Briefing
iGibraltar rejects US bid to seize tanker
The British overseas territory’s justice ministry has
thrown out Washington’s request for “restraint” of
the Grace 1, an Iranian tanker at the centre of a
stand-off between Tehran and the west.— PAGE 2iSoftBank to pay $15bn into fund for staff
The Japanese tech investor is planning to pour up to
$15bn into its new investment fund on behalf of its
own employees, with much of it funded personally
by billionaire founder Masayoshi Son.— PAGE 6iMacron to press Putin over Ukraine
A top aide has said Emmanuel Macron is stepping
up peace efforts on Ukraine as the French president
hosts Russian counterpart Vladimir Putin at his
Mediterranean retreat before a G7 summit.— PAGE 3iGreek finance minister pushes tax shift
Christos Staikouras has told the
FT the centre-right government
is planning “comprehensive”
reform as Athens seeks to spur
growth after a decade of
international bailouts.— PAGE 4iChina benchmark closer to market rate
The central bank has said it will press ahead with a
long-awaited shake-up in which its key lending rate
will be brought closer into line with the credit
market, cutting corporate borrowing costs.— PAGE 2iUS prepares fresh reprieve for Huawei
The commerce department is preparing to extend a
temporary general licence for companies to do
business with the Chinese telecoms group for
90 days. An announcement is due today.— PAGE 2iBrussels to revive dirty money blacklist
EUjustice commissioner Vera Jourova has told the
FT that a fresh methodology to spot jurisdictions
which are failing to crack down is set to be unveiled.
An initial draft was rejected by 27 states.— PAGE 4Datawatch
Divided loyalties
Iraq caught in the middle of Iran-US
stand-off— BIG READ, PAGE 17
Off the list
Banks will be frozen out of IPOs
for good— MICHAEL MORITZ, PAGE 19
Battling Bloomberg
Can the LSE challenge the
champion of data?— PAGE 8
MONDAY 19 AUGUST 2019 WORLD BUSINESS NEWSPAPER EUROPE
World Markets
STOCK MARKETS
Aug 16 Aug 9 %Week
S&P 500 2888.68 2918.65 -1.
Nasdaq Composite 7895.99 7959.14 -0.
Dow Jones Ind 25886.01 26287.44 -1.
FTSEurofirst 300 1456.14 1462.27 -0.
Euro Stoxx 50 3329.08 3333.74 -0.
FTSE 100 7117.15 7253.85 -1.
FTSE All-Share 3893.66 3965.54 -1.
CAC 40 5300.79 5327.92 -0.
Xetra Dax 11562.74 11693.80 -1.
Nikkei 20418.81 20593.35 -0.
Hang Seng 25734.22 26120.77 -1.
MSCI World $ 2082.84 -
MSCI EM $ 963.52 -
MSCI ACWI $ 497.85 -CURRENCIES
Aug 16 Aug 9
$ per € 1.110 1.
$ per £ 1.214 1.
£ per € 0.915 0.
¥ per $ 106.385 105.
¥ per £ 129.183 127.
SFr per € 1.088 1.
€ per $ 0.901 0.Aug 16 Aug 9
£ per $ 0.824 0.
€ per £ 1.094 1.
¥ per € 118.135 118.
£ index 74.639 74.
SFr per £ 1.189 1.COMMODITIESAug 16 Aug 9 %Week
Oil WTI $ 54.89 54.28 1.
Oil Brent $ 58.62 58.29 0.
Gold $ 1515.65 1495.75 1.INTEREST RATES
price yield chg
US Gov 10 yr 132.22 1.57 0.
UK Gov 10 yr 151.40 0.47 0.
Ger Gov 10 yr -0.69 0.
Jpn Gov 10 yr 120.50 -0.24 0.
US Gov 30 yr 116.69 2.03 0.
Ger Gov 2 yr 101.29 -0.92 0.price prev chg
Fed Funds Eff 2.40 2.38 0.
US 3m Bills 2.02 2.05 -0.
