THURSDAY 1 JUNE 2017
00
No future in plastics
Financial engineers reformulate big
chemical groups JOHN GAPPER, PAGE 9
At least 80 die
in Kabul truck
bomb blast
An Afghan man caught in the aftermath
of a truck bomb explosion in Kabuls
diplomatic quarter yesterday that killed
at least 80 people and injured hundreds
more.
It was the latest in a series of attacks as
security in Afghanistan has crumbled
following the reduction in US forces
over the past six years, down to fewer
than 10,000 personnel from more than
100,000. Washington is under pressure
to bolster security by sending more.
No group claimed responsibility for
the explosion, which followed previous
attacks carried out by the Taliban and
Isis. It was condemned as a cowardly
attack targeting innocent civilians by
Ashraf Ghani, the Afghan president.
Full story page 4
China and EU seal climate pact
as fears rise over US commitment
3 Resolve to counter any Trump retreat from Paris deal 3 President vows to decide this week
PILITA CLARK LONDON
China and the EU have forged a green
alliance to combat climate change and
counteract any retreat from interna-
tional action by Donald Trump.
In a stark realignment of forces, docu-
ments seen by the Financial Times show
that Beijing and Brussels have agreed to
measures to accelerate what they call
the irreversible shift away from fossil
fuels and the historic achievement of
the Paris climate accord.
Their collaboration is to be revealed
tomorrow at a summit of EU leaders and
Li Keqiang, Chinas premier, in the same
week that Mr Trump has said he will
end months of indecision over whether
to pull the US out of the Paris deal.
The move comes days after a tense G7
Macron turns unlikely win
into prospect for change
Emmanuel Macron has been praised
for his assured performance since
winning the French election, from his
frank exchange with Vladimir Putin to
his charm offensive on Angela Merkel.
Now polls suggest his cross-party
movement, La Rpublique En Marche!,
could be within reach of an absolute
majority in parliamentary elections.
That would defy his critics and widen
his room for manoeuvre as he tries to
revive the economy.
Analysis i PAGE 3
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THE FINANCIAL TIMES LTD 2017
No: 39,487
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Brussels, Milan, Madrid, New York,
Chicago, San Francisco, Washington DC, Orlando,
Tokyo, Hong Kong, Singapore, Seoul, Dubai, Doha
summit in Italy that ended with Mr
Trump at loggerheads with other lead-
ers on the Paris agreement and trade.
The sour mood intensified after
Angela Merkel, Germanys chancellor,
later hinted at a deeper transatlantic rift
by saying Europe could no longer fully
count on others and needed to fight
for our own future ourselves.
The EU-China alliance is an expres-
sion of international frustration with Mr
Trump, who has already moved to undo
measures agreed by Barack Obama, his
predecessor as president, as part of the
Paris deal adopted by almost every
country in December 2015.
The joint statement agreed by Beijing
and Brussels says the two sides are
determined to forge ahead with meas-
ures to lead the energy transition
AIBs return to market shows Ireland
close to full recovery from banks crisis
LAURA NOONAN DUBLIN
Ireland has marked a milestone in its
recovery from one of historys biggest
banking crises after Dublin announced
it would launch an initial public offer-
ing of Allied Irish Banks, a lender
whose collapse helped push the coun-
try into an international bailout.
Irelands finance ministry said it would
sell about 25 per cent of the bank
nationalised in 2010 on the Irish and
London stock exchanges. It will be one
of the UKs largest IPOs in 20 years.
Analysts value the bank, which has
made a profit for each of the past three
years, at about 12bn-13bn, well below
the almost 21bn invested by the Irish
state at the height of the financial crisis.
But the bank said it had already
repaid 6.8bn to the state through the
combination of fees, dividends and
STOCK MARKETS
May 31 prev %chg
S&P 500 2407.94 2412.91
Nasdaq Composite 6189.04 6203.19
Dow Jones Ind 20996.08 21029.47
FTSEurofirst 300 1532.14 1533.66
Euro Stoxx 50 3562.99 3561.22
FTSE 100 7519.95 7526.51
FTSE All-Share 4116.08 4119.58
CAC 40 5283.63 5305.93
Xetra Dax 12615.06 12598.68
Nikkei 19650.57 19677.85
Hang Seng 25660.65 25701.63
FTSE All World $ 306.26 306.58
WORLD BUSINESS NEWSPAPER USA $2.50 Canada C$3.
Sugar barons Watches & Jewellery
How a sweet Mexican deal turned The pearl industry moves back into
sour for Trump BIG READ, PAGE 7 fashions favour SPECIAL REPORT
Briefing
i 16bn CVC fundraising breaks records
The private equity group behind the takeovers of
Formula One, Samsonite suitcases and Breitling
watches has set a European fundraising record as
investors target leveraged buyouts. PAGE 11
i UK groups pressed for Brexit blueprints
The City of London regulator has written to several
of the biggest asset management companies seeking
detail of their Brexit planning as concern mounts
over the impact of the EU divorce. PAGE 14
i Push to market bundled eurozone debt
Brussels has unveiled a plan to create a market for a
new asset that would bundle together sovereign
debt from eurozone countries, in a bid to strengthen
the single currency area. PAGE 3; LEX, PAGE 10
i May refuses to debate as poll lead falls
The lead of the UK premiers
Conservatives has halved since
April and her refusal to appear
in a TV debate has fed an image
of a party besieged. PAGE 3;
Omar Sobhani/Reuters
EDITORIAL COMMENT, PAGE 8
i Ivanka brand activist arrested in China
Labour activist Li Qiang, who was investigating a
factory in China that makes shoes for the Ivanka
Trump fashion brand, has been detained by police
and two of his colleagues are missing. PAGE 4
i Israel takes aim at critics of occupation
The government has ramped up the pressure on
leftist critics as the nation prepares to celebrate the
50th anniversary of the 1967 Six Day war that began
the worlds longest military occupation. PAGE 4
i Revenues booster for Rocket Internet
The start-up investor that is a mainstay of the
thriving Berlin tech scene has seen revenues rise by
28 per cent at its main portfolio companies, which
towards a global low-carbon economy. Mr Trumps advisers are deeply split show a marked rise in profitability. PAGE 13
The EU, the worlds biggest carbon over whether he should follow through
market, has agreed to give China 10m on his campaign pledge to abandon the
to support its plan to roll out a national Paris accord. Steve Bannon, his chief Datawatch
emissions trading system this year in a strategist who leads the economic
move officials say will hasten the possi- nationalist camp, has been the leading
bility of linking the two schemes. Donald Trumps advocate for withdrawal, along with a Colombia weathers the storm Colombia has
The two sides have also agreed to look advisers are big group of Republican senators. GDP growth (year-on-year %) been more
at helping the worlds poorest countries deeply split But Gary Cohn, head of the White 8 resilient than other
develop greener economies. That could over whether he House national economic council, Rex Colombia 6 Latin American
economies in the
prove important in maintaining devel- should follow Tillerson, secretary of state, and Mr 4 face of recent
oping nation support for Paris if Mr through on his Trumps daughter Ivanka are trying to commodities price
Trump pulls the US from the accord. campaign persuade the president not to withdraw. 2
falls and it remains
Mr Trump tweeted yesterday: I will pledge to quit The EU and China have also agreed to 0 among the
be announcing my decision on the Paris the Paris accord co-operate on the deployment of elec- strongest in the
Accord over the next few days. MAKE tric cars, energy-efficiency labelling and Latin America-2 region. Economic
AMERICA GREAT AGAIN! Axios, the green innovation. They will also work -4 reform has helped
website, and other US media outlets on ways to spur the growth of renewable 2007 10 15 it adapt to
reported that Mr Trump had decided energy. Source: OECD external shocks
that the US should withdraw. US dithering page 2
other payments. Were into the ball- But AIB emerged as Irelands second-
park [of full repayment] and thats a most problematic lender, with signifi-
really good place for us to be, Bernard cant exposure to suddenly worthless
Byrne, AIBs chief executive, said. housing and commercial developments.
The IPOs price range and prospectus Dublins inability to finance the res-
are expected by mid-June. cues of Anglo Irish, AIB and other
Its a very good market at present, smaller lenders ultimately forced it into
said Michael Noonan, Irelands finance a 67.5bn bailout from the EU and Inter-
minister. IPOs are fashionable again. national Monetary Fund. Unlike fellow
So we think its the right time and we bailout recipients Greece and Portugal,
cant be certain that if we waited until however, Ireland has seen a sharp eco-
the next window of opportunity in the nomic recovery since the crisis, becom-
autumn that things would be as good. ing the first eurozone country to emerge
Irelands Fine Gael government had from a bailout in 2013.
promised to list up to 25 per cent of AIB But the return of AIB to the public
by the end of next year as part of a long- market is the most significant sign to
held policy to offload its bank holdings. date that Irelands financial system has
The now-defunct Anglo Irish Bank nearly recovered from a collapse that,
was at the forefront of the Irish mort- by some measures, was the largest of
gage lending spree that wrecked the any developed economy.
economy when the property bubble Lex page 10
burst at the start of the eurozone crisis. Analysis page 13
World Markets
CURRENCIES INTEREST RATES
May 31 prev May 31 prev price yield chg
-0.21 $ per 1.118 1.118 per $ 0.895 0.895 US Gov 10 yr 101.31 2.23 -0.02
-0.23 $ per 1.286 1.286 per $ 0.778 0.778 UK Gov 10 yr 101.72 1.07 -0.02
-0.16 per 0.869 0.869 per 1.151 1.151 Ger Gov 10 yr 99.63 0.29 -0.03
-0.10 per $ 110.980 110.980 per 124.049 124.049 Jpn Gov 10 yr 100.64 0.04 0.00
0.05 per 142.732 142.732 index 77.718 77.252 US Gov 30 yr 102.09 2.90 -0.01
-0.09 index 91.073 91.251 $ index 103.156 103.211 Ger Gov 2 yr 102.31 -0.71 0.00
-0.08 SFr per 1.090 1.090 SFr per 1.254 1.254 price prev chg
-0.42 COMMODITIES Fed Funds Eff 0.91 0.82 0.09
0.13 May 31 prev %chg US 3m Bills 0.93 0.94 -0.01
-0.14 Oil WTI $ 48.36 49.66 -2.62 Euro Libor 3m -0.37 -0.37 0.00
-0.16 Oil Brent $ 50.86 52.24 -2.64 UK 3m 0.30 0.30 0.00
-0.10 Gold $ 1266.20 1262.70 0.28 Prices are latest for edition Data provided by Morningstar
2 FINANCIAL TIMES Thursday 1 June 2017

INTERNATIONAL

US dithering exposes fragility of Paris accord

Climate experts debate whether Trump pullout would trigger race to the exit or allow carbon emissions deal to flourish
PILITA CLARK LONDON down their efforts to cut carbon emis- to derail important decisions on rules proportions. But it added: The rest of nations to poorer countries. Although showed China and India are making so
sions. But some climate experts have for the Paris deal that must be decided the world and key parts of the US econ- the US has handed over only $1bn, that much progress on moves to slow their
Donald Trump is nearing the moment of begun to argue it would be better for the by the end of 2018. Mr Kemp added that omy, such as California, will get on with has helped secure support for the Paris use of coal and boost renewable energy
decision over whether to pull the US out US to leave. A rogue US can cause more if the US withdrew, other countries implementation regardless. deal from developing countries, many that they could outweigh Mr Trumps
of the Paris climate agreement. But even damage inside rather than outside of the might finally take bolder action, per- However, a US departure would make of which have climate targets contin- move to roll back Obama-era clean
as he prepares to announce his choice to agreement, according to Luke Kemp of haps imposing border carbon adjust- a big difference for funding. The Obama gent on international funding. In addi- power rules.
the world, a debate has sprung up about the Australian National University. ments, or penalties on imports from administration committed $3bn, more tion, the US contributes about 20 per Moreover, US climate policies, such as
whether a US decision to leave the deal This is a minority view. World leaders climate laggards. than any other country in absolute cent, or $20m, to the two-yearly budget support for more wind and solar power,
would cripple the agreement or, alter- spent hours trying to convince Mr Other experts agree that the chances terms, to a green climate fund set up to of the UN climate secretariat in Bonn, were not the main reason emissions fell
natively, allow it to prosper. Trump of the benefits of tackling of serious US isolation are much greater channel billions of dollars from rich which manages the complex interna- there in the past decade, said Glen
The issue facing the rest of the world is climate change in the lead-up to last than the last time Washington aban- tional negotiating process. Peters, an Oslo-based climate
how a US pullout will affect other coun- weeks fraught G7 summit in Italy. doned an international climate agree- Mr Trumps budget plans already sug- researcher. A weaker economy and
tries policies and funding for climate While 147 nations have ratified the ment: the Kyoto protocol treaty of 1997, gest cuts are in store for international cheaper natural gas supplanting dirtier
change mitigation, as well as the direct deal, Russia has not and poorer coun- which President George W Bush climate programmes. It is far from clear coal power played a bigger role, he said.
impact on global emissions. tries, notably India, could face domestic rejected in 2001. Bush had the putative if the EU and other wealthy signatories That suggests a lack of climate poli-
Yesterday, as some US media reported pressure to reconsider if the US, the excuse that Kyoto didnt cover devel- would be able to make up the shortfall. cies under Mr Trump may not be suffi-
that Mr Trump had decided to with- worlds wealthiest nation, walks away. oping countries like China, said Paul Perhaps most important, without the cient to cause emissions to increase.
draw from the accord, he tweeted that But the argument advanced by Mr Bledsoe, a former Clinton White House US, many scientists think it will be Nevertheless, Mr Trump has exposed
he would make his decision over the Kemp in an opinion piece recently pub- climate official. Trump will have no much harder to meet the agreements the fragile nature of the Paris accord.
next few days, adding: MAKE AMER- lished in the Nature Climate Change excuse, and other leaders will punish goal of stopping the planet from warm- Countries face no legal obligation to
ICA GREAT AGAIN! journal is that, if the US stayed in but the US accordingly should he leave. ing more than 2C from pre-industrial meet any emissions-reduction target in
Many advocates of global climate reversed Obama-era climate action, The Carbon Tracker Initiative, a cam- levels. That could raise the risk of more their national climate blueprints,
action fear a US withdrawal could trig- other countries might still follow. paigning group, said yesterday that a extreme weather, faster ice-sheet melt- including the US. Nor is there anything
ger a wider race for the exit as other US negotiating teams could also use decision to leave would be an economic Countries including the US face no ing and rising sea levels. legally to prevent them from submitting
countries either follow suit or water the consensus-driven UN voting system and leadership failure of monumental legal obligation on emissions targets But one study earlier this month weaker plans.

Street protests. Military allegiance Word mystery

Venezuelan troops show loyalty to Maduro Trump teases
followers with
Many ask if army will continue covfefe tweet
to stand by the president after
two months of violent clashes COURTNEY WEAVER WASHINGTON

The world was waiting to see if the US

GIDEON LONG CARACAS
would pull out of the Paris climate
During two months of brutal street accord. The presidents son-in-law was
protests against the government of under pressure over dealings with the
Nicols Maduro, many Venezuelans Kremlin. A White House staff shake-up
have asked themselves one question was looming. Donald Trump had an
time and again: why are our armed answer for all of them.
forces allowing this to happen? Despite the constant negative press
While the Maduro government has covfefe, the president tweeted enig-
used the National Guard, a militarised matically shortly after midnight yester-
police force, to repress the protests, the day. And then went silent for six hours.
main armed forces have taken a back In no time, #covfefe was Twitters top
seat. They have neither been out on the trending hashtag as jokes and memes
streets, quelling the violence, nor has proliferated across the world. Many
the military top brass been openly criti- speculated that the president had fallen
cal of the government. asleep mid-tweet. Google Translate
Anti-Maduro protesters last week decided the mysterious word was
turned their anger on the soldiers Samoan, but offered no equivalent word
fence-sitting and tried to march to Los in English. Others offered pronuncia-
Prceres, home to Venezuelas military tion advice.
academy. Many carried posters of the A covfefe is a Yiddish term for I got
nations ultimate wartime hero, Simon to go to bed now, Senator Al Franken
Bolvar, who led the continents fight joked on CNN.
against imperial Spain. On the morning TV show Fox &
Some wore T-shirts with Bolvars Friends, correspondent Carley Shimkus
crimson and gold military tunic on one Security forces clash with demonstrators as a motorcycle is set on fire in San Cristbal, Venezuela Reuters/Carlos Eduardo Ramirez offered a more generous take. Hes a
side and the words I am a liberator on very busy man but he even has time to
the other. Their message was clear: the make up new words in the English lan-
late leader Hugo Chvez may have government and urged the armed forces [The government] has gone to great at Florida International University. National Guardsmen tire after two guage. She predicted it would be a boon
appropriated Bolvar as the emblem of to stand on the right side of history by lengths to keep the military on its side Potential cleavages or rebellions within months, which have been desperately for US business. Youre going to start
his socialist revolution, but the inde- refusing to oppress the Venezuelan peo- through cash bonuses, wage hikes and the military for now seem contained. tough for them too? Is there still room seeing this on shirts. Youre going to see
pendence fighter belongs to all Venezue- ple. They have since sought asylum in the doling out of lucrative governor- In the absence of such dissent, the for a negotiated settlement? And will this on hats, she predicted.
lans. They urged troops to reflect on neighbouring Colombia. ships and ministries, said Daniel most important and surprising thorn in the armed forces continue to support In contrast to most gaffe-fearing US
Bolvars legacy and abandon Maduros The opposition says there have been Lansberg-Rodriguez, Latin American the governments side has been Luisa Mr Maduro? politicians who have delegated their
increasingly discredited government. dozens more acts of rebellion but, even specialist at Northwestern University, Ortega, Venezuelas chief prosecutor. On Friday, a news website, social media accounts to an entire team,
Our military men are supposed to if true, this is scant reward for a punish- Illinois. Once a close confidant of Chvez, she www.cafeycafe.com, published a report Mr Trump has largely managed to
swear an oath of allegiance and agree to ing two-month street campaign in Having profited from smuggling, has openly criticised Mr Maduros deci- it said was based on a leaked memoran- maintain full control over his Twitter
respect the constitution, said Kerling which hundreds have been imprisoned arbitrage and narco-trafficking sion to call a constituent assembly dum from a meeting of the top brass. account, never mind the not-so-
de Snchez, the wife of a lieutenant and thousands injured. schemes, many within the military which, in theory, could re-write the con- It described a heated discussion sporadic mistake or spelling error.
colonel who is in jail for allegedly plot- In some ways, the militarys loyalty to worry that if the president falls they will stitution to allow him to stay in power. between military figures over the rights Most spelling mistakes were cor-
ting a coup against the Maduro regime. the government is unsurprising. The end up in court and then jail, he said. She has condemned the use of mili- and wrongs of the presidents decision to rected within hours, the offending tweet
So, if our constitutional rights are Bolivarian revolution was, after all, built The military controls food imports tary courts to try dozens of young pro- call a constituent assembly. deleted and replaced. Yet covfefe
being violated, why is the military going with military muscle. Chvez was an and distribution, trafficking routes and testers and last week she accused the The report, which the FT did not ver- remained online through the night. Mr
along with it? she asked as she held army man through and through. ports, and is unlikely to surrender its National Guard of using excessive force ify, said that at least eight senior mili- Trump eventually deleted the tweet,
aloft a portrait of her husband. In contrast, Mr Maduro was a bus power cheaply. to combat violence which has claimed tary figures, including the head of air adding one teasing addendum: Who
There has been limited dissent within driver and trade union leader before his Nearly one-third of the ministries nearly 60 lives. force and the National Guard, oppose it. can figure out the true meaning of cov-
the armed forces. In April, three lieuten- rise to the top, but if he lacks Chvezs are led by active or retired military offic- Meanwhile, Caracas is awash with Such reports might encourage the fefe??? Enjoy! he wrote at 6am the fol-
ant colonels posted a video on YouTube natural rapport with the military, he has ers, said Frank O Mora, director of the theories of what might happen next. opposition but, for now at least, Mr lowing morning.
in which they denounced the Maduro learnt how to buy it. Latin American and Caribbean Center Will the protests fizzle out? Will the Maduro has the military on his side. And so on to the next Twitter storm.

Monetary policy
MAKE A SMART INVESTMENT
Subscribe to the FT today at FT.com/subscription Sluggish US inflation raises concerns for Fed rate-setters
FRIDAY 31 MARCH 2017 WORLD BUSINESS NEWSPAPER UK 2.70 Channel Islands 3.00; Republic of Ireland 3.00
SAM FLEMING WASHINGTON meeting showed some participants rais- Ms Brainard said in her speech that they could be forced to step up the pace
JEEVAN VASAGAR SINGAPORE
Trump vs the Valley
Tech titans need to minimise
political risk GILLIAN TETT, PAGE 13
A Five Star plan?
Italys populists are trying to woo
the poor BIG READ, PAGE 11
Dear Don...
Mays first stab at the break-up
letter ROBERT SHRIMSLEY, PAGE 12
ing worries about the persistent short- the Phillips Curve, under which infla- of increases if unemployment fell far
HMRC warns Lloyds of Brussels Insurance market
to tap new talent pool with EU base
UK 3.80; Channel Islands 3.80; Republic of Ireland 3.80
Briefing
SATURDAY 1 APRIL / SUNDAY 2 APRIL 2017

Even as the Federal Reserve lays the fall in inflation. If price growth contin- tion is driven up when the economy more than expected, if wage growth un-
customs risks THE END
i US bargain-hunters fuel Europe M&A
Europe has become the big target for cross-border

ues to undershoot expectations, doves approaches full employment, was prov- expectedly surged or if Congress began a
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
HOW DRIVERLESS
OF THE
groundwork for the fourth increase in
Atlantic. PAGE 15; CHINA CURBS HIT DEALS, PAGE 17
TECHNOLOGY IS
being swamped i Report outlines longer NHS waiting times
A report on how the health service can survive CHANGING AN
ROAD
more austerity has said patients will wait longer for
non-urgent operations and for A&E treatment while AMERICAN WAY OF LIFE Censors and sensitivity
by Brexit surge
some surgical procedures will be scrapped. PAGE 4

on the Federal Open Market Committee ing flatter across a number of econo- highly stimulative fiscal policy.
i Emerging nations in record debt sales Warning: this article may be

short-term interest rates since the cri-

FT WEEKEND MAGAZINE
FEBRUARY 4 2017

Developing countries have sold record levels of

government debt in the first quarter of this year,
upsetting LIFE & ARTS
taking advantage of a surge in optimism toward
emerging markets as trade booms. PAGE 15

3 Confidence in IT plans has collapsed

Credit Suisse Art of persuasion Mystery deepens
i London tower plans break records
How To Spend It
will probably reassert themselves. mies. She also said it was possible the US Why the bullish approach? The US
A survey has revealed that a
3 Fivefold rise in declarations expected record 455 tall buildings are
planned or under construction over disputed painting of Jane Austen

sis, it is struggling with one of the

JAMES BLITZ WHITEHALL EDITOR adjust its negotiation position with the in London. Work began on

A computer system acquired to collect
duties and clear imports into the UK
may not be able to handle the huge
surge in workload expected once Britain
engulfed in
EU, a Whitehall official said. If running almost one tower a week
our own customs system is proving during 2016. PAGE 4
much harder than we anticipated, that
ought to have an impact on how we i Tillerson fails to ease Turkey tensions
press for certain options in Brussels. The US secretary of state has failed to reconcile

fresh tax probe

If we keep getting these low inflation labour market was not as strong as the economy has been adding jobs at a
leaves the EU, customs authorities have In a letter to Andrew Tyrie, chairman tensions after talks in Ankara with President Recep
admitted to MPs.
HM Revenue & Customs told a parlia-
of the Commons treasury select com-
mittee, HMRC said the timetable for
Tayyip Erdogan on issues including Syria and the
extradition of cleric Fethullah Gulen. PAGE 9
Chic new lodgings

conundrums of the US recovery: stub-

mentary inquiry that the new system
needed urgent action to be ready by
March 2019, when Brexit is due to be
completed, and the chair of the probe
said confidence it would be operational
in time has collapsed.
delivering CDS was challenging but
achievable. But, it added, CDS was a i Toshiba investors doubt revival plan
in Scotland
complex programme that needed to be In a stormy three-hour meeting, investors accused MAGAZINE
linked to dozens of other computer sys- managers ofhaving an entrenched secrecy culture
tems to work properly. In November, 3 UK, France and Netherlands swoop
and cast doubt on a revival plan after Westinghouse
HMRC assigned a green traffic light to filed for Chapter 11 bankruptcy protection. PAGE 16
3 Blow for bid to clean up Swiss image

numbers it is going to start raising ques- 4.4 per cent unemployment rate sug- monthly rate of 174,000 in the past
Setting up a digital customs system CDS, indicating it would be delivered on
has been at the heart of Whitehalls time. But last month, it wrote to the i HSBC woos transgender customers
Brexit planning because of the fivefold committee saying the programme had The bank has unveiled a range of gender-neutral it followed a strategy offull client tax

bornly slow inflation.

RALPH ATKINS ZURICH
increase in declarations expected at been relegated to amber/red, which DUNCAN
titles such asROBINSON BRUSSELS
Mx, in addition to Mr, Mrs, Misscompliance
or but was still trying to
British ports when the UK leaves the EU. means there are major risks or issues Ms, in a move to embrace diversity and cater togather the information about the probes.

FINANCIAL TIMES
About 53 per cent of British imports
come from the EU, and do not require
checks because they arrive through the
single market and customs union. But
apparent in a number ofkey areas. Credit
needs Suisse hascustomers.
of transgender been targeted by
PAGE 20 HM Revenue & Customs said it had
HMRC said last night: [CDS] is on sweeping tax investigations in the UK, launched a criminal investigation into
track to be delivered by January 2019, France and the Netherlands, setting suspected tax evasion and money laun-
and it will be able to support frictionless back Switzerlands attempts to clean up dering by a global financial institution
Datawatch

Theresa May announced in January that
Brexit would include departure from
both trading blocs. HMRC handles 60m
declarations a year but, once outside the
customs union, the number is expected
to hit 300m.
The revelations about the system,
tions on the path for monetary policy, three months, unemployment is at its
international trade once the UK leaves its image as a tax haven. and certain ofits employees. The UK
the EU . . . Internal ratings are designed
to make sure that each project gets the
focus and resource it requires for suc-
cessful delivery.
HMRCs letters to the select commit-
tee, which will be published today, pro- AFP
Terror attacks inwith
co-operating

were contacted
Highlighted
western

attack byOthers
Europe after
authorities
offices in London, Paris and Amsterdam
Recent

Published daily except Sundays, New Years Day,

called Customs Declaration Service, are
vide no explanation for the rating
Lloyds of London chose Brus-
insurers to follow. Most of the
EU, with Dublin and Luxem-
The Swiss bank said yesterday it was tax authority added: The international
reach
itsattacks
notably the message
2011
of this investigation sends a clear
that there is no hiding place for
massacre bythose seeking to evade tax.
local officials
concerning client tax matters. Anders BreivikDutch
Norway, the
in prosecutors, who initiated the
Dutch authorities said their counter- action, said they seized jewellery, paint-
The lure of the exotic
Robin Lane Fox on the flair
of foreign flora HOUSE & HOME
parts in Germany wereBrussels attacks in Paris
also involved, ings and gold ingots as part of their

330 Hudson Street, Presidents Day, Good Friday, Memorial Day, Labor
while Australias revenue department and Nice, and the while French officials said their
probe;
likely to throw a sharper spotlight on change, but some MPs believe it was sels over five or six other business written in Brussels bourg thought to be more likely Norway Brussels suicide
said it was investigating a Swiss
Nice bank. investigation had revealed several

whether Whitehall can implement a
host of regulatory regimes in areas
ranging from customs and immigration
to agriculture and fisheries by the
time Britain leaves the EU.
Problems with CDS and other projects
caused by Mrs Mays unexpected deci-
sion to leave the EU customs union.
Timetable & Great Repeal Bill page 2
Scheme to import EU laws page 3
Editorial Comment & Notebook page 12
Philip Stephens & Chris Giles page 13
cities in its decision to set up an
EU base to help deal with the
expected loss of passporting
rights after Brexit.
John Nelson, chairman of the
centuries-old insurance mar-
will be reinsured back to the
syndicates at its City of London
headquarters, pictured above.
The Belgian capital had not
been seen as the first choice for
Londons specialist insurance
homes for the industry. But
Mr Nelson said the city won on
its transport links, talent pool
and extremely good regula-
tory reputation.
Sources: Janes Terrorism and Insurgency Centre terror incidents in
Lex page 14
Paris
The inquiries threaten to undermine
efforts by the countrys banking sector
to overhaul business models and ensure
customers meet international tax
requirements following a US-led clamp-
The dominant view at the central bank said Tim Duy at the University of Ore- lowest level since before the crisis, and
bombings have
thousand bank accounts opened in
bucked the trend
Switzerland and not declared to French
of generally low
tax authorities.
fatalities from
The Swiss attorney-generals office
western Europesaid it was astonished at the way this

New York, NY 10013 essential to Brexit could force London to JPMorgan eye options page 18 ket, said he expected other groups after the UK leaves the Insurers set to follow page 18
billions of dollars in fines.

Day, Martin Luther King Day, Thanksgiving,

down on evaders, which resulted in operation has been organised with the
deliberate exclusion of Switzerland. It
The probes risk sparking an interna- demanded a written explanation from
tional dispute after the Swiss attorney- Dutch authorities.

James Bullard says

City watchdog sends a clear message as
is that with the US nearing full employ- gon. Should price growth remain slug- reports from employers of skills short-
generals office expressed astonish- In 2014, Credit Suisse pleaded guilty
ment that it had been left out of the in the US to an extensive and wide-
actions co-ordinated by Eurojust, the ranging conspiracy to help clients THE RISE
Escape OF
the taper ECO-GLAM
trap
banker loses job over WhatsApp boast
EUs judicial liaison body.
Credit Suisse, whose shares fell 1.2 per

Christmas Day and the day after Christmas Day.

evade tax. It agreed to fines of $2.6bn.
Additional reporting by Laura Noonan in
cent yesterday, identified itself as the Dublin, Caroline Binham and Vanessa
How high earners can evade
subject ofinvestigations in the Nether-
lands, France and the UK. The bank said in Paris
Houlder in London, and Michael Stothard
Austens descendants insist the Rice portrait depicts her as a girl see magazine Bridgeman Art Library
a pension headache FT MONEY

inflation rising
ment, the slack in the jobs market is gish into the second half of the year ages have been multiplying. If the Fed
LAURA NOONAN DUBLIN Berrys after discussions with regulators. media at work, but banks are unable to
JENNIFER THOMPSON LONDON

Subscriptions and Customer Service

A boastful WhatsApp message has cost
a London investment banker his job
Christopher Niehaus, a former Jeffer-
ies banker, passed confidential client
information to a personal acquaint-
ance and a friend using WhatsApp,
ban people from installing apps on their
private phones.
Brussels takes tough stance on Brexit
Andrew Bodnar, a barrister at Matrix
Chambers, said the case set a precedent

and a 37,000 fine in the first case of
Shutdown risk as border
regulators cracking down on commu-
meaningfully when
according to the FCA. The regulator said in that it shows the FCA sees these mes-
with Spain handed veto over Gibraltar
390_Cover_PRESS.indd 1 19/01/2017 13:57

wall bid goes over the top nications over Facebooks popular Mr Niehaus had turned over his device saging apps as the same as everything
chat app. to his employer voluntarily. else.

Tel: +1 800 628 8088 US subscription rates, 1 year $406. Periodicals

Congressional Republicans seeking to The FCA said Mr Niehaus had shared Information shared by Mr Niehaus

more or less gone and it is a matter of they will have to make some changes to waits too long before acting, chair Janet
avert a US government shutdown after The fine by the Financial Conduct confidential information on the messag- included the identity and details of a
April 28 have resisted Donald Trumps Authority highlights the increasing ing system on a number of occasions client and information about a rival of ALEX BARKER BRUSSELS ambitious trade and airline access deals. mise. If Britain wants to prolong its
attempt to tack funds to pay for a wall problem new media pose for companies last year to impress people. Jefferies. In one instance the banker GEORGE PARKER LONDON Gibraltar yesterday hit back at the status within the single market after
on the US-Mexico border on to
stopgap spending plans. They fear
that his planned $33bn increase in

uscirculation@ft.com, www.ft.com/subsusa
defence and border spending could
force a federal shutdown for the first
time since 2013, as Democrats refuse
that need to monitor and archive their
staffs communication.
Several large investment banks have
banned employees from sending client
information over messaging services
including WhatsApp, which uses an
Several banks have banned the use of
new media from work-issued devices,
but the situation has become trickier as
banks move towards a bring your own
device policy. Goldman Sachs has
clamped down on its staffs phone bills
boasted how he might be able to pay off
his mortgage if a deal was successful.
Mr Niehaus was suspended from Jef-
feries and resigned before the comple-
tion of a disciplinary process.
Jefferies declined to comment while
Living wage rise to pile
pressure on care services
STEFAN WAGSTYL BERLIN

The EU yesterday took a tough opening

stance in Brexit negotiations, rejecting

postage paid at New York, NY and at additional

Britains plea for early trade talks and
explicitly giving Spain a veto over any
arrangements that apply to Gibraltar.
clause, saying the territory had shame-
fully been singled out for unfavourable
treatment by the council at the behest of
Spain. Madrid defended the draft
clause, pointing out that it only reflected
the traditional Spanish position.
Brexit, the guidelines state it would
require existing regulatory, budgetary,
supervisory and enforcement instru-
ments and structures to apply.
Mr Tusk wants talks on future trade
to begin only once sufficient progress
unemployment is
time before core inflation hits tar- the forecast. Yellen has stressed, there is a risk of the
to accept the proposals. encryption system that cannot be as iPhone-loving staff spurn their work- Facebook did not respond to a request Senior EU diplomats noted that has been made on Britains exit bill and
About 2.3m people will benefit from European Council president Donald Mr Tusks text left room for negotiators citizen rights, which Whitehall officials

very low is not

US budget Q&A and accessed without permission from the issued BlackBerrys. for comment.
Trump attack over health bill i PAGE 8 user. Deutsche Bank last year banned Bankers at two institutions said staff Additional reporting by Chloe Cornish todays increase in the national living Tusks first draft of the guidelines, to work with in coming months. Prime believe means simultaneous talks are
WhatsApp from work-issued Black- are typically trained in how to use new Lombard page 20 wage to 7.50 per hour. But the rise which are an important milestone on minister Theresa Mays allies insisted possible if certain conditions are met.

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will pile pressure on English councils,
which will have to pay care workers a
lot more. Some 43 per cent of care
staff amounting to 341,000 people
aged 25 and over earn less than the
mailing offices; Post-Master. Send address changes
the road to Brexit, sought to damp Brit-
ains expectations by setting out a
phased approach to the divorce proc-
ess that prioritises progress on with-
drawal terms.
that the EU negotiating stance was
largely constructive, with one saying it
was within the parameters of what we
were expecting, perhaps more on the
upside.
Boris Johnson, the foreign secretary,
reassured European colleagues at a
Nato summit in Brussels that Mrs May
had not intended to threaten the EU
when she linked security co-operation

get. That contention will probably James Bullard, president of the St economy overheating
www.ft.com/subscribenow

Tel: +1 917 551 5040

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THE FINANCIAL TIMES LTD 2017
No: 39,435
STOCK MARKETS

S&P 500
Nasdaq Composite
Dow Jones Ind
FTSEurofirst 300
Euro Stoxx 50
Mar 30
2365.93
5902.74
prev %chg
CURRENCIES

2361.13 0.20 $ per

5897.55 0.09 $ per
20703.38 20659.32 0.21 per
1500.72 1493.75 0.47 per $
3481.67
Mar 30
1.074
1.249
0.859
prev
1.075 per $
1.241 per $
0.866 per
Mar 30
0.932
0.801
1.164
prev
INTEREST RATES

0.930 US Gov 10 yr
0.806 UK Gov 10 yr
1.155 Ger Gov 10 yr
111.295 111.035 per 119.476 119.363 Jpn Gov 10 yr
3475.27 0.18 per 139.035 137.822 index 76.705 76.951 US Gov 30 yr
price
98.87
100.46
98.68
100.45
100.14
yield
2.38
1.21
0.39
0.06
2.99
chg
0.00
-0.03
-0.01
0.00
0.01
new living wage and the increase is
expected to cost councils care services
360m in the coming financial year.
Analysis i PAGE 4
The decision to add the clause giving
Spain the right to veto any EU-UK trade

to F.T. Publications Inc., PO Box 469, Newburgh, NY

Printed in London, Liverpool, Glasgow, Dublin,
deals covering Gibraltar could make the
300-year territorial dispute between
Madrid and London an obstacle to
British officials admitted that the EUs
insistence on a continuing role for the
European Court of Justice in any transi-
tion deal could be problematic.
Brussels sees little room for compro-
after Brexit with a trade deal.
Reports & analysis page 3
Jonathan Powell, Tim Harford &
Man in the News: David Davis page 11
Henry Mance page 12 proved by studies
FTSE 100 7369.52 7373.72 -0.06 index 89.046 89.372 $ index 104.636 103.930 Ger Gov 2 yr 102.58 -0.75 0.00 Subscribe In print and online World Markets

underpin a further quarter-point rate Louis Fed, is one of the officials voicing While the Fed is watching sluggish
Frankfurt, Brussels, Milan, Madrid, New York, FTSE All-Share 4011.01 4011.80 -0.02 SFr per 1.069 1.072 SFr per 1.244 1.238 price prev chg

usads@ft.com Chicago, San Francisco, Washington DC, Orlando,

Tokyo, Hong Kong, Singapore, Seoul, Dubai
CAC 40
Xetra Dax
Nikkei
Hang Seng
FTSE All World $
5089.64 5069.04 0.41 COMMODITIES
12256.43 12203.00 0.44
19063.22 19217.48 -0.80 Oil WTI $
24301.09 24392.05 -0.37 Oil Brent $
297.99 297.73 0.09 Gold $
Mar 30
50.22
52.98
1248.80
prev
49.51
52.54
1251.10
Fed Funds Eff
%chg US 3m Bills
1.43 Euro Libor 3m
0.84 UK 3m
-0.18 Prices are latest for edition
0.66
0.78
-0.36
0.34
0.66
0.78
-0.36
0.34
0.00
0.00
0.00
0.00
Data provided by Morningstar
www.ft.com/subscribenow
Tel: 0800 298 4708

For the latest news go to

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THE FINANCIAL TIMES LTD 2017
12551; USPS number, 190640; ISSN# 09159460.
STOCK MARKETS

S&P 500
Nasdaq Composite
Dow Jones Ind
Mar 31
2367.10
5918.69
prev %chg
CURRENCIES

2368.06 -0.04 $ per

5914.34 0.07 $ per
20689.64 20728.49 -0.19 per
Mar 31
1.070
1.251
0.855
prev
1.074 per $
1.249 per $
0.859 per
Mar 31
0.935
0.800
1.169
prev
INTEREST RATES

0.932 US Gov 10 yr
0.801 UK Gov 10 yr
1.164 Ger Gov 10 yr
price
98.63
100.35
99.27
yield
2.41
1.22
0.33
chg
-0.01
0.02
-0.01
FTSEurofirst 300 1503.03 1500.72 0.15 per $ 111.430 111.295 per 119.180 119.476 Jpn Gov 10 yr 100.36 0.07 0.00
No: 39,436

Letters to the editor Printed in London, Liverpool, Glasgow, Dublin,

Euro Stoxx 50
FTSE 100
3495.59
7322.92
3481.58 0.40 per
7369.52 -0.63 index
139.338 139.035 index
88.767 89.046 $ index
77.226 76.705 US Gov 30 yr
104.536 104.636 Ger Gov 2 yr
99.27
102.57
3.04
-0.75
0.01
0.00

increase on June 14, as well as a move concern. The jobless rate is 4.4 per cent, gested. The ratio of employment to the inflation carefully, the data seem
Frankfurt, Brussels, Milan, Madrid, New York, FTSE All-Share 3990.00 4011.01 -0.52 SFr per 1.071 1.069 SFr per 1.252 1.244 price prev chg
Chicago, San Francisco, Washington DC, Orlando, CAC 40 5122.51 5089.64 0.65 COMMODITIES Fed Funds Eff 0.66 0.66 0.00
Tokyo, Hong Kong, Singapore, Seoul, Dubai Xetra Dax 12312.87 12256.43 0.46 Mar 31 prev %chg US 3m Bills 0.78 0.78 0.00
Nikkei 18909.26 19063.22 -0.81 Oil WTI $ 50.46 50.35 0.22 Euro Libor 3m -0.36 -0.36 0.00
Hang Seng 24111.59 24301.09 -0.78 Oil Brent $ 53.35 53.13 0.41 UK 3m 0.34 0.34 0.00

Fax: +44 20 7873 5938, Copyright The Financial Times Limited 2017. All
FTSE All World $ 297.38 298.11 -0.24 Gold $ 1244.85 1248.80 -0.32 Prices are latest for edition Data provided by Morningstar

letters.editor@ft.com rights reserved. Reproduction of the contents of this later this year towards shrinking the below the Feds 4.7 per cent estimate of overall population remained a percent- unlikely to force a change of strategy
Executive appointments newspaper in any manner is not permitted without Feds $4.5tn balance sheet. the long-term unemployment rate, so age point below pre-crisis levels, she just yet. Jim OSullivan of High Fre-
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shot the Feds target for 58 straight very low unemployment was not borne the US is not yet at full employment, it is to advocate further tightening soon. If
Printed by Reprints are available of any FT article with your months, even as the unemployment out by economic studies. With gross getting very close, however. They have the clash between progress on employ-
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Thursday 1 June 2017 FINANCIAL TIMES 3

INTERNATIONAL

Strong debut boosts Macron

Financial instrument

Brussels seeks new asset class

ahead of national elections
Rising support for French president puts parliamentary majority within reach
ANNE-SYLVAINE CHASSANY PARIS
From his inauguration parade on the
Champs-Elyses to his frank exchange
this week with Vladimir Putin, Presi-
dent Emmanuel Macron of France has
won praise for a largely assured debut at
home and abroad and markedly
increased his chances of securing a cov-
eted parliamentary majority for his
electorally untested party.
After Mr Macrons landslide victory
against far-right leader Marine Le Pen in
the presidential run-off last month, the
immediate question was whether he
could carry his success into next
months legislative elections.
Now polls suggest his cross-party
movement, La Rpublique En Marche!,
will attract about 30 per cent of the vote
in the first round of the election on June
11 a 10-point gain in a month and
putting the party within reach of win-
ning an absolute majority in the run-off
round on June 18.
Such an outcome would defy those
sceptical of Mr Macrons ability to turn
his unlikely presidential win into a long-
lasting overhaul of French politics. At
stake is his room for political manoeu-
vre as he tries to overhaul the dysfunc-
tional jobs market and revive the euro-
zones second-largest economy.
A month ago, despite his victory, I
was sceptical of Macrons chances of get-
ting a parliamentary majority, says
Jrme Fourquet, head of political sur-
veys at Ifop, the pollster. Now this is
totally feasible. Were witnessing a his-
toric shake-up of the French political
scene.
Mr Macrons momentum after his
May 7 victory has helped alleviate
doubts over whether he possesses the
skills to lead France. Pollsters say the
French have been broadly reassured by
his flawless inauguration ceremony, his
apparently effective charm offen-
sive on Angela Merkel, the German
chancellor, in Berlin and his trip to meet
French soldiers fighting jihadis in Mali.
Mr Macrons first steps on the interna-
tional stage at a Nato summit in Brussels
and a meeting of the G7 leading industr-
ialised nations in Sicily last week have
been deemed successful. The French
press has praised his knuckle-crushing
handshake with US president Donald
Trump, as well as his encounter with Mr
Putin, Russias president, in Versailles
on Monday.
His unpopular Socialist predecessor,
Franois Hollande, campaigned on
being a normal president and was
photographed shopping at a local super-
market after his election in 2012.
Macron is reactivating the presidency
after Hollandes inability to embody
the role, it is as though the French are
rediscovering this core institution of the
fifth republic, says Luc Rouban, a pro-
fessor at Sciences Po Cevipof.
Mr Macron, who was unknown to the
public three years ago and set up his
party a little more than a year ago, has
also been politically adroit in his efforts
to weaken Frances established parties
from right and left and maximise REMs
chances in the legislative elections.
The centre-right Republican party,
still recovering from defeat in the presi-
Momentum: dential election, has been destabilised
Emmanuel by the appointment of three of its politi-
Macron on the cians to key roles in Mr Macrons cabi-
campaign trail net, including Le Havre mayor Edouard
in Paris in April Philippe as prime minister and Bruno
Yoan Valat/EPA
Le Maire as economy minister.
Meanwhile, the far-right National
Front and the centre-left Socialist party
are grappling with internal divisions.
Surveys suggest the FN will attract less
than 20 per cent of the vote nationally in
what would be its poorest showing since
2012, while the Socialists are polling
only at about 10 per cent. Jean-Luc
Mlenchons far-left party, Unbowed
France, is predicted to win 15 per cent.
A clear majority is not a given for Mr
French legislative election projection
Number of seats
En Marche! Socialists 30
330
Republicans
160
National Front 15 Communists 30
Source: Opinionlab
Were Macron. In most of Frances 577 constit-
uencies, voters will face multiple con-
witnessing fusing choices: some Socialist and
a historic Republican candidates are claiming to
belong to the presidential majority
shake-up of even though they are not endorsed by
the French REM.
They include Manuel Valls, the
political former prime minister who is running
scene as a Socialist but has struck a deal with
REM, which will not field a candidate
Jrme against him in his Evry constituency.
Fourquet, Ifop A brewing controversy may also taint
the presidents flawless debut after it
emerged that Richard Ferrand, the ter- associated with this heroic mission,
ritorial cohesion minister who is a
former Socialist MP and early supporter
of Mr Macron, helped his partner buy a
property when he was head of a non-
profit insurance group in Brittany and
employed his son as a parliamentary
aide.
Every candidate garnering at least
12.5 per cent of the registered voters in
the first round will qualify for the run-
off. But a confusing array of candidates
could play to Mr Macrons advantage,
says Mr Fourquet. More and more peo-
ple who voted for Macron by default in
the second round, to bar Le Pen from
power, are now saying: OK, lets give
him a chance.
of eurozone sovereign debt
JIM BRUNSDEN BRUSSELS
GUY CHAZAN BERLIN
Brussels has called for sovereign debt
from across the eurozone to be bun-
dled into a financial instrument and
sold to investors as part of a plan aimed
at strengthening the single currency
area.
A European Commission paper on the
euros future, unveiled yesterday, has
advocated the creation of a market for
so-called sovereign bond-backed secur-
ities, which would package up the coun-
tries national debt into a new asset.
The plan is aimed at boosting demand
for debt issued by governments with rel-
atively weaker economies, and encour-
aging banks to manage their risks better
by diversifying their portfolios. It would
also sidestep the controversial issue
over whether the currency bloc should
issue common eurobonds.
Valdis Dombrovskis, vice-president
of the commission responsible for the
euro, said the move would require regu-
latory changes to make the securities
attractive. One idea would be to grant
the bonds the same zero-risk weight-
ing that applies to government debt in
the EU, which would exempt them from
capital requirements.
There would need to be an incen-
tive, he said. We see this in the form
Parker probe
Nasa vows to touch the sun
during solar flare mission
CLIVE COOKSON SCIENCE EDITOR
A US spacecraft will swoop inside the
suns corona, its superheated outer at-
mosphere, on a mission to learn more
about how stars work.
Nasas $1.5bn Parker Solar Probe, which
will be protected by a shield that can
withstand temperatures of 1,400C, will
journey within 6km of the suns surface,
seven times closer than previous craft.
We will finally touch the sun, Nicola
Fox, senior mission scientist, told a con-
ference in Chicago, at which Nasa gave a
progress report on the launch planned
for next year.
The spacecraft is named in honour of
Eugene Parker, a solar physics pioneer
from the University of Chicago who in
1958 predicted the solar wind, the
energy and electrically charged parti-
cles that flow from the sun into space at
more than a million miles per hour.
I am greatly honoured to have been
might destroy vulnerable infrastructure
said Professor Parker, the first living
individual to have a Nasa craft named
after him, who will be 90 next week.
Nasa and the European Space Agency
have launched several satellites to ob-
serve the sun but they have operated
from farther away, where heat and radi-
ation are less intense. Advances in ther-
mal engineering and materials technol-
ogy make a closer approach of the probe
possible, in particular a protective
carbon-composite shield 11.4cm thick.
The four main scientific instruments
State utility
of preferential regulatory treatment.
The proposal is part of a move to
restart integration inside the eurozone,
which has largely stalled since the crea-
tion of an EU banking union in 2014.
The paper also sets out options for
tighter policy co-ordination in the bloc
to give Brussels greater centralised
financial firepower against downturns.
Germany, the eurozones strongest
economy, reacted cautiously. The
finance ministry said the priority for the
eurozone should be ensuring respect for
existing rules, as only that can provide
the credibility for further integration.
Members must live up to their respo-
nsibility to create stability and growth in
the eurozone via structural reforms and
debt reduction, it said, before we can
talk about further risk-sharing.
Although the markets have warmed
to eurozone debt since the peak of the
financial crisis, many analysts believe
sentiment is reliant on continued sover-
eign bond purchases by the ECB as part
of its quantitative easing programme.
If the ECB were to end this stimulus,
some eurozone countries could become
vulnerable again. Many officials believe
that issuing bonds backed by all 19 euro-
zone countries would be the best way to
keep borrowing costs down for the more
underperforming economies.
Lex page 10
will remain at about terrestrial room
temperature. Their goal is to trace the
origin of the solar wind and how it gath-
ers speed through the corona.
Until we go there and touch the sun,
we cant answer basic questions like
Why is the corona much hotter than the
sun itself?, said Ms Fox of Johns Hop-
kins University.
Instabilities in the corona lead to solar
flares and mass ejections of highly mag-
netised material. When these reach
A computerised
image of the probe
nearing the sun
after a 7-year
journey to gather
data from the star
earths atmosphere they cause space
weather changes in the terrestrial
magnetic field and radiation levels.
Scientists say solar super-storms
such as electric grids and communica-
tions satellites, but operators could take
emergency action to reduce the damage
if they receive advance warning.
Nasa plans to launch the 685kg craft
from the Kennedy Space Center in Flor-
ida next summer on its Delta IV-Heavy
rocket, the most powerful available. It
will take almost seven years to reach the
sun via fly-bys of the planet Venus.
The ESA is also preparing a comple-
mentary mission to the sun, but not as
close as the probe.

South Africa power group told

General election
UK premier ducks live TV debate with rival as polls tighten
GEORGE PARKER AND JIM PICKARD
LONDON
Theresa May denied she was scared to
face her rival Jeremy Corbyn in a live
television debate as the British prime
minister tried to stabilise a shaky elec-
tion campaign yesterday.
The Conservative leader said she faced
her Labour counterpart week in, week
out across the parliamentary despatch
box as she tried to drag the political con-
versation back to the theme of Brexit.
By contrast the opposition leader
chose at the last minute to head to
Cambridge for the seven-way debate, a
sign of how much confidence a spate of
opinion polls and a study by YouGov
that predicted a hung parliament
has instilled in Mr Corbyn and his
supporters.
After initially declining to appear, Mr
Corbyn announced yesterday that he
had changed his mind and threw down
the gauntlet. Come on, prime minister
come and have a debate, he said.
Mrs Mays decision to steer clear has
fuelled the sense of a Conservative cam-
paign under siege. Tory candidates talk
of unforced errors by the prime minis-
ters team while Mr Corbyn is outper-
forming expectations.
Yet despite nerves among candidates
knocking on doors and talk of tensions
at Conservative HQ, the party remains
confident of victory as Sir Lynton Cros-
by, Mrs Mays campaign strategist, plots
to wrest back control of the election.
Obviously, going into the final week
of the campaign we would have liked a
bigger poll lead, said James Cleverly,
Conservative candidate for Braintree.
But it enables us to remind people of
what we were saying at the start of the
campaign: there is a genuine choice.
Insiders say Sir Lynton has taken a
firm grip on the Conservative campaign
after his misgivings over plans for a
floor on social care costs in the partys
manifesto were ignored; the proposals
were quickly labelled a dementia tax
and turned out to be a disaster.
He will spend the last days of the cam-
paign trying to focus voters on the
choice between Conservatives and
Labour over who is best placed to
deliver Brexit using for the best
Brexit deal slogan.
Sir Lynton will also try to turn the pol-
ling news to ram home the idea that Mr
Corbyn could in fact become prime mi-
nister. Immigration, a familiar Crosby
theme and an area seen as a Labour
weakness, is also moving up the agenda.
Giles Kenningham, head of communi-
cations in the 2015 Tory campaign, said:
The tightening of the polls could be
helpful. Voters will be suffering from
acute political fatigue with their third
vote in three years and the Tories need
to mobilise their base to get voters out.
Even so, Mrs Mays absence from the
BBC debate hardly spoke to confidence
in her as a strong and stable leader. By
contrast, Labours spirits have risen
steadily since the leak of the party mani-
festo; a document laden with big
increases in public spending, to be
Theresa May:
decision to steer
clear of TV line-up
has fuelled sense
of a campaign
under siege
funded by higher taxes on the rich and
on companies, which struck a chord
with a public weary of austerity.
The grassroots and Corbynista cam-
paigners are increasingly confident of
victory. If a poll gap of more than 20
points can be slashed to single figures,
they argue, why can it not be reversed?
Angela Rayner, Labours shadow edu-
cation secretary, was cheered at a cam-
paign event in Wiltshire as she dubbed
Mrs May a plastic Margaret Thatcher.
The Tories were arrogant enough to
think the electorate would elect them
no matter what, she said. What a
shock the people have given them.
Tory candidates have struggled to
identify any such positive offers in their
manifesto. In the old days, manifestos
would be accompanied by the offer of a
big fat tax cut, said one.
Some admit Mrs Mays team seems to
have done its best to help Labour. The
manifesto was such a screw-up, said
one Tory candidate. It was baffling
why would you want to scare your core
electoral base?
Another said: There was definitely a
wobble . . . a much bigger wobble than
anyone would have liked.
A YouGov model, in the Times news-
paper yesterday, reinforced the sense of
a Conservative campaign that has badly
lost its way: it projected Mrs May ending
with 310 seats, 20 fewer than in 2015.
That obscured a separate ComRes proj-
ection suggesting she is still on course
for a 100-seat majority, while most oth-
er surveys still imply a big Tory victory.
Labour candidates report that Mr
Corbyn remains a liability while their
Conservative counterparts say they
have not detected a big shift among
uncertain Tory voters back to Labour.
Editorial Comment page 8
Mays sterling work see Markets
to pull plug on chief executive
JOSEPH COTTERILL JOHANNESBURG
South Africas power utility Eskom has
been ordered to sack Brian Molefe, the
chief executive it rehired after he left
the organisation in the wake of a report
into state corruption.
Yesterday Lynne Brown, the public
enterprises minister who oversees
Eskom, instructed its board to remove
Mr Molefe from office less than 20 days
since his reappointment divided the rul-
ing African National Congress and deep-
ened concerns over the chaotic manage-
ment of Africas biggest utility.
Mr Molefe resigned from Eskom last
year. He was the biggest casualty of a
report issued by South Africas public
protector, a government ombudsman,
which detailed alleged corruption at
public institutions for private gain
under Jacob Zumas presidency.
Mr Molefe denied any wrongdoing
and said he would leave the utility to
clear his name. It was alleged he was in
contact with the Guptas, a business fam-
ily with ties to Mr Zuma and his relatives,
at the same time that a mining company
owned by the family negotiated to buy a
collierythatsuppliedEskom.
But Mr Molefe returned to his desk in
May, saying he had in fact been on
unpaid leave despite becoming an ANC
MP and Eskom advertising his old job.
He took up his post just weeks after Mr
Zuma fired Pravin Gordhan, a critic of
cronyism and suspect procurement at
state companies, as finance minister.
The ANC, which is riven over corrup-
tion allegations and Mr Zumas legacy of
scandals, agreed at a weekend meeting
that the rehiring of Mr Molefe should be
reversed ahead of a court challenge to
the appointment by opposition parties.
Malusi Gigaba, Mr Gordhans succes-
sor, said yesterday that Mr Molefes brief
comeback had caused a lot of harm, a
lot of reputational damage to the gov-
ernment. Mr Gigabas Treasury under-
writes Eskoms R320bn ($24bn) net
debt, which is the largest of South
Africas state-owned enterprises and is
set to escalate as ageing coal power sta-
tions are replaced.
But banks in South Africa and abroad
have grown wary of lending to Eskom
because of its links to the Guptas and
other scandals.
Everybodys looking at this the same
way, an executive at a South African
bank said. One problem is the level of
Eskoms debt. The second is the govern-
ance problem. The third is that people at
the top are not only PEPs [politically
exposed persons], but the kind of PEPs
that banks do not want to deal with.
They are being treated with extreme
caution.
4 FINANCIAL TIMES Thursday 1 June 2017

INTERNATIONAL

Afghanistan

Kabul bomb heaps pressure on US for more troops

Blast leaves scores dead
and exposes countrys
fragile grip on security
KIRAN STACEY NEW DELHI
A truck bomb ripped through the diplo-
matic area of Kabul yesterday, killing at
least 80 and wounding hundreds of oth-
ers in the deadliest attack in the Afghan
capital for months.
The blast, which took place during
rush hour near the German embassy,
was the latest in a wave of attacks to hit
Kabul that have exposed the govern-
ments fragile grip on security and put
pressure on US president Donald
Trump to commit more troops to the
conflict.
Afghanistans security has deterio-
rated as the US has drawn down the
number of its soldiers deployed in the
country from a peak of more than
100,000 six years ago to about 8,600.
Both the Taliban and Isis have struck
the capital in recent months, includ-
ing an attack outside the Supreme Court
in February that killed at least 20. The
Taliban denied it was behind yester-
days attack. No other group claimed
responsibility.
Ashraf Ghani, the Afghan president,
condemned the cowardly attack in the
holy month of Ramadan targeting inno-
cent civilians in their daily life.
Most of those killed were Afghans, but
one of the victims was a security guard
at the German embassy. Other embassy
staff were wounded, said Sigmar
Gabriel, Germanys foreign minister.
Several other embassies, including the
French, Turkish and Chinese missions,
were also damaged.
Such attacks do not change our
resolve in continuing to support the
Afghan government in the stabilisation
of the country, Mr Gabriel said.
Hugo Llorens, the USs special charg
daffaires in Kabul, said the horrific
and shameful attack demonstrates
these terrorists complete disregard for
human life and their nihilistic opposi-
tion to the dream of a peaceful future for
Afghanistan.
Figures from the UN showed that last
year was the deadliest in terms of civil-
ian casualties in Afghanistan since it
began recording data in 2009, with
3,498 civilians killed and 7,920 wounded
a 3 per cent rise on 2015. A recent Afghan security forces died in the first
report by John Sopko, the US special six weeks of this year. Mr Sopko said in
inspector-general for Afghanistan the report: Afghanistan remains in the
reconstruction, said more than 800 grip of a deadly war. Casualties suffered
by the Afghan National Defense and
Security Forces in the fight against the
A F G H A N I S TA N Taliban and other insurgents continue
to be shockingly high.
British embassy The deteriorating security situation
has caused Mr Trump to consider
whether to send thousands of additional
KABUL German
embassy
troops to the country, a move that would
commit the US, at least for the medium
term, to a conflict that is already by
some counts its longest ever. The US
Turkish embassy invaded Afghanistan in the wake of the
2001 September 11 attacks.
French embassy
In February, John Nicholson, com-
100 m
mander of US forces in Afghanistan,
maps4news.com/OSM urged Mr Trump to bolster troop num-
bers by a few thousand, saying the
conflict risked entering a stalemate.
Officials have reportedly said Mr Trump
is considering sending up to 5,000 more
troops. Rex Tillerson, US secretary of
state, last week said Mr Trumps Afghan
policy was still being formed.
Shashank Joshi, senior research fel-
low at the Royal United Services Insti-
tute, said: The president is willing to
give the military a free hand in tactics
and ground operations, but not neces-
sarily in committing thousands more
troops to a foreign conflict. He might
blush at that.
Even if Mr Trump does decide to
follow his generals advice, this is not
going to be enough to transform the
underlying situation, which is generally
deteriorating.

