Business Arena magazine nr. 94 - Most Admired Business Women Awards 2020

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LUXURY & LIFESTYLE

TOP BRAND pages 38 - 70

MOST ADMIRED BUSINESS

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With its strong tradition in recognizing and encouraging business excellence, achievements and overall success, Business Arena celebrates innovation, resourcefulness, perseverance and a culture of responsible risk-taking demonstrated by ladies that make a difference in the economy and contribute to the country's general development. pages 4 - 9

SHAKEN BUT NOT STIRRED Coronavirus lockdowns and subsequent tourism shutdown in key markets have given luxury industry employees and investors major headaches, but experts see the current hurdles as an opportunity for businesses to re-invent themselves and adapt to a changing world.

Meanwhile, please turn to our Luxury Section and see what's new, as the Destination Moon was industry has previously crafted in limited kept its allure editions of 50 pieces each in despite the black, blue, green or palladium challenges. and now a fifth edition in red!

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Inheriting a long tradition in the area of business events, Business Arena Magazine continues to diversify and expand its programs, covering a wider range of subjects, investors, cities and business sectors.

Business Arena is constantly adjusting its business event portfolio to meet market demand, while its long-established award galas and business roundtables continue to represent the highlights of the business year.

EDITORIAL

by

Cristian Cojanu

END-OF-SUMMER STATUS REPORT Romania's gross domestic product is expected to shrink by 3.9% in 2020 to 1.058 trillion lei (around 219 billion euro), according to the National Prognosis Commission (CNP), whose experts remain optimistic for 2021, as they expect the economy to return to a 4.9% growth. In turn, this year's consolidated budget deficit is seen going up to 8.6% of GDP. Even so, a majority of local company managers forecast growth in construction and retail sectors, while manufacturing and services sectors are expected to see a relative stability in the next three months, according to a recent business sentiment survey released by the National Institute of Statistics (INS).

In turn, a McKinsey report claims that over 40% of financial decision makers in Romania think the economy is weak, with a similar percentage expecting further weakening in the next three months.

On a similar note, over 50% of consumers consider their present financial situation to be at least somewhat weak, and only 20% see it improving in the next months. "While almost half of consumers have experienced reduction in income and savings, less than a third have been able to reduce household spending.

Lastly, 60% of consumers are

concerned about their job security, with a similar share having less than four months of savings," the report indicates.

In addition, the McKinsey report has found that only 20% of consumers believe their bank exceeded their expectations during the coronavirus crisis, as they expect more support from banks in terms of convenient credit terms and improved digital services.

Looking at the broader macroeconomic picture, Fitch Ratings has announced that the Romanian government's proposed 14% pension hike would reduce the challenge of consolidating public finances compared with the previously budgeted 40% increase. "However, the eventual increase may depend on complex political calculations amid looming elections, and a large pension hike remains a risk to our baseline fiscal forecasts," Fitch said, and added: "Romanian politics has been volatile in recent years, and the battle over the pension increase comes ahead of local elections due on 27 September and national legislative elections due

by March 2021."

Find more opinions and predictions about domestic and global economic and geopolitical issues in this edition of Business Arena.

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OPINION

CENTRAL BANKS HAVE PREVAILED:

FINANCIAL MARKETS ARE IN THE DARK Some cities around the globe can offer a unique experience when it comes to dining out called “Dinner in the dark”. This is basically having dinner in a pitch black room which completely deprives you of using what is probably the most important sense, namely sight.

BY RADU CR|CIUN

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RADU CRACIUN

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Whatever their initial intention, confusion and stress, clumsiness and at times acting by instinct are always some of the feelings that participants have in various degrees.

This is the perfect comparison for the situation which financial market investors are in.

Over the years, financial markets have been treated as the barometer of economic changes.

For a long time sovereign bond markets have mirrored inflationary expectations. The deeper the gap between long-term and short-term yields, the stronger the fears of higher inflation.

Similarly, an inverted yield curve may have signaled concerns about a possible recession.

THE BROKEN BAROMETER Whatever the case, though, the golden rule was that, exceptional circumstances aside, investors are bound to look for yields that exceed inflation and reflect the issuer’s risk profile: higher risks meant higher returns.

Similarly, capital markets provided clues as to where the economy was headed, based on microeconomics. As an economy is made up of a multitude of puzzle pieces represented by businesses, changes to their financial variables would invariably translate into an adjusted outlook for the entire economy. Corporate financial results were among the first to indicate the possibility of recession or economic recovery.

Moreover, the two main financial markets presented the extremely useful benefit of diversification, as stock prices and good-quality bond prices moved in opposite directions. Negative economic outlooks were dealt with by investors reallocating assets, from high to low risks. In other words, the

share of bonds in the portfolio was rising to the detriment of shares, a process reversed during good economic times.

THE PRINTER AND ITS VICTIMS We are now in a completely new paradigm, where the barometer role of financial markets was shattered by central banks’ policy of unrestricted money printing.

It all started against the backdrop of the 2008 financial crisis. Terrified by the prospect of an economic crash in the aftermath of a perfect storm formed by overlapping economic and financial crises, central banks put all biases aside.

They closed the economics textbooks and went on to buy their own governments’ debt by creating money, metaphorically called “money printing”.

The approach was meant to rescue the financial system by preventing a total freeze, but also to restart the economy by bringing interest rates back to lower levels, i.e. by promoting a cheap money policy. The initial purpose was met, but soon enough the side effects started to emerge.

The collapse in interest rates has led to the unprecedented situation where a unit of currency today shas the same value as a unit of currency in one or five years’ time. Money collected five or ten years later has the same value as money collected today...

At the same time, the inverse correlation between bonds and shares was wiped out. The two markets ended up moving in the same direction as a market flush with cash has prompted investors to buy piles of shares out of a simple wish to put their money somewhere. Thus, the historical advantage of diversification was gone.

That pushed financial markets into more unstable territory fuelled by all classes of assets moving in the same direction. That, in turn, increased investment portfolio volatility. Bonds were no longer an

effective hedge against assets. More volatile, therefore riskier, portfolios, increased investor anxiety and their reliance on central bank money injections. During the 2008 crisis and afterwards, any news relating to stopping “quantitative easing” was followed by stock market drops.

Financial markets went into withdrawal as they became addicted on valueless money. That in turn, had central banks trapped in their own unorthodox practices. Afraid of a possible stock market collapse, they reshaped their monetary policies based on investor expectations to their satisfaction. The policy of valueless money went on for years.

SOCIAL POLARIZATION - OR WHO GETS THE FRESHLY PRINTED MONEY But it did not benefit everyone. This takes us to the next side effect of quantitative easing: the financial polarization of the population.

The money that central banks printed did not reach everyone, only a small minority of people holding economic and financial assets. As a result, the cash pumped into the markets failed to translate into a large-scale increase in consumption, as a lack of inflationary pressure stands proof. It was found in inflated financial assets and real estate. This is why it only profited a minority who saw their wealth grow even more compared to the rest of the population. Indeed, polarization only extended globally after the crisis.

The bad news is that waking up from the valueless money stupor will not happen any time soon.

The pandemic has pushed central banks to new heights of despair for fear of a sudden economic crash caused by the intentional economic shutdown triggered by measures to protect the general public. The interventions after the 2008 crisis pale in comparison with the amount of money created on this occasion.

3.7 trillion USD was created in 2020 alone to finance public debt.

CENTRAL BANKS - THE ELEPHANT IN THE MARKET ECONOMY’S CHINA SHOP Clearly, unlike 2008, the need to finance government debt in affected countries takes center stage in 2020. Central banks seem willing to go along with this king of limitless funding of government spending which makes them a party to political decisions, for what is probably an unacceptably long period of time. The separation between politics and monetary policy seems to be vanishing into thin air, a fact that is eroding central banks’ independent decision-making. As The Economist noted “.. today interest rates, so close

to zero, seem impotent and the monarchs who run the world’s central banks are becoming rather like servants working as the government’s debtmanagement arm.” National interests are mistaken for political interests which lead to monetary policies which may either be borderline populist or fuel populism.

Central banks are supplying money that governments decide who receives it and who does not, which industries are rescued or subsidized although they have no future, which employees continue to stay home on printed money and which are left without income.

Valueless money is, in fact, creating a huge moral hazard. Once money is free, everyone feels entitled to get it. The prospect of going under due to poor cash allocation by the government or private sector is gone because, isn’t it, more money will be printed to replace it. In the meantime, the return received by investors for high-risk investments no longer matches their risks. At the same time, the massive presence of central banks on the sovereign and corporate bond market turns them into “mammoth marketmakers’, as The Economist dubs them and, I may add, any elephant in a china shop will eventually smash up everything around: the advantage of asset class diversification, interest rate and asset price signals, the risk/return correlation, and finally any other “lights” to plunge financial markets into complete darkness.

Confused and without decades-old benchmarks, they are left with only one choice: go with the herd. Mob mentality pushes the prices of all assets up and leads to the absurd situation where bond and gold prices go up at the same time.

Inflation cannot simultaneously go up and down.

SOCIALISM FOR THE RICH AND POWERFUL At the end of the day, the big issue is that economies are losing their creative destruction ability manifest during times of recession. It is a process of economic renewal whereby unprofitable businesses go under and those which correctly identify opportunities thrive.

For fear of economic cycles, zero cost money end up artificially keeping alive companies that should no longer exist. This is bound to thwart capital allocation and we are heading towards a new type of socialism.

Ruchir Sharma, Chief Global Strategist at Morgan Stanley Investment Management, declared in Wall Street Journal: “The rising culture of government dependence is, in fact, a form of socialism—for the rich and powerful.”

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MOST ADMIRED BUSINESS

WOMEN

AGala WARDS 2020

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* * * * * * * Admire the Value

Women celebrate success Business leaders entrepreneurs and high-level professionals got together to celebrate the ladies that make a difference in various sectors of the economy and contribute to the country's general development. The 2020 edition of Business Arena's Most Admired Business Women Awards Gala recognized women's success and achievements in the workplace, their creativity and leadership and their vital contribution to the success of business and banking activities throughout Romania.

And while the Covid-19 pandemic has hit the business world on an unprecedented scale, experts have suggested that women's contribution to the business recovery effort is going to be essential. In Grant Thornton's Women in Business 2020 report, Francesca Lagerberg, global leader - network capabilities for Grant Thornton International Ltd., emphasizes that diversity of thinking at senior management level is extremely important for business success.

"Why does having more women in senior management matter? It matters because of the sheer value you get from diversity of thinking. If you have a group of people leading a firm who come from a similar background, similar culture, the same gender, you're missing something in the market. You need diversity to look at the world through a broader lens that is also likely to be more reflective of the clients you have and the issues and opportunities they face," said Francesca Lagerberg.

The same report notes that among nearly 5,000 businesses surveyed in the International Business Report (IBR) research, the proportion of women in senior management is the same as the year before. "The lack of movement in the proportion of senior women between 2019 and 2020 does not necessarily reflect a failure of businesses to take positive action in this area. Last year's uplift rode the wave of attention generated by the #MeToo movement and gender pay gap reporting, and numbers have since steadied," the report said. It added: "Another factor in the leveling off could be that the 'easy' pro-

motions have been made. Research from McKinsey found that the biggest obstacle women face on the path to senior leadership is at the first step up to manager. For every 100 men promoted and hired to manager, only 72 women are promoted and hired. This 'broken rung' results in more women getting stuck at entry level. Unsurprisingly, men end up holding 62% of manager-level positions, while women hold just 38%."

The report also shows that "ensuring equal access to developmental work opportunities and creating an inclusive culture are the most common initiatives aimed at improving gender diversity, both at 34%. Meanwhile, offering unconscious bias training is the least common initiative. All actions have increased in popularity since 2019, with linking senior management reward to progress on gender diversity rising the most in the last year, climbing by five percentage points.

Nonetheless, 22% of businesses globally still take no action to ensure gender diversity."

Coming back to our awards gala, this year's event was organized in partnership with CEC Bank, OTP Bank, Garanti BBVA, Idea Bank Romania, Apulum Porcelain Factory, Ecooking, Romaqua Group Borsec, Via Viticola, Chocoland, World Class Romania, Kanal D, Trends by Adina Buzatu, Aida Events, Casa Anke, Ramada Bucharest Parc Hotel.

Aida Events, a young cultural production company, provided the musical interludes, the fashion presentation was offered by Trends by Adina Buzatu, while the event was moderated by Andi Alexandru Antemia.

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Winners 2020 Most Admired Business Woman of the Year

MIOARA POPESCU, CEO, IDEA BANK I would like to dedicate this award to all the teams that I have worked in throughout the years. I have learned something from everyone

place at the Vitality Club and involved an indoor triathlon competition. Vitality Club members who signed up for the competition made a donation to the Renasterea Foundation.

I hope we can do this campaign again in the future, and, why not, launch other CSR campaigns.

Performing Arts Personality of the Year

LAMIA BELIGAN and I continue to learn from every work colleague, from every business partner. I would also like to dedicate this award to my family, who have supported me every step of the way.

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CSR Professional of the Year

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SILVIA BALAN, PR MANAGER, RAMADA BUCHAREST PARC & RAMADA PLAZA BUCHAREST HOTEL The first CSR campaign I organized was a labor of love in which I got involved both professionally and emotionally. The event took

I love my job. Everything that life gives me, joy, pain, accomplishments or failures, I give back to my profession. This profession has helped me

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to discover myself, to discover the others, to know and love the others, to understand the world, to understand my purpose in this world.

I believe that a world without theater is a dead world. We are going through very difficult times and performing arts have been severely affected.

I sincerely hope that everything returns to normal and theaters reopen for the public, spreading beauty and joy.

Fashion Industry Personality of the Year

ADINA BUZATU, TRENDS BY ADINA BUZATU This event tonight proves that a sense of normality is possible even during these crazy times.

It has given me an extraordinary state of mind

competition with men. We all work together on a better world and a successful present and future.

Communication Executive of the Year

MIHAELA DRAGHICI, PR DIRECTOR, ROMAQUA GROUP BORSEC Tonight we celebrate professional success, but something else caught my attention. I would like

and I realized that things will work fine, even with a mask.

Most Dynamic Approach to Business Growth

DORA MORHAN, GENERAL MANAGER, PLEIADA BOUTIQUE HOTEL It is a great joy for me to see so many beautiful, smart, determined women who do not feel in

to congratulate Mrs. Mioara Popescu for her 37th wedding anniversary. It seems fitting in times like these. Congratulations to all of you, you are extraordinary women.

going to see the discrepancies and everything is going to turn against you. Creativity and innovation are the mother and the father of marketing, and I never repeat a successful recipe from one product to the next.

Sports Personality of the Year

Leading Banking Executive

MADALINA BERES

LUMINITA CIOACA, DEPUTY GENERAL MANAGER, GARANTI BBVA It is an extraordinary evening, in the presence of so many remarkable ladies in a very pleasant

There is nothing better than being appreciated for all your efforts.

Most Creative Leadership

ANDREEA LICA, MARKETING MANAGER, VIA VITICOLA

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With 20 years of marketing experience, I must say that I have only been able to promote products in which I believe. The coating that marketing offers to the promoted product must be as close to reality as possible, otherwise you're running a big risk. Sooner or later, consumers are

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atmosphere. After all this time spent in isolation, it gives me great pleasure to be here tonight.

Excellence in Media Sales

STEFANIA MITRACHE, DEPUTY SALES DIRECTOR, KANAL D

Cosmin Cernat accepting the award on behalf of Stefania Mitrache I have a great appreciation for the people who work in sales, they really do an extraordinary job, which is not very visible in the TV broadcasting industry. This is what Stefania does, and I'm sincerely sorry that she is not here tonight, but the award will be handed to her and the entire department at Kanal D.

Most Admired Woman in Banking

can work miracles. There are many examples of women-led countries that have responded better against the coronavirus. This award also gives me the responsibility to support all my female colleagues and women I come into contact with, especially those less fortunate than me. I have had access to education and I have been lucky to work with beautiful people, who always appreciate the results, never judging by appearances. I am sure that with proper education and with a lot of work anyone can achieve anything.

ROXANA MARIA HIDAN,

Model of Excellence

VICE PRESIDENT, DEPUTY CEO, RETAIL

MIHAELA POPA,

DIVISION, OTP BANK ROMANIA

FIRST VICE PRESIDENT, CEC BANK

I am happy to be a part of an organization that appreciates women and promotes them to the

table where important decisions are made. The current health crisis has shown that women

I want to share this award with my colleagues because, as you know very well, a successful manager always has a very strong team behind him or her.

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INTERVIEW

HIT REFRESH! The strength of the pack is the wolf, the strength of the wolf is the pack.

There is much to learn from what the animal kingdom exhibits and more so in time of crisis. Thought the association with wolves might seem striking and out of the box, it is just a different approach to how coordinated and strategically made moves happen in difficult times. It is, probably, the more natural way to mirrored by the chivalrous musketeers’ motto “one for all and all for one”.

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So, I shall begin with the end, because of the glued team, accepting and evolving in our roles and responsibilities, restlessly learning and developing our communication skills, understanding the need to lend your leader ear to your team and collaborate with them and all other internal and external stakeholders, got us here, with a strong, sustainable position and voice in the card payments market.

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One day in the life of a card manager, how does it look like?

There is no day like the other and I am, indeed, a lucky man because my business life is quite intense: meetings with customers and service providers, internal conferences, participation in various projects, one to one discussions with teammates. All this in a structured framework, but in different doses and ingredients every day.

What about your life in general? If you were a book, what title would you have?

