
$bn US trade with into Mexico
Imports Mexico as a %
from Mexico of total trade
5 Exports
to Mexico
4 300 15
14
3 30
200
13
2 20
12
100
1 11
0 0 10
16 2000 04 06 08 10 12 14 16
avocados, but I think we need space.
While the UK is about to file for divorce
from the EU, its biggest foreign market,
Mexico is still at the relationship
counselling stage, not yet ready to give
up on the destination for 80 per cent of
its exports. The possibility is receding,
but still there, that 23-year-old Nafta
could collapse. If that were to happen,
Mexico may have to recast many of the
deals tenets in local law. Issues like
security and immigration loom large.
When Nafta was born, many expected
Mexico would be unable to keep up with
its developed partners. It was assumed
that the US would never trigger the exit
clause, as President Donald Trump has negotiators, cautions, threats to look
threatened. Yet assertive Mexican
19
Mexican pesos to the
dollar, a recovery after
hitting 22 in January
lifted its key lending rate by 325 basis
points since December 2015, and is
expected to increase again on March 30.
Higher prices and borrowing costs,
plus the prospect of slower growth and
the political uncertainty attached to Mr
Trumps policies, sound like a senti-
ment-crushing combination. Yet con-
sumer confidence rallied in February
after the government backpedalled on
additional petrol price rises, the hedging
programme strengthened the peso and
fears of Nafta being scrapped receded.
Manufacturing output last month
grew at its fastest rate in almost two
years and there is no sign yet that facto-
ries are running down inventories to
insure against abrupt policy change.
Encouraged, some analysts have even
begun upgrading their growth outlook
for this year, although the central bank
has cut its forecast five times in a row
and the market consensus is for expan-
sion of just 1.5 per cent, less than half the
3.9 per cent seen in 2012.
A drop in foreign investment, how-
ever, remains a risk. Alfredo Coutio,
director for Latin America of Moodys
Analytics, says about $4.5bn in invest-
ments have been put on ice since Mr
Trumps victory, according to media
reports something he estimates could
Inflows ($bn)
From the US
Rest of the world
1999 2002 06 08 10 12 14 16
officials now stress they will walk away
rather than accept a bad new deal.
Im going to be OK, parodies Mr
Torres. Yes, yes, Ill miss you [for] the
first few days but I want to go to India,
I want to go to China, I want to
discover myself. Im a valuable, strong,
independent republic.
Mexico is heeding Mr Torres advice
about playing the field. It is exploring
deals with Brazil, Argentina, Australia
and New Zealand for starters, in order
to be ready to substitute corn, dairy
and other US imports if the time
comes. And it must move fast. As Luis
de la Calle, one of Mexicos Nafta
elsewhere have to be credible.
$1.6bn
Ford investment in a
Mexican plant was
scrapped after election
cost half a point in lost growth if they fail
to materialise. In a worst-case scenario,
economists say, Mexico could be staring
at the prospect of recession.
There might also be more pain for the
peso. Given that it is highly liquid and
used as a hedge for emerging market
risk, it could find itself in the line of fire
if an upset in European elections hits
markets.
The only certainty we have is that
theres a lot of uncertainty, Walmart
Mexicos chief executive Guilherme
Loureiro told analysts last week. His for-
mula to ride out the storm is to double
down on his core values being cheaper
than other shops. What we know is that
if we . . . stick to our values, to the price
gap, he said, if we stick to the right
things, we will succeed.
Getting out of the rut
Nafta is not the only cloud on the hori-
zon. Mr Trump has yet to spell out his
tax reform plans, expected to lower cor-
porate taxes and include a border
adjustment that would exclude export
revenues while effectively taxing
imports. A weaker economy would
squeeze Mexicos ability to stay compet-
itive by matching US tax cuts with
reductions to its own 35 per cent corpo-
rate rate. How do you lower taxes to
still be attractive for US companies
while promising to tighten fiscal pol-
icy? asks Mr Cervera.
Mexico has its own homegrown risks,
50 not least the prospect of a swing to pop-
ulism, and problems that predate Mr
40 Trump, including rising debt. The his-
torical balance of the public sector bor-
rowing requirement stands at $50.5bn
and Mexicos debt levels have prompted
regular admonishments from the cen-
tral bank and threatened sovereign debt
downgrades.
10 Andrs Manuel Lpez Obrador is the
frontrunner for next years presidential several deals in the pipeline.
0 elections. The leftist is an opponent of
the 2013 energy reform which opened
up a sector closed to private investment
for nearly 80 years to the likes of Exxon-
Mobil, BP, Chevron and Chinas Cnooc.
President Enrique Pea Nieto pushed
through energy, education, telecoms
and other structural reforms in a bid to
tackle Mexicos deep-seated problems,
including low productivity. While a full
U-turn would require congressional
support that he could probably not mus-
ter even if he won the election, oppo-
nents say the danger lies in Mr Lpez
Obrador dragging his feet on implemen-
tation and effectively killing them.
Mexico has been stuck in a low-
growth, low-productivity rut for dec-
ades hobbled by the fact that around
half the economy is informal, meaning
businesses pay no tax and workers
receive no protection. It is also ham-
strung by endemic corruption and weak
rule of law. Nafta has become one of the
9
1.5%
Consensus estimate for
2017 growth in Mexico
less than half 2012 level
few institutions that actually works.
Whatever happens, the government
must contemplate having to find new
import and export markets. It is already
discussing closer trade ties with grain
powerhouses Brazil and Argentina, as
well as countries in the Trans-Pacific
Partnership pact that Mr Trump has all
but killed by pulling the US out of it.
The US last week advanced one key
campaign pledge by launching a tender
for Mr Trumps border wall, prompting
the Mexican government to call on local
companies to examine their con-
science before participating.
For now, the panic has subsided. Mex-
ico expects the Trump administration
to lay out its tax plans before launching
into Nafta talks. Mr Ross has indicated
that the White House could inform
Congress this month that it is starting
90 days of mandatory private sector
consultations ahead of the Nafta talks,
fuelling Mexican optimism that proper
negotiations can get under way in
late June.
Mexico hopes that the Nafta revamp
will stick to relatively simple technical
issues like rules of origin. They establish
a limit for the proportion of raw materi-
als that can be sourced outside Nafta for
finished goods still to qualify for tariff-
free access and have already been
adjusted five times in the Nafta era.
Meanwhile, the uncertainty has made
Mexico attractively cheap.
Im far more optimistic than I was
before, says Ram Bala Chandran, a sen-
ior fixed income portfolio manager at
Neuberger Berman, after a trip to Mex-
ico this month. His company holds $1bn
in Mexican debt and I think there
might be an opportunity to add more.
Jorge Dickens, managing partner at
Acon Investments, a fund that has
committed around $800m to Mexican
businesses over the past three years, has
Yes, we worry about things, but we
dont think the world is going to end, he
says. Theres a lot of volatility and
uncertainty, but if and when this situa-
tion is resolved and we think it can be,
reasonably Mexico can bounce back.
Peso plunge The Mexican peso fell to a
historic low after the US election, on
fears that Nafta was to be scrapped
Grounds for optimism Some Trump
officials have hinted that the US is
keen to strike a sensible Nafta deal
Debt worries Mexico has problems that
predate Mr Trump, including rising
debt and a sizeable informal economy
10
THURSDAY 23 MARCH 2017
Making Ubers inner
fire burn more evenly
Aggressiveness fuelled its success. Might an IPO bring discipline?
Going forward there can be no room at
Uber for brilliant jerks. This pro-
nouncement was marched out by Ari-
anna Huffington on Tuesday, at a press
conference updating the public on the
car-booking companys crisis-manage-
ment effort. There is always room for
brilliant jerks in business. This is as
close to an absolute law as the field
admits. Ms Huffington, an Uber board
member and media business veteran,
ought to know it.
It is also fantastical to think that
Uber chief executive Travis Kalanick,
who sets the tone at the company, is
going to undergo a personality trans-
plant at the age of 40. The question at
Uber, as at other businesses, is how to
harvest brilliance while minimising the
collateral damage.
Uber is struggling with this balance.
In recent months, a scathing blog from
a former employee went viral, describ-
ing the companys deafness to sexual
harassment complaints; a scathing
video went viral, of Mr Kalanick berat-
ing an Uber driver who had com-
plained of how the company treated its
workers; several senior executives
have left, one of whom explained his
departure by saying that the beliefs
and approach to leadership that have
guided my career are inconsistent with
what I saw . . . at Uber; a program
designed to prevent authorities from
hailing rides was revealed; and Alpha-
bet, Googles parent company, sued
Uber, alleging theft of trade secrets.
What to do? It could be, of course,
that Uber is already doing enough. It is
seeking a chief operating officer to
partner with Mr Kalanick. It has a
new head of human resources who is at
least saying the right things. An inde-
pendent investigation of the sexual
harassment claims has been initiated.
And Mr Kalanick has learnt, if nothing
else, to express unequivocal contrition.
Ubers board has seven voting mem-
China stokes grievance
against Seoul at its peril
The protests and the boycott of South Korean goods may backfire
History is littered with examples of
governments removed by the same
nationalist forces they tried to unleash
on other countries. The Chinese Com-
munist party knows this but still insists
on whipping up attacks and encourag-
ing boycotts that target whichever
country it happens to be upset with at
the time.
Today it is the turn of South Korea.
Faced with the menace of a nuclear-
armed Pyongyang, Seoul has allowed
the US to deploy its Terminal High Alti-
tude Area Defence (Thaad) missile
shield on its soil. China claims the
weapons systems radar will enable the
US to see deep into Chinese territory,
thereby tilting the strategic balance in
the region and undermining Beijings
own military capabilities.
This is certainly part of the rationale
behind Washingtons plan to deploy
the shield. The US is essentially telling
Beijing that it is fed up with Chinas
lack of action in reining in its client
state. If Beijing does not want Thaad to
be deployed then it should do more
to curb provocative aggression by
North Korea.
Instead, the Communist party has
blanketed Chinese state media with
anti-Korean vitriol, harassed South
Korean businesses, stopped Chinese
tourists from travelling to Korea and
even allowed schoolchildren to be
indoctrinated through mass rallies and
boycotts of Korean products.
Korean supermarket chain Lotte,
which provided some land for the
deployment of Thaad, has borne the
brunt of the Chinese attacks. As many
as 87 of its 99 stores in China have been
temporarily or permanently closed,
including many that have been tar-
geted for spurious fire safety viola-
tions. This behaviour may violate
World Trade Organization rules. Seoul
has already requested that the WTO
looks into Chinas actions.
bers: Mr Kalanick, his second-in-com-
mand, a co-founder, three investors
and Ms Huffington. More independent
members would be welcome, but it
would be naive to expect too much
from even a strong board.
The next option is making the new
hire a CEO, not a COO, and giving Mr
Kalanick an executive chairman role,
or something similar. But these sorts of
arrangements fit a company that has
reached maturity, when a founders tal-
ents are less in demand. Uber, despite
its $70bn valuation, is still growing fast.
Moving Mr Kalanick might be a waste
of his talents. There is also the risk that
he will tire of his new CEO, and sack
him as he would clearly have the
power to do putting himself back in
charge (this has happened before, at
the game company Zynga). Then Uber
would be at square one, with more
damage to its reputation.
The public markets would provide
still stronger medicine. Uber would still
be controlled by Mr Kalanick and his
inner circle, but the presence of voting
minority investors, and higher disclo-
sure requirements, might provide fresh
air and discipline. This option carries
risk too. It might well hurt the com-
panys operations. If Mr Kalanick and
his team are struggling, it might not be
wise to add the additional duties a pub-
lic listing brings. Further, if Uber is still
in growth mode, the financial disciple
that the stock market enforces may not
be what maximises its potential. A few
more years of cosy venture funding
may be just the thing. These risks, all
the same, could be worth it: if what
Uber needs is a sharp shock, a listing
would deliver it.
Uber has grown with astonishing
speed by overturning a huge, well-
defended market. The reckless aggres-
siveness that accounts for its ills is, like
it or not, part of its success. Change,
whatever the catalyst, will take time.
At a time when Beijing is trying to
counter the protectionist instincts of
President Donald Trump, this behav-
iour is self-defeating. It provides
ammunition to those in the west who
would blame China for the ills of glo-
balisation.
The Chinese government has tried to
distance itself from the protests against
South Korea by arguing that they are
simply a reflection of public opinion.
But all forms of public protest in China
are effectively banned, except those
that happen to rail against the latest
foreign enemy that party leaders are
annoyed at.
It is clear that Beijing is encouraging
boycotts and stoking anti-Korean sen-
timent in the hope of forcing the next
leader of South Korea into backing
down over Thaad. Following the
impeachment of President Park Geun-
hye, the country will hold an election in
early May. The frontrunner to replace
Ms Park, Moon Jae-in, has already said
he would reconsider the deployment
of Thaad and that South Korea must
learn to say no to the US. Whoever
wins the presidential election must
find a way to ease tension with North
Korea. They will have to work with
China, which is South Koreas biggest
trading partner. But caving into Chi-
nese economic pressure and unilater-
ally backing down on Thaad would be a
mistake.
Beijing continues to use economic
nationalism in its disputes with other
countries because it believes the pres-
sure is effective; in the past it has
been quite successful in forcing those
countries to back down. Wiser heads
would be wary of mixing such strategic
and commercial imperatives, while
stoking nationalism at home. Not only
does this make for difficult trading
relations, but those same nationalist
forces could ultimately prove hard
to control.
FINANCIAL TIMES
Europes cities want
to work together across
national borders
Sir, We cant sit and watch Europe fall
further into Euroscepticism,
disillusionment and political
extremism. Europes large cities need
an EU that can deliver effective
solutions now. Ahead of the summit of
heads of state and government in
Rome on March 25, Eurocities is asking
EU and national leaders to consider
three key messages.
We need the EU! As president of
Eurocities, I represent the leaders of
137 of Europes largest cities. We want
Europe to thrive, and stand together to
deliver real solutions for our citizens.
Europes challenges are most evident in
cities, where in recent months leaders
and citizens have rallied to provide
warmth, shelter and comfort to tens of
thousands of refugees. Yet, the impact
of environmental, societal, economic,
cultural and technological transitions
will always be better mitigated when
we can work across national borders
and political divides.
Listen to us! Europe can be inspired
by its cities. We have a wealth of
experience, from the innovative ways
in which we engage citizens in
policymaking, to how we design
policies and programmes together with
not just for those they are meant
to serve. European democracy would
be reinforced through the adoption of
more citizen-centric tools for open
governance.
Work with us! Cities are integral to
solving Europes crisis of legitimacy. We
are concerned by the growing
disconnect between the EU and its
citizens, and we see an opportunity to
bridge this gap. We know our citizens
better than any other level of
government. Work with us, and
European and national leaders can also
understand their interests, concerns
and visions, and reach the people they
strive to represent.
Europe is more than trade and cross-
border co-operation; we are united as
Europeans by our shared values of
respect, freedom, democracy and
equality. In the coming 12-18 months,
we will work with local and European
partners on a campaign to show how
cities can help rethink and remodel
Europe. Together we can shape the
future of Europe in a way that makes
sense for citizens.
Danil Termont
Mayor of Ghent and President of Eurocities,
Brussels, Belgium
Urge the Treasury to use
the right model, Mr Davis
Sir, Given the inaccuracy of the
Treasurys earlier projections about the
effects of Brexit on the UK economy
noted by Stuart Fowler (Letters, March
21), it is perhaps understandable that
Brexit secretary David Davis has not
asked for an update.
The flaw in the earlier projections
was the use of a geography model (a
gravity model). This is based on
distance from market and ignores price
effects such as tariffs and exchange rate
changes, the key variables in an
economic model. If Mr Davis does seek
an update, I strongly recommend the
use of an economic model.
Michael Wickens
York, UK
Professor Emeritus, University of York;
Professor of Economics, Cardiff Business
School
Journalists enter
the classroom to
root out fake
news in France
Notebook
by Roula Khalaf
Letters
The job can be done quickly, but at what cost?
Sir, Frederick Studemann is right to
remind readers that the reunification
of Germany in less than 12 months
shows how daunting political
challenges such as Brexit can be solved
much more quickly than many fear
(What German unification teaches
Brexit doomsayers, Notebook, March
21). Perhaps a better example, and one
closer to home, is the rapid process of
decolonisation and the end of the
British empire in Africa under Harold
Macmillan in the early 1960s.
In many ways, this was a reverse of
Brexit: the pressure to grant
independence was driven by
metropolitan elites; it hadnt featured
prominently in the campaign for
the 1959 election that preceded it; it
was driven in part by a recognition
Success of Brexit talks
will depend on keeping
the politics dispassionate
Sir, Wolfgang Mnchaus assessment of
the coming Brexit negotiations is
absolutely correct (A Brexit deal is
more probable than you might think,
March 20). Done badly, everyone will
lose. Done well and we could look
forward to continued co-operation
between the UK and the EU, even if the
framework for this will look very
different to todays. However, it is a
very fine line between success and
failure.
The biggest challenge will be to keep
the politics dispassionate. As the
damaging and divisive effects of the
referendum campaign continue to
resonate throughout society, politicians
on all sides have to resist the
temptation to play to the gallery. Those
who shout the loudest are on the
fringes of the debate and we cannot
afford for them to be the only ones who
are heard. Instead, politicians should
listen to the majority who want them
to rely on expertise, not opinion, and to
prioritise pragmatism over ideology. If
they manage that, then a positive
outcome is much more likely.
Sydney Nash
London N5, UK
Progressives and liberals
won the Dutch election
Sir, Nikki Ikani (Letters, March 20)
paints a rather bleak picture of a Dutch
political landscape engulfed by
populists. If we should learn anything
from the victories of the pro-Brexit
camp or Donald Trump, it must be that
we cannot afford to forget segments of
society because of their inconvenient
views. If populism is the politics of
those who have become disillusioned
with our democracy and its
establishment, it seems quite clear to
me that the solution should be to grant
them a seat at the table. I may abhor
their views, but I do think it is to the
credit of our democracy that they have
been represented in our politics, first
by Pim Fortuyn and now by Geert
Wilders. As a result, we have seen the
populist share of the electorate remain
relatively constant, and quite far from
gaining executive power.
Yes, certain Dutch politicians have
expressed increasingly conservative
and nativist (rather than populist)
views, a successful strategy to take
the winds out of the populists sails.
We may like to think otherwise but
fake news is not a new trick. In the old
days, we referred to it simply as
propaganda, one of the many tools of
subjugation used by authoritarian
regimes. What has changed in the
digital age is the ease with which fake
news can spread, and its range.
You no longer have to live in a
repressed society to be a victim of
misinformation. It can intrude into
your home and into your smartphone,
play with your mind and muddle your
reality. It doesnt always need
Machiavellian spooks to make it up or
twisted schemes to embed it into the
collective consciousness. It can be
created by a bored youth in a bar or
terrorists on the battlefield.
Which is why our defences against
fake news can no longer be confined
to encouraging people to listen to the
BBC, as it once often was. Now
societies have to develop ways of
immunising young minds. Thats
where education comes in.
I was intrigued to learn of a new
initiative by journalists from Le
Monde, the French daily that has
developed a readers tool to weed out
fake news. A few weeks ago, they
started volunteering at schools,
teaching teenagers how to distinguish
between responsible journalism and
fabricated news. Other newsrooms in
France are doing the same.
Alexandre Pouchard, one of the Le
Monde journalists involved, tells me
the objective is to raise awareness
about sourcing and promote simple
tools (such as Google reverse image
that the UKs strategic and economic
interests had swung decisively from
empire to Europe; the process was
actively supported by the UKs main
allies, and actively opposed by those to
the right of the Conservative party. In a
little more than five years Britain
unpicked more than a century of
control, trade agreements and the
machinery of government in 16
colonies, including Nigeria, Kenya,
Uganda, Gambia and what are now
Tanzania, Malawi, Botswana and
Zambia.
The UK avoided the worst of the sort
of conflict that France experienced in
north Africa, and retained close
economic and political relations with
many of these former colonies through
the Commonwealth.
In my day this was all swamp
Nevertheless, I would be quite
surprised if it translated into any real
policies comparable to those pushed by
populists. Make no mistake, the Dutch
elections were won by progressive and
liberal parties.
Florian Keulers
Student,
Kings College London, UK
A good actuary would
design a parachute
Sir, I enjoyed a good chuckle on reading
the letter (March 20) from F Bouaziz
on being careful what to extrapolate
from a trend. No doubt it will feed a
few stale dinner table conversations in
future, and certainly the underlying
point is important.
However, in my experience a good
actuary is the one most likely to
connect the failure of the first engine
with the second, and furthermore to
propose the available materials, and
required dimensions, for an effective
parachute. Ignore your actuary at your
peril!
A McGrath
Singapore
Advantage of burning
gas over coal is easily lost
Sir, Yumehiko Hoshijima (Letters,
March 21) is correct to challenge the
myth that shale gas is going to benefit
climate change. If methane emissions
exceed 2 per cent of production, then
the advantage of burning gas over coal
is lost. Satellite observations over the
US have demonstrated that
exploratory fields release higher
amounts of methane than established
search) to check the origin of
photographs or memes. Its about
getting some reflexes, like wondering
where a story or image is from, he
says. On the one hand, young people
are more vulnerable to this
phenomenon and less used to
identifying unreliable sources and, on
the other hand, they are not our usual
readers, so we have to get in touch
with them.
The French, of course, feel
particularly exposed during this
presidential election. A leading
candidate, Emmanuel Macron, has
accused Russia and its news outlets of
hacking, and of spreading false stories.
The extent to which fake news
swayed voter preferences in the US,
however, is arguable. A new study by
Hunt Allcott of New York University
and Matthew Gentzkow of Stanford
University concludes that social media
was not the most important source of
US presidential election news, and
that the most widely circulated fake
news stories were seen by only a small
fraction of Americans. But according
to a Pew Research poll, 88 per cent of
Americans felt that fake news
contributed to confusion over facts.
There could be an indirect effect,
argues Tom Boll, an instructor at
Syracuse Universitys Newhouse
school of journalism.
I wouldnt say that fake news
would necessarily have to change a
persons mind or vote to be effective.
If it fires up the base to be more
involved or definitely go out and vote,
that would be an effect. And if
Thursday 23 March 2017
Email: letters.editor@ft.com
Fax: +44 (0) 20 7979 7790
Include daytime telephone number and full address
Corrections: corrections@ft.com
That the job can be done, and done
quickly, is not the question. More than
25 years after the unification of
Germany, gross domestic product per
capita in the former East Germany is
still one-third lower than in the West,
unemployment is significantly higher,
and German taxpayers are still paying
for unification through the solidarity
surcharge on their tax bills.
Meanwhile, the postcolonial record of
many of these former British colonies
in terms of violence, democracy,
human rights, corruption and
economic performance suggests that
perhaps even the most well-
intentioned and noble plans can be
executed too quickly.
William Wright
London W1, UK
fields, with losses over Bakken and
Eagle Ford representing 10 per cent of
production.
Global levels of atmospheric
methane plateaued in the 1990s but
have started to increase again since
2008 in tandem with increased shale
activity in North America. In 2016, a
study by AJ Turner and co-workers
from Harvard indicated that between
30 and 60 per cent of the global
increase in atmospheric methane can
be attributed to emissions from the US.
Oil companies maintain that these
losses are the result of unregulated
practices by cowboy operators, but
storage and distribution also
contributes to the problem as
demonstrated by the massive methane
leak that emanated from the Aliso
Canyon blowout in 2015-16.
Substituting one fossil fuel with
another as a way of solving climate
change is no more sensible than the
substitution of petrol by diesel.
Dr Robin Russell-Jones
Chair,
Help Rescue the Planet,
Stoke Poges, Bucks, UK
Americas east coast is
at just as great a risk
Sir, As a fellow member of the flat
earth society, I accept Gideon
Rachmans understanding of North
Koreas intercontinental ballistic
missile threat as one that places the
west coast of the US in harms way
(Bombing North Korea is not an
option, March 21). However, if the
followers of Aristotle are correct,
should Kim Jong Un elect to send his
missiles by the great circle route, the
east cost of America is at risk as well,
lying at a distance but 10 per cent
further than that between Pyongyang
and California.
Randall Greene
White Plains, NY, US
Correction
c The average pay ratio between FTSE
100 chief executives and the average
total pay of their employees in 2015 was
129:1 rather than 178:1 as incorrectly
stated in an article on February 17.
COMMENT ON FT.COM
Starbucks Schultz for president?
The farewell speech from the founder sounds
a lot like a stump speech, says Rana Foroohar
www.ft.com/comment
someone is leaning one way and this
cements their belief, that could be
an effect.
The US debate about fake news is
well advanced, and more heated than
in Europe. Many US schools are
teaching students about credible
sourcing on social media. In
California, a Democratic lawmaker
has introduced a bill in the state
senate to include digital literacy into
the school curriculum.
Mr Boll argues that a literacy effort
that warns against falling for fake
news should become part of a civics
course and every citizen should take
it. Id want (students) brains and
minds to be a fact-checking tool.
That may be what the OECD has in
mind with the revamp of its Pisa test,
which compiles global rankings of
national school systems, to assess
online skills. A new reading element
will in future take into account how
pupils deal with the digital
environment and online documents.
Fake news may not have won
Donald Trump the White House. It
has, however, stimulated much-
needed action over its insidious
influence. Once upon a time,
dictatorships targeted young minds
with manipulated tales in history
books and daily songs in praise of the
leader. Now propaganda and
conspiracy theories are beamed into
many more minds through their social
media feeds. The earlier youngsters
learn to fight it, the better.
roula.khalaf@ft.com
Thursday 23 March 2017
AMERICA
Edward
Luce
A
ll bull markets die. The
question with President
Donald Trumps boom is
whether it is heading for an
early grave. Tuesdays
sharp sell-off, the largest daily drop
since October, should have come as little
surprise. US equity valuations have
risen by a tenth since Mr Trump won the
US presidential election yet there is little
in Washingtons pipeline to merit it.
The chances that Mr Trump will pass
a big tax cut this year, let alone an infra-
structure bill, are slim. Without that
stimulus, it will be hard to sustain the
sugar high.
The first serious test is when Congress
votes today on Mr Trumps Obamacare
repeal bill. It looks like a 50-50 bet. Even
if it passes the House of Representatives,
Mobile upstarts
innovate faster
than oligopolies
BUSINESS
John
Gapper
T
he merger announced this
week between Vodafone in
India and Idea Cellular to
create the biggest Indian
mobile operator raises the
question of what works best for con-
sumers. Is it a) two giants merging or b)
a maverick cutting prices?
If your answer is a) then you may well
work for a large mobile telecoms com-
pany, since that is what they believe, or
claim to believe. If your reply is b) you,
like millions of users who have switched
to upstarts such as Reliance Jio in India,
Iliad in France or T-Mobile in the US,
probably do not.
The incumbents rhetoric is puzzling
to anyone who believes in the well-
tested virtues of free enterprise and
competition. How could anyone think
that what most benefits customers is an
oligopoly in which a few companies
no more than three in the view of many
large mobile operators command a
comfortable return on capital, free of
inconvenient challenges?
Yet this is what such companies
demand in market after market around
the world: let us merge and get bigger,
squeeze out smaller competitors and
As democracy retreats, famine makes a comeback
AFRICA
David
Pilling
F
amines are supposed to be a
thing of the past. So it came as
a shock this month when the
UN citing the risk of starva-
tion for 20m people in Yemen,
Somalia, South Sudan and north-east
Nigeria declared what it called the
largest humanitarian crisis since 1945.
Technically that is wrong. As horrible
as current events are, worse things have
happened in this timeframe. Mao
Zedongs catastrophically ill-conceived
Great Leap Forward led to the starva-
tion of perhaps 30m people between
1958 and 1962. Hunger was so rampant
that, according to Jasper Becker, author
of Hungry Ghosts, some people swapped
babies so they did not have to eat their
own progeny. In Cambodia, Pol Pots
fanatical Year Zero destroyed the
Trumponomics loses its mojo
its Senate prospects are dim. The bill is
an unloved mess that relies solely on
Republican partisan loyalty to pass.
What ever the fate of Trumpcare,
markets are digesting that nothing big
will happen soon. Without a bench of
nominees to staff his departments, Mr
Trump will be hard-pressed to forge the
deals necessary to enact once-in-a-gen-
eration tax reform.
Washington, by design, is treacherous
ground for ambitious reformers. Even
the most well-oiled attempts can run
aground in Capitol Hills turf battles. To
stand a chance, they require coherence,
skilful coalition-building and high presi-
dential approval ratings. Mr Trump
lacks all three. The least expected fea-
ture of Mr Trumps presidency is his
indecision. Without anything close to a
full team, he has been unable to produce
a tax reform plan. His advisers cannot
agree on whether to impose a border
tax, how to fund new infrastructure and
whether the reform should include per-
sonal as well as corporate tax cuts.
Steven Mnuchin, Mr Trumps Treas-
ury secretary, said the goal was to pass
the tax cuts by August. That can now be
boost profits. Then we will have reliable
returns and can invest billions in tech-
nology such as 5G wireless. That will be
better for everyone.
Thus Sunil Bharti Mittal, whose
Bharti Airtel is Vodafone and Ideas larg-
est competitor in India, craves consoli-
dation to three operators in large mar-
kets, and two in smaller ones regula-
tors should wake up to the fact that
more operators doesnt mean more
competition, he says. Others warn
darkly that 5G will be a pipe dream in
Europe unless they get their way.
It is pretty unconvincing to anyone
who does not live inside the regulated
bubble of mobile telecoms. Apart from
being dubious in theory, the experience
of the past few years suggests that it is
untrue in practice. Mobile disrupters,
not oligopolies, have made the fastest
progress.
India is the latest and most spectacu-
lar example of this. Mukesh Ambani,
head of Reliance Industries, threw the
market into turmoil six months ago by
launching a free 4G service called Jio. Jio
has 100m customers, stealing a march
on its larger rivals and prodding Voda-
fone into the Idea merger. It will try to
retain as many as possible when it starts
charging in April.
In more reflective moments, Mr
Ambanis rivals confess to admiring his
entrepreneurship. Knowing he would
have to invest at least $20bn to start his
service, he threw in the extra few bil-
lions to add entertainment to data and
voice services. Taxi drivers could soon
foundations of society, causing death
from starvation of an estimated 1.2m
people. There were also biblical-scale
famines, at least as bad as those happen-
ing now, in Biafra (1969-70), Bangla-
desh (1974), Ethiopia (1983-85) and
North Korea (1995-97).
Yet the UN statement, delivered by
Stephen OBrien, under-secretary-gen-
eral for humanitarian affairs, contains
important truths. Until now, the num-
bers of people dying from famine had
been falling dramatically.
According to the World Peace Foun-
dation at Tufts University, from the
1870s to the 1970s, in each decade great
famines killed between 1.45m and
16.64m people, averaging 928,000 a
year. Since 1980, the annual death toll
has dropped sharply to an average
75,000, just 8 per cent of the historic
level. As recently as last year, experts
had considered the possibility of the end
of famine. Tragically, that hope was pre-
mature.
The second truth in Mr OBriens
statement is that famines are man-
made. Rarely are they caused by any-
thing so mundane as a shortage of food.
FINANCIAL TIMES
Comment
ruled out. The soonest a significant bill
could reach Mr Trumps desk is proba-
bly in early 2018. The longer Mr Trump
takes to say what would be in it, the
more its prospects recede. Even with a
clear-cut plan, Mr Trumps weak
approval rating, which this week dipped
below 40 per cent and is the lowest for a
president this early into his term, will
limit his sway with legislators.
Even the most well-oiled
attempts at reform can
run aground in Capitol
Hills turf battles
Nobody knew precisely what Mr
Trump would do in office. Yet the mar-
kets, like Mr Trumps voters, thought he
would at least know how to play the role
of president. That conceit is dissolving.
Presidential terms can go one of three
ways. Some start off with a bang, like
Ronald Reagan in 1981 with his first big
tax cut. That also applies to Barack
Obama, who by this stage had passed
be seen in cities watching films on Jio
devices in stationary vehicles while
waiting for their next fares.
Jios breakout follows the lead of ear-
lier mavericks in European markets.
Free, a mobile service launched by Iliad
in France in 2012, has forced operators
such as SFR and Orange to lower their
margins by matching its prices. It now
has 18 per cent of French mobile sub-
scribers and has acquired spectrum in
Italy to enter that market.
The mavericks playbook, involving
low subscriptions for unlimited or
extensive data without hidden fees,
works reliably enough to be robust.
T-Mobile, the third-biggest US operator,
which is controlled by Deutsche Tele-
kom, has grown rapidly by using the tac-
The mavericks playbook
of low fees for unlimited
data has worked reliably
enough to be robust
Geography has little influence. Contrary
to common perception, Asia and east-
ern Europe not Africa have been the
locus of world hunger. Between 1870
and 2010, 87 per cent of deaths from
famine occurred in those regions, with
only 9.2 per cent in Africa. Certainly,
failed rains and creeping desertification
can trigger crises. That is precisely what
is happening in Somalia, which is suffer-
The key to stopping
starvation is not food, but
opening political, physical
and economic access
ing its worst drought in living memory.
But without human complicity, famine
cannot occur. The economist and phi-
losopher Amartya Sen wrote that fam-
ines do not take place in true democra-
cies. If democracy is in worldwide
retreat, famines could make a gruesome
comeback.
South Sudan is a case in point. The
worlds newest country won independ-
the largest stimulus in US history. An
early victory gives a young presidency
momentum. They can begin haltingly,
like Bill Clinton in 1993, who passed a
big budget reform but floundered on
healthcare. Or they can flop straight
away, like George W Bush in his
second term in 2005, whose defeat on
social security ended serious legislative
hopes.
The market has priced Mr Trump into
the Reagan mould. In reality he is hover-
ing between the second and the third
type of presidential start. His next
moment of truth after healthcare will
come with first-quarter US growth num-
bers in early April. The Atlanta Federal
Reserve has downgraded its forecast to
below 1 per cent. Though Mr Trump
cannot be blamed for the drop, he has
taken noisy credit for numbers on
which he has had no influence, such as
jobs growth. He has also basked in the
glow of a soaring stock market. It will be
hard for him to talk his way out of a
change for the worse.
Short of an epiphany on tax reform,
Mr Trump can kindle animal spirits
with aggressive deregulation. The
tic, dubbing itself an un-carrier, less technology upgrades that mobile
unlike Verizon and AT&T Mobility.
Disruption appeals to consumers it
would not be so popular otherwise
and cuts prices. A study for the UK regu-
lator Ofcom of 25 countries between
2010 and 2015 found that prices were
between 17 and 20 per cent lower in
places with at least four competitors,
including a maverick.
This makes intuitive sense. Once any
market has narrowed to three compa-
nies, they will be tempted not to battle
with each other too strenuously but to
maintain the equilibrium by offering
similar services. The fourth or fifth
player (Jio will be Indias fifth largest
after the merger of Vodafone and Idea)
needs to disrupt to survive.
Incumbents remain unmoved by the
evidence: they keep insisting that it is an
illusion and that mobile telecoms is a
special industrial case. Without stable
margins and attractive investment
prospects, they say, they lack the incen-
tive and capital strength to keep taking
part in the regular rounds of costly wire-
ence in 2011. Since then it has
descended into civil war as a gangster
elite fights over diminishing oil revenue.
That changed the country, in the phrase
of Alex de Waal, executive director of
the World Peace Foundation, into the
only thing worse than a kleptocracy a
bankrupt kleptocracy. The elite has
turned on itself and extorted its people,
sending them into the wilderness where
there is insufficient food to survive.
If, to paraphrase Tolstoy, every fully
fed nation is alike, then every starving
one is grotesque in its own way. In
Yemen, the Saudi-led blockade of
Hudaydah port is preventing food from
reaching some 7m people. In Somalia,
the humanitarian effort is severely
hampered by al-Shabaab militants who
last year carried out 165 violent attacks
against humanitarian efforts. The civil-
ian government in Nigeria has run down
its armed forces to such an extent that,
for years, it was incapable of fighting
Boko Haram insurgents in the north.
Now the military is fighting back but, in
every region that it liberates, it uncovers
displaced people struggling to survive.
Mr OBrien said $4.4bn was needed by david.pilling@ft.com
energy sector is likely to do well with Mr
Trumps plans to scrap Obama-era envi-
ronmental controls. Wall Street can also
expect a relaxation in lending con-
straints. These should help growth at
the margins.
Against that, however, is the effect of
Mr Trumps visa restrictions. Tourism
accounts for almost a tenth of the US
economy. Flights and hotel bookings are
dropping. Higher education is also a big
income generator. Forty per cent of US
colleges have reported a fall in student
applications this year. Canada has seen a
sharp jump.
In reality, Mr Trumps visa restric-
tions are fairly limited. He has tempo-
rarily stopped issuing visas to citizens
from six majority Muslim countries and
his order may not survive legal chal-
lenges. But perception is king. Foreign-
ers believe Mr Trump is rolling up
Americas welcome mat. They sense on
this that Mr Trump really does know his
own mind. Here is one policy that he has
broadcast too well. It is a pity it is so dis-
couraging for growth.
edward.luce@ft.com
lon and Macron campaigns but appears
phone customers want.
Some cite the view of Joseph Schum-
peter, the economist who coined the
term creative destruction, that dimin-
ished competition can raise investment,
at least temporarily, by offering higher
returns. They claim that they will shy
away from spending an estimated
57bn for 5G technology in Europe if
industry rivalry is too fierce and their
capital is likely to be wasted.
This sounds distinctly like an empty
threat, as Mr Ambani has shown in
India. If technology exists, along with
licences for its deployment, someone
will have a go. An oligopoly may well
drag its heels, demanding more security
before its members act, but innovation
will occur regardless if disruption is
allowed. It may or may not be a sound
investment but it will happen.
Life would be easier for telecoms
companies if mavericks were curbed.
The rest of us would suffer.
john.gapper@ft.com
July to avert catastrophe. But, as Mr de
Waal points out, he did not pretend that
money and sympathy would suffice.
Instead, he spelt out what should be
crystal clear: famines are acts of politi-
cal self-harm often aided and abetted by
international action, or inaction. Fam-
ines are made not by angry gods and are
thus not inevitable. Ethiopias govern-
ment proved that last year when it
averted the effects of a potentially
calamitous drought through carefully
planned and executed food relief. The
key to stopping starvation is not food
itself, but opening up political, physical
and economic access so that food can
reach those who need it. Beyond that,
the only solution is, as Mr OBrien said,
to stop the fighting.
On balance, the UN official was right
to risk the charge of crying wolf by
sounding the alarm loud and sounding it
early. The last time famine was declared
was in Somalia in 2011. You knew it was
a famine because perhaps 150,000 peo-
ple had already died. By the time it was
declared, it was already too late.
sarah.gordon@ft.com
11
French bosses
silence over the
perils of Le Pen
could be costly
EUROPE
Sarah
Gordon
T
here are many parallels
between the UKs referen-
dum on EU membership
and the French presidential
election. None is more wor-
rying than the double bind in which
the French business community finds
itself.
Many leading business people in Paris
refuse to contemplate the possibility of a
victory for Marine Le Pen, leader of the
far-right National Front. This position
contrasts with that of many foreign
investors, who have been trying to
secure briefings with Ms Le Pen and
her team.
French business people argue that the
FNs appeal does not compare with that
of political insurgents such as US Presi-
dent Donald Trump because the party
has been around for decades; that the
French electoral system is designed for
votes to cohere around a consensus
presidential candidate in its second
round; and that, as I heard in many
meetings in Paris this month, it simply
couldnt happen here. Valrie
Pcresse, head of the regional council of
Ile-de-France, told me that the British
were traumatised by the Brexit vote,
and thus hugely exaggerating the likeli-
hood of a Le Pen victory.
She may be right. Polls suggest Ms Le
Pen is likely to face defeat in the second
round of voting. But the dangers of this
approach are clear. First, lack of engage-
ment between business and the Le Pen
campaign. Medef, the employers asso-
ciation, has held talks with the rival Fil-
Speaking up for what big
business sees as priorities
for a prosperous economy
is a double-edged sword
to have been rebuffed by the FN.
Second, as in the UK ahead of the
Brexit vote last year, many business
people are refusing to get involved pub-
licly in the debate, despite being very
worried about the impact of a Le Pen
presidency on investment, employment
and growth. Most well-known business
figures deploy the excuse that business
should not get involved in politics.
Their caution is understandable.
Speaking up for what big business sees
as priorities for a prosperous economy is
a double-edged sword. Like the UK
Independence party, the FN casts itself
as the champion of small companies
against big business. Ms Le Pen reiter-
ated this stance in Mondays presiden-
tial debate. Warnings by big business
of the perils of a Le Pen presidency could
backfire.
French business should, though, draw
lessons from the UKs pre-EU poll
silence of UK business. One CAC 40
chairman described FN proposals,
which include reviving the franc for
domestic transactions, as crazy. To
choose not to explain to voters why this
is the case seems a dereliction of duty.
Finally, underestimating the possibil-
ity of a Le Pen presidency risks eroding
any competitive benefit that Paris
might hope to gain from Britain leaving
the EU. The government has put a lot of
effort into increasing the attractions of
France for UK investors.
A President Le Pen would be likely to
preside over a parliament where the FN
neither had a majority, nor was part of a
governing coalition. This would stop her
implementing some of the more
extreme policies. But the legislative
deadlock that this implies, allied to a
president spouting anti-big business
rhetoric, would not provide an attrac-
tive business environment.
The impact of heightened political
risk in France is clear. Businesses
seeking to relocate from London, such
as the US insurer AIG, have preferred
Luxembourg or Dublin. One French
insurer told me that a leading UK
bank had decided against relocating
activities to France because of political
uncertainty.
Even Paris Europlace, the agency
tasked with selling Paris to the UK
financial services sector, refuses to
acknowledge the ways a Le Pen victory
could harm its appeal. By early May, the
election will be over and there may be
no risk. But acknowledging that it exists
would be healthy.
12 FINANCIAL TIMES Thursday 23 March 2017

The turn of the screw

Do-it-yourself retailer Kingfisher reported another year of rising sales at its UK Screwfix business. This has
far lower overheads than big-box counterpart B&Q where sales are stagnating

Shares and UK sales UK sales bn* Employees per store

Twitter: @FTLex Email: lex@ft.com
US stocks:
Cape fear
Number crunchers have been trying to
calm the market hive mind for years.
This week they may feel as though
theyre getting somewhere. As Cape,
the cyclically adjusted price earning
multiple, hit a near two-decade high,
the S&P 500 had its worst day since the
US election.
By Professor Robert Shillers
measure of long-term value, the US
appears to be the most expensive
market in the western world. Data
from Research Affiliates show that
S&P 500 stocks now sell for 29 times
their 10-year earnings, compared with
a long-term average of 16.
If youre a Cape crusader the
conclusions this number throws up will
be deeply troubling. Companies have to
grow at a breathtaking pace. Otherwise
it will take up to three decades for
investors to make back their money.
As the US enters into its eighth year
of ever-higher stock prices, nerves are
starting to show. A survey by Bank of
America Merrill Lynch suggested
34 per cent of fund managers believe
equities are overvalued the most in
almost two decades.
On Tuesday, the S&P 500s first
palpable bad day since October boiled
down to a rather timid 1.2 per cent fall.
It was enough to unnerve wider
markets, boosting interest in havens
such as gold. It was difficult to point to
one trigger.
The explanation that investors are
suddenly questioning Donald Trumps
ability to keep animal spirits alive is
unconvincing alone. Valuation
concerns are the missing context.
Media mentions of Prof Shiller and
Cape have jumped to a record high in
the first three months of 2017.
Cape naysayers argue that this sort of
deep-valuation model is flawed.
Companies in the index have changed
over the years, as have accounting
conventions and taxation.
Comparisons are therefore messy.
More importantly, Cape is only a way
of looking backwards, not forwards. If
you want an adjusted measure of
where price-earning multiples have
been over time, its helpful. The only
way to make real money is to guess
where they might go in the future.
US stocks have appeared potentially
overvalued by the measure of the Cape
throughout the current market rally. In
fact, they have looked expensive for
decades. The last time there was this
much media chatter about the Cape
was 2015. The following year,
chastened pessimists went quiet.
Tsingtao Brewery:
spend to amend
Chinas vast consumer classes are
restocking their store cupboards. For
the urbanites of Beijing and Shanghai,
cheap booze no longer appeals.
Beermaking behemoths are starting to
feel the effects.
A profit warning from Tsingtao
Brewery, Chinas leading brewer by
market share, illustrates the trend. The
Hong Kong and Shanghai-listed
company says 2016 net profits, due for
release at the end of the month, fell
nearly two-fifths versus the prior year
and has blamed a one-off tax hit as the
culprit. Tsingtao must pay back tax for
an expired preferential rate, but this
accounts for only half of the drop.
Other factors are at play.
Tsingtao commands 30 per cent of
the market in China for packaged take-
home beer, according to Kantar
Worldpanel. The market has been
maturing even as consumer tastes
become more sophisticated. For three
years overall volumes have fallen about
5 per cent annually. The market value,
meanwhile, has risen as premium
products win favour. Incumbents such
as Tsingtao have lost market share.
The company knows it faces
challenges. It has already increased
spending on marketing and
promotions in an attempt to see off the
competition. Distribution and selling
expenses rose 6 per cent in the first
nine months of last year. Tsingtao
should do more. It could start by
acquiring or developing beers more to
the taste of wealthy young consumers.
Investment will cost money and hit
margins. Still, Tsingtao has the means.
The balance sheet is severely
underutilised, with net cash in
September of more than $1.5bn versus
equity of $2.5bn. As the cash has piled
up, returns have slipped. The group
could also make a push overseas.
Tsingtao claims global recognition,
with distribution in more than
90 countries, but in 2015 exports were
still a tiny proportion of total revenues
Kingfisher
share price (pence)
450
400
350
300
250
200
2010 11 12 13
*Financial year ending Jan
FT graphic Source: company, Thomson Reuters Datastream
Decades hence, social historians will
track down the UKs last surviving
do-it-yourselfer. The veteran will
display his hoard of Rawlplugs and
tell war stories of spokeshaves and
grout. Results from consumer-
focused DIY retailer Kingfisher show
Brits are no longer fixer-uppers so
much as caller-uppers of tradesmen.
As with a wall shifting on its base,
cracks will eventually show.
Perhaps for this reason, Kingfisher
no longer publishes a profit number
for Screwfix. This specialist sells tools
and materials to tradesmen online
and from utilitarian warehouses. Its
sales have risen from 518m in 2011
to 1.3bn last year. Group revenues
are meanwhile only 100m higher
than in 2014, at 11.2bn.
at just 1 per cent. Chinese consumers
are saving less and spending more.
Tsingtao must do the same.
Akzo Nobel/PPG:
getting his drift
Akzo Nobels colour of the year is
Denim Drift a greyish navy shade
that perfectly suits the time we live
in. Shareholders would surely agree.
The Dutch paintmakers shares drifted
for two years before US rival PPG made
a bid this month. But if Akzo
accelerates divestitures, the companys
rejection of an improved 22.4bn cash
and shares offer need not leave
investors feeling blue.
Ton Bchner, the chief executive, has
B&Q
Screwfix
5 Poland
4 target on his back
3 Brico Dpt
2 Screwfix UK
1
0 on notice.
14 15 16 17
Without Screwfixs growing
contribution, sales in the UK and
Ireland would have dropped, rather
than rising 2.6 per cent last year.
Assuming the 8 per cent margins
Screwfix disclosed in 2013 persist
today, the unit provides one-eighth of
group store-level profits of 847m.
If Screwfix ever generates one
quarter of group sales, some will
suggest it should be spun off. Analysts
often suggest fast-growing divisions
should be spun off by slow-growing
parents, just as DIYers frequently
wallop their thumbs with hammers.
The theory is that the parts are worth
more than their sum. You could make
the same argument less defensibly for
Kingfishers fast-growing business in
Poland, whose inhabitants still have
earned a hearing. When he arrived in
2012, his priorities were clear. He had
to clean up the conglomerates balance
sheet following the acquisition of
Imperial Chemical Industries and its
retirement fund. He has largely
succeeded. Worries over the pension
deficit are gone while operating
margins have grown 5 percentage
points to 15 per cent thanks to cost
cutting. The share price rallied by a
third before flatlining since 2015.
Mr Bchners current problem is a
lack of growth. The top line has
stagnated for almost a decade. It is
hard to see how PPG would change
that. Nevertheless, a poll by Bernstein
suggests shareholders want Akzo to
engage with PPG at a mooted price of
95 a 7 per cent increase on the
latest offer which is roughly a third
At Jan 2017
0 50 100 150
Russia
Castorama
France
B&Q
UK
Spain
Romania
Portugal
Screwfix Germany
the gritty self-reliance needed to put
up a shelf unaided. In both cases,
chief executive Vronique Laury
would riposte that savings from
common sourcing outweigh any gains
from spin-offs. She hopes to save
500m a year by 2020-21 this way.
But Kingfisher has been promising
to save a lot of money this way for as
long as anyone can remember.
Persuading the British and French to
buy the same self-tapping screws
must be harder than first thought.
Meanwhile, the legacy business is
exposed to waning enthusiasm for
DIY and to politics-related wobbles in
consumer confidence. The issue of
Screwfix a nice problem to have,
after all will become increasingly
hard for Ms Laury to paper over.
higher than the undisturbed share
price. The merged entitys earnings
uplift would come from cost cuts and
perhaps divesting speciality chemicals.
Advantage Mr Bchner. He could
split off the unit himself in a year or
less. A takeover could take longer,
given potential antitrust issues. The
simpler purchase of Valspar by US peer
Sherwin-Williams, announced a year
ago, has been delayed because of
regulatory concerns. In both cases,
earnings uplift would lie even further
off. But rejecting a bid on cultural
differences is a weak ploy, not least
because PPG has operations in the
Netherlands. A defence pointing to the
relative speed and certainty offered by
a spin-off, versus a takeovers inherent
execution risk, would give the refusal a
cheerier hue.
General Electric:
Transformation Underway . . . but
Nobody Cares. That was how activist
investor Trian Partners described
General Electrics pivot from financial
services to industry in 2015, when it
revealed a $2.5bn stake in the group.
Not much has changed. The shares
have risen only 15 per cent since. But
Jeff Immelt, GEs boss, is now officially
Yesterday, GE said it would aim to
reduce overheads in its core industrial
business from $25bn to $23bn between
2016 and 2018, and hit a profit target of
$17bn in 2017. To motivate managers,
existing cash bonus figures will rise
20 per cent if both targets are hit. If
both are missed, bonuses will be cut
20 per cent. Hit one out of the two, and
the status quo prevails.
While GEs shift towards
infrastructure has been celebrated, the
financial results have been slow to
materialise because of the fall in
commodity prices and the strong
dollar. Organic revenue growth for
2016 came in essentially flat, rather
than at the 2-4 per cent that had been
predicted at the end of 2015.
In its 2015 slides, Trian said GE
shares should trade at over $40 by the
end of 2017; that seems implausible
with the shares under $30. The figure
that matters most now is $2.00 the
earnings per share that the Mr Immelt
has pledged to reach in 2018.
GEs new targets delineate the path
to hit that figure. Such reverse
engineering to meet an arbitrary
yardstick is part of the hustle of being a
public company. That GE can simply
find another $1bn of fat to cut as
revenue growth stagnates only
underscores the farce.
Mr Immelts tenure, now a lengthy
15 years, has been a disappointment for
shareholders. Recent reports suggest
Trian has become frustrated with him.
It has voiced support for the new
targets and pay plan, and cares deeply
about how the next nine months
proceed. The GE boss needs to show
similar commitment if he wants to
stick around.
Lex on the web
For notes on todays breaking
stories go to www.ft.com/lex

CROSSWORD ACROSS
1 Clouts cast by insect (6)
5 Eradicate source of pruritis
(itch) (5)
No. 15,505 Set by DOGBERRY 4 Cut around page featuring 6 One in Thames struggling
      
prominent headline (6) with unbelief (7)
8 Froth of liquor giving succour 7 Clown Prince unbounded, one
to one who serves it (7) of five (9)
9 Where to grow fruit or 10 Sweetheart, conceited, holds
 
vegetable (7) fast to sweetheart (9)
 11 Speak ill of one taken in by 13 Incomplete farce maybe
decrease in value (10) turned titillating it gives
 
12 Couple I bumped into on the people what they asked for!
way back (4) (9)
13 Play with a tot first (5) 15 About to get rich without
  
