Financial Times Europe - 09 12 2020

2020·25.72 MB·English

WORLD BUSINESS NEWSPAPER
WEDNESDAY 9 DECEMBER 2020 EUROPE
Checking Big Tech More than profit China’s wolf warrior
Brussels takes on the digital Friedman was wrong on corporate The populist provocateur let loose
gatekeepers responsibility on social media
— BIG READ, PAGE 17 — MARTIN WOLF, PAGE 19 — PAGE 3
Helping hand
Briefing
UK sets Covid
i Europe banking union given fresh push
vaccine rolling 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
Margaret Keenan, 90, is applauded as
she returns to her ward at Coventry Uni- i Biden faces cabinet balancing act
versity Hospital in the UK yesterday US president-elect Joe Biden is under pressure from
after becoming the first person in the his party to select more people to his cabinet from
world to receive the Pfizer/BioNTech the progressive wing and those who represent
Covid-19 vaccine outside trials. minorities.
— PAGE 3; EDITORIAL COMMENT, PAGE 18
But as the rollout of inoculations picks
up speed in the UK, big logistical chal- i Pope backs drive for fairer capitalism
lenges remain over how to distribute the Pope Francis has given his
vaccine when it needs to be stored at blessing to the Council for
ultra-low temperatures. Inclusive Capitalism, a
In the US regulators yesterday con- coalition of investors, unions,
firmed that the vaccine has an average companies and foundations
efficacy rate of 95 per cent, while show- pledging to make capitalism
ing that Covid-19 cases start to taper off more equitable.
— PAGE 6
among those vaccinated within about
10 days. Authorisation is expected to be i Russia says economy recovered quickly
granted in the US in the coming days. Moscow has claimed its targeted approach to
Reports page 3 economic support has driven a faster recovery than
in much of the world, despite its cost being only
Jacob King/Reuters
4 per cent of gross domestic product.
— PAGE 2
UK will drop tariffs on US goods to 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
pave way for post-Brexit trade deal
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
3 London diverges with EU 3 Boeing-Airbus battle triggered penalties 3 Biden in ‘no rush’
i Japan unveils third stimulus scheme
Yoshihide Suga, Japan’s prime minister, has
announced a third fiscal stimulus scheme this year,
Jim Pickard and Trade Organization found Franco- deal by the late summer had been aban- de-escalate trade tensions “so the US with a $294bn package aimed at fighting Covid-19
Peggy Hollinger — London German aircraft maker Airbus had also doned because of sticking points such as and UK can move forward to the next and investing in green technologies.
— PAGE 4
Katrina Manson — Washington
benefited from unlawful state aid. Britain’s reluctance to give untram- phase of their trading relationship” and
Sam Fleming — Brussels
The move by Liz Truss, the UK trade melled access to US agricultural prod- ultimately draw a line under the damag-
Datawatch
The UK government has broken ranks secretary, will be viewed as an attempt ucts. ing dispute.
with the EU by disclosing plans to end to win favour with incoming US presi- Despite the new concession on tariffs, A person close to the US side of talks
Personally affected
punitive tariffs against the US over air- dent Joe Biden as Boris Johnson’s gov- the UK is likely to face a struggle to get The EU hit $4bn to settle the dispute said the move “sig- More than half of
craft subsidies, in an attempt to pave the ernment tries to reignite its effort to the Biden administration on board with of US products nificantly alters the atmospherics” of % who say they know someone who US adults say they
has either been treated in hospital
way for a post-Brexit trade deal with strike a separate trade deal with the US. any potential trade deal. with tariffs of up the bitter transatlantic trade war. personally know
or died as a result of Covid-19
Washington. Ms Truss said the UK wanted to Mr Biden said last week that he was in to 25 per cent in Had the UK maintained tariffs after someone who has
The EU last month hit $4bn of US “come to a negotiated settlement so we no rush to strike new trade deals: “I’m retaliation for leaving the trading bloc on December US adults needed hospital
products with tariffs of up to 25 per cent can deepen our trading relationship not going to enter any new trade agree- illegal state aid 31, it would have been “a very aggressive Black treatment or has
died from Covid-19.
in retaliation for illegal state aid to Boe- with the US”. ment with anybody until we have made to Boeing gesture,” he said. Hispanic
Some 71 per cent
ing. The move was the latest round in a Yet it has been unclear for weeks major investments here at home and in The UK could now seek a bilateral
White of black people
16-year battle over subsidies, one of the whether the UK could have unilaterally our workers and in education,” he told agreement with the US over what
fall into this
longest running trade disputes maintained the aviation-related tariffs the New York Times. “I want to make defined a “level playing field” for state Asian category, far more
It followed the imposition by Wash- after December 31, given its status as a sure we’re going to fight like hell by aid to aerospace. “It offers the chance 0 20 40 60 80 than Americans
ington last year of duties of up to 25 per departing member of the EU. investing in America first.” for the UK and US to say ‘here is the way from other
Survey carried out in Nov 2020
cent on $7.5bn worth of European The Financial Times revealed in July The UK government said the tariffs forward’.” Source: Pew Research Center ethnic groups.
imports into the US, after the World that attempts to strike a US-UK trade announcement was part of a strategy to Johnson heads to Brussels page 4
Shell loses green leaders amid tension
over slow pace of shift to clean energy
Anjli Raval and Leslie Hook weeks. Dorine Bosman, Shell’s vice- businesses such as biofuels and solar
London president for offshore wind, is also due power “needs to accelerate”. However,
Royal Dutch Shell has been hit by a to leave. Several other executives in the he has also said that oil will continue to
wave of executive departures within its clean energy part of the business also be a huge cash generator and the com-
clean energy business amid a split over plan to quit in the coming months, two pany will expand its gas division. “There
Indian farmers’ protests how far and fast the oil company of the people said. is going to be a place for our upstream
cause road and rail chaos should shift towards greener fuels. Not every move is known to be linked business for many decades to come,” he
to frustration about the pace of change recently told a conference.
Analysis i PAGE 4 The resignations come just weeks before but people familiar with the internal European oil companies are under
Shell is set to announce its energy transi- debate said there were deep divisions pressure from investors and environ-
tion strategy. Some executives wanted a over the timeframe for reducing the mentalists, forcing several — including
Austria €3.90 Malta €3.70 more aggressive move away from oil but company’s dependence on oil and gas Shell — to announce net-zero emissions
Bahrain Din1.8 Morocco Dh45
Belgium €3.90 Netherlands €3.90 top management wants to stick closer to revenues, which had influenced at least pledges. That pressure is now mounting
Bulgaria Lev7.50 Norway NKr40
Croatia Kn29 Oman OR1.60 Shell’s current path, according to four some of the departing executives. from the company’s own workforce.
Cyprus €3.70 Pakistan Rupee350 people familiar with the matter. “People are really questioning if there Ms Dixon said she had joined the
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.70 Marc van Gerven, who headed the will be any change at all,” said one per- International Energy Agency because it
Egypt E£45 Qatar QR15
Finland €4.70 Romania Ron17 solar, storage and onshore wind busi- son familiar with the tensions. “Part of had “incredible potential to lead the glo-
France €3.90 Russia €5.00 nesses at Shell; Eric Bradley, who the frustration is that you see the poten- bal energy transition”. Mr van Gerven,
Germany €3.90 Serbia NewD420
Gibraltar £2.90 Slovak Rep €3.70 worked in Shell’s distributed energy tial, but the mindset isn’t there among Mr Bradley and Ms Bosman did not
Greece €3.70 Slovenia €3.70
division; and Katherine Dixon, a leader senior leaders for anything radical.” respond to requests for comment.
Hungary Ft1200 Spain €3.70
India Rup220 Sweden SKr39 in its energy transition strategy team, Ben van Beurden, chief executive, Shell said it was “firmly focused on
Italy €3.70 Switzerland SFr6.20
Lithuania €4.30 Tunisia Din7.50 have all left the company in recent has said investment in lower-carbon leading in the energy transition”.
Luxembourg €3.90 Turkey TL19
North Macedonia Den220 UAE Dh20.00
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DECEMBER 9 2020 Section:FrontBack Time: 8/12/2020 - 19:06 User: andy.puttnam Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1, 1
2 ★ FINANCIAL TIMES Wednesday 9 December 2020
INTERNATIONAL
Finance ministers Eurozone
Eurogroup resets focus on banking union Soaring bloc
borrowing
fuels calls
Covid and UK split from in four key areas — including divisive nomic toll from Covid-19, Mr Donohoe deposit insurance for eurozone banks — the eurogroup that we need to have the
EU offer chance to deepen plans to create a eurozone-wide bank said in an interview. Brexit is a reminder something that has long been resisted strongest foundations possible for the for debt
deposit insurance (EDIS) — as he pre- that the euro area and EU need “resil- by richer northern eurozone countries euro in the coming years,” he said.
currency ‘architecture’ pares for a summit of eurozone leaders ient sources of employment and income who fear their taxpayers would be on This will also entail work on tackling
forgiveness
on Friday. growth”, he added. the hook for bank failures in other parts the nexus between banks and their
The package would also include Eurozone finance ministers last week of Europe. But sealing a banking union country’s sovereign debt, a so-called
Sam Fleming and Mehreen Khan
improving the region’s crisis manage- reached a political agreement on a long- deal will require efforts by multiple gov- doom loop that has long bedevilled the
Brussels
ment framework, cross-market integra- awaited reform to the bloc’s bailout ernments across the euro area, includ- European banking system. The priori-
Brexit and the coronavirus pandemic tion and tackling the link between fund, the European Stability Mecha- ing unpalatable reforms. ties also include examining how to han- Martin Arnold — Frankfurt
have reinforced the need to solidify the banks and their country’s sovereign nism, removing a barrier that has held Mr Donohoe said the eurogroup had dle the liquidity needs of a failing bank
Eurozone governments’ borrowing has
single currency’s foundations, said debt, said Mr Donohoe. He is aim- back work on the banking union yet to reach an agreement on how to and improving co-ordination between
rocketed to fund their response to the
the president of the eurogroup of ing for a new detailed banking union project. An attempt late last year by progress with EDIS, acknowledging home and host bank supervisors.
coronavirus pandemic, reigniting long-
finance ministers who is aiming to work plan in the middle of next year. German finance minister Olaf Scholz to “heightened concern” of some capitals The onset of the pandemic has forced
standing calls for the European Central
revive the bloc’s long-stalled banking “There is a renewed responsibility on end the “continuous gridlock” over the about greater risk-sharing. But he said Brussels to suspend temporarily the
Bank to ease debt burdens by forgiving
union project this week. those within the eurogroup to look at issue foundered after it was overtaken the task now was about “building bloc’s fiscal rules as governments turn to
sovereign bonds it owns.
Paschal Donohoe, who is also the Irish how we can deepen the foundations of by the Covid-19 crisis. momentum through constant political fiscal firepower to support companies
finance minister, told the Financial the euro and deepen the economic Mr Scholz’s set of proposals opened contact and dialogue”. and support employment. The proposal was floated by academic
Times he would seek to intensify work architecture of the euro,” given the eco- the door to the creation of common “There is a broad understanding in See Editorial Comment 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
Everest
through its asset purchase programme
or swap it for perpetual bonds, which
Dispute over are never repaid.
Governments’ responses to the pan-
demic will rack up €1.5tn of extra debt,
height settled
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-
Mount Everest is higher than ing Italy, France and Spain. Italy’s gov-
previously thought, Nepal and China ernment debt is expected to rise from
said yesterday, settling a long- 135 per cent of GDP last year to almost
running conflict over the world’s 160 per cent in 2021.
tallest peak, which straddles their While the EU’s fiscal rules — requiring
shared border. governments to keep deficits below 3
The two countries had different per cent of GDP and overall debt under
figures for the exact height of the 60 per cent of GDP — have been sus-
mountain, pictured, but after pended since the pandemic hit, they are
each sent an expedition of surveyors likely to be reactivated in some form
to the summit they agreed the once the crisis is over, piling pressure on
official height is 8,848.86 metres, governments to deleverage.
slightly more than previous David Sassoli, the Italian president of
calculations. the European Parliament, told La
Mountaineers had suggested a Repubblica last month that debt
7.8 magnitude earthquake in 2015, forgiveness was “an interesting working
which killed nearly 9,000 people in hypothesis, to be reconciled with
Nepal, may have altered the height of the cardinal principle of debt
Everest. Reuters, Kathmandu sustainability”.
