Wednesday9 October 2019 ★ 11
The Financial Times Limited 2019© Week 41
Hitachi stands out in Japan’s corporate
landscape. It nearly collapsed under an
$8bn loss in the financial crisis, but it
survived. Now, after a decade of
agonising restructuring, the group is
focused on pushing into fast-growing
sectors, such as the internet of things.
AnalysisiPAGE 15Revamped Hitachi focuses
on fast-growing sectorsDA N I E L S H A N E A N D
A L I C E WO O D H O U S E— HONG KONG
P H I L I P STA F F O R D— LONDONThe Hong Kong bourse abandoned its
£32bn offer for theLondon Stock
Exchange roup yesterday, ending itsG
attempt to create a global capital mar-
kets operator and break up the LSE’s
rival deal forRefinitiv.CharlesLi,chiefexecutiveofHongKong
Exchanges nd Clearing, said the com-a
panyhadconcludedthatanofferwasno
longer in the best interests of its share-
holders. “We only regret the chances we
didn’t take,” he said. “We believe the
strategic rationale for the combination
ofourtwobusinessesiscompelling.”
The cash-and-stock offer, tabled amonth ago, amounted to £83.61 per
share and required the LSE to give up its
agreed deal to buy Refinitiv, the data
andtradinggroup,for$27bn.
The LSE flatlyrejected ts rival and itsi
shareholders remained unmoved by a
three-weekHKEXcharmoffensive.The
LSE said it remained committed to the
Refinitivdeal.
Shares in HKEX, which had until the
end oftoday to make a formal bid,
gained2.3percentinHongKong ester-y
day.LSEsharesdropped6percent.
ChrisTurner,ananalystatBerenberg,
said HKEX’spulling the plug reflected
its finances. “Investors were asking
them to sweeten the bid to £95 and
upwards, yet even a simple merger
modelshowedthatwasnotpossible.”The bidfaced concerns overantitrust
and regulatory approval, particularly
over HKEX governance. The territory’s
government,controlled by Beijing,app-
ointssevenof13HKEXboardmembers.
The bid had arrived to a troubled
backdrop. Hong Kong’s stock market
turnedintheworstperformance monga
developed markets in the third quarter,
in part because of the political crisis in
the territory, parked bys violentpro-
testsoverthepastfourmonths.
HKEXisvyingtomaintainitsposition
as a gateway to China againstcompeti-
tion from Shanghai and Shenzhen. The
choice not to pursue the LSE acquisition
raisedquestionsoverHKEXstrategy.
Lexpage 10
Questions swirl age 13pHong Kong bourse ditches £32bn bid
for LSE after charm offensive falls flat
Nissansearching for a leader to signal a
decisive break both from the Ghosn era
andthesubsequentfactionalfighting.
“Today it’s a disaster,” a person close
to the board said before yesterday’s
meeting. “Everything is out of control.
Nobody seems to be in command and
thatcannotlastlong.Nowit’senough.”
Mr Uchida pent more than a decades
at a Japanese trading house before join-
ing Nissan in 2003. asakazu Toyoda,M
head of the nomination committee,
stressed that Mr Uchida valued the link
with Renault, saying that thiswas the
mainreasonhehadjoinedNissan.
Additional reporting by Peter Campbell
in Dubaihasbeenindictedonchargesoffinancial
misconduct,maintainshisinnocence.
After pressure within Nissan was
intensified by criticism from Renault,
Mr Nada’s role has been significantly
diminished, although he has not
resigned, say people familiar with the
decision. Some have questioned
whether Nissan is legally able to dismiss
Mr Nada given his role as a whistle-
blower and say talks are under way to
makehim“asenioradviser”.
Nissan declined to comment on the
status of Mr Nada, who did not respond
toarequestforcomment.
Mr Ghosn’s arrest last year, and the
breakdown of ties with Renault, leftfor control of Nissan. Paralysis caused
by infighting has left the company una-
ble to focus on its core business, its
recovery plan and its frayed relations
withFrenchpartnerRenault.
The selection processitself was
fraught with tension as the board
clashed over how its 10-month investi-
gation into Mr Ghosn’s financial deal-
ings had been conducted, according to
peoplewithknowledgeofthesituation.
