Author: Ashton Wenborn

Top 5 political events that rocked the global economy

Posted on by Ashton Wenborn

Political decisions have always affected social and economical aspects in a region – whether the change is as small as new parking restrictions, or as major as countries entering war with one another. Millicent Angel examines some of the most striking examples of political decisions affecting economies.

1 – The Greek financial crisis
The Greek financial crisis, which started in 2010, was arguably caused by the bad political decisions of the Greek authorities, which spent money excessively, engaged in tax avoidance and kept interest rates low for too long, leading to inflationary pressures. As a result, 50 percent of under-25 year olds in Greece became unemployed, deprivation was commonplace and riots took place throughout the country.

2 – The fall of the Berlin Wall
The fall of the Berlin Wall on November 9, 1989 signified the end of Soviet and communist rule in Eastern Europe; this political decision gave rise to many economic opportunities for the USSR’s ex-satellite states. Indeed, the trade market opened up to an extra 400 million people in Eurasia; moreover, it dramatically benefitted the financial state of countries such as Poland, Hungary and Ukraine. These economies were previously controlled by Moscow, but following the collapse of the wall, they gained the freedom to trade with any country they wished, manage their own finances and adopt capitalism.

3 – The formation of the European Union
The formation of the European Union (EU) on November 1, 1993 in the Netherlands, was an extremely significant political decision that is still felt today. The euro, which many EU member states use as their currency, better facilitates the freedom of movement and goods across the Union, while providing the benefits of integrated financial markets. It also gives the EU a stronger presence in the global economy. Since it was conceived, the single market is said to have added 2.2 percent to EU gross domestic product, as well as boosting employment by 2.8 million.

4 – World War Two
The end of World War Two in August 1945 came with countless economic effects. In the Soviet Union, around 15 million people were killed as a result of the war; productivity in the USSR slowed as a result, which in turn led to huge economic difficulties. In Germany, low industrial output led to a downturn, further exacerbated by the cost of $320bn in reparations. The UK was forced to borrow $4.33bn (£2.2bn) from the US, which it could not pay back until 2006, showing just how much the economy was dependent on the US after the war.

5 – The Arab Spring
The Arab Spring began in June 14, 2011 in Tunisia, and swiftly spread throughout the rest of the Middle East to countries such as Egypt, Yemen, Libya and even Saudi Arabia. There was an immediate backlash from authorities throughout the region, with numerous rash political decisions made to oppress those revolting. The Arab Spring is estimated to have cost the region $600bn or six percent of its GDP between 2011 and 2015.

Top 10 of the greatest leaders from ancient history

Posted on by Ashton Wenborn

Throughout history, there have been hundreds of well known and effective leaders. However, perhaps the most able ones can be found not from examining modern history, but by looking back into the throws of ancient times.

Alexander the Great
Alexander’s prowess in strategic warfare led to him being remembered as one of the finest military leaders of all time. He founded over 70 cities during his 13-year reign over Persia, Asia Minor and Macedonia. Inspiring bravery and loyalty in his troops, he adopted many foreign customs and traditions in order to rule his millions of subjects. Alexander was aged only 32 when he died of a fever in Babylon in June 323 BC.

Genghis Khan
Genghis Khan is most famed for his wildly destructive tendencies against his enemies, but he was also a great military leader. Khan was the founder of the Mongol Empire, the largest land-based empire the world has ever seen. Given the size of his army, the levels of discipline and training he instilled were incredible. His ability to discipline, as well as the wroth that could be incurred if he was betrayed, led to him being an extremely effective leader.

Raised by his father, [Hannibal] was made to hate Rome from a young age and was constantly engaged in battle against it during his adult life

Boudicca
Boudicca, Boadicea or Boudica was the wife of the leader of the Celtic Iceni tribe, Prasutagus. She famously won a battle against the Roman Ninth Legion after they tried to take over the tribe upon her husband’s death. She then went on to sack several cities in Roman Britain, before being defeated by the Roman army led by Paulinus in AD 60.

