WSJ : Trump Says Trade War Could Drag On, Stokes France Spat

Trump Says Trade War Could Drag On, Stokes France Spat
The president said he had no deadline for concluding the trade dispute with Beijing

LONDON—President Trump suggested a trade war with China could drag out past the 2020 election and stoked a tariff spat with France during a visit to Europe for a NATO meeting.

Mr. Trump said he had “no deadline” to conclude a trade deal with China, adding that “in some ways I like the idea of waiting until after the election,” during a sitdown with the North Atlantic Treaty Organization Secretary-General Jens Stoltenberg on Tuesday in London.

The president’s comments injected fresh uncertainty over the future of a “phase-one” trade deal between the U.S. and China. Looming closer are the administration’s plans to impose tariffs on smartphones, toys and other products from China on Dec. 15.

In Europe for the two-day gathering, Mr. Trump also criticized French President Emmanuel Macron for comments he made about the 29-member military alliance, and expressed frustration with France’s new digital-services tax.

“I don’t want France taxing American companies. If they’re going to be taxed it’s going to be the United States that will tax them,” Mr. Trump said, during a freewheeling exchange with reporters that lasted for over 50 minutes.

The French tax, which was signed into law July 24, applies a 3% tax on revenue that tech companies reap in France from such activities as undertaking targeted advertising or running a digital marketplace. In response, the Trump administration has proposed tariffs of up to 100% against $2.4 billion of French imports.

Mr. Trump also said the French leader’s comments about NATO were “very insulting.” Ahead of the meeting, Mr. Macron gave an interview to the Economist, warning that the continent was experiencing “the brain death of NATO" and renewing his call for Europe to bolster its own military capabilities.

“It’s a tough statement,” Mr. Trump said. “When you make a statement like that, that is a very, very nasty statement to essentially, including them, 28 countries.”

Mr. Trump is expected to meet later Tuesday with Mr. Macron, as well as Canadian Prime Minister Justin Trudeau, before attending tea with Prince Charles and his wife, Camilla, the Duchess of Cornwall, as well as a reception at Buckingham Palace hosted by Queen Elizabeth II. The president is also due at a reception at Number 10 Downing Street hosted by Prime Minister Boris Johnson.

Visiting the U.K. days ahead of parliamentary elections, Mr. Trump said he had “no thoughts” on the vote and promised to “stay out” of the election. But he also praised Mr. Johnson, saying he was “very capable and I think he’ll do a good job.”

Mr. Trump attended the NATO meeting as impeachment proceedings continue in Washington. On Wednesday, while the president is meeting with foreign leaders, the House Judiciary Committee will hold a hearing with legal experts on what constitutes an impeachable offense.

Asked if cast a cloud over his international efforts, Mr. Trump labelled Democrats leading the investigation as “very unpatriotic.”

“Does it cast a cloud?” he said. “Well, if it does, then the Democrats have done a very great disservice to the country, which they have. They’ve wasted a lot of time.”

Mr. Trump, who has repeatedly called on NATO members to increase their military spending, also said he was pleased that countries have increased their contributions and said he was looking forward to a “tremendous” few days.

Administration officials said Friday that nine members now meet or exceed the goal of spending 2% of GDP on defense and they expect it to rise to 18 countries by 2024.

At another event Tuesday, Mr. Stoltenberg said the military alliance was in good shape despite political rifts, citing the stationing of combat-ready troops from several nations on the alliance’s eastern flank.

“Actions speak louder than words,” Mr. Stoltenberg told a conference. “In NATO, we have bad rhetorics but extremely good substance.”

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FT : Companies vow to improve climate disclosure after TCI warning

Companies vow to improve climate disclosure after TCI warning
Moody’s and Airbus among those targeted by hedge fund over emissions


Companies including Charter Communications and Moody’s have vowed to improve their environmental disclosures after receiving warning letters from activist hedge fund TCI, which has said it will vote against directors at groups that do not publish their carbon dioxide emissions.

TCI, a long-only fund with $28bn under management, has launched a campaign to force companies in its portfolio to disclose their emissions and publish plans to reduce them. Founder Christopher Hohn has been outspoken advocate for greater disclosure on carbon dioxide emissions, arguing that investors must step in as governments have not yet made climate-related disclosures mandatory.

