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WORLD BUSINESS NEWSPAPER

TUESDAY 7 FEBRUARY 2017

EUROPE

Bridging loan

Tech Renaissance

Strangely invisible

Italy’s banks depend on UniCredit’s €13bn share sale — BIG READ, PAGE 7

Europe is starting to fight back against Silicon Valley — JOHN THORNHILL , PAGE 9

Women are the ‘ghosts of modern architecture’ — ARTS, PAGE 6

Fillon ‘fake jobs’ scandal shakes French bonds as Le Pen fears rise 3 Prices hit lowest levels in 18 months 3 Market concerns over far-right presidential boost ELAINE MOORE — LONDON ANNE-SYLVAINE CHASSANY — PARIS

Spread between French & German bonds 10-year benchmark yields, France minus Germany (% points)

Austria Bahrain Belgium Bulgaria Croatia Cyprus Czech Rep Denmark Egypt Finland France Germany Gibraltar Greece Hungary India Italy Latvia Lebanon Lithuania Luxembourg

€3.70 Din1.8 €3.70 Lev7.50 Kn27.50 €3.50 Kc105 DKr35 E£25 €4.20 €3.70 €3.70 £2.70 €3.50 Ft1090 Rup195 €3.50 €6.99 LBP7500 €4.30 €3.70

Macedonia Malta Morocco Netherlands Norway Oman Pakistan Poland Portugal Qatar Romania Russia Serbia Slovak Rep Slovenia Spain Sweden Switzerland Tunisia Turkey UAE

Den220 €3.50 Dh45 €3.70 NKr35 OR1.60 Rupee 280 Zl 20 €3.50 QR15 Ron17 €5.00 NewD420 €3.60 €3.50 €3.50 SKr39 SFr5.90 Din7.50 TL11 Dh15.00

© THE FINANCIAL TIMES LTD 2017 No: 39,390 ★ Printed in London, Liverpool, Glasgow, Dublin, Frankfurt, Brussels, Milan, Madrid, New York, Chicago, San Francisco, Washington DC, Orlando, Tokyo, Hong Kong, Singapore, Seoul, Dubai

The human rights group has said that the Assad regime executed up to 13,000 inmates at one prison between 2011 and 2015, and caused the deaths of thousands more through malnutrition.— PAGE 5

Feb 6 2017

0.778

Martin Schulz, the new Social Democrat leader, has pushed his party to a poll lead over Angela Merkel’s conservatives, raising the possibility the chancellor might lose her bid for a fourth term.— PAGE 2

i Draghi rejects US claims over Germany

Pledges from President Donald Trump to slash US corporate taxes have ignited a debate across the Pacific about whether Chinese levies on businesses will render the country uncompetitive.— PAGE 5

i India phases out daily rail inspections New Delhi has said it will phase out the inspections carried out by 125,000 engineers across its vast network and bring in electronic sensors to try to reduce the number of deadly derailments.— PAGE 5

Oct 3 2016

0.318

i Knife-edge vote over Swiss breaks

Source: Thomson Reuters Datastream

François Fillon arrives on stage to make his statement

Apologies Analysis, page 2

jumped from a record low of 0.1 per cent in July to a high of 1.159 per cent. Eurozone policymakers have pointed to narrowing spreads between Germany and more troubled economies as a sign of increased investor confidence in their policies since the height of the eurozone crisis in mid-2012. Mario Draghi, European Central Bank president, told the EU parliament yes-

Employing his wife was ‘a mistake’, Mr Fillon said. ‘What was acceptable in the past no longer is. I deeply regret it and apologise to the French people’

Anglo American’s chief executive has called on South Africa’s government to end a “20-year rot” in the country’s mining industry by rewriting legislation about black ownership in the sector with investment as a priority. Mark Cutifani said the next three to four months would be the “most important for the South African mining industry in 150 years”, with the ruling African National Congress overhauling laws to redress economic inequality. “We’ve had an industry that’s been shrinking for 20 years. If we are going to stop the rot we need a document and a framework that encourages investment,” he told the Financial Times. Mosebenzi Zwane, the country’s mineral resources minister, told the Mining

terday that the bank did not “target spreads” between eurozone bond yields. It has, however, been a hallmark of Mr Draghi’s tenure to narrow the gap. Policies such as quantitative easing — in which the central bank purchases debt to lower interest rates and spur lending — have countered what the ECB president has described as “financial fragmentation” by lowering the cost of credit in weaker economies. Ms Le Pen’s National Front has campaigned on a nationalist, anti-euro platform, including a pledge that, if France exited the euro, it would redenominate its €2tn national debt. Moritz Kraemer, head of sovereign ratings at S&P, said if euro-denominated obligations were converted to new francs, the rating agency would consider

Photo: Christophe Ena/AP

it a default. Craig Nicol, analyst at Deutsche Bank, said that, for markets, the risks lay in the lack of a convincing alternative to beat Ms Le Pen. He pointed out that the overall poll margin between Mr Fillon, Benoît Hamon, the Socialist candidate, and insurgent Emmanuel Macron for the election’s first round was just 5 per cent. “This is not just about politics,” said Mr Athey. “This is a confluence of politics and the fact that economic data in the eurozone has been improving, which makes investors think the ECB might be questioning how much stimulus is still required.” Additional reporting by Claire Jones in Frankfurt Editorial Comment page 8 French bonds pinched page 20

Indaba mining conference in Cape Town that his department would release a revised South African mining charter about black ownership in March, and press ahead with implementing “a tool for transforming the mining industry”. Rising costs, red tape and political uncertainty have made companies increasingly wary of investing in South African mines, in spite of the country boasting the world’s biggest platinum reserves and significant holdings of coal, gold and iron ore. Mining provides less than a 10th of the country’s gross domestic product, compared with a fifth in the 1970s. The latest mining charter draft requires companies to keep the level of black equity ownership at 26 per cent, even when original investors sell out. This has triggered a furious response from the industry, which has threatened

to take the government to court. The Chamber of Mines, representing the sector in South Africa, said that requiring mining companies to maintain the 26 per cent level could force them to dilute other investors and therefore destroy shareholder value. Mining companies, including Anglo, have argued for a “once empowered, always empowered” view of black ownership. This would mean that, once the level of black equity ownership had reached 26 per cent, thereafter it could fall below that level. Mr Cutifani said that, while “none of us wants to go to court”, it might be necessary if Anglo’s concerns were not reflected in the revised mining charter. “If it doesn’t serve the long-term interest of the industry, it won’t serve the interest of the country. They have to be one and the same,” he said.

World Markets STOCK MARKETS

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iApps 1627

i Amnesty says 13,000 hanged in Syria jail

i US tax plan sparks Pacific debate

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PAGE 8; ADAM TOOZE, PAGE 9; TOYOTA WARNING, PAGE 11

The ECB chief has dismissed US accusations that Germany is deliberately weakening the euro to boost exports at the expense of the US and the rest of the eurozone.— PAGE 2

NEIL HUME AND JOSEPH COTTERILL CAPE TOWN

Analysis i PAGE 3

John Kerry is the latest Obama official to join the fight over the White House travel ban, saying it will make the US less safe.— PAGE 4; EDITORIAL COMMENT,

i Schulz raises stakes in Merkel challenge

Anglo American demands changes to South Africa’s black ownership regime Violence prompts fears in Kiev of Putin-Trump ties

i Kerry joins battle against Trump ban

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Switzerland has been set on a knife-edge ahead of a referendum on reforms that would sweep away preferential tax deals for multinational companies after rising global pressure and criticism.— PAGE 2

Datawatch Pockets of populism % of respondents

60 Hungary 50 Italy Israel 40 Turkey UK US 30 France

20 0

10 10 20 30 40 50 Displayed nativist sentiment

Source: Ipsos Mori

Dissatisfied with system

French bond prices fell to their lowest levels in 18 months amid fears that the “fake jobs” scandal engulfing François Fillon, the one-time presidential frontrunner, could bolster populist candidates in April’s elections, particularly far-right leader Marine Le Pen. The spread between French 10-year sovereign bonds and the benchmark German Bund — a key measure of investor confidence as it shows the premium traders are demanding to buy French debt — hit a four-year high yesterday after Mr Fillon announced he would not withdraw from the race. Traders have been on edge after failing to predict the two big political shocks of last year — Britain’s vote to leave the EU and Donald Trump’s election in the US — and investors said yesterday’s sharp moves were a sign they were steeling themselves for more jolts. “Markets underpriced the political risks in 2016 and they are determined not to do the same again,” said James Athey, investment manager at Aberdeen Asset Management. “Investors want greater rewards for the risks they see in French, Dutch, German and, possibly, Italian elections this year to destabilise the region.” Mr Fillon dug in his heels yesterday, apologising in a news conference at his campaign headquarters for putting his wife and two children on the government payroll but vowing to salvage his damaged presidential bid. The centre-right candidate denied allegations that his family did no work while employed as his parliamentary assistants and vowed to disclose their payments, which the weekly Canard Enchainé said totalled €900,000. At the end of European trading, the difference in interest rates between French and German sovereign bonds reached the widest point since November 2012, with a 0.77 per cent spread. The yield on French 10-year bonds

Briefing

Political dissatisfaction in European nations such as France, Italy and Hungary is associated with strong ‘nativist’ sentiment — a belief, for example, that immigrants take jobs and social services from the locally born


2

FINANCIAL TIMES

Tuesday 7 February 2017

INTERNATIONAL Germany

Financial regulation

Merkel’s SPD rival takes opinion poll lead

Draghi pushes back against protectionist programme

Support for Schulz raises talk of defeat as chancellor seeks fourth term in office STEFAN WAGSTYL — BERLIN

Martin Schulz, Angela Merkel’s new Social Democrat challenger, has stirred German politics by helping his party to a lead over the chancellor’s conservatives in a national opinion poll — the first in more than a decade. The rise in support, two weeks after Mr Schulz was picked as the SPD’s leader, increases the uncertainty in the run-up to the September Bundestag election and raises the possibility that Ms Merkel — once seemingly invulnerable — might even be defeated in her bid for a fourth term in office. “This is phenomenal,” said Hermann Binkert, head of the Insa agency, which

published its results yesterday. “I would have said it was impossible to improve your ratings by 10 percentage points in 14 days. But that’s what’s happened.” According to Insa, support for the SPD has risen from 21 per cent two weeks ago, just before the former European Parliament president took over as party leader, to 31 per cent. The party has grabbed support from Ms Merkel’s Christian Democrat/Christian Socialist bloc, which is down from 32.5 per cent to 30 per cent, and from smaller parties, including the anti-immigration Alternative for Germany (AfD). While other pollsters still put the conservatives ahead of the SPD, all recent surveys show the Social Democrats, who are in government in a “grand coalition” with Ms Merkel, have rapidly gained ground since Mr Schulz returned to German politics and took over as the party’s leader and presidential candidate.

During the refugee crisis of the past two years, most of the pressure on the chancellor has been from the political right as the AfD has won support by demanding tough action to curb migrant inflows.

[It should be impossible] ‘to improve your ratings by 10 percentage points in 14 days. But it has happened’ Ms Merkel has repeatedly resisted moving to the right herself, fearing that ceding the centre ground, where she has won three elections, could be dangerous. Yesterday, she underlined that her CDU/CSU bloc would respond to the challenge from Mr Schulz by pledging to appeal “to all the people in the country”

and saying her bloc would remain “the party of the middle”. The conservatives took 41 per cent of the vote in the last Bundestag election in 2013. Ms Merkel was speaking at a joint press conference with Horst Seehofer, head of the Bavaria-based CSU, who said the party would endorse Ms Merkel. The two parties have fought together for decades, but the refugee crisis has strained their alliance, with Mr Seehofer repeatedly calling for a refugee quota despite Ms Merkel’s opposition. The two leaders said yesterday that they would launch a joint election campaign but agreed to differ over quotas. Mr Binkert suggested that Mr Schulz’s rise was no flash in the pan and that voters had been showing their frustrations with Ms Merkel for two years. “It needed somebody to bring together those frustrations. Schulz has benefited,” he said. “He has made an

emotional connection with the voters.” Even coming first in September’s elections would not guarantee Mr Schulz power because the SPD would almost certainly lack an overall majority and have to seek coalition partners. His options could include renewing the alliance with the CDU/CSU — with the SPD in charge for the first time — or seeking a centre-left government with the Green and far-left Left party. There is also the possibility political momentum will stay with the SPD. On Sunday, lawmakers are due to vote on a successor for Joachim Gauck in the largely ceremonial role of president. The overwhelming favourite is the popular social democrat ex-foreign minister Frank-Walter Steinmeier. Even though the CDU/CSU also supports him, his election will be seen as an SPD victory. Notebook page 8

France. Presidential election

Fillon says sorry but pledges to fight on Former frontrunner to reveal details of payments made to wife and children ANNE-SYLVAINE CHASSANY — PARIS

François Fillon has apologised for employing his wife and children as his aides but insisted their work justified their salaries, as France’s centre-right presidential candidate vowed to fight on to salvage his troubled campaign. The former premier, until recently a frontrunner in the presidential contest, said he would disclose details of the payments made to Penelope Fillon and two of his children when they worked as his parliamentary assistants. Mr Fillon denied allegations reported by satirical newspaper Le Canard Enchaîné that they had done no proper work, but admitted that “past standard practices” were no longer perceived as appropriate and that employing his family members had “caused mistrust”. “What was acceptable in the past no longer is,” Mr Fillon said during a press conference at his campaign headquarters. “It was a mistake. I deeply regret it and apologise to the French people.” The hastily arranged apology was Mr Fillon’s last ditch attempt to keep his presidential campaign afloat and fend off questions over his ethics. The presidential hopeful has faced calls from senior party figures to stand down as centre-right nominee over accusations that his family received a combined €880,000 in public money for the alleged fake jobs. But Mr Fillon’s Republican party also dreads a disruptive and potentially catastrophic withdrawal less than 80 days before the first round of presidential elections. “This has given him another few days to show he is a viable candidate,” says Jérôme Fourquet, director at Ifop, a polling organisation. “If he succeeds in consolidating support within his core electorate, he could probably hang on to his bid for some time — barring other revelations of course. If he doesn’t succeed and if support continues to decline, he’s done and it will be mayhem on the right.” Mrs Fillon is also embroiled in claims

Apology: François Fillon gives a press conference yesterday at his campaign headquarters in Paris — Martin Bureau/AFP/Getty Images

that she received €100,000 from Marc Ladreit de Lacharrière, a billionaire entrepreneur who was awarded the Légion d’Honneur at Mr Fillon’s instigation when he was prime minister, for an alleged fake adviser role at one of his publications. Mr Fillon has denied wrongdoing. State prosecutors are investigating the claims. Surveys suggest the allegations have hurt Mr Fillon, who has based his campaign on a promise to restore high moral standards in politics. Having been a favourite, he is now lying third in the presidential race and would be knocked out in the first of the election’s two rounds. He trails Marine Le Pen, the far-right leader, and Emmanuel Macron, the 39-year-old former economy minister who is running as an independent with a 10month-old party. In a communications offensive Mr Fillon’s staff printed and distributed more

than 3m leaflets over the weekend, entitled “Stop the Manhunt” and depicting the affair as a Socialist conspiracy. An Ifop survey released on Sunday showed 68 per cent believed Mr Fillon should drop his presidential bid. Less than one in four believed he was “honest”, from half of them in a previous poll in November shortly after he easily won the centre-right nomination. But support from core Republican sympathisers has remained strong, with two-thirds wanting Mr Fillon to stay on. Reports in Le Monde yesterday claimed that prosecutors were extending their investigations to look at allegations that Mrs Fillon’s job at Mr de Lacharrière’s publication could have been a way to thank Mr Fillon for decorating him the previous year. Mr Fillon did not address the allegations yesterday. On Friday, police carried out searches at the Senate, looking for information on alleged payments of tens of thou-

RALPH ATKINS — GENEVA

NOVEMBER 7 2015

It is not only Geneva’s lakeside setting that multinationals find idyllic.

Spain; Bermont Impresion, Avenida de Alemania 12, CTC, 28821, Coslada, Madrid. Legal Deposit Number (Deposito Legal) M-32596-1995; Publishing Director, Lionel Barber; Publishing Company, The Financial Times Limited, registered office as above. Local Representative office; C/ Infanta Maria Teresa 4, bajo 2, 28016, Madrid. ISSN 1135-8262.. UAE; Al Nisr Publishing LLC, P.O.Box 6519. Dubai. Editor in Chief: Roula Khalaf. Origin of publication, twofour54, Media Zone, Abu Dhabi. France; Publishing Director, Dominic Good, 40 Rue La Boetie, 75008 Paris, Tel. +33 (0)1 5376 8256; Fax: +33 (01) 5376 8253; Commission Paritaire N° 0909 C 85347; ISSN 1148-2753. Turkey; Dunya Super Veb Ofset A.S. 100. Yil Mahallesi 34204, Bagcilar- Istanbul, Tel. +90 212 440 24 24. ROLLING IN THE DEEP

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361_Cover.PRESS.indd 1

Editorial Comment page 8

In a question-and-answer session with the European Parliament, the European Central Bank president registered his concern at the White House’s plans to roll back the US’s 2010 Dodd-Frank financial regulations and Mr Trump’s hostility to multilateral trade deals. He also denied accusations by Peter Navarro, the US president’s top trade adviser, that the EU sought a weak euro. “The last thing we need is a relaxation of regulation,” Mr Draghi told MEPs, adding that it was thanks to supervisors that financial risk had been reduced. “The idea of repeating the conditions of before the crisis is very worrisome.” Heralding the biggest shake up of US regulation for the sector in six years, Mr Trump late last week ordered a review of Dodd-Frank, which was put in place to limit the risk of a new financial crisis but which Wall Street banks and many conservatives argue is too burdensome. Mr Draghi expressed concern over the new administration’s stance on trade, although he said it remained too early to tell what the ultimate impact of such policies would be. “We certainly look with worry about potential announcements of protectionist measures because our Union, the EU, has been created on the foundations of free trade,” the ECB chief said. “We’ll have to judge when we actually see in place what is being announced.” In one of his first acts as president, Mr Trump withdrew from the TransPacific Partnership, the 12-country Pacific Rim deal negotiated by his predecessor Barack Obama. The new president has also put “renegotiating” the two-decades-old North American Free Trade Agreement between the US, Canada and Mexico at the top of his economic agenda. Mr Draghi also hit back at the claims by Mr Navarro, head of Mr Trump’s new trade council, that Germany — whose vast current account surplus remains an issue of international controversy — was exploiting a weak euro at the expense of the US and the rest of the eurozone. Mr Navarro had accused Germany of using a “grossly undervalued” single currency to boost exports. “We are not currency manipulators first and foremost,” Mr Draghi said. “Our monetary policies reflect the diverse positions in the economic cycle of the eurozone and the US.” Mr Draghi added that the ECB had not intervened in currency markets since 2011, when it did so as part of a concerted G7 effort. He also cited an Obama administration report that absolved Germany and the ECB of currency manipulation. The euro has steadily depreciated against the dollar since mid-2014 as the ECB moved closer towards unleashing a programme of mass bond buying, and the US Federal Reserve began to taper its QE programme. The single currency is now worth $1.07, down from $1.39 in March 2014. Additional reporting by Mehreen Khan in London

Vote for Switzerland business tax reform on a knife-edge

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1 Southwark Bridge, London SE1 9HL

François Fillon

sands of euros made to Mr Fillon’s two children when he was a senator between 2005 and 2007. At the weekend, party insiders were considering alternative candidates in case Mr Fillon was forced to drop out. Senator Bruno Gilles, head of the influential southern Bouches-du-Rhone region, said in a radio interview the party faithful had “turned the page” and wanted a change of candidate. “This scandal is doing us more damage every day, and we can’t wait another two weeks,” he said, echoing Georges Fenech, an MP close to former president and unsuccessful primary candidate Nicolas Sarkozy, who described the primary vote as “void” on Wednesday. Alain Juppé, the 71-year-old former prime minister who came second in the primary elections, quashed mounting speculation that he would step in by tweeting: “No means no.”

Mario Draghi has pushed back against the new US administration on issues ranging from protectionism and financial regulation to the valuation of the euro, underlying the scope for transatlantic discord as Donald Trump’s team advances its ‘America first’ agenda.

Rates referendum

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FINANCIAL TIMES

‘It was a mistake. I deeply regret it and apologise to the French people’

CLAIRE JONES — FRANKFURT

21/10/2015 10:51

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Switzerland has a long history of offering preferential fiscal terms to international investors, and low tax rates have helped to attract companies such as Caterpillar and Japan Tobacco. But the country faces a huge challenge if it wants to retain those companies. Under international pressure, voters are being asked in a referendum on Sunday to approve reforms that would sweep away selective tax deals and introduce unified low rates for all companies. The vote is on a knife-edge. Reform supporters say Switzerland cannot affordtobesogenerous.Butrejectioncould prompt other countries to retaliate for the continued tax breaks, creating economicuncertaintyandinstability. “It is very important for Geneva,” said Serge Dal Busco, the canton’s finance minister, who backs the reforms. “Some 62,000 jobs in the canton rely directly or indirectly on multinationals. If they don’t have a favourable tax environment,wecouldloseatleastsomeofthose.” Switzerland, one of the world’s most

affluent countries, has had to rethink its economic model in the past decade. USled legal action against banks that helped overseas clients evade taxes has led to greater transparency in the financial system. Threats of retaliatory action by trading partners led Bern to agree to corporate tax norms set by the EU, with which it has vital business links, and the Paris-based OECD. “The Swiss government had to recognise that instruments which worked well for many years could no longer be used,” said Peter Uebelhart, head of tax at KPMG Switzerland. The reputation for being attractive to business started after the second world war. Switzerland gave international companies special status, with cantons competing to offer the best tax breaks. Multinationals with “auxiliary status” in Geneva pay an average corporate tax rate of 11.6 per cent, compared with the 24.16 per cent for ordinary businesses, one of the highest rates in Switzerland. Under the proposed reforms international and domestic companies would pay the same rates. Rather than multinationals paying significantly more, cantons would slash standard corporate tax

rates. Geneva’s main corporate tax rate wouldalmosthalveto 13.49percent. Business wants the referendum to pass. “Keeping the jobs, keeping the companies — that is what is at stake,” said Blaise Matthey, director-general of the Federation of Romandy Business, for companies in the French-speaking part of Switzerland, including Geneva. “We are rethinking our economic model and it is changing quite rapidly. People complain but there is no choice. If you don’t abide by international Geneva, where tens of thousands of jobs rely directly or indirectly on multinational companies

standards, you get put on a blacklist.” Although the federal government has promised to help the cantons bridge any revenue shortfalls from the unified lower rate, the implications for local budgets alarm opponents. “The reforms will cost more than the [federal] parliament thinks,” said Sandrine Salerno, Social Democratic

finance director in the Geneva city government. “The level of tax is important for companies, but it is not the only reason why they come to Geneva and Switzerland. They also come because of the good quality infrastructure — the schools and safety, for instance.” Fuelling voter suspicion is the complexity of the reforms, which opponents argue will enrich tax advisers and lawyers. The new system would introduce an internationally approved “tool box” of tax relief measures that cantons could offer companies. These would include incentives for research and development, relief for income from patents and tax breaks on shareholders’ equity. Pro-reformers point out that while multinationals will face slightly higher rates, for ordinary companies tax bills will be much lower. That could stimulate investment and job creation, which in time would boost cantons’ coffers, though the impact is hard to predict. Geneva scores highly for its qualified workforce and transport connections, said Jan Schüpbach, an economist at Credit Suisse. The tax reforms would remove “its main disadvantage — a relatively high corporate rate”.


Tuesday 7 February 2017

3

FINANCIAL TIMES

INTERNATIONAL

Troops fighting on Ukraine front line fear being used as pawns Upsurge in violence leads to concerns Putin is looking to extract concessions from Trump ROMAN OLEARCHYK — AVDIIVKA

Standing guard outside the shelled-out Avdiivka apartment block that has become a makeshift triage station, Serhiy scans the sky and listens nervously for the sound of artillery fire. “It’s like Aleppo,” says the Ukrainian soldier, referring to the war-ravaged Syrian city, as his unit works through sub-zero temperatures and freezing rain to ferry supplies into the emergency medical depot. Residents and soldiers stationed in the strategically important frontline town had got used to daily gunfire and mortar attacks in the three years since the conflict erupted between Ukrainian forces and Russia-backed separatists. But the low-level fighting unexpectedly escalated 10 days ago, as the town just 10 kilometres from the separatist stronghold of Donetsk came under Kiev

RUS SIA Lugansk People’s Republic**

UKRAINE

Black Sea

CRIMEA*

DONBASS

Avdiivka Donetsk Donetsk Sea of People’s Azov Republic**

* Annexed by Russia, disputed by Ukraine ** Under rebel and the international community control

fierce assault from Russian-made Grad rockets and high-calibre artillery. Ivanna Klympush-Tsintsadze, Ukraine’s deputy prime minister, said yesterday 15 Ukrainian military personnel and three civilians were killed in the violence in Avdiivka region in what was some of the most intense fighting in the east of the country for two years. The start of that bombardment coincided with a January 28 telephone call between Russian president Vladimir Putin and Donald Trump, leading to fears in Ukraine that the attack was part of Moscow’s plan to influence the US president and push him towards offering concessions. Mr Trump has largely kept silent on the Ukraine-Russia conflict during his early days in power, although indications that he is willing to work with Mr Putin has set alarm bells ringing in Kiev. There have been hints from the new president that he may be willing to lift sanctions on Russia and accept the annexation by Moscow of the Crimean peninsula. James Sherr, an analyst at the Chatham House policy institute, explicitly linked the Avdiivka flare-up to the Trump-Putin phone call. “The Russians — with planning and forethought — have responded visibly and disproportionately at this precise moment to test western reactions,” he explains. The US president spoke by phone with Ukraine president Petro Poroshenko this weekend, with the White House issuing a statement saying that

Devastation: an apartment block damaged by shelling in Avdiivka, eastern Ukraine, where fighting has sharply escalated Evgeniy Maloletka/AP

the administration would “work with Ukraine, Russia and all other parties involved to help them restore peace”. But in Avdiivka, soldiers and residents expressed fears that they are being used as pawns in a wider power game. “Let Trump come here to see the massive destruction for himself, how our people are suffering because of Russia’s war against our country,” said Dmytro, another soldier, who implores the west to support their cause and give them the weapons he says they need — particularly Javelin anti-tank missiles. “Does the world know what is happening to us?” asks Luda, an Avdiivka resident. “People are dying, suffering. We are being shelled. Without heating and electricity we nearly froze to death.” The assault on Avdiivka has drawn attention back to a long-running conflict that had slipped off the international radar. Nearly 10,000 people have died since the fighting erupted in east-

Kremlin leaks. Shaltai Boltai

Hacker exposes dark arts of Russian blackmail and spies ‘Black PR’ group’s last member at large tells of shadowy handlers and stolen data MAX SEDDON — TALLINN, ESTONIA

A few hours before Vladimir Putin gave his 2014 new year’s speech, a shadowy group calling itself Shaltai Boltai — the Russian for Humpty Dumpty, the Alice in Wonderland character — beat the Russian president to it by posting the text online. “We’re always with you, even when you least suspect it,” the anonymous bloggers wrote. Such audacious leaks used against the Kremlin itself made Shaltai Boltai one of the leading exponents of the peculiarly Russian dark art of “black PR”, a cottage industry mixing fake news and compromising material, or kompromat, used to blackmail politicians and businessmen. “It’s a kind of anonymous celebrity. Nobody knows who you are, but everyone’s writing about it,” says Alexander, one of the group. Now, after years of sparking intrigue and gossip among Kremlinologists by leaking top officials’ correspondence, Shaltai Boltai has been thrust into a wider spotlight by the arrest of its ringleader, Vladimir Anikeev, in a murky case tied to treason proceedings against officers of the FSB, the Russian intelligence service. Russian press reports claim the FSB officers were Mr Anikeev’s handlers. Alexander, who met the Financial Times in Estonia where he intends to seek asylum, believes he is the group’s last member at large. Asking to be identified only by his first name, Alexander confirmed his identity by producing previous email correspondence between this reporter and an account Shaltai Boltai used to leak information, as well as photos of him alongside Mr Anikeev. Amid western anxiety over Russia’s information war capabilities, the treason case — the most high-profile proceedings against senior officers in the FSB, the successor to the KGB, in years — has opened a door on Russian intelligence’s connections with the hacker underworld. US officials have already accused Russian intelligence of hacking Democratic party servers last year, while election

officials in France and Germany are on alert for any Russian attempts to use hacking to interfere with their forthcoming elections. Mr Anikeev has not been charged alongside the FSB officers in the treason case, denies having worked with any intelligence agencies and has pleaded guilty to leaking correspondence from politicians’ accounts, according to his lawyer, Ruslan Koblev. Alexander, who met the FT in a Mexican restaurant in Estonia, on the ground floor of a hotel once run by the KGB, says he met Mr Anikeev in St Petersburg in 2003 at an event for users of damo-

‘We had our finger on the button. People found out things they’d never have had any idea about’ chka.ru, a cross between an erotic services site and an embryonic social network. There is no independent way to verify Alexander’s account of his involvement with Shaltai Boltai. A decade after that first meeting, Alexander says, Mr Anikeev asked him to help leak kompromat that had been gathered on senior Russian officials. Bored by his job in mobile advertising and disgruntled with Mr Putin’s hardline politics, Alexander agreed. Alexander claimed he never knew exactly how the files, which usually came from easily hackable accounts on popular free services, such as Gmail, mail.ru and Yandex, were obtained. As Russia fanned the conflict in

In the spotlight: Shaltai Boltai has fuelled gossip and intrigue for years by leaking top Russian officials’ correspondence

Ukraine throughout 2014, the group posted the hacked correspondence of people involved in the seizure of Crimea, the Russia-backed insurgency in eastern Ukraine, and a pro-Putin online army. Later, they posted the correspondence of several top officials and hacked Prime Minister Dmitry Medvedev’s Twitter account. Many observers suspected officials themselves were leaking the files to settle internal scores. But Alexander said the group’s motivations became much simpler: selling stolen inboxes online for bitcoins. “It became more and more commercial,” he said. “I thought about leaving, but I already knew too much.” The group made $1m to $2m selling files, most of which was spent on “operational expenses”, Alexander said. By this point, he was spending most of his time in Thailand, and Mr Anikeev had moved to Ukraine. They communicated using encrypted chats. Alexander was not even sure how many people were in the group. Two other men have been arrested alongside Mr Anikeev; Alexander says he knew one of them, Konstantin Teplyakov, but claims never to have heard of the other, Alexander Filinov. Things changed in early 2016, Alexander said, when Mr Anikeev told him the group had acquired unnamed handlers in Russian intelligence who had asked for a publishing veto. Though they never exercised it, he became suspicious late last year, when Mr Anikeev told him that he had been arrested at Minsk airport on his way to Russia, held in Moscow for three days and then released after his handlers intervened. When Mr Anikeev asked him and Mr Teplyakov to meet him in Moscow in early December, Alexander told him to prove he was at liberty by sending a selfie and a receipt from a French café. Mr Anikeev duly complied. “That made me even more suspicious,” he said. “Normally, if I’d told him to go to the other side of town and do something like that, he’d have told me to screw myself.” Mr Koblev, Mr Anikeev’s lawyer, says Mr Anikeev has been in jail for three months and could not have gone to the café. Despite the group’s demise, Alexander says Shaltai Boltai represented the first wave of Russia’s murky online future. “We had our finger on the button. People found out things they’d never have had any idea about,” he said.

ern Ukraine in 2014. It also underscores the failure of the internationally brokered Minsk II peace accord, agreed in 2015, to end the suffering. In Ukraine, the worry is whether the divided group of western leaders grappling with everything from the Brexit vote to the unexpected Trump victory have the resolve to forge lasting peace in the war raging on the EU’s doorstep. As the worst of the fighting appeared to be easing in Avdiivka yesterday, Ukrainian forces and separatists continued to blame each other for the upsurge in hostilities. Eduard Basurin, a commander with the Donetsk People’s Republic, said two of his fighters died when Ukrainian forces shelled the city and nearby areas a total of 1,229 times. “Firing has not halted from positions of the Ukrainian armed forces,” he said in a video briefing. Such claims were not confirmed by Ukrainian authorities. But monitors from the Organisation for Security and

‘Let Trump come here to see the massive destruction for himself, how our people are suffering because of Russia’s war against our country’

Co-operation in Europe have routinely pointed to violations that have caused death, injury and damage to homes on both sides of the frontline. Over the weekend in Avdiivka, it appeared a humanitarian crisis had been averted. Officials were moving to restore power and other basic utilities as temperatures remained below zero, while the long lines of desperate residents that had formed at government soup kitchens last week thinned out. Yet dozens of residents were still huddled in heated tents, unwilling to return to their homes. Some pleaded with visiting journalists to tell the world about their predicament. As he continued his watch outside the triage station, Serhiy offered a mocking invite to the new US president to come to the frontline to view it for himself. “A big hello to Mr Trump from this very real war. Please visit us,” he said. “I have only two things to ask of you. Increase the sanctions and give us the Javelins.”


4

FINANCIAL TIMES

Tuesday 7 February 2017

INTERNATIONAL Immigration

State visit

Kerry wades into travel ban furore

British MPs applaud bar on address by Trump

Obama top brass say crackdown on security will not make US safer BARNEY JOPSON — WASHINGTON JOHN MURRAY BROWN — LONDON

Senior Obama administration officials including former secretary of state John Kerry have joined the battle between President Donald Trump and the US courts in a legal filing arguing the White House’s travel ban would not make the US safer. The 10 former diplomats and intelligence officials waded into the dispute yesterday as the Trump administration raced to meet an afternoon deadline to explain its call for a court-ordered suspension of the ban to be overturned. The ructions over the immigration

clampdown have sparked warnings of an impending constitutional crisis after Mr Trump attacked the judge who halted the ban. The furore over the curbs has dominated the first weeks of his presidency. The dispute is pitting Mr Trump’s claim he is protecting Americans against charges that his immigration order amounts to a discriminatory ban on Muslims The former Obama officials, among them ex-national security adviser Susan Rice, said in their filing that they had “held the highest security clearances” and were “unaware of any specific threat” that would justify the ban on security or foreign policy grounds. “To the contrary, the order disrupts thousands of lives, including those of refugees and visa holders all previously vetted by standing procedures that the

administration has not shown to be inadequate.” Their argument appears to undercut Mr Trump’s assertion that the suspension of the ban on refugees and immi-

‘This is becoming a huge potential landmark case that will define the limits of the president’s power’ grants from seven majority-Muslim countries has left the US in immediate danger. Barack Obama has already spoken out against Mr Trump’s move, discarding the convention of ex-presidents not commenting on their successors within days of leaving office. Mr Trump tweeted on Sunday: “Just

cannot believe a judge would put our country in such peril. If something happens blame him and court system. People pouring in. Bad!” David Gans, a director at the Constitutional Accountability Center, said the ban was out of line with US constitutional traditions. “This is shaping up to be a defining constitutional moment,” he said. “This is becoming a huge potential landmark case that will define the limits on the power of the president.” The technology sector has come out against Mr Trump’s ban with big companies including Apple, Google and Uber filing a separate brief that argued the travel ban would harm companies by making it harder to recruit employees. The halt on the ban was imposed by a federal judge in Washington state on Friday and the White House quickly appealed against the ruling to Ninth Cir-

cuit Court of Appeals, which gave the Trump administration until yesterday afternoon to make its full case. Once the appeals court has ruled on the injunction, the losing side could quickly appeal its decision to the US Supreme Court. But for now it was less likely that the entire case would end up at the US’s highest court, said Mr Gans. The two US states that won the injunction, Washington and Minnesota, yesterday said there would be “further chaos” if the ban were reimposed, arguing the White House could show no reason why the lower court judge’s ruling had to be reversed. Justice department lawyers have urged the appeals court to quickly remove the injunction against the ban, arguing that the ruling was putting national security at risk. Janan Ganesh page 9

Trump pledge. Bipartisan initiatives

Doubt over Africa deals as ‘America first’ policy bites US president’s approach poses threat to three aid and trade agreements, politicians warn DAVID PILLING — AFRICA EDITOR

Donald Trump’s “America first” pledge could threaten Washington’s three biggest health and trade initiatives in Africa, US and African experts and politicians warn. Concern focuses on three bipartisan programmes, backed by successive presidents, designed to help African countries deal with health emergencies, develop stronger economies and deepen democratic institutions, Chester Crocker, a former US assistant secretary of state for Africa in the Reagan administration, says. “If you’re transactional, you’re going to . . . say ‘what’s in it for us?’,” adds Mr Crocker, referring to the America first policy. Washington’s focus on security means it could also allow concern about Islamist insurgencies in north-east Nigeria, the Sahel and Horn of Africa to eclipse longer-term nation-building strategies, he adds. The three programmes seen as most at risk from the Trump administration are considered the pillars of Washington’s Africa policy. The first, the African Growth and Opportunity Act, enacted under former president Bill Clinton, provides nonreciprocal tariff-free access for African goods from countries deemed to be improving the rule of law and human rights. According to Mr Crocker, “there might be a reflex to revisit Agoa”, given that it allows African countries to access US markets without the US receiving anything obvious in return. There are fears any move to refocus resources on Americans could threaten the anti-Aids programme introduced by the George W Bush administration. Formally known as the US President’s Emergency Plan for Aids Relief, or Pepfar, it has provided billions of dollars for testing and treatment and is considered the biggest health programme mounted against a single disease. The third pillar is Barack Obama’s

Kenyan group Vermont Flowers has felt the benefits of the African Growth and Opportunity Act Thomas Mukoya/Reuters

$7bn Power Africa fund, launched in 2013 with the aim of doubling access to electricity in sub-Saharan Africa. When it was announced, Mr Trump gave it anything but a ringing endorsement, tweeting: “Every penny of the $7bn going to Africa as per Obama will be stolen — corruption is rampant!” Its future could be jeopardised unless Mr Trump can be persuaded that it means contracts for US engineering and power companies, says Mr Crocker. “The anxiety for us is that, if he carries through on his domestication policies, Africa could be adversely affected,” adds Mmusi Maimane, head of South Africa’s opposition Democratic Alliance. Olusegun Obasanjo, former president of Nigeria, also fears Mr Trump might revisit some programmes, including Agoa. But he says this would force the continent to stand on its own feet: “We should not allow things to fizzle out no matter what Trump does or doesn’t do.”

Witney Schneidman, deputy assistant secretary of state for Africa under Mr Clinton, is hopeful that Mr Trump can be persuaded that what is good for Africa is good for America. Like Mr Trump, neither presidents Clinton nor Bush knew much about Africa before they took office, he says, but both became more engaged. “The key question is how will Africa help America be great again? How does Africa fit into this?,” says Mr Schneidman, adding studies showed trade with the continent supported 120,000 US jobs. Even if Mr Trump remained unconvinced, he adds, “there is a legal architecture in place [underpinning the programmes] that’s been there for three administrations, which will not be easy to dismantle”. Mr Trump’s early days in office are already sending ripples through the continent. His travel ban affects three African countries — Libya, Somalia and Sudan — prompting Nkosazana

‘For us, the anxiety is that, if he carries through on his policies, Africa could be adversely affected’

Dlamini-Zuma, president of the African Union, to lash out at the US for once taking African slaves but now barring its refugees. Mr Trump’s election meant “very turbulent times” ahead, she says. One of Mr Trump’s first acts was to reinstate a Reagan-era policy that bans overseas funding to any organisation that discusses abortion as a family planning option. As part of proposed cuts to UN contributions, he also threatened to sign an executive order curtailing funding to the United Nations Population Fund. This supports family planning in Africa, where fertility rates are high. Some fear that Mr Trump’s inclination to question democratic processes, and his seeming tolerance for strongman leaders such as Russia’s Vladimir Putin, could undermine Washington’s moral authority. “African leaders may be less likely to look to American governance and human rights as something to be respected,” says Grant Harris, Mr Obama’s main adviser on Africa.

HENRY MANCE — LONDON

President Donald Trump was in effect barred from addressing the Houses of Parliament during his forthcoming UK state visit after the Speaker of the Commons said he should be denied the opportunity because of his “racism and sexism”. Foreign leaders including former US President Barack Obama, China’s Xi Jinping and Mexico’s Enrique Peña Nieto have all addressed MPs and peers in recent years. However, John Bercow, the forthright Speaker of the Commons, said that he was “strongly opposed” to Mr Trump being offered a similar invitation. He added he was “even more strongly opposed” after the president’s executive order blocking certain migrants from entering the US. Mr Bercow’s words were met with applause in the chamber, where clapping is normally not permitted. “Speaker Bercow just cancelled Trump visit to parliament. A proud moment for Commons. Racism and sexism not welcome here,” Harriet Harman, a Labour MP, wrote on Twitter. Another Labour MP, Wes Streeting, jokingly compared the decision with Mr Trump’s executive order on immigration: “Speaker Bercow has decided to check people coming into our Parliament VERY CAREFULLY.” Mr Bercow’s intervention is likely to infuriate prime minister Theresa May who presented the offer of a state visit — officially an invitation from the Queen — when she became the first foreign leader to visit Mr Trump at the White House last month. Mrs May hoped the honour would help facilitate a speedy US-UK trade deal. Mr Trump’s planned visit, expected this year, has already proved highly controversial, with 1.8m people signing a petition calling for it to be cancelled “because it would cause embarrassment” to the Queen. “An address by a foreign leader to both houses of parliament is not an automatic right, it is an earned honour. Moreover, there are many precedents for state visits to take place to our country which do not include an address to both houses of parliament,” Mr Bercow said. By custom, invitations to address parliament are issued in the name of the Commons speaker, as well as at least one other official. For addresses to Westminster Hall, an invitation is usually agreed by the speakers of the House of Lords and the House of Commons and the Lord Great Chamberlain. For addresses from the Royal Gallery, part of the chamber of the House of Lords, invitations have “customarily” been made in the names of the two speakers. It was unclear whether there was any proposal for Mr Trump to address parliament. “I would not wish to issue an invitation to President Trump to speak in the Royal Gallery,” Mr Bercow said. “We value our relationship with the United States. If a state visit takes place, that is way beyond and above the pay grade of the speaker. “However, as far as this place [parliament] is concerned, I feel very strongly that our opposition to racism and to sexism, and our support for equality before law and an independent judiciary, are hugely important considerations in the House of Commons.”

Monterrey. Manufacturing

Chill wind blows through Mexico’s industrial powerhouse Country’s business capital takes a long hard look at life without a northern trade deal JAMES FREDRICK — MONTERREY, MEXICO

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It was not the grand spectacle typical of the launch of a multimillion-dollar plant. But in Monterrey, Mexico’s northern industrial capital, it was significant that US metal-stamping company Trans-Matic held an event in the Donald Trump era. “I want to congratulate you on a gutsy move,” said Sergio Argüelles, chief executive of Finsa, a Mexican developer that owns the surrounding industrial park. “They did it because we all know projects like this benefit both our countries. You cannot flip the switch on the US-Mexico relationship from one day to the next,” he told the Financial Times. The new plant is relatively small: $12m invested with 55 full-time staff. But Trans-Matic is sticking its neck out given that President Trump, who has called the North American Free Trade

Agreement (Nafta) “the worst trade deal ever” and sworn to end it, has publicly shamed US companies that manufacture abroad as being unpatriotic. Trans-Matic’s neighbour is United Technologies’ Carrier arm, which chose not to send some 1,400 jobs to Monterrey after Mr Trump struck a deal with the air-conditioning manufacturer that included a $7m tax break in Indiana. Monterrey is Mexico’s Nafta powerhouse, home to US companies such as Caterpillar and Navistar. Every highway leaving the city of 1.3m leads to industrial parks. A quarter of the economy of surrounding Nuevo Leon state is manufacturing and, just a two-hour drive from Texas, Monterrey is emblematic of what Nafta is — or might become, if Mr Trump ends the trade deal and its $580bn a year of bilateral trade. “Everyone in the industry is feeling uncertainty and they’re all being cautious right now,” says Guillermo Dillon, director of local industrial chamber Caintra. “We certainly know companies are pulling back or putting projects on standby.” Nearly a dozen companies operating

in the area declined to speak to the FT. Prospective Mexico investors are wary. Doug Donahue, vice-president of business development at offshoring consultancy Entrada Group, says only two of his 10 clients that were eyeing expansion in Mexico are going ahead. A January 3 decision by Ford to cancel a $1.6bn Mexican plant was an early casualty of Mr Trump’s protectionism. Plans that were already under way, such as Trans-Matic’s, appear to have remained on track. At Interpuerto

Oreo cookies: disliked by Donald Trump after move to Monterrey

Monterrey, a giant industrial park north of the city, its president, Mauricio Garza, says he still sees investments. Three new companies will launch this year, outlaying $100m in total. “These aren’t four or eight-year projects. We’re talking decades,” he says. “Companies aren’t scared off by day-to-day rumblings.” Interpuerto is still mostly brush land, only 10 per cent developed towards its goal of $6bn in investment. It is a picture of Monterrey optimism — but also of the risks if Mr Trump does initiate a trade war with Mexico. In one corner sits a plant belonging to Mondelez, the US food conglomerate. Back in November 2015, Mr Trump said he would never eat another Oreo cookie because Mondelez had moved its production from Chicago here. As the Mexican government begins consulting with its private sector ahead of mooted Nafta negotiations with the US, businesses are considering what the country’s US trade relations might become. The most optimistic vision is of a rejigged Nafta. “We would like to keep any future

agreement as much as possible in its current form, and just add or strengthen areas that were not included or addressed in the original agreement,” says Alejandro Ramírez, chair of the Mexican business council. If that does not happen, the Nuevo Leon state government says it regards a possible era of US protectionism as an opportunity to take the region to its next stage. “Of course people are worried, but that is already transforming into a feeling of unity and resolution to find a new, more autonomous way forward,” says Fernando Turner, its economic development secretary. “Nafta and free trade hasn’t been as wonderful as everyone will tell you it has,” he adds, citing relatively low economic growth and wage stagnation since Nafta began 23 years ago. Mexico’s contribution to the final value of a product is relatively low as 75 per cent of imports are intermediate goods for future exports, which holds Mexico back, he says. Additional reporting by Jude Webber in Mexico City Work over the wall page 9


Tuesday 7 February 2017

5

FINANCIAL TIMES

INTERNATIONAL Business burden

Human rights

China scrutinises corporate tax after US pledges Companies fear they will be left uncompetitive if Trump makes cuts LUCY HORNBY — BEIJING

US president Donald Trump’s pledge to cut corporate taxes has triggered a debate across the Pacific about the taxes and fees China levies on businesses and whether those could leave the manufacturing colossus uncompetitive in future. The attention comes amid a revamp of the country’s tax structures that for now would increase the budget deficit, yet long-term aims to channel more tax revenues to local governments, reducing their unstable reliance on land sales and ad hoc fees to meet budget needs. Chinese officials are scrutinising Mr Trump’s proposals following pledges to revamp the US tax code and keep manufacturingjobsathomebyimposingsteep tariffs on imports from China. So far, the only proposal from the White House has been for a “border adjustment tax” to be leviedon imports totheUS. “The fact is, with or without Trump our tax rate is too high,” said Sheng Hong, director of the Unirule Institute of Economics, an independent thinktank. Its report late last year on China’s “death tax rate” found that Chinese corporate taxes reached as much as 45.6 per cent when factoring in additional fees levied by local governments, social security payments and other royalties. China and the US are not the only countries worrying about their tax competitiveness. The UK has floated the idea of becoming an offshore tax haven to maintain its investment appeal after it leaves the EU. In May, Australia outlined plans to cut company tax rates from 30 per cent to 25 per cent over the next decade to try to become a more

competitive location for foreign investment. The policy has been criticised by the centre-left Labor party and is likely to be blocked in parliament. “Generally, we see the ministry of commerce and the provincial-level governments remain very keen to attract investment from multinationals,” said Alan Beebe, president of the American Chamber of Commerce in Beijing. “They’re trying to make China more competitive, not just for foreign companies but for Chinese companies as well.” Premier Li Keqiang raised the issue at a state cabinet meeting this year. “Voices are saying corporate taxes are too high,” he said, acknowledging the arbitrary assessment of fees by localgovernments. Piling on corporate taxes and fees has become a safety net for cash-strapped local governments, which also leaned heavily on land sales for revenues at the peak of China’s economic boom. The practice began in the 1990s after a tax revamp funnelled more revenue to the national government in Beijing, leaving local governments to fall back on creative substitutes to balance budgets. “The tax burden by itself isn’t that heavy. But if you add in the fees and other factors then it is a different picture. Different departments, jurisdictions, industries all have different levels. Many companies, especially in certain areas, pay quite a lot,” said Zhao Xijun of Renmin University’s school of finance. The tax debate flared in December after one of the largest Chinese investors in the US said “deadly” Chinese taxes had forced him to transfer some of his glass production business to Ohio. Cao Dewang of Fuyao Glass told media in December that China’s tax burden is “35 per cent higher” than that in the US, sparking a rebuke from a government tax bureau. He was later forced to say his business is still “centred in China”.

Syria faces claims that it has abused human rights since the uprising against President Bashar al-Assad began in 2011, above — Reuters

Syria accused of mass executions at military prison FT REPORTERS

The Syrian government has hanged up to 13,000 inmates at a military prison and caused the deaths of thousands of others through disease, malnutrition and dehydration, according to Amnesty International. The human rights group said the deaths took place at Saydnaya prison from 2011, when the Syrian conflict began, to December 2015, adding that detainees were subjected to “extermination” as defined by the International Criminal Court. “The government has purposefully inflicted inhuman conditions on detainees in its custody in a calculated effort to kill them,” Amnesty said in a report titled Human Slaughterhouse. The report said at least 17,723 people died from torture, disease, malnutrition

Infrastructure

India tackles blight of rail derailments KIRAN STACEY — NEW DELHI

India is phasing out the daily track inspections conducted by an army of 125,000 engineers across its vast colonial-era railway network, as ministers attempt to put an end to the blight of deadly derailments. The plan to bring in electronic sensors on tens of thousands of kilometres of track is part of a wider programme to improve railway safety, to which finance minister Arun Jaitley allocated $15bn in last week’s Budget, and follows three serious derailments in the past three months. “We will be using wheel-based sensors and fixed monitors at certain positions on the track to measure whether they are fractured,” said Hanish Yadav, an adviser to rail minister Suresh Prabhu. He added that the sensors would take several years to install throughout the broad-gauge network. India’s rail system is one of the largest in the world, carrying 20m passengers a day, and is the country’s biggest employer, with about 1.3m staff. But it is also in need of modernisation, with many parts of its infrastructure more than 100 years old. Even where improvements are being made, technology updates often lag well behind those in western countries. The Linke-Hofmann-Busch coaches being

rolled out to replace older trains, for example, were designed in the 1990s. The problems with the system have been highlighted in recent months after a series of serious accidents in which dozens of people have died. The most recent, last month, involved a passenger train coming off the rails near the border between Andhra Pradesh and Odisha in eastern India, killing 41 people. Sabotage has not been ruled out for

‘The government focuses more on megaprojects rather than upgrading the current infrastructure’ any of the accidents. However, local officials have said there is no evidence of deliberate attacks and civil servants blame decades of under-investment for the state of the system. “In over 65 years [since independence] there was no money to be spent on new technology,” said Mr Yadav. “With the money they had, the best they could do was simply to maintain their assets.” Mr Prabhu has pledged $137bn until 2020 to overhaul the system, as part of a plan that includes attracting private sector money and foreign investment to help rebuild stations and build new services. Two years in, however,

the results of that scheme are mixed. Of 400 stations across the country due to be upgraded, only a handful have been approved. Of these, only one is designed by a private company, a model the government hopes to encourage. Another idea, to tap foreign markets for funds using “masala bonds” issued in London, has fallen by the wayside. “We were not able to get better rates than we could domestically,” said Mr Yadav. The ministry’s plans to electrify and broaden thousands of kilometres of track seem to be behind schedule. According to an internal strategy document seen by the Financial Times, about 5,000km of track is overdue for renewal. Meanwhile, a project to build a $15bn high-speed link between Mumbai and Ahmedabad has been signed off by the Japanese and Indian governments but New Delhi is yet to allocate its $2.7bn portion of the funds needed to build it. “Unfortunately the current government is focusing more on megaprojects like the bullet train rather than upgrading the current infrastructure,” said Sandeep Upadhyay, chief executive of Mumbai-based Centrum Infrastructure Advisory. However, he said passengers would start seeing improvements more quickly over the next few years.