Riccardo Fraccaro, a senior aide to
Narendra Shrestha/EPA-EFE/Shutterstock Italian prime minister Guiseppe Conte,
followed up by telling Bloomberg “mon-
etary policy must support member
Growth. Support measures states’ expansionary fiscal policies in
every possible way”. That could include
Russia claims it ‘recovered’ quicker than most in G20 “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
package was small,” Vladimir Kolychev Russia’s $167bn savings from its oil and US election.” She said the country would “We wanted to use these temporary low as the ECB buys most of the extra
Targeted spending ensured
said in an interview with the Financial gas wealth to make direct payments to have “one of the smallest contractions benefits to target growth in places where bonds sold, so many countries are able
efficient handling of crisis, Times. “The economy doesn’t care how businesses and citizens in favour of tax globally due to the arithmetic of keeping people had the most problems with to borrow for up to 10 years at yields of
you paint your expenditure. The impor- holidays and loan guarantees. lockdowns limited to keep economic their income. If you give everyone close to or below zero. That is set to con-
says deputy finance minister tant thing is that it increased.” Elina Ribakova, deputy chief econo- damage under control”. She added: [money], including the rich, then the tinue; at its latest policy meeting tomor-
The country was able to make a quick mist at the Institute of International “Unfortunately, it is not clear whether in rich are hardly going to change their row the ECB is expected to extend bond-
recovery because targeted spending Finance, said Russia’s “proactive fiscal Russia the healthcare system is capable consumption habits.” buying until mid-2022.
Max Seddon — Moscow made it more efficient in handling the support” in the wake of Covid-19 had of handling so many Covid cases.” Mr Kolychev defended Russia’s deci- “There are so many reasons not to be
Moscow’s targeted approach to support- coronavirus crisis, Mr Kolychev added. been small. “Not surprising as Russia Mr Kolychev said Russia’s Rbs500bn sion not to spend the $167bn national concerned by rising debt levels at the
ing Russia’s economy during the pan- He said Russia had boosted govern- was facing a triple shock in 2021 from in yearly payments to families with chil- wealth fund, squirrelled away from sur- moment, but in the future we will need
demic has helped it bounce back from ment spending in total by 27 per cent Covid, oil and risk of sanctions given the dren — one of the few direct support plus oil and gas revenue, on economic to have this discussion at some point,”
the crisis quicker than most of the this year, a figure Moscow claims is measures in the coronavirus package — stimulus payments, saying it had to be said Carsten Brzeski, economist at ING.
industrialised world, says a deputy higher than that of any EU country. “It’s had helped consumer activity grow 3 to saved to “spread natural resource reve- But central bankers have rejected the
Russia’s stimulus package
finance minister. obvious that Russia’s economy suffered 5 per cent in the second quarter and nue fairly among the generations over idea as “dangerous” and “destabilising”,
Although the Kremlin’s Rbs4tn less in the second quarter and recovered one of the smallest in the G20 continue to rise 1 to 2 per cent. time” rather than used as a way out of while economists dismiss it as counter-
($54.5bn) Covid-19 support package more quickly in the third quarter. Value of fiscal stimulus as share Moscow passed several tax breaks for the crisis. The finance ministry has used productive and poorly timed.
amounted to a scant 4 per cent of gross “That’s not just because of our sup- of GDP (%) small businesses and the petrochemi- some of the fund to cover budget short- “We have to distinguish the political
domestic product, or less than a tenth of port measures but because the quaran- cals industry. Mr Kolychev claimed the falls during the pandemic but has dou- position from the economic position,”
0 5 10 15 20 25
the assistance provided by Germany, tine itself in Russia was structured dif- contraction in Russia’s GDP would have bled its domestic borrowing to Rbs5tn to said Lucrezia Reichlin, economics pro-
Japan
Italy and the US, Russia estimates the ferently than in Europe.” Canada been negligible if not for the Opec+ deal boost spending. fessor at London Business School.
contraction in its GDP has slowed from Russia has recorded more Covid-19 US of oil producers that limited production Russia raised €2bn in eurobonds last “From the purely economic perspec-
8 per cent year on year in the spring to cases than all but three countries world- Brazil during the first wave of the pandemic. month for the first time this year, taking tive debt relief could make sense in
Germany
3.6 per cent in the third quarter of 2020, wide, hitting a new daily record “European countries haven’t grown advantage of favourable market condi- some circumstances, but it depends on
China
which places it in the top five of G20 of 29,093 on Sunday. But Mr Putin chose India their expenditure as quickly,” he said. tions at a time when the Kremlin fears how you do it. From a political point of
nations. not to impose a nationwide lockdown, France “The US, Canada, and Australia might US president-elect Joe Biden’s adminis- view it is extremely dangerous.”
Russia benefited from a stimulus instead delegating a patchwork of meas- Italy have but their programmes evidently tration could ramp up sanctions on Holger Schmieding, chief economist
Russia
ordered by President Vladimir Putin ures to local authorities who largely left were set up in a way that didn’t lead to Moscow next year. Mr Kolychev said at Berenberg, said it was “the worst idea
Saudi Arabia
before the virus struck, of which Russia’s industry alone while shutting Mexico quick growth in consumer spending. Russia had drawn up plans to ease the of the year” as it “could backfire badly”
Rbs1.75tn has been spent this year. the consumer sector almost entirely. They recovered, but there hasn’t been a impact of any US sanctions that would by spooking investors, causing borrow-
“It’s a myth that Russia’s anti-crisis The recovery plan eschewed tapping Source: IMF consumer boom. bar foreigners from holding Russia debt. ing costs to rise.
Environment
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Mehreen Khan — Brussels reflect vast improvements in a technol- In response to concerns the regulation ment and production capacity for sus-
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DECEMBER 9 2020 Section:World Time: 8/12/2020 - 18:07 User: john.conlon Page Name: WORLD1 USA, Part,Page,Edition: EUR, 2, 1
Wednesday 9 December 2020 ★ FINANCIAL TIMES 3
INTERNATIONAL
Top wolf warrior unleashed to
US regulator data
Pfizer jab starts to work
maul Beijing’s western critics 10 days after first dose
Hannah Kuchler — New York vaccine regulator, though not by Pfizer
Kiran Stacey — Washington itself.
Populist provocateur Zhao at forefront of aggressive social media campaign Pfizer and BioNTech’s Covid-19 vaccine The FDA documents provide the most
starts to work within about 10 days of detailed data yet on participants in the
the first dose, according to documents Pfizer vaccine trial, showing that it had
released yesterday by the US regulator worked well whatever their race, age or
ahead of an advisory meeting this week weight.
Flying the flag: Zhao Lijian has to discuss emergency approval. The regulator’s scientists did not raise
intensified China’s aggressive any significant concerns about safety,
wolf warrior diplomacy, which Data from the Food and Drug Adminis- although yesterday’s report said there
takes its name from the nationalistic tration confirmed the vaccine had an was not enough evidence about how safe
film series, below — Wu Hong/EPA/EFA efficacy rate of 95 per cent on average, it is in children, pregnant and breast-
with 93.8 per cent in participants over feeding women, and people with com-
55. It also showed Covid-19 cases began promised immune systems, such as
to taper off among those who had been those with HIV. The most common side-
vaccinated after just over a week, rais- effects are pain at the injection site,
ing hopes the inoculation could help fatigue and headache.
ease pressures on overwhelmed hospi- There were more cases of Bell’s palsy,
tals soon after it is rolled out. a muscular weakness in the face, and
The data were released two days appendicitis in the group of people who
before a committee of scientific experts received the vaccine than the group that
review the case for authorising Pfizer’s received the placebo.
vaccine and make a recommendation to But the FDA said the incidence was
the FDA. not higher than in the general popula-
The regulator is asking the advisers to tion of the same ages.
consider whether it is reasonable to There were four deaths in the placebo
believe the vaccine prevents Covid-19 in group and two in the vaccine group, at a
people aged 16 and over, and if the bene- similar rate to the general population.
fits outweigh the risks. The FDA is not
bound by adviser decisions. FDA documents show
FDA officials will then make a final
Pfizer vaccine worked
decision on whether to grant authorisa-
tion in the coming days. well whatever someone’s
Peter Hotez, a vaccine expert at the
race, age or weight
Baylor College of Medicine, said he
believed it was likely to do so. He said
the regulator sending it to the advisory With a trial of about 44,000, it is usual to
group was “kind of an endorsement”. see some death and serious illness.
“I don’t think they would set it up to Scientists said the vaccine would con-
fail,” he added. tinue to be studied after emergency
Christian Shepherd — Beijing “Historically, there was quite a lot of which has been dubbed “wolf warrior” area because it’s an area for the black & Dr Hotez said it was “important” that approval as it is rolled out in a broader
criticism [within China] of the Ministry diplomacy after a series of jingoistic Chi- Latin. There’s a saying ‘black in & white participants began to see a benefit after population.
Zhao Lijian thrives on controversy. of Foreign Affairs for being too willing to nese action films. out’.” Ms Rice called him “a racist dis- the first of the vaccine’s two doses, but As well as monitoring for side-effects
Aggressive promotion of China’s inter- compromise or even lacking in back- The tactics, however, risk a backlash. grace”. A month later, he was promoted warned it was still essential to ensure that may show up only in a larger group,
ests is expected for a foreign ministry bone,” Dali Yang, of the University of Surveys suggest perceptions of China to foreign ministry spokesman. everyone received both jabs. the FDA suggested there should be fur-
spokesperson, but Mr Zhao has pio- Chicago, said. are at an all-time low in western democ- Mr Zhao is a relative outsider of the British regulators have already ther evaluations to see whether the vac-
neered an extreme approach by becom- Mr Zhao’s eagerness to push bounda- racies, but the strategy is hugely popular diplomatic establishment, having gone approved the Pfizer vaccine, and doc- cine could prevent asymptomatic Cov-
ing a populist provocateur who owes his ries has occasionally sparked resistance at home, said Yun Jiang, a director at the to Central South University instead of a tors there began administering doses id-19 infection. A significant number of
career to a willingness to shock, needle in China’s foreign policy establishment. China Policy Centre, a research institute usual feeder university for the foreign yesterday. people can spread the virus without suf-
and troll Beijing’s critics on Twitter. When he backed a conspiracy theory in Canberra. “Everyone loves good old- ministry. His career has instead been The UK’s decision to approve it so fering from symptoms.
For Beijing, he has crystallised a in March that the US army could have fashioned nationalism,” she added. propelled by his loyal following on Chi- quickly attracted some criticism in the The documents said Pfizer would like
model for diplomacy with a jagged edge brought the coronavirus to Wuhan dur- nese social media, where he is known as US, with Anthony Fauci, head of the to “unblind the trial”, giving the trial
and driven the shift away from an older ing last year’s Military World Games, it One fan praised his an “internet celebrity diplomat”. National Institute of Allergy and Infec- participants who received a placebo the
generation of more conservative and was followed by a flurry of statements Many of his fans are young, tech savvy tious Diseases, saying the British proc- opportunity to receive the vaccine.
‘persistence in fighting
restrained engagement, analysts say. from senior diplomats, including Fu and openly nationalist. Hua Zhong, a ess had been “rushed”, although he later But the FDA warned that doing so
The diplomatic furore that Mr Zhao Ying, deputy chairperson of the tirelessly [with] shameless student in her early 20s, said she liked apologised for any “misunderstanding” immediately after authorisation was
set off last week, when he tweeted a National People’s Congress Foreign Mr Zhao because of his sharp tone and his comments had caused. granted could interfere with the ability
western politicians’
computer-generated image of an Aus- Affairs Committee, calling for restraint his “persistence in fighting tirelessly In the US, the process has proved to collect follow-up data. It said strate-
tralian soldier holding a bloody knife to in diplomacy. [with] shameless western politicians”. politically divisive, and President Don- gies should be considered to balance the
the throat of an Afghan child, was the But these differences probably reflect Starting in 2015, Mr Zhao pioneered Despite Twitter having been blocked ald Trump has criticised Pfizer and the need for this data with ethical obliga-
latest in a string of incendiary incidents contrasting styles among diplomats his aggressive Twitter use while rebuff- in China since 2009, Chinese diplomats FDA for not moving faster. tions to placebo recipients.
that delight Chinese nationalists. rather than a substantive disagreement, ing criticism of China’s investment in have opened dozens of accounts in the Mr Trump was set to host a vaccine Pfizer’s shares rose 2.4 per cent yes-
In a sign of acceptance of Mr Zhao’s said Mr Yang. Pakistan as minister counsellor at the past two years. Posts from Chinese offi- summit in the White House yesterday, terday morning to $42.23, while the S&P
tactics, the Chinese Academy of Social “Overall [the young generation’s] embassy in Islamabad. As his following cials are often translated and shared attended by Peter Marks, the FDA’s chief 500 share index was largely flat.
Sciences, a think-tank that reports to hardline stance and ability to have such grew, he began to post outside his brief, widely on social media.
