FT : Comcast set to spin off cable TV networks to drive streaming growth

Comcast set to spin off cable TV networks to drive streaming growth
‘Cord-cutting’ consumers lead entertainment group to focus investment on online assets

Comcast is close to announcing a plan to spin off its cable television networks, including news channels CNBC and MSNBC, in a move designed to position its remaining entertainment and sports assets as a faster-growing business better suited to compete in the streaming era. 

Comcast’s cable TV networks, which also include E!, Syfy, Oxygen and USA Network, have suffered as “cord-cutting” consumers favour streaming services.

The company’s other entertainment businesses — a portfolio that ranges from Universal Studios and theme parks to the NBC broadcast network and the Peacock streaming service — will be able to “invest in growth” without the drag of the cable businesses, according to a person familiar with the plan.

Mike Cavanaugh, Comcast’s president, said last month that the company was exploring the idea of spinning off the cable networks. Comcast is expected to announce the move on Wednesday morning, according to two people familiar with the plan. The Wall Street Journal first reported the details. 

The move by one of America’s largest media conglomerates is the latest acknowledgment of the collapse of cable, an enormously profitable business for decades. In August, Paramount and Warner Bros Discovery wrote down the valuations of their cable channels by $6bn and $9bn, respectively. Cable television channels have become “anchors around the necks” of media companies, LightShed analyst Rich Greenfield wrote at the time. 

Warner Bros has also explored spin-offs and other structures to isolate its legacy cable TV networks, the Financial Times reported in July.

Without the cable business, the newly constituted NBCUniversal entertainment group is expected to have healthy revenue without much debt, allowing it to pursue acquisitions of other digital assets, studios or networks.

“Like many of our peers in media, we are experiencing the effects of the transition in our video businesses and have been studying the best path forward for these assets,” Cavanagh told analysts last month. 

“The idea of playing some offence when you combine the balance sheet strength that we have, the assets we have and the management team we have — there may be some smart things to do,” he added.

Comcast shares jumped as much as 9 per cent after his comments on October 31.  

Dame Donna Langley, who has led the NBCU studios and served as chief content officer, will run the new entertainment group as chair of the NBCUniversal Media Group. Matt Strauss, who has been running the Peacock streaming service, will become chair of the NBCU Media group, overseeing distribution and programming agreements.  

The entertainment group will hold a broad portfolio of sporting rights, including with the NBA, NFL and Olympics. 

The cable television networks, which have $7bn in assets, will be spun off to shareholders in a tax-free transaction. Mark Lazarus, chair of the NBCUniversal Media Group, will run the cable TV group. Structuring the new company is expected to take about a year. 

Brian Roberts, Comcast chair and chief executive, will not serve on the board or as a member of the new company's management, but will hold a 33 per cent voting stake.

FT : Even brands built to last need a nimble strategy to thrive and endure

Even brands built to last need a nimble strategy to thrive and endure
No iron law states that a business will keep growing, even one renowned for excellence

Until fairly recently, if you asked someone to describe their idea of an established world-class European business, it seems likely that Volkswagen would get a mention.

Still the world’s second-largest carmaker by volume, despite a diesel emissions scandal that came to light in 2015, VW is a brand that suggests solidity, reliability and engineering soundness; a company which, like its products, is built to last.

So it is startling to read reports of possible factory closures, with job losses and 10 per cent pay cuts, for the first time in Volkswagen’s 87-year history. This sort of thing is not supposed to happen, not at this company, anyway. Yet there is no iron law that states a company will keep growing — even one with a deserved reputation for excellence.

For VW and its auto sector peers, the emergence and rise of electric vehicles — and, in particular, cheaper subsidised Chinese models — has shaken up the market. It has been an unavoidable disruption.

And, when a company is apparently successful and powerful, there can be a delay before the leadership makes necessary changes. “Some businesses remain hesitant to disrupt themselves,” says David Bach, president of the IMD business school in Lausanne. But investors will notice. “Capital markets can be ruthless, and may be better at picking winners than some managers,” he points out.

