the times | Tuesday April 5 2022 39Business
January and February, which against
weak comparatives from the lock-
downs in early 2021 had shown a 23 per
cent recovery to 174,000 across the two
months.
The poor trading came as UK con-
sumers tightened spending with cost-
of-living inflation soaring to 5.5 per
cent, the highest levels since 1992, and
expected to go higher this year as
household energy and fuel at the fore-
court pump soar to all-time records.
The latest figures from car dealers
show the average cost of a new car is up
25 per cent since the start of the pan-
demic having risen by 14 per cent in the
last year alone to an average £25,000.
According to data from the consult-
ancy New AutoMotive, sales of pure
electric cars are now running at 16 per
cent of all new registrations. One in six
of all new cars, or about 40,000 last
month, coming on to the road are now
zero-emission.
The decline of diesel appears termi-
nal. Diesel registrations slumped, with
the vehicles’ share of the market halv-
ing from 16 per cent in March 2021 to
8 per cent, or just 19,000, last month.Sunak asks Mint to launch
NFT as part of crypto plan
Louisa Clarence-SmithRishi Sunak has asked the Royal Mint
to launch a non-fungible token (NFT)
as part of plans to turn Britain into a
“global cryptoassets hub”.
NFTs are digital files that serve as a
certificate of ownership of a digital as-
set such as images, video and audio.
The Royal Mint, the coin-maker
which is ultimately owned by the
government, said its first NFT range
would be available from this summer.
John Glen, the City minister, said
that the Royal Mint’s NFT was “an em-
blem of the forward-looking approach”
the Treasury plans to take.
The government announced a num-
ber of measures aimed at making the
UK an attractive place to start and scale
crypto-companies. It said that stable-
coins — digital currencies pegged to
traditional currencies — will be broughtwithin regulation to pave the way for
use as a form of payment. The Treasury
will also review how the tax system
could encourage further development
of the cryptoasset market in the UK.
Glen, who was speaking at the Inno-
vate Finance Global Summit in
London, acknowledged concerns over
cryptoassets, including the potential to
harm consumers and provide a plat-
form for illicit activity free from gov-
ernment oversight. Andrew Bailey, the
Bank of England governor, warned in a
separate speech yesterday that crypto-
currencies created an “opportunity for
the downright criminal”.
But Charles Kerrigan, a fintech part-
ner with CMS, the law firm, said: “This
is exactly what the industry has been
calling for — to be judged on the reality
of the innovation case by case rather
than visiting the sins of the worst actors
on the whole community.”N
ot every company turns
itself into a cast-iron
case for a regulatory
review. So, full marks to
the London Metal
Exchange. Last month’s nickel
market farrago produced the sort of
chaos even the Financial Conduct
Authority and Bank of England
can’t miss. They’ve already spotted
one glaring issue, too: the LME’s
ropey governance.
The self-styled “world centre for
industrial metals pricing, hedging
[and] trading” is reeling from a
meltdown on on all three fronts. To
boot, it’s one that puts its ownership
bang in the frame. Bought by Hong
Kong Exchanges and Clearing
(HKEX) for £1.4 billion in 2012, the
London home of $16 trillion of
metal contracts a year claims to be a
“robust and regulated market”. But
is it actually too close to China?
It’s an issue that’s been ramped up
by Putin’s assault on Ukraine.
Sanctioned Russia produces 17 per
cent of the world’s nickel. So traders
were braced for price shocks. But
maybe not the 90 per cent spike on
Monday, March 7, to a record
$55,000 a tonne. Or the mayhem a
day later, when the price hit
$101,365. It proved the cue for the
LME board, led by chairman Gay
Huey Evans and a chief executive
off to join a crypto firm — Matthew
Chamberlain — to suspend trading.
Worse, the LME also cancelled all
overnight trades, declaring them
null and void: $4 billion in total.
The decision left traders
apoplectic. Not least because, at the
centre of the brouhaha was Chinese
nickel producer Tsingshan, founded
by Xiang “Big Shot” Guangda.
Sitting on a vast short position, he
became the victim of a classic bear
squeeze: facing margin calls as the
price shot up and losses heading for
$8 billion. What, though, of those
betting against him? Well, Clifford
Asness of the hedge fund AQR
made their point, accusing the LME
of “reversing trades to save your
favoured cronies and robbing your
non-crony customers”.
Look at the board and you
understand that sort of thinking. Of
the LME’s nine directors, four either
work for or have direct links to
parent HKEX, effectively controlled
by Beijing. One, laughably deemed
“independent”, is its chairman Laura
Cha. Remember her? She led the
group’s risible bid for the London
Stock Exchange in 2019. Her stint as
an HSBC non-exec also included
her Hong Kong protester remarks in
2014: “American slaves were
liberated in 1861 but did not get
voting rights until 107 years later. So
why can’t Hong Kong wait for a
while?” A fifth director, also deemed
“independent” is Stephen Yiu. But
he’s ex of KPMG in Hong Kong and
a director of China Mobile: the
nation’s top telco outfit.