China’s State Council, in May released a influence on the global discourse means frequently accusing the US of hypocrisy Mr Yang said China’s foreign ministry
series of strategy documents on the they clearly enjoy support within the and ulterior motives in sanctioning Chi- had an advantage because it had ready
need to “strengthen China’s ability to Chinese leadership,” he said. nese telecoms company Hua- access to international social media World-first
fight for international public opinion”. It President Xi Jin- wei. platforms, while accounts of foreign
UK launches mass virus
said China had to “counterattack” ping has done away In July last year, Mr Zhao leaders and diplomats were regularly
against critics on Twitter, Facebook and with China’s policy engaged in a sparring match censored in China.
YouTube, all of which are blocked in to “bide its time with Susan Rice, former WeChat, one of China’s largest social vaccination operation
mainland China. and hide its national security adviser to media platforms, last week removed a
As China’s most high-profile official strength”, instead Barack Obama. He had post by Australian prime minister Scott
on Twitter, with nearly 860,000 follow- calling for Beijing to defended China’s mass Morrison about Mr Zhao’s tweet
ers, Mr Zhao, 48, has built a personal be more assertive in internments in Xinjiang by directed at Chinese Australians.
brand that is rare for a foreign ministry spreading its mes- comparing tensions between “I don’t think the west has fully appre- Sarah Neville, Anna Gross, za-style boxes that held 195 vials, each
spokesperson. sage. In response, the Han majority and mostly ciated that China can create a bubble of Jasmine Cameron-Chileshe of which contained five doses. The
and Sarah Provan — London
A position of middling power in the the foreign ministry Muslim Uighur minority its own [at home],” said Mr Yang, “and entire box must be defrosted at the
Chinese bureaucracy, spokespeople had has raised its profile, with race relations in the US. at the same time interact with the rest of Thousands of Britons received the same time, meaning all 975 doses must
typically confined themselves to intensifying a no- In a now deleted tweet, he the world in this new way [on western world’s first approved coronavirus vac- be used in one go.
scripted reiteration of Beijing’s stance holds-barred wrote: “If you’re in Wash- social media].” cine yesterday as the UK embarked on Once defrosted, the vials must be
and the occasional outburst over issues approach to fighting ington, D.C., you know the Additional reporting by Emma Zhou in a mass immunisation campaign with- used within five days and they cannot
such as the South China Sea or Taiwan. perceived slights, white never go to the SW ­Beijing out parallel in the country’s history. easily be transported. “It’s a motion-
sensitive vaccine, that’s the challenge,
But even as a 90-year-old grandmother it’s a molecule that should not ideally be
and an 81-year-old named William moved,” said Roger Fernandes, chief
Washington. Cabinet picks Shakespeare became the inaugural pharmacist and clinical director at
recipients of the Pfizer/BioNTech vac- King’s. “The idea is that the patient goes
President-elect urged to appoint more progressives cine outside clinical trials, the practical- to the vaccine, not the vaccine goes to
ities of rolling it out to some 25m people the patient,” he said, alluding to the dif-
judged at highest risk from the disease ficulty of getting it into care homes.
raised questions about how quickly the Martin Green, chief executive of Care
nation’s at-risk population can be England, an industry body representing
Democratic lawmakers in a closely at the end of the day, you know, how Two progressive African-American protected. care homes, said the demanding storage
Civil rights groups push for
divided Senate. about reaching out and give us a little women who serve in the House of Rep- Matt Hancock, health secretary, told requirements and the need to use sup-
greater representation of “The progressives aren’t objecting, something, too?” resentatives are high on their wish list. lawmakers the arrival of the vaccine
but they’re also not jumping up and Waleed Shahid, communications Marcia Fudge of Ohio has been under meant the end was in sight “not just of
minorities among top jobs down saying ‘yay’,” said Don Beyer, a director for the progressive group Jus- consideration for agriculture and HUD. this terrible pandemic but of the oner- Front of the queue:
81-year-old William
Democratic congressman from tice Democrats, said there was some Karen Bass of California — who was also ous restrictions that have made this
Shakespeare was
Virginia. relief that Mr Biden had chosen former considered as a potential vice-presiden- year so hard for so many”.
one of the first in
Courtney Weaver — Washington
The nomination of Mr Becerra, the Fed chair Janet Yellen for Treasury sec- tial running mate for Mr Biden — is up But he warned that parts of the coun- Britain to be given
President-elect Joe Biden is facing a son of Mexican immigrants, came after retary over Lael Brainard, a Fed gover- for the HUD position. try, including areas of Essex, London the Covid jab
tough balancing act in his final cabinet intense pressure from Latino groups for nor who has been painted as more of a The debate over Mr Biden’s cabinet and Kent, were experiencing an
appointments, as leftwing Democrats greater representation in Mr Biden’s ­centrist. picks comes as Democratic leaders in increase in coronavirus infections, with plies rapidly once they had been opened
and civil rights groups clamour for more administration. Congress deal with accusations over the system of tiered constraints in Eng- would require “a very big group of peo-
progressives and minority-group mem- Civil rights groups including the who is to blame for last month’s down- land set to be reviewed by December 16. ple” to carry out vaccinations on loca-
bers in his administration. NAACP have also been calling on Mr Xavier Becerra: ballot races, where Democrats lost more “Let’s not blow it now,” he told parlia- tion. Some homes had already secured
the California
While progressives cheered the nomi- Biden to appoint more black nominees than half a dozen House seats they had mentarians. consent from residents, or those with
attorney-general
nation of Xavier Becerra, the California to cabinet roles, beyond the selection of flipped in 2018, and failed to retake the Mr Hancock outlined plans to power of attorney for them, to receive
has been picked as
attorney-general and former congress- Cecilia Rouse as chair of the White health and human Senate. increase in the coming days the number the vaccine so they could proceed
man, as Mr Biden’s health and human House council of economic advisers and services secretary Josh Gottheimer, a Democratic con- of hospitals joining the immunisation quickly when it became available.
services secretary on Monday, they have Linda Thomas-Greenfield as US ambas- gressman from New Jersey and member programme from 50. He added that However, Mr Green added: “I don’t
been pushing the president-elect to go sador to the UN. He said there was a similar reaction to of the bipartisan “problem solvers” cau- starting from next week, vaccines would want to put a damper on what the secre-
further as he fills out his team. Retired General Lloyd Austin, who is Mr Biden’s selection of Neera Tanden of cus, said Mr Biden was contending with also be distributed to GPs, while care tary of state says, I do think the vaccine
The pressure from the left comes African-American, has recently the Center for American Progress think- the reality that in order to pass legisla- homes would receive doses by Christ- is good news, but it will not be delivered
ahead of senior appointments expected emerged as a top contender to lead the tank as budget director over Bruce tion, “we’re going to have to bring both mas. New vaccination centres in venues before Christmas and it’s not helpful to
this week, including the next defence Pentagon, according to multiple US Reed, the president-elect’s former chief sides — Republican and Democratic — such as sports stadiums and conference raise expectations that will not be ful-
secretary and other members of Mr media reports. of staff who has been criticised by pro- together”. At the same time, he added: halls will also open from next year. filled.”
Biden’s “economic and domestic cabi- Pete D’Alessandro, a longtime Iowa gressive lawmakers as a deficit hawk. “Working across the aisle starts within But huge logistical hurdles remain as One hospital procurement leader said
net”, according to the transition. political operative and former adviser to “It’s not the progressive choice, but it’s your own party.” the vaccine, which needs to be stored at there were still questions over whether
So far, progressives have had to con- Mr Sanders, said there was growing better than the other option,” Mr Shahid A potential blueprint for how a Demo- minus 70C and can only be moved four the national supply chain would be able
tend with a list of mainly left-of-centre frustration in the progressive commu- said. cratic House and Republican Senate times within that cold chain before to provide sufficient supplies of the
nominees. Progressive rivals of Mr nity that Mr Biden and his team were As Mr Biden prepares to announce the might work together under the next being used, is distributed across the basic “consumables” needed to admin-
Biden, such as Senator Elizabeth War- more concerned about making their rest of his cabinet, progressives see their administration has been seen in recent country. ister the vaccine, such as wipes and plas-
ren or Senator Bernie Sanders, are no appointments palatable to Republicans. best hopes in his choices to head the days as a bipartisan group of legislators At King’s College Hospital in south ters. “We still bear the scars of national
longer being considered for cabinet “[If you’re Biden] you want to be an departments of education, interior, has tried to craft a $908bn stimulus London, where vaccinations were PPE supplies in the first wave,” added
roles, a decision the president-elect has inclusive president,” said Mr D’Alessan- labour, transportation and housing and package. administered from 1.30pm, staff the individual, who asked not to be
justified by saying he needs all current dro. “That’s probably a noble goal. But urban development (HUD). See Editorial Comment and Opinion explained that supplies were kept in piz- identified.
DECEMBER 9 2020 Section:World Time: 8/12/2020 - 18:35 User: john.conlon Page Name: WORLD2 USA, Part,Page,Edition: USA, 3, 1
4 ★ FINANCIAL TIMES Wednesday 9 December 2020
INTERNATIONAL
Brexit Supplementary budget
Johnson heads to Brussels for crunch talks Japan unveils
third stimulus
of the year to
British prime minister attempt to overcome an impasse in the deleting clauses from legislation allow- president Maros Sefcovic, was “very drawing up a dossier on the remaining
talks over three longstanding sticking ing British ministers to breach the good”. But Downing Street added it did sticking points before handing negotia- bounce back
in last-ditch attempt to
points: how to ensure fair competition treaty, which would have broken inter- not “signify anything for the wider nego- tions over to their political bosses.
break impasse over trade through a “level playing field” for busi- national law. tiation”. In Brussels, officials were The agreement announced by the UK
from Covid
nesses, dispute settlement arrange- Although the Northern Ireland deal is equally cautious, although they hoped government and Brussels yesterday
ments and EU access to UK fishing the step could create positive momen- covers issues relating to trade between
George Parker — London
Jim Brunsden and Sam Fleming waters. ‘I think the UK tum in the trade negotiations. Great Britain and Northern Ireland such
Brussels The announcement of the meeting Diplomats said EU chief Brexit negoti- as border checks on animals and plants,
government’s position
Boris Johnson will head to Brussels for comes after Mr Johnson yesterday ator Michel Barnier was “gloomy” about export declarations, the supply of medi- Robin Harding — Tokyo
crucial Brexit talks today in the hope the announced the scrapping of all “law- is that we are willing to the trade talks during a video meeting cines and the supply of food products
Japan has launched a third fiscal stimu-
two sides can use positive momentum breaking” clauses from controversial with Europe ministers yesterday. At one including chilled meat to supermarkets.
engage at any level’ lus of the year with a ¥30.6tn ($294bn)
generated by a deal on Northern Ireland Brexit legislation, in a boost to relations point, he quoted French Fourth Repub- Under the protocol, Northern Ireland
package aimed at speeding up the
to salvage trade negotiations. between London and Brussels. lic politician Pierre Mendès-France, will remain subject to the EU customs
nation’s recovery from Covid-19.
The British prime minister will have The EU and UK agreed a deal on the not directly linked to separate stalled saying the EU “must not sacrifice the code after Brexit.
talks over dinner with Ursula von der detailed implementation of the North- talks on a UK-EU trade agreement, it future for the present”. Mr Johnson told the BBC during a visit The supplementary budget, which
Leyen, European Commission presi- ern Ireland protocol, part of the with- will markedly improve the atmosphere One diplomat said Mr Barnier’s mes- to a hospital: “We will see where we get amounts to about 6 per cent of gross
dent, giving the two sides the opportu- drawal agreement signed last year, to around those negotiations and build sage to ministers was the prospects for a to in the course of the next two days, but domestic product, follows earlier
nity to hold negotiations ahead of a govern future trade between mainland confidence between the two sides. deal that could take effect at the end of I think the UK government’s position is rounds of stimulus in April and May.
summit of EU leaders starting in Brus- Britain and the region. Downing Street said the agreement, the year were “rather minimal at this that we are willing to engage at any level, In a significant expansion to the scope
sels tomorrow. The diplomatic breakthrough brokered by Cabinet Office minister point”. Mr Barnier and David Frost, his political or otherwise, we are willing to of Japan’s spending, Yoshihide Suga,
The meeting is seen as a last-ditch allowed Mr Johnson to announce he was Michael Gove and commission vice- British counterpart, yesterday began try anything.” prime minister, announced a package
that includes not just money to fight
Covid-19 but trillions of yen aimed at
investment in new digital and green
Deregulation. Agricultural reforms technologies.
It reflects concerns about the risk of a
prolonged economic downturn as Japan
India farmers’ strike hits transport network
heads into winter with a rising number
of coronavirus cases.