Hit Refresh. In fact, this is the title of a real book, written by the CEO of Microsoft, Satya Nadella, a very inspiring book about individual change and the technology that impacts all of our lives.

Why did you choose this path? Cards?

The good and the bad of this job?

After 12 years in Alpha Bank Romania I still feel like on the first day, from the first hour of the morning I feel the challenge of new projects and the importance of a close relationship with customers, the way they relate to the products and services offered, what we can learn from them about their needs. It helps when planning new projects, even if we are on a beaten path, we dare to discover the new in the old, innovate, push forward, and use new available tools offered by technology.

All this time, my main motivation was that feeling that I bring my contribution, that I achieve things that can make a difference in the environment in which I carry out my activity.

If we act today, tomorrow shall be different.

Did the pandemic have any influence on the digital transformation initiatives?

The lock-down made a significant shift for con-

sumer’s appetite to digital and online channels and, therefore also pushed the fast forward button in implementing our digital initiatives. All this period we were close to our customers’ needs, the same way they are there for us. Though their appetite for remote transactions was showing a huge change at the end of Q1, digital commerce had significant growth rates during the full lock-down period and after (over 80% in online). In addition, also the face-to-face transactions offered good recovery signs in May and especially in June, once the economy started to open.

Your job in one sentence?

Always look beyond what meets the eye, responsibly, and apply sustainable innovation in everything you do.

Leader or manager?

I see myself neither a leader, nor a manager; first of all, I prefer to be perceived as a good colleague. I have often been put in a position to coordinate teams with much more experience than mine and the most important aspect was to connect with each of these people in an honest manner, to establish a relationship based on mutual trust. In principle, I focus on the positive aspects of people and try to build a close relationship with each person. It takes a lot of time and effort, small and constant steps.

Coming back to digital, the very subject of these days… Digitization, Digitalization, and Digital Transformation: What’s the Difference?

Basically, Digitization, Digitalization, and Digital Transformation are all means in order to adapt to the accelerated pace of change of the society, to the digital world that puts its mark on both consumer behavior and companies, being the engine of innovation.

However, while Digitization refers to the transformation of an existing manual/ paper based information (nondigital/analog) into an into a digital format, which produces process and workflows automation, in order to streamline the result, Digitalization covers a wider area of business. Digitalization represents the change, and not just at the system of record level, but at the business operations and models level, to maximize the rev-

enue and to improve processes. Digital Transformation needs both Digitization and Digitalization, meaning the global change produced within the company’s strategy (covering all business levels) by identifying and using new ways for the company to respond and manage change effectively.

How do you see the transformation from transactional at the counter to Self Service POS in ABR case?

How was your experience?

We have developed the self-service payment technology in Alpha Bank Romania two years ago and it was from the start a growth engine for our acquiring business.

Depending on the sector in which it is utilized, the self-service equipment is very efficient. Less human staff required to serve customers, reduced waiting times for customers, improved customer experience by giving them control are just some of the advantages of the implementation of a self-service order &payment system.

ABR was one of the pioneers in the local market introducing the first kiosk payment at KFC, which is now widely used at even and replicated in other use cases.

Unattended technology can be very capable when is us used in simple activities where the customers have no requirement for consultancy or support.

How did the clients perceive this?

From a customer perspective is a significant improvement in terms of shopping experience. They are given in control of the process; they can select the products or services and they perform the payments without handling the card to a cashier. Interesting is also the merchant perspective: analyzing the transaction kiosk vs counter in a fast food restaurant we even found out that that tickets are higher at self-serve kiosks than at the counters.

What other operations are planned to be moved to SS ATM? Currently we offer at our ATM 24/7 banking the deposit operation in 3 currencies (RON, EUR and USD) in the own account and in other account. At the same time, we are developing the credit card payment functionality and we are aiming to also activate foreign exchange, utility payments, prepaid top-up, and money transfer in the near future.

What can you tell us more about the latest available card facilities you implemented? The Alpha PhonePos, for example or Alpha Pay Online?

We are committed to consolidate our position in the sector of payments, but also in line with the global trend, to respond to the existing high demand for digital payments solutions.

The Bank’s innovations included new local launches. such as the partnership with Symphopay Fintech for the implementation of a “POS sharing” solution accessible at kiosks in eMAG showrooms, the successful implementation of the New Instant Money Back solution (1st in Europe) on the online platforms eMag and Fashion Days,

the certification of the new POS terminals “Verifone Engage” in partnership with Printec Romania, the cards enrollment in multiple wallets (Apple Pay, Garmin Pay and Fitbit Pay), in parallel with the expansion of self-service banking technology by activating the cash deposit option at the new ATMs of Alpha Bank Romania.

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VIOREL VASILE DIRECTOR, CARDS DIVISION ALPHA BANK ROMANIA Recently, we have announced also the launch of two new applications: Alpha PhonePOS – an application that turns a mobile phone into a contactless POS and Alpha Pay Online – the new app for more secure and intelligent payments on the Internet using the biometric authentication.

A remarkable project in the local market is also the instant payment project and Alpha Bank Romania completed the certification for both MasterCard Money Send and VISA Direct programs, and launched several use cases, very appreciated in the market.

OPINION

EUROPEAN MONEY AND THE MACROECONOMIC ISSUE This article was written under the pressure of the epidemic. To paraphrase an old saying, the country is burning and some are doing macroeconomic analysis.

But life cannot function without the economy, and governments make decisions based on quantitative assessments and other conditions. Just how much figures matter was clearly shown at the latest European Council dedicated to the EU budget and the Economic Recovery Plan.

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BY DANIEL D|IANU

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This article was written under the pressure of the epidemic. To paraphrase an old saying, the country is burning and some are doing macroeconomic analysis. But life cannot function without the economy, and governments make decisions based on quantitative assessments and other conditions. Just how much figures matter was clearly shown at the latest European Council dedicated to the EU budget and the Economic Recovery Plan.

In the coming months, the European institutions must finalize the EU Budget for the financial year 2021-2027 and the Recovery Plan; the two will probably reach a combined value of 1,850 billion euros, of which Romania will be allocated some 80 billion euros. If we deduct the contribution to the EU budget, the country could still get some 60 billion euros, with 16.7 billion representing ultra-cheap loans - which benefit from the EU's rating (with Germany as the main factor). Those commenting on the loans should note Romania's current cost of financing and loan maturities. Net grants will amount to 42-43 billion euros, of which 16.8 billion will come from the Recovery Plan.

Seventy percent of the money in this plan should be used between 2021-2023, with the possibility that 10% could be drawn in advance in 2020 (according to statements by Commissioner Paolo Gentiloni).

How much could have been obtained and under what conditions dominates the domestic debate, just like everywhere else in the EU. What really matters is how we can make better use of the European resources, which, excluding our contribution to the common budget, accounts for over 30% of Romania's current

GDP in total. Based on the current GDP figure, the funding would reach more than 4% per year on average between 2021-2027.

Hypothetically, if we had an average annual GDP growth of, say, 3.6%, the European money would average 3.2% of GDP per year. If the fund absorption rate reached 80%, we would have additional budget resources of around 2.6% of GDP on average. In order to have an image of the weight of public sector investment (gross capital formation), we should add investments from own resources, which in recent years reached 2.5-3% of GDP, but they may increase in the following years in a positive scenario. In addition, the economy would also benefit from private investments. But we should keep in mind that some of the European funds represent agricultural subsidies, which do not automatically turn into investments. These figures are a rough guide, especially as we operate with average levels and the absorption is not uniform over time.

There is a benefit of European resources that is little mentioned in the public debate and that deserves attention - I mean the macroeconomic issue.

Romania started the fight against Covid-19 with a major macroeconomic handicap: a budget deficit (based on the European ESA standard) of 4.3% of GDP in 2019, while its structural deficit (over 4% of GDP in 2019) and primary deficit (over 3% of GDP in 2019) are among the widest in the EU. In April 2020, despite the outbreak of the pandemic and the (temporary) suspension of fiscal regulations in the EU, the European Commission launched the excessive deficit procedure (EDP). In 2009, during the financial crisis, almost all EU countries were in under EDP procedure, now only Romania. While

the large budget deficit increases in other EU countries are caused by the effects of the pandemic, around half of Romania's estimated 2020 budget deficit is related to its structural budget deficit. Any permanent spending increases would only increase that ratio. It should be noted that the current account deficit shows a deterioration in financing, with increasing debt flows, largely denominated in foreign currency, coming with attached risks.

And with the current account deficit (4.6% of GDP in 2019) we have the most unfavorable situation in the region in recent years.

The big macroeconomic challenge in the coming years is the correction of the budget deficit and macroeconomic imbalance.

DANIEL DÄ‚IANU, PRESIDENT OF THE FISCAL COUNCIL

With a 10% increase in the pension point value, as suggested by the Finance Ministry, the budget deficit would probably reach around 8% in 2020, and it would not decrease significantly in 2021, even with a GDP growth in excess of 4%.

A key question is whether the markets will accept budget deficits of over 7%, or even 6%, for several years in a row, given the size of the structural deficit. From that perspective, a distinction must be made between permanent expenditures and one-off expenditures (caused by the need to mitigate the effects of the epidemic). If 2021 economic recovery is more difficult than expected and the economic activity needs support, it is likely that a correction on the structural component of the total deficit may be dissociated from the non-permanent expenditure side at European level.

This correction involves a multiyear program

to bring the deficit close to 3% of GDP. The actual combination between adjusting expenditures and increasing fiscal / budgetary revenues is subject to debate. However, the impact will be significant, both on demand and supply. And we see why European funds have a key role to play in facilitating correction. Not only can they support aggregate demand through additional government spending of, say, 2-2.5% of annual GDP (excluding the contribution to the EU budget), but they also sustain domestic production. European money could also help finance the balance of payments.

The reasoning must be nuanced, however, given that the absorption of European money has been an ongoing process in recent years.

A 15% state-budget cofinancing is needed, but the accessing rules have been relaxed this year and the conditions are likely to remain unchanged next year.

It is therefore vital that the absorption of European funds be as high as possible in years when we should make macroeconomic corrections. It should be noted that the resources in the Recovery Plan should be used mainly during 2021-2023. Past experience demands caution, but we must perform as well as possible in the new financial year.

The macroeconomic issue is very complicated, although the public debt is still reasonable about 35% of GDP in 2019 and probably 4344% in 2020. Poland, for example, has announced a deficit of 7-8% of GDP this year, which is mainly generated by the support given to the economy (budget balance was announced before the pandemic). Hungary has forecast a budget deficit below that of Poland in 2020, mainly under the influence of the pandemic. Both countries, as well as the Czech Republic, have much more solid external balance positions and more robust economies.

Efforts to return to lower deficits in the EU will not be delayed, even if countries with good ratings can capitalize longer on the monetary conditions generated by unconventional policies and the decline in the natural interest rate

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in recent decades. Romania cannot even use QE programs as countries with strong economies do, or where reserve currency is issued.

We must soon find an answer to how to make macroeconomic correction in Romania.

That is why the European money counts in the macro equation.

Those who believe that the depreciation of the leu exchange rate is the key to macroeconomic correction should consider several aspects. A controlled depreciation can help, while a brutal one can destabilize the economy - including a potential flight from the currency. We should also consider inflationary expectations, balance sheet effects for households and companies, degree of euroization, etc. In Poland and Hungary, in the Czech Republic, the exchange rate (depreciation) issue is not obsessive. The point is that, in Romania, the correction of the aggregate demand, of the external imbalance, cannot be achieved through currency depreciation alone; an adjustment of the budget deficit is needed, even a gradual one. Note that the exchange rate-based adjustment depends on the share of exportable goods and services that can replace imports (tradables) in GDP, the elasticities of exports and imports in relation to exchange rate variation (under the MarshallLerner condition) - jointly they must be significantly above 1. The insertion in the European production chains and the added value produced at home are also to be considered.

The structural issue regarding the use of European funds is not the topic of this article.

But the aspects that facilitate a balanced and sustainable development are worth mentioning. If it supports structural reforms and better public sector governance, the development of competitive advantages, the European money will increase potential GDP, which is also supported by the development of basic infrastructure, agriculture (agri-food industry), land use planning and environment protection. Much better financed public health and education, with better infrastructure, help the robustness of the economy and society.

New epidemic episodes can still occur and climate change can be devastating if we do not take action in time, if we do not have a robust public budget, with adequate fiscal space to help cushion the shocks. Therefore, the problem of increasing budget revenues is not an obsession, but it originates in our precarious public budget (with wage and social

assistance expenditures eating up a large chunk of fiscal revenues) and the huge challenges on the horizon. No matter how hard we try to rationalize (reduce) budget expenditures and increase their efficiency, budget revenues still have to grow. There are neighboring countries (Bulgaria, Poland, Georgia) where they have managed to increase tax revenues through serious programs and political will; the thesis that low tax revenues are a structural reality is incorrect.

It is worth mentioning that in many countries (in Europe) there is a discussion about taxation systems in order to give fiscal policies a greater role in macroeconomic stabilization; it is about automatic stabilizers, fiscal rules (which should be less pro-cyclical), combating tax evasion and arbitrage of fiscal jurisdiction. International institutions (IMF, OECD, etc.) and the European Commission make analyses on that subject. The EU aims to increase the EU budget's own revenues through common taxes. It is time to open our eyes and see reality as it is.

Real economic systems, even the most technologically advanced, have become more fragile for various reasons in recent years higher public and private debt, more asymmetric distribution of income, increased propensity for short-term investments (speculative), health risks and climate change risks, other unconventional (IT-related) dangers, etc.

Financial systems are more fragile despite better bank capitalization, because systemic risks have increased (due to interconnection and exposure to over-indebted entities) and proliferated in non-banking entities as well.

The fragility of economies / societies, a paradox of our times in a way (because of the assumption that technological progress leads to more resilience), forces us to rethink aspects of public and private governance, individual and group conduct, relationship with nature, the state of public and private budgets. Romania's mission is even more complicated, as we have to make large-scale macroeconomic corrections and solve fundamental structural problems.

Instead of complaining about our lack of expertise and weak institutions, let's try to improve and be more responsible in the use of European funds and public policies, and in our general behavior (following individual and public protection rules in the fight against the epidemic).

LIMITS AND PITFALLS OF QE IN EMERGING MARKETS The pandemic caused by COVID-19 has shocked the whole world and is another huge blow to the world economy after the financial crisis that erupted in 2008. A sanitary crisis is interweaving with a very severe economic and social crisis. Although most economies seem to have got out of the deep hole caused by The Shutdown, a steady recovery is likely to be difficult and painful, surrounded by big uncertainties and contradictory effects. Much of economic activity is badly hit, not a few companies may not be able to survive.

BY DANIEL D|IANU In advanced economies (AEs), governments and central banks have unleashed massive support programs. In the US, for instance, the fiscal and monetary support goes beyond that seen during the Great Recession. The Fed’s intervention in markets is stunning in its depth and breadth, with its balance-sheet jumping from over four trillion to over seven trillion USD this year, and more is probably to come; even junk assets, fallen angels, are liable for acquisition. In Europe, the ECB has extended its non-conventional operations, while a European recovery plan that amounts to 750 billion euro, will supplement the EU budget for the period that starts in 2021. As a novelty, the Plan will be funded by the issuance of collective EU bonds. All in all, budged deficits have skyrocketed worldwide, as during war times.

Apart from the dire conditions entailed by the pandemic and the economic crisis, an intellectual context favors rising fiscal support. The apparent decline of the natural interest rates in recent decades and very low inflation after the financial crisis seem to prompt governments to rethink allegedly dangerous thresholds for public indebtedness. Kenneth Roggof and Carmen Reinhart’s upper level of 90% may no longer be seen as a discouraging barrier. Olivier Blanchard talks of a new normal (a new regime) for monetary policy by considering lower debt servicing costs when interest rates are inferior to economic growth rates, a view that is echoed by Paul Krugman and others.

Kenneth Rogoff argues in favor of deeply negative policy rates as an alternative to large scale QE, which itself is a form of financial repression; he says that such a policy would be a huge blessing to EMs that are plagued by falling commodity prices, fleeing capital, high debt and weak exchange rates.

Proponents of the New Monetary Theory argue

openly for monetizing fiscal deficits provided inflation is under control; their line of reasoning can be bolstered by the desire to reverse very low (or declining) inflation expectations (the threat of debt deflation) and the extraordinary nature (once in a lifetime) of the coronavirus shock and the related economic and social crisis.

This is the context which made some to examine the feasibility of QE,the injection of base money against financial assets, even monetization of budget deficits in emerging economies/markets (EMs). As a matter of fact, elements of QE are practiced in a series of emerging economies. In Colombia, Indonesia, Poland, Hungary, Thailand, among others, central banks do it. But the size of their programs is significantly smaller than what the Fed, BoE, the ECB and BOJ, etc. Why is it so?

The crux of the matter ist that QE in emerging economies can be pretty tricky and littered with pitfalls. The view that a Ñsilent monetary policy revolution” is taking place in emerging economies, in the sense of undertaking QE like in advanced economies is an overblown assertion. Where QE is done in EMs, it takes place as a sort of "free ride” on the wave of QE in AEs, but not without limits and risks.

There are basic differences between emerging and advanced economies, which asks for caution in judging QE in the former: - Emerging economies do not issue reserve currencies. This dents the efficacy and autonomy of monetary policy in dealing with severe shocks; - For not a few EMs there is an issue of institutional credibility and track record in subduing inflation and deficits; - Monetary policy, as a plus in a policy-mix framework, can be weakened by the exchange rate risk, by insufficient trust in the local currency; - The volatility of exchange rates in emerging

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economies does matter, the more so where dollarization/euroization is high. A flexible exchange rate can help in correcting imbalances, but it can also do harm when a massive depreciation entails substantial wealth and balance-sheet effects, intensifies currency substitution, and may cause inflation to get out of control. A brutal drop of the local currency value can cripple financial stability; - Local financial markets are frequenly quite thin and cannot absorb large issuances of sovereign debt. The exposure limits of commercial banks to local governement debt are to be considered as well.