Sometimes, new leadership is required to reinvent a business, as happened at Microsoft, when Satya Nadella helped lead a process through which an ageing software business became a reinvigorated technology giant, at the leading edge of the AI revolution.

Perhaps introducing (or, rather, reintroducing) a spirit of entrepreneurship can boost the longevity and growth prospects of an established business.

Monique Boddington, associate professor at Judge Business School at the University of Cambridge, agrees that the adaptability of entrepreneurs is a quality that can help a business of any size.

But that adaptability may not always take the form of (self-)disruption, she adds.

“When you think about new technologies, are they really disruptive or are they in fact iterative? Look at the success of Nvidia [the dominant chipmaker],” she says. “They were never really disruptive, even if they have ended up taking over an industry. It was iterative development. I was using their chips when I was playing computer games decades ago.”

Companies can also renew themselves by “bringing the outside in” — sometimes labelled “open innovation”.

Big pharmaceutical groups have, by necessity, survived in part by acquiring or partnering with start-ups and smaller companies that have developed new treatments — Pfizer’s work with BioNTech to develop a Covid vaccine is an obvious example.

The toy company Lego sustained itself by encouraging inventiveness among its fans and customers, co-creating new products and services.

The deceptively simple sounding verb “pivot” is sometimes used to describe what companies need to do to survive and grow.

The implication is that a more or less dignified leap can be made from one form of activity to another. But, for a large company, or even the individual, pivoting is not necessarily straightforward. Other approaches have been suggested over the years. Some have advocated a “blue ocean strategy”, finding new and perhaps uncontested markets.

Chris Zook at consultants Bain & Co argued for an intelligent focus on the core of the business, perhaps building on growth opportunities in adjacent markets.

Julian Birkinshaw, formerly at London Business School but now dean of the Ivey Business School in Canada, has shown how corporate venturing — that is, encouraging new business ideas internally — can reap rewards.

In the 1980s, a team of planners at Shell, the oil giant, studied companies that had been around and survived even longer than it had (the company was about 100 years old at the time).

This study led to the publication in 1997 of the Harvard Business Review article, later a book, called “The Living Company”, by Shell’s former head of planning Arie de Geus.

The central question was: why do so many companies die so young? “Few other types of institution — churches, armies, or universities — have the abysmal record of the corporation,” de Geus wrote. “What I have come to call living companies have a personality that allows them to evolve harmoniously,” he went on.

“They know who they are, understand how they fit into the world, value new ideas and new people, and husband their money in a way that allows them to govern their future.”

De Geus found that “living companies” welcomed new ideas: “The long-lived companies in our study tolerated activities in the margin: experiments and eccentricities that stretched their understanding. They recognised that new businesses may be entirely unrelated to existing businesses and that the act of starting a business need not be centrally controlled.”

In Europe, worries about corporate longevity and performance are not confined to the VW boardroom. It is a matter of concern for the EU as a whole. The prescription, contained in Mario Draghi’s report on competitiveness, published in September, is for more investment and a better co-ordinated capital market.

But, to survive and grow, businesses also need what General Chance Saltzman, head of the US military’s Space Force, has called “competitive endurance”. This is the quality displayed by the longest living companies.

FT : Citadel Securities aims to become big player in Eurozone bond trading

Citadel Securities aims to become big player in Eurozone bond trading
Ken Griffin’s high-speed trading firm builds team in Paris and will start trading German Bunds

Citadel Securities is aiming to become a “material” player in Eurozone government bond trading by next year after building a team of traders in Paris and securing valuable access to German debt auctions.

The Miami-based high-speed trading firm founded by billionaire Ken Griffin is already a major participant in the US Treasury market and is now targeting a similarly prominent role in Europe.

In September, Germany added Citadel Securities to the list of companies that were allowed to buy the country’s debt directly at its regular auctions — a move widely viewed as an implicit blessing that the market maker plans to use as a beachhead to expand its presence, according to senior executives at the firm.

“We want to be a material player in European rates markets and believe our efforts complement the EU’s renewed commitment to deepening and integrating its capital markets,” Michael de Pass, Citadel Securities’ head of rates trading, told the Financial Times.

