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More than profit
Friedman was wrong on corporate
responsibility — MARTIN WOLF, PAGE 19


World Markets


Dec 8 prev %chg

S&P 500 3697.51 3691.96 0.15

Nasdaq Composite 12528.75 12519.95 0.07

Dow Jones Ind 30166.44 30069.79 0.32

FTSEurofirst 300 1521.91 1519.27 0.17

Euro Stoxx 50 3528.80 3530.08 -0.04

FTSE 100 6558.82 6555.39 0.05

FTSE All-Share 3695.13 3695.80 -0.02

CAC 40 5560.67 5573.38 -0.23

Xetra Dax 13278.49 13271.00 0.06

Nikkei 26467.08 26547.44 -0.30

Hang Seng 26304.56 26506.85 -0.76

MSCI World $ 2635.88 2639.66 -0.14

MSCI EM $ 1253.39 1251.04 0.19

MSCI ACWI $ 632.46 633.09 -0.10


Dec 8 prev

$ per € 1.211 1.213

$ per £ 1.336 1.332

£ per € 0.907 0.911

¥ per $ 104.125 104.040

¥ per £ 139.126 138.550

SFr per € 1.077 1.079

€ per $ 0.826 0.824

Dec 8 prev

£ per $ 0.748 0.751

€ per £ 1.103 1.098

¥ per € 126.131 126.238

£ index 77.550 78.480

SFr per £ 1.188 1.184


Dec 8 prev %chg

Oil WTI $ 45.67 45.76 -0.20

Oil Brent $ 48.88 48.79 0.18

Gold $ 1859.95 1843.00 0.92


price yield chg

US Gov 10 yr 105.58 0.91 -0.02

UK Gov 10 yr 0.26 -0.02

Ger Gov 10 yr -0.61 -0.02

Jpn Gov 10 yr 101.05 0.01 -0.01

US Gov 30 yr 116.93 1.66 -0.02

Ger Gov 2 yr 105.63 -0.78 -0.01

price prev chg

Fed Funds Eff 0.09 0.09 0.00

US 3m Bills 0.08 0.09 -0.01

Euro Libor 3m -0.56 -0.55 -0.01

UK 3m 0.03 0.04 -0.01
Prices are latest for edition Data provided by Morningstar

Anjli Raval and Leslie Hook

Royal Dutch Shell has been hit by a
wave of executive departures within its
clean energy business amid a split over
how far and fast the oil company
should shift towards greener fuels.

The resignations come just weeks before
Shell is set to announce its energy transi-
tion strategy. Some executives wanted a
more aggressive move away from oil but
top management wants to stick closer to
Shell’s current path, according to four
people familiar with the matter.

Marc van Gerven, who headed the
solar, storage and onshore wind busi-
nesses at Shell; Eric Bradley, who
worked in Shell’s distributed energy
division; and Katherine Dixon, a leader
in its energy transition strategy team,
have all left the company in recent

weeks. Dorine Bosman, Shell’s vice-
president for offshore wind, is also due
to leave. Several other executives in the
clean energy part of the business also
plan to quit in the coming months, two
of the people said.

Not every move is known to be linked
to frustration about the pace of change
but people familiar with the internal
debate said there were deep divisions
over the timeframe for reducing the
company’s dependence on oil and gas
revenues, which had influenced at least
some of the departing executives.

“People are really questioning if there
will be any change at all,” said one per-
son familiar with the tensions. “Part of
the frustration is that you see the poten-
tial, but the mindset isn’t there among
senior leaders for anything radical.”

Ben van Beurden, chief executive,
has said investment in lower-carbon

businesses such as biofuels and solar
power “needs to accelerate”. However,
he has also said that oil will continue to
be a huge cash generator and the com-
pany will expand its gas division. “There
is going to be a place for our upstream
business for many decades to come,” he
recently told a conference.

European oil companies are under
pressure from investors and environ-
mentalists, forcing several — including
Shell — to announce net-zero emissions
pledges. That pressure is now mounting
from the company’s own workforce.

Ms Dixon said she had joined the
International Energy Agency because it
had “incredible potential to lead the glo-
bal energy transition”. Mr van Gerven,
Mr Bradley and Ms Bosman did not
respond to requests for comment.

Shell said it was “firmly focused on
leading in the energy transition”.

Shell loses green leaders amid tension
over slow pace of shift to clean energy

No: 40,578 ★

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Tokyo, Hong Kong, Singapore, Seoul,

Analysis i PAGE 4

Indian farmers’ protests
cause road and rail chaos

Austria €3.90 Malta €3.70
Bahrain Din1.8 Morocco Dh45
Belgium €3.90 Netherlands €3.90
Bulgaria Lev7.50 Norway NKr40
Croatia Kn29 Oman OR1.60
Cyprus €3.70 Pakistan Rupee350
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.70
Egypt E£45 Qatar QR15
Finland €4.70 Romania Ron17
France €3.90 Russia €5.00
Germany €3.90 Serbia NewD420
Gibraltar £2.90 Slovak Rep €3.70
Greece €3.70 Slovenia €3.70
Hungary Ft1200 Spain €3.70
India Rup220 Sweden SKr39
Italy €3.70 Switzerland SFr6.20
Lithuania €4.30 Tunisia Din7.50
Luxembourg €3.90 Turkey TL19
North Macedonia Den220 UAE Dh20.00


i Europe banking union given fresh push
Paschal Donohoe, the president of the eurogroup
of finance ministers, has said that Brexit and the
coronavirus pandemic have brought home the need
to revive plans for an EU banking union.— PAGE 2

i Biden faces cabinet balancing act
US president-elect Joe Biden is under pressure from
his party to select more people to his cabinet from
the progressive wing and those who represent

i Pope backs drive for fairer capitalism
Pope Francis has given his
blessing to the Council for
Inclusive Capitalism, a
coalition of investors, unions,
companies and foundations
pledging to make capitalism
more equitable.— PAGE 6

i Russia says economy recovered quickly
Moscow has claimed its targeted approach to
economic support has driven a faster recovery than
in much of the world, despite its cost being only
4 per cent of gross domestic product.— PAGE 2

i German banks funded Wirecard deal
Deutsche Bank and Commerzbank provided most
of the funding for and acquisition of two Indian
companies by defunct German payments company
Wirecard, papers seen by the FT reveal.— PAGE 6

i Ardern apologises for shooting failings
Prime minister Jacinda Ardern has apologised to
New Zealand’s Muslim community for failings by
authorities before a racist 2019 shooting attack on
two mosques that left 51 people dead.— PAGE 4

i Japan unveils third stimulus scheme
Yoshihide Suga, Japan’s prime minister, has
announced a third fiscal stimulus scheme this year,
with a $294bn package aimed at fighting Covid-19
and investing in green technologies.— PAGE 4


More than half of
US adults say they
personally know
someone who has
needed hospital
treatment or has
died from Covid-19.
Some 71 per cent
of black people
fall into this
category, far more
than Americans
from other
ethnic groups.

Personally a�ected
% who say they know someone who
has either been treated in hospital
or died as a result of Covid-19

0 20 40 60 80





US adults

Survey carried out in Nov 2020
Source: Pew Research Center

Checking Big Tech
Brussels takes on the digital
gatekeepers — BIG READ, PAGE 17

China’s wolf warrior
The populist provocateur let loose
on social media — PAGE 3

Helping hand
UK sets Covid
vaccine rolling
Margaret Keenan, 90, is applauded as
she returns to her ward at Coventry Uni-
versity Hospital in the UK yesterday
after becoming the first person in the
world to receive the Pfizer/BioNTech
Covid-19 vaccine outside trials.

But as the rollout of inoculations picks
up speed in the UK, big logistical chal-
lenges remain over how to distribute the
vaccine when it needs to be stored at
ultra-low temperatures.

In the US regulators yesterday con-
firmed that the vaccine has an average
efficacy rate of 95 per cent, while show-
ing that Covid-19 cases start to taper off
among those vaccinated within about
10 days. Authorisation is expected to be
granted in the US in the coming days.
Reports page 3

Jacob King/Reuters

Jim Pickard and
Peggy Hollinger — London
Katrina Manson — Washington
Sam Fleming — Brussels

The UK government has broken ranks
with the EU by disclosing plans to end
punitive tariffs against the US over air-
craft subsidies, in an attempt to pave the
way for a post-Brexit trade deal with

The EU last month hit $4bn of US
products with tariffs of up to 25 per cent
in retaliation for illegal state aid to Boe-
ing. The move was the latest round in a
16-year battle over subsidies, one of the
longest running trade disputes

It followed the imposition by Wash-
ington last year of duties of up to 25 per
cent on $7.5bn worth of European
imports into the US, after the World

Trade Organization found Franco-
German aircraft maker Airbus had also
benefited from unlawful state aid.

The move by Liz Truss, the UK trade
secretary, will be viewed as an attempt
to win favour with incoming US presi-
dent Joe Biden as Boris Johnson’s gov-
ernment tries to reignite its effort to
strike a separate trade deal with the US.

Ms Truss said the UK wanted to
“come to a negotiated settlement so we
can deepen our trading relationship
with the US”.

Yet it has been unclear for weeks
whether the UK could have unilaterally
maintained the aviation-related tariffs
after December 31, given its status as a
departing member of the EU.

The Financial Times revealed in July
that attempts to strike a US-UK trade

deal by the late summer had been aban-
doned because of sticking points such as
Britain’s reluctance to give untram-
melled access to US agricultural prod-

Despite the new concession on tariffs,
the UK is likely to face a struggle to get
the Biden administration on board with
any potential trade deal.

Mr Biden said last week that he was in
no rush to strike new trade deals: “I’m
not going to enter any new trade agree-
ment with anybody until we have made
major investments here at home and in
our workers and in education,” he told
the New York Times. “I want to make
sure we’re going to fight like hell by
investing in America first.”

