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Briefing
i ranklin Templeton to buy Legg MasonF
The $6.5bn deal between the US asset managers is
the latest sign of active fund groups seeking to scale
up to fend off threats. The combination will manage
more than $1.5tn in assets.— PAGE 11; LEX, PAGE 10
i ebate offers first glimpse of BloombergD
Billionaire Michael Bloomberg has qualified for
today’s televised Democratic debate in Las Vegas
after a national poll showed the former Republican
in second place, behind Bernie Sanders.— PAGE 4
i ussia ordered to pay $50bn over YukosR
A court in The Hague has reinstated the world’s
biggest arbitration award as Moscow was ordered to
pay former shareholders who had claimed that the
oil group was illegally expropriated.— PAGE 2
i acron woos right over ‘separatism’M
The French president has
launched a drive againstwhat
he calls Islamist “separatism”,
seeking to court support from
rightwing voters ahead of local
elections in March.— PAGE 4
i osneft curbs raise US heat on MaduroR
The White House has imposed sanctions on a unit
of Russia’s state energy company for transporting
Venezuelan oil in violation of US sanctions, raising
pressure on Venezuela’s president.— PAGE 4
i almart suffers from weak holiday salesW
The world’s biggest retailer has reported a drop in
profits and a sharp slowdown in US revenue growth
as sales of toys, computer games and clothing were
unexpectedly weak ahead of Christmas. —PAGE 11
i ntesa in midnight move for UBI BancaI
Italy’s biggest domestic lender has launched a €5bn
move for its rival in an audacious late-night attempt
on Monday to spur consolidation in the country’s
fragmented banking sector.— PAGE 12; LEX, PAGE 10
Datawatch
WEDNESDAY19 FEBRUARY 2020 WORLD BUSINESS NEWSPAPER EUROPE
World Markets
STOCK MARKETS
Feb 18 prev %chg
S&P 500 3355.82 3380.16 -0.
Nasdaq Composite 9678.06 9731.18 -0.
Dow Jones Ind 29117.79 29398.08 -0.
FTSEurofirst 300 1677.46 1683.73 -0.
Euro Stoxx 50 3833.54 3853.27 -0.
FTSE 100 7382.01 7433.25 -0.
FTSE All-Share 4118.84 4147.10 -0.CAC 40 6056.82 6085.94 -0.
Xetra Dax 13681.19 13783.89 -0.
Nikkei 23193.80 23523.24 -1.
Hang Seng 27530.20 27959.60 -1.
MSCI World $ 2430.69 2431.37 -0.
MSCI EM $ 1107.99 1106.30 0.
MSCI ACWI $ 580.02 580.06 -0.
CURRENCIES
Feb 18 prev
$ per € 1.082 1.
$ per £ 1.304 1.
£ per € 0.830 0.
¥ per $ 109.810 109.¥ per £ 143.165 143.
SFr per € 1.062 1.
€ per $ 0.924 0.
Feb 18 prev
£ per $ 0.767 0.
€ per £ 1.205 1.
¥ per € 118.847 119.
£ index 81.296 81.SFr per £ 1.279 1.
COMMODITIES
Feb 18 prev %chg
Oil WTI $ 51.90 52.58 -1.
Oil Brent $ 57.21 57.67 -0.
Gold $ 1580.80 1581.40 -0.
INTEREST RATES
price yield chg
US Gov 10 yr 1.54 -0.
UK Gov 10 yr 0.63 -0.
Ger Gov 10 yr -0.41 -0.
Jpn Gov 10 yr -0.06 -0.
US Gov 30 yr 114.77 1.99 -0.
Ger Gov 2 yr 105.77 -0.65 0.
price prev chg
Fed Funds Eff 1.55 1.55 0.
US 3m Bills 1.58 1.59 -0.
Euro Libor 3m -0.43 -0.44 -0.
UK 3m 0.76 0.75 0.