The total package includes a further
¥1.7tn in local government spending,
¥7.7tn in borrowing for infrastructure
investment and ¥33.6tn in loans and
Government accused over
guarantees for a total of ¥73.6tn.
level of public consultation “This economic package will protect
the lives and livelihood of the people,”
before laws were enacted Mr Suga told a meeting of his ruling coa-
lition. “It will maintain employment,
Amy Kazmin — New Delhi
‘From this point, the whole
India has been hit by severe road and
government will work
rail traffic disruptions as farmers and
opposition activists intensified their together to put this new
campaign against new laws intended to
strategy into effect’
pave the way for the reform of agricul-
tural markets.
The nationwide strike, in support of support businesses, drive the economic
thousands of protesting farmers who recovery and open the way to break-
have massed at New Delhi’s state border throughs in growth areas of green and
for the past 12 days, presents an awk- digital technology.”
ward political challenge to Narendra About half the spending will go
Modi. The Indian prime minister revels towards “post-corona” investments,
in his image as a strongman able to including billions of dollars to promote
impose his will on an unruly nation but the rollout of hydrogen for shipping,
his Bharatiya Janata party has been try- fuel cell vehicles and power storage.
ing to woo farmers. Mr Suga has committed Japan to be
Analysts said pushing big agricultural carbon neutral by 2050 and the
commodity market reforms, which bureaucracy is racing to find ways to
affect millions of people, without any meet that goal.
serious public consultation was a recipe About one-third of the money will go
for unrest. directly to fighting Covid-19, with cash
“The new law is a death warrant for set aside for a nationwide programme of
farmers like me and even for the general vaccinations, and the remainder will go
public,” said Rasam Singh, 55, who was towards projects to increase resilience
helping to blockade a highway in Punjab against natural disasters.
yesterday. “But this government has “From this point, the whole govern-
made it an ego issue. They don’t want to Farmers protest Forum, called the laws “a perfect exam- crops to licensed middlemen at govern- ‘People who state-owned Food Corporation of India ment will work together to put this new
listen to us.” in Amritsar ple of a government policy made by the ment regulated market yards. Mr Modi buying tonnes of wheat and rice at fixed strategy into effect,” said Mr Suga.
believe that
The trio of contentious farm bills was yesterday. bureaucracy without consulting the insisted the system would “liberate” prices to distribute to the poor as subsi- The first two supplementary budgets
rammed through a truncated parlia- Below, a poster supposed beneficiaries. They were fix- farmers, enabling them to deal with the current dised food aid. of the year amounted to ¥25.7tn and
mentary session in a chaotic voice vote of the PM about ated on the outcome of passing the bill, more buyers and earn higher prices. “There is the sense that procurement ¥31.9tn, taking the total stimulus for
system
in September, despite serious doubts to be set alight and they just ran roughshod over the But farmers fear the liberalisation reform is imminent and this is the this year to almost 17 per cent of GDP.
about the government’s majority. Sev- in Kolkata process.” presages the eventual demise of state- protects beginning of that,” Ms Krishnamurthy However, some of the spending will take
eral BJP allies, mindful of farmers’ anxi- Raminder Pal Singh/Epa-Efe; The new rules in effect end a socialist- run mandi — which are now used to said. years to disburse.
ety, wanted more time to scrutinise the Dibyangshu Sarkar/AFP/Getty era requirement that farmers sell their determine the fair value of crops — leav- them are In an effort to assuage farmers’ fears Whereas the earlier packages concen-
bills’ implications but the requests were ing them at the mercy of powerful cor- scared’ and encourage them to return home, trated on direct support for business
not granted. porate interests. government ministers last week and household incomes, the new stimu-
“He’s [Mr Modi] caught himself in a Although state-run markets are not engaged in several days of negotiations, lus is mainly investment, reflecting a
bind,” said Yamini Aiyar, president of being abolished, farmers will be able to offering to amend the contentious bills. hope that Japan will not need further
the Centre for Policy Research, a New sell their crops to anyone who wants to But farmers’ unions are demanding business closures or furloughs to make
Delhi-based think-tank. “This whole buy them. their full repeal and have dug in for the it through the winter.
thing was political mismanagement, “It’s a dramatic act of deregulation,” long haul. Kiichi Murashima, an economist at
just thinking you could bulldoze your Mekhala Krishnamurthy, an Ashoka “It’s genuinely very difficult to see Citi in Tokyo, said the resurgence of new
way through. The result is a complete University anthropologist who studies how this is going to get resolved without Covid-19 cases had contributed to the
breakdown in trust. agricultural markets, said. “People who a significant show by the government size of the stimulus. There have been
“This is a very major reform, but get- believe that the current system protects that they are willing to step down,” said about 2,500 new cases diagnosed every
ting reform right requires deep consen- them are scared.” Ms Krishnamurthy. “I don’t know day in recent weeks. “As usual, the size
sus building, negotiating and engage- Farmers are also anxious that author- whether face-saving of some kind is pos- of the economic package or the supple-
ment.” ities are debating reforms of India’s inef- sible. It’s a very tough one.” mentary budget has ended up consider-
Ajay Jakhar, chairman of the Bharat ficient public food procurement pro- Additional reporting by Jyotsna Singh in ably larger than the level discussed in
Krishak Samaj, or Indian Farmers gramme. The programme entails the New Delhi the early stages,” he said.
‘Repolinisation’ debate New Zealand
Polish media deal stirs fears for press freedom Ardern apologises over mosque attack failings
James Shotter — Warsaw media. There is no longer any informa- owned companies. Asked in October Jamie Smyth — Sydney agencies that would have allowed the The former gym instructor used auto-
tion in them, there is blunt propaganda. about the possibility of PKN Orlen buy- terrorist’s planning and preparation to matic weapons during the attacks,
Poland’s state-controlled refiner PKN Jacinda Ardern has apologised to New
“Now, when they have bought the ing Polska Press, Piotr Glinski, the cul- be detected,” said Ms Ardern. which were streamed live online.
Orlen is buying local media group Zealand’s Muslim community for fail-
company Polska Press, we will have the ture minister, said it was “not a normal “But they did identify many lessons to Tarrant posted a 74-page racist “man-
­Polska Press from Germany’s Verlags- ings by authorities in the lead-up to a
same in many regional media,” Malgor- situation that practically the entire be learned and significant areas needing ifesto” ahead of the assault, which ana-
gruppe Passau, it said on Monday, stok- white supremacist’s attack on two
zata Kidawa-Blonska, from the main local press was in the hands of, change . . . While the commission made lysts said was intended to gain as much
ing a debate on press freedom in the mosques in Christchurch last year that
opposition group, Civic Coalition, wrote first of all, a single corporation and, sec- no findings that these issues would have attention as possible. He was jailed for
central European nation. killed 51 worshippers.
on Twitter. ondly, of a Germany corporation in stopped the attack, these were failings life without the prospect of parole in
The deal has long been mooted and fol- “Step by step, they are destroying plu- Poland”. The prime minister’s apology follows nonetheless, and for that, on behalf of August.
lows years of calls from politicians from ralism and independence.” “This is not a situation that is in line the publication of a 792-page public the government, I apologise.” The inquiry was headed by William
the ruling Law and Justice party (PiS) Since coming to power in 2015, Law with European standards, because the report yesterday after a public inquiry. Young, a Supreme Court judge, and
for a “repolonisation” of Poland’s pri- and Justice has frequently raised the media market is particularly sensitive, The report found that the security serv- former diplomat Jacqui Caine. It inter-
vate media, in which they claim foreign prospect of passing legislation either to as a result of its influence on the ices did not pay enough attention to the Jacinda Ardern: viewed more than 400 people and
the report found
groups have too much sway. “repolonise” or to “deconcentrate” the functioning of democracy, and there- threat posed by rightwing terror while received 1,100 submissions during its
‘many lessons to
The transaction will bring 20 of Polish private media landscape. fore we must change this situation in placing an “inappropriate” focus on 18-month investigation.
be learned and
Poland’s 24 regional newspapers and However, no bill has been forthcom- Poland,” he told radio station RMF FM, Islamist extremism. It also identified significant areas The report details how Tarrant
almost 120 local weeklies under the ing, amid divisions in the ruling camp adding that state-controlled groups shortcomings in gun control laws and needing change’ arrived in New Zealand from Australia
ownership of the state-controlled over how to proceed. One problem is “should” buy up private media. made a series of recommendations in August 2017 and within days began
refiner. Terms were not disclosed. that legislation on repolonisation would In its statement, Orlen said compa- aimed at preventing massacres. The Labour-led coalition has planning the attack. His application for
Orlen said the purchase was part of its be hard to square with EU law. nies creating their own “communica- But the report concluded New Zea- appointed a minister to oversee imple- a firearms licence was approved within
plan to “strengthen its retail sales, Another is that the US — one of PiS’s tion platforms as a support for their land’s authorities could not have pre- mentation of the recommendations, three months of his arrival.
including non-fuel sales”, and that most important allies — has made clear business activities and for reaching new vented the attack perpetrated by Bren- which include reforms to hate speech, New Zealand’s Muslim community
access to Polska Press’s 17.4m users it will fiercely oppose any changes that clients” was a “global trend”. ton Tarrant, a 30-year-old Australian changes to firearms licensing laws and has called for the implementation of the
would allow it to improve its big data damage the interests of US investors. Daniel Obajtek, the company’s chief citizen, except “by chance”, as they had the creation of a national security and report’s recommendations.
tools and to win clients. The main independent broadcaster in executive, added that access to the only fragmentary information about intelligence agency. “We’ve known for a long time that the
However, opposition politicians said Poland, TVN, is owned by US group “17.4m users of the portals managed by the “lone wolf” attacker before the Tarrant shot dead 51 worshippers on Muslim community has been targeted
the deal boded ill for independent jour- ­Discovery. Polska Press will effectively strengthen shootings. March 15, 2019 and injured a further 49 with hate speech and hate crimes — this
nalism, pointing out that Law and Jus- Instead, in recent months there has the sales of the entire Orlen Group”. “On the matters of how the attack at the Masjid Al Noor and Linwood report shows that we are right,”
tice had already reduced the state- been mounting speculation that PiS Orlen had revenues of 111bn zloty occurred and what could have been Islamic Centre mosques, in the worst the Muslim Association of Canterbury
owned media to a claque. could seek to repolonise the media ($30bn) last year. Polska Press had rev- done to stop it, the commission found mass shooting in the Pacific nation’s his- said. “It’s time for change and the time is
“They have destroyed the public through transactions involving state- enues of 398m zloty. no failures within any government tory. ripe to make those changes.”

DECEMBER 9 2020 Section:World Time: 8/12/2020 - 18:57 User: john.conlon Page Name: WORLD3 USA, Part,Page,Edition: USA, 4, 1
Wednesday 9 December 2020 ★ FINANCIAL TIMES 5
DECEMBER 9 2020 Section:Ad Page Time: 8/12/2020 - 11:03 User: william.baxter Page Name: AD SAUDI, Part,Page,Edition: LON, 5, 1
6 ★ FINANCIAL TIMES Wednesday 9 December 2020
y
Michael Stott Brazil’s coronavirus-related spending spree has helped avert a deep recession. But at what price?
MARKETS INSIGHT
Two German
Tesla plans
True believers Pope Francis joins businesses
to sell $5bn
and investors in mission to redeem capitalism
banks funded
of stock after
six-fold rally
Wirecard
Peter Campbell — LONDON
Tesla plans to raise up to $5bn by sell-
deal in India ing stock, as the US electric car pioneer
takes advantage of a rally that will pro-
pel it into the S&P 500 this month.
The company said in a filing yesterday
that it would sell new shares from time
to time on the open market, handing it
more flexibility over the pricing than if
it held a formal secondary offering of
stock.
3 Deutsche and Commerzbank loans
The announcement comes just weeks
before Tesla is due to enter the S&P 500,
3 Query over stark purchase price rise
a move that is expected to fuel further
demand for the stock as passive inves-
tors who track the US benchmark index
Olaf Storbeck — Frankfurt According to documents seen by the are compelled to buy.
FT, Deutsche Bank and Commerzbank Tesla has hired 10 banks, including
Deutsche Bank and Commerzbank pro- provided loans of €125m each to Wire- Goldman Sachs, Citigroup and Barclays,
vided the bulk of the funding for Wire- card for the purchase. The loans under- to help it sell the shares.
card’s acquisition of a pair of Indian line the backing Wirecard enjoyed from Despite a six-fold rally in its shares
companies referred to in the fraud alle- some of Germany’s biggest financial catapulting its market capitalisation
gations against the defunct German institutions during its meteoric rise. above $500bn this year, Tesla became
payments group, documents seen by the By the end of 2015, Wirecard’s market eligible for inclusion in the S&P 500 only
Financial Times reveal. capitalisation had climbed to €5.7bn, after recording a fourth straight quarter
In 2015, Wirecard turned to the Ger- and it went on to peak at more than of profits over the summer.
man banks when it agreed to pay up to €24bn in 2018. Hailed for years as a rare Long dogged by problems over meet-
€340m to a Mauritius-based fund for German tech success, it collapsed in ing its delivery targets, an improvement
two India-based sister companies, June after disclosing that large parts of in its underlying performance has bur-
Hermes i Tickets and GI Technology. its operations in Asia were a sham. nished its credentials among investors.