Six-day war. 50th anniversary Worker conditions

Activist held
Israeli critics of the occupation draw flak in China
Views of ex-security officials
while probing
pack a punch as it is harder for Ivanka Trump
rightwingers to dismiss them shoe factory
JOHN REED JERUSALEM

As Ami Ayalon, a decorated Israeli war YUAN YANG BEIJING

hero, spoke in critical terms about
Israels occupation of Palestinian lands,
a heckler outside the art gallery used a
megaphone to scream traitors! and
hurl other insults at the gathering.
Inside, a crowd of Israeli leftists
listened raptly as Mr Ayalon, a former
head of the Shin Bet security service,
went on to voice his support for Break-
ing the Silence, a non-governmental
organisation of soldiers and former sol-
diers that exposes alleged human rights
abuses against Palestinians. Its not
only bravery on the battlefield, its brav-
ery to speak your mind, Mr Ayalon
said, as he warned of creeping totalitar-
ianism in the Israel Defense Forces.
We know the IDF is a moral army, but
an occupying army cannot be moral.
The panel discussion at Jerusalems
Barbur Gallery in April was a marked
contrast to the largely triumphalist tone
in Israel as the country prepares to cele-
brate the 50th anniversary of the 1967
Six-day war next week. During the con-
flict, Israel captured the West Bank, East
Jerusalem and the Gaza Strip, beginning
what has become the worlds longest
ongoing military occupation.
Half a century on and with the peace
process moribund, few Israelis even use
the word occupation. The rare voices
of domestic criticism come mainly from
left-leaning media and leftist NGOs,
such as Breaking the Silence, which
argue that ending the occupation and
creating a Palestinian state is crucial to
resolving the conflict. But the NGOs are
coming under increasing pressure from
Prime Minister Benjamin Netanyahus
rightwing government, which is openly
hostile to the groups and has taken steps
to shame, isolate and punish them.
Last year it passed a law requiring
NGOs to disclose the funding they
receive from foreign governments, a
move condemned by the EU and pro-
tested by activists as anti-democratic.
The current administration the
longest-serving prime minister in Israeli
history not only doesnt encourage
dissent, it seems hell-bent on silencing
voices of reason and experience, says
Ayelet Waldman, a US writer who co-
Philippines
Under arrest: edited Kingdom of Olives and Ash, a book
soldiers detain of essays on the occupation out this
an activist in the week, backed by Breaking the Silence.
West Bank last Breaking the Silence has been the
month after most conspicuous target of the govern-
a protest in ments ire. Rightwing Israeli critics
support of accuse it of smearing the IDF, the coun-
Palestinian trys most respected institution, and air-
hunger strikers ing Israels dirty linen abroad.
in Israeli jails. In April, Mr Netanyahu provoked a
Below, rare diplomatic spat with Germany
Ami Ayalon when he cancelled a meeting with its
Alaa Badarneh/EPA foreign minister, Sigmar Gabriel, after
he ignored the Israeli leaders ultima-
tum not to meet Breaking the Silence
and other NGOs. On Monday, he told
MPs from his Likud party he will not
meet foreign leaders who meet organi-
sations working against Israeli sol-
diers, Haaretz newspaper reported.
Mr Netanyahus criticism of NGOs
comes in the wake of the election of
President Donald Trump, who has
raised questions over longstanding US
policies on issues such as settlements in
the occupied territories. Mr Trump is
due, by today, to make a politically sen-
sitive decision on whether to move the
US embassy to Jerusalem, as he prom-
ised Israelis he would, or sign a waiver
postponing it, as past presidents have.
Breaking the Silence says it has faced
threats, cyber attacks and other harass-
ment. Naftali Bennett, the education
minister, has tried to bar the group from
speaking at Israeli schools.
However, criticism from former top
security officials such as Mr Ayalon
packs a punch in Israel because it is
harder for rightwingers to dismiss them
as unpatriotic and uninformed. Speak-
ers at the Barbur Gallery event also
included Carmi Gillon, another former
Shin Bet director, and Alik Ron, a
former senior police commander.
Not many Israelis can see ourselves
[what we look like] from the outside,
Mr Ayalon said in an interview after the
event. This is something that most of
us lack. Too many friends are dying, and
in the political environment they [the
government] manipulate our fear.
The 71-year-old was awarded the
Medal of Valour, Israels highest military
honour, for his role in an assault in 1969
on Green Island, an Egyptian military
The fortress at the southern tip of the Suez
Canal. He received multiple wounds,
occupation was evacuated by boat and had to inject
is so himself with morphine.
As a civilian he became a peace activ-
normalised ist, ran as an MP and unsuccessfully
that its contested the leadership in 2007 of
what was then the Labour party.
no longer In the decade since, Israels peace
a topic camp has shrunk both in the political
landscape and among the public. While
Yehuda Shaul, most Israelis say they support a two-
activist state solution, many are sceptical about
achieving it, particularly after Israel
fought three wars with Hamas, the mili-
tant group that controls the Gaza Strip,
and following a wave of Palestinian vio-
lence in Israel and the West Bank.
The occupation is so normalised that
its no longer a topic, nor an issue in the
public political sphere, says Yehuda
Shaul, a Breaking the Silence activist.
Those who understand the moral
aspect of the occupation are a small
minority, said Mr Ayalon.
Most Israelis dont want to stay in the
territories, but most dont want to
believe we can get out.
A labour activist investigating a factory
in China that makes shoes for the
Ivanka Trump fashion brand has been
detained by police and two of his col-
leagues are missing, according to the
US-based campaign group that
employs them.
Li Qiang of China Labor Watch, who last
made contact with the activists on Sat-
urday, said they were about to conclude
a three-month undercover investiga-
tion into suppliers to the brand owned
by the elder daughter of Donald Trump,
US president.
We have investigated hundreds of
factories over 17 years, Mr Li said. We
have investigated many other American
firms. This is the first time any of our
investigators have been detained under
a criminal process.
The activists, whose plight was first
reported by the Associated Press, had
gone undercover as workers at factories
in Ganzhou and Dongguan owned by
Huajian Group, one of Chinas largest
manufacturers of womens footwear
and a supplier to many western brands.
They were last known to be in Ganzhou,
Jiangxi province, CLW said.
The campaign group said it had
gathered eight hours of video footage
from inside Huajians factories that
raised concerns about the companys
labour practices.
Huajian Group yesterday said it had
received no notice of any detentions. Ms
Trump had no comment to make.
One activist, Hua Haifeng, is under
police detention in Ganzhou and faces a
charge of unlawful surveillance, accord-
ing to his wife. She said she was told of
the charge on Tuesday and informed
that Mr Hua was not allowed to commu-
nicate with anyone, including his family.
I couldnt believe it when I received
the call. What [my husband] does is just
and important, she said, adding that
this was the first time she had had to
worry about her husbands safety in his
more than 10 years of activism.
Pun Ngai, a professor specialising in
Chinese labour issues at the University
of Hong Kong, said that if Mr Hua had
been charged with the crime of surveil-
lance, it would be a first for labour activ-
ists, who often go undercover.
Workers conditions remain highly
politically sensitive, and labour activists

Duterte tested as battle for Marawi highlights extremists regional strength
MICHAEL PEEL BANGKOK
GRACE RAMOS MANILA
A battle between Isis-aligned militants
and the Philippine army is a show of
extremist strength and a blow to
President Rodrigo Dutertes self-styled
image as both hard man and peace-
maker.
Government troops yesterday entered
their ninth day of fighting to regain con-
trol of the southern city of Marawi on Mr
Dutertes home island of Mindanao,
after a failed security force raid trig-
gered a siege and spurred the president
to impose martial law.
The fierce skirmishes near the shores
of Lake Lanao have killed scores of peo-
ple, driven thousands from their homes
and underscored how the southern
islands of the Philippine archipelago
have become a magnet and launch pad
for violent Southeast Asian Islamist
groups.
Analysts warn more trouble is likely
to spring from a region plagued by long-
running Islamist and communist insur-
gencies, even if a president notorious for
his bloody drugs war delivers a prom-
ised security clampdown.
While Duterte has been focusing all
his attention on killing drug lords, a big-
ger problem has been growing under the
noses of the authorities, said Sidney
Jones, a Southeast Asia terrorism expert
and director of the Indonesia-based
Institute for Policy Analysis of Conflict.
What Isis has done is provide for the
first time a real umbrella that can link
across the region, across clan and across
ethnicity.
Philippine troops backed by
armoured vehicles and attack helicop-
ters are battling to dislodge militants
who have occupied strategic parts of
Marawi. Authorities say at least 21 secu-
rity force members, 19 civilians and 89
militants have been killed in fighting in
which at least two extremist groups
the local Maute and Abu Sayyaf of
south-west Mindanao have joined
forces.
Delfin Lorenzana, defence secretary,
said the military had control of about 70
per cent of the city of 200,000 people as
of Tuesday night and was clearing three
pockets of resistance. He admitted
extremist groups in the southern Philip-
pines were becoming a serious con-
cern, particularly because of growing
co-operation between different groups,
the presence of foreign fighters and the
ease with which militants had entered
built-up areas undetected.
The Marawi operation is the biggest of
several recent attacks by the Maute,
who are named after the brothers who
founded the group, in their home region
and beyond. Authorities allege that
Under siege: a government soldier
carries a girl to safety in Marawi
Maute members were behind thwarted
bomb plots in Manila and a blast in Sep-
tember that killed 15 people in a night
market in Mindanaos biggest city of
Davao, where Mr Duterte was mayor for
more than 20 years.
Abu Sayyaf, which is notorious for
beheading western hostages and hijack-
ing ships, appears to be diversifying
after coming under increasing pressure
from security force attacks on its bases
off the shores of Mindanao. The siege of
Marawi began after government forces
tried to capture Isnilon Hapilon, an Abu
Sayyaf leader who was thought to be in
the city. He is on a US most wanted list
and has been declared an Isis emir in
Southeast Asia after pledging loyalty to
the group.
Authorities say the two Mindanao
militant organisations have been joined
by foreign fighters from countries
including Malaysia, Indonesia and
states outside Southeast Asia. They
have responded to a call for militants
who want to go to the Middle East
where Isis is under increasing pressure
to divert to the Philippines instead.
Now its apparent that [Isis] has built
a very strong capability in the Philip-
pines and this threat is not going to go
away, said Professor Rohan Gunaratna,
a security expert at Singapores
S Rajaratnam School of International
Studies. What we are seeing is that all
these disparate groups have joined
together and they are willing to conduct
joint operations.
Mr Duterte has faced only muted
opposition to his declaration of 60 days
of martial law on Mindanao and his
warnings that he might need to expand
it to other parts of the country. But his
decision is highly sensitive because of
the way the late Ferdinand Marcos used
the special powers in 1972 to turn the
country into a dictatorship.
Christian Monsod, a constitutional
expert who has studied the peace proc-
ess in Mindanao, said some young peo-
ple in the region were growing impa-
tient. The solution is not martial law
but to speed up the peace process and to
go into projects that would show the
Muslim youth there is a better way to
improve their lives.
across China are facing a harsher cli-
mate, said Ms Pun.
Mr Hua and Li Zhao, one of his miss-
ing colleagues, had both recently been
prevented from leaving the country,
according to Li Qiang.
He said Mr Hua had been pulled in for
questioning by state security officers in
Shenzhen last week while attempting to
travel to Hong Kong, and had been told
he was suspected of a crime. He said Li
Zhao had also been stopped at the bor-
der in Shenzhen when trying to leave
China last month, but that the two had
been permitted to return to Ganzhou.
The run-ins with state security offic-
ers and police in Shenzhen and Ganzhou
suggest a wider regional collaboration
rather than the local police interference
to which activists are accustomed.
Mr Hua had twice before been inter-
viewed by police during his research
into the suppliers of Apple and Samsung
in Shanghai and Tianjin, but each time
was told simply to leave the city, accord-
ing to CLW.
Su Heng, the third missing activist,
had not been approached by police dur-
ing the Ivanka Trump project to the
knowledge of CLW.
Additional reporting by Yingzhi Yang
Editorial Comment page 8
Thursday 1 June 2017 FINANCIAL TIMES 5
6 FINANCIAL TIMES
An Oxford show of Raphael
works on paper challenges
our century-old view of the
Renaissance master,
Jackie Wullschlager writes
A
good exhibition of draw-
ings, bringing us near to an
artists thought processes
and inventions of hand,
mind and eye, is always
exciting. But a game-changing presenta-
tion of graphic art, one which alters our
conception of its creator, is rare. The
Ashmoleans Raphael: The Drawings is a
once-in-a-generation opportunity to see
some hundred exceptional, unexpected
works in a display that challenges the
century-old view of this artist as a Ren-
aissance master of harmonious balance
and chiselled perfection, remote com-
pared with Leonardos subtle ambiva-
lences or Michelangelos terribilit.
Raphael on paper remains astound-
ingly beautiful. In delicate, fluid red
chalk contours, a contrapposto infant,
arms outstretched, leaps joyfully across
the sheet in the Uffizis Christ Child.
A metalpoint nude in surging motion,
white body colour accentuating muscu-
lature, giving texture to flesh, and defin-
ing a helmets floppy feathers and
metallic sheen, fizzes with energy in
Study for a Horseman from Frank-
furts Stdel Museum.
Five pen and ink variations of a poised
Mary supporting her toddler son in his
first faltering steps in Studies for the
Virgin and Child from Viennas Alber-
tina have an experimental liveliness and
variety of pressure and speed touch-
ingly mirroring the subject. A black
chalk Head of a Muse from a private
collection looks freely sketched, almost
breezy; then you notice how different
densities of linear strokes, some airy,
some grainy, give rich tonal qualities,
while the brightness of the paper infuses
the face with luminosity.
Any one of these seldom shown works
is worth a trip to the Ashmolean; the
juxtaposition of sheets of such quality in
different drawing media, gathered from
around the world to supplement
Oxfords own superb collection, cele-
brates Raphaels virtuosity and versatil-
ity and allows an exhibition of con-
stantly evolving interest. Intimate yet
with the gravitas and scope of a retro-
spective, the show traces Raphaels
Drawn closer to the creator
development and reflects broadly on
drawings possibilities.
Rapid, spontaneous pen and ink fig-
ures in looping lines and swirls, some
barely decipherable, in sheets which
only survived as versos of more studied
designs, are compelling initial doodles:
the threshold between the artists inte-
ARTS
rior world and reality. More developed
compositions are the beginnings of
paintings. In the fragment of a life-size
charcoal cartoon The Head of a Horse,
the animal with voluminous mane and
open mouth looms out of darkness,
prelude to the Vaticans The Expulsion
of Heliodorus fresco. The Louvres
elaborately worked, psychologically
complex red chalk Psyche presenting
to Venus the vase of Proserpine is a
sketch for a fresco for Agostino Chigis
villa, the Farnesina. Still other drawings
are stand-alone small masterpieces:
Studies for Three Standing Men, a
rhythmic counterpoint of bending
arms, crossed legs, swinging hips, is
inscribed as a gift to Drer.
Throughout, the emphasis is on
expressive eloquence, struggle, playful-
ness, modes of observation, questions of
materiality features not always obvi-
ous in the polished finish and ideal
geometry of his paintings. Little-known
drawings, for example Lilles Studies of
Two Male Heads and the Head of a Lion
the human profiles extremes of ema-
ciation and double-chinned plumpness,
the big cat stately and sleepy reveal a
witty, informal aspect to Raphael. In a
sheet started with the depiction of a
woman sprawling in a window seat in
sunlight in a private moment, Raphael
goes on to improvise her dreams:
fluttering angels, an incongruous imag-
ining of St Peters basilica.
There are surprising instants of erotic
intensity, too: the pen and ink Muse
Melpomene begins as a sculptural head
like a carved relief, hatched shading
evoking the hard surface of stone; then
the pen is recharged for the folds and
billows of the drapery impetuous
waves and inky depths of material
clinging to the body. This mysteriously
frenzied figure was impossible to
The roots of virtual violence
T H E AT R E
Killology
Jerwood Theatre Upstairs, Royal Court, London
aaaae
Sarah Hemming
Games designer Paul has made a killing
with his super-violent online creation
Killology. Its USP is the reward of sadism:
the more imaginative and protracted
the murder, the more points the player
stacks up. But it is not, Paul protests,
immoral quite the reverse in fact,
because it forces the murderer to
watch the graphic effects of torture and
accept the consequences. So when some
vicious lads carry out a replica attack in
real life, who is to blame?
Gary Owens excellent new play
explores the corrosive impact of brutal
video games but that, it turns out, is
only one strand in this thoughtful, pro-
vocative and painful drama. Through
separate but interlocking monologues,
he examines the roots of violence, the
nature of masculinity and, above all, the
evasion of responsibility moral,
parental, corporate. And though it is
gruesome in places, what sticks with
you most about the play is its compas-
sion. At its heart are three lonely men.
Fathers absent, inadequate,
oppressive loom large. For all his
money and glib self-confidence, Paul
is desperate to impress his (unseen)
Clockwise from main: Study for the
Three Graces (c151718); Studies
for the Madonna of Francis I
(c1518); Head of a Muse (c151011)
translate into paint, says curator
Catherine Whistler; it demonstrates a
troubled exuberance far from the seren-
ity and sweetness mostly characterising
Raphaels paintings.
Yet that sweetness was natural: it is
there in the Ashmoleans earliest work, a
17-year-old, keen-eyed, long-necked
self-portrait, already finely modelled
and conveying the fall of light on unlined
skin. Compare this with the shows final,
most affecting sheet, The Heads and
Hands of Two Apostles, studies for the
Vaticans Transfiguration completed
dismissive father: a self-made man who
pours scorn on his sons toxic success.
Teenager Davey cherishes the dog his
Dad gave him before vanishing from his
life, leaving Davey in the care of his
exhausted, impoverished mother and at
the mercy of local bullies and a ruthless
street culture. Meanwhile Alan is that
missing Dad, a worn-out loser who seeks
revenge for what happens when all
these strands twist together.
Its a deeply troubling but subtle
piece: Owen keeps shifting ideas in and
out of focus and matches his structure to
the subject. He plays out different ver-
sions of the narrative so that you are
never sure which outcome is reality and
which is fantasy, or where the crossover
between the two lies. Meanwhile the
monologue form reflects the isolation
Thursday 1 June 2017
shortly before Raphaels premature
death in 1520, and you see the reach of
empathy he strove for.
Both works are in black chalk, simply
handled in the early drawing, com-
manded in the Apostles with carefully
calibrated shading, decisive marks,
freer lines, to create chords of feeling
between the figures and underline a
drama of antithesis in which the apos-
tles respond to the disciples humbling
failure to cure a possessed boy. One is a
sensuous, full-lipped youth, his features
full of concern, the other an elderly,
bearded man with wispy hair, alert,
sympathetic, with an expression mixing
pity and perturbation. The contrasts
extend to their hands, one pair closed,
anxious, the other open and accepting.
Hands, hard to draw and gesturally
powerful, are a dominant motif. Clasped
hands imply inner turmoil in Adam in
the Disputa, clenched, gnarled hands in
An Elderly Sibyl convey visionary
intensity. In A Figure Holding a Scroll
and A Flying Angel with a Scroll, com-
plex, fast-moving red chalk composi-
tions of grasping and pointing angels
hands express grace. Joined hands of
mother and baby in The Virgin with
the Pomegranate demonstrate close-
ness but hands are also instruments of
knowledge and foreboding here: the
tense spread of Marys fingers on a book;
the chubby child investigating the fruit,
symbol of suffering and resurrection,
and in wonder opening his other hand
inviting us into the scene.
This is a supremely engaging exhibi-
tion as, repeatedly, details which
scarcely register within large orches-
trated paintings shine vivid in inde-
pendent drawings. An odd couple from
The Fire in the Borgo fresco, for exam-
ple, is radiant in A Man Carrying an
Older Man on his Back: the collapsed
form of the aged man wrapped around
the younger, whose hand grabs the dan-
gling wrist, fingers falling in a gesture of
benediction, as he strains, determined,
under the weight. The allusion is to
Aeneas carrying his father Anchises
from burning Troy, but this is a fully
realised life drawing, the studio model
wearing a typical modesty pouch.
The impact of the classical world, and
Renaissance ideals of rhetoric Dantes
art as visible speech thread through
the show. Usually these modes of per-
fection urge what Lawrence Gowing
called the enduring Raphael question:
essentially, can so much beauty really be
truth? Here, doubts are vanquished in a
triumph of pathos, majesty, naturalism,
visual oratory and expressive narrative,
up close and personal.
To September 3, ashmolean.org; Albertina,
Vienna, September 29-January 7
that afflicts the characters and the
thriller element highlights the way
drama deploys potential violence to
keep you hooked.
Rachel ORiordans staging, co-pro-
duced with Sherman Theatre, Cardiff, is
taut and tense, played out on Gary
McCanns dark industrial set of wires
that coil and tangle in sympathy with
the dramas knotty moral terrain. And
the performances are superb, with Sen
Gleeson a sad, solid presence as the
grief-raddled father, Sion Daniel Young
lurching between aggression and terror
as his fearful, brutalised son Davey, and
Richard Mylan horribly compelling as
the repugnant, yet fundamentally inse-
cure Paul.
To June 24, royalcourttheatre.com
Making a
killing:
Richard
Mylan in
Killology
Mark Douet
Thursday 1 June 2017
Americas well-connected sugar barons are frustrating Washingtons efforts to cut a deal on Mexican
imports. The outcome of the negotiations will set the tone for Donald Trumps aim to renegotiate Nafta.
T
he description reads like a
Caribbean jet-set fantasy.
By night there was dancing
with actor George Hamilton
and alfresco dinners at the
local outpost of Le Cirque. By day there
were boat trips to deserted beaches with
Prince Dimitri of Yugoslavia. Breakfast
was delivered to guests villas on flower-
laden platters and featured the most
heavenly freshly squeezed tomato
juice.
Gotta say, staying chez Fanjul is
about as good as it gets, the author
writes. First of all there are no better
hosts, more fun or adorable than Pepe
and Emilia. Plus they happen to live in
Paradise.
The travelogue would be little more
than a high society vacation diary were
it not for the individuals involved.
Instead, the authors husband and her
hosts are now two of the lead characters
in one of the worlds most sensitive trade
negotiations, which has the potential to
add a sugar war to a growing list of ten-
sions between the US and Mexico.
Describing the 2009 trip was Hilary
Geary Ross, socialite wife of Wilbur
Ross, the billionaire investor who is now
Donald Trumps commerce secretary.
Their hosts at Casa de Campo, a Domini-
can Republic luxury resort: Jos Pepe
Fanjul, the Cuban-born Florida sugar
baron, and his wife Emilia.
Eight years on, Mr Ross and Mr Fanjul
are star players in a negotiation to
resolve a bitter sugar dispute over Mexi-
can exports to the US by a June 5 dead-
line. Mexican negotiators fear Mr Fanjul
a longtime Republican donor and part
owner of the UK sugar producer Tate &
Lyle, which lobbied for Brexit is
Ross said: I cant sell it with
my industry. They have lots
of lobbyists. Take it or leave
it, and if you dont sign . . .
Ill put duties in place
secretly pulling the political strings.
The sugar talks are a dress rehearsal
for bigger negotiations due later this
year to update the North American Free
Trade Agreement that governs Canada,
Mexico and the USs commerce in every-
thing from cars to corn. And that makes
them an early test for President Donald
Trump, who regularly boasts of his deal-
making prowess.
But they also serve as an example of
the minefield of interests and powerful
lobbies the Trump administration has
to navigate as it sets out to renegotiate
Nafta. And they are drawing attention
to the unusual personal relationships
that billionaire members of Mr Trumps
cabinet such as Mr Ross, a former Roth-
schild banker who made his fortune
turning around distressed businesses,
have brought into government.
Political ties
Mr Ross and Mr Fanjul have never done
business together. But they have known
each other for years, largely through the
New York and Palm Beach society cir-
cuits. The two men have also found
common purpose in politics. Mr Fanjul
is a longtime patron of Marco Rubio, but
became a major donor to the Trump
campaign after the Florida senators
presidential bid collapsed last year.
When Mr Ross hosted a Trump fund-
raiser last July at his home in Southamp-
ton, Long Island, Mr Fanjul was part of
the exclusive host committee. That
day, according to campaign finance
records collated by the Center for
Responsive Politics, he donated $94,600
to the Republican party and $5,400 to
the Trump campaign.
Mr Fanjuls role in the sugar talks has
been entirely behind the scenes, accord-
ing to sources close to the talks. In recent
weeks the sugar baron has visited Wash-
ington as part of the negotiations,
according to one person close to the situ-
ation. He and his son have also spoken
multiple times to Mr Ross by phone.
Florida Crystals, the company con-
trolled by Pepe Fanjul and his older
brother, Alfonso Alfy Fanjul, declined
repeated requests for comment. An
industry spokesman tasked with
responding by the company said: Who
attended meetings or had conversations
is immaterial to the case at hand.
But Pepes involvement should not be
a surprise. The brothers are major play-
ers in both the US sugar industry and
the countrys politics. The family once
owned vast plantations in Cuba but
were kicked out by Fidel Castro. We do
not want what happened in Cuba to hap-
pen to us again, Alfy Fanjul told Vanity
Fair in a rare interview in 2001.
In 2016 the Fanjul brothers each
donated more than $300,000 to politi-
cal campaigns, with Pepe focused on
Republicans and Alfy, a longtime Clin-
ton supporter who had a bit part in the
Monica Lewinsky scandal, preferring
Democratic causes. Their family hold-
FINANCIAL TIMES
FT BIG READ. US-MEXICO TRADE
By Shawn Donnan and Jude Webber
Sugar
talks
turn
sour
Workers harvest sugarcane at a ing company, Fanjul Corp, donated
plantation in Napoleonville, more than $1.1m in 2016, according to
Louisiana. The state is one of the data collected by the CRP.
leading US producers of the That push into politics is part of a big-
commodity Luke Sharrett/Bloomberg ger campaign by an industry that in
Washington is known simply as Big
Sugar and has been flexing its muscles
in the latest talks. Long considered one
of the biggest beneficiaries of US subsi-
dies and protectionism, the industry
donated $11.2m to political campaigns
in 2016 and it has gone all out in recent
weeks to urge the Trump administra-
tion to take a hard line on Mexico.
Its message is designed to resonate
with a president who won last years
election in part by railing against Nafta
and companies shifting jobs to Mexico.
I think [Wilbur Ross] really under-
stands this is about American sugar jobs
going potentially to Mexico, says Jack
Roney, director of economics and policy
analysis for the American Sugar Alli-
ance, the industrys voice in Washington.
A spokesman for the US commerce
secretary would say only that the nego-
tiations have been difficult and that
Mr Ross remained hopeful a deal could
be reached. But people close to the nego-
tiations say the industry pressure
appears to have contributed to a shift in
the administration.
Mr Ross was initially conciliatory,
portraying a deal as an easy way to
Sugar trade between
Mexico and US*
$bn
US imports
from Mexico
Wilbur Ross Jos Pepe Fanjul
The billionaire One of the owners
investor is now of Fanjul Corp, he
Donald Trumps controls vast
commerce secretary sugar plantations Mexico imports
and is leading the and is a major from US
sugar talks with donor to the
Mexico Republican party
* Includes sugar confectionery
Sources: International Trade Centre; Thomson Reuters Datastream
Louisiana organisation in 2004, the state had 17
A protected industry sugar mills and 750 cane farming families.
Now it is down to 11 mills and 450 families.
still faces tough times That points to a peculiar paradox. US
sugar farmers and producers have long
Down in the cane growing areas of been considered one of the biggest
Louisiana, where farmers began beneficiaries of political connections and
harvesting sugar cane in the 1790s, trade protection. Besides restrictions on
the industry is preparing for its 223rd imports, Washington sets a floor price for
consecutive crop. sugar, guarantees loans and operates a
Its a crucial part of our history, our production quota system that makes it
heritage and our economy, says Jim hard for new domestic producers to enter
Simon, general manager of the the market.
American Sugar Cane League, which But across the industry from sugar
represents Louisiana cane growers. beet growers in the Midwest to the cane
But Louisianas sugar industry is fields of Louisiana industry leaders
also in decline. When Mr Simon took complain of tough times. One factor,
over as general manager of the especially in sugar beet country where
rebuild confidence with Mexico after an
acrimonious start to the year.
It is my hope that this will be the
beginning of a long and fruitful relation-
ship that will strengthen our nations,
he told reporters in March, after launch-
ing the latest round of negotiations dur-
ing a visit from Ildefonso Guajardo,
Mexicos economy minister.
Privately, some Trump administra-
tion officials pitched the talks as a way
to help the centrist government of
Enrique Pea Nieto woo the 2m Mexi-
cans working in the sugar industry.
Those workers, they warned, repre-
80% >$700,000
Potential tariffs on Sum donated by
Mexican sugar the Fanjul brothers
imports if no deal is to various political
reached by June 5 causes in 2016
sented a natural constituency for
Andrs Manuel Lpez Obrador, the
leftwing populist leading in the polls
ahead of elections next year. A victory
for the man known as Amlo would
inevitably lead to a more confronta-
tional relationship with the US.
However, once negotiations started,
according to people involved, the tone
shifted and has not budged since. At one
point, according to people on both sides
Sugar production
Rolling five-year averages
(million tons)
US
Mexico
many farmers rely on multiple crops, is
the fall of other commodity prices.
Still, Mr Simon and others also blame
Mexico and what he sees as other
unfair competition.
The latest dispute with Mexico has
nothing to do with broader debates
about sugar policy or the looming
renegotiation of Nafta, they argue. It is
simply about enforcing their victory in
a 2014 anti-dumping case.
Our farmers and millers can
compete with any farm or mill in the
world, Mr Simon says. But we cant
compete against their governments
and we are not going to sit idly by and
not [use] the laws that are put in place
to protect. Shawn Donnan
of the talks, Mr Ross told his Mexican
counterparts by mobile phone that he
needed just 15 minutes to seal the deal
with US industry. When he called back
90 minutes later, says Juan Cortina, who
as president of Mexicos National Sugar
Chamber has played a leading role in the
talks, the message was blunt and Mr
Ross sounded deflated.
Mr Cortina described how the conver-
sation went: He said, I cant sell it with
my industry. Theyve always punched
above their weight, they have lots of lob-
byists in Congress and I cant force them
to accept. Take it or leave it, and if you
dont sign . . . Ill put duties in place.
The dispute between Mexico and the
US grew out of a collision between
Washingtons long-running and contro-
versial support for sugar growers and its
obligations under Nafta, which in 2008
required the US to remove restrictions
on Mexican imports.
Angered by what they claimed was a
flood of cheap sugar, US producers
responded by launching an anti-dump-
ing case in 2014. Before punitive tariffs
were introduced, a deal was negotiated
that set a floor price and strict quotas for
Mexican imports. But that deal col-
lapsed last year after US producers
accused Mexico of gaming the system.
US farmers and refiners still accuse
the Mexican industry of mounting a
state-subsidised assault on their liveli-
hoods and communities, pointing to a
2001 government rescue of the Mexican
industry that saw 27 sugar mills nation-
alised with the last two returning to pri-
vate hands only last year.
Monopoly mission?
Last year I grew the very best [sugar
beet] crop I have ever grown and I will
lose money on it, says John Snyder, a
fifth-generation beet farmer from Wor-
land, Wyoming, who until recently was
the president of the American Sugar-
beet Growers Association, a petitioner
in the 2014 dumping case. When [Mex-
ican producers] were dumping all of
that sugar in our market it depressed
our prices substantially. And were liv-
ing with the impact of that.
If no agreement is reached by June 5
Mr Ross has threatened to impose tariffs
of 80 per cent or more on Mexican sugar
imports. Mexico is already talking about
retaliatory moves should that happen,
an option made easier by its recent vic-
tory in a World Trade Organization case
against US curbs on tuna that has given
Mexico the legal right to levy $163m a
year in trade sanctions against Washing-
ton.
The talks hinge on complicated
details like tenths of percentage
points in the polarity, or quality, of
imported raw sugar. But the underlying
discussions reveal more deep-seated
suspicions. Mexican sugar producers
believe they are the targets in another
effort by the Fanjuls and US producers
to shut them out of the US market.
7
Commerce ties Pepe and Alfy Fanjul
are major players in the US sugar
industry and the countrys politics
Punitive measure US producers
launched an anti-dumping case
against Mexican imports in 2014
Letter to Ross Fifty-one members of
Congress say tariffs on Mexican sugar
would hurt US food companies
They want more [sugar] for their
mills so [the aim is to] remove competi-
tion from Mexico and remove competi-
tion from [other companies] in the US.
They want to become a monopoly in
refined sugar cane, says Mr Cortina.
Others close to the Mexican side
see the episode as a display of the Fan-
juls power in Congress and a lesson for
the Trump administration in the diffi-
culties of taking on a well-connected
industry.
Ross is sincerely trying to get a deal
but Fanjul and his friends in Congress
are putting a huge amount of pressure
on him, says James Glassman, a former
senior US state department official who
is helping the Mexican sugar chamber.
Also lined up against the Big Sugar
industry are the confectionery makers
and other sugar users. In a letter to Mr
Ross last week, 51 members of Congress
warned that imposing tariffs on Mexi-
can sugar would only hurt US food com-
panies, which complain they already
pay an inflated price.
This is a proposal that only a guy in
the sugar industry in the United States
could love, says Bill OConner of the US
Sweetener Users Association.
Mexicos negotiating team still
believes some on the US side want to tor-
pedo any agreement.
That too would benefit the Fanjuls.
The resort where Mr Ross and his wife
were staying in 2009 is owned by the
Fanjul familys Central Romana, the
Dominican Republics largest private
sector company. Among its holdings are
sugar cane plantations that export raw
sugar to the US and would benefit from
restrictions on their Mexican rivals.
It is also clear that it would be a blow
to the Mexican sugar farmers and work-
ers already alarmed at Mr Trumps
attacks on Mexican immigrants and his
vow to build a border wall.
That Trump is very angry. Hes mad
at Mexicans. Hes racist and thats why
he doesnt want Mexican sugar, grum-
bles Carlos Vzquez, a 52-year-old
mechanic at the Tala sugar mill near
Guadalajara, who fears for his job if the
US gets its way. There could be a lot of
lay-offs in Mexico.
8 FINANCIAL TIMES
THURSDAY 1 JUNE 2017
The safer bet of a
Conservative vote
Choosing Theresa May does not mean a blank cheque on Brexit
When Theresa May called a snap gen-
eral election, many assumed the prime
minister and her ruling Conservative
party would romp home. Armed with a
decisive mandate, Mrs May would be in
the strongest possible position to open
Brexit negotiations, the biggest
national challenge since 1945.
With one week to go before polling
day, the 2017 campaign has not gone to
script. The polls have tightened. Far
from being strong and stable, Mrs May
has looked curiously brittle. She has
failed to offer a credible picture of what
life outside the EUs single market and
customs union will look like, let alone
the economic trade-offs that will inevi-
tably form part of the Brexit end-game.
The opposition Labour party under
Jeremy Corbyns leadership has been
equally vague. Both sides have engaged
in a conspiracy of silence.
This is deeply unsatisfactory. Brit-
ains departure from the EU is happen-
ing at a time of great geopolitical uncer-
tainty. The western alliance is eroding
due to US President Donald Trumps
erratic foreign policy, combined with a
legacy of European fecklessness. Para-
doxically, Brexit and Mr Trump may be
propelling greater unity within the EU,
especially after Emmanuel Macrons
win in the French presidential election.
A more solid European front built on a
renewed Franco-German alliance is
not necessarily good news for the UK.
In these circumstances, it is a sad
indictment on the state of Britain that
neither of the main party leaders is par-
ticularly impressive. The Financial
Times has no fixed party allegiances.
This publication stands for a liberal
agenda: a small state, free trade, free
markets and social justice. Neither Mrs
May nor Mr Corbyn stands four-square
behind these principles. Neither has
offered tax and spending plans that are
credible, given the short-term risks fac-
ing the economy.
Mrs May recognises the inequalities
that need addressing in Britain and the
divisions that need healing. But the
Conservative manifesto is an amalgam
of the sublime (the great meritoc-
racy) and the ill-judged or badly pre-
sented (plans for social care reform).
Proposed interventions on energy and
telecommunications markets and
worker representatives on boards mir-
ror the market meddling of Ed Mili-
The World Banks
dealings with Trump
The institution should not trade personal favours for US funding
Pity the World Bank. Challenged by
other lenders in its key role of provid-
ing finance to developing countries, it is
battling for legitimacy as it tries to
reflect the rising influence of emerging
markets and grappling with discontent
among its staff. On top of this comes
hostility from the administration of
Donald Trump, who has threatened to
cut the US funding contribution.
The response of Jim Yong Kim, the
banks president, appears to be to put
bank services at Mr Trumps disposal.
He has offered to set up and administer
a fund for womens entrepreneurship
championed by Ivanka Trump, the US
presidents daughter, and offered to
provide expertise for Mr Trumps
planned infrastructure plan.
Looked at narrowly, neither of these
actions is outside the banks remit, and
pursuing them may be politically
astute. But such an obvious trading of
favours for funding falls well short of
required standards of probity, particu-
larly for an agency that insists its bor-
rower countries improve governance.
The initial capital for the fund,
$200m from Saudi Arabia and the
United Arab Emirates, justifiably
raised some eyebrows, given the Sau-
dis record on womens rights and the
banks commitment to gender equality.
And although the bank already admin-
isters a number of standalone funds,
making a deal with a presidents daugh-
ter presents a conflict of interest. The
bank will have political difficulty pull-
band, the former Labour leader. The
manifesto is overloaded with legisla-
tive commitments that cannot possibly
be fulfilled in the next parliament,
given the preponderance of Brexit.
Most concerning is the renewed Tory
commitment to reduce net migration
to the tens of thousands. If fulfilled,
this would damage the UKs flexible
labour market and harm economic
growth. It is hard to reconcile the
pledge with Mrs Mays promise of an
outward-facing Global Britain. The
pitch was intended to appeal to stray
UK Independence party voters but it is
best described as open for business,
closed for foreigners.
Yet the alternative to Mrs May is
worse. Mr Corbyn is a fringe figure who
has spent his entire political career in
opposition to his own Labour leader-
ship. Despite his recent media makeo-
ver, he is a pacifist relic of the 1970s, in
hock to the trade unions, with no grip
on economic issues. It is no accident
that the arrival of Mr Corbyn and his
hard-left supporters in mainstream
politics has coincided with a revival of
anti-Semitism and misogyny. Labours
team is unfit for government, let alone
the delicate Brexit talks. The Liberal
Democrats have failed to make an
impact with their pledge of a second EU
referendum. All the evidence points to
the end of European-style coalition and
the return of two-party politics, with
the exception of Scotland where the
independence movement remains
slightly diminished but a potent force.
Faced with such uncertainty at home
and abroad, Mrs May is the safer bet.
But accepting her as prime minister
does not amount to a blank cheque. A
substantially increased Conservative
majority, even a landslide, could lead to
an increase in the number of hardline
Eurosceptics, who advocate a crash exit
from the EU, a contemporary version
of the Charge of the Light Brigade.
If Mrs May is returned, her manage-
ment style must change. Her inner cir-
cle should be widened beyond the cur-
rent Praetorian guard. The next few
years will require the best and brightest
and, yes, experts. Mrs Mays gamble on
a snap election may pay off. Her resolve
on Brexit is not in doubt; but her ability
to deliver the best deal for Britain in
terms of the closest possible relation-
ship with the EU is worryingly unclear.
ing out if the fund underperforms.
Mr Trumps fondness for mixing
public policy with personal considera-
tions is not the least of his many flaws.
But for the bank, securing continuing
funding from the US is not worth the
blow to its credibility that such a quid
pro quo would deliver.
The banks legitimacy is already
compromised by the time-honoured
stitch-up whereby an American always
holds the presidency, purely in order to
persuade Congress to sign off contin-
ued US funding for the institution. This
attempt to curry favour with the US
administration strengthens the argu-
ment for a truly merit-based appoint-
ment. Mr Kim was not the best candi-
date when he was appointed in 2012,
but the unspoken US lock on the presi-
dency carried the day.
One suggestion to deal with the cur-
rent problems, admittedly an ambi-
tious one, does present itself. Angela
Merkel, the German chancellor, said
over the weekend Europe should take a
stronger role in global governance. Fill-
ing a funding gap at the bank created by
a US withdrawal would be an excellent
way to show that Europe is serious.
Mr Kim is in a difficult position. The
World Bank does not normally have to
deal with a White House that seems so
indifferent to its continued existence.
But risking the banks credibility by
appearing to engage in personal
favours for the US president is not the
way to proceed.
Chancellors speech signalled importance of continental unity
Sir, Gideon Rachman misses the point
in criticising Chancellor Angela
Merkels comments about the wests
alliance (Comment, May 30).
First, Ms Merkel is facing an election,
and her comments in a rally must be
taken as part of her campaign strategy.
US president Donald Trump won with
scare tactics about bad hombres and
Muslims. Brexiters won by creating a
panic about pesky Europeans sucking
up the UKs resources. Surely she can
be allowed a bit of criticism quite
justified in her case after the
developments of the past few months
to create cohesion among her
supporters. Her new ally Emmanuel
Macron went further and lumped
together Mr Trump. Vladimir Putin
Millennials should note
changing pension policies
Sir, Sarah OConnors article on
pensions (Cheer up, millennials: your
pensions could be even worse,
Comment, May 31) did not focus on
state pension provision in the UK. So it
did not give a complete picture of
recent policy changes and their
implications for the future. These
implications are mixed; but they
deserve some attention.
From April 2016 a single-tier state
pension replaced the previous basic
pension and earnings-related provision
entirely. This single-tier pension is
higher than the previous basic pension
on its own. For the young people she
describes particularly the self-
employed this is a significant
development.
But on the minus side, the abolition
of any earnings-related state pension
means that anything above the single
flat-rate pension can only be obtained
via the private sector, either as a
personal pension or through the
employer. Thus we lose the ability to
proactively shape that earnings-related
state provision to reflect social
priorities such as redistributing
towards the lower paid and those
taking time out for caring. These
priorities are yet to be demonstrated in
private auto-enrolment pensions. This
has more negative implications for the
millennial generation.
Auto-enrolment needs to be set
against this policy background. But
unfortunately the article provides a
perfect illustration of perhaps the most
significant factor about young
millennials and their pensions that
they may no longer consider the
relevance of state provision at all.
Fran Bennett
Oxford, Oxon, UK
No surprise bitcoin
boomed at a time of QE
Sir, The recent rise in popularity of
cryptocurrencies, as discussed in
excellent articles by Izabella Kaminska
and Richard Waters (Market Insight,
May 26; Inside Business, May 26), is
surely a natural further consequence of
global quantitative easing.
If central bankers can seemingly
print currency tokens with impunity
in order to finance whole economies, it
seems churlish to frown on anyone else
who tries to do the same on a smaller
scale.
Mark Boulton
Winkfield, Berks, UK
Karachi emerges
slowly from
decades of
darkness
Notebook
by Henny Sender
Letters
and Recep Tayyip Erdogan, which is
what many are thinking but do not
have the courage to express openly.
Second, Mr Trump is going to be
there for four years at least, and if he is
not, it is going to be Mike Pence, and
even if somehow both disappeared, this
does not change the fact that almost
half of the population of the US did
support the concept of America First,
versus Leader of the Free World.
Third, is it really true that Germany
has been freeriding on US military
spending? Germany, by choice and
historical legacy, gets into fewer wars
and conflicts but spends a lot of
resources to reduce risks of terrorism
and violence by other, more peaceful,
means, including helping refugees.
Give airlines more market
share at Heathrow
Sir, The introduction of competition
between Heathrow, Gatwick and
Stansted through government action in
breaking up the former BAA monopoly
has dramatically improved the
customer experience, especially at the
two smaller airports. Surely now is the
time to introduce proper competition
between airlines at our major national
hub airport Heathrow the situation
where one airline can control over 50
per cent of the take-off and landing
slots at an airport cannot be justified.
It has been well documented that BA
is no longer the UKs national carrier in
any real sense its tax domicile,
ownership and management are not
British so why is it allowed to retain
this quasi-monopoly position? If there
had been (say) five major airlines with
a 10-20 per cent market share at
Heathrow, this weekends awful
experience for customers would have
been minimised and the terrible
arrogance shown by BA management
hopefully would be another relic of the
UKs industrial past.
David Kassler
London SW13, UK
North Korean leaders
desk pose recalls Cleese
Sir, It would appear that North Koreas
current leader has very different
cultural tastes from his father, Kim
Jong-il, who was reported to be a fan of
Elvis Presley. Judging by his choice of
furniture while observing a missile test
and its rather incongruous location a
desk in an open field (May 30) Kim
Jong Un must be a secret admirer of
Monty Python. In between sketches the
Arif Habib recently bought a 1,300-
acre plot in Karachi that was
originally the site of a nationalised
steel plant. Among the problems the
founder of Arif Habib Corp, the
Karachi-based conglomerate, faced
was the fact that squatters occupied
250 acres of the property.
These illegal residents had found
their way there thanks to the so-called
land mafia; gangs of professional land
grabbers, many of whom came from
the restive border region of Khyber
Pakhtunkhwa. The main source of
income for these gangs is the
protection money they receive from
such squatters.
Lots of gangs roam Karachi, which
is one but hardly the only reason why
it is not exactly a normal city. There is
virtually no public transport; no
metro and hardly any buses. Few
tower cranes or skyscrapers dot the
skyline. Karachi used to be known as
the City of Lights; now, after twilight
descends, darkness follows. Once
considered more cosmopolitan than
Mumbai, today it looks decades
behind that Indian metropolis.
There are few beggars, thanks to the
Islamic tradition of giving known as
zakat. There are also few cinemas and
other places of entertainment, a
legacy of the days when people did not
dare venture out for fear of
kidnapping and mugging.
Sophisticated residents believe they
are hostage to the worst traits of
Islam, yet they also benefit from the
kindest and most charitable elements.
The problems of Karachi are those
Fourth, Ms Merkel did not announce
separation from the US and the UK as
Mr Rachman states; the US and the UK
did, each in their own way. All she said
is that friendly relations have to
continue, but that the times in which
we can fully count on others are
somewhat over and that Europe must
understand the message that is clearly
coming from the others and be in
charge of its own destiny.
Jem Eskenazi
London N3, UK
Sir, According to Gideon Rachman
(Comment, May 30), German
chancellor Angela Merkels speech at
an election rally in Munich was a
blunder. I would politely disagree.
British comedy group often featured
John Cleese, in black tie and displaying
mock gravitas, sitting at a news desk in
unexpected and humorous locations
such as fields and on beaches. I will
leave other FT readers to speculate on
what this may mean for international
relations.
John Moore
Guildford, Surrey, UK
Britains effort on Balkans
highlights future challenges
Sir, It is generally accepted that Boris
Johnson, UK foreign secretary, has little
influence in Europe as a result of 25
years denigrating and sneering at
Europe. But his efforts to knock heads
together in the west Balkans should be
commended (Britain is making short-
sighted diplomatic moves in Europe,
May 29)
The EU does not have the best of
records in the Balkans, with five
member states refusing to recognise
the independent state of Kosovo as
they pander to Serb revanchism and
the claim that Kosovo will one day
return to its previous status as a Serb
province.
As long as the bloc is divided on a
simple issue of recognising a small
European country and leading EU
member states are not willing to speak
truth to power in Belgrade, the role of
Brussels is limited. In this vacuum a
member state like Britain with its
professional diplomatic experience can
and should play a useful role. Of
course, post-Brexit Britains diplomatic
reach and influence in Europe will be
nugatory.
Denis MacShane
London SW1, UK
Customers consider more
than price in competition
Sir, John Thornhill is right (Comment,
May 30). Competition policy has for
too long been steered by economists
who think that the only concern of the
market is price, apparently assuming
that, because they cannot measure
other factors objectively, those factors
are irrelevant. So they laud the likes of
Amazon for their ability to push down
prices, ignoring those to whom other
factors matter, such as their customers.
If it is to provide any societal benefit,
competition policy needs to allow for,
and encourage, a range of approaches,
not just those aimed at reducing us all
to a level of cheap uniformity.
Philip Haberman
Radlett, Herts, UK
of Pakistan writ large. It is ranked as
one of the least liveable and most
dangerous cities on earth. Not long
ago the country was considered close
to becoming a failed state. So if the
government can indeed restore law
and order in Karachi it will be a big
step forward both for a nation of more
than 200m people and for the region
generally.
It is hard to believe that this is a city
of as many as 25m people and could
even be the largest city on the planet,
exceeding Tokyo or Mexico City. The
latest census was nearly 20 years ago,
which is one reason no accurate
statistics exist today. Since then the
city has expanded; its population
growth swelled equally by new births
and by an influx of immigrants and
refugees.
Weve lost the glory and shine of
Karachi, unfortunately, says Shahbaz
Sharif, chief minister of Punjab,
Pakistans largest province, and the
brother of prime minister Nawaz
Sharif. The [central] government is
committed to restore Karachis
splendid law and order tradition.
That law and order is maintained by
the Rangers and the Army rather than
the local police force, which is widely
regarded as both corrupt and weak.
There is still a long way to go
however. Karachi remains
dysfunctional. We are ground zero,
says Naheed Memon, chairwoman of
the Sindh Board of Investment, Sindh
being the province in which Karachi
sits. We cant even collect our own
garbage.
Thursday 1 June 2017
Email: letters.editor@ft.com
Fax: +44 (0) 20 7979 7790
Include daytime telephone number and full address
Corrections: corrections@ft.com
Her message that Europeans must take
their destiny in their own hands was
spot on, and was intended for
European and German citizens. For
fellow Europeans, it serves as an urgent
warning that the EU27 should put their
differences aside and start to act as one
strong and united continent driven by
values. For her fellow Germans, her
message was intended to pave the way
for increased German willingness to
support those other eurozone countries
which, just like Germany in the
beginning of this century, struggle to
commit to structural reforms to
increase economic growth and
competitiveness.
Herman Kaemingk
Hilversum, Netherland
America can withstand
a Trump presidency
Sir, It is possible to see the early Trump
presidency as the end of the US-led
world order, as Martin Wolf would
have it (Comment, May 31). Yet is this
not rather needlessly alarmist? Mr
Trump is a bad man, and a childish and
reckless president, but every day
shows how little power he really has to
change his own country, let alone the
world.
Mr Wolfs three challenges facing the
world prosperity, peace and
environmental protection are real
and pressing ones. But how much
damage has Mr Trump really done on
any of these three fronts? He has made
threatening noises about trade, and
cast a rhetorical pall over greater
globalisation; yet the global economy
keeps ticking along pretty steadily, and
it is in any case legitimate to ask
whether more globalisation is the
answer to all economic problems.
As for peace, while Mr Trumps
disdain for traditional diplomatic
alliances is troubling, his fondness for
despotic leaders makes him if anything
less likely to be drawn into conflict
over such trifles as democracy and
human rights. If he has an instinct for
conflict it seems to be easily satisfied
with some blustering on Twitter and
the occasional bombing of a terrorist
hideaway.
The presidents blithe disregard for
the environment (FT.com, May 31) will
do some harm in the short term, and
yet, both at home and abroad his
attitude looks increasingly archaic and
irrelevant. With everyone from the
Europeans to the Chinese to the head
of ExxonMobil speaking out in favour
of fighting climate change, one may
reasonably hope that Mr Trumps
opposition to the Paris accords will
merely spur others into action.
Americas moral standing in the
world, and its accustomed role as the
head of the west, are suffering and will
continue to suffer. But the country has
muddled through worse things than Mr
Trump before, and returned to lead the
free world again. It would be a pity to
write it off so soon.
David A McM Wilson
Jesus College, Cambridge, UK
COMMENT ON FT.COM
David Gardner
US president Donald Trump understands
little about what breeds and who encourages
the regional and international plague of
Sunni jihadism
www.ft.com/opinion
Instead, it is Chinese companies that
have received the contract to do so.
To be sure, progress has been made
in eradicating the scourge of the
gangs, although they have not entirely
gone away. The mix of crime and
politics is, sadly, a big feature of life in
both Karachi and in the country. The
gangs operate in collusion with a
number of political parties, their ties
reinforced by regional and clan
loyalties.
Meanwhile, the state of the property
market is symptomatic of the ills that
plague Karachi. Much of it is part of
the black economy, which bankers
calculate is almost as large as the
official one.
Developers say they have to pay
speed money to government
officials and the gangs if they are to
get their legal rights, while the
squatters demand market value to
vacate the properties they illegally
occupy.
After the terror attacks in the US in
September 2001, most wealthy
Pakistani families put their money
outside the country.
In recent years, though, some of the
money that flowed to Dubai and to tax
havens such as Panama has come
back through informal channels.
Much of it has come into the property
market.
Karachi remains a long way from
what it once was. But at least it is no
longer quite as dark as it was a few
years ago.
henny.sender@ft.com
Thursday 1 June 2017
AMERICA
Edward
Luce
I
t was a quirk of fate that Zbigniew
Brzezinskis visa application to
Britain was turned down. Had the
scholar gone to London in the
1940s instead of the US, there is
scant chance he would have achieved
high office let alone shaped the course
of a superpower. But it was Washing-
tons gain.
Brzezinskis death marks the passing
of an American era. It is a sad irony that
he died just as Donald Trump was dan-
gling the prospect of a weakened Nato
before Russia. Not many outdid
Brzezinskis cold war hawkishness.
Fewer still could outclass his strategic
brain. A handful of others notably
Henry Kissinger, Brent Scowcroft and
George Shultz are still with us. But
Brzezinski was in a category of his own.
Chemicals were
the future once
but no longer
BUSINESS
John
Gapper
I
n the 1967 coming-of-age film The
Graduate, the alienated hero Ben
Braddock, played by Dustin Hoff-
man, is taken to one side at a Cali-
fornia party and given career
advice by a friend of his parents. Plas-
tics . . . Theres a great future in plastics.
Think about it, says Mr McGuire.
The scene is meant to convey the hor-
rible claustrophobia of bourgeois life
but Mr McGuire was right: there was a
great future in plastics. The industry of
the 1960s was filled with innovation:
materials from Kevlar to Gore-Tex were
being invented and Neil Armstrong
walked on the moon in boots with Dow
Corning silicone rubber soles.
The films poster showed Mrs Robin-
son, Bens seductress, drawing up one
leg a stocking made of silk or perhaps
DuPonts Nylon. Artificial materials
refined from oil and gas were replacing
silk and cotton in clothing and being
adopted for all kinds of industrial and
medical products. Ben would have been
wise to heed Mr McGuire.
Markets now offer the opposite les-
son: there is not a great future in chemi-
cals. If there were, then companies such
as Dow Chemical, DuPont, Evonik and
AFRICA
David
Pilling
O
fficial campaigning started
last weekend for Kenyas
general election. In August
voters will choose not only
their next president but
also 416 members of the national parlia-
ment, 47 county governors and deputy
governors and 1,450 members of 47
county assemblies. Nationally, Raila
Odinga, a perennial opposition candi-
date, will challenge President Uhuru
Kenyatta for power. But many fear that
the next 10 weeks of rallies and rousing
speeches will be less a festival of democ-
racy and more an orgy of greed. Politics
in Kenya, they say, is big business.
People get into public office simply
to steal, says Patrick Lumumba, who
used to run the Anti-Corruption Com-
mission. The violence associated with
The untimely death of American statecraft
The threats confronting todays
America require the meritocracy of
intellect it nurtured in the cold war. The
US under Mr Trump faces a rising
China, a menacing Russia, a disintegrat-
ing Middle East and the fraying of the
transatlantic world. Navigating such
hazards requires expertise and courage.
Neither quality is highly prized in Wash-
ington today. It is hard to imagine some-
one like Brzezinski rising from any-
where else than the Ivy Leagues cold
war campuses. America then was
spurred by the Soviet threat into a quest
for global knowledge. With his Polish
background, and deep Russian scholar-
ship, Brzezinskis skills were prized. But
the past is another country. Mr Trumps
America is foreign to the one that sought
counsel from Brzezinski.
If there is anything positive in
Brzezinskis passing, it is to remind the
US of what it had and could still have.
His career would have been impossible
without Americas spirit of openness.
Born in Poland in 1928, Brzezinski never
shed his foreign accent. Nor did he lose
the tragic sense that came from watch-
ing his homeland razed by the Nazis and
ChemChina would not be involved in a
series of mergers, the biggest wave of
restructuring since conglomerates spun
off their pharmaceutical divisions in the
1990s.
Growth and innovation the future
that Mr McGuire recommended as
chemical engineering came into its own
in the 1960s are in short supply.
Instead, balance sheets are bulging with
cash for which chief executives have
struggled to find uses. Corporate raid-
ers, also known as activist hedge funds,
are knocking on the door.
The elements have combined at Akzo
Nobel, the Dutch paints and speciality
chemicals maker, which has rebuffed
takeover attempts by PPG, founded in
1883 as Pittsburgh Plate Glass. Elliott
Management, the hedge fund, this week
lost a legal battle to eject Antony Burg-
mans as Akzos chairman.
Delve inside chemicals conglomer-
ates and you will find many venerable
names. Akzo includes the old Imperial
Chemical Industries, which split itself 25
years ago into ICI and Zeneca, the
pharma group that is now part of Astra-
Zeneca, under pressure from Hanson, a
conglomerate raider.
This merger boom carries an echo of
those days. Companies such as ICI and
Hoechst spun off pharmaceuticals and
agrochemicals to unleash them from the
low-margin business of refining chemi-
cals from ethane and naphtha. Their
successors are reshuffling again, with
complex materials and speciality chem-
icals as the new hopes.
Money trumps civic duty in Kenyas elections
Kenyan elections, he says, has more to
do with money than with the supposed
ethnic rivalries politicians whip up at
polling time. Political office is like win-
ning a lottery and people are willing to
kill or maim for it, he says. Three out of
four presidents since independence
from the British in 1963 have been from
the Kikuyu ethnic group, Kenyas larg-
est. But that has more to do with patron-
age networks than with tribal loyalty.
For years, ordinary Kenyans have
pushed back against corruption. Yet if
anything, many say, politicians are
worse than ever. The assumption is that
money, not civic duty, is the motivation
to seek office. Why else, people ask,
would candidates lavish such vast sums
on their campaigns? Isaac Mwaura, who
hoped to become the governing Jubilee
coalitions candidate for MP in Kiambu
County, just outside Nairobi, told local
media he had spent Ks29m shillings
(about $280,000) on his losing primary.
He garnered just 4,632 votes, less than
half the tally of his opponent whom, he
said, had presumably spent even more
on securing victory.
You have to ask what is the return on
FINANCIAL TIMES
Comment
Soviets. That dimension gave an edge to
his insights that other Sovietologists
lacked. Even before becoming Jimmy
Carters national security adviser
Brzezinski foresaw that the Soviet
Union would be sunk by bureaucratic
sterility.
Much the same clear-mindedness
shaped the Camp David agreement
between Israel and Egypt, which
If there are budding young
Brzezinskis and Kissingers
available, they are unlikely
to be found in Washington
Brzezinski always said should be
extended to the Arab world as a whole.
He had better luck with China, with
which he normalised relations. He
toasted the deal with Deng Xiaoping at
his colonial-era farmhouse in Virginia.
Brzezinskis mark on American for-
eign policy is often unfairly overshad-
owed by Mr Kissingers another refu-
gee from war-torn Europe. Neither
It has more to do with financial engi-
neering than chemical engineering. The
giant leaps of the past have given way to
smaller steps. There is plenty of activity
in laboratories, where scientists are
developing materials from brake fluids
to emulsifiers and thermoplastics, but
these are incremental advances.
This has been dubbed a game of
inches by McKinsey, the consultancy.
With the exception of innovative crop
protection, we would be hard pressed to
name a single chemical blockbuster
developed in the last 10 years, wrote a
group of partners in March.
It is a result of success: buildings, air-
craft and cars are stuffed with materials
from recent decades. Everything you
see when you drive a car, from plastics
The merger boom echoes
the era of The Graduate,
when the industry was
at its most innovative
investment, says Alphonce Shiundu, a
political journalist who estimates that
MPs earn above Ks1m a month, includ-
ing basic salary and a plethora of car
allowances, committee-attendance fees
and per diems. Even so, he says, you
would need to spend years in office to
recoup the costs of being elected.
Mr Lumumba says salary is just the
start of it. Many politicians find other
Political office is like
winning a lottery and
people are willing to
kill or maim for it
ways, he alleges. A report by the audi-
tor-general last June found that about
$200m had gone missing from the
National Youth Service, which had paid
out grants to bogus companies. Many
academics point to what they say is the
grossly inflated $4bn cost of a Chinese-
built railway as evidence that officials
are raking commissions off the top.
What is more, says Mr Lumumba,
would be welcome in the Trump admin-
istration. Nor was there much appetite
for virtuosity of statecraft in Barack
Obamas White House or the Bush and
Clinton presidencies before. Brzezinski
ran the national security council with
just 25 people. Today it has burgeoned
to over 400. Brzezinski complained that
bureaucratic inflation suffocated room
for strategic thinking. Though he
dreaded Mr Trump, he was disap-
pointed by Mr Obama. The question is,
does Obama have it in his guts to strate-
gise as well as sermonise? Brzezinski
asked in 2012. I dont know the answer
to that. I really dont know.
Then there was his courage. No figure,
other than Mr Kissinger, orchestrated a
presidencys entire foreign policy. When
asked why he had sidelined Cyrus
Vance, the secretary of state, in favour
of Brzezinski, Carter said: Because Zbig
sent me 10 ideas a night, and I was lucky
to get a single idea a month out of the
state department. Are there budding
young Brzezinskis and Kissingers avail-
able to work for future presidents? It is
quite possible. But they are unlikely to
be found among Washingtons law firms
to polymers and batteries, comes from
chemicals, says Mike Shannon, KPMGs
global head of chemicals.
That creates a big market but not one
with exciting prospects. US companies
have invested heavily in commodity
refining trying to profit by cracking
ethylene from cheap shale gas. Saudi
Aramco is adding to global overcapacity
by forming a joint venture with Dow
Chemical to build a $20bn manufactur-
ing complex in Jubail.
The combination of a capacity glut
and an innovation drought has turned
chemicals companies into unstable
compounds. They are pulled into merg-
ing by having to cut costs in commodity
operations, while being pushed towards
more specialisation. They often seek to
do both things at once.
Dow Chemical and DuPont launched
their merger in 2015 with a plan to split
the amalgamated company into three
divisions. That was not precise enough
for Third Point, the aggressively activist
US hedge fund, which this month
pushed it to divide into six parts, includ-
devolution which split Kenya into 47
counties in 2013 has multiplied
opportunities for graft. Though he
applauds the idea of bringing politics
closer to communities, he worries that it
will unleash new evils. If Ali Baba has
40 thieves, he says, Kenya has just
multiplied the opportunity for thieves
to 47. One Ali Baba stealing at the centre
and 47 thieves stealing in the devolved
units.
Electoral violence is common. In
2007 more than 1,000 people were mur-
dered, hundreds of thousands pushed
from their homes and thousands of
women raped in an eruption of killing
that many allege was orchestrated.
Though elections in 2013 were more
peaceful partly because two of the
warring factions joined forces dozens,
perhaps hundreds, still died. One west-
ern diplomat agreed that electoral vio-
lence was better understood in terms of
money than ethnicity. There are bil-
lions at stake and a lot of people simply
cant afford to lose.
Candidates are pulling out all the
stops to ensure victory. Local media
reported they had imported 50 helicop-
and think-tanks. The America in which
Brzezinski thrived valued independent
thinkers. Todays climate makes it hard
for a contrarian to advance in govern-
ment. It is better to be wrong in good
company than right and alone. Brzezin-
ski was pilloried in 2003 for opposing
the Iraq invasion. He was vindicated,
but it harmed his influence.
What did Brzezinski make of Mr
Trumps foreign policy? In one of his
final interviews, he said there was little
sign of any thought at all. The United
States is currently a kind of wonderland
with the president speaking on subjects
of his choice . . . none of which are stra-
tegically substantive. It was a gentle
summary offered before Mr Trumps
damaging visit to Europe. He would
have been devastated to see the USs
withdrawal from the Paris deal on global
warming. Brzezinskis legacy is a testa-
ment to the value of knowledge. The
more you understand the world, the
higher your chance of shaping it. By that
measure, America is rapidly squander-
ing its influence.
edward.luce@ft.com
ing spinning up to four companies out of
its speciality chemicals arm.
Dow and DuPonts independent direc-
tors have promised to rethink after the
merger is completed but there is no
longer a clear answer to the question of
how to structure a large chemicals com-
pany. The options range from placing
thousands of products within a single
corporate entity to putting bundles of
them into their own enterprises.
This promises plenty of work for con-
sultants and bankers, merging and
dividing companies long into the future.
It is only a means to an end for hedge
funds, though; the underlying purpose
of Third Points intricate restructuring is
that it wants Dow and DuPont to hand
$40bn back to their shareholders within
two years of merging.
It is enough to make one long for the
era when Dow was Dow, ICI was ICI, cor-
porations were simpler, and there was
more of a future in chemical engineer-
ing than financial. Think about it.
john.gapper@ft.com
ters at a cost of about $3.8m each for
the campaign. The Independent Elec-
toral and Boundaries Commission,
which oversees polling, last year capped
campaign expenditure; however, limits
were later suspended by the High Court.
Many Kenyans are inured to the mon-
ey-infused nature of politics. At election
rallies some expect to receive cash, even
if only a few dollars. Eliud Mutembei, an
agricultural field officer in Meru
County, once campaigned for his local
assembly but gave up when would-be
voters asked him for money. No man
licks an empty hand, they told him,
quoting a Swahili proverb.
Mr Kenyatta has criticised high sala-
ries for politicians and civil servants,
which gobble up half the national
budget. In a recent Financial Times
interview, he conceded there was little
difference in the platforms of the com-
peting parties, implying that elections
are more about patronage and ethnic
allegiance than policy. Ideologically,
he said, we are all pretty much the
same.
david.pilling@ft.com
9
Chinas financial
clampdown
is a risky
business
OPINION
George
Magnus
T
he financial crackdown in
China in the past three
months flies in the face of
the conventional wisdom
that nothing would be
allowed to happen to rock the boat
ahead of the important 19th Communist
party congress later this year. There is
no doubting the serious intent of the
regulatory squeeze, but it may never-
theless not persist.
The catalyst for the crackdown was
probably President Xi Jinpings personal
support for co-ordinated measures and
edicts by the main regulatory agencies:
the Peoples Bank of China and the
banking, securities and insurance regu-
latory commissions. The heads of the
securities and banking commissions
were replaced by reform-minded and
highly respected people. In April the
head of the insurance commission was
placed under investigation for viola-
tions of party discipline, and fired.
This clean-up has been partly about
weeding out those who have indulged in
the abuse of financial regulations and
discipline; but it has also extended the
anti-corruption campaign into the
finance sector for the first time. From
Mr Xis standpoint ahead of the
Congress, therefore, the timing is quite
fortuitous.
Guo Shuqing, the head of the banking
commission, vowed to clean up the
chaos in the banking system. He
aimed to limit speculation and excessive
risk-taking, and penalise lax or corrupt
management. The authorities are urg-
ing banks to strengthen risk control sys-
tems, to curb the issuance of wealth
The authorities reckoned
that doing nothing was
probably worse than
trying to restore order
management products, and to account
for them properly so that banks do not
evade capital adequacy regulations.
The insurance commission has been
active in banning or restricting the issu-
ance of universal life insurance poli-
cies investment products that car-
ried higher risks than they claimed to
and bringing the sometimes reckless
behaviour of leading insurance compa-
nies to heel.
The central bank has allowed some
market interest rates to rise since the
start of the year, making liquidity more
expensive and discouraging fundraising
at very short-term maturities for a
broad range of banks and financial firms
in the shadow banking sector. For many
of them, wholesale funding now
accounts for more than a third of their
deposit liabilities three times as much
as five years ago.
The effects of the crackdown are not
visible in conventional measures of
credit expansion. However, the central
banks separately published data on
non-banking financial firms and the
government sector reveal a significant
year-on-year slowdown from more than
20 per cent at the end of 2016 to about 15
per cent in April.
This is certainly welcome, as the
authorities try to draw a line under
years of financial excess, indiscipline
and unacceptable leverage. They proba-
bly reckoned that doing nothing was
likely to be worse for financial stability
than the risk of trying to restore order.
Accordingly, we should expect the
squeeze to persist for now but not if it
exacerbates the slowdown in the econ-
omy that seems to be starting again.
It appears a safe bet, therefore, that
the authorities will back off again before
long and resume the stop-go policy
cycle. Chinas commitment to a 6.5 per
cent growth target, and the economys
credit-dependency, strongly suggest
that the current squeeze is not really
about regaining control of credit crea-
tion, and the risky ways in which finan-
cial companies fund assets.
As the liabilities of these companies
continue to grow in size and riskiness,
though, the government will have to
engage with both regulatory and macro-
economic tightening and take the eco-
nomic and currency consequences. Oth-
erwise, it faces a more abrupt and forced
deleveraging. What we are watching
today is a dress rehearsal for a bigger
show within the next two years or so.
The writer is an economic consultant and
associate at Oxford universitys China
Centre
10 FINANCIAL TIMES Thursday 1 June 2017