- Although issuing debt in local currencies is preferable, a small size of local financial markets can force the issuance of bonds on external markets.

And this creates a major vulnerability related to exchange rate dynamics. In addition, unless deficits are not perceived by financial markets as reasonable, their funding can be drastically limited and sudden stops can ensue; - For the EU weaker economies, the free movement of capital can be a headache in moments of market panic. This has been glaringly shown by substantial flow reversals during the euro area crisis, when money took a flight from South to North; or outside the euroarea, when capital sought to flee New Member States, which was a reason for the Vienna Initiative to be enacted in 2009.

- Sudden stops can take place in emerging markets even when global financial conditions are relatively benign.

- QE in advanced economies can induce EMs to borrow too much as hot money is searching for higher yields. And when conditions change, larger debts may find their servicing jump quite highly and turn very costly.

- It is not clear whether macropudential policies to deal with large capital inflows and outflows can be effective enough. As a mater of fact, a paradox operates here: QE in AEs may foster a temporary more benign global environment that helps ease monetary conditions in EM too. But this can easily turn out to be a nuisance in disguise to the extent there is much overborrowing (like after the Great Recession) and capital flows reversals harm weaker EMs. The features highlighted above indicate constraints for monetary and exchange rate polices in EMs and, consequently, for QE programs. Emerging economies that have been quite successful in reducing dollarization/euroization of their domestic transactions, where internal and external deficits are under control, with considerable sovereign bonds issued in local currency and plentiful foreign exchange reserves, can be more daring in practicing

QE. They could also benefit on back ups, such as swap and repo lines arranged with reserve currency issuers, like the Fed and the ECB. This room of manuever concerns the flow of liquidity on domestic markets and preventing excessive yields demanded by foreign lenders/inevstors (via asset purchases by local central banks on secondary markets), the easing of policy rates and of overall monetary conditions when interest rates fall in the global economy.

But QE and monetization of deficits are fraught

with major risks wherever deficits are large, external debts are considerable, and trust in the local currency is not sufficient.

The case of EMs in the EU deserves attention for some of them have undertaken parts of QE. Among New Member States which joined the EU in 2004 and 2007, Poland has announced a QE program that could go up to 5-6% of GDP this year, while the budget deficit could reach more than 8% of GDP. Hungary has a significatly smaller QE program as the budget support for its economy relies extensively on guarantees. Both these countries have started the war against the COVID-19 pandemic with much

smaller domestic and external imbalances and significantly lower euroization of the the financial system than Romania. The Czech Republic is quite a peculiar case for the high trust the crown enjoys among its citizen. Sovereign ratings illustrate macroeconomic situations, and the cost of issuing debt is indicative of national economic circumstances. Thus, Romania pays almost double for issuing debt in local and external markets, as compared to Hungary and Poland, not to mention the Czech republic; CDS term

premia are also telling in this regard. Hungary and Romania have repo arrangements with the ECB, whereas Bulgaria and Croatia benefit on swap lines as they entered ERM2 in June this year. These arrangements are a plus in dealing with possible liquidity squeezes in financial markets. The EU budget funds, together with the European recovery plan, help considerably the fight against COVID-19 and economic reconstruction.

Yield differentials for sovereign bonds and CDS term premia show that markets discriminate among EM, despite the easing of monetary and financial conditions worldwide. Therefore, caution must oper-

ate when contemplating dealing with the pandemic and the economic crisis by resorting to large fiscal stimuli and aggresive easing of monetary policy, to QE and monetization of deficits. The countries that have fiscal space can be more daring in this regard, but not without caution. In the EU, fiscal rules are temporarily suspended, but markets do discriminate and judge economies according to their robustness, the capacity to absorb shocks, whether back ups (as safety nets) are available. In the euro area, the debt servicing costs for more fragile economies hinge basicaly on the ECB support, which has saved the single currency via its unconventional oprations, including QE. In the global economy, instead, there is no automatic support, in spite of massive operations undertaken by the IMF to support emerging and poor economies.

In the Romanian case, the issue is not the stock of public debt, that was cca. 35% of GDP last year. It is a flow problem, that is rooted in a large structural deficit (above 4% of GDP at the start of 2019) and big pressures to increase permanent public budget expenditure while fiscal revenues are pathetically low (cca. 27% of GDP); there is also a twin deficit problem involved here. This creates a big policy conundrum since, on one hand, the room of maneuver to combat the Pandemic is severely curtailed and, on the other hand, there can be considerable depreciation pressures on the exchange rate which enhance inflationary expectations (as the pass-through effect is non-trivial). A significant rise in permanent budget expenditure would worsen even more the structural budget deficit, it would imperil Romania’s investment grade rating and entail a significant rise in the cost of debt service, in the public debt. This would invalidate a key assumption of the new normal for monetary policy in the Blanchard logic, namely a low interest rate (r) level. And if the economic growth rate (g) falls significantly, apart from an allegedly temporary impact of the pandemic, and in conjunction with a sizeable primary (and structural) budget deficit, one ends up with a reinforced invalidation: while (g) comes down, (r) goes up when the primary deficit is considerable and on the rise.

A correction of macroeconomic imbalances has to be undertaken in Romania in the next few years, which will be a pretty tough operation in view of the impact of the sanitary and economic crisis. This situation explains why the Romanian central bank cannot be as aggresive in reducing its policy rate as its peers in the Region, and why it cannot embark on a QE program per se. For it may undermine the trust in and trigger a run on the local currency, ultimately damaging financial stability. If markets would perceive that there is monetization of the budget deficit on a large

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scale, a crisis of the local currency would be quite inevitable. The correction of the large structural budget deficit, be it done gradually (so that it does not cripple a tenous economic recovery after the Lockdown) has, therefore, to play a critical role in reducing macroeconomic imbalances. This correction can be much facilitated by EU funds that can uphold public expenditure and help fund external deficits.

Is financial repression the exit out of the current situation with rapidly growing public debt worldwide as Carmen Reinhart and Sbrancia suggested by referring to the second world war period and its aftermath in the US and Europe?

Prima facie, this seems to be the case in view of the staggering rise in public and private debts following the financial crisis and, currently, because of the Pandemic.

QE is a form of financial repression as governments try to control the yield curve by purchasing sovereign bonds (and, thereby, by reducing the cost of budget funding) and other financial assets, by going beyond what can be seen as market-making (repair) in periods of distress. But even in AEs financial repression may be difficult to achieve when inflation is very low, which would imply negative nominal interest rates. And how sustainable are negative interest rates over the longer term is an open question, although Japan provides food for thought in this respect (as well as to the secular stagnation thesis, the Japanization syndrome). In some New Member States, which have experienced labor markets strains for years now (due to massive labor emigration), where the Balassa-Samuelson effect may be larger than some suspect, and where exchange rate dynamics have probably also played a role, inflation is quite considerable –- between 3-4% lately in Hungary, Poland, Romania, etc. When inflation is substantial and currency substitution is an issue, capping interest rates may be risky.

The bottom line ist that rapidly increasing public debts should not leave us unnerved, be the natural interest rate much lower than a few decades ago. QE may have merits as a means to avoid a lasting depression and, in the euro area having helped to save it, but it is unclear whether it can be the final solution to debt sustainability.

Some may argue that nothing seems to be like before, that economics enters a new "stage” and that old tools are no longer reliable, that emerging economies should do whatever

advanced economies do policy-making-wise. But this is hardly a convincing argument. The size of public and private debts, of structural deficits do matter yet, as do economic fundamentals, degrees of wealth and robustness (vs. fragility), policy track records, availability of back ups and "friendly” neighbours, or membership in clubs like the EU and the euro area. Balance of payments crises will not disappear, and defaults will continue to take place, especially among EMs. Sudden stops can also occur. This is why caution is warranted in EMs in trying to mimic QE as practiced by AEs. For emerging economies, there are limits and pitfalls in undertaking QE. As Agustin Carsten put it, "fiscal sustainability should be assured, otherwise perceptions may arise that debt can be inflated away”...and "crossing the traditional boundaries between fiscal and monetary polices, are only feasible for central banks in advanced economies with high credibility stemming from a long track record of stability-oriented policies.”

A final thought on QE: QE may be useful, indispensable, wherever avoiding a collapse of economies (of financial sectors) is aimed at. But to claim that this is the way to remake the toolbox of central banks radically, for the long haul, is a bold statement. As a matter of fact, QE is more like "kicking the can down the road”’, and it reflects, arguably, an inability to tackle fundamental issues related to resource allocation, taming the global financial cycle, overfinancialization of economies and feeble restructuring (zombification of many parts of economies), increasing income inequality, etc. If this is the case, QE in EMs cannot be but a pale side of this state of affairs and can, in no way be an actual breakthrough in policy making. Moreover, QE, as sort of prolonged crisis management component of monetary policy, has to be examined in a deeper sense: how economies can be remade in order to become more robust/resilient, more inclusive and fair, with an overhauled financial sector that should cater more to the needs of the real economy, antitrust laws that impede abusive concentration of market power, effective fight against tax evasion and avoidance, revamped tax systems that are more equitable, reinstating a sense of genuine ethical conduct in the corporate world, combating climate change which has become an existential threat to mankind, and avoiding a complete collapse of multilateral arangements in the global economy. opniibnr.ro

LEADERS’ Gala AWARDS 2020 F INANCIAL

HALL OF FAME

in partnership with

Business Arena Magazine is proud to announce the 20th edition of its annual event dedicated to the leaders in the financial market:

FINANCIAL LEADERS’ HALL OF FAME 2020 Some 180 persons from the financial and baking sectors, directors of investment funds and representatives of some of the largest companies in Romania, together with representatives of the local authorities, high government officials and diplomats will take part in this exclusive event.

According to a McKinsey report, "the profound humanitarian fallout of the COVID-19 crisis carries with it the potential equally disruptive economic fallout. The path ahead is hence a precarious one, driven by epidemiological uncertainty, the unique blend of resulting shocks to both supply and demand, and “preexisting conditions” in the global macroeconomy."

The same source noted that "addressing the situation will require further global action and public–private coordination. Banks around the globe will play a critical role in this as systemic stabilizers for their customers, their employees, and for their economies at large. Cash and deposit services, credit extension, payment facilitation, and market making are all essential services."

It also revealed that "banks have already taken

a series of actions in reaction to the spread of COVID-19. Common steps we’ve seen include establishing a central task force, curtailing travel, suspending large-scale gatherings, segregating teams, making arrangements for teleworking, and refreshing external-vendor-interaction policies."

In addition, the report pointed out that beyond these "immediate and basic actions", banks should prioritize three measures tailored to the particular combination of biological and market stresses and how they affect the global market. Thus, they should focus on normalizing workforce measures for multimonth sustainability, providing essential banking services to retail consumers, and fulfilling a social mission to support households and businesses with credit.

Business Arena Magazine is proud to recognize the achievements and successes of banks, financial institutions and business leaders that find the winning strategies in spite of the challenging economic background.

For more information please contact Cosmin Stangaciu at cosmin.stangaciu@business-arena.ro or phone 0755.274.125

OPINION

NOBEL PRIZE-WINNING ECONOMIST PAUL KRUGMAN STARKLY LAID OUT THE DISCONNECT BETWEEN THE STOCK MARKET AND THE REAL ECONOMY IN A SCATHING OP-ED

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Nobel-winning economist Paul Krugman explained what is driving the large disconnect between rising stocks and "growing misery" in a New York Times op-ed on August 20.

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"The real economy, as opposed to the financial markets, is still in terrible shape," he wrote.

"The truth is that stock prices have never been closely tied to the state of the economy," he said, adding that they are disconnected from indicators such as jobs and economic output.

Wall Street's fixation on tech mega-cap tech stocks has pushed the weighting of the S&P 500's 10 biggest components to record highs.

Those companies, including Apple, Facebook, Amazon, Microsoft, and Alphabet, have comprised roughly 29% of the S&P 500 as of July 31, The Wall Street Journal reported, citing data from S&P Dow Jones Indices.

That represents the largest share ever in data going back 40 years. Apple holds the greatest weight in the index, taking up roughly 6.5%. Last week, the tech giant became the first US-listed company to hit a $2 trillion market capitalization. Krugman pointed out that the market values of tech companies have little to do with their current profitability, or the state of the economy.

"Instead, they're all about investor perceptions of the fairly distant future," he said.

Apple's price-to-earnings ratio stands at about 33, which suggests that only around 3% of the value investors place on the company reflects the money they expect it to generate over the course of the next year, Krugman said. "The profits people expect Apple to make years from now loom especially large because, after all, where else are they going to put their money? Yields on US government bonds, for example, are well below the expected rate of inflation," he wrote.

"As long as they expect Apple to be profitable years from now, they barely care what will happen to the US economy over the next few quarters."

"Unfortunately, ordinary Americans get very little of their income from capital gains, and can't live on rosy projections about their future prospects."

He warned that ordinary citizens can only retrieve minimal income from capital gains and cannot survive on "rosy projections" about the future.

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NOURIEL ROUBINI SAYS WALL STREET EUPHORIA IGNORES MAIN STREET HARDSHIP The global economy faces a risk of a slow recovery or even another slump along the way unless a vaccine is found, according to Nouriel Roubini.

Speaking on Bloomberg Television on Friday, Roubini predicted that the shape of the recovery, which some predicted to be V, “is becoming a U and the U could become a W if we don’t find a vaccine and don’t have enough stimulus.”

The chief executive of Roubini Macro Associates Inc. also highlighted that the Wall Street recovery doesn’t mean that the real economy is healing. “Main Street is strug-

Roubini, who famously warned in 2006 that the housing market in the U.S would soon collapse, highlighted that a fresh outbreak of Covid-19 in Europe could also mean another wave of unemployment. Still, European workers have much better policies protecting their jobs compared with the U.S., he said.

“The European system of greater social cohesion gives you better economic out-

NOURIEL ROUBINI

gling,” he said.

A recent resurgence of coronavirus cases across the world has hampered the recovery seen when lockdowns ended. High-frequency gauges monitored by Bloomberg Economics indicate that the rebound in economic activity has slowed across developed nations and even turned in some European countries.

comes than the one of the United States that is just Wild West capitalism,” Roubini told Bloomberg’s Tom Keene and Francine Lacqua. “That’s why the unemployment rate barely went up in Germany or even in Italy, while in the U.S. we’ve had double-digit unemployment rate and actually even worse, considering underemployment and so on.”

CAPITAL MARKETS

COVID-19 PANDEMIC SLOWS GLOBAL IPO ACTIVITY YTD 2020

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The impact of the COVID-19 pandemic continued to play a significant role in declining IPO activity in the first half of 2020 – as shown in the quarterly report EY - Global IPO trends: Q2 2020. Overall, Q2 2020 saw a decline in IPO activity from Q2 2019 across all regions by deal numbers and for the Americas and EMEIA by proceeds.

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Global IPO activity slowed dramatically in April and May, with a 48% decrease by volume (97 deals) and a 67% decrease in proceeds (US$13.2b) compared to April and May 2019.

This dragged down 1H 2020 regional activities compared with 1H 2019 and overall YTD deal volume (419 deals) and proceeds (US$69.5b) decreased 19% and 8%, respectively, from YTD 2019.

Despite a late flurry of deals in June, global IPO activity was sluggish on Americas and EMEIA stock exchanges YTD, while Asia-Pacific IPO activity increased. Americas deal volume (81 deals) and proceeds (US$24.5b) both fell by 30% compared with YTD 2019, while EMEIA IPO deal volume (68 deals) and proceeds (US$10.1b) fell 50% and 44%, respectively. Asia-Pacific IPO activity rose 2% by deal numbers (270 deals) and rose 56% by proceeds (US$34.9b) compared with YTD 2019.

"In Romania, the capital market has developed significantly in recent times towards bond issues, compared to the IPO area, where the pace is still slow. The first half of 2020 was strongly affected by the spread of the COVID-19 virus, especially from the perspective of the IPOs. Although long awaited, listings of stateowned companies have been postponed again as a result of the parliamentary vote to temporarily freeze the sale of any part of stateowned companies. At the moment, an increase in the supply of shares on the Romanian capital market is needed in order to maintain the eligibility criteria for emerging market status.

Potential listings in the retail and IT sector are currently being announced and we may see greater interest in the AeRO market from companies. However, although the efforts of the Bucharest Stock Exchange and the Financial Supervisory Authority have been considerable in promoting the benefits of listing on the stock exchange, the preference of Romanian entrepreneurs remains for financing through credit insti-

tutions," said Florin Vasilică, Strategy and Transaction Leader, EY Romania.

The technology, industrials and health care sectors dominated in YTD 2020. Technology saw 87 IPOs raise US$17.2b, industrials saw 83 IPOs raise US$9.6b and health care had 76 IPOs that raised US$15.9b.

AMERICAS DEAL LANDSCAPE SLOWS US exchanges still accounted for the majority of IPOs in the Americas in the first half of 2020, with 79% by deal volume (64 deals) and 91% by proceeds (US$22.3b); this included five unicorn IPOs. The health care and technology sectors continued to have the highest level of IPO activity in the US in YTD 2020, representing 55% and 25% by deal volume, respectively. The health care sector dominated in proceeds (US$10.2b), contributing 46%, from 35 IPOs. The Mexican stock exchange posted one IPO valued at US$1.1b, making it the eighth-largest IPO globally in Q2 2020.

