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Any other business

London Stock Exchange picked the wrong year for a pan-European merger

Also in Any Other Business: Nokia nostalgia, business rates, and the new-look Spectator Money

4 March 2017

9:00 AM

4 March 2017

9:00 AM

The marriage of the London Stock Exchange and Deutsche Börse may not be stone dead but that’s the way to bet, as Damon Runyan would have said. This so-called ‘merger of equals’ — with the Germans holding the larger stake and the top job but with the head office in London, at least to begin with — has foundered over a demand from EU competition authorities that the LSE should sell its majority stake in MTS, an Italian bond-trading platform. Having had its alternative proposal (to sell a French clearing operation) rejected, the LSE refused to comply, allegedly without first consulting its German partners.

When this deal was announced a year ago, I opined that the German motivation behind it ‘must be to hoover as much business as possible from London to Frankfurt’. An LSE insider insisted I was wrong, that the synergies would be beautiful and that the omens were harmonious because LSE chief Xavier Rolet and Börse boss Carsten Kengeter ‘used to work together at Goldman Sachs’.

I can only guess, what with Brexit an’ all, that relations have frayed and the LSE team (despite ‘still holding out some hope’ for Brussels’s blessing, we’re told) sees the relatively minor MTS issue as an escape. But internationalisation of securities exchanges is the way the world’s going, even if 2016 was a bad year for London’s to become part of a pan-European model. America is a strange and unpredictable friend these days, but stand by for renewed interest in the LSE from New York and Chicago.

Nokia nostalgia

I’m eager to order a Nokia 3310, the classic mobile phone of the millennium that was relaunched this week. The original was famed for its simple functions, unbreakable casing and ultra-long battery life; my earlier 3210 was just as good. I lost it on a coach trip 15 years ago and haven’t been truly happy since, having never learned to love my iPhone. But what’s more interesting about this revival is what it tells us about the turbulent evolution of the mobile device market, as well as the curious history of Nokia itself.


Nokia is Finland’s contribution to corporate parable. Having started in 1865 as a smalltown wood-pulp mill, it diversified into manufacturing galoshes and generating electricity, then into telecoms equipment — and emerged from the frozen forests in the 1990s as the global market leader of ‘2G’ mobile technology. The 3310 and its successors were bestsellers for a decade until new technologies and fashions swept BlackBerry, Apple and Samsung to the fore.

Nokia failed to stay ahead of the wave. As its market share crashed, chief executive Stephen Elop famously compared himself in 2011 to an oil worker on a ‘burning platform’ who chooses to jump — in his case into the arms of Microsoft, which bought Nokia’s mobile business and subsequently sold the branded ‘feature phone’ part of it to HMD, a Finnish start-up with a Taiwanese partner. It is HMD, not Nokia itself, that has recommissioned the retro 3310. It won’t turn back the digital clock — even if it appeals to old-timers like me — but it is succeeding in the owners’ objective of drawing attention back to a pioneering brand that sank so much faster than it rose.

Listen to me, Chancellor

I campaigned hard for a business rates review, and even tried to claim credit for it — or at least for its pro-northern bias — when details emerged last September. The smallest enterprises are exempt and the provinces will gain some benefit; but it’s clear that new rateable values from 1 April will impose undeservedly harsh rises on mid-sized businesses in London and the south-east. I’m even feeling a twinge of sympathy for Victoria Beckham, whose Dover Street boutique reportedly faces a 415 per cent hike. Philip Hammond, meanwhile, is in ‘listening mode’ — not least, we might imagine, when accosted by furious shopkeepers in his Runny-mede and Weybridge constituency — and is expected to introduce extra reliefs in his Budget next week.

But he won’t back down from his defence that the review is ‘revenue neutral’, redistributive in a good way, and adverse only for businesses in prosperous areas. Well maybe, but I suggest he considers two points. First, business rates are a charge for local services, not a tax, and no business person will ever be content to pay more for deteriorating infrastructure and policing. Secondly, a smarter calculation of ‘revenue neutrality’ would take account of profits generated, jobs created and benefits unclaimed in thriving towns and high streets. On that basis, the Treasury would be better off if there were no rises in business rates anywhere.

Sell America, buy Japan

I hope you enjoy our new Money section this week. The format has changed but the message remains constant: be alert to political shifts that affect investment fundamentals; buy assets that hold value and give pleasure, rather than leaving cash idle; but don’t take risks outside your comfort zone.

In this issue, we suggest you consider selling US stocks and funds — because the markets’ euphoric welcome for the Trump regime is likely to be short-lived — and invest instead in shares that could benefit from a surge in infrastructure spending or, more boldly, in Japan as a long-term recovery play. Meanwhile, you might also snap up a deeply discounted nearly-new car and load it with as much gold as you can afford or the suspension will take, then drive to the Alps, buy a ski apartment in Courchevel or Gstaad, and furnish it with bargain-priced English antiques. And don’t forget to tell your wealth manager to fill your increased annual Isa allowance as soon as the new tax year begins.

All this should bring you a comfortable future, an enjoyable spring and a good night’s sleep — so long as you also steer well clear of Freddy Gray’s betting tips.

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