TheChek News Flow

Mitsubishi Heavy Industries chief says tactic risks being ‘enormous waste’ of taxpayers’ money

Converting struggling car factories into production sites for military drones would fail and waste taxpayers’ money, Japan’s largest defence contractor has warned.

Japan’s defence ministry has triggered a frenzy among foreign drone producers and local start-ups trying to break into the domestic market after almost trebling the procurement budget for unmanned vehicles to ¥277bn ($1.7bn) for this financial year.

Eisaku Ito, chief executive of Mitsubishi Heavy Industries, said he was plotting a major role for the industrial group in Japan’s drone push but criticised plans to convert idle factories because of the stark differences between car and drone production.

“Honestly, I felt like such comments were made by people who don’t really understand this,” he said. “Products in this field change their specifications constantly depending on the situation. Automobile factories, by contrast, are designed to manufacture tens of thousands or millions of the same units.”

Several European carmakers are pushing forward with overhauling car production lines into drone and missile component factories in a bid to exploit plants that are below maximum capacity or face closure.

Under the encouragement of the French government, Renault has signed deals to partner with French aeronautics group Turgis Gaillard, followed by defence company Thales, to produce drones at its factories.

Volkswagen is in talks with the Israeli maker of the Iron Dome air defence system about a possible partnership, while Mercedes-Benz is tying up with Tytan Technologies to manufacture drones.

Ito said “it would be a terrible idea to use factories like the ones used for automobiles” to make drones for military use, and warned of the risk of producing large numbers of unusable, out-of-date products.

“If that was to be done, then it would end up being an enormous waste of taxpayers’ money. I don’t think we can afford to do that,” he said.

Taking inspiration from Ukraine’s ability to defend itself against Russia by using cheap drones, Japan wants to deploy them at scale to gain an asymmetric advantage against potential future adversaries such as China. At the centre of its plans is the Shield coastal defence programme to deploy thousands of drones to protect the country’s south-westerly islands near Taiwan.

Ito believed that the conglomerate’s drone business would grow to a “considerable scale”. The company could become Japan’s premier drone supplier because it specialised in producing low volumes with high levels of variation, he said.

The defence ministry would want Japan to develop and make some drones without international partners because of data security concerns, Ito said, giving MHI an advantage. “We’re the only company in Japan that can handle this comprehensively,” he said, referring to its ability to produce military kit covering sea, land and air.

In just three months MHI recently developed an interceptor drone prototype that can take out enemy unmanned aerial vehicles, drawing on its expertise in satellites, command and control systems and submarines.

The Japanese conglomerate, whose share price has jumped 50 per cent since Ito took over 15 months ago, is basking in a generational boom for defence spending and gas turbines related to AI.

Ito is tasked with delivering on a backlog that is expected to exceed ¥15tn ($93bn), through production expansions that include doubling gas turbine output. He also wants to show that MHI’s conglomerate structure spanning hundreds of technologies can be a strength by creating new products such as drones.

Even if the AI data centre investment turns out to be a bubble that bursts, Ito argued that the gas turbine order boom would persist because of the need to replace units at ageing power plants, the switch from coal to gas and their role in helping to absorb the volatility of renewable energy output.

Thales signs binding agreement with Gorge family for 35.51 pct block in Exail Technologies at EUR 134/shr - EV EUR 3.9bn - 44 pct premium

to unaffected (Jun 25). Mandatory tender for 100 pct + ODIRNANE to follow via AMF. Block closing 3Q26 - tender close early 2028 latest.

Safran was at EUR 128.5 last week. Can they come back?

French family block sale = no fiduciary out. Once the SPA is signed, the Gorge family cannot flip to a higher bid. Conditions are normally

limited to regulatory clearance. Safran's window was BEFORE signing.

Post-closing Thales sits on 35.51 pct - above the 33.3 pct threshold. A competing AMF offer (min +2 pct = EUR 136.7) would only capture the

float and leave Thales as entrenched blocking minority - no squeeze- out (90 pct), no merger, no EGM control. Nobody pays a 45 pct premium to cohabit with Thales.

- Antitrust: overlap in sonar / underwater warfare / MCM (Thales UWS vs ex-iXblue / ECA). The "early 2028 at the latest" tender close

telegraphs a long regulatory review. If remedies kill the deal, Safran re-enters as white knight. Low probability, non-zero.

- Political: DGA / APE arbitration of the defense landscape. The signing suggests Paris has already blessed Thales.

- ODIRNANE / minority agitation: noise, not a blocker.

