Issue 1,245 Wednesday 20 October 2010

BUSINESS WITH PERSONALITY FREE

www.cityam.com

BBC SHARES IN THE

PAIN AS AXE LOOMS
■ State-funded broadcaster faces ■ Defence budget is cut by eight ■ George Osborne prepares to
real-terms cuts of 16 per cent as per cent and replacement for unveil toughest spending cuts in
licence fee frozen for six years Trident is delayed until 2016 Britain’s peacetime history
UK POLITICS the defence budget by 2014-15.
▲

BY DAVID CROW AND STEVE DINNEEN Unveiling a sweeping review of

THE BBC is being forced to share the
pain of public sector cuts, after the
government imposed a six-year
licence fee freeze, effectively slash-
ing the corporation’s budget by 16
per cent.
From 2015, the state-funded
broadcaster will also be forced to
foot the £293m-a-year bill for the
World Service, which is currently
paid for by the Foreign Office, as
well as Welsh broadcaster S4C and
the BBC Monitoring news aggrega-
tion service, which have a combined
budget of £127m.
In total, the BBC, led by director-
general Mark Thompson, will be
forced to spend at least £340m of
licence fee cash a year on these three
services, which were all previously
funded by the government.
By freezing the licence fee at
£145.50 for the next six years, the
government is in effect cutting 16
per cent from the BBC’s £3.6bn
budget when rising prices are taken
into account.
The cuts are equal to the total
annual budgets of Radio 1, 2, 3, 4
and 5 Live combined.
Chancellor George Osborne decid-
ed it was impossible for the BBC’s
funding to increase while defence
and public spending faced swinge-
ing cuts.
An aide to the chancellor told City
A.M.: “Effectively licence fee payers
were facing a tax rise over the next
six years. We’ve just given them a
tax cut.”
(L--r) The BBC’s Mark Thompson, George Osborne and a union member protesting against the cuts
Meanwhile, the BBC will be
forced to freeze the budget for its
website, in a move that will please
commercial rivals who claim the
huge amount invested in
bbc.co.uk has prevented them
from making a decent return
online. It is also forbidden from
rolling out any more local news
services on the web.
And it will have to spend
£150m-a-year, previously allocated
for the conversion from analogue
to digital TV, to aid the roll out of
super-fast broadband. A further
£25m-a-year must be spent on
local television, with £5m of that
going to commercial producers.
A BBC insider yesterday said the
cuts were “tough but fair”, telling
City A.M. the broadcaster accepted
that “tough times call for tough
measures”.
“This secures the future fund-
ing of the BBC. It will be tough
but we accept cuts need to be
Pictures: REUTERS
made,” the person added.
The BBC will be relieved that it
managed to thwart plans to make
it shoulder the cost of giving free
TV licences to the over 75s. This
would have cost £556m a year,
and risen exponentially as the
population ages.
The plans, which represent an
unprecedented scaling back of
the BBC, emerged shortly after
the Prime Minister announced an
eight per cent cut in real terms to
the armed forces, David Cameron
said the £39.6bn worth of cuts
meant the military would have to
cope with fewer people, fewer ships,
fewer aircraft and fewer nuclear
warheads.
The decision on when to renew
Britain’s Trident submarine-based
nuclear deterrent was pushed back
until 2016, after the next general
election, and the system will be
scaled back, saving £3bn over 10
years.
The Army escaped with the best
settlement, and will likely have to
cut 7,000 jobs between now and
2015, while the Navy will see cuts to
headcount as well as a reduction in
ships from 23 to 19. However the
Navy’s two aircraft carriers will be
built.
It is the Royal Air Force that will
face the biggest cuts. The Harrier
force is being scrapped, leaving the
RAF with just two remaining jets.
Analysts said the plans implied
some 42,000 job losses by 2020,
meaning Britain would be unable to
take part in Afghanistan or Iraq-size
wars in the future.
Today, the chancellor will unveil
the biggest cuts to public spending
in a generation, with some depart-
ments facing cuts in real terms of up
to 35 per cent.
The government expects 490,000
public sector jobs to be lost as a result
of the cuts, according to a draft copy
of the spending review caught on
camera by a photographer.
WHAT TO LOOK OUT FOR: P2

FTSE 100 t5,703.89 -38.63 DOW t10,978.62 -165.07 NASDAQ t2,436.95 -43.71 £/$ t1.57 -0.02 £/¤ 1.14 unc ¤/$ t1.37 -0.03 Certified Distribution
30/08/10 – 03/10/10 is 110,015
 2 News
A traumatic but necessary cutback
EDITOR’S LETTER
ALLISTER HEATH
IT WILL be grim. The Ministry of
Justice will lose 14,000 jobs over the
next four years. Close to 10,000 will go
in the prison and probation system.
There will be 42,000 job losses in the
military. These form only part of the
490,000 net public sector jobs set to go
over the next four years as a result of
the Comprehensive Spending Review,
to be unveiled today by George
Osborne. Some of these will take place
via natural wastage; some depart-
ments will be asking staff if they want
to cut hours and pay. But there will
also be involuntary redundancies,
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Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Pictures Alex Ridley
Commercial
Sales Director Jeremy Slattery
Commercial Director Harry Owen
Head of Distribution Nick Owen
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WHAT THE OTHER PAPERS SAY THIS MORNING
INDIAN OIL PLANS RECORD $4.3BN IPO
Indian Oil plans to raise a record
Rs190bn ($4.3bn, £2.73bn) by selling
20 per cent of its shares in what
would be India’s biggest IPO, as sever-
al state-run groups are rushing to tap
the nation’s booming equity market.
Sumit Bose, India’s minister of disin-
vestment, said yesterday that in the
next few weeks the government
would appoint the bankers for the
issue, which is expected to hit the
markets by the first quarter of 2011.
C&W REASSURE ABOUT OFFICIAL CON-
TRACTS
Cable & Wireless Worldwide sought
to reassure investors by saying it had
retained its existing telecoms con-
tracts with the government following
a review in which ministers secured
significant cost savings. C&W
Worldwide had issued a profit warn-
ing in July.
inflicting much trauma. Everybody
with a heart will be feeling for those
about to be chopped.
The trouble is that the coalition has
no choice but to act; the pain of the
next few years would turn into a far
greater disaster otherwise. Years of
over-spending under Labour, com-
bined with the recession, mean that
the public sector is facing its day of
reckoning. Government spending is
too large for a shrunken private sector
to support. There is nothing anybody
can do about this reality: the spending
cuts are the minimum required to
eliminate the structural deficit over
the next few years and are being
accompanied by painful tax hikes. The
situation is precarious: there is no way
the UK government could now cope
with a secondary crisis, caused for
example by a sovereign bankruptcy.
But while the overall reduction in
public spending is absolutely right,
many of the individual policies are
much more debatable. This is especial-
ly true of the decision to increase for-
What to look out for in today’s spending review
OVERALL CUTS
• The chancellor is expected to
announce real-terms cuts of 3.6 per cent
to total public spending over four years.
• Because of interest payments on
Britain’s debt pile, that will equate to an
average 14 per cent cut for individual
departments.
• Some departments, such as Health and
Overseas Aid, have been ring-fenced,
meaning their budgets won’t be cut.
• That leaves other departments facing
real-terms cuts of 25 per cent over four
years.
• But some departments such as
Defence (which saw its budget cut by
eight per cent yesterday) and Education
will secure above-average settlements.
• The remaining departments are there-
fore likely to cut their budgets by around
35 per cent in real terms over four years,
although this will vary case-by-case.
• Total spending in nominal or cash
terms will continue to rise over the
course of the parliament, from
£696.8bn this year to £737.5bn by the
end of the parliament in 2014-14.
AD DISBURSAL RECOVERING FASTER
THAN EXPECTED
Global advertising spending is recov-
ering more quickly than expected by
big agencies ahead of the Christmas
season. Strong third-quarter results
for the industry are showing that
investment by clients in branding
and promotions has rebounded from
a record low last year as companies
strive to gain market share.
BLACKFRIARS TOWER SITE IN ADMIN-
ISTRATION
A 52-storey skyscraper project on
London’s South Bank backed by
Sergei Polonsky, the Russian property
tycoon, has been put into administra-
tion by the Royal Bank of Scotland.
The Beetham Organisation, a
Liverpool-based developer, and
Mirax, the property company found-
ed by Mr Polonsky, planned to build a
large mixed-use scheme on
Blackfriars Road that was once
expected to have an end value of as
much as £1bn.
eign aid, sacrificing the military and
prisons. Governments should be con-
centrating on core functions; yet the
reverse seems to be happening in
Britain, where we will soon have air-
craft carriers devoid of planes. A better
restructuring of the way services are
delivered could preserve value-
adding, frontline jobs while reducing
back-office, administrative functions.
Unfortunately, producer interests con-
tinue to dominate departmental
thinking; and the easiest cuts are
being made, rather the right ones.
There is one key way in which the
job losses should be put into context.
Private firms were forced to go
through a nasty process of shrinkage
during the recession; and even in
these slightly better times thousands
of people are being made redundant
weekly. No fewer than 143,000 people
were made redundant in the three
months to August, nearly all in the
private sector. The redundancy rate
was 5.8 per 1,000 employees, down 2.7
from a year earlier. These sorts of rates
WELFARE
• The chancellor could soften the pain of
departmental cuts by making cuts to the
welfare bill, something he did in his emer-
gency Budget.
• He has already announced plans to axe
child benefit for higher rate taxpayers,
saving around £1bn a year.
• The Treasury has also refused to deny
that it is planning to abolish child benefit
OIL EXPLORERS TOP LIST OF ACQUISI-
TION TARGETS
UBS added Premier Oil and Heritage
Oil to its watchlist of British takeover
targets yesterday, saying that a wave
of mergers and acquisitions was
building in Europe. “We think it may
finally be time for investors in
European equities to ‘wax their surf-
boards’,” Daniel Stillit, a London-
based analyst at the Swiss bank, said.
IF YOU WANT TO MAKE ’EM SPEND,
MAKE ’EM LAUGH
Luminar will announce a licencing
deal with Jongleurs this week to run
comedy nights at some of its clubs as
it seeks ways of pepping up its for-
tunes. The nightclub operator, which
is trying to reverse a 20 per cent
decline in like-for-like sales, recently
signed a tie-up with Ministry of
Sound to run branded club nights.
Trade has been hit by youth job cuts.
have long been the norm in the pri-
vate sector – yet while some of the big-
ger layoffs are reported, we don’t see
these aggregates splashed on front
pages every quarter when they are
published by the Office for National
Statistics. This is for good reason: even
more jobs tend to be created than are
destroyed. That is how capitalism
works; the public sector is now being
confronted with a much harsher and
precarious reality that the rest of us
have had to face all of our lives.
The good news is that total employ-
ment is growing again, reaching
29.158m in June-August, up 315,000
from a trough of 28,843m in
December-February. Private sector jobs
grew at an even faster rate of 361,000,
compensating for 46,000 public sector
job cuts. As long as this continues,
most of the public sector workers who
will lose their jobs ought to be able to
find alternative work. That, at least, is
what we must all hope ahead of
today’s traumatic announcements.
allister.heath@cityam.com
The chancellor is
expected to
announce more
cuts to benefits
Picture: GETTY
for children over 16.
• Other options, such as means-testing job-
seekers’ allowance, are also under consid-
eration.
• The chancellor is more likely to take ben-
efits away from those in households where
at least one earner is on the higher 40 or
50 per cent rate of tax in a bid to prove
the spending review is “fair”.
IRAN WARNS BRITISH OIL GROUPS IN
REFUELLING ROW
Iran is threatening to retaliate against
British oil companies for refusing to
sell fuel to its commercial aircraft fly-
ing back from London. BP has cut off
ties with Iran Air since the summer,
while Shell and three other interna-
tional groups signed an agreement
with Washington last month to with-
draw from operations in Iran altogeth-
er.
AGENCY WORKER REFORM SCUPPERED
BY “SOCIAL PARTNER” DEAL
The government has said a stand off
between the unions and CBI have
scuppered its attempts to reform new
employment legislation giving equal
rights to 1.3m agency workers.
Employment relations minister Ed
Davey said the decision to retain the
regulations in their current form was
“clearly disappointing”.
CITYA.M. 20 OCTOBER 2010
NEWS | IN BRIEF
Former PM Thatcher in hospital
Former Prime Minister Baroness
Thatcher was admitted to hospital last
night to be treated for an infection. She
is thought not to have fully recovered
from an illness which prevented her
attending a reception at Downing Street
to mark her 85th birthday last week. At
the time the reason for her lack of atten-
dance was given as a bout of the flu.
Lady Thatcher was taken to Cromwell
hospital in West London in what was
described as a routine admission.
EU proposes Europe-wide VAT
The European Commission has published
proposals for direct taxes across the
European Union (EU), including a possi-
ble Europe-wide version of VAT. The pro-
posals are part of a package of options
being explored to find new ways of
funding the EU budget. The UK, France
and Germany have all rejected the idea
of direct taxes in the EU. Currently all 27
member states pay a fixed amount to
the EU budget, based on their GDP and
a percentage of their VAT. The proposal
was first mooted by the EU’s budget
commissioner Janusz Lewandowski in
August.
CAPITAL SPENDING
• Spending on capital projects like roads
and transport is expected to fall from
£68.7bn to £45bn in 2014-15, although
the government could make less severe
cuts in a bid to protect spending that
will support growth.
RE-PROFILING
• There has been much talk of “re-profil-
ing” the cuts, essentially delaying them
until later in the parliament or until eco-
nomic growth is stronger.
• The Treasury has denied that it is plan-
ning to alter the pace of fiscal tighten-
ing, but has admitted there could be
some “marginal” revisions due to the
cost of redundancy payoffs and break
fees on government contracts.
• Key to this is the amount the chancel-
lor hopes to cut spending by in 2011-12.
In his June Budget he said he would
achieve total cuts of £23bn in real-terms.
A significantly lower number, alongside a
higher target near the end of the parlia-
ment, would suggest he is putting off
tough decisions. By David Crow
BP LINKS PAY TO SAFETY IN FOURTH
QUARTER
BP, which faced accusations that it
precipitated the Gulf of Mexico oil
spill by placing profits before safety,
said in an internal memo to its staff
that safety would be the sole criterion
for rewarding employee performance
in its operating business for the
fourth quarter. BP’s new chief execu-
tive, Bob Dudley, announced the step
in an email to employees that was
viewed by The Wall Street Journal.
VW-PORSCHE DEAL FACES DELAY
Volkswagen said that tax and legal
disputes could delay its planned
takeover of Porsche and might
prompt it to deploy a backup provi-
sion to initially just acquire Porsche’s
sports-car-making operations, instead
of also merging with its holding com-
pany as planned.
CITYA.M. 20 OCTOBER 2010 News 3

Hands says he was

Mark Hoban said
the outcome was a
good result for the
industry and
investors

Picture: Micha
Theiner/City A.M.
betrayed over EMI
bidders had pulled out. He alleged

▲
MEDIA
BY MATTHEW WEST
GUY Hands, the head of private equi-
ty firm Terra Firma, accused senior
Citigroup banker David Wormsley of
betraying him over the sale of EMI, as
he gave evidence in a New York court
yesterday.
Hands told the court he would
never have bid for the record label if
he had known all other interested
Wormsley misled him into believing
another bidder, private equity group
Cerberus, had submitted a 262p per
share bid, leading him to up Terra
Firma’s offer to 265p per share.
“I knew him well. I trusted him. I
considered him my closest business
colleague,” Hands said of Wormsley.
Terra Firma paid £4bn for EMI in
2007. It has since struggled financial-
ly and nearly defaulted on debts.

EU hedge fund
rules not as
bad as feared
rights from each individual member
▲

HEDGE FUNDS
BY DAVID CROW
EUROPEAN finance ministers have
agreed tough new rules for hedge
funds and private equity houses,
although the regime will not be as
strict as many in the industry feared.
The directive, agreed in
Luxembourg yesterday afternoon,
will force alternative funds to comply
with a costly registration regime, as
well as subjecting them to restric-
tions on remuneration and tougher
capital requirements. All alternative
funds, including property funds, will
have to comply.
However, the new regime will
enable fund managers to market
their funds across the 27-member EU
bloc rather than applying for individ-
ual permission from each member
state.
And in an important victory for
London’s hedge fund industry – most
of which is based offshore for tax pur-
poses – these pan-European market-
ing rights will be made available to
non-EU funds that apply for a “pass-
port”.
The French had wanted to force
non-EU funds to apply for marketing
state, which would have proven too
costly and burdensome for some
smaller firms.
However, the new passport scheme
will not be up and running until two
years after the rules come into force,
most likely around 2015. Until then,
funds will need to apply for market-
ing rights on a country-by-country
basis.
France had also wanted the pass-
port scheme to be policed by the new
Paris-based European Securities and
Markets Authority, but this demand
was again vetoed by other finance
ministers. Once funds have received
authorisation from a national regula-
tor, in Britain’s case the FSA, they will
be given an EU-wide passport.
Mark Hoban, the financial secre-
tary to the Treasury, said the final set
of rules were a “good outcome for the
sector and investors”.
“Given where we were in May,
when we picked up a hospital pass
from the previous government, this is
a good agreement,” he told City A.M.
And trade body AIMA also said the
impact of the text agreed by finance
ministers yesterday would be “be far
less severe than” first thought.