Ten companies — including Airbus, Moody’s, Safran and Charter Communications — have received letters from TCI reprimanding them over their climate records.

Moody’s pledged to improve after it was criticised for receiving a “D grade” in its emissions rating from CDP, a non-profit climate assessment group.

“Moody’s takes shareholder input on ESG [environmental, social, governance] issues seriously,” a spokesman said, pointing to the group’s recent acquisition of several sustainability related businesses.

Although Moody’s is increasingly focused on environmental risks in its ratings business, the group received the low grade from CDP because it has not set any emissions targets for its own business.


“It is untenable for Moody’s to achieve such a low score when seeking to demonstrate environmental leadership,” TCI warned in its letter. “It may also leave Moody’s at a competitive disadvantage relative to peers.”

TCI, which holds a 3 per cent stake in Moody’s, also asked the agency to lobby for better disclosure from banks about the exposure of their loan books to climate risk.

“Moody’s must advocate for banks to disclose climate change risks associated with their loan books,” the activist hedge fund wrote.

Charter Communications, the US cable telecoms group in which TCI holds a 4.2 per cent stake, was also quick to respond to the campaign.

“Charter Communications will be issuing its inaugural ESG report in the coming weeks and has met with TCI to discuss their concerns,” a spokesperson said. The group does not currently disclose its emissions.


everal companies including Airbus said they were still preparing their response to the letter they had received. Guillaume Faury, chief executive of the aerospace group, is speaking with the fund later this week.

Safran said it was looking into the seven recommendations made by TCI and that it would “set up goals” to address some of the shareholder’s points. Most of the recommendations are already “quite aligned” with the French defence group’s existing goals, a spokesperson said.

While carbon emissions disclosures were once considered an afterthought for investors, they are now becoming a higher priority for many fund managers as they focus on climate-related risks.

“Investing in a company that doesn’t disclose its pollution is like investing in a company that doesn’t disclose its balance sheet,” Sir Christopher said in an interview with the Financial Times.

The number of companies that disclose their emissions to the CDP rose by a fifth in 2019 compared with the previous year.

More than 500 institutional investors use the CDP’s database as they make investment decisions said Paul Dickinson, chair of CDP.

“We’ve seen a rapid rise in the number of investors and how investors are using CDP data, particularly since 2015 with the Paris agreement,” he said. “This is absolutely the new normal, as we see the whole financial system addressing climate risk.”

One of CDP’s major donors is the Children’s Investment Fund Foundation, a charity set up by Sir Christopher which donates about $150m a year to climate-related causes.

Only 2.2 per cent of companies that disclose their emissions to CDP received an “A grade” last year, the level that TCI considers acceptable.

A recent study found companies that underperformed on ESG metrics were more likely to be targeted by activist investors.

Companies in the lower half of ESG rankings were 24 times more likely to be targeted by an activist campaign, according to the study of 1,300 European companies conducted by Alvarez & Marsal, a professional services firm. However, that poor ESG performance is usually a signal of poor governance overall, rather than the subject of the activist campaign itself.

Activist funds have previously stopped short of going as far as TCI and launching a campaign on climate disclosure for every company in its portfolio.

“Everyone is looking around, saying who is going to save the planet. One answer is investors,” said Sir Christopher. “They can use their voting power to force change on companies who refuse to take their environmental emissions seriously.”

FT : Family offices turn their attention to tech companies

Family offices turn their attention to tech companies
A fifth of new venture capital funds raised in Europe come from private wealth

Rohini Finch is putting her money where her passion is: risky yet potentially lucrative technology companies. Previously an oil trader, she and her husband Bob set up a family office to manage the wealth they had accumulated working in the City of London.

The pair began by investing in bricks-and-mortar assets, including a farm in Ukraine, but roughly a decade ago switched to technology companies. Finch observed how technology ran through different industries, from health to financial services, and applied this insight to the investment philosophy behind her company, Talis Capital. “Technology touches everything,” she says. “Everything is being disrupted by it.”

Wealthy individuals such as Finch are emerging as the fastest-growing body of investors in technology. New research by database company Dealroom.co shows a fifth of new venture capital funds raised in Europe come from private wealth, with the rest coming from institutions.