ASIA-PACIFIC IPO ACTIVITY REMAINS STABLE Although year-on-year YTD 2020 IPO activity in Asia-Pacific rose by deal number (2%) and proceeds (56%), Q2 2020 saw a decline of 18% compared with Q2 2019 by deal number, while proceeds rose by 28%. Asia-Pacific exchanges accounted for four of the top five exchanges by deal volume and three of the top exchanges by proceeds. Globally, by proceeds, NASDAQ led YTD 2020, followed by the Shanghai Stock Exchange and Hong Kong Stock Exchange. By deal volume, Shanghai, Hong Kong and NASDAQ markets led the way.

In Greater China, IPO activity was up 29% by volume (179 deals) and 72% by proceeds (US$30.9b) YTD 2020 compared with YTD 2019.

In Japan, IPO volume (34 deals) declined 17% YTD 2020, while proceeds (US$625m) dropped

by 53%. Australia and New Zealand IPO activity was also down YTD — 41% by volume and 82% by proceeds.

EMEIA ALSO SEES IPO DEAL SLOWDOWN After a strong start to 2020, YTD IPOs (42) and proceeds (US$7.8b) declined 47% by volume and 48% by proceeds in Europe, as the COVID-19 pandemic significantly curtailed IPO activity from March through to May. In the Middle East and North Africa (MENA), IPO activi-

ty was down 11% by volume (8 IPOs) and down 43% by proceeds (US$0.9b) YTD 2020. Indian exchanges saw 16 IPOs, which raised US$1.4b YTD 2020, a decline of 61% by deal number and 9% decrease by proceeds. There was also one IPO each on the Malawi and Bangladesh exchanges, which raised US$29m and US$7m, respectively.

H2 2020 outlook: IPO rebound expected Given the COVID-19 outbreak and its negative impact on global economic activities, in the short to medium term, governments around the world will continue to implement policies and stimulate economies against rising unemployment. At the same time, central banks will inject more liquidity into the financial systems. Both actions bode well for equity markets and IPO activity in 2H 2020.

SURVEY FINDS FOUR OUT OF FIVE CEOS EXPECTING REMOTE WORKING TO CONTINUE Four out of five CEOs expect remote working to become more widespread in their businesses, after finding that their prior concerns about productivity losses în lockdown were unfounded, according to PwC’s CEO Panel Survey, conducted in June and July 2020.

A prior survey of PwC, CFO Pulse, from April showed that nearly half of the surveyed financial executives expected productivity loss because of a lack of remote work capabilities.

Two months later, when asked again, just 26% of CFOs anticipated productivity loss in the month ahead. ”CEOs feel they’ve passed a critical test and are now armed with important knowledge about their organisation — and are prepared to capitalise on the enduring trends brought about by COVID-19. The new normal tested companies capacity to conduct their activity without travelling, without personal meetings or ways of working that seemed indispensable and forced them to adapt in order to have a comparable or higher productivity.

Organizational culture, business specifics and investments in technology have played and will play a very important role in this process, with some activities becoming even more efficient,” said Ionu Simion, Country Managing Partner PwC Romania.

Two key themes emerged among our respondents, when asked about their priorities.

The first one is the plan to make their compa-

nies more digital, by digitising core business operations and processes, and adding digital products and services.

The second theme is that the CEOs plan to develop a more flexible and involved workforce by increasing the share of remote or contingent workers, and expand employee health, safety and wellness programmes.

In this context, respondents believe shifts towards automation (76% of CEOs), low-density workplaces (61%), supply chain safety (58%), gig economy (54%) and public safety (50%) will have a lasting impact.

CEOs are significantly more pessimistic about the direction of the global economy over the next 12 months now than they were at the end of 2019, with just 30% saying economic growth will improve in the year ahead. And with good reason: The World Bank forecasts that the global economy will shrink by 5.2% in 2020, representing the deepest recession since the Second World War. As a result, CEOs also face uncertainty about their own operations, with only 15% indicating that they are very confident in their organisation’s revenue prospects.

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OPINION

DURING THIS CRISIS GENERATED BY THE PANDEMICS, THE ROMANIAN BANKING SECTOR HAS BEEN A FULCRUM During this crisis generated by the pandemic, the Romanian banking sector has been a fulcrum for the population, for companies and for Romania’s economy in general.

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GABRIELA FOLCU}, EXECUTIVE DIRECTOR, ROMANIAN ASSOCIATION OF BANKS

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When it entered this crisis, the Romanian banking sector was prepared, its solvency and liquidity ratios standing at levels higher than the European averages. Quick liquidity stood at 43.8% at the end of 2019. In December 2019, total own funds reached 20%, while tier one capital stood at 18%, these levels being slightly higher than the European averages. At the end of the first six months of 2020, the sector’s solvency was on the rise i.e. up to 22.76% - which was more than double compared to what was required. The NBR data shows that the NPL provision coverage rate went up to 60.6% at the end of 2019, which is a rate significantly higher than the European average (44.6%), while the NPL rate has had the tendency to be in line with the European average.

The impact of the pandemics is a negative one while a potential positive impact that we could witness at the end of the crisis pertains to stimulating digital access to banking services and also, paradoxically actually, an increase in financial intermediation.

Lending to the private sector as weight against the GDP stood at 25% in March 2020, Romania having the lowest rate of financial intermediation across the EU. In the countries in the region, this rate is significantly higher: Hungary - 34.7%, Poland - 51.9 %, Bulgaria 53.3 %, the Czech Republic - 53.4 %. As an effect of the crisis - contemplating the shrinking of the GDP and of lending to the economy, financial intermediation could go up.

Lately, credit institutions have invested significant amounts in order to develop digital solutions. Thus, due to the COVID-19 outbreak, actually, what went up has been the number of the people who discovered how easily they can perform banking operations remotely and how much digitalization was promoted by the industry. After this period ends, I am confident that we could remark a certain behavioural change one on the long-term for that matter and, moreover, that we will be able to maintain a higher usage rate when it comes to the digital products and services provided by banks.

Furthermore, the value and the number of card payment transactions performed with cards issued by resident payment services providers went up by almost 10% since the beginning of the COVID 19 pandemics, at an annual rate, thus accelerating the digitalization process in the banking sector.

But, nevertheless, it is still difficult to estimate with clarity the magnitude of these effects generated by the crisis and implicitly banks’ contribution. And this is so because we have an atypical crisis. In other words, we do not know how deeply it will continue to affect different industries, the economy and the social environment in general. At the same time, a policy devised by policymakers to support as efficiently as possible the restauration of economic activity will help us contain these challenges.

Unfortunately, during this period of time, the legal risk specific to the banking industry has continued to be high. Needless to say that, in the COVID-19 context, it would be desirable to avoid the additional costs generated by legal measures, now more than ever.

We anticipate that the economy could recover in 2021. There are several opinions here. The European Commission forecast indicates a contraction of the real GDP by 6% in 2020, followed by a recovery of only 4% in 2021.

But this does not mean that there will be less pressure on the banking industry. To the contrary, we will reach the end of the legal and non-legal moratoria period this year and, as such, we could be witnessing an increase in NPLs. The data in the first semester already shows an increase in NPLs to 4.38%.

And this happened despite the fact that banks have suspended the payment obligations of those affected by this pandemic-generated crisis. More than 22% of non-government credit on the household segment have been affected by the legal and non-legal moratoria, while for the corporate segment the percentage is 28%.

Taking into account this atypical year, the banking sector’s capacity to make profit could be negatively impacted by the outlook regarding a worsening of macroeconomic conditions.

If we conduct a quick analysis related to profitability, we will see that the domestic banking sector ranked 11 in 2019 respectively 7 among European Union Member States as regards ROA (1.4%) and ROE (12.3%).

In this context dominated by uncertainty, I am launching three main topics which, in my opinion, should become priorities for triggering a fast recovery of Romania’s economy. The first topic targets the huge opportunity of modernizing the economy and the society with European money.

The banking sector is ready both as a whole - via the Romanian Association of Banks, as well as at individual level - via banks, to contribute to the acceleration of accessing European funds. A second very important topic

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is the actual digitalization of the economy. A fractured digitalization does not exist. And for this to happen, the public administration has to cooperate, even if this means making its footprint more efficient.

The banking sector is one of the most advanced sectors when it comes to digitalization. Public authorities have to give momentum to a widescale usage of digitalization (and not just to a marginal usage). As for the state, the advantage is the reduction of red tape, lower costs and less fiscal evasion.

The state could use the banking sector in

GABRIELA FOLCU} order to accelerate digitalization just like planes make use of aircraft carriers.

And finally, a third topic and a concern as well refers to what we should invest in during the second half of this year so that the recovery in 2021 takes place as fast as possible.

Romania’s economic recovery depends on the manner and swiftness with which we will be able to prioritize the solutions since challenges continue to occur, and even stronger ones actually.

OP-ED

LET’S EMBRACE THE 5G REVOLUTION NOT THE CULTURAL REVOLUTION Under the leadership of President Trump, the United States and other democracies around the world have chosen freedom. Romania has also chosen freedom along with scores of like-minded countries that believe in transparency, the rule of law, and security. Romania, like other 5G Clean countries, should accept only the highest standards of security.

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OP-ED BY U.S. AMBASSADOR ADRIAN ZUCKERMAN

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Huawei is still the wrong way. Why? Because nations must not entrust their citizens’ security to a company indicted for intellectual property theft, conspiracy, wire fraud, bank fraud, racketeering, and for helping Iran avoid sanctions meant to stop that nation from funding terrorism.

Huawei has been implicated in wrongdoing and criminal behavior from the Czech Republic, to Sierra Leone, and in countless countries in between. 5G is a revolution, not an evolution, in digital technology and it must be secure. As the internet of things develops, I am comfortable with my smartphone talking to my car, but I refuse to let it communicate with Chinese communists and their surveillance state.

Romania faces a decision and it needs to bear in mind its security, its alliances, its history, and whom it wishes to do business with.

As Romania decides its digital future, I offer one bit of advice that has guided me for decades, “When someone shows you who they are, believe them the first time.” These words by storied American poet and civil rights activist Maya Angelou ring true. And I would ask those seeking lax standards for their citizen’s digital security or paving the way for Chinese communists to control Romania’s infrastructure, what else does the Chinese Communist Party need to show you before you believe it? Is the territorial expansionism not enough, do the Uighur concentration camps not show who and what you are dealing with? Does China’s

ADRIAN ZUCKERMAN behavior in Tibet or its deprivation of human rights in Hong Kong not show you?

President Iohannis, like President Trump, has approached this matter with a cleareyed perspective and one informed by history.

President Iohannis’ efforts to finish the work started 30 years ago and rid Romania of the remaining red-barons and their corrupt legacy are laudable. He will not cede one inch of Romania to communist control. A year ago, President Iohannis pledged with President Trump to avoid the security risks inherent with Chinese investment and involvement in 5G networks.

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President Iohannis was also clear when he said, “We don’t want to end up with critical systems being operated by companies which are not trustworthy.” U.S. Secretary of Defense Mark Esper was emphatic about the very real negative impacts that a European embrace of Chinese 5G technology could have on NATO: “Reliance on Chinese 5G vendors could render our partners’ critical systems vulnerable to disruption, manipulation and espionage. It could also jeopardize our intelligence and communicationsharing capabilities, and by extension it could jeopardize our alliances.” Fortunately for Romania, the Orban government has made the bilateral 5G memorandum a pillar of its cybersecurity platform.

Huawei fails to meet free democratic nations’ standards because of its complete control by Beijing. In addition to the litany of criminal charges against the company and its subsidiaries, Huawei lacks a transparent ownership structure, is profoundly unethical, and not accountable to any impartial judiciary in China.

The Chinese communist propaganda machine has been hard at work pressuring Romania and saying that Huawei is caught in a “trade war” with the United States. It is not. The United States is not attempting to steer the decision toward any one company. The United States will not entrust an aggressive foreign surveillance apparatus with every aspect of our very lives.

There are numerous companies that offer 5G solutions such as Nokia, Ericsson, and Samsung.

These companies have the added benefit of not being aligned with communist governments, militaries, and gross human rights abusers.

When the propagandist’s false trade war narrative fails, they draw yet another card from the over-played communist deck—they threaten.

Huawei claims thousands of jobs and billions of euros are at risk—ignore our attempts to control you and our slave labor practices, or your workers and your nations’ economies will be punished. Again, this is a lie. Ericsson has more than twice as many employees in Romania and is already producing 5G equipment here.

Information and infrastructure are power which should not be given to the Chinese nation that ascribes to an absolute authoritarianism that Romania and many other Eastern European countries are still recovering from.

Secretary Pompeo reminded us that those who do business with Huawei, do business with human rights abusers. You do not need to do it.

There are alternatives. Romania can embrace the 5G revolution while avoiding the Chinese Cultural Revolution. Ericsson, Nokia, and Samsung are just some of the alternatives. We support every nation’s progress towards the future. But progress must include information security and an infrastructure that does not rest in the hands of corrupt foreign powers that threaten and coerce. Romania should set its own standards.

Romania needs to protect its future and its people. Far too much of this country’s past was stolen in the 20th century by communists— foreign and domestic—and by unchecked surveillance. The Chinese Communist Party is incredibly experienced with using technology for surveillance and oppression. There is no place for crooked communist Chinese companies in a free and democratic Romania.

TECHNOLOGY

UIPATH LAUNCHES VIRTUAL STREAMING SOLUTION UiPath announced the launch of a virtual streaming solution that allows customers, prospects, and partners to explore enterprise automation solution showcases, attend demos and participate in workshops as part of a fully remote UiPath Immersion Lab experience. The launch, which marks the Lab’s first anniversary, celebrates one year of client-centric innovation in automation and will allow UiPath to provide continued support to businesses amid limited mobility.

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In March 2019, UiPath became the first RPA vendor to offer its customers and partners the opportunity to test the company’s automation technology via first-hand, interactive and highly customized experiences in its Immersion Lab in Bucharest, Romania. According to the company,

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the Immersion Lab’s primary mission is to closely support automation champions across organizations to become successful in their hyperautomation journeys. Since its launch, the UiPath Immersion Lab has hosted around 400 visits and has created numerous co-innovation projects together with customers and partners.

In response to the mobility challenges the business community is currently facing due to the COVID-19 crisis, the web-based virtual solution will give UiPath clients and partners direct and

enhanced access to the UiPath Immersion Lab experience. From a single Immersion Lab map the home office-bound audience will access a series of virtual spaces to participate and collaboratively interact with the lab team and UiPath experts. The streaming solution used supports all major video streaming and conferencing platforms and places attendees in virtual offices, where they get direct access to each presenter and expert to ask questions individually. After the live sessions, the streamed content will be made available on demand as a ready-to-use microwebsite for the attendees’ internal re-use.

Boris Krumrey, VP of Automation Innovations at UiPath, and the designer of the Immersion Lab concept, commented: “We launched the idea of setting up a space where our customers and partners can immerse themselves in the art of the possible with our technology and test their ideas one year ago and since then the response has gone beyond anything we had imagined. Nothing beats the excitement of seeing how minds passionate about automation can work closely together and dream up and execute innovation projects that transform the way our clients run their operations. Thanks to the newly launched virtual solution, we will be able to welcome our customers and offer uninterrupted support throughout their automation journey, helping them to accelerate digital innovations during a time of major disruption.”

Oonagh Phelan, Process Automation Implementation Manager at Paddy Power Betfair, said: “The Immersion Lab online experience was a great one for PPB, with highly informative sessions and excellent prep work done in advance to

ensure the topics were suited for our stage of the automation journey. We particularly liked that the sessions were tailored around our business needs and problems and that we were shown new technologies that could help accelerate our automaton journey and solve outstanding issues.

Moreover, the remote interaction worked well and allowed for open collaboration. The overall experience was excellent, and we would highly recommend it to other companies looking to accelerate their journey and learn more about UiPath’s latest automation solutions.”

Girish Pai, Director of Strategic Product management at Ericsson, said: “We have spent two full and exciting days in the UiPath Immersion Lab, exploring innovations driven by UiPath. We

were happy to get firsthand experience of the latest automation solutions developed using AI and Machine Learning and to have been welcomed by a highly dedicated Immersion Lab team of experts in Bucharest.”

Aurelia Costache, Advisory Leader EY Romania and Intelligent Automation Leader for EY CESA region, said: “EY and UiPath share a mutual commitment to driving the digital transformation of enterprises, and the UiPath Immersion Lab is the ideal setup for customers to explore what hyperautomation can achieve. By making the experience a fully digital one, UiPath proves once again that both its technology and vision for adopting it are future-proof."

CENTRAL EUROPEAN PRIVATE EQUITY FIRMS' CONFIDENCE LEVEL HITS NEW LOWS Central Europe’s private equity (PE) firms’ confidence hits lowest level since the global financial crisis, as a result of the COVID-19 impact, but deal-doers are more optimistic than during the 2008 crisis, according to the latest Deloitte CE Private Equity Confidence Survey. The confidence index, which has been decreasing since the end of 2017, is now at 62, the second historical lowest after October 2008, when it reached 48. Seven in ten professionals in Central Europe private equity houses forecast a decline in market activity and worsening economic conditions, given that the regional economies, which are largely consumer-driven, are expecting significant GDP contraction in 2020 amid demand shrink caused by unemployment rise.

The survey results also indicate a noteworthy proportion of believers in a quick economic recovery, as 13% of respondents actually expect conditions to improve.