Senior Nissan figures questioned why
the probe had not looked more closely
attheroleofHariNada,theformerhead
of legal and close Ghosn associate who
was a central figure in the investigation
against his former boss. Mr Ghosn, whoDAV I D K E O H A N E— PARIS
L E O L E W I S A N D K A N A I N AG A K I— TOKYO
Nissan as ah ppointedanewchiefexecu-
tive and sidelined the whistleblower
behindCarlos Ghosn’s downfall in an
effort to end the boardroom rift that has
threatenedthecarmaker’ssurvival.
The unanimous board decision to
appointMakoto Uchida, head of China
operations, to lead the “new Nissan”
ends a three-month search to replace
HirotoSaikawa,MrGhosn’shandpicked
successor who himself was ousted in
September.
People close to the board said
that Mr Saikawa’s sudden dismissal had
laid bare the extent ofthe “toxic” battle
Nissan appoints China head as chief
3 Carmaker promotesUchida 3 Move to end board rift 3 Ghosn whistleblower sidelined
‘Today it’s
a disaster.Everything
is out ofcontrol.
Now it’senough’
Companies / Sectors / People
ABB..................................................................Companies 15
AIGAMS..................................................................................................................................... 209
Adidas............................................................ 19
Air IndiaAlibaba................................................................................................................4,10 9
AllianzAlphabet...............................................................................................................8,20 12
AltiostarAnglo American................................................................................................ (^1415)
AppleArqiva.........................................................................................................10,15,2012,
AstraZenecaBAE Systems.............................................................................................. (^104)
BHPBT....................................................................................................................................... (^1515)
Ball CorpBarclays............................................................................................................9,14 19
BayernLBBessemer Venture Partners................................................................... (^1214)
Bharat PetroleumBlackRock........................................................................................... 199
BlackstoneBlue Origin....................................................................................................... (^1213)
BoeingBrevan Howard.................................................................................................... (^1319)
Brooklyn NetsBundesliga................................................................................................ 144
CCTVCanada Pension Plan.....................................................................................4,10 10
Carnegie SteelCellnex...............................................................................................10,20 14
Cellnex TelecomCerberus............................................................................................. (^1512)
CiscoCoca-Cola HBC........................................................................................................ 2014
Container Corporation of India........ 9
CornerstoneCredit Suisse...........................................................................................9,13 15
Crown HoldingsDeka......................................................................................................... (^1912)
Deutsche BankDish................................................................................................................ (^89)
Domino’s PizzaDoorDash.......................................................................................10,20 10
DuckDuckGoEasyJet.......................................................................................................... 208
Elliott ManagementEndeavor...................................................................................... 1412
EricssonFacebook............................................................................................................1,14 12
FaureciaFender..................................................................................................................... (^1512)
Fiat Chrysler............................................... 14
FidelityFirewood..................................................................................................................... 121
FordFortress Investment................................................................................................ (^1412)
General MotorsGoldman Sachs.................................................................................. (^1412)
GoogleGreenlight Capital.....................................................................................8,10,12 19
Gresham Investment Manag’tGrubhub................................................................. 1019
HDILHIS...................................................................................................................................... 124
HSBCHSH Nordbank.................................................................................................8,9,13 12
HaysHelaba........................................................................................................................... (^2012)
HitachiHong Kong Exchanges.........................................................................10,11,13 15
Houston RocketsHuawei...................................................................................1,12,144,
Hugo Boss.................................................. 20
IFlytekIL&FS............................................................................................................................... 41
ITVIliad................................................................................................................................10,15 20
IlluminaInvesco...................................................................................................................... (^209)
JD.comJPMorgan................................................................................................................ (^1012)
JPXJuventus.......................................................................................................................... (^1514)
KKRKPMG.................................................................................................................................. (^159)
KinnevikLBBW..................................................................................................................... (^2012)
La LigaLancashire Holdings......................................................................................... (^1419)
Land Securities........................................ 20
LinkedInLondon Metal Exchange............................................................................. (^1210)
London Stock ExchangeLyft............................................................................10,11,13 14
Man GroupMedMen......................................................................................................... 2019
MediaMonksMegvii................................................................................................................ (^121)
MetLifeMetro Bank............................................................................................................. 199
MoelisMicron Technology.............................................................................................. 1213
NBANaval..............................................................................................................................4,10 4
Nektar TherapeuticsNetflix......................................................................................... (^2014)
NissanNokia..........................................................................................................................1,14 11
NordLBNorges Bank.......................................................................................................... (^1212)
O2...................................................................... 15
Odey Asset ManagementOracle............................................................................... (^1914)
Osram............................................................ 20
PageGroupPapa John’s...........................................................................................10,20 10
Pfizer.............................................................. 10
PinterestPizza Hut............................................................................................................ 1014
Postmates.................................................... 10
Premier InnPremier League........................................................................................ (^2014)
Promeritum Investment Manag’t..