Prices are latest for edition Data provided by Morningstar
DAV I D C R OW— LONDON
G E O R G E H A M M O N D— HONG KONGHSBCis to slash about 35,000 jobs as
part of adownsizing of its operations in
Europe and the US in the bank’s latest
efforttoreviveitsstutteringbusiness.
The UKlendersaidit aimed to cut
annual costs by $4.5bn and shed $100bn
of assets adjusted for risk by the end of
2022 in its most drastic overhaul since
the financial crisis.
Noel Quinn, interim chief executive,
told the Financial Times that he
expected the number of full-time
employees to fall from about 235,000 to
200,000 within three years.
Mr Quinn described the overhaul as
one of the “deepest restructurings” in
the bank’s 155-year history and said it
would allow the lender to capture high-
growth opportunities in Asia. Investors
reacted negatively, sending the shares
down 6 per cent at the close of trading.
European banksare scrambling to
position for a prolonged period of low or
negative interest rates. Deutsche Bank,
the ailing German lender, last year said
it would slash 18,000 jobs.
Ewen Stevenson, HSBC’s chief finan-
cial officer, said the headcount reduc-
tions would nclude the downsizing ofi
the lender’s business in Europe and the
US and a broader cost-cutting plan
designed to reduce complexity.
HSBC said it would shrink its inv-
estment bank by reducing ts assetsi
adjusted for risk by about 35 per cent in
Europe and 45 per cent in the US. The
capital tied up in these businesses would
be deployed in higher-growth areas, the
lender added.
HSBC also said it would cut its sales
and trading and equity research opera-
tions in Europe and move its structured
products division from London to Asia.
In the US, where the bank has gener-
ated subpar returns for years, HSBC
pledged to “reposition” itself by slashing
its retail branch network, moving fixed-
income trading to London and reducing
operating costs by 10 to 15 per cent.
It also unveiled plans to merge its
standalone global private bank, which
provides services to rich clients, into a
beefed-up retail banking unit. António
Simões, who heads the private bank, is
leaving, the highest-profile casualty of
the restructuring. He was once tipped to
bechief executive of the group.
The bank will suspend share buy-
backs, “given the high level of restruc-
turing”, but maintain its dividend.
Additional reporting by Attracta Mooney
Lex age 10p
Shake-up as cool receptionh age 13p
HSBC dips 6% on interim chief ’s push
to axe 35,000 jobs in US and Europe
© THE FINANCIAL TIMES LTD 2020
No: 40,327★
Printed in London, Liverpool, Glasgow, Dublin,
Frankfurt, Milan, Madrid, New York, Chicago, San
Francisco, Orlando, Tokyo, Hong Kong, Singapore,
Seoul, Dubai, Doha
AnalysisiPAGE 3
Virus threat throws Abe’s
arrows off course again
Austria €3.90 Malta €3.
Bahrain Din1.8 Morocco Dh
Belgium €3.90 Netherlands €3.
Bulgaria Lev7.50 Norway NKr
Croatia Kn29 Oman OR1.
Cyprus €3.70 Pakistan Rupee
Czech Rep Kc105 Poland Zl 20
Denmark DKr38 Portugal €3.
Egypt E£45 Qatar QR
Finland €4.70 Romania Ron
France €3.90 Russia €5.
Germany €3.90 Serbia NewD
Gibraltar £2.90 Slovak Rep €3.
Greece €3.70 Slovenia €3.
Hungary Ft1200 Spain €3.
India Rup220 Sweden SKr
Italy €3.70 Switzerland SFr6.
Latvia €6.99 Tunisia Din7.
Lithuania €4.30 Turkey TL
Luxembourg €3.90 UAE Dh20.