The UK government said the tariffs
announcement was part of a strategy to

de-escalate trade tensions “so the US
and UK can move forward to the next
phase of their trading relationship” and
ultimately draw a line under the damag-
ing dispute.

A person close to the US side of talks
to settle the dispute said the move “sig-
nificantly alters the atmospherics” of
the bitter transatlantic trade war.

Had the UK maintained tariffs after
leaving the trading bloc on December
31, it would have been “a very aggressive
gesture,” he said.

The UK could now seek a bilateral
agreement with the US over what
defined a “level playing field” for state
aid to aerospace. “It offers the chance
for the UK and US to say ‘here is the way
Johnson heads to Brussels page 4

UK will drop tariffs on US goods to
pave way for post-Brexit trade deal
3 London diverges with EU 3 Boeing-Airbus battle triggered penalties 3 Biden in ‘no rush’

The EU hit $4bn
of US products
with tariffs of up
to 25 per cent in
retaliation for
illegal state aid
to Boeing

DECEMBER 9 2020 Section:FrontBack Time: 8/12/2020 - 19:06 User: andy.puttnam Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1, 1

Page 2

2 ★ FINANCIAL TIMES Wednesday 9 December 2020

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Sam Fleming and Mehreen Khan

Brexit and the coronavirus pandemic
have reinforced the need to solidify the
single currency’s foundations, said
the president of the eurogroup of
finance ministers who is aiming to
revive the bloc’s long-stalled banking
union project this week.

Paschal Donohoe, who is also the Irish
finance minister, told the Financial
Times he would seek to intensify work

in four key areas — including divisive
plans to create a eurozone-wide bank
deposit insurance (EDIS) — as he pre-
pares for a summit of eurozone leaders
on Friday.

The package would also include
improving the region’s crisis manage-
ment framework, cross-market integra-
tion and tackling the link between
banks and their country’s sovereign
debt, said Mr Donohoe. He is aim-
ing for a new detailed banking union
work plan in the middle of next year.

“There is a renewed responsibility on
those within the eurogroup to look at
how we can deepen the foundations of
the euro and deepen the economic
architecture of the euro,” given the eco-

nomic toll from Covid-19, Mr Donohoe
said in an interview. Brexit is a reminder
that the euro area and EU need “resil-
ient sources of employment and income
growth”, he added.

Eurozone finance ministers last week
reached a political agreement on a long-
awaited reform to the bloc’s bailout
fund, the European Stability Mecha-
nism, removing a barrier that has held
back work on the banking union
project. An attempt late last year by
German finance minister Olaf Scholz to
end the “continuous gridlock” over the
issue foundered after it was overtaken
by the Covid-19 crisis.

Mr Scholz’s set of proposals opened
the door to the creation of common

deposit insurance for eurozone banks —
something that has long been resisted
by richer northern eurozone countries
who fear their taxpayers would be on
the hook for bank failures in other parts
of Europe. But sealing a banking union
deal will require efforts by multiple gov-
ernments across the euro area, includ-
ing unpalatable reforms.

Mr Donohoe said the eurogroup had
yet to reach an agreement on how to
progress with EDIS, acknowledging
“heightened concern” of some capitals
about greater risk-sharing. But he said
the task now was about “building
momentum through constant political
contact and dialogue”.

“There is a broad understanding in

the eurogroup that we need to have the
strongest foundations possible for the
euro in the coming years,” he said.

This will also entail work on tackling
the nexus between banks and their
country’s sovereign debt, a so-called
doom loop that has long bedevilled the
European banking system. The priori-
ties also include examining how to han-
dle the liquidity needs of a failing bank
and improving co-ordination between
home and host bank supervisors.

The onset of the pandemic has forced
Brussels to suspend temporarily the
bloc’s fiscal rules as governments turn to
fiscal firepower to support companies
and support employment.
See Editorial Comment

Martin Arnold — Frankfurt

Eurozone governments’ borrowing has
rocketed to fund their response to the
coronavirus pandemic, reigniting long-
standing calls for the European Central
Bank to ease debt burdens by forgiving
sovereign bonds it owns.

The proposal was floated by academic
economists as an answer to the single
currency area’s last debt crisis in 2012.
Senior Italian officials have recently
stirred up the idea once more, suggest-
ing the ECB could forgive debt bought
through its asset purchase programme
or swap it for perpetual bonds, which
are never repaid.

Governments’ responses to the pan-
demic will rack up €1.5tn of extra debt,
pushing the eurozone’s sovereign debt
above the size of the bloc’s economy this
year for the first time. Many countries
are running budget deficits above 10 per
cent of gross domestic product, includ-
ing Italy, France and Spain. Italy’s gov-
ernment debt is expected to rise from
135 per cent of GDP last year to almost
160 per cent in 2021.

While the EU’s fiscal rules — requiring
governments to keep deficits below 3
per cent of GDP and overall debt under
60 per cent of GDP — have been sus-
pended since the pandemic hit, they are
likely to be reactivated in some form
once the crisis is over, piling pressure on
governments to deleverage.

David Sassoli, the Italian president of
the European Parliament, told La
Repubblica last month that debt
forgiveness was “an interesting working
hypothesis, to be reconciled with
the cardinal principle of debt

Riccardo Fraccaro, a senior aide to
Italian prime minister Guiseppe Conte,
followed up by telling Bloomberg “mon-
etary policy must support member
states’ expansionary fiscal policies in
every possible way”. That could include
“cancelling sovereign bonds bought
during the pandemic or perpetually
extending their maturity”, he said.

So far, investors have not added to the
clamour — the cost of new debt remains
low as the ECB buys most of the extra
bonds sold, so many countries are able
to borrow for up to 10 years at yields of
close to or below zero. That is set to con-
tinue; at its latest policy meeting tomor-
row the ECB is expected to extend bond-
buying until mid-2022.

“There are so many reasons not to be
concerned by rising debt levels at the
moment, but in the future we will need
to have this discussion at some point,”
said Carsten Brzeski, economist at ING.

But central bankers have rejected the
idea as “dangerous” and “destabilising”,
while economists dismiss it as counter-
productive and poorly timed.

“We have to distinguish the political
position from the economic position,”
said Lucrezia Reichlin, economics pro-
fessor at London Business School.

“From the purely economic perspec-
tive debt relief could make sense in
some circumstances, but it depends on
how you do it. From a political point of
view it is extremely dangerous.”

Holger Schmieding, chief economist
at Berenberg, said it was “the worst idea
of the year” as it “could backfire badly”
by spooking investors, causing borrow-
ing costs to rise.

Finance ministers

Eurogroup resets focus on banking union
Covid and UK split from
EU offer chance to deepen
currency ‘architecture’


Soaring bloc
fuels calls
for debt

Mehreen Khan — Brussels

Brussels will introduce mandatory
recycling targets for battery makers
including electric car manufacturers
from 2030, as the EU attempts to meet
growing demand for vital raw materi-
als without undermining its ambitious
environmental goals.

Virginijus Sinkevicius, EU commis-
sioner for environment, oceans and
fisheries, told the Financial Times an
update of the bloc’s battery directive
would crack down on the use of hazard-
ous materials and propose “ambitious
but realistic” recycling targets for mate-
rials used in batteries to help create a
“sustainable batteries value chain”.

“Global exponential growth in
demand for batteries will lead to an
equivalent increase in demand for raw
materials — notably cobalt, nickel and
manganese. We have to strive for sus-
tainable production and consumption
and reduce batteries’ carbon footprint,”
said Mr Sinkevicius.

The commission will tomorrow pro-
pose an update of the EU’s batteries
directive for the first time in more than
a decade, revamping the legislation to

reflect vast improvements in a technol-
ogy that is seen as a major driver in the
transition to clean transport.

European electric carmakers and
non-EU manufacturers who want to sell
their batteries in the single market will
have to abide by tougher environmental
standards, said Mr Sinkevicius, adding
Europe was on course to be the world’s
second-largest market for electric vehi-
cles over the next decade.

Under the updated regulation, elec-
tric vehicle manufacturers would have
to disclose the recycled content in their
batteries in an attempt to then meet
mandatory targets set in 2030 and 2035,
said Mr Sinkevicius.

“This is a fundamental first step in
closing the loop for valuable materials
contained in batteries. We’re going to
aim for ambitious yet realistic targets
for collection, recycling efficiencies, and
the recovery of materials from waste

Before settling on the exact targets for
2030 and 2035, Brussels will need to
carry out a thorough impact assessment
and consult with sectors such as electric
vehicle manufacturers and the chemi-
cals industry.

In response to concerns the regulation
would stifle the development of clean
car technology in Europe, Mr Sinkevi-
cius said the rules would provide “legal
certainty” and “incentivise the invest-

ment and production capacity for sus-
tainable batteries in Europe and

The EU has committed itself to
becoming the first continent to reach
net zero emissions by 2050, a goal that
will require a radical overhaul of
Europe’s energy, transport, and manu-
facturing sectors.

The commission estimates that lith-
ium, one of the key components of bat-
tery cells, has a recycling efficiency of
only 50 per cent. Mr Sinkevicius said
that rather than encouraging more min-
ing of raw materials like lithium, Brus-
sels wants to meet rising battery
demand by creating a secondary market
for recycled materials.

The regulation will also propose
measures to extend the life cycle of bat-
teries, by making recycling obligatory
for collected waste batteries, and
encouraging the repurposing of batter-
ies for “second life”.

Brussels also wants to phase out grad-
ually non-recyclable single life batteries
— such as those used to power remote
controls — but the commission will not
impose a target date for their expiry,
said the commissioner.


EU pledges to bring in recycling targets for battery makers

Battery demand is being powered by
growth in electric vehicle production

Narendra Shrestha/EPA-EFE/Shutterstock

Mount Everest is higher than
previously thought, Nepal and China
said yesterday, settling a long-
running conflict over the world’s
tallest peak, which straddles their
shared border.