14 Plaudit for commune I initially running to fat (9)
reformed (8) 17 Flashlight illuminating
16 Drug being injected, stay dishcloth? (7)
    Rolling Stone (of sorts) (8) 19 Bird giving name to beer (7)
18 Endlessly dressing bird (5) 21 Waste matter and energy,
20 Relic of damage to cliff (4) lacking refinement (5)
   21 Advisor finding new ruler in 22 Loud part of casino is yours
bed (10) (5)
23 Be in centre, keeping time
  be in hot water here? (7)
24 Dissenter causing present Solution 15,504
convulsion (7) 0 $ 6 6 ( 8 5 7 , 3 7 2 3
  25 Left number unspecified $ / 5 ( ( / (

number back over there (6) 1

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cars (4,5) : 5 , 7 + ( < ) 5 2 1 7 6
Thursday 23 March 2017 13

Nike Antofagasta FedEx Dollar/yen Gold FTSE 100 10-year Brent oil
Italian drama Corporate spoils German Bund
system spooks investors 6.3% 1.7% 1.3% 0.7% $5 0.7% 5bp 0.8%
RACHEL SANDERSON, PAGE 14
$54.35 843.5p $194.83 110.95 $1,249 7324.72 0.41% $50.57

Kepco dashes Toshiba deal hopes Short

3 Korean utility says no to Westinghouse stake 3 Keen to join UK nuclear consortium
View
SONG JUNG-A SEOUL Kepco had been seen by industry sales conditions, including debt and Many experts had thought Kepco
Miles
experts as the only potential acquirer of equity, are decided, he said. Kepcos goal would be interested in taking over West- Johnson
Korea Electric Power Corp has ruled out Westinghouse that would be acceptable Kepco has been in talks for months is to become inghouse, as a way of accelerating its
buying Toshibas controlling stake in from a national security perspective. about investing in NuGen, according to expansion in the global nuclear market.
Westinghouse, but confirmed it is inter- Analysts note that prospective suitors people involved in the process, with the worlds Some analysts said the downturn in Market legend has it that Joe Kennedy managed to avoid
ested in joining the NuGen consortium from China and Russia risk being Toshiba looking to scale back as part of third-largest the nuclear sector and mounting the Wall Street Crash by getting out of the market once his
that is planning to build a nuclear plant blocked by the US and the UK, while its restructuring. The group is keen to uncertainty over the true scale of the shoe shine boy started to offer up hot stock tips. Could it be
in the UK. other possible bidders, including enter the UK nuclear market as part of a exporter of difficulties facing Westinghouse, follow- that the investor of 2017 will look back on retired heavy-
The decision by the South Korean Mitsubishi Heavy Industries and goal to become the worlds third-largest nuclear ing last months disclosure of a $6.3bn weight boxer Mike Tysons recent endorsement of a retail
state-run utility is a blow to Toshibas Hitachi, have ruled themselves out. exporter of nuclear reactors by 2030. writedown may have dimmed the brokerage offering 400 times leverage to clients as a
efforts to find a buyer for its troubled US However, Mr Cho said Kepco would It landed a breakthrough $20bn deal reactors appeal for Kepco of Toshibas US unit. modern day equivalent? With the S&P 500 this week
nuclear subsidiary as the Japanese be keen to take Toshibas 60 per cent in 2009 to supply the United Arab Emir- by 2030 Global interest in building new suffering its worst one-day slide since October, analysts at
conglomerate grapples with the worst stake in NuGen, pending more clarity on ates with four reactors but has failed to reactors is decreasing, especially in Northern Trust have drawn up a list of warning signs that
financial crisis in its history. the sale conditions. The basic sales win a single commercial contract since. advanced countries, and we dont know suggest a rally based on hopes of global reflation is look-
Cho Hwan-eik, Kepcos president, structure has not been set yet although Kepco is now eyeing potential nuclear how much in further losses Westing- ing increasingly brittle.
said yesterday: We have no plan to intense negotiations are going on deals in South Africa and Saudi Arabia, house would incur, said Suh Kyun-ryul, Aside from anecdotal signs of exuberance, such as
acquire Toshibas stake [in Westing- between the UK and Japan. We will be in addition to the UK project, aiming to professor of atomic engineering at Seoul Mr Tysons new venture and President Donald Trumps
house] . . . there is no role for us there. the first to jump into the race once the sell six more reactors by 2020. National University. tweets of joy at the great level of confidence and opti-
mism, Northern Trust worries that the price-to-sales
ratio for the S&P is close to a record high, and that US equi-
ties have grown to account for close to 40 per cent of global
equity value in spite of making up only a quarter of global
gross domestic product. Other portents of a tiring bull
Akzo brush-off market they identify include the fact that US transport
Sweetened bid by stocks have started to underperform the wider market in
spite of the fall in the price of oil (which should be good
rival PPG rejected news for airlines), and the recent signs that the US vehicle
finance market is starting to slow. Somewhat puzzlingly,
large institutional investors who have embraced the post-
election rally themselves appear to be fretting about possi-
Akzo Nobel, the Dutch paints and ble over-exuberance. A recent Bank of America Merrill
chemicals group, yesterday rejected a Lynch survey of large fund managers says stocks are the
revised 22.4bn bid from US rival PPG most overvalued since the dotcom bubble.
Industries. This will make uneasy reading for anyone who has
The maker of Dulux paint said the blindly leapt into US equities since November based on
second offer, which was 1.5bn higher vague macroeconomic views. But in confusing times, there
than PPGs initial approach earlier this is one guide that all sensible investors should rely on:
month, undervalued the company and value, or in other words the price they pay versus the value
its prospects, and did not address the they receive. US equities are, in aggregate, expensive rela-
significant uncertainties and risks for tive to their historic levels and myriad uncertainties loom
shareholders and other stakeholders. It over the market. Anyone buying shares today should pay
also warned a tie-up would lead to less attention to politics and ask themselves one question:
substantial divestitures on competition if the price of the stock you purchase halves tomorrow, is it
grounds, as well as job cuts. still so good or cheap you would buy more? If the answer is
However, three large shareholders in no then maybe you should not be buying at all.
Akzo including activist investor Elliott
Advisors urged the company to enter S&P 500
talks with PPG, with one warning that Forward price/sales ratio
2.0
the Dutch groups management was
losing credibility.
PPGs advance has attracted criticism 1.5
from politicians in the Netherlands, who
are worried about job losses and the
countrys corporate champions being 1.0 US equities are,
picked off by larger rivals. The US in aggregate,
groups first bid came during the Dutch expensive relative
election campaign and just weeks after 0.5 to their historic
Kraft Heinzs failed bid for Unilever, the 2007 09 11 13 15 17 levels and myriad
Anglo-Dutch consumer group. Source: Thomson Reuters Datastream uncertainties loom
Lex page 12 over the market
Analysis page 14
miles.johnson@ft.com

Ex-Disney chief Eisner in advanced

talks to buy English football club
MURAD AHMED, MATTHEW GARRAHAN consent to a full acquisition or insist that Portsmouth has suffered a steady fall
AND DAVID BOND LONDON
Mr Eisner settles for a smaller stake. from grace since being relegated from
Michael Eisner, the former chief execu- An investment in Portsmouth would the top division in 2010, and entered
tive of Walt Disney, is in advanced talks be Mr Eisners first step into profes- administration with more than 60m in
to buy Portsmouth FC, becoming the sional sports ownership, although he debts. Out-of-court settlements
latest international corporate figure to has previously had an eye on the sector. between the former owners and admin-
seek an investment in English football. In 2007, alongside Madison Dearborn istrators allowed the PST to taketheclub
Baidu suffers AI setback Partners, the private equity group, he over, bringing it out of administration in
after top scientist quits Several people briefed on the discus- bought Topps, a trading card company 2013.
sions said Mr Eisner was in the final that has a licensing deal with several US The PST said: Retaining an owner-
Chinese search engine Baidu has been stages of takeover talks through his professional leagues and the English ship stake will be central to any discus-
dealt a blow after leading artificial media investment vehicle The Tornante Premier League, in a $385m deal. sions we enter into.
intelligence expert Andrew Ng said he Company. Portsmouth play in League Mr Eisners office said: We dont Portsmouth FC said: If we reach a
was leaving the company after three Two, the lowest in Englands profes- comment on rumours or speculation. point where such an offer of investment
years. Baidu sees AI as a future sional league structure. Several wealthy individuals and into the club is made, then ultimately it
revenue source as its core search Negotiations remain at a delicate corporations have sought takeovers of will be for all our shareholders of
business becomes less lucrative. stage, as it is unclear whether the Pom- English football clubs in recent years, which the PST is the single largest to
Analysis i PAGE 15 pey Supporters Trust (PST), the fans although most have focused on the Pre- decide whether such new investment
group and majority shareholder, will mier League, the wealthy top division. would be in the clubs best interest.

Companies / Sectors / People

Companies
AIG....................................................................11
AT&T Mobility...........................................11
Aberdeen Asset Management........21
Aetna...............................................................21
Airbnb............................................................16
Akzo Nobel......................................12,13,14
Alibaba...........................................................15
AllFunds Bank...........................................14
Alsea.................................................................9
Amazon.........................................................16
American Apparel...................................17
Amundi..........................................................14
Arch Capital................................................14
Avaloq............................................................14
Avocis.............................................................17
Aropostale.................................................17
BP.................................................................9,20
Royal Dutch Shell .................................20
Baidu...............................................................15
Basic Element..............................................2
Bats Europe...............................................20
Berendsen....................................................21
Bharti Airtel.................................................11
BlackRock....................................................22
Bloomberg..................................................20
BrokerTec...................................................20
Burger King..................................................9
CBOE..............................................................20
CME................................................................20
Capita..............................................................17
Chevron .........................................................9
Cnooc................................................................9
Columbia Threadneedle......................14
Connaught...................................................17
Coursera........................................................15
Credit Suisse..............................................14
DRW...............................................................20
Deutsche Bank..........................................14
Deutsche Brse.......................................20
Deutsche Telekom..................................11
Dow Jones..................................................20
EBS..................................................................20
Elliott Advisors.........................................14
Emaar.............................................................16
English Premier League......................13
Equinix..........................................................20
Euronext......................................................20
Evergrande..................................................16
ExxonMobil.............................................9,20
FIS.....................................................................14
FedEx..............................................................21
G4S...................................................................17
GAC..................................................................17
Geely...............................................................17
General Electric........................................12
Geo...................................................................17
Goldman Sachs...................................14,16
Great Wall....................................................17
Greenland Holdings...............................16
Henderson Global Investors.............14
Herms...........................................................17
Hitachi............................................................13
IAG....................................................................21
Idea Cellular.................................................11
Iliad...................................................................11
Instagram.....................................................14
Interactive Data......................................20
Intercontinental Exchange...............20
Interserve.....................................................17
Interxion.......................................................20
JPMorgan Chase................................14,17
Jackpotjoy....................................................21
Jarvis...............................................................17
Kingfisher ...................................................12
Kohls...............................................................17
Korea Electric Power Corp................13
Kraft Heinz..................................................14
Landbridge ..................................................6
Leonardo......................................................14
Letica..............................................................21
Macys.............................................................17
Merlin Entertainments..........................21
Microsoft.......................................................15
Mitie.................................................................17
Monte dei Paschi di Siena.................14
Morgan Stanley........................................14
Naspers.........................................................16
Nex..................................................................20
Nike..................................................................21
Noon................................................................16
PPG Industries...............................12,13,14
Pimco..............................................................22
Portsmouth FC..........................................13
Poste...............................................................14
RPC..................................................................21
Reliance Industries..................................11
Rusal..................................................................2
SFR....................................................................11
Santander.....................................................14
Sears................................................................17
Serco...............................................................17
Snap................................................................14
Souq.com......................................................16
Standard Life.............................................21
Starbucks ......................................................9
Swiss Re........................................................14
T-Mobile........................................................11
Tencent.........................................................15
Terna..............................................................14
Thomson......................................................20
Tiger Global Management.................16
Toshiba..........................................................13
Tsingtao Brewery....................................12
Tujia.................................................................16
UniCredit......................................................14
Unilever.........................................................14
VEB..................................................................14
Van Elle.........................................................21
Verizon...........................................................11
Vigilant.........................................................20
Vodafone.......................................................11
Volvo...............................................................17
Walmart...........................................................9
Walt Disney.............................................6,13
Warburg Pincus........................................14
Westinghouse............................................13
Xiaozhu..........................................................16
Mitsubishi Heavy Industries.............13
Sectors
Aerospace & Defence...........................14
Automobiles................................................17
Banks...................................................14,16,17
Chemicals.....................................................14
Financial Services.................14,16,20,22
Financials...................................14,16,20,22
Food & Beverage....................................14
Healthcare...................................................17
Industrial Goods...................................2,14
Industrials....................................................14
Media...............................................6,14,15,16
Oil & Gas.....................................................20
Personal & Household Goods.........17
Property..................................................16,17
Retail...............................................................16
Retail & Consumer......................14,16,17
Support Services................................14,17
Technology......................................14,15,16
Travel & Leisure......................................16
People
Aigrain, Jacques.......................................14
Alabbar, Mohamed.................................16
Almanza, Ashley.......................................17
Bennett, John............................................14
Bchner, Ton.............................................14
Caio, Francesco........................................14
Chesky, Brian.............................................16
Cossey, Jonathan....................................14
Deripaska, Oleg..........................................2
del Fante, Matteo...................................14
Dudding, David.........................................14
Dumas, Axel................................................17
Fernndez, Francisco............................14
Horbury, Peter..........................................17
Hwan-eik, Cho...........................................13
Immelt, Jeff.................................................12
Krause, Stefan...........................................14
Lampert, Eddie.........................................17
Lau, Martin..................................................15
Li, Robin........................................................15
Ma, Pony.......................................................15
Ma, Jack........................................................15
Marn, Javier...............................................14
McGregor-Smith, Ruby.........................17
Moretti, Mauro..........................................14
Mouchawar, Ronaldo.............................16
Ng, Andrew.................................................15
Parker, Andy...............................................17
Profumo, Alessandro............................14
Qi, Lu...............................................................15
Quarles, James..........................................14
Ringrose, Adrian......................................17
Soames, Rupert........................................17
Wilson, Don................................................20
Zhang, Daniel.............................................15
Zilberman, Daniel....................................14

The Financial Times Limited 2017 Week 12

14 FINANCIAL TIMES Thursday 23 March 2017

COMPANIES
INSIDE BUSINESS
Media
EUROPE

Instagram advertiser numbers top 1m Rachel

Sanderson
Monthly active figure for James Quarles, vice-president of such as designing their own lenses or fil- 400m sive video format. Small businesses are
Instagram business, said the service had ters to overlay on peoples images. using it to do a walk through the store, a
Facebook app up fivefold Daily active users,

in a year after shake-up

HANNAH KUCHLER SAN FRANCISCO
Instagram has more than 1m monthly
active advertisers, up fivefold from last
year, after it transformed the app and
harnessed Facebooks infrastructure in
the face of heightened competition from
focused on making it easier for even
small businesses to make creative vid-
eos, with tools such as boomerang,
which creates mini-loops, and Hyper-
lapse, which speeds up footage.
About 80 per cent of Instagrams
600m monthly active users now choose
to follow a business on the platform, and
120m have interacted with a business
this month.
But it is still significantly smaller than
Instagram: with 150m daily active users
to Instagrams 400m. Snap is forecast to
compared with
150m for Snap
hairstyle tutorial or go behind the
scenes before a big launch, he said.
Instagram also has more granular
Italys corporate spoils
generate $770m in revenue this year, up
158 per cent, but far smaller than the
80%
Portion of monthly
data than Snapchat and benefits from
being able to sell to marketers at the system spooks investors
$3.2bn Instagram is set to contribute to
Facebooks top line, according to
research firm eMarketer.
active users
following a business
same time as they are buying ads
through Facebooks platform.
Mr Quarles said Instagram planned to
as Caio says goodbye
Instagram has copied one of Snap- provide more insights to businesses,
chats key features the 24-hour photo such as automatically advising them on

Snap.
The photo app, once known simply
for its pretty filters, has expanded to
allow users to communicate with the
8m businesses that have accounts,
including directly contacting them, ask-
ing for directions to a physical store, or
buying online.
These are big milestones. This scale
and diversity puts us in rare company,
said Mr Quarles.
Snap, the owner of Snapchat, had
been rapidly increasing revenue in the
past year as it prepared to go public. The
app has a young, engaged audience and
unusual creative options for advertisers,
Chemicals. Tie-up offer
collection known as a story and is
already selling advertising in Instagram
stories. Mr Quarles said many small
businesses were advertising in stories as
an easy way of creating their own video
ads, which were previously expensive
and time-consuming.
Stories is also a full-screen immer-
which posts would be best to promote,
and in a few months it will allow users to
book services such as hairdressers
through the platform.
But social media sites are still trying to
work out how to increase purchases
made on their platforms, after launch-
ing buy buttons a couple of years ago.
I
talys triennial spoils system, in which the govern-
ment parcels out the top jobs in some of its biggest
companies, is always a drama.
This years spectacle involves the entrance of Ales-
sandro Profumo, who has been proposed as chief
executive of Leonardo, the state-backed defence group,
and the exit of Francesco Caio, chief executive of Poste
Italiane.
Shares in both companies have fallen on the decisions
and investors do not have to look hard to see why. Though
Mr Profumos appointment must be approved by share-
holders, that is seen as a formality given the states 30 per
cent stake. It caps a remarkable rise, fall and rise for the
former banker with ties to centre-left politicians. Mr Pro-

Akzo Nobel urged to hear out US suitor
Critics say Dulux makers
rebuff to PPG goes against
tide of sector consolidation
MICHAEL POOLER AND JENNIFER
THOMPSON LONDON
DUNCAN ROBINSON BRUSSELS
Three large shareholders in Akzo Nobel
have urged the company to enter into
talks with PPG Industries after the
Dutch paints and chemicals group
rejected a revised 22.4bn takeover
attempt from its US rival.
The latest unsolicited bid from PPG
represented a 1.5bn improvement on
an earlier offer, made on March 9, but
Akzo Nobels two boards again rejected
it unanimously.
Akzo Nobels instant rebuff goes
against the tide of large-scale consolida-
tion sweeping the broader chemicals
sector and drew criticism from several
investors, with one warning that the
management was losing credibility.
The maker of Dulux paint said the
second offer, worth 88.72 per share
and made on March 20, undervalued
the company and its prospects. It also
The management
team is rapidly
losing credibility
John Bennett, Henderson
said the proposal did not address the
significant uncertainties and risks for
shareholders and other stakeholders
and warned a tie-up would lead to sub-
stantial divestitures on competition
grounds, as well as job cuts.
Combining the groups would be likely
to attract stiff scrutiny from antitrust
regulators because it would create a
dominant group in the $130bn paints
and coatings market.
Activist investor Elliott Advisors, a
top five shareholder with more than
3 per cent of the stock, said that while
the offer price was inadequate, it pro-
vided a credible basis for engagement.
The hedge fund urged Akzo Nobels
management to engage with PPG
immediately to determine whether the
US group was prepared to bid higher
and address all relevant stakeholder
considerations.
Two other top-20 shareholders ech-
oed Elliotts position, suggesting that
Akzo Nobels chief executive, Ton Bch-
ner, faced rising investor dissent as he
sought to see off a hostile buyout of one
of Europes oldest industrial companies.
We see strong logic in a combination
of Akzo Nobel and PPG and the poten-
tial benefits this offers all stakeholders.
An Akzo Nobel Akzo needs to recognise this and
employee at engage, said David Dudding, portfolio
work in a manager at Columbia Threadneedle.
German facility John Bennett, head of European equi-
where bromine ties at Henderson Global Investors, said
is extracted Akzo Nobel should hear out PPG on
from chlorine. its proposal.
The Dutch group He said: If you dont think its right,
has spurned a present a recommendation to the board
22.4bn move and shareholders [to vote on]. The
by PPG management team is rapidly losing
Industries credibility.
Hendrika Schmidt/dpa
VEB, a Dutch investor group, called
for the company to consider the deal.
Paul Koster, director, said: They
cant just shut the door. I can under-
stand them saying it is too low. But when
a second bid comes in from a serious
player, then you should talk to each
other.
PPGs new cash and stock offer was
worth a total of 88.72 per share. Of this,
56.22 was in cash and 0.331 in PPG
shares. Shares in Akzo Nobel fell 1.1 per
cent to 75.75 yesterday.
There was some confusion over the
value of the bid. PPG put the offer at 90
per share including a dividend, for a
total value of 22.70, but Akzo Nobel
said that included a payout which share-
holders would receive regardless.
PPGs advance has attracted criticism
from politicians in the Netherlands,
who are worried about job losses and the
countrys corporate champions being
picked off by larger rivals.
Their response was especially fierce
as PPGs first bid came during an elec-
tion campaign and just weeks after
Kraft Heinzs failed bid for Unilever, the
Anglo-Dutch consumer group.
Dismissing the new bid yesterday,
Akzo Nobels management complained
that there was a significant culture
gap between the two companies.
In his defence, Mr Bchner said the
group had listened carefully to share- Dutch groups corporate governance has
holders and taken their views into con-
sideration when arriving at the decision.
Analysts were doubtful whether PPG
would return with a third offer.
Jeremy Redenius, analyst at Bern-
stein, said that a survey of investors car-
ried out by the brokerage found inves-
tors had been hoping for 95 a share.
We think PPG knew they needed a
second bid in the 90s to get engage-
ment from Akzo (eg, opportunity to do
due diligence) and elected to not be
aggressive enough, which calls into
question their desire to return with a yet
higher offer.
The latest bid will pile pressure on Mr
Bchner to explain his plans for the
company, which is planning to sell or
float its specialty chemicals business to
focus on paints and industrial coatings.
During five years at the helm of the
group, which traces its roots to Swedish
inventor Alfred Nobel, Mr Bchner has
concentrated on making Akzo Nobel a
more efficient operation. But analysts
say the companys stock trades at an
earnings multiple discount to its peers, a
situation that can make it more suscep-
tible to takeover attempts.
If PPG returns with a higher bid, the
to the possibility that their power will be swept away by a
a decades-old provision that creates a
foundation with priority shares, which
acts as a poison pill to protect the
incumbent board and prevent a hostile
takeover.
But Elliott suggested that it might
attempt to convene an extraordinary
general meeting, at which members of
the management and supervisory
boards could be voted out, should Akzo
Nobel not accede to the shareholders
requests for engagement.
Additional reporting by Alice Ross
in London
See Lex
fumo made an inglorious exit from UniCredit in 2010 after
15 years as chief executive pocketing a 43m golden
goodbye with the share price down 85 per cent. But he then
salvaged his reputation with the centre-left government
by agreeing to be chairman of Monte dei Paschi di Siena as
it teetered on collapse.
The Leonardo job is seen as a reward for his time in the
trenches at Monte dei Paschi which he did for reduced
pay and his emergence as a politically trusted pair of
hands at a sensitive time. He replaces Mauro Moretti, who
is appealing against his conviction and seven-year prison
sentence for his role in a 2009 rail crash that killed 32 peo-
ple in the Tuscan town of Viareggio. While Mr Profumo has
a record of internationalising a business at UniCredit,
investors are sensitive about his lack of defence industry
experience. The share price lost 6 per cent in two days
against a flat Milan blue-chip index.
Mr Caio, meanwhile, departs after successfully taking
the post office public two years ago and overseeing a 13 per
cent rise in net profit last year. A well respected if prickly
manager who previously turned Avio, the aerospace
group, round and sold it to General Electric, he declared
he would have been reconfirmed in the job in a normal
country. The shares have recovered from their initial fall
but still troubling for investors are reports corroborated
by people involved that Mr Caio had annoyed the centre-
left government by being too independent. He declined to
use Poste Italiane to help
Monte dei Paschi avoid a
state bailout, one scheme
Troubling are
proposed by Rome last year. reports that the
More crucial, say people
involved, was the fact that he
Poste Italiane
opted not to bid top dollar for chief annoyed the
Pioneer, UniCredits funds
business. Instead, it went to
government
Frances Amundi. Mr Caio
will be replaced by Matteo del Fante, a former JPMorgan
banker who was most recently boss of Terna, the state grid
group, and is close to Matteo Renzi, former prime minister.
These changes come as Italys political environment is
shifting. Mr Renzi resigned in December after a crushing
referendum defeat ended three years of political stability
that had been welcomed by investors and threw the cen-
tre-left into disarray. A poll published in Corriere della
Sera on Tuesday showed the populist Five Star Movement
is emerging as Italys most popular party with a 32.3 per
cent share versus 26.6 per cent for the centre-left.
Mauro Baragiola, an analyst at Citi, argues that Five
Stars popularity is accelerating due to the many mistakes
of centre-left leaders including the recent appointment
of top management of state-owned companies. Wolfango
Piccoli, a Teneo analyst, calls the new appointments out-
right nepotism. It is a far cry from three years ago when
Mr Renzi, newly come to power, pledged to be a reformer
and make appointments based on merit and transparency.
One chief executive in Milan describes the atmosphere
in Italys boardrooms today as one of the ultimo treno the
last train. A generation of managers is scrambling to adjust
populist change of guard amid a worsening macroecon-
omy. Italys debt-to-gross domestic product ratio is nearly
133 per cent, one of the worlds largest relative to the size of
its economy, and still rising. Growth has stagnated for
more than a decade and 40 per cent of young people are
out of a job.
The accepted wisdom among business leaders and
bankers is that Italy will be uninvestable if Five Star
comes to power. With the movements chaotic administra-
tion in Rome under Virginia Raggi, its mayor, being inves-
tigated for abuse of office and a top aide in jail for corrup-
tion, the omens are not good. But in the meantime the rul-
ing elite is spooking investors on its own.
rachel.sanderson@ft.com

Banks Financials

JPMorgan climbs up prime brokerage rankings Warburg Pincus takes banking software stake
LINDSAY FORTADO
HEDGE FUND CORRESPONDENT
JPMorgan Chase is moving up the
prime brokerage market, beating
Goldman Sachs for second place in the
rankings of banking advisers to hedge
funds.
Morgan Stanley held the top spot while
Goldman slipped to third, according to a
closely followed annual ranking by rev-
enue compiled by Coalition, the indus-
try monitor.
JPMorgan, which is aiming to reach
the top spot, is prepared to take more
risk in the area because it expects prime
to bring in halo revenue by driving
more business to its equities arm and
electronic trading platform.
Its been a combination of tremen-
dous investment in infrastructure from
2011 onwards that buoyed its perform-
ance, said Jonathan Cossey, global co-
head of prime brokerage at JPMorgan.
We now genuinely have a global prod-
uct offering.
Prime brokerage, which offers securi-
ties lending, cash management, trading
and other services to hedge funds, came
under scrutiny by management during
the financial crisis as a capital-intensive
unit. Regulations around banks fund-
ing requirements have hurt prime bro-
kerage, since prime brokers often
finance their clients holdings by
extending credit, inflating their balance
sheet as a result.
Many of the largest banks responded
by reining in the number of clients they
served to focus on the largest and
most lucrative funds. But some banks,
especially those in the US who were
forced to clean up their balance sheets
the quickest, are returning to the area.
The hedge fund industry began to
contract last year, with investors pulling
$110bn from the $3tn industry, accord-
ing to the data provider eVestment.
That trend continued into January, with
funds seeing further redemptions. As
performance improves and managers
agree to reduce some fees, the industry
is likely to see money return, however.
JPMorgan started its prime brokerage
division in 2008 with the acquisition of
Bear Stearns. In 2014, it set up an Asia-
specific prime platform.
Revenue from the division has risen
22 per cent since 2014, with the biggest
growth coming from Europe and from
quantitative funds, which trade using
computer algorithms.
Goldman declined to comment.
JAVIER ESPINOZA
PRIVATE CAPITAL CORRESPONDENT
Warburg Pincus, the private equity
group, is to pay close to SFr300m
($303m) for a minority stake in Swit-
zerlands largest provider of software
to banks.
The acquisition of a 35 per cent stake
valued Avaloq at more than SFr1bn,
Warburg Pincus said.
European banks are under pressure
from regulation, the need to hold more
capital and low interest rates. Some are
looking to cut costs by outsourcing soft-
ware functions.
Warburg Pincus was seeking to capi-
talise on that trend, said Daniel Zilber-
man, its European head.
It planned to expand Avaloq and help
it become a leader in the jurisdictions
in which it operated, he added. The
bet is that not only are we going to domi-
nate in Switzerland, said Mr Zilber-
man. We are going to make it a great
German product and a great Singapo-
rean product and eventually a great glo-
bal product.
Avaloq was also one of the few uni-
corns available in Europe, said Mr Zil-
berman, using a term for private com-
panies valued at more than $1bn.
The software provider has more than
2,000 employees and serves 155 banks
and wealth managers in London, Frank-
furt, Paris and other financial centres.
It generated revenues of SFr533m in
2016, a 10 per cent increase on the previ-
ous year.
Warburg Pincus has recruited several
banking figures to sit on the Swiss
groups advisory board, among them
Javier Marn, former chief executive of
Santander, Stefan Krause, former chief
financial officer at Deutsche Bank, and
Jacques Aigrain, former chief executive
at Swiss Re.
Francisco Fernndez, founder of
Avaloq, will retain a 28 per cent stake.
Management and employees will keep
27 per cent.
Warburg Pincus, which becomes the
largest shareholder, said it foresaw a
seven-year involvement.
The buyout group has invested more
than $10bn in 90 financial services and
financial technology companies includ-
ing AllFunds Bank, Arch Capital and
FIS, which went from a $2bn to a $35bn
company.
JPMorgan, Credit Suisse and Deutsche
Bank are lenders for the deal, with Deut-
sche also acting as adviser.
Thursday 23 March 2017 FINANCIAL TIMES 15

COMPANIES

Baidus ambitions hit by loss of top AI expert

Ngs exit after three years as head scientist is a setback for the New York-listed Chinese search engine as it expands
YUAN YANG BEIHAI
Signs of intelligence
Andrew Ng, a leading artificial intelli- Timeline
gence expert, is to leave Baidu after just
three years, dealing a blow to the
Chinese companys ambitions to
become a world leader in a technology it Research progress on the
says is its key strategic focus for the
next decade.
road and in language lab
Having participated in the AI trans-
formation of two large tech companies,
Im excited about looking elsewhere, July 2013: Baidu establishes its
said Mr Ng, who is widely regarded as Institute of Deep Learning (IDL)
one of the worlds top AI authorities. May 2014: Andrew Ng joins Baidu Big
New York-listed Baidu has turned to Data Lab and Silicon Valley AI Lab
AI as a future source of revenue, as its established
core search engine becomes less lucra- Dec 2014: Breakthrough in Baidus
tive operating profit in the final quar- Deep Speech project on voice-to-text
ter of 2016 fell 38.2 per cent year on year transcription
to Rmb2.2bn ($320m), dented by a Sep 2015: Public demonstration of
highly publicised advertising scandal on smartphone augmented-reality
Baidu.com. technology
Most of the Rmb20bn ($2.9bn) that Dec 2015: Deep Speech 2 surpasses
Baidu has spent on research and devel- human speech recognition of
opment over the past two-and-a-half Mandarin Chinese using Baidus
years has been spent on AI, according to benchmarks
Robin Li, chief executive. Dec 2015: First public demo of
Although Baidus early-stage AI autonomous driving and successful
projects, such as driverless cars, do not Baidus mobile newsfeed ad revenues Chinese mobile ad revenue market share road tests of autonomous cars in
yet generate revenue, the group has Beijing. Autonomous Driving Unit
promised to dedicate more resources to News feed As a % of As a % of Market Per cent established as a separate unit from Mr
hire the worlds top AI talent one of advertising advertising revenues share 100 Ngs research teams
the main roles played by Mr Ng at Baidu. (Rmb bn) revenues (%) (%) (%) Apr 2016: Baidu Artificial Intelligence
Born in the UK, raised in Singapore Other 80 group formed October 2016: Launch of
and based in California, Mr Ng joined 15 14 14 14 Melody, a conversational medical
Baidu in May 2014 from Coursera, the 12 12 12 Tencent 60 assistant who helps diagnose
online education platform that he co- patients
founded. He also founded the Google 10 10 10 10 Baidu Nov 2016: The tourist town of
8 8 8 40
Wuzhen uses Baidus facial recognition
Having participated in the 6 6 6 gates to verify visitors identity
5 20
4 4 4 Alibaba Jan 2017: Augmented Reality Lab
AI transformation of two 2 2 2
established: launch of DuerOS, a
0
tech companies, Im excited 0 0 0 0
computing platform for voice-enabled
digital assistants
2017 19 2017 19 2017 19 2017 19 2016 17 18 19
about looking elsewhere Feb 2017: Deep Voices text-to-speech
Sources: Jefferies; eMarketer synthesis technology revealed

Brain project, which used computers to
mimic the neural networks in human
brains.
Some 1,300 AI researchers report
directly to Mr Ng. They are spread
across Baidus research labs, as well as
teams working on technologies such as
speech recognition, big data and explor-
ing new business applications for AI.
AI research is important for Baidu
marketing itself as a cutting-edge place
for engineers to work. A graduate stu-
dent wondering why they might join
Baidu versus Google would look to the
companies reputation in AI, said
Dhruv Parthasarathy, lead engineer at
Athelas, a start-up that applies AI to
healthcare.
Attracting AI-versed engineers is
important for facilitating Baidus trans-
$2.9bn formation from a desktop website to a
Amount Baidu has mobile-oriented search app, with fea-
spent on research tures such as voice input.
and development in If AI can be used to develop accurate
two-and-a-half voice and image search, thats infinitely
years, mostly on AI more attractive than text-based search
for the mobile user, which will in turn
1,300 attract more advertisers, said Mark
Number of AI Natkin of Marbridge Consulting, a tech
researchers who consultancy in Beijing.
reported directly to Baidus core revenue source Chi-
Mr Ng at Baidu
nese advertisers is increasingly
focused on mobile rather than desktop
users. But over the next two years, some
consultants predict that Baidu will lose
market share in mobile ad revenues
compared with competitor Tencent,
whose WeChat social messaging app was
designed primarily for mobile.
AI engineers are also used to develop
Baidus long-term business goals in driv- ment, said Pedro Domingos, a compu- Attracting
erless cars and speech recognition for ter science professor at the University AI-versed
Duer, its Amazon Alexa-like digital of Washington, explaining that such engineers is
assistant. techniques were used to predict the important for
As well as AI talent, raw data are vital probability that someone would click facilitating
for training the machine-learning on an ad crucial information for Baidus
algorithms used in AI, which are able to marketers. transformation
improve themselves from exposure to But what marketers want even more from a desktop
more data. Baidu has strengths in this is profiles of users, which social media website to a
field, especially due to comparatively companies such as Tencent have and mobile-oriented
lax data privacy laws in China. where Baidu trails, according to Philip search app
AP Photo/Alexander F. Yuan
Big data, and lots of data, are really Beck of Dubeta, an angel investment
useful for pattern recognition. In terms group focused on Chinese technology.
of user base, Baidu is in the same league In a move reminiscent of Google push-
as Google, said Jrgen Schmidhuber, ing its Google+ social network, Baidu is
director of the Swiss Institute for Artifi- trying to get more users to sign in on
cial Intelligence. its app as well as spend more time on its
[Baidu is] already monetising AI in a mobile news feed.
big way by using deep learning for Baidu said it would not appoint a
things like web search and ad place- direct replacement for Mr Ng, but
instead would consolidate its technol-
ogy teams into the AI Group, which will
be headed by Haifeng Wang, currently
vice-president.
The April departure of Mr Ng has
been cushioned by the recent hiring of
Lu Qi, previously global executive vice-
president at Microsoft and a leading
expert in the field of AI, as Baidus new
chief operating officer.
Mr Ng said he had been thinking for
some time about leaving Baidu, and
that the appointment of Mr Qi made it
much easier to do so. In a blog post, Mr
Ng said: Baidus AI is incredibly strong,
and the team is stacked up and down
with talent; I am confident AI at Baidu
will continue to flourish.
In the future I want AI to be as perva-
sive as electricity is today, he added.

Media Technology

Tencent margins hit by Alibaba kicks off plan for

higher content costs
LOUISE LUCAS HONG KONG
Rising content costs hit profitability at
Tencent, the Chinese social media
group, which unveiled annual net
income of Rmb41.4bn ($5.97bn) for
the year to end-December below
Bloombergs consensus analyst fore-
casts of Rmb44.1bn.
Shenzhen-based Tencent, the most
highly valued stock in the emerging
market universe with a market capitali-
sation of $270bn, still displayed strong
growth.
Net profit was up 42 per cent year on
year and revenues surged 48 per cent to
Rmb151.94bn on the back of games
including Honor of Kings, which contin-
ued to dominate domestic gaming
charts. But the annual operating margin
shrank from 39 per cent to 37 per cent.
The numbers confirm Tencents role
as an ecosystem of gaming, chatting
and payments and part of the fabric of
life in China. Its social platforms
WeChat and Weixin had 889m monthly
active users at the end of last year.
Mobile gaming will continue to be a
key focus, said Pony Ma, chairman and
chief executive: Mobile gaming is
developing rapidly in China as well as
globally, therefore we are focusing and
going to increase investment and attach
great importance to the ecosystem of
games.
However, fourth-quarter revenue
growth of 16 per cent year on year
lagged behind annual growth of 25 per
cent, leading Benjamin Wu, senior ana-
lyst at digital research consultancy
Pacific Epoch, to say the fourth quarter
was a weak season for the company.
Even so, he predicted that Tencent
would continue to dominate Chinas
gaming market, especially in mobile,
where he forecast the overall Chinese
industry would grow 20 to 30 per cent
year on year.
Tencent last year paid $8.6bn for a
majority stake in Clash of Clans devel-
oper Supercell, and will receive its
maiden dividend from the company in
the current quarter.
Tencent, like its local rivals Baidu and
Alibaba, is paying more for original con-
tent in a bid to keep users on its site.
Known collectively as BAT, the three are
eagerly buying up content, especially in
sports and blockbuster movies, and the
cost is dragging down margins.
Tencent has exclusive rights in China
to show the NBA basketball champion-
ships, for which it charges between
Rmb22 and Rmb60 a month depending
on the subscription package, as part of
its freemium model that offers some
content free and charges at the pre-
mium end.
Martin Lau, president and executive
director, noted too that as video sub-
scribers grow, there is less opportunity
to load ads at the beginning.
Elsewhere, mobile payments and
cloud computing also grew rapidly. Ten-
cent is signing up more bricks and mor-
tar merchants to its payments arm,
including Starbucks coffee shops in
China. But neither unit is a big producer
of profits rather, they encourage cus-
tomers to stay within the ecosystem.
Mr Lau said Tencent was planning to
spin off its online literature arm, Yue-
wen, on the Hong Kong stock exchange.
Tencent is paying more for original
content to keep users on its site
frontier-free global trade
LOUISE LUCAS HONG KONG
Alibaba has kicked off its grand plan
for global trade without frontiers, sign-
ing a bilateral deal designed to ease the
passage of goods shipped by smaller
businesses between Malaysia and
China.
The pact, established as a public-private
partnership in Malaysias digital free
trade zone, is focused on infrastructure,
including a fulfilment centre and co-
operating on electronic payments and
financing.
Daniel Zhang, chief executive of the
Chinese ecommerce group, said that
discussions with the Malaysian govern-
ment were continuing to ensure that
participants would be granted the best
trade terms.
The move sees a Chinese private com-
pany take the initiative on dismantling
borders at a time when global free trade
pacts are being thwarted and protec-
tionism is the new mantra of the US
under Donald Trump.
The bilateral pact is the first of a
patchwork of agreements that ulti-
mately aims to enable small and medi-
um-sized businesses to trade freely
across the globe and further the ecom-
merce groups ambitions of securing
2bn customers in the next decade.
First hatched by Alibaba founder and
chairman Jack Ma at the G20 summit in
Hangzhou last year, the electronic world
trade platform (eWTP) is envisaged as a
set of international rules to pull down
barriers to ecommerce and help small
and medium-sized enterprises conduct
cross-border trade.
Mr Ma sees the initiative operating as
a sort of parallel World Trade Organisa-
tion for SMEs, with business in the lead
and governments playing a supporting
role rather than being in the driving
seat.
As in the case of Malaysia, which is
embracing the eWTP as part of its own
economic and strategic goals, govern-
ments would need to create virtual free
trade zones for SMEs where, ultimately,
SMEs can sell goods to consumers over-
seas with low or zero import duties and
speedy customs clearance.
Malaysia becomes the first participat-
ing country outside China, where a hub
has been developed on Alibabas home
turf of Hangzhou, and a third is
expected to follow shortly.
Najib Razak, Malaysia prime minis-
ter, said that the countrys role as an
early participant would provide a
plethora of opportunities for Malaysian
organisations.
Mr Ma said that the addition of Malay-
The initiative is politically
savvy, as China inherits
the globalisation mantle
formerly carried by the US
sia on the eWTP will go a long way
towards making global trade more
inclusive and provide much needed
support to a hugely important constitu-
ent: SMEs and the younger generation.
Duncan Clark, founder of BDA con-
sultancy and author of a book on Ali-
baba, said the challenge in taking on
trade was both complex and border-
driven.
But Jack [Ma] likes to take on very
difficult challenges. Even seemingly
impossible ones. And he has the
resources and team to go a long way, he
said.
Mr Clark added: I think the initiative
is politically savvy too, as China inherits
the globalisation mantle formerly car-
ried by the US.
Can Jacks more human face of glo-
balisation win him supporters in Beijing
as well as clients overseas?
16
Debt pressures build for Chinas developers
High leverage combines with
first downturn in years to put
some groups on a knife edge
YUAN YANG BEIJING
JENNIFER HUGHES HONG KONG
When Li Keqiang, Chinas premier, told
the National Peoples Congress this
month that the government was wor-
ried about high leverage in non-
financial Chinese firms, finance direc-
tors of the countrys property develop-
ers must have winced.
Balanced between their reliance on
ballooning debt markets, which Beijing
wants to bring under control, and a
housing boom that authorities want to
cool, developers have defied predictions
of collapse for years.
Even now, few analysts are predicting
disaster but they say high leverage is a
rising risk as margins come under pres-
sure. Chinas more heavily indebted
developers are living on a knifes edge,
says Andrew Collier, managing director
of Orient Capital Research, an invest-
ment research group in Hong Kong.
Real estate developers are facing a
funding squeeze just as they are enter-
ing their first downturn in three
years. House prices rose 40 per cent in
big cities last year but have stalled.
Single-digit price declines are expected
this year and sales revenues for the big-
ger developers could fall by as much as
10 per cent, according to S&P Global
Ratings, as transaction volumes decline.
Last year, revenues rose 20 per cent.
Chinas big developers stand out
compared to their peers worldwide for
being highly leveraged, thanks to their
access to local banks and capital mar-
kets, says Wang Xinling, lead analyst at
China Policy, a think-tank in Beijing.
Many funding sources are also com-
ing under threat. Beijing began restrict-
ing funding last October, ordering regu-
lators to limit equity and bond sales by
developers as part of efforts to rein in
the property market.
Authorities have also clamped down
on the inclusion of property loans in
wealth management products, which
had in effect allowed banks to keep a
portion of their lending off the books.
The ability to tap WMPs had become a
key source of capital for developers,
according to several analysts.
We believe the funding restriction
Global Appointments
FINANCIAL TIMES
COMPANIES
Property. Recovery risks
Time out: sales are poised to drop for Chinas construction groups this year at a time when funding sources are coming under threat Qilai Shen/Bloomberg
Profitability is falling for ...as leverage is rising Evergrande debts and leverage
Chinese developers Chinese property developers net debt Rmb bn
Per cent divided by ebitda (x) Perpetual bonds Net debt as a
Long-term debts % of equity
35 20 Short-term debts
500 600
Gross profit margin
30 15 400 500
400
300
25 10 300
200
200
20 5 100
100
Ebitda margin
0 0
15 0 H1 * 10 11 12 13 14 H1
2012 13 14 15 H1 2016 2012 13 14 15 16 2009 2016
* Full-year
Average of 13 listed developers
Sources: CreditSights; SWS; Evergrande company data from Wind
Travel & leisure
Airbnb changes name for tilt at biggest market
LESLIE HOOK SAN FRANCISCO
Many US tech companies have found
the Chinese market difficult to crack,
but Airbnb is betting on a new name
and an investment drive to help it gain
ground in the worlds biggest tourism
market.
The accommodation company plans to
double investment and triple its staff in
China this year, as well as launching tour
programmes in Shanghai and a new
advertising campaign.
The efforts are the latest in a years-
long attempt by Airbnb to boost its mar-
ket share in China, which is home to
more international tourists than any
other country.
Whereas Airbnb has focused mostly
on Chinese tourists travelling overseas
a demographic that more than dou-
bled last year on the platform the new
push aims to increase its domestic pres-
Technology
Amazon wins Mideast toehold with Souq deal
SIMEON KERR DUBAI
Amazon has agreed to buy Middle East-
ern online retailer Souq.com in a deal
worth more than $650m that will shake
up the regions small but fast-growing
ecommerce sector.
Souq, which was co-founded in 2005 by
Syrian entrepreneur Ronaldo Moucha-
war, is one of the Middle Easts most rec-
ognised online brands as its largest dig-
ital sales portal.
The deal was agreed this week,
according to two people familiar with
the transaction, with the US group pay-
ing between $650m and $750m for the
Dubai-based company. Amazon and
Souq declined to comment.
Amazon, which had been considering
its entry into the Middle East under its
own name, has instead opted to buy
Souq, which provides an existing cus-
tomer base and the infrastructure to
store and deliver products.
Souq, which delivers to the six Gulf
Arab states and Egypt, launched as an
online auction site before shifting to a
ited 40 Evergrande developments and
will weaken Chinese property develop-
ers access to alternative financing and
increase their cash flow burden, says
Cindy Huang, credit analyst at S&P Glo-
bal Ratings.
Evergrande, Chinas second-biggest
property group by sales, is the most lev-
eraged among mainland and Hong
Kong-listed developers, according to
data from Wind Information. Its net
debt was 605 per cent of its equity as of
June 2016, versus a sector average of 90.
Evergrande is the poster child for the
wackiness of the Chinese property mar-
ket, where property is an asset to be held
rather than something to live in, says
Anne Stevenson-Yang, director of
research at J Capital Research.
ence too. In Chinas home-sharing mar-
ket, Airbnb ranks third behind homeg-
rown rivals Tujia and Xiaozhu in
number of accommodation listings.
Airbnb held discussions with Xiaozhu
last year about a possible acquisition,
but the announcement of its new China
initiatives in effect signals its intention
to go it alone.
Yesterday Airbnb unveiled a Chinese
name, Aibiying, which is easier for Chi-
nese travellers to pronounce than the
English version it previously used in
promotional material.
Chief executive Brian Chesky, who is
in Shanghai, said the company would
start offering guided tours in the city a
programme called Trips, launched
last year in a dozen cities and expand
its engineering team in China.
Airbnb has recruited some heavy-
weight Chinese investors including
Hong Kong-based Hillhouse Capital,
marketplace model similar to Amazon
in 2011. The transaction will conclude a
nine-month sales process for Souq after
private equity backers Tiger Global
Management and South Africas
Naspers sought an exit.
The deal was initially envisioned as a
30 per cent stake sale, which had been
hoped to value Souq at more than $1bn,
making it the regions first putative uni-
corn. But the price slipped and the
transaction moved to an outright sale,
said people familiar with the deal.
One of the rival bidders was tycoon
Mohamed Alabbar, chairman of Dubai
real estate company Emaar.
Mr Alabbars bid was rejected as too low,
say people aware of the matter.
In November, the prominent busi-
nessman revealed plans to launch Noon,
an ecommerce start-up with financial
backing from Saudi Arabias Public
Investment Fund, controlled by the
kingdoms powerful deputy crown
prince, Mohammad bin Salman.
Other retailers, worried about the
growing threat of internet-based rivals,
Thursday 23 March 2017
The developers borrowings increased
almost 50 per cent in the second half of
last year to Rmb565bn ($82bn), accord-
ing to a company filing last month.
Yet it has repeatedly refinanced debt
from banks and bond investors embold-
ened, say JPMorgan analysts, by a per-
ception that Evergrande is too big to fail.
Greenland Holdings, number four last
year in terms of property sales, has simi-
larly heavy debts. Its net debt to equity
ratio was almost 300 per cent at the end
of September, according to estimates by
Huachuang Securities. As of the end of
June, it held net debt of Rmb185bn.
State-owned status is an added bene-
fit that has given Greenland privileged
access to loans in return for partnering
with the government for projects.
The property sector is the founda-
tion for Chinas economy, says Jonas
Short, head of NSBO China, a policy
research group in Beijing.
Links between corporate and state
interests have tempted investors to con-
sider big property groups as sure-fire
investments, no matter the scale of their
debt or asset quality. Foreign investors
look at these companies and think
their bond yields are relatively high, and
they must be backed by the govern-
ment, so why not buy? says J Capitals
Ms Stevenson-Yang. Developers are also
adept at avoiding writedowns on assets,
often halting sales when prices slip to
preserve their valuations, she adds.
Another tactic is to classify empty
buildings as investment properties
rather than inventory, which is marked
at market prices. GMT Research, an
accounting research group, said it vis-
found that many investment proper-
ties were empty hotels and shop fronts
or abandoned parking lots.
In China its not unusual for large
development sites to take five to 10
years to be fully sold, says Su Aik Lim,
senior director at Fitch. The question is
whether they will be fully sold.
Yet so far there are few signs of acute
financing strain among the biggest
developers and appetite for their high-
yielding paper remains robust. Last
week Evergrande attracted bids worth
$5.4bn for the sale of $1.5bn in bonds.
A lot of people have made money
from buying these bonds at the bottom
and there are real assets behind them,
too, says one China debt banker. Peo-
ple feel like theyve seen the worst and
these guys are the survivors.
which invested in the company in 2015,
to help guide its efforts.
The companys user base in China is
much younger than in other countries,
with about 80 per cent of its Chinese
users under the age of 35.
Theres a whole new generation of
Chinese travellers who want to see the
world in an entirely different way, Mr
Chesky said in a statement. We hope
that Aibiying and our Trips product
strike a chord with them.
At $30bn, Airbnb is Silicon Valleys
second most highly valued private com-
pany, behind Uber. Its rapid growth has
often caused friction with regulators,
though in China local governments have
been more open to home-sharing prac-
tices than regulators in Europe or mar-
kets such as New York.
Airbnb has agreements with Shang-
hai, Shenzhen, Chongqing and
Guangzhou.
also looked at the transaction, which
was handled by Goldman Sachs.
Amazons acquisition of Souq sets the
scene for a battle over the regions fast-
growing ecommerce market.
Digital sales account for less than 2
per cent of all retailing activity in the
Middle East, but the sector is growing at
around 30 per cent a year.
Additional reporting by Madhumita
Murgia
Legal Notices
Thursday 23 March 2017
Retail & consumer
Sears shares dive on fears for its survival
US store chain warns of
substantial doubt it can
continue as going concern
LINDSAY WHIPP CHICAGO
Sears shares tumbled more than 13 per
cent yesterday after the struggling
retailer warned that there was substan-
tial doubt over its ability to continue
operating over the next year.
In its annual report, released after the
market closed on Tuesday, the owner of
the Sears and Kmart chains said: Our
historical operating results indicate
Fast expansion is big source of contractors woes
Capita becomes latest
casualty in sector prone to
some spectacular blow-ups
GILL PLIMMER
Doctors in England started complaining
last year that the transfer of patient
records and delivery of drugs and
syringes were often delayed some-
times for months.
The work had been switched from the
NHS to UK outsourcing business Capita
a year earlier in a 400m, seven-year
contract aimed at cutting costs
by 40 per cent. It involved office clo-
sures and swingeing job cuts as Capita
modernised the service, bringing in new
technologies and processes.
Although doctors representatives say
the system has since improved, com-
plaints like this are often levied at UK
outsourcing companies, which across
the globe are taking over services previ-
ously provided by governments.
Led by G4S, the worlds biggest secu-
rity company, and UK competitors
Serco, Mitie, Capita and Interserve,
these providers can be found in the bow-
els of hospitals, at the prison gates, and
on programmes aimed at getting the
jobless back to work. Their growth since
the 1980s has been rapid, spanning con-
tinents and governments, but their
stumbles have been equally spectacular.
This month Capita became the latest
casualty, ousting chief executive Andy
Parker after a string of profit warnings
over the previous year culminated in a
33 per cent fall in profits for 2016.
Adrian Ringrose, chief executive of
Interserve, and Ruby McGregor-Smith,
head of Mitie, also quit last autumn after
separately delivering multiple profit
warnings.
The rise in the UK minimum wage
and the countrys decision to leave the
EU, which has stalled the signing of new
contracts, has exacerbated problems in
a sector prone to public hostility and
sharp stock market corrections.
But its troubles have also exposed
some of the structural problems that
contributed to the implosion of G4S and
Serco in 2014, when their market caps
plummeted after they were referred to
the Serious Fraud Office for overcharg-
ing on tagging of offenders.
In many cases, blow-ups at these sup-
port services groups have been caused
by their expanding too quickly, racking
up contract wins and snapping up
smaller participants in sectors and
countries in which they have too little
expertise.
It delivers revenue but not necessarily
profit growth, storing up problems for
Personal & household goods
Herms outpaces rivals with record revenues
HARRIET AGNEW PARIS
Herms yesterday reported an excep-
tional 2016, as the French luxury
goods companys operating profit mar-
gin hit an all-time high and revenue
exceeded 5bn for the first time.
Herms said like-for-like sales
increased 7.5 per cent to 5.2bn last
year, while net profit rose 13 per cent to
1.1bn. The company recorded an oper-
ating margin of 32.6 per cent, partly due
to a favourable impact from foreign
exchange hedges.
The results outperformed the luxury
sector, which in the fourth quarter of
last year reported an improvement in
fortunes after several years of pressure
due to a slowdown in Chinese consumer
spending and declining tourism in
Europe after terrorist attacks.
Once again a strong year for Her-
ms, said chief executive Axel Dumas
in an interview with the Financial
Times. Its keeping its galloping
moment. He added: 2016 was an
substantial doubt exists related to the
companys ability to continue as a going
concern. Its shares were down $1.21 at
$7.89 in mid-morning trading in New
York.
The company which is steered by
Eddie Lampert, the billionaire hedge
fund investor who owns about 48 per
cent of Sears through a number of affili-
ates attempted to allay concerns by
adding that it believes the execution of
its restructuring plans should help it
mitigate this doubt over the next 12
months. It has announced plans to cut
costs by $1bn and reduce its debt and
pension obligations by $1.5bn.
Support services. Growth snags
British outsourcing companies such as Capita and G4S have taken over public services including in prisons, hospitals and police forces Alamy
the future, says Stephen Rawlinson,
analyst at Applied Value.
Capita has gained 2bn in revenues in
the past six years, including its biggest
purchase, in 2015 a 160m deal to buy
Germanys third-biggest outsourcer
Avocis. But as revenue rose, net income
fell sharply. Net debt rose each year
before a 3 per cent fall in 2016, when the
acquisition spree ended.
In some cases, companies have failed
properly to integrate purchases. When
Ashley Almanza became chief executive
Capitas declining returns
Net return on capital (%)
2010 11 12 13 14
Sources: company; Thomson Reuters Datastream
exceptional year because the stars were
aligned for us: currency, growth and the
collections did well.
However, Mr Dumas said Herms
would maintain caution for 2017. The
companys outlook statement con-
firmed an ambitious target for reve-
nue growth at constant exchange rates
in the medium term.
Revenue growth last year was spread
across all geographical regions.
Mr Dumas said that while tourist
numbers were down in Paris, some of
this spending had moved to Rome or
London.
Business in the UK is booming, he
added. With Brexit there has been a
decrease in the pound and thats
brought a lot of tourists to the UK.
Herms has posted
sales above 5bn
for the first time,
in what chief Axel
Dumas called an
exceptional year
FINANCIAL TIMES
COMPANIES
However, we cannot predict, with
certainty, the outcome of our actions to
generate liquidity, including the availa-
bility of additional debt financing, or
whether such actions would generate
the expected liquidity as currently
planned, the company said in its filing.
Sears has accumulated more than
$10bn in net losses in the past six fiscal
years while its shares have lost 90 per
cent of their value over the past five
years, leaving its market capitalisation
below $850m. The losses reflect the
department store chains failure to
adapt to a far more competitive retailing
environment where consumers are
of G4S four years ago, he discovered that
it had 900 operating units and 45 differ-
ent email platforms. Rupert Soames,
who took the helm at Serco in June 2014,
found that the company lacked a single,
coherent register documenting its 700
businesses, from dog-walking in Eng-
land to the running of air traffic control
towers in Iraq.
The common source of failure, says
Joe Brent, an analyst at broker Liberum,
has been that some chief executives
have lost day-to-day management of
UK outsourcers underperform
Share price change since 2014 (%)
20 -80 -60 -40 -20 0 20
19 G4S
18 Mitie
17 Capita
16 Interserve
15 Serco
14 FTSE 100
15
Herms saw a 14 per cent rise in sales
of leather goods and saddlery last year.
Within this division, which is home to
handbags such as Constance, Kelly and
Birkin, all models regardless of the
price grew well, said Mr Dumas.
The only constraint was the capacity
of production.
Sales of watches fell 3.2 per cent, hurt
by too much weighting towards chal-
lenging Asian markets.
Herms net cash position increased
by 731m during 2016 to 2.3bn at
December 31, and the company pro-
posed a dividend of 3.75.
It is not expanding its store numbers
but it has been refurbishing existing
outlets and increasing their size.
Herms added 600 new jobs last year,
with two-thirds of these being in France.
The company employs 12,843 people
globally, including 7,881 in France.
Mr Dumas said there were no contin-
gency plans for the result of Frances
presidential elections, where the first
round of voting takes place next month. volume rose to 31 per cent in 2016
increasingly shopping online while
demanding better in-store experiences.
Sears is not alone in struggling to
adapt to the ecommerce era. Depart-
ment stores from Macys to Kohls have
also suffered sharp falls in sales, pushing
them to shutter hundreds of stores
already and announce more closures for
this year.
Their difficulties in integrating online
and in-store sales while offering prod-
ucts consumers want have prevented
the one-time leaders of US retailing
from capitalising on the 15-year high in
consumer confidence that has lifted
ecommerce retailers led by Amazon and
contracts. They are in too many busi-
ness areas, too many geographies, and
they too often have bad IT systems.
Outsourcers are vulnerable to last-
minute government decisions and
changes of heart risks they cannot
control. This includes the British Cabi-
net Offices decision in 2012 to cut pay-
ments to suppliers, which until then had
enjoyed margins of more than 20 per
cent on some contracts.
Mitie, the UKs biggest provider of
immigration detention centres, for
example, won a deal in 2014 to run Har-
mondsworth immigration removal cen-
tre near Heathrow airport, and merge it
with the adjacent Colnbrook facility, at a
price 30 per cent less than previous con-
tracts held by Geo and Serco.
By making the contractors compete
on price, the government forced them to
chase profit through cost-cutting, driv-
ing down the quality of some services,
analysts say.
Under austerity, front line services
have been cut and private companies
are often blamed, says Mr Brent.
Mr Rawlinson points to a lack of
transparency in some of the outsourc-
ers accounts. Revenue and cost can be
shifted between years in ways that
investors cannot see on long-term/mul-
Automobiles
Geely profits more than double after SUV drive
CHARLES CLOVER BEIJING
HUDSON LOCKETT HONG KONG
A big bet on sport utility vehicles
paid off for Geely, the Chinese car-
maker, as strong sales led to a 126 per
cent rise in full-year net profits to
Rmb5.1bn ($740m).
Geely shares closed up 5.8 per cent in
Hong Kong after the announcement,
which beat high expectations. The
median analyst estimate by Bloomberg
had been for profit growth at just above
100 per cent.
The group rolled out several SUV
models last year, including Boyue, GS,
and Vision, to capitalise on enthusiasm
for the larger, higher-margin cars in sec-
ondary Chinese cities.
Geely said SUVs accounted for 50 per
cent of the sales volume growth year on
year, and offset a fall in exports.
Full-year revenues were up 78 per
cent to Rmb53.7bn.
The proportion of SUVs in sales by
competitors.
newer specialist retailers such as beauty
store Ulta.
Some retailers have failed. American
Apparel filed for bankruptcy protection
in November for a second time in
13 months, while teen retailer Aropost-
ale was bought by a consortium of prop-
erty companies and investors last year
after it filed for Chapter 11.
Moodys has estimated that 14 per
cent of its US retail and apparel portfolio
is made up of distressed issuers, the
largest proportion it has seen since the
financial crisis.
Sears total long-term debt climbed to
$4.2bn at the end of January.
tiyear contracts. This benefits manag-
ers, who are often awarded bonuses
based on short-term financial perform-
ance, but it can create problems.
Jarvis, the collapsed railway contrac-
tor, ended up in the High Court after it
booked income that was due but not
received. Connaught, the social housing
maintenance provider, fell into admin-
istration after irregularities were found
in its largest contracts.
Despite the latest run of problems,
companies do recover. G4S has made
strides, selling off businesses and with-
drawing from lossmaking contracts.
The company this month posted a jump
in profits and revenues for last year,
driven by its expansion into the US,
where it provides technology to the Pen-
tagon and has been pioneering technol-
ogy-driven security services.
Rivals like Capita have further to go.
Analysts at Shore Capital say that with
debt at uncomfortable levels because
of acquisitions, conditions for the out-
sourcer do not appear set to improve
markedly in the immediate future.
Still, Mr Rawlinson expects demand
for outsourcers services to remain.
Once an activity is outsourced, there is
rarely any going back, so the companies
providing services are here to stay.
from 12 per cent the previous year.
They [Geely] have gotten on the
bandwagon of SUV demand, said Janet
Lewis, who covers the Asian car market
for Macquarie Capital Securities in
Tokyo.
Buyers in cities other than Beijing,
Shanghai and Shenzhen were less con-
cerned about traffic congestion and
liked roomier vehicles, she said.
In the Chinese car market sales of
SUVs as a percentage of total sales by
volume rose to 39 per cent last year,
from 13 per cent in 2012.
SUVs have become a mainstream
product in China, said Yale Zhang of
Automotive Foresight in Shanghai.
Women were disproportionately high
buyers of SUVs, he added.
Geely has pushed up prices thanks to
greater acceptance of domestic brands
and improved technology.
The carmakers average selling prices
were up 22 per cent year on year, though
they were still below those of foreign
17
Financials
UK watchdog
wins London
Whale case
and fends off
overhaul
CAROLINE BINHAM
FINANCIAL REGULATION
CORRESPONDENT
The UK financial watchdog has
snatched victory in a case brought by
the boss of JPMorgan Chases London
Whale trader an outcome that will
have repercussions for other bankers
caught up in regulatory probes.
Yesterday the Supreme Court ruled
in favour of the Financial Conduct
Authority in the final stage of a long-
running legal battle with Achilles Mac-
ris, who had argued that the FCA
improperly identified him when it fined
JPMorgan 138m in 2013 over $6.2bn in
losses run up by the credit derivatives
team he managed.
The Supreme Court overturned deci-
sions by the Court of Appeal and Upper
Tribunal, which had said the FCA in
effect identified Mr Macris when it
referred to CIO London management
in its public notice accompanying the
banks fine.
How the FCA conducts investigations
and publishes findings will no longer
have to be overhauled. The decision
also provides a test case for traders
embroiled in other investigations by
the FCA, such as the manipulation of
Libor and foreign exchange, who have
brought similar challenges.
FCA notices against companies are
meant to keep confidential the identi-
ties of individuals so as not to prejudice
any action against them personally. If
the watchdog identifies them in any
way, it is meant to give them a chance to
put across their side of the story and
access to evidence. This is known as
third-party rights.
Individuals are described using
names such as Trader A or Manager B,
but the media can often identify them
by piecing together parallel investiga-
tion reports from other countries or
information in the public domain.
In this courts view, a third person is
not identified unless [the FCAs notice]
contains enough information to identify
him, either a name or a synonym like a
job title, said Lord Sumption, giving
judgment.
But he is not identified in a notice
simply because information is available
in the public domain. CIO London is
not sufficiently precise.
The watchdog said in a statement:
The FCA is pleased there is now a final
ruling on the issue and is considering
the impact of the Supreme Courts judg-
ment on the other third-party refer-
ences currently before the tribunal.
Athens-based Mr Macris, who at the
time of the losses was chief investment
officer of the synthetic credit portfolio
team at JPMorgan, managed Bruno
Iksil, dubbed the Whale for his outsize
derivatives position.
I am naturally disappointed with the
decision, Mr Macris said in a statement
through his lawyers at Clifford Chance.
The FCA has won its case on a technical
interpretation of the law. Although the
Supreme Court has ruled that I was not
identified, the reality is that the FCAs
final notice to JPMorgan made findings
about my conduct which the FCA had to
retract. That is wrong and unfair.
In addition to the notice against the
bank, the FCA fined Mr Macris
800,000 last year for failing to report
concerns about the losses, but it said he
had not acted dishonestly.
The FCA dropped its action against
Mr Iksil after an internal panel.
Geely does relatively well on a qual-
ity basis versus other domestic produc-
ers, said Ms Lewis.
The leaders in Chinese SUV sales had
been higher-quality domestic brands
such as Geely, Great Wall and Trumpchi,
part of the GAC group, rather than for-
eign brands, she added.
Geely has used its 2010 acquisition of
Volvo to upgrade its offering and
buy parts from a more global array of
suppliers.
China Automotive Review linked the
sales uptick to the combination. The
acquisition of Volvo has helped Geely
get more in line with consumers tastes,
said Xing Lei, chief editor,
Peter Horbury, formerly Volvos chief
designer, is in charge of Geelys design
studios.
Geely proposed a final dividend of
HK$0.12 per share and set its
automobile sales target for the 2017
financial year at 1m units, up 31 per cent
from 2016.
Additional reporting by Sherry Fei Ju
18 FINANCIAL TIMES Thursday 23 March 2017

