TheChek News Flow

European managers relocate staff to meet impending T+1 rules

The US will require trades to settle in one day next year leaving much of the rest of the world on T+2

European asset managers are moving staff to the US ahead of new settlement rules, while others may change the working hours of some roles.

The Securities and Exchange Commission is reducing the settlement time for US equities and corporate bonds from two days, referred to in the industry as T+2, to one day, T+1.

Timezone issues mean the rules will be even harder to meet for firms outside the US.

Under the changes, firms must allocate, confirm and affirm trades by 9pm Eastern Standard Time on trade date. This is the early hours of the morning in Europe.

Currently, they have until 5pm EST the day after a trade.

“The further you’re away from New York, the less time you have for US trades,” said Adrian Whelan, global head of market intelligence at Brown Brothers Harriman.

Vikesh Patel, president of Cboe Clear Europe, a clearing firm, said European asset managers would have to adopt a night shift for some staff or move staff to the US, or a mixture of the two.

Firms were already moving staff or hiring in the US, Patel said.

Baillie Gifford is one such example. It was reported earlier this year that the firm is moving across three staff members from its trading and settlement teams, and hiring a fourth in the US.

What steps firms took to meet T+1 depended on their size, footprint and their prime brokers’ coverage globally and particularly in the US, said Patel.

Abrdn, for example, said it was not impacted by timezone issues as it already had operations and fund management teams in North America.

Robeco said it had a trading desk in New York and outsourced its back and middle offices to a provider that used a “follow the sun” support model. Robeco also takes this approach in its oversight of the provider.

The roles most likely to have to align more closely with US hours included those managing equity settlement, securities lending, corporate actions, cash management and collateral, said Brian Collings, chief executive officer of Torstone Technology, a post-trade software provider.

The impact of T+1 would be felt “across the board”, but asset managers with significant exposure to North American markets would be more affected, said Collings.

More important than shifting roles would be optimising processes, for example via the automation of tasks, he said.

Some European firms had been slow to prepare for the new rules because they incorrectly perceived their impact to be focused on SEC-regulated companies, said Whelan.

However, the new rules will require a “huge shift in timelines and behaviours” as firms “rewire the entire life cycle” of their trading.

“You might literally have to change what time you get out of bed,” he said.

Currently, firms had time to edit “in-flight” trades if there was an error, but the new rules left less time to do so and that required teams to become quicker and more effective, he said.

There was a risk of more failed trades, Whelan added.

Jeffrey O’Connor, head of market structure, Americas, at Liquidnet, an investment trading network, said the sell side faced more of a burden from T+1 than their clients on the buy side.

“If trade processing and recording is not done within the time requirements, it will be a frustration for the buy side and a loss of business for their sellside counterparty,” said O’Connor.

The major investment banks already adopted a “follow the sun” model, but brokers without global coverage would be most impacted on US executions sourced in Europe or other regions, he said.

Globally, larger asset management firms were well prepared for T+1, said Val Wotton, president and chief executive officer of Institutional Trade Processing, a business unit of clearing organisation Depository Trust & Clearing Corporation.

But mid to smaller-sized asset management firms might be depending on their broker-dealers or custodians to fulfil their obligations, Wotton said.

It was “critical” that firms conducted end-to-end testing from trade execution to trade settlement to ensure they were ready to meet T+1, he said.

They had also to test “non-standard” events, such as public holidays, double settlement days and corporate actions, such as tender offers and stock splits, he added.

Barron’s Weekend Summary: The rising generation of octogenarian workers won’t be the first:

Cover Story:

-The rising generation of octogenarian workers won’t be the first: Look no further than the current resident of the White House and many members of Congress (the median age in the Senate is 65). In the upper ranks of the business world, it has long been common to see leaders in their 70s (Blackstone’s Stephen Schwarzman, 76, is a current example), 80s (see: Barry Diller, 81, or Carl Icahn, 87), and, in some cases, even 90s (ever heard of a 93-year-old investor named Warren Buffett?). But the staggering size of the boomer cohort could mean changes to workplaces and the economy that we haven’t seen before. From bolstering a labor market that’s facing a shortfall of prime-age workers to pushing back against the ageism that remains rampant in many industries, the generation that never trusted anyone over 30 could continue to play changemaker as it pushes 80.

