cityam 2011-06-22

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Join us at our next information session on 29 June 2011. For more

details call 020 7040 5258 or email [email protected]

Cass Masters“I’m not waiting for the upturn,

I’m making it happen.”

www.cass.city.ac.uk/skillup

www.cass.city.ac.uk/skillup

FTSE 100 ▲5,775.31 +81.92 DOW ▲12,190.01 +109.63 NASDAQ ▲2,687.26 +57.60 £/$ ▼1.62 -0.002 £/¤ ▲1.13 +0.004 ¤/$ ▲1.44 +0.01

JP Morgan

pays out onfraud probe

BANKING giant JP Morgan has agreedto pay $153.6m (£94.6m) to the US reg-ulators to resolve an investigation intothe selling of risky mortgages at theheight of the financial crisis, thoughit has not admitted liability.

The Securities and ExchangCommission (SEC), Wall Street’s watchdog, had filed civil fraudcharges against the bank for allegedly misleading investors who boughtmortgage securities it helped to sell.

The New York-based bank hadhelped to put together a collateraliseddebt obligation (CDO), a form of investment package, without inform-ing investors that a hedge fund hadhelped to select some of the mortgage- based assets backing the product.

The hedge fund, Magnetar Capital,had bet the assets would lose value.

Magnetar had helped to selectmortgages to be included in the CDO,marketed under the name Squared, whilst investors were told an inde-pendent firm, GSC Capital, had select-ed the securities.

The SEC also filed civil chargesaccusing Edward Steffelin, a formermanaging director at GSC Capital, forfailing to reveal in marketing materi-als for the transaction Magnetar’sinvolvement.

JP Morgan agreed to settle with theregulator, reimburse investors who

lost money and improve the way itapproves mortgage securities transac-tions. No executives at the bank have been charged in the probe.

BY RICHARD PARTINGTON

BANKING▲

George Osborne was speaking following a vist to Luxembourg to meet Eurozone leaders and ECB president Jean-Claude Trichet Pic:AP

THE chancellor, George Osborne, hasgiven the cabinet a deeply pessimistic briefing on the outlook for Greece, City A.M. has learned.

Osborne told senior colleagues,including the Prime Minister DavidCameron and foreign secretary William Hague, that the situation inthe stricken country was “very seri-ous” at a cabinet meeting yesterday morning.

City A.M. understands the chancelloroffered little hope that the Eurozone would be able to find a solution to the worsening crisis.

The chancellor’s comments come aday after Mark Hoban, the Treasury minister, refused to say whether thegovernment thought the euro wouldsurvive the sovereign debt crisis dur-ing a Commons debate.

Osborne reiterated that the UK gov-

ernment would not contribute to any kind of Eurozone-led bailout, althoughit could be forced to stump up its shareof any further loans from the IMF.

OSBORNE BLEAK ONGREECE PROSPECTS

BY DAVID CROWAND JULIET SAMUEL

EUROZONE▲

www.cityam.comIssue 1,408 Wednesday 22 June 2011 FREE

CITY A.M.AWARDS

SHORTLIST FOR

TRADER OF THE

YEAR P20

FOSTER’S SPURNS A BIDFROM SABMILLER

£6BN TAKEOVER REJECTED P4

BUSINESS WITH PERSONALITY

The chancellor’s downbeat outlook comes despite Greece being granted atemporary reprieve last night as PrimeMinister George Papandreou won aknife-edge no-confidence vote in par-liament, enabling Athens to pressahead with an austerity programmethat is a condition of its rescue funds.

Papandreou avoided a catastrophicdefeat on the back of his slim majority in parliament, with his ruling Socialistparty narrowly defeating the alliance

of far-left and centre-right parties by 155 votes to 143, with two abstentions.

The euro rose as high as $1.4435immediately following the vote, afterfalling earlier in the day.

But Greece’s political troubles arefar from over. Parliament will now spend the next week debating the €

28bn (£24.8bn) of additional budgetcuts that it must pass on 30 June inorder to qualify for its next €12bntranche of aid from the IMF and EU.

If it does not receive the aid, whichis part of the €110bn bailout it waspromised last year, the sovereign willgo bankrupt in July.

Markets saw a relief rally through-out the day on the expectation of a vic-tory for Papandreou, with the FTSE100 closing up 1.44 per cent, the

Eurostoxx 50 gaining two per cent, theDow rising 0.9 per cent.MORE ON EUROZONE: P3

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Euro rises after GreekPM George Papandreouwins key confidencevote late last night

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News2 CITYA.M. 22 JUNE 2011

Misys finallyadmits to bidMISYS surged almost nine per cent

yesterday after confirming it hasreceived a preliminary bid.

One analyst described the move asthe “end game” for the firm, whichhas been subject to takeover specula-tion for almost a year. The unnamedsuitor is thought to be a US-listedfinancial software firm, with MerrillLynch understood to be advising.

Financial terms were not disclosed but analysts say an offer could be between 450p to 500p a share, a pre-mium of up to 20 per cent on its clos-ing price of 419p yesterday, which

valued it at £860m.Misys, which competes with com-

panies including Temenos, Fidelity,Fiserv and SunGard, has seen itsshare price climb more than a third

since bid rumours began to circulate.Fiserv and Fidelity have both been

named as possible buyers, with someanalysts suggesting an unnamedIndian firm could also be interested.

In a statement Misys said: “The board confirms it has received a pre-liminary approach that may or may not lead to an offer being made.”

Misys has brought in BarclaysCapital as its adviser on the deal. Itsusual broker is Deutsche but a sourceclose to the company told City A.M. thefirm has worked with a number of

banks over the last 12 months.

BY STEVE DINNEEN

TECHNOLOGY▲

UK public finances still in sorry state

SLOWLY but surely, the government isregaining control over public spend-ing. Yet there is still a long way to go:the deficit, believe it or not, has actu-ally been higher so far this financial

year than it was during the same two-month period of 2010.

This deeply depressing fact shows just how detached from reality muchof the political and media debate has

become, where it is widely assumedthat massive cuts have already takenplace. But while it is true that spend-ing increases are gradually becomingless pronounced, austerity still

remains more of a goal than the actu-al reality in Britain today.

Central government current spend-ing in April-May, the first two monthsof the new financial year, was 4.1 per

cent higher in cash terms than duringthe same months of 2010. The officialinflation rate used for the public sec-tor is just 2.9 per cent (it is lower thanthe usual consumer or retail priceindices) so spending still grew in realterms by over one per cent. So muchfor the “massive, reckless cuts” thatare supposed to have taken place.

But there were also signs thatspending is finally being tightened inother areas: public sector net invest-ment during April and May 2011 wasfive per cent lower in cash terms thanin the same two months of 2010.Current spending grew by just 2.3 percent in May, though monthly figuresare even less meaningful that the two-monthly ones. So progress is beingmade at trying to ensure that Britainstarts living within its means onceagain, albeit too slowly.

Depressingly, public sector net bor-rowing (excluding financial interven-tions) was £27.4bn so far during2011-12, up substantially from £25.9bnin the same period last year. Two

months don’t make much of trend, of course, and borrowing in May alone was down £1.1bn on the previous year.It would be interesting, however, toknow what Ed Balls, the shadow chan-cellor, would be doing differently –

would he be increasing the nationaldebt that we will be bequeathing ourchildren and grand-children at aneven faster rate?

The reason why the deficitincreased was that spending rosefaster than tax revenues. Receipts in

April and May were just three per centhigher in cash terms than in the samemonths of 2010. If this were a fairreflection of the situation, Britain

would truly be in crisis. Fortunately for George Osborne, April 2010 figures

were flattered by £3.5bn worth of receipts from the temporary Bank Payroll Tax. Excluding these suggests

that underlying receipts grew by 7.8per cent in April and May 2011 com-pared to the same two months a yearago, a much healthier trend.

Yet the overall picture remains

grim. Even on the official measure, which excludes off-balance sheetitems, public sector net debt was£920.9bn (60.6 per cent of GDP) at theend of May 2011. This compares to£778.9bn (53.8 per cent of GDP) as atthe end of May 2010. Again, thisdemolishes the sloppy claim that isstill so often heard that the coalitionis “paying down the national debt”. Itisn’t.

So far this year, spending is still ris-ing, the deficit is increasing and thenational debt is soaring. The goodnews is that this miserable situation

will probably start to improve over thenext few months. But until we actual-ly see better numbers, it will remaintoo early to declare Britain back on thepath to fiscal sanity.

[email protected] Follow me on Twitter: @allisterheath

INSURANCE giant Aviva is close toselling the RAC, the roadside rescue

business it owns. Two private equity firms are in the

final stages of bidding for the compa-ny, Sky News reported last night.

Three buyout firms had put upfinal offers several days ago, includ-ing BC Partners, Carlyle Group andClayton Dubilier & Rice.

The sale of RAC, which is being

handled by JP Morgan, is expected tonet Aviva anywhere up to £900m.

The insurer bought the RAC in2005 for £1.1bn. Since then, it haspackaged off and sold parts of its

business, such as the BSM motoringschool and Auto Windscreens.

An announcement on the sale isexpected by the end of this week atthe earliest.

Aviva put the business up for saleearlier this year as part of a widerrestructure of the group. The firmdeclined to comment last night.

BYRICHARD PARTINGTON

M&A▲

Aviva nears RAC disposal

VINCE Cable has asked economist John Kay to review Britain’s stock mar-kets, as the business secretary steps uphis attack on corporate short termism.

Kay, formerly head of the Institutefor Fiscal Studies, will chair the equity market review, which reports in 2012.

As part of the review, Kay will look at how to get institutional investorsmore involved in the running of thecompanies in which they hold sharesin order to minimise “short-termism”.

Cable will use a speech to the Association of British Insurers latertoday to announce the review andKay’s appointment.

“The financial crisis has raised justi-fiable concerns about whether thereare systemic flaws in the way compa-nies are owned and managed in theUK,” he is expected to say.

Cable appointsKay to head upmarket review

Aviva chief Andrew Moss is close to selling off the RAC

FINANCIAL MARKETS▲

EDITOR’S LETTER

ALLISTER HEATH

7th Floor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowActing Night Editor Marion DakersBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alice HeppleCommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system of

self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the Editor’sCode of Practice, a copy of which can be found at www.pcc.org.uk

Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

Misys chief exec MikeLawrie has overseen amajor restructuring of the firm since takingthe reins in 2006

JUSTICE SHAMBLES ATTACKED BYLABOUR

The coalition’s strategy on criminal justice was said to be “in shambles” yesterday after the governmentscrapped its cost saving plans to halveprison sentences for offenders whoplead guilty. Ken Clarke, justice secre-tary, came under fire for creating a£130m hole in his departmental budg-et.

MADOFF’S YACHT IN THE MONACOSALESFor the great and the good of thehedge fund world gathered in Monacothis week, only one trade is worth dis-cussing: Bernard Madoff’s yacht.

The 90ft powerboat, “one of the fastestever built”, is being discreetly offered for sale for €3m (£2.7m) this

week at the Gaim conference, an

annual event for the European hedgefund industry.

DIRECTORS AT C&W WORLDWIDE SEEPAY CUT

Cable & Wireless Worldwide is cuttingthe pay packages for its top managersfollowing shareholder anger over thetelecoms group’s poor performanceduring its first year as an independentcompany. The basic pay and perks of

Jim Marsh, chief executive, rose 45 percent in 2010-11, while the group’sshare price fell 43 per cent in the sameperiod following two profit warnings.

TOP RBS STAFF GET £2.7M IN BONUSSHARESSeven of Royal Bank of Scotland’smost senior executives were grantedshares in the bank worth £2.7m aftera deffered part of an earlier bonusscheme was paid out. John Hourican,head of the investment banking divi-sion, was awarded the biggest pay-outof 2.4m shares for his performance in2009, a bumper year for his part of the

business. After tax he received 1.16m

shares, which he immediately sold forabout £450,000.

BIG SIX ESCAPE ENERGY REGULATOR The Big Six energy companies haveescaped a referral to the CompetitionCommission, Ofgem will confirmtoday. The decision comes in spite of Britain’s largest independent suppli-er warning that the regulator’s pro-posed reforms are unlikely to beeffective.

BA GIVES UP ON NEW RUNWAY ATHEATHROWBritish Airways has given up hope of a third runway being built atHeathrow and is looking instead forspace to expand in foreign cities, withMadrid at the top of its list of targets.Speaking at The Times CEO Summit

yesterday, Willie Walsh, chief execu-tive of BA’s parent company, conced-ed for the first time that theGovernment’s decision to cancel

expansion at Heathrow had killed theprospect of a new runway for good.

US TOBACCO INDUSTRY TO FIGHTGRAPHIC CANCER IMAGES ON PACKSCigarette packs sold in the US next

year will be required to carry imagesof a corpse and cancer-ridden lungs ina change that has triggered a legalprotest from the tobacco industry.Cigarette packs sold in the US next

year will be required to carry imagesof a corpse and cancer-ridden lungs ina change that has triggered a legalprotest from the tobacco industry.

BELGIUM LIFTS SECRECY ON FOREIGNBANK ACCOUNTSBelgian tax authorities are preparingto release the details of thousands of foreign-owned bank accounts, as partof a move to improve tax transparen-cy. Information about around 250,000savings accounts owned by foreigners

will be handed to governments

around the world in the next few weeks.

M&A BOSS LEAVES UBSIn the latest of a string of high-leveldepartures to hit Swiss banking giantUBS AG, its head of global mergersand acquisitions has defected to

become a partner at New York-based boutique Moelis & Co. Liam Beere, a19-year veteran at UBS, will joinMoelis in September, according to astatement from the boutique bank.

GEITHNER CONFIDENT US WILL AVOIDDEFAULT CRISIS

Treasury Secretary Timothy Geithner Tuesday said he is confident that theU.S. will avoid a default crisis thissummer as policy makers near agree-ment on a broad budget framework.“We’re going to have a bipartisan,comprehensive long-term deficitreduction framework. The questionis, what is going to be the shape of

that framework,” Mr. Geithner said at The Wall Street Journal CFO Forum.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/6/2019 Cityam 2011-06-22


FITCH has said that most of Europe’s banks do not have a large amount of direct exposure to Greece, holdingonly €37bn in the sovereign’s bonds.

“Banks should be able to absorb theimmediate credit, market and liquidi-ty risks with only minor, if any, nega-tive rating actions,” the agency said of the situation in Greece. But this couldchange due to “the risk of a disorderly contagion spiral”, it added.

“Most at risk would be wholesale‐funded banks with directexposure to peripheral Eurozone risk

and banks still in rehabilitationmode,” Fitch said.

BANKS’ use of emergency liquidity from the European Central Bank (ECB)shot to its highest level since February

yesterday, defying forecasts thatdemand for one-week loans from theBank would be the same as last week.

In a worrying reminder of thereliance Europe’s banks still have onthe ECB for their day-to-day funding,Eurozone banks borrowed €189bn ver-sus expectations of €135bn.

The banks’ rush for cash came asFitch warned that any rollover of Greek sovereign debt would send the coun-try’s banking system into defaultunless the ECB is bends its rules regard-ing the collateral it will accept inreturn for emergency funding.

“The most crucial immediate con-sideration for Fitch’s bank ratings

would be whether a mechanism would remain for ensuring that cen-tral bank liquidity continues to be pro-

vided to the Greek banks,” the agency said. It estimates that Greek bankshold some €45bn in Athens paper,equal to 160 per cent of their equity.

The ECB has warned policymakersnot to precipitate a “credit event” – a

default – by imposing losses on privateholders of Greek debt. This wouldmake it impossible for the Bank toaccept Athens’ paper as collateral, itsaid, which would freeze Greek banksout of the ECB’s emergency loans pro-gramme -- a situation that Fitch calls a“worst-case scenario”.

But City A.M. understands that theBank could instead decide to ignoreratings agencies. A source close to theECB told City A.M.: “When we accept col-lateral, we can always say we trust theGreek government and they are imple-menting a programme regardless of

what the ratings agencies are saying.”However, the source added that if an

agency were to downgrade Greece to adefault, the ECB’s governing council

would investigate the suitability of its bonds as collateral.

Euro banks

scramble forECB funding

THE European Commission (EC) ispressing ahead with plans to imposea Tobin tax on all financial transac-tions that pass through the EU,despite concerns that it would devas-tate the City.

EC president Jose Manuel Barrososaid yesterday that the 0.05 per centtax on “every type of financial trans-action” would “create appropriate

disincentives for overly risky or pure-

ly speculative transactions” and would also “address concerns aboutexcessive profits” in the financialsector.