“Europe’s market structure remains fragmented and resistant to new entrants, but we’re focused on building our business incrementally and deliberately,” he added.

The firm recently established a team of six traders at its new continental European hub in Paris. They will start to trade German Bunds in the coming weeks, but Citadel Securities expects this to grow swiftly as more markets are gradually added, according to people familiar with the firm’s plans.

Citadel Securities’ entry into European government bond trading — a market that for centuries has been dominated by local and regional banks — highlights the growing ambitions of algorithm-driven trading firms and the subtle changes taking place in the fabric of fixed-income markets.

High-frequency traders have been dominant players in most developed stock markets for more than a decade, but firms such as Susquehanna International Group, Jump Trading, Jane Street and Citadel Securities have in recent years expanded aggressively in markets long considered less hospitable to their technology-driven approach.

However, some critics say that the liquidity these specialist traders provide can prove ephemeral at times of turbulence, when the difference between the prices they quote for buying or selling can balloon. Sceptics argue that these trading firms therefore make markets more fragile, pointing to the increasing number of “flash crashes” and “flash rallies” across markets in recent years.

A 2019 paper by the European Central Bank found that “when an increase in high-frequency trading is accompanied by high-frequency trading competition, HFTs use more speculative trading strategies and, as a result, liquidity deteriorates and short-term volatility rises”.

European banks have also urged caution. In a report on European bond markets earlier this year, the International Capital Market Association, a trade body, said “the speed at which markets become volatile — the ‘volatility of volatility’ — has increased, possibly aided by greater transparency and more dependence on e-trading and automation”.

Nevertheless, there has been a growing acceptance among some European technocrats and policymakers that the region’s bond markets need to be developed to help better fund the debt burdens of many countries, and to finance investments in climate change mitigation and defence.

Mario Draghi, former ECB head and Italian prime minister, made overhauling the eurozone’s bond market a central plank of his competitiveness strategy for Europe.

The European Securities and Markets Authority, the EU financial watchdog, is already in the process of setting up a so-called consolidated tape that would register and make public the price of every single bond trade across the Eurozone.

This is likely to be a boon for tech-oriented trading firms such as Citadel Securities, which thrive on analysing large quantities of data, and attract more investors to the market, the trader’s executives argue.

“There’s dramatic underappreciation for what greater liquidity and transparency would mean for Europe’s bond markets,” said Shyam Rajan, global head of fixed income at Citadel Securities.

“The journey towards greater competitiveness and the ultimate goal of a EU capital markets union starts with encouraging broader participation and liquidity in sovereign bond markets.”

FT : Italy cracks down on ‘reckless’ e-scooter riders

Italy cracks down on ‘reckless’ e-scooter riders
Users will have to wear helmets and carry insurance but rental operators say new rules will slash demand

Italy will require people riding electric scooters to wear helmets and carry insurance to clamp down on what the Italian government describes as “reckless behaviour” that turned streets into a “jungle”. 

But dismayed e-scooter operators like Uber-backed Lime, US-based Bird and Franco-Dutch Dott warn that the new conditions — set to be approved by Italian parliament in the coming days — will seriously depress demand in one of the most important European markets after Paris banned the two-wheelers in a referendum last year. 

“It’s implicit sabotage,” said Andrea Giaretta, vice-president for western Europe at Dott, which has 9,000 e-scooters across 20 Italian cities and towns. “These rules are unworkable. It will boomerang . . . and make sharing less sustainable.” 

Giorgio Cappiello, head of public affairs for Bird Italy, called the new rules “completely ideological” and warned it could reduce demand for the company’s 15,000 e-scooters in Italy by up to 70 per cent, raising questions over the future of such operations.  

“As in all industries, if the regulatory framework is hostile for private companies, they leave,” he said. 

Italy has around 55,000 e-scooters available for rent in cities and towns, offering what advocates call an affordable, green transport option. Favourable weather and high volumes of tourists have led to the rapid growth of this sector.

But the proliferation of two-wheelers has also triggered a local backlash, especially in tourist hubs like Rome, where e-scooters are left scattered on narrow pavements, and riders weave amid the traffic congestion. 