Interview:

-Barron’s has interviewed Alan Patricof, who at the age of almost 88 has spent more than 50 in the investment business. Patricof was present almost at the creation of the venture capital industry, and has helped fund an astonishing number of companies in the course of a highly successful career. His first firm, Alan Patricof Associates, was an early investor in Apple. Later, he backed a variety of digital-media start-ups at Greycroft Partners, which he co-founded in 2006 and where he is now chairman emeritus. Long past the age when most of his peers packed it in—and packed up for Florida—Patricof co-founded yet another VC firm, Primetime Partners, in 2020, to invest in companies serving the over-60 market.

Tech Trader:

This coming week, three major pieces of news will align in a way that could shift the dynamics of the technology sector in dramatic and unanticipated ways. Within the span of a few days, Apple will launch an updated iPhone; the Department of Justice will finally bring its three-year-old antitrust case against Google to trial; and the UK-based chip design firm Arm Holdings will likely go public. Each event carries potential payoffs for investors, along with big risks. On Tuesday, Apple will hold its annual fall launch event, dubbed “Wonderlust” this year. The event will almost certainly be focused on the debut of the iPhone 15. (Analysts also expect new Apple Watches and potentially updated AirPods.)

The Trader:

-The Walgreens Boots Alliance (Walgreens for short) needs a new CEO. Walgreens shares have tumbled since Rosalind Brewer announced on Sept. 1 that she was stepping down. That could present a buying opportunity if the company makes the “right” choice for a new leader. However, Walgreens shares have slumped 13% in September, that’s nothing new—they have lost two-thirds of their value over the past five years. The problems are wide-ranging: Growth has been sluggish, it missed out on buying a pharmacy-benefits manager the way competitor CVS Health has, and its pivot to buying physician practices has dragged down profitability. With the stock down so much, investors apparently think Brewer’s replacement will probably fail too. Turning the company around will be tough. Walgreens’ total operating margin is expected to have fallen to just under 3% this year from just over 5% in 2018. Earnings per share are expected at $3.95 from $6.01 in 2018. The stock now trades just under six times EPS estimates for the next year, a mere fraction of the S&P 500 index’s 19 times.

-The S&P 500, after all, dropped 1.3% this past week, while the Nasdaq Composite fell 1.9%, and the Dow Jones Industrial Average dropped 0.75%. It’s starting to feel like the setup for yet another September scare. Nevertheless, the index could make a new high before January. And here’s why. The S&P 500 has powered through a wall of worry to gain 16% so far this year, navigating obstacles such as a mini banking crisis, higher interest rates, and recession fears. Now the Federal Reserve’s interest-rate-hiking campaign is almost over, while the economy continues to muddle through. If all goes well, earnings will start growing again in 2024, justifying higher valuations and more gains.

Features:

-AAR isn’t a household name, but every airline knows it because it sells used, repaired, and overhauled engine and airframe parts they need to keep their planes flying. The $2B company also provides repair and maintenance services at seven facilities spread across the North America. What’s more, AAR is an aerospace parts distributor. More planes flying equals more business for the company.And more planes are in the air. April 2023 was the first month that worldwide domestic air traffic—flights that originate and land in the same country—exceeded prepandemic levels. The domestic airline industry finally put Covid in the rearview mirror. International air traffic is also growing but hasn’t eclipsed prepandemic levels yet. In July, the latest global data available, international travel was about 11% below July 2019 levels. There’s still room for recovery.

-The rate of inflation has been a challenge for some companies’ earnings, while providing a boost to others—perhaps none more so than processors, distributors, and other middlemen. As prices rise, so does their take. That applies to the likes of Visa and Mastercard perhaps most of all, but also to the numerous distributors of goods that bridge the gap between producers and manufacturers and their end customers. Several have been recent Barron’s picks, including Ferguson, Pool, Watsco and Wesco International.