He promised to present legislationto implement the tax, from whichthe EU hopes to raise €200bn(£177.5bn) for additional spending,at this week’s European Councilmeeting of the region’s leaders.

Sovereign states will have a vetoover the tax, but in practice it will be

difficult for the UK to veto the whole

raft of proposals the EC is hoping topush through, which include meas-ures to cede control over asylum pol-icy, giving the EU the right toapprove the UK budget and kickingoff a timetable for Croatia’s admis-sion to the EU.

UKIP said that the tax was beingproposed alongside a “tsunami of legislation”. The party’s leader, NigelFarage, warned: “David Cameronhad better have his wits about him.”

European Commission drawsup legislation for EU Tobin tax

SPAIN paid a slightly higher premiumto borrow €2.99bn (£2.65bn) over threeand six months at a debt sale yesterday as investors awaited clarity over a sec-ond Greek bailout.

The amount of treasury bills sold was at the higher end of the Spanishgovernment’s target range of €2.25- €3.25bn and attracted solid volumes of bids from investors.

Yields on the three-month paper jumped 18 basis points compared tothe last tender in May and on six-month paper they inched up a point.

The Spanish auction was beingclosely watched for signs of contagion.

Spanish yieldsrise in bond saleEU banks couldabsorb default

BY JULIET SAMUEL

EUROZONE▲

EUROZONE▲

EUROZONE▲

BY JULIET SAMUEL

TAX▲

Focus on Eurozone 3CITYA.M. 22 JUNE 2011

ANALYSIS l Use of ECB oneweek loan facilityby Eurozone banks

€bn

Jan Feb Mar Apr May Jun

250

150

50

Jose Manuel Barroso said the tax would discourage risky trades Picture: REUTERS

8/6/2019 Cityam 2011-06-22


FOSTER’S Group yesterday rejected a A$9.5bn (£6.2bn) cash takeover offerfrom global drinks giant SABMillersparking speculation that a bidding war will follow.

SABMiller, which makes Peroni,Grolsch and Miller Lite, has long beenseen as the favourite to take overFoster’s, but the Australian brewer isdigging in for a higher price.

The indications were thatSABMiller would “let the dust settle”after the offer to gauge the reaction

from Foster’s shareholders and themarket in general. The company isadamant that the offer is a realistic valuation of Foster’s, which sold off its wine business last month.

SABMiller chief executive Graham

Mackay said: “Through the applica-tion of our commercial capabilities we believe we can improve Foster’stop line growth and enhance its prof-itability.” Mexican brewing power-house Grupo Modelo had been tippedto be the first to table a bid forFoster’s.

BY JOHN DUNNE

CONSUMER▲

INTELLIGENT software company Autonomy yesterday announced ithad appointed Goldman Sachs as athird joint broker.

Goldman, which now has 11 FTSE100 broking clients, will work along-side existing brokers UBS and Citi.

The Goldman pitch was headed up by Phil Shelley, the former UBS bro-ker who was recruited in December

to help strengthen the bank’s broking business. Shelley knows the company well from his days at UBS.

By appointing a third broker, Autonomy joins the ranks of compa-nies such as Diageo, Tesco andBurberry, who also employ three broking houses to advise them.Earlier this year Burberry addedNomura to its team.

The traditional broking role is notnormally the most profitable forinvestment banks but it can lead to

other business and helps to createpotentially lucrative relationships with corporate clients.

Goldman has won a few other man-dates lately, such as Balfour Beatty and Arm, in a sign that it is takingthe broking side of the business evermore seriously.

JP Morgan is still the most success-ful bank in terms of brokerships, butmost of these were acquired whenthe group bought Cazenove, theCity’s blue-blooded stockbroker.

Goldman Sachs picks up abroking slot with AutonomyBYDAVID HELLIERADVISERS▲


DOES A RECORD LABEL LIKE EMI HAVE A FUTURE INA DIGITAL WORLD? Interviews by Phoebe Torrance and Cora Gardiner

“They do. I prefer to use CDs because they arewhat I am used to. I dislike the idea of down-loads because the idea of buying an actual CD

is far more appealing as it is physically avail-able to you; you can touch, hold and unwrapthe merchandise itself.”

MIKE MCGILL | LLOYDS

“It depends whether people want to go onlineor go to the shops. When the younger genera-tion has access to free music online, they can'tlose or damage the songs like CDs, which hasits own appeal. I think that makes it hard tosee a future in record labels like EMI.”

“Records labels do have a future, but notnecessarily in the form they are in now.They need to diversify and adapt. Theolder generation will always enjoy thenostalgia in CDs but the younger genera-tion will look online to access free music.”

PAUL SMITH | INCEPTA

GERARD KINSELLA | CITYNET

ANALYSIS l Sabmiller

p

28 Mar 18 Apr 9 May 20 Jun31 May

2,300

2,200

2,100

2,000

2,103.0021 Jun

Foster’s turnsdown £6bn

SABMiller bid

ASDA’S share of the UK grocery mar-ket fell from 16.7 per cent to 16.3 percent in the 12 weeks to 13 June,according to figures from Kantar Worldpanel.

The figures show that the Wal-

Mart-owned chain is now only mar-ginally ahead of Sainsbury’s, whichheld its share steady at 16.2 per cent.

Discount stores Aldi and Lidl bothheld their market shares at record lev-els of 3.4 per cent and 2.6 per cent

respectively.

Asda loses market share as Lidland Aldi shore up their positionRETAIL

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EDWARD Bonham Carter and othershareholders in Jupiter AssetManagement have sold more than 25per cent of their holding in the fundmanager through a share placement,netting a total of almost £63m.

The sale of 26.9m shares – equal to5.7 per cent of the company –came asa lock-in period on the stock expiredexactly a year after the company floated on the London Stock Exchange.

Fund managers Anthony Nutt andPhilip Gibbs divested the largeststakes, placing almost half of theoffered shares between them, to bank £18m and £12.7m respectively.

Chief executive Bonham Carter,

brother to actress Helena, sold just555,103 shares, netting £1.3m at theoffer price of £2.40 per share, butretaining a huge 14m shares – or 3.6per cent of the company.

Shares in Jupiter closed down 2.08per cent yesterday at 249.51p, havingfallen to 238.10p earlier in the day.

Jupiter team

nets £63m inshare placingBY ELIZABETH FOURNIER

FUND MANAGEMENT▲

News 7CITYA.M. 22 JUNE 2011

Jupiter is led by Edward Bonham Carter, brother of actress Helena Picture: REX

Sell-off provides a buying opportunity WHEN fund managers sell off shares in the firm they work for, ithardly inspires confidence. So it isunsurprising that shares in Jupitertumbled two per cent yesterday,after Edward Bonham Carter et al

sold stock representing 5.7 per centof Jupiter’s issued capital.However, Bonham Carter sold

just 550,000 shares – only 12 percent of the 4.6m he was allowed todivest under the rules of the lock-up put in place when the firmfloated last year. That suggests hethinks the shares could go higherstill, and we’re inclined to agree.

Assets under management of

£24.8bn were broadly in-line withanalyst estimates, as was first-half revenue guidance of £126.5m-£129m and an adjusted Ebitdarange of £69.5-£71.5m. Performancefees surpassed expectations, howev-

er, coming in at £4.5m against con-sensus of £1m or so.Most analysts trimmed their fore-

casts yesterday on the back of softermarkets. But Jupiter still has muchto recommend. Its margins arehigher than the sector average; it is

well exposed to the structuralgrowth in the UK def ined contribu-tion pensions market; it hasdemonstrated good organic

growth; and is not as reliant on per-formance as some.

For that reason, it likely deservesan enterprise value of 11.4 timesnet operating profit after tax – afive per cent premium to the sector.

Investors mightn’t like the signalthat is sent when directors andemployees cash in – but we think

yesterday’s sell-off is a buyingopportunity.

[email protected]

BOTTOMLINEAnalysis by David Crow

ANALYSIS l Jubiter

p


310

290

270

250

249.5121 Jun

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DUTCH insurer Aegon said yesterday it would target seven to 10 per centannual earnings growth and resumedividend payments, as it unveiled anew strategy after repaying Dutchstate aid.

Earlier this month, Aegon became

the first Dutch financial institutionto repay the state in full, repaying

the government €4.1bn (£3.6bn) toopen the way to a resumption in div-idends and the possibility to maketakeovers.

The company said it aimed to grow underlying earnings before tax by anannual seven to 10 per cent, on aver-age from 2010-15, and resume divi-dends this year. It plans to pay a 10cent dividend over the second half of

2011 in May 2012.“With the completion of repay-

ment to the Dutch State, we arefocusing our full attention to achiev-ing ambitious financial targets, con-sistent with our ambition to be aleader in all our chosen markets inthe coming years,” chief executive Alex Wynaendts said.

Aegon said it would target areturn on equity of 10-12 per cent by 2015 and increase fee businesses to

30-35 per cent of underlying earn-ings before tax by 2015.

Aegon sets targets and resumes dividends

EVERYTHING Everywhere, the joint venture between Orange and T-Mobile,

faced criticism from MPs yesterday over profit it stands to book on the saleof radio waves.

Orange, which acquired the spec-trum for free in 1991, must now offload it as part of its merger agree-

ment with Ofcom, with analysts esti-mating it is worth around £450m.

After taking into account licencefees, this would give the firm a profitof £290m. In a Department of Culture,

Media and Sport hearing yesterday Labour MP Tom Watson asked if it wasfair that the firm make a profit for itsstakeholders in France and Germany on the taxpayer-subsidised spectrum.

Everything Everywhere responded

by pointing out it has invested mil-lions in infrastructure in the UK andsaid it will re-invest the proceeds intothe rollout of a 4G network.

MPs believe the government must

set a coverage obligation to make surethe whole of the country can accessmobile internet. They said mobile broadband is a vital aspect of the roll-out of superfast internet to the wholeof the UK.

MPs hit out at OrangeBY STEVE DINNEEN

TELECOMS▲

FINANCIAL data provider Dealogic hassaid it intends to delist from London’salternative investment market (Aim).

The company, which offers researchand analysis to investment banks,plans to delist next month, subject toshareholder approval.

Management at the firm will hold ashareholder meeting on 7 July to seek approval for the plans, with delistingeffective from 19 July.

Directors at the firm want to delistas they believe its share price had notrisen in line with its financial per-formance, saying there had been lim-ited liquidity of its ordinary shares.

Over the past year, trading of thefirm’s ordinary shares occurred ononly 131 days out of a possible 252trading days, the firm said.

Dealogic also said its free float cur-rently comprised of less than ten percent of its total issued share capital.

Since the firm listed in May 2004 itsrevenues have increased from $59.1m(£36.4m) to $103.6m in 2010. Pre-taxprofits have increased by 100.7 percent since 2004 from $19.2m to$38.6m in 2010.

“The AIM listing does not, in itself,offer investors meaningful liquidity ormarketability of the ordinary sharesor the opportunity to trade in mean-ingful volume or with frequency,” thefirm said.

Dealogic todelist fromLondon AIM

CRUISE operator Carnival hasrevealed an 18 per cent slip in second-quarter earnings, as higher fuel priceshit a growth in revenue.

The world’s largest cruise operator, which owns the Cunard brand,reported a pre-tax profit of $206m(£127m) for the quarter ended 31 May,down from $252m a year earlier.

The profit equates to 26 cents pershare, above predicted earnings of between 20 cents and 24 cents thecompany made in March.

Revenues for the firm jumped 11per cent to $3.6bn, beating analystforecasts.

Carnival’s operating margin tight-ened to 7.7 per cent from 10.7 percent, after high fuel prices pushedcosts for the company about $150mhigher than a year earlier.

The company lowered its full-yearearnings estimate to between $2.40 to$2.60, compared to $2.47 per share a year earlier.

Carnival also said it had been hit by the earthquake and tsunami in Japan, as well as other geo-politicalevents.

“Revenue yield improvement wasmore than offset by higher fuel prices which cost the company approxi-mately $150 million, or $0.19 pershare,” said Carnival chairman andchief executive Micky Arison.

Carnival isknocked byfuel prices

Labour MP Tom Watson asked if Orange should make a profit from the spectrum sale


LEISURE▲

BYHARRY BANKS

INSURANCE▲


CAPITAL MARKETS▲

ANALYSIS l Dealogic

p330

310

290

270


310.0021 Jun

ANALYSIS l Carnival

p

8 Apr 28 Apr 7 Jun18 May

2,600

2,500

2,400

2,300

2,200

2,324.0021 Jun

JEFFERIES Group, a mid-sized USinvestment bank, posted a bigger-than-expected drop in quarterly earnings as rising costs outpaced arevenue increase.

Profit fell to $80.6m (£49.6m), or36 cents per share, in the secondquarter ended 31 May, from $83.8m,

or 41 cents per share, a year earlier. Analysts on average had expected

earnings of 39 cents per share.Net revenue rose 8.3 per cent to

$727.2m from $665.5m. Jefferies has been spendin

aggressively to build up its businessas new regulations make invest-ment banking more costly for its bigger rivals.

The bank added 140 employeesduring the quarter, resulting in a

4.5 per cent increase in staffingfrom the first quarter of 2011.

Jefferies profits disappointFINANCIAL SERVICES

▲

8/6/2019 Cityam 2011-06-22


FOR ONCE, Boris Johnson wasn’t thecentre of attention.

Instead, his brother Jo Johnson MPtook the spotlight at the Number 11Downing Street reception to launchReconnecting Britain and India, the

book of essays Johnson co-edited withthe Indian Chambers of Commercesecretary general Dr Rajiv Kumar.

Rachel Johnson, editor of The Lady, was also representing the Johnsonclan, while London Stock Exchangechief executive Xavier Rolet, DrissBen-Brahim, partner at Man GLGPartners, and Clifford Chance partnerSimon Gleeson were among those

who heard trade minister StephenGreen outline how the British govern-ment is determined to forge a “new special relationship” with New Delhi.

The point is no doubt elaborated on by Prime Minister David Cameron in

the “personal reflections” on the ties between the two countries he con-tributed to the book.

RUSSIA WITH GLOVESIT WAS billed as “one of the mostenthralling events of the corporateage”: a white-collar boxing match

between rival Moscow and Londontraders.

However, Mark Nicholls from ICAP, James McLaughlan from JP Morganand Sean Mooney from GoldmanSachs going several rounds with

Alexei Poliakov from SocGen Moscow, Anatoly Mishnov from LukOil and Alexander Matveev from RenaissanceCapital this Friday was obviously notenough of a draw, as the fundraisersold only 100 tickets and has beendownsized from the original venue of Kensington Town Hall to organiser

The Real Fight Club’s City gym nearLiverpool Street.

The first rule of fight club: givespectators sufficient advance warn-ing. Let’s hope this announcementpulls in the crowds for the resched-uled “big event” at Kensington TownHall on 25 November – although thefighters have yet to be confirmed…

FREEDOM FOR DAMESHE has already been made a Dame,

but yesterday the list of Judi Dench’shonours grew ever longer as shereceived the Freedom of the City at aceremony at the Guildhall for herservices to acting.

“I feel very honoured,” said the 76- year-old thespian as she accepted herframed parchment certificate in theChamberlain’s Court, adding that she

looks forward to “occasionally wear-ing a sword in public”.Dench was nominated by the clear-

ly starstruck Deputy William Fraserand Gerald Bodmer, a liveryman fromthe Worshipful Company of Feltmakers. Fraser gushed: “In anexceptional career spanning morethan 50 years, the breadth of Dame Judi’s roles has been aston-ishing: Queen Elizabeth I,Queen Victoria, Iris Murdoch,M o t h e rCourage,L a d y Bracknell,M in theB o n dfilms andher many Shakespeareanroles, includinga memorably chilling

Lady Macbeth.”

THE FLYING TRADER YOU’VE heard of the flying doctors,now meet flying trader Greg Secker,

who will attempt to make money outof thin air on Friday as he hovers10,000 feet above the City in a heli-copter while trading live on the for-eign exchange markets.

Trading from his laptop in the sky,every trade Secker makes will be post-ed live on the website of his training

business Knowledge for Action toallow the City’s traders to keep up.

See www.theflyingtrader.org to co-pilot Friday’s mission – over to yourconscience as to whether you joinSecker in donating all the brokeragecommissions generated by your firmon Friday to Barnardo’s and TheUbuntu Education Fund.