Yahoo reports Suitors emerge

jump in profits for BAE division
▲

MEDIA
SEARCH giant Yahoo more than dou-
bled its profits in the third quarter on
the back of stronger margins and a 17
per cent rise in display advertising.
Net earnings jumped 113 per cent
to $396m (£252m), or $0.29 per share,
while sales increased two per cent to
$1.58bn.
Profit from operations beat consen-
sus projections, and Yahoo shares
rose slightly in after-hours trading.
Total pages viewed on Yahoo fell
four per cent from a year earlier, but
minutes spent on the site rose three
per cent from the second quarter and
the number of unique visitors rose.
M&A
GENERAL Electric, Honeywell
International and United
Technologies are among the suitors
for BAE Systems’ aerospace unit, it
emerged last night.
The defence group has hired advis-
ers to sell the aerospace unit for up to
$2bn, and is now close to completing
a series of management meetings
with nearly a dozen strategic buyers
and private equity firms, sources said.
Aerospace suppliers Goodrich,
Moog and Esterline Technologies are
also thought to be eyeing the divi-
sion, along with private equity firm
Carlyle Group.
CITYA.M. 20 OCTOBER 2010
GOLDMAN SACHS MERRILL LYNCH |
BANK OF AMERICA
$1.9bn
Net profit
BANK OF AMERICA MERRILL LYNCH |
$7.3bn
Net loss
BANK OF NEW YORKMERRILL
AMERICA MELLON LYNCH |
$622m
Net profit
Goldman sees
its profits fall
▲
BANKING
BY MATTHEW WEST
US INVESTMENT bank Goldman
Sachs said yesterday that net profit
fell during the third quarter of this
year after lower than expected trad-
ing volumes during the summer
dragged on earnings.
Goldman reported a net profit of
$1.9bn (£1.2bn), or $2.98 per share, for
the three months to 30 September,
down more than 40 per cent on the
previous year’s $3.19bn profit haul, or
$5.25 per share.
Net revenues were also down 28
per cent on the previous quarter to
$8.9bn, the bank said.
Revenues from the bank’s trading
desks were $6.38bn, 36 per cent lower
than a year earlier and three per cent
lower than the previous quarter.
But the fall in trading volume was
offset by growth in the bank’s invest-
Bank of New York Mellon buys
two firms to boost its recovery
▲
BANKING
BANK of New York Mellon continued
its recovery during 2010, based in
part on its acquisition of two compa-
nies that provide back-office servic-
es – deals which took assets under
administration 10 per cent higher
year-on-year to $24.4 trillion (£15.5
trillion).
The bank yesterday reported third
quarter operating profit of $625m, or
$0.51 per share, compared with a loss
of $2.4bn, or $2.04 per share, a year
earlier as the bank dealt with $4.18bn
in losses on risky investments.
The figure was slightly below the
previous quarter’s income of $668m,
News 5
Bank of America in the red
down from:
$3.19bn
in Q3 2009
Net revenue down
28% to
$8.9bn
amid wrangle with investors
Investment Management are believed third quarter earnings on declining
▲
BANKING
BY MATTHEW WEST to be among investors that have writ- credit losses, though a hefty one-off
ten to the bank. BoA, led by chief exec- charge on its debit and credit card
BANK of America (BoA) said yesterday utive Brian Moynihan, said: “We’re business sent it plunging into the red.
it would vigorously defend itself not responsible for the poor perform- Excluding the non-cash goodwill
down from: against demands from investors who ance of loans as a result of a bad econ- charge, BoA reported earnings of
hit by one-off
writedown of
have written to the bank to insist it
take back billions of dollars in failing
omy. We don’t believe we’ve breached
our obligations as servicer. We will
$3.1bn (£1.97bn), or 27 cents per
share, compared to analyst forecasts
$2.2bn
net loss $10.4bn
mortgages originally issued by its
Countrywide subsidiary.
examine every avenue to vigorously
defend ourselves.”
of 16 cents per share.
Including the $10.4bn charge, the
The Federal Reserve Bank of New News of the letter emerged as the bank posted a net loss of $7.3bn, com-
in Q3 2009 York, BlackRock and Pacific bank reported better-than-expected pared to a loss last year of $2.2bn.
up from:
Net revenue up
3% to
$2.46bn
net loss in $3.43bn
Q3 2009
Stop dreaming
about a C-Class.
Start driving one.
ment banking division, which saw
revenues increase to $1.12bn, 24 per
cent higher than a year earlier, on the
back of a 40 per cent increase in rev-
enues from equity and bond under-
writing.
Goldman also revealed it had put
$3.8bn (£2.4bn) aside in the third
quarter to cover employee pay and
bonuses. For the year to date it has set For more information on our current
aside $13.1bn to cover staff pay and
bonuses, or £268,000 per employee. offers or to book a test drive visit
Overall, the staff pay and bonus pool
is down 21 per cent from the $16.7bn
set aside at this time last year.
mercedes-benz.co.uk/offers
Chairman and chief executive
Lloyd Blankfein said the bank’s
results reflect solid performance.
“While economic conditions con-
tinue to be challenging in a number
of important markets, our focus is on
helping our clients achieve their
goals,” he said.
or $0.55 per share, as well as being a
little below analysts’ expectations of
$0.54 per share.
Assets under management (AUM)
increased by 18 per cent year-on-year
to $1.41 trillion, the bank added.
AUM were also up nine per cent on
the quarter.
Fee revenue increased two per cent
to $2.66bn as net interest revenue fell
0.6 per cent to $718m.
Robert Kelly, chairman and chief
executive officer of BNY Mellon said
the bank’s two recent acquisitions, of
GIS and BHF Asset Servicing, had
helped to offset weakness in the capi-
tal markets.
 6 News
China and Brazil moved to
action to control currencies
▲
WORLD ECONOMY
BY MATTHEW WEST
CHINA sent financial markets into
retreat yesterday as it announced a
25 basis point increase to its bench-
mark interest rate, taking one-year
deposit rates to 2.5 per cent and one-
year lending rates to 5.56 per cent.
The increase, which takes effect
from today, is the first in three years
and was seen internally as a warning
to Chinese property developers that
the government was willing to inter-
vene to restrain rampant house price
growth.
But the US has also been calling for
China to allow its currency to appreci-
ate, accusing the government of keep-
ing the yuan artificially low and its
exports cheap through low interest
rates.
The FTSE, along with markets
across Europe, reacted badly to the
news, falling 30 points to 5,711.
The news came as it emerged that
the finance minister of Brazil, Guido
Mantega, will skip the G20 summit in
South Korea this week to concentrate
on measures to curb the strengthen-
ing of the country’s currency, the
real. The finance ministry has
increased the financial transactions
tax on foreign investments in fixed
income securities from four per cent
to six per cent.
King hints at
possibility of
further QE
▲
UK ECONOMY
BY JESSICA MEAD
BANK OF ENGLAND governor Mervyn
King yesterday signalled that he was
open to a second round of quantita-
tive easing to support growth and
keep inflation close to target, but a
leading economic think-tank will
warn today that monetary policy
could become too loose in response to
overly-tight fiscal policy.
In a speech in the West Midlands,
King said the risk that inflation will
undershoot the two per cent target is
at least as large as the dangers of over-
shooting. “A range of other indicators
– growth in broad money, pay, and
the pressure of demand on supply,
that together are likely to be a more
reliable guide to inflationary pres-
sure looking ahead – all remain
extremely subdued,” he explained.
Howard Archer at IHS Global
Insight said the speech indicated that
the Bank is prepared to take further
stimulative action to support activity
if the economy falters further.”
Housing starts WTO enters a
rise again in US currency row
▲
WORLD ECONOMY
US HOME construction scaled a five-
month high in September, another
sign the housing market decline is
bottoming, though permits for future
building fell.
While the data was encouraging,
housing starts remained at depressed
levels and added to the case for more
monetary stimulus to shore up the
sluggish recovery.
Housing starts advanced for a third
straight month, gaining 0.3 per cent
to a seasonally adjusted annual rate
of 610,000 units in September. August
starts were revised up to a 608,000-
unit pace from 598,000 units.
CITYA.M. 20 OCTOBER 2010
Mervyn King says
further QE could be
justified
Picture: GETTY
King’s words came as CBI data
showed factory orders dropped more
than expected to -28 this month from
-17 in September, raising concerns
over the health of UK manufacturing.
King also called on policymakers to
thrash out a “grand bargain” to rebal-
ance the global economy and avoid a
1930s-style disastrous collapse in activ-
ity. He warned it may be only a matter
of time before one or more countries
resort to trade protectionism.
Meanwhile, the National Institute
for Economic and Social Research
(Niesr) said in its UK forecast, which
predicts sluggish growth of 1.6 per
cent this year and next, that fiscal pol-
icy could become too tight and in
response monetary policy could
become too loose, possibly causing
risks to price stability.
The think-tank added: “We suspect
that spending cuts will be delayed
and their scale reduced compared to
the budget plans.” Raising taxes to fill
the gap would boost growth in 2011
and 2012 and the same budget target
would be reached in 2015.
WORLD ECONOMY
THE HEAD of the World Trade
Organisation (WTO) stepped into an
escalating row over currency policies
yesterday, saying growing disputes
about exchange rates could threaten
global trade and economic recovery.
WTO director-general Pascal Lamy
said governments had largely resisted
resorting to conventional trade meas-
ures such as higher tariffs to protect
jobs in the wake of the crisis.
Disorderly currency movements
could damage stability in the trading
system, especially if they were seen to
be the pursuit of comparative advan-
tage through exchange rates, he said.
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 The Capitalist
8 CITYA.M. 20 OCTOBER 2010
PLAYBOY
CLUB SET TO
REOPEN IN
LONDON
EXCITING news for fans of the good life –
Playboy, the iconic brand set up by Hugh
Hefner, is reopening its private members
club in London, over two decades after the
original closed its doors at 45 Park Lane
back in the Eighties.
This time around Hef’s relocating to
swanky new premises at Mayfair, and has
leased a 17,000 square foot property
spread over two floors in partnership with
London Clubs International (LCI), owners
of the Empire casino at Leicester Square
and the Rendezvous on Old Park Lane.
The new club is being designed by savvy
architects Jestico and Whiles, and will
house an upmarket restaurant, cocktail
bar, casino, lounge and gentlemen’s bar-
ber shop when it opens next year.
Joining will certainly cost you – LCI
chief executive Michael Silberling isn’t
disclosing the exact fee, but he says it’ll
definitely be in the “upper quartile” of
London’s league of private members
clubs. But for fun and games, it’s going to
be worth it, with the membership com-
mittee hoping to pull together a diverse
group of individuals from all industries –
showbiz, entertainment, finance and
more – to frequent the club. And then, of
Hugh Hefner is bringing his Playboy bunnies back to the London club scene
course, there’ll be the requisite Playboy
Bunnies on hand at all times, working in
every role from waitresses and hostesses
to croupiers in the casino...
GIVEN THE WILLIES
Prompted by the recent news that BlueBay
Asset Management founders Hugh Willis
and Mark Poole are set to make £81m each
from their stake in the firm if the £963m
sale to Royal Bank of Canada goes ahead, a
reader writes in to reminisce about work-
ing with the pair in the good old days at
Kleinwort Benson.
“So nice to see how well they’ve done,”
writes our source, who describes Poole as
a “very clever trader and thoroughly
EDITED BY
VICTORIA BATES
GOT A STORY? EMAIL
thecapitalist@cityam.com
“Hugh Hefner
is bringing a
Playboy club
back to
London, over
two decades
after the
original shut
the markets get too hectic (see above).
its doors” Friends are welcome to his retirement
drinks tomorrow evening at his regular
haunt, the Old Doctor Butlers Head on
Masons Avenue.
Picture: REX DRINKING BUDDY
Wine lovers usually pay good money for
decent chap” and Willis as a “truly great expert advice on which vintages to pair
salesman”. Such a great salesman, appar- with different foods, so Mayer Brown cor-
ently, that his colleagues on the testos- porate lawyer William Charnley deserves
terone-fuelled trading desk awarded him a mention for one of the most informative
the cheeky nickname Hugh “Huge Willy” Twitter feeds The Capitalist has seen in a
Willis… while. Charnley, tweeting as @WC7, is a
fount of knowledge on vino, updating the
feed regularly with suggestions for fellow
CRACKING SEND OFF wine lovers.
A fond farewell this week to Chris Stallard, “Fish pie with Domaine Daniel Rion &
a City veteran of very long standing, who’s Fils 1998 Echezeaux, classy and balanced,”
leaving the Square Mile after 40 years of he tweeted this week, while previous
sales trading. entries read along the same lines.
Stallard, known as “Stan”, spent 23 “Troplong Mondot 1988, excellent with
years of that time at Panmure Gordon and chicken pie,” he advises, or “Lobster
finished up at Ambrian – where a mischie- omelette with Krug 1995, fantastic…” Next
vous colleague tells me he’s renowned for time you’re hosting a dinner party, you
snatching a quick snooze at his desk when know who to turn to.
CITYA.M. 20 OCTOBER 2010 News 9

YouView gets
London
Underground man-
aging director
Mike Brown said
yesterday that pas-
sengers deserve bet-

green light
ter than the travel
chaos of the last
two days

Picture: REX

from Ofcom
Ofcom acknowledged there could
▲

MEDIA
BY STEVE DINNEEN
OFCOM has effectively given the
green light to a controversial video-
be competition concerns in the
future but said it was unable to
launch an investigation until it had
time to assess the impact YouView

Tube boss says sorry to the thousands

on-demand service backed by the BBC has on the emerging sector.
after declining to launch a competi- Ofcom chief executive, Ed
tion investigation. Richards, said: “An investigation
The YouView service – previously would be premature at the current

of commuters forced to walk on tracks

codenamed “Project Canvas” – is now
due to launch by March next year.
The platform will allow users to
stream on demand content from a
number of providers from a single
set-top box. It is backed by the BBC,
ITV, Channel 4, Five, BT, TalkTalk,
stage of YouView’s development given
the absence of a clear risk of con-
sumer harm.
“But if evidence does emerge in the
future that YouView causes harm to
the interests of viewers and con-
sumers we may reconsider whether TRANSPORT the tunnel for two hours before TfL rupted journeys to work,” said
▲

Orange and Arqiva and will allow
providers to stream pay-as-you-go as
well as free to air content.
Analysts believe it could prove as
successful as Freeview, which
brought digital TV crashing into
almost every home in the UK.
However, competitors including
Virgin Media and BSkyB have raised
concerns it could distort competition
in the increasingly important content
on demand market.
to investigate.”
Virgin Media branded the decision
“perplexing” and may appeal.
FAST FACTS | YOUVIEW
● YouView is a joint venture between media
giants including BT, TalkTalk and ITV.
● It will offer video streamed over users’
broadband connections through a set-top box.
● Broadcasters will be able to offer pay per view.
BY MARION DAKERS
THE HEAD of the London
Underground apologised for a second
day of Tube chaos yesterday, which
saw thousands of commuters forced
to climb out of trains and walk to
safety through pitch-black tunnels.
The Victoria line was suspended
after a train broke down near Seven
Sisters station at peak rush hour,
stranding around 400 passengers in
staff led them through the tunnel.
The Northern, District and Circle lines
also suffered delays due to myriad
signal failures and defective trains.
The chaos followed Monday’s
power failure on the Jubilee line,
which also led to thousands of pas-
sengers escaping by walking down
the underground tracks.
“I am sorry that for a second day
many of our customers have had diffi-
cult and in some cases severely inter-
London Underground managing
director Mike Brown. “I know that
having to walk along the track
through a tunnel is distressing.
“Our customers deserve much bet-
ter than the service they have had in
recent days and all our energies are
focused on delivering a fast, reliable
and safe service.”
The rail union RMT said the break-
downs illustrated the dangers of cut-
ting staff.
 10 News
Autonomy bounces back
with robust set of results
▲
TECHNOLOGY
BY STEVE DINNEEN
AUTONOMY staged a partial recovery
yesterday after its disastrous profit warn-
ing earlier this month – which sent its
shares falling 17 per cent – an update it
now describes as “conservative”.
The software giant, which enables
searches of information including
emails, phone conversations, docu-
Autonomy chief executive Mike Lynch says its last update was “conservative” ments and video, posted third quar-
ter pre-tax profit of $86.3m (£55m), a
year-on-year hike of 34 per cent.
It also reported a 10 per cent rise in
revenue to $211m, which comes in at
the top of its own guidance.
Two weeks ago it warned its 2011
revenues could be as much as three
per cent lower than estimates, send-
ing its shares into free-fall.
But yesterday chief executive Mike
Lynch said: “Given this update it may
seem very conservative to have previ-
Tech giant continues to divide opinion
AUTONOMY is one of the most divi-
sive companies in the FTSE 100. To
the bulls, it is the closest thing
Britain has to Microsoft or Google, a
genuine trailblazer in the field of
meaning-based computing (technol-
ogy that can understand human
interaction). For the bears, the
firm’s needless complexity masks
the fact that growth – which was
always fuelled by acquisitions – is
slowing down.
Recently, the doubters have had
the upper hand. Earlier this month,
the firm was forced to issue a profit
warning for the full year that sent
shares plummeting by 17 per cent.
In the event, yesterday’s third quar-
ter results weren’t that bad, and
Autonomy says it was too cautious.
That won’t satisfy some. Cash
conversion, a perennial problem for
Autonomy, came in at 80 per cent in
the third quarter, below an average
conversion of 117 per cent achieved
CITYA.M. 20 OCTOBER 2010
ously changed our outlook for the
fourth quarter, but we felt it was
safer. We are confident in maintain-
ing our view of the outlook for
demand and expect to continue to
deliver good earnings per share
growth in 2011, with upside to cur-
rent market consensus.”
Analysts reacted warily to the
update yesterday, with Evolution’s
Roger Phillips saying the announce-
ment “makes little sense”.
in the same quarters of 2008 and
2009. This can be partly explained
by $15.9m it shelled out to sponsor
Tottenham Hotspurs, but it’s an
issue that won’t go away. Others
point out deferred revenues, anoth-
er hot topic, are set to increase in
the next quarter, suggesting a slow-
down for the software firm.
But the share price could also be
seen as a buying opportunity.
Management’s change of tone was
reassuringly bullish; IT spending
will rise; new deals are being closed;
and an acquisition that will be earn-
ings accretive is due soon. Above all,
Autonomy is the leader in this rela-
tively untapped sphere of comput-
ing: it doesn’t go head to head with
the same competitor in any more
than three per cent of deals.
BOTTOMLINE
Analysis by David Crow
CITYA.M. 20 OCTOBER 2010
Ryanair boss Michael O’Leary has twice tried to buy Aer Lingus
Xstrata ups
its copper
production
▲
MINING
BY HARRY BANKS
XSTRATA, the miner, yesterday
revealed mixed third-quarter produc-
tion figures for its two key products,
with an increase in copper output
and a fall in coal, as strong commod-
ity prices pointed to a surge in annu-
al profit.
The Anglo-Swiss company, which
has switched focus from takeovers to
building mines, also released initial
data about the size of a copper
deposit at its joint venture in Chile.
Xstrata said production of mined
copper increased 10 per cent to
233,647 tonnes during the three
months to the end of September, due
to improved mining rates and
grades.
Consolidated coal output fell 5 per
cent to 21.9m tonnes following
planned mine closures in Australia
and South Africa and bad weather in
Colombia.
Copper is the group’s most impor-
tant product, accounting for 43 per
cent of first-half operating profit,
while coal ranks second, making up
32 per cent.
“While Xstrata’s third quarter pro-
duction was certainly patchy, the
company is very focused on growth
and the board has approved some
sizeable investments during the last
few months,” said analyst Charles
Kernot at Evolution Securities.
The group also released the first
resource estimate for the West Wall
project in Chile, a 50:50 joint ven-
ture with Anglo American, showing
it has four million tonnes of copper.
“These exploration results con-
O’Leary wants Aer Lingus
▲
AVIATION
BY HARRY BANKS
RYANAIR hopes the Irish govern-
ment’s financial woes will help the
low-cost carrier finally seal a takeover
of Aer Lingus, Ryanair chief executive
Michael O’Leary told a German news-
paper yesterday.
Ryanair, which owns almost 30 per
Picture: REX cent of Aer Lingus, has tried twice to
“It’s not about
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take over its rival but has struggled to
overcome opposition from the Irish
government which holds a quarter of
Aer Lingus.
“The government is broke now, it
has to sell its holdings. In the end, it
will sell Aer Lingus as well,” O’Leary
said in an interview published in
daily Frankfurter Allgemeine
Zeitung yesterday.
Ireland said at the end of last
In cinemas Wednesday 6th October
News 11
month it could cost as much as
€50bn (£44bn), or over €11,000 per
head of a recession-weary popula-
tion, to unwind years of reckless
lending to developers during the
“Celtic Tiger” boom.
“And I hope, we will buy [Aer
Lingus],” O’Leary said, adding he
would aim to expand Aer Lingus as
quickly as possible following any
deal.
Bellway sees
muted house
price rises
▲
CONSTRUCTION
BY HARRY BANKS
BELLWAY said the autumn pick up in
house sales had been muted, leading
the housebuilder to cut its full-year
sales target as uncertainty around the
government’s spending review
crimps confidence.
The housebuilder, which posted
full-year results in line with expecta-
tions, is the first housebuilder to com-
ment on the traditionally active
autumn selling period. A stagnant
housing market will add to the gloom
of the coalition government’s austeri-
ty measures, with spending cuts to be
announced tomorrow.
“The first two months of this trad-
ing year, it’s picked up, but not quite
to the extent we that we hoped,” said
chief executive John Watson.
He added that subdued activity so
far this year has caused the builder to
abandon its target of raising sales vol-
umes by 10 per cent this year.
Still, Bellway’s total order book is
currently at £397m, roughly 13 per
cent ahead of last year.
Selling prices and margins are up,
with the average selling price rising
to £163,175 compared with £154,005
last year, while margins will continue
to be driven up by cheaper land, the
Newcastle-based firm said. Bellway,
reported a pre-tax profit of £44.4m in
the 12 months to end July compared
with £29.8m
ANALYSIS l Bellway
640 p 565.00
19 Oct
600
firm West Wall represents an impor-  
 





  
 


  

 
 

tant discovery with the potential to


 
 








  


contribute to Xstrata Copper’s proj-
ect development pipeline in Chile,”
the company said.
The price of copper is up 24 per
cent on the same period a year ago.
Petroneft raises $43m for Russian drilling Cove in African gas find
▲
ENERGY
BY HARRY BANKS
PETRONEFT RESOURCES, the Russia-
focused oil and gas explorer, raised
$43m (£27m) to finance the develop-
ment of two of its Russian fields.
The Aim-listed firm sold 63,125,000
new ordinary shares at 43p each to
raise the cash. The firm said it will
use the money to accelerate explo-
ration and business development at
560
its licences 61 and 67 at Tomsk Oblast
in western Siberia, Russia. Petroneft
holds 100 per cent of licence 61 and
50 per cent of licence 67.
The placing was “substantially over-
subscribed”, the firm said.
Petroneft chief executive Dennis
Francis said: “We are delighted with
the outcome of the placing and the
very high level of support received
from both new and existing share-
holders.”
He added: “The combination of
year-round oil production and the
continued development and explo-
ration of licences 61 and 67, provides
an excellent base from which we can
generate significant cash flow.”
Petroneft added it is looking at
other opportunities in Russia.
The firm also said it is on course to
hit a year end production target of
4,000 barrels of oil per day and plans
to treble this by the end of 2012.
ENERGY
COVE ENERGY said its licence partner
US oil major Anadarko found more
than 416 net feet of natural gas at the
deepwater Barquentine exploration
well in Mozambique, sending the
British oil explorer’s shares to an all-
time high.
Interest in offshore East Africa,
which is much less explored than
West Africa, has picked up since the
520
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct
discovery of natural gas by Anadarko
and Cove at the Windjammer
prospect on the same licence in
February.
“We believe that this additional dis-
covery of deeper gas could yield a fur-
ther three trillion cubic feet of gross
resource to that previously encoun-
tered at Windjammer (255bn cubic
feet net to Cove),” Cenkos Securities
analysts wrote in a note to the market
yesterday.
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CITYA.M. 20 OCTOBER 2010 News 13

State Street reports healthy

quarterly profit, lifted by fees
earnings per common share rose to in new assets to be serviced.

