TUESDAY 30 MAY 2017 WORLD BUSINESS NEWSPAPER USA $2.50 Canada C$3.

00

Janan Ganesh Death of the west? Gael force

Voters will not accept pain for the Gideon Rachman berates Merkel Leo Varadkar offers Ireland a fresh
promise of Brexit gain PAGE 9 over her warning PAGE 9 face with a hard line PAGE 2

Macron looks Briefing

to history for i World Bank faces Ivanka fund questions
Concerns have been raised over links between the
Russia reboot World Banks advice to the White House on its
infrastructure plans and a $1bn womens enterprise
fund backed by Donald Trumps daughter. PAGE 3
French President Emmanuel Macron
(right) and Russian counterpart i Reliance Communications shares plunge
Vladimir Putin make their way through The Indian mobile phone operator controlled by
the Galerie des Batailles on the way to a billionaire Anil Ambani has come under mounting
joint news conference at the Palace of pressure over its debt obligations after revealing its
Versailles, near Paris, yesterday. first annual loss. PAGE 11; LEX, PAGE 10
The opening of an exhibition to mark
the tricentenary of Peter the Greats i Missile test clouds Moon-shine policy
trip to Versailles provided a timely North Korea has fired its 12th missile test of the
opportunity for the newly elected year, angering Washington, Tokyo and Seoul, but
French leader to restore a demanding complicating a bid by South Koreas President Moon
dialogue but still a dialogue with his Jae-in to engage Pyongyang more closely. PAGE 4
Russian counterpart.
Amid tensions over Ukraine, Syria i Varadkar tipped for premiership
and suspected Russian meddling in Welfare minister Leo Varadkar,
Frances presidential election, the 38-year-old gay son of an
Mr Macron described the talks as Indian doctor, has been hailed
extremely frank and direct. as Irelands answer to Frances
Analysis page 2 Emmanuel Macron and is on
Stephane de Sakutin/AFP/Getty Images
course for the top job. PAGE 2

i Renzi talks raise prospect of Italy poll

US consumer debt pile deters big

Matteo Renzi, leader of Italys ruling Democratic
party, has begun talks with opposition parties on a
voting system that could allow an election within
months, unnerving stock markets. PAGE 2

banks from $1.2tn car-loan market

i ANC closes ranks to protect Zuma
South Africas ruling African National Congress has
sought to close ranks around President Jacob Zuma,
a day after he quashed an attempt by senior party
members to remove him as head of state. PAGE 4

i Nasdaq and Shanghai eye Kazakh stake

3 Rising delinquencies spook subprime-scarred lenders 3 Fall in outstanding agreements
BEN MCLANNAHAN NEW YORK
Big banks are throttling back from the
$1.2tn US car-loan market, fearing
consumers have taken on more debt
than they can handle.
Lenders piled into the sector in the
years after the financial crisis, as low
defaults and an improving economy
encouraged them to double down on a
sector that performed relatively well as
mortgages soured. Total loans across
the industry rose to $1.17tn at the end of
the first quarter, according to the New
York Federal Reserve, up almost 70 per
cent from a trough in 2010.
But data last week from the Federal
Deposit Insurance Corporation showed
the first sequential drop in car loans out-
standing at commercial banks in at least
six years. The total slipped $1.6bn to
$440bn from the fourth quarter to the
first, suggesting that banks wary of
repeating the mistakes of the subprime
mortgage crisis have been spooked by
rising delinquencies.
Bruce van Saun, chief executive of Cit-
izens Financial Group, told the Finan-
cial Times he would rather steer
resources into areas such as student
loans. We ran up auto for a while when
there was not much else going on. Now
we have growth in other areas which
offer better risk-adjusted returns.
Wells Fargo and JPMorgan Chase, the
two biggest banks in the sector, saw dou-
ble-digit drops on first-quarter origina-
tions from a year earlier. Even relatively
aggressive car loan specialists such as
Capital One which added a net $2bn to
The US and Chinese stock exchanges are in talks to
acquire stakes in the Astana market set to be
launched this year and aim to provide technology,
its $50bn car-loan book in the first quar- Currency has warned of rising credit data services and know-how. PAGE 11
ter are toning down their outlook. risk in car loans, while airing fears over
Were certainly one more notch cau- violations of fair-lending standards.
tious, said Richard Scott Blackley, chief Several subprime-focused lenders have Datawatch
financial officer, this month, noting big- disclosed that regulators are investigat-
ger-than-expected falls in used car ing them for possible abuses.
prices in the first quarter. Analysts expect Analysts expect losses to keep rising if Smartphone surfing People are
Analysts expect the car loan market losses to keep used-car prices, already down about Hours per day spending more of
to keep growing, fanned by specialist rising if used-car 8 per cent this year, fall further. Lower 0 1 2 3 each day surfing
the web on their
non-bank lenders which focus on bor- prices already prices mean higher gross charge-offs, as China smartphones.
rowers with lower credit scores. But the down about customers default on loans greater than
caution of the big banks which claim 8 per cent this the value of the car, and smaller recov- US Britons spent an
average of just
more than 30 per cent of the market year fall eries for forced vehicle sales. Italy over two hours a
shows many now worry about the con- further The consequences of a car sector UK day last year, up
sequences of looser underwriting, meltdown might not be as severe as in from an hour a
which has seen them stretch terms for mortgages but there will be fallout, Germany 2012 day in 2012.
borrowers while pushing up loan-to- said Joseph Cioffi, chair of the insol- France 2016 Chinese spent
value ratios and debt-to-income ratios vency and creditors rights practice at longer
in an echo of the subprime crisis. Davis & Gilbert, a law firm. Source: Statista Digital Market Outlook
The Office of the Comptroller of the Big Read page 9

British Airways faces inquest after

Toymakers square up
over India board game tax
The Indian government has decided to
include board games as luxury items
in the new national goods and services
tax. Sales of toys have risen in recent
years as the growing economy has
boosted the middle class but now
manufacturers warn chess, Scrabble
and Monopoly are about to get up to
20 per cent more expensive. The row is
the latest to follow publication of rates
for the sales tax that will replace the
existing tangle of statewide levies.
Analysis i PAGE 4
IT chaos strands 75,000 passengers
TANYA POWLEY AND
OLIVER RALPH LONDON
British Airways is set to come under
pressure to explain how it mishandled
the IT outage that led to a weekend of
chaos stranding 75,000 passengers
that is expected to cost it tens of mil-
lions of pounds in compensation.
Speaking in his first interview since a
global computer outage all but shut the
airline down on Saturday, Alex Cruz,
chief executive, apologised profusely for
the problems but insisted that he would
not resign. He told BBC news: I dont
think it would make much of use [sic]
for me to resign.
The focus will now move to how one of
Britains most respected airlines failed
to learn the lessons of similar shut-
downs at US groups Delta Air Line and
Southwest last year. Delta, the worlds
biggest carrier, faced costs of about
$100m after three days of disruption.
There has now got to be a forensic
evaluation of everything that has hap-
pened, said John Strickland aviation
analyst. There has to be an explanation
of what the technical problem was at the
root of it, why any back up system did
not work . . . and how that can be
addressed.
Willie Walsh, chief executive of BAs
parent International Airlines Group,
declined to comment. Mr Cruz had
refused to talk to the media over the
weekend, instead opting to use in-house
videos posted on the groups website
and social media to address passengers
who were stranded around the world.
In the interview yesterday, he denied
that an outsourcing deal was to blame
for the IT problems.
There was a power surge and there
was a back-up system, which did not
work at that particular point in time. It
was restored after a few hours in terms
of some hardware changes . . . we will
make sure that it doesnt happen again,
Mr Cruz said.
However, Mr Cruz had also tried to
stop his staff from talking publicly about
the problems over the weekend. In an
internal memo to staff he said: Guys,
either you are part of the team working
to fix this or you arent.
Meanwhile, the airline said in a state-
ment that its services were beginning to
return to normal. BA said there was a
full service from Gatwick and that all
long-haul flights from Heathrow were
operating. But short-haul operations
from the airport were still affected, with
BA cancelling 10 per cent of services.
Lex page 10
Brand damage page 13

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2 FINANCIAL TIMES Tuesday 30 May 2017

INTERNATIONAL

Munich speech Italy

Merkel signals more activist Berlin for EU Renzi raises

prospect of
German leader presents atlantic relations, an acknowledgment Ms Merkels coalition partners. She has Europe and the US over everything from see the EU strengthened. Polls show that early election
vision of Europe taking
fate into its own hands
that with Mr Trump, the US-European
alliance would never be the same again.
It was not only anti-Trump, but
to realise that Europe is more than just
fiscal consolidation. We need closer
integration, we need to strengthen the
Nato and Russia to climate change and
trade. Yet in one crucial respect the two
see eye to eye: the need for Germany to
for the first time since the Berlin Wall
fell in 1989, a majority of Germans want
faster European integration.
with voting
GUY CHAZAN BERLIN
strongly pro-European, a signal to vot-
ers in Germany and the wider EU that
currency and fight social imbalances.
Perhaps more than was immediately
spend more on defence. Ms Merkel has
committed herself to spending 2 per
Brexit, Marine Le Pen, Geert Wilders
have only emphasised to the Germans reform talks
they should get used to Berlin playing a understood abroad, the speech, four cent of gross domestic product on the how important the EU is to them and
Angela Merkel is not one for bold state- more activist role in Europe. That might months before Germanys federal elec- military, a goal rejected by Martin how disastrous it would be if it fell
ments that ricochet round the world. well involve partnering with Frances tion, was also aimed at a domestic audi- Schulz, the Social Democrats leader, apart, the CDU official said. JAMES POLITI ROME
Her speeches tend to be bloodless, newly elected president, Emmanuel ence. It shows she is finally moving into who warns it could lead to an arms race. Ms Merkels beer tent speech was not,
Matteo Renzi, leader of Italys ruling
understated and forgettable. Macron, to spearhead reforms of the campaign mode, said Jan Techau, a for- Many saw the Munich speech as Ms however, just aimed at her domestic and
centre-left Democratic party, is start-
But that all changed on Sunday. At a eurozone. If that happens, it would eign-policy analyst at the American Merkels attempt to outflank Mr Schulz European audience. It was also a
ing talks with opposition parties on a
campaign event in a Munich beer tent mark a sharp departure from her previ- Academy in Berlin. Shes switched on defence. In the past shes been seen reminder to the US political establish-
new electoral system that could allow
Germanys chancellor suggested that ous role as the EUs crisis manager, who from the international Merkel to the as too indulgent, too understanding of ment of what is at stake: that Mr
an election within months.
the US was no longer a reliable partner. was reticent about exercising leadership domestic Merkel. Trump, and now shes correcting that, Trumps America First isolationism
Europe should pay more attention to its and favoured good governance and fis- The chancellors intervention came said one SPD official. risks seriously undermining the trans- Italy, the third-largest economy in the
own interests and really take our fate cal discipline over grand, idealistic ges- after meetings with Mr Trump that The speechs pro-European message atlantic alliance. eurozone and one of its most indebted
into our hands, the chancellor said. tures. Mr Macrons election has revealed deep differences between could also be seen as a way of pulling the No one in Germany was giving up on and slowest growing, is seen as the next
Many, even in her own CDU party, increased the pressure on her to present rug out from under Mr Schulz, a former that alliance, said Jrgen Hardt, a lead- test of populist sentiment in the bloc.
were stunned. For Merkel, that was an a vision of Europes future that all of its European Parliament president who ing CDU MP. The lack of clarity over The apparent increased likelihood of an
unusually strong statement, said one citizens can believe in.
Merkel seems to have gains advantage from his image in vot- Americas future political course should autumn poll and a consequent hung
official. Trumps only been president Merkel seems to have finally under- understood that she really ers minds as a symbol of European be an incentive to us to keep pushing the parliament sent Italys stock market
for four months. stood that she really needs to get stuck unity a role to which Ms Merkel is now US government and US Congress via all down more than 1 per cent yesterday.
Parsed by journalists, commentators in and solve Europes problems, said
needs to get stuck in and laying claim. Ms Merkels speech was a available channels for closer co-opera- The risk of early elections has sud-
and politicians globally, the speech Norbert Spinrath, Europe spokesman in solve Europes problems rallying cry, a direct appeal to the vast tion, he said. denly increased to 60 per cent, in my
seemed to herald a sea change in trans- the Bundestag for the Social Democrats, numbers of German voters who want to Gideon Rachman page 9 view, wrote Lorenzo Codogno, an econ-
omist and former senior Italian treasury
official.
In an interview with Il Messaggero,
the Roman newspaper, Mr Renzi said he
Ruling party. Two-horse race favoured a German-style electoral sys-
tem, based on proportional representa-

Ireland game-changer poised to be premier tion, and suggested Italy could vote on
the same day as Germany in September.
Voting with Berlin would make sense
for many reasons on a European level,
and would allow the new parliament to
Rightwinger Varadkar said to cated at expensive private schools. Mr set five years of economic policy with-
Coveneys patrician earnestness is prov- out losing a day, Mr Renzi told Il Mes-
have X-factor that will ensure ing a handicap on the hustings, how- saggero.
ever; Mr Varadkar appeared to have a With Democratic party lawmakers
he leads Fine Gael and nation better understanding of the mood of his due to discuss electoral reform today,
Carlow audience. He was quick-witted Mr Renzi said a German system was
VINCENT BOLAND CARLOW and spoke briefly in Irish, which his possible in theory and had some vir-
opponent neglected to do. tues. One aspect of the system is that
He is, for some, the most dynamic per- Quite what his X factor might be is parties must get at least 5 per cent of
sonality in Irish politics: the countrys difficult to pin down, however. Mr Var- votes to gain seats in parliament.
version of Emmanuel Macron, the adkar is a machine politician. He joined The move by Mr Renzi comes after
youthful, pro-European new president Fine Gaels youth wing at 17 and repre- Silvio Berlusconi, the leader of the cen-
of France. For others, he is a rightwing sented it in the European Peoples party, tre-right Forza Italia party, and Beppe
ideologue who threatens Irelands cen- the main bloc in the European Parlia- Grillo, head of the populist Five Star
trist consensus. ment. He was a local councillor before Movement, also embraced the German
Leo Varadkar, the social welfare min- becoming an MP in 2007. Even in a model in recent weeks.
ister, whose personal story and political right-of-centre party he is notably right- It alters Mr Renzis previous prefer-
message to represent hardworking wing: his most eye-catching initiative as ence for first-past-the-post single con-
people who get up early in the morn- welfare minister was a crackdown on stituencies, or a run-off between the
ing have transfixed Ireland, has welfare cheats. leading parties, which are more likely to
emerged as the favourite to become the His message that he wants to repre- deliver a clear winner and avoid a hung
next leader of Fine Gael, the centre- sent people with ambition and talent parliament.
right party that leads the Irish govern- who work hard and pay taxes has drawn Italys sluggish recovery and a contin-
ment. Following a vote in parliament, he cheers from his supporters and criti- uous inflow of migrants have fuelled the
would then become prime minister, or rise of Eurosceptic parties led by Five
taoiseach, until the next election. Star, adding to nervousness in Europe
The 38-year-old gay son of an Indian
He has the potential about the countrys political direction.
immigrant father has taken a com- to have a dramatic But Mr Renzi he stepped down as
manding lead over Simon Coveney, his prime minister last year after a referen-
only rival for the job, as both men appeal
impact on our staid but dum defeat appears to be growing
for the support of fellow MPs, local volatile political system more confident in his chances of victory
councillors and Fine Gaels 21,000 over Five Star. After falling behind the
members. These three camps make up cism from opponents. But nobody anti-establishment party this year, the
the electoral college that will select a should be too surprised by it. You have PD has regained its footing and drawn
leader on Friday to replace Enda Kenny, to be rightwing to move up in Young even in recent polls.
who is retiring after 15 years as head of Fine Gael, said Mr Whelan. Of course it will be a complicated
Fine Gael and six as prime minister. Mr Varadkar is the first openly gay election but compared to a few months
Mr Coveney is not out of the race, but Irishman to be within shouting distance ago the party is more solid. The PD
the contest is Mr Varadkars to lose: the of becoming prime minister. As such, he seemed to be drifting: now it is less so,
latter has won the backing of most of his is part of a defining moment in recent said Andrea Romano, a PD lawmaker
fellow MPs, who have a two-thirds Irish history: in 2015, the country close to Mr Renzi.
weighting in the electoral college. A new became the first in the world to legalise Without a deal on electoral reform,
generation will then take control of Fine gay marriage in a popular vote. Irish the centre-left government led by Paolo
Gael, one of the two parties the other people believe they are progressive, and Gentiloni, Mr Renzis successor as prime
is the centre-left Fianna Fail that have Strongly pro-EU: says he has drawn support from across At a hustings last Friday in rural Mr Varadkars rise reflects that. minister, would carry on until the
dominated Irish politics for nearly a Leo Varadkar, the party, which is sometimes seen as County Carlow, that broad base of sup- His supporters portray him as a natu- scheduled end of the legislature in early
century. right, at his socially and culturally conservative. His port was evident in the 600-strong audi- ral addition to the ranks of youthful, 2018.
This is all about Leo hes a game- campaign socially liberal, economically conserva- ence. Though the crowd was relatively optimistic global leaders such as Mr Both PD and Forza Italia officials cau-
changer not just in style but in sub- launch this tive and strongly pro-EU views which evenly divided between backers of the Macron and Justin Trudeau, prime min- tion that talks on a new electoral system
stance, said Noel Whelan, a political month he broadly shares with Mr Coveney two men, Mr Varadkars supporters ister of Canada. Frances Fitzgerald, dep- could struggle. Mr Renzi and Mr Berlus-
commentator. He has the potential to Clodagh Kilcoyne/Reuters appeal to the partys core supporters seemed noisier and more enthusiastic, uty prime minister and a prominent coni used to have a good relationship
have a dramatic impact on our staid but among professionals. But the party also and in thrall to the X factor he is said backer of Mr Varadkar, said: He is very and struck a deal in 2014 on political
volatile political system. hopes they can appeal to a wider elec- to possess. much a politician of European stature reforms. But their alliance ended in
Helen McEntee, one of numerous torate at the next election, which could Both men come from relatively he has always shared the values and 2015 and they have not met for more
Fine Gael MPs to back Mr Varadkar, come as early as next year. wealthy backgrounds and were edu- vision of Europe. than two years.

Putin visit
MAKE A SMART INVESTMENT
Subscribe to the FT today at FT.com/subscription Macron uses Versailles to ease tension with Moscow
FRIDAY 31 MARCH 2017 WORLD BUSINESS NEWSPAPER UK 2.70 Channel Islands 3.00; Republic of Ireland 3.00

Trump vs the Valley

Tech titans need to minimise
political risk GILLIAN TETT, PAGE 13
A Five Star plan?
Italys populists are trying to woo
the poor BIG READ, PAGE 11
Dear Don...
Mays first stab at the break-up
letter ROBERT SHRIMSLEY, PAGE 12
ANNE-SYLVAINE CHASSANY to prop up the regime of Bashar al-Assad precondition for a political settlement, military victories (including Napo-
VERSAILLES
HMRC warns Lloyds of Brussels Insurance market
to tap new talent pool with EU base
UK 3.80; Channel Islands 3.80; Republic of Ireland 3.80
Briefing
SATURDAY 1 APRIL / SUNDAY 2 APRIL 2017

KATHRIN HILLE MOSCOW

in Syria putting the emphasis instead on the leonic ones against Russia).
customs risks THE END
i US bargain-hunters fuel Europe M&A
Europe has become the big target for cross-border

Tensions intensified during the need to maintain the integrity of the Mr Macron defended his decision to
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the
HOW DRIVERLESS
OF THE TECHNOLOGY IS
Atlantic. PAGE 15; CHINA CURBS HIT DEALS, PAGE 17

being swamped i Report outlines longer NHS waiting times

A report on how the health service can survive CHANGING AN
ROAD
more austerity has said patients will wait longer for
non-urgent operations and for A&E treatment while AMERICAN WAY OF LIFE Censors and sensitivity
by Brexit surge
some surgical procedures will be scrapped. PAGE 4

French president Emmanuel Macron French presidential election when Mr Syrian state. Mr Putin seemed to con- deny access to Russia Today and Sput-
i Emerging nations in record debt sales Warning: this article may be
FT WEEKEND MAGAZINE
FEBRUARY 4 2017

Developing countries have sold record levels of

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

3 Confidence in IT plans has collapsed

3 Fivefold rise in declarations expected
JAMES BLITZ WHITEHALL EDITOR
A computer system acquired to collect
duties and clear imports into the UK
may not be able to handle the huge
surge in workload expected once Britain
Credit Suisse Art of persuasion Mystery deepens
i London tower plans break records
How To Spend It
opened up the Palace of Versailles for Macron accused the Kremlin of hacking cur: We cannot fight against terrorism nik to his presidential campaign
A survey has revealed that a
adjust its negotiation position with the
record 455 tall buildings are
planned or under construction
in London. Work began on
over disputed painting of Jane Austen
engulfed in
EU, a Whitehall official said. If running almost one tower a week
our own customs system is proving during 2016. PAGE 4
much harder than we anticipated, that
ought to have an impact on how we i Tillerson fails to ease Turkey tensions
press for certain options in Brussels. The US secretary of state has failed to reconcile

fresh tax probe

leaves the EU, customs authorities have
admitted to MPs.
HM Revenue & Customs told a parlia-
mentary inquiry that the new system
needed urgent action to be ready by
March 2019, when Brexit is due to be
completed, and the chair of the probe
said confidence it would be operational
in time has collapsed.
Russias Vladimir Putin yesterday in an into his partys website and spreading by fighting against a fragile state in the because the state-owned media outlets
In a letter to Andrew Tyrie, chairman tensions after talks in Ankara with President Recep
of the Commons treasury select com-
mittee, HMRC said the timetable for
Tayyip Erdogan on issues including Syria and the
extradition of cleric Fethullah Gulen. PAGE 9
Chic new lodgings
delivering CDS was challenging but
achievable. But, it added, CDS was a i Toshiba investors doubt revival plan
in Scotland
complex programme that needed to be In a stormy three-hour meeting, investors accused MAGAZINE
linked to dozens of other computer sys- managers ofhaving an entrenched secrecy culture
tems to work properly. In November, 3 UK, France and Netherlands swoop
and cast doubt on a revival plan after Westinghouse
HMRC assigned a green traffic light to filed for Chapter 11 bankruptcy protection. PAGE 16
3 Blow for bid to clean up Swiss image

Setting up a digital customs system
has been at the heart of Whitehalls
Brexit planning because of the fivefold
increase in declarations expected at
British ports when the UK leaves the EU.
attempt to reboot troubled relations false information in an effort to help region, he said. were no journalists and spreading
CDS, indicating it would be delivered on
time. But last month, it wrote to the i HSBC woos transgender customers
committee saying the programme had The bank has unveiled a range of gender-neutral
RALPH ATKINS ZURICH it followed a strategy offull client tax
been relegated to amber/red, which DUNCAN
titles such asROBINSON BRUSSELS
Mx, in addition to Mr, Mrs, Misscompliance
or but was still trying to
means there are major risks or issues Ms, in a move to embrace diversity and cater togather the information about the probes.

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

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

were contacted
Highlighted
western

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

Published daily except Sundays, New Years Day,

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

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

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

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

Day, Martin Luther King Day, Thanksgiving,

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

The opening of an exhibition to mark Russians were behind hacking. when Mr Putin praised Ms Le Pens
There have been missed
City watchdog sends a clear message as
generals office expressed astonish- In 2014, Credit Suisse pleaded guilty
ment that it had been left out of the in the US to an extensive and wide-
actions co-ordinated by Eurojust, the ranging conspiracy to help clients THE RISE
Escape OF
the taper ECO-GLAM
trap
banker loses job over WhatsApp boast
EUs judicial liaison body.
Credit Suisse, whose shares fell 1.2 per

Christmas Day and the day after Christmas Day.

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

the tricentenary of Peter the Greats trip Mr Macron is keen to reset the rela- effort to bolster Franco-Russian rela-
LAURA NOONAN DUBLIN Berrys after discussions with regulators. media at work, but banks are unable to
JENNIFER THOMPSON LONDON

Subscriptions and Customer Service

A boastful WhatsApp message has cost
a London investment banker his job
and a 37,000 fine in the first case of
Christopher Niehaus, a former Jeffer-
ies banker, passed confidential client
information to a personal acquaint-
ance and a friend using WhatsApp,
ban people from installing apps on their
private phones.
Brussels takes tough stance on Brexit
Andrew Bodnar, a barrister at Matrix
Chambers, said the case set a precedent

opportunities with
Shutdown risk as border according to the FCA. The regulator said in that it shows the FCA sees these mes-
with Spain handed veto over Gibraltar
regulators cracking down on commu- 390_Cover_PRESS.indd 1 19/01/2017 13:57

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

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

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

avert a US government shutdown after
April 28 have resisted Donald Trumps
attempt to tack funds to pay for a wall
on the US-Mexico border on to
stopgap spending plans. They fear
that his planned $33bn increase in
The fine by the Financial Conduct
Authority highlights the increasing
problem new media pose for companies
that need to monitor and archive their
staffs communication.
Several large investment banks have
confidential information on the messag-
ing system on a number of occasions
last year to impress people.
Several banks have banned the use of
new media from work-issued devices,
but the situation has become trickier as
to Versailles provided a timely opportu- tionship with Moscow, aides say. There tions and her stance on preserving
included the identity and details of a
client and information about a rival of ALEX BARKER BRUSSELS ambitious trade and airline access deals. mise. If Britain wants to prolong its
Jefferies. In one instance the banker GEORGE PARKER LONDON Gibraltar yesterday hit back at the status within the single market after
boasted how he might be able to pay off STEFAN WAGSTYL BERLIN clause, saying the territory had shame- Brexit, the guidelines state it would
his mortgage if a deal was successful. The EU yesterday took a tough opening fully been singled out for unfavourable require existing regulatory, budgetary,
Mr Niehaus was suspended from Jef- stance in Brexit negotiations, rejecting treatment by the council at the behest of supervisory and enforcement instru-

uscirculation@ft.com, www.ft.com/subsusa
defence and border spending could
force a federal shutdown for the first
time since 2013, as Democrats refuse
banned employees from sending client
information over messaging services
including WhatsApp, which uses an
banks move towards a bring your own
device policy. Goldman Sachs has
clamped down on its staffs phone bills
feries and resigned before the comple-
tion of a disciplinary process.
Jefferies declined to comment while
Living wage rise to pile
pressure on care services
postage paid at New York, NY and at additional
Britains plea for early trade talks and
explicitly giving Spain a veto over any
arrangements that apply to Gibraltar.
Spain. Madrid defended the draft
clause, pointing out that it only reflected
the traditional Spanish position.
ments and structures to apply.
Mr Tusk wants talks on future trade
to begin only once sufficient progress

nity for the newly elected French leader have been missed opportunities with national sovereignty to justify inviting
to accept the proposals. encryption system that cannot be as iPhone-loving staff spurn their work- Facebook did not respond to a request Senior EU diplomats noted that has been made on Britains exit bill and

Russia, on Syria notably

US budget Q&A and accessed without permission from the issued BlackBerrys. for comment. About 2.3m people will benefit from European Council president Donald Mr Tusks text left room for negotiators citizen rights, which Whitehall officials
Trump attack over health bill i PAGE 8 user. Deutsche Bank last year banned Bankers at two institutions said staff Additional reporting by Chloe Cornish todays increase in the national living Tusks first draft of the guidelines, to work with in coming months. Prime believe means simultaneous talks are
WhatsApp from work-issued Black- are typically trained in how to use new Lombard page 20 wage to 7.50 per hour. But the rise which are an important milestone on minister Theresa Mays allies insisted possible if certain conditions are met.

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

to restore a demanding dialogue but Russia in the recent past, on Syria nota- her to the Kremlin during the campaign.
www.ft.com/subscribenow new living wage and the increase is The decision to add the clause giving British officials admitted that the EUs after Brexit with a trade deal.
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For the latest news go to S&P 500 2365.93 2361.13 0.20 $ per 1.074 1.075 per $ 0.932 0.930 US Gov 10 yr 98.87 2.38 0.00
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still a dialogue with his Russian coun- bly. The idea is to keep Russia close to Macron adviser The meeting comes at a time of global
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Fed Funds Eff
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terpart. Europe, an adviser to Mr Macron said diplomatic upheaval: it follows a gather-