NEPTUNE TURNS NINE THE STAGE was set for the ninthanniversary of Neptune AssetManagement at the National Theatre,hosted by chief executive RobinGeffen with non-executive chairman

Jonathan Punter and directorsRichard Green, Robert Warner andPatrick Berton.

Neptune sponsors four productionsa year as the National Theatre’sCottesloe Partner, so the guests weregiven a behind-the-scenes tour, led by the NT’s chairman John Makinson,

before taking in the views over theSouth Bank from the theatre’srooftop venue The Deck.

The evening’s entertainment wasprovided by a skiffle band inspired by the NT’s current play One Man, TwoGuvnors and later by The Gandinis,

who gave a juggling performancefrom their “Glow” repertoire.

BORIS BROTHER PLOTSHIS PASSAGE TO INDIA

Getting high: Flying trader Greg Secker

Jo Johnson MP (far left), co-editor of Reconnecting Britain and India, with trade minister Stephen Green (centre) and book contributors

9

The CapitalistEDITED BY

HARRIET DENNYSGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

CITYA.M. 22 JUNE 2011

8/6/2019 Cityam 2011-06-22



VIRGIN Atlantic pilots voted infavour of a strike over pay yester-day, although union members saidno date for industrial action had

been set because they still hope anagreement can be reached.

“With no pay increase since2008, a below-inflation offer for2011 and proposals for 2012 and2013 that will be sub-inflation thisis now a six-year attack on livingstandards which has not happenedin any other UK airline. Pilots at

Virgin are saying ‘enough’,” pilots

union Balpasaid.

The state-ment added thatBalpa hoped SirRichard Branson( p i c t u r e d ) ,

whose VirginGroup owns am a j o r i t y stake in thea i r l i n e ,

would meetto resolvethe dispute.

B a l p asaid 97 per

cent voted for strike actionin the ballot and noted thatthere had been no UK pilotstrike for 32 years.

Virgin said it hadoffered pilots pay rises over the nexttwo and a half yearsand a share of com-pany profits.

“We believe thatonce Balpa commu-nicate this offer toour pilots, industri-al action will be

averted,” the airlinesaid.

BYHARRY BANKS

AVIATION▲

lNEWS FROM THE PARIS AIR SHOW

AIRBUS piled up orders for itsrevamped A320neo passenger jet atthe Paris Air Show yesterday, puttingmore pressure on Boeing.

European planemaker Airbusnotched up $14.4bn (£8.8bn) of orderson the first day, outselling US rivalBoeing’s $9.3bn.

Early yesterday its sales chief said ithad 544 commitments for its new

A320 aircraft, including a memoran-dum of understanding with leasingcompany CIT for 50.

Healthy demand from buyers atthe show has provided evidence thata solid upswing in civil aviation isunderway, powered by emerging mar-kets in Asia. The hike in oil prices this

year has also given buyers a new senseof urgency to get more fuel-efficientaircraft.

Airbus beatsrival BoeingBY CORAGARDINER

AVIATION▲

ROLLS-ROYCE WINS ETIHAD DEAL

ROLLS-ROYCE yesterday signed a $360m (£222m) agreement with

Etihad Airways, which will see the engineering giant provide long- term engine services and performance kits to the United Arab Emirates national carrier.

Pilots at Virgin votefor first ever strike

8/6/2019 Cityam 2011-06-22


8/6/2019 Cityam 2011-06-22


the market.City A.M. was given an exclusive

sneak preview of the TouchPad run-ning an early version of WebOS at theConsumer Electronics Show in Las

Vegas earlier this year and, while per-fectly useable, it is far from revolu-tionary and gives no compellingreason to choose HP’s offering overthe all-conquering iPad.

Last year Apple raked in an esti-mated $1.8bn (£1.1bn) throughits App Store, an 87 percent share of revenue,

while Google made$100m.

HEWLETT-PACKARDis fighting to per-suade more developers to jump on

board its app store as it prepares tolaunch its first tablet PC next month.

The world’s biggest computer man-ufacturer lags far behind market lead-ers Apple and Google in the boomingmarket. Its online store offers just7,000 apps, compared to more than500,000 on Apple’s App Store andalmost 300,000 on Google’s AndroidMarketplace.

Analysts say it is vital developersprovide apps if the upcoming

TouchPad is to have even theslimmest of chances of chipping mar-ket share from established rivals likethe iPad.

Many developers are wary of going to the expense of port-ing their products ontoHP’s WebOS platform

while it isunproven in


NOKIA boss Stephen Elop yesterday said he expects the first wave of

Windows Phone 7 (WP7) handsets to be released later this year, asrevealed by City A.M. earlier thismonth.

Elop said he has “increased confi-dence” that troubled Nokia willlaunch its first device based on theplatform by the end of 2011, afterditching its in-house Symbian oper-ating system.

He added the firm will begin sell-ing WP7 phones in bulk in 2012.

Industry insiders said the firstNokia WP7 handset – which they said will be fully touch-screen – will

be a “fantastic piece of hardware”.

The Finnishcompany is des-perate to gain afoothold in thelucrative smart-phone market,

where it has been rocked by intense compe-tition from thelikes of Apple,Samsung andHTC.

Nokia yes-t e r d a y launched itsN9 handsetrunning theMeeGo operating system it jointly developed with Intel. Analysts have

described the phone as an “orphan”

as it is unlikely to be joined by other MeeGo phones, andcould miss out on futureupdates.

The release will do little toreassure investors, who haveseen Nokia’s shares tumblesince announcing a shock sales and margin warningearlier this month, andadmitting it may not make aprofit this quarter.

To make matters worseNokia will this year besuperceded by Samsungas the world’s largestsmartphone man-u f a c t u r e r ,

with Apple also biting at its

heels.

Nokia boss confirms

2011 release of WP7BY STEVE DINNEN

TELECOMS▲

NEWS | IN BRIEF

Leighton takes over as Pace chairmanAllan Leighton has taken the role of non-executive chairman of set-top box maker Pace. His appointment was announced inMay. He takes over from Mike McTighe, who is step-ping down after a decade at Pace, with five yearsunder his belt as chairman. McTighe will con-tinue as a non-executive director until heretires at the end of August. Shares inPace crashed 39 per cent lastmonth after an unscheduledtrading statement warnedthat profits for theyear would beworse thanforecast.

HP urges developersto join its app store

NEWS |IN BRIEF

Halma sees boost to profitsBritish safety, health and sensor technology

group Halma has reported a rise in full-year pre-tax profit to £104.6m to 2 April compared with

£86.2m a year ago. Total revenues rose 13 per cent to£518.4m with strong organic growth in its health and analy-

sis division and in emerging markets. Revenue contribution fromoutside the UK, rest of Europe and the US was about 24 per cent,

compared with 21 per cent last year.

RPC Group beats expectations as Superfos buy lifts turnoverEurope's leading plastic-packaging supplier RPC Group announced their full-year

results, which where better than expected strengthened by the acquisition of its peerand cost cuts. The results for the year ended 31 March 2011 showed that sales increased

by £99.3m to £819.2m due to nine per cent growth on a like-for-like basis and the inclusion of £37.5m Superfos turnover after RPC acquired the packaging company last year. The company,

which bought Superfos in December, raised its final dividend by about 10 per cent, taking the totaldividend to 11.5p. Net profit improved by 94 per cent to a record £25.6m.

App Store (Apple)

500,000Android Marketplace (Google)

300,000Nokia Store

40,000

Windows Phone 7 (Microsoft)

18,000Blackberry App World (RIM)

8,500WebOS (HP)

7,000

Number of apps:

* estimated numberof Apps as of April

Most downloaded apps (paid for):

Android Marketplace (Google) Angry Birds Seasons

App Store (Apple)

Doodle Jump

Nokia Store

Angry BirdsWindows Phone 7 (Microsoft)

Doodle Jump

HOW DO THE APP STORES MEASURE UP?

BY STEVE DINNEEN

TECHNOLOGY▲

MI CR OSOF T is pr epar ing f or an all-out assault on the mobilephone mar k et ina desper at e bidt o reg ain g r ound cededtoGoog le.T he f ir m plans t o unveil a host of new handset s t o coincide w it h thenew ver sion of it s W indow s Phone 7(W P 7) platf or m – codenamed Mang o –slated f or r elease t his aut umn.

A mong t he line- up w ill be t he f ir st N ok ia handset dev eloped f or W P 7 f ol- low ing t he F innish f ir m’sdecision t o abandon it sS y mbian oper at ing s y s- t em to climb int o bedw it h Microsof t , led b y Stev e Ballmer (pic- t ured).

I ndustr y insidershav e descr ibedt he handset –

BY ST EV E DINNEEN

EXCLUSIV E

▲

8/6/2019 Cityam 2011-06-22


HENDERSON Global Investors hascompleted the purchase of theLeadenhall Triangle site for around£190m, the fund manager announced

yesterday. The Triangle, which encompasses

five sites in the City includingLeadenhall Street and FenchurchStreet, was sold following interestfrom 11 potential bidders.

The plot’s previous owners, who were clients of Investream, hired debt-servicing specialist Hatfield Philipslast summer, who in turn appointedPwC in November last year after£172m of debt secured on the assets

was not repaid. The sale followed a marketing

process including over 60 informationmemoranda issued to interested par-ties, resulting in 11 initial bids beingsubmitted, ranging from £145m to£183m.

Philip Byun, vice president, HPI saidthat achieving the full debt repay-ment “highlighted that London’sfinancial districts and West End retailproperty continue to defy the slumpthat affects most of the Europeancommercial property markets”.

Henderson could not confirm yes-terday whether plans drawn up by architects in 2006 to turn the triangle

into 1.25m square foot site for bankingheadquarters would still go ahead.

NEW plans for the redevelopment of Chelsea Barracks in central London

were given the go-ahead yesterday by Westminster council, two years afterthe Prince of Wales intervened overthe original plans for the site.

The outline of the masterplan forthe scheme, which will cost around£3bn, will see the 13-acre property that

used to house the Queen’s guard trans-formed to include up to 448 housesand flats, as well as a sports centre,retail and a health centre.

The approval comes two years afterthe site’s owners Qatari Diar withdrew

their plans following Prince Charles’objections to award-winning architectLord Rogers’ designs.

In a letter to the prime minister of Qatar last year, the Prince said that his“heart sank” when he saw Lord Rogers’plans.

The plans, revised by architectsDixon Jones, Squire and Partners andKim Wilkie, will now be referred toLondon Mayor Boris Johnson forapproval before more detailed designs

for the buildings are put before thecouncil.Sources familiar with plans said the

buildings will be less “futuristic”,reaching up to eight stories in heightcompared to 11 stories outlined in the

previous plan and will be joined by some five acres of new public squares.

The Grade II listed chapel on the site will also be maintained.

The development will also feature123 affordable homes, with £78m

being contributed to the council’saffordable housing fund.

“Chelsea Barracks is the most signif-icant residential development we haveseen in Westminster in recent years,said councillor Alastair Moss, chair-

man of Westminster Council’sPlanning and City DevelopmentCommittee. “It is a world class site, in ahistoric part of the capital and it is

vital that its re-development helpsimprove the area.”

BYKASMIRA JEFFORD

PROPERTY▲

NEWS | IN BRIEF

Product demand boosts Domino PrintingBritain's Domino Printing has seen a rise in profits on increaseddemand for its products. Domino, whose printers are used forstamping barcodes and expiry dates on foods and otherproducts, raised its interim dividend by 20 per cent.Pre-tax profit for the six months to 30 April was£28.2m in comparison to the £25.1m in the

same period one year ago. Additionally,revenue rose eight per cent to£156.4m. The gross margin forthe year was also improvedrising from 48.9 percent the previousyear to 49.8per cent.

LeadenhallTriangle salecompletedPROPERTY

▲

SHORT sellers are targeting global technology stocks, as traders bet on areturn to dot.com boom and bust.

The tech sector recorded the highest proportion of new stock loans out of allother sectors last week, according to research provider DataExplorers.

US technology software and services had short interest at 6.5 per cent of total shares atthe end of last week. The rise is well above the average US broad market Russell 3,000 index

where short interest hit 4.6 per cent. AOL, the US internet provider, has been subject to rising short interest over recent months.

Shares in the company have fallen in recent months, and short sellers increased their positions inMarch to reach a fresh high of 16.7 per cent of total shares.

The developments come on the back of several high-profile technology f loats in the US, including the listingof networking website LinkedIn, and in anticipation of the float of Facebook.

CITYA.M. 22 JUNE 2011 News

● May 1984At the 150th Anniversary of the RoyalInstitute of British Architects (RIBA), thePrince launches an unexpected attack onmodern design, calling a plan for theNational Gallery extension "a monstrouscarbuncle on the face of a much-lovedand elegant friend”.● December 1987At the Corporation of London Planningand Communication Committee's annualdinner at Mansion House, Prince Charles

criticises a scheme by Lord Rogers toredevelop Paternoster Square, whichleads to Rogers changing the design.● October 1988In his BBC documentary A Vision of Britain, the Prince criticised the buildingof Canary Wharf saying he would “gomad if I had to work in a place like that”.● July 1991Charles wins the battle over designs forthe extension of the National Gallery inTrafalgar Square with a postmodern

classical design by US architects RobertVenturi and Denise Scott Brown.● February 2008Prince Charles described designs for iron-clad Ivor Crewe Lecture Hall inColchester as looking "like a dustbin".The building went on to win a regionalawards from the RIBA.●April 2009The Prince’s kicks off a row over LordRogers’ by intervening with his design of Chelsea Barracks.

TIME LINE | PRINCE CHARLES’ DESIGN INTERVENTIONS

Shortsellers bet

on return of dot.com bubble

13


TECHNOLOGY▲

Chelsea Barracks£3bn plan approved

8/6/2019 Cityam 2011-06-22


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NEWS | IN BRIEF

Kier says trading is in lineSupport services group Kier hasannounced that trading remains in linewith forecasts. It insists that its orderbooks in services and constructionremain resilient with net cash balances

staying at healthy levels. Kier said it hassecured all its expected construction rev-enue for the year to 30 June and 86 percent of targeted revenue for the follow-ing year.

Creston makes progress on profitsCommunications firm Creston has posteda sufficiently higher than expected fullyear profit, raised its dividend and said itexpected revenue growth next year fromforeign markets and marketing services.

Like-for-like revenues rose seven percent, giving a pre-tax profit one per centahead of last year at £10.4m. The compa-ny said it would pay a final dividend of 2.25p per share.

China consumer confidence down as UK grows

IN recent months when we havelooked at the economic confi-dence figures from theBloomberg/YouGov Household

Economic Activity Tracker (HEAT) we

have seen that the Chinese consumeris buoyant whilst the UK one is gener-ally negative about the next 12months. The figures from May show that this position remains with a 68

point difference between the net con-fidence figures in the two countries(China +42, UK -26).

However that gap has narrowed ineach of the last four months withearly signs that confidence hasimproved slightly in the UK andcooled to some degree in China. InChina, confidence is now 12 points worse than it was in February (+42compared to +54) while in the UK it is10 points better (-26 compared to -36).

To a large extent this is reflected inpeople’s actual circumstances, i.e.how their financial situation haschanged in the last month. In Chinathis number fell from +27 in February

to +17 in May, whilst in the UK it rosefrom -35 in February to -23 in May.So in China we still have good num-

bers but getting worse, and in the UK it remains bad but it’s getting better.

One spot where concern in China isincreasing is with respect to inflationand this is impacting how people pur-chase. In February, UK and Chinaconsumers were nearly identical inreporting an increase of price-con-sciousness compared to the last

month (60 per cent in China said they were more price-conscious; 59 percent in the UK). Over the past threemonths, there has been divergence,as Chinese consumers become more

price conscious (66 per cent reportingincreased price consciousness versus

51 per cent in the UK). Worries about inflation continue

to make news in China and we areseeing those worries register at theconsumer level.

Stephan Shakespeare is chief executive of YouGov

BRANDINDEX

STEPHAN SHAKESPEAREANALYSIS l Change since last month

Feb Mar Apr May

40

30

20

10

-10

0

-20

-30

-40

China UK

ANALYSIS l Change expected in 12 months

Feb Mar Apr May

605040302010

-100

-20-30

-50-40

China UK

8/6/2019 Cityam 2011-06-22


8/6/2019 Cityam 2011-06-22


CAPITAL Pub Company yesterday reported a profit surge that could sendits price tag up as Fuller, Smith & Turner looks to buy the business.

Fuller made public a£54m bid last week butCapital’s chief execu-tive Clive Watson hassteadfastly refused toentertain the offer.

His bargaining handis now stronger giventhat in the year to March,Capital saw revenue at its34 pubs rise 24 per cent to£27m.