Mark Antony
Known as a Roman politician and the lover of the Egyptian queen, Cleopatra, Mark Antony was a great leader because of his ability to craft rousing speeches. He could rally the citizens of Rome and beyond with his oratory skills, and used both logic and emotion in order to influence the people. He most famously turned the tide of popularity against the men who had assassinated Julius Caesar, whose administrative team he was on and to whom he was related.

Cleopatra
Cleopatra VII was the ruler of Egypt from 51BC – 30BC and is famed for her independence. In a world where men ruled, she exerted impressive influence and control over Egypt. She was the only member of her dynasty – one that ruled Egypt for considerable time – to learn the difficult language of Egyptian and was, thus, able to interact with her subjects on a much deeper level than any of her ancestors had been able to.

Alaric the Visigoth
Alaric was king of the Visigoths (the western branches of the nomadic Germanic tribes) from 394-410 AD. He marched on Rome and sacked the city for three days, the first time in almost 800 years that Rome had fallen to a foreign power. As St Jerome, who was living in Bethlehem at the time, put it “The city which had taken the whole world was itself taken.”

Cyrus the Great
Perhaps less celebrated than the others, Cyrus the Great was the founder of the Achaemenid Empire, centred on Persia. The Persians he ruled as a wise and capable leader applauded him, and this legacy continued on in his death as Xenophon (Greek philosopher and student of Socrates) chose Cyrus to name as a model leader in his Cyropaedia. It is said that he was a father figure to his subjects, and his appearance in the Bible as the liberator of the Jews that were held captive in Babylonia, shows his reputation as a generous and ideal monarch.

Augustus
Augustus (originally known as Gaius Octavius) is accredited with founding the Roman Empire and was the first Emperor. He was known as a great military strategist, after defeating his rivals Mark Antony and Marcus Lepidus to take complete control over Rome and its Empire. He was also a shrewd politician and helped to transform Rome into the great city it became through the next centuries. As the biographer Suetonius reported him saying, “I found a Rome of bricks; I leave to you one of marble.”

Hannibal
Hannibal Barca was a military leader who won many victories over the Romans. Raised by his father, he was made to hate Rome from a young age and was constantly engaged in battle against it during his adult life. Said to have slept with his men out in the open and to have gone hungry with them when supplies were low, his troops placed their utmost trust in him. As a result, they followed his orders unconditionally until his assassination in 221 BC.

Tutankhamen
Although Tutankhamen was only around eighteen or nineteen at the time of his death, his status as a great leader was gained through the achievements he made over his nine-year reign. King Tut’s main success was reinstalling the traditional Egyptian polytheistic religion upon his ascension, after his father had promoted the worship of only the Sun God Aten, and banned worship of any other gods. This new religion was very unpopular within Egypt, and Tutankhamen’s decision to reverse it made him a widely acclaimed leader.

Macron and Merkel propose eurozone budget

Posted on by Ashton Wenborn

On June 19, German chancellor Angela Merkel and French president Emmanuel Macron agreed, in broad terms, on a budget for the eurozone. Though the declaration is far reaching in scope, the details are still to be determined.

The declaration, made from Chancellor Merkel’s Meseberg retreat in Brandenburg, covers a wide range of topics, including the European economy, defence and migration.

A proposed eurozone budget – parallel to the EU budget – would aim to promote competitiveness and stabilisation in the European Monetary Union, and would be implemented in 2021. It would be planned on a pluriannual basis and derive revenue from national contributions of eurozone states, tax revenue and European resources.

A proposed eurozone budget would aim to promote competitiveness and stabilisation in the European Monetary Union

According to the proposal, funds from the budget could be used to invest in member countries as a substitute for national spending.

Also included are changes to the European Stability Mechanism, put in place in 2012 to deal with the European debt crisis, that would increase its capacity to lend money to struggling economies within the eurozone and contribute to preventing liquidity issues.

To come into effect, all 19 eurozone countries would have to agree to the plan, a difficult task in a divided Europe. To this end, the proposal also addresses perhaps the most politically divisive issue on the bloc: migration. Proposals include increased staffing, an expansion of Frontex, the EU’s migration agency, and improved cooperation with origin and transit countries.