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letters.editor@ft.com rights reserved. Reproduction of the contents of this Amid tensions over Ukraine, Syria before the meeting. a new round of talks with the German ing of the seven leading industrialised
Executive appointments newspaper in any manner is not permitted without and suspected Russian meddling in On Syria, the two leaders agreed to set and Ukrainian leaders on the simmer- nations in Sicily a club of which Mr
www.exec-appointments.com the publishers prior consent. Financial Times and
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Frances presidential election, Mr up a working group to better co-ordi- ing conflict in Ukraine. Putin has been excluded following his
Published by Times Limited. Macron described the talks as nate military operations and exchange The encounter seemed friendly: Mr annexation of Crimea that has
F.T. Publications Inc. 330 Hudson St, New York, extremely frank and direct. information in the fight against Islamist Macron and Mr Putin shook hands on exposed deep frictions with Mr Trump
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Tel: +1 917-551-5000; a self-regulation regime under the FT Editorial Code
Editor: Lionel Barber of Practice: www.ft.com/editorialcode Putin said. I am convinced that the In a warning directed at the Syrian XIVs palace, drawing comparisons with and military co-operation. The rift
interests of our two countries will help leader, Mr Macron said Frances red the virile, knuckle-whitening grasp the prompted German chancellor Angela
Printed by Reprints are available of any FT article with your find solutions. line would be the use of chemical weap- French leader exerted on US president Merkel to acknowledge on Sunday that
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Tuesday 30 May 2017
World Bank woos Trumps
Ivanka Trump and husband Jared Kushner with Donald Trump, centre, in Riyadh. She held talks with the World Bank president on the trip Jonathan Ernst/Reuters
Bank role in Ivanka Fund and
advice to White House raise
eyebrows amid budget fears
SHAWN DONNAN WASHINGTON
The World Bank has begun advising the
Trump administration on its infrastruc-
ture plans, the latest product of a budd-
ing relationship between Ivanka Trump
and president Jim Yong Kim that is rais-
ing eyebrows among bank veterans and
governance experts.
The unusual move grew out of an
April 3 White House meeting between
Mr Kim and Ms Trump to discuss a $1bn
womens entrepreneurship fund cham-
pioned by Donald Trumps eldest daug-
hter and official adviser that the bank is
trying to rush to set up ahead of a Group
of 20 summit in Germany in July.
After the April meeting Ms Trump as-
ked whether Mr Kim wanted to meet
her father and led him to the Oval
Office. There, according to people brief-
ed on the meeting, the president was
with advisers discussing infrastructure
plans, prompting Mr Kim to offer help.
Three days later a team of infra-
structure experts from the bank
was sent to New York to meet
members of a new presidential
Jim Yong Kim:
strategy raises
issues of bank
governance,
say former
officials
Global lender. US ties
council, according to the bank. These
conversations continue at an informal
level, it said.
Former senior bank officials see the
infrastructure push and the rapid estab-
lishment of the womens entrepreneur-
ship fund as efforts by Mr Kim to use his
growing relationship with Ms Trump to
curry favour as the administration
threatens to cut funding to the bank.
They say Mr Kims strategy raises
issues of governance for the institution.
Past US administrations and the banks
board would view a similar project scep-
tically, they point out, if it involved the
daughter of a central Asian autocrat rat-
her than the banks biggest shareholder.
If this was not the US and this was
happening in any other country, we
would be deeply uncomfortable with it,
said Joel Hellman, dean of Georgetown
Universitys school of foreign service
and until a few years ago the banks top
anti-corruption expert.
Bank officials dismiss those concerns
and say the womens fund will abide by
the institutions strict governance rules.
The White House said Ms Trump
would have no formal role in the facility
and would not be raising funds for
it, although the US would be
pledging a sum that had not
yet been determined.
She will just be involved as
a champion of these issues, it
said.
The plan to create the fund
was announced last
month in Berlin at a
G20 meeting on
womens issues
FINANCIAL TIMES
INTERNATIONAL
that Ms Trump attended. Ms Trump
and Mr Kim also co-authored an FT
comment on womens economic
empowerment.
According to a draft of the proposal to
be voted on on June 30 by the banks
board and seen by the FT, it would be set
up with $200m in seed capital, half of
which was pledged by Saudi Arabia and
the United Arab Emirates during a rec-
ent visit to Riyadh by Mr Trump. Ms
Trump and Mr Kim met a group of Sau-
di women during that visit. Ms Trump
later praised Mr Kim on Facebook.
The Saudi pledge and Mr Kims
appearance surprised bank veterans
because of the kingdoms discrimina-
tion against women and its past role in
If this was not the US and
was happening in any other
country, we would be deeply
uncomfortable with it
blocking gender-related work by the
bank as too political.
Because the bank does almost all of its
work in the developing world the infra-
structure move is also unusual. Under
its rules it is unlikely the bank would
lend to any US infrastructure projects. It
can, however, provide expertise to any
of its members and bank officials point
to advice it has given Canada on its
infrastructure plans.
But staff within the bank say they are
under growing budget pressure with
plans to push for a needed capital
increase stalling largely due to uncer-
tainty surrounding the Trump adminis-
trations support.
One senior bank official called the
push to set up the womens facility,
known internally as the Ivanka Fund,
an awkward process made worse by
the administrations mixed signals.
In a budget released last week, the
White House argued that the US cur-
rently pays more than its fair share to
the bank. The budget also proposed a
cut of almost $100m annually from the
USs planned $1.1bn contribution to the
International Development Associa-
tion, the bank arm that provides low-in-
terest loans and grants to the worlds
poorest nations.
Scott Morris, a former US Treasury
official now at the Center for Global
Development, a think-tank, said Mr
Kims moves were canny given the cur-
rent situation. He has an obligation to
the bank as a whole to have a relation-
ship with the government of its biggest
shareholder, Mr Morris said.
But others worry the bank is becom-
ing too cosy with an administration that
is vowing to cut foreign aid budgets and
family planning programmes.
While we appreciate Ivanka Trumps
efforts to create a fund for womens eco-
nomic empowerment, they contrast
dramatically with the deep cuts Presi-
dent Trump has proposed on US pro-
grammes to support women globally,
said Nadia Daar, head of Oxfam Interna-
tionals Washington office. Many find it
hard to separate the relationship being
built here from the banks need for US
financial support now.
Gideon Rachman page 9
Legal adviser
President poses big tests
for White House lawyer
DAVID J LYNCH WASHINGTON
Donald Trump needs a good lawyer.
Washington wonders whether he has
one.
Don McGahn, the White House counsel,
has been embroiled in controversy ever
since the Trump administrations first
week. On January 27, an executive order
banning travellers from seven majority
-Muslim countries, which Mr McGahn
had reviewed, ignited a furore. The
same day, the acting attorney-general
warned him that national security
adviser Michael Flynn was vulnerable
to Russian blackmail.
For Mr McGahn, a 48-year-old
election law expert, keeping the White
House out of legal trouble has not got
any easier since that tense winter
Friday. Criticism over his performance
leavened with sympathy over advis-
ing a strong-willed client such as Mr
Trump has only escalated amid the
administrations potential conflicts of
interest and lapses in vetting new hires.
Hes not the kind of person who
spends time worrying about burnishing
his image with other folks, says Bradley
Smith, a friend and law professor at
Capital University Law School in
Columbus, Ohio. Hell just do the work
he needs to do and take his lumps.
Those wounds have been inflicted by
both Republicans and Democrats. Fol-
lowing the botched travel ban rollout,
Jack Goldsmith, a senior George W Bush
administration justice department offi-
cial, warned in his blog of an ineffectual
or incompetent White House counsel.
Ellen Weintraub, a Democrat who
clashed with Mr McGahn while serving
with him on the Federal Election Com-
mission, worries that he will invent
legal rationales for whatever conduct
the president favours
Mr McGahns greatest challenge may
be his client. The federal judges who
blocked the travel ban cited the presi-
dents inflammatory tweets and public
statements in ruling against him. Mr
Trump also took 18 days to remove Mr
Flynn from his job after Mr McGahn for-
warded the blackmail warning, a delay
that has dogged the White House.
Its easy to blame the lawyer for all of
the problems, says Ron Bonjean, a vet-
eran Republican strategist. But many
of them dont rest at his feet.
Mr McGahns defenders say the presi-
dent respects his legal acumen. As the
Russia scandal deepened this month,
with the appointment of a special coun-
sel, Mr McGahn kept Mr Trump from
issuing public statements of support for
Jared Kushner, his son-in-law, and Mr
Flynn. The president very much
wanted to issue the statements, said
one Republican close to the White
House. But he took Dons advice.
The Supreme Court nomination of
Neil Gorsuch, perhaps the administra-
tions greatest political success, also bore
Mr McGahns fingerprints.
3
In the hours before Mr Trump
announced his decision, a television
news producer spotted Judge Thomas
Hardiman, the other finalist, driving
south from Pittsburgh in the general
direction of the capital.
When the judge, who was travelling to
see a friend in eastern Pennsylvania,
noticed that he was being followed and
called Washington for guidance, Mr
McGahn relayed a message to keep
heading south, according to a Republi-
can with knowledge of the call.
The ruse preserved the element of
surprise for the presidents primetime
White House announcement, allowing
Mr Trump to introduce Mr Gorsuch
before Democrats could attack him.
Mr McGahn was an unlikely choice for
a White House job often filled by estab-
lishment icons such as Clark Clifford,
who advised Democratic presidents
from Harry Truman to Jimmy Carter.
Don McGahn has
been embroiled
in controversy
since the Trump
administrations
first week
Until the election, the former FEC chair-
man wore his hair over his ears and
moonlighted as a guitarist with a rock
band in Maryland beach bars.
Mr McGahn, whose uncle Patrick
worked for Mr Trump in the 1980s, first
met the former property developer in
late 2014. He was part of his campaign
from the start, earning the candidates
loyalty by joining when most Republi-
cans scoffed at a Trump presidency.
At the White House, Mr McGahn has
assembled a respected team of two
dozen lawyers, including veterans of the
US Department of Justice and graduates
of Harvard, Yale and Stanford law
schools.
He reported more than $2.4m in com-
pensation last year as a partner at Jones
Day. His clients included the National
Rifle Association, the Republican
National Committee, and Aaron
Schock, a congressman who was
indicted after using government funds
to decorate his office in a style inspired
by Downton Abbey, the TV programme.
As the administrations legal prob-
lems mount, Mr McGahn, who repre-
sents the office of the presidency rather
than Mr Trump himself, is about to
receive welcome reinforcements. The
president has retained Marc Kasowitz, a
New York attorney who has represented
him previously, to oversee a team han-
dling the investigations of alleged Rus-
sian involvement with his campaign.
Leonard Leo of the Federalist Society
says that Mr McGahns position has
improved as an administration filled
with government neophytes found its
footing. It took a while for Don to train
everybody: This is how we do things,
said Mr Leo.
4 FINANCIAL TIMES
N Korea challenges moonshine policy
An undated picture released by the North at the weekend shows leader Kim Jong Un inspecting a new anti-aircraft guided weapon system STR/AFP/Getty Images
New administration in South
seeks closer ties with North
in challenge to US approach
BRYAN HARRIS SEOUL
Pyongyangs 12th missile test of the year
yesterday was met with a familiar cho-
rus of condemnation from Washington,
Tokyo and Seoul, with South Korea
promising to take stern action in
response.
But the rhetoric in Seoul has been
complicated by the election of Moon
Jae-in, whose new administration is
moving towards closer engagement
with North Korea in what has been nick-
named the moonshine policy, after
the sunshine policy in place for a dec-
ade to 2008.
President Moon, who was elected this
month, has vowed to take a twin-track
approach to Pyongyang of increasing
pressure but also pursuing dialogue.
Analysts say the evolving stance threat-
ens to undermine US-led efforts to iso-
late and punish the Kim Jong Un regime
for continuing to develop nuclear and
ballistic weapons.
In principle, the new government is
strongly in favour of engagement with
Pyongyang, but it is contingent on the
behaviour of North Korea, said Moon
Chung-in, a top adviser to Mr Moon.
Latin America
Mexicos ruling party under threat in its heartland
JUDE WEBBER STATE OF MEXICO
Im not going to vote for anyone,
theyre all thieves, sighed Jorge
Hernndez.
Residents of the town of San Mateo
Atenco had just heard a list of promises
from Alfredo del Mazo a candidate for
governor of State of Mexico from the
Institutional Revolutionary party
(PRI). They included an unspecified
pink salary for housewives, a new uni-
versity and a cleaned-up police force.
But Mr Hernndez was not buying it.
I dont know why people continue to
back all of them when were going to
stay poor. Ive lost faith.
The shoe industry worker was voicing
widespread disgust at corruption and
violence that has put Mexicos ruling
PRI under threat in its heartland and is
driving support for Andrs Manuel Lp-
ez Obrador, the leftist populist leading
the race for presidential poll next year.
The race for the governorship, which
will be decided on Sunday, has reso-
nance beyond Mexicos most populous
state. In PRI hands since the partys
birth in 1929, the State of Mexico is the
home turf of Enrique Pea Nieto, whose
failure to curb rising crime and corrup-
tion has made him Mexicos most
unpopular president.
As such, the vote is widely seen as a
referendum on his rule and a judgment
on his party. Instead of being a shoo-in,
Mr del Mazo, the 41-year-old son and
grandson of State of Mexico governors
and the presidents cousin, finds himself
in a close race with Delfina Gmez, a
working-class former teacher from the
Missile launch. Seoul strategy
North Korea yesterday launched a
ballistic missile from a military base on
its east coast.
The projectile flew for about six min-
utes and 450km before landing in the
Sea of Japan, according to the South
Korean and US militaries.
On Friday, Seoul granted permission
for the first inter-Korean civilian
exchange since the start of 2016, when
relations were put on ice after North
Koreas fourth nuclear test. The dia-
logue between humanitarian groups is
likely to pave the way for a widening of
bilateral relations, potentially leading to
the resumption of economic exchanges,
experts say.
The government will respond
strongly to any North Korean provoca-
tions but at the same time we are flexi-
bly reviewing ways to allow humanitar-
ian and civilian exchanges without com-
promising international sanctions, an
official from Seouls unification minis-
try said last week.
Chun Yung-woo, a top former South
Korean negotiator with the North, said
the Seoul governments new tilt was
clear from the people with whom the
president was surrounding himself.
If you look at the presidents
appointments, there are some influen-
tial people who are eager to engage with
North Korea . . . these are people who
are sympathetic to North Korea.
leftwing Morena party, which is only
three years old.
Victory for Ms Gmez would consoli-
date the chances of Mr Lpez Obrador,
Morenas leader, in 2018. The former
mayor of Mexico City, known as Amlo,
who says he was cheated of victory in
2006 and 2012 presidential elections, is
as divisive a figure in Mexico as Donald
Trump is in the US.
Detractors see him as a dangerous
demagogue who is a fan of Fidel Castro
and would imperil Mexicos market-
based economy. Fans see him as a
breath of fresh air in corruption-tainted
politics. A poll in El Financiero newspa-
per gives Mr del Mazo the edge with 34
per cent to 29 per cent for Ms Gmez, 54,
who has been courting voters with
promises of higher pensions and salary
cuts for top officials.
Challenger: Delfina Gmez campaigns this week in Nezahualcoyotl Rebecca Blackwell/AP
INTERNATIONAL
It will be painful for them to tighten
the screws.
It is no surprise to observers that the
new leader would seek to emulate the
sunshine policy, which sought to pry
open North Korea with generous invest-
ment and aid, as it was pursued for years
by his mentor, former president Roh
Moo-hyun.
Engagement under Mr Moon could
take a variety of forms, from uncontro-
versial humanitarian support to
behind-the-scenes talks.
More contentious would be the re-
opening of joint commercial ventures
between the two Koreas, a prospect
There are some influential
people who are eager to
engage with North Korea
Chun Yung-woo, former negotiator
already hinted at by leading South
Korean presidential advisers.
One such project, the Kaesong indus-
trial complex, was shut last year follow-
ing Pyongyangs fourth nuclear test.
While critics say it was simply a means
for Mr Kim to fund his weapons pro-
grammes, supporters believe it served
an invaluable role in exposing thou-
sands of North Koreans to South Korean
wealth and ideology.
The future of the PRI, the future of
our country depends on our triumph,
Mr del Mazo said as he closed his cam-
paign on Sunday.
The PRI has yet to announce a presid-
ential candidate for 2018 Mr Pea
Nieto, a former State of Mexico gover-
nor, cannot stand again. But there is no
doubt that a win for Mr del Mazo would
be a boost for a party that governed
Mexico like royalty for 71 years until
2000, when it ended a rule synonymous
with authoritarianism and corruption.
The party came back in 2012, claiming
to have reinvented itself, but spiralling
scandals have taken their toll.
Mr del Mazos campaign has been a
typically slick PRI affair. A large crowd
packs a sports field in San Mateo
Atenco; streets are cordoned off by
police; and in case anyone is struggling
The new government would love to
reopen Kaesong but there are so many
domestic and international constraints
including UN sanctions on North Korea.
There needs to be a sense of confidence-
building. North Korea needs to show
calm behaviour first, Mr Moon, the
adviser, said.
North Korea has been straining under
strengthened international sanctions
since its fifth nuclear test last Septem-
ber.
Meanwhile, the US administration of
President Donald Trump is seeking to
rally the global community to imple-
ment further punitive measures as it
seeks to prevent Pyongyang from
achieving its ambition of developing a
missile capable of delivering a nuclear
warhead to the American mainland.
However, the Kim regime has only
stepped up its efforts, with this years
tests showing increasing technological
sophistication.
Sanctions should be an instrument
to bring North Korea to the table but
they dont perceive it that way, Mr
Moon said.
They think it is a hostile move. That
is the fundamental dilemma.
Nam Kwang-kyu, a professor at Korea
University, said he believed the Trump
administrations stance would compli-
cate any effort at an inter-Korean thaw.
Additional reporting by Kang Buseong
to see the grey-haired candidate on
stage above all the balloons and ban-
ners, there are huge television screens.
I want to be the candidate of wo-
men, he said to cheers. At the rallys
close, he stops for selfies in a crowd
where aides fill forms stating Del Mazo
Listens with peoples contact details so
women, jostling for the forms said, they
can get a little help if he is elected.
I dont like him. I like his proposals
though, said Karla Hernndez, a house-
wife. Hes won us over with the pink
salary. I want my pay.
Mr del Mazo says Ms Gmez is too
inexperienced for such a big job the
State of Mexico is the size of New Jersey,
with a population nearly as large as
Chile and a $100bn gross domestic
product the size of Ecuadors and vio-
lence is rife. The daughter of a builder
and housewife, she plays up her woman-
of-the-people credentials and retorts
that Mexico is not a monarchy.
The biggest challenge is abstention-
ism, she said between rallies. If people
go to vote and the votes arent bought,
well win. Whats at stake here isnt just
the State of Mexico its so other states
can see that victory is possible. We have
to break the idea that its like a decree
that the PRI is going to win, she said.
Markets would be relieved at a PRI
victory, while a win for Ms Gmez could
fuel jitters about Amlo, even as some in
the business community warm to him.
Although he is known as a populist,
my perception is that he is moderating
his tone, said Jean-Philippe Adam,
head of Latin America at Natixis, the
investment banking and fund manager.
Deepening fractures
South Africas ANC rounds on
Zuma critics after removal bid
JOSEPH COTTERILL JOHANNESBURG
South Africas ruling African National
Congress sought to close ranks around
President Jacob Zuma yesterday, a day
after he quashed an attempt by senior
party members to remove him as head
of state.
Mr Zumas allies easily rebuffed calls for
him to step down at a meeting of the
ANCs powerful national executive com-
mittee over the weekend. But it was the
second time in six months that his scan-
dal-prone leadership has been chal-
lenged, underlining the deepening frac-
tures in the former liberation move-
ment.
Gwede Mantashe, the ANCs secre-
tary-general, said a number of [NEC]
members were of the view that the ANC
should listen to this call for Mr Zuma to
go. But the meeting emphasised the
need for unity, he said.
Various contributions in support of
and against the appeal to the president
to step down were raised, Mr Mantashe
told a briefing following the NECs meet-
ing. Many more were neither in favour
nor against the appeal.
In a warning to ANC MPs, he said they
would face disciplinary action if they
voted against Mr Zuma in a no-confi-
dence motion in parliament that has
been called by the opposition. The vote
has been delayed while a court rules
whether the motion can be decided by a
secret ballot.
Mr Zuma has faced growing calls to
resign, both from within and outside the
ANC, since he sacked Pravin Gordhan,
his finance minister and a prominent
critic of government corruption. Mr
Gordhan was among 18 members of the
110-strong NEC who spoke in favour of
Mr Zumas removal, local media
reported.
Mr Gordhan did not comment on the
NEC meeting, the first since his dis-
missal.
Mr Zuma has been dogged by increas-
ing allegations of corruption and crony-
Gwede Mantashe: the meeting
emphasised the need for unity
Manufacturer alarm
Board games rated a luxury
as India toys with tax regime
KIRAN STACEY NEW DELHI
Chess, Scrabble and Monopoly are
about to get up to 20 per cent more
expensive in India after the govern-
ment decided to include board games
as a luxury item in the new national
goods and services tax, manufacturers
have warned.
Ministers have set three rates for toys
under the tax, which is being rolled out
on July 1 to replace the existing tangle of
statewide levies and sales taxes. Tradi-
tional toys will face a tax rate of 12 per
cent, electronic toys 18 per cent and
board games 28 per cent.
The rates for different playthings
highlight the anomalies emerging as
India prepares to introduce its goods
and services tax. Narendra Modis gov-
ernment has hailed the GST as a vital
measure to boost economic potential by
creating a true single market and
streamlining Indias tax system.
Toymakers say their costs for every
type of toy will rise by at least 5 per cent.
The weighted average tax rate for toys is
currently 6.5 per cent, the industry says.
Ishmeet Singh, manager for India at
Mattel, the US company that makes
Barbie dolls, said: We need to persuade
the government that toys are an essen-
tial part of childrens development.
The government seems to have
taken the populist move of putting
every daily essential into the zero-tax
category and used every kind of discre-
tionary item to generate revenues.
The row is the latest in a string of dis-
putes between government and indus-
try since the provisional tax rates were
announced a week ago. Yesterday, the
government signalled it would roll back
its plans to tax parts for solar panels at
18 per cent, which had triggered accusa-
tions of hypocrisy, given India has some
of the most ambitious solar power tar-
gets in the world.
Other industries, however, say they
Tuesday 30 May 2017
ism that threaten the ANCs once domi-
nant grip on power ahead of 2019 elec-
tions. But the president, who is in his
second and final term, has shrugged off
calls for him to step aside and main-
tained control of critical party struc-
tures.
Its very clear that Zuma has reached
the point of no return, and he will go all
the way in putting his survival over the
interests of the party, said Prince
Mashele, an analyst at the Centre for
Politics and Research in Pretoria.
On the other hand you have guys
who worry they will lose their jobs in
2019 . . . it is almost impossible to rec-
oncile the factions. It is a win-lose situa-
tion.
Many of the allegations relate to Mr
Zumas ties to members of the Gupta
business family, who work with his son.
The Guptas have been accused of influ-
encing ministerial appointments and
public contracts to benefit their mining-
to-media conglomerate.
The Guptas and Mr Zuma deny the
allegations.
However, the NEC meeting did
support a proposal that a judicial com-
mission of inquiry be set up without
delay to investigate allegations of
state capture.
That follows a report by the public
protector, a state ombudsman, in
November that found that Mr Zuma
may have infringed ethics laws. It
implicated him in giving the Guptas
knowledge of ministerial appointments
before he made them, including the dis-
missal of a finance minister in Decem-
ber 2015.
But the presidents ability to repeat-
edly put down challenges to his leader-
ship in spite of the mounting pressure
on him and the party, illustrates the
weakness of the anti-Zuma faction in
the ANC and that they are failing to
counter Mr Zumas ability to mobilise
patronage politics in his favour.
The battles within the ANC come at a
critical period as the party prepares for
a conference in December at which dele-
gates will elect a new leadership.
The contest is widely viewed as a two-
horse race between Cyril Ramaphosa,
the deputy president, who criticised his
boss over the March cabinet reshuffle,
and Nkosazana Dlamini-Zuma, Mr
Zumas ex-wife and the mother of four
of his children.
Thought to be the presidents pre-
ferred choice, Ms Dlamini-Zuma enjoys
the backing of several influential ANC
groups, including its youth and womens
leagues and powerful provincial heads.
Analysts say Mr Ramaphosa, who
lacks a strong grassroots constituency,
faces a stiff battle to overcome the pro-
Zuma camp.
are still being caught unfairly in the 28
per cent luxury band, including paint,
detergent and fizzy soft drinks.
Hindustan Unilever, the consumer
goods company, said: Laundry deter-
gents and dishwashing bars are daily
necessity products . . . it is important
they get the same treatment as other
daily necessity products.
Executives from the toy industry
believe the 28 per cent tax rate on board
games is a result of an administrative
oversight, as such games are bundled in
with video games and playing cards.
Also in that category are carrom boards,
the shuffleboard-style game popular
across south Asia.
Vivek Jhangiani, president of the All
India Toy Manufacturers Association,
said: We think this is a mess-up rather
than deliberate policy I dont think
This is not the one
product, one tax rate
system we were promised
Vivek Jhangiani, toymakers group
anyone has applied themselves to this
problem.
Mr Jhangiani added that even taxing
more general toys at 12 per cent would
result in price rises of about 5 per cent
on most items. Prices will go up, not
just because of the higher rates, but also
because of the administration of having
to adjust for three different rates, he
said.
This is not the one product, one tax
rate system we were promised.
Sales of toys in India have risen in
recent years as the growing economy
has boosted the middle class. But execu-
tives say the industry is still being
undercut by illegal cheap Chinese
imports, and has struggled to achieve
the kind of growth that has occurred in
China itself over the past decade.
Tuesday 30 May 2017 FINANCIAL TIMES 5
6 FINANCIAL TIMES
Reflections of
Japan in Europe
Jackie Wullschlager visits an
exceptional Japanese private
collection that celebrates
the rich artistic exchange
between east and west
T
he Muse de lOrangeries
sumptuous summer exhi-
bition Tokyo Paris opens
with Shigeru Aokis vast
frieze of naked fishermen,
some with ghoulish whitened faces,
dragging home sharks, A Gift from the
Sea (1904), and ends with a black gold
gestural waterfall Konto (1990) by
Kazuo Shiraga, who used to paint with
his feet, swinging from a rope.
The first work is indisputably
Japanese; the second speaks the homo-
genised language of abstraction.
Between the two hang mid-20th century
works as enticing yet disorientating as
Star Yasuis hard deco portrait of a
Japanese matron in a striped Chanel suit
and jaunty red boater, Portrait of Mad-
ame F, and Tsuguharu Foujitas inky,
pale wartime dream of a feast in a black
interior overlooked by cat and bird,
metaphor of threat and longing, Still
Life with Cat. Close in style to western
modernism, these are also oriental and
different, defensive, melancholy.
Tokyo Paris is a wonderfully lively
show about how context and culture
condition looking and collecting, with
surprises which make even 19th-
century painting piquant and fresh. In a
rare, stunning Nature morte la tte de
cheval, painted during Gauguins brief
experiment with neo-Impressionism,
vibrant diagonal hatchings and blots
represent the Horse of Selene from the
Elgin Marbles alongside Japanese fans
and puppets. The contrasting elements
blend in scintillating interplays of line
and light, announcing twin allegiances
to western and eastern heritage.
The Gauguin shares a small gallery
with a lapis lazuli and peacock-blue
orientalist watercolour fantasy featur-
ing a Japanese screen, La Toilette, by
Matisses teacher Gustave Moreau, and a
rugged self-portrait in uneven, loose
patches of colour Czanne coiff dun
chapeau mou, in which I dont think I
ARTS
JAPANESE
ART ONLINE
As the British Museum launches
its major Hokusai exhibition,
Simon Schama reflects on the
Japanese masters genre-defying
genius, while FT arts editor Jan
Dalley presents a video survey of
Hokusais influence on the west
ft.com/arts; ft.com/hokusai
am imagining this the sallow-skinned,
narrow-eyed artist half-turned towards
us looks Japanese.
All these works come from Tokyos
Bridgestone Museum of Art, founded by
rubber tyre magnate Shjir Ishibashi,
whose Impressionist, modern and Japa-
nese paintings now revisit Europe for
the first time since 1962. Like all good
private collections, its attraction is the
charm of a refined, distinctive taste:
Ishibashis flair for powerful simplicity
and clarity, tending towards minimal-
ism. Czannes Montagne Sainte-
Victoire et Chteau Noir, the Bridge-
stones flagship piece, is an abstracted
version of the celebrated motif.
Matisses portrait of his daughter
Marguerite La Jaquette raye and
Paul Signacs harbour watercolour
La Rochelle, which hung in Ishibashis
living room, each leave large areas of
white ground bare to luminous effect.
Beyond Ishibashis personal interest,
though, lies a broader historical story.
This is a collection rooted in a century of
east-west correspondences, which
unfold with striking resonance against
the backcloth of the Orangeries monu-
mental, permanent immersive installa-
tion of Monets Nymphas.
Monets debt to Japan, and the popu-
larity across fin-de-sicle art of
japonisme motifs, have long been
acknowledged. Van Gogh believed all
his work derived from the bold, flat,
cropped, high colour compositions of
Japanese prints. Monet felt similarly:
invited to exhibit in Tokyo, he replied,
with the admiration I have for Japanese
art, I am wondering what would be the
point of showing my poor efforts there.
An engagement with Hokusai defines
his earliest work: he could never have
painted the buoyant 1860s masterpiece
Terrasse Saint-Adresse without the
formal design, flat surface and elevated
viewpoint of Gohyaku Rakan-ji
Sazai- do Temple from Thirty-six
Views of Mount Fuji as model.
Less well-known is the cultural jour-
ney in the opposite direction. Ishibashi
began as a collector of yga painting:
fusion works employing western styles
for mostly Japanese subjects. A pair of
tall gold-backed screens featuring
DA N C E
Nicht Schlafen
MC93, Bobigny, France
aaaae
Laura Cappelle
The MC93 is back. The theatre, based in
the northern Paris suburb of Bobigny,
has been an important creative force
since 1980. Three years ago, it closed for
much-needed upgrade work, added stu-
dios and a small third stage. Its grand
reopening, with Alain Platels contem-
porary dance piece Nicht Schlafen,
betrayed some rough edges, with public
areas a cheerless beige. Still, the
improvements should stand artists in
good stead.
Hortense Archambault, appointed
MC93 director in 2015, selected Platel
for the main stages trial run ahead of
her first full season. The world of Nicht
Schlafen is unstable and overtly violent.
It takes its cue from Gustav Mahler, with
ment of water with mirrored sky and
hanging willow suggesting at once
Clockwise from top left: Saint-
Mamms et les coteaux de la Celle
matin de juin (1884) by Alfred
Sisley; Jardin potager au jardin de
Maubuisson, Pontoise (1878) by
Camille Pissarro; Czanne coiff
dun chapeau mou (c1890-94) by
Paul Czanne; Nature morte la
tte de cheval (1886) by Paul
Gauguin; ventail noir (1908-09)
by Takeji Fujishima
Bridgestone Museum of Art, Ishibashi Foundation
excerpts from a range of symphonies,
and the uncertain times the composer
lived through in the early 20th century.
An unsettling sculpture by artist Ber-
linde De Bruyckere sets the tone: three
horse carcasses are piled up on stage,
morbidly cut up, legs open and twisted.
The nine performers gather around it in
silence. Soon enough, in a burst of rabid
energy, they tear each others clothes
off, leaving them in tatters.
Alain Platels Nicht Schlafen
Tuesday 30 May 2017
symbolist figures from Japanese
myth and legend, Takeji Fujishimas
Memories of the Tempy Era and
Aokis Underwater Paradise, frame
his collection.
Aoki, a natural rebel born into a
samurai family, dead at 28 from tuber-
culosis, was a talented draughtsman
with a willowy, lyrical line who also pos-
sessed chameleon gifts of absorption
and imitation. Marine, Mera, depict-
ing the Boso Peninsula on the Pacific
Coast, follows and closely resembles
Monets 1880s Breton seascapes, such as
the surging, stabbing turquoise white
strokes in Belle-Ie, effet de pluie here.
Monet in turn has drawn on Hokusais
stylised calligraphic notation.
Belle-le entered Japan through
Kojiro Matsukata, president of
Kawasaki Shipbuilding, who bought 18
canvases on a single visit to Giverny
part of a collection of 10,000 works,
western and Japanese, developed in the
1920s. Eventually fire and financial
recession decimated and dispersed
Matsukatas holdings; among Matsu-
kata pieces which found their way to
Ishibashi here are the laconic, sketchy
Portrait de Manet par lui-mme, one
of only two Manet self-portraits, a lush
late Renoir landscape Terrasse
Cagnes, and Monets depiction of sub-
merged trees as elegant abstractions,
black verticals on an unstable watery
ground Linondation Argenteuil.
Ishibashi acquired other great Monets
from the collections of painter Shintaro
Yamashita a cerulean Nymphas of
plunging steep perspective, the frag-
enclosure and infinity and banker
Sanji Kuroki, who befriended the wid-
owed artist from 1918. Kurokis choice
late paintings included a blistering
Crpuscule Venise and the tremu-
lous Nymphas, temps gris where
pink reflections begin to pierce the sur-
face of the overcast pond of water lilies:
flowers grown from bulbs sent from
Japan, in Monets French garden.
Through pioneering Japanese collec-
tors, quick to appreciate the Nymph-
eas when most French collectors in the
1920s disdained them, these works
went home to Tokyo. Returning now to
the Orangerie, they bring the Franco-
Japanese exchange full circle.
Ishibashi died in 1976; a decade later
Japanese enthusiasm for 19th-century
French painting transformed the mar-
ket into the record-smashing global
theatre we know today, after Japanese
businessmen Yasuo Goto and Ryoei
Saito bought Van Goghs Sunflowers
($39.9m in 1987) and Dr Gachet
($82.5m in 1990).
Ishibashis heirs took an alternative
route, expanding the Bridgestone with
postwar works amplifying east-west
dialogue. Hisao Domotos packed red
and black rectangles Solution de
Continuit no 9 and Wou-Ki Zaus
slippery, subtle abstraction 07.06.85
typify purchases of the last two decades.
So does a starry work by the westerner
who influenced them both, Paul Klees
rough/refined pattern in oil and sand,
Island, formerly owned by Daniel-
Henry Kahnweiler, then Mies van der
Rohe. All contribute to a top-flight, mul-
tifaceted show, inviting us to reconsider
the familiar through the unfamiliar, and
the global through the personal.
To August 21, musee-orangerie.fr
There is irony in their sudden domes-
tication when Mahler intrudes and the
group pauses to listen intently and step
carefully to the music. Nicht Schlafen
veers between seemingly instinctive
behaviour and disciplined choreogra-
phy: at one point, all gather around the
horses to pump their chests, in a pagan
ritual that winks at The Rite of Spring.
As often with Platels Les Ballets C de
la B, the performers are a varied crew,
and the loose structure feeds off their
idiosyncrasies. Two of them, Boule
Mpanya and Russell Tshiebua, are Con-
golese singers who memorably spin
Mahler melodies into polyphonic mate-
rial. David Le Borgne also stands out in a
face-off where he is by turns Wagnerian
demi-god, bull and casualty.
Platels ability to unite them as a
group yet let them articulate movement
with sinuous individuality, gives some
scenes a nervy, intense edge. A few cuts
would help Nicht Schlafen, but the MC93
is off to an uncompromising new start.
mc93.com
Tuesday 30 May 2017
In an echo of the subprime housing crash that triggered the financial crisis, delinquencies of US car loans
are rising amid allegations of mis-selling and concerns over the bundling of debt from the $1.2tn market.
K
athy Boluch was in a bit of a
state when she visited her
local used-car dealership in
Quincy, Massachusetts. The
rear of her Volvo had been hit
by a drunk driver and her insurer was
badgering her to buy another vehicle so
she could return the rental car it had
given her. But her low credit score and
irregular income disqualified her from
every loan available until the guys out
the back called Santander.
Within a couple of hours she was driv-
ing off in an $18,000 Chevrolet sport
utility vehicle, financed with a $16,000
loan from Santander Consumer USA,
the auto-loans division of Spains biggest
bank. To clinch the deal, the salesman
suggested that Ms Boluch, a freelance
copywriter, help out the dealership with
promotions. He even listed her as an
employee on the loan application.
But the work never came. Five years
on, Ms Boluch, 60, is still paying $350 a
month to bring down an outstanding
balance of about $10,000. Meantime,
she has spent another $7,000 on repairs
to a terrible car that would now fetch
about $750 in a sale.
I was basically putty in their hands,
totally swept off my rational sensible
self, drawn into this vortex, she says.
Ms Boluchs story which helped
trigger an investigation by the state
attorney-general and a $22m fine in
March for Santander Consumer is just
one of many from a seven-year boom in
car loans that has strong echoes of the
pre-crisis mortgage frenzy.
What we should have
learnt from the last crisis
was that we can prevent
needless repossessions.
But we didnt
In both cases, big banks and finance
companies relaxed underwriting stand-
ards to keep up with rampant competi-
tion. Investors snapped up whatever
high-yielding products investment
banks could come up with. And con-
sumers signed up to big loans on the
assumption that if they had trouble pay-
ing them off, they could always just sell
the asset.
Just as with mortgages, the car loan
business has grown rapidly. Total auto
loans outstanding came to $1.17tn at the
end of the first quarter of this year,
according to the New York Federal
Reserve, up almost 70 per cent since a
post-crisis trough in 2010. That has
helped push total household debt to
$12.7tn, surpassing the 2008 peak.
But now there are signs that consum-
ers have had about as much as they can
take after eight years of weak economic
expansion.
Strains have been evident for at least a
year at the bottom end of the auto-loan
market, in the world of subprime. But in
prime debt, too, delinquencies are
beginning to pick up, forcing big banks
such as Wells Fargo and JPMorgan Chase
to pull back.
Carmakers are now boosting dis-
counts and cutting production to
address rising inventories on dealer lots.
Falling used car values, in turn, are
pushing up defaults, as people find
themselves stuck in loans they cannot
afford but cant trade out of because
they still owe more than the vehicle is
worth.
Here we are again, says Janet Tava-
koli, president of Tavakoli Structured
Finance, a Chicago-based consulting
firm. Car loans are a smaller market
than mortgages, she notes, which total
about $9tn. But they could still do a lot
of damage if consumers keep missing
payments.
The share of auto debt more than 90
days overdue rose to 2.3 per cent in the
first quarter, the highest in six years,
according to the New York Federal
Reserve. Its a new mini-Big Short, she
says, alluding to traders who made bil-
lions by betting on a housing collapse a
decade ago.
Rise of the subprime specialists
If the architects of the Dodd-Frank Wall
Street Reform and Consumer Protec-
tion Act had their way, auto dealers
across the US might have been on a
tighter leash. In early drafts of the 2010
law, dealers were to be put under the
supervision of the new Consumer
Financial Protection Bureau.
But then a Republican congressman
from Orange County, California him-
self a former auto dealer pushed for a
carve-out and won. The result: the CFPB
regulates auto lenders, but car dealers
continue to answer to the Federal Trade
Commission, which has historically had
more of an eye on deceptive advertising
than shakedowns at the point of sale.
It is an unsatisfactory situation, says
Chris Kukla, an executive vice-presi-
dent at the Center for Responsible Lend-
By Ben McLannahan
Buyers look at
new cars at a
Ford dealership
in Glendale,
California Kevork
Djansezian/Getty Images
Gearing up for trouble
Lots on the lots
Total car and light truck inventory units
(m)
2000 05 10
Sources: Autodata; Morgan Stanley Research; Rating Agency Reports; Bloomberg
History repeating
Big Short fund manager
targets auto sector
Steve Eisman knows sloppy
underwriting when he sees it. The
fund managers attempts to profit
from lax lending in the run-up to the
2008 financial crisis were one of the
main narrative arcs of The Big Short,
Michael Lewiss book about the
subprime mortgage meltdown.
That same eye for a badly crafted
loan has now drawn him to autos,
where he is shorting some of the
FINANCIAL TIMES
FT BIG READ. AUTO FINANCE
ing in Durham, North Carolina. He
notes that Dodd-Frank required mort-
gage lenders to take specific steps to
determine that home buyers can actu-
ally handle their payments. If they do
not take those steps, homeowners can
sue and potentially win big damages.
No such protections apply to car
loans. As a result, he says, dealers have
stretched out terms, moving from the
standard 60-month contract to 72 or
even 84, meaning that borrowers are
Going deep
Deep subprime* share of subprime auto
securitisations (%)
4.5 35
Traditional deep
4.0 subprime lenders 30
3.5 New deep 25
subprime lenders
3.0 20
2.5
2.0 10
1.5
1.0
15 17 2010 11 12 13 14 15 16
* Weighted average FICO <550
subprime lenders and one or two used-
car sellers.
During the recession, Mr Eisman
notes, car loans held up pretty well.
Consumers tended to default on their
house first, credit card second and car
third.
But the deterioration of underwriting
standards has been so dramatic that
losses are bound to rise, he predicts.
Meanwhile, falling used car values
caused by a glut of vehicles coming off
lease contracts will probably push up
defaults too.
Its starting to get a little dicey in
terms of credit quality, says Mr Eisman, a
likely to stay underwater on their
loans for longer.
At the same time, dealers have
cranked up loan-to-value ratios and
debt-to-income ratios, putting borrow-
ers under greater strain.
Were setting people up to be in very
expensive loans where they owe more
than the car is worth for the duration,
says Mr Kukla. So theres a higher
chance of having some kind of life event
such as a big medical bill where they
are forced to sell their car and end up in
lots of trouble.
The loss of a car could mean the loss of
a job, and other loan defaults, he adds.
What we should have learnt from the
last crisis was that we can prevent need-
less repossessions. But we didnt.
Echoes of the mortgage crisis
Some of the most rapid growth has
occurred at specialist subprime lenders
15 such as Exeter Finance of Irving, Texas,
owned by Blackstone, and Skopos
5 Financial, also of Irving, which is owned
by Lee Equity Partners, a New York pri-
0 vate equity firm. Lenders like these
have pumped out billions of dollars of
loans, which have been bundled
together, then sliced into securities by
former lawyer who put on his big bets
against subprime mortgages at
Greenwich, Connecticut-based
FrontPoint Partners, then a unit of
Morgan Stanley. He is now a senior
portfolio manager at Neuberger
Berman in New York.
Will it be as bad as the home loan
crisis? Probably not. Lending
standards have dropped, but it is not
quite the free-for-all of a decade ago.
At the height of subprime
mortgages, the standard was, can you
breathe? It never got that bad in
subprime auto. They definitely
checked your pulse.
the likes of Wells Fargo and JPMorgan
Chase.
According to Morgan Stanley, the
share of auto securities tied to deep
subprime loans those given to bor-
rowers with scores below 550 on the
commonly-used FICO creditworthiness
scale rose from 5.1 per cent of total
subprime deals in 2010 to 32.5 per cent
last year.
Santander Consumer, Americas big-
gest issuer of subprime auto securities,
says it has smartened up its act since the
2009-2014 period covered by the $22m
settlement with Massachusetts. Dela-
ware separately fined the company $3m
for allegedly harming consumers by
funding loans without having a reasona-
ble basis to believe that the borrowers
could afford them. In agreeing to the set-
tlements, Santander Consumer neither
admitted nor denied the attorney-gen-
erals allegations.
The Spanish bank became a domi-
nant player in the US auto market in
2006, when it bought Drive Financial
Services of Dallas. Since then it has
bought other auto lenders and built
relationships with more than 15,000
dealerships across the country.
According to the Delaware consent
order, essentially a voluntary agree-
ment, some of those dealers were engag-
ing in practices reminiscent of the mort-
gage crisis, when terms like ninja
loans short for no income, no job, no
assets became part of the lexicon.
The consent order talks of power
booking, for example, or stating
falsely that a vehicle has additional
features that increase its value, thereby
supporting a higher loan amount. Then
there was packing, or adding extra
products such as warranties to a loan,
without breaching maximum loan-to-
value ratios.
Santander Consumer had suspected
for a while that salesmen at one outlet
were inflating customers incomes as est ebb, people in a bad frame of mind,
they applied for loans. Those suspicions
7
Fast growth Total auto loans
outstanding hit $1.17tn at the end of the
first quarter, up 70 per cent since 2010
Brakes applied Some big banks have
cut car lending amid fears that buyers
have taken on too much debt
Bank pain A combination of higher
defaults and lower recovery rates on
the cars could be damaging for lenders
were right. Of the 11 loans Santander
Consumer examined in 2013, just one
stated income was accurate and another
three could not be verified. Of the seven
that were inflated, the smallest over-
statement was $45,324 a year.
Outrageous, said Maura Healey,
attorney-general of Massachusetts, as
she handed out the fine. The company
had continued to buy loans from the
unnamed dealer even after the fraud
was detected.
Ms Healey drew parallels to earlier
home-loan cases featuring Goldman
Sachs, Royal Bank of Scotland and
Countrywide, among others. After
years of combating abuses from sub-
prime mortgage lenders, these practices
are unfortunately familiar, she said.
Used car glut
The big banks have been throttling back
and assuring investors that the prob-
lems can be contained. Wells Fargos
$5.5bn of auto-loan originations during
the first quarter were down 29 per cent
from a year earlier.
Last month, Franklin Codel, head of
consumer lending, said Wells had been
taking prudent steps to manage
industry stresses within its $61.5bn
portfolio.
JPMorgan Chase has slammed on the
brakes too, adding $8bn of loans and
leases during the quarter, down 17 per
cent. According to Gordon Smith, head
of the banks consumer banking divi-
I was basically putty
in their hands, totally
swept off my rational
sensible self, drawn
into this vortex
sion, the share of subprime loans within
that mix has fallen dramatically.
But losses look set to rise because
when lenders repossess cars from
defaulted borrowers and then sell them,
they are getting less and less money
back.
A flood of used cars has hit the mar-
ket, depressing prices, and many more
are on the way. Another 7m or 8m cars
will come off-lease by the end of next
year, according to Morgan Stanley esti-
mates, which is about twice the long-
term average.
The combination of higher defaults
on the loans and lower recoveries on the
cars could be painful for the banks,
says Brian Foran, analyst at Autono-
mous Research in New York. He notes
that Wells or JPMorgan probably wont
be blown up by their exposures. JPMor-
gan, which often boasts of its fortress
balance sheet, has $79bn of auto loans
and leases among total assets of $2.5tn.
But for specialists with higher car-
loan concentrations such as Capital
One, Huntington Bancshares, Ally
Financial or Santander Consumer USA,
he says, the outlook is gloomier.
Data from Allys securitisation pro-
gramme show that the Detroit-based
lender, spun out of General Motors a
decade ago, got back about 60 cents in
every dollar owed in April, from 72 cents
a year ago. The recovery rate at
Santander Consumer was even worse,
dropping to 46 cents from 53 a year ago.
Recoveries drove off a cliff, says Betsy
Graseck, an analyst at Morgan Stanley.
Meanwhile, the legal troubles are not
over for the subprime lenders. Ally,
Santander Consumer and others have
been subpoenaed by federal prosecu-
tors as part of an investigation into sub-
prime auto practices and related securi-
tisation activities, according to public
filings. New Yorks Department of
Financial Services is also probing sev-
eral car finance companies, according to
a person familiar with its supervisory
programme.
As for Ms Boluch, she is expecting a
cheque for $8,000 from Santander as
compensation for the way she was
treated. To this day, she kicks herself for
allowing herself to be manipulated.
They do seek out people at their low-
she says. I should have walked away.
8 FINANCIAL TIMES
TUESDAY 30 MAY 2017
This is not the time to
diminish the Treasury
Britain needs a strong chancellor with the power to kill off bad ideas
With little more than a week to go to
the UK election, civil servants are
weighing the implications of a likely
Conservative victory for their own
departments. Treasury officials have
more cause for concern than most. Ear-
lier this month, Theresa May pointedly
refused to confirm whether Philip
Hammond would keep his job if she
wins. Her equivocation, following a
series of bruising run-ins between No
10 and No 11, has fuelled rumours that
she might replace him with a more pli-
ant chancellor, trim his powers or
even break up his department. Any
such move would be a serious mistake.
It is not that the Treasury deserves to
be inviolate. Its broad remit and politi-
cal clout are unusual: many other
countries split financial and economic
policy into separate ministries. There
are good reasons to question its
extraordinary concentration of power
and the way it has historically used its
budgetary and economic roles to dic-
tate policy to other departments.
There are also good grounds to ques-
tion its record of economic manage-
ment from its failure to moderate the
Lawson boom of the 1980s, to its reli-
ance on light touch regulation in the
run-up to the financial crisis. More cul-
pable, perhaps, is an institutional bias
towards short-term control of spend-
ing that has starved Britain of long-
term investment in infrastructure.
However, prime ministers have
toyed for decades with proposals to
split the Treasury whether by creat-
ing a ministry for economic affairs, or
by handing oversight of public spend-
ing to No 10. This would be the worst
possible time to attempt such a reform.
Upheaval at the heart of Whitehall is
the last thing Britain needs, given the
enormous strain Brexit will place on
the entire machinery of government.
What is more, the prime ministers
motives for any restructuring, or for a
The world cannot walk
away from South Sudan
The regions leaders have a particular responsibility to take action
The worlds newest country, South
Sudan, is vying for the status of its most
broken. Created in 2011 after decades
of civil war and a referendum vote to
leave Sudan, the new country quickly
sank into a cesspit of infighting and
destruction. Long-simmering resent-
ments, which had been kept in check
while the mainly Christian south
fought the mainly Muslim north,
sprang into unholy war as a corrupt
cadre of leaders manipulated ethnic
allegiances for their pecuniary ends.
That was just the start. In the past
year or so, the situation has become
decisively worse. Following the break-
down of successive peace accords, Riek
Machar, the former vice-president
once accused of plotting a coup, has
fled the country leaving President
Salva Kiir in control. What has often
been portrayed as a conflict between
Mr Kiirs Dinka ethnic group and Mr
Machars Nuer has shattered into a
plethora of deadly squabbles between
an alphabet soup of rebel groups.
As usual, it is the people who suffer.
Of South Sudans population of 12m,
nearly 1.5m have fled the country and a
further 2m are internally displaced.
Nearly 5m face hunger. The UN has
declared the first famine in six years. It
is Africas worst humanitarian crisis
since the Rwandan genocide of 1994.
It would be tempting to leave South
Sudan to it, particularly since the gov-
ernment in Juba has so blatantly used
food aid for its own ends: both as a
source of revenue and as a weapon
of war. Nor is engagement without
risk: in March, seven aid workers
were ambushed and killed in just
the latest attack on those trying to
bring help.
Yet abandoning South Sudan would
be wrong for humanitarian, moral
and practical reasons. If assistance
stops indeed if it is not increased
tens of thousands or more could starve.
decision to replace Mr Hammond,
would be suspect. Mrs May has made it
clear that the economy will not be her
overriding priority. Her wish to control
the details of policy has already led her
to take some poor decisions most
recently on the funding of social care
on advice from too small and tightknit
a circle of aides. A further tightening of
No 10s grip would not be reassuring.
The problem now is not that the
Treasury is too strong or the chancellor
too meddlesome. The department
increasingly looks sidelined. Mr Ham-
mond has signalled that he intends to
refrain from policy gimmicks and focus
on the core task of managing the public
finances. But on the crucial issue of
Brexit, he is struggling to assert his
influence. The Treasury warned of the
costs of leaving the single market and
customs union, and of the self-defeat-
ing nature of the net migration target,
but lost the argument.
Given the difficult trade-offs Brexit
will require, and the choices it entails, it
is vital to have a strong chancellor who
can voice the concerns of business and
advocate the needs of the economy. It is
equally important to have a depart-
ment that can make the case as the
Treasury consistently has for compe-
tition and openness to foreign invest-
ment and skilled migration.
Rather than undermining Mr Ham-
mond, as Mrs May did by reversing a
key element of his spring Budget, or
dismembering his department, the
prime minister should back him up.
After all, the Treasury has one other
function that is nonetheless important
for being unofficial killing off bad
ideas that pose a threat to the economy.
There is no lack of well-intentioned but
ill-conceived ideas circulating at
present and the stakes have never been
higher. This is not the time to diminish
the chancellor or water down the
Treasurys influence.
Like victims everywhere, ordinary
South Sudanese are caught in a swirl of
events they have no power to control.
The moral imperative is linked to the
role of the west, particularly the US, in
helping to create the country. Its cause
became one close to the heart of US
evangelicals. Washington pushed
Khartoum to allow South Sudan to
secede. For mainstream America, the
country has fallen off the map. But
there is at least an element here of you
break it, you keep it. The west cannot
simply walk away.
Still, the biggest responsibility falls
on regional powers, principally Kenya,
Ethiopia, Uganda and Sudan. None is
keen to act. If anything, they appear to
be giving a green light to the govern-
ment in Juba to carry out what looks
suspiciously like ethnic cleansing.
Arms are pouring into the country and
the South Sudanese elite is laundering
its looted money into real estate in
neighbouring capitals.
East Africa has done noticeably
worse than west Africa in establishing
acceptable norms. The Economic Com-
munity of West African States has
taken on a creative political role, pres-
suring each others leaders to observe
term limits and to hold fair elections.
That worked as recently as January
when the threat of an Ecowas invasion
forced Gambias dictator Yahya Jam-
meh to accept electoral defeat.
If east Africas leaders cannot sum-
mon the moral resolve to act, they
should do so on practical grounds. If
not, they risk being swamped by refu-
gees. Conflict could spill over the bor-
ders into their territories.
Bringing stability, let alone lasting
peace, to South Sudan will be the work
of Solomon. Yet if the phrase African
solutions to African problems is to
mean anything, east African leaders
need to start following the lead set by
their west African peers.
Statisticians work is crucial to Greeces reform effort
Sir, As you reported on May 22
(FT.com), the eurogroup failed to
complete the review of the economic
programme with Greece and enable the
disbursement of 7bn of Eurozone
member taxpayer money to Greece.
Negotiations are continuing.
Meanwhile, on May 29, Andreas
Georgiou again went on trial for
violation of duty while he was
president of the Hellenic Statistical
Authority (Elstat) from August 2010 to
August 2015 (The Big Read, December
30, 2016).
These two strands should be linked,
but to date have not been. The
Brexit settlement must
support British business
Sir, I am writing in response to the
article Frustrated business leaders
seek to rebuild ties with No 10 (May
29). As the leading body for small and
medium-sized enterprises in the UK,
we have enjoyed improving
relationships with all parties. Our work
led to good government decisions for
help on business rates for small firms
and to stop a National Insurance tax
hike on the self-employed.
The Federation of Small Businesses
has been listened to, both by those in
power, and also those who seek to be.
Whoever wins on June 8, we do not
want to see the return of a big business
advisory group dominated by FTSE
100 executives, which excluded the
interest of 5.5m small businesses.
I agree with the CBI that the benefits
of business and the next government
working together are clear therefore,
we are calling for a proper partnership
between government and business
small, medium and large to deliver
an ambitious agenda for jobs and
growth and a pro-business Brexit for
trade, talent and transition.
Mike Cherry
National Chairman, Federation of Small
Businesses
London SW1, UK
Deficit of expertise holds
the ministry back
Sir, With the latest public sector figures
showing the UK deficit rising faster
than expected, the government now
more than ever needs a Treasury fit for
purpose. (Treasury fears post-
Election break up, May 26). In our
2016 report A Modern Finance
Ministry, we assessed whether the
Treasury was fit for the challenges of
the 21st century. It is certainly clear
that compared with the private sector,
the Treasury is under-resourced in
terms of its financial management
expertise and systems. Without
reforms, tackling the deficit, being
effective in spending taxpayers money
and informing political decision-
making with reliable information will
continue to be uphill struggles.
Ross Campbell
Director of Public Sector, Institute of
Chartered Accountants in England and
Wales,
London EC2, UK
Londons housing gains
lock out the rest of the UK
Sir, You report that Londoners
subsidised the rest of the UK in
2015/16 by paying 3,070 more in tax
Divorce, Indian
style, stokes
sectarian
divisions
New Delhi
Notebook
by Amy Kazmin
Letters
eurogroup and associated European
organisations (the European Stability
Mechanism, the European Commission
and the European Central Bank) have
not established the appropriate
linkage.
Mr Georgiou and senior colleagues of
his at Elstat are being prosecuted for
doing their job in producing honest
statistics about Greeces fiscal condition
for 2009, before the start of the first
Greek programme, and during the first
five years of programmes. Their work
is central to the Greek economic
reform efforts. It was based on
European standards for statistical data
than they received in public spending
(May 24).
This is an alarming figure. It is
disgracefully low.
Londoners have succeeded in
redefining, to their own advantage, the
rights of property owners, and have
used these powers to restrict new
housing. Non-Londoners have been
unable to move and participate in the
productive and well-paid London
economy.
Londoners may gloat over their
housing wealth, but it has been
acquired at very severe cost to the rest
of the UK.
How large a cost? A recent study
relating to the US suggests that
economic growth there, over recent
decades, has been halved by
restrictions on housing supply. The
damage on this side of the Atlantic has
surely been on a similar scale.
If so, the tiny subsidy is an entirely
inadequate response to the damage
that Londons Nimbyism has inflicted
on the rest of the United Kingdom.
Ian Hirst
Emeritus Professor of Finance,
Heriot-Watt University,
Edinburgh EH14, UK
Funding woes persist but
nuclear has a role to play
Sir, It is ironic that just as growing
numbers of environmental scientists
and others have come to see the role
fission can play in providing both
reliable and low carbon electricity
supplies, the Financial Times (The
nuclear option is vanishing, May 27)
should claim nobody outside the
nuclear industry now thinks the future
of electricity generation is nuclear
fission. James Hansen, Tom Wigley,
Ken Caldeira, George Monbiot, Mike
Shellenberger, Stephen Tindale . . .
As the disaster of the German
Energiewende unfolds greenhouse gas
emissions up four years in five, major
boost for brown coal and the
inherent implausibility of 100 per cent
renewables (or anywhere close)
becomes more obvious, there are
many who would like to see a re-run of
the dash for nuclear of 1975-1995
when the proportion of global
energy from very low-carbon sources
doubled.
Since then it has been effectively
static. Nuclear does face great funding
challenges but very many non-industry
commentators are far from ready to
write it off.
Malcolm Grimston
Honorary Senior Research Fellow,
Imperial College Centre for Energy Policy
and Technology,
London SW7, UK
Narendra Modi, Indias prime
minister, is concerned about divorce.
In particular, he and his Bharatiya
Janata party are concerned about
divorce within Indias minority
Muslim community.
Their dismay is focused on the ease
and speed with which Muslim men
can legally end marriages simply by
uttering talaq, talaq, talaq, under
the Islamic law that regulates
marriage and divorce among Indias
Muslims. It is radically different for
Hindu men, who must prove in a civil
court that their wives have wronged
them in order to formally end a
marriage over the womens objections.
Muslim womens groups have
petitioned the Supreme Court to ban
the triple talaq which Muslim
clerics insist is rare arguing it
violates constitutional promises of
gender equality. Mr Modi has thrown
the BJPs weight behind them,
repeatedly denouncing a practice he
says facilitates exploitation of
Muslim women.
Instant divorce in which women
can be abruptly cast out of marital
homes is indeed a brutal practice.
But many Indians are dismayed at the
way the BJP appears to be demonising
Muslims over the issue particularly
with unsavoury rhetoric suggesting
Muslim men have rapacious sexual
appetites. Deeply-embedded in the
BJP campaign is the idea that Muslim
women are uniquely vulnerable to
marital abandonment, while Hindu
women are more protected and
their husbands far better behaved.
quality. Successive Greek governments
have committed to comply with those
standards and to defend the
professional independence of Elstat.
The current government and several
previous governments have failed to
live up to these commitments.
We the undersigned call on the
European authorities not to complete
the programme review with Greece
until and unless the Greek government
declares publicly in writing that the
statistics compiled by Mr Georgiou and
his colleagues at Elstat were accurate
and that they were produced and
disseminated using appropriate
I keep having that dream where I
think I can fly
Stylistic turgidity hit a rival
institution decades ago
Sir, The Paul Romer story (May 26)
takes me back to the mid-1980s when I
was a member of a team of economists
at the UN department of economic and
social affairs putting out the annual
World Economic Survey. The survey
far predates the World Development
Report and is the oldest document of
its kind. The turgidity that you
mention had perhaps already crept in
it and the arrival of competitors from
other international organisations, like
the UN Conference on Trade and
Development, was beginning to take
the shine off the report in public eyes.
In came Goran Ohlin, the Swedish
economist, at the head of the
department. He soon began to fuss
about the English being written for the
survey. With his red pencil at the ready
he read every sentence we wrote,
mercilessly using it to strike out
bloated or winding sentences, often
replacing them with simple ones,
sometimes turning pages authored
even by the most senior economists
into a battlefield. Perhaps most
importantly, he had copies made of
George Orwells seminal 1946 essay.
Politics and the English Language, and
made it required reading for us.
We heard it said that the readability
of the survey had suddenly improved.
Mahfuzur Rahman
New York, NY, US
The mark of an economist
Sir, In regard to the latest kerfuffle at
the World Bank over the writing of a
report (May 26), it should be noted
that only an economist would judge
writing style with a percentage.
Woodruff Price
Dennis, MA, US
Yet that, lawyer Kirti Singh says, is a
laughable proposition. As if Hindu
men are not doing the same, she tells
me. Its just that they dont bother to
get a divorce. They just separate and
do their own thing.
I am reminded of a friends Hindu
housekeeper whose husband
working in another state abandoned
her and their three children, moving
in with a woman in another city.
The consequences of triple talaq or
deserting women generally are the
same, continues Ms Singh, who has
written a book on the economic status
of Indian women after separation and
divorce. You leave the woman high
and dry, often along with the
children.
As less than 30 per cent of Indian
women have paid jobs, abandonment
by a husband threatens their very
survival, forcing most back to parental
homes. They live on the fringes of
their natal families, says Ms Singh.
Financial realities make most women
vehemently opposed to divorce no
matter how dire the marriage.
Accurately assessing Indian
patterns of marriage, divorce and
remarriage is tricky, as the census
only records peoples current
marital status and doesnt separately
count re-marriages. But inferences
can be drawn. In the 2011 census,
1.3m Indians were divorced and 3.5m
were separated, including 3.8m
Hindus, and 654,000 Muslims. Of
those 4.8m, 3.3m were women while
just 1.6m were men, suggesting when
marriages end, men move on,
Tuesday 30 May 2017
Email: letters.editor@ft.com
Fax: +44 (0) 20 7979 7790
Include daytime telephone number and full address
Corrections: corrections@ft.com
processes and procedures based on
European standards.
Michel Camdessus
Paris, France
Jos Manuel Campa
Madrid, Spain
Edwin M. Truman
Washington, DC, US
Gertrude Trumpel-Gugerell
Vienna, Austria
Nicolas Vron
Washington, DC, US and Paris, France
Geoffrey Woglom
Amherst, MA, US
For a full list of signatories, go to
ft.com/letters
UK aid must be preserved
and rigorously spent
Sir, We warmly welcome the main
political parties promise to uphold our
commitment to international aid. We
know from our work the extraordinary,
life-saving impact of UK aid.
We also welcome the promises made
to ensure the UKs aid budget has
maximum impact. No one is keener
than us to see UK aid spent effectively
when lives are at stake, we must be
rigorous about every penny.
The Conservative party has proposed
a review of the OECD-governed rules
on aid spending. These rules are
neither perfect nor frozen in time, but
they do provide a robust framework for
ensuring that development assistance
puts people living in poverty first.
We are very concerned about the
suggestion that this country should
apply new aid rules unilaterally if
agreement is not reached on any
proposed changes. This step could
weaken the vital independent scrutiny
and standard setting role played by the
Paris-based OECD, and heighten the
risk of misuse of aid.
As a nation we are rightly proud of
our global leadership in development,
a record we have built through a
determination to seek international co-
operation and a resolute focus on the
worlds poorest people.
A truly global Britain is one that
builds consensus with friends and allies
about how to make the world a more
peaceful and prosperous place.
Amy Agnew
Europe Director, Global Citizen
Christine Allen
Director of Policy & Public Affairs,
Christian Aid
Chris Bain
Director, CAFOD
Tanya Barron
Chief Executive, Plan International UK
Tamsyn Barton
Chief Executive, Bond
Rose Caldwell
Executive Director, Concern Worldwide
UK
For a full list of signatories, go to:
ft.com./letters
Trump puts America first
Sir, Here is a better, more accurate
headline for your coverage of US
President Donald Trumps recent
foreign trip and foreign policy
statements (May 27), one I think will
prepare your readers for what is likely
to follow:
US Rejects Being Rolled Any More;
World Outraged.
Harold Seneker
Fair Lawn, NJ, US
regardless of religion. The data also
indicate more Hindus separate
without obtaining a legal divorce,
while Muslims formally end failed
marriages.
Mr Modis own personal history
shows how misleading an official
marital status can be. Until 2014, most
Indians believed he was a bachelor.
But on his 2014 election nomination
form, he admitted he was legally
married, though it seemed he had not
seen his wife, Jashodaben, in
decades. His political allies explained
the two were promised to each other
as children; married as teenagers
despite Mr Modis objections; and
lived together only briefly.
After the sensational revelation,
Indian media tracked down
Jashodaben, who had supported
herself for decades as a village
schoolteacher. She was living with her
brother, still displaying the traditional
markers of a Hindu married woman
and praying regularly for the welfare
of her long-absent husband. This
history and the narrow focus on
Muslim women, while excluding
others equally vulnerable leaves
feminists suspicious of the prime
ministers motives over triple talaq.
They are not interested in giving
substantive rights to women, says Ms
Singh. They are not interested in
gender justice. They are only
interested in making fun of the
Muslims and creating hate around
them.
amy.kazmin@ft.com
Tuesday 30 May 2017
The myth that voters have chosen to be poorer
POLITICS
Janan
Ganesh
W
hen he ran to be US
president in 1968, Rob-
ert Kennedy questioned
whether gross national
product could measure
American greatness while it counted
napalm, cigarette advertisements, envi-
ronmental ruin, special locks for our
doors and the jails for people who break
them. He sensed the loftier needs of a
rich but troubled nation. Within a dec-
ade, slow growth and extreme inflation
put paid to such high-mindedness and
gifted the west to free-marketers until,
well, now.
When he became Britains prime min-
ister in 2010, David Cameron said there
was more to life than gross domestic
product and offered wellbeing as an
alternative metric of success. Within a
Merkel, Trump
and the end of
the west
FOREIGN AFFAIRS
Gideon
Rachman
D
onald Trumps first visit to
Europe was awkward. Its
aftermath has been explo-
sive. Speaking at an election
rally in Munich, shortly
after the US president had returned to
Washington, Angela Merkel came close
to announcing the death of the western
alliance.
The German chancellor warned that:
The times in which we can fully count
on others are somewhat over, as I have
experienced in the past few days. We
Europeans must really take our destiny
in our own hands. Of course we need to
have friendly relations with the US and
with the UK and with other neighbours,
including Russia. But we have to fight
for our own future ourselves.
Ms Merkels remarks swiftly made
headlines. Richard Haass, who as presi-
dent of the Council on Foreign Relations
is the doyen of the US foreign-policy
establishment, tweeted: Merkel saying
Europe cannot rely on others & needs to
take matters into its own hands is a
watershed & what US has sought to
avoid since WW2.
It is easy and appropriate to blame
President Trump for this state of affairs.
But despite her cautious phrasing, Ms
Competition is not for losers even in the digital era
TECH NOLOGY
John
Thornhill
T
wo very different and seem-
ingly contradictory tales
are told about the economy:
call them the Disrupt and
Decay schools of storytell-
ing. The first says that we are living
through an era of unprecedented, dis-
ruptive change. I heard that story cubed
on a recent visit to Silicon Valley, where
entrepreneurs enthused about the
effect of applying artificial intelligence
in different industries. I try to resist
hyperbole, one investor told me. But
I think AI will be as transformational
as fire.
The Decay storytellers counter that
the real problem is a lack of innovation
rather than a surfeit of it. Contrary to
West Coast mythmaking, developed
economies are living through one of
year, his government was scrabbling
around for economic growth wherever
it could find some, its electoral pros-
pects hinged to tenths of a percentage
point in the quarterly data.
A post-economic world, where voters
look past the material to nobler priori-
ties, is always in the offing. A smart poli-
tician should assume that the offing is
where it will stay. The thought occurs
because traces of that Kennedy-Cam-
eron naivete is it a trust-fund thing?
survives in Britains general election
campaign.
Neither Theresa May, the Conserva-
tive prime minister, nor Jeremy Corbyn,
her Labour opponent, answer to eco-
nomic imperatives. Both interpret the
public anger of recent years as a cry for
something more than the soulless quest
for 2.5-ish per cent annual output
expansion, damn the human conse-
quences. Mrs May wants a more famil-
iar nation, a more British Britain. Mr
Corbyn wants a more equal and state-
controlled one. Both offset policies that
risk immediate damage to the economy
with policies that might restructure it
over time.
Merkel has also behaved irresponsibly
making a statement that threatens to
widen a dangerous rift in the Atlantic
alliance into a permanent breach.
The case against Mr Trump is easiest
to make. His performance in Europe
was disastrous. In a speech to Nato, the
US president failed to reaffirm Article 5,
the alliances mutual defence clause.
This was not an accidental oversight
and sent a clear message that Americas
commitment to the defence of Europe
can no longer be taken for granted.
That, in turn, risks encouraging Russia
to test Natos defences.
At a G7 summit, Mr Trump stood
alone in his failure to endorse the Paris
climate accord. And he was also widely
quoted as calling Germany bad, very
bad for the sin of selling too many cars
in the US.
Faced with all this, and with Brexit
Britain, Ms Merkel may feel that she is
merely stating the obvious in suggesting
that Germany can no longer count on its
American and British allies. Nonethe-
less, her speech was a blunder for at
least five reasons.
First, it is a mistake to allow four
months of the Trump presidency to
throw into doubt a Transatlantic alli-
ance that has kept the peace in Europe
for 70 years. It may come to that. But it is
also possible that Mr Trump is an aber-
ration and will soon be out of office.
Second, the US president actually
had a valid point to make about the
failure of most European countries to
meet Nato targets on military expendi-
ture. Mr Trumps behaviour in Europe
the least innovative periods in modern
history.
According to research from the Eco-
nomic Innovation Group, a Washington-
based think-tank, dynamism is in
retreat and the rate of new business for-
mation in the US has been declining.
Since the great recession of 2008, more
firms have died than have been born.
That lack of new competition has cre-
ated the golden age of the corporate
incumbent, rather than the insurgent.
There has been a marked concentration
of market power in many industries and
regions. As a result, corporate profits
have risen to a record 9.4 per cent of
output.
Which story we collectively believe
has big implications for economic and
social policy. If we accept the first tale
then there is no need to worry much
about competition. If we truly stand on
the cusp of revolutionary technological
change, then the market should do it all
for us. Competition is just a click away,
as the saying goes.
In this world, the main focus of policy
should be how to mitigate social risk.
Whole regions, and groups of people,
FINANCIAL TIMES
Comment
The Tories plan to replace immigra-
tion and European single-market mem-
bership with an industrial strategy that
will not produce results, if at all, until
well into the next decade. They are
relaxed about the lag because they
believe that voters are willing to pay for
the society they want that Britain can
be poorer but happier, like an exhausted
bond trader who quits to brew artisanal
ales in Devon.
If anything, public anger
stems from the crash,
a slow recovery and
growth that is too weak
In that belief lies the eventual rout of
this generation of leaders. There is no
evidence that voters are ready to bear a
cost to live in their own version of Eden.
Last year, a large majority told surveys
they would not pay a single pound to cut
European immigration. A similar per-
centage still either assume there is no
choice to be made between migration
was crass. But his argument that it is
unsustainable for the US to account for
almost 75 per cent of Nato defence
spending is correct and was also made
by Robert Gates, defence secretary for
President Obama. Given that Germany
has been freeriding on American
military spending, it is a little cheeky
to blame the US for being an unreliable
ally.
Third, by implying that the western
alliance is now coming apart, Ms Merkel
has compounded the error that Mr
Trump made when he failed to endorse
Article 5.
Both events will have encouraged the
Russian government in its hope of
breaking up the western alliance. That,
in turn, makes Europes security situa-
tion more dangerous.
The German leader
displayed an
uncharacteristic deafness
to the echoes of history
are likely to be tossed around or margin-
alised in this entrepreneurial mael-
strom. The public conversation may
be about sharing wealth, as much as cre-
ating it. That partly explains why so
many tech entrepreneurs have come
round to the idea of a universal basic
income.
But the lessons are clearly very differ-
ent if we believe the second story. In that
To the US, European
regulators appear like lion
tamers dealing with the
EUs tech kittens
undynamic world we should be a lot
more concerned about creating incen-
tives for greater innovation and be far
more interventionist in tackling market
dominance.
To generalise heroically, the Disrupt
story appears to prevail in the US, with
the administration of President Donald
Trump seemingly committed to a win-
ner-takes-all economic model. That
controls and trade with Europe or,
forced to choose, favour the trade. The
British did not brave the costs to vote for
exit. They just did not believe there
were costs. None of this suggests that
buyers remorse about exit is imminent,
but politicians who count on a new pub-
lic tolerance of economic pain to get
through the coming years are foolish
and should fear signs of a slowdown.
It is fashionable to wave away GDP
talk as an abstraction for elites who, in
the sin of the times, dont geddit. But attributable to government policies.
those decimal-point movements trans-
late into wage rises given or withheld,
investments that generate returns or do
not, public services that are funded or
start to creak. There was no populist
momentum in, say, 2007, not even in
the deindustrialised towns that seethe
now. Growth was unequal but there was
enough of it to keep unproductive parts
of the realm in state largesse. As official
data exposed last week, the UK is a
patchwork of deficit-running regions
that are subsidised by London and its
surrounds. Imagine if voters in those
areas receive less generous transfer pay-
ments and inferior public services
Fourth, Ms Merkel was unwise and
unfair to bracket the UK with Trumps
America. In the climate change discus-
sions, Britain sided with the EU not
the US. Similarly, the government of
Theresa May has been at pains to stress
Britains commitment to Nato.
However, if Ms Merkels government tion from Britain and the US while
pursues the Brexit negotiations in the
current confrontational spirit
demanding that the UK commit to
vast upfront payments, before even
discussing a trade deal she risks
creating a self-fulfilling prophecy and a
lasting antagonism between Britain and
the EU.
It is hard to see how the UK can be
expected to see the same countries as
adversaries in the Brexit negotiations
and allies in the Nato context. So a really
hard Brexit could indeed raise questions
about Britains commitment to Nato
particularly if the US is also pulling back
from the western alliance.
The final flaw in Ms Merkels
approach is that it displayed an unchar-
acteristic deafness to the echoes of his-
tory. One of the truly impressive things
spirit is perhaps summed up by Peter
Thiel, the tech investor, who declared
that: Competition is for losers.
But Europe, which has long grown
used to a low-growth economy, appears
more familiar with the Decay story. The
EU certainly believes in a far more activ-
ist competition policy. It recently
slapped a 110m fine on Facebook for
breaking its promises not to share user
data following its acquisition of What-
sApp in 2014.
At a conference last week for the
Oxford Centre for Competition Law and
Policy, there was a lively debate about
how far competition policy should be
rethought for our digital age. Should it
be further broadened to encompass
concepts of privacy, discriminatory
pricing and national data security?
Should it even tackle those who seek to
game the online advertising market and
attract revenue-generating clicks by
peddling fake news?
From the US perspective, European
regulators appear like lion tamers deal-
ing with kittens. The European players
in the digital economy do not amount to
much. The five US platform companies,
because of diminished growth in the
capital. Would they console themselves
that at least their country was less glo-
balised and that Londoners had some of
the strut knocked out of them? Or would
they become angrier? This is not a hard
question.
Mrs May and Mr Corbyn will deny
indifference to growth and claim what
they want is a fairer version of it. But the
British will not happily weather a rough
period on the way, especially if it is
Any post-material consciousness is still
confined to a sect. It is the politics of the
retired asset owner and the too-rich-to-
care bohemian. Everyone else the
average-earner, the welfare claimant,
the millionaire investor is hair-trigger
sensitive to fluctuations in GDP and the
way prices relate to wages. The poorer-
but-happier thesis has it the wrong way
around. If anything, public anger stems
from the crash and a recovery of historic
slowness from growth that is too weak
rather than a will to transcend growth
altogether.
janan.ganesh@ft.com
Daniel Pudles
about modern Germany is that, more
than any other country I can think of, it
has thought hard about the lessons of
history, and learnt them with thorough-
ness and humility. So it is baffling that a
German leader could stand in a beer-
tent in Bavaria and announce a separa-
bracketing those two countries with
Russia. The historical resonances
should be chilling.
None of this is meant to suggest that
Ms Merkel is on the same moral and
political level as Mr Trump. The US
president has repeatedly displayed con-
tempt for core western values from
freedom of the press to the prohibition
on torture and the support of democra-
cies around the world.
As a result, some have even pro-
claimed that the German chancellor is
now the true leader of the western
world. That title was bestowed prema-
turely. The sad reality is that Ms Merkel
seems to have little interest in fighting to
save the western alliance.
gideon.rachman@ft.com
Facebook, Apple, Amazon, Netflix and
Google have a combined stock market
valuation of $2.4tn, bigger than Frances
CAC 40 or Germanys Dax.
Ariel Ezrachi, an Oxford law profes-
sor, argues that policymakers have to
recognise that new dynamics of compe-
tition are at play.
Increasingly, competition in the dig-
ital era is between tech company
monopolies that have access to massive
data sets and vast computing power,
creating formidable barriers to entry.
The narrative pushed by some com-
panies is not the least convincing or
credible, says Prof Ezrachi. No one
wants to see competition agencies inter-
vene for the sake of it. But neither do we
want them to go to sleep as a result of
intellectual or regulatory capture.
Competition policy has long been
viewed predominantly as a tool to pro-
mote economic efficiency. But it
remains a political and social construct.
As such it must be reinvented to match
the needs of our times, whichever eco-
nomic story you believe.
john.thornhill@ft.com
9
Irans banks face
reform to aid
post-sanctions
recovery
OPINION
Naysan
Rafati
H
aving secured a comforta-
ble re-election victory,
Irans president Hassan
Rouhani will almost cer-
tainly make the Iranian
economy a priority. If the nuclear agree-
ment reached with six major world
powers in 2015 was the prize achieve-
ment of his first term as president, the
challenge of the next four years is to con-
vert the lifting of international sanc-
tions into jobs, investment and growth.
Since the nuclear deal came into
effect, Iran has raised its oil exports and
lowered inflation. But one of the
laments from Tehran is the reluctance
of foreign banks to follow international
oil companies, aircraft makers and car
manufacturers, which have begun to dip
their toes in Iranian waters.
This, Iranian officials maintain, is out
of fear of Washington. Some US sanc-
tions remain in place and its authorities
have determinedly pursued violations
to the tune of billions of dollars. The
United States, instead of encouraging
these financial institutions, use[s] mul-
ti-pronged words that are actually
bringing fear to the hearts of these
banks, Mr Rouhani told an American
interviewer last autumn.
But putting the blame for Tehrans
banking problems on US enforcement
fails to tell the whole story. Interna-
tional banks have their own reasons to
be cautious, and Irans institutions have
many problems, although these are
being recognised and slowly redressed.
Iran hopes to shed its place on the
Financial Action Task Forces blacklist,
designating the country as parlous terri-
The Revolutionary Guard
may not take kindly to
having their business
interests scrutinised
tory. Last June, the Paris-based money
laundering and terrorism financing
watchdog acknowledged that Tehran
was taking sufficient steps to have coun-
ter-measures suspended for a year. Ira-
nian officials are keen to win over FATF
and are bullish about their chances of
getting a clean bill of health when the
task force convenes next month. That,
however, could trigger internal push-
back by hardliners. The Revolutionary
Guard, for example, may not take
kindly to having the books on their con-
siderable business interests scrutinised.
International observers and Iranian
officials alike acknowledge that the
state of Irans banks leaves much to be
desired; in February, the executive
board of the International Monetary
Fund noted an urgent need for finan-
cial sector reforms. The scale of the
challenge was highlighted in a 2016 poll
that revealed Iranians saw banks as the
most corrupt institutions in the country.
Proposals for a banking reform bill are
under consideration by both the cabinet
and Irans parliament, with the hope of
introducing it this summer. Even so,
there will be no quick fix.
Even if Tehran manages to get a
favourable FATF review and also begins
to overhaul its banks, top-tier compa-
nies may still find Iran too much of a
gamble. The Trump administration is
reviewing US policy on Iran generally,
and the nuclear deal specifically. If the
nuclear deal survives the assessment,
the strong likelihood of further punitive
measures against the Islamic Republic
by the US over terrorism, missiles and
other concerns may well curb the appe-
tites of foreign institutions.
Last week, for example, the Senate
foreign relations committee resound-
ingly voted in favour of The Countering
Irans Destabilising Activities Act, and in
Saudi Arabia this month President Don-
ald Trump lambasted Iran as the
regime that is responsible for so much
instability in the region. The prospect
of US secretary of state Rex Tillerson
meeting bankers to encourage forays to
the Islamic Republic, as his predecessor
did, seems unlikely any time soon.
President Rouhani has acknowledged
that for Irans economy to flourish, his
country needs constructive interaction
with the world. Strengthening Irans
banking at home and taking steps to
make the country a less risky proposi-
tion abroad is a necessity. It may not
prove sufficient.
The writer holds a fellowship for interna-
tional relations and security at the US Insti-
tute of Peace
10 FINANCIAL TIMES Tuesday 30 May 2017