Accidents involving e-scooters have been rising steadily, with 21 people killed last year and 182 pedestrians hit compared with just nine fatalities and 127 injured pedestrians in 2021, according to the national statistics agency, Istat.  

Around half of thousands of e-scooter accidents recorded each year involved foreign riders — mainly tourists and migrants working for food delivery services, Istat said.

Transport minister Matteo Salvini has vowed to tackle what he called a “jungle in the streets” created by e-scooter driving. He said the new rules would “end impunity and reckless behaviour” with an eye to public welfare.

“Everyone’s lives and safety depend on it,” Salvini wrote in a social media post on Monday.  

Under the new law, all e-scooter riders will be required to wear protective helmets — bringing them in line with what Vespa and other moped riders have been obliged to wear since 2000.

Operators say this is likely to reduce usage by 25 to 70 per cent given the challenges of providing helmets, which they argue are unnecessary anyway given that the e-scooters cannot travel above 20km per hour.

“On a scooter you can’t attach a helmet — we wouldn’t know where to put it,” said Dott’s Giaretta, adding that most accidents “do not involve the skull but the face, legs, arms and abdomen”.

Enrico Stefàno, a senior public policy manager for Lime — which operates 10,000 e-scooters in 12 Italian cities, said the company could attach helmets to their scooters at an initial cost of around €1mn. 

But he said that e-scooter use would likely drop by around 25 per cent as helmets would prove tempting targets for theft, and be easily damaged or vandalised.

“In the short-run this can translate into fewer rides,” Stefano said. “We don’t want to leave Italy or disinvest or lay off anyway, but it’s clear that this is a measure that has an impact.”

Italy will also require e-scooter riders to carry third-party liability insurance to cover pedestrians and others hurt in accidents, which shared-mobility companies say will be more costly than the coverage they now provide for their users.

Andrea Giuricin, a transport economist at the University of Milan-Bicocca who also serves as a consultant to the sector, said operators would continue lobbying for an easing of the new law, even after the bill is adopted.

“Due to the fact that they are global players, they will continue to operate making losses,” Giuricin said. “They will not close tomorrow, but they will try to change the law.”

FT : Germany finds itself in a predicament of its own making

Germany finds itself in a predicament of its own making
While it loses sympathy abroad, the country faces political uncertainty at home

Even when Germany holds highly unusual snap elections, some of its political laws seem etched in stone. Incumbent Chancellor Olaf Scholz faces a bubbling groundswell of revolt in his SPD, where some want him to step aside for defence minister Boris Pistorius, the country’s most popular politician. Both men were born in the town of Osnabrück; both have law degrees.

In 2020, the three men competing to succeed Angela Merkel as the next conservative chancellor were all from the same state and had all gone to the same law school. One of them, opposition leader Friedrich Merz, could become the country’s leader next year.

The other thing that appears to be immutable in Berlin is the chancellor himself. Scholz’s densely imperturbable self-righteousness grows more astounding (some would say disturbing) by the day given the rapid deterioration of circumstances: for him, for his coalition, for Germany, for Europe and for Ukraine.

Scholz is currently limping on in a minority government with the Greens, having sacked his finance minister, Christian Lindner, on the day after the US election in a fight over the constitutional debt brake. He has reluctantly agreed to call a confidence vote on December 16 (which he is projected to lose), clearing the way for elections on February 23. In a new survey, two-thirds of his own party faithful rate Pistorius over him. Yet Scholz insisted in a recent hour-long television interview that he was the best candidate, and that he would win.

How that might transpire is his secret. The polls have his SPD at 16, the Greens at 12, and the Free Democrats (FDP) languishing at or below the parliamentary threshold of 5 per cent. When this “traffic light” coalition came into power in 2021, its programme of progressive transformation felt like a rush of fresh air. Its forceful initial response to Russia’s invasion of Ukraine — becoming a major supporter for Kyiv and Nato, agreeing on “watershed” defence spending and decoupling from Russian energy imports — was admirable.

But since then, it has become mired in policy failures and public bickering. The economy is hovering just above recession. The far right has surged, together with the new left-nationalist BSW led by the firebrand Sahra Wagenknecht. Key reform promises are left unfulfilled, and unfunded. One senior politician has been heard to say that Lindner relished vivisecting his colleagues’ projects at the cabinet table.

