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How should Ireland put its wealth to work? West cannot turn blind eye to Canada murder
BIG READ, PAGE 19 GIDEON RACHMAN, PAGE 21

Trump trial Briefing

Ex-president i Doctors offer to suspend
strikes for pay negotiations
blasts ‘scam’ Senior medics have offered to
hold off from further action if
ministers agree to meet for talks
Donald Trump, centre, appears in mediated by Acas, providing a
court in Manhattan yesterday at the glimmer of hope for resolving one
start of a civil fraud trial against the of the most intractable public
former US president, his eldest sons and sector pay disputes.— PAGE 2
the Trump Organization brought by
state attorney-general Letitia James. i Spotify presses ministers
James’s office has alleged that Trump, Co-founder Daniel Ek has called
his sons and business inflated the value on the government to use its
of assets by more than $2bn to obtain freedom outside the EU to “show
loans worth hundreds of millions of dol- leadership” and introduce new
lars on favourable terms. rules to reduce the dominance of
“For years, Donald Trump falsely big tech companies.— PAGE 7
inflated his net worth to enrich himself
and cheat the system,” James said in a i Shop price rises slow
statement as the parties arrived at the High street inflation has declined
court. to the lowest level in a year as
Trump called the trial a “scam”, food price growth eased sharply
claiming that his financial states were to a single-digit rate. Price cuts
“phenomenal”. for uniforms and back-to-school
He added: “This is a continuation of essentials spurred the fall.— PAGE 2
the single greatest witch hunt of all
time.” i WHO backs malaria jab
Report page 6 The World Health Organization
Seth Wenig/AFP
has recommended approval of a
vaccine from Oxford university,
marking a turning point in the

Sunak faces mounting protests over

treatment of a disease that kills
600,000 each year.— PAGE 5

i Sports Direct court row

JPMorgan has taken the retailer

plan to axe northern branch of HS2

owned by Mike Ashley’s Frasers
to the High Court over a £5.4mn
bill it alleges the store group owes
for leaving a vast site in Wigan in
a state of disrepair.— PAGE 10

i Birkenstock eyes $9bn

3 Tory mayor fears ‘cancelled future’ 3 Row dominates party conference 3 Business warns of damage The German sandal maker has
updated its prospectus for its
initial public offering this month.
GEORGE PARKER, JENNIFER WILLIAMS servatives said Sunak had decided to diverted to “other rail and bus projects”. losses.” But Tory officials lamented the cuts must be funded by a squeeze on It is set to be valued at more than
AND JIM PICKARD — MANCHESTER
GILL PLIMMER — LONDON
save billions of pounds by building only One senior railway industry official way in which Sunak had allowed the public spending. He said £1bn would be $9bn if it sells at the top of its
the southern leg between London and said: “My sources tell me the PM has HS2 row to dominate the conference. saved by freezing civil service numbers, $44-$49 per share range.— PAGE 7
Rishi Sunak faced a storm of protest yes- Birmingham. Aides to Jeremy Hunt, the made his decision and is unlikely to Street acknowledged that costs on the with a plan to cut 66,000 posts. He also
terday as the prime minister prepared chancellor, did not deny that he had change his mind.” project had risen, but warned that “grip- wants to cut the estimated 10,000 peo- i Google ‘default’ under fire
to use his party conference in Manches- already approved a radical scaling back Andrew Gilligan, a Number 10 adviser ping this situation” did not mean “giving ple working full time on equality initia- Microsoft chief executive Satya
ter to announce the axing of the north- of the HS2 project. “A decision will be and HS2 critic, wrote a Policy Exchange up, admitting defeat, or even . . . can- tives in the civil service. Nadella has described as “bogus”
ern leg of the HS2 high-speed rail line. announced in due course,” said one. pamphlet in November last year saying celling the future”. He declined to say But Mark Serwotka, general secretary the idea that users have choice in
Andy Street, the Conservative mayor One cabinet minister said Sunak was that scaling back the project could save whether he would resign over HS2. of the Public and Commercial Services internet search. He said contracts
of the West Midlands, accused Sunak of planning to use his conference speech £3bn a year by 2027-28 and “perhaps Four former prime ministers have union, said shrinking “an already over- make Google the default search
“cancelling the future” and undermin- tomorrow to announce that money £44bn or more in total”. already warned Sunak against scrap- stretched and under-resourced” civil engine on mobile devices.— PAGE 8
ing investor confidence in Britain by saved from the HS2 project would be But Sunak’s decision would turn HS2 ping the northern leg of HS2. service would damage vital services.
aborting the country’s most high-profile — once the government’s flagship “level- Henri Murison, chief executive of the The Tory conference has been domi- i Argentina unity pledge
infrastructure project. “If you tell the ling up” project — into a shuttle service Northern Powerhouse Partnership, a nated by calls for tax cuts before the Economy minister Sergio Massa,
international investment community If you tell global investors between Birmingham and London. The business lobby group, said: “We urge the next general election, expected in 2024. backed by the populist ruling
you are going to do something, you
bloody well have to stick to your word,”
you will do something, you line could also terminate at Old Oak
Common, six miles from central Lon-
prime minister to listen to the business
community about what this would
Hunt said fighting inflation was his
top priority, telling the conference:
coalition, has promised to forge a
“national unity government”
he said on the fringes of the conference. ‘have to stick to your word’ don, rather than Euston. mean for inward investment, for jobs “Nothing hurts families more.” with opposition politicians if he
Downing Street insisted “no decision Andy Street, West Midlands mayor One cabinet minister said of HS2: “It’s and the UK’s international reputation.” Rift with right page 2 wins this month’s election.— PAGE 4
has been taken” on HS2 but senior Con- a monstrosity. We have to cut our Hunt warned Tory activists that tax Stephen Bush page 20

IMF chief backs reforms that pave

way for greater Chinese voting power
COLBY SMITH — WASHINGTON and overcome differences in views so institution’s resources to deal with eco-
many times since Covid hit”, Georgieva nomic problems across the globe.
The head of the IMF has backed
said she was “optimistic” there would be “We are at the centre of the global
reforms that could give Beijing more
changes in the IMF’s voting power. financial safety net,” she said. “If the
voting power in the fund, warning of
Traditionally each member country fund is unable to step forward and bring
“devastation” if her institution
White to quit John Lewis remains without adequate financial
has a so-called quota, based on its posi- confidence for others, the devastation
as reform strategy falters tion in the world economy, which deter- can be profound economically, socially,
resources to aid struggling countries.
mines its contributions to the IMF as but also from a security standpoint.”
Dame Sharon White will have been the In an interview with the Financial well as its voting weight within the insti- As part of the push for more
shortest-serving chair in John Lewis Times, Kristalina Georgieva called for tution and access to emergency funds. resources, the US wants to increase
and Waitrose history when she steps the IMF to better represent changes in At present, China’s quota is less than member countries’ quotas but Ameri-
down in 2025. She told the board the global economy over the past dec- Japan’s, despite its larger share of global can officials have signalled that they
yesterday that she would set the ball ade, which include the rise of China. GDP. As the IMF’s largest shareholder, would veto an expansion of Beijing’s
rolling on an ‘orderly succession “There is a need to constantly change the US holds roughly 17 per cent, giving voting rights. Jay Shambaugh, Treasury
process’, just weeks after the retailer to reflect how the world economy is it veto power over quota decisions that under-secretary for global affairs, said
warned it would take a further two changing,” she said, in an implicit refer- require 85 per cent support. such a move would require “all coun-
years to complete a turnaround plan ence to the disparity between China’s Georgieva’s call for a rethink of IMF tries — especially those that would see
she began. Previously a top Treasury 6 per cent voting power in the IMF and representation comes amid a US effort an increase in share” to respect “the
official, White joined in 2020 from the its share of the world economy, which is to shore up Washington-based multilat- roles and norms of the IMF”.
helm of media regulator Ofcom. roughly three times as much. eral institutions to increase western China, the biggest bilateral lender, has
Transfer of power i PAGE 10 Noting that she was encouraged by influence with developing countries. It been criticised by creditors for hamper-
how the fund had been “able to mobilise also comes as she seeks to step up her ing debt relief deals.

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COMMODITIES
2 ★ FINANCIAL TIMES Tuesday 3 October 2023

NATIONAL

Industrial action Cost of living

Doctors offer to halt strikes for pay talks Retail sector

inflation falls
Senior medics’ proposal to represented by the British Medical than six months, with the government Care pointed to a statement issued last the NHS to reduce growing waiting
to lowest
involve Acas provides ray
Association are staging the latest in a
series of three-day strikes this week,
stipulating that it would only enter
negotiations if strikes were called off.
month in which Barclay said doctors
had received “a fair and reasonable pay
lists”.
But the BMA made no mention of any
level in a year
of hope in NHS dispute coinciding with the Conservative party’s The BMA said that with no further rise”. Those starting their hospital train- offer to open negotiations with minis-
annual conference and leaving hospitals action scheduled, its consultants’ com- ing this year were receiving a 10.3 per ters over junior doctors’ pay — despite a
DELPHINE STRAUSS AND SARAH NEVILLE with only Christmas Day levels of staff- mittee had written to the prime minis- cent increase, with the average junior similar suggestion of talks to be medi- VALENTINA ROMEI — LONDON
ing. Medics are planning a mass rally ter offering to enter negotiations that doctor getting 8.8 per cent and consult- ated by Acas earlier in the year.
UK retail inflation declined to the low-
Senior NHS doctors have offered to hold outside the conference centre in Man- could be facilitated by Acas if necessary. ants 6 per cent “alongside generous The NHS Confederation, which repre-
est level in a year in September as food
off from further strike action if minis- chester today. It added it had also written to the concil- reforms to their pensions”. sents health organisations across Eng-
price growth eased sharply to a single-
ters agree to meet for pay talks medi- With more than 1mn appointments iation service to formally request its Julian Hartley, chief executive of NHS land, Wales and Northern Ireland, said
digit rate, industry data showed today.
ated by the conciliation body Acas, pro- and procedures cancelled since Decem- involvement. Its letter to Barclay said it Providers, which represents health the BMA’s arbitration offer was “a posi-
viding a glimmer of hope for resolving ber as a result of NHS strikes, Barclay would hold off calling any further organisations across England, described tive step” but leaders “will be keen for Shop prices rose at an annual rate of 6.2
one of the most intractable pay disputes has publicly attacked senior doctors for strikes for four weeks to allow time for the overture as an “olive branch” that industrial action to be suspended for per cent last month, down from 6.9 per
to have hit England’s public sector. choosing to take action, accusing them talks but would resume action if there could serve as a first step towards end- both consultants and junior doctors cent in August — the lowest level since
But an ally of health secretary Steve in a Financial Times interview last week was no “credible deal that we can put to ing the disruption caused by strikes. while Acas comes in to broker talks”. September 2022, according to figures
Barclay said the government had made of withholding cancer treatment, our members by November 3”. “Something has to give. We can’t go Matthew Taylor, the confederation’s published by trade body the British
a pay award after accepting the inde- despite earnings that put them “in the Vishal Sharma, chair of the BMA con- into another ‘full on’ winter with the chief executive, said both sides in the Retail Consortium.
pendent pay review body’s recommen- top 2 per cent of public sector pay”. sultants’ committee, said: “If they fail to threat of more strikes hanging over the dispute owed it to the public to resume The drop in retail inflation is good
dations “and we are not reopening it”. No direct talks have taken place negotiate, we are not going anywhere.” NHS,” he said, adding that industrial talks “in the hope that they can agree a news for the economy. With household
Both consultants and junior doctors between Barclay and the BMA for more The Department of Health and Social action made it “well-nigh impossible for compromise before winter sets in”. incomes boosted by record wage
growth, lower price rises could help
increase consumer spending and busi-
ness activity.
Conservatives. Conference Households benefited from price cuts
for school uniforms and other back-to-
school essentials, with non-food infla-

Truss rally highlights right’s rift with Sunak tion hitting 4.4 per cent in September,
its lowest since December 2022, down
from 4.7 per cent in August.
The data showed that annual food
inflation fell to 9.9 per cent in Septem-
ber, hitting single digits for the first time
Prime minister’s predecessor since August last year after falling for
returns to limelight at fringe five consecutive months, and down
from a peak of 15.7 per cent in April.
event with call for tax cuts The BRC also reported that food
prices fell 0.1 per cent between August
and September in the first month-on-
LUCY FISHER AND ANNA GROSS
MANCHESTER month drop for more than two years,
which the trade body attributed to
A year to the day since Liz Truss’s first “fierce competition between retailers”.
Conservative conference as leader “Customers who bought dairy, marga-
imploded over her ill-fated tax cuts, she rine, fish and vegetables — all typically
was back in front of the party faithful own-brand lines — will have found
beating the drum for giveaways. “Axe lower prices compared to last month,”
the tax,” she told Prime Minister Rishi said Helen Dickinson, chief executive of
Sunak. the BRC.
Last October Truss was under fire The drop in food price inflation will be
from her cabinet, struggling to contain a big relief for the UK’s poorest house-
the fallout from her disastrous “mini” holds, which devote a large share of
Budget. Yesterday she was the back- their income to necessities and have
bench darling of the Tory right. been hit hard by soaring food and
Her intervention on tax came just 90 energy costs following Russia’s full-scale
minutes before Chancellor Jeremy invasion of Ukraine in February 2022.
Hunt’s keynote speech and directly “With further price cuts by supermar-
challenged his view that the Treasury kets in recent weeks, food inflation con-
must prioritise tackling inflation over tinues to slow which is good news,”
reducing taxation at present. said Mike Watkins, head of retailer and
The return of Truss showcased the business insight at NielsenIQ, which
increasingly vocal dissent of the Tory helped compile the data.
right over the government, as Sunak Fresh food inflation, which has been
seeks to unify the party ahead of the the main driver of retail price growth in
general election expected next year. the past year, also slowed last month,
Several hundred activists crammed down to 9.6 per cent — the lowest since
into an overheated hotel ballroom for July 2022 — from 11.6 per cent the previ-
the “Great British growth rally”, to hear Growth demand: ment’s working majority. It suggests cheaper food, he said: “I want hormone- ‘We cannot migrants, telling the event: “When you ous month, according to the BRC data. It
luminaries of the Conservative right, from left, Liz that the group could threaten to defeat injected beef from Australia. I’ve eaten walk into a town centre sometimes it reached a peak of 17.8 per cent in April.
including Dame Priti Patel and Sir Jacob Truss, former the government — if it acts as a bloc — in beef in Australia, it was absolutely deli- be timid feels like you’re living in a foreign coun- The level of inflation for ambient food
Rees-Mogg, speak. environment any forthcoming rows over legislation, cious.” any more, try. I don’t think that makes you a xeno- — items that can be stored at room tem-
A queue to gain access started snaking secretary Ranil neutering Sunak’s ability to manoeuvre. Patel, former home secretary and phobe.” perature — remained in double digits
around the bar outside an hour before Jayawardena, The development is likely to give longtime favourite of the Tory grass- we cannot Centrist MPs in the One Nation cau- last month at 10.4 per cent but was
the event began. Prominent Brexiter Priti Patel Downing Street pause for thought as it roots, made a string of veiled criticisms be risk cus have been at pains to stress their down from its 13.1 per cent peak in May.
Nigel Farage, the former leader of Ukip, and Jacob draws up its legislative programme for of Sunak. “We cannot be timid any influence over the party as a counterbal- According to official figures, food and
was among those attending. Rees-Mogg the next session of parliament, which more, we cannot be risk averse and we averse and ance to the volume of the right. Damian non-alcoholic beverage inflation fell to
Charlie Bibby/FT
The buzz at the fringe event con- will be announced in the King’s Speech cannot accept the status quo,” she said, we cannot Green, chair of the group, told The 13.6 per cent in August from 14.8 per
trasted with a muted atmosphere and on November 7. adding: “Politicians in this country are House magazine that it boasted 80 cent in July, after hitting a 45-year high
rows of empty seats in the main audito- Yesterday Truss urged Sunak to just accepting big government and we accept the members, outnumbering the member- of 19.2 per cent in March. The BRC fig-
rium during speeches given by cabinet shrink the state and tear up planning cannot have that.” status quo’ ship of the Growth Group. ures, which precede the government’s
ministers on Sunday and yesterday. rules to bolster development, alongside The New Conservatives, a grouping of Fellow centrist Matt Warman was also statistics, suggest the slowdown in infla-
In a jibe directed at Sunak, activists at her central demand for the government rightwing Tory MPs from the 2019 Priti Patel due to use a platform at a fringe event tion will continue this month.
the growth rally were reminded that to cut corporation tax to 19 per cent in intake who are seeking to carve out their yesterday to tell activists: “When we’ve But despite the drop, food inflation in
Truss had been elected leader by the the autumn statement in November. own identity, later hosted a co-ordi- won elections it’s from the centre the UK was still much higher than in the
party membership. The current prime Rees-Mogg called for the abolition of nated rally. They announced their own ground.” US, where it stands at 4.3 per cent, and
minister was chosen by MPs in an expe- inheritance tax, condemning the “hor- demand for a tax cut, calling for the Many MPs described the mood of the in the eurozone, where it is 8.8 per cent.
dited contest that bypassed the grass- ror of death duties”, while talking up the value added tax threshold to be raised conference overall as “flat”. One Dickinson said she expected that shop
roots’ vote. idea of a flat rate of income tax, a pro- from £85,000 of a business’s turnover to reflected: “We’ve all been out on the price growth would ease over the rest of
The activists also heard that the posal he acknowledged had been “too £250,000, and argued for a ban on the doorstep and things are very tough — the year but warned this was subject to
number of Tory MPs in Truss’s right- radical even for Liz Truss” in office. inclusion of “gender ideology” in that’s true of every part of the country. “many risks”, including “high-interest
wing Growth Group, set up to promote Tariffs and checks on food imports schools and a cut in legal migration. That’s why the mood isn’t zingy.” rates, climbing oil prices, global short-
tax cuts and deregulation, had swelled should also be scrapped, the former Tom Hunt, one of the group’s mem- The energy at Truss’s rally, by con- ages of sugar, as well as the supply chain
to 60, the same number as the govern- business secretary suggested. Calling for bers, called for a public vote on quotas of trast, clearly stood out. disruption from the war in Ukraine”.

Nationwide figures

House prices drop in every region for first time since 2009
MAKE A WISE VALENTINA ROMEI their take-home pay on their monthly mortgage rate rose to the highest level some of the pressure on those remort-
INVESTMENT House prices fell across all UK regions
mortgage payment — well above the since 2008. gaging or looking to buy a home.”
long-run average of 29 per cent. But markets and most economists Graham Cox, of broker SelfEm-
Subscribe today at for the first time since 2009 in the three
The rise in mortgage payments fol- now expect the BoE will not raise inter- ployedMortgageHub.com, said because
ft.com/subscribetoday months to September as high mortgage
lows the Bank of England’s increase in est rates again after inflation fell more house prices were expected to fall fur-
rates hit the property market, accord-
interest rates from a record low of than expected in August. ther, many buyers had decided to “put
ing to Nationwide.
0.1 per cent in November 2021 to the The reassessment of interest rate things on hold and wait for house prices
The average house price was 4.7 per cent current 5.25 per cent. expectations “has put downward pres- to become even more competitive”.
FINANCIAL TIMES Reproduction of the contents of this newspaper in lower in the third quarter than in the Last week, BoE data showed that sure on longer-term interest rates which He added: “With both mortgage rates
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Editor: Roula Khalaf The Financial Times and its journalism are subject to cent, but many regions, including Wales Q3, annual % change house price was unchanged between
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© Copyright The Financial Times Limited 2023. All ical first-time buyer home with a 20 per downturn in house prices probably has
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Tuesday 3 October 2023 ★ FINANCIAL TIMES 3

NATIONAL

Scotland turns
Child poverty rates
% of children in relative poverty after
housing costs, 2020 to 2022
0 10 20 30

pioneer in
England

Wales

cutting child
Scotland

Northern
Ireland

deprivation
Rolling average for financial years ending 2020
to 2022. Children defined as under-16s
Source: gov.wales

gramme, opinion over whether it

should be made permanent was divided
and was ultimately scrapped.
The UK government has been criti-
Welfare payment reduces under-16 poverty cised over its cap on welfare support
payments for children, which restricts
in boost for crisis-hit SNP before by-election tax credit and universal credit to the
first two children in a family.
LUKANYO MNYANDA — EDINBURGH Quinn’s six-year-old son is one of The UK government said: “Since
AMY BORRETT — LONDON
316,000 children who have benefited 2010, 400,000 children have been lifted
For Bonnie Quinn, a cash payment of from the payment, which Edinburgh out of absolute poverty after housing
£25 a week has proved to be a lifeline said has helped to lift about 90,000 chil- costs. Around 7mn families across the
during the cost of living crisis. dren from poverty this year. UK, including Scotland, receive child
A single mother from Polbeth, south Paid in addition to other welfare ben- benefit payments.”
west of Edinburgh, the Scottish child efits received by families with children The devolved government in Edin-
payment has enabled her to afford under 16, the payment means a four- burgh has a target to cut the number of
packed lunches for her son, who rejects child family is entitled to £5,200 a year Cash lifeline: government commission on inequality Meanwhile, Child Poverty Action ‘It moves children living in families in relative
school meals because of his autism, and that is not available to peers in England. Bonnie Quinn, and poverty. “This is a game-changer Group said the child payment needed to poverty, defined as those whose income
travel to her job as a catering assistant. Each child (under 16) resident in at work in a food for Scotland.” increase to at least £40 for Scotland to Scotland is below 60 per cent of the UK median,
“[It] has really helped just for me to Scotland is entitled to £25 a week on top bank, is grateful But some campaigners and charities meet its interim child poverty target. from being to fewer than 18 per cent in 2023-24,
be able to get to work and make sure of a “qualifying” welfare benefit, such as for the Scottish have said Scotland’s first minister, Scotland’s child poverty rates were from 24 per cent. For 2030, the target is
that my little boy had everything when I universal credit or income support. child payment Humza Yousaf, is not doing enough to 6 percentage points lower than the rest one of the less than 10 per cent.
was at work,” Quinn said of the govern- The child payment was introduced in that enables her meet his poverty-reduction pledges. of the UK in 2019-22, according to the most While Edinburgh expects to miss its
ment assistance she has received since 2021 at £10 a week per child, and is one to afford packed Magic Breakfast, a group that pro- Scottish government. target next year, with the poverty rate
2021. “It has definitely been a lifesaver.” of seven welfare benefits specific to lunches for her vides breakfast clubs, criticised Yousaf’s Data from the Welsh government unequal falling to 19 per cent, it estimated the
Supporters of the programme say the Scotland. It was raised to £20 in April autistic son. government for not implementing a showed that England had the highest places to figure would stand at 28 per cent with-
money is reducing deprivation among 2022 and to £25 in November. Below, pledge, made in 2020, to provide free child poverty rate in 2020-22 at 31 per out its policy interventions.
Scottish children to levels below the rest Supporters of Scottish independence Morag Treanor morning meals to all primary school cent, compared with 24 per cent in Scot- live in Danny Dorling, a professor of geogra-
Jeremy Sutton-Hibbert/FT
of the UK. They also say the initiative believe its success is an example of how children. land and 28 per cent in Wales. Northern Europe for phy at Oxford university, said the
could act as a model for cash disburse- the country could do things differently if Ireland’s rate was 22 per cent. child payment would lower the Gini
ments in combating poverty globally. it broke with the UK. This divergence is expected to widen a child to coefficient, a statistical measure of
But few people outside of Scotland Evidence that the payment, which further due to the child payments and being one inequality, for children in Scotland
were aware of the “bold policy interven- will cost the government £405mn in other Scotland-specific welfare policies, to 0.25 this year, from 0.33 before
tion”, said Liz Ditchburn, honorary pro- 2023-24, according to official estimates, according to Edinburgh. of the the support was increased to £25 in
fessor at the Adam Smith Business is cutting poverty could boost the In the US, the child tax credit, a simi- most equal’ November.
School, Glasgow university, and an ex- chances of the crisis-hit Scottish lar scheme that was part of the Biden “This might not sound like a large
civil servant who held senior roles with National party at the UK parliamentary administration’s pandemic response, shift, but it moves Scotland from being
the Scottish and UK governments. by-election this week in Rutherglen and was welcomed by policy experts. one of the most unequal places to live in
“I’ve lost track of the number of times Hamilton West. Introduced in July 2021, the monthly Europe for a child to being one of the
I’ve mentioned the Scottish child pay- “Levels of child poverty in Scotland direct payment of up to $300 a month most equal — in just 12 months,” he said.
ment to colleagues and friends based will drop faster [and] further than they per child was hailed by analysts as a The SNP hopes that the policy will
elsewhere in the UK . . . and been told will in the rest of the UK, particularly remarkable success that kept almost improve perceptions of its competence
they’ve never heard of it,” she wrote in a England, because of this payment,” said 4mn children out of poverty, according after 16 years in office and a recent crisis
blog posted by the David Hume Insti- Morag Treanor, professor at Glasgow to Columbia University research. linked to a police investigation into its
tute, a think-tank. university and former deputy chair of a But despite support for the pro- finances.
4 ★ FINANCIAL TIMES Tuesday 3 October 2023

INTERNATIONAL

Latin America German-Italian tensions

Massa pledges Argentina unity government Musk joins

heated debate
Polls show Peronist party “If I am president, you can be sure we
will call up the best people, whether
playing an identity that today is much
diminished among voters.”
state and replace the peso with the US
dollar. “The other candidates are talk-
accumulating [foreign exchange]
reserves”. He criticised Milei’s dollarisa-
over transfer
candidate trailing rightwing
radical in presidential race
they come from [Bullrich’s Juntos Por el
Cambio], or even Javier Milei’s party,”
Ana Iparraguire, a partner at Wash-
ington strategy firm GBAO, said Massa
ing to you about a model that has been
drowning us for a hundred years,” he
tion plan as “planting another flag on
our central bank”.
of migrants
CIARA NUGENT — BUENOS AIRES
he said during a televised debate on
Sunday.
Analysts said that Massa, Argentina’s
was “already thinking about facing off
with Milei in a second round in Novem-
ber”, a scenario that would take place if
said during the debate.
Massa, who hails from Peronism’s
moderate wing, has previously been a
As a minister, Massa has resorted to a
web of currency controls and the rollo-
ver of growing government debt to keep
rescued at sea
Sergio Massa, the presidential candidate economy minister, was attempting to they emerge as the two most voted can- strong critic of Cristina Fernández de Argentina’s fragile economy afloat.
for Argentina’s populist ruling coalition, distance himself from the populist Per- didates but neither gets above 40 per Kirchner, the movement’s de facto He has unnerved economists with GUY CHAZAN IN BERLIN AND
AMY KAZMIN — ROME
says he will seek to build a “national onist movement, which many voters cent on October 22. leader and current vice-president. As measures to put money in voters’ pock-
unity government” with opposition pol- blame for Argentina’s worst economic “He is trying to reach out to all those president from 2007 to 2015, she dra- ets before the election, including bil- Elon Musk has become embroiled in a
iticians if he wins this month’s election. crisis in 20 years, and position himself who would feel unrepresented in that matically expanded the state and imple- lions of dollars of cash handouts and a public dispute with Germany’s foreign
Massa, who is polling in second place for a potential run-off clash with Milei. situation, particularly moderate Juntos mented populist policies that made her law exempting all but 1 per cent of regis- ministry over the country’s policy of
behind hard-right radical libertarian He was “trying to become a change por el Cambio voters who might be a controversial figure for non-Peronist tered workers from income tax. helping organisations that rescue
Javier Milei and just ahead of establish- candidate”, said Lucas Romero, director afraid of Milei,” she added. voters and business leaders. The schemes are expected to aggra- migrants in the Mediterranean Sea and
ment rightwing candidate Patricia Bull- of Argentine consultancy Synopsis. “He Milei, an eccentric former television On Sunday, Massa said he wanted to vate price pressures — annual inflation bring them to Italian shores.
rich, said he would aim to include mem- is saying his government won’t strictly personality, has promised a sweeping move “towards economic modernity, hit 124 per cent in August — and widen
bers of their parties in his government. be a Peronist government, and down- plan to “take a chainsaw” to Argentina’s obviously with fiscal balance, obviously Argentina’s fiscal deficit. The argument began last Friday when a
far-right social media account called
RadioGenoa wrote on X, the platform
formerly known as Twitter and owned
US sanctions. Domestic compliance by Musk, that German NGO ships in the
Mediterranean were “collecting illegal
immigrants to be unloaded in Italy”. It