The parallel eurozone budget represents a win for Macron, who has been pushing for such an instrument, but it is likely to be much smaller than he hoped. Though Macron has pushed for allocations to the eurozone budget in the hundreds of billions, it is likely to only be in the tens of billions.

Top 5 regulatory concerns currently facing financial institutions

Posted on by Ashton Wenborn

Achieving regulatory compliance has become a daily focus for financial institutions of all sizes. Although meeting these standards is no small task, there is no other option; the cost of non-compliance is much too high. Whether it’s debilitating fines or being named and shamed, no company wants to be called out. As such, firms need to understand the biggest regulatory challenges facing the financial sector and take steps to address them.

The broad scope of regulation
First and foremost, firms must recognise the sheer volume and breadth of regulation in existence. There are currently more than 750 global regulatory bodies and governing businesses, which means financial organisations are under the microscope; no company can escape compliance standards.

Each regulation comes with numerous clauses. For example, the Dodd-Frank Act, which was passed in response to the financial crash, has 2,300 pages of regulations that financial institutions must comply with. The abundance of legally enforced guidelines has a financial and operational knock-on effect for businesses, and the costs of compliance are only rising.

There are currently more than 750 global regulatory bodies and governing businesses in operation, which means that financial organisations are under the microscope

Managing risk
The scale of regulatory requirements isn’t the only issue that firms need to consider; complex risk calculations also demand their attention. Risk management is likely to pose a major challenge for many firms, in part because of the real-time calculations that are needed to comply with regulations such as Basel III.

Calculating risk has long been a manual process. As such, the infrastructure to cope with new demands for risk management is simply not in place. Firms are only just starting to realise that some level of automation is required to avoid falling behind.

Additionally, firms are working to build their three lines of defence, particularly with surveillance and controls processes becoming an integral part of compliance procedures. Firms should be looking to track, timestamp and easily recall specific data points as part of these procedures, especially as regulators, and the industry at large, have come to expect a certain level of transparency.

Knowing the customer
The financial sector must respond to increasing concerns about money laundering and terrorist financing. Even if a bank launders money unknowingly, it will still face huge repercussions from regulators. As a result, know your customer processes, which see businesses carrying out appropriate background checks for all clients, have become a priority for the industry. However, this puts huge pressure on the staff processing this information manually.

Errors can occur, and information risks being mismanaged unless employees receive the appropriate training and support. As such, it’s vital that staff are given the right tools to record client information accurately.

Reporting standards
Recording information is vital to regulatory compliance. However, the method of recording required depends on the country the business is operating in. For international banks, this means varying the recording standards used across different countries – from the US Generally Accepted Accounting Principles to the International Financial Reporting Standards.

As a result of these different standards, banks often find themselves doubling up on work and investing a huge amount of time in meeting these requirements. Financial institutions dealing with numerous reporting standards must streamline each method in order to consolidate all the data.

Data management
The legal implications of data storage are perhaps one of the most understated challenges of regulatory compliance. Depending on the circumstance, firms may need to hold specific client information for several years, which can put a strain on the employees who need to provide this data to regulators, should it be requested.

Poor data management can have major repercussions for firms; those with inadequate data management procedures have been forced to improve their document processing capabilities very quickly or risk facing legal action.

Regulation in the financial services sector will continue to pose a challenge to firms both large and small. Compliance is not just about recognising the key regulatory pressures facing financial institutions, but also proactively ensuring the company is improving its processes and streamlining its operations. As the challenges around compliance continue to put pressure on firms, finding new solutions and methods will be vital.

World Bank releases Doing Business report

Posted on by Ashton Wenborn

The World Bank’s Doing Business 2018 report ranks 190 economies based on how easy it is to do business there, taking into account trading regulations, property rights, contract enforcement, investment laws, the availability of credit and a number of other factors.