Eurozone: common bond

The spread between yields on bonds sold by eurozone countries has narrowed as a result of central
bank intervention. Without a new form of debt support, spreads are expected to rise again once QE ends

Twitter: @FTLex Email: lex@ft.com
Ericsson:
swing time
Fifty years ago a pop band asked if
listeners believed in magic. It would
seem that fans of Ericssons newish
chief executive Brje Ekholm do.
Shares in the Swedish telecoms
equipment maker have jumped 38 per
cent since he was appointed. That is
more than Finnish rival Nokia, but it
has not stopped a new shareholder
demanding more change.
Mr Ekholm has promised to remove
the rocks from Ericssons business,
retaining the roll. But Cevian Capital
wants to see new members on
Ericssons board to ensure that his plan
is delivered. On Tuesday evening, it
revealed that it has taken a stake of
more than 5 per cent in Ericssons B
shares, and may increase that further.
Mr Ekholms major target depends
on erasing losses from Ericssons two
smaller units: IT and Cloud, and Media.
Together, these account for roughly a
quarter of sales. The rest of the
revenues come from Ericssons core
Networks unit, which supplies
networking equipment and, in recent
quarters, all the operating profits. Mr
Ekholm says that by fixing the
troublesome units, he can get group
operating margin to double after 2018
from last years decade-low of 6.6 per
cent. That would take group margins
back only to the normalised level of
Networks.
So far, analysts are willing to dance
near him, if not exactly lose themselves
in the music. Ericssons ratio of
enterprise value to 2019 forecasts for
earnings before interest, tax,
depreciation and amortisation two
years forward still looks about a fifth
cheaper than Nokia. Cevian, too, does
not necessarily dispute the new plans
aims. It has faith in Ericssons core
business. Its beef is that Ericssons
board is largely the same as the one
that sanctioned the previous failed
growth strategy. There is also an
iniquitous split between the A and B
shares that, in effect, entrenches an old
guard. Two big Swedish shareholders,
Investor and Industrivrden, hold 8.5
per cent of the A shares but have
36.9 per cent of votes.
Singing a new tune may boost
Ericsson short term. Longer term, the
company will still need a new strategy.
The boost to revenues from the
rollout of 4G tech is largely over, but
the move to 5G will not begin in earnest
until at least 2019. The afterglow of Mr
Ekholms appointment is not going to
last that long. Cevian is right to turn up
the volume on calls for change.
Michael Kors:
2020 vision
For institutions in upheaval, the
turnround playbook is clear: come up
with a strategic report with the year
2020 in the title. The New York
Times has a 2020 document on how to
reinvent its newsroom. Deutsche Bank
promises something similar for its
business. Michael Kors has a plan to
sell more handbags: Runway 2020. In
the meantime, it is working through
something possibly called
Retrenchment 2018.
The luxury goods company had
weak full-year results yesterday.
Revenue fell by 5 per cent, same-store
sales dropped a tenth, and operating
profit was down a quarter. Its fiscal
2018 outlook was worse than hoped.
Earnings should fall by another fifth.
Kors also said it would shut between
100 and 125 stores. Closing shops is
standard stuff these days for US
retailers. Credit Suisse recently
estimated that close to 9,000 store
closures will happen this year,
exceeding the peak of 6,200 in 2008.
Such a move at Kors jars, given its
recent history.
At the end of 2012, Kors had fewer
than 250 retail stores. By April, that
number had exploded to more than
800. Having listed in late-2011 at $20,
two years later its shares were touching
$100 as it opened store after store to
keep up with unstoppable demand.
But saturation and competition have
taken their toll. The stock is now just
above $30. Kors admitted its product
and store experience did not engage
and excite customers. It is trying to
re-energise its style. It is also building a
menswear business as well as
expanding into China. It believes both
could turn over $1bn.
Kors also admitted that its retail
strategy has to adapt. Online sales are
proliferating. The company still
believes high-quality stores are
essential to its brand it just needs
fewer of them running constant
promotions. Perhaps 2018 is its
Eurozone government 10-year bond spreads
Over Bund yield (% points)
2012 13 14
Sources: Thomson Reuters Datastream; Eurostat
Eurobonds are the dream that
refuses to die. No matter how often
Germany rebuffs the notion of jointly
issued debt, eurozone officials cannot
let go. The latest iteration is
European safe assets, a fixed-income
instrument to compete with US
Treasuries. It is likely to receive as
frosty a reception as its predecessors.
Proponents argue that debt
distribution is a stumbling block to a
genuine union. Borrowing costs vary
according to creditworthiness, one of
many imbalances in the region. The
European Commissions vision for
the future includes a common asset
class, denominated in euros. To begin
with, it suggests a security issued by a
commercial entity but backed by
sovereign bonds. Later, it envisages a
dreaded year of transition. Just in
case, though, it has built in an extra
two-year cushion with a 2020 plan.
Allied Irish Banks:
surfacing
Even the sunniest optimist might
express surprise should Allied Irish
Banks trade around its book value
again. Such is the confidence around
AIB shares following this weeks news
that Irelands government intends to
sell a quarter of its 99 per cent stake.
Analysts expect it to fetch about
3bn at IPO in London and Dublin. A
pledge to ramp up mortgage lending
should drive earnings, helping to put
its dark past behind it.
Italy Spain Portugal
15
10
5 As % of GDP (2016)
0
15 16 17
more liquid form of collective debt.
The obvious beneficiaries would be
eurozone countries with the highest
levels of debt and largest borrowing
costs. Italys borrowings, at 132 per cent
of GDP, are almost double Germanys.
But for the European Central Banks
bond buying, it would be paying a lot
more than the current 189 basis point
premium over Germany to borrow.
European safe assets could provide
Italy with a source of low-cost funding.
Experience suggests they will remain
castles in the sky. In 2010, economists
came up with blue bonds, in which
eurozone countries might sell joint
debt worth up to 60 per cent of GDP.
The following year, the European
Commission suggested E-bonds, issued
by a European debt agency, to tackle
Retail banks should provide a
leveraged bet on economic growth. If
so, AIB, with a 40 per cent share of
current accounts and nearly the same
in mortgage lending, is the equivalent
of doubling down. During Irelands
financial crisis the lenders decline was
catastrophic. Thanks to high single-
digit economic growth since 2014, plus
a 21bn government bailout, AIBs
rehab has been remarkable.
Capital buffers are solid. So is
underlying profitability. Credit quality
is improving. A sustainable net
interest margin of 2.4 per cent
compares favourably with Lloyds,
which has a similarly dominant retail
position in the UK, and is slightly
higher than domestic peer Bank of
Ireland. And dividends have restarted.
But this is not yet a normal bank.
Central bank balance sheets
$tn Fed ECB BOJ
5
4
3
2 Amazon: comma club
1
2012 13 14 15 16 17
Eurozone government debt
Germany 68.3
France 96.0
Spain 99.4
Portugal 130.4
Italy 132.6
the debt crisis. A year later, the idea
of eurozone bonds was raised again,
backed by politicians and the OECD.
Each time, the idea has been shot
down by Germany, horrified at the Its market capitalisation would remain
thought of debt mutualisation. This
time will be no different. Note that
the commission paper carries no
German signatory.
But there is already a version of
pan-eurozone bonds. The European
Stability Mechanism borrows on
behalf of all eurozone nations to fund
rescue programmes. The programme
is small and countries cannot access
its funding for their own purposes.
Eurobond believers cite the ESM to
put forward their own fancies.
Without German acquiescence, they
will continue to dream on.
Yes, non-performing loans have fallen
by 70 per cent to 8.6bn, or 14 per cent
of customer loans. But use a broader
definition, taking into account
restructured loans and that ratio rises
to 21 per cent.
Declining NPLs will help drive
earnings. So will more home loans.
Mortgage lending totalled just under
6bn across the country last year, has recently revised his views and
down from around 40bn during the
peak. New housing completions have
barely budged off near-decade lows.
Lending can comfortably double.
With an economy expected to grow
in excess of 3 per cent for the
foreseeable future, both these goals are
attainable. Investors may have missed
the initial turnround. A recovering
property market, however, should
ensure plenty of upside remains.
Berkshire Hathaway,
The club is exclusive but the newly rich
tech crowd is lobbying to be admitted.
Only four companies in the US have
exchange-traded shares valued at more
than $1,000 each.
Berkshire Hathaway is the senior
member, with A shares costing almost
$250,000. Now on the brink of entry,
almost certainly disobeying the dress
code and demanding charging stations
for their electric cars, are Amazon and
Alphabet. Amazon briefly surpassed
$1,000 on Tuesday, while Alphabet, the
parent company of Google, is just a
couple of dollars shy.
By itself, this says little about the
state of the companies. Macys could
get one over on Amazon tomorrow by
doing a 50-1 reverse split of its shares.
$470bn lower, however.
The high per-share cost does price
out some small investors. Demand
from that quarter 20 years ago, and the
threat that a third-party would satisfy
it with a synthetic product, prompted a
reluctant Warren Buffett to issue
modestly priced B shares in Berkshire.
Amazon and Alphabet have split
their stock in the past, but doing so has
become less fashionable over time. A
popular argument against splits is that
retail investors should (and
increasingly do) buy index funds
rather than individual stocks.
Even without the annoying
paternalism, it is an odd time to make
this argument. Amazon and Alphabet
are only approaching $1,000 because of
their outperformance. Amazon is up a
third this year, Alphabet by a quarter;
the S&P 500 is up 8 per cent.
Active managers who bought the
FAANG stocks have trounced the
index. Those who have not like
Berkshire Hathaway itself have been
doomed to underperform. Mr Buffett
invested in Apple, but Berkshire
remains underweight on the sector.
With or without Mr Buffetts letter of
endorsement, Amazon and Alphabet
will soon qualify for his comma club.
They would be better splitting from it.
Lex on the web
For notes on todays breaking
stories go to www.ft.com/lex

CROSSWORD ACROSS
1 Nice caption, but cross it out! (6)
5 Part of a ship in port (4)
6 Frank Sinatras heart broken,
No. 15,564 Set by MUDD 4 Green light wallop! Bus nation supporting Martin initially
swerving into it (6-2) (3-2-3)
        9 Light casket in Gibraltar tipping 7 Material went this way then that,
over somewhat (6) say? (5)
10 Information required to access 8 Talk nonsense, primarily, as a
  industrial business thats model (7)
booming (8) 11 Opponent of Richard I leaves
 12 Unconventional characteristic home (7)
(8) 14 Artist, tragic character standing
 
13 Stick present beside card, around a pub (7)
 ostensibly both to open? (6) 17 However, adult was awake for
15 Double agents ultimate success the story? (9)
   (4) 18 Swinging under a power line
16 Taking part in samba, nan asking initially foolish (8)

for a potential slip-up! (6,4) 19 Party put up figure to be the PM
   19 Philanderer in decay, evidence of (7)
slowing down (5,5) 21 Occupy digs around university,
 20 Talk about scent for a flower! (4) the dregs (7)
23 Lubricate back, having accepted 22 Arctic ale (6)
  
proposal for passion (6) 24 Stay on top of toilet thats fitting
 25 Performances from memory in the bathroom (5)
improvised, its clear (8) 26 I agree with that change, not
  27 A burning passion no longer? entirely! (4)
(3,5) Solution 15,563
28 Little boy gripping male with a
% 8 5 / , ( 6 7 , 1 . 3 2 7
 
fleece thats thick (6) 2 $ 1 , 2 $ +
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(6) 1 < 7 5 6 , & $
JOTTER PAD DOWN ( ' , 7 2 5 6 + , 3
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7 8 1 ' 5 $ 7 ( $ 6 3 2 2 1
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Thursday 1 June 2017 11

Burberry Sterling/dollar FTSE 100 Rio Tinto Gold Glencore Dollar index 10-year Bund
Russia relents Dividend
rules relaxed for some 1.6% 0.25% 0.09% 2.5% 0.58% 2.4% 0.27% 1bp
NEIL BUCKLEY, PAGE 12
18.15 $1.2890 7,519.95 31.02 $1,270.1 285.1p 97.02 0.31%

CVC fund Fresh vein Chinas Fosun shows an appetite for

Russias mining market with stake in Polyus
Short
View
attracts 16bn Dan
McCrum

to set record While markets for stocks, bonds and currencies are largely
tranquil, the way asset prices are interacting displays a
high level of what statisticians might call unusualness.

for Europe The idea is related to correlation, how movements in the

price of one thing correspond to those of another.
On a normal day, changes in the price of a barrel of oil
delivered to a refinery in Texas might be expected to show
little relationship to, say, the share price of an online social
media company. The point of diversification when invest-
3 Investors scramble to take part ing is in some respects an attempt to own a collection of
assets that behave differently.
3 Buyout group cements dominant role There may be useful information in correlations as well.
If the oil price and tech stocks start to move together, it can
be considered unusual. One of the extreme features of the
JAVIER ESPINOZA LONDON eign wealth funds, have materially financial crisis was that large swaths of different markets
increased their commitment, the per- around the world plunged and rebounded in unison.
The private equity group behind the son added. As a result of high demand The reverse situation also counts. Intuitively, if the share
takeovers of Formula One racing, Sam- CVC tightened the terms offered to prices for two German banks suddenly stop moving in
sonite suitcases and Breitling luxury investors by cutting the hurdle rate for similar ways, the change in their relationship may signal
watches has set a new European fund- its fees and scrapping early-bird dis- something unusual and worthy of investigation.
raising record as investors scramble to counts. Measuring and assessing such correlations across large
put money into leveraged buyouts. Still, investors are keen to invest in markets to draw deeper conclusions runs into practical
CVC Capital Partners, which is based CVC, which is perceived to be the best difficulties. In 2010, however, a pair of academics used a
in Luxembourg but has offices in Euro- buyout manager in Europe, one fund- statistical measure, known as the Mahalanobis distance, to
pean hubs including London, comforta- raiser in the UK said. On average, net develop a turbulence score for when asset prices are show-
bly raised 16bn after being swamped returns after costs are 20 per cent ing uncharacteristic movements.
with demand of between 25bn and per year for all CVC funds, according to As large market movements clearly stand out, a follow-
30bn from investors. data seen by the Financial Times. up paper from State Street Global Investors separated two
The fund had a hard cap of 15.5bn, CVC is expected to invest 3bn-4bn aspects of such turbulence, dividing them into the magni-
and reached 16bn after the fund man- of equity each year in an investment tude of price movements, and the unusualness of price
ager added its own money of 3-5 per strategy that mirrors previous funds: a relationships on a given day, compared with history.
cent of the total fund, according to two focus on individual companies rather The level of such correlation surprises in global stocks is
people familiar with the move. than industries or countries. The latest highly elevated right now, which some see as cause for con-
Pension funds and other institutional fund will invest over a five- year period cern. It measures up very well with the shocks weve had
investors are pouring money into the and out of 14 countries in Europe. in the last 10 to 12 years, says Eoin Murray, chief invest-
best performing private equity funds. The group has already spent close to ment officer for Hermes Investment Management.
They are attracted by the way the top 80 per cent from its previous fund, It may be that small market moves carry limited infor-
performing funds have beaten most raised in 2013. It expects to make the mation, even if they are uncharacteristic. It is the combi-
other asset classes, including hedge first acquisition with the new fund no nation of magnitude and surprising correlations that tends
funds. later than the start of next year, a person to produce persistent, painful turbulence. Watch out if
The record fundraising by CVC takes familiar with the investment plan said. volatility picks up; we live in times of great unusualness.
the total it has raised since its creation in However, some investors have The Russian gold miner has long been a target of the Fosun-led consortium Andrey Rudakov/Bloomberg
1981 as an offshoot of Citigroup to expressed concerns about the size of Correlation surprise index
almost $107bn. large funds and managers ability to 000
600
It has since become the dominant spend wisely. HENRY FOY ST PETERSBURG Shanghai-based conglomerate, than a year of negotiations that
force in European private equity by con- Investors are concerned that fund HENRY SANDERSON LONDON
whose interests range from nearly collapsed when Polyuss 500
sistently generating double-digit sizes are going back to large levels and A consortium led by Fosun has mining to tourism. board twice sought better 400
returns by cashing in stakes in compa- valuations are pretty rich at the agreed to acquire up to 15 per Fosun and two subsidiaries, terms to reflect the companys 300
nies including Saga, the UK-based over- moment, said an industry veteran. cent of Polyus, Russias largest Hainan and Zhaojin, will pay improved business forecasts,
50s insurer and travel agent, and Sun- But in an interview, Steve Koltes, CVC $890m for an initial 10 per cent two people briefed on the talks 200
gold producer, in the first big
rise, the Swiss telecoms operator. co-chairman, said that CVC remained Chinese investment in the stake in the group. The $70.60 told the Financial Times. 100
Due to its size, CVCs fund has seen disciplined in its investment style. He countrys sprawling mining share price represents a sub- Fosun, led by billionaire Guo The current level
0
new entries from new geographies, said: Weve consistently invested 3bn industry. stantial discount to yesterdays Guangchang, owns the Club of correlation
including established investors from each year and weve been very disci- closing price of Rbs4445 Med holiday chain and the 2001 05 07 09 11 13 15 17 surprises in global
North America, Europe, the Middle East plined [investors]. Polyus this year won control of ($78.30). The deal also includes Cirque du Soleil entertainment Source: Thomson Reuters Datastream stocks is highly
and Asia, a person familiar with the Fundraising has been buoyant for pri- a gold deposit thought to be one a one-year option to buy business. elevated
process said. Existing investors, which vate equity and other managers have of the worlds largest. It has long another 5 per cent for $490m. Its investment in Polyus will
include large pension funds and sover- also benefited. been a target of the $13.3bn The agreement follows more be its first purchase in Russia. dan.mccrum@ft.com

Toshiba moves to regain full control of

$20bn chip division amid push for sale
KANA INAGAKI AND LEO LEWIS TOKYO had feared that the process of resolving main lenders and Japanese government
the dispute could take up to a year. But officials have grown increasingly fearful
Toshiba is realigning its joint venture
people close to Toshiba said the techni- that Western Digitals legal assault,
with Western Digital in an effort to
cal switch could see the sale of the Nand through its acquisition of SanDisk last
defuse a legal spat with the US chip-
memory-chip unit completed within a year, could derail the whole process.
maker and accelerate the $20bn sale of
month. Toshibas transfer back to the main
its memory business.
Toshiba is anxious to sell its memory conglomerate in effect resets ownership
BMW shifts up a gear in The move, laid out in a letter from business. The group has yet to have its of the groups assets in the venture to
China with 1bn plant Toshibas lawyers yesterday, addresses a most recent financial statements signed where they stood before the chip busi-
claim by Western Digital that the Japa- off by its auditor and is struggling with ness was separated in April as a prelude
BMWs new 1bn manufacturing plant nese conglomerates attempt to sell its huge losses arising from its US nuclear to the sale.
in Shenyang, northern China, chip business without its consent was in business. It remains on the brink of a Western Digital was not immediately
underlines how the country is central breach of its JV agreement. stock market delisting. available for comment and has yet to
to the German groups strategy and a Toshiba is to transfer its interests in Western Digitals complaint, consist- confirm receipt of the letter.
battleground for carmakers. China, the the venture from its chip unit back to ently dismissed by Toshiba, has rattled Earlier in the day, Toshiba acknowl-
worlds largest car market, accounts for the conglomerate, making it difficult for parties involved in the sale of the Nand edged it would not be able to submit
22 per cent of BMWs car sales. the US group to seek exclusive negotia- business. As well as unsettling potential audited full-year results when it holds
Analysis i PAGE 15 tion rights on the basis of its claimed bidders a list of leading private equity its shareholder meeting on June 28, trig-
joint venture rights. The Japanese group and technology groups Toshibas gering a 3.4 per cent drop in its shares.

Companies / Sectors / People

Companies
AIG...................................................................18
Aberdeen Asset Management........14
Akzo Nobel...................................................9
Alibaba...........................................................12
Allied Irish Banks............................1,10,13
Alphabet......................................10,12,14,15
Alrosa..............................................................12
Amazon..............................................10,12,15
Apple....................................................10,11,12
Arif Habib Corp..........................................8
Ashmore.......................................................14
AstraZeneca.................................................9
Audi.................................................................15
Axa...................................................................15
BHP Billiton................................................19
BMW................................................................15
BT Group......................................................19
Bain Capital.................................................11
Bank of America Merrill Lynch.......19
Bank of Ireland................................1,10,13
Berkshire Hathaway..............................10
Breitling..........................................................11
British Airways..........................................14
Brown Brothers Harriman.................14
Burberry........................................................19
CVC Capital Partners.............................11
Cevian Capital.....................................10,12
ChemChina....................................................9
Cirque du Soleil.........................................11
Club Med.......................................................11
Cnooc..............................................................15
Daimler...........................................................15
Delivery Hero.............................................13
Didi Chuxing...............................................12
Dow Chemical..............................................9
Dow Corning................................................9
Dropcam........................................................15
DuPont.............................................................9
Emirates........................................................12
Ericsson...................................................10,12
Evonik...............................................................9
ExxonMobil..................................................12
FAW Group.................................................15
Facebook................................................12,14
Fifa....................................................................12
Formula One...............................................11
Fosun...............................................................11
Foxconn.........................................................11
Gazprom........................................................12
Glencore..................................................12,19
Goldman Sachs.........................................19
Google......................................................10,15
HelloFresh....................................................13
Hisense..........................................................12
Hoechst...........................................................9
Huajian Group.............................................4
Huawei...........................................................12
IAG...................................................................14
IG Group.......................................................19
Industrivrden.....................................10,12
Inter RAO.....................................................12
Intermediate Capital Group..............14
Investor....................................................10,12
JPMorgan...............................................18,19
Jupiter............................................................14
Kinnevik.........................................................13
Legal & General.......................................14
Lighthouse...................................................15
Lloyds.............................................................10
M&G................................................................14
Mercedes-Benz.........................................15
Michael Kors.........................................10,19
Microsoft.......................................................12
Morgan Stanley........................................19
Motorola........................................................15
Nest..................................................................15
Netflix.............................................................12
Nokia.........................................................10,12
Old Mutual Global Investors............14
PPG....................................................................9
Permanent TSB.....................................1,13
Plastic Omnium........................................15
Polyus..............................................................11
Reliance Communications..................14
Renault...........................................................15
Reserve Bank of India..........................14
Rio Tinto.......................................................19
Rocket Internet.........................................13
Rosneft...........................................................12
Rosneftegaz................................................12
Russian Railways.....................................12
SK Hynix........................................................11
Saga..................................................................11
Samsonite.....................................................11
SanDisk...........................................................11
Schroders.....................................................14
Sinopec..........................................................15
Sky....................................................................19
Sony.................................................................12
Spotify............................................................12
Sunrise............................................................11
TalkTalk........................................................19
Tencent.........................................................12
Toshiba...........................................................11
Transneft......................................................12
Uber.................................................................12
Unilever.........................................................19
Valeo...............................................................15
Vivo..................................................................12
Vodafone......................................................19
Volkswagen.................................................15
Wanda............................................................12
Western Digital..........................................11
Yi Technology...........................................15
Sectors
Airlines.....................................................14,15
Automobiles................................................15
Banks.....................................................1,10,13
Basic Resources........................................12
Chemicals.......................................................9
Energy......................................................12,12
Financial Services...............................11,14
Food & Beverage......................................7
Industrials....................................................10
Insurance......................................................15
Media..............................................................14
Mining........................................................11,12
Oil & Gas.......................................................12
Personal & Household Goods.........10
Retail...............................................................19
Retail & Consumer.................................10
Technology...........................10,12,13,14,15
Telecoms...........................................10,12,14
Transport......................................................12
Travel & Leisure......................................12
People
Ambani, Anil...............................................14
Aschenbroich, Jacques.........................15
Bollor, Thierry.........................................15
Buffett, Warren.........................................10
Burelle, Laurent........................................15
Byrne, Bernard.......................................1,13
Castries, Henri de....................................15
Duffy, Greg..................................................15
Ekholm, Brje.......................................10,12
Fadell, Tony................................................15
Fawaz, Marwan.........................................15
Guo, Guangchang....................................11
Habib, Arif.....................................................8
Idol, John......................................................19
Johansson, Leif.........................................12
Kimpel, Peter..............................................13
Koltes, Steve..........................................11,11
Meeker, Mary.............................................12
Peter, Nicolas.............................................15
Samwer, Oliver..........................................13
Veron, Maxime..........................................15
Walsh, Willie...............................................14
Woods, Darren..........................................12
Zuckerberg, Mark....................................14

The Financial Times Limited 2017 Week 22

12
Technology
Activist takes aim at Ericsson board
Main investors in Swedish
equipment maker have
done too little, says Cevian
RICHARD MILNE
NORDIC CORRESPONDENT
Ericssons new activist shareholder has
hit out at the board of the struggling
Swedish telecoms equipment maker
and the influential Wallenberg family,
blaming them for contributing to the
mess the company is in.
Cevian Capital, one of Europes largest
activist investors, has spent $1bn on a
5.6 per cent stake in Ericsson. It is seen
as likely to raise its position further to
become the biggest shareholder in
terms of capital, although it is only
Pace of digital disruption surprises
Meeker says healthcare is ripe
for upheaval, with India on the
cusp of an online explosion
RICHARD WATERS LONDON
A new phase of global competition has
broken out between a handful of mas-
sively wealthy US and Chinese internet
companies with consumers and busi-
nessesthebeneficiariesoftheir services.
That, at least, is the view of Mary
Meeker, the former US internet analyst
who is still most closely associated with
the dotcom boom of the 1990s. Since
leaving Wall Street for Silicon Valley
seven years ago to join venture capital
firm Kleiner Perkins Caufield & Byers,
her annual analysis in more than 200
slides has become a widely used refer-
ence on the global state of the internet.
After what she calls an epic half-dec-
ade of expansion and stock market
appreciation, Apple, Microsoft, Alpha-
bet, Amazon and Facebook have
emerged as the worlds five most valua-
ble companies. Two Chinese internet
companies Alibaba and Tencent
have also broken into the top 10.
The rise of this handful of internet
giants has stirred worries among regula-
tors and other industries that have not
yet felt the touch of digital disruption.
But, according to Ms Meeker, the con-
cerns fail to take into account the rivalry
that has engulfed the internet compa-
nies as they move out of their initial
markets and on to each others turf.
People dont spend enough time
looking at how intense the competition
is, she says in an interview with the
Financial Times. The bet here is: we
cant stop progress. Are we better off or
worse off? So far, the data implies we are
better off.
The picture of growing global domi-
nance emerges from Ms Meekers latest
slideshow, published yesterday. Refer-
ring to how online activity is reshaping
markets spanning retail to transport,
she says: The pace and breadth of glo-
bal change is happening at a pace that is
faster than I would have anticipated.
In the US, for instance, growth in
online advertising and ecommerce has
accelerated again since earlier this dec-
ade, with advertising revenues up 22 per
cent last year and ecommerce up 15 per
cent. Global online ad spending, at
nearly $200bn, is forecast to exceed TV
advertising for the first time this year.
The disruption is deeper than the
numbers suggest. In ecommerce, the
adoption of technologies such as geolo-
cation and machine learning are chang-
ing retail at what is probably an acceler-
ating rate. And the collection of data on
a mass scale is about to have a profound
impact. Ms Meekers tip for a sector on
the cusp of upheaval: healthcare, where
Travel & leisure
Vivo backs Fifa as western groups step back
MURAD AHMED
LEISURE CORRESPONDENT
Fifa has secured crucial financial back-
ing from Chinese smartphone maker
Vivo in a 400m sponsorship deal, as
western groups continue to shun the
2018 and 2022 World Cups.
According to people briefed on the deal,
Vivo will pay about 60m-70m a year
to sponsor tournaments run by interna-
tional footballs governing body, up until
the 2022 World Cup in Qatar.
It becomes the third big Chinese com-
pany to sponsor the World Cup in the
past year, after real estate and leisure
conglomerate Wanda and consumer
electronics brand Hisense.
Endorsements from China have pro-
the third largest in terms of votes at
approximately 3 per cent.
Just having lots of nice names on the
board you cant think like that in Eric-
sson . . . Its part of the problem we are
facing, because the board has done a
very poor job, said Christer Gardell,
Cevian co-founder.
Leif Johanssons position as Ericssons
chairman is under threat, according to
allies, as Mr Gardell who will join the
committee that proposes board direc-
tors looks for people with more indus-
try experience.
The shares closed up 4.5 per cent
higher yesterday at SKr63.40, their
highest since last autumn.
Ericsson has been mired in trouble for
some time as competition has increased
from Chinas Huawei and a revitalised
Technology. Internet trends
The internet regulations and barriers to sharing data
market in China have slowed innovation, but which she
has reached a nowsaysisripeforchange.
scale where it Despite Ms Meekers optimism about
will strongly competition, however, the picture that
benefit its emerges from her global snapshot also
economy, shows the effects of increasingly heavy
Ms Meeker says concentrations in some digital markets.
Jie Zhao/Getty
Google and Facebook, for instance,
accounted for 85 per cent of online
advertising in the US last year, up from
76 per cent a year before. In the media
world, Ms Meeker estimates that Spot-
Worlds biggest stocks by market capitalisation
$bn
0 200
Apple
Alphabet
Microsoft
Amazon.com
Facebook
Berkshire Hathaway
ExxonMobil
Johnson & Johnson
Tencent
Alibaba
Source: Bloomberg
vided welcome support for Fifa, which
has struggled to secure commercial
partners before next years World Cup in
Russia. It lost several big sponsors,
including Sony and Emirates, when
their contracts expired at the end of the
previous tournament in 2014.
Fifas secretary-general, Fatma
Samoura, told the Financial Times: Its
not always an easy business [to seek
sponsorship] anywhere, but to have
China as a partner of Fifa for the third
time in less than a year demonstrates
that football is a global sport, and that
China will be an important client when
it comes to football.
Vivo becomes Fifas 12th sponsor for
the 2018 World Cup. According to its
annual reports, revenues from commer-
FINANCIAL TIMES
COMPANIES
Nokia. It has issued several profit warn-
ings, had its credit rating cut to junk sta-
tus, and fired its chief executive.
One peculiarity of Ericsson is the
presence of Swedens two largest invest-
ment companies Industrivrden and
Investor, the vehicle of the Wallenberg
family on the shareholder register.
Mr Gardell said: The action from the
main investors has been too late and
completely insufficient.
Both shareholders have significantly
higher voting rights than their capital
exposures thanks to vote-heavy class A
shares. Investor owns 5.9 per cent of the
capital but controls 21.8 per cent of the
votes. Industrivrden has 2.6 per cent of
the capital and 15.1 per cent of the votes.
If the investor has very low capital
exposure, theres a fundamental prob-
ify has already secured 20 per cent of
global music revenues, and Netflix 30
per cent of home entertainment reve-
nue in the US. These digital-first compa-
nies reflect a trend towards increasingly
personalised services, she says: It
speaks to the power of the algorithms
and the data. It improves pricing for
users and consumer satisfaction.
Future competition between the dig-
ital giants is likely to take place on the
global stage. The internet markets in
China and India have each reached a
2016 revenues, $bn
400 600 800
cial and marketing deals related to the
2018 World Cup were $246m in 2015,
down from $404m in 2013. The lack of
sponsors, alongside legal costs related to
corruption probes, contributed to Fifa
making a $369m loss in 2016.
Sports industry analysts have said
western groups are avoiding the poten-
tial reputational damage of being associ-
ated with scandal-hit governing body.
To a certain extent, China can step
back from Fifa and say what happened
over the last 20 or 30 years is nothing to
do with us, we are associated with the
new Fifa, said Simon Chadwick, a pro-
fessor of sports enterprise at Salford
Business School, who has studied Chi-
nese football. In those terms, the repu-
tational damage is far less for China.
Thursday 1 June 2017
INSIDE BUSINESS
EUROPE
Neil
Buckley
$1bn lem if that owner doesnt feel pain when
Ericsson performs poorly, said Mr
What Cevian
spent on a 5.6%
stake in Ericsson
Gardell. Heres the danger with A
shares.
He backed the plan of Brje Ekholm,
Russia state businesses
4.5%
Ericsson stock rise,
who was brought in as chief executive
this year. But he said the new man had to
with clout benefit from
to highest level
since the autumn
deliver on a strategy announced in
March to refocus Ericsson on its net-
works business while selling some
relaxed dividend rules
peripheral units such as media.
Cevian is known for taking a more
I
supportive approach than other activist t is becoming an annual ritual. Each spring, Russias
investors. It has also held on to its posi- government presses its state-controlled companies to
tions for an average of about five years, pay out more of their profits in dividends. The compa-
longer than most activists. However, it nies then scurry to find loopholes or lobby for exemp-
has been unafraid to push for radical tions.
change in Volvo Group, Danske Bank Moscow has been trying for years to increase the payout
and ThyssenKrupp. from national champions such as Alrosa, the diamond
See Lex producer, Russian Railways, Transneft, the oil pipeline
monopoly, and Rosneft and Gazprom, the energy groups.
It first proposed state companies should pay out at least 25
per cent of net profits in 2012 and later sought more as low
oil prices and sanctions squeezed budget revenues.
Last year, the government demanded a 50 per cent pay-
out, originally as a one-off anti-crisis move. But in April
this yea, the prime minister Dmitry Medvedev, signed a
decree again ordering state companies to pay out 50 per
cent of net income under International Financial Report-
ing Standards.
The issue is vital for state coffers. The finance ministrys
projected revenues assume state companies will pay the
full 50 per cent, with Rbs480bn ($8.5bn) in dividends ear-
marked for this years budget. Getting them to pay up is a
test of how much control the government really exerts,
and a way of trying to enforce tighter capital discipline.
The payout ratio matters to investors, too. Many state-
controlled companies have substantial and largely foreign-
owned free floats. Expectations of higher payouts have
underpinned recent investor interest in several of the busi-
nesses. If some groups really moved to a 50 per cent payout
ratio, a big jump in share prices could result.
Analysts at Renaissance Capital, the investment bank,
suggest the government has had some success. For nine
state-owned companies in the MSCI Russia index, they
found the aggregate payout rate nearly doubled from 16
per cent of 2012 earnings to 28 per cent of 2015 earnings.
But in all, only five companies hit the 50 per cent level
last year. Some of the biggest payers in cash terms won
exemptions. Rosneft was on 35 per cent, Gazprom 24 per
cent and Transneft 9 per cent.
A clash loomed this year when Gazproms management
proposed holding its dividend payment at last years level,
saying it had to fund big
investments. By mid-May, it
was clear the battle for a big-
Exemptions
ger payout was already lost. should be based
President Vladimir Putin
publicly backed Gazproms
on transparent
line that almost half of its reasoning, not
Rbs951bn IFRS profit for
2016 was only on paper,
special pleading
since it came from currency
movements. Gazprom will pay out 20 per cent of IFRS
profit.
Rosneft, meanwhile, proposed the same 35 per cent
ratio as last year, arguing that it, too, must make big invest-
ments and is not a directly state-controlled company.
That is because the states 72.5 per cent stake in Rosneft
is owned by Rosneftegaz, an intermediary holding com-
pany chaired, like Rosneft itself, by the redoubtable Igor
scale where they are poised to have a Sechin. Rosneftegaz also holds 11 per cent of Gazprom, and
strong beneficial impact on their econo- more than a quarter of Inter RAO, an electricity holding.
mies, Ms Meeker says. Their mobile Then, to general amazement, Russian media reported in
payment infrastructures, for instance, May that Rosneftegaz had managed to make a Rbs90.4bn
put both countries in an enviable posi- loss last year, and might not pay any full-year dividend.
tion relative to the rest of the world. The company has not published accounts, but exchange
And thanks to its national identity rate effects on cash holdings were reportedly to blame.
scheme, Aadhaar, and the spread of low- Rosneftegaz said the Rbs692bn proceeds from selling a
cost bandwidth, India is on the brink of 19.5 per cent stake in Rosneft to Qatar and Glencore, which
an explosion of digital services. it handed to the treasury last December, were a de facto
With so much to play for, that has dividend. It had also paid a small interim dividend.
already made India a global priority Anton Siluanov, the finance minister, countered that
between US and Chinese companies. Rosneftegaz could fund a payout from prior-year profits.
American companies such as Amazon The minister, who has championed the 50 per cent rate,
are approaching new markets such as suffered a setback, conceding that lower dividend payouts
this more aggressively, she says. than planned meant budgetary receipts might have to be
But even if competition becomes revised down.
increasingly fierce between the digital Mr Siluanov has faced opposition within government to
giants, will it create a new global oli- the 50 per cent payout, and in reality a one-size-fits-all
218 gopoly? After more than two decades approach across companies and sectors may be too rigid.
90 watching the rise of internet leaders, Ms But setting ambitious targets and failing to enforce them
86 Meeker says she is highly confident for all highlights the extent to which Russias government
136 new categories of activity will emerge, struggles to make its writ stick with companies it suppos-
28 with new groups set to dominate them edly controls and the ability of corporate barons to use
215 much as Uber and Didi Chuxing have their closeness to Mr Putin to lobby for special treatment.
198 cometodominateridehailing. Exemptions should be based on transparent reasoning,
72 But at least one thing has changed. not special pleading. Raising payout rates could lead to a
22 What is different this time is these glo- re-rating for Russias market. But so, too, could ending the
21 bal players, she concedes. They have impression that there is one rule for some state companies,
CEOs who have the ability to see around and different rules for others.
corners and they will continue to
make acquisitions. neil.buckley@ft.com
Oil & gas
Exxon shareholders insist on climate updates
ED CROOKS NEW YORK technological advances and global cli- only 38.1 per cent of the shares. The
mate change policies. economic tide is running fast, showing
Shareholders have backed a call for
The proposal requests an assessment market support for Paris, said Anne
ExxonMobil to publish an annual
of the effects on Exxons oil and gas Simpson of Calpers, the California state
assessment of the potential impact of
reserves and resources if government employees pension fund. Money talks
climate policies on its business.
policies restrict greenhouse gas emis- on this.
The vote at the largest US oil and gas sions to try to keep the rise in global BlackRock, one of the worlds largest
group suggests there will still be signifi- temperatures since pre-industrial times investment management groups, sup-
cant investor pressure to address cli- to 2C. ported the resolution, according to a
mate change, even if the US withdraws Darren Woods, chief executive, who person familiar with the voting.
from the Paris agreement. wrote to Donald Trump, US president, The largest European oil companies
Investors controlling 62.3 per cent of last week supporting the Paris accord, have agreed to conduct regular assess-
the shares supported the proposal, sub- reiterated his position. ments of climate policies, and Chevron,
mitted by the New York State pension But the board had recommended a the largest US oil group after Exxon,
fund and the commissioners of the vote against the proposal on climate published a report on the issue in
Church of England at the annual meet- change, arguing that Exxon already March.
ing in Dallas yesterday. took such factors into account. No other proposal at the Exxon meet-
Exxon is asked to report every year on A similar resolution a year ago won ing had majority votes against the
the long-term portfolio impacts of support from investors controlling boards recommendation.
Thursday 1 June 2017
Chief pitches a very different AIB to investors
Dublins sale of a
25% stake follows
the shedding of more
than half the staff and
a sharp reduction in
non-performing loans
LAURA NOONAN DUBLIN
Before Allied Irish Banks 21bn
bailout, a waiter in an AIB-liveried
waistcoat ran an enviable tea trolley
service on the executive floor, knocking
mid-meeting to ask if anyone would like
a hot drop. In the new AIB, cost control
takes precedence: the nearest warm
body is dispatched to the canteen to
grab something in a paper cup.
Bernard Byrne, the chief executive
who will lead the bank through the his-
toric reprivatisation it announced on
Tuesday, missed most of the trolleys
glory days.
He joined as chief financial officer in
early 2010, when the bank was careen-
ing towards its December 2010 nation-
alisation, as Irish property prices col-
lapsed, unemployment soared and
cheap interbank liquidity dried up.
The country took a bailout from the
EU and the International Monetary
Fund in November 2010.
Mr Byrne says AIB has changed mas-
sively from the crisis-stricken institu-
tion that needed the biggest bailout of
any surviving Irish bank.
Since 2010, Irelands second-largest
bank by assets has shed more than half
its staff and rid itself of more than
40bn of non-performing loans, cutting
them from 35 per cent of its loan book to
a still high 13 per cent. Annual costs are
down 300m to last years 1.37bn.
Profits returned in 2014, 2015 and
2016, enough to earn regulators
The big benefit of a
new team is you dont
own history
Bernard Byrne, AIB chief
approval for AIBs first post-crisis divi-
dend. Mr Byrne believes he has the team
to make the momentum stick.
The entire board is different [from
2008], the entire senior leadership team
is different, the entire divisional man-
agement teams is different, he says.
The big benefit of a new team is you
dont own history: your focus is how do
we make sure we get to the right point in
terms of what the bank is going to look
like.
With the Irish economy once again
boasting economic growth that is the
envy of Europe and property prices
taking off, Mr Byrne will spend the com-
ing weeks trying to persuade investors
that they should be looking to AIBs
future rather than its calamitous past,
when soaring property prices tempted it
into irresponsible lending practices
such as offering 100 per cent mortgages.
He has had time to prepare; Ireland
began seriously considering options for
how to monetise its AIB stake in 2015.
In 2016, Michael Noonan, the finance
minister, began talking openly of a pos-
Technology
Rocket eyes profitability as sales lift off
GUY CHAZAN BERLIN
Rocket Internet, the German investor
in technology start-ups, has reported a
28 per cent increase in revenues at its
main portfolio companies in the first
quarter and said they had shown a big
improvement in profitability.
Oliver Samwer, founder, also reiterated
a pledge that three of Rockets start-ups
would turn profitable by the end of 2017.
The results, announced yesterday,
represented another quarter of solid
performance and further progress
towards profitable growth, said
Michelle Wilson, an analyst at Beren-
berg. She singled out HelloFresh,
Rockets meal-kit delivery service, as the
standout performer and the groups
fastest-growingoperatingcompany.
Rocket, which listed on the Frankfurt
stock exchange in 2014, has been a
mainstay of the Berlin tech scene. The
company carved out a niche by replicat-
ing successful ecommerce models first
pioneered in Silicon Valley and export-
ing them to emerging markets in Africa,
the Middle East and Latin America.
But investor sentiment has soured on
Rocket amid concerns about continuing
losses at its investments, and about how
it values its various holdings.
In February, Rockets biggest investor,
the Swedish group Kinnevik, sold half of
its stake in the group, in what was seen
Allied operations
AIBs annual costs are down 300m to last years 1.37bn while profits have returned, enough to win approval for a maiden post-crisis payout Aidan Crawley/Bloomberg
Allied Irish Banks
Profit before tax (bn)*
2010 11 12 13 14
*From continuing operations
Source: company
sible sale, culminating in the appoint-
ment of bankers to run an initial public
offering in December.
Now, after Tuesdays formal notifica-
tion of the flotation plan, the bank, the
Irish government and their advisers
have four weeks to persuade investors
that the 25 per cent stake on offer should
command a healthy valuation. All
parties are deliberately vague on what
that might be, scared of missing any
target.
People familiar with the Department
of Finances thinking say its not about
break-even share prices on AIB;
instead, the mission is to recoup the
29.4bn it invested across Irelands sur-
viving banks (which includes invest-
ments in Bank of Ireland and Perma-
nent TSB). That is just as well, because
analysts estimate AIB is worth 12bn to
13bn, well short of the governments
investment.
The finance department believes it
has already got 6.6bn back from AIB,
including dividends, government guar-
as a big blow to Rockets credibility.
However, the groups shares have recov-
ered amid press speculation that two of
the biggest start-ups in its portfolio
HelloFresh and Delivery Hero a food
delivery outfit, could soon be floated.
HelloFresh had been heading for an
initial public offering in 2015, but the
plan was pulled as investors balked at its
2.6bn valuation. Rocket values the
company at 2bn.
Rocket said first-quarter sales at
selected companies in its key sectors
food and groceries, fashion, general
merchandise and home and living
rose 28 per cent to 617m. Adjusted
earnings before interest, tax, deprecia-
HelloFresh, whose sales have risen
45 per cent, could soon be floated
FINANCIAL TIMES 13
COMPANIES
according to Central Bank of Ireland fig-
ures, suggesting limited capacity for fur-
ther consumer borrowing.
Mortgage demand is up, but a short-
age of new homes means much demand
goes unsatisfied. AIB grew its loan book
only marginally in the first quarter of
2017, and its 38 per cent share of the
mortgage market means that for AIB to
expand its most important loan book,
Ireland has to grow too.
Mr Byrne counters by pointing to
areas where AIB is not that present or
we have a very low market share such
as personal lending, where its market
share is about 22 per cent.
We have an aspiration around 35 to
45 per cent market shares across most
things, he says.
He adds that wealth management and
pensions are areas where nothing has
happened for the last 10 years in the
Irish market . . . I think thats going to
be a big thing for the next 10 years.
The Financial Services Union, which
represents about 70 per cent of AIBs
10,000 workers, is broadly supportive of
the listing but its head, Larry Broderick,
is concerned that AIB is not staffed in
our view enough to competently and
capably deliver what it says it wants to
Weve had 10 years of
change; the last thing we
need is more change
AIB staff member
deliver into the future. An AIB staff
member with more than 30 years expe-
rience says the IPO just adds further
Non-performing loans as % of total Employees (000)
5 40 25 uncertainty for staff who have lost
around 15 per cent of their pay because
20 the bank suspended incremental pay
0 30 increases and other pay rises. Weve
had 10 years of change; the last thing we
15 need is more change.
-5 20 She is not expecting colleagues to be
10 among the small investors who are
allowed to invest a minimum of
-10 10 10,000 in the IPO.
5
But if the bankers are right and if
things have changed as fundamentally
-15 0 0 as Mr Byrne says, AIB will not need staff
15 16 2010 11 12 13 14 15 16 2010 11 12 13 14 15 16 buyers to ensure the IPO is heavily over-
subscribed.
See Lex
antee payments, the bank levy and the
redemption of preference shares.
Officials and AIB executives have
already fielded almost 20 meetings with
potential investors as part of their regu-
lar investor engagement programme.
The story has gone down really well,
Bernard and Mark [Bourke, chief finan-
cial officer] come across as conserva-
tive, one person familiar with the talks
says. The fact that AIB now pays a divi-
dend is a crucial part of the pitch.
The government has vowed ulti-
mately to sell the remaining 75 per cent
of AIB.
Analysts are broadly positive. Eoin
Mullany, of Berenberg in London, says a
lot of people are attracted to the Irish
market and that AIB may see interest
from Bank of Ireland investors who
want a purer exposure to the Irish
recovery, as 40 per cent of Bank of Ire-
lands assets are in the UK.
But he and others also warn of head-
winds: household debt to disposable
income is still around 150 per cent,
tion and amortisation moved from a loss
of 118m in the first quarter of last year
to 98m this year.
Meanwhile, the ebitda margin at its
main portfolio companies improved by
7.9 percentage points from minus 22.6
per cent a year ago to minus 14.7 per
cent in the first quarter.
Rocket said online retailer Global
Fashion Group achieved revenues of
265m in the quarter, up 35 per cent,
and an adjusted ebitda margin of minus
12.5 per cent, up from minus 24 per cent
a year ago. Sales at HelloFresh rose 45
per cent to 205m, and revenues at
Delivery Hero nearly doubled from
63m to 121m.
We continue to show growth across
our key selected companies and a signif-
icant improvement in profitability, said
chief financial officer Peter Kimpel.
But not all of Rockets companies
showed signs of improvement. The
ebitda margin at Jumia, an online
retailer focused on Africa, deteriorated
to minus 124 per cent in the first quarter,
down from minus 108 per cent a year
ago. Rocket said the group had been hit
by a scarcity of foreign currency and
devaluationsinNigeriaandEgypt.
Rocket said it had a strong cash posi-
tion, with about 1.5bn capital. Rockets
own losses at a consolidated level stood
at 86m in the first quarter, down from
342m a year ago.
14
Media
Investors to tackle Facebook over fake news
Shareholders set to
confront Zuckerberg on
reputational impact
HANNAH KUCHLER SAN FRANCISCO
Facebook shareholders will confront
Mark Zuckerberg over the social net-
works role in spreading fake news at the
annual general meeting today, arguing
democracy is at risk every time it
tweaks an algorithm.
Impact investing funds Arjuna Capi-
tal and Baldwin Brothers are set to put
forward proposals at both Facebook and
Alphabets AGMs, demanding the com-
panies evaluate the impact of fake news
flows on their brand reputation and
BA account of meltdown greeted with scepticism
Some experts say it is very
rare for uninterruptible
power supply systems to fail
TANYA POWLEY AND NATHALIE THOMAS
IT and electricity experts have reacted
with scepticism to British Airways
explanation of the cause behind the sys-
tems meltdown that led to travel chaos
for 75,000 passengers worldwide over
the weekend.
Willie Walsh, chief executive of IAG,
BAs parent company, blamed the prob-
lem on a back-up system known as an
uninterruptible power supply a big
battery connected to the mains power
that ensures IT systems and data cen-
tres can continue to function even if
there is a power cut.
IAG said the UPS malfunctioned, cut-
ting off power supply.
When power was restored, it returned
in an uncontrolled way, which dam-
aged its IT infrastructure, BA claimed
triggering the chain of events that
caused it to cancel all flights out of Lon-
don on Saturday and resulted in further
disruption across the UK bank holiday
weekend.
Some people working in the field have
questioned the explanation, however,
pointing out that it is extremely rare for
UPS systems to fail.
Even if they do, it should not affect the
continued supply of mains electricity to
the data centres they serve, the people
added.
What is BAs explanation?
The airline has blamed its problems on
the loss of electrical power at its main
data centre, near Heathrow. It said the
back-up power supply was at the root of
the problem, rather than an issue with
the electricity networks that serve Hea-
throw airport and the surrounding area.
BA said there was an immediate loss
of power from the UPS. When power
returned, a surge physically damaged
its IT servers. This caused the loss of cus-
tomer, baggage, flight and crew infor-
mation and required the airline to phys-
ically replace IT infrastructure that had
been damaged.
So it was not an issue
with BAs systems?
Mr Walsh was at pains to stress that
the meltdown was not a technology
problem.
You give me any IT system in the
world and Ill show you how good it is
Global Appointments
whether it will create public policy risks.
Natasha Lamb, Arjuna Capitals direc-
tor of equity research and shareholder
engagement, said she believed that even
though both companies have taken
steps to address the problem of fake
news spreading online, neither had gone
far enough.
Both prefer to see themselves as neu-
tral technology platforms but they have
been transformed into media platforms
that is why we are so concerned, she
said.
Facebook already stands to suffer
under German legislation that would
impose fines of millions of euros on
social networks that do not remove fake
news or hate speech, she added.
Ms Lamb is hoping to meet Facebook
The airline pointed to loss of electrical power at its data centre near Heathrow, saying the back-up supply was at the root of the problem Daniel Leal-Olivas/AFP/Getty
when it doesnt have any electrical
power going to it, he said.
He insisted there was no data loss,
no data corruption. The IT systems
functioned how they are supposed to
function.
What are IT experts saying?
Jonathan Glover, co-founder of PSI, a
company that helps businesses protect
their equipment against sudden, unex-
pected power surges said the failure of
an UPS was relatively unlikely as they
are robust and well-proven pieces of
equipment.
He added that even if the UPS system
did fail, it should not make a difference
to the power supply to the airlines IT
system.
The answers given dont make a lot
of sense, he said.
Alan Woodward, visiting professor at
the department of computer science at
the University of Surrey, agreed: It is
like on your laptop and if you just pull
FINANCIAL TIMES
COMPANIES
management at the meeting, but they
have not yet confirmed.
The big risk to Facebook is a loss in
user trust and people getting what has
been coined Facebook fatigue and
turning away from the platform, she
said.
When false content is being propa-
gated at scale over Facebooks platform
that presents a real risk not only to the
company and user trust in the content
they find on Facebook but also to our
democracy and having an informed
electorate.
Facebook has been under fire after
several of the most shared stories on the
social network during the US presiden-
tial election campaign were proved to be
fake, prompting questions about their
Airlines. Outage
the plug out of the back, it shouldnt
affect your laptop, it keeps running until
the battery runs down. Even if you
unplug the battery [of a laptop], it
doesnt like it from a data perspective.
but plug it back in again, you dont sud-
denly get a big power surge.
Mr Woodward said one possible
explanation was that a voltage regulator
contained within the UPS may have
malfunctioned, but he added it was
very unusual for it to happen.
Normally they fail and power stops,
he said.
Another expert on UPS technology
confirmed that even if the system had
failed, it would simply have been
bypassed and normal electricity supply
should have continued.
What else could have
caused the failure?
This is still being investigated by BA.
It said it was looking at whether it
was human error or a mechanical fault.
role in the election of President Donald
Trump.
After Mr Zuckerberg initially dis-
missed the allegations that the platform
had influenced the election as pretty
crazy, it has since shown signs of taking
the issue more seriously.
Facebook has tried to cut off financial
incentives to fake news websites, is part-
nering with fact-checkers around the
world to identify hoaxes, and has cre-
ated a journalism project to work more
closely with legitimate publishers.
Facebook opposes the measure to be
put forward, arguing it has been work-
ing to address the issue of false news and
hoaxes for years and the content is
already prohibited by its community
standards and terms of service.
Mr Walsh said there was no evidence
of sabotage, but it was looking at all
possibilities.
Why would the failure of the UPS
impact BAs back-up data centre?
This remains unclear. BA would not
comment on whether their two Heath-
row-based data centres relied on the
same UPS.
Ryanair on Tuesday pointed out that
it had IT systems in three locations
around Europe and if one went down,
there were backups at each of its data
centres. This also helps add another
layer of insurance by making sure data
centres are not in close proximity.
Could external power
have been at fault?
According to BA, it had nothing to do
with the external power supply provided
by energy companies. Mr Walsh insisted
itwasdowntopowerfromtheUPS.
The two electricity companies whose
Telecoms
Concern over RCom silence on loan repayments
ALIYA RAM NEW DELHI
Investors and analysts have raised gov-
ernance concerns about the reluctance
of Indian telecoms group Reliance
Communications to provide an update
on its debt obligations.
The mobile phone operator, which is
controlled by billionaire Anil Ambani,
has lost a fifth of its market value
over the past week and had its debt
downgraded by three rating agencies
after a media report claimed it had
missed interest payments to multiple
lenders.
The company has refused to confirm
or deny the report in Indias Economic
Times on Monday, or reassure credit
analysts that it has made its loan repay-
ments on time.
Investors and rating agencies yester-
day said the company had neglected its
governance responsibilities and kept
stakeholders in the dark by not provid-
ing details on its loan repayments.
They should tell us when they can
provide proper information, otherwise
Alphabet also recommends stock-
holders vote against the proposal.
Analysts at Sustainalytics, a provider
of environmental, social and govern-
ance research on companies, said in a
report on Tuesday that they believe
investors would become more inter-
ested in how companies protect them-
selves from the risks of fake news.
Only 16 per cent of media and internet
companies studied had what the ana-
lysts called adequate or strong meas-
ures in place to tackle false information,
with the analysts giving Alphabet and
Facebook a lower score than media
companies such as Thomson Reuters
and the New York Times and a far lower
score than the top-rated company, the
broadcaster Sky.
low-voltage networks cover Heathrow
airport and the surrounding area have
both denied there were any issues on
their networks on Saturday morning.
How can BA prevent
this happening again?
There are protection measures such
as equipment called transient voltage
surge arresters that can shield
against power surges both from the local
electricity network as well as malfunc-
tions in a companys own equipment.
According to Mr Glover, either they
had inadequate defences or they didnt
have the right level of industrial-level
surge protection.
BA would not comment on what pro-
tection measures it had.
What happens next?
Mr Walsh said the airline would be fur-
ther investigating what caused the
power loss and the following surge. We
are consulting with experts in this area.
share suspension would be an option
since they are in a position where it is
having a material impact on the mar-
ket, said Josh Crabb, head of Asian
Equities at Old Mutual Global Investors,
which has a small stake in RCom.
The Reserve Bank of India is crack-
ing down on non-performing assets [in
Indias financial system] and in that
context when the market sees concerns
about loan repayments they jump on it.
Mr Crabb said Old Mutual had not
Contracts & Tenders
Thursday 1 June 2017
Financials
UK regulator
asks asset
managers
for detailed
Brexit plans
MADISON MARRIAGE LONDON
The UK regulator has sent letters to
several of Britains largest asset man-
agement companies requesting
detailed information about their Brexit
contingency plans as concern mounts
about the impact of the EU divorce
process on the City of London.
The Financial Conduct Authoritys
letter contains 30 questions about the
effect of Brexit on asset managers busi-
ness models, including whether or not
UK-based companies are planning to
relocate staff or operations to the EU.
Asset managers have also been asked
to explain whether their Brexit contin-
gency plans will affect their capital base
or IT systems; whether they have
applied for new licences from foreign
regulators; and to what extent fund
houses are responding to Brexit based
on how other companies react.
It is important for us as supervisors
to understand the plans that our regu-
lated firms have regarding Brexit, the
FCA said. To help firms prepare for
these conversations, we shared the
details of the questions we would be ask-
ing. This was not a formal data request
and was not asking firms to undertake
any further work.
The letter comes at a pivotal moment
for the UKs investment industry, with
I suspect they will find
that many groups have far
more developed plans
than publicly announced
asset managers divided on how best to
prepare for Britains departure from the
EU before formal negotiations between
Brussels and Westminster begin.
Last week, it emerged that Jupiter and
Legal & General Investment Manage-
ment, two of Britains largest fund com-
panies, plan to set up new entities in
mainland Europe in response to Brexit,
while Intermediate Capital Group and
M&G have already strengthened their
presence in Luxembourg.
Other asset managers, including
Schroders and Ashmore, have held back
from making operational changes
before receiving more clarity on Brit-
ains future relationship with the EU.
Last week, Martin Gilbert, chief exec-
utive of FTSE 250-listed Aberdeen Asset
Management, said that if clearing of
euro securities and pricing of euro assets
moved from the UK to other EU coun-
tries, his company would need to move
jobs to mirror those shifts. But, he clari-
fied: This is not a hugely significant
point. It may be a handful of jobs rather
than anything more.
The FCAs letter was sent to 20 compa-
nies overseen by the regulator. The FCA
declined to comment.
Sean Tuffy of Brown Brothers Har-
riman, the US bank, said: I suspect [the
FCA] will find that many groups have
far more developed plans than has been
publicly announced.
The letter was sent out soon after the
Bank of England wrote to banks and
other large financial services companies
in April giving them a deadline of July 14
to set out their plans for a hard Brexit.
Sam Woods, head of the BoEs Pru-
dential Regulation Authority, said in the
letter: Our current assessment is that
the level of planning is uneven.
Additional reporting by Martin Arnold
changed its holding in RCom this week.
Amit Tandon, managing director at
Institutional Investor Advisory Serv-
ices, a voting proxy firm in India, also
insisted the company should disclose
whether it has missed a payment to a
bank, adding: It is a material event
and has implications for the market.
RCom declined to comment on inves-
tor reactions or the rating downgrades
yesterday but said it would update the
market this week.
Thursday 1 June 2017 FINANCIAL TIMES 15