Amazon/Shopify: stripped malls

The growth of the online retailing group has turned the world upside down for the big shopkeepers of the
US. Value still lurks in businesses that can adapt to the threat, and companies helping them to do so.

Share prices Shopify sales

Twitter: @FTLex Email: lex@ft.com
IAG/British Airways:
high flyer, high wire
British Airways had no right to mess up
the journeys of many thousands of
Britons during a holiday period. That
prerogative has traditionally belonged
to striking French air-traffic
controllers. Nevertheless, the flagship
company of International Airlines
Group cancelled an estimated 600
flights to and from London airports
over the bank holiday weekend. The
debacle suggests cost cuts by Willie
Walsh, chief executive of IAG, have
passed through fat into flesh and bone.
The group, never guilty of public
oversharing, has shed little light on its
systems breakdown. A power failure
has been blamed. This is puzzling.
Most businesses with critical IT have
back-up generators for their back-up
generators. A similar meltdown at
Delta Air Lines in the US last April put
rivals on notice to check their own
vulnerabilities.
Delta was left with costs of $100m.
BA faces a bill for the same amount in
euros, according to Citigroup estimates.
That represents a modest 5.2 per cent
of forecast 2017 profits before tax,
hence a dip of just 2.4 per cent in IAGs
dual-listed shares in Madrid yesterday.
The stock would deserve to fall
further if glitches recur. RBC warns of
potential for an annuity cost.
Helpfully so: deferential stock market
analysts tend to keep mum when one-
off failures are an annual event at
powerful companies. Last year, a glitch
grounded Vueling, a low-cost IAG
airline where BA boss Alex Cruz
previously worked.
A common delusion of all market
watchers is that cost cutting costs
nothing beyond such explicit expenses
as redundancy payments. In reality,
there is always an efficient frontier
between costs and profits. The irascible
Mr Walsh has done a good job in
reducing legacy overheads at BA and
Iberia, two flag-carriers heavily
burdened with them. The operating
margin has risen from zero to 11.8 per
cent since the 2011 merger.
Improvements will now be harder to
extract without damaging
competitiveness. The margin is only
expected to widen another percentage
point by 2019, according to S&P CIQ
estimates. This depends on sales
growing steadily. BAs protected slots at
Heathrow are a help. The growth of
low-cost rivals such as Ryanair is a
hindrance. Walking a high wire,
Mr Walsh cannot regularly afford to
strand his customers, even if Mr Cruz
carries the can for it this time.
Swedish banks:
Bjrn to be mild
Bumper profitability, massive payout
ratios, low loan losses, great cost
control. And exceptionally dull.
Shareholders must work hard to
come up with reasons not to like
Swedish banks. Yet high yields point to
a genuine concern about escalating
household debt. These are overblown.
Swedens banks have outperformed
the Euro Stoxx 600 banks index each
year since the financial crisis, bar the
current one. That is understandable.
Robust Swedish lenders have been a
haven for investors fleeing credit woes.
But since the second half of last year
the rest of the continents lenders have
recovered, aided by benign economic
data and favourable election results in
France. Meanwhile, Swedish bank
share prices have broadly stayed put.
Sceptics believe record high house
prices and steep household debts
presage a re-run of Swedens banking
crisis in the 1990s. The central bank is
one such worrier. It has called for
regulators to introduce a 5 per cent
minimum leverage requirement,
meaning lenders would have to hold
more equity relative to assets, diluting
returns. A spike in inflation has added
pressure to raise interest rates.
Handelsbanken, Nordea, SEB and
Swedbank offer dividend yields of
4-6 per cent, higher than the European
average. But if house prices fall and
loan losses tick up from exceptionally
low levels then payouts could swiftly
evaporate along with lenders
peer-beating capital buffers.
However, banks leverage ratios are
already comfortably more than 4 per
cent. Swedish short-term lending rates
have fallen back to where they were a
year ago, suggesting debt-servicing
costs will remain low. Finally, banks
typically lend to borrowers that could
afford a substantial rate rise: Moodys
reckons a 30 per cent drop in house
prices would raise mortgage loss rates
to a modest 15 basis points.
Whether or not the banking recovery
Rebased
Amazon
American Eagle Outfitters
Urban Outfitters
Jan Feb
FT graphic, Sources: Thomson Reuters Datastream; S&P Capital IQ; AlixPartners
Quake, shopkeepers of the
world. Amazon will continue gorging
on your business. Even as it conquers
new worlds of computing and
hardware, Jeff Bezoss company still
has ambitions in retail: one day the
pharmacy business; the next, stores
with no checkouts.
Confronted with this juggernaut
on top of idiosyncratic problems
shareholders in other retail stocks
have taken fright this year. Rite Aid
has more than halved. JC Penney has
fallen more than 40 per cent. Urban
Outfitters and Macys have fallen a
third. Other chains, including
American Eagle Outfitters, are also
among the worst-performing stocks.
Shares in Sears, the venerable retailer
to middle America, have recently
continues, Sweden should remain a
haven. Investors should snaffle the
extra income while they can.
UK bookmakers:
downhill slog
UK high street bookmakers are giving
short odds on a Conservative election
victory next week. That outcome may
only limit the pain from a government
review of restrictions on lucrative
fixed-odds betting terminals (FOBTs).
Ladbrokes Coral and William Hill
jointly have more than half of the 9,000
UK shop estate. Each faces the problem
of a declining business that owns too
much property. Betting on horses has
been moving into cyber space, where
140
Macys
JC Penney
Rite Aid 120
100
80
60
40
Mar Apr May
2017
bounced back, but only because fears
that it might cease operating have
lessened.
Amazon, for its part, is up more than
30 per cent; the stock has doubled in
two years and may soon breach the
$1,000 barrier for the first time
There are bright spots away from
Seattle. Amazons retail-goods
revenues were $94bn in the past
12 months; physical retailer Home
Depots sales were $96bn.
Meanwhile, Walmarts expensive
gamble on ecommerce strategy
paying $3.5bn last year for the talent
and technology of Jet.com appears to
be paying off. Online sales increased
63 per cent in the last quarter, four
times faster than those of Amazon.
Investors could also consider the
sports wagering is buoyant but punters
fickle. Retail bookmaking is a race to
the bottom where the winner will be
the one best able to capture customers
online while managing shop closures.
More than half of retail profits come
from FOBTs, which the opposition
Labour party believes should pay out
no more than 2 per winning bet.
Lobbyists claim a much lower cap set
by either party would be the coup de
grce for almost half of existing shops.
With jobs at stake any compromise
will probably bring closures in the
hundreds rather than thousands.
As the pool of traditional punters
shrinks, operators face the same choice
that has hit other businesses with real
estate; margin or market share.
Consider first-quarter results. Wagers
placed at Ladbrokes Coral shrank 7 per
$m 500
400
300
200
100
0
2012 13 14 15 16 17*
US major retail bankruptcies
Number
20
15
10
5 own mobile phone company, Reliance
0
2008 09 10 11 12 13 14 15 16 17
*2017 past 12-months
arms dealer to the resistance.
Shopify, a Canadian software
company that recently celebrated its
second anniversary as a public
company, provides the tech
backbone to more than 400,000
merchants online. They are mainly
small businesses but larger retailers
are adopting the platform too.
The problem for Shopify is its
price. The shares have doubled this
year alone, giving it an enterprise
value of almost $8bn on sales of less
than $500m and narrow losses. It is
growing fast, with sales expected to
be above $600m this year and more
than $800m in 2018.
But that is still a sky-high multiple
for a business built on supplying
Amazons withering competition.
cent. At William Hill they rose 2 per
cent. While gross win margins the
money the bookies keep grew at the
former, they shrank at the latter.
Offering better odds brings customers,
but magnifies losses when they win.
Operating margins on the high street
are equally gloomy, losing 5 percentage
points at both Ladbrokes Coral and
William Hill since 2014 to hit 10 per
cent and 16 per cent respectively at the
end of 2016. Shares are off accordingly.
Both groups are growing online but
a reliance on bricks and mortar for
earnings leaves them vulnerable. A
damaging decision on FOBTs would
merely accelerate the decline of betting
shops along a trajectory traced by pubs
and music shops. The stock of
traditional bookies should appeal only
to punters with a taste for long odds.
Indian telecoms:
frat spat
Fights among siblings sometimes
require parental intervention lest
serious injuries occur. Reliance
Communications, led by Anil Ambani,
declared its first annual loss on
Saturday. Shares dropped 19 per cent
yesterday. Anils brother Mukesh, a
business rival, is held responsible: his
Jio, has undercut industry prices and
offered plans for free. The resulting
pain has prompted calls for a bailout
from the state in loco parentis.
Jio launched in September,
accumulating 50m subscribers by the
end of November. RCom lost 3m of its
roughly 85m voice customers in the
year to March. Revenues fell 11 per
cent, in line with the industry.
Operating cash flow was negative in
the last quarter. The group says the
pressures are unprecedented.
RCom is working with its lenders
towards a refinancing of scheduled
payments. Rating agencies have
downgraded the outlook for RComs
debt in the past month. This makes
sense. Net borrowings are 6.7 times
trailing annual earnings before
interest, taxes and depreciation.
Even before the price war RCom
knew that it needed to lower its debt
burden. It is raising $1.7bn by selling its
telecom towers business. Merging its
wireless arm with Aircel, which is
controlled by Maxis of Malaysia, is
expected to reduce RComs debt
burden by two-fifths. The Reserve
Bank of India points out that the
industrys ebitda is not enough to
cover its interest expenses.
There are rarely grounds for a
government to prop up failing
businesses. The state may legitimately
intervene in markets to prevent
predatory pricing, anti-competitive
barriers or the creation of oligopolies.
The tussle in Indian telecoms is
pregnant with all three possibilities.
Investors and regulators must wish
the Ambanis would content themselves
with sniping across the dinner table at
family parties, as other fractious
siblings are content to do.
Lex on the web
For notes on todays breaking
stories go to www.ft.com/lex

CROSSWORD
No. 15,562 Set by SAYANG
        ACROSS DOWN
1, 4 Aha! Malay a basis for my 1 Display health food (8)
domain tongue (6,8) 2 Look among two farm animals
  9 Every river is an attraction (6) for 3-D image (8)
10 Mysterious drugs to upset 3 Rambler way in front and
Morecambe (8) more off-beat (8)
 
11 Enjoyed touching tail of 5 Give guarantee when certain
charming mermaid? (6) (6)
 12 SS in pursuit of George and 6 Notice a dry object (6)
  
Charlotte (8) 7 The way to bemuse setter (6)
13 No contest for free run (3) 8 Zolas charge (6)
    14 Small bed for Buffy, perhaps 12 Threads for crashing out (7)
(6) 15 Spirit captured back live from