Europe:

-UBS needs to clean up before the combined group can reliably make money. “The profit number tells us that UBS did not really find any toxic assets on Credit Suisse’s balance sheet,” says Johann Scholtz, an analyst covering European banks at Morningstar. “Management’s artwork starts now.” Credit Suisse is still losing $2B every quarter, estimates Andreas Venditti, head of banks research at Bank Vontobel. The gaping wound is its investment bank, where revenue plummeted 78% year-over-year in the latest results, costs just 15%. UBS CEO Sergio Ermotti aims to slash head count commensurately. But firing investment bankers is apparently expensive, too. UBS has earmarked $10 billion for “restructuring expenses,” Scholtz says. Ermotti of the investment bank that are thriving, like the U.S. leveraged finance practice.UBS also added $4.5B in litigation provisions, preparations./

Emerging Markets:

-Mexico is doing well. The latest political news from our southern neighbor was no surprise: The governing Morena party tapped former Mexico City Mayor Claudia Sheinbaum as its candidate to succeed Andres Manuel Lopez Obrador in presidential elections next June. What is surprising is the sound economy that AMLO, as the incumbent leader is known, looks set to leave behind. Mexican gross domestic product is on track for a second year of 3% growth. The iShares MSCI Mexico exchange-traded fund (ticker: EWW) has climbed by a quarter over the past 12 months. The peso is up 14% against the dollar, even as the greenback dominates most world currencies. Inflation has halved to 4.6% annually, leaving the central bank plenty of room to cut its 11.25% prime rate.

Commodities:

-Workers at liquefied natural gas projects in Australia operated by oil major Chevron went on strike Friday after talks with employers broke down. The industrial action could disrupt global supplies of natural gas, which were impacted last year after Russia invaded Ukraine. Australia is the world’s biggest producer of LNG. European natural-gas prices were up 9% on Friday. US gas prices rose about 2%. No further talks have been scheduled after five days of discussion, mediated by the Fair Work Commission, an Australian regulator. The dispute concerns pay, overtime, job security and rosters, and the strikes are designed to escalate over coming weeks.

Streetwise:

-This week, Jack Hough is taking on Hollywood, specifically Disney and Charter Communications are locked in what’s called a carriage dispute. In the clinical language that cable uses to describe the entertainment business, companies like Disney that fill channels with shows are programmers, and ones like Charter that sell bundles of channels are MVPDs, or multichannel video programming distributors. Programmers make money by charging MVPDs carriage fees to include their channels in bundles, and by selling advertising on those channels. MVPDs charge viewers for the bundles and get a modest share of the ad slots, which is why commercial breaks are often a mix of national pitches for big brands, local ones for car dealers and furniture stores, and ones for the cable service itself.

Partnership could boost U.S. in race with China for cobalt while jump-starting Saudi mining industry

The U.S. and Saudi Arabia are in talks to secure metals in Africa needed for both countries’ energy transitions, as the White House tries to curb China’s dominance in the electric-vehicle supply chain and the kingdom looks to buy $15 billion in global mining stakes, said people with knowledge of the talks.

Any agreement could entail Saudi Arabia giving the U.S. a boost in its attempt to play catch-up with China in the global race for cobalt, lithium and other metals that are processed into rechargeable lithium-ion batteries to power electric cars, laptops and smartphones. Chinese companies refine three-quarters of the world’s cobalt supply and produce about 70% of the world’s lithium-ion batteries, raising concerns in the West about reliance on Beijing.

If completed, the U.S.-Saudi partnership would mark a positive step for two countries that have had strained relations since President Biden took office and promised to make the Gulf kingdom a “pariah” for its human-rights record. Since Russia’s invasion of Ukraine, the U.S. has been critical of Saudi Arabia’s alignment with Moscow to keep oil prices high and wary of its embrace of China, though Washington-Riyadh relations have begun to thaw, with increasing commercial cooperation.

Under the ideas being discussed with the Biden administration, a state-backed Saudi venture would buy stakes in mining assets in African countries such as the Democratic Republic of Congo, Guinea and Namibia, some of the people said. U.S. companies would then have rights to buy some of the production from those Saudi-owned stakes, the people said, though the details are still being hashed out.

U.S. automakers have long sought better access to critical minerals for lithium-ion batteries and increasingly have gotten into the mining business. But much of the world’s cobalt lies in difficult business environments such as Congo, where Western companies’ business practices have resulted in Justice Department allegations of bribery.

Saudi Arabia would likely have more flexibility to invest in countries where corruption is rampant, insulating U.S. companies from that risk. The kingdom is also less bound by environmental, social and governance concerns that crimp other investors’ ability to deploy capital there.