Profit jumped 48 per centto £4.1m, allowing the com-pany to pay a dividend of 2.25p, the first since 2008.

The company specialises

in revamping pubs and tapping intoLondon communities, particularly attracting young and well-off pubgo-ers.

Watson said: “We have a growthstrategy and want to continue doing

what we are doing. We are theonly remaining independentLondon pub company. Londondeserves a freehouse operator.”

Watson, who stood treceive £7m for his stock under the Fuller’s offer, saidthe company was on the huntfor more pubs to buy and isaiming to bring the total to

between 45 and 50.Cenkos Capital broker Ian

Berry said in a note: “Pubs repre-sents a unique potential acquisi-tion opportunity for a larger

business and in due course it will be acquired by a larger operator.”

He added that Fuller’s bid is“woefully inadequate”.

BY JOHN DUNNE

LEISURE▲

News16

VERSACE TO DESIGN FOR H&M

H&M yesterday announced that Versace would be its next guest designer. The Versaceline will hit some 300 H&M stores worldwide in November and “will look back on theheritage of the brand, full of leather, print, colour and exuberance in exclusive materi- als”. A further collection, also designed by Donatella Versace (above, centre left), will beavailable exclusively online from January 2012. Picture: H&M

Capital Pubsin profits lift

8/6/2019 Cityam 2011-06-22


STRONG turnover and new stores atCosta Coffee have helped Whitbreadraise its sales by 9.2 per cent.

Total sales at its coffee chain in thelast three months were 22.5 per centup on a year ago.

Costa was boosted by the opening of 73 new branches during the period, as well as new customers joining its loyal-ty scheme. Whitbread’s Premier Innchain also did well thanks to strongsales in London, with growth of eight

per cent.But trading at its restaurants, which

are based outside London, was hurt by “a more difficult casual dining mar-ket” chief exec Andy Harrison said.

Like-for-like sales at its restaurants, which ignore the effects of new restau-rant space, fell 1.4 per cent compared with a year ago.

The overall sales figures were largely in line with analysts’ forecasts.Business was “adversely affected by theextended Easter and Royal Wedding

holiday”, Harrison said.He attributed that to a drop in busi-

ness travellers due to extended holi-days and pub-goers only usingpremises with gardens in the May heatwave.

The FTSE 100 hotel and restaurantgroup plans to open another 300 CostaCoffee outlets over the next year, a 15per cent increase, and to add 4,000rooms to Premier Inn, which is a nineper cent increase.

Harrison said: “We are very pleased with the results especially in a toughtrading environment.”

Whitbread insales lift asCosta grows Chief executive Andy Harrison says London is fuelling a group sales jump

BY JOHN DUNNE

LEISURE▲


ANALYSIS l Whitbread

p1,750

1,650

1,550

1,4508 Apr 28 Apr 7 Jun18 May

1,587.0021 Jun

ANALYST VIEWS: IS WHITBREAD ON ASUSTAINABLE GROWTH TRAIL? Interviews by John Dunne

“

NIGEL PARSON | EVOLUTION SECURITIES

We are trimming our forecasts to reflect a more cautious view of theUK economy ex-London but the stock remains good value. Whitbread's strongvalue proposition remains relevant and the increasing roll-out will compensate formore muted like for like sales.

”

“

RICHARD HUNTER | HARGREAVES LANSDOWN

Total sales showed an impressive growth spurt, whilst within thisPremier Inn was the beneficiary of a promising London market. Whilst concernsremain around the intensity of competition in the markets in which it operates, thecompany seems well placed to deliver on its growth plans. Buy.

”

“

SIMON FRENCH | PANMURE GORDON

The commentary suggests the Premier Inn and Costa performancesare on a rising trend which should reassure the market. We will likely see abounce in the shares today but remain cautious on UK regional hotel revpar [rev-enue per available room] trends and reiterate our Hold recommendation.

”

THE capital is weathering the eco-nomic downturn much better thanmight have been expected with cof-fee bars, hotels and pubs bursting atthe seams, according to two chief executives yesterday.

Andy Harrison at Whitbread andClive Watson at Capital PubCompany, who both reported buoy-

ant sales, extolled the virtues of London as an oasis in a countrywhere the downturn has drainedsales and seen pub closures in theirdozens.

Harrison said his Premier Inns inthe capital had seen an eight per centsales rise, compared with a minor liftin other parts of the country.

The jump has been fuelled mainlyby business travellers who have comeflooding back since the global econo-my started on the road to recovery.

Costa has performed well acrossthe country but it is London wherecustomers have the disposableincome to splash out.

Similarly Watson at Capital Pubssaid there were no shortage of afflu-ent punters to fill his pubs on anygiven day of the week.

The company is planning an expan-sion on the strength of the spending

power in London, which evidently hasits own “micro econ-omy”.

LONDON | AN ECONOMIC OASIS

8/6/2019 Cityam 2011-06-22



CHANCELLOR George Osborne’sdeficit reduction plan is already run-ning off track, some economic ana-lysts said yesterday.

Government borrowing measured£17.4bn in May, down from the£18.5bn borrowed in May 2010 -- yetin the fiscal year to date (April andMay), borrowing was £1.5bn higherthan at the same time last year.

Central government spending was2.24 per cent higher in May this yearthan in May 2010 (in nominal termsand excluding capex), the Office forNational Statistics revealed.

“It’s early days yet but, at this rate, borrowing will overshoot the Officefor Budget Responsibility’s £122bn borrowing forecast by almost£30bn,” calculated Jonathan Loynesof Capital Economics.

“The government’s plans forreducing the deficit are now show-ing worrying signs of slippage,”added Mark Littlewood, head of theInstitute for Economic Affairs.

Public sector borrowing for thelast fiscal year, which came in suc-cessfully below target, was revisedup by £3.8bn, to £143.2bn.

In 2009-10, the deficit hit a high of £156.5bn.

“Spending in April and May was4.1 per cent higher than in the samemonths of 2010,” the Institute forFiscal Studies (IFS) revealed in a note.

This year’s budget, according tothe Office for BudgetResponsibility’s (OBR) forecasts,allows for a 3.6 per cent rise inspending, the IFS said.

The higher spending “is because of higher debt interest payments,” theOBR said yesterday.

Responding to the figures, theOBR continued to point to dentedtax receipts early in the financial year and a distorting effect from theone-off payroll tax on banks in April2010. The tax raised £3.5bn in April2010, “suppressing receipts growthin the early part of 2011-12,” it said.

Excluding the effects of the one-off bank tax, government receiptsare up 7.8 per cent this fiscal year,the IFS calculated -- above the OBR forecast for a 7.3 per cent rise.

Government debts reached£920.9bn in May, equivalent to 60.6per cent of GDP – up from £778.9bn(53.8 per cent of GDP) at the sametime in 2010.

SHARES of major Chinese lendersChina Construction Bank (CCB) and Agricultural Bank of China (AgBank)fell to multi-month lows yesterday,hit by potentially souring loans, aneconomic slowdown and tighter capi-tal requirements.

CCB printed a nine-month low of HK$6.43 (£0.50) in early trading,

down 2.7 per cent. AgBank was down3.8 per cent to a four-month low of

HK$3.84, versus the benchmark HangSeng Index’s 0.4 per cent rise.

“The risk of a hard landing for theChinese economy is increasing,” said Alexander Lee, a Hong Kong-basedanalyst at DBS Vickers. “The Japaneseearthquake, a slow US economy, theEurozone problems and a slowingChinese economy are all building up.”

CCB is China’s largest mortgagelender at a time when the govern-

ment is taking increasingly heavy-handed measures to cool real estate

prices, prompting Standard & Poor’sto lower its outlook on the country’sproperty sector to negative.

AgBank is the biggest lender torural causes and has the highest non-performing loan ratio and lowest cap-ital adequacy ratio among the bigfour lenders, raising worries that itmay need fresh capital if the govern-ment tightens capital requirements.

Further weighing on the two stocks

is the impending expiry of their cor-nerstone investors’ lock-up period

Big Chinese lenders see stocks drop onfears of capital requirement tightening

HIGH crude prices may derail growthin China and India, the two nationsthat have helped the global economy overcome the financial crisis, theInternational Energy Agency has said.

Prices for Brent crude have peakedat just above $127 (£78) a barrel so farthis year although it fell to around$111 yesterday as uncertainties abouthow Greece’s debt crisis could beresolved spurred risk aversion.

“Oil prices are still significantly

higher than average of 2008. High oil

prices are a significant risk to derail-ing the economic recovery not only inthe OECD countries, but also in Chinaand India,” the IEA’s chief economistFatih Birol said.

“China and India are two mostimportant economies which helpedus get out of the economic crisis. If they go for tightening of monetary policies, this may lead to a slowdownin their economies which is bad newsfor all of us.”

Emerging economy boomat risk from high oil values

WORLD ECONOMY▲

THE UK could still face a deflationary threat despite stubbornly high infla-tion, Bank of England rate-setter PaulFisher claimed yesterday.

“The economy could be much weaker than we expect, pushingdown on inflation and risking defla-tion,” Fisher told a gathering inLondon yesterday.

“Recovering to the target from thatcould be even harder,” he said.

Fisher also acknowledged anupside risk to inflation, which cur-rently stands at 4.5 per cent on theconsumer price index.

“Higher inflation expectationscould become entrenched making it very costly for the Bank to subse-quently bring inflation back to tar-

get,” he said. “There are very majorrisks to either side.”

The Bank has been correct to keeprates at their historic low of 0.5 percent for over two years, Fisher argued.

“I do not think I have heard many argue that we should have donesomething materially different withpolicy during the depths of the reces-sion,” Fisher said.

Deflation could still hit the UK, insistsdefiant Bank of England official Fisher

UK ECONOMY▲

CONSUMERS can expect price hikes

from UK factory products in the com-ing months, as manufacturers look topass on steep and rising costs.

Yet despite inflationary productsand weak domestic demand, theindustry is upbeat about its currentsituation, a survey from theConfederation for British Industry (CBI) revealed yesterday.

Nearly a third (31 per cent) of manu-facturers expect to raise output pricesover the next three months, it said.

“Inflationary pressures remainacute,” said CBI chief economist IanMcCafferty. “High commodity pricesand import costs mean firms still

expect to raise factory gate pricesmarkedly over the next three months.” A positive balance of 27 per cent of

manufacturers expect prices to rise,up from 24 per cent in May’s survey and well above the long-run average of a one per cent balance.

Overall business, measured by totalorder books, climbed out of negativeterritory for only the second time this year in the survey. A positive balance of one per cent reported “above normal”

orders, considerably higher than thelong-term average of -18 per cent.

The result were partly driven by strong exports, which recorded an

even balance, with 27 per cent sayingoverseas orders were above normaland 27 per cent reporting below nor-mal exports – a monthly improve-ment, and above the long-run averageof -21 per cent.

Expectations for the coming threemonths moderated slightly. “Much of this appears to be due to the tempo-rary supply chain disruptions follow-ing the tsunami in Japan,” McCafferty added.

UK factories set to hike pricesBY JULIAN HARRIS

UK ECONOMY▲

Planned cuts

to deficit yetto be realisedBY JULIAN HARRIS

UK ECONOMY▲

BYHARRY BANKS

BANKING▲

GOVERNMENT’S FISCAL WATCHDOG ANNOUNCES NEW OFFICIALS

FORMER Bank of England interest rate-setter Kate Barker and ex- Treasury official

Terry Burns were yesterdayannounced as thelatest recruits tothe government’sOffice for Budget Responsibility. Meanwhile, Michael Cohrs -- amember of the Bank’s interim Financial PolicyCommittee -- hasbeen appointed tothe Bank’s Court of Directors.

Pictures: REUTERS/PA

NEWS | IN BRIEF

German morale plummets in JuneA majority of German investors nowexpect its economy to slow over the nextsix months, with the Eurozone’s debt cri-sis is weighing heavily on sentiment. TheMannheim-based ZEW economic thinktank’s headline sentiment index hit itslowest since January 2009 in June,falling into negative territory for the firsttime since last October at -9 points com-pared to 3.1 in May.

American housing market slumpsSales of previously owned US homes fellto a six-month low in May and pricesdropped 4.6 per cent from a year ago,pointing to a housing market still strug-gling to regain its footing. The National

Association of Realtors said yesterdaythat sales slipped 3.8 per cent month-on-

month to an annual rate of 4.81m units,the lowest since November. It was thesecond straight month of declines. Thedrop was smaller than economists hadexpected, but the April sales figure wasrevised lower, leaving a report that waslargely in line with expectations in finan-cial markets. Sales were partly affectedby tornados and flooding.

Gold spikes due to Greek worriesGold rose for a third day yesterday, driv-en by a weaker dollar and uncertainty of the sovereign debt crisis in Greece.Bullion also got a lift from a return of investor risk appetite across-the-board,as the grains, commodity and equitymarkets all rose. The precious metal has

hit a high against sterling this week,printing over £954 an ounce.

8/6/2019 Cityam 2011-06-22


NewsCITYA.M. 22 JUNE 2011 19

UBSAntanas Petrosius has been appointed asdeputy chief executive for Russia and

CIS and head of investment banking forRussia and CIS, based in Moscow.Petrosius will join UBS on 1 August from

Credit Suisse, where he is chief executivefor Credit Suisse Kazakhstan.

British Polythene IndustriesThe polythene manufacturer hasappointed Ian Russell as an independent

non-executive director and as chairmanof the audit committee. Russell is cur-rently chairman of Johnston Press,Advance Power AG and Remploy.

Domino’s PizzaSyl Saller and Helen Keays will beappointed as non-executive directorsof Domino’s Pizza UK & Ireland witheffect from 20 September. Saller is

global innovation director for Diageo,and Keays is a consultant and a non-executive director of Majestic Wine.

EC HarrisThe built asset consultancy has hired

Nick Hayes as its new head of sus-tainability. Hayes joins from environ-ment specialist BRE, where he wasinternational director.

HSBC Private BankAdam Brownlee has been appointed as adirector on the high net worth team atHSBC Private Bank. He joins from CreditSuisse, where he was a vice president.

Aon HewittThe HR consulting business of AonCorporation has appointed JohnHarrison to its UK Investment team asa principal consultant. Harrison waspreviously UK chief investment officer

at UBS Global Asset Management.

Barclays CorporateJason Clinton has been appointed asbusiness development director in thenon-bank financial institutions team.Clinton joins from National AustraliaBank, where he has held the role of director, international payment solutions,Europe, for the past five years.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys

+44 (0)20 7092 0053morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

US stocks recoveron Greece hopes

US stocks posted gains for thefourth day yesterday on grow-ing hopes that Greece willavoid a debt default, adding

momentum to the market’s recentrebound.

The Nasdaq had its biggest per-centage gain since October, whilethe S&P 500 marked its best day intwo months in what investors believe could be continued short-term buying from deeply oversoldlevels.

The Nasdaq reclaimed positive ter-ritory for the year and led the mar-ket’s advance, boosted by a jump insemiconductor stocks. A semicon-ductor index shot up 2.5 per cent, its best gain since April.

Consensus grew that Greek primeminister George Papandreou’s cabi-net would survive a confidence voteafter the US market close. The confi-dence vote is seen as the first step inmoving closer to a resolution of Greece’s debt crisis.

It could pave the way for more aidand also remove a source of con-stant worry about global banks’

exposure to the euro zone’s debtproblems. The PHLX KBW Bank

Index gained 1.1 per cent aftertouching a 52-week high earlier inthe day.

“If you’re an investor, you don’t want this Greek debt crisis to touchoff another round of financial con-tagion around the world,” saidMichael Sheldon, chief marketstrategist of RDM Financial, in Westport, Connecticut.

Volume was lighter than normal,however, with just 6.69bn sharestraded on the New York, Nasdaq andNYSE Amex exchanges, compared

with a daily average of 7.58bn. The Dow Jones industrial averagerose 109.63 points, or 0.91 per cent,to 12,190.01 at the close. TheStandard & Poor’s 500 Index gained17.16 points, or 1.34 per cent, to1,295.52. The Nasdaq CompositeIndex climbed 57.60 points, or 2.19per cent, to 2,687.26.

The Nasdaq ended Tuesday’s ses-sion above its 50 and 200-day mov-ing averages, for the first time since31 May.

The Dow and the S&P 500 finishedlast week with gains after six weeksof declines. The Nasdaq, however,ended the week in the minus col-umn.

The S&P 500 is down five per centsince its 2 May high.