17 Manage a donkey almost in a Uranus (3)
    frenzy (3,4) 16 No.1 crackpot (3)
21 Accident involving a knife (6) 18 GPS, a monk reorientated for
  25 Many hours for Doris (3) some villages (8)
26 No orisons needed for 19 Present time singer (8)
meritoriousness presented to 20 A swimmer a newspaper
  one honourably discharged turned to jelly (4-4)
(8) 22 No rot in arboretum
27 Clamour at college, sound of cultivating tropical hard wood
  pride (6) (6)
28 Report of shot at home (8) 23 Extremist to booze a lot of
29 Remove from power (6) bottles (6)
30 Rt Hon mixed up in a French 24 One-dimensional king
JOTTER PAD move to topple (8) accepting only the popular (6)
31 Shylock, perhaps, firm in old 25 Fruit for desperate character
city (6) who embraced spoonbender
(6)
Solution to Saturdays prize puzzle on Saturday June 10
Solution to yesterdays prize puzzle on Monday June 12
Winners names will be printed in Weekend FT
Tuesday 30 May 2017
Revealed preference Unicorn
investors lose the class war
SUJEET INDAP, PAGE 12
RCom hit by loan-payment fears
3 Indian telecoms groups shares dive 22% 3 Fallout from fight between billionaire brothers
ALIYA RAM MUMBAI
Reliance Communications, the Indian
mobile phone operator controlled by
billionaire Anil Ambani, is facing
mounting pressure over its debt obliga-
tions after revealing its first-ever annual
loss in the countrys fiercely competitive
telecoms market.
The industry has been shaken by the
aggressive and free-spending entrance
of rival Reliance Industries, chaired by
Mukesh Ambani, in the latest public
battle between the brothers ranked first
and 32nd on the countrys rich list.
Prices for RCom stock and bonds
plunged yesterday after the weekend
announcement of a net loss of Rs12.9bn
Trump blow to SEC
Budget proposal to
axe $50m in funding
Donald Trumps administration plans to
eliminate the part of the Securities and
Exchange Commission budget that it has
used to help identify insider traders and
pursue enforcement, writes Kara
Scannell.
A line in the budget proposed by the
White House last week would scrap the
$50m annual Reserve Fund created by
Congress after the financial crisis.
The SEC has used the fund to
modernise its technology and, according
to Mary Jo White, who chaired the SEC
until January, needs the ability to fully
use the Reserve Fund in order to
discharge its critical responsibilities.
Some Republicans in Congress have
condemned the money as a slush fund.
The budget proposes to restore the
[SECs] accountability to the American
taxpayer by eliminating the Reserve
Fund created by the Dodd-Frank Act.
The SEC declined to comment.
A July 2015 report by the SECs
inspector general warned that, without
the fund, the SEC would not have the
capability to ingest, mine and use large
data sets to meet its oversight mission.
The SEC said a $25m cut to the fund in
2014 had forced it to postpone upgrades
that would have allowed it to analyse
high-frequency trading activities.
Adidas chief leads chase
to catch up with Nike
Kasper Rorsted, the trainer-wearing
chief executive of Adidas, has made a
fast start since taking over in October.
The company is back in second place
in the US, thanks to the athleisure
trend and he thinks that suits with
trainers is a look thats here to stay.
Interview i PAGE 12
Companies
Adidas............................................................12
Aircel..........................................................10,11
Ally Financial................................................1
Amazon.........................................................10
American Eagle Outfitters................10
Astana International Exchange.......11
BBVA..............................................................18
BMW................................................................13
Bain..................................................................12
Banco BPM..................................................18
BlackBerry....................................................12
BlackRock.....................................................18
Bosch...............................................................13
Brembo..........................................................18
British Airways.................................1,10,13
The Financial Times Limited 2017
11
FTSE MIB Adidas Brent crude Dollar index UniCredit Sterling/dollar Euro / dollar Volkswagen
2% 0.4% 0.8% 0.1% 4.34% 0.3% 0.5%
20,783 172.80 $52.57 97.36 15.87 $1.2845 $1.1180 137.30
Short
View
($200m) for the year to March, a drop Reliance Communications debt bur- with lenders to obtain consent for the
James
from profits of Rs6.6bn the year before, den has been an issue for a long time, What has two transactions and to refinance Kynge
blaming competitive intensity on a said Anjan Ghosh, an analyst at Icra, the come as an scheduled payments falling due until
scale never witnessed before in the rating agency. That problem has the closure of the deals in September, to
country. always been there but whats come as an additional facilitate expeditious closing of both China investing has become strikingly bipolar, with the
After a 22 per cent drop in the share additional burden is the heightened burden is transactions in the best interests of all strategies of many fund managers set by the answer to one
price, the company said it was seeking competition that has put their cash flow stakeholders. overriding question: Is the Communist party strong
to refinance its debt with a new consor- under pressure. heightened The yield on the companys dollar enough to resolve the economys chronic debt addiction?
tium of lenders. The move to refinance comes as competition bonds due in 2020 rose 5 percentage Those who answer No see the Chinese sky falling, and
A note to the companys financial RCom plans to merge its wireless busi- points yesterday to 17.08 per cent, tailor their investments accordingly. Those who answer
results indicated that it has asked lend- ness with rival Aircel, and to sell its putting cash according to Bloomberg. Yes are free to gorge themselves on high-yielding domestic
ers for waiver of certain loan cove- mobile phone towers to Canada-based flow under The industry experienced a shake-up bonds and a bargain basement of Chinese bank equities.
nants. Analysts said the note could Brookfield Asset Management. It has after Reliance Industries has ploughed Others, though, are cloven in uncomfortable ambiguity.
mean Reliance has not met all the condi- said this pair of deals will improve its pressure $30bn into a pan-national 4G data serv- They see potentially dire consequences from Chinas debt
tions of its loans and could be at risk of sales and cash flow, and reduce debt by Anjan Ghosh ice, Jio, and announced tariffs well problem but are obliged by the countrys strong presence
default if banks did not agree to waive Rs250bn. Icra analyst below prevailing rates as well as provid- in benchmark indices a 27 per cent weight in the MSCI
them, but there was not yet enough In a call held for analysts yesterday, ing free services for six months. emerging markets equity index to hold Chinese assets.
information to assess. the company said it is in discussions Lex page 10 For these investors, China investing is a giant game of
chicken. I see the [Chinese] sky falling but just not yet,
said Arjun Divecha, head of emerging market equities at
GMO, an asset manager. They are sitting on a powder keg.
I think the Chinese can [manage the situation] but in the
meantime all you need is a lightning bolt from somewhere
to set the whole thing off.
Such thinking puts a premium on being able to spot the
signs of a market rout. Vigilant fund managers believe they
should be able to exit Chinese assets before the herd stam-
pedes. Their propensity to take pre-emptive action helps
explain the wild swings in Hong Kong share prices even as
Chinas economic growth remains strong.
Between its 2015 peak and its 2016 trough, Hong Kongs
Hang Seng share index lost 35 per cent of its value. The
slump was in contrast to the general stability of Chinas
macro economic indicators; GDP eased only slightly from
6.9 per cent in 2015 to 6.7 per cent in 2016 while retail sales
and household income growth remained robust.
Since last years trough, the index has recovered much of
its lost ground, bolstering confidence for those who see the
Communist party as equal to the debt challenge. But signs
of stress are building. Moodys, the rating agency, down-
graded Chinas sovereign debt last week. Domestic money
market rates are at elevated levels and corporate defaults
are rising. The all-important real estate market is starting
to cool. The market consensus may again start to favour
those who think the sky is falling.
Hang Seng index
(000)
28
26
24
22
The Hang Sengs
20 rise has boosted
confidence for
18 those who see the
2014 15 16 17 Communist party
Source: Thomson Reuters Datastream as equal to the
debt challenge
james.kynge@ft.com
Jonathan Ernst/Reuters
Nasdaq and Shanghai bourses in talks
to acquire Kazakh stock market stakes
HENRY FOY ASTANA traders and legal and financial services exchange that is home to most of the
companies. worlds largest tech groups, and the
Nasdaq and the Shanghai Stock
Kazakhstan has pledged to list stakes Shanghai bourse, Chinas largest,
Exchange are in talks to acquire stakes
in its largest state-owned companies on declined to comment on the talks.
in the Kazakhstan stock market to be
the exchange as a lure to foreign capital, The AIFC hopes that bringing the
launched this year, as its owners look to
and has agreed to allow the Astana exchanges on board will help to encour-
attract international investors to the
International Finance Centre (AIFC) to age US and Chinese investors to use the
central Asian country.
be ruled by English law and foreign new bourse, enhance its technological
Under plans to be announced in the judges independently of the countrys expertise and improve its credibility
coming weeks, the US and Chinese judicial system. among investors.
exchanges will provide technology, data Talks with Nasdaq and the Shanghai In addition to the two primary part-
services and know-how to the Astana bourse on equity stakes in the exchange ners, the AIFC has agreed co-operation
International Exchange, according to have taken place in recent months and agreements with exchanges in Warsaw
three people involved in the talks. should bear fruit next month, according and Moscow, the Kospi in South Korea
The Astana exchange, which is sched- to the people. and Saudi Arabias Tadawul.
uled for launch this winter, is the centre- Under a separate but related deal, Central Asia has no financial capital.
piece of the Kazakh capitals bid to cre- Nasdaq has signed an agreement to pro- Kazakhstans biggest bourse is located
ate a financial hub for the central Asian vide trading technology infrastructure in Almaty, the former capital.
region to attract international banks, to the new bourse. Both Nasdaq, the US Additional reporting by Nan Ma, Shanghai
Companies / Sectors / People
Capital One....................................................1 JC Penney...................................................10 Nordea...........................................................10 UniCredit......................................................18 Personal & Household Goods.........12
China Everbright Bank........................18 JPMorgan Chase.........................................1 Oak Investment Partners...................12 Union Investment....................................12 Retail...............................................................10
China Minsheng Bank..........................18 Jet.com..........................................................10 Puma...............................................................12 Unione di Banche Italiane..................18 Retail & Consumer..................................12
Citizens Financial Group........................1 Jio................................................................10,11 Reebok...........................................................12 Urban Outfitters......................................10 Technology............................................12,13
Delta Air Lines.........................................10 Kering.............................................................12 Reliance Communications.............10,11 Vodafone.......................................................11 Telecoms.................................................10,11
Finecobank..................................................18 Kia Motors...................................................14 Reliance Industries..................................11 Volkswagen.................................................18 Travel & Leisure..................................4,10
Geely...............................................................14 LVMH..............................................................12 Rite Aid.........................................................10 Walmart.........................................................10 People
Good Technology....................................12 Ladbrokes Coral......................................10 Royal Bank of Scotland.......................12 Wells Fargo....................................................1 Ambani, Anil..........................................10,11
Great Wall Motor.....................................14 Macys............................................................10 Ryanair..........................................................10 William Hill..................................................10 Ambani, Mukesh................................10,1,1
Handelsbanken.........................................10 Mattel...............................................................4 SEB..................................................................10 Sectors Bezos, Jeff...................................................10
Herms...........................................................12 Maxis..............................................................10 Samsung Electronics.............................13 Airlines..................................................1,10,13 Cruz, Alex.................................................1,10
Hindustan Unilever..................................4 Mediaset ......................................................18 Santander Consumer USA...................1 Automobiles..............................1,7,13,14,18 Goodwin, Fred...........................................12
Home Depot..............................................10 Mediobanca................................................18 Sears...............................................................10 Banks..................................1,7,9,10,12,18,18 Hainer, Herbert.........................................12
Hyundai Motor.........................................14 Michelin.........................................................18 Shanghai Stock Exchange..................11 Financial Services.........................11,12,18 Rorsted, Kasper........................................12
Iberia.........................................................10,13 Nasdaq............................................................11 Shopify..........................................................10 Financials......................................................18 Speich, Ingo................................................12
International Airlines Group.......10,13 Nike..................................................................12 Swedbank....................................................10 Oil & Gas......................................................18 Walsh, Willie............................................1,10
Week XX
12 FINANCIAL TIMES Tuesday 30 May 2017

COMPANIES
INSIDE BUSINESS
Banks
FINANCE

RBS settles with investor action group Sujeet

Indap
Former chief set to avoid former employees. The majority are crisis. RBS is defending the case and 82p However, there are a number of
thought to back the settlement. denies wrongdoing. practical and legal risks which had to be
potentially embarrassing What the group

appearance in court
Those who do not accept will have to
find funding for the action to continue.
If they cannot do this, the court case,
RBS, which will pay out about 200m
if all claimants accept 82p per share, did
not respond to requests for comment on
representing
shareholders
said it would
considered.
Those risks included the possibility it
could lose the trial, the chance that RBS
Venture capitalists
OLIVER RALPH LONDON scheduled to start on 7 June, is unlikely
to go ahead.
the settlement.
The offer was raised from 43p to 82p
accept per share

Fred Goodwin, the former chief execu-
tive of Royal Bank of Scotland, is likely
to escape a potentially embarrassing
court appearance after the bank
reached a legal settlement in principle
The legal costs of fighting the trial
would run to millions of pounds
including 25m for RBSs defence costs,
which the claimants could become lia-
ble to pay if they lose the case.
200m
would launch an appeal, uncertainty
over the amount that a court would
should pay more heed
earlier this month after discussions
between the two sides, but the investor
group had been aiming for a figure of up
Sum the lender
would have
award, and the costs of going ahead.
The claim is presently being funded
by a substantial claimant in the action,
to the common good
to pay out if
to 234p per share. Most investors paid all claimants the group said in its letter.
200p per share in the rights issue. accepted the deal That claimant has decided to accept

with a shareholder action group.
The group, representing about 9,000
RBS shareholders, said yesterday it
would accept 82p per share from the
bank. Its members include institutional
investors, private shareholders and
The case relates to the months leading
up to the 2008 bailout of the bank.
The shareholders allege that RBS,
under Mr Goodwins watch, misled
them about the banks health ahead of a
12bn rights issue during the financial
Interview. Kasper Rorsted
In a letter to members, the action
group said: We understand that accept-
ing an offer of slightly below the previ-
ously advised range of damages, being
92p per share and 234p per share, may
be surprising to some claimants.
B
the offer and they are no longer willing
to fund the action. That means that
there is currently no available funding
to fund the legal and other costs to take
the matter to trial.
Additional reporting by Jane Croft
y 2014, Good Technology had reached mythic
unicorn status: a tech start-up with valuation
exceeding $1bn and a wealth of options about
how investors, management and employees
could cash in. But just a few months later, the
venture capitalists on the mobile software companys
board were suddenly feuding about whether it should sell
itself or list on a public stock exchange. Tensions increased
so much that directors resorted to insults.
This guy is a certified nut job, said Bandel Carano, a
representative of Oak Investment Partners on the Good
board, in an email written in April 2015. His derisive diag-

Adidas chief still has to earn his stripes
Growth is rapid but operating
margin remains half Nikes
and a US turnround is vital
JAMES SHOTTER HERZOGENAURACH
Kasper Rorsted has hit the ground run-
ning. Since taking over as chief execu-
tive of Adidas last October, the Danish
manager has ratcheted up the German
sportswear makers financial targets,
put its ice hockey business up for sale,
and finally sold off its underperforming
golf business.
In combination with rapid growth
Adidass net earnings increased by
almost a third in the first quarter, hav-
ing risen 59 per cent last year Mr
Rorsteds first steps have enthused
investors: the groups shares have more
than doubled since his appointment was
announced in January last year, and ear-
lier this month hit an all-time high.
Despite his quick start, Mr Rorsted is
determined not to get carried away.
He says: We have one good year
behind us. But one good year does very
little for [our] 2020 [targets]. You need
to do more than have a good start.
Indeed, for all the investor euphoria,
the second biggest sportswear group is a
work in progress. Its operating margin
last year was barely half that of its bigger
rival, Nike. Improving this will be one of
the main metrics on which Mr Rorsted
is judged.
Analysts say it is vital to turn round
business in North America the biggest
sports market and the one where Adidas
most lags behind Nike and adapt to
consumers increasing penchant for
shopping online.
They clearly have to get the US right:
in the rest of their markets they have an
average share of around 15 per cent, and
in the US they have less than 10, so there
is a big opportunity there to make up
ground, says John Guy, an analyst at
MainFirst.
And their online business is where
the margins are highest, so if they can
really drive this, that will help them
with their overall margin targets.
In the US, Adidas is already making
strides. It has regained the number two
spot it lost in 2014.
But the surge has been driven by two
factors that are unlikely to last for ever:
a marketing splurge initiated by Mr
Rorsteds predecessor, Herbert Hainer;
and the popularity of lifestyle brands
such as Adidass Stan Smith trainers,
whose sales have surged amid a trend
for retro styles.
Mr Rorsted acknowledges that follow-
ing the lifestyle trend has caused trouble
for rivals such as Puma but says that
Adidas is not betting the farm, point-
ing out that athleisure products account
for 30 per cent of Adidass sales, versus
70 per cent for its sports products. The
nosis was directed at a fellow Good director and investor,
Russell Planitzer of Lazard Technology Partners.
The tension between Goods owners was debilitating and
by the summer of 2016 the company was facing a cash
crunch. Good was acquired by BlackBerry that September,
but at a valuation of only $425m. Employees who held
common stock received just 44 cents for each of their
shares, even though Good stock had been valued at more
than $3 in private share transactions just weeks earlier.
A Delaware corporate law court is due to examine the
circumstances of Goods implosion in early June. The eco-
nomic interests of its VC owners were represented by vari-
ous classes of preferred stock securities senior to com-
mon stock. The board is accused of improperly putting its
narrow interests ahead of its duty to common sharehold-
ers, leading to the BlackBerry transaction. The VCs reject
the charges.
But the rest of Silicon Valley is watching. Unicorn valua-
tions have begun to plateau. The VCs who invest in start-
ups such as Good may soon be making similarly treacher-
ous decisions about how layers of preferred stockholders
must treat each other and common stock owners.
VCs are special not only because they gain exclusive
access to hot start-ups. They also invest in an advantaged
way. Rather than taking basic common stock like manage-
ment and employees, they usually purchase preferred
stock. This limits their potential losses, as it comes with a
liquidation preference. Thus, if the company is sold, pre-
ferred stockholders receive their initial investment back
before any payout to com-
mon shareholders. However,
preferred stockholders still
Preferred stock
share in potential gains with was thought to
common investors if the sale
price exceeds their liquida-
be privileged . . .
tion preference. A nice deal if This is now being
you can get it.
This structure becomes
trimmed back
problematic when groups
raise multiple rounds of venture capital. In each round, the
firms buy in at different prices, have different expecta-
tions of returns, and want their money back at different
times. At Good, common shareholder plaintiffs assert that
early VC backers such as Oak wanted to swing for the
fences that is, they wanted an IPO where they could reap
Kasper Rorsted shift towards more comfortable sporty Boosting Adidass online sales is the Its about changing how we operate, big gains over several years. Later investors such as Lazard
has made solid footwear is also a permanent change, other big challenge. Mr Rorsteds deci- and making sure that we drive consum- sought to sell Good as quickly as possible because their
progress net rather than a fad, he argues. sion to lift the groups 2020 sales target ers to our website, says Mr Rorsted. firms needed immediate liquidity, plaintiffs allege.
earnings rose by If you go to a US airport and look at from 22bn to near 26bn was based in The other big question is the future of Another email from Mr Carano written in July 2015
almost a third in what people are wearing . . . this is a part on his belief that Adidas can quad- Adidass underperforming Reebok fit- appears to illustrate the differing motives introduced by
the first quarter change in how you dress. I believe very ruple its online sales to 4bn by 2020, ness brand, which was bought by Mr preferred stock terms: Oak is completely indifferent
but boosting strongly that the vast majority of people rather than merely doubling them, as Hainer in 2005, and which many inves- between a $250m and $450m sale price, it said.
online sales is a wearing these shoes actually dont want Mr Hainer had envisaged. tors would like Adidas to sell. The Good case resembles a landmark 2013 decision in
large challenge to go back, he says. The group has been building data Buying Reebok was a mistake which the Delaware court. A venture-backed company called
Krisztian Bocsi/Bloomberg I had a meeting with a prime minis- tools that allow it to decide in real time distracted Adidas for many years, says Trados was sold hastily and the proceeds were so scant
ter on Sunday night, and I was wearing a how to sell its wares and at what price Ingo Speich, a portfolio manager at that only preferred stockholders were paid. This ruling
suit and black shoes like these, gestur- with greater precision. And it is increas- Union Investment, one of Adidass top could portend trouble for Goods VCs as it held that board
ing to his Adidas trainers. And it was ingly targeting advertising towards 15 shareholders. members are to act in the best interests of common share-
not like people said you cant wear that. mobile devices. Now it seems to be under control, but holders and then bear the daunting burden of proving
there is a lot to be said for Adidas focus- their good faith at trial.
ing on its core brand instead. If Rorsted A similar issue arose in an April ruling in Delaware.
Adidas cant fix Reebok soon, then they should Here, common shareholders accused a company control-
Share price () Nike and Adidas operating profit margin (%) get rid of it. led by a private equity firm of liquidating assets in a way
200 14 Mr Rorsted expects Reeboks turn- that favoured the firms preferred stock over common
round to be complete within four years. shareholders. The court suggested that a company may
180 Nike But he concedes that he could consider even be required to violate the preferred stock terms if
12
offloading it sooner if we completely such a breach maximises value for the common stock.
160 miss what were trying to do. Preferred stock was thought to be something that was
10 He says: If we have an asset that con- privileged because it came with rights. That idea is now
140 sistently misses all its targets, then of being trimmed back, said Michael Kendall, a lawyer at the
Adidas
8 course we will draw conclusions with corporate law firm Goodwin. The heightened litigation
120
that asset. risk he noted suddenly gives common shareholders new
100 6 But I want to be specific: that applies leverage in M&A negotiations. A better balance between
to everything. The moment you say in a the interests of elite VC/PE investors and common share-
80 4 company that anything is sacred, that is holders would bring more sanity and fairness to the pri-
Jan 2016 2017 May 2007 08 09 10 11 12 13 14 15 16 the beginning of the end, because that vate dealmaking marketplace.
means that you give someone a free
Sources: Thomson Reuters Datastream; Bloomberg ride. sujeet.indap@ft.com

Contracts & Tenders Personal & household goods

Europe consumer cheer and China spending lift luxury sector

HARRIET AGNEW PARIS
The global luxury market is expected
to grow by a solid 2 to 4 per cent this
year in a clear sign the turnround in
performance for the sector that began
last year is on a steady and sustainable
footing.
Consultant Bains spring luxury update
predicts that the global personal luxury
goods market will grow to
254bn-259bn this year, as consumer
confidence returns in Europe and Chi-
nese customers spend more at home
and overseas.
Large luxury houses, such as LVMH,
Kering and Herms, began indicating
this trend in their results from the mid-
dle of last year. The industry had previ-
ously suffered a difficult period as a
result of an economic slowdown, a cor-
ruption crackdown in China and the
impact of terrorism on spending.
The market is growing again, said
Claudia DArpizio, a Bain partner and
the studys lead. Its less dependent on
gift-giving in China and less dependent
on tourist flows that were driven by
price differentiation and bargain-hunt-
ing. Its more solid and its healthier.
Bain estimates the overall market will
expand to 290bn in sales by 2020.
Performance is polarised across geo-
graphical regions. In the US the luxury
market continues to underperform,
hurt by a strong dollar, political uncer-
tainty and problems faced by depart-
ment stores a pillar of distribution for
luxury brands in North America. Bain
expects the regions luxury sector to
shrink by as much as 2 per cent in 2017.
Meanwhile fortunes in Europe, where
luxury spending was worst hit by terror-
ist attacks, are improving. Bain fore-
casts growth of 7 to 9 per cent in luxury
sales in Europe, and highlights bright
spots such as the UK where sterling
has dropped in the past year following
its vote to leave the EU and Spain,
which is perceived as a safe destination.
The increasing tendency for Chinese
consumers to buy luxury goods at home
is expected to drive growth of 6-8 per
cent this year for the mainland China
market. Chinese consumers account for
one in three luxury purchases globally
and will remain an important source of
overseas tourist flows. Outside main-
land China, however, Bain predicts the
Asian luxury market will shrink by 2 to
4 per cent because of decreased tourism
in Taiwan and Southeast Asia.
Digital is the channel that is fastest
growing, said Ms DArpizio, who added
that there was increasing differentiation
between winners and losers. Brands
doing well are typically those that have
invested in digital platforms and
engaged with a millennial mindset.
This strategy means shifting part of
their advertising budgets online, using
social media to talk directly to the cus-
tomers, and using an omni-channel
approach that combines the best of dig-
ital and ecommerce with physical
stores. Buying a luxury good now is not
just walking into a store. It has become a
journey of engagement through multi-
ple touchpoints well before the point of
sale, said Bain partner Federica Levato.
Tuesday 30 May 2017
Costs squeeze
fuels concern
over damage
to BA brand
Move to cut UK jobs by outsourcing
IT systems to India comes under focus
TANYA POWLEY
TRANSPORT CORRESPONDENT
Just three weeks ago, Willie Walsh, chief
executive of International Airlines
Group, the owner of British Airways,
abruptly dismissed concerns that the
group had seen any negative impact
from recent cost-cutting at the UK flag
carrier.
We are clearly doing something right
because more and more customers are
flying with us, said Mr Walsh at the
groups first-quarter results, pointing to
a growth in passengers flying with BA in
April.
However, following three days of
chaos after IT problems left more than
75,000 passengers stranded at Heath-
row and Gatwick, the topic of Mr Walshs
laser-sharp focus on costs has once
again come under the spotlight.
Slasher Walsh, as he became known
during his time as chief executive at
Irish airline Aer Lingus, has made a
name for turning round ailing airlines.
During his time as chief executive of
BA, where he headed up the group from
2005 to 2011, Mr Walsh set about slash-
ing the cost base, firing managers and
facing down unions. After creating IAG
through the merger of BA and Iberia,
the Spanish airline received the same
attention as Mr Walsh focused on turn-
ing what was formerly a chronic loss-
maker to a profitable airline by 2015.
Willies phenomenal strength is in
cost management in terms of the busi-
nesses he has run, says John Strickland,
a London-based aviation analyst.
While this has helped IAGs financial
performance, aviation insiders are con-
cerned that a squeeze on costs is damag-
ing BAs strong brand. Its decision to
slash 700 jobs in the UK by outsourcing
the airlines IT systems to Tata Consul-
tancy Services in India has come under
particular focus although BA has
denied that this was to blame for the
glitch.
He drives the business quite aggres-
sively. I dont think theres very much
strategic or directional freedom of the
Automobiles
Parts shortage hits BMW production
PATRICK MCGEE FRANKFURT
BMW is unable to complete the build-
ing of thousands of luxury cars this
week because of production problems.
A shortage of steering systems from
Bosch, the worlds largest supplier of car
parts, was the cause of the disruption.
Car manufacturing is complex and
BMW typically relies on just-in-time
production, meaning that it only orders
parts when it needs them. Disruptions
can, therefore, have immediate impact.
In this case, the supply shortage has
already affected production in Leipzig
and Munich in Germany, as well as Ross-
lyn, South Africa, and Shenyang, China.
A missing part even if only a small
one, as in this case can have a major
impact, said Markus Duesmann, BMW
board member overseeing purchasing
and supplies. He said only limited pro-
Technology
Premium phone helps Samsung sales recover
SONG JUNG-A SEOUL
Samsung Electronics latest flagship
Galaxy S8 smartphone has hit
1m in domestic sales twice as quickly as
its predecessors, highlighting the
speed of the companys recovery
from last years costly Galaxy Note 7
recall.
The South Korean company has pinned
its hopes on the new premium device,
which went on sale on April 21, to repair
its image after the demise of the fire-
prone Note 7 and stage a comeback in
the competitive global smartphone
market.
The Galaxy S8 has been well accepted
in Samsungs home market, luring con-
people who run the individual airlines.
Policy and strategic direction is set fairly
firmly from Willie, says one city ana-
lyst, who wanted to remain anonymous.
While Mr Walsh has refused to com-
ment on last weekends public relations
disaster, Alex Cruz, BAs chief executive,
waited until the third day of chaos to
give his first interview, previously pre-
ferring to use in-house videos posted on
the BA website to address passengers
and the media. In the interview with the
BBC on Monday, he denied cost-cutting
had anything to do with its IT problems.
Mr Cruz was hired by IAG last April,
from its sister low-cost airline Vueling,
with a mandate to make BA more cost
efficient. In the space of a year, this has
seen jobs outsourced, a new dispute
with cabin staff over money, and remov-
ing free food and drinks for economy
passengers flying around Europe.
Mr Cruz has previously denied accu-
sations that he is trying to Ryanair-ise
BA. However, at IAGs capital markets
day last November he said: When we
look at economy, we are looking at a
commodity product, without a doubt.
BA staff seem unimpressed. Accord-
ing to Glassdoor, which collates
employee reviews, BA scores a low 2.8
out of 5 ranking overall. In comparison,
French flag carrier Air France, which
has been embroiled in long-running
labour disputes, scores 3.4, while low-
cost rival easyJet has a rating of 4.1. Only
Ryanair, out of the major European car-
riers, scores lower, with a rating of 2.4.
One cabin crew member told the
Financial Times that staff felt upset by
the lack of visibility of management,
and poor communication, throughout
the disaster. An internal memo sent by
Mr Cruz on Sunday, in which he tried to
stop staff from talking publicly about
the problems over the weekend, has fur-
ther compounded ill feeling. At first I
thought it was a joke. It has provoked
more anger from staff, she says.
However, aviation insiders say the
ultimate responsibility lies with Mr
Walsh. It is down to Willie because hes
the one who has led the direction of Brit-
duction of BMW 1-, 2-, 3- and 4-Series
cars is possible and that BMW expects
Bosch to compensate for damages.
Up to 17,500 units are built each week,
according to Christian Ludwig, an ana-
lyst at Bankhaus Lampe in Dsseldorf.
If these figures cannot be made up
for during the quarter the sales impact
would be 400m-500m per week, he
BMWs factories in Germany, China
and South Africa have been struck
sumers with its cool bezel-less design
and upgraded features including its
Bixby voice assistant.
Samsung must be glad that the new
phone has not caused any big trouble
like the Note 7 battery problem. There
seems to be no worry about its quality,
said Kim Young-woo, analyst at SK
Securities.
However, the phones are not selling as
well abroad as in the domestic market,
Mr Kim added. Its domestic perform-
ance is very good while its overseas sales
have been similar to those of its prede-
cessors. There seem to be many con-
sumers overseas waiting for the new
iPhone launch, he said.
The S8 is on sale in the US, South
FINANCIAL TIMES 13
COMPANIES
Double blow
Willie Walsh, left, chief executive of International Airlines Group, and Alex Cruz, chief executive of British Airways FT montage. Getty Images; Bloomberg
IAG: Key moments over past year
Share price (pence) May 5 2017 Enjoys
600 record first quarter as 600
Jun 2016 Issues demand picks up
profit warning
Aug 2016 BA halves business
class-only flights from London
500 City airport to New York 500
May 27 Global
computer outage
May 2016 Qatar grounds BA flights
raises stake to
400 15 per cent 400
Nov 2016 Cuts
profit target
Sep 2016 BA to
charge for meals in
short-haul economy
300 300
May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May
Source: Thomson Reuters Datastream 2016 17
ish Airways, a former BA pilot told
the FT.
Branding experts warn that airlines
need to tread a careful balance between
focusing on costs and investing in the
brand. Most CEOs of airlines have
come out of the operations side. Their
whole life is about how to squeeze an
extra mile out of a gallon of jet fuel, says
Allan Adamson, founder of BrandSim-
ple. Its a different headset to think
about what am I going to do to make the
customer in seat 9C happy so that they
are going to tell people to fly BA. The
first one is much easier because you can
do it on a spreadsheet.
See Lex
said. The impact on earnings, on an
operating margin of 9 per cent, would be
45m. Marc-Ren Tonn, an analyst at
Warburg Research in Hamburg, esti-
mated that a week of no production for
1-4 Series cars would cut revenues by
about 550m, plus any losses incurred
at BMWs joint venture in China.
Bosch said the problem stems from a
sub-supplier based in Italy, which deliv-
ers the housing for electric steering sys-
tems it sends to BMW. It said Bosch asso-
ciates were on site in Italy doing all they
can to resolve the delivery bottlenecks.
Jochen Mller, a BMW spokesman,
said production of the 1- and 2-Series
cars was at a standstill on Friday and
Saturday, whereas output of the i3 and
i8 electric cars was running as normal.
BMW had hoped to resume work by
today, but conceded yesterday the situ-
ation is unlikely to change this week.
Korea and parts of Europe, and analysts
said this month that Samsung had sold
5m units globally in the three weeks
after its launch. The company did not
deny the industry estimate, but
declined to comment.
The new flagship device, which is
being gradually rolled out to about 150
countries, had been expected to outsell
its predecessor S7, which shipped 48.5m
units in its first year.
But Mr Kim now projects S8 global
sales of about 45m this year, with
momentum likely to be sapped by the
expected launch of the new iPhone in
the second half. He estimates the S8 has
now sold about 8m units globally since
its late-April launch.
14
A look under the bonnet reveals strategic failings
Quality issues and flagging
foreign sales take toll as Korea
carmaker plays tech catch-up
SONG JUNG-A SEOUL
The road looks rocky for Hyundai
Motor as the carmaker attempts to navi-
gate reputational and sales pitfalls
abroad and outmanoeuvre encroaching
rivals at home.
This month Seoul ordered Hyundai
and affiliate Kia Motors to recall hun-
dreds of thousands of vehicles for vari-
ous defects raised by a whistleblower,
reviving quality concerns dogging the
fifth-largest car group.
South Koreas first compulsory recall
for a domestic carmaker is the latest
sign of Hyundais deepening woes, rang-
ing from flagging overseas sales to a
deteriorating brand image at home and
its struggle to catch up with next-gener-
ation car technology.
The company, once the fastest-grow-
ing big carmaker after the financial cri-
sis, has had a rough couple of years.
It failed to read changing trends
including a growing consumer prefer-
ence for gas-guzzling sport utility vehi-
cles and crossovers thanks to low oil
prices. Sales have slowed in emerging
markets, and rivals have chipped away
at its domestic dominance.
Its plight has been exacerbated by
a Chinese boycott of South Korean cars
over Seouls installation of a US-oper-
ated missile defence system.
Hyundais first-quarter net profit
dropped by a fifth, while sales in the first
four months of this year fell 4.3 per cent.
Carmakers are facing the prospect of
slowing sales in the two biggest vehicle
markets: China, where a tax increase on
small-engine cars has dented demand,
and the US, where rising interest rates
have put off buyers.
But while the difficulties are not
unique to Hyundai, analysts say it has
been hit especially hard.
It is a total strategic failure. They are
now in the worst possible situation with
no easy way out, says Lee Hang-koo, a
Legal Notices
Contracts & Tenders
Engineer Kim Gwang-ho turned over documents on many alleged defects, prompting extensive recalls Kim Hong-Ji /Reuters
The whistleblower
Veteran employee reported
safety lapses to regulators
Kim Gwang-ho, an engineer who
worked for Hyundai for 26 years, is a
rare whistleblower in corporate Korea,
where loyalty is typically stressed
above all else.
Last year, the 55-year-old reported
Hyundai safety lapses to US and
South Korean regulators, turning over
250 pages of internal documents on
dozens of alleged defects, including an
engine fault.
As a result, Hyundai and Kia last
FINANCIAL TIMES
COMPANIES
Automobiles. Hyundai
Hyundai
Sales by region (units sold, 000)
300
Q1 2006 Q1 2017
250
200
150
100
50
0 The US market downturn looks seri-
China Korea India
US Western Others
Europe
Residual brand US incentives
value (%) spending per car
($)
54 3000
52 2500
50 2000
48 1500
46 1000
2009 12 14 16
Sources: company; Autodata; ALG; Nomura
senior research fellow at the Korea Insti- Hyundai has faced a struggle to
month recalled 1.5m vehicles in the US, tute for Industrial Economics & Trade. defend its share in its two largest over-
Canada and South Korea, at a cost of Hyundai is forecasting a gradual earn- seas markets: China and the US.
Won360bn ($321m); this month they ings recovery over coming quarters, In China, which accounts for more
were ordered by South Korean counting on its new small Kona SUV and than a fifth of total sales, Hyundais and
authorities to recall a further 240,000 the G70 Genesis sports sedan both Kias sales fell more than 60 per cent in
vehicles. US safety regulators are now launching later this year. April, shunned for a second straight
looking into whether Hyundais recalls It has pledged to expand its SUV month by Chinese consumers. The
were timely and whether enough line-up, bolster its luxury Genesis brand duo have cut production in China to
vehicles were covered. and boost spending on research and reduce inventories and plan to launch
Mr Kim was fired in November for development to put the brakes on four new models in the second half of the
allegedly leaking trade secrets, but years of profit declines. year to compete better with local rivals
later reinstated by Hyundai following a But analysts are sceptical. Things affordable SUVs.
South Korean government ruling to will likely remain tough for Hyundai But even if the political row over the
protect whistleblowers. Hyundai then until a new model cycle starts in earnest missile shield is resolved, analysts warn
filed a criminal complaint against him, in the second half of 2018, says Angela that Hyundai may find it difficult to
which it dropped after Mr Kim quit the Hong of Nomura. The planned new reverse the trend.
carmaker last week. cars for this year are not volume models The Korean brand is no longer so
that can significantly boost sales. well-accepted in China. Price-conscious
Contracts & Tenders
The Property Market
Businesses
For Sale
Business for Sale, Business Opportunities,
Business Services,
Business Wanted, Franchises
Runs Daily
.............................................................................................................................
Classified Business Advertising
UK: +44 20 7873 4000 | Email:
acs.emea@ft.com
Tuesday 30 May 2017
consumers are opting for domestic
brands such as Geely or Great Wall
Motor, while those who want to show off
their wealth are buying German cars,
says Ms Hong.
Hyundai is grappling with slowing
demand in the US, where together with
Kia it controls 8.2 per cent of the market
and where industry-wide vehicle sales
are expected to fall this year for the first
time in eight years.
Hyundais US sales dropped 4.3 per
cent in the first four months of the year,
despite a 15 per cent rise in first-quarter
spending on incentives.
ous, outweighing improving conditions
in emerging markets this year, says Ms
Hong.
The latest recall has renewed con-
sumer distrust at home, with Hyundais
dominance already under threat in its
most profitable market from a flood of
import cars and quality issues.
Hyundai and Kia have a combined
67.6 per cent domestic market share,
but that is down from more than 80 per
cent in 2009.
Looming wage negotiations also are a
concern for Hyundai, which lost billions
of dollars in production last year due
to strikes.
Analysts think the carmaker may
manage a modest sales recovery in the
second half of the year, but warn that its
long-term outlook remains cloudy.
They note that Hyundai has
trailed rivals in technologies for green
cars and autonomous driving, partly
due to relatively low research and devel-
opment spending.
Hyundai and Kia together spent
2.4 per cent of sales on R&D last year,
versus the 5-7 per cent average for global
carmakers.
They have been lagging in innova-
tion . . . Hyundai needs to aggressively
ramp up its R&D efforts as well as
exploring new mobility models to pre-
pare for a very different automotive
future, says Dominique Bonte at ABI
Research.
If not, it will be left behind by other
[global players], which are all aggres-
sively moving forward.
Tuesday 30 May 2017 FINANCIAL TIMES 15
16 FINANCIAL TIMES Tuesday 30 May 2017

MARKET DATA

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

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

-0.01% -0.03% -0.02% -0.04% -0.458%

No change No change
0.03% 0.08% 0.40% 0.24% 0.391% 0.040% 0.64%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Apr 30 - - Index All World Apr 30 - May 29 Index All World Apr 30 - May 26 Index All World Apr 30 - May 29 Index All World Apr 30 - May 29 Index All World Apr 30 - May 29 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
7,547.63 2,352.97
2,415.82 19,682.57
2,388.77 15,506.47 15,430.88 12,628.95
7,288.72 19,079.33
12,438.01 2,205.44
Day 0.03% Month 1.14% Year 15.56% Day 0.09% Month -1.00% Year 9.40% Day 0.40% Month 3.60% Year 20.52% Day 0.21% Month 0.08% Year NaN% Day -0.02% Month 2.53% Year 16.92% Day -0.10% Month 6.69% Year 19.49%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
6,210.19 25,701.63
49,440.96 49,597.21 1,536.99 10,884.00 3,214.55
6,048.94 1,519.34 10,715.80 24,578.43 3,173.76
Day 0.08% Month 3.07% Year 26.87% Day -0.18% Month 0.66% Year 7.51% Day -0.03% Month 1.19% Year 11.98% Day -0.19% Month 1.57% Year 19.51% Day 0.24% Month 4.41% Year 24.91% Day -0.15% Month 1.23% Year 14.70%

Dow Jones Industrial New York Bovespa So Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
31,109.28
21,080.28 3,288.93
20,981.33 64,676.55 5,332.47 3,257.06
63,687.37 20,783.82
5,267.33 20,597.34 30,029.74
Day -0.01% Month 0.40% Year 18.09% Day -0.62% Month -2.63% Year 29.83% Day -0.08% Month 1.24% Year 18.11% Day -2.01% Month 0.85% Year 14.28% Day 0.08% Month -0.78% Year 10.48% Day 0.26% Month 3.98% Year 16.72%

Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous Country Index Latest Previous
Argentina Merval 22536.91 22141.71 Cyprus CSE M&P Gen 77.09 77.42 Italy FTSE Italia All-Share 23024.74 23469.55 Philippines Manila Comp 7886.03 7867.49 Taiwan Weighted Pr 10101.95 10108.49 Cross-Border DJ Global Titans ($) 274.72 274.80
Australia All Ordinaries 5747.70 5792.10 Czech Republic
PX 1012.90 1016.24 FTSE Italia Mid Cap 40092.59 40552.35 Poland Wig 60742.91 60907.75 Thailand Bangkok SET 1568.17 1569.27 Euro Stoxx 50 (Eur) 3578.46 3579.02
S&P/ASX 200 5707.10 5751.70 Denmark OMXC Copenahgen 20 983.05 988.26 FTSE MIB 20783.82 21210.57 Portugal PSI 20 5226.48 5226.58 Turkey BIST 100 97533.28 97712.94 Euronext 100 ID 1026.46 1028.06
S&P/ASX 200 Res 3367.70 3391.80 Egypt EGX 30 13205.11 13094.42 Japan 2nd Section 5964.36 5956.35 PSI General 2884.38 2879.54 UAE Abu Dhabi General Index 4496.38 4516.84 FTSE 4Good Global ($) 6077.47 6078.08
Austria ATX 3184.45 3209.58 Estonia OMX Tallinn 1116.80 1122.13 Nikkei 225 19682.57 19686.84 Romania BET Index 8676.40 8647.49 UK FT 30 3367.40 3359.20 FTSE All World 306.94 307.05
Belgium BEL 20 3893.48 3900.93 Finland OMX Helsinki General 9739.58 9759.57 S&P Topix 150 1271.62 1271.32 Russia Micex Index 1940.32 1934.25 FTSE 100 7547.63 7517.71 FTSE E300 1536.99 1537.41
BEL Mid 6703.99 6700.11 France CAC 40 5332.47 5336.64 Topix 1570.21 1569.42 RTX 1082.22 1073.04 FTSE 4Good UK 6693.63 6675.26 FTSE Eurotop 100 3016.81 3016.18
Brazil Bovespa 63687.37 64085.41 SBF 120 4245.47 4249.12 Jordan Amman SE 2156.24 2156.36 Saudi-Arabia TADAWUL All Share Index 6783.39 6871.72 FTSE All Share 4130.15 4114.68 FTSE Global 100 ($) 1507.95 1507.87
Canada S&P/TSX 60 910.16 Germany
909.27 M-DAX 25282.30 25208.33 Kenya NSE 20 3442.38 3410.89 Singapore FTSE Straits Times 3214.55 3219.42 FTSE techMARK 100 4673.33 4647.66 FTSE Gold Min ($) 1512.73 1503.02
S&P/TSX Comp 15430.88 15416.93 TecDAX 2275.91 2275.43 Kuwait KSX Market Index 6649.66 6687.53 Slovakia SAX 308.12 308.55 USA DJ Composite 7288.05 7286.01 FTSE Latibex Top (Eur) 3965.80 3944.00
S&P/TSX Div Met & Min 708.06 702.43 XETRA Dax 12628.95 12602.18 Latvia OMX Riga 848.12 835.33 Slovenia SBI TOP 789.05 791.12 DJ Industrial 21080.28 21082.95 FTSE Multinationals ($) 1762.36 1763.55
Chile IGPA Gen 24475.90 24515.14
Greece Athens Gen 777.19 778.35 Lithuania OMX Vilnius 584.89 583.80 South Africa FTSE/JSE All Share 53944.22 53996.14 DJ Transport 9176.20 9163.84 FTSE World ($) 543.34 543.59
China FTSE A200 9019.42 9028.96 FTSE/ASE 20 2068.21 2077.55 Luxembourg LuxX 1743.91 1744.16 FTSE/JSE Res 20 31253.22 31037.03 DJ Utilities 720.22 720.30 FTSEurofirst 100 (Eur) 4354.88 4349.38
FTSE B35 9000.71 8988.96
Hong Kong Hang Seng 25701.63 25639.27 Malaysia FTSE Bursa KLCI 1764.89 1772.30 FTSE/JSE Top 40 47533.50 47535.43 Nasdaq 100 5788.36 5778.37 FTSEurofirst 80 (Eur) 4915.56 4921.84
Shanghai A 3257.06 3254.35 HS China Enterprise 10619.34 10579.67 Mexico IPC 49597.21 49688.27 South Korea Kospi 2352.97 2355.30 Nasdaq Cmp 6210.19 6205.26 MSCI ACWI Fr ($) 464.50 464.88
Shanghai B 320.83 320.37 HSCC Red Chip 4078.50 4056.22 Morocco MASI 11592.31 11566.48 Kospi 200 306.52 306.96 NYSE Comp 11631.87 11639.30 MSCI All World ($) 1912.21 1914.59
Shanghai Comp 3110.06 3107.46
Hungary Bux 34138.11 34358.93 Netherlands AEX 527.73 528.03 Spain IBEX 35 10884.00 10904.20 S&P 500 2415.82 2415.07 MSCI Europe (Eur) 1600.03 1599.56
Shenzhen A 1893.24 1895.13
India BSE Sensex 31109.28 31028.21 AEX All Share 802.23 802.42 Sri Lanka CSE All Share 6679.46 6697.86 Wilshire 5000 25107.11 25105.23 MSCI Pacific ($) 2536.54 2541.07
Shenzhen B 1086.47 1084.98 Nifty 500 8299.50 8331.85 New Zealand NZX 50 7412.74 7441.57 Sweden OMX Stockholm 30 1631.91 1635.77 Venezuela IBC 73959.10 72689.66 S&P Euro (Eur) 1637.86 1640.41
Colombia COLCAP 1448.93 1444.39
Indonesia Jakarta Comp 5712.33 5716.82 Nigeria SE All Share 29064.52 28467.61 OMX Stockholm AS 585.10 586.77 Vietnam VNI 746.25 743.41 S&P Europe 350 (Eur) 1581.57 1582.44
Croatia CROBEX 1853.42 1862.07
Ireland ISEQ Overall 6972.30 6973.83 Norway Oslo All Share 789.60 790.15 Switzerland SMI Index 9031.96 9042.03 S&P Global 1200 ($) 2130.25 2130.84
Israel Tel Aviv 100 13.02 12.99 Pakistan KSE 100 52138.90 52636.87 Stoxx 50 (Eur) 3232.42 3228.26
(c) Closed. (u) Unavaliable. Correction. Subject to official recalculation. For more index coverage please see www.ft.com/worldindices. A fuller version of this table is available on the ft.com research data archive.