The effort would jump-start plans by Saudi Arabia, long the world’s dominant oil power, to delve into the world of mining, digging for its own minerals and metals at home and buying up stakes in projects around the world. It is part of an economic diversification effort that involves building its own EV industry, creating massive solar farms and setting up high-tech industries such as artificial intelligence.

The White House is seeking the financial backing of other sovereign-wealth funds in the region, but talks with Saudi Arabia have progressed the farthest, according to people familiar with the matter.

The mining conversations are part of a larger initiative by the Group of Seven countries to invest in global infrastructure projects in developing countries, some of the people said. The White House said Saturday that it would support the development of a corridor connecting Congo and Zambia to global markets via Angola’s Port of Lobito, and announced an intercontinental economic corridor linking India to Europe through Saudi Arabia.

China has built up its position in the EV supply chain primarily by buying up production in African countries like Congo. China’s main advantage has been its companies’ willingness to outbid other firms, and Saudi Arabia is willing to do the same, some of the people said.

The Saudi Public Investment Fund—the $700-billion vehicle for the kingdom’s oil wealth—approached the Congolese government in June about its intention to secure assets in the country via its $3 billion joint venture with Saudi-state-owned mining company Ma’aden, according to Saudi and Congolese officials and people briefed on the discussions. Congo supplies around 70% of the world’s cobalt.

The two sides discussed a special-purpose vehicle funded by the Saudis that would invest not only in cobalt mines, but also in copper and tantalum, an element used in electronics, some of the people said.

Congo has had discussions with the U.S. about building factories in the African country to process metals into batteries rather than just exporting them, said a Congolese official.

Manara Minerals, the joint venture between Ma’aden and the PIF, is focusing on minority equity positions in other minerals such as iron ore, nickel and lithium, as Saudi Arabia seeks to build up new industries away from hydrocarbons.

In July, Manara made its first mining deal, agreeing to buy a 10% stake in Brazilian miner Vale’s base-metals unit. Manara plans to buy more than $15 billion in mining assets globally in the next few years, according to officials familiar with the fund’s planning. Saudi Arabia has been looking at lithium and uranium projects globally.

Asked about the U.S. talks, Manara said minerals and natural resources are strategically significant to Saudi Arabia’s economic transformation goals. “Manara Minerals has access to long-term capital which it plans to deploy in order to accelerate the development of world-class mining assets,” it said.

Bandar Alkhorayef, Saudi Arabia’s minister of industry and mineral resources, has said that the kingdom seeks to help address the shortage of certain minerals used in manufacturing EVs and renewable energy.

The kingdom’s talks with the U.S. come as governments and companies increase efforts to secure greater supplies of battery metals. Beijing has set export restrictions on two minerals the U.S. says are critical to the production of semiconductors, highlighting the risk of relying on Chinese supplies.

Some Western companies are starting to build processing plants in Africa so they can refine the raw materials they mine on the continent locally and export them directly to Europe and the U.S. In addition to corruption risks, the countries also have poor infrastructure and limited skilled labor.

Saudi Arabia is also more interested in securing stakes rather than buying outright and then operating the assets, making the kingdom a more lucrative investor for African countries that have sought in recent years to carve out a bigger slice of mining companies’ revenue for themselves in a new wave of resource nationalism.

The Swiss luxury group Richemont announced several changes to its non-executive board this week and created two new positions: corporate affairs director and CEO of a newly created fragrance division. Both will join the group’s Senior Executive Committee. It is great news that Richemont is boosting its corporate governance and has made fragrance a new area of focus. The move mirrors similar efforts by the rival French group Kering which is investing heavily in this promising category.

Richemont will not stop there. More top management changes are on the cards, particularly at Richemont’s Specialist Watch Makers’ division and at jeweler Buccellati, Miss Tweed found out. Some bosses are on their way out while others are preparing to move to another brand within the group, several industry sources said.

BUCCELLATI

Catherine Rénier, CEO of Richemont’s Jaeger-LeCoultre since 2018, is expected to leave her position in the next six months to join Buccellati, the Italian jeweler favored by European royals and celebrities. “Rénier is a recurring name to takeover Buccellati,” one industry source told Miss Tweed. Since its purchase in 2019 for €230 million, Richemont has been investing vast amounts in the Italian jeweler. Buccellati’s revenue stood at €45 million when it was acquired by the group. Thanks to new boutiques, notably in Asia, and the expansion of its teams and marketing resources, it is now estimated to generate more than €180 million in revenue.