At or below EUR 134 the market pays zero for counter-bid optionality

- correctly. Any premium above deal price prices the antitrust- collapse-then-Safran path - we would fade it. Residual trades: the

carry to a 2027-28 tender close, and Thales itself - year-one EPS accretion claimed at a 44 pct premium implies a synergy number worth

stress-testing against Exail's revenue base.

LC / Graham Advisors

Buyers increasingly are seeking rare historical pieces, rather than looking to accumulate status symbols

As auctioneer Aurel Bacs brought the hammer down on the highest-grossing watch auction ever, he felt justice was “being served”. “Overall there was this sense of, after decades of waiting . . . the world is giving the same amount of respect and credit to the watch community as to art and other wonderful collecting areas,” says Bacs, a senior consultant to Phillips, which took SFr74.8mn ($96.3mn) in the Geneva sale in May.

The 43 world records achieved in that sale are among a slew of recent eye-catching results that point to the buoyancy of the auction market for watches. Phillips grew total sales for its spring watch auctions from $114mn to $235mn year on year. Sotheby’s realised its highest total for a watch sale, setting a new record for the most valuable watch auction held in Asia, in Hong Kong in April. The following month, Christie’s and Bonhams set their own auction records.

Geoff Hess, global head of watches at Sotheby’s, says the auction market is “ripping”, with “explosive” growth across modern and vintage watches. There is “quite enormous” global demand, he says, adding that the number of bidders per lot is up from five in 2025 to six this year to the end of May. There has also been a 60 per cent rise in both average lot value ($81,500) and spend ($139,000), and half of lots sold above the high estimate, compared with 27 per cent last year, Hess says.

The “poster child . . . for the market being on fire”, as Palm Beach-based watch dealer Eric Wind puts it, is the independent watchmaker FP Journe. Phillips sold a rare pink gold and platinum Chronomètre à Résonance “Souscription, No 007” (c2000) for $13,922,000 last month, an auction record for this brand or any other independent watchmaker. Half of the top 10 lots in that New York sale, which achieved a record total for a watch auction in the US, were FP Journe pieces.

“François-Paul [Journe] himself is clearly one of the greatest watchmakers in the history of watchmaking . . . his innovations, his finishing, his cleverness, his talent [are] historic,” says Bacs. He says independent watchmakers are combining the quality, features and hand-finishing buyers seek with the romance and storytelling that can be missing from contemporary watches by luxury groups.

Recent records have been set for other independents including Voutilainen, Roger Smith and Akrivia (Rexhep Rexhepi). Oliver Müller, founder of Swiss watch industry consultancy LuxeConsult, says the secondary market is a reflection of the primary market, where high-end independents are performing well.

Patek Philippe, which Bacs says is “as much of a pillar of the landscape in watch collecting as Picasso is in art”, is another brand driving the market, with rare contemporary and vintage pieces sought-after. Phillips achieved HK$80.37mn ($10,255,212) for a Ref 2499 First Series in pink gold (1951) in Hong Kong in May, an auction record for a timepiece sold in Asia.

Auctions are one segment of the secondary market. Analysis by Morgan Stanley of data from secondary watch market research platform WatchCharts found prices for Patek Philippe were up 17.1 per cent year on year in the first quarter of 2026. Across 35 Swiss brands, prices rose 1.9 per cent quarter on quarter in the first three months of this year, continuing the “stabilisation and recovery” of the secondary market that began in the first quarter of 2025 following the peak of the bubble in 2022.

Remi Guillemin, head of watches for Emea and the Americas at Christie’s, says the auction market today is “healthier” than during the Covid-19 pandemic, when purchases were “linked to status or to acquiring the most fashionable and recognisable pieces”. At that time, says Sotheby’s Hess, people were buying many modern steel sports watches, “the prices of which were going up exponentially very quickly”. The product in demand now “is far more broad and varied”, he adds. “We’re in a real moment of discovery.”

Last month, Christie’s sold a white gold Audemars Piguet jumping hour watch (c1928) for $1,016,000, nearly 34 times the low estimate. “It shows you that, today, clients are not looking for hype, they’re looking for watches that have shaped the world of watchmaking,” says Guillemin, who adds that clients are now more knowledgeable, while the pool of buyers and sellers is “growing tremendously”.

Auction houses are attracting a younger audience. Thirty-five per cent of bidders and buyers for watches at Phillips during the first half of 2026 were under 40; about 40 per cent of new registrants for a Christie’s watch auction were millennials.

Hess believes a factor behind Sotheby’s own audience being “meaningfully younger” is that people enjoy being part of a community, as demonstrated by the wider growth in interest in experiences and travel.