The two countries had different
figures for the exact height of the
mountain, pictured, but after
each sent an expedition of surveyors
to the summit they agreed the
official height is 8,848.86 metres,
slightly more than previous

Mountaineers had suggested a
7.8 magnitude earthquake in 2015,
which killed nearly 9,000 people in
Nepal, may have altered the height of
Everest. Reuters, Kathmandu

Dispute over
height settled

package was small,” Vladimir Kolychev
said in an interview with the Financial
Times. “The economy doesn’t care how
you paint your expenditure. The impor-
tant thing is that it increased.”

The country was able to make a quick
recovery because targeted spending
made it more efficient in handling the
coronavirus crisis, Mr Kolychev added.

He said Russia had boosted govern-
ment spending in total by 27 per cent
this year, a figure Moscow claims is
higher than that of any EU country. “It’s
obvious that Russia’s economy suffered
less in the second quarter and recovered
more quickly in the third quarter.

“That’s not just because of our sup-
port measures but because the quaran-
tine itself in Russia was structured dif-
ferently than in Europe.”

Russia has recorded more Covid-19
cases than all but three countries world-
wide, hitting a new daily record
of 29,093 on Sunday. But Mr Putin chose
not to impose a nationwide lockdown,
instead delegating a patchwork of meas-
ures to local authorities who largely left
Russia’s industry alone while shutting
the consumer sector almost entirely.

The recovery plan eschewed tapping

US election.” She said the country would
have “one of the smallest contractions
globally due to the arithmetic of keeping
lockdowns limited to keep economic
damage under control”. She added:
“Unfortunately, it is not clear whether in
Russia the healthcare system is capable
of handling so many Covid cases.”

Mr Kolychev said Russia’s Rbs500bn
in yearly payments to families with chil-
dren — one of the few direct support
measures in the coronavirus package —
had helped consumer activity grow 3 to
5 per cent in the second quarter and
continue to rise 1 to 2 per cent.

Moscow passed several tax breaks for
small businesses and the petrochemi-
cals industry. Mr Kolychev claimed the
contraction in Russia’s GDP would have
been negligible if not for the Opec+ deal
of oil producers that limited production
during the first wave of the pandemic.

“European countries haven’t grown
their expenditure as quickly,” he said.
“The US, Canada, and Australia might
have but their programmes evidently
were set up in a way that didn’t lead to
quick growth in consumer spending.
They recovered, but there hasn’t been a
consumer boom.

“We wanted to use these temporary
benefits to target growth in places where
people had the most problems with
their income. If you give everyone
[money], including the rich, then the
rich are hardly going to change their
consumption habits.”

Mr Kolychev defended Russia’s deci-
sion not to spend the $167bn national
wealth fund, squirrelled away from sur-
plus oil and gas revenue, on economic
stimulus payments, saying it had to be
saved to “spread natural resource reve-
nue fairly among the generations over
time” rather than used as a way out of
the crisis. The finance ministry has used
some of the fund to cover budget short-
falls during the pandemic but has dou-
bled its domestic borrowing to Rbs5tn to
boost spending.

Russia raised €2bn in eurobonds last
month for the first time this year, taking
advantage of favourable market condi-
tions at a time when the Kremlin fears
US president-elect Joe Biden’s adminis-
tration could ramp up sanctions on
Moscow next year. Mr Kolychev said
Russia had drawn up plans to ease the
impact of any US sanctions that would
bar foreigners from holding Russia debt.

Growth. Support measures

Russia claims it ‘recovered’ quicker than most in G20

Max Seddon — Moscow

Moscow’s targeted approach to support-
ing Russia’s economy during the pan-
demic has helped it bounce back from
the crisis quicker than most of the
industrialised world, says a deputy
finance minister.

Although the Kremlin’s Rbs4tn
($54.5bn) Covid-19 support package
amounted to a scant 4 per cent of gross
domestic product, or less than a tenth of
the assistance provided by Germany,
Italy and the US, Russia estimates the
contraction in its GDP has slowed from
8 per cent year on year in the spring to
3.6 per cent in the third quarter of 2020,
which places it in the top five of G20

Russia benefited from a stimulus
ordered by President Vladimir Putin
before the virus struck, of which
Rbs1.75tn has been spent this year.

“It’s a myth that Russia’s anti-crisis

Targeted spending ensured

efficient handling of crisis,

says deputy finance minister

Russia’s $167bn savings from its oil and
gas wealth to make direct payments to
businesses and citizens in favour of tax
holidays and loan guarantees.

Elina Ribakova, deputy chief econo-
mist at the Institute of International
Finance, said Russia’s “proactive fiscal
support” in the wake of Covid-19 had
been small. “Not surprising as Russia
was facing a triple shock in 2021 from
Covid, oil and risk of sanctions given the

Russia’s stimulus package
one of the smallest in the G20

Source: IMF

Value of fiscal stimulus as share
of GDP (%)





Saudi Arabia


0 5 10 15 20 25

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World Markets


Mar 30 prev %chg

S&P 500 2365.93 2361.13 0.20

Nasdaq Composite 5902.74 5897.55 0.09

Dow Jones Ind 20703.38 20659.32 0.21

FTSEuro�rst 300 1500.72 1493.75 0.47

Euro Stoxx 50 3481.67 3475.27 0.18

FTSE 100 7369.52 7373.72 -0.06

FTSE All-Share 4011.01 4011.80 -0.02

CAC 40 5089.64 5069.04 0.41

Xetra Dax 12256.43 12203.00 0.44

Nikkei 19063.22 19217.48 -0.80

Hang Seng 24301.09 24392.05 -0.37

FTSE All World $ 297.99 297.73 0.09


Mar 30 prev

$ per € 1.074 1.075

$ per £ 1.249 1.241

£ per € 0.859 0.866

¥ per $ 111.295 111.035

¥ per £ 139.035 137.822

€ index 89.046 89.372

SFr per € 1.069 1.072

Mar 30 prev

€ per $ 0.932 0.930

£ per $ 0.801 0.806

€ per £ 1.164 1.155

¥ per € 119.476 119.363

£ index 76.705 76.951

$ index 104.636 103.930

SFr per £ 1.244 1.238

Mar 30 prev %chg

Oil WTI $ 50.22 49.51 1.43

Oil Brent $ 52.98 52.54 0.84

Gold $ 1248.80 1251.10 -0.18


price yield chg

US Gov 10 yr 98.87 2.38 0.00

UK Gov 10 yr 100.46 1.21 -0.03

Ger Gov 10 yr 98.68 0.39 -0.01

Jpn Gov 10 yr 100.45 0.06 0.00

US Gov 30 yr 100.14 2.99 0.01

Ger Gov 2 yr 102.58 -0.75 0.00

price prev chg

Fed Funds E� 0.66 0.66 0.00

US 3m Bills 0.78 0.78 0.00

Euro Libor 3m -0.36 -0.36 0.00

UK 3m 0.34 0.34 0.00
Prices are latest for edition Data provided by Morningstar


AboastfulWhatsAppmessagehas cost
a London investment banker his job
and a £37,000 fine in the first case of
regulators cracking down on commu-
nications over Facebook’s popular

The fine by the Financial Conduct
Authority highlights the increasing
problem new media pose for companies
that need to monitor and archive their

Several large investment banks have
banned employees from sending client
information over messaging services
including WhatsApp, which uses an
encryption system that cannot be
accessed without permission from the
user. Deutsche Bank last year banned
WhatsApp from work-issued Black-

Berrys after discussions with regulators.
Christopher Niehaus, a former Jeffer-

ies banker, passed confidential client
information to a “personal acquaint-
ance and a friend” using WhatsApp,
according to the FCA. The regulator said
Mr Niehaus had turned over his device

The FCA said Mr Niehaus had shared
confidential informationonthemessag-
ing system “on a number of occasions”

Several banks have banned the use of
new media from work-issued devices,
but the situation has become trickier as
banks move towards a “bring your own
device” policy. Goldman Sachs has
clamped down on its staff’s phone bills
as iPhone-loving staff spurn their work-

Bankers at two institutions said staff
are typically trained in how to use new

media at work, but banks are unable to
ban people from installing apps on their

Andrew Bodnar, a barrister at Matrix
Chambers, saidthecaseset“aprecedent
in that it shows the FCA sees these mes-
saging apps as the same as everything

Information shared by Mr Niehaus
included the identity and details of a
client and information about a rival of
Jefferies. In one instance the banker
boasted how he might be able to pay off
hismortgage ifadealwassuccessful.

Mr Niehaus was suspended from Jef-
feries and resigned before the comple-

Jefferies declined to comment while
Facebook did not respond to a request
Additional reportingbyChloeCornish
Lombard page 20

Citywatchdog sends a clearmessage as
banker loses joboverWhatsAppboast

Congressional Republicans seeking to
avert a US government shutdown after
April 28 have resisted Donald Trump’s
attempt to tack funds to pay for a wall
on the US-Mexico border on to
stopgap spending plans. They fear
that his planned $33bn increase in
defence and border spending could
force a federal shutdown for the first
time since 2013, as Democrats refuse
to accept the proposals.
US budget Q&A and
Trump attack over health bill i PAGE 8

Shutdown risk as border
wall bid goes over the top



iUSbargain-hunters fuel EuropeM&A
Europe has become the big target for cross-border
dealmaking, as US companies ride a Trump-fuelled
equity market rally to hunt for bargains across the

iReport outlines longerNHSwaiting times
A report on how the health service can survive
more austerity has said patients will wait longer for
non-urgent operations and for A&E treatment while
some surgical procedures will be scrapped.— PAGE 4

iEmerging nations in record debt sales
Developing countries have sold record levels of
government debt in the first quarter of this year,
taking advantage of a surge in optimism toward
emerging markets as trade booms.— PAGE 15

i London tower plans break records
A survey has revealed that a
record 455 tall buildings are
planned or under construction
in London. Work began on
almost one tower a week
during 2016.— PAGE 4

iTillerson fails to ease Turkey tensions
The US secretary of state has failed to reconcile
tensions after talks in Ankara with President Recep
Tayyip Erdogan on issues including Syria and the
extradition of cleric Fethullah Gulen.— PAGE 9

iToshiba investors doubt revival plan
In a stormy three-hour meeting, investors accused
managers o�aving an entrenched secrecy culture
and cast doubt on a revival plan after Westinghouse
filed for Chapter 11 bankruptcy protection.— PAGE 16

iHSBCwoos transgender customers
The bank has unveiled a range of gender-neutral
titles such as “Mx”, in addition to Mr, Mrs, Miss or
Ms, in a move to embrace diversity and cater to the
needs of transgender customers.— PAGE 20