‘Russian agent’ saga tests Georgia’s ties to west said the NGOs were “subsidised by the
German government”.
Musk reposted the message, adding:
“Is the German public aware of this?”
The foreign ministry responded: “Yes.
of the bank’s vice-presidents resigned. And it’s called saving lives.”
Failure to freeze assets creates The political atmosphere in Georgia The billionaire replied, saying: “So
tension amid Tbilisi’s desire remains tense as the nation awaits Brus- you’re actually proud of it. Interesting.
sels’ decision on whether to grant the Frankly, I doubt that a majority of the
to become member of EU country EU candidate status, as it did German public supports this. Have you
last year for Ukraine and Moldova. run a poll?” He went on: “Surely it is a
EU concerns over democratic back- violation of the sovereignty of Italy for
NADIA BEARD — TBILISI
sliding, corruption and oligarchisation Germany to transport vast numbers of
Georgia’s reluctance to freeze the assets consigned Georgia to the slow lane of illegal immigrants to Italian soil? Has
of a former official accused by the US of accession, with the European Commis- invasion vibes . . . ”
being a Russian agent is further testing sion granting it only the “conditional Musk’s tweets come amid rising anger
Tbilisi’s ties with the west. perspective” of being granted candidate in Italy’s rightwing coalition govern-
The US Department of State has status dependent on it passing reforms. ment over Berlin’s funding of humani-
added Otar Partskhaladze, who briefly Instead of focusing on judicial and tarian groups conducting search-and-
served as Georgia’s chief prosecutor, to economic reforms, authorities have rescue missions in the Mediterranean,
its sanctions list, citing help he allegedly begun a campaign against an alleged as Rome struggles to cope with a surge of
received from Russia’s FSB security pro-western plot to topple the govern- migrants arriving from north Africa.
service in becoming a Russian citizen ment. Last week, the intelligence serv- Prime Minister Giorgia Meloni
and saying that, in return, he had agreed ice announced without providing evi- believes such charities encourage more
“to influence Georgian society and poli- dence that they uncovered coup plans migrants to undertake the dangerous
tics for the benefit of Russia”. by former officials who had served crossing, and her government has tried
After initially backing the asset freeze under pro-western president Mikheil to restrict their operations.
that the sanctions entail, Georgia’s cen- Saakashvili and a commander currently In a letter to German chancellor Olaf
tral bank changed its compliance rules, fighting against Russia in Ukraine. Scholz last week, Meloni expressed
in effect shielding Partskhaladze. Three “They do this all the time when there’s shock and dismay at Berlin’s renewal of
senior bankers resigned in protest at the a crisis in the country,” said Eka Gigauri funding for the organisations at a time
changes. A virulent domestic debate of Transparency International Georgia. when Rome was already dealing with
ensued on why the ruling Georgian “The government creates stories like “exceptional migratory pressure”.
Dream party was seemingly prepared to this before elections, for example, and More than 133,000 migrants have
protect figures linked to its founding oli- says this or that western country, or arrived in Italy by crossing the Mediter-
garch, Bidzina Ivanishvili, at the Ukraine, are helping people destabilise ranean so far this year, up from 71,000
expense of alienating its international the country. It’s a story aimed at sustain- in the same period last year.
partners. ing their supporters.” Meloni’s letter argued that migrants
“No one believes that the central bank Still, the public remains pro-western, rescued by German-funded charities
is independent. It’s part of the govern- with latest polls showing 90 per cent of should be taken to Germany, and said
ment,” said Alexandre Rakviashvili, an respondents in favour of EU integration. Berlin’s policies had “the direct effect of
economist and MP for Girchi a libertar- Change of rules: ladze was acquitted of the allegations The National Bank of Georgia’s U-turn The central Georgian Dream came to power in multiplying the departure of precarious
ian party. “Partskhaladze is a very people protest by Tbilisi City Court. came soon after Georgian Dream chair 2012 as part of a coalition that ousted boats, which not only increases the bur-
important person in our country,” he at the central The state department described Part- Irakli Kobakhidze publicly warned bank stated Saakashvili, whom they have incarcer- den for Italy but increases the risk of
added. “He was prosecutor-general and bank in Tbilisi skhaladze as a “Georgian-Russian oli- against freezing Partskhaladze’s assets. that assets ated since his return to the country in new tragedies at sea”.
has close ties with Ivanishvili.” against the garch” who “routinely travels to Russia” The bank changed its rules on sanctions 2019, with the former leader decrying Berlin has its own conflict with Rome,
In 2016, Ivanishvili said that his son, decision not to and obtained a Russian passport with compliance, stating that assets of Geor- of Georgian detention conditions and staging hun- which it accuses of failing to properly
Bera, was godfather to Partskhaladze’s freeze the bank the help of the FSB. Two Russian com- gian nationals would be frozen only if nationals ger strikes that have left him emaciated. register many of the migrants who
grandson. While he no longer has a for- accounts of Otar panies partly owned by Partskhaladze they were indicted by local courts. Unlike most other EU candidate travel on to Germany. Last month, the
mal political role, Ivanishvili is still con- Partskhaladze were also added to the sanctions list. Natia Turnava, the central bank’s act- would be countries, Georgia has refused to join German government briefly suspended
Davit Kachkachishvili/
trolling Georgian Dream, analysts say. Anadolu Agency/Getty
Partskhaladze could not be reached ing president, defended the decision frozen only western sanctions against Russia follow- an ad hoc deal to alleviate the burden on
The oligarch accrued much of his for comment. and said it was a “better way” of imple- ing its invasion of Ukraine. Instead it has Italy by taking in some of the people res-
wealth in 1990s Russia and from his 1 menting international sanctions. if they were resumed direct flights between Tbilisi cued in the Mediterranean.
per cent share in Russian energy giant 200 km “We found out that there might be indicted by and Moscow, welcomed Russian émi- German politicians reacted with
Gazprom. His wealth is estimated at Kyiv some gaps and non-compliance grés and sought to push through a Rus- anger to Musk’s intervention. Erik Mar-
$6.2bn, about a third of Georgia’s entire between local legislation and the mech- local courts sian-style foreign agents law that would quardt, a Green member of the Euro-
gross domestic product. Ivanishvili did KAZ anism of automatic implementation of target non-government organisations pean parliament, asked him on X: “Why
UKRAINE
not respond to a request for comment. MOLDOVA sanctions,” Turnava told the Financial and media critical of the government. are you spreading lies? Only 8% of the
Partskhaladze, appointed by Geor- Times. She said the legal framework “It seems that Georgian Dream has to migrants are rescued by NGOs. It’s a far-
Chișinău Sea of
gian Dream, resigned in 2013 after six RUSSIA “may need some fine tuning with pretend to move forward with the EU right conspiracy theory.”
Azov
weeks in office as chief prosecutor, amid regards to Georgian citizens”. bid because the population is so There was also concern that the
revelations he had a criminal record in ROMANIA In July, the IMF delayed its approval of pro-EU,” said Sonja Schiffers, South RadioGenoa post endorsed by Musk
Germany. He made a written statement the second tranche of a $289mn loan, Caucasus office director at the Heinrich backed the Alternative for Germany
Black Sea
that he was found guilty by a German BULGARIA citing concerns about changes to the Boell Stiftung, a German think-tank. (AfD), a far-right party. “Let’s hope AfD
court for having a “verbal altercation” GEORGIA Tbilisi bank’s management structure. Turnava “They can’t openly turn back on Europe wins the elections to stop this European
with a policeman. He was charged in confirmed that the IMF had suspended without risking large protests, but so suicide,” it said, apparently a reference
2018 for assaulting the former head of TURKEY ARMENIA AZE the programme and said that additional much of what we see doesn’t help their to crucial regional elections in Bavaria
Georgia’s audit body. In 2021, Partskha- questions had been raised after three EU bid at all.” and Hesse next Sunday.

Central bank

‘Last mile’ of disinflation the hardest, warns ECB deputy head

MARTIN ARNOLD — FRANKFURT fallen more than economists expected he said. “If the transmission is much “After four years without EU fiscal
to 4.3 per cent in the year to September. closer to completion, then we should rules, governments may have got used
Luis de Guindos has dismissed talk of
Most economists think the eurozone consider the next steps to guarantee to a little bit of a ‘whatever it takes’
rate cuts by the European Central Bank
economy is likely to shrink in the third that inflation converges to our target.” approach with respect to fiscal policy,”
as “premature”, warning that hurdles
quarter, contributing to a cooling of The cost of borrowing has shot up and said de Guindos. “But that has to
over “the last mile” of bringing infla-
price pressures, making the ECB demand for loans has fallen — private change. Having a tightening of mone-
tion back to rate-setters’ 2 per cent tar-
unlikely to raise rates further. sector lending in the eurozone rose 0.6 tary policy and, simultaneously, an
get will be tough to overcome.
Yet bond markets sold off heavily last per cent in August, the slowest annual expansionary fiscal policy would be a
The vice-president of the ECB has, along week, sending government borrowing pace for eight years. But he said there very bad policy mix.”
with other members of the bank’s gov- costs to their highest level since was “much more uncertainty” over how The sharp increase in interest rates
erning council, been grappling with a Europe’s debt crisis more than a decade fast this is transmitted to households has caused property prices to fall in
surge in inflation that has forced them ago, as investors fretted about signals much of Europe, which de Guindos said
to raise the deposit rate to a high of 4 per from central banks that they will keep was “our main source of concern in
cent. While price pressures are at a two- rates high for a prolonged period. Luis de Guindos: terms of financial stability”.
‘The elements that
MAKE A WISE INVESTMENT year low, De Guindos told the Financial
Times the recent surge in oil prices
De Guindos’s remarks signal eurozone
interest rates will remain high for some
might torpedo the
disinflation
Some ECB council members have
called for a faster reduction of so-called
would “make our task more difficult”. time yet. He said the “crucial” factor process are “excess liquidity” in the banking sys-
“We are on our way towards 2 per determining the ECB’s next move was powerful’ tem, which has fallen but remains high
Choose the Financial Times subscription for you cent, that is clear,” said de Guindos. “But the speed with which its policy tighten- at about €3.7tn. These reserves inflict
• React to trusted global news everywhere you we must monitor that very closely, as ing is transmitted from banks and bond and companies as many have locked in losses on national central banks, which
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• Get the iconic FT newspaper delivered to your ments that might torpedo the disinfla- Changes to monetary policy usually impact of the ECB’s policy tightening. One way to address this is to increase
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• Enjoy our award-winning lifestyle journalism Along with oil, rapid wage growth, a year, meaning much of the impact from higher government spending. Last required to hold at the ECB, on which
with FTWeekend weaker euro and resilient demand for the ECB’s tightening could lie ahead. But week, Italy and France outlined plans to they receive no interest. But De Guindos
services could also keep inflation high. if policy transmission has been rapid run bigger than expected fiscal deficits pushed back on this idea, saying: “My
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“This is, at the end of the day, a very and inflation stays high, the bank might above the EU rule limiting them to 3 per opinion is that we should conduct mon-
delicate balance,” he said, speaking a need to take further action on rates. cent of output, which has been sus- etary policy based on price stability, not
few days before eurozone inflation data “If the transmission is incomplete, pended since the pandemic but is due to on the profit and loss of national central
was released on Friday showing it had then we should be a little more patient,” come back into force next year. banks.”
Tuesday 3 October 2023 ★ FINANCIAL TIMES 5

INTERNATIONAL

German manufacturers resist

Kurdish militants

Turkey detains 20 linked to

Ankara suicide bombing
trade tension in China enclave ADAM SAMSON — ANKARA
AYLA JEAN YACKLEY — ISTANBUL
denies having any links to the PKK.
The Ankara suicide bombing came on
Turkish authorities have detained 20 the same day as parliament was recon-
Mittelstand companies seek to withstand rising competition and slower growth people with alleged links to the Kurd-
ish militant group that claimed respon-
vening from its summer recess. Recep
Tayyip Erdoğan, president, called the
sibility for Sunday’s suicide bombing of attack “the last stand of terrorism.
a government building in Ankara. These cowards who threaten the peace
and security of our citizens have not and
More than two dozen “operations” were will never attain their aims.”
carried out in Istanbul and Kırklareli, a The “Immortals Battalion”, a unit of
city in Turkey’s far north-west, interior the PKK, claimed responsibility for the
minister Ali Yerlikaya said yesterday. attack, according to ANF News, a media
The arrests come a day after two sui- outlet with ties to the separatist group.
cide bombers attacked the interior min- Turkish authorities later said that at
istry in a busy part of the capital that is least one of the attackers was a member
home to many government buildings. of the PKK.
One of the individuals blew himself up The PKK, which the US, EU and Tur-
while the other was shot dead by police, key designate a terror group, said the
authorities said. Two police officers incident was timed to coincide with the
were wounded. opening of parliament, according to
The Kurdistan Workers’ party (PKK), ANF.
which has fought a violent insurgency in Security was a big campaign issue in
Turkey for decades, said it carried out May’s general election, with Erdoğan’s
the attack. In response, Turkish armed fiery rallies often featuring references to
forces launched overnight air raids his fight against the PKK, Isis and a reli-
against 20 PKK targets in northern Iraq, gious network that Turkey blames for a
where the group is based. 2016 coup attempt.
A provincial spokesperson and dis- Sunday’s attack comes less than a
trict presidents for the pro-Kurdish Peo- year after a bombing in a commercial
ples’ Democratic party (HDP) were district of Istanbul that killed six and
among those arrested, according to Yer- injured dozens. Turkey says that attack
likaya. Turkey claims the HDP is the was ordered by Kurdish groups affili-
political wing of the PKK and has jailed ated with the PKK. Isis and far-left mili-
thousands of its supporters. The HDP, tants have also staged bombings in Tur-
Turkey’s third-biggest political party, key in the past.

Home from home: Taicang, a city

50km from Shanghai, has become a Vaccine
favoured place to invest for German
businesses seeking growth in China
Wang Xueqiao/FT
Oxford university malaria shot
THOMAS HALE AND WANG XUEQIAO they still produce because they produce intense scrutiny. The European Com- nese competition was “stronger and will
for children approved by WHO
TAICANG
for the Chinese market,” she said. “It mission, the EU’s executive arm, last get stronger in future”.
With its steep red-tiled roofs, signs really depends on [the] industry.” month announced a probe into Chinese But he argued that “Germany is very
pointing to the Bierplatz and loudspeak- Germany’s presence in Taicang dates electric-vehicle makers’ cheap imports, well positioned to keep the high-value DONATO PAOLO MANCINI — LONDON through Gavi, the global vaccine alli-
ers playing The Blue Danube, Taicang’s back to a visit in 1993 by Hans-Jochem prompting fears of a response from chain under control to a certain extent”. ance, the highest ever demand for any
The World Health Organization has
new town square feels like a version of Steim on behalf of Kern-Liebers, a Black Beijing. Taicang had “always managed to jab in the first year after applications
approved a malaria vaccine made by
Germany from someone’s imagination. Forest-headquartered supplier to the Beyond the sudden shock of more reg- develop new industry”, he added, point- were opened, said Mary Hamel, the
Oxford university that has shown sus-
Over 30 years, this city 50km from automobile, textile and consumer ulatory interventions, German and ing to opportunities in China’s aero- WHO’s team lead for malaria vaccines.
tained protection in children, marking
Shanghai has become a favoured place industries. Steim opened a factory and other foreign businesses now also face space sector. Oxford university said SII had
a turning point in the treatment of the
to invest for German businesses seeking more companies followed. “I never saw greater competition from within China. Whatever the geopolitical tensions at “already” established annual produc-
disease.
growth in the world’s second-largest a town growing so quickly . . . as Tai- Willi Riester, the chief technology international level, Taicang’s authori- tion capacity of 100mn doses, which
economy. Many are family-owned and cang,” he said on a return visit this year. officer in China at Chiron, a family-run ties — as with other local governments Tedros Adhanom Ghebreyesus, the would be doubled over the next two
highly specialised Mittelstand busi- Richard Zhang, who worked for Kern- maker of machine tools, said that 15 in China — are still trying to attract more WHO’s director-general, said yesterday years. “This scale of production is criti-
nesses of the type that have powered Liebers and is now head of the Taicang years ago local competition was rare and foreign investment. They aim to address that the health body was recommend- cal because vaccinating those at high
German exports and built the country’s Roundtable, a group of more than 100 “not really able to produce and engineer a slide in confidence and new overseas ing a second vaccine for widespread use risk of malaria will be important in
reputation for high-end manufacturing. largely German businesses, said the machines at our level, at that time”. funding that arose under Covid restric- in preventing malaria in children.
Today, business ties between Ger- town — which as of 2019 had a popula- Today, “we have more and more local tions and has persisted months after “As a malaria researcher, I used to
many and China are frayed, with Berlin tion of half a million — was attractive in they were brought to an end. dream of the day we would have a safe The R21/Matrix-M
vaccine was shown
warning of the need to “de-risk” expo- part because of its smaller size. A Taicang government delegation has and effective vaccine,” Tedros said.
sure. In China, a heightened focus on German companies here “are used to
‘I have the feeling everyone been to Germany twice in the past year, “Now we have two.”
to reduce cases
by 75% in people
national security has increased scrutiny life in this kind of small town”, he said. is trying to get back to the according to Bossek, including a trip to The approval of R21/Matrix-M adds a in the year after
of foreign companies across various sec- “If you come to Taicang [and] you have Stuttgart, the headquarters of some highly effective shot to the range of three doses
tors, adding to a sense that collaboration a problem, you can go to the mayor. If
good business relationship prominent German companies includ- treatments for malaria. The WHO rec-
with Beijing is transitioning into rivalry. you go to Shanghai and you have a prob- they had before [Covid]’ ing Mercedes-Benz. ommended the GSK-produced stemming the spread of disease, as well
But more than 400 German compa- lem, you can wait in [a] long queue.” “I have the feeling everyone is trying RTS,S/AS01, which Tedros said showed as protecting the vaccinated,” it added.
nies clustered in Taicang show the inter- But Zhang admits that businesses in competition”, he said. “There will in to get back to the good business rela- similar efficacy to the Oxford shot, for The decision to approve the drug was
dependence that persists between the city have suffered this year as China future still be a hub of German compa- tionship they had before [Covid],” she widespread use in 2021. based on input from the WHO’s strate-
China and Europe’s largest economy struggles to bounce back from the pan- nies, but there will be more and more said. The latest vaccine will now be rolled gic advisory group of experts on immu-
even as geopolitical tensions worsen. demic, with growth slowing and con- Chinese [companies].” But Sommer said it was now clear that out to the countries in sub-Saharan nisation and its malaria policy advisory
“Companies are not leaving Taicang sumer confidence fragile. Only two of Chiron’s 190 employees in political differences would continue Africa where children are at the greatest group. They reviewed evidence showing
as far as I know,” said Marieke Bossek, “It’s not a very good time in terms of Taicang are German. Riester said the between China and the west — and sug- risk from malaria. Oxford university the shot reduced symptomatic cases by
head of the German Centre for Industry business, in terms of overall econom- company’s local research and develop- gested businesses from Germany and has a manufacturing agreement with 75 per cent in the year after three doses
and Trade in the city. “The general man- ics,” he said. A European Chamber of ment department, made up of Chinese elsewhere would have to accommodate the Serum Institute of India (SII). of the vaccine, with a fourth dose shown
agers here, they continue their business Commerce report released last month staff, had gained an edge over the Ger- those differences. Tedros estimated the vaccine would to maintain protection.
not thinking about leaving.” noted that “many companies experi- man headquarters in the field of electric “The system of China will not open up cost $2-$4 per shot, which he described Malaria killed more than 600,000
Still, Bossek noted that some of those enced an outflow of foreign workers” vehicles, where China is now the world’s in a way that we westerners would like as “comparable to other malaria inter- people worldwide in 2021, 96 per cent of
companies’ headquarters were hesitant during the pandemic. leading producer. to see, in particular in regard to politics,” ventions and other childhood vaccines”. them in Africa. Children under five
over further investment. “Some compa- A large number of German companies Christian Sommer, head of the Ger- he said. “So now we have to simply Eighteen countries had expressed accounted for four-fifths of all deaths
nies, they hold back investment because in the city are also part of an automotive man Centre for Industry and Trade in acknowledge [how we co-operate] in a interest in procuring the vaccine from malaria in the region.
they want to see where it’s going, others supply chain that has come under Shanghai, also acknowledged that Chi- world with diff ,erent systems.”

Coronavirus
Munich. Annual event
Scientists whose work led to
Glasses raised at Oktoberfest despite economic woes mRNA jab win Nobel Prize
tative post-pandemic recovery. And the said Stefan Kooths, director at the Kiel Inflationary pressures also appear to
High interest rates and rising outlook remains gloomy. A joint fore- Institute for the World Economy. “That be easing, with the annual rate plunging CLIVE COOKSON — LONDON manipulated and delivered to human
prices fail to deter Germans cast by the country’s leading economic means more purchasing power will flow to 4.3 per cent in September, its lowest cells in a stable form.
Katalin Karikó and Drew Weissman
think-tanks last week predicted gross to private households and that will in level in two years. In August, it was They worked out how to prevent the
have won the Nobel Prize in Medicine
as purchasing power grows domestic product would shrink 0.6 per turn boost consumption-related sectors 6.4 per cent.
for discoveries leading to the messen-
immune system from destroying
cent this year. In the spring, they said it of the economy.” This year’s Oktoberfest offers evi- mRNA, so that its instructions to make
ger RNA vaccines that played the most
GUY CHAZAN — MUNICH would actually grow by 0.3 per cent. Numbers released in August showed dence of the brightening mood. By its useful proteins could be applied in phar-
important role in the scientific battle
Oliver Holtemöller, of the Halle Insti- German wages rose at a record annual halfway point, some 3.4mn people had maceutical and vaccine development.
against the Covid-19 pandemic.
A litre of beer has never cost so much at tute for Economic Research, said Ger- pace of 6.6 per cent in the second quar- attended the Wiesn, as it is known Their most important research paper
Munich’s Oktoberfest. But that is not man industry and private consumption ter, the highest rate of increase since locally, 100,000 more than in 2019, The two laureates shared the SKr11mn initially attracted little scientific atten-
deterring the crowds, whose willingness were recovering “more slowly than we such records began in 2008. when guests spent an eye-watering ($1mn) prize for their “contribution to tion on its publication in 2005, the
to shell out €14.40 on a Maß of pilsener expected in the spring”. That boosted annual wage growth €1.25bn on its drinks, food and fair- the unprecedented rate of vaccine Nobel committee said, but interest
offers vital clues about consumer confi- Stubbornly high inflation, the above the consumer price inflation rate ground rides. The Wiesn attracted 1mn development during one of the greatest picked up after follow-up studies in
dence in Europe’s largest economy. researchers said, was hurting ordinary for the first time since 2021. Household visitors on the first weekend, compared threats to human health in modern 2008 and 2010. Several biotech compa-
Jörg Biebernick, chief executive of citizens, rising interest rates had crip- incomes appeared to be finally catching with just 700,000 last year. times”, the Nobel Assembly in Stock- nies began to work on vaccines against
Paulaner, one of Germany’s largest pled the construction industry and up with the cost of living. “Private con- The contrast to 2022 is stark. “Last holm said yesterday. viral infections — culminating in the
breweries, learnt the hard way how big uncertainty caused by the government’s sumption has been very weak and that year was the most terrible weather in The work by Hungarian scientist successful rush to produce Covid jabs
the Oktoberfest is this year. He tried to erratic energy policies was souring the has caused real problems in the past, my experience,” said Andreas Steinfatt, Karikó and her US counterpart Weiss- that were approved by regulators in the
get a table for a group of friends on a mood in boardrooms. especially around the turn of the year,” Paulaner’s head of trade, marketing and man led directly to the rapid develop- winter of 2020-21.
recent evening and was told he had no But there was one ray of light: German said Kooths. “But that’s changing now.” regional brands. “It rained on 14.5 of the ment of mRNA Covid vaccines by Mod- According to Airfinity, a UK-based
chance. “The tents are all fully booked,” purchasing power, the think-tanks said, 17 days, and the temperature never rose erna and BioNTech/Pfizer during 2020. health analytics company, 5.5bn doses
he said. “And this despite inflation.” was growing. Energy prices had fallen above 12 degrees. You needed to wear These vaccines prevented millions of of mRNA Covid vaccines have been
Biebernick was speaking in the from their 2022 highs and export prices scarves.” deaths and played a big role in stem- administered worldwide to date, with a
Paulaner tent, a vast hall in Munich’s had risen strongly, showing companies This year, Munich is enjoying an ming the tide of coronavirus infections, total sales value of $117bn.
Theresienwiese fairground that daily were succeeding in passing on price Indian summer — but prices are at helping authorities end the range of The impressive flexibility and speed
dispenses thousands of litres of beer to increases to international customers. historical highs, and brewers say they restrictions on social activity during the with which mRNA vaccines could be
revellers, many of them clad in Lederho- The most important factor, however, have no choice but to pass on higher pandemic. developed has paved the way for the
sen and Dirndls. By midday, tables were was rising wages. Incomes in general are input costs. Karikó, 68, and Weissman, 64, dis- potential use of the technology to pro-
already filling up and the oompah bands set to grow, largely thanks to a basic However, no one seemed bothered by cussed collaboration after meeting by a duce vaccines against a wide range of
were at full throttle. allowance for jobseekers introduced by the extra expense, said Biebernick, who laboratory photocopier at the Univer- infections, including flu, and treat some
But “by 8.30pm things really blast the government late last year and a expected 7mn litres of beer to be drunk sity of Pennsylvania in 1998. Over the cancers and non-transmissible diseases.
off”, said Biebernick. “It’s bombastic.” boost to pensions scheduled for 2024. in the course of the 18-day fest. “I don’t following 12 years, they formed a pro- Weissman remains a professor at the
For more than a year, Germany has “Wages and transfer income such as think people are deterred by the high ductive research partnership, as the University of Pennsylvania. Karikó
been stuck in an economic downturn, benefit payments are going to pick up prices,” he said. “Purchasing power in pair discovered how mRNA — the bio- joined BioNTech as a research vice-
precipitated by a brutal surge in energy significantly in the second half of 2023 On the up: Oktoberfest, where visitor Munich is in any case around the high- logical molecule that translates genetic president in 2013 and she is a professor
costs that snuffed out the country’s ten- and then even more strongly next year,” numbers have risen on last year est in Germany, if not in Europe.” information into proteins — could be at Szeged university in Hungary.
6 ★ FINANCIAL TIMES Tuesday 3 October 2023