▲
FUND MANAGEMENT
BY HARRY BANKS
STATE Street, one of the world’s
largest institutional investors, report-
State Street chief ed higher-than-expected quarterly
Joseph Hooley profit yesterday after recent acquisi-
says acquisitions tions helped it earn more in fees.
boosted fees State Street, which also earns fees
for offering services like record-keep-
ing to mutual and hedge funds, said
$1.08 (69p) from 66 cents a year ago.
On an operating basis, earnings per
share climbed to 86 cents a share
from 71 cents, beating analysts’
expectations of 83 cents a share.
The company said it earned 19 per
cent more in servicing fees during
the third quarter, pushing the total to
$989m (£628m). Part of the increase
was fuelled by new business, State
Street said, noting that it won $477bn
Chief executive Joseph Hooley said:
“With the support of the two acquisi-
tions, as well as strong year-to-date
wins in servicing and growth in pas-
sive strategies and ETFs in asset man-
agement, we continue to expect that
our operating-basis earnings per
share, which exclude discount accre-
tion, will be slightly above the adjust-
ed operating-basis $3.32 per share
recorded last year.”

Jupiter flying
high as assets
shoot up 12pc
a note yesterday.
▲

FUND MANAGEMENT
BY HARRY BANKS
ASSET manager Jupiter posted a 12
per cent rise in assets under manage-
ment to £22.2bn at 30 September,
trumping analyst forecasts and lifting
its shares sharply yesterday.
The company, which listed on the
London Stock Exchange this summer,
reported net inflows of £734m in its
third quarter as investors flocked to
its mutual funds, especially its Merlin
fund of funds and Sicav products.
The segregated mandate business –
in which Jupiter manages money for
institutional investors -- had net
inflows of £210m, benefiting from
the funding of a new mandate and
additional assets from existing
clients.
Jupiter’s shares rose 9.6 per cent to
285p, well up on their 165p June list-
ing price, prompting Numis analysts
to upgrade their rating to “add” from
“hold” after asset growth outpaced
expectations.
“We believe the group deserves a
premium valuation to reflect premi-
um growth, low earnings volatility
and superior margins,” Numis said in
Earlier this month, Jupiter
launched a Strategic Total Return
fund and a Global Convertibles fund
to be managed by recent hires Miles
Geldard and Lee Manzi. It said that
initial flows into these funds had
been “encouraging”.
A global emerging markets unit
trust run by Kathryn Langridge, who
joined in July, will launch in the
fourth quarter, Jupiter added.
In its half-year results, Jupiter’s
chief executive Edward Bonham-
Carter said the hedge funds business
was moving onshore and its absolute
return funds were delivering strong
growth.
ANALYSIS l Jupiter
300 p
285.00
19 Oct
260
220
180
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct

Warren Buffett ups stake

in reinsurer Munich Re
ry bodies, Munich Re said.
▲

FINANCIAL SERVICES
US INVESTOR Warren Buffett has
raised his stake in reinsurer Munich
Re to above 10 per cent and plans to
further expand the holding, the firm
said yesterday.
The world’s biggest reinsurer said
in a statement that Buffett’s
Berkshire Hathaway had repeated its
assurances in a letter that the invest-
ment was financial, rather than
strategic.
Berkshire also did not aim to influ-
ence Munich Re’s management, its
direction or the company’s superviso-
“It is not intended to significantly
change the capital structure of
[Munich Re] ...in particular not with
regard to the equity/debt ratio or the
dividend policy,” Munich Re said in a
summary of Buffett’s letter.
Berkshire intends to acquire fur-
ther voting rights within the next 12
months, Munich Re added.
Reinsurer Berkshire has been
steadily raising his holding in its
Munich-based rival since crossing the
three per cent threshold in January.
Munich Re said it “rejoices at every
investor”.
 14 News CITYA.M. 20 OCTOBER 2010

Walkie Talkie CITY SKYSCRAPERS UNDER CONSTRUCTION

work restarts
after JV deal
PROPERTY CWG, a subsidiary of Aim-listed
▲

BY MARION DAKERS Songbird, has agreed to sell 35 per THE THE THE THE
cent of the venture to its biggest WALKIE TALKIE CHEESE GRATER HERON TOWER PINNACLE SHARD
PROPERTY firms Land Securities and shareholders Morgan Stanley Real 20 Fenchurch Street 122 Leadenhall St 110 Bishopsgate 22 Bishopsgate 32 London Bridge St
Canary Wharf Group (CWG) will team Estate, sovereign wealth fund Qatar
up to build the £500m Walkie Talkie Holding and the state-owned China Land Securities British Land Heron International Arab Investments Sellar Property Grp
project on 20 Fenchurch Street, the Investment Corporation. CWG will Completion: 2014 Completion: 2012 Completion: 2011 Completion: 2013 Completion: 2012
pair announced yesterday. retain the remaining 15 per cent. Est. Cost: £300m Est. Cost: £286m Est. Cost: £185m Est. Cost: £800m Est. Cost: £435m
Land Securities has sold the site to The deal will allow CWG, operator Size: 500ft high, Size: 736ft high, Size: 755ft high, Size: 945ft high, Size: 1,017ft high,
a newly-formed 50-50 joint venture of the eponymous east London busi- 639,000 sq ft of 612,000 sq ft of 461,000 sq ft of 1m sq ft of space 1m sq ft of space
with CWG for £90.2m, in line with ness hub, to maintain a foothold in space space space
the March 2010 valuation. the City office market where rents
Preparatory work on the cleared are expected to rise by 37 per cent to
site will begin immediately, with
CWG’s own construction firm set to
£58 per square foot by the end of
2012, broker Knight Frank estimates.
CITY VIEWS: DO SKYSCRAPERS ADD TO THE CITY SKYLINE? Interviews by Marion Dakers
start construction work in January “It’s going to be the largest build-
2011. The 690,000 square foot office ing we have ever built in the City,”
space should be ready by the second company secretary John Garwood BEN WATSON | XCHANGING DEAN LUMER | KNADEL
quarter of 2014. told City A.M. “It is further evidence
Land Securities, the UK’s largest of our diversification and move into
real estate company, shelved the 36- the Square Mile following the suc-
“I think they are a good addition to the “I think the new buildings are a
storey skyscraper last year after clear- cess of Drapers Gardens.” City. It adds to the impact that London great idea, and will hopefully bring
ing the site, worried it would not has as a financial centre. Plus, there are more people to work in the City.
attract tenants in the dour financial a lot of people to fit in such a small The designs are quite modern, but
climate. ANALYSIS l Songbird space, so skyscrapers are a necessity.” they fit in fairly well. It’s all part of
The 150m-high Walkie Talkie, 160 p
144.25
19 Oct the evolution of London.”
designed to be top-heavy partly to
cash in on the higher rents com- 155
manded by top floors, will be one of
several City skyscrapers vying for ten- 150 NICK TILLIN | RFIB GROUP
ants at a time when dozens of rent
145
contracts are due for renewal.
Companies such as insurer Aon,
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CITYA.M. 20 OCTOBER 2010
Blacks fields potential buyers
▲
CONSUMER
BY MARION DAKERS
CAMPING and hiking retailer Blacks
Leisure yesterday confirmed it has
received several approaches to take
over all or parts of its business.
Shares in the company rose 25 per
cent to 42.50p following the news
that Blacks has taken on financial
advisers McQueen to help field
potential offers. The share price
gives the company a market capitali-
sation of around £35m.
Blacks did not reveal the number
or names of the potential biders, and
added in a statement: “There is no
Whitbread’s
profit boosted
by discounts
▲
LEISURE
BY JOHN DUNNE
WHITBREAD profit jumped by 28 per
cent to £151m in the six months to
September, as its Premier Inn and
Costa Coffee businesses boomed.
Revenue rose 14.5 per cent to
£805m as the company expanded its
operations across the UK.
Whitbread raised its interim divi-
dend by 17 per cent to 11.25p to
reflect the results.
Costa has just over 1,100 in the UK –
and plans to take the total to 1,850 by
the end of the year.
Like-for-like sales at coffee stores
chain Costa rose 8.5 per cent, boosted
by new products such as the flat
white and ice cold Costa, and a cus-
tomer loyalty card.
Whitbread also plans to expand its
Premier Inn hotel chain, and open at
least 1,700 rooms in 18 hotels across
the UK.
It says its advertising campaign,
fronted by the comedian Lenny
Henry, promoting its £29 a room
offer helped to boost like-for-like sales
by 10.1 per cent.
In London, a rise in the number of
tourists over the summer also helped
the Premier Inn business.
Sport retailers cleared by fraud probe
but individuals are still under scrutiny
▲
RETAIL
BY JOHN DUNNE
SPORTS Direct and JJB Sports have
been cleared by a fraud probe,
although investigations into uniden-
tified individuals continue, the two
companies announced yesterday.
Britain’s Serious Fraud Office (SFO)
had been investigating both sporting
goods retailers over possible price fix-
ing and fraud.
“No charges are to be brought
against the companies or any compa-
certainty that any formal offers will
be forthcoming or as to the terms on
which any such offer might be
made.”
Blacks declined to comment fur-
ther yesterday.
A spokesperson for Lion Capital, a
private equity group that made an
offer for the retailer in 2009,
declined to comment on whether it
was one of the parties involved. Lion
already owns the Cotswold Outdoor
retail chain.
Blacks, which runs the Blacks
Outdoor and Milletts chains, came
close to administration last year
before striking a rescue deal with
Chief executive Alan Parker, who
was reporting his final set of results,
said: “People want value for money
and Whitbread is benefiting from
these times of austerity.
“In London the number of tourists
over the summer helped us. This is a
great business based on a solid
grounding.
“Our Premier Inn offers for periods
of low occupancy are really paying
off.” Andy Harrison has arrived from
easyJet to take over as chief executive.
Premier Inn was voted UK’s
favourite hotel brand according to a
YouGov survey.
The group also owns the Beefeater
and Brewers Fayre pub restaurant
chains. Parker added: “In our markets
we feel in a fairly buoyant position.”
ANALYSIS l Whitbread
p advertising to continue to drive mid-single digit like-for-like sales growth.
1,728.00
1,700 19 Oct
1,600
1,500
1,400
19 Jul 6 Aug 26 Aug 16 Sep
nies within their corporate groups.
The Serious Fraud Office’s investiga-
tion into individuals continues,”
Sports Direct said in a statement that
was later echoed by JJB Sports.
The probe was carried out under
the Competition Act, which covers
cartel offences against companies.
Sports Direct, Britain’s biggest
sporting goods retailer and which is
controlled by Newcastle United soccer
club owner Mike Ashley, declined to
identify the individuals being investi-
gated.
News 17
CLIVE BAKER
MCQUEEN
to set up the firm. The team of advis-
ers has now grown to 17.
McQueen is currently advising BWin
for its ongoing €2.5bn merger with
Party Gaming. It also advised Bay
Restaurant Group on its £19.5m sale of
creditors that saw it close over 100 ha ha bar & grill to leisure giant
stores. It raised £20m in May to accel- Mitchells and Butlers in September.
erate turnaround plans, after report- The McQueen name is linked to a
ing an annual pre-tax loss of £47m. Blacks has appointed McQueen, a number of high-profile names in retail,
Plans include refurbishing stores financial advisory firm with a focus on from grocer Waitrose, which bought
and opening 35 new ones on more consumer M&A, debt issues and strat- several supermarkets from its client
favourable terms. egy. The team is led by financial veter- Sandpiper, through to luxury shoe-
The fundraising was opposed by an Clive Baker, who spent 19 years maker Kurt Geiger, which was sold to
shareholder Sports Direct building up the private equity business Graphite Capital by Barclays Private
International, which considered a at corporate finance house Hawkpoint Equity for £95m in 2008.
bid for Blacks before walking away. before leaving in 2002 to co-found Baker himself is also something of a
Sport Direct, owned by billionaire McQueen. high-flyer, having taken part in the sale
Mike Ashley, still owns a stake of The company was named after the of big stakes in Birmingham and Luton
around 14 per cent in Blacks, but Great Escape actor Steve McQueen Airports by Bridgepoint and Barclays
was unavailable for comment yester- while in the planning stages, as four Private Equity respectively during his
day on whether it is in the running directors and six junior bankers worked time at Hawkpoint.
to bid this time.
Bubble back
in Coca-Cola
earnings
▲
CONSUMER
COCA-COLA yesterday reported high-
er-than-expected sales and earnings,
helped by its second straight quarter
of improved drinks sales in North
Chief executive Alan Parker’s final results are healthy Picture: Micha Theiner/CITY A.M America.
The world’s largest soft drink
ANALYST VIEWS: WHAT IS THE LEGACY OF maker has made turning around the
ailing North American market a top
OUTGOING CHIEF ALAN PARKER ? Interviews by John Dunne priority. It bought its largest bottler in
the region, developed high-tech foun-
tain machines that can dispense a
NICK BATRAM | KCB PEEL HUNT hundred different drinks, and intro-
“
duced smaller can sizes to lure calorie
counters.
The attraction of Whitbread is that not only has it proven to be a Coke’s third-quarter net income
defensive investment during hard times but that it should be equally rewarding in was $2.06bn (£1.3bn), or 88 cents per
”
a recovery. We don’t perceive the change in chief executive to weaken the story in share, up from $1.90bn, or 81 cents
any way. per share, a year earlier.
Excluding items, earnings were 92
cents per share, topping analysts’
SIMON FRENCH | PANMURE average estimate of 89 cents.
Revenue rose five per cent to
“
$8.43bn as worldwide volume rose
Premier Inns continues to benefit from a combination of a recovering five per cent. Analysts had forecast
market, dynamic pricing, Premier Offers and the Business Account Card.Whilst we revenue of $8.3bn.
”
expect recent price increases at Costa Coffee combined with the launch of TV Volume in North America rose two
per cent in the third quarter. That fol-
lows a two per cent increase in the
second quarter, which was its first
RICHARD HUNTER | HARGREAVES LANSDOWN increase in over two years.
Coke said international volume
“
rose six per cent, fuelled by growth of
Both the business model and the share price performance continue to 12 per cent in the Eurasia and Africa
be recession proof. The company itself stresses the importance of its value offer- business, 11 per cent in the Pacific
”
ings in what could turn out to be a cash constrained environment. Growth at both region and four per cent in Latin
the Premier Inn and Costa Coffee businesses remains extremely strong. America. Volume in Europe was
6 Oct slightly positive, but rounded to even.
MORE NEWS
ONLINE
www.cityam.com
“This announcement giving Sports
@
Direct a clean bill of health regarding
the SFO investigation is what
investors were hoping for,” said
@
Singer analyst Matthew McEachran.
“The shares have run up in antici-
pation of this result though.
Furthermore, with the investigation
into individuals still ongoing there
remains some risk and uncertainty to
the investment case,” he said.
Sports Direct International’s
brands include Dunlop, Slazenger
and Lonsdale.
 18 News
Plunging sales hit J&J results Intel planning to invest in
▲
HEALTHCARE
BY HARRY BANKS
JOHNSON & Johnson (J&J) yesterday
reported disappointing quarterly rev-
enue as sales of US consumer prod-
ucts plunged 25 per cent following
recalls of Tylenol and other con-
sumer brands.
Although J&J reported better-than-
expected quarterly earnings, analysts
said the profit performance was
largely due to lower taxes and one-off
items.
“There was more of a decline in the
consumer business than we had
expected and not as strong a showing
BP tells court
it waives spill
liability cap
BP IN CRISIS
BY HARRY BANKS
OIL giant BP yesterday told a court it
was committed to waiving the legal
cap on its liability from the Gulf oil
spill, which could have limited the
cost to the oil giant to $75m (£47.7bn)
plus clean-up costs.
“BP has chosen to waive the statuto-
ry limitation on liability under OPA,”
BP said in a court filing. OPA is the Oil
Pollution Act of 1990.
BP has already paid out hundreds of
millions of dollars to fishermen, retail-
ers, charter boat captains and property
owners who suffered from the spill,
the largest in US history.
The company has publicly commit-
ted to pay clean-up costs and all “legit-
imate claims”, rather than applying
the cap.
Under pressure from the Obama
administration, the company has also
established a $20bn compensation
fund, though a slew of lawsuits have
been brought against the company
and its business partners.
At a court hearing on the lawsuits
on Friday, BP created confusion about
its stance on the liability cap. It did not
commit to waiving the cap at the hear-
Betfair heads for the FTSE 250 as float
expected to hit top end of price range
▲
GAMING
BY STEVE DINNEEN
BETFAIR’S £1.5bn float is expected to
hit the top end of its price range,
while the firm may also up the size
of its planned listing, it emerged last
night.
Sources close to the negotiations
said the float is already oversub-
scribed by top institutional investors
within its £11 to £14 price range.
It is understood at least one major
investor has increased its offer from
in the medical device business,”
Nobel Financial Capital analyst Jan
Wald said.
The diversified healthcare compa-
ny earned $3.42bn (£2.18bn), or $1.23
per share, in the third quarter. That
compared with $3.35bn (£2.16bn), or
$1.20 per share, a year earlier.
Global company revenue fell 0.7
per cent to $14.98bn, shy of Wall
Street forecasts of $15.19bn.
J&J raised its full-year profit fore-
cast to between $4.70 and $4.80 per
share, from its prior view of $4.65 to
$4.75 per share, citing the weaker dol-
lar – which raises the value of sales in
overseas markets.
ing, as many plaintiffs’ attorneys had
expected, and said in a statement on
Friday that the cap “is not relevant”.
“BP lawyers wouldn’t say on the
record they would waive the cap,” said
Steve Herman, a Louisiana attorney
who is leading the hundreds of law-
suits against BP and its partners. “It
certainly took everyone by surprise.”
In the court filing, BP said it would
waive the liability cap. BP also urged
other defendants in the case, includ-
ing rig owner Transocean Holdings,
Anadarko Petroleum Corp and MOEX
Offshore 2007, to waive the liability
cap, according to the filing.
BP also said it reserved the right to
seek reimbursement from the other
defendants and denied engaging in
grossly negligent conduct.
ANALYSIS l BP
450 p 435.70
19 Oct
430
410
390
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct
£12.50 a share to £13.75 a share.
City A.M. understands that the list-
ing will now exceed the originally-
planned 10 per cent due to strong
demand and after taking into
account employee shareholdings.
Betfair chief David Yu
had to disclose in the
float prospectus that
he has previously suf-
fered heart problems
Global sales of consumer products
fell 10.6 per cent to $3.57bn. Sales of
the consumer brands plunged 25 per
cent in the US, where tens of millions
of bottles of Tylenol and other con-
sumer medicines have been recalled
in the past year due to quality control
lapses – including mouldy odours in
the products and overly high dosages
of active ingredients.
The company is facing a US con-
gressional probe of the repeated
recalls of Tylenol, painkiller Motrin
and allergy treatment Benadryl –
including alleged “phantom” recalls
which J&J failed to disclose to the
public.
FIRST STOP FRANKFURT
Rockhopper seals £203m fundraising
to step up south Atlantic drill activity
▲
WORLD ECONOMY
FALKLAND Islands-focused oil group
Rockhopper completed a £206.3m
fundraising yesterday in an effort to
ramp up its drilling campaign in the
south Atlantic region.
Rockhopper, listed on the
Alternative Investment Market (Aim),
said the funds – raised through plac-
ing a total of 65,500,000 new shares at
Betfair declined to comment last
night on talk that the firm may float
up to 50 per cent more than original-
ly planned, selling around 15 per
cent of the company at the upcom-
ing IPO.
The final pricing is set to be
announced on Friday, with Betfair
expected to crash straight into the
FTSE 250 index.
The exchange was launched 10
years ago by Andrew Black, an ex-
professional gambler, and former JP
Morgan trader Edward Wray.
its US production facilities
▲
TECHNOLOGY
CHIPMAKER Intel yesterday said it
plans to spend between $6bn
(£3.8bn) and $8bn on high-tech man-
ufacturing facilities in Arizona and
Oregon, projects it estimates would
create up to 8,000 construction jobs.
Intel said plans call for it to build a
new fabrication plant in Oregon and
upgrade several existing factories.
The projects, it said, would support
6,000 to 8,000 construction jobs
along with another 800 to 1,000 per-
a price of 315p each – will help it to
realise its goal of becoming the first oil
producer in the region, after striking
black gold at its Sea Lion oil resource
in the Falkland Islands earlier this
year.
The new shares represent around 34
per cent of Rockhopper’s ordinary
shares currently in issue.
The fundraising was headed up by
Bank of America Merrill Lynch’s oil
NEWS | IN BRIEF
Pizza firm tops profit forecasts
Domino’s Pizza yesterday reported quar-
terly profit that topped Wall Street’s
expectations, as its new pizza recipe
attracted more US diners than expected,
sending shares up as much as 6.7 per
cent to a five-month high. The company
saw sales at restaurants open at least a
year in the United States surge 11.7 per
cent in the third quarter, far above the
6.9 per cent consensus among analysts.
US and China set for trade talks
The United States and China will hold
annual high-level trade and economic
talks the week of 13 December in
Washington, a top US trade official said
yesterday. US undersecretary of com-
merce Francisco Sanchez said he hoped
for progress on resolving US concerns
CITYA.M. 20 OCTOBER 2010
manent new high-tech jobs.
Intel said the new plant in
Oregon – which would be called
D1X – is scheduled for research and
development start-up in 2013. In
addition, upgrades would be under-
taken at four existing factories in
Oregon and Arizona.
Currently, about 75 per cent of
Intel’s microprocessor manufactur-
ing takes place in the US, while the
majority of its sales occur overseas.
The company employs more than
80,000 people worldwide.
GERMAN rail oper-
ator Deutsche Bahn
yesterday show-
cased a Siemens
high-speed train in
London which it
hopes will run serv-
ices to Germany
through the
Channel Tunnel in
a challenge to
Eurostar’s monop-
oly and Alstom
trains. The ICE 3
train was on dis-
play at St Pancras
station. Deutsche
Bahn wants to
operate services
from London to
Frankfurt and
Cologne by the end
of 2013.
Picture: GETTY
and gas expert Andrew Osborne. Also
acting on the advisory team was
Canaccord.
Rockhopper shares closed down 12p
at 324p, though they have almost
quadrupled their value this year after
the original Falklands discovery.
However, the stock fell sharply only
last week, as investors were spooked by
the company revising down its reserve
estimates for Sea Lion.
about Chinese barriers to its government
procurement market and protection of
US intellectual property rights at the
annual US-China Joint Commission on
Commerce and Trade meeting.
Harley profits move up a gear
Motorcycle maker Harley-Davidson
reported a stronger-than-expected profit
yesterday – but only because improved
results at its once-struggling finance arm
helped offset stubbornly soft sales of its
bikes. The company also said the econo-
my in the US, its biggest market by far,
continues to hurt sales there and said it
was not sure when US buyers would
return to dealer showrooms. Harley-
Davidson reported a third-quarter net
profit of $88.8m (£56.6m), up from
$26.5m a year earlier.
 In association with