Healthcare

Chinese psychiatrist and his patients go private TOM HANCOCK — SHANGHAI

A Chinese psychiatrist who took 64 mental patients with him when he moved to a better-funded hospital has sparked debate about doctors’ professional freedoms as China tries to encourage private capital to enter its strained healthcare system. A state-run hospital in the southern province of Guizhou notified police last week when Yang Shaolei, its director of psychiatry, transferred all but one of his ward’s patients to a privately backed rival after submitting his resignation. Over the weekend, Guihang 300 Hospital vowed to sue Dr Yang, attacking his actions as “an organised violation of medical consent and medical professional guidelines . . . which tramples on industry rules for healthy competition”.

However, others have hailed Dr Yang as a champion of professional freedoms for China’s low-paid doctors, who are treated akin to civil servants with medical licences and are generally tied to a single hospital. Reformers have tried to relieve the burdens on public hospitals, in part by encouraging investment of private capital into healthcare. In 2015, China’s health minister called on physicians to moonlight in the private sector where they can command higher salaries. Yet while several high-profile private sector businesses have invested in hospitals, many say their public counterparts have prevented their best doctors from moving to private institutions. “Local governments wouldn’t want to see that happening,” said He Jingwei, a professor at The Education University

of Hong Kong. “They see that they have spent so much effort and resources in training doctors and want to keep them. Private healthcare in China is still very undeveloped.” Reports compared the scene of Dr Yang loading his patients into ambulances as they moved to better conditions to the 1975 film One Flew Over The Cuckoo’s Nest, in which the character played by Jack Nicholson rails against poor conditions in a psychiatric hospital and encourages patients to escape. “Formally, there is nothing wrong with what he did,” a Shanghai orthopaedist surnamed Tan told the Financial Times. Local authorities said they were investigating the incident. Their response is being watched as a gauge of commitment to healthcare reforms. Additional reporting by Xia Keyu

or dehydration in Saydnaya, 30km north of Damascus, the capital, during the period it covered. Another 5,000 to 13,000 were hanged after military trials lasting one to three minutes. A government spokesperson was not immediately available for comment, but regime officials have previously argued such reports are politicised. Some Syrian opposition activists also accused Amnesty of politicising its reports, but said they agreed with the overall account of the alleged abuses at Saydnaya. Another international humanitarian group, which asked not to be identified because it works inside Syria, said the methodology and sourcing in the report was sound. The Syrian government has been accused of human rights abuses since the uprising against President Bashar al-

Assad erupted in 2011. More than 400,000 people are estimated to have been killed in the conflict and tens of thousands have been arrested or are missing. The UK-based Syrian Observatory for Human Rights estimates some 200,000 have been held and are yet to be released, with their fate unknown. Thousands are believed to have disappeared at the hands of both sides of the conflict. SOHR, a monitoring group, estimates 60,000 inmates have died in Saydnaya between 2011 and 2016. Amnesty, which based its report on interviews with 84 witnesses, including former inmates, prison guards and medics, said it had no detailed information on last year’s death toll at the prison. Saydnaya is inaccessible to international monitors or journalists, making it impossible for the Financial

Times to verify the information. But the accounts shared with Amnesty correlate with prisoner accounts related to the FT in recent months. One former inmate, who asked not to be identified for the safety of relatives inside Syria, told the FT that more than torture or threat of execution, prisoners feared simple diseases like scabies or diarrhoea. “Those were the deadliest,” he said. “If someone got that — we’d count the days for him. Two months for scabies. Twenty days for diarrhoea . . . The prison guards would give us a black bag and a pen to write a number on the body’s forehead.” The prison has been occupied solely by men since 2011, Amnesty said, relating accounts by some prisoners of being sexually molested or forced to rape each other.


6

FINANCIAL TIMES

Tuesday 7 February 2017

ARTS

Women have traditionally fared poorly in the profession — but are things changing? By Edwin Heathcote

one of the men would say ‘I think what Denisereallymeansis . . . ’andthenhe’d say what he thought. Or Bob would be invited to an event and I’d be invited to the ‘ladies’ luncheon’. South Africans wouldhavecalleditpettyapartheid. “At first I saw an advantage in being a woman, it was unusual and more visible. But then I realised this was what they call a‘slavementality’.” There are, however, real reasons for optimism. The appointment of Dublinbased Grafton Architects (founded by two women, Yvonne Farrell and Shelley McNamara) as the curators of next year’s Venice Biennale of architecture feels like a major step. Chicago’s second architecture biennale (2018) is being led by a mixed male and female team, California-based Johnston Marklee, and the architecture section of this year’s Royal Academy summer exhibition will be curated by Farshid Moussavi. There is also increasing recognition for female architects. Liz Diller of Diller, Scofidio + Renfro has propelled the practice into a position as one of the world’s leading builders of cultural blockbusters; Jeanne Gang is on the verge of

Architecture’s glass ceiling

T

he ghosts of modern architecture.” That memorable phrase is how architectural historian Beatriz Colomina describes women’s status in the profession. “Everywhere present, crucial,butstrangelyinvisible.” In the UK, women make up over half of university admissions to architecture courses but only a quarter of registered architects. Somethingiswrong. In2012theArchitect’sJournaldecided to go some way towards ending the invisibility of women in the profession by supporting an award for women’s achievement in architecture. The Jane Drew Prize is named after a prominent British modernist architect who died in 1996, after many years of distinguished practice withherhusbandMaxwell Fry. The winner of this year’s prize is the 85-year-old Philadelphia-based Denise Scott Brown. Although Scott Brown may not have been exactly invisible through her long career, the award begins to right a wrong committed when her husband, Robert Venturi, was awarded architecture’s biggest prize, the Pritzker, in 1991, and Scott Brown was left out, despite theirhaving builttheircareers together. Scott Brown’s omission from the Pritzker was addressed in a 2013 petition (eventually garnering 20,000 signatures)tohaveherequallyhonoured.The Pritzker committee declined. Was she bitter? “No, no,” she says. “The petition was my reward, that was my Pritzker. We don’t need another award ceremony, I justwantjoint creativityrecognised.” Such prejudices are still common, however. Architecture is a tough world: the hours are long, the pay for all but the most eminent is poor, and women are still held back in a culture obsessed with macho ideas of the maverick genius defined by Ayn Rand in her 1943 novel The Fountainhead. This aggressively male vision of architecture has, arguably, held womenbackforgenerations.

‘Being an architect is enough of a struggle anyway without worrying about being a woman’ Last year the death of Zaha Hadid robbed the system of its most visible and most powerful woman. Hadid had become successful by making herself more forceful, more characterful, more aggressive than her male counterparts. In 2007, Hadid said to me, “If I was a man, do you think I would be called a diva? No — they would just talk about the architecture.” There is speculation about how architecture might be different if it was designed by women, just as there is perennial discussion about how big business might benefit from more women at the top, but such debates tend towards the simplistic. “I’m uncomfortable with the subject of being a woman architect,” says Madrid-based Indian-born architect Anupama Kundoo. “Being an architect is enough of a struggle anyway without worrying about beingawoman. “What are the capacities and capabili-

ties we need to be an architect?” she asks rhetorically. “Do we need men’s genitals? Can’t men be sensitive too? These discussions about men producing phallic towers and Zaha designing a stadium [for the Tokyo Olympics] like a vagina are verycondescendingtobothsexes.” Likewise the concept of a prize for women strikes some as problematic. British architect Sarah Wigglesworth, forexample,tellsmesheis“abitcritical” of such awards. “It sets [women] up in competition, and that’s exactly the problem — the same old, same old,” she says. Wigglesworth, Scott Brown and Colomina all agree about the importance of recognising collaboration. “A building,” says Scott Brown, “might involve several thousand people in its construction. Howcanyoucreditjustone?” Colomina concurs. “Architecture is fundamentally different from art, it is a collaborative practice. We need to think

ofitmorelikefilmandinthemovieseveryone is credited.” She delves back into history for architecture’s ghosts. “[Charles Rennie] Mackintosh used to say it was his wife, Margaret Macdonald, who was the real genius, yet history only remembers Mackintosh. Lily Reich, with Mies van der Rohe, Charlotte Perriand with Le Corbusier — they’ve disappeared. The star system, this idea of the genius figure, has been holding womenback.” What is seen as the individualistic expression of genius in a man is, as Hadid found, seen as aggression if it is perpetrated by a woman. “It’s uncomfortable,” says Wigglesworth. “Women need to fight their corner, but if they do, they risk being seen as harpies. People are still scared of feminism but they don’t see it for what it is, which is a tool forunderstandingwhat’sgoingon. “We still don’t talk about this enough,” she continues, “and it’s shocking, for instance, how even supposedly progressive architects still don’t understand the importanceofaflexibleworkingculture. This isn’t an issue about women, it’s aboutthequalityoflifeforeverybody.” But pure, unadulterated sexism has played its part. “In academe,” Scott Brown says, “I would say something and

Denise Scott Brown in the Las Vegas desert, 1966. With her husband Robert Venturi, she wrote a seminal work on architecture based on Las Vegas buildings. Below: Scott Brown with Venturi in 2015 — Frank Hanswijk

becoming a starchitect; and New Yorkbased Annabelle Selldorf is the most indemand gallery architect in the US. Japan’s Kazuyo Sejima won the Pritzker Prize and directed a Venice Biennale. There is also a new generation of partnerships in practice and in life, including SelgasCano, Pezo von Ellrichshausen, DowJonesandothers. In 1989, Scott Brown wrote this: “The heroically original modern architectural revolutionary with his avant-garde technology, out to save the masses through mass production, is a macho image if ever there was one. It sits strangely on the middle-aged reactionaries who bear its mantle today. A more conserving and nurturing(female?)outlookisbeingrecommended to the profession by urban planners and ecologists, in the name of social justice and to save the planet. Womenmayyetrideinonthistrend.” That nurturing environment now confronts a resurgent atmosphere of “locker room” rhetoric. Yet to my surprise, Scott Brown asks, “Did you see the pussy hats?” She is referring to antiTrump protestors’ handcrafted headwear. “There is real change,” she adds. The struggle continues. As Wigglesworth says, “The suffragettes didn’t achieve what they did by knitting.”

Kaufmann ends his silence in style C L A S S I CA L M U S I C

Jonas Kaufmann Barbican, London

aaaae

Richard Fairman The gods are smiling on the Barbican in 2017. First, the proposal for a new concert hall was rescued when the Corporation of London found the cash to press ahead with the business plan. Now, Jonas Kaufmann has recovered from his long, enforced silence, caused by a burst blood vessel on his vocal cords, just in time for his Barbican residency. The “Kaufmann Residency” is one of the highlights of the Barbican season. Although lasting only 10 days, it includes this opening recital, a Wagner concert, a public discussion and a Strauss concert that will showcase the tenor in an unlikely raid on soprano territory with a daring performance of the Four Last Songs. So far, so good. To start his solo recital, Kaufmann set the audience at ease by joking about his need for a music-stand

OPERA

Falstaff La Scala, Milan

aaaae

James Imam In 2014, La Scala’s incoming director general Alexander Pereira bought four productions from his former (and then current) employer the Salzburg Festival. The result was an almighty row with La Scala’s board over conflicts of interest: not the best start to a new job. Yet one feels that Damiano Michieletto’s 2013 realisation of Falstaff, the most celebrated of those productions, was destined to come to La Scala sooner or later. Verdi wrote Falstaff for La Scala in 1893. After a triumphant premiere the work did not catch on; it was Arturo Toscanini, the theatre’s former music director and a tireless advocate of Falstaff, who would revive interest in

after his long break. He sports an appealing personality and also sounded in healthy voice throughout the evening with the single caveat that he overuses his soft, floating head voice. What should be a special effect starts to come across more like a mannerism. Like his compatriot Christian Gerhaher, Kaufmann sings German Lieder with a straightforward, almost spoken clarity to the words, married to a vocal

In healthy voice: Jonas Kaufmann

the work especially during the 1920s. Thereafter, it has enjoyed greater popularity. Michieletto adds another Milanese connection. He sets the action within the city’s Casa di Riposo, a home founded by Verdi for retired musicians. Michieletto imagines Falstaff as a retired singer — a guest of the Casa dreaming of former glories. Elderly doubles appear for the duet between Nannetta (Guilia Semenzato) and Fenton (Francesco Demuro), thus lacing their youthful love with a sense of wistfulness. The director focuses on the sense of nostalgia that runs through Verdi’s score. He pursues this concept with characteristic conviction, reinforcing his ideas with neat theatrical details. Ambrogio Maestri in the title role makes this production tick. He is by now the quintessential Falstaff. Maestri’s vivid crafting of the text and sharp comic instincts are typical of the baritone. Yet, by injecting a sense of bitterness and melancholia, this was a

line always shaped with care. In Schumann’s Kerner-Lieder this resulted in a performance at the opposite pole to Alice Coote’s intense outpouring at Wigmore Hall the previous week. Kaufmann was restrained, poetic and beautifully accompanied by Helmut Deutsch, who judged perfectly how much volume to use in support of a singer who has a heroic tenor voice to unleash when he wants to. After the interval came a selection of Duparc mélodies, their hothouse, early French impressionism painted in warm, husky, baritonal colours. Most interesting for a British audience was Kaufmann’s first performance in this country of Britten’s Seven Sonnets of Michelangelo. This was a long way from English performances of the cycle, partly because Kaufmann’s voice is no cool, reedy English tenor, partly thanks to the relaxed, Mediterranean glow he cast over the Italian poems. Britten’s songs blossomed for him, as though let out for once into the sun. On to Wagner next. Residency ends on February 13 barbican.org.uk

more rounded depiction of the protagonist compared with Maestri’s performance of the role in Robert Carsen’s production last year. Despite such impressive singing, the performance as a whole never quite got going. Conductor Zubin Mehta delivered on his promise to provide a light reading of the score. The result was stubbornly slow tempi and low-energy playing that, with the notable exception of a crackling final fugue, rarely communicated the vivacity of Verdi’s score. Many of the ensembles had a precarious quality as a result. Still, this almostentirely Italian cast conveyed the text with clarity and precision. Carmen Giannattasio gave a rich account of Alice, Yvonne Naef’s Mistress Quickly was fantastically bawdyand Massimo Cavalletti’s Ford was Falstaff’s worthy counterpart. If musical imperfections can be ironed out over coming performances, this production will surely age well. To February 21, teatroallascala.org


Tuesday 7 February 2017

7

FINANCIAL TIMES

FT BIG READ. UNICREDIT Italy’s largest lender by assets is seeking to restore confidence with a €13bn share sale. Many hope a successful offering will lift a troubled banking sector but fears about bad loans are likely to persist. By Rachel Sanderson, Martin Arnold and Jonathan Ford

J

ean Pierre Mustier, chief executive of UniCredit, has crisscrossed the world in the past two months seeking to cajole investors into buying €13bn in new shares — a major test of confidence not just for Italy’s largest bank but also the country’s teetering banking sector. Having sold the bank’s private jet as part of a cost-cutting drive to boost its lean capital base, the wiry 56-year-old, and Mirko Bianchi, his finance chief, sent a strong signal that UniCredit was watching every cent. They turned up at meetings in London straight off the Tube with Mr Mustier carrying a small backpack, say people who met him. In the US, they shunned pricey restaurants as they zigzagged from coast to coast, instead eating on planes to save time and money. This lean and hungry image conveyed by Italy’s top banker, whether accidentally or by design, contrasts starkly with that of the country’s lenders. Over the past year, the banking sector has flirted with systemic crisis, bloated with bad loans and weighed down by too many financial institutions supporting a gravy train of bankers and board posts. As UniCredit launched its bumper rights issue — at a steep 38 per cent discount to its theoretical ex-rights issue price — bankers in the underwriting consortium said they were confident that it would be successful. It needs to be. The rights issue has acquired a talis-

Bridging the loans gap

€13bn

Value of Unicredit’s rights issue. Shares are priced at a 38% discount to their likely market price

€20bn

Total value of the rescue package earmarked by the government for Italy’s troubled midsized banks

€356bn

Gross non-performing exposures held by Italian banks

€200bn

Gross figure for sofferenze, the worst kind of defaulted loan, on Italian banks’ books

€18bn

Value of bad loans consolidated by UniCredit in a deal with Pimco and Fortress

6,500

‘The banks have to employ lots of people to manage 15 per cent of their businesses that are not producing income’ manic quality among Italy’s battered banks. They hope it will reverse the breakdown that has seen their shares plunge over the past 18 months. Besides worries about profitability and governance, investors fear the industry’s €360bn mountain of doubtful loans, of which €200bn are in default. The offering comes at a tumultuous moment. The implementation of a government decree — earmarking €20bn to rescue several midsized banks, including Monte dei Paschi di Siena, the world’s oldest lender — remains up in the air. Italy is in talks with the European Commission and bankers do not rule out the possibility that regulators could impose tough conditions in exchange for allowing the state rescue of the Italian lender. At the same time, Intesa Sanpaolo, Unicredit’s rival, is considering a bid for Generali, Italy’s largest insurer. Such a deal would alter the dynamics of Italian finance, say senior bankers. The broader issue is whether a successful fundraising by UniCredit will help draw a line under concerns about Italy’s largest bank by assets, and in turn Italy’s banking sector. Alberto Gallo, portfolio manager at London-based Algebris, says Italy’s €20bn intervention — and the acknowledgment of the bad loan problem — could be a positive for big banks such as UniCredit and Intesa Sanpaolo. Unlike some of the their smaller rivals, these can absorb bigger writedowns because they can raise capital. He says: “It remains to be seen if the weak banks will be seriously restructured, though. Absent that, the issues will come back.”

Latest target for the number of job cuts, bringing the total losses to 14,000. UniCredit wants to make annual cost savings of €1.7bn

€4.7bn

Target for net profit by 2019

8%

UniCredit’s common equity tier 1 ratio — the ECB’s minimum is 8.75%

An austere approach: the walkway that leads to Milan’s business district and Unicredit’s headquarters Luca Bruno/AP Photo

UniCredit’s rights issue is designed to allow it to confront its own dire lending history, which dates from a hubristic takeover of Roman bank Capitalia in 2006, the financial crisis and Italy’s subsequent recessions. These hit its domestic businesses and its network in eastern Europe, saddling the bank with one of the country’s biggest bad loan piles. It amounts to some €50bn in gross terms. Even after the provisions UniCredit has taken, it still stands at a lofty €27bn. As well as cutting costs, Mr Mustier’s strategy is to sell assets, including €18bn of bad loans in a deal with Pimco and Fortress, two US debt funds. UniCredit has a target of €4.7bn of net profit in 2019, more than triple that of 2015 under Federico Ghizzoni, the former chief executive. Over the next three years, the bank plans to shed an additional 6,500 jobs, bringing the total to 14,000. It aims to cut costs by €1.7bn a year. Mr Mustier’s plan has won over some analysts. Giovanni Razzoli, an analyst at Milan’s Equita brokerage, who recently put a “buy” recommendation on the stock, says a successful recapitalisation

Non-performing loans

Italian banks’ bad debts

As a % of gross loans

Estimated realisable value (€bn) 100

20 Italy

Failing loans Italian banks have long been burdened by a large stock of non-performing loans, which they have valued at prices higher than investors are willing to pay. For years, few doubted the sector’s ability to muddle on if left to its own devices, or the public’s apparent tolerance of a creaking, inefficient system. Nicolas Véron, a fellow at Brussels think-tank Bruegel, says: “There is a high level of anxiety that reforming the system may imply changing fundamentally an Italian community involving bankers, journalists and politicians.” He argues for the closure of failing banks and forced mergers to fix the system. What has changed is the supervisory approach. Since 2014, the European Central Bank has overseen Italy’s banks and it takes a more stringent approach to bad loans than the previous national incumbent, the Bank of Italy. The Frankfurt-based supervisor’s concern is understandable. Gross nonperforming exposures measured €356bn, or 17.7 per cent of total loans, according to the latest financial stability report. That is three times the amount that is normal in most European economies. The stock of gross sofferenze — the worst kind of defaulted loan — remains at about €200bn; net of provisions that the banks themselves have taken these amount to €85bn.

80

15 Portugal

60

Germany and Italy sovereign bond yields 10-year (%)

8 Italy 6 4

5 Germany

20

2008 09 10 11 12 13 14 15 16

‘It remains to be seen if the weak banks will be seriously restructured. Absent that, the issues will come back’

10 Spain

40

0

should change the sentiment that has driven UniCredit to underperform its peers. But in an indication of the difficulties facing Italian banks, UniCredit warned in a filing before the launch of its rights issue that its common equity tier 1 ratio — a measure of financial strength — was about 8 per cent at the end of 2016, below the ECB minimum of 8.75 per cent. This was because of charges made in the fourth quarter to cover bad loans. The bank will take a €12.2bn hit ahead of its planned balance sheet clean-up. The writedowns, related to hiving off its bad loans, indicate the extent to which Italian banks still have NPLs marked on their balance sheets at much higher prices than they could fetch in the market. This suggests the

0 2007 08 09 10 11 12 13 14 15 16

2 Germany

0

2007 08 09 10 11 12 13 14 15 16 17

FT graphic Sources: Thomson Reuters Datastream; Banca d’italia

Governance Reform process held up by political manoeuvres Poor governance is often cited as a weakness of the Italian banking system. The concerns often focus on the composition of Italian bank boards and controls over pay and lending, especially since revelations of fraud and malpractice at Italy’s weakest lenders. But a senior Italian official says the latest worry for the country’s banks is that the few governance reforms carried out by the former government of Matteo Renzi will be rolled back. Mr Renzi resigned in December after losing

a referendum on constitutional changes. Courts have blocked some aspects of the implementation of governance reform for the popolari co-operative and mutual banks. This reform, passed by Mr Renzi two years ago and which paved the way for the merger of Banca Popolare di Milano and Banco Popolare to create Italy’s third-largest bank by assets, was applauded by investors. While the reform process has gone too far to be repealed the popolari banks still risk being tied up in legal battles. The European Central Bank’s push to reduce the stock of non-performing loans in the short term has clashed with the preference within Italian institutions for selling portfolios gradually to

achieve the best price. An Italian official blames “supervisory bias” for the pressure on Italian banks, arguing that the weaknesses of German banks do not get the same attention. In an open contradiction of the ECB, Ignazio Visco, governor of the Bank of Italy, told Italian bankers last month that “the majority of bad loans are held by banks in a sound financial position . . . [They] therefore do not need to sell them immediately.”

hole in the system could be far bigger than previously disclosed, say senior financiers.

Breaking the circle Italian officials insist UniCredit’s recapitalisation — if Mr Mustier pulls it off — coupled with Italy’s rescue package will clear a cloud of systemic risk that has been hanging over the country. Regulators, however, remain concerned by the depressing effect of stillunrecognised loan losses on both the banks and their customers. Andrea Enria, Italian chairman of the European Banking Authority, last week called on Brussels policymakers to create an EU “bad bank” to buy billions of euros of toxic loans from lenders to break the vicious circle of falling profits, squeezed lending and weak growth. Lorenzo Codogno, a former economist at the Italian Treasury, argues that the planned €20bn fund to recapitalise the banks has sharply reduced the risk of sudden bank runs and disorderly failures. He argues that three critical issues remain: profitability which requires deep restructuring and cost cuts, governance and, most crucially, a reduction in the stock of bad loans. Most agree that the banks need to crystallise what are now sunk losses. “It is a very inefficient system because the banks have to employ lots of people to manage 15 per cent of their businesses that aren’t producing any income,” says Panfilo Tarantelli of Tages Group, a fund that controls Credit Fondiaria, Italy’s biggest distressed bank loan fund. Banks also have to reserve hefty amounts of capital against non-performing exposures. Collectively these factors weigh on their ability to make fresh loans. Banks will need to mark down the value of the loans and consequently raise larger sums of equity to shore up their balance sheets, says Philippe Bodereau, Pimco’s portfolio manager and global head of financial research. He argues that €30bn-€40bn of equity is required to bolster the sector’s balance sheet, an amount he says is “manageable” given that it is equal to about 2 per cent of Italy’s gross domestic product. This compares with banking crises in Ireland, which cost about 30 per cent of GDP to resolve, and in Spain, which cost close to 10 per cent to resolve.

UniCredit chief executive Jean Pierre Mustier: reforming the balance sheet

A €13bn cliffhanger Underwriters are confident that Unicredit’s discounted rights issue will be successful New backstop One former Treasury official says Rome’s planned €20bn fund has reduced the risk of bank runs ‘Hot money’ risks Jean Pierre Mustier says the problem of non-performing loans is deeper than many appreciate

The Bank of Italy and the Italian banking association point to signs that the flow of new bad loans has peaked. “But the stock is still in place”, says Giovanni Bossi, chief executive of Banca Ifis, which specialises in small and medium-sized enterprises and NPL management. He says this pile of NPLs is partly due to Italy’s slow economic recovery since the financial crisis and a judicial system that puts more emphasis on debtors’ interests than on the creditors’. Some attempts to alleviate the load and so raise bad loan values include new laws, such as a move to speed up the courts over bankruptcy claims. There is also a scheme to provide state guarantees for some tranches of securitisations known as GACs and a backstop fund called Atlante which bought two failing banks in the Veneto — though it failed in its second task of buying NPLs. “These are unlikely to be a panacea,” say analysts at Berenberg. Crucially, investors argue that a market in NPLs cannot emerge until better data are available. In some cases, paper loan documents are sitting in bank branches, say senior bankers — a situation that is unlikely to meet standards required by rating agencies. Mr Mustier, speaking to the Financial Times in December, suggested that the problem of its NPLs is deeper than many appreciate. He said the issue stems from Italy’s double-dip recession but also from Italian companies’ practice of funding themselves with “hot money”. The companies had “the wrong kind of balance sheet,” he said. “They had not enough capital and they were managing their liabilities by having short-term liabilities to cover long-term assets”. It has taken Mr Mustier, a Frenchman who lived in London for 20 years, to call out the deeper cultural problems facing Italy’s banking sector. The question is whether his remedy will last beyond this month’s share sale.


8

FINANCIAL TIMES

Tuesday 7 February 2017

Letters Trump will discover that it pays to be nice

TUESDAY 7 FEBRUARY 2017

Le Pen’s siren call to the French people An unworkable economic plan is mixed with unvarnished xenophobia The national interest comes first. Sovereignty must be restored to the people. No one must be forgotten. A choice of civilisation lies ahead, a choice between destructive globalism and patriotic defence of the nation. If these Trumpian slogans sound familiar, the echoes are intentional. Marine Le Pen, launching her bid for the Elysée at the weekend, was at pains to remind her supporters that presidents like Donald Trump cannot only be elected, but can act on their campaign promises. The leader of the far right National Front, long an extreme voice on the fringes of French politics, has fused anti-immigrant sentiment with growing Euroscepticism and hostility to globalisation. Sensing a chance of victory, she has unveiled a clear outline, in the form of 144 “presidential commitments”, of what she intends to do, should she win power. Much of the programme is standard National Front fare: more police and prison places, a reintroduction of national service, an extreme clampdown on immigration. Ms Le Pen is careful to avoid overtly racist language, talking instead of the threat posed by Islamic extremists. But she opposes all visible signs of Muslim identity — calling for “assimilation” above “integration” and for enforcing secularism in all public spaces. These policies attract a wider audience than in the past. But the reason Ms Le Pen is winning over new constituencies is her promise of “intelligent protectionism”. In her manifesto, she spells out what this would mean. There would be a state-led industrial policy, favouring manufacturing over finance. Imports and foreign workers would be taxed, foreign investment subject to strict controls and national industry subsidised, not least by a huge expansion in military spending — with all new equipment to be sup-

plied by the French defence industry. Almost as an aside, there is a half sentence committing to scrap the euro and reintroduce a national currency. Another half sentence promises to authorise direct financing of the Treasury by the Banque de France. There are expensive promises to drop the retirement age to 60, slash income taxes and allow huge tax-free transfers of wealth to the next generation. Very few proposals would offset these costs. But there is no attempt to do anything as mundane as make the sums add up. Needless to say, none of this is compatible with EU norms — but this is scarcely relevant, since one of the first acts of a Le Pen presidency would be to hold a referendum on France’s EU membership. The idea that France could prosper under these policies is laughable — but that does not make them impossible, or any less seductive. Moreover, the ideology that underpins her manifesto is both coherent and deeply rooted in French society. The NF’s origins lie in the 1970s, when its support was drawn from former Vichy collaborators. Ms Le Pen has gone to great lengths to sanitise the party and widen its appeal, but its xenophobic, nationalist, authoritarian underpinnings remain intact. After the shocks of the US election and the vote for Brexit, there may be a temptation to overplay Ms Le Pen’s chances of victory. Polls still suggest that she would lose in the second round of the election to almost any mainstream candidate. But the French establishment is entirely discredited. Her opponent on the right, François Fillon, is mired in scandal. Despite the buzz around Emmanuel Macron, the centrist newcomer is largely untested. The chance of a Le Pen presidency may still be slim — but there should be no doubt of the dire consequences for Europe should she succeed.

Sir, Courtney Weaver and Jamie Smyth in “Trump plays down combative phone calls” (February 3), write about the difficulties many western leaders have in communicating with the new American president. Angela Merkel, the German chancellor, in particular, has been vocal in her opposition to Donald Trump’s lack of interest in the upholding of common western values. In looking at the present AmericanGerman relations, it is becoming clear that there is a clash of cultures between the two countries. The clash goes beyond differences of opinion with regard to foreign policy. It is deeply rooted in the German love of stability and fear of chaos. The risk-averse Germans do not take kindly to individuals whom they judge as risktakers. It is interesting to note that after dealing with Mr Trump in the late

Trade agreements were all about investment Sir, Lawrence Summers, in “Revoking trade deals will not help the middle class” (February 6), says it is inconceivable that trade agreements such as the North American Free Trade Agreement could have had any meaningful impact on US wages and jobs because the US market was almost completely open long before Nafta and other agreements came along. This would be true if Nafta and the agreements to bring China into the World Trade Organization had been mainly about trade and reducing tariffs. But they weren’t. Amazingly, Professor Summers presents himself as not understanding that they were mostly about investment. Nafta made it safe for the US and other global manufacturers to offshore production to Mexico for export to the US market. Between 1983 and 1992 foreign investment in Mexico rose to $23bn. From 1992 to 2002, it rose to $124bn. Similarly, the admission of China to the WTO was not nearly as much about trade and reducing tariffs as it was about making China safe for foreign direct investment and the subsequent offshoring of production to China. Those investment surges to Mexico and China were followed by export surges from both countries to the US that substantially increased the US trade deficit, and that certainly did have an impact on US jobs and wages. Clyde Prestowitz President, The Economic Strategy Institute, Washington, DC, US Former US Trade Negotiator

A model that has never fulfilled its promises

Trump takes a risky tilt at the fiduciary rule The law is imperfect but hardly excessive and it should stay in place It is a strong strain of libertarianism that, on principle, objects to a law requiring that financial advisers only sell advice intended to help their clients. US president Donald Trump has signed an executive order directing that the fiduciary rule — a law insisting on precisely that — be reviewed before it is made effective, as planned, in April. Mr Trump’s suspicions about the rule may indeed be principled. Like all regulations, it will have costs. But it addresses a real need, and that Mr Trump has chosen this facet of Obamaera financial reform for early review — and the fact that his economic team is thick with finance industry insiders — raises questions about who his deregulatory agenda is intended to help. The rule requires that paid-for financial advice be prudent, put the interests of the client first, be transparent about conflicts of interest and fees, and that those fees be reasonable. This sounds sensible but there are two reasonable objections. The first is that the rule, in practice, will force advisers to charge fees rather than commissions for their services and will increase compliance costs. This will reduce the demand for financial advice (clients balk at fees) and the supply (fewer advisers will want to bother). The result will be less access to advice, especially for less affluent clients. Consider the analogy with lending. Poorer people are riskier credits and borrow less for shorter periods. So lenders charge them higher rates. Make the higher rates illegal and the result is less credit for those that need it. Similarly, it may be argued, commissions may be the only economically viable way to sell advice to lower-income savers, who need it most. Experience in Britain appears to give some support for this argument. Since the UK’s Financial Conduct Authority changed its regulations in 2013 to man-

date the use of fee-based pay structures, the number of advisers working in the UK has fallen, according to the FCA. This is not conclusive, however: the UK rules went further than the fiduciary rule, requiring higher educational credentials, for example. Further, the analogy with lending ultimately breaks down. Anyone paying a commission is in fact paying a fee, whether they know it or not. If the consumer objects when faced with a fee, they should object when it is called something else. Obscure expenses do not make a product more affordable. The solution to providing high-quality advice to people of modest means is not to dispense with fiduciary responsibility but to drive costs down. This should not be impossible, given improving technology and the fact that the planning needs of most people are quite simple. For the overwhelming majority of Americans, a low-cost mix of treasuries, high-quality equities and cash, adjusted for age and frequently rebalanced, is the answer. The second objection is that the rule will subject advisers to groundless legal actions every time the market falls. It is quixotic, however, to accommodate the broken US tort system by lowering the bar for financial advisers. Better to make the limits of prudence clear and modest — and pursue tort reform. Gary Cohn, the head of Mr Trump’s economic team, says the new fiduciary rule will limit consumer choice. It is meant to, of course. The question is if the options eliminated can possibly be worth having. In any case, the fact Mr Cohn was until recently second-incommand at Goldman Sachs makes the appearance of conflict inevitable. Mr Trump is gambling that the electorate will not see financial deregulation as inconsistent with his populist rhetoric. He may win his bet. In the case of the fiduciary rule, that would be a shame.

1980s, German bankers were exceptionally frank in their judgment of the “too loud” upstart who has gone “too far, too fast”. At that time, it was clear that Mr Trump was overleveraged. One of the lenders was the American branch of Commerzbank. The German bank wanted to leave him hanging, but eventually the other lenders decided to restructure the Trump holdings. Speaking of him, Ulrich Cartellieri, who was a member of the management board of Deutsche Bank in 1990, apparently said that, “I have to wonder when I see bankers of the first league in the United States lend to a man like Donald Trump . . . I hope such a bird never takes wings in Germany.” (Source: Philip Glouchevitch, Juggernaut: The German Way of Business: Why It Is Transforming Europe and the World, Simon & Schuster, 1992.) Thus,

Sir, It is the job of the economist to advise the government on how to get things right. But Martin Wolf (“Tough talk on trade will not bring jobs back”, February 1) offers only a fantasy solution to the problems of manufacturing job losses in rich countries, which he interprets as the “often geographically concentrated [problem of] import competition”. His idea of “assisting workers to gain skills and so new jobs” calls to mind the relentless newsreels of the 1980s when announcements of job losses were

Germans think the unthinkable on going nuclear

Notebook by Frederick Studemann

‘You’ve got a piece of lettuce stuck between your teeth. Can I have it?’ accompanied by cash set aside for “retraining”. As a social engineering idea this makes perfect sense. It’s just that neither the US nor the UK government has been able to turn it into reality: in their rusted-out former industrial heartlands the retrained have not become the prosperous or the contented. Mr Wolf’s prescription — more globalisation — rests on a model that has not in a generation been demonstrated to do what it says on the tin and therefore looks outdated and facile. In spite of Mr Wolf’s tough talk it is no wonder voters prefer the idea of protectionism. Peter Geiger San Francisco, CA, UK

Do away altogether with the European Parliament Sir, Xavier van Hove’s primary suggestion for renewing the EU, however, is both inadequate and unworkable (“Allow Europe’s parliament to defend the four freedoms”, February 2). He would make the European Parliament sovereign in matters concerning the four freedoms — “only if goods, services, capital or people move across borders” — with national authorities responsible for everything else. This kind of division of responsibility works in the US, where there is a much more firmly established federal authority: it would be disastrous in Europe, leading to never-ending legislative and legal

In about 10 days’ time the elite of the US and European defence and diplomatic establishment will gather in Bavaria for the annual Munich Security Conference. Sometimes it is an occasion for high diplomatic drama; other times a chin-stroking gabfest. This year, one senses there will be quite a lot to talk about. At a time when many of the old certainties have been overturned, few questions seem inappropriate. So in that spirit, I have one for those gathering in Munich to consider: is it time for Germany to go nuclear? Simply entertaining the thought might seem grossly irresponsible. The world, surely, has quite enough nuclear powers already. Also, history makes Germany an unlikely candidate to join the club — even if a fair number of the pioneers of the original atomic bomb were German émigrés, thus making the country sort-of present at the creation of mass destruction. German defence policy has long been characterised by restraint — sometimes to the frustration of its allies — and is obliged by international treaty not to take up nuclear arms. This makes it all the more remarkable that the nuclear option is being countenanced in Berlin, as part of a wider discussion about how Germany might need to reposition itself in a fast-changing geopolitical environment — one in which talk of a break up of the “supranational” EU or the “obsolescence” of Nato is almost routine.

Mr Trump’s pride in being “the king of debt” stands in sharp contrast to what German bankers judge to be prudent behaviour. It is going to be interesting to see what Berlin thinks of Washington’s new policy of increasing government spending while simultaneously reducing taxes. Regardless of the merits of such policy, no amount of tough talk on the part of the new American president could hide the fact that, at least in the foreseeable future, the US will need to keep borrowing resources from overseas. Sooner or later, Mr Trump will find out that it pays to be nice to the Germans (and the Chinese). Khairy Tourk Professor of Economics, Stuart School of Business, Illinois Institute of Technology, Chicago, IL, US battles over where exactly national sovereignty ended and European rule began. Furthermore, by handing more authority to the widely ignored and unloved European Parliament, it would do nothing to restore the trust of citizens in an EU they have come to see as alien and aloof. Far better to do away with that parliament altogether, leaving EU authority mainly in the hands of the Council representing member states. This would return more sovereignty to national governments and begin rebuilding a democratic Europe, respectful of national differences, that could regain the confidence of its own people. David A McM Wilson Jesus College, Cambridge, UK

Industrial strategy needs support of capital markets Sir, M&G chief executive Anne Richards, an engineer and Sainsbury Management Fellow, questions whether Theresa May’s industrial strategy is “of the right sort and directed at the right targets” (“Industrial strategy stirs City concern”, February 6). She makes a good point. The legion of technologies from the UK science base that have formed the basis of vast enterprises in other countries is well known. They range from fibre optics, through LED screens to antibody drugs, to name a few. This is not the result of a failure in industrial strategy but a failure in London’s renowned capital markets. Fund managers are rewarded for providing returns in the one to fiveyear horizon, whereas the capital needed to build a substantial company from a spinout technology provides attractive returns in seven to 15 years. The fallacy that a good long-term investment is a series of good shortterm investments has left the UK without a modern industrial base. Investment opportunities in worldclass biotech drugs, fusion power, artificial intelligence and robotics, are the UK’s to lose. Mrs May should look to the likes of Ms Richards for an innovation capital strategy. The challenge is that the time it will take to yield meaningful national wealth is beyond both Mrs May’s and Ms Richards’ time horizons. Chris Martin Lausanne, Switzerland

The spark for the nuclear part of this discussion was provided by the election of Donald Trump. A few days ahead of the US presidential vote, an article in Spiegel Online asked whether, with the election of an American administration that may no longer care so much for Europe or Nato, Germany might need to pursue its own, or a European, nuclear deterrent. This was later echoed by Roderich Kiesewetter, a foreign policy spokesman in parliament for the ruling Christian Democrats and a former colonel. He told Reuters that if the US no longer wanted to provide a nuclear shield, then “Europe still needs nuclear protection for deterrent purposes”. A subsequent opinion piece by one of the publishers of the Frankfurter Allgemeine Zeitung, Germany’s conservative paper of record, made a similar case and suggested that it was time the country reconsidered things long deemed “unthinkable”. It did not take long for the thinktank community and commentariat to weigh in. Some saw such views as the logical consequence of developments that could see Germany left vulnerable in an increasingly dangerous neighbourhood, with a newly expansionist Russia flexing its muscles to the east. Others maintained that it was reckless even to entertain such thoughts. Almost all observers have been quick to note that there is almost zero public support in Germany for nuclear

Email: letters.editor@ft.com Fax: +44 (0) 20 7979 7790 Include daytime telephone number and full address Corrections: corrections@ft.com

For all its imperfections, the Order of Malta is an effective institution Sir, An opinion is just that, but once printed on the FT’s Comment page it ceases to be just that. This is why it was particularly saddening to see the Order of Malta besmirched in Austen Ivereigh’s op-ed on Pope Francis’s intervention in its governance (“Francis decrees a spiritual mission for disorderly knights”, February 1). Whatever its imperfections, the Order remains a very effective international charitable organisation, helping large numbers of refugees in the Middle East and caring for hundreds of thousands of people in need throughout the world. Those who castigate human institutions for their worldliness should also spare a thought for the self-denying, dedicated and principled within them. Sylvana Tomaselli (St Andrews) St John’s College, Cambridge, UK

Snap can be excluded from index eligibility Sir, In a free society, the owners of Snapchat should have the right to sell shares in their business on any terms they choose (“Minor tech nobility, with a royal share structure”, editorial, February 4). And investors have every right to decline to invest or, if they like, to demand a heavy discount in exchange for their agreement to abandon conventional shareholder rights. The solution to the problems faced by index funds is simple. Companies with shares that limit voting rights could be excluded from index eligibility, and investors sitting on the relevant committees of the index providers have the power to make this happen. Daniel Godfrey Co-Founder, The People’s Trust

Luxury shoppers have their reputation to protect Sir, Pilita Clark’s report “Ethics-minded Kering buys snake farm” (January 26) begins by posing the seemingly incredulous question: “Do people with £2,000 to spend on a Gucci pythonskin handbag really care how the snake in question lived?” The question seems to express surprise that the luxury shopper has an interest in ethics — a somewhat harsh assessment. The currency at stake here is reputation. The luxury shopper cares as much about reputation as a multinational corporation or a local restaurant. Kering’s customers will include those with a visible public profile, such as actresses and other high-profile businesswomen, who are powerful endorsers of their products, consciously or not. These high-profile customers understand the significance of their own brand as much as they appreciate one of Kering’s luxury offerings. I doubt many of these customers would enjoy being tainted by association with a brand that wilfully sourced illegally acquired or inhumanely produced materials. That Kering is making a point of more ethical production techniques is a good thing. Businesses should be applauded for thinking about where and how their materials are sourced and taking action accordingly. Hannah Pocock Bayswater, Western Australia

weapons. Even those who have raised the issue acknowledge this. Mr Kiesewetter says that Europe does not need another nuclear power. He has talked instead about a European nuclear “umbrella” provided by the continent’s existing atomic powers, France and the UK, and possibly partfinanced by Germany. Other analysts note that Germany’s more immediate defence requirements may lie in the area of trade, where the new US administration has identified Berlin as the miscreant in a system supposedly manipulated to America’s detriment. Yet the very fact that this is being discussed at all is a further indication of how the German security debate is changing. Calls for Europe’s biggest economy to pull its weight more militarily have been a feature of western defence discourse for years. Germany has responded, albeit cautiously. Past taboos about overseas deployments have been overcome. Defence spending is due to rise, and the need to modernise the armed forces is widely recognised. Now added to this are the disruptive changes threatened by Brexit, the rise of populism and the election of Mr Trump. In an extreme case, these could sever the moorings of postwar German foreign and security policy in Europe and the western defence system. In that context, thinking the unthinkable becomes more imaginable. frederick.studemann@ft.com


Tuesday 7 February 2017

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Comment Liberalism can only win if it holds a hawkish line POLITICS

Janan Ganesh

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iberals worldwide met Donald Trump’s recent border bans with principled opposition, practical help for the victims and the occasional lapse into nonsense. Consider the Bathtub Fallacy, a staple of educated opinion for too long. Whenever the state imposes a counterterror measure, especially one as brute as the US president’s, statistics are dug out to show that fewer westerners perish in terror attacks than in everyday mishaps. Slipping in the bath is a tragicomic favourite. We chuckle, share the data and wait for voters and politicians to see sense. For good reason, that epiphany never happens. Leaving aside the many curbs on freedom that governments enforce

to prevent accidents — product regulations and tort laws, we call them — most people can intuit the difference between domestic misfortune and political violence. The latter is an assault on the system: the rules and institutions that distinguish society from the state of nature. Bathroom deaths could multiply by 50 without a threat to civil order. The incidence of terror could not. If the lawyers who volunteered to help unjustly detained arrivals at American airports showed liberalism at its best, the elision of terror with slippery porcelain is liberalism at its eye-rolling, clever-clever, unserious worst. In the coming years, reasonable people have to oppose populists while taking immense care in how they oppose them. Voters are watching. If they come to see a choice between demagogues who push security and national cohesion to paranoid extremes and liberals who take these things too lightly, the liberals should just forfeit the next few electoral cycles to save time and ballot paper. The most insidious art in politics is the steering of one’s opponent into fringe positions, almost without their

knowledge. Leaders of the Third Way, Tony Blair in Britain, Bill Clinton in the US, did it by holding the centre so greedily that their adversaries had nowhere to go but their ideological comfort zones. Boxers call it “cutting off the ring”. Today, populists do it through their own extremism. They bet on it being enough to incite liberals into righteous overreaction, and then on voters to

In coming years, reasonable people will have to oppose populists while taking care in how they do it favour rightwing stridency over the opposite kind. The first bet looks promising so far, the second seems a sure thing. This does not call for total intellectual capitulation to the other side. There is little electoral need, and much less virtue or dignity, in the parroting of altright dogma by people who correctly abhor the stuff. But liberal politicians

will need to at least hold the hawkish line — on national security, crime, welfare dependency — that took them into office in the very recent past, and harden it on migration. At a time when the authoritarian provocation is so great, when the natural reflex is to redouble one’s liberalism in defiance of the zeitgeist, this will be some feat of strategic discipline. Every political commentary has to stipulate that Trumpism is not the same as Britain’s impending exit from the EU, which is not the same as Marine Le Pen’s National Front in France, which is not the same as the rest of the continental far-right. But they elicit the same flavour of response from intellectuals and protesters. It is one that celebrates internationalism and human diversity as ends in themselves. For anyone who owes their life or livelihood to the west’s openness to outsiders, it is stirring to behold. But if it comes to define the official alternative to populism, if it crowds out hardheadedness on matters of security and identity, it will fail. Liberalism only wins when it is dunked in molten steel. Before Mr Blair

became code for transnational looseness, he stood for vigilance to crime, terror and, more contentiously, rogue states. The coming wave of anti-populist leaders will have to resemble him at his peak much more than Canada’s prime minister and dreamboat of cosmopolitan piety, Justin Trudeau. This is what the marchers and the venting celebrities should consider: not the futility of their efforts, but their inadvertent potential to drag politicians of goodwill into ideas and rhetoric that only sell in the most progressive jurisdictions. Of course, the ultimate problem with the Bathtub Fallacy is its fallaciousness, not its repellence to voters. It is wrong on its own terms. But logic can wait. Politics matters more. Mr Trump, Ms Le Pen, the British rightwinger Nigel Farage: there are no giants or geniuses here. They are beatable with patience and discipline. It would be worse than ironic if, in their efforts to de-liberalise the west, they made their opponents more liberal than they ever were before, than is sensible, than is electable. janan.ganesh@ft.com

Europe’s chance to dominate deep tech TECH NOLOGY

John Thornhill

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ike so many other European entrepreneurs at the start of the century, Siraj Khaliq headed off to the magic factory that is Silicon Valley to chase his dreams. His choice was a smart one: he pursued a successful career as an early Googler and start-up entrepreneur. But when Mr Khaliq returned to Britain after 13 years in the valley, he was in for a big surprise. As he began touring Europe as a partner in Atomico, the venture capital fund, Mr Khaliq discovered that the region’s once laggardly tech hubs had changed beyond recognition. “I was shocked,” he says. “There is an energy across Europe. It is almost like there’s another Renaissance going on.” Mr Khaliq’s impressions are supported by some harder analysis. In a report published in November, Atomico argued that Europe had acquired real traction in what it termed “deep tech”: artificial intelligence, robotics, virtual and augmented reality and the internet of things. “The future is being invented in Europe,” the report proclaimed. Some European politicians have latched on to this sense of possibility and are spying the chance to attract glo-

bal tech “refugees” from an increasingly nationalistic US. On Saturday, Emmanuel Macron, the 39-year-old upstart in France’s presidential election race, appealed to all those scientists and entrepreneurs disillusioned with the Trump administration to move to Europe. “I want all those who today embody innovation and excellence in the United States to hear what we say: from now on, from next May, you will have a new homeland, France,” he said. All this happy Euro-tech talk requires something of a reality check. Previous predictions of a European tech resurgence have — rightly — met with derision from the west coast of the US. Where precisely are Europe’s answers to Google, Apple, Facebook and Amazon — or les Gafas as they are known in France? In those rare instances when promising European tech companies do achieve significant scale, they tend to be snapped up by US and Asian rivals. Qualcomm of the US is paying $47bn for NXP, the Netherlands-based chipmaker, Japan’s SoftBank has acquired Arm Holdings for £24.3bn and Google bought Britain’s leading AI company, Deep Mind, for a reported £400m in 2014. The market value of the entire European tech sector amounts to just 7 per cent of that of the US. If ever the leaders of Silicon Valley lie awake at night fretting about the future, they are far more likely to worry about the astonishing internet giants of China, such as Alibaba, Tencent and Baidu,

Sarah Gordon

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ellside analysts may be a dying breed. The Financial Times reported last week that the number of investment bank analysts providing economic forecasts and stock and bond recommendations has fallen by a tenth since 2012. There were only 6,000 analysts working in these jobs at the world’s 12 largest investment banks in 2016, down from 6,600 four years previously. Tighter regulation and falling profits have certainly had an impact, though the numbers suggest that reports of the death of sellside analysis have been greatly exaggerated. Yet even if the numbers do continue to decline, there would be little cause for mourning. For a start, most analysts’ research is not very good. In 1973 Princeton Univer-

sity professor Burton Malkiel claimed in his book, A Random Walk Down Wall Street, that: “A blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do just as well as one carefully selected by experts.” Many of those pages have disappeared, but research suggesting random selection would be as accurate as analysts’ predictions continues to proliferate. In 2013, for example, Nerdwallet, a personal finance website, found that 49 per cent of analysts’ ratings on the top 30 US stocks during the year were incorrect. There are many reasons analysts get it wrong. Like other people, they tend to believe that the past is a guide to the future. In 2004 an influential academic paper found that analysts from sellside firms generally recommended “glamour” stocks, that is those with positive momentum, high growth and high volume. Unsurprisingly, these also tended to be the most expensive stocks. Analysts do not like to break away from the herd. Being an outlier and wrong is much more painful than being close to what everyone else is predicting