“One of the great joys in watch collecting is you’re buying an experience, you’re creating relationships,” adds Hess, who in 2019 founded Rolliefest, a New York gathering for collectors. He says that Sotheby’s embraces the notion of community in its sale rooms by having hotdog carts and drinks.

Wind, owner of Wind Vintage, has “never seen the watch market hotter” for vintage and special independent pieces. “The caveat is, people are looking for exceptional watches,” he says, “and I don’t feel like it’s an incredibly deep market in terms of buyers.” He says top buyers with unlimited resources have “never been hungrier for excellent watches”, with some collectors pivoting to watches from other categories.

Wind adds that “a lot of the more common watches are not really moving” in value. He adds, however, that headline-grabbing results have a “halo effect”. “It helps everyone feel confidence all the way down to someone buying a $5,000 vintage Rolex,” he says.

Brands such as Panerai, Piaget and Tag Heuer have referenced vintage designs when launching new releases in recent months. Wind says there is “a synergistic effect”: contemporary releases lead people to seek out original models, and “brands are monitoring what people want in terms of their vintage watches and then obviously trying to replicate it in some way”.

He warns that inventory could become an issue for auction houses, highlighting the importance of continuing to find rare pieces to keep collectors happy. He thinks at the market’s top end it “might be a little bit dry in the near term, in terms of the trophy examples out there”.

Having exceptional pieces, including “the most incredible Cartier collection ever assembled”, has boosted recent performance at Sotheby’s, says Hess. But he thinks the buoyancy is here to stay. “I have great confidence that we’re at the beginning of a long road up,” he says.

A marketing drive is using storytelling to win over consumers, particularly targeting the important millennial and Gen Z audience

An organisation that promotes the diamond industry is working to create a “hallmark” for natural diamonds. Amber Pepper, chief executive of the Natural Diamond Council (NDC), says the scheme will help people differentiate between natural and lab-grown stones. “Obviously a mark then goes bigger than just a mark,” she adds, “because a mark then becomes a way consumers are thinking about brand.”

The early-stage project follows the April launch of the inaugural World Diamond Day, which encouraged people to share stories about natural diamonds on social media. These are among varied marketing initiatives aimed at reviving consumer interest in diamonds.

Last year, representatives from diamond-producing countries and De Beers signed the Luanda Accord, committing to fund global generic marketing led by the NDC. Pepper says marketing is a “big focus” following a “softening in spend in recent years”. “Certainly now there is a big pivot back to understanding we really need to be investing and, if we are selling a product that is about storytelling, is about emotion, is about legacy, that story needs to be told,” she says.

The Diamond Report, released by De Beers last month, suggests marketing is “critical” to demand for natural diamonds, which has been hit by factors including the cost of living crisis and introduction of tariffs in the US; “a property crisis and decline in marriage rates in China”; geopolitical instability; soaring gold prices; and an increasing supply of lab-grown diamonds.

In the US, the largest consumer market for diamonds, lab-grown accounted for 25 per cent of the volume, and 18 per cent of the value, of diamond jewellery sold between January and May this year, according to data analytics company Tenoris, which tracks sales at more than 2,000 retailers. Lab-grown represented 57 per cent by units, and 30 per cent by value, of engagement rings sold over the same period, compared with 10 per cent and 9 per cent, respectively, in 2020.

Edahn Golan, co-managing partner of Tenoris, says there is “a migration towards lab-grown” among 25- to 35-year-olds. He says engagement ring purchases in the US are “very price-orientated and there was something very, very appealing in the marketing line [by the lab-grown industry] that said, ‘We’re the same, but cheaper’”. The average retail price of a one-carat round lab-grown diamond fell 79 per cent to $768 between January 2020 and May 2026; a comparable natural diamond dipped 24 per cent to $4,553 due to overall decreased demand. Yet the “appeal of natural diamonds is still very much there”, says Golan. There is a bifurcation in the US jewellery retail market, he says, with items priced at $2,500-plus “in increased demand”. The natural diamond industry is going towards a “luxury market”; lab-grown “will likely take everything else”.

De Beers returned to global category marketing in 2024 to address the widening of competition in luxury and that diamonds were not “top of mind” for purchases, according to Sandrine Conseiller, chief executive of De Beers brands. Last October, it launched the Desert Diamonds campaign to US consumers with the aim of reviving desire through an industry-wide focus on warm white, champagne and amber diamonds. This choice tapped into the macro trend of “the quest for individuality”, particularly among younger people, says Conseiller.

Reaching that demographic is key: millennials represent 32 per cent of US consumers of natural diamonds but 55 per cent of demand value, according to De Beers, while Gen Z is the second-largest group of buyers by generation. Pepper says the NDC is responding to this audience by thinking about the “channel mix” for content. It also has projects that consider natural diamonds from the perspective of AI large language models, which consumers use to research purchases.