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SPECIAL THIS THURSDAY IN CITY A.M.
WITH EXTENDED COMMENTARY FROM OUR EXPERTS

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EDITOR POLITICAL EDITOR

VICTORIA BATES DAVID JONES

DIARY EDITOR OF
 20 News
Evolution bid
for Panmure
is abandoned
▲
FINANCIAL SERVICES
BY HARRY BANKS
STOCKBROKER Evolution Group has
decided against bidding for smaller
City rival Panmure Gordon in the face
of opposition from both its takeover
target and one of its own big share-
holders.
Evolution said in September that it
was considering bidding for
Panmure, which was later granted a
“put up or shut up” deadline of 28
October from the Takeover Panel, to
force Evolution to decide whether to
go ahead with a firm bid.
Evolution said yesterday it aban-
doned its interest in Panmure after a
rebuff from the company’s directors,
led by chief executive Tim Linacre.
“Evolution has now received a let-
ter from the board of Panmure
Gordon rejecting the proposal out-
right and has therefore concluded
that there is no merit in further dis-
cussions,” the firm, run by chief exec-
utive Alex Snow, said in a statement.
“Accordingly it has determined not
To register for this event, visit:
www.rbs.co.uk/markets
This adver tisement contains numerous trade marks belonging to The Royal Bank of Scotland Group plc and other companies in the RBS Group. These trade marks include, but are not limited to, The Royal Bank of Scotland logo, The Royal Bank of Scotland and RBS. If you are in doubt as to
whether an item is a trade mark of The Royal Bank of Scotland Group plc or a member of the RBS Group, please contact us for clarification at the registered office address The Royal Bank of Scotland plc, Registered in Scotland No 90312. Registered Office: 36 St Andrew Square, Edinburgh
EH2 2YB. RBS is authorised and regulated in the UK by the Financial Ser vices Authority
to make an offer for Panmure
Gordon.”
Panmure said the offer had not
been in the interests of the company
or its shareholders.
“As set out in the interim results of
29 September, the company is well
positioned for the future, with a
strong brand, excellent client list and
clear strategy,” it stated.
Panmure shares fell after Evolution
threw in the towel, closing down
eight per cent at 31p. Meanwhile
Evolution’s share price rose 5.4 per
cent to 88.5p.
ANALYSIS l Evolution
p 88.50
19 Oct
90
85
80
75
19 Jul 6 Aug 26 Aug 16 Sep
y. RBS is an authorised agent of The Royal Bank of Scotland N.V in cer tain jurisdictions.
CITYA.M. 20 OCTOBER 2010
Daniel Stewart
out of red after
buying Mena-RL
FINANCIAL SERVICES
▲
DANIEL Stewart Securities returned
to profit in the first six months of the
year following its acquisition of Dubai
based financial adviser Mena-RL in
May, it said yesterday
Pre-tax profit rose to £190,572, or
4p per share, for the first six months
to 30 September compared with a loss
of £699,000 for the same period a year
earlier.
Net assets also rose to £5.7m com-
pared with £4.1m a year earlier, while
revenues grew to £3m – up £1m year-
on-year.
Peter Shea, group chief executive,
said the acquisition of Mena-RL had
led to a substantial increase in inter-
national business, particularly from
Asia. The opening of a new office in
Kuala Lumpur had also resulted in a
number of new clients and several
new institutional investors.
And the company launched a retail
stockbroking division, which had suc-
cessfully opened in excess of 450
accounts and now had assets under
management of over £65m.
Mena-RL is headed by Adam
Wilson, who pulled out of taking up
the role of chief executive of Daniel
Stewart at the last minute earlier this
year. Wilson previously sold Hichens
Harrison to India’s Religare
6 Oct Alex Snow, bottom, has decided against a bid for Panmure, run by Tim Linacre (top) Enterprises for £55m in 2008.
CITYA.M. 20 OCTOBER 2010 News 21

QINETIQ LOSES FIGHT FOR DEFENCE CASH

Premier Foods shells out
£167m to simpify debts
QINETIQ was one
of the first to feel
the government
axe swinging yes-
terday, with news
that a planned
£14bn academy in paves the way to seek a credit rating

▲
CONSUMER
Wales, combining with a view to raising funds in the
army, navy and air HOVIS and Mr Kipling owner Premier bond market. The firm added that it
force training, has Foods has taken another step to sim- still has ample headroom for its debt
been scrapped. plify and reduce its debt pile, it covenants.
QinetiQ, which was announced yesterday, after agreeing The company laid out its plans to
in a joint manage- to pay £167m to end derivatives con- reduce debts in August, and has since
ment venture with tracts linked to interest rates. ended its final salary pension scheme
Sodexo, said it will The company said yesterday the and fielded bids for the Quorn brand
write off £37m swaps from 2007 and 2008 could have and the rest of its non-meat business.
already spent on meant a £450m fee if interest rates Chief financial officer Jim Smart
the project. changed. The termination cost will be said the restructuring is “an impor-
Picture: REX spread between now and 2013, it said. tant step in delivering a more stable
Premier said the restructuring financial structure”.

City property
BEST OF THE BROKERS
ANALYSIS l Ladbrokes ANALYSIS l Old Mutual ANALYSIS l BT 148.30
150 p
137.70 155 p 19 Oct
150 p 132.90 19 Oct
19 Oct 145

debts could
150
145 140
135 145
140 130
140
125
135
120 135
115
130

spark sell-off
130
110
125 105 125
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct

LADBROKES OLD MUTUAL BT GROUP

Royal Bank of Scotland rates the betting UBS maintains a “buy” rating on the insur- Standard & Poor’s maintains its “sell” rat-
group a “sell” with a target price of 90p. ance group with a reduced target price of ing with a 12-month target price of 130p.
estate investment trusts, for exam-
▲

PROPERTY
BY MARION DAKERS
CENTRAL London’s real estate market
could be flooded by properties in the
next three years as around £47bn of
property-linked debt becomes due, a
director at CB Richard Ellis suggested
yesterday.
Mike Edwards, an executive direc-
tor in central London capital markets,
told CBRE clients yesterday that debt-
The broker says Ladbrokes is facing limited 163p. The broker believes that OM’s stake The broker says the government’s spending
ple.”
growth in betting shops as well as tighter in Nedbank will be sold in the long-term, review will be negative for the telecoms
In a possible taste of things to
come, the Maybourne hotel group is European restrictions on internet gambling. despite HSBC walking away last week, and group in the long term, even though the
currently racing to refinance £610m RBS forecasts a 10 per cent growth in rev- that the group has an achievable strategy firm said last week there will be no change
of debt and avoid an asset sale, enue over the next two years, but expects to pay down its £1.5bn by 2012 without to its 2011 outlook. It also sees a risk of
according to recent reports. The
owner of the Claridge’s and competition from rivals to intensify. the sale. smaller rivals eroding BT’s market share.
Connaught hotels has until the end
of the year to refinance. To appear in Best of the Brokers email your research to notes@cityam.com
However, CBRE thinks the slew of
property sales will do little to affect

Bunzl sales move forward despite the

laden landlords could be forced to sell the upward pressure on commercial
off commercial property if the cur- rents.
rent sluggishness in the credit supply Peter Damesick, chief economist
continues. for the EMEA region, said yesterday

tough trading climate in UK and Ireland

“We estimate that 15 to 20 per cent
of all real estate supply [in the last 18
months] has been triggered by some
sort of financial distress. We expect it
to be much greater going forward,”
he said at a briefing.
“Over the next 10 years there will
the move back to rental growth in
London has been much quicker than
in previous downturns, adding: “The
market has not been suffering from
an overhang of supply that we saw in
the last recession.”
Damesick said prime City rents toilet rolls, said yesterday that group za virus as well as several acquisi-
▲

be £94bn of debt maturing in central
London, and half of that will be in the
next three years.”
Edwards said more property own-
ers in the capital might turn to joint
ventures to stave off sales. He told City
A.M. on the sidelines of the briefing:
“Equity could be provided by equity
rich investors, from overseas, sover-
eign wealth funds, UK funds and real
have risen 25 per cent compared to
this time last year. He added that the
government’s spending cuts, to be
announced today, were likely to
“erode growth slightly”.
He estimated around 8.1m square
feet of office space is set to enter the
market in 2013 to 2015 if all current
developments are brought to comple-
tion, helping to ease supply pressure.
INDUSTRIAL
DISTRIBUTOR Bunzl said third-quar-
ter revenue was up, boosted by acqui-
sitions and demand for H1N1 flu
virus products, but sales at its UK
business were below last year due to
tough economic conditions.
Bunzl, which supplies supermar-
kets, hospitals and hotels with prod-
ucts ranging from carrier bags to
revenue for the third quarter was up
six per cent compared with the same
period last year.
Revenues in the UK and Ireland
were below last year’s figures, Bunzl
said, because of tough trading condi-
tions, but across Europe sales and
operating profit were ahead of last
year, helped by strong demand for
products related to the H1N1 influen-
tions.
Bunzl also announced details of its
latest purchase, Dutch company W.
Van’t Veer Verpakkingen B.V., a com-
pany that sells cleaning and hygiene
products to the healthcare market
and the ninth acquisition Bunzl has
made so far in 2010.
Bunzl’s shares closed the day down
11.5p at 760.5p.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Marion Dakers in association with

Signia Wealth
The wealth manager has hired Kirin Ohbi (pic-
tured) as head of legal and Jonathan Morris as
an associate director in its risk division, as it
continues to expand its team since launching in
March. Ohbi joins from law firm McGrigors,
where she trained as a solicitor in the corporate
team. Morris joins from Aviva Investors, where
he spent more than four years in the portfolio
risk team. Prior to this, he worked as a business
analyst and software consultant.
Altium Securities Adams to group chief executive.
The investment bank has promoted Phil Adams, 43, has worked for the firm for
14 years, most recently as UK chief
executive. He is a chartered accountant
who has advised on over 50 transac-
tions with the firm. The bank has also
appointed Christian Wipf, Alexander
Gruenwald and Simon Lord to the
group’s board of directors. All three are
currently working at Altium.
F&C Investments
The asset manager has appointed Chris
Brils as director of institutional high
yield. He will join the company in
January and will report to Kevin
Mathews, head of high yield invest-
ments. Brils joins from Pall Mall
Investment Management, where he
was a senior fund manager and head of
high yield since 2008. He holds a
Masters degree in general management
from the Netherlands Business School,
and a Masters in forestry science from
Wageningen Agricultural University.
Spreadex
The spread betting firm has promoted
Tom Salmon to manager of its financial
trading room. Salmon, 25, has spent
four years at the firm since graduating
from Manchester University with a
degree in mathematics.
Spreadex said Salmon will oversee
several new developments including the
launch of a financial mobile trading
product next year.
Royal London Asset Management
The asset management firm has hired
David Billyard to the post of business
development manager with immediate
effect.
Billyard joins from Premier Asset
Management, where he was head of
sales. Prior to this he was head of sales
and marketing at Ruffer. He will be
responsible for promoting RLAM’s retail
funds to the wholesale market, with a
focus on London and the South West.