OPINION

Adam Tooze

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ne thing is for sure. Donald’s Trump’s proposed wall is going to be huge. It will also be expensive. The border with Mexico is nearly 2,000 miles long. Under George W Bush, the US fenced 670 of those. Experts differ on how much that cost but it was between $4bn and $7bn. Not surprisingly, they started with the easy bits. To finish the rest, and to make it a wall rather than a “sad” fence, could cost more than $15bn. It will fulfil a shocking campaign pledge. It will satisfy a basic nationalist impulse. It may stop some eager workers from getting to the US. But if the aim is to put “America first”, the effects are likely to be contradictory. We know from experience that what regulates the flow of Mexican labour is the state of the US economy. When central Americans come north, it is a sign of good times. And the good times may be about to roll as President Trump’s policy pumps money into the border region and concentrates it in construction, which has a heavily Latino workforce. More than 55 per cent of construction labour in Texas and New Mexico is Hispanic. Many are citizens or legal residents but in Texas the undocumented percentage is thought to be about half. Contractors working on the wall may manage to stay within the law. But, thanks in large part to the departure of foreign workers since 2008, skilled construction labour is scarce in the US. And the wall is bound to drive up wages, making it more attractive for other employers to look elsewhere. As Mr

Severing the ties of an internationally integrated economy is a messy business than they are about any emerging rivals from Europe. Besides, mainland Europe, like Brexit Britain and the Trumpian US, may yet succumb to its own forms of inwardlooking nationalism, which is so anathema to the globalised tech world. Yet there are two reasons why Atomico is right to suggest things may pan out differently in Europe this time. The first is that we are now moving from the era of the consumer internet to the industrial internet, which is reshaping the manufacturing sector, playing more to Europe’s strengths. It would be senseless for Europe to try to replicate Silicon Valley. But given its strong industrial base, Europe can still create something unique. Europe undoubtedly has the technological, financial and human

Previous predictions of a European resurgence have rightly been met with derision from the US

assets to flourish in the digital economy. As the Atomico report highlights, Europe boasts five of the world’s top 10 computer science institutions. There are some 4.7m professional developers in Europe compared with 4.1m in the US. Europe’s financing market has also grown bigger and deeper. Although the market has cooled since the Brexit vote, about $13bn was invested in European tech start-ups in 2016 compared with $2.8bn in 2011. There also appears to be an urgent recognition by many of Europe’s established companies that they need to surf the digital wave if they are not to be crushed by it. Two-thirds of Europe’s biggest companies have directly invested in a tech company as the old and new economies merge. One-third have acquired one since 2015. The second reason for relative optimism is cultural. Frédéric Mazzella, the founder of BlaBlaCar, the French ride-sharing company that now operates in 22 countries, points to a profound shift in atti-

tudes among Europe’s young. They no longer expect all the answers to come from the state or big organisations and are determined to shape their own future. “Mindset is the most important thing for a country to be innovative. When people switch from willing to be a civil servant to willing to be an entrepreneur then the country is on the right path,” he says. The European tech sector does indeed appear to be heading in a new direction and may yet surprise us all. There is no doubt that it is changing faster than ever before. But the critical question remains whether it is changing fast enough given developments elsewhere. Speaking about the life cycle of companies, Jack Welch, the legendary boss of General Electric, once warned that if the rate of change on the outside exceeded the rate of change on the inside, then the end was near. The same may apply to economies. Europe had better keep accelerating. john.thornhill@ft.com

Sellside research would be little missed BUSINESS

Determined Mexicans will still find work over the wall

and wrong. This discourages originality of thought and means convergence to the consensus is the norm. Nowhere is this more apparent than in the inaccuracy of analysts’ recommendations of whether to buy, hold or sell a stock. Numerous studies have found that analysts routinely overhype the companies they cover, and that “buy” recommendations outnumber “sell” recom-

Numerous studies have found that analysts routinely overhype the companies they cover mendations, even when the market is heading for a meltdown. An analysis in 2015 by Bespoke Investment Group of S&P 500 stock ratings found that, of the 12,122 ratings, just 6.67 per cent carried a sell label. The temptations to be bullish are clear. Access to company management gets more difficult with a sell recommendation, and the relationship is often of primary importance to an

analyst’s employer, the bank. And, as a former analyst wrote in the FT, “fund managers do not want to talk to analysts about their hold recommendations”. The remark gets to the heart of the problem, which is the unhealthy relationship between the “sellside” and the so-called “buyside”, the fund managers whom the analysts serve. Jack Grubman, while a telecoms analyst at Citigroup’s Salomon Smith Barney unit, once claimed in an email that he raised a rating to suit the bank’s chief executive, who he hoped would help get his children into an exclusive kindergarten. (Sandy Weill denied wrongdoing and said the facts had been distorted.) Most examples are less egregious. But they still suggest that the interaction between equity and bond analysts and fund managers continues to encourage unhealthy cosiness. When I was a fund manager in the City and on Wall Street in the 1990s and early 2000s, it surprised me how much reliance was placed on analysts to do the hard graft of sifting through accounts and deliver the in-depth knowledge of a company to which we then committed

money. I felt then, and still do, that fund managers should do their own numbercrunching before investing. More distorting was the prevalence of “soft” commission, whereby research was provided to fund managers in return for brokerage business, a profoundly untransparent mechanism behind which a lot of mutual backscratching took place — rarely in the interest of the ultimate investor. Much has changed since then. For one, the rules on soft commissions have been tightened up considerably. However, stricter regulation has not resulted in analysts getting it right more often. Academics in Texas and Kansas examined the patterns in analyst forecasts made from October 1993 to September 2013, and found that analyst forecast error “significantly increased over the long-term post-regulation period”. If greater transparency has not forced analysts to do a better job, other mechanisms must be tried. Alternatively, the demise of sellside research should be quietly celebrated. sarah.gordon@ft.com

Trump knows from his experience of Polish workers who cleared the site for Trump Tower in New York, it is a temptation that is hard to resist. It is not just the labour market that will tighten. So will the market for building materials. Cement and concrete are local businesses: the stuff is too heavy to move more than 200 miles. So it is suppliers in the border region who will benefit. Many of them, unsurprisingly, are Mexican. Added to this, since the 1990s the global aggregate and concrete industry has undergone massive modernisation. Among the leading players are giant Chinese businesses, European corporations like LafargeHolcim and HeidelbergCement and Cemex of Mexico. It is not by accident that Cemex shares are up almost 70 per cent since the summer. This is a world-beating company that pioneered the use of just-in-time GPScontrolled delivery. Importantly, it owns many of the best-located depots on both sides of the border. The lesson? Severing the ties of an internationally integrated economy is a messy business. You cannot stop the world and get off. Walling yourself in is a good way of discovering just how many ways you depend on the outside. Lesson two is that a trade war with China is one thing. It is thousands of miles away. The desperate refugees of Syria and tens of thousands of Iraqis who threw in their lot with the Americans and thought they were entitled to friendship in return, are also thousands of miles away. They can be abandoned or confined to miserable airport waiting rooms. Severing the south-north continental flow of millions of people that has reshaped America is a different proposition altogether. Border regions are naturally entangled. The only borders that are not hybrid melting-pots are those marked by oceans — a mere sea is not enough, as the Mediterranean illustrates — or by impassable desert, or by their human equivalent, something like the death strip of the Iron Curtain. Much as some Trumpists may long for a death strip, they will crave in vain. Better to bet on people’s desire for self-improvement, the resilience of connections, their mobility and ingenuity — and to think seriously about an intelligent win-win immigration policy. Since this administration shows no signs of that, you may consider balancing your Mexican construction portfolio with the shares of the makers of tall ladders. The writer is a professor of history at Columbia University


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Tuesday 7 February 2017

Eye to the Main chance

Ryanair’s market share in Germany is much lower than in other European countries. It is on an expansion drive, helped by its low operating costs and resilient profitability

Twitter: @FTLex Email: lex@ft.com

low as 27p on the pound. The government says cash now is better than cash dribbling in over decades. The danger for taxpayers is that repayments are better than expected, making the bonds a steal for the City.

Student loan bonds: subprime scholars Rote learning is based on memorising facts and figures. When it comes to lessons from the last financial crisis, some regulators pledged to never revive the asset-backed securitisations that proved such terrible value for money. Yesterday, the UK government had a memory lapse: it announced plans to sell ÂŁ4bn of student loans on the ABS market. While there is little threat to financial stability, taxpayers are likely to be the long-term losers. Such assets were dubbed “toxicâ€? after the crisis, a description aimed at instruments whose underlying securities were subprime mortgages. The similarities with student loans are striking. Borrowers are not subject to credit checks. Almost any university student can take out a loan. Levels of arrears and losses are comparable to subprime ABS, according to Moody’s. Previously, loan bundles were sold to investors with the scale and expertise to manage them. The idea is that securitisation, where loans are sliced into senior and junior tranches depending on credit quality and buyers’ risk appetite, will make them appeal to a wider range of investors. Repayments, linked to wages, should broadly rise in line with inflation. But unlike traditional asset-backed securities, which are underpinned by collateral, such as a home or car, these are more akin to claims on future tax revenues. Student loan payments are collected by the national tax authority directly from graduates’ pay cheques. The first sale consists of a pool of loans made between 2002 and 2006. About 40 per cent of the pool’s borrowers did not make a repayment in the 2014-15 financial year because they earned below the repayment threshold (currently ÂŁ17,495). Normally, such delinquency would be reflected in higher yields. Yet thanks to government subsidies, the loans yield substantially less than market rates. This means the loans will probably be priced at a substantial discount to face value and losses crystallised immediately. The government said it hoped to raise ÂŁ12bn from sales of loans made before 2012, although it has not said how much it plans to sell. If the entire portfolio of ÂŁ44.5bn was offloaded this would suggest a price as

Ithaca Energy: North Sea star fisher Phineas Taylor Barnum prepared for his death in an unusual way: he had the New York Evening Sun print his obituary early. North Sea oil explorers — and workers — will have read of the imminent end of that region’s prospects more than once. Yet every few years, buyers return to buy up reputedly fading oilfields. Delek Group of Israel sees life under the North Sea. It agreed to buy London and Toronto-listed Ithaca Energy yesterday for £1.20 per share at an enterprise value of $1.24bn, including net debt of $614m. While the premium over the undisturbed price looks low at 12 per cent, it is low for good reason. As a holder of a fifth of Ithaca’s shares, Delek should know what it is getting into. Having bought shares in late 2015, it will have already benefited over the past year from the bull run in Ithaca’s share price, which has risen fivefold. Delek may have waited to bid partly to get more confidence on Ithaca’s cash flow outlook. Stella, Ithaca’s key 55 per cent-owned oilfield, had been severely delayed — due to equipment problems with a floating production vessel — but should come on stream this month. Ithaca’s production, at 9,300 barrels a day at the end of last year, will more than double this year. Could Delek have paid a bit more? Perhaps. But at £1.20, Delek has offered as much as a fifth above broker RBC’s net asset value per share estimate from the beginning of this year. Given almost every London-listed oil explorer trades below its respective NAV, Ithaca does not seem to have gone so cheaply. Yes, Ithaca’s cash flow will surge from this year, sharply reducing its leverage and possibly attracting more suitors. Yet that looks priced in on an enterprise value of over 5 times cash flow, excluding net interest charges. That valuation is above average for its peer group. Shareholders of Ithaca, like

Forward earnings estimates

Operating cost

Ryanair market shares

Forecast FY earnings per share (rebased)

Per available seat kilometre (â‚Ź)*

Per cent

0

200 Ryanair Wizz Air

Norwegian Air easyJet











 

































JOTTER PAD





4

6

8

Ryanair Wizz Air

150 easyJet Norwegian 100

Vueling Air Berlin

0

10

20

30

40

50

Ireland Poland Belgium Italy Portugal UK Spain Greece Europe

50 2015

16

17

Lufthansa

Germany

Source: Thomson Reuters Datastream; company; S&P Capital IQ *Most recent financial year. ÂŁ1 = â‚Ź0.86189, NKr1 = â‚Ź0.112925

Flying from London to Frankfurt takes about an hour and 40 minutes. Yet for business types thinking about using Ryanair: getting from the airport to the city centre currently takes the same. That looks set to change, with implications for the Irish carrier’s rivals. Ryanair’s market share in Germany is small at about 6 per cent. One reason is that it has not always been cost effective to obtain slots at the country’s main airports, many of which are owned by branches of city or regional government. That often left Ryanair serving leisure travellers from airports like Hahn and Weeze. Frankfurt is slightly different. The airport’s holding company, Fraport, is controlled by the state and city, but it

is also quoted — and has wised up to the fact that it is losing customers to nearby rivals such as Cologne. Low-cost carriers account for just 4 per cent of Frankfurt’s passengers and turmoil in Turkey has dented traffic; passenger numbers were down 1.2 per cent in the nine months to September. It has every incentive to find new customers. From March, Ryanair will base two aircraft at Frankfurt am Main, flying once-daily to four Iberian holiday destinations. This might look insignificant next to the squadrons of Lufthansa jets stationed there, but the expansion template is familiar. Ryanair set up in Berlin with five planes in 2015; now it has nine there. Across its network, it is switching from secondary to primary airports mainly to increase

its appeal to business customers. And its third-quarter results, announced yesterday, show it can afford its big expansion push. Yes, fares are falling because of overcapacity. But costs are too; for the year to March 2018, Ryanair has hedged 85 per cent of its fuel costs at $49 per barrel and last year it agreed a pay deal with staff. Lufthansa, by contrast, is still embroiled in a bitter dispute with its pilots and is helping to prop up tottering compatriot Air Berlin via a lease deal. It has little prospect of matching Ryanair’s average ₏33 fare. That might not have mattered so much when the low-cost carrier was banished to secondary airports; it will become more of a problem as the upstart moves into established hubs.

Mr Barnum, should accept the inevitable and assent to the Delek offer, which looks fair. The show must go on.

the past five years. Unlike its compatriots, however, Ajinomoto has also been willing to sell businesses it deems noncore. In 2014, it sold drinks maker Calpis, subsequently buying US frozen foodmaker Windsor Quality Foods. Asset reshuffles have begun to pay off. Last week’s third-quarter results revealed that margins in the food products divisions, which account for three-quarters of revenues, have expanded 2 percentage points, to 10 per cent, since the financial year that ended in March 2014. The company’s stock has responded to restructuring with a re-rating. From post-crisis lows to a high just 12 months ago, it has risen nearly fourfold, significantly outperforming the MSCI Japan large capitalisation index. Since then, the share price has languished,

drifting down by more than one quarter. This probably reflects unfavourable external factors — such as the stronger yen, which reduces its overseas earnings — rather than corporate failings. As these headwinds abate, focus will return to Ajinomoto’s takeover strategy. Recent buys in Africa and Turkey have shown the company has not lost its momentum. Ajinomoto’s real target, however, is Europe, where it lost out to Archer Daniels in buying Wild Flavours in 2014. Acquisitions are an additive that can induce headaches, like food overseasoned with MSG. But judicious M&A by Ajinomoto should mean the market will back the group if it does add European flavours to its portfolio as planned.

Ajinomoto: going for a European White powder tends to get a bad name. Monosodium glutamate is no exception, despite what suppliers say. This helps explain why Ajinomoto, the Japanese-listed food group that first marketed the seasoning in the early 1900s, has diversified well beyond its original product in a quest for growth. In recent years it has become acquisitive, with more purchases planned. The strategy has done little for the top line, which has gone nowhere over

CROSSWORD No. 15,467 Set by HAMILTON 

2

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DOWN 1 Screen copper’s preliminary review of Scottish town (7) 2 Nourishment for insect ingesting fruit (7) 3 Fabulous but scandalous green lady (9) 4 After jetty ends, look out! German removing faulty gun from boat (5) 5 One wondering what it’s like to be funny (7) 6 Family boys with reports about Joseph? Not half! (7) 7 Play! Bowled by agile character (6,6) 10 Play Guardian? (3,9) 15 Not ceased making up stories (9) 17 Bird wins the heart of disciple; that’s preposterous (7) 18 Learned simple English first, one having time inside (7) 19 Repository used by shop endlessly over the years (7) 20 Images of Ms Gardner, star in the making (7) 22 Painter left in student accommodation (5)

Solution to Saturday’s prize puzzle on Saturday February 18 Solution to yesterday’s prize puzzle on Tuesday February 20 Winners’ names will be printed in Weekend FT

Tyson Foods: paltry results Meat might take a smaller share of Americans’ future diets. Tyson Foods, the largest US meat processor, is anxious to hedge its bets. In December it launched a $150m venture capital fund to find novel protein sources, which has invested in a start-up called, appropriately, Beyond Meat. This followed another strategic move in 2014: paying $8bn in a bidding war for Hillshire Brands, which provided a way into higher-margin packaged foods. Despite the steep price, investors appreciated the synergies. And, over five years, the approach has paid off. Tyson shares have risen 234 per cent. For the time being, however, cows, pigs and chickens are still crucial. Yesterday, they contributed to a record first quarter, with earnings up 38 per cent. Poultry, though, continues to let the side down. In the previous quarter, weak results and margins in the chicken segment dragged down earnings. The company attributed the margin shortfall to higher soyabean prices and operational issues. The latest quarter brought more foul results: another margin decline blamed this time on higher marketing expense. Still, Tyson’s beef and pork segments both hit record margins. If it were just chickens to blame, Tyson investors could be more sanguine but there are other clouds. In November, Tyson replaced its longtime chief executive and set aside $1bn for capital expenditure this year, with the pay-off likely to be lower than operating costs. Yesterday, Tyson said the SEC was probing what is thought to be the company’s role in an alleged chicken price collusion scheme (separate civil litigation is continuing). Tyson was confident enough to boost its profit forecast for the fiscal year. But the litigation uncertainty sent the shares down another couple of points and they are now 18 per cent lower than their October high. Tyson is thinking about the future of food. But investors remain preoccupied with the company’s past. Lex on the web For notes on today’s breaking stories go to www.ft.com/lex


Tuesday 7 February 2017

HBOS scandal Time for Lloyds to do the decent thing INSIDE BUSINESS, PAGE 12

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Yamaha

Randgold

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French 10-year yield

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11.19% ¥2,993

4.15% £7.14.5

2.15% 193.05p

0.4% $1.0736

$10 $1,230

6bp 1.14%

1.4% $56.02

2.2% 18,693

Toyota wary of ‘America first’ fallout 3 Carmaker warns on Trump trade policy 3 Europe elections and Brexit also risk factors KANA INAGAKI — TOKYO

Toyota, the Japanese carmaker under pressure to manufacture more vehicles in the US, warned yesterday that White House trade policy was a key risk alongside Britain’s planned exit from the EU. The carmaker said it would stick to its 3m target for vehicles built in Japan, some of which would be exported to the US, even as analysts warned that the company might be forced to change its stance if the US president’s “America first” policy led to a collapse of the North American Free Trade Agreement between the US, Mexico and Canada. “We see the impact of the new US administration’s trade policies on global

trade as an economic risk,” said Tetsuya Otake, Toyota’s managing officer, adding that the company saw elections in France and Germany this year as well as the UK’s negotiations to leave the EU as risk factors. Toyota’s improved earnings target for the year to March 2017 — it raised net profit guidance from ¥1.55tn to ¥1.7tn ($15.1bn) because of expectations of a weaker yen — fell short of analysts’ forecasts. The company’s outlook has darkened since Mr Trump threatened it with penalties over its plans to build a plant in Mexico and criticised Japan for what he described as a closed market for US-

made vehicles. Toyota responded with a promise to invest $10bn in the US over the next five years, including proposals to add 400 jobs at its plant in Princeton, Indiana. A meeting on Friday between Akio Toyoda, Toyota’s president, and Shinzo Abe, Japanese prime minister, ahead of the latter’s visit to Washington this week has sparked speculation that the two men discussed how the company could produce more vehicles in the US. Koji Endo, analyst at SBI Securities, said: “Toyota exports the largest number of cars to the US [among Japanese carmakers] so any change in currency moves and trade policies, such

‘Any change in US trade policies, such as [the collapse of] Nafta, will hit Toyota hardest’ SBI Securities

as Nafta, will hit the company hardest. Mr Abe may have asked Mr Toyoda how much reduction in domestic production the company can bear in the future.” Even during the strong yen era, Toyota stuck to plans to produce 3m vehicles a year in Japan — a level that executives say is necessary to maintain employment, relationships with suppliers and technological development. Last year, Toyota exported 21 per cent of the 3.17m vehicles produced in Japan to the US. The carmaker reported a 23 per cent fall in net profit to ¥486.5bn in its third quarter, as labour and development costs rose.

Crowning glory Disney dolls scatter stardust on Hasbro The seemingly insatiable demand for Disney Princess and Frozen dolls helped US toymaker Hasbro buck the gloom that hit retailers over the festive shopping period, write Pan Kwan Yuk and Adam Samson in New York. Shares in Hasbro jumped almost 17 per cent to a record high of $96.34 after the company delivered fourthquarter sales and earnings that beat market estimates and lifted its dividend. At a time when the industry is struggling in the face of competition from computers and electronic games, Hasbro’s girls division has proved a rare bright spot. Sales surged 52 per cent to $394.2m during the December quarter, helping to offset declines in the boys and pre-school divisions. The boys business remains Hasbro’s biggest money spinner even as it has struggled with stagnant growth. Sales fell 3 per cent to $552.3m as the frenzy that drove sales of Star Wars products a year ago faded. Overall, revenue for the quarter climbed 11 per cent to $1.63bn. Net profits rose to $192.7m, or $1.52 a share, from $175.8m, or $1.39 a share, in the same three-month period in 2015. The company boosted its quarterly dividend 12 per cent to 57 cents.

Source: Morgan Stanley

RICHARD MILNE NORDIC CORRESPONDENT

Electrolux is paying up to $250m for a maker of smartphone-controlled sous vide cookers as the world’s secondlargest manufacturer of household appliances pushes more into internetconnected devices and new ways of selling its products. San Francisco-based Anova, for which Electrolux is paying $115m in cash with an extra $135m possible depending on financial performance, was only set up in 2013 and raised funds on Kickstarter, the crowdfunding website. Anova’s sous vide cookers can be controlled over WiFi or Bluetooth wireless technology. The US company offers

thousands of recipes for everything from swordfish steak to port-poached pears through its app and website. The appliances, which cost $149 to $199 each, slowly cook food placed in a sealed bag in a water bath to retain moisture. “It’s all about this opportunity to get closer to consumers, give them great experiences and build a community of users that we can interact with,” Jonas Samuelson, chief executive of Electrolux, told the Financial Times. The Swedish group is in the middle of a shift away from being seen as a white goods manufacturer with retailers as its main customers towards a more consumer-orientated company. As part of the deal, Electrolux will open an office in San Francisco to help

with innovation, especially in the smart home. Mr Samuelson pointed to two areas where Anova — which had net sales of $40m last year and was profitable — could help: “user-friendly connectivity solutions” and “digital direct-toconsumer marketing”. Electrolux is expecting significant disruption in the small appliances area, which is less important and lower margin than its bigger products, such as washing machines and cookers. “There are, and will be, more disruptions in [small appliances],” said Mr Samuelson. “The world is moving faster and we need to stay on top of that. We need to watch out for business model disruption.”

Companies / Sectors / People Companies Adecoagro....................................................15 Air Berlin......................................................10 Airbnb.............................................................12 Airtel................................................................12 Ajinomoto...............................................10,13 Alcoa...............................................................12 Alibaba.....................................................13,13 Allianz.............................................................12 Ally Financial..............................................13 Anglo American....................................1,14 Anova..............................................................11 Apache...........................................................21 Apple...........................................................2,12 Archer Daniels Midland.................10,15 Autoliv............................................................15 Axa...................................................................12 Bain Capital.................................................15 Bajaj.................................................................12 Barclays.........................................................13 Bartlett Grain.............................................15 Bear Stearns...............................................13 Bharti..............................................................12 British Airways..........................................13

CHS..................................................................15 CMC Markets..............................................15 Calpis..............................................................10 Cargill..............................................................15 Caterpillar.......................................................2 Cemex .............................................................9 Daicel .............................................................15 Delek Group.........................................10,14 Deutsche Börse........................................14 Dropbox........................................................12 eBay.................................................................12 Electrolux......................................................11 Eni.....................................................................13 Euronext.......................................................14 Facebook......................................................12 Fraport...........................................................10 Future Group.............................................12 Fuyao Glass..................................................5 Generali.........................................................12 Glencore........................................................14 GoPro..............................................................12 Goldman Sachs.........................................13 Google............................................................12 Hasbro.......................................................11,21

© The Financial Times Limited 2017

When a market is held to be good for stockpicking, it is a safe bet to be stuck in the doldrums with no trend or tailwind in sight. The phrase, much in evidence among Asiabased forecasts for the year ahead, can be translated as telling investors to dig deep to pick winners. The problem is such advice has not worked so far this year. Asian stocks have got off to a strong start but the question is whether this is a mere puff of wind, or is the long lull finally over? So far this year the region’s standard index, the MSCI Asia ex-Japan, has gained 6.7 per cent against a developed market index that has risen just 3.1 per cent. What goes for Asia goes for the broader emerging markets performance worldwide since the region accounts for more than twothirds of the global MSCI EM index. Global EM gains are being driven by higher risk cyclical stocks in sharp contrast to recent years when disinflationary pressures have favoured defensive companies with low leverage and stable earnings. That shift argues in favour of Asia, which abounds in low-margin, capital-intensive manufacturers that need high turnover to drive cash flow. Emerging Asian stocks look due a recovery. Earnings have undershot forecasts for several years and MSCI’s Asia ex-Japan index has underperformed the developed world benchmark for five years. The hope is a nadir has been reached: Asian stocks are at or below their long-term valuations while developed markets are trading higher. It is not a big stretch to identify tailwinds among emerging Asia’s good growth prospects backed by strong demographics (China aside) and some reform-minded leaders. Expectations among analysts for an 8 per cent rise in earnings this year are hardly extreme. But this breezy optimism must also factor in the US. A strong dollar works against emerging markets’ performance compared with their developed cousins. And Asia’s responsibility for two-thirds of the US trade deficit puts it at high risk of punitive action given president Trump’s threats of trade wars. An inflationary environment is all very well if it driven by demand, not tariff-related cost increases. It may well be Asia’s turn to outperform but there are significant headwinds. Given this uncertainty, the good old days of enforced stockpicking in becalmed markets may not seem so bad — if, alas, unlikely.

MSCI EM relative to developed markets

Electrolux warms to internet-linked appliances with deal for US start-up

Having worked with Bear Stearns and Lehman Brothers, Walter ‘Jay’ Clayton, nominated as head of the SEC, had a front-row seat for the financial crisis. The question is how he will use his experience — to be a friend of Wall Street or an investor advocate. Analysis i PAGE 13

Jennifer Hughes

Strong dollar dents EM performance

Reuters/Carlo Allegri

Corporate legal eagle set to turn Wall St watchdog

Short View

HeidelbergCement....................................9 Honda.............................................................15 IG Group.......................................................15 Iberia...............................................................13 Ithaca Energy......................................10,14 JPMorgan.....................................................13 Japan Tobacco............................................2 Key Safety Systems...............................15 Klépierre.......................................................14 LafargeHolcim.............................................9 Lehman Brothers Holdings...............13 Levi Strauss................................................12 Lloyd’s............................................................12 London Stock Exchange Group.....14 Lotte Group................................................15 Lufthansa.....................................................10 Lyft...................................................................12 Marathon Oil..............................................21 MicroEnsure................................................12 Microsoft.......................................................12 Mondelez........................................................4 Monte dei Paschi di Siena...................7 Munich Re....................................................12 Nestlé..............................................................13

Ningbo Joyson Electronic..................15 Oaktree Capital...................................12,13 Och-Ziff..........................................................13 Plus500..........................................................15 Procter & Gamble.....................................2 Promasidor Holdings............................13 Rio Tinto.......................................................14 Ryanair.....................................................10,15 Samsung.......................................................15 Seagate............................................................5 SpaceX...........................................................12 Spotify............................................................12 Swiss Re........................................................12 Takata............................................................15 Tata Group..................................................12 Tesla................................................................12 Tiffany............................................................14 Toyota.......................................................11,15 Transocean..................................................21 Twitter............................................................12 Uber.................................................................12 UniCredit.........................................................7 Unilever.........................................................13 Volkswagen.................................................15

WPP.................................................................12 Wahaha Group............................................5 WhatsApp....................................................12 Wild Flavors................................................13 Windsor Quality Holdings ................13 Wood Group...............................................14 XL Catlin.......................................................12 Yelp..................................................................12

Sectors Airlines...........................................................15 Automobiles...........................................11,15 Banks..............................................................12 Basic Resources........................................15 Financial Services..............................12,15 Financials.....................................10,12,13,15 Food & Beverage...............................13,15 Industrial Goods.......................................15 Insurance......................................................12 Mining............................................................14 Oil & Gas......................................................14 Personal & Household Goods..........11 Retail.........................................................14,15 Technology..................................................12

Travel & Leisure......................................15

People Argüelles, Sergio.......................................4 Bosch, Mariano..........................................15 Cook, Tim.....................................................12 Cumenal, Frederic...................................14 Goodale, Mark...........................................12 Horta-Osório, António..........................12 Hurtubise, Brad........................................14 Jobs, Steve..................................................12 Kowalski, Michael....................................14 Kurosaki, Masayoshi..............................13 Leftley, Richard........................................12 Nelson, John...............................................12 O’Leary, Michael.......................................15 Singhel, Tapan..........................................12 Smith, Brad..................................................12 Soros, George............................................15 Srinivasan, Sanjeev.................................12 Thomas, Les...............................................14 Thompson, Paul.......................................12 Toyoda, Akio...............................................11 Upadhyay, Sandeep.................................5 Wattez-Richard, Garance....................12

Week 6

jennifer.hughes@ft.com

Dollar index (DXY)

It may well be Asia’s turn to outperform but there are significant headwinds


★ †

12

FINANCIAL TIMES

Tuesday 7 February 2017

COMPANIES INSIDE BUSINESS

Technology

Silicon Valley joins attack on travel ban US tech groups say Trump order threatens ability to attract talent and business TIM BRADSHAW, LESLIE HOOK AND RICHARD WATERS — SAN FRANCISCO

Silicon Valley companies are stepping up their opposition to Donald Trump’s executive order on immigration amid an intensifying legal battle over the policy, with a joint legal filing attacking the US president’s position. Airbnb, Uber, Twitter, Google, Facebook, Apple and Microsoft are among the technology companies that submitted an amicus brief — a legal document filed by non-litigants with a strong interest in the subject — to the ninth US Circuit Court of Appeals on Sunday night. Other signatories include Box, Dropbox, eBay, GoPro, Lyft, Spotify, Yelp and Levi Strauss.

The brief urges the US to make a “fundamental commitment” to welcoming immigrants, while recommending that increased background checks can adequately protect the country. “Immigrants make many of the nation’s greatest discoveries and create some of the country’s most innovative and iconic companies,” the brief said. “The [executive] order represents a significant departure from the principles of fairness and predictability that have governed the immigration system of the US for more than 50 years — and the order inflicts significant harm on American business, innovation and growth as a result. “The order makes it more difficult and expensive for US companies to recruit, hire and retain some of the world’s best employees. It disrupts business operations, and it threatens companies’ ability to attract talent, business and investment to the US.”

With growing pressure from employees and customers, tech executives have been among the most prominent corporate opponents to Mr Trump’s ban on travel to the US by all refugees and people from seven majority-Muslim nations. Thousands of Google employees staged a walkout against the order last Monday as the internet company pledged to match up to $2m in staff donations to support refugees. Tim Cook, Apple’s chief executive, has said it was “not a policy we support”, noting that the iPhone maker “would not exist without immigration”; its cofounder Steve Jobs was the son of a Syrian immigrant. Last week, Microsoft asked the White House to set up an exemption programme for US visa holders affected by the order. Brad Smith, its chief legal officer, said: “The suspension of admission creates a significant burden on US companies contrary to the country’s

‘Immigrants make many of the nation’s greatest discoveries and create some of the most iconic companies’

national and economic interests.” Travis Kalanick, chief executive of Uber, stepped down from Mr Trump’s business advisory council on Thursday after a weeklong backlash against the ride-hailing service saw thousands of customers delete its app. Elon Musk, the Tesla and SpaceX chief, who remains on the president’s advisory council, spent Sunday defending his position on Twitter. “Activists should be pushing for more moderates to advise president, not fewer. How could having only extremists advise him possibly be good?” Mr Musk wrote. The tech industry’s latest step in opposition to the Trump administration came after a weekend of legal manoeuvring and growing rhetoric, as the row over immigration even extended to the Super Bowl. On Sunday, a federal appeals court rejected Mr Trump’s request to reinstate his travel ban after a lower court had halted the order.

Financials. Cash shake-up

Insurers eye untapped India customer base Axa, Allianz and Generali see opportunity as people shift away from informal sector MICHAEL STOTHARD — PARIS OLIVER RALPH — LONDON KIRAN STACEY — NEW DELHI

India’s radical experiment in demonetisation is providing an opportunity for insurance groups to reach a customer base that has long proved elusive. Axa has used the push to get more Indians using banks to sign up more than 1m new customers to its accident insurance over the past three months, according to the French insurer. Other insurance groups are looking for a slice of the fast-growing $60bn market, with companies such as Germany’s Allianz and Generali of Italy exploring how they can benefit from the wave of Indians entering the formal banking sector. The plans come as Narendra Modi, prime minister, announced late last year that he would scrap 86 per cent of India’s cash supply as part of a plan to nudge people towards banks. The government has at the same time licensed nearly a dozen payment banks,

‘It is giving us access to an emerging customer base that has been impossible to reach’ which are allowed take small deposits — up to the equivalent of about €1,400 — and pay bills and transfer money through a mobile phone. The licence includes the ability to offer third-party financial products such as insurance, offering groups a way into a new customer base. Nearly half of India’s 1.3bn people do not have a bank account. Bharti-Axa, a joint venture between insurance groups Bharti and Axa in India, signed a deal in November with Airtel, a telecoms group that has set up the first payment bank in India, Airtel Payment Bank. Every user of the bank is receiving free Bharti-Axa accident insurance of up to Rs100,000 ($1,500). Sanjeev Srinivasan, chief executive of Bharti-Axa’s property and casualty division, says the move to encourage lower-income Indians into the banking sector is providing an opportunity to offer insurance to a new type of individual. “It is giving us access to an emerging customer base that has been impossible

Nearly half of the country’s 1.3bn people do not have a bank account — Alamy

to reach through brokers and agents,” he says, adding that the target is 15m20m people in the first year with Airtel. “We are riding the wave of India’s digitalisation and demonetisation.” Axa hopes this will allow it to get previously unbanked Indians used to the concept of insurance, allowing the group eventually to sell a larger range of products such as life, motorbike or health insurance. Axa is not the only overseas insurer active in India. Tapan Singhel, chief executive of Bajaj Allianz General Insurance, says the increase in access to formal banking should lead to more opportunities. “Our hope would be that private insurance and investments would rise,” he says. Generali and India’s Future Group announced a tie-up last year with 10 cooperative banks in Maharashtra with a view to offering microinsurance and rural insurance to a wider section of society. The growth has not escaped the notice of the reinsurance industry. In January

Lloyd’s, the London-based market, was granted a licence to operate in India along with XL Catlin, Swiss Re and Munich Re. John Nelson, Lloyd’s chairman, called it “a watershed moment in Lloyd’s international strategy”. Richard Leftley, chief executive of MicroEnsure, which designs and operates insurance programmes for emerging customers in Asia and Africa, says many insurance operators are looking to pick up newly banked Indians. He says the challenge is to convince them of the value of insurance. “People don’t know they want it until they can see what it can do.” Garance Wattez-Richard, director of Axa’s emerging customers group, says dealing with these new customers is a challenge, in part because a company cannot have the same approach as with traditional insurance. “These are no-information clients, mostly first-time buyers, so we have to think differently to inform and educate them, for example by using WhatsApp for claims and text messages to send the

Basic resources

policies.” Axa is trying to tap into similar low to middle-income demographics in markets such as Thailand and Morocco, as part of its goal of expanding sales and offsetting the pressure of low interest rates. Successive Indian governments have tried to encourage people into the formal banking sector, using schemes such as Aadhaar, which issues citizens with an identity number based on fingerprints and iris scans, which can then be used to open a bank account. The prime minister said that part of the reason for his decision to scrap most banknotes last November was to accelerate the move into a more formalised economy. Insurers are increasingly seeing the newly banked in emerging economies as part of their long-term strategy. In India alone, the insurance market is expected to expand from $60bn today to $240bn in 10 years, says the government, partly because of this trend. “Tapping this market has gone from a nice-to-have to a must-have,” Ms Wattez-Richard says.

FINANCE

Patrick Jenkins

Lloyds must do the decent thing and pay victims of HBOS scam

F

or Lloyds Banking Group, the old scandals just keep on coming. Infamous for having mis-sold the most payment protection insurance (£17bn and counting), Britain’s biggest high street bank now faces another bill: compensating victims of Lynden Scourfield, the disgraced former head of an impaired loans operation who was last week sentenced to 11 years in prison on fraud and corruption charges. Scourfield — in cahoots with a number of others, principally David Mills’ debt consultancy Quayside Corporate Services — conspired to pile unmanageable debt on to clients of HBOS (now part of Lloyds), forcing them to pay exorbitant fees for QCS services in the process. It is a decade since the scam ended. But victims have yet to be compensated. The bank is expected to appoint a third-party consultancy firm soon to investigate all clients who were referred to QCS, including the two dozen who were dealt with by Scourfield. Compensation payouts could start by the autumn. Determining who should get that compensation, and how much it should be, will be complicated. Many will argue that it should extend to all 200 or so smaller companies that were dealt with by Scourfield’s unit. Victims may feel entitled not only to a refund of unreasonable fees with interest, but to “loss of opportunity” payments. In some cases, this may be justified. In others, it would be unreasonable. Clients were part of Scourfield’s “impaired lending” unit because they were struggling. He exploited them, but their businesses may have failed anyway. It will be a hard job coming up with a compensation scheme that reflects that reality, and yet looks fair, without it costing the bank hundreds of millions of pounds. If he gets it right, Lloyds’ chief executive, António HortaOsório, could salvage the bank’s and his own reputation. He can already plausibly claim no direct connection to the scandal. Scourfield was suspended and then resigned in the spring of 2007, more than a year before Lloyds bought HBOS and four years before Mr Horta-Osório became chief executive. The Portuguese banker burnished his credentials The bank with consumers early on by breaking ranks with fellow should resist the bank bosses in 2011. They temptation to had been using a judicial review to fight regulatory characterise itself efforts to force them to comas a fraud victim pensate PPI mis-selling victims. But Mr Horta-Osório’s attempt to start his job with a clean slate on PPI, by taking a £3.2bn provision to settle claims, snowballed into a scandal that has cost the big banks close to £35bn in customer redress. Over recent months, his personal standing has been hit by newspaper reports of an extramarital affair — an issue that briefly alarmed some shareholders, who asked questions about the chief executive’s attitude to risk and lobbied the bank’s chairman to ensure a convincing succession plan was in place. But Mr Horta-Osório’s reputation with customers could be boosted by swift resolution of the HBOS scandal. Swift is a relative concept, given how much time has passed. Compensation has understandably been put on hold while the criminal investigation and trial were ongoing. Now, though, it should proceed promptly. The bank should resist the temptation to characterise itself as a victim of fraud (it lost £245m on loans in Scourfield’s unit that were never repaid). And it should not belittle the issue. On one level, the scandal is tiny, dwarfed in financial terms by the PPI scandal and the banking sector’s marketfixing affairs of recent years. But putting it right with customers could have a powerful direct impact on the bank’s brand. Repairing reputations has been a fringe concern in recent years. Since the 2008 financial crisis, most banks have focused on fixing their battered finances, putting in place the controls they lacked, and implementing the tougher rules that regulators have imposed. That should have fixed one root cause of the HBOS case (and others) — that the rogue banker at the centre of it was not subject to the kind of supervision needed to prevent abuses. Many bank scandals have had no clear victims, other than the banks themselves, and their investors. The HBOS affair, though, like the PPI scandal, had a direct impact on customers. And Britain’s biggest high street lender, with a focus on straightforward relationships with individuals and businesses, has the most to lose if it is not seen to behave honourably. A bank that does the right thing has been an oxymoron for far too long. patrick.jenkins@ft.com

Insurance

Arconic board resists activist calls to ditch chief Reliance ends 100 years of mutual ownership ED CROOKS — NEW YORK

The board of Arconic has unanimously defended the company’s chief executive Klaus Kleinfeld against pressure from shareholders to oust him, saying he brings the “experience and execution” the company needs. Elliott Management, the activist fund, last week launched a campaign to remove Mr Kleinfeld from his position at Arconic, the specialised metals and components company formed in the break-up of Alcoa last year. The fund, which controls 10.6 per cent of Arconic, argued that “management’s persistent failure . . . has destroyed

considerable shareholder value”, called for Mr Kleinfeld to go, and nominated five new directors to the board. Elliott said under Mr Kleinfeld, shares in Alcoa and then Arconic had underperformed the S&P 500 index by 151 per cent. In a letter to shareholders yesterday, however, the Arconic board said it had confidence in the company’s “strategic direction, executive leadership and prospects”. The letter argues that having split from the commodity aluminium business of Alcoa just three months ago, on November 1 last year, the company is at a “pivotal moment”. It says Mr Kleinfeld’s record since taking charge at

Alcoa in 2008 was shaped by the aluminium price slump of 2008-09. It adds that since then, he has succeeded in positioning Arconic as a supplier to the aerospace and automotive industries, and in raising margins. “This is a critically important, formative time for Arconic. As a company, we cannot afford to be distracted,” the board said. That board includes three directors who were nominated to it a year ago. Other directors include Sir Martin Sorrell, chief executive of WPP, Stanley O’Neal, the former chief executive of Merrill Lynch, and Ratan Tata, former chairman of Tata Group.

OLIVER RALPH INSURANCE CORRESPONDENT

Reliance, the UK life insurer, is calling an end to 100 years of mutual ownership by transferring its business to an asset manager in the face of tougher regulation. Reliance Mutual, which has £1.9bn of assets, said it did not have a viable future strategy as a standalone mutual. It will demutualise and transfer its business to a vehicle backed by Oaktree Capital. The deal comes as insurers warn about the heavy burden that the EU’s Solvency II capital rules impose on relatively small businesses such as Reliance.

The disclosure rules are said to be particularly problematic for small and medium-sized insurers, which do not have the scale and infrastructure of their larger competitors. Reliance, which was founded in 1911, is to transfer its business to Life Company Consolidation Group, backed by Oaktree, an alternative asset manager. LCCG’s business model is to buy small books of insurance business and save money by managing them together. Reliance, which was advised by Fenchurch Advisory Partners, has about 170,000 members. Each will receive a payment of about £100 for the loss of membership rights, and may receive

more depending on the size of their policy. Chief executive Mark Goodale said the deal would “provide our members with the best value and the long-term security that is increasingly difficult to provide as a mutual insurer”. Paul Thompson, chief executive of LCCG, said Solvency II had increased costs for insurers. “It was complex and expensive to implement and there are a lot of reporting requirements.” Others in the industry have said insurers have to hold more capital under Solvency II, which has created problems for small mutuals that do not write much new business and have no access to outside capital.


Tuesday 7 February 2017

13

FINANCIAL TIMES

COMPANIES

SEC nominee set to lighten the rules burden Early signs are that Clayton’s emphasis will be less on handing out punishments and more on working with companies KARA SCANNELL — NEW YORK

When the US financial system came crashing down in 2008, Walter “Jay” Clayton, the man who has been nominated as the top US markets watchdog, had a front-row seat. He first advised the board of Bear Stearns in its fire sale to JPMorgan Chase, and then helped Lehman Brothers Holdings in its ill-fated attempt to find a saviour before filing for bankruptcy protection. He has also been there for celebratory moments, helping Goldman Sachs secure a $5bn investment from Warren Buffett’s company and advising Alibaba on its record 2014 initial public offering. Now Donald Trump, US president, has selected this low-key attorney with a gold-plated roster of clients and an impressive golf game to head the Securities and Exchange Commission. That begs the question of how Mr Clayton will use his behind-the-scenes knowledge: as a friend of Wall Street or investor advocate. “One of the things that gives me hope is that he is a highly skilled corporate attorney who really knows securities laws,” said James Angel, a professor at Georgetown University, who does not know Mr Clayton personally. “The question is, what is he going to do with his knowledge?” Mr Clayton is a pillar of the New York establishment, having spent his entire career at Sullivan & Cromwell, the “white shoe”, or prestigious, law firm where he serves as a trusted tactical adviser for his clients, rather than a headline-grabbing rainmaker. Early indications are that he will be more focused on working with financial services groups and more interested in easing rules than handing out record punishments. That shift in emphasis is typical when the chairmanship of the five-member commission moves from being a Democratic appointee to a Republican, but it would mark a change for the agency — under the Obama administration, the two SEC chairmen spent much of their time on enforcement and writing tighter rules in the wake of the financial crisis and the passage of the 2010 Dodd-Frank financial reform act. Mr Clayton declined to comment for this article, but people familiar with his thinking say he is likely to start by easing capital-raising rules. Groups including the Chamber of Commerce have argued that tight regulations enacted since 2002 make it unattractive for companies to go public and cite the drop in initial public offerings: in 2015 there were 152 IPOs, down from 845 in 1996. Mr Clayton understands the value of “raising capital inexpensively in this country and the importance of having markets that are fair, accessible and well regulated”, said Matthew Biben, a law school classmate and a litigator at Debevoise & Plimpton. “I don’t think he will shirk from enforcement when necessary but I don’t think he’ll seek it out to make a name for himself either.” He is also expected to align with a prominent Republican party line of thinking that securities enforcement should focus on investigating individuals and weigh up corporate fines against shareholder harm, said a person familiar with the matter. Mr Clayton knows first hand the trials ofsmallbusinesses.HegrewupnearHer-

Shift of focus Enforcement has increased in the wake of the financial crisis ... Number of SEC enforcement actions Democrat

Republican

Democrat 800 600 400 200 0

1996

2000

2005

2010

2015

... and critics say tighter regulation discourages floats ... Number of US initial public offerings 1,000 800 600 400 200

1996

2000

2005

2010

2015

... which has led to a fall in the number of US-listed companies Number of domestic listed companies 8,000 6,000 4,000 2,000 0 1996

2000

2005

2010

2015

Sources: Dealogic; SEC; World Bank, World Federation of Exchanges

shey, Pennsylvania, where his father worked for a time at the chocolate company. The family later settled outside Philadelphia where his parents operated several small companies, including a logistics and steel warehousing business

In the front rank Low-key lawyer’s journey to the top c Grew up outside Hershey and then Philadelphia c Attended Lafayette College, University of Pennsylvania, and University of Cambridge c Clerked for US District Judge Marvin Katz in Pennsylvania c Joined Sullivan & Cromwell, 1995 c Advised: Ally Financial on its IPO and in a mortgage settlement with state authorities; Bear Stearns’ sale to JPMorgan; Barclays’ purchase of Lehman Brothers assets; British Airways’ merger with Iberia; Eni in an overseas corruption probe; Goldman Sachs on a variety of transactions; the IPOs of Alibaba, Oaktree Capital and Och-Ziff

that initially prospered and then struggledasthelocaleconomychanged. In ninth grade Mr Clayton met his future wife Gretchen, who now works as a private wealth manager at Goldman Sachs. She plans to resign from her position, if he is confirmed by the Senate as SEC chairman, a person familiar with their thinking said. He studied and played soccer at Lafayette University before transferring to the University of Pennsylvania, where he earned a degree in engineering. After studying economics at the University of Cambridge in the UK, he returned to UPenn for law school. It was then that he developed the seeds of a serious golf game that began as a hobby with his grandfather. He has played at some of the top private clubs in the New York area, and came in second at the club championship tournament at the Baltusrol Golf Club, where his handicap is an enviable 3.5. After working as a clerk for a federal judge, Mr Clayton joined Sullivan & Cromwell, where he spent the next two decades working from its Washington DC, London and New York offices. As a lawyer, he started out by helping companies to raise money, but he has since emerged as a go-to adviser for

Food & beverage

Open season on European acquisitions KANA INAGAKI AND LEO LEWIS — TOKYO

Ajinomoto, the Japanese seasonings group with an appetite for new international markets, is directing the third stage of its $2bn acquisition campaign at Europe. Executives at Ajinomoto’s international food businesses said the company had narrowed the search for its next takeover target to the UK, Germany or France — and could pursue deals in more than one of those. The focus on Europe comes after Ajinomoto — among the biggest producers of artificial sweetener and the first to mass-produce monosodium glutamate — agreed more than $1bn of dealmaking over the past two years. It bought US frozen foods maker Windsor Quality Holdings for $800m in 2014 and last year built on that with $600m of purchases that expanded its footprint in Africa and the Middle East. The company has said it still has capacity to spend a further ¥150bn ($1.3bn) on acquisitions. A deal in Europe, which analysts expect to be struck this year, would fit Ajinomoto’s two-pronged strategy for growth: seeking revenues outside its

declining home market of Japan and expanding its portfolio of food products to compete with multinational groups such as Nestlé and Unilever. Many of the companies with which Ajinomoto will compete are already bulk customers for its MSG, aspartame sweetener and other flavourings. “Our priority in Europe is UK, France and Germany,” Masayoshi Kurosaki, Ajinomoto’s corporate executive officer, said in an interview. “We’re narrowing

Deal-hungry Ajinomoto is a big monosodium glutamate producer

our candidates but we don’t plan to finish [dealmaking] with just one country in Europe.” Ajinomoto has struggled to find a target in Europe after it lost a bidding war for Wild Flavors, a Switzerland-based food and drinks flavourings group, in 2014. But executives say the search is advancing. The Japanese group’s recent acquisitions mark a shift from its traditional strategy of spending decades organically building its distribution and sales channels in Southeast Asian and Latin American markets. One of the company’s boldest breaks from its usually cautious approach came when it agreed to buy one-third of South Africa’s Promasidor Holdings in November last year. The $532m purchase places Ajinomoto at the heart of the rapidly growing African market for powdered drinks and seasonings. Promasidor has a sales network that reaches 36 African countries, including Nigeria and Egypt. After the acquisition of Windsor, North America generates 27 per cent of its ¥386bn overseas sales of seasonings and frozen food, while Asia accounts for 60 per cent and Europe just 4 per cent. See Lex

Walter ‘Jay’ Clayton: front-row seat when the system came crashing down

financial institutions. While representing Ally Financial as part of a national mortgage settlement with state and federal authorities, he worked alongside Rodgin Cohen, a heavyweight in the legal community who straddled the role advising the government and financial institutions during the crisis. “He’llunderstandthebusinesssidebut he’ll also understand the importance of his role as a regulator making sure the playing field is level and no one gets a shortcut simply because they belong to any special class of people,” said Cyrus Vance, the Manhattan district attorney whoknowsMrClaytonwell. If confirmed, Mr Clayton will take office at a time when partisan tensions are high and the Trump administration is committed to rewriting Dodd-Frank. “The present moment is a delicate one,” Mary Jo White, the departing SEC chairman, warned recently. “The postcrisis commission has been revitalised and remains the investor’s strongest advocate, but it is more susceptible than ever to the erosion of its expertise and authority by the partisan tides.” Lawyers who have worked with Mr Clayton say he has talents the SEC needs: someone who can manoeuvre politically and who has a deep understanding of corporations. “He’s really very smart, extremely thoughtful, and very reasonable. He knows the markets and I think he’ll be a very good leader,” said Andrew Ceresney, a former SEC enforcement director under the Obama administration. Mr Clayton has donated to more Republicans than Democrats but did not give to Mr Trump’s campaign, according to the Center for Responsive Politics. He was asked by a long-time client to offer suggestions to the Trump transition team and responded with proposals to make US equity markets more open and to promote growth by reducing regulatory barriers. That led to a meeting just before Christmas with Mr Trump at his Mar-a-Lago estate in Florida and an official offer followed.