MARKET DATA

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous days trading (%)
S&P 500 Nasdaq Composite Dow Jones Ind FTSE 100 FTSE Eurofirst 300 Nikkei Hang Seng FTSE All World $ $ per $ per per $ per Oil Brent $ Sep Gold $

-0.14% -0.73% -0.37% -2.13% -1.11% -0.32% -0.093% -0.706% -1.53%

No change No change
0.06% 0.21% 0.60%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Feb 23 - - Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World Feb 23 - Mar 22 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
2,168.30
15,922.37 7,378.34
2,365.38 11,967.49 11,904.12
15,306.47 7,299.86 19,251.08 2,102.93
2,345.41 19,041.38
Day 0.06% Month -0.86% Year 14.31% Day -0.04% Month -3.31% Year 13.44% Day -0.73% Month 0.34% Year 18.32% Day -0.48% Month -0.79% Year 19.16% Day -2.13% Month -1.75% Year 13.85% Day -0.46% Month 3.11% Year 8.97%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
48,480.14 10,229.30 24,320.41
5,865.95 1,471.87 1,475.46 23,963.63 3,118.19
5,805.72 47,083.81 3,096.69
9,561.00
Day 0.21% Month -1.04% Year 20.72% Day -0.22% Month 2.73% Year 6.25% Day -0.37% Month 0.18% Year 10.26% Day 0.17% Month 6.99% Year 13.39% Day -1.11% Month 1.49% Year 17.58% Day -1.28% Month 0.78% Year 8.24%

Dow Jones Industrial New York Bovespa So Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
4,994.70 19,953.44
69,052.03 29,167.68
20,743.00 3,253.33 3,245.22
20,638.25 63,732.17 4,888.76 19,043.58 28,468.75
Day -0.14% Month -0.52% Year 17.09% Day 1.19% Month -7.12% Year 24.89% Day -0.15% Month 2.17% Year 12.80% Day 0.17% Month 5.66% Year 6.71% Day -0.50% Month -0.25% Year 7.50% Day -1.08% Month 1.41% Year 15.35%

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 19593.02 19535.20 Cyprus CSE M&P Gen 66.54 66.67 Italy FTSE Italia All-Share 21990.45 21943.23 Philippines Manila Comp 7254.93 7323.31 Taiwan Weighted Pr 9922.66 9972.49 Cross-Border DJ Global Titans ($) 265.82 266.06
Australia All Ordinaries 5732.00 5819.50 Czech Republic
PX 978.91 982.72 FTSE Italia Mid Cap 37069.75 36887.79 Poland Wig 58749.94 59452.75 Thailand Bangkok SET 1566.66 1568.78 Euro Stoxx 50 (Eur) 3420.70 3429.62
S&P/ASX 200 5684.50 5774.60 Denmark OMXC Copenahgen 20 896.72 902.12 FTSE MIB 19953.44 19918.84 Portugal PSI 20 4619.64 4635.88 Turkey BIST 100 90606.46 90902.11 Euronext 100 ID 964.21 967.59
S&P/ASX 200 Res 3319.60 3394.90 Egypt EGX 30 12905.37 13023.49 Japan 2nd Section 5859.40 5929.60 PSI General 2533.51 2535.44 UAE Abu Dhabi General Index 4481.89 4512.82 FTSE 4Good Global ($) 5872.15 5891.17
Austria ATX 2799.28 2825.14 Estonia OMX Tallinn 1125.13 1127.67 Nikkei 225 19041.38 19455.88 Romania BET Index 7969.25 7974.92 UK FT 30 3221.80 3252.50 FTSE All World 295.50 296.45
Belgium BEL 20 3730.01 3759.44 Finland OMX Helsinki General 9084.61 9131.92 S&P Topix 150 1246.12 1274.02 Russia Micex Index 2061.53 2048.07 FTSE 100 7324.72 7378.34 FTSE E300 1475.46 1480.99
BEL Mid 6520.18 6557.34 France CAC 40 4994.70 5002.43 Topix 1530.20 1563.42 RTX 1123.17 1121.63 FTSE 4Good UK 6482.56 6532.06 FTSE Eurotop 100 2903.06 2913.74
Brazil Bovespa 63732.17 62980.37 SBF 120 3951.07 3961.10 Jordan Amman SE 2230.39 2231.00 Saudi-Arabia TADAWUL All Share Index 6832.30 6912.78 FTSE All Share 3984.24 4013.76 FTSE Global 100 ($) 1446.46 1447.88
Canada S&P/TSX 60 903.04 902.07 Germany M-DAX 23172.16 23377.29 Kenya NSE 20 3037.16 3007.90 Singapore FTSE Straits Times 3118.19 3158.57 FTSE techMARK 100 4403.54 4448.49 FTSE Gold Min ($) 1569.40 1542.71
S&P/TSX Comp 15306.47 15313.13 TecDAX 1953.51 1968.53 Kuwait KSX Market Index 7020.18 6881.20 Slovakia SAX 304.33 301.83 USA DJ Composite 7129.63 7122.79 FTSE Latibex Top (Eur) 4202.60 4189.00
S&P/TSX Div Met & Min 803.66 794.38 XETRA Dax 11904.12 11962.13 Latvia OMX Riga 757.42 772.44 Slovenia SBI TOP 792.90 799.61 DJ Industrial 20638.25 20668.01 FTSE Multinationals ($) 1682.18 1694.38
Chile IGPA Gen 23432.42 23398.51 Greece Athens Gen 640.65 640.42 Lithuania OMX Vilnius 560.63 561.72 South Africa FTSE/JSE All Share 52096.71 52753.56 DJ Transport 8956.28 8930.66 FTSE World ($) 523.05 524.56
China FTSE A200 8736.70 8775.96 FTSE/ASE 20 1710.12 1706.68 Luxembourg LuxX 1746.23 1757.13 FTSE/JSE Res 20 30870.13 31507.65 DJ Utilities 705.36 701.16 FTSEurofirst 100 (Eur) 4206.09 4222.90
FTSE B35 9000.71 8988.96 Hong Kong Hang Seng 24320.41 24593.12 Malaysia FTSE Bursa KLCI 1748.30 1754.67 FTSE/JSE Top 40 44855.72 45507.67 Nasdaq 100 5355.27 5332.53 FTSEurofirst 80 (Eur) 4674.56 4688.76
Shanghai A 3398.11 3415.28 HS China Enterprise 10456.96 10644.15 Mexico IPC 48480.14 48589.05 South Korea Kospi 2168.30 2178.38 Nasdaq Cmp 5805.72 5793.83 MSCI ACWI Fr ($) 448.05 451.06
Shanghai B 349.50 351.00 HSCC Red Chip 4003.56 4046.99 Morocco MASI 11906.91 11941.97 Kospi 200 282.63 283.84 NYSE Comp 11410.84 11420.43 MSCI All World ($) 1846.39 1860.53
Shanghai Comp 3245.22 3261.61 Hungary Bux 31827.13 32044.13 Netherlands AEX 509.52 513.59 Spain IBEX 35 10229.30 10211.90 S&P 500 2345.41 2344.02 MSCI Europe (Eur) 1531.29 1540.26
Shenzhen A 2131.95 2138.28 India BSE Sensex 29167.68 29485.45 AEX All Share 769.90 774.89 Sri Lanka CSE All Share 5996.65 6041.59 Wilshire 5000 24340.17 24429.98 MSCI Pacific ($) 2534.39 2529.63
Shenzhen B 1152.40 1155.91 Nifty 500 7830.10 7909.20 New Zealand NZX 50 7060.83 7085.54 Sweden OMX Stockholm 30 1562.96 1570.88 Venezuela IBC 37410.66 37849.62 S&P Euro (Eur) 1552.20 1556.94
Colombia COLCAP 1343.97 1337.29 Indonesia Jakarta Comp 5534.09 5543.09 Nigeria SE All Share 25558.57 25671.55 OMX Stockholm AS 552.97 556.45 Vietnam VNI 712.94 716.18 S&P Europe 350 (Eur) 1517.40 1524.33
Croatia CROBEX 2081.26 2132.91 Ireland ISEQ Overall 6591.81 6660.32 Norway Oslo All Share 764.12 773.91 Switzerland SMI Index 8567.88 8614.86 S&P Global 1200 ($) 2052.15 2057.46
Israel Tel Aviv 100 12.63 12.71 Pakistan KSE 100 49016.79 49020.21 Stoxx 50 (Eur) 3111.71 3122.85
(c) Closed. (u) Unavaliable. Correction. Subject to official recalculation. For more index coverage please see www.ft.com/worldindices. A fuller version of this table is available on the ft.com research data archive.

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

AMERICA LONDON EURO MARKETS TOKYO Mar 22 %Chg %Chg Mar 22 %Chg %Chg Mar 22 %Chg %Chg Mar 22 %Chg %Chg
ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's FTSE 100 price(p) week ytd FTSE 250 price(p) week ytd FTSE SmallCap price(p) week ytd Industry Sectors price(p) week ytd
traded m's price change traded m's price change traded m's price change traded m's price change Winners Winners Winners Winners
Bank Of America 29.0 22.84 -0.18 Hsbc Holdings 239.1 647.50 -6.33 Bbva 829.7 7.15 0.03 Mitsubishi Ufj Fin,. 849.2 713.70 -32.00 Fresnillo 1569.00 6.8 27.1 Ferrexpo 172.00 9.2 28.6 Circassia Pharmaceuticals 105.00 19.3 11.7 Industrial Metals 2413.42 9.0 7.5
Apple 23.8 140.76 0.92 Glencore 177.5 329.55 0.90 Santander 652.6 5.68 0.02 Sumitomo Mitsui Fin,. 815.0 4150.00 -116.00 Anglo American 1265.00 5.5 8.6 Polymetal Int 1035.00 9.1 21.4 Lindsell Train Investment Trust 838.00 11.4 -8.2 Household Goods 17923.81 2.1 11.9
Facebook 16.0 139.00 0.49 Glaxosmithkline 164.1 1670.50 -6.59 Novartis N 591.6 69.64 0.00 Toyota Motor 682.2 6161.00 -212.00 Randgold Resources Ld 7295.00 4.9 13.8 Softcat 368.30 8.9 23.7 Cape 208.75 11.1 43.4 Gas Water & Multiutilities 6256.95 1.5 3.4
Amazon.com 15.8 846.23 3.03 Bp 159.2 454.75 -3.90 Ing Groep N.v. 565.2 13.82 -0.58 Softbank . 547.3 8053.00 -221.00 Admiral 1983.00 3.5 8.3 Hastings Holdings 261.30 8.7 7.4 Lonmin 94.50 9.9 -33.2 Mining 16147.93 1.4 9.3
J P Morgan Chase & Co 13.5 87.37 -0.02 Vodafone 158.8 207.65 -1.52 Unicredit 417.0 14.30 0.00 Mizuho Fin,. 443.1 206.50 -4.50 National Grid 1001.50 2.5 5.3 Berkeley Holdings (the) 3205.00 8.6 13.5 Tt Electronics 198.00 8.0 20.6 Mobile Telecommunications 4699.94 1.1 3.9
Nike 13.4 54.28 -3.74 Rio Tinto 155.6 3309.50 -82.65 Daimler Ag Na O.n. 416.7 70.55 0.00 Japan Tobacco . 255.1 3752.00 -104.00 Convatec 264.30 2.2 12.3 Evraz 223.40 6.3 -1.8 Stv 381.25 7.3 6.1 Beverages 18361.28 1.1 9.8
Goldman Sachs 10.6 230.00 -3.00 British American Tobacco 150.7 5180.00 -10.76 Intesa Sanpaolo 404.6 2.50 0.00 Fast Retailing Co., 253.2 34960.00 -890.00 United Utilities 1008.00 2.2 11.5 Hochschild Mining 284.30 5.7 34.1 Topps Tiles 94.00 7.1 7.4 Forestry & Paper 20788.72 0.9 15.8
Wells Fargo & 10.5 55.23 -0.62 Royal Dutch Shell 146.7 2204.00 -18.44 Roche Gs 393.3 233.93 0.00 Fuji Heavy Industries 250.7 4120.00 -192.00 Barratt Developments 546.00 2.1 17.7 John Laing 274.50 5.4 1.3 Petropavlovsk 6.28 6.6 -8.6 Industrial Transportation 3017.29 0.6 -1.1
Citigroup 10.3 57.76 -0.28 Prudential 145.4 1726.50 -42.50 Nestle N 362.8 72.11 0.00 Thb Dai-ichi Life Insurance , 247.3 2054.00 -137.00 Coca-cola Hbc Ag 2008.00 2.0 13.6 William Hill 280.80 3.7 -3.5 Robert Walters 430.00 6.5 26.9 Real Estate Investment Trusts 2881.84 0.5 -1.1
Nvidia 10.2 107.46 1.55 Barclays 143.2 224.55 -3.07 Akzo Nobel 319.1 75.78 -0.82 Fanuc 242.8 22615.00 -390.00 Taylor Wimpey 193.90 2.0 26.3 Savills 876.50 3.5 25.3 Kenmare Resources 314.00 6.4 25.1 Health Care Equip.& Services 7558.56 0.5 3.1
Glencore 329.55 1.8 19.3 Hansteen Holdings 118.50 3.5 6.0 Mj Gleeson 641.50 5.1 17.7 Nonlife Insurance 2835.67 0.2 3.1
BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's
Severn Trent 2412.00 1.7 7.9 Syncona 147.00 3.3 9.1 Costain 417.00 5.0 20.8 Real Estate & Investment Servic 2563.51 0.2 3.5
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Marriott Int 91.66 2.56 2.87 Ferrexpo 172.00 10.03 6.15 Grifols 21.56 0.56 2.67 Unitika 103.00 2.00 1.98 Hikma Pharmaceuticals 2072.00 -10.1 9.1 Tullow Oil 201.80 -14.4 -35.7 Laird 147.25 -14.5 -2.8 General Industrials 5908.13 -2.6 7.0
Freeport-mcmoran 12.91 0.34 2.74 Softcat 368.30 17.38 5.00 Ucb 69.60 1.42 2.08 Sumitomo Osaka Cement Co., 480.00 4.00 0.84 Ashtead 1608.00 -6.4 0.9 Nostrum Oil & Gas 420.00 -12.0 8.9 Flybe 44.00 -8.8 0.0 Banks 4201.54 -2.3 1.7
Ventas 62.41 1.64 2.70 Hochschild Mining 284.30 8.60 3.13 Safran 69.19 1.04 1.53 Thb Kansai Electric Power ,orporated 1238.50 8.00 0.65 Merlin Entertainments 473.00 -4.5 5.6 Allied Minds 347.50 -8.3 -25.7 Soco Int 130.25 -8.8 -18.3 Industrial Engineering 11159.91 -2.2 8.8
Cooper Companies 200.40 5.06 2.59 Polymetal Int 1035.00 28.83 2.86 Gas Natural 19.38 0.24 1.28 Nippon Meat Packers,. 3100.00 5.00 0.16 Shire 4638.00 -4.2 -0.8 Balfour Beatty 263.20 -7.5 -2.3 Hostelworld 212.00 -8.5 -4.5 Food & Drug Retailers 2974.22 -2.0 -3.5
Fmc 61.04 1.44 2.42 Hicl Infrastructure Ld 165.20 3.20 1.97 Asml Holding 119.10 1.50 1.28 Meiji Holdings Co., 9350.00 0.00 0.00 Tui Ag 1093.00 -4.1 -5.9 Rpc 866.50 -7.4 -18.4 Biotech Growth Trust (the) 740.00 -6.2 3.8 Software & Computer Services 1852.50 -2.0 -2.2
Sage 615.50 -3.7 -6.0 Euromoney Institutional Investor 1030.00 -6.8 -10.0 Gem Diamonds 104.00 -6.1 -5.4 Construction & Materials 6817.40 -2.0 0.1
Downs Downs Downs Downs
St. James's Place 1041.00 -3.7 2.9 Ao World 137.00 -6.3 -24.5 Oxford Biomedica 5.23 -5.8 28.5 Electronic & Electrical Equip. 5302.13 -1.9 8.1
Frontier Communications 2.01 -0.35 -14.83 Clarkson 2919.00 -201.00 -6.81 Ing Groep N.v. 13.82 -0.58 -4.03 T&d Holdings, . 1644.50 -127.50 -7.20
Hsbc Holdings 647.50 -3.3 -1.3 Worldwide Healthcare Trust 2307.00 -5.6 8.9 Enquest 40.25 -5.5 -3.9 Travel & Leisure 8987.67 -1.6 2.9
Nike 54.28 -3.74 -6.44 Rpc 866.50 -42.33 -4.65 Aegon 5.10 -0.14 -2.65 Thb Dai-ichi Life Insurance , 2054.00 -137.00 -6.25
Direct Line Insurance 334.90 -3.2 -9.3 Berendsen 781.50 -5.6 -9.7 Mothercare 120.00 -5.5 6.2 Support Services 7379.36 -1.5 4.9
Mallkrodt 42.29 -1.76 -4.00 Ao World 137.00 -6.60 -4.60 Ageas 36.16 -0.78 -2.11 Sumitomo Heavy Industries, 804.00 -45.00 -5.30
Wpp 1646.00 -3.1 -9.2 Jrp 136.00 -5.5 -9.0 The Gym 176.50 -5.0 3.4 General Financial 9680.63 -1.5 4.1
Transdigm orporated 216.57 -8.22 -3.66 Spectris 2437.00 -91.86 -3.67 Ryanair Holdings 14.45 -0.30 -2.03 Nksj Holdings,. 4133.00 -225.00 -5.16
Rio Tinto 3309.50 -3.1 2.7 Computacenter 715.00 -5.4 -10.0 Jimmy Choo 161.00 -4.8 14.3 Pharmaceuticals & Biotech. 14260.76 -1.4 5.9
L Brands 47.66 -1.52 -3.09 Cairn Energy 205.90 -7.52 -3.52 Casino Guichard 49.79 -1.03 -2.03 Tokio Marine Holdings,. 4813.00 -249.00 -4.92
Morrison (wm) Supermarkets 232.30 -3.0 0.8 Tp Icap 444.80 -4.7 2.4 Int Biotechnology Trust 593.50 -4.7 7.9 General Retailers 2444.82 -1.3 -5.6
Based on the constituents of the S&P500 and the Nasdaq 100 index Based on the constituents of the FTSE 350 index Based on the constituents of the FTSEurofirst 300 Eurozone index Based on the constituents of the Nikkei 225 index
Based on last week's performance. Price at suspension.

CURRENCIES
DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND
Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's
Mar 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change Mar 22 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 15.5775 -0.0750 16.8260 -0.0944 19.4330 -0.1006 Indonesia Indonesian Rupiah 13329.0000 10.0000 14397.2933 -0.5390 16628.0066 6.4674 Poland Polish Zloty 3.9618 0.0087 4.2793 0.0061 4.9424 0.0091 ..Three Month 0.8019 0.0003 0.8657 -0.0004 - -
Australia Australian Dollar 1.3033 0.0074 1.4077 0.0069 1.6258 0.0087 Israel Israeli Shekel 3.6486 0.0141 3.9410 0.0121 4.5516 0.0159 Romania Romanian Leu 4.2193 0.0026 4.5575 -0.0008 5.2636 0.0013 ..One Year 0.8030 0.0003 0.8651 -0.0004 - -
Bahrain Bahrainin Dinar 0.3770 - 0.4072 -0.0003 0.4703 -0.0002 Japan Japanese Yen 111.0900 -0.7900 119.9935 -0.9487 138.5853 -1.0360 Russia Russian Ruble 57.8525 0.3875 62.4892 0.3696 72.1713 0.4575 United States United States Dollar - - 1.0801 -0.0009 1.2475 -0.0005
Bolivia Bolivian Boliviano 6.9100 - 7.4638 -0.0059 8.6203 -0.0031 ..One Month 111.0898 -0.7903 119.9935 -0.9486 138.5853 -1.0362 Saudi Arabia Saudi Riyal 3.7501 - 4.0506 -0.0032 4.6782 -0.0017 ..One Month - - 1.0800 -0.1678 1.2476 -0.0005
Brazil Brazilian Real 3.0857 0.0013 3.3330 -0.0012 3.8494 0.0002 ..Three Month 111.0896 -0.7909 119.9936 -0.9485 138.5851 -1.0365 Singapore Singapore Dollar 1.3984 0.0002 1.5105 -0.0010 1.7445 -0.0004 ..Three Month - - 1.0796 -0.1678 1.2478 -0.0004
Canada Canadian Dollar 1.3347 0.0028 1.4417 0.0019 1.6650 0.0029 ..One Year 111.0879 -0.7942 119.9936 -0.9485 138.5853 -1.0372 South Africa South African Rand 12.5600 -0.0600 13.5666 -0.0756 15.6687 -0.0805 ..One Year - - 1.0780 -0.1678 1.2489 -0.0005
Chile Chilean Peso 663.0150 4.4950 716.1536 4.2940 827.1145 5.3102 Kenya Kenyan Shilling 102.9000 -0.1500 111.1471 -0.2499 128.3683 -0.2337 South Korea South Korean Won 1123.3000 2.9500 1213.3291 2.2315 1401.3225 3.1744 Venezuela Venezuelan Bolivar Fuerte 9.9850 -0.0050 10.7853 -0.0139 12.4563 -0.0107
China Chinese Yuan 6.8869 -0.0101 7.4389 -0.0168 8.5914 -0.0157 Kuwait Kuwaiti Dinar 0.3047 -0.0001 0.3291 -0.0003 0.3801 -0.0002 Sweden Swedish Krona 8.8000 0.0100 9.5052 0.0033 10.9780 0.0084 Vietnam Vietnamese Dong 22774.0000 -8.5000 24599.2778 -28.5951 28410.7052 -20.9211
Colombia Colombian Peso 2931.3000 23.4550 3166.2353 22.8563 3656.8125 27.9481 Malaysia Malaysian Ringgit 4.4275 0.0020 4.7824 -0.0016 5.5233 0.0005 Switzerland Swiss Franc 0.9898 -0.0036 1.0691 -0.0048 1.2348 -0.0050 European Union Euro 0.9258 0.0007 - - 1.1549 0.0005
Costa Rica Costa Rican Colon 557.7400 -0.0750 602.4411 -0.5565 695.7834 -0.3454 Mexico Mexican Peson 19.0653 -0.0339 20.5933 -0.0529 23.7840 -0.0509 Taiwan New Taiwan Dollar 30.4900 0.0770 32.9337 0.0572 38.0364 0.0823 ..One Month 0.9256 0.0007 - - 1.1549 0.0005
Czech Republic Czech Koruna 25.0155 0.0197 27.0204 -0.0001 31.2070 0.0132 New Zealand New Zealand Dollar 1.4174 0.0012 1.5310 0.0001 1.7683 0.0009 Thailand Thai Baht 34.6605 -0.0120 37.4384 -0.0425 43.2391 -0.0306 ..Three Month 0.9253 0.0007 - - 1.1548 0.0005
Denmark Danish Krone 6.8859 0.0074 7.4378 0.0021 8.5903 0.0061 Nigeria Nigerian Naira 307.0000 -7.7500 331.6051 -8.6394 382.9840 -9.8103 Tunisia Tunisian Dinar 2.2620 0.0005 2.4433 -0.0014 2.8219 -0.0005 ..One Year 0.9236 0.0007 - - 1.1541 0.0005
Egypt Egyptian Pound 18.1520 0.0310 19.6068 0.0180 22.6447 0.0305 Norway Norwegian Krone 8.4685 0.0055 9.1472 -0.0013 10.5645 0.0030 Turkey Turkish Lira 3.6112 -0.0016 3.9006 -0.0048 4.5049 -0.0036
Hong Kong Hong Kong Dollar 7.7667 0.0009 8.3891 -0.0056 9.6889 -0.0024 Pakistan Pakistani Rupee 104.8300 - 113.2318 -0.0894 130.7759 -0.0473 United Arab Emirates UAE Dirham 3.6729 - 3.9672 -0.0031 4.5819 -0.0017
Hungary Hungarian Forint 285.9835 0.8863 308.9041 0.7143 356.7658 0.9769 Peru Peruvian Nuevo Sol 3.2530 0.0075 3.5137 0.0054 4.0581 0.0080 United Kingdom Pound Sterling 0.8016 0.0003 0.8658 -0.0004 - -
India Indian Rupee 65.4488 0.2088 70.6943 0.1699 81.6476 0.2310 Philippines Philippine Peso 50.3000 0.1175 54.3314 0.0841 62.7495 0.1239 ..One Month 0.8017 0.0003 0.8658 -0.0004 - -
Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata
UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
Produced in conjunction with the Institute and Faculty of Actuaries Mar 22 Mar 21 Mar 20 Mar 17 Mar 16 Yr Ago High Low Year to date percentage changes Closing Day's Closing Day's
Strlg Day's Euro Strlg Strlg Year Div P/E X/D Total FT 30 3221.80 3252.50 3268.90 3259.00 3253.50 0.00 3275.20 3060.90 Personal Goods 20.91 Life Insurance 6.27 Gas Water & Multi 2.35 FTSE 100 Price Change FTSE 100 Price Change
Mar 22 chge% Index Mar 21 Mar 20 ago yield% Cover ratio adj Return FT 30 Div Yield 1.53 1.52 1.51 1.52 1.53 0.00 3.93 2.74 Forestry & Paper 16.15 Support Services 6.24 Construct & Material 2.24 3I Group PLC 711.50 -6.00 London Stock Exchange Group PLC 3018 -47.00
FTSE 100 (100) 7324.72 -0.73 6592.66 7378.34 7429.81 6199.11 3.66 0.89 30.78 75.41 6034.23 P/E Ratio net 29.10 29.32 29.47 29.34 29.25 0.00 19.44 14.26 Industrial Eng 13.08 Financial Services 6.02 Technology 1.85 Admiral Group PLC 1983 -9.00 Marks And Spencer Group PLC 324.90 -5.20
FTSE 250 (250) 18832.94 -0.82 16950.71 18988.02 19151.80 16864.64 2.72 1.84 20.06 58.57 13522.31 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Tech Hardware & Eq 12.57 Mobile Telecomms 5.79 Utilities 1.04 Anglo American PLC 1265 18.00 Mediclinic International PLC 761.00 -1.00
FTSE 250 ex Inv Co (207) 20144.36 -0.88 18131.06 20323.89 20497.49 18347.77 2.76 1.90 19.05 60.06 14750.88 FT 30 hourly changes Mining 12.46 Industrial Metals & 5.64 Telecommunications 0.69 Antofagasta PLC 843.50 14.00 Merlin Entertainments PLC 473.00 -10.50
FTSE 350 (350) 4042.43 -0.74 3638.42 4072.64 4102.18 3454.48 3.50 1.01 28.26 36.75 6690.70 8 9 10 11 12 13 14 15 16 High Low Automobiles & Parts 12.42 FTSE 250 Index 5.63 Software & Comp Serv 0.69 Ashtead Group PLC 1608 -41.00 Micro Focus International PLC 2150 -22.00
FTSE 350 ex Investment Trusts (306) 4010.80 -0.75 3609.95 4041.11 4070.23 3432.31 3.54 1.00 28.17 37.01 3419.45 3252.5 3219.7 3223.4 3225.3 3222 3222.6 3221.4 3222.7 3224.4 3252.5 3218.0 Consumer Goods 12.16 FTSE SmallCap Index 5.28 Industrial Transport 0.66 Associated British Foods PLC 2605 -56.00 Mondi PLC 1930 2.00
FTSE 350 Higher Yield (122) 3798.56 -0.65 3418.92 3823.39 3846.13 3169.69 4.77 0.69 30.41 53.71 6572.28 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Tobacco 11.75 Travel & Leisure 4.91 Consumer Services 0.32 Astrazeneca PLC 4852.5 26.00 Morrison (Wm) Supermarkets PLC 232.30 -3.70
FTSE 350 Lower Yield (228) 3889.48 -0.85 3500.75 3922.98 3957.65 3411.09 1.96 1.96 26.03 11.40 4220.68 Basic Materials 11.74 Real Est Invest & Se 4.55 Real Est Invest & Tr -0.24 Aviva PLC 534.00 -5.00 National Grid PLC 1001.5 1.00
FTSE SmallCap (282) 5361.23 -0.57 4825.41 5391.76 5411.20 4535.27 2.81 1.22 29.09 25.57 7606.22 Household Goods & Ho 11.56 Financials 4.43 Food Producers -0.49
FTSE SmallCap ex Inv Co (149) 4741.96 -0.62 4268.03 4771.48 4781.69 4150.35 2.94 1.54 21.99 16.23 7059.26 FX: EFFECTIVE INDICES Beverages 10.22 FTSE All{HY-}Share Index 4.26 Food & Drug Retailer -2.13
Babcock International Group PLC 911.00 -8.00 Next PLC 3885 20.00
Bae Systems PLC 644.50 - Old Mutual PLC 221.70 -2.70
FTSE All-Share (632) 3984.24 -0.74 3586.04 4013.76 4042.35 3403.59 3.48 1.02 28.29 35.61 6667.93 Electronic & Elec Eq 10.07 NON FINANCIALS Index 4.21 Media -2.15
Mar 21 Mar 20 Mnth Ago Mar 22 Mar 21 Mnth Ago Barclays PLC 224.55 -5.45 Paddy Power Betfair PLC 8610 -45.00
FTSE All-Share ex Inv Co (455) 3933.94 -0.75 3540.77 3963.57 3991.75 3368.04 3.52 1.01 28.02 35.87 3408.55 Aerospace & Defense 7.79 FTSE 100 Index 3.95 General Retailers -3.27 Barratt Developments PLC 546.00 0.50 Pearson PLC 645.50 -10.50
FTSE All-Share ex Multinationals (572) 1191.01 -0.87 888.47 1201.50 1208.05 1139.59 3.02 1.44 22.93 4.31 2103.26 Australia 97.01 97.65 97.10 Sweden 78.31 78.35 77.94 Pharmace & Biotech 7.64 Chemicals 3.84 Electricity -3.75 Bhp Billiton PLC 1271.5 -12.00 Persimmon PLC 2099 -3.00
FTSE Fledgling (95) 9582.26 -0.97 8624.58 9675.95 9702.13 7634.96 2.51 -0.04 -928.64 51.39 17800.00 Canada 88.36 88.22 90.09 Switzerland 161.92 162.23 162.72 Health Care 7.23 Banks 3.59 Oil Equipment & Serv -4.38 BP PLC 454.75 -3.60 Provident Financial PLC 2907 -23.00
FTSE Fledgling ex Inv Co (46) 13185.85 -1.20 11868.01 13345.94 13318.34 10706.37 2.97 -1.05 -32.05 84.14 23898.49 Denmark 107.81 107.79 107.24 UK 76.90 76.46 77.68 Industrials 6.65 Health Care Eq & Srv 3.43 Oil & Gas -6.83 British American Tobacco PLC 5180 -8.00 Prudential PLC 1726.5 -32.50
FTSE All-Small (377) 3730.12 -0.59 3357.31 3752.14 3765.49 3145.65 2.79 1.17 30.73 17.90 6793.58 Japan 139.44 138.89 138.65 USA 104.50 105.04 105.00 Equity Invest Instr 6.32 Leisure Goods 3.20 Oil & Gas Producers -6.90 British Land Company PLC 604.00 -12.00 Randgold Resources LD 7295 100.00
FTSE All-Small ex Inv Co Index (195) 3552.63 -0.64 3197.57 3575.59 3582.63 3099.50 2.95 1.44 23.59 12.58 6701.00 New Zealand 118.22 118.41 121.16 Euro 89.32 89.28 88.12 Nonlife Insurance 2.68 Fixed Line Telecomms -8.09 Bt Group PLC 330.55 3.50 Reckitt Benckiser Group PLC 7430 -9.00
FTSE AIM All-Share Index (813) 913.89 -0.64 822.56 919.82 926.48 710.33 1.63 0.66 93.75 2.72 1001.89 Norway 89.11 89.51 91.66
Bunzl PLC 2312 -53.00 RELX PLC 1545 7.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Burberry Group PLC 1748 -9.00 Rentokil Initial PLC 242.60 -0.80
Oil & Gas (16) 8220.15 -0.52 7398.60 8263.15 8288.05 6527.91 6.14 0.13 127.47 130.14 7494.37 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Carnival PLC 4475 -25.00 Rio Tinto PLC 3309.5 -17.50
Oil & Gas Producers (9) 7856.06 -0.52 7070.90 7897.32 7922.01 6212.62 6.21 0.13 124.45 128.27 7415.83 Centrica PLC 213.30 -1.80 Rolls-Royce Holdings PLC 758.00 -20.00
Oil Equipment Services & Distribution (7)16029.38 -0.45 14427.34 16102.51 16092.38 14418.91 3.76 0.05 574.76 0.00 12287.65 FTSE GLOBAL EQUITY INDEX SERIES Coca-Cola Hbc AG 2008 2.00 Royal Bank Of Scotland Group PLC 235.00 -3.20
Basic Materials (28) 5485.81 -0.11 4937.54 5492.03 5666.64 3229.46 2.02 1.37 36.29 70.03 5582.32 Compass Group PLC 1489 -24.00 Royal Dutch Shell PLC 2204 -6.50
Chemicals (7) 13375.99 -1.26 12039.14 13546.89 13645.03 11570.62 2.24 1.91 23.38 25.92 11848.66 Mar 21 No of US $ Day Mth YTD
YTD Gr Div Mar 21Total No of US $ Day Mth YTD Total YTD Gr Div Convatec Group PLC 264.30 2.80 Royal Dutch Shell PLC 2104.5 -8.00
Forestry & Paper (1) 22684.31 0.10 20417.16 22660.81 22837.11 15667.46 2.38 3.38 12.46 0.00 24339.02 Regions & countries stocks indices % % %
% Yield Sectors retn stocks indices % % % retn % Yield Crh PLC 2794 -26.00 Royal Mail PLC 408.50 -7.00
Industrial Metals & Mining (2) 2599.64 2.37 2339.82 2539.36 2674.79 897.52 0.00 0.00 9.33 0.00 2268.68 FTSE Global All Cap 7756 507.74 -0.7 0.36.5 6.0 715.89
2.4 Oil & Gas 147 356.08 -0.3 -0.3 -5.1 568.72 -4.4 3.5 Croda International PLC 3582 -47.00 Rsa Insurance Group PLC 589.00 -8.50
Mining (18) 15468.62 -0.03 13922.63 15473.52 16019.57 8626.12 2.00 1.13 44.39 226.52 8252.33 FTSE Global All Cap 7079 462.39 0.3 7.30.2 -0.3 624.68
2.5 Oil & Gas Producers 110 331.25 -0.3 -0.3 -5.7 539.61 -5.0 3.6 Dcc PLC 7025 -15.00 Sage Group PLC 615.50 -14.00
FTSE Global Large Cap 1440 447.38 -0.6 0.76.9 6.3 646.77
2.5 Oil Equipment & Services 28 337.31 -0.4 -0.4 -3.5 487.55 -3.0 2.9 Diageo PLC 2310 -9.50 Sainsbury (J) PLC 266.60 -6.50
Industrials (113) 5172.70 -1.09 4655.72 5229.82 5272.74 4356.33 2.29 0.85 51.18 10.10 5285.40
Construction & Materials (15) 6974.47 -0.94 6277.41 7040.37 7109.18 5242.92 2.12 0.47 101.42 75.65 7382.47 FTSE Global Mid Cap 1652 682.34 -0.8 -0.36.2 5.9 913.32
2.1 Basic Materials 259 457.17 -0.9 -0.9 8.3 690.18 8.8 2.2 Direct Line Insurance Group PLC 334.90 -5.10 Schroders PLC 3103 -26.00
Aerospace & Defense (9) 5140.22 -1.02 4626.49 5193.41 5213.89 4432.53 2.32 -2.29 -18.89 1.58 5454.63 FTSE Global Small Cap 4664 714.78 -1.3 -1.84.3 4.0 927.50
1.9 Chemicals 123 674.15 -0.4 -0.4 6.9 1021.23 7.2 2.4 Easyjet PLC 985.00 -24.00 Scottish Mortgage Investment Trust PLC 360.40 -2.60
General Industrials (5) 4811.63 -1.38 4330.74 4878.89 4950.96 3774.57 2.58 1.17 33.05 0.00 5402.39 FTSE All-World 3092 296.45 -0.6 0.66.8 6.3 441.40
2.4 Forestry & Paper 15 249.50 -1.1 -1.1 4.8 416.65 5.1 3.2 Experian PLC 1624 -2.00 Severn Trent PLC 2412 8.00
Electronic & Electrical Equipment (11) 6671.49 -1.73 6004.71 6789.04 6881.06 5505.18 1.88 1.95 27.36 6.30 6043.53 FTSE World 2547 524.56 -0.7 0.46.5 6.0 1048.76
2.4 Industrial Metals & Mining 68 403.98 -1.6 -1.6 11.6 608.04 11.8 1.7 Fresnillo PLC 1569 16.00 Shire PLC 4638 -42.50
Industrial Engineering (12) 12247.99 -1.54 11023.88 12440.09 12692.23 8306.23 2.12 1.44 32.66 3.67 14763.00 FTSE Global All Cap ex UNITED KINGDOM In 7428 526.53 -0.8 0.26.5 6.1 731.23
2.3 Mining 53 566.88 -1.5 -1.5 10.5 857.01 11.7 1.8 Gkn PLC 366.80 -3.90 Sky PLC 982.50 -4.50
Industrial Transportation (7) 4728.16 -1.05 4255.61 4778.11 4770.77 4138.62 3.98 1.22 20.53 4.61 4155.30 FTSE Global All Cap ex USA 5839 458.13 0.1 2.18.3 7.9 688.91
2.8 Industrials 545 354.79 -0.6 -0.6 7.1 506.71 7.5 2.1 Glaxosmithkline PLC 1670.5 -10.00 Smith & Nephew PLC 1238 1.00
Support Services (54) 7263.48 -0.99 6537.54 7336.12 7385.90 6460.31 2.21 1.87 24.23 6.90 7475.71 FTSE Global All Cap ex JAPAN 6463 518.56 -0.8 0.16.4 5.9 738.10
2.4 Construction & Materials 112 496.60 -0.2 -0.2 7.8 739.48 8.0 1.9 Glencore PLC 329.55 -0.55 Smiths Group PLC 1552 -20.00
FTSE Global All Cap ex Eurozone 7103 525.85 -0.8 -0.26.4 5.9 727.97
2.3 Aerospace & Defense 27 604.77 -1.2 -1.2 7.0 856.61 7.5 2.1 Hammerson PLC 572.00 -10.50 Smurfit Kappa Group PLC 2175 13.00
Consumer Goods (38) 21982.80 -0.37 19785.76 22064.54 22149.48 19113.26 2.84 1.83 19.21 239.41 16146.68
FTSE Developed 2105 475.56 -0.7 0.46.2 5.7 676.08
2.4 General Industrials 57 242.19 -0.7 -0.7 2.9 374.52 3.8 2.5 Hargreaves Lansdown PLC 1285 -14.00 Sse PLC 1498 -3.00
Automobiles & Parts (1) 8619.97 -1.05 7758.46 8711.62 8786.82 6749.33 2.39 1.88 22.35 0.00 8171.62
FTSE Developed All Cap 5698 499.61 -0.8 0.15.9 5.4 701.91
2.3 Electronic & Electrical Equipment 70 381.70 -0.4 -0.4 11.1 499.88 11.2 1.7 Hikma Pharmaceuticals PLC 2072 -25.00 St. James's Place PLC 1041 -16.00
Beverages (5) 18399.47 -0.40 16560.56 18473.20 18536.15 15874.65 2.58 1.54 25.22 170.25 12956.86
FTSE Developed Large Cap 913 439.25 -0.7 0.66.4 5.8 633.89
2.5 Industrial Engineering 101 694.24 -0.7 -0.7 10.2 976.05 10.5 2.1 HSBC Holdings PLC 647.50 -7.50 Standard Chartered PLC 725.00 -6.50
Food Producers (8) 7980.25 -1.63 7182.67 8112.16 8125.61 9089.84 2.03 1.81 27.13 4.06 6827.07
FTSE Developed Europe Large Cap 227 338.43 0.0 3.36.8 6.0 557.70
3.4 Industrial Transportation 99 593.99 -0.7 -0.7 5.5 847.89 5.9 2.3 Imperial Brands PLC 3827 -49.00 Standard Life PLC 356.20 -10.20
Household Goods & Home Construction (15)15013.52 -0.02 13513.01 15016.50 15085.10 14050.10 2.34 2.63 16.22 47.01 10481.26
FTSE Developed Europe Mid Cap 314 530.80 0.0 3.18.0 7.8 783.57
2.6 Support Services 79 316.54 -0.4 -0.4 7.2 432.31 7.4 1.8 Informa PLC 629.50 -10.50 Taylor Wimpey PLC 193.90 0.50
Leisure Goods (1) 5536.15 -1.36 4982.85 5612.57 5688.99 5733.37 3.60 1.45 19.13 0.00 4902.53
FTSE Dev Europe Small Cap 713 745.23 -0.3 2.37.7 2.4 Consumer Goods
7.4 1067.73 433 456.16 0.0 0.0 9.1 668.27 9.5 2.4 Intercontinental Hotels Group PLC 3785 -86.00 Tesco PLC 185.85 -3.05
Personal Goods (6) 30757.32 -0.15 27683.32 30804.37 31120.30 24369.45 2.60 3.14 12.28 179.83 20606.71
FTSE North America Large Cap 294 501.82 -1.2 -0.85.4 4.9 679.21
2.1 Automobiles & Parts 106 386.45 -0.5 -0.5 5.0 544.85 5.2 2.6 International Consolidated Airlines Group S.A. 545.00 -15.50 Tui AG 1093 -25.00
Tobacco (2) 58591.00 -0.46 52735.19 58863.78 58914.55 49237.39 3.49 1.19 24.02 1195.57 37841.77
FTSE North America Mid Cap 390 742.46 -1.6 -2.83.8 3.4 936.62
1.8 Beverages 46 592.61 0.5 0.5 7.4 882.07 8.0 2.6 Intertek Group PLC 3871 -9.00 Unilever PLC 4025.5 -3.00
Health Care (21) 10436.78 -0.29 9393.69 10466.95 10578.42 8831.31 3.37 0.63 46.85 155.98 8017.94
FTSE North America Small Cap 1451 755.75 -2.1 -4.11.5 1.2 926.29
1.6 Food Producers 109 597.40 -0.3 -0.3 5.0 896.81 5.2 2.2 Intu Properties PLC 275.40 -4.80 United Utilities Group PLC 1008 -
Health Care Equipment & Services (9) 7682.60 -0.08 6914.77 7688.42 7739.82 7065.01 1.39 2.55 28.20 8.10 6618.09
FTSE North America 684 335.46 -1.2 -1.15.1 4.7 464.82
2.1 Household Goods & Home Construction 49 441.53 -0.1 -0.1 9.2 642.28 9.8 2.2 Itv PLC 208.00 -0.70 Vodafone Group PLC 207.65 -1.95
Pharmaceuticals & Biotechnology (12)14156.47 -0.31 12741.62 14200.55 14357.66 11874.73 3.58 0.55 50.33 232.03 9697.83
FTSE Developed ex North America 1421 240.45 0.1 2.88.0 7.5 388.61
2.9 Leisure Goods 30 191.44 0.8 0.8 19.7 250.38 19.9 1.2 Johnson Matthey PLC 2958 -45.00 Whitbread PLC 3896 -18.00
Consumer Services (94) 4838.93 -1.26 4355.31 4900.87 4924.99 4850.32 2.61 2.08 18.42 17.09 4499.60 FTSE Japan Large Cap 180 346.72 0.4 1.66.4 6.4 443.85
2.0 Personal Goods 81 644.98 -0.2 -0.2 11.5 895.67 11.9 2.0
Food & Drug Retailers (7) 3103.28 -1.61 2793.13 3154.12 3168.86 3132.06 1.40 2.47 28.87 0.00 3601.47 Kingfisher PLC 328.00 -17.60 Wolseley PLC 5000 -85.00
FTSE Japan Mid Cap 317 562.14 0.6 2.78.8 8.8 692.19
1.7 Tobacco 12 1452.86 0.4 0.4 14.7 2979.84 15.9 3.4 Land Securities Group PLC 1040 -10.00 Worldpay Group PLC 289.00 -4.00
General Retailers (30) 2408.24 -1.62 2167.55 2447.84 2458.21 2811.68 3.18 2.21 14.23 2.16 2720.73
FTSE Global wi JAPAN Small Cap 796 613.28 0.7 3.1
10.0 9.9 781.07
1.8 Health Care 181 455.12 -0.7 -0.7 7.6 651.76 8.3 2.1 Legal & General Group PLC 250.90 -0.60 WPP PLC 1646 -23.00
Media (21) 7678.68 -0.68 6911.24 7731.48 7765.03 7618.10 2.89 1.79 19.28 1.50 4672.82
FTSE Japan 497 146.69 0.4 1.97.0 6.9 210.81
1.9 Health Care Equipment & Services 68 743.07 -0.6 -0.6 8.0 862.32 8.2 1.0 Lloyds Banking Group PLC 67.63 -1.11
Travel & Leisure (36) 8773.63 -1.48 7896.76 8905.77 8957.16 8221.01 2.49 2.22 18.09 74.13 8269.01
FTSE Asia Pacific Large Cap ex Japan 547 640.19 0.4 3.5
13.4 12.9 993.70
2.9 Pharmaceuticals & Biotechnology 113 328.76 -0.7 -0.7 7.4 491.98 8.4 2.5
Telecommunications (6) 3350.84 -0.25 3015.94 3359.33 3388.40 3874.79 5.26 0.33 58.20 0.00 3684.26 FTSE Asia Pacific Mid Cap ex Japan 412 858.91 0.3 3.0
13.3 12.9 1279.15
2.7 Consumer Services 383 414.44 -0.6 -0.6 5.0 550.06 5.4 1.8
Fixed Line Telecommunications (4) 3858.06 0.94 3472.47 3822.02 3888.20 5111.44 4.54 1.48 14.87 0.00 3478.29
Mobile Telecommunications (2) 4692.82 -0.85 4223.81 4732.98 4753.52 5025.07 5.62 -0.15 -121.95 0.00 4633.86
FTSE Asia Pacific Small Cap ex Japan
FTSE Asia Pacific Ex Japan
1450 537.28
959 506.52
0.4
0.4
2.5
10.9
3.4
13.4
10.5
12.9
787.99
2.5 Food & Drug Retailers
835.18
2.9 General Retailers
55 285.78
120 569.56
-0.5
-0.8
-0.5
-0.8
1.1 395.12
4.6 736.45
1.4
5.0
2.0
1.6
UK STOCK MARKET TRADING DATA
Utilities (7) 8763.43 -0.10 7887.58 8771.87 8727.07 8532.27 4.65 1.58 13.59 34.60 9820.80 FTSE Emerging All Cap 2058 701.10 0.1 2.4
12.2 11.9 1032.58
2.8 Media 79 325.02 -0.7 -0.7 6.9 432.17 7.0 1.9 Mar 22 Mar 21 Mar 20 Mar 17 Mar 16 Yr Ago
Electricity (2) 8821.06 -0.26 7939.45 8843.97 8881.17 8467.98 5.58 1.74 10.31 148.19 12602.69 FTSE Emerging Large Cap 527 659.98 0.1 2.3
11.8 11.5 978.78
2.8 Travel & Leisure 129 404.01 -0.3 -0.3 6.1 542.61 6.6 1.8 SEAQ Bargains 6767.00 6348.00 6271.00 6271.00 6271.00 5943.00
Gas Water & Multiutilities (5) 8269.20 -0.05 7442.75 8273.75 8212.00 8079.49 4.41 1.53 14.78 5.75 9259.65 FTSE Emerging Mid Cap 460 900.12 0.0 2.7
13.5 13.2 1316.21
2.8 Telecommunication 94 165.72 -0.2 -0.2 2.9 305.01 3.5 4.1 Order Book Turnover (m) 697.57 146.83 202.97 202.97 202.97 238.99
Financials (292) 4917.44 -1.15 4425.98 4974.87 4998.28 4114.75 3.57 1.17 23.97 42.33 4514.23 FTSE Emerging Small Cap 1071 736.24 0.1 2.7
13.8 13.6 1042.16
2.6 Fixed Line Telecommuniations 43 139.75 -0.4 -0.4 -0.6 283.11 0.3 4.6 Order Book Bargains 1174363.00 860353.00 1129592.00 1129592.00 1129592.00 1129708.00
Banks (12) 4148.16 -1.39 3733.57 4206.57 4224.60 3155.62 4.12 0.78 31.24 62.67 3051.98 FTSE Emerging Europe 114 347.09 -0.1 -1.23.3 3.2 530.90
3.8 Mobile Telecommunications 51 172.84 0.0 0.0 8.2 285.79 8.2 3.5 Order Book Shares Traded (m) 1615.00 1218.00 2739.00 2739.00 2739.00 1928.00
Nonlife Insurance (10) 3238.27 -1.06 2914.62 3273.11 3263.89 2879.04 3.04 1.74 18.92 39.27 5680.57 FTSE Latin America All Cap 231 852.19 -1.8 -2.7
11.5 11.0 1299.90
2.8 Utilities 168 260.91 1.0 1.0 5.8 500.24 6.5 3.8 Total Equity Turnover (m) 9670.46 8335.05 8732.93 8732.93 8732.93 9542.71
Life Insurance/Assurance (10) 8441.75 -1.39 7598.05 8561.04 8580.57 7279.33 3.55 1.31 21.58 0.21 8084.27 FTSE Middle East and Africa All Cap 242 722.76 0.0 3.4
10.5 3.1 Electricity
9.9 1115.33 109 287.65 1.0 1.0 5.8 545.80 6.5 3.9 Total Mkt Bargains 1305008.00 983581.00 1273161.00 1273161.00 1273161.00 1280371.00
Index- Real Estate Investment & Services (20) 2581.76 -0.90 2323.73 2605.16 2619.34 2705.80 2.61 2.69 14.21 11.54 6847.85 FTSE Global wi UNITED KINGDOM All Cap In 328 325.30 0.2 1.45.5 3.5 Gas Water & Multiutilities
4.5 539.05 59 271.93 0.9 0.9 6.0 534.38 6.5 3.8 Total Shares Traded (m) 6582.00 5653.00 7860.00 7860.00 7860.00 6513.00
Real Estate Investment Trusts (31) 2627.51 -1.01 2364.90 2654.21 2656.96 2743.37 3.70 1.62 16.70 22.51 3247.54 FTSE Global wi USA All Cap 1917 576.82 -1.4 -1.34.9 1.9 Financials
4.4 758.19 700 224.85 -1.0 -1.0 5.4 362.75 5.9 2.9 Excluding intra-market and overseas turnover. *UK only total at 6pm. UK plus intra-market turnover. (u) Unavaliable.
General Financial (32) 8273.15 -1.05 7446.30 8360.55 8463.13 7669.07 3.44 2.11 13.76 24.35 9370.18 FTSE Europe All Cap 1446 394.29 0.0 3.06.9 3.2 Banks
6.3 627.38 248 203.43 -1.2 -1.2 5.6 352.16 6.2 3.2 (c) Market closed.
Equity Investment Instruments (177) 9189.78 -0.46 8271.32 9232.20 9300.51 7446.39 2.44 1.12 36.58 44.28 4991.54 FTSE Eurozone All Cap 653 379.55 0.1 4.97.5 3.0 Nonlife Insurance
7.2 607.83 68 242.26 -0.7 -0.7 4.5 346.94 4.7 2.2
Non Financials (340) 4720.43 -0.59 4248.65 4748.43 4786.25 4063.07 3.45 0.96 30.17 42.72 6918.17 FTSE RAFI All World 3000 3052 6257.01 -0.5 -0.25.3 3.0 Life Insurance
4.8 8169.20 52 214.11 -0.8 -0.8 6.9 337.35 7.2 2.9
Technology (17) 1858.06 -1.16 1672.36 1879.80 1898.47 1450.52 2.38 0.72 58.44 17.41 2380.22 FTSE RAFI US 1000 1005 10326.46 -1.4 -2.42.3 2.4 Financial Services
1.8 13449.36 148 254.21 -1.7 -1.7 5.5 347.41 5.8 2.0 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Software & Computer Services (12) 2059.46 -1.19 1853.63 2084.27 2111.57 1872.43 2.34 1.27 33.66 20.30 2786.08 FTSE EDHEC-Risk Efficient All-World 3092 354.80 -0.7 0.16.4 2.2 Technology
6.0 489.79 182 215.76 -1.1 -1.1 11.1 262.94 11.5 1.6 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Technology Hardware & Equipment (5) 2250.34 -0.90 2025.43 2270.77 2239.13 1587.38 2.70 -2.87 -12.90 12.16 2638.22 FTSE EDHEC-Risk Efficient Developed Europe 541 287.44 -0.1 3.37.7 2.6 Software & Computer Services
7.4 432.30 89 367.10 -1.2 -1.2 10.3 426.94 10.6 1.0 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment 93 164.99 -1.1 -1.1 12.1 208.78 12.6 2.2 liable for any loss arising from the reliance on or use of the listed information.
Hourly movements 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day Alternative Energy 9 104.38 0.3 0.3 13.6 140.15 13.6 1.4 For all queries e-mail ft.reader.enquiries@morningstar.com
FTSE 100 7335.65 7308.90 7317.21 7317.11 7314.46 7315.92 7316.48 7324.27 7333.64 7338.46 7302.06 Real Estate Investment & Services 108 308.13 0.6 0.6 11.6 506.73 11.9 2.5
FTSE 250 18911.40 18749.53 18766.94 18785.09 18780.09 18798.94 18796.82 18810.66 18827.96 18911.40 18739.99 The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/
mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index and RAFI are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC
Data provided by Morningstar | www.morningstar.co.uk
FTSE SmallCap 5377.18 5360.49 5351.36 5351.25 5346.49 5353.40 5351.85 5348.54 5347.67 5377.18 5345.37
FTSE All-Share 3992.11 3974.47 3978.46 3979.03 3977.56 3979.03 3979.17 3982.95 3987.61 3992.27 3972.41 (US Patent Nos. 7,620,577; 7,747,502; 7,778,905; 7,792,719; Patent Pending Publ. Nos. US-2006-0149645-A1, US-2007-0055598-A1, US-2008-0288416-A1, US-2010- 0063942-A1, WO 2005/076812, WO 2007/078399 A2,
Time of FTSE 100 Day's high:15:46:15 Day's Low08:44:00 FTSE 100 2010/11 High: 7429.81(20/03/2017) Low: 7099.15(31/01/2017) WO 2008/118372, EPN 1733352, and HK1099110). EDHEC is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
Time of FTSE All-Share Day's high:08:04:00 Day's Low08:44:00 FTSE 100 2010/11 High: 4042.35(20/03/2017) Low: 3858.26(31/01/2017) www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the London Stock Exchange
Group companies and is used by FTSE International Limited under licence.
Further information is available on http://www.ftse.com FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the
London Stock Exchange Group companies and is used by FTSE International Limited under licence. Sector P/E ratios greater than 80 are not shown.
For changes to FTSE Fledgling Index constituents please refer to www.ftse.com/indexchanges. Values are negative.