Desert Diamonds, which launches in China next month, is having an impact, says Conseiller, who points to a 19 per cent year-on-year rise in sales of K-Z colour diamonds at US independent jewellers in the first quarter of this year, plus their presence on the red carpet. A bridal chapter launched in April, with a focus on stud earrings, tennis bracelets, eternity bands and halo pendants coming in September. New York-based jeweller Jade Trau had met “a little bit of resistance” from clients towards browner diamonds but says “now, people are really embracing them”.

Sales of desert diamonds have been “consistently hot” at Vancouver-based Misfit Diamonds since the wholesaler’s launch in 2019, says founder Ashkan Asgari. “The only thing the De Beers campaign has done is double the price of rough, which is not so fun, but that’s good because it’s nice to see natural diamonds being celebrated and demand growing for the product category.”

Clients of Misfit, which specialises in unusual natural stones, are typically the same age group that buy lab-grown. “Anything natural diamonds can do, lab will find a way to do it, but the price point really doesn’t incentivise people to do imperfect stones . . . so when people want natural, they want something that feels like it came from the earth,” says Asgari, whose company is sponsoring Melee the Show in New York next month as a “new platform” to reach jewellers and grow awareness of unusual diamonds. It is providing stones to jewellers for a design competition. Asgari has used “fun, offbeat marketing” on social media, which he says resonates because it feels genuine. “It’s not the traditional, stuffy, ‘A Diamond is Forever’, this is only high luxury, caviar and private jets type of vibe,” he says.

Consumer habits have changed since copywriter Frances Gerety coined the slogan “A Diamond is Forever” for De Beers in 1947. Women are more involved in choosing engagement rings, while self-purchasing accounts for 31 per cent of US natural diamond demand value, according to De Beers. Diamonds are not necessarily saved for best; brands such as Jessica McCormack promote “day diamonds”.

Conseiller says the marketing line remains relevant but “has a different meaning” to the 1950s, when linked to a love relationship that would endure. In a world “where everything is fast-paced [and] fabricated”, she says the genuine “becomes the ultimate aspiration”. “That ‘foreverness’ is talking to the new generation in that way — that permanence, that idea that we are human and we are in a bigger story than just the one that is on our phone on social networks,” she says.

Pepper thinks storytelling can boost demand for natural diamonds. The industry is “recognising the need not just for marketing, but also understanding that it’s a new consumer . . . and responding to that in a modern, relevant way”, she says.

The Cartier Crash becomes a $2mn watch

Long dismissed as a horological curiosity, Cartier’s surreal Sixties icon is now smashing auction records and reshaping the vintage watch market

With the appearance of having been designed by Salvador Dalí and then left to melt on the wearer’s wrist, when it was first launched in 1967 the London-made Cartier Crash was the swinging watch for the swinging city. However, it proved a bit too groovy and far-out: only a tiny number were sold in the 1960s, 1970s and 1980s. 

For decades it was seen as little more than a horological curiosity. Mainstream collectors feasted on steel sports watches, and, to be fair, the Cartier Crash is their diametric opposite. It is the very last watch one would take potholing, skiing, diving, or, for that matter, to the moon. Its objective was simply to be beautiful. It may have taken the best part of 60 years, but finally the pendulum of fashion has swung the Crash’s way.

The first ripples came just over four years ago, when Loupe This, a specialist American auction website, sold a 1960s London Crash (so-called to distinguish it from later, less valuable, Paris-made examples) for $1.5mn. It was viewed as something of an anomaly until this spring, when the auction market for this watch went wild and prices detached themselves from reality. The first gavel of the season was raised at Sotheby’s Hong Kong; in that sale, in April, a late London Crash from 1987 made close to $2mn.

It was a world record — one that held for little more than a fortnight, when Christie’s Geneva sold an even later London Crash (1990), achieving an almost identical result that, when translated into US dollars, came in at a whisper over two million dollars. There isn’t much to choose between them, it depends how you convert the selling currency into US dollars. It was official: the London Crash was now a $2mn watch. And within seconds of the gavel coming down in Hong Kong, dealers in vintage watches around the world were repricing their Cartier stock. 

This has not escaped the notice of Cartier’s director of style and heritage, Pierre Rainero, who has seen that dealers who were selling modest ladies’ Tank LC models for €3,000 are now asking €8,000-€14,000 for the same watch. “When you look through the shop windows,” he says, “you see that they have multiplied by three or four times the price of a year or even six months ago.”

