Aurelia Butler

Germany’s deputy chancellor has endorsed the idea of outbound investment screening for companies in China, highlighting the growing convergence between Berlin and Washington on trade with Beijing. But the intervention by Robert Habeck could put him on a collision course with German business groups, which oppose the idea of creating more barriers between them and one of their biggest partners. It could also lead to tensions within Germany’s governing coalition. Chancellor Olaf Scholz of the Social Democrats and finance minister Christian Lindner of the liberal FDP are sceptical about such export controls.Speaking at a conference this week about the new investment controls being considered by the US, Habeck said: “I think we should do the same.”The Biden administration is working on legislation that would create a mechanism for scrutinising overseas investment by American companies, especially those made in China.US Treasury Secretary Janet Yellen said this week that the new US restrictions would be “narrowly scoped” and “targeted at technologies where there are clear national security implications”. Officials later elaborated on Habeck’s remark, made on Wednesday, saying he wanted to ensure that German and European knowhow wasn’t lost to countries beyond Europe and that “we need a debate about the appropriate tools” to stop that happening. Habeck’s spokesperson also confirmed on Friday that his ministry was studying the implications of outbound investment screening. “We are on it, and dealing with this issue,” she said. Business groups gave the idea a thumbs down, particularly the VDMA, which represents Germany’s machinery companies. “So far we’ve seen no plausible example of the circumstances under which an outbound investment could be security-critical for Europe,” said VDMA expert Klaus Friedrich. “The US’s argument for such screening is also thin at best.”Scholz’s advisers are also not enthusiastic. One close aide stressed this week that the US proposals were “highly targeted”, “precise” and “narrowly focused”, suggesting they would have limited impact. “We don’t expect what is sometimes feared — a big, comprehensive set of controls,” he said. Nils Schmid, the Social Democrats’ foreign policy spokesperson, described the idea of screening as an “important addition to our foreign policy toolbox”. But he said it must be “precisely calibrated and only apply to narrowly defined high-tech sectors”. Any measure must be closely co-ordinated between the EU and the US, Japan and South Korea, he added. Habeck has long been concerned that German companies might be inadvertently helping Beijing to build up a high-tech arms industry, and has frequently expressed concern about the leakage of critical technologies from the west to China. Scholz’s government has been nudging German companies to diversify away from China, and explore other markets in Asia, South America and Africa. But they have proven largely impervious to its efforts. According to statistics from the country’s central bank, the Bundesbank, German companies invested the record sum of €11.5bn in China last year. The total stock of German foreign direct investment in China was €103bn, according to the Bundesbank— making it second only to the US and Luxembourg. China was also Germany’s most important trading partner last year with almost €300bn of trade between the two countries, according to the federal statistical agency. China ranked fourth in terms of German export markets with €107bn of sales and it was the biggest source of imports with €192bn of inbound shipments.Germany already has export restrictions on so-called dual use goods that have both civilian and military applications. But many in Habeck’s ministry believe they don’t go far enough. Habeck’s spokesperson stressed that the idea of investment screening was gaining traction in Brussels. European Commission Ursula von der Leyen said in a speech in March that the EU needed to look at the “gaps in our toolbox”, which allowed the “leakage of emerging and sensitive technologies through investments in other countries”.For that reason, she said, the EU was considering a “targeted instrument on outbound investment”. This, she said, would be applied to sensitive technologies “where investment can lead to the development of military capabilities that pose risks to national security”.Additional reporting by Martin Arnold More

Today’s top storiesAn EU watchdog said the European Central Bank had been too lax in supervising Europe’s biggest banks. Bundesbank chief and ECB policymaker Joachim Nagel said eurozone rate rises could continue beyond the summer as underlying inflation was yet to be defeated. Elon Musk is in talks to hire Linda Yaccarino, NBCUniversal’s head of advertising, as Twitter’s new chief executive. Musk in December said he would resign from the role as soon as he found someone “foolish enough to take the job”.Mike Lynch, founder of UK software group Autonomy, was extradited to the US to face trial over multiple allegations including conspiracy to commit wire fraud and securities fraud, charges he has strongly contested. The case centres on claims that Autonomy’s accounts were manipulated, leading Hewlett-Packard to pay an extra $5bn when it acquired Autonomy in an $11bn takeover in 2011.For up-to-the-minute news updates, visit our live blogGood evening.UK prime minister Rishi Sunak, 43 today, can take some birthday cheer from news that the