14

FINANCIAL TIMES

Tuesday 7 February 2017

COMPANIES Banks

Mining

AnaCap buys €177m of Barclays’ Italy loans

Rio Tinto results set to highlight industry’s resurgence

Private equity group extends reach in country as bank retrenches EMMA DUNKLEY — LONDON

Private equity group AnaCap Financial Partners has struck a deal to acquire €177m of Italian loans from Barclays as the bank continues to retrench from its operations in Europe. AnaCap, which specialises in European financial services investments, will acquire the portfolio of loans that were made primarily to small and medi-

um-sized companies secured against Italian property. The price paid for the portfolio has not been disclosed. The deal, which comprises performing and non-performing loans, comes weeks after AnaCap signed an agreement to buy Barclays’ French retail banking operations. The disposal of Barclays’ Italian loans — expected to complete in the second quarter — will cut its noncore riskweighted assets by £78m. Barclays is aiming to reduce its noncore business, targeting risk-weighted assets of around £20bn, by the end of this year. Barclays offloaded its Italian retail

Retail

Klépierre turnround on track as cash flow rises

business to CheBanca!, a subsidiary of Mediobanca Group, last year for a loss of £258m. Although the AnaCap deal removes the last of Barclays’ noncore corporate loans in Italy, the bank still has a large mortgage book as well as other retail loans in the country, which it will wind

The lender still has a large mortgage book as well as other retail and wealth loans in Italy

down over time. Barclays will retain its investment and corporate banking business in the country. Jes Staley, chief executive of Barclays, said last year that accelerating the rundown of its noncore portfolios was “a key part” of the bank’s strategy to “close the gap between the group’s returns and those in our strong core business”. In the past year, Barclays has completed the sale of divisions including its Portuguese and Italian retail banks, southern European cards business, Asian wealth unit, and index and risk analytics business. The Italian government agreed a deal

last year for banks to package up bad loans with a state guarantee, to make them easier to sell to private investors. Last year, AnaCap acquired three portfolios for €2.5bn of non-performing Italian corporate loans from GE Capital, Royal Bank of Scotland and UniCredit, as part of a clear-out of Italy’s bad debts. AnaCap’s banking investments include Aldermore in the UK, MeDirect in Belgium, Mediterranean Bank in Malta, Equa bank in the Czech Republic and Nest Bank in Poland. The private equity company also completed the buyout of AssurOne Group, a French digital insurance broker in 2014.

Retail. Luxury goods

Tiffany hit by sell-off after chief bows out

HARRIET AGNEW — PARIS

Shopping centre owner and operator Klépierre has posted its best performance since 2012 as a turnround strategy launched five years ago starts to bear fruit. CAC 40-listed Klépierre said yesterday that net current cash flow per share increased 6.8 per cent to €2.31 last year — the highest level since it started its turnround. Total revenues rose 0.4 per cent year on year to €1.3bn. Klépierre said it planned to increase its dividend by 7.1 per cent to €1.82. The group said that in France and Belgium, which together account for 36.8 per cent of its shopping centre rental income, like-for-like net rental income rose 3 per cent. Klépierre said that overall, the total like-for-like value of its property portfolio was €22.8bn, a 4.5 per cent increase during the 12 months. “It’s the outcome of a very clear strategy over the past five years to transform the company,” said Jean-Marc Jestin, chairman of the Klépierre executive board, as the group announced its first full-year results since he was promoted to the position in November. The group’s shares have risen more than 45 per cent in the past five years. Klépierre operates in 16 countries across Europe and its tenants include household names such as Zara, H&M, Sephora and Primark. Just over a year ago it gained a place in France’s bluechip CAC 40 index, replacing EDF, the mainly state-owned electricity group. As part of its five-year turnround, Klépierre rebalanced its portfolio, selling more than €5bn in assets and acquiring €8bn, as it reduced the number of shopping centres it owns and focused on affluent urban areas to benefit from strong demographic growth. It sold unfashionable office buildings, as well as 126 retail outlets attached to Carrefour superstores. Klépierre said its tenants were also overhauling their stores as they adapt to the digital transformation of the retail industry.

A display at Tiffany’s store on New York’s Fifth Avenue, which was hit by security measures during Donald Trump’s transition to the White House — Alamy

Shares drop after Cumenal is replaced in wake of lacklustre holiday season for US jeweller ADAM SAMSON — NEW YORK

Shares in upmarket US jeweller Tiffany lost some of their lustre yesterday, after the abrupt departure of its chief executive sparked uncertainty following a disappointing holiday season. Frederic Cumenal has been replaced with immediate effect by board chairman and former chief executive Michael Kowalski, Tiffany said in a statement late on Sunday. The news sent shares down 3.3 per cent in late-morning trading in New

York yesterday, cutting Tiffany’s 12month rise to about 25 per cent. The group said its board was committed to existing core business strategies, “but has been disappointed by recent financial results”. It has been working to add more sparkle to the customer experience at its stores and freshen its product assortment, something Tiffany said it plans to accelerate. Mr Cumenal’s departure comes after the company recorded lacklustre sales during the holiday season. Like-for-like sales fell 2 per cent in the two months to the end of December compared with 2015. Net revenues ticked up to $966m from $961m. The tepid performance during the key shopping season was driven by a 4 per

Contracts & Tenders

cent fall in like-for-like revenues in the Americas, its biggest market. Tiffany attributed the weakness to lower consumer spending and a 14 per cent drop in sales at its flagship store on New York’s Fifth Avenue. The store sits directly next to Trump Tower and was subject to intense security measures when Donald Trump used the building as his main office during his transition to the White House. For the fourth quarter, Wall Street analysts reckon Tiffany’s like-for-like sales fell 1.1 per cent, marking the fifth consecutive quarterly decline. Revenues are forecast to come in at $1.21bn. The group is due to report on its fourth quarter on March 17. Tiffany reported a 2 per cent fall in

like-for-like sales in the third quarter, though net revenues edged up 1 per cent to $949m. Mr Kowalski will serve as interim chief while the group seeks a permanent replacement for Mr Cumenal. Mr Kowalski was the company’s CEO from 1999 to April 2015, when Tiffany promoted Mr Cumenal, who joined the jeweller in 2011 from champagne brand Moët & Chandon, to the top spot. Mr Cumenal’s departure represents the third shake-up in the past 10 months. Former finance chief Ralph Nicoletti left in May to assume the same role at consumer goods group Newell Brands. Tiffany also announced last month that it had appointed Reed Krakoff as chief artistic officer.

NEIL HUME MINING AND COMMODITIES EDITOR

The sharp turnround in the mining industry’s fortunes will be highlighted this week when Rio Tinto reports results that are expected to show strong cash generation and a large reduction in net debt. A sharp rebound in commodity prices in 2016 brought an end to several slump years for the sector and the world’s largest mining companies are now enjoying some of the most favourable conditions in years. Cost-cutting has repaired several groups’ balance sheets, and 2017 could be a bumper year of investor returns, but only if companies stick to a newfound discipline of increasing profits rather than market share. “It will be critical for the mining companies to build investor confidence, as the market is looking for confirmation that they will maintain capital discipline, keep capital expenditure down and return excess cash to shareholders,” said analysts at Citi. Share prices across the industry surged last year. Anglo American’s stock jumped almost 300 per cent, while Glencore shares rose 200 per cent and Rio’s increased 60 per cent. The gains have continued into the new year, with the sector among the best performers on European stock markets. A test of the industry’s prospects will come tomorrow when Rio, which is one of the least indebted mining companies, unveils its annual results. Analysts expect the Anglo-Australian company to end 2016 with net debt of close to $11bn, down from $13.8bn one year earlier, putting it in a good position to raise dividends or even launch a share buyback. “The key for Rio will be getting the right balance between its gearing level and returns to investors,” says George Cheveley, portfolio manager at Investec Asset Management, a Rio shareholder. If Rio retains too much cash, it might unsettle investors, who want big mining companies to show they have dropped their longstanding interest in ambitious deals and big expansion projects. Like several other mining companies, Rio made some poor acquisitions during the commodities boom: notably the purchase of Alcan for $39bn in 2007. Rio last year scrapped its longstanding policy of maintaining or increasing its dividend. It is expected to announce a full-year dividend of at least $1.10 per share for 2016 — just over half the $2.15 payout made for 2015. Rio is then due to adopt a more flexible dividend policy of providing cash returns of between 40 per cent and 60 per cent of underlying earnings. The company is aiming for a gearing ratio — net debt as a percentage of shareholder equity — of 20 to 30 per cent but may decide to run at an even lower level given the uncertainties created by Britain’s vote to leave the EU and the election of Donald Trump as US president.

Oil & gas

Israel’s Delek seals $1.2bn deal for North Sea explorer Ithaca NATHALIE THOMAS ENERGY CORRESPONDENT

North Sea oil explorer Ithaca Energy has agreed a $1.24bn takeover by Israel’s Delek Group, in the latest of a flurry of acquisitions in the region as more stable oil prices fuel a revival of confidence.

Contracts & Tenders

Delek, which has been seeking to raise its North Sea presence, already held a 19.7 per cent stake in Ithaca, which is listed in both Toronto and London. It offered C$1.95 (120p) per Ithaca share to gain full control — a 12 per cent premium to last Friday’s closing share price of C$1.74 in Toronto. The offer values the equity at C$841m (£517.6m) and including debt is worth US$1.24bn. Ithaca’s independent directors, excluding board members linked to Delek, unanimously recommended the offer. Its London-listed shares rose more than 10 per cent to £1.19 by close of trading yesterday. However, one top 10 shareholder, Paul Mumford at Cavendish Asset Management, who holds a 3 per cent stake in Ithaca, questioned the timing of the deal and said it was on the “low” side. Ithaca, which has been reducing its debt burden, is on the cusp of producing its first oil from the Greater Stella Area in the central North Sea, after two years

of delays. Output is anticipated to start this month and is expected to lift Ithaca’s production to 19,000-22,000 barrels of oil equivalent per day, up from an average 9,300 last year. Mr Mumford said the management team led by Les Thomas, a former executive at oilfield services company Wood Group, had put Ithaca in a “healthy” position. Mr Mumford told the Financial Times he would “think hard” about an offer closer to 150p per Ithaca share — a 25 per cent premium on the recommended offer — but stressed that he would like to keep hold of his shares in the company, given the potential presented by the Stella development. Brad Hurtubise, Ithaca’s chairman, said Delek’s offer “provides an attractive opportunity for all shareholders”. See Lex


Tuesday 7 February 2017

15

FINANCIAL TIMES

COMPANIES Automobiles

Airlines

Takata investors price in bankruptcy risk

Cautious tone at Ryanair as weak sterling takes toll

China-owned KSS emerges as bidding frontrunner amid airbag safety crisis KANA INAGAKI — TOKYO

Investors in Takata have begun to price in the growing risk of a court-led bankruptcy after Chinese-owned Key Safety Systems emerged as the leading bidder for the Japanese automotive supplier mired in a recall crisis over exploding airbags. Takata said a steering committee of outside experts, commissioned by the company, had recommended KSS, a US airbag manufacturer owned by China’s Ningbo Joyson Electronic, as the pre-

ferred financial sponsor, though a final decision had yet to be made. KSS was among several bidders for Takata that preferred a court-led restructuring to minimise their exposure to the company’s liabilities, according to people close to the talks. KSS declined to comment. Shares in Takata fell ¥100 yen — the daily limit — or 19 per cent to ¥436 yesterday. “Investors now see Takata’s bankruptcy as a high possibility, so it doesn’t help them to buy the stock even if the company finds a sponsor,” said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management. Takata said it continued to hope for an out-of-court restructuringagreement

with carmakers to avert bankruptcy and supply disruption. It was unaware of the veracity of several reports that carmakers, which are footing the estimated $10bn-plus bill to replace potentially defective Takata airbags in their vehicles, are seeking a court-led restructuring for the company both in the US and Japan. Analysts say KSS is an unexpected frontrunner because some Japanese carmakers had expressed reservations about putting Takata’s turnround in Chinese hands. Autoliv, a Swedish car parts supplier, and a consortium of Japanese airbag-inflator maker Daicel and private equity firm Bain Capital had been considered the two preferred bidders.

KSS, which was established in 1916, has historically enjoyed close relations with Takata, and its management team has remained intact even after the Michigan-based group was acquired by a Chinese company last June. Before the scandal, the Japanese manufacturer had even twice considered buying KSS during the past decade, according to people close to KSS. Its selection as the preferred bidder came after KSS executives met Takata, its lenders and carmakers in Tokyo last week. KSS was in talks with Bain on whether it could take a minority stake in Takata, a person familiar with the talks said. Bain Capital was not immediately available for comment.

In January, Takata agreed to plead guilty and pay a $1bn criminal penalty in the US for fraud with three executives indicted for their roles in the scandal. The company will be subject to an independent compliance monitor and on probation for three years after admitting to wire fraud for misleading US regulators, consumers and carmakers about the safety of the airbags. Takata’s airbags have been linked to at least 17 deaths and more than 100 injuries, triggering a recall that could affect more than 100 vehicle types sold by at least 13 carmakers including Honda, Toyota and Volkswagen.

Travel & leisure. Crackdown

Tighter regulation weighs on spread-betting operators Curbs on pace of growth feared with industry braced for further rules tightening CHLOE CORNISH — LONDON

Chris Stringman was a schoolteacher in 2007, when he stumbled on a report on spread betting. Intrigued, he began placing bets with UK spread-betting companies. Five years later, he’d lost a total of £130,000. “It’s sold as a financial instrument, and it isn’t — it’s a gambling product,” says Mr Stringman, whose experience prompted him to write a book entitled Win. Lose. Repeat. Such customer losses are commonplace — evidence of the mounting problems among customers that have forced a regulatory crackdown of the online retail trading industry. Companies are now assessing the extent of the damage so far even as they are braced for further tightening of rules in future, spreading concern among investors. “It’s not quite the beginning of the end [for spread-betting companies],” says Javier Paz, analyst at Aite Group, “but it’s definitely curtailing the pace of growth going forward.” Shares in the larger listed spread betters tumbled in December after the Financial Conduct Authority released proposals for tighter regulation, wiping billions of pounds from their value. Many of Europe’s regulators introduced rules for the sector last year, but the UK’s City watchdog surprised companies by taking the harshest stance on curtailing the use of debt when trading. At the heart of the crackdown are classes of particularly risky bets on the movement of markets and stocks. Socalled contracts for difference (CFDs) allow individual retail investors to take a position on financial markets — from gold prices to Apple shares — without owning underlying stock, or, in the UK, paying stamp duty. Leverage — borrowing money to increase a stake — can be used to multiply wins but can also deepen losses, meaning investors can owe providers more money than originally deposited. The sale and marketing of CFDs — as well as a related class of so-called binary options, each way bets — has been scrutinised by financial regulators across Europe, who are worried that inexperienced investors may not fully understand the risks involved.

Risky business: spread betting is marketed as an investment product, but its critics say it is closer to gambling Dreamstime

Matteo Cassina, chief executive of Saxo Capital Markets, which offers CFDs but not binary options, says “caps on leverage will undoubtedly impact the profitability (and in some cases the viability) of parts of the industry”. But he argues: “For its long-term survival, the industry should welcome the move away from competition on leverage and embrace competition on platform depth and service.” The regulatory clampdown “is giving operators in the CFD market serious pause for thought and consideration of their businesses in the UK,” says Michael McKee, partner and head of financial services regulation at DLA Piper, a law firm. Many companies are already making adjustments. The UK’s largest spread better, IG Group, last week said it would remove access for new customers to one of its binary options products. The decision was seen as a pre-emp-

tive measure to mitigate against further regulation. And in a similar move, rival CMC Markets said it was planning to launch a “limited risk account”. IG told investors that it was shifting its business “towards sophisticated trading and investing”, with a more traditional stockbroking service to attract longerterm clients and obtaining an FCA licence to offer an automated wealth management service. Paul McGinnis, analyst at Shore Capital, says IG might encourage high-value clients to register as “professional” traders, thereby exempt from FCA proposed leverage limits for retail investors. But companies are not turning away from what has been a lucrative business. The market for leveraged financial instruments has grown rapidly as technology improves, with global leveraged retail volumes reaching $85tn in 2013, according to Aite Group. CMC Markets posted a profit before

tax margin of 31.5 per cent for the 2016 year, up from 30.3 per cent year before. CMC said it was seeking to “attract and retain higher value and experienced clients”, it has also introduced more binary options products, called “Knockouts”, in Germany and Austria. A faction within the CFD and FX Association, the industry group for retail online trading companies, is pushing for it to resist proposed changes, according to a person briefed on the meetings. But such effort might prove futile. Although the FCA is not trying to ban retail CFD trading, says Elizabeth Budd, partner at Pinsent Masons law firm specialising in financial regulation, “they do want it to be more difficult”. With proposed UK leverage restrictions, combined with marketing restrictions by European regulators, CFD provision will become more expensive, according to Mr Paz. He adds that leverage limits mean customers must post more money against trades to enjoy the returns they did before, which is likely to put off less wealthy traders and shrink the market. Bigger CFD businesses are likely to be less affected, according to Plus500, a spread-betting company based in Israel and listed in London, whereas smaller companies could face elimination. “We anticipate that the industry will consolidate around a smaller number of larger participants,” says a Plus500 spokesman. Regulatory efforts to curtail risky betting will continue given the view that CFDs and forms of binary investing are not suitable for retail investors. Steven Maijoor, chairman of the European Securities and Markets Agency, questions the products’ place in retail investment portfolios. “CFDs are not a logical asset category,” he says, pointing to low returns for investors. With the FCA unable to directly tackle offshore firms, UK-based companies have complained that the regulator’s harsh stance on leverage will leave them vulnerable to competition from less-restricted European rivals. The Cypriot regulator is also tightening its rules, however, and many Cyprus-based firms are falling in line. Exness and HotForex, both Cyprusregulated CFD providers, this month said they would comply with new requirements to allow customers to set a default leverage limit of 50:1, and distinguishing between experienced and inexperienced traders when providing access to higher leverage levels.

ROBERT WRIGHT TRANSPORT CORRESPONDENT

A falling pound and a flood of rivals moving into its profitable markets dented Ryanair’s performance in the last three months of 2016, with the airline reporting yesterday that fares and profits fell slightly more than expected during the quarter. Europe’s biggest low-cost carrier said it was “cautious” about the rest of its fiscal year, which finishes at the end of next month, and warned that its previous guidance for post-tax profits for the year — €1.3bn to €1.35bn — depended heavily on the absence of “security events”. For the quarter to the end of December, Ryanair’s average fare per passenger fell 17 per cent year on year, to €33. The figure was slightly sharper than the 13 to 15 per cent decline it had forecast for the second half of its financial year. The decline pushed post-tax profits for the quarter down 8 per cent to €95m, on revenues that increased 1 per cent to €1.34bn. The profit figure fell just short of the consensus expectation of €99m post-tax profits. Like many European airlines, Ryanair faces a market where excess capacity has helped to drive down fares, terrorism has hit passenger confidence and air traffic control disruption has grown. The airline has pushed ahead with expansion, betting that its low-cost base will enable it to withstand the decline in fares better than rivals. Michael O’Leary, chief executive, said fares over the winter had fallen sharply

17

% Year-on-year fall for the quarter in average fare per passenger

8

% Slide in post-tax profits for the quarter. Revenues were up 1%

as Ryanair continued to increase both its traffic and the proportion of its aircraft operating at full capacity. Passenger traffic was up 16 per cent on the same quarter the previous year. The falling yields had been exacerbated by the sharp decline in sterling following Britain’s vote to leave the EU in June. Ryanair collects an outsized portion of its fare revenue in pounds, while the vast majority of its expenses are in euros and other non-sterling currencies. The company previously said it would reduce its planned growth at UK airports and shift capacity to mainland European markets such as Germany. Mr O’Leary said he expected that a “volatile” pound would continue to make performance difficult, and said he was sticking to his plans to emphasise growth outside the UK. “We expect sterling to remain volatile for some time, and we may see a slowdown in economic growth in both the UK and Europe as we move closer to Brexit,” he said. “While there may be opportunities to expand at certain UK airports, we expect to grow at a slower pace than previously planned in the UK and will continue to switch capacity into other key markets around Europe.” As well as sounding cautious about the remainder of the financial year, Ryanair said pricing would continue to be “challenging” next year. But Mr O’Leary vowed to push on with growth plans. “We will respond to these adverse market conditions with strong traffic growth and lower unit costs,” he said. See Lex

Retail

Basic resources

Lotte to shut trio of Beijing stores in fallout from South Korean missile shield move

Soros-backed group looks to sell grain to Mexico and reap harvest from US tensions

SONG JUNG-A — SEOUL

Lotte Group is to close three retail stores near Beijing in the first concrete example of South Korean business hit by fallout from Seoul’s plan to deploy a US-made missile shield. The retailer, South Korea’s fifth-largest conglomerate, faced a series of regulatory investigations into its operations in China in December after it struck a deal with the government in November to relinquish one of its golf courses to accommodate the advanced anti-missile system. South Korean businesses have found themselves in China’s crosshairs since Seoul’s decision in July to deploy the Terminal High Altitude Area Defence (Thaad) platform. Beijing strongly opposes the move, fearing the US will use the platform’s powerful radar to peer deep into Chinese territory. Lotte said yesterday it had been restructuring its lossmaking China busi-

ness for the past few years, but deteriorating bilateral relations due to the Thaad deployment influenced its decision. The profitability of the three stores to be closed actually improved slightly last year, according to the company. Lotte already has closed some of its unprofitable outlets in China, where analysts estimate supermarket chain Lotte Mart suffered an operating loss of more than Won100bn ($88m) last year. The company does not provide divisional breakdowns. The group also has been opening new stores in China, though has no plans to add outlets this year after its affiliates there weathered government fire, safety and tax investigations last year. “The decision is part of our ongoing business restructuring to boost business efficiency, but it has also been affected by the Thaad problem,” Lotte said. It is not the first indication that China is stepping up economic retaliation over Thaad. In the wake of Seoul’s decision to

host the platform, Beijing has blocked imports of high-tech bidets and some cosmetics, cancelled music concerts by South Korean pop idols and restricted Chinese flights and tourism to Korea. In January, Beijing warned some of South Korea’s largest companies, including Lotte and Samsung, that their business in China could suffer because of Seoul’s stance, say people briefed on the conversations. “Beijing has not been explicit about economic retaliation but companies are already feeling the pinch,” said Jeong Hyung-gon, a researcher at Korea Institute for International Economic Policy. “The negative effects from the retaliatory measures are becoming more visible now.” China is an important market for South Korean companies, and retailers have been keen to expand there. Lotte has 99 big outlets and 16 Lotte Super stores in China, and analysts estimate the group has invested more than Won10tn since entering China in 1994.

GREGORY MEYER — NEW YORK

A South American farming group backed by investors including George Soros aims to sell grain to Mexico as it capitalises on the country’s deteriorating trade relations with the US since Donald Trump’s arrival as president. The move by Adecoagro embodies fears in the US agriculture sector that White House plans to rework the North American Free Trade Agreement could spoil a lucrative export market. The pact allows most agricultural commodities to trade freely among Canada, Mexico and the US. Last year the US sold $17.7bn worth of agricultural products to Mexico, the top destination for US corn, rice and dairy exports. Mexico buys 98 per cent of its corn imports from the US, according to International Trade Centre calculations. New York-listed Adecoagro harvests nearly 2m tonnes of crops a year from farms in Argentina, Brazil and Uruguay.

Mariano Bosch, chief executive, said his commercial team was seeking deals to sell rice, corn and dairy products to Mexico. “Mexico may become an important market for us if Trump continues having problems with Mexico,” Mr Bosch said. “We see an opportunity to enter into that market.” Adecoagro’s crops would compete with shipments handled by US-based merchants such as Archer Daniels Midland, Bartlett Grain, Cargill and CHS. Open trade and a short southbound haul on railway lines give US grain supplies a formidable edge in the Mexican market. If those imports became more costly, “the Mexicans have options”, said Philippe de Lapérouse, managing director at HighQuest Partners, a consultancy. “They can turn to Brazil and Argentina for these products.” Mexico has free-trade agreements with 45 countries, the most in the world.

The country wanted to conclude bilateral agreements with Brazil and Argentina and strengthen relations with Pacific nations including Australia and New Zealand, Ildefonso Guajardo, the economy minister, said. “We cannot stand still without expanding our trade frontiers intensively.” Most states in the US Midwestern farm belt voted for Mr Trump. Yet the agriculture sector has fretted over his trade policies, sending him a letter noting that the “industry — and the rural communities that depend on it — relies heavily on export markets to sustain prices and revenues”. Cargill’s chief executive last week warned against new curbs on global trade. Adecoagro, based in Buenos Aires, was backed early on by Mr Soros. His family office continues to hold a 9.5 per cent stake. Additional reporting by Jude Webber in Mexico City and Emiko Terazono in London


16

FINANCIAL TIMES

Tuesday 7 February 2017

MARKET DATA WORLD MARKETS AT A GLANCE

FT.COM/MARKETSDATA

Change during previous day’s trading (%) S&P 500

Nasdaq Composite

Dow Jones Ind

-0.04%

-0.05%

-0.18%

FTSE 100

FTSE Eurofirst 300

-0.22%

Nikkei

-0.60%

Hang Seng

0.31%

0.95%

FTSE All World $

$ per €

$ per £

¥ per $

-0.30%

-0.463%

-0.480%

-0.027%

Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison AMERICAS EUROPE Index

Jan 07 - S&P 500

All World

New York

Index

Jan 07 - Feb 03 S&P/TSX COMP

All World

Toronto

2,293.22 15,496.05

2,269.00 Day -0.18%

Month 1.07%

Year 21.98%

Day -0.15%

New York

IPC

Nasdaq Composite

15,453.86 Month -0.28%

Year 21.07%

All World

London 7,188.30

7,195.31

Mexico City 47,225.10

5,487.94 Day -0.04%

Month 3.21%

Year 29.82%

Month -0.47%

Year 22.71%

FTSE Eurofirst 300

Index

Jan 07 - Feb 06 Xetra Dax

All World

Frankfurt

Dow Jones Industrial

New York

Month 2.39%

Year 9.17%

Index

Jan 07 - Feb 06 Nikkei 225

All World

Bovespa

São Paulo 64,486.30

20,060.50

19,899.29 Day -0.05%

Month 0.82%

Country

Index

Argentina Australia

Merval All Ordinaries S&P/ASX 200 S&P/ASX 200 Res ATX BEL 20 BEL Mid Bovespa S&P/TSX 60 S&P/TSX Comp S&P/TSX Div Met & Min IGPA Gen FTSE A200 FTSE B35 Shanghai A Shanghai B Shanghai Comp Shenzhen A Shenzhen B COLCAP CROBEX

Year 23.81% Latest

Previous

Month -1.47%

Year NaN%

Ibex 35

18,976.71 Day 0.31%

Madrid

19227.95 5665.40 5615.60 3485.40 2711.99 3578.10 6243.16 64486.30 911.54 15453.86 887.46 21141.62 8591.18 9000.71 3305.80 337.58 3156.98 2016.48 1099.07 1369.79 2170.28

19200.50 5672.50 5621.60 3496.30 2730.77 3606.16 6270.25 64953.93 913.38 15476.39 925.14 21266.72 8579.70 8988.96 3288.17 336.63 3140.17 1997.82 1098.10 1366.79 2147.92

CAC 40

9,357.30 Day -1.11%

Paris

Month 4.59% Index

Year 58.88% Latest

Previous

Day -0.98%

Month -2.50%

Country

Index

Year 13.75% Latest

Previous

CSE M&P Gen 68.33 68.77 Italy FTSE Italia All-Share 20432.19 PX 942.06 943.99 FTSE Italia Mid Cap 32607.43 OMXC Copenahgen 20 894.90 899.82 FTSE MIB 18693.65 EGX 30 12883.43 12806.07 Japan 2nd Section 5469.21 Austria OMX Tallinn 1108.36 1103.55 Nikkei 225 18976.71 Belgium OMX Helsinki General 8788.46 8828.60 S&P Topix 150 1246.93 CAC 40 4778.08 4825.42 Topix 1520.42 Brazil SBF 120 3787.45 3824.90 Jordan Amman SE 2156.88 Canada Germany M-DAX 22365.86 22644.50 Kenya NSE 20 2862.39 TecDAX 1830.21 1854.88 Kuwait KSX Market Index 6701.73 XETRA Dax 11509.84 11651.49 Latvia OMX Riga 745.98 Chile Greece Athens Gen 620.75 628.92 Lithuania OMX Vilnius 567.20 China FTSE/ASE 20 1655.61 1680.08 Luxembourg LuxX 1685.71 Hong Kong Hang Seng 23348.24 23129.21 Malaysia FTSE Bursa KLCI 1691.24 HS China Enterprise 9840.26 9683.23 Mexico IPC 47225.10 HSCC Red Chip 3795.57 3759.17 Morocco MASI 12228.99 Hungary Bux 32388.91 32905.89 Netherlands AEX 482.08 India BSE Sensex 28439.28 28240.52 AEX All Share 733.03 Nifty 500 7628.10 7569.90 New Zealand NZX 50 7094.38 Colombia Indonesia Jakarta Comp 5360.77 5353.71 Nigeria SE All Share 25802.54 Croatia Ireland ISEQ Overall 6448.48 6510.67 Norway Oslo All Share 779.60 Israel Tel Aviv 100 12.48 12.49 Pakistan KSE 100 49630.04 (c) Closed. (u) Unavaliable. † Correction. ♥ Subject to official recalculation. For more index coverage please see www.ft.com/worldindices. A fuller version of this table is available on the ft.com research data archive.

20911.02 33116.03 19116.04 5453.49 18918.20 1241.64 1514.99 2160.76 2833.09 6686.92 744.82 567.89 1692.34 1685.01 47095.07 12138.86 485.92 738.50 7094.38 25936.24 778.25 49555.83

Cyprus Czech Republic Denmark Egypt Estonia Finland France

Month -2.79%

2,049.12

Year 12.83%

Hang Seng

Day 0.22%

Hong Kong

Month 1.75%

Year 8.34%

FTSE Straits Times

Singapore 3,056.91

Milan

Philippines Poland Portugal Romania Russia Saudi-Arabia Singapore Slovakia Slovenia South Africa South Korea Spain Sri Lanka Sweden Switzerland

Month 3.97%

Year 21.05%

Shanghai Composite

Day 0.49%

Shanghai

Month 3.48%

Year 16.53%

BSE Sensex

Mumbai 28,439.28

3,156.98

3,154.32

Day -2.21% Country

2,954.14

22,134.47 Day 0.95%

18,693.65 Year 8.37%

Month -5.05% Index

Latest

Manila Comp Wig PSI 20 PSI General BET Index Micex Index RTX TADAWUL All Share Index FTSE Straits Times SAX SBI TOP FTSE/JSE All Share FTSE/JSE Res 20 FTSE/JSE Top 40 Kospi Kospi 200 IBEX 35 CSE All Share OMX Stockholm 30 OMX Stockholm AS SMI Index

Previous

7294.40 55628.62 4597.07 2465.67 7578.00 2210.51 1178.52 7062.35 3056.91 308.12 746.67 52151.16 34336.43 45353.95 2077.66 269.49 9357.30 6068.31 1548.90 547.15 8330.93

Day 0.54% Country

7226.70 55408.23 4622.82 2489.23 7492.76 2226.61 1190.40 7046.38 3041.94 308.12 744.09 52265.16 34426.56 45417.57 2073.16 268.85 9462.70 6119.99 1557.31 549.61 8350.84

Taiwan Thailand Turkey UAE UK

USA

Venezuela Vietnam

Month -0.27%

Year 14.24%

Index

Latest

Weighted Pr Bangkok SET BIST 100 Abu Dhabi General Index FT 30 FTSE 100 FTSE 4Good UK FTSE All Share FTSE techMARK 100 DJ Composite DJ Industrial DJ Transport DJ Utilities Nasdaq 100 Nasdaq Cmp NYSE Comp S&P 500 Wilshire 5000 IBC VNI

26,878.24 Day 0.70%

Previous

9538.01 1589.13 88389.50 4521.58 3088.20 7172.15 6353.24 3899.70 4282.27 7009.85 20060.50 9255.27 661.80 5163.73 5664.77 11269.08 2293.21 24006.50 28001.47 700.04

Country Cross-Border

9455.56 1582.95 87394.19 4490.01 3106.20 7188.30 6370.66 3907.69 4279.33 7009.44 20071.46 9241.56 662.07 5161.60 5666.77 11310.74 2297.42 24052.79 28194.68 700.35

Month 5.81% Index DJ Global Titans ($) Euro Stoxx 50 (Eur) Euronext 100 ID FTSE 4Good Global ($) FTSE All World FTSE E300 FTSE Eurotop 100 FTSE Global 100 ($) FTSE Gold Min ($) FTSE Latibex Top (Eur) FTSE Multinationals ($) FTSE World ($) FTSEurofirst 100 (Eur) FTSEurofirst 80 (Eur) MSCI ACWI Fr ($) MSCI All World ($) MSCI Europe (Eur) MSCI Pacific ($) S&P Euro (Eur) S&P Europe 350 (Eur) S&P Global 1200 ($) Stoxx 50 (Eur)

Year 15.53% Latest

Previous

258.33 3240.78 924.03 5707.96 287.67 1427.78 2804.31 1396.54 1623.12 4121.70 1630.05 509.56 4048.77 4432.94 436.45 1805.51 1481.49 2450.64 1477.72 1468.84 2000.94 2996.25

258.66 3273.11 932.52 5727.48 288.53 1436.45 2820.53 1399.45 1616.42 4128.40 1622.57 511.39 4076.57 4483.60 434.02 1795.11 1472.67 2447.28 1494.48 1478.13 2007.01 3008.31

UK MARKET WINNERS AND LOSERS

LONDON ACTIVE STOCKS

stock traded m's Apple 17.9 Amazon.com 16.9 Facebook 11.1 Bank Of America 9.2 Hasbro 7.8 Nvidia 7.7 Goldman Sachs 6.4 J P Morgan Chase & Co 5.0 Citigroup 4.5 Cabot Oil & Gas 4.3

close price 130.04 806.49 131.61 23.24 94.27 116.77 241.99 87.02 57.87 23.97

Day's change 0.96 -3.71 0.63 -0.05 11.64 2.39 1.04 -0.16 0.11 2.54

BIGGEST MOVERS Ups Hasbro Cabot Oil & Gas Fastenal Hanesbrands Nvidia

Close price

Day's change

Day's chng%

94.27 23.97 50.77 19.51 116.77

11.64 2.54 1.73 0.53 2.39

14.09 11.85 3.53 2.81 2.09

Ups Randgold Resources Ld Spire Healthcare Indivior Hochschild Mining Mccarthy & Stone

Downs Laboratory Of America Holdi Newell Brands Sysco Xylem Int Paper

130.09 44.64 50.12 47.38 51.03

-7.61 -2.26 -2.42 -1.87 -1.98

-5.52 -4.81 -4.61 -3.80 -3.74

Downs Jd Sports Fashion Restaurant Ao World Thomas Cook William Hill

Based on the constituents of the S&P500 and the Nasdaq 100 index

Year 10.09%

FTSE MIB

STOCK MARKET: BIGGEST MOVERS AMERICA ACTIVE STOCKS

Month -1.38%

19,687.71

4,909.84

Seoul

23,348.24

4,778.08

62,070.98 Day -0.72% Country

Year 11.28%

All World

2,077.66

9,515.90 Month -1.19%

Index

Jan 07 - Feb 06 Kospi

Tokyo

11,509.84

Day -1.22%

Europe

1,444.97 Day -0.60%

0.95%

19,520.69 11,599.01

1,427.78

Day 0.28%

Gold $

-0.30%

No change

5,664.77 46,719.99

Oil Brent $ Sep

ASIA Index

Jan 07 - Feb 06 FTSE 100

Day -0.22%

£ per €

EURO MARKETS ACTIVE STOCKS

stock traded m's British American Tobacco 152.1 Rio Tinto 143.3 Sky 125.4 Bp 120.8 Royal Dutch Shell 119.5 Hsbc Holdings 110.8 Astrazeneca 107.3 Vodafone 103.5 Reckitt Benckiser 102.1 Glencore 101.9

close price 4985.00 3385.00 1006.00 476.55 2281.00 686.50 4387.50 192.85 7025.00 310.80

Day's change 20.63 -8.27 0.70 0.60 -2.66 1.24 30.27 -0.36 -104.63 1.68

BIGGEST MOVERS

Close price

Day's change

Day's chng%

7145.00 325.90 325.70 248.30 172.50

284.36 10.89 10.77 7.50 4.70

4.15 3.42 3.42 3.11 2.80

Ups Unicredit Grifols Red Ele. Airbus Ucb

351.20 291.50 153.60 88.45 270.00

-13.46 -10.90 -4.40 -2.28 -6.50

-3.69 -3.60 -2.78 -2.50 -2.36

Downs Ryanair Holdings Bankia B.popular Sodexo Credit Agricole

Based on the constituents of the FTSE 350 index

Unicredit Santander Amadeus It Novartis N Siemens Ag Na Daimler Ag Na O.n. Intesa Sanpaolo Allianz Se Na O.n. Roche Gs Nestle N

stock traded m's 823.1 512.3 371.2 351.1 344.9 275.7 270.7 265.3 264.5 238.5

close price 26.16 5.22 43.60 68.42 118.25 67.65 2.24 158.30 221.17 68.33

Day's change 13.05 -0.11 -0.22 0.00 0.00 0.00 0.00 0.00 0.00 0.00

Close price

Day's change

Day's chng%

26.16 20.32 16.66 63.11 66.52

13.05 0.13 0.03 0.05 0.02

99.54 0.67 0.15 0.08 0.03

14.15 0.96 0.85 100.75 11.97

-0.62 -0.04 -0.02 -2.60 -0.31

-4.20 -3.52 -2.64 -2.52 -2.48

BIGGEST MOVERS

Based on the constituents of the FTSEurofirst 300 Eurozone index

TOKYO ACTIVE STOCKS

stock traded m's Mitsubishi Ufj Fin,. 1018.7 Softbank . 464.0 Toyota Motor 412.3 Yahoo Japan 367.3 Sumitomo Mitsui Fin,. 355.9 Mizuho Fin,. 342.2 Sony 314.7 Nomura Holdings, . 268.5 Kddi 240.0 Honda Motor Co., 222.0

close price 754.70 8653.00 6493.00 529.00 4485.00 209.50 3589.00 741.20 2952.50 3493.00

Day's change 24.70 122.00 48.00 68.00 72.00 1.60 52.00 9.00 38.50 70.00

BIGGEST MOVERS Ups Yahoo Japan Nippon Suisan Kaisha, Nippon Electric Glass Co., Toyo Seikan Kaisha, Sony Fin Holdings .

Close price

Day's change

Day's chng%

529.00 593.00 696.00 2143.00 1996.00

68.00 47.00 42.00 83.00 74.00

14.75 8.61 6.42 4.03 3.85

Downs Yamaha Kikkoman Teijin Thb Shizuoka Bank, Advantest

2993.00 3370.00 2228.00 972.00 2039.00

-377.00 -200.00 -124.00 -21.00 -40.00

-11.19 -5.60 -5.27 -2.11 -1.92

Based on the constituents of the Nikkei 225 index

FTSE 100 Winners Randgold Resources Ld Micro Focus Int Hikma Pharmaceuticals Fresnillo Pearson Standard Chartered Barratt Developments Sage Paddy Power Betfair Smurfit Kappa Bunzl Standard Life

Feb 06 price(p)

%Chg week

%Chg ytd

Feb 06 price(p)

%Chg week

%Chg ytd

11.4 3.6 1.3 21.8 -21.2 21.1 6.8 -3.5 -2.5 13.9 1.1 -4.2

FTSE 250 Winners Kaz Minerals Greencore Centamin Indivior Beazley Nmc Health Gvc Holdings Britvic Evraz Playtech Ferrexpo Essentra

512.00 246.10 171.10 325.70 431.40 1736.00 672.50 629.00 234.50 875.00 153.10 430.00

17.1 13.1 12.7 10.4 8.1 8.0 7.9 6.8 6.5 6.2 6.2 5.9

43.3 0.1 23.6 9.9 12.7 14.1 1.6 10.9 5.9 5.9 13.7 -5.8

FTSE SmallCap Winners Carpetright Lindsell Train Investment Trust Sanne Rps Imagination Braemar Shipping Services Communisis Devro Headlam Jimmy Choo Forterra Mears

7145.00 2257.00 1912.00 1488.00 644.00 803.60 493.50 631.50 8560.00 2130.00 2130.00 350.70

7.7 6.2 5.7 5.2 4.8 4.5 4.4 4.2 3.8 3.6 3.2 3.0

Losers Dixons Carphone Capita Rio Tinto Glencore Easyjet Tesco Johnson Matthey Wpp Int Consolidated Airlines S.a. Itv Croda Int Worldpay

305.30 487.20 3385.00 310.80 932.50 193.05 3179.00 1831.00 474.30 202.80 3355.00 278.90

-5.6 -3.7 -3.4 -3.2 -3.2 -2.3 -2.3 -2.3 -2.0 -1.6 -1.5 -1.4

-15.8 -8.3 7.1 12.2 -7.2 -6.6 -0.2 1.0 7.9 -1.8 4.7 4.1

Losers Wizz Air Holdings Ip Cobham Aberdeen Asset Management Sophos Ig Holdings Millennium & Copthorne Hotels Ao World Mitchells & Butlers Petrofac Supergroup Senior

1593.00 182.50 130.20 248.30 260.90 519.50 425.00 153.60 257.10 894.00 1476.00 194.70

-13.0 -6.4 -5.6 -5.4 -5.1 -4.8 -3.3 -3.1 -2.8 -2.8 -2.6 -2.6

-11.2 2.1 -20.5 -3.5 -2.1 5.3 -7.7 -15.3 2.4 3.1 -10.7 0.2

Losers Circassia Pharmaceuticals Premier Oil Xaar Foxtons Cambian Lamprell Gem Diamonds Tarsus St. Ives Shanks Flybe Servelec

Feb 06 price(p)

%Chg week

%Chg ytd

Feb 06 price(p)

%Chg week

%Chg ytd

39.7 -10.1 15.7 14.1 2.9 -4.9 10.8 -4.9 19.3 12.1 9.7 16.9

Industry Sectors Winners Industrial Metals Software & Computer Services Household Goods Electronic & Electrical Equip. Pharmaceuticals & Biotech. Nonlife Insurance Real Estate & Investment Servic Banks Industrial Engineering Tobacco Health Care Equip.& Services General Industrials

211.00 810.00 689.50 253.00 270.00 263.50 47.75 180.50 584.00 157.00 195.00 531.00

21.3 17.6 12.9 12.8 9.8 9.5 8.6 8.6 8.6 8.3 7.1 6.4

2415.87 1893.35 16625.41 5278.48 13254.76 2771.59 2475.08 4360.40 11021.01 56529.38 7348.94 5967.78

6.6 4.1 2.8 2.7 2.3 2.2 1.9 1.6 1.5 1.5 1.4 1.3

7.8 0.1 3.9 7.6 -1.5 0.8 0.1 5.5 7.5 7.1 0.4 8.1

83.50 84.75 381.00 96.25 144.50 91.00 115.75 260.50 71.25 92.50 43.50 289.00

-7.0 -6.1 -4.6 -4.4 -4.0 -4.0 -3.8 -3.5 -3.4 -3.4 -3.3 -3.2

-11.2 14.5 -4.8 -6.7 16.8 -1.1 5.4 -8.0 -43.6 0.5 -1.1 4.8

Losers Oil Equipment & Services Mining Mobile Telecommunications Food & Drug Retailers Chemicals Electricity General Retailers Automobiles & Parts Beverages Media Industrial Transportation Fixed Line Telecommunication

15640.43 16318.34 4327.10 3047.20 12596.83 8866.55 2417.83 8040.61 17554.32 7750.32 2875.18 3523.97

-2.0 -1.5 -1.2 -0.8 -0.7 -0.4 -0.3 -0.2 0.1 0.2 0.2 0.6

-4.2 10.2 -4.1 -1.1 2.6 -4.2 -6.7 3.8 5.0 -1.2 -5.7 -15.5

Based on last week's performance. †Price at suspension.