Last year, Buccellati “generated the highest growth rate across the group, albeit from a smaller base” than its much bigger sister brands Cartier and Van Cleef & Arpels (VCA), Richemont wrote in its 2023 annual report. Best-selling collections include Tulle, which is recognizable thanks to its honeycomb design made to look like lace, and Macri, whose surfaces are engraved with thin lines to resemble silk. Founded in 1919 by Mario Buccellati, the brand is regarded today as a classic expression of timeless elegance in jewelry. It is distinctly European and designed to adorn aristocrats. It has also been run in the same way for years. Very little has changed since it joined Richemont and came under the supervision of Nicolas Bos, CEO of VCA, an expert in preserving brand equity and spirit. Several Buccellatis are members of the founding family and work for the company: Andrea, honorary chairman and creative director, Maria Cristina, head of communication, and Luca, who looks after business development.

Bucellati has been led by Italian luxury veteran Gianluca Brozzetti for nearly a decade now. The seasoned executive will be 70 in March next year. He is well over Richemont’s official age limit for CEOs of 65 and is due to retire next year, several industry sources have said. It is expected that Rénier will first join Buccellati as Brozzetti’s deputy and take over after a transition period of several months. Her departure from Jaeger-LeCoultre has not been announced yet and it may be some time before it is, several sources said. The timing of her official appointment will also depend on how quickly Richemont finds a replacement. Many wonder whether Richemont will pick one of its senior managers or someone from outside the group or even the hard luxury sector. Earlier this year, Audemars Piguet surprised the industry by appointing as its new CEO Ilaria Resta, an executive at the Swiss fragrance group DSM-Firmenich.

Rénier worked for VCA and Bos for many years, mainly as head of the French jeweler in Asia Pacific. “Catherine is a woman under Nicolas’ protection. He’s the one who pushed for her to become CEO of Jaeger. He’s not going to let her down,” a source close to Richemont said. “However, taking over Buccellati will not be easy for Catherine as the brand is managed in a very patriarchal, top-down fashion.”

Several industry sources said Jaeger-LeCoultre’s sales growth has been lackluster in recent years. Watch retailers and connoisseurs said its best-selling Reverso model remained popular mainly in Western Europe and it was struggling to impose itself in Asia and elsewhere.

PANERAI

Another Richemont watch executive due to exit the group in the next few months is Benoit de Clerck, Chief Commercial Officer at the watchmaker Officine Panerai, industry sources said. That confirms media speculation over the summer. He is going to become CEO of LVMH’s Zenith, replacing Julien Tornare, who is leaving to become CEO of TAG Heuer. Frédéric Arnault, who was CEO of TAG Heuer, will take up a new role within the French group headed by his father Bernard, several industry sources said. Miss Tweed will publish more details regarding these musical chairs in a separate report.

These management changes come as the watch industry is suffering from a slowdown that started in January. After the post-pandemic boom of 2021 and 2022, demand is falling back to more normal levels. Also, sales in China have not picked up as much as hoped and U.S. consumers have been keeping their purse strings tight in an inflationary environment of rising interest rates. When business gets tough, shareholders start questioning management and its strategy. That’s also why so many leadership changes are planned at Richemont and at other groups such as LVMH.

However, replacing a leader who has been a brand’s father figure for many years is no easy task. Panerai, for example, has struggled to find a new voice after its charismatic leader Angelo Bonati left in 2018 after 17 years. Bonati led the brand’s storytelling and identity built around exploration and adventure. Under the current Richemont regime, there is less room for out-of-the box ideas and larger-than-life characters like Bonati. Panerai has become more subdued under Jean-Marc Pontroué, one of the many watch brand CEOs under the tight control of top Richemont executives – something Bonati avoided for years.

ROGER DUBUIS

Pontroué previously was CEO of Roger Dubuis, one of the smallest brands of the Specialist Watchmakers’ portfolio. It is estimated to make between €70 million and €100 million in annual revenue. The current Roger Dubuis CEO, Nicola Andreatta, is leaving Richemont at the end of November after five years, several industry sources have said. Founded in 1995, Roger Dubuis has been through several CEOs in the past decade. Its timepieces are known for their skeleton movements, avant-garde designs and prices between €65,000 and €130,000 -- a hefty sum for a brand that is not so well-known or popular among collectors. Some expensive Roger Dubuis models can be found at a discount to their official retail price on the second-hand market as many retailers are desperate to offload them to get cash into their coffers.