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

Amount Latest Company Turnover Pre-tax EPS(p) Div(p) Pay day Total Issue Issue Stock Close Mkt
Issue paid renun. closing Cello Group Pre 165.266 156.74 1.686L 5.029 3.23L 3.54 2.4 2.02 May 26 3.4 2.86 date price(p) Sector code Stock price(p) +/- High Low Cap (m)
price up date High Low Stock Price p +or- CloudBuy Pre 1.714 1.748 4.272L 6.065L 3.2L 4.8L - - - - - 03/21 135.00 MGP Medica Group PLC 186.00 - 186.00 135.00 20666.7
85p Nil 03-04-17 151.25 146.50 Laird PLC 147.25 -1.75 ECSC Group Pre 4.51 - 0.517L - 8L - - - - - - 03/06 20.00 AIM AAOG Anglo African Oil & Gas PLC 27.00 -0.57 30.25 20.00 1435.1
345p Nil 27-03-17 462.90 455.80 Segro PLC 462.90 1.30 EG Solutions Pre 8.209 7.595 0.025 0.009 0.7 0.8 - - - - - 02/27 100.00 LXI LXI REIT PLC 103.75 -0.14 104.25 99.50 14333.1
130p Nil 24-04-17 203.10 197.50 Tullow Oil PLC 201.80 -1.90 Ferrexpo Pre 986.325 961.003 231.398 25.35 0.32 0.057 3.3 - May 31 3.3 - 02/22 150.00 AIM GBGI GBGI Ltd 141.50 0.00 159.00 138.00 12305.4
Fidelity Japanese Values Pre 31.809 23.067 0.07 0.14L - - - - - 02/17 207.00 ARIX Arix Bioscience PLC 202.50 0.24 218.00 171.70 19458.4
Haydale Graphene Industries Int 1.106 0.325 2.624L 2.014L 15L 16L - - - - - 02/16 139.00 XAF Xafinity PLC 156.13 1.63 160.36 151.00 21372.9
Kingfisher Pre 11225 10441 759 512 27.1 17.8 7.15 6.92 Jun 19 10.4 10.1 02/15 3.00 EML Emmerson PLC 2.63 0.00 3.60 2.50 126.5
Kings Arms Yard VCT Pre 1.37 1.412 0.719 0.869 0.29 0.4 0.5 0.5 Oct 31 1 1 02/15 86.00 AIM RFX Ramsdens Holdings PLC 99.00 -1.90 113.20 92.00 3052.9
Medaphor Group Pre 3.286 2.208 2.487L 1.672L 8.826L 8.095L - - - - -
Neptune-Calculus Income & Growth VCT Pre 0.077 0.114 0.05L 0.031L 0.45L 0.27L 2 2 Jun 30 3.5 3.5
Quixant Pre 90.365 41.829 11.663 7.788 0.143 0.099 2.457 2.222 May 18 2.5 2.2
Savills Pre 1445.9 1283.5 99.8 98.6 48.8 47 10.1 8 May 15 14.5 12
Softcat Int 378.45 293.591 20.98 15.434 8.5 6.1 2.9 1.7 Apr 28 6.48 1.7

Figures in m. Earnings shown basic. Figures in light text are for corresponding period year earlier. Placing price. *Intoduction. When issued. Annual report/prospectus available at www.ft.com/ir
For more information on dividend payments visit www.ft.com/marketsdata For a full explanation of all the other symbols please refer to London Share Service notes.
Thursday 23 March 2017 FINANCIAL TIMES 19

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

52 Week 52 Week 52 Week 52 Week 52 Week 52 Week
Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m
Australia (A$) Finland () Japan () Sweden (SKr) AutomData 103.30 0.18 105.20 84.36 1.97 32.20 46371.64 Lockheed 269.78 0.78 274.57 217.14 2.03 27.51 78188.5
ANZ 30.76 -0.81 32.05 22.06 7.78 16.97 69296.84 Nokia 4.97 -0.05 5.58 3.66 - - - AstellasPh 1504 -13.00 1779 1358 2.15 14.80 29159.69 AtlasCpcoB 269.00 -1.80 275.80 181.60 - - - Avago Tech 217.85 1.83 227.75 139.18 1.15 -41.53 87436.81 Lowes 82.34 0.42 84.00 64.87 1.56 29.20 71618.87
BHPBilltn 23.92 -0.72 27.95 15.85 2.38 39.10 58946.83 SampoA 43.85 -0.45 44.55 34.42 - - - Bridgestne 4531 -82.00 4717 3089 3.26 12.39 33163.8 Ericsson 57.20 -0.55 83.60 43.19 - - - BakerHu 60.81 0.58 68.59 38.16 1.04 -9.28 25865.48 Lyondell 88.00 -0.15 97.64 69.82 3.38 10.13 35422.76
CmwBkAu 82.71 -1.71 86.09 69.22 6.91 16.10 109358.84 France () Canon 3485 -50.00 3549 2780 4.53 20.68 41841.44 H&M 227.30 -1.50 305.10 226.20 - - - BankAm 22.84 -0.18 25.80 12.05 1.11 15.08 228672.77 Marathon Ptl 49.54 0.28 54.59 32.02 2.77 22.20 26150.93
CSL 122.58 -2.47 126.00 91.62 1.59 32.70 42812.22 Airbus Grpe 68.90 -0.71 71.85 48.07 1.89 20.65 57521.81 CntJpRwy 18290 -255.00 21045 16305 0.68 10.17 33916.1 Investor 364.00 -3.90 373.90 260.70 - - - Baxter 51.74 0.34 52.33 39.90 0.86 6.39 28038.17 Marsh&M 74.36 0.16 75.52 59.11 1.77 21.79 38295.67
NatAusBk 31.71 -0.51 33.28 23.90 7.76 15.52 65096.03 AirLiquide 106.00 0.30 106.65 88.25 2.14 21.21 44529.3 Denso 5048 -170.00 5323 3317 2.29 17.03 36082.98 Nordea Bk 98.55 -1.35 110.70 66.30 - - - BB & T 43.95 -0.06 49.88 32.22 2.45 17.01 35530.31 MasterCard 111.51 0.80 113.50 86.65 0.72 29.93 118044.45
Telstra 4.55 -0.06 5.86 4.52 8.81 16.31 41522.12 AXA 23.49 -0.44 25.05 16.11 4.50 10.09 61524.81 EastJpRwy 9752 -161.00 10645 8388 1.28 15.78 34184.05 SEB 105.80 -0.20 107.30 67.75 - - - BectonDick 182.98 1.66 186.11 147.74 1.32 37.42 38942.73 McDonald's 128.97 0.45 131.96 110.33 2.83 23.48 105623.42
Wesfarmers 43.29 -0.63 46.06 38.62 6.04 131.90 37565.79 BNP Parib 60.29 0.03 63.35 35.27 3.83 11.34 81232.23 Fanuc 22615 -390.00 23370 15445 2.19 31.38 41543.83 SvnskaHn 124.90 -0.10 136.30 90.25 - - - BerkshHat 253648.52 -2.48 266445 205074 - 18.66 195561.49 McKesson 146.44 0.44 199.43 114.53 0.73 17.11 31052.97
Westpc 33.49 -0.83 35.26 27.57 7.68 16.05 86254.6 ChristianDior 207.30 0.05 209.70 133.75 1.31 28.50 40418.24 FastRetail 34960 -890.00 44370 25305 1.02 72.60 33381.36 Swedbank 220.80 -1.00 234.00 159.70 - - - Biogen 277.56 1.77 307.33 205.43 - 16.24 59939.62 Medtronic 81.00 0.31 89.27 69.35 2.04 26.42 110879.68
Woolworths 25.43 -0.39 26.75 20.30 4.12 12.86 25135.23 Cred Agr 12.20 -0.08 12.70 6.79 4.85 7.24 37505.37 Fuji Hvy Ind 4120 -192.00 5016 3252 3.36 10.85 28526.46 Telia Co 36.62 -0.16 43.43 33.93 - - - BkNYMeln 46.05 -0.37 49.54 35.44 1.58 14.48 47691 Merck 63.43 -0.48 66.80 52.44 2.94 44.56 174151.57
Belgium () Danone 63.97 0.18 70.53 57.66 2.00 35.79 45320.17 Hitachi 611.60 -16.30 679.50 400.00 1.89 13.13 26610.39 Volvo 127.60 0.20 129.20 78.50 - - - BlackRock 374.60 -0.56 399.46 317.60 2.47 19.49 60779.21 Metlife 51.53 -0.39 58.09 36.17 3.09 81.17 56026.35
AnBshInBv 102.80 -0.90 119.60 92.13 3.43 63.05 188016.09 EDF 7.67 -0.11 12.82 7.33 20.05 6.77 17473.63 HondaMtr 3413 -129.00 3675 2417 2.54 14.98 55652.23 Switzerland (SFr) Boeing 176.53 0.57 185.71 122.35 2.27 28.02 108120.85 Microsoft 64.93 0.72 65.91 48.04 2.29 30.19 501717.6
KBC Grp 62.78 -0.37 64.79 39.35 - 16.94 28351.16 Engie SA 12.47 -0.01 15.21 10.77 7.70 -6.70 32801.9 JapanTob 3752 -104.00 4837 3607 3.59 14.79 67548.84 ABB 22.96 -0.14 23.87 18.14 3.29 26.41 51374.54 BrisMySq 56.06 0.35 77.12 46.01 2.60 29.19 93772.42 Mnstr Bvrg 46.94 0.25 55.50 40.30 - 43.90 26597.11
Esslr Intl 111.75 -0.75 124.55 93.41 0.95 32.16 26377.98 KDDI 3007 -33.00 3446 2745.5 2.63 13.06 70931.91 CredSuisse 14.85 -0.27 16.31 9.76 4.62 -4.38 31354.79 CapOne 83.53 -0.12 96.92 58.03 1.66 14.01 40148.01 MondelezInt 43.91 -0.19 46.40 39.21 1.66 41.42 67033.54
Brazil (R$)
Hermes Intl 432.20 3.75 436.90 289.20 0.74 45.62 49283.97 Keyence 44730 -460.00 45650 28790 0.26 - 48963.36 Nestle 76.95 -0.15 77.45 71.45 2.87 28.46 241948.59 CardinalHlth 81.51 0.06 87.85 62.70 2.15 19.45 25712.72 Monsanto 112.75 -0.05 116.04 84.79 1.91 31.54 49447.06
Ambev 17.27 -0.15 20.09 15.79 2.17 24.91 87969.61
LOreal 178.30 0.90 179.60 151.30 1.71 32.88 108244.36 MitsbCp 2427.5 -63.50 2705.5 1679.5 2.39 -30.01 34745.8 Novartis 73.40 -1.05 82.80 67.00 3.51 27.19 194817.38 Carnival 58.09 0.30 58.76 42.94 2.13 18.88 31126.69 MorganStly 42.17 -0.49 47.33 23.11 1.68 14.30 78696.17
Bradesco 31.72 0.37 34.16 23.96 3.06 12.07 28545.07
LVMH 199.60 0.90 201.80 130.55 1.71 28.33 109311.46 MitsubEst 2102 -70.50 2443 1724 0.82 32.15 26314 Richemont 76.90 0.60 78.45 65.60 2.18 39.42 40555.46 Caterpillar 92.28 -0.15 99.46 69.04 3.37-830.96 54120.93 MylanNV 41.61 -0.06 50.40 33.60 - 44.80 22282.03
Cielo 26.79 0.09 37.78 24.43 1.74 17.28 19656.45
Orange 14.83 0.13 15.85 12.38 3.88 18.17 42595.97 MitsubishiEle 1646 -42.50 1802 1064.5 1.73 14.98 31814.7 Roche 250.20 0.10 265.20 218.30 3.07 25.04 177592.63 CBS 66.15 0.18 68.59 48.88 1.01 18.94 24602.37 Netflix 141.03 -1.39 147.70 84.50 - 324.86 60700.95
ItauHldFin 33.82 0.59 36.38 22.27 0.44 10.76 36736.49
PernodRic 110.65 0.65 111.65 90.00 1.63 24.79 31722.72 MitsuiFud 2413 -62.50 3009 2031.5 1.20 18.99 21534.87 Swiss Re 89.35 -1.00 98.50 88.60 5.32 9.11 32504.02 Celgene 123.31 -0.51 127.64 94.42 - 49.05 95931.05 NextEraE 132.11 0.26 133.20 110.49 2.66 20.94 61772.24
Petrobras 14.13 0.43 19.72 9.36 - -4.15 34080.93
Renault 79.50 0.05 90.76 63.64 2.03 9.08 25394.17 MitUFJFin 713.70 -32.00 778.80 425.80 2.16 14.47 91028.08 Swisscom 457.10 -0.70 526.00 426.80 4.72 16.07 23922.68 CharlesSch 40.02 -0.42 43.65 23.83 0.62 33.61 53425.47 Nike 54.28 -3.74 65.44 49.01 1.21 23.95 71926.61
Vale 29.90 0.86 37.28 13.66 0.96 -10.15 31174.62
Safran 69.19 1.04 69.89 53.00 1.53 -79.69 31166.86 Mizuho Fin 206.50 -4.50 225.30 142.00 3.49 6.52 47189.34 Syngent 433.30 -1.20 444.60 360.50 2.62 33.90 40527.49 Charter Communications 320.49 -0.17 341.50 193.77 - 19.91 86179.05 NorfolkS 111.97 0.47 125.00 78.15 2.02 21.55 32531.85
Canada (C$) Murata Mfg 15575 -355.00 16790 10365 1.36 22.82 31582.33 ChevrnTx 108.70 0.66 119.00 92.25 3.67-298.67 205780.29 Northrop 241.77 2.05 253.80 193.25 1.46 19.65 42213.65
Sanofi 82.77 0.05 83.73 62.50 3.49 24.76 115542.58 UBS 15.53 -0.27 17.49 15.27 5.37 17.40 60423.1
BCE 58.63 0.63 63.41 56.80 4.49 19.02 39466.46 NipponTT 4923 -23.00 5180 4156 2.34 13.14 92902.6 Chubb 136.59 0.51 140.56 116.65 2.03 15.25 63621.04 NXP 102.78 -0.16 107.54 73.62 - 175.52 35562.17
Sant Gbn 46.21 -0.02 48.12 32.15 1.14 82.24 27720.29 Zurich Fin 284.40 -1.60 290.80 195.30 6.19 13.32 43301.59
BkMontrl 98.35 -0.30 104.15 77.08 3.55 12.82 47816.97 Nissan Mt 1115 -23.00 1220 893.10 3.88 9.67 42362.94 Cigna 150.70 1.09 154.83 115.03 0.03 21.32 38736.51 Occid Pet 63.52 0.16 78.48 61.01 4.80 -48.03 48547.78
Schneider 66.40 -0.69 69.53 49.50 2.97 21.80 42498.37 Taiwan (NT$)
BkNvaS 76.72 0.45 82.30 60.95 3.86 12.79 69520.58 Nomura 712.00 -33.80 784.00 338.80 1.62 17.05 24499.64 Cisco 34.08 0.20 34.53 25.81 3.03 17.71 170642.7 Oracle 44.80 -0.04 46.99 37.62 1.34 21.18 184337.84
SFR Group 28.17 -0.27 39.18 19.51 - -36.24 13460.23 Chunghwa Telecom 104.50 - 125.50 99.50 4.90 21.19 26587.49
Brookfield 47.61 -0.44 49.37 41.05 1.37 17.94 35183.41 Nppn Stl 2578.5 -75.00 2912 1787.5 1.23 61.34 22057.82 Citigroup 57.76 -0.28 62.53 38.31 0.73 12.07 159698.62 Pepsico 112.18 0.41 112.38 98.50 2.49 25.62 160220.26
SocGen 46.77 -0.73 49.38 25.00 4.27 10.15 40804.57 Formosa PetChem 106.50 - 115.00 83.30 3.59 14.03 33273.7
CanadPcR 193.01 0.58 209.12 156.01 0.96 18.07 21164.6 NTTDCMo 2673 -27.50 2946 2361 2.96 15.11 95248.76 CME Grp 119.22 -1.06 127.60 89.00 1.85 28.94 40492.82 Perrigo 68.50 0.36 133.93 67.08 0.66 - 9820.43
Total 46.24 -0.08 49.50 38.07 5.46 19.71 122557.85 HonHaiPrc 91.50 - 91.80 72.50 3.71 12.81 52003.2
CanImp 115.89 -0.37 120.83 94.51 3.87 11.70 34692.85 Panasonic 1205 -40.00 1309.5 831.40 2.19 13.16 26608.42 Coca-Cola 42.35 -0.16 47.13 39.88 3.34 28.15 181745.36 Pfizer 34.38 0.13 37.39 29.41 3.30 35.79 204707.45
UnibailR 220.00 0.55 250.55 203.10 4.23 8.95 23619.18 MediaTek 227.50 - 260.50 192.00 4.52 16.51 11804.87
CanNatRs 42.46 0.04 46.74 33.11 2.11 -75.06 35342.05 Seven & I 4352 -69.00 5028 4051 1.87 35.64 34726.75 Cognizant 59.12 0.59 63.23 45.44 - 24.05 35982.63 Phillips66 78.47 -0.13 90.87 73.67 3.15 26.62 40633.57
Vinci 72.19 - 72.63 49.93 2.59 16.35 46011.76 TaiwanSem 193.50 - 195.00 143.00 2.90 17.70 164563.01
CanNatRy 95.85 0.55 98.23 72.78 1.38 22.06 54624.57 ShnEtsuCh 9470 -228.00 10120 5517 1.28 23.99 36835.45 ColgtPlm 73.76 0.06 75.38 63.43 2.12 26.86 65119.51 PhilMorris 113.26 -0.23 114.65 86.78 3.67 25.04 175705.89
Vivendi 16.93 -0.05 20.09 14.87 11.65 18.47 23536.83
Enbridge 54.60 0.48 59.19 48.60 3.90 28.15 66855.06 Softbank 8053 -221.00 9066 5194 0.50 24.54 79787.72 Thailand (THB) Comcast 37.08 0.01 38.44 29.35 1.50 20.58 88385.56 PNCFin 118.32 -0.38 131.83 77.40 1.81 16.05 57522.01
GtWesLif 36.74 -0.12 37.79 30.83 3.51 14.15 27152.38 Germany () PTT Explor 406.00 - 430.00 272.00 2.41 12.79 33457.61
Sony 3553 -74.00 3665 2541 0.54-101.48 40413.43 ConocPhil 44.80 -0.39 53.17 38.19 2.25 -15.25 55359.12 PPG Inds 103.98 -0.50 117.00 89.64 1.51 48.81 26687.42
ImpOil 40.85 -0.03 48.72 38.41 1.45 15.94 25941.73 Allianz 168.90 -1.35 172.35 118.35 4.15 13.39 83373.62
SumitomoF 4150 -116.00 4768 2766.5 3.48 7.75 52825.02 United Arab Emirates (Dhs) Corning 27.20 0.33 28.36 18.21 2.00 8.34 25244.14 Praxair 116.98 0.03 125.00 106.31 2.59 22.24 33371.73
Manulife 22.70 -0.35 25.57 16.43 3.28 16.02 33594.02 BASF 88.70 0.12 91.59 61.58 3.14 21.15 87998.55
Takeda Ph 5222 -93.00 5527 4098 3.31 32.16 37155.13 Emirtestele 18.05 -0.10 20.20 17.15 4.14 18.88 42739.68 Costco 167.47 0.69 178.71 138.57 1.08 30.82 73509.49 Priceline 1746.69 -0.45 1776.69 1148.06 - 40.56 85885.48
Potash 22.68 -0.02 26.62 19.93 5.82 44.28 14267.4 Bayer 105.05 -0.35 112.00 83.45 2.35 20.81 93833.3
TokioMarine 4813 -249.00 5441 3063 2.50 12.53 32819.92 United Kingdom (p) CrownCstl 91.28 0.58 102.82 79.38 3.99 95.17 32909.94 ProctGmbl 90.90 -0.29 92.00 79.10 2.97 26.10 232386.34
RylBkC 95.38 -0.05 99.90 73.18 3.49 13.10 105414.94 BMW 82.74 -0.19 91.76 63.38 3.81 8.03 53801.12
Toyota 6161 -212.00 7215 4917 3.59 9.06 180964.34 AscBrFd 2605 -56.00 3465 1910 1.31 36.50 25727.43 CSX 46.38 0.76 50.31 24.36 1.35 27.83 42963.98 Prudntl 105.18 -0.66 114.55 66.51 2.69 10.73 45227.4
Suncor En 40.40 -0.15 44.90 32.69 2.89 148.91 50503.89 Continental 193.20 -1.45 201.50 158.20 1.86 13.80 41738.12
Mexico (Mex$) AstraZen 4852.5 26.00 5505 3680 4.52 21.72 76593.85 CVS 78.13 -0.49 106.67 69.30 2.20 15.76 80132.78 PublStor 225.26 0.98 277.60 200.65 3.27 32.76 39084.22
ThmReut 57.93 0.25 60.13 50.01 3.16 32.08 31561.28 Daimler 69.90 -0.65 73.23 50.83 4.65 9.16 80775.16
AmerMvl 13.53 -0.04 14.10 10.40 1.89 31.78 31411.83 Aviva 534.00 -5.00 570.50 290.00 3.90 44.50 27059.25 Danaher 86.25 -0.03 88.01 70.07 0.67 27.74 59795.42 Qualcomm 56.81 0.01 71.62 49.67 3.42 15.52 83903.32
TntoDom 64.75 -0.09 71.31 53.91 3.45 13.23 90227.95 Deut Bank 15.73 -0.28 19.97 9.90 - -13.21 23434.83
FEMSA UBD 169.99 -1.85 184.10 28.35 1.31 35.31 - Barclays 224.55 -5.45 267.32 121.10 2.45 -47.11 47524.85 Deere 109.98 0.37 112.18 74.91 1.86 25.88 35004.78 Raytheon 154.19 0.59 157.59 120.24 1.92 20.53 45159.17
TrnCan 61.46 0.37 65.24 48.25 3.69 382.27 39919.3 Deut Tlkm 15.96 - 16.67 13.54 3.44 12.88 80600.51
WalMrtMex 42.19 -0.05 46.10 34.70 1.24 27.70 38640.86 BP 454.75 -3.60 521.20 249.44 6.76 -29.40 110472.53 Delphi 78.42 0.26 83.23 58.04 1.49 18.45 21117.51 Regen Pharm 369.51 -1.47 452.96 325.35 - 61.77 38491.6
ValeantPh 14.25 -0.11 50.18 13.82 - -1.52 3662.38 DeutsPost 31.23 -0.29 32.95 23.36 2.68 15.08 41859.8
BrAmTob 5180 -8.00 5254.27 3940 2.97 22.37 120477.35 Delta 45.53 0.01 52.76 32.60 1.11 7.95 33271.26 ReynoldsAm 62.12 0.12 62.28 43.38 2.86 14.48 88579.04
E.ON 7.10 0.00 9.72 5.99 6.94 -5.90 15350.07 Netherlands ()
China (HK$) BSkyB 982.50 -4.50 1050 560.00 3.34 27.29 21069.55 Devon Energy 39.25 -0.55 50.69 24.58 1.47 -2.23 20590.55 S&P Global 128.33 0.13 133.08 95.07 1.13 16.01 33181.34
Fresenius Med 76.73 0.01 85.65 70.00 1.09 20.22 25462.44 Altice 20.44 -0.16 21.54 12.20 - -19.24 21468.03
AgricBkCh 3.58 -0.07 3.74 2.66 5.21 5.82 14169.06 BT 330.55 3.50 457.25 297.80 3.90 11.21 41070.71 DiscFinServ 67.54 -0.06 74.33 48.68 1.44 14.96 25928.64 Salesforce 81.62 0.07 84.48 66.43 - 275.43 57742.61
Fresenius SE 72.93 -0.02 77.45 60.00 0.74 25.51 35293.43 ASML Hld 119.10 1.50 120.60 79.38 0.87 35.12 56501.04
Bk China 3.93 -0.06 4.08 2.90 5.04 6.17 42313.71 Compass 1489 -24.00 1559 1203.5 2.03 24.69 30533.88 Disney 111.68 -0.08 113.16 90.32 1.35 19.93 176365.08 Schlmbrg 78.09 -0.60 87.84 71.34 2.59 -62.38 108866.85
HenkelKgaA 102.70 -0.70 106.25 82.66 1.39 22.07 28819.44 Heineken 79.38 -0.45 86.95 67.47 1.27 28.26 49387.65
BkofComm 6.09 -0.10 6.44 4.46 4.69 6.49 27453.5 Diageo 2310 -9.50 2348.09 1737 2.49 25.93 72535.19 DominRes 78.99 0.78 79.36 68.71 3.58 22.74 49624.09 Sempra Energy 112.00 0.74 114.66 92.95 2.72 20.32 28060.89
Linde 150.30 -2.85 166.00 116.80 1.92 26.39 30153.05 ING 13.82 -0.58 14.75 8.30 4.64 11.98 57900.56
BOE Tech 1.72 0.02 2.30 1.55 0.99 34.34 44.06 GlaxoSmh 1670.5 -10.00 1745.56 1363 4.79 89.81 102466.59 DowChem 62.37 -0.71 64.73 47.51 2.83 10.16 75674.24 Shrwin-Will 311.07 3.12 316.66 239.48 1.09 25.70 28973.14
MuenchRkv 177.00 -0.30 185.00 140.90 4.60 11.13 30791.25 Unilever 46.53 0.11 46.83 36.22 2.67 25.93 86171.63
Ch Coms Cons 11.36 -0.12 11.60 7.81 1.87 10.26 6475.93 Glencore 329.55 -0.55 347.00 124.55 - -81.45 59178.94 DukeEner 82.87 0.19 87.75 72.34 4.09 22.12 57976.78 SimonProp 165.33 -3.63 229.10 163.55 3.75 29.33 52876.54
SAP 90.50 0.24 91.70 64.94 1.25 30.20 120090.33 Norway (Kr)
Ch Evrbrght 3.94 -0.03 4.06 3.09 5.28 5.92 3484.51 HSBC 647.50 -7.50 715.20 392.37 6.42 114.30 160429.66 DuPont 78.81 -0.95 81.86 61.12 1.85 35.37 68137.08 SouthCpr 36.29 0.40 39.50 24.90 0.45 43.94 28052.77
Siemens 122.00 -1.20 126.50 86.82 2.83 17.83 112011.23 DNB 137.40 -2.30 144.90 90.80 - - -
Ch Rail Cons 11.76 -0.02 11.92 8.51 1.45 10.84 3143.87 Imperial Brands 3827 -49.00 4154 3324 3.79 57.98 45770.79 Eaton 72.55 0.56 74.35 54.30 3.17 17.07 32542.38 Starbucks 55.99 0.45 61.64 50.84 1.37 30.68 81595.45
Volkswgn 139.65 1.75 157.40 116.05 0.08 42.67 44512.09 Statoil 146.20 -1.80 163.50 120.20 - - -
Ch Rail Gp 7.39 -0.06 7.68 5.40 - 12.57 4003.33 LlydsBkg 67.63 -1.11 74.00 47.10 3.47 28.18 60228.5 eBay 33.45 0.26 34.43 22.30 - 5.20 36361.58 StateSt 76.73 0.42 83.49 50.60 1.89 15.29 29306.25
ChConstBk 6.36 -0.14 6.55 4.50 4.70 6.41 196875.34 Hong Kong (HK$) Telenor 143.00 -1.10 150.90 122.50 - - - Ecolab 124.23 0.03 126.17 108.04 1.15 29.72 36033.82 Stryker 132.55 0.17 133.59 104.34 1.05 33.50 49450.36
Natl Grid 1001.5 1.00 1148 888.90 4.33 18.41 46888.59
China Vanke 22.50 -0.40 24.10 14.56 3.48 12.28 3809.42 AIA 49.90 -0.25 54.15 41.50 1.46 18.39 77474.23 Qatar (QR) Emerson 58.93 -0.04 64.37 48.45 3.00 22.39 38010.44 Sychrony Fin 33.02 0.00 38.06 23.25 0.38 12.93 26775.42
Prudential 1726.5 -32.50 1801.5 1096 2.25 24.15 55595.15
ChinaCitic 5.27 -0.06 5.50 4.36 4.41 5.49 10098.14 BOC Hold 31.80 -0.35 32.40 21.55 2.99 16.54 43289.51 QatarNtBk 145.00 -2.00 173.00 133.50 2.44 9.97 33434.83 EOG Res 94.73 0.20 109.37 69.66 0.71 -47.39 54674.34 Target 53.23 -0.16 84.14 52.77 3.52 11.88 29418.91
RBS 235.00 -3.20 260.90 148.40 - -5.11 34661.33
ChinaLife 24.30 -0.90 25.50 16.00 1.72 24.03 23281.65 Ch OSLnd&Inv 24.35 -0.45 27.85 20.15 2.34 7.03 34349.88 EquityResTP 63.13 0.14 75.49 58.28 3.14 5.73 23174.88 TE Connect 74.00 0.40 76.77 54.54 1.82 14.65 26291.67
Russia (RUB) ReckittB 7430 -9.00 7786 6496 1.87 34.27 64890.34
ChinaMBank 20.95 -0.55 21.85 15.00 3.70 7.68 12383.63 ChngKng 53.00 -0.55 59.75 44.05 2.47 11.65 25932.72 Exelon 36.36 0.40 37.70 29.82 3.51 29.52 33660.75 Tesla Mtrs 251.92 1.24 287.39 178.19 - -40.99 40727.21
Gzprm neft 131.65 2.35 170.43 127.20 5.28 4.13 53871.68 RELX 1545 7.00 1547 631.02 2.11 27.69 39440.45
ChinaMob 90.35 - 99.30 80.30 2.64 16.84 238192.73 Citic Ltd 11.28 -0.24 12.78 10.54 2.48 13.57 42249.53 ExpScripts 64.01 0.17 80.02 63.22 - 11.76 38426.02 TexasInstr 80.45 0.70 82.44 56.08 2.06 22.90 80421.02
Lukoil 3120.5 19.50 3582 2523 5.00 26.52 45878.45 RioTinto 3309.5 -17.50 3718.5 1845 3.59 16.02 57130.06
ChinaPcIns 28.95 -0.75 31.00 24.25 3.80 19.09 10344.88 Citic Secs 16.72 -0.28 19.40 15.14 3.37 15.41 6282.55 ExxonMb 81.80 -0.04 95.55 80.31 3.35 34.78 339005.9 TheTrvelers 121.75 0.06 125.49 103.45 2.17 11.73 34051.71
MmcNrlskNckl 9180 71.00 11199 8064 6.69 17.35 25110.3 RollsRoyce 758.00 -20.00 875.50 588.00 1.54 -3.44 17388.01
ChMinsheng 8.69 -0.09 9.48 6.89 4.53 6.12 7757.91 CK Hutchison 96.45 -0.50 103.90 80.60 2.47 14.05 47906.51 Facebook 139.00 0.49 142.31 106.31 - 55.88 327368.37 ThrmoFshr 155.32 -0.22 161.66 137.40 0.39 30.17 60635.54
Novatek 747.00 4.50 800.70 581.30 1.63 12.06 39205.24 RylDShlA 2104.5 -8.00 2295.5 1622 7.16 44.83 116275.29
ChMrchSecs RMB 16.48 -0.11 20.09 15.21 4.41 16.92 11280.33 CNOOC 8.93 -0.16 10.88 8.46 5.12-163.71 51335.2 Fedex 194.67 2.83 201.57 145.00 0.56 30.32 51881.36 TimeWrnr 96.73 -0.74 99.29 68.97 1.68 19.39 74901.36
Rosneft 320.35 4.35 425.70 293.25 3.10 14.99 58685.93 Shire 4638 -42.50 5377 2707.19 0.44 91.98 52339.75
Chna Utd Coms RMB 7.66 - 8.05 3.75 0.751048.92 23576.13 HangSeng 158.40 -1.60 164.40 127.60 3.36 21.41 38991.82 FordMtr 11.77 0.05 14.22 11.07 4.76 5.95 45943.55 TJX Cos 78.41 0.32 83.64 71.50 1.07 24.26 51487.53
Sberbank 162.92 -0.06 185.34 105.35 0.21 15.03 60791.65 StandCh 725.00 -6.50 821.60 425.65 - -61.78 29705.77
ChShenEgy 18.78 -0.12 19.78 11.40 1.92 14.57 8217.87 HK Exc&Clr 196.40 -3.30 213.20 175.00 2.62 40.88 30960.2 Franklin 41.29 -0.07 44.35 30.56 1.67 14.62 23339.29 T-MobileUS 63.25 0.78 65.41 36.27 - 37.07 52277.76
Surgutneftegas 30.08 0.42 40.00 26.92 - 3.22 18572.52 Tesco 185.85 -3.05 219.40 143.08 - 72.03 18953.26
ChShpbldng RMB 7.22 -0.07 8.13 5.80 - -99.69 19249.82 MTR 42.85 -0.45 44.50 35.55 2.31 27.14 32582.64 GenDyn 189.74 1.05 194.00 127.74 1.58 19.04 57442.31 UnionPac 104.05 0.40 111.38 77.29 2.03 21.71 84675.39
Saudi Arabia (SR) Vodafone 207.65 -1.95 240.10 186.50 6.06 -8.55 68954.71
ChStConEng RMB 8.96 0.03 11.45 5.09 1.77 11.41 38622.97 SandsCh 35.05 -0.25 39.30 24.60 5.72 29.47 36426.13 GenElectric 29.54 0.15 33.00 28.19 3.18 29.26 257770.22 UPS B 106.39 -0.12 120.44 100.05 2.77 19.75 73376.82
AlRajhiBnk 63.00 -0.25 67.50 48.60 2.80 12.49 27299.64 WPP 1646 -23.00 1928.07 1204 2.72 25.60 26274.73
ChUncHK 10.08 -0.10 10.48 7.70 1.90 54.73 31079.96 SHK Props 114.90 -0.20 123.30 85.40 2.81 10.88 42835.79 GenMills 58.88 -0.89 72.95 58.59 3.24 21.75 34148.16 USBancorp 52.59 -0.10 56.61 38.48 2.05 16.08 89042.39
Tencent 225.20 -3.60 229.80 152.20 0.19 56.63 274800.07 Natnlcombnk 38.50 -1.10 46.30 32.00 3.54 8.19 20533.06 United States of America ($)
CNNC Intl RMB 7.36 0.02 8.02 6.58 - 32.64 4532.62 GenMotors 34.41 -0.15 38.55 27.34 4.19 4.14 51537.47 UtdHlthcre 167.13 -0.57 172.14 125.26 1.29 25.71 158968.24
SaudiBasic 95.50 -1.00 98.50 73.25 5.03 18.15 76398.99 21stC Fox A 30.90 0.34 31.75 23.33 1.08 18.55 32516.6
CSR 7.78 -0.13 8.35 6.45 3.88 331.81 4378.58 India (Rs) GileadSci 67.72 -0.02 103.10 65.38 2.74 6.75 88514.57 UtdTech 112.07 -0.09 114.44 96.89 2.36 18.11 89845.04
SaudiTelec 66.75 -0.25 74.00 51.00 5.75 16.84 35599.52 3M 191.99 -0.14 193.50 163.05 2.33 23.30 114464.44
Daqin RMB 7.12 0.03 7.69 5.98 6.27 15.96 15370.03 Bhartiartl 338.20 -11.70 401.00 283.05 0.38 38.37 20656.17 GoldmSchs 230.00 -3.00 255.15 138.20 1.14 13.98 91491.8 ValeroEngy 67.46 0.31 71.40 46.88 3.59 13.53 30427.8
Singapore (S$) AbbottLb 44.77 -0.03 45.84 36.76 2.35 62.46 77362.45
Gree Elec Apl 0.19 - 0.25 0.16 - -6.21 295.01 HDFC Bk 1430.9 -10.05 1454 1040.55 0.63 30.00 55970.73 Halliburton 49.70 -0.45 58.78 33.26 1.46 -7.36 43086.58 Verizon 49.50 -0.66 56.95 46.01 4.66 15.27 201785.99
DBS 18.67 -0.33 19.37 14.63 3.14 11.51 33946.96 Abbvie 65.29 -0.06 68.12 55.06 3.53 17.82 104044.63
GuosenSec RMB 14.81 -0.09 18.94 14.03 1.25 11.45 4720.39 Hind Unilevr 904.95 1.50 954.00 781.95 1.47 55.94 29925.5 HCA Hold 82.07 -0.55 88.62 67.00 - 11.14 30402.08 VertexPharm 89.76 0.26 103.73 71.46 - -193.28 22299.81
JardnMt US$ 65.45 -1.30 67.27 52.42 2.07 12.66 46752.59 Accenture 125.93 1.29 126.22 107.21 1.83 18.68 83001.55
HaitongSecs 13.94 -0.30 15.24 11.60 3.57 15.58 6119.66 HsngDevFin 1442.3 -16.10 1473.45 1060.15 1.00 23.69 34975.8 Hew-Pack 17.22 0.07 17.81 11.31 2.94 11.01 29160.01 VF Cp 52.82 -0.23 66.31 48.05 2.92 18.82 21895.12
JardnStr US$ 39.45 -0.44 40.56 27.35 0.67 10.62 43693.04 Adobe 126.43 1.36 130.30 90.35 - 54.58 62667.8
Hngzh HikVDT RMB 31.55 0.87 31.69 20.28 2.20 27.75 22165.68 ICICI Bk 265.00 -7.05 298.40 213.20 1.78 18.16 23577.83 HiltonWwde 57.48 0.79 60.49 42.81 1.40 12.79 18952.96 Viacom 42.38 0.28 46.69 33.94 3.17 12.22 14725.56
OCBC 9.45 -0.17 9.78 8.21 3.75 11.10 28271.2 AEP 67.42 0.44 71.32 57.89 3.40 53.42 33151.23
Hunng Pwr 5.45 -0.30 7.34 4.43 9.41 6.84 3298.35 Infosys 1027.7 -5.15 1279.3 901.00 2.42 16.55 36067.45 HomeDep 147.42 0.81 149.99 119.20 1.84 23.38 179581.29 Visa Inc 88.82 0.76 92.05 72.77 0.66 34.64 165029.41
SingTel 3.92 -0.02 4.36 3.59 4.40 16.65 45773.24 Aetna 128.44 -0.65 136.50 104.59 0.73 20.18 45172.35
IM Baotou Stl RMB 2.99 -0.03 3.43 2.74 - -46.46 6834.56 ITC 279.85 -8.05 292.15 204.00 1.28 39.85 51908.99 Honywell 125.15 -0.51 127.52 105.25 1.98 19.99 95205.72 Walgreen 82.74 -0.47 88.00 75.74 1.77 21.92 89310.35
UOB 21.53 -0.27 22.04 17.41 3.18 11.91 25190.23 Aflac 71.48 0.07 74.50 62.34 2.34 11.03 28676.15
In&CmBkCh 5.14 -0.08 5.27 3.82 5.26 6.40 57440.3 L&T 1529.85 -19.20 1615 1177.8 0.91 32.76 21807.87 HumanaInc 213.53 -0.02 220.49 150.00 0.41 51.97 30809.07 WalMartSto 69.82 -0.08 75.19 62.72 2.01 16.01 214570.15
AirProd 135.74 -0.71 150.45 124.02 2.40 20.37 29535.66
IndstrlBk RMB 16.09 -0.09 17.58 15.10 3.76 5.97 44512.36 OilNatGas 192.50 -1.55 211.80 133.33 1.71 20.39 37745.5 South Africa (R) IBM 174.50 0.62 182.79 142.50 3.18 13.95 164590.59 WellsFargo 55.23 -0.62 59.99 43.55 2.77 13.71 276363.86
Alexion 119.35 0.65 162.00 109.12 - 67.17 26806.53
Kweichow RMB 394.48 0.47 396.50 231.30 1.55 30.21 71954.72 RelianceIn 1259.7 -4.10 1327 925.65 0.81 14.22 62437.29 Firstrand 53.06 0.04 54.46 40.52 3.95 13.38 23697.39 IllinoisTool 133.83 0.35 136.03 98.32 1.81 23.25 46377.15 Williams Cos 28.37 0.01 32.69 14.60 5.98 -49.29 23424.5
Allegran 234.42 -0.13 282.59 184.50 - -73.25 78583.38
Midea 1.69 -0.06 1.95 1.64 5.99 23.54 46.79 SBI NewA 267.50 -4.85 288.80 166.40 0.95 47.37 32589.07 MTN Grp 122.98 -4.17 151.90 104.76 8.53 99.14 18449.64 Illumina 165.74 2.24 186.88 119.37 - 57.91 24247.76 Yahoo 45.86 0.09 47.19 33.93 - -9.43 43864.5
Allstate 81.47 -0.22 83.09 64.36 1.64 17.28 29747.07
New Ch Life Ins 37.55 -1.00 41.75 23.80 - 20.61 4999.67 SunPhrmInds 701.45 3.40 854.95 571.90 0.14 23.62 25714.52 Naspers N 2240 -51.20 2553.59 1883.01 0.16 95.79 78161.72 Intcntl Exch 59.72 -0.31 61.98 45.88 1.15 24.96 35553.79 Yum!Brnds 63.24 -0.49 68.98 56.06 2.79 16.84 22377.1
Alphabet 851.91 1.77 874.42 672.66 - 30.30 253117.37
PetroChina 5.79 -0.11 6.38 4.76 0.90 172.71 15729.23 Tata Cons 2478.95 -7.75 2744.8 2051.9 1.59 21.71 74632.32 South Korea (KRW) Intel 35.36 0.32 38.45 29.50 2.97 16.52 167193.43 Venezuela (VEF)
Altria 75.49 -0.45 76.55 59.48 2.55 31.40 146397.15
PingAnIns 43.25 -0.95 44.40 32.50 2.63 11.80 41473.17 Indonesia (Rp) HyundMobis 255500 2000 293500 229500 1.34 14.30 22141.33 Intuit 121.01 -0.05 128.45 99.20 1.05 40.95 30951.3 Bco de Vnzla 470.00 77.30 470.00 93.00 - - 2432.09
Amazon 846.23 3.03 862.80 545.05 - 171.06 403796.09
PngAnBnk RMB 9.16 -0.08 10.26 8.48 1.67 6.94 22501.94 Bk Cent Asia 16325 - 16325 12625 0.96 20.73 30196.72 KoreaElePwr 47200 1300 63700 40050 5.98 2.27 26974.72 John&John 126.78 -0.47 129.00 107.05 2.51 21.18 343998.08 Bco Provncl 5000 - 7000 2200 - 22.90 764.94
AmerAir 40.00 -0.42 50.64 24.85 1.01 8.24 20165.67
Pwr Cons Corp RMB 7.66 0.07 8.73 5.40 - 20.16 10677.7 SK Hynix 48650 1100 54900 25650 1.01 19.76 31529.7 JohnsonCn 41.68 0.30 46.17 32.48 2.71 -30.81 39124.4 Mrcntl Srvcs 15350 -650.00 16000 4500 0.04 105.43 1325.92
Israel (ILS) AmerExpr 77.75 0.22 82.00 57.15 1.58 13.63 69968.57
SaicMtr RMB 24.44 -0.23 26.55 19.15 5.52 8.59 39127.2 SmsungEl 2123000-5000.00 2134000 1240000 0.97 16.51 265879.31 JPMrgnCh 87.37 -0.02 93.98 57.05 2.02 15.69 312070.63
TevaPha 119.70 -1.90 217.70 118.50 3.97 19.82 33407.35 AmerIntGrp 61.51 -0.25 67.47 48.41 1.94 98.54 60252.74
ShenwanHong 0.26 0.01 0.32 0.14 - -0.38 194.04 Spain () Kimb-Clark 132.78 -0.90 138.87 111.30 2.63 25.14 47236.6 Closing prices and highs & lows are in traded currency (with variations for that
Italy () AmerTower 118.17 1.43 118.60 98.87 1.69 61.52 50481.64
ShgPdgBk RMB 15.78 -0.22 17.57 15.08 3.24 6.40 47014.98 KinderM 21.00 0.06 23.36 16.63 4.05-136.67 46881.22 country indicated by stock), market capitalisation is in USD. Highs & lows are
Enel 4.25 0.03 4.26 3.54 - - - BBVA 7.15 0.03 7.24 4.50 5.17 12.78 50714.3 Amgen 166.99 0.14 184.21 133.64 2.18 17.41 122980.25
Sinopec Corp 6.10 -0.01 6.34 4.66 2.57 18.49 20038.51 Kraft Heinz 92.34 0.44 97.77 75.86 2.57 32.55 112395.46 based on intraday trading over a rolling 52 week period.
ENI 14.89 -0.03 15.92 12.18 - - - BcoSantdr 5.68 0.02 5.77 3.15 3.61 19.61 89481.76 Anadarko 61.46 -0.36 73.33 43.52 0.97 -6.43 34337.25
Sinopec Oil RMB 3.76 -0.03 5.33 3.60 - -7.98 1538.7 Kroger 28.89 -0.05 39.22 28.29 1.37 14.57 27097.73 ex-dividend
Generali 14.33 -0.22 16.00 9.76 - - - CaixaBnk 3.89 0.04 3.94 1.82 3.80 22.02 25158.47 Anthem 166.95 -0.04 170.79 114.85 1.48 20.31 44138
Denmark (kr) Iberdrola 6.51 0.07 6.53 4.80 6.30 15.57 45446.03 L Brands 47.66 -1.52 88.76 47.34 4.99 12.08 13585.41 ex-capital redistribution
IntSPaolo 2.51 0.00 2.59 1.52 - - - Aon Cp 117.66 0.09 119.88 99.67 1.11 22.58 30896.29
DanskeBk 235.00 -0.50 247.60 161.80 - - - Inditex 31.81 -0.20 33.47 27.18 1.50 31.24 107086.51 LasVegasSd 55.75 -0.17 63.38 41.45 5.22 26.30 44265.2 # price at time of suspension
Luxottica 50.80 -0.15 56.90 39.92 - - - Apple 140.76 0.92 142.80 89.47 1.28 17.98 738502.97
MollerMrsk 11500 -230.00 12380 7775 - - - Repsol 14.46 -0.02 14.74 9.14 5.24 -22.32 23364.15 LibertyGbl 34.96 -0.59 39.85 26.16 - 16.04 8859.9
Unicred 14.48 0.18 37.38 11.93 - - - ArcherDan 45.38 0.43 47.88 34.55 2.67 20.81 25915.62
NovoB 233.50 -1.20 384.80 218.20 - - - Telefonica 10.44 0.08 10.63 7.45 6.99 25.20 56782.76 Lilly (E) 84.12 0.39 86.14 64.18 2.45 32.30 92817.1
AT&T 41.66 -0.42 43.89 36.10 4.68 19.65 255857.81