INTERNATIONAL

Trial first day Congress

Trump confronts New York fraud claims Former Harris

aide picked
Ex-president comes face for the Trump Organization who served
a five-month jail term after being con-
Arthur Engoron, last week ruled that
Trump and his fellow co-defendants
prison time for the former president but
his business empire is at risk.
former personal lawyer, in which he
explained the methodology for calculat-
for Feinstein
to face with judge and
state’s attorney-general
victed of tax fraud.
In perhaps the most surreal moment
had for years committed persistent
fraud by inflating the value of his assets.
In his opening statement, Wallace
argued that the former president and
ing the former president’s net worth. “It
was basically backing in numbers . . . to
Senate seat
JOSHUA CHAFFIN — NEW YORK
of the morning, the former president,
who attended the proceedings in per-
son, peered into a video monitor to
He ordered that Trump’s companies be
stripped of their business certificates in
New York and that receivers be
his co-defendants had knowingly lied
about his net worth — inflating it by as
much as $2.2bn per year — in order to
obtain the number Mr Trump wanted,”
Cohen said.
Christopher Kise, Trump’s lawyer,
in California
Donald Trump came face to face with watch his own testimony from April, in appointed to oversee their dissolution. secure bank loans on advantageous insisted in his rebuttal that the former
his adult sons, his former lieutenants which he was asked under oath whether The trial will consider additional terms from Deutsche Bank and other president’s statements of financial con- LAUREN FEDOR AND JAMES POLITI
WASHINGTON
and even himself as the first day of his Weisselberg was responsible for ensur- charges brought by Letitia James, the lenders. dition “were true and accurate in all
civil fraud trial began in dramatic fash- ing that his personal financial state- New York attorney-general, including “The defendants knew that a high net material respects” and that there had California governor Gavin Newsom has
ion in a Manhattan court yesterday. ments complied with generally insurance fraud and falsification of worth was necessary to obtain and been no intent to defraud. selected Laphonza Butler, a former
The opening argument delivered by accepted accounting principles. “I business records. It will also determine maintain certain financial benefits,” The trial is but one legal proceeding adviser to vice-president Kamala Har-
Kevin Wallace, a lawyer for New York’s would say, yes,” Trump replied in the what financial penalties Trump will pay, Wallace said, estimating that the lower that the former president will face as ris and former labour leader, to fill the
attorney-general, featured clips from videotaped deposition. if any, and whether or not he and his co- interest rates had saved the Trumps he campaigns for a return to the White Senate seat of the late Dianne Feinstein.
recent video depositions of Eric Trump, “Were you lying then or are you lying defendants will be permitted to again tens of millions of dollars a year. House.
Donald Trump Jr and Allen Weissel- now?” Wallace said yesterday. operate a business in New York. At one point, Williams played a video Additional reporting by Steff Chávez in Feinstein, who served in the Senate for
berg, the former chief financial officer The judge presiding over the trial, As a civil matter, there is no threat of deposition of Michael Cohen, Trump’s Chicago three decades, died last week aged 90,
leaving a vacancy in the upper chamber
of Congress. Her death shifted the bal-
ance of power in the Senate, which Dem-
South America. Political reform ocrats control by a razor-thin margin.
When Butler is sworn in, the Demo-
crats will in effect again control the

Chile president curbs radical plans for renewal upper chamber by a 51-49 margin, with
three independents voting with the
party.
Chuck Schumer, the Senate’s top
Democrat, said Butler was joining the
Senate at a key time, adding that her
Boric forced to shift course as “breadth of work, acumen, and public
public turns against policies service will meet this moment and be a
great help to Senate Democrats”.
inspired by ‘social explosion‘ Butler is currently the president of
Emily’s List, a leading political group in
Washington that works to elect female
CIARA NUGENT IN SANTIAGO
candidates who support abortion rights.
A string of legislative defeats, a corrup- She lives in Maryland.
tion scandal and the worst crime wave Butler said she was “honoured” to
in decades have derailed leftist Chilean accept Newsom’s nomination to repre-
president Gabriel Boric’s plans to radi- sent a “state I have long called home”.
cally transform the country, forcing an She was previously director of public
attempt to change course for his policy and campaigns in North America
remaining two years in office. for Airbnb and a Democratic strategist
“We have to learn to move slowly, step at SCRB Strategies, a political consulting
by step . . . or we risk falling off a cliff,” firm. Butler was also a senior adviser to
Boric said last month in a speech to the Harris’s 2020 presidential campaign.
Organization of American States, recall- Before those roles, Butler was presi-
ing advice from Jose Mujica, a former dent of Service Employees International
revolutionary who took a pragmatic Union Local 2015, the biggest labour
approach as Uruguay’s president from union in California, representing home-
2010 to 2015. care workers.
“By wanting it all, we can end up with “As we mourn the enormous loss of
nothing.” Senator Feinstein, the very freedoms
Boric, a 37-year-old former student she fought for — reproductive freedom,
leader, was elected in 2021 in the wake equal protection, and safety from gun
of mass protests over inequality dubbed violence — have never been under
“the social explosion”. He promised greater assault,” said Newsom. “Lap-
sweeping changes to the privatised serv- honza has spent her entire career fight-
ices, low taxes and investor-friendly ing for women and girls and has been a
constitution that underpin the eco- fierce advocate for working people.”
nomic model Chile adopted in the 1980s California’s Democratic governor had
under dictator Augusto Pinochet. previously said that if Feinstein, whose
Eighteen months in, Boric’s core cam- Step by step: by leaders who came of age during the a revolution, or a violent or abrupt ‘People Gonzalo Winter, a lawmaker for health visibly deteriorated in the final
paign pledges to scrap Chile’s private Gabriel Boric is cold war, said Michael Shifter, former change in any way.” Boric’s leftwing Frente Amplio party, years of her life, was unable to complete
pension system and raise taxes to fund having to be president of the Inter-American The government hopes to present the weren’t disagreed. “Since the social explosion, her term, he would nominate a black
social programmes have foundered. A pragmatic after Dialogue think-tank. pension bill by the end of the year, she naive that it the right has mobilised fiercely against woman to her seat.
radical leftwing constitution was his leftwing “People weren’t naive that it was added. “The outlook is much better the possibility of real structural Alex Padilla, the junior senator from
rejected by voters, who then handed constitution was going to be easy, but there was a sense than it was midway through the year, was going to changes,” he said. “If we don’t solve California, and a fellow Democrat,
Chile’s far right control of writing a rejected by that the torch was being passed at least when all the doors seemed closed.” be easy . . . Chile’s structural problems, we create praised Newsom’s appointment, saying
replacement. The president’s approval voters — Sebastián in one country,” Shifter added. “A lot of Analysts said the deck has always the conditions for a new crisis.” the governor’s “swift action ensures that
ratings hover at about 30 per cent. Vivallo Oňate/Agencia Makro/
Getty Images
eyes were on Chile, and a very appealing been stacked against Boric’s trans- [but] a lot of Although strategic errors have hurt Californians maintain full representa-
Boric has banked a few policy wins, young leader.” formative agenda. His coalition, which eyes were Boric, experts said the greater drag on tion in the Senate as we navigate a nar-
including a boost to the minimum wage In a shift to a more pragmatic stretches from the centre-left to the his popularity is a surge in crime. While row Democratic majority”.
and a 40-hour work week. He said on approach, Boric has sidelined ministers Communist party, is difficult to corral on Chile, still low for the region, Chile’s murder Feinstein had confirmed this year that
Thursday that he aimed to increase from his youth-led leftist coalition in and lacks a majority in congress. The and a very rate increased by almost 50 per cent in she would not seek re-election in 2024,
public spending by 3.5 per cent in 2024. favour of established figures from the rightwing opposition has made few leg- the five years to 2022, as organised triggering a competitive primary con-
But with congress divided, analysts said centre-left Socialist party, such as inte- islative concessions to a government it appealing crime groups gained a foothold. A July test among Democrats for the party’s
Boric risks becoming a lame duck. rior minister Carolina Tohá. perceives as weak. young survey by pollster CEP found that 85 per nomination for the seat.
Since June, the president’s coalition The tax bill, already rejected once, is “When a president is popular, even if cent of Chileans consider the country’s Several high-profile Democrats have
has also been rocked by a corruption being split into separate parts on com- he has a minority in parliament, he can leader’ police “overwhelmed” by crime. launched campaigns, including House
scandal. Regional officials are accused bating evasion and increasing levies. find a way to build agreements,” said Insecurity and the stalled reforms Democrats Adam Schiff, Katie Porter
of awarding millions of dollars in gov- Rightwing leaders have vowed to block Javier Macaya, president of the right- have hit economic activity, including in and Barbara Lee.
ernment contracts to politically friendly the latter. wing Unión Democrática Independiente the crucial mining sector. Investors It remains unclear whether Butler will
non-government organisations without Officials have scaled back the pension party. “Citizens have lost confidence in were also spooked by Boric’s announce- enter the race or simply serve out the
relevant expertise. In one case, a former reform to a proposal similar to one that this government.” ment in April of a plan to semi-national- remainder of Feinstein’s term.
influencer is accused of repeatedly nearly passed under Boric’s rightwing Patricio Navia, a political scientist and ise the lithium industry. The IMF “I have no doubt she will carry the
spending taxpayer cash on lingerie. predecessor, which would increase professor at New York University, said expects Chile’s GDP to shrink by 1 per baton left by Senator Feinstein, con-
His government’s trajectory has dis- employer contributions, allocating part Boric, who was elected via a run-off vote cent this year. tinue to break glass ceilings, and fight
appointed leftists in Latin America, who of the proceeds to a solidarity fund, and against controversial far-right leader Leadership renewal is important, for all Californians in Washington,” said
saw in Boric — a champion of democ- raise the minimum state pension. José Antonio Kast, had misread the pub- Shifter said, but “political skill and Newsom, noting that Butler would be
racy and climate action — the hope of “The government’s proposals are lic’s enthusiasm for radical change after experience are also essential. The key is the first black lesbian to serve in the US
renewal for a movement still dominated reformist,” Tohá said. “None of them are the “social explosion”. to find the right combination.” Senate.

Global warming South Asia

UAE offers to host second UN climate summit Bangladesh hits back at US over visa curbs
AIME WILLIAMS — WASHINGTON of Nagorno-Karabakh has escalated headquarters of the UNFCCC, two peo- BENJAMIN PARKIN — DHAKA election build-up as “false propaganda”, Any tension in relations could spill into
ATTRACTA MOONEY — LONDON
tensions between the two countries, and ple familiar with the discussions said, on comparing it with western interven- regional geopolitics. Sheikh Hasina has
Tensions are rising between Bangla-
The United Arab Emirates is proffering with Russia. the grounds that the city was not large tions in Iraq and elsewhere. sought to promote the country of 170mn
desh and the west as the US pressures
itself as host of a second annual UN Germany, as the home of the UN enough to accommodate the huge num- After the visa restrictions were as a development success, largely on the
Prime Minister Sheikh Hasina’s
climate summit, as negotiations over Framework Convention on Climate bers that would descend on its confines imposed, Momen said he had been back of its enormous garment sector,
authoritarian government to ensure
who will lead the next round of critical Change, is the default host if countries for the fortnight’s duration. exhorting world leaders to “check their which relies on exports to the US and
the integrity of upcoming elections.
discussions on global warming remain cannot agree on another option, while More than 45,000 people registered facts correctly” regarding Bangladesh. Europe. She has also cultivated closer
deadlocked by geopolitical tensions the UAE would remain the holder of the to attend last year’s COP27 in Sharm el- Sheikh Hasina, who has been in power “Unfortunately, today people are ties with India and China.
following Russia’s war in Ukraine. presidency. But several people familiar Sheikh, Egypt. since 2009, has cracked down on politi- hard-pressed for time and don’t have a The country’s domestic politics have
There is no deadline for an agreement cal opposition and curtailed democratic habit of reading,” he said while in the US been marred by a decades-long, often
The move would give the UAE, which about the handover to the next host, but freedoms in what analysts say is an to attend the UN General Assembly. He bloody rivalry between her Awami
will host the UN COP28 in Dubai later
Russia has pushed back the scale of the event means countries attempt to sway the outcome of the added that relations with US president League and the rival Bangladesh
this year, a large influence over global against any EU country typically need a year to prepare. polls, which are expected by January. Joe Biden and secretary of state Antony Nationalist party. Sheikh Hasina’s pre-
climate policy during a key two-year At this year’s COP28, the UAE will pre- Last month, the US imposed visa Blinken were nonetheless “very good”. vious re-elections, in 2014 and 2018,
period in which the world needs to agree
hosting the summit in the side over talks among almost 200 coun- restrictions on an unspecified number were dogged by low participation and
on efforts to halt climate change. wake of the Ukraine war tries that will aim to reach agreements of Bangladeshis for “undermining the allegations of electoral manipulation.
Next year’s COP29 is due to be hosted on the so-called global stocktake of democratic election process”. Members The US state department said its visa
by a country in eastern Europe, as part with discussions said the UAE was reluc- emissions, and to seal arrangements for of law enforcement, the ruling party and penalties reflected “concerns where we
of a rotation in which various regions tant to preside over the negotiations a fund for loss and damage related to cli- the political opposition were among see actions that undermine democracy
and countries preside over the event. unless it could also host the event. mate change. those included. Britain has also pressed and human rights in Bangladesh”.
The 23 countries that make up the The COP28 presidency office said the Laying out the agenda for COP28, Sul- Sheikh Hasina’s government to ensure Michael Kugelman, a senior associate
COP grouping known as the eastern host of the next UN climate summit tan Ahmed al-Jaber, the president-des- elections are “free, fair, participatory at the Washington-based Wilson Center
European states must unanimously needed to be agreed under the proper ignate, set down a loose “mid-century” and peaceful”. think-tank, said: “The Biden adminis-
agree on the host country. But Russia procedures. “This is not even on our timeline for the reduction of fossil fuels Bangladesh’s government has pushed tration has made Bangladesh a test case
has pushed back against any EU mem- radar. We remain focused on delivering produced without the capture of emis- back against western censure. Foreign for its values-based foreign policy. It’s a
ber country hosting the summit in the ambitious climate action at COP28,” it sions. The EU has said it will also push to minister AK Abdul Momen said the visa big gamble . . . If Dhaka starts to feel
wake of the Ukraine war. Armenia and added. phase out so-called unabated fossil policy was Washington’s “prerogative”. increasingly boxed in by Washington, it
Azerbaijan were front runners until this At the same time, Germany was “not fuels, or those burnt without emissions But last month he told Financial Times Prime Minister Sheikh Hasina has could be tempted to gravitate closer to
month, but Baku’s seizure of the enclave keen” to host the summit at the Bonn captured, “well before 2050”. that he dismissed criticism of the cracked down on political opponents China.”
Tuesday 3 October 2023 ★ FINANCIAL TIMES 7

Feta fallout Floods that killed 80,000 goats and sheep take toll on region that produces 40% of Greece’s soft cheese y PAGE 8

Spotify boss Pet project Musk’s X signs live shopping deal

with influencer Hilton in effort to boost fortunes
Birkenstock
targets $9bn
urges ‘nimble’ valuation
in US listing
UK to take lead NICHOLAS MEGAW — NEW YORK
IVAN LEVINGSTON — LONDON

on tech rules
German sandal maker Birkenstock is
set to be valued at more than $9bn in an
initial public offering this month, the
latest sign of a revival in the US market
for new listings after a dearth of deals
since the start of 2022.
Birkenstock said in an updated prospec-
3 Ek criticises dominant US platforms tus that it would sell stock at between
$44 and $49 per share, which would
3 Call for post-Brexit regulatory drive raise up to $1.6bn for the company and
its private equity owner L Catterton.
At the top of the price range, Birken-
DANIEL THOMAS companies [Apple and Google] essen- stock would have an initial market capi-
tially control how over 4bn consumers talisation of $9.2bn based on outstand-
Spotify boss Daniel Ek has urged the UK access the internet around the world. ing shares after the offering, or $9.9bn
government to use its freedom outside Not only are they dictating the rules, on a fully diluted basis.
the EU to introduce new rules that they also compete directly downstream L Catterton, which is backed by
would reduce the dominance of big tech with those providers.” French luxury fashion house LVMH, is
companies. Ek said that the UK legislation needed expected to list the business next week.
In an interview with the Financial to ensure that “if you want to be the refe- About a third of the proceeds of the
Times, Ek also said that development of ree you can’t also be the player” in the deal will go to Birkenstock, which said it
artificial intelligence would be “super digital market. would use the funds to repay debt, with
important” but raised concerns that “If we’re going to pass the DMCC regu- the rest going to L Catterton.
regulations made now would quickly lation, it needs to have real teeth,” he The company and its advisers have
become obsolete because of the speed at said. He is also calling on EU lawmakers lined up anchor investors for the deal.
which the technology was changing. to fully enact similar legislation called Financière Agache, the family holding
“It’s very much developing in real the Digital Markets Act, and is backing company of LVMH chief executive Ber-
time. AI capabilities six months ago are the Open App Markets Act in the US. nard Arnault, has indicated an interest
not going to be the same as they are in a As the dominant music-streaming in purchasing up to $325mn of shares.
year or two years from now,” he said. company, Spotify has attracted criti- Arnault’s son Alexandre is expected to
The Spotify co-founder and chief cism in the past for how much artists are join the company’s board of directors
paid and for the underexposure of less- following the IPO, according to the filing.
er-known musicians. The Norwegian sovereign wealth fund
‘I find it insane that [Apple Ek said that the debate was not about Hotel heiress Paris Hilton, who has 16.6mn followers on X, will create four video programmes a year for the group and Durable Capital Partners plan to
and Google] control how the cost of using the App Store but that buy up to a further $300mn of shares.
Apple was so dominant for a large group HANNAH MURPHY — SAN FRANCISCO June. She is tasked with reviving reve- rino in which she repeatedly dodged Birkenstock, which traces its roots
4bn consumers access the of consumers, functioning as a gate- nues after many advertisers pulled questions on safety and policy on the back to 1774, took private equity money
X, formerly known as Twitter, has
internet around the world’ keeper while also offering competing
signed a first-of-its-kind deal with
their spending citing concerns over platform. for the first time when L Catterton
services. the loosening of moderation policies On Thursday, Yaccarino is set to bought a majority stake in a €4bn deal
celebrity Paris Hilton centred
executive has been in the UK to lobby “Imagine that this was a mall and lit- since Elon Musk’s $44bn acquisition meet bankers at Morgan Stanley, in 2021. It reported revenues of €1.1bn
around live shopping and other
ministers about the Digital Markets, erally half of the UK population is in this of the platform nearly a year ago. Bank of America, Barclays, MUFG, in the nine months to the end of June, up
exclusive content, as chief executive
Competition and Consumers Bill, which mall,” he said, adding that businesses Revenues were down 60 per cent in BNP Paribas, Mizuho and Société 21 per cent year on year. But net profits
Linda Yaccarino attempts to revive
is being considered in parliament. competing directly with Apple were the US, Musk said last month, without Générale — the lenders who financed dropped 20 per cent to €103mn.
the platform’s fortunes.
The bill will regulate competition in forced to pay commission on in-app specifying a timeframe. Musk’s takeover of the platform — to It is set to be the third-largest US list-
digital markets, with new rules to create sales. “That’s where it becomes anti- The two-year deal required the Amer- Yaccarino has been on a charm lay out her vision for the company. ing of the year so far, according to Dea-
a more level playing field between large competitive.” ican heiress to work with X to create offensive, meeting Hollywood groups Social media groups including Tik- logic. Bankers hope a successful deal
tech groups and smaller start-ups. “This is for every single developer,” he four original video programmes per such as Creative Artists Agency and Tok have recently invested in live from a consumer brand such as Birken-
It will allow competition authorities said. “More and more of these develop- year including for its nascent live United Talent Agency, in an attempt shopping features in the west follow- stock will further boost the market after
to set conduct requirements for big ers are now finding that Apple is a com- shopping space, the company said. to attract stars and influencers — and ing success in Asian markets. a string of tech listings in September. “It
groups to address market power and petitor.” She would also produce content on therefore users and advertisers. X made a tentative foray into live will be important as it’s a different sec-
limit the potential for harm to consum- The EU has launched an antitrust case other X mediums such as its Spaces The deal comes after Yaccarino shopping in 2021 that gained little tor, so it gives a broader set of data [to
ers and rivals. against Apple after Spotify made a com- audio feature, it added. faced criticism following a testy inter- traction, and now has a product encourage other potential IPO candi-
Ek said that “the UK can be nimble plaint against it in 2019. X said that it had struck a revenue- view with CNBC’s Julia Boorstin at the allowing users to watch, talk and shop dates],” said a senior IPO banker.
right now and show leadership”, claim- Apple, which declined to respond to sharing agreement with Hilton’s 11:11 Code Conference last week, during all in the same window. Arm, Instacart and Klaviyo all priced
ing that Spotify was being unfairly held Ek’s comments, said at the time: “The Media company and described the which she fumbled questions on X’s Hilton, who has 16.6mn followers deals at the top of or above their target
back by digital platforms such as Apple App Store has helped Spotify become financial arrangement as “attractive” user metrics and insisted that she on X, said: “Together, we’re going to ranges last month, though trading in the
because of their position as internet the top music streaming service across for both parties. wielded power as CEO despite be exploring new ways to connect stocks has been mixed in the weeks
gatekeepers. “The UK is now setting its Europe and we hope the European Com- The partnership will be a test for repeated interference from Musk. with all of you across video, live video, since. Companies have raised $17.4bn in
own agenda [after Brexit],” he said. mission will end its pursuit of a com- Yaccarino, who joined the social The same day, the Financial Times live shopping, and even Spaces. And US IPOs this year, up more than 140 per
He added: “I find it insane that two plaint that has no merit.” media platform as chief executive in published an interview with Yacca- we’re just getting started. Loves it.” cent from the same period last year.

Financials. Fundraising

GIC ditched Vista stake after founder’s tax scandal

Singapore fund’s $300mn sale apologised to Vista’s investors for “any interest rates drive up the cost of buying invested with other private equity firms
issues or concerns” it may have caused, companies and a sluggish market for in deals in which Vista also participated,
at discount shows reputational saying: “I should never have put myself initial public offerings and a slump in said a person familiar with the matter.
in this situation.” takeovers make selling them harder. Vista and GIC declined to comment.
risks private equity firms face Based in Austin, Texas, Vista is trying With distributions from private Wellcome Trust declined to comment
to raise $20bn for its first flagship buy- equity firms muted, more investors are on its relationship with Vista but said
WILL LOUCH — LONDON out fund since being shaken by the scan- choosing to commit less to new funds. “we take ethical considerations very
MERCEDES RUEHL — SINGAPORE
KAYE WIGGINS — HONG KONG
dal. It has until October to raise the Vista’s own fundraising effort comes seriously when making investment
ANTOINE GARA — NEW YORK money or it will have to ask investors for decisions” and was “prepared to take
an extension to the deadline, said peo- action” if expectations were not met.
Singaporean sovereign wealth fund GIC, ple familiar with the matter.
‘We take ethical In a recent letter to investors, Smith
one of the world’s most influential Smith, a former Goldman Sachs considerations very noted that the new flagship fund was on
investors, sold its stake in a Vista Equity banker, founded Vista in 2000. It was track to be the “largest pool of capital” it
Partners fund after the buyout firm’s initially seeded with money from soft-
seriously when making had ever raised. Its previous flagship
founder was embroiled in a tax scandal, ware entrepreneur Robert Brockman. investment decisions’ fund raised $16bn in 2018.
according to people familiar with the Under its founder, Vista grew rapidly, In October 2021, Vista borrowed
matter. acquiring a reputation for its expertise amid concerns over whether the returns against its management company to
GIC disposed of its holding of roughly in investing in software companies. It made backing tech companies during raise $930mn, most of which was to
$300mn at a discount, leaving the Sin- manages more than $100bn in assets. the past two decades can be sustained. invest in future funds, the FT has previ-
gaporean fund with a loss on its invest- The group has recently sold large soft- The reputational risk generated by ously reported.
ment, the people said. ware companies such as Cvent and Ping the tax scandal has also weighed on the In an effort to entice investors to back
It is rare for an investor to sell a stake Identity, while acquiring Avalara and fundraising, with some investors telling its new flagship fund, Vista has adopted
in a buyout fund for reputational rea- Citrix Systems, in two of the largest pri- the Financial Times that they chose not several tactics to accelerate the pace at
sons, underlining the challenge facing vate equity takeovers in recent years. to participate. which it returns money to investors.
Vista as it now tries to draw a line under The buyout industry is confronting its Since GIC ditched its holdings in Vista, These include so-called net asset value
a scandal in which its billionaire toughest conditions in years as higher the sovereign wealth fund had co- financing, which involves a buyout firm
founder Robert Smith agreed a $140mn borrowing against a portfolio of assets.
settlement in 2020 with US authorities Earlier this year, Vista hired Goldman
to resolve a criminal tax investigation. to arrange a $1.5bn loan secured against
Smith admitted to his involvement in its portfolio companies, the FT has pre-
a scheme that allowed him to evade pay- viously reported. Some of the money
ing millions of dollars in taxes. Several was used to pay investors.
of Vista’s senior dealmakers, including During its fundraising push, Vista has
Brian Sheth and Alan Cline, left follow- sold off assets to generate profits for
ing the settlement. Sheth quit a month investors, monetising more than $14bn
after Smith entered a non-prosecution in investments since November 2021.
agreement with the Department of Jus- “At a time when many investors are
tice in October 2020 and Cline departed struggling to create realisation opportu-
the following year. nities for their portfolio and limited
Wellcome Trust, the UK’s largest partners, Vista has delivered consistent
charitable donor and a large institu- returns,” Smith noted, according to
tional investor, also divested from someone who has seen the investor let-
Vista’s funds following the scandal, peo- ter. The letter did not mention whether
ple familiar with the matter said. the firm would seek an extension on its
At the time of the settlement, Smith Vista founder Robert Smith: apologised to investors — Lucy Nicholson/Reuters October fundraising deadline.
8 ★ FINANCIAL TIMES Tuesday 3 October 2023