In much of Europe, the coalition is viewed with emotions that run the gamut from disappointment to dismay and distrust. It prioritised the largest countries over smaller ones; but even relations with Paris and Warsaw are at a nadir. Too often, it took unilateral decisions — on migration, on subsidies for fossil fuel substitution, on tariffs for Chinese electric vehicles — resulting in beggar-thy-neighbour effects beyond Germany’s borders. Scholz’s phone call with Vladimir Putin last week aroused particularly severe contempt and anger.

On Ukraine, the German government was sharply divided. The Greens and the FDP wanted to give Kyiv more lethal weapons — like the Taurus cruise missile — more quickly. The chancellery saw itself in a mind-meld with the Biden administration’s concerns about escalation and being pulled into a war with Russia. But now that the White House has decided to let the Ukrainians use US-made Atacms missiles for limited long-range strikes, pressure on Scholz to deliver the Tauruses is growing again, including in his own party. His adamant refusal only increases Berlin’s isolation.

Meanwhile, Merz has his eyes on the chancellery, an office he has been chasing all his life. His CDU currently polls at 34 per cent, so, barring an electoral miracle, he will need to partner with the SPD and possibly the Greens as well. He will have to keep the extremists at bay, make the economy competitive again, re-centre Germany in Europe and Nato, manage a vindictive Donald Trump, face down a Russia hell-bent on subjugating Ukraine and fend off Chinese assertiveness.

He should expect little sympathy abroad, since Germany has very largely brought these dilemmas on itself — through complacency, denial and deliberately cultivated dependencies. But Merz could do worse than remember what his arch-nemesis Angela Merkel did in a time of national crisis. At the height of the pandemic, she went on television and told Germans the stark truth: “It is serious. You should take it seriously.” That would be a start. And perhaps a new beginning.

FT : Billionaire Poonawalla family buy £42mn Mayfair property despite non-dom fe

Billionaire Poonawalla family buy £42mn Mayfair property despite non-dom fears
Purchase of block on upmarket Grosvenor Square comes ahead of tax changes for wealthy international investors

The billionaire Poonawalla family have bought a £42mn building in London’s upmarket Grosvenor Square, around the corner from their Mayfair home, despite concerns that changes to the UK’s non-dom tax rules would put off wealthy international investors. 

Grosvenor, the Duke of Westminster’s property company, which owns much of Mayfair, has granted a long lease on the building to Phinity Developers Ltd, a company controlled by Natasha Poonawalla, according to UK public records. 

The deal, concluded in May, came in the same month that her husband, Adar Poonawalla, who leads the family’s vaccine business, told the Financial Times that the UK’s tax changes for wealthy non-doms would deter investors from the country. 

“The policy should be such that it encourages . . . individuals to come and invest and stay in the UK . . . Instead of doing that, you’re making rules which would make people stay away,” he said. 

Non-dom rules allow UK residents with a permanent home overseas to avoid UK tax on their international income and gains. The Labour government will abolish the regime in 2025, among a suite of tax changes hitting the UK’s wealthiest residents. 

Adar Poonawalla told the FT in May that he did not spend enough time in the UK to be affected by non-dom rules, but that Natasha could lose the tax benefits. “Some people are willing to pay that cost like I am, but most others aren’t . . . They can easily move out,” he said. 

Natasha Poonawalla is a fashion influencer and an executive director at the family’s Serum Institute of India, which manufactured hundreds of millions of doses of the Oxford/AstraZeneca vaccine — and has invested millions in vaccine research and production in Oxford. 

38 Grosvenor Square is around the corner from Aberconway House, the more than 25,000 sq ft home the Poonawallas bought last year through a holding company for £138mn — making it the second most expensive home ever sold in London. 

Built in 1727, and still featuring 18th century decorated ceilings in the style of Robert Adam, the Grosvenor Square property was an aristocratic townhouse and then the Indonesian embassy until 2017. 