Punjab and Maharashtra Co-opQatar Holding.................................................4 14
Qiagen........................................................... 20
QualcommRELX..................................................................................................................... 201
RefinitivRenaissance Technologies..............................................................10,11,13 19
Renault........................................................... 11
ReutersRobert Walters.............................................................................................10,20 10
S4 Capital..................................................... 12
SalesforceSamsung Electronics.................................................................................. (^1212)
SenseTime...................................................... 1
Shipping Corporation of IndiaSilver Lake................................................................ (^91)
Société Générale........................................ 8
SoftBankSpaceX..........................................................................................................1,12,14 13
Telefónica..................................................... 15
TemasekTencent...............................................................................................................4,10 1
Tesco............................................................. 20
ToyotaTwilio.......................................................................................................................... (^1214)
UBS.................................................................. 13
Uber.......................................................9,10,
Uber EatsUnited Rentals.............................................................................................. 2010
Unizo............................................................... 12
Virgin GalacticVodafone................................................................................................. (^1315)
WPPWeWork.......................................................................................................................... 1412
WestLB........................................................... 12
WhitbreadYitu........................................................................................................................ (^201)
Yum Brands................................................ 10
Aerospace & DefenceSectors.......................4,
AirlinesAutomobiles....................................................................................................11,14 20
Banks......................................................4,8,
EnergyFinancial Services............................................................................................9,19 19
FinancialsFood & Beverage.............................................................10,11,12,13,14,19 20
Healthcare.................................................. 20
Industrial GoodsIndustrials.....................................................................................14,20 15
Media........................................4,10,12,14,
MiningOil & Gas................................................................................................................... 1915
Personal & Household GoodsPharmaceuticals............................................... 2012
Property............................................12,14,
RetailRetail & Consumer................................................................................................ (^2012)
Support Services..............................10,
TechnologyTelecoms.................................................1,8,10,12,14,15,2010,12,14,15,
TobaccoTravel & Leisure.............................................................................4,10,14,20 20
People
Agnelli, Andrea......................................... 14
Bezos, JeffBoath, Richard.............................................................................................. (^1314)
Branson, RichardChai, Nelson........................................................................................ (^139)
Cutifani, MarkDeeter, Byron........................................................................................ (^1514)
Einhorn, DavidErgen, Charlie......................................................................................... (^199)
Flint, JohnGhosn, Carlos.................................................................................................... 118
Greenberg, HankGulliver, Stuart................................................................................... (^98)
Healy, GeoffHigashihara, Toshiaki........................................................................... (^1515)
Howard, AlanJenkins, Roger........................................................................................ (^1914)
Kalaris, Tom............................................... 14
Kiyota, AkiraLi, Charles........................................................................................10,11,13 15
Maupilé, ThierryMusk, Elon.......................................................................................... (^1413)
Nada, HariNakanishi, Hiroaki........................................................................................ 1511
Odey, CrispinPhipps, Henry.......................................................................................... (^1914)
Quinn, NoelRoberts, George.......................................................................................... 158
Saikawa, HirotoSchatz, Peer........................................................................................ 2011
Schwimmer, DavidSimons, Jim.............................................................................10,13 19
Slyngstad, YngveSorrell, Martin................................................................................. (^1212)
Toyoda, AkioTsai, Joe........................................................................................................ (^124)
Tucker, MarkUchida, Makoto......................................................................................... 118
Varley, John................................................ 14
Car crashGM — and its workers — pay a
heavy price as strike drags on— ANALYSIS, PAGE 14
Human shieldIs Japan Inc right to put
staff before shareholders?— INSIDE ASIA, PAGE 12
Laurence
Fletcher
Tail
Risk
There-emergenceoffearsoverglobaltradehasgivenequi-
ties a bumpy start to October. Europe, seen as particularly
vulnerable to any downturn, has seen its Stoxx 600 index
givebackallitsgainsfromSeptember.
Yet stocks remain strong performers. The Stoxx 600 has
delivered a total return of 16 per cent this year, while the
S&P500hasreturnedalmost20percent.