After nearing its 200-day movingaverage on Monday, the S&P 500rebounded solidly above the level.

Analysts saw 1,360 as the next tech-nical level on the upside.

BRITAIN’S leading sharespushed higher yesterday, led by rallying commodity stocksand banks as investors await-

ed a vote of confidence in the Greek Parliament.

The vote, due after the London

market close, is seen as a key steptowards the passage of more spend-ing cuts in exchange for foreignemergency loans.

“What equity markets need is a bit of good news or even some relief from the sheer dreariness of theEurozone’s sovereign debt crisis andGreece’s financial odyssey,” saidMike Lenhoff, market strategist atBrewin Dolphin.

“A vote of confidence for MrPapandreou and his governmentmight be the catalyst that helpsequity markets to regain their foot-ing,” he added.

At the close, the FTSE 100 index was up 81.92 points, or 1.4 per centat 5,775.31, recovering the previoussession’s losses, although trading was thin, at just 68 per cent of theaverage 90-day volume.

Energy issues were the top blue

chip sector gainers as crude pricesrose, with BG Group ahead 2.7 per

cent.BP added 3.7 per cent after

Weatherford, which provided equip-ment used in the Macondo oil well,agreed to pay $75m (£46m) towardthe cost of the Gulf of Mexico spill.

Miners also rebounded as metalprices ticked up, with Chilean cop-per miner Antofagasta ahead 5.1 percent and Fresnillo up 4.7 per cent.

Outside the top f light, gold minerPetropavlovskgained 7.6 per cent onthe back of strong production fig-ures.

Banks lent their strength to the blue chip index as well, withBarclays up 2.5 per cent, while glob-al heavyweight HSBC added 0.9 percent.

Whitbread was the top FTSE 100gainer, up 6.9 per cent afterBritain’s biggest hotel and coffeeshop operator said its London opera-tions had performed strongly inrecent weeks.

Cruises operator Carnival got a boost from better-than-expected sec-ond-quarter results, adding 6.0 percent.

Wolseley rose 4.3 per cent as INGupgraded its rating for the buildingsupplies firm to “buy”.

FTSE 250-listed software firmMisys rose almost nine per centafter it announced that it hadreceived a bid approach.

On the downside, brewer

SABMiller was the top blue chip fall-er, down 3.6 per cent after rival

Australian firm Foster’s Grouprejected its A$9.5bn cash takeoveroffer.

Defensively-perceived water bluechips were also weak, with UnitedUtilities down 0.8 per cent, asGoldman Sachs cut target pricesand estimates in a sector review.

“The rotation into defensives inEurope may have been a feature of last week ... We favour the non-cycli-cals until sovereign risk abates, themanufacturing data turns andChinese inflation peaks,” said strate-

gists at RBS in a note.Domestic macroeconomic news was mixed. British factory orders were stronger than expected in June, but Britain ran up a record budget deficit in the first twomonths of the fiscal year.

But US data was supportive, witha smaller than expected decline inMay existing home sales helping US blue chips add one per cent by London’s close.

FTSE gains after commodityrally and flurry of M&A bidsTHELONDONREPORT

THENEW YORKREPORT

BEST OF THE BROKERS To appear in Best of the Brokers email your research to [email protected]

ANALYSIS l Commerzbank

6.0

5.0

4.0

3.08 Apr 28 Apr 18 May 7 Jun

€3.174

21 Jun

COMMERZBANKDeutsche Bank reinitiates coverage of Germany’s second largest bank witha “buy” rating and a target price of €4.60, reflecting the group’s strongposition in core German banking products. The broker sees the main profitdriver in the next 18 months as the normalisation of loan losses and execu-tion on cost saving potential, after the bank completed its recapitalisationprogramme earlier this month.

ANALYSIS l Homeserve

540

520

500

480

460

440

8 Apr 28 Apr 18 May 7 Jun

p

522.0021 Jun

HOMESERVEUBS rates the emergency insurance cover and domestic repair providers as a“buy”, and increases its target price from 560p to 580p. The upgrade isbased on a recent visit to the group’s US operations in Miami and Connecticut,which the broker sees as having potential for UK-levels of penetration, cross-selling and retention. The broker adds three to five per cent to its earningsper share estimates for 2014-16 based on the US opportunity.

ANALYSIS l AXA

16.0

15.6

15.2

14.8

14.4

8 Apr 28 Apr 18 May 7 Jun

€

15.3821 Jun

AXAJP Morgan Cazenove rates the French financial protection group as “under-weight” with a target price of €16, and increases its earnings per shareestimate for 2011 by three per cent following a recent investor day. Thebroker sees sense in Axa’s focus on turning round its property and casualtybusiness, but thinks it will take some time before Axa can bring underwrit-ing profits to a more attractive level.

6,100

5,900

5,700

4 May 24 May 14 Jun8 Apr21 Mar

ANALYSIS l FTSE 100 5,775.3121 June

LinklatersThe law firm has appointed Michael Cutting asglobal head of competition and Sir ChristopherBellamy (pictured) as chairman of the practice,both effective from 1 July. Cutting, who has beena partner at the firm since 2005, specialises in

banking, energy and utilities competition law,and takes over from Gerwin Van Gerven, who isstepping down as global head of competition.Bellamy joined Linklaters as a senior consultantin 2007, and was previously president of the UKCompetition Appeal Tribunal.

8/6/2019 Cityam 2011-06-22


This hasn’t been the easiest of times for investment banks but

there are signs that deal activity,at least, is picking up to morenormal levels. We have chosen JP

Morgan because, as ever, it has shownitself to be strongly placed in most

markets. Bank of America MerrillLynch is something of a recovery story.It is fast moving on from the traumas

of the early days of its ownership by Bank of America. Barclays Capital is a

relative newcomer on the equitiesfront, while Evercore and the ever-green Goldman complete the list.

JP Morgan has had a bumper year forM&A, pulling off AT&T’s $39bnacquisition of T-Mobile USA, in partthrough a $20bn unsecured bridgeloan – the largest single one of itskind in the bank’s history.

The bank has also advised Sanofi

Aventis on its $7bn yankee bondissuance, one of the biggest pharmatransactions ever, and GDF Suez inits €300m bond sale.

And JP Morgan took a spot on theopposite side to Goldman on the$23.4bn merger of InternationalPower and GDF Suez. It also helpedFTSE 100 miner BHP Billiton in its$45bn capital-raising to fund its bidfor Potash Corp. The acquisition wasscuppered by protectionist Canadianauthorities, but it was nonethelessthe bank’s biggest financing jobsince 2008.

JP MORGANCAZENOVE

After a deceptively slow start tothe year, Goldman confounded itsrivals by keeping its place at thetop of the league tables for M&A services, advising on transactions worth $679bn globally.

It has taken on some of the

most complex deals and restruc-turing jobs in the industry includ-ing spin-offs by Fiat, Motorola and ArcelorMittal as well as Vodafone’s purchase of a 33 percent stake in Vodafone Essar andGDF Suez’s acquisition of a con-trolling stake in InternationalPower. The bank’s UK brokerages business is benefiting from recentchanges at the top, gaining FTSE100 tech giant Autonomy andFTSE 250 builder Balfour Beatty asclients in just the last week. Other wins seem likely.

GOLDMANSACHS

BARCLAYSCAPITAL

take a lot of the plaudits for this but

it has to be said that the bank, which is not a traditional brokingfirm but wants to become one, willalso be benefiting from the stronglending relationships it already has with clients.

Its client list includes Barclays,National Grid, Resolution and thenew British Airways owner IAG.

The bank has also been pickingup an increasing amount of UK transactions work, including lead-ing on the £900m IPO of JusticeHoldings, the largest blind pool vehicle ever listed. In 2010 the bank moved up from 14th to 2nd in theUK M&A table. The investment banking boutique

Evercore has had an eventful andsuccessful year.

Recently it paid £86m to buy theadvisory firm Lexicon and it raisedfunds by way of a $155m shareissue.

It has mandates on a number of high profile mergers and acquisi-tions deals, such as advising Nasdaqon its joint bid with ICE for controlof the NYSE and AT&T in its bid for T- Mobile US.

In the UK, stars such as Bernard Taylor have helped push theEuropean business forwards, advis-ing the Qataris on their investmentin Hochtief and Lafarge on its joint venture with Anglo American.

The bank is growing fast and has big ambitions, with some expectinganother acquisition soon.

EVERCORE

Deals in Bank of America/MerrillLynch’s European financial institu-tions group (FIG) have been comingthick and fast, with the bank win-ning mandates to advise on some of the region’s biggest capital-raisings,including rights issues for Deutsche

BANK OFAMERICA/

MERRILLLYNCH

Bank ( €10.2bn), Commerzbank ($6.1bn), Danske Bank ($3.8bn) andthe $3.3bn privatisation of Russia’sflagship investment bank VTB.

That’s in addition to non-FIGmega-deals such as book-running forGlencore’s float and a role advisingPorsche on its $7.2bn capital-raising.

The bank’s volume of deals and itsexpertise in new instruments likecontingent convertibles has made itthe go-to adviser for capital-raisingsand seen a boost in M&A mandatesas well, such as advising onSantander’s $5.4bn purchase of Bank Zachodni, National Bank of Greece’s $4bn acquisition of AlphaBank and VTB’s $3.5bn deal to buy the Bank of Moscow.

They are far less visible than theircounterparts in corporatefinance or in the capital mar-kets, but traders play a crucial

role in many organisations.

For this year’s selection we havechosen two traders for big banks, onehedge fund founder and one hedgefund trader. And then there’s a manfrom Glencore.

Don’t miss the City event of the year – book your table for the City A.M. Awards on 21 September 2011 atGrange St Paul’s Hotel, London EC4. www.CityAMAwards.com

GLG’s Steven Roth is the manresponsible for the GLG MarketNeutral Fund, which generatedreturns of 33.7 per cent last year. This year returns have been moremodest but are still said to bearound nine per cent.

Roth joined Man-owned GLG in2005 to co-manage the GLG MarketNeutral and GLG GlobalConvertible Funds. Earlier this yearhe wrote about a paper explaining why he is a convertible bonds fan.

He previously spent seven yearsat Deutsche Bank, where he was amanaging director and head of thenumber one ranked European convertible business. Away from thescreens, Roth enjoys wine tastingand collecting and watchingmovies. He also is reported to play a

mean game of table football.

STEVENROTHMAN GROUP

Alex Beard is Glencore’s globalhead of oil, whose stake in the firm became worth around £1.7bn whenit was f loated earlier this year.

He joined Glencore in 1995. He was appointed director of the oilcommodity department inFebruary 2007, overseeing all of Glencore’s crude oil and oil prod-ucts.

Now he runs the group’s oil trad-ing division from offices in Mayfair,and he is also a director of Chemoiland various other Glencore Groupcompanies.

Beard holds an MA degree in bio-chemistry from Oxford. BeforeGlencore, he worked for BP.

Beard is the top man forGlencore in the UK, and is already afully fledged member of the

Sunday Times rich list.

ALEX BEARDGLENCORE

Morgan Stanley’s Richard Evans is arising star in the electronic equity trading world.

He currently runs Delta-1 strate-gists, which is focused on creating

better toolkits to help manageMorgan Stanley’s execution busi-ness and ensure that the firm is

RICHARDEVANSMORGANSTANLEY

positioned appropriately for thefuture trading environment.

He joined Morgan Stanley inSeptember 2009 in a well reportedmove from Citigroup, where he wasresponsible for a range of electronicexecution services, including itsagency programme trading, trans-action cost analysis, market datamonetisation and the Lava e-trad-ing product lines.

Evans was also a founding boardmember of the investment bank-backed Turquoise tradingplatform from April 2007 toDecember 2008.

Outside work, Evans is a keen

runner who, having run threemarathons, has most recently turned his hand to triathlons.Michael Hintze, the Australian

founder of hedge fund CQS, isshort-listed this year mainly for hisdecision to donate £2m of his per-sonal wealth to the NationalGallery in January.

Hintze, who founded CQS in1999, is a regular giver to the arts,supporting institutions includingthe Old Vic, the V&A and Wandsworth Museum.

Hintze, who is also a donor tothe Conservative party, said at thetime of his gift: “We have alwayssought to give back to those institu-tions that have enriched and givenso much to our lives.” He was for-merly head of equity trading atGoldman.

CQS took a massive short posi-tion on Bradford & Bingley at the

time of the financial crisis.

MICHAELHINTZECQS

At the age of 29, David Hitchens was made one of the youngest evermanaging directors when he became global head of FX deriva-tives trading at Bank of America.

Since then he has successfully

managed the FX options businesses

DAVIDHITCHENSUNICREDIT

at Calyon, TD Securities and latterly Unicredit, Italy’s biggest bank, where he is managing directorand global head of vanilla forextrading.

Now 36, Hitchens has been one of the foremost FX options traders inrecent years demonstrating consis-tent success.

Following the credit crisis, he has been quick to respond to changingmarket conditions, leading TD to bethe first bank to stream live optionsprices into the CME, the world’s biggest derivatives exchange.

Hitchens has also been highly involved in the application of artifi-cial intelligence to the algorithmic

trading of both FX spot and options.

OF THE YEAR | The Shortlist day 3INVESTMENT BANK

Sponsored byOF THE YEAR |TRADER


Headline sponsor

Sponsored by

Since hiring Jim Renwick as head of UK equity capital markets and cor-porate broking in April 2009,Barclays Capital has won 14 clientsfrom a standing start, which is why it makes it into our list this year.

Renwick, formerly of UBS, must

8/6/2019 Cityam 2011-06-22


Counting the cost of business travel

Picture: REX

I T’S fair to say that climate changeissues have stormed into the main-stream of political debate over the pastcouple of decades.

David Cameron’s 2006 trip with thehuskies and the consequent “vote blue, gogreen” strapline wouldn’t have been possi-

ble without the change in perception of green issues; “climate change” got a wholeUK government department to look after itin 2008.

Despite finally being taken seriously by politicians, climate change today sharesone major problem with climate change

yesterday: a concerted and effective interna-tional political response is missing.

Individual countries may take positivesteps, but in a globalised world, these areundermined by the inaction of others.

One of the few concrete steps on climatechange taken by politicians on the interna-tional stage, the 1997 Kyoto Protocol,expires next year and attempts to renew ithave, despite the pre-event hype, alwaysended in failure.

This has left a rather large policy vacuumat the centre of the sustainability agenda; a

vacuum that business can fill.

FILLING THE VACUUMBusiness and sustainability goals are usual-ly presented as mutually exclusive, but thisneedn’t be the case. Business is in a greatposition to drive forward the sustainability agenda and benefit their bottom line at thesame time.

Discussion of how businesses can benefitfrom embracing sustainable business prac-tices doesn’t often stray beyond reputation-al benefits, but this often riskssustainability becoming a PR add-on for

businesses.Businesses that genuinely embrace sus-

tainability can find efficiency savings, man-age risk, and identify new opportunities forgrowth.

Finding these advantages isn’t easy: ittakes good information and innovative crit-ical analysis. Above all, it takes measure-ment.

Without measurement, management of something is impossible. Businessesaccount for their financial inputs and out-puts for a reason, after all.

There’s been plenty of work over the pastdecade or so to develop credible method-ologies to help businesses measure theirgreenhouse gas (GHG) emissions. However,most of this work has focused on the most

obvious kind of emissions: Scope-1 andScope-2 emissions.

Briefly, Scope-1 GHG emissions are thosedirectly caused by a business; Scope-2 emis-sions result from the generation of pur-chased electricity.

What don’t really receive attention areScope-3 emissions.

MEASURING EVERYTHING

Scope-3 is everything else. Business travel;distribution and logistics; waste disposal.Even the use of a business’s products andthe impact of the whole supply chaincounts. Unsurprisingly, Scope-3 emissionsmake up the vast bulk of business emis-sions, perhaps up to 75 per cent.

It’s from measuring Scope-3 that busi-nesses can find the information needed tounderstand climate-related risks andopportunities upstream and downstreamfrom operations, beyond operational

boundaries and in the products and servic-es developed and sold. It’s from measuringScope-3 that businesses can gain an edgeover their competitors.

Scope-3 reporting lifts the bonnet on businesses to show business leaders how their company works in a way they havenever seen it before. It reveals previously unseen trends amongst inputs and outputsthat can challenge assumptions and affectstrategic decision-making.

Measuring Scope-3 can result in deci-sions to develop new products rather than

adapt old ones; it can highlight where busi-nesses use inefficient and unsustainableresources; it can result in new criteria forevaluating supply chain performance.

