9 November/10 November 2019 ★ FT Weekend 15
MARKETS & INVESTING
TO M M Y ST U B B I N GTO N
A N D L AU R E N C E F L E TC H E R
Even in a record-breaking year for glo-
bal bond markets, Greece stands out.
In 2012, investors refused to lend to
Athens at any cost but now investors
payGreecetoborrow short-termdebt.
Ten-year bond yields trade at 1.2 per
cent. And as of this week, Greece is no
longer seen as the riskiest eurozone bet
— this week, its yields fell below those of
Italy for the first time since 2008.
The market rehabilitation owes much
to the gradual healing of Greece’s econ-
omy and a calming of volatile politics,
which has removed the possibility of a
departure from the euro.
But in addition, very low yields
around the world have driven investors
into riskier and riskier markets. The
torrent of cash flowing into Greece’s
small bond market has jammed yields
to record lows.
The process began in April 2014 when
Greece returned to bond markets two
years after restructuring its debt. Inves-
tors hoovered up €3bn of new five-year
debt at a yield of 4.75 per cent.
“We felt that the rules of the game had
changed,” said Keith Ney of French asset
manager Carmignac Gestion, which
bought in the 2014 sale.
“Once the vast majority of the liabili-
ties were owned and controlled by the
official sector... we thought any future
restructuring wouldn’t involve the pri-
vate sector,” he said.
Carmignac held on when yields
spiked in 2015 as the leftwing Syriza
government took Greece to the brink of
a eurozone exit and has been buying
ever since.
Greece’s credit rating is still three
notches inside junk territory. But a
recent upgrade todouble B minus by
S&P has fuelled hopes of an eventual
path back to investment grade, which
would clear the way for the European
Central Bank to buy Greek bonds under
its timulus programme.s
Riding Greece’s bond rally all the way
has been profitable. Buying and holding
a 10-year bond since 2014 would have
earned a total return of 87 per cent. Any-
one lucky or shrewd enough to have
bought at the height of the 2015 crisis
has more than trebled their money.
Some did even better. Achilles Risvas,
founder of hedge fund Dromeus Capital,bought bonds in the low 20s of cents in
2012 after the elections. “Everyone
thought we were crazy,” he said.
Having held on, he has now made four
times his money on the trade, though he
has been reducing his position over the
past year or so. “Yields are not reflective
of the risks,” he said.
One of risks is that Athens still has a
large debt pile of more than 180 per cent
of GDP. But just €67bn of that is in the
hands of investors — most of the rest is
long-term loans from EU bailout funds
and the IMF with very favourable inter-
est rates.
Italy, whose debt is 134 per cent of
GDP, has to constantly refinance it all on
bond markets, leaving it open to “rollo-
ver risk”, as Chris Jeffery of Legal & Gen-
eral Investment Management put it.
However, even when more than
$12.5tn of debt trades at sub-zero yields,
some are sceptical about Greece’s
transformation into a “normal” bond
market. “I’d have no interest now,” said
Graham Neilson, investment director at
Fulcrum Asset Management in London.
“It’s a screaming ‘buy’ with retail and
local banks chasing it at 1.2 per cent? No
thanks,” he said.Fixed income
Greek debt rehabilitation gains pace as
Italy becomes riskiest bet in eurozone
B E N JA M I N PA R K I N— BANGALOREIndian stocks wobbled on their record-
high perch after Moody’s lowered its
outlook for the country to negative,
citing concern over a deepening
economic slowdown and insufficient
governmentaction.The New York-based credit rating
agency said it was less confident about
the government’s ability to manage the
slowdown, which has seen growth in
gross domestic product fall to 5 per cent
year on year between April and June,a
six-year low.
Growth has been curtailed by a severe
liquidity squeeze, prompted by an
intensifying crisis in India’s enormous
shadow-banking system and bad loans
at its public and private banks.
The negative outlook reflected in part
“lower government and policy effec-
tiveness at addressing longstanding eco-
nomic and institutional weaknesses
than Moody’s had previously esti-
mated”, it said. The rating agency cited
demand for reforms to labour and land
laws in order to boost productivity and
stimulate private investment.
India is currently two notches awayfrom losing its hard-earned investment
grade status.
Moody’s, which first gave India a pre-
mier ranking in 2004, proceeded to
upgrade its rating a second time in 2017
amid optimism about early reforms
made in Prime Minister Narendra
Modi’s first term.