COMPANIES & MARKETS

Technology Financials

Microsoft boss testifies against Google Frankfurt

prosecutors
levy charges in
Nadella tells antitrust trial
that rival’s search engine
dominance in internet search by paying
more than $10bn annually to ensure it is
the default search engine on mobile
of changing search behaviour,” he
added. “You get up in the morning, you
brush your teeth and you search on
Nadella was asked by a federal prose-
cutor how much Microsoft was pre-
pared to pay to unseat Google as the
The Google case has resulted in the
highest-profile monopoly trial since the
DoJ accused Microsoft in the 1990s of
M&A insider
has unfair advantage phones and computers.
The company has denied wrongdo-
Google. The only way to change is by
changing defaults.”
default search engine for Apple. He said
the cost of doing so could reach nearly
seeking to quash then-pioneering web
browser Netscape with its Windows
trading case
STEFANIA PALMA — WASHINGTON ing, arguing it is facing tough competi- Microsoft is featured in the trial as the $15bn a year, plus any additional costs. dominance. A judge ordered a break-up
tion and that its market share is because most prominent Big Tech group seeking Google has argued it is easy for users of Microsoft, but the ruling was ulti-
Microsoft chief executive Satya Nadella of the strength of its product. to break Google’s grip on the internet to change default settings. John mately overturned on appeal. OLAF STORBECK — FRANKFURT
called the idea that users have choice in “Defaults are the key things where search market via its engine Bing. Schmidtlein, a lawyer for Google, yes- The case was initially brought under
Frankfurt prosecutors have charged a
internet search “bogus” because of con- network effects in digital products come Nadella also addressed Google’s deal terday suggested while cross-examining the Donald Trump administration and
48-year-old German with insider trad-
tracts that make Google the default about,” Nadella said in his testimony, with Apple, which makes its search Nadella that Microsoft had failed to inherited by Jonathan Kanter, now head
ing in one of the country’s biggest such
search engine on mobile devices. which comes as the trial in Washington engine the default in Apple’s Safari invest enough in developing its search of the DoJ’s antitrust unit. It represents a
cases as the authorities seek to crack
During his testimony in an antitrust enters its fourth week. “Users can love, browser. business, despite having the financial big test for the tougher antitrust
down on the practice.
trial pitting Google against the US love, love a product, but will not switch He said he had “focused every year” of resources to do so. Nadella said that enforcement stance adopted by Kanter,
Department of Justice, Nadella yester- defaults.” his tenure as chief executive “to see if while he was in charge of search at who was appointed by Joe Biden to The defendant, who allegedly received
day took aim at the agreements at the “This entire notion that users have Apple would be open” to a default agree- Microsoft, he had sought more invest- crack down on excessive corporate confidential information about forth-
heart of the US government’s case, choice . . . is complete bogus. Defaults ment with Bing, which would be “nee- ment but generally felt “well-supported power. He has compared technology to coming M&A deals from a partner at
which accuses Google of preserving are the only thing that matter in terms dle-moving” for Microsoft. and well-funded”. the “new oil” in the US economy. boutique investment bank Perella
Weinberg, is accused by prosecutors of
having used inside information in 20
different trades between 2017 and 2021.
Food & beverage. Storm damage The man, who has been in custody
since January, is alleged to have made
€14mn in profit, after taking into

Greek feta makers reel from devastating floods account the costs of executing the
trades. The gross proceeds from the
insider trading are alleged to exceed
€24mn. Some earlier deals, where pros-
ecutors allege he also relied on insider
information, fall outside the statute of
About 80,000 sheep and goats limitations.
The Perella Weinberg banker, who
died in a region that produces worked on mergers and acquisitions in
its London office, was found dead days
40% of country’s soft cheeses after police raided its premises in the
UK and Europe. He had been put on
ELENI VARVITSIOTI — ATHENS leave by the bank after the raids.
Greece is grappling with the destructive People familiar with the case said the
impact of Storm Daniel on one of its men had been longtime friends and
most recognisable exports: feta cheese. were in regular contact.
Some 40 per cent of the country’s soft The probe, which involved Germany’s
cheeses are made from sheep and goat
milk produced in the central region of
Thessaly, which was devastated by the
The defendant allegedly
floods that ripped through several Med- received information from
iterranean countries last month. Greek
farmers lost an estimated 80,000 goats
a partner at investment
and sheep in the disaster — and keeping bank Perella Weinberg
the surviving animals alive is difficult
amid high water levels and scarce feed. financial watchdog BaFin, Frankfurt
As farmers reel from the destruction state prosecutors and federal police,
of their livelihoods, the fallout of the tor- highlights the increased awareness
rents is also having an impact on the among the authorities of insider trading
region’s industry. “The largest blow is and market manipulation.
that many breeders in the area say that This is the third big insider trading
after the flood, they don’t want to return scandal involving a large financial insti-
to their profession,” said Christos Apos- tution in Germany since 2021.
tolopoulos, president of the association Last year a former Lazard investment
of Greek dairy industries. banker received a suspended jail sen-
Farmers expect millions of euros in tence after sharing confidential infor-
damage from Storm Daniel, the worst to mation with a trader.
hit the country in nearly a century. More In 2021, a former senior fund man-
than 700 tonnes of rain per acre fell in 12 Disaster: houses ages will be more apparent in Greece,” be larger, we have no other choice.” Feta ‘In a few handling of natural calamities. ager at Union Investment was sen-
hours on September 7 — almost double and farms in the he said. prices had already soared about 40 per Greece allocated €200mn for regional tenced to three-and-a-half years in jail
the amount that falls in Athens in a year. Thessaly region Greece’s largest feta factory is Hel- cent in the past two years due to infla- months, reconstruction and flood prevention in and ordered to repay almost six times
In Greece, 16 people died in the floods. left under water lenic Dairies, which is based in Trikala tion, driving a 10 per cent drop in local there will regions such as Thessaly when it was hit the €8mn in profits he made from
About a quarter of the land used for after last in northwestern Thessaly. It had to shut demand. For Sarantis, that decline will by a milder storm in 2020. insider trading.
agriculture and industrial production in month’s storms down for two weeks as water and mud be enough to prevent shortfalls. “There be chain “Someone must be held accountable; That case is currently being retried in
Vaggelis Kousioras/AP
Thessaly was inundated — and will covered the machinery, with estimated will be less feta around, but I don’t think reactions whose fault was this disaster, and what Frankfurt after Germany’s highest court
probably not be fertile for years — along damage of €25mn. The factory has since there will be any shortages.” happened to the funds given a few years found procedural flaws.
with hundreds of buildings, with many reopened. Another feta maker, Nikolaos Bizios, [leading] ago that supposedly would protect us Insider trading can be punished with
bridges and parts of the country’s rail Stelios Sarantis, chief commercial of Bizios Dairy Industry, said prices for especially from future storms?” asked Vasilis Pat- up to five years in jail under German
and road networks destroyed. officer of Hellenic Diaries, acknowl- the cheese could spike even more if ani- sialis, a large wheat and cotton producer law.
Analysts warn about the storm’s long- edged big businesses like his would have mal feed costs increased. “It’s a hard small based in the Thessaly town of Karditsa. Perella Weinberg has become one of
lasting impact on the economy. to incur part of the losses. “Every year, equation that needs to be solved, as businesses That feeling of helplessness is echoed the leading M&A advisers in Germany.
“Everyone talks about the cost of the we fund animal breeders,” he said. “This crops and factories with animal food throughout the region. It has acted on deals including
floods . . . in a few months, there will be time, the amount that we will give will have been flooded,” he said. to collapse’ “This is the second time that we are the €29bn acquisition of Deutsche
chain reactions [leading] especially While a clearer picture of the total called to rebuild our herds,” said Fotis Wohnen by Vonovia in 2021, the €4.5bn
small businesses to collapse,” said Yan- Storm Daniel caused major floods in Thessaly, cost of the storm damage emerges, the Patounis, president of the livestock takeover of Osram in 2019 and the
nis Karastergios, an agricultural con- European Commission has said Ath- breeders’ association of Palamas, the €59bn asset swap between RWE and
sultant in the area. Other than lost live-
Greece’s agricultural heartland ens could tap up to €2.25bn in emer- Greek village hit hardest by Storm Dan- Eon in 2018.
stock, he said many warehouses could Cumulative rainfall Sep 2-5 (mm) gency funding and Greek prime minis- iel. “In the previous flood, our animals After the raids in January, the bank
not be repaired, with farmers losing ter Kyriakos Mitsotakis said the coun- drowned and our lands were flooded, told the Financial Times that it was
tonnes of feed. GREECE 0 250 500 try’s strong economy would help it but we managed to survive.” “assisting in an investigation by German
“Years of hard work were destroyed in “withstand the costs of reconstruction”. In addition to the lost goats and sheep, law enforcement authorities”, stressing
two days,” said Karastergios. “It’s not THESSALY Greece is allocating an additional locals now have to deal with severe dam- that it was not the subject of the investi-
easy to recreate warehouses and set up a Trikala €600mn to the budget to address imme- age to their homes and destroyed farm- gation itself and that there was “no sug-
Palamas
herd from scratch.” diate funding needs caused by the storm ing equipment and machinery. “Many gestion of wrongdoing on the part of the
Greece makes 140,000 tonnes a year damage. Mitsotakis added that a special of my colleagues tell me they don’t have firm.”
of feta, exporting 65 per cent. reserve account for national disasters the drive to start again,” Patounis said. Charges were filed in July but have not
“Producers will face a dilemma soon, would be doubled from next year to “This time round the disaster could be previously been made public. No date
Athens
as they will have less milk production; €600mn, funded through a higher occu- beyond repair,” he added. “Many local has yet been set for a trial, but people
they will have to choose where to send pancy tax on luxury hotels. producers are ready to desert their vil- familiar with the case said it was likely
their products,” said Apostolopoulos, But the promise of aid offers little lages and move to cities. It all depends to start early next year.
who estimates that feta makers will solace to agricultural businesses that on how much help the government will A lawyer for the defendant declined to
Source: Nasa
focus on export markets. “The short- have grown to distrust authorities’ provide for them.” comment.

Financials Automobiles

Deutsche monitored over Postbank IT woes Tesla misses lower forecast for car deliveries
STEPHEN MORRIS AND “BaFin is fulfilling its legal mandate bank, keeping only the brand and its RICHARD WATERS — SAN FRANCISCO 1.8mn deliveries for the year as a whole, rates affect sales of electric vehicles.
DONATO PAOLO MANCINI
for collective consumer protection and branches, which it forecasts will deliver requiring volume in the fourth quarter Tesla succeeded in stoking sales ear-
The number of new vehicles Tesla
Germany’s financial regulator has can intervene on a supervisory basis if €300mn in annual cost savings by 2025. to rebound to about 475,000. lier in the year by cutting prices of its
delivered in the latest quarter fell short
installed a special supervisor at Deut- the urgently needed improvements in The so-called Project Unity was com- A forthcoming revamp of the Model 3 cars, although at the cost of eating into
even of Wall Street’s reduced expecta-
sche Bank, as the lender grapples with order processing at Postbank and DSL pleted in July when the final batch of cli- and the planned launch this quarter of its industry-leading profit margins. Its
tions, as planned factory shutdowns
deepening customer service issues at Bank do not materialise,” the supervisor ents and contracts was moved on to Tesla’s long-awaited electric pick-up, gross margin during the second quarter
crimped production and demand for
its subsidiary Postbank after a botched added. “We are making progress in Deutsche’s IT systems. dubbed the Cybertruck, caused the fell to 18.2 per cent, a decline of eight
electric vehicles sagged in the face of
IT integration. improving processing times at Post- However, the Financial Times has company to pause production for percentage points from the previous
high interest rates.
bank,” Deutsche said in a statement. previously reported that Deutsche had retooling in the latest quarter. year, although its shares have more than
Deutsche has been inundated by com- “We will work closely with the financial failed to give Postbank staff enough The US electric-car maker said yester- But some analysts had also trimmed doubled this year on hopes it will ride
plaints since the July migration of 12mn supervisory authority and its represent- training on its own computer systems day that it had delivered 435,059 vehi- their forecasts because of concerns out the difficult economy better than
Postbank clients, which the bank origi- ative to meet the expectations of our and struggled to comply with legal cles in the third quarter, below the about weaker demand, as high interest rivals.
nally claimed was successful. However, regulators and customers affected by requirements around court orders. 440,000 to 455,000 analysts had been Production in the latest quarter fell to
thousands of customers have since been inconvenience as quickly as possible.” The monitor is a blow for chief execu- expecting. 430,488, down 10 per cent from the sec-
locked out of their accounts for weeks — The technology problems stem from tive Christian Sewing, who ran the retail The figure was 27 per cent higher than ond quarter. The scheduled production
leaving them struggling to buy food and Deutsche’s ill-fated 2010 takeover of business for three years before he was for the same period the previous year, pause has paved the way for the first
pay rent — and customer-service cen- rival Postbank, a troubled retail lender promoted to the top job in 2018. He has although deliveries fell back more than refresh of Tesla’s model line-up since
tres have been overwhelmed. that was once part of Germany’s state- previously apologised for the customer 31,000 from the second quarter of this the launch of the Model Y more than
Last month, BaFin issued a rare pub- owned postal service. Over the past dec- services issues. The bank could now also year. three years ago.
lic rebuke, calling the “considerable dis- ade, Deutsche first failed to find a buyer face a regulatory fine. Tesla said that the decline from the Speaking during his company’s latest
turbances” and long wait times “unac- for Postbank and then bungled an ear- Deutsche Bank already has external preceding quarter “was caused by quarterly earnings call, chief executive
ceptable”. Yesterday, it announced that lier IT integration effort, wasting €1bn auditors installed overseeing improve- planned downtimes for factory Elon Musk said that demand for the
it was placing a monitor inside the bank between 2010 and 2015. ments to its anti-money laundering and upgrades, as discussed on the most group’s long-awaited Cybertruck was
to ensure the issues were addressed In 2017, Deutsche decided it would go compliance controls. The bank’s shares recent earnings call”. Tesla says it delivered 435,059 “so off the hook you can’t even see the
“quickly, completely and permanently”. ahead with a full integration of Post- closed down 3.27 per cent yesterday. It added that it continued to expect vehicles in the third quarter hook”.
Tuesday 3 October 2023 ★ FINANCIAL TIMES 9

COMPANIES & MARKETS

FTX founder
prepares for
fight of his life
in fraud trial
Once-celebrated US crypto billionaire
Bankman-Fried faces legal reckoning
JOSHUA OLIVER — LONDON tion on one of the seven charges against
JOE MILLER — NEW YORK
Bankman-Fried — including conspiracy
A year ago, billionaire Sam Bankman- to commit money laundering and fraud
Fried, then 30 years old, posted a 14- against lenders, investors and custom-
tweet thread on the balance of “safety vs ers of his crypto empire — could be
freedom” in cryptocurrency regulation. enough to expose him to a lengthy
Now, a different kind of freedom is on prison term.
the line when he walks into a Manhattan The prosecution will try to prove that
courtroom to face criminal charges that Bankman-Fried conspired with his
carry a combined maximum sentence inner circle of college and childhood
of more than a century in prison. friends to funnel billions of dollars of
Bankman-Fried’s trial, which is set to customers’ money from FTX in secret
begin with jury selection today and last loans to his crypto trading firm Sam Bankman- very closely with him and are going to He has said he was unaware of crucial ‘This is a Bankman-Fried’s contact with FTX US
for six weeks, marks the ultimate reck- Alameda Research, which spent the Fried, centre, say that they committed a crime with details of the financial engineering general counsel Ryne Miller via email
oning for the disgraced tycoon who was money lavishly on venture investments, arrives at him,” said Paul. “It’s hard to imagine behind the scenes of his empire and that young man and an encrypted messaging app
once welcomed by Washington law- luxury real estate, political donations Manhattan that doesn’t carry the day here.” he never intended to defraud anyone. who I don’t seemed to be an attempt to get a poten-
makers and Silicon Valley investors as and marketing — including a Super federal court on Bankman-Fried’s lawyers will proba- A crucial decision for Bankman-Fried tial witness to “sing out of the same
the responsible face of cryptocurrencies Bowl TV commercial and glossy Vogue August 11 for the bly try to undermine the credibility of will be whether to take the stand to try think is hymn book”. He also lambasted the
and a respected voice on the future of magazine ads featuring FTX promoter hearing that the witnesses, pointing to their past to rebut the government’s witnesses, going to defendant for using a VPN, ostensibly to
disruptive digital assets. Gisele Bündchen. revoked his bail. relationships and the leniency they and run the risk of a damaging cross-ex- watch an American football game via a
He is accused of having defrauded Critical to the prosecution’s case will Below, Caroline hope to receive for co-operating. amination. Theranos founder Elizabeth generate a Bahamas-based subscription.
dozens of the world’s top investors and be testimony from Bankman-Fried’s Ellison, former The evidence includes millions of Holmes testified at her trial in 2021, and lot of Cohen assured the court that his cli-
millions of customers at his FTX crypto- closest confidantes and former roman- CEO of Alameda, pages of private notes, Slack messages was later found guilty on some charges. ent understood “that there is no margin
currency exchange and stealing billions tic partners, many of whom lived has pleaded and emails culled from FTX’s internal “It would be foolhardy for Bankman- sympathy. for error”. But in August Kaplan finally
of dollars entrusted to his custody. together in a $30mn luxury penthouse guilty in the case records. The prosecution also plans to Fried to testify. He’s shown himself to be He was a revoked Bankman-Fried’s bail over
The shambles left behind by FTX’s in the Bahamas, where FTX was based and is set to be a introduce a recording of an Alameda all- very erratic,” said Bradley Simon, a accusations that he leaked Ellison’s pri-
$40bn bankruptcy in November last until a run on the exchange drove it into star witness staff meeting held in the days before criminal defence partner at Schlam high roller’ vate writings to The New York Times
Bebeto Matthews/AP
year has been described as worse than bankruptcy, exposing up to $9bn in FTX’s bankruptcy, where they say Elli- Stone & Dolan. “Presumably his counsel allegedly to intimidate witnesses.
Enron, and Bankman-Fried’s alleged missing customer funds. son told her staff that Bankman-Fried are telling him that’s out of the question. Bankman-Fried has since been con-
crimes have been likened to those of the Bankman-Fried achieved global fame had raided customer funds. But sometimes clients don’t listen.” fined to Brooklyn’s notorious Metropoli-
infamous Ponzi scheme architect Ber- after he amassed more than $20bn in The issue of whether Bankman-Fried While the prosecutors will tell a tan Detention Center, where he claims
nard Madoff. US prosecutors called his just three years as FTX chief, and defrauded his investors may shed light straightforward story of deception and ‘FTX’s he is deprived of vegan food and medi-
alleged scheme “one of the biggest pledged to donate the bulk of that per- on how he induced venture capitalists, greed, the defence team may lean into cation. His lawyers have also argued
financial frauds in American history”. sonal fortune. He was known for out- including prominent firms such as the legal and tech complexity of the implosion that he has had inadequate access to lap-
The trial will feature millions of pages landish behaviour, including sleeping Sequoia Capital, BlackRock and events surrounding FTX’s collapse. highlighted tops and the internet to prepare for trial.
of evidence and will probably include on a beanbag in his office and greeting Temasek, to pump nearly $2bn into “This is a young man who I don’t think Beyond the ignominy of a formerly
testimony by Bankman-Fried’s closest luminaries such as former president Bill FTX. Investors have been sharply criti- is going to generate a lot of sympathy. lots of feted billionaire being led into a court in
friends and romantic partners. It repre- Clinton wearing shorts and a T-shirt. cised for failing to spot problems at FTX He was a high roller. There are going to problems handcuffs, the trial will cast a harsh light
sents the first big test for US authorities His inner circle indulged in late-night through their due diligence. be jurors from every walk of life. I don’t on reckless borrowing, risk-taking and
in their efforts to bring to heel the law- board-game sessions and was entangled There is always a chance that Bank- think they are going to relate to him that are handling of customer money within the
less world of offshore crypto trading. in a web of romantic liaisons. Before man-Fried will change his plea and very well,” said Simon. “But you never endemic to crypto industry at the height of the 2022
“This is a hugely important case. This FTX’s failure, Bankman-Fried’s known admit guilt before or during the trial, know. All it takes is one juror to hold out bubble, as creditors now seek to recoup
is the biggest trial we have seen in the vices were a weakness for vegan burgers although the incentives for doing so will and then everything for the government the entire billions of dollars in several high-profile
crypto world,” said Sarah Paul, a former and oversalting his meals. have diminished as the government goes down in flames.” crypto bankruptcies and US regulators battle
federal prosecutor and partner at law Four of Bankman-Fried’s former lieu- would be unlikely to offer a particularly Bankman-Fried’s path to the court- with other big crypto companies,
firm Evershed Sutherland. “If there is tenants have already pleaded guilty. attractive deal at such a late stage. room has been turbulent. After being industry’ including the largest exchange, Binance.
not justice here for the victims, I think it Caroline Ellison, the former chief execu- In the likely event that the trial will freed on a $250mn bond and confined to Hilary Allen, professor of law at the
will be a real blow. And I think it’s dan- tive of Alameda and his one-time love proceed as planned, Bankman-Fried’s his parents’ home in Palo Alto, Califor- American University, said: “The crypto
gerous. You have to get bad actors like interest, is expected to be a star witness. spree of interviews and filings by his nia, the FTX founder soon began violat- industry now wants to paint SBF as a
this out of the industry.” “I think the government’s case looks legal team suggest his defence strategy ing various bail conditions, much to the lone rotten apple, but FTX’s implosion
The defence team, led by Mark extremely strong. They have multiple will involve casting blame on others, court’s irritation. highlighted lots of problems that are
Cohen, faces a daunting battle. Convic- co-operating witnesses who worked including Ellison and FTX’s lawyers. In February, Judge Lewis Kaplan said endemic to the entire crypto industry.”

Financials Legal Notices

Swedish pension fund chair quits amid probe into $2bn losses
RICHARD MILNE the fund’s decision to take a large stake ments left the fund with $2bn in losses. state venture capital group Saminvest
NORDIC AND BALTIC CORRESPONDENT
in struggling Swedish property group The FSA is looking into Alecta’s risk who took over as Alecta’s chief execu-
The chair of Alecta has become the lat- Heimstaden Bostad. Alecta manages management and whether it complied tive last month, told the daily Dagens
est senior executive to leave Sweden’s $110bn in assets for 2.8mn savers. with rules when it made a SKr50bn Industri that the pension fund never
biggest pension fund as regulators “In a situation where there has been ($4.5bn) investment in Heimstaden. should have invested in Heimstaden.
expand their investigation into a series too much focus on my person, I have Jan-Olof Jacke, deputy chair and the
of botched investments. decided to resign,” said Bonde. chief executive of the Confederation of
Ingrid Bonde has
Bonde is one of the leading financial resigned from Swedish Enterprise, succeeds Bonde
Ingrid Bonde said yesterday she would figures in Sweden, where her long career Alecta with until a new chair is elected. He has sat on
resign as chair of Alecta with immediate has included stints at the top of the main immediate effect the board since 2019.
effect, six months after she fired Mag- regulator, the debt office and three of its following a series Alecta is examining its model of con-
nus Billing as chief executive after the biggest companies. of soured bets centrating on a few large investments,
Swedish fund ended up as one of the big- But Alecta’s strategy of making large which had worked well before turmoil
gest losers from the collapse of several concentrated bets has come under Alecta is one of Heimstaden’s biggest swept the banking sector in the first
US banks, including Silicon Valley Bank. increasing scrutiny. investors with a 38 per cent stake. Like quarter of the year. The fund had
Sweden’s financial regulator is inves- It was the fourth-largest shareholder much of the Swedish property sector, boasted to the local media just before
tigating Alecta over those investments. in Silicon Valley Bank, the fifth-biggest the group has been hit by a rapid series the crisis about how it had sold out of
Since last month, the Financial Supervi- in First Republic Bank and the sixth- of interest rate rises. Sweden’s most conservative bank and
sory Authority has also been examining biggest in Signature Bank. The invest- Peder Hasslev, the former head of instead invested in the niche US lenders.