economy is showing greater resilience than forecast a few months ago, albeit tempered by signs that high levels of inflation could be here for longer than expected.This morning’s official data showed GDP rose 0.1 per cent in the first quarter, boosted by upwardly revised growth in January. Output in March, however, was much worse than expected as the services sector stuttered. The quarterly increase follows a similarly anaemic 0.1 per cent rise in the final three months of last year but means at least that the economy has (just) avoided recession.GDP is still 0.5 per cent below pre-pandemic levels, compared with a 5.3 per cent increase in the US and 2.5 per cent in the eurozone, leaving the UK stuck at the bottom of the G7 league table.The Bank of England, which yesterday increased its key interest rate to 4.5 per cent, the highest level in almost 15 years, said growth would accelerate later in the year thanks to lower energy prices, a stronger global economy and growing business and consumer confidence. This compares with its February forecast of a recession lasting throughout 2023 and into the first quarter of next year. The BoE warned, however, that it would not hit its inflation target until 2025. It now expects CPI to fall from the current 10.1 per cent to 5.1 per cent in the fourth quarter of 2023, instead of its previous forecast of 3.9 per cent. Any further downgrading would leave Sunak missing his pledge to halve inflation by the end of the year.The BoE for its part insists it is still winning the fight to get inflation back to its 2 per cent target, but governor Andrew Bailey accepted that higher interest rates were bad news for households struggling with the cost of living crisis.Families are being hit particularly hard by food inflation at its highest level in 45 years. The government last week rejected calls for intervention and an inquiry into supermarket “profiteering”. France, by contrast, has reached an agreement with food retailers to set the “lowest possible price” on certain products for three months.New retail sector data this week showed inflation was also holding back demand, but retailers hope to see a boost from May’s glut of bank holidays and extra spending around the King’s coronation.Need to know: UK and Europe economyThe UK pulled back from its plan to ditch all EU-derived laws by the end of this year, a move welcomed by business groups but criticised by Tory Brexiters.More than $1bn of EU exports targeted by sanctions have disappeared in transit to Russia’s economic partners, according to FT analysis. The flow of “ghost trade” is believed to be helping sustain Vladimir Putin’s wartime economy. The EU is planning an undersea internet cable to improve connectivity and reduce dependence on lines running through Russia as concerns grow about vulnerable infrastructure. The €45mn cable will link up EU member states to the Caucasus via international waters in the Black Sea. Need to know: Global economyChina said it would send a special envoy to seek a “political settlement” to the war in Ukraine. It has been holding talks with the US to try to defuse recent tensions between the two countries. The EU’s chief diplomat warned, however, that China would “take advantage” of a Russian defeat in Ukraine and that Brussels needed to respond to Beijing’s global ambitions.At the same time, US Treasury secretary Janet Yellen is calling for “co-ordinated action” by G7 nations against Beijing’s use of “economic coercion” ahead of next week’s summit in Hiroshima, Japan. Yellen said new US investment restrictions would be “targeted at technologies where there are clear national security implications”. Federal Reserve policymaker Michelle Bowman cast doubt over the notion that the Fed was about to pause its interest rate rise programme, citing a lack of “consistent evidence” that inflation was under control. The South African rand fell to a record low against the dollar after the US accused Cyril Ramaphosa’s government of covertly supplying arms to Russia, jeopardising trade links with South Africa’s second-largest trading partner.The FT Magazine uncovers the harrowing story of the South African gangs risking their lives to supply cartels with scrap copper. The world’s third most-used metal is a smuggler’s dream: malleable, recyclable and easy to melt down, making its origin untraceable.Need to know: BusinessPwC is caught up in an Australian leak scandal after it emerged that the firm used confidential government tax plans to advise tech clients. A regulator will hit the biggest US banks — those with more than $50bn in assets — with a $16bn bill for clean-up costs in the rescue of Silicon Valley Bank and Signature Bank in March. JPMorgan Chase chief Jamie Dimon called for a probe into investors betting against bank stocks as part of official efforts to “finish” the turmoil in the sector. Switzerland’s Richemont followed other luxury groups such as France’s LVMH and Hermès with bullish earnings after sales picked up in Asia and in particular in China. The owner of jewellers Cartier and Van Cleef & Arpels reported record annual sales of €20bn and operating profits of €5bn. China’s largest contract chipmaker, Semiconductor Manufacturing International Corp, reported its sharpest revenue fall in more than 10 years amid weak demand for consumer electronics. Our Big Read looks into Germany’s new chip factories. The government is spending billions subsidising the industry — but some