The Bombay Stock Exchange’s Sensex
index fell 0.8 per cent yesterday, havingrisen to a record of 40,684 points a day
earlier. Indian 10-year bonds sold off a
little with yields up 3 basis points to
6.534 per cent while the rupee softened
to Rs71.3 against the dollar from Rs71.
The government retorted that it had
undertaken a series of initiatives to
counter the slowdown and reform
India’s economy, from the corporate tax
cut and real estate investment to scrap-
ping a controversial tax increase on for-
eign portfolio investors.“These measures would lead to a posi-
tive outlook on India and would attract
capital flows and stimulate invest-
ments,” the finance ministry said. “The
fundamentals of the economy remain
quite robust with inflation under check
and bond yields low. India continues to
offer strong prospects of growth in [the]
near and medium term.”
Indian stocks have been on a bull run
since Mr Modi’s government announced
in September that it wouldcut corpo-
rate taxes rom an effective rate of 35f
per cent to 25 per cent.
The rally in Indian stocks accelerated
this week after finance minister
Nirmala Sitharaman announced that
the government would commit
Rs100bn ($1.4bn) to invest in the coun-
try’s struggling real estate sector.
That prompted the stocks of major
real estate developers such as DLF to
surge higher.
The market also got a boost after
China and the US on Thursday agreed to
removesome tariffs, increasing hopes
that the pair would strike a truce after a
20-month trade war.
Additional reporting by Daniel Shane in
Hong KongEquities
Sensex slips from record highs after
Moody’s cuts India outlook to negative
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LONDON
The length of the trading day in London
has forced many of the sector’s working
parents to change track and head down
career paths that suit their families’
needs.
“I don’t want my career to suffer
because I’m a mother,” said Rachel
Przybylski, head of regulatory affairs at
Saxo Capital Markets — a role set back
from the front line of trading.
She enjoys her job and can fit it
around her family but reflects on a pre-
vious role working on the equities desk
at Nomura. “The long hours are part of
it,” she said. “Even if I wanted to go back
to working on the desk, could I?”
That trade-off may soon change. This
week, two of the largest industry bodies
in Europe’s financial markets —
encouraged by employees from bank-
ing, broking, trading and investing units
—called or exchanges to open stockf
trading one hour later, at 9am, and to
close half an hour earlier, at 4pm.
The London Stock Exchange said it
would consult on the matter, which
could result in its first tweak to trading
hours in 20 years.
At eight-and-a-half hours, Europe’s
equity markets are open far longer than
other comparable global hubs. New
York conducts its business in six-and-a-
half hours while exchanges in Hong
Kong and Tokyo both close for lunch.
In London, traders are typically at
their desks at 7am when price-sensitive
information such as companies’ quar-
terly earnings are published.
After markets close and the day’s
trading is over, various other tasks
mean that traders regularly clock up 11-
hour days, excluding their commute.
A growing number of banks and
investors now think such long hours are
unnecessary and damaging to workers’
mental health, while reinforcing gender
and cultural biases.
“We are convinced this will be an
important step towards an industry that
will be able to attract more diverse tal-
ent,” said Galina Dimitrova of the
Investment Association, a body that
represents fund managers and is leading
the call along with AFME, which largely
represents banks.
The campaign is a far cry from the
turn of the century when it was still
common to see pubs in the City filled
with male traders.
“A big lesson of the financial crisis was
that the lack of diversity led to group-
think on an industrial scale,” said Lee
Hodgkinson, chief executive of OSTC, a
proprietary trading group. “So anything
that the industry can do to encourage
greater inclusivity and gender diversity
on the trading floor is to be encouraged.”Share trading is now highly auto-
mated, requiring fewer people.
Meanwhile, electronic communica-
tion has revolutionised how people con-
sume news and react to it with many of
those managerial functions now handed
over to machines.
But the custom of arriving at work
before 7am persists and takes its toll.
“If you’re 40 or 50 years old with a
family, there’s no doubt it has a material
effect on your work-life balance,” said
James Blackburn, a former equity sales-
man at Merrill Lynch and Execution.
Aside from the physical strain of daily
5am commuting, market participants
also say early starts now make less
sense.
The growing clout ofexchange traded
funds means that trading volumes are
concentrated in the closing auction, in
thelast minutes of activity that set the
final price for shares that day.
Collectively, the last hour of trading
accounts for 35 per cent of total daily
volume, Afme estimated.
Shorter hours also do not appear to
constrain trading opportunities —
consultancy New Financial estimated
that trading volumes for UK and US
stock markets were near-identical,
relative to their combined market capi-
talisation, even though the US day is 90
minutes shorter.