Beyond a trickle-down effect, the super-high prices achieved during this auction season reflect a Cartier fever with origins that can be traced back to 2016, when the brand returned to its heartland of elegant watches in shaped (ie not round) cases. 

During the first decade and a half of this century, Cartier gradually lost its way in watchmaking, seduced by the complications arms race that consumed the industry. It launched tourbillons, perpetual calendars, astronomical indications — watches, however well made, that nobody particularly wanted to wear, by a brand whose customers had historically prized elegance over engineering. The secondary market reflected the confusion; vintage Cartier pieces, with a few exceptions, drifted.

The catalyst that was to lead to its return to greatness was perhaps the worst watch Cartier has ever made: the Diver — a perfectly good watch, just not a Cartier — which made its debut in 2014. In 2016, Johann Rupert, chair of Cartier’s parent company Richemont, took action. Under a new chief executive, Cyrille Vigneron, Cartier reclaimed its heritage and cultural identity, and steered back towards its own icons including the Tank, the Santos, the Panthère, the Cloche and the Crash.

In addition, Rupert authorised one of the more dramatic acts of brand stewardship in recent memory, spending an estimated €500mn buying back unsold inventory. The decision was strategically brilliant: it prevented the secondary market from being flooded with heavily discounted stock, protecting both brand prestige and resale values.

In 2017, the Panthère watch was relaunched with an advertising film dripping with American Gigolo style, directed by Sofia Coppola and set to Donna Summer’s “I Feel Love”, with a hot couple making out, at one point naked except for the gender-fluid Cartiers on their wrists. The messaging was clear: this was Cartier — just not your grandmother’s Cartier.

Cartier also benefited from a shift in the collector climate. The market had spent a decade in a frenzy of speculation, with certain steel sports references trading at multiples of their retail prices. The bubble began to deflate rapidly in 2021. It is not that steel watches had changed; rather that fatigue had set in among some collectors. The obvious trophies had been won; the culture of quick flipping that saw watches as a sort of crypto alternative leached the pleasure from the hobby for genuine enthusiasts, who began looking beyond the sports watch. Cartier, now coherently repositioned, was waiting for them.

“Cartier thrives because clients reward longstanding consistency. Its designs are immediately recognisable and offer exceptional value,” says current chief executive Louis Ferla: “What sets the maison apart for collectors is the rare combination of historical depth, everyday wearability and cultural relevance.” 

It is an opinion reflected in the latest figures issued by the influential Morgan Stanley/Luxe Consult report on the watch market. According to the report, in 2017 the brand lagged behind Rolex, Omega and Patek, with just 5.6 per cent market share; now it is second after Rolex with about 8.7 per cent of a significantly larger market than a decade ago.

What strikes Remi Guillemin, Christie’s head of watches for Europe and the Americas, about Cartier’s new audience is its diversity. “You have Asians collecting Cartier, you have Middle Eastern collectors from Saudi Arabia, the UAE, Qatar, Europeans with a great deal of taste, and then the US. It has really become global.” 

And when Taylor Swift announced her engagement, the Cartier Santos on her wrist was as remarked upon as her engagement ring. A few months later Bloomberg declared: “Cartier Is Gen Z’s Rolex, Thanks to Taylor Swift.” Typical of this new breed of customers, fresh to the collecting market, is Brynn Wallner, America’s leading female watch influencer, and founder of online platform Dimepiece. At 36, she is a millennial who only came to watches six years ago, during a brief stint as a copywriter. Her first purchase was, yes, a Cartier, and the whole experience was documented by American Vogue. 

“For somebody to be able to access a storied luxury brand like that and still afford it within reason — it hits such a sweet spot,” she says, noting that “a lot of brands have ditched the sub-$5,000 price point.”

The brand certainly has enough of the commercial rocket fuel of our times: celebrity endorsement. The Crash alone seems to be worn by a representative cross-section of mid-2020s fame, from Tyler, the Creator and Bad Bunny to Jay-Z, Kim Kardashian, Kris Jenner and Tom Brady.

Wallner is impatient with the suggestion that Cartier’s cool is somehow new. “If you look at the real, true A-list, from 50 years ago, compared with today — you just can’t argue about the amount of influence they have,” she says, noting that Alain Delon, Muhammad Ali, Andy Warhol, Jackie Kennedy, Princess Grace of Monaco and Diana, Princess of Wales all wore the brand before famous wrists became advertising space. “They’ve all chosen Cartier. So, if it’s good enough for them, it’s good enough for you.”