North Macedonia Den
In every year but
one since 2010,
more than 20 per
cent of bond
issues have been
non-investment
grade. That share
was 25 per cent
in 2019. It is the
longest period
since 1980 that the
indicator of lower
issuer quality has
been so highQuality issues
of non-investment grade
bonds in global issuance
Source: OECDTackling the
climate crisis
Morality tale
Paris race shows politicians’ lives
are no longer private affairs— PAGE 8
RYA N M C M O R R OW
A N D N I A N L I U— BEIJING
K AT H R I N H I L L E— TAIPEI
Apple’s biggest iPhone plant is strug-
gling to return to full production after
China’s new year holiday because of
restrictions onmovement related to the
coronavirus, adding to concern that the
outbreak will have a lasting effect on the
US company.
Foxconn ssembles many of Apple’sa
iPhones at a huge factory complex ni
Zhengzhou, Henan, which has, at full
capacity, more than 200,000 workers.
But faced with municipal policies
such as a required quarantinefor work-
ers returning from outside the city,
where many of its employees live, the
Zhengzhou plant has struggled to mus-
ter its full workforce. The city equiresr
returning workers to self-quarantine for
between seven and 14 days.
The iPhone production unit stopped
accepting workers from outside the city
yesterday, citing issues in housing those
in need of quarantine. “In response to
government epidemic control require-
ments to prioritise prevention and
safely resume work,” non-Zhengzhou
workers had to temporarily hold off
reporting for work, a notice seen by the
Financial Times read.
Appleannounced a revenue warning
on Monday due, in part, to its “tempo-
rarily constrained” smartphone supply.
The company told investors hat its fac-t
tories in China were “ramping up more
slowly than we had anticipated” and
that “iPhone supply shortages will tem-
porarily affect revenues worldwide”.
Apple has perfected a just-in-time sup-
ply chain that cuts costs but makes it
vulnerable to unforeseen disruptions.
Analystsvary in their assessment of
likely damage to Apple. Manish Nigam,
head of Asian technology research at
Credit Suisse, forecasts a 15 per cent
shortfall inproduction in the first quar-
ter, based on the assumption that a
month of output will be lost but partially
offset by overtime in March.
Others believe the fallout will last
longer. “The impact starts looking big-
ger and bigger, and in the coming weeks,
the impact will grow,” said Bill Lu, head
of Asian semiconductor research at
UBS, noting component shortages were
the next threat. “Inventory is low in the
smartphone supply chain.”
Zhengzhoufears an influx of workers
might rapidly spread the virus. enanH
province officialshave instructed health
commissions to “step up oversight of
workplace virus-control measures”.
Foxconn allotted each returning
worker his or her own dormitory room
for self-quarantine. The rooms, which
usually house eight workers, had
quickly filled, causing Foxconn to halt
the return of additional staff, said a
Zhengzhou-based factory recruiter who
asked not to be named.
“There’s no one snoring. There’s no
one bothering you. The internet is
finally fast,” said one worker of thecon-
ditions in quarantine. The seven other
bunks in his dorm roomwere empty.
News & analysispage 2
Virus bond salespage 19
Marketspage 20
Apple’s biggest iPhone plant held
back by coronavirus travel curbs
3 Battle to recover full output 3 Long-term damage feared 3 Component shortage looms
Turkey verdict
Court clears
protesters
Mucella Yapici, an architect, flashes a
victory sign outside court in Istanbul
after her acquittal in a trial that critics
said symbolised President Recep Tayyip
Erdogan’s crackdown on civil liberties.
The court cleared philanthropist and
businessman Osman Kavala who, along
with eight others, was charged with
seeking to violently overthrow the
government. Mr Kavala had spent 840
days in jail and was expected to be
released but, hours later, prosecutors
issued a fresh detention warrant.
The case centred on the “Gezi park”
protests that swept Turkey in 2013,
which Mr Erdogan had sought to
present as an international conspiracy
to bring down his government.
Report age 3p
Umit Bektas/Reuters
The Apple plant
in Zhengzhou is
struggling to
muster its full
workforce while
staff returning
from outside the
city are made to
self-quarantine
for up to 14 days
3 artin Wolf: we need an energy revolutionM — PAGE 9
3 Big Read: covering the costs of catastrophe— PAGE 7
3 ail Risk: the dying embers of UK coalT — PAGE 11