The seller, dubbed Emerging Markets People familiar with the transaction However, the challenges facing Tesla
Investment Funds 1A, had acquired the told the FT that the two €125m loans are growing. Despite a lead in battery
targets weeks earlier from their original were bridge loans, which had a duration car technology, Tesla is confronting
owners for less than €40m. of about a year. The loans were repaid by renewed competition from incumbent
Wirecard said that it never checked Wirecard long before the company went players such as Volkswagen, which has
bust, the people added. Thou shalt not: Pope Francis, at a mass for the poor, has warned against the idolatry of profit pledged to spend €35bn to achieve its
— Remo Casilli/Reuters
The sequence of events Prior to Wirecard’s insolvency, both electric vehicle ambitions.
German lenders were part of a consor- Andrew Edgecliffe-Johnson address humanity’s biggest chal- founder, told the Financial Times. VW, the world’s largest carmaker by
led to allegations of
tium that provided a €1.75bn revolving New York lenges was “urgently needed”. The The Pope’s support was significant, volume, aims to have 20 per cent of glo-
potential embezzlement credit facility to the payments group, Pope Francis is giving his blessing to a group’s leaders had taken up the chal- she said, because “it’s a positive bal electric car sales by 2025, and pro-
which was 90 per cent drawn. While coalition of large investors, compa- lenge of making capitalism a “more embrace of doing the right thing for duce 26m fully electric vehicles by the
and money laundering
Deutsche Bank’s exposure stood at nies, unions and foundations that inclusive instrument for integral capitalism, but it’s also a challenge.” end of the decade.
€80m, Commerzbank’s was €200m. are pledging to make capitalism human wellbeing”, he said. Members of the council have made By contrast, Tesla has laid out plans to
who was the ultimate beneficial owner Wirecard in 2019 had also raised €1.4bn less socially and environmentally The council’s founding members, commitments specific to their opera- set a record by producing more than
of EMIF 1A, and forensic investigations via bonds after receiving an investment- ­damaging. who will hold annual meetings with tions, and have agreed to a shared set 500,000 cars this year — but still a frac-
by Big Four accounting firms EY and grade rating from Moody’s. the Pope, include the managers of of guiding principles, pledging to cre- tion of the 10m units turned out annu-
KPMG later failed to uncover this. A person familiar with Deutsche The Vatican yesterday lent its name to $10.5tn of assets, companies with a ate equality of opportunity and long- ally by VW and Toyota. The US com-
The unusual sequence of events, the Bank’s decision in 2015 to finance the the Council for Inclusive Capitalism, combined market capitalisation of term value for all stakeholders. pany, which recorded its fifth straight
stark increase in purchase price and the Wirecard deal in India said that, at the whose members must commit to more than $2tn and groups represent- Marcie Frost, chief executive of quarterly profit in October, is building a
unclear ownership of the seller led to time, Germany’s largest lender was not measurable action to create a more ing more than 200m workers. Calpers, said she was optimistic that plant in Germany and ramping up pro-
allegations of potential money launder- aware that the target was acquired from equitable and trusted economic sys- They include heads of companies the initiative would prompt meaning- duction at its new Chinese facility.
ing and embezzlement. a middleman that had paid just a frac- tem, including adherence to the UN’s including Bank of America, BP, EY, ful change, in addition to environ- In July the group overtook Toyota
An Indian Wirecard employee in 2016 tion of the purchase price weeks earlier. sustainable development goals. Johnson & Johnson, Salesforce and mental, social and governance when its market value topped $200bn.
told EY auditors that “senior manage- The first public report about the deal’s The alliance marks an embrace of Visa. The investment groups Calpers, pledges which companies have made Since then, Tesla’s value has more than
ment” of the German group was behind unusual circumstances was published big business and finance by a head of State Street and TIAA are also mem- in response to public pressure — and doubled.
EMIF, and EY fraud investigators later by the Foundation for Financial Journal- the Roman Catholic Church who has bers, alongside the Ford and Rockefel- growing sums invested in ESG funds. The rally has raised concerns over the
referred to “hints” that Wirecard’s then- ism in early 2018, some two years after warned of the idolatry of making ler Foundations, OECD secretary-gen- The California pension fund would group’s valuation, with sceptics pointing
chief operating officer Jan Marsalek was the deal was announced. profit one’s only purpose and called eral Angel Gurría and Mark Carney, look to persuade companies in which out that its profits have been helped by
behind EMIF, according to documents Deutsche Bank and Commerzbank unfettered free markets the “dung of UN special envoy for climate finance. it invests to sign up, she said, adding the sale of regulatory credits — in which
seen by the FT. Mr Marsalek, who is a declined to comment on their lending the devil”. “We need action and we need to that the council’s founders would the carmaker sells zero-emission cred-
fugitive and on Interpol’s most-wanted relationship with Wirecard, citing client Pope Francis said that a fair, trust- reform capital markets,” Lynn For- serve as “influencers” to get others to its to rivals who need them.
list, always denied those allegations. confidentiality rules. worthy economic system that could ester de Rothschild, the council’s make similar commitments. See Lex
Legal Notices
Reprieve for lithium producer shines light on Beijing’s priorities
pleted in May 2018, says a lot about the thanks to a global supply glut, putting
inside business
unique role it has carved out for itself as the Chinese company in a precarious
a national champion operating in a stra- financial position.
asia
tegic industrial sector. Tianqi Lithium and its creditors face a
At the time, Mr Liu was overseeing a challenge as they try to avoid triggering
Tom clampdown on an overseas buying a formal default at the end of the month:
binge by large private groups including how to balance the Chinese state’s inter-
Mitchell Anbang, Fosun, HNA and Wanda. Many est in getting its money back with its
of their acquisitions in the entertain- interest in securing lithium supplies
ment, insurance and tourism sectors, around the world.
such as Anbang’s purchase of the Wal- Tianqi Lithium could, for example,
dorf Astoria hotel in New York, were raise money by selling down its 51 per
I n China, if you owe your creditors a viewed by Chinese regulators as over- cent stake in its Greenbushes open-pit
few hundred million dollars you priced trophy assets. lithium mine in southwestern Australia.
Contracts & Tenders had better pay them back or face Tianqi Lithium’s desire to purchase a Greenbushes is 49 per cent held by
the wrath of vice-premier Liu He. stake in SQM, however, dovetailed with Albemarle Corp of the US.
But if you owe them $1.9bn and a core interest of the state — the creation But given Washington’s determina-
control strategic natural resource of leading, if not monopoly positions, in tion to challenge Beijing’s grip on strate-
assets, well, that is a rather more com- the production of commodities such as gic commodities such as lithium, Presi-
plicated situation. lithium. What oil and copper were to the dent Xi Jinping would probably not be
When a Chinese coal company and transport and communication revolu- happy about yielding control of Green-
automotive group recently defaulted on tions of the mid- bushes to an American rival.
four bonds totalling Rmb4bn ($612m), 20th century, lith- Selling a stake in the huge Selling a stake in the huge Green-
sending tremors through the country’s ium is to their early bushes pit to an Australian miner would
Greenbushes pit to an
$15tn bond market, a regulatory body 21st century equiv- be more palatable, although also a bit
headed by Mr Liu threatened “zero tol- alents, as it is used Australian miner would humbling for China in light of the
erance” for any business caught trying in the batteries that 14-point memo its Canberra embassy
be more palatable, though
to evade debt repayments. power products released last month blaming Australia
By contrast, Tianqi Lithium, one of from iPhones to a bit humbling for China for this year’s rapid deterioration in
the world’s biggest producers of the ele- Tesla cars. bilateral relations.
ment used in electric batteries, faced an In addition to billions of dollars of For Beijing, the ideal outcome would
end of November deadline to pay back credit from China Citic and other state- be figuring out a way to keep Tianqi
creditors led by China Citic Bank almost owned banks, Tianqi Lithium could Lithium afloat with its assets intact until
$1.9bn. It borrowed the money two count on Beijing’s open and vocal sup- global lithium prices recover. On Mon-
years ago to fund its $4bn purchase of a port as it pursued the SQM stake. When day, Reuters reported that a deal that
Public Notice Financial 23 per cent stake in Chilean rival Socie- Chilean opponents complained the deal might accomplish exactly that was
dad Química y Minera. would give China too much sway over nearing completion, with Australian
China Citic Bank gave Tianqi Lithium, the global lithium industry, Beijing’s miner IGO poised to take a minority
based in southwestern Sichuan prov- man in Santiago waded in. Any move to position in a vehicle holding Tianqi Lith-
ince, a month-long reprieve as they try block the deal, ambassador Xu Bin told ium’s Greenbushes stake for $1.5bn.
to sort out a new repayment schedule by local media at the time, would “nega- That should allow Tianqi Lithium to
December 28. tively” affect Sino-Chilean relations. retain control of Greenbushes while
Tianqi Lithium is a private sector The sale went through, although helping China Citic Bank get its money
company, listed on the Shenzhen stock Tianqi Lithium now wishes it hadn’t. It back. If so, China might consider thank-
exchange. The fact that it was able to was closed as lithium carbonate prices ing Australia for the favour.
borrow so much money from state were peaking at $17,000 per tonne. They
banks for the SQM stake purchase, com- have since plunged about 70 per cent [email protected]
DECEMBER 9 2020 Section:Companies Time: 8/12/2020 - 18:58 User: alistair.fraser Page Name: Comps&Mkts1, Part,Page,Edition: USA, 6, 1
Wednesday 9 December 2020 ★ FINANCIAL TIMES 7
DECEMBER 9 2020 Section:Ad Page Time: 8/12/2020 - 11:03 User: william.baxter Page Name: AD FT1, Part,Page,Edition: LON, 7, 1
8 ★ FINANCIAL TIMES Wednesday 9 December 2020
COMPANIES & MARKETS
Technology Banks
UK plans global penalties for Big Tech Goldman on
course to take
full control of
Competition regulator penalties available under UK competi- Businesses could qualify as “strate- important,” said Mr Coscelli, pointing to gated if they allow tech companies to joint venture
tion law, said Andrea Coscelli, chief gic” on a range of metrics including rev- the potential growth of large Chinese take substantial market power.
prepares the ground for
executive of the Competition and Mar- enues, market capitalisation, user num- internet companies that are not yet a The CMA felt the risk of a “chilling in China
digital markets enforcer kets Authority. bers or time spent using a given product significant presence in the UK. effect” on M&A — an important concern
“For the system to be enforceable . . . or service, the CMA said, giving the new The CMA said Google and Facebook among tech investors — was “limited”
you need a carrot and a stick and the regulator wide-ranging powers to con- would probably have to adhere to codes and “in any event does not outweigh the
Kate Beioley and Tim Bradshaw
stick needs to be serious penalties that strain existing companies and entrants. of conduct governing search and social potential risk of harm”.
London
make it into the boardroom of large A new designation would take up to a media respectively, following on from a In response to the plans, Google said Thomas Hale — Hong Kong
Technology companies that abuse a new companies,” said Mr Coscelli. year to determine then last for five study it has already done on competi- the rules should apply only to specific
Goldman Sachs is set to take full owner-
code of conduct intentionally will be He spoke as the CMA made recom- years, the CMA said. tion in digital advertising. markets where a company has demon-
ship of its securities joint venture in
liable for fines of up to 10 per cent of mendations for a UK Digital Markets Strategic companies would be held to Mr Coscelli said Amazon and Apple strable market power. It pointed out
China, as western investment banks
their global revenue under competi- Unit, a task force the government hopes specific, individual rules as well as a could be designated as strategic but only that Big Tech platforms may be domi-
seek to expand across the country’s
tion plans proposed by the UK yester- to create next year to tackle the market broader merger regime designed for the if the CMA’s research threw up issues in nant in some sectors, but marginal in
booming financial industry.
day, raising the prospect of billions of power of Big Tech. The business depart- tech sector. They will be subject to “pro the markets in which they operate. others.
dollars of potential penalties. ment will now consider the proposals. competitive interventions” to address The UK is taking a different approach Facebook said some of the options The US bank has signed a definitive
The head of the UK’s competition Under the plans, the UK will decide on the root of their market dominance, to the EU, with individual rules rather under discussion would “significantly agreement and initiated regulatory
authority suggested specific rules for a case-by-case basis to class some tech such as orders to share their data with than a broader set of rules for all “gate- rewrite the regulatory framework” and processes to acquire all of the outstand-
the biggest tech companies, potentially companies as having “strategic market third parties. keeper” companies to follow. encouraged the UK “to carefully weigh ing shares in Goldman Sachs Gao Hua
starting with Facebook and Google status” if they have “substantial, The CMA’s proposals would give the The CMA recommended that even the potential trade-offs of intervention from Beijing Gao Hua Securities, its
before moving on to Apple and Amazon. entrenched market power in at least one new regulator significant flexibility in acquisitions of digital companies that and ensure that the value created by local partner, according to an internal
Deliberate breaches would make digital activity” or if they serve as an responding to changes in the market. fall below the usual threshold of at least Facebook is not destroyed, to the detri- memo seen by the Financial Times. It
companies liable for the full extent of online “gateway” for other businesses. “The concept of future proofing is very £70m in UK revenues should be investi- ment of users and innovation”. currently holds 51 per cent.