COMPANIES

Automobiles. Growth push Automobiles

Onerous
China emerges as engine of BMW strategy emissions
standards risk
Shenyang factory is part of
a plan to double production
Sino-German journey punishing
in the country by 2020 the worst off
CHARLES CLOVER SHENYANG
PATRICK MCGEE FRANKFURT MICHAEL STOTHARD PARIS

The rush by global policymakers to dis-

Disco-dancing assembly-line robots,
comedy sketches in the Dongbei dialect,
and an impassioned reading of Mao
Zedongs poem Snow greeted the
opening of BMWs newest factory in
China.
For BMW, the plant is a big bet on the
countrys fast-growing car market as it
increases the groups production capac-
ity in China by 50 per cent to 450,000
vehicles a year.
Sited in the northern city of Shen-
yang, BMWs 45,000-square-metre
facility cost 1bn to build and is a shin-
ing example of German high-tech man-
ufacturing.
Workers wear exoskeletons, smart-
gloves and augmented reality glasses,
allowing them to see inside a virtual
reality engine or chat online with the
plants artificial intelligence bot, nick-
named Xiao Bao.
It underlines how China is central to
BMWs strategy and a battleground for
car groups. China surpassed the US in
2009 to become the largest car market.
At the luxury end of the sector, the
Germans are the dominant force. More
than 70 per cent of the 2.2m premium
vehicles sold in China last year were
German, led by Audi, BMW and Mer-
cedes-Benz.
Workers at the 1bn
facility wear exoskeletons,
smart-gloves and
augmented reality glasses
Sources: IHS; company; McKinsey
In the case of BMW, the country
accounts for 22 per cent of its cars sold,
according to the company, and roughly
28 per cent of pre-tax income, says
Evercore in London.
The carmaker hopes its strategy in
China will help it reclaim the sales
crown in the premium market, won by
Daimler-owned Mercedes-Benz last
year.
It also has its sights on Audi,
the luxury unit of Volkswagen, which
has been the sales leader in China
since 1988.
BMWs performance in China so
far this year is promising, with sales
in the first four months up 18 per cent
to 191,697 units enough to outpace
Audi, whose China sales are down
nearly a fifth in the same period to
154,873 units.
Its Shenyang plant generates vast
amounts of data every day. Just tighten-
ing 140,000 screws creates an enormous
amount of data, which is analysed for
optimal torque and angle.
The bodyshop is 95 per cent auto-
mated, and a high-tech pressing shop
can make the BMW 5 Series saloons, or
sedans, at the plant 130kg lighter than
previous versions of the same model.
This is the most modern, sustaina-
ble, efficient car plant within
BMW, says Nicolas Peter, BMWs
chief financial officer.
Today Shenyang sets a new
standard. Maybe in two years time
it will be somewhere else,
but for the time being
this is it.
Analysts say that the
plant is just the start of
a plan to double pro-
duction in China
from 2016 levels to
600,000 vehicles by
2020.
Its by far BMWs
best market in terms of
German carmakers production in China
By volume (000) 600
Audi
BMW 500
Mercedes-
Benz
400
300
200
100
0 0
2011 12 13 14 15 16 17 18 19 20
Forecasts
Bow to Mao When Mao Zedong wrote Snow in
Businesses 1936, he was dreaming of northern
China and the wintry landscapes that
compete for had beguiled conquerors from Han
order of the Wudi to Genghis Khan: A thousand
red nose leagues of whirling snow/Both sides of
the Great Wall/One single white
immensity. The poem ends: The past
is past, the real hero is yet to come in
our time.
He was probably not thinking that,
one day, his words would be the
keynote to a BMW factory opening in
the northern city of Shenyang. BMW
said it had chosen the poem because
the strong sense of confidence and
pride fits well with the whole
atmosphere at the grand opening of
BMWs new Plant Dadong.
Observers say it is part of a trend:
the cult of Mao has advanced under
Xi Jinping.
Jude Blanchette, a scholar of
Chinese politics who will shortly be
publishing a book on Maos legacy,
refers to this as red-nosing:
companies seek to ingratiate
themselves with the authorities by
clambering onto the Mao bandwagon.
As the cult of For instance, Fu Chengyu, former
Mao advances, chairman of state oil groups Cnooc
companies and Sinopec, startled reporters with an
are rushing ode to the Communist partys early
to make the years in Jinggangshan, a mountainous
necessary guerrilla base in southern China.
genuflections He said: Let me tell you a bit about
Communist history. Communist history
is about achieving what was humanly
impossible.
In the car industry, one has to look
no further than FAW Group, which
built the first Communist-era luxury
car, the Hongqi (Red Flag), for Mao in
1958. In 2013 it relaunched retail sales
of the car, and says it is competing
with, among others, BMW. Charles
Clover, Emily Feng and Lucy Hornby
BMW sales at home and in China
By volume (000)
Germany
China
2012 13 14 15 16
growth outlook nowhere else comes
even remotely close, says Robin Zhu of
Bernstein in Hong Kong.
However, BMW officials say they are
cautious about over-reliance on China.
For a start, although the Chinese car
industry recorded its highest growth
rate for three years in 2016, the market
is projected to cool.
McKinsey says that it expanded at a
compound annual growth rate of 12 per
cent from 2010 to 2015. It projects that
this will slow to 5-10 per cent from 2016
to 2020.
The Shenyang project faced a number
of challenges.
In 2013, it was investigated by
the Chinese ministry of the environ-
ment over the impact of raising produc-
tion at the plant in Shenyang.
Keeping Chinas goodwill takes con-
siderable effort, company officials say
privately.
Everything BMW does nowadays
needs a full consideration of the Chinese
consumer and regulator, says Arndt
Ellinghorst, head of cars research for
Evercore ISI in London.
But the temptation is to take advan-
tage of the companys brand recognition
in the fastest-growing large market.
Not many companies have the brand
equity to create a major pull among the
biggest emerging consumer, says Mr
Ellinghorst.
Or put it this way, BMW could never
afford to pay high salaries in Munich if it
wasnt for the Chinese consumer.
High-tech manufacturers such as
BMW are considered an inspiration to
Chinas own efforts to make its manu-
facturing sector more competitive a
policy known as Made in China 2025, to
which BMW has been at pains to link the
factory at every opportunity.
We are really proud to be able to con-
tribute to Made in China 2025, Mr Peter
says.
Beijings initiative is based on Ger-
Alamy
Top luxury marques sold in China
Vehicle registration, 2016 (000)
600 0 100 200 300 400 500
Audi
BMW
400 Mercedes-Benz
Cadillac
Lexus
Land Rover
200
Volvo
Porsche
Infiniti
Mini
70% manys own high-tech manufacturing
German share of push, which is exemplified by BMWs
the 2.2m premium facilities.
vehicles sold in BMW has made efforts to woo the
China last year local government. Since 2003 the com-
pany has been working in the city of
12% Shenyang, in the economically blighted
China car industrys province of Liaoning.
compound annual Formerly the steel and coal capital of
growth rate from China, Liaoning has been hard hit by the
2010 to 2015 glut in metals, and 13m tons of steel
capacity closed last year.
Retooling into high-tech industry is a
sought-after goal BMW Brilliance
Automotive, BMWs Chinese joint ven-
ture in Shenyang, employs 16,000 peo-
ple and is the provinces largest tax-
payer.
As wages in China rise, it may no
longer rely on cheap labour as the
source of its competitiveness, and facto-
ries are under pressure to become more
high-tech.
Jiang Youwei, Shenyangs mayor, says
BMWs facilities in the city are the key to
building Shenyang into an innovation
city by 2030 and an engine in the revi-
talisation of the north-east China
region.
However, some other European man-
ufacturers have been cautious about
Made in China 2025, saying it puts pres-
sure on foreign companies to localise
production, thereby putting sensi-
tive technology at risk of being stolen.
It blatantly aims to create Chinese
national champions in industries
directly competing with foreign groups,
including cars.
Despite the influence of the authori-
ties on investment policy and the
potential challenge from Chinese
groups, BMW is in a strong position to
compete with its state-of-the-art tech-
nology that should help spark further
sales growth.
As Mr Peter says, BMW is not afraid of
taking on Chinese rivals: You know, we
actually welcome competition.
courage the use of petrol and diesel
cars risks punishing the poorest in soci-
ety, according to a new study.
Increasingly onerous emissions stand-
ards as well as the promotion of ride-
sharing and electric cars also risk bene-
fiting the wealthy and those in big cities
at the expense of the poor and those in
rural areas.
For those who want to chase away
the car, be careful, warned Henri de
Castries, former chief executive of
French insurer Axa and president of the
Institut Montaigne, the think-tank that
drew up the report.
You risk exasperating the divisions
in society between the rich and poor,
between the urban and the rural, he
pointed out.
The institute drew up the report with
help from some of the most powerful
figures in French business, including
Laurent Burelle, chief executive of Plas-
tic Omnium, as well as Thierry Bollor, a
senior executive at Renault and Jacques
Aschenbroich, chief executive of Valeo.
The report comes weeks after the
French presidential campaign, which
was defined by the debate over the win-
ners and losers of globalisation.
Those that voted for the far right
National Front party were predomi-
nately residents from rural areas, which
in France and across Europe have not
benefited from the same fruits of glo-
balisation as the big cities over the past
20 years.
It is mainly rural areas where having a
car is essential, as there are no other
transport options. Less wealthy people
often also live on the outskirts of major
cities, where alternative transport
options are limited.
Todays report was published on the
back of a survey across France, Ger-
many and California which found that
four out of 10 people have no other
alternative than to use their cars.
In Paris, 58 per cent of households do
not own a car, using public transport or
ride-sharing. This is compared with 22
per cent in the citys disadvantaged sub-
urbs and 12 per cent across the country.
The report said that widespread use of
autonomous driving cars, electric cars
and ride-sharing schemes could radi-
cally change our relationships to cars
with a potentially positive impact on the
environment.
But these changes were coming slowly
particularly in the countryside, it said,
and policymakers should be aware that
a large number of people relied on a
cheaper diesel or petrol car and had no
expectation of this changing.
The survey found that 99 per cent of
people surveyed across France, Ger-
many and California had no intention of
giving up their car in the next three
years. The rate of young people getting
their driving licence also remained high,
at 80 per cent.
The report said that it aimed to
nuance the dogmatic discourse on the
subject.
It comes as carmakers are facing
increased pressure to reduce the envi-
ronmental impact of their cars, particu-
lar their harmful nitrous oxide emis-
sions in the wake of the Volkswagen
emissions scandal. This could poten-
tially lead to an added cost for consum-
ers.
Cities have also been cracking down,
with Paris promising to ban diesel cars
with high emission levels and London
planning an ultra low emission zone
in the city that would progressively ban
older diesel models.

Contracts & Tenders

Technology

Alphabet smart-home unit revamps security camera

TIM BRADSHAW SAN FRANCISCO
Alphabets smart-home unit Nest is
launching a high-definition update to
its internet-connected home security
camera, powered by Googles artificial
intelligence technology, a year after the
exit of its co-founder Tony Fadell.
This weeks unveiling of the $299 Nest
Cam IQ, which will ship in late June,
marks the beginning of the end for a rel-
ative dearth of new device introductions
at the smart-home pioneer. Other new
products are anticipated later this year.
Nest Cam IQ draws on computer-vi-
sion technology from its Alphabet sister
company Google to introduce new fea-
tures such as face recognition, to
improve the relevance of security alerts
pushed out through its companion
smartphone app.
Last July, Nest launched a new version
of its existing home camera that was
designed for outdoor use. At that point,
it had been more than a year since the
company first released the Nest Cam, a
home security camera based on tech-
nology it acquired with start-up Drop-
cam in 2014.
The launch of the Nest Cam Outdoor
came just weeks after Mr Fadell had
been replaced by Motorola veteran Mar-
wan Fawaz as the companys chief exec-
utive, amid criticism about the pace of
new product innovations after the com-
pany was acquired by Google for $3.2bn
in early 2014.
The learning thermostat for which
it is best known was first introduced in
2011, followed by its Protect smoke
alarm in 2013.
Greg Duffy, founder of Dropcam, crit-
icised Mr Fadells leadership, saying
dozens of employees had left soon after
its acquisition by Nest, amid a contin-
ued lack of output.
Mr Fadell pointed to several upgrades
to its hardware and software in the year
leading up to his exit. He told the Finan-
cial Times in an interview last year: It
takes a long time to innovate. You cant
just redo one thing, you have to rebuild
from the ground up.
That is what Nest says it has done with
the Cam IQ, which includes an overhaul
of its hardware design and a new 4K sen-
sor that allows images to be enlarged 12-
fold for a clearer look at intruders.
It takes a long time to
innovate. You cant just redo
one thing, you have to
rebuild from the ground up
Nests new camera promises to be able
to tell the difference between a person
and a pet or another shadow, reducing
the frequent false alarms that can
occur using simpler motion-sensing
technology. Subscribers to Nest Aware,
a premium service costing $100 a year,
can receive familiar face alerts when
family members come home.
Our philosophy is that a security
camera should be an intelligent camera
a guard watching for you but thinking
before they pick up the phone to call
you, said Maxime Veron, Nests direc-
tor of product marketing.
Over the past year, Nests camera has
seen growing competition from both
lower-priced Chinese devices, such as Yi
Technology, and newer entrants offer-
ing advanced AI technology, including
Amazons new Echo Look and start-up
Lighthouse.
16 FINANCIAL TIMES Thursday 1 June 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 $

-0.21% -0.23% -0.16% -0.09% -0.10% -0.14% -0.16% -0.10% -1.72%

No change No change No change No change
0.28%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
May 01 - - Index All World May 01 - May 31 Index All World May 01 - May 31 Index All World May 01 - May 31 Index All World May 01 - May 31 Index All World May 01 - May 31 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
7,526.51 2,347.38
2,407.94 19,650.57
2,388.33 15,575.63 12,615.06
15,309.77 7,237.17 12,507.90 19,251.87 2,219.67
Day -0.21% Month 1.00% Year 14.72% Day -0.41% Month -1.77% Year 8.84% Day -0.09% Month 4.46% Year 20.77% Day 0.13% Month -0.22% Year NaN% Day -0.14% Month 2.36% Year 15.13% Day 0.16% Month 6.44% Year 19.33%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
6,189.04 25,660.65
49,588.84 10,880.00
6,091.60 49,139.09 10,820.30 3,210.82
1,532.14 24,698.48
1,527.55 3,175.44
Day -0.23% Month 2.34% Year 25.46% Day -0.28% Month -0.26% Year 8.08% Day -0.10% Month 0.84% Year 12.36% Day 0.03% Month 1.53% Year 19.34% Day -0.16% Month 4.25% Year 24.39% Day 0.19% Month 1.11% Year 14.81%

Dow Jones Industrial New York Bovespa So Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
31,145.80
20,996.08 66,721.75 3,300.81
20,913.46 3,264.54
63,032.97 5,304.15 20,733.25 20,731.68
5,283.63 29,921.18
Day -0.16% Month 0.24% Year 17.44% Day -1.45% Month -3.60% Year 30.08% Day -0.42% Month 0.31% Year 16.65% Day -0.40% Month 0.59% Year 15.01% Day 0.23% Month -1.19% Year 10.44% Day -0.04% Month 4.10% Year 16.54%

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 22263.74 22310.58 Cyprus CSE M&P Gen 77.16 76.67 Italy FTSE Italia All-Share 22982.45 23058.36 Philippines Manila Comp 7837.12 7860.77 Taiwan Weighted Pr 10040.72 10101.95 Cross-Border DJ Global Titans ($) 274.30 274.56
Australia All Ordinaries 5761.30 5756.00 Czech Republic
PX 1002.38 1006.15 FTSE Italia Mid Cap 40186.51 40135.95 Poland Wig 60130.38 60344.58 Thailand Bangkok SET 1561.66 1568.57 Euro Stoxx 50 (Eur) 3562.99 3561.22
S&P/ASX 200 5724.60 5717.90 Denmark OMXC Copenahgen 20 995.63 987.64 FTSE MIB 20731.68 20814.48 Portugal PSI 20 5289.98 5279.80 Turkey BIST 100 97347.63 97725.95 Euronext 100 ID 1019.99 1022.64
S&P/ASX 200 Res 3360.80 3380.20 Egypt EGX 30 13239.16 13207.94 Japan 2nd Section 5960.52 5971.39 PSI General 2921.18 2908.82 UAE Abu Dhabi General Index 4501.76 4492.92 FTSE 4Good Global ($) 6071.52 6076.85
Austria ATX 3123.54 3160.27 Estonia OMX Tallinn 1116.57 1116.20 Nikkei 225 19650.57 19677.85 Romania BET Index 8676.72 8688.50 UK FT 30 3365.70 3367.10 FTSE All World 306.26 306.58
Belgium BEL 20 3888.32 3890.83 Finland OMX Helsinki General 9664.53 9711.88 S&P Topix 150 1270.23 1273.55 Russia Micex Index 1896.95 1932.91 FTSE 100 7519.95 7526.51 FTSE E300 1532.14 1533.66
BEL Mid 6749.61 6719.66 France CAC 40 5283.63 5305.93 Topix 1568.37 1572.67 RTX 1052.93 1074.81 FTSE 4Good UK 6678.64 6682.46 FTSE Eurotop 100 3003.64 3007.72
Brazil Bovespa 63032.97 63962.26 SBF 120 4213.76 4228.62 Jordan Amman SE 2160.39 2155.26 Saudi-Arabia TADAWUL All Share Index 6870.62 6821.71 FTSE All Share 4116.08 4119.58 FTSE Global 100 ($) 1507.26 1506.75
Canada S&P/TSX 60 905.28 Germany
907.53 M-DAX 25128.46 25229.32 Kenya NSE 20 3438.17 3438.20 Singapore FTSE Straits Times 3210.82 3204.79 FTSE techMARK 100 4641.46 4653.18 FTSE Gold Min ($) 1500.33 1506.40
S&P/TSX Comp 15309.77 15372.35 TecDAX 2289.26 2284.48 Kuwait KSX Market Index 6726.87 6662.89 Slovakia SAX 304.13 307.54 USA DJ Composite 7266.46 7279.68 FTSE Latibex Top (Eur) 3962.20 3976.10
S&P/TSX Div Met & Min 711.71 701.59 XETRA Dax 12615.06 12598.68 Latvia OMX Riga 851.33 855.16 Slovenia SBI TOP 782.22 785.95 DJ Industrial 20996.08 21029.47 FTSE Multinationals ($) 1761.66 1762.11
Chile IGPA Gen 24332.32 24572.19
Greece Athens Gen 775.24 776.02 Lithuania OMX Vilnius 592.18 589.05 South Africa FTSE/JSE All Share 53562.57 54158.04 DJ Transport 9113.56 9163.66 FTSE World ($) 542.23 542.69
China FTSE A200 9047.77 9019.42 FTSE/ASE 20 2061.55 2064.22 Luxembourg LuxX 1732.15 1743.69 FTSE/JSE Res 20 31220.26 31489.10 DJ Utilities 725.21 722.73 FTSEurofirst 100 (Eur) 4328.45 4338.65
FTSE B35 9000.71 8988.96
Hong Kong Hang Seng 25660.65 25701.63 Malaysia FTSE Bursa KLCI 1765.87 1765.34 FTSE/JSE Top 40 47153.91 47699.35 Nasdaq 100 5784.73 5794.63 FTSEurofirst 80 (Eur) 4887.86 4895.54
Shanghai A 3264.54 3256.93 HS China Enterprise 10602.97 10619.34 Mexico IPC 49139.09 49277.95 South Korea Kospi 2347.38 2343.68 Nasdaq Cmp 6189.04 6203.19 MSCI ACWI Fr ($) 463.73 464.29
Shanghai B 320.96 320.81 HSCC Red Chip 4084.68 4078.50 Morocco MASI 11536.13 11534.46 Kospi 200 304.67 304.59 NYSE Comp 11575.75 11601.31 MSCI All World ($) 1909.90 1911.70
Shanghai Comp 3117.18 3109.94
Hungary Bux 34551.90 34321.14 Netherlands AEX 524.07 525.70 Spain IBEX 35 10880.00 10876.90 S&P 500 2407.94 2412.91 MSCI Europe (Eur) 1594.48 1598.24
Shenzhen A 1891.38 1893.24
India BSE Sensex 31145.80 31159.40 AEX All Share 798.18 800.11 Sri Lanka CSE All Share 6674.32 6655.25 Wilshire 5000 24988.79 25053.41 MSCI Pacific ($) 2541.58 2533.33
Shenzhen B 1081.09 1086.47 Nifty 500 8350.95 8328.95 New Zealand NZX 50 7418.90 7411.95 Sweden OMX Stockholm 30 1639.11 1639.74 Venezuela IBC 74977.92 73959.10 S&P Euro (Eur) 1629.63 1632.94
Colombia COLCAP 1444.09 1448.93
Indonesia Jakarta Comp 5738.16 5712.33 Nigeria SE All Share 29064.52 28467.61 OMX Stockholm AS 588.46 588.27 Vietnam VNI 737.82 738.21 S&P Europe 350 (Eur) 1576.23 1578.12
Croatia CROBEX 1854.08 1853.42
Ireland ISEQ Overall 6946.59 6995.83 Norway Oslo All Share 781.55 788.92 Switzerland SMI Index 9016.64 9007.54 S&P Global 1200 ($) 2126.24 2128.39
Israel Tel Aviv 100 12.96 12.97 Pakistan KSE 100 50591.57 51453.16 Stoxx 50 (Eur) 3224.66 3220.57
(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 May 31 %Chg %Chg May 31 %Chg %Chg May 31 %Chg %Chg May 31 %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
Amazon.com 21.0 993.78 -2.92 Lloyds Banking 516.8 70.59 -0.54 Total 630.6 47.27 -0.28 Softbank . 776.4 9003.00 23.00 3i 895.00 6.5 27.1 Wizz Air Holdings 2279.00 18.0 28.2 Hostelworld 360.25 10.1 61.1 Personal Goods 37701.59 2.8 28.4
Tesla 19.2 341.65 6.55 Glaxosmithkline 461.4 1703.50 25.57 Nestle N 602.2 75.96 0.28 Mitsubishi Ufj Fin,. 651.9 690.90 -5.60 Easyjet 1414.00 5.4 40.9 Restaurant 364.20 15.8 12.3 Stock Spirits 175.00 9.9 -3.1 Industrial Transportation 3206.52 2.7 5.1
Nvidia 17.8 144.82 -0.05 Bp 413.3 466.70 -1.92 Unicredit 548.1 15.57 -0.28 Honda Motor Co., 382.3 3117.00 44.00 Informa 671.00 4.7 -1.3 Countryside Properties 332.80 12.9 34.8 Communisis 53.75 9.7 23.9 Mobile Telecommunications 5210.21 2.4 15.2
Bank Of America 15.1 22.24 -0.60 Convatec 359.3 320.00 -0.06 Novartis N 462.3 72.89 0.64 Nippon Telegraph And Telephone 373.8 5308.00 57.00 Burberry 1815.00 4.1 21.9 Sophos 452.40 9.7 73.0 Boot (henry) 304.00 8.6 50.9 Electronic & Electrical Equip. 6002.55 1.8 22.2
Facebook 14.4 151.93 -0.45 Reckitt Benckiser 332.7 7938.00 10.41 Santander 454.7 5.78 -0.02 Tosoh 357.6 941.00 2.00 Glaxosmithkline 1703.50 4.0 8.7 Intermediate Capital 882.50 9.4 26.1 Hss Hire 68.75 7.4 -15.6 Aerospace & Defense 5401.25 1.7 16.6
Apple 14.1 153.20 -0.47 Hsbc Holdings 298.3 675.60 3.24 Roche Gs 416.5 244.30 -0.83 Tokyo Electron 342.0 15690.00 40.00 Compass 1670.00 3.9 11.8 Spirax-sarco Eng 5675.00 7.8 35.6 Ncc 165.50 5.4 -8.4 General Industrials 5996.92 1.7 8.7
Alphabet 11.9 966.06 -9.82 Vodafone 254.0 231.50 2.88 Intesa Sanpaolo 395.8 2.55 0.00 Toyota Motor 338.3 5932.00 -49.00 Wolseley 5110.00 3.7 2.8 Just Eat 671.50 6.8 15.1 Nanoco 42.00 5.0 -6.7 Travel & Leisure 9938.89 1.7 13.7
J P Morgan Chase & Co 9.9 82.10 -1.80 Unilever 237.5 4331.50 36.85 Repsol 355.2 14.92 -0.09 Sumitomo Mitsui Fin,. 313.9 3974.00 -74.00 Unilever 4331.50 3.2 32.0 Marshalls 412.20 6.3 41.0 Petropavlovsk 7.93 4.9 14.1 Household Goods 19180.41 1.5 19.8
Goldman Sachs 8.6 211.46 -6.96 British American Tobacco 225.7 5530.00 39.46 Enel 345.0 4.76 0.03 Kirin Holdings , 264.9 2336.50 -5.50 Scottish Mortgage Investment Trust 397.10 3.1 25.1 Nostrum Oil & Gas 531.50 6.2 37.7 Macau Property Opportunities Fund 168.50 4.7 39.5 Media 7973.71 1.3 1.7
Alphabet 7.7 988.10 -8.07 Royal Dutch Shell 221.5 2100.00 -0.42 Cs N 344.8 12.22 -0.15 Ntt Docomo,. 253.2 2717.00 -12.50 Vodafone 231.50 3.0 16.1 Assura 63.50 5.5 10.5 Brown (n) 287.00 4.2 28.3 Health Care Equip.& Services 8412.98 1.1 14.4
Wpp 1744.00 3.0 -3.6 Ibstock 252.30 5.5 35.4 Costain 484.25 4.0 37.0 Software & Computer Services 2131.71 1.1 12.6
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
Bae Systems 665.50 2.8 13.0 Nmc Health 2272.00 5.1 47.1 Morgan Sindall 1240.00 3.9 66.4 Tobacco 60618.11 1.0 14.6
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Perrigo 71.54 3.62 5.32 Nostrum Oil & Gas 531.50 37.90 7.68 Ericsson , Telefonab. L M Ser. B 6.57 0.35 5.61 Toyobo Co., 195.00 10.00 5.41 Shire 4471.50 -5.2 -3.3 Petrofac 380.00 -38.2 -56.3 Enquest 35.25 -15.8 -15.3 Oil Equipment & Services 12582.82 -12.2 -22.8
Analog Devices 87.94 3.14 3.70 Ig Holdings 584.00 30.79 5.56 E.on Se Na O.n. 7.79 0.22 2.87 Showa Denko K.k. 2153.00 107.00 5.23 Anglo American 1031.50 -4.7 -10.9 Tullow Oil 182.80 -13.8 -41.3 Lonmin 73.50 -15.5 -48.0 Fixed Line Telecommunication 3574.08 -2.2 -14.6
Tesla 341.65 6.55 1.95 Nmc Health 2272.00 84.09 3.85 Fresen.med.care Kgaa O.n. 85.16 2.26 2.73 Mitsui Mining And Smelting , 441.00 16.00 3.76 Paddy Power Betfair 8070.00 -4.4 -8.6 Onesavings Bank 407.30 -12.9 20.5 Premier Oil 57.75 -10.5 -22.0 Mining 14615.10 -2.2 -1.1
Vertex Pharmaceuticals orporated 122.73 2.34 1.94 Ibstock 252.30 9.27 3.82 Kinnevik Ab Ser. B 25.55 0.68 2.72 Tokai Carbon Co., 568.00 20.00 3.65 Bhp Billiton 1173.00 -3.2 -10.2 Hunting 505.50 -8.6 -19.4 Renold 55.00 -9.1 24.6 Electricity 8907.20 -1.7 -3.2
Illumina 176.70 3.12 1.80 Standard Chartered 731.90 25.97 3.58 Rwe Ag St O.n. 18.08 0.43 2.47 Advantest 1979.00 68.00 3.56 Old Mutual 188.20 -2.8 -8.5 Acacia Mining 287.40 -7.5 -24.5 Renewi 94.50 -9.0 1.9 Oil & Gas Producers 7809.35 -1.4 -7.9
Marks And Spencer 382.50 -2.8 9.2 Tate & Lyle 738.00 -6.6 4.2 Ashley (laura) Holdings 12.75 -7.3 -36.3 General Retailers 2648.72 -1.3 2.3
Downs Downs Downs Downs
Lloyds Banking 70.59 -2.7 12.9 Cairn Energy 202.60 -6.5 -14.1 Ophir Energy 82.75 -7.2 -14.2 Industrial Metals 2177.94 -1.1 -3.4
Michael Kors Holdings 32.79 -3.48 -9.59 Hunting 505.50 -33.50 -6.22 Societe Generale 46.67 -2.35 -4.78 Kyowa Hakko Kirin Co., 1894.00 -76.00 -3.86
Babcock Int 933.00 -2.7 -2.1 hcape 817.00 -4.8 16.3 St. Ives 48.00 -6.8 -62.4 Food Producers 8654.72 -1.1 7.6
Transocean Ltd 8.86 -0.40 -4.27 Ferrexpo 171.70 -10.99 -6.02 Norsk Hydro 4.81 -0.21 -4.11 Toshiba 252.00 -8.80 -3.37
Kingfisher 325.10 -2.5 -7.1 Aldermore 243.60 -4.5 2.8 Gulf Marine Services 65.75 -5.7 34.2 Life Insurance 8279.74 -0.7 4.5
Chesapeake Energy 4.92 -0.18 -3.53 Vedanta Resources 611.50 -36.69 -5.66 Deutsche Bank Ag Na O.n. 15.57 -0.56 -3.47 Familymart Co., 6220.00 -200.00 -3.12
Bt 309.55 -2.5 -15.8 Polypipe 417.40 -4.3 28.9 Kainos 232.25 -5.7 16.9 Gas Water & Multiutilities 6552.75 -0.5 8.1
Cf Industries Holdings 26.93 -0.98 -3.52 Tullow Oil 182.80 -9.07 -4.71 Arcelormittal Sa 19.31 -0.66 -3.28 Concordia Fin Ltd 509.90 -12.40 -2.37
Experian 1618.00 -2.4 3.3 Paypoint 945.50 -4.2 -6.0 Trinity Mirror 104.00 -5.5 -1.9 Real Estate & Investment Servic 2720.97 -0.4 10.1
United Rentals 106.78 -3.87 -3.50 Nex 644.50 -29.68 -4.40 Yara Int 33.16 -1.00 -2.94 Dentsu . 5640.00 -120.00 -2.08
United Utilities 1029.00 -2.4 14.4 Dixons Carphone 328.60 -3.9 -7.3 Headlam 604.50 -5.3 23.9 Banks 4323.01 -0.3 4.6
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
May 31 Currency Mid Change Mid Change Mid Change May 31 Currency Mid Change Mid Change Mid Change May 31 Currency Mid Change Mid Change Mid Change May 31 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 16.1363 0.0488 18.1453 0.1634 20.8312 0.1409 Indonesia Indonesian Rupiah 13320.0000 -2.5000 14978.4236 87.1226 17195.5443 61.3717 Poland Polish Zloty 3.7215 -0.0150 4.1848 0.0084 4.8042 -0.0012 ..Three Month 0.7750 -0.0029 0.8709 0.0020 - -
Australia Australian Dollar 1.3433 0.0021 1.5105 0.0114 1.7341 0.0092 Israel Israeli Shekel 3.5393 -0.0042 3.9800 0.0192 4.5691 0.0118 Romania Romanian Leu 4.0645 -0.0251 4.5706 -0.0006 5.2471 -0.0126 ..One Year 0.7761 -0.0029 0.8703 0.0019 - -
Bahrain Bahrainin Dinar 0.3771 0.0000 0.4241 0.0025 0.4868 0.0018 Japan Japanese Yen 110.5850 -0.3950 124.3534 0.3049 142.7603 0.0281 Russia Russian Ruble 56.7625 0.1312 63.8297 0.5298 73.2779 0.4440 United States United States Dollar - - 1.1245 0.0067 1.2910 0.0048
Bolivia Bolivian Boliviano 6.9100 - 7.7703 0.0466 8.9205 0.0335 ..One Month 110.5848 -0.3953 124.3534 0.3050 142.7603 0.0280 Saudi Arabia Saudi Riyal 3.7504 - 4.2173 0.0253 4.8416 0.0182 ..One Month - - 1.1243 -0.1616 1.2911 0.0048
Brazil Brazilian Real 3.2428 -0.0244 3.6465 -0.0054 4.1863 -0.0157 ..Three Month 110.5845 -0.3959 124.3535 0.3051 142.7601 0.0277 Singapore Singapore Dollar 1.3834 -0.0017 1.5556 0.0074 1.7859 0.0045 ..Three Month - - 1.1239 -0.1616 1.2913 0.0049
Canada Canadian Dollar 1.3507 0.0041 1.5189 0.0136 1.7437 0.0118 ..One Year 110.5830 -0.3991 124.3536 0.3053 142.7603 0.0271 South Africa South African Rand 13.1863 0.0625 14.8280 0.1589 17.0229 0.1443 ..One Year - - 1.1222 -0.1616 1.2925 0.0048
Chile Chilean Peso 671.5100 -4.2200 755.1165 -0.1844 866.8896 -2.1718 Kenya Kenyan Shilling 103.4000 -0.0100 116.2738 0.6867 133.4848 0.4884 South Korea South Korean Won 1119.6000 -5.6000 1258.9962 1.2975 1445.3541 -1.7741 Venezuela Venezuelan Bolivar Fuerte 10.1029 0.1329 11.3607 0.2167 13.0423 0.2198
China Chinese Yuan 6.8210 -0.0400 7.6703 0.0013 8.8056 -0.0184 Kuwait Kuwaiti Dinar 0.3037 0.0001 0.3415 0.0021 0.3921 0.0015 Sweden Swedish Krona 8.6750 -0.0649 9.7551 -0.0140 11.1990 -0.0414 Vietnam Vietnamese Dong 22715.0000 4.0000 25543.1756 157.8260 29324.1373 115.2882
Colombia Colombian Peso 2922.8450 4.4600 3286.7545 24.7131 3773.2631 19.9053 Malaysia Malaysian Ringgit 4.2800 -0.0025 4.8129 0.0261 5.5253 0.0175 Switzerland Swiss Franc 0.9675 -0.0078 1.0880 -0.0021 1.2491 -0.0053 European Union Euro 0.8893 -0.0054 - - 1.1480 -0.0026
Costa Rica Costa Rican Colon 573.7450 -2.8200 645.1793 0.7205 740.6793 -0.8452 Mexico Mexican Peson 18.6998 0.0393 21.0280 0.1701 24.1406 0.1412 Taiwan New Taiwan Dollar 30.0790 -0.0260 33.8240 0.1740 38.8307 0.1124 ..One Month 0.8891 -0.0054 - - 1.1480 -0.0026
Czech Republic Czech Koruna 23.4353 -0.2355 26.3531 -0.1051 30.2539 -0.1893 New Zealand New Zealand Dollar 1.4090 -0.0022 1.5844 0.0071 1.8189 0.0040 Thailand Thai Baht 34.0600 -0.0700 38.3006 0.1517 43.9699 0.0751 ..Three Month 0.8887 -0.0054 - - 1.1478 -0.0026
Denmark Danish Krone 6.6159 -0.0395 7.4396 0.0005 8.5408 -0.0187 Nigeria Nigerian Naira 314.7500 - 353.9380 2.1245 406.3283 1.5259 Tunisia Tunisian Dinar 2.4387 0.0069 2.7423 0.0241 3.1482 0.0206 ..One Year 0.8870 -0.0054 - - 1.1473 -0.0026
Egypt Egyptian Pound 18.1025 0.1255 20.3564 0.2625 23.3695 0.2492 Norway Norwegian Krone 8.4224 -0.0236 9.4710 0.0305 10.8729 0.0105 Turkey Turkish Lira 3.5365 -0.0145 3.9768 0.0077 4.5655 -0.0014
Hong Kong Hong Kong Dollar 7.7925 -0.0009 8.7627 0.0516 10.0597 0.0366 Pakistan Pakistani Rupee 104.8350 - 117.8875 0.7076 135.3373 0.5083 United Arab Emirates UAE Dirham 3.6730 0.0000 4.1303 0.0247 4.7417 0.0177
Hungary Hungarian Forint 274.1530 -1.5035 308.2865 0.1700 353.9193 -0.6045 Peru Peruvian Nuevo Sol 3.2693 -0.0177 3.6763 0.0022 4.2205 -0.0070 United Kingdom Pound Sterling 0.7746 -0.0029 0.8711 0.0020 - -
India Indian Rupee 64.5200 -0.1175 72.5531 0.3042 83.2925 0.1617 Philippines Philippine Peso 49.7750 -0.0550 55.9722 0.2745 64.2573 0.1706 ..One Month 0.7747 -0.0029 0.8710 0.0020 - -
Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata
UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
Produced in conjunction with the Institute and Faculty of Actuaries May 31 May 30 May 26 May 25 May 24 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 3365.70 3367.10 3367.40 3359.20 3358.40 0.00 3369.50 3060.90 Personal Goods 22.76 FTSE 250 Index 9.60 General Retailers 4.41 FTSE 100 Price Change FTSE 100 Price Change
May 31 chge% Index May 30 May 26 ago yield% Cover ratio adj Return FT 30 Div Yield 1.46 1.47 1.47 1.48 1.48 0.00 3.93 2.74 Electronic & Elec Eq 19.50 Real Est Invest & Se 9.31 Banks 4.38 3I Group PLC 895.00 6.50 London Stock Exchange Group PLC 3425 -17.00
FTSE 100 (100) 7519.95 -0.09 6730.72 7526.51 7547.63 6191.93 3.67 0.91 29.93 139.74 6249.32 P/E Ratio net 30.51 30.36 30.36 30.11 30.05 0.00 19.44 14.26 Forestry & Paper 18.85 FTSE SmallCap Index 8.82 Utilities 3.80 Admiral Group PLC 2037 6.00 Marks And Spencer Group PLC 382.50 -4.40
FTSE 250 (250) 19972.17 -0.10 17876.08 19991.85 20024.92 17061.47 2.64 1.70 22.37 231.82 14468.55 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Household Goods & Ho 16.88 Equity Invest Instr 8.63 Construct & Material 3.29 Anglo American PLC 1031.5 -24.50 Mediclinic International PLC 808.50 19.00
FTSE 250 ex Inv Co (207) 21409.05 -0.16 19162.16 21442.54 21466.09 18529.79 2.67 1.73 21.65 256.03 15824.83 FT 30 hourly changes Consumer Goods 14.26 Health Care 8.46 Real Est Invest & Tr 3.04 Antofagasta PLC 801.00 -8.50 Merlin Entertainments PLC 529.00 9.50
FTSE 350 (350) 4172.99 -0.09 3735.03 4176.71 4187.61 3458.04 3.49 1.01 28.29 72.54 6967.52 8 9 10 11 12 13 14 15 16 High Low Aerospace & Defense 13.45 Chemicals 8.19 Basic Materials 3.00 Ashtead Group PLC 1566 -5.00 Micro Focus International PLC 2394 -18.00
FTSE 350 ex Investment Trusts (306) 4138.43 -0.10 3704.10 4142.44 4152.99 3434.08 3.52 1.01 28.22 72.88 3559.60 3367.1 3373.1 3372.9 3373 3381.3 3388.3 3386.2 3377.4 3376 3391.1 3364.7 Tobacco 13.10 Pharmace & Biotech 8.02 Leisure Goods 2.44 Associated British Foods PLC 2996 12.00 Mondi PLC 2024 5.00
FTSE 350 Higher Yield (121) 3877.29 -0.14 3470.36 3882.81 3891.63 3157.85 4.75 0.74 28.57 91.83 6775.79 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Industrial Eng 12.82 Nonlife Insurance 7.68 Mining 1.80 Astrazeneca PLC 5234 19.00 Morrison (Wm) Supermarkets PLC 246.20 -1.40
FTSE 350 Lower Yield (229) 4069.78 -0.03 3642.66 4070.85 4083.10 3432.18 2.01 1.78 27.97 40.23 4448.71 Software & Comp Serv 12.42 Automobiles & Parts 6.57 Telecommunications 1.18 Aviva PLC 525.00 0.50 National Grid PLC 1089.5 0.50
FTSE SmallCap (277) 5655.22 0.02 5061.70 5653.93 5661.48 4569.78 2.69 1.22 30.58 61.66 8075.96 Financial Services 12.37 Financials 6.17 Media 0.20
FTSE SmallCap ex Inv Co (146) 5032.50 -0.07 4504.34 5035.97 5043.67 4159.48 2.81 1.54 23.08 54.02 7549.43 FX: EFFECTIVE INDICES Health Care Eq & Srv 12.10 Gas Water & Multi 5.85 Food & Drug Retailer -2.25
Babcock International Group PLC 933.00 -4.00 Next PLC 4360 -20.00
Bae Systems PLC 665.50 0.50 Old Mutual PLC 188.20 -3.10
FTSE All-Share (627) 4116.08 -0.09 3684.09 4119.58 4130.15 3407.91 3.46 1.02 28.37 70.58 6948.59 Travel & Leisure 10.53 FTSE All{HY-}Share Index 5.54 Electricity -3.69
May 30 May 26 Mnth Ago May 31 May 30 Mnth Ago Barclays PLC 210.00 0.80 Paddy Power Betfair PLC 8070 -25.00
FTSE All-Share ex Inv Co (452) 4061.31 -0.10 3635.07 4065.23 4075.50 3369.91 3.51 1.01 28.10 70.97 3550.08 Support Services 10.37 Life Insurance 5.39 Oil Equipment & Serv -5.50 Barratt Developments PLC 612.50 11.00 Pearson PLC 706.50 6.50
FTSE All-Share ex Multinationals (567) 1249.93 0.02 927.24 1249.68 1252.82 1145.62 2.95 1.29 26.26 14.88 2226.68 Australia 92.58 92.58 93.72 Sweden 76.82 77.27 77.13 Technology 10.09 NON FINANCIALS Index 5.32 Industrial Metals & -5.76 Bhp Billiton PLC 1173 -29.50 Persimmon PLC 2455 2.00
FTSE Fledgling (94) 9936.71 0.33 8893.85 9904.40 9887.69 7660.76 2.49 1.79 22.41 103.30 18556.61 Canada 87.06 87.19 85.97 Switzerland 160.55 160.78 160.34 Industrials 9.99 Food Producers 5.08 Oil & Gas -7.02 BP PLC 466.70 -5.40 Provident Financial PLC 3051 -6.00
FTSE Fledgling ex Inv Co (45) 13972.61 1.03 12506.18 13829.86 13757.25 10381.24 2.84 2.90 12.11 152.50 25450.55 Denmark 108.81 108.75 107.89 UK 77.72 77.25 79.43 Beverages 9.91 Industrial Transport 5.00 Oil & Gas Producers -7.07 British American Tobacco PLC 5530 29.00 Prudential PLC 1736 -4.00
FTSE All-Small (371) 3931.23 0.04 3518.64 3929.73 3934.37 3168.89 2.68 1.24 30.02 42.76 7206.39 Japan 138.94 138.60 139.57 USA 103.16 103.21 104.54 Mobile Telecomms 9.90 FTSE 100 Index 4.59 Tech Hardware & Eq -9.13 British Land Company PLC 634.00 -2.50 Randgold Resources LD 7365 200.00
FTSE All-Small ex Inv Co Index (191) 3770.11 -0.03 3374.43 3771.08 3775.84 3102.28 2.81 1.60 22.28 40.50 7165.16 New Zealand 118.08 117.57 115.00 Euro 91.07 91.25 89.08 Consumer Services 4.54 Fixed Line Telecomms -13.85 Bt Group PLC 309.55 0.70 Reckitt Benckiser Group PLC 7938 12.00
FTSE AIM All-Share Index (799) 992.55 0.14 888.38 991.11 991.38 737.16 1.58 0.77 82.27 5.41 1091.20 Norway 87.24 87.80 87.40
Bunzl PLC 2432 4.00 Relx PLC 1663 11.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Burberry Group PLC 1815 29.00 Rentokil Initial PLC 265.60 1.50
Oil & Gas (16) 8175.13 -1.05 7317.14 8261.64 8285.25 6416.72 6.33 0.40 39.18 259.92 7570.10 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Carnival PLC 4970 11.00 Rio Tinto PLC 3102.5 -80.50
Oil & Gas Producers (9) 7851.96 -0.99 7027.89 7930.38 7955.19 6120.10 6.38 0.41 37.80 251.49 7527.13 Centrica PLC 203.30 0.60 Rolls-Royce Holdings PLC 867.50 -1.00
Oil Equipment Services & Distribution (7)13388.26 -3.22 11983.16 13834.36 13733.68 13322.78 4.69 -0.22 -97.33 306.86 10450.56 FTSE GLOBAL EQUITY INDEX SERIES Coca-Cola Hbc AG 2253 6.00 Royal Bank Of Scotland Group PLC 260.00 -0.60
Basic Materials (28) 5079.15 -1.75 4546.09 5169.67 5181.44 3138.35 2.45 1.09 37.31 90.92 5189.91 Compass Group PLC 1670 9.00 Royal Dutch Shell PLC 2143.5 -21.50
Chemicals (7) 14328.82 -0.34 12825.00 14377.20 14457.55 11446.43 2.12 1.89 24.95 95.63 12755.91 May 30 No of US $ Day Mth YTD Total
YTD Gr Div May 30 No of US $ Day Mth YTD Total YTD Gr Div Convatec Group PLC 320.00 - Royal Dutch Shell PLC 2100 -15.00
Forestry & Paper (1) 23789.15 0.25 21292.46 23730.38 23636.35 15596.93 2.38 3.36 12.50 375.43 25950.40 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Crh PLC 2792 -12.00 Royal Mail PLC 441.40 3.20
Industrial Metals & Mining (2) 2345.99 -4.03 2099.78 2444.42 2402.46 1121.96 0.55 21.48 8.39 13.01 2058.44 FTSE Global All Cap 7723 524.89 -0.1 1.7 9.6 745.21
10.8 2.4 Oil & Gas Producers 108 327.49 -0.7 -0.7 -6.8 537.44 -5.4 3.8 Croda International PLC 3963 -3.00 Rsa Insurance Group PLC 625.50 -2.00
Mining (18) 14002.24 -2.01 12532.70 14288.79 14323.76 8333.21 2.52 0.84 47.28 273.28 7495.24 FTSE Global Large Cap 1442 462.40 -0.1 2.0 9.9 673.34
11.3 2.5 Oil Equipment & Services 28 308.24 -1.6 -1.6 -11.8 448.29 -10.8 3.2 Dcc PLC 7375 30.00 Sage Group PLC 720.50 3.50
FTSE Global Mid Cap 1644 707.64 -0.1 1.3 9.8 953.46
10.9 2.0 Basic Materials 259 456.83 -0.2 -0.2 8.2 696.24 9.7 2.4 Diageo PLC 2327 4.00 Sainsbury (J) PLC 281.00 1.30
Industrials (112) 5489.74 0.06 4913.59 5486.38 5491.36 4402.53 2.23 0.84 53.27 57.73 5659.89
Construction & Materials (15) 7152.38 -0.03 6401.73 7154.34 7115.80 5452.11 2.14 0.39 120.93 101.80 7598.91 FTSE Global Small Cap 4637 736.87 -0.3 0.2 7.2 961.05
8.1 1.9 Chemicals 123 695.23 -0.3 -0.3 10.3 1065.07 11.8 2.4 Direct Line Insurance Group PLC 348.60 0.20 Schroders PLC 3157 -11.00
Aerospace & Defense (9) 5598.34 -0.30 5010.79 5615.08 5632.24 4141.11 2.14 -2.18 -21.42 63.69 6012.32 FTSE All-World 3086 306.58 -0.1 1.9 9.9 459.76
11.2 2.4 Forestry & Paper 15 268.64 0.5 0.5 12.8 456.97 15.3 2.9 Easyjet PLC 1414 14.00 Scottish Mortgage Investment Trust PLC 397.10 -1.70
General Industrials (5) 4883.94 0.29 4371.37 4869.87 4852.59 3782.18 2.69 1.20 31.04 56.24 5550.14 FTSE World 2543 542.69 -0.1 1.8 9.7 1092.94
11.0 2.4 Industrial Metals & Mining 68 375.66 -0.1 -0.1 3.7 568.94 4.6 2.2 Experian PLC 1618 3.00 Severn Trent PLC 2500 -34.00
Electronic & Electrical Equipment (10) 7598.17 -0.19 6800.74 7612.28 7537.26 5427.67 1.66 1.91 31.52 53.21 6926.38 FTSE Global All Cap ex UNITED KINGDOM In 7396 543.57 -0.1 1.6 9.5 760.03
10.7 2.3 Mining 53 538.88 0.1 0.1 5.0 818.84 6.7 2.3 Fresnillo PLC 1576 -9.00 Shire PLC 4471.5 -31.50
Industrial Engineering (12) 12773.17 -0.61 11432.62 12852.11 12939.36 8516.00 2.09 1.41 33.87 171.69 15599.31 FTSE Global All Cap ex USA 5826 476.26 -0.1 2.5 12.1 723.82
13.8 2.8 Industrials 547 369.82 0.1 0.1 11.6 531.81 12.8 2.1 Gkn PLC 350.00 -2.70 Sky PLC 991.00 -6.00
Industrial Transportation (7) 5128.92 0.99 4590.63 5078.75 5086.00 4455.60 3.80 1.25 21.07 52.62 4553.11 FTSE Global All Cap ex JAPAN 6436 537.04 -0.2 1.6 9.7 769.51
10.9 2.4 Construction & Materials 113 517.15 0.0 0.0 12.3 777.44 13.6 2.0 Glaxosmithkline PLC 1703.5 30.50 Smith & Nephew PLC 1354 4.00
Support Services (54) 7716.89 0.23 6906.99 7699.27 7719.03 6644.04 2.15 1.81 25.65 69.69 8008.32 FTSE Global All Cap ex Eurozone 7074 540.36 -0.1 1.4 8.8 752.31
9.9 2.3 Aerospace & Defense 26 651.76 -0.3 -0.3 15.4 929.24 16.6 2.1 Glencore PLC 285.10 -6.90 Smiths Group PLC 1603 13.00
FTSE Developed 2102 492.47 -0.1 1.8 9.5 705.27
10.8 2.4 General Industrials 57 245.69 0.0 0.0 4.4 381.26 5.6 2.5 Hammerson PLC 585.50 1.50 Smurfit Kappa Group PLC 2181 -1.00
Consumer Goods (38) 22987.99 0.40 20575.39 22896.14 23032.67 19051.26 2.77 1.84 19.67 339.50 16961.25
FTSE Developed All Cap 5666 517.28 -0.1 1.6 9.2 731.87
10.4 2.3 Electronic & Electrical Equipment 71 404.79 0.5 0.5 17.8 532.88 18.5 1.6 Hargreaves Lansdown PLC 1398 1.00 Sse PLC 1505 -10.00
Automobiles & Parts (1) 8225.16 -0.77 7361.93 8288.61 8330.91 6490.83 2.53 1.89 20.88 138.65 7928.41
FTSE Developed Large Cap 917 454.38 -0.1 1.9 9.5 660.65
10.9 2.5 Industrial Engineering 102 723.62 0.2 0.2 14.9 1027.15 16.3 2.0 Hikma Pharmaceuticals PLC 1688 13.00 St. James's Place PLC 1173 -10.00
Beverages (5) 18725.63 0.18 16760.37 18692.64 18806.66 15816.57 2.54 1.53 25.72 175.38 13190.25
FTSE Developed Europe Large Cap 227 361.62 -0.2 3.6 13.3 605.52
15.9 3.3 Industrial Transportation 99 629.86 0.4 0.4 11.8 905.83 13.1 2.2 HSBC Holdings PLC 675.60 0.40 Standard Chartered PLC 731.90 5.40
Food Producers (8) 8666.97 0.36 7757.37 8635.78 8570.33 8276.05 1.87 2.05 26.05 9.11 7419.19
FTSE Developed Europe Mid Cap 313 580.19 0.0 3.5 17.8 869.23
19.8 2.5 Support Services 79 323.63 0.1 0.1 9.6 445.20 10.6 1.8 Imperial Brands PLC 3629 21.50 Standard Life PLC 382.80 -2.10
Household Goods & Home Construction (15)16051.26 0.30 14366.68 16003.91 15927.76 14211.65 2.32 2.52 17.07 212.12 11328.78
FTSE Dev Europe Small Cap 709 823.50 0.1 3.5 18.7 1194.40
20.4 2.4 Consumer Goods 430 476.07 -0.1 -0.1 13.9 702.80 15.2 2.4 Informa PLC 671.00 1.50 Taylor Wimpey PLC 203.10 1.80
Leisure Goods (1) 5638.04 -0.60 5046.33 5672.01 5765.41 5295.41 3.84 1.34 19.48 104.95 5087.90
FTSE North America Large Cap 295 516.16 -0.1 1.3 7.9 701.45
8.9 2.1 Automobiles & Parts 105 387.07 0.4 0.4 5.2 552.99 6.8 2.7 Intercontinental Hotels Group PLC 4373 27.00 Tesco PLC 183.70 -1.65
Personal Goods (6) 32849.39 0.60 29401.83 32654.83 32638.74 23743.01 2.52 3.04 13.05 376.77 22151.58
FTSE North America Mid Cap 388 759.47 -0.3 0.1 5.8 960.87
6.5 1.7 Beverages 45 628.88 -0.2 -0.2 14.0 939.30 15.0 2.5 International Consolidated Airlines Group S.A. 604.00 -1.50 Tui AG 1198 6.00
Tobacco (2) 60618.22 0.54 54256.30 60289.88 61335.40 49897.28 3.39 1.24 23.90 1304.93 39221.89
FTSE North America Small Cap 1432 769.70 -0.7 -0.9 3.1 946.11
3.7 1.6 Food Producers 107 620.51 -0.3 -0.3 9.0 943.05 10.7 2.2 Intertek Group PLC 4299 49.00 Unilever PLC 4331.5 21.50
Health Care (21) 10776.93 0.80 9645.88 10691.06 10702.05 9212.29 3.26 0.72 42.79 208.49 8321.32
FTSE North America 683 344.72 -0.1 1.1 7.5 479.49
8.5 2.0 Household Goods & Home Construction 49 454.56 0.2 0.2 12.5 666.14 13.8 2.3 Intu Properties PLC 272.00 1.80 United Utilities Group PLC 1029 -12.00
Health Care Equipment & Services (9) 8522.64 0.81 7628.18 8454.27 8512.75 7267.29 1.26 2.43 32.67 60.36 7391.70
FTSE Developed ex North America 1419 251.95 0.0 2.9 12.6 412.41
14.6 2.9 Leisure Goods 31 210.21 -0.9 -0.9 31.4 276.21 32.3 1.4 Itv PLC 195.70 -3.20 Vodafone Group PLC 231.50 2.35
Pharmaceuticals & Biotechnology (12)14497.10 0.80 12975.62 14381.68 14386.26 12406.79 3.50 0.64 44.44 300.97 9980.57
FTSE Japan Large Cap 180 350.46 0.4 2.8 2.1 Personal Goods
7.5 453.04
8.6 81 686.84 0.2 0.2 18.8 959.51 19.9 1.9 Johnson Matthey PLC 3112 -25.00 Whitbread PLC 4291 62.00
Consumer Services (94) 5205.51 0.04 4659.19 5203.57 5209.60 4714.62 2.53 2.00 19.80 62.50 4884.30 FTSE Japan Mid Cap 313 572.92 0.4 3.3 10.9 711.24
11.8 1.7 Tobacco 12 1519.57 -0.3 -0.3 19.9 3119.63 21.4 3.3
Food & Drug Retailers (7) 3187.81 -0.42 2853.25 3201.21 3221.65 2834.02 1.31 2.26 33.84 22.81 3726.55 Kingfisher PLC 325.10 1.10 Wolseley PLC 5110 70.00
FTSE Global wi JAPAN Small Cap 794 625.93 0.7 3.7 12.2 804.47
13.3 1.9 Health Care 181 469.02 -0.1 -0.1 10.9 674.85 12.2 2.0 Land Securities Group PLC 1070 -4.00 Worldpay Group PLC 310.60 -4.90
General Retailers (30) 2611.96 -0.13 2337.83 2615.26 2626.34 2681.90 3.00 2.00 16.72 21.52 2972.98
FTSE Japan 493 148.53 0.4 2.9 2.0 Health Care Equipment & Services
8.3 215.48
9.3 68 797.83 -0.1 -0.1 16.0 928.44 16.5 1.0 Legal & General Group PLC 251.80 0.30 Wpp PLC 1744 -7.00
Media (21) 8066.71 -0.08 7220.10 8073.35 8077.04 7376.77 2.88 1.82 19.11 95.38 4967.51
FTSE Asia Pacific Large Cap ex Japan 548 655.46 -0.1 2.0 15.6 1022.50
16.7 2.8 Pharmaceuticals & Biotechnology 113 333.20 -0.1 -0.1 8.9 501.40 10.5 2.5 Lloyds Banking Group PLC 70.59 -0.53
Travel & Leisure (36) 9713.75 0.33 8694.29 9682.11 9672.05 8274.98 2.39 2.13 19.64 146.27 9226.29
FTSE Asia Pacific Mid Cap ex Japan 412 875.68 0.1 1.4 15.1 1309.22
15.9 2.6 Consumer Services 383 440.92 -0.1 -0.1 11.7 587.76 12.6 1.6
Telecommunications (6) 3529.37 0.75 3158.96 3503.14 3532.78 3886.51 5.01 -0.01 -1347.4 4.42 3885.89 FTSE Asia Pacific Small Cap ex Japan 1449 541.94 0.1 0.1 11.5 797.70
12.2 2.6 Food & Drug Retailers 55 292.19 -0.2 -0.2 3.3 406.47 4.4 2.0
9
Fixed Line Telecommunications (4) 3642.93 0.29 3260.60 3632.33 3691.51 4989.12 4.81 1.20 17.40 0.00 3284.34
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
960 518.37
2057 714.10
-0.1
-0.1
2.0
1.8
15.6 858.90
16.6 2.8 General Retailers
14.0 1057.37
14.9 2.8 Media
120 610.79
79 336.60
-0.1
0.0
-0.1
0.0
12.2 792.78
10.7 449.65
13.0
11.4
1.5
1.6
UK STOCK MARKET TRADING DATA
Mobile Telecommunications (2) 5202.32 0.95 4656.34 5153.49 5179.55 5125.84 5.10 -0.51 -38.63 9.33 5147.52 FTSE Emerging Large Cap 525 676.73 -0.2 2.6 14.4 1008.80
15.2 2.8 Travel & Leisure 129 446.97 0.0 0.0 17.4 602.73 18.4 1.7 May 31 May 30 May 26 May 25 May 24 Yr Ago
Utilities (7) 9105.87 -0.31 8150.20 9134.18 9144.69 8640.11 4.64 1.64 13.16 83.90 10261.79 FTSE Emerging Mid Cap 459 892.63 -0.1 -0.9 12.2 1314.25
13.3 2.8 Telecommunication 94 165.46 0.4 0.4 2.7 307.23 4.2 4.1 SEAQ Bargains 4742.00 5233.00 5202.00 5202.00 5202.00 5058.00
Electricity (2) 8886.98 -0.60 7954.29 8940.63 8953.85 8868.24 5.53 2.02 8.96 149.05 12698.17 FTSE Emerging Small Cap 1073 737.05 -0.1 -0.5 13.7 1048.61
14.5 2.6 Fixed Line Telecommuniations 43 134.60 0.6 0.6 -4.3 275.44 -2.5 4.8 Order Book Turnover (m) 346.64 193.26 193.78 193.78 193.78 139.89
Gas Water & Multiutilities (5) 8660.13 -0.24 7751.25 8680.59 8689.85 8111.85 4.42 1.51 14.95 63.82 9764.86 FTSE Emerging Europe 114 352.75 -0.5 -0.5 4.9 543.93
5.8 4.0 Mobile Telecommunications 51 181.03 0.1 0.1 13.3 301.43 14.1 3.3 Order Book Bargains 1303651.00 1020479.00 1020304.00 1020304.00 1020304.00 950568.00
Financials (289) 5098.39 -0.06 4563.31 5101.42 5110.78 4174.65 3.55 1.04 27.00 101.66 4736.50 FTSE Latin America All Cap 230 841.65 -0.2 -1.6 9.6 1294.94
11.1 2.8 Utilities 167 274.47 0.3 0.3 11.3 530.90 13.0 3.7 Order Book Shares Traded (m) 2953.00 1709.00 1702.00 1702.00 1702.00 1275.00
Banks (12) 4269.13 -0.03 3821.08 4270.46 4287.29 3276.23 4.13 0.62 38.75 107.82 3174.76 FTSE Middle East and Africa All Cap 242 712.81 -0.5 2.8 8.4 1110.16
10.0 3.0 Electricity 109 300.81 0.3 0.3 10.6 575.06 12.2 3.7 Total Equity Turnover (m) 11361.67 8747.73 8690.30 8690.30 8690.30 8386.30
Nonlife Insurance (10) 3448.14 0.14 3086.25 3443.19 3412.63 2949.83 3.12 1.69 18.96 60.87 6087.79 FTSE Global wi UNITED KINGDOM All Cap In 327 343.52 -0.1 3.4 3.5 Gas Water & Multiutilities
10.3 574.30
12.4 58 289.06 0.2 0.2 12.6 574.38 14.5 3.6 Total Mkt Bargains 1498417.00 1152592.00 1152315.00 1152315.00 1152315.00 1060320.00
Life Insurance/Assurance (10) 8399.81 -0.32 7518.24 8426.38 8461.32 7069.83 3.69 1.26 21.54 210.60 8251.25 FTSE Global wi USA All Cap 1897 593.32 -0.2 0.9 7.4 782.68
8.3 1.9 Financials 698 226.79 -0.4 -0.4 6.3 369.66 7.9 3.0 Total Shares Traded (m) 6527.00 4815.00 4794.00 4794.00 4794.00 3976.00
Index- Real Estate Investment & Services (20) 2742.63 -0.38 2454.79 2753.16 2765.92 2760.58 2.49 1.86 21.56 31.00 7326.63 FTSE Europe All Cap 1440 423.52 -0.2 3.4 14.2 684.20
16.6 3.1 Banks 248 202.56 -0.6 -0.6 5.2 354.61 6.9 3.4 Excluding intra-market and overseas turnover. *UK only total at 6pm. UK plus intra-market turnover. (u) Unavaliable.
Real Estate Investment Trusts (31) 2756.31 0.09 2467.04 2753.97 2740.49 2815.61 3.53 1.19 23.74 44.78 3434.82 FTSE Eurozone All Cap 649 414.15 -0.2 3.7 17.0 675.02
19.3 2.9 Nonlife Insurance 68 245.69 -0.1 -0.1 5.9 356.81 7.7 2.3 (c) Market closed.
General Financial (31) 9083.82 -0.23 8130.46 9104.84 9067.41 7580.55 3.18 2.17 14.49 108.34 10387.89 FTSE RAFI All World 3000 3042 6390.28 -0.2 1.3 7.0 8420.10
8.5 3.0 Life Insurance 52 214.60 -0.2 -0.2 7.1 342.10 8.8 3.0
Equity Investment Instruments (175) 9646.26 0.17 8633.88 9629.60 9662.48 7590.10 2.37 1.17 36.17 93.60 5267.21 FTSE RAFI US 1000 1001 10407.29 -0.2 -0.2 2.6 13615.53
3.5 2.4 Financial Services 147 259.71 -0.4 -0.4 7.8 356.95 8.7 2.0
Non Financials (338) 4870.60 -0.09 4359.42 4875.18 4888.90 4051.00 3.43 1.01 28.88 78.79 7192.45 FTSE EDHEC-Risk Efficient All-World 3086 369.70 -0.1 1.9 10.4 513.59
11.5 2.2 Technology 182 235.14 0.2 0.2 21.1 287.66 22.0 1.5 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Technology (16) 2076.40 -0.04 1858.48 2077.18 2070.60 1424.19 2.17 1.30 35.54 26.90 2672.40 FTSE EDHEC-Risk Efficient Developed Europe 540 313.43 0.0 3.6 17.1 477.82
19.0 2.5 Software & Computer Services 89 403.81 0.2 0.2 21.3 471.07 22.0 0.9 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Software & Computer Services (12) 2376.79 0.04 2127.34 2375.87 2367.49 1908.57 2.09 1.48 32.47 32.21 3231.99 Oil & Gas 145 347.77 -0.9 -1.5 -7.3 559.41
-6.0 3.7 Technology Hardware & Equipment 93 177.92 0.3 0.3 20.9 226.21 22.0 2.1 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment (4) 1895.29 -0.84 1696.38 1911.41 1912.61 1505.97 3.00 0.00-7302.44 12.16 2221.97 Alternative Energy 9 109.88 -1.2 -1.2 19.6 147.99 19.9 1.6 liable for any loss arising from the reliance on or use of the listed information.
Real Estate Investment & Services 107 323.35 0.1 0.1 17.1 537.64 18.7 2.5 For all queries e-mail ft.reader.enquiries@morningstar.com
Hourly movements 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/
FTSE 100 7532.74 7543.03 7548.01 7542.31 7555.84 7576.80 7576.20 7552.73 7546.02 7586.29 7519.95 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
(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,
Data provided by Morningstar | www.morningstar.co.uk
FTSE 250 20017.44 20003.31 19990.20 19982.87 19994.33 19989.03 19988.86 19981.00 19974.70 20030.88 19948.39
FTSE SmallCap 5654.75 5647.48 5649.25 5648.40 5650.91 5655.54 5654.59 5650.33 5648.22 5658.81 5645.28 WO 2008/118372, EPN 1733352, and HK1099110). EDHEC is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
FTSE All-Share 4123.21 4127.03 4128.81 4126.05 4132.81 4141.52 4141.23 4130.60 4127.43 4145.69 4115.88 www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the London Stock Exchange
Time of FTSE 100 Day's high:12:12:30 Day's Low15:35:30 FTSE 100 2010/11 High: 7547.63(29/05/2017) Low: 7099.15(31/01/2017) Group companies and is used by FTSE International Limited under licence.
Time of FTSE All-Share Day's high:12:13:00 Day's Low15:27:00 FTSE 100 2010/11 High: 4130.15(29/05/2017) Low: 3858.26(31/01/2017)
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 3i Group Pre 1524 794 169.2 85.6 18.5 16 Jul 21 26.5 18.7 date price(p) Sector code Stock price(p) +/- High Low Cap (m)
price up date High Low Stock Price p +or- Aberdeen Japan Investment Trust Pre 16.141 5.417L 7.25 5.67 6 4.2 Jul 14 6 4.2 05/22 10.00 GFHG Grand Fortune High Grade Ltd 10.50 - 10.88 10.88 1680.0
There are currently no rights offers by any companies listed on the LSE. Artemis VCT Int 0.156 0.26 0.042L 0.077 0.08L 0.15 2 2 Jun 30 4 3.989 05/17 5.00 SOP Spinnaker Opportunities PLC 4.75 -0.11 5.25 4.50 123.5
Cadence Minerals Pre 5.783 2.493 0.616 0.852L 0.008 0.01L - - - - - 05/09 100.00 DSM Downing Strategic Micro-Cap Investment 107.50 -0.95 109.50 100.00 5977.0
Lowland Investment Co Int 41.197 9.587 16.2 13.7 12 11 Jul 28 24 21.94 Trust PLC
Proton Power Systems Pre 1.989 0.684 19.498L 9.172L 3L 1.4L - - - - - 04/25 160.00 AIM ESL Eddie Stobart Logistics PLC 158.50 -2.00 165.00 155.00 56730.1
Puma VCT 11 Pre 1.317 0.764 0.923 0.341 2.42 1.35 - - - - -
Shires Income Pre 16.347 5.353L 13.09 12.06 3.75 3.25 Jul 28 6.75 6.25
Telford Homes Pre 265.975 242.679 34.632 32.315 36.8 39.3 8.5 7.7 Jul 14 15.7 14.2
Unicorn AIM VCT Int 1.388 0.911 0.733 0.284 0.78 0.34 3 - Aug 11 3 -