Automobiles

Chinese high-end EV brand Zeekr expands into Middle East

CHENG LENG AND PETER CAMPBELL Audi,” Chen Yu, a Zeekr vice-president, back from Brussels, which has launched and performance EV brand Polestar
said. “The Middle East is a relatively an anti-subsidy investigation into a through a Spac deal in 2022. It has filed
Zeekr, the premium electric-vehicle
new market for EVs and there isn’t a “flood” of Chinese electric vehicles. paperwork to list the Chinese arm of lux-
brand of Chinese carmaker Geely, is
matured brand offering of premium A planned Zeekr IPO is the latest ury sports car brand Lotus in a Spac deal.
launching in four Middle East coun-
EVs in most of their markets.” attempt by Geely’s owner, billionaire Li Yale Zhang, head of Shanghai-based
tries next year as it intensifies its global
The push into Saudi Arabia, UAE, Shufu, to realise value from companies consultancy AutoForesight, said mar-
push ahead of a planned US listing.
Qatar and Bahrain comes at a time of within his sprawling empire. The group kets in the Middle East were a good fit
The brand joins other Chinese EV mak- growing co-operation between China previously floated Volvo Cars in 2021 for Zeekr because “consumers have the
ers including Warren Buffett-backed and Gulf countries as they deepen col- spending power” to buy upper-end EVs.
BYD that are expanding overseas in laboration on a number of projects. Other carmakers are deepening their
search of growth at a time of slowing Zeekr was expected to deliver 10,000 presence in the region. NIO has received
sales and fierce competition in China. units in the four markets by 2025, Chen $738.5mn in new capital from an Abu Notice to Advertisers
The expected $1bn Zeekr IPO would said, adding that the company was also Dhabi government fund and Saudi Ara- Calls to the Financial Times Advertising Department
be the largest US listing by a Chinese open to fundraising from investors in bia has signed a $5.6bn deal with the Chi- may be monitored.
company since ride-hailing giant DiDi the Middle East. Zeekr’s cars are also nese parent of high-end EV brand Hiphi. Acceptance of any advertisement for publication will be
raised $4.4 billion in 2021. Since then, expected to be launched in Israel by the “A Middle East push is actually work- subject to the then current terms and conditions of
strained US-China ties and Beijing’s end of the year. It has delivered about ing for some of the high-end Chinese EV insertion of advertisements in FT publications.
stricter cross-border listing rules have 150,000 cars in China since 2021. brands, as they would face fewer politi- A copy of the terms and conditions of insertion of
frozen the Chinese listing pipeline. The carmaker is also expanding in cal headwinds,” Zhang said. advertisements in FT publications can be obtained from
“Our competitive pricing strategy will Europe and has plans to start sales in Additional reporting by Simeon Kerr in +44 (0)20 7873 3000, or viewed at www.FT.com/
advertising
be set to compete with traditional pre- Netherlands and Stockholm stores in Sales drive: Geely’s Zeekr electric Dubai
mium car brands such as BMW and the fourth quarter. But its faces push- vehicles being loaded for export See Opinion
10 ★ FINANCIAL TIMES Tuesday 3 October 2023

UK COMPANIES

Dear London, my negativity is not the problem Telecoms

Brussels urged
“clickbait” coverage of the market’s launched one report to rule them all, in Revolution Beauty was. Companies where robust coverage becomes intru-
to ensure ‘fair’
Helen struggles. Clare Cole, the Financial Con-
duct Authority’s director of market
an attempt to impose some order.
But those sounding the alarm are deal-
listed with great fanfare, such as online
retailer THG, did not have their busi-
sive or overly personal. But the thinning
ranks of specialist business reporters payments by
Thomas oversight, suggested that UK journalists ing with a government for which boost- ness or their story straight. Those that around Fleet Street means executives
could do more to improve the business
environment. “We are very negative
erish positivity is the price of engage-
ment, says one of them. That means
did and could explain it well, like the
entrepreneurs behind Wise, fared much
are actually getting an easier time, reck-
ons one longstanding City spinner.
Big Tech for
about our entrepreneurs and listed issu- skirting over the idea that ailing growth, better — despite an unusual direct list- An interesting question is whether the
network use
K
ers,” she said. political dysfunction, policy compla- ing, unconventional governance and the UK is queasier about money and success
ing Digital’s 2014 US stock Fake news. It isn’t my job to improve cency and the economic self-own of odd hiccup along the way. than other European markets and
market debut was, the Wall the listings environment (I checked Brexit underpin London’s troubles. whether that is reflected or created by
Street Journal wrote, a “dud”. with management). But it is the regula- The City has also been increasingly at the media. But I don’t believe that a YASEMIN CRAGGS MERSINOGLU AND
After the shares sank 16 per tor’s. This is a poor way to go about it. odds with itself in recent years — over
‘This is just shooting the country where Dragon’s Den is among JAVIER ESPINOZA
cent, the paper compiled five “The media is always going to be criti- governance questions such as dual- messenger. Bad press is the most popular TV programmes is Europe’s biggest telecoms companies
charts examining just how hard the cal but that is true in the US as well,” says listed shares, ESG and most obviously anti-entrepreneurship.
maker of Candy Crush had sucked. Craig Coben, former global head of pay. When that blows up publicly, like in
a symptom not a cause In the age of private capital, founders
have called on the EU to compel Big
Tech to pay a “fair” contribution for
There was analysis and a video, all equity capital markets at Bank of Amer- the 2021 Deliveroo IPO, it is doubtless of London’s problems’ see less need to go public and venture using their networks — the latest stage
illustrated by pictures of people in enor- ica. “This is just shooting the messenger. annoying. That doesn’t mean the hoopla capital backers hold sway when they do. in a battle for payments that has
mous brightly coloured fruit candy cos- Bad press is a symptom not a cause of is determinant to a poor outcome. “There is a quality of company issue,” Stock exchange boss and Hamilton fan pitched the sector against companies
tumes on the stock exchange floor. London’s problems.” “Institutional investors just tune it out,” says Rupak Ghose, former financial ana- Julia Hoggett says this requires London such as Netflix and Google.
Negative news in everyone’s favourite There is no need to rehash London’s says Coben, in a crushing blow to the lyst and independent adviser. “Whether to be “young, scrappy and hungry”, in a
capitalist paradise gets negative cover- decline in terms of listings, liquidity or egos of reporters everywhere. it is large caps or IPOs, show me the way that is unfamiliar to the exchange. Technology companies that “benefit
age in the American media (and full dis- valuations. Those interested can consult London news flow just hasn’t been home runs. Name the companies that One impressive UK founder told me most” from telecoms infrastructure and
closure, I worked at the WSJ at the time). at least four government reviews, vari- good. Companies that floated in 2020 are really crushing their peer group.” that while Nasdaq and NYSE had forced drive traffic growth should contribute
Yet Panglossian longing for the US in ous regulatory consultations, two com- and 2021 performed poorly every- Those who criticise the media’s failure their way on to his schedule, he hadn’t more to costs, according to the chief
London now extends to taking tips from peting City task forces and innumerable where. But London had several outright to “celebrate success” seem to think it heard from London. I have his details — executives of 20 groups including BT,
the Trump school of reputation man- reports. The bunfight to be seen to be embarrassments. Companies shouldn’t can be willed into being by the power of if anyone would like to get in touch. Deutsche Telekom and Telefónica, who
agement. London Stock Exchange involved was such that the Capital Mar- go bust a year after listing, as Made.com newsprint. Generic bleating risks over- signed an open letter seen by the Finan-
Group boss David Schwimmer criticised kets Industry Taskforce in May did, or be accused of channel stuffing as shadowing legitimate questions about [email protected] cial Times. It will be sent to the Euro-
pean Commission and members of the
European parliament.
“Future investments are under seri-
Retail ous pressure and regulatory action is
needed to secure them,” they warned.

John Lewis chair

“A fair and proportionate contribution
from the largest traffic generators
towards the costs of network infrastruc-
ture should form the basis of a new

pledges ‘orderly’
approach.”
They added that regulators needed to
take action to help secure future invest-
ment, with telecoms groups having to
spend billions to support the rollout of

transfer of power
5G and upgrade to full-fibre networks.
Signatories included Timotheus Hött-
ges at Deutsche Telekom, Christel Hey-
demann at Orange, José María Álvarez-
Pallete at Telefónica and Pietro Labriola
at Telecom Italia. It was also supported
White to leave post in The management was also asked if it by outgoing BT chief executive Philip
intended to appoint more executives Jansen, his successor Allison Kirkby,
2025 as ailing group seeks with experience in retail — newly
return to profitability appointed chief executive Nish Kanki-
‘Future investments are
wala has a consumer goods background,
LAURA ONITA while White, previously a senior Treas- under serious pressure
ury official, joined from media regulator
Dame Sharon White will step down as Ofcom, which she ran.
and regulatory action is
chair of John Lewis and Waitrose in 2025 Kankiwala said at the time: “We as a needed to secure them’
as part of an “orderly succession proc- team feel strongly that we have the right
ess”, just weeks after the retailer warned skills and capability to deliver the per- who is currently chief executive at Telia,
it would take a further two years to com- formance that we need.” The former as well as Vodafone’s chief executive
plete a turnaround plan she began. Hovis boss and PepsiCo and Burger King Margherita Della Valle.
White, who informed the board of the executive assumed the newly created They suggested that a payment mech-
UK’s largest employee-owned company role of CEO earlier this year. anism might only make demands on
yesterday of her intention to leave, said: John Lewis Partnership posted a loss “the very largest traffic generators”
“Having led the partnership through the before tax of £57.3mn in the six months with a focus on “accountability and
pandemic and the worst of the cost of transparency on contributions . . . so
living crisis, it is important that there is that operators invest directly into
now a smooth and orderly succession
‘There is a long road ahead Europe’s digital infrastructure”.
process and handover.” and I am committed to The so-called fair share initiative has
Her five-year tenure makes her the been picking up support in Brussels,
shortest-serving chair in the mutual’s
handing on the strongest with the European parliament calling in
history, having joined in February 2020. possible partnership’ June for “the establishment of a policy
Last month the retailer warned it framework where large traffic genera-
would take until 2027-28 to complete a to July 29, less than the £66.8mn loss it tors contribute fairly to the adequate
five-year revival plan spearheaded by recorded during the same period last funding of telecom networks without
White, who has pledged to return the
ailing retailer to profitability.
White also faced controversy after she
year. Total group sales were £5.8bn in
the six-month period, up 2 per cent year
on year, with Waitrose sales up 4 per
High Court JPMorgan has taken Sports Direct to
the High Court over a £5.4mn bill it
alleges the retailer owes for leaving a
— work that the bank subsequently
had to undertake before it could
lease the premises again. This
prejudice to net neutrality”.
The commission has said perhaps
€200bn of additional investment is
considered selling a stake to outside
investors to raise money to invest in the
cent but John Lewis’s down 2 per cent.
In March, it cancelled its prized staff
Sports Direct vast UK site in a state of disrepair.
The sportswear chain, which was
amounted to £3.3mn.
The site included a distribution
required to meet its connectivity targets
of 5G in all populated areas and full giga-
partnership. That plan was eventually
shelved.
bonus for the second time in three years
and warned of job cuts. faces property ultimately a tenant of the bank,
vacated the complex in Wigan in 2019,
centre, office, warehouse, two
helicopter hangars and car parks.
bit coverage across the EU by 2030.
The letter’s signatories said Big Tech
Asked last month if the current senior
team would be in place to see it through,
White said “yes”.
Both the department store and super-
market typically make three-quarters
of their annual profits in the months
disrepair claim taking advantage of a break clause in
the 10-year lease it signed in 2014.
Sports Direct, owned by Mike
“In the final six weeks of the term
of the lease, [Sports Direct] started
removing the mezzanines and
companies pay “almost nothing for data
transport in our networks” while some
cloud providers charge customers “up
before Christmas. Ashley’s Frasers, has been accused of racking,” Mills & Reeve, to 80 times as much for the onward
White said yesterday: “There is a long not carrying out most of the representing JPMorgan Europe, said. transport of data from the cloud”.
road ahead and I am committed to refurbishment work that it was “They made a poor job of this and Tech groups have previously opposed
handing on the strongest possible part- contractually required to do before it ran out of time . . . there was fair share proposals and argued they
nership to my successor.” left, breaching some covenants and considerable debris on site.” already invest in internet infrastructure
Rita Clifton, deputy chair, will over- causing “loss and damage”, according The law firm claims the bank lost including subsea cables and data cen-
see the process of appointing White’s to court documents filed by the bank. £1.8mn in potential rent in the time tres as well as content and services.
replacement who must be approved by Lawyers for JPMorgan Europe said in it took to refurbish and advertise the Daniel Friedlaender, head of CCIA
the retailer’s board. the documents that Sports Direct had property. It is also seeking interest Europe, which lobbies on behalf of the
The process to appoint White started more than six months to make good and other miscellaneous payments. tech industry, said: “Telcos want to get
in November 2018; she succeeded Sir “any alterations, cover up or changes it Sports Direct and JPMorgan their networks fully subsidised by the
Sharon White’s five-year tenure is Charlie Mayfield, who was chair from made without the landlord’s consent” declined to comment. Laura Onita same firms who have helped them grow
the shortest in the mutual’s history 2007 until 2020. and thrive.”
Chris J Ratcliffe/Bloomberg

Retail Financials

Store chains warn on EU payment shake-up GAM appoints chief after Liontrust bid failure
IAN JOHNSTON — BRUSSELS and furniture prefer to negotiate longer body for retailers and wholesalers, said: SALLY HICKEY the year, with net outflows hitting Pictet, founder of Fabien Pictet & Part-
terms with suppliers, allowing them to “We’re extremely worried. For example, SFr2.2bn in the same period, despite a ners and Carlos Esteve, founder of
The EU’s plans to enforce 30-day pay- The new board of Swiss asset manager
spread payments over time. if you’re a small clothing boutique, you strong investment performance. Banque Heritage.
ment terms for businesses in the bloc GAM has appointed Elmar Zumbuehl
While Lakin said Kingfisher preferred buy your season in advance and usually GAM’s board agreed to step down last Anthony Maarek, a former partner at
have dismayed retail groups, which say as chief executive after the previous
30-day payment terms for small busi- pay your supplier over a certain period month after the failure of the takeover Deloitte, and Jeremy Smouha, a found-
the proposals will inadvertently push board stepped down following the
nesses to avoid putting “good suppliers as you sell it. You don’t have the offer by Liontrust, which was disrupted ing member of GAM, have also been
up prices and encourage them to buy blocking by activist investors of a take-
under financial strain”, it has negotiated resources to buy the stock up front. That by the activist investors, who branded appointed to the board.
more from China. over bid by UK rival Liontrust.
payment terms across Europe of up to will no longer be possible.” the deal “lopsided”. Spillmann said he was “delighted”
The move is intended to support small 60 days, or 90 days for Asian suppliers. The proposals, which still have to be Zumbuehl, who has been the firm’s chief The activists launched a tender offer Zumbuehl had been appointed chief
businesses. But Kingfisher, the UK- negotiated with the European parlia- risk officer since 2017, replaced previ- for 17.5 per cent of the company last executive. “[Zumbuehl] has the right
listed owner of British home improve- ment and member states, are part of a ous CEO candidate Randy Freeman, blend of experience and operational
ment store B&Q and European DIY
‘This [has] consequences broader package of support measures who withdrew from the process because expertise, as well as an in-depth knowl-
stores Castorama and Brico Dépôt, said for consumers in terms for small and medium businesses of “unforeseen family circumstances”. Elmar Zumbuehl,
the newly elevated
edge of GAM to lead the firm,” he said.
the 30-day limit proposed by the Euro- announced by Paolo Gentiloni, EU econ- Rock Investment SAS, part of the “Under his leadership we look to build
pean Commission would lead the com-
of product availability, omy commissioner, and Thierry Bre- “NewGAMe” group of activist investors,
CEO of the Swiss
asset manager, has on GAM’s heritage and strong invest-
pany to raise prices to generate enough choice and price’ ton, commissioner for the internal mar- which includes French telecoms billion- been its chief risk ment performance to return GAM to a
cash in order to pay suppliers on time. ket, last month. aire Xavier Niel, has also increased its officer since 2017 path of success and growth that will cre-
“It does not come for free. It puts the Home improvement stores already Late payments disproportionately hit funding for the company from SFr20mn ate long-term value for our clients,
cost somewhere else in the value chain,” source at least half of their goods from small businesses, with a quarter of all ($21.8mn) to SFr100mn. month, which closes today. The group employees and other stakeholders.”
said Nick Lakin, head of corporate China, said Alisdair Gray, head of EU bankruptcies for EU companies caused GAM’s share price has collapsed 86 currently owns 9.6 per cent of GAM. Zumbuehl said: “[GAM] has a strong
affairs at Kingfisher, which generates affairs at European DIY retail associa- by invoices not being paid on time, per cent since March 2021 after it was The new board, which was voted in by international brand, talented teams
more than half its sales in the EU. “This tion EDRA. “Businesses are going to buy according to the commission. fined by regulators and lost one of its shareholders last week, includes across the business and exceptional
would ultimately have consequences for more from China because they will give The commission “considers that big star fund managers over its involve- Antoine Spillmann, chief executive at investment performance. I look for-
consumers in terms of product availa- you 90 days,” he said. retailers currently use long payment ment in the Greensill scandal. The Bruellan, part of the activist investor ward to building on these strengths to
bility, choice and price.” Christel Delberghe, director-general terms as a way to transfer their business struggling asset manager reported a group, as chair. put GAM on to a sustained recovery
Retailers in sectors such as clothing at Euro Commerce, the representative risk on to smaller suppliers”, it said. SFr22.5mn loss in the first six months of Other appointments include Fabien path.”
Tuesday 3 October 2023 ★ FINANCIAL TIMES 11

COMPANIES & MARKETS

Equities. Soaring costs Commodities

Louis Dreyfus
Renewable energy shares hit profits slip as
Ukraine war
hard by higher interest rates boost fades
SUSANNAH SAVAGE

Louis Dreyfus Company, one of the

world’s biggest traders of coffee, sugar
and wheat, experienced a fall in profits
and sales as the boost from price volatil-
ity because of the war in Ukraine faded
in its main markets.
The Netherlands-based trader gener-
ated net profits of $568mn in the first
half of 2023, down from $662mn for the
same period last year, while the group’s
sales fell from $30.3bn to $25.8bn.
The profits of agricultural trading
groups have slipped from the record
highs seen in the past two years but they
are still well above historical levels.
The Covid-19 pandemic and Russia’s
invasion of Ukraine, a leading supplier
of grain and oilseeds to international
markets, disrupted global supplies,
driving up food prices and threatening a
hunger crisis in many parts of the world.
But for agricultural trading houses the
volatility boosted sales and profits.
LDC’s net profit increased by 44 per
cent in 2022 to more than $1bn, up from
$697mn in 2021, as net sales went up by
more than a fifth.
Prices of key agricultural commodi-
ties have since stabilised, with Chicago
wheat futures falling from a peak of
more than $13 a bushel in March 2022 to
below $5.80 last month. Operating

“Two years ago, we got a huge growth ers of turbine foundations have made In the red: shorting wind stocks Ørsted and Vestas.
‘LDC pursued its focus on
Solar power and wind turbine in commitments to hit net zero, which life even harder for offshore wind com- Shorting means betting on a lower share keeping essential supply
wind turbine
groups among big losers as translated into a lot of investment panies such as Danish developer Ørsted, groups have price.
chains moving safely,
opportunities,” Frandsen said. “Then whose shares have tumbled about 30 been weighed “The contracts signed for offshore
sector falls 20% in two months we hit this inflation wave and compa- per cent since late August. down by a [wind] will be heavily lossmaking for a reliably and responsibly’
nies that locked in their [electricity] Analysts at UBS estimate that sensi- combination long time until the different govern-
GEORGE STEER prices have been left very exposed. The tivity to higher interest rates could cost of less generous ments realise that they need to give costs, meanwhile, have risen, slightly
lag effect is hitting now.” Ørsted between DKr5bn ($709mn) and tax credits, $80-$100 per MWh and not $30-$40,” damping the performance of traders.
Renewable energy stocks have sold off Solar power and wind turbine groups DKr10bn. contracts struck he added. LDC’s chief rivals, Archer-Daniels-
sharply in recent months, significantly have been among the hardest-hit stocks. Some traders argue that renewable at unfavourable European solar module manufactur- Midland (ADM) and Bunge, posted a
underperforming fossil fuel companies, Swedish wind turbine developer groups’ business models are poorly prices and delays ers last month warned that a flood of decline in their second-quarter profits,
as higher interest rates take a toll on the Vattenfall in July said its costs had suited to a high inflation, high interest- in production cheap Chinese alternatives are pricing and last month Cargill, the largest pri-
Tobias Schwarz/AFP/Getty
sector. climbed 40 per cent while South Korean rate world. local companies out of the market. vately held US company, reported a
The S&P Global Clean Energy index, manufacturer CS Wind is down 28 per “Most important is that a lot of these “Big supply-demand imbalances have drop in profits of 43 per cent for its fiscal
which is made up of 100 of the biggest cent since the start of August. companies disappointed in their profit- been building up over the past year or year ending May 31, according to docu-
companies in solar, wind power and US-based wind and solar generator ability,” said David Souccar, a portfolio so,” said Fiona Manning, an emerging ments seen by Bloomberg.
other renewables-related businesses, NextEra Energy last week announced a manager at Vontobel Asset Manage- markets portfolio manager at Premier But ADM and Bunge still beat ana-
has dropped 20.2 per cent over the past cut to its three-year growth expecta- ment. Miton. lysts’ expectations, with ADM posting
two months. tions. “To support rapid growth, you need to Yet manufacturers in China, which adjusted earnings per share of $1.89,
That has put it on course for its worst “Tighter monetary policy and higher keep leveraging the balance sheet or dominates the solar supply chain, are down only slightly from $2.5 in the sec-
annual performance since 2013. By interest rates obviously affect the issue equity. In a zero-rate environ- nursing heavy share price losses of their ond quarter of 2022, when the firm gen-
contrast, the oil and gas-heavy S&P 500 financing needed to grow distributions” ment, this formula worked. In a higher own, having been caught up in this erated its highest-ever profits.
Energy index has added 6 per cent. to shareholders at 12 per cent, said rate environment, it falls apart,” he year’s sell-off in the country’s equity Despite declining profits, Cargill’s
“There’s a dark cloud hanging over NextEra chief executive John Ketchum. added. markets. annual revenue also rose by 7.1 per cent
green stocks,” said Martin Frandsen, a Turbine manufacturer Vestas fell to a “The whole value chain is in trouble,” Since January, S&P Global Clean to a record $176.7bn, according to
portfolio manager at Principal Asset €130mn loss in the second quarter. said Renaud Saleur, a former trader at Energy Index constituents Sungrow Bloomberg.
Management. The threat of less generous tax credits Soros Fund Management who now Power Supply, JA Solar Technology and LDC attributed its buoyant profits to
The decline comes despite tens of bil- and delays affecting the US manufactur- heads Anaconda Invest and who is Risen Energy have fallen about 32 per high crop yields in Brazil and ample
lions of dollars in tax credits, subsidies cent, 33 per cent and 44 per cent, demand from China.
and loans being offered by governments Renewable energy stocks’ gloomy third quarter respectively. “While international trade flows pro-
to green energy companies in the US and The median company in the global gressively adapted to last year’s turbu-
Percentage appreciation
Europe. solar panel manufacturing sector lent environment, some challenges per-
The renewable sector has been partic- 10 ‘The trades at an enterprise value to ebitda sisted into 2023 — a context in which
ularly vulnerable to rising interest rates
because many companies agree long-
contracts (earnings before interest, tax,
depreciation and amortisation) multi-
LDC pursued its focus on keeping essen-
tial food, feed, fibre and ingredient sup-
0
term contracts — fixing the price at signed for ple of about nine times, according to ply chains moving safely, reliably and
which they will sell energy — before
developing their projects. -10 offshore BloombergNEF. That is down from
about 16 times a year ago.
responsibly,” said LDC’s chief executive
Michael Gelchie in a statement.
As global inflation has surged, green
S&P Global Mining
& Energy index
wind will However, Saleur said he was no longer Our global Although prices of wheat and corn
energy companies have been hit by a
huge rise in costs — exacerbated by S&P Global Clean Energy
-20 be heavily shorting solar companies and had
bought in to some stocks in the sector.
team gives you
market-moving
have fallen, the cost of other commodi-
ties traded by the group, such as sugar,
growing demand for renewable projects Industry index
-30
lossmaking “We believe the large part of the value news and views, rice and citrus fruit, have climbed
— while elevated rates have made their
high levels of borrowing more expensive Jan 2023 Sep for a destruction is over,” he said.
Additional reporting by Rachel Millard and
24 hours a day
ft.com/markets
recently as a result of the El Niño sea
temperature phenomenon and rising
to service. Source: Bloomberg long time’ Laurence Fletcher temperatures from climate change.

Crypto Currencies

Three Arrows co-founder Zhu sent to Afghani posts world-beating rally as

prison in Singapore, says liquidator economy shows sign of stabilisation
NIKOU ASGARI its holdings but the liquidators have Zhu and Davies told the New York HUDSON LOCKETT — HONG KONG less shown signs of stabilisation as the Group, the conflict prevention organisa-
BENJAMIN PARKIN — NEW DELHI
grown frustrated with Zhu and Davies. Times in June they had instead spent Taliban has consolidated control and tion, allowing them to shore up dollar
Su Zhu, co-founder of collapsed crypto
It won a Singapore court order earlier time travelling, including visiting Bali, Afghanistan’s currency was the best- taken steps to support the afghani, supplies.
hedge fund Three Arrows Capital, has
this year compelling Zhu to co-operate meditating and surfing. performing in the world in the third which initially fell precipitously after Smith said this had helped make
been imprisoned for four months for
in the investigation, arguing that the They also announced plans in January quarter of this year as foreign aid the takeover. imported foodstuffs, such as wheat,
failing to co-operate with investiga-
founders had not made themselves to raise $25mn for a new crypto inflows and strict capital controls Inflows of dollars from the UN and more affordable for ordinary Afghans,
tions into its failure, its liquidator has
available and had not voluntarily pro- exchange that traded bankruptcy helped the afghani recover from the other aid from international donors many of whom are going hungry.
said.
vided important information. claims after the failure of FTX. historic lows that it reached after the have helped to stabilise it — as have cur- “The strong currency saves lives,” he
Zhu was arrested in Singapore’s Changi Teneo on Friday said it won the com- Teneo said Davies’s fundraising Taliban’s takeover two years ago. rency controls imposed by the Taliban said. “When the crumpled paper cur-
airport while trying to leave the country mittal order from the Singapore court efforts were done “shamelessly, while rency in their hands gets them a little
after Teneo won a court order last week against Zhu “as a consequence of his ducking his obligations to his failed The afghani’s near-10 per cent climb extra bread each day, that makes a huge
for his committal to prison, the advisory deliberate failure” to comply with the company”. makes it the third-best performing cur-
‘They’ve put quite strict difference.”
firm said in a statement on Friday. liquidators and “account for his activi- “Liquidators will seek to engage with rency this year — behind the Colombian capital controls on The prospects for the country are
His Three Arrows co-founder, Kyle ties as one of the founders of 3AC”. him on matters relating to 3AC, focusing peso and Sri Lankan rupee — and its nonetheless bleak. The central bank’s
Davies, has also been committed to four on the recovery of assets that are either strengthening helps to bolster the Tali-
so you can’t exchange overseas reserves have been frozen by
months in prison “but his whereabouts the property of 3AC or that have been ban’s finances as the regime struggles to afghanis for dollars now’ the US, depriving authorities of a vital
remain unknown at this point in time”, acquired using 3AC’s funds,” Teneo said. cope with widespread unemployment. source of foreign currency.
Teneo said. The Singapore police were contacted Its takeover from the US-backed gov- that restrict ordinary Afghans’ access to The UN has so far only raised about 25
Zhu’s detention marks a year-long for comment. ernment in 2021 triggered a historic foreign exchange transactions. per cent of the more than $3bn in
search to find the heads of the crypto The firm owes more than $3bn to economic collapse, with the country’s “They’ve put quite strict capital con- humanitarian aid that it estimates the
fund whose failure last year marked the creditors, including collapsed broker gross domestic product immediately trols on so you can’t exchange afghanis country needs this year.
start of a sharp decline in crypto prices Genesis and exchange Blockchain.com. contracting by a fifth as international for dollars now,” said Gareth Leather, a Smith said this shortfall in aid was
and the collapse of many companies. Last month, the Monetary Authority powers withdrew support and imposed senior economist focused on emerging expected to worsen as the Taliban con-
The Singapore-based hedge fund was of Singapore banned the disgraced sanctions. markets at Capital Economics. “That, tinued to crack down on women’s rights,
a prominent actor in crypto markets, founders from participating in the The gains this quarter have erased the together with the aid money, is support- souring relations with donors.
turbocharging its outsized positions financial sector for nine years. currency’s post-takeover slump but the ing the currency.” “Cash shipments to support UN oper-
with heavy borrowing before its bets Last year, Singapore reprimanded country is now among “the poorest two Authorities have also cracked down ations are slowing down and will con-
soured last June. Three Arrows for providing false infor- or three countries in the world”, accord- on currency speculators and corruption tinue to tail off,” he said. “That could
Teneo was appointed by a court order Three Arrows co-founder Su Zhu mation and breaching asset manage- ing to the UN Development Programme. at customs offices, according to Graeme leave the Afghan economy dangerously
in the British Virgin Islands to liquidate will serve four months in jail ment thresholds. Afghanistan’s economy has nonethe- Smith, senior consultant at Crisis short of liquidity.”
12 ★ FINANCIAL TIMES Tuesday 3 October 2023

COMPANIES & MARKETS

Currency wars The day in the markets

are not what What you need to know
they used to be 3 Treasuries fall and dollar rallies as US
manufacturing activity improves
Gold slides as bond sell-off continues
3 Gold stumbles to lowest level since Price ($ per troy ounce)