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

AMERICA LONDON EURO MARKETS TOKYO May 26 %Chg %Chg May 26 %Chg %Chg May 26 %Chg %Chg May 26 %Chg %Chg
ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's ACTIVE STOCKS stock close Day's FTSE 100 price(p) week ytd FTSE 250 price(p) week ytd FTSE SmallCap price(p) week ytd Industry Sectors price(p) week ytd
traded m's price change traded m's price change traded m's price change traded m's price change Winners Winners Winners Winners
Amazon.com 34.5 995.78 2.40 Countryside Properties 353.3 326.10 23.10 Unicredit 319.7 15.87 -0.72 Softbank . 482.6 8732.00 -165.00 Easyjet 1386.00 10.5 37.9 Wizz Air Holdings 2285.00 19.9 27.6 Hss Hire 65.50 21.9 -19.6 Industrial Metals 2230.37 5.2 -0.9
Apple 33.7 153.61 -0.26 Henderson 255.5 233.70 -1.10 Intesa Sanpaolo 264.9 2.57 -0.05 Mitsubishi Ufj Fin,. 242.7 697.90 2.70 Convatec 325.00 8.3 38.9 Intermediate Capital 892.00 10.6 27.4 Imagination 113.75 13.5 -54.9 Mobile Telecommunications 5187.40 4.4 14.8
Nvidia 27.6 141.84 3.58 Lloyds Banking 174.1 71.74 -1.36 Cs N 197.5 12.47 -0.07 Toshiba 206.3 262.30 3.90 Informa 688.50 6.5 1.3 Spirax-sarco Eng 5760.00 10.2 37.7 On The Beach 412.00 8.4 48.6 Personal Goods 37456.03 4.0 27.6
Tesla 25.4 325.14 8.31 Shire 170.2 4651.50 -86.50 Eni 159.8 14.28 -0.03 Toyota Motor 193.5 5970.00 29.00 3i 868.50 4.8 23.4 Sig 153.40 10.0 48.6 Hostelworld 328.00 7.9 46.6 Aerospace & Defense 5433.48 3.3 17.3
Facebook 22.8 152.13 0.17 Unilever 168.8 4310.50 41.00 Nestle N 151.3 75.52 -0.41 Sony 186.7 4038.00 29.00 Vodafone 230.20 4.5 15.2 Sophos 436.80 9.1 67.0 Spirent Communications 124.75 7.5 26.3 Tobacco 61335.30 2.7 16.2
Alphabet 16.3 993.27 1.41 Hsbc Holdings 154.0 675.00 6.00 Bnp Paribas Act.a 150.4 66.35 -0.04 Sumitomo Mitsui Fin,. 158.3 4041.00 7.00 Carnival 4935.00 4.3 19.6 Countryside Properties 326.10 8.4 31.1 Edinburgh Worldwide Investment Trust 617.00 7.5 24.1 Gas Water & Multiutilities 6575.24 2.6 8.6
Microsoft 13.9 69.96 0.34 Glaxosmithkline 152.2 1643.50 25.50 Enel 150.1 4.70 -0.11 Honda Motor Co., 135.9 3064.00 6.00 Johnson Matthey 3175.00 4.3 -0.2 Allied Minds 152.50 8.3 -67.6 Porvair 595.25 7.1 37.6 Electronic & Electrical Equip. 5956.28 2.5 21.5
Alphabet 12.2 971.47 1.93 Vodafone 148.4 230.20 2.10 Roche Gs 130.9 244.24 -0.09 Tokyo Electron 118.1 15815.00 10.00 Unilever 4310.50 4.2 30.9 Electrocomponents 579.50 8.1 21.6 Moss Bros 116.00 6.9 17.2 Food & Drug Retailers 3086.72 2.5 0.1
Bank Of America 11.7 23.24 -0.01 Bp 141.9 474.55 1.45 Novartis N 126.2 71.94 -0.09 Japan Tobacco . 116.6 4203.00 31.00 Scottish Mortgage Investment Trust 400.00 4.0 24.8 Just Eat 656.00 8.0 12.4 Boot (henry) 299.00 6.8 48.4 Industrial Transportation 3178.94 2.5 4.3
Best Buy Co 8.8 58.97 -2.28 Diageo 133.1 2337.00 12.50 Credit Agricole 118.1 13.91 -0.60 Rakuten . 116.5 1375.50 5.50 Bae Systems 665.50 4.0 12.5 Ocado 313.00 7.7 18.5 Speedy Hire 57.50 6.5 12.7 Travel & Leisure 9895.04 2.5 13.1
Severn Trent 2534.00 3.9 14.0 Udg Healthcare 812.50 7.3 21.5 De La Rue 676.00 6.5 9.9 Industrial Engineering 11781.07 2.4 14.9
BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's BIGGEST MOVERS Close Day's Day's
Burberry 1778.00 3.7 18.8 Ferrexpo 172.70 6.2 28.4 Pendragon 37.25 6.4 19.2 Beverages 18778.95 2.1 12.4
price change chng% price change chng% price change chng% price change chng%
Ups Ups Ups Ups Losers Losers Losers Losers
Mallkrodt 43.28 2.28 5.56 Restaurant 350.60 33.20 10.46 Carrefour 23.64 0.52 2.25 Maruha Nichiro 3220.00 95.00 3.04 Kingfisher 328.30 -10.7 -6.3 Just 138.50 - - Lonmin 86.25 -14.8 -39.0 Oil Equipment & Services 12939.71 -14.0 -20.7
Sirius Xm Holdings 5.29 0.17 3.32 Spirax-sarco Eng 5760.00 450.00 8.47 Ryanair Holdings 18.01 0.38 2.16 Nippon Electric Glass Co., 774.00 22.00 2.93 Mediclinic Int 816.00 -6.9 5.8 Petrofac 389.00 -40.7 -55.2 Renewi 91.50 -12.0 -0.5 General Retailers 2665.12 -1.0 2.9
Ulta Beauty 302.40 9.36 3.19 Countryside Properties 326.10 23.10 7.62 Hugo Boss Ag Na O.n. 66.73 1.23 1.88 Matsui Securities Co., 925.00 22.00 2.44 National Grid 1091.00 -5.1 5.1 Acacia Mining 285.80 -33.7 -23.5 Topps Tiles 91.50 -10.9 4.6 Mining 14949.45 -0.8 1.1
Kansas City Southern 95.95 2.88 3.09 Acacia Mining 285.80 19.90 7.48 Yara Int 34.90 0.53 1.55 Shiseido , 3701.00 84.00 2.32 Shire 4651.50 -4.1 -0.7 Onesavings Bank 427.20 -6.9 26.4 Nanoco 39.25 -8.7 -12.8 Construction & Materials 6861.37 -0.3 0.7
Tesla 325.14 8.31 2.62 Informa 688.50 38.00 5.84 Ucb 61.59 0.86 1.42 Toho Co.,ltd 3340.00 70.00 2.14 Anglo American 1052.50 -3.7 -9.3 Amec Foster Wheeler 518.00 -6.8 10.2 Kainos 240.00 -6.3 17.4 Pharmaceuticals & Biotech. 14493.87 -0.2 7.8
Hikma Pharmaceuticals 1692.00 -2.5 -10.6 Tate & Lyle 732.00 -5.9 3.5 Sthree 305.50 -5.4 -1.5 Life Insurance 8340.38 0.0 5.4
Downs Downs Downs Downs
Micro Focus Int 2418.00 -2.2 11.0 Wood (john) 733.50 -5.8 -16.3 Ncc 158.75 -5.1 -12.2 Real Estate Investment Trusts 3007.62 0.3 3.2
Ggp 22.65 -1.04 -4.39 Petrofac 389.00 -41.80 -9.70 Unicredit 15.87 -0.72 -4.34 Dainippon Sumitomo Pharma Co., 1673.00 -71.00 -4.07
Dcc 7290.00 -2.1 20.7 Hunting 544.50 -5.8 -13.2 Renold 59.63 -5.0 35.1 Automobiles & Parts 8288.44 0.3 6.9
Shire 177.18 -7.64 -4.13 Zpg 360.20 -14.10 -3.77 Credit Agricole 13.91 -0.60 -4.10 Nippon Steel & Sumitomo Metal 2387.00 -81.50 -3.30
London Stock Exchange 3391.00 -2.0 16.4 Great Portland Estates 629.50 -5.3 -10.5 Circassia Pharmaceuticals 93.75 -4.1 -0.3 Oil & Gas Producers 7910.23 0.3 -6.7
Best Buy Co 58.97 -2.28 -3.72 Intermediate Capital 892.00 -28.00 -3.04 Ageas 36.28 -1.38 -3.66 Jfe Holdings,. 1832.00 -52.00 -2.76
Direct Line Insurance 345.40 -1.8 -6.5 Paypoint 956.00 -5.3 -5.0 Xaar 365.75 -4.0 -8.6 Software & Computer Services 2125.43 0.5 12.3
yte 134.38 -4.03 -2.91 Aldermore 246.30 -6.40 -2.53 Amadeus It 48.96 -1.35 -2.69 Kobe Steel, 1021.00 -27.00 -2.58
Randgold Resources Ld 7200.00 -1.5 12.2 Softcat 424.00 -5.1 43.8 4imprint 1749.00 -3.5 -0.7 Banks 4341.46 0.6 5.0
First Solar 36.84 -1.10 -2.90 Britvic 705.00 -18.00 -2.49 Enel 4.70 -0.11 -2.25 Oki Electric Industry , 1663.00 -40.00 -2.35
Barratt Developments 601.00 -1.5 30.0 Ao World 142.00 -5.1 -21.7 Trinity Mirror 108.00 -3.4 1.9 Nonlife Insurance 2995.62 0.6 8.8
Based on the constituents of the S&P500 and the Nasdaq 100 index Based on the constituents of the FTSE 350 index Based on the constituents of the FTSEurofirst 300 Eurozone index Based on the constituents of the Nikkei 225 index
Based on last week's performance. Price at suspension.

CURRENCIES
DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND DOLLAR EURO POUND
Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's Closing Day's
May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change May 29 Currency Mid Change Mid Change Mid Change
Argentina Argentine Peso 15.9900 -0.0201 17.8721 -0.0337 20.5345 0.0568 Indonesia Indonesian Rupiah 13322.0000 27.0000 14890.0814 20.8784 17108.2301 103.2493 Poland Polish Zloty 3.7438 0.0056 4.1844 0.0036 4.8078 0.0265 ..Three Month 0.7790 -0.0031 0.8702 -0.0041 - -
Australia Australian Dollar 1.3436 0.0005 1.5018 -0.0003 1.7255 0.0076 Israel Israeli Shekel 3.5617 -0.0144 3.9809 -0.0187 4.5739 -0.0001 Romania Romanian Leu 4.0851 0.0078 4.5659 0.0059 5.2461 0.0310 ..One Year 0.7802 -0.0031 0.8696 -0.0041 - -
Bahrain Bahrainin Dinar 0.3772 0.0001 0.4216 -0.0001 0.4844 0.0021 Japan Japanese Yen 111.2900 0.0450 124.3895 -0.0276 142.9195 0.6316 Russia Russian Ruble 56.4800 -0.3838 63.1280 -0.4687 72.5321 -0.1995 United States United States Dollar - - 1.1177 -0.0007 1.2842 0.0052
Bolivia Bolivian Boliviano 6.9100 - 7.7233 -0.0048 8.8739 0.0356 ..One Month 111.2899 0.0447 124.3895 -0.0275 142.9195 0.6315 Saudi Arabia Saudi Riyal 3.7504 0.0001 4.1918 -0.0025 4.8163 0.0195 ..One Month - - 1.1175 -0.1613 1.2843 0.0052
Brazil Brazilian Real 3.2704 0.0163 3.6553 0.0159 4.1999 0.0377 ..Three Month 111.2895 0.0441 124.3895 -0.0274 142.9193 0.6312 Singapore Singapore Dollar 1.3854 0.0033 1.5485 0.0027 1.7791 0.0114 ..Three Month - - 1.1172 -0.1613 1.2846 0.0052
Canada Canadian Dollar 1.3439 -0.0015 1.5020 -0.0026 1.7258 0.0051 ..One Year 111.2880 0.0409 124.3897 -0.0272 142.9195 0.6305 South Africa South African Rand 12.9800 0.1175 14.5078 0.1223 16.6690 0.2172 ..One Year - - 1.1154 -0.1613 1.2857 0.0052
Chile Chilean Peso 673.9500 4.3350 753.2777 4.3765 865.4921 9.0207 Kenya Kenyan Shilling 103.3500 0.0400 115.5149 -0.0276 132.7229 0.5842 South Korea South Korean Won 1121.7000 0.9000 1253.7305 0.2214 1440.4963 6.9365 Venezuela Venezuelan Bolivar Fuerte 10.1401 0.1701 11.3336 0.1831 13.0219 0.2698
China Chinese Yuan 6.8610 - 7.6686 -0.0048 8.8110 0.0354 Kuwait Kuwaiti Dinar 0.3037 0.0001 0.3394 -0.0002 0.3900 0.0016 Sweden Swedish Krona 8.6962 0.0099 9.7198 0.0049 11.1677 0.0575 Vietnam Vietnamese Dong 22741.0000 13.5000 25417.8052 -0.7753 29204.2428 134.5599
Colombia Colombian Peso 2911.5000 -3.8750 3254.1999 -6.3727 3738.9719 10.0594 Malaysia Malaysian Ringgit 4.2760 0.0075 4.7793 0.0054 5.4913 0.0316 Switzerland Swiss Franc 0.9762 0.0019 1.0912 0.0015 1.2537 0.0075 European Union Euro 0.8947 0.0006 - - 1.1490 0.0053
Costa Rica Costa Rican Colon 580.6550 -7.4350 649.0014 -8.7218 745.6819 -6.5149 Mexico Mexican Peson 18.5133 0.0435 20.6924 0.0357 23.7749 0.1511 Taiwan New Taiwan Dollar 30.1050 - 33.6485 -0.0211 38.6611 0.1553 ..One Month 0.8945 0.0006 - - 1.1489 0.0053
Czech Republic Czech Koruna 23.6911 0.0457 26.4797 0.0345 30.4243 0.1806 New Zealand New Zealand Dollar 1.4133 -0.0054 1.5797 -0.0070 1.8150 0.0004 Thailand Thai Baht 34.1305 0.0950 38.1479 0.0824 43.8307 0.2975 ..Three Month 0.8941 0.0006 - - 1.1488 0.0053
Denmark Danish Krone 6.6560 0.0018 7.4394 -0.0027 8.5476 0.0366 Nigeria Nigerian Naira 314.7500 - 351.7978 -0.2203 404.2045 1.6234 Tunisia Tunisian Dinar 2.4339 -0.0010 2.7203 -0.0028 3.1256 0.0113 ..One Year 0.8924 0.0006 - - 1.1482 0.0053
Egypt Egyptian Pound 18.1135 0.0320 20.2456 0.0231 23.2615 0.1344 Norway Norwegian Krone 8.4095 0.0218 9.3993 0.0185 10.7995 0.0713 Turkey Turkish Lira 3.5792 0.0008 4.0004 -0.0016 4.5964 0.0195
Hong Kong Hong Kong Dollar 7.7948 0.0017 8.7123 -0.0036 10.0101 0.0423 Pakistan Pakistani Rupee 104.8350 - 117.1747 -0.0734 134.6300 0.5407 United Arab Emirates UAE Dirham 3.6731 0.0000 4.1054 -0.0025 4.7170 0.0190
Hungary Hungarian Forint 275.6465 0.5705 308.0916 0.4450 353.9874 2.1513 Peru Peruvian Nuevo Sol 3.2810 0.0080 3.6672 0.0067 4.2135 0.0272 United Kingdom Pound Sterling 0.7787 -0.0031 0.8703 -0.0041 - -
India Indian Rupee 64.4900 0.0600 72.0808 0.0220 82.8186 0.4094 Philippines Philippine Peso 49.8200 0.0600 55.6841 0.0322 63.9792 0.3337 ..One Month 0.7788 -0.0031 0.8703 -0.0041 - -
Rates are derived from WM Reuters Spot Rates and MorningStar (latest rates at time of production). Some values are rounded. Currency redenominated by 1000. The exchange rates printed in this table are also available at www.FT.com/marketsdata
UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY
Produced in conjunction with the Institute and Faculty of Actuaries May 26 May 25 May 24 May 23 May 22 Yr Ago High Low Year to date percentage changes Closing Day's Closing Day's
Strlg Day's Euro Strlg Strlg Year Div P/E X/D Total FT 30 3367.40 3359.20 3358.40 3338.30 3339.80 0.00 3366.30 3060.90 Personal Goods 22.76 FTSE 250 Index 9.60 General Retailers 4.41 FTSE 100 Price Change FTSE 100 Price Change
May 29 chge% Index May 25 May 24 ago yield% Cover ratio adj Return FT 30 Div Yield 1.47 1.48 1.48 1.49 1.49 0.00 3.93 2.74 Electronic & Elec Eq 19.50 Real Est Invest & Se 9.31 Banks 4.38 3I Group PLC 868.50 -3.00 London Stock Exchange Group PLC 3391 -9.00
FTSE 100 (100) 7547.63 0.40 6727.86 7517.71 7514.90 6270.79 3.66 0.91 30.04 139.74 6272.33 P/E Ratio net 30.36 30.11 30.05 29.85 29.90 0.00 19.44 14.26 Forestry & Paper 18.85 FTSE SmallCap Index 8.82 Utilities 3.80 Admiral Group PLC 2006 -10.00 Marks And Spencer Group PLC 386.30 -3.00
FTSE 250 (250) 20024.92 0.29 17849.94 19967.58 19950.52 17232.26 2.64 1.69 22.46 231.82 14506.76 FT 30 since compilation: 4198.4 high: 19/07/1999; low49.4 26/06/1940Base Date: 1/7/35 Household Goods & Ho 16.88 Equity Invest Instr 8.63 Construct & Material 3.29 Anglo American PLC 1052.5 -5.00 Mediclinic International PLC 816.00 7.50
FTSE 250 ex Inv Co (207) 21466.09 0.22 19134.57 21418.01 21410.16 18743.30 2.68 1.72 21.73 256.03 15866.98 FT 30 hourly changes Consumer Goods 14.26 Health Care 8.46 Real Est Invest & Tr 3.04 Antofagasta PLC 824.50 -1.00 Merlin Entertainments PLC 518.50 1.00
FTSE 350 (350) 4187.61 0.38 3732.78 4171.80 4169.89 3500.46 3.48 1.01 28.39 72.54 6991.93 8 9 10 11 12 13 14 15 16 High Low Aerospace & Defense 13.45 Chemicals 8.19 Basic Materials 3.00 Ashtead Group PLC 1570 12.00 Micro Focus International PLC 2418 8.00
FTSE 350 ex Investment Trusts (306) 4152.99 0.37 3701.92 4137.74 4136.30 3477.18 3.51 1.00 28.33 72.88 3572.12 3359.2 3357.6 3355.1 3355.2 3357.3 3354.3 3365.7 3367.8 3366.3 3368.8 3352.9 Tobacco 13.10 Pharmace & Biotech 8.02 Leisure Goods 2.44 Associated British Foods PLC 2950 -19.00 Mondi PLC 2011 3.00
FTSE 350 Higher Yield (122) 3891.63 0.46 3468.95 3873.81 3875.44 3197.95 4.73 0.74 28.66 91.83 6800.86 FT30 constituents and recent additions/deletions can be found at www.ft.com/ft30 Industrial Eng 12.82 Nonlife Insurance 7.68 Mining 1.80 Astrazeneca PLC 5227 18.00 Morrison (Wm) Supermarkets PLC 247.40 2.00
FTSE 350 Lower Yield (228) 4083.10 0.28 3639.62 4071.58 4065.49 3472.68 2.00 1.78 28.08 40.23 4463.27 Software & Comp Serv 12.42 Automobiles & Parts 6.57 Telecommunications 1.18 Aviva PLC 526.50 -4.50 National Grid PLC 1091 6.50
FTSE SmallCap (278) 5661.48 0.29 5046.56 5644.88 5647.41 4577.56 2.69 1.20 30.82 61.66 8084.89 Financial Services 12.37 Financials 6.17 Media 0.20
FTSE SmallCap ex Inv Co (147) 5043.67 0.15 4495.86 5035.94 5051.24 4174.13 2.81 1.51 23.45 54.02 7566.19 FX: EFFECTIVE INDICES Health Care Eq & Srv 12.10 Gas Water & Multi 5.85 Food & Drug Retailer -2.25
Babcock International Group PLC 941.50 -9.00 Next PLC 4384 -18.00
Bae Systems PLC 665.50 9.50 Old Mutual PLC 196.60 1.40
FTSE All-Share (628) 4130.15 0.38 3681.55 4114.68 4112.93 3448.45 3.45 1.02 28.47 70.58 6972.34 Travel & Leisure 10.53 FTSE All{HY-}Share Index 5.54 Electricity -3.69
May 25 May 24 Mnth Ago May 26 May 25 Mnth Ago Barclays PLC 211.65 -2.40 Paddy Power Betfair PLC 8315 15.00
FTSE All-Share ex Inv Co (453) 4075.50 0.36 3632.84 4060.70 4059.57 3411.61 3.50 1.01 28.21 70.97 3562.49 Support Services 10.37 Life Insurance 5.39 Oil Equipment & Serv -5.50 Barratt Developments PLC 601.00 -6.00 Pearson PLC 699.00 9.00
FTSE All-Share ex Multinationals (568) 1252.82 -0.05 925.58 1253.43 1251.56 1163.96 2.95 1.29 26.34 14.88 2231.83 Australia 92.83 92.93 94.37 Sweden 77.10 77.05 77.29 Technology 10.09 NON FINANCIALS Index 5.32 Industrial Metals & -5.76 Bhp Billiton PLC 1205 -4.50 Persimmon PLC 2443 -19.00
FTSE Fledgling (94) 9887.69 0.15 8813.75 9872.49 9853.40 7667.86 2.50 1.79 22.36 103.30 18465.07 Canada 87.23 87.25 87.09 Switzerland 160.65 160.28 160.57 Industrials 9.99 Food Producers 5.08 Oil & Gas -7.02 BP PLC 474.55 1.45 Provident Financial PLC 3091 -41.00
FTSE Fledgling ex Inv Co (45) 13757.25 -0.03 12263.02 13761.41 13739.97 10438.37 2.89 2.90 11.93 152.50 25058.27 Denmark 108.72 108.66 107.81 UK 78.10 78.29 78.49 Beverages 9.91 Industrial Transport 5.00 Oil & Gas Producers -7.07 British American Tobacco PLC 5591 96.00 Prudential PLC 1749 6.50
FTSE All-Small (372) 3934.37 0.29 3507.04 3923.11 3924.40 3174.16 2.68 1.23 30.24 42.76 7212.15 Japan 137.59 137.51 141.68 USA 103.18 103.33 103.93 Mobile Telecomms 9.90 FTSE 100 Index 4.59 Tech Hardware & Eq -9.13 British Land Company PLC 631.50 0.50 Randgold Resources LD 7200 105.00
FTSE All-Small ex Inv Co Index (192) 3775.84 0.15 3365.73 3770.31 3781.11 3113.45 2.82 1.57 22.61 40.50 7176.05 New Zealand 117.46 117.03 117.06 Euro 91.16 91.03 88.98 Consumer Services 4.54 Fixed Line Telecomms -13.85 Bt Group PLC 313.80 0.40 Reckitt Benckiser Group PLC 7869 72.00
FTSE AIM All-Share Index (800) 991.38 0.23 883.71 989.10 987.44 735.84 1.58 0.74 84.83 5.41 1089.92 Norway 88.02 87.76 87.64
Bunzl PLC 2437 -3.00 RELX PLC 1654 18.00
FTSE Sector Indices Source: Bank of England. New Sterling ERI base Jan 2005 = 100. Other indices base average 1990 = 100. Burberry Group PLC 1778 5.00 Rentokil Initial PLC 264.70 1.80
Oil & Gas (16) 8285.25 0.26 7385.35 8263.99 8342.50 6499.44 6.25 0.40 39.71 259.92 7672.06 Index rebased 1/2/95. for further information about ERIs see www.bankofengland.co.uk Carnival PLC 4935 59.00 Rio Tinto PLC 3190 24.50
Oil & Gas Producers (9) 7955.19 0.26 7091.15 7934.67 7990.82 6200.20 6.29 0.41 38.29 251.49 7626.10 Centrica PLC 203.20 -2.50 Rolls-Royce Holdings PLC 873.00 21.50
Oil Equipment Services & Distribution (7)13733.68 0.20 12242.01 13706.48 15097.67 13418.04 4.58 -0.22 -99.84 306.86 10720.18 FTSE GLOBAL EQUITY INDEX SERIES Coca-Cola Hbc AG 2269 -2.00 Royal Bank Of Scotland Group PLC 261.60 -4.40
Basic Materials (28) 5181.44 0.40 4618.66 5160.68 5179.08 3235.73 2.41 1.09 38.07 90.92 5294.43 Compass Group PLC 1643 23.00 Royal Dutch Shell PLC 2166.5 5.50
Chemicals (7) 14457.55 1.20 12887.26 14285.82 14322.02 11619.22 2.10 1.89 25.17 95.63 12870.51 May 26 No of US $ Day Mth YTD Total
YTD Gr Div May 26 No of US $ Day Mth YTD Total YTD Gr Div Convatec Group PLC 325.00 4.00 Royal Dutch Shell PLC 2118 6.50
Forestry & Paper (1) 23636.35 0.15 21069.11 23601.09 23554.07 15973.05 2.40 3.36 12.42 375.43 25783.72 Regions & countries stocks indices % % % retn
% Yield Sectors stocks indices % % % retn % Yield Crh PLC 2790 16.00 Royal Mail PLC 438.90 0.80
Industrial Metals & Mining (2) 2402.46 -1.32 2141.52 2434.51 2364.38 1158.83 0.54 21.48 8.60 13.01 2108.00 FTSE Global All Cap 7724 525.86 -0.1 1.6 11.0 9.8 746.43
2.3 Oil & Gas Producers 108 329.59 -0.3 -0.3 -6.2 540.87 -4.8 3.8 Croda International PLC 3962 21.00 Rsa Insurance Group PLC 620.00 -1.50
Mining (18) 14323.76 0.34 12768.00 14275.13 14337.27 8616.88 2.46 0.84 48.37 273.28 7667.34 FTSE Global Large Cap 1442 463.09 -0.1 1.9 11.410.1 674.19
2.5 Oil Equipment & Services 28 313.32 -0.2 -0.2 -10.4 454.91 -9.5 3.2 Dcc PLC 7290 -120.00 Sage Group PLC 713.50 -0.50
FTSE Global Mid Cap 1644 708.93 -0.2 1.1 11.110.0 954.99
2.0 Basic Materials 259 457.80 -0.1 -0.1 8.5 697.62 9.9 2.4 Diageo PLC 2337 12.50 Sainsbury (J) PLC 281.70 3.10
Industrials (112) 5491.36 0.71 4894.92 5452.71 5456.37 4435.27 2.23 0.84 53.26 57.73 5661.56
Construction & Materials (15) 7115.80 0.47 6342.92 7082.83 7101.81 5483.05 2.16 0.39 120.32 101.80 7560.05 FTSE Global Small Cap 4638 739.92 -0.2 0.2 8.57.7 964.86
1.9 Chemicals 123 696.65 0.0 0.0 10.5 1067.11 12.0 2.5 Direct Line Insurance Group PLC 345.40 -3.60 Schroders PLC 3165 -4.00
Aerospace & Defense (9) 5632.24 1.77 5020.50 5534.37 5508.75 4147.58 2.13 -2.18 -21.55 63.69 6048.73 FTSE All-World 3086 307.05 -0.1 1.8 11.310.1 460.37
2.4 Forestry & Paper 15 267.54 0.1 0.1 12.3 455.10 14.9 2.9 Easyjet PLC 1386 6.00 Scottish Mortgage Investment Trust PLC 400.00 6.50
General Industrials (5) 4852.59 0.82 4325.54 4812.95 4808.64 3782.14 2.71 1.20 30.84 56.24 5514.52 FTSE World 2543 543.59 -0.1 1.8 11.2 9.9 1094.51
2.4 Industrial Metals & Mining 68 378.15 0.0 0.0 4.4 572.59 5.3 2.1 Experian PLC 1641 -5.00 Severn Trent PLC 2534 -10.00
Electronic & Electrical Equipment (10) 7537.26 0.63 6718.61 7490.17 7459.26 5405.79 1.68 1.91 31.26 53.21 6870.86 FTSE Global All Cap ex UNITED KINGDOM In 7396 544.75 0.0 1.5 10.9 9.8 761.50
2.3 Mining 53 539.17 -0.5 -0.5 5.1 819.18 6.8 2.3 Fresnillo PLC 1581 5.00 Shire PLC 4651.5 -86.50
Industrial Engineering (12) 12939.36 2.07 11533.96 12677.38 12675.20 8619.09 2.06 1.42 34.19 171.69 15802.28 FTSE Global All Cap ex USA 5827 477.17 -0.2 2.4 14.012.3 724.99
2.8 Industrials 547 369.56 -0.1 -0.1 11.5 531.35 12.7 2.1 Gkn PLC 354.50 5.10 Sky PLC 997.00 -4.00
Industrial Transportation (7) 5086.00 0.55 4533.59 5058.00 4997.42 4497.04 3.83 1.25 20.89 52.62 4515.01 FTSE Global All Cap ex JAPAN 6437 538.32 -0.1 1.5 11.2 9.9 771.17
2.4 Construction & Materials 113 517.40 -0.1 -0.1 12.3 777.75 13.6 2.0 Glaxosmithkline PLC 1643.5 25.50 Smith & Nephew PLC 1351 9.00
Support Services (54) 7719.03 0.19 6880.64 7704.41 7734.59 6717.56 2.15 1.81 25.66 69.69 8010.55 FTSE Global All Cap ex Eurozone 7075 541.17 -0.1 1.3 10.1 9.0 753.35
2.3 Aerospace & Defense 26 653.89 0.3 0.3 15.7 931.47 16.9 2.0 Glencore PLC 292.50 1.10 Smiths Group PLC 1582 2.00
FTSE Developed 2102 493.13 -0.1 1.7 10.9 9.6 706.04
2.4 General Industrials 57 245.47 -0.1 -0.1 4.3 380.91 5.5 2.5 Hammerson PLC 581.00 1.00 Smurfit Kappa Group PLC 2178 21.00
Consumer Goods (38) 23032.67 0.77 20531.00 22856.14 22721.87 19189.07 2.76 1.84 19.71 339.50 16994.21
FTSE Developed All Cap 5667 518.13 -0.1 1.5 10.6 9.3 732.91
2.3 Electronic & Electrical Equipment 71 403.52 -0.1 -0.1 17.4 531.21 18.2 1.6 Hargreaves Lansdown PLC 1390 -15.00 Sse PLC 1519 -17.00
Automobiles & Parts (1) 8330.91 1.46 7426.06 8211.06 8220.46 6425.03 2.50 1.89 21.15 138.65 8030.35
FTSE Developed Large Cap 917 454.97 -0.1 1.8 11.0 9.6 661.35
2.5 Industrial Engineering 102 723.04 -0.1 -0.1 14.8 1026.31 16.2 2.0 Hikma Pharmaceuticals PLC 1692 27.00 St. James's Place PLC 1172 -5.00
Beverages (5) 18806.66 0.41 16763.99 18729.51 18723.82 15834.77 2.53 1.53 25.83 175.38 13247.33
FTSE Developed Europe Large Cap 227 362.69 -0.5 3.5 16.213.6 606.96
3.3 Industrial Transportation 99 628.02 0.2 0.2 11.5 903.09 12.7 2.2 HSBC Holdings PLC 675.00 6.00 Standard Chartered PLC 733.50 5.50
Food Producers (8) 8570.33 -0.79 7639.48 8638.27 8755.67 8322.72 1.89 2.05 25.76 9.11 7336.47
FTSE Developed Europe Mid Cap 314 580.85 -0.5 3.6 19.917.9 869.94
2.5 Support Services 79 323.43 -0.4 -0.4 9.6 444.87 10.5 1.8 Imperial Brands PLC 3680.5 23.00 Standard Life PLC 383.90 -4.80
Household Goods & Home Construction (15)15927.76 0.19 14197.79 15897.53 15822.85 14453.14 2.34 2.52 16.93 212.12 11241.62
FTSE Dev Europe Small Cap 709 823.49 -0.4 4.0 20.418.7 1194.05
2.4 Consumer Goods 430 476.70 0.1 0.1 14.0 703.66 15.3 2.4 Informa PLC 688.50 38.00 Taylor Wimpey PLC 199.70 -0.90
Leisure Goods (1) 5765.41 -1.16 5139.21 5833.34 5926.74 5369.72 3.76 1.34 19.92 104.95 5202.84
FTSE North America Large Cap 295 516.65 0.1 1.3 9.08.0 702.00
2.1 Automobiles & Parts 105 386.05 0.0 0.0 4.9 551.34 6.5 2.7 Intercontinental Hotels Group PLC 4357 5.00 Tesco PLC 186.80 0.05
Personal Goods (6) 32638.74 0.83 29093.72 32369.01 31966.42 23666.75 2.54 3.04 12.96 376.77 22009.53
FTSE North America Mid Cap 387 761.53 -0.1 -0.2 6.76.1 963.29
1.7 Beverages 45 630.55 0.0 0.0 14.3 941.77 15.3 2.5 International Consolidated Airlines Group S.A. 614.00 -2.00 Tui AG 1169 6.00
Tobacco (2) 61335.40 1.46 54673.53 60452.30 59890.08 50440.88 3.35 1.24 24.19 1304.93 39685.94
FTSE North America Small Cap 1433 774.65 -0.1 -1.2 4.33.8 952.04
1.6 Food Producers 107 623.73 0.2 0.2 9.6 947.75 11.2 2.2 Intertek Group PLC 4295 -19.00 Unilever PLC 4310.5 41.00
Health Care (21) 10702.05 0.43 9539.65 10656.10 10691.35 9198.10 3.28 0.72 42.49 208.49 8263.50
FTSE North America 682 345.15 0.0 1.0 8.67.7 480.01
2.0 Household Goods & Home Construction 49 453.14 0.0 0.0 12.1 664.05 13.5 2.3 Intu Properties PLC 269.70 1.20 United Utilities Group PLC 1035 -19.00
Health Care Equipment & Services (9) 8512.75 0.64 7588.15 8458.88 8411.32 7263.84 1.26 2.44 32.61 60.36 7383.13
FTSE Developed ex North America 1420 252.32 -0.3 2.8 14.712.8 412.87
2.9 Leisure Goods 31 212.60 0.4 0.4 32.9 279.34 33.8 1.3 Itv PLC 200.20 1.20 Vodafone Group PLC 230.20 2.10
Pharmaceuticals & Biotechnology (12)14386.26 0.41 12823.71 14328.05 14390.92 12386.20 3.53 0.64 44.10 300.97 9904.26
FTSE Japan Large Cap 180 349.07 0.0 1.9 8.2 2.1 Personal Goods
7.1 451.24 81 685.64 0.0 0.0 18.6 957.83 19.6 1.9 Johnson Matthey PLC 3175 80.00 Whitbread PLC 4242 -6.00
Consumer Services (94) 5209.60 0.57 4643.77 5180.26 5163.18 4771.13 2.52 1.99 19.88 62.50 4888.14 FTSE Japan Mid Cap 313 570.36 -0.1 2.8 11.310.4 708.03
1.7 Tobacco 12 1521.18 0.4 0.4 20.1 3122.93 21.5 3.3
Food & Drug Retailers (7) 3221.65 0.36 2871.73 3210.03 3180.49 2861.57 1.30 2.26 34.20 22.81 3766.11 Kingfisher PLC 328.30 -2.70 Wolseley PLC 4988 76.00
FTSE Global wi JAPAN Small Cap 794 622.16 -0.3 3.7 12.611.5 799.56
1.9 Health Care 181 469.78 -0.2 -0.2 11.1 675.92 12.4 2.0 Land Securities Group PLC 1075 4.00 Worldpay Group PLC 317.50 -3.50
General Retailers (30) 2626.34 -0.45 2341.08 2638.33 2641.95 2758.36 2.98 2.00 16.81 21.52 2989.34
FTSE Japan 493 147.93 0.0 2.1 8.9 2.0 Health Care Equipment & Services
7.8 214.60 68 799.05 -0.1 -0.1 16.1 929.85 16.6 1.0 Legal & General Group PLC 250.30 -1.80 WPP PLC 1737 26.00
Media (21) 8077.04 0.97 7199.77 7999.20 7979.45 7393.47 2.87 1.82 19.14 95.38 4973.88
FTSE Asia Pacific Large Cap ex Japan 548 657.22 0.0 2.1 17.015.9 1025.19
2.8 Pharmaceuticals & Biotechnology 113 333.75 -0.3 -0.3 9.1 502.21 10.7 2.5 Lloyds Banking Group PLC 71.74 -1.36
Travel & Leisure (36) 9672.05 0.74 8621.53 9600.68 9559.48 8374.40 2.40 2.12 19.69 146.27 9186.68
FTSE Asia Pacific Mid Cap ex Japan 412 877.30 -0.2 1.2 16.115.3 1311.50
2.6 Consumer Services 383 441.18 0.2 0.2 11.8 587.96 12.6 1.6
Telecommunications (6) 3532.78 0.69 3149.07 3508.61 3492.12 3991.72 5.01 -0.01 -1348.7 4.42 3889.64 FTSE Asia Pacific Small Cap ex Japan 1449 543.91 0.0 0.2 12.611.9 800.56
2.5 Food & Drug Retailers 55 292.38 0.2 0.2 3.4 406.72 4.4 2.0
9
Fixed Line Telecommunications (4) 3691.51 0.15 3290.56 3686.05 3719.09 5217.15 4.74 1.20 17.63 0.00 3328.13
FTSE Asia Pacific Ex Japan
FTSE Emerging All Cap
960 519.72
2057 716.84
0.0
0.3
2.0
1.8
16.9
15.3
15.9 861.08
2.8 General Retailers
14.5 1061.31
2.8 Media
120 611.67
79 336.86
0.0
0.6
0.0
0.6
12.3 793.40
10.8 449.99
13.1
11.4
1.5
1.6
UK STOCK MARKET TRADING DATA
Mobile Telecommunications (2) 5179.55 0.93 4616.98 5131.91 5076.74 5207.24 5.12 -0.51 -38.46 9.33 5124.99 FTSE Emerging Large Cap 525 678.96 0.3 2.4 15.614.7 1012.03
2.8 Travel & Leisure 129 446.57 0.0 0.0 17.3 602.15 18.3 1.7 May 26 May 25 May 24 May 23 May 22 Yr Ago
Utilities (7) 9144.69 -0.34 8151.45 9176.00 9163.48 8728.40 4.62 1.64 13.22 83.90 10305.53 FTSE Emerging Mid Cap 459 898.22 0.1 -0.4 14.012.9 1322.36
2.8 Telecommunication 94 165.05 0.0 0.0 2.5 306.45 3.9 4.1 SEAQ Bargains 5233.00 5202.00 5202.00 5058.00 6262.00 5629.00
Electricity (2) 8953.85 -1.06 7981.33 9049.67 9073.93 9024.36 5.49 2.02 9.03 149.05 12793.71 FTSE Emerging Small Cap 1073 740.69 0.2 0.1 15.014.3 1053.54
2.6 Fixed Line Telecommuniations 43 133.94 -0.1 -0.1 -4.7 274.09 -2.9 4.8 Order Book Turnover (m) 193.26 193.78 193.78 139.89 454.55 244.59
Gas Water & Multiutilities (5) 8689.85 -0.16 7746.01 8703.40 8682.43 8179.17 4.40 1.51 15.00 63.82 9798.37 FTSE Emerging Europe 114 352.99 -1.4 -0.7 5.95.0 544.20
4.0 Mobile Telecommunications 51 181.15 0.2 0.2 13.4 301.58 14.2 3.3 Order Book Bargains 1020479.00 1020304.00 1020304.00 950568.00 976389.00 941036.00
Financials (290) 5110.78 -0.02 4555.68 5111.70 5100.00 4240.33 3.54 1.04 27.05 101.66 4748.02 FTSE Latin America All Cap 230 850.28 1.4 -0.7 12.210.7 1308.01
2.8 Utilities 167 273.97 -0.2 -0.2 11.1 529.91 12.8 3.7 Order Book Shares Traded (m) 1709.00 1702.00 1702.00 1275.00 1511.00 1341.00
Banks (12) 4287.29 -0.07 3821.63 4290.10 4288.69 3337.03 4.11 0.62 38.92 107.82 3188.26 FTSE Middle East and Africa All Cap 242 722.88 0.1 3.7 11.6 3.0 Electricity
9.9 1125.82 109 300.32 -0.1 -0.1 10.4 574.11 12.0 3.7 Total Equity Turnover (m) 8747.73 8690.30 8690.30 8386.30 9870.73 8343.18
Nonlife Insurance (10) 3412.63 -0.37 3041.97 3425.33 3420.78 2930.92 3.15 1.69 18.77 60.87 6025.10 FTSE Global wi UNITED KINGDOM All Cap In 328 342.48 -0.8 2.7 12.0 3.5 Gas Water & Multiutilities
10.0 572.56 58 288.41 -0.4 -0.4 12.4 573.09 14.2 3.6 Total Mkt Bargains 1152592.00 1152315.00 1152315.00 1060320.00 1108477.00 1077384.00
Life Insurance/Assurance (10) 8461.32 -0.18 7542.30 8476.26 8458.86 7237.84 3.66 1.26 21.70 210.60 8311.67 FTSE Global wi USA All Cap 1897 594.38 0.0 0.8 8.4 1.9 Financials
7.6 783.97 698 227.82 -0.2 -0.2 6.8 371.14 8.3 2.9 Total Shares Traded (m) 4815.00 4794.00 4794.00 3976.00 4546.00 3746.00
Index- Real Estate Investment & Services (20) 2765.92 -0.19 2465.51 2771.23 2752.12 2776.39 2.47 1.86 21.74 31.00 7388.86 FTSE Europe All Cap 1441 424.48 -0.5 3.4 16.8 3.1 Banks
14.5 685.42 248 204.14 -0.3 -0.3 6.0 357.07 7.7 3.3 Excluding intra-market and overseas turnover. *UK only total at 6pm. UK plus intra-market turnover. (u) Unavaliable.
Real Estate Investment Trusts (31) 2740.49 0.11 2442.83 2737.35 2746.80 2892.02 3.55 1.19 23.60 44.78 3415.10 FTSE Eurozone All Cap 649 416.15 -0.3 3.9 19.8 2.9 Nonlife Insurance
17.5 677.58 68 246.00 -0.1 -0.1 6.1 357.24 7.8 2.3 (c) Market closed.
General Financial (32) 9067.41 -0.49 8082.56 9112.02 9004.67 7710.26 3.23 2.11 14.68 108.34 10369.12 FTSE RAFI All World 3000 3043 6404.66 -0.2 0.9 8.7 3.0 Life Insurance
7.3 8436.41 52 215.07 -0.4 -0.4 7.4 342.58 8.9 3.0
Equity Investment Instruments (175) 9662.48 0.64 8613.00 9600.81 9564.89 7591.20 2.37 1.17 36.24 93.60 5276.07 FTSE RAFI US 1000 1001 10428.27 0.0 -0.5 3.7 2.4 Financial Services
2.8 13640.85 147 260.63 0.0 0.0 8.2 358.12 9.1 1.9
Non Financials (338) 4888.90 0.51 4357.90 4863.93 4865.04 4094.16 3.42 1.01 29.00 78.79 7219.49 FTSE EDHEC-Risk Efficient All-World 3086 370.23 -0.1 1.7 11.7 2.1 Technology
10.6 514.22 182 234.71 0.0 0.0 20.9 287.11 21.7 1.5 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed
Technology (16) 2070.60 0.42 1845.71 2061.89 2056.47 1422.29 2.17 1.30 35.35 26.90 2664.94 FTSE EDHEC-Risk Efficient Developed Europe 541 314.03 -0.4 3.9 19.2 2.5 Software & Computer Services
17.3 478.58 89 403.20 0.1 0.1 21.2 470.34 21.8 0.9 accurate at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor
Software & Computer Services (12) 2367.49 0.38 2110.35 2358.59 2348.85 1896.23 2.10 1.48 32.27 32.21 3219.34 Oil & Gas 145 350.59 -0.3 -1.8 -6.6 563.80
-5.3 3.6 Technology Hardware & Equipment 93 177.52 0.0 0.0 20.6 225.68 21.7 2.1 guarantee that the information is reliable or complete. The FT does not accept responsibility and will not be
Technology Hardware & Equipment (4) 1912.61 0.90 1704.88 1895.51 1920.65 1511.44 2.97 0.00-7369.18 12.16 2242.28 Alternative Energy 9 111.38 -0.4 -0.4 21.2 150.01 21.6 1.6 liable for any loss arising from the reliance on or use of the listed information.
Real Estate Investment & Services 107 320.67 0.1 0.1 16.2 533.18 17.8 2.5 For all queries e-mail ft.reader.enquiries@morningstar.com
Hourly movements 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 High/day Low/day The FTSE Global Equity Series, launched in 2003, contains the FTSE Global Small Cap Indices and broader FTSE Global All Cap Indices (large/mid/small cap) as well as the enhanced FTSE All-World index Series (large/
FTSE 100 7518.43 7530.84 7525.80 7524.87 7526.55 7517.46 7547.27 7548.53 7549.81 7554.07 7514.69 mid cap) - please see www.ftse.com/geis. The trade names Fundamental Index and RAFI are registered trademarks and the patented and patent-pending proprietary intellectual property of Research Affiliates, LLC
(US Patent Nos. 7,620,577; 7,747,502; 7,778,905; 7,792,719; Patent Pending Publ. Nos. US-2006-0149645-A1, US-2007-0055598-A1, US-2008-0288416-A1, US-2010- 0063942-A1, WO 2005/076812, WO 2007/078399 A2,
Data provided by Morningstar | www.morningstar.co.uk
FTSE 250 19960.92 20010.59 19979.45 19984.41 20000.70 19982.71 20024.89 20040.06 20015.45 20050.52 19960.92
FTSE SmallCap 5644.40 5650.47 5648.19 5647.68 5647.90 5650.33 5651.25 5654.37 5654.04 5661.48 5644.40 WO 2008/118372, EPN 1733352, and HK1099110). EDHEC is a trade mark of EDHEC Business School As of January 2nd 2006, FTSE is basing its sector indices on the Industrial Classification Benchmark - please see
FTSE All-Share 4114.75 4122.05 4118.70 4118.46 4119.75 4115.23 4129.72 4130.87 4130.58 4132.64 4114.30 www.ftse.com/icb. For constituent changes and other information about FTSE, please see www.ftse.com. FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the London Stock Exchange
Time of FTSE 100 Day's high:14:38:30 Day's Low07:22:00 FTSE 100 2010/11 High: 7522.03(16/05/2017) Low: 7099.15(31/01/2017) Group companies and is used by FTSE International Limited under licence.
Time of FTSE All-Share Day's high:14:12:00 Day's Low07:25:00 FTSE 100 2010/11 High: 4114.68(25/05/2017) Low: 3858.26(31/01/2017)
Further information is available on http://www.ftse.com FTSE International Limited. 2013. All Rights reserved. FTSE is a trade mark of the
London Stock Exchange Group companies and is used by FTSE International Limited under licence. Sector P/E ratios greater than 80 are not shown.
For changes to FTSE Fledgling Index constituents please refer to www.ftse.com/indexchanges. Values are negative.