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
ChShenEgy 18.78 18.90 -0.12 -0.63 2.90 18.3 14.09 Vale 29.04 29.04 0.00 0.00 -4.28 -12.8 -13.87 Mar 22 date Coupon S* M* F* price yield yield yield US Mar 22 date Coupon S* M* F* price yield yield yield US
KoreaElePwr 47200.00 45900.00 1300.00 2.83 4350.00 10.2 9.77 Deut Bank 16.01 16.01 0.00 0.00 -2.30 -12.6 -14.07 High Yield US$ US$
ChinaMob 90.35 90.35 0.00 0.00 6.25 7.4 3.91 BankAm 22.84 23.02 -0.18 -0.78 -2.34 -9.3 -7.88 Navient Corporation 03/20 8.00 BB- Ba3 BB 106.79 5.60 -0.01 0.07 4.30 SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 111.80 4.65 -0.01 0.05 2.18
Kweichow 394.48 394.01 0.47 0.12 24.98 6.8 9.96 Amgen 166.99 166.85 0.14 0.08 -15.61 -8.5 -3.28 High Yield Euro FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 118.00 4.78 -0.01 -0.01 2.31
WalMrtMex 42.24 42.24 0.00 0.00 2.58 6.5 4.04 MorganStly 42.17 42.66 -0.49 -1.15 -3.68 -8.0 -9.39 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - Nicor Gas Company 02/28 6.58 A Aa3 AA- 114.81 4.87 -0.01 0.12 2.40
Ch Coms Cons 11.36 11.48 -0.12 -1.05 0.68 6.4 12.03 Sychrony Fin 33.02 33.02 0.00 0.01 -2.78 -7.8 -10.21 NationsBank Corp. 03/28 6.80 BBB Baa3 A- 115.07 5.06 -0.01 0.39 2.58
AmerMvl 13.57 13.57 0.00 0.00 0.76 5.9 6.28 ICICI Bk 265.00 272.05 -7.05 -2.59 -22.25 -7.7 -6.95 Emerging US$ United Utilities PLC 08/28 6.88 BBB- Baa1 A- 116.02 5.07 0.00 -0.02 2.60
ChUncHK 10.08 10.18 -0.10 -0.98 0.53 5.5 8.39 Fuji Hvy Ind 4120.00 4312.00 -192.00 -4.45 -334.00 -7.5 -4.67 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 Countrywide Home Loans, Inc. 06/29 6.15 BBB+ Baa1 A 99.72 6.36 0.00 0.00 -
BakerHu 60.81 60.23 0.58 0.96 3.10 5.4 0.46 GenMotors 34.41 34.55 -0.15 -0.42 -2.69 -7.2 -9.06 Brazil 01/18 8.00 BB Ba2 BB 103.68 3.45 -0.05 0.06 2.15
Peru 03/19 7.13 BBB+ A3 BBB+ 110.20 1.97 0.01 0.07 0.67 Euro
Hngzh HikVDT 31.55 30.68 0.87 2.84 1.57 5.2 10.12 H&M 228.80 228.80 0.00 0.00 -17.70 -7.2 -7.08 HSBC Holdings plc 06/28 3.13 BBB+ A2 A+ 104.55 2.65 0.02 0.12 0.17
Surgutneftegas 30.08 29.66 0.42 1.42 1.42 5.0 -1.49 Petrobras 13.70 13.70 0.00 0.00 -1.05 -7.1 -14.88 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 110.57 9.71 -0.03 -0.12 7.71 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 103.24 2.30 0.02 0.08 -
Tencent 225.20 228.80 -3.60 -1.57 10.60 4.9 6.73 Regen Pharm 369.51 370.98 -1.47 -0.40 -28.29 -7.1 -0.06 Citigroup Inc. 02/30 4.25 BBB Baa3 A- 117.26 2.34 0.02 0.01 -
E.ON 7.10 7.10 0.00 0.00 0.33 4.9 4.90 CapOne 83.53 83.65 -0.12 -0.14 -6.39 -7.1 -10.07 Poland 03/23 3.00 BBB+ A2 A- 99.03 3.21 -0.01 -0.01 1.21
Colombia 03/23 2.63 BBB Baa2 BBB 95.46 3.50 -0.01 0.04 1.50 HBOS plc 03/30 4.50 BBB- Baa2 A- 112.23 2.93 0.02 -0.09 -
Pwr Cons Corp 7.66 7.59 0.07 0.92 0.35 4.8 -0.91 MitUFJFin 713.70 745.70 -32.00 -4.29 -54.00 -7.0 -7.75
Turkey 03/23 3.25 - Ba1 BB+ 80.56 7.31 -0.05 -0.31 5.31 Yen
ITC 279.85 287.90 -8.05 -2.80 12.75 4.8 6.35 FordMtr 11.77 11.72 0.05 0.43 -0.88 -7.0 -7.06
Turkey 03/27 6.00 - Ba1 BB+ 102.91 5.69 -0.01 -0.04 3.21 Enagas Transportes, S.A.U. 09/39 3.23 A- Baa2 A- 106.57 2.85 0.00 0.01 -
BcoSantdr 5.68 5.66 0.02 0.42 0.25 4.6 10.53 Nordea Bk 99.90 99.90 0.00 0.00 -7.40 -6.9 -7.84
BBVA 7.15 7.12 0.03 0.41 0.31 4.5 14.58 GoldmSchs 230.00 233.00 -3.00 -1.29 -16.78 -6.8 -8.67 Russia 06/28 12.75 BB+ Ba1 BBB- 174.82 4.34 -0.01 -0.06 1.86 Sterling
Sinopec Corp 6.10 6.11 -0.01 -0.16 0.25 4.3 -1.13 TokioMarine 4813.00 5062.00 -249.00 -4.92 -348.00 -6.7 -6.38 Emerging Euro Electricite de France (EDF) 05/28 6.25 A A3 A- 130.10 3.04 0.01 -0.09 0.56
Bk Cent Asia 16325.00 16325.00 0.00 0.00 650.00 4.1 5.32 BB & T 43.95 44.00 -0.06 -0.13 -3.08 -6.5 -8.74 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- 96.09 3.04 0.01 -0.02 0.56
Novatek 747.00 742.50 4.50 0.61 29.60 4.1 -4.10 Bhartiartl 338.20 349.90 -11.70 -3.34 -22.90 -6.3 -6.79 Mexico 02/20 5.50 BBB+ - BBB+ 113.99 0.63 0.01 0.05 -0.67 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+ 105.69 1.75 0.02 -0.07 -0.25 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- 106.55 2.32 0.02 -0.11 -0.16
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
Mar 22 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return Mar 22 Day Chng Prev 52 wk high 52 wk low Red Change in Yield 52 Week Amnt
US Fed Funds 0.50-0.75 14-12-2016 1.00 0.50-0.75 0.25-0.50 Index change change change 1 month 1 year VIX 12.67 0.20 12.47 26.72 9.97 Mar 22 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 12.29 0.31 11.98 23.69 3.59 Tr 8.75pc '17 103.76 -0.03 50.00 -40.00 -40.00 -107.14 105.16 100.00 11.14
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 179.11 -0.03 0.24 3.41 1.12 -1.49 VXN 12.86 0.36 12.50 27.10 9.75 Tr 5pc '18 104.69 0.09 -25.00 125.00 12.50 -70.97 109.17 104.68 35.24
Euro Repo 0.00 10-09-2014 0.05 0.05 0.05 Corporates( ) 333.66 -0.17 -0.55 1.07 0.94 10.56 VDAX - - - - - Tr 4.5pc '19 108.63 0.08 -27.27 700.00 60.00 -82.22 112.19 108.59 36.35
UK Repo 0.25 05-03-2009 0.25 0.50 0.50 Corporates($) 265.27 0.17 -0.70 0.77 -0.70 0.77 CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.75pc '20 113.61 0.14 -17.65 75.00 -17.65 -77.78 117.02 113.51 33.31
Japan O'night Call 0.00-0.00 05-10-2010 0.00 0.00-0.10 0.00-0.10 Corporates() 220.67 -0.10 -0.85 -0.28 -0.42 2.34 Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 1.5pc '21 104.53 0.31 -11.43 10.71 -16.22 -63.95 106.04 102.20 32.46
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov() 227.10 0.10 -1.42 -2.40 -0.36 -2.11 Tr 4pc '22 117.60 0.41 -10.87 5.13 -8.89 -55.43 121.31 116.43 37.95
Gilts( ) 318.38 -0.25 -0.93 0.41 0.91 6.07 BONDS: BENCHMARK GOVERNMENT Tr 5pc '25 131.90 0.85 -7.61 -4.49 -11.46 -36.57 138.11 128.54 35.08
INTEREST RATES: MARKET Global Inflation-Lkd 247.63 0.14 -1.32 0.19 -0.50 -0.46 Red Bid Bid Day chg Wk chg Month Year Tr 1.25pc '27 100.05 1.24 -6.06 -3.88 -3.88 -23.93 138.26 99.31 2.56
Over Change One Three Six One Markit iBoxx Non-Gilts 329.68 -0.16 -0.54 1.02 0.89 9.02 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '32 136.84 1.53 -4.97 -3.16 -6.13 -22.73 148.92 128.17 35.44
Mar 22 (Libor: Mar 21) night Day Week Month month month month year Overall ($) 232.07 0.17 -0.56 0.49 -0.56 0.49 Australia 10/19 2.75 102.07 1.93 -0.03 -0.09 -0.02 0.00 Tr 4.25pc '36 141.52 1.68 -4.55 -4.00 -7.18 -22.22 155.77 130.11 29.76
US$ Libor 0.92533 -0.001 0.243 0.000 0.97722 1.15622 1.43378 1.81539 Overall( ) 318.77 -0.22 -0.82 0.58 0.91 6.93 11/28 2.75 97.79 2.98 -0.03 -0.12 0.00 0.00 Tr 4.5pc '42 155.94 1.78 -3.78 -4.30 -5.82 -21.59 174.65 140.38 26.64
Euro Libor -0.42471 0.001 -0.003 -0.006 -0.39357 -0.35571 -0.24729 -0.11071 Overall() 224.16 0.03 -1.18 -1.69 -0.36 -0.95 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 3.75pc '52 155.19 1.67 -4.57 -4.57 -7.73 -24.43 177.28 134.20 23.59
Libor 0.22500 0.000 0.000 0.000 0.25638 0.34313 0.49844 0.73975 Treasuries ($) 219.66 0.17 -0.56 0.25 -0.56 0.25 10/26 0.75 100.94 0.65 0.01 -0.01 0.04 0.00 Tr 4pc '60 174.33 1.60 -4.19 -4.19 -8.05 -25.58 201.27 147.24 23.21
Swiss Fr Libor 0.000 -0.79200 -0.72800 -0.66460 -0.49860 FTSE Belgium 06/18 0.75 100.93 -0.02 0.00 0.00 0.00 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per 100 nominal of stock. Red yield: Gross redemption yield.
Yen Libor 0.000 -0.04886 0.00357 0.03343 0.13357 Sterling Corporate () 117.21 0.29 - - 0.20 4.94 06/27 0.80 98.45 0.96 0.03 -0.01 0.11 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Euro Euribor -0.003 -0.37400 -0.32900 -0.24100 -0.10600 Euro Corporate () 106.75 0.17 - - -0.82 -1.03 Canada 05/19 0.75 99.79 0.85 0.00 -0.07 0.00 0.00
Sterling CDs
US$ CDs
0.000
0.000
0.20000
0.82000
0.30000
1.04000
0.45500
1.24000
Euro Emerging Mkts () 809.04 -0.57 - - -3.43 -2.11 06/27 1.00 92.14 1.85 -0.02 -0.13 0.00 0.00 GILTS: UK FTSE ACTUARIES INDICES
Eurozone Govt Bond 110.89 0.36 - - -0.33 -4.57 Denmark 11/18 0.25 101.40 -0.59 0.00 0.00 0.00 0.00
Euro CDs 0.000 -0.43500 -0.38500 -0.29500 11/27 0.50 97.93 0.70 0.00 -0.01 0.11 0.00 Price Indices Day's Total Return Return
CREDIT INDICES Day's Week's Month's Series Series Fixed Coupon Mar 22 chg % Return 1 month 1 year Yield
Short 7 Days One Three Six One Index change change change high low Finland 05/18 1.00 99.46 1.48 0.00 -0.02 0.10 0.33
04/26 0.50 99.51 0.56 0.01 -0.03 0.07 0.00 1 Up to 5 Years 96.71 0.10 2431.01 0.10 1.43 0.23
Mar 22 term notice month month month year Markit iTraxx 2 5 - 10 Years 184.80 0.47 3482.20 0.65 3.93 0.83
Euro -0.50 -0.35 -0.50 -0.35 -0.51 -0.36 -0.46 -0.31 -0.37 -0.22 -0.28 -0.03 Crossover 5Y 369.26 -12.07 35.21 40.34 390.04 288.69 France - - - - - - -
3 10 - 15 Years 218.47 0.76 4212.49 1.18 6.20 1.29
Sterling 0.15 0.25 0.15 0.25 0.25 0.35 0.38 0.53 0.55 0.70 Europe 5Y 85.00 -1.98 7.21 7.01 90.43 67.59 11/20 0.25 101.37 -0.12 0.00 0.00 0.00 0.00
4 5 - 15 Years 192.94 0.57 3660.95 0.81 4.61 1.03
Swiss Franc - - - - - - - - - - - - Japan 5Y 70.05 -2.51 2.21 -0.87 93.03 64.22 10/22 2.25 110.62 0.33 0.01 0.05 0.12 0.00
5 Over 15 Years 340.51 1.47 5118.64 2.56 12.14 1.69
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 111.86 -3.89 10.86 12.50 121.66 80.36 11/26 0.25 92.07 1.12 0.01 0.03 0.06 0.00
7 All stocks 182.99 0.81 3566.38 1.35 6.58 1.48
US Dollar 0.90 1.00 0.95 1.05 1.00 1.10 1.20 1.30 1.30 1.40 1.65 1.75 Germany 04/19 0.50 102.67 -0.78 0.00 0.00 0.00 0.00
Markit CDX 08/23 2.00 113.79 -0.14 0.00 0.00 0.00 0.00
Japanese Yen -0.20 0.10 -0.15 0.15 -0.45 -0.15 -0.35 -0.05 -0.25 0.05 -0.25 0.05 Day's Month Year's Total Return Return
Emerging Markets 5Y 218.09 4.02 0.00 0.00 218.09 214.07 02/27 0.25 98.16 0.44 0.01 -0.03 0.14 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 Mar 22 chg % chg % chg % Return 1 month 1 year
Nth Amer High Yld 5Y 335.81 9.73 -7.60 17.78 343.41 305.86 08/46 2.50 132.40 1.19 0.01 -0.05 0.09 0.00
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. 1 Up to 5 Years 316.32 0.08 0.30 2.05 2466.25 0.30 3.71
Nth Amer Inv Grade 5Y 69.24 1.32 0.00 0.00 69.24 67.92 Greece 04/19 4.75 93.31 8.40 0.30 0.61 -0.70 0.00
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 2 Over 5 years 706.91 1.55 1.91 19.22 5256.38 1.95 19.89
02/27 3.00 75.05 7.38 0.08 0.27 -0.03 0.00 3 5-15 years 478.02 0.67 0.86 9.24 3684.87 0.88 10.43
Ireland 10/19 5.90 116.00 -0.28 0.00 0.00 0.00 0.00 4 Over 15 years 905.87 1.85 2.26 22.99 6594.78 2.31 23.46
05/26 1.00 98.85 1.13 0.00 -0.02 0.06 0.00 5 All stocks 640.19 1.43 1.78 17.19 4828.81 1.82 17.99
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/19 0.05 99.10 0.40 0.00 -0.05 0.10 0.00
11/21 0.35 97.18 0.98 -0.03 -0.06 0.07 0.00 Yield Indices Mar 22 Mar 21 Yr ago Mar 22 Mar 21 Yr ago
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/27 2.20 97.07 2.54 0.01 0.02 0.20 0.00 5 Yrs 0.40 0.45 0.78 20 Yrs 1.80 1.88 2.23
Crude Oil Apr 47.57 -0.74 Corn May 360.25 -1.00 Mar 21 Mar 21 Prev return stock Market stocks
03/47 2.70 86.58 3.45 -0.01 -0.02 0.15 0.00 10 Yrs 1.17 1.24 1.53 45 Yrs 1.59 1.67 2.17
Brent Crude Oil 50.56 -0.25 Wheat May 423.25 -2.75 Can 4.25%' 21 121.62 -0.318 -0.319 0.14 5.18 73192.65 7
Japan 03/19 0.10 100.71 -0.26 0.00 0.00 0.00 0.00 15 Yrs 1.63 1.71 2.02
RBOB Gasoline Mar 1.60 0.00 Soybeans May 998.75 -2.00 Fr 2.25%' 20 112.48 -1.371 -1.383 -0.74 20.31 218995.32 16
02/22 0.05 100.59 -0.07 0.00 0.00 0.00 0.00
Heating Oil Mar 1.50 -0.01 Soybeans Meal May 324.70 -1.10 Swe 0.25%' 22 113.18 -1.710 -1.715 -1.13 29.53 225762.44 7
12/26 0.10 100.33 0.07 0.00 0.00 0.00 0.00 inflation 0% inflation 5%
Natural Gas Mar 3.05 -0.03 Cocoa (ICE Liffe)X May 1745.00 15.00 UK 2.5%' 20 371.81 -2.736 -2.970 -0.13 6.58 618020.65 27
12/46 0.60 93.84 0.86 0.00 0.00 0.00 0.00 Real yield Mar 22 Dur yrs Previous Yr ago Mar 22 Dur yrs Previous Yr ago
Ethanol - - Cocoa (ICE US) May 2154.00 -4.00 UK 2.5%' 24 366.54 -1.998 -2.122 -0.84 6.82 618020.65 27
Netherlands 01/20 0.25 102.52 -0.63 0.00 0.00 0.00 0.00 Up to 5 yrs -2.48 2.14 -2.44 -1.21 -3.22 2.14 -3.18 -1.95
Uranium Mar 18.10 0.00 Coffee(Robusta)X Mar 2139.00 -32.00 UK 2%' 35 264.86 -1.588 -1.635 -1.56 9.08 618020.65 27
01/28 5.50 150.94 0.62 0.00 -0.04 0.05 0.00 Over 5 yrs -1.64 24.69 -1.57 -0.97 -1.67 24.79 -1.61 -1.00
Carbon Emissions - - Coffee (Arabica) May 143.00 -1.45 US 0.625%' 21 103.70 -0.227 -0.219 -0.04 35.84 1230730.68 38
White SugarX 488.70 1.20 New Zealand 04/20 3.00 101.95 2.34 -0.03 -0.12 -0.10 0.00 5-15 yrs -1.86 8.63 -1.78 -0.96 -1.99 8.64 -1.92 -1.09
Diesel - - US 3.625%' 28 132.57 0.581 -0.219 -0.51 16.78 1230730.68 38
Sugar 11 17.17 -0.13 04/27 4.50 110.75 3.24 -0.05 -0.16 -0.06 0.00 Over 15 yrs -1.62 29.84 -1.55 -0.97 -1.64 29.89 -1.58 -0.99
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices Local currencies. Total market
Norway 05/19 4.50 108.28 0.64 0.00 -0.03 0.00 0.00 All stocks -1.64 22.94 -1.58 -0.97 -1.68 23.06 -1.62 -1.02
Base Metals ( LME 3 Months) Cotton May 77.02 0.22 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
Aluminium 1925.00 2.00 Orange Juice May 190.80 0.85 02/27 1.75 99.65 1.79 0.00 -0.04 0.08 0.00 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
amount.
Aluminium Alloy 1690.00 -20.00 Palm Oil - - Portugal 06/19 4.75 109.14 0.61 -0.03 0.05 0.06 0.00
Copper 5820.50 49.50 Live Cattle Apr 119.78 0.00 BONDS: TEN YEAR GOVT SPREADS 04/27 4.13 98.73 4.28 0.00 0.00 0.00 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 2370.00 100.00 Feeder Cattle Apr 132.83 1.20 Spain 01/19 0.25 100.81 -0.18 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 10070.00 -80.00 Lean Hogs Apr 67.95 0.00 Spread Spread Spread Spread 04/27 1.50 96.88 1.84 -0.02 -0.05 0.16 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Tin 20450.00 50.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.26 1.49 0.00 -0.06 0.08 0.38 loss arising from the reliance on or use of the listed information. For all queries e-mail
Zinc 2865.00 44.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 12/26 9.41 181.12 0.76 0.02 -0.04 0.10 0.28 ft.reader.enquiries@morningstar.com
Precious Metals (PM London Fix) Mar 21 Month Year Australia 2.98 2.54 0.50 Italy 2.54 2.10 0.07 Switzerland 05/19 3.00 108.40 -0.87 0.00 0.00 0.00 0.00
Gold 1249.05 7.45 S&P GSCI Spt 378.40 -6.46 12.56 Austria 0.65 0.21 -1.83 Japan 0.07 -0.37 -2.41 05/26 1.25 112.16 -0.07 0.00 0.00 0.00 0.00 Data provided by Morningstar | www.morningstar.co.uk
Silver (US cents) 1758.00 27.00 DJ UBS Spot 84.73 -3.58 4.87 Belgium 0.96 0.52 -1.52 Netherlands 0.62 0.18 -1.86 United Kingdom 07/19 1.75 103.90 0.08 0.00 -0.02 -0.07 0.00
Platinum 973.00 11.00 R/J CRB TR 185.35 -4.17 4.71 Canada 1.85 1.41 -0.63 Norway 1.79 1.35 -0.69 07/22 0.50 99.54 0.59 -0.02 -0.03 -0.08 0.00
Palladium 788.00 11.00 M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Denmark 0.70 0.26 -1.78 Portugal 4.28 3.84 1.80 07/27 1.25 99.46 1.31 -0.01 0.00 0.00 0.00
Bulk Commodities UBS Bberg CMCI TR 13.91 -5.10 11.39 Finland 0.56 0.12 -1.92 Spain 1.84 1.40 -0.64 07/47 1.50 92.68 1.82 -0.01 -0.03 -0.08 0.00
Iron Ore (Platts) 84.75 -2.25 LEBA EUA Carbon 4.89 -8.77 -16.12 France 1.12 0.68 -1.36 Switzerland -0.07 -0.51 -2.55 United States 02/19 1.13 99.66 1.30 -0.02 -0.08 0.00 0.00
Iron Ore (The Steel Index) 84.20 -3.20 LEBA CER Carbon 0.28 0.00 -22.22 Germany 0.44 0.00 -2.04 United Kingdom 1.31 0.87 -1.17 02/22 1.88 99.41 2.00 -0.02 -0.14 0.00 0.00
GlobalCOAL RB Index 75.00 -1.50 LEBA UK Power 2700.00 -23.84 18.21 Greece 7.38 6.94 4.90 United States 2.48 2.04 0.00 02/27 2.25 98.01 2.48 -0.02 -0.15 0.00 0.00
Baltic Dry Index 1190.00 -10.00 Ireland 1.13 0.69 -1.34 02/47 3.00 98.20 3.09 -0.02 -0.11 0.00 0.00
Sources: NYMEX, ECX/ICE, CBOT, X ICE Liffe, ICE Futures, CME, LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information & Tullett Prebon Information Data provided by SIX Financial Information & Tullett Prebon Information
unless otherwise stated.
20 FINANCIAL TIMES Thursday 23 March 2017

MARKETS & INVESTING

INSIGHT Commodities

Alberto
Gallo Brent below $50 for first time this year
US inventories climb to like Russia late last year in a bid to end shale drillers ramp up efforts after a
$49.71 It is just too early to say [what Saudi
the two-year price collapse that has rebound in prices relieved the pressure will do in May], he said.
record amid fears Opec upended the oil industry. on their balance sheets, which had been Price per barrel of Opecs compliance with the cuts has
Brent crude oil at
ECBs dilemma is to efforts are falling short It will heap pressure on the 13-mem-
ber cartel to either increase cuts or roll
over the initial six-month cut period
hard hit by the slump.
US drillers have added rigs for nine
straight weeks, leading analysts to
one point yesterday been above 90 per cent but Saudi Arabia
has helped that by cutting more than its
share. Non-Opec countries, like Russia,
withdraw stimulus yet DAVID SHEPPARD AND
ANJLI RAVAL LONDON
when it meets in May, as signs a rebound
in US oil output is blunting their efforts.
revise up their forecasts for how much
the country might produce this year.
$47.01
US benchmark West
are yet to meet their pledges.
Some analysts think they may need to

keep eurozone intact Brent crude oil fell below $50 a barrel
for the first time this year after US crude
inventories climbed to a fresh record,
raising fears that Opecs attempts to
tighten the market are falling short.
There are growing doubts among
market participants about whether the
Opec production cuts will be able to
quickly restore balance on the oil mar-
ket, Carsten Fritsch at Commerzbank
That poses a challenge to Opec who
hoped the rebound in shale output
would be limited.
Saudi Arabia, the most powerful
member of Opec, has warned other
Texas Intermediate enact a bigger cut to have the impact
price per barrel
they desire on the market and prices.
Between late 2014 and 2016 Saudi
Arabia pursued a policy of raising out-
put to try and squeeze out US shale and

T
he Fed is now on a clearly flagged path to
reduce stimulus. But if normalisation was dif-
ficult to start for the Fed chair Janet Yellen,
Mario Draghi, president of the European Cen-
tral Bank, faces three policy dilemmas that
make a tightrope walk look easy.
The eurozone has consistently beaten growth expecta-
tions over the past quarters. Yet theres a two-speed recov-
ery in growth and inflation among its members. Core coun-
tries are leading, together with Ireland and Spain, which
have been early on reforms while France, Italy and Por-
tugal remain behind. Armed with mostly one-size-fits-all
tools, the ECB will need extra skill to withdraw stimulus
and keep the eurozone together at the same time.
The first dilemma is about timing. Normalising policy
early can curb inflation where it is rising, such as in Ger-
many, but could choke any recovery elsewhere.
The second dilemma is the trade-off between higher
long-term yields versus keeping government borrowing
costs in check. Current 10-year core yields, below 1 per
cent, do not compensate for inflation, expected to be
around 1.5 per cent over the same horizon. Tapering bond
purchases further can help savers to meet their pension
goals and revive banks profitability, but it can also make it
more expensive for governments to borrow, penalising
public spending and investment.
The third dilemma is about short-term rates, currently
still negative at -0.4 per cent. While negative rates have
kept the euro low and helped to boost exports, they also
hinder bank profitability and lending activity.
Today, the consensus is for the ECB to follow the same
normalisation path as the Fed: tapering bond purchases
later this or next year and bringing interest rates back to
zero only after that. We believe Europe instead should
bring rates back to zero before the end of tapering.
The ECB weighs its bond
purchases following the share
of capital contributions of its
Europe should
eurozone members, the so- bring rates
called capital key. This means
it buys more bonds from
back to zero
larger economies such as Ger- before the end
many and France, not those
with the most debt outstand-
of tapering
ing. The result is that core
debt has become so scarce investors are hoarding it, push-
ing its yields even lower than the central banks overnight
deposit rate.
Tapering QE would normalise long-end yields to more
reasonable levels, but it wouldnt solve the scarcity prob-
lem. It could also exacerbate the gap in core-periphery
spreads, potentially leaving Italy or Portugal above sus-
tainable funding levels: we estimate that Italy would need
a steady 2 per cent nominal growth rate to make up for 3.5
per cent funding costs over the next decade. This means
that a 2 per cent 10-year Italy-Germany spread would be
barely sustainable. A better alternative would be to taper
while at the same time buying more periphery debt as well
as making more collateral available in the repo market to
reduce hoarding of core debt.
As for short-term rates, the longer the ECB leaves them
in negative territory, the more it depresses bank lending.
Bank loans account for nearly 90 per cent of corporate
funding in Europe, and small businesses, which generate
80 per cent of jobs, rely mostly on banks. This means the
central bank should look at credit, not monetary aggre-
gates to judge a successful transmission of its stimulus.
For these reasons, we think the ECB should normalise
interest rates before ending bond purchases. This is the
best policy option for financial stability. It is also the most
challenging. To do it, the central bank would have to justify
a delay or an adjustment in tapering, acknowledging that
some countries need more support than others.
Mr Draghi has said that policy rates are likely to remain
low beyond the end of QE. But others in the ECB say the
central bank doesnt have to follow the same normalisa-
tion sequence as the Fed, and some say that the time
between the end of QE and rate hikes can be shortened.
To hang together, eurozone leaders have to make diffi-
cult decisions. These include giving leeway to Greece over
its debt, establishing a common budget for infrastructure
and defence, and recognising that monetary policy needs
to adapt to the different rates of growth of its members.
The ECB will need to lead the way.
Alberto Gallo is partner at Algebris Investments and manager
of the Algebris Macro Credit fund
US crude inventories rose by 5m bar-
rels in the week ended March 17, the US
Energy Information Administration
reported yesterday, triggering about of
selling that pushed Brent below $50 for
the first time since November.
The latest price dip means Brent has
reversed all of its gains since Opec
agreed to cut production alongside allies
City confident of keeping infrastructure edge
Brexit outcome unlikely
to unpick dense web of data
centres and matching engines
PHILIP STAFFORD
As the UK looks to start the process of
leaving the EU next week, optimism
reigns that London will remain home
for the vital physical infrastructure that
underpins trading across Europes
financial markets.
In a 30-mile radius from the City are a
cluster of technology sites that power
the highly computerised trading of
shares, currencies, bonds, commodities
and numerous contracts for derivatives
and futures.
Article 50 of the Lisbon treaty is
expected to be triggered on March 29.
No matter what the eventual terms of
Brexit are, the City is seen as retaining
its status as a trading hub.
If youre in the business of trading,
London is the place to be and Brexit isnt
going to change that, says Hirander
Misra, chief executive of GMEX, a UK
trading technology and services group.
[The City] has such a position of
dominance within global markets trad-
ing, it will probably withstand a hard
Brexit. Its influence may even increase
in the future, as it can connect the
Americas, Europe and key Asian mar-
kets with Africa and the Middle East.
For all the uncertainty over some
businesses the clearing of euro-de-
nominated swaps is potentially leaving
London for the continent the City is a
highly desirable location for the price-
matching engines in data centres that
cement deals in milliseconds.
I find it highly unlikely that an out-
come of Brexit would be that exchange
matching engines, data centres and
other vital cogs in the execution chain
are mandated to be based in the EU,
says Seth Johnson, chief executive of
Nex Markets, which runs the BrokerTec
and EBS venues, for fixed income and
foreign exchange respectively.
The Citys elevated status reflects
geography and market dominance.
You need connectivity from where
the news comes from the CME futures
markets in Chicago, and New Jersey,
where the US stock exchanges are
based, says Stphane Tyc, co-founder
of McKay Brothers, a European high-
speed trading network operator. For
foreign exchange markets in Europe,
the news is in London.
The demand for speedy information
has been highlighted in recent weeks by
said. [The cuts are] still failing to drive nations who signed up to the supply cut
down stocks. to comply, saying the kingdom which
Oil stocks were hit by the latest price has shouldered the bulk of cuts so far
drop, which saw Brent hit a low of $49.71 will not be taken for granted.
a barrel, while US benchmark West A report yesterday said it may enlist
Texas Intermediate dropped as low as Opec members largely exempt from the
$47.01 a barrel. BP, Royal Dutch Shell deal, such as Iran, should any agree-
and ExxonMobil shares all slipped. ment be extended. One person close to
The rise in US crude stocks comes as Saudi policymaking denied the claim.
Analysis. Trading room
Shifting positions
High-speed financial networks
around the English Channel
Selected microwave sites
NYSE
UK data
centre
Slough
Equinix
data
centre
London
a nn
Ch
is
h BE LG IU M
l
E ng
Sources: Ofcom; Alexandre Laumonier
Close to the the planned 35m expansion of Interx-
action: despite ion, a Dutch operator of data centres,
tech advances, and a failed attempt by US high-fre-
physical quency traders to build 300-metre
proximity is masts close to the English Channel.
critical. For FX Cables emerge from under the north
markets in Atlantic and head towards Slough, near
Europe, the Heathrow airport, and a cluster of data
news is in centres owned by Equinix of the US.
London, says These airless warehouses are the
one network modern equivalent of the Citys coffee
operator houses and open outcry pits of a bygone
Tolga Akmen
age. Trading is monitored by software
on servers in remote data centres. Secu-
rity is high in these bunkers, which have
enough fuel to withstand an outage of
several days.
Here are the matching engines of Bats
Europe, the largest pan-European stock
exchange, and access points for US
exchanges such as the CBOE. Alongside
them are housed data providers such as
Bloomberg, Thomson, Dow Jones and
Interactive Data, dark pools and smaller
equity and derivatives markets.
Sites on Slough-Frankfurt
microwave path
Other sites
Proposed new
Vigilant and NLN
mast sites
el
FR AN CE
In Basildon, to the east of the city, is a
data centre owned by Intercontinental
Exchange that houses Euronexts Paris,
Amsterdam, Lisbon and Brussels
exchange servers, FTSE 100 futures and
what was the Liffe derivatives bourse.
Those futures exchanges have strong
connections to Frankfurt and Deutsche
Brses Eurex futures exchange. Its
Bund, Bobl and Schatz futures are
pegged to the prices of German govern-
ment bonds.
The exchange also has the closely
watched DJ Stoxx and Dax equity
indices.
Connecting the cities are microwave
networks, similar to those in the US
between Chicago and New York. They
also connect sites in central London,
such as the Interxion site and the Lon-
don Stock Exchanges data centre.
Microwave networks can be profita-
ble for the few HFT groups that can
make the investment.
It also makes the market more effi-
other high-cost producers, but found
the depth and extent of the price fall hit
their oil-dependent economy hard.
They did not do a big enough cut to
begin with, said Jamie Webster, a Fel-
low at the Center on Global Energy Pol-
icy at Columbia University. Physical
balances eventually win out and that is
what is happening here.
N E T H ER L AN D S
To Fr
ankfur
t
cient, says Don Wilson, chief executive
of DRW, a Chicago proprietary trader.
It ensures that somebody who is buy-
ing an instrument in Frankfurt is getting
pretty much the same price as someone
buying a similar instrument in London.
Vigilant, one of DRWs subsidiaries,
was one of the US groups blocked from
building the masts in Kent.
One uncertainty is that Euronexts
five-year Basildon contract expires in
April 2019, and it has a one-year window
to provide notice if it is leaving.
The exchange says the location of the
data centre is not directly related to its
markets structure.
We have no current plans to change
our infrastructure in the foreseeable
future, but will revisit the subject in con-
sultation with clients at the appropriate
time, it says.
Given the density of the existing con-
nections, Euronext is likely to meet
resistance from its biggest customers if
it tries to move away.

Currencies

Euro adds to robust gains after investor doubts grow over Trump tax reforms
ROGER BLITZ
The euro came within a whisker of its
highest level against the dollar in
almost four months, as investors
waited nervously ahead of the US presi-
dent Donald Trumps first key legisla-
tive test over the repeal of Obamacare.
So far this week the euro has gained
0.8 per cent on the US currency, taking
its rise this month to 2.6 per cent and
leaving it worth $1.0825 late yesterday.
Euro strength is, in part, down to
investors uncertainty about when Mr
Trumps administration will be able to
steer tax reform and fiscal stimulus
through a Congress currently debating
the presidents plan to replace
Obamacare.
The Trump trade, which propelled
the dollar higher, was built on expecta-
tions that a Republican-controlled
Congress would provide a safe passage
for the presidents pro-business
reforms. But there were growing doubts
about his ability to win a House vote
today to repeal the Affordable Care Act.
Also climbing against the dollar is the
yen, which at one point yesterday had
risen 0.9 per cent to a four-month high,
taking its gains for the year to 5 per cent.
The index that measures the dollar
against its peers retreated to 99.56,
adding up to a decline for March of
almost 2 per cent.
Weakness in the dollar is just one fac-
tor buoying the euro. Also adding to
appetite for the single currency is inves-
tors increasing attention on the pros-
pect of the European Central Bank pull-
ing away from monetary easing.
The euro is the currency investors
love to hate, said Axel Merk, president
of San Francisco-based Merk Invest-
ments. However, it has been finding
support because investors increasingly
believed that the lows in rates have been
reached.
The dollar started to surge at the first
talk of tapering, even as the first actual
rate hike was far, far, off. Similarly, the
euro may well start appreciating well
before rates will actually go up again in
the eurozone, said Mr Merk.
Also offering support to the euro are
opinion polls in France suggesting far-
right presidential candidate Marine Le
Pen is unlikely to win the keys to the
Elyse Palace.
Dutch lender Rabobank has been
forecasting the euro to rise to $1.10 by
the end of the year, on the basis of disap-
pointment in the Trump reflationary
Euro plans and euro short-covering after the
French election. We would argue that
Against the dollar ($ per )
concerns about political risk in Europe
1.25 are not weighing as heavily on the single
currency as at the end of last year, said
Rabobank strategist Jane Foley.
1.20 But if European political risk from
France is waning for some investors, it
may yet resurface in Italy. Steve Barrow,
1.15 G10 strategist at Standard Bank, warned
that Italian elections in early 2018 could
cast doubt on Italys participation in the
1.10 Eurozone.
It means that if the euro jumps on the
French election result in May it could
1.05 come down to earth with quite a bump
as the next Italian election approaches,
said Mr Barrow.
1.00 For now, though, many analysts
2015 16 17 believe that reasons to buy the euro are
plentiful. It is also getting a boost
Source: Thomson Reuters Datastream
because of its role as a funding currency.
Retreats in risk appetite, as seen in the
sharp sell-off in US stocks on Tuesday,
force those who borrowed in euros to
fund purchases of higher-yielding assets
to scale back those bets and buy back
the euro, said Mr Merk.
On the dollar side, Mr Merk added,
the dollar was also being hurt by the
Federal Reserves unwillingness to take
an aggressive line on rates policy and
the Trump administrations tilt towards
protectionism.
Our take is: if you introduce barriers
to trade, we believe currencies of coun-
tries with current account deficits tend
to suffer, said Mr Merk.
The greenback qualifies, and the
recent decline coincides with more pro-
tectionist talk coming from the Trump
administration.
Thursday 23 March 2017 FINANCIAL TIMES 21

MARKETS & INVESTING

Global overview
TRADING POST Markets update
Jamie
Chisholm
Risk-averse mood sets in amid S&P 500 index
Change on day 0.10%

doubts over pace of US reform

Wall Streets wobble on worries that
the Trump trade is being banjaxed by
political reality delivered a text book
response across global markets.
The growth-focused assets that had
benefited since Novembers election
were sold and the perceived havens
like gold and the yen were bought.
So, too, were government bonds,
pushing yields sharply lower.
But does this provide a handy
opportunity to re-establish short
positions in Treasuries, given many
believe the multi-decade bond bull run
is ending.
In the long term, probably. In the
short term, it may depend on
Washington, not Wall Street.
Thursdays House vote on the
American Health Care Act (AHCA)
may be a key litmus test of the Trump
agenda, said Gennadiy Goldberg at
TD Securities.
Markets are concerned about
House Republicans potential inability
to pass AHCA. This would be seen as a
sign that the remainder of Trumps
legislative agenda (tax reform and
infrastructure spending) could be
delayed further.
So, if the AHCA vote fails, expect
more market turbulence, with 10-year
Treasury yields retesting the 2017 lows
of 2.33 per cent, says Mr Goldberg.
But if the Republican-based
Freedom Caucus members are given a
free vote the law is likely to pass,
buoying risk appetite and pushing
yields back towards the top of their
recent range. In case of such a yield
pop, TD has just closed a successful
long bet on Treasury prices.
jamie.chisholm@ft.com
10-year Treasury yield
Per cent
2.5
2.0
1.5
Sep 2016 2017 Mar
Source: Thomson Reuters Datastream
S&P 500 inches into
positive territory while
European sovereign yields
slip on taking cue from
Treasuries and gold rises
DAVE SHELLOCK
US stocks staged a tentative rally after
the previous days sharp sell-off but the
underlying mood in the markets
remained distinctly risk-averse over
growing doubts about the pace of fiscal
policy reform under President Donald
Trump.
The dollar remained under pressure,
with the yen reaching its highest level
against the US currency for four
months. The yield on the 10-year US
Treasury hovered near a three-week
low and gold touched its highest since
the start of the month. Brent oil briefly
dipped below the $50 a barrel mark.
But Wall Street remained the chief
focus after the S&P 500 registered a 1.2
per cent fall on Tuesday its first drop
of more than 1 per cent since before
Novembers US presidential election.
The move unsettled stock markets
across the globe as market participants
questioned the outlook for the Trump
trade that has driven US equity indices
to record highs and fuelled a strong per-
formance by the dollar.
According to Michael Every, analyst
at Rabobank, global equity markets
were finally catching up to the fact that
they have been aggressively pricing for a
structural change in US fiscal and trade
policy when the former is perhaps far
from being achieved.
With previously invulnerable US
equities finally showing signs of weak-
ness there was naturally a further bid
tone to US Treasuries, Mr Every said.
The incredible thing is that this yield
move coincided with[Cleveland Federal
Reserve president Loretta] Mester say-
Are markets ignoring political risk? FT.com/video
The FTs Roger Blitz says that while policy uncertainty
is high, good data are more important drivers
ing that she favours starting to shrink
the Feds bloated balance sheet this year
and she expects a bit more than three
[rate] hikes in 2017.
Markets will be closely watching the
outcome of the House vote on repealing
Obamacare scheduled to take place
today for insights into how tough the
going might become for the Trump
administration to secure the passage of
other mooted measures.
This is seen by some commentators
as an important data point allowing
markets to make a judgment on the abil-
ity of the US government to deliver on
other reform projects, particularly on
taxes and banking sector reform, said
Hans Redeker, FX strategist at Morgan
Reuters/Jean-Paul Pelissier
Stanley. In early afternoon trade yester-
day, the benchmark S&P 500 equity
index was up 0.1 per cent at 2,345, hav-
ing touched 2,351.21 earlier in the ses-
sion. The Nasdaq Composite was 0.2 per
cent firmer.
These are still early days but the lack
of an acceleration lower suggests that
the [equity] correction is going to be
more controlled and smooth as opposed
to violent, said Divyang Shah, global
strategist at IFR Markets.
What is interesting is that despite the
lack of downside on equity prices the
gains for bond markets continued.
Indeed, the yield on the benchmark
10-year US Treasury which moves
inversely to its price fell another 4
2400
2380
2360
2340
Feb 2017 Mar
basis points to 2.40 per cent, the lowest US equities Wall Street attempted to
since the end of February. rally after the S&P 500s 1.2 per cent
That left it a hefty 23bp down from the slide on Tuesday although concerns
intraday level reached the day before remained that the Trump trade could
the Feds dovish rate rise last week. be running out of steam
Across the Atlantic, the pan-Euro-
pean Stoxx 600 equity index extended FTSE 100 index
Tuesdays drop by a relatively modest Change on day 0.73%
0.4 per cent, while the FTSE 100 in Lon- 7450
don shed 0.7 per cent. 7400
There was little impact on the stock 7350
market from news of a suspected terror- 7300
ist attack outside the UK parliament,
7250
while sterling which briefly fell as low
Feb 2017 Mar
as $1.2426 recovered to trade at
$1.2477, flat on the day. UK equities The FTSE 100 closed at
European government bonds, mean- its lowest for nearly two weeks as the
while, took their cue from Treasuries. London market joined the Wall Street-
The yield on the 10-year German Bund inspired global equity sell-off. Financial
fell 5bp to 0.41 per cent, while the 10- stocks were among the biggest fallers
year UK gilt outperformed as its yield
fell 8bp to 1.18 per cent. Eurofirst 300 index
The latest bout of uncertainty over
the Trump trade left the dollar strug- Change on day 0.37%
1490
gling for traction. The dollar index a 1480
measure of the US currency against a 1470
weighted basket of peers extended its
1460
foray below the 100 level as it shed
1450
another 0.2 per cent to a six-week intra-
Feb 2017 Mar
day low of 99.66.
The dollar was down 0.8 per cent European equities The Eurofirst 300
against the yen at 110.94, its first dip managed to pare an early 0.9 per cent
below 111 since November 23. The decline as Wall Street showed early
euro, however, was unchanged on the signs of stabilising after the previous
day at $1.0808 although it remained sessions steep sell-off
close to a five-week intraday high.
The softer tone of the dollar did little
to support industrial commodity prices. Nikkei 225 index
Oil continued to struggle after data (000) Change on day 2.13%
19.6
from the Energy Information Adminis-
tration showed a larger-than-expected 19.4
build in US crude inventories last week. 19.2
Brent fell as low as $49.71 a barrel
before pushing back to $50.46, still 19.0
Feb 2017 Mar
down 1 per cent on the day. Copper hit a
near two-week low in London. Asian equities The Nikkei tumbled to
But gold benefited from its traditional a three-week low as participants took
haven status and the weak dollar, ris- their lead from a sell-off for US stocks
ing $5 to a three-week high of $1,249 a and a fresh rally for the yen
troy ounce.