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 1 June 2017 FINANCIAL TIMES 17

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 102.04 0.51 105.68 85.23 2.23 25.54 45653.75 Lockheed 279.89 -0.20 284.00 228.50 2.56 21.90 81012.22
ANZ 28.01 0.11 32.95 22.66 8.63 13.49 61222.54 Nokia 5.65 -0.02 5.96 3.66 2.82 -44.18 37046.29 AstellasPh 1398.5 -5.00 1779 1392 2.38 13.36 27238.07 AtlasCpcoB 287.10 4.10 302.00 183.80 2.12 32.48 12914.34 Avago Tech 238.72 -1.10 242.89 142.27 1.08 -43.98 95813.25 Lowes 78.59 -0.82 86.25 64.87 1.74 22.07 67377.79
BHPBilltn 23.90 -0.10 27.95 17.29 2.54 36.62 57143.69 SampoA 45.23 0.23 47.28 34.42 4.67 15.46 28421.33 Bridgestne 4652 -57.00 4856 3089 3.08 13.28 34204.93 Ericsson 63.40 2.75 67.75 43.19 7.44 -18.59 22432.25 BakerHu 54.68 -0.39 68.59 41.74 1.28 -12.06 23264.36 Lyondell 79.98 -0.58 97.64 69.82 4.39 8.82 32216.35
CmwBkAu 79.65 0.21 87.74 69.22 7.66 14.53 102573.57 France () Canon 3780 -15.00 3869 2780 4.07 22.67 45590.5 H&M 216.50 -3.60 279.90 211.80 4.50 19.34 36453.66 BankAm 22.24 -0.60 25.80 12.05 1.28 13.22 221317.29 Marathon Ptl 51.79 -0.63 54.59 32.02 2.79 22.13 26865.41
CSL 129.29 -2.35 136.85 91.62 1.54 37.05 43717.65 Airbus Grpe 73.07 -0.20 76.07 48.07 1.75 47.70 63636.13 CntJpRwy 18135 -55.00 19835 16305 0.71 9.79 33782.25 Investor 401.80 2.70 415.70 260.70 2.50 4.15 21096.66 Baxter 59.49 0.30 59.78 42.22 0.90 17.05 32342.88 Marsh&M 77.59 0.20 77.85 62.33 1.81 21.11 39893.67
NatAusBk 30.12 0.39 34.09 23.90 9.93 13.25 59990.74 AirLiquide 108.50 -0.40 115.25 88.25 2.07 21.84 47488.76 Denso 4721 -54.00 5323 3317 2.52 15.46 33899.7 Nordea Bk 111.60 -1.50 115.70 66.30 5.58 12.26 52100.81 BB & T 41.36 -0.72 49.88 32.85 2.95 15.65 33554.22 MasterCard 122.62 0.97 122.83 86.65 0.69 31.01 129231.96
Telstra 4.40 -0.01 5.86 4.00 9.72 14.79 38957.57 AXA 23.74 0.03 25.80 16.11 4.54 9.36 64776.41 EastJpRwy 10615 -85.00 10770 8388 1.21 16.67 37379.07 SEB 104.80 -0.50 107.30 67.75 5.26 13.28 26215.33 BectonDick 189.01 0.94 190.71 161.29 1.52 30.41 42726.73 McDonald's 150.06 0.13 150.33 110.33 2.52 25.68 122309.43
Wesfarmers 42.70 0.48 46.06 38.62 6.53 121.98 36042.63 BNP Parib 62.82 -0.78 68.40 35.27 3.61 10.57 88168.82 Fanuc 21770 -10.00 23410 15445 2.34 29.32 40174.19 SvnskaHn 122.40 -0.10 136.30 90.25 4.10 14.65 26933.96 BerkshHat 247890 -211.00 266445 205074 - 17.51 190605.1 McKesson 161.41 -0.70 199.43 114.53 0.72 6.72 34041.77
Westpc 30.50 0.17 35.39 27.57 9.00 13.71 76214.59 ChristianDior 254.20 -0.85 256.05 133.75 1.07 35.16 51597.93 FastRetail 37100 130.00 44370 25305 0.94 37.61 35586.5 Swedbank 209.50 -0.70 234.00 162.90 5.14 12.06 27337.78 Biogen 245.30 -1.24 307.33 205.43 - 14.89 52031.86 Medtronic 84.56 -0.30 89.27 69.35 2.03 26.66 115749.49
Woolworths 26.05 0.19 27.72 20.30 4.29 12.35 25102.58 Cred Agr 13.64 -0.14 14.73 6.79 4.31 8.14 43654.26 Fuji Hvy Ind 3745 -37.00 5016 3252 3.81 9.57 26048.41 Telia Co 39.78 -0.01 41.30 33.93 10.09 10.78 19855.99 BkNYMeln 46.94 -0.16 49.54 35.72 1.63 13.99 48811.83 Merck 65.23 0.35 66.80 55.10 2.94 40.24 178401.11
Belgium () Danone 66.08 -0.15 70.53 57.66 1.92 37.19 48737.56 Hitachi 668.70 -1.50 681.90 400.00 1.78 13.94 29227.61 Volvo 142.10 -1.40 148.40 78.50 2.12 26.30 26796.7 BlackRock 406.48 -0.34 409.58 317.60 2.35 20.43 65709.88 Metlife 50.32 -0.38 58.09 36.17 3.28 -80.34 54140.96
AnBshInBv 103.85 -0.30 119.60 92.13 3.56 164.38 197736.6 EDF 9.59 0.04 12.35 7.33 15.94 8.51 29574.58 HondaMtr 3117 44.00 3675 2417 2.86 13.28 51057.75 Switzerland (SFr) Boeing 187.95 1.07 188.26 122.35 2.58 22.42 113443.05 Microsoft 69.99 -0.42 70.74 48.04 2.21 29.87 540358.05
KBC Grp 66.98 0.37 70.98 39.35 1.47 10.93 31490.05 Engie SA 13.59 0.22 15.21 10.77 7.21 -60.27 37202.39 JapanTob 4161 -37.00 4540 3607 3.20 19.06 75254.32 ABB 24.33 0.02 24.89 18.59 3.10 24.85 55691.91 BrisMySq 53.99 0.06 77.12 46.01 2.94 18.16 88944.99 Mnstr Bvrg 50.68 -0.04 55.50 40.64 - 39.58 28773.86
Esslr Intl 118.35 -0.40 124.55 93.41 0.89 34.27 29086.33 KDDI 3066 4.00 3378 2745.5 2.65 12.93 71731.22 CredSuisse 13.30 -0.16 16.31 9.76 5.01 -15.53 29729.69 CapOne 76.73 -1.55 96.92 58.03 1.87 12.44 37058.18 MondelezInt 46.67 0.31 46.83 40.50 1.64 40.72 70803.79
Brazil (R$)
Hermes Intl 439.95 -1.30 468.30 314.00 0.73 46.72 52227.94 Keyence 50310 920.00 50340 31555 0.23 - 55322.96 Nestle 82.65 0.30 83.45 71.45 2.71 30.22 265846.74 CardinalHlth 73.42 -0.13 85.52 62.70 2.52 16.97 23192.1 Monsanto 116.82 -0.03 117.33 97.35 1.91 31.58 51261.51
Ambev 18.79 - 20.09 15.79 2.16 24.92 91073.84
LOreal 190.45 0.85 191.80 155.20 1.60 35.34 120473.09 MitsbCp 2218 -15.00 2705.5 1679.5 2.69 -26.62 31892.12 Novartis 79.30 0.70 82.80 67.40 3.45 28.02 214475.53 Carnival 64.11 0.37 64.33 42.94 2.00 20.14 34402.38 MorganStly 41.39 -0.90 47.33 23.11 1.77 13.57 76553.23
Bradesco 27.13 -0.57 31.13 22.19 2.20 9.31 25554.49
LVMH 227.15 0.45 239.65 130.55 1.55 29.38 129658.21 MitsubEst 2068.5 -1.50 2443 1724 0.86 30.71 26017.03 Richemont 80.80 0.30 85.90 65.60 2.07 35.32 43592.17 Caterpillar 105.39 -0.09 105.98 70.53 3.02-408.31 62088.32 MylanNV 39.27 -0.10 50.40 33.60 - 37.66 21045.32
Cielo 22.85 -0.76 31.48 20.36 2.35 14.88 19143.71
Orange 15.64 -0.01 15.80 12.38 3.76 84.00 46783.11 MitsubishiEle 1527 -21.50 1802 1108 1.92 13.49 29649.37 Roche 265.80 -0.90 273.00 218.30 3.03 24.01 193004.15 CBS 61.43 -0.09 70.10 48.88 1.12 16.99 22628.24 Netflix 162.88 -0.34 164.75 84.50 - 204.90 70202.48
ItauHldFin 32.37 0.13 36.38 22.27 4.62 8.55 33457.48
PernodRic 120.90 0.80 121.75 90.00 1.52 25.92 36084.78 MitsuiFud 2621 41.00 2863.5 2031.5 1.13 20.03 23497.99 Swiss Re 88.30 0.20 98.50 86.30 5.45 8.90 32860.74 Celgene 114.45 -0.68 127.64 94.42 - 41.68 89362.69 NextEraE 141.23 0.58 141.83 110.49 2.63 16.66 66116.27
Petrobras 13.80 -0.37 19.72 9.95 - -17.18 31671.96
Renault 83.09 -1.84 90.76 63.64 2.83 6.80 27630.85 MitUFJFin 690.90 -5.60 778.80 425.80 2.30 13.59 88522.46 Swisscom 464.40 2.10 489.80 426.80 9.46 14.95 24863.65 CharlesSch 38.16 -0.50 43.65 23.83 0.68 30.97 51024.99 Nike 53.21 0.29 60.33 49.01 1.33 21.37 70318.12
Vale 27.15 -1.45 37.28 13.80 0.59 6.93 26935.56
Safran 78.80 -0.35 80.09 53.00 1.33 -91.31 36953.41 Mizuho Fin 192.80 -2.40 225.30 142.00 3.85 5.91 44260.01 Syngent 463.00 -6.70 471.20 360.50 2.57 34.61 42748.26 Charter Comms 342.26 3.34 350.38 214.06 - 18.05 92275.35 NorfolkS 123.25 -0.88 125.00 78.73 1.90 22.92 35715.71
Canada (C$) Murata Mfg 15350 -105.00 16790 10365 1.42 21.83 31268.22 Chevron Corp 103.39 -0.67 119.00 97.53 4.29 65.45 195878.73 Northrop 257.11 0.90 257.93 206.69 1.42 20.19 44884.41
Sanofi 88.17 0.61 92.97 62.50 3.26 26.53 124493.94 UBS 15.40 -0.27 17.49 15.11 5.51 15.59 61300.94
BCE 61.25 0.41 63.41 56.80 4.50 18.98 40788.16 NipponTT 5308 57.00 5390 4156 2.24 13.76 100625.43 Chubb 142.68 0.79 143.12 121.08 2.01 15.40 66620.92 NXP 109.30 1.16 109.49 73.62 - 19.14 37816.38
Sant Gbn 49.78 -0.28 52.40 32.15 2.44 21.61 31097.47 Zurich Fin 284.70 1.70 290.80 217.10 6.25 13.19 44519.31
BkMontrl 90.52 -0.47 104.15 79.82 3.79 11.55 43700.59 Nissan Mt 1061.5 -13.00 1220 893.10 4.20 8.94 40514.43 Cigna 161.65 0.15 164.88 115.03 0.02 22.10 41384.76 Occid Pet 59.70 -0.42 78.48 57.20 5.29 -43.62 45645.53
Schneider 68.56 -0.27 74.50 49.50 2.86 22.64 45802.65 Taiwan (NT$)
BkNvaS 76.44 -0.16 82.30 62.36 4.06 12.17 68017.79 Nomura 663.40 -6.00 784.00 338.80 1.79 15.42 21135.77 Cisco 31.69 0.01 34.60 27.13 3.37 16.12 158426.72 Oracle 45.37 -0.05 46.99 37.62 1.37 20.73 186683.21
SFR Group 31.37 0.07 32.55 19.51 - -65.13 15604.82 Chunghwa Telecom 107.50 0.50 125.50 99.50 4.98 21.16 27724.49
Brookfield 51.23 0.24 53.08 41.39 1.44 29.63 37493 Nppn Stl 2356.5 -46.00 2912 1787.5 1.38 54.42 20250.78 Citigroup 60.16 -1.48 62.69 38.31 0.91 11.68 165635.99 Pepsico 117.48 0.28 118.12 98.50 2.65 24.58 167820.32
SocGen 46.67 -2.35 52.26 25.00 4.21 11.85 42400.06 Formosa PetChem 108.00 2.00 115.00 83.30 3.79 11.45 34203.34
CanadPcR 213.27 -0.33 218.78 156.01 0.98 20.30 23170.15 NTTDCMo 2717 -12.50 2946 2361 3.00 14.91 95809.69 CME Grp 116.81 -0.40 127.60 92.29 1.96 27.40 39688.95 Perrigo 71.54 3.62 111.00 65.47 0.86 -2.91 10257.93
Total 47.27 -0.29 49.50 39.03 5.17 17.34 132009.31 HonHaiPrc 103.00 -1.50 105.50 76.30 3.61 11.78 59339.14
CanImp 104.94 -0.34 120.83 95.50 4.63 8.87 31207.21 Panasonic 1420.5 25.50 1433 831.40 1.74 15.98 31510.26 Coca-Cola 45.59 0.16 46.01 39.88 3.22 31.10 194806.06 Pfizer 32.64 0.51 37.39 29.83 3.86 26.56 194760.6
UnibailR 229.65 -1.45 250.55 203.10 4.03 9.40 25749.93 MediaTek 230.00 0.50 260.50 203.00 4.89 13.53 12093.77
CanNatRs 38.98 -0.15 46.74 36.26 2.54-194.97 32240.48 Seven & I 4708 -34.00 4902 4051 1.96 42.00 37739.02 Cognizant 66.78 0.29 67.13 45.44 - 23.52 39333.27 Phillips66 76.23 -0.77 88.87 73.67 3.41 22.93 39342.17
Vinci 77.73 1.19 79.84 49.93 2.40 17.71 51786.97 TaiwanSem 203.00 -4.00 208.50 154.00 3.02 14.51 175001.29
CanNatRy 104.76 0.24 104.95 72.78 1.53 20.74 58730.43 ShnEtsuCh 9932 48.00 10120 5603 1.26 24.42 38808.92 ColgtPlm 76.54 0.45 76.86 63.43 2.12 26.93 67607.23 PhilMorris 120.36 0.41 121.11 86.78 3.55 25.79 186936.31
Vivendi 19.31 -0.09 20.09 14.87 5.09 56.16 27945.63
Enbridge 52.07 0.07 59.19 50.76 4.36 45.69 63170.62 Softbank 9003 23.00 9084 5194 0.46 26.63 89607.5 Thailand (THB) Comcast 41.31 0.21 41.64 30.02 1.42 21.23 195541.4 PNCFin 117.85 -1.01 131.83 77.40 1.88 15.45 57027.78
GtWesLif 33.42 -0.47 37.79 30.83 4.04 12.29 24495.75 Germany () PTT Explor 393.00 1.00 430.00 298.00 2.53 12.18 32957.3
Sony 4034 3.00 4091 2700 0.49-111.85 46101 ConocPhil 44.37 -0.42 53.17 38.80 2.36 -34.11 54890.3 PPG Inds 106.45 -0.03 113.49 89.64 1.55 47.96 27272.16
ImpOil 38.40 -0.28 48.72 38.24 1.62 14.31 24096.99 Allianz 170.90 0.05 177.80 118.35 4.08 13.63 87825.32
SumitomoF 3974 -74.00 4768 2766.5 3.74 7.20 50815.73 United Arab Emirates (Dhs) Corning 29.15 -0.17 29.72 18.88 1.98 7.71 26824.75 Praxair 131.69 0.10 133.68 106.31 2.38 23.98 37578.26
Manulife 23.16 -0.32 25.57 16.43 3.43 14.20 33894.52 BASF 83.84 -0.33 94.32 63.00 3.40 17.94 86592.81
Takeda Ph 5707 -47.00 5856 4098 3.12 34.12 40798.36 Emirtestele 17.50 0.05 20.20 17.30 4.76 16.48 41435.08 Costco 179.24 0.32 183.18 142.11 1.04 31.88 78675.82 Priceline 1855.64 -1.81 1927.13 1148.06 - 40.58 91190.67
Potash 22.30 -0.18 26.62 19.93 5.00 34.02 13865.38 Bayer 118.10 1.60 118.85 85.00 2.08 21.36 109822.03
TokioMarine 4700 26.00 5441 3063 2.63 11.87 32004.47 United Kingdom (p) CrownCstl 102.40 -1.12 104.34 79.38 3.68 103.17 37489.53 ProctGmbl 87.96 0.56 92.00 80.74 3.14 23.80 224967.76
RylBkC 93.28 -0.26 99.90 74.64 3.74 12.24 100641.2 BMW 83.29 -0.95 91.76 63.38 3.77 7.55 56382.89
Toyota 5932 -49.00 7215 4917 3.84 8.47 175033.68 AscBrFd 2996 12.00 3183 1910 1.23 21.55 30619.61 CSX 54.14 -0.08 54.43 24.43 1.37 28.66 49950.71 Prudntl 104.38 -0.48 114.55 66.51 2.80 10.29 44779.02
Suncor En 42.26 -0.37 44.90 33.49 2.94 43.93 52230.81 Continental 198.00 -2.25 210.35 158.20 1.86 14.31 44531.74
Mexico (Mex$) AstraZen 5234 19.00 5505 3680 4.23 24.51 85517.58 CVS 76.49 -0.29 98.67 69.30 2.40 15.47 77922.57 PublStor 214.93 0.58 262.74 200.65 3.55 30.21 37364.7
ThmReut 59.08 0.11 62.83 50.01 3.22 28.43 31495.19 Daimler 64.61 -0.59 73.23 50.83 5.00 8.51 77728.27
AmerMvl 15.09 0.04 15.15 10.40 1.90 24.13 35947.51 Aviva 525.00 0.50 570.50 290.00 4.09 34.77 27561.27 Danaher 85.17 0.36 88.01 73.40 0.67 28.16 59118.23 Qualcomm 57.23 -0.11 71.62 50.84 3.82 18.48 84556.94
TntoDom 64.35 -0.09 71.31 54.20 3.45 12.90 88573.35 Deut Bank 15.58 -0.56 19.97 9.90 - -19.47 36197.82
FEMSA UBD 175.59 0.23 184.10 28.35 1.46 160.64 - Barclays 210.00 0.80 267.32 121.10 1.43 16.03 46169.02 Deere 122.49 0.23 123.59 76.73 1.73 27.85 38986.5 Raytheon 163.12 0.28 163.61 129.00 1.39 20.41 47479.99
TrnCan 62.79 -0.24 65.24 54.11 3.86 111.21 40314.73 Deut Tlkm 17.73 -0.06 18.15 13.54 3.05 300.85 93219.31
WalMrtMex 42.99 -0.01 46.10 34.70 1.34 25.27 40143.07 BP 466.70 -5.40 521.20 349.35 6.59 -30.18 118556.92 Delphi 86.99 0.39 89.58 58.04 1.39 19.78 23303.79 Regen Pharm 451.65 2.98 464.40 325.35 - 52.90 47142.32
ValeantPh 16.07 -0.41 42.25 11.20 - -2.83 4081.21 DeutsPost 32.52 0.70 33.31 23.50 2.57 15.77 44373.79
BrAmTob 5530 29.00 5602 4072 2.78 23.88 121486.75 Delta 48.61 -0.45 52.76 32.60 1.58 8.72 35779 ReynoldsAm 66.78 0.11 66.99 43.38 2.86 28.00 95275.82
E.ON 7.79 0.22 9.72 5.99 6.30 -6.34 17524.06 Netherlands ()
China (HK$) BSkyB 991.00 -6.00 1050 560.00 3.31 27.53 21992.02 Devon Energy 34.03 -0.46 50.69 32.81 1.75 -1.87 17889.57 S&P Global 141.37 0.56 141.71 99.15 1.06 17.04 36443.9
Fresenius Med 85.16 2.26 86.13 70.00 0.92 20.95 29420.44 Altice 22.16 -0.02 23.43 12.20 - -16.62 29761.77
AgricBkCh 3.78 0.01 3.79 2.75 5.17 5.87 14910.79 BT 309.55 0.70 453.62 297.40 4.67 16.21 39803.91 DiscFinServ 58.23 -0.63 74.33 50.32 2.09 9.64 22138.51 Salesforce 90.11 -0.76 91.81 66.43 - 475.26 64172.78
Fresenius SE 76.21 0.71 79.49 60.00 0.71 25.28 47433.92 ASML Hld 117.50 -1.55 124.95 79.38 0.88 29.69 58031.16
Bk China 3.90 - 4.08 2.90 5.27 5.89 41851.28 Compass 1670 9.00 1683 1242.15 1.90 24.81 35450.89 Disney 107.93 -0.41 116.10 90.32 1.44 18.61 168897.4 Schlmbrg 69.28 0.54 87.84 68.23 3.02 -53.48 96262.96
HenkelKgaA 110.55 0.65 111.55 87.00 2.71 23.02 32296.28 Heineken 87.67 0.80 87.94 67.47 1.14 31.40 56785.43
BkofComm 6.04 0.02 6.44 4.76 5.22 5.81 27138.05 Diageo 2327 4.00 2372.5 1737 2.47 26.12 75620.66 DominRes 80.76 0.49 81.30 69.51 3.62 22.47 50796.83 Sempra Energy 116.45 0.79 116.96 92.95 2.74 19.41 29209.32
Linde 169.95 1.30 174.00 116.80 1.69 30.02 35495.4 ING 14.89 -0.04 15.88 8.30 4.28 12.99 65045.93
BOE Tech 1.58 0.01 2.00 1.30 1.33 20.61 40.34 GlaxoSmh 1703.5 30.50 1745.56 1363 4.70 49.96 108141.37 DowChem 60.99 0.10 65.42 47.51 3.11 14.44 74511.65 Shrwin-Will 334.46 -0.90 339.62 239.48 1.05 26.70 31147.69
MuenchRkv 175.75 2.10 189.40 140.90 4.61 10.51 31829.37 Unilever 50.70 0.26 50.98 36.22 2.44 28.43 97760.76
Ch Coms Cons 10.52 -0.08 11.74 7.81 2.11 8.84 5977.21 Glencore 285.10 -6.90 347.00 124.55 - -70.46 52979.99 DukeEner 85.67 0.26 87.75 72.34 4.09 21.28 59959.02 SimonProp 154.12 -0.86 229.10 152.09 4.45 25.52 48115.37
SAP 95.44 0.34 96.00 64.94 1.18 32.51 131846.49 Norway (Kr)
Ch Evrbrght 3.69 0.01 4.06 3.18 6.03 5.02 3252.62 HSBC 675.60 0.40 715.20 392.37 6.15 119.26 174871.24 DuPont 77.80 0.12 82.37 61.12 2.02 25.29 67455.09 SouthCpr 34.68 -0.43 39.50 24.90 0.49 40.58 26808.21
Siemens 127.05 0.65 133.50 86.82 2.78 18.46 121438.13 DNB 143.10 -2.30 148.50 90.80 3.18 13.34 27673.96
Ch Rail Cons 10.70 -0.06 11.98 8.61 1.66 8.93 2851 Imperial Brands 3629 21.50 4154 3324 4.28 34.17 44914.43 Eaton 77.17 -0.55 79.31 54.30 3.09 17.42 34518.14 Starbucks 63.32 0.06 63.52 50.84 1.47 30.36 91693.69
Volkswgn 139.45 -2.20 157.40 116.05 0.08 42.86 46273.7 Statoil 146.90 -1.90 163.50 123.90 5.17 -21.94 56973.89
Ch Rail Gp 6.46 -0.03 7.71 5.40 1.58 10.67 3487.97 LlydsBkg 70.59 -0.53 73.58 47.10 3.33 29.41 65394.14 eBay 34.16 -0.46 35.30 22.30 - 4.80 36972.67 StateSt 81.28 -0.40 85.38 50.60 1.88 14.77 30580.44
ChConstBk 6.44 -0.05 6.55 4.73 4.97 5.93 198690.49 Hong Kong (HK$) Telenor 139.50 2.30 150.90 122.50 5.50 72.20 24868.6 Ecolab 132.46 0.90 132.59 110.65 1.12 30.63 38420.14 Stryker 142.48 0.50 143.20 106.48 1.17 31.01 53254.04
Natl Grid 1089.5 0.50 1252.36 969.71 4.34 18.36 52789.15
China Vanke 20.70 -0.05 24.10 14.56 4.05 9.39 3493.07 AIA 55.25 0.50 56.15 42.65 1.37 19.61 85606.87 Qatar (QR) Emerson 58.89 -0.06 64.37 48.45 3.35 22.28 37953.43 Sychrony Fin 26.58 -0.53 38.06 23.25 0.49 10.05 21552.68
Prudential 1736 -4.00 1801.5 1096 2.27 23.15 57948.25
ChinaCitic 4.81 0.01 5.50 4.40 5.17 4.85 9186.16 BOC Hold 35.15 0.15 35.25 22.00 3.66 14.62 47691.48 QatarNtBk 146.90 -1.00 173.00 133.50 2.23 10.59 37259.21 EOG Res 89.69 0.07 109.37 78.04 0.77 -81.19 51775.21 Target 54.74 -0.20 79.33 52.72 4.30 11.48 30200.51
RBS 260.00 -0.60 271.00 148.40 - -4.37 39861.75
ChinaLife 25.60 - 26.05 16.00 1.92 31.78 24445.97 Ch OSLnd&Inv 23.40 -0.25 27.85 20.15 2.53 6.50 32900.49 EquityResTP 65.44 0.13 71.53 58.28 3.18 27.56 24026.62 TE Connect 79.08 0.07 79.69 54.54 1.93 13.58 28075.56
Russia (RUB) ReckittB 7938 12.00 8083 6496 1.85 30.95 71797.28
ChinaMBank 23.40 -0.15 24.30 15.24 3.47 8.12 13786.06 ChngKng 58.50 0.70 59.75 44.75 2.32 12.38 28030.05 Exelon 36.20 0.14 37.70 29.82 3.65 28.40 33524.7 Tesla Mtrs 341.65 6.55 342.89 178.19 - -72.10 56119.34
Gzprm neft 119.89 -2.21 160.62 119.40 5.89 3.70 50001.54 RELX 1663 11.00 1676 631.02 1.96 29.80 44124.48
ChinaMob 86.45 0.25 99.30 80.30 2.87 15.52 227156.44 Citic Ltd 12.36 0.06 12.78 10.60 2.55 10.42 46141.52 ExpScripts 59.43 -0.17 80.02 57.80 - 10.50 35676.59 TexasInstr 82.88 0.91 83.24 58.61 2.07 22.80 82575.32
Lukoil 2742.5 -82.50 3582 2523 7.09 8.31 41095.26 RioTinto 3102.5 -80.50 3718.5 1853 3.83 15.02 55301.89
ChinaPcIns 31.20 1.25 31.60 24.25 3.66 19.82 11111.97 Citic Secs 16.34 -0.04 19.16 15.36 3.60 15.38 6119.44 ExxonMb 80.73 -0.37 95.55 80.30 3.84 32.58 342074.44 TheTrvelers 124.40 0.67 125.49 103.45 2.22 11.87 34759.33
MmcNrlskNckl 7905 -145.00 11199 7903 8.75 14.72 22037.97 RollsRoyce 867.50 -1.00 895.00 588.00 1.35 -3.94 20607.8
ChMinsheng 7.99 - 9.48 6.91 4.04 5.19 7109.35 CK Hutchison 101.60 -0.20 103.90 80.60 2.43 14.25 50297.42 Facebook 151.93 -0.45 153.60 108.23 - 37.45 359281.42 ThrmoFshr 173.49 0.24 174.38 139.07 0.36 30.61 67872.74
Novatek 639.50 -11.10 800.70 622.00 2.24 8.72 34207.75 RylDShlA 2100 -15.00 2295.5 1645 7.18 44.74 121363.53
ChMrchSecs RMB 17.00 0.20 20.09 15.21 2.42 18.22 11748.63 CNOOC 8.90 -0.12 10.88 8.75 5.33-157.14 50993.2 Fedex 192.80 -1.08 201.57 145.00 0.78 26.14 51549.89 TimeWrnr 99.18 0.24 100.60 68.97 1.68 18.19 76917.81
Rosneft 301.55 -3.45 425.70 300.20 3.79 18.17 56302.71 Shire 4471.5 -31.50 5377 2707.19 0.54 118.97 52363.61
Chna Utd Coms RMB 7.47 - 8.05 3.75 0.78 550.86 23213.45 HangSeng 164.50 0.80 165.30 127.60 3.36 21.41 40359.34 FordMtr 11.03 -0.05 14.04 10.67 5.25 5.39 43155.46 TJX Cos 74.99 0.14 83.64 71.50 1.38 21.35 48239.29
Sberbank 155.86 -5.78 185.34 125.35 0.22 14.16 59274.09 StandCh 731.90 5.40 821.60 471.34 - -62.37 31083.6
ChShenEgy 18.98 -0.24 19.78 11.96 1.97 14.19 8277.89 HK Exc&Clr 196.70 -0.50 213.20 175.00 2.67 38.23 30904.83 Franklin 41.42 -0.19 44.35 30.56 1.89 12.94 23249.73 T-MobileUS 67.06 -0.02 68.88 40.50 - 33.66 55715.85
Surgutneftegas 30.08 -1.11 34.40 26.00 - -13.21 18929.06 Tesco 183.70 -1.65 219.40 143.08 - 226.79 19417.09
ChShpbldng RMB 6.21 - 8.14 5.87 - -83.66 16716.83 MTR 44.40 -0.10 50.00 36.45 2.32 27.08 33676.39 GenDyn 202.19 0.18 202.73 132.68 1.59 19.07 60997.78 UnionPac 109.66 -1.15 115.15 81.96 2.17 20.31 88543.79
Saudi Arabia (SR) Vodafone 231.50 2.35 240.10 186.50 5.44 -9.53 79565.29
ChStConEng RMB 9.45 0.12 11.45 5.09 2.16 9.53 41128.83 SandsCh 35.95 0.75 39.30 24.60 5.79 29.11 37242.47 GenElectric 27.30 -0.07 33.00 27.10 3.56 26.13 237028.77 UPS B 105.76 -1.05 120.44 101.95 3.09 26.13 72844.35
AlRajhiBnk 62.00 - 67.50 48.60 3.73 11.75 26863.8 WPP 1744 -7.00 1928.07 1204 2.77 16.15 28711.7
ChUncHK 11.18 -0.16 11.36 7.70 1.79 208.51 34357.36 SHK Props 115.30 0.10 123.30 85.40 2.90 10.52 42847.93 GenMills 56.83 0.26 72.95 55.57 3.47 20.29 32738.89 USBancorp 50.67 -0.43 56.61 38.48 2.23 14.87 85393.3
Tencent 267.60 -7.20 280.60 167.00 0.17 46.97 325465.58 Natnlcombnk 41.30 0.80 45.00 32.00 3.40 8.52 22024.32 United States of America ($)
CNNC Intl RMB 7.72 0.09 7.83 6.58 1.19 25.10 4787.12 GenMotors 33.63 0.10 38.55 27.34 4.67 5.04 50743.87 UtdHlthcre 175.41 -1.18 178.89 132.39 1.47 21.76 169035.88
SaudiBasic 98.75 1.00 102.50 76.00 5.01 18.21 78991.56 21stC Fox A 26.97 -0.08 32.60 23.33 1.38 15.93 28381.46
CSR 7.30 -0.02 7.99 6.45 2.40 16.46 4094.81 India (Rs) GileadSci 64.41 -0.08 88.85 63.88 3.09 6.60 84172.52 UtdTech 121.24 -0.03 122.84 96.89 2.25 18.21 97140.82
SaudiTelec 69.00 0.25 74.00 51.00 5.96 15.49 36796.08 3M 203.79 1.35 203.82 163.85 2.28 23.87 121712.11
Daqin RMB 8.55 0.09 8.61 5.98 5.38 15.21 18635.23 Bhartiartl 371.55 0.85 401.00 283.05 0.38 38.09 23019.75 GoldmSchs 211.46 -6.96 255.15 138.20 1.27 10.92 83237.18 ValeroEngy 61.17 -0.92 71.40 46.88 4.22 12.97 27357.15
Singapore (S$) AbbottLb 45.53 0.53 45.84 36.76 2.37 49.55 79006.94
Gree Elec Apl 0.19 0.00 0.25 0.16 - -6.04 333.54 HDFC Bk 1636.2 7.15 1648 1144.25 0.56 33.62 65144.15 Halliburton 44.98 -0.17 58.78 40.12 1.65 -11.12 39036.72 Verizon 46.38 0.18 56.95 44.46 5.11 15.02 189184.83
DBS 20.47 -0.13 21.18 14.72 2.93 12.33 37623.41 Abbvie 65.92 -0.10 68.12 55.06 3.61 17.38 104914.35
GuosenSec RMB 13.35 0.18 18.94 12.39 4.59 22.15 4296.15 Hind Unilevr 1067 -5.60 1077 781.95 1.59 50.30 35792.95 HCA Hold 81.95 -0.04 91.03 67.00 - 10.80 30067.83 VertexPharm 122.73 2.34 123.48 71.46 - 169.83 30568.21
JardnMt US$ 63.89 -0.09 67.27 52.90 2.37 9.15 46185.91 Accenture 124.04 0.27 126.53 108.66 1.92 17.78 82130.83
HaitongSecs 13.06 -0.12 15.24 11.98 4.08 15.12 5714.37 HsngDevFin 1569.85 -9.65 1604 1182.15 0.94 25.28 38671.51 Hew-Pack 18.86 -0.08 19.58 11.48 2.78 11.66 31942.74 VF Cp 54.07 0.29 65.28 48.05 2.96 18.61 21650.71
JardnStr US$ 41.97 -0.18 43.78 28.45 0.72 8.60 46488.72 Adobe 141.93 -0.48 143.48 90.35 - 52.22 70212.49
Hngzh HikVDT RMB 26.50 -0.24 40.16 20.41 1.80 30.54 18797.62 ICICI Bk 326.45 5.05 327.30 221.10 1.52 22.54 29485.18 HiltonWwde 65.76 0.22 66.39 43.47 1.22 92.33 21620.65 Viacom 34.43 -0.62 46.72 33.44 4.04 9.60 12129.7
OCBC 10.49 0.08 10.65 8.22 3.51 12.13 31715.86 AEP 71.55 0.34 71.87 57.89 3.32 48.46 35182
Hunng Pwr 6.22 0.05 6.23 4.43 8.85 9.48 3751.89 Infosys 977.05 -19.15 1279.3 901.00 2.59 15.42 34783.48 HomeDep 153.60 -0.28 160.86 119.20 1.84 23.21 183637.24 Visa Inc 95.14 0.42 95.38 73.25 0.66 45.85 175652.26
SingTel 3.76 0.01 4.36 3.59 4.69 15.60 44381.04 Aetna 144.61 -0.94 147.48 104.59 0.71 43.50 47967.14
IM Baotou Stl RMB 2.19 -0.80 2.37 1.96 - 83.74 5054.29 ITC 311.80 0.35 319.85 222.00 1.43 35.97 58703.56 Honywell 133.26 0.33 135.00 105.25 1.92 20.57 101589.18 Walgreen 80.75 0.59 88.00 76.26 1.91 20.01 87286.78
UOB 22.98 -0.11 24.02 17.41 3.11 11.71 27179.09 Aflac 75.06 -0.08 76.88 66.50 2.31 11.82 29787.3
In&CmBkCh 5.21 0.01 5.27 4.03 5.27 5.80 58030.5 L&T 1760.7 -6.85 1833.95 1295.1 0.81 36.96 25468.24 HumanaInc 230.99 0.62 234.88 150.00 0.57 22.65 33335.3 WalMartSto 78.78 0.63 79.44 65.28 2.61 17.53 238826
AirProd 143.62 -0.35 150.45 124.02 2.54 20.16 31269.59
IndstrlBk RMB 16.55 0.05 17.58 14.99 3.77 5.72 46227.26 OilNatGas 177.00 -1.65 211.80 138.00 1.90 18.38 35205.93 South Africa (R) IBM 152.34 0.61 182.79 142.50 3.80 12.14 143122.96 WellsFargo 51.18 -0.98 59.99 43.55 3.07 12.39 255742.75
Alexion 98.41 0.63 157.02 96.18 - 45.39 22097.49
Kweichow RMB 442.94 -8.98 456.48 263.00 1.42 30.34 81574.6 RelianceIn 1340.7 -18.65 1467.75 930.00 - 12.92 67563.51 Firstrand 49.31 -1.47 54.46 41.50 4.62 11.45 20976.68 IllinoisTool 141.22 0.12 142.82 98.32 1.83 22.99 48784.59 Williams Cos 28.27 -0.43 32.69 19.60 6.21 -47.46 23354.66
Allegran 223.59 1.48 261.27 184.50 0.32 -20.41 75013.62
Midea 1.72 0.01 1.87 1.62 6.11 23.07 47.47 SBI NewA 288.30 -0.55 315.30 195.40 0.90 50.05 36237.92 MTN Grp 117.50 -1.70 151.70 104.76 9.26 -81.00 16790.35 Illumina 176.70 3.12 189.48 119.37 - 34.58 25798.2 Yahoo 50.33 -0.23 51.23 35.05 - -1625.12 48226.16
Allstate 86.28 0.28 86.63 65.27 1.60 17.68 31450.62
New Ch Life Ins 42.05 1.25 42.85 25.50 - 22.23 5580.3 SunPhrmInds 501.60 -6.40 854.95 492.65 0.20 16.86 18652.88 Naspers N 2715.56 -84.44 2846.5 1925.98 0.14 106.88 90255.8 Intcntl Exch 60.21 0.05 61.98 48.15 1.18 24.32 35648.33 Yum!Brnds 72.52 0.11 72.75 56.80 2.46 25.92 25253.67
Alphabet 988.10 -8.07 999.60 672.66 - 33.96 294087.02
PetroChina 5.19 -0.07 6.38 4.92 1.04 29.63 14052.5 Tata Cons 2546.6 -4.50 2744.8 2051.9 1.87 18.61 77772.65 South Korea (KRW) Intel 36.09 -0.09 38.45 30.44 2.98 15.13 169947.81 Venezuela (VEF)
Altria 74.74 -0.33 76.55 60.82 2.66 30.04 144379.49
PingAnIns 49.95 -0.40 51.80 32.50 1.30 11.82 47739.34 Indonesia (Rp) HyundMobis 274500-6500.00 293500 212000 1.32 12.18 23866.46 Intuit 140.83 0.78 141.08 103.03 0.94 40.32 36081.75 Bco de Vnzla 750.00 - 800.00 93.00 - - 3762.2
Amazon 993.78 -2.92 1001.2 682.12 - 181.28 475002.49
PngAnBnk RMB 9.20 0.05 10.26 8.52 1.70 7.03 22818.65 Bk Cent Asia 17150 -625.00 18550 12625 1.05 19.44 31744.31 KoreaElePwr 42700 450.00 63600 40050 4.49 4.02 24483.62 John&John 128.50 1.39 129.00 109.32 2.57 20.92 346157.55 Bco Provncl 10400 400.00 10400 2200 - 43.64 1542.38
AmerAir 47.91 -0.05 50.64 24.85 0.86 11.24 23599.93
Pwr Cons Corp RMB 7.94 0.08 9.00 5.40 0.99 16.26 11174.88 SK Hynix 57000 -400.00 58800 27400 1.09 9.50 37063.36 JohnsonCn 41.83 -0.15 46.17 37.31 2.80 -29.88 39241.08 Mrcntl Srvcs 31150 - 31150 4500 0.02 153.87 2608.36
Israel (ILS) AmerExpr 76.60 -0.49 82.00 57.15 1.68 13.39 68463.49
SaicMtr RMB 30.07 0.45 30.12 19.60 4.62 10.13 48605.55 SmsungEl 2235000 3000 2361000 1268000 0.95 16.85 260846.81 JPMrgnCh 82.10 -1.80 93.98 57.05 2.23 14.24 291685.19
TevaPha 101.50 0.20 217.70 100.60 4.72 16.66 28907.29 AmerIntGrp 63.78 -0.33 67.47 48.41 1.93 98.73 58808
ShenwanHong 0.30 -0.01 0.35 0.16 - -5.07 341.32 Spain () Kimb-Clark 130.25 1.28 138.87 111.30 2.96 20.82 46229.39 Closing prices and highs & lows are in traded currency (with variations for that
Italy () AmerTower 132.16 0.04 137.12 99.72 1.70 61.84 56169.25
ShgPdgBk RMB 12.84 - 13.52 11.16 3.15 6.80 40694.68 KinderM 18.73 0.31 23.36 17.07 4.70-117.76 41802.48 country indicated by stock), market capitalisation is in USD. Highs & lows are
Enel 4.76 0.03 4.81 3.54 3.34 16.52 54395.8 BBVA 7.25 -0.11 7.89 4.50 5.01 12.96 54376.01 Amgen 154.33 0.48 184.21 133.64 2.78 14.20 113494.15
Sinopec Corp 6.39 0.02 6.57 5.08 2.57 11.48 20921.53 Kraft Heinz 92.24 -0.22 97.77 79.69 2.66 31.80 112314.47 based on intraday trading over a rolling 52 week period.
ENI 14.09 -0.23 15.92 12.18 5.64 -5.33 57581.05 BcoSantdr 5.78 -0.02 6.35 3.15 3.48 14.02 94796.3 Anadarko 50.54 -0.23 73.33 48.67 1.22 -5.11 28319.54
Sinopec Oil RMB 3.72 -0.20 4.51 3.02 - -3.27 1537.03 Kroger 29.66 -0.10 37.97 28.29 1.56 14.10 27067.82 ex-dividend
Generali 14.05 0.17 16.00 9.76 5.02 10.86 24675.48 CaixaBnk 4.20 0.05 4.47 1.82 3.50 23.92 28276.77 Anthem 182.29 -1.03 185.00 114.85 1.40 21.43 48304.34
Denmark (kr) Iberdrola 7.10 0.05 7.16 4.80 5.74 17.07 51561.96 L Brands 51.10 0.46 79.67 43.04 4.82 12.51 14553.74 ex-capital redistribution
IntSPaolo 2.55 0.00 2.90 1.52 5.38 21.21 45442.09 Aon Cp 131.09 0.38 131.62 100.55 1.03 24.32 34354.76
DanskeBk 248.70 -0.10 259.30 161.80 3.56 11.76 35216.53 Inditex 36.40 0.06 36.65 27.18 1.30 35.96 127553.25 LasVegasSd 58.45 -0.25 63.38 41.45 5.10 24.61 46305.69 # price at time of suspension
Luxottica 53.95 0.05 56.90 39.92 1.62 31.10 29390.05 Apple 153.20 -0.47 156.65 91.50 1.54 17.29 798735.78
MollerMrsk 12610 70.00 12880 7775 3.65 -20.29 19175.43 Repsol 14.92 -0.09 15.22 9.60 4.13 13.52 25097.7 LibertyGbl 30.80 -0.20 39.85 26.16 - 13.45 7304.51
Unicred 15.57 -0.28 30.80 11.93 3.79 -1.58 38968.65 ArcherDan 42.00 -0.11 47.88 39.01 3.00 17.24 23871
NovoB 281.40 0.60 384.80 218.20 3.31 19.24 83475.5 Telefonica 9.91 -0.06 10.63 7.45 7.33 21.48 56163.16 Lilly (E) 79.68 1.33 86.72 64.18 2.66 37.29 87918.02
AT&T 38.61 0.06 43.89 36.10 5.22 17.60 237404.41