CURRENCIES Feb 6 Argentina Australia Bahrain Bolivia Brazil Canada Chile China Colombia Costa Rica Czech Republic Denmark Egypt Hong Kong Hungary India

Currency Argentine Peso Australian Dollar Bahrainin Dinar Bolivian Boliviano Brazilian Real Canadian Dollar Chilean Peso Chinese Yuan Colombian Peso Costa Rican Colon Czech Koruna Danish Krone Egyptian Pound Hong Kong Dollar Hungarian Forint Indian Rupee

DOLLAR Closing Mid 15.6275 1.3091 0.3770 6.9300 3.1197 1.3121 640.1000 6.8643 2859.7000 556.6300 25.1588 6.9242 18.5017 7.7581 288.2216 67.2038

Day's Change -0.0350 0.0081 0.0200 0.0067 0.0123 2.6600 -0.0097 8.6650 0.6400 0.1143 0.0307 -0.2143 -0.0002 1.2859 -0.1012

EURO Closing Mid 16.7839 1.4059 0.4049 7.4428 3.3505 1.4092 687.4665 7.3722 3071.3144 597.8198 27.0205 7.4366 19.8708 8.3322 309.5496 72.1767

POUND Day's Closing Day's Change Mid Change -0.1144 19.4500 -0.1399 0.0023 1.6293 0.0021 -0.0018 0.4692 -0.0023 -0.0124 8.6251 -0.0176 -0.0081 3.8827 -0.0109 0.0068 1.6330 0.0073 -0.2676 796.6695 -0.6089 -0.0441 8.5433 -0.0543 -4.6679 3559.1875 -6.7470 -2.0378 692.7826 -2.6222 -0.0001 31.3126 -0.0118 -0.0008 8.6179 -0.0042 -0.3219 23.0272 -0.3818 -0.0382 9.6557 -0.0480 -0.0254 358.7211 -0.1640 -0.4386 83.6419 -0.5399

Feb 6 Indonesia Israel Japan ..One Month ..Three Month ..One Year Kenya Kuwait Malaysia Mexico New Zealand Nigeria Norway Pakistan Peru Philippines

Currency Indonesian Rupiah Israeli Shekel Japanese Yen

Kenyan Shilling Kuwaiti Dinar Malaysian Ringgit Mexican Peson New Zealand Dollar Nigerian Naira Norwegian Krone Pakistani Rupee Peruvian Nuevo Sol Philippine Peso

DOLLAR Closing Day's Mid Change 13322.5000 -22.5000 3.7439 -0.0020 112.3550 -0.0300 112.3549 -0.0302 112.3546 -0.0308 112.3529 -0.0342 103.7500 -0.0500 0.3048 -0.0003 4.4270 -0.0010 20.5500 0.2042 1.3713 0.0057 315.2500 10.5000 8.2563 0.0558 104.7750 3.2755 0.0360 49.7075 -0.0675

EURO POUND Closing Day's Closing Day's Mid Change Mid Change 14308.3624 -89.5735 16581.2181 -110.0682 4.0209 -0.0205 4.6597 -0.0255 120.6691 -0.5831 139.8372 -0.7284 120.6691 -0.5830 139.8372 -0.7285 120.6692 -0.5829 139.8370 -0.7288 120.6692 -0.5829 139.8372 -0.7296 111.4273 -0.5625 129.1274 -0.7005 0.3274 -0.0018 0.3794 -0.0022 4.7546 -0.0228 5.5099 -0.0285 22.0707 0.1196 25.5766 0.1291 1.4727 -0.0006 1.7067 -0.0013 338.5780 9.7833 392.3606 11.1944 8.8673 0.0197 10.2758 0.0190 112.5282 -0.5135 130.4031 -0.6443 3.5179 0.0228 4.0767 0.0249 53.3858 -0.3165 61.8660 -0.3901

Feb 6 Currency Poland Polish Zloty Romania Romanian Leu Russia Russian Ruble Saudi Arabia Saudi Riyal Singapore Singapore Dollar South Africa South African Rand South Korea South Korean Won Sweden Swedish Krona Switzerland Swiss Franc Taiwan New Taiwan Dollar Thailand Thai Baht Tunisia Tunisian Dinar Turkey Turkish Lira United Arab Emirates UAE Dirham United Kingdom Pound Sterling ..One Month

DOLLAR Closing Mid 3.9945 4.1957 58.9375 3.7504 1.4113 13.4050 1137.9000 8.8315 0.9927 30.9315 35.0200 2.2804 3.6882 3.6731 0.8035 0.8035

Day's Change 0.0105 0.0030 -0.0262 -0.0001 0.0042 0.1812 -9.7000 0.0802 0.0015 -0.1100 -0.0525 0.0024 -0.0068 0.0001 0.0039 0.0039

EURO POUND Closing Day's Closing Day's Mid Change Mid Change 4.2900 -0.0083 4.9715 -0.0114 4.5062 -0.0173 5.2220 -0.0220 63.2988 -0.3172 73.3537 -0.3952 4.0279 -0.0185 4.6677 -0.0232 1.5157 -0.0024 1.7564 -0.0034 14.3969 0.1298 16.6839 0.1443 1222.1029 -16.0428 1416.2322 -19.1291 9.4850 0.0433 10.9917 0.0461 1.0662 -0.0033 1.2355 -0.0043 33.2204 -0.2703 38.4974 -0.3278 37.6114 -0.2283 43.5859 -0.2810 2.4491 -0.0086 2.8382 -0.0110 3.9611 -0.0254 4.5903 -0.0311 3.9449 -0.0179 4.5715 -0.0225 0.8629 0.0003 0.8629 0.0003 -

Feb 6 ..Three Month ..One Year United States ..One Month ..Three Month ..One Year Venezuela Vietnam European Union ..One Month ..Three Month ..One Year

Currency

United States Dollar

Venezuelan Bolivar Fuerte Vietnamese Dong Euro

DOLLAR Closing Day's Mid Change 0.8037 0.0039 0.8048 0.0040 9.9900 0.0200 22590.0000 -35.0000 0.9311 0.0042 0.9310 0.0042 0.9307 0.0042 0.9290 0.0042

EURO POUND Closing Day's Closing Day's Mid Change Mid Change 0.8628 0.0003 0.8621 0.0003 1.0740 -0.0049 1.2446 -0.0061 1.0739 -0.1768 1.2447 -0.0061 1.0736 -0.1767 1.2449 -0.0062 1.0719 -0.1767 1.2459 -0.0061 10.7292 -0.0274 12.4336 -0.0364 24261.6571 -148.4721 28115.5549 -182.6744 1.1588 -0.0004 1.1588 -0.0004 1.1587 -0.0004 1.1581 -0.0004

Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata

UK SERIES

FTSE ACTUARIES SHARE INDICES

www.ft.com/equities

Produced in conjunction with the Institute and Faculty of Actuaries

£ Strlg Day's Euro £ Strlg £ Strlg Year Div P/E Feb 06 chge% Index Feb 03 Feb 02 ago yield% Cover ratio FTSE 100 (100) 7172.15 -0.22 6484.42 7188.30 7140.75 5848.06 3.64 0.85 32.18 FTSE 250 (250) 18377.37 -0.19 16615.19 18411.67 18259.16 16002.28 2.70 1.81 20.42 FTSE 250 ex Inv Co (207) 19685.82 -0.24 17798.17 19733.45 19558.13 17381.50 2.76 1.93 18.78 FTSE 350 (350) 3955.96 -0.22 3576.63 3964.62 3937.29 3262.07 3.48 0.98 29.36 FTSE 350 ex Investment Trusts (307) 3926.22 -0.23 3549.74 3935.16 3907.83 3239.97 3.51 0.98 29.16 FTSE 350 Higher Yield (124) 3759.22 -0.15 3398.75 3765.03 3735.44 2994.92 4.68 0.64 33.62 FTSE 350 Lower Yield (226) 3753.87 -0.30 3393.92 3765.10 3743.70 3218.20 1.98 1.99 25.34 FTSE SmallCap (282) 5272.08 0.17 4766.55 5263.22 5232.94 4324.42 2.78 1.27 28.38 FTSE SmallCap ex Inv Co (148) 4707.08 0.15 4255.73 4699.81 4667.10 3923.41 2.86 1.64 21.28 FTSE All-Share (632) 3899.70 -0.20 3525.77 3907.69 3880.91 3215.11 3.46 0.99 29.33 FTSE All-Share ex Inv Co (455) 3852.03 -0.22 3482.66 3860.51 3833.70 3179.39 3.50 0.99 28.95 FTSE All-Share ex Multinationals (571) 1159.21 -0.31 868.64 1162.86 1151.85 1088.88 3.13 1.39 23.01 FTSE Fledgling (97) 9284.98 0.39 8394.65 9248.70 9196.62 7371.77 2.51 0.11 360.61 FTSE Fledgling ex Inv Co (47) 12435.33 0.58 11242.92 12364.10 12250.98 10417.67 3.09 -0.89 -36.47 FTSE All-Small (379) 3665.32 0.18 3313.86 3658.74 3637.71 3001.37 2.77 1.21 29.79 FTSE All-Small ex Inv Co Index (195) 3519.37 0.17 3181.90 3513.34 3488.59 2933.48 2.87 1.53 22.71 FTSE AIM All-Share Index (810) 896.09 0.28 810.17 893.63 890.08 689.85 1.57 0.72 88.71 FTSE Sector Indices Oil & Gas (16) 8565.91 Oil & Gas Producers (9) 8195.06 Oil Equipment Services & Distribution (7)16145.42 Basic Materials (28) 5521.75 Chemicals (7) 13423.29 Forestry & Paper (1) 20780.24 Industrial Metals & Mining (2) 2602.28 Mining (18) 15644.72 Industrials (114) 4997.32 Construction & Materials (15) 6926.82 Aerospace & Defense (9) 4728.73 General Industrials (5) 4860.20 Electronic & Electrical Equipment (11) 6563.53 Industrial Engineering (12) 12122.08 Industrial Transportation (7) 4486.00 Support Services (55) 7008.08 Consumer Goods (38) 20467.38 Automobiles & Parts (1) 8081.81 Beverages (5) 17592.26 Food Producers (8) 7393.76 Household Goods & Home Construction (15)13922.60 Leisure Goods (1) 5205.00 Personal Goods (6) 25602.95 Tobacco (2) 56529.47 Health Care (21) 9740.25 Health Care Equipment & Services (9) 7464.11 Pharmaceuticals & Biotechnology (12)13155.39 Consumer Services (94) 4833.15 Food & Drug Retailers (7) 3178.24 General Retailers (30) 2383.03 Media (21) 7840.67 Travel & Leisure (36) 8571.12 Telecommunications (6) 3096.24 Fixed Line Telecommunications (4) 3590.41 Mobile Telecommunications (2) 4320.55 Utilities (7) 8417.38 Electricity (2) 8846.41 Gas Water & Multiutilities (5) 7854.06 Financials (291) 4885.75 Banks (12) 4304.68 Nonlife Insurance (10) 3168.01 Life Insurance/Assurance (10) 7894.38 Index- Real Estate Investment & Services (20) 2507.99 Real Estate Investment Trusts (30) 2542.05 General Financial (32) 8158.43 Equity Investment Instruments (177) 8911.10 Non Financials (341) 4596.20 Technology (17) 1879.55 Software & Computer Services (12) 2105.90 Technology Hardware & Equipment (5) 2081.07

-0.50 -0.46 -1.60 0.13 -0.05 0.11 -0.11 0.15 -0.03 -0.97 0.78 -0.39 -0.56 -0.34 0.03 0.10 -0.31 -0.92 0.16 -0.22 -1.41 0.16 -0.41 0.17 0.36 -0.06 0.41 -0.71 -1.59 -0.79 -0.44 -0.62 -0.42 -0.26 -0.50 0.38 0.49 0.35 -0.21 -0.01 0.02 -0.99 -0.06 -0.18 -0.46 0.15 -0.20 0.50 0.32 2.11

7744.54 7409.24 14597.26 4992.27 12136.15 18787.65 2352.75 14144.57 4518.14 6262.62 4275.30 4394.17 5934.16 10959.71 4055.84 6336.09 18504.79 7306.86 15905.37 6684.78 12587.58 4705.90 23147.92 51108.94 8806.27 6748.38 11893.94 4369.70 2873.48 2154.52 7088.84 7749.25 2799.35 3246.13 3906.25 7610.25 7998.14 7100.94 4417.26 3891.91 2864.23 7137.40 2267.50 2298.30 7376.13 8056.63 4155.47 1699.32 1903.97 1881.52

8608.84 8233.33 16408.08 5514.62 13429.94 20756.73 2605.24 15621.20 4998.74 6994.82 4692.24 4879.11 6600.46 12162.85 4484.85 7000.86 20530.69 8157.01 17563.80 7409.91 14122.31 5196.51 25708.21 56436.12 9704.99 7468.46 13101.75 4867.52 3229.52 2401.94 7875.63 8624.55 3109.34 3599.76 4342.44 8385.75 8803.15 7826.92 4896.10 4305.02 3167.53 7973.13 2509.53 2546.57 8196.04 8897.71 4605.50 1870.22 2099.10 2037.98

8506.06 8133.21 16331.40 5674.61 13454.63 20815.50 2649.04 16137.78 4977.59 6951.09 4692.98 4893.15 6470.60 12042.28 4469.78 6971.40 20351.45 8138.21 17425.92 7328.34 14041.60 5162.55 25548.33 55765.38 9607.06 7393.55 12969.46 4838.72 3201.38 2394.62 7833.96 8565.75 3091.50 3574.05 4320.64 8352.94 8816.99 7784.85 4825.92 4235.71 3100.19 7782.89 2478.35 2520.64 8146.59 8856.03 4586.07 1850.95 2078.66 2006.32

6045.36 5751.72 13522.46 2688.96 10269.41 13704.62 656.17 7090.34 4004.37 4857.15 3997.92 3370.03 4941.90 7053.25 3693.97 6076.44 17890.50 6342.78 15202.52 8494.43 13128.33 5346.59 22751.40 45307.99 8767.65 6773.63 11836.44 4605.60 2798.13 2727.07 7041.13 8038.72 3846.50 5424.56 4760.83 8211.32 8098.21 7787.09 3951.90 3149.44 2635.38 6591.84 2736.89 2720.30 6983.03 7153.22 3817.75 1371.40 1753.94 1512.11

5.69 0.02 726.56 5.75 0.02 1036.28 3.73 0.40 66.79 1.46 2.35 29.13 2.23 1.85 24.25 2.60 3.44 11.21 0.00 0.00 -15.40 1.35 2.38 31.08 2.36 1.09 39.05 1.96 0.30 169.99 2.52 -0.47 -84.94 2.62 1.16 32.90 1.91 1.74 30.08 2.14 1.33 34.98 4.22 1.03 22.96 2.30 1.76 24.66 2.91 1.78 19.32 2.54 1.29 30.56 2.65 1.56 24.14 2.20 1.82 24.95 2.43 2.53 16.23 3.82 1.45 17.98 3.00 3.18 10.48 3.38 1.09 27.17 3.47 0.54 53.56 1.44 1.96 35.27 3.69 0.48 56.76 2.58 2.05 18.90 1.37 2.41 30.30 3.20 2.05 15.24 2.84 1.74 20.17 2.47 2.28 17.71 5.69 0.33 53.61 4.88 1.48 13.84 6.11 -0.14 -113.39 4.83 1.65 12.53 5.56 1.72 10.48 4.64 1.63 13.22 3.63 1.02 27.09 4.06 0.35 70.28 2.89 2.16 16.02 3.79 1.36 19.37 2.63 3.56 10.67 3.91 2.12 12.03 3.49 2.17 13.21 2.51 0.94 42.18 3.40 0.97 30.21 2.33 0.85 50.36 2.24 1.21 36.81 3.13 -1.49 -21.50

X/D adj 3.07 18.51 17.77 2.08 1.95 1.74 2.27 11.87 6.38 2.29 1.98 1.21 8.39 1.70 8.00 4.60 0.42

Total Return 5850.30 13167.28 14385.04 6491.51 3318.13 6415.87 4063.93 7460.63 6992.80 6471.96 3308.88 2041.76 17170.48 22397.06 6657.86 6623.37 979.90

0.00 0.00 0.00 0.94 25.92 0.00 0.00 0.00 1.14 0.00 1.37 0.00 0.00 2.81 0.00 2.43 1.70 0.00 0.00 4.06 2.86 0.00 2.06 0.00 1.04 8.10 0.00 7.55 0.00 2.05 1.50 30.26 0.00 0.00 0.00 34.60 148.19 5.75 3.34 0.00 0.00 0.00 0.59 7.44 8.33 20.32 2.54 6.38 7.93 0.00

7689.16 7612.81 12376.61 5549.40 11890.56 22296.06 2270.98 8226.79 5097.42 7254.71 5017.75 5456.93 5940.21 14610.24 3938.61 7208.46 14868.10 7661.45 12272.70 6325.33 9690.51 4609.28 17036.66 35763.72 7369.46 6429.88 8861.34 4485.48 3688.46 2692.12 4771.40 8037.53 3404.33 3236.99 4266.26 9432.99 12638.92 8794.78 4450.09 3121.38 5489.62 7559.89 6624.06 3123.97 9222.67 4827.51 6678.49 2393.70 2832.26 2425.63

8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day Hourly movements FTSE 100 7193.14 7192.40 7204.12 7204.73 7200.02 7185.18 7168.01 7180.87 7170.69 7208.68 7165.40 FTSE 250 18438.62 18346.00 18387.43 18404.33 18410.88 18395.19 18369.26 18385.20 18383.65 18440.08 18339.34 FTSE SmallCap 5273.16 5271.09 5270.22 5270.29 5272.09 5273.90 5270.36 5275.40 5276.85 5278.15 5266.93 FTSE All-Share 3910.99 3907.45 3913.96 3914.80 3913.01 3906.05 3897.58 3903.86 3899.42 3916.83 3896.40 Time of FTSE 100 Day's high:10:16:15 Day's Low13:57:30 FTSE 100 2010/11 High: 7337.81(13/01/2017) Low: 7099.15(31/01/2017) Time of FTSE All-Share Day's high:11:17:00 Day's Low13:57:00 FTSE 100 2010/11 High: 3971.69(13/01/2017) Low: 3858.26(31/01/2017) Further information is available on http://www.ftse.com © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence. † Sector P/E ratios greater than 80 are not shown. For changes to FTSE Fledgling Index constituents please refer to www.ftse.com/indexchanges. ‡ Values are negative.

UK RIGHTS OFFERS Amount Latest Issue paid renun. price up date High Low Stock There are currently no rights offers by any companies listed on the LSE.

FTSE SECTORS: LEADERS & LAGGARDS

FT 30 INDEX

Feb 06 Feb 03 Feb 02 Feb 01 Jan 31 Yr Ago High Low Year to date percentage changes FT 30 3088.20 3106.20 3081.40 3074.60 3061.20 0.00 3166.20 3060.90 Mining 10.04 FT 30 Div Yield 1.59 1.59 1.60 1.61 1.62 0.00 3.93 2.74 Basic Materials 9.16 P/E Ratio net 28.04 28.14 27.97 27.68 27.62 0.00 19.44 14.26 Industrial Eng 8.62 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Industrial Metals & 7.60 FT 30 hourly changes Tobacco 6.85 8 9 10 11 12 13 14 15 16 High Low Electronic & Elec Eq 6.67 3106.2 3096.1 3102.7 3104 3102.9 3097 3088.3 3093.3 3089.5 3107.2 3087.3 Forestry & Paper 6.00 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Banks 5.37 Household Goods & Ho 5.30 Beverages 4.75 Automobiles & Parts 4.64 Consumer Goods 4.30 Feb 03 Feb 02 Mnth Ago Feb 06 Feb 03 Mnth Ago Financial Services 3.07 Australia 96.45 96.29 92.85 Sweden 78.59 78.83 77.55 Chemicals 2.57 Canada 90.57 90.48 87.83 Switzerland 162.48 162.59 161.56 Financials 2.45 Denmark 107.45 107.43 107.71 UK 77.00 77.12 77.11 FTSE SmallCap Index 2.33 Japan 138.71 138.63 134.84 USA 104.01 103.95 107.27 FTSE 250 Index 1.85 New Zealand 122.75 122.47 120.24 Euro 89.00 89.03 88.84 Norway 91.95 91.62 89.60 Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk

FX: EFFECTIVE INDICES

Tech Hardware & Eq Equity Invest Instr Industrials Construct & Material Travel & Leisure FTSE All{HY-}Share Index Support Services FTSE 100 Index Nonlife Insurance Real Est Invest & Se Personal Goods Food & Drug Retailer Technology NON FINANCIALS Index Health Care Eq & Srv Software & Comp Serv Life Insurance Consumer Services

+or-

Media Oil Equipment & Serv Health Care Pharmace & Biotech Gas Water & Multi Aerospace & Defense Utilities Oil & Gas Oil & Gas Producers Mobile Telecomms Real Est Invest & Tr Electricity Industrial Transport General Retailers Leisure Goods Telecommunications Food Producers Fixed Line Telecomms

-0.75 -1.51 -1.74 -1.95 -2.12 -2.56 -2.62 -3.62 -3.68 -3.78 -3.93 -4.47 -5.07 -5.33 -6.71 -8.00 -8.27 -15.27

FTSE GLOBAL EQUITY INDEX SERIES Feb 3 Regions & countries FTSE Global All Cap FTSE Global All Cap FTSE Global Large Cap FTSE Global Mid Cap FTSE Global Small Cap FTSE All-World FTSE World FTSE Global All Cap ex UNITED KINGDOM In FTSE Global All Cap ex USA FTSE Global All Cap ex JAPAN FTSE Global All Cap ex Eurozone FTSE Developed FTSE Developed All Cap FTSE Developed Large Cap FTSE Developed Europe Large Cap FTSE Developed Europe Mid Cap FTSE Dev Europe Small Cap FTSE North America Large Cap FTSE North America Mid Cap FTSE North America Small Cap FTSE North America FTSE Developed ex North America FTSE Japan Large Cap FTSE Japan Mid Cap FTSE Global wi JAPAN Small Cap FTSE Japan FTSE Asia Pacific Large Cap ex Japan FTSE Asia Pacific Mid Cap ex Japan FTSE Asia Pacific Small Cap ex Japan FTSE Asia Pacific Ex Japan FTSE Emerging All Cap FTSE Emerging Large Cap FTSE Emerging Mid Cap FTSE Emerging Small Cap FTSE Emerging Europe FTSE Latin America All Cap FTSE Middle East and Africa All Cap FTSE Global wi UNITED KINGDOM All Cap In FTSE Global wi USA All Cap FTSE Europe All Cap FTSE Eurozone All Cap FTSE RAFI All World 3000 FTSE RAFI US 1000 FTSE EDHEC-Risk Efficient All-World FTSE EDHEC-Risk Efficient Developed Europe

No of US $ stocks indices 7718 495.60 7079 462.39 1424 434.41 1656 671.45 4638 712.89 3080 288.53 2544 511.39 7394 513.93 5808 442.70 6433 506.68 7071 514.27 2102 464.14 5675 489.15 899 427.67 221 327.53 313 514.79 705 725.07 292 491.20 393 744.72 1445 769.61 685 329.79 1417 232.03 173 336.62 321 535.26 791 582.67 494 141.80 543 601.77 416 812.14 1446 512.04 959 476.42 2043 663.91 525 624.69 453 854.93 1065 697.01 112 350.89 230 842.06 242 680.48 324 317.72 1910 568.09 1426 382.48 647 363.93 3018 6170.19 996 10323.08 3080 347.17 534 277.49

Day % 0.6 0.3 0.6 0.6 0.9 0.6 0.6 0.6 0.4 0.6 0.6 0.6 0.6 0.6 0.5 0.2 0.3 0.7 0.8 1.2 0.7 0.3 0.4 0.2 0.5 0.3 0.0 0.2 0.5 0.0 0.5 0.5 0.7 0.8 1.5 1.2 0.4 0.5 0.8 0.4 0.3 0.6 1.0 0.5 0.2

Mth % 3.1 7.3 2.9 3.8 3.4 3.0 2.9 3.1 4.3 2.9 3.0 2.8 2.8 2.6 3.0 4.8 4.7 1.9 2.7 2.4 2.0 4.1 4.5 4.8 5.6 4.6 5.5 6.1 5.1 5.6 5.5 5.0 7.1 7.2 3.1 7.9 3.0 2.5 2.0 3.5 3.3 2.8 0.8 3.5 4.2

YTD % 3.5 -0.3 3.3 4.2 3.8 3.4 3.4 3.6 4.2 3.5 3.5 3.2 3.2 3.0 2.6 4.5 4.5 2.7 3.7 3.1 2.9 3.7 3.3 3.6 4.4 3.4 6.2 6.7 5.3 6.2 6.0 5.6 7.5 7.5 4.4 9.6 3.5 2.1 2.8 3.2 2.8 3.3 1.7 3.7 3.7

Total retn 696.48 624.68 625.66 896.70 923.20 428.12 1018.79 711.62 663.34 718.62 709.41 657.46 684.85 614.76 536.40 758.81 1037.19 662.65 936.75 941.27 455.49 373.41 430.79 658.96 741.55 203.73 930.31 1205.85 749.14 782.48 975.88 924.54 1247.54 985.36 536.70 1279.85 1044.78 521.88 744.41 605.70 582.28 8026.91 13397.28 477.89 416.48

YTD Gr Div Feb 3 No of US $ Day Mth YTD Total YTD Gr Div % Yield Sectors stocks indices % % % retn % Yield 3.6 2.4 Oil & Gas 148 370.87 0.9 0.9 -1.2 588.18 -1.2 3.3 0.2 2.5 Oil & Gas Producers 109 344.52 0.9 0.9 -2.0 556.87 -1.9 3.5 3.4 2.6 Oil Equipment & Services 29 355.99 0.9 0.9 1.8 512.34 1.9 2.7 4.3 2.1 Basic Materials 256 455.20 -0.8 -0.8 7.8 684.48 7.9 2.1 3.8 1.9 Chemicals 126 662.64 0.0 0.0 5.1 1001.96 5.1 2.4 3.5 2.5 Forestry & Paper 15 243.16 -1.5 -1.5 2.1 404.95 2.2 3.3 3.5 2.5 Industrial Metals & Mining 62 406.08 -1.2 -1.2 12.1 609.90 12.2 1.5 3.7 2.3 Mining 53 581.36 -2.3 -2.3 13.3 869.36 13.3 1.4 4.3 2.9 Industrials 546 343.60 0.4 0.4 3.7 489.40 3.8 2.1 3.6 2.4 Construction & Materials 110 483.86 0.4 0.4 5.1 719.29 5.1 2.0 3.6 2.3 Aerospace & Defense 26 574.87 0.6 0.6 1.8 811.36 1.8 2.1 3.3 2.4 General Industrials 56 236.22 0.2 0.2 0.4 363.39 0.7 2.5 3.3 2.3 Electronic & Electrical Equipment 71 366.99 0.9 0.9 6.8 480.06 6.8 1.7 3.2 2.5 Industrial Engineering 104 673.00 0.0 0.0 6.8 944.37 6.9 2.1 2.7 3.5 Industrial Transportation 100 586.62 1.0 1.0 4.2 834.59 4.2 2.3 4.6 2.7 Support Services 79 303.45 0.3 0.3 2.8 413.94 2.9 1.9 4.6 2.5 Consumer Goods 430 433.59 0.5 0.5 3.7 633.29 3.8 2.4 2.9 2.1 Automobiles & Parts 106 377.02 0.5 0.5 2.5 531.11 2.6 2.6 3.8 1.7 Beverages 46 562.83 0.7 0.7 2.0 833.60 2.0 2.7 3.2 1.6 Food Producers 108 580.76 0.8 0.8 2.0 870.55 2.2 2.3 3.0 2.1 Household Goods & Home Construction 49 419.24 0.1 0.1 3.7 609.04 4.1 2.3 3.8 3.0 Leisure Goods 31 175.83 0.6 0.6 9.9 229.86 10.1 1.3 3.3 2.1 Personal Goods 79 595.52 0.0 0.0 3.0 824.81 3.0 2.1 3.6 1.7 Tobacco 11 1361.20 1.1 1.1 7.4 2761.50 7.4 3.5 4.4 1.9 Health Care 180 435.97 0.6 0.6 3.1 620.73 3.2 2.1 3.4 2.0 Health Care Equipment & Services 67 718.76 0.6 0.6 4.5 833.08 4.5 1.1 6.2 3.0 Pharmaceuticals & Biotechnology 113 313.73 0.6 0.6 2.5 465.95 2.7 2.5 6.8 2.7 Consumer Services 382 405.67 0.0 0.0 2.8 536.91 2.9 1.8 5.4 2.7 Food & Drug Retailers 55 282.60 0.4 0.4 -0.1 389.77 0.1 2.1 6.3 3.0 General Retailers 120 554.73 -0.5 -0.5 1.9 714.95 1.9 1.6 6.1 2.9 Media 79 321.82 0.3 0.3 5.8 427.35 5.8 1.9 5.6 3.0 Travel & Leisure 128 391.04 0.4 0.4 2.7 523.14 2.8 1.8 7.6 2.8 Telecommunication 95 160.71 0.1 0.1 -0.2 295.39 0.2 4.2 7.6 2.7 Fixed Line Telecommuniations 44 136.23 0.4 0.4 -3.1 275.42 -2.5 4.7 4.4 3.7 Mobile Telecommunications 51 166.41 -0.4 -0.4 4.1 275.03 4.1 3.6 9.8 3.0 Utilities 167 248.79 0.3 0.3 0.9 474.84 1.1 4.0 3.6 3.1 Electricity 109 274.21 0.2 0.2 0.8 517.81 1.1 4.0 2.1 3.5 Gas Water & Multiutilities 58 259.43 0.4 0.4 1.1 507.74 1.2 4.0 3.0 1.9 Financials 694 220.88 1.2 1.2 3.5 355.25 3.7 2.9 3.2 3.3 Banks 246 201.21 1.4 1.4 4.5 347.12 4.7 3.3 2.9 3.2 Nonlife Insurance 68 235.73 0.6 0.6 1.6 336.94 1.7 2.3 3.5 2.9 Life Insurance 50 206.37 1.0 1.0 3.0 324.31 3.1 3.0 1.9 2.3 Financial Services 147 250.91 1.8 1.8 4.1 342.10 4.2 2.0 3.8 2.2 Technology 182 206.35 0.5 0.5 6.3 250.91 6.4 1.6 3.7 2.7 Software & Computer Services 90 353.33 0.6 0.6 6.2 410.18 6.2 1.0 Technology Hardware & Equipment 92 156.66 0.3 0.3 6.4 197.71 6.6 2.3 Alternative Energy 10 100.06 0.2 0.2 8.9 134.41 8.9 1.4 Real Estate Investment & Services 108 288.54 0.4 0.4 4.5 473.32 4.5 2.6 The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/ mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index® and RAFI® are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC (US Patent Nos. 7,620,577; 7,747,502; 7,778,905; 7,792,719; Patent Pending Publ. Nos. US-2006-0149645-A1, US-2007-0055598-A1, US-2008-0288416-A1, US-2010- 0063942-A1, WO 2005/076812, WO 2007/078399 A2, WO 2008/118372, EPN 1733352, and HK1099110). ”EDHEC™” is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. © FTSE International Limited. 2013. All Rights reserved. ”FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under licence.

UK COMPANY RESULTS closing Price p

1.81 1.77 1.41 1.29 1.06 0.89 0.81 0.64 0.57 0.56 0.53 0.44 0.35 0.35 0.20 0.19 -0.72 -0.72

FTSE 100 SUMMARY

Company Henderson Opportunities Trust SolGold

FTSE 100

Closing Day's Price Change FTSE 100

3I Group PLC Admiral Group PLC Anglo American PLC Antofagasta PLC Ashtead Group PLC Associated British Foods PLC Astrazeneca PLC Aviva PLC Babcock International Group PLC Bae Systems PLC Barclays PLC Barratt Developments PLC Bhp Billiton PLC BP PLC British American Tobacco PLC British Land Company PLC Bt Group PLC Bunzl PLC Burberry Group PLC Capita PLC Carnival PLC Centrica PLC Coca-Cola Hbc AG Compass Group PLC Convatec Group PLC Crh PLC Croda International PLC Dcc PLC Diageo PLC Direct Line Insurance Group PLC Dixons Carphone PLC Easyjet PLC Experian PLC Fresnillo PLC Gkn PLC Glaxosmithkline PLC Glencore PLC Hammerson PLC Hargreaves Lansdown PLC Hikma Pharmaceuticals PLC HSBC Holdings PLC Imperial Brands PLC Informa PLC Intercontinental Hotels Group PLC International Consolidated Airlines Group S.A. Intertek Group PLC Intu Properties PLC Itv PLC Johnson Matthey PLC Kingfisher PLC Land Securities Group PLC

694.00 1847 1329.5 817.50 1641 2399 4387.5 490.10 889.00 588.00 227.40 493.50 1385.5 476.55 4985 588.00 306.85 2130 1616 487.20 4311 225.80 1788 1429 246.10 2814 3355 6375 2217 353.10 305.30 932.50 1558 1488 343.90 1556 310.80 548.00 1362 1912 686.50 3717 655.00 3752 474.30 3469 266.50 202.80 3179 334.90 999.50

-1.00 12.00 -2.50 4.50 19.00 -8.00 29.50 -3.00 1.00 4.50 -1.45 -8.00 -12.00 -2.05 22.00 2.00 -0.60 1.00 -26.00 1.20 23.00 -1.00 -7.00 -15.00 -1.40 -35.00 -4.00 -45.00 4.00 -3.30 0.70 -7.50 3.00 19.00 -3.20 8.50 1.30 -2.50 -19.00 -18.00 1.30 -20.50 -6.50 12.00 -10.40 12.00 -2.20 -2.70 -3.00 -3.80 -4.50

Closing Day's Price Change

Legal & General Group PLC Lloyds Banking Group PLC London Stock Exchange Group PLC Marks And Spencer Group PLC Mediclinic International PLC Merlin Entertainments PLC Micro Focus International PLC Mondi PLC Morrison (Wm) Supermarkets PLC National Grid PLC Next PLC Old Mutual PLC Paddy Power Betfair PLC Pearson PLC Persimmon PLC Provident Financial PLC Prudential PLC Randgold Resources LD Reckitt Benckiser Group PLC RELX PLC Rio Tinto PLC Rolls-Royce Holdings PLC Royal Bank Of Scotland Group PLC Royal Dutch Shell PLC Royal Dutch Shell PLC Royal Mail PLC Rsa Insurance Group PLC Sage Group PLC Sainsbury (J) PLC Schroders PLC Severn Trent PLC Shire PLC Sky PLC Smith & Nephew PLC Smiths Group PLC Smurfit Kappa Group PLC Sse PLC St. James's Place PLC Standard Chartered PLC Standard Life PLC Taylor Wimpey PLC Tesco PLC Tui AG Unilever PLC United Utilities Group PLC Vodafone Group PLC Whitbread PLC Wolseley PLC Worldpay Group PLC WPP PLC

235.70 66.06 3159 335.10 804.00 480.00 2257 1768 239.40 933.50 3843 207.20 8560 644.00 1938 2676 1583.5 7145 7025 1444 3385 680.50 223.90 2281 2175 406.80 584.50 631.50 260.00 2937 2250 4448.5 1006 1201 1510 2130 1488 1064 803.60 350.70 169.80 193.05 1180 3263 915.50 192.85 3939 4960 278.90 1831

-2.40 0.21 -40.00 -5.10 15.50 -1.40 17.00 2.00 -1.10 5.50 -42.00 -1.80 25.00 0.50 -33.00 19.00 -17.00 285.00 -104.00 2.00 -5.50 9.50 -4.60 -4.00 -18.00 -2.50 5.00 1.50 -4.80 -21.00 3.00 -13.00 1.00 -10.00 2.00 -15.00 8.00 -16.00 2.10 -5.50 -2.80 -4.25 1.00 -5.50 2.00 -1.25 -30.00 -3.70 -15.00

UK STOCK MARKET TRADING DATA Feb 06 Feb 03 Feb 02 Feb 01 Jan 31 Yr Ago SEAQ Bargains 5626.00 4858.00 4858.00 5283.00 5621.00 7264.00 Order Book Turnover (m) 172.00 127.92 127.92 158.66 241.31 130.89 Order Book Bargains 869318.00 965124.00 965124.00 1106971.00 1056629.00 1045368.00 Order Book Shares Traded (m) 1195.00 1544.00 1544.00 1694.00 1857.00 1684.00 Total Equity Turnover (£m) 8659.17 7625.31 7625.31 7923.59 8007.67 8006.67 Total Mkt Bargains 976918.00 1076049.00 1076049.00 1234096.00 1171411.00 1174137.00 Total Shares Traded (m) 4695.00 4975.00 4975.00 5604.00 5704.00 5186.00 † Excluding intra-market and overseas turnover. *UK only total at 6pm. ‡ UK plus intra-market turnover. (u) Unavaliable. (c) Market closed.

All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any loss arising from the reliance on or use of the listed information. For all queries e-mail ft.reader.enquiries@morningstar.com

Data provided by Morningstar | www.morningstar.co.uk

UK RECENT EQUITY ISSUES Turnover Pre Int

-

-

Pre-tax 9.809 0.255 1.254L 3.629L

Figures in £m. Earnings shown basic. Figures in light text are for corresponding period year earlier. For more information on dividend payments visit www.ft.com/marketsdata

EPS(p) 22.51 20.45 0.002L 0.003L

Div(p) 13.5 -

Pay day 13 Mar 24 -

Total 19 -

18 -

Issue date 01/30 01/19 01/11

Issue price(p) 10.00 0.10 7.00

Sector

Stock code RBW BOCH ZEN

Stock Rainbow Rare Earths Ltd Bank of Cyprus Holdings PLC Zenith Energy Ltd

§Placing price. *Intoduction. ‡When issued. Annual report/prospectus available at www.ft.com/ir For a full explanation of all the other symbols please refer to London Share Service notes.

Close price(p) 12.00 3.08 10.00

+/0.11 -0.03 0.24

High 12.84 3.65 12.11

Low 10.00 2.97 7.00

Mkt Cap (£m) 1824.3 1375.4 1112.6


17

FINANCIAL TIMES

Tuesday 7 February 2017

MARKET DATA FT500: THE WORLD'S LARGEST COMPANIES Stock Australia (A$) ANZ BHPBilltn CmwBkAu CSL NatAusBk Telstra Wesfarmers Westpc Woolworths Belgium (€) AnBshInBv KBC Grp Brazil (R$) Ambev♦ Bradesco♦■ Cielo♦ ItauHldFin Petrobras Vale Canada (C$) BCE BkMontrl♦ BkNvaS Brookfield CanadPcR CanImp CanNatRs CanNatRy Enbridge GtWesLif ImpOil Manulife Potash RylBkC♦ Suncor En ThmReut TntoDom TrnCan ValeantPh China (HK$) AgricBkCh Bk China BkofComm BOE Tech Ch Coms Cons Ch Evrbrght Ch Rail Cons Ch Rail Gp ChConstBk China Vanke ChinaCitic ChinaLife ChinaMBank ChinaMob ChinaPcIns ChMinsheng ChMrchSecs RMB Chna Utd Coms RMB ChShenEgy ChShpbldng RMB ChStConEng RMB ChUncHK CNNC Intl RMB CSR Daqin RMB Gree Elec Apl GuosenSec RMB HaitongSecs Hngzh HikVDT RMB Hunng Pwr IM Baotou Stl RMB In&CmBkCh IndstrlBk RMB Kweichow RMB Midea New Ch Life Ins PetroChina PingAnIns PngAnBnk RMB Pwr Cons Corp RMB SaicMtr RMB ShenwanHong ShgPdgBk RMB Sinopec Corp Sinopec Oil RMB Denmark (kr) DanskeBk MollerMrsk NovoB

52 Week High Low

Price Day Chg

Yld

P/E MCap m

29.03 25.91 81.91 111.79 30.62 5.12 40.26 32.05 25.36

-0.08 -0.29 0.23 -0.58 0.23 0.04 -0.29 0.16 -0.03

31.84 27.95 85.65 121.25 32.10 5.86 46.06 34.08 26.05

21.86 14.95 69.22 91.62 23.82 4.70 38.62 27.57 20.30

8.27 15.98 65109.7 5.23 -17.72 63567.97 6.65 17.05 107821.24 1.68 34.09 38891.42 8.06 14.95 62459.05 7.85 18.32 46516.71 6.50 122.41 34781.66 8.04 15.33 82180.1 6.30-370.95 24954.98

97.49 60.12

-0.52 -0.41

119.60 62.30

92.13 39.35

3.52 47.45 177289.41 16.16 26995.38

17.18 31.75 26.93 32.41 16.02 30.37

-0.17 -0.22 -0.04 -0.09 -0.32 -0.24

20.09 33.02 37.78 33.49 19.72 34.72

15.79 18.36 23.36 19.87 5.78 9.36

2.20 3.08 1.74 0.46 0.95

24.57 11.98 17.22 10.22 -4.66 -10.23

57.43 98.80 78.29 45.94 193.89 113.33 39.10 90.09 56.23 35.44 42.75 24.76 24.06 94.90 40.37 58.32 67.55 61.86 19.17

0.01 -0.19 -0.11 0.37 -1.69 0.44 -0.82 -0.27 -0.82 -0.15 -0.14 -0.07 -0.13 0.30 -0.36 -0.30 0.06 -0.62 0.63

63.41 101.15 78.96 47.85 209.12 113.61 46.74 93.93 59.19 37.10 48.72 25.57 26.62 95.47 44.90 60.13 68.60 65.24 137.77

56.69 68.65 51.57 37.11 156.01 82.63 25.68 72.78 41.01 30.83 38.41 15.32 19.93 64.52 28.40 47.56 48.52 46.68 17.19

4.49 3.43 3.67 1.40 0.84 3.88 2.25 1.44 3.33 3.57 1.30 2.80 7.06 3.41 2.70 2.83 2.74 3.30 -

19.00 38110.13 14.31 48844.27 13.60 72106.82 17.65 34534.05 20.07 21620.19 11.67 34362.72 -70.48 33105.9 21.14 52456.51 42.70 40417.05 13.92 26642.76 46.07 27615.93 17.14 37277.84 24.32 15399.25 14.03 107426.96 -22.01 51317.48 28.93 32333.28 17.29 95659.96 -32.56 40722.61 -5.34 5011.73

3.23 3.54 5.73 1.67 9.45 3.69 10.84 6.86 5.80 19.48 5.07 23.00 19.34 88.80 28.80 8.40 16.53 6.52 16.18 7.64 8.87 9.21 7.10 7.31 6.99 0.20 14.97 13.90 26.00 4.93 2.91 4.74 16.72 346.85 1.79 39.50 6.07 41.05 9.31 7.24 25.39 0.27 16.66 6.18 3.85

-0.01 0.04 0.05 -0.05 0.12 0.02 0.08 0.06 0.04 0.02 0.01 1.60 0.12 1.85 1.55 0.02 -0.06 -0.06 0.03 0.03 -0.15 0.01 0.00 0.03 0.32 -0.39 -0.02 -0.01 0.04 -0.01 0.01 2.50 0.03 1.80 0.05 0.03 0.28 -0.01 0.03 0.01 -

3.48 3.77 6.33 2.30 10.40 3.89 11.74 7.13 6.14 24.10 5.42 23.10 20.20 99.30 31.00 9.15 20.09 8.05 17.70 7.90 11.45 10.26 8.02 8.35 7.69 0.25 18.94 15.24 28.74 7.34 3.43 5.12 17.58 359.80 1.95 40.25 6.38 44.15 10.26 8.73 26.55 0.32 17.57 6.34 7.27

2.50 5.75 5.27 12797.8 2.83 5.57 5.57 38156.84 4.24 4.97 6.13 25859.06 1.55 1.01 33.45 42.83 6.11 2.24 8.57 5393.05 3.07 5.62 5.56 3266.98 6.79 1.56 10.03 2901.1 4.61 11.71 3720.34 4.31 5.14 5.86 179738.39 14.56 4.01 10.66 3301.75 4.00 4.57 5.30 9725.64 16.00 1.81 22.83 22060.41 12.72 3.99 7.11 11444.57 80.30 2.68 16.61 234364.43 23.70 3.81 19.06 10302.61 6.13 2.31 6.32 7507.26 13.45 4.37 17.07 11351.79 3.75 0.86 110.28 20133.37 10.52 2.15 21.29 7087.95 5.66 - -106.08 20436.53 4.98 1.78 11.35 38695.91 7.70 2.07 50.18 28428.78 6.58 31.66 4386.89 6.45 4.12 312.83 4118.59 5.98 6.35 15.75 15139 0.16 -6.65 315.63 13.28 1.23 11.64 4787.1 10.50 3.57 15.59 6108.86 20.28 2.65 23.00 18204.46 4.43 10.36 6.21 2986.91 2.66 - -45.48 6673.52 3.72 5.69 5.93 53028.56 13.77 3.60 6.23 46407.49 199.60 1.75 26.71 63475.12 1.64 5.20 12.82 49.62 22.00 21.76 5265.1 4.35 0.85 181.69 16507.99 30.50 2.76 11.24 39406.92 7.85 1.62 7.10 22945.7 5.40 19.16 10125.41 17.66 5.28 8.98 40781.92 0.12 -0.39 205.68 15.08 3.05 6.80 49800.2 3.96 2.53 18.80 20323.75 3.60 -8.22 1580.72

234.50 -3.90 11620 110.00 232.50 0.10

240.90 12380 391.30

161.80 7355 218.20

Stock

Price Day Chg

86557.38 28260.67 19543.82 34821.24 38218.42 31319.55

3.38 11.43 33315.14 2.61 -20.85 16883.22 4.05 15.75 67577.65

Week change change % 31.50 9.7 3.45 9.5 19.61 9.3 19.40 7.5 11.22 7.3 2.52 7.0 8.41 6.9 1.45 6.7 18.30 6.7 11.80 6.5 1.04 5.9 34.65 5.4 7.56 5.3 3.57 5.1 4.01 5.1 3.03 4.9 3.60 4.8 11.20 4.8 1.80 4.8 4.65 4.7

Month change % 10.64 3.29 5.37 12.18 5.62 1.88 10.24 9.00 12.85 3.76 -5.67 4.93 2.38 6.02 8.78 6.91 -8.53 -0.65 5.61 4.54

Current 0.25-0.50 3.75 0.75 0.00 0.25 0.00-0.00 0.00-0.25

Since 16-12-2015 16-12-2008 16-12-2015 10-09-2014 05-03-2009 05-10-2010 15-01-2015

Last 1.00 3.75 0.75 0.05 0.25 0.00 0.00-0.75

Mnth Ago 0.25-0.50 3.50 1.00 0.05 0.50 0.00-0.10 -1.25--0.25

Year Ago 0.00-0.25 3.50 0.75 0.05 0.50 0.00-0.10 0-0.25

INTEREST RATES: MARKET Feb 06 (Libor: Feb 03) US$ Libor Euro Libor £ Libor Swiss Fr Libor Yen Libor Euro Euribor Sterling CDs US$ CDs Euro CDs

Stock

52 Week High Low

Price Day Chg

Japan (¥) AstellasPh 1487 9.00 1779 1358 Bridgestne 4063 30.00 4463 3089 Canon 3245 2.00 3468 2780 CntJpRwy 18070 -50.00 22630 16305 Denso 4987 33.00 5284 3317 EastJpRwy 10035 -15.00 10950 8388 Fanuc 21660 -155.00 22765 15300 FastRetail 35810 550.00 44370 25305 Fuji Hvy Ind 4333 -15.00 5016 3252 Hitachi 664.70 4.00 679.50 400.00 HondaMtr 3493 70.00 3604 2417 JapanTob 3693 16.00 4837 3610 KDDI 2952.5 38.50 3446 2696 Keyence 44010 -130.00 44840 25250 MitsbCp 2535 -29.00 2705.5 1565 MitsubEst 2149 -11.00 2443 1724 MitsubishiEle 1609 -28.00 1802 947.00 MitsuiFud 2590 14.50 3009 2031.5 MitUFJFin 754.70 24.70 773.30 425.80 Mizuho Fin 209.50 1.60 225.30 142.00 Murata Mfg 15425 5.00 16200 10365 NipponTT 4852 -21.00 5329 4156 Nissan Mt 1120 -5.50 1220 893.10 Nomura 741.20 9.00 784.00 338.80 Nppn Stl 2741 13.50 2818 1773.5 NTTDCMo 2690 2.50 2946 2361 Panasonic 1180 14.00 1309.5 799.00 Seven & I 4451 5190 4051 ShnEtsuCh 9590 -141.00 10120 5160 Softbank 8653 122.00 9066 4133 Sony 3589 52.00 3610 2199 SumitomoF 4485 72.00 4768 2766.5 Takeda Ph 4999 86.00 5871 4098 TokioMarine 4736 5.00 5441 3063 Toyota 6493 48.00 7215 4917 Mexico (Mex$) AmerMvl 12.86 -0.36 14.10 10.40 FEMSA UBD 160.70 0.66 184.10 28.35 WalMrtMex 38.39 0.54 47.44 34.70 Netherlands (€) Altice 20.57 -0.17 20.87 10.51 ASML Hld 113.95 -0.40 117.80 70.54 Heineken 71.29 -0.66 86.95 67.47 ING 13.64 -0.18 14.05 8.30 Unilever 37.86 -0.08 43.11 36.22 Norway (Kr) DNB 140.20 -1.70 142.20 90.65 Statoil 156.50 1.90 163.50 108.60 Telenor 131.00 -0.40 150.90 116.80 Qatar (QR) QatarNtBk 162.20 -7.60 173.00 133.50 Russia (RUB) Gzprm neft 148.50 -0.85 170.43 129.31 Lukoil 3338 -32.50 3582 2334 MmcNrlskNckl 9922 -167.00 11199 8064 Novatek 759.80 -3.50 800.70 581.30 Rosneft 394.00 -3.85 425.70 259.70 Sberbank 172.87 -0.93 185.34 92.70 Surgutneftegas 32.57 -0.10 41.16 26.92 Saudi Arabia (SR) AlRajhiBnk 66.00 -0.25 67.50 48.60 Natnlcombnk 41.60 -0.30 46.30 32.00 SaudiBasic 96.75 0.25 98.50 63.25 SaudiTelec 66.25 74.00 51.00 Singapore (S$) DBS 18.93 0.27 19.20 13.01 JardnMt US$ 62.55 -0.13 63.71 51.69 JardnStr US$ 38.42 38.86 27.03 OCBC 9.51 0.09 9.54 7.41 SingTel 3.84 -0.01 4.36 3.54 UOB 20.51 0.13 21.35 16.80 South Africa (R) Firstrand 49.20 -0.36 54.46 40.52 MTN Grp 119.86 -2.69 156.47 104.76 Naspers N 2214.81 27.18 2553.59 1685.94 South Korea (KRW) HyundMobis 241000-1500.00 293500 229500 KoreaElePwr 41350 -600.00 63700 40050 SK Hynix 53700 54900 25650 SmsungEl 1978000 5000 2000000 1118000 Spain (€) 6.12 -0.06 6.80 4.50 BBVA BcoSantdr 5.22 -0.11 5.49 3.15 CaixaBnk 3.46 -0.08 3.63 1.82 Iberdrola 5.83 -0.03 6.43 4.80 Inditex 30.57 -0.16 33.47 26.60 Repsol 13.86 -0.07 14.37 8.06 Telefonica 8.90 -0.14 10.35 7.45

Yld

P/E MCap m

2.19 14.50 28505.51 3.66 11.01 29403.54 4.91 19.08 38521.32 0.76 9.38 33130.88 2.56 16.27 35245.61 1.32 15.66 34780.01 2.31 29.78 39341.51 1.01 73.70 33808 2.88 8.95 29663.47 1.92 12.94 28595.11 2.68 15.48 56315.43 3.68 14.43 65738.06 2.70 12.71 68862.16 0.26 47632.82 2.31 -31.06 35875.97 0.89 33.13 26599.47 1.78 14.51 30749.39 1.23 19.51 22854.25 2.06 15.16 95173.61 3.47 6.56 47336.07 1.39 16.44 30926 2.31 12.66 90531.85 4.27 9.02 42073.78 1.57 17.59 25217.25 1.16 64.62 23183.94 2.96 15.07 94775.32 1.34 17.38 25763.02 1.84 36.12 35116.84 1.27 24.07 36882.23 0.52 33.00 84767.16 0.54-101.59 40356.04 3.56 6.37 56446.44 3.67 24.84 35167.75 2.81 10.38 31931.25 3.44 9.46 188568.76 2.13 28.23 27977.05 1.48 31.19 1.48 23.47 32947.57 0.92 1.41 2.26 3.12

-19.30 39.06 25.29 11.57 22.72

21481.59 53750.17 44101.84 56797.61 69723.54

2.95 11.06 27658.58 4.35-193.27 61510.63 5.67-124.86 23823.14 2.17 11.18 37402.94 4.76 4.75 6.29 1.63 2.56 0.20 -

4.58 27.91 18.45 12.07 18.14 15.69 3.43

59648.26 48172.73 26640.28 39142.9 70849.35 63316.89 19742.9

2.54 13.95 28597.34 3.11 9.46 22184.6 4.95 18.43 77392.77 5.78 16.75 35330.04 3.09 2.16 0.69 3.75 4.52 3.33

11.41 12.13 10.37 11.10 16.20 10.83

34033.55 44681.05 42552.26 28186.87 44431.48 23777.64

3.90 14.35 20588.34 9.31 90.74 16848.08 0.17 88.95 72411.14 1.44 13.34 20616.81 6.90 1.97 23328.25 0.92 21.58 33317.78 1.05 15.22 244541.46 6.06 3.94 4.35 0.52 1.57 5.48 8.39

10.90 43161.51 17.96 80954.7 26.69 22233.66 15.53 39849.26 29.91 102309.59 -21.32 22266.88 -80.71 48154.31

Day 0.004 0.000 -0.001

Change Week 0.572 -0.005 -0.004

Month -0.001 0.000 -0.001 0.000 -0.003 0.000 0.000 0.000 0.000

One month 0.77556 -0.38329 0.25931 -0.78840 -0.00614 -0.37300 0.25000 0.71000 -0.42500

Three month 1.03400 -0.34386 0.35213 -0.72620 0.00414 -0.32800 0.33000 1.01000 -0.37500

Six month 1.34989 -0.24114 0.52550 -0.66220 0.02857 -0.24400 0.51500 1.23000 -0.27500

One year 1.71344 -0.10600 0.75606 -0.50660 0.13271 -0.10100

Short term -0.50 -0.35

7 Days One Three Six One Feb 06 notice month month month year Euro -0.50 -0.35 -0.51 -0.36 -0.45 -0.30 -0.35 -0.20 -0.25 0.00 Sterling 0.18 0.28 0.20 0.30 0.28 0.38 0.44 0.59 0.65 0.80 Swiss Franc Canadian Dollar US Dollar 0.68 0.78 0.72 0.82 0.75 0.85 1.05 1.15 1.20 1.30 1.60 1.70 Japanese Yen -0.15 0.05 -0.20 0.10 -0.20 0.10 -0.25 0.05 -0.20 0.10 -0.20 0.10 Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs: Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA.

COMMODITIES Energy Price* Crude Oil† Feb 53.65 Brent Crude Oil‡ 56.05 RBOB Gasoline† Feb 1.55 Heating Oil† Feb 1.66 Natural Gas† Feb 3.05 Ethanol♦ Uranium† Feb 18.10 Carbon Emissions‡ Diesel† Unleaded (95R) Base Metals (♠ LME 3 Months) Aluminium 1837.00 Aluminium Alloy 1600.00 Copper 5843.00 Lead 2335.00 Nickel 10465.00 Tin 19265.00 Zinc 2788.50 Precious Metals (PM London Fix) Gold 1226.75 Silver (US cents) 1760.00 Platinum 992.00 Palladium 747.00 Bulk Commodities Iron Ore (Platts) 80.80 Iron Ore (The Steel Index) 80.20 GlobalCOAL RB Index 85.00 Baltic Dry Index 735.00

www.ft.com/commodities

Change -0.16 -0.75 -0.01 -0.01 -0.01 0.00 -3.00 0.00 77.50 13.00 185.00 -385.00 3.50

Agricultural & Cattle Futures Corn♦ Wheat♦ Soybeans♦ Soybeans Meal♦ Cocoa (ICE Liffe)X Cocoa (ICE US)♥ Coffee(Robusta)X Coffee (Arabica)♥ White SugarX Sugar 11♥ Cotton♥ Orange Juice♥ Palm Oil♣ Live Cattle♣ Feeder Cattle♣ Lean Hogs♣

S&P GSCI Spt DJ UBS Spot R/J CRB TR M Lynch MLCX Ex. Rtn UBS Bberg CMCI TR 0.05 LEBA EUA Carbon -1.80 LEBA CER Carbon -1.00 LEBA UK Power -17.00 11.55 32.00 -12.00 -20.00

Feb Mar Feb

Price* 367.25 431.25 1036.25 334.30 1678.00 2072.00 2155.00 144.40 557.80 21.46 76.29 166.35 117.10 123.78 70.35

Change 2.75 1.75 9.75 2.80 -10.00 9.00 -16.00 -1.70 2.80 0.12 -0.01 0.15 0.00 -0.28 0.00

Feb 03 397.87 87.97 193.92 231.14 14.59 4.99 0.28 3940.00

% Chg Month 0.01 0.54 -0.53 -9.84 1.84 9.67 0.00 2.34

% Chg Year 36.43 16.41 19.36 -33.05 27.45 -28.71 -26.32 31.33

Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar

Sources: † NYMEX, ‡ ECX/ICE, ♦ CBOT, X ICE Liffe, ♥ ICE Futures, ♣ CME, ♠ LME/London Metal Exchange.* Latest prices, $ unless otherwise stated.