UK £2.70 Channel Islands £3.00; Republic of Ireland €3.00

No: 39,435 ★

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Brussels, Milan, Madrid, New York,
Chicago, San Francisco, Washington DC, Orlando,
Tokyo, Hong Kong, Singapore, Seoul, Dubai

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Tel: 0800 298 4708

For the latest news go to

Recent attacks —
notably the 2011
massacre by
Anders Breivik in
Norway, the
attacks in Paris
and Nice, and the
Brussels suicide
bombings — have
bucked the trend
of generally low
fatalities from
terror incidents in
western Europe

Sources: Jane’s Terrorism and Insurgency Centre

Terror attacks in western Europe

Highlighted attack Others

Paris Nice


A Five Star plan?
Italy’s populists are trying to woo
the poor — BIG READ, PAGE 11


Trump vs the Valley
Tech titans need to minimise
political risk — GILLIAN TETT, PAGE 13

Dear Don...
May’s first stab at the break-up

Lloyd’s of London chose Brus-
sels over “five or six” other
cities in its decision to set up an
EU base to help deal with the
expected loss of passporting

John Nelson, chairman of the
centuries-old insurance mar-
ket, said he expected other

insurers to follow. Most of the
business written in Brussels
will be reinsured back to the
syndicates at its City of London

The Belgian capital had not
been seen as the first choice for
London’s specialist insurance
groups after the UK leaves the

EU, with Dublin and Luxem-
bourg thought to be more likely
homes for the industry. But
Mr Nelson said the city won on
its transport links, talent pool
and “extremely good regula-
Lex page 14
Insurers set to follow page 18

Lloyd’s of Brussels Insurancemarket
to tapnew talent poolwithEUbase



A computer system acquired to collect
duties and clear imports into the UK
may not be able to handle the huge
surge inworkloadexpectedonceBritain
leaves the EU, customs authorities have

HM Revenue & Customs told a parlia-
mentary inquiry that the new system
needed urgent action to be ready by
March 2019, when Brexit is due to be
completed, and the chair of the probe
said confidence it would be operational

Setting up a digital customs system
has been at the heart of Whitehall’s
Brexit planning because of the fivefold
increase in declarations expected at

About 53 per cent of British imports
come from the EU, and do not require
checks because they arrive through the
single market and customs union. But
Theresa May announced in January that
Brexit would include departure from
both trading blocs. HMRC handles 60m
declarations a year but, once outside the
customs union, the number is expected

The revelations about the system,
called Customs Declaration Service, are
likely to throw a sharper spotlight on
whether Whitehall can implement a
host of regulatory regimes — in areas
ranging from customs and immigration
to agriculture and fisheries — by the
timeBritain leavestheEU.

Problems with CDS and other projects
essential toBrexit could force London to

adjust its negotiation position with the
EU, a Whitehall official said. “If running
our own customs system is proving
much harder than we anticipated, that
ought to have an impact on how we
press forcertainoptions inBrussels.”

In a letter to Andrew Tyrie, chairman
of the Commons treasury select com-
mittee, HMRC said the timetable for
delivering CDS was “challenging but
achievable”. But, it added, CDS was “a
complex programme” that needed to be
linked to dozens of other computer sys-
tems to work properly. In November,
HMRC assigned a “green traffic light” to
CDS, indicating it would be deliveredon
time. But last month, it wrote to the
committee saying the programme had
been relegated to “amber/red,” which
means there are “major risks or issues
apparent inanumbero£eyareas”.

HMRC said last night: “[CDS] is on
track to be delivered by January 2019,
and it will be able to support frictionless
international trade once the UK leaves
the EU . . . Internal ratings are designed
to make sure that each project gets the
focus and resource it requires for suc-

HMRC’s letters to the select commit-
tee, which will be published today, pro-
vide no explanation for the rating
change, but some MPs believe it was
caused by Mrs May’s unexpected deci-
sionto leavetheEUcustomsunion.
Timetable & Great Repeal Bill page 2
Scheme to import EU laws page 3
Editorial Comment & Notebook page 12
Philip Stephens & Chris Giles page 13
JPMorgan eye options page 18

customs risks
being swamped
byBrexit surge
3Confidence in IT plans ‘has collapsed’
3Fivefold rise in declarations expected

World Markets


Mar 31 prev %chg

S&P 500 2367.10 2368.06 -0.04

Nasdaq Composite 5918.69 5914.34 0.07

Dow Jones Ind 20689.64 20728.49 -0.19

FTSEuro�rst 300 1503.03 1500.72 0.15

Euro Stoxx 50 3495.59 3481.58 0.40

FTSE 100 7322.92 7369.52 -0.63

FTSE All-Share 3990.00 4011.01 -0.52

CAC 40 5122.51 5089.64 0.65

Xetra Dax 12312.87 12256.43 0.46

Nikkei 18909.26 19063.22 -0.81

Hang Seng 24111.59 24301.09 -0.78

FTSE All World $ 297.38 298.11 -0.24


Mar 31 prev

$ per € 1.070 1.074

$ per £ 1.251 1.249

£ per € 0.855 0.859

¥ per $ 111.430 111.295

¥ per £ 139.338 139.035

€ index 88.767 89.046

SFr per € 1.071 1.069

Mar 31 prev

€ per $ 0.935 0.932

£ per $ 0.800 0.801

€ per £ 1.169 1.164

¥ per € 119.180 119.476

£ index 77.226 76.705

$ index 104.536 104.636

SFr per £ 1.252 1.244

Mar 31 prev %chg

Oil WTI $ 50.46 50.35 0.22

Oil Brent $ 53.35 53.13 0.41

Gold $ 1244.85 1248.80 -0.32


price yield chg

US Gov 10 yr 98.63 2.41 -0.01

UK Gov 10 yr 100.35 1.22 0.02

Ger Gov 10 yr 99.27 0.33 -0.01

Jpn Gov 10 yr 100.36 0.07 0.00

US Gov 30 yr 99.27 3.04 0.01

Ger Gov 2 yr 102.57 -0.75 0.00

price prev chg

Fed Funds E� 0.66 0.66 0.00

US 3m Bills 0.78 0.78 0.00

Euro Libor 3m -0.36 -0.36 0.00

UK 3m 0.34 0.34 0.00
Prices are latest for edition Data provided by Morningstar


stance in Brexit negotiations, rejecting
Britain’s plea for early trade talks and
explicitly giving Spain a veto over any

European Council president Donald
Tusk’s first draft of the guidelines,
which are an important milestone on
the road to Brexit, sought to damp Brit-
ain’s expectations by setting out a
“phased approach” to the divorce proc-
ess that prioritises progress on with-
drawal terms.

The decision to add the clause giving
Spain the right to veto any EU-UK trade
deals covering Gibraltar could make the
300-year territorial dispute between
Madrid and London an obstacle to

Gibraltar yesterday hit back at the

clause, saying the territory had “shame-
fully been singled out for unfavourable
treatment by the council at the behest of
Spain”. Madrid defended the draft
clause,pointingoutthat itonlyreflected

Senior EU diplomats noted that
Mr Tusk’s text left room for negotiators
to work with in coming months. Prime
minister Theresa May’s allies insisted
that the EU negotiating stance was
largely “constructive”, with one saying it
was “within the parameters of what we
were expecting, perhaps more on the

Britishofficialsadmittedthat theEU’s
insistence on a continuing role for the
European Court of Justice in any transi-

Brussels sees little room for compro-

mise. If Britain wants to prolong its
status within the single market after
Brexit, the guidelines state it would
require “existing regulatory, budgetary,
supervisory and enforcement instru-
mentsandstructures toapply”.

Mr Tusk wants talks on future trade
to begin only once “sufficient progress”
has been made on Britain’s exit bill and
citizen rights, which Whitehall officials
believe means simultaneous talks are
possible if certainconditionsaremet.

Boris Johnson, the foreign secretary,
reassured European colleagues at a
Nato summit in Brussels that Mrs May
had not intended to “threaten” the EU
when she linked security co-operation
Reports & analysis page 3
Jonathan Powell, Tim Harford &
Man in the News: David Davis page 11
Henry Mance page 12

Brussels takes tough stance onBrexit
with Spainhandedveto overGibraltar

About 2.3m people will benefit from
today’s increase in the national living
wage to £7.50 per hour. But the rise
will pile pressure on English councils,
which will have to pay care workers a
lot more. Some 43 per cent of care
sta� — amounting to 341,000 people
aged 25 and over — earn less than the
new living wage and the increase is
expected to cost councils’ care services
£360m in the coming financial year.
Analysis i PAGE 4

Living wage rise to pile
pressure on care services

SATURDAY 1 APRIL / SUNDAY 2 APRIL 2017UK £3.80; Channel Islands £3.80; Republic of Ireland €3.80

No: 39,436 ★

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For the latest news go to

Censors and sensitivity
Warning: this article may be
upsetting — LIFE & ARTS



Escape the taper trap
How high earners can evade
a pension headache — FT MONEY

The lure of the exotic
Robin Lane Fox on the flair
of foreign flora — HOUSE & HOME

How To Spend It

Chic new lodgings
in Scotland

Art of persuasionMystery deepens
over disputed painting of JaneAusten

Austen’s descendants insist the Rice portrait depicts her as a girl — seemagazine Bridgeman Art Library


Credit Suisse has been targeted by
sweeping tax investigations in the UK,
France and the Netherlands, setting
back Switzerland’s attempts to clean up
its imageasataxhaven.