Shipowners turn to dirty fossil fuels and nuclear power as green hopes sail away

Deeply divided industry fractures into several camps backing different technologies and fuels

The shipping industry’s backing for green power has sunk as the majority of vessel owners stick to traditional dirty marine fossil fuels or explore alternatives including nuclear energy.

Data from the International Chamber of Shipping’s latest annual survey of shipping executives shows that confidence in ammonia or hydrogen becoming viable fuel sources has plummeted this year as they prioritise cost and availability over tackling rising carbon emissions.

Conviction that ammonia will become a commercial reality in the next decade fell from 31 per cent of shipping executives last year to 12 per cent this year. Their confidence in hydrogen fell from 18 to 10 per cent.

By contrast, their confidence in traditional fuel oils as the most viable option rose from 41 per cent last year to 50 per cent — despite the global disruption to supply chains driven by the Iran war.

The data reveals the fracturing of the industry into several camps backing different technologies and fuels amid a decline in the willingness of cargo owners to pay a “green premium” for cleaner shipping, according to a report by Boston Consulting Group. Shipping accounts for about 3 per cent of all emissions, and 11 per cent of those from transport.

“Everybody wants to be green, nobody wants to pay for it,” said Alexander Saverys, chief executive of CMB Tech, one of the largest listed shipping companies.

Despite the 176 member countries of the International Maritime Organization previously agreeing to pursue a goal of cutting shipping emissions to “net zero” by 2050, this year the proposal all but fell apart.

The negotiations that would have cleared the way for the first global carbon pricing effort ran into aggressive blocking tactics led by the US. The IMO, a UN body which sets global shipping standards, is now considering four proposals, with the hope of getting agreement among its deeply divided membership.

“We need to be aware that shipping cannot decarbonise on its own. We need all the sectors to assist us, and that includes the energy sector,” Arsenio Dominguez, IMO secretary-general, told a recent FT conference. He added that future discussions might take place in a “better geopolitical situation”.

But shipping executives say that the net zero framework will only be viable if greener fuels become cheaper and more widespread. Semiramis Paliou, chief executive of dry bulk company Diana Shipping, said alternative fuels had “taken a back seat. But I think that’s only temporary”.

Deciding which fuel to choose when buying a ship with a lifetime of 20-25 years is “a very difficult decision, and partly has to do with a bit of gambling as well. Some technologies make more sense for some ships and some make more sense for other ships,” she said.

That challenge, coupled with the low availability of ammonia, methanol and other greener fuels, has pushed shipowners to order an increasing number of so-called “dual-fuel” ships that run on both traditional and cleaner fuels.

Others — notably Greek shipowners — have reverted to new builds powered by fossil fuels, arguing modern ships can be as much as 25 per cent more efficient.

“Energy is going to be scarce no matter what we do so we need to look at ways that we reduce our footprint,” Ioanna Procopiou, chief executive of ship management company Prominence Maritime, told an industry conference in Greece.

Greece, which controls around a fifth of the global merchant fleet by tonnage, was among the countries to fall into line with the US and Saudi Arabia in the rearguard action against the IMO’s net zero plans.

Their shipowners argue that even if all the present supply of green hydrogen, ammonia and methanol went into shipping, it would still only cover a tiny fraction of the industry’s needs.

China, which rivals Greece as the biggest shipowner, has been more supportive at the IMO, as it would bolster the country’s burgeoning green fuels industry.

Denmark’s Maersk, one of the world’s largest container shipping lines, also put an early bet on methanol and operates the world’s first methanol-powered vessel. In the past two years, however, it has diversified its order book to include vessels run on liquefied natural gas.

A few shipowners are looking at less conventional options to allow them to run on fossil fuels for longer. Container lines such as Hapag-Lloyd have explored technology from Seabound, a start-up that uses pebbles to absorb carbon dioxide emissions from ships and turn them into limestone.

Scientists have voiced scepticism that carbon capture will be either economic or feasible. But Alisha Fredriksson, Seabound’s founder, who previously worked for an e-methanol company, argues that dual-fuel vessels may not be able to readily source greener options and may turn to carbon capture methods.

Other shipowners have turned to more time-tested methods: the global fleet of wind-powered cargo ships, for example, passed 100 this month.

There has also been a notable increase in enthusiasm for nuclear propulsion — a technology long used in military submarines but little used in commercial shipping except for Russian icebreakers.

The US is pushing the technology as a way to invigorate its shipbuilding industry and redeploy its nuclear expertise. The American Bureau of Shipping in June approved the design of a nuclear-propelled vessel by the Maritime Consortium of US university MIT.