Wall Street’s biggest firms have
rushed to boost their presence in China
as the country opens up its financial sys-
Automobiles tem to foreign investment. That long-
term shift has gathered pace this year
Ineos to build
despite escalating geopolitical tensions
between Beijing and Washington.
off-roader in “100 per cent ownership of our fran-
chise on the mainland represents a sig-
nificant commitment to and investment
France rather
in China,” Goldman Sachs said in the
memo, which was signed by David Solo-
than Wales mon, chief executive, and other senior
leaders. It pointed to “ongoing reforms
under way in China’s capital markets,
continued robust economic growth and
Joe Miller — Frankfurt the expanding needs of increasingly
sophisticated clients”.
British tycoon and Brexiter Jim Rat-
Foreign firms have been able to apply
cliffe’s Ineos is to produce its first flag-
ship off-road vehicle in France in a
‘There’s a lot of deals to be
blow to the UK car industry.
done, so even if foreigners
The company signed a deal yesterday to
buy a Mercedes plant in Hambach, near only get crumbs off the
the German border, for an undisclosed
table, that’s still a big table’
sum. Ineos had planned to build the
Grenadier off-roader in Bridgend, South
Wales, and create 500 jobs in the area. for full ownership in China as of April
The model, billed as a “spiritual suc- this year, following a decades-long push
cessor” to the Land Rover Defender, is to increase their presence. Goldman
one of a family the industrial group Sachs set up its joint venture, the first of
intends to build as it attempts to gain a its kind in the country, in 2004.
foothold in the car industry. In 2018, UBS became the first foreign
Daimler, the German owner of Mer- bank to increase its stake in a securities
cedes, said Ineos would take over the joint venture to 51 per cent. In March
plant, which produces Smart cars, in the this year, both Goldman Sachs and Mor-
coming weeks, and all parties had gan Stanley received approval to
agreed to safeguard about 1,300 jobs at acquire majority stakes in their securi-
the site in the Moselle department. ties joint ventures. Goldman Sachs said
Boris Johnson, UK prime minister, at the time it planned to move to full
had hailed plans to build the car in ownership at the “earliest opportunity”.
Skies brighten
Wales as “a vote of confidence in UK The price of insuring against a debt weeks, by between 38 per cent and and profits at US airlines, and they JPMorgan in October took its stake in
expertise”. default by US airlines has plunged as 67 per cent for the four big carriers. are still burning cash faster than its securities joint venture to 71 per cent
Sir Jim, chairman of Ineos and one of Investors see investors anticipate a round of bailout The market on Monday priced Delta they forecast. after it last year became the first US
Britain’s richest men, said: “Hambach funding to see the sector through to a CDS at 368 basis points — meaning a Ed Bastian, Delta chief executive, bank to obtain approval for majority
presented us with a unique opportunity coronavirus vaccine next year. buyer would pay $368,000 a year to told staff last week the carrier was ownership. Jamie Dimon, chief execu-
lower risk of
that we simply could not ignore.” Even as the main carriers burn insure $10m of Delta debt against a burning $12m to $14m a day as virus tive, has said that China is “a critical
In a tweet, Ineos’ car unit said it had through tens of millions of dollars a default for the next five years — with cases hit new records. Delta had market for many of the company’s
always intended to build its first vehicle airline defaults day, and the pandemic rages across the United at 559bp and Southwest at earlier forecast that cash burn domestic and global clients”.
in Britain, and the plan to do so “was US, prices for airline credit default 74bp, according to IHS Markit. would be $10m a day by December, This year Beijing has unveiled govern-
fully costed and deliverable”. swaps have fallen to levels unseen since The market continues to treat from $24m in the third quarter. ment reforms that encourage financial
“Of course, we understand there will March or, in some cases, February. American, which has a heavier debt American put its cash burn at the liberalisation, including expanding for-
be disappointment in the UK,” the com- Share prices for American Airlines, load than its peers, as a distressed high end of the predicted $25m to eign access to futures markets.
pany added, “but the business case for Delta, United and Southwest, have also entity. As well as $500,000 annually, $30m a day for the fourth quarter. The Chinese government has also
Hambach was overwhelming.” risen, outpacing the broader stock buyers of CDS protection on $10m of its As well as taking a government taken steps to open up the country’s
Ineos said it would start building the market since the first vaccine trial debt must also pay $2.5m upfront. bailout, airlines have been able to mutual fund industry. JPMorgan this
Grenadier at the site from late 2021, and results were published a month ago. There is bipartisan support for replace cash with fundraising in the year became the first foreign firm to
that it intends to start delivering the “The immediate existential threat another $17bn for the industry in a public markets. United and reach an agreement to take full owner-
vehicle in early 2022. has receded,” said Adrian Yanoshik, stimulus package under discussion on American have raised equity capital, ship of its mutual fund joint venture,
It said Hambach, close to Baden- Berenberg analyst. “And the very Capitol Hill. Lawmakers last week while all the big four carriers have which is pending regulatory approval.
Württemberg, a carmaking heartland, obvious second act of this is a lot of signalled renewed progress towards a raised debt, using assets such as “I think the view of most Wall Street
would give it access to “supply chains, people feel like vaccines are coming, deal, although unrelated areas of planes, landing slots and frequent firms is China is a large market, it’s going
automotive talent and target markets”. the world will open up and we’ll travel disagreement have dashed previous flyer programmes as collateral. to continue to get bigger, the opportuni-
Daimler, which is undergoing a pain- again next year.” hopes for a stimulus package. “The investment community is ties for foreign firms will be larger, and
ful restructuring as it pivots to electric The cost of the swaps, which pay out Airlines received $50bn in funds looking through near-term therefore they want to have a footprint
vehicles, has promised to cut a fifth of its when a company defaults on its debts, from the US Cares Act in March in negatives,” Helane Becker, a Cowen in that market,” said Fraser Howie, an
fixed costs over the next four years. is now a fraction of the peak in May, as exchange employing workers through analyst, told clients. independent analyst and expert on the
The Stuttgart-based company said it airlines have tapped government and the summer. More than 350 airlines “The value trade theme . . . has country’s financial system.
had already booked impairments from Break in the clouds: a pilot at New private market funds to improve their took the funds. Tens of thousands of clearly attracted incremental “There’s clearly a lot of deals to be
the sale of Hambach, amounting to sev- York’s LaGuardia. Prices for liquidity positions. CDS prices act as a employees have been furloughed since capital . . . given [year-to-date] done in China, so even if foreigners only
eral hundred million euros, in its second airline credit default swaps have proxy for the market’s view of a the programme expired on October 1. performances, but at some point ever get crumbs off the table, that’s still
and third quarters. It said the deal was a fallen to levels unseen since company’s creditworthiness. The collapse in demand for air travel fundamentals will take over, or at a big table.”
step towards slimming down to focus on March They have tumbled again in recent since the spring has crushed revenues least matter.” Additional reporting by Wang Xueqiao in
— Spencer Platt/Getty
fewer, more profitable models. Shanghai

Financials Mining
BlueCrest to return $170m after settlement Kaz suitors switch to straight takeover offer
Ortenca Aliaj — New York ing by not disclosing that it was transfer- the firm’s BCI flagship outside fund. Neil Hume A straight takeover offer lowers the decarbonisation, we still believe that the
Kadhim Shubber — Washington ring its highest-performing traders to a At the same time, BlueCrest began Natural Resources Editor main acceptance threshold so Kaz can offer price materially undervalues the
BlueCrest Capital, the investment firm fund that benefited its own personnel to managing significant chunks of the BCI The vehicle bidding for Kaz Minerals, be delisted if 75 per cent of its share- company’s existing and future assets,”
led by billionaire trader Mike Platt, will the detriment of its fund investors,” said portfolio through an algorithm that rep- the Kazak copper producer, has flipped holder base tender their stock in favour. said James Johnstone, co-head of RWC’s
return $170m to its former investors Stephanie Avakian, director of the SEC’s licated live trades on a one-day delay. its £3bn buyout proposal to a straight As things stand Nova Resources has emerging and frontier markets team.
after the US Securities and Exchange division of enforcement. The “Rates Management Trading”, or takeover offer after minority share- almost 50 per cent of the company’s Kaz said yesterday it expected full-
Commission said it prioritised an inter- BlueCrest managed $36bn at its peak RMT, algorithm allowed BlueCrest to holders opposed the deal. shareholders backing its offer, including year copper and gold production to be
nal hedge fund over the flagship fund but stopped managing outside money in make bigger profits because it did not 2-3 per cent higher than earlier guid-
they had invested in. 2015. The misleading disclosures at have to pay traders performance fees on Oleg Novachuk, Kaz chairman, and ance of 280,000-300,000 tonnes and
issue in the SEC case occurred between money managed that way. Vladimir Kim, the Kazakh metals Oleg Novachuk, 180,000-200,000 ounces respectively.
Kaz chairman, is
The London-based firm had transferred 2011, when BlueCrest created its inter- The SEC said RMT’s next-day trading tycoon, had offered, via their Nova Shares in the company fell but were still
behind the £3bn
top traders from the flagship fund to an nal fund, and the end of 2015. caused it to “perform especially poorly Resources vehicle, 640p a share in cash trading above the offer price at 650p.
buyout proposal
internal entity that managed only the “We are pleased to have resolved this in volatile markets because RMT waited for the 60 per cent of the London-listed along with tycoon The switch to a takeover offer also
personal fortunes of its founders, leav- matter which primarily involved disclo- too long to respond to sudden market miner they do not already own. Vladimir Kim means shareholders will not get the
ing outside investors reliant on an sures that were made more than five moves”, such as the 2013 taper tantrum. That was rebuffed by CFC Manage- opportunity to voice concerns about the
underperforming algorithm, the SEC years ago,” said BlueCrest. Despite these changes, BlueCrest ment and RWC Partners, two of Kaz’s shares held by Roman Abramovich, deal to London’s Companies Court.
said. “Today’s order does not relate in any made only vague disclosures to inves- biggest minority shareholders, who said owner of Chelsea Football Club, and Under the previous deal structure,
The settlement announced yesterday, way to our current business operations,” tors about its BSMA fund before 2014, it materially undervalued the com- some of his business associates. Kaz asked a judge to rule on whether Mr
in which BlueCrest neither admitted nor it added. when it was discovered by an outside pany’s assets and projects. But securing the rest of the shares Abramovich and his business associates
denied the SEC claims, highlighted con- The internal fund at issue, called due-diligence consultant, said the SEC. Because of the way the deal was origi- Nova needs to push the deal through had the same status as other investors
flicts of interest that can arise when BSMA, was set up in 2011 to manage BlueCrest also allegedly failed to tell nally structured — through a court- could still be difficult because of soaring and would be able to vote on the deal.
investment firms have separate funds money for BlueCrest employees and to its independent directors until 2015 sanctioned scheme of arrangement — it gold and copper prices, say traders. The Abramovich group stands to
for employees and external investors serve as an incentive for its staff to about the amount of capital managed would have taken only a small group of “With copper prices up over 10 per receive $225m in cash if the company is
“BlueCrest repeatedly failed to act in remain. The SEC said BlueCrest moved through its RMT system, which at times investors with a collective holding of cent this quarter and the growing delisted.
the best interests of its investors, includ- its best traders to BSMA and away from was as high as half the money in BCI. about 12 per cent to scupper the deal. acceptance of copper’s role in global See Lex
DECEMBER 9 2020 Section:Companies Time: 8/12/2020 - 18:58 User: john.conlon Page Name: CONEWS1, Part,Page,Edition: USA, 8, 1
Wednesday 9 December 2020 ★ FINANCIAL TIMES 9
COMPANIES & MARKETS
Glencore’s new chief faces tough
Automobiles
Asia’s online
used car sellers
choices in push to ride green wave
tap investors
after sales leap
Nagle will aim to decide fate of coal assets and how best to supply metals for energy transition
Mercedes Ruehl — Singapore
Neil Hume
Booming sales of used cars in south-
Natural Resources Editor
east Asia and India are fuelling a burst
Glencore has had only three chief execu-
of fundraising by online platforms seiz-
tives since it was founded in 1974. Next
ing the pandemic-driven opportunity
year it will get a fourth when 45-year-
to sell to the region’s growing middle
old South African Gary Nagle takes the
class.
reins.