FedEx FedEx also discussed the growth of its

Wall Street
FedEx bid to capture
more online shopping
leads to strong gain
Joe Rennison
and Jessica Dye
FedEx delivered strong gains yesterday
as the companys push to capture more
of the growing business from online
shopping appears set to pay off for
margins, helping it overcome weak
earnings results from Tuesday evening.
The parcel delivery company
reported adjusted earnings per share of
$2.35 for the third fiscal quarter, down
from $2.51 a year ago and missing
analysts consensus expectations of
$2.62, leading to an initial 4 per cent
tumble in after-hours trading.
But yesterday morning, the stock
traded up 1.3 per cent to $194.83,
reversing its initial declines after its
earnings were released.
An important component of that
Share price ($) express service since the acquisition of
200 competitor TNT Express in May 2016.
It offered combined profit forecasts
190 for the first time since the acquisition of
$1.2bn to $1.5bn in operating profit
180
17 Mar 2017 22
improvement.
Source: Bloomberg
But despite the positive guidance,
some analysts warn that investors
Indices Close
Day's
change should not forget the earnings miss. As
S & P 500
DJ Industrials
2345.41
20638.25
1.39
-29.76
the company slows its expansion
efforts, top-line growth may moderate,
Nasdaq Comp
Russell 2000
5805.72
1204.70
11.90
-8.35
says David Vernon, an analyst at
Bernstein Research.
VIX 12.67 0.20
Elsewhere, sneaker giant Nike
US 10 yr Treas Bd 2.48 -0.02
US 2 yr Treas Bd 1.30 -0.02
delivered weak quarterly sales on
Tuesday and following a call with
investors yesterday the companys
stock price fell more than 6 per cent
after it unveiled a mixed bag of
reversal came on its earnings call, with indicators about its future performance.
discussion of the profitability of FedExs Executives said that Nike brand
so-called ground segment that handles future orders were down 4 per cent, or 1
deliveries over land using roads. per cent on a constant currency basis,
FedEx has invested heavily in the compared with the same time last year.
business in an attempt take advantage The quarterly results underscore
of the rise in ecommerce as shops and investors concerns that rivals such as
department stores continue to struggle. Adidas and Under Armour are gaining
But that has affected profitability due on Nike, a long-time leader in the
to the capital expenditure. Yesterday, market for trainers and athletic apparel.
FedEx indicated that the decline in The S&P 500 healthcare sector edged
margins has hit a bottom. 0.1 per cent higher in morning trading,
The question was when are we going ahead of a contentious vote today for
to see ground margins recover? said President Donald Trumps reforms
Jack Atkins, an analyst at Stephens. hitting the sector.
They talked about a 15 per cent margin Health insurance company Aetna fell
in the fourth quarter, which is much 0.3 per cent to 128.76. But rivals
higher than I was expecting. Humana, Anthem and Cigna all rose.

acquisitions by innovative bonus outside the Houses of Parliament.

London
RPC crumples after
broker calls spending
spree value destroying
Bryce Elder
RPC hit a six-month low yesterday after
Northern Trust analysts accused it of
disguising structural problems with a
lot of acquisitions.
Last week the packaging maker
completed the $640m purchase of
Letica, a Michigan-based peer, for its
tenth deal in 12 months. Analyst Paul
Moran said RPC management had been
encouraged to pursue value-destructive
schemes and some of the most
aggressive accounting we have seen.
RPCs definitions of adjusted profit
and free cash flow had been inconsistent
over the past five years and had
flattered the figures in ways that
sometimes defy accounting logic,
he added.
Stepping up the pace of acquisitions
had masked the groups structurally
weak pricing power and labour cost
inflation, Northern Trust told clients.
We accept that a rights issue-funded,
value-destroying roll-up story can
continue to report adjusted EPS growth
for as long as shareholders are willing to
fund it, the broker said.
But should the hitherto supportive
appetite for rights issues fade, we think
shareholders will find a structurally
challenged, low-margin, highly levered,
sub-cost of capital business trading on
circa 23 times [current year] earnings
on our estimates, an undeserved 50 per
cent premium to the market.
RPC closed 4.8 per cent lower at
866.5p in a weak wider market. The
FTSE 100 was 0.7 per cent lower, down
53.62 points at 7,324.72.
Tourism and travel stocks fell on the
news of a suspected terrorist attack
British Airways owner IAG slipped
2.8 per cent to 545p and Merlin
Entertainments, the owner of
attractions including Madame
Tussauds and the London Eye, was
down 2.2 per cent to 473p.
Standard Life eased 2.8 per cent to
356.2p. Panmure Gordon, which cut the
stock off its buy list, argued that
StanLife was overpaying for Aberdeen
Asset Management.
Berendsen, an industrial laundries
operator, faded 3.8 per cent to 781.5p on
a downgrade to underperform from
Credit Suisse. The cost of fixing historic
under-investment would mean negative
free cash flow for three years, with the
benefits of extra spending more than
offset by higher depreciation and
interest charges combined with wage
inflation, analysts at the bank said.
Ground engineering specialist Van
Elle dropped 20.1 per cent to 91p after
warning on revenue just five months
after its flotation. It blamed rail contract
delays and cancellations.
Jackpotjoy, the recently listed
online bingo operator, edged 0.2 per
cent lower to 569p even after
Paulson & Co, the hedge fund, declared
a 5.4 per cent stake.
22 Thursday 23 March 2017

SMART MONEY Analysis. Currencies

John
Authers
EMs defy expectations as dollar takes a bruising
Repeat of taper tantrum Shifting positions
US equities sell-off looks unlikely but US rates
are not the only headwind
JPMorgan EM FX index G20 finance
ministers refrain
Emerging markets put G10 FX in the shade
Change to forex positioning in past year

does not signal the end ROGER BLITZ Fed raises rates
from warning 69
about risk of
protectionism
50

40
of the Trump trade Markets now and again behave in ways
least expected as demonstrated most Dollar retreats as
but sticks firmly to
its rates guidance
30
notably by the resilience of emerging US administrations 68
market currencies against the US dollar. 20
rocky start puts

R
ather than MAGA perhaps it is time for the Two of the main factors underpinning skids under
MEGA trade as in Make Europe great again. EM foreign exchange flows globalisa- Trump trades 10
On Tuesday the Trump trade had its first bona tion and oil are going the wrong way.
fide bad day with a 1.14 per cent fall for the S&P Globalisation looks more vulnerable Trump talks up 0
67
500. That was unremarkable in itself, and than ever following a G20 finance minis- need to redraw
indeed the US benchmark picked up a little yesterday ters meeting that pointedly failed to US trade relations -10
morning. But after a period of calm stretching back to include the need to fight protectionism
October, in which the S&P avoided daily falls of as much as in its communiqu. Meanwhile the oil Markets warm to idea of -20
1 per cent, it seemed rather a big deal. price is under pressure from excessive Fed quickening rates cycle
Combine that with a fall in Treasury yields, down from stockpiles and the resurgence in the US 66 -30
above 2.6 to below 2.4 per cent in the week since they shale industry.
appeared on the cusp of breaking out upwards, and a fall By rights EM currencies should be -40
Oil prices fall 10 per
in the dollar index to the bottom of its range, and markets suffering as the Federal Reserve stays on
cent in one week
have taken a clear reflation-off turn. course for further tightening, while
-50
Meanwhile European stocks briefly overtook the US. Treasury yields remain elevated despite
The FTSE-Eurofirst 300 ended Tuesday ahead of the S&P coming off in the past week. That has 65
EM Euro Swe Nor Aus Can Japan US GB NZ Swiss
500 in common currency terms. prompted some traders to wonder Jan Feb Mar krona krone dollar dollar yen dollar pound dollar franc
Given that the US stock market is up almost 10 per cent whether conditions are similar to the FT graphic Source: Thomson Reuters Datastream
since the election, it would be absurd to declare the Trump 2013 taper tantrum, when elevated
trade over. It is also hard to attribute Tuesdays sell-off to yields drove investors out of EM in an
the presidents political problems although many warn unseemly rush. developing economies, led by the South clarity about its decisions, she says. A commodity prices are stalling they are
that failure to get a workable compromise on healthcare As Brad Bechtel at Jefferies Interna-
We are set African rand, up 9 per cent, and the tantrum is less possible as people will not in freefall.
through Congress would seriously damage the positive tional says, a combination of higher for a good Mexican peso, up 8.5 per cent. not be caught off guard. EM countries are more exposed to a
predictions on fiscal policy that drove the rally. yields and lower commodities should How long will this rally last? Another Yet few forex analysts are prepared to reversal in capital flows, he admits, and
As it is, politics in Europe may be more important. Over- hit EM square in the chops.
run, but this three months, says Valentijn van declare the death of the dollar rally. there are headwinds from higher yields
blown negativity is in danger of turning into overblown Yet, amid increasing signs of global isnt some Nieuwenhuijzen of NN Investment Risks to EM loom large, the biggest and Fed tightening.
positivity. The Eurofirst started its sharp rally against economic growth, EM currencies are Partners, a Netherlands-based fund. For being US protectionism aimed at China, Compare today with the rates-driven
the S&P last Thursday, when traders arrived at work to doing just fine, benefiting especially
new bull the time being, he says, flexibility is the says Paul McNamara, investment direc- EM sell-off in 2013, says Mr McNamara,
news of the defeat of the from the bruising treatment investors market. best strategy. tor at GAM. If you see a big slowdown in and you see better fundamentals fall-
populist Geert Wilders in the are meting out on the dollar. EM investors appear sanguine about China, it is very hard to see EM doing ing current account deficits, and the
Dutch election, and of what
Europes risks After its stellar rise in the fourth quar-
This is only the likelihood of Trump policies such as well, he says. growth gap with developed markets
was regarded as a surprisingly are significant ter, the global reserve currency has been catch-up a border adjustment tax, and reassured Nor is there much underlying narrowing and going into reverse.
dovish statement by the US suffering not just against EM currencies by the Feds dovish hike last week, strength across EMs to give investors So while it could in part simply be the
Federal Reserve. The euro was
and should but also its G10 peers, as investors says BofA strategist Myria Kyriacou. comfort. Productivity and competitive- turn of EM currencies to be in favour, it
already recovering on the command unwind their so-called post-election The Feds even-handed approach to ness are not improving, says Bhanu is also the case that investors were
back of a surprisingly hawkish Trump trades. US growth suits EM countries. Sri Muly- Baweja, EM cross-asset strategist at underweight.
stance from the European
a discount JPMorgans EM index has climbed ani Indrawati, Indonesias finance min- UBS. Structural problems persist and That has run its course, Mr McNa-
Central Bank. more than 4 per cent this year to its ister, says the Fed has communicated EM growth relative to growth in devel- mara says. We are set for a good run,
The odds on Emmanuel Macron winning the French highest level since late October. more clearly since the 2013 taper tan- oped markets is going to remain low. but this isnt some new bull market.
presidency have increased slightly since Monday nights Seven of this years 10 strongest cur- trum, making an upset less likely. Still, economic growth is picking up, This is only catch-up.
presidential debate. But Europes political risks are signifi- rencies against the dollar are from It is data driven and it is providing says Mr van Nieuwenhuijzen, and while Additional reporting by Jonathan Wheatley
cant and should plainly command a discount. Beyond
Frances election, there is the continuing Greek debt crisis
and the uncertainty that Brexit will produce.
Rather than politicians, the most important market Capital markets
drivers continue to be central bankers. With the ECB set-
ting up to be more hawkish, while the Fed has been more
lenient, the gap between US and German bond yields has
tightened, relieving upward pressure on the dollar. Add
Top asset houses shun
Tuesdays UK inflation data, which increased the chance of
monetary tightening and lifted the pound, and last weeks
Portuguese bond sale
tightening by the Peoples Bank of China, and suddenly the
US does not seem so out of step.
These shifts also call one of the assumptions of the refla- THOMAS HALE CGD has hired Deutsche
tion trade into question that central banks would keep Bank, Barclays, JPMorgan
rates lower for longer, allowing more growth before apply- BlackRock and Pimco are and Citi for the sale, and yes-
refusing to take part in the
ing the brakes. That hope looks to have diminished. terday marketed the bond in
Another critical factor this week is the oil price, which first bond sale by a Portu- Paris after two days doing so
has dropped clearly below its 200-day moving average for guese bank in more than a in London. Bankers hope to
year, because of a legal bat-
the first time since April last year. This has little or nothing sell the bond later this week,
to do with broader global demand and growth. tle with the countrys central and say the London road-
Speculators were heavily positioned long in oil as bank over losses sustained show attracted interest from
in 2015.
last week started, betting that the price would continue to more than 100 investors.
rise. Further, the news on Saudi production and on the State-owned Caixa Geral de As well as potentially reo-
scale of US inventories, revealed yesterday to be at an Depsitos is this week court- pening bond markets to Por-
all-time high, showed that bullish hopes for prices had ing investors in London and tuguese lenders, the sale is a
been overdone. Paris, as it seeks to sell a critical moment for CGD. If
But even if oils fall was a 500m subordinated bond, the bank pulls off the sale,
function of the fundamentals
S&P 500 streak in what would be a return to the government will inject
of the oil market and traders without a 1% fall the debt market for Portu- 2.5bn of capital into CDG.
positioning, rather than a gals troubled banking sector. The bond will count as
retreat from a global reflation
was the eighth Pimco and BlackRock, two additional tier 1 (AT1) capi-
trade, the impact on energy longest for of the worlds largest asset tal the riskiest class of
stocks suggests that investors managers, have ruled out bank debt, making it highly
are unnerved. Relative to
almost 90 years buying the bond because of exposed to losses at times of
the rest of the US market, the losses they incurred via distress.
energy sector is almost back to its lows of early last year, another Portuguese lender, The 100bn European
when the oil price was also at lows. Novo Banco, in late 2015, AT1 market fell sharply in
Cheaper oil also reduces short-term inflation expecta- according to people with price early last year, in part
tions, at the margin reduces the likely pace of US rate rises, knowledge of the matter. due to concerns over Novo
and raises the risk of further pressure on high-yield bonds, Senior Novo Banco bonds Banco, as well as regulatory
heavily exposed to the US shale sector. That, again, would held by institutional inves- uncertainty and weakness in
reduce pressure for a rise and impinge on growth. tors were transferred to a so- financial stocks.
None of this adds up to more than a reassessment of the called bad bank, effectively Since then, the market has
Trump trade. The S&P 500 remains above its 50-day mov- wiping out their value, while staged a dramatic recovery.
ing average, as it has been constantly since election day in other bonds held mainly by Investors in AT1 bonds who
November. But the internal pattern of returns suggests Portuguese investors were bought at last Februarys
doubts about growth. left untouched. lows have made returns of
Growth has outperformed value since the election, A year ago a group of 14 over 30 per cent so far.
Russell indices show. This suggests that investors consider bondholders including The rally in bank capital
growth scarce and so will pay more for it. Meanwhile cycli- Pimco, BlackRock and Elliott bonds has fuelled demand
cal stocks have started to give up some of their outper- Management, launched legal for riskier peripheral debt.
formance. According to FTSE indices, US cyclicals are up action aagainst Banco de Por- Earlier in March, Bankia, the
14.4 per cent since the election, far ahead of defensives, tugal, the countrys central state-owned Spanish bank
which are up 6.65 per cent. But since March 1, when stocks bank, which approved the that became a symbol of the
had a strong rally after the presidents speech to Congress, transfer of the bonds. The countrys financial collapse,
cyclicals have fallen 4.9 per cent while defensives have lawsuit is ongoing, the peo- attracted nearly 5bn in
slipped only 0.7 per cent. ple said. BlackRock and demand ffor a 500m tier 2
None of this need be alarming. The rally looked over- Pimco declined to comment. subordinated bond.
done, and the streak without a 1 per cent fall was the eighth Novo Banco was created Government bond yields
longest since records began almost 90 years ago. from the failure of Esprito on 10-year Portuguese debt
A weaker dollar, stronger emerging markets and a less Santo in 2014, and Portu- have risen by more than 1.5
frothy US stock market are in a way healthy. Compared guese banks have not percentage points since the
with angst of late November and early December that accessed bond markets since beginning of 2016.
the strong dollar and a protectionist US agenda would losses were imposed at the They are currently trading
force an EM crisis, the position is healthier for everyone end of 2015. The decision by at 4.15 per cent, compared to
including the US. Pimco and BlackRock under- 1.77 per cent for Spain, where
lines the challenges still fac- yields have scarcely changed
john.authers@ft.com ing Portuguese borrowers. over the same period.

Watches Jewellery
Thursday March 23 2017
Baselworld brands put
their best face forward
This years fair
comes at a critical
moment, says
Simon de Burton
T
his year marks the cente-
nary of a handful of Swiss
watchmakers organising an
exhibition of their latest
creations. It was the foun-
dation of a trade show that has grown
into Baselworld, the largest and most
important gathering in the horological
calendar. Last year it attracted more
than 145,000 people from more than
100 countries.
The 2017 event, which opens today,
features around 300 watch brands
unveiling new models, ranging from
grand names such as Rolex, Patek
Philippe, Omega and TAG Heuer to low-
volume independents offering high-
priced pieces for connoisseurs. But
while the default Baselworld mood is
upbeat, exhibitors and retailers will set
Hour guide
Baselworlds top 12
timepiece launches
GRAPHIC Page 4
out their stalls at this years show after a
further decline in sales.
The January figures from the Federa-
tion of the Swiss Watch Industry show
exports were down 6.2 per cent by value
on the same month last year. Sales of
precious metal watches fell 9.7 per cent,
while those for steel models fell 0.8 per
cent. This follows two full years of
declining sales, including a contraction
of almost 10 per cent last year.
Like many people in his position,
Jean-Paul Girardin, the vice-president
of Breitling, sees Baselworld as the most
important opportunity of the year to sell
watches and to cement client relation-
ships but he is not overly optimistic
about how the fair will go. The picture
certainly looks interesting, he says deli-
cately. While we must be confident, we
also remain cautious. Although the
industry has seen a general decline, our
2016 levels were around the same as
those for 2015, and I think this can
partly be attributed to the fact that we
have never been very strong in China, so
the market slowdown in that part of the
world did not really affect us.
He adds: We also use a very high-tech
system to monitor sales to ensure we
FT SPECIAL REPORT
Resetting history Time for frankness
How the Romanovs Piagets old and new
gems found new homes CEOs speak
ANTIQUES Page 14 INTERVIEW Page 8
www.ft.com/reports | @ftreports
The Deconstructed Watch
dont ship further stock before existing
watches have been sold. This is in order
to prevent an excess of product which
could, potentially, lead to discounting
and selling on the grey market (out-
side the intended region).
He believes, however, that sales suc-
cess in the current retail environment
will not come from offering cheaper
products, but from maintaining the par-
ity between price and quality. Breitlings
main Baselworld launch will be the
Navitimer Rattrapante (9,720), the
first time the split seconds function has
appeared on the Navitimer chrono-
graph since its launch in 1952.
Herms Watches, meanwhile, aims
for a less technically-focused sector of
the market with its range of dress and
Keystone/Jean-Christophe Bott
sports pieces, including longstanding
favourites such as the Cape Cod. This,
While we says chief executive Laurent Dordet, is
exactly the sort of well-recognised
must be model that can help to support a brand
confident, in tricky times. Within a difficult and
highly unstable economic context, we
we also see a comeback to more classical Watchmakers are not fans of magnetism it can the heart of its X-Trem-1 Sting HD. We take it to
remain watches instead of over-designed time- send a timepieces mechanism haywire. But pieces to work out what makes it tick and why it
pieces, he says. Christophe Claret has brought magnetism into is so unusual. Page 10
cautious Continued on page 2
2 FINANCIAL TIMES Thursday 23 March 2017

Watches & Jewellery | Inside

Baselworld new models to copy. Plus: our top tips for In pieces The silversmith
We look at the state of the avoiding a fake We take apart Christophe Georg Jensens chief executive
industry as brands Page 7 Clarets magnetic new on polishing up the brand
gather. Plus: clock our X-Trem-1 Sting HD Page 13
guide to the fairs 12 Time for change Page 10
best launches We speak to the outgoing and Press reset
Pages 3-4 incoming chief executives of Click and collect Jewellery maisons are
Piaget about mistakes made recycling antique
Watch fans are now paying
la Modi and opportunities to grasp
more than $100,000 for pieces
gemstones, sometimes
Jeweller Nirav Page 8 with a royal provenance
they have only seen online
Modi picks the Page 10 Page 14
watches which mean
most to him,
A mans
including a fair few world Size matters The art of
platinum pieces A survey of the watch Why have so many the jewel
Page 6 industry shows that enormous diamonds Collector Susan Kaplan, picking her
women are found their way to favourite pieces, says museums
market lately?
The youthquake under-represented
Page 11
should treat jewellery as an art form
Brands have finally realised that Page 8 Page 15
Generation Z wants to buy watches, but
they are having to innovate to reach them Military timing Beijing bling Bond Street blues
Page 6 Western luxury brands are hesitantly Luxury brands on Londons chicest street
Watches used in wars are embracing Chinese online platforms
popular with collectors, but they have been hit with huge tax rises
such as WeChat
Frankenwatches raise difficult questions
Page 12
Page 16
As watch prices rise, fraudsters seek out Page 9

Crowds await the opening of Baselworld in 2016 Didier Oberson/MCH Messe Schweiz

Baselworld brands put

their best face forward
Continued from page 1
Mr Dordet believes that, despite gen-
eral instability in the industry, the
watchmaking side of the Herms busi-
ness is in a relatively good position
because it creates up to 95 per cent of its
products in-house, following a decade-
long programme of integration. The
company produces its own dials, cases,
movements and straps.
Baselworld attendees can visit the
maisons stand on the first floor of Hall 1,
but the prospect of setting up in such a
prestigious location is beyond many
smaller independent brands because of
The SIHH is run as a
college. At Baselworld, no
one asks. The attitude is
that the exhibitors should
be grateful just to be there
the cost of space. This causes them to
piggyback on the main event by hold-
ing meetings in nearby hotel suites.
One brand that does this is H Moser &
Co, a small-volume producer of simple
but high-end watches that exhibits both
at Januarys SIHH watch show, popu-
lated by luxury conglomerate Richem-
onts brands, in Geneva, and at the Ram-
ada Hotel in Basel during Baselworld.
Edouard Meylan, chief executive of H
Moser, says: A small brand such as ours
simply doesnt have the budget to show
in the main halls at Baselworld, which
charges around SFr1,500 ($1,490) per
square metre of space.
On top of that, you have to pay to
construct the stand and then you have
to do absolutely everything else your-
self. Our suite at the Ramada Hotel cov-
ers 250 sq m and costs a fraction of the
price of being an official Baselworld
exhibitor, and we have reduced costs
further by sharing the space with some
other brands.
The gap between the fairs is philo-
sophical as well as geographical, contin-
ues Mr Meylan. The SIHH is run as a
college, with everyone working together
and being included in the decision-mak-
ing process. At Baselworld, no one asks.
The attitude is that the exhibitors
should be grateful just to be there.
Those smaller brands which can
afford to show at Baselworld have a new
space this year. The organisers have
removed the marquee known as the Pal-
ace, because around 30 independent
brands which used to show in it are no
longer attending, and have replaced it
with a set-up on the first floor of Hall 1,
dubbed Les Ateliers.
Yvan Arpa, owner of self-described
provocative niche brand ArtyA, has
moved into Les Ateliers this year: The
space is far better than before, but it
does require each brand to build its own
booth from scratch, which has cost us
SFr50,000-SFr60,000 on top of the cost
of renting the space. But the show
remains the most important in the
world and, if you can afford to be there,
you have to go.
The Financial Times asked Basel-
worlds managing director, Sylvie Ritter,
for comment about these changes but
she was unavailable.

Contributors
Ralph Atkins Josh Spero
Switzerland correspondent Commissioning editor

Simon de Burton Steven Bird

Contributing editor, How to Spend It Designer
Christopher Campbell Alan Knox
Graphic journalist, FT Picture editor
Nicholas Foulkes
Contributing editor, How to Spend It For advertising details, contact:
Mark Howarth, +44 (0)20 7873 4885 or
Camilla Apcar mark.c.howarth@ft.com, or your usual FT
Rachel Garrahan representative.
Milena Lazazzera
Ming Liu All editorial content in this report is
Sarah Shannon produced by the FT. Our advertisers have
Robin Swithinbank no influence over or prior sight of the
Rachael Taylor articles.
Kate Youde
Freelance journalists Follow us @ftreports
Thursday 23 March 2017
Outlook Sales growth hints at end to two-year downturn, but the bad news has not fully abated yet, writes Ralph Atkins
Industry hopes worst
is behind it, at last
A
fter a bleak year for the lux-
ury business, there should
be some sparkle at the
Baselworld watch fair,
which opens today. Signs
are emerging of a tentative rebound in
sales of finely-crafted timepieces and
jewellery, reviving growth at the worlds
biggest brands.
Many in the sector would prefer to
forget 2016. Swiss watch exports a
closely watched barometer for the lux-
ury goods business fell almost 10 per
cent compared with the previous year,
according to the Federation of the Swiss
Watch Industry.
Sales were hit by sluggish global eco-
nomic growth, with the trend in Europe
exacerbated by declining numbers of
Chinese tourists, fearful of terrorism
although the cheap pound made the UK
a bright spot.
Evidence of a turnround has started
to emerge. In January, luxury conglom-
erate LVMH reported watch and jewel-
lery sales in its brands, such as Bulgari
and TAG Heuer, had risen 8 per cent in
the final three months of 2016 com-
pared with a year earlier. For the full
year, watch and jewellery revenues were
up 5 per cent compared with 2015,
LVMHs figures showed.
Further brightening the mood, Rich-
emont, the company behind brands
such as Cartier, Vacheron Constantin
and Piaget, has also hinted the worst is
over. Last year Richemont cut jobs and
even bought back and destroyed
watches to reduce inventories.
But the Geneva-based group reported
sales in the final three months of 2016
had been 5 per cent higher than a year
earlier. Sales in the Asia-Pacific region
were up 10 per cent, thanks largely to
strong performances in mainland
China and Korea. Local sales and tourist
purchases in the UK were described as
robust.
Swatch, the group that owns brands
such as Omega and Tissot, as well as its
eponymous plastic watches, is predict-
ing healthy growth in 2017 although
analysts point out the company has a
record of excessive optimism. Swatch
has refused to cut jobs, arguing the
downturn was temporary.
If sustained, the recovery could
soon be apparent in Swiss watch export
sales (although weak sales figures 12
months earlier will flatter headline
numbers).
Still, the recovery is unlikely to be
dramatic. Watch exports were down 6.2
per cent in January 2017 year on year,
suggesting they have yet to reach the
trough. And Bernard Arnault, LVMHs
It feels like the industry is
only at the beginning of
downsizing, but the
numbers are less bad
chairman, warned that last years
improvement should be seen in a con-
text of geopolitical and economic insta-
bility. Within luxury sectors, watches
will almost certainly lag behind jewel-
lery, analysts believe, and still have
problems from the downturn.
One is the steep increases in prices
from the years before the downturn
and these have been worsened in euros
and pounds by the subsequent strength
of the Swiss franc. Some customers are
no longer willing to pay SFr30,000
[$30,000] for something that 10 years
ago cost only SFr10,000, argues Ren
Weber, analyst at Swiss private bank
Vontobel.
The new models at Baselworld will
be very much at the entry-price level of
the brands and there will be more
FINANCIAL TIMES 3
Baselworld | Watches & Jewellery
Welcome to Baselworld: Chanel will
launch the Mademoiselle Priv
Aubazine (top left) and de Grisogono
the Eccentrica S01 (above right) at
the fair (top right and bottom)
Stefan Schmidlin/MCH Messe Schweiz
focus on watches for women, which are
nearer the jewellery market, which is
doing fine.
Thomas Chauvet, head of luxury
goods equity research at Citigroup, says:
It feels like the industry is only at the
beginning of downsizing, but the num-
bers are less bad and investors want to
believe were at the bottom.
There has been too much price infla-
tion without innovation over the past
decade. There is a danger of too much
complacency after all it was a technol-
ogy company, not a Swiss company, that
launched smartwatches.
He continues: The fact that these
companies are not adapting to changes
in consumer behaviour and that con-
sumers are spoilt for choice in luxury
means that the watch category may
have become less relevant.
For luxury watches especially, the
decline was worsened in recent years by
the crackdown on corruption and tax
evasion in China and by excess invento-
ries in the large Hong Kong market
but also by questions about the long-
term appeal of costly Swiss-made
mechanical timepieces in an era of fru-
gal consumption.
The price segment for Swiss watches
showing the fastest pace of contraction
in 2016 was the most valuable sector
top-of-the-range watches costing in
excess of SFr3,000.
Helping the recovery are the pros-
pects of a pick-up in global economic
confidence, particularly in the US, and
a revival in tourism, including in
Europe. There is also optimism among
executives and analysts that some of the
sectors long-term challenges have
abated, such as smartwatches threat.
At Baselworld there will be schaden-
freude at the woes of wearable tech-
nology pioneers such as Fitbit and Jaw-
bone. Once hailed as the next big tech
market after smartphones and a sig-
nificant threat to lower-price Swiss
watch manufacturers the sector has
failed to live up to expectations.
Meanwhile, progress has been made
in reducing inventories in Hong Kong,
which remains the biggest market for
Swiss watch manufacturers. To better
manage the sales distribution chain,
Richemont is rolling out a multi-brand
retail concept in Asia, called TimeVal-
le, which offers partners an off the
peg model for stores selling a range of
luxury lines. A pilot store opened in
Nanjing, mainland China, in 2015.
Another has followed in Tokyo and
three more are expected to open by the
end of the year.
4 FINANCIAL TIMES
Watches & Jewellery | Baselworld
Companies bring their best, most complicated and most expensive new timepieces to Baselworld: here is our guide to a noteworthy dozen
A
round 300 watch brands will exhibit at this years
Baselworld trade fair, encompassing the gamut of
horology. Above, we illustrate the diversity of
offerings rising in price clockwise.
In the one oclock position is a watch
recognisable to anyone who has visited a Swiss railway station:
the Mondaine SBB Classic is based on the Swiss Federal
Railways platform clock, and is now available on a loden
woollen strap (1). Two straps are supplied with Tudors latest
take on its bestselling Heritage Black Bay (2), which has a new
bezel in plain steel and an in-house movement, while
Hamilton (3) draws on its longstanding association with the
movie world to launch the ODC X-03, co-designed by Nathan
Crowley, production designer for the sci-fi film Interstellar.
TAG Heuers anticipated launch is a version of its 1960s
Autavia (4), which has been voted back into its range by
enthusiasts in an online poll. Another drivers chronograph is
the Breitling for Bentley Supersports (5), a connected
smartwatch which monitors driving performance through a
link to a mobile phone app.
Also built for performance is Omegas Speedmaster Racing
Master Chronometer (6) which combines the brands latest,
ultra-accurate mechanical movement and a high-tech
ceramic bezel with a dial inspired by a model from 1968.
Striking
twelve
Details and prices
1 oclock: Mondaine Classic SBB 40mm
with felt strap (175)
2 oclock: Tudor Heritage Black Bay
Steel. (2,370)
3 oclock: Hamilton ODC X-03. (3,145)
4 oclock: TAG Heuer Autavia (3,900)
5 oclock: Bretling for Bentley
Supersports (6,725)
6 oclock: Omega Speedmaster Racing
Master Chronometer (7,995)
7 oclock: Zenith Defy El Primero 21
Thursday 23 March 2017
Zeniths celebrated El Primero which launched the year
Illustrations: Brian Saffer; Design: Alan Knox
after gets its first significant update in the Defy El Primero
21 (7), which has a central chronograph hand that performs an
entire sweep of the dial in just one second.
Hublot has gone for style over mechanical substance with its
tweed-clad Classic Fusion models (8); these are made in
(10,000, anticipated price) conjunction with design house Italia Independent and tailor
8 oclock: Hublot Classic Fusion Italia Rubinacci. The platinum-cased Slim dHerms (9) uses a
Independent (13,300) perpetual calendar movement that automatically accounts
9 oclock: Herms QP Platinum for leap years and short months.
(30,500) Female watch-lovers can travel the globe with Patek
10 oclock: Patek Philippe Ref 7130G Philippes Reference 7130G World Time (10), featuring a blue
World Time (37,040) dial and a white gold case, and Bulgari demonstrates that less
11 oclock: Bulgari Octo Finissimo can be more with the unveiling of its Octo Finissimo Skeleton
Skeleton Tourbillon (114,000) Tourbillon in platinum (11) the smallest tourbillon watch on
12 oclock: Dior Grand Botanic (from the market.
220,000) The most expensive is from Dior, which has made eight one-
off watches in a collection dubbed Grand Soir Botanic (12).
Despite being powered by unremarkable quartz movements,
each unique piece is expensive because of its dial encrusted
with precious stones arranged to depict blossoming flowers.
Prices start at 220,000.
Simon de Burton
Research by Tatjana Mitevska
Thursday 23 March 2017 FINANCIAL TIMES 5
6 FINANCIAL TIMES
Watches & Jewellery
A watch collection la Modi
My Favourite Pieces
Jeweller Nirav Modi
goes for complex
mechanisms and
platinum cases in his
wristwear, writes
Simon de Burton
erhaps ironically, says
P gem trader and jeweller
Nirav Modi, I have never
really worn jewellery
only my wedding band
and, for the past three years, a ring
made from the most beautiful ruby I
have ever seen.
Mr Modi, 46, is a third-generation
diamond trader and chairman of
Firestar Diamond, which he founded in
1999. This now employs 2,200 people
and buys and sells diamonds worth
$1.5bn annually. In 2010 Mr Modi
selected 15 of his craftsmen to establish
an eponymous brand that he bills as
Indias first luxury jewellery house. It
now has 600 employees and sells
jewellery priced from $3,000 to $8.5m.
He has always had a taste for watches,
however. I have loved watches since
the 1980s . . . probably because my
father always wore nice pieces by
brands that were particularly popular in
that era, such as Grald Genta, Corum
and Franck Muller.
IWC Novecento perpetual calendar
(early 1990s)
The timepiece that means most to Mr
Modi was launched in the early 1990s as
the first-ever square-cased perpetual
calendar watch. The Novecento
(bottom left) is relatively rare and few
people recognise it a fact Mr Modi
appreciates, along with the understated
appeal of its white dial and modest size.
When he bought it more than 20 years
ago, it cost $30,000, which represented
six months salary. I still use it quite
Watch this space: jeweller Nirav Modi Sebastian Bttcher/Nirav Modi
regularly and I like the fact that it looks
like a stainless steel watch, although it is
actually made from platinum.
Swatch Trsor Magique (1993)
Despite its reputation for inexpensive,
plastic-cased watches, Swatch regularly
Im told it would be more counteract the effect of gravity on
valuable if it was still
wrapped and unused. But I
just enjoy wearing it Constantins tonneau-shaped Malte
creates more valuable, limited-edition
pieces that are often sought-after by
collectors, such as the Trsor Magique
(top left). Unlike most Swatches, it has a
mechanical movement and, more
surprisingly, a case hewn from
platinum.
Mr Modi bought his in Rome, complex and sophisticated tourbillon
attracted by the dial decorated with
stars and Roman numerals. Unlike
collectors of Swatch limited editions, he
could not resist removing it from its
packaging and putting it on his wrist.
Im told it would be more valuable if it
was still wrapped and unused. But I just
enjoy wearing it.
Vacheron Constantin Malte tourbillon
(2000)
At the turn of the millennium, many
manufacturers engaged in a race to
produce ever more sophisticated
tourbillon wristwatches. (A tourbillon is
a mechanism that contains the watchs
escapement in a revolving cage, to
Among Mr Modis favourite pieces is
timekeeping accuracy.) Mr Modi was
among many high-end collectors who
sought different examples of tourbillon
watches, and his first was Vacheron
a white gold dial and diamond hour
Gen Z turn to
their wrists,
not just their
pockets, for
the time
Marketing The young
are keen on watches,
but brands must
innovate to woo them,
says Robin Swithinbank
The perceived lack of interest in
watches among young people is a
myth, according to Omegas chief exec-
utive, Raynald Aeschlimann. As head of
a watch brand, he might be expected to
say that, but the Jewellery and Watches
Retailing Report, published by market
research company Mintel in September
2016, confirmed that Generation Z
roughly defined as those born from the
mid-1990s onwards is keenest of all
age groups on timepieces.
The report showed that one in five 16-
24-year-olds were thinking of buying a
watch in the coming months, as well
as a similar percentage of those aged 25
to 34. It also found that the young are
the biggest buyers of all age groups.
While an average of 12 per cent of peo-
ple in Britain were considering buying a
traditional or digital watch in the next
six months, the report said, the figure
rose to 26 per cent among men aged 16
to 24, and to 16 per cent among women.
Demand for classic timepieces remains
strong among the youngest shoppers,
says retail analyst Alice Goody, who
wrote the report.
A rash of data at the start of the dec-
ade suggested young people had lost
interest in watches. A YouGov survey in
2011 found that 59 per cent of 16-34-
year-olds in the US used a mobile phone
to tell the time. While 69 per cent of
them owned watches, only 26 per cent
were wearing one at the time of the sur-
vey. A YouGov survey of British 18-39-
year-olds in 2013 found that 61 per cent
used a phone to tell the time.
Interest in watches among young buy-
ers is largely fuelled by online engage-
ment. We conducted a survey among
3,000 people in China, Germany, Italy,
Japan, the US and Switzerland. It con-
firmed bloggers and social media have a
great influence on young peoples buy-
ing decisions, says Luc Zobrist, an eco-
nomic analyst at consultants Deloitte.
model in platinum (top middle), which
also incorporates a perpetual calendar.
Jaeger-LeCoultre Reverso
Gyrotourbillon 2 (2008)
At its launch in 2008, watch fans
considered this one of the most
wristwatches on the market because it
featured a spherical tourbillon:
instead of simply revolving, the
tourbillon turns on more than one axis,
to mesmerising effect. Limited to 75
pieces, the model (top right) has
become highly collectible and its
rectangular Reverso case with twin
dials is regarded as a mechanical tour de
force. It is fascinating because it is an
open watch and the mechanism can be
seen very clearly from both the front
and the back I frequently just look at
it, even when Im not wearing it, says
Mr Modi.
Rolex Day-Date (2000)
ring in my life, I suddenly went to
one of the rarest of all recent Rolexes, a
platinum Day-Date (bottom right),
which he has worn on a daily basis since
buying it. The watch is distinguished by
Mr Modi adds.
Luxury brands now invest heavily in
social media strategies, youth-focused
marketing campaigns and online retail
platforms. According to Mintels report,
consumers aged 27 to 36 are the most
likely to buy a watch online.
The young generation see brands on
Instagram, says Jean-Claude Biver,
head of LVMHs watch division, which
owns Hublot and TAG Heuer. Hublot
has 1.9m followers and the second big-
gest community of Instagram fans in the
whole Swiss watch industry, behind
Rolex [3.4m].
TAG Heuer has signed up social-me-
dia ambassadors since Mr Biver became
the companys chief executive in 2014.
Among them is footballer Cristiano
Ronaldo, who has 94m Instagram fol-
lowers. On New Years Day, Mr Ronaldo
posted an image of himself wearing a
TAG Heuer watch, adding the hashtags
#tagheuer and #DontCrackUnderPres-
sure, the brands strapline. It was liked
The pride of ownership is
not sufficient any more. A
product has to bring an
experience. There is much
more balance for the young
2.5m times. The influence of the young
is very important, even if they cant buy
for themselves, says Mr Biver. They
influence their parents choices, for
example.
Smartwatches still face resistance
among the young. According to Mintels
research, 44 per cent of the 16 to 24 age
group did not want to buy them; half of
Thursday 23 March 2017
markers, although Mr Modi believes
most people glancing at it would think it
was a regular, stainless steel model. I
have worn it most days for the past 17
years and it has never gone wrong,
despite never having been serviced, he
says proudly.
Ruby pinky ring (2014)
Mr Modi claims never to have worn any
jewellery other than his wedding band,
which is made from a continuous row of
diamonds in his brands patented
Endless cut. But about three years ago
he acquired a 6ct ruby that was badly
scratched and in poor condition. Drawn
to the stone by its exceptional colour
and clarity, Mr Modi had it recut and
discovered that rarely for a ruby it
was internally flawless.
I completely fell in love with the
colour and, after it was recut, I had it
mounted as a pinky ring [bottom
middle]. My family were completely
mortified: having never worn a dress
wearing this one on the little finger of
my right hand, he says. But the stone
is absolutely pristine, and that gives me
great pleasure every time I look at it,
these were put off because prices
remain high (the Apple Watch Series 1
starts from 269).
In January, Omega created a limited
edition Speedy Tuesday version of its
signature Speedmaster watch that sold
out quickly. The name was taken from a
term coined by an online fan (see page
10). Social media is no longer comple-
mentary to our marketing strategy, its
the way we communicate, says Mr
Aeschlimann.
At the Salon International de la Haute
Horlogerie watch fair in January, Baume
& Mercier introduced a collection called
My Classima. The quartz watches are
priced under 1,000 and aimed at first-
time luxury-watch buyers. The com-
pany commissioned a series of short,
lively films designed to appeal to a
young audience.
We have invested a lot of money to
get young people, says Alain Zimmer-
mann, chief executive of Baume & Mer-
cier. We have to seduce them. And
these days, a lot of it comes down to
social media. Three years ago, we pro-
duced one major movie a year. Now we
make 10 short movies instead, because
you have to post content every day.
But social media alone are not a solu-
tion. You need the right stories to tell, he
says. Before [the young] invest their
money, they want to be sure of the envi-
ronmental impact and how the product
is sourced.
Jrme Lambert, chief executive of
Montblanc, says: The pride of owner-
ship is not sufficient any more. A prod-
uct has to bring an experience. There is
much more balance for the new genera-
tion between the experience a product
delivers and the pride of ownership.
Thursday 23 March 2017
Counterfeits Rarer models are easier to imitate, but not everyone minds having a Frankenwatch, says Simon de Burton
As prices climb, fakes
get broader and better
W
atches that might have
been worth between
1,000 and 2,000 rel-
atively recently can now
fetch multiples of that
as collectors look at more affordable,
less appreciated makes. Vintage pieces
by makers such as Longines, Tudor,
Heuer, Breitling, Omega and Zenith are
being fiercely fought over when they
appear for sale privately, through deal-
ers or in the auction rooms.
For owners who have kept genuine
examples of such watches tucked away
in drawers and in the backs of cup-
boards while they were hardly worth
the effort of selling, the price hikes have
brought welcome windfalls. But the
buoyant vintage market is also proving
a boon for fakers. They recognise an
opportunity to make money from
watches that, in many cases, have been
cobbled together from diverse parts to
create apparently collectable models
which are actually all but worthless.
The geeks call them Franken-
watches watches that have been built
from parts that didnt start life
together, says Adrian Hailwood, head
of the watch department at auction
house Fellows in Birmingham. It has
long been a problem with popular
makes, especially Rolex but it is some-
thing that has extended to other names
during the past couple of years, with the
situation really accelerating within the
last six months or so.
Mr Hailwood notes Heuer is espe-
cially affected, as the growing values of
well-known models such as the Autavia,
Carrera and Monaco have been brought
to peoples attention. But its the less
well-known pieces the Cortina and
Kentucky, for example that can
present real problems because people
can build them using age-appropriate
parts and bamboozle someone who
doesnt have the knowledge to see that
they are not genuine, he says.
Values of these models have certainly
rocketed. In 2010, for example, a Heuer
Autavia Reference 2446 a popular
drivers chronograph of the 1960s
favoured by the late Formula One star
Jochen Rindt was sold by Bonhams in
London for 5,400. But late in 2016,
Christies New York achieved $125,000
for an identical watch, albeit one that
was in better condition.
The worst consequence of
fake watches appearing for
sale is that they eventually
kill the market for the
genuine article. People
become too nervous to buy
The work of the fakers is often made
easier because many vintage pieces
were produced in relatively large num-
bers using generic movements and
other components. Such parts can be
gathered together easily and inexpen-
sively before being combined to make a
passable copy of a collectable model.
The publicity achieved by a particular
watch selling for a high price often
serves to fuel the market in fakes, says
Mr Hailwood, citing the 2015 sale of a
1930s Breguet wrist chronograph for
15,000. Six months ago he was sent
another one a poor copy. The engrav-
ing was wrong, the dial was clearly a
confection and the whole appearance
was that of a modern take on an early
military watch.
The most audacious attempt at fakery
Mr Hailwood has seen, however, con-
cerned a counterfeit version of one of
the most collectable of all Patek Philip-
pes, the Reference 3448 perpetual cal-
endar model produced between 1962
FINANCIAL TIMES 7
Watches & Jewellery
Top tips for avoiding a Frankenwatch
1. Do not be seduced by the name on 5. All parts need to tie together
the dial a particular brand name seamlessly; with a Frankenwatch there
does not mean it is authentic. are usually compromises.
2. Check that the case/dial/hands 6. Watches built from age-correct
configuration was ever made by the parts culled from a number of the
manufacturer. Brand-specific internet same make and model to create the
forums can be helpful. perfect example may be impossible to
3. Beware of anything that claims to spot and even regarded as acceptable.
be a prototype. The difference between restored and
4. Pay attention to signed parts of the Frankenwatch rests on whether the
movement and compare to authentic changes are disclosed.
examples. Differences in colour, finish Adrian Hailwood, director, Fellows,
or engraving style will be a clue. watch auctioneers
Frankenspotter: auctioneer Adrian Hailwood has a keen eye for a fake watch Kalory Photo & Video
and 1985. In December 2011, Christies
sold one of only two known examples
with a pink gold case, for SFr2.1m
($2.08m), so Mr Hailwood was amazed
when what was apparently the second
one was sent to Fellows for appraisal two
years later.
At first glance it could have been
taken as genuine, he says. But a closer
look revealed that the movement had
been messed about with and had some
very un-Patek screw damage, and the
case, dial and hands were clearly not of
Patek quality.
According to Jonathan Darracott, glo-
bal head of watches at Bonhams, how-
ever, there is less likelihood of buying a
fake at auction. When a client comes to
us to consign a watch, he says, we tell
them all about the checks it will undergo
during the cataloguing process and
explain that, in some cases, a watch will
be dismantled and photographed piece
by piece so that its individual compo-
nents can be verified to the nth degree.
The ultimate problem with fake
watches is that they breed mistrust, Mr
Darracott says. Perhaps the worst con-
sequence of fake watches appearing for
sale on a regular basis, however, is that
they eventually kill the market for the
genuine article. People just become too
nervous to buy.
The growing number of vintage fakes
is causing equal concern in the pre-
owned watch trade. Justin Koullapis is a
director of Watch Club, which has
premises in Mayfairs Royal Arcade
from where it sells watches by a wide
range of brands.
Generally, watch collectors are very
much more fussy than collectors in
other fields, so anything that is wrong
tends to be quickly filtered out, says Mr
Koullapis, also the Horological Journals
technical editor. But the problem of
fakes in the vintage market undoubt-
edly exists, and it is growing. He cites
the Rolex Cosmograph Daytona with
the so-called Paul Newman dial: written
about in great detail, they become easier
for fakers to perfect a copy.
He adds, however, that the question of
what is a fake and what is not is far from
black and white. There is the obvious
ethical question, ie has someone set out
to deceive by passing the watch off as
something that it isnt? Or, in the case of
watches that were altered or modified
many years ago before they became val-
uable, have they simply set out to pre-
serve? says Mr Koullapis.
There is no accurate record, for
example, as to which examples of the
Cosmograph Daytona began life with a
standard dial and which were originally
fitted with the Paul Newman dial. Back
in the 1970s, long before the watches
were considered especially valuable, it
was quite common for an owner to ask
an independent watchmaker who had
access to materials to change one dial
for another in that instance, I dont
think such a watch should be regarded
as a fake.
A Frankenwatch is not necessarily a
bad thing, however, at least according to
classic car authority Robert Coucher,
who proudly sports a 1920s Patek
Philippe which was transformed from
pocket watch format to a wristwatch. I
wanted a vintage Patek Philippe wrist-
watch but the prices had become out of
reach. I discovered, however, that
Patek pocket watches are far less
expensive so I bought one and
had it converted to wear on the
wrist. I realise it isnt a factory product,
but its still a beautiful piece with a
genuine Patek Philippe movement
that keeps perfect time, and it was
considerably more affordable than the
real thing.
So long as one knows exactly what
one has bought, I dont see any problem
with a Frankenwatch.
The Heuer Autavia Reference 2446
is a desirable item to fake
8 FINANCIAL TIMES
Watches & Jewellery
Interview Philippe Lopold-Metzger and Chabi Nouri, Piagets old and new chief executives, on changing times. By Nicholas Foulkes
The old guy
gives way to a
Richemont
rarity: a woman
W
hen Johann Rupert,
chairman of luxury
conglomerate Richem-
ont, decided the com-
pany needed a chief
transformation officer in November
2016, few imagined the scale of the
changes he had in mind. In January
alone, Richemont announced four new
chief executives of brands, and two fur-
ther brands lost their chief executives to
more senior roles within the group.
Another transformation Mr Rupert
felt necessary was in Richemonts male,
francophone management. He told
investors at the end of 2016 that he
wanted to see less grey men, less grey
Frenchmen as a subcategory. We have
too few women. We dont have enough
diversity. (See industry data below.)
Richemonts all-white board has 19
members but only one woman, and
there are no female chief executives at
its watch and jewellery brands. That
changes, however, next week.
On April 1, Chabi Nouri will be pro-
moted to chief executive of Piaget from
international managing director for
sales and marketing, succeeding
Philippe Lopold-Metzger, who has
been in the job since 1999. Ms Nouri is
not the first female chief executive at
Richemont.
However, based in Plan-les-Ouates, a
Geneva suburb where many watch
brands have headquarters, she is the
first at the heart of the horological
industry. She plays down the gender
issue and says that during her years at
Cartier, also a Richemont brand, being
a woman was never a disadvantage.
Her appointment signals a change in
direction for the house. Piaget was
founded as a watchmaker in 1874 and
until the mid-20th century it supplied
other brands with movements, after
which it started selling watches under
its own name.
During the 1960s and 1970s the brand
gained a reputation for jewellery-
watches, but its emphasis has tended to
be on the watch element.
The watch industry has suffered since
2014 Swiss exports were down 10 per
cent globally in 2016 alone but the
jewellery market remains relatively
buoyant, having grown 7.5 per cent in its
10 biggest markets in 2016, according to
Euromonitor. Ms Nouris mandate is to
boost Piagets presence there.
Boardroom diversity
Men dominate chief executive positions
CEOs of luxury watch and jewellery brands
Number of male CEOs Age
7580
7074
6569
6064
5559
5054
4549
4044
3539
6 4 2 0 0 2
Source: FT research
Pale and male but not stale There is nothing like gender equality in the luxury industry
While women are under-represented at the top of
the watch and jewellery sector, according to
Financial Times research, there are many more of
them than in the corporate world at large.
Of the 31 chief executives surveyed by the FT,
only five were women, a rate of 16 per cent. This
For the past two and half years Ms
Nouri has worked with Mr Lopold-
Metzger. He now acknowledges that,
during his stewardship, Piaget concen-
trated on being taken seriously as a
watchmaker at the expense of its jewel-
lery. But given the changes in the mar-
ket, with hindsight, what I do regret is I
could have started the strong develop-
ment of jewellery earlier.
In contrast to Ms Nouris demurral on
gender, Mr Lopold-Metzger feels that a
woman will have a greater affinity with
jewellery: Jewellery is very driven by
beauty and elegance, and is more femi-
nine than masculine. It is not the key
advantage but I think definitely more an
advantage than a disadvantage to have a
woman leading the company.
He is not, of course, suggesting that
Ms Nouri rose to run a Richemont com-
pany because of beauty and elegance.
Between her departure from Cartier in
2008 and her arrival at Piaget in 2014,
she worked at British American
Tobacco as global head of brand for
Vogue cigarettes and was about to move
to Japan with BAT when she was con-
tacted by her old boss at Cartier, Ber-
nard Fornas, who had been promoted to
run Richemont. Mr Lopold-Metzger
also received a call from Mr Fornas,
encouraging him to meet Ms Nouri,
though he denies he was under instruc-
tions to appoint her as director of mar-
keting, communications and heritage.
Ms Nouri says she would not have
joined if she had thought she was being
foisted on others. It was Philippe who
had to want me to be here for this transi-
tion. If not, I would have not joined to
fight. They met, to test out their chem-
istry, and most of the elements were
quite in agreement.
But while their personalities worked
together, their experiences in the watch
and jewellery industries could hardly
have been more different. Mr Lopold-
Metzger belongs to an earlier generation
of management where intuition, not
experience or rigorous analysis, played
a more important role than it does
today, he says.
He joined Cartier in 1981 and helped
to built the brand into a dominant force
in todays global luxury market.
(Cartier was responsible for most of
Richemonts 6.1bn jewellery sales in
2016.) He ran Cartier in Canada, the UK
and Asia before taking over Piaget.
Most CEOs are Swiss or French
CEOs of luxury watch and jewellery brands by nationality
Number of female CEOs
Swiss
10
French
10
4 6
figure will improve further once Chabi Nouri of
Piaget assumes her role on April 1.
Perhaps surprisingly, however, this level is
much better than the global average, which is 3.9
per cent, according to Credit Suisse research. In
Switzerland, home to many luxury brands, the
Thursday 23 March 2017
Every time I see a
product Im excited,
I want to launch it,
and probably we
have too many
launches
It was Philippe who
T
hese days Richemont is a
global business, and there is
less place for intuition, as had to want me to
Mr Lopold-Metzger con- be here for this
cedes: Every time I see a
product Im excited, I want to launch it, transition. If not, I
and probably we have too many would have not
launches, which could have been
launched later and been more focused. joined to fight
The times changed, and today we are in
a much more marketing-driven world
than five or 10 years ago. As he says of
Ms Nouri, I think shes a better market-
eer than I was.
Ms Nouri confirms that, under her
management, there will be fewer
launches; her priority is to raise the
awareness of these icons and make sure
that they are known. Given that her
boss as of April 1 will be Georges Kern, by his values and his ethics, and thats Philippe Besides, he is not leaving the business
Richemonts new head of watchmaking, quite amazing, I have to say. He laughs: Lopold- completely, as in April he will become
who built the IWC watch brand on such You can translate that as old guy only Metzger will be non-executive president, overseeing
a policy, she is certainly on-message. focused on the past. succeeded on special projects. Some people probably
If Mr Lopold-Metzger describes his He does not say this bitterly, but with April 1 by would be happy if a brand collapses
successor as a better marketeer, what is a hint of nostalgia, and he wishes that he Chabi Nouri after their departure. But the best
it that Ms Nouri admires about the man were leaving the role of chief executive Alex Stephen Teuscher reward for me is to see the brand enter-
she is replacing? She thinks and answers at a better time for the company. I ing the next stage of growth, he says
carefully. Philippe is probably the most would have preferred to end up with the optimistically. Hopefully Ill stay
ethical [man] and the man with the growth continuing, but . . . it is the around a little bit so I can share some of
most values Ive met. He really stands beginning of a new cycle. the glory.
Most CEOs are new to the job
Number of CEOs luxury watch and jewellery brands by tenure
7
Italian British
3 2
6
5
Number of CEOs
4
3
Swedish US
1 1
2
Luxembourg
1
1
German
1 0
0 5 10 15 20 25
Swiss/French/Italian joint citizenship 1 Number of years as CEO
average is 3.8 per cent, while France another tenure of seven years was boosted by some noteworthy that there was only one non-
luxury centre only acquired its second female extremely long-serving bosses. European chief executive.
chief executive of a CAC40 company in 2016. Given that most of the brands surveyed are The average age of the chief executives was
There has been rapid turnover in the luxury based in France and Switzerland, the fact that 54, compared with 55 in FTSE 100 companies.
industry: 12 of the 31 chief executives had been in two out of three chief executives were French or Josh Spero
their jobs two years or less, and the average Swiss is unsurprising. However, it may be Research by Tatjana Mitevska
Thursday 23 March 2017 FINANCIAL TIMES 9