The pandemic is creating a buyers’ market, with 74% of the survey respondents believing 2020 will be a good vintage. Nearly half (45%) of them believe vendors have decreased their price expectations over the last six months, and over half (51%) believe they will continue to do so.

As a result, the proportion of PE firms expecting to focus on new investments in the coming months remains relatively high, of 45%.

“Although they are walking on moving sands, most of deal-doers have also gone through the 2008 financial crisis and many of them are well capitalised, which can help them navigate this period of uncertainty. As any crisis, the current one also offers opportunities to those players who are positioned well enough to take risks. This is why almost half of the CE private equity houses are interested in fresh investment partnerships, either to benefit from the fact that valuations are coming down or to generate more value in the existing portfolios through add-ons. There are various such situations that were announced in Romania since the beginning of the year in various industries: recycling, manufacturing, services, technology etc.,” said Radu Dumitrescu, Financial Advisory Partner-in-Charge, Deloitte Romania.

In terms of deal sizes, most private equity houses expect them to stay the same (58%) or decrease (43%). Also, 62% of the survey respondents expect liquidity to decrease over the coming months.

The survey results also show a steep increase in the proportion of respondents who feel the efficiency of their CE financial investments will decline, the second-highest percentage in the survey’s history, after the one reported in the autumn of 2008. Nearly a third (30%) expect efficiency to decline, up from just 6% in the previous survey and 0% a year ago.

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BUSINESS ARENA

m a g a z i n e

AWARDS for2020

EXCELLENCE Enjoy the Quality ***** Admire the Value in partnership with

With its strong and diverse tradition in creating new platforms for the business community to share their views and ideas, and in recognizing business success and achievements, spanning over 19 years, Business Arena has launched a new project designed to expand the scope of its annual award ceremonies, with the addition of a new gala to its events calendar.

The Awards for Excellence is already becoming a highlight in the business events calendar. Guests gather to celebrate excellence in business, sports, culture, and community, enjoying the company of friends and industry colleagues.

Innovation, resourcefulness, perseverance and a culture of responsible risk-taking have helped many overcome major challenges. Thus, the new awards gala brings recognition to individuals and organizations in business, culture, sport and civil society that recorded outstanding results and achievements.

FIND MORE DETAILS ABOUT LAST YEAR’S CATEGORIES AND WINNERS ON OUR WEBSITE AT WWW.BUSINESS-ARENA.RO.

For more information please contact Cosmin Stangaciu at cosmin.stangaciu@business-arena.ro or phone 0755.274.125

NEPI ROCKCASTLE AND AFI EUROPE CLOSE 307 MILLION EURO OFFICE TRANSACTION AFI Europe, owner of among others the largest mall in Bucharest, has completed the takeover of the portfolio consisting of four office projects from NEPI Rockcastle. With a value of 307 million euro, the transaction through which NEPI Rockcastle, advised by Colliers International, sold four office projects to AFI Europe represents a third of the real estate investment market estimated at about one billion euro in 2020.

The acquisition places Romania on the map of large strategic investors and has the potential to become a catalyst for significant new transactions in the future, being an important benchmark for local market liquidity and contributing to increasing investor confidence, according to Colliers International specialists.

The sale of the NEPI Rockcastle office portfolio to AFI Europe, first agreed on at the end of 2019, is probably the largest transaction with revenue generating commercial real estate assets in Romania, competing with major transactions in Central and Eastern Europe. In addition, it is the most important strategic sale of a portfolio brokered by Colliers International in Romania.

“The transaction is a benchmark not only in value and complexity. The fact that it was completed in an economic context marked by Covid-19, under the terms initially agreed upon, confirms the investor's confidence in the potential of the assets and the market. At the same time, it proves that there is liquidity in the local real estate sector, being a reference for future transactions and contributing to increasing confidence of potential new investors in Romania,” said Robert Miklo, Director Investment Services at Colliers International.

The transaction is a strategic disposal made by the NEPI Rockcastle investment fund, one of the largest real estate investors in Central and Eastern Europe with a total portfolio valued at around 6.1 billion euros, focused on the high quality and dominant retail sector. At the same time, AFI Europe, owner of the AFI Cotroceni shopping center and of around 92,000 square meters of offices in the AFI

Park and AFI Tech Park projects in Bucharest, is in the process of expanding locally. The portfolio sold by NEPI Rockcastle to AFI Europe comprises four Class A office projects: Floreasca 169, The Lakeview, Aviatorilor 8 in Bucharest and City Business Center in Timisoara, all with green credentials and strategically located in the most sought after business centers in Romania, with a total leasable area of 118,500 square meters.

“The sale process was elaborate and involved complex strategies to meet the scale of the transaction and to successfully attract a major strategic investor with the financial strength to support such an acquisition. We are talking about a significant transaction not only for Romania, but also for the region, taking into account that such acquisitions are not often found in much larger markets such as Poland, where market liquidity is 4-5 times higher than in Romania. So, it is a very strong message for foreign investors who seek to place very substantial amounts of capital in the market, looking at large-scale acquisitions and having long-term strategies,” said Mihai P trulescu, Senior Associate Investment Services at Colliers International.

The NEPI Rockcastle and AFI Europe transaction, one third of the investment market of 2020 The first half of the "pandemic year" closed with real estate investments worth over 400 million euros in Romania, around 18% above the first semester of 2019, with office assets accounting nearly 86% of volumes, according to a Colliers International’s market report for the first semester of 2020. Over one quarter of the volumes recorded in the first six months

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REAL ESTATE

BUSINESS

was generated by the GTC portfolio sale to Optimum Private Equity Fund, which includes several office projects in Bucharest (deal estimated around 116 million euro for Romania).

Two similar-sized deals (in excess of 50 million euro) came from the closing of the third phase of The Bridge office project (purchased by the owners of the Romanian DIY chain Dedeman) and Global City Business Park offices (purchased by Greek-owned Arion Green).

Together with the transactions between NEPI Rockcastle and AFI Europe, respectively between the German fund GLL and the Chinese investment company Fosun for the Floreasca Park office project, the investment market currently exceeds 800 million euro and

is estimated to reach one billion euro, similar to the level in 2019.

In Central and Eastern Europe (CEE), the local market attracted, in the first half of the year, almost 6.5% of the total investment volume of about 6.3 billion euros. Poland and the Czech Republic are the region's leaders in the investment market, with a cumulative share of about 78% of the total, followed by Hungary and Romania. The most active sector in the region was also that of office space, with a share of 41% of the total volume of investments, followed at a considerable distance by that of industrial and logistics spaces (22%), while the retail sector accounted for 12% of the total.

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IBIS STYLES DUNĂREA GALATI OPENS FOR BUSINESS

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Accor strengthens its position on the Romanian market with the opening of its first hotel in Gala]i, ibis Styles Dun\rea Galati. The property in Gala]i is the second to open in Romania in 2020 and will be closely followed by five more this year, including Mercure Gala]i Centrum, by the end of September. With growing interest from its partners, Accor will add 10 more hotels to the portfolio in 2021 - 2023.

Pipeline covers various brands from economic to upscale segment.

The new hotel in Gala]i is located within walking distance to the Old Town of Gala]i and next to the Gala]i Port. On the opposite side, there are the city's theatres, parks, university, and other civic and cultural institutions.

The renovation plan included modernization of rooms, restaurants and public areas up to the standards of the ibis Styles brand as well as investments in latest IT & digital services that willoffer a seamless, efficient and personalized guest experience.

The theme of ibis Styles Dun\rea Gala]i tells the story of an immersion in nature. Guests can choose one of the 80 design rooms and enjoy beautiful public areas as well as a fully equipped conference area. The hotel invites travellers and local communities to the cosy Wise Café, that serves delicious freshly roasted coffee and healthy snacks.

“The speed of Accor’s development in Romania was not influenced by the unprecedented challenges that we have experienced in hospitality in past few months. The proof is given by the opening of seven new hotels this

year will total 802 keys. The first hotels opened are ibis Styles Bucharest City Center, on June 22nd and ibis Styles Dun\rea Galati, August 24th. They are only some of the several new flagship properties coming to Romania this year. In the next few months, they will be followed by Mercure Galati, Mercure Timisoara, ibis Styles Bucharest Airport, ibis Timi!oara and ibis Bucharest Politehnica. We are particularly enthusiastic about the opening of two new promising markets this year – Gala"i and Timi!oara. Along with our partners, we look forward to bringing the superior Accor guest experience to the travellers and local communities of these two wonderful cities,” says Christophe Chamboncel, VP Operations Management Romania & South-Eastern Europe.

INVESTORS CHOOSE ACCOR For the next two to three years, Accor has secured a strong pipeline in Romania, with further 10 properties, totalling more than 1344 keys. The new openings include Swissotel Bucharest, as the flagship five-star hotel development in the capital, and other new brands to enter on the Romanian market.

Further hotels join the Accor network, as investors and owners want to take full advantage of the future return of the hospitality market. They are motivated to become part of the brands’ portfolio, thus benefiting from their awareness and preference, the power of Accor's distribution networks and loyalty club, both in Europe and in Romania.

AI

WHAT IS THE ARTIFICIAL INTELLIGENCE REVOLUTION AND WHY DOES IT MATTER TO YOUR BUSINESS? As a species, humanity has witnessed three previous industrial revolutions: first came steam/water power, followed by electricity, then computing. Now, we’re in the midst of a fourth industrial revolution, one driven by artificial intelligence and big data.

BY BERNARD MARR I like to refer to this as the “Intelligence Revolution.” But whatever we call it – the fourth industrial revolution, Industry 4.0 or the Intelligence Revolution – one thing is clear: this latest revolution is going to transform our world, just as the three previous industrial revolutions did.

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WHAT MAKES AI SO IMPACTFUL, AND WHY NOW?

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AI gives intelligent machines (be they computers, robots, drones, or whatever) the ability to “think” and act in a way that previously only humans could. This means they can interpret the world around them, digest and learn from information, make decisions based on what they’ve learned, and then take appropriate action – often without human intervention. It’s this ability to learn from and act upon data that is so critical to the Intelligence Revolution, especially when you consider the sheer volume of data that surrounds us today. AI needs data, and lots of it, in order to learn and make smart decisions. This gives us a clue as to why the Intelligence Revolution is happening now.

After all, AI isn’t a new concept. The idea of creating intelligent machines has been around for decades. So why is AI suddenly so transformative? The answer to that question is twofold: - We have more data than ever before.

Almost everything we do (both in the online world and the offline world) creates data.

Thanks to the increasing digitization of our world, we now have access to more data than ever before, which means AI has been able to

grow much smarter, faster, and more accurate in a very short space of time. In other words, the more data intelligent machines have access to, the faster they can learn, and the more accurate they become at interpreting the information. As a very simple example, think of Spotify recommendations. The more music (or podcasts) you listen to via Spotify, the better able Spotify is to recommend other content that you might enjoy. Netflix and Amazon recommendations work on the same principle, of course.

- Impressive leaps in computing power make it possible to process and make sense of all that data. Thanks to advances like cloud computing and distributed computing, we now have the ability to store, process, and analyze data on an unprecedented scale. Without this, data would be worthless.

WHAT THE INTELLIGENCE REVOLUTION MEANS FOR YOUR BUSINESS I guarantee your business is going to have to get smarter. In fact, every business is going to have to get smarter – from small startups to global corporations, from digital-native companies to more traditional businesses.

Organizations of all shapes and sizes will be impacted by the Intelligence Revolution.

Take a seemingly traditional sector like farming. Agriculture is undergoing huge changes, in which technology is being used to intelligently plan what crops to plant, where and when, in order to maximize harvests and run more efficient farms. Data and AI can help farmers monitor soil and weather conditions, and the health of crops. Data is even being

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gathered from farming equipment, in order to improve the efficiency of machine maintenance. Intelligent machines are being developed that can identify and delicately pick soft ripe fruits, sort cucumbers, and pinpoint pests and diseases. The image of a bucolic, traditional farm is almost a thing of the past.

FARMS THAT REFUSE TO EVOLVE RISK BEING LEFT BEHIND. This is the impact of the Intelligence Revolution. All industries are evolving rapidly.

Innovation and change is the new norm. Those who can’t harness AI and data to improve their business – whatever the business – will struggle to compete.

Just as in each of the previous industrial revolutions, the Intelligence Revolution will utterly transform the way we do business. For your company, this may mean you have to rethink the way you create products and bring them to market, rethink your service offering, rethink your everyday business processes, or perhaps even rethink your entire business model.

FORGET THE GOOD VS BAD AI DEBATE In my experience, people fall into one of two camps when it comes to AI. They’re either excited at the prospect of a better society, in which intelligent machines help to solve

humanity’s biggest challenges, make the world a better place, and generally make our everyday lives easier. Then there are those who think AI heralds the beginning of the end, the dawning of a new era in which intelligent machines supersede humans as the dominant lifeform on Earth.

Personally, I sit somewhere in the middle.

I’m certainly fascinated and amazed by the incredible things that technology can achieve.

But I’m also nervous about the implications, particularly the potential for AI to be used in unethical, nefarious ways.

But in a way, the debate is pointless.

Whether you’re a fan of AI or not, the Intelligence Revolution is coming your way.

Technology is only going in one direction – forwards, into an ever-more intelligent future.

There’s no going back.

That’s not to say we shouldn’t consider the implications of AI or work hard to ensure AI is used in an ethical, fair way – one that benefits society as well as the bottom line. Of course, we should do that. But it’s important to understand that; however, you feel about it, AI cannot be ignored. Every business leader needs to come to terms with this fact and take action to prepare their company accordingly. This means working out how and where AI will make the biggest difference to your business, and developing a robust AI strategy that ensures AI delivers maximum value.

BUSINESS

GARANTI BBVA WINS AWARD FOR DIGITAL BANKING

UFUK TANDOĞAN

Garanti BBVA has announced winning Global Finance's “Best Consumer Digital Bank in Romania” award, confirming the success of its digitalization efforts. It was the bank's 13th award from the monthly business and finance magazine. Garanti BBVA’s performance was evaluated by a world-class panel of judges at Infosys, a global leader in consulting, technology, and outsourcing. The judges evaluated the strength of strategy for attracting and servicing digital customers, success in getting clients to use digital offerings, growth of digital customers, and web/mobile site design and functionality.

“We are proud that our digital channels are widely recognized by the reputable financial magazine Global Finance. Our strategy to invest in their constant development is the right one, as we can see that during these challenging times, the clients prefer to do

banking through our easy-to-use and safe digital channels. With Garanti BBVA Mobile and Garanti BBVA Online, we strive to put the clients in center of our activity and offer them better and personalized products.

Together with our excellent, custom oriented services, our digital channels help us to maintain the trust our customers have invested in us,” said Ufuk Tandoğan, CEO, Garanti BBVA Romania. In the first half of 2020, Garanti BBVA recorded over 47% increase in volume and number of transactions by its mobile retail customers over the same period of 2019. In developing the digital channels, Garanti BBVA Romania is benefiting from the support and know-how of its shareholders.

Garanti BBVA Turkey (TGB) has over 8.9 million active digital customers, while Banco Bilbao Vizcaya Argentaria (BBVA) reached 34 million digital clients. BBVA was recognized last year by Forrester Research as the global mobile banking leader, within the review of the mobile apps of 54 retail banks across the world.

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CITYLINK ACQUIRES MOLDOVA’S RIDE-HAILING PLATFORM ITAXI

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Local shared mobility platform Citylink has announced the acquisition of itaxi, Moldova’s online taxi booking service, via an all-equity deal.

“The tremendous potential of the smart mobility services is not only demonstrated by the ever-growing appetite for the sharing economy in Romania, but also confirmed by the strong growth opportunities within the region.

It is thus natural for Citylink not only to grow its services footprint in Romania, via car and bike-sharing, but also to expand beyond the borders and to acquire another technology leader – itaxi, the first mobility platform of its kind in Moldova, also active in Ukraine, with a demonstrated track record of innovation and reliability since 2012,” said Igor Grosu, CEO, Citylink.

The all-equity deal is the first step on Citylink’s regional expansion roadmap and represents a firm foothold in Moldova’s major

cities, as well as in Ukraine’s Odessa.

An equity deal refers to the sale of the common shares of a company, instead of only the assets. When an equity sale occurs, the acquired company remains the same, with only the ownership structure changing hands between the seller and the buyer. Citylink, Bucharest’s largest car sharing service, has recently announced the addition of a bikesharing service available in Romania’s Capital, as a response to the widely positive impact achieved by the services launch at the beginning of 2020. The company is also eyeing local geographical expansion, beyond Bucharest. itaxi is the first and largest app in Moldova that allows online taxi bookings. The service connects, on a daily basis, thousands of passengers to the partner companies’ drivers.

In addition, earlier this year, the company launched a modern online delivery service.

The platform was created in 2012.

special section

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Luxury industry needs fast changes to overcome challenges

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As the coronavirus pandemic has hit demand, the luxury industry is estimated to recover to 2019 levels no earlier than 2022 or 2023, according to a Bain & Company report.

Faced with a global collapse driven by lockdowns and the shutdown of tourism in all key markets, the luxury industry faces a challenge like never before.

After falling by an estimated 25 percent in the first quarter of 2020, the slowdown should accelerate and could lead to an estimated contraction of between 20 percent to 35 percent for the full year.

Global consultancy firm Bain & Company suggests in its Luxury Study 2020 that China has begun to lead the way toward a recovery and Chinese consumers are set to cement their status as crucial drivers of the industry, accounting for nearly 50 percent of the market by 2025. Luxury purchases made online have increased throughout the crisis and the online channel could represent up to 30 percent of the market by 2025.