Atfirstglancethereareplentyofgoodreasonsforequity
resilience. Economic growth may be slowing but with the
US still in “a good place”, according to Jay Powell, Federal
Reserve chairman, a severe contraction looks unlikely.
Central banks appear ready to step in when things get
dicey and higher government spending in Europe is
expected. And when bonds are offering you negligible or
evennegativeyields,equitydividendsstilllookappealing.
However, there is cause to be wary of each of these four
pillars. Take US growth. “The underlying global momen-
tumisweakerthangenerallyaccepted,”saidRalfPreusser,
at Bank of America Merrill Lynch. The US has remained
resilient only “due to the fact
that the Fed has delivered a
spectacularpolicyreversal”.
The assumption of central
bank support for markets is
also shaky. Mr Powell may
have given the impression
that the Fed is watching asset
prices but it is unclear when
aidmightmaterialise.
“The ‘Fed put’ is quite far
away—itcouldbe10-20percentbelowwhere[stocks]are
now,” said Graham Neilson,at Fulcrum Asset Manage-
ment, who believes the Fed has more of an eye on the tight
US labour market and “excessive leverage”.His weighting
instocksisabouthalfitsaverage,onthatbasis.
Fiscal stimulus is oftentouted as picking up the baton
from monetary policy. But, even if itcomes, the effects are
likelytobetemporary.
“Fiscalstimulusistypicallyaone-offboostandnotwith-
outcost,”saidMrNeilson.
Supply-side reforms, which are more likely to deliver
sustainable benefits, have failed to materialise across the
eurozone. Indeed, years of quantitative easing have eased
the pressure on governments to come up with growth-
friendlymeasures.
That leaves the reflected attraction ofnegative-yielding
bonds. Geraldine Sundstrom, a Pimco fund manager,
warns that equity yields in Europe might seem attractive
but valuations are “fairly expensive” and balance sheets
areinmanycasesnotstrongenoughtojustifythem.
Moreover, some hedge funds are whispering that, with
borrowing costs at such low levels, governments must
eventually be lured into issuing more debt. That would
pushbondyieldshigher,reducingtheallureofequities.
Equity bulls have had a goodrun. But they could soon
discoverthatpropsforthemarketarefallingaway.
[email protected]
‘The Fed put is
quite far away
— it could be
10-20 per cent
below where
stocks are now’
Morethanhalfofcentralbanksarein
easingmode,thebiggestproportionsince
thefinancialcrisis.Thethirdquartersaw
58.5percentofcentralbankscutinterest
ratesinresponsetoadeepeningmalaise
inglobalmanufacturing,whichrecorded
itslongestdownturninsevenyears.
UBSanalystsestimatedthatannualised
third-quarterglobalgrowthwas2.3per
cent,nearthelowsofthefinalquarterof
2018,whentradewardisruptionwasatits
peak.Theslowdownwasconsistentwitha
“globalconfidenceshock”,theysaid,
giventheconcentrationofweaknessin
surveydata.TheEuropeanCentralBank
cut rateslastmonthaspartofitsbiggest
stimuluspackage nthreeyears,followedi
bytheUSFederalReserve’ssecond
reductionthisyear.
Onlythreeof41countriesraisedrates
inthethirdquarter.Robusteconomic
growthinNorwaypromptedathird
increasethisyear,whileKazakhstan
raisedratesowingtoworriesover
inflation.Interestrateswereratchetedup
inArgentinatosupportthecurrencyafter
PresidentMauricioMacri’sdefeatinthe
Augustpresidentialprimary.
Ratecutshavecontinuedintothefourth
quarter.Australia,IcelandandIndiaall
loosenedpolicylastweekandthemarket
ispricingasignificantprobabilityof
anothercutfromtheFedthismonth.The
BankofJapan—whererateshavebeenon
holdformorethanthreeyears—isalso
expectedtocutthismonth.Caroline Grady
Letterspage 8
Markets Insight age 20p
Spark into action anufacturing malaise spurs central banks to cut ratesM
Central banks across globe
accelerated easing in Q
Share of central banks cutting rates
( )
Sources: UBS; FT research
Manufacturing growth
has slowed
Annual change in output ( )
Manufacturing
Non-
manufacturing
A prolonged downturn in global manufacturing has prompted central banks to take action —Reuters
OCTOBER 9 2019 Section:2Front Time: 10/20198/ - 19:01 User:nick.miller Page Name:2FRONT USA, Part,Page,Edition:EUR , 11, 1