1. New Zealand (Rank 1)
For the second year in a row, New Zealand retains its position at the top of the Doing Business rankings. The Oceanic country may be thousands of miles away from major markets in the West, but global supply chains and new communication technologies are eroding this hindrance. New Zealand’s strengths are particularly pronounced when it comes to starting a business; the country boasts the smallest number of procedures required – just one – and the shortest time needed to fulfil them (half a day). It also scores highly in terms of building regulation transparency, tax payment services and protecting minority investors.

2. Georgia (Rank 9)
The only lower-middle-income economy to feature in the top 20, at first glance Georgia appears to be something of an anomaly. With a population of just 3.7 million and a GDP per capita that ranks among the lowest in Europe, it is not a country often considered a business hotspot. However, the Georgian Government has made great efforts to enhance private enterprise in the country, implementing 47 business regulation reforms since the Doing Business report began in 2003 – more than any other country in the survey. Among the many changes, Georgia has made electricity more affordable and created more accessible insolvency proceedings for debtors and creditors.

3. UAE (Rank 21)
The UAE is the best-performing country in the Middle East and North Africa region, and climbed five places from last year. The country performs particularly well in the availability of electricity and the efficiency of issuing construction permits. In addition, great strides have been made towards improving credit reporting, with credit bureaus now offering scores to banks and other financial institutions, helping them to more accurately determine the creditworthiness of borrowers. The formation of a regulatory reform committee, which pays close attention to the Doing Business metrics and how to score highly, has also helped the UAE’s rise.

4. Thailand (Rank 26)
Thailand is one of the world’s most improved economies in terms of the ease of doing business, having implemented eight reforms during the 2016/17 period covered by the report. The adoption of a new secured transactions law has bolstered the rights of creditors and borrowers, while changes to risk assessment and land administration systems boosted efficiency markedly. These reforms, and a host of others, have created a much more welcoming business climate in the country. Not so long ago, starting a company in Thailand took an average of 27.5 days. Now, it takes less than five, demonstrating the South-East Asian country’s impressive recent development.

5. Chile (Rank 55)
Chile was ranked 34th in the 2014 Doing Business report, but has suffered a significant drop in the years since. While the World Bank has been keen to stress that the fall is simply due to other nations improving at a faster rate, some suspect foul play. Critics of the report have gone as far as suggesting that Chile’s lower ranking is politically motivated, influenced by opponents of the country’s left-leaning former president, Michelle Bachelet. The 12 methodological changes made between 2014 and 2016, which have largely damaged Chile’s score, have only added credence to claims of the report’s bias.

6. India (Rank 100)
India may already be the world’s sixth-largest economy, and is growing fast, but it still has a long way to go if it’s to make doing business in the country easier. Fortunately, the government is working hard to climb the ranking. The processes for making tax payments were streamlined in 2016, thanks to the introduction of income computation and disclosure standards. Contract enforcement has also improved due to the adoption of performance measurement reports on a wider scale. One area where India has had great success is protecting minority investors, where enhanced standards of governance have had a significant impact.

7. Nigeria (Rank 145)
Nigeria made it onto the report’s list of the 10 most improved economies for the first time this year as a result of recently enforced business reforms. Africa’s most populous state recently increased transparency regarding construction permits and the transferral of property rights. Starting a business has also become a faster process since the government introduced the electronic stamping of registration documents. Nigeria is still playing catch-up in other areas, and ranks particularly poorly in terms of electricity access and cross-border trade. The country’s overall position shows there is much work still to be done.

8. Somalia (Rank 190)
For the second year in a row, Somalia has the unwanted distinction of being named the most challenging place in which to do business. Dire economic conditions, a fragile political climate and the ongoing threat of terrorism make it difficult for Somalia to create much upward momentum. A mostly dollarised economy and a worrying number of regulatory loopholes have also meant that the informal economy often seems more prominent than the formal one. Business potential does exist, particularly if diaspora professionals can be enticed back to the country, but the chances of Somalia rising significantly up the Doing Business rankings look slim for now.