“China gets a more and more prominent role in shipbuilding . . . because they’re the ones that can make the cheapest ships [but] if we’re going to revitalise the maritime industries in Europe, in Britain, in the US, we need a technological catalyst,” said Mikal Bøe, chief executive of CorePower, which is developing a nuclear-propelled fleet.

One benefit of nuclear power was that ships could run without the need to refuel potentially for decades, Bøe said. Less concern over fuel consumption and pollution could also mean sailing at faster speeds.

Themis Sapsis, professor of mechanical and ocean engineering at the MIT consortium, said one of the biggest issues was reactor safety. The MIT design does not use a highly pressurised system, reducing the chance of an explosion on board and allowing lower uranium enrichment levels.

Despite the advances, nuclear power still comes with some big hurdles, said Peter Jameson, managing director at BCG.

“One is cost — nuclear is expensive, and despite reducing costs, it can only be considered for certain vessel types and activities,” he said. “The other is a challenging regulatory environment. Trying to get a local agreement to put a nuclear power reactor in a harbour next to 10mn people will be a challenge.”

At around $500-$600 a tonne, Bøe said nuclear could compete on price with traditional fuels. But nuclear-powered ships are not expected to hit the water until the 2030s at the earliest, executives say.

Not all shipowners have given up on cost-effective, cleaner shipping fuels. CMB Tech boss Saverys believes that ammonia still has the potential to be the cheapest of all alternatives. “Costs are going down very fast,” he said.

CMB Tech has invested in its own ammonia fuel terminal in Namibia and has 12 ammonia-powered ships being built. The first will be launched later this year.

“In shipping, pioneers have traditionally carried the greatest risks — sinking ships, diseases, cannibals — while the early followers got the riches and the paradise,” Saverys said.

“That is why our industry has not always embraced being first. We are taking a pragmatic approach to show that pioneering can create a real head start, especially in a world that is moving much faster than it did 600 years ago.”

The costs of remaining at the frontier of AI are punishing, but the penalties for falling behind may be even worse

The legendary investment sage Benjamin Graham famously wrote that “in the short run, the market is a voting machine, but in the long run, it is a weighing machine”. When it comes to the current AI boom, the short run may be drawing to a close and the long run is approaching fast. 

Over the past few years, private market investors have been maniacally voting for OpenAI and Anthropic, bidding up the target valuations for their planned flotations to about $1tn apiece. The valuations of west coast start-ups are routinely and necessarily based on speculation, given their short history. So, the narrative goes: how can investors possibly miss out on these historic opportunities to achieve godlike superintelligence? 

Yet slightly less excitable east coast public market investors will eventually, and more prosaically, discount the hype and weigh these companies’ long-term abilities to generate hard cash (we hope). On that score, there are huge doubts about both companies. Their listing prospectuses will need to be unusually convincing. Great vibes will not automatically translate into sustainable valuations.

The AI labs’ investment bankers will surely point to the success of SpaceX, which floated last month at a blockbuster valuation of $1.8tn. Stock market investors snapped up the offering even though the valuation was about $1tn in excess of fair market worth, according to Morningstar. But SpaceX boasts two advantages over the pure AI start-ups. At its core is a highly defensible business in rocket launches and satellites. And the company’s founder Elon Musk enjoys a cult-like following among retail investors.  

Even so, a more sceptical market judgment has already been made about SpaceX’s subsequent $25bn debt offering. The credit rating agencies generously assigned the company’s bonds investment grade on launch. But they have since been trading in junk bond territory as investors weigh the company’s operational losses.

There are three interrelated reasons why OpenAI and Anthropic may face even stiffer headwinds. First, it is not yet clear that either of them has a sustainable business model. For sure, both have built astonishing AI models that have won ecstatic user acclaim and generated rocketing revenues. But the maths is daunting. The costs of remaining at the frontier of AI are punishing. The penalties for falling behind may be even worse. 

A new report from Exponential View calculated that the tech sector had generated actual revenues of $110bn from generative AI over the past year, a far faster rate of growth than in any previous tech cycle. But it estimated that foundation models only accounted for about 11 per cent of this revenue in the first quarter of 2026, with 82 per cent going to hosting services.

In November, JPMorgan forecast that $5tn would be spent on AI infrastructure over the next five years. As Matt Scherer, a fellow at the Open Markets Institute, notes, the generative AI industry is producing 11 digits of annual revenue to cover 13 digits of annual spending, which assumes an extraordinary rate of future growth. 

Second, the big US tech companies that have heavily backed OpenAI and Anthropic, including Microsoft, Alphabet and Amazon, are increasingly evolving from collaborators into competitors. Alphabet is itself soaking up investor money by raising $80bn in fresh equity to help fund up to $190bn of capital expenditure this year. SpaceX is also expanding its own xAI business aggressively, spending $60bn on acquiring code-editing start-up Cursor in a direct challenge to Anthropic.