Stock

Price Day Chg

52 Week High Low

Sweden (SKr) AtlasCpcoB 258.70 -0.10 266.40 162.80 Ericsson 50.40 -0.75 83.60 43.19 H&M 242.90 -2.50 305.10 232.60 Investor 353.20 -0.50 358.50 256.80 Nordea Bk 106.80 0.40 110.70 66.30 SEB 102.40 -0.90 103.50 67.75 SvnskaHn 135.10 -0.60 136.30 90.25 Swedbank 226.30 -1.50 229.30 150.80 Telia Co 34.80 -0.24 43.43 33.93 Volvo 117.80 0.10 120.40 74.75 Switzerland (SFr) ABB 23.18 -0.27 23.87 15.97 CredSuisse 14.95 -0.13 16.31 9.76 Nestle 72.65 -0.20 74.90 71.65 Novartis 73.35 0.40 82.80 67.00 Richemont 74.20 -1.35 78.45 65.60 Roche 236.10 0.30 265.20 218.30 Swiss Re 93.90 -0.50 98.50 91.40 Swisscom 431.20 -1.20 528.50 426.80 Syngent 423.10 -1.60 434.90 360.50 UBS 15.82 -0.18 17.49 15.62 Zurich Fin 285.20 -1.50 290.80 194.70 Taiwan (NT$) Chunghwa Telecom 100.50 125.50 99.50 Formosa PetChem 106.50 115.00 79.20 HonHaiPrc 85.00 90.10 72.50 MediaTek 212.00 265.00 192.00 TaiwanSem 184.50 193.00 142.00 Thailand (THB) PTT Explor 416.00 6.00 430.00 227.00 United Arab Emirates (Dhs) Emirtestele 17.85 0.05 20.20 15.85 United Kingdom (p) AscBrFd 2399 -8.00 3465 1910 AstraZen 4387.5 29.50 5505 3680 Aviva 490.10 -3.00 500.00 290.00 Barclays 227.40 -1.45 267.32 121.10 BP 476.55 -2.05 521.20 249.44 BrAmTob 4985 22.00 5135 3609 BSkyB 1006 1.00 1080 560.00 BT 306.85 -0.60 496.85 297.80 Compass♦ 1429 -15.00 1559 1170 Diageo 2217 4.00 2286.5 1724.5 GlaxoSmh 1556 8.50 1745.56 1314.26 Glencore 310.80 1.30 334.46 87.10 HSBC 686.50 1.30 692.48 392.37 Imperial Brands 3717 -20.50 4154 3324 LlydsBkg 66.06 0.21 74.00 47.10 Natl Grid 933.50 5.50 1148 888.90 Prudential 1583.5 -17.00 1649 1085 RBS 223.90 -4.60 260.90 148.40 ReckittB 7025 -104.00 7786 5839.08 RELX 1444 2.00 1514 631.02 RioTinto 3385 -5.50 3685 1604.5 RollsRoyce 680.50 9.50 875.50 497.00 RylDShlA 2175 -18.00 2295.5 1405.5 Shire 4448.5 -13.00 5377 2707.19 StandCh 803.60 2.10 821.60 373.40 Tesco 193.05 -4.25 219.40 143.08 Vodafone 192.85 -1.25 240.10 186.50 WPP 1831 -15.00 1904 1204 United States of America ($) 21stC Fox A 31.30 -0.10 31.75 22.66 3M 174.78 -0.26 182.27 149.00 AbbottLb 42.30 -0.49 45.79 36.02 Abbvie♦ 60.94 0.27 68.12 51.60 Accenture 114.67 0.18 125.72 91.40 Adobe 114.33 -0.84 115.45 71.27 AEP 63.92 -0.11 71.32 57.89 Aetna 121.21 -1.35 136.50 92.42 Aflac 68.86 0.25 74.50 55.24 AirProd 139.47 -0.69 150.45 116.59 Alexion 127.21 0.23 162.00 109.12 Allegran 231.48 0.61 301.32 184.50 Allstate 78.11 0.63 78.23 60.48 Alphabet 821.37 1.24 867.00 672.66 Altria 71.55 0.06 72.08 58.84 Amazon 806.49 -3.71 847.21 474.00 AmerAir 45.02 0.82 50.64 24.85 AmerExpr 77.66 -0.38 78.42 50.27 AmerIntGrp 64.94 67.47 48.41 AmerTower 103.59 -1.67 118.26 83.07 Amgen 165.65 -1.88 176.85 133.64 Anadarko 69.01 -1.39 73.33 33.85 Anthem 158.18 -0.91 161.80 114.85 Aon Cp♦ 113.75 -0.31 116.59 87.21 Apple 130.04 0.96 130.49 89.47 ArcherDan 44.16 0.17 47.88 31.30 AT&T 41.09 -0.16 43.89 35.91

Yld

P/E MCap m

2.31 7.25 3.63 2.80 5.70 5.06 3.29 4.67 4.26 2.52

29.82 16.15 23.74 6.97 12.91 20.74 15.49 13.28 16.78 22.21

11430.63 17516.55 40174.06 18216.27 48976.39 25161.07 29201.42 29006.73 17062.44 21793.46

4.59 2.54 3.51 2.26 3.25 4.82 5.01 2.49 5.27 5.87

31.72 51715.27 -4.40 31473.73 30.01 227761.06 27.15 194115.91 38.02 39017.22 23.61 167094.84 7.88 34059.45 15.15 22501.26 35.63 39457.86 17.72 61370.02 21.43 43285.35

5.16 3.55 4.45 4.91 3.07

20.13 25204.8 16.37 32798.74 11.76 47619.55 15.20 10843.56 16.68 154669.28

2.33 16.74 33929.78 4.17 18.71 42263.27 1.42 33.62 23637.8 4.61 33.52 69092.91 4.24 40.84 24776.89 2.42 -47.71 48016 6.45 -30.81 115498.97 3.09 21.52 115672.08 3.26 27.94 21523.28 4.20 10.40 38037.24 2.11 23.70 29238.76 2.59 24.88 69458.41 5.14 277.86 95094.69 1.44 -12.29 55682.03 5.79 42.47 169743.83 3.91 56.32 44351.73 3.41 31.46 58692.96 4.64 17.16 43603.25 2.45 22.15 50870.32 -4.87 32947.2 1.98 32.40 61210.46 2.06 27.82 36830.49 4.621160.44 57924.79 2.41 -6.09 15573.87 6.60 53.31 119890.78 0.46 88.22 50084.41 1.28 -8.32 32849.67 74.83 19641.66 6.53 -7.94 63890.99 2.44 28.48 29188.94 1.01 21.49 33078.18 2.39 22.97 105124.3 2.31 66.88 62271.33 3.49 17.19 99033.53 2.01 17.05 75579.98 49.47 56487.99 3.36 74.13 31430.07 0.77 19.09 42532.59 2.01 13.08 28101.91 2.33 20.97 30347.27 80.46 28485.1 - -40.89 86823.56 1.58 22.09 28763.76 29.28 243197.15 2.68 29.83 139541.87 - 192.62 383217.05 0.85 5.16 23323.4 1.47 14.32 71078.73 1.83 104.28 66702.15 1.92 54.06 44100.54 2.19 17.31 123230.76 0.86 -7.23 38569.75 1.56 19.29 41668.89 1.01 23.14 29926.95 1.39 16.65 682260.06 2.45 19.28 25409.59 4.48 18.17 252333.69

Stock

52 Week High Low

Price Day Chg

AutomData Avago Tech BakerHu♦ BankAm Baxter BB & T BectonDick BerkshHat Biogen BkNYMeln BlackRock Boeing BrisMySq CapOne CardinalHlth Carnival Caterpillar♦ CBS Celgene CharlesSch Charter Communications ChevrnTx Chubb Cigna Cisco Citigroup CME Grp Coca-Cola Cognizant ColgtPlm♦ Comcast ConocPhil Corning Costco CrownCstl CSX CVS Danaher Deere Delphi Delta Devon Energy DiscFinServ Disney DominRes DowChem DukeEner DuPont Eaton eBay Ecolab Emerson EOG Res EquityResTP Exelon ExpScripts ExxonMb Facebook Fedex FordMtr Franklin GenDyn GenElectric GenMills GenMotors GileadSci GoldmSchs Halliburton HCA Hold Hew-Pack HiltonWwde HomeDep Honywell HumanaInc IBM IllinoisTool Illumina Intcntl Exch Intel♦ Intuit John&John JohnsonCn JPMrgnCh Kimb-Clark KinderM Kraft Heinz Kroger L Brands LasVegasSd LibertyGbl Lilly (E)

96.69 -0.18 104.09 78.98 205.94 -0.22 206.60 114.25 61.46 -0.39 68.59 38.16 23.24 -0.05 23.55 10.99 48.23 -0.40 50.16 35.54 46.51 -0.10 47.85 29.95 178.34 -1.03 181.76 129.50 245130 -516.00 250786 187405 264.87 0.20 307.33 205.43 45.78 0.11 49.54 32.20 377.71 -0.29 399.46 286.52 163.75 1.35 170.00 102.10 50.97 0.19 77.12 46.01 87.98 0.06 91.64 58.03 75.82 0.95 87.85 62.70 55.46 0.18 57.79 40.52 92.78 -0.50 99.46 60.51 64.67 0.52 66.88 41.36 115.96 0.32 127.00 94.39 39.72 -0.45 42.61 21.51 323.07 -5.64 341.50 156.13 113.07 -0.50 119.00 80.64 131.97 0.69 133.89 106.82 147.31 -1.99 150.69 115.03 31.23 -0.09 31.95 22.46 57.87 0.11 61.63 34.52 119.37 -0.58 124.01 85.47 41.55 0.01 47.13 39.88 52.99 0.49 63.23 45.44 65.65 -0.32 75.38 63.43 75.02 -0.24 76.87 54.70 49.46 -0.97 53.17 31.05 26.67 -0.07 26.99 17.61 167.39 -0.93 169.59 138.57 87.24 -1.50 102.82 79.38 46.86 0.07 49.13 22.28 76.36 0.90 106.67 69.30 82.95 -0.74 84.74 62.80 107.98 -0.01 108.47 74.91 73.27 -0.47 78.00 55.59 48.28 0.47 52.76 32.60 45.62 -1.17 50.69 18.07 69.23 -0.13 74.33 42.86 109.86 -0.44 111.99 86.25 72.18 0.48 78.97 67.58 60.04 -0.17 61.73 44.40 77.61 -0.04 87.75 72.34 76.35 -0.08 78.36 55.94 69.75 -0.47 72.00 52.35 32.18 0.11 33.19 21.52 119.60 -1.15 124.60 98.62 59.61 0.07 60.93 44.70 99.64 -1.30 109.37 62.53 60.68 0.30 76.93 58.28 35.87 0.09 37.70 29.82 67.67 0.58 80.02 64.46 83.16 -0.38 95.55 77.56 131.61 0.63 135.49 96.82 188.91 0.70 201.57 122.78 12.53 -0.03 14.22 11.07 40.20 -0.11 42.18 30.56 183.78 0.66 187.37 125.74 29.63 -0.07 33.00 27.10 61.86 -0.87 72.95 54.84 36.46 0.13 38.38 26.69 72.53 0.19 103.10 69.78 241.99 1.04 247.77 138.20 56.23 -0.36 58.78 27.96 83.30 -0.50 84.26 63.87 15.17 -0.10 16.25 8.91 58.06 0.26 59.76 36.11 137.19 -0.79 139.37 109.62 119.24 0.05 119.59 99.31 195.40 -2.84 217.80 150.00 175.02 -0.80 179.25 116.90 127.08 -0.13 130.16 88.32 162.98 0.83 186.88 119.37 58.44 -0.10 59.86 45.44 36.17 -0.35 38.45 27.68 118.13 -0.24 120.55 88.17 112.77 -0.87 126.07 99.78 42.16 -0.50 46.17 30.84 87.02 -0.16 88.17 52.50 121.17 -0.37 138.87 111.30 22.56 -0.38 23.36 13.26 88.82 -0.45 90.54 70.01 33.86 -0.16 40.91 28.71 59.24 -0.34 93.00 57.48 52.16 0.35 63.38 39.02 36.24 -0.29 39.85 26.16 77.11 -0.12 83.79 64.18

BONDS: HIGH YIELD & EMERGING MARKET

Close Prev Day price price change change % Fuji Hvy Ind 4333.00 4348.00 -15.00 -0.34 HyundMobis 241000.00 242500.00 -1500.00 -0.62 UPS B 106.22 106.95 -0.73 -0.68 MitsubishiEle 1609.00 1637.00 -28.00 -1.71 NovoB 232.40 232.40 0.00 0.00 BHPBilltn 25.91 26.20 -0.29 -1.11 Metlife 51.93 51.77 0.16 0.31 AutomData 96.69 96.87 -0.18 -0.19 Vale 30.61 30.61 0.00 0.00 SandsCh 32.75 32.86 -0.11 -0.33 CharlesSch 39.72 40.17 -0.45 -1.12 Tata Cons 2240.75 2240.75 0.00 0.00 KDDI 2952.50 2914.00 38.50 1.32 Fanuc 21660.00 21815.00 -155.00 -0.71 EastJpRwy 10035.00 10050.00 -15.00 -0.15 KoreaElePwr 41350.00 41950.00 -600.00 -1.43 CntJpRwy 18070.00 18120.00 -50.00 -0.28 Canon 3245.00 3243.00 2.00 0.06 Lukoil 3338.00 3370.50 -32.50 -0.96 Caterpillar 92.78 93.28 -0.50 -0.54 Based on the FT Global 500 companies in local currency

Week change change % -485.00 -10.1 -25000.00 -9.4 -10.81 -9.2 -157.00 -8.9 -16.20 -6.5 -1.61 -5.9 -2.97 -5.4 -5.28 -5.2 -1.64 -5.1 -1.75 -5.1 -2.11 -5.0 -117.05 -5.0 -141.50 -4.6 -1030.00 -4.5 -470.00 -4.5 -1900.00 -4.4 -815.00 -4.3 -145.00 -4.3 -148.00 -4.2 -4.01 -4.1

Month change % -12.75 -14.08 -7.94 -2.07 -9.53 1.09 -4.10 -6.18 16.98 -3.68 -3.64 -4.01 -2.66 7.68 -3.28 -6.55 -7.88 -3.11 -1.21 -0.27

Bid yield

Mth's Spread chge vs yield US

Feb 06 High Yield US$ Navient Corporation

S*

Ratings M*

F*

Bid price

03/20

8.00

BB-

Ba3

BB

105.95

5.98

-0.03

1.63

4.80

High Yield Euro Kazkommerts Intl BV

02/17

6.88

B

Caa1

B

97.50

-

0.00

0.00

-

Emerging US$ Mexico Brazil Peru Peru Colombia Brazil Turkey Poland Russia Turkey

09/16 01/18 03/19 03/19 07/21 01/22 09/22 03/23 05/26 10/26

11.40 8.00 7.13 7.13 4.38 12.50 6.25 3.00 4.75 4.88

BBB+ BB BBB+ BBB+ BBB BB BBB+ -

A3 Ba2 A3 A3 Baa2 Ba2 Ba1 A2 Ba1

BBB+ BB BBB+ BBB+ BBB BB BB+ ABBBBB+

106.80 104.00 111.11 114.01 105.82 109.75 105.73 98.56 103.30 94.41

1.49 3.63 1.83 2.60 2.98 9.97 5.13 3.29 4.36 5.71

0.03 -0.02 -0.01 0.00 -0.03 -0.02 -0.03 -0.02 -0.02 -0.02

0.01 -1.24 -0.04 0.20 -0.16 -1.29 -0.40 0.03 0.00 -0.35

0.44 2.45 0.66 0.84 1.12 8.10 3.26 1.42 1.93 3.28

Red date Coupon

Index

Day's change

Markit IBoxx ABF Pan-Asia unhedged Corporates( £) Corporates($) Corporates(€) Eurozone Sov(€) Gilts( £) Global Inflation-Lkd Markit iBoxx £ Non-Gilts Overall ($) Overall( £) Overall(€) Treasuries ($)

177.22 327.68 263.94 220.27 227.48 312.07 249.99 323.93 231.54 312.67 224.42 219.58

0.04 0.17 0.04 0.06 -0.16 0.15 -0.18 0.16 0.05 0.16 -0.08 0.04

0.40 0.22 -0.09 0.17 -0.10 0.19 -0.34 0.23 -0.06 0.20 -0.02 -0.07

2.31 -0.74 0.26 -0.46 -2.24 -1.58 1.15 -0.75 0.26 -1.34 -1.58 0.21

2.26 -0.09 -0.09 -0.27 -1.61 -0.47 1.06 -0.07 -0.06 -0.36 -1.12 -0.07

2.24 10.45 0.26 3.75 -1.08 4.36 3.35 8.36 0.26 5.53 0.05 0.21

FTSE Sterling Corporate (£) Euro Corporate (€) Euro Emerging Mkts (€) Eurozone Govt Bond

116.07 107.06 796.29 110.71

0.17 0.11 -12.93 -0.46

-

-

-0.29 -0.46 -0.53 -1.84

5.62 0.94 -0.87 -3.84

Index

Day's change

Week's change

Month's change

Series high

Series low

369.26 85.00 70.05 111.86

-12.07 -1.98 -2.51 -3.89

35.21 7.21 2.21 10.86

40.34 7.01 -0.87 12.50

390.04 90.43 93.03 121.66

288.69 67.59 64.22 80.36

CREDIT INDICES Markit iTraxx Crossover 5Y Europe 5Y Japan 5Y Senior Financials 5Y

Month's change

Year change

Return 1 month

Return 1 year

Emerging Euro Brazil 02/15 7.38 BBBBaa2 BBB 111.75 0.73 0.00 0.00 0.09 Mexico 02/20 5.50 BBB+ A3 BBB+ 113.87 0.84 -0.02 -0.18 -0.34 Mexico 04/23 2.75 BBB+ A3 BBB+ 104.95 1.90 -0.03 0.11 0.03 Bulgaria 03/27 2.63 BB+ Baa2 BBB- 103.96 2.19 -0.03 0.04 -0.24 Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poor’s, M - Moody’s, F - Fitch.

Markit CDX Emerging Markets 5Y 222.79 -6.99 -11.11 -6.51 283.44 222.79 Nth Amer High Yld 5Y 323.84 0.00 0.00 0.00 323.84 323.84 Nth Amer Inv Grade 5Y 63.82 -1.75 -0.34 -0.60 81.57 63.43 Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names.

BONDS: INDEX-LINKED Price Month Value No of Yield Feb 03 Feb 03 Prev return stock Market stocks Can 4.25%' 21 121.48 -0.183 -0.185 -0.01 5.18 72537.49 7 Fr 2.25%' 20 113.62 -1.541 -1.543 0.10 20.31 217609.40 15 Swe 0.25%' 22 114.17 -1.816 -1.821 0.03 29.53 232111.18 7 UK 2.5%' 20 372.13 -2.683 -2.694 0.03 6.58 612725.29 27 UK 2.5%' 24 368.06 -2.040 -2.052 0.09 6.82 612725.29 27 UK 2%' 35 266.05 -1.617 -1.650 -0.61 9.08 612725.29 27 US 0.625%' 21 104.19 -0.311 -0.332 0.04 35.84 1219240.91 37 US 3.625%' 28 132.25 0.636 -0.332 -0.42 16.78 1219240.91 37 Representative stocks from each major market Source: Merill Lynch Global Bond Indices † Local currencies. ‡ Total market value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par amount.

BONDS: TEN YEAR GOVT SPREADS Spread Spread Bid vs vs Yield Bund T-Bonds Australia 2.84 2.47 0.42 Italy Austria 0.66 0.29 -1.77 Japan Belgium 1.02 0.65 -1.41 Netherlands Canada 1.83 1.46 -0.60 Norway Denmark 0.67 0.30 -1.75 Portugal Finland 0.60 0.23 -1.83 Spain France 1.15 0.78 -1.28 Switzerland Germany 0.37 0.00 -2.06 United Kingdom Greece 7.56 7.19 5.13 United States Ireland 1.22 0.84 -1.21 Data provided by SIX Financial Information & Tullett Prebon Information

Spread Spread Bid vs vs Yield Bund T-Bonds 2.47 0.10 0.63 1.65 4.54 1.87 -0.15 1.32 2.43

2.10 -0.27 0.26 1.28 4.17 1.50 -0.52 0.95 2.06

0.04 -2.32 -1.79 -0.77 2.11 -0.56 -2.58 -1.11 0.00

P/E MCap m

Stock

52 Week High Low

Price Day Chg

Lockheed 255.70 1.24 269.90 Lowes 72.99 -0.30 83.65 Lyondell 94.99 0.30 97.64 Marathon Ptl 48.21 0.05 54.59 Marsh&M♦ 70.25 -0.27 70.65 MasterCard 106.36 -0.22 111.07 McDonald's 124.82 0.58 131.96 McKesson 139.91 1.07 199.43 Medtronic 75.81 -0.53 89.27 Merck 64.46 0.17 65.46 Metlife♦ 51.93 0.16 58.09 Microsoft 63.46 -0.22 65.91 Mnstr Bvrg 42.72 0.08 55.50 MondelezInt 44.18 -0.18 46.40 Monsanto 108.18 -0.69 114.26 MorganStly 44.71 0.28 45.03 MylanNV 39.79 0.58 53.21 Netflix 139.98 -0.27 143.46 NextEraE 123.67 -0.54 131.98 Nike 52.25 -0.12 65.44 NorfolkS 119.12 -1.34 122.17 Northrop 232.51 1.15 253.80 NXP 100.77 1.31 107.54 Occid Pet 68.46 -0.72 78.48 Oracle 40.29 -0.15 42.00 Pepsico 105.09 -0.02 110.94 Perrigo 78.00 0.01 147.58 Pfizer♦ 32.29 0.20 37.39 Phillips66 79.65 -0.30 90.87 PhilMorris 100.32 -0.79 104.20 PNCFin 122.39 0.23 122.82 PPG Inds 99.82 -1.12 117.00 Praxair 116.62 -0.85 125.00 Priceline 1579.87 -3.51 1605.47 ProctGmbl 87.64 0.23 90.33 Prudntl 106.08 -0.25 108.29 PublStor 216.05 -0.48 277.60 Qualcomm 53.02 0.04 71.62 Raytheon 147.70 0.81 152.58 Regen Pharm 359.80 1.54 452.96 ReynoldsAm 60.30 -0.09 60.49 S&P Global 122.20 -0.40 128.40 Salesforce 79.69 -0.53 84.48 Schlmbrg 81.81 -0.69 87.84 Sempra Energy 102.46 -0.33 114.66 Shrwin-Will 304.12 0.12 312.48 SimonProp 183.13 -2.21 229.10 SouthCpr 37.67 -0.77 39.23 Starbucks 55.56 0.50 61.64 StateSt 77.30 -0.24 83.49 Stryker 122.33 -1.03 127.23 Sychrony Fin 36.43 -0.08 38.06 Target 63.75 84.14 TE Connect 75.41 0.03 76.46 Tesla Mtrs 253.46 2.13 269.34 TexasInstr 76.21 -0.29 79.47 TheTrvelers 117.89 0.11 123.09 ThrmoFshr 150.85 -0.58 160.68 TimeWrnr 96.30 0.43 97.35 TJX Cos 75.54 0.07 83.64 T-MobileUS 61.06 -0.30 63.68 UnionPac 108.06 -0.45 111.38 UPS B 106.22 -0.73 120.44 USBancorp 53.49 -0.17 54.04 UtdHlthcre 160.91 -0.96 164.00 UtdTech 110.70 1.05 112.83 ValeroEngy 65.66 0.15 71.40 Verizon 48.16 -0.43 56.95 VertexPharm 87.25 0.52 103.73 VF Cp 49.55 -0.02 67.10 Viacom 41.93 0.03 47.47 Visa Inc 85.97 -0.12 86.82 Walgreen 81.06 0.59 88.00 WalMartSto 66.68 0.18 75.19 WellsFargo 56.89 -0.38 58.02 Williams Cos 29.29 0.40 32.69 Yahoo 44.43 0.72 45.08 Yum!Brnds 66.38 0.15 66.53 Venezuela (VEF) Bco de Vnzla 222.00 -18.00 280.00 Bco Provncl 4050 -50.00 7000 Mrcntl Srvcs 11250 14500

2.10 30.21 43404.39 0.96 -44.20 82164.07 1.03 -9.40 25984.92 0.93 17.58 234841.28 0.92 5.97 26233.26 2.31 18.05 37739.34 1.35 36.56 37955.23 18.07 192345.91 15.63 57199.19 1.47 16.14 48404.87 2.30 20.72 61215.21 2.45 26.05 101060.92 2.86 26.60 85182.59 1.57 14.80 42432.88 1.98 18.85 24267.2 2.23 18.07 29719.53 3.18 90.50 54283.03 0.80 24.01 25349.08 46.02 89892.6 0.63 33.43 52655.7 24.05 87443.87 3.52-311.40 213450.08 1.90 22.72 61410.81 0.03 20.89 37820.17 3.23 14.66 156767.07 0.51 13.02 164913.89 1.85 29.04 40507.86 3.18 26.28 179181.9 21.60 32149.28 2.25 44.49 58352.52 1.48 20.86 178801.77 3.73 -9.34 61282.3 1.78 15.23 25364.42 1.04 30.66 73524.44 3.71 93.70 29573.37 1.33 28.18 43891.94 2.04 17.10 81433.3 0.67 21.86 57376.69 1.89 25.47 34397.08 1.46 19.66 19844.42 1.04 8.45 35552.65 1.26 -2.60 23886.63 1.40 15.37 27304.22 1.24 20.01 173999.69 3.48 24.15 45238.85 2.94 9.81 67654.89 4.11 20.40 53468.74 1.91 34.35 66010.22 2.99 18.50 31506.08 20.99 35974.87 1.12 34.67 34869.62 2.96 22.70 38415.67 0.64 -46.02 57470.12 3.26 5.52 22188.42 2.99 21.46 33117.71 16.74 41726.74 3.29 35.44 344824.5 53.04 308075.92 0.58 29.49 50346.27 4.46 6.35 48902.87 1.72 14.27 22725.91 1.55 19.88 55964.6 2.97 35.55 262118.54 3.00 23.17 35879.5 3.94 4.40 54691.46 2.26 6.87 95555.09 0.93 31.47 96225.15 1.11 -22.78 48603.83 13.76 31212.44 3.33 9.73 25871.69 1.39 12.95 57461.86 1.98 21.81 167119.5 1.91 19.48 90878.88 0.43 27.56 29134.37 2.96 14.92 166418.56 1.61 25.42 44605.68 57.08 23941.76 1.08 24.96 34811.31 2.35 17.85 171427.16 1.07 38.24 30316.65 2.63 20.65 306804.97 2.50 94.34 39492.04 2.03 15.66 311380.56 2.88 22.99 43397.69 3.76-147.16 50362.14 2.99-151.43 108117.94 1.16 17.12 31764.9 3.96 14.71 16940.03 4.89 27.20 41456.45 - -59.40 9307.14 2.52 34.99 85125.45

Yld

203.65 62.62 69.82 29.24 52.95 78.52 110.33 114.53 69.35 47.97 35.00 48.04 37.69 35.88 83.73 21.16 33.60 79.95 109.34 49.01 67.52 180.10 61.61 63.21 34.47 96.09 71.84 28.25 71.74 86.78 77.40 88.37 100.47 954.02 79.10 57.19 200.65 42.24 119.38 325.35 43.38 81.77 52.60 66.10 92.95 239.48 173.11 23.54 50.84 50.60 94.31 23.25 62.94 51.70 141.05 49.10 103.07 119.75 55.53 66.82 33.23 72.02 94.22 37.07 108.83 83.85 46.88 46.01 71.46 49.03 30.11 66.12 71.50 62.35 43.55 10.22 26.15 46.35

P/E MCap m

2.13 26.13 74914.34 1.76 25.94 63490.14 3.13 10.96 38709.59 2.62 23.51 25445.97 1.77 22.56 36220.47 0.68 30.67 113751.5 2.73 24.49 103655.97 0.77 16.39 29668.27 2.18 24.79 104090.72 2.44 45.67 177725.08 2.86 16.63 57078.1 2.33 29.58 490389.04 40.05 24393.12 1.43 10.23 68232.11 1.99 30.33 47442.86 1.39 18.67 83733.84 83.05 21281.99 - 323.20 60249.01 2.47 23.76 57787.03 1.26 23.10 69236.4 1.90 22.98 34776.16 1.52 18.94 40595.23 36.52 34866.71 4.08 -6.54 52319.48 1.48 19.35 165263.29 2.65 24.05 150718.3 0.58 11183.21 3.50 33.70 195947.19 2.86 21.76 41485.72 3.92 25.05 155631.42 1.63 17.74 59542.93 1.46 33.07 26352.01 2.34 22.82 33282.06 36.09 77958.46 3.07 25.22 224038.93 2.35 11.70 45614.4 3.10 34.53 37471.77 3.65 14.52 78312.72 1.77 22.28 43371.66 60.29 37260.47 2.64 16.69 85975.04 0.96 33.52 31662.02 - 269.54 55516.54 2.46 -65.50 113836.61 2.77 19.84 25621.25 1.00 26.50 28255.1 3.37 32.56 57543.28 0.43 45.72 29119.53 1.38 30.52 80973.14 1.74 16.53 29817.29 1.13 30.99 45806.68 0.34 14.29 30071.72 2.93 14.27 35808.09 1.78 14.96 26792.64 - -41.33 37991.42 1.81 27.65 76173.31 2.08 12.50 33487.69 0.38 31.43 59589.56 1.31 22.51 74327.3 1.10 23.43 49602.96 40.33 50314.38 1.95 22.60 89053.59 2.77 19.76 73223.86 1.78 18.01 90915.69 1.34 24.81 153156.75 2.17 26.36 91146.89 3.36 14.25 29721.97 4.52 14.65 196310.31 - -82.93 21618.69 2.86 17.89 20497.32 3.20 12.12 14565.69 0.58 39.97 159724.76 1.81 21.53 87496.94 2.09 15.33 204920.33 2.54 14.73 285718.82 7.42 -35.98 23901.95 -9.16 42391.75 2.66 17.72 24361.83

93.00 2200 4500

18.94 0.06 78.89

1175.43 633.98 994.32

Closing prices and highs & lows are in traded currency (with variations for that country indicated by stock), market capitalisation is in USD. Highs & lows are based on intraday trading over a rolling 52 week period. ♦ ex-dividend ■ ex-capital redistribution # price at time of suspension

Feb 06 US$ SunTrust Banks, Inc. FleetBoston Financial Corp. NationsBank Corp. Merrill Lynch & Co., Inc. United Utilities PLC Countrywide Home Loans, Inc. Euro HSBC Holdings plc Barclays plc HBOS plc Electricite de France (EDF) Yen Wal-Mart Stores, Inc. £ Sterling Electricite de France (EDF) HSBC Holdings plc

Red date Coupon

Ratings M*

Bid yield

Day's chge yield

Mth's Spread chge vs yield US

F*

Bid price

01/28 01/28 03/28 06/28 08/28 06/29

6.00 6.88 6.80 6.75 6.88 6.15

BBB+ BBB BBB BBB+ BBBBBB+

Baa1 Baa3 Baa3 Baa1 Baa1 Baa1

AAAA AA

111.91 118.32 117.01 120.65 115.28 99.87

4.65 4.77 4.86 4.46 5.17 6.34

-0.01 -0.01 -0.01 -0.01 -0.01 0.00

-0.02 0.00 0.03 -0.15 -0.41 0.00

2.23 2.34 2.43 2.03 2.74 -

06/28 08/29 03/30 04/30

3.13 2.29 4.50 4.63

BBB+ BBB BBBA

A2 Baa2 Baa2 A3

A+ A AA-

104.10 99.08 110.75 125.25

2.70 2.38 3.07 2.38

-0.03 -0.03 -0.03 -0.03

0.08 -0.05 -0.10 0.21

0.27 -

07/15

0.94

NR

WR

NR

100.00

0.31

0.00

0.00

-

05/28 08/28

6.25 2.63

A A

A3 A1

AAA-

129.25 94.21

3.14 3.23

-0.02 -0.02

0.10 0.16

0.71 0.81

S*

Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poor’s, M Moody’s, F - Fitch.

GILTS: UK CASH MARKET

Feb 06 Day Chng Prev 52 wk high 52 wk low VIX 11.27 0.30 10.97 30.90 9.97 VXD 11.66 0.30 11.36 28.83 3.59 VXN 13.01 0.23 12.78 34.08 12.18 VDAX † CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. ‡ Deutsche Borse. VDAX: DAX Index Options Volatility.

BONDS: BENCHMARK GOVERNMENT Red Bid Date Coupon Price Australia 10/19 2.75 102.22 11/27 2.75 99.14 Austria 10/19 0.25 99.98 10/26 0.75 100.85 Belgium 06/18 0.75 100.91 06/27 0.80 97.86 Canada 02/19 0.50 99.53 06/27 1.00 92.26 Denmark 11/18 0.25 101.50 11/27 0.50 98.19 Finland 05/18 1.00 99.58 04/26 0.50 99.11 France 11/20 0.25 101.85 10/22 2.25 111.66 11/26 0.25 91.74 Germany 04/19 0.50 102.84 08/23 2.00 114.46 02/27 0.25 98.81 08/46 2.50 133.89 Greece 04/19 4.75 91.98 02/27 3.00 73.70 Ireland 10/19 5.90 116.84 05/26 1.00 98.12 Italy 10/19 0.05 99.31 11/21 0.35 97.14 06/27 2.20 97.67 03/47 2.70 86.01 Japan 01/19 0.10 100.64 02/22 0.05 100.37 12/26 0.10 99.96 12/46 0.60 92.86 Netherlands 01/20 0.25 102.57 01/28 5.50 151.26 New Zealand 04/20 3.00 101.39 04/27 4.50 109.46 Norway 05/19 4.50 108.66 02/26 1.50 98.71 Portugal 06/19 4.75 109.46 04/27 4.13 96.64 Spain 01/19 0.25 100.66 04/27 1.50 96.63 Sweden 10/18 1.00 99.37 12/26 9.41 182.70 Switzerland 05/19 3.00 108.99 05/26 1.25 113.14 United Kingdom 07/19 1.75 103.83 07/22 0.50 98.65 07/26 1.50 101.61 07/47 1.50 89.84 United States 01/19 1.13 99.91 01/22 1.88 100.03 11/26 2.00 96.30 11/46 2.88 96.28 Data provided by SIX Financial Information & Tullett Prebon Information

Yld

BONDS: GLOBAL INVESTMENT GRADE Day's chge yield

VOLATILITY INDICES

BOND INDICES

INTEREST RATES: OFFICIAL

Over night 0.69278 -0.41214 0.22375

P/E MCap m

FT 500: BOTTOM 20 Day change change % 0.00 0.00 0.58 1.47 0.61 0.26 0.00 0.00 -1.88 -1.12 0.54 1.43 0.96 0.74 1.60 7.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 -0.58 -0.38 -0.47 -0.64 -0.50 -0.59 0.17 0.26 0.01 0.01 0.00 0.00 2.50 6.76 0.00 0.00

Close Prev price price Bhartiartl 355.25 355.25 MylanNV 39.79 39.21 Allegran 231.48 230.87 ITC 276.80 276.80 Amgen 165.65 167.53 WalMrtMex 38.39 37.85 Apple 130.04 129.08 ChinaLife 23.00 21.40 ICICI Bk 290.30 290.30 Continental 194.10 194.10 ValeantPh 18.54 18.54 SunPhrmInds 675.15 675.15 ThrmoFshr 150.85 151.43 Delphi 73.27 73.74 HCA Hold 83.30 83.80 Merck 64.46 64.29 Perrigo 78.00 77.99 H&M 245.40 245.40 New Ch Life Ins 39.50 37.00 SEB 103.30 103.30 Based on the FT Global 500 companies in local currency

Rate Fed Funds Prime Discount Repo Repo O'night Call Libor Target

Yld

Finland (€) Nokia 4.40 -0.04 5.83 3.66 3.65 -34.10 27566.31 SampoA 43.07 -0.24 44.32 34.42 5.00 15.57 25848.48 France (€) Airbus Grpe 63.11 0.05 66.32 48.07 2.07 18.85 52388.07 AirLiquide 99.45 -1.45 106.65 88.25 2.22 20.74 41537.92 AXA 22.73 -0.44 25.05 16.11 4.66 9.73 59189.69 BNP Parib 60.01 -1.13 63.35 35.27 3.86 11.25 80370.13 ChristianDior 196.55 -3.75 207.30 133.75 1.39 26.93 38104.13 Cred Agr 11.97 -0.31 12.70 6.79 5.03 36588.84 Danone 58.98 -0.12 70.53 57.59 2.17 32.88 41547.1 EDF 9.18 -0.21 12.82 8.68 17.10 158.90 20796.89 Engie SA 10.99 -0.09 15.21 10.77 8.76 -5.88 28744.25 Esslr Intl 107.15 -1.40 124.55 93.41 1.00 30.73 25145.63 Hermes Intl 401.65 -2.60 414.00 281.20 0.80 42.25 45539.64 LOreal 170.20 -0.85 177.90 146.20 1.75 34.52 102704.16 LVMH 185.15 -3.80 193.35 130.55 1.85 26.19 100813.45 Orange 14.28 -0.09 16.63 12.38 4.05 17.44 40796.49 PernodRic 108.90 -0.50 111.65 90.00 1.66 24.32 31043.3 Renault 83.66 -1.17 90.58 63.64 1.94 9.52 26570.86 Safran 63.05 -0.46 69.89 48.87 1.68 -72.37 28239.41 Sanofi 75.64 0.02 79.07 62.50 3.73 24.74 104960.34 Sant Gbn 45.42 -0.59 48.12 31.47 1.17 80.57 27087.14 Schneider 67.07 -0.76 69.53 45.32 2.87 26.38 42662.71 SFR Group 26.62 -0.61 39.22 19.51 - -34.13 12647.2 SocGen 44.76 -1.11 49.38 25.00 4.48 9.68 38821.19 Total 47.11 -0.05 49.50 35.21 5.16 33.21 124127.93 UnibailR 212.60 -2.45 252.95 203.10 4.39 8.62 22694.79 Vinci 65.82 -0.72 69.80 49.93 2.69 17.77 41701.63 Vivendi 16.95 -0.03 20.09 14.87 16.26 15.90 23430.49 Germany (€) Allianz 156.35 -1.95 163.85 118.35 4.50 12.36 76739.28 BASF 87.61 -1.46 91.55 56.01 3.19 20.82 86422.42 Bayer 102.00 -1.20 112.00 83.45 2.46 18.60 90590.35 BMW 82.94 -1.09 91.76 63.38 3.21 9.14 53624.19 Continental 189.15 -4.95 206.55 158.20 1.91 13.46 40630.58 Daimler 67.21 -0.44 73.23 50.83 4.85 8.77 77224.55 Deut Bank 18.48 -0.36 19.97 9.90 -3.26 27375.11 Deut Tlkm 15.83 -0.17 16.64 13.54 3.48 12.73 79488.77 DeutsPost 31.16 -0.19 32.18 19.55 2.73 15.86 40585.76 E.ON 6.90 -0.07 9.72 5.99 7.26 -3.17 14832.89 Fresenius Med 75.63 -0.92 85.65 70.00 1.05 22.14 24954.55 Fresenius SE 72.83 -0.98 75.07 52.39 0.76 26.32 34928.62 HenkelKgaA 96.70 -1.19 106.25 77.35 1.50 19.89 26981.27 Linde 147.00 -2.80 166.00 113.50 1.97 25.72 29323.14 MuenchRkv 175.80 -2.10 187.35 140.90 4.05 11.48 30408.42 SAP 84.77 -0.71 86.12 64.62 1.36 29.77 111846.53 Siemens 117.20 -1.05 123.40 79.23 2.95 17.07 106991.73 Volkswgn 145.10 -3.85 157.40 106.65 0.08 44.18 45985.97 Hong Kong (HK$) AIA 47.50 0.40 54.15 36.85 1.25 34.10 73817.41 BOC Hold 31.00 0.55 31.30 18.82 3.05 16.18 42246.93 Ch OSLnd&Inv 22.90 27.85 20.15 2.48 6.63 32339.97 ChngKng 51.30 0.05 59.75 38.35 2.54 11.31 25128.56 Citic Ltd 11.36 0.04 12.78 10.02 2.46 13.71 42596.29 Citic Secs 15.72 0.22 19.40 13.26 1.89 10.12 5913.32 CK Hutchison 91.65 -0.10 103.90 80.60 2.59 13.39 45572.54 CNOOC 9.70 -0.04 10.88 7.23 4.70-178.43 55823.16 HangSeng 161.00 1.70 161.00 122.20 3.30 21.83 39675.52 HK Exc&Clr 187.20 0.80 213.20 161.20 2.96 35.46 29542.45 MTR 40.10 0.30 44.50 34.50 2.46 25.48 30523.2 SandsCh♦ 32.75 -0.11 39.30 23.70 5.64 28.70 34071.39 SHK Props 108.20 0.20 123.30 79.00 2.97 10.28 40382.18 Tencent 207.40 2.40 220.80 132.10 0.21 52.34 253354.18 India (Rs) Bhartiartl 355.25 385.00 283.05 0.37 39.35 21130.9 HDFC Bk 1314.1 1320 928.00 0.70 26.89 50024.59 Hind Unilevr 860.55 954.00 781.95 1.58 51.92 27713.73 HsngDevFin 1400.3 1464 1011.45 1.06 22.45 33027.91 ICICI Bk 290.30 298.40 180.75 1.67 19.42 25145.95 Infosys 935.25 1279.3 901.00 2.69 14.77 31965.73 ITC 276.80 279.90 178.67 1.32 38.48 49945.28 L&T 1483.8 1615 1016.05 0.96 31.02 20599.07 OilNatGas 199.00 211.80 125.17 1.69 20.57 38001.01 RelianceIn 1041.65 1129.55 888.10 1.01 11.48 50278.85 SBI NewA 277.05 288.80 148.25 0.91 66.25 32871.09 SunPhrmInds 675.15 898.45 571.90 0.57 22.74 24103.81 Tata Cons 2240.75 2744.8 2051.9 1.80 19.16 65699.25 Indonesia (Rp) 15600 125.00 16200 12625 1.00 19.86 28869.78 Bk Cent Asia Israel (ILS) 128.10 -0.40 230.40 119.50 3.83 20.53 34688.96 TevaPha Italy (€) 3.84 -0.08 4.24 3.33 4.18 13.21 41928.91 Enel ENI 14.23 -0.30 15.92 10.93 5.64 -5.34 55541.25 Generali 14.63 -0.35 16.00 9.76 4.74 12.87 24509.83 IntSPaolo 2.18 -0.05 2.79 1.52 6.17 15.87 37200.87 Luxottica 48.83 -1.14 56.90 39.92 1.76 31.49 25391.82 Unicred 12.21 -0.90 41.34 12.21 4.94 8.21 8101.29

FT 500: TOP 20

Feb 06 US US US Euro UK Japan Switzerland

52 Week High Low

Bid Day chg Wk chg Month Year Yield yield yield chg yld chg yld 1.90 -0.02 0.03 -0.02 0.00 2.84 -0.03 0.05 0.06 0.00 0.26 0.00 0.00 0.00 0.00 0.66 -0.07 -0.05 0.12 0.00 0.06 0.00 -0.08 0.00 0.00 1.02 0.02 0.00 0.00 0.00 0.74 -0.04 -0.06 -0.02 0.00 1.83 -0.05 -0.07 0.04 0.00 -0.59 0.00 0.00 0.00 0.00 0.67 -0.03 -0.07 0.00 0.00 1.34 -0.01 -0.02 -0.04 0.30 0.60 -0.05 -0.06 0.13 0.00 -0.23 0.00 0.00 0.00 0.00 0.19 0.04 -0.01 0.19 0.00 1.15 0.06 0.09 0.34 0.00 -0.79 0.00 0.00 0.00 0.00 -0.20 0.00 0.00 0.00 0.00 0.37 -0.05 -0.08 0.00 0.00 1.14 -0.03 -0.04 0.09 0.00 8.94 0.71 0.47 2.11 0.00 7.56 0.11 0.04 0.74 0.00 -0.32 0.00 0.00 0.00 0.00 1.22 0.06 0.03 0.28 0.00 0.31 0.07 0.01 0.18 0.00 0.97 0.10 0.00 0.32 0.00 2.47 0.11 0.00 0.00 0.00 3.48 0.10 0.10 0.40 0.00 -0.23 0.00 0.00 0.00 0.00 -0.02 0.00 0.00 0.00 0.00 0.10 0.00 0.02 0.00 0.00 0.90 0.03 0.06 0.00 0.00 -0.61 0.00 0.00 0.00 0.00 0.63 -0.02 -0.03 0.12 0.00 2.54 0.00 0.00 0.00 0.00 3.39 0.00 0.00 0.00 0.00 0.66 -0.01 -0.03 0.02 0.00 1.65 -0.03 -0.09 0.09 0.00 0.67 0.05 -0.09 -0.01 0.00 4.54 0.03 0.03 0.00 0.00 -0.08 0.00 0.00 0.00 0.00 1.87 0.10 0.15 0.00 0.00 1.39 -0.01 -0.03 -0.04 0.33 0.71 -0.02 -0.03 0.02 0.19 -0.92 0.00 0.00 0.00 0.00 -0.15 0.00 0.00 0.00 0.00 0.19 -0.02 -0.08 -0.04 0.00 0.75 -0.04 -0.12 -0.05 0.00 1.32 -0.04 -0.13 -0.02 0.00 1.94 -0.02 -0.07 0.02 0.00 1.17 -0.03 -0.04 0.00 0.00 1.87 -0.04 -0.08 0.00 0.00 2.43 -0.04 -0.06 0.06 0.00 3.07 -0.03 -0.01 0.11 0.00

Red 52 Week Amnt Change in Yield Feb 06 Price £ Yield Day Week Month Year High Low £m Tr 8.75pc '17 104.83 -0.05 -16.67 0.00 -135.71 -115.15 105.16 100.00 11.14 Tr 5pc '18 105.29 0.09 0.00 -30.77 -40.00 -71.88 109.96 105.29 35.24 Tr 4.5pc '19 109.13 0.10 -16.67 -41.18 -9.09 -80.77 112.71 109.00 36.35 Tr 4.75pc '20 113.80 0.25 -7.41 -26.47 -10.71 -65.28 117.12 113.51 33.31 Tr 1.5pc '21 104.00 0.48 -4.00 -17.24 -5.88 -51.02 106.04 102.20 32.46 Tr 4pc '22 117.07 0.58 -6.45 -15.94 -7.94 -44.23 121.31 116.43 37.95 Tr 5pc '25 130.28 1.08 -2.70 -9.24 -1.82 -25.52 138.11 128.54 35.08 Tr 4.25pc '27 128.33 1.42 -2.74 -7.79 0.71 -17.44 138.26 125.32 31.00 Tr 4.25pc '32 133.68 1.74 -1.69 -3.87 1.75 -15.12 148.92 128.17 35.44 Tr 4.25pc '36 137.61 1.89 -1.56 -3.57 1.61 -15.25 155.77 130.11 29.76 Tr 4.5pc '42 150.96 1.97 -1.50 -3.43 1.55 -15.81 174.65 140.38 26.64 Tr 3.75pc '52 147.71 1.90 -1.04 -2.56 2.15 -16.67 177.28 134.20 23.59 Tr 4pc '60 164.37 1.83 -1.61 -2.66 2.81 -17.94 201.27 147.24 23.21 xd Ex dividend. Closing mid-prices are shown in pounds per £ 100 nominal of stock. Red yield: Gross redemption yield. This table shows the gilts benchmarks & the non-rump undated stocks.