In short, measuring Scope-3 can result inchange. It can challenge companies to look at what they’re doing, not just how they’redoing it.

In 2009, 409 (82 per cent) Global 500companies responded to the CarbonDisclosure Project’s request for GHG emis-sion information. Just over half of thisgroup reported any Scope-3 emissions (209;42 per cent). Only six companies reportedon all five classes of Scope-3 emissions.

This lack of engagement is understand-able. For one thing, none of the regulatory or voluntary reporting programmesrequire Scope-3 reporting. Besides, measur-ing Scope-3 can be tricky. There’s the risk of double-counting, there are questions about

what exactly to measure, and how to meas-ure it.

WHO DOES WHATBusinesses respond to these challenges inthree broad ways. There’s the “control”approach, where businesses focus on emis-sions that they can control. In other words,they ignore Scope-3.

There are businesses that adopt an

“influence” approach, an approach in which a business recognises the impor-

tance of Scope-3 and uses its influence tochange Scope-3 upstream.

Then there’s the “engaged” approach, where businesses identify opportunitiesfor innovation downstream as well asupstream. This kind of business looks notonly at how they make their products, buthow they are used and disposed of too.

Among businesses that report Scope-3,German chemical giant Bayer is one of theleading proponents of this approach.

MUTUAL EXCLUSIVITYSustainability and business are not mutu-ally exclusive. Businesses face as many risksfrom climate change and unsustainablepractices as the rest of us, perhaps evenmore so.

Climate change and other sustainability issues will impact the very foundations of

businesses: availability of inputs; marketstability; reputation; efficiency; and cus-tomer and investor demand.

A better understanding of the risks andopportunities associated with GHG emis-sions would benefit business by enablingthe development of strategies that can cre-ate value for organisations and their stake-holders.

In the absence of global political leader-ship, businesses have the opportunity to

shape the sustainability agenda before itshapes them.

Counting up the fullpollution impact of afirm can also help itgenerate innovationand reduce its costs

ANDREW LECKHEAD OF ACCA UK

Keeping track of your company’s total

emissions makes sense on every level

CITYA.M. 22 JUNE 2011 21

City Focus | Accounting

8/6/2019 Cityam 2011-06-22


Wealth Management | Foreign Exchange22

There isn’t an

alternative toGreek defaultEvents in the Eurozone are moving fastfor forex traders, writes Philip Salter

GREECE is in a dire state. Whilepeople protest in the streets,

bond yields consistently pointtowards expectations of a

default. Things are going to be bad, but if the key actors continue to deny the inevitable, the tragedy will play out even worse. As such, forex tradersneed to keep on their toes.

SEEING THE WOOD FOR THE TREES The former Federal Reserve chief AlanGreenspan has gone on record as say-ing of Greece that the risks of defaultare “so high you almost have to say there’s no way out.” Rishi Patel of FairFX concurs: “Interest rates demanded

by investors are so high it makes itimpossible for Greece to fund itself through the bond market.” He arguesthat the structural deficit remainsunchallenged: “Greece has already

burned its way through one bailout,if it is offered the same again it willdo the same.” Former foreign secre-tary Jack Straw MP believes “the euro,in its current form, is going to col-lapse.”

Throughout Europe and across thepolitical spectrum, people are losingfaith in a Greek renaissance. On

bailouts, Conservative MP JohnRedwood has noted: “We could easily lose substantial sums through thisactivity. The IMF has been lending toeuro countries at a little over 5 percent when the market says they should be paying twice that.” His sec-ond concern is one of timing: “TheUK government is rightly fighting the

battle of the bulge on its own borrow-

ing habits. Having to borrow more tolend to ailing Euroland economiesthrough the IMF is not helpful to theUK programme of debt and risk

reduction in the national accounts.”

THE EUROPEAN DISEASEIan O’Sullivan of Spread Co comparesthe Greek debt crisis to the Asianfinancial crisis of 1997/8, which sweptacross the global economy: “Thisstarted in Thailand, a small country too, but when that collapsedinvestors fled from the surrounding

vulnerable economies. In the fallout,most of South East Asia and Japansaw their currencies fall, stock mar-kets tank and asset prices fall acrossthe region.” He thinks this is “some-thing that could well happen inEurope.”

Yet, the can can’t be kicked downthe road forever. Bill Bonner in his lat-est Daily Reckoning thinks “the prob-lem could be solved by letting a few

banks and speculators go broke. It would teach the rest of them a lesson.Most likely, Europe could get back to

work soon after.” But for better or worse, the authorities aren’t going tolet banks go bust any time soon – amanaged default would be the bestpolitically feasible option. MichaelHewson of CMC Markets suggestsrather than throwing good money after bad, Europe should opt for acontrolled default, by recapitalisingexposed banks. Even this might fail.Capital Economics notes: “There isstill considerable uncertainty aboutthe ripple effects throughout the

global financial system.” Adding “aGreek default would crystallise anddeepen the worries about the direstate of the public finances in many countries.”

NIMBLE TRADERSO’Sullivan warns that traders willneed “to stay nimble.” He argues in aGreek default “the fallout could beswift and brutal.” As such, he thinks“euro-dollar will swing wildly and willalmost certainly be hit hard. Just how hard will depend on the results in the

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AFTER GREECE,THE EURO WILL

LOOK TO DATABORIS SCHLOSSBERGDIRECTOR OF CURRENCY RESEARCH, GFT

CURRENCY markets were in a state of sus-pended animation, awaiting the Greek no con-fidence vote. But the verdict of the parliamentin Athens wasn’t surprising. Prime Minister

Papandreou was never likely to lose, despite the factthat he had a majority of just five in the parliamentof 300. The stakes were simply too large. If thePapandreou government fell, the ensuing chaoscould easily have sent the euro below the $1.4000figure, as the prospect of a Greek default suddenlybecame quite real.

Even with the Papandreou government’s sur-vival, and the austerity measures passed by theGreek parliament, the credit crisis will face addi-tional challenges. The German Banking Federation

is now demanding better incentives before itsmembers are asked to extend repayments on theirexisting Greek debt. The situation is complicatedfurther by the rating agencies who may not acqui-esce to a rollover of Greek debt. Fitch Ratingswarned it would treat a voluntary rollover of Greece’s sovereign bonds in any rescue package asa default and would cut the credit rating accord-ingly.

Nevertheless, now the Greeks have been able tostave off immediate crisis, the focus in the euro-dollar will turn to economic rather than politicalnews. As the week proceeds, the market will get aglimpse of the flash PMI data on Thursday and theIFO survey on Friday. Given the disappointingresults from Tuesday’s ZEW report, which showedthe first negative reading since October 2010, Ibelieve there is a strong chance that the latest eco-nomic data from the Eurozone could miss to thedownside. Despite the turmoil in the periphery,euro-dollar has held up remarkably well over thepast month on the assumption that growth in thecore economies will lead to further tightening bythe European Central Bank, but that thesis will besorely tested if this week’s reports show a signifi-cant deceleration in economic activity. That’s whyeven if euro-dollar rallies in post-vote euphoria, itsgains may be capped at the $1.4500 level.

Word on thestreet is thatthe Greek economy is deadand buried

Picture: A

8/6/2019 Cityam 2011-06-22


23

days and weeks that follow.” Patel believes many questions are going to be asked about the effect of the cur-rent uncertainty on the other periph-ery nations. He says: “In January wesaw the euro at $1.29. Given the cur-rent turmoil in the Eurozone, thatlevel may not be as far away as thecharts display.”

THE TRAGEDYGreek civilisation arguably peaked in Athens during the fifth century BC. Then the wealthy subsidised the

entertainments of the people, includ-ing theatre. There are few wealthy enough in Athens today to pay forsuch diversions. Unlike modernentertainment in which blood andguts are strewn across screen andstage, the Ancient Greeks confinedtheir violence to the imagination –the chorus at the front of the stagedescribed the deaths. In this moderntragedy, even though the key actorsare ignoring the chorus of the mar-ket – the sound of the death knellrings clear.

with extreme caution. It might be best towait to see if it reaches ¥128.0 before buy-ing. Spread Co offers sterling-yen at¥129.69-¥129.77.So long as there’s call for a safe haven infinancial markets, the Swiss franc is unlike-ly to be short of supporters. The greenback

has lost around 30 per cent of its valueagainst the Swissie over the last 12months. With ongoing uncertainty overeconomies on both sides of the Atlantic,there’s little reason to believe this trend willcome to an end any time soon. Current IGIndex price on dollar-Swiss franc isSFr0.8433-SFr0.8435.With the FOMC meeting today, and aBernanke press conference later, the USdollar could be set for a bounce, especiallyif the chairman signals that no further QE

is forthcoming. This could well provoke abounce in dollar-yen, which is trading justoff one month lows. CMC Markets spreadon dollar-yen is ¥80.165-¥80.174.Mixed Chinese macro data has been hittingthe wires – weaker credit growth butstronger industrial production is being off-

set by a positive Japanese recovery sincethe tsunami. Japan’s industrial productionreport released last week revealed thatmanufacturers are forecasting a huge 8per cent increase in production during bothMay and June. If the actual economy fol-lows these forecasts, the level of industrialproduction would exceed the average of Jan and Feb 2011 (pre-tsunami) by June.On euro-yen, Alpari offers a spread of ¥114.90-¥114.92.

Craig Drake

STERLING-yen continues to comeunder pressure as it hit a low yester-day not seen since the earthquakerelated slide in mid-March of

¥129.73. Heavy pressure on dollar-yen anda similarly weak cable helped to push itlower. It looks intent on testing the supportareas around ¥129.15-¥128.70, so anyonetempted to buy this pair should approach

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CAXTON FXRICHARDDRIVERThere is little push-ing the Fed to tight-en policy. The US isnot suffering fromthe same price pres-sures as other

economies and labour market improvementremains the Fed’s number one concern.Moreover, there have emerged serious ques-tion marks over the US economic outlookamid a raft of awful growth figures. The Fedand Bank of England policy outlooks are verysimilar; tighter policy can only be consideredwhen sustained growth emerges. The threat

of a double-dip recession in both economiesremains realistic, and premature tighteningcould be the tipping point.Accordingly, we are probably looking at themiddle of next year for a Fed rate hike.Bernanke looks highly likely to maintain his“extended period” rhetoric with regard to theFed’s current ultra-loose monetary policy.However, a third round of quantitative easingwould probably only be resorted to if the USdid fall back into negative growth. Bernankeis likely to stress the recent weakness of USgrowth and in the absence of any hints tofuture tightening, the US dollar looks likely tocome under a little pressure. The dollar willremain weak for many months to come, buthopes for hawkish Fed rhetoric are so sparsethat we are unlikely to see the greenback suf-fer any major losses for today at least.

IG INDEXCHRISTOPHERBEAUCHAMPBen Bernanke doeshis “Meet the Press”act for the secondtime today, when hewill take questionson the Fed’s view of the state of the USeconomy. As itstands, the Fed is

stuck between a rock and a hard place;the US economy is not yet strong enoughto withstand tighter policy, nor is it weakenough for QE3. The most likely course of action is for the Fed to refrain from any

changes to policy, preferring instead tosee how the current “soft patch” in theUS economy plays out.A decision to stand fast would most likelyresult in a rally for the US dollar, due todiminished expectations of more moneyprinting, although this could rapidly peterout as investors realise rate hikes are stillsome way off.Continued loose policy will give a lift toboth equities and commodities, but per-haps the longer term driver remains thecrisis in Europe. If people continue toshift back to US Treasuries as a safehaven, the US dollar could make gainsregardless of the Federal debt ceilingproblem that looms on the horizon, andthis could contribute to further losses forstocks.

CHARLESSCHWABLIZ ANNSONDERS

We believe mone-tary policy is large-ly on hold for thenear to medium-

term. It’s unlikely the Fed will begin to let itsbalance sheet shrink; as such, “QE 2.5” – rein-vesting proceeds from maturing Treasuries tomaintain the level of its balance sheet –would be considered a go once QE2 ends thismonth. Given the US and global economy’ssoft patch, expectations for the first actualrate hike by the Fed have been pushed to

mid-2012. It may be premature to set targetdates for the first hike because the Fed istruly data-dependent and driven by their dualmandate. In other words, if employmentgrowth were to improve meaningfully andinflation expectations were to pick up uncom-fortably, the Fed might be moved to at leasthint about rate hikes sooner than what isbuilt into expectations.As for whether QE3 is on the table, Fed chair-man Bernanke has already said explicitly thatthe bar is very high.In our minds that bar would only be hit if deflation risk increased markedly from hereand the unemployment rate were to movemeaningfully higher from here. In otherwords, both of their mandates would likelyhave to be breached for the Fed to considerQE3 a necessary remedy.

GFT FOREX

KATHY LIEN

With US economicdata still very weak,the Federal Reservewill have no choicebut to keep mone-tary policy easy.The idea of anotherround of quantita-

tive easing (QE3) has been floated, but the dete-rioration in US data has not been severe andconsistent enough to warrant such a nuclearoption. QE2 received a significant amount of opposition both inside and outside of the FederalReserve and QE3 would make Bernanke evenmore politically unpopular. The Fed has decided

to go with their initial game plan of ending assetpurchases but keeping the size of the balancesheet unchanged going forward by reinvestingprincipal payments. The more interesting ques-tion to consider is what could happen to the dol-lar once QE2 is completed at the end of thismonth. To answer this question, we can examinehow the dollar behaved when the first round of quantitative easing ended around April 2010.The dollar index rose 10 percent between Apriland mid June but over the next few months, ittrended lower as investors considered the possi-bility of QE2. We saw a similar reaction in euro-dollar, which fell from $1.33 down below $1.20.Since more stimulus is not a serious possibilitythis time around, the end of QE2 this monthcould spark a dollar rally based on the prospectof higher yields along with less concerns aboutinflation or currency debasement.

Looking into the Fed’s crystal ball

FOREX ANALYST PICKS

FOREX STRATEGISTILYA SPIVAK

My pick: Short euro-dollarExpertise: Global macroAverage time frame of trades: 1 week to 6 months

FOREX STRATEGISTDAVID RODRIGUEZ

My pick: Long dollar-Canadian dollarExpertise: System tradingAverage time frame of trades: 2 days to 10 weeks

The dollar remains in a fairly steady short-term uptrend against theCanadian dollar, and I think it will continue to recover off of multi-year

lows. Our proprietary FXCM Speculative Sentiment Index data showedretail trading crowds remained heavily net-long dollar-Canadian dollarfrom September 2010 through mid-May 2011. The fact that crowdsare now net-short underlines the sentiment shift and gives contrariansa consistent signal that the pair could continue higher.

The euro is bouncing higher as a lack of new bad news on the Greek debtcrisis front allows for a relief rally. Indeed, bears are likely to at leastwait for the outcome of the EU leaders’ summit on Thursday to resumeselling in earnest. However, the situation itself has not improved, withthe chance of a default as priced into CDS rates actually up from lastweek (81 per cent). I will look for short entry opportunities below the$1.46 figure in the days ahead.

FOREX STRATEGISTJOHN KICKLIGHTER

My pick: Long sterling-Swissie, short Kiwi-dollar and Swissie-yenExpertise: Fundamental analysis with risk managementAverage time frame of trades: 1 day to 1 week

Last week’s short euro-dollar setup with a $1.4300 breakout workedout well; but without a $1.4000 break the trend dried up. I’ll keep aneye on this benchmark pair; but in the meantime, both my short Kiwidollar-dollar and Swiss franc-yen positions are in play (the latter itsfirst target at ¥94.25 so the stop is trailed). More speculative thisweek, I’m looking for a bullish sterling-Swiss franc break aboveSFr1.3900 as the Greek crisis spreads unevenly.

Wealth Management | Foreign Exchange24 CITYA.M. 22 JUNE 2011

In advance of Federal Reserve chairman Ben Bernanke giving a conference this afternoon, we ask aselection of experts for their view on the monetary policy of the United States in the coming months

8/6/2019 Cityam 2011-06-22


8/6/2019 Cityam 2011-06-22


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● PETROCHINAHong Kong listed PetroChina is the listed arm of the state-owned China National Petroleum Company. Headquarteredin Beijing, it is China’s biggest oil producer and is the mostvaluable company by market capitalisation in the world. Itsshares are listed in both New York and Shanghai, as well asHong Kong.

● CHINA MOBILEChina Mobile is the world’s largest mobile phone operator.More than 600m subscribers use its nationwide mobiletelecommunications network, which is also the largest of itskind. In 2010, Vodafone made £4.2bn in cash by selling its3.2 per cent stake in the company. China Mobile’s shares arelisted in Hong Kong and also on the New York StockExchange.