Financial History: CAFTA-DR

Posted on by Ashton Wenborn

2001
Representatives of five Central American countries – Nicaragua, Costa Rica, El Salvador, Honduras and Guatemala – met with counterparts from the US in 2001 to discuss the development of a trade relationship akin to the NAFTA agreement between the US, Mexico and Canada. The aim was to eliminate trade barriers between member countries, improving the US’ access to regional markets while encouraging economic growth in Central America through export diversification and higher foreign investment.

2003-04
Official negotiations began in January 2003, with the Dominican Republic joining in November. CAFTA, without the Dominican Republic, was signed on May 28, 2004. Separate negotiations between Central America and the Dominican Republic were undertaken to iron out issues stemming from a previous free trade arrangement between the two. The final CAFTA-DR agreement, which integrated the Dominican Republic, was signed in August 2004 in Washington DC.

All seven signatories signed agreements to facilitate the handling of environmental measures within CAFTA-DR and establish the Environmental Affairs Council in 2006
All seven signatories agreed to facilitate the handling of environmental measures within CAFTA-DR and establish the Environmental Affairs Council in 2006

2006-07
All seven signatories signed agreements to facilitate the handling of environmental measures within CAFTA-DR and establish the Environmental Affairs Council. CAFTA-DR came into force for El Salvador, Honduras, Nicaragua and Guatemala in 2006. The Dominican Republic implemented the deal on March 1, 2007. Costa Rica held a referendum on whether to approve CAFTA-DR, in which Costa Ricans voted affirmatively, though by a narrow margin, on October 7, 2007 – it came into force two years later.

2008-09
Trade began to decline in November 2008, two months after the global financial crisis began. Two-way trade between the US and CAFTA-DR countries fell from $44.7bn in 2008 to $38.7bn in 2009. All Central American countries saw a sharp drop in foreign direct investment, which was exacerbated further by regional security issues. With the exception of Guatemala and the Dominican Republic, all CAFTA-DR countries saw negative economic growth in 2009.

2010-12
Bilateral trade between CAFTA-DR countries and the US returned to pre-crisis levels in 2010, with total trade amounting to $48.2bn. In March 2012, a number of Honduran and American labour organisations alleged that the Honduran Government was failing to enforce labour laws. At around the same time, the US requested the establishment of an arbitral panel to consider whether Guatemala was enforcing its labour laws pursuant to its commitments under CAFTA-DR.

2013-14
In April 2013, the US and Guatemala signed an enforcement plan to address the labour dispute that had prompted the establishment of the arbitral panel. Two-way trade between the US and the bloc saw its strongest year in 2014, totalling $59.6bn. US exports to the region alone amounted to $31.1bn, an increase of almost 85 percent from 2005, before the agreement had been signed. The CAFTA-DR bloc constituted the US’ 13th-largest export market and the third-largest in Latin America.

US farm and food exports to CAFTA-DR countries doubled between 2006 and 2016. Corn exports from the US to the rest of the bloc were particularly strong
US farm and food exports to CAFTA-DR countries doubled between 2006 and 2016. Corn exports from the US to the rest of the bloc were particularly strong

2015-16
As of 2015, $87.2m had been invested in the Environmental Cooperation programme, funding training in a number of environmental issues. Trade between the US and CAFTA-DR fell slightly but remained strong, totalling $52.4bn and $52bn in 2015 and 2016, respectively. US farm and food exports to CAFTA-DR countries doubled between 2006 and 2016. Corn exports from the US to the rest of the bloc were particularly strong, reaching record levels as tariff elimination schedules advanced.

2017
After scrutinising Guatemala’s labour law enforcement, the arbitral panel determined that the issues did not reflect a system-wide problem. The protectionist attitudes of the new US administration cast uncertainty over regional free trade agreements, particularly NAFTA. However, CAFTA-DR maintained consistent trade surpluses for the US, placing it on solid ground going forward. In 2017, the US saw its largest trade surplus with the bloc to date, amounting to over $7bn.

Top 5 trade deals that changed history

Posted on by Ashton Wenborn

With Donald Trump imposing tariffs on steel and aluminium imports, now seems as good a time as any to reiterate the benefits of the global system of trade that the US helped to create.