“There will be a recovery for the luxury market but the industry will be profoundly transformed,” said Claudia D’Arpizio, a Bain & Company partner and lead author of the study. “The coronavirus crisis will force the industry to think more creatively and innovate even faster to meet a host of new consumer demands and channel constraints.”

The report shows that a strong start to the year in all key regions (Mainland China, Europe, America) was quickly offset by the imposition of lockdowns and the collapse of tourism, which amplified the decline in Europe. Luxury sales in Japan and the rest of Asia also declined, albeit at a slightly slower pace and the consumer mood globally remains subdued.

Online luxury has remained resilient, while traditional models of directly operated stores and department stores have seen sharp drops. Travel retail has been decimated by the shutdown of worldwide air travel.

“As consumers slowly emerge from lockdowns, the way they see the world will have changed and luxury brands will need to adapt,” said Bain & Company partner and report co-author Federica Levato. “Safety in store will be mandatory, paired with the magic of the luxury experience: creative ways to attract customers to store, or to get the product to the customer, will make the difference.”

All categories have seen declines, with accessories showing the most resilience and watches declining the most due to a lack of online sales platforms to offset the shutdown of physical channels.

LUXURY& LIFESTYLE pages 38 - 71

Looking towards the future It will take time for the market to recover. Bain & Company anticipates that a recovery to 2019 levels will not occur until 2022 or 2023. Market growth will resume gradually from then on, reaching an estimated 320-330 billion euro by 2025.

“The speed of future market growth will depend on luxury players’ strategic responses to the current crisis and their ability to transform the industry on behalf of the customer,” said Federica Levato.

Chinese consumers are set to confirm their place as the most important buyers of luxury, accounting for nearly half of all purchases worldwide by 2025.

As a region, mainland China will account for 28 percent of the luxury market, up from 11 percent in 2019.

The online channel, already experiencing doubledigit growth in 2019, will continue to gain share and account for up to 30 percent of the market by 2025.

This goes hand-in-hand with the younger generations becoming the majority of the luxury market.

Luxury players will need to face disruption head-on Faced with a crisis like never before, luxury players will need to act now to create their future.

Every aspect of the market, from creation to distribution, marketing to supply chain, and crucially the interaction with the final customers will need to be re-imagined to suit a changed world.

“Winning brands will be the ones that best interpret the zeitgeist all while remaining consistent with their inner DNA and individual story,” said Claudia D’Arpizio.

McKinsey report assesses pandemic impact A recent McKinsey report claims that even before the pandemic struck, independent luxury-goods wholesalers in Europe (many of which are small, family-owned boutiques) and some of the large North American luxury department stores were already struggling - in part because of luxury brands

TOP BRAND moving to vertical integration over the past 20 years and, more recently, the growth of e-commerce.

According to the report, this pandemic might force some of them out of business. The damage could extend to brands that have not yet fully transitioned to a vertically integrated distribution model, as well as to upstart brands that need wholesale channels to reach new customers and to finance the development of their full collections.

To survive, wholesalers are likely to adopt aggressive commercial and discount policies - which, at least in the medium term, could hurt the luxury positioning of brands that don’t have a concession model.

From global traveler to local shopper The luxury sector appeals to a global consumer: 20 to 30 percent of industry revenues are generated by consumers making luxury purchases outside their home countries. In 2018, Chinese consumers took more than 150 million trips abroad; we estimate that purchases outside the mainland accounted for more than half of China’s luxury spending that year. Asian shoppers buy luxury goods outside their home countries not only to benefit from lower prices in Europe, but also because shopping has become an integral part of the travel experience: buying a brand in its country of origin comes with a sense of authenticity and excitement. With the recent travel restrictions, an important driver of luxury spending has come to a halt, and we anticipate only a gradual ramp-up in international travel, even after the restrictions are lifted. That said, Chinese consumers remain the biggest growth opportunity for the luxury sector. Brands, clearly, will need a new approach to attracting luxury shoppers. To reactivate Asian luxury consumers in their home countries, brands can focus on creating tailored local experiences, strengthening their digital and omnichannel offerings, and engaging more deeply with consumers in tier-two and -three cities. The latter will be challenging, given the limitations in both retail infrastructure and customerservice capabilities in those cities.

Shows without live audiences Fashion weeks and trade shows have been essential ways that brands have maintained vibrant relationships with consumers and trade partners.

While a return to normalcy is expected, the luxury industry - in close collaboration with fashion-week organizers and trade associations - should explore alternative ways to deliver the same kind of magic that these events offer when there are restrictions on international travel and large gatherings. Industry players might also consider pushing for a coordinated revamping of the fashion calendar, with brands simplifying and streamlining their presentation calendars.

From ownership to experience, and back again “Experiential luxury” - think high-end hotels, resorts, cruises, and restaurants - has been one of the most dynamic and fast-growing components of the luxury sector. Millennials opted more for experiences and “Instagrammable moments” rather than luxury items.

Baby boomers (born 1946–64), too, were moving in this direction, having already accumulated luxury products over the years. While we expect the positive momentum of experiential luxury to persist, it will slow down in the short term as consumers temporarily revert to buying goods over experiences.

Hyperpolarization in performance Even before the crisis, it made little sense to talk about the sector in terms of averages because growth rates and profit margins were so widely spread out. Even within the same segment and price point, luxury brands’ growth varied from 40 percent to negative percentages, and earnings from 50 percent to single-digit percentages. A further polarization is expected based on three fundamentals: the health of a brand’s balance sheet prior to the crisis, the resilience of its operating model (including its digital capacity, the agility of its supply chain, and its dependence on wholesale channels), and its response to COVID-19.

Over the past decade, European luxury conglomerates, private equity firms, and, more recently, US fashion groups and Middle Eastern investors eagerly snapped up attractive acquisition targets. As a result of the current crisis, some of these acquirers - particularly those that aren’t luxury companies themselves-could find that they have neither the core competencies nor the patience to nurture these high-potential brands, and thus might be willing to put them back on the market. Acquisitions that were once forbiddingly expensive could become

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viable in the post-crisis period. Such developments could result in further industry consolidation or even the formation of new luxury conglomerates.

Time and again, the luxury industry has proved capable of reinvention.

Much will depend on their ability to respond to the short-term urgencies related to COVID-19 while simultaneously planning and executing for the future.

As stores remain closed in many parts of the world, e-commerce is a crucial channel for keeping sales up, communicating with customers, and forging a sense of community around a brand. Accelerate your digital investments and shift media spending to online channels, with a focus on customer activation rather than brand building. Aside from enhancing your own websites, also consider partnerships with reputable eretailers. Digital marketing could help not only boost online sales but also entice consumers to visit stores once they reopen.

More than 40 percent of global luxury-goods production happens in Italy - and all the Italian factories, including small, family-based façonniers (a French term that loosely translates to “contract manufacturers”), have temporarily shut down. Luxury companies should assess, category by category and product by product, where the impact is likely to be felt most acutely. Potential short-term actions include moving inventory across regions and channels, privileging geographic markets that are less affected, and making sure to fulfill online orders. In the medium term, luxury companies should help production partners recover by making prompt payments and restoring production as quickly as possible. If Italy’s façonniers do not survive, a signature element of the luxury ecosystem—the craftsmanship that is the result of excellence and skill passed down through generations, and the source of the “Made in Italy” aura—could be lost forever.

Technology - from remote-working platforms to virtual showrooms—can help luxury companies maintain productivity during the crisis and, perhaps, even improve productivity for good. In addition, the commercial elements (such as virtual showrooms and digital prototyping and sampling) will be valuable in maintaining strong relationships with buyers, even during times when travel restrictions are in place. Digitizing the supply chain from end to end will, of course, require investment in innovative, leadingedge technologies.

While the COVID-19 pandemic has made for a challenging 2020, the authors of the McKinsey study are confident that, with careful planning and deft execution, the luxurygoods sector can successfully weather the crisis and emerge even stronger.

MB&F + L'ÉPÉE 1839

DESTINATION MOON Conceived by MB&F and manufactured by L’Epée 1839, Switzerland's premier clock maker, Destination Moon is the quintessential torpedoshaped rocket of childhood dreams. But look more closely and you will see that its minimalistic form is evocative rather than definitive.

Hours and minutes are displayed on large-diameter stainless steel discs with stamped numerals. While the legibility of the time display is not in question, focusing on the time rather than the spectacular, vertically-structured, open movement is likely to require deep concentration.

Destination Moon was previously crafted in limited editions of 50 pieces each in black, blue, green or palladium - and now a fifth edition in red!

The vertical architecture of L’Epée 1839's eightday movement was developed specifically for Destination Moon and follows the basic principles of a real spaceship. The power comes from the oversized winding crown in its base and the control systems are above the power source: Destination Moon has a vertical regulator underneath the time display, as well as a timesetting knob at the top of the movement. The regulator with its animated balance is protected from cosmic radiation (and curious fingers) by a panel of virtually invisible mineral glass.

And then there's Neil: a smile-inducing, space-suited figurine forged in solid silver and stainless steel, magnetically attached to the ladder connecting the crown

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to the movement. Neil imparts a childlike sense of wonder by putting man into the machine.

THE CREATOR L'EPÉE 1839 Dedicated to making high-end clocks, L'Epée has been a prominent Manufacture for over 180 years. Founded in 1839 by Auguste L’Epée in France’s Besançon region, the company originally focused on producing music boxes and watch components. The brand was synonymous at the time with entirely hand-made pieces.

From 1850 onwards, the Manufacture became a leading light in the production of ‘platform’ escapements, creating regulators especially for alarm and table clocks, as well as musical watches. It became a well-known specialist owning a large number of patents on exceptional escapements and the chief supplier of escapements to several celebrated watchmakers of the day. L'Epée has won a number of gold awards at international exhibitions.

L'Epée 1839 is now based in Delémont in the Swiss Jura Mountains. Under the impetus of its CEO Arnaud Nicolas, it has developed an exceptional table clock collection, encompassing a full range of sophisticated clocks. All models are designed and manufactured in-house. Their technical prowess, combination of form and function, very long power reserves and remarkable finishes have become signature features of the brand.

SPECIFICATIONS DISPLAY Hours and minutes on two revolving stainless steel discs NEIL Astronaut figurine: solid polished silver with stainless steel helmet, magnetic LANDING PODS

Landing pods in palladium-plated brass, with PVD coating for the blue, green and black editions, or anodized aluminium for the red edition MATERIALS Body in palladium-plated brass, stainless steel and nickel-plated stainless steel ENGINE In-house movement designed and manufactured by L'Epée 1839 Balance frequency: 2.5 Hz / 18,000 bph 164 components / 17 jewels Manual-winding / 8 days power reserve DIMENSIONS & WEIGHT Height: 41.4 cm Diameter at base: 23.3 cm Weight: approx. 4.0 kg WINDING Manual winding by rotating the propulsion wheel at the base of the rocket Power reserve: 8 days

LUXURY & LIFESTYLE - TOP BRAND

AUDEMARS PIGUET’S FROSTED GOLD ROYAL OAK CONCEPT FLYING TOURBILLON REVEALED Swiss watchmaker Audemars Piguet has revealed the newest Royal Oak Concept Flying Tourbillon featuring a frosted white and rose gold finish.

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Audemars Piguet’s newest Royal Oak Concept Flying Tourbillion has been revealed and features a clean circular design that draws the eye inward to the diamond-encrusted flying tourbillon cage.

The latest in the “Royal Oak Concept” range, this is a smaller design compared to the majority

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of the oversized Royal Oak Concept men’s watches and is the first time it has been offered with a frosted case.

While the Audemars Piguet Royal Oak Concept has been around since 2002, it wasn’t until 2018 that a flying tourbillon was introduced to the range.

Suspended from underneath, the flying tourbillon doesn’t require an overhead bridge and facilitates a slimmer design.

Available in either 18ct pink gold or white gold, the latest edition revisits the frosted look first introduced in 2016 through the collaboration with Italian jewelry designer Carolina Bucci.

Using a decorative Florentine technique of “frosting,” a diamond-tipped tool is used to hammer thousands of tiny indentations into the metal that creates a sparkling effect as though it were precious stones or “diamond dust.”

To maintain a clean and unfettered view of the mesmerizing dial, no hour markers have been included. Still, the two small semi-skeletonized luminescent hands allow the wearer to quickly tell the time at a glance.

Taking a look closer inside the 38.5mm frosted and satin-brushed case, the watch face consists of a sunburst blue multi-layered dial with four concentric ovals stepping down towards the diamond encrusted flying tourbillon cage positioned at 6 o’clock.

Compared to previous frosted Royal Oak editions powered by the automatic caliber 3120 and caliber 2713 quartz movements, the new Frosted Royal Oak Concept has a 72-hour power reserve and is powered by Audemars Piguet’s caliber 2964 with a hand-wound flying tourbillon, a design only a few expert watchmakers have the necessary skill to create.

Both editions are available on either a blue “large square-scale” alligator strap or a blue textured rubber strap with a constellation motif.

Audemars Piguet Royal Oak Concept Frosted Gold Flying Tourbillon 38.5 mm Diameter: 38.5 mm Material: 18 pink or white gold with hammered finish Crystal: Sapphire Water-resistance: 20 m Movement: Cal. 2964 Functions: Hours, minutes, and tourbillon regulator Winding: Hand-wind Frequency: 21,600 beats per hour (3 Hz) Power reserve: 72 hours Strap: Blue alligator with pink gold folding clasp Availability: Only at boutiques Price: CHF 145,000 (USD$159,000)

BEHIND THE LENS: BEAT HALDIMANN H1 FLYING CENTRAL TOURBILLON – REPRISE It’s important to have a clear identity to be successful in the crowded world of watchmaking; perhaps doubly so when attempting to address the microcosmic set of collectors interested in ultra-high-end independent watches.

In my view, every successful independent watchmaker has elements of a “house style” that may attract some buyers and put off others, but nonetheless sets him or her apart. And, at the highest level, this style goes beyond “branding” to become an expression of the personality and artistic vision of the creator.

In the picturesque Swiss town of Thun, Beat

Haldimann and his small team distinguish themselves by focusing on technical virtuosity of the highest order, as typified by the subject of this installment of Behind the Lens: the Haldimann H1 Flying Central Tourbillon.

VIRTUOSITY OF A PARTICULAR TYPE As I researched Haldimann’s work (with special attention to Valentin Blank’s splendid book and the chapter on him in our own Elizabeth Doerr’s Twelve Faces of Time), four very specific themes emerged: Reductionism: the ideas of removing frills rather than adding them and reducing a concept to its

essence. With Haldimann, this idea extends beyond the H1 all the way to radical expressions like the H8, a watch with central tourbillon but no hands to indicate the time. And the H9, with its opaque black front surface that allows no observation of the mechanism at all!

Germanic-style classicism: as evidenced by the full rear plate of the movement and the reinterpretation of the tourbillon developed in the last century by Glashütte maestro Alfred Helwig, who made Breguet’s design into a flying tourbillon. Haldimann has taken major elements of the Helwig design, including the lyre-shaped tourbillon carriage, brought them forward to today, and enhanced them with features including a greatly increased tourbillon size.

His H2 watch includes not one, but two tourbillons that resonate with each other while revolving about the center of the watch. And in the H1, resonance takes the form of a “singing” tourbillon carriage that resonates with the slow-beat escapement to produce a lovely pocket watch-like ticking.

Quick Facts Haldimann H1 Flying Central Tourbillon Case: 39 or 42 x 10.8 mm in yellow, rose, and white gold or platinum Movement: manually wound Caliber H-Zen-A with central one-minute flying tourbillon; 38-hour power reserve Functions: hours, minutes; seconds (indicated by pointer on tourbillon cage) Dial and hands: dial available in black, silver, or rhodium with numerals in black, silver, gold, green, red, or blue; hands in steel or gold Retail price (2014): 171,800 Swiss francs in gold and 180,800 Swiss francs in platinum; recent preowned and auction sale prices fall between $68,500 and $85,000

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LUXURY & LIFESTYLE

TOP BRAND

THE NEW $520,000 FRANCK MULLER VANGUARD REVOLUTION 3 SKELETON The new Franck Muller Vanguard Revolution 3 Skeleton features a triple-axis tourbillon movement for the first time in the brand’s popular Vanguard case.

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For fans of Franck Muller’s triple-axis tourbillon movement and the Vanguard watch shape – this is for you. For the first time, the Swiss watchmaker has revealed the Revolution 3 triple-axis tourbillon movement in its popular Vanguard case.

Founded in 1991 by master watchmaker Franck Muller and a watchmaking specialist and entrepreneur Vartan Simarkes, the House of Franck

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Muller is known for its highly technical complications and innovations, produced in-house at Genthod, Geneva.

One particular innovation is the “Triple Axis Tourbillon” first created in 2004 which was the world’s first tri-axial tourbillon, designed to correct the forces of gravity in all positions (contrary to a classic one which only compensates when the wristwatch is in a vertical position ie, Franck Muller Revolution 1, or the double-axis tourbillon in Revolution 2).

Previously Franck Muller has debuted the tripleaxis tourbillon in the iconic Cintrée Curvex case, easily identifiable by its perfectly curved tonneau body and known as the Cintrée Curvex Revolution 3 model.

For the first time, the triple-axis tourbillon “Revolution 3” has now been released in Franck Muller’s more sporty looking Vanguard case, designed to cleverly integrate the strap inside the case to retain the smooth curves of the watch.