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
Tesla Mtrs 341.65 335.10 6.55 1.95 31.43 10.1 8.81 IM Baotou Stl 2.19 2.99 -0.80 -26.76 -0.77 -26.0 -27.48 May 31 date Coupon S* M* F* price yield yield yield US May 31 date Coupon S* M* F* price yield yield yield US
MediaTek 230.00 229.50 0.50 0.22 17.50 8.2 5.99 SunPhrmInds 501.60 508.00 -6.40 -1.26 -112.50 -18.3 -21.86 High Yield US$ US$
Surgutneftegas 30.08 31.18 -1.11 -3.54 2.27 8.1 7.79 ShgPdgBk 12.84 12.84 0.00 0.00 -2.59 -16.8 9.74 Navient Corporation 03/20 8.00 BB- Ba3 BB 110.09 4.21 0.00 -1.29 2.93 Citigroup Inc. 01/28 6.63 BBB+ Baa1 A 121.14 4.19 0.00 0.11 1.96
ChUncHK 11.18 11.34 -0.16 -1.41 0.82 7.9 11.35 Devon Energy 34.03 34.49 -0.46 -1.33 -3.10 -8.3 -13.93 High Yield Euro SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 111.09 4.72 0.00 -0.02 2.49
ChinaPcIns 31.20 29.95 1.25 4.17 2.25 7.8 8.52 Deut Bank 15.58 16.14 -0.56 -3.47 -1.38 -8.1 -8.11 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 120.98 4.43 0.00 -0.15 2.20
NorfolkS 123.25 124.13 -0.88 -0.71 8.28 7.2 4.87 Unicred 15.57 15.85 -0.28 -1.77 -1.31 -7.8 4.22 Nicor Gas Company 02/28 6.58 A Aa3 AA- 117.13 4.59 0.00 -0.07 2.36
China Vanke 20.70 20.75 -0.05 -0.24 1.32 6.8 4.86 ValeantPh 16.07 16.48 -0.41 -2.49 -1.29 -7.4 27.19 Emerging US$ NationsBank Corp. 03/28 6.80 BBB Baa3 A- 121.97 4.28 0.00 -0.29 2.06
Hunng Pwr 6.22 6.17 0.05 0.81 0.39 6.7 15.83 SocGen 46.67 49.02 -2.35 -4.78 -3.58 -7.1 -7.05 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 United Utilities PLC 08/28 6.88 BBB- Baa1 A- 120.02 4.62 0.00 -0.19 2.40
ICICI Bk 326.45 321.40 5.05 1.57 20.40 6.7 17.22 Petrobras 13.80 14.17 -0.37 -2.61 -1.01 -6.8 -3.83 Peru 03/19 7.13 BBB+ A3 BBB+ 109.92 1.61 0.00 -0.18 0.33
Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84 Euro
ChinaMBank 23.40 23.55 -0.15 -0.64 1.45 6.6 15.84 Williams Cos 28.27 28.69 -0.43 -1.48 -2.02 -6.7 -7.80 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 104.14 2.22 0.02 0.15 -
Softbank 9003.00 8980.00 23.00 0.26 495.00 5.8 6.65 Shire 4471.50 4503.00 -31.50 -0.70 -307.00 -6.4 -0.17 Brazil 01/20 12.75 BB Ba2 BB 124.48 3.00 0.00 0.41 1.72
Brazil 01/22 12.50 BB Ba2 BB 112.45 9.15 -0.07 -0.23 7.38 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 104.83 2.15 0.00 0.06 -
Ch Evrbrght 3.69 3.68 0.01 0.27 0.20 5.7 1.10 Sberbank 155.86 161.64 -5.78 -3.58 -10.45 -6.3 -5.61 Citigroup Inc. 02/30 4.25 BBB Baa3 A- 117.34 2.29 0.02 0.04 -
BOE Tech 1.58 1.57 0.01 0.64 0.08 5.3 3.27 Novatek 639.50 650.60 -11.10 -1.71 -41.50 -6.1 -8.04 Colombia 03/23 2.63 BBB Baa2 BBB 97.23 3.18 -0.02 -0.09 1.41
Poland 03/23 3.00 BBB+ A2 A- 100.95 2.84 -0.02 -0.20 1.07 HBOS plc 03/30 4.50 BBB- Baa2 A- 117.08 2.47 0.02 -0.23 -
ChMinsheng 7.99 7.99 0.00 0.00 0.40 5.3 4.31 Cred Agr 13.64 13.78 -0.14 -1.02 -0.88 -6.1 -0.07
Turkey 03/23 3.25 - Ba1 BB+ 80.65 7.41 0.06 0.27 5.64 Yen
SandsCh 35.95 35.20 0.75 2.13 1.65 4.8 1.84 BNP Parib 62.82 63.60 -0.78 -1.23 -4.02 -6.0 -3.03
Russia 05/26 4.75 - - BBB- 105.31 4.08 0.00 0.00 1.85 Enagas Transportes, S.A.U. 09/39 3.23 A- Baa2 A- 106.57 2.85 0.00 0.01 -
PngAnBnk 9.20 9.15 0.05 0.55 0.41 4.7 2.34 Hngzh HikVDT 26.50 26.74 -0.24 -0.90 -1.63 -5.8 -27.54
Ericsson 64.05 60.65 3.40 5.61 2.85 4.7 12.08 Halliburton 44.98 45.15 -0.17 -0.38 -2.73 -5.7 -2.14 Turkey 03/27 6.00 - Ba1 BB+ 106.82 5.17 0.00 0.03 2.94 Sterling
AbbottLb 45.53 45.00 0.53 1.18 2.00 4.6 4.33 ENI 14.09 14.32 -0.23 -1.61 -0.84 -5.6 -1.26 Emerging Euro Electricite de France (EDF) 05/28 6.25 A A3 A- 135.06 2.55 -0.01 -0.19 0.32
Fresenius Med 85.16 82.90 2.26 2.73 3.58 4.4 4.39 GoldmSchs 211.46 218.42 -6.96 -3.19 -12.37 -5.5 -5.60 Brazil 02/15 7.38 BBB- Baa2 BBB 111.75 0.73 0.00 0.00 0.09 HSBC Holdings plc 08/28 2.63 A A1 AA- 101.54 2.47 -0.01 -0.30 0.24
ChMrchSecs 17.00 16.80 0.20 1.19 0.70 4.3 6.65 MmcNrlskNckl 7905.00 8050.00 -145.00 -1.80 -454.00 -5.4 -9.60 Mexico 02/20 5.50 BBB+ A3 BBB+ 113.88 0.35 0.00 -0.07 -0.92 Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poors, M -
Mexico 04/23 2.75 BBB+ A3 BBB+ 107.90 1.35 0.02 -0.01 -0.42 Moodys, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 03/28 3.00 BB+ Baa2 BBB- 108.38 2.12 0.02 0.01 -0.11
Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other
London close. *S - Standard & Poors, M - Moodys, F - Fitch.

INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET
May 31 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return May 31 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 10.76 0.38 10.38 26.72 9.56 May 31 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 10.73 0.45 10.28 23.69 3.59 Tr 8.75pc '17 102.05 0.02 100.00 100.00 -300.00 -94.59 105.16 100.00 11.14
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 181.42 -0.09 0.90 4.74 0.90 1.05 VXN 13.23 0.33 12.90 27.10 9.75 Tr 5pc '18 103.73 0.13 30.00 44.44 333.33 -56.67 108.38 103.73 35.24
Euro Repo 0.00 10-09-2014 0.05 0.05 0.05 Corporates( ) 343.70 0.10 1.51 4.12 1.51 11.26 VDAX - - - - - Tr 4.5pc '19 107.78 0.09 28.57 28.57 200.00 -80.00 111.97 107.78 36.35
UK Repo 0.25 05-03-2009 0.25 0.50 0.50 Corporates($) - - - - - - CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.75pc '20 112.86 0.09 12.50 0.00 12.50 -86.57 117.02 112.86 33.31
Japan O'night Call 0.00-0.00 05-10-2010 0.00 0.00-0.10 0.00-0.10 Corporates() 223.81 -0.03 0.37 1.14 0.37 2.86 Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 1.5pc '21 104.58 0.24 9.09 0.00 -4.00 -73.63 106.04 102.80 32.46
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov() 231.47 -0.03 0.53 -0.52 0.53 -0.46 Tr 4pc '22 117.46 0.31 6.90 -8.82 -3.13 -67.37 121.31 116.43 37.95
Gilts( ) 325.76 -0.02 0.77 2.73 0.77 7.59 BONDS: BENCHMARK GOVERNMENT Tr 5pc '25 132.18 0.73 2.82 -3.95 -2.67 -45.11 138.11 129.09 35.08
INTEREST RATES: MARKET Global Inflation-Lkd 258.03 0.10 0.20 4.40 0.24 3.60 Red Bid Bid Day chg Wk chg Month Year Tr 1.25pc '27 101.34 1.11 1.83 -3.48 -1.77 -31.06 138.26 99.31 5.43
Over Change One Three Six One Markit iBoxx Non-Gilts 338.49 0.09 1.28 3.71 1.28 9.82 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '32 138.27 1.41 0.71 -2.08 -2.76 -27.69 148.92 131.34 35.44
May 31 (Libor: May 30) night Day Week Month month month month year Overall ($) - - - - - - Australia 10/19 2.75 102.65 1.62 -0.01 -0.08 -0.13 -0.03 Tr 4.25pc '36 143.20 1.58 1.28 -1.25 -3.07 -25.47 155.77 134.98 29.76
US$ Libor 0.93111 0.001 0.002 0.006 1.05050 1.20178 1.41489 1.72150 Overall( ) 326.49 0.01 0.92 3.02 0.92 8.24 11/28 2.75 102.15 2.53 -0.01 -0.10 -0.20 0.00 Tr 4.5pc '42 157.97 1.69 1.81 -0.59 -2.31 -23.18 174.65 147.27 26.64
Euro Libor -0.43000 0.000 -0.002 -0.004 -0.40214 -0.36929 -0.28571 -0.16729 Overall() 227.79 -0.02 0.43 -0.10 0.43 0.25 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 3.75pc '52 157.40 1.61 2.55 0.00 -1.83 -23.33 177.28 143.60 23.59
Libor 0.22375 0.000 0.000 0.000 0.25225 0.29650 0.43925 0.63631 Treasuries ($) - - - - - - 04/27 0.50 99.26 0.58 0.00 -0.11 -0.03 0.00 Tr 4pc '60 176.89 1.54 2.67 0.00 -1.91 -24.14 201.27 159.04 23.21
Swiss Fr Libor -0.002 -0.78740 -0.72960 -0.66180 -0.48960 FTSE Belgium 06/18 0.75 100.87 -0.11 0.00 0.00 0.00 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per 100 nominal of stock. Red yield: Gross redemption yield.
Yen Libor -0.012 -0.02850 -0.01564 0.02300 0.12643 Sterling Corporate () 118.69 -0.12 - - 0.86 5.58 06/27 0.80 101.44 0.65 -0.04 -0.12 -0.11 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Euro Euribor -0.001 -0.37300 -0.32900 -0.25400 -0.13100 Euro Corporate () 107.44 0.03 - - 0.17 -0.52 Canada 08/19 0.75 100.00 0.75 0.00 0.02 0.00 0.00
Sterling CDs
US$ CDs
0.000
0.000
0.20000
0.97000
0.28000
1.13000
0.42500
1.31000
Euro Emerging Mkts () 803.84 -5.63 - - 0.16 -8.52 06/27 1.00 96.07 1.42 -0.02 -0.09 -0.09 0.00 GILTS: UK FTSE ACTUARIES INDICES
Eurozone Govt Bond 112.45 0.19 - - 0.50 -2.97 Denmark 11/20 0.25 102.29 -0.41 0.00 0.00 0.00 0.00
Euro CDs 0.000 -0.43500 -0.39500 -0.29500 11/27 0.50 99.33 0.57 -0.02 -0.10 -0.03 0.00 Price Indices Day's Total Return Return
CREDIT INDICES Day's Week's Month's Series Series Fixed Coupon May 31 chg % Return 1 month 1 year Yield
Short 7 Days One Three Six One Index change change change high low Finland 09/19 1.75 100.48 1.54 0.00 0.00 -0.02 0.23
07/28 2.75 115.37 1.45 0.00 0.00 0.00 0.00 1 Up to 5 Years 96.66 -0.07 2434.96 0.03 1.55 0.19
May 31 term notice month month month year Markit iTraxx 2 5 - 10 Years 186.48 -0.20 3513.88 0.39 4.71 0.71
Euro -0.50 -0.35 -0.50 -0.35 -0.51 -0.36 -0.47 -0.32 -0.37 -0.22 -0.36 -0.11 Crossover 5Y 369.26 -12.07 35.21 40.34 390.04 288.69 France - - - - - - -
3 10 - 15 Years 218.15 -0.26 4275.48 0.66 7.16 1.16
Sterling 0.15 0.25 0.15 0.25 0.23 0.33 0.35 0.50 0.47 0.62 Europe 5Y 85.00 -1.98 7.21 7.01 90.43 67.59 11/20 0.25 102.44 -0.44 0.00 0.00 0.00 0.00
4 5 - 15 Years 193.96 -0.22 3701.90 0.49 5.48 0.91
Swiss Franc - - - - - - - - - - - - Japan 5Y 70.05 -2.51 2.21 -0.87 93.03 64.22 10/22 2.25 112.98 -0.14 0.00 0.00 0.00 0.00
5 Over 15 Years 344.67 -0.41 5212.98 1.20 11.96 1.61
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 111.86 -3.89 10.86 12.50 121.66 80.36 05/27 1.00 102.59 0.73 -0.04 -0.11 -0.09 0.00
7 All stocks 184.19 -0.25 3606.63 0.65 6.81 1.40
US Dollar 0.90 1.00 0.95 1.05 1.00 1.10 1.10 1.20 1.25 1.35 1.50 1.60 Germany 10/19 0.25 102.29 -0.71 0.00 0.00 0.00 0.00
Markit CDX 08/23 2.00 114.03 -0.24 0.00 0.00 0.00 0.00
Japanese Yen -0.15 0.05 -0.20 0.00 -0.40 -0.10 -0.30 0.00 -0.25 0.05 -0.20 0.10 Day's Month Year's Total Return Return
Emerging Markets 5Y 198.09 -3.26 -11.46 -11.68 218.09 197.56 02/27 0.25 99.59 0.29 -0.03 -0.12 -0.04 0.00
Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs: Index Linked May 31 chg % chg % chg % Return 1 month 1 year
Nth Amer High Yld 5Y 328.29 0.17 -17.13 -10.17 353.95 327.35 08/46 2.50 133.68 1.14 -0.02 -0.10 0.03 0.25
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. 1 Up to 5 Years 314.86 -0.12 -0.24 1.88 2472.69 -0.03 3.78
Nth Amer Inv Grade 5Y 63.53 0.28 -4.09 -3.35 69.24 62.53 Greece 04/19 4.75 98.38 5.68 0.10 0.16 -0.13 -1.39
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 2 Over 5 years 720.73 -0.81 -1.27 22.78 5365.54 -1.15 23.43
02/27 3.00 84.14 5.98 0.09 0.26 0.07 -1.25 3 5-15 years 483.40 -0.42 -0.10 10.82 3734.38 0.11 11.99
Ireland 10/19 5.90 115.28 -0.47 0.00 0.00 0.00 0.00 4 Over 15 years 926.07 -0.94 -1.64 27.35 6747.85 -1.55 27.80
05/26 1.00 102.06 0.76 -0.02 -0.09 -0.07 -0.04 5 All stocks 651.48 -0.76 -1.19 20.34 4922.08 -1.06 21.12
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/19 0.05 99.80 0.14 0.01 0.05 -0.12 0.00
11/21 0.35 98.48 0.70 0.04 0.08 -0.10 0.00 Yield Indices May 31 May 30 Yr ago May 31 May 30 Yr ago
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/27 2.20 100.33 2.18 0.00 0.06 -0.12 0.00 5 Yrs 0.33 0.30 0.82 20 Yrs 1.71 1.69 2.18
Crude Oil Jun 48.65 -0.85 Corn Jul 371.25 4.50 Apr 21 Apr 21 Prev return stock Market stocks
03/47 2.70 89.72 3.27 0.02 0.06 -0.10 0.69 10 Yrs 1.06 1.03 1.55 45 Yrs 1.53 1.52 2.05
Brent Crude Oil 50.86 -1.24 Wheat Jul 432.50 1.75 Can 4.25%' 21 121.46 -0.361 -0.372 0.29 5.18 75355.91 7
Japan 05/19 0.10 100.52 -0.17 0.00 0.00 0.00 0.00 15 Yrs 1.53 1.50 2.00
RBOB Gasoline Jun 1.59 -0.03 Soybeans Jul 915.00 3.00 Fr 2.25%' 20 112.37 -1.431 -1.458 0.13 20.31 222459.38 16
03/22 0.10 101.07 -0.12 0.00 0.00 0.00 0.00
Heating Oil Jun 1.58 0.00 Soybeans Meal Jul 299.30 1.80 Swe 0.25%' 22 114.09 -1.848 -1.830 0.17 30.03 229025.37 7
03/27 0.10 100.59 0.04 0.00 -0.01 0.02 0.00 inflation 0% inflation 5%
Natural Gas Jun 3.16 0.02 Cocoa (ICE Liffe)X Jul 1586.00 4.00 UK 2.5%' 20 373.10 -2.880 -2.849 0.27 6.58 653041.71 27
03/47 0.80 100.00 0.80 -0.01 0.00 0.00 0.00 Real yield May 31 Dur yrs Previous Yr ago May 31 Dur yrs Previous Yr ago
Ethanol - - Cocoa (ICE US) Jul 2058.00 27.00 UK 2.5%' 24 371.80 -2.205 -2.162 0.74 6.82 653041.71 27
Netherlands 01/20 0.25 102.40 -0.65 0.00 0.00 0.00 0.00 Up to 5 yrs -2.45 1.97 -2.51 -1.25 -3.19 1.97 -3.25 -1.86
Uranium Jun 18.10 0.00 Coffee(Robusta)X Jul 1989.00 -21.00 UK 2%' 35 273.88 -1.791 -1.774 1.49 9.08 653041.71 27
07/27 0.75 102.32 0.51 -0.03 -0.10 -0.03 0.00 Over 5 yrs -1.70 24.65 -1.73 -0.92 -1.73 24.73 -1.76 -0.95
Carbon Emissions - - Coffee (Arabica) Jul 132.30 0.25 US 0.625%' 21 103.72 -0.249 -0.260 0.21 35.84 1253376.13 38
White SugarX 435.10 -2.90 New Zealand 04/20 3.00 102.48 2.11 0.00 -0.03 -0.14 -0.03 5-15 yrs -1.96 8.46 -2.01 -0.91 -2.09 8.47 -2.13 -1.03
Diesel - - US 3.625%' 28 133.26 0.507 -0.260 0.58 16.78 1253376.13 38
Sugar 11 15.11 -0.16 04/27 4.50 114.35 2.82 0.00 -0.04 -0.17 0.23 Over 15 yrs -1.68 29.72 -1.71 -0.92 -1.69 29.77 -1.72 -0.94
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices Local currencies. Total market
Norway 05/19 4.50 107.69 0.57 0.01 -0.01 -0.08 -0.05 All stocks -1.70 22.93 -1.74 -0.92 -1.74 23.04 -1.77 -0.96
Base Metals ( LME 3 Months) Cotton Jul 76.98 -0.34 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
Aluminium 1932.00 1.00 Orange Juice Jul 134.85 -1.15 02/27 1.75 102.24 1.50 -0.02 -0.03 -0.12 0.00 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
amount.
Aluminium Alloy 1670.00 -10.00 Palm Oil - - Portugal 06/19 4.75 109.20 0.22 0.01 -0.06 -0.14 -0.83
Copper 5690.50 32.50 Live Cattle Jun 122.93 0.00 BONDS: TEN YEAR GOVT SPREADS 04/27 4.13 108.60 3.10 -0.04 -0.06 -0.46 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 2116.50 16.50 Feeder Cattle Aug 149.85 2.65 Spain 01/19 0.25 100.89 -0.28 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 8955.00 -155.00 Lean Hogs Jun 80.58 0.00 Spread Spread Spread Spread 04/27 1.50 99.78 1.52 -0.01 -0.07 -0.12 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Tin 20360.00 -15.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.42 1.44 0.00 0.00 0.02 0.30 loss arising from the reliance on or use of the listed information. For all queries e-mail
Zinc 2601.00 -25.00 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 11/26 1.00 104.62 0.50 0.01 -0.03 -0.09 -0.30 ft.reader.enquiries@morningstar.com
Precious Metals (PM London Fix) May 30 Month Year Australia 2.53 2.24 0.30 Italy 2.18 1.88 -0.05 Switzerland 07/20 2.25 109.54 -0.78 0.00 0.00 0.00 0.00
Gold 1266.20 3.50 S&P GSCI Spt 377.87 -1.37 1.52 Austria 0.58 0.29 -1.65 Japan 0.04 -0.25 -2.19 06/27 3.25 134.53 -0.15 0.00 0.00 0.00 0.00 Data provided by Morningstar | www.morningstar.co.uk
Silver (US cents) 1731.00 4.00 DJ UBS Spot 82.87 -1.39 -3.07 Belgium 0.65 0.36 -1.58 Netherlands 0.51 0.22 -1.71 United Kingdom 07/19 1.75 103.56 0.09 0.00 -0.04 0.01 0.00
Platinum 941.00 -20.00 R/J CRB TR 181.38 -1.08 -3.01 Canada 1.42 1.13 -0.81 Norway 1.50 1.21 -0.73 07/22 0.50 100.29 0.44 -0.02 -0.08 -0.07 0.00
Palladium 797.00 17.00 M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Denmark 0.57 0.27 -1.66 Portugal 3.10 2.80 0.87 07/27 1.25 101.68 1.07 -0.02 -0.09 -0.09 0.00
Bulk Commodities UBS Bberg CMCI TR 13.50 -1.83 1.26 Finland 1.45 1.15 -0.78 Spain 1.52 1.23 -0.70 07/47 1.50 96.34 1.65 0.00 -0.05 -0.07 0.00
Iron Ore (Platts) 57.40 -0.40 LEBA EUA Carbon 5.04 0.00 -13.55 France 0.73 0.44 -1.50 Switzerland -0.15 -0.44 -2.38 United States 03/19 1.25 99.95 1.28 -0.03 -0.02 0.01 0.00
Iron Ore (The Steel Index) 56.20 -1.70 LEBA CER Carbon 0.23 -8.00 -42.50 Germany 0.29 0.00 -1.94 United Kingdom 1.07 0.78 -1.15 04/22 1.88 100.49 1.77 -0.02 -0.06 -0.03 0.00
GlobalCOAL RB Index 74.00 0.25 LEBA UK Power 5835.00 520.74 200.77 Greece 5.98 5.69 3.75 United States 2.23 1.94 0.00 05/27 2.38 101.30 2.23 -0.02 -0.06 0.00 0.00
Baltic Dry Index 878.00 -22.00 Ireland 0.76 0.47 -1.47 05/47 3.00 102.07 2.90 -0.01 -0.05 0.00 0.00
Sources: NYMEX, ECX/ICE, CBOT, X ICE Liffe, ICE Futures, CME, LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information Data provided by SIX Financial Information
unless otherwise stated.
18 FINANCIAL TIMES Thursday 1 June 2017

MARKETS & INVESTING

INSIGHT EU regulations

Willem
Buiter Letterbox companies face Brexit ban
City businesses warned as
regulator sets out rules for
common effort, at EU level, to safeguard passport while essentially performing The UKs earlier this year that rival financial cen-
investor protection, the orderly func- all substantial activities or functions tres were engaged in regulatory arbi-
tioning of financial markets and finan- outside the EU27. departure trage in a bid to lure business from

It is time for proper those seeking to relocate
management of public JIM BRUNSDEN BRUSSELS
One of the EUs top financial regulators
commercial assets has warned businesses in the City of
London that they will not be allowed to
use letterbox companies in Europe to
save their market access after Brexit.
The European Securities and Markets
cial stability, said Mr Maijoor. The
EU27 have a shared interest in building
a common approach.
Another priority for the agency is to
make sure that national supervisors do
not compete with each other to take a
lighter-touch approach in overseeing
the industry to attact business.
The nine relocation conditions set out
by Esma include that national supervi-
Relocations should also be rejected
when they are linked to evading
stricter rules in force elsewhere, it said.
creates a
unique
London.
Eoghan Murphy, the Irish financial
services minister, warned that compa-
Numerous financial institutions have
already taken steps to shift operations
situation nies are being offered certain incentives,
that they are offering a back door to the
requiring a
to the continent as they adapt to the
UKs imminent departure from the EU
single market, or have outlined plans to
common
single market, without the requirement
to have capital to back up their entities
in the European Union.
do so. effort, at Valdis Dombrovskis, the EUs finan-
Some of the most high-profile moves EU level cial regulation chief, has also raised con-

I
t is often claimed that there is this great wall of money
searching for assets but a dearth of investment oppor-
tunities. Yet at the same time commercial assets
owned by the public sector transportation, airports,
ports, water and electric utilities, communications
and vast portfolios of real estate represent a veritable
gold mine. Much of it is hidden from public view, without
professional management and impaired by rent-seeking
activities of the insiders in control.
There is an obvious opportunity to match the wall of
money with the gold mine. It is not something that has
appeared suddenly. Rather, the opportunity, with its
potential and challenges, has been demonstrated by occa-
sional bursts of privatisation.
How can the growing supply of yield-hungry funds find a
significant and sustainable way of working with public
commercial assets? If properly managed, the yield from
this vast portfolio could more than double the level of
infrastructure investments.
Publicly owned commercial assets at central govern-
ment level have a book value of $75tn, roughly equivalent
to global annual gross domestic product. Their market
value would be a multiple of global GDP. On top of this
are commercial assets at the local (city, provincial and
state) government level, which are of at least of the same
magnitude.
In total this public wealth represents a substantial
opportunity for investors, business and society as a whole.
The global capital market is valued at almost three times
global annual GDP. It transacts mostly assets of the private
sector and liabilities of both private and public sectors, but
remarkably few public sector assets. What is missing, first
of all, is a better understanding of the variety and valua-
tion of public assets transparency that can be achieved
through better accounting (including serious attempts at
fair valuations).
But in order for investors
and ordinary savers to engage
This vast
with this vast portfolio of portfolio could
opportunities, the public sec-
tor would need to package
yield a doubling
and present assets in a way of spending on
that instils trust in the capital
markets community.
infrastructure
As regards accounting,
trust is created by using internationally accepted account-
ing standards such as IFRS and its public sector equivalent,
IPSAS. Such international language transcends geogra-
phies, cultures, politics and language barriers, with the
help of international auditors, lawyers and investment
bankers.
In the same way, the public sector needs an organisa-
tional vehicle to manage its portfolio of commercial assets
in order to interact in a professional and transparent way
with the private sector that is, in a way that is recognised
as the international standard of asset management. In the
private sector that vehicle would be a corporate holding
company, set up with internationally recognised standards
of corporate governance and accounting.
Commercial assets owned by the public sector are in
urgent need of professional management. There can be no
professional management without such a vehicle and
the best place to start is most likely at the local level.
Cities could set up an urban wealth fund, an institution
that would be capable of managing commercial assets
and would be recognised by the private sector as an equal
professional partner.
A UWF is necessary not only to unlock the value hidden
in public commercial asset portfolios, but also to avoid giv-
ing away public value through the many unsuccessful
attempts to co-operate with the private sector in public-
private partnerships. PPPs have their place; properly
designed and implemented, they can benefit both public
and private partners. Too often, however, they have been
no more than vehicles to avoid public sector budgetary
and balance sheet constraint, transferring most of the
gains to the private partners.
Professional management of public commercial wealth
by means of UWFs, achieving returns above 3.5 per cent,
would enable governments to double spending on national
infrastructure for transport, power, water, and commu-
nications combined.
Institutionalising professional management of public
commercial assets in what smells and feels like a private
sector corporation would enable the great wall of money to
start working for the public sector and in the public inter-
est to the benefit of investors, savers, businesses, taxpay-
ers and society as a whole.
Willem Buiter is the chief economist of Citigroup; his co-author,
Dag Detter, also co-wrote The Public Wealth of Cities
Authorityyesterdaysetoutrulesforthose
keen to relocate, ahead of an expected
influxastheUKexitdrawsnearer.
Esma chief Steven Maijoor said the
step is intended to make sure compa-
nies cannot get around EU rules on over-
seas access to its financial markets.
The UKs departure from the EU cre-
ates a unique situation requiring a
June set to recalibrate the global outlook
Four big events in the next
few weeks have the potential
to alter expectations sharply
FT REPORTERS
This is set to be a busy month in the glo-
bal markets calendar, with important
meetings for the EU and US central
banks, a decision that could shape the
future for Chinese equities, and an elec-
tion in a UK racked by doubts over its
exit from the EU.
Eurozone recovery
When European Central Bank meets to
discuss monetary policy in Tallinn in
Estonia on June 8, a tweak to the institu-
tions language is expected.
Interest rates will remain below zero
for an extended period, but policymak-
ers could remove the possibility of mov-
ing lower from guidance given to the
public, a reflection of economic
improvement.
Bond investors will be alert to any dis-
cussion of the asset purchase pro-
gramme, which buys 60bn of securi-
ties each month. Mario Draghi, ECB
president, has just damped expecta-
tions of any swift announcement of a
reduction in buying, however.
Speaking to the European Parliament
this week, he said risks had receded and
Europes economic upswing was
increasingly solid. However, he was
firmly convinced, he said, of the need
for monetary stimulus and reiterated
the ECBs commitment to providing it.
After the comments Citigroup econo-
mists lowered their modest expecta-
tions for action. Even the guidance
change we currently expect (dropping
the reference to lower interest rates) is
not a foregone conclusion, they said.
The Fed
Many investors are near certain that
the US Federal Reserve will tighten pol-
icy in June. The market implied proba-
bility is 86 per cent that the Fed will
raise its target policy rate 25 basis points
to a corridor between 1 per cent and
1.25 per cent.
The question on investors minds is
what happens next? The policy meeting
on June 13-14 could provide clues.
Minutes of the most recent Fed meet-
ing gave additional detail on the poten-
tial for the US central bank to begin
winding down its balance sheet by the
end of the year.
Policymakers have contemplated
ending the reinvestment in its more
than $4tn portfolio of mortgage-backed
securities and Treasuries. Such a move
would, in turn, be likely to put upward
pressure on interest rates, serving in
sors should be able to verify the objec- have included the decision of insurer cerns, saying work must be acceler-
tive reasons for relocation and that AIG to set up a new base in Luxembourg Esma chief ated to develop common supervisory
special attention should be granted to and that of Lloyds of London to open a Steven Maijoor standards across the bloc.
avoid letterbox entities. new subsidiary in Brussels. Esma added: Firms need to be sub-
The Paris-based agency, which brings Investment bank JPMorgan has indi- ject to the same standards of authorisa-
together market watchdogs from across cated that it will move hundreds of peo- tion and ongoing supervision across the
the EU, said explicitly that regulators ple from London to Frankfurt, Luxem- EU27 in order to avoid competition on
should reject requests when it is clear bourg and Dublin. regulatory and supervisory practices
companies plan to benefit from an EU The Irish government complained between member states.
Analysis. Capital markets
Sterling Euro markets The dollar and Treasury yield
Against the dollar ($ per ) Rebased 10-year Treasury yield (%) Dollar index
Cac 40 Eurofirst 300
1.50 120 3.0 105
Dax $ per
110 2.5
1.40 100
100 2.0
1.30 95
90 1.5
1.20 80 1.0 90
May 2016 2017 May Jan 2016 2017 May May 2016 2017 May
Source: Thomson Reuters Datastream
tandem with higher policy rates to The addition of mainland stocks to an about the countrys uncertain future.
All the tighten financial conditions. index tracked by $1.5tn of assets would The prime minister, whoever that is
signalling All the signalling and posturing from be a watershed for Chinese markets. after June 8, will have a demanding
the Fed is for a June [rate rise], says Mainland regulators have been courting domestic agenda. However, for markets
and Todd Lowenstein, director of research foreign investment for years, but suf- the most important signal from the
posturing at HighMark Capital Management. fered a big setback following the dra- result will be what it means for Britains
The Fed seems to be more outlook matic stock market bubble and bust of relationship with the EU.
from the dependent than data dependent, and 2015. MSCIs endorsement would surely If, as most polls predict, the Conserva-
Fed is for a absent a destabilising shock they are be welcomed by Beijing. tives win a sizeable majority, Theresa
set on their agenda . . . to normalise It will be the fourth time the question May, the current prime minister, could
June [rate policy. has been asked, but recently the mood have more elbow room to carve out a
rise] But weaker data, a falling dollar and music has changed. BlackRock has Brexit deal while disempowering hard-
low longer-dated Treasury yields have backed the move, which would force line Eurosceptics in her party a pros-
cast doubt as to how fast the US central global fund managers benchmarked pect that boosted demand for the pound
bank can continue on its tightening tra- against the MSCI EM index to add when the election was called.
jectory. Shanghai and Shenzhen equities to But a narrow Tory win or a shock
Traders put the odds that the Fed will their portfolios. Labour victory could lead to the cur-
have lifted its target rate by 75bp by Regulatory changes during the past rency sinking back to test last years
years end at 44 per cent. That is down year, such as the opening of the Shen- post-referendum lows.
from as much as 59 per cent in mid-May. zhen-Hong Kong Stock Connect, have Sterling took a dip last week after a
bolstered the case for inclusion. poll showed the Tory lead narrowing.
China shares But analysts at JPMorgan say the pros-
On June 20 comes the return of MSCIs The pound pect of a centre-left coalition govern-
yearly will-they-wont-they ritual, when As the UK general election nears, all ment could be positive for the pound.
the index provider decides whether to eyes in the market will be on sterling,
include mainland-listed Chinese shares which has in the past year become the Reporting by Kate Allen, Josh Noble,
in its popular emerging markets gauge. main conduit for changing sentiment Dan McCrum, Joe Rennison and Eric Platt

Capital markets

Demand for floating-rate paper narrows CLO spread to post-crisis record

JOE RENNISON NEW YORK
Strong demand for floating-rate assets
has pushed borrowing costs for manag-
ers of bonds backed by leveraged loans
to their lowest level since the 2008
financial crisis.
The premium investors demand to
hold the highest rated slice of collateral-
ised loan obligations bundles of lever-
aged loans carved into tranches and
sold on has fallen to 1.1 percentage
points above the three-month London
interbankofferedrate,orLibor.
According to Citigroup, the premium
is below a post-crisis low in early 2013
and down from the 2016 peak when the
spread against the Libor benchmark.
was 1.9 percentage points
The drop in risk premium follows a
surge in refinancings of CLOs and a bout
of repricings in underlying loan market
as companies have cut borrowing costs.
More than $90bn of CLOs have been
refinanced this year, according to data
from LCD, a unit of S&P Global. That
compares with $42bn for the whole of
2016, and $10bn and $7bn for 2015
and 2014 respectively.
A steady rise in short-term interest
rates during the past year three-
month dollar Libor has doubled from
0.60 per cent to 1.20 per cent since last
June has spurred investors to own
floating-rate debt. The rise in Libor off-
sets narrowing spreads for buyers of
CLO tranches.
With the US Federal Reserve
expected to raise overnight rates this
month, more than $17bn has this year
flowed into mutual and exchange
traded funds that buy US bank loans,
according to EPFR.
Its a record year by far, said Amir
Vardi at Credit Suisse Asset Manage-
ment, which refinanced a $813m CLO
last week.
After a frenetic pace of refinancing,
managers are looking to lock in low
funding costs for longer periods. Refi-
nancing allows the rate paid to investors
to be adjusted, but managers can also
CLO spreads fall to new
reset, extending the maturity of existing
post-crisis low debt and changing the interest rate.
CLO 2.0 AAA spreads (basis points)
Almost $9bn has been reset in the sec-
200 ond quarter, compared with just over
$2bn for the entire first quarter.
Resets can be triggered only by the
equity holders in a CLO. Returns from
150
the lowest tranches in such structures
stand to benefit if spreads narrow after a
revised deal.
We have the ability to lock in attrac-
tive liabilities today, said Oliver Wriedt,
100 co-chief executive at CIFC, a large CLO
2011 13 14 15 16 17 manager.
Its likely there will be volatility in
Source: Citi
loan asset prices down the road, so we
want to secure plenty of runway with
longer investment period deals.
The increasing volume of resets also
shows growing comfort with new risk
retention rules. Regulations that came
into effect in December 2016 require
CLO managers to hold 5 per cent of the
economic interest of new deals.
Most of the bonds being refinanced
were issued in 2013 and 2014, and so do
not have to comply. But resets are not
exempt, and managers must front up
capital to extend the life of existing
deals.
The market has got more comforta-
ble to support resets and is accepting
lowerspreads,saidMaggieWangatCiti.
Thursday 1 June 2017 FINANCIAL TIMES 19

MARKETS & INVESTING

Global overview
TRADING POST Markets update
Jamie
Chisholm
Stocks end seventh successive S&P 500 index
Change on day 0.16%

month of gains on a flatter note

A couple of factors may conspire to
ensure the UKs FTSE 100 gets June
off to a difficult start.
The first day of the month sees a
rash of national manufacturing surveys
for investors to absorb.
Should these not come in quite as
strong as expected it may lead to
further pressure on industrial
commodities.
China iron ore futures hit a six-
month trough yesterday, weakening
London-listed base metals.
The Brent crude oil price by mid-
session was off another 1.9 per cent to
trade below $51 a barrel. It had lost
more than 7 per cent since the latest
rally peaked on hopes for Opec cuts.
Unsurprisingly, all this weighed on
the share prices of energy and
materials groups, which together make
up some 23 per cent of the Footsie.
Helping counteract that and
pushing the blue-chip index to a new
record above 7,550 was early
weakness in the pound after a study
by a well-known polling group
suggested next weeks election could
lead to a hung parliament.
A weak pound is seen helping the
Footsie because of the gauges notable
population of foreign currency earners.
However, it was clear that as the
session wore on the accuracy of this
prediction was being doubted by
psephologists and traders alike.
Sterling moved well off its lows.
More election polls are coming.
Should they once again favour the
current government then the pound
may swiftly revisit $1.30, encouraging
some Footsie profit-taking.
jamie.chisholm@ft.com
FTSE 100 Basic Materials
index
2600
2400
2200
2000
Dec 2017 May
2016
Source: Thomson Reuters Datastream
Best winning streak
in more than a decade
but crude oil drops
while sterling recovers
from election jitters
STEPHEN SMITH AND JAMIE CHISHOLM
Stocks ended an otherwise strong
month on a flatter note, while crude oil
prices dived and the pound recovered
some poise from overnight election jit-
ters as the dollar weakened.
Falls for Wall Streets financial and
energy stocks pushed the S&P 500 lower
yesterday by mid-session with US Mid-
west manufacturing, and housing data
also contributing to a tone of mild risk
aversion.
But global stocks were still poised to
close May with a seventh successive
month of gains, representing the best
winning streak in more than a decade.
The highlight for Europes equities yes-
terday was the FTSE 100 edging up to a
fresh intraday record high before later
slipping back.
Meanwhile, the US currency experi-
enced its weakest session of trading for
nearly two weeks with the US dollar
index a measure of its strength against
a basket of leading rivals dipping
0.3 per cent.
We look for broad, choppy range
trading to continue for the moment as
markets work to assess broader direc-
tional risks facing the US dollar in the
coming months, said Shaun Osborne,
of Scotiabank.
The weaker dollar helped to provide
respite for sterling, which had been
under some selling pressure late into
Tuesday night trading following model-
ling by a polling company that sug-
gested a growing chance of a hung par-
liament after next months election.
A slip to a six-month low of $1.2767
was followed by broad advances that
Low volatility, high political risk: FT.com/video
The FTs Dan McCrum and Eoin Murray of Hermes explain
how markets are pricing in a different kind of unpredictability
saw sterling recapture the $1.29 level at
one point yesterday up 0.3 per cent on
the day and also erase nearly all of its
session losses against a robust euro.
Against the single currency, the
pound had nursed early losses of as
much as 0.5 per cent before later paring
those to 0.1 per cent at 0.8706 per euro.
Some analysts cautioned not to over-
play the UK general election as a big
determining factor for pound strength.
Since the first sign that Labour was
catching up with the Tories last week,
GBP/USD has only dropped approxi-
mately 200 pips although this is a
decent move to the downside, it does
not suggest that the market is panicked
over [Jeremy] Corbyn, said Kathleen
Jonathan Ernst/Reuters
Brooks of City Index. The pound set off
on a rally in the middle of April, closing
above $1.30 by mid-May an eight-
month high having strengthened to
0.8312 per euro after the announce-
ment of the snap election.
But mixed UK economic data had
already caused the pounds rebound to
pause before the recent narrowing of
election polls, with the currency
appearing to reflect the caution about
the UKs economic prospects that has
been evident in the government bond
market.
In commodities, Brent crude oil, the
international benchmark, fell 2.9 per
cent to $50.32 a barrel and US gauge
West Texas Intermediate sank 2.5 per
2420
2400
2380
2360
May 2017
cent to $48.43. Brent hit a five-week US equities Wall Street was in the red
high of $54.67 a barrel last week ahead as weaker than expected economic
of an agreement by Opec to extend pro- data and losses for financial and
duction cuts but has since relapsed as energy stocks weighed on the indices
some traders believe the deal did not go
far enough to counteract expected out-
put increases from US drillers. FTSE 100 index
China iron ore futures fell 3.2 per cent, Change on day 0.09%
a fifth consecutive day of declines that 7600
has taken prices to a six-month low as 7500
investors worry over a glut being exac- 7400
erbated by fears Chinas steelmaking 7300
activity may have peaked.
7200
Gold rose 0.4 per cent to $1,267
May 2017
an ounce, recovering most of Tuesdays
0.5 per cent decline. UK equities The FTSE 100 briefly
In equities, the FTSE All World index surpassed last Fridays record close to
slipped 0.1 yesterday but remained set an all-time intraday peak, but late
nearly 2 per cent higher for May. In selling left it nursing small losses
Europe, the Euro Stoxx 600 edged 0.1
per cent lower while the S&P 500 was
0.2 per cent weaker at midday in New Eurofirst 300 index
York.
The market is now pausing and try- Change on day 0.10%
1560
ing to ascertain the likely durability of 1550
favourable economic data, said Mihir 1540
Kapadia, of Sun Global Investments.
1530
In government bonds, the bench-
1520
mark 10-year gilt yield rose 4 basis
May 2017
points to 1.04 per cent but remains near
its lowest since October as investors European equities The continents
priced in slower UK growth and an stocks slid marginally lower but still
extended period of ultra-accommoda- recorded their fourth successive
tive monetary policy by the Bank of month of gains
England.
The gilt market appears to have
maintained a pessimistic position on the
economic effects of Brexit and the Nikkei 225 index
implications for official interest rates, (000) Change on day 0.14%
20.0
said Jonathan Loynes of Capital Eco-
nomics. 19.8
Note that market rate expectations 19.6
derived from Overnight Indexed Swaps
(OIS) now imply that the first quarter- 19.4
May 2017
point hike wont arrive until well into
2019. Asian equities The regions shares
Elsewhere, 10-year US Treasury edged lower but mainland Chinese
yields dipped 1bp to 2.20 per cent while stocks trading for the first time
those of German 10-year Bunds rose 1bp since Friday made gains
to 0.31 per cent.

Michael Kors consumers, said chief executive John

Wall Street
Michael Kors hit
as sales slide and
outlook disappoints
Adam Samson
and Joe Rennison
Michael Kors posted a sharp drop in an
important sales metric yesterday and
revealed a disappointing outlook,
sending shares in the fashion retailer
into the red.
The group said its comparable-store
sales tumbled 14.1 per cent in the fiscal
fourth quarter that ended on April 1,
worse than the 13.4 per cent fall Wall
Street analysts forecast.
Michael Kors added that it would
close 100 to 125 of its full-price retail
stores over the next two years as part of
its plans to improve the profitability of
its store fleet, according to a statement.
The company is the latest big US
retailer to announce closures, as stores
grapple with shifts in consumer
Share price ($) Idol.
50 Fourth-quarter sales in the Americas
Michael Korss biggest market
40
declined 13.8 per cent to $351.7m.
30 Revenues in Europe dipped as well, but
May 2016 2017 May Asia was a bright spot, with sales up to
Source: Thomson Reuters Datastream $117.1m from $38.8m. Total revenues
came in at $1.06bn, above the $1.05bn
Indices Close
Day's
change that analysts expected.
S & P 500
DJ Industrials
2407.94
20996.08
-4.97
-33.39
The group swung to a net loss of
$26.8m, or $0.17 a share, from a profit of
Nasdaq Comp
Russell 2000
6189.04
1204.70
-14.15
-8.35
$177m, or $0.98 a share, in the previous
year. Adjusted earnings per share of 73
VIX 10.76 0.38
cents beat estimates by 3 cents.
US 10 yr Treas Bd 2.23 -0.02
US 2 yr Treas Bd 1.28 -0.03
The S&P 500 index fell 0.1 per cent to
2,410, extending Tuesdays losses, with
utilities and consumer staples among
sectors that outperformed. The Dow
Jones Industrial Average dipped 0.1 per
spending habits, including the cent to 21,010 and the tech-heavy
continuing rise of ecommerce. Nasdaq Composite dropped 0.2 per cent
For the current fiscal year, Michael to 6,192.
Kors expected a high-single-digit fall It proved a particularly bruising
in like-for-like sales. Total revenues morning for the financials sector which
were forecast at $4.25bn, with earnings fell 1.1 per cent and trailed the broader
per share of $3.57-$3.67, falling short of S&P 500 index, prompted by executives
the $4.36bn and $3.96 a share that at both JPMorgan and Bank of America
analysts had expected. Merrill Lynch who said low market
The shares slid 10 per cent to $32.65 in volatility was weighing on second-
the morning, extending the year-to- quarter revenue at their trading
date fall to more than 23 per cent. businesses.
Fiscal 2017 was a challenging year, as Goldman Sachs was the worst-
we continued to operate in a difficult performing bank, down 3 per cent to
retail environment with elevated $211.70, while Bank of America dropped
promotional levels. In addition, our 2.7 per cent to $22.28. Morgan Stanley
product and store experience did not fell 2 per cent to $41.43 and JPM was off
sufficiently engage and excite 1.9 per cent to $82.35.