GILTS: UK FTSE ACTUARIES INDICES Price Indices Fixed Coupon 1 Up to 5 Years 2 5 - 10 Years 3 10 - 15 Years 4 5 - 15 Years 5 Over 15 Years 7 All stocks Index Linked 1 Up to 5 Years 2 Over 5 years 3 5-15 years 4 Over 15 years 5 All stocks Yield Indices 5 Yrs 10 Yrs 15 Yrs

Day's chg % 0.06 0.23 0.38 0.28 0.54 0.32

Feb 06 97.47 184.20 213.19 191.04 327.17 179.81 Feb 06 315.67 701.79 478.03 897.16 635.82 Feb 06 0.58 1.38 1.83

Day's chg % 0.05 0.58 0.28 0.68 0.54 Feb 03 0.61 1.42 1.86

Yr ago 0.73 1.46 1.94

Total Return 2423.39 3432.58 4110.70 3597.37 4903.32 3481.12

Month chg % 0.43 0.79 0.47 0.89 0.76

Return 1 month 0.22 0.55 0.43 0.51 0.28 0.33

Year's chg % 1.83 17.77 9.23 20.98 15.90

20 Yrs 45 Yrs

inflation 0% Feb 06 Dur yrs Previous Yr ago Feb 06 Real yield Up to 5 yrs -2.47 2.26 -2.45 -1.09 -3.07 Over 5 yrs -1.62 24.63 -1.59 -0.97 -1.64 5-15 yrs -1.88 8.75 -1.85 -0.92 -2.00 Over 15 yrs -1.59 29.74 -1.57 -0.98 -1.61 All stocks -1.62 22.87 -1.60 -0.97 -1.65 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts

Total Return 2461.21 5216.06 3684.33 6527.97 4793.89 Feb 06 1.99 1.84

Return 1 year 1.05 2.31 3.08 2.53 6.54 3.59

Yield 0.31 0.98 1.52 1.20 1.90 1.67

Return 1 month 0.43 0.84 0.60 0.93 0.81

Return 1 year 3.48 18.45 10.42 21.45 16.69

Feb 03 2.02 1.86

Yr ago 2.16 2.13

inflation 5% Dur yrs Previous 2.26 -3.05 24.71 -1.62 8.76 -1.97 29.78 -1.58 22.97 -1.63

Yr ago -1.81 -1.00 -1.03 -0.99 -1.01

All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any loss arising from the reliance on or use of the listed information. For all queries e-mail ft.reader.enquiries@morningstar.com

Data provided by Morningstar | www.morningstar.co.uk


18

FINANCIAL TIMES

Tuesday 7 February 2017

MANAGED FUNDS SERVICE Fund

Bid

Offer D+/- Yield

Algebris Investments

(IRL)

Regulated Algebris Financial Credit Fund - Class I EUR € 144.04

-

0.31 0.00

Fund

Bid

Offer D+/- Yield

Fund

Bid

Offer D+/- Yield

Fund

Bid

Offer D+/- Yield

-

Algebris Financial Equity Fund - Class B EUR € 111.89

-

Algebris Asset Allocation Fund - Class B EUR € 98.18

-

Algebris Macro Credit B EUR Acc € 105.50

-

1.28 0.00 2.30 0.00 -0.05 0.00 -0.23

-

Genesis Asset Managers LLP

FCA Recognised

Other International Funds

BL-Equities Europe B

€ 6180.07

-

24.85 0.00

BL-Equities America B

$ 5957.88

-

49.49 0.00

BL-Equities Japan B

¥ 16574.00

-

-4.00

BL-Emerging Markets B

€ 163.29

-

-

1.03 0.00

Emerging Mkts NAV

Dodge & Cox Worldwide Funds

(IRL)

Eurobank Fund Management Company (Luxembourg) S.A. (LF) Absolute Return

BL-Global Equities B

€ 778.44

-

4.71 0.00

BL-Global 30 B

€ 1405.83

-

1.80 0.00

BL-Global 50 B

€ 1699.78

-

4.97 0.00

BL-Global 75 B

€ 2324.18

-

9.27 0.00

BL-Global Flexible EUR B

€ 155.21

-

0.76 0.00

(LF) Eq Emerging Europe EUR Accumulating Class

€ 13.00

-

Other International $ 580.47

-

-6.88

-

AEF Ltd Eur (Est)

€ 579.30

-

-6.68 0.00

CCLA Investment Management Ltd

(UK)

Senator House 85 Queen Victoria Street London EC4V 4ET Authorised Inv Funds 1.54

1.54 0.00

-

DIVERSIFIED INCOME 2 UNITS GBP INC £

-

-

-

Arisaig Partners Other International Funds

DIVERSIFIED INCOME 3 UNITS GBP INC £

Arisaig Africa Consumer Fund Limited $ 11.48

-

Arisaig Asia Consumer Fund Limited $ 65.59 Arisaig Global Emerging Markets Consumer Fund $

-

9.34

-

Arisaig Global Emerging Markets Consumer UCITS € 11.14

-

Arisaig Global Emerging Markets Consumer UCITS STG £ 12.23

-

Arisaig Latin America Consumer Fund $ 23.15

-

-

-

-

0.02 0.00 0.04 0.00 0.05 0.00 0.37 0.00

EUR Accumulating Class (H)

9.86

-

0.02 0.00

-

CG Asset Management Limited

(IRL) Northern Trust, George's Court, 54-62 Townsend Street, Dublin 2, Rep of Ireland 00 353 1 434 5098 FCA Recognised Capital Gearing Portfolio Fund Plc £ 30857.99 30857.99 83.82 0.54 CG Portfolio Fund Plc

Dollar Fund Cls D

Artisan Partners Global Funds PLC

(IRL) Beaux Lane House, Mercer Street Lower, Dublin 2, Ireland Tel: 44 (0) 207 766 7130 FCA Recognised

Capital Value Fund Cls V Dollar GBP Hedged Inc

EUR Distributing Class

€ 11.85

-

0.01 3.74

EUR Distributing Class (H)

8.97

-

0.01

GBP Distributing Class

£ 12.45

-

0.08 3.63

GBP Distributing Class (H)

£

9.14

-

0.02

USD Accumulating Class

$ 10.11

-

0.02 0.00

USD Accumulating Share Class

1.34

-

0.00 0.00

0.88

-

0.08 0.00

Artisan Global Opportunities I USD Acc $ 13.80

-

0.10 0.00

0.85

-

0.00

Artisan Global Value Fund Class I USD Acc $ 17.78

-

0.15 0.00

Artisan US Value Equity Fund Class I USD Acc $ 13.67

-

0.12 0.00

Artisan Global Opportunities Class I EUR Acc € 19.23

-

$ 19.06

-

(LF) Eq Mena Fund

€ 13.60

-

0.09 0.00

(LUX)

2 rue Albert Borschette L-1246 Luxembourg FCA Recognised

0.54

-

-0.02 0.00

Holiday Property Bond Ser 2

£

0.64

-

-0.02 0.00

£ 25.12

-

0.39 0.00

GBP Distributing Share class

£ 18.11

-

0.28 0.74

EUR Accumulating Share Class

€ 26.55

-

0.25 0.00

GBP Distributing Class (H)

£ 10.49

-

0.12

Haussmann

0.01 0.00

(LF) Greek Corporate Bond

€ 12.96

-

0.00 0.00

Haussmann Cls A

$ 2638.23

-

(LF) FOF Dynamic Fixed Inc

€ 12.60

-

0.08 0.00

Haussmann Cls C

€ 2269.87

(LF) FOF Real Estate

€ 17.00

-

0.17 0.00

Haussmann Cls D

SFr 1193.09

€ 16.59

-

0.13 0.00

-

0.12 0.00

£ 159.79 159.79 0.08 1.83

USD Accumulating Share Class

$ 22.34

-

0.27

£ 148.77 148.77 0.40 0.44

GBP Accumulating Share Class

£ 27.85

-

£ 98.77 98.77 -0.14

GBP Distributing Share Class

£ 17.56

EUR Accumulating Share Class GBP Distributing Class (H)

-

(IRL)

Cedar Rock Capital Fd Plc

$ 374.89

-

£ £

1.00

-

1.00

-

0.00 0.00 0.00 0.17

Target 2020 A-ACC-GBP Target 2025 A-ACC-GBP Target 2030 A-ACC-GBP

£ £ £

0.64

-

1.54

-

1.70

-

0.01 0.01 0.01

-

Institutional OEIC Funds -

£ 467.80

-

-8.17 1.56

Cedar Rock Capital Fd Plc

€ 361.08

-

-0.62 1.57

(IRL)

Regulated $

1.00

-

0.00 0.01

£

4.65

-

0.00

0.46 0.00

UK Gilt Fund Inc

£

1.35

-

0.01 1.85

-

0.29 0.68

UK Long Corporate Bond - Gross Inc £ 11.86

-

0.08

Hermes Abs Return Credit Fund Class F Acc £

1.26

Hermes Abs Return Credit Fund Class R Acc €

2.07

Hermes Asia Ex-Japan Equity Fund Class F Acc £

2.16

-

Ashmore SICAV Emerging Market Frontier Equity Fund $ 157.43

-

0.16

€ 26.88

-

0.28 0.00

£ 10.29

-

0.12

3.95 1.69 3.35

Asset Management

-

Findlay Park Funds Plc

Dragon Capital Group 1501 Me Linh Point, 2 Ngo Duc Ke, District 1, Ho Chi Minh City, Vietnam Fund information, dealing and administration: funds@dragoncapital.com

30 Herbert Street, Dublin 2, Ireland Tel: 020 7968 4900 FCA Recognised

Hermes European Alpha Equity Fund Class R Acc €

American Fund USD Class

Hermes Global Emerging Markets Fund Class F Acc £

$ 90.22

-

-

(LUX)

-

0.28 6.27

CAM-GTF Limited

$ 294872.41 294872.41 1198.44 0.00

www.dsmsicav.com Regulated

Ashmore SICAV Global Small Cap Equity Fund $ 143.17

-

0.91 0.00

CAM GTi Limited

$ 649.39

-6.70 0.00

DSM Global Growth I2 Acc

€ 147.41

-

0.95 0.00

EM Mkts Corp.Debt USD F

$ 97.02

-

0.01 7.38

Raffles-Asia Investment Company $

1.58 0.01 1.94

DSM Global Growth I1 Acc

€ 110.10

-

0.71 0.00

EM Mkts Loc.Ccy Bd USD F

$ 82.40

-

0.40 3.70

DSM US Large Cap Growth I3

$ 105.89

-

0.62

-

DSM US Large Cap Growth A

€ 102.23

-

0.77

-

DSM US Large Cap Growth I1

€ 100.00

-

-

-

DSM US Large Cap Growth I2

€ 102.24

-

0.77

-

(IRL)

Regulated Cheyne Convertibles Absolute Return Fund € 1391.23

-

3.41 0.00

Aspect Diversified USD

$ 394.50

-

-4.46 0.00

Cheyne Global Credit Fund

€ 124.01

-

0.13 0.00

Aspect Diversified EUR

€ 235.20

-

1.79 0.00

Cheyne European Mid Cap Fund

€ 1055.71

-

-13.05 0.00

Aspect Diversified GBP

£ 121.53

-

-1.39 0.00

Aspect Diversified CHF

SFr 111.33

-

0.84 0.00

Aspect Diversified Trends USD

$ 117.02

-

-0.16 0.00

Aspect Diversified Trends EUR

€ 115.40

-

-0.16 0.00

Edinburgh Partners Limited

European Opportunities I GBP

-

-0.17 0.00

Atlantas Sicav

(LUX)

Regulated American Dynamic

$ 3931.31

-

28.60 0.00

American One

$ 3561.41

-

13.81 0.00

Bond Global

€ 1482.85

-

4.78

-

Eurocroissance

€ 905.10

-

5.85

-

Far East

$ 746.23

-

5.76 0.00

-

2.17

-

Cheyne Real Estate Credit Holdings Fund £ 169.27

-

-0.34 0.00

Cheyne Real Estate Credit Holdings Fund III £ 114.87

-

0.78 0.00

Cheyne Real Estate Debt Fund Class A1 £ 139.20

-

2.76 0.00

Cheyne Total Return Credit Fund - December 2017 Class $ 223.94

-

4.81 0.00

Cheyne Total Return Credit Fund 2020 $ 122.11

-

-6.76 0.00

$ €

1.20 2.60

-

0.01 0.87 0.01 1.43

£

2.24

-

0.02 1.37

European Opportunities A EUR

2.54

-

0.01 0.93

Global Opportunities I USD

$

1.74

-

0.01 1.13

Global Opportunities I GBP

£

1.39

-

0.01 1.13

Pan European Opportunities I EUR €

1.80

-

0.02

Ennismore Smaller Cos Plc

-

(IRL)

5 Kensington Church St, London W8 4LD 020 7368 4220 FCA Recognised

Cohen & Steers SICAV

(LUX)

Ennismore European Smlr Cos NAV £ 118.56

-

0.32 0.00

Regulated

Bank of America Cap Mgmt (Ireland) Ltd

(IRL)

Regulated 1.00

-

0.00 0.61

European Real Estate Securities

€ 21.8586

-

0.0808 2.23

Europ.RealEstate Sec. IX

€ 29.9597

-

0.1107 0.00

Gbl Listed Infrastructure I

$ 10.6298

-

0.0657 1.17

Gbl Listed Infrastructure IX

$ 10.7997

-

0.0667 0.00

Gbl RealEstate Sec. I

$ 10.9797

-

0.0521 2.35

Gbl RealEstate Sec. IX

$ 13.3828

-

0.0635 0.00

Barclays Investment Funds (CI) Ltd

(JER) 39/41 Broad Street, St Helier, Jersey, JE2 3RR Channel Islands 01534 812800 FCA Recognised Bond Funds

Ennismore European Smlr Cos NAV € 137.45

-

-

0.00

-

Davis Value A Davis Global A

BlackRock

(JER)

$ 32.08

-

Other International Funds NAV

€ 506.19

-

5.99 0.00

-

0.19

-

Kames Global Equity Market Neutral Fund - B Acc GBP £

9.90

-

0.02

-

Mir. - Eq Spain A

€ 28.02

-

0.23 0.00

Invesco Euro Corporate Bond Fund (A) € 17.38

-

0.03

-

Kames Global Sustainable Equity Fund - B Acc EUR € 11.08

-

0.07

-

Mir. - Eq Swiss Sm/Mid A

SFr 380.46

-

2.19 0.00

Invesco Euro Inflation Linked Bond A € 15.65

-

-0.04

-

Kames Absolute Return Bond Global Fund - B Acc GBP £ 10.19

-

0.00 0.00

Mir. - Glb High Yield Bds A

$ 118.21

-

0.06

Invesco Euro Reserve A

€ 321.56

-

-0.02 0.00

Strategic Global Bond A GBP Inc

1111.26

-

0.86 0.95

Mir. - Glb Eq High Income A USD $ 101.25

-

0.65 0.00

Invesco Euro Bond A

7.25

-

0.00

-

Strategic Global Bond B GBP Inc

630.52

-

0.51 1.41

Mir. - Glb Strat. Bd A USD

$ 110.24

-

-0.04 0.00

Invesco European Growth Equity A € 24.98

-

-0.03

-

Mir. - US Shrt Term Credit Fd

$ 103.04

-

0.04 0.00

Invesco Global Absolute Return Fund A Class € 11.61

-

0.03 0.00

Invesco Global Bond A Inc

-

0.01

$

5.48

-

Lloyds Investment Fund Managers Limited (1000)F (JER) PO Box 311, 11-12 Esplanade, St Helier, Jersey, JE4 8ZU 01534 845555 Other International Funds £ 12.5500xd

-

-

-

15.86 0.00

Invesco Global Inc Real Estate Sec A dist $

9.29

-

0.04

-

European

£ 9.0930

-

8.21 0.00

Invesco Global Inv Grd Corp Bond A Dist $ 12.20

-

0.02

-

High Income

Invesco Global Leisure A

-

0.11

-

International

$ 41.80

1.58 1.51 3.22 1.61

Invesco Global Smaller Comp Eq Fd A $ 64.70

-

0.42

Invesco Global Structured Equity A $ 46.79

-

Invesco Global Total Ret.(EUR) Bond Fund A € 13.42 Invesco Gold & Precious Metals A $

-

Equinox Fund Mgmt (Guernsey) Limited

(GSY)

Regulated -

-

0.0600 2.09

5.99 0.00

Euronova Asset Management UK LLP

0.04 0.00

Smaller Cos Cls One Shares

€ 37.45

-

-0.02 0.00

(CYM)

Regulated

2.16 0.02

MW Japan Fund PLC A

$ 28.09

-

0.29

-

0.0030 2.99

MW Japan Fund PLC B

$ 28.15

-

0.28

-

-

0.0370 0.66

MW Japan Fund PLC C

$ 100.39

-

0.43 0.00

£ 0.8796xd

-

0.0027 4.59

£ 5.2050

-

0.0410 0.46

Lloyds Investment Funds Limited

Smaller Cos Cls Two Shares

€ 25.88

-

-0.02 0.00

0.02

-

Smaller Cos Cls Three Shares

€ 13.04

-

-0.01 0.00

BLK Intl Gold & General

$

6.83 0.11

-

Smaller Cos Cls Four Shares

€ 16.75

-

-0.01 0.00

Morant Wright Funds (Ireland) PLC

(IRL)

-

0.2100 0.00

Morant Wright Fuji Yield EUR Acc Hedged € 12.28

-

0.03

0.12 1.13

Sterling Bond

£ 1.5240xd

-

0.0060 3.12

Morant Wright Fuji Yield EUR Dist Hedged € 10.93

-

0.03 2.25

-

0.03

-

UK

£ 7.3060

-

0.0360 1.10

Morant Wright Fuji Yield GBP Acc Hedged £ 11.62

-

0.03 0.00

6.22

-

0.04

-

Morant Wright Fuji Yield GBP Dist Hedged £ 10.57

-

0.02 5.88

Lloyds Gilt Fund Quarterly Share £ 1.3120xd

-

0.0060 1.66

Invesco Greater China Equity A

$ 48.95

-

0.19

-

Morant Wright Fuji Yield USD Acc Hedged $ 11.43

-

0.03 0.00

Monthly Share

-

0.0060 1.66

Invesco India Equity A

$ 58.77

-

0.67

-

Morant Wright Fuji Yield USD Dist Hedged $ 11.19

-

0.03 2.19

Invesco Japanese Equity Adv Fd A ¥ 3968.00

-

5.00

-

Sterling Class

Morant Wright Fuji Yield YEN Acc ¥ 1188.79

-

3.27

-

Invesco Japanese Value Eq Fd A ¥ 1298.00

-

4.00

-

Lloyds Multi Strategy Fund Limited

3.95 0.04

Morant Wright Fuji Yield B YEN Acc ¥ 1047.92

-

3.02

-

Invesco Latin American Equity A $

7.06

-

0.08

-

Morant Wright Fuji Yield YEN Dist ¥ 1134.15

-

3.12

-

Invesco Nippon Small/Mid Cap Equity A ¥ 1190.00

-

4.00

-

Morant Wright Sakura Fund Sterling Acc Hedged £ 14.10

-

0.04 0.00

Invesco Pan European Equity A EUR Cap NAV € 19.18

-

0.01

-

Morant Wright Sakura Fund Euro Acc Hedged € 14.16

-

0.05 0.00

-

1.69 0.00

-

3.35 -0.01 0.00 1.58 0.00 1.51 0.00

-

3.22 -0.01 1.61 0.01

Lloyds Gilt Fund Limited

£ 1.2610xd

Lloyds Money Fund Limited £ 52.6110

-

-0.0010 -0.18

Conservative Strategy

£ 1.2200

-

0.0090 1.67

Growth Strategy

£ 1.7280

-

0.0130 1.22

Aggressive Strategy

£ 2.2510

-

0.0180 0.00

Global USD Growth Strategy

$ 1.4690

-

0.0050 0.00

Asset Management

Invesco Pan European High Income Fd A € 14.18

-

0.03

-

Invesco Pan European Small Cap Equity A € 22.78

-

-0.02

-

Invesco Pan European Structured Equity A € 17.32

-

-0.03

-

Invesco UK Eqty Income A

-

0.38

-

1.05

-

0.01

-

M&G Episode Growth A Inc

56.34

-

0.36 2.58

Invesco US Structured Equity A

$ 23.81

-

0.19

-

M&G Global High Yield Bond A Inc

50.89

-

-0.29 5.16

Invesco US Value Eq Fd A

$ 36.07

-

0.46

-

M&G Global High Yield Bond A Acc

126.03

-

-0.70 3.74

Invesco USD Reserve A

$ 87.25

-

0.01

-

M&G Managed Growth A Inc

102.82

-

0.69 1.67

(IRL)

M & G (Guernsey) Ltd

-

Dealing Daily

-

3.45

3.45 0.03

-

American Fund GBP Unhedged

£ 72.12

-

0.75 0.00

Hermes Global Equity Fund Class F Acc £

2.02

2.02 0.01

-

Latin American Fund USD Class

$ 14.47

-

0.12 0.00

Hermes Global Equity Fund Class R Acc €

4.48

4.48 0.02

-

Latin American Fund GBP Unhedged £ 11.79

-

0.13 0.00

Hermes Global ESG Equity Fund Class F Acc £

1.53

1.53 0.02

-

Hermes Global High Yield Credit Fund Class F Acc £

1.39

1.39 0.00 0.00

Hermes Global High Yield Credit Fund Class R Acc €

3.04

3.04 0.00 0.00

Hermes Global Small Cap Fund Class F Acc £

1.35

1.35 0.01

£ 32.47

Invesco Global Asset Management Ltd

5th Floor, Barwa Bank Building, Grand Hamad Street , P.O. Box 16034, Doha, State of Qatar + 974 4459 6111 http://www.tfi.com.qa/ Other International Funds TFI GCC Equity Opportunities Fund (Q)QAR 1275.53

-

9.44 0.00

Foord Asset Management Website: www.foord.com - Email: info@foord.com FCA Recognised - Luxembourg UCITS $ 35.89

-

0.09 0.07

2.24

2.24 0.02

Hermes Multi Asset Inflation Fund Class F GBP Acc £

1.03

Hermes Multi Strategy Credit Fund Class F Acc Hed £

-

Dublin 00 353 1 439 8100 Hong Kong 00 852 2842 7200 FCA Recognised

M & G Securities (1200)F

(UK) PO Box 9039, Chelmsford, CM99 2XG www.mandg.co.uk Enq: 0800 390 390, Dealing: 0800 328 3196 Authorised Inv Funds

Foord Global Equity Fund (Sing) | B $ 13.24

-

0.08 0.00

Foord International Trust (Gsy)

-

0.08 0.00

The M&G Offshore Fund Range

Invesco Stlg Bd A QD F

£

2.67

-

0.00

-

Corporate Bond A

1356.88

-

5.66 3.98

1.03 0.00 0.00

Invesco Asian Equity A

$

7.17

-

0.05

-

Global Basics X

3016.25

-

14.16 0.17

1.12

1.12 0.00 0.00

Invesco ASEAN Equity A

$ 89.34

-

0.60 0.13

Global Dividend A

156.66

-

1.55 2.66

Hermes US All Cap Equity Class F Stg £ Acc £

1.37

1.37 0.01

Invesco Bond A

$ 26.80

-

0.07

-

Global Leaders A

4324.43

-

30.25 1.03

Hermes US All Cap Equity Class R € Acc €

2.27

2.27 0.02 0.00

Invesco Continental Eurp Small Cap Eqty A $ 224.93

-

0.27

-

Global High Yield Bond X

1000.59

-

-5.69 5.26

Hermes US SMID Equity Fund Class F Acc £

2.35

2.35 0.03 0.00

Invesco Emerging Markets Equity A $ 40.79

-

0.45

-

Global Macro Bond A

13562.86

-

53.74 2.52

Hermes US SMID Equity Fund Class R Acc €

4.24

4.24 0.05 0.00

Invesco Emerging Markets Bond A $ 21.50

-

0.06

-

North American Dividend A

225.22

-

1.80 1.77

Invesco Continental European Equity A €

8.78

-

-0.01

-

Optimal Income A

148.35

-

0.43 3.96

£ 15.90

-

0.09 1.13

Recovery A

12023.35

-

55.50 2.17

Invesco Global Small Cap Equity A NAV $ 132.67

-

1.09

-

Strategic Corproate Bond A

137.49

-

0.48 3.97

Invesco Global High Income A NAV $ 12.36

-

0.03

-

UK Inf Lkd Corp Bd A Inc

110.99

-

0.11 2.19

Invesco Gbl R/Est Secs A GBP F F £

9.48

-

0.04

-

UK Select A

1595.35

-

-7.88 1.08

-

INDIA VALUE INVESTMENTS LIMITED (INVIL)

Invesco Gilt A

www.invil.mu

NAV

£

9.59

-

0.09 0.00

JPMorgan House - International Financial Services Centre,Dublin 1, Ireland Other International Funds Franklin Emerging Market Debt Opportunities Fund Plc

(GSY)

Regulated

-

Regulated

$ 35.59

Hermes Global Small Cap Fund Class R Acc €

-

-

Intrinsic Value Investors (IVI) LLP

Franklin Emg Mkts Debt Opp CHFSFr 17.72

-

0.15 7.92

(IRL) 1 Hat & Mitre Court, 88 St John Street, London EC1M 4EL +44 (0)20 7566 1210 FCA Recognised

Invesco Global Health Care A

$ 116.73

-

0.78

-

Franklin Emg Mkts Debt Opp EUR € 12.60

-

0.12 6.05

IVI European Fund EUR

€ 20.32

-

-0.01 0.00

Invesco Global Select Equity A

$ 13.68

-

0.11

-

Franklin Emg Mkts Debt Opp GBP £ 11.07

-

0.13 6.46

IVI European Fund GBP

£ 23.45

-

-0.01 0.66

Invesco Jap Eqty Core A

$ 19.75

-

0.25

-

Franklin Emg Mkts Debt Opp SGD S$ 23.49

-

0.27 4.62

Invesco Japanese Equity A

$ 20.43

-

0.17

-

Franklin Emg Mkts Debt Opp USD $ 17.94

-

0.30 6.06

Invesco Korean Equity A

$ 25.24

-

0.44 0.00

Invesco PRC Equity A

$ 53.82

-

0.48

-

Invesco Pacific Equity A

$ 53.85

-

0.50

-

Invesco Global Technology A

$ 16.89

-

0.06

-

Invesco UK Eqty A

£

-

0.02

-

MMIP Investment Management Limited

Invesco Fund Managers Ltd

(UK)

Perptual Park, Henley-On-Thames, Oxon, RG9 1HH Dealing: 0800 085 8571 Investor Services: 0800 085 8677 www.invescoperpetual.co.uk Authorised Inv Funds

Frontier Capital (Bermuda) Limited Other International

Invesco Perpetual Funds (No Trail)

Commercial Property-GBP Class

£ 71.42

-

-0.53

-

Global Real Estate-GBP C Class

£ 45.26

-

-0.50

-

Global Targeted Income Fund Acc (No Trail)

102.48

-

0.23

-

Global Targeted Income Fund Inc (No Trail)

103.06

-

0.23

-

8.73

UK Equity Fd Cl A Series 01

£ 2578.16 2605.95 106.95 0.00

Diversified Absolute Rtn Fd USD Cl AF2 $ 1524.80

-

12.80 0.00

Diversified Absolute Return Stlg Cell AF2 £ 1529.62

-

7.90 0.00

Global Equity Fund A Lead Series £ 1294.16 1299.31 29.16 0.00

Marwyn Asset Management Limited

(CYM)

£ 423.33

-

-5.93 0.00

Other International Funds -

0.71

-

Global Gold & Resources Fund

Kames Capital VCIC

GYS Investment Management Ltd

(GSY)

Regulated Taurus Emerging Fund Ltd

$ 167.37 170.78 10.63

-

(LUX)

Dublin 00 353 1 439 8100 Hong Kong 00852 3191 8282 FCA Recognised

Absolute Return Bond B GBP Acc

Invesco Management SA Invesco Active Multi-Sector Credit Fund A €

1102.80

-

$ 284.30

-

-30.48

-

Global Energy & Resources Fund $ 37.59

-

-0.66

-

-0.02 1.14

3.07

-

0.01

-

Eq Market Neutral B Acc

995.50

-

2.86

-

$ 13.91

-

0.03

-

Eq Market Neutral Plus B Acc

980.42

-

1.95

-

Invesco Asia Consumer Demand Fund A income $ 13.05

-

0.15

-

High Yield Global Bond A GBP Inc

528.14

-

1.19 3.68

Generali Worldwide PO Box 613, Generali House, Hirzel Street, St Peter Port, Guernesy, GY1 4PA 01481 714108

(IRL)

1 North Wall Quay, Dublin 1, Ireland +35 3162 24493 FCA Recognised

Global Multi-Strategy Managed

$

4.97

5.35 -0.01 0.00

Invesco Asia Infrastructure (A)

$ 12.64

-

0.06

-

High Yield Global Bond B GBP Inc

1103.08

-

2.51 4.24

UK Multi-Strategy Managed

£

5.29

5.69 -0.01 0.00

Invesco Asia Opportunities Equity A $ 108.42

-

0.85

-

Investment Grade Global Bd A GBP Inc

565.29

-

1.69 2.27

EU Multi-Strategy Managed

3.01

3.24 -0.01 0.00

Invesco Balanced Risk Allocation Fund A € 16.12

-

0.06

-

Kames Emerging Market Bond Fund - B Acc USD $ 10.65

-

0.04

-

Global Bond USD

$

3.55

3.83 0.00 0.00

Invesco Emerging Europe Equity Fund A $ 10.30

-

0.07

-

Kames Global Equity Income B GBP Acc

1497.50

-

11.88

-

Invesco Emerging Local Currencies Debt A Inc $

-

0.06

-

Kames Global Equity Income B GBP Inc

1371.25

-

10.89

-

-

4.94

-

Morant Wright Sakura Fund Dollar Acc Hedged $ 14.18

-

0.05 0.00

Morant Wright Sakura Fund Swiss Franc Acc HedgedSFr 13.91

-

0.05 0.00

Morgan Stanley Investment Funds

(LUX) 6b Route de Trèves L-2633 Senningerberg Luxembourg (352) 34 64 61 www.morganstanleyinvestmentfunds.com FCA Recognised US Advantage A F

$ 62.52

-

-0.07

-

Asian Equity A F

$ 43.79

-

0.19

-

Asian Property A F

$ 18.60

-

0.01

-

Diversified Alpha Plus A F

€ 27.50 27.50 -0.10 0.00

Emerg Europ, Mid-East & Africa Eq A F € 73.42

-

0.08 0.00

Emerging Markets Debt A F

-

0.47

-

Emerging Markets Domestic Debt AX F £ 12.85 12.85 0.04

-

Emerging Markets Equity A F

$ 36.55 36.55 0.11

-

Euro Bond A F

€ 16.03 16.03 0.01

-

Euro Corporate Bond AX F

£ 26.47 26.47 0.02

-

Euro Strategic Bond A F

€ 45.00 45.00 -0.01

-

European Currencies High Yield Bd A F € 23.63 23.63 0.02

-

European Equity Alpha A F

€ 42.36

-0.19

-

European Property A F

€ 32.08 32.08 -0.01

-

Eurozone Equity Alpha A F

€ 11.91 11.91 -0.09

-

Global Bond A F

$ 39.37 39.37 -0.03

-

Global Brands A F

$ 105.95

-

-0.46

-

Global Convertible Bond A F

$ 43.21

-

0.02 0.00

Global Property A F

$ 27.55

-

-0.05

-

Indian Equity A F

$ 39.28

-

0.18

-

Latin American Equity A F

$ 48.65

-

-0.05

-

Short Maturity Euro Bond A F

€ 20.36 20.36 0.00

-

US Dollar Liquidity A F

$ 13.05

-

0.00 0.00

US Growth A F

$ 73.66

-

-0.15

US Growth AH F

€ 50.31 50.31 -0.10 0.00

US Growth AX F

£ 59.18 59.18 0.04

US Property A F

$ 71.44

$ 83.72

-

Regulated

Meridian Fund Managers Ltd

£ 102.63

Asset Management

Morant Wright Sakura Fund Yen Acc Unhedged ¥ 1473.54

Multi-Manager Investment Programmes PCC Limited

Marwyn Value Investors

LAPIS TOP 25 DIV.YLD-D

-

(GSY)

Regulated

International Insurances

-

(IRL)

FCA Recognised

£ 20.6700

2.07 0.00 0.00

Hermes Global Emerging Markets Fund Class R Acc €

Invesco Asia Balanced A dist

0.29 0.00

MW Japan Fund Plc

North American

1.26 0.00 0.00

Invesco

£ 41.29 6.48

$ 19.36

funds@gam.com, www.jbfundnet.com Regulated

Ennismore European Smlr Cos Hedge Fd

BlackRock UK Property

Regulated

Invesco Energy A

€ 1.6080xd

0.42 0.00

(LUX)

$ 45.08

0.44 0.00

0.33 0.00

Regulated 0.47

-

GAM

Equinox Russian Opportunities Fund Limited $ 116.66

DAVIS Funds SICAV

€ 122.87

Euro High Income

-

Franklin Templeton International Services Sarl (IRL)

Cheyne Capital Management (UK) LLP Cheyne European Event Driven Fund € 140.14

Mir. - EqPanEuropeSm&Mid

-

Other International Funds

Edinburgh Partners Opportunities Fund PLC

European Opportunities I EUR

£ 121.63

(IRL)

27-31 Melville Street, Edinburgh EH3 7JF Tel: +353 1 434 5143 Dealing - Fax +353 1 434 5230 FCA Recognised

Emerging Opportunities I USD $

Other International Funds

-

0.49

£ 48.74

Foord Global Equity Fund (Lux) | R $ 11.05

Other International Funds

0.02

-

American Fund GBP Hedged

Foord International Fund | R

Cheyne Capital Management (UK) LLP

-

0.01 0.00

Ashmore SICAV Emerging Market Total Return Fund $ 87.83

Aspect Capital Ltd (UK)

0.77 0.00

Other International Funds

DSM Capital Partners Funds

1.58

Kames Global Diversified Growth Fund - B Acc EUR € 10.45

Invesco UK Investment Grade Bond A £

Chartered Asset Management Pte Ltd

-

-

Invesco Global Equity Income Fund A $ 61.07

(IRL)

The First Investor QSCC Other International Funds

Offer D+/- Yield

0.14

21.94 0.00

-

Hermes European Alpha Equity Fund Class F Acc £

-

0.47 1.09

Bid

-

-

-

Hermes Europe Ex-UK Equity Fund Class R Acc €

0.80

Fund

Invesco Emerging Mkt Quant.Eq. A $ 11.12

0.01

(IRL) Hermes Investment Management Limited, 1 Portsoken Street, London E1 8HZ +44 (0) 207 680 2121 FCA Recognised

Hermes Europe Ex-UK Equity Fund Class F Acc £

Vietnam Property Fund (VPF) NAV $

Offer D+/- Yield

-

Hermes Investment Funds Plc

Hermes Asia Ex-Japan Equity Fund Class R Acc €

Europe (ex-UK) Fund ACC-GBP

5.68 1.53

Cedar Rock Capital Fd Plc

Bid

Invesco Global Conservative Fund 90 (EUR) A € 11.52

Other International Funds

OEIC Funds

-

Dodge & Cox Worldwide Funds plc-International Stock Fund $ 15.19

Fund

FCA Recognised

Cash Fund Y-Inc-GBP

USD Accumulating Share Class

Offer D+/- Yield

Lloydstrust Gilt

-

130, Tonbridge Rd, Tonbridge TN11 9DZ Callfree: Private Clients 0800 414161 Broker Dealings: 0800 414 181

Dodge & Cox Worldwide Funds plc-U.S. Stock Fund

Cedar Rock Capital Limited

Schwab USD Liquid Assets Fd

Ashmore SICAV Emerging Market Debt Fund $ 100.99

£

£

€ 20.26

FIL Investment Services (UK) Limited (1200)F (UK)

£ 204.42 204.42 0.90 1.77

Charles Schwab Worldwide Funds Plc

Sterling Bond F

Holiday Property Bond Ser 1

(LF) Greek Government Bond

0.21 0.00

0.11 0.00

Ashmore Sicav

$

-

-

Regulated

Global Liquidity USD

International Insurances

Hermes European Alpha Equity Fund Class F Dis £ -

Aspect Diversified Trends GBP

0.01 0.00

-

GBP Accumulating Share Class

EUR Accumulating Share Class

Artisan Partners Global Funds plc Artisan Global Equity Fund Class I USD Acc $ 14.80

0.06 0.00

Bid

Anglo Intl House, Bank Hill, Douglas, Isle of Man, IM1 4LN 01638 563490

(LF) Eq Flexi Style Greece

Cash Fund Y-Acc-GBP

Real Return Cls A

-

Fund

0.01 0.00

-0.01 0.00 0.27 0.00

7.07

Dodge & Cox Worldwide Funds plc-Global Stock Fund

DIVERSIFIED INCOME 1 UNITS GBP INC £

-

£

Offer D+/- Yield

HPB Assurance Ltd

Regulated

6 Duke Street,St.James,London SW1Y 6BN www.dodgeandcox.worldwide.com 020 3713 7664 FCA Recognised

The Antares European Fund Limited AEF Ltd Usd (Est)

Bid

BLI - Banque de Luxembourg Investments S.A.

Dodge & Cox Worldwide Funds plc - Global Bond Fund Algebris Financial Income Fund - Class I EUR € 129.28

Fund

-

-

-

0.03 0.00

Morgens Waterfall Vintiadis.co Inc Mirabaud Asset Management

(LUX)

www.mirabaud.com, marketing@mirabaud.com Regulated

Other International Funds Phaeton Intl (BVI) Ltd (Est)

Mir. - Conv. Bds Eur A EUR

€ 135.71

-

0.28 0.00

Mir. - Conv. Bds Glb A USD

$ 118.05

-

0.57 0.00

Mir. - Eq Asia ex Jap A

$ 185.37

-

1.43

Mir.- EqEurope ExUK Sm&Mid

£ 134.18

-

0.29 0.00

Mir. - Eq Glb Emrg Mkt A USD

$ 99.03

-

0.75

Mir. - Eq Global Focus A USD

$ 98.20

-

0.68 0.00

$ 365.46

-

-7.29 0.00

-

-

Natixis International Funds (LUX) I SICAV (LUX) FCA Recognised

6.86

ASG Managed Futures Fund I/A (USD) $ 95.81 95.81 0.48

-


19

FINANCIAL TIMES

Tuesday 7 February 2017

MANAGED FUNDS SERVICE Fund

Bid

Offer D+/- Yield

Harris Global Equity Fund R/A (USD) $ 276.27 276.27 2.17 0.00 Loomis Sayles Global Growth Equity Fund I/A (USD) $ 104.93 104.93 0.48

-

Fund Odey European Focus Fund

Bid

Offer D+/- Yield

€ 17.56

Odey Giano European Fund EUR R € 100.30

-

0.04 0.00

-

0.11 0.00

Fund

Bid

Offer D+/- Yield

Pictet-Global Megatrend Selection-I USD F $ 236.82 Pictet-Greater China-I USD F

$ 474.14

-

Fund

Bid

Offer D+/- Yield

RobecoSAM Gl.Small Cap Eq/A

1.17 0.00 3.68

-

Fund

Private Fund Mgrs (Guernsey) Ltd

(GSY)

RobecoSAM Gl.Small Cap Eq/N

Bid £ 104.71 € 184.69

Offer D+/- Yield -

1.26 1.11 2.17 0.00

Fund

Bid

Strategic Europe Value Fd - EUR

Offer D+/- Yield

€ 196.42

Strategic Europe Value Fd - EUR Inst € 172.61

-

-

Natixis International Funds

(UK)

Odey Naver Fund EUR I

€ 111.40

-

0.00

Odey Odyssey USD I

$ 113.46

-

Odey Swan Fund EUR I

€ 54.67

Odey European Absolute Return GBP S £ 88.01

-

Pictet-Health-I USD

$ 252.89

-

1.76 0.00

-1.36 0.00

Pictet-High Dividend Sel I EUR F

€ 166.40

-

1.24 0.00

-

-0.19 0.00

Pictet-India Index I USD

$ 101.50

-

0.16 0.00

Prusik Investment Management LLP

-

-0.25 0.00

Pictet-Indian Equities-I USD F

$ 495.35

-

1.97

-

Enquiries - 0207 493 1331 Regulated

Pictet-Japan Index-I JPY F

¥ 16163.12

-

61.15

-

Pictet-Japanese Equities Opp-I JPY F ¥ 9978.04

-

29.35

-

Authorised Funds H2O MultiReturns Fund N/A (GBP) £

1.34

-

-0.02 0.66

Loomis Sayles U.S. Equity Leaders N/A (GBP) £

1.98

-

0.01

-

Odey Wealth Management (CI) Ltd

(IRL)

www.odey.com/prices FCA Recognised Odey Opportunity EUR I

€ 228.98

-

Pictet-Japanese Equity Selection-I JPY F ¥ 14625.23

-

6.10

-

Pictet-LATAM Lc Ccy Dbt-I USD F $ 131.23

-

0.74 0.00

Monument Growth 31/01/2017

£ 509.26 514.82 -0.41 1.59

(IRL)

Prusik Asian Equity Income B Dist $ 176.58

-

0.63

-

Prusik Asia A

$ 196.84

-

1.79

-

Prusik Asian Smaller Cos A

$ 157.05

-

0.68

-

0.10 0.00

Pictet-Multi Asset Global Opportunities-I EUR € 120.16

-

-0.06 0.00

Omnia Fund Ltd New Capital Fund Management Ltd

(IRL)

Leconfield House, Curzon Street, London, W1J 5JB www.newcapitalfunds.com FCA Recognised New Capital Asia Pacific Bond Fund - USD Ord Inc. $ 92.97 New Capital Asia Pacific Equity Income Fund - USD Ord Inc. $ 95.03 New Capital Dynamic European Equity Fund - EUR Ord Inc. € 175.63 New Capital China Equity Fund - USD Ord Acc. $ 132.14

-

Estimated NAV

-0.07

0.74

-

0.46 0.00

New Capital Swiss Select Equity Fund - CHF Ord Acc.SFr 134.09 New Capital US Growth Fund - USD Ord Acc. $ 220.13 New Capital All Weather UCITS Fund - EUR Inst Acc. € 100.59 New Capital Dynamic UK Equity Fund - GBP Inst Acc. £ 106.49

-

0.48 0.00 0.18 3.31 0.77 0.00 1.24 0.00 0.26

-

0.79

-

Pictet-Russia Index I USD Pictet-Russian Equities-I USD F Pictet-Security-I USD F Other International Funds Cuttyhunk Fund II Limited

$ 1668.57

JENOP Global Healthcare Fund Ltd $ 13.23 OPTIKA Fund Limited - Cl A Optima Fd NAV (Est)

$ 96.46 $ 87.91

Optima Discretionary Macro Fund Limited $ 85.66 The Dorset Energy Fd Ltd NAV (Est) $ 37.48 Platinum Fd Ltd (Est)

-

1.14

-

Platinum Fd Ltd EUR (Est)

New Capital Global Alpha Fund - USD Ord Inc $ 101.55

-

0.21

-

Platinum Japan Fd Ltd Optima Partners Global Fd (Est) Optima Partners Focus Fund A

$ 91.10 € 17.25 $ 59.19 $ 14.80 $ 15.63

-

-2.88 0.00 0.40 0.00 0.34 0.00 0.60 0.00 0.18 0.00 -0.10 0.00 1.31 0.00 0.27 0.00 -0.30 0.00 0.15 0.00 0.01 0.00

Oryx International Growth Fund Ltd Other International Funds 11th Floor, Kinwick Centre, 32, Hollywood Road, Central Hong Kong +852 9084 4373 Other International Funds Northwest $ class

$ 2379.19

-

NAV (Fully Diluted)

£

7.70

-

0.05 0.00

Other International Funds -

Oasis Global Mgmt Co (Ireland) Ltd

$ 72.88 $ 210.56

-

0.92 0.00

1.10 0.00 0.91 0.00

Pictet-Select-Callisto I EUR

€ 103.48

-

-0.29 0.00

Pictet-Small Cap Europe-I EUR F

€ 1184.00

-

2.20 0.00

Pictet-ST.MoneyMkt-I Pictet-ST.MoneyMkt JPY I USD

€ 140.02 ¥ 101286.46

-

0.00

0.94 0.00

Pictet-ST.MoneyMkt-ICHF

SFr 123.08

-

-0.01 0.00

Pictet-ST.MoneyMkt-IUSD

$ 136.75

-

0.01

Pictet-Timber-I USD F Pictet Total Ret-Agora I EUR

$ 160.36 € 119.47

-

-

0.77 0.00 0.00 0.00

Pictet Total Ret-Corto Europe I EUR € 139.85

-

-0.04 0.00

Pictet Total Ret-Divers Alpha I EUR € 107.36

-

0.00 0.00

Pictet Total Ret-Kosmos I EUR

-

0.03 0.00

€ 111.21

Pictet Total Ret-Mandarin I USD $ 123.50

-

0.39 0.00

Pictet-US Equity Selection-I USD $ 201.56

-

2.10 0.00

Pictet-US High Yield-I USD F

-

0.49 0.00

$ 159.47

-

0.01 1.35

$ 28.06

-

0.14 0.33

Oasis Crescent Global Investment Fund (Ireland) plc

Oasis Crescent Variable Balanced Fund £ 10.72 OasisCresGl Income Class A OasisCresGl LowBal D ($) Dist

$ 10.66

-

0.13 0.20 0.05 1.00 0.00 2.57

$ 11.85

-

0.04 0.00

OasisCresGl Med Eq Bal A ($) Dist $ 12.19

-

0.03 0.51

Oasis Crescent Gbl Property Eqty $

-

0.07 1.80

9.25

Odey Asset Management LLP

€ 107.86

-

-0.03 0.00

Pictet-Agriculture-I EUR F

€ 197.02

-

0.89 0.00

Pictet-Asian Equities Ex Japan-I USD F $ 232.55

-

2.12

Pictet-Asian Local Currency Debt-I USD F $ 157.71

-

0.76 0.00

Pictet-Biotech-I USD F

$ 703.69

-

7.11 0.00

SFr 508.69

-

0.28 0.00

-

OEI Mac Inc GBP B OEI MAC Inc USD

£ 190.43 £ 116.37 $ 1005.48

-

-0.01 0.00 -4.11 0.00 0.28 0.00

Odey European Inc EUR

€ 435.05

-

0.80 0.00

Odey European Inc GBP A

£ 172.02

-

0.37 0.00

Odey European Inc GBP B

£ 97.58

-

0.21 0.00

Odey European Inc USD

$ 204.16

-

0.51 0.00

Giano Capital EUR Inc

€ 3896.93

-

Odey Asset Management LLP

-273.26 0.00

(IRL)

FCA Recognised Odey Pan European EUR R

€ 305.17

Odey Absolute Return Focus Fund $ 83.57 Odey Allegra European EUR O

Pictet-CHF Bonds I CHF Pictet-China Index I USD Pictet-Clean Energy-I USD F

$ 111.70 $ 84.99

-

-

-

1.43 0.00

Strategic Europe Value Fd - Euro R Class € 92.46

-

0.05 0.00

RobecoSAM S.HealthyLiv/B

€ 178.44

-

0.71 0.00

Strategic European Smaller Companies Fd - EUR € 1161.48

-

-13.63 0.00

Trojan Global Income O Acc

99.98

-

0.63

-

RobecoSAM S.HealthyLiv/N

€ 167.71

-

0.68 0.00

Strategic Global Bond Fd - RMB

$ 1040.34

-

5.30 0.00

Trojan Global Income O Inc

99.44

-

0.62

-

RobecoSAM S.HealthyLiv/Na

£ 124.84

-

0.55 1.09

Strategic Global Bond Fd - USD

$ 1045.03

-

-0.04 0.00

RobecoSAM S.Water/A

£ 215.56

-

1.21 1.54

Strategic Global Quality Fd - USD $ 104.19

-

0.74

RobecoSAM S.Water/N

€ 184.20

-

0.97 0.00

Strategic Global Quality Fd - USD Inst $ 112.19

-

0.80 0.00

Strategic Quality Emerging Bond Fd - EUR Inst € 1010.05

-

2.65

-

Strategic Quality Emerging Bond Fd - USD $ 1021.43

-

2.81

-

-

2.42 0.00

PCG C

176.76

-

2.38 0.00

Strategic US Momentum and Value Fd - USD Class $ 765.09

-

Strategic US Momentum and Value Fd - USD Inst $ 511.32

-

Rubrics Global UCITS Funds Plc

(IRL)

www.rubricsam.com Regulated Rubrics Emerging Markets Fixed Income UCITS Fund $ 126.52

-

0.48 0.00

Rubrics Global Credit UCITS Fund $ 14.97

-

0.02 0.00

Rubrics Global Fixed Income UCITS Fund $ 159.47

-

0.15 0.00

Putnam Investments (Ireland) Ltd

(IRL)

Q Rubrics India Fixed Income UCITS Fund $ 11.02

-

0.02 0.00

Putnam New Flag Euro High Yield Plc - E € 1022.78

-

2.33 3.45

Rubrics India Fixed Income UCITS Fund $ 94.30

-

0.17 0.00

Rubrics International Bond UCITS Fund $ 17.76

-

-0.02 0.00

RAM Systematic Emerg Markets Core Eq $ 89.73

-

0.67

-

RAM Systematic Emerg Markets Eq $ 160.49

-

1.14

-

RAM Systematic European Eq

€ 403.18

-

0.99

-

RAM Systematic Global Shareholder Yield Eq $ 109.69

-

0.52 0.00

RAM Systematic Long/Short Emerg Markets Eq $ 116.60

-

0.36

-

RAM Systematic Long/Short European Eq € 143.42

-

-0.28

-

RAM Systematic North American Eq $ 266.03

-

2.45

-

RAM Tactical Convertibles Europe € 148.64

-

0.29

-

SIA (SIA Funds AG) (CH) SFr 207.40

-

-4.10

-

LTIF Stability Inc Plus

SFr 174.80

-

-3.50 0.23

(JER)

RAM Tactical Global Bond Total Return € 142.54

-

0.18

-

PO Box 189, St Helier, Jersey, JE4 9RU 01534 709130 FCA Recognised

RAM Tactical II Asia Bond Total Return $ 135.07

-

0.03

-

Standard Life Offshore Strategy Fund Limited

1.49 0.00

Bridge Fund

£ 1.8100

-

0.0082 2.01

Pictet-USD Government Bonds-I F $ 638.67

-

-0.89 0.00

Global Equity Fund

£ 2.2436

-

0.0127 1.30

Pictet-USD Short Mid-Term Bonds-I F $ 131.13

-

0.00 0.00

Global Fixed Interest Fund

£ 1.0077

-

0.0018 4.53

Pictet-USD Sov.ST.Mon.Mkt-I

$ 103.42

-

0.00

Income Fund

£ 0.5442

-

0.0014

Pictet-Water-I EUR F

€ 314.93

-

2.14 0.00

Sterling Fixed Interest Fund

£ 0.8724

-

0.0040 3.82

UK Equity Fund

£ 2.0459

-

0.0032 2.98

-

-

0.54 0.00

Pictet-Em Lcl Ccy Dbt-I USD F Pictet-Emerging Europe-I EUR F

$ 300.58 $ 168.14

-

0.42 0.00 0.94 0.00

€ 364.61

-

4.94 0.00

Pictet-Emerging Markets-I USD F $ 566.09

-

5.61

Pictet-Emerging Markets Index-I USD F $ 243.63

-

0.98 0.00

Pictet-Emerging Corporate Bonds I USD $ 117.79

-

0.21 0.00

Pictet-Emerging Markets High Dividend I USD $ 107.37

-

1.06

-

-

Pictet-Emerging Markets Sust Eq I USD $ 93.90

-

0.54 0.00

Pictet-EUR Bonds-I F

€ 569.02

-

-0.54 0.00

Pictet-EUR Corporate Bonds Ex Fin i EUR € 148.51

-

0.10 0.00

Pictet-EUR Corporate Bonds-I F

€ 206.47

-

0.13 0.00

Pictet-EUR Government Bonds I EUR € 159.17

-

-0.24 0.00

Pictet-EUR High Yield-I F

-

0.45 0.00

2.00 0.00 0.45 0.00

€ 259.82

Pictet-EUR Short Mid-Term Bonds-I F € 137.20 Pictet-EUR Short Term HY I EUR

€ 125.10

-

0.01 0.00 0.13 0.00

Pictet-EUR Sov.Sht.Mon.Mkt EUR I € 102.33

-

-0.01

Pictet-Euroland Index IS EUR

€ 138.68

-

1.08 0.00

Pictet-Europe Index-I EUR F

€ 175.23

-

1.00 0.00

Pictet-European Equity Selection-I EUR F € 651.89

-

4.89 0.00

Pictet-European Sust Eq-I EUR F

-

1.33 0.00

€ 245.67

-

Pictet-Global Bds Fundamental I USD $ 119.36

-

0.01 0.00

Pictet-Global Bonds-I EUR

-

-0.06 0.00

€ 171.05

€ 250.13

-

0.55 0.00

Odey Allegra International EUR O € 165.39

-

0.87 0.00

Pictet-Global Emerging Debt-I USD F $ 390.10

-

2.30 0.00

Odey Allegra Developed Markets USD I $ 121.47

-

0.36 0.00

Pictet-Global Env.Opport-I EUR

-

1.11 0.00

Pictet-Global Emerging Currencies-I USD F $ 102.20

€ 177.47

-

(LUX)

Weena 850, 3014 DA Rotterdam, The Netherlands www.robeco.com/contact FCA Recognised Asia-Pacific Equities (EUR)

€ 151.84

-

0.72

-

-

-

BP US Premium Equities (EUR)

€ 206.36

-

2.63 0.00

Platinum Global Dividend Fund - A $ 47.06

-

-

-

BP US Premium Equities (USD)

$ 234.00

-

3.03 0.00

Platinum Maverick Enhanced Fund Limited $ 86.74

-

-

0.00

Chinese Equities (EUR) Em Stars Equities (EUR)

€ 79.99

-

€ 202.85

-

1.24

-

Emerging Markets Equities (EUR) € 171.07

-

0.76

-

Flex-o-Rente (EUR)

€ 107.55

-

0.03 0.00

Glob.Consumer Trends Equities (EUR) € 160.40

-

0.96 0.00

High Yield Bonds (EUR)

€ 140.39

-

-0.39 0.00

www.stenhamassetmanagement.com

Polar Capital Funds Plc

(IRL)

Asian Financials I USD

$ 317.59 317.59 2.19 0.86

Lux -O- Rente (EUR)

€ 140.21

-

-0.08 0.00

Biotechnology I USD

$ 18.62 18.62 0.16 0.00

New World Financials (EUR)

€ 58.00

-

0.94 0.00

European Income Acc EUR

€ 11.42 11.42 0.08 0.00

European Ex UK Inc EUR Acc

€ 10.29 10.29 0.06 0.00

Financial Opps I USD

$ 12.54

-

0.17 1.59

GEM Growth I USD

$

-

0.06 0.00

9.47

GEM Income I USD

$ 10.55

-

0.05 0.00

Global Alpha I USD

$ 13.70 13.70 0.09 0.00

S W Mitchell Capital LLP

-

1.08 0.00

Stenham Equity UCITS USD

$ 152.17

-

-0.01

-

Stenham Growth USD

$ 200.36

-

0.59

-

Stenham Healthcare USD

$ 173.85

-

0.62 0.00

Stenham Managed Fund USD

$ 110.78

-

1.04 0.00

Stenham Macro UCITS USD

$ 94.92

-

-0.03 0.00

Stenham Multi Strategy USD

$ 110.38

-

1.26

-

Stenham Quadrant USD A

$ 421.17

-

7.74

-

Stenham Trading Inc USD

$ 121.36

-

2.02

-

Stenham Universal USD

$ 419.54

-

5.40

-

Stenham Universal II USD

$ 154.58

-

1.92 0.00

S W Mitchell European Fund Class A EUR € 267.78

-

18.88

(UK) 21 Lombard Street, London, EC3V 9AH Client Services 0800 358 3012, Client Dealing 0800 358 3012 www.ubs.com/retailfunds Authorised Inv Funds

£

5.68

-

0.05 0.00

S W Mitchell Capital LLP

Global Technology I USD

$ 28.57

-

0.19 0.00

£

0.82

-

0.01

-

www.morningstar.co.uk

UBS US Equity C Acc

£

1.12

-

0.01

-

Data as shown is for information purposes only. No offer is made by Morningstar or this publication.