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

Amount Latest Company Turnover Pre-tax EPS(p) Div(p) Pay day Total Issue Issue Stock Close Mkt
Issue paid renun. closing 21st Century Technology Pre 11.555 12.232 2.309L 4.815L 2.47L 5.17L - - - - - date price(p) Sector code Stock price(p) +/- High Low Cap (m)
price up date High Low Stock Price p +or- Andes Energia Pre 67.768 66.815 28.416L 12.447L 0.038L 0.027L - - - - - 05/22 10.00 GFHG Grand Fortune High Grade Ltd 10.50 - 10.88 10.88 1680.0
There are currently no rights offers by any companies listed on the LSE. Beowulf Mining 1st - - 0.208L 0.167L 0.041L 0.037L - - - - - 05/09 100.00 DSM Downing Strategic Micro-Cap Investment 107.25 0.50 109.50 100.00 5963.1
British Empire Trust Int 113.814 40.914 0.89 3.91 2 2 Jun 30 2 2 Trust PLC
Caffyns Pre 212.581 186.401 1.659 1.243 186.3 90.1 15 14.5 Aug 4 22.5 21.75 04/25 160.00 AIM ESL Eddie Stobart Logistics PLC 159.50 0.00 165.00 158.00 57088.0
Ecofin Global Utilities and Infrastructure Trust 3rd - - 1.814 - 1.63 - 1.6 - Feb 28 1.6 -
Edinburgh Investment Trust (The) Pre 192.638 60.755 27.9 26.7 9.15 8.75 Jul 21 14.55 13.95
Independent Oil & Gas Pre - - 21.437L 5.322 23.2L 7.4 - - - - -
JPMorgan Asian Investment Trust Int 26.99 19.426 0.2 0.05 3.4 - May 10 6.4 -
JPMorgan Indian Investment Trust Int 57.958 12.822 0.23L 0.32L - - - - -
Strategic Minerals Pre 1.552 1.252 0.351 0.88L - 0.001L - - - - -
Tertiary Minerals Int 0.135 0.085 0.212L 0.3L 0.08L 0.14L - - - - -
Value and Income Trust Pre 17.172 0.617 11.17 10.97 3.2 6 Jul 28 5.8 10.5
Victoria Oil & Gas Pre 32.751 21.379 29.999L 1.622 0.287L 0.002 - - - - -

Figures in m. Earnings shown basic. Figures in light text are for corresponding period year earlier. Placing price. *Intoduction. When issued. Annual report/prospectus available at www.ft.com/ir
For more information on dividend payments visit www.ft.com/marketsdata For a full explanation of all the other symbols please refer to London Share Service notes.
Tuesday 30 May 2017 FINANCIAL TIMES 17

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

52 Week 52 Week 52 Week 52 Week 52 Week 52 Week
Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m Stock Price Day Chg High Low Yld P/E MCap m
Australia (A$) Finland () Japan () Sweden (SKr) AutomData 101.35 0.19 105.68 85.23 2.22 25.60 45345.04 Lockheed 283.65 1.59 284.00 228.50 2.50 22.40 82100.52
ANZ 27.69 -0.53 32.95 22.66 8.69 13.40 60506.88 Nokia 5.70 -0.04 5.96 3.66 2.79 -44.53 37148.42 AstellasPh 1403.5 -6.00 1779 1396 2.38 13.39 27162.29 AtlasCpcoB 280.10 -1.80 302.00 183.80 2.16 31.78 12568.75 Avago Tech 241.21 0.35 241.60 142.27 1.06 -44.85 96812.64 Lowes 80.91 -0.42 86.25 64.87 1.67 22.94 69366.81
BHPBilltn 23.84 -0.17 27.95 17.29 2.54 36.71 56984.97 SampoA 45.29 0.19 47.28 34.42 4.67 15.46 28286.95 Bridgestne 4715 -15.00 4856 3089 3.05 13.45 34448.54 Ericsson 60.60 -0.65 67.75 43.19 7.76 -17.82 21389.27 BakerHu 55.45 0.61 68.59 41.74 1.25 -12.35 23591.96 Lyondell 80.73 0.06 97.64 69.82 4.31 8.99 32518.45
CmwBkAu 78.89 -1.25 87.74 69.22 7.69 14.47 101567.62 France () Canon 3807 13.00 3869 2780 4.04 22.80 45625.29 H&M 222.80 -0.90 279.90 211.80 4.36 19.96 37422.99 BankAm 23.24 -0.01 25.80 12.05 1.21 13.94 231282.13 Marathon Ptl 52.82 0.37 54.59 32.02 2.71 22.78 27399.71
CSL 132.88 0.79 136.85 91.62 1.49 38.27 44919.52 Airbus Grpe 73.72 -0.18 76.07 48.07 1.73 48.09 63813.99 CntJpRwy 18245 -40.00 19835 16305 0.71 9.83 33771.86 Investor 398.00 0.10 415.70 260.70 2.51 4.12 20846.2 Baxter 58.64 -0.50 59.41 42.22 0.91 16.96 31880.76 Marsh&M 76.37 -0.16 76.68 62.33 1.82 20.97 39266.4
NatAusBk 29.27 -0.46 34.09 23.90 10.17 12.94 58282.16 AirLiquide 110.70 -0.25 115.25 88.25 2.03 22.26 48158.69 Denso 4747 -10.00 5323 3317 2.51 15.53 33870.47 Nordea Bk 112.80 -0.20 115.70 66.30 5.50 12.43 52532.66 BB & T 42.56 -0.07 49.88 32.85 2.84 16.25 34531.92 MasterCard 121.63 -0.29 122.48 86.65 0.69 31.05 128188.58
Telstra 4.44 -0.04 5.86 4.00 9.59 15.00 39301.16 AXA 23.89 0.18 25.80 16.11 4.52 9.41 64777.99 EastJpRwy 10700 55.00 10770 8388 1.20 16.79 37439.7 SEB 105.20 -0.20 107.30 67.75 5.23 13.36 26251.24 BectonDick 186.48 -0.29 187.69 161.29 1.52 30.28 42154.81 McDonald's 149.86 0.08 150.24 110.33 2.50 25.89 122146.42
Wesfarmers 42.55 -0.07 46.06 38.62 6.52 122.16 35906.38 BNP Parib 66.35 -0.04 68.40 35.27 3.42 11.16 92560.13 Fanuc 21775 25.00 23410 15445 2.35 29.30 39928.87 SvnskaHn 122.40 -0.10 136.30 90.25 4.09 14.69 26868.29 BerkshHat 248540 690.00 266445 205074 - 17.72 191104.89 McKesson 161.20 -1.16 199.43 114.53 0.71 6.77 33997.48
Westpc 30.02 -0.40 35.39 27.57 9.09 13.56 74995.03 ChristianDior 254.35 0.35 256.00 133.75 1.07 35.15 51316.19 FastRetail 37200 400.00 44370 25305 0.94 37.67 35456.38 Swedbank 205.40 0.70 234.00 162.90 5.23 11.86 26737.42 Biogen 250.80 -2.17 307.33 205.43 - 15.36 53198.49 Medtronic 85.09 -0.49 89.27 69.35 1.99 27.07 116478.42
Woolworths 25.88 -0.17 27.72 20.30 4.30 12.33 24932.08 Cred Agr 13.91 -0.60 14.73 6.79 4.23 8.29 44233.3 Fuji Hvy Ind 3767 -16.00 5016 3252 3.79 9.62 26035.45 Telia Co 39.77 0.06 41.30 33.93 10.06 10.80 19802.6 BkNYMeln 47.41 0.03 49.54 35.72 1.60 14.26 49300.57 Merck 64.92 -0.12 66.80 55.10 2.93 40.43 177566.88
Belgium () Danone 66.65 0.10 70.53 57.66 1.91 37.48 48860.73 Hitachi 667.90 -2.50 681.90 400.00 1.78 13.90 29007.74 Volvo 141.30 -1.20 148.40 78.50 2.13 26.22 26580.89 BlackRock 407.02 0.66 407.93 317.60 2.33 20.65 65797.18 Metlife 51.05 -0.14 58.09 36.17 3.21 -82.27 54926.39
AnBshInBv 105.05 -0.50 119.60 92.13 3.52 166.14 198811.98 EDF 9.60 -0.01 12.35 7.33 15.93 8.51 29426.41 HondaMtr 3064 6.00 3675 2417 2.91 13.04 49871.65 Switzerland (SFr) Boeing 186.59 -0.48 187.61 122.35 2.57 22.47 112622.18 Microsoft 69.96 0.34 70.22 48.04 2.19 30.13 540127.21
KBC Grp 66.07 -0.34 70.98 39.35 1.49 10.77 30874.4 Engie SA 13.26 0.02 15.21 10.77 7.40 -58.76 36079.21 JapanTob 4203 31.00 4540 3607 3.17 19.24 75532.4 ABB 24.36 0.04 24.89 18.59 3.11 24.79 55263.65 BrisMySq 53.97 -0.42 77.12 46.01 2.92 18.32 88912.04 Mnstr Bvrg 50.90 0.14 55.50 40.64 - 40.13 28901.62
Esslr Intl 119.30 -0.70 124.55 93.41 0.89 34.51 29142.52 KDDI 3060 -1.00 3378 2745.5 2.66 12.89 71137.32 CredSuisse 13.61 -0.08 16.31 9.76 4.91 -15.83 30151.52 CapOne 79.79 0.28 96.92 58.03 1.78 13.06 38536.07 MondelezInt 46.44 -0.09 46.83 40.50 1.63 40.90 70462.4
Brazil (R$)
Hermes Intl 440.00 -0.30 468.30 314.00 0.73 46.69 51918.03 Keyence 48920 270.00 49140 31555 0.24 - 53453.68 Nestle 82.40 -0.45 83.45 71.45 2.73 30.01 262680.65 CardinalHlth 73.10 -0.34 85.52 62.70 2.51 17.06 23091.01 Monsanto 116.78 0.25 117.33 97.35 1.89 31.86 51243.96
Ambev 18.83 -0.20 20.09 15.79 2.17 24.90 90497.47
LOreal 189.40 0.30 191.05 155.20 1.61 35.11 119084.44 MitsbCp 2229 0.50 2705.5 1679.5 2.68 -26.72 31847.25 Novartis 78.50 -0.10 82.80 67.40 3.50 27.63 210419.79 Carnival 63.36 0.59 63.45 42.94 2.00 20.09 33999.92 MorganStly 42.84 0.21 47.33 23.11 1.69 14.17 79244.67
Bradesco 27.09 -0.46 31.13 21.78 2.21 9.26 25301.46
LVMH 227.00 -0.40 239.65 130.55 1.56 29.33 128789.1 MitsubEst 2064 -31.00 2443 1724 0.86 30.61 25795.98 Richemont 81.25 - 85.90 65.60 2.07 35.39 43444.3 Caterpillar 105.66 0.64 105.98 70.53 2.98-413.19 62250.33 MylanNV 39.72 -0.11 50.40 33.60 - 38.45 21289.19
Cielo 23.10 -0.68 31.48 20.36 2.34 14.99 19189.84
Orange 15.74 0.01 15.80 12.38 3.74 84.44 46782.68 MitsubishiEle 1549.5 -10.00 1802 1108 1.89 13.67 29895.66 Roche 266.50 -0.10 273.00 218.30 3.03 23.99 191787.92 CBS 61.57 -0.03 70.10 48.88 1.11 17.19 22679.81 Netflix 162.43 -0.62 164.10 84.50 - 206.23 70008.05
ItauHldFin 32.02 -0.25 36.38 22.27 4.69 8.43 32816.42
PernodRic 119.95 -0.25 121.75 90.00 1.54 25.69 35584.75 MitsuiFud 2583 -17.50 2863.5 2031.5 1.15 19.71 23010.6 Swiss Re 88.45 0.80 98.50 86.30 5.46 8.88 32623.22 Celgene 116.78 0.04 127.64 94.42 - 42.92 91184.67 NextEraE 140.71 0.01 141.06 110.49 2.61 16.76 65875.17
Petrobras 14.46 -0.09 19.72 9.95 - -17.94 32906.66
Renault 84.64 -0.03 90.76 63.64 2.78 6.93 27976.1 MitUFJFin 697.90 2.70 778.80 425.80 2.28 13.72 88852.88 Swisscom 465.10 -0.20 489.80 426.80 9.48 14.92 24679.21 CharlesSch 39.52 0.11 43.65 23.83 0.65 32.37 52843.49 Nike 52.59 0.24 60.33 49.01 1.33 21.32 69498.78
Vale 28.40 0.54 37.28 13.80 0.57 7.23 27937.9
Safran 79.59 0.02 80.09 53.00 1.32 -92.14 37098.2 Mizuho Fin 195.00 -0.20 225.30 142.00 3.81 5.97 44481.38 Syngent 463.00 -6.70 471.20 360.50 2.57 34.61 42748.26 Charter Comms 337.44 3.68 350.38 214.06 - 17.96 90975.85 NorfolkS 122.33 2.56 125.00 78.73 1.90 22.96 35449.11
Canada (C$) Murata Mfg 15530 -245.00 16790 10365 1.40 22.06 31434.48 Chevron Corp 104.72 -0.39 119.00 97.53 4.20 66.91 198398.49 Northrop 256.99 0.47 257.93 206.69 1.41 20.37 44863.46
Sanofi 87.62 -0.12 92.97 62.50 3.28 26.34 122969.25 UBS 15.90 0.05 17.49 15.11 5.35 16.03 62727.19
BCE 60.89 0.12 63.41 56.80 4.48 19.06 40755.11 NipponTT 5249 29.00 5345 4156 2.27 13.59 98876.57 Chubb 142.24 -0.52 142.87 121.08 1.99 15.49 66415.47 NXP 108.00 0.05 108.29 73.62 - 19.09 37368.31
Sant Gbn 50.02 -0.03 52.40 32.15 2.43 21.70 31061.56 Zurich Fin 285.50 -0.60 290.80 217.10 6.26 13.17 44246.55
BkMontrl 91.80 0.63 104.15 79.82 3.70 11.84 44544.45 Nissan Mt 1074 -2.00 1220 893.10 4.16 9.03 40731.84 Cigna 161.32 -0.33 164.88 115.03 0.02 22.26 41300.28 Occid Pet 61.00 0.29 78.48 57.20 5.12 -44.98 46639.48
Schneider 68.85 -0.11 74.50 49.50 2.85 22.72 45718.26 Taiwan (NT$)
BkNvaS 76.10 0.19 82.30 62.36 4.04 12.24 68059.61 Nomura 669.00 -0.30 784.00 338.80 1.78 15.53 21179.14 Cisco 31.50 0.06 34.60 27.13 3.36 16.17 157501.71 Oracle 45.26 0.06 46.99 37.62 1.36 20.87 186230.6
SFR Group 31.35 -0.25 32.55 19.51 - -65.03 15500.57 Chunghwa Telecom 107.00 - 125.50 99.50 4.96 21.24 27571.75
Brookfield 51.30 -0.07 53.08 41.39 1.43 29.98 37735.6 Nppn Stl 2387 -81.50 2912 1787.5 1.37 55.06 20382.94 Citigroup 62.07 0.12 62.69 38.31 0.87 12.16 170894.71 Pepsico 117.91 0.38 118.00 98.50 2.61 24.90 168434.58
SocGen 49.73 0.38 52.26 25.00 3.95 12.62 44902.38 Formosa PetChem 106.00 - 115.00 83.30 3.83 11.33 33541
CanadPcR 214.74 1.00 218.78 156.01 0.96 20.65 23449.45 NTTDCMo 2720 8.00 2946 2361 3.00 14.91 95307.85 CME Grp 117.98 -0.09 127.60 92.29 1.92 27.93 40088.2 Perrigo 69.95 -1.90 111.00 65.47 0.86 -2.41 10030.64
Total 47.54 0.11 49.50 39.03 5.14 17.42 131960.53 HonHaiPrc 104.50 -0.50 105.50 76.30 3.53 12.06 60151.17
CanImp 106.50 1.13 120.83 95.50 4.52 9.10 31674.71 Panasonic 1376 -12.00 1410 831.40 1.80 15.46 30329.77 Coca-Cola 45.39 -0.02 46.01 39.88 3.20 31.25 193931.47 Pfizer 32.14 -0.02 37.39 29.83 3.88 26.40 191806.52
UnibailR 231.65 -0.35 250.55 203.10 4.00 9.48 25817.12 MediaTek 229.50 1.00 260.50 203.00 4.86 13.61 12057.07
CanNatRs 39.77 -0.23 46.74 36.26 2.46-200.98 33063.85 Seven & I 4739 -10.00 4902 4051 1.95 42.23 37746.86 Cognizant 66.79 -0.09 67.13 45.44 - 23.74 39339.1 Phillips66 77.44 0.02 88.87 73.67 3.33 23.51 39966.65
Vinci 76.90 -0.10 79.84 49.93 2.42 17.50 50924.19 TaiwanSem 207.00 - 208.50 154.00 2.94 14.92 178295.48
CanNatRy 103.41 -0.29 104.65 72.78 1.54 20.69 58269.1 ShnEtsuCh 9912 61.00 10120 5603 1.26 24.34 38485.41 ColgtPlm 75.45 0.08 76.86 63.43 2.13 26.80 66644.44 PhilMorris 119.83 0.35 119.88 86.78 3.53 25.92 186113.15
Vivendi 19.52 -0.07 20.09 14.87 5.04 56.73 28078.81
Enbridge 52.36 -0.12 59.19 50.76 4.29 46.42 63846.23 Softbank 8732 -165.00 9066 5194 0.48 25.80 86359.66 Thailand (THB) Comcast 40.91 0.57 40.99 30.02 1.43 21.22 193648 PNCFin 121.32 -0.13 131.83 77.40 1.81 16.06 58706.92
GtWesLif 34.07 0.23 37.79 30.83 3.92 12.66 25099.46 Germany () PTT Explor 394.00 1.00 430.00 298.00 2.51 12.25 32972.92
Sony 4038 29.00 4091 2700 0.49-111.83 45854.37 ConocPhil 45.35 0.30 53.17 38.80 2.29 -35.19 56102.66 PPG Inds 107.24 0.33 113.49 89.64 1.53 48.76 27474.55
ImpOil 38.69 -0.07 48.72 38.26 1.59 14.57 24402.73 Allianz 171.60 0.55 177.80 118.35 4.06 13.68 87651.81
SumitomoF 4041 7.00 4768 2766.5 3.68 7.31 51345.12 United Arab Emirates (Dhs) Corning 29.30 -0.12 29.72 18.88 1.95 7.83 26962.79 Praxair 131.97 0.04 133.68 106.31 2.35 24.25 37658.16
Manulife 23.69 -0.01 25.57 16.43 3.32 14.67 34846.91 BASF 84.70 0.84 94.32 63.00 3.36 18.11 86952.07
Takeda Ph 5791 24.00 5856 4098 3.08 34.59 41136.6 Emirtestele 17.45 - 20.20 17.30 4.75 16.53 41317.23 Costco 177.86 3.13 183.18 142.11 1.04 31.93 78070.08 Priceline 1863.9 3.47 1927.13 1148.06 - 41.14 91596.59
Potash 22.51 0.14 26.62 19.93 4.90 34.70 14070.44 Bayer 116.70 - 118.40 85.00 2.11 21.09 107863.96
TokioMarine 4694 -6.00 5441 3063 2.64 11.85 31761.13 United Kingdom (p) CrownCstl 102.81 0.03 103.19 79.38 3.63 104.55 37639.64 ProctGmbl 87.25 0.39 92.00 80.74 3.14 23.83 223151.86
RylBkC 94.54 0.62 99.90 74.64 3.65 12.53 102520.55 BMW 84.56 0.25 91.76 63.38 3.72 7.66 56896.48
Toyota 5970 29.00 7215 4917 3.82 8.51 175039.03 AscBrFd 2950 -19.00 3183 1910 1.25 21.22 29871.44 CSX 53.96 0.17 54.23 24.43 1.36 28.83 49784.64 Prudntl 105.07 -0.95 114.55 66.51 2.76 10.45 45075.03
Suncor En 42.53 -0.05 44.90 33.49 2.90 44.67 52827.12 Continental 198.80 -0.40 210.35 158.20 1.85 14.36 44441.3
Mexico (Mex$) AstraZen 5227 18.00 5505 3680 4.23 24.48 84615.63 CVS 76.64 0.69 98.67 69.30 2.37 15.64 78080.48 PublStor 216.39 -0.70 262.74 200.65 3.49 30.70 37618.51
ThmReut 58.70 -0.22 62.83 50.01 3.21 28.55 31452.12 Daimler 65.44 0.06 73.23 50.83 4.94 8.62 78250.75
AmerMvl 14.99 -0.08 15.14 10.40 1.89 24.34 36069.12 Aviva 526.50 -4.50 570.50 290.00 4.08 34.87 27392.19 Danaher 84.40 -0.11 88.01 73.40 0.67 28.16 58583.75 Qualcomm 57.52 -0.93 71.62 50.84 3.77 18.74 84982.15
TntoDom 64.53 0.28 71.31 54.20 3.40 13.07 89273.85 Deut Bank 16.43 -0.06 19.97 9.90 - -20.52 37954.02
FEMSA UBD 177.00 0.79 184.10 28.35 1.43 164.42 - Barclays 211.65 -2.40 267.32 121.10 1.42 16.16 46102.6 Deere 122.79 0.36 123.59 76.73 1.71 28.18 39081.99 Raytheon 163.30 0.19 163.61 129.00 1.38 20.63 47532.38
TrnCan 63.35 0.07 65.24 53.68 3.79 113.36 40881.61 Deut Tlkm 17.95 0.04 18.15 13.54 3.01 304.33 93805.7
WalMrtMex 43.70 -0.13 46.10 34.70 1.29 26.08 41217.12 BP 474.55 1.45 521.20 349.35 6.48 -30.68 119439.28 Delphi 87.50 0.87 89.58 58.04 1.37 20.08 23440.42 Regen Pharm 455.17 -0.53 464.40 325.35 - 53.81 47510.26
ValeantPh 17.22 -0.03 42.25 11.20 - -3.07 4395.57 DeutsPost 31.58 -0.01 33.31 23.50 2.65 15.30 42837.17
BrAmTob 5591 96.00 5602 4072 2.75 24.14 121694.14 Delta 50.80 0.40 52.76 32.60 1.50 9.20 37390.93 ReynoldsAm 66.98 0.22 66.99 43.38 2.83 28.35 95561.17
E.ON 7.56 0.02 9.72 5.99 6.50 -6.15 16896.98 Netherlands ()
China (HK$) BSkyB 997.00 -4.00 1050 560.00 3.29 27.69 21921.13 Devon Energy 35.82 0.09 50.69 32.81 1.65 -1.99 18830.57 S&P Global 140.21 -0.48 141.11 99.15 1.06 17.06 36146.14
Fresenius Med 83.20 -0.38 86.13 70.00 0.94 20.45 28569.51 Altice 22.32 -0.29 23.43 12.20 - -16.73 29795.44
AgricBkCh 3.77 0.02 3.77 2.75 5.16 5.88 14867.14 BT 313.80 0.40 453.62 297.40 4.60 16.43 39978.02 DiscFinServ 59.80 0.76 74.33 50.32 2.02 9.99 22735.41 Salesforce 90.83 -0.44 91.81 66.43 - 483.55 64689.13
Fresenius SE 76.29 -0.05 79.49 60.00 0.71 25.29 47196.59 ASML Hld 119.25 -0.55 124.95 79.38 0.87 30.11 58539.33
Bk China 3.90 0.01 4.08 2.90 5.24 5.92 41838.73 Compass 1643 23.00 1646 1242.15 1.93 24.41 34556.09 Disney 108.41 1.14 116.10 90.32 1.42 18.87 169648.54 Schlmbrg 70.09 0.70 87.84 68.94 2.95 -54.61 97388.43
HenkelKgaA 109.65 0.45 110.00 87.00 2.73 22.82 31839.65 Heineken 87.03 -0.27 87.84 67.47 1.15 31.14 56030.03
BkofComm 6.02 0.01 6.44 4.72 5.21 5.82 27040.01 Diageo 2337 12.50 2348.09 1737 2.46 26.23 75245.26 DominRes 81.03 0.06 81.19 69.51 3.58 22.76 50966.72 Sempra Energy 114.48 -0.07 114.82 92.95 2.76 19.26 28715.18
Linde 171.35 -0.15 174.00 116.80 1.67 30.24 35571.41 ING 15.12 -0.08 15.88 8.30 4.22 13.18 65651.29
BOE Tech 1.57 - 2.05 1.30 1.33 20.58 40.07 GlaxoSmh 1643.5 25.50 1745.56 1363 4.87 48.20 103370.28 DowChem 61.06 0.41 65.42 47.51 3.08 14.60 74597.17 Shrwin-Will 334.95 0.86 339.62 239.48 1.04 26.99 31193.33
MuenchRkv 174.15 1.55 189.40 140.90 4.66 10.41 31348.89 Unilever 50.41 -0.13 50.61 36.22 2.46 28.24 96613.83
Ch Coms Cons 10.60 0.04 11.74 7.81 2.09 8.95 6020.87 Glencore 292.50 1.10 347.00 124.55 - -72.29 53853.89 DukeEner 85.07 -0.07 87.75 72.34 4.08 21.33 59539.09 SimonProp 157.26 -3.44 229.10 152.09 4.33 26.28 49095.66
SAP 95.22 0.40 95.52 64.94 1.19 32.41 130747.15 Norway (Kr)
Ch Evrbrght 3.68 - 4.06 3.18 6.02 5.03 3242.8 HSBC 675.00 6.00 715.20 392.37 6.16 119.15 173097.66 DuPont 77.85 0.46 82.37 61.12 2.00 25.54 67498.44 SouthCpr 34.89 -0.01 39.50 24.90 0.48 41.20 26970.54
Siemens 126.60 0.55 133.50 86.82 2.79 18.38 120276.3 DNB 145.80 0.20 148.50 90.80 3.10 13.68 28239.53
Ch Rail Cons 10.76 -0.02 11.98 8.61 1.64 9.02 2866.14 Imperial Brands 3680.5 23.00 4154 3324 4.22 34.66 45131.75 Eaton 77.56 0.25 79.31 54.30 3.05 17.68 34692.59 Starbucks 63.30 0.40 63.42 50.84 1.45 30.64 91664.73
Volkswgn 141.95 -0.70 157.40 116.05 0.08 43.60 46818.45 Statoil 149.80 0.10 163.50 123.90 5.04 -22.53 58188.11
Ch Rail Gp 6.49 -0.01 7.71 5.40 1.56 10.77 3503.11 LlydsBkg 71.74 -1.36 73.58 47.10 3.28 29.89 65585.66 eBay 34.90 -0.32 35.30 22.30 - 4.94 37773.6 StateSt 81.99 -0.15 85.38 50.60 1.85 15.04 30847.57
ChConstBk 6.49 0.03 6.55 4.73 4.90 6.01 200173.86 Hong Kong (HK$) Telenor 137.80 - 150.90 122.50 5.53 71.81 24603.39 Ecolab 131.30 0.99 131.49 110.65 1.12 30.64 38082.96 Stryker 141.27 0.42 141.59 106.48 1.17 31.04 52801.79
Natl Grid 1091 6.50 1252.36 969.71 4.33 18.38 52374.34
China Vanke 20.75 0.40 24.10 14.56 4.02 9.46 3500.45 AIA 54.75 - 56.15 42.65 1.37 19.52 84806.49 Qatar (QR) Emerson 58.92 -0.33 64.37 48.45 3.32 22.50 37972.77 Sychrony Fin 27.37 0.14 38.06 23.25 0.47 10.45 22197.43
Prudential 1749 6.50 1801.5 1096 2.25 23.32 57843.79
ChinaCitic 5.04 0.02 5.50 4.40 4.91 5.10 9622.51 BOC Hold 35.00 0.30 35.15 22.00 3.65 14.63 47473.58 QatarNtBk 148.00 2.00 173.00 133.50 2.20 10.72 37538.21 EOG Res 91.22 0.20 109.37 78.04 0.75 -83.35 52658.43 Target 54.40 0.20 79.33 52.72 4.29 11.51 30012.93
RBS 261.60 -4.40 271.00 148.40 - -4.40 39736.63
ChinaLife 25.60 0.25 25.75 16.00 1.91 31.94 24438.6 Ch OSLnd&Inv 23.65 0.35 27.85 20.15 2.49 6.60 33241.88 EquityResTP 65.17 0.10 71.53 58.28 3.16 27.70 23927.49 TE Connect 78.01 -0.16 79.69 54.54 1.94 13.52 27695.68
Russia (RUB) ReckittB 7869 72.00 7869 6496 1.87 30.68 70516.84
ChinaMBank 23.55 -0.15 24.30 15.24 3.43 8.21 13870.21 ChngKng 57.80 0.15 59.75 44.75 2.34 12.30 27686.29 Exelon 35.82 -0.21 37.70 29.82 3.65 28.36 33172.78 Tesla Mtrs 325.14 8.31 327.66 178.19 - -69.25 53407.41
Gzprm neft 123.29 1.09 160.62 120.54 5.67 3.85 51676.91 RELX 1654 18.00 1657.4 631.02 1.97 29.64 43394.3
ChinaMob 86.20 0.05 99.30 80.30 2.86 15.55 226431.2 Citic Ltd 12.30 0.06 12.78 10.60 2.55 10.42 45903.85 ExpScripts 59.76 -0.33 80.02 57.80 - 10.66 35874.69 TexasInstr 81.12 0.33 82.92 58.61 2.09 22.52 80821.79
Lukoil 2805.5 9.00 3582 2523 5.59 23.72 42249.56 RioTinto 3190 24.50 3718.5 1853 3.73 15.44 56346.57
ChinaPcIns 29.95 0.10 31.00 24.25 3.80 19.12 10663.56 Citic Secs 16.38 0.10 19.16 15.36 3.57 15.50 6132.57 ExxonMb 81.55 -0.20 95.55 80.30 3.76 33.22 345549 TheTrvelers 123.66 -0.06 125.49 103.45 2.22 11.91 34552.56
MmcNrlskNckl 8167 -33.00 11199 8064 7.56 15.36 22882.27 RollsRoyce 873.00 21.50 895.00 588.00 1.34 -3.97 20547.17
ChMinsheng 7.99 -0.10 9.48 6.91 4.02 5.21 7107.2 CK Hutchison 101.80 -0.10 103.90 80.60 2.42 14.35 50381.25 Facebook 152.13 0.17 153.60 108.23 - 37.84 359754.38 ThrmoFshr 173.42 0.52 173.64 139.07 0.35 30.88 67845.36
Novatek 645.20 -13.00 800.70 622.00 2.20 8.88 34685.27 RylDShlA 2118 6.50 2295.5 1645 7.11 45.12 121274.98
ChMrchSecs RMB 16.80 - 20.09 15.21 2.45 17.99 11542.73 CNOOC 9.02 -0.06 10.88 8.75 5.24-160.05 51665.14 Fedex 194.26 -0.55 201.57 145.00 0.77 26.58 51940.26 TimeWrnr 99.07 0.10 100.60 68.97 1.66 18.34 76832.5
Rosneft 307.00 3.00 425.70 300.85 3.68 18.69 57606.93 Shire 4651.5 -86.50 5377 2707.19 0.52 123.76 53969.17
Chna Utd Coms RMB 7.47 - 8.05 3.75 0.78 550.53 23078.01 HangSeng 163.70 -0.30 165.30 127.60 3.36 21.41 40150.95 FordMtr 10.93 0.07 14.04 10.67 5.25 5.39 42748.7 TJX Cos 75.53 0.16 83.64 71.50 1.36 21.70 48683.09
Sberbank 163.97 3.27 185.34 125.35 0.21 15.06 62670.15 StandCh 733.50 5.50 821.60 471.34 - -62.51 30864.27
ChShenEgy 19.22 0.04 19.78 11.96 1.94 14.44 8380.05 HK Exc&Clr 197.20 1.20 213.20 175.00 2.65 38.52 30974.05 Franklin 41.70 - 44.35 30.56 1.86 13.15 23406.9 T-MobileUS 67.80 -0.06 68.88 40.50 - 34.34 56330.67
Surgutneftegas 30.69 0.98 34.40 26.00 - -13.62 19409.58 Tesco 186.80 0.05 219.40 143.08 - 230.62 19562.67
ChShpbldng RMB 6.21 0.06 8.14 5.85 - -83.61 16619.51 MTR 44.50 1.35 50.00 36.05 2.30 27.28 33742.05 GenDyn 202.24 1.15 202.58 132.68 1.58 19.25 61012.87 UnionPac 110.57 1.48 115.15 81.79 2.14 20.67 89278.56
Saudi Arabia (SR) Vodafone 230.20 2.10 240.10 186.50 5.47 -9.48 78388.81
ChStConEng RMB 9.33 0.05 11.45 5.09 2.19 9.41 40369.74 SandsCh 35.20 0.30 39.30 24.60 5.88 28.64 36454.51 GenElectric 27.45 -0.04 33.00 27.10 3.51 26.52 238374.78 UPS B 105.87 -0.07 120.44 101.95 3.06 26.40 72920.12
AlRajhiBnk 62.25 - 67.50 48.60 3.70 11.86 26973.2 WPP 1737 26.00 1928.07 1204 2.78 16.08 28341.62
ChUncHK 11.34 0.16 11.36 7.70 1.76 212.54 34838.69 SHK Props 115.20 0.40 123.30 85.40 2.89 10.56 42797.87 GenMills 57.32 0.49 72.95 55.57 3.41 20.65 33024.08 USBancorp 51.44 -0.33 56.61 38.48 2.18 15.24 86690.97
Tencent 274.80 -3.20 280.60 167.00 0.17 54.46 334121.74 Natnlcombnk 40.10 -0.80 45.00 32.00 3.48 8.32 21385.24 United States of America ($)
CNNC Intl RMB 7.63 0.04 7.83 6.58 1.21 24.79 4703.71 GenMotors 33.07 0.47 38.55 27.34 4.70 5.00 49906.31 UtdHlthcre 177.50 -0.55 178.89 132.39 1.44 22.22 171049.93
SaudiBasic 97.25 -0.75 102.50 76.00 5.06 18.03 77794.8 21stC Fox A 27.03 -0.30 32.60 23.33 1.36 16.11 28444.6
CSR 7.32 0.04 7.99 6.45 2.38 16.59 4104.82 India (Rs) GileadSci 64.50 -0.06 88.85 63.88 3.06 6.67 84283.98 UtdTech 121.85 -0.40 122.84 96.89 2.22 18.47 97629.57
SaudiTelec 67.75 -1.00 74.00 51.00 6.04 15.30 36130.92 3M 200.67 1.13 200.69 163.85 2.30 23.72 119848.07
Daqin RMB 8.46 - 8.61 5.98 5.44 15.04 18331.65 Bhartiartl 373.10 - 401.00 283.05 0.37 38.47 23126.52 GoldmSchs 223.53 1.06 255.15 138.20 1.19 11.65 87988.3 ValeroEngy 62.45 -0.74 71.40 46.88 4.09 13.36 27929.6
Singapore (S$) AbbottLb 44.71 0.76 45.84 36.76 2.39 49.11 77584.01
Gree Elec Apl 0.19 - 0.25 0.16 - -6.10 335.17 HDFC Bk 1631.9 - 1648 1144.25 0.56 33.73 64904.26 Halliburton 45.76 0.35 58.78 40.12 1.61 -11.42 39713.66 Verizon 45.32 0.01 56.95 44.46 5.19 14.82 184877.02
DBS 20.84 0.04 21.18 14.72 2.87 12.60 38248.17 Abbvie 66.06 -0.26 68.12 55.06 3.57 17.58 105137.17
GuosenSec RMB 13.17 0.06 18.94 12.39 4.64 21.92 4213.53 Hind Unilevr 1072.25 - 1076.95 781.95 1.57 50.83 35985.8 HCA Hold 82.70 -0.41 91.03 67.00 - 11.00 30343.01 VertexPharm 119.92 1.32 121.96 71.46 - 167.48 29868.33
JardnMt US$ 63.68 -0.17 67.27 52.90 2.37 9.17 46034.1 Accenture 122.89 -0.21 126.53 108.66 1.92 17.78 81369.37
HaitongSecs 13.18 - 15.24 11.98 4.02 15.33 5765.14 HsngDevFin 1598.85 - 1601.2 1182.15 0.92 25.89 39391.8 Hew-Pack 18.47 0.10 19.58 11.48 2.81 11.52 31276.73 VF Cp 53.71 0.52 65.28 48.05 2.95 18.66 21508.54
JardnStr US$ 41.78 0.28 43.78 28.45 0.72 8.61 46278.26 Adobe 141.89 -0.96 143.48 90.35 - 52.69 70192.7
Hngzh HikVDT RMB 26.74 -0.57 40.16 20.30 1.78 30.92 18857.28 ICICI Bk 314.90 - 323.00 221.10 1.57 21.87 28455.23 HiltonWwde 65.34 0.21 66.39 43.34 1.22 92.59 21482.56 Viacom 35.13 0.21 46.72 33.44 3.92 9.88 12376.31
OCBC 10.44 0.01 10.65 8.22 3.51 12.12 31519.11 AEP 70.87 0.07 71.32 57.89 3.32 48.45 34847.63
Hunng Pwr 6.17 0.33 6.21 4.43 8.88 9.45 3720.59 Infosys 985.15 - 1279.3 901.00 2.56 15.64 35088.15 HomeDep 154.90 -1.56 160.86 119.20 1.81 23.62 185191.46 Visa Inc 94.67 -0.37 95.38 73.25 0.66 46.05 174784.52
SingTel 3.74 0.01 4.36 3.59 4.70 15.58 44081.24 Aetna 145.57 0.34 146.97 104.59 0.70 44.20 48285.57
IM Baotou Stl RMB 2.99 - 3.32 2.74 - 114.26 6860.37 ITC 315.85 - 319.80 222.00 1.40 36.65 59493.75 Honywell 133.25 -0.50 135.00 105.25 1.90 20.76 101581.56 Walgreen 81.25 0.50 88.00 76.26 1.88 20.32 87827.26
UOB 23.35 -0.02 24.02 17.41 3.05 11.94 27576.83 Aflac 74.84 0.13 76.88 66.50 2.30 11.90 29700
In&CmBkCh 5.20 0.01 5.27 4.03 5.26 5.81 57901.18 L&T 1782.4 - 1809.95 1295.1 0.79 37.63 25794.12 HumanaInc 232.25 0.02 234.88 150.00 0.56 22.98 33517.14 WalMartSto 78.13 -0.18 79.44 65.28 2.60 17.55 236855.49
AirProd 143.91 -0.21 150.45 124.02 2.51 20.39 31332.73
IndstrlBk RMB 16.50 -0.07 17.58 14.99 3.78 5.70 45818.97 OilNatGas 175.75 - 211.80 138.00 1.90 18.35 34973.52 South Africa (R) IBM 152.49 -0.71 182.79 142.50 3.76 12.27 143263.88 WellsFargo 52.41 -0.37 59.99 43.55 2.97 12.81 261909.44
Alexion 97.70 -0.80 157.02 96.18 - 45.48 21939.17
Kweichow RMB 451.92 1.32 456.48 250.00 1.40 30.93 82743.19 RelianceIn 1356.9 - 1467.75 930.00 - 13.15 68411.71 Firstrand 50.67 -0.43 54.46 41.50 4.40 12.01 21897.76 IllinoisTool 140.37 -0.13 142.82 98.32 1.82 23.06 48490.96 Williams Cos 29.69 -0.17 32.69 19.60 5.86 -50.32 24532.1
Allegran 223.12 -1.24 261.27 184.50 0.32 -20.56 74855.94
Midea 1.71 0.01 1.87 1.62 6.11 23.05 47.18 SBI NewA 284.00 - 315.30 181.50 0.90 49.58 35714.03 MTN Grp 119.91 0.69 151.70 104.76 8.89 -84.41 17407 Illumina 175.91 2.15 189.48 119.37 - 34.74 25682.86 Yahoo 50.67 0.07 51.23 35.05 - -1651.33 48551.94
Allstate 86.50 0.22 86.63 65.27 1.58 17.89 31530.81
New Ch Life Ins 40.80 -0.25 42.30 25.40 - 21.68 5412.78 SunPhrmInds 502.60 - 854.95 493.00 0.20 16.69 18698.78 Naspers N 2790.2 -12.80 2846.5 1925.98 0.13 112.15 94210.15 Intcntl Exch 60.35 -0.09 61.98 48.15 1.17 24.60 35731.22 Yum!Brnds 72.09 -0.04 72.52 56.80 2.45 26.01 25103.93
Alphabet 993.27 1.41 996.39 672.66 - 34.45 295625.76
PetroChina 5.26 -0.03 6.38 4.92 1.03 30.18 14237.75 Tata Cons 2572.85 - 2744.8 2051.9 1.84 18.91 78610.87 South Korea (KRW) Intel 36.26 - 38.45 30.44 2.93 15.35 170748.34 Venezuela (VEF)
Altria 74.41 0.27 76.55 60.82 2.65 30.19 143733.74
PingAnIns 50.35 0.35 50.90 32.50 1.28 11.97 48107.1 Indonesia (Rp) HyundMobis 281000 -500.00 293500 212000 1.28 12.51 24385.87 Intuit 138.56 0.20 140.25 103.03 0.94 40.04 35501.42 Bco de Vnzla 750.00 - 800.00 93.00 - - 3762.2
Amazon 995.78 2.40 999.00 682.12 - 183.34 475958.44
PngAnBnk RMB 9.10 - 10.26 8.49 1.71 6.98 22439.01 Bk Cent Asia 17775 - 18550 12625 1.01 20.25 32896.19 KoreaElePwr 42100 -350.00 63600 40050 4.54 3.97 24094.4 John&John 126.92 -0.61 129.00 109.32 2.58 20.85 341901.29 Bco Provncl 10000 -400.00 10400 2200 - 42.19 1483.05
AmerAir 48.74 0.72 50.64 24.85 0.84 11.54 24008.78
Pwr Cons Corp RMB 7.86 0.17 9.00 5.40 1.00 16.09 10997.86 SK Hynix 57900 800.00 58800 27150 1.07 9.68 37578.08 JohnsonCn 42.03 -0.13 46.17 37.31 2.76 -30.30 39428.71 Mrcntl Srvcs 31150 1150 31150 4500 0.02 154.72 2608.36
Israel (ILS) AmerExpr 77.46 0.02 82.00 57.15 1.65 13.67 69232.14
SaicMtr RMB 29.62 0.28 29.95 19.60 4.69 9.98 47599.03 SmsungEl 2281000-23000.00 2361000 1268000 0.93 17.25 265717.07 JPMrgnCh 85.36 0.01 93.98 57.05 2.12 14.95 303267.33
TevaPha 103.30 1.20 217.70 100.60 4.69 16.77 29334.68 AmerIntGrp 63.55 0.43 67.47 48.41 1.92 99.30 58600.52
ShenwanHong 0.31 0.01 0.35 0.16 - -5.18 346.91 Spain () Kimb-Clark 129.51 0.11 138.87 111.30 2.95 20.89 45966.74 Closing prices and highs & lows are in traded currency (with variations for that
Italy () AmerTower 131.11 0.06 132.86 99.72 1.69 61.92 55722.99
ShgPdgBk RMB 12.84 -0.09 13.52 11.16 3.15 6.79 40457.53 KinderM 19.25 -0.17 23.36 17.07 4.53-122.19 42974.52 country indicated by stock), market capitalisation is in USD. Highs & lows are
Enel 4.70 -0.11 4.81 3.54 3.38 16.30 53407.81 BBVA 7.49 0.04 7.89 4.50 4.86 13.36 55783.74 Amgen 155.01 -0.42 184.21 133.64 2.74 14.39 113994.22
Sinopec Corp 6.37 -0.01 6.57 5.08 2.56 11.50 20849.84 Kraft Heinz 92.99 0.18 97.77 79.69 2.61 32.35 113227.69 based on intraday trading over a rolling 52 week period.
ENI 14.28 -0.03 15.92 12.18 5.57 -5.40 58004.65 BcoSantdr 5.86 0.00 6.35 3.15 3.44 14.21 95576.01 Anadarko 51.84 -0.23 73.33 48.67 1.18 -5.29 29047.98
Sinopec Oil RMB 3.92 0.24 4.51 3.02 - -3.44 1610.25 Kroger 29.45 0.21 37.97 28.29 1.55 14.13 26876.17 ex-dividend
Generali 14.06 -0.29 16.00 9.76 5.02 10.86 24543.72 CaixaBnk 4.21 -0.02 4.47 1.82 3.49 23.93 28145.9 Anthem 183.08 1.58 184.45 114.85 1.38 21.72 48513.68
Denmark (kr) Iberdrola 7.03 0.02 7.07 4.80 5.81 16.88 50723.07 L Brands 50.51 0.24 79.67 43.04 4.83 12.48 14385.71 ex-capital redistribution
IntSPaolo 2.57 -0.05 2.90 1.52 5.35 21.36 45521.87 Aon Cp 130.01 -0.31 130.60 100.55 1.03 24.34 34071.72
DanskeBk 249.50 -2.10 259.30 161.80 3.55 11.79 35117.23 Inditex 35.98 -0.30 36.65 27.18 1.32 35.51 125318.89 LasVegasSd 58.02 0.07 63.38 41.45 5.09 24.66 45967.39 # price at time of suspension
Luxottica 54.00 -0.20 56.90 39.92 1.62 31.11 29239.41 Apple 153.61 -0.26 156.65 91.50 1.52 17.50 800897.96
MollerMrsk 12480 - 12770 7775 3.69 -20.06 18863.55 Repsol 15.01 0.06 15.22 9.60 4.11 13.60 25104.83 LibertyGbl 31.13 0.20 39.85 26.16 - 13.72 7382.77
Unicred 15.87 -0.72 30.80 11.93 3.72 -1.61 39479.32 ArcherDan 42.45 -0.17 47.88 39.01 2.94 17.59 24126.76
NovoB 276.60 -0.40 384.80 218.20 3.37 18.90 81557.88 Telefonica 10.08 0.03 10.63 7.45 7.22 21.81 56730.12 Lilly (E) 78.05 -0.29 86.72 64.18 2.69 36.86 86119.49
AT&T 38.12 -0.11 43.89 36.10 5.24 17.54 234361.76

FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE
Close Prev Day Week Month Close Prev Day Week Month Day's Mth's Spread Day's Mth's Spread
price price change change % change change % change % price price change change % change change % change % Red Ratings Bid Bid chge chge vs Red Ratings Bid Bid chge chge vs
Surgutneftegas 30.69 29.71 0.98 3.30 3.44 12.6 9.94 SunPhrmInds 502.60 502.60 0.00 0.00 -150.55 -23.0 -21.71 May 26 date Coupon S* M* F* price yield yield yield US May 26 date Coupon S* M* F* price yield yield yield US
Intuit 138.56 138.36 0.20 0.14 13.18 10.5 19.64 ShgPdgBk 12.84 12.93 -0.09 -0.70 -2.18 -14.5 -14.68 High Yield US$ US$
ITC 315.85 315.85 0.00 0.00 29.65 10.4 13.62 Alexion 97.70 98.50 -0.80 -0.81 -16.14 -14.2 -19.08 Navient Corporation 03/20 8.00 BB- Ba3 BB 110.12 4.20 -0.02 -1.35 2.93 Citigroup Inc. 01/28 6.63 BBB+ Baa1 A 121.50 4.15 -0.02 -0.04 1.90
ChinaMBank 23.55 23.70 -0.15 -0.63 2.10 9.8 16.58 SBI NewA 284.00 284.00 0.00 0.00 -24.00 -7.8 -1.98 High Yield Euro SunTrust Banks, Inc. 01/28 6.00 BBB+ Baa1 A- 110.63 4.77 -0.02 0.06 2.52
ChUncHK 11.34 11.18 0.16 1.43 1.00 9.7 12.95 Devon Energy 35.82 35.73 0.09 0.25 -2.57 -6.7 -11.75 Kazkommerts Intl BV 02/17 6.88 B Caa1 B 97.50 - 0.00 0.00 - FleetBoston Financial Corp. 01/28 6.88 BBB Baa3 A- 120.95 4.43 -0.02 -0.11 2.18
PingAnIns 50.35 50.00 0.35 0.70 4.05 8.7 14.95 ValeantPh 17.22 17.25 -0.03 -0.17 -1.12 -6.1 36.13 NationsBank Corp. 03/28 6.80 BBB Baa3 A- 121.22 4.36 -0.02 -0.08 2.11
MediaTek 229.50 228.50 1.00 0.44 17.00 8.0 6.74 Novatek 645.20 658.20 -13.00 -1.98 -39.20 -5.7 -7.10 Emerging US$ GTE Corporation 04/28 6.94 BBB+ Baa2 A- 125.37 4.07 -0.02 -0.08 1.82
NorfolkS 122.33 119.77 2.56 2.14 9.06 8.0 3.83 Unicred 15.87 16.59 -0.72 -4.34 -0.91 -5.4 6.22 Mexico 09/16 11.40 BBB+ A3 BBB+ 106.80 1.49 0.03 0.01 0.44 United Utilities PLC 08/28 6.88 BBB- Baa1 A- 120.34 4.59 -0.02 -0.24 2.34
AmerAir 48.74 48.02 0.72 1.50 3.52 7.8 5.04 CanNatRs 39.77 40.00 -0.23 -0.58 -2.24 -5.3 -8.53 Brazil 01/18 8.00 BB Ba2 BB 102.89 3.45 0.47 0.16 2.18
Peru 03/19 7.13 BBB+ A3 BBB+ 109.93 1.61 -0.01 -0.20 0.34 Euro
CSX 53.96 53.79 0.17 0.32 3.58 7.1 6.24 ENI 14.28 14.31 -0.03 -0.21 -0.74 -4.9 0.07 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 103.98 2.23 -0.02 0.17 -
Charter Comms 337.44 333.76 3.68 1.10 21.66 6.9 -2.30 BakerHu 55.45 54.84 0.61 1.11 -2.77 -4.8 -6.74 Peru 03/19 7.13 BBB+ A3 BBB+ 114.01 2.60 0.00 0.20 0.84
Brazil 01/22 12.50 BB Ba2 BB 111.99 9.28 0.02 -0.16 7.49 AT&T Inc. 12/29 2.60 BBB+ Baa1 A- 104.41 2.19 -0.07 0.11 -
SK Hynix 57900.00 57100.00 800.00 1.40 3700.00 6.8 7.22 ConocPhil 45.35 45.05 0.30 0.67 -2.13 -4.5 -6.19 Citigroup Inc. 02/30 4.25 BBB Baa3 A- 117.32 2.30 -0.02 0.04 -
Mnstr Bvrg 50.90 50.76 0.14 0.28 3.21 6.7 12.84 Lowes 80.91 81.33 -0.42 -0.52 -3.68 -4.4 -5.07 Poland 03/23 3.00 BBB+ A2 A- 100.90 2.85 -0.03 -0.20 1.06
Colombia 03/23 2.63 BBB Baa2 BBB 97.22 3.18 -0.03 -0.11 1.39 HBOS plc 03/30 4.50 BBB- Baa2 A- 116.87 2.49 -0.02 -0.24 -
China Vanke 20.75 20.35 0.40 1.97 1.29 6.6 5.12 IntSPaolo 2.57 2.62 -0.05 -2.06 -0.12 -4.3 -3.96
Turkey 03/23 3.25 - Ba1 BB+ 80.87 7.35 0.06 0.14 5.56 Yen
Hind Unilevr 1072.25 1072.25 0.00 0.00 64.25 6.4 14.69 Halliburton 45.76 45.41 0.35 0.77 -2.02 -4.2 -2.62
Russia 05/26 4.75 - - BBB- 105.58 4.05 -0.02 -0.03 1.80 Enagas Transportes, S.A.U. 09/39 3.23 A- Baa2 A- 106.57 2.85 0.00 0.01 -
Ch Evrbrght 3.68 3.68 0.00 0.00 0.22 6.4 0.82 Shire 4651.50 4738.00 -86.50 -1.83 -200.50 -4.1 1.10
IndstrlBk 16.50 16.57 -0.07 -0.42 0.91 5.8 7.35 Generali 14.06 14.35 -0.29 -2.02 -0.56 -3.8 -3.23 Turkey 03/27 6.00 - Ba1 BB+ 106.81 5.17 -0.02 -0.03 2.92 Sterling
Hunng Pwr 6.17 5.84 0.33 5.65 0.34 5.8 14.90 NatAusBk 29.27 29.73 -0.46 -1.55 -1.11 -3.7 -13.91 Emerging Euro Electricite de France (EDF) 05/28 6.25 A A3 A- 135.01 2.56 -0.03 -0.19 0.31
Ch OSLnd&Inv 23.65 23.30 0.35 1.50 1.25 5.6 4.65 Daimler 65.44 65.38 0.06 0.09 -2.30 -3.4 -3.40 Brazil 02/15 7.38 BBB- Baa2 BBB 111.75 0.73 0.00 0.00 0.09 HSBC Holdings plc 08/28 2.63 A A1 AA- 101.46 2.47 -0.03 -0.31 0.22
ChinaLife 25.60 25.35 0.25 0.99 1.35 5.6 8.25 Deut Bank 16.43 16.49 -0.06 -0.36 -0.56 -3.3 -3.27 Mexico 02/20 5.50 BBB+ A3 BBB+ 113.90 0.36 -0.01 -0.07 -0.92 Data provided by SIX Financial Information. US $ denominated bonds NY close; all other London close. *S - Standard & Poors, M -
Mexico 04/23 2.75 BBB+ A3 BBB+ 108.00 1.33 -0.01 -0.04 -0.46 Moodys, F - Fitch.
Based on the FT Global 500 companies in local currency Based on the FT Global 500 companies in local currency
Bulgaria 03/28 3.00 BB+ Baa2 BBB- 108.58 2.10 -0.02 -0.02 -0.15
Data provided by SIX Financial Information & Tullett Prebon Information. US $ denominated bonds NY close; all other
London close. *S - Standard & Poors, M - Moodys, F - Fitch.

INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET
May 26 Rate Current Since Last Mnth Ago Year Ago Day's Month's Year Return Return May 26 Day Chng Prev 52 wk high 52 wk low Red Change in Yield 52 Week Amnt
US Fed Funds 0.50-0.75 14-12-2016 1.00 0.50-0.75 0.25-0.50 Index change change change 1 month 1 year VIX 9.81 -0.18 9.99 26.72 9.56 May 26 Price Yield Day Week Month Year High Low m
US Prime 4.00 16-12-2008 3.75 3.50 3.50 Markit IBoxx VXD 9.60 -0.32 9.92 23.69 3.59 Tr 8.75pc '17 102.10 0.01 0.00 0.00 -200.00 -97.44 105.16 100.00 11.14
US Discount 0.75 16-12-2015 0.75 1.00 0.75 ABF Pan-Asia unhedged 181.71 0.08 1.06 4.90 0.80 0.64 VXN 12.26 -0.32 12.58 27.10 9.75 Tr 5pc '18 103.78 0.10 11.11 25.00 233.33 -66.67 108.38 103.78 35.24
Euro Repo 0.00 10-09-2014 0.05 0.05 0.05 Corporates( ) 343.37 0.24 1.41 4.01 1.59 11.04 VDAX - - - - - Tr 4.5pc '19 107.85 0.07 0.00 16.67 133.33 -84.44 111.97 107.85 36.35
UK Repo 0.25 05-03-2009 0.25 0.50 0.50 Corporates($) 271.45 0.05 0.75 3.11 0.75 3.11 CBOE. VIX: S&P 500 index Options Volatility, VXD: DJIA Index Options Volatility, VXN: NASDAQ Index Options Volatility. Tr 4.75pc '20 112.94 0.08 -11.11 -11.11 0.00 -87.88 117.02 112.94 33.31
Japan O'night Call 0.00-0.00 05-10-2010 0.00 0.00-0.10 0.00-0.10 Corporates() 223.44 0.13 0.20 0.98 0.46 2.65 Deutsche Borse. VDAX: DAX Index Options Volatility. Tr 1.5pc '21 104.64 0.22 -8.33 -12.00 -12.00 -75.28 106.04 102.64 32.46
Switzerland Libor Target 0.00-0.25 15-01-2015 0.00-0.75 -1.25--0.25 0-0.25 Eurozone Sov() 231.47 0.24 0.53 -0.52 0.79 -0.59 Tr 4pc '22 117.56 0.29 -14.71 -17.14 -9.38 -68.82 121.31 116.43 37.95
Gilts( ) 325.82 0.23 0.79 2.75 0.92 7.46 BONDS: BENCHMARK GOVERNMENT Tr 5pc '25 132.35 0.71 -6.58 -6.58 -5.33 -45.38 138.11 129.09 35.08
INTEREST RATES: MARKET Global Inflation-Lkd 259.18 0.01 0.65 4.86 1.37 3.84 Red Bid Bid Day chg Wk chg Month Year Tr 1.25pc '27 101.55 1.09 -5.22 -6.03 -3.54 -31.45 138.26 99.31 5.43
Over Change One Three Six One Markit iBoxx Non-Gilts 338.18 0.22 1.18 3.62 1.33 9.60 Date Coupon Price Yield yield yield chg yld chg yld Tr 4.25pc '32 138.52 1.40 -2.78 -4.11 -3.45 -27.84 148.92 131.34 35.44
May 26 (Libor: May 25) night Day Week Month month month month year Overall ($) 236.23 0.05 0.48 2.29 0.48 2.29 Australia 10/19 2.75 102.62 1.63 -0.02 -0.06 -0.11 0.01 Tr 4.25pc '36 143.62 1.56 -2.50 -3.70 -4.29 -26.42 155.77 133.98 29.76
US$ Libor 0.93000 0.000 0.002 0.001 1.04467 1.20178 1.41378 1.72122 Overall( ) 326.45 0.23 0.91 3.01 1.04 8.08 11/28 2.75 101.95 2.55 -0.02 -0.07 -0.18 0.00 Tr 4.5pc '42 158.85 1.66 -2.35 -3.49 -4.05 -24.89 174.65 145.64 26.64
Euro Libor -0.43000 -0.006 -0.004 0.000 -0.39857 -0.36929 -0.28500 -0.15543 Overall() 227.66 0.19 0.38 -0.16 0.60 0.09 Austria 10/19 0.25 99.98 0.26 0.00 0.00 0.00 0.00 Tr 3.75pc '52 158.57 1.57 -2.48 -3.68 -4.27 -25.94 177.28 140.85 23.59
Libor 0.22375 0.000 0.000 0.000 0.25263 0.29963 0.44138 0.63813 Treasuries ($) 223.04 0.06 0.33 1.79 0.33 1.79 04/27 0.50 98.99 0.61 -0.03 -0.04 0.02 0.00 Tr 4pc '60 178.41 1.50 -2.60 -3.85 -4.46 -27.18 201.27 155.52 23.21
Swiss Fr Libor 0.000 -0.78540 -0.72960 -0.66180 -0.48960 FTSE Belgium 06/18 0.75 100.87 -0.11 0.00 0.00 0.00 0.00 xd Ex dividend. Closing mid-prices are shown in pounds per 100 nominal of stock. Red yield: Gross redemption yield.
Yen Libor -0.002 -0.01629 -0.01529 0.02300 0.12500 Sterling Corporate () 118.74 0.31 - - 1.03 5.44 06/27 0.80 101.10 0.69 -0.04 -0.07 -0.10 0.00 This table shows the gilts benchmarks & the non-rump undated stocks.
Euro Euribor 0.003 -0.37100 -0.32900 -0.25400 -0.13000 Euro Corporate () 107.44 0.19 - - 0.17 -0.65 Canada 08/19 0.75 100.02 0.74 -0.01 0.03 0.00 0.00
Sterling CDs
US$ CDs
0.000
0.000
0.20000
0.97000
0.28000
1.13000
0.42500
1.31000
Euro Emerging Mkts () 797.74 3.45 - - -0.52 -8.70 06/27 1.00 95.98 1.43 -0.03 -0.04 -0.11 0.00 GILTS: UK FTSE ACTUARIES INDICES
Eurozone Govt Bond 112.35 0.03 - - 0.42 -3.19 Denmark 11/20 0.25 102.18 -0.37 0.00 0.00 0.00 0.00
Euro CDs 0.000 -0.43500 -0.39500 -0.29500 11/27 0.50 98.35 0.66 -0.01 0.03 0.07 0.00 Price Indices Day's Total Return Return
CREDIT INDICES Day's Week's Month's Series Series Fixed Coupon May 26 chg % Return 1 month 1 year Yield
Short 7 Days One Three Six One Index change change change high low Finland 09/19 1.75 100.46 1.55 0.00 0.00 0.00 0.21
07/28 2.75 115.37 1.45 0.00 0.00 0.00 0.00 1 Up to 5 Years 96.70 0.03 2435.91 0.09 1.57 0.17
May 26 term notice month month month year Markit iTraxx 2 5 - 10 Years 186.69 0.19 3517.80 0.52 4.70 0.69
Euro -0.50 -0.35 -0.50 -0.35 -0.51 -0.36 -0.47 -0.32 -0.37 -0.22 -0.36 -0.11 Crossover 5Y 369.26 -12.07 35.21 40.34 390.04 288.69 France - - - - - - -
3 10 - 15 Years 218.49 0.30 4282.02 0.75 7.20 1.14
Sterling 0.15 0.25 0.15 0.25 0.23 0.33 0.35 0.50 0.47 0.62 Europe 5Y 85.00 -1.98 7.21 7.01 90.43 67.59 11/20 0.25 102.42 -0.44 0.00 0.00 0.00 0.00
4 5 - 15 Years 194.21 0.23 3706.57 0.60 5.48 0.89
Swiss Franc - - - - - - - - - - - - Japan 5Y 70.05 -2.51 2.21 -0.87 93.03 64.22 10/22 2.25 112.83 -0.11 0.00 0.00 0.00 0.00
5 Over 15 Years 346.65 0.41 5242.96 1.61 12.93 1.58
Canadian Dollar - - - - - - - - - - - - Senior Financials 5Y 111.86 -3.89 10.86 12.50 121.66 80.36 05/27 1.00 102.27 0.76 -0.03 -0.05 -0.08 0.00
7 All stocks 184.73 0.24 3617.31 0.88 7.21 1.38
US Dollar 0.90 1.00 0.95 1.05 1.00 1.10 1.10 1.20 1.25 1.35 1.50 1.60 Germany 10/19 0.25 102.21 -0.67 0.00 0.00 0.00 0.00
Markit CDX 08/23 2.00 113.78 -0.20 0.00 0.00 0.00 0.00
Japanese Yen -0.10 0.10 -0.15 0.05 -0.20 0.10 -0.15 0.15 -0.15 0.15 -0.10 0.20 Day's Month Year's Total Return Return
Emerging Markets 5Y 198.09 -3.26 -11.46 -11.68 218.09 197.56 02/27 0.25 99.22 0.33 -0.03 -0.04 0.01 0.00
Libor rates come from ICE (see www.theice.com) and are fixed at 11am UK time. Other data sources: US $, Euro & CDs: Index Linked May 26 chg % chg % chg % Return 1 month 1 year
Nth Amer High Yld 5Y 328.29 0.17 -17.13 -10.17 353.95 327.35 08/46 2.50 133.25 1.15 -0.04 -0.05 0.05 0.30
Tullett Prebon; SDR, US Discount: IMF; EONIA: ECB; Swiss Libor: SNB; EURONIA, RONIA & SONIA: WMBA. 1 Up to 5 Years 315.17 0.02 -0.12 1.97 2475.12 0.10 3.87
Nth Amer Inv Grade 5Y 63.53 0.28 -4.09 -3.35 69.24 62.53 Greece 04/19 4.75 98.46 5.63 -0.08 0.13 -0.60 -1.40
Websites: markit.com, ftse.com. All indices shown are unhedged. Currencies are shown in brackets after the index names. 2 Over 5 years 730.52 -0.30 1.04 23.87 5438.46 1.16 24.53
02/27 3.00 84.59 5.91 -0.05 0.29 -0.35 -1.26 3 5-15 years 484.94 0.31 0.36 10.93 3746.22 0.57 12.11
Ireland 10/19 5.90 115.33 -0.47 0.00 0.00 0.00 0.00 4 Over 15 years 941.79 -0.49 1.26 28.79 6862.39 1.35 29.24
05/26 1.00 101.90 0.78 -0.03 -0.04 -0.06 0.01 5 All stocks 659.70 -0.27 0.95 21.37 4984.18 1.07 22.16
COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED Italy 10/19 0.05 99.86 0.11 0.01 0.01 -0.15 0.00
11/21 0.35 98.83 0.62 0.01 0.01 -0.17 0.00 Yield Indices May 26 May 25 Yr ago May 26 May 25 Yr ago
Energy Price* Change Agricultural & Cattle Futures Price* Change Price Yield Month Value No of
06/27 2.20 101.01 2.10 -0.02 -0.03 -0.18 0.00 5 Yrs 0.31 0.33 0.80 20 Yrs 1.69 1.71 2.18
Crude Oil Jun 49.79 0.00 Corn Jul 373.75 0.00 Apr 21 Apr 21 Prev return stock Market stocks
03/47 2.70 91.11 3.19 0.00 -0.06 -0.16 0.61 10 Yrs 1.04 1.07 1.52 45 Yrs 1.49 1.51 2.08
Brent Crude Oil 52.42 0.24 Wheat Jul 438.75 0.00 Can 4.25%' 21 121.46 -0.361 -0.372 0.29 5.18 75355.91 7
Japan 05/19 0.10 100.53 -0.17 0.00 0.00 0.00 0.00 15 Yrs 1.51 1.53 1.99
RBOB Gasoline May 1.64 0.00 Soybeans Jul 926.00 0.00 Fr 2.25%' 20 112.37 -1.431 -1.458 0.13 20.31 222459.38 16
03/22 0.10 101.08 -0.12 0.00 0.00 0.00 0.00
Heating Oil Jun 1.58 0.00 Soybeans Meal Jul 301.30 0.00 Swe 0.25%' 22 114.09 -1.848 -1.830 0.17 30.03 229025.37 7
03/27 0.10 100.61 0.04 -0.01 0.00 0.02 0.00 inflation 0% inflation 5%
Natural Gas Jun 3.23 -0.07 Cocoa (ICE Liffe)X Jul 1499.00 0.00 UK 2.5%' 20 373.10 -2.880 -2.849 0.27 6.58 653041.71 27
03/47 0.80 100.12 0.80 -0.02 0.00 0.01 0.00 Real yield May 26 Dur yrs Previous Yr ago May 26 Dur yrs Previous Yr ago
Ethanol - - Cocoa (ICE US) Jul 1914.00 0.00 UK 2.5%' 24 371.80 -2.205 -2.162 0.74 6.82 653041.71 27
Netherlands 01/20 0.25 102.35 -0.63 0.00 0.00 0.00 0.00 Up to 5 yrs -2.49 1.97 -2.47 -1.25 -3.24 1.97 -3.24 -1.89
Uranium Jun 18.10 0.00 Coffee(Robusta)X Jul 1983.00 0.00 UK 2%' 35 273.88 -1.791 -1.774 1.49 9.08 653041.71 27
07/27 0.75 102.07 0.54 -0.04 -0.03 -0.01 0.00 Over 5 yrs -1.75 24.76 -1.76 -0.94 -1.78 24.84 -1.79 -0.97
Carbon Emissions - - Coffee (Arabica) Jul 131.05 0.00 US 0.625%' 21 103.72 -0.249 -0.260 0.21 35.84 1253376.13 38
White SugarX 438.30 0.00 New Zealand 04/20 3.00 102.51 2.10 -0.01 -0.03 -0.20 -0.03 5-15 yrs -2.00 8.47 -1.96 -0.93 -2.12 8.48 -2.09 -1.06
Diesel - - US 3.625%' 28 133.26 0.507 -0.260 0.58 16.78 1253376.13 38
Sugar 11 15.37 0.00 04/27 4.50 114.49 2.81 -0.04 -0.03 -0.24 0.20 Over 15 yrs -1.73 29.81 -1.75 -0.94 -1.75 29.85 -1.77 -0.96
Unleaded (95R) - - Representative stocks from each major market Source: Merill Lynch Global Bond Indices Local currencies. Total market
Norway 05/19 4.50 107.75 0.55 0.00 -0.02 -0.11 -0.08 All stocks -1.76 23.05 -1.77 -0.94 -1.79 23.16 -1.80 -0.98
Base Metals ( LME 3 Months) Cotton Jul 77.15 0.00 value. In line with market convention, for UK Gilts inflation factor is applied to price, for other markets it is applied to par
Aluminium 1952.00 -8.00 Orange Juice Jul 139.00 0.00 02/27 1.75 102.14 1.51 -0.01 -0.01 -0.12 0.00 See the FTSE website for more details: http://www.ftse.com/products/indices/gilts
amount.
Aluminium Alloy 1670.00 -10.00 Palm Oil - - Portugal 06/19 4.75 109.26 0.20 -0.06 -0.08 -0.17 -0.79
Copper 5662.00 -67.50 Live Cattle Jun 122.63 0.00 BONDS: TEN YEAR GOVT SPREADS 04/27 4.13 108.29 3.13 -0.05 -0.04 -0.40 0.00 All data provided by Morningstar unless otherwise noted. All elements listed are indicative and believed accurate
Lead 2123.00 30.00 Feeder Cattle Aug 147.20 -4.03 Spain 01/19 0.25 100.85 -0.25 0.00 0.00 0.00 0.00 at the time of publication. No offer is made by Morningstar or the FT. The FT does not warrant nor guarantee
Nickel 9085.00 40.00 Lean Hogs Jun 81.88 0.00 Spread Spread Spread Spread 04/27 1.50 99.76 1.53 -0.05 -0.03 -0.11 0.00 that the information is reliable or complete. The FT does not accept responsibility and will not be liable for any
Tin 20325.00 -125.00 Bid vs vs Bid vs vs Sweden 10/18 1.00 99.45 1.42 -0.01 -0.01 0.00 0.26 loss arising from the reliance on or use of the listed information. For all queries e-mail
Zinc 2644.50 10.50 % Chg % Chg Yield Bund T-Bonds Yield Bund T-Bonds 11/26 1.00 104.49 0.51 -0.01 0.00 -0.06 -0.28 ft.reader.enquiries@morningstar.com
Precious Metals (PM London Fix) May 25 Month Year Australia 2.55 2.22 0.30 Italy 2.10 1.77 -0.15 Switzerland 07/20 2.25 109.56 -0.78 0.00 0.00 0.00 0.00
Gold 1265.05 8.10 S&P GSCI Spt 385.50 0.53 4.03 Austria 0.61 0.28 -1.64 Japan 0.04 -0.29 -2.21 05/26 1.25 113.13 -0.20 0.00 0.00 0.00 0.00 Data provided by Morningstar | www.morningstar.co.uk
Silver (US cents) 1729.00 14.00 DJ UBS Spot 84.01 -0.03 -1.39 Belgium 0.69 0.35 -1.56 Netherlands 0.54 0.21 -1.71 United Kingdom 07/19 1.75 103.58 0.08 -0.02 -0.03 0.01 -0.55
Platinum 961.00 11.00 R/J CRB TR 183.68 0.24 -1.44 Canada 1.43 1.10 -0.82 Norway 1.51 1.18 -0.74 07/22 0.50 100.20 0.46 -0.02 -0.06 -0.05 0.00
Palladium 780.00 13.00 M Lynch MLCX Ex. Rtn 231.14 -9.84 -33.05 Denmark 0.66 0.33 -1.59 Portugal 3.13 2.80 0.88 07/27 1.25 101.51 1.09 -0.03 -0.08 -0.07 0.00
Bulk Commodities UBS Bberg CMCI TR 13.68 -0.48 2.92 Finland 1.45 1.11 -0.81 Spain 1.53 1.19 -0.72 07/47 1.50 96.31 1.66 0.00 -0.06 -0.06 0.00
Iron Ore (Platts) 57.80 -0.20 LEBA EUA Carbon 5.04 0.00 -13.55 France 0.76 0.43 -1.49 Switzerland -0.20 -0.53 -2.45 United States 03/19 1.25 99.96 1.27 0.00 -0.01 0.02 0.00
Iron Ore (The Steel Index) 57.80 0.00 LEBA CER Carbon 0.23 -8.00 -42.50 Germany 0.33 0.00 -1.92 United Kingdom 1.09 0.76 -1.16 04/22 1.88 100.40 1.79 -0.01 0.01 -0.02 0.00
GlobalCOAL RB Index 72.75 -0.25 LEBA UK Power 1755.00 36.05 50.00 Greece 5.91 5.58 3.66 United States 2.25 1.92 0.00 05/27 2.38 101.11 2.25 -0.01 0.01 0.00 0.00
Baltic Dry Index 912.00 -6.00 Ireland 0.78 0.45 -1.47 05/47 3.00 101.73 2.91 -0.01 0.02 0.00 0.00
Sources: NYMEX, ECX/ICE, CBOT, X ICE Liffe, ICE Futures, CME, LME/London Metal Exchange.* Latest prices, $ Data provided by SIX Financial Information Data provided by SIX Financial Information
unless otherwise stated.
18 Tuesday 30 May 2017

INSIGHT Analysis. Capital markets

Renaud
de Planta
Bank stocks gloom as China curbs shadow loans
Some $38bn in shareholder Chinas CSI 300 Banks index
value has been wiped out since Guo Shuqing took over
Risk of unpleasant in a two-month stretch
as top banking regulator

side-effects if we keep
Feb 23
Guo Shuqing 5800
appointed as
DON WEINLAND HONG KONG CBRC* chair

taking the trackers GABRIEL WILDAU SHANGHAI 5600

A crackdown on Chinas $9.4tn shadow
banking business is hitting bank share 5400
prices and rattling bond markets.
5200
The countrys new banking regulator Dec 2017 May