Euro Libor 3m -0.43 -0.43 0.
UK 3m 0.77 0.77 0.
Prices are latest for edition Data provided by MorningstarJ U D I T H E VA N S— LONDONHundreds of landlords are exposed to
WeWork via $47.2bn of rental commit-
ments, with little recourse if the office
space company fails to pay.More than 220 landlords have leased
space in the US to WeWork and more
than50intheUK,accordingtoCoStar,a
real estate data provider, as the com-
pany expanded rapidly to become the
largest office tenant in Manhattan and
centralLondon.
The CoStar data show that TIAA-
CREF, Boston Properties, Beacon Capi-
tal Partners and Moinian Group are
amongthebiggestlandlordsintheUSto
WeWork, which published its prospec-
tus last week ahead of a highly antici-
patedinitialpublicoffering.
WeWork sublets the space to busi-nesses, from start-ups to large corpora-
tions, on a short-term basis. The mis-
match in rental periods is seen by many
in the industry as a potential weakness
initsmodelduringarecession.
“There are so many WeWork leases in
town, and I think there are a lot of land-
lords who are very cautious... about
the financial model. I’m one of them,”
saidonelargeLondon-basedlandlord.
If WeWork were to hit trouble, there
are limits to what landlords can do to
enforce rental commitments. The com-
pany — like its rivals — creates special
purpose vehicles for its leases, meaning
landlords do not have direct recourse to
theparentcompanyifitfailstopayrent.
In the past, similar companies have
changed the terms of their leases when
downturns hit. Regus, now IWG, rene-
gotiated leases in 2002 when the end of
thetechboomhititscustomerbase.To counter such concerns, WeWork
has guaranteed a portion of its rental
payments — though a small fraction of
the overall obligation. About $4.5bn of
rent payments are backed by corporate
guarantees and $1.1bn by bank guaran-
tees, according to the group’s pre-IPO
filing. It has paid more than $268.3m in
cash deposits to landlords and used
another$183.9mofsuretybonds,aform
ofinsurance.
That leaves more than $40bn of rent
payments, stretched over a typical 15-
year lease length, with no such backing,
though the group maintains in its filing:
“Our business, reputation, financial
condition and results of operations
depend on our subsidiaries’ ongoing
compliancewiththeirleases.”
WeWork’s$47.2bnofleaseobligations
dwarfthe£6.6bn($8bn)heldbyitslarg-
estrival,IWG.WeWork’s city leases leave landlords
exposed to $40bn in rent liabilities
AnalysisiPAGE 4Ideals of border picnic at
odds with today’s Hungary© THE FINANCIAL TIMES LTD 2019
No: 40,172★Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, DohaSubscribeIn print and online
http://www.ft.com/subscribetoday
email: [email protected]
Tel: +44 20 7775 6000
Fax: +44 20 7873 3428Austria €3.80 North Macedonia Den
Bahrain Din1.8 Malta €3.
Belgium €3.80 Morocco Dh
Bulgaria Lev7.50 Netherlands €3.
Croatia Kn29 Norway NKr
Cyprus €3.60 Oman OR1.
Czech Rep Kc105 Pakistan Rupee
Denmark DKr37 Poland Zl 20
Egypt E£42 Portugal €3.
Finland €4.50 Qatar QR
France €3.80 Romania Ron
Germany €3.80 Russia €5.
Gibraltar £2.70 Serbia NewD
Greece €3.60 Slovak Rep €3.
Hungary Ft1200 Slovenia €3.
India Rup220 Spain €3.
Italy €3.60 Sweden SKr
Latvia €6.99 Switzerland SFr6.
Lebanon LBP7500 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.80 UAE Dh17.The share of
Americans who
believe China is
the biggest threat
to the US has
doubled since- A quarter
think either China
or Russia pose
the greatest risk,
while just over
one in 10 have
the same fears
about North Korea
Threat level
Source: Pew Research Center of US respondents who perceive
country as the biggest threatRussiaChinaNorth
KoreaRussiaNorth
Korea
0 10 20 302007 2014 2019
Hundreds of thousands of anti-
government protesters stage a
peaceful protest through cen-
tral Hong Kong yesterday in
defiance of ever more threaten-
ingrhetoricfromBeijing.