London
Weakness for miners
tempers FTSE 100s
run at a record close
Michael Hunter
and Henry Sanderson
A weak performance from the mining
sector kept the FTSE 100 from setting a
record closing high, as sliding iron ore
prices took their toll on the blue-chip
index.
Rio Tinto was the biggest single faller
on the blue-chip index, dropping 2.5 per
cent to 31.02. Five other miners also
found a place on the list of the top 10
fallers, with BHP Billiton dropping 2.45
per cent to 11.73, while Glencore fell
2.4 per cent to 285.1p.
The FTSE 350 mining index recorded
a 2 per cent drop that pulled the
benchmark back into negative territory
for the year.
The selling came after iron ore prices
dropped to their lowest levels in six
months as stockpiles of the steelmaking
ingredient build up in China, where
inventory of iron ore at Chinas ports
rose to a record 136.6m tonnes last
week, according to data from
SteelHome. The stockpiles have
expanded more than a third this year.
As consumption rolls over into the
middle of the year, iron ore inventory
will start to become an increasing drag
on prices, analysts at Macquarie said.
We continue to look for iron ore prices
to average only $50 a tonne over 2H17.
The weakness in the mining sector
stood out on a day in which the overall
FTSE 100 briefly surpassed last Fridays
record close and set an all-time intraday
peakof7,586.45.Asthe pound recovered
from a brief drop below $1.28, the blue-
chip index lost steam and closed off 0.1
per cent at 7,519.95. That clipped the
benchmarksperformancefor May, with
the index up 4.9 per cent on the month.
The fortunes of the pound have been a
big driver of the FTSE 100 over the past
12 months, and fresh weakness in
sterling dominated early trading on the
stock market. Exporters, which benefit
from weakness in the currency, gained.
Unilever, the maker of Ben and Jerrys
ice cream, climbed 0.5 per cent to
43.31. Burberry, the exporter of
luxury clothing, also fared well, rising
1.6 per cent at 18.15.
Elsewhere, IG Group rose 5.5 per cent
to 584p after the UKs largest online
trading company by market share said
its full-year profits would be modestly
ahead of its previous financial year,
despite quiet financial markets in its
final quarter. In a pre-close trading
update for the year to May 31, the mid-
cap group said fourth-quarter revenues
were higher than the same period last
year, and it anticipated full-year
revenues would be up 7 per cent.
The FTSE 250, whose fortunes are
more closely tied to the UK economy,
was also held back by its miners, and
was unable to make overall gains. It
slipped 0.1 per cent to 19.972.17.
Back on the top tier, shares in BT
Group were fractionally higher at
309.5p after it cut the cost it charges
Vodafone, Sky and TalkTalk for its
broadband service.
20 Thursday 1 June 2017

MARKET DASHBOARD Analysis. Currencies

Optimism pushes euro bear
bets to lowest in 3 years
Currency sentiment
Hedge funds have cut
bearish bets on the euro
to the lowest level in
three years, with the
common currency
recording a gain of more
than 2 per cent against
the dollar for the second
straight month in May.
The shift in sentiment
by leveraged funds, a
proxy for hedge funds,
follows Emmanuel
Macrons victory in May in
the French presidential
election and signs that
activity in the long
moribund eurozone
economy is quickening.
Leveraged funds cut short bets on the euro
Net position in the euro held by leveraged funds
(Number of contracts, 000)
2012 13 14
Source: CFTC
S&P 500
Feeling confounded by
the S&P 500s string of
record highs despite
lacklustre economic data?
Youre not alone.
Investors have scaled
back optimism that
policies championed by
the Trump administration,
including a corporate
tax cut, will become law
this year.
Nonetheless, the S&P
US stocks at record levels despite weak data
The S&P 500 compared with the Citi US economic index,
a measure of how economic data have fared compared
with expectations
S&P 500 index
2600
2400
Short bets against the
euro now outnumber long
positions by just 5,342
contracts, based on latest
data from the Commodity
Futures Trading
Commission. That figure
eclipsed 155,000 in
November.
The unwinding of
bearish bets has been a
fillip for the euro, which
has hovered around the
$1.12 mark in recent days.
Analysts say the
currencys rally now faces
headwinds, including a
likely election in Italy after
former Italian premier
Matteo Renzi signalled he
favoured an early poll.
100
50
0 Labour leader, might look like.
-50
-100
-150
-200
15 16 17
500 has set 20 closing
highs this year. Investors
point to the comfort
offered by the double-
digit earnings growth US
companies delivered in
the first quarter.
Whats more, the S&P
500s advance has been
fuelled by the ascent of
large technology
companies, which
investors believe will be
better shielded should the
US economy slow down.
Citi economic surprise
100
Mays sterling work loses more of its shine
Pounds dip below $1.28 shows
extent of political jitters as
Tories lead in UK polls fades
KATE ALLEN AND ROGER BLITZ
For a prime minister with little experi-
ence of the City or financial markets,
Theresa May has been a boon for the
pound in 2017.
In January her first big speech on the
governments Brexit strategy sent the
currency up 3 per cent against the dollar
in a day. Underlining how the market
was warming to her premiership, ster-
ling jumped 2 per cent on April 18 when
she called the snap election.
However, the confidence Mrs May has
inspired in traders and investors for
much of this year has been hurt by a
bruising election campaign, prompting
foreign exchange strategists to specu-
late on what a coalition government or
even one led by Jeremy Corbyn, the
While polls suggest that both pros-
pects remain remote, the question fac-
ing investors is whether their longstand-
ing assumption that the election will
strengthen Mrs Mays hand in the Brexit
negotiations still stands.
The Conservatives ended the last par-
liament with a majority of just 17, and
some pollsters said that could increase
to as much as 100.
Investors had assumed the election
was a done deal and was going to deliver
this stunning majority, says Chris
Turner at ING. But the polls pulled the
carpet from under their preconceived
notions.
After a torrid couple of weeks of cam-
paigning for Mrs May, including a dam-
aging U-turn on a flagship social care
policy, the Conservatives lead in the
polls has been whittled down or even
wiped out, if modelling released yester-
day by the YouGov pollster turns out to
be accurate. That helped drive sterling
briefly below $1.28 yesterday.
The pound was the second worst per-
Capital markets
Last month was forming big currency against the dollar
bad for the during May, while it has declined almost
pound, which 3 per cent against a resurgent euro as
had leapt 2% on the eurozone economy shows increas-
April 18, the day ing vigour.
Theresa May It is a far cry from the spring day when
called for a vote the prime ministers surprise decision to
seek her own mandate from voters was
quickly followed by polls putting
Labour at least 20 points behind.
Investors had reasoned that a thump-
Investors ing majority would allow Mrs May to
silence hardline Brexiters on the Tory
had assumed backbenches and make retaining as
the election much access to the EU market as possi-
ble her chief ambition in negotiations.
was a done With a week until the election, the
deal and currency market is having to recalculate
how sterling might react to outcomes
would in which a much bigger majority fails
deliver a to materialise. ING predicts that a
stunning majority of 50 is the minimum required
to prevent a negative reaction in the
majority UK currency.
Compared to where we were a few
weeks ago, when we were looking at a
majority of 100 to 150, if the Tories end
up with an increase only in the tens that
will be a big disappointment for the
market, says Mr Turner.
In the event of a majority of fewer
than 50 seats, none of the alternatives
are market-friendly, according to Mark
Wall of Deutsche Bank, who suggests
there is value in owning [sterling]
downside.
The influence of hardline Euroscep-
tics on the negotiations would be sub-
stantial if Mrs May is returned on June 8
with a slim majority, reducing the likeli-
hood of the UK reaching a deal with the
EU27, he says.
It is not just the shape of the next par-
liament that is concerning investors.
What does Mrs Mays social care mani-
festo flip-flop say about her leadership
as Brexit talks loom?
You are seeing the inability to hold a
Sterling
Currency per
1.5
Against the dollar
Against the euro
1.4
1.3
1.2
1.1
May 2016 2017 May
Gilt yields
Per cent
1.5
1.0
2-year
0.5
10-year
0
May 2016 2017 May
Source: Thomson Reuters Datastream
position, argues Tim Graf, macro strat-
egist at State Street Global Markets.
Kacper Brzezniak, a portfolio man-
ager at Allianz, says: I dont think
many people in the markets are
impressed with Theresa May or the
Conservatives performance [in the
election campaign] so far.
Some observers are still giving her the
benefit of the doubt, arguing the policy
reversal at least demonstrates an adapt-
ability that might prove useful in the
testing Brexit negotiations, due to start
soon after polling day.
What no one disputes is that the nar-
rowing in the opinion polls has injected
an extra dose of political uncertainty
into a currency that has been more or
less dominated by such jitters since the
EU referendum almost a year ago.
As Paul Lambert, head of currency at
Insight Investment in London, puts it:
The pounds barrel of uncertainty risk
premia is already pretty full.

2200
50

2000
1800
2015 16
Source: Bloomberg
Fund manager relief
Active fund managers who
face mounting competition
from passive investment
products after years of
underperformance can at
last brag about something.
Goldman Sachs says
52 per cent of funds that
focus on large-cap US
stocks have beaten
benchmarks since the start
of 2017. If the trend held
steady, it would mark the
Mutual fund performance improves
Percentage of large-cap funds beating their benchmarks
2007 08 09 10 11 12 13 14 15 16 17
Source: Goldman Sachs
More comment and data on ft.com
Y Fast FT Our global
team gives you market-
moving news and views,
24 hours a day, five days
a week. ft.com/fastft
Y Alphaville Our
irreverent financial blog.
Join Paul Murphy and
Bryce Elder for the daily
Markets Live session at
11am. ft.com/alphaville
Y beyondbrics News and
comment from more
than 40 emerging
0
-50
-100
17
first time the hit rate has
exceeded 50 per cent
since 2009.
This figure, compared
to last years 19 per cent,
comes as managers have
bet on the technology,
consumer discretionary
and healthcare sectors.
These represent the
top-performing S&P 500
sectors this year, with
price returns of 20.1 per
cent, 11.5 per cent, and 9.7
per cent, respectively.
80
60
40
20
0 down.
Year-to-date
economies, headed
by Brazil, Russia, India
and China.
ft.com/beyondbrics
Y Podcast The Hard
Currency podcast takes a
look at what is driving
the global currency
market. ft.com/podcasts
Y Lex Video Analysis
and opinion from the
team on the hot issues
affecting companies and
markets. ft.com/lexvideo
Bond investors signal
gloomier UK outlook
KATE ALLEN CAPITAL
MARKETS CORRESPONDENT
Bond investors are flagging
up a deteriorating outlook
for the UK economy as the
country negotiates leaving
the EU, with fixed-income
assets denominated in ster-
lingextendingthisyearsout-
performanceduringMay.
Yields on sterling-denomi-
nated bonds have remained
low, with those on the bench-
mark 10-year gilt this week
dipping below 1 per cent, a
level not seen since October.
In contrast, yields on US and
German government bonds
have trailed the drop in gilt
yields, reflecting expecta-
tions UK growth risks lagging
behind big competitors.
Survey data published this
week suggested that the
buoyant economic senti-
ment of recent months may
now be aligning with official
data, which have for some
time been signalling a slow-
The UK bond markets con-
cern about the economy has
translated into relative out-
performance for investors.
Gilts were on course for total
returns of 0.75 per cent in
May, compared with 0.53 per
cent for US Treasuries and
0.54 per cent for euro area
sovereign debt, according to
BloombergBarclaysindices.
A wider measure that
includes sterling-denomi-
nated corporate and other
bonds fared even better, gen-
erating a total return of 0.9
per cent in May against the
US equivalent of 0.67 per
cent and a euro area aggre-
gate of just 0.44 per cent.
The gloom of bond inves-
tors has so far exceeded that
of the currency market,
where sterling has found a
new range just below $1.30
since Theresa May called a
snap election last month.
The currency markets
look as if they are pricing in a
relatively even set of eco-
nomic outcomes, but the
bond markets are skewed
towards a gloomier eco-
nomic outlook, said Mike
Amey, head of sterling port-
folio management at asset
manager Pimco. The level of
pessimism priced into bonds
is overdone, he said; So far
the economy has weathered
the uncertainty pretty well. .
Britains decision to leave
the EU has added a political
layer of uncertainty to the
economic outlook, leaving
bond investors anticipating
that the Bank of England will
have little room to manoeu-
vre over the next two years.
The two-year gilt a
measure of investors risk
appetite in the run-up to
Britains EU exit in March
2019 has been drifting
lower since the referendum,
and has repeatedly dipped
below 0.1 per cent since the
start of the year. Yields move
in the opposite direction to a
bonds price.
Kacper Brzezniak, a port-
folio manager at Allianz, said
the political uncertainty
meant the Bank of England
would be constrained in the
actions it could take.
As a result, I dont see
them hiking interest rates
during the Brexit negotia-
tions, particularly if we see
even weaker economic per-
formance than were seeing
now and so it is hard to see
a catalyst that would see
yields move much higher.
Lefteris Farmakis, global
macro strategist at UBS,
warned: Brexit risks remain
acute, all the more so if they
materialise during a cyclical
downturn.

Thursday June 1 2017
City readies for the spotlight
The capital aims to
show off its best side for
a global audience, writes
John Murray Brown
C
ardiff has a chance to show
off its best side this Satur-
day, when the Welsh capital
plays host to Europes big-
gest football fixture the
final of the Uefa Champions League.
Preparations are well advanced: Lon-
dons Paddington station, from where
many fans will catch trains to Cardiff, is
planning billboard advertisements dis-
playing the citys attractions.
In Cardiff, buildings are festooned
with banners. Bars and restaurants can
anticipate lively business from the more
than 170,000 fans expected to arrive in
the city for the match between Spains
Real Madrid and Italys Juventus.
Staging the event poses big logistical
challenges, not least security a height-
ened concern since last weeks terror
attack in Manchester. Police say 2,000
officers will patrol Cardiffs streets on
the day of the final. A secure zone is
being established around the stadium.
Huw Thomas, leader of Cardiff coun-
cil, says: Hosting the Champions
League shows that we can welcome the
worlds biggest events to our city. Visi-
tors will see the development that is cur-
rently taking place.
Mr Thomas says such events are just
one part of the citys development
agenda. Cardiff s economy has
changed considerably in recent years,
with an increasingly diverse business
base creating more and better jobs and
opportunities, he says. Were regularly dents in work grew by 6 per cent last
Doing Business in Cardiff
Flag day: Cardiff castle festooned with banners to celebrate the city hosting the Champions League final Francesca Jones
at the top of the league in the UK in
terms of measures of growth and quality
of life, and our vision for the city will
make sure we stay there.
The citys economy has indeed had a
good run of late. The number of resi-
plus Glasgow and Cardiff.
FT SPECIAL REPORT
www.ft.com/reports | @ftreports
year, according to Ken Poole, head of
economic development at Cardiff Coun-
cil. This is a faster rise than in any of the
other members of the Core Cities UK
group made up of Englands eight big-
gest city economies outside London,
More than 45 per cent of Cardiffs
working age population has a degree
and the city enjoys high demand for
office space. Estate agent Savills says
2016 was the strongest year of take-up
for 15 years and that Cardiff remains
one of the UKs strongest office market
Inside
Tech start-ups find a
home in the city
Training and co-working
spaces help foster a
performers in the wake of the June 2016
vote to leave the European Union. nascent industry
The council projects the citys popula- Page 2
tion about 1.1m in the wider city
region will grow by a fifth by 2036, the Centre for services
fastest of any UK city with the exception Finance companies
of London. It reckons that Cardiff will
need to create 40,000 new jobs and benefit from wide pool
of skilled workers and
build about 41,000 new homes over the
next two decades. cheap rent
The next challenge will be for Cardiff Page 2
to capitalise on this growth. Over the
next five to seven years, Mr Poole says, The Silicon Valleys
6bn of spending is planned to improve
infrastructure, including a new rail link Semiconductor makers
connecting the city with outlying towns. hope to spur new
The aftermath of the Brexit vote has specialist industries
made forecasting growth more difficult. Page 3
Cardiff which voted 60 per cent to
remain in the EU has in the past been
a beneficiary of the relocation of finan- Talking bout a
cial services companies from London, regeneration
lured by its skilled labour force and
comparatively low office rents. As a City centre undergoes a
result, it has one of the fastest growing facelift that it expects to
financial services sectors of any British attract business
city and, in 2015, the UK government Page 3
recognised the South Wales region as a
financial centre of excellence.
But, as David Stevens, chief executive
of Waless only FTSE 100 company,
insurer Admiral Group, says: If youre
moving people out of London not
within the UK, but to Frankfurt, Brus-
sels or Luxembourg then thats not
helpful for Cardiff.
The Welsh capital has some natural A travellers guide:
advantages over other regional cities.
Paul Swinney, principal economist at what to do in the city
the think-tank Centre for Cities, says Thousands of tourists
that investors view its private-sector- are due to arrive this
dominated economy as having greater
resilience than those that depend more week for the Uefa
on public sector jobs, such as Swansea, Champions League final
Continued on page 4 Page 4
2 FINANCIAL TIMES
Local investment: Chris Ganje, co-founder of Amplyfi, picked the Welsh capital for a headquarters over London, San Francisco and Beijing Francesca Jones for the FT
Tech companies aspire to
become the citys first unicorn
Start-ups A generation
of entrepreneurs wants
to put the capital city
on investors maps,
reports Brian Groom
O
nce, Cardiff was at the
heart of an economy based
on coal and steel. But, in
recent years, the Welsh
capital has been looking to
grow new industries such as digital
start-ups to help secure its future.
Amplyfi, for example, is an artificial
intelligence start-up that wants to trans-
form the business intelligence industry.
Its DataVoyant software platform har-
vests and reads data that is both publicly
available online and from the deep web
the parts of the internet that are not
indexed by standard search engines.
The technology enables clients to spot
potential disruptions to their busi-
nesses, whether a war, a market shift, or
a new technology.
The companys co-founders made the
decision to base themselves in Cardiff in
2015, having considered London, San
Francisco, Boston, Beijing and Cam-
bridge as potential headquarters. Chris
Ganje, Amplyfis American chief execu-
tive, says Cardiff beat rival locations
because of its low costs, a ready supply
of graduates from local universities as
well as funding and incentives from the
Welsh government. Relatively easy
access to London, and to international
airports, was another factor.
Cardiffs tech start-up scene, which
includes many locally founded compa-
nies, is already strong in life sciences
and software technology. It is building a
How Cardiff compares with other large British cities
Office space is cheaper in Cardiff
Office rents (Grade A, per sq ft)
22
Cardiff
The average wage is slightly above the national average of 21,876
Median gross annual pay (000s, 2016)
20.1 21.6
The average house costs 192,000
Average house price (000s, Feb 2017)
158.4 165.2 192.5
Nearly half of adults in Cardiff have a degree
Share of working-age population with a degree (%)
32.3 39
Demand for jobs is higher than in Bristol but lower than in Birmingham
Job density (ratio of jobs to working-age population)
0.79
A high share of the workforce are managers and directors
Share of labour force employed as managers or directors
7.3 7.5
One in four of Cardiffs workers are in professional roles
Share of labour force in professional occupations
20.9 21.8
Sources: DCLG; ONS; HM Land Registry; Colliers
profile in cyber security and compound
semiconductors. The citys creative
industries are also growing.
Cardiff and Swansea have nearly
17,500 digital jobs between them,
according to Tech City UK, the govern-
ment-backed body that promotes tech-
nology companies. That places the Car-
diff/Swansea area 16th out of 30 zones
in the UK for technology jobs, just
behind Nottingham and ahead of
Bournemouth and Brighton.
But David Warrender, chief executive
of Innovation Point, a Welsh govern-
ment agency set up to encourage the
sectors development, says those figures
are underestimates. We think we have
got about 40,000 digital economy jobs
in the South Wales region, he says.
I grew up in Wales, went away to uni-
versity, looked around for things to do in
Wales and couldnt find what I wanted,
so I moved away for many years, Mr
Warrender says. When I compare that
with the opportunities in the Cardiff
region for having a career in digital and
technology now, [there is] a world of dif-
ference.
There has been, as yet, no Cardiff uni-
corn a start-up valued at more than
$1bn but several companies have
ambitions to grow quickly. Mr Ganje
expects Amplyfis Cardiff workforce to
increase from 14 to 40 over the next two
years and its turnover to reach 50m
within five years.
DevOpsGuys is an IT consultancy that
helps online businesses manage their
applications in the cloud. Founded in
2013, the company now has 40 staff and
employs another 40 associates. James
Smith, chief executive and co-founder,
says his target is to employ 500 people
with a 100m turnover within five years
up from 5m now.
28.5 30
Bristol Edinburgh
22.7
45.7 48.6
0.92
26.2 26.5
FT graphic by John Burn-Murdoch / @jburnmurdoch and Federica Cocco / @federicacocco; Cleve Jones / @cleveco
Doing Business in Cardiff
Mr Smith, who is originally from
Llanelli in south-west Wales, was living
in England when the business started
but he was keen to bring it home as soon
as he could. Wales needs success sto-
ries of people who have put a business
together and grown it, so others can
understand how it was done, he says.
My view is that, here in Cardiff, we
need to figure out how to build a uni-
corn. That ambition, he says, will be a
more realistic prospect for a consumer-
facing business than a business-to-busi-
ness venture. I wont claim we will be
there, but we have got that mindset and
that capability, he says.
Cardiff is working hard on promoting
tech skills to support the nascent indus-
try. A National Software Academy has
opened at Cardiff university and discus-
sions are under way about the creation
of a data science academy.
We have a generational
opportunity to replace the
industrial economy that we
are emerging from
A National Cybersecurity Academy is
also being piloted at the University of
South Wales, which has campuses at
Cardiff, Newport and Pontypridd.
Several co-working spaces and incu-
bators have opened in the city, including
Tramshed Tech, Indycube, Entrepre-
neurial Sparks Cardiff Hatchery and
Cardiff Medicentre, as well as the Welsh
Innovation Centre for Enterprise in
nearby Caerphilly. Cardiff Start, a net-
work of start-ups and entrepreneurs,
has 2,500 members.
32.5
Birmingham Manchester
23.8
227.6 260.3
0.98 1.01
9 9.3
To date, Cardiffs biggest weakness
has been a lack of experienced technol-
ogy entrepreneurs and investors, but
there are now some locally based busi-
ness angels and small venture capital
companies. Loans and equity finance
are also available from Finance Wales,
the governments venture capital arm.
Cardiff needs to make itself better
known to venture capitalists in London
and beyond. To this end, Innovation
Point is promoting an annual digital
dozen of promising start-ups.
Stephen Milburn, a co-founder of Car-
diff Start who runs an app development
agency called Tradebox Media, says he
is positive about the future but would
like the Welsh government to create a
centralised platform for making open
data available an area in which, he
says, it is lagging.
Cardiff-based Nudjed, a start-up spe-
cialising in health data, is working with
the National Health Service using tech-
nology to boost preventive care. For
example, it is working for a weight man-
agement service to find out why some
patients often those with low literacy,
anxiety or depression miss their
appointments or drop out of its pro-
grammes.
Warren Fauvel, Nudjed chief execu-
tive and co-founder, is talking to the
NHS about other ways to apply the tech-
nology, he says. Within five years I
would be hoping for us to be an interna-
tionally traded business in the tens if not
hundreds of millions [of pounds in turn-
over], he says.
We have got a large public sector and
we need it to support the growth of new
digital or intellectual-property-driven
business. We have a real generational
opportunity to replace the industrial
economy that we are emerging from.
Cardiffs workforce is more
skilled than Birminghams
35
and Manchesters
% of workforce
Cardiff
Greater Manchester
Birmingham
25.6 0 10 20 30 40 50
Professional &
managerial
Skilled &
administrative
Caring, sales &
services
Unskilled &
58.7 manual
1.07
9.7
32.4
Skilled workers and
cheap rent benefit
finance companies
Professional services
Close links to universities
help businesses to recruit,
reports Brian Groom
Cardiffs financial services sector has
been one of the fastest-growing among
UK cities over the past 20 years. The
Welsh capital now hopes to build on that
growth, both by attracting investors
looking for a cheaper location than Lon-
don and by expanding its reputation as a
hub for financial technology.
Cardiff is already home to the Admi-
ral insurance group, Waless only FTSE
100 company, and Principality, the UKs
sixth largest building society. Financial
services companies with large offices in
the city include Deloitte, Legal & Gen-
eral, Lloyds Banking Group, Dutch
credit insurer Atradius, car insurer
MotoNovo and finance and law firm
Eversheds Sutherland.
We have built the foundation for sig-
nificant progress over the next five
years, says Chris Nott, chairman of the
Welsh governments financial and pro-
fessional services advisory panel. The
major challenge is making sure that the
people who are making investment
decisions understand the scale of oppor-
tunity here.
Across the UK the financial services
sector faces uncertainties, not least the
potential impact of Brexit, but Mr Nott
says Cardiff offers a substantial pool of
staff, prime office rents that are half
those in London and good communica-
tions with the City. Rail electrification
by 2018 will bring the Cardiff-London
journey down from two hours to 1hr 45
mins and, with the completion of Lon-
dons Crossrail (Elizabeth Line) project,
it will be possible to travel from Cardiff
to Canary Wharf in two hours.
According to the Welsh government,
Cardiffs financial and professional
services sector employed 46,700 in
2014, almost a quarter of the citys total
employment up 4,000 from 2011.
TheCityUK, the finance sector lobby
group, estimates a lower total of about
20,300, making it the seventh largest in
the UK behind Edinburgh, Manches-
ter and Birmingham, but ahead of Bel-
fast and Sheffield, for example. In 2015,
the UK government designated South
Wales a financial centre of excellence
one of eight outside London.
Cardiff is also growing its fintech sec-
tor with start-ups including Wealthify, a
so-called robo-investor; Sonovate, a
provider of financial services to recruit-
ment agencies; and Delio, which helps
financial institutions connect wealthy
clients to investment opportunities.
Target Group, a financial software
outsourcer, was founded in Cardiff in
the 1970s and now employs more than
900 people. It was recently acquired in a
112m deal by Indian IT services com-
pany Tech Mahindra. Equiniti, the
financial administrator, has created a
fintech innovation centre in the city.
Admirals presence has been crucial
to Cardiffs growth as a financial centre.
Started in 1993 with 57 staff, it has
Thursday 1 June 2017
grown to employ more than 6,000 in
South Wales, of whom 3,600 are based
in Cardiff. The insurer originally chose
Cardiff over Brighton, with the lure of a
1m grant from the UK governments
now-defunct Welsh Development
Agency, and has stayed.
There is access to a large pool of high-
quality employees, says David Stevens,
who took over as chief executive of the
company last year from his co-founder,
Henry Engelhardt. Staff have a high
degree of loyalty to South Wales, which
means people tend to stay with us for a
long time. The city has changed phe-
nomenally in two and a half decades,
Mr Stevens adds: It has consistently
upped its game.
Steve Hughes, chief executive of Prin-
cipality, says close links between Car-
diffs businesses and universities helps
with recruitment. We have invested in
apprenticeship schemes, trainee
schemes for our accountants, he says.
We have partnered with local universi-
ties to offer long-term sandwich
courses to technology graduates.
Legal & General also collaborated
with Cardiff University to create a medi-
cal underwriting academy, while Cardiff
Business School created a 56-seat trad-
ing room in partnership with the tech-
nology company Market Squared a
subsidiary of derivatives trader OSTC
in which students use a simulator to
practise trading like a professional.
Mr Hughes, who took the top job at
Principality in March, says 700-800 of
its 1,100 staff are based in its Cardiff
offices and expects its core activities to
continue to grow. Assets have increased
from 5bn to more than 8bn over the
past five years, he says.
Deloitte has expanded its staff in Car-
diff from 300 to 720 over the past nine
years, mainly by establishing a centre
for regulatory and compliance work,
which serves the Deloitte network and
some clients.
Wayne Harvey, senior partner in
Wales, expects the number of staff
based in the city to rise to almost 900 by
the end of next year. Its a great place to
recruit, he says, citing the high propor-
tion of graduates and undergraduates to
the adult population. We have 32 lan-
guages [spoken] at a business standard
in our delivery centre.
Cardiffs growth as a finance centre
was boosted by the creation of a city-
46,700 2 hrs
Financial and Train journey time
professional to Canary Wharf
services workers after completion
in Cardiff of Crossrail
centre enterprise zone in 2012, exclu-
sively for financial and professional
services, which offers incentives such as
training grants and assistance with busi-
ness rates for small businesses.
Cardiff is in a strong place, says
Chris Sutton of property agent JLL, who
chairs the enterprise zones advisory
board. I guess the challenge is always to
get more of the headline acts.
There are no easy wins, he adds. The
city has to have a relentless focus on
improving the business environment.
Contributors
John Murray Brown
FT writer
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Freelance journalist and former FT UK
business editor
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Statistics journalist
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Graphics
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Commissioning editor
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Revise editor
Steven Bird
Designer
Alan Knox
Picture editor
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Thursday 1 June 2017
Semiconductor
maker eyes a
market in
optical sensors
Profile IQE A specialist electronics cluster would
spur new industry, reports John Murray Brown
I
t has been known for years that
dogs can detect disease, but a Welsh
semiconductor company says that
optical sensors in healthcare
devices for the home could one day
provide a similar early warning system.
IQE of St Mellons, Cardiff, makes
compound semiconductors composed
of two or more chemical elements.
These work faster than conventional,
single-element silicon semiconductors.
The wafers that are the base for semi-
conductors can be found in mobile
phone handsets and are also used in
lasers. They were a key technology in
DVD and Blu-ray players.
Three years ago, more than 80 per
cent of IQEs production was to support
wireless technology in mobile handsets.
But Chris Meadows, IQEs head of mar-
keting, says that has now dropped to
around 70 per cent, because the fastest
growing sector is photonics, the area of
technology that is concerned with the
properties and transmission of photons,
such as fibre optics.
Dogs can [detect] compounds down
to parts per million, or parts per billion
even, Mr Meadows says. Until now, we
Demand for
office space
accelerates
regeneration
Profile Rightacres
A family-run, local property
company is behind two
significant redevelopment
projects, reports Brian Groom
Paul McCarthy looks down from his
eighth-floor office as work progresses
on Central Square, one of Waless largest
regeneration schemes, which his prop-
erty company, Rightacres, is developing
in partnership with Cardiff Council.
Asked what the city needs to do to
maintain its healthy growth, he says:
Hope interest rates stay low.
Like other UK cities, Cardiffs com-
mercial property market is thriving as a
result of low interest rates and Right-
acres is at the heart of the growth. Mr
McCarthy, a former sports journalist
and producer, is chief executive of the
company. His father, Michael, who
founded it in 1969, is chairman.
Central Square, which lies between
the citys Principality Stadium and the
Cardiff Central railway station, will
eventually see up to 1m sq ft of office,
residential and retail space developed
with the backing of a 400m invest-
ment from Legal & General. It has room
for about 10,000 workers.
The first of Central Squares five
phases was completed last year and
work is progressing on phases two and
three, including a new 120m head-
quarters for BBC Cymru Wales,
designed by Norman Fosters architec-
ture firm, Foster + Partners.
Central Square is one of several devel-
opment projects planned or under way
across the city.
We at Rightacres have let the best
part of 800,000 sq feet of new space in
two years, Mr McCarthy says. The
normal take up of newly constructed
office space in Cardiff is about 150,000
have not been able to use technology to
do that, but optical sensing is getting to
the precision where that can happen
using lasers and detectors.
He says the semiconductor industry is
at an inflection point: Mobiles have
grown the industry, but compound
semiconductors are key to driverless
cars and sensors in healthcare technol-
ogy. Healthcare will be dependent on
compound semiconductors.
Mr Meadows says the cost of com-
pound semiconductors account for $10
of the price of a mobile phone. The part
played by IQE represents about 30 per
cent of that.
The bulk of these processors are still
made by the big telecommunications
companies such as Motorola and Sam-
sung. Of the specialist, standalone com-
panies whose only activity is making
compound semiconductors, IQE
accounts for half the global market.
IQEs products are found in the sen-
sors in the speaker-receiver part of a
mobile phone, which tells touchscreens
to switch off when they are brought
close to the ear. They are also used
in driverless cars and, once infrared
Paul McCarthy: developing the Central Square regeneration scheme Francesca Jones
sq ft per annum. He adds that, com-
pared with other cities, Cardiff is proba-
bly undersupplied with office space
but undersupplied means that you can
fill what you build.
Other projects in the city include Cap-
ital Quarter, where one-third of a 1m sq
ft mixed-used scheme by local property
developers JR Smart is already built or
under way. On the other side of the rail-
way line from Central Square, Right-
acres is planning Central Quay, an even
more ambitious venture in partnership
with SA Brain, the regional brewer
founded in Cardiff in 1882. Central Quay
will involve another 2.5m sq ft of mixed-
use space.
Brains brewery will move elsewhere,
but its old building and chimney will
remain, as the backdrop for a water-
front scheme beside the River Taff. The
scheme will help to connect the city cen-
tre with Cardiff Bay, Mr McCarthy says.
We have to encourage
businesses to consider
Cardiff as a location
Cardiff is a waterfront city but we dont
make the most of our waterfront.
Mr McCarthy, who was born and grew
up in Cardiff, broke his leg playing
rugby at the age of 18. The break was
complicated and it took him two years
to recover fully, after several operations
on the bone. As a result, he says, he did
FINANCIAL TIMES
Doing Business in Cardiff
Silicon Valleys: sensing is deployed, could allow such
Cardiff and the cars to see through stationary vehi-
surrounding area cles. We think this will be a growing
is earmarked as market for us, Mr Meadows says.
a hub for tech IQE employs 600 people worldwide,
Patrick Olner
including 160 at two facilities in Cardiff.
Forty per cent are graduates and half of
those are PhDs.
The company was founded in 1988 by
chief executive Drew Nelson, who had
previously worked at BTs global
research headquarters at Martlesham,
near Ipswich. It has grown through
acquisition and has 11 sites, housing fac-
tories, research and sales teams, includ-
ing five in North America.
IQE floated on the Easdaq, the former
Brussels-based market for fast-growth
Healthcare
companies that is now part of Brse Ber- will be
lin. It was briefly on the main UK mar-
ket before switching to the Alternative
totally
Investment Market in London in 2003. dependent
The company had sales of 133m in
2016 and profit of 19.8m before tax.
on these
The share price has more than tripled compound
over the past year. One explanation for
its strong performance is that when the
semi-
British smartphone chip designer Arm conductors
Holdings was bought for 24bn in July
Animators look beyond Wales to
build on strong production base
Profile Cloth Cat Animation
Creative company chief
hopes diversification and
international collaborations
will help the UK regain lost
ground, reports
John Murray Brown
Jon Rennie, who heads Cloth Cat, the
biggest animation production company
in Wales, believes Cardiff is poised to
not sit his A-level exams or attend uni- become a hub of creative industry.
versity. The 40-year-old entrepreneur
Instead, he worked for the BBC as a worked in computer games before
news and sports editor before forming training as a film-maker. He now
an independent television production employs around 70 people in a Welsh-
company, which was eventually sold. government-owned building that over-
About 20 years ago he joined his father looks the old docks in Cardiff Bay.
in the family business and he became its Cloth Cat was co-producer on Boj, a
chief executive a decade later. childrens series starring a rare Austral-
He and his father have had two argu- ian marsupial called a bilby, which first
ments in their working lives, he says, aired on the BBCs CBeebies in 2014. It is
both over the design of penthouse suites also behind Ethel & Ernest, the animated
in hotels. feature film based on a Raymond Briggs
He wanted mirror balls and mir- book that ran on the BBC last Christmas.
rored ceilings and I think the world has Cardiff has a history of creating popu-
gone past that. We work well together, lar animation characters from
he enjoys what we do, and everything I SuperTed, the teddy bear with special
have learnt, I learnt from him. powers, to Fireman Sam, hero of the fic-
In a notoriously cyclical industry, Mr tional Welsh town of Pontypandy, who
McCarthy says Rightacres has managed first appeared in 1987 as Sam Tn (Sam
not to overstretch itself financially. Dur- Fire in Welsh).
ing market downturns, he says, the The citys film and television industry
company has made sure the properties is already strong. The BBC has a signifi-
it owned were as fully occupied as possi- cant operation there: Doctor Who is
ble until the good times returned. made at studios next to Mr Rennies
My father has seen interest rates of offices and Casualty, the BBC hospital
over 15 per cent, Mr McCarthy says. drama, is produced nearby.
Luckily, for much of the 20 years I have Pinewood, the film studio behind the
been here they have been under 1 per James Bond franchise, set up a Cardiff
cent, on average. operation in 2015 and S4C, the Welsh-
Cardiff, he says, needs to publicise the language public-service television chan-
fact that we have a great city and nel, which first aired SuperTed and Fire-
incredibly talented and skilled young man Sam, is also based in the city.
people coming out of well-respected The skills are here, says Mr Rennie.
universities, who have so much to offer. The challenge is to get companies to
To be able to offer them jobs, we commit to using outside sources like us.
have to encourage businesses that are Its a chicken and egg [situation]. Until
considering moving out of London, or youve done the work, you dont win the
Manchester, or Birmingham to consider business.
Cardiff as a location. Mr Rennie began as an animation
by Japanese telecoms group SoftBank,
many UK technology investors
switched allegiance to IQE.
The company has become a driving
force behind efforts by the Welsh gov-
ernment to create a cluster of specialist
electronics companies in Cardiff and
South Wales, dedicated to producing
and selling compound semiconductors.
Mr Meadows says there are already
several clusters of semiconductor man-
ufacturing in Europe. One is Eindhoven
in the Netherlands, which is the centre
of research and was the original head-
quarters for electronics company
Philips. They also exist in university
towns such as Leuven, Belgium, but
these clusters are all concentrated on
silicon [semiconductor manufactur-
ing], he says.
Cardiff already has some semicon-
ductor research activity. Cardiff Univer-
sity tests radio frequency components
for handset manufacturers often
these are companies supplied by IQE.
Last month, Cardiff Capital Region
announced it was allocating nearly
38m to fund a high-volume foundry
specifically to make compound with the materials to make those lasers.
compositor combining special effects
and other graphics at the end of the
animation process to create the illusion
that the different elements are part of
the same scene. I started as a composi-
tor because I didnt know how to draw,
he says.
His company now operates under
three brands: Cloth Cat, the animation
unit; Bait, a special effects arm; and
Thud, which does post-production.
Bait, for example, does special effects
work on Casualty, adding digital blood
and gore to make scenes look more
graphic. We have different brands
because each industry is very different,
he says. We cant have exploding heads
next to childrens content. It doesnt fallen behind other countries. In
really work.
His company has benefited from the
animation film tax credits that were
introduced in 2013 by then chancellor of
the exchequer George Osborne
largely at the behest of the UKs best-
known animation studios Aardman
Animations, the Bristol-based creators
of Wallace and Gromit and Shaun the
Sheep. The Welsh government has been
supportive, too. Mr Rennies subsi-
dised offices help keep overheads
down.
Still, he says, the finances of a
typical animation company are
precarious. Mr Rennie retains his
staff on short-term contracts. We
cant always guarantee we have
work, he says, pointing out that ani-
mation and film companies have
always sought cheap office space
the reason that many in the
1970s ended up in Soho,
an area that was then
known as Londons
red light district.
Cloth Cat likes to
be a co-investor in
most productions
with which it is
involved. There
will typically be a
single broadcaster
acting as anchor
Cloth Cats
Jon Rennie
3
semiconductors. The facility will be
owned by Cardiff and nine neighbour-
ing councils. Equipment will be leased
to manufacturers.
We will build a pilot line production
to give us the critical mass needed to be
seen as a go to place for compound
semiconductors, says Mr Meadows,
adding that there are already potential
end users in Wales, such as Airbus, the
aircraft manufacturer, and General
Dynamics UK, the aerospace and
defence company.
Separately, Cardiff has been selected
to be the home of the UKs Compound
Semiconductor Applications Catapult, a
UK government-funded facility where
technologies will be available to mid-
tier and small companies to use for a fee.
This is one of 10 hubs of high-perform-
ance manufacturing across the UK.
Both initiatives are designed to
encourage more supply-chain activity
in Wales. We have come across UK
companies that are developing new
healthcare technologies and they are
importing lasers from China, says Mr
Meadows. We probably supplied China
investor, but several backers are often
needed to finance an animation feature.
Long gone are the days when Thames
Television used to fund Danger Mouse
[alone] he says, referring to a popular
cartoon, first aired on the BBC in 1981.
In some ways, the childrens industry
has had to be far more commercially
savvy than even the live action sector,
Mr Rennie says. A company like HBO
will pay for the whole of Game of Thrones,
whereas, for animation, because we can
dub what we do into different languages,
broadcasters will assume we can get
backing from all over the world.
While the UK has a strong heritage in
animation, Mr Rennie believes it has
France and Japan they dont see anima-
tion as just a childrens medium, he
says. In this country weve lost the abil-
ity to see animation as a storytelling
medium [for adults].
On the other hand, international col-
laborations are becoming more com-
monplace. Cloth Cat, for example, is
currently working with a Chinese com-
pany called Magic Mall to create an ani-
mated pre-school series based
on the Chinese character
Luo Bao Bei, a spirited
seven-year-old.
One of the editors
working on the Luo Bao
Bei series is Nia James, a
29-year-old originally
from Carmarthen in south
west Wales. Animation was
never a plan but I wouldnt
change it now, she says.
I started off in 2009
in Cardiff. Then I
went on to Aard-
man [in Bristol]. I
did a bit of Shaun
the Sheep.
Ms James
returned to Car-
diff last year to
join Cloth Cat, con-
fident there was a
future in the ani-
mation industry
in the Welsh
capital.
4 FINANCIAL TIMES Thursday 1 June 2017

Doing Business in Cardiff

Cawl, clubbing and culture a visitors guide

Tourism Partnership, which was selected to build
the National Assembly in 1998, was
Enjoy the vibrant art, replaced in 2001, six months after
theatre and music construction started, in a row over costs.
The late Zaha Hadid won a 1994
scenes but dont sneer competition to build an opera house in
Cardiff Bay, but the project was stymied
at the stew, advises by the authorities who felt the scheme
John Murray Brown was unsuitable.
Today, the city is making amends,
commissioning Norman Fosters

T
he nearest thing to a Welsh
national dish is cawl a
lamb and potato stew so
watery it is sometimes
mistaken for a soup. Not a
great advertisement for foodies visiting
Cardiff, you might think.
But the Welsh actor Rhys Ifans swears
by it, as did his fellow Welshman the late
Howard Marks. The convicted drug
smuggler and counter culture pin-up
whose autobiography, Mr Nice, was
made into a film starring Mr Ifans
once said that he never returned to
Cardiff without treating himself to a
bowl of cawl. He even claimed it was a
cure for erectile dysfunction.
Food is not what lures most travellers
to the Welsh capital. The city has never
had pretensions to match the buzz of
Birminghams restaurant scene, say, or
Manchesters sophistication. But woe
betide the Englishman who dares point
that out.
When the food critic Jay Rayner
visited Cardiff in 2016, he was subjected
to an angry Twitter storm after
suggesting the best place to head to for
lunch was Cardiffs Central Station
because from there, he observed, you
can catch a train to Bristol.
In truth, the choice of restaurants is
much improved. Among the best city-
centre eateries is The Potted Pig, which
is housed in a converted bank vault.
Also rated by locals are Nant, I Giardini
di Sorrento, Purple Poppadom and, for
vegetarians and vegans, Anna-Loka.
Cardiff is better known for its pubs
and nightclubs than its fine dining.
Music particularly singing is part of
the Welsh identity, as anyone who has
attended a rugby international can
testify. Membership of a male voice
choir or a colliery band used to be a rite
of passage for young men from coal
mining communities in the Valleys.
Cardiff is the birthplace of several pop
and rock bands, including Super Furry
Animals, who, along with Stereophonics
and the Manic Street Preachers, were
part of a resurgence of Welsh music in
the 1990s. Catatonias Cerys Matthews,
who sings in Welsh and English, was
born in Cardiff, as was pop and classical
music star Charlotte Church.
No Cardiffian will let you forget that
Shirley Bassey was brought up in the
city. She was raised in the working-class
dockland neighbourhood of Tiger Bay,
which is now part of the redeveloped
Cardiff Bay cultural zone.
This month, the city hosts the
biennial BBC Cardiff Singer of the World
competition to discover opera stars of
the future. Any visitor lucky enough to
obtain a ticket to a production by the
Two major Welsh National Opera would be wise to
exhibitions are grab it with both hands.
showing at the For those who like clubbing, the city
National has a wide choice of venues. Tiger Tiger
Museum. Left: is the place to be on Mondays. The chain
works from a Revolutions Cardiff bar is the hang out
private for Tuesdays and, on Thursdays, there is
collection. Right Clwb Ifor Bach.
(above and Theatre too is thriving. The Sherman
below) works by Theatre routinely wins prizes for its
Gillian Ayres. productions. One homegrown success
Francesca Jones for the FT from the Cardiff theatre company
Sherman Cymru was Deep Cut, a play
based on the real-life deaths of four
trainees at the Deepcut army barracks
in Surrey. A more recent production was
of Robin Soans play Crouch, Touch,
Pause, Engage, about the gay former
Welsh rugby captain, Gareth Thomas.
The citys theatres, concert halls and
nightclubs are centrally located and
Cardiff has the advantage of being
compact and easy to navigate on foot,
although the commercial and business
district can feel cut off from the Cardiff
Bay area.
One of the less well known tourist
attractions is the National Museum,
which is currently showing two
important exhibitions of modern art.
One features the brightly coloured
abstract works of painter Gillian Ayres.
The other is a show of paintings and
sculpture from the private collection of
Ian and Mercedes Stoutzker, including
works by Francis Bacon, Lucian Freud,
Barbara Hepworth and David Hockney.
In the past, Cardiff has had a
somewhat chequered relationship with
famous architects. The Richard Rogers
architectural firm to build the new BBC
Wales headquarters, the centrepiece of
the Central Square development around
the citys former bus station. But, unlike
in Edinburghs Georgian New Town or
the grand municipal centres of the
northern cities of Liverpool and
Glasgow, Cardiffs built environment is
nothing to set the pulses racing.
The main reason tourists come to
Cardiff is to watch their sporting heroes.
For rugby fans, the Principality Stadium
(formerly known as the Millennium
Stadium), and the iconic Cardiff Arms
Park have provided the backdrop for
some of the sports greatest moments. It
was at the Arms Park in 1973 that
Gareth Edwards scored a try for the
Barbarians v the All Blacks, which
experts say has never been matched.
This week, Cardiff plays host to
another huge sporting event. As many
as 170,000 football fans are expected to
arrive for the 2017 Champions League
Final between Spains Real Madrid and
Juventus of Italy.
Staging such extravaganzas presents
logistical challenges. With all the citys
hotel rooms sold out long ago (and
many block-booked by footballs
governing body Uefa, according to
locals) the BBC reports that travelling
fans are being invited to campsites, and
charged 300 to sleep in a two-person
tent in a city-centre park.
One of the Local residents have also tried to cash
less well in. Adverts on websites such as Gumtree
and Airbnb are offering rooms for
known between 80 and 2,000. Special
tourist surveillance cameras are in operation
for the event. Roads have been closed off
attractions and trees in the city centre are to be
is the boxed in.
There is even talk of waiving road tolls
National for the day on the Severn Bridge
Museum crossing from England reason enough
to drop in for some cawl.

City readies Mega-events power tourism strategy

for a global Staying in a tent in a public park may

audience
Continued from page 1
where the UKs Driver and Vehicle
Licensing Agency has a large operation.
Since Cardiff is also the seat of Waless
devolved government, its businesses
have the opportunity to influence signi-
ficant policies in a way that those based
in Nottingham or Swindon, for exam-
ple, cannot.
The Cardiff region is the richest part
of Wales. In 2007, its economic output
per head was briefly higher than the UK
average, but since then a gap has opened
up as house prices in London and the
south east of England have risen. Public
spending is skewed towards the city but
policymakers are trying to address this.
The recently signed 1.2bn Cardiff Capi-
tal Region City agreement to boost eco-
nomic growth in south east Wales
requires Cardiff council to co-ordinate
with nine adjoining local authorities.
At the moment, all the investment is
five or 10 miles either side of the M4,
says Ian Price, head of the Wales office of
the CBI employers lobby. The new
agreement, he adds, is about trying to
drive some of that wealth up into the
Valleys, the former coal mining areas
north of the city.
Over the past few decades, Cardiff has
had the challenge of transforming itself
from an industrial city fuelled by coal,
into a centre for financial services and
science, technology and creative sector
companies. In the late 19th century, Car-
diff was the worlds busiest coal port and
its Coal Exchange was the first place to
handle a 1m coal contract. The
exchange is now being redeveloped as a
luxury hotel.
The city has embarked on a large
regeneration project in its Cardiff Bay
area. Once a rough neighbourhood of
wharfs, railway sidings and cheap hous-
ing, the area is now home to the Welsh
National Assembly, the Millennium arts
centre and a stretch of shops and bars
along a waterfront created by the con-
struction of the Cardiff Bay barrage.
Cardiff has also been chosen by the
UK government as the location for a new
semiconductor research centre, to be
linked with Cardiff University.
Im Cardiff born and bred, says Rob-
ert Lloyd Griffiths, head of the Institute
of Directors in Wales. The changes in
the city are phenomenal. Its like going
from black and white to colour.
Two big city-centre office
not seem the ideal way to experience a
city for the first time. But, with a
shortage of hotel beds available in
Cardiff this weekend, it is one option
open to football fans arriving for
Saturdays Champions League final.
The biggest concern for city officials
is that supporters might simply take
the train back to London after the
match without spending the night.
That uncertainty raises the question of
whether Cardiff Councils 45m
estimate of the economic gain from
hosting the event will materialise.
When Lisbon hosted the match in
2014 it netted an estimated 45m
(39m). Of this, 54 per cent was spent
on overnight stays, 22 per cent in the
citys restaurants and bars and
7 per cent on other tourist
activities. When the
final went to London
in 2011, the city
earned an
estimated 43m.
Academics have
long argued about
the merits of
relying on large
single events to boost
tourist income. Professor
Calvin Jones, an economist
specialising in tourism at Cardiff
University, wrote a paper in 2001
saying there was a growing body of
academic literature concerned with
the negative and ambivalent effects
on the host economy of hosting
hallmark and mega events.
But this strategy of relying on
blockbuster events has been central to
Cardiffs tourism plan ever since 1999,
developments are under way, led by
local companies Rightacres and JR
Smart. While some national developers
have pulled out of the city, says Mr Poole
at Cardiff council, local developers
have been able to read the market, see
the trends and respond.
In the creative industries, Cardiff is
developing its reputation not least
thanks to the BBC, which makes its pro-
grammes Doctor Who, Sherlock and Casu-
alty at studios in the city.
The city is also sufficiently far away
from London for companies not to lose
too many key staff to the UK capital, as
The changes in this city
have been phenomenal. It is
like going from black and
white to colour
when the citys newly built Millennium
Stadium (since renamed Principality
Stadium) hosted the Rugby World
Cup. In 2018, Cardiff will be one of
12 city venues worldwide for the Volvo
Ocean Race, a sailing competition that
covers 46,000 nautical miles from
Alicante to The Hague, via Cape Town,
Hong Kong and Auckland. Organisers
say it will be the first time the race
has visited the UK in more than
decade.
Gareth Berry, tourism projects
manager at Cardiff Council, says the
yacht race will take place sometime in
May or June, depending on tides in
the River Severn estuary.
It is important to get the policy
right, he says, because tourism is the
citys second biggest employer
after financial and
professional services.
The council
estimates tourisms
total economic
contribution to the
city last year was
about 1.2bn.
Figures from the
Office for National
Statistics show that
Cardiff received around
310,000 business visitors in
2015. Over the same period,
Edinburgh the UKs best performing
city after London received more
than 1.5m.
In a rank of 20 UK cities by visitor
numbers, using international rail and
air passenger statistics, Cardiff came
tenth, ahead of Leeds and Nottingham
but behind Bristol and Brighton.
JMB
Mr Stevens at Admiral notes. Most of
our competitors in the world of car
insurance are based in the South East
[of England] and Im sure staff turnover
and retention is a much bigger challenge
for them than it is for us, he says.
The next question for Cardiffs com-
panies is what the impact of Brexit will
be. Wayne Harvey, senior partner in
Wales for professional services com-
pany Deloitte, says 140 of its 720 Cardiff
staff are from other EU countries: They
are doing a great job for us and one
assumes that they are enjoying their life
in Wales. We want that to continue.
Chris Nott, chairman of the Welsh
governments financial and professional
services advisory panel, thinks Wales
has good reason to be confident: Of the
regions in the UK, what will happen in
Scotland? Will it be a separate country?
What will happen, he wonders, between
Northern Ireland and Ireland. Wales, he
believes, will continue to be stable.

Watches Jewellery
Thursday June 1 2017
Sales hint at recovery but
celebrations premature
The industry still
faces significant
challenges, says
Ralph Atkins
J
ohann Rupert, the veteran
chairman and controlling
shareholder of Richemont, was
in a defensive mood when
unveiling the Swiss luxury
goods groups annual results in May.
Please do not expect us to make predic-
tions on margins, sales, he told journal-
ists bluntly.
His comment captured the uncer-
tainty gripping the watch and jewellery
industry. Last year was difficult for
many brands; Mr Rupert described it as
horrible. Luxury goods were in retreat
in 2016. Global sales of Swiss watches
fell steeply as a result of heavy over-
stocking in the large Hong Kong market;
at the same time changing tourist flows,
weak economic growth and terrorism
worries hit European and US markets;
Time is (less) money
Mechanical watches
are now under 500
INDUSTRY Page 3
and the effects of Chinas clampdown on
gifting continued to work through.
At least some of those factors have
now faded. Sales in mainland China
have become a bright spot: Swiss watch
exports there in the first four months of
2017 were 21.6 per cent higher than the
same period a year earlier, according to
the Federation of the Swiss Watch
Industry (FHS). Optimism is growing
among industry executives and analysts
that the worst of the downturn is over,
although jewellery is outperforming
watches, where excessive inventory
remains significant.
Share prices of luxury groups have
moved sharply higher this year, reflect-
ing the improvements. China drove
strong sales growth in the first three
months at Herms. LVMH, the worlds
biggest luxury goods group, also
reported a strong first quarter. Baselworld
Investor optimism was boosted when
the FHS reported that total exports visitors
admittedly a volatile barometer were were down
7.5 per cent higher in March than 2016,
following 20 months of falls. 4 per cent,
But hopes of a revival were then set exhibitors
back when Aprils figures showed
another fall in Swiss watch exports, 13 per cent
FT SPECIAL REPORT
Lost lustre Mrs Motivator
The pearl industry is Jewellers hire coaches
recovering from a crisis to pep up deflated staff
LONG READ Page 6 RETAIL Page 9
www.ft.com/reports | @ftreports
which were 5.7 per cent lower than a
year earlier. (Analysts reckoned sales
would have risen if differences in the
number of working days had been taken
into account.) The more recent data
were disappointing and will raise con-
cerns over the timing of any tangible
restocking cycle, warns Thomas Chau-
vet, analyst at Citigroup.
As a result, it remains unclear how
powerful the sector-wide recovery will
prove or whether the upheaval caused
by sluggish global economic growth,
geopolitical risks and technological
change spell a further period of restruc-
Keystone/Alessandro della Valle
turing and consolidation for the sector.
Luxury executives remain cautious.
At this years Baselworld watch trade
fair, where luxury brands generate as
much as half of their annual sales, the
number of visitors was down 4 per cent
at 106,000 on 2016, organisers said, and
exhibitors fell 13 per cent. In response to
this decline and problems in the sector,
Into the light Watchmakers claim prominence
the organisers will shorten Baselworld
from eight days to six next year and cut Big brands have used independent watchmakers eyed watch fans on social media work out who
exhibitor fees, a source of complaint. like Stephen Forsey, above for decades, but invented what, the houses are starting to make a
People are buying watches but the have often preferred not to disclose the fact, in virtue out of their necessity and own up about
question was always going to be how case they seem less capable. But now, as keen- these shadow watchmakers. Page 4
Continued on page 2
2 FINANCIAL TIMES Thursday 1 June 2017

Inside | Watches & Jewellery

Mid-price mechanicals Viva Las Vegas Greubel Forsey

As cheap watch sales collapse and
expensive watches grab all the attention, a
space is opening up for affordable
automatic pieces
Pages 3
Moving on up
Big brands have long kept the
independent watchmakers
they use in the shadows, but
these are now gaining
recognition
Page 4
A Rolex record
News in brief: emperors watches hit
the auction block; a British timepiece
makes it to the top of Everest (again); and
artefacts from the Kennedy White House
are for sale
Page 4
The citys jewellery week rolls round, with
its important trade fairs, but designers and
retailers are rethinking how and to whom
they sell. Plus: Ivanka Trump absent for the
first time in years
Page 5
Pearls of wisdom
They used to be the height of
style and value, but scientific and
taste revolutions rendered pearls
almost unsellable. So what is
behind their recent rise?
Page 6
In pieces
We take apart Louis Vuittons new
Tambour Moon Flying Tourbillon to work
out what makes it tick
Page 7
watch (left), page 4;
As time goes by
Mikimoto sash clip Auctioneer Paul Maudsley turns back time
(right), page 6; with his collection of vintage pieces from
Rihanna for Chopard
(below), page 8 the 1940s and 1950s Page 7
Wrist risks
Retail scion Kim-Eva Wempe says brands
need to be less secretive or they will lose
buyers trust Page 8
Particular
News in brief: what emeralds have to do
with nanoparticles; a new diadem with
18th-century roots; and Rihannas rocks
Page 8
Motivated sellers
The retail sector is suffering, so concerned
jewellers are bringing in coaches for their
sales staff only not everyone is sure they
know what they are doing Page 9

Sales hint at recovery but

celebrations premature
Continued from page 1
long it would be before the inventory
cycle worked through, says Scilla
Huang Sun, luxury sector specialist at
GAM Investment Management in
Zurich. Things are improving it may
just be a bit slower than people
expected.
Large groups with significant watch
activities, such as Richemont and
Swatch, bore much of the downturn, as
privately owned groups and Japanese
watch companies gained market share
at their expense, according to research
by Swiss bank Vontobel. Rolex, an inde-
pendent group, took over from Richem-
ont last year as the number two (after
Swatch) in traditional watches by
worldwide market share by value,
according to the banks research.
For high-end independent brands,
family ownership is a part of their
cachet, notes Ren Weber, luxury ana-
lyst at Vontobel. Remaining independ-
ent has become harder, however. In
April, private equity group CVC Capital
Partners announced it would take con-
trol of luxury Swiss watchmaker Brei-
tling, which has been owned by just two
families in its 133-year old history. CVC
will buy an 80 per cent stake in the com-
pany for an undisclosed amount.
Larger groups not only have the finan-
cial power needed during prolonged
periods of structural change, they are
also arguably better at reacting to tech-
nology-led developments. Jewellers and
watchmakers are having to adjust to
fast-altering markets, stepping up
efforts to rethink distribution channels
and respond to consumer demands.
Swatch, the company behind brands
such as Omega and Tissot as well as its
eponymous mass-market watches,
revealed recently that it was developing
an operating system to rival Apples iOS
and Googles Android. This would ena-
ble the creation of its own range of min-
iaturised watch-tech products.
But the good news for traditional lux-
ury watchmakers is that smartwatches,
led by the Apple Watch, have not
emerged as the threat some feared.
There was a 51.6 per cent fall in smart-
watches shipped in the third quarter of
2016 compared with 2015, according to
IDC market intelligence. IDC did also
predict, however, that the industry
would sell 76.6m smartwatches in 2020,
up from 21.5m last year.
The good news for luxury
watchmakers is that
smartwatches, led by
Apple, have not emerged as
the threat some feared
At Richemont, Mr Rupert announced
that his son Anton, 29, would join the
board, along with technology investor
Nikesh Arora. The changes were part of
a reorganisation of the groups manage-
ment, which has involved some of its
longest-serving executives leaving and
is meant to position Richemont for the
fast-changing and uncertain world
foreseen by Mr Rupert. The company
is being right-sized to demand, he said.
The broader industry needs to follow.