Satyajit Das March amid rise in bond yields

3 Wall Street mixed while European
stocks lose ground
1,940

Markets Insight US Treasuries fell sharply yesterday as

the sell-off in the global sovereign debt
1,920

market resumed following stronger than 1,900

C
expected US manufacturing data.
urrency wars, like military companies irrespective of domicile use dollar is more consequential due to the Yields on the benchmark 10-year note
conflicts, have changed. the dollar as their functional currency, need to attract foreign investors to fund advanced 13 basis points to 4.70 per cent, 1,880
Conventional economics further complicating matters. its current account and budget deficit. hitting a fresh post-2007 high, while
assumes that devaluation Foreign exchange amounts are often For emerging market borrowers those on policy-sensitive two-year debt
affects trade, corporate hedged by derivatives or borrowing and funding in non-indigenous currencies rose 7bp to 5.12 per cent as investors 1,860
earnings, prices and capital flows. It sourcing inputs in the revenue currency. without offsetting export income, a offloaded the debt.
does but the relationships are now more The real financial consequences require devaluation can reduce the capacity to The moves were echoed in Europe
nuanced than some might expect. detailed understanding of individual service commitments. where yields on 10-year German Bunds, a 1,840
First, the impact of a weaker business operations — which varies However, devaluation can also be an regional benchmark, advanced 9bp to
exchange rate on export competitive- within the same industry or country. effective mechanism for decreasing real 2.92 per cent and those on 10-year UK
ness might be lessening. Since the 1985 Third, at a macroeconomic level, debt levels, where borrowings are in gilts rose 13bp to 4.56 per cent. 1,820
Plaza Accord, companies — originally devaluation is theoretically inflationary national currency and held by overseas US and European government bond Sep 25 2023 Oct 2
led by automobile manufacturers — but in practice the link is weaker. investors. In practical terms, it can yields have risen sharply in recent weeks Source: LSEG
diversified supply chains to locate pro- Higher import costs may not flow into amount to a selective default. as investors bet that a resilient American
duction in or close to final markets. price levels because of the mix of local The importance of currency may economy will make rate cuts by the US
The threat of disruption from and overseas produced products, avail- reduce further over time if deglobalisa- Federal Reserve over the coming years view has been that markets had become Oil prices retreated from their highest
extreme weather, pandemics and more tion results in lower trade and cross- less likely. overly confident in pricing a rapid easing point of the year. Brent crude, the
recently from geopolitical pressures has border capital flows. The sell-off regained momentum after of monetary policy from the Fed.” international oil benchmark, fell 1.2 per
encouraged so-called “reshoring and The reduced importance Greater emphasis on direct interven- the Institute for Supply Management The US Dollar index, a measure of the cent to $91.09 a barrel.
friendshoring” of operations. This of exchange rates may tion such as tariffs, embargoes, sanc- manufacturing purchasing managers’ currency’s strength against a basket of Blue-chip stock indices on Wall Street
reduces or alters currency exposures. tions, subsidies, restrictions on invest- index, which tracks monthly changes in six peers that tends to rise when were mixed, with the benchmark S&P 500
The effects depend on the export — alter the balance of power ments and asset seizures may also US factory activity, came in at 49 for investors expect higher rates, added 0.6 down 0.6 per cent while the tech-focused
especially the elasticity of demand for it, between policymakers diminish the role of exchange rates. September compared with 47.6 in the per cent and reached its highest level Nasdaq Composite had gained 0.1 per
relative production costs, available This shift, in part, reflects the practi- previous month. The reading was the since November last year. cent by midday in New York.
capacity, competition, switching costs cal difficulty of targeting specific cur- highest since November and well above The sell-off in bond markets also hit Across the Atlantic, the region-wide
as well as issues such as quality, techno- ability of substitutes and the inability or rency values, particularly where every economists’ forecasts of 47.8. demand for gold, which gave up 0.9 per Stoxx Europe 600 index lost 1 per cent,
logical complexity, specifications, trans- unwillingness to pass on higher nation wants an advantageous exchange Mark Haefele, chief investment officer, cent to trade at $1,831.3 per troy ounce, closing at its lowest level since March,
port expense and supply reliability. expenses to end users. rate. Such targets may clash with infla- at UBS Global Wealth Management, said its lowest level since early March. Higher after a purchasing managers’ survey
But many goods and raw materials Finally, in terms of capital flows, cur- tion and monetary objectives and risk it had become a “consensus trade” that bond yields typically make gold less indicated that business activity was
are priced in dollars, muting currency rency weakness is assumed to make a retaliation, complicating economic bond prices would rise next year. “Our attractive to investors. continuing to shrink. Daria Mosolova
risks. Sales under long-term contracts country a less attractive investment management. For policymakers, the
are partially immunised from short- destination due to potential losses. reduced importance of exchange rates
term exchange rate fluctuations. But this depends on the instrument’s as a policy tool may alter the balance of Markets update
Second, devaluation boosts account- denomination and whether the buyer is power between central banks and gov-
ing incomes with foreign earnings trans- domestic or foreign. The ability to ernments.
lated at a more advantageous rate but attract foreign capital is also influenced Investment decisions need to incor-
does not improve cash flow — unless the by available investment options (such porate these realities rather than exist- US Eurozone Japan UK China Brazil
amount is repatriated and converted. as the US technology sector), relative ing preconceptions about currency Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa
Exporters often keep their foreign currency adjusted returns and special influences. As economist John Kenneth Level 4273.08 1767.34 31759.88 7510.72 3110.48 115282.94
earnings to meet commitments in the considerations such as the dollar’s sta- Galbraith held, the march of events is % change on day -0.35 -0.97 -0.31 -1.28 0.10 -1.10
relevant currency, reducing the influ- tus as a reserve currency. the enemy of conventional wisdom. Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $
ence of variable exchange rates. The Japan’s ability to finance itself from Level 106.515 1.050 149.845 1.212 7.304 5.071
location of ultimate business owners domestic savings and its central bank Satyajit Das is a former banker and author % change on day 0.274 -0.850 0.415 -0.737 0.000 1.320
and the actual cash flow to them is cru- has limited the problems of a falling yen. of ‘A Banquet of Consequences Reloaded’ Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond
cial. Some businesses such as resource In contrast, for the US, the value of the and ‘Fortune’s Fool’ Yield 4.694 2.922 0.771 4.720 2.687 11.457
Basis point change on day 14.660 8.300 0.540 13.400 0.000 2.200
World index, Commods FTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 430.62 90.97 89.27 1870.50 23.08 3716.90
% change on day -0.67 -1.33 -1.67 -0.16 2.33 0.69
Yesterday's close apart from: Currencies = 16:00 GMT; S&P, Bovespa, All World, Oil = 17:00 GMT; Gold, Silver = London pm fix. Bond data supplied by Tullett Prebon.

Main equity markets

S&P 500 index Eurofirst 300 index FTSE 100 index
4640 1840 7840

7680
4480
1800 7520
4320 7360

| | | | | | | | |
4160 | | | | | | | | | | | | | | | | | | | |
1760 | | | | | | | | | | | | | | | | | | | | 7200 | | | | | | | | | | |

Aug 2023 Oct Aug 2023 Oct Aug 2023 Oct

Biggest movers
% US Eurozone UK
Discover Fin Services 5.88 Schindler 1.87 Intercontinental Hotels 1.35
Insulet 3.60 Continental 0.93 Bae Systems 1.12
Ups

Viatris 3.14 Vivendi 0.80 Entain 0.88

Nvidia 2.79 Dassault Systemes 0.75 United Utilities 0.25
Live Nation Entertainment 2.18 Kone 0.53 Scottish Mortgage Investment Trust 0.24
%
Nextera Energy -8.73 Edenred -11.07 Beazley -3.79
Kellanova -6.48 Casino Guichard -5.99 Sse -3.57
Downs

Nisource -5.83 Ses -4.12 Natwest -3.39

Vf -5.80 Ageas -4.02 Rs -3.37
Pg&e -5.61 Fresenius -4.01 Centrica -3.33
Prices taken at 17:00 GMT Based on the constituents of the FTSE Eurofirst 300 Eurozone
All data provided by Morningstar unless otherwise noted.

Wall Street Europe London

Media group Sphere Entertainment Corporate voucher and catering groups Following Severn Trent’s news last week
jumped after its Las Vegas venue opened fell sharply after Olivia Grégoire, a French of a fundraising to boost infrastructure
on Friday with a show from rock stars U2. minister, threatened to cap the spending, water group Pennon headed
The globe-shaped venue reportedly commissions from meal vouchers. the FTSE 250 index on plans to invest
cost $2.3bn and features a “16K by 16K The news was revealed in Le Figaro, about £2.8bn in “water quality and
immersive display plane”, said the which said the government was awaiting resilience”, it said.
company. the results of a probe by the competition FTSE 100 peer United Utilities edged
SmileDirectClub tumbled after a watchdog into the meal voucher market up on unveiling plans also to spend
regulatory filing revealed that the teeth- to determine whether it was “fair”. billions, with the programme being
straightening group had voluntarily A cap would be introduced if the sector “funded with equity and debt”, it said.
applied for Chapter 11 bankruptcy was proved to be dysfunctional, reported Russ Mould, investment director at
protection. the newspaper — a possibility that AJ Bell, said “the problem the utilities
Founders of the lossmaking company weighed on Edenred and Sodexo. face is that the costs of borrowing have
committed to invest “at least” $20mn to A report in Finanz und Wirtschaft gone up significantly”, which made
bolster its balance sheet as it searched buoyed sensor maker AMS Osram. juggling “between rewarding
for longer-term financing. Finance chief Rainer Irle told the Swiss shareholders, funding investment and
A regulatory development sent pharma newspaper that recent refinancing keeping a lid on bills a difficult one”.
group NRx rallying. initiatives would ensure the group’s long- Joining United in the upper reaches of
It was given clearance by the US Food term stability, adding that he expected the FTSE 100 was defence contractor
and Drug Administration to proceed with AMS to deliver positive free cash flow BAE Systems, which announced that it
human trials for NRX-101, its experimental from 2024. had been awarded £3.95bn of funding
drug for treating chronic pain. The Austrian group dived last week on from the Ministry of Defence linked to a
Jonathan Javitt, chair, said he was announcing plans to secure €2.25bn next-generation submarine programme.
seeking “fast-track designation, priority through several measures, including a Some positive regulatory news lifted
review and breakthrough therapy capital increase and new corporate debt. Futura Medical, which said that it had
designation” for this treatment. France’s Teleperformance slid after been granted a patent that would give its
Viatris, another healthcare company, Deutsche Bank lowered the outsourcer’s treatment for erectile dysfunction
climbed on news that it had received rating from “buy” to “hold”. protection until 2040 in all European
offers to divest substantially all of its Teleperformance has made no secret of markets.
over-the-counter business and its its plans to deploy generative AI but this Broker Liberum said that European
women’s healthcare division for more “will take time to initiate large scale”, said approval boded well for other
than $3bn. the broker, “with key barriers to widescale geographies such as the US, where the
It would, however, retain rights for adoption likely to remain in place over the pharma group was seeking similar
Viagra, it said. Ray Douglas coming quarters”. Ray Douglas protections. Ray Douglas
Tuesday 3 October 2023 ★ FINANCIAL TIMES 13

MARKET DATA

WORLD MARKETS AT A GLANCE FT.COM/MARKETSDATA

Change during previous day’s 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 $

-0.35% -0.56% -1.28% -0.97% -0.31% -0.67% -0.850% -0.737% -0.115% -0.16%
0.34% 2.51% 0.415% 0.58%
Stock Market movements over last 30 days, with the FTSE All-World in the same currency as a comparison
AMERICAS EUROPE ASIA
Sep 03 - - Index All World Sep 03 - Oct 02 Index All World Sep 03 - Oct 02 Index All World Sep 03 - Oct 02 Index All World Sep 03 - Oct 02 Index All World Sep 03 - Oct 02 Index All World

S&P 500 New York S&P/TSX COMP Toronto FTSE 100 London Xetra Dax Frankfurt Nikkei 225 Tokyo Kospi Seoul
4,507.66 15,840.34
20,292.62 7,510.72 32,619.34 2,563.71
7,464.54
31,759.88
4,273.08 19,470.08 15,219.39 2,465.07
Day -0.35% Month -5.41% Year 19.12% Day -1.64% Month -6.45% Year 4.21% Day -1.28% Month 0.59% Year 8.92% Day -0.91% Month -1.99% Year NaN% Day -0.31% Month -2.83% Year 22.54% Day 0.09% Month -2.15% Year 5.69%

Nasdaq Composite New York IPC Mexico City FTSE Eurofirst 300 Europe Ibex 35 Madrid Hang Seng Hong Kong FTSE Straits Times Singapore
14,034.97
53,145.36 1,812.07 18,382.06
9,449.60 9,319.00 3,233.30 3,208.86
13,264.57 1,767.34 17,809.66
50,962.30
Day 0.34% Month -5.51% Year 25.37% Day -0.41% Month -4.65% Year 13.55% Day -0.97% Month -2.48% Year 14.96% Day -1.16% Month -1.38% Year 26.50% Day 2.51% Month -1.70% Year 3.33% Day -0.27% Month -0.68% Year 2.59%

Dow Jones Industrial New York Bovespa São Paulo CAC 40 Paris FTSE MIB Milan Shanghai Composite Shanghai BSE Sensex Mumbai
34,721.91 116,338.56 28,650.49 3,137.14 65,828.41
115,741.81 7,296.77 3,110.48 65,087.25
33,319.76 7,068.16 27,849.65

Day -0.56% Month -4.38% Year 15.96% Day -1.10% Month -2.17% Year 4.82% Day -0.94% Month -3.13% Year 22.66% Day -1.39% Month -2.80% Year 34.87% Day 0.10% Month 1.51% Year 0.54% Day 0.49% Month 1.23% Year 15.22%

STOCK MARKET: BIGGEST MOVERS UK MARKET WINNERS AND LOSERS

CURRENCIES

UK SERIES
FTSE ACTUARIES SHARE INDICES www.ft.com/equities FT 30 INDEX FTSE SECTORS: LEADERS & LAGGARDS FTSE 100 SUMMARY

FT WILSHIRE 5000 INDEX SERIES

FTSE GLOBAL EQUITY INDEX SERIES

UK STOCK MARKET TRADING DATA

UK RIGHTS OFFERS UK COMPANY RESULTS UK RECENT EQUITY ISSUES

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.
14 ★ FINANCIAL TIMES Tuesday 3 October 2023

MARKET DATA

FT500: THE WORLD'S LARGEST COMPANIES

FT 500: TOP 20 FT 500: BOTTOM 20 BONDS: HIGH YIELD & EMERGING MARKET BONDS: GLOBAL INVESTMENT GRADE

INTEREST RATES: OFFICIAL BOND INDICES VOLATILITY INDICES GILTS: UK CASH MARKET

BONDS: BENCHMARK GOVERNMENT

INTEREST RATES: MARKET

GILTS: UK FTSE ACTUARIES INDICES

COMMODITIES www.ft.com/commodities BONDS: INDEX-LINKED

BONDS: TEN YEAR GOVT SPREADS

Sources: NYMEX, ECX/ICE, CBOT, ICE Liffe, ICE Futures, CME, LME/London Metal Exchange.* Latest prices, $
unless otherwise stated.
Tuesday 3 October 2023 ★ FINANCIAL TIMES 15

FINANCIAL TIMES SHARE SERVICE

Main Market

AIM

Investment Companies
Guide to FT Share Service

Investment Companies - AIM

16 ★ FINANCIAL TIMES Tuesday 3 October 2023

MANAGED FUNDS SERVICE

SUMMARY FT.COM/FUNDS
Tuesday 3 October 2023 ★ FINANCIAL TIMES 17

MANAGED FUNDS SERVICE

18 ★ FINANCIAL TIMES Tuesday 3 October 2023

ARTS

Elemental music and

Rock ballet shows dancers’ mettle a hall-shaking finale
CLASSICAL
like landscape; the feeling of
space for Montgomery came
through in a questing quality, as if
New York Philharmonic Bell was setting off on an enor-
David Geffen Hall, New York mous endeavour.
aaaae The violin was the lead voice,
with one modest cadenza in “Air”,
George Grella Bell playing with his typical sing-
ing tone, with long, elegant
The New York Philharmonic’s phrases even in the fastest music.
2023-24 season opened at David Without the usual pile of virtuosic
Geffen Hall with outgoing music challenges for the violinist, this
director Jaap van Zweden leading was still a showcase for him.
the first subscription concert. One of the more sheerly beauti-
Except for a brief announcement ful players, the straightforward
to begin, there was little fuss over and warm communication of the
that, but there was a sense of occa- music fitted his manner perfectly.
sion beyond it being opening Though new, it seemed well-worn
night. The feature was the US pre- and comfortable for Bell and the
miere of The Elements, a collabora- musicians, with classic pleasures
tive violin concerto commissioned for the listener.
and performed by Joshua Bell. The Copland’s Third Symphony is a
other work on the programme was familiar, well-worn work for the
Aaron Copland’s Symphony No 3, Philharmonic. They first played it
and on this crowd-pleasing night, in 1947, and this concert was the
there was the subtle and powerful 69th performance. Beyond that,
feeling that the real event was the this is a defining work of mid-20th-
orchestra putting its own history century American music, for
on display. which the Philharmonic was an
The Elements (which had its essential ensemble.
different choreographer, seven compos- wail of Osborne’s vocals and onstage gui- world premiere on September 1 With van Zweden crisp and
DANC E ers and orchestrators have replumbed tarist Marc Hayward, while excellent, with the NDR Elbphilharmonie clean with the baton, the orchestra
the original music for the Royal Ballet never quite takes control — a better Orchestra in Hamburg) comes played with an easy energy and
Black Sabbath — The Ballet Sinfonia and, yes, a dramaturge licked sound mix might help. from Bell wanting a new work in power, creating that extra bit of
Hippodrome, Birmingham the whole thing into shape. A smoke BRB’s dancers, performing to tunes multiple parts, each of which can musical feeling that comes when
aaaee machine on overdrive and lighting by KJ that were hits before their mothers were stand on its own. He commis- the notes are so familiar. There
enhanced the rock arena vibe. born, were on cracking form. The open- sioned Kevin Puts, Edgar Meyer, were a few casual moments in the
Louise Levene Lead composer Christopher Austin, ing by Cuban dancemaker Raúl Reinoso Jake Heggie, Jennifer Higdon and brass, but the impression was that
in consultation with the band’s guitarist offers plenty of free-spinning ensembles Jessie Montgomery to write, the players were enjoying listening
Black Sabbath — The Ballet was the brain- and founding member Tony Iommi, and a never-ending kiss duet for Javier respectively, “Earth”, “Water”, to what was going on around them.
child of Birmingham Royal Ballet direc- focused on early 1970s hits such as “Par- Rojas and Yaoqian Shang. But only Rei- “Fire”, “Air” and “Space”. As it went along, the perform-
tor Carlos Acosta, who cannily surmised anoid”, “War Pigs” and “Iron Man”, but noso’s closing sequence, full cast power- Even for composers known for ance grew thrilling. Some of that
that joining forces with one of the city’s interleaved these bedsit headbangers ing through fouettés and grandes pirou- their way with a lyrical line and was volume — this is the loudest
greatest exports would prove a natural with more lyrical numbers such as “Soli- ettes, keeps pace with the furious energy satisfying harmonies, the fit the orchestra has been in the
audience magnet. tude”, “Laguna Sunrise” and “Orchid”. of the guitar. between the movements was refurbished hall — while most was
Acosta isn’t the first to pair classical Austin was determined to highlight In act two, which focuses on Sabbath’s remarkable. Each was imaginative the feeling in the music, not just
dance with rock, but the Birmingham the musicality underpinning the band’s drug-crazed touring years, Cassi and distinctive while also flowing Copland’s simple expression but
connection was truly inspired. Perform- material notably the doomy tritones Abranches’ less classical, more loose- naturally from one to the other. the complex and deep emotions of
ances sold out at startling speed, attract- Top: Birmingham Royal that were their signature. Large help- limbed movement style is a better fit for The consistent approach was the slow movement. That was so
ing an entirely new crowd intrigued by Ballet in ‘Black Sabbath — ings of brass and percussion mimic the the music. Sun Keting’s brassy, filmic impressionistic: Puts used a rising lovely, it almost overshadowed the
the oil-and-water crossover. The Ballet’. Above: with Sturm und Drang of the Sabbath sound orchestration is supplemented by the do-re-mi-sol figure as his founda- famous fanfare in the finale. In
Acosta assembled an unusually large guitarist Marc Hayward but the end result remains a very kid- voices of band members recalling highs tion; Meyer’s music cycled over the end, that made the hall shake
Johan Persson
— and potentially unwieldy — creative gloved rendering of the real thing. There and lows: “The cocaine bill was more and around itself; Heggie’s flames with the sounds of music and then
team. Each of the ballet’s three acts has a is nothing in the pit to match the siren than the recording bill”; “We’d disman- were in the dancing energy; roaring applause.
tle the bathroom completely.” for Higdon, air was a tender,
The finale, Everybody is a Fan, was slightly melancholy Sibelius- lincolncenter.org/home
written by Swedish choreographer-in-
chief Pontus Lidberg. He has an impres-
sive pedigree — Paris Opera, Royal Dan-
ish and New York City Ballet — but his
writing here seems generic (when in
doubt: twirl). Arms in fourth, feet in
fifth position is hardly the default
response to “Sabbath Bloody Sabbath”.
There is a smooth duet for Tyrone Sin-
gleton and Céline Gittens and another
between Riku Ito and the guitarist, but it
all feels strangely deaf to the music — as
if it had been rehearsed to Rameau.
There are moments of Dionysian
release — headbanging, a little air guitar
— but it was only in Wednesday’s closing
moments, when the 75-year-old Iommi
stepped out of the mist with his down-
tuned Gibson, that the stage caught fire.
Sadly he isn’t booked for the whole run.

Touring to Plymouth and London to

October 21, brb.org.uk Violinist Joshua Bell and conductor Jaap van Zweden — Chris Lee

Foot-stamping pizzazz of a fiddler’s band

audience very much up for the ride. Hebrew liturgical vocal; or a flavourful
MUSIC But if the atmosphere was more akin Yiddish or Ladino harmonic flourish, to
to a rock concert — albeit with a crowd make the hairs on the back of your neck
Itzhak Perlman: In the that included very young children and stand up. And sometimes, what it took
Fiddler’s House multifaith elders — many seemed to be was Netsky encouraging us to get up and
Music Center at Strathmore experiencing this acoustic fiesta for the dance in the aisles, as if we were guests
Bethesda, Maryland first time. There was an easy intimacy at a wedding.
aaaae about proceedings. From the happy-sad It was in 1998 that Perlman first pre-
lament of “Kale Bazetsn/Khusidl” to the sented In the Fiddler’s House with a group
Clemency Burton-Hill bubbling vivacity of “Simkhes Toyre of star klezmorim. Three decades later,
Time”, you felt this could almost be a the project has lost none of its charm
I was a child when I first saw the violinist jam session in the company of friends and foot-stamping pizzazz. This “old
Itzhak Perlman perform, and had my and family, dealing with big feelings, world” music — much of it rooted in the
life duly changed. It was at London’s anywhere across the globe. folk traditions of what is now Ukraine,
Barbican Centre, on November 12 1989, Music, expressing and addressing as it but sounding for all the world like the
just three days after the Berlin Wall had does the gamut of human experience, melting pot that is simply global
fallen. I couldn’t have known the intri- can do so much with so little. In this humanity — feels particularly resonant
cate connections I see now, of course; or case, sometimes, all it took was a bit of in our current one.
what an extraordinary life that Perlman fiddle improv — I like to think Stradivar-
— who was born, in Tel Aviv-Yafo, in the ius would have approved — or a keening strathmore.org
final weeks of the second world war —
has lived. Yet to see him wheeling him- Itzhak Perlman
self on stage now, exuding his imitable on stage at the
charisma, is to know there has been no Music Center at
attrition, no limits, no slowing down. Strathmore
Lloyd Wolf
This is a 78-year-old violinist who is evi-
dently still searching for something.
Last week, Perlman brought a live In
the Fiddler’s House show to Bethesda,
Maryland, in preparation for a multi-
year, multi-country, multi-genre project
to commemorate his 80th birthday
in 2025. The band featured many
superb musicians, including the eth-
nomusicologist and saxophonist
Hankus Netsky; Andy Statman, the
composer, clarinettist and mandolinist
(wearing fluorescent yellow trainers,
as you do); and various instrumentalists
and singers from the Brave Old World
klezmer conservatory. The cavernous
Music Center at Strathmore was
brimful and buzzing, the fan-heavy
Tuesday 3 October 2023 ★ FINANCIAL TIMES 19

FT BIG READ. ECONOMIC POLICY

Bumper corporation tax receipts have filled the country’s coffers. But, despite the windfall, the
government is acting cautiously in trying to invest in a more sustainable economy.
By Jude Webber

I
reland is booming, thanks to the Ireland has one of the EU’s fastest
impact of global tech. So you might growing populations: the number of
expect Brendan, the managing people living in the country has risen by
director of a US-owned software nearly a third in the past two decades,
development and IT centre in the largely driven by immigration. In the
country’s south-east, to be a happy man. year to April alone, Ireland’s population
Instead he is worried about recruiting has grown by almost 100,000.
and retaining staff in a country whose But it also has the bloc’s fastest-ageing
creaking infrastructure is not keeping population, with the proportion of peo-
pace with its wealth. ple aged 65 and over, as a share of the
Take housing. While the cost of living working age population, set to almost
outside the capital is enviably cheaper double to 46 per cent in 2050 from 25
than in Dublin, Brendan — who asked per cent in 2020.
for his real name not to be used — finds That sets up a mismatch between
staff struggle to relocate because there those contributing taxes and the
are only a handful of properties for rent number drawing pensions. The govern-
in the entire county where his firm is ment estimated two years ago that by
based. 2030, Ireland would have to find at
Ireland’s acute housing crisis has con- least an extra €7bn a year to fund
signed two-thirds of people in their mid- age-related costs, a cost that will grow
to late-20s to living in their childhood as the government predicts the number
bedrooms because they cannot afford to of over 65s will increase 60 per cent in
buy or rent. But the country’s logistical the next 20 years.
problems go well beyond that. In addition, the government esti-
Ireland’s transport, health, education, mates that investment of some €119bn
energy and water services are under will be needed by 2030 in low-carbon
increasing strain after a decade of technologies and infrastructure — like
under-investment following the 2008 wind power, electric vehicles, heat
financial crash. In just one illustration of pumps, reforestation and changes in
the bottlenecks in a country of 5.3mn agricultural practices — and the govern-
people, nearly 10 per cent of adults on ment has already warned that policy-
hospital waiting lists have been waiting makers need to “use taxation as an
for more than 18 months. The official instrument in the transition towards a
target is 12 weeks. lower carbon economy”.
For Brendan, his county’s poor train But in the meantime, simply funding
and bus connections are especially frus- today’s needs remains a challenge. Over
trating. A transport system designed 670,000 people in Ireland live below the
“largely for people going shopping”, not poverty line, says Colette Bennett, an
commuting, is “hurting competitive- economic and social analyst with Social
ness,” he says. The IT centre could easily Justice Ireland, an independent think-
be located in another country so “we’ve tank and advocacy group, including
got to work harder to actually make it a 100,000 who have jobs.
viable proposition” for workers, he She urged the government to recog-
adds. nise that using some of the corporation
Yet Ireland is awash in cash. Corpora- tax windfall to tackle social needs
tion tax receipts have more than tripled should also be considered an invest-
in the past eight years and hit a record of ment in the future. “It doesn’t make
€22.6bn last year. The central bank esti- sense to only ringfence that [windfall
mates that Ireland’s general govern- tax bonanza] for a rainy day because for
ment balance swung from a deficit of many, it’s already raining,” she says.
€6.8bn in 2021 to an €8bn surplus last But at the same time, she adds, raising
year, the largest surplus since 2006. taxes is now becoming “an imperative.”
The boom times show no sign of slow- McDonnell, at Neri, agrees. “For now,
ing: corporate tax receipts are flooding the implication is that we need not to
in so fast that the government has pen- cut taxes but to increase them so we
cilled in a surplus of €10bn this year, can have an extra level of public spend-