Featuring an eye-catching skeleton movement, the Vanguard Revolution 3’s large sapphire dome case allows viewers to see the inner-workings and watch as the triple-axis tourbillon works effortlessly to correct the force of gravity in all positions.

Dominating the lower half of the movement, the triple-axis tourbillon slowly turns through the one-hour, eight-minute, and 60-second cycles of its respective three carriages.

Power flows from the gear train through all three carriages to activate the balance wheel five times each second. As the Revolution 3 has three carriages, the gear train has significant resistance to overcome. To provide an abundance of energy to drive this triple-axis tourbillon, the movement has a massive ten days of power reserve.

There are also two retrograde indications at 4 and 8 o’clock for the progression of the eight-minute carriage and the 60-second carriage.

The Vanguard case itself is made of grade-2 titanium and has been treated with black PVD coating. In contrast, the bright red strap features Alcantara® (a material popular with supercar interiors like those of Lamborghini), which effortlessly takes the shape of the wrist and complements the red detailing on the movement and the Vanguard case.

Price for the Franck Muller Vanguard Revolution 3 Skeleton Watch is CHF 480,000 excluding taxes (approx US$520,000) with first deliveries scheduled from September 2020.

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WATCHES & WONDERS 2020: JAEGER-LECOULTRE MASTER GRANDE TRADITION GRANDE COMPLICATION Highlighting its expertise in chiming watches, Jaeger-LeCoultre reinterprets its Master Grande Tradition Grande Complication with a magnificent new design. the new Master Grande Tradition Grande Complication harnesses more than a century and a half of accumulated expertise. This masterpiece of mechanical engineering incorporates two of the most romantic yet technically challenging complications in horology: a minute repeater and a celestial vault. The complex mechanism is further elevated by an orbital flying tourbillon. This limited edition of eight pieces each in rose gold and in white gold features a new aesthetic that reaffirms JaegerLeCoultre’s mastery of the artistic crafts.

Over the past 150 years, minute repeaters have had a major presence in Jaeger-LeCoultre’s portfolio of complicated timepieces. La Grande Maison’s mastery of chiming watches is confirmed by more than 200 calibres, including some 100 minute repeaters made before the year 1900.

The new Master Grande Tradition Grande Complication embodies Jaeger-LeCoultre’s mastery of astronomical complications in its celestial vault complication, which defines the dial of the watch.

Jaeger-LeCoultre first brought together the technical innovations of its new generation minute repeaters

with an astronomical display in the original Master Grande Tradition Grande Complication of 2010. That watch also introduced the Orbital Flying Tourbillon, integrating it into the mechanism as a regulating device.

A golden sun-shaped pointer set at the edge of the disc of constellations indicates the date, the month, and the signs of the Zodiac, as well as the 24-hour scale that is marked on the inner flange of the dial.

A multiple-level dial amplifies the beauty of the celestial theme while also showcasing the orbiting tourbillon. On the deepest level of the dial, a midnight blue or black disc —depending on the model— is decorated with tiny stars. Above it, a delicate laser-welded filigree forms a dome, its structure echoing the pattern of the constellations marked on the convex celestial disc.

The manual wound JLC calibre 945 with 52 jewels provides a power reserve of 40 hours when fully wound. The watch is water-resistant to 50 meters and available in a limited edition of 8 pieces for each model

LUXURY & LIFESTYLE TOP BRAND

RICHARD MILLE INTRODUCES THE RM 57-03 TOURBILLON SAPPHIRE DRAGON A dragon sculpted in crystal.

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Most of Richard Mille’s recent – and bestselling – watches have mainly been ultralight and extremely technical in terms of materials and styling. The new RM 57-03 Tourbillon Sapphire Dragon is different. Instead it harks back to an earlier era of Richard Mille from not too long ago, when decorative techniques were employed to create unusually

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intricate watches like the Boucheron tourbillon.

Originally unveiled in 2012, the RM 57-01 was initially launched as the “Jackie Chan” edition, designed in collaboration with the Hong Kong action star and bearing a miniature dragon sculpture on the movement. Subsequent iterations included the RM 57-02 where the dragon was replaced by a falcon, a motif popular in the Gulf.

Available only in Asia, the RM 57-03 Tourbillon Sapphire Dragon is essentially a variant of the RM 57-01 the dragon executed in sapphire crystal and gold, the first time Richard Mille has created a sculpture in that material.

Produced by Olivier Vaucher, a microdecoration specialist in Geneva that serves

brands including Roger Dubuis, Van Cleef & Arpels and Zenith, the sapphire body of the dragon is first milled from a block of sapphire, and then laser engraved to create its detail.

Then the engraving is finished and polished by hand.

The sapphire pieces are then joined to solid red gold components that make up the dragon’s head, tail, limbs and spine. To highlight the dragon’s tongue and eyes, both are painted red with a tiny brush. And to match that, the endstone of the tourbillon is a large, round ruby in a rose gold chaton.

The watch is powered by the cal. RM 57-03, a variant of the hand-wound movement that is found in most Richard Mille tourbillons. It’s produced by Renaud & Papi, the complications workshop of Audemars Piguet. Here the movement base plate has been open-worked in a spiral pattern.

The watch pictured has a case made of NTPT

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Carbon, a carbon composite made by Swiss carbon specialist North Thin Ply Technology (NTPT). The layers of carbon inside create its distinctive grained appearance.

Other versions of the RM 57-01 will be produced, including five with a clear sapphire case.

Key facts Diameter: 42.7mm Height: 14.55mm Material: Carbon composite, or

THE VOUTILAINEN 28TI WRISTWATCH PERFECTLY ENCAPSULATES THE PHILOSOPHY OF KARI VOUTILAINEN

sapphire crystal Water-resistance: 50m Movement: RM 57-03 Functions: Hours and minutes Winding: Hand-wound Frequency: 21,600bph, or 3Hz Power reserve: 48 hours Strap: Rubber with folding clasp The RM 57-03 Tourbillon Sapphire Dragon is a limited edition of 55 watches, all available only at Richard Mille boutiques in Asia.

Within the 55 pieces there will be variations in case material as well as the style of the dragon inlay. Five of the watches will have a clear sapphire crystal case.

Prices are unavailable, but expect the base model in NTPT Carbon to start at approximately US$950,000.

Its elegant and strong mechanism is housed in a stylish and robust case.

The in-house movement of the Vingt-8 was designed, built, fabricated, finished and assembled in its entirety in Voutilainen workshops. The design and philosophy of the movement combines respect for longevity and precision with classical watchmaking tradition.

The movement has a very large balance wheel manufactured in-house, allowing perfect regulation of the watch to within strict tolerances.

To equip such an exceptional timepiece, a very rare and unique balance- spring system has been used. The exterior of the spring uses a typical Phillips overcoil, while the internal curve uses the little known Grossmann curve.

The escapement makes the movement very special; this is the first watch to have two escapement wheels in such a configuration. The escapement wheels give a direct impulse to the balance through the impulse roller/jewel. This escapement is extremely efficient and requires much less energy than traditional lever escapements, offering benefits in terms of longevity and stability in day-to-day use.

The balance-wheel bridge is sublimely elegant, offering an unimpeded view of the escapement and balance. It also allows the enthusiast to admire the extremely neat synchronized movements while watching the time.

The surfaces of pinions and wheels are completely flat and highly polished to within exceptionally uniform tolerances. All finishing work on the main plate and bridges is by hand to achieve the highest possible levels of surface finish.

Screws and all steel parts are finished and polished by hand.

The Voutilainen 28ti is limited to eight total pieces in titanium.

LUXURY & LIFESTYLE - TOP BRAND

THESE 4 WOMEN’S WATCHES WILL HELP YOU CONQUER THE BOARDROOM Arm yourself for success.

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CARTIER BAIGNOIRE Cartier has never had a problem appealing to women, but this year the French luxury-goods house was one of the few watchmakers that introduced a slew of new feminine models—and it paid off.

Among the best are the edgy, elongated Baignoire models, such as this Allongée version that takes Cartier’s exaggerated Roman numerals and encapsulates them in a “Clou Carré motif” rose-gold case. First created

by Louis Cartier in 1958, the watch takes its name from the French word for bathtub in a nod to its unusual oval shape, but this graphic watch was made for a modern woman—the kind who’s busy plotting her rise rather than soaking up leisure time. ($24,700)

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A. LANGE & SOHNE LITTLE LANGE 1 MOONPHASE A. Lange & Söhne is the watchmaker for connoisseurs, and this timepiece has as much prestige as the legendary brand itself.

Revived in the early ’90s by the founder’s greatgrandson—145 years after the company was founded—this model celebrates the Lange 1’s 25th anniversary with exceptional guilloche details on a solid-gold dial. It’s a prime example of what Lange does best: over-the-top finishing and supreme watchmaking housed in an understated, elegant design. ($51,900)

PATEK PHILIPPE NAUTILUS REF. 7118 If you’re looking to get noticed in power circles, this is the timepiece to put on your wrist.

The rare Nautilus is one of the most hard-won acquisitions in watch collecting today, reserved only for Patek Philippe’s most serious clients.

Its simple, retro, ’70s design is all the rage among those who know, and secondhand prices have skyrocketed accordingly. It’s the kind of watch that suggests you’ve struck gold—without having to dig for it. ($47,629) AUDEMARS PIGUET MILLENARY You don’t need a watch to tell time anymore, but you may want a watch to remind you to slow down.

The latest version of Audemars Piguet’s Millenary watch—an oblong-shaped version of the timepiece you may have spotted court-side on Serena Williams—shows only the hour with a single hand and no index markers. It’s a nod to 17th-century single-hand timepieces, which were more costefficient to produce. Here, however, the bare-bones representation of time is pure luxury. The watch features a new selfwinding movement, the caliber 3140, with a patented mechanism that moves the hand in an elliptical path around the color-plated dial. ($29,500)

GENUS FORGES AHEAD WITH A NEW DAMASCUS TITANIUM TIMEPIECE Newcomer to the watchmaking scene, Genus unveils a new look for its awardwinning GNS1.2 in blued damascene titanium.

Only a year has passed since Genus unveiled its first timepiece, the GNS1.2 WG, last June. Since then, the brand has been on a thrilling rollercoaster ride with a win at the Grand Prix d’Horlogerie de Genève prestigious boutique openings, and more.

Even COVID-19 hasn’t slowed the brand down as it unveils another new model, the GNS1.2 TD, this time in a flame-blued damascene titanium case.

WHAT IS DAMASCENE TITANIUM? The Damascus metalworking technique dates back to 900 AD in the region of Damascus, Syria, and traditionally uses steel and iron. This ancient savoir-faire involves melting and folding the metal over and over so that when it is cut, it reveals this mesmerizing pattern of waves. It is historically used for making swords and daggers as it is both resistant and flexible and blades in this material stay sharper longer.

THE GENUS DAMASCENE TITANIUM CASE Genus has taken this traditional Japanese technique and created a titanium-only billet, adding a serious level of difficulty to the process. Titanium is three times harder than steel and is forged at temperatures 300 degrees higher. To enhance the wave pattern, Genus used different titanium alloys that were then blued with an open flame to produce

this bright blue color.

A BESPOKE FINISH Each and every GNS1.2 TD is unique thanks to the final cut of the metal, which creates a unique pattern with every cut. The owner of each timepiece is also invited to the forge for the final process of coloring the case with an open flame. Genus calls this the “Damascene Revelation,” and each future owner can dictate the intensity of the color and the surface finish (which can be matte, satin, or polished), making each piece truly unique.

THREE NEW IMPROVEMENTS TO THE GNS1.2 For this new version, Genus is also introducing three updates to the model. The first is a new sapphire crystal, which eliminates the perceived ridges on the upper perimeter, reducing visual distortion and thereby offering a clearer view of the dial. The second change is the possibility to orient the direction of the free-moving elements that flow in a pattern to indicate the tens-of-minutes, creating more possibilities for personalization.

And last but not least, each watch now comes with a digital certification which will stay with the timepiece throughout its lifetime.

READING THE TIME To explain how the watch works in words is no easy task, but in a nutshell, the 12 satellites (one for each hour) make a complete revolution around the outside of the dial once every 12 hours. The fixed white arrow on the left points to the current hour as the satellites scroll by. Moreover, for the numerals to be consistently readable as they rotate, the satellites orient themselves, pivoting 90 degrees every hour, using a patented mechanism.

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KOENIGSEGG GEMERA THE WORLD’S FIRST MEGA-GT EXTREME MEGACAR MEETS SPACIOUS AND PRACTICAL INTERIOR

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Ultimate performance has belonged to the world of two-seaters with very limited luggage space – until now.

The Gemera is the world’s first Mega-GT and Koenigsegg’s first four-seater. Extreme megacar meets spacious interior and ultimate environmental consciousness.

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The Gemera seats four large adults comfortably with space catering to their carry-on luggage, meaning the Koenigsegg megacar experience can be shared with family and friends.

The notion behind Gemera’s name – a combination of the two Swedish words – “ge” (give) and “mera” (more) signifies “to give more”. A suitable name for a car that adds features and functions without taking away anything that makes it a true megacar.

It is not often one can say a new category of car has been created. But in the case of the Gemera it has to be believed – the Mega-GT.

ULTIMATE PERFORMANCE Since the birth of the company more than 25 years ago, Koenigsegg has been driven to create the ultimate performance car.

Despite being a four-seater, the Gemera easily outperforms most twoseat megacars, both combustion and electric. Still, the focus of the Gemera is taking on long-range public roads – family trips, in comfort, style and safety with never-before-experienced performance.

With its 1.27 megawatts of power and 3500 Nm of torque, the Gemera goes from 0 to 100 km/h in 1.9 seconds and to 400 km/h in record matching pace.

The Gemera comes with the most amazing sound from a 3-cylinder engine ever.

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The Gemera is limited to an edition of 300 cars.

THE TINY FRIENDLY GIANT

ond-generation renewable fuel sources are more accessible, the Gemera can also be driven on E85 and in worst case normal petrol.

The Gemera yields a combined power output of 1700 bhp or 1.27 MW. Power output from the three motors – one for each rear wheel producing 500 bhp and 1000 Nm, and one E-motor on the crankshaft that produces an extra 400 bhp and 500 Nm to power the front wheels – add up to 1400 bhp as individuals and 1100 bhp when combined.

The Gemera’s 2-liter 3-cylinder dry sumped twin-turbo Freevalve engine, named the Tiny Friendly Giant (or TFG for short) adds another 450 kW or 600 bhp. The TFG is a progressive outlook on the powertrains of tomorrow. The TFG offers a lighter, more efficient cradle-to-grave solution compared to any combustion engine before it. Combined with electrification, the Gemera can be argued to be cleaner than a long-range EV, by using next-generation combustion technology designed for next-generation renewable liquid fuels, together with a small battery plug-in electrification.

The Gemera, if plugged in and filled with Gen 2.0 ethanol or CO2 neutral methanol like Vulcanol or any mix thereof, becomes at least as CO2 neutral as a pure electric car. Before these sec-

PLUGGED IN TO GO FURTHER Equipped with three electric motors, the Gemera can drive completely silent up to 300 km/h, and the powerful 800V battery offers in itself a range of up to 50 km.

The silence in EV mode disguises the true battle cry of the Gemera. When the TFG is activated and the gas pedal hits the floor the Gemera comes alive with a riotous roar as it disappears into the horizon.

All-wheel steering and torque vectoring The 3000 mm wheelbase gives unprecedented comfort and straight-line stability. The rear-wheel steering makes sure the Gemera corners with agility and can achieve a turning radius only seen in smaller cars. At high speed, the rear-wheel steering also gives even better directional control. The mix of allwheel steering and all-wheel torque vectoring gives limitless tunability and adaptability of steering and driving feel, making it possible for the Gemera to be one of the most fun and safe cars on the planet.

SAFETY IN FOCUS The Gemera is one of the safest megacars out there and it is designed

for world-wide homologation. The Gemera has a very strong carbon fiber monocoque, six smart airbags, stability control, TC, ABS and ADAS 2.5. It lacks nothing in ultimate safety.

The all-wheel steering and all-wheel drive and all-wheel torque vectoring give the Gemera maximum opportunity to offer a safe, stable and exhilarating drive. ISOFIX is available for both rear seats.

100% FOUR-SEATER, 100% KOENIGSEGG The Gemera is the first of its kind in a completely new vehicle category. Still, it has clear ties to all previous Koenigsegg cars and their Swedish and understated design roots. The Gemera maintains many recognizable Koenigsegg traits like its wrap-around jet fighter inspired windshield, the hidden A-pillars, the simple shapes, the short overhangs and the large side air intakes. The front design is inspired by the first-ever Koenigsegg prototype – the Koenigsegg CC from 1996. Of course, the Gemera features giant fulllength Koenigsegg Automated Twisted Synchrohelix Actuation Doors (KATSAD) that open wide. The doors are unhindered by the absence of B-pillars, thanks to a strong carbon monocoque.

The door openings reveal an impressive four-seater space that boasts equal ease of access, comfort and respect for both front and rear passengers.

LUXURY CARS

CALIFORNIAN HYDROGEN ELECTRIC SUPERCAR “HYPERION XP-1” PROTOTYPE REVEALED

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Southern Californian technology company Hyperion has revealed the prototype of the futuristic-looking hydrogen-powered XP-1 supercar.

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Californian technology company Hyperion has revealed the prototype for the futuristic-looking hydrogen-powered XP-1 hypercar that has an impressive 1,000-mile range and utilizes space-age technology.

Initially scheduled to be revealed at the New York Auto Show, the reveal was brought forward online in the wake of COVID-19 induced event cancellations.