Watch this: guests at the Baselworld trade fair Christophe Chamartin

Contributors
Ralph Atkins Alan Knox
Switzerland correspondent Picture editor

Simon de Burton For advertising details, contact:

Contributing editor, How To Spend It Mark Howarth, +44 (0)20 7873 4885,
mark.c.howarth@ft.com, or your usual FT
Camilla Apcar representative.
Rachel Garrahan
Ming Liu All editorial content in this report is
Sarah Shannon produced by the FT.
Rachael Taylor
Kate Youde Our advertisers have no influence over or
Freelance journalists prior sight of the articles.
Josh Spero All FT Reports are available at
Commissioning editor ft.com/reports

Steven Bird Follow us on Twitter @ftreports

Designer
Thursday 1 June 2017
The rise of
the low-cost
mechanical
watch makes
up for lost time
Competition
Today 500 will
buy you a stylish
product with a proper
movement, says
Simon de Burton
S
ince 2000, Switzerlands most
expensive watches have
attracted the most attention
and have almost trebled in
numbers sold, according to
the Federation of the Swiss Watch
Industry. But beneath that success is a
story of crisis and of opportunity, which
agile watchmakers are starting to seize.
The crisis is in the cheapest category
of watches, inexpensive quartz-pow-
ered ones. In April 2017, sales of watches
under SFr200 ($205) fell 11 per
cent by units from a year
earlier. Furthermore, this
is not a blip. Since 2000,
the category has con-
tracted by a quarter, fall-
ing from 22.8m watches
sold to 16.5m. A
YouGov survey from
2013 found that 61
per cent of 18 to 39-
year olds used their
smartphone, rather
than a watch, to tell the
time, giving context to
the decline.
There is more promising
news a little further up the price
scale. The SFr200-SFr500 category
has registered a 31 per cent growth in
units sold since 2000. What this
implies is that even if cheap watches
are giving way to electronic devices, in
the medium term there is still a market
for pricier, more ambitious brands.
Such brands include those producing
mechanical watches at lower costs, with
lower margins, than established houses,
and then selling them online.
One watchmaker is taking a bet that
the stigma formerly attached to cheap
Chinese mechanisms is fading, meaning
that they can be regarded (and
priced) seriously. Marketing con-
sultant Oliver Goffe and draughts-
man Gordon Fraser launched
British watch company
Marloe on crowdfunding
platform Kickstarter in
January 2016.
Having raised an ini-
tial 179,000, Marloe
began deliveries of its
first model the three-
hand Cherwell (249) in
August 2016 and has since
introduced a two-hand
design (the Derwent) at
329 and a chronograph
(the Lomond) at 449.
All three models use hand-
wound mechanisms produced by
Chinas Tianjin Seagull, the worlds larg-
est manufacturer of mechanical watch
movements. With almost 2,000 Mar-
loes sold to date, Mr Goffe says reliabil-
ity problems have been negligible.
I decided to establish Marloe after
living in Sweden for a few years, where
there are two or three brands
which have become very
successful selling
quartz watches at very
high margins, says Mr
Goffe. It sort of infuri-
ated me to think that
people would pay so
much for a quartz watch
that cost, perhaps, $5 to
make. So I went down
the route of seeing
how much a proper
mechanical watch
could actually be pro-
duced for. He and Mr
Fraser chose Seagull
because it makes its compo-
nents with Swiss machinery.
Mr Goffe is reluctant to reveal
how much his company pays for
what he describes as absolute
grade-A Seagull movements. He indi-
cates a ceiling of around 50 per unit,
however, plus cases, dials, crystals and
so on. Even after the cost of assembly
by a Chinese manufacturing partner
he is left with a viable profit.
FINANCIAL TIMES 3
Watches & Jewellery
No expense saved: Gordon Fraser
and Oliver Goffe of the mid-price
Marloe watch company (right) and
(below, from top to bottom) their
Cherwell and Derwent watches
and the Meakin watch from Farer
Mark Lord
It was absolutely a conscious deci-
sion to price our watches at below 500.
It was a long process to get them down to
that figure but weve proved that its
possible to maintain quality and cus-
tomer service for that price while still
making enough of a profit to support
and grow the business, he adds.
Perhaps ironically, the success of Mar-
loes initial offerings has led to calls from
existing and potential customers for a
Marloe with a Swiss-made movement.
Having contacted a number of Swiss
suppliers, Mr Goffe believes that he
will be able to offer such a watch
before the end of the year at a tar-
get price of 750.
If he achieves his aim,
Marloe will be competing
with the well-estab-
lished Christopher
Ward ecommerce
brand, which started
selling Chinese-made
quartz watches in 2005,
before forming a part-
nership with Swiss move-
ment maker Synergies
Horlogres in 2008. (The
two companies merged in
2014.) Christopher Ward
offers several mechanical
watches for under 1,000,
with the entry-level Mal-
vern automatic from 495.
Paul Sweetenham, a former senior
executive at TJX Europe, parent com-
pany of discount retailer TK Maxx, is
another person who has nurtured a
close relationship with a Swiss move-
ment maker in order to offer cheaper
mechanical watches. Mr Sweetenham
has used his considerable retail
experience to engineer a
deal with Roventa-
Henex, which pro-
duces watches for
other brands under
their names.
On this basis, he
founded online-
only brand Farer,
which sells three-
hand automatic
watches from
875, a niche he
believes is largely
ignored by the promi-
nent Swiss makers. (Baume
et Mercier did recently intro-
duce a range, Classima, for
under 1,000 but they are quartz,
not mechanical.) I think the mar-
ket is polarising at a point some-
where between excessively expensive
mechanical watches and very cheap,
almost throwaway quartz fashion
watches, Mr Sweetenham says.
We started the business by selling
good-quality quartz products and had
some success but then we realised that
there are many people in their mid-30s
who aspire to own a good mechanical
watch but dont want to pay the prices
charged by the established brands,
Mr Sweetenham adds. We have
been able to produce a watch
which we can sell for between
one-third and one-half of
the amount typically
charged by a Swiss
firm . . . I would say
we now sell three
mechanical watches
for every one quartz.
He thinks the Swiss
industry needs myth-
busting when it comes
to mechanisms prices
and says he can obtain
movements for one-
tenth of what bigger
brands say they cost.
When you add that to
the low overheads and
marketing costs of ecommerce, he
says, Its suddenly perfectly possible to
offer mechanical watches that are
affordable and of great quality.
4 FINANCIAL TIMES Thursday 1 June 2017

Watches & Jewellery

Shadow watchmakers come into the light

Industry Brands would rather not reveal that
C
hristophe Claret has worked, in his words, as a changes at other brands, his company can offer constant
shadow watchmaker for 65 brands in his 35-year access to his knowledge acquired over 20 years.
career. Some houses Ulysse Nardin and Harry
Winston he can name, others require pri-
they use external partners, but the internet is Being small is another plus. We are quite flexible and
quick to launch, he says. In a big company there are so
vacy. Despite large brands protestations of driving openness, says Ming Liu many decision makers that need to decide and go step
in-house expertise, sometimes collectors want by step. By the time they have [decided], we are
exceptional pieces, he says. Of course, some already finished.
houses can do this internally, but many prefer This is a sentiment echoed by Mr Wieder-
to go outside because they dont necessarily recht, who has developed playful (but
have the creativity within. They turn to sophisticated) products for Van Cleef &
Mr Claret, who launched his own brand in Arpels since the early 2000s. Among his
2009 (his Maestro, right), and to his peers more notable pieces is 2010s Le Pont des
but have rarely communicated that Amoureux (from 104,100, below), which
fact. Now, that is changing. features a retrograde module where the
As Swiss craftsmen started excelling in hands trace an arc before returning to their ini-
watchmaking in the 19th century, makers of tial position animating lovers meeting on a
discrete parts for movements developed inde- bridge. Its not easy to find good ideas, he says.
pendently alongside familiar brands. For Most brands [need] to think a little more out
example, ETA, the largest manufacturer of of the box, advancing the mechanics, not just
Swiss watch movements, is the agglomeration of the design.
several independent workshops and, although it was Nicolas Bos, chief executive and president of Van Cleef &
absorbed by the Swatch Group in the 1980s, it continues Arpels, says that Agenhor, Mr Wiederrechts company, was
to make movements for other brands. For the past five the right partner for the counter-current approach
to 10 years, to control production and avoid supply- sought by his company. Van Cleef & Arpels does men-
chain disruption, big brands have bought other tion Agenhor in its online specifications for Le Pont
companies. and tends to be more open than most brands
But sophisticated innovations in watch- about its partnerships.
making and the growing popular interest Agenhor also conceived Herms Slim
in haute horlogerie, where price tags are dHerms LHeure Impatiente (28,100)
often high and production limited, are which launched at the Baselworld watch
further driving brands to call on inde- fair in March. Riffing off the idea of
pendents and to give them their anticipation, the design features an
due. Weve had a long period of impatient hour complication (a
branding, branding, branding, 60-minute countdown you can set
says Jean-Marc Wiederrecht, ahead of an appointment) with a
whose Geneva company, Agen- striking mechanism. It is the third
hor, has created movements for such watch by Agenhor and Her-
Van Cleef & Arpels and Her- ms since they started working
ms, among others. Only the together in 2008.
brand existed and everything That was around the time
was about their name. But that Herms was bringing
that is slowly changing, skills such as dial and case
which is a very good thing. making in-house. Philippe
Competition and corpo- Delhotal, the creative director
rate image are two reasons of Herms watch arm, says
for imposing relative ano- that such integration is more
nymity. Its a mix of not interesting and efficient, yet
showing your cards and he notes that Mr Wiederrecht
sometimes holding up this fills a crucial gap, turning Her-
rather brittle faade that, yes, ms ideas and specific
we are doing everything our- approach to time into a techni-
selves, says Anders Modig, a cal achievement.
watch expert and writer based

A
in Basel, Switzerland. Its a mar- principal reason for
keting balloon where you have a the shift to openness
few companies who are really about using external
doing it, then some who are stretch- watchmakers is the
ing the truth. role of social media,
blogs and collectors clubs. Mr Torrigiani

T
here are several reasons
why large houses find it
worthwhile to call on independ-
ents. Equipment and labour costs
are high, especially for complicated
movements in low quantities. A dedicated labora-
tory is also needed to test new watches for daily use.
Independents can thus benefit from econo-
mies of scale: developing 10 complex
movements, or calibres, for 10
brands does not require significantly
more equipment or space than a
brandworkingonjust one in-house.
Watchmakers Robert Greubel and
Stephen Forsey not only have their
own brand, launched in 2004 (their
Art Piece, top right), but run Com-
pliTime, which has been supplying
mechanisms to other brands since
2001. The mechanical watch uses about
30 techniques or skills, says Mr Forsey, all
of which were historically performed by
separate craftsmen. Hence, endeavouring to
make all parts of the movement in-house is
really challenging.
has created complications for brands including IWC and A
Lange & Shne. Co-founder Dominique Renaud, who sold
his share in APRP in 2000 and has since started his own
brand, believes it is almost impossible for watchmakers to
have all these skills in-house.
It is nonsense to think that you can master everything,
says Luiggino Torrigiani, Mr Renauds business partner in
his new venture.
says that these have raised awareness
about the independents and recognition will
come. There is a need from collectors to have
more transparency, he says. There will be
added premium for brands that can tell the full
story. Collectors already suspect that outstanding
complications may not come from within the house.
For smaller brands, the association can be a
boost. Mr Strehler helped create the first
watches for independent Swiss house H
Moser & Cie in 2003 by developing around
10 calibres and producing its movements
for the first five years. Meanwhile, in 2015
Faberg launched its first watch after sev-
eral years of franchising: the Visionnaire I
(from $220,000), a flying tourbillon that
Clockwise from top: is made by APRP.
Christophe Claret; You cant waste any time when you
Stephen Forsey; only have 18 months to develop, says
Jean-Marc Wiederrecht; Aurlie Picaud, Fabergs timepieces direc-
Andreas Strehler tor, who adds that it is still important to keep
Alex Stephen Teuscher, Keystone/Alessandro della development know-how and 3D and technical ani-
Valle, Darrin Vanselow, Anne Morgenstern for the FT
mation in-house. All of Fabergs subsequent time-
pieces have been co-created.
These watchmakers do not necessarily linger in the

CompliTime specialises in more unusual, radical complica-
tions; Mr Greubel and Mr Forsey made the Opus 6, part of an
annual project that Harry Winston launched in 2001 to cele-
brate independent watchmaking. Mr Greubel and Mr Forseys
co-design featured a double tourbillon inclined at 30 degrees,
giving the impression of being suspended in space. Compli-
Time makes a few tens of movements each year that are tai-
lored to clients. Theyre la carte and made to measure to fit
the companys identity, says Mr Forsey.
Renaud & Papi, a movement-maker in which Audemars
Piguet took a stake in 1992 and which is now known as APRP,
T
ime and access to expertise count too. While a
prototype can be made in a few months, new cali-
bres take three to four years. It can be easier to
outsource this to avoid wasting manpower.
Andreas Strehler, based in Switzerlands Ger-
man-speaking north, was previously chief of prototyping at
Renaud & Papi and today works with other brands alongside
his own (his Sauterelle, above left); one of his designs holds the
Guinness world record for the precision of its lunar phase.
Employing nine people who create on average three calibres a
year for outside houses, Mr Strehler says that, with staff
background, however little the large houses may want to men-
tion them. Mr Claret, Mr Greubel and Mr Forsey, Mr Renaud
and Mr Strehler have all launched their own brands, some-
times before or concurrent with their external work. It makes
There is a need from economic sense, too, having dual income streams.
collectors to have more But the more discreet method can also be a vital first step or
accompaniment: Mr Forsey notes that without CompliTime,
transparency, There will be he and Mr Greubel might have never launched their own line.
added premium for brands If you just focus on your brand, you can find the walls closing
in around you, he says. When you have to look outside and
that can tell the full story interact with others, you keep dynamic and fresh.

Meanwhile, a unique Patek wristwatches supplied by convertible car, plunging into a six watches that belonged to Henry
Second-hand
Imperial Philippe perpetual calendar
wristwatch that was
Lincolnshires Robert Loomes.
These are the first English watches
swimming pool and clubbing with
friends. The film will be shown in
Graves Jr, a celebrated collector in the
1920s and 1930s, and five owned by his Bremont has become the first watch

watches on presented to Ethiopian

emperor Haile Selassie in
1954 has sold for SFr2.9m
to be used at the top of the
worlds highest peak since
Edmund Hillary and Tenzing
30-second and 90-second versions and
ends with Ms Eaton relaxing in a
bathtub and downing one last flute of
contemporary, automobile tycoon
James Ward Packard.
manufacturer to offer an automotive-
style trade-in programme in a bid to
attract new customers. Run in
the march to at Christies in Geneva.
Christies believes the
Norgay carried Smiths
models when they
champagne. She wears a Panthre
throughout. Return to Camelot (2) conjunction with US-based online
retailer Crown & Caliber, the scheme

royal prices
Auction house Phillips has set a record
price for a Rolex with the sale of a
Reference 6062 triple calendar model
for more than SFr5m ($5.1m). The
yellow gold watch one of three black-
dial models set with diamond hour
markers and the only one of its
particular configuration was
originally owned by Bao Dai, the last
emperor of Vietnam. Bao Dai bought
the watch (above right) in Geneva in
1954 during a break from peace talks on
the future of Vietnam, following the first
Indochina war.
It was first offered on the open market
by Bao Dais family in 2002 following his
death five years earlier, when it sold for
SFr370,000, also then a record.
yellow gold watch, with
a rare matte black dial
and Selassies
monogram engraved
on the case back, was
commissioned by Italian
aviation pioneer Federico
Bazzi. According to the
catalogue, Selassie gifted the
watch to an eminent African
personality whose descendant
consigned it to Christies. The
house attempted to sell the watch two
years ago, but it was withdrawn
moments before being offered because
of an ownership dispute. It was acquired
this time by dealer Davide Parmegiani.
Peak performance
Members of the British Armys Brigade
of Gurkhas made up of Nepalese
soldiers have climbed Mount Everest
in their ancestral home equipped with
conquered Everest in 1953.
The team attempted the
climb in 2015 but were
forced to abandon it by
the catastrophic
earthquake that struck
Nepal as they neared the
summit. This years successful
ascent, completed on May 15,
made the Gurkhas the first to
reach the top this season.
A day in the life
Sofia Coppola has made a (very) short
film to promote Cartiers recently
relaunched Panthre womens
wristwatch, which was first sold in 1983
but phased out 21 years later. The film,
which runs in UK cinemas from June 9
to July 21, stars Mad Max actress
Courtney Eaton as a young woman
living an average day in 1980s Los
Angeles which involves driving a
The Cartier wristwatch worn by
Jacqueline Kennedy Onassis for
Return to Camelot much of her life is expected to
(1) fetch up to $120,000 when it
crosses the block at Christies in
Patek Philippe has announced New York on June 21. The yellow
that its Art of Watches gold Tank (left) was given to
exhibition, running at her by her brother-in-law,
Cipriani 42nd Street in Prince Stanislaw Stas
New York July 13-23, will Radziwill, in 1963, following
feature a US Historic Room the 50-mile hike the pair
showcasing 27 important undertook in Palm Beach
pieces with American as part of the craze for
connections. The items will endurance walking
include the desk clock sparked by President
presented to John F Kennedy. The back of the
Kennedy by West Berlin watch is engraved Stas to
mayor Willy Brandt after Jackie 23 Feb. 63 2.05am to
the president gave his Ich 9.35pm, referring to the
bin ein Berliner speech in hikes duration. Consigned by
June 1963, as well as a an anonymous owner, some of
chronograph originally owned the sale proceeds will go to the
by baseball player Joe National Endowment for the
DiMaggio. There will also be Arts.
ran throughout May and enabled
owners to submit details of watches
online to receive a cash-buy valuation or
a store credit (worth 20 per cent more)
to use at Bremonts New York boutique.
Time for a drink
Historical maker Louis Moinet has
made 50 watches fitted with airtight
capsules containing a drop of Old Vatted
Glenlivet from 1862, supposedly the
worlds oldest whisky. Collectibles
investment company Wealth Solutions
conceived the spirit watches idea;
previous watches in the run made
with different manufacturers contain
cognac from 1762 and rum from 1780.
The whisky belongs to Sukhinder Singh,
co-owner of spirits dealer the Whisky
Exchange. There are 10 examples of the
whisky watch in gold and 40 in steel,
priced at around 36,000 and 15,000.
Simon de Burton
Thursday 1 June 2017
Las Vegas fairs prompt
innovation and excuses
Trade Jewellers turn to
ecommerce to escape
the retail slump, writes
Rachel Garrahan
P
eople will always find a rea-
son for bad business, says
Deborah Nicodemus, chief
executive of high-fashion
ecommerce business Moda
Operandi. Some in the industry are
blaming political uncertainty, others
economic drag. But as the trade fairs of
Las Vegas Jewellery Week get under
way, designers and retailers are reflect-
ing on the poor performance of tradi-
tional retail and conceding that there is
a need to innovate and diversify.
Las Vegas Jewellery Week includes
the JCK trade fair, which organisers
expect to attract 30,000 (June 5-8); the
Couture Show, a higher-end fair (June
2-6); and the Las Vegas Antique Jewelry
and Watch Show (June 5-8).
There is no doubt that business could
be better. Although US jewellery sales
grew 2.5 per cent in 2016 to $61.8bn,
according to Euromonitor, this com-
pares with an average growth of 7.5 per
cent across the worlds top 10 markets.
The Jewelers Board of Trade ( JBT)
reports that, in 2016, 1,564 retail jewel-
lers, wholesalers and manufacturers
closed down in North America, a rise of
64 per cent on 2015s 956.
This in part reflects a growing seg-
ment of customers willing to buy jewel-
lery online or who reject old-fashioned
retail. Were seeing many owners of the
traditional independent family jewel-
lers choosing to quietly liquidate their
businesses and retire, rather than pass
them on to the next generation, says
Anthony Capuano, president of the JBT.
The news from department store
chains has been poor, with Macys, Nor-
dstrom and JC Penney all reporting falls
in sales in the first quarter. In March,
retail giant Signet Jewelers, which owns
Kay Jewelers and Zales, became the S&P
500s worst performer so far this year. It
blamed poor mall traffic, ecommerce
problems and flat sales across the indus-
try over the critical Christmas period.
Ms Nicodemus says companies need
to find an advantage in the market or try
something radical. Moda Operandi
The First Daughter and her jewellery line Drew Angerer/Larry Busacca/Getty Images
Ivanka Trump passes on Las Vegas trade shows
One person unlikely to be seen at Las
Vegas Jewellery Week this year is
Ivanka Trump, who had exhibited her
fine jewellery line at the JCK and
Couture trade shows between 2010
and 2016.
The 10-year-old line, which, like Ms
Trumps clothing and shoe ranges, was
the result of a licensing deal, has been
discontinued. Neiman Marcus dropped
the line in February, citing poor sales,
and Ms Trumps company is shifting
its efforts to accessibly
priced jewellery.
Ivanka Trump Fine
Jewelry became the
focus of attention in
November 2016, a
week after her
father won the
presidential
election. The
company sent out a
PR notice drawing
attention to its $10,800
gold and diamond bracelet,
which Ms Trump wore in an
appearance with her father on
primetime television.
FINANCIAL TIMES 5
Watches & Jewellery
reckons that its customers value exclu-
sive access to high fashion and fine jew-
Gemfields, says experience, a current
luxury watchword, is key. She believes
ellery before it hits the stores, so its
strategy is now to give first dibs on jewel-
the industry still has a long way to go in
giving customers, particularly young
lery collections being unveiled at the ones, a memorable experience when
Couture Show to its clients. shopping. Theres not a Sephora [a
We want to make it exciting for the lively make-up chain] for jewellery yet,
returning visitor, says Ms Nicodemus she says. Theres not a place where peo-
who adds that returning customers ple can go and play.
spend on average 44 per cent more on As well as a continued collaboration
their next purchase. The companys fine with Muse, a showroom in New York
jewellery sales have increased 170 per representing independent designers,
cent in the year to date so far, compared and a new luxury collection with former
with 2016, she says. Tiffany designer Maria Canale, Gem- Ring of truth: the Couture Show for the fifth year with The recent results from middle-
Mark Emanuel, co-owner of jewellers fields comes to Las Vegas to broaden brands sell their his first diamond collection, priced at American department stores would
David Webb, says it is exhibiting at the sales of its smaller, accessibly-priced wares at the JCK $10,000 to $100,000, a higher range support this theory, although consul-
Couture Show for the first time to coloured gemstones. Ms Morrison fair in Las Vegas than his coloured gem collections. He tancy McKinsey argued in late 2016 that
engage with independent US retailers, points to fashion fine jewellery brands has received strong pre-show interest the luxury end of the [watches and jew-
having focused previously on relation- like Wwake and Zo Chicco, whose from his US partners, which include Online, we ellery] category suffered an especially
ships with department stores: We hope smaller-scale jewellery resonates with higher-end departments stores like Bar- sell a big hard blow after a decade of growth.
these stores can help us reach customers younger consumers, in a combination of neys New York. As challenging as these times may be
in many parts of the country that Nei- both aesthetic and price point, she says. People are buying high jewellery or piece every in US jewellery retail, it remains, says
man Marcus and Saks cant reach. We want to be a part of that. very simple, low-priced fine jewellery, month, over Euromonitor, the second strongest jew-
While the company has experi- Some designers are taking the oppo- he argues. The middle ground seems to ellery market after China, which grew
mented with ecommerce for its lower- site approach. Fernando Jorge returns to have plateaued. $30,000 by 9.6 per cent last year to $103bn.
price Tool Chest collection (from
$2,600), Mr Emanuel believes that
online technology still lacks the sophis-
tication to sell higher-end products, at
$50,000 and above. He recognises that
emerging technologies like virtual real-
ity will make selling online easier, but
for now we are committed to more tra-
ditional ways of retailing.
Ms Nicodemus disagrees: Moda Oper-
andis no-returns policy has not
deterred customers from buying expen-
sive pieces. A recent sale included a pair
of $80,000 Martin Katz diamond and
ruby tassel earrings.
Jay Hartington of Marissa Collections
in Florida says lower-price jewellery
may represent the bulk of his stores
online sales but we sell a big piece every
month, something over $30,000. Since
the multi-brand fashion boutique
started selling fine jewellery eight years
ago, the category has grown to more
than 50 per cent of revenue.
One area of growth lately is what Mr
Hartington describes as more fashion-
driven jewellery, priced under $2,000,
by brands such as Dana Rebecca and
Shay Jewelry. The store initially
invested in this category believing it
would work well for ecommerce but
customers in-store also responded. One
recently came in and bought 20 $800
necklaces as office gifts.
Sally Morrison, director of sales and
marketing in the Americas for miner
In response to growing criticism
about this and other potential conflicts
of running a business while having a
role in Washington, Ms Trump gave up
day-to-day control of her company in
January.
Given that she still owns the
company that uses her name, debate
continues about whether there is no
longer a conflict of interest.
As part of our companys
commitment to offering solution-
oriented products at
accessible price points,
we decided to
discontinue the
Ivanka Trump Fine
Jewelry collection,
said Abigail Klem,
who became
president of the
company when Ms
Trump stood down.
The fine jewellery
collection is still advertised
on the company website and its
boutique in Trump Tower remained
open at time of going to press.
Rachel Garrahan
6 FINANCIAL TIMES
Long Read | Watches & Jewellery
N
icholas Paspaley was the teenage son of a Greek
first world war refugee when he started harvest-
ing pearls off the coast of Australia in the 1930s. A
dark-haired, muscular young man, he worked on
a wooden pearl lugger, a small sailing boat, using
rudimentary diving equipment to seek rare natural pearls and
oyster shells for mother-of-pearl. Natural pearls were so valu-
able that it wasnt uncommon for a captain to be murdered
for one and be thrown overboard by the greedy crew, says
Paspaleys granddaughter, Christine Salter.
On a trip in 1932, Paspaley found a beautiful lustrous natu-
ral pearl, hid it and under the pretext of a large storm sent
the boat back to shore. It saved his life: a cyclone soon hit, wip-
ing out hundreds of other boats. He sold the pearl and bought
his own lugger, and 80 years later his familys business, bear-
ing his surname, is Australias largest producer of South Sea
pearls, with the worlds biggest pearling fleet and shops across
the country.
Paspaleys business has endured not untroubled but the
popularity of pearls has not. Available in cheap and profuse
cultivated or even plastic form, they became deeply unfash-
ionable, deemed fuddy-duddy and only suitable for the over-
60s. In the past decade, however, they have had an unexpected
renaissance: from the large South Sea cultured pearls found
off Australias most remote coastline to historic exam-
ples of natural pearls, like La Peregrina, once
owned by Queen Mary I and Elizabeth Taylor and
sold by Christies for $11.8m in 2011. Nature, sci-
ence and industry are playing their part and,
after a century of dullness, the pearl is regain-
ing its lustre.
P
earls have the longest demonstrable
history of any jewellery. Mother-of-pearl
was used as far back as 100,000 years ago,
says jewellery historian Beatriz Chadour-Sampson,
the co-curator of the Victoria and Albert Museums
Pearls exhibition. Roman women were
particularly keen on natural pearls,
which were symbols of beauty,
purity and fertility. The gems
desirability was heightened
because men risked their lives
to hand-collect them and
still do. Elizabeth I wore
pearls lavishly, as a symbol of
her chastity and her king-
doms affluence, according to
Ms Chadour-Sampson. A por-
trait in the Tate Britain gallery
testifies to this a long string hangs
from her waist almost to the floor.
They were the most valuable and prized gem for thousands
of years, says David Warren, senior international jewellery
director at auction house Christies. He pores over The Book of
the Pearl, published in 1908, which records the ancient belief
that pearls were formed by dewdrops falling into clams.
In New York just before Nicholas Paspaley started
his diving adventures in Australia the pearl reached
what in retrospect seems like its high point. In 1917,
Morton Freeman Plant made a deal with jeweller
Pierre Cartier: Plant would give Cartier his Fifth
Avenue mansion in exchange for $100 and a neck-
lace of 128 natural pearls, valued then at $1m. The
house is now Cartiers flagship store.
Gabrielle Coco Chanel is also vital to the story,
says Ms Chadour-Sampson. Chanel wore several
ropes of pearls in varying lengths, and turned them
into haute couture and fast fashion, mixing real pearls
whether natural or cultivated with plastic. Her effort-
less everyday use put them back in womens wardrobes but
ultimately made them unpleasantly ubiquitous.
A
t the turn of the 20th century, Japanese entrepre-
neur Mikimoto Kokichi revolutionised the indus-
try by commercialising cultured pearls. Scarce
natural pearls, retrieved by hand from the sea-
beds around the Gulf, India and Sri Lanka, were
replaced by a scientific endeavour, changing the economics of
the pearl industry.
Today, there are three main species of cultivated saltwater
pearl: the Pinctada fucata, which produces the small, round
Akoya pearls used by jewellery house Mikimoto; the Pinctada
maxima, which can grow up to the size of a dinner plate and
produces the white South Sea pearl, considered the largest and
most lustrous in the industry; and the Pinctada margaritifera,
which produces black Tahitian pearls. Freshwater pearls, by
contrast, are made from mussels, not oysters, and raised in
hatcheries.
Lustre for life
The pearl industry rose and fell in
the 20th century as fashion and
science revolutionised then
destroyed it, says Sarah Shannon.
But why is it now rising again?
By the 1950s, over-harvesting and the use of plastics instead
of mother-of-pearl led to a collapse of the Australian industry,
so the Paspaley family tried to learn from the Japanese exam-
ple. It worked with Japanese partners to master culturing
methods for the Pinctada maxima oyster shell to generate
white South Sea pearls. Today, divers hand-collect oyster
shells from the seabed off Australias north-west coast and
then place a nucleus a ball made from Mississippi River shell
into the oyster. They are then returned to the ocean where
they hang on lines in sheltered bays to protect them from
cyclones. It takes two to three years before a pearl is harvested.
Not all of Paspaleys pearl divers have fared well. In 2012,
Jarrod Hampton died while collecting shells from the seabed.
He surfaced prematurely, crying out in distress before disap-
pearing below the water and being hauled, lifeless, to the boat,
his inquest heard. Three years later, Paspaley was fined
A$60,000 after pleading guilty to failing to provide a safe
workplace, having been unprepared for such an emergency,
according to the WorkSafe agency. At the inquest into Hamp-
tons death in May 2017, the court was told the diver had no
buoyancy control and no inflation device to lift him to the sur-
face. (Paspaley has made these devices mandatory since the
incident. There had been no verdict from the inquest as this
story went to press. The company declined to comment.)
You can only produce high-quality pearls by working in a
pristine marine environment, says Laurent Cartier, a lecturer
at Lausanne university and a researcher into sustainable
pearls and no relation to the jewellery house. Climate
change is having a huge impact on the pearl industry, he
adds. The increased regularity of typhoons and hurricanes can
wipe out whole harvests; ocean acidification from higher car-
bon dioxide levels make it harder for oyster shells to form; and
rising water temperatures can hurt sensitive oyster shells. The
industry has an inherent need to do sustainability so their
business is still around in 50 years.
G
lobal production of cultured saltwater pearls is
now worth $400m, according to veteran pearl
wholesale trader Andy Muller, who is based in
Kobe, Japan; he says the South Sea pearl accounts
for $230m of that. If cultured saltwater pearls are
no more than 5 per cent of what China produces in its fresh-
water, according to Russell Thor, senior industry analyst at
the Gemological Institute of America, this suggests the whole
pearl industry is valued somewhere above $8bn.
Pearly kings and queens
(anticlockwise from top
left): Nicholas Paspaley;
Mikimoto Kokichi; Mary I
and Elizabeth Taylor, both
wearing La Peregrina;
Elizabeth I; Coco Chanel;
Michelle Obama
Gamma-Keystone via Getty Images,
Jim Smeal/Ron Galella Collection, UIG via Getty
Images, Pictorial Press Ltd / Alamy, AFP/
Getty Images
for 15,000. A natural pearl is not man-made, they are freaks
Above: Japans ama divers 1990s would now sell for 100,000, Mr Warren estimates.
plunge for pearls (centre),
including cultivated ones
like the Akoya type (top
left); J Hunter Fijis rare tions. Its very important people understand that.
coloured ones (bottom
left) are also cultivated.
They may end up in a grain pearl La Regente has been sold three times by Christies.
lavalier (top right, by
Paspaley) or a kimono
sash clip (bottom right, by
Mikimoto)
fluctuates a little bit but I think after 100 years of solitude,
ple view pearls. She wore a lot of pearls in big chokers, in a cool,
modern way. I think she probably did a lot for making pearls
Thursday 1 June 2017
The eventual, halting revival of taste for pearls took an
unexpected form. While the earlier fashion had been for gen-
tly graduating strings of pearls, in the 1990s big South Sea cul-
tured pearls were desirable, says Mr Warren of Christies.
This resulted in the ridiculous scenario where a large South
Sea or black Tahitian cultured pearl necklace would sell for
150,000 while a natural pearl one much rarer would sell
of nature, and there arent a lot out there, he says.
Since 2000, however, natural pearls have again assumed
their primacy. A necklace that may have cost 10,000 in the
Cultured pearls will wear out if you use them heavily, but
because of the nacre the substance which makes up the
outer layers of a natural pearl, it wont wear out for genera-
You can follow the rise in interest in pearls at auction. Once
given by Napoleon to his second wife, the drop-shaped 302.68-
(A grain is one-twentieth of a gramme.) In 1987 it went for
$143,000; a year later, once its provenance was confirmed, for
$859,000; and in 2005 it reached $2.5m, making it the most
expensive single pearl sold at auction. (The most expensive
diamond is the Pink Star, sold by Sothebys earlier this year
for $71.2m.)
T
he peak in pearl prices at auction
was 18 months to two years ago, Mr
Warren says. People are being
more selective now, they are buy-
ing better quality. Collectors will
pay a lot for perfection in pearls because it
doesnt really exist. Hong Kong and the Middle
East are the most prominent places for buyers, fol-
lowed by India, he says. Even so, I think prices will stay
high because they are so genuinely rare. Like all markets it
from the early 20th century to the early 21st
century . . . the world has moved on
and realised how precious they are.
Prominent and influential
women wearing pearls have
aided the revival. London jew-
eller Annoushka Ducas says
pearls are among the bestsell-
ers across her 13 boutiques,
including a diamond hoop and
freshwater baroque pearl drop
earring for 1,115. (Baroque
pearls are irregularly shaped.)
[Former US First Lady] Michelle
Obama changed a lot about the way peo-
modern again, says Ms Ducas.
Taste is diversifying beyond traditional colours and being
able to tell a story of provenance is now attractive too. Ms
Ducas finds golden pearls from Iloilo in the Philip-
pines, where they are cultivated with minimal inter-
vention. She buys them directly from the farmer,
not by the bucketload from wholesale dealers
and harvests 8,000 a year, numbering each one in
her collection. There is a real warmth about
golden pearls that is incredibly flattering, Ms
Ducas says.
J Hunter Pearls Fiji, established in 1999, pro-
duces some new, very rare colours, including choc-
olate brown, peacock green, cranberry and pistachio.
It benefits from the unique shell colours of Fijis black-
lipped oyster subspecies, alongside modern hatchery
techniques. Partnering with Savusavu villages has helped
locals to retain their traditional way of life and the natural
environment needed to produce the pearls.
Scientific intervention is allowing more spectacular pearls
to be created. Chinese freshwater producers have grown hol-
low souffl pearls, which come in iridescent colours, as well as
giant fireballs, ripples, Ming pearls and Edisons, all formed
using different nuclei and culturing processes. Some of Chinas
freshwater pearls come in colours, sizes and lustres compara-
ble to South Sea pearls.
Not everyone approves of the Chinese approach. Mr Thor of
the Gemological Institute of America says Chinese pearls are
a cheap alternative because they come from mussels, which
produce pearls much faster than oysters. Its really fakeland
when it comes to pearls, he says.
All cultured pearls are ultimately fake to one degree or
another, beauty augmented by science, but that argument was
settled a century ago by Chanel and other tastemakers. What
has been real is their renaissance.
Thursday 1 June 2017 FINANCIAL TIMES 7

Watches & Jewellery

The
Deconstructed
Watch

Louis Vuitton Tambour Moon

Flying Tourbillon

If you bought a Louis Vuitton watch more than 10 years ago, the
chances are you were more fashionista than horophile. Nowadays,
however, LV watches can be seen on the wrists of serious collectors
and leading industry figures after the brand best known for
selling luxury luggage decided it wanted to compete seriously as
a watchmaker.
This week Louis Vuitton unveils an example of watchmaking
artistry, the Tambour Moon Flying Tourbillon (197,000), which is
good enough to have been awarded the Poinon de Genve
(Geneva Seal), an independently-assessed symbol of quality
available only to watches made within the canton of Geneva.
The Moon in the name refers to the scalloped edge of the
42.5mm diameter case, a new take on Louis Vuittons signature
softly-rounded Tambour design. Only available in platinum, the
watch features an in-house, hand-wound movement that has been
skeletonised to the point that it is largely transparent.
Almost all of the 160 components have been filed, drilled or
filigree-decorated to leave a mechanism in which important parts
are reduced to gossamer-thin frameworks. Even the carriage for the
tourbillon (a device that contains the escapement within a
revolving cage to counteract the effect of gravity on timekeeping
accuracy) has been reduced to something reminiscent of a spiders
web. The winding mechanism is exposed and the mainspring barrel
Keystone/Jean-Christophe Bott

located at the 12 oclock position features the Louis Vuitton

name in fretwork and offers 80 hours of autonomous running.
Lest the owner forget the origins of their watch, each Tambour
Moon Flying Tourbillon will be supplied in a miniature Louis Vuitton
trunk a monogrammed one, of course.
Simon de Burton

My Favourite Pieces Auction expert Paul Maudsley favours vintage watches from under-appreciated houses of the 1940s, says Kate Youde

Forgotten
brands
reappear on
the wrist
P
aul Maudsleys affinity for
the watch trade was evident
from his first purchase. Aged
14, he bought a silver-case
pocket watch in a slight state
of disrepair from an antiques shop in
Whitby, on the Yorkshire coast. I can
remember fitting the hand back on
myself with my dads tweezers. [I]
polished the case and I sold it, he says.
I made double the money that I
bought it for.
Since then, Mr Maudsley, 45, who
joined Phillips auction house as
international specialist and director of
watches two years ago from Bonhams,
reckons he has sold more than 20,000
watches on other peoples behalf. He
has also continued to pursue his love of
horology through a personal collection
with a focus on chronographs.
Alongside his interest in Rolex sports
watches, he is drawn to lesser-known
brands such as Gruen and Doxa. It
doesnt have to be an $11m Patek
Philippe to excite the senses, he says.
He studied ceramics and 3D design at
university and worked in Selfridges
ceramics department, then set up a
business producing handmade ceramic
wall tiles before joining Bonhams in
1998. It is perhaps unsurprising,
therefore, that it is a watchs look, style
and complications, rather than name,
which appeal.
Gruen centre seconds doctors watch
(1941)
While his elder brother was into the
outdoors, Mr Maudsley loved all things
mechanical. When he was 11, his
grandmother gave him a vintage Gruen
(bottom left), a US brand that had its
heyday in the 1930s and 1940s. As well
as telling the time, the watch has a
central seconds hand that allows a
doctor to take a pulse over 60 seconds.
His grandmother had been given the
watch by an American pilot, Ralph,
with whom she was friends during
world war two. This is the watch
which started me off on my journey,
he says.
Doxa (c1945-50)
Mr Maudsley bought his Doxa (bottom,
second right) at the Munich Watch Fair
about seven years ago. Doxa is a Swiss
brand best known for its dive watches.
Also a classic car collector, he
remembers wearing the piece in the pit
lane for the Goodwood Revival vintage
motorsport event a few weeks later.
I love this one to bits, says Mr
Maudsley. To me, its everything a
chronograph should be. This includes
its size the case is 38mm in diameter
and its sought after black dial. He
likes the balance of the watch, which
features a telemeter dial with inner
snail scale tachymeter for measuring
speed over a fixed distance.
Glycine (1940s)
Its salmon pink dial very of the
period attracted Mr Maudsley to
another of his 1940s pieces. Since 1914,
Swiss manufacturer Glycine has made
watches favoured by the military.
He loves the chapter ring (the
circular band on the dial showing the
numerals) of the Glycine (main
picture), which he bought six months meetings for fellow Rolex collectors in include a constant seconds subdial, Handy picks: Maudsley said it was the Carrera
ago from a collector friend, and says it Hong Kong, London and Maastricht. moonphase with calendar and 30- Paul Maudsleys reference 3147. Introduced in 1966, the
is quite unusual in having Roman If you collected violins, you wouldnt minute and 12-hour recording subdials, favourite watches model is unusual because Heuer only
numerals on the dial. The majority of all meet in a restaurant . . . and get all housed in a beautiful brushed and Craig Gibson for the FT
made it for one year with the date at
wristwatches have either batons (hour your violins out, he says. polished case. Collectors have coveted the 12 oclock position (second left).
markers) or Arabic numerals. this piece, Mr Maudsley says, but he A couple of weeks after Mr Maudsley
Most of his watches are vintage as, Mulco (c1955) will not sell it he does not like to part I dont handled the sale of the Haslinger
unlike modern pieces, he finds them It was from another collector, Gerd- with his watches. He makes a better actively go Collection at Bonhams in 2010, the pair
emotive. I think its when an item Rdiger Lang, the founder of auctioneer than client: I wouldnt be met and Mr Haslinger gave him a
was made and how it was made and manufacturer Chronoswiss, that Mr great for an auction house, would I? out seeking Heuer Carerra reference 3147, which
how it was designed, thats the appeal, Maudsley bought his Mulco (bottom watches. I they had not discussed since 2000.
he says. I get thinking [about the] right). The piece features in Mr Langs Heuer Carrera reference 3147 This, to me, marks an achievement
historical context of a watch, so its not bible of chronograph collecting, (1966/67) think, more, in the auction and a friendship really
just something that tells the time. Chronograph Wristwatches: To Stop Time. In 2000, Mr Maudsley befriended the the watches more than anything else, he says. I
Mr Maudsley enjoys the social side of Like most of Mr Maudsleys pieces, the collector Arno Haslinger, who asked dont actively go out seeking watches. I
watch collecting and has organised watch is stainless steel. Its features him about his favourite Heuer. Mr find me think, more, the watches find me.
8 FINANCIAL TIMES Thursday 1 June 2017

Watches & Jewellery

We will lose the industry, as simple as that

Ms Wempe is proud of the fact that she sees, examines and
Interview Kim-Eva Wempe approves every watch model that joins the stock list. She is
The head of the Wempe retail chain not afraid to admit that she bases her decisions on what to
sell more on instinct than on prevailing trends.
explains what is threatening the Perhaps because it is a privately held company, it can
afford to make decisions which cost it money (if only in the
watch world to Simon de Burton short term). Wempe has at least one in-house watchmaker at
every store and says it operates the largest independent

A
wful: the exact word Kim-Eva Wempe, fourth-
generation owner of her familys chain of watch
and jewellery retailers, uses to describe online
watch sales. It treats the pieces solely as a
commodity, she says, sitting in Wempes
Hamburg headquarters. Selling a watch face-to-face and
selling one over the internet is rather like the difference
between simply looking at a piece of art on ones own and
having an expert there who can explain it to you and help
you to see what makes it special.
Ms Wempe is not wholly recalcitrant when it comes to
ecommerce, citing luxury conglomerate Richemonts
purchase of fashion website Net-a-Porter as a positive
example of engagement. In an ideal world, a customer
would always be able to have personal contact but thats
not always possible when someone lives in a country where
there isnt a store just around the corner.
Ecommerce is not something, of course, that could have
been envisaged when Wempe was founded. Master
watchmaker Gerhard Wempe established his first shop in
1878 in the town of Elsfleth, near Bremen. Almost 30 years
later he opened one in Hamburg, quickly adding four more
in the city. The company has occupied its headquarters in a
historic building on Hamburgs Steinstrasse since 1923.
Absorbed into the aviation and navy ministry by the Nazis
in 1939, it regained independence in 1945, with its Hamburg
branches bombed to ruins, amid the destruction of the city,
and the third generations intended heir dead. As Germanys
postwar economic miracle helped to resuscitate the
company, Hellmut Wempe, Kim-Evas father, expanded the
number of its branches around the world to 29 by the time
he handed over control to her.
Ms Wempe had joined the business full-time in 1994 after
deciding university was not for me and built her
knowledge of watch retail while working for Rolex in
Geneva. She says this was an experience which helped her to
learn the importance of long-term commitment over short-
term gain when it comes to establishing customer loyalty
loyalty which can be won, she reiterates, through old-
fashioned, across-the-counter selling.
There is certainly plenty of selling going on: in 2016,
Wempe had revenues of 466m and sold 32,000 watches and
27,000 pieces of jewellery, according to Ms Wempe. But if
things were to go less well, Ms Wempe and her father would
be fully liable. When I turned 40, around 15 years ago,
people asked if I wanted to make Wempe a limited
company, she says. But I said no because I love being
responsible for my decisions and for being certain that
everything we do here is for the long-term.
Family time: Kim-Eva Wempe is Over the past couple of years, Ms Wempe might have
the fourth generation to run the regretted this certainty: watch sales account for 80 per cent
Wempe retail business of Wempes business, while global sales of Swiss watches fell
Petra Stadler from SFr22.2bn ($22.8bn) in 2014 to SFr19.4bn in 2016.
Wempes own watch brand, made in the Saxon town of
Glashtte, will have been affected too: German watch
exports fell 16 per cent in 2016. These falls were reflected in
a 12 per cent drop in Wempes revenues.
watch workshop in Europe from its headquarters, where 28
technicians last year repaired or serviced 35,000 watches.
The company says it can offer a faster turnround than the
manufacturer and, while prices can be slightly higher, parts
are often supplied for free.
The workshop costs money to run, but it doesnt make
any, says Ms Wempe. But if we sell someone a watch I
think we should be willing to repair it. I have always admired
how Rolex builds the service infrastructure in a country
before working on the sales side, because it immediately
creates confidence.
Some Swiss brands are in danger of losing the confidence
of their customers by failing to maintain the quality of their
products as the industry has gone through difficult times, Ms
Wempe believes. The Swiss really need to keep an eye on
the value of being Swiss, she says. I am very afraid that, if
the Swiss industry fails to tell things exactly as they are, then
it will backfire.
What does she mean by this I am very afraid
hint of deceit? It is obvious
that some brands are using that, if the Swiss
more components sourced industry fails to tell
from abroad and they can be
of inferior quality. But there things exactly as
should be no problem if, for they are, then it will
example, a bracelet comes
from overseas and it is backfire
perfect. I would just love it if
the manufacturers could maintain the quality and be totally
open about where components come from. She added that
she also felt some brands were placing too much emphasis
on marketing and not enough on product: If it becomes all
about marketing then we will lose the industry, its as simple
as that.
One industry myth (or wish) Ms Wempe is keen to tackle
is that women are now buying more watches with
mechanical movements. Asian women have been told that
the real value of a watch lies in its mechanism and so they
often buy them but many women who have long,
manicured nails hate the business of having to pull out the
crown of a watch and wind it. Cartier knows that, which is
why the new Panthre has a quartz movement and why it
will probably become one of the brands biggest sellers.
Ms Wempe might be pointed when it comes to online sales,
but her company looks like it is conceding to the times.
When the Financial Times checked Wempes website in late
May, a message said Wempe was revising our online shop
and that it was unavailable. But it added that this was only
for the moment.

The latest from a dainty necklace. Earrings have

taken a playful turn: a bee perches atop
one openwork design in
emerald white, pink or yellow
gold; another features

accessory? a green gemstone-

covered leaf that
appears to have
Nanoparticles been nibbled by a
tiny ravenous
insect.

Switzerland-based Gbelin Gem Lab religious symbols

has introduced a patented emerald
paternity test: Gbelin applies DNA-
based nanoparticles to stones to encode
information about exactly where it was
mined. The nanoparticles are invisible
to optical microscopes and do not affect
how the stone gleams, the company
says. At any point in the emeralds
journey, the nanoparticles can be
decoded to give proof of provenance.
Gbelin, which says this is the first time
nanotechnology has been used in this
way, tested its system at the Kagem
emerald mine in Zambia.
School jewel
Chaumet will display 300 of its jewels,
paintings, drawings and objets dart at
Beijings Palace Museum until July 2. On
display will be items from its archive
and borrowed from the Louvre, the
Palace of Fontainebleau and the
Victoria and Albert Museum. The
exhibition, Imperial Splendours: the Art of
Jewellery Since the 18th Century, was also
marked by a competition for jewellery
students at Londons Central
Saint Martins art and
design school, who
were invited to
create a
contemporary
diadem (a crown or
headband worn as a
symbol of royalty).
From the 60 who
entered, 21-year-old
Scott Armstrong was
chosen as the winner.
His strikingly angular
white and red gold design,
with diamonds, green
tourmalines and garnets, was
inspired by the book The French Formal
Garden.
Holy stones gather
Kate Moss
You wait years for a jeweller/celebrity
collaboration and two come along at
once. Brazilian designer Ara Vartanian
has launched a limited edition capsule
collection with model Kate Moss, a
friend who encouraged him to set up
shop in London. The pair have
illustrated medieval, mythical and
like St Georges
dragon-slaying
sword in 18ct
yellow gold,
amethyst, citrine and
green goldstone.
Meanwhile, Swiss
jeweller Chopard has
been working with
singer Rihanna. A high
jewellery collection that draws on
carnival spirit and the singers
Barbadian upbringing offers delicate
diamond clusters and vibrant florals
(above right); a second collection will be
packed with green cubes and frosted
rose gold.
A Surreal sparkle
Masterpiece London, a fair that sells
across categories in art, antiques and
luxury, will return to the Chelsea
Embankment for its eighth edition from
June 29 to July 5. While its horological
exhibitors have dwindled over the
past couple of years, Boghossian,
Van Cleef & Arpels, Wallace
Chan, Hemmerle and Theo
Fennell will be among the
jewellery brands
present. Verdura
will stage a
miniature
exhibition
that marks its
work with
Salvador Dal,
including the
spinel and star
sapphire Dogwood
brooch from 1943
that starred in one of
the Surrealist painters
works.
Rock gardens
As Dior celebrates its 70th anniversary
this year, everything has come up roses
for Victoire de Castellane, its creative
director of fine jewellery. Christian
Diors childhood home in Granville,
France, and its garden inspired many of
his creations: from rose and lily-of-the-
valley perfumes to his New Look
ensembles of 1947. Now Ms de
Castellane has hung a flower made from
pink quartz decorated with diamonds
Par(ure) for
the course
Bidders will be keeping a close
eye on a pair of Victorian
designs at Christies Important
Jewels sale in London on June 13. First,
there is an 1870 diamond parure
(jewellery set) by Collingwood & Son,
which comes with an estimate of
100,000-150,000. A surprisingly
modern design for its time, it has a tiara
with nine detachable stars mounted in
silver and gold; a necklace with five stars
of its own; and a pair of pear-shaped
diamond pendants. Another parure
(30,000-40,000) comprises a
necklace of pearls set within diamond
flowers, earrings and a pendant
brooch.
The Platinum Lady
The most notable lot in Sothebys Fine
Jewels sale in London on June 7 will be a
1930s Cartier platinum and diamond
brooch worn by Margaret Thatcher on
the day she offered her resignation to
the Queen in 1990, and also the day she
met President Ronald Reagan. The
brooch (left) will go under the hammer
with an estimate of 25,000-35,000,
and proceeds will benefit the Endeavour
Fund, a charity for wounded
servicemen. The organisation is backed
by the Duke and Duchess of Cambridge
and Prince Harry, and is close to the
heart of the seller, a friend of Lady
Thatchers who bought the brooch from
Sothebys in 1986.
Appy talk
After launching an app earlier this year
that visitors to ski resort St Moritz could
ask about places to eat, shop, relax and
stay, jeweller De Grisogono is preparing
versions this summer for Capri and
Porto Cervo. Made for users of Facebook
Messenger and the Telegram messaging
app, the Botler uses natural language
processing and machine learning the
more conversations it has, the smarter it
becomes to answer questions. De
Grisogonos chief executive, Fawaz
Gruosi, wants the app to attract a more
modern clientele by creating a personal
and immersive brand experience.
Camilla Apcar
Thursday 1 June 2017
Staff apathy sends jewellers to brain trainers
Retail Shops are trying
unconventional, even
unproven, techniques
to motivate their staff,
says Rachael Taylor
O
n a gloomy Wednesday
morning in Staines, a town
west of London, two
women sit at a small table
in the plush seating area of
Swag jewellers having a congenial chat.
They laugh and joke as if friends or close
colleagues, which makes the nature of
their relationship all the more surpris-
ing. Jo Henderson, who will submit an
invoice after this and subsequent con-
versations, is a motivational coach
brought in to enthuse Susanne Moschini
and her colleagues at the jewellers to
deftly rein in the cocky, bolster the anx-
ious and reflate the deflated.
Ms Henderson is not the only one
making a living from motivating shop
floor staff. She is part of a wave of train-
ers in the jewellery and watch industry
eschewing flipcharts and sales tran-
scripts in favour of a person-centric
approach, and businesses from inde-
pendent jewellers to international
watch brands are paying for it.
This is becoming a more common sce-
nario across the broader economy: staff
need motivating as their wages lag. UK
inflation outpaced wage growth
between 2008 and 2014, and looks like
it will do so again this year. The UK was
also the only major advanced nation
where wages fell by 1 per cent a year
as its economy expanded between 2007
and 2015, according to the OECD.
While the rise of internet shopping
means consumers who wish to purchase
a watch or jewel no longer have to leave
the house to do so, this is still a small
share of the sector. Online jewellery
shopping will be 10 per cent of the mar-
ket by 2020, forecasts consultancy
McKinsey.
I dont tell them anything they dont
already know, says Ms Henderson, who
before launching JHJ Consultancy spent
more than a decade building her Wave
Jewellers chain. Its about making peo-
ple happy and getting them to fall in love
with their jobs. The bedrock of every
team has to be positivity. Often I get
called in because a store has become a
negative environment, and its about
ripping that down and starting again.
Indeed, Ms Moschini does seemed
buoyed by the session, describing it as
infectious affirmation. As Ms Hender-
son steps out of earshot, she whispers:
She wasnt so much training me as
really reminding me of all the stages we
need to go through. Im not adverse to it,
and there are things I will take away
from this.
For the man footing the bill, Swag
managing director Edward Ferris,
investment in individual sales staff is a
long-term strategy from the late 1990s
when the company brought in a sales
trainer from the US. We started send-
ing people on seminars or one-day
training courses but it wasnt developing
staff properly, he says.
We needed them to get closer to their
normal environment, and have some-
one teach them the science of selling but
bring out their personality. Even the
best salespeople get lazy, and [this train-
ing] is a reminder of all the right words,
body language and buying signals.
Working in the jewellery sector can
have its own charms, says Simon John-
son, director of Marmalade Fine Jewel-
lery in Chiswick and chairman of the
National Association of Jewellers: the
industry tends to attract and retain
more sales professionals because the
potential rewards are greater thanks to
the commission they can make.
Simon
Johnson,
chairman of
the National
Association
of Jewellers
David Parry/FT
FINANCIAL TIMES 9
Watches & Jewellery
Even the best But some staff see this sort of coaching
less positively. Turn the spotlight on an
salespeople get lazy, individual and they start to grow shifty,
and this kind of wondering if they and their position
training is a reminder
in the company are being surrepti-
tiously tested.
of all the right words, While Ms Henderson says she is not
afraid to advise when people should be
body language and moved on, she joins other retail cheer-
buying signals leaders in saying that they are not hired
to sniff out incompetence but to build
confidence.
Back at Swag, Ms Henderson is about
to end her day with Omid Wahedi, a
sharp young sales associate a year into
the job with a passion for watches but
little interest in jewellery sales. At their
last meeting, Ms Henderson had
How to buy a luxury watch focused on building his confidence so
that he could approach shoppers who
Led by Simon de were browsing jewellery in the stores
Burton, this
event will windows.
provide a Keen to demonstrate he is willing, and
comprehensive perhaps buoyed by a Rolex sale earlier
overview of that ensured his weekly target was
todays luxury watch market already in the bag, he turns the plan into
action while waiting for Ms Henderson
18:30 14 June 2017
to finish with another staff member. It
Sofitel London St James,
London seems to have worked: on a day with
live.ft.com/LuxuryWatch scant footfall, he sells a 4,000 engage-
Mrs Motivator: Jo Henderson is brought in by jewellers to inspire and enthuse their staff Jon Super/FT ment ring.
Luxury conglomerate Richemont has
invested in sales coaching, though
because of expense and time constraints
it has focused its resources on senior
retail managers, office-based senior
managers and boutique managers.
Ward Niou, who is learning and devel-
opment director for Richemont in Asia-
Pacific, says coaching will become even
more important for the next generation,
which he describes as having more dif-
ficulties building face-to-face relation-
ships. He adds: Coaching is about
helping individuals become more self-
aware and thereby understand ways to
overcome different obstacles.
It can be like staring into the abyss,
says Lee Lawson, whose luxury sales
training company Lee Lawson Associ-
ates has worked with Pandora, TAG
Heuer and Aurum Holdings (owner of
Mappin & Webb, Goldsmiths and
Watches of Switzerland).
While Mr Lawson started out on the
shop floor of a jeweller and speaks their
language, he is also fluent in the contro-
versial system of neuro-linguistic pro-
gramming (NLP). This school of
thought emerged from California in the
1970s and believes that life experiences
have a direct impact on the way we react
in a situation and the language we use.
By figuring out why sales staff are hold-
ing back or using negative phrases, they
work to break the cycle. In the past, Mr
Lawson claims to have had tangible
results by getting a sales associate to
substitute a single word in their pitch.
Its about understanding what cre-
ates patterns and triggers certain
behaviour, says Mr Lawson. We take
all the structure out and it becomes sim-
ply about communication. You have to
raise their awareness, and to do that
they do have to tap into their emotions.
N
ot everyone holds with
NLP: it has been discredited
by some mainstream scien-
tists. Christian Jarrett, edi-
tor of the British Psycholog-
ical Societys Research Digest, has writ-
ten: It is a serious error to think that
NLP is grounded in scientific findings in
either psychology or neuroscience. He
goes on to describe it as full of false
claims that sound scientific-ish.
Marmalades Mr Johnson is aware of
the criticisms of NLP, yet describes Mr
Lawson, whom he has hired to train
staff, as a Jedi and is himself an enthu-
siast for NLP, calling it a kind of magic.
It looks weird and sounds weird, and if
you treat it like a lifestyle it is potentially
cultish, but its powerful.
Swags Mr Ferris has also studied NLP,
and still uses it with managers, but had
to rein it back, as it got a bit heavy. He
explains: Its very exciting but also
mind-manipulating, look into my eyes
sort of stuff, and people find it hard to
get on board.
You can get into looking for custom-
ers eye movements, pace of voice, seat-
ing position, how they interact with
their partner, and before you know it
youre off in cloud-cuckoo land and
youve forgotten youre trying
to sell a diamond ring.
Nigel Neill of Aura Consul-
tancy uses a more struc-
tured approach to sales
training his bible is The
Leadership Challenge by
Jim Kouzes and Barry
Posner. His encourage-
ment of those under his
watch to reflect and
address suppressed
feelings to boost pro-
ductivity carries a hint
of the mindfulness
zeitgeist. People do
get emotional and can
find coaching liberat-
ing, confirming, fun,
challenging and some-
times a good way of reflect-
ing out loud.
10 FINANCIAL TIMES Thursday 1 June 2017