He has a formidable predecessor to A pick-up in consumer appetite for
live up to — over 19 years outgoing CEO making bigger-ticket purchases online
Ivan Glasenberg built Glencore into a has helped create India’s newest uni-
$42.5bn commodity trading and mining corn, a used car platform, while in
powerhouse that spans the globe, south-east Asia these companies are
employing 160,000 staff and contrac- raising fresh capital and plotting US list-
tors in 35 countries. ings.
Mr Nagle also faces immediate chal- The change in attitude mirrors a glo-
lenges. The company has come under bal trend. In the US, share prices of
heavy regulatory scrutiny in recent online used-car dealers have surged,
years including a US probe into possible with New York-listed Carvana rising
corruption in developing countries such more than 180 per cent this year. The
as the Democratic Republic of Congo. valuation of privately held Cazoo, a UK-
It must decide on whether to remain based start-up, has doubled to $2.5bn.
in coal mining, a sector out of favour The $321m raised across south-east
with investors focused on environmen- Asia and India this year by online play-
tal, social and governance criteria — and ers selling used cars is comparatively
a division at Glencore currently run by small but a bright spot in a patchy fund-
Mr Nagle. raising environment during the public
And it needs to give a jolt to a share health crisis.
price that despite doubling since a Overall fundraising by start-ups
March low still languishes far below its dropped nearly 30 per cent in India in
2011 flotation price. the first half of 2020 compared with
“Glencore needs to decide what it 2019, to $4.2bn, according to Tracxn, a
wants to be in the post-Ivan, ESG world,” data provider. In south-east Asia over
said Paul Gait, a mining expert at the same period it fell 18 per cent to
Azvalor Asset Management. “My gut Glencore The copper pipeline is dwindling $6.3bn, according to data from Google,
feeling is that coal will be separated Temasek and Bain & Co.
Performance and key moments since flotation (share price, pence) Cash flow projection for 2021 ($bn) Index of highly probable and probable
eventually.” Car sales per capita in south and
IPO in London DOJ launches investigation into copper projects, 2001=100
Now based in Australia, where he 600 south-east Asia are low, helping fuel the
alleged bribery and corruption
runs Glencore’s coal assets, Mr Nagle Marketing rise of ride-hailing companies such as
Completes ebitda 250
will move to Switzerland next year. He Xstrata deal Rio Tinto rebuffs Gary Nagle Other 0.1 3 Cash, Gojek and Grab, south-east Asia’s big-
will spend six months working along- merger proposal tax, gest start-ups, and Ola, which competes
named Nickel 0.8 200
side Mr Glasenberg as he gets to know new CEO 400 Coal 1.6 intaenrdest with Uber across India.
the company’s most important part- capex 150 The number of cars in circulation
ners, including Felix Tshisekedi, presi- Zinc -8.5 equates to 22 per 1,000 people in India
3
dent of the DRC, and the banks that Commodity market Ivan Glasenberg 200 Industrial 100 and 86 in south-east Asia, according
finance its vast trading operations. crash/debt crisis. says he doesn’t ebitda to data from Momentum Works,
Mr Nagle was in Sydney when Mr Senior executives want to be the 11.1 Free 50 a research firm. That compares with
Glasenberg anointed him as his succes- stump up $500m ‘old guy’ running Copper cash 138 in China, 480 in Japan and 618 in
in cash call the company 5.6 flow
sor last week towards the end of an 0 5.6 0 the US.
investor presentation in which Glencore “Markets in south-east Asia have one
2011 15 20 2001 05 10 15 19
announced its ambition to be the first of the lowest vehicle ownerships in the
big miner fully aligned with the goals of Sources: Refinitiv; Glencore; WoodMac world, which also previously paved the
the Paris agreement on climate change. way for ride-sharing platforms taking
Mr Glasenberg did not want Mr Copper is crucial managed decline in which reserves are Christopher LaFemina, an analyst at Jef- ‘It is clear probes the company faces. In 2018 it off,” said Oliver Rippel, co-founder of
Nagle’s appointment to detract from his to Glencore’s not replaced as they run down. feries. Mr Nagle will then have another was ordered by the US Department of private equity firm Asia Partners and a
we are fast
vision of a new, green-tinged Glencore future along By setting out a credible pathway to decision to make: when to increase pro- Justice to hand over documents and former executive at Naspers, the South
that will attract climate-conscious with cobalt, net zero, Mr Glasenberg believes Glen- duction of the metals — mainly copper approaching records relating to possible corruption African internet giant.
investors, according to people familiar nickel and zinc, core will be able to hang on to a business and nickel — that will be needed for the and money laundering in Nigeria, Vene- Now, with ride-hailing and public
a moment
with his thinking. but Gary Nagle, it can milk for cash and not be penalised energy transition. zuela and the DRC over more than a dec- transport being abandoned as unsafe
The leadership transition comes as below, needs to by investors. Deciding when to pull the trigger on where a ade. across the coronavirus-ravaged region,
Glencore, which has missed out on the improve the Coal accounts for about 10 per cent of mine expansions will be crucial. If Mr DoJ investigations usually take at people are snapping up used cars.
standard on
bull market in iron ore, enjoys a tailwind safety record as earnings before interest, tax, deprecia- Nagle moves too early he risks adding least three years, although the depar- Monthly sales on Carsome, a Malay-
from rising industrial metals prices. If he decides when tion and amortisation, and 5 per cent of too much supply to the market and what is ture of Mr Glasenberg and other senior sia-based used car platform that also
current prices persist, the group could to expand mines revenue, so it is not a huge part of its depressing prices. executives caught up in the inquiries has operations in Indonesia, Singapore
sufficiently
generate $5.6bn of excess cash next business. Analysts are not expecting big could speed up the process. The com- and Thailand, have jumped to 6,000
year, allowing it to pay down debt and The move has met a positive changes to Glencore’s hard-charging ambitious pany has said it is co-operating with the cars, from 2,000 to 3,000 pre-Covid.
resume dividend payments that were response. While Glencore’s commit- business culture under Mr Nagle, who is investigations. The company this week raised $30m
will be
suspended this year. ments require careful consideration, seen as “incredibly commercial”. Another challenge for Mr Nagle will from investors including Asia Partners,
From there, Mr Nagle can get to grips they are “significant”, according “We expect a seamless transition decided’ be maintaining a good relationship with and is planning an initial public offering
with the two big decisions that reflect to Adam Matthews, director of ethics from Ivan to Gary,” said Mr LaFemina. Mr Glasenberg, whose presence will in the US as soon as 2022.
Glencore’s unique position as a com- and engagement at the Church of Eng- The new chief executive will also loom over the business even after his “The pandemic has definitely acceler-
pany at both ends of carbon spectrum. It land Pensions Board and co-chair of the want to improve Glencore’s safety retirement. ated our business. We expect to be prof-
is the world’s biggest exporter of ther- Transition Pathway Initiative. record — it has suffered eight fatalities Mr Glasenberg has said he has no itable across the group next year,” said
mal coal but also a big producer of “It is clear we are fast approaching a this year — and must decide whether to intention of becoming the company’s Eric Cheng, Carsome chief executive.
metals crucial to the energy transi- moment where a standard on what is prune a tail of marginal assets including next chairman — Tony Hayward cannot “Then we want to list on a major
tion — copper, cobalt, nickel and sufficiently ambitious and what is not Glencore’s oil exploration business continue in the role much longer under exchange like the Nasdaq.”
zinc. will be determined. Such a standard will and its Zambia copper unit. Glencore the UK corporate governance code. But Last month CARS24 became India’s
At Friday’s event Glencore clearly include scope 3 emissions,” he has a sprawling base of more than 150 the outgoing chief will remain a big first online used-car sales unicorn — a
pledged to reduce its greenhouse gas said. industrial assets, according to Deutsche shareholder, with a 9.1 per cent stake start-up valued at more than $1bn —
emissions — including “scope 3” cre- Ultimately it will be up to Mr Nagle to Bank. worth almost $4bn. after raising $200m from investors
ated when customers burn raw decide whether Glencore can remain in Mr Nagle, who comes from the asset “If Gary wants to defer to me for help, including Russian billionaire Yuri Mil-
materials — to net zero coal or has to demerge the business. side of the business, will also have to get I will be there to help him if need be, but ner’s DST Global. CARS24, which sells
by 2050. “We believe a coal demerger will up to speed with its trading, or “market- I definitely do not intend interfering more than 2m vehicles on its platform
It plans to do this eventually happen after Gary Nagle ing”, arm. with him,” Mr Glasenberg said. “He annually, plans to use the funds to
mainly by placing its takes over as CEO and Glencore will One issue over which Mr Nagle has lit- must run the company as he deems fit expand new business lines including
coal business into then be the green wave miner,” said tle power are the various regulatory and create value for shareholders.” financing.
Energy. Renewable generation Financials
Numis plans for EU office
‘Airbus for hydrogen’ seeks to cut low-carbon costs
in case of no-deal Brexit
accord. It has also been tagged as a key continued use of existing infrastructure, to go from seeing [memorandums of
Orsted and peers team up to
factor in curbing emissions from com- and express doubts that it will be any understanding] in place to seeing actual
boost output of sustainable panies in “hard-to-abate” sectors such more than a “niche” energy solution. offtake contracts,” he said. “Seeing the Daniel Thomas — London office or buying a company that had the
as shipping, where there are presently Various countries have already set supply side commitment to scale and necessary licences as an alternative, he
City broker Numis may be forced to
fuel and help it replace diesel few viable alternatives to fossil fuels. targets that encourage the development cost makes ambition less risky.” said.
open a new European office or buy a
“When you feed that magic number of of green hydrogen. The EU in July said it Snam is betting on hydrogen in an While EU clients are only a small
rival on the continent to service its cli-
$2 per kilo into the economic models, wanted to install at least 40GW of green effort to curb its own emissions. It com- share of company revenues at less than
Billy Nauman then [green hydrogen] starts displacing hydrogen capacity by 2030, and the UK mitted last month to a plan to invest ents in the region, if the UK leaves the 2 per cent, Mr Mitchinson said it was
EU without an agreement on financial
A consortium of energy companies has diesel,” said Marco Alverà, chief execu- has pledged to support the development €7bn over the next four years. Orsted, a important for client relationships and
services.
joined forces to drive the cost of green tive of Snam, the Italian energy infra- of 5GW of low-carbon hydrogen produc- leader in offshore wind power, also an area that he wanted to expand. “Eve-
hydrogen below $2 per kilogramme — structure company. tion and to develop the first town heated recently announced a new green hydro- With talks still ongoing and just three ryone wants a bit of certainty,” he said.
the price at which they estimate the eco- As it stands, green hydrogen typically gen project in conjunction with BP. weeks until the end of the Brexit transi- Numis is also in talks with regulators
friendly inert gas will become an attrac- costs anywhere between $3.50 and $8 Mr Alverà sees the collaboration tion period, City firms are preparing for about how to improve the UK’s stock
tive alternative to fossil fuels. per kilogramme. An analysis from Green hydrogen among the energy companies as a sort of the worst-case scenario that would leave market listing process after Brexit,
is produced
The group, which includes Denmark’s Bloomberg New Energy Finance earlier “Airbus for hydrogen”, referring to the them without EU market access. including how to adapt rules to attract
through the
Orsted, Italy’s Snam, Spain’s Iberdrola, this year forecast the price would fall European alliance to create a world class Brussels has not yet said whether the fast growing companies.
electrolysis of
the Saudi-based ACWA Power, the Aus- below $2 a kg by 2030, but the energy water using aircraft manufacturer, with hopes that UK will be allowed access based on While there were few initial public
tralian CWP Renewables, China’s Envi- groups “coalition” would seek to shave renewable power scaling production would not only make “equivalence” — mutual recognition of offerings during the pandemic, Alex
sion and the Norwegian chemical’s com- four years off that timeline. hydrogen more affordable as a fuel but regulatory standards. Without this, UK Ham, co-chief executive of Numis, said
pany Yara, is aiming to lower prices by “Phase 1 of the tipping point is to start entirely by hydrogen by the end of the might also preserve some manufactur- businesses such as Numis will in effect that the pipeline for 2021 looked
boosting their combined output of competing with diesel for all the trans- decade. ing in Europe. The companies have be unable to sell services such as healthy, with companies that had done
green hydrogen to 25 gigawatts by 2026, port sector — which costs a bit more Nigel Topping, appointed by the UK committed to share expertise and work research and market dealing in many well during the pandemic accelerating
a 50-fold increase over present minimal than crude oil,” said Mr Alverà. For government as the high-level champion together to develop technology and parts of the EU. plans and delayed flotations restarting.
levels. green hydrogen to compete with natural for global climate action ahead of the large manufacturing capabilities. Ross Mitchinson, co-chief executive He said that Numis had talked to the
Green hydrogen, which is produced gas and coal, it will need to fall even fur- UN climate summit next year, said the “We have to avoid doing what we did of Numis, said the business had applied Treasury and other regulators about
through the electrolysis of water using ther to $1 a kg. coalition was a demonstration of a com- with solar and wind subsidies in Europe, for licences in some EU countries but what could be done to attract compa-
renewable power, is a big part of the EU Sceptics argue that both big fossil fuel mitment to build the infrastructure where a few countries paid all the subsi- still lacked access to several larger coun- nies based in Europe to list in London
and UK plans to achieve the reductions consumers and energy groups are keen needed. dies and then all the manufacturing tries including France. and to retain those that are already
in emissions set out in the Paris climate to promote hydrogen because it allows “In the next year, I think we’re going went offshore,” he said. Numis would consider opening an EU listed in the UK.