● BHP BILLITONBHP Billiton is a global mining, oil and gas company head-quartered in Melbourne, Australia. It is the largest companyin Australia in terms of market capitalisation and the thirdlargest in the world. Created in 2001 by the merger of theAustralian Broken Hill Proprietary Company (BHP) and theAnglo-Dutch Billiton, its shares are listed in both Sydney andLondon.

● RIO TINTOThe Rio Tinto Group is a multi-national mining and resourcescompany headquartered in London and Melbourne. It wasfounded in 1873 as a result of the purchase of a Spanishmine complex and now has operations on six continents,producing commodities including aluminium, copper, coaland diamonds.

MAJOR ASIA-PACIFIC LISTINGS

China makesthe very bestof neighboursfor Australia

Wealth Management26 CITYA.M. 22 JUNE 2011

WHILE Australia’s first stock

exchange officially openedin Melbourne in 1861,some 10 years after the

start of the Gold Rush, the national Australian Stock Exchange was notestablished until more than 100 years later, in 1987.

But ASX Group, current owner of the entity created by the merger of the Australian Stock Exchange andthe Sydney Futures Exchange in July 2006, is now one of the world’s top10 listed exchange groups by marketcapitalisation.

BIG THINGSIt still wants to get bigger if it can. The group’s most recent attempt togrow in size and influence was aproposed merger with – readtakeover by – the Singapore Stock Exchange (SGX).

The plan was to create theregion’s pre-eminent exchange by combining “the strengths of ASXthrough its listings, stock optionsand fixed income franchises, withSGX, the Asian gateway for interna-tional listings, equity futures andover-the-counter (OTC) clearing”.

And had the deal gone through,

the resulting exchange would have

had a market value of US$14bn.It would also have become the sec-

ond largest listing venue in the Asia-Pacific region, with over 2,700 listedcompanies from more than 20 coun-tries, including 200-plus listingsfrom Greater China and more than900 resource sector listings.

SINGAPORE SLUNGHowever, on 8 April, the Australiantreasurer and deputy leader of the Australian Labour Party, WayneSwan, decided to block the merger.

ASX Group’s David Gonski saysthat this will not prevent the compa-ny seeking further ways to increaseits reach.

He said: “We believe very strongly that Australia can and should beinvolved in a much wider dimensionthan just Australia onshore.”

SGX, meanwhile, has already moved on to join forces with BursaMalaysia, the Philippine Stock Exchange and the Stock Exchange of Thailand, appointing US technology firm Sungard to provide a cross-bor-der trading platform.

The move is part of a wider plan by the 10-country Association of

South East Asian Nations (ASEAN) totransform itself into a unified trad-ing bloc with free flow of capital by 2015.

While that development is boundto be of interest to investors keen onemerging Asian markets, those whoprefer commodities and resourcestocks will be watching closely to see what ASX does next.

Australia’s steady economgrowth – it is now the world’s four-teenth largest economy – has beendriven by its position as one of the

In the last of our global exchanges series,Jessica Bown finds ASX rich with resourcestocks at home and keen on mergers away

HKEx: a global IPO hot-spotMajor names look to Hong Kongto go public, writes Jessica Bown

THE Hong Kong Stock Exchange(HKEx) is Asia’s third largestexchange in terms of marketcapitalisation, after Tokyo and

Shanghai.It was first established in 1891,

although informal exchanges weretaking place in Hong Kong for somethirty years previous to that date.

Nowadays, the exchange has become well-known for attracting biginternational companies – particular-ly those based in China – that aregoing public for the first time.

Italian fashion house Prada, forexample, recently chose Hong Kongfor its landmark flotation.

It is the first luxury goods group tolist in the city, hoping to tap the bur-geoning spending power of theChinese consumer.

And HKEx was hoping that it would

cement its position as the world’s biggest initial public offering (IPO)

market – one that it has held for thepast two years, raising US$57.4bn in2010 alone.

However, Prada’s offering failed todazzle investors, forcing the company

to cut the final price of its listing by nearly one-fifth. Its value slipped toabout £8bn as a result.

Analysts said the offering had beenhit by the volatility caused by eventsin Greece, while retail investors wereput off by the fact that they would beliable for Italian taxes when sellingthe shares.

Other luxury goods brands, such asBurberry, that have expressed an

interest in listing in Hong Kong, may think twice as a result.

HKEx is facing increased competi-tion for IPOs from both the US andShanghai, which wants to provide an

alternative for companies looking tolist closer to China’s lucrative market. Andrew Weir, a partner at KPMG in

Hong Kong, said: “The law and regula-tion is in the process of beingfinalised, and it’s likely that a numberof companies will want to list inShanghai.”

That said, HKEx is still well ahead of London, where companies have raisedUS$14bn so far this year, and has someadvantages over Shanghai.

“Hong Kong is a mature market, with well-established regulation andcorporate governance, and thatshould protect its position,” Weiradded.

Manoj Agarwal at Royal Bank of Scotland also believes that things willstart to look up for the exchange soon.

“As Asian inflation fears subsideand global economic certainty increases, you will see companies

returning to the IPO markets again,” Agarwal said.

TOP FIVE HKEX LISTINGS BY MARKET CAP SOURCE: BLOOMBERG

Ticker Company Market Market CapSymbol HK$ trillion

857 PetroChina SEHK 2.315

1398 ICBC SEHK 1.865

939 CCB SEHK 1.605

941 China Mobile SEHK 1.397

5 HSBC SEHK 1.367

8/6/2019 Cityam 2011-06-22


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ASIA-PACIFIC: FACTS AND FIGURES

27CITYA.M. 22 JUNE 2011 Global Exchanges: Asia-Pacific

largest global suppliers of raw mate-rials such as coal and iron ore – andone well-placed to benefit from thenear-insatiable demand for suchresources from China’s breakneck economic expansion.

AMBER NECTARSo it is no surprise that theresources sector makes up a massive23 per cent of t he Australian equity market.

Only the financial services sectoris bigger, with a 35 per cent market

share.One of the biggest players in the

resources field is Rio Tinto, whichfirst listed on the ASX in 1962 as Rio Tinto-Zinc Corporation.

Mining giant BHP Billiton is alsolisted in Australia, along with many smaller resources companies suchas Focus Minerals.

If that sector fails to excite you,however, beer manufacturer Fostersis another household name that youcan invest in through the Australianexchange.

ANALYSIS l S&P/ASX 200 index

Jan 07 Jan 08 Jan 09 Jan 10 Jan 11

7,000

6,500

6,000

5,500

5,000

4,500

4,000

3,000

3,500

A HAVEN OF FREE TRADE SHOWS THEWAY TO CHINA’S OPENING MARKETS

PAUL INKSTERHEAD OF PRODUCT,BARCLAYS STOCKBROKERS

THIS week takes us to Asia-Pacific;to Australia, Hong Kong andSingapore. All three offer investorsaccess to China but none more so

than Hong Kong.

FRAGRANT HARBOURHong Kong is Asia’s second largestexchange by market capitalisation andwas formed in 1980 by a mergerbetween the Far East Exchange, KamNgan Stock Exchange and KowloonStock Exchange.

Now it is a leading global financial

centre, characterised by a progressiveapproach to free trade and low taxes,

which make it an attractive place forboth institutions and individuals alike.Not only is Hong Kong considered

the business capital of Asia, it is alsoseen as an economic barometer forthe region.

Hong Kong’s business credentialsgo a long way; evidenced byboth the individuals andcompanies which arechoosing to relocate there. Oneexample is Anthony Bolton, therenowned fund manager, who hasrecently moved to Hong Kong tomanage the China Special Situationsfund. Or even HSBC, returning home.

CHINAFor many investors, Hong Kongis a route into China. China isone of Hong Kong’s principaltrading partners, in both goodsand services, and there areover 3,000 Chinese businessesbased in Hong Kong – plentyof food for choice. Hong Kong

has long been considered theinternational trading outlet for

China and since the 1997 handover hasbeen increasingly positioned as theinternational financial centre for China.

Large Chinese companies such as theBank of China (SEHK: 3988) andChina Telecom (SEHK: 728) are listedon the Hong Kong Stock Exchange.

OPPORTUNITIESPrada recently chose to float on theHong Kong Stock Exchange, raisingHK$16.7bn (£1.32bn) in institutional

and retail investment. Not only was itthe largest listing in Hong Kong so farthis year, it is the largest ever consumerlisting to take place on the exchange.

Despite the difficulties that this list-ing experienced in practice, due to botheconomic fallout from the Greek crisisand potential Italian tax liabilities (seearticle, left), Prada’s groundbreaking

decision to opt for the Hong KongStock Exchange, rather than one in

London or the US, could still be awake up call for the more “tradi-

tional” exchanges – a reminder

of the growing lure of theEast’s fragrant harbour.

● LOCATIONSASX

Exchange Centre, 20 Bridge Street, SydneySGX

2 Shenton Way, SingaporeHKEx

Exchange Square, Central, Hong Kong

● OPENING TIMES[LOCAL TIME]ASX: 10amSGX: 9amHKEx: 9.30am

● CLOSING TIMES[LOCAL TIME]ASX: 4pmSGX: 5pm(with a break between 12.30pm and 2pm)HKEx: 4pm(with a lunch break during which some trading continuesbetween midday and 1.30pm)

● CURRENCIESASX: Australian dollarSGX: Singapore dollarHKEx: Hong Kong dollar

● NUMBER OF LISTINGSASX: About 2,240 companiesSGX: About 800 companiesHKEx: More than 1,400 companies

●MARKET CAPITALISATIONASX: US$1.4 trillionSGX: SG$700bnHKEx: US$2.7 trillion

The ASX –good callPicture: GETTY

8/6/2019 Cityam 2011-06-22


CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010

The Cygnet lacks theacceleration of bigger Astons, butloses none of theenvy-factor.

CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010

And we found the car attracted a greatdeal of attention on the road – all posi-tive, too.

So what’s not to like? Well only theprice really. But if you’re balking at theprice then you can’t afford it. Remind yourself you’d rather be stuck in com-muter traffic in an Aston Martin thananything else, then breathe in thatleather smell. City driving has never been like this.

CARAVAN PARADISEIf you’ve never salivated over a caravan, then you’ve never seen anAirstream. This is the latest flagship 684 DB model with “loft style”interior. Its predecessor won the Caravan Club Caravan DesignAwards for three years running and this one is even better thanks to

a complete clean sheet redesign. It costs £52,575 and sleeps four.

CAR TALK BY RYAN BORROFF

I T used to be the richer the man the bigger and more powerful the car.But now, in case you hadn’t noticed,there is an emerging trend towards

expensive and increasingly stylish littlecity cars. None more so than AstonMartin’s pocket-sized Cygnet which is both very stylish and very exclusive.

Aston came up with the idea for theCygnet when it realised so many of itscustomers took their Astons out at week-ends and commuted in something elseduring the week. The resulting vehicle isundoubtedly the world’s most luxuriouscommuter car, if not the most controver-sial. It would be an understatement tosay that the Cygnet has raised some eye- brows amongst Aston Martin purists.

Yet bespoke it is...think Saville Row. According to Aston Martin it takes 150man hours to produce every car. Based

on the Toyota iQ – with which it sharesits mechanicals – almost every exterior body panel – bar the roof – and all of the bespoke interior are entirely new. Available in two special edition colours, white and black, these launch Cygnetscars cost £39,995 (the regular Cygnet will be priced from £30,995) but come with bespoke luggage by Bill Amberg. And if you’re cynical about it,remember that its target buyersare people that spend similarsums of money on watches,even mobile phones.

The exterior is surpris-ingly handsome. There’s achrome grille from thesame supplier as the mil-lion-pound-plus One-77hypercar, plus the signa-ture side strake andinverted rear lights famil-iar on bigger Astons. Thealloy wheels have been cre-ated especially for the Cygnettoo. Even the paint work is per-fect. Not to forget that all-impor-tant Aston Martin badge which, inthese special editions, matches the

body colour.But it’s inside where most of your

money goes. Created to each customer’sspecification and then trimmed by handin as much leather as that used to totrim the DB9, the result is an interiorthat is positively sumptuous. Besidesleather there’s polished aluminium,

glossy piano black surfaces and Alcantara, plus a cool Garmin sat-

nav on the dash. As intuitive touse as any I’ve seen.

But this smallest AstonMartin of all time is also theslowest. Acceleration time isan un-Aston Martin-like 0-62mph in 11.6 seconds. That said, around town,flying about Chelsea andPimlico between theBluebird Cafe, the ConranShop and Daylesford

Organic, the Cygnet feels very nippy. This is especially

the case in the automatic ver-sion with CVT transmission. The

steering is light and the car isremarkably entertaining to drive, so

easy is it to flow in and out of traffic.

FERRARI UK DEBUTFerrari’s new four-seater sports car, the FF, is making its UK publicdebut at the Goodwood Festival of Speed, 1-3 July. The 660bhp,V12-engined Grand Tourer is the first Ferrari to feature four-wheeldrive, has near-perfect weight distribution and an acceleration time

of 0-62mph in 3.7 secs.

PARK LANE’S MCLAREN PALACEMcLaren’s flagship London showroom has just opened at One HydePark. McLaren claims the showroom will stock a spare of everyserviceable part for its new MP4-12C high-performance, carbon-fibre-based sports car and provide an efficient “pitstop” service for

repairs. McLaren aims to hand-build 1,000 cars this year.

Aston Martin’s hotlittle car will evenmake traffic fun

CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010CITYA.M. 22 SEPTEMBER 2010

Lifestyle | Motors

28 CITYA.M. 22 JUNE 2011

The new frontier of city driving

THE VERDICT:DESIGN hhhhi

PERFORMANCE hhhii

PRACTICALITY hhhii

VALUE FOR MONEY hhhii

THE FACTS:ASTON MARTIN CYGNET

PRICE: £30,9950-60MPH: 11.6secsTOP SPEED: 106mphCO2 G/KM: 120g/kmMPG COMBINED: 54.3mpg

WORDS BYRYAN BORROFF

8/6/2019 Cityam 2011-06-22


T E R

R E S T R I A L

WATERLOO ROAD

BBC1,7.30PMChris discovers new pupil Scout is adrug courier, but trying to help herlands him in trouble with both Karenand the police.

24HOURS IN A&E

CHANNEL4,9PMTension mounts after two men fromdifferent areas are brought in withstab wounds suffered in the samefight.

PAWN STARS

CHANNEL5, 7.30PMCorey takes a quiz after misidentifyinga Faberge crystal egg – if he loses heworks the graveyard shift, but if hewins he gets $2,500.

BBC1

SKY SPORTS 14.30pm Live UEFA Under-21s

European Championship 7.30pm

Live UEFA Under-21s European

Championship 10.30pmThe Sky

Sports Years 11.30pm Time of

Our Lives 12.30amUEFA

Under-21s European

Championship 2.30am FIFA

Futbol Mundial 3am Football’s

Greatest 3.30am Football Asia

4am-6am UEFA Under-21s

European Championship

SKY SPORTS 25.30pm Live Twenty20 Cup

Cricket 9pm Boots ‘n’ All 10pm

Bowls 11pm NFL 12am

Twenty20 Cup Cricket 2am

Inside the PGA Tour 2.30am

European Tour 3am-5am

PGA EuroPro Tour Golf

SKY SPORTS 33.55pm Live Test Cricket

11pm Total Rugby

11.30pmWatersports World

12.30amFootball’s Greatest

1am Cage Fighter 1.30am

Poker 3.30am-4.30am

Watersports World

BRITISH EUROSPORT7pm MotoGP 9pm Live

Under-17s World Cup Football

11pm Under-17s World Cup

Football 12.35am-1am

Eurosport for the Planet

ESPN7pm Live Russian Premier

League Football 8pm Premier

League Goals 8.30pmSerie A

9pm Premier League World

9.30pm DTM Review Show

10.30pm VW Scirocco Cup

11.30pmPremier League Top

50 Goals 12am Serie A

12.30amESPN Press Pass

1.30am 30 for 30 5.15am

ESPN Kicks: Extra 5.30am-

6am ESPN Press Pass

SKY LIVING7pm CSI: Crime Scene

Investigation 8pm Psychic Sally:

On the Road 9pm Nikita 10pm

Supernatural 11pm Criminal

Minds 12am CSI: Crime Scene

Investigation 1.50am

Supernatural 2.40am Ghost

Whisperer 3.30am Charmed

4.20am Nothing to Declare

5.10am-6am Maury

BBC THREE7pm Top Gear 8pm Great TV

Mistakes 9pmFILM Norbit

2007. 10.40pm Family Guy

12.10amKids Behind Bars

1.10amAmerican Dad!