The property was advertised as a “blank canvas” for commercial redevelopment. The five-storey, 27,000 sq ft building has not had a full-time tenant for several years, but has been used to host events. It is described in marketing materials as one of the “last remaining buildings from the square’s original date of construction”. 

Grosvenor declined to comment. A spokesperson for the Poonawalla family declined to comment.

>>> US After Hours Summary: DLB +12.8%, KEYS +8.9% higher on earnings; POWL -11%

After Hours Summary: DLB +12.8%, KEYS +8.9% higher on earnings; POWL -11%, XP -5.1% lower on earnings; SGMO +11.2% on FDA clearance; FLEX +5.4% to join S&P MidCap 400

After Hours Gainers:

Companies trading higher in after hours in reaction to earnings/guidance: DLB +12.8%, KEYS +8.9%, QFIN +3.4% (also authorizes new $450 mln share repurchase program), VREX +3.3%, AZEK +2.6%, LZB +2.5% (also increases dividend), SNEX +1.3%

Companies trading higher in after hours in reaction to news: SGMO +11.2% (announces FDA clearance of IND application for ST-503), CON +7.6% (to join S&P SmallCap 600), FLEX +5.4% (to join S&P MidCap 400), VKTX +4.6% (presents results from Phase 2b VOYAGE study), AZTA +4.6% (CEO bought 13967 shares; also moves to S&P 600 from S&P 400), ZI +3.8% (CEO bought 492500 shares), ALGM +1.8% (CTO bought 15000 shares), BALY +0.7% (shareholders approve merger), OKE +0.3% (DTM to acquire 3 nat gas pipelines from OKE for $1.2 bln), MKC +0.2% (increases dividend)

After Hours Losers:

Companies trading lower in after hours in reaction to earnings/guidance: POWL -11%, XP -5.1% (also authorizes new R$1 bln share repurchase program), ZTO -3.1%, GBDC -0.9%

Companies trading lower in after hours in reaction to news: SVM -15.9% ($130 mln convertible notes offering), QDEL -6% (stock offering by selling shareholder), LUNR -3.1% (NASA intends to award Blue Origin and SpaceX additional work), DTM -1.8% (DTM to acquire 3 nat gas pipelines from OKE for $1.2 bln; also files mixed shelf securities offering), QCOM -0.2% (sets new growth targets), DNB -0.1% (announces availability of its generative A.I. asst)

FT : The doomsday that wasn’t

The doomsday that wasn’t
VIXplaining the events of August 5


One fun thing about the VIX — called the “fear gauge” because it puts a price on expectations for future stock-market volatility — is that it has pretty deep lore.

For example, the army of young daytraders who first logged on in 2020 might not know much about 2018’s Volmageddon, when an implosion in retail-focused volatility products and swings in the S&P 500 options that determine VIX levels helped exacerbate declines in the large-cap index itself. It also may not be obvious that it’s a mathematically iffy business to talk about its moves in percentages, because it’s basically a standard deviation, or a percentage itself.

The BIS adds to the canon in a recent bulletin: the past summer’s massive VIX move can be explained away by a quirk in the way the index is calculated during the trading day.

Remember August 5? If you were on leave (or vacation) then, there was a global sell-off in equities. The worst of the stock-market losses happened in Japan, and were presumed to be a result of a rapid unwinding of the yen “carry trade”. In response, the VIX spiked above 65 early in the trading day. If it had stayed there, it would’ve closed at its highest level since Covid or the global financial crisis.


But a carry-trade unwind isn’t exactly a global pandemic or a subprime mortgage meltdown. The VIX captures what traders will pay to protect against volatility in the S&P 500 over the next month, by weighting a range of options on the index. Presumably US large-cap companies hadn’t piled significant portions of cash into yen carry trades, so what gives?

The VIX spiked because its minute-to-minute moves are calculated based on quoted options prices, not transactions, according to the BIS. (Kudos to Peter Tchir, who as we noted raised this possibility in the wake of the spike.)

In other words, options market makers got spooked because they saw some extreme moves in overnight trading. And because they didn’t want to get run over once the market opened, so they made it very expensive to buy protection against volatility.