DECEMBER 9 2020 Section:Companies Time: 8/12/2020 - 17:38 User: jon.wright Page Name: CONEWS2, Part,Page,Edition: USA, 9, 1
10 ★ FINANCIAL TIMES Wednesday 9 December 2020
COMPANIES & MARKETS
Currencies. Dwindling reserves Equities
JD Health
Investment inflows pave way for
shares jump
Turkey to rebuild forex coffers 75% on debut
in Hong Kong
Christian Shepherd — Beijing
Thomas Hale — Hong Kong
Shares in JD Health surged 75 per cent
on their trading debut after the unit of
JD.com, 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
The country burnt through Turkey’s foreign currency war chest is severely depleted Investor flight: “If there is no de-dollarisation and the it was so heavily oversubscribed.”
some foreign central bank starts buying foreign JD Health and other Chinese online
billions of dollars this year in $bn fund flows have currency, the dollar will rise again
an effort to prop up the lira Net foreign assests 40 come back to [against the lira],” he said. ‘This was not only a single
Turkey after an Mr Kara said further rate rises would
20
exodus over the be “very important” for creating the incident. It raised the
Laura Pitel — Ankara 0 past two years right environment for reserve-building. overall standard of
Foreign investors have snapped up NFA excluding short-term borrowing Murad Sezer/Reuters Raising the main rate to 17 per cent
Turkish assets in recent weeks, opening -20 and keeping it there for six months China’s online healthcare’
the window for the country to rebuild its would create a “virtuous circle” that he
-40
stores of foreign currency that were estimated could help the central bank to healthcare platforms including Ping An
severely depleted in an ill-fated attempt -60 add $15-20bn to its war chest. Good Doctor and Alibaba’s AliHealth
to prop up the lira. The question is whether Mr Erdogan, have reported surging revenue and user
Jan 2019 2020 Oct
Analysts have warned, however, that a staunch opponent of high interest activity this year. Wariness of hospital
Turkey’s newly installed finance Net foreign assets are considered a key proxy for foreign currency reserves rates, is willing to tolerate further rate visits in the pandemic fuelled a jump in
Sources: CBRT; FT calculations
minister and central bank chief have rises. “That’s the biggest risk ahead,” he online consultations in early 2020.
their work cut out, given the scale of the added. Online consultations and pharmacies
rebuild needed and the damage that fall in the currency since the end of 2019. A decision last month to raise the Steps by the central bank to reduce its also offer a way to plug gaps in China’s
the pandemic is inflicting on one of the The scheme was the centrepiece of central bank’s main interest rate reliance on swaps, and the lifting of healthcare coverage where the best
biggest emerging markets. the turbulent tenure of Berat Albayrak, sharply to 15 per cent, plus the lifting of measures that prevented Turkish banks provision is in top-tier city hospitals.
The draining of Turkey’s FX coffers the son-in-law of president Recep other measures that had put pressure from performing similar transactions Xin Lijun, chief executive, said the
has been one of the overarching worries Tayyip Erdogan who ran the country’s on commercial banks to lend, is with foreign counterparts, would help platform was hosting more than
of foreign investors over the past two economy until his surprise resignation expected to help slow the credit-fuelled, restore the normal functioning of 100,000 online consultations a day — a
years since reserves are considered a last month. consumption-driven growth that was Turkey’s financial markets, analysts number that peaked at 150,000 during
crucial insurance policy against the His successor, former bureaucrat stoking a large current account deficit said. the height of China’s Covid-19 outbreak.
country’s large import bill and hefty Lutfi Elvan, and a new central bank and contributing to the drain on But bankers expect the arrangement New government policies allowing
foreign debt obligations. governor, Naci Agbal, have been left to reserves. to be dismantled gradually to avoid an insurance claims for online care and
Gross reserves, excluding gold, have pick up the pieces. But the pandemic provides a chal- abrupt decline in the central bank’s hospitals distributing medicines via the
hovered around a 15-year low in recent Their task is a daunting one but they lenging backdrop for correcting the reported reserves. internet were other lasting changes that
months, according to data from the have a chance to turn the tide, said trade imbalance. Meanwhile, Turkish “I think public banks will continue to benefited JD Health, he said.
Turkish central bank. Hakan Kara, a former Turkish central companies continue to create demand roll over swaps for a long time,” said one “This was not only a single incident,”
The picture is even more bleak once bank chief economist. for FX as they pay down foreign debts. Istanbul banker. said Mr Xin, referring to the pandemic.
an adjustment is made for a contentious “There is an opportunity here,” he Such factors mean it is likely to be a The central bank nodded to a desire “It raised the overall standard of China’s
accounting method adopted by the said. “With more credible people who “relatively slow process to rebuild to increase reserves in the statement online healthcare.”
central bank last year. are saying exactly what the market reserves”, said Paul Gamble, a senior that accompanied last month’s interest JD Health’s internet pharmacy
When tens of billions of dollars expects, that will attract some inflows director at rating agency Fitch. rate rise. business had 72.5m annual users last
borrowed through short-term swap [of foreign capital].” If the country can attract large ‘It was Bulent Gultekin, a former Turkish year and its healthcare platform, which
arrangements with commercial banks Dwindling reserves contributed to enough inflows of foreign money, the central bank governor who is now a links patients and medical profession-
never clear
are excluded from the bank’s balance downgrades by international rating central bank could begin building its professor of finance at the Wharton als, has more than 65,000 doctors.
sheet, net foreign assets — a proxy for agencies and alarmed foreign investors, coffers by starting FX purchase auctions where they School at the University of Pennsylva- For the six months to June, JD Health
net reserves — stood at a deficit of $52bn who pulled roughly $13bn from Turkish for the first time since 2011. nia, said a comprehensive plan and good reported a Rmb5.4bn ($820m) loss on
were going.
at the end of October, according to stocks and bonds in the first 10 months Some analysts warned that the time communication would be critical to Our global Rmb8.8bn in revenue with the latter
Financial Times calculations. of 2020, central bank data show. was not yet right. “It’s too early,” said That was “create an environment of confidence to team gives you growing 76 per cent year on year. Under-
A key cause of the decline was an The shake-up in the country’s eco- Haluk Burumcekci, an Istanbul-based reverse the capital flows”. market-moving writers on the deal included BofA
why they
intervention aimed at halting a freefall nomic management has lured some for- economist and consultant, pointing to Prof Gultekin added: “It was never news and views, Securities, UBS and Haitong Securities.
in the lira. The central bank spent tens eign fund flows with $1.9bn shifting the relatively small size of recent foreign got into clear where they were going [with the 24 hours a day Additional reporting by Wang Xueqiao in
of billions of dollars, according to ana- back into Turkish assets in the three inflows and the fact that sceptical local previous policies] — that was the reason ft.com/markets Shanghai
that mess’
lysts, but has failed to stem a 24 per cent weeks after Mr Albayrak’s departure. investors have continued to buy dollars. why they got into that mess.” See Lex
Currencies Equities
Sterling traders poised for volatility Grantham stumbles on $200m profit
as EU-UK negotiations hang in balance after Spac swoop on battery maker
Eva Szalay — London $1.33 from above $1.35 at the end of last measure. Bets that pay out if sterling Robin Wigglesworth — Oslo biggest investment I have ever made,” That marked a quintupling from the
week. The pound is also down 0.8 per depreciates have also increased. Eric Platt — New York he told the Financial Times. “It gets Spac’s listing price.
Traders are bracing for big swings in
the value of the pound as UK-EU trade cent against the euro by yesterday after- Options markets indicate that buying Investor Jeremy Grantham has “by around the idea of listing requirements, Although the shares have dipped after
talks go down to the wire with a key noon, which would mark its worst protection against a weaker pound has accident” made about $200m from a so it is not a useful tool for a lot of that frenzy, the newly combined
measure predicting the highest volatil- weekly performance since September if become about 50 per cent more personal investment in battery maker successful companies. But I think it is a company still boasts an overall market
ity since the coronavirus crisis tore it does not improve in the coming days. expensive than those that pay out if QuantumScape after it merged with reprehensible instrument and very, value of roughly $16bn. Mr Grantham
through markets earlier this year. In recent weeks, investors upped their sterling rises. a listed blank-cheque company — very speculative by definition.” holds about 4.8m shares in the com-
bets on a positive outcome to the talks Kamakshya Trivedi, co-head of global despite deriding the US craze for Ironically for an investor mostly pany, which at their $44.17 closing level
Sterling’s implied volatility over the but the lack of progress has punctured FX, rates and EM strategy at Goldman so-called Spacs as “reprehensible”. known for contrarian bets on underval- on Monday would be worth over $210m.
next four weeks has reached a mark not some of the optimism and forced inves- Sachs, said rising volatility and ued, unfashionable companies and But he pointed out that the company
seen since the aftermath of the March tors into buying contracts that protect increased caution about further sterling Mr Grantham, the co-founder of itself estimates that commercial
sell-off — having risen by nearly a third them from large exchange rate shifts — gains reflect rising nervousness about Boston-based GMO, is now semi-retired ‘This is unlike anything production of its batteries for electric
over the past week for both the dollar driving up the implied volatility the outcome, especially because many and works primarily in environmental cars is years away and compared the
else in my career. This was
and euro exchange rates. investors had expected an agreement to philanthropy. But seven years ago, his current Spac frenzy to some of the
“Volatility going higher makes sense be struck ahead of the EU summit personal foundation invested $12.5m in by accident the biggest wilder schemes launched in the 18th
as negotiations sit on a knife edge,” said tomorrow. QuantumScape, a Stanford University century South Sea Bubble.
investment I have made’
Ian Tew, a sterling trader at Barclays. “A deal could still come together in spinout, as part of a series of bets on Spacs have taken Wall Street by storm
The next few days will be critical, he the coming days if political interven- early-stage “green” technology. in 2020, generating lucrative returns for
added, with markets sensitive to head- tions are successful but it might take a Mr Grantham stressed that he is a big industries, the bet on QuantumScape is their backers as well as large fees for the
lines and set up for a “a decent-sized little more brinkmanship to make believer in QuantumScape. But he was on track to be one of the most lucrative underwriters and law firms that have
move for sterling”. compromises palatable on all sides — taken aback by his gains from investing investments of Mr Grantham’s six- helped usher them to market.
That marks a sharp turnround from something that is likely to keep in the company, which were super- decade career. More than 200 blank cheque compa-
last week when the pound hit its [sterling] markets on edge,” he said. charged since it announced in Septem- The combination with Kensington nies have listed so far this year, raising a
strongest level since May 2018 against Traders have also built up record ber that it would secure a slot on the Capital Acquisition Corp valued Quan- record $66.3bn, according to data
the dollar after weeks of growing positions in futures contracts to bet on New York Stock Exchange by merging tumScape at $3.3bn but the vehicle’s providerRefinitiv.
optimism that a deal could be struck. or hedge against moves in UK interest with a special purpose acquisition stock price more than doubled after the This September, United Wholesale
But a lack of progress over the week- rates as tension rises that Britain may company set up by Kensington Capital deal was announced on September 2 Mortgage agreed to go public by merg-
end and tough words from both sides leave the Brexit transition period Partners, a Canadian investment group. and spiked to a peak of $52.80 after the ing with a blank-cheque company in a
has sent the pound down about 0.7 per The pound last week hit its strongest without a trade deal. “This is unlike anything else in my merger was formally approved and transaction that valued United at $16bn:
cent in just two days to trade a bit above level against the dollar since 2018 Additional reporting by Philip Stafford career. This was by accident the single completed on November 30. the largest deal ever struck by a Spac.
DECEMBER 9 2020 Section:Markets Time: 8/12/2020 - 17:45 User: stephen.smith Page Name: MARKETS1, Part,Page,Edition: ASI, 10, 1