To appear in CITYMOVES please email your career

SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com morganmckinley.com
 Markets&Investment
22 CITYA.M. 20 OCTOBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .299.90 –2.40 308.10 246.90 Compass . . . . . . . . . . . . . . . . . .518.50 –9.00 574.50 382.00 Jupiter Fnd Mgmt . . . . . . . . . . . .285.00 +25.00 294.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .271.30 –1.70 286.80 208.20
3i Infrastructure . . . . . . . . . . . . . 113.30 –0.30 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .564.50 –13.00 616.00 347.60 Kazakhmys . . . . . . . . . . . . . . . .1318.00 –41.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .383.10 –2.70 397.00 307.60
A.B. Foods . . . . . . . . . . . . . . . .1047.00 — 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1509.00 +8.00 1540.00 692.00 Kesa Electricals . . . . . . . . . . . . .159.50 –2.00 172.40 98.45 Schroders . . . . . . . . . . . . . . . . .1482.00 –9.00 1503.00 1056.00
Aberdeen Asset Man . . . . . . . . . .171.00 +1.00 172.80 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .515.00 –3.50 539.00 381.00 Kingfisher . . . . . . . . . . . . . . . . . .240.30* –0.80 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1178.00 –17.00 1211.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1613.00* –5.00 1695.00 1003.00 Dana Petroleum . . . . . . . . . . . .1800.00 +1.00 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .132.90* –1.20 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . .1125.00 +10.00 1206.00 1006.00
Aegis . . . . . . . . . . . . . . . . . . . . .126.70 –1.50 137.30 103.10 Davis Service . . . . . . . . . . . . . . .419.80 –1.60 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .384.00* +21.10 386.80 157.30
Afren . . . . . . . . . . . . . . . . . . . . . 113.00 –2.50 121.80 76.50 Debenhams . . . . . . . . . . . . . . . . .72.80 –0.05 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .573.50 –1.50 582.50 416.70 Scottish Mortgage. . . . . . . . . . . .653.00 +4.00 661.00 475.00
African Barr Gold . . . . . . . . . . . .556.50 –13.50 685.00 520.50 Derwent London . . . . . . . . . . . .1547.00* +2.00 1633.00 1174.00 Land Securities . . . . . . . . . . . . . .678.00* +5.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .300.00 +2.40 389.30 244.00
Aggreko . . . . . . . . . . . . . . . . . .1680.00* –3.00 1697.00 727.50 Dexion Absolute . . . . . . . . . . . . .138.40 –0.10 148.00 131.20 Legal & General . . . . . . . . . . . . .105.20 –0.50 107.50 69.05 Serco . . . . . . . . . . . . . . . . . . . . .626.50 –3.50 656.50 491.20
Alliance Trust . . . . . . . . . . . . . . .348.90* –0.20 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1163.00* +28.00 1176.00 951.50 Lloyds Banking Gp . . . . . . . . . . . .70.50 –1.70 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1350.00 +17.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . .1044.00 –12.00 1066.00 728.00 Dixons Retail . . . . . . . . . . . . . . . .27.12 — 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .131.00 –2.40 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .451.90 –2.90 465.00 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .395.10 –2.10 437.60 350.80 Domino’s Pizza . . . . . . . . . . . . . .454.00 –4.70 484.70 278.20 London Stk Exchange . . . . . . . . .685.50 –13.00 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1493.00 –8.00 1532.00 999.00
Anglo American . . . . . . . . . . . .2781.50 –65.00 3015.50 2153.00 Drax . . . . . . . . . . . . . . . . . . . . . .370.50 –4.10 478.00 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1769.00 –39.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .550.50* –3.50 700.50 525.50
Antofagasta . . . . . . . . . . . . . . .1244.00 –44.00 1344.00 755.50 Dunelm . . . . . . . . . . . . . . . . . . . .463.00 +4.60 482.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .259.80 –10.10 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .163.50 –0.80 168.20 103.00
Aquarius Platinum . . . . . . . . . . .371.90 –10.10 490.00 211.50 Easyjet . . . . . . . . . . . . . . . . . . . .449.10 –4.80 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .410.00 –3.70 419.10 321.90 Smiths . . . . . . . . . . . . . . . . . . .1250.00 –1.00 1297.00 885.00
ARM Holdings . . . . . . . . . . . . . . .388.70 –10.40 419.50 143.00 Edinburgh Inv Tst . . . . . . . . . . . .437.70 –2.30 441.70 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .305.00 +0.90 331.00 229.80 SOCO Intl . . . . . . . . . . . . . . . . . .333.60 –11.50 510.00 333.20
Ashmore . . . . . . . . . . . . . . . . . . .380.00 –1.60 400.50 215.00 Electrocomponents . . . . . . . . . . .240.80 –0.90 251.00 144.80 Melrose . . . . . . . . . . . . . . . . . . .294.10 –1.60 302.00 160.00 Spectris . . . . . . . . . . . . . . . . . .1095.00 –6.00 1128.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3312.50 –46.50 3389.50 2668.00 EnQuest . . . . . . . . . . . . . . . . . . .129.90 –1.30 133.50 87.35 Mercantile IT . . . . . . . . . . . . . . . .973.50* –3.50 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .777.00 –0.50 801.00 532.50 Essar Energy . . . . . . . . . . . . . . .500.00 +6.00 510.00 358.50 Michael Page Intl. . . . . . . . . . . . .475.90 –3.60 495.40 316.70 Spirax-Sarco Eng . . . . . . . . . . .1822.00* +6.00 1859.00 1060.00
Autonomy Corp . . . . . . . . . . . .1444.00 +25.00 2012.00 1278.00 Eurasian Nat Res . . . . . . . . . . . .913.00 –17.00 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .378.20 –6.60 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .142.00 –2.50 148.20 86.50
Aveva . . . . . . . . . . . . . . . . . . . .1415.00 +4.00 1504.00 856.50 Euromoney Inst Inv . . . . . . . . . . .607.50 +6.00 630.00 371.80 Millen & Copthorne . . . . . . . . . . .559.50 –7.50 572.50 321.40 Sports Direct Intl . . . . . . . . . . . . .147.50 –1.70 154.30 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .398.90* +1.20 456.90 290.20 Experian . . . . . . . . . . . . . . . . . . .712.00 +3.00 726.00 550.00 Misys . . . . . . . . . . . . . . . . . . . . .288.60 — 298.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 — 1190.00 616.00
Babcock International . . . . . . . . .564.00 –28.50 660.50 489.00 Ferrexpo . . . . . . . . . . . . . . . . . . .339.20 –0.70 396.20 140.70 Mitchells & Butlers . . . . . . . . . . .310.20 +1.20 343.90 228.30 St James’s Place . . . . . . . . . . . . .277.00 +1.30 298.00 203.40
BAE Systems . . . . . . . . . . . . . . .363.90 –6.00 389.90 288.10 FirstGroup . . . . . . . . . . . . . . . . .377.30 +1.60 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .200.70 +0.70 255.00 187.60 Stagecoach. . . . . . . . . . . . . . . . .187.50 +0.40 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .264.20* –2.10 304.80 228.60 Foreign & Col Inv Tst. . . . . . . . . .294.70 +0.90 297.20 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .544.00 –4.00 550.00 304.70 Standard Chartered . . . . . . . . . .1959.00 +38.00 1969.50 1366.50
Barclays . . . . . . . . . . . . . . . . . . .288.85 –0.40 394.25 253.40 Fresnillo . . . . . . . . . . . . . . . . . .1223.00 –68.00 1333.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .332.40 –0.70 336.40 265.00 Standard Life . . . . . . . . . . . . . . .230.60* –1.60 238.00 170.00
Barratt Development . . . . . . . . . . .88.15 –1.55 172.50 85.75 G4S . . . . . . . . . . . . . . . . . . . . . .265.60 –1.40 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .295.00* –2.50 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . .1073.00 –39.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .199.50* +2.10 220.00 145.90 Genesis Emerging Mkts Fd . . . . .525.50 –2.50 536.00 370.00 Murray Intl Tst . . . . . . . . . . . . . . .921.50* –8.50 938.00 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .129.60 –3.90 153.80 106.60
Bellway. . . . . . . . . . . . . . . . . . . .565.00 –36.50 838.00 510.00 GKN . . . . . . . . . . . . . . . . . . . . . .172.40 –2.40 183.30 100.40 National Express. . . . . . . . . . . . .238.30 +0.70 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .527.00 –3.00 547.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .834.50 –1.50 927.50 735.00 GlaxoSmithKline . . . . . . . . . . . .1292.50 –11.50 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .579.50 +7.50 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .501.00 –2.00 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1186.50 –8.00 1248.00 966.90 Great Portland Estates . . . . . . . .349.00 –0.70 368.60 236.60 Next . . . . . . . . . . . . . . . . . . . . .2240.00 –14.00 2360.00 1733.00
BHP Billiton . . . . . . . . . . . . . . .2139.00 –46.50 2346.00 1618.50 Greene King . . . . . . . . . . . . . . . .420.30 +5.30 484.00 372.50 Northumbrian Water . . . . . . . . . .343.30 +5.30 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .25.20 –0.91 46.34 24.29
BlackRock Mining . . . . . . . . . . . .662.50 –17.00 695.00 475.00 Halfords . . . . . . . . . . . . . . . . . . .407.90 +2.90 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .135.70 +4.30 169.00 120.90 Telecity . . . . . . . . . . . . . . . . . . . .490.40 –7.60 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .486.00 –1.00 495.00 251.00 Halma . . . . . . . . . . . . . . . . . . . . .331.10 –3.80 345.50 218.40 Old Mutual . . . . . . . . . . . . . . . . .137.70* –0.80 146.90 95.30 Templeton Emrg Mkts . . . . . . . . .645.50 –3.50 657.50 455.00
Bluecrest Allblue GBP . . . . . . . . .172.80 +0.30 172.90 151.00 Hammerson . . . . . . . . . . . . . . . .416.60 +1.30 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .271.80 +0.50 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .431.30* –1.65 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .53.20 –0.55 55.10 37.50 Hargreaves Lansdown . . . . . . . .450.20 –2.30 478.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .981.00 –5.50 1069.00 805.00 Thomas Cook . . . . . . . . . . . . . . .183.90 –3.30 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .435.70 +3.55 658.20 296.00 Hays . . . . . . . . . . . . . . . . . . . . . . 119.80 +1.20 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .597.50 +3.00 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .837.00 –16.50 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1040.00 +5.00 1045.00 709.00 Henderson . . . . . . . . . . . . . . . . .135.70 –1.90 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .370.00 –16.20 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .228.00 +1.90 313.90 189.20
British Airways . . . . . . . . . . . . . .279.40 –3.10 285.80 172.40 Heritage Oil. . . . . . . . . . . . . . . . .337.20 –4.70 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1465.00* –4.00 1492.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .405.90 –8.00 431.80 261.20
British Amer. Tob . . . . . . . . . . .2447.50 +0.50 2462.50 1832.00 Hikma Pharma . . . . . . . . . . . . . .751.00 +15.00 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . . .996.50* –39.50 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1264.00* — 1375.00 979.50
British Empire Tst . . . . . . . . . . . .479.30 –1.60 490.60 338.50 Hiscox . . . . . . . . . . . . . . . . . . . .348.00 +0.90 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .699.50 +9.50 775.00 550.50 UK Commercial Prop. . . . . . . . . . .77.00 –0.30 84.90 71.00
British Land . . . . . . . . . . . . . . . .504.50* +3.00 515.00 416.00 Hochschild Mining . . . . . . . . . . .484.30 –7.30 522.00 220.00 Premier Farnell . . . . . . . . . . . . . .278.00* –2.00 283.80 140.60 Ultra Electronics . . . . . . . . . . . .1820.00 +5.00 1850.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .472.00 +5.20 518.00 341.50 Home Retail . . . . . . . . . . . . . . . .219.90 –0.10 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1609.00 –26.00 1717.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1791.00 –23.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .282.30 +1.90 284.30 204.80 Homeserve . . . . . . . . . . . . . . . . .479.00 –1.00 502.00 422.00 Provident Financial . . . . . . . . . . .811.50 –2.00 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .705.50 –0.50 732.00 521.00 HSBC Hldgs . . . . . . . . . . . . . . . .660.50 +0.10 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .634.00 +10.50 665.00 475.70 United Utilities . . . . . . . . . . . . . .590.50 +6.00 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .148.30 –1.30 153.00 108.40 Hunting . . . . . . . . . . . . . . . . . . .641.50 –1.00 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .375.90 +3.50 383.00 231.70 Utd Business Media . . . . . . . . . .640.50 +8.00 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .760.50 –11.50 784.50 614.00 ICAP . . . . . . . . . . . . . . . . . . . . . .476.10 –6.20 485.20 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . . 111.50 +0.90 179.10 96.00 Vedanta Resources . . . . . . . . . .2174.00 –79.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . . .959.50 –12.00 1065.00 513.00 IG . . . . . . . . . . . . . . . . . . . . . . . .541.00 –2.50 550.00 291.00 Randgold Resources. . . . . . . . .6225.00 –195.00 6755.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1310.00 –2.00 1355.00 726.50
Cable & Wire Comms . . . . . . . . . .53.75 –0.55 150.00 52.30 Imagination Tech Gp . . . . . . . . . .423.50 –6.50 431.90 193.70 Reckitt Benckiser . . . . . . . . . . .3420.00 –32.00 3667.00 2971.00 Vodafone . . . . . . . . . . . . . . . . . .166.25 –2.15 169.10 126.50
Cable & Wire Wwide . . . . . . . . . . .72.05 –1.15 94.80 60.05 IMI . . . . . . . . . . . . . . . . . . . . . . .825.50 +1.00 836.50 410.00 Reed Elsevier . . . . . . . . . . . . . . .553.50 –3.50 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1580.00* –9.00 1614.00 639.00
Cairn Energy. . . . . . . . . . . . . . . .429.90 –1.50 497.60 306.80 Imperial Tobacco. . . . . . . . . . . .1934.00 — 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .84.95 –1.20 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .748.50 –6.50 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1776.00 +1.00 1784.00 1496.00 Inchcape. . . . . . . . . . . . . . . . . . .345.90 +3.90 347.50 235.00 Renishaw . . . . . . . . . . . . . . . . . 1183.00* –2.00 1215.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .484.00 +1.90 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .784.50 –8.00 829.50 693.00 Informa . . . . . . . . . . . . . . . . . . . .420.90 –2.10 439.40 263.30 Rentokil Initial . . . . . . . . . . . . . . .101.30 –0.10 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1728.00 +35.00 1730.00 1215.00
Capital & Counties . . . . . . . . . . .145.00* –0.50 146.60 99.60 Inmarsat . . . . . . . . . . . . . . . . . . .606.50* –10.00 831.00 541.00 Resolution . . . . . . . . . . . . . . . . .254.20 –3.80 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .159.90 –4.40 217.80 159.60
Capital Shopping Centres . . . . . .384.20* –1.40 533.50 300.10 Intercontl Hotels . . . . . . . . . . . . 1175.00 –14.00 1244.00 762.50 Rexam . . . . . . . . . . . . . . . . . . . .318.90 –4.20 348.80 271.40 Witan Inv Tst . . . . . . . . . . . . . . . .480.70 –1.20 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .341.20* –0.80 361.90 272.00 Intermediate Capital . . . . . . . . . .319.00 +1.30 331.50 233.50 Rightmove . . . . . . . . . . . . . . . . .765.00* +1.50 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2576.00 –14.00 2937.00 1876.00 Intertek . . . . . . . . . . . . . . . . . . .1852.00 –15.00 1881.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .3948.00 –132.00 4165.00 2631.00 Wolseley . . . . . . . . . . . . . . . . . .1632.00 –15.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .335.10 –1.40 394.60 303.20 Intl Personal Fin . . . . . . . . . . . . .303.20 +4.00 310.00 181.40 RIT Capital Partners . . . . . . . . .1127.00 –7.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .430.80 –5.70 452.90 279.60
Centamin Egypt . . . . . . . . . . . . .174.50 –1.80 194.40 103.50 Intl Power . . . . . . . . . . . . . . . . . .404.40* +1.00 408.60 248.20 Rolls Royce . . . . . . . . . . . . . . . .622.50 –1.50 643.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .733.50* +1.50 744.00 528.00
Centrica . . . . . . . . . . . . . . . . . . .324.40* +2.50 347.00 236.30 Invensys . . . . . . . . . . . . . . . . . . .309.70 –3.00 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . .1807.00 –21.00 1906.00 1101.00 Xstrata . . . . . . . . . . . . . . . . . . .1248.50 –57.00 1349.00 832.50
Charter Intl . . . . . . . . . . . . . . . . .803.00 +21.00 855.50 563.50 Investec . . . . . . . . . . . . . . . . . . .506.50 –4.00 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .46.95 +0.64 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3021.00 +3.00 3711.00 2551.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .65.25 –0.25 71.75 41.04 Royal Dutch Shell A . . . . . . . . .1985.50 –20.50 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .769.00* –4.00 803.50 657.00 Jardine Lloyd Thompson. . . . . . .581.00 +1.50 604.50 420.70 Royal Dutch Shell B . . . . . . . . .1932.00 –22.50 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .238.90* +1.20 278.60 205.50 Johnson Matthey . . . . . . . . . . .1914.00 –13.00 1938.00 1397.00 RSA Insurance . . . . . . . . . . . . . .132.90* — 137.40 114.10
COLT Group . . . . . . . . . . . . . . . . 119.80 –0.70 144.20 107.70 JPMorgan Emerg Mkts . . . . . . . .599.00* –6.50 618.00 443.00 SABMiller . . . . . . . . . . . . . . . . .2075.50 +6.50 2103.00 1571.00 www.interactivedata.com

China’s first interest rate rise Bank of America

since 2007 drags FTSE down scare hits stocks
third-quarter production figures for upgraded ratings for Autonomy in matter, said investors PIMCO and
THELONDON its two key products.
Energy stocks were weighed down
the wake of the numbers, with
Panmure having downgraded after THENEW YORK BlackRock as well as the New York
Federal Reserve Bank were seeking to

REPORT by a 2 per cent drop in the price of

crude oil, with BG Group and Royal
Dutch Shell down 0.7 per cent and 1
the firm cut its full-year revenue view
earlier this month.
But tech peer ARM Holdings shed
REPORT force the lender to repurchase $47bn
in mortgage bonds. The bank, the
New York Fed and PIMCO declined to
per cent respectively. 2.6 percent after Apple, which uses its comment.

C U
hina’s first interest rate rise Banks, however, found modest chips, disappointed investors late on stocks posted their biggest loss The Dow Jones industrial average
since 2007 hit mining shares gains after above-forecast earnings Monday with weaker-than-expected in two months yesterday on dropped 165.07 points, or 1.48 per
and dragged the FTSE 100 lower from BofA Merrill Lynch and gross margins and iPad shipments. fears banks might be on the cent, to 10,978.62. The Standard &
yesterday, offsetting gains from Goldman Sachs, which backed up US blue chips were 0.9 per cent hook for billions of dollars in Poor’s 500 Index lost 18.81 points, or
banks after solid results from Bank of Citigroup’s numbers from Monday. lower by London’s close knocked by souring mortgage bonds. 1.59 per cent, to 1,165.90. The Nasdaq
America and Goldman Sachs. Standard Chartered rose the most, weak tech issues, led by Apple and The afternoon selloff hit investors Composite Index fell 43.71 points, or
At the close, the FTSE 100 index up 2 per cent having announcing a IBM after their results. already reeling from an unexpected 1.76 per cent, to 2,436.95.
was down 38.63 points, or 0.7 per cash call to enhance its balance sheet Investors failed to draw support credit tightening by China and disap- Apple’s shares fell 2.7 per cent to
cent at 5,703.89, having earlier last week, while majority state-owned from an unexpected rise in US hous- pointing financial results from Apple $309.49 and weighed on the Nasdaq
dipped below the 5,700 level to a ses- Royal Bank of Scotland added 1.4 per ing starts in September to a five- and IBM. after iPad sales fell short of some ana-
sion low of 5,690.58. cent, and HSBC gained 0.1 per cent. month high. The biggest scare came on news lysts’ expectations. Only the day
“Miners put the skids under the Defensive issues found support as Among domestic news, British fac- that Bank of America and possibly before, Apple shares hit a lifetime
FTSE, dropping after the China rate investors sought safer havens, with tory orders fell at their sharpest pace others may be forced to take back bil- high.
move designed to rein in its booming drinks group Diageo the top FTSE 100 since April, the CBI’s October indus- lions of dollars in mortgages that International Business Machines
economy, but the underlying mood is riser, up 2.5 per cent, while utilities trial trends survey showed. should not have been bundled into was lower after it won fewer technol-
not too bad with banks seeing sup- Severn Trent and National Grid both bonds. ogy service deals than expected in the
port and volumes fairly solid,” said gained 1.3 per cent. ANALYSIS l FTSE 5703.59 “It’s reminding investors of what third quarter. Its shares were down
Mic Mills, head of electronic trading Hotels to coffee shops operator 19 Oct was the main impetus for the horrific 3.4 per cent at $138.03, even though it
5,800
at ETX Capital. Whitbread added 2.1 per cent after selloff we had a few years ago,” said announced stronger profits and
Metal prices fell on concerns posting first-half results at the top Eric Kuby, chief investment officer at raised its full-year outlook.
demand might weaken after China’s end of market expectations. 5,600 North Star Investment Management Shares of Apple and IBM had
central bank said it will raise its Software firm Autonomy was in Chicago. “If you were recently advanced sharply heading into the
benchmark one-year lending and among the big gainers, up 1.8 per 5,400 struck by lightning, you are a little earnings reporting season.
deposit rate by 25 basis points effec- cent after it said with third-quarter skittish when there is a thunder- The foreclosure mess overshad-
tive from October 20. Silver miner results that demand for its products 5,200 storm.” owed earnings from Bank of America,
Fresnillo was the top blue chip faller, remained strong and it could still Bank of America shares fell 4.4 per- which joined its two biggest rivals in
down 5.3 per cent, while Xstrata shed beat expectations for 2011. cent to $11.80 after a Bloomberg reporting stronger-than-expected
4.4 per cent, also pressured by mixed Both Numis and Panmure Gordon 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct report, citing people familiar with the operating earnings.
CITYA.M. 20 OCTOBER 2010 Investment | Fund Management 23

Unloved, unowned but undervalued:

Emerging Europe shakes off its past
It allows investors a Eastern Europe is no
longer beholden to its
cheap way to tap history

into the big themes, Picture: SXC

writes Jessica Mead

S
ANDWICHED between the bright
stars of emerging Asia and the fad-
ing light of the West lies Eastern
Europe, an investment destination
that is often forgotten and perennially
unfashionable. This is partly because the
region has struggled to shake off its Soviet
legacy – at least in the minds of Western
investors it is still tainted with corruption
while the tentacles of a big state strangle
free markets and business. More recently,
it suffered unfairly as a result of its per-
ceived ties to the Club Med countries.
But here perception lags far behind real-
ity; the region is recovering well from the
recent financial crisis and countries are
gradually rolling back the role of the state.
When everybody is focusing on the nega- middle-class is forecast to support con- IN FOCUS | EMERGING EUROPE EQUITY FUNDS SOURCE:MORNINGSTAR
tives and ignoring the positives, that is pre- sumption. For example: “In Turkey we have
cisely the time that the savvy investor a consumer heaven with some of the best UK REGISTERED 15/10/07 RANK LATEST DOMICILE PORTFOLIO MANAGEMENT
should be buying. Fund managers are demographics in the world, a huge num- INVESTMENT FUNDS: - PORTFOLIO MANAGER GROUP
already quietly becoming more bullish ber of small and mid-size businesses, gen- EQUITY EUROPE 15/10/10 SIZE (£M)
about the region’s prospects but valua- erations of business tradition, hardly any EMERGING MARKETS % PERF. CHG
tions remain compelling. penetration on mortgages and exceptional TOP 10
“It is a very cheap market on the basis of financial institutions,” says Chrystowski. Nevsky Eastern European USD 13.39 1 237.78 Ireland (Eire) Martin Taylor Nevsky Capital LLP
valuations. Only four years ago emerging Turkey is not alone. In Russia, household
Europe was trading at a premium to global debt is low with very few mortgages JPMorgan New Europe A Acc 3.04 2 268.35 United Kingdom Oleg Biryulyov JPMorgan Asset
emerging markets on a price-to-earnings because most house purchases are done Management (UK) Limited
(p/e) basis,” says David Reid, an analyst at using cash. Year-on-year wage growth com- Deka-ConvergenceAktien CF 3.03 3 699.41 Luxembourg Martin Hrdina Deka International S.A.
BlackRock’s Eastern European Investment bined with a low basic income tax has PineBridge Emerging Europe Equity Y 0.54 4 80.86 Ireland (Eire) David Molnar PineBridge Investments Ireland Ltd
Trust. Russia is currently trading at a price improved disposable income and seen Lloyds TSB Eastern Europe & Frontier Eq -0.2 5 19.51 Luxembourg Iain Fulton Lloyds TSB Bank Intl Private Bank
of seven times earnings while Turkey is on Russia grow to become one of Europe’s Schroder ISF Emerg Europe A GBP -0.88 6 230.41 Luxembourg Tom Wilson Schroder Investment
10 times and Poland is on 11-12 times. largest retail markets. Management (Luxembourg)
While fund managers are keen to stress Thirdly, Eastern Europe is also a lever- Templeton Eastern Europe A Acc € -1.3 7 688.55 Luxembourg Mark Mobius Franklin Templeton Investment Funds
the heterogeneity of the region, “one com- aged play on the industrial success of
mon feature that they have, and it’s proba- Germany, which now outsources much of JPM Eastern Europe Eq A (dist)-EUR -1.79 8 889.25 Luxembourg Sonal Pandit JPMorgan Asset Mgmt (Europe) S.a.r.l.
bly the most important one for investors its manufacturing to Central Europe. MS INVF EMEA Eq A -1.97 9 284.79 Luxembourg Paul Psaila Morgan Stanley Investment Funds
these days, is that they offer growth and Around 70 per cent of flat screen televi- Manulife Emerg Eastern Europe A -2.24 10 158.4 Luxembourg Stefan Bottcher Manulife Global Fund
yield,” says Renaissance Asset Managers’ sions sold in Europe come from Poland
Karol Chrystowski. Investors are desperate- while Poland is also the second largest sup- BOTTOM 10
ly seeking yield at the moment as a source plier to Ikea after China, says Chrystowski. Amundi Funds Emerging Europe C C -13.03 26 26.78 Luxembourg Patrice Lemonnier Amundi
of income. The region is also becoming a hub for Jupiter Emerging European Opps -14.37 27 552.12 United Kingdom Elena Shaftan Jupiter Unit Trust Managers Ltd
Although cheap valuations are a good accounting centres of multinationals such iShares STOXX Europe EU Enlargd 15 (DE) -14.74 28 24.23 Germany Management Team iShares
enough reason in themselves to be bullish, as IBM and Royal Dutch Shell. Aberdeen Global Eastern European Eq S2 -17.47 29 187.16 Luxembourg Emerging Markets team Aberdeen Asset Managers Limited(Lux)
there is more to emerging Europe than Although there is usually a heavy
value. It also offers the capacity to tap into weighting to Russia in funds – partly Aberdeen European Frontiers A Acc -19.91 30 46.04 United Kingdom Devan Kaloo Aberdeen Unit Trust Managers Limited
some of the biggest investment themes of because the typical benchmark MSCI Aviva Investors European Convg Eq A EUR -20.4 31 94.24 Luxembourg Mark Artherton Aviva Investors Luxembourg SA
the 21st century. Emerging Europe 10/40 is 65 per cent Parvest Equity Europe Converging C -21.31 32 65.88 Luxembourg Cécile Daudet-Bahar BNP Paribas
weighted towards it – fund managers are SGAM Fund Eqs Emerging Europe A -23.22 33 38.56 Luxembourg Nerea Heras Mendaza Société Générale Asset Management
CHINESE FORTUNES keen to spread their risk: “Having a region- Allianz RCM Eastern Europe A EUR -23.57 34 138.73 Ireland (Eire) Alexandra Richter Allianz Global Investors Ireland Ltd
First, the region’s biggest market Russia is al fund enables you to have a more multi-
inextricably tied to the fortunes of growth dimensional risk positioning. Within WestLB Me Co Fd Eastern Europe Div A € -24.82 35 36.56 Luxembourg Glen Prentice WestLB Mellon Asset Mgmt (Lux) S.A.
in emerging markets. Its trade turnover Russia the correlations between many JB EF Black Sea CHF B -61.1 36 57.68 Luxembourg Javier Garcia Swiss & Global Asset Management AG
surged 1,200 per cent between 1998 and companies are actually very high but if you
2008 with exports to China rising 10-fold look at it on a pan-emerging Europe basis, IN FOCUS | EMERGING EUROPE EQUITY FUNDS
over the past decade, according to Robin you end up with a much healthier correla-
Geffen, chief executive of Neptune tion matrix,” says BlackRock’s David Reid. According to data from Morningstar, there are 36 Emerging Europe equity funds with a track record of at least three
Investment Management and fund manag- With valuations attractive and the fun- years that are available to UK investors. There are also six funds which focus on Russian and Commonwealth of
er of its Russia and Greater Russia fund. damentals compelling, it’s time to make Independent States (CIS) equities, which are not included in the above table. Many of these are structured as a Sicav
Second, emerging Europe is placed for the most of the Eastern European story rather than as an OEIC – the above table doesn’t include investment trusts. The average three-year performance is -10.35
accelerated catch-up growth with devel- before the masses cotton on and the region per cent while the average portfolio size is £251.25m. Figures are calculated on a bid-bid, gross income reinvested basis.
oped markets. A youthful and expanding becomes expensive.

FUND MANAGEMENT NEWS

BY JESSICA MEAD
Investors continue to seek out risky situations
INVESTORS REGAIN THEIR RISK APPETITE
Investors are channeling most of their
renewed risk appetite into global emerging
market equities in the wake of an expected
second wave of QE, according to the Bank of
America Merrill Lynch October survey of fund
managers. The level of risk that investors are
taking in their portfolios rose more sharply
than in any month since April 2009 while the
proportion that are overweight equities nearly
tripled. Managers are also more optimistic
Picture: GETTY about China’s growth over the coming year.
FUND MANAGER ASSETS ROSE 16PC IN 2009
Assets managed by the world's largest 500
fund managers rose by 16 per cent in 2009 to
$62 trillion by the end of the year, according
to research by investment consultants Towers
Watson. These inflows partially offset the 23
per cent loss of assets the previous year.
However, assets are still below 2006 levels.
Of the top 20 managers, 12 were US-based
(managing 63 per cent of assets) while the
remaining eight were European-based. Their
share of assets increased to over 40 per cent.
STELLAR SEPTEMBER FOR HEDGE FUNDS
Hedge funds experienced their best month so
far this year in September, as the Dow Jones
Credit Suisse Hedge Fund Index rose 3.43 per
cent. Nine out of 10 sectors posted positive
performance while the best ones were
long/short equity and emerging markets,
which benefited from long directional expo-
sure to the equity market rally in September.
Only dedicated short bias funds, understand-
ably, suffered from the improvements in the
stock markets.
 24 Markets & Investment | Foreign Exchange
DOLLAR-YEN
IS READY FOR
A REBOUND
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
W
HY is the yen so strong? This is the
most common question I am asked
by anyone who follows the currency
markets. It is easy to understand the
perplexity. Japan has been mired in deflation
and low growth for more than twenty years.
Yet the price action in dollar-yen has nothing
to do with the country’s woeful economic fun-
damentals. These days, the yen’s strength is
simply a reflection of the dollar’s weakness. The
Fed’s intention to engage in a second round of
quantitative easing (QE), buying billions of dol-
lars of government debt, has sent the green-
back tumbling against all of its major trading
partners, including the yen. One result is that
US bond yields have hit record lows. Dollar-yen
has followed suit, declining as the spread
between 10-year Japanese government bonds
and 10-year Treasuries has narrowed. Even the
Bank of Japan’s (BoJ) announcement of its
own quantitative easing program has not
stopped dollar-yen drifting lower.
Part of the reason is that Japanese policy-
makers have been extremely cautious, allocat-
ing only $50bn for their QE initiative – a
pittance relative to the Fed’s anticipated
$500bn-$1 trillion. Furthermore, with the G-20
meeting just ahead, most traders are convinced
that the BoJ will not intervene again. The
shorts are therefore primed to break through
stops at the key ¥80.00 figure.
But they may be overconfident. I believe
that if the pair does approach the ¥80.00 level,
Japanese officials may not stand on ceremony
and will once again intervene because the pain
to their export sector will be greater than any
diplomatic damage that they suffer as a result.
Furthermore, if US economic data shows any
sign of improvement, the Fed could curtail the
size and the scope of its QE, which could prove
very bullish for dollar-yen. So unless US data
deteriorates markedly, dollar-yen may hold at
¥80 and the pair could rebound from there.
Boris Schlossberg and Kathy Lien are directors
of currency research at GFT. Read commen-
tary at www.GFTUK.com/commentary or e-
mail borisandkathy@gftuk.com.
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CITYA.M. 20 OCTOBER 2010
The true scale of QE is
still cloaked in mystery
Bernanke has lost
control of the story,
writes Juliet Samuel
E
XPECTATIONS about quantitative eas-
ing (QE) have now been driven so high
– with the market anticipating
between $500bn and $1 trillion of
extra liquidity – that someone was soon
bound to call a halt to the party. That killjoy
has arrived, in the form of US broker BTIG’s
Mike O’Rourke.
“There are many who have QE trades on
and we believe there is high risk that they
will be disappointed if the Federal Open
Markets Committee (FOMC) walks the way
it has been talking the talk,” he wrote in a
note to investors last week.
O’Rourke suggests that Ben Bernanke
has completely lost control of the QE narra-
tive, leading to expectations massively out
of line with his original intentions. The Fed
is therefore in a bind: disappoint and cause
a correction or pander to the markets.
Either way, O’Rourke points to the influ-
ence of St Louis Fed chairman Jim Bullard
as evidence that Bernanke will let the extra
cash dribble out of the Fed only gradually
and in response to economic data. If he is
correct, the FOMC’s next meeting on 2-3
November will be a nasty shock for markets
that have grown increasingly reliant on a
tidal wave of QE. The two Bernankes –
As GFT’s David Morrison says: “The mar- but which has the
ket has priced in QE; the question is how market priced in?
much is priced in.” Morrison estimates $1 Picture: GETTY
trillion. BNP Paribas’ forex strategist Mary
Nicola puts it at $500bn over five months,
followed by an additional $1 trillion if nec-
essary. As a result, she forecast that “a weak- the US economy. A reasonably strong earn- market has banked on and how much
er dollar looks like it might have more to ings season and good retail figures on Bernanke will deliver.
go” and is predicting parity with the Aussie Friday are matched by persistently high
and loonie by the end of the year. unemployment and a struggling housing ANALYSIS l Money quantity up, velocity down
But the truth is that the Fed’s lack of clar- market weighed down further by the fore-
ity has kept everybody guessing. The reali- closures mess. 2,200 10
US$bn Money
sation that huge QE inflows are not a given As Charles Schwab’s Kully Samra says: 2,000 multiplier 9
seems to have knocked the dollar upwards “Adding more cash into the system isn’t (RHS)
1,800 8
in the last few days, as CMC Markets’ necessarily going to change things. The 1,600 7
Michael Hewson notes: “The Fed chair- problem is not the amount of money. It’s Monetary base
man’s comments about the difficulties in the velocity of money – the amount of 1,400 (LHS) 6
determining the pace, size and costs of any money left on the sidelines (see chart).” 1,200 Money multiplier = M2 5
purchases has given the markets pause for The truth is that for the US economy in 1,100 money supply to 4
monetary base ratio.
thought.” the long-term, it might not matter what 800 3
A pause is well-advised. If the Fed is not the Fed does. In the meantime, dollar Source: Charles Schwab, FactSet, Fed.
sending clear signals, after all, neither is traders are left guessing how much QE the 2007 2008 2009 2010
OPEN AN ACCOUNT WITH GFT
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CITYA.M. 20 OCTOBER 2010 Investment | Foreign Exchange 25

THE
This might look TIPSTER
TALK OF QE

dramatic, but HAS BEEN

OVERBLOWN

R
ECENT weakness in the dollar has been
exaggerated by talk of another round of

it’s all priced in stimulus spending from the Fed. While this
is increasingly likely to happen, the dollar
is approaching what looks like a point of inflec-
tion. ETX Capital is quoting 77.51-77.59 for the
Dollar Index December contract.
Euro-dollar may have had a recent uptrend,
but it topped out at the $1.3150 level and
Expect sterling volatility today, but hold firm retraced its step back down to the $1.3550-
3750 level, before it was saved by a support
on long-term positions, says Donata Huggins and bounced back. WorldSpreads offers a one-
point spread at $1.3870-$1.3871.
After reaching parity with the US dollar for a

T
ODAY is jam-packed with economic
data: the Monetary Policy
Committee (MPC) minutes are
released at 9.30am and George
Osborne unveils the Comprehensive
Spending Review (CSR) at 12.30pm.
All this activity seems to have unnerved
sterling traders. The pound dropped 0.2
per cent to $1.5844 and 0.1 per cent to
88.40p per euro yesterday morning. Some
are suggesting that traders have closed
their positions in fear of the effect of fur-
ther quantitative easing (QE) from the MPC
and the extent of Osborne’s budget cuts.
While this sounds like sterling could be
preparing to tumble, most commentators
regard this as a typical “event risk” sell-off
– a reaction that comes into play in the
lead up to major events regardless of the
expected outcome. The broad expectation
is, in fact, that the pound will return to the
$1.55-6 level against the dollar and fall
back into range against the euro.
George Osborne’s pledge to hack £156bn
off state spending has pleased the market
up until now. This is evident from ster-
ling’s bounce-back against the dollar and
the euro after both the election and the
emergency budget. The market clearly
likes cuts, and as Neil Mellor of the Bank of
New York Mellon says: “If anything, there’s
a feeling that the cuts won’t be aggressive
enough and that might disappoint.” After
today’s immediate-reaction volatility it
would be reasonable to expect the CSR to
reassure the market that the government
is still on track to slash spending.
If George Osborne sticks to the headline
numbers given in his emergency budget
there should not be any surprises for the
market since all the relevant information
is already known. Mellor says: “The market
doesn’t care how many bureaucrats get
fired from what department, this is micro
information that won’t matter to the trad-
er.”
Analysts have much the same feeling
about the MPC meeting. Despite the hype,
further QE is unlikely to be announced.
Ross Walker, RBS’s UK economist, says:
“Perhaps the [MPC] members are playing
us with a straight bat – they don’t like to
drop hints, but it seems as if [Adam] Posen
is the only dove, the others sound pretty
neutral. My guess would be that the others
are waiting to see the inflation report.” The
GDP and Purchasing Managers Index (PMI)
figures out next week are more likely to
give a steer on the probability of more QE.
The immediate market reaction will
offer traders a bumpy ride. Sterling’s
direction will be a tough call and most
analysts refrained from making one. A
strong feeling and a lot of confidence
could make you a quick buck, but as David
Jones of IG Index warns the uncertainty
few seconds on Friday, the Australian dollar lost
more than 150 basis points against the green-
back yesterday. With Australian rates still on
hold for the time being and the US dollar likely
to come under further strain in the coming
months, some analysts are speculating that the
Aussie could make a comeback and possibly
even move beyond parity. Spreadex offers a
spread on spot Australian dollar-US dollar at
US$0.9765-US$0.9768.
Since breaking parity against the US dollar
last Thursday, the Loonie has been in reverse. It
is taking back levels to around Ca$1.02. The
deters most traders. Protestors will have a decision by the Bank of Canada to leave rates
Traders should not let sterling’s wobble stronger reaction to unchanged yesterday has helped propel US dol-
over the last few days knock their strate- the cuts than the mar- lar-Canadian dollar to a new high. But then it
gies off course. Today’s volatility might be kets settled below the strong Ca$1.0350 resistance
unpredictable, but the long game looks Picture: REUTERS level. Look out for weakness around this area
fairly straightforward for sterling. for a short play, or if it breaks through and clos-
es above Ca$1.038 go long for a run at
ANALYSIS l The performance of sterling against the dollar over the last three trading days Ca$1.05. Spread Co offers a spread on US dol-
$
lar-Canadian dollar of Ca$1.0322-Ca$1.0326.
The Swiss franc’s foray below parity against
1.605
the greenback could be looking short-lived after
tough talk from the Fed and a rate hike out of
China. This will doubtless offer much relief to
1.595
the Swiss National Bank, which despite costly
intervention measures has been unable to rein
in Swiss franc strength and instead was harm-
1.585
ing the country’s own economic recovery. The
current IG Index price on US dollar-Swiss
franc is SFr0.9717-SFr0.9719.
1.575
Fri 15 Oct Mon 18 Oct Tue 19 Oct Donata Huggins

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
JOEL KRUGER JOHN KICKLIGHTER ILYA SPIVAK

My pick: Buy dollar-yen at ¥79.50 (100 objective stop at ¥86.60)
Expertise: Classic technical analysis
Average time frame of trades: 1 month – 12 months
This market has been under intense pressure over the past few months,
with the price dropping relentlessly to multi-year lows and now quickly
closing in on a retest of the record lows from 1995 at the ¥80.00 level.
Despite the oversold technical studies, we cannot rule out a test and
break below the critical barriers at ¥80.00. At this point, any further
declines should be limited, with the greater risk of a major upside correc-
tion back in favour of the US dollar.
My pick: Pending short euro-dollar below $1.38
Expertise: Fundamental and technical analysis with average time
Average time frame of trades: 1 day – 1 week
Volatility has held consistent, but so has technical congestion. This lack
of conviction undermined my sterling-dollar long above $1.60. This
week, I am waiting for a confirmed reversal from euro-dollar below
$1.38 (with low size and an initial stop of 150 basis points). In an effort
to limit exposure to stimulus expectations with the dollar or risk trends,
I am also looking at a potential Australian dollar-New Zealand dollar
break below NZ$1.30 (stop and first target: 150 basis points).
My pick: Short euro-dollar (pending)
Expertise: Global macro
Average time frame of trades: 1 week – 6 months
Euro-dollar has just lost step ahead of the $1.42 figure, which has acted
as both support and resistance since 2008. Weekly charts reveal a bear-
ish shooting star candlestick pattern, hinting at a reversal lower. Shorter
term, the eight-hour chart shows prices carving out a head-and-shoul-
ders top with a neckline at the $1.38 figure. Negative relative strength
index (RSI) divergence reinforces the case for a downside scenario. Look
for a daily close below the neckline to enter short, targeting $1.3340.
 City Focus
26 CITYA.M. 20 OCTOBER 2010

| Law

Algo crackdown
is an awful idea
MiFID should not kill wrong in algorithmic trading is left to
one side, it’s hard to see what is wrong
off what it created, with them.
Algos are not even as bad as their oppo-
write Vincent Miller nents say. Apocryphal stories immediate-
ly after the US flash crash blaming it all
on the algorithmic and high frequency
and William Garner traders for “turning off their algos” at
the crucial time and causing or exacer-
bating the free-fall do not appear to have
been true.