Other European exchanges have sig-
nalled they are willing to consider a cut
to hours, including CBOE Europe, Nas-
daq and Euronext, which runs six equityexchanges including Paris and Amster-
dam. BME, owner of the Madrid
exchange, is not in favour.
Ms Przybylski said shorter opening
times are not a panacea, especially for
staff on lower salaries who may not be
able to afford childcare. “But it opens up
the conversation about how you can do
things differently.”
Outside of equities, market partici-
pants are sceptical that shorter hours
for stock exchanges would force other
big markets, such as currencies, futures,
bonds or swaps, to follow suit.
Those much larger markets are open
for longer and some trade through the
night, pausing only at weekends.
Traders routinely work early or late to
link up with clients in Asia and New
York. “My first thought when I read
about the [equity-market] proposal
was, what a bunch of lightweights,’” said
Kevin Rodgers, former head of curren-
cies at Deutsche Bank.
For some, long hours and early starts
are a rite of passage and point of pride.
Darryl Hooker, chief executive of
Harperdan Consulting, said that, when
he was a broker at ICAP, he would often
shout out prices in his sleep, nodding
back off only if his wife shouted out
numbers in response.
“I never thought of early starts as a
mental health issue,” he said. “It was
about discipline and you got used to it.
Equity markets always kept very
gentleman’s hours anyway.”
See LexA growing number of banks
and investors think working
day should be shortened
‘My first
thoughtwhen I read
about theproposal
was, whata bunch of
lightweights’Traders in
London’s
financial district
may get help
with their work-
life balance
Mike Kemp/In Pictures/GettyCross asset. orkplace diversityW
Trading looks to tackle
its long-hours culture
H U D S O N LO C K E T T— HONG KONGChina has scrapped profitability
requirements for companies seeking to
list stocks on Shenzhen’s technology-
focused ChiNext market, kicking off a
battle for start-up listings following the
high-profile launch of Shanghai’s Star
Market earlier this year.
The China Securities Regulatory
Commission announcedyesterday that
it was removing rules demanding that
companies seeking an initial public
offering on the tech-heavy ChiNext
board, which is run by the Shenzhen
Stock Exchange, must first report prof-
its for two consecutive years.
“There is certainly real competition
[between the two markets], that’s unde-
niable,” said Gerry Alfonso, a director at
Shenwan Hongyuan Securities in
Shanghai.
Mr Alfonso said relaxing ChiNext’s
listing regime made sense in light of
relaxed requirements for profitability
introduced by the Shanghai Stock
Exchange’s newStar board, which
launched in July with the backing of Chi-
nese president Xi Jinping and was hailed
by state media as the country’s answer
to New York’s Nasdaq. ChiNext has
raised $3.6bn from IPOs this year, while
Star has far outstripped it with $8.7bn
since launch.
The looser rules will help ChiNext
compete with Star for listings by Chi-
nese start-ups, which struggle to meet
the three-year profitability require-
ments of Shanghai and Shenzhen’s main
boards.
“These are baby steps in opening up
the market, but they are steps in the
right direction,” said Mr Alfonso, who
characterised competition between the
two exchanges as “healthy”.
He added that policymakers were
eager to ensure that promising start-ups
that take longer to become profitable do
not choose to go public in New York,
where the listings process is less ardu-
ous.
Beijing had previously signalled its
intent to extend reforms introduced by
Star to ChiNext, which was itselfbilled
as the Chinese answer to Nasdaq when it
launched a decade ago. But the Shen-
zhen board has come nowhere close to
the prominence enjoyed by the New
York tech market. Following its debut,
big-name technology listings continued
to flow offshore to Hong Kong and New
York, including Alibaba’s record $25bn
listing in 2014 on the New York Stock
Exchange.
Analysts said the relaxation of stand-
ards for ChiNext was also a response to
the difficulties many companies faced
in raising capital as the country’s growth
has slowed to the lowest level in three
decades.
“They’re trying to help companies
with financial needs to tap the market,”
said Ronald Wan, chief executive at
Hong Kong-based Partners Capital.
“Some of these companies that are in
trouble have [a] good business model or
business concepts... so they’re waiv-
ing the requirement for companies that
have been temporarily hit,” he said.
“But whether investors will be inter-
ested, it’s up to the market.”Equities
China relaxes
listing rules
for Shenzhen
exchange
The negative outlook
reflected in part
‘lower government andpolicy effectiveness’
NOVEMBER 9 2019 Section:Markets Time: 11/20198/ - 18:11 User:stephen.smith Page Name:MARKETS1, Part,Page,Edition:EUR , 15, 1