1st November 2019

Written by Iain Gibson, Associate Partner

Edited by Kevin Pringle, Partner



Good morning,


Whatever problems the European Union is grappling with, you only need to cast your eyes rightwards along a map of the world to see how it could be worse.

Considering the logistical melee of Britain’s (possible?) exit, buffered by the understandable tensions that exist between 27 or 28 different nation states, it’s clear that holding the whole EU project together as a powerful entity is a rather extraordinary feat of tactful negotiation and sheer chutzpah. This achievement is even more marked when you compare the EU with an equivalent bloc further east.

Today, leaders from the ten-member Association of Southeast Asian Nations (ASEAN) assemble in Bangkok for their 35th summit. The summit is the last act of Thailand’s chairmanship of ASEAN, before it passes to Vietnam. The other eight members are: Singapore, Malaysia, Laos, Indonesia, Cambodia, Brunei, Myanmar and the Philippines.

The summit is twice-yearly nowadays, and its first incarnation was back in 1976. War and other diplomatic skirmishes ensured it rarely met before the mid-1990s; however now it is a regular fixture. And frankly, for all that it accomplishes, people are asking why?

Maybe it is the frequency of the event, or maybe it is the host of unresolved issues lurking in the background, but the summit is likely to attract the most attention for the issues it manages to sweep under the carpet. In the words of The Economist this week: “Touted as a key forum of strategic dialogue, it may well turn out to be a demonstration of the bloc’s powerlessness. The summit is likely to skip over the Rohingya refugee crisis (Myanmar’s government does not want to discuss the genocide), largely ignore the region’s burning forests (the monsoon rains have arrived) and struggle to craft policies to cushion the blow of slowing global trade on the region’s economic growth”.

Perhaps we are being unfair, because ASEAN is a whole generation younger than the EU. It also has the exact opposite demographic dynamic from Europe. South-East Asia may have fewer nations, but Thailand alone is host to more than 70 native languages. The overall population of ASEAN is bigger than the EU as well, at roughly 625 million to 500 million.

There is another reason the bloc is so powerless: China. The most populous country on the planet is not a member of ASEAN but it has a powerful connection with all members and its prime minister will be in attendance at the summit, along with his Japanese and South Korean counterparts. As the nation that dictates all power plays on its own doorstep, China has no interest in ensuring ASEAN countries have the ability to affect real change.

The equivalent for us would be an EU with Germany or France looking in from the outside. Or an EU with those two countries in it, but with Russia embedded across every single member state and pulling all the strings. That is, thankfully, not the case. As we in Britain prepare to man the lifeboats and head overboard, we should consider that, for all its many (many, many) faults, the EU is an extraordinary example of strength in numbers, of co-operation and of collaboration. Oh well.



News


The UK Government has rejected Donald Trump’s claim that the US would not be able to make a trade deal with the UK under the latest withdrawal agreement from the EU. President Trump, who was speaking to Nigel Farage on LBC, was otherwise supportive of Boris Johnson, saying that Jeremy Corbyn would be “so bad” as prime minister. The names of 120 female employees who have undertaken gender pay complaints against the BBC have been revealed as part of the paperwork for Samira Ahmed’s ongoing employment tribunal case against the corporation. The BBC has told The Guardian newspaper, which has seen the list, that it was submitted as part of the evidence the National Union of Journalists put before the tribunal. The Islamic State has named Abu Ibrahim al Hashemi al Quraishi as its new leader. He succeeds Abu Bakr al Baghdadi, who killed himself (and two children) last weekend as he attempted to flee US special forces in Syria.



Business and economy


Sidewalk Labs, which is the “urban innovation” subsidiary of Alphabet, has reached a new agreement with Toronto relating to its development plans for the Canadian city. The new deal scales back some of Sidewalk’s plans, including the size of area that is to be developed and the company’s approach to privacy protection. Waterfront Toronto, the government body overseeing the high-tech development, will now begin formal study of the plans, before a final approval of the project in March 2020. Altria Group, one of the world’s largest producers and marketers of tobacco products, has written down its investment in e-cigarette company Juul by $4.5 billon. One year ago, Altria invested $12.8 billion into Juul, but since then the company has encountered a number of problems, including a lawsuit alleging that it knowingly sold contaminated products. Earlier this week, Juul announced it was to cut about 500 jobs. Fiat Chrysler and Peugeot owner PSA Group have announced the terms of a $48 billion merger. The deal will create the world's third-largest automaker and help spread the huge cost of developing electric and autonomous vehicles. Shareholders of each automaker would own 50% of the combined operation and Fiat Chrysler shareholders also would get a special one time dividend worth €5.5 billion ($6.1 billion).  The combined company would be based in the Netherlands, which is the current headquarters of Fiat Chrysler, although it will keep a head office for its North American operations near Detroit.

Markets


What happened yesterday?

The latest bout of trade tensions between the US and China, plus a manufacturing report showing a decline in activity in the American Midwest, saw the main exchanges end the day down – the S&P 500 and the Nasdaq Composite both fell 0.3%. The sentiment extended across the Atlantic and potentially even further east. The Stoxx Europe 600 traded 0.5% lower, Germany’s Dax declined 0.3% and the FTSE 100 fell by 1.1%. In Asia, China’s CSI 300 was down slightly, at 0.1%, although the Topix in Japan edged up by 0.1%.

However, thus far today stock markets in the Asia-Pacific region are broadly higher as a survey of Chinese manufacturers appears to offset yesterday’s concerns about trade with the US.

Source: FTSE 100, Financial Times

What's happening today?


Final Dividend Payment Date

Daejan Holdings Hargreaves Serv Smith (DS)


UK Economic Announcements

(09:30) PMI Manufacturing

Intl. economic announcements

(12:30) Unemployment Rate (US) (12:30) Non-Farm Payrolls (US) (13:45) PMI Manufacturing (US) (14:00) ISM Prices Paid (US) (19:30) Auto Sales (US)



Columns of note


Philip Stephens argues that the 1989 promise of liberal democracy was a squandered opportunity in this morning’s Financial Times. The collapse of the Berlin Wall brought, amongst other things, a general feeling of optimism. Democracy, political pluralism and open markets were the flavours of the day; only to be later squandered by “those intoxicated with their apparent triumph”. The 2008 global financial crash and subsequent recession delivered a shattering blow to rich democracies. But the real damage was less economic, more political. The rise of populists exposed a fundamental divide: “the elites had grown richer at the expense of the majority”. (£) Lucy Denyer weighs in on Samira Ahmed’s pay tribunal in the Telegraph. She argues that it is reasonable for Ahmed – comparatively less famous and the star of a programme with fewer viewers – to be paid less than Jeremy Vine. The real question is: why is she less famous? She started her career at the same time, and possesses the same drive and ambition. Perhaps, the problem is not in pay, in this instance, but in a systemic problem with the BBC “boys club” whereby women are denied opportunity for progression and, subsequently, inflated pay packets. (£)

Cartoon source: The Times

Did you know?


The hugely successful John Wick film franchise, which released its third instalment earlier this year, has seen its lead character – an assassin played by Keanu Reeves – kill a total of 299 people thus far (77 in part one, 128 in part two and 94 in part three). The fourth part of the series is scheduled to hit cinemas in 2021.


Parliamentary highlights


TODAY


House of Commons No business scheduled.

House of Lords No business scheduled.

Scottish Parliament No business scheduled.