argue it does not make economic sense. Germany is also offering state support for Northvolt, Europe’s main battery maker, to build a factory in the country. The company had earlier indicated it might concentrate solely on the US unless the EU matched Joe Biden’s green tech subsidies.Science round-upOne in five articles published in scientific journals may contain faked data from unauthorised “paper mills” that are paid to fabricate submissions, according to a study by German researchers who used new techniques to “red flag” problematic papers.The UK is haggling with the EU over the cost of rejoining Horizon, the bloc’s flagship scientific research programme. The €95.5bn scheme is seen by many UK scientists as vital but they have been excluded since 2020 over disagreements about post-Brexit trading relationships.The World Health Organization said mpox, previously known as monkeypox, is no longer a global health emergency after causing 87,000 infections and 140 deaths.The pharma industry has high hopes for the new class of drugs being developed to treat Alzheimer’s. In clinical trials, the medications slowed the progress of the degenerative disease that affects 50mn worldwide.Join CEOs from Amgen, Roche, Pfizer and more in New York from May 16-17 at the US Pharma and Biotech Summit. Register here today. The development of defence technologies such as sensors, robotics and unmanned systems — has been supercharged by the war in Ukraine.And finally, historian and FT contributing editor Simon Schama reflects on how mankind’s primitive impulses and conspiratorial suspicion have always managed to get in the way of science.Some good newsAn expanded “pan-genome” database of the biochemical letters that form individuals’ DNA has raised the prospect of improved diagnosis and treatment of genetic diseases and offering new insights into human diversity. Something for the weekendTry your hand at the range of FT Weekend and daily cryptic crosswords. More

Forrester Research, a US tech-focused research group, has told staff it plans to cut the majority of its China analysts after Beijing intensified scrutiny of western consultancies in the country.The Boston-based firm plans to fire several dozen employees in China, according to three people with knowledge of the matter, as company executives react to an intensifying crackdown on western research and due diligence companies.Asked about the plans, Forrester said it was closing the China office as part of a previously announced global restructuring that was driven by economic issues and changes to its products.Two people with direct knowledge of the matter said Forrester’s US headquarters decided to cut the jobs in China in response to the recent tightening of restrictions on western consultancies scrutinising Chinese investments and business partners for foreign clients.Another company insider said weak revenues in 2022 from global operations contributed to the decision to cut staff in China. The group’s net profits fell by $3mn to $22mn in 2022 compared to the previous year, according to its annual report. About 10 per cent of the group’s more than 2,000 staff are employed in the Asia Pacific region. The decision caught some local staff by surprise. One person with knowledge of the lay-offs said: “I didn’t see it coming at all. I never thought something like this would happen so fast.” Forrester said most of its restructuring was taking place in the US. “The unsteady economy, along with our ongoing product transformation, are the key drivers for the change,” the company said.It added that its China business was “not material” in relation to global revenue and it would service clients in the country through its global research team.During Forrester’s latest earnings report this month, founder and chief executive George Colony said the group was “taking actions to maintain our margins by reducing [its] cost structure to align with [its] expected revenue”.Several analysts at consultancies in mainland China have told the Financial Times it is becoming increasingly challenging to service foreign clients’ requests for information on Chinese industries. Beijing is setting increasingly stringent red lines on what kind of information is deemed sensitive to national security and cannot be shared with foreign parties. Last month, Beijing broadened the scope of an already expansive espionage law to include “all documents, data, materials and articles concerning national security and interests”. Chinese officials have launched a series of raids on consultancies in China, including Capvision, Bain & Company and due diligence group Mintz. Investors and foreign multinationals say the crackdown will make it difficult to carry out the due diligence necessary to proceed with investments or sign contracts with Chinese partners and suppliers. On Monday, Chinese media reported that state security services had raided multiple offices of consultancy Capvision, accusing the group of tapping personnel in “our party and government organs and other clandestine units” to provide sensitive information to overseas clients. The clampdown comes at an awkward time for Beijing, which has launched a charm offensive trying to woo foreign and private investors back to mainland China, after it ditched its controversial zero-Covid policy at the end of last year. “Private equity and hedge funds have a fiduciary responsibility to hire consultants and show that they’ve conducted due diligence. It becomes a very different kind of market when you don’t have the tools to make your assessments,” said one industry insider. More