How will Ireland put its

€16.2bn next year, €18.1bn in 2025 and ing,” he says.
€20.8bn in 2026 — a colossal €65bn in Ireland’s ratio of tax revenues to GDP
all over the next four years (though it is the lowest in the EU, according to the
has cautioned that the real figure may IMF — and still below the EU average
be much lower, due to external factors). when compared with the government’s
As a result, the once rural economy is preferred measure of modified gross

newfound wealth to work?

now preparing to set up a sovereign national income, which strips out some
wealth fund. Its GDP numbers, distorted of the distorting effects of the country’s
as they are by the outsized role that glo- globalised economy.
balised companies play in Ireland, were Income tax, corporation tax and the
nevertheless so off the charts last year VAT sales tax together make up 90 per
that they lifted the European Union cent of Ireland’s overall €83bn national
overall. By the same measure, a country tax take — a reliance on income tax
only half a century ago seen as the poor Ireland’s acute on tax cuts and benefits. But a property disastrous. Ireland is poised to raise its away €6bn of those corporation tax that is well above the OECD average,
man of Europe is now one of the EU’s top housing crisis crash and government bailout of the corporation tax rate to 15 per cent from profits in an existing rainy day fund, the IMF notes.
10 economies. has consigned banks, whose reckless lending had January under a global deal, and while which will be subsumed into the new McDonnell says real reform would
But Ireland’s future-focused economy two-thirds of fuelled the property boom, plunged Ire- officials stress there are no signs on the sovereign wealth fund. Separately, it has mean looking at VAT, excise duties,
is being held back by infrastructure people in their land into a fiscal hole that required a horizon that any firms are planning to promised to spend €2.25bn of its sur- income tax and social insurance taxes.
stuck in the past, with companies like mid- to late-20s €67.5bn bailout from the IMF and the relocate, they are queasy at what might plus between 2024-26 on key infra- Yet the government seems more
Brendan’s caught in the middle. As the to living in their EU to climb out of. happen if they did. structure like schools, hospitals and interested in going in the opposite direc-
government prepares to unveil its 2024 childhood In a humiliating turnaround, a Finance minister Michael McGrath transport projects, as well to fund envi- tion. Three junior ministers ignited furi-
budget on October 10, debate is intensi- bedrooms “troika” of IMF, EU and European Cen- and Donohoe warn that as much as ronmental challenges ahead. ous debate in May when they called in a
fying about how best to put the coun- because they tral Bank officials, swept into Dublin in €11bn of last year’s record haul was a But economists say what the govern- national newspaper — with the blessing
try’s newfound wealth to work. And cannot afford to 2010, to put Ireland’s house in order. not-to-be-relied-upon “windfall” with- ment really needs to do is increase other of Taoiseach Leo Varadkar — for a
despite its overflowing coffers, econo- buy or rent Draconian budget cuts followed. out which Ireland would have had a taxes to be ready if the corporate reve- €1,000 tax break in the budget for full-
mists say the real recipe for funding Ire- FT montage/Bloomberg That bust still casts a traumatic nearly €3bn deficit. nue tap runs dry. “There’s a real risk time workers on average wages.
land’s future needs is not splurging tem- shadow; no policymaker wants to be Indeed, without excess corporation with the sovereign wealth fund that it That €1,000 tax break has since been
porary gains, but raising taxes. responsible for bringing austerity back. tax receipts, which have “flattered” will breed complacency in terms of the ruled out but cuts to the universal social
“We are ‘nouveau riche’,” says Fergal Public expenditure minister Paschal Irish state accounts, the country would need to do hard things,” says O’Brien. charge — essentially another form of
O’Brien, director of lobbying and influ- Donohoe recently told an Irish Times be running its 17th consecutive annual income tax — are expected as part of a
ence at business confederation Ibec. podcast that “not spending every cent is deficit this year, IFAC, the budget Multiple crises ahead €1.1bn tax package in this month’s
“What is the point of us being a wealthy the best insurance policy you can have”. watchdog, noted. Underscoring that The government, a coalition of Ireland’s budget. As Varadkar put it recently,
country if we don’t have the things we The second reason for caution is, as vulnerability, Ireland’s corporation tax two centre-right parties, Fianna Fáil and “there are many ways to skin a cat”.
need the most — physical infrastruc- the government, central bank, budget receipts fell by a whopping €1bn in Fine Gael, and the Green Party, is reluc- The Irish Congress of Trade Unions
ture, social and public services?” watchdog the Irish Fiscal Advisory August alone compared with the same tant to boost taxes, however. A general has warned against across-the-board
Council and a string of other economists month last year, although the tax has election is just under a year-and-a-half tax cuts that it says would dispropor-
Treading carefully ceaselessly warn, Ireland’s corporation still netted nearly €13bn so far this year. away at most and with the ruling parties tionately benefit better-off people.
Ireland’s fortunes were transformed tax bonanza could evaporate as quickly The third reason to tread carefully is under pressure from Sinn Féin, the pro- Owen Reidy, ICTU general secretary,
two decades ago when it slashed its cor- as it emerged. that a government spending spree risks Irish unity party that polls show is by far says polls show people want spending
porate tax rate to 12.5 per cent from 40 Last year, three-fifths of Ireland’s fuelling inflation, which has been per- the country’s most popular, cutting on health, education and other public
per cent, accelerating its policy of court- record corporate tax haul came from sistently high in Ireland as it has else- taxes is more on officials’ minds. services to be prioritised.
ing foreign direct investment. Global only 10 groups. A third of the total paid where in Europe since Russia’s full-scale “We’re going to have a proper conver- The government is walking a tight-
giants such as Google, Apple, Meta, between 2017 and 2021 came from just invasion of Ukraine last year. After fall- sation about revenue,” says Tom rope, as it seeks to deliver much-needed
Amazon and Pfizer soon piled in or three companies, according to the IFAC, ing to an 18-month low of 5.8 per cent in McDonnell, co-director of the Nevin investment while not alienating voters
expanded existing operations. which did not name them. July, the consumer price index rose Economic Research Institute, as Ireland or increasing inflation. It says its budget
Using their booming contributions to Using potentially temporary reve- again to 6.3 per cent in August. faces multiple crises “coming at us like a package will total €6.4bn, but it has
state coffers to make long overdue nues for permanent spending would be So far, the government has squirrelled speeding train”. been sternly upbraided by the IFAC
investments to upgrade the domestic watchdog for serially breaching its
economy and improve services might The housing crisis impedes Corporate taxes prevent public A greying population will strain own spending rule that commits to
seem like an obvious, and affordable, the young from moving out finances slipping into deficit the public purse keeping annual increases in core spend-
solution for Ireland’s government. ing to 5 per cent. The government is
As well as the sovereign wealth fund, Share % of those aged 18-34 living with their % of modified gross nation income* Old-age dependency ratio (population aged planning to increase core spending by
whose returns could help ease long- parents, 2022
10
65 and over as a % of those aged 20-64) ‘It doesn’t 6.1 per cent in the 2024 budget.
0 20 40 60 80
term cost pressures such as pensions
and the green transition, the govern-
Including excess
corporation tax
70 make sense But its parallel task is to ensure that
the corporate tax bonanza from the
Greece
ment has said it will set up a public
Portugal
0 60 to only multinational firms that pay a third of
investment fund to finance infrastruc- Ireland’s wages can be used to build an
ture projects. Italy
-10 50 ringfence economy that will not just be a magnet
Spain
But it is likely to approach next
month’s budget with caution. There are Ireland 40
that [tax for global giants but a breeding ground
for homegrown companies it hopes
three reasons for this: firstly, Ireland EU27
-20
bonanza] might one day rival them.
has been spectacularly rich before, 30 “I think that there is an opportunity
during the “Celtic Tiger” boom of the
Belgium
-30 for a rainy to spend the money wisely,” says Edel
France 20
mid-1990s to mid-2000s. The period
was pithily summed up by Charlie Netherlands day Clancy, director of corporate affairs at
Musgrave Group, a supermarket and
-40
McCreevy, a finance minister from Germany Excluding excess 10 because for food retailer whose suppliers include
that time, as “when you have it, you Denmark corporation tax receipts Projections small firms and sometimes low-margin,
spend it”. Sweden
-50 0 many, it’s family companies, “so that we do actu-
On his watch, public spending dou- 1995 2000 05 10 15
* Excludes globalisation effects, especially corporate profits sent abroad, from GDP
20 23 1980 2000 20 40 60 80 2100 already ally put in the foundation for the
bled and the government splurged tax next phase of development in the
revenues from the booming economy
Sources: Eurostat; Irish Fiscal Advisory Council; UN; FT calculations
raining’ country.”
20 ★ FINANCIAL TIMES Tuesday 3 October 2023

The FT View
How to lock in support for Ukraine for the long haul
Anti-Ukraine currents in western pol- tive EU budgetary support to wartime Congress at the fied Russian lines and retake territory,
Aid to Kyiv is becoming itics should not be overstated. The Ukraine is set to surpass that from the weekend Ukraine must be given vital tools —
handful of hard-right Republicans in US this year. Europe, including the UK, including F16 fighter jets and long-range
a political football in the Congress are outliers. Fico’s Smer party may need to take on more of the finan-
jettisoned $6bn
missiles. Its military needs to be mod-
US and elsewhere won only 23 per cent of Slovakia’s vote. cial and military burden if the US politi- of aid to the ernised and shifted more on to Nato-
Poland’s nationalist Law and Justice cal situation worsens. Much responsibil- country to avert standard weaponry. Western training of
These are trying times for Ukraine. Four party is fighting to retain its parliamen- ity falls on the biggest EU countries, a government its troops should be more rigorous and
months in, its counteroffensive against tary majority in elections. But rash elec- France, Germany, and Italy, to hold the shutdown in comprehensive, but tailored more to
Russia’s invasion has not achieved the toral rhetoric can influence how parties line — not easy when key opposition Washington Ukrainians’ preferred way of fighting.
hoped-for breakthroughs. Support for act in power — and minority hardliners parties show pro-Russian sympathies. Ukrainians need more reassurance,
Kyiv, meanwhile, is becoming a political can find ways to hold the rest to ransom. Efforts also need to be redoubled to too, that their country has an assured
football in some western allies. The US A Fico-led Slovakia, if it happens, might enable Ukraine to become more eco- future in Euro-Atlantic institutions.
Congress at the weekend jettisoned join Hungary in a central European nomically self-reliant. War risk insur- Nato’s July summit ended in an awk-
$6bn of aid to Kyiv to avert a govern- “awkward squad”. ance to cover losses for domestic and ward fudge. But an EU summit in
ment shutdown. In Slovakia, populist US president Joe Biden insists agree- foreign investors would help to create December should commit to opening
Robert Fico’s party won the highest vote ment will be reached on all the further confidence to invest in urgent rebuild- accession talks with Kyiv — provided
in an election with an anti-Ukraine $24bn of aid for Ukraine the White ing projects and in boosting Ukraine’s Ukraine, too, has met agreed targets on
stance, days after Poland’s premier House is seeking, but the politics are defence production capacity. So would reforms and fighting corruption.
appeared to threaten a halt in weapons tortuous. And the whole episode is a providing more air defence systems to In a cost of living squeeze, it is easy for
donations to Kyiv amid a dispute over reminder that Donald Trump could yet cities beyond Kyiv — which could also populist parties to insist spending
grain exports. The conclusion is clear: be back as president in 16 months. potentially encourage more refugees to should be funnelled to domestic priori-
Ukraine’s western allies must find ways Support for Kyiv, then, must be return from abroad. Supplying Ukraine ties. But Kyiv’s supporters have a power-
both to speed up support for Ukraine future-proofed as far as possible. The with more anti-ship missiles would help ful message they should shout from the
and to lock it in for the future, in what EU is wisely seeking to pass a four-year, it secure vital Black Sea export routes rooftops: the costs of supporting
now seems set to be a multiyear war of €50bn “Ukraine Facility”, though the for its grain and steel. Ukraine’s fight are tiny compared with
ft.com/opinion attrition. deal is not yet formally done. Cumula- If it is to break through heavily forti- those of allowing Russia to prevail.

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multiculturalism works Don’t penalise poorer states for climate crisis they didn’t cause
Ewan White In the article “Business braced for red The carbon border adjustment along with the UK, are not meeting vulnerable countries to adapt, such as
tape from EU carbon border tax” mechanism (CBAM) regulation was their fair share of current climate and new forms of aid-for-trade.
(Report, FT.com, September 28) by originally conceived with bold development finance needs. This would help ensure countries
Alice Hancock and Andy Bounds it is promises from the EU to collaborate There are also issues regarding the aren’t penalised for a climate crisis
worth noting that unpredictable costs with low- and middle-income countries transfer of resources to the EU through they didn’t cause. If UK politicians plan
and bottlenecks aren’t just a problem in decarbonising their manufacturing the submission of carbon credits. These similar reforms in their quest for
for business. industries, particularly in sub-Saharan could assist green transition efforts in decarbonisation they would do well to
Significant costs may be incurred in Africa. These support measures have the countries where the emissions are learn from this.
future on goods coming from the yet to materialise. The revenue from generated. Jodie Keane
world’s least developed nations, and the CBAM is estimated to exceed Carbon border taxes should come Senior Research Fellow, Overseas
these revenues will flow back to the EU. $80bn a year by 2039, yet EU nations, with support measures for the most Development Institute, London SE1, UK

Hayek’s warnings about Why debt reduction will (Nick) Schaeffer and I recounted in our
book Access for All: Transportation and
free markets apply to AI entail many leaps of faith Urban Growth, about a group of 19th-
The FT Big Read on artificial When discussing fiscal politics, Martin century entrepreneurs seeking a
intelligence regulation (September 14) Wolf is right to highlight the challenges railroad charter from the German
“not a big deal”. It’s a good thing that compares the various approaches being in reducing taxation (“UK politicians kaiser. To convince the sovereign of the
Stephen outside of a smattering of tiresome
bigots on left and right, his premier-
taken around the world. None of them,
however, seem to address the threat
owe voters some candour on tax”,
Opinion, September 18). The same
vast benefits of the new technology,
they attempt to provide him with a
Bush ship has only been greeted positively.
But it is less of a good thing that the UK
that AI poses to markets themselves.
Maintaining the integrity of markets
applies to debt.
It is fashionable to argue for new
practical answer in terms of his daily
life. They explain that with the new rail
hasn’t taken a moment to reflect on its is frequently a matter of regulatory fiscal rules to allow politicians to service he would be able to depart his
successes, and that whenever British concern; but the new thing about AI is increase debt-financed investment, for sumptuous Potsdam residence and

W
politicians talk about the UK model, it that it might destroy markets example, to stimulate green industries. arrive at his Berlin abode by 11 in the
hat unites the follow- is largely to harp on its failures, altogether, or at least undermine the The extent to which such a strategy morning instead of three in the
ing three countries: whether real or imagined. rationale for relying on them as a way will drive growth, create headroom and afternoon. To which the sovereign is
Portugal, the Republic That’s not to say that the UK model of organising human affairs. deliver debt reduction involves several reputed to have replied “And what do I
of Ireland, and the is perfect or comes without trade-offs. If competition within markets is to leaps of faith, in market and political want to do in Berlin at 11?”
United Kingdom? One In my own neighbourhood of Hackney drive innovation and realise other behaviours. The naysayers on the HS2 project are
answer is that all three are led by eth- in north-east London, lower rates of aspects of material prosperity, it must Politicians need to detail how their very much the modern-day version of
nic minority leaders: António Costa, vaccine take-up in the Charedi com- be supplied with freely-made choices fiscal plans will generate growth and the parable’s old monarch. They clearly
Leo Varadkar, and Rishi Sunak. munity (the largest outside Israel and by market participants. However, these return debt to a more sustainable path see the sizeable costs against the
Another is that they are nations where the United States) threatens the suc- choices will quickly be put in the hands to stave off volatile and adverse backdrop of current alternatives, not
the Turkish diaspora heavily rejected cessful elimination of diseases such as of AI, as rational buyers, in all sorts of economic situations in the second half the transformative opportunities high-
Recep Tayyip Erdoğan in May’s elec- mumps, diphtheria, tetanus and polio. markets, realise that AI can do a better even extinguishes, the role of markets of the decade. speed rail will create. Importantly the
tions. Elsewhere in London, fears of witch- job of choosing than they can. as theatres for the exercise of human Malcolm Gooderham already sunk costs cannot be
These two facts are reliable signs of craft and demonic possession have led Markets will then cease to rely on the autonomy, it might call into question Senior Partner, Elgin, London W1, UK recovered. They can only be redeemed
something that any liberal state to child abuse among the capital’s free choices of human beings in order the capacity of free-market capitalism if the project is fully completed.
should want to do: welcome new arriv- black African population. In Bradford, to activate Adam Smith’s “hidden itself to provide a platform for good HS2 naysayers’ arguments It is both a matter of political
als and integrate them into the coun- a rise in preventable illnesses and hand”. This will sever the relationship and fulfilled human lives. credibility and economic common
try’s mores and cultures. infant deaths has been attributed to between markets and human freedom, Owen Kelly echo curmudgeonly kaiser sense.
The elevation of Varadkar, Costa higher rates of cousin marriage among which so preoccupied Friedrich Hayek Director of Engagement and Your editorial “High-speed trains and Elliott Sclar
and Sunak tells us something about the city’s Pakistani community. (he memorably argued that replacing Internationalisation, University of the crashing of Britain’s credibility” Emeritus Professor of Urban Planning
how welcoming those countries are to French critics of the UK model are free markets with planning was “the Edinburgh Business School (FT View, September 27) brought to Climate School, Columbia University
minorities. And the fact that 80 per right to say that the British approach road to serfdom”). If AI diminishes, or Edinburgh, UK mind a likely apocryphal story KH New York, NY, US
cent of British Turks, 91 per cent of presupposes and in some ways encour-
Irish Turks, and 95 per cent of those in ages parallel communities living side-
by-side, rather than together. But

A
France’s more muscular model of inte-
Yet Britain hasn’t taken a gration has not prevented the emer-
gence of parallel communities there
O UTLO O K posse of 20-odd cyclists
in Lycra whoosh down
getting new life,” artist James Charles
Morris, 39, tells me as we stroll down
Bedrock, Detroit philanthropist Dan
Gilbert’s property company which has
moment to reflect on its either. Indeed, it has proved rather Detroit’s infamous “Cass Cass Avenue. been behind much of the city’s recent
AMERI CA
successes, and harps on its more successful at preventing the
emergence of French Rishi Sunaks than
Corridor”. Known for
decades more as a
Morris, moved here around 2013,
doesn’t own a car — unusual, in the
development, credits mayor Mike
Duggan for understanding that “when
failures — real or imagined it has of French Hackneys or Bradfords. destination for addicts and sex Motor City. What’s more, he is neither you want to bring stability, you’ve got
The successful bet that the British workers than for urban lofts, tapas white nor 20-something — the cliché to do the little things first . . . like
Portugal chose opposition candidate
Kemal Kılıçdaroğlu, however reluc-
model makes is that, over time, people
choose freedom for themselves. But it
Detroit is bars and landscaped parks, this area
has now been rebranded “Midtown”.
of those who have recently moved to
Detroit for its arts, food scene and low
making sure the grass is mowed”.
And it’s not just the grass. I was
tantly, also tells us something. As does
the finding that in France and Ger-
many, just a third of Turkish expatri-
faces two threats. The first is that
while the assimilationist model is,
ironically, worse at assimilating
sprucing Once a heart-rending symbol of just
how far my mighty hometown had
fallen, it has become a token of how
cost of living. Morris is a middle-class
African American who moved to
Midtown from one of the city’s poorer
spoilt for choice with places to sit
down this year, from pristine picnic
tables to The Congregation, a
ates voted for Kılıçdaroğlu. Notably,
neither country has had a member of
an ethnic minority at the head of their
minorities, it appeals to the urge, com-
mon in democratic societies, for gov-
ernments to Do Something about
itself up Detroit has bounced back in the 10
years since it became the largest US
city ever to declare bankruptcy.
black neighbourhoods, rather than
following the exodus to the suburbs.
Detroit’s post-bankruptcy scorecard
converted church that is now a
restaurant and performance venue.
Local residents Erica George and Lola
government and neither looks close to immigration. (That the Something is A deal between the philanthropic is impressive by many measures. Its Rushin have seen the area change
doing so either any time soon. ineffective is besides the point.) The community, businesses and the state poverty rate fell from 42.3 per cent in dramatically in the past five years.
That’s the reality that politicians British model will always be under of Michigan led to a debt restructuring 2012 to 30.2 per cent in 2021, says “People are buying properties and
such as UK home secretary Suella threat from politicians who want to plan in 2013 that gave the city a Luke Shaefer of University of taking care of them,” George says. The
Braverman, former German chancel- look like they are doing something, or holiday from paying certain pensions. Michigan Poverty Solutions — though average value of owner-occupied
lor Angela Merkel and ex-president of get good write-ups for supposedly That allowed it to do things such as get it remains the poorest big US city. housing in the area rose between 2016
France Nicolas Sarkozy must confront dynamic action. street lights working, trash collected Unemployment has fallen from 43 and 2021 from $94,700 to $170,300,
when they say that the multicultural The second threat is that part of and derelict properties demolished to per cent at the start of Covid to 16 per according to Data Driven Detroit.
model has “failed”’. What, precisely, what has made the model work is a attract business and residents. All that cent in March — but is still twice the Rushin is worried about
do they think success looks like? callous disregard for the downsides. helped restore a municipal economy estimated pre-pandemic rate. Detroit gentrification, however. She says,
Sunak, the UK prime minister, is The result of pretending there is no shattered after many factories closed, was harder hit by Covid than other “sometimes people of colour cannot
right to say that Britain is a “fantastic problem with vaccinations in Hack- and more than half the city’s cities, largely because its big poor afford to rent properties around here”.
multi-ethnic democracy”, and right, ney, witchcraft in Thamesmead or population fled, starting in the 1950s. population had higher infection And Saunteel Jenkins, CEO of The
too, that there is a successful British genetic diseases in Bradford is they Upgrading Detroit’s credit rating in rates. But now, critically, recovery is Heat and Warmth Fund, which helps
model that manages to incorporate can be left to cause social harm that April, S&P praised its financial spreading to poorer neighbourhoods. with utility bills, says the number of
diversity and maintain the country’s helps to undermine support for the management since 2013, saying For decades, I’ve been visiting the Detroit families needing utility
values and traditions. What he is too UK’s multicultural model. “Detroit’s financial position and area where Detroit’s 1967 riots broke assistance is still going up.
modest to say is that he himself All too often, when called upon to economic condition are the strongest out. When I was there for the 50th How will we know when Detroit’s
embodies that success. He is a practis- defend that model, British politicians they’ve been in decades”. Cash on anniversary in 2017, I had to interview future is secure? “When people born
ing Hindu and a committed monar- adopt a Panglossian tone that leaves hand rose from less than two days of residents under trees — there wasn’t here choose to stay here,” says Bonner.
chist who swore allegiance to King the field open for those whose solution expenditure at the end of fiscal 2013, so much as a fast-food outlet on offer. People like me, who came of age in the
Charles on the back of the Bhagavad is simply to rip it up, despite its rela- to 202 days by the end of fiscal 2022. But last month, city workers were 1970s, couldn’t wait to get out. Now
Gita. He enjoys mithai and the novels tive success. Yes, they should agree “Every day I see people walking their planting rose bushes next to a there is something to stick around for.
of Jilly Cooper. with Sunak — but just do so without dogs, jogging, biking, new apartments manicured park with bright new
But Sunak is not quite right when he illusions. are going up, you’re seeing buildings playground equipment. The writer is a contributing columnist,
says that it is “also a wonderful thing” by Patti Waldmeir that have been abandoned for years Kofi Bonner, chief executive of based in Chicago
that his becoming prime minister is [email protected]
Tuesday 3 October 2023 ★ FINANCIAL TIMES 21