Over the five years to 2018, the number of individuals and families using private wealth to invest directly in early-stage technology companies in Europe grew fivefold to a record-breaking $5bn. This year, the figures are on track to reach new highs.

Dealroom.co’s research also found an increased allocation of capital to venture capital funds as entrepreneurs have sought greater yields in today’s low-interest-rate environment. Globally, the allocation of private wealth to these funds has nearly doubled since 2008, from 14 to 22 per cent, and has overtaken the amount of capital allocated to property investments, which stands at 18 per cent.

Thanks to the tech boom, millionaires with money to invest are getting younger too. A Bloomberg study revealed that since 2011 the average age of US investors with $25m or more fell by 11 years to 47.

Talis Capital has invested more than $600m in technology businesses since 2009. Highlights in a portfolio of 50 companies include cyber security company Darktrace, challenger bank Iwoca and identity-verification provider Onfido.

The attractions of early-stage companies are clear. In the US, companies such as ride-hailing app Uber and holiday lets platform Airbnb have rocketed from start-up stage to a market capitalisation of $46bn and a valuation of $42bn, respectively. In Europe, Spotify went from being an obscure Swedish streaming site to one of the world’s most valuable tech companies, worth some $27bn.

But investors have also been burnt badly when going after the latest shiny new thing. Lossmaking WeWork, the office-sharing company, has seen its valuation plunge after a series of investigations into its business practices.

Start-ups are exposed to wider economic risks and are inherently riskier because of their often untested business models, warns Matus Maar, managing partner at Talis Capital. “The risk of a potential change in the macroeconomic conditions, a development of other innovations which can result in a company being less relevant or a lack of investment are all risks for technology companies,” he says.

Maar also says technology companies pose a specific threat to investors who fail to diversify. “A particular risk relating to investing in early-stage technology companies is that if you don’t buy into a group of companies, the chances of succeeding are low,” he says. It takes an average of seven years to sell a tech company, he says, and most of the return comes from a few hyper-successful outliers. Investors should take a portfolio approach to have the best chance of “catching the winners”, he advises.

The hype over technology companies has led to record valuations. As with the property market, sellers wanting to sell at unrealistic levels and driving up prices may one day lead to a crash, say analysts.

Finch says the high prices demanded by founder-entrepreneurs is making it more challenging to invest in tech companies than when she started. She does not think the sector is in “bubble territory”, even though certain tech companies might be, and that there are still opportunities for savvy investors.

Finch warns there could be “a fresh wave of selling” in publicly listed tech companies as the lock-in periods imposed on founders and managers at flotation time expire.

There are, however, still opportunities,” she says. “We have had a 10-year bull run, but people are underestimating how much productivity tech has added to companies. There is a huge amount of private wealth going into technology and we are not coming to an end, that story has a long way to run.”

Beyond the business opportunity, Finch has a more personal motivation to invest in technology companies: legacy. “We did not want to leave money to our children,” she says. “We wanted to leave them businesses they could be involved in.”

FT : China in 2050: will it be a global player or split the world economy?

China in 2050: will it be a global player or split the world economy?
Country’s economic rise and modus operandi is endangering diplomatic, trade and tech links

Xi Jinping, China’s strongman leader, was in an expansive mood as he presided over celebrations marking the 70th anniversary of the People’s Republic in October.

China, he said, with a “proud civilisation spanning over five millennia . . . will write a more brilliant chapter in our new journey toward the realisation of the two centenary goals and the Chinese dream of great national renewal.”

The twin goals, to be achieved by 2049, are the “rejuvenation of the Chinese nation” both economically and territorially by reunifying with Taiwan.

Mr Xi has reason to be grandiloquent. China’s $14tn economy is second only to the US; Standard Chartered reckons that on the basis of purchasing power parity, China will take the number one slot as early as next year. Even in nominal terms — depending on how you analyse the data — the Chinese economy is expected to surpass the US at some point in the 2030s.

China is also the world’s largest trading nation in goods, according to management consultancy McKinsey, and Chinese and Taiwanese companies account for more than a fifth of this year’s Global Fortune 500. It ranks in the world’s top two countries for receiving and giving foreign direct investment and is the second biggest spender on research and development at some $300bn last year.