Richemont’s watch brands, which also include Piaget and IWC, have been through rough trading waters this year, several industry sources have said. An executive at a successful independent Swiss brand told Miss Tweed at the Geneva Watch Days that there were fewer problems securing watch parts thanks to IWC canceling orders in recent months. “The problem for some creates happiness for others,” the executive said with a smile. There are also question marks over the future of some members of the IWC’s leadership team, market sources have said.

Richemont watch brands have seen prices on the second-hand market collapse since last year. Big spenders have become reluctant to buy an expensive timepiece from a brand that some see as relatively dormant in terms of design and innovation. Also, the market’s polarization has gained pace. Leading brands have become even bigger and more desirable. In the current uncertain environment, buyers have been opting for safe names such as Rolex, Audemars Piguet, Patek Philippe, Richard Mille, Rolex’s Tudor and the independent Breitling. At Richemont, the only brands that continue to enjoy solid growth are A. Lange & Söhne and Vacheron Constantin. The latter has been helped by the reopening of China post-Covid, a country in which its rival Patek Philippe is poorly distributed. For its part, A. Lange & Söhne benefits from the fact that demand still outstrips supply for many of its models.

Also, many big brands — including Richemont ones — are having a hard time competing against smaller watchmakers. These independent brands can be more creative. They are also doing a better job building relationships with customers. People are tired of being told they cannot buy a Rolex, a Patek Philippe or another popular brand because there is officially no stock in the boutique. Best sellers are kept for privileged customers who have already bought many watches from them. Therefore, customers have been falling back on more niche and innovative brands.

CENTRALIZED DECISION-MAKING

Richemont’s watchmakers’ woes are not only due to tough market conditions and fierce competition from smaller brands, sources close to the group say. Centralized decision-making by top Richemont executives and the group’s Strategic Products and Communication Committee (SPCC) are also an issue. Together, they form a tight leash that controls Richemont’s watch brands and their bosses. Such governance leaves little room for creativity, innovation and zany ideas – qualities that feed brand desirability and awareness.

All power is in the hands of Richemont CEO Jérôme Lambert and Emmanuel Perrin, CEO of the Specialist Watch Makers division, distributors say. Watch CEOs have little freedom and room to maneuver. Lambert is the nephew of Alain-Dominique Perrin, the man who built Cartier into the world’s No. 1 jeweler. The industry legend, who celebrated his 80th birthday last year, still acts as a consultant for the group and has been advising the SPCC. Both Lambert and Emmanuel Perrin are said to be risk-averse. That’s why so many of the group’s watch brands are struggling to remain competitive and come up with original and smart initiatives that would help them stand out on the crowded luxury watch market, industry analysts say. “There are a lot of incredible brands at SWM that cannot express themselves properly because of the way the group is run,” one person close to Richemont said on condition of anonymity. The brands that are doing best are those whose CEOs have been able to hold their ground and resist Perrin’s intervention.

“The heads of Vacheron Constantin and Lange are the most resilient,” the source said. “They have a clear strategy and it’s working. So, there’s no reason to bother them. It’s when business isn’t doing so well that Perrin steps in,” the source said, referring to brands such as Jaeger-LeCoultre, Roger Dubuis, Panerai, IWC and Piaget.

Also affecting sales is the way Richemont has been treating third-party distributors. The group has been building its own network of boutiques and shutting down accounts with multi-brand retailers. Last week, Miss Tweed reported on how Richemont was expected to part ways with Bucherer after the Swiss retailer was acquired by Rolex.

Richemont watch bosses under centralized command from the top, have also been alienating distributors by showing them new releases at meetings and watch fairs and then telling them that they cannot order them because they will be sold exclusively at the brand’s own boutique. “Many distributors are tired of being badly treated by Richemont and that’s not helping sentiment towards the group and the performance of its brands,” one senior watch CEO told Miss Tweed at the Geneva Watch Days.

Miss Tweed reported in 2020and in 2021 that managers at the Specialist Watch Makers division enjoyed little freedom and felt hamstrung by Perrin and Lambert. In retaliation, the two executives blacklisted Miss Tweed from all Richemont events, press conferences and the annual Watches & Wonders trade fair, preventing this independent Paris-based news website from talking to non-Richemont brands participating in the show. On Friday, Richemont again did not answer Miss Tweed’s emails asking for comment or clarifications for this report.