The Swiss bank said yesterday it was
co-operating with authorities after its
offices inLondon,ParisandAmsterdam
were contacted by local officials
“concerningclient taxmatters”.

Dutch authorities said their counter-
parts in Germany were also involved,
while Australia’s revenue department
said itwas investigatingaSwissbank.

The inquiries threaten to undermine
efforts by the country’s banking sector
to overhaul business models and ensure
customers meet international tax
requirements following a US-led clamp-
down on evaders, which resulted in
billionsofdollars infines.

The probes risk sparking an interna-
tional dispute after the Swiss attorney-
general’s office expressed “astonish-
ment” that it had been left out of the
actions co-ordinated by Eurojust, the
EU’s judicial liaisonbody.

Credit Suisse, whose shares fell 1.2 per
cent yesterday, identified itself as the
subject ofinvestigations in the Nether-
lands, France and the UK. The bank said

it followed “a strategy offull client tax
compliance” but was still trying to
gather informationabouttheprobes.

HM Revenue & Customs said it had
launched a criminal investigation into
suspected tax evasion and money laun-
dering by “a global financial institution
and certain ofits employees”. The UK
tax authority added: “The international
reach of this investigation sends a clear
message that there is no hiding place for

Dutch prosecutors, who initiated the
action, said they seized jewellery, paint-
ings and gold ingots as part of their
probe; while French officials said their
investigation had revealed “several
thousand” bank accounts opened in
Switzerland and not declared to French

The Swiss attorney-general’s office
said it was “astonished at the way this
operation has been organised with the
deliberate exclusion of Switzerland”. It
demanded a written explanation from

In 2014, Credit Suisse pleaded guilty
in the US to an “extensive and wide-
ranging conspiracy” to help clients
evadetax. Itagreedtofinesof$2.6bn.
Additional reportingbyLauraNoonan in
Dublin, Caroline Binham and Vanessa
Houlder in London, andMichael Stothard

Credit Suisse
engulfed in
fresh taxprobe
3UK, France and Netherlands swoop
3Blow for bid to clean up Swiss image






390_Cover_PRESS.indd 1 19/01/2017 13:57

DECEMBER 9 2020 Section:World Time: 8/12/2020 - 18:07 User: john.conlon Page Name: WORLD1 USA, Part,Page,Edition: EUR, 2, 1

Page 10

10 ★ FINANCIAL TIMES Wednesday 9 December 2020


Eva Szalay — London

Traders are bracing for big swings in
the value of the pound as UK-EU trade
talks go down to the wire with a key
measure predicting the highest volatil-
ity since the coronavirus crisis tore
through markets earlier this year.

Sterling’s implied volatility over the
next four weeks has reached a mark not
seen since the aftermath of the March
sell-off — having risen by nearly a third
over the past week for both the dollar
and euro exchange rates.

“Volatility going higher makes sense
as negotiations sit on a knife edge,” said
Ian Tew, a sterling trader at Barclays.

The next few days will be critical, he
added, with markets sensitive to head-
lines and set up for a “a decent-sized
move for sterling”.

That marks a sharp turnround from
last week when the pound hit its
strongest level since May 2018 against
the dollar after weeks of growing
optimism that a deal could be struck.

But a lack of progress over the week-
end and tough words from both sides
has sent the pound down about 0.7 per
cent in just two days to trade a bit above

$1.33 from above $1.35 at the end of last
week. The pound is also down 0.8 per
cent against the euro by yesterday after-
noon, which would mark its worst
weekly performance since September if
it does not improve in the coming days.

In recent weeks, investors upped their
bets on a positive outcome to the talks
but the lack of progress has punctured
some of the optimism and forced inves-
tors into buying contracts that protect
them from large exchange rate shifts —
driving up the implied volatility

That marked a quintupling from the
Spac’s listing price.

Although the shares have dipped after
that frenzy, the newly combined
company still boasts an overall market
value of roughly $16bn. Mr Grantham
holds about 4.8m shares in the com-
pany, which at their $44.17 closing level
on Monday would be worth over $210m.

But he pointed out that the company
itself estimates that commercial
production of its batteries for electric
cars is years away and compared the
current Spac frenzy to some of the
wilder schemes launched in the 18th
century South Sea Bubble.

Spacs have taken Wall Street by storm
in 2020, generating lucrative returns for
their backers as well as large fees for the
underwriters and law firms that have
helped usher them to market.

More than 200 blank cheque compa-
nies have listed so far this year, raising a
record $66.3bn, according to data

This September, United Wholesale
Mortgage agreed to go public by merg-
ing with a blank-cheque company in a
transaction that valued United at $16bn:
the largest deal ever struck by a Spac.

measure. Bets that pay out if sterling
depreciates have also increased.

Options markets indicate that buying
protection against a weaker pound has
become about 50 per cent more
expensive than those that pay out if
sterling rises.

Kamakshya Trivedi, co-head of global
FX, rates and EM strategy at Goldman
Sachs, said rising volatility and
increased caution about further sterling
gains reflect rising nervousness about
the outcome, especially because many
investors had expected an agreement to
be struck ahead of the EU summit

“A deal could still come together in
the coming days if political interven-
tions are successful but it might take a
little more brinkmanship to make
compromises palatable on all sides —
something that is likely to keep
[sterling] markets on edge,” he said.

Traders have also built up record
positions in futures contracts to bet on
or hedge against moves in UK interest
rates as tension rises that Britain may
leave the Brexit transition period
without a trade deal.
Additional reporting by Philip Stafford


Sterling traders poised for volatility
as EU-UK negotiations hang in balance

Robin Wigglesworth — Oslo
Eric Platt — New York

Investor Jeremy Grantham has “by
accident” made about $200m from a
personal investment in battery maker
QuantumScape after it merged with
a listed blank-cheque company —
despite deriding the US craze for
so-called Spacs as “reprehensible”.

Mr Grantham, the co-founder of
Boston-based GMO, is now semi-retired
and works primarily in environmental
philanthropy. But seven years ago, his
personal foundation invested $12.5m in
QuantumScape, a Stanford University
spinout, as part of a series of bets on
early-stage “green” technology.

Mr Grantham stressed that he is a big
believer in QuantumScape. But he was
taken aback by his gains from investing
in the company, which were super-
charged since it announced in Septem-
ber that it would secure a slot on the
New York Stock Exchange by merging
with a special purpose acquisition
company set up by Kensington Capital
Partners, a Canadian investment group.

“This is unlike anything else in my
career. This was by accident the single


Grantham stumbles on $200m profit
after Spac swoop on battery maker

biggest investment I have ever made,”
he told the Financial Times. “It gets
around the idea of listing requirements,
so it is not a useful tool for a lot of
successful companies. But I think it is a
reprehensible instrument and very,
very speculative by definition.”

Ironically for an investor mostly
known for contrarian bets on underval-
ued, unfashionable companies and

industries, the bet on QuantumScape is
on track to be one of the most lucrative
investments of Mr Grantham’s six-
decade career.

The combination with Kensington
Capital Acquisition Corp valued Quan-
tumScape at $3.3bn but the vehicle’s
stock price more than doubled after the
deal was announced on September 2
and spiked to a peak of $52.80 after the
merger was formally approved and
completed on November 30.

‘This is unlike anything
else in my career. This was
by accident the biggest
investment I have made’

The pound last week hit its strongest
level against the dollar since 2018

fall in the currency since the end of 2019.
The scheme was the centrepiece of

the turbulent tenure of Berat Albayrak,
the son-in-law of president Recep
Tayyip Erdogan who ran the country’s
economy until his surprise resignation
last month.

His successor, former bureaucrat
Lutfi Elvan, and a new central bank
governor, Naci Agbal, have been left to
pick up the pieces.

Their task is a daunting one but they
have a chance to turn the tide, said
Hakan Kara, a former Turkish central
bank chief economist.

“There is an opportunity here,” he
said. “With more credible people who
are saying exactly what the market
expects, that will attract some inflows
[of foreign capital].”

Dwindling reserves contributed to
downgrades by international rating
agencies and alarmed foreign investors,
who pulled roughly $13bn from Turkish
stocks and bonds in the first 10 months
of 2020, central bank data show.

The shake-up in the country’s eco-
nomic management has lured some for-
eign fund flows with $1.9bn shifting
back into Turkish assets in the three
weeks after Mr Albayrak’s departure.

A decision last month to raise the
central bank’s main interest rate
sharply to 15 per cent, plus the lifting of
other measures that had put pressure
on commercial banks to lend, is
expected to help slow the credit-fuelled,
consumption-driven growth that was
stoking a large current account deficit
and contributing to the drain on

But the pandemic provides a chal-
lenging backdrop for correcting the
trade imbalance. Meanwhile, Turkish
companies continue to create demand
for FX as they pay down foreign debts.

Such factors mean it is likely to be a
“relatively slow process to rebuild
reserves”, said Paul Gamble, a senior
director at rating agency Fitch.

If the country can attract large
enough inflows of foreign money, the
central bank could begin building its
coffers by starting FX purchase auctions
for the first time since 2011.

Some analysts warned that the time
was not yet right. “It’s too early,” said
Haluk Burumcekci, an Istanbul-based
economist and consultant, pointing to
the relatively small size of recent foreign
inflows and the fact that sceptical local
investors have continued to buy dollars.

“If there is no de-dollarisation and the
central bank starts buying foreign
currency, the dollar will rise again
[against the lira],” he said.

Mr Kara said further rate rises would
be “very important” for creating the
right environment for reserve-building.

Raising the main rate to 17 per cent
and keeping it there for six months
would create a “virtuous circle” that he
estimated could help the central bank to
add $15-20bn to its war chest.