Watches & Jewellery

Watches used in wars have legions of fans

Auctions Military 1990s, according to Mr Wind. [Today]
militaries generally dont purchase
watches are in favour watches and issue them or, if they do,
theyre off-the-shelf items that other
for their unusual spec people can buy, says Mr Wind.
Military watches can come with
and intriguing stories, moral qualms: they may have been
involved in deadly attacks or even
says Kate Youde crimes against humanity. In December
2015, Bonhams sold a Japanese Imperial

I
t was a pilots timepiece that first
drew Bill Heming to military
watches. Previously a diving watch
enthusiast, he had admired the
style and engineering of a friends
Breguet Type 20, issued by the French
military in the 1950s, and bought his
own at auction five years ago.
He regards such watches those pur-
chased by a military from a manufac-
turer and issued to service personnel
as a piece of history. They are also
relatively rare so it is somewhat of a
challenge to find them, says the retired
lawyer from Boston, who sources pieces
at auction, through fellow collectors or
at specialist shops.
His hobby coincides with a wider
uptick in interest as watch enthusiasts
websites, forums and social media put
military pieces on collectors radars.
There has been really remarkable
growth in auction prices over the past
five years, says Eric Wind, vice-presi-
dent of Christies watch department in
New York. He partly attributes this to
better scholarship and thus increased
knowledge about pieces unique charac-
teristics, how many were made and how
many survive. For many models, weve
seen them grow 300 per cent in five
years, some far more, he says.
Before 2016, Mr Wind says the record
price for a Heuer Autavia made for the
Israel Defense Forces was probably
around $10,000-$12,000; in November
2016 in Geneva, Christies sold one from
the 1980s for SFr62,500 (then $63,200),
more than treble its estimate.
An Omega Seamaster 30 made in 1963
for the Republic of Singapore Air Force
achieved SFr12,500 in the same sale,
also exceeding its high estimate. Phillips
will offer two rare Heuer Carreras,
issued by the Jordanian air force and the
Angolan army, for sale in November.
Watch collectors, rather than military
history buffs, are driving the market,
say auction house watch specialists.
Part of the appeal of these pieces, which
usually have military-issue markings on
the back and are often made for specific
purposes such as diving or flying, is the
distinctive features not found on equiv-
alent civilian models.
The Rolex Military Submariner (Mil-
Sub), for example, has sword-shaped
luminous hands and a bezel marked
with minutes all the way round
instead of the first 15 minutes only, as on
a regular model. It has solid bars
between fixed lugs that mean it has to be
worn with a Nato strap (one that folds
through the bars, which cannot be
pulled off).
All those things were actually
defined by the Ministry of Defence in a
contract for Rolex, says Jonathan
Darracott, head of watches at Bonhams.
From left: the The MoD issued three series of the
Rolex MilSub MilSub in the 1970s, the holy grail
5517/5513 made (according to Mr Darracott) being the
for the British reference 5517/5513: Bonhams sold one
forces; a Tornek- for 120,100 in London in December
Rayville made 2015. Another sought-after model
for the US Navy; issued by the MoD is the Omega military
a Breguet made Seamaster 300.
for the French Mr Darracott says there is tangible
Aronavale; a interest in these watches because they
military-issue were made specifically for the military
Heuer Autavia and are quite rare beasts since they
Chris Ware/Keystone/ were produced in limited numbers and
Battman Archive/Mondadori/
Getty Images
not all survived. About 1,000 Tornek-
Rayville dive watches were made for the
US Navy during the Vietnam war,
according to factory documentation.
Countries were not brand-loyal; the
French used a number of manufactur-
ers including Breguet to make Type
20 watches to the same specifications
for their Aronavale (naval air force).
But they were certainly brand-aware.
Bonhams recently offered for sale 11
Omegas issued to the Pakistan Air Force
in the 1950s and 1960s. Theyre models
that had names already, so they were the
Ranchero and the Railmaster, says Mr
Darracott. Popular fable says that [the
Pakistani military] didnt really want to
issue their officers with something
which is called the Railmaster
because the rail in Pakistan is the public
mode of transport or the Ranchero
a ranch person is not particularly officer
material so they had those names
completely taken off the dial and had
Seamaster put on there instead.
While military watches from the first
world war come up for auction, the
pieces popular with collectors date from
the second world war onwards, partly
because these tend to be larger and
more to current tastes.
Government-issued military watches
started declining in number in the
Air Force Seikosha believed to date from
the time of the attack on Pearl Harbor
and a pilots watch produced around
1942 by A Lange & Shne for the Luft-
waffe, the German air force during the
second world war. Other second world
war models in demand include those
signed by Rolex and sold by Panerai to
the Italian military, which Mr Wind says
in many cases issued them to German
frogmen whom it was training.
He believes watch enthusiasts who do
buy Nazi-era pieces are not so much
interested in the history as the design.
Mr Heming says it was indeed the
amazing design that attracted him to
his 1944 anonymous piece, attributed
to Panerai and Rolex, belonging to a
German combat swimmer. He says that
while the history is bothering, his pur-
chase of the watch is by no means a
statement of support or confirmation
that what went on was right.
Mr Hemings piece does not feature
Nazi symbols. But some collectors will
pay a premium for original markings,
many of which were polished off after
the war, says Paul Maudsley, interna-
tional specialist director of watches at
Phillips. Auction houses are reluctant to
handle such pieces, however. We hesi-
tate to sell things that have insignia that
is Nazi-related, says Mr Darracott.
The variety of military watches avail-
able means the category is a very broad
church, says Mr Maudsley. With some
pieces selling for hundreds of pounds, it
also provides a very visible and afford-
We hesitate able entry into collecting.
to sell things But collectors will require patience,
warns Mr Heming, as condition is highly
that have variable. Many people . . . would much
insignia that rather have a perfect watch and these
things are 50 or 60 years old now and
is Nazi- were used in war, he says. They earned
related their scars.

Apple patents launch of a unique version of its

Excalibur Knights of the Round Table

a crowning
model, costing the noble sum of
425,500. The watch features 12 three-
dimensional bronze figures

achievement (representing each of the knights of

Arthurian legend) as hour markers,

for its watches

The crown found on the side of watches
and wound to generate power might
seem old-fashioned in the era of the
smartwatch, but Apple has taken a new
interest in it. The company, which
produces the Apple Watch, has filed a
patent for a mechanical winding
system, resembling a crown, which
could be used on its smartwatch to
extend its operating time (currently
pitched at 18 hours). The application,
lodged at the US Patent and
Trademark Office, describes a
twisting mechanism that
creates a rotational magnetic
field driving a tiny generator.
Complex
In May, Sothebys will
auction a rare example of
a Patek Philippe which
for 26 years held the
record for worlds most
complicated watch
with an estimate of
SFr6.5m-SFr10m ($6.5m-
$10m). The Calibre 89
pocket watch (right) marked
Pateks 150th anniversary in 1989
and showcases the brands horological
prowess with its 33 complications.
These include a calendar displaying
Easter (which moves each year).
Comprising 1,728 components,
weighing 1.1kg and measuring 88.2mm
in diameter, it was made in four
examples. The Calibre 89 remained the
worlds most complicated watch until
2015, when Vacheron Constantin
unveiled its Reference 57260 with 57
complications. Sothebys will exhibit
the Calibre 89 in Hong Kong from
March 31 to April 4 before its sale in
Geneva.
A fishy project
Independent brand Oris has launched a
SFr2,550 ($2,500) version of its Aquis
dive watch as part of a campaign to
further research into the worlds
declining shark population. The Oris
Hammerhead (above right) will be
limited to 2,000 and highlights a
conservation project being run by non-
profit organisation Pelagios Kakunj.
This follows shark movements and
researches migration routes of the
endangered scalloped hammerhead in
Clockwise from above:
Roger Dubuis Excalibur Knights of
the Round Table, the Oris
Hammerhead, the Patek Philippe
Calibre 89
the eastern Pacific. The sharks will be
tracked using Oris-funded MiniPAT
satellite transmitters, which release
automatically after six to nine months
and float to the surface. The scalloped
hammerhead population has fallen by
90 per cent since the 1980s.
Knight time
Roger Dubuis has opened its first UK
boutique in the Fine Watch Room at
the Harrods department store in
Londons Knightsbridge and
celebrated the occasion with the
while the dial takes the form of a
miniature round table (left). The
brand has also unveiled a one-off
version of its skeletonised Excalibur
Spider pocket watch, priced at
243,500. The boutique, fitted-out in
leather, bronze and wood, is intended
to resemble a giant jewel box.
Factory fresh
An architecturally important watch
factory in Germany, which once
employed 3,000 people and produced
3m timepieces a year, is to be restored
to its former glory. The old Junghans
HQ in the Black Forest town of
Schramberg was designed by industrial
architect Philipp Jakob Manz and
inaugurated in 1918. Built into the side
of a cliff, it comprises nine storeys
arranged in terraces, each with 14
windows positioned to take advantage
of the uniform northern light. The
factory was abandoned decades ago
and left to deteriorate, but local spring
manufacturing tycoon Dr Hans-Jochem
Steim, who bought Junghans in 2009,
has vowed to restore the building and
open it as a museum. He expects the
work to cost 6m and take up
to four years.
Slick move
Ulysse Nardin has created
one of the most unusual
commemorative watches
of recent times: its North
Sea minute repeater is
intended to serve as a
powerful homage to
the oil industry. The
watch will be made in an
edition of 18 and features a
gold and champlev enamel dial
depicting a trio of miniature drilling
platforms, with automated derricks
that move when the minute repeater is
activated. Each watch costs 236,000
enough to buy to 5,700 barrels of
crude at time of writing.
Time out
Panerai has developed a watch
designed to run without servicing for
half a century and it is backing this
claim with a 50-year guarantee. The
LAB-ID Luminor 1950 Carbotech has a
movement made from ultra-low-
friction materials that do not require
additional lubricant. Only 50 examples
will be available, at 50,000 a piece.
Simon de Burton
10 FINANCIAL TIMES Thursday 23 March 2017

Watches & Jewellery

The
Deconstructed
Watch

Christophe Claret X-Trem-1 Sting HD

At Baselworld this week, Christophe Claret will unveil its new X-

Trem-1 Sting HD watch (SFr300,000/$299,000), which defies
conventional watch-world thinking by incorporating magnetism.
Horologists usually go to some lengths to eliminate the effects of
this because it can play havoc with the accuracy of a watchs
mechanism, affecting the all-important hairspring.
A minuscule magnet is attached to each side of the movement by
silk threads; the magnet on the left travels up its track once every
24 hours, the one on the right once every hour. (You can see all of
these part to the right.) As the magnets move, they drag with them
two hollow steel balls, floating in a pair of sapphire crystal tubes,
next to which are indices for hours and minutes. What makes the
innovation impressive is that the balls are not attached to the
mechanism in any way.
Like many horological gimmicks, the X-Trem-1s chief concern is
not providing the time with pinpoint accuracy, since the display
gives only a rough indication of the minutes past the hour.
The movement that powers the piece, nevertheless, is
exceptional. Comprising 419 components and 64 jewel bearings, it
is equipped with two mainspring barrels to provide 50 hours of
autonomous running, plus a tourbillon regulator which (despite the
Keystone/Jean-Christophe Bott/KEYSTONE

vague time display) enhances overall accuracy. A pair of crowns set

into the back of the watch can be folded out for winding and
setting, while the case (40.8mm by 56.8mm) is made from
blackened titanium.
The X-Trem-1 not only offers an ingenious method of displaying
the time but also appeals to the contemporary pirate: when you
breathe on the sapphire crystal, it reveals the image of a skull and
crossbones. Now that is what we call a hidden treasure.
Simon de Burton

Watch sales push through online frontiers

Retail Brands know Holdings has been deliber-
ately growing its online
that innovative digital presence, says Mr Duffy.
Last year it significantly
partnerships and retail upgraded its online cus-
tomer experience, from
will win them custom, improving navigation to
adding video and text
writes Ming Liu concierge services.
During the SIHH
watch fair in Geneva

W
hen Omega launched its in January, it broad-
Speedy Tuesday model cast live web discus-
in January its first sions for the first time
watch sold directly to an initiative it is
consumers online the bringing to the Basel-
full run of 2,012 was snapped up in just world fair, which opens today
over four hours. in Switzerland.
While the name refers to Omegas

Speedmaster watch, it is also apt for the
haste with which buyers pounced on the
timepiece and for a fast-growing trend
in a traditionally cautious industry: sell-
ing luxury watches online.
Online luxury watch sales esti-
mated at just over 3 per cent of the
watch market, or around 1.1bn, in
2016 remain a small part, says John
Guy, a luxury analyst and managing
director at Mainfirst Bank.
But this is double its share from three
years ago, according to Mr Guy, and the
past year has seen several high-end
brands continue to expand digitally:
Jaeger-LeCoultre and Cartier joined the
UKs The Watch Gallery online, which
has 12,000 visitors a day. In its first six
months on the site, Cartier sold more
pieces there than on cartier.com, says
The Watch Gallery chairman David Col-
eridge. And in May, luxury conglomer-
ate LVMH will launch an ecommerce
site for all its brands.
Direct online selling is the new way
of talking to consumers, says Omega
chief executive Raynald Aeschlimann,
who adds that he felt quite sure about
the success of the Speedy Tuesday a
watch that, pre-launch, not even a lot
of people within Omega had seen.
Mr Aeschlimann may have had faith
in this idea because a Speedmaster cus-
tomer base already existed online. Rob-
ert-Jan Broer, founder of the blog
Fratello Watches, created the hashtag
#SpeedyTuesday in 2012 and, through
posting weekly entries about the model,
a community developed.
By the time Omega announced the
brand awareness, he does not expect
they will bring about a huge conversion
of sales to digital.
In November 2016, Swiss watch-
maker IWC made shopping site Net-a-
Porter its first online-only outlet. The
fine watch shop on Mr Porter (Net-a-
Porters male equivalent) opened in
2013 with Bremont as its first brand;
today it carries seven brands, with a
99,500 IWC Portugieser tourbillon its
top-end piece. Asked whether IWC
envisions selling directly online at some
point, incoming chief executive Chris-
toph Grainger-Herr says it is a logical
consequence . . . The question is never
if but when and how.
Brian Duffy, chief executive of Aurum
Holdings, which owns around 150 UK
stores across its Goldsmiths, Mappin &
Webb and Watches of Switzerland
brands, says that his companys average
online selling price for luxury watches
has grown 25 per cent since 2011 to
1,948 and that its sales are increasing
about 50 per cent year on year, driven
entirely by domestic UK buyers. Mr Col-
eridge says that his companys average
online transaction value is 2,500.
O
nline marketing is a
very new and fas-
cinating space,
says Mr Duffy, hint-
Above, from left: the Omega Speedy Tuesday; ing that what works
Vacheron Constantins Historiques Cornes de Vache and what does not remain to be seen.
1955; a Rolex Paul Newman Daytona. You do tend to spread your appeal
Below: the MB&F LM101 widely but hope to capture anybody out
Michalrojek/Dreamstime/The Watch Gallery there whos looking for a luxury watch.
The Watch Gallerys Mr Coleridge
25 sold in just over an hour. And in Feb- unique to Hodinkee, such as photo- echoes this sentiment. He argues that
ruary 2017, Hodkinee partnered with graphs of real watches (as opposed to large generalist retailers such as
Vacheron Constantin to offer the His- digital renderings) often placed in Selfridges, whose online store has 100m
toriques Cornes de Vache 1955, priced at glossy lifestyle settings. visitors per year and whose watch
$45,000; all 36 went in 30 minutes after Mr Pulvirent says the editorial site department is operated by The Watch
interested parties had filled out online provides the everyday expertise of a Gallery, will be a critical part of the
reservation request forms. salesperson. Our users trust and hear future of online trading generally, par-
MB&F, which does not sell online from us daily. Equally, when asked ticular for watches.
directly, had a mixed online experience whether Hodinkee is risking its reputa- The plans of LVMH, the worlds larg-
previously. In 2010, it had partnered tion for impartiality by working with est luxury goods company by revenue,
with watch blog PuristSPro and sold all brands, Mr Pulvirent contends the site is to launch an ecommerce site for all its
the examples of a $79,000 watch. aware of not wanting to disrupt that brands in May under its department
But in 2015, a collaboration with Cool credibility at all as its role expands into store marque, Le Bon March, reflect
Hunting, a more general online design selling watches. this impetus.
publication that at the time had more The Hodinkee shop uploads details of Ultimately, the divide between online
users than PuristSPro and Hodinkee, new watches on the same day every and offline might become less impor-
resulted in only three of the 10 pieces week, with no promotion or images tant, says Mr Coleridge: Customers are
selling on Cool Hunting, despite a lower beforehand to keep the element of sur- not the slightest bit interested in
price of $34,000. prise. With a 90 per cent sell-through whether theyre buying online or in a
A trusted community and a well- rate, there is often a race to buy. shop. For them its a process.
aimed product underpin Hodinkees We like this idea that out of nowhere Purchasing a luxury watch will usu-
sales, just as #SpeedyTuesday devel- we create this flash, says Mr Pulvirent. ally be completed within two to three
oped within Fratellos community. The bulk of its vintage watches are months, he adds, during which there
Hodinkee has around 1m active priced between $2,000 and $10,000, will be a mixture of visiting shops, read-
users per month, says managing with a $175,000 Rolex Paul Newman ing articles, searching primarily via
editor Stephen Pulvirent, with Daytona its most expensive to date. Google and talking to friends: We try to
visitors ranging from those The piece was bought using be reactive to that process, says Mr Col-
Someone that buy $200 Seiko Apple Pay: Someone purchased eridge. The Watch Gallery lets custom-
watches on Amazon to it at 10.30pm on their iPad ers chat about a watch online with a spe-
purchased a collectors who spend mil- using their thumb, which is cialist, who can then offer to meet them
$175,000

watch (4,100), Fratello had written
almost 250 #SpeedyTuesday articles
and the hashtag had been used more
than 40,000 times on Instagram.
The numbers sold online are still
small compared to overall sales, how-
ever, notes Mr Guy, especially for some-
thing like the Speedy Tuesday. Omega
sells around 600,000 watches a year,
whereas this was a line of just over
2,000. And while such marketing
ploys, as he calls them, can help build
B
rands are also seeing the vir- lions of dollars on watches wild, says Mr Pulvirent. (You in store.
tue in launching watches in a year. Indeed, the buyers unlock the payment on your Still, while these online exclusives
partnership with enthusiasts watch at of its co-branded watches device with your thumb.) Apple continue, watch fans will pursue them.
websites. Hodinkee, a site 10.30pm on reflected that mix, being Pay was also the method by George Bamford, founder of the Bam-
founded in 2008, has been both existing collectors and which Hodinkees first co- ford Watch Department which person-
behind four limited edition, co-branded their iPad newcomers. branded watch was sold: the alises watches, including Rolexes,
watches which have been selling out using their In 2015, Hodinkee merged with $52,000 MB&F watch was then the believes that limited editions like
faster and faster. In 2015, its first effort another watch site and raised $3.6m largest Apple Pay purchase. Hodinkees are the new game.
the MB&F LM101, priced at $52,000 thumb, from investors including Google Ven- In the same way that Hodinkee He admits to buying into the Speedy
sold all 10 pieces within five hours. which is tures and Twitters Evan Williams, and uses luxurious photography to sell its Tuesday hype, and says he would like
The Zenith El Primero Original a year later it launched an online vin- watches, retailers are also focusing on to own one. Even I couldnt get one
($7,900) followed in October 2016 all wild tage shop. All commercial content is attractive online experiences. Aurum and normally I can get most watches.

Big business
Mining Why have
there been so many
large diamonds on the
market recently? And
will we soon see more?
By Rachael Taylor
could show you my email, vol-
I unteers William Lamb, the chief
executive of Lucara Diamond. I
get three offers a week on that
stone. Id love to say were going
to sell it next week, but we have to find
the right buyer.
Mr Lamb is referring to the Lesedi La
Rona at 1,109ct, the second-largest
gem-quality rough diamond ever dis-
covered. Lucara unearthed it, and its
attempted sale at Sothebys in June 2016
was meant to represent a peak in the
market for enormous stones: the first
time one had been sold in public.
Instead, when bidding stalled
at $61m, falling short
of an undisclosed
reserve
Sothebys presale
estimate was in
excess of $70m it
exposed the risk and
the difficulties of the
market for outsize gems.
Mr Lamb says there
are several reasons he has
not yet sold the stone. No
actionable offer has yet met his
financial expectations some-
thing he attributes to a lack of
similar stones setting price prece-
dents. The only gem-quality rough
diamond larger was the 3,106.75ct Cull-
inan Diamond found in 1905, and that
was given to Edward VII.
Mr Lamb claims there has been inter-
est from outside the diamond industry,
but these offers are difficult to accept
because of the due diligence into buyers
backgrounds that is required to ensure
their legitimacy and the transparency of
their funds: We cant do the paper-
work, we need to dot the is and cross
the ts.
One expects such exuberance about
the Lesedi La Rona from the person sell-
ing it, but Lucaras competitors, who
also have large stones to sell, are of a
similar mind. I dont think theyll have
a problem selling it at the right price,
some of our buyers would love to buy it,
says Brandon de Bruin, group sales and
marketing executive at Gem Diamonds,
which controls the Letseng mine in
Lesotho, the source of several large dia-
monds. The reserve on the auction was
high, which is why it didnt get over. We
have never had an issue [selling a big
diamond] the larger, the better. When
we find a diamond over 200ct, my
phone starts ringing immediately.
L
arger diamonds fetch higher
prices per carat, in part
because of the stones rarity.
Gem Diamonds sold a large
white rough diamond at
$70,000 per carat, according to Mr
Bruin, while a top-quality 1ct white pol-
ished diamond is available on the con-
sumer market for about 14,000.
Gem Diamonds found fewer stones
weighing more than 100ct in 2016 than
they expected and its average price per
carat fell from $2,299 to $1,695, reflect-
ing the importance of size. In May 2015,
it had unearthed a 314ct rough dia-
mond, and it was bought the next
We need to talk
about WeChat
CHINA Page 12
month through a partnership agree-
ment, which usually involves working
with an external cutter and sharing the
profits. Then in July a 357ct rough was
unearthed and by September it had
changed hands for $19.3m.
A public auction, as with the Lesedi La
Rona, was a break from the traditional
way of buying large rough diamonds,
and David Bennett, worldwide chair-
man of Sothebys jewellery department,
says it has no plans at present to offer
more rough diamonds at auction.
The more established model for
mines is to sell rough gems to a select
group of buyers at invitation-only ten-
ders and auctions; the buyers will then
cut and polish the stones, ready to sell to
manufacturers and retailers. De Beers
Group, for example, generally sells to
just 84 approved companies, known as
sightholders.
Caroline Scheufele, co-president of
jeweller Chopard, followed this pattern
in 2016. She bought a 342ct rough dia-
mond, later named the Queen of
Kalahari, not directly from
Lucara which has been
lucky in having a mine that
produces so many large
stones but through
Antwerp-based Tach
D i a m o n d s. Ms
Scheufele was
involved in every
stage of buying and
cutting the stone, and
even travelled to the
mine to see it.
It is pretty much a
closed circle, says Ms
Scheufele of rough
diamond buyers. We
need the expertise. I
am an expert on cut
diamonds but not rough dia-
monds. It is a different business alto-
gether. Rough diamonds dont get
bought by private people. It is really a
very confidential business, with only a
very few big companies, some that have
been in the diamond business for more
than 100 years.
One of the more recent entrants to
trading and manufacturing is Antwerp-
based Safdico, co-founded in 1999 by
diamond magnate Laurence Graff, who
claims to have owned nine of the 18 larg-
est diamonds found this century.
Another name important in rough dia-
mond sales is South Africas Golden Yel-
low Diamonds, which last year bought a
32.3ct rough pink diamond from
miner Petra on behalf of the
MA Anavi Diamond Group
for $15m.
In January 2017,
Chopard unveiled the
stones produced
from the Queen of
Kalahari (many
are usually cut
f ro m a l a r g e
rough, rather
than one enormous
stone). They had elic-
ited 23 cut and pol-
ished diamonds, the larg-
est a 50ct round brilliant, set
into a six-piece suite of jewels. Singer
Dame Shirley Bassey performed Dia-
monds Are Forever while she wore one
of the pieces.
W
hile Chopard had the
funds to buy the Queen
of Kalahari from Tach,
the process of evaluat-
ing, cutting and selling
such large diamonds may take years,
which can place a burden on cash flow.
Jewellery
Bond Street stores Why gems belong
hit by huge tax rise among artworks
MAP Page 16 MY FAVOURITE PIECES Page 15
An alternative route for jewellery
houses is to win the marketing rights to
Rock on (from left): the
342ct Queen of Kalahari, the
of rock an hour, allowing miners to use it
earlier in the process.
the company expects to be able to scan
material 4mm thick by the second quar-
large stones bought by the rough buyers
clique. The dealer remains the owner
813ct Constellation, the 1,109ct
Lesedi la Rona and the 3,107ct
As little as 10 years ago, it was more
like 10 or 15 tonnes an hour, he says.
ter of 2017.
Innovation is also afoot at Gem Dia-
until the point of sale, while the jeweller Cullinan Diamond, with a standard The progress is phenomenal. Gem monds, the miner. It is now working on
takes on the cost of cutting and polish- engagement ring for size comparison Diamonds estimates that it processes two new types of technology that it
ing, as well as marketing to build hype 100 tonnes of ore for every 1.5ct of dia- claims will almost eliminate breakage
around the gem and find a buyer. Once a mond found. in diamond mining, according to Mr
deal has been struck, the jeweller and Processing lots of large material has Velloza: Weve got it to work on a lab
dealer will split the profits.
De Grisogono has been working in this
become easier; what remains difficult is
X-raying ore that has been made
scale, but the challenge is to scale it up to
an industrial level.
way since entering into a partnership smaller by crushing, as it calls for higher He estimates the technology is about
two years ago with rough diamond We have never had an resolution technology. two years away from fruition, but it
trader Nemesis International; de Gri-
sogono founder Fawaz Gruosi describes
this as revolutionary. It has since
acquired the marketing rights to the
$63m Constellation, the worlds third-
largest gem-quality rough diamond at
issue selling a big diamond
the larger, the better
Lucara is in the process of improving
the capabilities of its XRT machines.
Currently these are capped at 8mm but
could ultimately mean that enormous
rough diamonds become a more
common phenomenon.
813ct, and the 404ct 4 de Fevereiro,
(February 4).
We now have privileged access to the
best stones in the world, without having
to go through large numbers of middle-
men, says Mr Gruosi. Previously the
only companies that could access these
stones were those with mines them-
selves, or you had to go through a raft of
traders, which made the stones much
more expensive.
Desire for such stones is relatively
new, says Johnny Velloza, chief operat-
ing officer at Gem Diamonds. He sug-
gests that demand for enormous rough
diamonds stirred in the late 1990s as
wealthy investors started to view the
gems as collectors items. This is a
hypothesis supported by sales at
Sothebys. I can still vividly recall
bringing the first cut diamond over
100ct to auction that was back in 1990
and it was unheard of in those days,
says Mr Bennett. Since then, I have sold
seven diamonds over 100ct and each
one has had a unique and powerful
appeal for collectors.
S
uch demand has stimulated
new ways of getting the dia-
monds out of the ground.
Traditionally, the methodol-
ogy was that you would
recover as much as you can as cheaply as
you can, says Mr Velloza.
The process of liberating diamonds
from the rocks that hold them is brutal:
the rocks are blasted with dynamite,
drilled, put through a series of crushers
and grinding mills, and transported
roughly throughout. Despite their repu-
tation for toughness, diamonds have a
crystal structure and as such
are fragile; Mr Lamb at
Lucara suggests anyone
sceptical of this should try
taking a hammer to
their diamond ring.
When there was a
smaller market for
ultra-largediamonds,
this rough extraction
was satisfactory, but
now mine s are
investing in reduc-
ing b re a k a g e s
through better detection to
preserve larger stones. Lucara,
like other diamond mines, is focused
on using X-ray transmission machines
(XRT) to better identify diamonds.
At Lucaras Karowe mine, where the
Queen of Kalahari was found, ore is
trucked in from the mines, dropped on
to a heavy-duty sorter, run through a
primary crusher and evaluated by a
coarse sizing screen. Then the first
X-rays take place, with any diamond-
bearing kimberlite rock sent for hand
sorting; the rest is crushed ever smaller.
Mr Velloza says that modern XRT
machines can process up to 400 tonnes
12
Watches & Jewellery
Cartier and co chat about WeChat
W
ith 850m monthly
Asia Western luxury active users, it is unsur-
brands are taking big prising that Chinas
WeChat online platform
steps into Chinese wields considerable
sway when it comes to retail.
ecommerce, reports But WeChat, owned by Chinese inter-
net giant Tencent, is also the most
Sarah Shannon important platform for luxury brands
in China today, according to L2, a busi-
ness intelligence company. Local brands
competing in Chinas $103bn jewellery
market have already used it to establish
themselves with its audience, but now
some western names are stepping into
this arena, setting an example and a
challenge for their competitors.
So far very few western luxury jewel-
lers have used it for sales. Bulgari has
offered limited-edition flash sales, such
as the pink gold Divas Dream range
during the Qixi festival, known as
FINANCIAL TIMES
Chinese Valentines Day, while Tiffany
uses it for marketing and customer
interaction. Antoine Pin, managing
director of Bulgari in greater China, says
that while the range sold out within a
month and spurred store sales of the
same collection, online sales in China
remain limited: The physical touch
point seems to remain important for our
product category, he says.
In spite of such concerns, Cartier last
year launched a storefront on WeChat,
one of the first ecommerce-enabled
sites belonging to a western luxury jew-
eller on the platform. The Richemont-
owned brand sells around 60 products
via WeChat, including its Clou collec-
tion, which has a pink gold and diamond
ring on sale for Rmb27,600 ($3,550).
Cartier says that it plans to expand its
WeChat range and is monitoring other
Chinese shopping sites for opportunities
as site quality and reliability improve.
Chinese consumers are so digitally
native and mobile that it is crucial for
brands to get their strategy straight,
says Liz Flora, editor of Asia-Pacific
research at L2. A lot of old heritage
brands from Europe are very careful
with their reputations and they shy
away from ecommerce, but youre look-
ing at a whole different type of market,
and brands that dont have a strategy
will fall behind their peers.
WeChat is attractive on top of its mas-
sive audience because it has one-to-one
messaging functionality, direct pay-
ment system and a high level of brand
control. Companies can build their own
site on the platform, fulfil orders and
deal with customers.
This Valentines Day, Cartier used its
WeChat boutique to sell 150 pink gold
Love bracelets. More a marketing cam-
paign than a sales drive, the first 88
orders were personally delivered by
Cartier boys dressed in red jackets and
hats, with bunches of fresh flowers,
across 18 cities in China. The product
sold out in a few days.
WeChat transcends ecommerce and
is first and foremost about connecting to
our customers, says Renaud Litr, chief
executive of Cartier in China. The app
offers customers the ability to pur-
chase our collections online, book
appointments, check on the status of
their online purchase and repair orders,
and enjoy easy access to one-to-one
communication with sales staff, Mr
Litr says. Ecommerce sales, while still a
small percentage of the brands total,
offer a great potential area for future
growth, the company says. It declined
to give sales figures or projections.
T
here are ecommerce attrac-
tions for jewellers at the
other end of the price range
too. Affordable Danish jew-
eller Pandora started work-
ing in China with several distribution
partners in 2011 and now has over 100
outlets. It opened a store on the Tmall
platform, owned by Chinese ecom-
merce group Alibaba, in October 2016,
which has half the brands product
offering and 15 unique products for
China, such as the HK$5,999 gold mon-
eybag charm. It also has a separate
ecommerce site which opened in
December.
Sales on Tmall, where it only offers
full-price items, are significant, says
Kenneth Madsen, Asia-Pacific president
for Pandora, and the company is consid-
ering a WeChat store too. China
accounts for 4 per cent of group reve-
nues and same-store sales rose 44 per
cent in the fourth quarter.
Despite few rival branded interna-
tional jewellers operating there, going
into China was risky for Pandora. We
knew there was a very strong gold mar-
ket, says Mr Madsen, and not having a
history of buying branded silver jewel-
lery meant we would be driving market-
ing and investment. He cites collabora-
tions with local celebrities including
actress Ivy Chen.
The brands core customer base is 25-
35-year olds who are more aware of
global brands. They buy for different
reasons: they dont see jewellery as an
expensive piece but more so as an acces-
sory, as does the European customer,
says Mr Madsen. Were seeing consum-
ers in China now that are dedicated to
online shopping only and that group of
people is growing, so just by not being
online youre shaving off a huge part of
the Chinese consumer.
Hazel Meng, a 26-year-old Chinese
fashion blogger with 270,000 WeChat
followers, says her audience are exclu-
sively looking for western brands, pref-
erably with a little heritage, a bit of pres-
tige. While many western brands have
a presence on WeChat, they do not sell
A pedestrian on their phone walks
past a Cartier store in Shanghai
(above); online, however, they can
buy a Cartier Love bracelet, a Cartier
Clou ring, a Chanel J12 watch or a
Pandora moneybag charm (below,
top to bottom)
Tomohiro Ohsumi/Bloomberg
basic, popular styles, the ones without
too many diamonds, the popular ones
so much easier, says Ms Meng. She sug-
rooster gold ornaments.
used to be that diamonds and gold were
Rmb1,000-Rmb1,500.
quick process now given WeChats
celebs wear their jewellery. The combi-
Thursday 23 March 2017
there, which means Ms Mengs followers
have to go to physical stores or other,
less popular platforms such as Tmall
and JD.com, where counterfeiters and
unauthorised resellers have operated.
For jewellery and watches, WeChat
would work really well with the more
the celebrities wear. A lot of people buy
these items for gifts and buying online is
gests Tiffany, with its silver and simple
bracelets could work well on WeChat.
N
ow may be a good moment
for western brands consid-
ering a WeChat store. In the
past, Chinese jewellery
sales were dominated by
shoppers seeking out diamonds and
gold as investment pieces from local
companies like Chow Tai Fook, which
sells HK$7,510 gold bars and year of the
That is changing as the Chinese mar-
ket, especially tier-one cities like Shang-
hai and Guangzhou, adopt more west-
ern tastes, says Renee Hartmann, co-
founder of China Luxury Advisors. It
more of an investment. Now its much
more about what it looks like, its much
more traditional western, a lot of fash-
ion-related pieces, she says. Theres
more curiosity about the western cul-
ture and [Chinese people] want to try
different things, adopt different habits.
If western brands respond to Chinese
consumers, the opportunities are even
better. Ms Hartmann cites the popular-
ity of Chanels XS range, where a 4,000
J12 ceramic watch has a tiny 19mm
diameter, suited to a narrower wrist.
Western brands bring in the western
flair, the western design and the western
magic but in order to sell it they need to
be present, says Luca Solca, luxury
analyst at investment company Exane
BNP Paribas. Its a matter of waking up
and coming to the party. I dont think
there is first-mover advantage. People
buy brands, so the moment they are
available, they will go to them.
Chinese brands have already worked
out their online propositions. A spokes-
person for Chow Tai Fook, the biggest
jeweller in the world by market capitali-
sation, said the price range in their
physical stores is Rmb3,000-
Rmb6,000, whereas online it is
Orders placed on Tmall and JD.com
can be picked up at shops or delivered to
houses, but there are synergies, said
the spokesperson, in attracting online
customers into shops.
Entering China can be a reasonably
scope, says Ms Hartmann. Compared
to 10 years ago, its much easier for
brands to break into the market, have
nation of technology and consumers is
so cool.
London-based digital consultancy
agency Qumin, which works with Euro-
pean brands to launch WeChat apps,
says the platform is a useful way of rais-
ing brand awareness. The agency devel-
oped an app for Mappin & Webb, the
British jeweller whose Aster pendant
sells for 2,000, to promote the brand
over Chinese new year.
The Chinese are moving away from
showy brands, says Arnold Ma, chief
executive of Qumin. The Chinese love
the heritage and the history of European
brands but often they dont know about
them. He believes that WeChat is the
best way right now to reach a Chinese
audience and to introduce them to spe-
cific brands and tell the story of the
brand. If the shoppers dont yet know
about that brand, this means it will
probably be the next big thing.
Additional research by Tom Hancock
Thursday 23 March 2017 FINANCIAL TIMES 13

Watches & Jewellery

A silversmith embraces democratic design

Interview
Eva-Lotta Sjstedt
Georg Jensens chief
executive is creating an
intimate environment.
By Rachel Garrahan

I
t is a frigid day in Manhattan but
Eva-Lotta Sjstedt, chief executive
of silver specialists Georg Jensen, is
willing to exchange the warmth of
its new Madison Avenue flagship
and brave the cold to demonstrate how
the Danish design brand defines itself.
The shops minimalist window dis-
play of modern silverware and jewel-
lery, set against a curving wall of natural
moss, catches the attention of passing
shoppers as she stands outside. It is in
contrast with the traditional face of high
luxury represented by neighbours
including Herms and Graff Diamonds.
If you dont like Scandinavian
design, you probably shouldnt come
in, laughs the Swede, who was
appointed in January 2016 to drive
growth, integration and digitisation at
the 113-year old company.
The fact that only now has Georg
Jensen appointed its first female chief
executive is perhaps surprising given down 10 per cent in a year. Ms Sjstedt Georg Jensens and democratic, providing high-qual- be tailored to individual markets. In smithy for its original New York shop in
that staffing at the companys Copenha- says that the company will streamline first female chief ity conception and craftsmanship no New York, London and Australia, for 1924 sits alongside a wall of screens dis-
gen headquarters is 82 per cent female. its offering accordingly, focusing on core executive is Eva- matter what a customers budget. example, the company will continue to playing the digital campaign.
In addition, every country manager is models such as the womens Vivianna Lotta Sjstedt Now Ms Sjstedt needs to communi- focus on the higher-end hollowware and To create a more intimate environ-
female and the global management bangle and the mens Koppel watches. (centre), cate this message across a formerly dis- bespoke jewellery pieces for which ment inside the store, the traditional
team is half female. Koppel watches are mostly priced photographed at parate business, where the different there is already a strong customer fol- counter that divides staff and clients has
Ms Sjstedt hopes to capitalise on the from $1,100-$1,600, which may not its New York product categories and countries were lowing. In Taiwan, where Ms Sjstedt been replaced by a custom-made
growth Georg Jensen has already seem like premium stock for Madison store (top left) managed and marketed in a less says the companys current customers wooden smithy table, inlaid with silver,
enjoyed. In 2015 revenue grew 13 per Avenue. However, with jewellery, among its unified way. tend to be older and are less comfortable to give the feeling of being at a party
cent to DKr1.14bn ($164m) while oper- homeware and silver hollowware cost- silveware In September, the brand, which has buying online than in some markets, and standing around the kitchen table.
ating profit grew from DKr2m to ing up to six figures, the flagship is not Pascal Perich 100 stores around the world, launched investment will be aimed at more tradi- All transactions now take place behind
DKr44m. This can be attributed, out of place on one of Manhattans most its first digital campaign with the some- tional retail distribution. the scenes at the rear of the shop.
according to the company, to homeware luxurious shopping streets. Ms Sjstedt what cosy slogan, You can never be too Georg Jensens Madison Avenue bou- Its like an Ms Sjstedts mantra of accessibility
and jewellery sales, as well as increased
ecommerce and new retail locations in
resists the luxury label, however: We
do not use the word luxury. We use
much you. In late spring, the company
plans to roll out an improved mobile-
tique puts into practice some of the
changes Ms Sjstedt has introduced. It is
exhibition, means that customers can handle pieces
here without asking the staff. Certain
London, Taipei and Munich. In Beijing, design and accessibility, she says. enabled ecommerce site to complement a smaller, brighter space than belonged but one items are presented in the open, on top
Georg Jensen has a concept store with
a restaurant called The Georg, serving
Ms Sjstedt, a former senior executive
at Ikea, adds that the terms luxury
its in-store experience.
While unifying the companys ethos
to its predecessor.
With Scandinavian-style blond wood
where you of locked vitrines housing others. Its
like an exhibition, but one where you
new Nordic fusion cuisine. can be interpreted in many different and message has been a priority since and textured opalescent-silver walls, it can touch can touch and feel the product, says Ms
Watches, by contrast, have suffered
alongside the overall fall in the Swiss
ways. She wants Georg Jensen to be
defined as a master of Scandinavian
her arrival, Ms Sjstedt also says it is
essential that Georg Jensens website
tips its hat to Georg Jensens storied past
as well as to its future: the sterling silver
and feel the Sjstedt, who must wait and see how
Georg Jensens customers respond to her
watch market, where exports were design, a style that is both functional and its product and distribution mix can signage created at its Copenhagen product gleaming vision of democratic design.

Hot type Novelist Jackie Collins jewels up for sale

Jackie Collins (1937-2015) was the author of 32 racy novels,

often set in Hollywood and featuring the affairs of the rich
and the attractive. She spent some of the proceeds from
selling over 500m books on watches and jewellery, which are
being sold as part of her estate at Bonhams auction houses in
Los Angeles on May 16-17.
Lots include a diamond and platinum ring (bottom left,
estimate: $100,000-$150,000), an Art Deco diamond,
emerald, stone and platinum necklace (right, estimate:
$40,000-$60,000), signed pieces by Cartier and watches by
Patek Philippe, Harry Winston, Chanel and Chopard.
Her jewellery defined her style, and she had a piece for
every occasion, punctuating her outfits with a splash of
colour or a glint of sparkle, says Rory Green, Collins
youngest daughter. She loved to design jewellery and would
incorporate different pieces to create something new and
special. One of her most beloved pieces was the emerald and
diamond necklace which she created from Art Deco clips it
was the epitome of glamour and elegance.
Harvey Cammell, deputy chairman of Bonhams, says the
ring with a 6ct diamond is a standout piece and was
something that one perhaps would imagine one of her
heroines in a novel wearing.
The proceeds from certain lots in the auction, which also
includes the contents of her Beverly Hills house, will go
toward charities supporting young women. Josh Spero
Craig Barritt/Getty Images
14 FINANCIAL TIMES Thursday 23 March 2017

Watches & Jewellery

Antiques Recycling gems from existing pieces is
temptingly lucrative, says Milena Lazazzera

Resetting the Russian

Empress Maria
Feodorovna

Romanovs
(right) owned
the sapphire
which is now in
a Cartier cuff
(below); the

jewels, and
Wittelsbach-
Graff recut
diamond (below
left); van Cleef &
Arpels Bleu

other stories
Absolu necklace
(left) uses
formerly royal
sapphires
Bridgeman Archives

A
gemstone may have more
than one life. This summer,
Bulgari will unveil a neck-
lace featuring a 53ct emer-
ald as a centrepiece, a new
setting for the Colombian stone. Origi-
nally 55ct, the emerald was bought on
the vintage market in New York and has
been recut to enhance its colour and
update its style.
The business of sourcing stones is as
complex as it is competitive, says Lucia
Boscaini, director of the heritage
department at Bulgari, who adds that
the most exceptional stones are often
found in pre-owned items. Such
repurposing has occurred throughout
the history of jewellery and it has
been thriving over the past decade.
According to Russell Shor, senior
industry analyst at the Gemological
Institute of America, this trend was
spurred by the rising price of gold,
which encouraged the sale of pieces and
let gemstones enter the market while
either loose or still set. An ounce of gold
rose from under $700 in 2008 to almost
$1,900 in 2011; it has hovered between
$1,200 and $1,400 for most of the time
since 2013.
Jewels sourced on the vintage mar-
ket can initially seem less expensive
than new ones because of damage.
Mr Shor notes that although gem-
stones are quite durable, they are
often abraded [worn away],
chipped or even cracked, requiring
that they be recut. The cost of
recutting, plus loss of weight, can
negate the lower purchase prices.
Scarcity of supply is one reason jew-
ellers pursue second-hand stones. It is
like a treasure hunt, says Brazilian jew-
eller Ara Vartanian, who recently at
auction bought some petrol-blue indi-
colite tourmalines now sitting in a white
gold bracelet and a double-finger white
gold ring. The mines for indicolite
tourmalines are almost dry, so the gems
are more easily found through pre-
owned pieces, he says.
Alongside emeralds, jewellery houses
and dealers find sapphires from
Kashmir and rubies from Mogok in
Myanmar through the vintage market
because they often yield gems of
superior quality, as Ms Boscaini sug-
gests. This is how Van Cleef & Arpels
acquired the five Kashmir sap-
phires totalling 85.9ct, which used
to belong to the Maharani of Bar-
oda and are now installed in its
Bleu Absolu necklace (above).
By buying an antique stone, a
jewellery house acquires its
glamorous provenance too.
Cartier first bought the 197.8ct
cushion-shaped Romanov Sap-
phire between 1925 and 1928 during
the sale of the Russian imperial jewels
by the communist government. The
pale-blue gem, with a flash of pink due
to a deep inclusion (flaw), was then in a
brooch worn by the Empress Maria Feo-
dorovna (above right). Cartier put it
into a pendant, which was sold to opera
singer Ganna Walska in 1929.
The maison reunited only briefly with
this fabled sapphire when it bought it
again in 2014 to set it in a contemporary
cuff in its tourdissant high-jewellery
collection (right). It was sold in 2015.
Provenance matters, says Pierre Rain-
ero, director of style, image and heritage
at Cartier: In many ways jewellery is Laurence Graff, founder of Graff Dia-
comparable with art, as far as important monds, bought it from Christies in Lon-
collections are concerned. If a piece don for 16.4m (and promptly renamed
belongs to a renowned collection, it is it the Wittelsbach-Graff diamond, far
definitely a plus. left). Graff recut and repolished it to
Some women, by contrast, do not remove wear marks and chips, enhance
want any association with the tastes, its colour to fancy deep blue and reduce
culture or personality of the previous the size of its culet (the stones bottom).
owner, so provenance does not always This attracted criticism from the
translate into more interest for a piece director-general of the German Histor-
of jewellery, he adds. ical Museum in Berlin, Hans
Repurposing is not without contro- Ottomeyer, who maintained that
versy, as the story of the Wittelsbach recutting a gem laden with his-
diamond illustrates. Before they tory had altered its identity
ran dry in the 19th century, the irreparably. It has been
diamond mines in Golconda, turned into a piece of hard
India, produced some of the candy, he told Der Spiegel
worlds finest and most in 2010. Its as if someone
desirable stones. Esteemed had painted over a Rembrandt
by jewellers and collectors painting.
alike, they were renowned Despite the objections, it was a com-
for their clarity because they mercially successful decision:
lacked any traces of nitrogen. revamped into a 31.1ct stone, it was one
One such stone, the 35.6ct fancy of the main attractions in an exhibition
grey-blue Wittelsbach, successively at the Smithsonian museum in 2010
sparkled in different jewels owned by and was reported to have subsequently
the king of Bavaria. sold for four times its purchasing price
In 2008, it came up for auction and in 2011, around $2.5m per carat.