A
cure-all. This is what passive investing repre- has already taken several shots at stem- 2016
sents to its growing band of proponents. The ming the rapid growth of off-balance- *China Banking Regulatory Commission
funds, we are told, will rid the market of toxic sheet lending at banks since taking con- Chinas shadow banking
elements and restore it to health. trol in February. The central bank has
It is a persuasive argument. Poorly per- also tightened liquidity in the financial
sector continues to grow
forming and expensive active managers have lingered too system, sparking angst earlier this year. Total assets Total assets as a
(Rmb tn) % of all banking
long, eroding returns for investors. Yet index-tracking The regulator issued a flurry of rules system assets
products are no miracle remedy. They are like antibiotics: to discourage banks from using bor- 80 30
valuable in moderation, but likely to do more harm than rowed money to invest in bonds. The
good should their use become widespread. sell-off that followed pushed yields to 60
25
Indeed, if passive equity funds were to continue their two-year highs and even led to a rarely 40
growth trajectory, they would own all listed stocks by seen inversion of the yield curve. 20
20
2030. That could threaten the free-market economy. The moves have also dented the share
To see why, look at the workings of index investing and prices of Chinese banks among the 0 15
the structure of the passive fund industry. worlds largest by market capitalisation 2012 13 14 15 16
Sources: Bloomberg; Moodys
Under index-tracking, shares with large weightings in wiping out about $38bn in share- Shanghais Pudong financial district. The crackdown also clouds the issue for bonds Carlos Barria/Reuters
the major indices attract more capital irrespective of their holder value in a two-month stretch.
underlying performance. In a system in which passive Its been very clear . . . that regula- sion plateaued at the end of last year, the have also been curbed. The leaders of of capital, Mr Xia said. Asset managers
funds monopolise flows, the price of a security ceases to tors want to stamp out some of this first quarter of 2017 witnessed a resur- Chinas top three financial regulators and trust companies are already start-
function as a gauge of a firms underlying prospects. This [shadow banking] activity. During that gence in entrusted loans and trust prod- are now Xi appointees. Rules issued by ing to unwind some of their businesses.
distorts the cost of equity and the price of credit. time theres been lots of inquiries from ucts, two pillar instruments used in the CBRC this month will force banks to Wealth management products have
In such conditions, serious misallocations of capital investors and some concern on what shadow banking. Last week, in an unex- be more transparent about wealth man- been exceptionally popular among
would become the norm, creating asset bubbles on the one that will look like, said the Asia head of pected move, Moodys cut Chinas credit agement products, which are often banks and their customers. These have
hand and leaving innovative groups starved of funds on a global banks securities unit. rating for the first time in 25 years, high- channelled to borrowers through asset given banks a loosely regulated and
the other. That would not be good for productivity or The CSI 300 bank index fell nearly 10 lighting economic and financial risks. management companies or trusts. highly lucrative channel for using funds
growth. Likely to make matters much worse is the concen- per cent in the weeks after Guo Shuqing, The curbs to shadow lending are part Rumours that Mr Guo may unleash a that would otherwise be simple depos-
tration in the market. The industry is an oligopoly: three a respected Beijing technocrat, was of a much larger shift in how President sweeping campaign to clean up the its. Because the instruments are off bal-
groups control almost three-quarters of passively-man- appointed to head the China Banking Xi Jinping controls Chinas financial sec- channels that are used to structure ance sheet, institutions can use them to
aged investment in stocks. Regulatory Commission (CBRC) in Feb- tor, said Kevin Lai, chief economist for products, namely asset managers, have ramp up their lending. New credit hit a
Drawing on seemingly lim- ruary, although it has recovered some- Asia ex-Japan at Daiwa Capital Markets. been rocking markets, said Xia Le, chief record high in January, mostly due to
itless economies of scale,
Governance what following a central bank liquidity
The moves Mr Xi has been working to uproot economist for Asia at BBVA. He added lending by non-bank institutions.
these powerhouses have been standards and injection in early May. Individual stocks by Beijing imbalances in the financial system that that several large banks have started to Foresea Life Insurance, one of Chinas
able to amass assets by slash- of lenders known to engage heavily in have allowed some individuals to grow restrain standard long-term lending in biggest insurers, this month said it
ing costs. The more assets
competitive shadow banking, such as China Ever-
are part of extremely wealthy, Mr Lai said. preparation for reforms that could expected Rmb60bn ($8.7bn) in
they gather, the more they can forces risk bright Bank and China Minsheng Bank, a larger shift Those changes include the departure require extra liquidity. redemptions in wealth management
cut fees and continue expan- have suffered during the period. of Shang Fulin as CBRC head and replac- Im aware of some bank managers products this year, and warned of the
sion, in contrast to active
erosion Shadow banking expanded by about
in how Xi ing him with Mr Guo, followed by that have stopped giving longer-term possibility of mass defaults. But Chinas
managers, whose room for 20 per cent in 2016 to Rmb64.5tn, fol- controls the putting the chairman of Chinas insur- loans because they think there is a possi- central bank is battling to rein in issu-
manoeuvre is constrained by liquidity and therefore size. lowing several years of much higher ance regulator, Xiang Junbo, under bility they will need to move off-bal- ance of these instruments, fearing that a
As demand for index products grows, a greater propor- growth, according to rating agency
financial investigation in April. Wealth manage- ance-sheet loans on to the balance sheet rise in defaults would create panic, and
tion of listed groups will fall under the control of the three Moodys. While the industrys expan- sector ment sold through insurance groups a type of bail-in that could require lots possibly destabilise the banking system.
largest groups. These firms own close to 20 per cent of US
large-cap companies. Taking the commoditisation of the
asset management industry to its logical conclusion, entire
industries could end up being swallowed by the big three. Global overview
What happens when a small group of passive sharehold-
ers control most or all of the companies in a given indus-
try? Two developments are likely.
The first is a weakening of governance standards.
Talk of early election
The second is an erosion of competitive forces, where
the overlapping holdings of the dominant passive share-
hits Italian financials
holders create conditions for oligopolistic corporate prac-
tices. Studies have found that competition has diminished
where shareholdings are concentrated among a small MICHAEL HUNTER LONDON record closing high on Friday
group of mostly passive investors, hurting consumers. for Wall Streets S&P 500.
In the US airline sector, in which the biggest groups are A sharp fall on Italys main Crude prices bounced
owned by the same large, predominantly passive institu- equities index, sparked by around yesterday following a
tional money managers, competition between carriers has talk of early election in week of big moves as Opec
dwindled, causing a spike in fares. the country, stood out in members agreed last Thurs-
In US banking, researchers find a strong link between otherwise steady European day to extend production
accumulation of bank shares by a small group of index markets. cuts to March of next year to
fund groups and a rise in deposit account servicing fees. Matteo Renzi, the countrys address a global supply glut.
Other industries appear vulnerable to a passive annexa- former prime minister and Brent crude, the interna-
tion: those that are very capital-intensive or quite concen- leader of the governing Dem- tional benchmark, was up
trated, such as utilities, energy and telecoms. ocratic Party, said in a week- 0.8 per cent at $52.57 a barrel
Passive dominance will not happen overnight. Yet left end interview that holding a late in the European day,
unchecked, growth of index-trackers has the potential to national poll in September, having been down by a simi-
erode the market-based economy, one industry at a time. at the same time as German lar margin in Asian trade.
There is a geopolitical dimension. If the passive giants elections, made sense from a West Texas Intermediate fol-
end up owning large parts of the capital market, they will European perspective. lowed the same pattern, to
have a big say on the composition of indices. Effectively His words were enough to rise 0.9 per cent at $50.26. It
able to decide which country or company should be unnerve investors in Italian spent time under $50 during
included or excluded, they would wield great influence assets. Milans FTSE MIB was the Asian session.
over international capital flows. Note BlackRocks call for the biggest faller in the Frances CAC 40 fell 0.1 per
China to be included in MSCIs global equity indices. Some region by a significant mar- cent, while Germanys Xetra
might see that as an excessive concentration of power. gin. It lost 2 per cent, while Dax 30 rose 0.2 per cent.
None of this relieves the pressure on active managers to the international Euro Stoxx Export stocks were among
perform and offer better value to their clients. Nor does it 600 was flat. the biggest fallers with
deny the utility of passive investment. Index products Italys relatively steep fall Volkswagen down 0.6 per
offer benefits to investors. The problem is that if the was led by financial stocks, cent in Frankfurt and Miche-
majority of us embrace them, index-trackers threaten to with Unione di Banche Ital- lin was 0.8 per cent weaker in
sabotage the economic system. If passive funds are over- iane, Banco BPM and Paris as the euro remained
used, they will create more problems than they solve. UniCredit down about 4 per immune to the Italian wor-
cent each. Mediobanca and ries.
Renaud de Planta is chairman of Pictet Asset Management and Finecobank fell by 3 per cent The shared currency was
managing partner of the Pictet Group each. flat at $1.1180, leaving it near
The losses for the Italian to the seven-month high
stock index were also nota- above $1.12 it reached last
bly broad, with only two week.
stocks rising. Mediaset The pound regained 0.3
More comment and data on ft.com gained 1 per cent, as did per cent to $1.2845, after
Brembo, the brake maker. stumbling 1.1 per cent on Fri-
Italys elections are not due day as polls in the lead-up to
Y Fast FT Our global economies, headed until May 2018, and only the next months general elec-
team gives you market- by Brazil, Russia, India countrys president has the tion showed the Conserva-
moving news and views, and China. power to dissolve parlia- tives had lost ground to
24 hours a day, five days ft.com/beyondbrics ment. Labour.
a week. ft.com/fastft Nonetheless, after Mr Japans Topix ticked up 0.1
Y Podcast The Hard
Y Alphaville Our Currency podcast takes a Renzis words were quoted per cent and Hong Kongs
irreverent financial blog. look at what is driving by the newspaper Il Messag- Hang Seng was up 0.2 per
Join Paul Murphy and the global currency gero, the countrys stocks cent ahead of a public holi-
Bryce Elder for the daily market. ft.com/podcasts were the standout movers day today.
Markets Live session at throughout the session. Mainland Chinas markets
Y Lex Video Analysis Wider continental Euro- were closed for a public holi-
11am. ft.com/alphaville
and opinion from the pean stock markets followed day, as were London and
Y beyondbrics News and team on the hot issues on from a lacklustre lead N e w Yo r k e q u i t i e s
comment from more affecting companies and from their Asian peers, as exchanges.
than 40 emerging markets. ft.com/lexvideo volatility in crude prices off- Additional reporting by Peter
set momentum from another Wells in Hong Kong
 FT SPECIAL REPORT

New Trade Routes

Arab World
Tuesday May 30 2017 www.ft.com/reports | @ftreports

Region seeks end

to oil dependence
Yet hydrocarbons remain a big draw for trading partners, Page 2

Reuters
6 |2 FTReports
| FTReports FINANCIAL TIMES
FINANCIAL Tuesday
TIMES 30 30
Tuesday May 2017
May 2017 FINANCIAL TIMES
FINANCIAL Tuesday
TIMES 30 30
Tuesday May 2017
May 2017 FTReports
FTReports| 3| 7

New
NewTrade
TradeRoutes
RoutesArab
ArabWorld
World New
NewTrade
TradeRoutes
RoutesArab
ArabWorld
World

EU accord Shipping Ports operator aims to co-ordinate expansion with Chinas plans for One Belt, One Road, writes Simeon Kerr
monarch sealed deals worth $65bn, We are further diversifying our Arab world are driven by China,

Morocco capitalises
US and China offeron opens
including schemes to develop refiner- economy and attracting more invest- which is also financing major infra-
ies and petrochemicals plants. China, ment, he added.
an increasingly important destina-
structure projects in the wider Mid-
The Dubai International Financial dle East, Africa and South Asia

early
new lead
tradein potential
renewables door for
Jordan
DP World tion for Saudi crude, has balanced its Centre (DIFC), the citys financial region, says Essa Kazim, the DIFCs
interests within the conflicts of the free zone, is seeking to place itself at governor. Facilitating trade and
Middle East, maintaining close rela- the centre of a so-called south-south investment across the south-south
tions with Riyadhs enemy, Tehran. trade corridor formed by emerging corridor remains a priority for DIFC.
The kings visit to China part of economies trading with one another, Mr Kazim says the UAE as a whole

Energy Nations
expertise counts Market access
hitches lift an Asian tour that included Japan and rather than with countries in the is interested in reaping potential ben-
Indonesia would have been west.
watched closely by other Gulf coun-
efits from Chinas One Belt, One Road
The DIFC said it had 1,648 active project an initiative seeking to re-
tries who are exploring deeper trad- registered companies in 2016, up establish historic land and maritime
ing relationships with China. from 1,445 in 2015. This included a 10 routes from China through Asia and

T
Diplomacy he effects of the oil price with the US and China. Saudi Arabia,
crash of 2014 are still the regions largest economy, needs to In the United Arab Emirates, per cent rise in the number of regu- Africa to Europe.
inTrump
sub-Saharan
market,
Siona
withJenkins
while
visit seals
writes
deals worth $380bn
Saudi Arabia,
Chinas
reverberating around
the Middle East. A dec-
ade of plenty, when oil
prices were high, has been replaced
foster a recovery after two years of
slashing expenditure to cover gaping
budget deficits. The private sector
has been too reliant on state spending
Refugee deal comes
with trade benefits,
writes John Reed Opportunity: refugees at a
camp in Jordan
on the new Dubais main trading partner with lated financial companies.
13 per cent of trade is China, fol-
The Agricultural Bank of China,
About 11 per cent of the DIFCs one of Chinas largest lenders, opened
lowed by India with 7.4 per cent and companies are from Asia, a propor- in the DIFC in 2013, with an onshore
the US with 6.7 per cent.
Dubai is looking towards China in
branch handling renminbi clearing.
Zhao Huan, president of ABC, said
thinksnew
by two years of fiscal crisis and the and the kingdom is keen to open up
Karim

links,
developed
el-Alami
Silk Road fosters
Since finishing

says
university
years ago, the young Moroccan
south-south
engineer and a friendtrade
softwareSimeon
big.
two

have
that uses Kerr
region continues to feel the pain. In
the oil-rich Gulf states, for example,
growth is expected to slow to 0.9 per
cent this year, compared with 2 per
cent in 2016, as exporters trim output
new avenues for investment and
trade.
This month, Donald Trump chose
Saudi Arabia for his first overseas
visit since taking office and agreed
At a conference in London last services and created friction
year, Jordan made a deal with with locals over scarce jobs.
international donors: it would Jordans unemployment rate
issue tens of thousands of work in 2016 stood at 15 per cent.
permits to Syrian refugees in The war in Syria has also
Silk Road the hope of facilitating new trading
routes from the worlds second-larg- A number of growing
est economy through Asia, the Mid- trade routes through
dle East andthe
Making connections: Africa
firstinto Europe.
freight trainThe
from UK to China sets off from London Gateway
the developing strategic partnership
between the UAE and China, along
with the increasing internationalisa-
tion of
emirates successful free zones Dubai into the Arab world make a new and greater contribu-
the renminbi,
Isabel was
Infantes/AFP/Getty helping ABC
Images

artificial intelligence to man- return for aid from and most brought havoc to Jordans tra- which offer termi-
preferential terms for are tion to bilateral tradesystems
and co-opera-

W
in a bid to support flagging oil prices. deals worth as much as $380bn hen China manufacturing in cheaper DP Worlds container ments at Gwadar in Pakistan
driven by China assets, have and infra-
age renewable energy costs. Economists see hopeful signs of including an $110bn arms deal. importantly, easier market ditional trading routes, closing held its One locations at home, such as nals handled businesses that establish
64m twenty-foot leadoperations
to that port becoming a tion. structure that have made
Their company, Elum Energy, recovery, however. In its most recent Under the agreements, Saudi Ara- access to the EU. the borders and hastening B e l t , O n e Urumqi in north-west China, equivalentthere units(TEU)
have attracted a broad range hub, says
last transshipment He saidthem Dubaia had an important
success, says Mr
will start deploying the soft- outlook for the region, the IMF bia will buy US goods, including for The scheme
pledge to assemble to provide
150 Lockheed Its amanufacturers searchgreets
deal: Donald Trump for new Mr Trumps visit. RoadSaudi Arabias
summit Saudiafield
and further Arabia is also turning
in Myanmar, to the
year, of companies,
compared with capacityfrom Simon
industrial to head
Kitchen, tionofthat is forecast to rise. Last year, role to play
macro Kitchen.and noted that it was
ware in telecoms towers expects non-oil growth in the Gulf to the oil industry, and invest $20bn into international
Martin Blackhawk help to
helicopters in Jordan,
the KingexportSalmanmarkets
on hisin the EU.
recent trip economic and social reformear-
in Beijing process east asand
Indonesia it Cambodia.
seeks to diversify of its 85m
eco- TEU.
mediaItand technology.
hopes to strategy research about 60 per cent
at Cairo- Weofwill thework
centres
withattracting more Chinese being
But Gwadar, enterprises
outside
around Morocco this summer. rise to 3 per cent in 2017 against 2 per a US infrastructure fund managed by kingdom. which has been burdened with to SaudiA year after the London con-
Arabia known as 2030
lier this month Vision would
it used boost These
the nomic areas
base away from traditional
are mush- expand capacity Wetoare moving
100m TEUswiftly
basedtowards a growth
investment bankcame
EFG from emerging markets and financial institutions
the Gulf, is in to a come
very for
good
They are considering exports cent last year. Saudi Arabia and the Blackstone. Saudi Arabia is also look- a large population
Both governments will openof Syrian
their EPA ference on the Jordan com- capital
eventflows
as aninto the kingdom
opportunity not and reliance
rooming andon western
will allies.
produce post-oil UAE,
for by 2020, dependent said Sheikh
on market Hermes.Hamdan institutions. the Chinese to make investment and business.
location, The UAE,
and if Pakistan can
and are in talks with operators UAE, in particular, are looking to bol- ing for capital flows into its own econ- refugees, is dubbed
doors, wide, Khalid al-Falih, the the Jor- pact, Jordan says it has issued ease business
only for foreign
to announce investors,
lavish new he EuropeWhen Kingwest,
and the SalmanMrbin
binAbdul Aziz, bin Mohammed al-Maktoum,
demand. Jebel Ali port andAJebel
number
Ali ofour
growing
portstradeready
routes he said, get is inthe a pivotal
incentivesposition on it
right,
in a number of countries of ster this growth by enhancing trade omy and the deals included a $6bn danminister
Saudi energy compact. saidItduring
was wel- some 49,000 work permits for added.
financing plans, but also to Sulayem visited China in March, the Saudi
says. With plansDubais crown in
to expand prince,
Free recently. flowingprime
Zone, DP Worlds through Dubai and into the Chinas new shouldmaritime
thrive, trade routes.
he adds.
sub-Saharan Africa. comed in the EU, which is keen Syrians. allay regional countries con- One Belt, One Roads mari- Latin America, Russia and
My hope is to deploy our to institute measures that Every application of a Syr- cerns that the global trade time routes link China to Africa, DP Worlds focus on
software in every solar storage might help to stem the flow of ian refugee gets accepted strategy would benefit China Southeast Asia, India, and, via international markets is help-
[unit] that is launched in refugees to Europe. because of agreements with at their expense. the Maldives, to Africa and on ing to mitigate a slowdown in
Africa in the next five years, Big ambitions: Morocco is home to one of the largest solar power plants Youssef Boudlal/Reuters Jordan, meanwhile, wants to Inside
Those misgivings have not to Europe through the Red Sea. its domestic activity.
says Mr Alami. explore the benefits of the EUs troubled Sultan Ahmed bin Land connections include Currency fluctuations,
He and his business partner, Sub-Saharan Africa have no lending arm of the World nesses compete for contracts offer to lower the threshold on Sulayem, chief executive of DP the main trans-Eurasian route weaker world economic
Cyril Colin, are well placed to access to electricity and some Bank. The Moroccans have a in the renewables market. rules of origin, effectively Influx has been a Egypt
World. Heaims to profit
sees Chinas massive via Kazakhstan. Morocco growth capitalises on oil
and the fall in crude
succeed. They are part of a energy experts are hoping that comparative advantage in We have a big chance in lowering tariffs that the EU from trafficof hotspot
reimagining ancient Silk Other rail networkslead link in renewables
prices have combined to make
small band of entrepreneurs the region could leapfrog tradi- terms of sharing expertise and Morocco right now, says charges on a range of Jordani- burden and created Road trade
Plans areroutes
advancingas a business
to China to Iran and the Gulf, Itsasexpertise
business conditions
will paymore offdiffi-
that has spotted an opportu- tional electricity generation experience with other parts of Mohamed Bernannou, chief an-made goods. friction with locals opportunity that could help well as to Pakistan by way of cult.
nity in a new but growing field infrastructure with renewa- Africa, he adds. executive of the Moroccan Cli- Amman hopes this would turn Suez Canal into an
ameliorate the effects of slow- Afghanistan.
as it targets markets in
Volumes at its Jebel Ali deep
of energy storage for renewa- bles. A subsidiary of Moroccos mate Innovation Centre provide an inducement for over scarce jobs industrial hub growth. The rail routes are expected
ing global economic sub-Saharan Africa
port, the largest marine termi-
bles. Morocco appears well national utility, the Office (MCIC), created in 2014 to European companies to invest The
Page 4 Chinese horizon is to compete with air cargo,Page with6 nal in the Middle East, fell by
Moroccos government is placed to help. It has more National de lElectricit, with develop green technology in Jordans 18 industrial zones changing, says Mr bin the sea routes used for lower- about 5 per cent in 2016, as
keen to support them. The than 20 trade agreements with funding from IFC, won a con- industry and entrepreneur- and development areas the EU, says Abdullah EUSulayem,
accord one opens
of Dubais most value bulk trade. We are on DP Gulf
World governments
hitchesspending lift
country is fossil-fuel poor and African countries. Casablanca, cession to bring power to rural ship. He says conditions in where factories manufacture Alhares, marketing and sales senior officials. all those routes, Mr bin cuts bit into regional trade. DP
has won attention for its suc- the countrys commercial cap- Senegal back in 2010. Morocco can replicate those goods for export. With new department head of Sigma, a door for Jordan
DP World has, for example, Sulayem says. onWorld
newsays Silkit Road
expects this
cess in developing renewable ital, is establishing itself as a Moroccan companies have found in many sub-Saharan jobs being created, Jordan detergent company. Refugee deal
just seen off the first direct Ports operator
DP World has about 20 ter- years volumes at the port to be
energy. In 2009, 1.7 per cent of hub for investment in Africa. begun to expand south with African countries, giving local hopes Syrian refugees will be a The harder part, for Jordan, freight train
comes withfrom trade the UK to minals poised to take advan- stable. plans to grow on
its electricity came from Moroccan banks and insur- European partners. French companies a competitive edge source of surplus labour rather has been attracting investors China. The train left in April on tage of One Belt, One Road. Among its overseas projects,
renewable sources. By 2012, ance companies and the energy giant Engie, which built over those from other parts of than competition with native who want to export to the EU. benefits
its
fort hthe China trade
r e e - w e e k These include six in South Asia DP World is advising on the
this had risen to 32 per cent national airline, Royal Air Moroccos Tarfaya wind farm the world. You have extreme Jordanians for scarce jobs. Of the work permits given to kingdom
journey from DP Worlds and four in China, as well as Khorgos Eastern Gate termi- routes
and is projected to be 42 per Maroc, have a strong presence Africas largest with local heat, you have dust. You are The idea of trying to turn Syrians over the past year, says London
Page 6 Gateway, at the mouth others operating in Thailand, nal near Page 7the Chinese border
cent by 2020 and 52 per cent across the continent. Rabat, company Nareva Holding, last working with a local popula- the challenge of refugees into Mr Fakhoury, only a few hun- of the river Thames, to Vietnam, South Korea and with Kazakhstan, an impor-
by 2030. Last year Morocco the seat of national govern- year announced a partnership tion that may not be able to an economic opportunity is dred, not more are inside the Yiwu in eastern China, laden Indonesia. tant point on rail routes link-
opened the worlds biggest agreement to jointly develop look after the maintenance. based on the protracted nature industrial zones where Jordan Contributors
with British products ranging ing China to Europe. Trains
concentrated solar power 5GW-6GW of power genera- The innovation is not in, for of the crisis, says Imad wants to see jobs created. from whisky to pharmaceuti- have to stop there where the
plant, Noor 1, and hosted the tion and energy services example, a photovoltaic Fakhoury, Jordans minister of If this Jordan compact is cals.Jenkins
Siona Steven Bird former Soviet Union meets
UNs COP 22 climate change The innovation is in Ivory Coast, Senegal, Ghana, technical adaptations that can operation. Its based on our Mr Fakhoury.itWe
projects in countries including panel, he adds. Its in small planning and international co- unbalanced, will crash, says DPand
Writer World
editor,aims to co-ordi-
FT Curation Designer China as the rail gauge
summit. need a win- nate its global network with changes.
Mustapha Bakkoury, head tailoring the product and Cameroon. tailor the product so that it is philosophy that this can hap- win for the Jordanian econ- Chinas
Simeon Kerrprojected $900bn Alan Knox In a similar way to how the
of the Moroccan Agency for so that it is suited for executive Bruno Bensasson, chief suited for local needs. pen if it complements Jorda- omy, donors and Syrian refu- investment
Gulf for the One Belt,
correspondent Picture editor Jebel Ali Free Zone trade
Solar Energy (Masen), which of Engie Africa, says Mr Alamis company nian job creation and does not gees. One Road project. area helped transform Dubai
is responsible for renewables local needs that Morocco has specific received MCIC support. In his displace it. According to Mr Fakhoury, JohnWe
Reedwill work with the intocontact:
For advertising details, an entrepot for global
development in the country, strengths thanks to its strong talks with companies in As of May 1, Jordan had just one company hiring refu- Chinesebureau
Jerusalem to prepare
chief our ports Mark Carwardine, +44 trade,
(0)20 DP
7873 World
4880 andhopes
told the FT in 2015 that the institutional and diplomatic Nigeria, Ghana and Congo, he 659,000 Syrians officially reg- gees has managed to crack the t o b e r e a d y, M r b i n mark.carwardine, orthat
Larrythe Khorgos
Kenney, agreement
+44 (0)20
state was looking to do more ment, hopes that the nascent relations with countries such has found that Moroccos expe- istered as refugees with the EU market and is exporting Sulayem
Heba Saleh says. They need to will build a new
7873 4835 and larry.kenney@ft.com, Dubai at
or your
than just reduce reliance on renewables sector can build on as Senegal or Ivory Coast. So it rience in building up its own UN, and a total of more than goods to Cyprus and Spain. build
Cairo thousands of kilometres
correspondent Chinas border with Kaza-
usual FT representative.
fossil fuels and reduce emis- these ties. made sense, he says, to work renewables capacity is a big 1m Syrians living within its However, he adds, its just the of rail network to make it khstan.
sions: We are working to cre- Targeting African markets with Nareva. advantage. borders, including those who beginning. work.Wazir
Burhan All editorial content inHowever,
this report some observers
is produced by
ate the conditions for future makes sense within the Moroccan experts hope that Morocco is not exactly the are not officially registered. The UK, Dutch and Wagewriter
Freelance costs in China are spi- think
the FT. Our advertisers haveDPno
World couldover
influence suffer
or if
exports, he said. Moroccan economy, says partnerships with companies same as Ivory Coast or Senegal, Most of the Syrians are not German governments are ralling by 20 per cent a year, certain terminals on Chinas
prior sight of the articles.
To do this, the Moroccan Dana Younger, chief renewa- like Engie, coupled with a but its issues are similar. You living in refugee camps, but offering Jordan assistance in says DP World, which has four new Silk Road become too suc-
government is looking south. ble energy specialist at the requirement for domestic con- cannot imagine these prob- cheek-by-jowl with Jordanians getting its goods ready to joint ventures in the country. cessful. at: ft.com/reports
All FT Reports are available
According to 2014 figures, International Finance Corpo- tent in Moroccan energy lems and issues if you are in in cities and towns. The influx export and matching them SuchBoyde
Emma cost rises are pushing Bei- Sultan Ahmed bin Sulayem: There are risks to Jebel Alis
two-thirds of the population in ration, the private sector projects, will help local busi- Europe or in America. has been a burden on local with buyers. jing to locateeditor
Commissioning export-oriented DP World chief Follow us on Twittergrowth
executive should the develop-
@ftreports
4 | FTReports FINANCIAL TIMES Tuesday 30 May 2017

New Trade Routes Arab World

Egypt aims Suez Canal Special

Economic Zone
Zones
West Port Said port
East Port Said port
Mediterranean Sea

Al Arish port

to profit from Ports

East Port Said

E G Y P T
its waterway Qantara
West
East Ismailia

Development Plans are afoot to turn the Suez

Canal into an industrial hub, writes Heba Saleh Main
Cairo map

A
s it struggles to revive its
economy and create
more jobs, Egypt is seek-
ing to take further
advantage of its strategic
location between Africa, Asia and
Europe.
The Suez Canal Economic Zone,
launched in 2015, has plans to create
an industrial and logistics hub sur-
rounding the Suez Canal, the vital
shipping route connecting the Red
Sea and the Mediterranean.
The most important feature of the
zone is its geographical location on an
international trade route, says
Mohab Mamish, the SCEZ chairman
who also heads the Suez Canal
Authority that runs the waterway. He
adds that 10 per cent of global trade
goes through the Suez Canal.
Egypt hopes to attract foreign
investors into export-oriented indus-
tries in the special zone which
encompasses ports on the Red Sea
and the Mediterranean and to
exploit Egypts trade agreements with
African, Arab and European coun-
tries. These increase access to a mar-
ket of more than a billion people.
Another ambition is to provide
logistical services such as bunkering
and transshipment to some of the
17,000 vessels that use the canal
every year. If you can grab the atten-
tion of a good percentage of these ves-
sels and provide some value-added
services you make a huge amount of
money, says Ahmed Darwish,
former chairman of the zone.
The SCEZ will be helped by the
reforms undertaken to secure a loan
from the International Monetary
Fund. These include the flotation,
and subsequent sharp devaluation, of
the Egyptian pound, which has made
the country more attractive to foreign
investors. The IMF recently agreed to
disburse the second tranche of a
$12bn loan.
However, business people and ana-
lysts still want to see an improvement
in Egypts labyrinthine bureaucracy.
It is ranked 122 out of 190 countries in
the World Bank ease of doing busi-
ness rankings.
In an effort to avoid that bureauc-
racy and attract investment, the zone
has been established as an independ-
ent entity able to register companies
50 km
Ain Sokhna
Source: SCZone Image: Google
and issue permits with minimum
delays. It is customs free and allows
repatriation of profits.
Work is under way to expand and
develop the zones ports so they can
handle bigger vessels and accommo-
date activities such as transshipment,
Ten per cent of global
trade goes through
the Suez Canal
with the facilities to handle, store and
repackage cargo. Tunnels are being
dug under the canal to improve con-
nectivity between its two banks.
Officials say they have already
Adabyia port
Gulf of
Suez
Sokhna port
leased 23m sq m of land for $15bn
worth of investment in projects that
are due to be built over the next five
years. Clients include Siemens and
General Electric, as well as such
industrial developers as the ASEC-
Capital alliance, which includes
prominent Saudi, UAE, Egyptian, and
Lebanese companies.
The SCEZ is in talks with a consor-
tium comprising Toyota, Japanese
shipping group NYK and Bollor, the
French transport and logistics com-
pany, for a roll on roll off ferry termi-
nal at East Port Said, part of the zone.
There are also negotiations with the
Port of Singapore and French ship-
ping group CMA CGM for an East Port
Said container terminal.
The SCEZ also hopes to attract job-
Al Tor port
EGYPT
creating medium and light industries,
such as textiles and pharmaceuticals.
But some investors say transport is
inadequate and that, apart from Port
Said, the regions biggest city, canal
zone towns have small populations.
Alaa Arafa, of Arafa Holding, one of
Egypts biggest garment exporters
says proximity to labour is more
important than being near a port: It
is no good building a factory then
transporting people to work in it.
Wael Ziada, head of investment
company Zilla Capital, says that the
zones success depends on whether
managers will be responsive to inves-
tors needs. It will need patience
and planning, he says, to avert the
pitfalls which often mar economic
management in Egypt.

Turkey
Infrastructure
investment is
key to plans
for expansion
As oil-rich nations in the
Arab world pick up the pace
of modernisation building
new airports, roads and
refineries the region
continues to draw interest
from Turkish companies,
which are winning
construction tenders and
finding new markets for
Turkish goods and services.
For the Turks, it is
important to be heavily
involved in big infrastructure
projects everywhere from
Iraq to Saudi Arabia. The
long-term strategy is
investment when Syria opens
up, which would create a land
bridge from Turkey to Syria,
Jordan, Saudi Arabia and the
rest of the Gulf, says Steven
Cook, senior fellow at the
Council on Foreign Relations,
a US-based think-tank.
Turkish trade with the
region has grown
consistently since 2002,
according to figures from the
Investment Support and
Promotion Agency of Turkey
(Ispat). Exports to Saudi
Arabia soared from $555m in
2002 to $3.2bn in 2016;
exports to the United Arab
Emirates have also grown
from $457m in 2002 to
$5.4bn in 2016.
The Middle East has
been very important to us in
terms of trade and export,
says Necmettin Kaymaz,
chief project director of Ispat,
adding that Turkey looked
to the Middle East when
demand from other trading
partners declined as a
result of the financial crisis.
Trade with the Middle
East has accelerated in
recent years, Mr Kaymaz
says.
But it has largely been one
way, mainly due to the fall in
the price of oil. The UAEs
investment in Turkey, for
example, fell from $1.6bn in
2005 to $38m in 2016, Ispat
figures show.
Turkish trade with the
Middle East is focused on
infrastructure, technical
consultancy and defence.
Last year, 18 Turkish
companies signed an
agreement with Saudi
Aramco that will allow
them to bid for the oil
giants projects for the
first time.
Turkish companies such as
Tekfen Construction, Tav
Construction and Gama are
already building oil refineries
and pipelines, motorways,
reservoirs, road networks
and a new airport terminal
building in different projects
across the region.
Ispat says that in the five
years to the end of 2016,
Turkish contractors had won
$48.3bn in Arab region
infrastructure and
construction projects.
Burhan Wazir
6 | FTReports
Morocco capitalises on
early lead in renewables
Energy Nations
expertise counts
in sub-Saharan
market, writes
Siona Jenkins
Karim el-Alami thinks big.
Since finishing university two
years ago, the young Moroccan
engineer and a friend have
developed software that uses
artificial intelligence to man-
age renewable energy costs.
Their company, Elum Energy,
will start deploying the soft-
ware in telecoms towers
around Morocco this summer.
They are considering exports
and are in talks with operators
in a number of countries of
sub-Saharan Africa.
My hope is to deploy our
software in every solar storage
[unit] that is launched in
Africa in the next five years,
says Mr Alami.
He and his business partner,
Cyril Colin, are well placed to
succeed. They are part of a
small band of entrepreneurs
that has spotted an opportu-
nity in a new but growing field
of energy storage for renewa-
bles.
Moroccos government is
keen to support them. The
country is fossil-fuel poor and
has won attention for its suc-
cess in developing renewable
energy. In 2009, 1.7 per cent of
its electricity came from
renewable sources. By 2012,
this had risen to 32 per cent
and is projected to be 42 per
cent by 2020 and 52 per cent
by 2030. Last year Morocco
opened the worlds biggest
concentrated solar power
plant, Noor 1, and hosted the
UNs COP 22 climate change
summit.
Mustapha Bakkoury, head
of the Moroccan Agency for
Solar Energy (Masen), which
is responsible for renewables
development in the country,
told the FT in 2015 that the
state was looking to do more
than just reduce reliance on
fossil fuels and reduce emis-
sions: We are working to cre-
ate the conditions for future
exports, he said.
To do this, the Moroccan
government is looking south.
According to 2014 figures,
two-thirds of the population in
Big ambitions: Morocco is home to one of the largest solar power plants Youssef Boudlal/Reuters
Sub-Saharan Africa have no
access to electricity and some
energy experts are hoping that
the region could leapfrog tradi-
tional electricity generation
infrastructure with renewa-
bles.
Morocco appears well
placed to help. It has more
than 20 trade agreements with
African countries. Casablanca,
the countrys commercial cap-
ital, is establishing itself as a
hub for investment in Africa.
Moroccan banks and insur-
ance companies and the
national airline, Royal Air
Maroc, have a strong presence
across the continent. Rabat,
the seat of national govern-
The innovation is in
tailoring the product
so that it is suited for
local needs
ment, hopes that the nascent
renewables sector can build on
these ties.
Targeting African markets
makes sense within the
Moroccan economy, says
Dana Younger, chief renewa-
ble energy specialist at the
International Finance Corpo-
ration, the private sector
New Trade Routes Arab World
lending arm of the World
Bank. The Moroccans have a
comparative advantage in
terms of sharing expertise and
experience with other parts of
Africa, he adds.
A subsidiary of Moroccos
national utility, the Office
National de lElectricit, with
funding from IFC, won a con-
cession to bring power to rural
Senegal back in 2010.
Moroccan companies have
begun to expand south with
European partners. French
energy giant Engie, which built
Moroccos Tarfaya wind farm
Africas largest with local
company Nareva Holding, last
year announced a partnership
agreement to jointly develop
5GW-6GW of power genera-
tion and energy services
projects in countries including
Ivory Coast, Senegal, Ghana,
and Cameroon.
Bruno Bensasson, chief
executive of Engie Africa, says
that Morocco has specific
strengths thanks to its strong
institutional and diplomatic
relations with countries such
as Senegal or Ivory Coast. So it
made sense, he says, to work
with Nareva.
Moroccan experts hope that
partnerships with companies
like Engie, coupled with a
requirement for domestic con-
tent in Moroccan energy
projects, will help local busi-
nesses compete for contracts
in the renewables market.
We have a big chance in
Morocco right now, says
Mohamed Bernannou, chief
executive of the Moroccan Cli-
mate Innovation Centre
(MCIC), created in 2014 to
develop green technology
industry and entrepreneur-
ship. He says conditions in
Morocco can replicate those
found in many sub-Saharan
African countries, giving local
companies a competitive edge
over those from other parts of
the world. You have extreme
heat, you have dust. You are
working with a local popula-
tion that may not be able to
look after the maintenance.
The innovation is not in, for
example, a photovoltaic
panel, he adds. Its in small planning and international co-
technical adaptations that can
tailor the product so that it is
suited for local needs.
Mr Alamis company
received MCIC support. In his
talks with companies in
Nigeria, Ghana and Congo, he
has found that Moroccos expe-
rience in building up its own
renewables capacity is a big
advantage.
Morocco is not exactly the
same as Ivory Coast or Senegal,
but its issues are similar. You
cannot imagine these prob-
lems and issues if you are in
Europe or in America.
EU accord
opens
door for
Jordan
Market access
Refugee deal comes
with trade benefits,
writes John Reed
At a conference in London last
year, Jordan made a deal with
international donors: it would
issue tens of thousands of work
permits to Syrian refugees in
return for aid from and most
importantly, easier market
access to the EU.
The scheme to provide
international help to Jordan,
which has been burdened with
a large population of Syrian
refugees, is dubbed the Jor-
dan compact. It was wel-
comed in the EU, which is keen
to institute measures that
might help to stem the flow of
refugees to Europe.
Jordan, meanwhile, wants to
explore the benefits of the EUs
offer to lower the threshold on
rules of origin, effectively
lowering tariffs that the EU
charges on a range of Jordani-
an-made goods.
Amman hopes this would
provide an inducement for
European companies to invest
in Jordans 18 industrial zones
and development areas
where factories manufacture
goods for export. With new
jobs being created, Jordan
hopes Syrian refugees will be a
source of surplus labour rather
than competition with native
Jordanians for scarce jobs.
The idea of trying to turn Syrians over the past year, says
the challenge of refugees into
an economic opportunity is
based on the protracted nature
of the crisis, says Imad
Fakhoury, Jordans minister of
unbalanced, it will crash, says
operation. Its based on our
philosophy that this can hap-
pen if it complements Jorda-
nian job creation and does not
displace it.
As of May 1, Jordan had
659,000 Syrians officially reg-
istered as refugees with the
UN, and a total of more than
1m Syrians living within its
borders, including those who
are not officially registered.
Most of the Syrians are not
living in refugee camps, but
cheek-by-jowl with Jordanians
in cities and towns. The influx
has been a burden on local
FINANCIAL TIMES Tuesday 30 May 2017
Opportunity: refugees at a
camp in Jordan
services and created friction
with locals over scarce jobs.
Jordans unemployment rate
in 2016 stood at 15 per cent.
The war in Syria has also
brought havoc to Jordans tra-
ditional trading routes, closing
the borders and hastening
manufacturers search for new
export markets in the EU.
A year after the London con-
ference on the Jordan com-
pact, Jordan says it has issued
some 49,000 work permits for
Syrians.
Every application of a Syr-
ian refugee gets accepted
because of agreements with
Influx has been a
burden and created
friction with locals
over scarce jobs
the EU, says Abdullah
Alhares, marketing and sales
department head of Sigma, a
detergent company.
The harder part, for Jordan,
has been attracting investors
who want to export to the EU.
Of the work permits given to
Mr Fakhoury, only a few hun-
dred, not more are inside the
industrial zones where Jordan
wants to see jobs created.
If this Jordan compact is
Mr Fakhoury. We need a win-
win for the Jordanian econ-
omy, donors and Syrian refu-
gees.
According to Mr Fakhoury,
just one company hiring refu-
gees has managed to crack the
EU market and is exporting
goods to Cyprus and Spain.
However, he adds, its just the
beginning.
The UK, Dutch and
German governments are
offering Jordan assistance in
getting its goods ready to
export and matching them
with buyers.
FINANCIAL TIMES Tuesday 30 May 2017
Shipping Ports operator aims to co-ordinate expansion with Chinas plans for One Belt, One Road, writes Simeon Kerr
DP World
hitches lift
on the new
Silk Road
W
hen China
held its One
Belt, One
Road summit
in Beijing ear-
lier this month it used the
event as an opportunity not
only to announce lavish new
financing plans, but also to
allay regional countries con-
cerns that the global trade
strategy would benefit China
at their expense.
Those misgivings have not
troubled Sultan Ahmed bin
Sulayem, chief executive of DP
World. He sees Chinas massive
reimagining of ancient Silk
Road trade routes as a business
opportunity that could help
ameliorate the effects of slow-
ing global economic growth.
The Chinese horizon is
changing, says Mr bin
Sulayem, one of Dubais most
senior officials.
DP World has, for example,
just seen off the first direct
freight train from the UK to
China. The train left in April on
its three-week
journey from DP Worlds
London Gateway, at the mouth
of the river Thames, to
Yiwu in eastern China, laden
with British products ranging
from whisky to pharmaceuti-
cals.
DP World aims to co-ordi-
nate its global network with
Chinas projected $900bn
investment for the One Belt,
One Road project.
We will work with the
Chinese to prepare our ports
t o b e r e a d y, M r b i n
Sulayem says. They need to
build thousands of kilometres
of rail network to make it
work.
Wage costs in China are spi-
ralling by 20 per cent a year,
says DP World, which has four
joint ventures in the country.
Such cost rises are pushing Bei-
jing to locate export-oriented
manufacturing in cheaper
locations at home, such as
Urumqi in north-west China,
and further afield in Myanmar,
Indonesia and Cambodia.
These areas are mush-
rooming and will produce for
Europe and the west, Mr bin
Sulayem says.
One Belt, One Roads mari-
time routes link China to
Southeast Asia, India, and, via
the Maldives, to Africa and on
to Europe through the Red Sea.
Land connections include
the main trans-Eurasian route
via Kazakhstan.
Other rail networks link
China to Iran and the Gulf, as
well as to Pakistan by way of
Afghanistan.
The rail routes are expected
to compete with air cargo, with
the sea routes used for lower-
value bulk trade. We are on
all those routes, Mr bin
Sulayem says.
DP World has about 20 ter-
minals poised to take advan-
tage of One Belt, One Road.
These include six in South Asia
and four in China, as well as
others operating in Thailand,
Vietnam, South Korea and
Indonesia.
Sultan Ahmed bin Sulayem:
DP World chief executive
FTReports | 7
New Trade Routes Arab World
Making connections: the first freight train from UK to China sets off from London Gateway Isabel Infantes/AFP/Getty Images
DP Worlds container termi- ments at Gwadar in Pakistan assets, have systems and infra-
nals handled 64m twenty-foot lead to that port becoming a structure that have made
equivalent units (TEU) last transshipment hub, says them a success, says Mr
year, compared with capacity Simon Kitchen, head of macro Kitchen.
of 85m TEU. It hopes to strategy research at Cairo- We will work with But Gwadar, being outside
expand capacity to 100m TEU based investment bank EFG the Gulf, is in a very good
by 2020, dependent on market Hermes. the Chinese to make location, and if Pakistan can
demand. Jebel Ali port and Jebel Ali our ports ready get the incentives right, it
With plans to expand in Free Zone, DP Worlds prime should thrive, he adds.
Latin America, Russia and
Africa, DP Worlds focus on
international markets is help-
ing to mitigate a slowdown in
its domestic activity.
Currency fluctuations,
weaker world economic
growth and the fall in crude oil
prices have combined to make
business conditions more diffi-
cult.
Volumes at its Jebel Ali deep
port, the largest marine termi-
nal in the Middle East, fell by
about 5 per cent in 2016, as
Gulf governments spending
cuts bit into regional trade. DP
World says it expects this
years volumes at the port to be
stable.
Among its overseas projects,
DP World is advising on the
Khorgos Eastern Gate termi-
nal near the Chinese border
with Kazakhstan, an impor-
tant point on rail routes link-
ing China to Europe. Trains
have to stop there where the
former Soviet Union meets
China as the rail gauge
changes.
In a similar way to how the
Jebel Ali Free Zone trade
area helped transform Dubai
into an entrepot for global
trade, DP World hopes
that the Khorgos agreement
will build a new Dubai at
Chinas border with Kaza-
khstan.
However, some observers
think DP World could suffer if
certain terminals on Chinas
new Silk Road become too suc-
cessful.
There are risks to Jebel Alis
growth should the develop-