The question is whether Mr Erdogan,
a staunch opponent of high interest
rates, is willing to tolerate further rate
rises. “That’s the biggest risk ahead,” he

Steps by the central bank to reduce its
reliance on swaps, and the lifting of
measures that prevented Turkish banks
from performing similar transactions
with foreign counterparts, would help
restore the normal functioning of
Turkey’s financial markets, analysts

But bankers expect the arrangement
to be dismantled gradually to avoid an
abrupt decline in the central bank’s
reported reserves.

“I think public banks will continue to
roll over swaps for a long time,” said one
Istanbul banker.

The central bank nodded to a desire
to increase reserves in the statement
that accompanied last month’s interest
rate rise.

Bulent Gultekin, a former Turkish
central bank governor who is now a
professor of finance at the Wharton
School at the University of Pennsylva-
nia, said a comprehensive plan and good
communication would be critical to
“create an environment of confidence to
reverse the capital flows”.

Prof Gultekin added: “It was never
clear where they were going [with the
previous policies] — that was the reason
why they got into that mess.”

Laura Pitel — Ankara

Foreign investors have snapped up
Turkish assets in recent weeks, opening
the window for the country to rebuild its
stores of foreign currency that were
severely depleted in an ill-fated attempt
to prop up the lira.

Analysts have warned, however, that
Turkey’s newly installed finance
minister and central bank chief have
their work cut out, given the scale of the
rebuild needed and the damage that
the pandemic is inflicting on one of the
biggest emerging markets.

The draining of Turkey’s FX coffers
has been one of the overarching worries
of foreign investors over the past two
years since reserves are considered a
crucial insurance policy against the
country’s large import bill and hefty
foreign debt obligations.

Gross reserves, excluding gold, have
hovered around a 15-year low in recent
months, according to data from the
Turkish central bank.

The picture is even more bleak once
an adjustment is made for a contentious
accounting method adopted by the
central bank last year.

When tens of billions of dollars
borrowed through short-term swap
arrangements with commercial banks
are excluded from the bank’s balance
sheet, net foreign assets — a proxy for
net reserves — stood at a deficit of $52bn
at the end of October, according to
Financial Times calculations.

A key cause of the decline was an
intervention aimed at halting a freefall
in the lira. The central bank spent tens
of billions of dollars, according to ana-
lysts, but has failed to stem a 24 per cent

The country burnt through

billions of dollars this year in

an effort to prop up the lira

‘It was
never clear
where they
were going.
That was
why they
got into
that mess’

Investor flight:
some foreign
fund flows have
come back to
Turkey after an
exodus over the
past two years
Murad Sezer/Reuters

Currencies. Dwindling reserves

Investment inflows pave way for
Turkey to rebuild forex coffers

Turkey’s foreign currency war chest is severely depleted

Net foreign assets are considered a key proxy for foreign currency reserves
Sources: CBRT; FT calculations







Jan 2019 2020 Oct

Net foreign assests

NFA excluding short-term borrowing

Christian Shepherd — Beijing
Thomas Hale — Hong Kong

Shares in JD Health surged 75 per cent
on their trading debut after the unit of, the Chinese ecommerce group,
raised $3.5bn in Hong Kong’s biggest
initial public offering of 2020.

JD Health, which sells pharmaceuti-
cals and health services online,
trimmed those gains to end trading
56 per cent higher yesterday.

Demand heavily outstripped supply.
The company sold 339.9m shares at
HK$70.58 ($9.11) each, or slightly more
than 12 per cent of its share capital,
according to a term sheet, giving it a
market capitalisation of about $44bn.

If bankers exercise a so-called
overallotment option, which would
boost the offering by 15 per cent, the IPO
could surpass $3.9bn.

JD Health is Hong Kong’s first big
tech listing since Chinese regulators in
November stepped in at the last minute
to suspend payments business Ant
Group’s proposed $37bn IPO, which
would have been the world’s biggest.

Andy Maynard, managing director at
China Renaissance Securities, hailed a
“landmark transaction” and said the
shares could rally further: “We’ve still
got a lot of institutional buyers because
it was so heavily oversubscribed.”

JD Health and other Chinese online

healthcare platforms including Ping An
Good Doctor and Alibaba’s AliHealth
have reported surging revenue and user
activity this year. Wariness of hospital
visits in the pandemic fuelled a jump in
online consultations in early 2020.

Online consultations and pharmacies
also offer a way to plug gaps in China’s
healthcare coverage where the best
provision is in top-tier city hospitals.

Xin Lijun, chief executive, said the
platform was hosting more than
100,000 online consultations a day — a
number that peaked at 150,000 during
the height of China’s Covid-19 outbreak.

New government policies allowing
insurance claims for online care and
hospitals distributing medicines via the
internet were other lasting changes that
benefited JD Health, he said.

“This was not only a single incident,”
said Mr Xin, referring to the pandemic.
“It raised the overall standard of China’s
online healthcare.”

JD Health’s internet pharmacy
business had 72.5m annual users last
year and its healthcare platform, which
links patients and medical profession-
als, has more than 65,000 doctors.

For the six months to June, JD Health
reported a Rmb5.4bn ($820m) loss on
Rmb8.8bn in revenue with the latter
growing 76 per cent year on year. Under-
writers on the deal included BofA
Securities, UBS and Haitong Securities.
Additional reporting by Wang Xueqiao in
See Lex


JD Health
shares jump
75% on debut
in Hong Kong

‘This was not only a single
incident. It raised the
overall standard of
China’s online healthcare’

Our global
team gives you
news and views,
24 hours a day

DECEMBER 9 2020 Section:Markets Time: 8/12/2020 - 17:45 User: stephen.smith Page Name: MARKETS1, Part,Page,Edition: ASI, 10, 1

Page 11

Wednesday 9 December 2020 ★ FINANCIAL TIMES 11


Tesla fell after a filing revealed that the
electric-car maker planned to raise up to
$5bn by selling stock.

The shares would be sold “from time to
time, through an ‘at-the-market’ offering
programme”, stated the Californian
company. The news comes just weeks
before Tesla is due to enter the S&P 500,
a move that is expected to fuel demand
for the stock as passive investments that
track the benchmark buy the stock.

A target price boost from UBS helped
Arista Networks climb.

Analyst David Vogt raised the
computer networking company’s target
price to $308 a share from $260 on
confidence over its introduction of 400G,
the next generation of cloud
infrastructure that promises substantially
higher transfer speeds.

“Following the Q4 guide and
commentary, favourable channel checks
and bullish conference remarks on
maintaining share in 400G, we now
model Arista maintaining its 100G share
in the 400G data centre market going
forward,” said Mr Vogt.

Uber slid after the ride-hailing group
announced that it was abandoning its
efforts to develop self-driving cars.

Uber will instead transfer its 1,200-
employee self-driving unit to Aurora,
a driverless vehicle start-up backed by
Amazon and Sequoia. Ray Douglas

Wall Street LondonEurozone

Beijer Ref climbed after announcing that
EQT was buying Carrier’s entire stake in
the Swedish cooling technology group.

The Stockholm-based private equity
company would then become the
principal shareholder and control 29.6 per
cent of the capital in Beijer.

“The ambition is to support Beijer Ref’s
continued growth journey, both through
acquisitions and organically,” said Albert
Gustafsson, a partner at EQT.

A better than expected earnings
outlook helped to lift Hella. In a trading
update, the German automotive part
supplier said it expected group currency
and portfolio-adjusted sales in the range
of €6.1bn to €6.6bn for the full year
2020-21, from a previous estimate of
€5.6bn to €6.1bn.

“Production trends have remained
resilient with strong momentum in China
continuing and a more limited than
expected impact from European
government shutdowns on volumes in
November,” said Citi analyst Gabriel
Adler, who gave Hella a “buy” rating.

Qiagen rose after the German
diagnostics company improved its
earnings outlook, stating that net sales
were expected to grow approximately 22
per cent in 2020 and 18 per cent to 20 per
cent for 2021.

Covid-19 tests are among the products
that Qiagen makes. Ray Douglas

Ashtead climbed after the construction
and industrial equipment rental group
lifted its full-year guidance.

Its performance was boosted by
supplying equipment and services to first
responders, hospitals and food services
companies during the pandemic.

“We continue to like the story in terms
of . . . increased ownership to rental
penetration but are cognisant that
medium-term GDP and construction
growth is likely to be lower than pre-
Covid levels and the size and shape of a
recovery is uncertain,” said RBC Europe
analyst Andrew Brooke, who gave
Ashtead a “sector perform” rating and
target price of £27 a share.

An upbeat trading update helped to lift
plumbing and heating group Ferguson.

Underlying trading profit rose to
$486m for the quarter ending October 31
from $433m a year earlier, representing a
12.2 per cent rise.

“Since the start of the second quarter,
Ferguson has continued to generate low
single-digit revenue growth in broadly
flat markets, although we remain
cautious on the outlook for the year as a
whole, considering current pandemic
trends,” said Kevin Murphy, group chief

Virgin Money rose after Liberum
initiated a “buy” rating for the UK’s sixth-
largest bank. Ray Douglas

3 One-month implied volatility for
sterling hits April high
3 Wall Street’s S&P 500 breaks 3,700
mark for the first time
3 Gold up more the 5% this month after
climbing five out of the past six sessions

The pound was volatile yesterday as
investors weighed Britain’s chances of
striking a post-Brexit trade deal with the
EU in make-or-break talks this week.

The currency weakened to $1.3288
after British officials reported “no
tangible progress” in UK-EU trade talks
but regained some ground when the UK
said it would ditch parts of a controversial
bill that breached Britain’s withdrawal
treaty. By the evening, the pound was flat
for the day at $1.3363, putting its losses
for the week at 0.5 per cent.

This week, one-month implied volatility
for sterling — a measure of expected
price swings over the period — hit its
highest level since the first days of April,
following a coronavirus-induced sell-off
of global assets in March.

“This doesn’t tell you markets are
pricing in no deal,” said Trevor Greetham,
investment strategist at Royal London
Asset Management. “But it tells you
market participants are anxious.”

