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Pandemic brings lasting changes to city centres



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Société Générale shuts branches and increases focus on online banking

Today’s news that France’s Société Générale will shut 600 branches as part of a cost-cutting drive is just the latest example of how the pandemic is not only accelerating changes in the way we do business but also bringing major changes to our built environments. 

The move follows similar decisions across Europe from the likes of ABN Amro, Deutsche Bank, HSBC and Svenska Handelsbanken. 

As with so many other sectors, the shift to online banking did not start with the public health crisis but has certainly been turbocharged by it.

Retail has been the most obvious example. Today we report a trebling of losses at Ted Baker and news that even the Queen’s coffers — Her Majesty is a big commercial landlord via the Crown Estate — have been hit by the enforced closures of stores and restaurants. Online beauty retailer The Hut Group, meanwhile, has increased its full-year sales forecasts for the second time since September as digital sales rocket. 

But beyond the distress of individual retailers, as our Big Read explains, the crisis has led to a wider discussion on the very purpose of city centres and how they might look in the future. The crisis is particularly acute in the UK where town planning for so long was entwined with the expansion of big retail at the expense of small businesses. Now the industry is in crisis, retail landlords can either slash rents in search of new tenants or repurpose stores for other uses. 

Office space is another area ripe for a rethink, argues columnist Pilita Clark, not least because surveys indicate staff want to keep working at home — at least for part of the week — once the pandemic is over.

Remodelling of workspaces to do away with the distraction of open-plan design, adding more meeting rooms and providing more privacy for workers could actually turn the office into a vastly better version of what it was before Covid-19, she writes.


The European Central Bank on Thursday is expected to increase its €1.35tn emergency asset purchase programme by another €500bn. Investors are betting the bank will do what it takes to keep EU borrowing costs low, writes capital markets correspondent Tommy Stubbington. An EU summit on Thursday and Friday — as well as contemplating the final outcome of Brexit talks — will continue the debate about the bloc’s coronavirus recovery fund.

Line chart of 10-year yield spreads versus Germany (percentage points) showing shrinking spreads in the eurozone

Consultancy PwC says the pandemic will lead to structural changes in the asset management industry, as infrastructure, private markets and a business focus on sustainability lead to new revenues. If coronavirus vaccination triggers a rapid economic recovery, assets overseen by investment managers could increase 5.6 per cent a year to hit $147.4tn by the end of 2025.

Absolute return funds — those that promise results in all circumstances — have performed particularly badly during the crisis. Investors’ frustration that the all-weather funds failed to shield them from the pandemic shock could hasten the end of the products, once one of the asset management industry’s hotspots.


The strength of digital media has helped the global advertising market overcome the serious downturn in traditional marketing and could potentially deliver a rebound of 6.2 per cent in 2021. There are still casualties from the pandemic: Japan’s Dentsu — the world’s fifth-largest ad company and suffering greatly from the postponement of the Tokyo Olympics — is cutting 6,000 of its overseas jobs.

Airbnb’s decision to go public — trading begins in the accommodation booking company’s shares on Thursday — gives us an interesting opportunity to gauge investor thinking on the future of a travel industry ravaged by the pandemic. At the more traditional end of the sector, Hyatt Hotels today announced plans to expand in Europe, hoping that post-vaccine demand can compensate for its losses during the crisis.

Fintech groups in the Middle East have benefited from the drive towards online financial services caused by the pandemic. From a low base, the sector is growing 30 per cent a year in a region where the young are swift to adopt new technologies but where millions have been overlooked by banks and wealth managers. Read more in our special report: The future of telecommunications

Global economy

China’s export success, supported by demand for pandemic-related products such as personal protective equipment and gear for working at home, continued with a 21 per cent jump in November compared with last year, pushing the country’s trade surplus to record levels. Things are less rosy in Hong Kong where its top financial official said the pandemic had “derailed the city’s economy”.

Forecast-beating industrial production data in Germany — including an almost 10 per cent jump in carmaking — raised hopes that Europe’s largest economy could avoid a double-dip recession.

A decision on a new US stimulus bill is inching closer. The current proposal includes $288bn in small business aid, $180bn in unemployment benefits, $160bn for hard-hit local governments and help for stricken business sectors such as airlines. President-elect Joe Biden today unveiled his team to tackle the pandemic.