After10weeksofdemonstra-
tions that have sparked the
financial hub’s biggest political
crisis in decades, the crowdsrallied in one of the city’s parks
before spilling out into the
streets and marching towards
thecentralbusinessdistrict.
Organisers estimated 1.7m
people attended the protest,
while police estimated that at
itspeak128,000gatheredinthe
designatedprotestzone.
Yesterday’s rally followedprotests on Saturday, when
anti-government demonstra-
tors gathered across the har-
bour in Kowloon and teachers
marchedincentralHongKong.
Both ended peacefully — in
contrast to recent weeks, when
protests have been character-
ised by fierce clashes between
policeandprotesters.Umbrella groupHong Kong marchers
defy the rain and threats from Beijing
Vincent Yu/AP PhotoA DA M SA M S O N A N D
TO M M Y ST U B B I N GTO N— LONDON
B R E N DA N G R E E L E Y— WASHINGTONInvestors are anticipating a fresh wave
of stimulus measures to tackle flagging
growth, as the White House said it was
considering a new round of tax cuts to
boosttheeconomy.
Central bankers will gather at their
annual Jackson Hole meeting in Wyo-
ming on Thursday as warning signals
from financial markets add to rising
pressure to find ways to support the glo-
baleconomy.
The US yield curve — which reflects
market expectations of future interest
rates — turned upside down last week
for the first time since the summer of
2007, a move seen by many as a leading
marketindicatorofrecession.
Weak data from countries including
Germany and China have fuelled fears
that the global economy is running out
of steam. But Larry Kudlow, White
House economic adviser, insisted that
the US economy was “in pretty good
shape”, telling Fox News yesterday: “I
don’tseearecessionatall.”
Mr Kudlow added that the Trump
administration was weighing up tax
cuts, possibly funded by money col-
lectedfromtariffsonChinesegoods.
Concern over the global economy has
sent investors fleeing into the perceived
safety of government bonds, driving
yields to record lows — the 30-year US
Treasury yield fell below 2 per cent for
the first time last week — and boosting
the pile of debt that offers a negative
interest rate to more than $16tn. InEurope, several countries have no sov-
ereigndebtofferingpositiveyields.
“There’s a risk that you will never get
a positive yield on a safe asset again — so
buy them now while stocks last,” said
GarethColesmith,atInsightInvestment.
Investors poured almost $500bn into
fixed income mutual funds in the first
half of this year, according to Morning-
star,thefastestrateforatleastadecade.
As a result, the price of highly rated
countries’ debt has jumped by an aver-
age of 6.4 per cent so far this year,
putting the asset class on track for its
strongest rally since 1995, according to
ICEBofAMerrillLynchbondindices.
Central banks have already begun
responding to the gathering storm
clouds: more than a third of central
bankshaveeasedinthelastsixmonths.
“Markets have an insatiable appetite
for easing,” said Nicola Mai, a portfolio
manageratPimco.
But with interest rates around the
worldalreadyatornearrecordlowsand
many central banks either still running
post-crisis stimulus programmes or sig-
nalling that they are about to restart
them, some economists argue that their
optionsareseverelylimited.
James Stock, a Harvard University
political economist, said the US Federal
Reserve would typically respond to rec-
ession with 5 percentage points of rate
cuts. But this time around “we don’t
have5percentagepoints”,hesaid.
Additional reporting by Lauren Fedor
and Robin Wigglesworth
All eyes on Powellpage 10
Rana Forooharpage 19Investors take
up position
for fresh wave
of stimulus
3 Downturn fears spur dash into bonds
3 White House weighs round of tax cuts
AUGUST 19 2019 Section:FrontBack Time: 18/8/2019 - 18:56 User: simon.roberts Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1 , 1
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