The FTSE 100 benchmark edged up
0.1 per cent while the more domestic-
focused FTSE 250 index slid 0.3 per cent.

Wall Street’s S&P 500 rose 0.3 per cent
by lunchtime in New York to break the
3,700 mark for the first time.

The tech-heavy Nasdaq Composite
also hit a record high after rising 0.2 per
cent while the pan-regional Stoxx Europe
600 rose 0.2 per cent.

“Markets are consolidating,” said Ben
Laidler, chief executive of Tower Hudson
Research — after global stocks as
measured by the FTSE All-World index
climbed more than 12 per cent in
November and continued rallying in the
first few days of this month.

“You’ve had two big themes:
coronavirus vaccines and the possibility
of US [economic] stimulus,” he added.
“But investors are concerned about
markets getting too far ahead of the
current macroeconomic situation.”

The oil price, which was buoyed last
week by the Opec+ group agreeing to

impossible to resist — particularly
after his candidates fared poorly in
November’s municipal elections.

Marcelo Castro, a portfolio manager
at Brazilian hedge fund SPX Capital, said
a slow deterioration in Brazil was more
likely than a sudden crisis. “It’s bubbling
and frothing but not exploding.”

Mr Castro expected a rebound in
growth next year to drive higher infla-
tion, forcing rates up to 4 per cent by
June. But he conceded that “there are
lots of risk scenarios around this”.

Ilan Goldfajn, chairman of Credit
Suisse Brazil and a former central bank
head, believes nothing will happen on
extending coronavirus spending or pro-
gressing reforms until February. “If
that’s the case, Brazil can surf the risks
for a couple of months,” he said.

But if next year brought extra spend-
ing without reforms, Mr Goldfajn said
the risk of a market crisis would rise.

Marcos Casarín, Latin America chief
economist at Oxford Economics, agreed
that the real test would come next year
with short-term debt equal to about 6 per
cent of GDP needing to be rolled over by
April. “Brazil is on a tightrope,” he said.

The scenario of a markets crisis in
Latin America’s biggest economy is not
one many Brazil watchers want to
contemplate. But Mr Casarín said: “It’s
increasingly likely that it will become
the baseline scenario unless we see a
U-turn from Bolsonaro.”

However, Mr Guedes ridiculed the
idea that his plans lack credibility in his
riposte to the central bank governor,
saying: “The day that the stock market
is falling 50 per cent and the dollar
exploding, then I will say that credibility
is lacking.”

[email protected]

curtail planned increases in production,
drifted higher. Brent crude, the
international benchmark, rose 0.1 per cent
to $48.86 a barrel.

A modest rally in haven assets
continued. The yield on the 10-year US
Treasury, which had been approaching
the 1 per cent milestone late last week,
slipped a further 1 basis point yesterday
to 0.91 per cent.

Gold, meanwhile, has risen five out the
past six sessions, taking the precious
metal up more than 5 per cent since the
start of the month to $1,870 an ounce.
Naomi Rovnick and Eva Szalay

What you need to know

Pound bu�eted by Brexit drama

Source: Refinitiv

Against the dollar ($ per £)









1 8Dec 2020

The day in the markets

Markets update

US Eurozone Japan UK China Brazil
Stocks S&P 500 Eurofirst 300 Nikkei 225 FTSE100 Shanghai Comp Bovespa
Level 3697.49 1521.91 26467.08 6558.82 3410.18 113778.06
% change on day 0.15 0.17 -0.30 0.05 -0.19 0.17
Currency $ index (DXY) $ per € Yen per $ $ per £ Rmb per $ Real per $
Level 90.807 1.211 104.125 1.336 6.532 5.065
% change on day 0.017 -0.165 0.082 0.300 -0.095 -0.107
Govt. bonds 10-year Treasury 10-year Bund 10-year JGB 10-year Gilt 10-year bond 10-year bond
Yield 0.910 -0.607 0.015 0.256 3.269 6.855
Basis point change on day -1.660 -2.400 -0.580 -2.400 -2.600 -0.900
World index, Commods FTSE All-World Oil - Brent Oil - WTI Gold Silver Metals (LMEX)
Level 417.22 48.88 45.67 1859.95 23.75 3404.70
% change on day 0.07 0.37 -0.04 0.92 -1.96 -0.49
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

| | | | | | | | | | | | | | | | | | | |
Oct 2020 Dec






| | | | | | | | | | | | | | | | | | | |
Oct 2020 Dec






| | | | | | | | | | | | | | | | | | | |
Oct 2020 Dec





Biggest movers
% US Eurozone UK



Equifax 9.59
Arconic 5.31
Marathon Oil 4.82
Norwegian Cruise Line Holdings Ltd 3.98
Arista Networks 3.57

Coloplast 2.95
Novozymes 1.91
Siemens 1.76
Santander 1.67
Dsm 1.60

Smith (ds) 3.84
Experian 3.36
Intertek 3.26
3i 2.93
Sse 2.90




H&r Block -7.46
Alliance Data Systems -5.12
Autozone -4.72
Coty -4.50
Newell Brands -3.91

Prices taken at 17:00 GMT

Klepierre -3.78
Amadeus It -2.70
Credit Agricole -2.66
Inditex -2.61
Man -2.53
Based on the constituents of the FTSE Eurofirst 300 Eurozone

Int Consolidated Airlines S.a. -3.62
Intercontinental Hotels -3.57
Rolls-royce Holdings -3.52
Hsbc Holdings -2.71
Berkeley Holdings (the) -2.62

All data provided by Morningstar unless otherwise noted.

Michael Stott

Markets Insight

t’s not unusual to hear an emerging
market government be told to
produce a credible plan showing
public finances are sustainable. But
when the person demanding it is

the government-appointed head of the
central bank, there may be greater
reason for investor concern.

Paolo Guedes, Brazil’s economy
minister, certainly didn’t appreciate the
wake-up call late last month, swiftly
challenging Roberto Campos Neto, the
central bank chief: “If he has a better
plan, then ask him what his plan is.”

Mr Campos Neto, however, had a
point. Mr Guedes is an acolyte of the free
market principles of Milton Friedman
and a believer in smaller government.

But he has gone on one of the emerg-
ing market world’s biggest coronavirus-
related spending sprees, using a meta-
phorical credit card that was already
maxed out before the pandemic. The
spending has helped Brazil avoid a deep
recession this year but at what price?

“I’m seriously concerned about the
medium-term and the short-term fiscal
picture,” said Alberto Ramos, Latin
America chief economist at Goldman
Sachs, noting that Brazil has one of the
highest levels of public debt to GDP of
any emerging market — and predicting
it will hit 94 per cent this year.

More than 90 per cent of Brazil’s gov-
ernment debt is issued in local currency,
according to national treasury figures
and the stress is starting to show in
domestic markets.

The yield curve for Brazilian debt has
steepened sharply this year with the
10-year bond now yielding 7.4 per cent
compared with today’s central bank
benchmark Selic rate of 2 per cent.

Luis Oganes, global head of emerging
markets at JPMorgan, said it was

Bolsonaro borrowing
binge gives investors
in Brazil the jitters

“among the steepest yield curves on the
planet” with long-term rates rising
sharply from shorter-term ones. Inves-
tors are pricing in a rate rise of up to
300 basis points starting in January, he
said, and “the government is issuing
massively at the short end because it
doesn’t want to validate this curve”.

Average maturities on domestic
federal public debt are down to 3.57
years at the end of October from 3.83
years at the end of last year, according to
Brazil’s national treasury.

Behind the jitters lies the fear that
Brazil’s much-vaunted reform pro-
gramme to cut high budget deficits —

the main reason why investors feted Jair
Bolsonaro’s election as president — has
stalled. “The problem is essentially
political,” said Zeina Latif, an economic
consultant in São Paulo. “The economy
ministry knows what needs to be done
but we are seeing an economy minister
who has been greatly weakened and
who now doesn’t convince.”

Mr Bolsonaro, meanwhile, has discov-
ered the electoral joys of welfare spend-
ing. His opinion poll ratings jumped
after he launched a $110 a monthly sub-
sidy for nearly a third of the population
at a cost of more than $9bn a month.

The snag is that the “coronavoucher”
payments are due to end on December
31. As his re-election campaign cranks
up, Mr Bolsonaro may find the attrac-
tions of literally buying popularity

‘We are seeing an economy
minister who has been
greatly weakened and who
now doesn’t convince’

DECEMBER 9 2020 Section:Markets Time: 8/12/2020 - 18:58 User: stephen.smith Page Name: MARKETS2, Part,Page,Edition: ASI, 11, 1

Page 20

20 ★ FINANCIAL TIMES Wednesday 9 December 2020

No 16,655 Set by GOZO


Across answers have a common theme
and are undefined in the clues

1 First of customers returns bottle of milk

4 Greetings! It has left the digestives, say

9 Oddly, they answer to Liberal leader (6)
10 Dancing girl at Le Lido line in Sussex (8)
12 Lodging in hotel in Gretna (4)
13 Southern border (5)
14 See 24
17 Bill coming after dessert (5,7)
20 Served dab and red salmon (3,4,5)
23 Bit of a looker! (4)
24, 14 Dry seed we scattered (5,4)
25, 27 Funny Girl – Adele’s leading first

28 Nehru takes nap – out of sorts (8)
29 Farrow drinks some of the German wine

30 Spoke of rooms with endless ringing

31 Attempt to cut tree back (6)
1 Refined accent of Under Milk Wood’s

Lord (3,5)
2 Coaches and French model railway (5,3)
3 Goat from central Tibet – spot marked

thus (4)
5 False registration made by a burglar

6 Confectionery from unjust magistrates

7 Basket holding women’s yarn (6)
8 Food, alas, upset diners – no stomach

for it (6)
11 Cavalier villain could be a nurse (5-3-4)
15 No wind yet (5)
16 Former PM extremely believable?