Third, AI models are becoming commoditised, which is likely to cap the margins of the frontier models. As many finance directors are discovering, it is all too easy for employees to rack up massive AI usage costs without generating a commensurate return on investment. Increasingly, companies are turning to cheaper and more adaptable open models, many of them Chinese, for routine tasks. 

Anthropic currently has the edge over OpenAI in targeting business customers, driving revenues and focusing on real-world applications in areas such as law and science. Then again, it will be hard for Anthropic to float while suing the US government over its designation as a “supply-chain risk” following a dispute with the Pentagon. By contrast, OpenAI is wooing the Trump administration by offering the government 5 per cent of its stock.

In the background, the stock market is growing increasingly jumpy about the AI industry’s colossal investment plans. Although semiconductor companies have surged ahead, the Magnificent Seven stocks have underperformed UK gilts over the first half of the year.

Overall, the US market is the most expensive it has ever been, says the veteran investor Jeremy Grantham. The Bank for International Settlements warns that current AI “exuberance” could lead to an “investment bust”.

Many are comparing this AI boom with the run-up to the dotcom crash of 2000. This did not stop the emergence of internet giants such as Amazon and Google but the Nasdaq stock market still fell 77 per cent from peak to trough and 4,800 internet companies went bust by 2003. OpenAI and Anthropic must be praying they have their timing right.

Big investors commit billions to private credit despite turmoil

Institutional investors poured money into funds as retail money fled

Large investors are committing billions of dollars to private credit funds as big institutions seek to profit from an exodus of smaller retail clients.

North American direct lending funds that seek to attract institutional clients raised at least $16bn in the second quarter, according to Preqin data analysed by the FT. These funds, which are a subset of the wider private credit market, underwrite bespoke loans to companies without a bank acting as an intermediary.

The three months to June 25 were the second-strongest quarter for fundraising by such “closed-end” funds — which raise money from investors only once and have a finite life — in four years.

The data indicates that large investors remain committed to this part of the private credit market despite a handful of large defaults and worries about its overexposure to the software sector.

“Retail money has pulled back from private credit as they have digested the reality of lower return expectations” for loans made in 2021 and 2022, said David Colla, global head of credit investments at the Canadian pension plan CPP Investments.

But he added that “the returns are still respectable”, and the retail withdrawal had “left a gap in the private credit markets which institutional capital is filling”.

Some of the largest private investment groups including Blackstone, Ares Management and BlackRock’s HPS Investment Partners are meeting investors as they try to attract funds for new flagship vehicles.

Executives at Apollo Global brought forward the fundraising for their latest flagship direct-lending fund by six months to capture the demand, according to a person briefed on the matter, launching it to prospective investors last week.

Those funds have yet to close and so are not included in the Preqin figures for the second quarter.

Brad Marshall, who co-runs Blackstone’s flagship $45bn private credit fund, said that many investors expected returns to increase, particularly if outflows from retail-focused vehicles limited how much money those funds were willing to lend.

“Periods of volatility [are] usually the best time to invest capital because people are nervous, capital structures are a little more conservative and pricing is a little wider,” he added — a reference to the extra interest, or “spread”, that lenders are able to charge above benchmark rates.

The demand from institutional investors contrasts with a spate of outflows from funds pitched to smaller retail investors and wealthy individuals. Private investment groups from Apollo to Morgan Stanley have limited withdrawals from those vehicles, which faced requests for more than $22bn of redemptions in the second quarter.

“The institutional side seems to be pretty clinical about how they’re approaching” direct lending, one private credit executive said. “Leverage is a little lower [on new deals], documents are a little tighter and price is wider. Those are the dynamics institutional investors see: that this market is getting better, not worse.”

Maine’s state public pension approved up to $375mn in commitments to Blackstone’s latest direct lending fund in February, state disclosures showed. 

New Jersey’s investment arm, which oversees one of the largest pension plans in the country, proposed committing as much as $600mn to vehicles managed by private credit specialist Golub Capital.

Institutional investors’ optimism has been buoyed by the strength of the US economy, as well as the chance that interest rates could begin to rise if policymakers at the Federal Reserve attempt to tame inflation. Higher interest rates would bolster the returns on floating-rate private debt.

“They want more of it,” John Zito, co-president of Apollo Asset Management, said last month in reference to the institutional demand for private credit. “When they see the headlines, they are like, great, this is going to create a bunch of excess spread for us to put some money to work.”