Have your say

Coronavirus vaccines mean light at the end of the tunnel at last. But there’s a long way to go before the world can say goodbye to pandemic disruptions. Can governments roll out vaccine programmes swiftly, efficiently and fairly? And who should have priority? Please share your views with us — email us at Thanks

AdamC comments on Here’s what the office of 2021 should look like:

Amen on the meeting rooms point from me. Office designers seem to chronically underestimate the need for private meeting rooms and overestimate the need for trendy, open collaboration-type spaces, which seem to sit largely unused.

It is particularly hard for people who have people management responsibilities, or who work in sensitive functions like HR or finance. These workers cannot discuss much of their work in a café-style booth next to the lunchroom or wherever!

The essentials

Business education correspondent Jonathan Moules looks at how family businesses have coped with the pandemic and offers some tips from experts on how they can balance short-term pressures against long-term opportunities.

The UK’s NHS will administer the first doses of its Pfizer/BioNTech vaccine on Tuesday. One in three UK adults will not accept a vaccine, a poll has found.

Final thought

From European Commission president Ursula von der Leyen to Wuhan diarist Fang Fang, the FT’s Women of 2020 series celebrates the politicians, scientists, activists and authors who have inspired us during a difficult year.

We would really like to hear from you. Please send your reactions or suggestions to Thanks

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European stocks stabilise ahead of US inflation data




European equities stabilised on Wednesday after a US central banker soothed concerns about inflation and an eventual tightening of monetary policy that had driven global stock markets lower in the previous session.

The Stoxx 600 index gained 0.4 per cent and the UK’s FTSE 100 rose 0.6 per cent. Asian bourses mostly dropped, with Japan’s Nikkei 225 and South Korea’s Kospi 200 each losing more than 1.5 per cent for the second consecutive session.

The yield on the 10-year US Treasury bond, which has dropped in price this year as traders anticipated higher inflation that erodes the returns from the fixed interest securities, added 0.01 percentage points to 1.613 per cent.

Global markets had ended Tuesday in the red as concerns mounted that US inflation data released later on Wednesday could pressure the Federal Reserve to start reducing its $120bn of monthly bond purchases that have boosted asset prices throughout the Covid-19 pandemic.

Analysts expect headline consumer prices in the US to have risen 3.6 per cent in April over the same month last year, which would be the biggest increase since 2011. Core CPI is expected to advance 2.3 per cent. Data on Tuesday also showed Chinese factory gate prices rose at their strongest level in three years last month.

Late on Tuesday, however, Fed governor Lael Brainard stepped in to urge a “patient” approach that looks through price rises as economies emerge from lockdown restrictions.

The world’s most powerful central bank has regularly repeated that it will wait for several months or more of persistent inflation before withdrawing its monetary support programmes, which have been followed by most other major global rate setters since last March. Investors are increasingly speculating about when the Fed will step on the brake pedal.

“Markets are intensely focused on inflation because if it really does accelerate into this time near year, that will force central banks into removing accommodation,” said David Stubbs, global head of market strategy at JPMorgan Private Bank.

Stubbs added that investors should look more closely at the month-by-month inflation figure instead of the comparison with April last year, which was “distorted” by pandemic effects such as the price of international oil benchmark Brent crude falling briefly below zero. Brent on Wednesday gained 0.5 per cent to $69.06 a barrel.

“If you get two or three back-to-back inflation reports that are very high and above expectations” that would show “we are later into the economic recovery cycle,” said Emiel van den Heiligenberg, head of asset allocation at Legal & General Investment Management.

He added that the pandemic had sped up deflationary forces that would moderate cost pressures over time, such as the growth of online shopping that economists believe constrains retailers’ abilities to raise prices. Widespread working from home would also encourage more parents and carers into full-time work, he said, “increasing the labour supply” and keeping a lid on wage growth.

In currency markets on Wednesday, sterling was flat against the dollar, purchasing $1.141. The euro was also steady at $1.214. The dollar index, which measures the greenback against a group of trading partners’ currencies, dipped 0.1 per cent to stay around its lowest since late February.