China is also represented in international institutions. Its citizens sit at the top of global bodies like the International Telecommunications Union and — until Meng Hongwei was detained for reportedly confessing in a Chinese court to taking bribes — Interpol.

Once dismissed as a copycat maker of cheap gadgets, China now rivals the US in technology, sparking a new arms race in areas such as artificial intelligence and fifth-generation telecoms networks.

“Technology is arguably at the centre of the changing relationship between China and the world,” wrote McKinsey in a report about the country’s global relations.

While China needs access to foreign markets to support tech development, it also wants to increase the market share for local technology players. Other countries are paying “close attention” to whether China breaks from global trade to focus on its domestic market, the report says.

This scrutiny reflects the inconvenient truth Mr Xi did not bring up in his anniversary speech: China’s rise and modus operandi have created waves across the globe, threatening foreign relations and imperilling trade, tech and capital flows.

The big question for the future is whether it will backtrack and become an integrated part of the global economy or whether the current decoupling will turn into a massive rift. This would create a two-gear world economy — much as has happened with the “splinternet”, bifurcated between China and the rest of the world.

The Sino-US trade war and consequent tariff rises threaten to unstitch global supply chains as manufacturers move to cheaper shores in south-east Asia and elsewhere. The broader tech war and concerns over national security has put chipmakers and others on notice that they can no longer deal with blacklisted Chinese companies — US national carriers, for example, have been banned from using Huawei as a supplier.

But the backlash from America’s own tech giants — many of which have long griped at China’s intellectual-property theft and uneven playing field in terms of market access and subsidies — shows how much they want access to the nation’s market. Huawei is on its third licence extension enabling US companies to work with it despite the ban.

How the blacklisting of Huawei plays out will dictate the course of future relations in tech. An outright ban would, many analysts argue, be an own goal — forcing China to ratchet up its efforts in self-sufficiency and cutting American players out of a 1.4bn-strong market.


But caving in does not guarantee an open door. China has flexed its muscle in other industries such as airlines, hotels and movie producers, all of which have been called upon to choose between acquiescing or rebelling.

China’s insistence on its sovereignty over the independently ruled island of Taiwan has snagged the likes of Marriott International. The hotel group was accused of “seriously violat[ing] national laws and hurt[ing] the feelings of the Chinese people” when it listed Taiwan as a country in some online forms. It apologised and changed the forms.

Others have been less swift to apologise, including the cartoon show South Park. The show’s producers tweeted a fake apology following its “Band in China” episode that satirised censorship in the country. They said: “Like the NBA, we welcome the Chinese censors into our home and our hearts. We too love money more than freedom and democracy . . . We good now China?”

Yet it will take more than plucky cartoonists to stand up to China — multinationals who want to serve the whole world will need to tread carefully.

One question is whether bending to China’s will can jeopardise business elsewhere — say, from flocks of millennials spurning sneakers or movies from companies that make what they see as unpalatable choices.

Accessing China’s market may look less attractive if it means being shunned by an entire generation of consumers across the rest of the world.

FT : Forget the paper trail — blockchain set to shake up trade finance

Forget the paper trail — blockchain set to shake up trade finance
Technology could streamline process and open up market for creditors and borrowers

Blockchain technology could radically shake up trade finance, one of the most archaic corners of the financial world, by reducing its reliance on paper documents.

On average, a cross-border transaction requires the exchange of 36 documents and 240 copies, says Kerstin Braun, president of Stenn Group, which provides trade finance.

By 2050, experts suggest blockchain could provide a digital record of transactions. This would streamline the paper trail and improve transparency between parties, allowing the introduction of practices such as “dynamic factoring”, where interest rates change as goods approach their final destination.

Trade finance bridges the gap between when an exporter ships a consignment of goods and the time an importer pays for it. Banks shoulder the interim risk, such as if the importer does not or cannot pay, and finance the transaction for a fee.

A letter of credit — a promise to pay for the goods if certain conditions are met — is sent to the exporter by the importer’s bank. This gives the exporter the green light to ship the goods. The exporter then presents proof of shipping to get financing from its own bank, which recoups the money directly from the importer’s bank.

At the moment, information is limited: the companies doing business are often in different parts of the world and may have little credit history. Information is also slow to reach the relevant parties as paper documents have to be physically exchanged.