(Reuters) -Gold miner AngloGold Ashanti will move its primary listing to New York from Johannesburg in a bid to access a deeper pool of investors and reduce risks associated with South Africa, it said on Friday. The company has shifted its focus to more lucrative mines in Ghana, Tanzania, the Democratic Republic of Congo as well as Australia and the Americas as mining in South Africa becomes more difficult and costly due to geological challenges posed by mining some of the world’s deepest gold deposits.AngloGold, whose forerunner was founded by industrialist Ernest Oppenheimmer a century ago, completed the sale of its South African mines in 2020. The company will also move its corporate base to the United Kingdom, but will maintain the South African office.”There are strategic reasons why we did this. By far the largest pool of gold capital is in the U.S and it was clear that a secondary listing incorporating South Africa was restricting access to that pool of capital,” CEO Alberto Calderon told Reuters in an interview.He added that two-thirds of AngloGold stock volumes were already being traded in New York, where the company has listed depository receipts.”We have outgrown South Africa,” he said, adding that a primary listing in the United States was aligned to its development of four greenfield projects in Nevada, which will take AngloGold’s annual output close to 3 million ounces.Calderon said rating agencies linked AngloGold’s credit rating to that of South Africa, which is struggling with severe power cuts that are souring investor sentiment in Africa’s most industrialised economy. Shares in Anglogold, which plans to keep a secondary listing in Johannesburg and another in Ghana, were down 5.8% with analysts citing disappointment with its first-quarter results reported earlier and outlook for 2024, which shows marginal growth on 2023.”The fall in share price today in my opinion is primarily being driven by the weaker operational data for Q1/23 and 2024 outlook,” said BMO analyst Raj Ray, adding the guidance for next year was “lighter on production and higher on costs”.SHAREHOLDERS TO VOTE ON PLANNED MOVEThe plan to move the primary listing will be put to a shareholders’ vote and requires at least 75% support from investors, Calderon said on a conference call. Responding to Reuters questions, state-owned asset manager Public Investment Corporation (PIC), which is AngolGold’s single largest shareholder with a 15.73% stake, said investors “will continue to be able to invest locally”. It did not directly answer queries on whether it will vote for the move.Arnold Van Graan, analyst at Nedbank Group, said the move was unlikely to lead to an immediate re-rating of AngloGold’s valuation.”This move should, however, benefit the company in the longer term if its full asset potential initiative delivers operational improvements and the company continues to meet its operational and cost guidance,” Van Graan said in a note to clients.($1 = 18.3161 rand) More

(Reuters) – Wall Street’s main stock indexes were set to open higher on Friday as Tesla (NASDAQ:TSLA) rose and shares of regional banks held steady after a selloff, while data-driven hopes of a pause in interest-rate hikes bolstered investor sentiment. Both consumer and producer prices cooled a bit, while weekly jobless claims posted their sharpest rise in 1-1/2-years. The University of Michigan’s preliminary reading on the overall index of consumer sentiment is expected to come in at 63.0 this month, down from 63.5 in April.”It (markets) is bullish on the fact that we are not going to have a hard landing, and we are not going to have a big recession,” said Adam Sarhan, chief executive of 50 Park Investments.”The Fed can pause because inflation is coming down. Even the banking failures that happened, the financial system was dented, but it didn’t break.”Tesla Inc rose 2.1% in premarket trade and was the top gainer among its growth peers after top boss Elon Musk said he found a new chief executive for Twitter. The EV maker also raised the U.S. prices of its Model S, X, and Y vehicles. Regional bank stocks steadied after the KBW Regional Banking index ended four straight sessions lower on concerns over the sector’s health following the collapse of three regional lenders. PacWest Bancorp, Zions Bancorp, KeyCorp (NYSE:KEY) and Western Alliance (NYSE:WAL) Bancorp all rose between 1.4% and 1.8%.Shares of Fox Corp fell 1.8% after Wells Fargo (NYSE:WFC) downgraded the media company to “equal-weight” from “overweight”.At 8:40 a.m. ET, Dow e-minis were up 116 points, or 0.35%, S&P 500 e-minis were up 13.25 points, or 0.32%, and Nasdaq 100 e-minis were up 23.5 points, or 0.17%.Data showed U.S. import prices increased in April for the first time since late 2022 amid higher fuel costs, but imported inflation pressures remained subdued. Markets will also be watching for signs of a breakthrough in raising the U.S. government’s $31.4 trillion debt ceiling to avoid a catastrophic default.A meeting between President Joe Biden and top lawmakers that was scheduled for Friday has been postponed, and the leaders agreed to meet early next week.Meanwhile, Fedwatchers will keep a close eye on comments from St. Louis Federal Reserve President James Bullard and Fed Board Governor Philip Jefferson later in the day. More