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Potash/grains: prices out of sync with fundamentals




The rising tide of commodity prices is lifting the ricketiest of boats. High prices for fertiliser mean that heavily indebted potash producer K+S was able to report an unusually strong first quarter on Tuesday. Some €60m has been added to the German group’s full year ebitda expectations to reach €600m. Its share price has gone back above pre-pandemic levels.

Demand for agricultural commodities has pushed prices for corn and soyabeans from decade lows to near decade highs in less than a year. Chinese grain consumption is at a record as the country rebuilds its pork herd. Meanwhile, the slowest Brazilian soyabean harvest in a decade, according to S&P Global, has led to supply disruptions. Fertiliser prices have risen sharply as a result.

But commodity traders have positioned themselves for the rally to continue for some time to come. Record speculative positions in agricultural commodities appear out of sync even with a bullish supply and demand outlook. US commodity traders have not held so much corn since at least 1994. There are $48bn worth of net speculative long positions in agricultural commodities, according to Saxo Bank.

Agricultural suppliers may continue to benefit in the short term but fundamentals for fertiliser producers suggest high product prices cannot last long. The debt overhang at K+S, almost eight times forward ebitda, has swelled in recent years after hefty capacity additions in 2017. Meanwhile, utilisation rates for potash producers are expected to fall towards 75 per cent over the next five years as new supply arrives, partly from Russia. 

Yet K+S’s debt swollen enterprise value is still nine times the most bullish analyst’s ebitda estimate, and 12 times consensus, this year. Both are a substantial premium to its North American rivals Mosaic and Nutrien, and OCI of the Netherlands, even after their own share prices have rallied.

Any further price rises in agricultural commodities will depend on the success of harvests being planted in the US and Europe. Beyond restocking there is little that supports sustained demand.

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Amazon sets records in $18.5bn bond issue




Amazon set a record in the corporate bond market on Monday, getting closer to the level of interest paid by the US government than any US company has previously managed in a fundraising. 

The ecommerce group raised $18.5bn of debt across bonds of eight different maturities, ranging from two to 40 years, according to people familiar with the deal. On its $1bn two-year bond, it paid just 0.1 percentage points more than the yield on equivalent US Treasury debt, a record according to data from Refinitiv.

The additional yield above Treasuries paid by companies, or spread, is an indication of investors’ perception of the risk of lending to a company versus the supposedly risk-free rate on US government debt.

Amazon, one of the pandemic’s runaway winners, last week posted its second consecutive quarter of $100bn-plus revenue and said its net income tripled in the first quarter from the same period a year ago, to $8.1bn.

The company had $33.8bn in cash and cash equivalents on hand at the end of March, according to a recent filing, a high for the period.

“They don’t need the cash but money is cheap,” said Monica Erickson, head of the investment-grade corporate team at DoubleLine Capital in Los Angeles.

Spreads have fallen dramatically since the Federal Reserve stepped in to shore up the corporate bond market in the face of a severe sell-off caused by the pandemic, and now average levels below those from before coronavirus struck.

That means it is a very attractive time for companies to borrow cash from investors, even if they do not have an urgent need to.

Amazon also set a record for the lowest spread on a 20-year corporate bond, 0.7 percentage points, breaking through Alphabet’s borrowing cost record from last year, according to Refinitiv data. It also matched the 0.2 percentage point spread first paid by Apple for a three-year bond in 2013 and fell just shy of the 0.47 percentage points paid by Procter & Gamble for a 10-year bond last year.

Investor orders for Amazon’s fundraising fell just short of $50bn, according to the people, in a sign of the rampant demand from investors for US corporate debt, even as rising interest rates have eroded the value of higher-quality fixed-rate bonds.

Highly rated US corporate bonds still offer interest rates above much of the rest of the world.

Amazon’s two-year bond also carried a sustainability label that has become increasingly attractive to investors. The company said the money would be used to fund projects in five areas, including renewable energy, clean transport and sustainable housing. 

It listed a number of other potential uses for the rest of the debt including buying back stock, acquisitions and capital expenditure. 

In a recent investor call, Brian Olsavsky, chief financial officer, said the company would be “investing heavily” in the “middle mile” of delivery, which includes air cargo and road haulage, on top of expanding its “last mile” network of vans and home delivery drivers.

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