Between 1950 and 1973, global trade grew by 8.2 percent in real terms, helping many countries to recover from the devastation of the Second World War. While technological advancements have, of course, played a key role in the development of international trade networks, political will has proven equally significant.

Trade agreements provide the legal framework that enables goods and capital to flow from country to country; they are the enablers of the global economy.

While technological advancements have played a key role in the development of international trade networks, political will has proven equally significant

Over the centuries, these deals have opened up new markets, boosted growth and created new employment opportunities. Although their detractors rightly point out that free trade agreements have not benefitted everyone equally, their international impact cannot be disputed. Here are five of the most important:

Convention of Kanagawa (1854)
Trade agreements can prove significant not only because of their direct economic effects but because of their longer-term impact as well. This was certainly the case with the Convention of Kanagawa.

The convention, which was signed under threat of US military action, ended Japan’s period of economic and cultural isolation that had begun in the early-17th century.

Prior to signing the convention, the only foreign trade that Japan engaged in was with the Netherlands and China, exclusively at Nagasaki and under strict government control. Although the Convention of Kanagawa did not immediately result in a huge increase in trade, it led to the subsequent signing of many other treaties between Japan and other Western powers.

The so-called ‘unequal treaties’ often imposed unfavourable clauses that heavily favoured the other party and weakened Japanese sovereignty. These trade agreements showed subsequent Japanese governments how far the country had fallen behind the rest of the world. In doing so, they played a pivotal role in Japan’s rapid period of modernisation, which would become known as the Meiji Restoration.

Cobden-Chevalier Treaty (1860)
International trade may have existed for thousands of years, yet formal free trade agreements are a relatively recent development. In 1860, with the UK and France committed to a naval arms race, two diplomats, Richard Cobden and Michel Chevalier, negotiated an agreement that would have a huge influence on Europe’s economic landscape for the remainder of the 19th century.

Under the Cobden-Chevalier Treaty, tariffs between the UK and France were significantly reduced, causing the value of British exports moving across the Channel to double over the course of the decade. The treaty is also significant for including one of the earliest examples of the most favoured nation clause – a mainstay of global trading legislation to this day. Similar trade deals between the other major European nations quickly followed the passing of the Cobden-Chevalier Treaty.

As well as giving British and French producers access to a new market, the treaty helped significantly improve relations between the two countries. Today, the idea that increasing trade helps promote peace is well established, but that might not be the case if it wasn’t for the Cobden-Chevalier Treaty.

The European Coal and Steel Community (1952)
During the first half of the 20th century, the continent of Europe set about tearing itself apart. Nationalist sentiment was used to accentuate the differences between countries while dismissing their common history and values. The European Coal and Steel Community (ECSC), which came into force on July 23, 1952, was an early attempt at making sure this never happened again.

The launch of the ECSC created a common market for coal, iron ore and scrap metal across its six member states (Belgium, France, West Germany, Italy, the Netherlands and Luxembourg). This greatly increased economic co-operation between the signatories – steel trade increased tenfold following the creation of the community – while also showing them the importance of supranational collaboration. In this regard, it paved the way for closer European integration and, as such, is viewed as a precursor to the European Economic Community and its successor, the EU.

CETA (2016)
Despite its reputation as a champion of free trade, the EU has found that completing new trade deals is a complicated task. With the European Parliament, the European Council and national governments (plus some regional ones) all able to veto any potential deals, there are a lot of hurdles that must be cleared before pen can be put to paper.

Given this complexity, it is hardly surprising that the EU’s free trade deal with Canada, the Comprehensive Economic and Trade Agreement (CETA), took seven years to negotiate. The agreement includes an ambitious tariff reduction package, eliminating tariffs for 98.6 percent of Canadian goods and 99 percent of those originating in the EU. The deal is also predicted to result in GDP gains for both parties and has been cited as a potential model for the future trading relationship between a post-Brexit UK and the EU.