H
IGH frequency traders are getting
a bad press at the moment. They
have been widely blamed for the
so-called “flash crash” on 6 May,
and the latest noises coming out of the
European Commission suggest that
when its review of the Markets in
Financial Instruments Directive (MiFID)
is finalised next year it may well look at
curbing the activities of these traders,
who trade using computer algorithms, or
algos, largely without human interven-
tion. The EC would be wrong to do so.
High frequency trading is a big deal.
Statistics released by the New York Stock
Exchange show that in one week in late
May this year up to 60 per cent of trades
on the exchange were down to high fre-
quency and algorithmic traders.
Many in the markets have been call-
ing to curb the influence of these
traders by slowing down speeds, limit-
ing the numbers of orders and restrict-
ing co-location (the practice of locating
a trader’s computers alongside exchange
servers) as well as increasing the use of
circuit breakers such as automatic paus-
es and introducing limit up/limit down
technology.
It is fashionable to look at ways of curb-
ing the high-frequency traders’ activities,
but in fact they are simply a natural pro-
gression from the move to screen-based
electronic trading in the mid 1980s. They
steal a head start on their competitors by
using technology and leveraging off the
inefficiencies inherent in European mar-
kets. When Luddism and a sneaking feel-
ing that there is something somehow
In fact, the CFTC/SEC joint report into
the flash crash, which was issued on 30
September 2010, not only points to a
large order placed by a broker via an algo-
rithmic programme as a probable tip-
ping point in the crash, it also says that
early sell pressure was absorbed by algo-
rithmic and high frequency traders. The
evidence suggests that high-frequency
trading adds significant liquidity to the
markets and is therefore beneficial.
And anyway, the EC is in no position to
grumble about these traders. Xavier
Rolet, CEO of the LSE, has observed in
numerous speeches that algorithmic and
high frequency traders were created by
the regulators. MiFID swept away the
monopolies previously enjoyed by incum-
bent exchanges leading to today’s prolif-
eration of alternative trading venues
which in turn spurred a technological
arms race and price war between compet-
ing venues. This opened the doors to algo-
rithmic and high frequency trading
strategies while (largely) de-regulating
proprietary trading.
The result of increased competition
and the changes to the execution land-
scape has doubtless surprised both legis-
lators and regulators. But they might
spend their time more profitably worry-
ing about how to maintain liquidity and
improve price discovery in the European Fragmentation quency trading are good – circuit-break- prised by some of the consequences of
markets, which have been damaged by its can have ers, for example, would prevent automat- the market’s deregulation, but that is the
fragmentation, and exacerbated by the unforeseen results ed trades from running away with nature of a free market. Any moves to
decision not to introduce a US style con- themselves. But a wide-ranging clamp- curb high frequency trading in the
solidated tape that shows the best price Picture: REX down would be both hypocritical and review would be a backward step.
across all trading venues. anticompetitive. Vincent Mercer and William Garner are
Some of the ideas around high fre- No doubt the creators of MiFID are sur- financial services partners at Speechly Bircham

Cleantech investment gets government boost

ically over the last few years. In the first
quarter of 2010, global cleantech venture
investment totalled $2.1bn (£1.34bn) across
189 deals, says publisher The Cleantech
Group. The Stern Report said that govern-
ments had poured $400bn into cleantech
by 2009. And business intelligence
provider IntertechPira predicts that the
amount of cleantech-generated electricity
IAN MOORE consumed globally will increase by on
average 13.5 per cent each year until 2019.
Energy efficiency measures were given
see future investment in the sector.
Seventy-seven per cent of respondents
thought that the most likely beneficiary of
investment over the next 18 months would
be energy efficiency – which covers every-
thing from LED lighting to electric and
hybrid cars. Energy generation was second,
followed at some distance by waste recy-
cling, energy storage and water.
Within energy generation, wind and
solar were expected to be the biggest
sources of potential investment over the
without its problems. Some larger scale
projects have been impacted by the down-
turn. For example, some solar power proj-
ects in Spain have been scaled back, partly
because of uncertainty over the long-term
levels of their own feed-in tariffs. Likewise
some wind projects in Denmark have been
affected. There is also a perceived paucity
of investment available for genuine start-
up technologies. There remains a great
deal of hesitancy when it comes to putting
money into less proven or mature technol-

L
ATER today as he announces his com-
prehensive spending review George
Osborne is expected to announce the
creation of a £2bn green investment
bank to fund sustainable projects in the
UK. It follows Google announcing last week
that it is to invest in a massive off-shore
wind turbine project. And in China the
government is trying to reduce emissions
by 20 per cent by the end of the year.
There’s no doubt any more than green
investment is big business.
Investment interest from the private
equity and venture capital communities in
the cleantech sector has increased dramat-
fresh emphasis in President Obama’s
Green New Deal and other similar meas-
ures by governments around the world.
Awareness of the potential returns to be
made from investment in energy efficien-
cy appears to have come to the fore in the
current environment of cost cutting. This
is also reflected in the trends of current
legislation, particularly encouraging the
implementation of energy efficiency meas-
ures within the built environment.
Earlier this year, we undertook a survey
alongside Cleantech Investor that can-
vassed opinion from private equity and
cleantech communities about how they
coming 18 months. They are viewed as the
most exploitable technologies within the
energy generation sector. Forty per cent of
respondents thought that wind would
attract most investment. Wind is consid-
ered a “mature” technology – forty-six per
cent of respondents thought that invest-
ment in existing, mature technologies was
preferable to start-ups. The high expecta-
tions for solar may have been influenced
by the recent introduction of feed-in tariffs
in the UK. When this comes in, govern-
ment payments will be made for electricity
fed back into the national grid.
Of course, cleantech investment is not
ogy, something that continues to cause
concern within the sector. Just six per cent
of people in our survey predicted increased
investment in start-ups.
The task of developing technology in the
sector is enormous. The question remains
whether investors will exploit the sector to
its full potential. Forty per cent of respon-
dents thought changes in government pol-
icy are the biggest threat to cleantech.
Investors should keep a close eye on gov-
ernment action and regulatory pressures
that are sure to impact the sector in the
coming years.
Ian Moore is a partner at Norton Rose LLP
 Lifestyle
27

| Motors WORDS BY
RYAN BORROFF

Let your hair fly back like the Wind

What a good time
this little car is, with
its clever, tidy and
useful retractable roof

I
T’S FAIR to say that most people, even
trainspotters like motoring colum-
nists, don’t get too excited about car
roofs. People don’t usually queue to
buy a specific car because of its roof but
Renault’s new Wind coupé-roadster may
be about to change that.
Traditionally, sports car design and
practicality are at odds with each other.
By their nature small sporty cars are not
great load luggers and practical cars –
with enough stowage space – are fre-
quently dull to drive. Yet the new Wind
successfully manages to be both sporty
and practical, thanks to the cleverest roof
design I’ve seen. Instead of some convolut-
ed, folding stacking tin-top (the kind that
moves balletically, marvellously and all
too slowly into the boot of other roadsters
and ensuring you have almost no space at
all for weekend luggage or shopping once
the roof is folded), the Wind has a marvel-
lous roof system. You turn a handle above
your head, push a button and watch as a
single roof panel pivots back like a hinge,
before resting atop the boot under a spe-
cial cover. It’s all very tidy and takes only
12 seconds. It also means that the 270-
litre boot still has 270 litres of space avail-
able from that trip home from Bluewater
so you can store all your shopping in the
boot and still drive with the roof down,
weather permitting.
If you think this isn’t important, you
are wrong because for many, many people
– particularly single people and younger
couples – the two-seater just moved confi-
dently out of second car territory and into with the passenger airbag off, my baby The Renault Wind THE FACTS:
primary and only-car practicality. That’s a daughter next to me in the passenger seat is a sporty two-seater RENAULT WIND 1.6 VVT
big step and one that Renault hopes will and the roof down on a lovely cold, with a well-designed
translate into increased sales. bright, sunny October day, an awful lot of interior. PRICE: £17,300
Even aside from the roof, Renault’s fun it was too.
sporty two-seater is an intriguing and The interior, though sparse, has a cock-
0-60MPH: 9.2 secs
unique option. The exterior is muscular pit that feels more spacious than it is TOP SPEED: 125mph
and angular so not to everyone’s taste, but two-seat convertible rides on the Twingo’s thanks to low sports seats and elements CO2 G/KM: 165g/km
there’s no doubt about it, the steep bon- underpinnings and comes with a choice like the clever leather pull handles which MPG COMBINED: 40.9mpg
net, high waist and twin roof cowls of a 1.2 litre, 100bhp turbocharged petrol open and close the doors without
ensure the car is a real attention grabber engine or the more powerful, convention- demanding sizeable plastic door pulls.
and should appeal to both men and ally aspirated 1.6, 133hp engine from the There’s even stowage cubbies behind the
THE VERDICT:
women. Twingo Renaultsport 133. We’re driving seats. But regardless of the Wind’s unusu- DESIGN hhhhi
The Wind was engineered with the the 1.6, 133hp VVT engine and though the al and aggressive looks – even if the car PERFORMANCE hhhii
help of the company’s Renaultsport wing, car is not quite as quick as I would have does make your hair fly back – it’s the PRACTICALITY hhhii
masters of Renault’s RS hot hatches. The liked, it is pokey enough to be fun and amazing roof that will blow you away. VALUE FOR MONEY hhhii

CAR TALK BY RYAN BORROFF

BMW DRIVERS ARE RUDEST FOSTER’S ZEPPELIN-SHAPED THREE-WHEELER FORD RANGER

BMW drivers are the most likely to be obnoxious on the road accord-
ing to a survey of 3,000 motorists conducted by gocompare.com.
Results from the study found BMW drivers the most likely to tail-
gate, make rude hand gestures and to speed, and more than half of
the survey’s respondents had suffered a “bad experience” involving a
BMW driver. White van men were rated the second most anti-social.
Architect Norman Foster has recreated the historic three-wheeler
Dymaxion designed by his mentor, Buckminster Fuller, as part of a retro-
spective of the pioneering architect. Just three of the 11-seater, zeppe-
lin-shaped, front-wheel drive vehicles were made and only one survives.
It's green with a white roof and will be on show at the Ivory Press
gallery in Madrid until the end October.
This is the all-new Ford Ranger pickup which has just debuted at
the Australian International Motor Show in Sydney. Now it’s
bound for the UK – not just the outback. It will come in three dif-
ferent cab body styles, a choice of 4x2 and 4x4 drivetrains and
two different ride heights. Which means there should be an option
for you if you're the kind of driver who likes automotive parkour.
 28 Lifestyle | TV& Games CITYA.M. 20 OCTOBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Helicopter Heroes; News
8pm Waterloo Road
9pm The Apprentice
10pm BBC News
10.30pm Regional News
10.40pm The National Lottery
Draws
10.50pm Film 2010 with
Claudia Winkleman; National
Lottery Update
11.30pm FILM The Mosquito
Coast 1986; Weatherview
1.25am Sign Zone: Country Tracks
2.25am Bang Goes the Theory
2.55am Watchdog 3.55am-6am
BBC News
6pm Eggheads: Quiz show,
hosted by Jeremy Vine.
6.30pm Strictly Come Dancing
– It Takes Two
7pm Hostage in the Jungle –
This World: Ingrid Betancourt’s
abduction by FARC rebels.
8pm MasterChef: The
Professionals
9pm Wonderland – High
Society Brides
10pm The Apprentice: You’re
Fired!
10.30pm Newsnight; Weather
11.30pm Whites
12.00pm Harry & Paul
12.30am BBC News
3.55am Close 4am-6am BBC
Learning Zone
6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm ITV News 6.30pm Hollyoaks 6.25pm Live from Studio Five:
7pm Emmerdale: Natasha and 7pm Channel 4 News Topical reports.
Faye come to blows. 7.55pm 4thought.tv 7pm Five News at 7
7.30pm CHOICE Live UEFA 8pm Food: What Goes in Your 7.30pm How Do They Do It?;
Champions League: Inter Milan Basket? Five News Update
v Tottenham Hotspur (Kick-off 9pm CHOICE Grand Designs 8pm Cowboy Builders; Five
7.45pm). 10pm Rude Tube: Ultimate News at 9
10pm ITV News at Ten Champions 9pm NCIS
10.30pm London News 11.05pm 3 Minute Wonder 10pm CHOICE Law & Order:
10.35pm UEFA Champions 11.10pm FILM Love the Beast Criminal Intent LIVE UEFA CHAMPIONS LEAGUE
League: Extra Time 2009. 11pm Law & Order ITV1, 7.30PM
1.10am Music on 4: 4Play: Eliza Inter Milan v Tottenham Hotspur (Kick-
12.30am The Zone; ITV News Doolittle 1.20am Music on 4: The 11.55pm Poker
Headlines Album Chart Show Spotlight 12.55am SuperCasino off 7.45pm). All the action from the
2.35am FILM Bend of the River: 1.35am FILM Birthday Girl 2001. 4.05am House Doctor 4.30am Group A fixture at the San Siro, as the
Western, starring James Stewart. 3.10am Momma’s Boy 3.30am Great Scientists 4.55am Rough sides in first and second position meet.
1952. 4.05am The Jeremy Kyle Afterworld 3.55am ER 4.40am Hill Guide to Short Breaks 5.10am
Show 5am-5.30am ITV Street Blues 5.30am-6.15am Michaela’s Wild Challenge 5.35am-
Nightscreen Countdown 6am Michaela’s Wild Challenge

SKY SPORTS 1 9.30pm Inside the PGA Tour LIVING 10pm Desperate Housewives 2am Industrial Revelations
SATELLITE & CABLE

7pm Sky Sports News at
Seven 7.30pm Soccer Special
10pm You’re on Sky Sports!
11.30pm FIFA Futbol Mundial
12am UEFA Champions League
Goals 1am Total Rugby 1.30am
Transworld Sport 2.30am
FIFA Futbol Mundial 3am
UEFA Champions League Goals
4am Transworld Sport 5am
FIFA Futbol Mundial 5.30am-
6am Total Rugby
SKY SPORTS 2
6pm UEFA Champions League
Pre-Game Show 7.30pm Live
UEFA Champions League 10pm
UEFA Champions League Goals
11pm Transworld Sport 12am
Watersports World 1am Poker
Million 3am Total Rugby
3.30am-4am Powerboating
SKY SPORTS 3
6.30pm PGA Grand Slam of
Golf: Highlights of the opening
day’s play in Bermuda.
10pm PGA Grand Slam of Golf
2am Golfing World 3am-
3.30am Inside the PGA Tour
BRITISH EUROSPORT
6.45pm Equestrian 7.45pm
Riders Club 7.50pm US Tour
Golf 8.50pm European Tour
Golf 9.20pm Golf Club 9.25pm
Wednesday Dossier 9.35pm
Sailing 10.05pm Yacht Club
10.30pm Olympic Magazine
11pm WTA Tennis 12am-
12.30am Champions Club
ESPN
6.45pm Press Pass 2010
7.15pm ESPN Kicks Extra
7.30pm DTM Review Show
8.30pm F3 Euroseries Review
Show 9.30pm ESPN Game of
the Week 10pm 30 for 30
11pm Ultimate Fighting
Championship 12am Late
Night Poker 1am Press Pass
2010 1.30am UFC All Access
2am Live NHL Ice Hockey
7pm Four Weddings 8pm
Psychic Sally: On the Road 9pm
Ghost Whisperer 10pm Make
Me a Man 11pm Criminal Minds
12am CSI: Crime Scene
Investigation 2am Medium
3am Nothing to Declare
3.50am Pete Burns’ PA 4.40am
The Jerry Springer Show
5.30am-6am Home Shopping
BBC THREE
7pm Don’t Tell the Bride 8pm
Young Voters’ Question Time
9pm Mobo Awards 2010 11pm
Family Guy 11.50pm Lip Service
12.50am One Non Blonde Down
Under 1.20am Young Voters’
Question Time 2.20am The Real
Hustle Undercover 2.50am Lip
Service 3.50am One Non
Blonde Down Under 4.20am-
5.15am Don’t Tell the Bride
E4
7pm Hollyoaks 7.30pm
Friends 9pm Ugly Betty
11pm FILM Me, Myself and 3am Weaponology 3.50am
Irene 2000. 1.15am RuPaul’s Treasure Quest 4.40am Days
Drag Race 2.10am Scrubs That Shook the World 5.30am-
2.55am Reno 911! 3.20am 6am How Does That Work?
Scrubs 3.40am RuPaul’s Drag
Race 4.25am Switched DISCOVERY HOME & GRAND DESIGNS
4.45am Accidentally on HEALTH CHANNEL4, 9.00PM
Purpose 5.05am-6am Switched 7pm Deliver Me 8pm Half Ton Kevin McCloud follows interior
Hospital 9pm A&E 10pm designer Kathryn Tyler as she tries to
HISTORY Hospital Sydney 11pm The fulfil her dream of creating a
7pm Nostradamus: 500 Years Trauma Team 12am A&E 1am
Scandinavian-style eco house.
Later 8pm Mega Movers 9pm Hospital Sydney 2am The
Ax Men 10pm Sex in the Trauma Team 3am Half Ton
Ancient World 11pm Warriors Hospital 4am Midwives 5am-
12am Ax Men 1am Barbarians 6am Bringing Home Baby
2am Nostradamus: 500 Years
Later 3am Conquistadors SKY1
4am-5am UFO Files 7.30pm The Middle 8pm
Prince William’s Africa 9pm
DISCOVERY Bones 10pm Lie to Me 11pm
8pm How Do They Do It? FILM The Mummy Returns
8.30pm How It’s Made 9pm 2001. 1.30am Road Wars 2am LAW & ORDER: CRIMINAL INTENT
Dive to the Bottom of the Street Wars 2.55am Oops TV CH FIVE, 10.00PM
World 10pm Trawler Wars 3.25am Lost 4.20am Goren and Eames trace the man’s
11pm 9/11: After the Towers Tabatha’s Salon Takeover movements via his car’s GPS tracking
Fell 12am Bear Grylls: Born 5.10am-6am Are You Smarter system and they suspect he was the
Survivor 1am Deadliest Catch Than a 10 Year Old? victim of a carjacking.

COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
     

SUDOKU KAKURO
34 15 13 11 9 22 23 
18 18
12  
10 11
Place the numbers from 1 to 9 in each empty cell so that each 29 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 33 21
25
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 9 9 4
  
above or to the left of it. 16 10
You can only use the digits 1-9 8 39
 and you must not use the
14
20  
same digit twice in a block. 30 30 35 17
    The same digit may occur 21 12
27
    more than once in a row or
column, but it must be in a
16
10
17
19
23
   
15 16
   separate block.
5 
28 22
    7 29
 

   ACROSS DOWN
1 Long noosed rope 1 Franz ___, Hungarian
   
    WORDWHEEL G E
used to catch
animals (5)
4 Month with
composer (1811-1886) (5)
2 Thoroughly tidy and remove
dirt from the house (6-5)
Using only the letters in the Wordwheel, you have 30 days (5) 3 Hard durable wood (3)
 ten minutes to find as many words as possible,
S N 8 Spanish dish (6) 4 High mountain (3)
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 Sport
Misfiring Cook and KP are
England’s big Ashes worries
AT THE CREASE WITH
ANDY LLOYD
ENGLAND coach Andy Flower has
few worries as the Ashes hove into
view. Results have been good and the
team is very settled. Yet there are one
or two issues that will be playing on
his mind with five weeks to go until
the first Test.
First, the players need to adjust
their mindsets after finishing the
summer with a clutch of one-day
internationals. It’s now all about Test
cricket and Flower will be keen to
focus minds on the task in hand. Last
time in Australia they got stuffed;
he’ll be telling them, ‘That won’t hap-
pen again’. I imagine that was one of
the motivations behind the recent
boot camp.
Second, and far more significant,
is the conspicuous need for major
improvements from two players:
Alastair Cook and Kevin Pietersen.
Both batsmen have been short of
form for some time and must be
using the next month or so to hone
their games. I’m sure Flower and
Graham Gooch will be really working
hard with those two – and if not they
should be.
Cook should be practising his tech-
nique and tightening up his decision
making – which shots to go for and
which ones to leave.
Pietersen, meanwhile, is in Natal,
South Africa, getting some much-
needed game time. He has played lit-
tle competitive cricket due to injury
and the conditions over there will
pose a decent challenge, as they are
often not that conducive to batting.
I expect them both to start the first
Test, although Jonathan Trott is a
SPORT | IN BRIEF
Jockey Katsidis found dead
HORSE RACING: Top Australian jockey
Stathi Katsidis has been found dead at
his home on Brisbane, aged 31, just two
weeks before the Melbourne Cup. The
multiple Group One winner had been set
to saddle Australian Derby winner
Shoot Out in the famed race on 2
November. Police say there are no suspi-
cious circumstances surrounding his
death, which has stunned the country’s
racing community. Katsidis had made a
successful comeback after serving a
nine-month ban for drug use, riding
more than 170 winners last year.
Ennis on shortlist for top award
ATHLETICS: British heptathlete Jessica
Ennis has been shortlisted for the IAAF
World Athlete of the Year award. The
world champion has enjoyed a superb
2010, adding European and World
Indoor titles to her collection, along
with a new personal best. Her main
rivals for the women’s prize are US
sprinter Allyson Felix and Croatian high-
jumper Blanka Vlasic.
more than able deputy should Flower
want to make a change. Trott may not
be flamboyant but he is very effective
and has been one of the successes of
the year. The only issue with promot-
ing him might be that there are few
as good as him at batting at No3.
The third and final concern is if
Massa to help Alonso see
off Hamilton and Button
▲
FORMULA ONE
FERRARI’S Felipe Massa has pledged
to aid colleague Fernando Alonso’s
title challenge in the final three races
of the season.
Massa’s willingness to effectively
perform as the team’s second driver
has been in doubt since he was asked
to step aside and let Alonso win in
July’s German Grand Prix.
But the Brazilian is now deter-
mined to earn success for the iconic
Italian outfit by making it difficult
for Alonso’s title rivals.
“I will be trying to bring home a
significant number of points to help
the Scuderia in its fight for both
championships,” said Massa. “First we
need to qualify well on Saturday and
after that, in the race, I want to be in
FERGUSON ADMITS ROONEY
WANTS OUT OF OLD TRAFFORD
MAN UTD BOSS BLASTS STRIKER’S
LACK OF RESPECT: PAGE 30
something happened to Graeme
Swann. In my view he is the best
bowler on either side, is of the high-
est class and it has been terrific to
watch his development. I hate to
worry about injuries but it could hap-
pen.
@
England are better equipped if they
the middle of the battle for the driv-
ers’ championship. I want to be fight-
ing with those five drivers who are
chasing the title, which is the best
thing I can do to help Ferrari’s and
Fernando’s aspirations as we head for
the end of the championships.”
Alonso is joint second in the driv-
ers standings, behind Red Bull’s Mark
Webber and level with his team-mate
Sebastian Vettel. English pair Lewis
Hamilton and Jenson Button are
fourth and fifth. Massa, meanwhile,
has endured disappointment in his
last two races, finishing eighth in
Singapore and then crashing out
early on in Japan, and is desperate to
rediscover form this weekend in
Korea. “I would like to arrive back in
Sao Paolo for my home race with a
good result in my pocket,” he added.
29
Ponting still
top man for
Australia,
says Warne
▲
CRICKET
BY FRANK DALLERES
AUSTRALIA great Shane Warne insists
he fully supports captain Ricky
Ponting, adding that recent criticism
of him had been meant as “an obser-
vation, not an attack”.
Warne riled Ponting by slamming
his field placings during last week’s
second Test against India, a match
they went on to lose by seven wickets,
in a post on Twitter.
Angry Ponting responded with a
barbed text message, but spin legend
Warne has played down the spat and
emphasised his endorsement of the
current skipper.
“Ricky is the right man to lead
Australia for the Ashes,” he said. “It’s a
great opportunity for him to show his
leadership and captaincy skills. He
also looks in super touch with the bat;
I am sure he’s going to fill his boots
this summer. Commentators on the
match, cricket journalists and even
the Indian captain, MS Dhoni, have
agreed with my tweet. It was an obser-
vation, not an attack! Never at any
stage did I say or imply that Ricky’s
time as captain is up.”
Meanwhile Australia bowler Brett
Lee has warned team-mates against
attempting to wind up misfiring
Cook (L) and England batsman Kevin Pietersen, say-
Pietersen (R) are ing the tactic could backfire.
both short of form “I’d always back Kevin Pietersen to
ahead of the Ashes. come out and do well,” said Lee.
“There are guys you can stir up and
Picture: GETTY get stuck into and there are others
you leave alone. Sachin Tendulkar is a
lose a seamer, because Tim Bresnan guy you don’t want to chat to period,
could come in for James Anderson or because he will knuckle down, same
Stuart Broad. If Swann is out it’s as Brian Lara.
Monty Panesar. He is an excellent “Kevin Pietersen has controlled
selection and the best of the other aggression and he likes it when some-
spinners, but they need to be working one has a chat to him. He takes it per-
him pretty hard to make sure he’s sonally and it fires him up and he’ll
ready just in case. want to score a big hundred.”
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 30 Sport | Football CITYA.M. 20 OCTOBER 2010

Results
Gomez 77
UEFA CHAMPIONS LEAGUE GROUP E
Bayern Munich .........(2) 3 CFR Cluj-Napoca............(1) 2
Cadu 32 (og), Panin 38 (og) Cadu 28, Culio 86
Att: 65,000
Roma ................................(1) 1 Basle......................................(2) 3
You’ve disrespected United:
Ferguson accuses Rooney
Borriello 21 Frei 12, Inkoom 44
Att: 20,000 Cabral 90
P W D L F A GD Pts
Bayern Munich 3 3 0 0 7 3 4 9
Basle 3 1 0 2 5 5 0 3
CFR Cluj-Napoca 3 1 0 2 5 6 -1 3
Roma 3 1 0 2 3 6 -3 3
GROUP F
Marseille.......................(0) 1 MSK Zilina.........................(0) 0
Diawara 48 Att: 30,000
Spartak Moscow....(0) 0 Chelsea................................(2) 2

Q&A
Att: 75,000 Zhirkov 23, Anelka 43
P W D L F A GD Pts
Chelsea 3 3 0 0 8 1 7 9
Spartak Moscow 3 2 0 1 4 2 2 6
Marseille
MSK Zilina
3 1 0 2 1
3 0 0 3 1
3 -2
8 -7 0
3
Manager portrays club WHAT
GROUP G
as victim of ungrateful, HAPPENS
Ajax ..................................(2) 2 Auxerre...............................(0) 1 NEXT? CITY AM
De Zeeuw 7
Suarez 41
Birsa 57
Att: 51,000
Real Madrid ................(2) 2 AC Milan.............................(0) 0
double-crossing striker EXPLAINS
Ronaldo 13, Ozil 14 Att: 72,000
says Frank Dalleres
Real Madrid
AC Milan
P W D L F A GD Pts
3 3 0 0 5
3 1 1 1 3
0
3
5
0
9
4
Q. WHEN WILL ROONEY LEAVE
UNITED?
Ajax
Auxerre
3 1 1 1 3
3 0 0 3 1
4
5 -4 0
-1 4 MANCHESTER UNITED manager
Sir Alex Ferguson’s yesterday
emphatically retaliated in the war
A. His contract expires in sum-
mer 2012 but his value will
depreciate steadily until then,
GROUP H
Arsenal...........................(2) 5 Shakhtar Donetsk.......(0) 1 of words with Wayne Rooney, meaning United’s best chance of
Song 19, Nasri 42 Eduardo 82 accusing the unsettled striker of getting a big fee will be in
Fabregas 60 (pen) going back on his word and disre- January. In theory he could buy
Wilshere 66, Chamakh 69 Att: 60,016 specting the club. out his contract then for £7m,
Braga................................(1) 2 Partizan Belgrade .......(0) 0
Lima 35, Matheus 90 Att: 20,000 Ferguson broke his silence on using the Webster ruling, but
P W D L F A GD Pts the controversy with a six-and-a- Europe’s top clubs have agreed not
Arsenal 3 3 0 0 14 2 12 9 half-minute statement in which he to exploit that legal loophole.
Shakhtar Donetsk 3 2 0 1 5 5 0 6 revealed Rooney informed United
Braga 3 1 0 2 2 9 -7 3
Partizan Belgrade 3 0 0 3 1
NPOWER CHAMPIONSHIP
6 -5 0 he wanted to leave back in August,
leaving the Scot “dumbfounded”. Q. WHAT TEAM IS HE MOST
LIKELY TO JOIN?
Bristol City...................(1) 1 Reading...............................(0) 0
Haynes 28 Att: 13,519
Burnley ..........................(0) 3 Barnsley..............................(0) 0
He also suggested Rooney, who
will miss tonight’s Champions
League clash with Bursaspor
A. Manchester City are the hot
favourites and are able to out-
bid mooted rivals Chelsea and Real
Eagles 50, 66 (pen), Iwelumo 82 Att: 14,428 through injury, had been unprofes- Madrid. Rooney seems willing to
Coventry........................(1) 1 Cardiff ..................................(1) 2 sional since then and failed to cross town; the question is
McSheffrey 44 Whittingham 5 (pen)
Att: 14,604 Bothroyd 87 show loyalty to a club that has whether United and Sir Alex
Doncaster ....................(0) 2 Derby.....................................(1) 3 “done nothing but help him”. Ferguson would sanction the deal.
Shiels 66, 68 Moore 19 And he insisted, contrary to the
Att: 9,000 Commons 59, 72
Hull....................................(0) 0 Sheff Utd............................(0) 1
Att: 20,276 Yeates 53
24-year-old’s denial last week, that
Rooney had been carrying an ankle Q. DOHIM?MAN UTD NEED TO SELL
Leeds ...............................(0) 1 Leicester ............................(0) 2
Becchio 83
Att: 22,775
Naughton 63
Howard 81
injury, but rubbished claims the
pair had fallen out in any way.
Ferguson emphasised the door
A. The club’s £720m debt pile
bleeds £40m in interest from
the club’s coffers every year, so
Millwall..........................(0) 0 Portsmouth......................(0) 1 remained open for Rooney to sign a Rooney’s sale would certainly ease
Att: 12,095 Lawrence 78 (pen)
Norwich..........................(1) 1 Crystal Palace ................(0) 2
new deal, but the striker looks that burden. But that benefit has
Holt 43 Bennett 56 more likely to leave than ever, with what his agent had said, he wanted become increasingly clear Rooney to be weighed up against increas-
Att: 24,975 Gardner 63 mega-rich neighbours Manchester to go. The one thing I said was, ‘Just is determined to leave the club he ing the risk of damage to United’s
Nottm For.....................(0) 1 Middlesbrough..............(0) 0 City the favourites to exploit remember one thing: respect this joined from Everton for £27m in finances by missing out on
McGugan 51 Att: 22,115 United’s crisis. club. I don’t want any nonsense 2004. Aside from City, Chelsea and Champions League qualification.
Preston ..........................(0) 2 Scunthorpe .......................(1) 3
Morgan 58, Jones 64 Dagnall 4, O'Connor 65 Recalling the moment on 14 from you. Respect the club’. Real Madrid are tipped to bid for a
Att: 11,179 Woolford 82
Swansea........................(0) 0 QPR.........................................(0) 0
Att: 16,742
August when chief executive David
Gill told him Rooney no longer
“I don’t know if he’s done that. I
have got doubts on that because
player whose value will gradually
deteriorate between now and his Q. WHAT COULD HE EARN AT
UNITED AND ELSEWHERE?
Watford.........................(2) 2 Ipswich...............................(0) 1
McGinn 41 Norris 69
wanted to stay, Ferguson said: “I
couldn’t believe it. I just was dumb-
founded. I could not understand it
we’re reading things about falling
out with me and all that nonsense.
It’s disappointing because we have
contract’s end in May 2012.
“We cannot quite understand
why he would want to leave,”
A. City are said to be ready to
make him the best paid player
in Britain, on £230,000 a week, or
Sordell 43 Att: 11,836
P W D L F A GD Pts because only months before he was done everything we possibly can to Ferguson added. “We can specu- £12m a year. United are thought
QPR 12 8 4 0 24 3 21 28 saying he was at the greatest club help Wayne Rooney from the late. We can have opinions. It won’t unlikely to go above £150,000 a
Cardiff 12 8 2 2 21 11 10 26 in the world and he wanted to stay minute he’s come to the club.” matter a dickie bird, simply week, the same as Chelsea’s high-
Watford 12 6 3 3 25 16 9 21
Burnley 12 5 5 2 21 11 10 20 for life. I then asked to have a meet- Ferguson’s statement follows because the player is adamant he est earner John Terry.
Norwich 12 6 2 4 18 15 3 20 ing with the boy and he reiterated days of speculation in which it has wants to leave.”
Swansea 12 6 2 4 15 12 3 20
Derby 12 5 3 4 21 14 7 18
Ipswich 12 5 3 4 15 13 2 18
Coventry 12 5 3 4 17 16 1 18

Zhirkov relishes return as Blues cruise

Leeds 12 5 2 5 19 21 -2 17
Reading 12 4 4 4 14 11 3 16
Millwall 12 4 4 4 16 15 1 16
Nottm For 12 3 7 2 13 12 1 16
Doncaster 12 4 4 4 18 19 -1 16
Portsmouth 12 4 3 5 17 17 0 15
Barnsley 12 4 3 5 17 21 -4 15
Sheff Utd 12 4 3 5 9 15 -6 15
Scunthorpe 12 4 2 6 15 17 -2 14 “It was an impor- why he commanded such a high fee. We have to play three games and
Hull
Leicester
Middlesbro'
12 3 4 5 8 15 -7 13
12 3 3 6 16 25 -9 12
12 3 2 7 12 21 -9 11
SPARTAK MOSCOW 0 tant moment for
Yury, coming back
Seizing on a loose ball just outside
the home side’s area, Zhirkov (left)
must do our best in those matches.
We have to stay focused about the
Crystal Pal 12 3 2 7 11 21 -10 11 to play for Chelsea showed athleticism and grace to next game. We want to finish in first
Preston
Bristol City
12 3 1 8 16 26 -10 10
12 2 3 7 11 22 -11 9
CHELSEA 2 in Russia. He scored
a fantastic goal and
evade a challenge and fire into the
top-right corner in one simultane-
place. That’s our aim.”
What looked on paper to be
will be very happy,” ous movement. Chelsea’s trickiest Group F fixture
TODAY’S DIARY said Ancelotti. That 23rd-minute strike was fol- was not without its difficult
▲

FOOTBALL
(7.45pm unless stated) “He was very good. He lowed just before half-time by moments. Welliton forced a smart
UEFA Champions Lge CHELSEA manager Carlo Ancelotti played very well and Anelka’s composed finish, and any near-post save from Petr Cech with
Group A
FC Twente v Werder Bremen ................................................................................ hailed Yury Zhirkov after the Russian doesn’t have a problem fears that the visitors would strug- the scoresheet still blank, while for-
Inter Milan v Tottenham.......................................................................................... midfielder chose the perfect setting playing either left-back gle in icy conditions and on an mer Celtic winger Aiden McGeady
Group B to reignite his Blues career. or on the left of midfield. artificial surface evaporated. also tested the Blues goalkeeper in
Lyon v Benfica .............................................................................................................. Zhirkov’s extraordinary 30-yard vol- He scored a very important goal A place in the knockout stages the second half.
Schalke 04 v Hapoel Tel-Aviv ................................................................................ ley set the west Londoners on their and opened up the game. After looks a formality after a victory
Group C
Man Utd v Bursaspor ................................................................................................
Rangers v Valencia ....................................................................................................
way to an ultimately comfortable win
that virtually guarantees their
that, it was easier for us to win
the match.”
earned despite the absence of
Didier Drogba,
GROUP F
Group D progress to the last 16. Zhirkov’s Chelsea career Frank Lampard, TEAM PLD W D L F A PTS
Barcelona v FC Copenhagen .................................................................................. Striker Nicolas Anelka slotted a sec- has stalled since his £18m Alex and Chelsea 3 3 0 0 8 1 9
Panathinaikos v Rubin Kazan ................................................................................ ond for Chelsea, who were without a transfer from Spartak’s rivals Ramires. Spartak 3 2 0 1 4 2 6
host of big names but still main- CSKA Moscow in the summer B u t Marseille 3 1 0 2 1 3 3
SPORTS EDITOR FRANK DALLERES tained their perfect record into a of 2009, but his first strike in a Ancelotti
email sport@cityam.com third game. Blues shirt reminded everyone added: “We are not in the last 16 yet. MSK Zilina 3 0 0 3 1 8 0
CITYA.M. 20 OCTOBER 2010
Fabregas nets
in a five-star
Arsenal rout
ARSENAL 5 after Johan Djourou was felled. The
SHAKHTAR DONETSK 1 the teenager also capped his perform-
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES
ARSENAL boss Arsene Wenger
preached caution after seeing his side
take a firm grip of Group H with a
record-breaking drubbing of
Shakhtar Donetsk.
Alex Song, Samir Nasri, fit-again
Cesc Fabregas, Jack Wilshere and
Marouane Chamakh all netted as the
Gunners trampled over the Ukrainian
champions. So dominant were the
home side that they could afford to
cheer even when ex-Emirates star
Eduardo volleyed a late consolation
for the visitors. Victory continued
Arsenal’s perfect start and took their
tally to 14 goals in just three games –
a new record for the competition.
But Wenger said: “Let’s not deduce
too much, we have shown good quali-
ty but it is just the start, let’s continue
to improve. I am cautious because as
soon as you lose urgency your level
drops dramatically.”
Captain Fabregas started his first
game after a month out with a ham-
Sport | Football 31
Spurs won’t sit back at Inter
month but is suspended for from home against the holders.
INTER MILAN Redknapp’s hardest fixture in a high- “We always have a go; we play an
ly competitive Group A campaign. attacking game,” he added. “We’ll
“Obviously, he [Van der Vaart] look to have a go [at Inter] and try to
TOTTENHAM changes the way we play,” said the cause them problems. We won’t just
Spurs boss. “We played one system look to sit back and soak up pressure
ITV1, ko 7.45pm
when Rafa was playing and it suited for 90 minutes; that’s not the way we
him fine. He’s not here but the other play. We’ll be positive and see what
▲
CHAMPIONS LEAGUE
BY FRANK DALLERES players can play the same type of role. we can do.”
Luka Modric is a world-class player, so Ex-Liverpool boss Rafael Benitez,
TOTTENHAM manager Harry he could easily slot into that same now at Inter, has steered the club to
Redknapp insists his plans for one of role that Rafa plays.” third in the Italian top flight after
the biggest games in the club’s recent Both Inter Milan and Spurs scored seven games but is without striker
history have not been derailed by the four goals in thumping home wins on Diego Milito. “Tottenham have
absence of Rafael van der Vaart. Matchday Two and, although it may changed a lot since I last faced them
The Holland playmaker has been be inviting danger, Redknapp has with Liverpool,” he said. “They’ve
an instant hit since joining last vowed to remain gung-ho even away spent a lot and now have quality.”
Fabregas (centre)
scored on his first
game back from
injury.
Picture: PA
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string injury and marked the occa-
sion with the third goal, a penalty
Spaniard’s midfield partnership with
Wilshere unravelled Shakhtar, and
ance by clipping the fourth after a
one-two with Tomas Rosicky. Wenger
added: “I am convinced [Fabregas and
Wilshere] work well together. The
midfield worked very well tonight.”
Song put Wenger’s charges in front
after 19 minutes when he capitalised
on an awful fumble by goalkeeper
Andriy Pyatov to flick home. Song
then laid on the second just before
half-time, his cross falling to Nasri,
who lashed home. After the break
Fabregas and Wilshere underlined
Arsenal’s superiority and Chamakh
netted the third of a 10-minute spell
when he beat the offside trap and
prodded past Pyatov. With confidence
boosted for Sunday’s trip to
Manchester City, Arsenal could afford
to concede, especially to the ever-pop-
ular Eduardo, who left in August.
GROUP H
TEAM PLD W D L F A PTS
Arsenal 3 3 0 0 14 2 9
Shakhtar 3 2 0 1 5 5 6
Braga 3 1 0 2 2 9 3
Partizan 3 0 0 3 1 6 0
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