Another G7 summit is over with nothing much to show for it. Highly orchestrated meetings such as the...
Another G7 summit is over with nothing much to show for it. Highly orchestrated meetings such as the one in Okinawa rarely surprise the markets these days. Most of the issues have been exhaustively discussed way ahead and any communique endlessly rehearsed (if it hasn't been leaked) weeks before the final release.
There was nothing from this summit on key issues for the markets: Japan's economic condition, US monetary policy, global financial regulation or risk control. The only faintly spontaneous moments were the flurries over exactly when President Bill Clinton would leave the Camp David talks and the brief intervention by Russian President Vladimir Putin. Putin is worth watching because he has an instinctive, highly pragmatic way of advancing his own, and Russia's interests. Having earlier summarily renounced his country's ambition to world influence, as though the Cold War had never happened, Putin presented the leaders of the Western world with a crisp call for a $42bn reduction in Russia's external debt, and then left.
Given the upturn in his country's economy in the last six months, due mainly to some strong-arm fiscal reform and the rising price of oil, there was zero chance of such a handout on this occasion. So Putin flew off to joust with more challenging opponents: the Russian oligarchs or industry mega-moguls, whom he has been stirring up with a series of "tax investigations". If Putin's deadly strategy was not behind it, this attack on men who seized and built up General Motors-sized companies in sectors like media, airlines, commodities or energy, would be laughable. No-one could have succeeded in Russia in the last decade without cutting corners and standing on heads.
For years these entrepreneurs have been applauded for their drive; great chunks of their spoils even funded Putin's own political rise. They consider the spotlight of the President's moral righteousness, now turned on them, a gross betrayal. The incarcerations of top executives are sullying the reputation of Russian business, they say, and making credit more expensive. It is true that what Putin regards as a clean-up has made foreign investors nervous. Many have significant holdings in sector giants like Lukoil, Norilsk Nickel and utilities group UES, among others. They have closed their eyes to the rough and tumble of Russian political and corporate life, held on tightly through some very rough markets, and were about ready to reap their reward. They cannot object to the president targeting business clans whose warfare has resulted in over 150 contract killings of top business people in the last year. Putin is also clearly out to divide and control a sector likely to provide future political challengers to himself. As if by magic a new industry, called kompromat, or the supply of compromising material, has sprung up as the heads of huge industrial groups use their private security forces to deal the dirt on rivals.
Having brought the Duma (parliament) to heel, Putin is getting into his stride. His personal policy unit has just produced a 200-page document outlining plans to break up Russia's monopolies, end subsidies, raise taxes and "make all companies equal before the law". The package would make Russia a very attractive investment story, if it happens. Just as long as the president doesn't take against foreign investors, for some reason.
UCITS rules need changing
Scope for change post-Brexit
To tackle liquidity issues
More than £100m in pipeline
DB data published last week