Financial Times Europe - 31.07.2019

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Briefing


iGrowth dip raises stakes for Macron
Aslight dip in French economic growth in the
second quarter has underlined the challenges faced
by President Emmanuel Macron as he tries to
defuse protests and boost consumption.— PAGE 2

iJapan central banks holds rates steady
The Bank of Japan has kept monetary policy on
hold at its July meeting, but signalled it would
respond aggressively to any economic weakness
caused by events abroad.— PAGE 3

iTehran ex-mayor sentenced to death
Mohammad Ali Najafi, former
mayor of Tehran once seen as a
presidential candidate, has
become the first Iranian
ex-official to receive a death
sentence, after being found
guilty of murder.— PAGE 4

iS Africa’s economic challenge laid bare
The economic challenge facing President Cyril
Ramaphosa was laid bare as South African
unemployment rose to its highest for a decade and
power provider Eskom posted huge losses.— PAGE 2

iHuawei profits rise despite US ban
Chinese telecoms company Huawei reported that
its profits had risen 23 per cent in the first half of
the year even after it was blocked from buying
components from US suppliers.— PAGE 11

iCanberra probes fast-tracked visas
Australia’s government is to investigate whether
immigration authorities gave special treatment to
the country’s largest casino operator by speeding up
visa applications from Chinese gamblers.— PAGE 4

iTanzania police detain journalist
Police in Tanzania have arrested Erick Kabendera a
journalist in the latest in a series of attacks on
freedoms in a country that had been seen as one of
east Africa’s strongest democracies.— PAGE 4

Datawatch


Mexican power grab


Is the leftwing president flirting with


demagoguery?— BIG READ, PAGE 7


WEDNESDAY 31 JULY 2019 WORLD BUSINESS NEWSPAPER EUROPE


World Markets


STOCK MARKETS
Jul 30 prev %chg
S&P 500 3009.44 3020.97 -0.
Nasdaq Composite 8261.50 8293.33 -0.
Dow Jones Ind 27152.19 27221.35 -0.
FTSEurofirst 300 1516.75 1538.32 -1.
Euro Stoxx 50 3465.49 3523.58 -1.
FTSE 100 7646.77 7686.61 -0.
FTSE All-Share 4164.69 4186.17 -0.
CAC 40 5511.07 5601.10 -1.
Xetra Dax 12147.24 12417.47 -2.
Nikkei 21709.31 21616.80 0.
Hang Seng 28146.50 28106.41 0.
MSCI World $ 2212.50 2215.71 -0.
MSCI EM $ 1045.73 1048.66 -0.
MSCI ACWI $ 530.15 531.00 -0.

CURRENCIES
Jul 30 prev
$ per € 1.114 1.
$ per £ 1.215 1.
£ per € 0.917 0.
¥ per $ 108.645 108.
¥ per £ 132.030 133.
SFr per € 1.104 1.
€ per $ 0.898 0.

Jul 30 prev
£ per $ 0.823 0.
€ per £ 1.091 1.
¥ per € 121.025 121.
£ index 75.040 75.
SFr per £ 1.205 1.

COMMODITIES

Jul 30 prev %chg
Oil WTI $ 57.25 56.87 0.
Oil Brent $ 64.10 63.62 0.
Gold $ 1419.05 1420.40 -0.

INTEREST RATES
price yield chg
US Gov 10 yr 127.24 2.07 0.
UK Gov 10 yr 148.93 0.63 -0.
Ger Gov 10 yr 148.24 -0.40 -0.
Jpn Gov 10 yr 121.51 -0.16 -0.
US Gov 30 yr 103.23 2.59 0.
Ger Gov 2 yr 101.17 -0.76 0.

price prev chg
Fed Funds Eff 2.38 2.39 -0.
US 3m Bills 2.12 2.10 0.
Euro Libor 3m -0.40 -0.40 0.
UK 3m 0.78 0.78 -0.
Prices are latest for edition Data provided by Morningstar

TO B I A S B U C K— BERLIN

The number of lawsuits alleging a link
between Bayer’s Roundup pesticide
and cancer has leapt more than a third
from 13,400 to 18,400 in just three
months, underlining the growing legal
riskfacedbytheGermanpharmaceuti-
calsandchemicalsgroup.

Bayer’s shares have fallen sharply over
the past year, in response to a string of
juryverdictsinCaliforniathatfoundthe
glyphosate-based weed killer was
responsible for the plaintiffs’ cancer.
Analysts believe the avalanche of cases
could cost the German group billions of
dollarsindamagesawards.
“Bayercontinues to believe that it has
meritorious defences and intends to
defend itself vigorously in all of these
lawsuits,”thegroupstatedyesterday.
The group’s share price continued to

slide yesterday, falling more than 4 per
cent to €56.83. Over the past year, the
stock has lost more than 40 per cent of
itsvalue.
The news of the 5,000 extra lawsuits
came as Bayer announced a 21 per cent
increase in second-quarter sales to
€11.5bn, reflecting the acquisition of
Monsanto last year. Adjusted for portfo-
lio and currency effects, the increase in
revenueswasjust1percent.
“Bayer is on track in its operational
business,” saidWerner Baumann, its
chiefexecutive.
Thegroupconfirmeditsfinancialout-
look for the rest of the year but cau-
tioned that the targets were “becoming
increasinglyambitious”.
Analysts said the results came in
slightly below expectations. They cau-
tioned that investor sentiment was
drivenbytheUSlitigationrisk.