Founded in 2011 by an expert team of PhD’s, Hyperion is a technology company that consists of three divisions, Hyperion Energy, Hyperion Motors, and Hyperion Aerospace, all of which are focused on hydrogen-based power and delivery.

Now a team of over 200 researches and scientists, including ex-NASA engineers, have spent more than ten years developing, testing, and researching the hydrogen technology required to create the XP-1. “The XP-1 was partially designed to function as an educational tool for the masses.

Aerospace engineers have long understood the advantages of hydrogen as the most abundant, lightest element in the universe, and now, with this vehicle, consumers will experience its extraordinary value proposition,” said Angelo Kafantaris, Hyperion CEO and founding member. “This is only the beginning of what can be achieved with hydrogen as an energy storage medium. The potential of this fuel is limitless and will revolutionize the energy sector.”

Capable of a 1,000-mile range, the hydrogen storage technology of the XP-1 means it can be recharged in less than 5 minutes at public stations thanks to the electric energy fuel cell systems.

Compared to heavy lithium batteries traditionally found in electric vehicles, the lightweight fuel cell systems provide all of the benefits of electric cars but without the added weight, extended charging times, battery degradation, and expensive recycling costs.

Without the need to carry heavy batteries, the acceleration of the Hyperion XP-1 allows the vehicle to hit 0-60mph in under 2.2 seconds and reach a top speed of 220+ mph. As the hydrogen storage system is not affected by extreme temperatures, this also guarantees it can complete these times consistently. Limited to 300 units, the Hyperion XP1 will be produced in the United States beginning in 2022, with prices yet to be announced.

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RENAULT'S ELECTRIC CROSSOVER CONCEPT CAN SHAPE-SHIFT FOR ADDED SPACE The Morphoz concept likely would have been a hit in Switzerland.

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For years, Renault has rolled out some pretty wild concept cars as it previews a future full of electric cars. Yet, I think the Morphoz concept takes the cake simply because it freaking shape-shifts.

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While the basic concept is meant to show off Renault's new CMF-EV platform that'll underpin future electric cars, the Morphoz concept delivers serious pizzazz. Underneath the pretty handsome design is an "adaptable function" that can switch between a City mode and Travel mode.

City mode is for, well, city travel; in this configuration the Morphoz measures 173 inches. It keeps the crossover fairly short to maneuver around tight spaces, but when drivers want more room, they can activate Travel mode. The EV then extends itself to 189 inches and unlocks the capacity to install extra batteries. While the concept boasts a 40-kilowatt-hour battery standard for about 250 miles of range, Travel mode makes room for an additional 50 kWh worth of batteries.

Renault imagines the shape-shifting would occur at a special travel station, and there, I'm assuming some sort of robotic process opens a compartment in the underbody to install the extra batteries. The process would take "seconds," according to Renault. At the end of the trip, the driver makes a stop at the same kind of station to ditch the extra batteries and convert the car back to its City mode size.

Level 3 partially automated technology features in the Morphoz concept, too, and gives the driver the ability to hand off controls in certain situations. Thus, this isn't a self-driving car, even if the interior comforts sound like something you'd see in one. There's a massive screen available for rear-seat passengers to enjoy movies, TV and so on, and the passenger seat swivels to let the occupant interact with those in the back.

Speaking of the rear, the seats automatically move backward when the driver activates Travel mode to provide more interior space.

When it comes time to charge the car, it's all about induction -- aka wireless -- charging.

Renault imagines cities will have invested in specific road technology that will even let this concept car charge while it drives. (My city can't even fill potholes in a timely manner.) The Morphoz concept is super-smart, too, in that when it's not driving, it can power things around the house and share its power with the grid. And with a digital key, this is a shared vehicle not meant for private ownership.

The amazing part of it all is that this concept embodies core features Renault wants to implement in its cars after 2025. The Morphoz concept itself doesn't look drastically futuristic, either. Take away the oversize wheels, add some necessary regulatory equipment, and it looks like something feasible -- not to mention pretty good looking at that. We all know this decade will shake up the auto industry, but maybe further out, we're in for shape-shifting cars.

AUTO

ASTON MARTIN’S NEW 007 “NO TIME TO DIE” INSPIRED VANTAGE AND DBS SUPERLEGGERA To celebrate the upcoming 25th James Bond film “No Time To Die,” Aston Martin’s bespoke division is releasing two special 007 editions of the Vantage and DBS Superleggera.

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Just as much as one associates a martini “shaken not stirred” with special agent 007 James Bond, it is undoubtedly British automaker Aston Martin that jumps to mind when recalling the famous vehicles 007 has thrown around the streets of cities across the world.

Now celebrating the 25th James Bond film “No Time To Die,” Aston Martin’s bespoke division “Q by Aston Martin” has collaborated with film producers EON Productions and are releasing two exclusive limited editions inspired by the vehicles featured in the new film (of which no less than four iconic Aston Martin cars appear – the iconic DB5, DBS Superleggera, Aston Martin’s latest GT, and the Valhalla). “Creating a 007 Edition is always an exciting challenge as we work to develop and style a car that embodies the legend of James Bond” shared Aston Martin Vice-President and Chief Creative Officer Marek Reichmann.” It is an honour to apply carefully judged 007-inspired styling to our sports cars, which gives our customers the opportunity to own a unique piece of both cinematic and automotive history.”

Offered in limited numbers, the first of the two special editions will be the Vantage 007 Edition and

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is inspired by the 1987 The Living Daylights film, which was the first time an Aston Martin appeared in a James Bond movie.

The upgraded Vantage comes in Cumberland Grey and features new exterior styling treatments, including a unique bespoke mesh grille with chrome bezel, a yellow diffuser, and the option to include a limited edition The Living Daylights inspired skis and ski rack. Meanwhile, the 007 Vantage interior features obsidian black leather and dark chrome 007 branding throughout the center console.

Other details include crosshairs etched onto the car’s paddle-shift gear, an embroidered radio station frequency across the sun-visor (96.60 FM referencing the Russian police frequency used in The Living Daylights film to aid his escape) and laser-etched gadget plaque referencing the weapons and devices used on the original film car.

The second special edition, which will be strictly limited to only 25 vehicles, is the Aston Martin DBS Superleggera 007 Edition.

The DBS Superleggera 007 Edition is limited to 25 vehicles and is priced at RRP £279,025, while Vantage 007 Edition will be limited to 100 cars and priced from RRP £161,000.

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MASERATI’S NEW TROFEO COLLECTION HAVE BEEN GIVEN FERRARI BUILT V8 ENGINES Maserati has announced both the Ghibli and Quattroporte Trofeo models will be given sporty Trofeo upgrades and powered by Ferrari built V8 engines.

Beginning in 2018 with the sporty Levante Trofeo SUV, Maserati has now announced the Ghibli and Quattroporte will also receive a supersports upgrade and be made available in Trofeo versions – the top of Maserati’s range.

Powered by a 580 horsepower 3.8 V8 Twin Turbo engine, both the Ghibli Trofeo and Quattroporte Trofeo have a top speed of 326 kilometers an hour and take the title of Maserati’s faster sedans ever. In contrast, the Levante Trofeo’s maximum speed is 302 km/h.

The engine, which is already in the Levante Trofeo, is built at the Ferrari plant at Maranello to Maserati’s specifications, and has been modified and developed to deliver equally impressive performances on the rear-engine sedans.

Although entirely new for Ghibli, the V8 engine has already been used in the past on Quattroporte GTS as the 530 hp version and today is available in the 580 hp V8 engine in the new Ghibli, Quattroporte and Levante Trofeo.

The Ghibli Trofeo has also been given two extra air vents on the hood of the car while the lateral air vents are bordered in red with the distinctive Trofeo badge and features a new front grille finished in Black Piano.

The Trofeo details continue into the interior, with a new on-board panel that displays an exclusive interface at switch-on, and headrests that bear the Trofeo badge with the name in threedimensional embroidery. Both Trofeo models also feature full-grain Pieno Fiore natural leather and carbon fiber inserts with the Italian flag embellished on the central pillar.

Like the Levante Trofeo, the new Ghibli and

Quattroporte Trofeo incorporates the Integrated Vehicle Control (IVC) system, with a specific setup that guarantees enhanced driving dynamics and greater active safety.

580hp V8 engine built in Maranello at the Ferrari plant

Both sedans feature a “Corsa” button that sets the car for an even sportier driving style. Also included is Launch Control, a function that first appeared on Levante Trofeo, to unleash all the engine’s power for the ultimate driving experience. For their official launch, the Quattroporte Trofeo model will be released in green, the Levante Trofeo in white and the Ghibli Trofeo in red to celebrate Maserati’s all-Italian heritage.

The new Ghibli and Quattroporte Trofeo will be built at the Avvocato Giovanni Agnelli Plant (AGAP) at Grugliasco (Turin), and Levante Trofeo at the Mirafiori (Turin) plant.

LUXURY CARS

FIRST BUGATTI DIVO HYPERCARS READY FOR DELIVERY After two years of development at the Molsheim factory, the first Bugatti Divo hypercars are ready for delivery to their new owners.

Only 40 Bugatti Divo’s will be produced.

Unique 3D taillight design of the Divo

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Bugatti has released two cars since it joined the Volkswagen Group in 1998: the Veyron and the Chiron. Both are high-horsepower, multimillion-dollar machines built in strictly limited numbers. That wasn't the original plan; executives envisioned a three-car rangeme proportions [as the Atlantic] but it's as exclusive as it It’s been two years since the Bugatti Divo was first revealed, and now the first Divo’s have been revealed ahead of delivery to their new owners.

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Named after French pilot and Bugatti works racing driver Albert Divo who won six Grand Prix races and two Targa Florio’s, the limited edition Bugatti Divo takes a page out of the early era custom-bodied Bugatti’s and reimagines coachbuilding.

“The Divo starts a new era at Bugatti – the era of modern coachbuilding,” shared Stephan Winkelmann, President of Bugatti. “With the Divo we have created a highly customised masterpiece of automotive craftsmanship that is a must-have for any Bugatti collection.”

The difference in terms of today’s coachbuilding vehicles like the Divo is that in the past, master body-makers tailored different body shapes to a chassis – they hardly ever modified

the technology. In contrast, with the new Divo development, designers and engineers have modified the technology and boosted the performance.

“We had a host of liberties when we developed the Divo because we limited the top speed to 380 km/h” shared Frank Heyl, Bugatti’s Deputy Design Director. “As a result, we were able to generate more downforce and turn the Divo into a visually and technically independent model.”

An even sportier-looking model compared to the Chiron, the Divo has a host of additional air intakes including a NACA air duct on the roof to help cool the 8.0-liter W16 engine, ducts to cool the brakes and intakes on the bonnet to reduce the front surface of the vehicle and improve airflow. Likewise, a new front spoiler design creates greater downforce.

Divo’s rear is also distinguished by a unique 3D taillight design featuring 44 light-up finds that complement the narrow LED front headlights.

Only 40 Bugatti Divo’s will be produced, with each of the already sold-out models priced at approx €5 million.

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LUXURY CARS

LAMBORGHINI’S FIRST HYBRID SUPERCAR, THE SIÁN, IS ALSO ITS QUICKES With the lowest weight-to-power ratio the brand's V12 family has ever seen, the car is capable of going from 0 to 62 in just 2.8 seconds.

Lamborghini isn’t afraid of the electric future, apparently. Instead the marque envisions the EV era as just another opportunity to do what it does best—create powerful and lightening-fast supercars that serious collectors lust for.

On Tuesday, the Italian automaker unveiled its first hybrid, the Sián. Set to make its public debut at the 2019 Frankfurt Auto Show later this month, the first glimpse of the eagerly anticipated vehicle makes clear that the company isn’t interested in compromises even as it moves into uncharted territory.

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“Not only does the Sián deliver a formidable hyper-car design and engineering tour de force today, it augments the potential for Lamborghini as a super sports car brand for tomorrow and for decades to come, even as hybridization becomes more desirable and inevitably essential,” said Stefano Domenicali, the company’s chairman and CEO. But what’s most intriguing about the Sián— which means means “flash” or “lightning” in Bolognese dialect—is what lays under the hood.

The first thing you’ll notice, of course, is the car’s striking design. The wedge-shaped supercar is a Lamborghini through and through, showing off all the dramatic angles and flourishes you expect from the brand. There are distinct Countach touches throughout the design, most apparent in the car’s aerodynamic roof tunnel. It also features the same Y-shaped headlights that were first seen on the Terzo

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Millennio concept car. The company considers the car the “first step in Lamborghini’s route to electrification” and has outfitted its with a 785hp V12 engine with titanium intake valves. But rather than being powered by a lithium ion battery, this one gets its juice from an ultra-light supercapacitor, the first to be used in a hybrid powertrain. The supercapacitor is charged through regenerative braking, and an additional 34hp electric motor sits between the cockpit and bulkhead to ensure perfect weight distribution. The two takeover whenever the car is operating at low speeds, like when its parking or reversing.

Combining to produce 819 hp, the Sián’s two engines also produce some very serious zip.

With the lowest weight-to-power ratio the Lamborghini V12 family has ever seen, the car is capable of going from 0 to 62 in just 2.8 seconds, a record for the automaker. It can also

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sprint from 20 mph to 40 mph and 45 mph to 75 mph quicker than the company’s extremely powerful Aventador SVJ. But design and performance aren’t the only way the Sián lives up to the Lamborghini name. The brand’s first electrified bull will also be incredibly hard to come by. Apparently the car’s entire production run of 63—in honor of the year the Lamborghini was founded—has already been sold.

Check out more photos of the car below:

ELECTRIC CARS

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2023 CADILLAC LYRIQ FIRST LOOK: QUITE LITERALLY A CAR OF THE FUTURE

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Cadillac enjoyed two years of increasing sales prepandemic, but MotorTrend hasn't exactly been singing the praises of its heart-of-market XT4, XT5, and XT6 crossover vehicles. The brand hopes to change our tune with the 2023 Cadillac Lyriq (like the song), by giving it dramatic proportions and a brand new face, plus Tesla-esque electric performance, range, and technology.

Technically, the "show car" you're seeing here is a concept, but Cadillac assures us it's 80-85 percent production-ready. With the 2023 model year two years away, you can expect the final production Lyriq to look very similar with only some small details changing significantly.

ULTIUM ELECTRIC ARCHITECTURE Cadillac claims that by the end of this decade, almost all of its cars will be electric. This initiative will be spearheaded by the Lyriq, which will follow the 2022 GMC Hummer EV to market by a matter of months on the same new Ultium dedicated EV architecture that will eventually underpin the hand-built flagship Celestiq and other Cadillac models.

The platform will feature rear-wheel or performance all-wheel drive, powered by an under-floor structural battery featuring relatively novel nickel-cobalt-manganese-aluminum chemistry that supports 150-kW DC Fast charging and 19-kW Level 2 home charging. The batteries boast aluminum-intensive cathodes, which reduce the amount of precious, rare-earth (and sometimes ethically problematic) cobalt required by more than 70 percent compared to current GM battery technology. Large, flat, pouch-style cells will be ganged in "smart modules" that incorporate the control electronics, reducing complexity and simplifying cooling.

Cadillac claims battery pack wiring is thereby reduced by 90 percent.

HOW FAR WILL IT GO? So far, Cadillac is only claiming "more than 300 miles." Officials add that whatever the big number is for the rear-drive model, expect to subtract 20-30 miles for the performance AWD version.

NOVEL CHARGING OPTION It would be foolish to propose a new electric vehicle that was not capable of 150-kW DC Fast charging, so naturally the Lyriq is so equipped. But it's also designed to accept Level 2 charging at rates up to 19 kW—about double the 7-11 kW that typical home chargers deliver today. Of course, wiring a charger capable of handling that much juice will require a circuit good for 80-100 amps, which might prove to be a stretch for most existing homes. New mansion and condo/apartment construction can probably incorporate it, however, and workplaces could upgrade their parking lot charger network if the technology proves popular with its executives.

HOW WILL LYRIQ PERFORM? The Lyriq concept that we are seeing is about two years out from production, so Cadillac isn't ready to share power and torque figures, weight estimates, or many other specific details. We do know that what we are seeing is 80-85 percent production intent, that its center of gravity is expected to be 100 mm (3.9 inches) lower than the XT5's, and that its front/rear weight distribution will be very close to 50/50. This will surely help deliver the same impressive flat cornering and pitch-free acceleration and braking we love on most other battery-in-floor performance EVs. The standard rear-drive and performance AWD models will both deliver rear-biased accelerative traction and driving dynamics, no doubt assisted by fast-acting magnetic ride control shocks.

50-LIGHT BLACK CRYSTAL "GRILLE" EVs don't typically need quite as much grille as their combustionpowered counterparts do, but we humans expect to see a "face" on our cars, and Lyriq is showing us the new face of Cadillac. It's an expressive one. When you approach the car, multiple lighting elements comprising the Cadillac crest illuminate in an animated fashion, after which a sequence of 50 LED lighting elements around the bottom and sides of the grille light up, working from the bottom center outward and upward. It's a dramatic effect. That grille is flanked by trademark vertical signature lighting elements.

SCREEN TIME The new Escalade set a pretty high bar with its 38 combined inches of curved OLED screens, but that'll be old news by fall 2022 when the Lyriq hits the road. So its headline-grabber is a single 33-inch (diagonal) curved LED screen boasting "the highest pixel density available in the automotive industry today" (no numbers were provided to fact-check that boast). It's said to be capable of displaying over 1 billion colors—64 times more than any other automotive screen. The screen was designed to look like it's floating on the dash and tailored to the Lyriq—not purchased off the shelf.

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