3.20am Great TV Mistakes

4.15am-5.15am Kids Behind

Bars

E47pm Hollyoaks7.30pm Friends

9pmFILM School of Rock

2003. 11.05pm Alan Carr

12.10am Rude Tube: Viral Ads

1.10am My Name Is Earl

2.05am Glee 2.50am Alan Carr

3.45am Privileged 4.30am

Reaper 5.10am-6am Switched

HISTORY7pm Heir Hunters 8pm Ax Men

10pm Only in America 11pm Oil

Riggers 12am Ax Men 2am

Deep Wreck Mysteries 3am Heir

Hunters4am How the Earth

Was Made 5am-6am Ax Men

DISCOVERY8pm How It’s Made 9pm

Britain’s Toughest Cops 10pm

I Almost Got Away with It

11pm Disaster Eyewitness 12am

Bear Grylls: Born Survivor 1am

Britain’s Toughest Cops 2am

I Almost Got Away with It 3am

Deadliest Catch 3.50am Future

Weapons 4.40am Treasure

Quest 5.30am-6am Destroyed

in Seconds

DISCOVERY HOME &

HEALTH7pm Bringing Home Baby 8pm

Little People, Big World 9pm

Untold Stories of the ER 10pm

Hospital Sydney 11pm The Real

ER 12am Untold Stories of the

ER 1am Hospital Sydney 2am

The Real ER 3am Little People,

Big World 4am A Baby Story

5am-6am Bringing Home Baby

SKY18pm Emergency with Angela

Griffin: Theactressattends the

sceneof a traffic collision.9pm

BritCops: ZeroTolerance 10pm

An Idiot Abroad 11pm Wallof

Fame 11.30pm Cop Squad

12.30am TheChicago Code

1.30am NCIS:Los Angeles

3.10am Fringe4amAirline

4.50am CrashTestDummies:

A game ofcar conkers.

5.15am-6amSell Methe Answer

BBC2 ITV1 CHANNEL4 CHANNEL5

S A T E L L I T E &

C A B L E

TVPICK6pm BBC News6.30pm BBC London News7pm The One Show7.30pmCHOICE WaterlooRoad: BBC News8.30pm In with the Flynns9pm The Apprentice10pmBBC News 10.25pmRegional News 10.35pmTheNational Lottery Wednesday NightDraws 10.45pm Not Going Out

11.15pmFILM Extreme Measures: 1996; National Lottery Update1.10am Sign Zone: See Hear1.40am Country Tracks 2.35am

Saints and Scroungers3.05amGreat British Railway Journeys3.35am-6amBBC News

5.50pmWimbledon 2011: Thethird day’s play continues atthe All England Club.8pm Today at Wimbledon:Reflections on the third day’splay at the All England Club.9pmAfghanistan: War withoutEnd?: John Ware examines the

last decade of conflict.10pm The Apprentice:You’re Fired!10.30pmNewsnight: Weather11.20pmThree Men Go toVenice12.20amThe Tudors1.15am BBC News 3.35am-6am

Close

6pm London Tonight

6.30pm ITV News

7pm Emmerdale

7.30pm Poms in Paradise

8pm Lewis: A man is

found dead in the Bodleian

Library basement.

10pm ITV News at Ten

10.30pm London News10.35pmThe Kids Are Alright

11.35pmBaby Hospital

12.30am The Zone;

ITV News Headlines2.35am FILMTrue Crime:

Crime thriller, starring Clint

Eastwood. 1999. 4.40am-

5.30am ITV Nightscreen

6pm The Simpsons 6.30pmHollyoaks7pm Channel 4 News7.55pm4thought.tv

8pm Embarrassing Bodies:Live from the Clinic9pm CHOICE

24 Hours in A&E:10pm Desperate Housewives11.05pm 8 Out of 10 Cats Uncut

11.50pmMusic on 4: Live fromAbbey Road 12.40am The AlbumChart Show: Spotlight 12.55am4Play: Foster the People 1.10am

4Music Favourites: Avril Lavigne1.35am FILMMy First Mister: 2001. 3.30am Conservation’sDirty Secrets: Dispatches4.25amHill Street Blues5.20am-6.05am Countdown

6pm Home and Away6.25pmOK! TV7pm 5 News at 77.30pm CHOICE PawnStars: 5 News Update8pm Submarine School9pm NCIS10pm Law & Order:

Criminal Intent11pm Law & Order: Special VictimsUnit: 11.55pm Poker: Aussie

Millions:12.55amSuperCasino4amMeals in Moments 4.10amMichaela’s Wild Challenge4.35amMichaela’s Wild Challenge

4.55amRough Guide toAdventures 5.10am Wildlife SOS5.35am-6amHouse Doctor

6 7 16

45

28 19

16 9 4

17 10

10 11

6 24

13 15 12

23 29

45

8 11 9

27

7

5

14

38

13

7

17

34

10

11

3

14

12

6

35

13

10

16

35

12

16

8

30

Fill the grid so that each block

adds up to the total in the box

above or to the left of it.

You can only use the digits 1-9

and you must not use the

same digit twice in a block.

The same digit may occur

more than once in a row or

column, but it must be in a

separate block.

COFFEE BREAKCopyright Puzzle Press Ltd, www.puzzlepress.co.uk

KAKURO

QUICK CROSSWORD

LAST ISSUE’SSOLUTIONS

KAKURO

WORDWHEELUsing only the letters in the Wordwheel, you have

ten minutes to find as many words as possible,

none of which may be plurals, foreign words or

proper nouns. Each word must be of three letters

or more, all must contain the central letter and

letters can only be used once in every word. There

is at least one nine-letter word in the wheel.

SUDOKU

Place the numbers from 1 to 9 in each empty cell so that each

row, each column and each 3x3 block c ontains all the numbers

from 1 to 9 to solve this tricky Sudoku puzzle.

SUDOKU

QUICK CROSSWORD

ACROSS

1 Lose heat (4)

3 Bicycle seat (6)

5 Bustle (3)

6 Nautical term usedin hailing (4)

7 Foolish (6)

9 All (10)

14 Fixedconventionalised orstock image (10)

17 Fast gait o ahorse (6)

19 Go of, as withmilk (4)

20 ___ Maria, prayer tothe Virgin Mary (3)

21 Loveliness (6)

22 Tatters (4)

DOWN

1 Swiss cottage (6)

2 Stratum (5)

3 Call or help (inits) (3)

4 Mendacious (5)

8 Mr Geller, spoon-bender (3)

10 Young newt (3)

11 Be equal, draw (3)

12 Word indicating anegative answer (3)

13 One o our playing-card suits (6)

14 Frighten away (5)

15 Long and slippery fish (3)

16 Weapon that delivers atemporarily paralysingelectric shock (5)

18 Hand over money (3)

R

I

C

A

PE

O

T

V

M C C O N S U L T

O N A I R H E

U R A R T I S A N

S E E R S V V

S S S O M E E

E A S T W R O S E

N R I N K L A

G I O R D E R

D E S P A I R H N

L L A G A V E

J A V E L I N T D

8 2 1 9 7 2 5

9 3 6 1 7 2 5 4 8

1 3 2 4 3 1

3 4 5 8 9 3 8

9 7 8 6 8 9 5 7

2 1 4 1

5 8 9 7 2 2 3 1

1 3 2 1 6 7 3

5 9 6 9 7 8

4 9 7 5 3 8 1 6 2

8 7 6 4 3 9 8

WORDWHEELThe nine-letter word was

WHOLESALE

Lifestyle | TV& Games 29CITYA.M. 22 JUNE 2011

8/6/2019 Cityam 2011-06-22


ANDREW STRAUSS’S decision toswitch counties in order to findsome form ahead of the India’simpending visit has been criti-

cised in some quarters, but I can’t seea problem with it.

It’s unprecedented, innovative andSomerset should be applauded for

being so accommodating. It’s alsoencouraging to see Strauss, now retired from international one-day cricket, accepting he needs time inthe middle, rather than putting hisfeet up for a month.

Clearly there’s a problem with thescheduling if the captain of Englandhas to go to such lengths to find anopportunity to prepare appropriately for a major Test series, but there areplenty of good reasons why the ECBshoehorn the majority of domesticone-day fixtures into this period of the summer.

In any case, talk of Strauss’s demiseand a supposed weakness against left-arm seamers is greatly over exaggerat-ed – he didn’t look too shabby againstMitchell Johnson last winter did he?

Sure, his scores don’t look tooclever against what was the worst SriLankan attack I’ve seen for ages, buthe only had four innings and muchlike Kevin Pietersen has, he’ll comegood again. Taunton, with its flattrack and small boundaries will pro-

vide the perfect setting for him to get back in the runs.

Credit goesto Straussfor taking abrave move

Sport30

OLYMPIC chiefs sparked a furious row last night by announcing that a dealhad been reached paving the way forplayers from all four home nations torepresent Team GB in the London2012 football tournament.

Scottish, Welsh and Irish footballassociations swiftly responded by col-lectively rubbishing the notion, withone official saying he was “astound-ed” at the British Olympic

Association’s (BOA) statement. They added that they would contin-

ue to oppose a unified team, say-ing: “We have stressed this incommunications to themand are disappointed thatthis has been ignored in themedia release.”

It is the latest and mosthigh-profile spat in a long-running row over

whether the likesof Wales and

T o t t e n h a m winger GarethBale (right) willplay alongsidethe bestE n g l i s h ,Scottish andN o r t h e r nIrish foot-

ballers at nexts u m m e r ’ sGames.

The spat alsomeans England’sFootball Association(FA) is still the only

body in agreement with the BOA,although that will

not stop both parties pressing ahead with plans.

The BOA appeared to have broughtthe remaining home nations on

board when they released a state-ment entitled: “Historic agreementreached to enable Team GB to returnto the Olympic football pitch”.

It explained the FA will effectively

pick the 18 players who will make upthe men’s team, and will do so fromall four home nations. The FA willalso identify the manager, who is like-ly to be appointed before next season.

But a response from the chief exec-utives of the Scottish, Welsh and IrishFAs hit back by insisting they did not

“support nor formally endorse” theplans. They added: “No discussionstook place with any of us, far lesshistoric agreement been reached.”

George Peat, president of theScottish FA, said: “I am absolute-ly astounded that they have put

out this statement. Iknow nothing of any

agreement and we want nothing to do with this tourna-ment.”

England’s fellow home nations opposeforming a unifiedBritish team for thefirst time since 1960 because they fear itmay harm their FAs’independent statuses

with world chiefs. They do not have

power to block the likesof Bale from competing,

but inclusion will be at theplayers’ discretion, meaningthey could come under pres-sure to withdraw.

War breaks

out over 2012football teamBY FRANK DALLERES

OLYMPICS▲

THE FULHAM SEASON TICKET FROM£379ADULTS

AND ONLY£125JUNIORS (UNDER 16s)

Visit fulhamfc.com/seasontickets or call 0843 208 1234

CRICKET COMMENT

ANDY LLOYD

CHELSEA last night confirmed they are in negotiations with managerial target AndreVillas-Boas and hope to reach a satisfactory conclusion shortly. The 33-year-old, who led Porto to the Treble last season, yesterday resigned from the Portuguese club who later revealed they had received the outstanding £13.3m compensation detailed in the termi- nation clause of Villas-Boas’ contract. Picture: GETTY

GOODBYE PORTO, HELLO CHELSEA

8/6/2019 Cityam 2011-06-22


31

TWO OF THE major threats to Andy Murray’s hopes of achieving Wimbledon glory, Roger Federer andNovak Djokovic, got their campaignsoff to winning starts yesterday.

Federer, who skipped his tradition-al SW19 warm-up event in Halle dueto a knee injury, looked rusty in what was his first match since

he was beaten in the final of theFrench Open.

Despite not being at his bestthe third seed required just 102minutes to see off Centre Courtdebutant Mikhail Kukushkin of Khazakhstan 7-6 (7-2), 6-4, 6-2.

“It’s always nerve-wrackingplaying your first match onCentre Court because youdon’t get the chance topractice at the start of the tournament,”said the six-timeschampion (right).“But it was a matter of playing solid and gettingthrough.”

Federer plays France’s Adrian Mannarino, who battled past Ireland’sConor Niland in five sets,

in round two, while Djokovic, the world No2, will play Kevin Andersonof South Africa or Ukraine’s IllyaMarchenko next after he demolishedFrance’s Jeremy Chardy, dropping just six games in a 6-4, 6-1, 6-1 win.

It represented a timely return to winning ways for the Serb who sur-rendered his 43 match unbeaten runto Federer in Paris and hadn’t playedsince, having opted not to play atQueen’s Club.

Andy Roddick, three-times a losingfinalist here, and Spaniard DavidFerrer, the seventh seed, were alsonotable winners on day two.

In the women’s draw defendingchampion Serena Williams followedher older sister Venus into the secondround, but she had to overcome ascare in doing so.

The 29-year-old broke down in tearsafter securing only her second vic-

tory – 6-3, 3-6, 6-1 over Aravane Rezai – since

last year’s final fol-lowing a near 12-month lay-off.

“It has been a disaster year but I have been praying, I have

my family and I love tennis,”said Williams. “This was themost emotional I’ve gottenafter a match.” Things were far more

straightforward for the topseed Caroline Wozniacki who dropped just threegames in defeating ArantxaParra Santonja, while FrenchOpen champion Li Na andfifth seed Maria Sharapovaprogressed in straight sets.

FULHAM manager Martin Jol insistshe doesn’t have any hard feelingstowards Tottenham as he prepares forhis second stint in English football.

Jol, who officially began work atCraven Cottage on Monday, wasunceremoniously shown the door by Spurs in October 2007 just monthsafter nearly taking them into theChampions League.

But the Dutchman has sinceenjoyed success at Hamburg and Ajaxand says he is on good terms with theman who axed him, Tottenham chair-man Daniel Levy.

“I won’t lie – I didn’t feel great atthat moment,” Jol said yesterday.“Then later on you go to another club,

I was in Germany and Hamburg have55,000 season ticket holders – not30,000 – it was a big club.

“Then after a few weeks you go onand we played in Europe, we got tothe semi-finals [of the Europa League]– we had played in the quarter-final atSpurs. So it was even better, it wasnice. There was no looking back orhard feelings.”

Jol will need to call on his Spursconnections if, as has been suggested,he is interested in making strikerRobbie Keane, who has fallen out of

favour in north London, one of hisfirst signings.He plans to bring in “four or five”

players but will need to act fast as theclub’s first match of the season – theEuropa League qualifier against NSIRunavik of the Faroe Islands – is in just eight day’s time.

No problems for Federer butit’s emotional for Williams

No grudge with Spurs, says Jol,as Dutchman arrives at Fulham

BY FRANK DALLERES

FOOTBALL▲

SPORT | IN BRIEF

England drop Prior and CollyCRICKET: Matt Prior and PaulCollingwood have been axed from

England’s one-day squad ahead of theupcoming series against Sri Lanka. Therewere recalls for wicketkeeper CraigKieswetter and all-rounder Samit Patel.

McIlroy to take extended breakGOLF: US Open champion Rory McIlroysaid he is planning to take a break fromgolf before playing at next month’s Open.“I’ve got three weeks off and then theBritish Open so I want to take it easy,”said the Northern Irishman.

Results

email [email protected]

OUTSIDE COURT | WEATHER, GOSSIP AND TODAY’S HIGHLIGHTS

MURRAY UPDATEAndy Murray’s second round oppo-nent, Germany’s Tobias Kamke,warmed up for today’s clash with animpressive 6-3, 7-6 (7-4), 5-7, 6-1 winover Blaz Kavcic. The pair, who are dueto be the second match on Court One,have never met in an ATP or grand

slam event before.

BRIT WATCHQueen’s semi-finalist James Ward and

Dan Cox fell by the wayside, but therewere wins for Elena Baltacha andAnne Keothavong, although the latter’svictory was tempered by the fact shebeat compatriot Naomi Broad.

WHAT TO WATCHHeather Watson, the great hope of British women’s tennis, finally gets hercampaign underway against MathildeJohansson on Court Three.

BY JAMES GOLDMAN

TENNIS▲

WEDNESDAY FORECAST

Heavy rain shower

HIGH

LOW

190

110

8/6/2019 Cityam 2011-06-22


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cityam 2011-06-22

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