Indeed, only three non-execs,
including ex-Financial Services
Authority director Huey Evans, look
independent, while there’s a lack of
commodity nous. Hence the
regulators’ calls for the LME to hire
“additional independent directors to
strengthen its governance” — to go
with a successor to Chamberlain,
who last year failed to shut down its
“open outcry” trading floor.Yes, the exchange says it had to
cancel trades “in the interests of
systemic stability and market
integrity”, believing prices failed to
reflect “the underlying physical
market”. It’s since introduced price
circuit breakers and wants
“reporting for all LME metals” of
“over the counter trades”, saying it
was blindsided by last month’s short
positions. Funnily enough, the FCA
had more data on them than the
LME, though not enough to identify
Xiang. Whatever, the episode has
left the exchange rather tarnished.
Its cosy Chinese links hardly help.Ted Baker sits tight
A
nother day, another Ted
Baker sale (report, page 42).
This time, the entire
company’s in the window — on the
block after a trio of takeover tilts
from US private equity firm
Sycamore Partners and some “other
unsolicited third-party bid interest”.
Yes, the bargain hunters are out in
force, at least compared with where
poor old Ted was in 2018, when the
shares improbably topped £30. That,
though, was before Ray Kelvin’s
“forced hugging” antics that cost the
founder his job, even if he retains an
11.5 per cent stake. It was followed
by a brutal unravelling, starring an
accounting fiasco. Now, even a “for
sale” sign has only lifted Ted shares
to 146½p, up 14 per cent, valuing the
togs outfit at £270 millon.
Still, at least it’s double the price
at which Ted raised £105 million in
2020, 75p. And, while it makes sense
to test the market, with bids fielded
by Evercore and Blackdown
Partners, Ted’s no forced seller. It’s
rebuffed Sycamore at 130p and
137½p, with the raider’s third effort
clearly no knockout. Under chief
executive Rachel Osborne, sales
grew 35 per cent last quarter, with
Ted sitting on £80 million liquidity.
And she’s dangling £30 million free
cashflow this year. True, net profit
may be another year away. And 28
per cent investor Toscafund may
end up wearing the trousers. But
this is one sale where Ted shouldn’t
be afraid to turn the shoppers away.Musk diversifies
A
t last, something Elon Musk
didn’t front run on Twitter:
becoming its biggest investor,
paying $2.9 billion for a 9.2 per cent
stake. It sent its shares up almost 30
per cent to top $50. But the bigger
surprise was that Tesla shares rose
about 6 per cent, too.
Twitter has long been Musk’s
go-to arena for run-ins with the US
Securities and Exchange
Commission, typically to the
detriment of Tesla investors. And
now it could prove an even bigger
distraction. Only a fortnight ago he
used the site to ask his followers if
Twitter “rigorously adheres” to free
speech. Will he now be arguing the
toss with politicians, demanding a
board seat or even kicking around a
bid? Being electric car No 1 is a big
enough challenge without vanishing
down endless side roads.[email protected]business commentary Alistair Osborne
Nickel
price13 20 27$50,00045,00040,00035,00030,00025,00020,000Source: RefinitivNi
pr4540353025March 14
LME says nickel
trading will resume
on March 16, when
it will be subject to a
5 per cent price
limit in either
direction to limit
volatilityMarch 16
Resumes trading
then suffers another
temporary
suspension. The
nickel market also
had its first in a
series of “disruption
events”, when the
new price limit was
reached during
pricing windows that
set the metal’s
so-called official and
closing pricesMarch 18
Price limit increased
to 12 per cent.
Disruption event
declaredMarch 24
Disruption event
declaredMarch 21
Limit raised again
to 15 per cent.
Disruption event
declaredMarch 23
Disruption event
declaredMarch 17
Nickel price limit
raised to 8 per cent.
Disruption event
declaredMarchnickel market chaos
one veteran broker said. Since 2012
the exchange has been owned by
Hong Kong Exchanges and
Clearing (HKEX). Laura Cha,
chairwoman of the Hong Kong
group, sits as an independent non-
executive director on the metal
exchange board, as does John
Williamson, who until last year was
a non-exec at HKEX. The
chairwoman, Gay Huey Evans, is a
City veteran who held top roles at
the now defunct Financial Services
Authority, Barclays and Citigroup.Of the other independent directors,
Stephen Yiu had a long career as an
accountant, Antony Stuart was an
investment banker at NM
Rothschild, and Herta Von Stiegel
had a career in finance. It is down
to the board’s nomination
committee — Cha, Evans and Von
Stiegel — to recommend new
independent directors.
Some market participants
claimed the metal exchange may
have suspended the nickel market
and cancelled trades to protect theChinese group Tsingshan after its
short bet against the metal went
wrong. HKEX’s chief executive,
Nicolas Aguzin, and Richard
Leung, chief technology officer, are
also on the metal exchange’s board.
Matt Chamberlain, chief
executive of the metal exchange,
said: “I understand the frustration
and the anger but I can genuinely
say that that wasn’t the case.
“I can absolutely say that the
nationality of participants was not a
relevant factor.”Shine knocked off
metal trading