CPTPP (2018)
Donald Trump made plenty of threats during his election campaign: he vowed to build a wall along the Mexican border, suggested that he would pull the US out of NATO and said that he would look to prosecute Hillary Clinton for her use of a private email server. Those promises, among others, have failed to materialise but he did fulfil one of his campaign pledges after just a few days in office when he pulled the US out of the Trans-Pacific Partnership.

The loss of the world’s largest economy was certainly a blow and could have derailed the entire proposal. However, the remaining eleven members (Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam) ultimately decided to persevere with the agreement. The re-named Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) still covers a market of almost 500 million people and additional nations have indicated that they may join at a later date.

There is also a chance that Trump will reverse his decision. If he does not, and it seems unlikely, the CPTPP shows that there are still many other countries around the world willing to defend the global trading network.

Prudential announces split of global businesses

Posted on by Ashton Wenborn

On March 14, London-based business Prudential, one of the biggest insurance and financial services companies in the world, announced it will split into two separately listed companies, demerging its UK and Europe division from its international operations.

According to the company’s statement, its UK and Europe savings and investment business, M&G Prudential, led by its current division chief, John Foley, will be a standalone entity focusing on more “capital-efficient and customer-focused” financial services. Meanwhile, Prudential will be helmed by the group’s current CEO, Mike Wells, and will operate in the growing Asia, Africa and US markets, but remain headquartered in London.

“The decision to demerge M&G Prudential follows a rigorous review by the board which considered all options, including the status quo, and concluded that it is in the best interest of the group to operate as two separately-listed companies, able to focus on their distinct strategic priorities in their chosen geographies,” said Chairman of Prudential Paul Manduca in the statement. “Both are expected to meet the criteria for inclusion in the FTSE 100 index.”

Both companies will have premium listings on the London Stock Exchange, while Prudential’s primary listing will be in Hong Kong

Shareholders will retain stakes in both companies after the demerger, and both will have premium listings on the London Stock Exchange. Prudential’s primary listing will be in Hong Kong.

Prudential also announced the sale of £12bn ($16.7bn) of its UK shareholder annuity portfolio to life insurer Rothesay Life. Revenue from the sale will support the demerging process.

As part of the split, ownership of the group’s Hong Kong insurance subsidiaries will be transferred from M&G Prudential to its Asia division by 2019.

The company has not given a timescale for the demerger, saying that a number of factors could affect it, including the annuity sale to Rothesay, market conditions and the transfer of the Hong Kong business. It is also subject to regulatory and shareholder approval.

Trump blocks $117bn Qualcomm acquisition over national security concerns

Posted on by Ashton Wenborn

US President Donald Trump has shown his commitment to economic protectionism once more by blocking the proposed $117bn takeover of semiconductor firm Qualcomm by Singapore-based rival Broadcom.

The deal, which would have been the biggest technology acquisition in history, was thwarted by a presidential order issued on March 12, over fears that it would “impair the national security of the United States”.

Although Broadcom could appeal the president’s decision, Trump’s action looks to have drawn a line under a takeover saga that began back in November. Last month, the Committee on Foreign Investment in the United States requested 30 days to review the acquisition but, in a characteristically impulsive move, Trump acted before the full investigation has been concluded.

The deal, which would have been the biggest technology acquisition in history, was thwarted by a presidential order

The president’s decision is highly unusual and is only the fourth time in the past three decades that a US president has intervened directly to scupper a foreign investment deal. The last instance, however, came just two years ago, when Barack Obama blocked the takeover of Aixtron by overseas investors, also on national security grounds.

In spite of the fact that Broadcom is based in Singapore, Trump is likely to have had another Asian country in mind when passing his presidential order: China.

The US is battling for supremacy in the race for 5G technology and, although Qualcomm is currently considered to be a global leader in the field, the disruption caused by the Broadcom takeover may have provided Chinese company Huawei with the opportunity to take the top spot.

Donald Trump’s presidency is often dismissed as being big on talk and light on action, but his recent moves are likely to have been well received by his core support.

Prior to the Broadcom intervention, his decision earlier this month to impose tariffs on steel and aluminium imports further demonstrated that he is willing to act on the protectionist promises that he made during his election campaign.