Will the ECB deliver one more rate rise?

For the first time in more than a year, the European Central Bank’s decision of whether to raise interest rates at its meeting on Thursday is resting on a knife-edge.

Having already raised its benchmark deposit rate from minus 0.5 per cent last summer to 3.75 per cent as it tackled the biggest surge in inflation for a generation, the ECB now seems to be approaching the peak of its policy tightening.

Investors’ doubts over whether the central bank will raise interest rates for the 10th consecutive time have intensified amid widespread signs of an impending economic downturn, including weaker business confidence and falling German industrial production.

The ECB will also publish new quarterly forecasts after its meeting on Thursday, which most economists expect to include a weaker outlook for growth and a slight increase to its inflation expectations for this year and next year.

“As forward looking growth data has been identified as having disappointed lately, we expect this to be sufficient to justify staying on hold next week,” said Peter Schaffrik, global macro strategist at RBC Capital Markets.

Derivatives markets are pricing about a 35 per cent chance of the ECB raising its deposit rate to 4 per cent on September 14.

However, with eurozone inflation of 5.3 per cent in August still running well above the ECB’s 2 per cent target, there are many economists who believe another — and almost certainly final — rate rise is still possible.

“It is a very close call, but still too high inflation, a focus on actual rather than on predicted developments, and the fear of stopping prematurely will tilt the balance towards a final rate hike,” said Carsten Brzeski, global head of macro research at ING. Martin Arnold

Latest filings show two top 10 shareholders voted against Swiss miner’s climate plan

BlackRock and MFS Investment Management both voted against Glencore’s climate plan at the Swiss miner’s annual general meeting earlier this year, marking a rare break between the mining company and two of its largest institutional shareholders over environmental policy.

Glencore, which is the world’s most profitable coal miner, has been facing growing questions from investors about how it will cut emissions while continuing to produce coal.

The new disclosures made in US securities filings show that many big institutional shareholders supported Glencore’s climate report, which passed with 70 per cent approval even though dissent increased to 30 per cent, up from 24 per cent in 2022.

BlackRock is Glencore’s third-largest shareholder, holding an 8.2 per cent stake worth more than £4bn, while MFS is the ninth-largest shareholder with a 1.1 per cent stake, according to records from S&P Capital IQ.

BlackRock said that concerns about “inconsistencies” in the company’s stated strategy drove its decision to vote against the climate plan, according to its 2023 investment stewardship summary.

In the weeks leading up to Glencore’s AGM in May, the company made a takeover bid for Teck Resources of Canada, a miner of coal used in steel making as well as base metals.

While Glencore’s bid for all of Teck was rejected, the two companies are still in talks over whether Glencore might buy Teck’s coal operations.

If its acquisition of Teck’s coal unit is successful, Glencore plans to spin out the merged coal businesses as a separate business.

Glencore is aiming for net zero emissions by 2050, and also plans to cut emissions (both direct and indirect) by 15 per cent by 2026, relative to a 2019 baseline.

The company’s total 2022 emissions were about 370mn tonnes of carbon dioxide equivalent, the majority of which is indirect emissions from customers burning coal.

In June, chief executive Gary Nagle said the vote on the climate report showed “overwhelming support from our shareholders”. He blamed the increase in dissenting votes on “some ESG person in the basement in office number 27” engaged in a box-ticking exercise.

A shareholder resolution calling for more clarity on Glencore’s coal plans also had high levels of dissent, with 29 per cent of shareholders in favour and 71 per cent against.

That resolution was supported by investors including Legal and General, State Street and HSBC Asset Management, although the recent proxy filings show that none of Glencore’s biggest institutional shareholders including BlackRock supported the measure.

Following the results of the AGM in May, Glencore is undertaking a consultation with major shareholders on both its climate plan and the shareholder resolution.

Glencore’s top shareholders also include current and former directors at the company. However, these private holdings are not reflected in public shareholder registries unless they account for more than 3 per cent of company shares. Former chief executive Ivan Glasenberg is Glencore’s largest shareholder with 9.8 per cent.

Glencore, MFS and BlackRock declined to comment.