Blockchain, a digital ledger, could give every party in a trade finance deal access to a single record of the transaction. This would allow them to see instantly what is happening, what changes have been made to documents and by whom, which could have far-reaching consequences for the cost and availability of trade finance.

The riskiness of trade finance, in theory, reduces as the goods get closer to the importer, although this is currently hard for all parties to ascertain. Aided by satellite or radio-frequency identification technology, blockchain could allow interested parties — from exporters to banks — to see immediately when, for instance, the goods are put on to a ship or the logistics firm picks them up.

Professor Hau Lee of the Stanford Graduate School of Business foresees a process of “dynamic factoring”, where at each stage of the journey, as risk falls, so too does the rate of interest charged to the exporter or importer.

“Blockchain lets you track every step along the way. Therefore it lowers the interest rate, because less collateral is needed,” says Prof Lee, who expects the technology to be widespread in trade finance by 2050.

Another benefit of organisations using a common digital platform to track trade finance deals is that it creates a data pool about potential clients and their transaction histories. This could make it easier for new entrants, such as large institutional investors or tech firms, to offer financing or refinancing options.

“At a time when institutional investors struggle to find yield in the public bond universe, the availability of this alternative source of income would be greatly welcomed,” says Francesco Filia, whose hedge fund Fasanara Capital invests in trade finance. 

The opening up of the sector could even mean that by 2050 the cost of basic trade financing may fall to zero, says Cécile André Leruste, managing director for the consultancy Accenture Banking in Europe. Banks would instead earn money from selling data about, or providing ratings of, exporters or importers.

Blockchain could also help to expand the pool of companies that can access trade finance. This could reduce the trade finance gap — the difference between demand for the credit, particularly among small and medium-sized enterprises, and creditors’ willingness to supply it.

The trade finance gap currently stands at $1.5tn, according to the Asian Development Bank. It cites “know your customer” issues as a key reason why trade finance is refused. Many SMEs and firms in the developing world, for instance, cannot show a long history of transactions. This makes it harder for creditors to assess their risk, and therefore less likely to lend to them.

“Blockchain can provide detailed data on previous transactions, and thus provide some history to facilitate risk assessment by the financier,” says Prof Hau.

Banks could look at data — that would be more readily available, more comprehensive and, in theory, more trusted (because all participants can see who made changes to a document) — on the parties related to current and previous transactions, and possibly even the wider supply network.

Making financing more accessible would also give importers more choice of goods and help the economic development of poorer countries.

Many of the documentary contracts currently used in trade finance could eventually be replaced by self-executing smart contracts that run on blockchain, according to Tim Cummins, president of the International Association for Contract and Commercial Management.

This would mean contracts could be executed quicker and more simply, for instance when someone speaks into their phone to confirm shipment.

Smart contracts could also open up markets to more people, for instance using pictures to help suppliers who are illiterate to understand the terms.

Mr Cummins says many contracts in the developed world require PhD-level study to be understood. “It is all about a world where we are seeking to reduce the inequalities created by the misuse of power and by ‘bullying’ — which is arguably what traditional contracts are all about,” he says, adding that by 2050 documentary contracts will be unusual.

For all the eventual benefits of blockchain, some parts of this archaic world may remain untouched, however.

“You’re probably never going to get to the situation where it’s paperless,” says Alisa DiCaprio, head of trade and supply chain at blockchain software firm R3. “You’re always going to have countries or regions that require paper.”

FT : Buying versus shopping: how retail will be transformed by 2050

Buying versus shopping: how retail will be transformed by 2050
Technology will remove the drudgery of sourcing daily essentials and alter what consumers pay for products

The consumers of 2050 will look back at the early years of the millennium and marvel at the amount of time people wasted sourcing daily essentials and accumulating things they used infrequently.

The drudgery of pushing a trolley and two children around a packed supermarket on a Saturday morning and loading a dozen bags of groceries into a car will appear comically inefficient, rather like doing laundry by hand and putting it through a mangle.

“The things we need will just come to us without us thinking too much about it,” says Sophie Hackford, a UK-based futurist, as internet-connected devices “learn” when (and when not) to order replacement items.