UBS S&P 500 Index C Acc

£

0.74

-

0.01 1.49

UBS Targeted Return C Acc

£ 12.63

-

0.05

-

€ 783.60

-

4.01 0.00

Superfund Red EUR SICAV

€ 783.56

-

1.32 0.00

Superfund Blue EUR

€ 853.65

-

-1.56 0.00

The Hartford International Funds

UBS Sterling Corporate Bond Indexed C Acc £

0.60

-

0.00

-

UBS Multi Asset Income C Inc Net £

0.49

-

0.00

-

UBS UK Equity Income C Inc Net £

0.69

-

0.01

-

UBS Corporate Bond UK Plus C Inc Net £

0.53

-

0.00

-

UBS Global Allocation (UK) C Acc £

0.74

-

0.00

-

UBS Global Enhanced Equity Income C Inc £

0.45

-

0.00 9.87

UBS US Growth C Acc

£

1.06

-

0.00

-

UBS Emerging Markets Equity Income C Inc £

0.48

-

0.00

-

UBS FTSE RAFI Dev 1000 Index J Acc £ 134.99

-

1.04 2.33

UBS MSCI World Min Vol Index J Acc £ 140.00

-

0.88 2.18

(IRL)

Regulated Gbl Govt Bond (Ex Japan) Index (GBP) £ 1894.71

-

0.23

-

UK Corporate Bond

-

7.67

-

Gilt

£ 1696.55

-

9.33 0.00

Global Eq (Ex Japan) Index Fund

¥

-

0.00 0.00

Unicapital Investments

(LUX)

Regulated

SWMC European Fund B EUR

€ 15066.65

-

61.02 0.00

Healthcare Blue Chip Fund I USD Acc $ 10.68 10.68 0.05 0.00

SWMC UK Fund B

£ 12111.33

-

87.80 0.00

Healthcare Opps I USD

0.17 0.00

SWMC Small Cap European Fund B EUR € 13353.19

-

-6.70 0.00

2.04 0.01 0.00

SWMC Emerging European Fund B EUR € 11638.99

-

142.19 0.00

Income Opportunities B2 I GBP Acc £

2.04

-

Japan Alpha I JPY

¥ 213.10 213.10 0.56

-

Japan I JPY

¥ 2095.34

-

North American I USD

$ 19.98 19.98 0.16 0.00

UK Absolute Equity I GBP

£ 14.92 14.92 0.08 0.00

UK Val Opp I GBP Acc

£ 10.12 10.12 -0.01

-

8.60

The sale of interests in the funds listed on these pages may, in certain jurisdictions, be restricted by law and the funds will not necessarily be available to persons in all jurisdictions in which the publication circulates. Persons in any doubt should take appropriate professional advice. Data collated by Morningstar. For other queries contact reader.enquiries@ft.com +44 (0)207 873 4211. The fund prices published in this edition along with additional information are also available on the Financial Times website, www.ft.com/funds. The funds published on these pages are grouped together by fund management company. Prices are in pence unless otherwise indicated. The change, if shown, is the change on the previously quoted figure (not all funds update prices daily). Those designated $ with no prefix refer to US dollars. Yield percentage figures (in Tuesday to Saturday papers) allow for buying expenses. Prices of certain older insurance linked plans might be subject to capital gains tax on sales.

1.58

-

0.00 0.00

Global Eq (ex Japan) Class JP5

¥

1.61

-

-0.02 0.00

Global Eq Ex Japan Index Fund (Hedge) ¥

1.46

-

-0.01

Gbl Govt Bond (Ex Japan) Index

¥

1.26

-

-0.01 0.00

Gbl Govt Bond (ex Japan) Class JP4 ¥

1.24

-

0.00 0.00

www.valuepartners.net, fis@vp.com.hk Regulated

Japan Equity Index Fund

¥

1.09

-

0.00 0.00

Value Partners Asia Dividend Stocks Fund $

9.65

-

0.00 0.00

OEIC: Open-Ended Investment Company. Similar to a unit trust but using a company rather than a trust structure.

Japan Equity Class JP3

¥

1.32

-

0.00 0.00

Value Partners Classic Equity Fund USD Z Unhedged $ 11.67

-

0.05

Different share classes are issued to reflect a different currency, charging structure or type of holder.

Value Partners Classic Equity Fund CHF HedgedSFr 11.90

-

0.05 0.00

Value Partners Classic Equity Fund EUR Hedged € 12.09

-

0.05 0.00

Value Partners Classic Equity Fund GBP Hedged £ 12.48

-

0.06 0.00

Value Partners Classic Equity Fund GBP Unhedged £ 15.30

-

0.17 0.00

Value Partners Classic Equity USD Hedged $ 14.55

-

0.07

Value Partners Greater China Equity Fund $

9.08

-

-0.01 0.00

Value Partners Health Care Fund RMB Class Z UnhedgedCNH 10.99

-

0.12

Value Partners Health Care Fund HKD Class A UnhedgedHK$ 10.07

-

0.09 0.00

Value Partners Health Care Fund USD Class A Unhedged $ 10.09

-

0.09 0.00

Investments IV - Global Private Eq. € 245.16 257.42 -41.46 0.00 -

Value Partners Hong Kong Limited

(IRL)

-

(UK)

Aptus Global Financials B Acc

£

3.58

-

0.04

-

Aptus Global Financials B Inc

£

2.94

-

0.03

-

Toscafund Asset Management LLP

-

-

www.toscafund.com

Tosca A USD

$ 282.31

-

8.53

-

Tosca Mid Cap GBP

£ 279.28

-

14.93

-

Waverton Investment Funds Plc (1600)F

Waverton Asia Pacific A USD Tosca Opportunity B USD

$ 391.68

-

23.28

Pegasus Fund Ltd A-1 GBP

£ 64.92

-

-1.15 0.00

(IRL)

waverton.investments@citi.com FCA Recognised $ 18.97

-

0.09

-

Waverton Global Equity Fund A GBP £ 18.02

-

0.12

-

Waverton Global Strategic Bond Fund A USD $

8.48

-

0.00 4.88

Waverton UK Fund A GBP

£ 13.66

-

-0.03

-

Waverton Equity Fund A GBP

£ 17.30

-

0.13

-

-

0.03 5.11

-

Waverton Sterling Bond Fund A GBP £

9.43

(IRL)

(LUX)

European Multi-Sector

€ 120.55

-

-0.04

-

TreeTop Convertible Sicav International A

€ 286.41

-

0.18

-

Yapi Kredi Asset Management

(TUR)

International B

$ 374.56

-

0.36 0.00

www.yapikrediportfoy.com.tr Tel: + 90 (212) 385 48 48 Other International Funds

International C

£ 122.98

-

0.10 3.28

YKAM Eurobond (Dollar) Bonds and Bills FundTRY 0.098521

-

-1.156685

-

International D

€ 257.53

-

0.17

-

YKAM Koc Holding Affiliate and Equity Fund (Equity Intense Fund)TRY 0.873691

-

-0.381515

-

YKAM DPM Bonds and Bills (Foreign Currency) Private Fund $ 0.998242

-

-0.256964

-

E.I. Sturdza Strategic Management Limited (GSY) Nippon Growth Fund Limited

¥ 95476.00

-

-2935.00

Strat Evarich Japan Fd Ltd JPY

¥ 84926.00

-

-23.00 0.00

TreeTop Global Sicav

Strat Evarich Japan Fd Ltd USD

$ 831.29

-

-0.25 0.00

Global Opp.A

€ 145.34

-

1.20

-

Global Opp.B

$ 145.45

-

1.17

-

Global Opp.C

£ 211.41

-

2.10

-

Sequoia Equity A

€ 143.63

-

0.13 0.00

Sequoia Equity B

$ 150.70

-

0.15

E.I. Sturdza Funds PLC

The fund prices quoted on these pages are supplied by the operator of the relevant fund. Details of funds published on these pages, including prices, are for the purpose of information only and should only be used as a guide. The Financial Times Limited makes no representation as to their accuracy or completeness and they should not be relied upon when making an investment decision.

¥

Regulated

Regulated $ 36.01

Guide to Data

Global Eq (ex Japan) Class HJ4

WA Fixed Income Fund Plc

Regulated

Data Provided by

UBS UK Opportunities C Acc

Other International Funds

(IRL)

0.72 0.00

-1.41 0.00

TreeTop Asset Management S.A.

Global Insurance I GBP

-

OEIC

Regulated $ 11.58 11.58 0.02 0.00

£ 144.82

-

-

Global Convertible I USD

(LUX)

FCA Recognised

UBS Asset Management

(CYM)

Regulated

Zadig Gestion (Memnon Fund)

0.00

Other International Funds Stenham Credit Opportunities A Class USD $ 106.46

-1.72 0.00

-

www.toscafund.com Authorised Funds

Stenham Asset Management Inc

-

0.90

Toscafund Asset Management LLP

0.56 0.00

Yuki Japan Rebounding Growth Fund USD Hedged Class $ 1005.75

Memnon European Fund I GBP

-

$ 120.80

Platinum All Star Fund - A

Regulated Pictet-Digital-I USD F

Robeco Asset Management

-

-37.00 0.00

Trojan Investment Funds

Investments IV - European Private Eq. € 192.31 201.92 -14.15 0.00

Standard Life Wealth

-

£

Superfund Green EUR SICAV

1.51

Yuki Japan Rebounding Growth Fund JPY Class ¥ 25846.00

UBS Global Optimal C Acc

Other International Fds LTIF Stability Growth

-

-2.11 0.00

Superfund Asset Management GmbH

£ 1717.58

-40.00

-

Other International Funds £ 130.20 136.94 1.02 2.98

-

0.01

Schroder Property Managers (Jersey) Ltd Indirect Real Estate SIRE

¥ 15523.00

Yuki Asia Umbrella Fund

-

Regulated

www.ram-ai.com Other International Funds

ACD Capita Financial Mgrs

Offer D+/- Yield

0.67

www.superfund.com, +43 (1) 247 00

Ram Active Investments SA

Bid

UBS Global Emerging Markets Equity C Acc £

Regulated

-

-0.02 0.00

(CYM)

Regulated OEI Mac Inc GBP A

RobecoSAM Sustainable Gl.Eq/N € 173.54

$ 205.80

Pictet-USA Index-I USD F

Other International Funds

Pictet-Absl Rtn Fix Inc-HI EUR

(IRL)

0.99

Oasis Crescent Global Equity Fund $ 28.98

0.06 0.00

-

Oasis Global Investment (Ireland) Plc

Oasis Global Equity

-

1.99 0.00

Platinum Capital Management Ltd

-0.02 0.00

Regulated

Oasis Crescent Global Short Term Income Fund $

179.61

(UK)

40 Dukes Place, London EC3A 7NH Order Desk and Enquiries: 0345 608 0950 Authorised Inv Funds

Strategic Europe Value Fd - EUR Inst Dist € 93.83

0.94 0.00

(LUX)

15, Avenue J.F. Kennedy L-1855 Luxembourg Tel: 0041 58 323 3000 FCA Recognised

Oasis Crescent Management Company Ltd R 10.25

$ 71.23

-

-0.78 0.00

PCG B

Troy Asset Mgt (1200)

1.65 0.00

-

Fund Yuki Japan Value Select

-

-12.74 0.00

Pictet Asset Management (Europe) SA

Oasis Crescent Equity Fund

€ 147.76

-

Regulated

Optima Fund Management

New Capital US Small Cap Growth Fund - USD Inst Acc $ 100.21

Northwest Investment Management (HK) Ltd

Pictet-Premium Brands-I EUR F

Pictet-Quality Global Equities I USD $ 150.44

-

New Capital Global Equity Conviction Fund - USD Ord Acc. $ 97.90

-

18.50 0.00

1.09 1.41

0.20 0.00

New Capital Wealthy Nations Bond Fund - USD Inst Inc. $ 116.54

-

-

-

-

Pictet-Pacific Ex Japan Index-I USD F $ 377.21 $ 921.66

0.09 2.59

New Capital Global Value Credit Fund - USD Ord Acc. $ 177.14

New Capital Strategic Portfolio UCITS Fund - USD Inst Acc. $ 103.62

Other International Funds

(JER)

Offer D+/- Yield

RobecoSAM Sustainable Gl.Eq/B € 199.49

1.07 0.00

Purisima Investment Fds (CI) Ltd

Bid

0.11 0.00

Regulated Loomis Sayles U.S. Growth Equity Fund I/A (USD) $ 105.23 105.23 0.68

Fund

Guide to pricing of Authorised Investment Funds: (compiled with the assistance of the IMA. The Investment Management Association, 65 Kingsway, London WC2B 6TD. Tel: +44 (0)20 7831 0898.)

Selling price: Also called bid price. The price at which units in a unit trust are sold by investors. Buying price: Also called offer price. The price at which units in a unit trust are bought by investors. Includes manager’s initial charge. Single price: Based on a mid-market valuation of the underlying investments. The buying and selling price for shares of an OEIC and units of a single priced unit trust are the same. Treatment of manager’s periodic capital charge: The letter C denotes that the trust deducts all or part of the manager’s/operator’s periodic charge from capital, contact the manager/operator for full details of the effect of this course of action. Exit Charges: The letter E denotes that an exit charge may be made when you sell units, contact the manager/operator for full details. Time: Some funds give information about the timing of price quotes. The time shown alongside the fund manager’s/operator’s name is the valuation point for their unit trusts/OEICs, unless another time is indicated by the symbol alongside the individual unit trust/OEIC name. The symbols are as follows: ✠ 0001 to 1100 hours; ♦ 1101 to 1400 hours; ▲1401 to 1700 hours; # 1701 to midnight. Daily dealing prices are set on the basis of the valuation point, a short period of time may elapse before prices become available. Historic pricing: The letter H denotes that the managers/operators will normally deal on the price set at the most recent valuation. The prices shown are the latest available before publication and may not be the current dealing levels because of an intervening portfolio revaluation or a switch to a forward pricing basis. The managers/operators must deal at a forward price on request, and may move to forward pricing at any time. Forward pricing: The letter F denotes that that managers/operators deal at the price to be set at the next valuation. Investors can be given no definite price in advance of the purchase or sale being carried out. The prices appearing in the newspaper are the most recent provided by the managers/operators. Scheme particulars, prospectus, key features and reports: The most recent particulars and documents may be obtained free of charge from fund managers/operators. * Indicates funds which do not price on Fridays. Charges for this advertising service are based on the number of lines published and the classification of the fund. Please contact data@ft.com or call +44 (0)20 7873 3132 for further information.

-

(IRL)

Regulated

Polar Capital LLP

-

Nippon Growth (UCITS) Fd - B

RobecoSAM Tel. +41 44 653 10 10 http://www.robecosam.com/ Regulated

European Conviction A EUR

€ 146.64

-

-2.89 0.00

European Forager A EUR

€ 172.29

-

2.67 0.00

0.25 0.00

-

-685.00 0.00

Nippon Growth (UCITS) Fd - D Inst ¥ 53487.00

-

-446.00 0.00

Asset Management

RobecoSAM Sm.Energy/A

£ 14.90

-

0.13 1.51

Strategic China Panda Fd - USD

RobecoSAM Sm.Energy/N

€ 13.40

-

0.11 0.00

Strategic China Panda Fd - USD Inst $ 902.50

-

-5.73

RobecoSAM Sm.Materials/A

£ 173.70

-

1.29 1.30

Strategic Euro Bond Fd - Acc

€ 1136.04

-

0.83 0.00

RobecoSAM Sm.Materials/N

€ 177.40

-

1.26 0.00

Strategic Euro Bond Fd - Dist

€ 1013.02

-

0.74 0.00

RobecoSAM Sm.Materials/Na

€ 120.69

-

0.85 1.30

Strategic Euro Bond Fd - EUR Inst € 1016.70

-

0.75 0.00

(CYM)

Regulated

¥ 82064.00

(LUX)

$ 2340.31

-

-14.81

-

Sequoia Equity C

-

Yuki International Limited

(IRL)

Asset Management

Tel +44-20-7269-0207 www.yukifunds.com Regulated

Asset Management £ 197.00

-

0.58

-

Yuki Mizuho Umbrella Fund

-

Yuki Mizuho Japan Dynamic Growth ¥ 7403.00

-

43.00 0.00

Yuki Japan Low Price

-

-1.00

¥ 30978.00

-


20

FINANCIAL TIMES

Tuesday 7 February 2017

MARKETS & INVESTING INSIGHT

Capital markets

Anne Richards

US yields fall as inflation prospects fade

Demographic trends require a rethink of our economic model Capital markets have experienced a shift in sentiment over the course of the past couple of months. Fears over secular stagnation and deflation have dissipated and investors have been willing to embrace risk assets again. Many economists have revised upwards their estimates of global economic growth, starting first with the US, where the fiscal reigns are expected to be loosened in order to meet some of President Donald Trump’s election promises to voters. While there is clear short-term momentum in economies like the US and UK, where unemployment rates are low and consumption is robust, there remain secular themes that investors should be aware of when they formulate long-term investment decisions. One of these themes is a shift in the focus of economic policy, driven by demographics. Unlike economic variables, demographic trends are predictable and greatly affect all of us. The global economy has now passed an important tipping point. For the first time in recorded history, children under the age of five no longer outnumber those aged 65 and above. We have arrived at “peak child”. The UN has estimated that the global population will continue to age and, by 2050, more than 15 per cent of the global population will be aged over 65. Economists often point to the challenges that Japan faces as the population ages; by 2050, most of the G7 will have a similar demographic profile as Japan does today, as will China, Brazil and Russia. Longevity risk — the risk that people live longer than expected — could put huge pressure on our current retirement systems. Research from Bank of America Merrill Lynch suggests that age-related spending accounts for 40 per cent of government spending in developed markets and as high as 55 per cent for the US. In order to meet the challenges presented by an ageing Longevity risk society, we will need to work longer and think about poli- could put huge cies and initiatives that incenpressure on our tivise people to work past the traditional retirement age. If retirement these issues aren’t addressed, systems increasing old-age dependency ratios could have wideranging impacts on government finances, productivity rates and inequality. Ageing populations represent a huge challenge for policymakers, and our economic model needs to adapt to this shifting demographic. In a world where immigration policy reform is increasingly dominating political agendas, policymakers should recognise that gross domestic product largely reflects a demographic profile where more workers enter the workforce, who (if everything goes to plan) will then produce, earn and consume more than the previous quarter. Naturally, as the workforce shrinks due to ageing, the reverse will be true. However, it does not necessarily mean that an economy is underperforming if the trend rate of growth is failing to reflect a smaller workforce. The changing demographic trend that the developed and parts of the emerging world are now experiencing will increasingly act as a headwind to global GDP. China in particular, which has driven global growth post-crisis, will probably slow markedly in coming years from historic growth rates. In the future, it will be important for policymakers to look beyond GDP as a measure of economic success, in favour of alternative measures which look at economic wellbeing. While it is easy to focus on near-term tactical shifts in markets, it is increasingly important to focus on long-term secular trends that are reshaping the economies we live in. Higher rates of GDP are not necessarily the answer to an ageing population. Individuals, companies and governments will have to adapt to these challenges, and we may find that in the future we see a greater focus on intergenerational fairness and living standards than has historically been the case. Of course, the effects of ageing will have far-reaching impacts on financial markets. Ageing societies will usher in an era of saving, which should provide a tailwind for companies that help people plan, invest and save for retirement. Fixed income and dividend-paying equities will probably benefit in this environment given both asset classes provide a regular income for retirees to use. Additionally, the structural demand for longer-dated bonds from insurers and pension funds may limit the extent to which bond yields can rise in the future. Anne Richards is chief executive of M&G Investments

Five-year Treasury futures are targeted as odds of March rate rise lengthen JOE RENNISON AND ERIC PLATT NEW YORK

Benchmark US Treasury yields fell yesterday morning, with a focus on fiveyear debt indicating a shift in investor sentiment and a belief that subdued inflation will prevent the Federal Reserve raising interest rates in coming months. Declines in yields may mark a reversal of the so-called Trump trade, based on the expectation that new policies would prompt higher economic growth and inflation. The five-year yield was 1.87 per cent, below its 1.92 per cent 50-day moving

average — a closely watched gauge of market momentum. Yields on two-year and 10-year notes tested short-term moving averages. Asset managers have increased their record buying of Treasury futures, targeting the five-year sector, according to data from the Commodity Futures Trading Commission. The scale of the positioning suggests that they think the rise in yields since the November election has peaked. Implied volatility in the market, as measured by the Merrill Lynch optional volatility index, fell to 67.4 — its lowest since the end of October. Following Friday’s jobs data for January, the bond market has halved the probability of a March rate rise to about 12 per cent. Analysts at BMO Capital Markets said annualised wage growth of 2.5 per cent in January was “not dismal

by any means, but it’s also not consistent with any rush for the Fed to tighten policy in an attempt to offset inflation’’. The jobs report showed less evidence of upward pressure on wages than many economists had expected. A consensus appears to be building that the central bank will not tighten policy in March but will wait until the summer, when stimulus proposals from the Trump administration will be more fleshed out. Bond investors and the Fed are waiting for the White House to announce stimulus policies, including infrastructure spending and individual tax reforms. The degree of stimulus ultimately passed by Congress will determine the pace of economic growth and inflation, driving policy and bond yields for 2017, say traders. The five-year Treasury yield is also closely watched because futures offer an

1.87% Yield on the 5-year note, below its 50-day moving average of 1.92%

67.4 Merrill Lynch optional volatility index reading — its lowest since the end of October

easily traded alternative to holding cash, providing some income but without the greater exposure to losses from rates rising of longer-dated contracts. Analysts at Goldman Sachs began the week noting how the vaunted switch among retail investors from government bonds to stocks on expectations of rising US inflation seemed to have run its course and “almost fully reversed”. Although the president’s proposed spending splurge should “help promote a supply-side revival in productivity and thus long-run growth, these outcomes are speculative at best and would take years to realise”, wrote the bank’s Charles Himmelberg. He added that “other policy proposals, like greater immigration restrictions, could in fact reduce potential supply”, pulling down on growth and inflation.

Analysis. Currencies

Dialogue lures pound out of political opposition UK government changes its communications strategy after series of Brexit mis-steps KATE ALLEN AND ROGER BLITZ

David Bloom, a strategist at HSBC, described sterling as the “de facto official opposition” to the UK government, reflecting its transition to a political currency as traders sold off the pound on worries about the forthcoming departure from the EU. That was in October. Four months on, with the pound relatively stable, such a description looks out of date. After a series of mis-steps that left investors frustrated at what they viewed as government Brexit drift, there is evidence that Theresa May, prime minister, and her advisers have learnt some lessons. With the aid of better signalling, they have defused market anxiety. The question for both political and market analysts is whether Mrs May has navigated the worst of Brexit bearishness or Downing Street has simply raised its communications game. Investor frustration, a factor behind the pound’s slide to below $1.20 three weeks ago, seems to have eased. The pound is back to early-October levels, at about $1.25. Take last week’s two-day Commons debate on Article 50, the process that triggers the two-year divorce negotiations from the EU — once billed as a market-moving event. Not only did Mrs May steer a comfortable route through the debate, and the launch of a Brexit white paper, but sterling stayed relatively subdued. The pound was more prone to fluctuations around the dollar, UK data and the Bank of England’s rate intentions than any Article 50 machinations. Brexit has plenty of scope for keeping markets on edge. Referring to the white paper, JPMorgan says: “The shallowness of the analysis and absence of detail are matters of great concern.” The difference is that the dialogue between No 10 and the City “has significantly improved since late last year”, according to one business figure in regular contact with Tory advisers. Back in October that dialogue was stilted at best. Mr Bloom’s quip came at the end of the week of sterling’s flash crash and the prime minister’s address to the Conservative party conference in Birmingham — dubbed her “citizens of nowhere” speech. “The Birmingham speech gained the room — it was for those people,” says a person who has close knowledge of Downing Street’s thinking. “But it had not been gamed for the markets, and we

Learning curve Pound and politics Sterling against the dollar ($ per £) 1.28

Bank of England meeting prompts sterling fall

Prime Minister Theresa May’s ‘citizens of nowhere’ speech leads to start of sterling sell-off

1.26 May’s Sky TV interview leaves markets unimpressed, pound falls again 1.24 Government ministers Philip Hammond and David Davis meet bank chiefs at the Shard in a ‘reassurance exercise’ 1.22 May’s Lancaster House Brexit speech contributes to pound’s 3 per cent bounce

Sterling retreats after Downing Street briefings on upcoming PM speech on Brexit

1.20 Oct

Nov 2016

Source: Thomson Reuters Datastream

‘Downing Street machine was pretty scarred’ by the sterling flash crash

Dec

Jan

Feb 2017

saw the immediate currency impact.” Sterling dropped 1 per cent the next day, kicking off a bearish market mood that by the end of October had pushed sterling 4.5 per cent lower. The dip exemplified a gulf in understanding between investors and politicians, as Brexit fogged up the lines of communication between Westminster and the City. In the corridors of Westminster the chatter was about how the markets did not “get” the politics of leaving the EU. City traders concluded that the government “didn’t have a clue” about what the Brexit outcome would be. Saker Nusseibeh, chief executive of Hermes Investment Management, says: “The worry was about how far No 10, in its rhetoric for negotiations, would go and what effect that would have, in particular on currency markets.” The prime minister appears anxious to avoid a repeat of the negative headlines the Birmingham speech generated. “There is absolutely no doubt the Downing Street machine was pretty scarred by that experience,” says a City figure with knowledge of No 10’s thinking. “It has been on a rapid learning curve.” Recalibrations began ahead of Mrs May’s Lancaster House speech last

month, which set out her Brexit negotiating strategy. Unlike the Birmingham speech, its contents were signalled in advance. A national newspaper was briefed that her words were likely to cause a “market correction” that would send the pound lower. From the announcement of her speech to its delivery, the sterling declined 2 per cent. “Everyone thought the speech was going to be super-hard Brexit,” says Andrew Soper, head of FX options trading at Nomura. “They scared everyone into going short sterling.” Whether by accident or design, the “correction” briefing set the pound up for a rally after a speech in which Mrs May “didn’t really say anything new at all”, says Mr Soper. The speech was well received, and contributed to a 3 per cent boost to the pound. It was “very effectively briefed, giving markets a chance to adjust to her message”, says Iain Anderson, chairman of Cicero, a government relations adviser. “She presented a series of signals in a very structured way.” For Mrs May the speech marks a shift in political culture. As home secretary she kept a low profile and courted headlines infrequently. She and her Downing Street aides have adopted a bolder com-

munications strategy in the face of intense demand for information. Markets and companies “want to hear about and interpret every nuance” of the Brexit process, says Mr Anderson. “Surprises make the markets nervous.” There has been a stabilisation in the pound, says Mr Nusseibeh, because the market was reassured by her desire to seek a transitional deal with the EU. It perceives that “the government does have a plan” and is “making efforts to listen and talk to industry”. Some strategists question her influence on sterling. “The stabilisation of the pound has much more to do with recent dollar weakness than Theresa’s May words,” says Luca Paolini at Pictet Asset Management. The economy has been more resilient than expected while sterling is cheap and short of buyers, he adds. “But the Brexit discount will not go away soon. The UK economy is set to decelerate and let’s not forget that the UK has a twin deficit [fiscal and balance of payments] of around 10 per cent, one of the highest in the world.” Investors will have plenty of opportunities to fuss and fret about Brexit. It will be up to Mrs May and her advisers to decide how and when to soothe their furrowed brow.

Currencies

Dollar index creeps above 100 as Trumpflation enthusiasm runs out of steam ROGER BLITZ

The dollar found renewed support among currency traders yesterday despite lingering doubts about its ability to mount a sustained push higher in a climate of US economic and political uncertainty. Gains over the euro and sterling helped push the index that measures the dollar against its main peers back above the psychological 100 benchmark. While the dollar was weaker against the yen, broad gains helped push the index 0.3 per cent higher to 100.16. Investors’ biggest uncertainty is whether the US president can make

good on promised tax cuts and fiscal stimulus, which have provided momentum for the dollar rally. Meanwhile Donald Trump’s protectionist rhetoric threatens to undermine global growth prospects. “The dollar rally that started last autumn looks to be running out of steam,” said Luca Paolini, chief strategist at Pictet Asset Management. “Having priced in all the possible good Trump-related news, investors seem to have started considering what might happen if the new US president’s plans fall short or hit the buffers.” Further dollar depreciation may result, said Mr Paolini, while Pictet

increased its European currency weightings against the greenback. The index has frequently recorded daily trading either side of 100 since Mr Trump was inaugurated on January 20. Between election and inauguration, the index was only occasionally below 100, climbing to a 14-year high of 103.8 on January 3, before the month ultimately provided the dollar with its worst start to the year since 1987. Positioning data from the Commodity Futures Trading Commission showed net dollar longs pared back for the fourth week in a row to levels not seen since October. “This indicates that the reflation

Yen on the rise Against the dollar (¥ per $) 112

114

116

118 Jan

2017

Source: Thomson Reuters Datastream

Feb

enthusiasm which followed the US election has been reversed,” said Jane Foley, Rabobank foreign-exchange strategist. “That said, dollar longs are still well above the levels held last summer, suggesting that there is still a lot of good news priced in.” Currency markets “continue to be myopically US-centric” and more focused on repricing expectations about the so-called “Trump trade” than on macro events, said Paul Meggyesi, FX strategist at JPMorgan. The dollar was “vulnerable” to US policy moves, he added. “Trump’s growing direct engagement with international currency politics . . . threatens to upset

the status quo and drive a further leg down in the dollar.” Trading was particularly volatile last week. Anticipation of the Federal Reserve’s meeting and January’s payrolls data drove the dollar higher, only for it to retreat as the outcomes of these two closely watched events disappointed. Ulrich Leuchtmann at Commerzbank said that while the January number for newly created jobs had exceeded market expectations, unemployment had risen slightly and hourly wages hardly had hardly grown. That made Fed tightening unlikely and was “thus negative for the US currency”, he added.


Tuesday 7 February 2017

21

FINANCIAL TIMES

MARKETS & INVESTING Global overview

TRADING POST

Michael Hunter A recovery in earnings growth will be a vital ingredient in any rebound this year in European equities. The region’s stocks are accustomed to being hotly tipped, only to have expectations cool in line with frigid profit growth. If 2017 is to warm them up, it is earnings growth that could make much of the difference. Morgan Stanley has tracked updates on the fourth quarter of 2106 from 75 companies. It sounds an upbeat tone. It describes the “strongest results season in over six years” with “43 per cent of companies beating earnings estimates by 5 per cent or more, while just 29 per cent have missed, giving a net beat of 13 per cent of companies”. That performance has led the bank’s Matthew Garman to predict that “2017 will see the first year of positive earnings growth after five consecutive years of earnings declines”. Mr Garman anticipates European earnings will grow 12 per cent in the year, “driven by a rebound in commodity earnings, a trough in financial earnings, improving global growth and rising margins”. There is also a sign of deeper improvement. Companies beating forecasts in the fourth quarter are doing so without consensus estimates being cut in the run-up to results. The outperformance is rooted in a stronger underlying performance, in which “results beat estimates despite little change to consensus ahead of results”. January and February have proved to be a false spring for the asset class before. Could 2017 be the year when the green shoots will survive? michael.hunter@ft.com

Euro Stoxx 600 index

Jan

2016

360 340 320 300 Feb 2017

Source: Thomson Reuters Datastream

Uncertainty on both sides of Atlantic prompts flight to safety Trump’s legal wrangling helps Treasury prices while developments in Europe broaden yield spreads and euro falls DAVE SHELLOCK

US and European stocks struggled for traction while the dollar gained ground against the euro as political and economic uncertainty on both sides of the Atlantic left financial markets trading with a mildly risk-averse tone. Friday’s rally for financial stocks — largely fuelled by the prospect of lighter regulation of the US banking industry — ran out of steam, while the energy sector fell sharply as oil prices retreated. By midday in New York the S&P 500 equity index was down 0.2 per cent at 2,292, just six points short of its recent record closing high. The financial sector was down 0.1 per cent while energy was 0.5 per cent lower. The pan-European Stoxx 600 index, meanwhile, fell 0.7 per cent and the Xetra Dax in Frankfurt shed 1.2 per cent. In London the FTSE 100 outperformed with a dip of just 0.2 per cent as mining stocks gained ground and sterling fell against the dollar. Amid a lull in significant economic data releases after Friday’s mixed US non-farm payrolls report, the focus shifted back to the potential impact of the new US president’s policies and uncertainty around forthcoming elections in Europe, most notably in France. Uncertainty about the legal wrangling over Donald Trump’s restrictions on travel to the US offered a helping hand to Treasury prices, with the yield on the 10-year note down 6 basis points to 2.43 per cent — 2bp below its 50-day moving average. The yield had finished slightly higher on Friday as an initial drop sparked by

Gold mining shares advanced for the seventh consecutive day yesterday, the longest winning streak since August 2014, as investor anxiety supported prices of the yellow metal. The NYSE Arca gold miners index, which includes nearly 50 names such as Barrick Gold and Newmont Mining, was up 0.8 per cent on the day and has climbed 7.8 per cent over the past seven. The gains come as gold prices have climbed 3.2 per cent to $1,226.76 a troy ounce over that seven-day period. That performance reflected a degree of investor nervousness that pushed the S&P 500 index down 0.2 per cent to 2,294 by midday. The Dow Jones

London Mediclinic rallies as prospects of Swiss patient levy fade Bryce Elder Mediclinic was a gainer yesterday as analysts played down the risk of a tax rise in Switzerland, its biggest market. JPMorgan Cazenove turned positive on the hospital operator, on hopes that the Zurich canton will throw out a proposed private patient levy. The regional parliament is expected to decide early next month whether to call a second referendum on the

Xixinxing/Dreamstime.com

Outlook for Asian equities: FT.com/video The FT’s Jennifer Hughes warns that optimism about a stock market that has long trailed the world risks being derailed news of weak US wage growth was offset by relatively hawkish remarks by John Williams, president of the San Francisco Federal Reserve. Analysts continued to fret about the broader implications of Mr Trump’s protectionist policies and his team’s comments on the undervaluation of certain currencies. “The new US administration brings with it a lot of uncertainty for the future of transatlantic trade and strategic cooperation,” said the economics research team at Citigroup. “While it may also open up new opportunities, the risks of upheaval in Europe are high, both economically and politically. The mere uncertainty about

Industrial Average and Nasdaq Composite both traded flat at 20,064 and 5,665, respectively. Political and legal wrangling generated by President Donald Trump’s travel ban have bolstered haven assets; so have geopolitical concerns including a possible trade spat following the new administration’s accusations that key countries such as Japan and Germany have benefited from weak currencies. “The acceleration of protectionism and ‘currency war’ chatter directed toward key trading partners should be seen as a catalyst driving the yellow metal to higher ranges,” said Rob Sica at TD Securities.

Gold miners clocked their biggest annual gain since 2002 and their first annual gain in six years in 2016 — rising more than 50 per cent — driven by a jump in gold prices that came as companies’ focus on cost-cutting helped lift their margins. They have advanced more than 17 per cent so far this year. On the other end of the spectrum, the shares of US energy groups came under pressure with the S&P 500 energy sector falling 0.8 per cent as the price of crude oil dipped. The selling pressure came amid concerns that the uptick in oil prices over the past few months would prompt US drillers to turn rigs back online at a quicker pace, offsetting a production cut that was agreed to by Opec, Russia and other leading exporters. The S&P 500 energy sector slipped by 0.8 per cent, leading the decline on the benchmark index. Transocean, an operator of offshore oil rigs, was among the worst performers, off 2.3 per cent to $13.65. Meanwhile, exploration and production companies that are seen as sensitive to fluctuations in the oil price also took a hit. Marathon Oil declined 2.7 per cent to $16.77 while Apache was down 2.4 per cent to $58.20. Tiffany shares fell out of fashion, sliding 3.1 per cent to $78 after the chief executive abruptly left while toymaker Hasbro enjoyed a 14.5 per cent rally to $94.61 early yesterday after quarterly results easily beat Wall Street estimates.

proposal, a 2012 ballot having rejected it 52 per cent to 48 per cent. If a healthcare levy were rolled out across Switzerland, it would cost Mediclinic between SFr70m and SFr100m, or up to 14 per cent of 2019 earnings, said JPMorgan. However, it forecast a better than even chance that bargaining between the Liberal party and the Swiss People party would lead to the referendum proposal being scrapped. “We believe risk/reward has swung back towards shareholders,” said JPMorgan, which put a 900p target on Mediclinic. The shares closed 2 per cent higher at 804p while Spire Healthcare, in which Mediclinic has a 29 per cent stake, rose 2.4 per cent to 325.9p. A mixed wider market led the FTSE 100 lower by 0.2 per cent, or 16.15 points, to 7,172.15. Housebuilders drifted a day before the housing policy white paper, which is expected to include support measures for smaller builders and set time limits on planning permission. Persimmon fell 1.7 per cent to £19.38 while Taylor Wimpey was down 1.6 per cent to 169.8p. But retirement home builder McCarthy & Stone climbed 2.8 per cent

to 172.5p after Gavin Barwell, housing minister, suggested the white paper would introduce incentives for older people to downsize. A revival of bid speculation helped Imagination Technologies jump 6.2 per cent to 270p, a three-year high. The graphics chip designer has long been speculated as a likely target for its customer Apple, which last year admitted to discussing a potential deal, and for Chinese peers such as 3 per cent shareholder Tsinghua Unigroup. The consumer goods company Reckitt Benckiser faded 1.5 per cent to £70.25 awaiting news on its proposed bid for a baby milk producer, expected as early as this week. Buying Mead Johnson was “a sign that Reckitt is running out of steam and management is buying growth”, said RBC, which pointed out that Reckitt had no experience of the formula business. “We think the risk associated with the Reckitt investment case has increased materially, while the prospect of a slowing core business and steeply declining return on invested capital is not one we regard with equanimity,” added the broker, downgrading the stock to “underperform”.

Index

Mamta Badkar, Adam Samson and Joe Rennison

S&P 500 index Change on day

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NYSE Arca Gold Miners

Wall Street Investor worries help gold miners rise for seventh day in row

Markets update

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2016

Source: Thomson Reuters Datastream

1000 800 600 400 Feb 2017 Day's

Indices S & P 500

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change

2293.22

-4.20

DJ Industrials

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-10.96

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Russell 2000

1204.70

-8.35

VIX

11.27

0.30

US 10 yr Treas Bd

2.43

-0.04

US 2 yr Treas Bd

1.17

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these developments may soon affect business sentiment in the eurozone and weigh on investment and growth.” The spread between benchmark French and German government bond yields widened to 77bp, the most for more than four years, after François Fillon, the former presidential frontrunner, defied mounting pressure to pull out of the race. Revelations about his use of public funds to pay family members have prompted the markets to price in an increasing possibility of an election victory for Marine Le Pen of the far-right National Front party. The yield on French 10-year paper rose 6bp to 1.14 per cent, according to

Trading Directory

Reuters data, while that on the equivalent-duration German Bund fell 4bp to 0.37 per cent. Meanwhile, the euro was 0.5 per cent lower against the dollar at $1.0732 — not helped by Mario Draghi’s latest comments on monetary policy. “The European Central Bank president stressed that while the eurozone recovery is firming and headline inflation has picked up, underlying inflationary pressures are still expected to pick up only gradually,” said Howard Archer, chief European economist at IHS Markit. “And this expectation is based on the assumption that very expansionary ECB monetary policy remains in place. “Mr Draghi said the ECB needed to be convinced that the eurozone could achieve a self-sustainable inflation target of ‘close to but just below 2 per cent’ over the medium term before considering reducing its monetary stimulus.” The dollar was down 0.4 per cent against the yen at ¥112.24 — after briefly dipping below ¥112 for the first time since November — as the Japanese currency’s haven status came to the fore. Sterling was down 0.3 per cent versus the dollar at $1.2444 but up 0.1 per cent against the euro at €1.1591. Gold benefited from the day’s “flight to safety” trend, as it rose $10 to $1,229 an ounce, the highest intraday level since mid-November. Copper prices rose 1.3 per cent in London to $5,847 after Friday’s 1.9 per cent decline. But oil lost ground, with the international benchmark shedding 1.4 per cent to $56.04 a barrel. “Oil prices have rallied back to the top end of the $54-$57 per barrel range on Brent that has held since early December,” said David Martin, commodities analyst at JPMorgan. “Markets remain focused on political developments in Washington and the return of geopolitical risks regarding Iran to the agenda, but also on signs that [oil] markets are starting to tighten.”

0.20%

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2300 2290 2280 2270 2260

US equities A lack of fresh catalysts left Wall Street drifting lower amid ongoing uncertainty about the impact of President Trump’s policies and the outlook for Federal Reserve policy

FTSE 100 index Change on day

0.22%

7400 7300 7200

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7100

UK equities The FTSE 100 retreated from a two-week high hit earlier in the session, as weakness for housebuilders and energy stocks outweighed gains for precious metal miners

Eurofirst 300 index Change on day

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1450 1440 1430

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1420

European equities Carmakers lost ground amid concerns that a recent rally for the sector was starting to look stretched, while banking stocks gave back some of Friday’s big gains

Nikkei 225 index (’000) Change on day

0.31%

19.5 19.0 18.5

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2017

Feb

Asian equities Financial stocks led the Nikkei higher as participants focused on the prospect of reduced regulation in the US banking industry


22

Tuesday 7 February 2017

Analysis. Capital markets

SMART MONEY

French bonds pinched by election and the ECB

Miles Johnson

Why any cookie-cut approach to value investing is mistaken

S

ince the US election prompted financial markets to reconsider the outlook for growth and inflation we have heard numerous commentators boldly declare the return of value investing as a winning strategy. Shares possessing “value characteristics” have duly outperformed those defined as growth stocks. While the “return of value” as a thesis is an attractive story to peddle, especially when trying to lure money back into higher cost actively managed funds, it is in fact built on a number of spurious premises. Howard Marks, the distressed debt investor, has spoken of the tendency of modern financial theory to assign importance to things that are easily quantifiable, or what he calls “machinable” inputs, at the expense of caring about things that are harder to know. Value investment, as pioneered by the Columbia Business School professors Ben Graham and David Dodd, is by its very nature impossible to grind down into a small number of neat ratios. It requires many hours of painstaking and often tedious fundamental analysis. Anyone who believes that the long-proven benefits of bottom-up research can be replaced by a cookie-cutter approach is likely to be making a significant blunder. The first mistake made by those who choose to define value investment in this way is to misunderstand what value investors are really trying to achieve. Defining a value investment as possessing certain predefined characteristics, such as low price to earnings or price to book Whether a share ratios, is an easy way to find precisely that: companies that trades on a low trade on low valuation multior a high multiple ples. This is the simple method used by the majority is meaningless of “value” smart beta in and of itself exchange traded funds, which have attracted hundreds of millions of dollars in assets since the financial crisis. But the value investor is not simply trying to find stocks that trade on low p/e multiples. The true value investor is trying to dig out securities that are, for one reason or another, mispriced and misunderstood by the wider market. Whether a share trades on a low or high earnings multiple is meaningless in and of itself. More important is how accurately its price reflects its intrinsic value. The second mistake of this crude value approach is how the small number of inputs used by smart beta funds to identify value characteristics treats all companies as if they were the same. Declaring that a stock that trades on a low p/e or price to book multiple is “cheap” can only be understood in conjunction with fundamental analysis of its accounts and assets. Businesses are complex and dynamic. Using these multiples on their own to assess the merits of an investment can be deeply misleading. A smart beta value screen may, for example, show a miner and a retailer trade on a earnings multiple of six, and infer that this means their shares represent equivalent value. A mining company’s earnings tend to be cyclical, so a low p/e often coincides with the top of the commodities cycle. A retailing company’s earnings may be temporarily depressed by a significant amount of capital expenditure although this investment will cause a large jump in profits in the future. Large amounts of depreciation may be obscuring the true earnings power of a highly cash generative business. Such nuances are not discernible from looking at a p/e multiple. Similarly, the nature of company assets and how they are accounted for change over time. The market value of the S&P 500 made up of intangible assets stood at just 17 per cent in 1975, but reached 87 per cent by 2015, according to Ocean Tomo. Under current rules US companies do not specifically record these types of assets on their balance sheets. Such assets often dominate the earnings and investment of large companies and this should be taken into account when people make historical comparisons about price to book multiples. Investors like seeking simple ways of looking at the world, when it is a messy and complicated place. Declaring the return of value because stocks displaying a few crude valuation characteristics have bounced does a great disservice to a great investment tradition. The truth is that value investing never went away in the first place. miles.johnson@ft.com

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Domestic policy uncertainty threatens to open yield gap further as tapering nears

France 10-year bond Spread over Bund (basis points)

DAN MCCRUM

As France and Germany diverge in the bond market, with the greatest difference in yields for more than three years, investors are forced to consider three interlocking questions. What are the potential implications of a French presidential election that remains too close to call? How much of the change in sovereign yields reflects politics, or is the real story an end to asset purchases by the European Central Bank? And if country risks are shifting, what other reordering across the eurozone bond market beckons? Politics has come to the fore as support for François Fillon, formerly the frontrunner in this year’s two-stage presidential election, has collapsed following a scandal related to payments to family members. A mainstream candidate of the right, Mr Fillon had been favourite to win the May run-off vote, after April’s initial round. His drop in support may have given Marine Le Pen, the far-right Eurosceptic candidate, a better chance. Bond prices fall as market interest rates rise, and yields on French debt have crept up relative to those of Germany, in a sign of shifting investor preference or even caution. However, while many investors focus on the risks of a populist who has promised to take France out of the euro, there is no candidate for the status quo among the three polling above 20 per cent, Ms Le Pen, Benoît Hamon and Emmanuel Macron, according to Gilles Moec, European economist for Bank of America Merrill Lynch. “The presidential elections present an unusually stark choice, between proregulation and in some cases anti-European populism, and an untypical commitment to supply-side reforms from

2013

Data from regulators and exchanges showed speculators have built long positions equivalent to almost 1bn barrels of crude across the major contracts, while short positions amount to just 111m barrels. This one-sided bet has left speculative investors holding a record net long position — the difference between bets on rising and falling prices — in global benchmark Brent crude and US marker West Texas Intermediate futures and options contracts equivalent to 885m barrels by January 31. That massive paper position is equal to just over nine days of global oil demand, and has prompted some traders to express concern prices could fall if funds move to take profits by selling positions en masse. But the record oil bet, which investors have increased while prices have held relatively steady since the start of the year, could also point to the involvement of large macro funds. These sometimes trade oil as a hedge against moves in other markets. Markets are also focused on the impact of policies under US president Donald Trump as Opec producers and allies such as Russia have cut oil output as part of a deal to curb supplies and raise prices. His plans for lower taxes,

16 17

Per cent Ireland

1M

9Y

20Y 30Y

2.5 2.0 France 1.5 1.0 0.5 0 -0.5 -1.0 50Y

Source: Bloomberg

Supporters of far-right candidate Marine Le Pen cheer as she launches her campaign. French voters face a choice between ‘pro-regulation populism and supply-side reforms’, says BofA’s European economist Jeff J Mitchell/Getty Images

Funds make record bet on rising oil prices Hedge funds have amassed the biggest ever bet on rising oil prices as investors back Opec’s supply cuts to tighten the crude market and seek protection against fears of inflation.

15

Sovereign yield curves

Commodities

ANJLI RAVAL AND DAN MCCRUM

14

80 70 60 50 40 30 20 10

deregulation and increased infrastructure spending has fostered confidence in US economic growth, but also stoked concerns about inflation — which sometimes leads fund to buy oil as protection against rising costs. Richard Robinson, of the Global Energy Fund at Ashburton Investments, said “energy is probably the only commodity which gives you a real hedge against unexpected inflation”. He said an attraction for European investors concerned about inflation is that oil futures are widely traded and provide portfolios with exposure to both the potential for higher commodity prices and a stronger dollar. Still, other investors see reasons more directly linked to oil’s output behind the surge in crude buying by funds. Opec’s production cuts have been led by the group’s largest producer and de facto leader Saudi Arabia. Exports data shows steep curbs have been enacted, supporting the view oil markets will come back into balance this year, despite a rebound in drilling by US shale companies. “We see inventories going down a lot in the coming months and prices are not high enough to prompt more investment,” said one hedge fund manager. “Our question is why are prices not higher.” Opec’s global supply pact lifted prices more than 22 per cent between the November 30 meeting and January 1 to $55 a barrel, but gains have since slowed. Traders are closely watching the shape of the oil futures price curve, as it indicates the market could be tightening even as spot prices are relatively stable.

mainstream candidates and a more traditional leftwing candidate,” he says. Part of the calculation is the potential for the economy to accelerate as a result of policy changes or structural reforms. The yield on two-year debt remains negative, and benchmark 10-year bonds offered 1.14 per cent late yesterday, an annual income that would have seemed low before 2014. Then there is the effect of central bank policy. The ECB has said it will cut the securities it purchases each month from €80bn to €60bn in April. With the programme of quantitative easing due to run until the end of the year, one of the debates on trading desks is whether higher inflation and economic growth will prompt a further reduction in monthly buying. “ECB tapering has been a topic gaining traction, and it makes the QE impact less powerful,” says Ioannis Sokos, interest rate strategist at BNP Paribas. In late 2014, as bond markets anticipated the asset purchases that were to be announced at the start of the follow-

ing year, yields across the eurozone converged. In what may be the reverse process, investors are beginning to anticipate the removal of a weight that suppressed differences between the members of the eurozone. A gap has also opened up between Spain and Italy, for instance, with buyers of the latter demanding a 60 basis point premium for benchmark debt. Such a movement prompts the final question, about the implications for borrowing costs across Europe. France is a country of 65m people, with a diverse economy that is likely to remain at the political heart of the EU. Its debt perhaps deserves to be less prized than that of Germany, long regarded as the safest choice of bonds denominated in euros. Another way to look at market movements is that France is being treated more like Ireland. Yesterday morning yields on Irish and French two-year debt were both around minus 0.50 per cent; of the two countries’ 10-year bonds, French yields were a mere 8bp lower.

Ireland has emerged from the depths of the financial crisis in better shape, but it remains a nation of 4m people with longstanding political, cultural and economic ties to a much larger neighbour, which happens to be about to negotiate a disruptive exit from the EU. Credit rating agencies judge Ireland single A or lower, while France is still double A. Peter Goves, strategist at Citigroup, says French yields are unlikely to trade near or higher than those of Ireland “in a meaningful way” unless investors expect a “fundamental deterioration” in Europe’s second-largest economy. Questions about the border with Northern Ireland, not to mention a longstanding peace agreement built on the assumption of UK membership of the EU, hint at potential challenges ahead. US tax reform may also erode Ireland’s position as a location for the profits for large corporations. It may be hard for bond investors to continue seeing little difference between Dublin and Paris.


Financial times europe 7 february 2017