“Market attention will remain solely
focused on glyphosate litigation,” said
Peter Verdult, an analyst at Citi. “In the
absence of a court win and/or settle-
ment, we continue to see the shares
trading at a steep discount to fair value,
and calculate the shares currently dis-
count[about]€30bnoflitigationrisk.”
Netearningsinthesecondquarterfell
almost 50 per cent to €404m. The
decline was in part the result of the
“increased seasonality” of Bayer’s busi-
nessaftertheMonsantotakeover,which
has made the German group more reli-
antontheagriculturalsector.
Bayer also took impairment charges
related to the sale of its Dr Scholl’s foot-
care unit and restructuring after the
Monsanto deal. Second-quarter sales in
Bayer’s pharmaceuticals division rose
4 per cent to €4.4bn, while adjusted
ebitdarose10percentto€1.5bn.

Bayer’s legal risk mounts as 5,000 more


lawsuits claim pesticide links to cancer


©THE FINANCIAL TIMES LTD 2019
No: 40,156★

Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha

AnalysisiPAGE 4

Hong Kong real estate
weakens on China fears

Austria €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 Ft1090 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.

Kuwait and Iraq
have the most
undiversified
revenue bases of
oil exporters in
the Middle East
and north Africa,
and are most
vulnerable to oil
price movements.
Oil revenue in
Iraq made up
92 per cent of
total revenue.

Fuelling the economy
 of total revenue, 

    

Kuwait
Iraq
Oman
Qatar
Bahrain
UAE
Saudi Arabia
Yemen
Algeria
Iran

Oil revenue Non-oil revenue

Source: IMF

Don’t count the cost


Spending more on audits is a price


worth paying— BROOKE MASTERS, PAGE 9


Walkman at 40


What Sony’s greatest gadget tells


us about Japan— LEO LEWIS, PAGE 8


ECB easing


faces German


challenge


Members of Germany’s constitutional
court in Karlsruhe prepare to open a
fresh hearing yesterday into the legality
of the European Central Bank’s pur-
chasesofgovernmentbonds.
The ECB’s quantitative easing
programme, under which it has pur-
chased€2.6tnofbonds,remainscontro-
versial in Germany, where plaintiffs
claim it constitutes illegal “monetary
financing”.
The European Court of Justice last
year ruled in favour of the ECB, but the
German court is now set to interpret the
issue under domestic law. The hearings,
set to last months, begin as the ECB is
expected to launch further easing
measureslaterthisyear.
Constitutional courtpage 2
Uli Deck/dpa

JA M E S P O L I T I— WASHINGTON
C O L BY S M I T H— NEW YORK
Donald Trump lashed out at China and
the US Federal Reserve yesterday,
unsettling investors worried by mount-
ingriskstotheglobaloutlook.
Typically aggressive outbursts by the
US president hit equity markets in both
Europe and the US on a pivotal day for
theinternationaleconomy.
Mr Trump let fly as top American and
Chinese officials met in Shanghai in a
renewed effort to end their trade war,
nearlyayearandahalfafteritsstart.
In Washington, Jay Powell, the Fed
chairman,wasmeetingfellowUSmone-
tary policymakers amid high expecta-
tions that the US central bank will cut
rates today for the first time since the
financial crisis in order to shield the

economy from trouble brewing abroad.
US stocks opened lower for a second
day, alongside a broad decline in Euro-
pean equities, with the continent-wide
Stoxx 600 down 1.4 per cent. German
stocks fared particularly badly, with the
benchmark Dax 30 index falling more
than 2 per cent — its heaviest one-day
fallsinceFebruary.
Mr Trump suggested that officials in
Beijing were not negotiating in good
faith and were failing to implement the
purchases of US farm goods that they
havebeenpledging.
“China is doing very badly, worst year
in27—wassupposedtostartbuyingour
agriculturalproductnow—nosignsthat
they are doing so. That is the
problem with China, they just don’t
come through,” Mr Trump wrote on

Twitter. “My team is negotiating with
them now, but they always change the
dealintheendtotheirbenefit.”
Mr Trump’s comments reduced
expectations that even limited progress
could be made in Shanghai, despite the
fact that he dispatched his top team,
including Robert Lighthizer, the US
trade representative, and Steven
Mnuchin, the Treasury secretary, to
negotiate with Chinese officials includ-
ingLiuHe,thevice-premier.
In a widely criticised challenge to the
Fed’s independence, Mr Trump has
been loudly pressing it to help the
administrationinthetradeconflictwith
China by reverting to deep monetary
easing. But even though Mr Powell has
come round to the need for interest rate
cuts this year, after tightening policy in

2018, Mr Trump is still not satisfied.
Economists are expecting the Fed to
reduce its main interest rate by 25 basis
points, to a target range between 2 and
2.25 per cent, but Mr Trump has been
pushingforamoreaggressivestep.
“I’d like to see a large cut, and I’d like
to see quantitative tightening immedi-
ately stopped,” Mr Trump said yester-
day. “They moved in my opinion far too
early and far too severely, and put me at
somewhatofadisadvantage.”
Mr Trump’s persistent commentary
on Fed policy has put the US central
bank in a difficult spot, although its offi-
cials insist they will not be swayed by
WhiteHousepressure.
Powell pressedpage 3
Robin Hardingpage 9
Marketspages 19 & 20

Trump rattles equity markets by


lashing out at Beijing and the Fed


3 China accused of bad faith 3 Powell pressed to loosen policy 3 Threats to global outlook


Donald Trump
wrote on
Twitter: ‘That
is the problem
with China,
they just don’t
come through’

JULY 31 2019 Section:FrontBack Time: 30/7/2019 - 19: 37 User: keith.allen Page Name: 1FRONT USA, Part,Page,Edition: EUR, 1, 1


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