But for this to happen, technology will have to improve to the point where its intervention is barely perceptible. “We don’t want to see technology . . . Most people don’t want to live in the Matrix,” adds Ms Hackford. 

The current, slightly clunky experience of the Alexa voice-controlled assistant and smart fridges suggests there is some way to go on this.

Tech will also permeate how we decide what to buy. The task of searching for the best deals and comparing products will fall to chatbots and avatars, raising the bizarre prospect of companies marketing not to an individual, but to that person’s cyber space presence. Adverts will no longer exploit human weaknesses or tug at heartstrings but rather seek to game our avatars’ algorithms, making marketing as much about information and computing power as human creativity.

Beyond life’s daily essentials, shopping will become an increasingly social activity, rather like going to a concert or a restaurant. Shops will become more digitally integrated but they will still exist — albeit in smaller numbers — and we will still visit them in person.

This will make the distinction between “buying and shopping” — as EY’s global head of consumer, Kristina Rogers, puts it — even more clear than it is now.

By 2050 the idea that everybody pays the same amount for an item will appear bizarre, predicts Michael Ross, a data scientist at retail analytics company Dynamic Action.

“Dynamic pricing is coming very soon,” he says, noting that this model, where prices are set according to supply and demand, is already commonplace in sectors such as travel. It will appear first as individual offers based on how valuable the customer is to the retailer or stock levels, according to Mr Ross.

The number of things we actually buy, however, will fall as sharing or renting becomes more socially acceptable and practical. The “sharing economy” has grown mostly in big-ticket items such as cars, but it is already extending into sectors such as fashion, with subscription-based services like Rent the Runway becoming more mainstream.

Retailers will also face increasing competition: advances in technology and changing business models have lowered the barriers to entry in consumer and retail industries. This means new businesses can launch quickly and provide more choice for consumers.

“Platforms allow firms to participate [in the digital economy] without having to make huge investments,” says Roland Palmer, head of Europe at Alipay, the payments system owned by Ant Financial.

Many will of course ultimately fail, but a few will be wildly successful. This is why Jeff Bezos, the founder of Amazon, reportedly told a staff meeting last year that the company which dominates ecommerce “will one day go bankrupt”.

Wider changes are afoot when it comes to groceries. Ms Rogers at EY says that in a future where climate issues will be paramount, it is improbable that we will consume so much carbon-intensive meat.

Food supply chains, which have spent decades growing longer as consumers developed a taste for more exotic foods, will almost certainly have to shorten.

Manufacturers and retailers will increasingly decentralise production “into local factories that can serve consumers more reactively and with a lower environmental impact”, according to John Vary, a futurologist at the John Lewis Partnership, a UK retailer.

Indoor farming in carefully controlled conditions will become more commonplace, offering a potential alternative use for the large retail spaces that will become vacant in decades to come.

These shorter supply chains — alongside technology such as autonomous vehicles — will also make “last mile” delivery more economically and environmentally viable than it is at present. This will become increasingly important as about two-thirds of the population are predicted to live in dense urban areas by 2050, according to UN predictions.

The pace of technological advance might sound implausible, given that in many developed economies the basic habit of shopping has not fundamentally changed over the past 30 years.

But the example of China shows it is possible for technology establish itself quickly. Three decades ago, most Chinese people bought groceries at markets or local stores using cash. Today, digital payment platforms such as Alipay and WeChat have hundreds of millions of users.

“China went straight from zero to WeChat whereas we went through all the intermediate stages,” says Ms Hackford. The pace of change in China has made its citizens more open to trying new ideas, adds Ms Rogers. 

And while there are those who already fear a dystopian future where computers know more about us than we do and a handful of giant technology corporations use their “data lakes” to control our lives, experts suggest utility will trump privacy.

“There will be blowback and people will get outraged about it. We’re seeing that already,” says Ms Hackford. “But the same people also like the convenience.”

China is already in the vanguard of technologies such as facial recognition, vehicle batteries and solar power. While the west shaped much of the world’s shopping experiences in the 20th century, the east will play a much greater role in the 21st.

FT : French protectionism is being challenged by a new wave of activists

French protectionism is being challenged by a new wave of activists
Welcome to Due Diligence, the FT’s daily deals briefing

France is famous for many things — its cuisine, luxury goods and art de vivre. In the corporate world, however, it has a reputation for one reflex that it is still struggling to shake off: protectionism.