In BIS’s more demure parlance, with our emphasis:

[The] asymmetric widening of bid-ask spreads likely played a key role in exacerbating the spike, as it lifted mid-quotes of option prices used in the calculation of VIX . . . 

Market makers’ (MMs) adjustment of quotes was behind the widening, as MMs sought to avert an imbalanced book in uncertain conditions. These effects were particularly strong for less liquid put options, which have an outsize impact on the calculation of VIX and accounted for more than 85% of the spike.


That means it really did represent pure fear — and primarily from market makers — without the actual trades to back it up.

There’s not much we love more than a messy benchmark here at Alphaville. For the VIX, however, it kind of makes sense to use quotes and not transactions, partly because the index includes deep out-of-the-money options that rarely trade.

And that’s all the more reason to take any intraday VIX move with a giant pillar of salt. BIS:

Our findings highlight the possibility that the calculation of VIX makes it vulnerable to a widening of bid-ask spread quotes regardless of a fundamental rise in underlying volatility. The outsize role of less liquid put options in the calculation of VIX exacerbates these problems. Given the subdued liquidity in overnight option markets and reliance on quotes instead of trades in the VIX methodology, pre-market readings of VIX may be less informative than those during regular trading hours.

FT : Chinese vessel spotted where Baltic Sea cables were severed

Chinese vessel spotted where Baltic Sea cables were severed
Swedish investigators are looking into Yi Peng 3 bulk carrier that was travelling from Russia to Egypt

Investigators of two severed data cables in the Baltic Sea are looking at the movements of a Chinese bulk carrier, the second such probe in recent months amid rising jitters in Europe over potential acts of sabotage.

Yi Peng 3, a Chinese-registered vessel that was on its way from the Russian port of Ust-Luga to Port Said in Egypt, passed close to both the Swedish-Lithuanian and Finnish-German cables around the time each was cut on Sunday and Monday, according to data provided by maritime tracking group Marine Traffic. The cargo ship was closely followed by the Danish Navy afterwards, said open source intelligence experts.

Sweden has opened an investigation into both incidents, and is examining what role the Yi Peng 3 might have played, said people familiar with the probe.

“The Swedes are taking a hard look at the Chinese vessel,” said one person with insight into the investigation.

Sweden’s government declined to comment about the Chinese craft. But an official said the police investigation would look at the movement of the ship in co-operation with the coastguard and the armed forces. 


The latest probe comes slightly more than a year after the anchor from another Chinese ship — the container vessel Newnew Polar Bear — damaged a Baltic gas pipeline between Finland and Estonia. Finnish and Estonian authorities have not said whether they believe that was done intentionally or by accident.

Germany’s defence minister Boris Pistorius on Monday said the severing of two fibre optic cables in 24 hours was likely to have been sabotage and was an act of hybrid warfare.

He added: “No one believes that these cables were cut accidentally . . . Therefore, we have to state, without knowing specifically who it came from, that it is a ‘hybrid’ action. And we also have to assume, without knowing it yet, that it is sabotage.”

Yi Peng 3 is owned by Ningbo Yipeng Shipping, a company that owns only one other vessel and is based near the eastern Chinese port city of Ningbo. It was not immediately possible to contact the company. China’s embassies in Stockholm and Helsinki did not respond to a request for comment.

The US has accused China of offering direct support to Russia’s “war machine” by supplying its military with items that were helping it in its invasion of Ukraine. But there has been little if any public discussion about the activity of Chinese ships in the Baltic Sea.

Finnish officials on Monday urged caution and advised against rushing to conclusions. Authorities in Helsinki have said China co-operated with their investigation into the 2023 damage to the gas pipeline.

The governments of Germany, Sweden, Finland and Lithuania expressed their “deep concern” over the severing of the undersea cable and did not rule out sabotage.

Ministers from the countries said in a joint statement.: “Situations like these must be assessed with the growing threat posed by Russia in our neighbourhood as a backdrop. This includes an increased number of hybrid activities in Europe.”

Laurynas Kasčiūnas, Lithuania’s defence minister, added: “After the investigation, the EU and member states must make best use of its newest sanctions regime for such sabotage of critical infrastructure.”