Opinion
Nagorno-Karabakh shows Russia has lost control of its near-abroad With AI and
democracy,
Alexander
flict would not become another big war.
Russia is Armenia’s ally through the
But, in less than three ye yeaars, Ilham
Aliyev, the president of Azerbaijan, has
m o re d e p e n d e n t o n A z e r b a i j a n a n d
Turkey, which both play a vital role in
t o u s e t h e c u r re n t c r i s i s t o ove r t h ro w
Armenia’s west-leaning prime minister, we can’t be
Gabuev Moscow-led Collective Security Treaty
Organization and maintains a military
presence in the country.
managed to rewrite this arrangement at
gunpoint with no pushback from Mos-
cow. It is Putin’s aggression in Ukraine
shadowy financial and logistical
scheme
sch emess tha thatt hel
western sanctions.
help p the KrKreml
emlin in evad
vadee
Nikol Pashinyan. Whether he survives
or not, relations between Armenia and
Russia have been badly damaged. Large
careful enough
At the same time, Moscow has strong that has allowed him to do so. This gives Aliyev and Turkey’s Presi- parts of Armenian society, particularly
economic and security ties with Azerba- First, Russia’s armed forces have no dent Recep Tayyip Erdoğan additional young people, feel betrayed by Moscow
he tens of thousands of peo- ijan that provide significant leverage. s p a re c a p a c i t y f o r a n o t h e r re g i o n a l l eve r a g e , w h i c h t h ey a re n o t s h y and wilwilll pr
proba
obabl blyy dri
drift ft out of Russ ussia ia’’s
p l e w h o h ave f l e d t h e i r Finally, Russia worked closely with w a r w i t h a s o p h i s t i c a t e d a dve r s a r y about using to change the facts on the sphere of influence. TECHNOLOGY
home s in Nagorno -Kara- Fr a n c e a n d t h e U S t h ro u g h t h e U N - backed by Turkey, a leading member ground. At the same time, the European However, it will not be easy for Arme-
bakh, a part of Azerbaijan s a n c t i o n e d M i n s k p ro c e s s, w h i c h Un i o n h a s t u r n e d t o A z e r b a i j a n t o n i a t o f i n d a w ay f o r w a r d . I t h a s f e w Marietje
with a pre dominantly sought to resolve the conflict via talks. re p l a c e t h e o i l a n d g a s i t n o l o n g e r options: ties with Turkey are poisoned Schaake
Armenian population, are a powerful
illustration of the sad reality that “might
Although the Minsk process failed to
produce a negotiated solution, it was an
Due to its brutal invasion of w a n t s t o i m p o r t f ro m Ru s s i a . T h e s e
ties give Baku confidence it will escape
by h is to ry, I ran d o e s no t have t h e
w h e re w i t h a l t o p rov i d e m e a n i n g f u l
makes right” in the South Caucasus. insurance that the Nagorno-Karabakh Ukraine, Moscow can no sanctions for using force in Nagorno- assistance, and the west’s resources are
Last month, Azerbaijan took by force
the ethnic Armenian enclave which first
issue wouldn’t be solved by force.
W h e n A z e r b a i j a n s e i z e d c o n t ro l
longer protect the interests Karabakh.
Finally, Russia is no longer capable of
stretched thin given commitments in
U k r a i n e a n d e l s e w h e re a ro u n d t h e ext year is being labelled
claimed independence in 1991. over the Armenian-controlled Azerbai- of even its closest partners working with the we st . Instead of world. the “Year of Democracy”: a
But the tragic exodus also reveals jani territories and a third of Nagorno- uneasy diplomatic co-operation with One thing is clear: Russia’s role as a series of key elections are
another truth: as a result of its brutal Karabakh in a 44-day war in 2020, the of Nato. Moscow cannot support Arme- Paris and Washington over Nagorno- provider of security in its near-abroad s c h e d u l e d t o t a ke p l a c e ,
i nv a s i o n o f U k r a i n e , Ru s s i a c a n n o K re m l i n m a n a g e d t o t u r n t h e s i t u a - nia sshhould iitt ddeecide ttoo ggoo ttoo w
waar with K a r a b a k h , M o s c o w i s n o w i n o u t- has been severely diminished as a result including in places with sig-
longer protect the interests of even its tion to Russia’s advantage. President Azerbaijan. Russia’s military weakness right competition for influence in the of its dis
disast
astrrous war aga agains instt Ukr
Ukrainaine.e. nificant power and populations, such as
closest partners. Vladimir Putin’s diplomatic interven- in the region was expo possed for all to see South Caucasus. This duel creates space The destabilising effects will continue to the US, EU, India, Indones esiia and Mex-
S i n c e A r m e n i a wo n a w a r a g a i n s t tion positioned Moscow as the region’s last year when Azerbaijan launched a for Baku to use its military without fear be felt across the vast Eurasian land- i c o . I n m a n y o f t h e s e j u r i s d i c t i o n s,
Azerbaijan in 1994, capturing Nagorno- leading power broker, putting Russian brief military assault on Armenia and of a co-ordinated pushback from three mass. democracy is under threat or in decline.
K a r a b a k h a n d s o m e s u r ro u n d i n g peacekeepers on the ground to protect the Kremlin stood by. UN Security Council permanent mem- It is certain that our volatile world will
Azerbaijani regions, the Kremlin has Karabakh Armenians and monitor S i n c e t h e s t a r t o f t h e i nv a s i o n o f bers. The writer is the director of the Carnegie look different after 2024. The question
been the guarantor that this frozen con- the ceasefire. Ukraine, Russia has become more and For now, the Kremlin has been trying Russia Eurasia Center in Berlin is how — and why.
Artificial intelligence is one of the wild
cards that may well play a decisive role
in the upcoming elections. The technol-
ogy already features in varied ways in

West cannot
the electoral process — ye yett many of
these products have barely been tested
before their release into society.
Generative AI, which makes synthetic
texts, videos and voice messages easy to
prorod duce and difficult to distinguish

ignore a murder
from human-generated content, has
been embraced by some political cam-
p a i g n t e a m s. A c o n t r o v e r s i a l v i d e o
showing a crumbling world should Joe
Biden be re-elected was not created by a

in Canada
foreign intelligence service see eek king to
manipulate US elections, but by the
Republican National Committee.
Foreign intelligence services are also
using generative AI to boost their influ-
ence operations. My colleague at Stan-
ford, Alex Stamos, warns that: “What
once to ok a team of 20 to 40 p e ople
with India that they will do their utmost working out of [Russia or Iran] to pro-
global affairs
rs to brush any unpleasantness under the duce 100,000 pieces can now be done by
carpet. This would leave Canada dan- one person using open-source gen AI”.
Gideon gling.
Rachman That Indian assessment might yet be
proved right. But I doubt it. Trudeau
may sometimes come across as a light-
There are steps we can
weight, but he is unlikely to have made a take to prevent it from
e l c o m i n g N a re n d r a
charge of this gravity without evidence.
Indeed, it seems that much of the initial
causing unpleasant
Modi to Washington in intelligence actually came from the US. surprises in 2024 elections
J u n e , Jo e B i d e n s a i d : So these allegations are unlikely simply
“There’s an overwhelm- to disappear into thin air. or other western nations refuse to hand cal view of the idea. Like the Russians an support for the IRA. Deadly bombs AI also makes it easier to target mes-
i n g re s p e c t f o r e a c h It is clearly true that the US sees coun- over Hong Kong activists — or Tibetans and the Chinese, they believe that the were regularly going off in the UK at the sages so they reach specific audiences.
other because we’re both democracies.” tering China as its most important secu- or Uyghurs — might China conclude U S b o t h m a ke s a n d b re a k s t h e r u l e s time,
tim e, and the IRA twi
twice
ce cam
camee clo
close
se to T h i s i n d iv i d u a l i s e d ex p e r i e n c e w i l l
The joint statement issued by the US rity challenge and that India is regarded that, in the emerging world order, it can according to its own needs and whims. wiping out the top levels of the British increase the complexity of investigating
and Indian leaders stressed their com- as an indispensable partner. Australia safely have them kidnapped or killed? Shashi Tharoor, a prominent Indian government. Despite that, it would have whether internet users and voters are
mon belief that “the rules-based inter- and Britain are also ardently courting It is believed that there are over 250 opp osition p olitician and former UN been inconceivable for the UK to send a being fed disinformation.
national order must be respected”. t h e Mo d i g ove r n m e n t . B u t a l l o w i n g different ethnicities represented in the official, gave voice to this sentiment hit-squad on to the streets of Boston — While much of generative AI’s impact
That statement was issued on June 22, India to commission a murder on Cana- populations of both London and when he mocked western condemna- or Vancouver for that matter. on elections is still being studied, what is
four days after the killing of Hardeep dia
dian n soi
soill — if tha
thatt is what
what hap
happ pene
ened d— Toronto. Among them are many people tion of the alleged Indian role in the Nij- The fawning tone adopted by many known does not reassure. We know peo-
Singh Nijjar, who was hit by 34 bullets in would pose a more immediate danger to who are mistrusted or hated by the gov- jar killing, arguing that: “The two fore- wesstern governments, when dealing
we ple find it hard to distinguish be bettwee
een n
a car park in Vancouver. national security than a temporary set- ernments of the countries they have left most practitioners of extraterritorial with Modi, might have given New Delhi synthetic media and authentic voices,
The Nij jar killing got little interna- back in efforts to counter China. behind. Turkey, for example, regularly assassinations in the last 25 years have the impression it can get away with any- making it easy to deceive them. We also
tional attention at the time. But that has If the Indian government concluded accuses western nations of harbouring been Israel and the US.” thing. Anthony Albanese, tth he A
Auustral- know AI repeats and entrenches bias
changed dramatically, following Can- that it now has a free hand to go after its Kurdish terrorists. Tensions between But this argument misses a vital ian prime minister, has called Modi “the against minorities. And we’re aware that
ada’s allegation that India was linked to e n e m i e s — f o re i g n a n d d o m e s t i c — different immigrant communities could point. The US killed dangerous enemies, boss”s”.. Gina Raimondo, the US com- AI companies seeking profits do not also
the killing of the Sikh activist, who India wherev eveer they are liv iviing , that wowou uld also easily be ignited by the importation such as Osama bin Laden, when they merce secretary, called him “unbelieva- seek to promote democratic values.
regarded as a terrorist. create a really dangerous precedent for of political violence. were in countries where it was regarded ble, visionary” when she visited Delhi. Many members of the teams hired to
India rejected Canada’s charges as multicultural societies such as Canada, Despite Modi’s endorsement of the as futile to try and use the loc ocaal justice There is no doubt that the US and its deal with foreign manipulation and dis-
“absurd” and there is already plenty of Britain and Australia. “rules-based international order”, system. But the Americans do not kill allies badly want to get along with India. information by social media companies,
gle eful commentary anticipating the Who would be next in the line of fire? many Indian policymakers take a cyni- alleged terrorists when they are on the But if Canada provides convincing evi- particularly since 2016, have been laid
humiliation of Canada and its prime And which other countries might decide territory of allied democracies. Even the dence of an Indian role in the Nijjar kill- off. YouTube has explicitly said it will no
minister, Justin Trudeau. This view that they also fancied committing a few Israelis are not believed to have assassi- ing, then there will be legal and diplo- longer remove “content that advances
seems ttoo rreest on two iid deas. F
Canada has not produced the evidence
Fiirst, tth
hat murders in the west? China, for exam-
ple, accuses Britain of harbouring crimi-
The fawning tone of many nated anybody in the west since a killing
in Paris more than 30 years ago.
matic processes unleashed that cannot
simply be wished away. The “rules-
f a l s e c l a i m s t h a t w i d e s p re a d f r a u d ,
errors, or glitches occurred in the 2020
to justify its claims. Second, that Can- nals fleeing justice in Hong Kong. Like might have given New Indian frustration over Canada’s based order” may turn out to have some and other past US Pre ressidential elec-
ada’s closest allies — above all, the US,
but also Britain and Australia — are so
the Indians, the Chines esee often see
blur the line between support for seces-
eem m to Delhi the impression it can alleged tolerance for Sikh terrorism
reminds me of the rage felt in Britain in
meaning, after all. tions”. It is, of course, highly likely that
lies about past elect ctiions will play a role
heavily invested in their relationship sion and support for terrorism. If Britain get away with anything the 1980s and 1990s over Irish-Ameri- [email protected] in 2024 campaigns.
Similarly, after Elon Musk took over
X, formerly known as Twitter, he gutted
trust and safety teams. Right when
defence barriers are need eededed the most,

US has the trade tools needed for China’s EVs — but it must use them they are being taken down.
A t U S u n i v e r s i t i e s, e x p e r t s d o i n g
independent research into disinforma-
tion online have been subject to political
attack. The se efforts to undermine
state subsidies and other government duction and ex exccess supply, saturating B u t t h e re i s n o g u a r a n t e e t h a t t h i s d i s p u t e s w i t h a l l i e s a n d p a r t n e r s. important work are troubling. And in
Wendy support. This paved the way for the global markets and crippling interna- situation will continue, particularly as Rather than begin lengthy trade India, the large st country to go to the
Cutler country to b e come the large st global
vehicle exporter this year, surpassing
tional competitors. The ove overrsupply
of EVs has already found its way to
Chinese companies face rising pressure
t o o f f l o a d t h e i r e xc e s s p r o d u c t i o n .
investigations, the Biden administra-
tion has another mechanism at its dis-
polls in 2024, civil society and journalists
seeking to investigate electoral practices
Germany and Japan. “New energy vehi- E u ro p e a n d m a n y o t h e r c o r n e r s o f As a result, it’s in the US interest to posal. It could adjust the vehicle levy as are under growing pressure, as well.
cles and eq equ uipment” was one of the 10 the world. act early. part of the trade representative’s ongo- There are steps we can take to prevent
tec
ech hnology sec ecttors targeted for global So far, the US has been spared an The Biden administration has a ing, mandated Section 301 review of the t h i s n e w t e c h n o l o gy f ro m c a u s i n g
mid resounding applause leadership in Beijing’s Made in China influx of Chinese cars due to a number n u m b e r o f t o o l s a t h a n d t o d o t h i s. wider China tariffs imposed by former unpleasant surprises in 2024 24.. Inde-
from the European parlia- 2025 policy. of factors. First, the American tariff Like Europe pe,, it can initiate a subsidies president Donald Trump. pendent audits for bias and research
ment, Commission presi- Morreove
Mo overr, China has strategically of 27.5 per cent (a 2.5 per cent toll on investigation under the US counter- This review, which is due to be com- into disinformation efforts must be sup-
dent Ursula von der Leyen s e c u re d c r i t i c a l m i n e r a l d e p o s i t s vailing duty law, and even couple it pleted by the end of the year, could ena- ported. AI companies should offer
recently announced the ini- around the wo worrld needed for battery w i t h a n a n t i d u m p i n g p ro b e i f i t c a n ble the US to raise the 27.5 per cent duty researchers access to information that is
tiation of a subsidies investigation into
China’s unfair trade practices in the
p ro d u c t i o n , s u c h a s l i t h i u m . T h a t
means for several ye yeaars Beijing has
EU’s move will hopefully show that Chinese car companies are
charging unfairly low prices. The chal-
to a level that would, with more cer-
tainty, shield the American market
currently hidden, such as content mod-
eration decisions. International teams
electric vehicle sector. b e e n a b l e t o d i c t a t e t h a t E Vs u s e lead Washington l e n g e h e re w o u l d b e d e m o n s t r a t i n g from an onslaught of Chinese EVs. should study the elections taking place
This was a bold move in light of possi-
ble retribution against European car
Chinese-made batteries, which account
for up to 60 per cent of the value of
policymakers to develop a — a s re q u i re d b y s t a t u t e — t h a t t h e
d o m e s t i c i n d u s t r y w a s i n j u re d by
Importantly, this could be done as
part of an overall rebalancing of the tar-
thiss year
thi ear,r, suc
suchh as thothosese in the Neth
lands, Poland and Egypt, to understand
ether-
er-

and other companies operating in a car. proactive response too imports from China when the volume of iffs, paving the way for the US to reduce how AI plays a role.
China. Recalling how Chinese unfair While
While China
China has the worl orld’ d’ss lar
large
gestst Chinese cars imported so far has been tariffs on other consumer and industrial When it comes to AI and elections, I
a n d p re d a t o r y p r a c t i c e s l e d t o t h e domestic automotive market at some all auto imp orts plus the 25 p er cent negligible. goods that are hurting America’s inter- believe we cannot be careful enough.
demise of the European solar industry, 26mn vehicles, its EV companies are China import-specific one) is relatively An alternative could be a new investi- ests more than China’s. Democracies are precious experiments,
von der Leyen stressed the urgency for producing way more than the domestic high. gation under Section 301 of the Trade Katherine Tai, the trade representa- with a growing set of enemies. Let us
Europe to pre-empt a similar fate in the market can consume — an excess of as Second, Chinese vehicles are ineligi- Actt focused exc
Ac xcllusively on Chinese tive, has repeatedly said that the US hope that 2024 will indeed be the “Year
auto sector. much as 10mn a year, according to some ble for consumer EV tax credits under u n f a i r p r a c t i c e s i n t h e a u t o m o t i ve needs to use its trade tools in a strategic of Democracy” — and not the year that
The EU’s move will hopefully lead US estimates. the Inflation Reduct ctiion Act, disadvan- a n d b a t t e r y s e c t o r s , b u t t h i s wo u l d manner. This is the perfect opportunity marks its decisive decline.
policymakers to evaluate their own pol- In many respects, the EV playbook taging them in the US market. take time. The administration could to put this p olic y obje c tive into
i c y t o o l s a n d d eve l o p a p ro a c t ive lo oks similar to those followe d by T h i r d , g e o p o l i t i c a l t e n s i o n s a re also consider initiating cases on national practice. The writer is international policy director
response. Beijing in developing its solar, steel likely to have steered Chinese auto man- security grounds or over safeguards, at Stanford University’s Cyber Policy Center
Over the past decade, the Chinese EV and aluminium sectors. In those indus- ufacturers away from the American but such remedies would not be China- The writer is vice-president of the Asia and special adviser to The European Com-
industry has benefited from massive tries, massive subsidies led to overpro- market. specific and could result in contentious Society Policy Institute mission
22 ★ FINANCIAL TIMES Tuesday 3 October 2023

London vs Paris: dancing round handbags

London-listed companies are once again more valuable in total than those quoted in Paris. The largest
businesses on the French market are highly valued luxury brands. Paris still trades on a higher average
earnings multiple than London.

Twitter: @FTLex A tale of two bourses Largest companies by value Valuations

Market value ($tn) $bn Average price as ratio of forward
UK earnings
UK
UK carbon market: required to incentivise fuel switching.
Phasing out coal in power generation is
4
Unilever
2013 average 2023 average PayPal/Temu:
credibility slap mandated by policy. Shell AstraZeneca HSBC 124 fairweather friends
But other sectors of the economy will 3 214 210 154
The world has lost faith in Britain’s need prompting. Official vacillation BP UK PayPal is in a funk. At their peak in
green ambitions. For evidence, look no benefits no one. France 111 2021, shares in the digital-payment
further than the country’s carbon powerhouse were worth more than
price. It has collapsed to £36 per tonne, 2 $300, giving the group a market cap of
less than half the level in the EU.
Forget Prime Minister Rishi Sunak’s
Rinehart/Liontown: France $362bn. These days they trade for less
than $60. The valuation, at 11 times
target tinkering for EVs and heat full metal packet 1 TotalEnergies forward earnings, is at a record low.
pumps. This is a more serious risk to 159 France Could the advent of Temu, a fast-
LVMH L’Oréal Hermès
UK decarbonisation. The credibility Gina Rinehart made her billions from 381 223 193 growing discount ecommerce platform
gap may not be immediately obvious to heavy metals. Australia’s richest person 0 Sanofi linked to one of China’s top retailers,
onlookers. The carbon market is often seeks one of the lightest, lithium. 136 finally give investors something to
2014 15 17 19 21 23 0 2 4 6 8 10 12 14
talked about in terms of short-term Her privately held iron ore miner cheer about? Their worries focus on
supply and demand dynamics. These Hancock Prospecting has built a 12.4 Paypal’s higher-margin branded unit.
Sources: LSEG; Datastream total market indices Source : LSEG Sources: LSEG; Datastream total market indices
are currently bearish for CO₂ prices. per cent stake in locally listed This makes money every time a
Sectors covered by the UK carbon Liontown Resources. She could block a shopper clicks on the PayPal-branded
trading system are expected to emit proposed A$6.6bn ($4.3bn) takeover French-British rivalry goes back heavily weighted towards luxury 10 years ago. Since then, the French checkout button. Stiff competition
about 100mn tonnes of carbon dioxide by Albemarle of the US. centuries. Paris’s seizure last year of goods, which recently has been the average multiple has increased by 17 from the likes of Apple, Google, Affirm
this year, says consultancy ICIS. That is Lithium carbonate prices may have the “Europe’s biggest stock market” worst-performing European sector. per cent, while the UK’s multiple has and Afterpay is squeezing the business.
some 10mn tonnes less than 2022. Low crashed, down 68 per cent year on year. crown was a symbolic twist. The “revenge” spending that kicked shrunk by nearly a tenth. PayPal’s payment volumes grew just
power demand is taking much fossil- Demand for this key battery input will London has now reclaimed its off post-lockdowns in China has fizzled. The threat to London lies not just 5 per cent last year, compared with a
fuel generation offline. The supply of not do so in the long term. Electric bragging rights. The market value of The weakness of China’s economy in the departures of a handful of compound annual growth rate of 26
credit, meanwhile, will be 118mn vehicles depend on cells using lithium. the companies listed in the UK poses a threat, given its consumers are groups such as CRH or Ferguson that per cent between 2018 and 2021.
tonnes, meaning lots going spare. Australia offers an important supply. capital totalled $3tn yesterday. That expected to account for two-fifths of have moved their listings to the US. Temu sells ultra-low-price clothing
The situation should persist into Rinehart has a reported worth of is a whisker ahead of the total value global luxury sales by 2030. More important are the acquisition of and knick-knacks mostly made in
2024. Emissions are expected to fall more than A$34bn. Hancock has of French shares, says Datastream. Over the same period, the rally in the listed groups by private or overseas China. It has exploded in popularity
further. Yet the government in July said plenty of firepower of its own. It last The reasons do little to bolster UK oil price since mid-June has helped the ones. Over the past decade, there since its debut last September. The app,
that it would be making additional reported more than A$17bn of net cash national pride. It reflects flagging energy-heavy FTSE All-Share index have been more than £700bn in owned by PDD (formerly Pinduoduo),
carbon credits available. That is a with billions more piling up annually. designer handbag sales in China hold its ground. The shares of Shell, delistings, over six times the amount is currently the most popular shopping
recipe for continuing oversupply. Liontown, worth a third of that, sits on rather than a flood of high-growth currently the UK’s largest stock, are up raised by new issues, says analysis by app in the US, ahead of Amazon and
Attributing the fall in carbon prices Australia’s fifth-largest lithium site. tech businesses listing in London. a tenth over three months. the New Financial think-tank. Walmart. Visits to Temu’s website have
only to technical factors misses a key Rinehart set her cap at Liontown Over three months, France’s CAC In principle, the London market’s tilt The UK is the only developed increased from 7mn in September 2022
point. Investors can buy an allowance months ago. Keen to diversify from All-Share index is down 6 per cent. It towards high-yielding value stocks equity market to have shrunk to nearly 300mn in August 2023,
today and surrender it any time. And — iron ore, she has been accumulating was led by LVMH, the largest group, should appeal to bargain hunters. The relative to GDP over the past 20 according to Similar Web.
if they believed the government’s shares since early April, local filings which has dropped by more than French and UK markets shared the years. Edging ahead of Paris does PayPal is among available checkout
midterm targets — that would be a say. Her in-price sits below Albemarle’s twice that. The French index is same average price/earnings multiple little to solve that problem. options. Mizuho analysts reckon Temu
worthwhile thing for them to do. latest agreed offer of A$3 a share. accounted for about 2 per cent of
The UK still targets a carbon budget Rinehart’s stake could yet climb over incoming website traffic to PayPal in
of about 50mn tonnes by 2030 — the current A$800mn. Under deal August. They think that as Temu grows
around half the level of emissions terms so far, the Albemarle takeover shareholders of Liontown have nothing on non-life sectors still deserves credit. would mean about €300mn of returns in popularity, it could become a large
today. Achieving that would require would require 75 per cent approval to lose as two industry heavyweights The move will make Sampo the for Sampo shareholders. source of revenue for PayPal.
expensive industrial abatement, for from shareholders. A vote will not vie for their favour. largest pure property and casualty The story at Mandatum is similar. There are many stumbling blocks.
instance switching fuel for steel happen until the board recommends insurer in the Nordic area. The shares, The standalone life unit will generate For starters, incoming website traffic is
production. The carbon price would the deal. It may not occur until next along with those of peer Tryg, have capital in two ways: from its growth an imperfect proxy for checkout share.
need to rise to £97 per tonne to
incentivise businesses to do that,
year, if at all.
Albemarle’s margin for victory
Sampo split: long commanded a sizeable premium
over the European insurance sector.
business managing pension assets for
corporate clients and from winding
Second, Temu’s customers in the US
tend to snap up bargain items like 10
according to Aurora Energy. On that reduces every time Hancock raises its Finn end of the wedge Combined ratios near 80 per cent for down an old back book of with-profits pairs of socks for $2 and $5 shower
assumption, an entry point of £36 stake — five times last month alone. If both reflect disciplined underwriting. policies, generating capital as it does. caddies. PayPal’s take must be slim.
today would yield a juicy internal rate it goes over 20 per cent, a mandatory Low interest rates largely explain the Capital releases for shareholders will Mandatum’s standalone SCR is now And how long can low-cost retail
of return above 15 per cent. bid would be required. poor performance of life insurers over cement the spin-off’s logic. at about 232 per cent. A target range of platforms like Temu last, given high
The implication of current prices is Team Rinehart has intimated that it the past decade. Add low premium The turnaround in interest rates is 170-200 per cent is expected in the cash burn?
that the market no longer believes the will not pay more than A$3 a share. growth in developed economies to that helping. Sampo estimated its Solvency medium term. Even at the top end of The upshot is that new chief Alex
UK will stick to midterm objectives. Albemarle could raise its offer to tempt and a change of gear at Finland’s Capital Ratio would be 193 per cent that would mean an extra €300mn to Chriss needs to revive PayPal via self
That is worrying. Low carbon prices Reinhart to sell. Or perhaps it can work Sampo makes sense. after the split, at the top of its target come back to shareholders on top. help. He can rely very little on Temu
harm the UK economy in the long run. with Hancock as a minority investor. Yesterday, the Helsinki-based group range. Higher rates mean insurers need Add that on to the €500mn that the and its bargain-basement trinkets.
True, industry and power companies That is possible. Lithium projects, completed the demerger of its life unit to hold less capital against liabilities company expects to return on ordinary
might save £3bn a year if prices given the mining and processing skills Mandatum, whose shares valued the anyway. But shedding life exposures dividends over the next three years and Lex on the web
remained constant, but that would be required, do suit partnerships. spin-off at €1.9bn. A dip in Sampo will also mean lower targeted capital the annual yield moves to 15 per cent. For notes on today’s stories
money forfeit by government. Albemarle has one at Wodgina, a larger shares suggested little value creation and a surplus for shareholders. A 10 Even in the higher rate environment, go to www.ft.com/lex
Meanwhile, higher carbon prices are local lithium project. Either way, on the day, yet a broader plan to focus percentage point fall in targeted SCR that should attract interest.

CROSSWORD
No 17,538 Set by BRADMAN
ACROSS

1 Awful rainproof hats — lacking

originality, in a manner of speaking? (6-7)
9 Soldiers needing attire to be correct (7)
10 Imposing area in state capital (7)
11 Doctor associated with university, I had
become priest (5)
12 One very reduced that’s no longer
uneasy about being huge (9)
13 Gifted Edward keeping a holy fast (8)
15 Singer to quiver, maiden being put off
(6)
18 Senility could make date go wrong (6)
19 Miners with dogs, right for protection
(8)
22 Component of a gate? (9)
24 Saw wild area mostly keeping dry (5)
25 Lettuce that is frozen solid? (7)
26 Bishop gets to help musician (7)
27 Ten try healing drunk displaying
menacing manner (13)

DOWN

1 Fairy with something tiny, a gem (7)

2 Swimmer with dyed hairstyle (3,6)
3 Nymph that’s old to get stuck in a
book? (5)
4 Time of abstinence with need somehow
to be secure? (8)
JOTTER PAD 5 Attempt to engage worker in song? (6)
6 Learning a bit of English — it’s tricky,
usually (2,7)
Solution 17,537 7 Child of immigrants that is evil in
revolution (5)
8 Cluster in marathon? Yours truly is last
(6)
14 Possible laundry items near running
water (9)
16 Wild bear, not fat and grand, still alive
(9)
17 Nasty b-bit of skeleton found in pit (8)
18 Refine little daughter, one up to now
falling short (6)
20 In a while dwarfish person will acquire
length (7)
21 New mag — it’s making a mark (6)
You can now solve our crosswords 23 Outcome of e.g. long jump (5)
in the FT crossword app at
24 African mum’s tiptop (5)
ft.com/crosswordapp*