Possibly (5)
18 Inside truck is your broken implement

19 Water, alas, made impure (5,3)
21 With which Leo’s composed polonaises?

22 He’s promised work in cafe (6)
26 Quarrel – it is bath time (4)
27 See 25

Solution 16,654

Tesla is following advice from an
earlier era of metal-bashing: strike
while the iron is hot. The US electric-
car maker plans to tap the equity
market yet again. It intends to sell up
to $5bn in new shares, its third capital
raise in 10 months.

For Tesla boss Elon Musk, the lure is
clear. The company’s share price defies
gravity, surging almost 650 per cent
from a low in March to a new high this
week. Its market capitalisation exceeds
$600bn. That is six times greater than
General Motors and Ford Motor
combined, even though Tesla’s
production is just a fraction of theirs. It
also explains why Mr Musk can raise
$5bn while diluting shareholders by
just 0.8 per cent.

Newbie investors cannot get enough
of a stock emblematic of the new
corporate world order. Tesla is one of
the most traded US shares according to
Refinitiv. Demand has been fuelled by
a stock split and upcoming admission
to the S&P 500 index.

Like the previous capital raise in
September, the share sale is an “at-the-
market” offering, or ATM. The
structure allows companies to raise
cash bit by bit, over the course of
months or years in the open market.
The advantage is flexibility and instant
access to capital. Fees are lower.

Public investors usually dislike ATMs
because they have limited say in how
proceeds are spent. That hardly applies
to Mr Musk, a formidable entrepreneur
whose fans think he can do no wrong.

Tesla has delivered five straight
quarterly profits helped by sales of
carbon credits. The new share sale
could take cash and equivalents to

Old-school analysis finds nothing in
Tesla’s fundamentals to justify a
valuation of 141 times forward
earnings. The stock even looks
expensive if you believe the group
could monopolistically supersede the
world’s traditional carmakers. Tesla
continues to produce more irrational
exuberance than vehicles.

more funding secured

reasonable returns from them. Ofgem
tries to limit unnecessary investment.
Had it done nothing, energy bills would
have risen by an average of £18 a year.

That looks like small change
compared with what households might
pay in other areas. Renewable energy
costs have fallen. These trends will
reduce the impact on consumers, says
the CCC. But it is pie in the sky for the
CCC to expect every household boiler
to be “hydrogen ready” when there is
no wholesale gas making or
distribution system.

The bigger challenge is to persuade
consumers that short-term investment
will have long-term environmental
payback. Not all of the bill can be
covered by better technology and
economies of scale. The easy part of the
green revolution has already passed.

failing to do so would be steeper. Think
of parched farmland, freak weather
events and surging immigration. That
message is unpopular with voters.
Politicians and regulators are in a bind.

Official timidity was apparent in
guidelines from UK electricity and gas
regulator Ofgem yesterday. It reduced
significantly — for the coming five
years — what electricity and gas
networks can earn on their regulated
assets. Ofgem’s efforts will not add up
to much. Consumers will pay £10 less
annually for essential investments to
the electricity and gas networks.

This reduction in charges seems
curious when the UK government is
promising to speed up energy
transition. Transmission groups such
as National Grid and SSE need more
renewable assets and should make

days, the deal could be sealed before
full-year results are released on the
25th. Patently one to reject.

A new type of British hobbyist may
appear, if politicians and climate
activists have their way: gas boiler
collectors. To achieve decarbonisation
targets by 2050, the government plans
to electrify homes and businesses.
Green groups such as the Climate
Change Committee want all gas boilers
replaced by 2033, potentially costing
each household £10,000.

Individuals will ultimately have to
pay for energy transition. The cost of

power deficit

Miners from locations as far afield as
Kazakhstan and Indonesia flocked to
London’s stock exchange on the back of
the commodity boom in the mid-
noughties. Most have since exited,
leaving disenchanted investors in their
wake. Kaz Minerals, worth about
£3.1bn, is still trying to wangle its way
out — like its predecessors, via a
lowball buyout. Investors, having been
short-changed before, should dig their
heels in.

Of the many reasons to stand firm
against the 640p a share offer, now
being made by way of a takeover, two
stand out. One is the soaring copper
price. Copper prices have jumped 18
per cent since the board greenlighted
the bid from chairman Oleg Novachuk
and Kazakh metals tycoon Vladimir
Kim in early October for shares they do
not already own.

Using Kaz’s own figures, every 10 per
cent increase in the copper price adds
$182m of ebitda. That should juice up
profits by $360m or 75 cents a share.
Add that to the pre-offer share price of
£5.70 and you are already within reach
of the current bid. Production,
according to an update put out after
the takeover bid was announced, will
meet or exceed guidance.

The second spur is Baimskaya, a vast
undeveloped copper mine in a forsaken
part of Russia. Purchase of this mine,
for $900m in 2018, relieved oligarch
Roman Abramovich of a cash-guzzling
asset and torpedoed Kaz’s share price.

No wonder. Kaz reckoned on eight
years to develop the mine at a cost of
$5.5bn; that figure has since swollen to
$8bn. More than two years later,
shareholders are still waiting for a
feasibility study to get a true sense of
its potential. They have already spent
the best part of $300m on the elusive
document and “pioneer works”.

Timing is everything for would-be
acquirers. Offer documents will be sent
out “on or before” February 4. If
completed within the minimum 21

Kaz Minerals bid:
just say no

Waiting to consult doctors at their
surgeries is becoming old-fashioned
among China’s early adopters. Remote
medical consultations via platforms
such as JD Health have surged during
the pandemic. JD Health’s Hong Kong
listing, in which it sold $3.5bn of
shares, is well timed.

The stock rose 56 per cent yesterday,
valuing the offshoot at more
than $40bn. Hot money stacked up for
the postponed Ant Group listing was
one reason for the jump. The industry’s
potential was the other. China is a
perfect test bed for digital medicine.
Public healthcare is under-resourced.
The private sphere lacks a US-style
oligopoly. The large, ageing population
is prepared to pay for the best doctors.

The group’s healthcare revenues
grew more than three-quarters in the
first half to $1.3bn. It is already

There is room for more. JD Health
launched online consultations less than
three years ago. The sessions work well
for conditions not requiring physical
examinations. They are mostly free.

Drug sales are the main revenue
source, making JD Health’s the largest
online retail pharmaceuticals platform
in China. That creates conflicts of
interest for online physicians as big as
those that conventional practitioners
wrestle with.

Charging for consultations would
resolve these. Public national medical
insurance cannot be used to cover fees
from online consultations, absent
regulatory reform. But China’s growing
middle classes can be persuaded to
stump up.

JD Health’s parent is a bigger concern
for investors. will be hit by
Beijing’s new antitrust regulations. JD
Health’s main competitors are
healthcare units of Alibaba, Ping An
and Tencent, tech giants equally
exposed to official disapproval of
cross-selling and cross subsidies.

It helps that the online healthcare
sector is worth just $4bn within a $1tn
local healthcare market, too small to
inspire direct attacks. The need for
medical resources during the pandemic
has kept regulators friendly, for now.
Companies such as JD Health can curry
further official favour by helping with a
push to digitise medical records.

Telemedicine/JD Health:
what the doctor ordered

JD Health’s enterprise value of 14
times trailing sales is high. But smaller
rival Alibaba Health Information
Technology trades at 20 times.
Medium-term prospects are good — a
picture of health, even.

Lex on the web
For notes on today’s
breaking stories go to

Twitter: @FTLex

Who said Europe can’t build tech
unicorns? London-based venture
capital firm Atomico has impressive
statistics to sway the doubters. In
2020, 18 homegrown businesses
swelled to more than $1bn each in
market value. Two exceeded $10bn.
Two more — Spotify and Adyen —
topped $50bn. European tech start-
ups are set to raise more than $40bn
this year, a record.

The problem with UK unicorns is
they like to migrate. The pull of the
US has been displayed yet again by
the New York listing plans of Paysafe,
a digital payments specialist. It will
seek a $9bn valuation via a merger
with a blank-cheque company.
Electric vehicle group Arrival will
also list in the US through a $5.4bn

takeover by another special acquisition

The US, with its deep capital markets
and love of innovation, accounts for
just over half of the exits of $1bn-plus
venture capital-backed European
companies. Most are via listings.
Financial data group Markit was born
in London, floated in New York and is
being bought by S&P for $44bn.

There are fears foreign takeovers
threaten national expertise and trade,
reflected in the row over Nvidia’s
purchase of UK chip group Arm. A US
float is less controversial but still
makes a difference to who captures
future value.

Rishi Sunak is the latest UK
chancellor to review listing rules in a
bid to attract more fast-growing

companies. There is pressure to relax
governance rules in favour of
founders. The Hut Group was
ineligible for the FTSE 100 index
because of the golden share held by
boss Matthew Moulding.

The reality is that critical mass — in
capital markets and potential
customers — is the main reason
unicorns such as Paysafe and Arrival
list in the US. Tweaking UK rules
cannot fix that.

Moreover, gloom is often
overdone. The value of recently
founded European tech companies is
growing fast. After suffering a lost
decade in the 1990s, there is more
confidence and cash in European
tech than ever. For Europe, New York
listings represent an export success.

FT graphic Source: Atomico Note: S&P Capital IQ Platform, as of Oct 31 2020

IPO in Europe (36%)







IPO in the US (38%)

Acquired by
US buyers (14%)

Acquired by Chinese
buyers (8%)

Acquired by European
buyers (4%)

The US exerts a big pull on Europe’s unicorns
Value flow by country of headquarters and exit route

European venture capital-backed companies that exit with a valuation of more than $1bn

European tech: why unicorns migrate
US acquisitions or listings account for just over half of the exit value of Europe’s biggest venture capital-
backed businesses. Large German companies are the most likely to choose local exchanges for initial public
offerings, followed by those from the UK and Sweden.

DECEMBER 9 2020 Section:FrontBack Time: 8/12/2020 - 18:47 User: alistair.fraser Page Name: 1BACK, Part,Page,Edition: EUR, 20, 1

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