The textbook example of this is PepsiCo’s interest in French yoghurt maker Danone in 2005, which led Dominique de Villepin, then French prime minister, to warn the US company to stay away from a corporate “crown jewel”.

PepsiCo retreated. Now the country’s reputation for protecting its corporates is being tested anew by an increased wave of activity from a crop of often foreign activist investors on French soil.

Activist hedge funds like Elliott Management and Amber Capital are demanding change at some of the country's best-known companies, including drinks maker Pernod Ricard, utility company Suez, and media group Lagardère.

A decade ago it would have been almost unheard of to see foreign activist investors on a French company’s shareholder register. This was a country, after all, where local raiders such as Vincent Bolloré and Albert Frère had roamed for years. 

This year, five large French companies have faced activist campaigns, according to Richard Thomas, the Paris-based American who runs the shareholder advisory group at Lazard.

“The old style of activism in France was slow-build, more private and centred around the AGM votes,” Thomas told the FT. “That has flipped on its head. Now the strategy is more US-style: more aggressive, less patient and more public.” 


Elliott’s European arm, which is run by founder Paul Singer’s son Gordon Singer, has been busy across the continent and built up stakes in French, German and Italian companies. Other US funds like Dan Loeb’s Third Point have followed suit.

Outside investors have been quick to criticise corporate governance in France, where companies often have high levels of family ownership, and long-term investors benefit from laws that give them double voting rights. 

French politicians are trying to resist the onslaught of activist investors. Finance minister Bruno Le Maire said back in April that he was looking for ways to allow French companies to resist activist investors. Then last month a cross-party government commission published recommendations on how to prevent short-sellers and activists from unfairly destabilising French corporates.

One thing is clear: trying to freeze out activists may not sit well with France’s desire to show that Paris can serve as a European financial hub after Brexit. But DD believes that the landscape has shifted. Expect to see more battles. 

>>> Europe : Brokers Upgrades & Downgrades - 3rd of December 2019 V2 (+)

>>> Up
* Auto Trader Raised to Neutral at UBS (+)
* E.ON Raised to Neutral at MainFirst; PT 8.90 euros (+)
* Diageo Raised to Outperform at RBC; PT 3,500 pence
* Francotyp-Postalia Raised to Buy at GSC Research; PT 4.20 euros
* Liberbank Raised to Buy at Grupo Santander; PT 41 euro cents (+)
* Ontex Raised to Overweight at JPMorgan; PT 19 euros
* Pandora Raised to Buy at Handelsbanken; PT 300 kroner
* Rightmove Raised to Neutral at Goldman; PT 653 pence
* Serco Raised to Overweight at JPMorgan; PT 170 pence

>>> Down
* Alstria Office Cut to Hold at Jefferies
* Aston Martin Cut to Neutral at Goldman; PT 520 pence
* Deutsche Beteiligungs AG Cut to Hold at M.M. Warburg (+)
* Elis Cut to Equal-Weight at Morgan Stanley; PT 18.80 euros
* Essity Cut to Neutral at JPMorgan; PT 330 kronor
* Go-Ahead Cut to Hold at Canaccord; PT 2,200 pence (+)
* IMCD Cut to Hold at HSBC; PT 75 euros
* JD Sports Cut to Hold at Stifel; PT 780 pence (+)
* Michelin Cut to Hold at HSBC; PT 125 euros
* TUI Cut to Neutral at Oddo BHF; PT 1,103.88 pence
* Hurricane Energy Cut to Speculative Buy at Canaccord (+)
* William Hill Cut to Hold at Stifel; PT 190 pence (+)

>>> Initiation
* Aedifica Rated New Underweight at Barclays; PT 100 euros
* Assura Rated New Overweight at Barclays; PT 81 pence
* Cofinimmo Rated New Underweight at Barclays; PT 115 euros
* Telenor Resumed Buy at Citi; PT 190 kroner (+)
* Verallia Rated New Buy at Citi

>>> Call
* Diageo Upgraded to Outperform at RBC on Strong Revenue Growth
* JD Sports Cut to Hold at Stifel; PT 780 pence