Emerald
collectors
green with
envy at sale
New York auction house Guernseys
will put the Marcial de Gomar emerald
collection under the hammer on April
25. It includes La Gloria (below), at
887ct the largest rough emerald in
North America from Colombias Muzo
mines. Manuel Marcia de Gomar
started mining emeralds in 1955 and
became a wholesaler in the 1960s, as
well as a court-recognised emerald
expert. In June, Guernseys will also
sell a set of four star rubies discovered
in Appalachia in 1990, the Mountain
Star Ruby Collection. The stones are so
called because they have a six-armed
star on their surfaces. The largest is the
139ct Appalachian Star.
Paris-Tokyo rally
From April 29 to August 6,
Mastery of an Art:
Van Cleef & Arpels
High Jewelery and
Japanese Crafts will
examine Japanese and
French workmanship
side by side at the
National Museum of
Modern Art in Kyoto.
The exhibition will
illustrate the jewellers 120-
year history through brooches,
clips and pendants from its archive,
while the contemporary, often
intricate, Japanese artwork on display
will include weaving, ceramics, lacquer
and metalwork. Kyoto Japans capital
from the late eighth century to the start
of the Meiji Restoration in 1868 has a
particularly rich textile heritage,
highlighted by Kunihiko Moriguchi, a
government-recognised living
national treasure in yuzen dyeing,
used for kimonos.
Egg-citing
In search of a broader audience in Asia,
Faberg will host a series of private
viewings of its jewellery across Hong
Kong and Singapore in May. This
follows the February debut of its
jewellery, timepieces and objets dart at
a series of private brunches, cocktail
evenings and appointments in India,
where the Winter Egg from its new
Four Seasons collection was unveiled.
A Pure Earth project in Peru to wean miners off using mercury Pure Earth
(The original Winter Egg was an Easter
gift in 1913 from Tsar Nicholas II to his
wife, and it sold at auction for $9.6m in
2002.) The jeweller was founded in
imperial Russia by Peter Carl Faberg
and nationalised in 1918 by the
Bolsheviks, but was relaunched in
2009 and acquired by mining company
Gemfields in 2013.
Mercurial
Brilliant Earth, the
ethically-sourced fine
jewellery retailer, is
supporting a project to
teach artisanal gold
miners in the Peruvian
rainforest (top) how to
mine without mercury. The
miners traditionally use toxic
mercury to bind fragments of
gold together, then burn them
releasing the mercury into the air
and leaving the gold behind. The
programme, run by charity Pure
Earth, will benefit an
association of 400 miners
in Huepetuhe, an area
placed under a state of
emergency last year
due to mercury
contamination, and
where mining activity
has taken over more
than 100 sq km of
rainforest.
Modern motif
This month Boodles will introduce a
68.6ct cushion-cut Brazilian imperial
topaz ring (above) to its high jewellery
collection. The rectangular burnt-
yellow/orange stone is surrounded by
tiny round brilliant-cut diamonds and
set lengthways on an 18ct yellow gold
openwork wheatsheaf design with
marquise-cut white diamonds. It is a
contemporary take on the popular
Victorian motif. The stone was spotted
in a Victorian pendant by Boodles
chairman Nicholas Wainwright, who
bought it as a family heirloom and
arranged for it to be recut and
polished.
Upside down
Graff is turning the design process on
its head in a new collection of rings
with stones that are cut according to
their setting, rather than basing the
setting on the stones available. We use
custom-cut stones to give designs a
dynamic flair, says design director
Anne-Eva Geffroy. Each month the
jewellers polishing and procurement
division cuts and polishes thousands of
carats in Johannesburg, Botswana and
Antwerp. The collection includes a 9ct
pear-shape fancy vivid pink diamond
and a 14.2ct emerald.
Frosty reception
In January, Audemars Piguet
launched its Ladies Royal Oak
Frosted Gold watch, featuring
jeweller Carolina Buccis
Florentine gold finish on its
casing and strap. Now Ms
Bucci has launched her
own range of pendants
using the same
centuries-old
technique. The
shimmering effect is
made by hand-beating gold
with a diamond-tipped tool,
leaving tiny dents in the metal. Like
every piece by the fourth-generation
jeweller, these heart, horn and
matchstick charms in 18ct yellow,
white, pink or black gold will be
created in her familys Florentine
workshop.
Camilla Apcar
Thursday 23 March 2017
Jewellery? Definitely an art
My Favourite Pieces
Susan Kaplan has treated
gems as artworks and has
helped museums to do
so too, says Kate Youde
J
ewellery tends to be kept out of the lime-
light when it comes to museums, but
Susan Kaplan feels differently: [Jewel-
lery] should be part of the mainstream in
the art world, she says.
Before retiring in 1995, Ms Kaplan, 65, ran the
New England division of the education provider
Kaplan, Inc, the company her father, Stanley, had
founded in 1938 to prepare students for standard-
ised tests. The family used some of the proceeds of
the sale of the business to the Washington Post
Company in 1984 to establish the Rita J and Stanley
H Kaplan Family Foundation, which makes grants
to non-profit organisations.
Ms Kaplans mother, Rita, used to collect Victo-
rian jewels and took her daughter after the school
day to the homes of women in Brooklyn who went
antiquing and then sold their finds from their din-
ing room tables. It was a bonding experience for
me, says Ms Kaplan.
In recognition of their shared love, her familys
foundation endowed the position of Rita J Kaplan
and Susan B Kaplan Curator of Jewelry at the
Museum of Fine Arts (MFA), Boston, in 2006 the
first curatorship for jewellery at an art museum in
the US. A jewellery gallery bearing the foundations
name followed in 2011.
Slide bracelet (1950s/1960s)
When she was a child, Ms Kaplans mother took her
hunting for decorative Victorian slides, which
were originally used to change the length of a neck-
lace. Her very creative mother found one brace-
let made from slides and had someone put her own
slides mostly made from her birthstone of opal
on gold chains to make two more. The three strands
are held together with a clasp to create one favour-
ite bracelet (right).
Ms Kaplan loved and played with the piece and,
about 30 years ago, asked her mother if she could
have it. Its not precious . . . in terms of gems but
its really precious in terms of the fact that my
mother did it and I was a part of it, she says. She
appreciates both a pieces design and materials.
The joy of jewellery is part adornment, but [also]
being able to wear art, she says. You cant carry
around a painting.
Jewels head home Antique Portuguese gems go on show
At its height in the 17th and 18th centuries, the Portuguese
empire stretched from Brazil to India and Japan, and
countless precious stones were extracted from the mines of
Brazil for the jewellery of the aristocrats of Lisbon.
Jeweller SJ Phillips has assembled a collection of over 70
pieces from this period and, in association with auction house
Sothebys, is putting them on show at a museum in Portugal.
Francis Norton, a director at SJ Phillips, says the business
had been acquiring Portuguese jewellery largely outside
the country for a decade when it put on a selling show in
London in October 2016. A Portuguese employee of
FINANCIAL TIMES
(1965)
Macklowe Gallery in New York thanks in part to its
monds. I said to Ben Macklowe, I love this brace-
Chaumet. This was beyond her financial reach
Past is Present: Revival Jewellery is at the Museum of
Bill Horsman
Sothebys saw it and said, according to Mr Phillips, that there
were no collections of comparable quality in Portugal itself.
He proposed the current show.
The pieces, which draw on floral and sacred motifs, embed
diamonds, sapphires and emeralds in gold and silver-gilt,
alongside bright semi-precious stones. They tend to the
baroque style, with elaborate designs. When the jewels are
back in London, prices will range from 2,000 to 200,000.
Josh Spero
The SJ Phillips Collection of Jewels of Portugal is at the
Casa-Museu Medeiros e Almeida in Lisbon May 25-28
15
Watches & Jewellery
Amethyst, diamond and platinum ring
(early 20th century)
Ms Kaplans own birthstone is amethyst. Her par-
ents bought her this elegant Edwardian amethyst
ring with millegrain decoration where the metal
has a fine, beaded texture for her birthday in
2009. The three found it (left) when together in
Florida at the Palm Beach Jewelry, Art & Antiques
Show months before her fathers death. She says
she did not spend as much time with him as she
would have liked because of his seven-day-a-week
business . . . My father worked very hard to pro-
vide for his family . . . and the special time I had
with him was very meaningful.
Gold and glass micromosaic brooch by Castellani
(before 1888)
Ms Kaplan loves micromosaics a technique that
uses small pieces (of glass, in this case) to create an
image and admires the precision of her 19th-cen-
tury lion brooch. It almost looks like its painted
but when you go up close you see the individual
pieces of glass. Regarding it as practically perfec-
tion she has never worn it for fear of damaging it
Ms Kaplan bought the brooch in 2012 at Wartski,
one of the antique jewellery shops she likes to visit
when in London, and intends to donate it to the
MFA in the future.
Long gold chain (19th century)
Unlike the lion brooch, Ms Kaplan often wears the
gold chain she bought the same year. One of the
attractions of 19th-century jewellery to collectors
is its symbolism, and Ms Kaplans chain (bottom
right) has a glove, inset with a tiny ruby ring, as its
clasp. One of the symbols of the hand is friend-
ship, says Ms Kaplan, which makes her feel that it
is friendship which keeps the whole thing together.
Cross River diamond bracelet by David Webb
Ms Kaplans bracelet (top left) caught her eye at the
mix of circular, rectangular and marquise cut dia-
let. Seriously, how long do I have to pay it [off]? I
was being facetious but it was not something you
sat there and wrote a cheque for. The bracelets
silky movement also reminds her of the one that
got away a diamond necklace made by
when she saw it in London in the 1990s and had
been sold when she returned a year later. Im clos-
ing my eyes at the moment and reimagining what it
felt like, she says, because I will never forget.
Fine Arts, Boston until August 19 2018
16 FINANCIAL TIMES Thursday 23 March 2017

Watches & Jewellery

Bond Street blues

Luxury retailers have been hardest by

North Dolce & Gabbana rises in the UKs business rates, the first
1.5m reassessment since 2010.
The rateable value of their premises
which determines the size of their bill
has been updated, with startling
results: Louis Vuittons value has gone
Bond Street luxury shops from 3.9m in 2010 to 8.5m this year,
an increase of 118 per cent, and Chanels
hit by property tax rises has risen by 135 per cent to 6.6m,
Companies in the UK must pay business rates, a tax according to research for the Financial
based on the value of their properties. When their Times by CVS, business rates
properties were reassessed for 2017, businesses on consultants.
Business rates themselves show
Londons chic Bond Street found that values and
similar steep increases: Burberrys
thus taxes had gone up by over 150 per cent in payment will rise by 197 per cent to
some cases. 2.8m between 2016/17 and 2021/22,
and De Beers by 170 per cent, CVSs
Increase in Business rates figures estimate. Most rates will
business rates (est) in 2021/22 (est) increase by around 50 per cent in the
first year.
2016/17 v 2021/22 2.8m (for example) These rises are far higher than
Less than 100% Assumes uniform business rate elsewhere in London. A shop on Regent
multiplier of 0.466 in 2017/18 and Street can expect an 87 per cent rise in
100%114% RPI increases at 2.5% per annum
rates, and an office in the City of
115%129% London 34 per cent, according to
130%144% consultants Deloitte. Outside London,
rates are expected to fall.
145% and above Josh Spero

Map designer: Christopher Campbell

Additional research: Hasan Chowdhury Rate rage: shoppers outside Tiffany & Co on Bond Street, whose rates have gone up by 130 per cent Daniel Jones
20 metres
New Bond Street

Miu Miu
1.0m
t
tree
nduit S
Bruton Street Co

Herms
1.4m
Burberry
2.8m

Chanel
3.6m
Louis Vuitton
Dior 4.6m
New Bond Street

2.9m
Clifford Street

Patek Philippe
Boucheron 1.4m
0.5m
Grafton Street
De Grisogono
0.3m
Asprey
2.5m
Bulgari Blancpain
0.6m 0.3m
Piaget
0.6m Van Cleef & Arpels
Harry 0.4m
Winston
0.5m
Chaumet Graff
0.4m 1.0m
Cartier
Boodles 1.7m
0.5m Ralph Lauren
4.3m
Mikimoto
0.5m David Morris
0.7m
Burlington Gdns
Tiffany & Co
1.5m Salvatore Ferragamo
Moncler 1.0m
0.7m
DKNY Chatila
1.5m 0.5m
MaxMara
Rolex 1.9m
0.4m
Akris
0.5m
Nirav Modi Prada
0.4m 2.0m
Stafford Street
Old Bond Street

Jaeger-LeCoultre
0.9m

Omega
Vertu 0.4m
0.2m
Daks
Valentino 1.7m
0.8m
La Perla
Cartier 0.3m
0.6m
Alexander McQueen
Boghossian 0.8m
0.5m

De Beers
Diamond Mappin & Webb
Jewellers 0.5m
1.6m
Piccadilly

FT graphic Source: CVS

 FT SPECIAL REPORT

Investing in the Arab World

Thursday March 23 2017 www.ft.com/reports | @ftreports

Karim Sahib/AFP/Getty Images

Lift-off for Middle East start-ups

Plus Sudans sanctions are suspended; a plan to replenish the Dead Sea; and Egypts currency fall brings hope
102| |FTReports
FTReports FINANCIAL TIMES
FINANCIAL Thursday
TIMES 23 23
Thursday March 2017
March 2017 FINANCIAL TIMES Thursday 23 March 2017 FTReports | 3

Investing
Investingininthe
theArab
ArabWorld
World Investing in the Arab World

Bankruptcy
ant and former minister of state in the
Inside
New markets The country will need to shed its violent reputation as a ministry of finance, argues that the
economic and political policies of the
pariah state if its industries are to prosper, says Yousra Elbagir government have had as much of a Plan floated to help

no longer
dire effect as sanctions. A lack of inde-
pendent regulatory bodies, labour the Dead Sea
laws and contract enforcement leaves Industrial overuse has
a long process of reform ahead. For- reduced the water level
eign investors will not come and local
investors will not prosper, she says, to a critical point

leads straight
if there is no level playing field, with Pages 4-5

Sudan appeals to
economic and political stability and
clear policies to reduce the high levels Bankrupt, not broken
of poverty in the country.
Even if the government imple-
The UAEs new debt law
will help entrepreneurs

to prison
ments the new and comprehensive
economic policy, Mr Faisal says, bil- to take risks

investors after
lion-dollar loans from financial insti- Page 6
tutions are a distant reality. The next
step for the government is debt relief. Foot on the accelerator
Ninety-seven per cent of [South
Sudans] population voted to secede Gulf states are coming

sanctions thaw
and we are now carrying our debt and up with creative ways to
South Sudans on our back. support start-ups
UAE A new insolvency law will help SMEs While Khartoum remains optimis-
tic about new relations between
Pages 8-9
caught in a cash crunch, says Simeon Kerr Sudan and the US, it is unclear if a
permanent lifting of sanctions will be Egypts currency

PT
ervez, a British business- Monetary Fund predicts it will have approved on July 12. It is anyones
man, wosetweeks upbefore
a building
first tar- been 2.3 per cent
favourable in 2016.
either. The economy has Sudanese women carry food aid Mr Amin says that the cash-based the money goes off-network. It cre- guess how the Trump administration plunge brings hope
materials supplier nation-
geting Sudanese just In thewithered
been past six by quarters,
inflationCoface,
(now ata 31 (above), while a street vendor sells economy enforced by sanctions has ates the most fertile ground for ter- will evaluate Sudans progress, says Investors are taking a
before Dubais
als with financial credit
a controversial insurer,
per cent), reported
a fiscal deficit814of 17runa-
per cent vegetables in Khartoum
AFP; Reuters
allowed corruption to flourish. rorism and laundering money to mix Ms Mahdi. Even if the outcome is in look at the country
crisis beganban,
travel in 2008. The way
the Trump casesand
in 2016 acrossthethe UAE, a 200
sixth-worst per
ranking He argues that it is counterintui- with business money. our favour, it will take time for eco- Page 10
small-scale operation started assigned
administration the cent increase on the
in Transparency previous six-
Internationals Cor- tive to set things up in a way where all Abda el-Mahdi, economic consult- nomic change to take root.
emirates real estate
off on a move that mayboom turned
bring to quarter
in Sudan ruptionperiod. More Index.
Perceptions than half of
In 2011,
bust,
from withthe state-owned
cold. The incoming developers presi- theseSouth so-called
Sudan secededskipsfrom were Sudanfrom and
repaying only a fraction
dents transition team approved of thean companies tradingthree
cost the country in goods. Coface
quarters of its
invoices
executive outstanding
order signed for goods and says
by President oil areserves,
lack of estimated
bank lending andbar-
at 3.5bn a
services
Obama owed. during his Scraping
final days through
in office liquidity
rels. Incrunch
2014, the in the USUAE helpedsanc-
tightened to
this difficult
which period,sanctions
suspended his business against drive tionsa 4andper cent
levied increase
a finein of delayed
$8.9bn
flourished as a newObama
Sudan. President building saidboom
the sus- payments
against BNP last year.
ParibasUAEfor loan growth
illegal deal-
gripped
pension Dubai
cameafterseenKhartoums
as a safe haven pos- decelerated
ings withinSudan. January Such by 5.7 per cent
high-risk
in theactions
itive aftermath of the Arab Spring ontransactions
on counter-terrorism. a year-on-yearhave basis,paralysed
according tothe
of 2011.
This means Sudans rich resource central bank statistics.
countrys banking sector and will
But
basethe return
with of another
1.5bn barrels of crunch
proven Notifications
take time to reverse. of overdue [pay-
since
oil 2014,
reserves, sparked by the to
according regional
BP, and ments] have increased
Nevertheless, in key sectors
potential investors
oilextensive
price slide, goldledand to mineral
a chain of late of are
deposits the countrys
moving ineconomy,from thesays Gulf, Mas-
Asia,
payments
may be throughout
back on the the construc-
global market simo EuropeFalcioni,
and South chiefAmerica,
executive of
accord-
tion industry.
after 20 years Customers
of US sanctions.just chose They Coface
ing to in thebusinesspeople
local Middle East,and which
inter-
notwere
to pay, says Pervez.
first imposed (He wouldal- monitors
for harbouring nationaltheconsultants.
creditworthiness The UAE of
only use his
Qaeda leaderfirstOsama
name.) binThat
Ladenmeantin the 23,000
recently companies
agreed to inprovide
the UAESudansand
owners
1990swere runningfor
and upheld away, because
ongoing humanif Saudi Arabia.
central bankMetal
with atraders,
$400mbuilding
deposit as
they bounced
rights a cheque
violations. they would
The sanctions may materials
a reserve, businesses
and the Sudanese and construc-govern-
face
bejail.
liftedHalf my market
permanently ran away,
following a six- tion companies
ment has formed reported the highest
a joint business
hemonth
says. People
probationarytake asperiod.
much credit increase council in with
overdue notifications,
Bahrain to promote up
as they can and
Despite therun.
uncertainty following 26investment. per cent, followed by general
Civil servants trad-
at the min-
As
thethe situationtravel
January worsened, banhis bank
which ers,istryup 22ofper cent.
investment have told the
froze
barred hundreds
citizensofof thousands
Sudan, andofsix But UAE residents
Financial Times that are hopeful
a Saudithat com- Big build-up: Banks Ease of Doing Business rank- Dh1m ($270,000) and Dh200m.
dirhams in his personal account,
other Muslim-majority states,fur-from new bankruptcy
pany is financing legislation
an industrialwill ease
estate men workingand
stability ing even
on security more business-friendly.
concerns. The governments
to Adil Mufti, deputyambition
chairmanisoftothe
ther limitingthe
entering hisUSability
andtoits service
March thenorth burden on small business
of Khartoum with $150m. owners. scaffolding
Despitein He showing
a UN report expects that
higher oil prices to boost the contribution
National Chamber of Air ofTransport
SMEs to
debts. Last year,
reformulation, as due dates
the Sudanese govern- AfterForeign yearsdirectof deliberations,
investment in Sudan in Dubai
2m Sudanese children improveare sentiment.
malnour- The UAE has GDP from 40aviation
Sudanese per centcompanies
now to 45 per have
approached
ment remains on cheques
optimistic he had thatguar-
busi- December
fell from the $2.3bnfederal
in 2010 to $1.3bn in Sarinished,
government Soman/Getty Images
the country remained relatively
has swaths of resilient in the cent
hadinapproaches
2021. It hopes to foster
from global 40,000
compa-
anteed, Pervez also
ness interests will chose
prevail. to Sanctions
flee, to introduced
2014, before an insolvency
recoveringlaw to ease in uncultivated arable
to $1.7bn face land.
of lower hydrocarbon prices
Foreign start-ups, thereby
nies to begin creating
trading spare370,000
parts. He
hisrelief
nativeisBritain. His staffsays
a win-win, dismem-
Osama the2015, orderly unwinding
United Nationsoffigures bankrupt show. businessmen investing because of its economic diversity, but
in agriculture jobs andthat
adds adding
a new Dh65bn ($17.7bn)
flight path from toPort
bered histhe
Faisal, business once news
undersecretary forof his companies,
Sudans Highlighting including protections
the countrys for
potential welcome newcomers. the lower
Weoil revenues
need a left govern- theSudan
economy.
to Jeddah, Saudi Arabia, is set
departure
ministryspread. of investment, who envi- debtors. growthThe law
sectors, in still
2010untested
a German competitive, saturated ment spending
market with constrained and this Government
to start operatingagencies
in earlywillApril,
be moreindi-
His
sionscase has been
$10bn comingall toofrom
familiar
the in US. because
petroleum of itscompany
newness made stays pro-
a $1.6bn more agriculturalhad a spillover
technology. effect
With a on all economic comfortable dealingplans
cating potential with rated com-
for tourism
theThe
United ArabofEmirates
potential business over the ceedings
and invest- investment on bounced
in a lubricantcheques if the
plant, activities.
and strategy and an effective The slight rise in oil prices Banks will
agriculture panies, says Abdul
investment Baset al-Janahi,
in Sudans untouched
past couple
ment willofoverride
years, especially
any politicalwithincir- debtor
in 2015 is in a court-approved
there were two investments insol- structure, we wont nowjust
should givetoa corresponding
be able chief
Redexecutive
Sea reef. of Dubai SME. Banks
thecumstances.
construction and trading sectors. vency worth process.
$1.1bn by an Egyptian pharma- feed Sudan but theimpetus to the[Mid-
entire Mena UAE economy. be more will be moreAmin,
Ahmed confident in looking
president at
of the Cen-
As oilThese
pricespolitical
slumped from $115 per
circumstances The
ceutical removal
company, of according
the criminal to the dle East and northThe Africa] region, has launched confident
government these
tral SMEs,
Tradingbut there are
Company, alsointwo
active agri-
barrel
haveinbeen Juneat 2014
theto a lowofofthe
heart $27sanc-
in offence of bankruptcy
FDI Intelligence database. by default, direct initiatives
says Mohammed Iftikhar, an investorto boost the SME sides to every
culture story, and the
and engineering andSMEs
one of
January
tions. 2016,
Sudanand as economic
remains on the US confi-
State provisions
Chinese forcompanies,
bounced cheques and
which control from Pakistan sector, includingof
and chairman Dubai SME, which in looking also have tolargest
Sudans get theirand
act together.
oldest private
dence dissipated,
Sponsors companies
of Terrorism delayed
blacklist and new 75 requirements
per cent of foreign for creditor-initi-
investment in Crown Agriculture, haswhich
created a voluntary ratings at SMEs,
has been Abdulla
businesses,Shaibani,
says thatsecretary-gen-
banking restric-
payments,
Presidentplunging Omar al-Bashircompanies is still ated insolvency
Sudans oil sector, proceedings
according are to operating in Sudanframework.
since 2001. Companies which sign eral of Dubais
tions have hadexecutive council,
a knock-on sayson
effect
especially
wanted for smallwar and medium-sized
crimes and crimes likely to be particularly
Sudans petroleum helpful, minister,said may up to the
Sectors like aviation, extratolevelInvestors
reduced of scrutinyare but SMEs
receiving studies
foreignhave shown
direct that 80 per Many
investment: cent
against humanity over the conflict in now face fierce competition. Execu- rundown and aged planes, could be financing forhave
enterprises into distress. (The oil consultants KPMG in a note. will get a score, making them more
manytoother
get of investors
entrepreneurs
wont inbe the city in
coming havewithtoall
price has risen
Darfur, which butstarted
is still volatile.)
in 2003, killed Mr tivesFalcioni
at oil thinks
companies the insolvency
in the UAE on the brink of revival. attractive
The US toTreas-
lenders. Most govern- finance themselves:
of their own cash. It Theyis not
are so easy
receiving
Growth
hundreds in of
thethousands
UAEs economy fell lawsay
of Sudanese willtheymakeare thesurveying
countrys invest- oil-rich urys Office of Foreign mentAssets
departments
Control have signed up,in their
countries act
the region, to financing
access finance,
from banksso they need to
and investment
access to contracts for together
from
and6.8
centFinancial
per cent
displaced
in 2014, and
in 2012 to 3.1 per ment
millions.
the International
circumstances
areas
are not thepotential
climate
in the
Gulf, according
southalreadyof thethe best infor has temporarily halted
country
to the World
business, assessing political trading with Sudan
pledging
fines
companies
easier
on those but not for Sudan
with turnover between
and according
work hand for
guarantees
improve
in many
hand otherwithcountries
access.but not for Sudan.
in the region,
us to
4 | FTReports FINANCIAL TIMES Thursday 23 March 2017

Investing in the Arab World

New life needed for the Dead Sea

Resources A deal
between Israel, Jordan
and Palestine aims to
undo human damage,
says John Reed

T
he Lido Hotel, on the
northern shore of the
Dead Sea, is one of the
Holy Lands more evoca-
tive recent ruins. The
hotel was built when the British
administered Palestine (1920-1948),
and guests would drink sweet Arab
coffee on the hotels terrace and gaze
across the salty water which lapped at
its steps.
But the Dead Sea no longer laps at
the Lidos steps: its water level has
been dropping at a rate of one metre
per year. Today the shore lies nearly
half a kilometre away, across dry
sand, and the Lido has been long
abandoned to the elements and van-
dals. Graffiti is scrawled over a fresco
showing what used to be the mighty
Jordan river the source of the Dead
Sea and its tributaries, including
the Yarmouk, originating in Syria.
Israel, Jordan and the Palestinian
Authority, which all share the Dead
Seas shoreline, are now trying to halt
the decline with the ambitious, long-
discussed and controversial $1.1bn
Red-Dead project: to divert water
from the Red Sea, turn some of it into
drinking water and pipe the rest
north into the Dead Sea. The pipeline
will start at Aqaba, the Jordanian
port, where a desalination plant will
be built. It will run through Jordan,
generating hydroelectric power from
its final stretch when it plunges sev-
eral hundred metres below sea level
into the Dead Sea, the worlds lowest
land elevation.
Freshwater from Aqaba will be
bought by Israels southern Arava
region; Jordan will buy Israeli water
from the Sea of Galilee; and the Pales-
tinian Authority will buy water from non-governmental group which also The decline of biggest challenges that we are facing will be in commission by 2021.
an Israeli desalination plant as part of includes Jordanian and Palestinian the Dead Sea, when it comes to water shortage. Jor- Plans to pump water into the Dead
a water swap. (Pumping it north from environmentalists. He squarely as seen from dan has one of the worlds worst water Sea have been discussed for more
Aqaba would be too expensive.) blames the governments of Israel, space in 1972 problems, ranking 173rd in terms of than a century, but always delayed
According to environmentalists, Jordan and Syria. (left) and 2011 renewable internal freshwater per due to cost concerns, geopolitical ruc-
about two-thirds of the drop in the Large sinkholes have appeared Nasa capita, according to the World Bank, tions or worries about the environ-
Dead Seas water level is due to the along the Dead Seas shores, which only slightly better than Israel. ment. Planners priorities have
companies and farms that divert officials and environmentalists link Compounding its desert climate Sinkholes shifted as they pondered what they
water from the Jordan river in Israel, to the drop in water levels; in Ein and meagre natural endowments of wanted from a desert waterway
Jordan and Syria. The remaining Gedi, Israel, the highway that runs water, primarily from aquifers, Jor- have power, water, neighbourly relations,
30-40 per cent is caused by the large along the shore has been diverted to dans water purification and delivery appeared leaving a mark on the landscape or,
mining companies in Israel and Jor- avoid them. On the Jordanian side, infrastructure has had inadequate more recently, simply arresting the
dan that steer its southern waters into hotels have built staircases and eleva- investment by the government, along the alarming drop in the Dead Seas level.
evaporation ponds to make potash tors to convey tourists down to the which faces multiple and competing Dead Seas In the 19th century, British engi-
and bromine. The Dead Sea has lost receding shoreline. demands from a swelling population. neers and early Zionists mooted the
more than a third of its surface over Jordan is very committed to the In November 2016 Jordan shores, idea of a Mediterranean-Dead Sea
the past two decades. Red-Dead project, and we think it is a announced that five global consorti- linked to canal (nicknamed Med-Dead),
The demise of the Dead Sea is not very important strategic project for ums had pre-qualified for a first- generating hydroelectric power in the
caused by climate change, says us, says a Jordanian official involved phase tender in the first quarter of the drop in waters final plunge from 200m above
Gidon Bromberg, Israeli director of in the project, who asked not to be 2017. Construction is due to begin in water levels sea level to 430m below it at the Dead
EcoPeace Middle East, a regional named. It is to counter one of the 2018, officials say, and the project Sea. Discussion of the project revived
FINANCIAL TIMES Thursday 23 March 2017
in Israel after the 1973 global oil
shock, but it was deemed unviable.
A Red Sea-Dead Sea canal, debated
for decades after Israels founding in
1948, gained currency after the Israe-
lis signed a peace agreement with Jor-
dan in 1994. It was formally pursued
from 2002 by Israeli, Jordanian and
Palestinian officials, with plans to
produce 800m cubic metres of drink-
ing water per year and release more
than 1bn cubic meters of brine into
the Dead Sea. It was abandoned for
cost and environmental reasons. In
Washington in 2013, the three gov-
ernments signed a memorandum of
understanding on the more modest
current plan, the Red Sea-Dead Sea
Water Conveyance Project.
Israeli, Jordanian and US officials
have championed the project as a
vehicle for economic co-operation in
a region where, despite the 1994
peace treaty, widespread animosity
toward Israel exists. (An agreement
by Jordan to buy $10bn of Israeli nat-
ural gas over 15 years has generated
street and parliamentary protests.)
While the desalination and water
purification and transfer portion of
the scheme will be a Build-Operate-
Transfer project designed to finance
itself, the conveyance system piping
water north to the Dead Sea will not
FTReports | 5
Investing in the Arab World
losing every year, so levels will con- Contributors
The Red-Dead pipeline JORDAN tinue dropping. They also say that
WEST Dead Sea because the Red Sea and Dead Sea Cleve Jones
BANK
have different chemical composi- Interactive design artist, FT
GAZA Brine falls into tions, there is a risk that the water in
the Dead Sea the latter could turn from its trade- Simeon Kerr
ISRAEL mark blue to a milky white. This Gulf correspondent
would in turn endanger tourism, they
EGYPT say. We are calling on our govern- John Reed
ments and the international commu- Jerusalem bureau chief
Pressure-reducing nity to at least study alternatives of
stations which may how to dispose of the brine, and not Heba Saleh
Reservoir become hydropower assume dumping it in the Dead Sea is Cairo correspondent
at high point generation stations
the only option, says Mr Bromberg.
The most effective way of dimin- Yousra Elbagir, Burhan Wazir
ishing the Dead Seas shrinkage, he Freelance journalists
Two desalination
pump stations says, would be to sharply reduce the
diversion of water from the Jordan Josh Spero
river and to give the mining compa- Commissioning editor
nies greater incentives to invest in
Seawater pipeline
Freshwater pipeline less water-intensive technology. Steven Bird
Jordanian and Israeli officials insist Designer
Aqaba that the environmental concerns are
50 km
Red Sea Sources: Image Landsat/Copernicus Data being taken seriously, including in a Michael Crabtree
SIO; NOAA; U,S; Navy; NGA; GEBCO
study by the European Investment Picture editors
Bank now under way. They say the
pay its way. Israel and Jordan are ther commitments will firm up as project will be closely monitored, For advertising details, contact:
looking for $400m in grants and donors finalise their due diligence. I especially when the discharge begins Mark Carwardine, +44 (0)20 7873
loans on favourable terms to under- am sure there will be more pledging, replenishing the Dead Seas water lev- 4880 and mark.carwardine@ft.com, or
write the project, and say they are says Oded Fixler, deputy director- els. When and if this happens, Israe- Larry Kenney, +44 (0)20 7873 4835
making progress. general at the Israel Water Authority. lis, Palestinians and Jordanians will and larry.kenney@ft.com, or your
An Israeli official says that the US, Environmentalists have warned welcome the revival of their natural usual FT representative. Our
EU, Japan and Italy have pledged that the project will replenish only a wonder, even if it comes too late for advertisers have no influence over or
money towards the project, and fur- fraction of the water the Dead Sea is the Lido hotel. prior sight of the articles.
6 | FTReports
Bridal party: a newly-married couple pose for photos with Cairo in the background Getty
Cairo attracts as currency falls
Egypt After a radical
reform, investors are
returning, says
Heba Saleh, but can
the state stay the
course?
I
t was the nettle that successive
Egyptian governments had con-
sistently shied away from grasp-
ing but could no longer avoid: the
full float of the currency. Finally
adopted in November 2016, the Egyp-
tian pound halved in value against
the dollar overnight, catapulting the
country into a new era of risk and
potential.
The flotation of the pound long
overdue, according to analysts and
businessmen was the most radical
of politically-sensitive measures
implemented by the Egyptian gov-
ernment to clinch a deal with the
International Monetary Fund for a
$12bn loan.
The aim was not just to shore up the
countrys precarious finances and
ease a severe dollar shortage throt-
tling the economy, but also to secure
the IMFs seal of approval on a pro-
gramme of reforms to restore inves-
tor confidence. This was damaged by
years of political upheaval and mis-
management since the 2011 uprising
which overthrew authoritarian presi-
dent Hosni Mubarak.
Recent weeks have brought signs of
renewed investor interest in Egypt.
After years of near total absence, for-
eigners have returned to the Egyptian
Investing in the Arab World
debt market, buying more than
$3.3bn of treasuries to mid-March,
according to the finance ministry.
Egypt also issued a $4bn eurobond at
the end of January that was three
times oversubscribed. The currency
black market has all but disappeared,
bankers say, and remittances are ris-
ing, official figures show, improving
dollar liquidity in banks.
In February, the Emirates National
Bank of Dubai Purchasing Managers
Index, which measures activity in the
non-oil private sector, registered its
third increase in a row to 46.7. The
index still stands below 50, which
means the economy remains in con-
traction, but the rise indicates an
improvement in business confidence.
Emirates NBD also says that com-
panies are starting to report an
increase in export demand, signalling
that the weak pound is increasing
competitiveness. In business circles
there is a new mood of cautious opti-
mism, but also demands for more
reform and an awareness that the sit-
uation is still fragile and uncertain.
What Egypt has done was in my view
necessary and overdue, says Hussein
Choucri, chairman of HC Securities &
Investment. But it should not stop
here. This has to be a means to a final
outcome. We need to see better man-
agement overall of the economy and
better decision making.
Egypt is grappling with a budget
deficit that reached 12.2 per cent of
gross domestic product in the fiscal
year which ended in June 2016; it is
expected to drop to 10.1 per cent in
the current year. Domestic debt is
high at 95 per cent of GDP.
Egyptian Pound
Against the $
6 he says, includes reducing the 22.5
8 tape and addressing overall govern-
10
12
14
16
18
20
2015 16 17
Source: Thomson Reuters Datastream
The increased flow of dollars has
also enabled the government to speed
up its disbursements to foreign inves-
tors, whose dividends and profits had
been stuck in Egypt because of cur-
rency shortages, according to bank-
ers. Officials and local businesses
hope that the inflows of hot money
into government debt and to some
extent into equities will be followed
by a pick-up in foreign direct invest-
ment, seen as crucial for job creation
in a country suffering from high
unemployment (12.4 per cent in the
final quarter of 2016 and much higher
among young people).
Angus Blair, chief operating officer
of Pharos Holding, an Egyptian
investment bank, argues that the
devaluation has placed Egypt on the
international investment map, but
says the government needs to do
more to improve the operating envi-
ronment for the private sector. This,
per cent top tax rate, slashing red
ance in terms of the involvement of
the state in the economy, which can
be very heavy-handed . . . The over-
all business environment needs to be
managed by people who are more
likely to say yes rather than well
see or no.
A chief concern currently for for-
eign investors, bankers say, is what is
perceived as execution risk. IMF
monitoring of Egypts adherence to its
economic reform programme is seen
as inspiring confidence in the govern-
ments commitment, but some also
fear that social pressures arising
from high inflation, the cap on public
sector wages and subsidy cuts could
cause the authorities to let up
on reforms. The devaluation and
the austerity measures imposed by
the IMF have led to domestic pain
in the shape of inflation: the
annual rate reached 31.7 per cent in
February.
What is the governments ability
to stick with these reforms to the
end? says Sherif el-Helw, executive
director at Arqaam Capital, a regional
investment bank.
Thats the question investors are
asking. They are worried about a
U-turn or getting cold feet because
the reality is that we will go through a
lot of pain. For Egypt this is not a
small challenge but a seismic shift.
Another concern cited by some
investors is the expanding role of
FINANCIAL TIMES Thursday 23 March 2017
the military in the economy. In
the absence of private investment in
recent years, the army has taken up
the slack, establishing companies or
taking over existing ones to work in
sectors such as steel and cement.
Abdel Fattah al-Sisi, the Egyptian
president and former head of the
armed forces, has praised the armys
economic activities in building infra-
structure and providing cheap serv-
ices to the public.
But he has also sought to reassure
the private sector, which fears it will
not be able to compete with such a
powerful and politically-connected
institution.
Bankers say that while this is a con-
cern in some sectors, it is felt less else-
where in a market of 90m people. Mr
Helw says investors are more worried
about Egyptian consumers, who are
losing buying power: The first chal-
lenge is execution risk and the second
is that related to inflation and discre-
tionary spending.
Sherif Elkholy, co-head of Mena
at Actis, a private equity firm
which has invested $750m in the
country over the past 15 years,
including more than $200m during
the past three, says Actis is now
actively seeking investments in
defensive sectors.
The reforms are making us move
faster, and we are looking at opportu-
nities within the consumer and
healthcare sectors, he says. The
harder steps have been done, but
make no mistake: it will still be a chal-
lenging period with inflation and the
middle class struggling with disposa-
ble income.
8 | FTReports
The Gulf Government support tries to buoy
young businesses, writes Burhan Wazir
Start-ups
tempt wary
investors
into tech
T
wo recent successes
dominate the Middle
Easts start-up landscape
and are instructive about
important trends in the
sector. In February 2016, Dubai-
based ecommerce marketplace
Souq.com which sells health and
beauty products and electronic goods
became the highest-valued inter-
net company in the Middle East.
A US investment round led to
$275m of funding, giving a valuation
of $1bn, according to media reports
and people familiar with the deal.
Souq.com lists more than 1.5m prod-
ucts and operates in seven countries,
including Egypt and Saudi Arabia.
Then in December 2016, the ride-
hailing app Careem raised $350m, led
by investments from Saudi Telecom
Co and Japanese ecommerce com-
pany Rakuten, in the first stage of its
latest funding round, which valued it
at $1bn. Careem, which launched in
2012, operates in 47 cities in 11 coun-
tries and uses 150,000 drivers. Its pre-
vious funding round raised $72m.
The two examples show how Dubai
has emerged as the start-up capital of
the region, buoyed by the United
Arab Emirates 78 per cent smart-
phone penetration, diverse popula-
tion, versatile banking products and
strong financial support services.
According to a report by Magnitt, a
Dubai-based website aimed at entre-
preneurs and investors, the UAE
leads Mena as home to 42 per cent of
its start-ups, followed by Egypt (12
per cent), Lebanon (9 per cent) and
Jordan (8 per cent). The report
excludes Israel from its calculations.
Funding for start-ups has grown
steadily in the Mena region in the last
Investing in the Arab World
three years. According to another
report by Magnitt, the average invest-
ment has grown from $0.8m in 2014
to $2.8m in 2016 (excluding Careem
and Souq).
Since 2015, the governments of
Qatar, the UAE and Saudi Arabia have
launched start-up incubators; each is
reinforced by a group of angel inves-
tors, private equity groups and
crowdfunding platforms seeking to
monetise Menas population of 424m.
We can see the government is try-
ing to create laws which are helpful to
entrepreneurs, says Faris al-Rashed
al-Humaid, founder and chairman of
Oqal, Saudi Arabias first angel inves-
tor network.
Launched in 2011, Oqal has 350
members and 28m riyals ($7.5m)
invested in 30 companies. Our main
issue is a lack of investment from
banks. Banks currently only allocate
2 per cent of their money to SMEs
[small and medium-sized enter-
prises]. I think that should be closer
to 20 per cent.
Others think government-backed
accelerators like StartAD in Abu
Dhabi and Dubai Future Accelerators
will make creating or investing in a
start-up much more common.
The government here is rapidly
promoting the growth of start-ups
and SMEs, says Zoe Blakemore, a co-
founder of Support Legal, a UAE-
based website due to start this week,
which offers legal services to entre-
preneurs and emerging companies in
the region.
Her co-founder, Patrick Rogers,
agrees: Once the structures are in
place for shares options or equity,
investors will find it easier to navigate
the system.
A report published by Dubai SME,
an offshoot of Dubais Department of
We can see the Economic Development, showed the
government is trying to value of early-stage equity invest-
ments in Dubai in 2014 amounted to
create laws that are $30m, split between 35 angel inves-
helpful to entrepreneurs tors, three incubators or accelerators
and 13 venture capital firms.
Data show that investors living in
the tax-free regions of the Gulf are
likely to commit more to start-ups
than in the US, although in compa-
nies with similar valuations. An angel
investor in Dubai spends an average
of $65,000 on each deal for a 20 per
cent stake, compared to an average
$30,000 commitment in the US, for
10 per cent.
According to a number of entrepre-
neurs and investors, large and well
established companies like the
Dubai-based venture funds Wamda
Capital and Beco Capital and Jordans
Oasis500 are still the most sought-af-
ter investors.
In 2015, Wamda Capital, which also
has offices in Amman and Beirut,
announced the launch of a new $75m
investment fund. Wamda Mena Ven-
tures is the largest of its kind in the
region and has attracted investment
from, among others, the Interna-
tional Finance Corporation.
Dubai is also home to smaller
crowdfunding platforms like Eureeca
and angel investment sites like Ven-
ture Souq, Envestors, Womens Angel
Investment Network and Womena,
which are aimed at novice and sea-
soned entrepreneurs.
A lack of government oversight,
however, creates uncertainty. There
is currently no mechanism in
the UAE to review the qualifications
of investors or start-up entrepreneurs
FINANCIAL TIMES Thursday 23 March 2017 FINANCIAL TIMES Thursday 23 March 2017 FTReports | 9
Investing in the Arab World
tions like the British Virgin Islands or
the Cayman Islands.
You find you have to do a lot of
work to get investors to help you,
says Saed Shela, the chief executive of
SocialDice, a Dubai-based hiring plat-
form which began its life in Ramallah
in the West Bank. Investment in the
Middle East is not easy to find, Mr
Shela declares. Established busi-
nesses still prefer to invest in bricks
and mortar, meaning that start-ups
tend to outnumber investors.
Operators of online investment
platforms want to educate those cli-
ents who have tended to restrict
themselves to investing in property,
perceived as a less volatile sector. We
felt the needs of investors were not
being addressed, says Sonia Wey-
Ronaldo Mouchawar (left) set up muller, a founding partner at Ven-
Souq.com; Abdullah Elyas, tureSouq, an early-stage equity fund-
Mudassir Sheikha and Magnus ing website which focuses on the
Olsson (below left) are behind Mena region, Africa and India.
Careem; a Magnitt event in Dubai It has 650 members mostly pro-
(above) fessionals in their 30s and 40s and
Thiagaraja Shanmugam/Arab Publisher House recently held its 16th investor
round-up, which introduced new
start-ups to prospective investors.
Theres all these support channels
for entrepreneurs, Ms Weymuller
says. That doesnt exist for investors.
We think that will change, but it is a
process.
beyond their liquidity. The same
lack of regulation also exists in coun-
tries like Saudi Arabia, Lebanon and
Jordan. A new bankruptcy law in the
UAE has yet to be tested (page 10).
It is a little bit complicated,
agrees Philip Bahoshy, the founder of
Magnitt. The lack of regulation
around insolvency and foreign
direct ownership of companies
doesnt always make people comfort-
able. Theres also the geopolitical
risk in some parts of the region.
Scaling up to expand to other coun-
tries is costly and can take up to
12 months.
Ammar Mardawi, the co-founder
and chief executive of Yaqut, a free-
mium Arabic ebook store which is
largely free except at the high end,
agrees: We are optimistic, but I
believe the Mena region is one of the
most fragmented in rules and regula-
tions and currencies and different
products. This can lead to a number
of complications. Yaqut has over
160,000 monthly active users and is
the most popular Arab-language
ebook app on Google Play, according
to its listing in the store.
Moving between countries is par-
ticularly problematic. What works
in the Gulf might not work in Egypt,
Mr Mardawi continues. In cities like
Dubai, electronic payments are part
of the landscape. In Egypt, cash on
delivery is the only payment method
which exists. These additional chal-
lenges can put off investors, leading to
more demand for capital than supply,
he says.
One common request from those
seeking to secure their investments is
to ask entrepreneurs to register their
businesses in familiar offshore loca-
10 | FTReports
Bankruptcy
no longer
leads straight
to prison
UAE A new insolvency law will help SMEs
caught in a cash crunch, says Simeon Kerr
P
ervez, a British business-
man, set up a building
materials supplier just
before Dubais financial
crisis began in 2008. The
small-scale operation started as the
emirates real estate boom turned to
bust, with state-owned developers
repaying only a fraction of the
invoices outstanding for goods and
services owed. Scraping through
this difficult period, his business
flourished as a new building boom
gripped Dubai seen as a safe haven
in the aftermath of the Arab Spring
of 2011.
But the return of another crunch
since 2014, sparked by the regional
oil price slide, led to a chain of late
payments throughout the construc-
tion industry. Customers just chose
not to pay, says Pervez. (He would
only use his first name.) That meant
owners were running away, because if
they bounced a cheque they would
face jail. Half my market ran away,
he says. People take as much credit
as they can and run.
As the situation worsened, his bank
froze hundreds of thousands of
dirhams in his personal account, fur-
ther limiting his ability to service
debts. Last year, as due dates
approached on cheques he had guar-
anteed, Pervez also chose to flee, to
his native Britain. His staff dismem-
bered his business once news of his
departure spread.
His case has been all too familiar in
the United Arab Emirates over the
past couple of years, especially within
the construction and trading sectors.
As oil prices slumped from $115 per
barrel in June 2014 to a low of $27 in
January 2016, and as economic confi-
dence dissipated, companies delayed
payments, plunging companies
especially small and medium-sized
enterprises into distress. (The oil
price has risen but is still volatile.)
Growth in the UAEs economy fell
from 6.8 per cent in 2012 to 3.1 per
cent in 2014, and the International
FINANCIAL TIMES Thursday 23 March 2017
Investing in the Arab World
Monetary Fund predicts it will have
been 2.3 per cent in 2016.
In the past six quarters, Coface, a
credit insurer, reported 814 runa-
way cases across the UAE, a 200 per
cent increase on the previous six-
quarter period. More than half of
these so-called skips were from
companies trading in goods. Coface
says a lack of bank lending and a
liquidity crunch in the UAE helped to
drive a 4 per cent increase in delayed
payments last year. UAE loan growth
decelerated in January by 5.7 per cent
on a year-on-year basis, according to
central bank statistics.
Notifications of overdue [pay-
ments] have increased in key sectors
of the countrys economy, says Mas-
simo Falcioni, chief executive of
Coface in the Middle East, which
monitors the creditworthiness of
23,000 companies in the UAE and
Saudi Arabia. Metal traders, building
materials businesses and construc-
tion companies reported the highest
increase in overdue notifications, up
26 per cent, followed by general trad-
ers, up 22 per cent.
But UAE residents are hopeful that Big build-up: Banks Ease of Doing Business rank- Dh1m ($270,000) and Dh200m.
new bankruptcy legislation will ease men working on ing even more business-friendly. The governments ambition is to
the burden on small business owners. scaffolding in He expects higher oil prices to boost the contribution of SMEs to
After years of deliberations, in Dubai improve sentiment. The UAE has GDP from 40 per cent now to 45 per
December the federal government Sarin Soman/Getty Images remained relatively resilient in the cent in 2021. It hopes to foster 40,000
introduced an insolvency law to ease face of lower hydrocarbon prices start-ups, thereby creating 370,000
the orderly unwinding of bankrupt because of its economic diversity, but jobs and adding Dh65bn ($17.7bn) to
companies, including protections for the lower oil revenues left govern- the economy.
debtors. The law still untested ment spending constrained and this Government agencies will be more
because of its newness stays pro- had a spillover effect on all economic comfortable dealing with rated com-
ceedings on bounced cheques if the activities. The slight rise in oil prices Banks will panies, says Abdul Baset al-Janahi,
debtor is in a court-approved insol- now should give a corresponding chief executive of Dubai SME. Banks
vency process. impetus to the UAE economy. be more will be more confident in looking at
The removal of the criminal The government has launched confident these SMEs, but there are also two
offence of bankruptcy by default, direct initiatives to boost the SME sides to every story, and the SMEs
provisions for bounced cheques and sector, including Dubai SME, which in looking also have to get their act together.
new requirements for creditor-initi- has created a voluntary ratings at SMEs, Abdulla Shaibani, secretary-gen-
ated insolvency proceedings are framework. Companies which sign eral of Dubais executive council, says
likely to be particularly helpful, said up to the extra level of scrutiny but SMEs studies have shown that 80 per cent
consultants KPMG in a note. will get a score, making them more have to get of entrepreneurs in the city have to
Mr Falcioni thinks the insolvency attractive to lenders. Most govern- finance themselves: It is not so easy
law will make the countrys invest- ment departments have signed up, their act to access finance, so they need to
ment climate already the best in pledging easier access to contracts for together work hand in hand with us to
the Gulf, according to the World companies with turnover between improve access.