Westbank Ambitions
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FTwealth WEST BANK AMBITIONS PROPERTY DEVELOPER BASHAR MASRI CALLS FOR WEALTHY PALESTINIAN EMIGRES TO INVEST IN THE TERRITORY’S FUTURE BY JOHN REED CORPORATE ART SALES BILL BROWDER JAGUAR FTYPE INVESTMENT FOCUS ON EUROPE WWW.FT.COMWEALTH AUTUMN 2013 Ft WEALtH Autumn 2013 this could be boom time for“ au“ction houses as companies downsize their collections covEr pHotogrApH Status quo shake-up by AHikAm sEri Special reports editor Michael Skapinker Editor Hugo Greenhalgh Deputy editor Rohit Jaggi Production editor George Kyriakos Art director Sheila Jack Picture editors Michael Crabtree, John Wellings Sub-editors Philip Parrish, Jearelle Wolhuter Illustrator Nick Lowndes Commercial director, Emea Dominic Good Advertising Ceri Williams, Rachel Padhiar Publishing systems manager Andrea Frias-Andrade Advertising production Daniel Lesar contributors Daniel Ben-Ami is a freelance journalist and writer Emma Jacobs writes for the FT’s Business Life page Rohit Jaggi is the FT’s aircraft, car and motorcycle columnist Gaza and the West Bank are often thought of as no more than war Ellen Kelleher is a reporter for FTfm zones. John Reed’s article on the development of the West Bank may James Mackintosh is the FT’s investment editor Jonathan Margolis is a contributing editor of change this perception. How To Spend It Palestinian Bashar Masri is a property developer and a man keen to Madison Marriage is a reporter on FTfm encourage émigrés to invest in their homeland. An admirable mission, Jonathan Moules is the FT’s enterprise but, as Reed explores, one fraught with problems. correspondent Bill Browder is also attempting to shake up the status quo, but this Sarah Murray is a freelance journalist Feargus O’Sullivan is a freelance journalist time his target is no less than Vladimir Putin, the Russian president. and writer Browder, formerly one of the largest foreign investors into the country, John Reed is the FT’s Jerusalem correspondent has gone from friend to foe – and, as Daniel Ben-Ami writes, is urging Sridhar Venkatapuram is a lecturer in global governments around the world to do the same. health and philosophy at King’s College, London Matthew Vincent is the FT’s personal Corporate art collections are facing a different set of pressures as finance editor companies experience falling profits. As Madison Marriage explains, Lucy Warwick-Ching is the FT’s online this could be boom time for the auction houses, as companies seek to Money editor downsize their collections in tune with these more austere times. As always we welcome your comments on these and other stories. Please get in touch. Hugo Greenhalgh, Editor [email protected] 4 |Ft.com/WEALtH contEnts 56 openings 6 invEstmEnt Focus The sectors and funds that can help put europe back on the map 8 tHE idEAs coLumn Momentum investing has been running out of steam 10 tHE ricH coLumn 10 Wealthy musical instrument owners and virtuosos are getting together features 12 pEAcE dividEnds exiles from the West Bank are being urged to invest and kick-start the territory’s revival as a $4bn 46 economic plan is drawn up 18 HEirsAnd sorroWs The twists of succession that have insight shaped europe’s monarchies 36 EquitiEs 24 boArdroom LEgAciEs The toxicity of acronyms: a health Companies are selling off their bulletin on exchange traded funds artcollections to raise cash for 40 invEstmEnt a variety of commercial and Social impact bonds are the cutting-edge philanthropic purposes way to finance social enterprises 42 invEstmEnt 30 crusAdE on tHE krEmLin enterprise Investment Scheme funds How Bill Browder went from being 44 pLAnning one of the biggest foreign investors in What mortality data reveal about what is Russia to one of the fiercest critics of 24 happening in society President Vladimir Putin’s rule 46 pLAnning How the world’s finest hotels look after their long-term residents 48 pHiLAntHropy ft wealth online Donating to lesbian, gay, bisexual and transgender causes Jonathan Margolis delves deep into the issues 50 pHiLAntHropy surrounding company succession; and Ellen Kelleher Family foundations after divorce discusses the uses of trusts under Sharia Law 52 book rEviEW vidEo The Society of Equals by Pierre Flying Tiger: Rohit Jaggi flies the DH Rosanvallon 82A Tiger Moth 54 cAr rEviEW vidEo Rohit Jaggi drives the Jaguar F-Type Fast cat: Rohit Jaggi takes the Jaguar 56 LiFEstyLE F-type for a spin Flying the DH 82A Tiger Moth www.ft.com/ftwealth 58 tHE businEss guru Steven Murphy of Christie’s International PHoToS: CHARLIe BIBBy, GeTTy InvESTmEnT FoCUS LUCy wARwICK-ChInG ThE RoAD AhEAD Global brands boost STEphAnIE lure of continent BUTChER urope is finally showing expected reduction in the Us’s quanti- Reports may have been exaggerated signs of recovery, prompt- tative easing programme. 28% about the death of European equity ing analysts to suggest now But there are many unresolved issues of all France’s markets, which, despite widespread is the time for investors to within Europe. European banks are still foreign-owned gloom associated with the sovereign buy into this “cheap” mar- believed to have large amounts of bad second homes debt crisis, have posted significant ket in the hope of generat- debt to write down, which means any are British owned gains over the past year. Eing high returns. recovery is likely to be slow. A sustained A combination of factors have con- the eurozone economy grew 0.3 recovery will need growth to return SoURCE tributed, not least European Central per cent in the second quarter of across the region, not just to Germany. AyLESFoRD Bank president Mario Draghi’s speech 2013, driven by an expansion in the But investors should not ignore InTERnATIonAL assuaging the redenomination fears German economy of 0.7 per cent – Europe. there is a difference between the that had stalked European markets. its fastest rate of growth for more health of the economy and the region’s there is growing evidence the periph- than a year. stock markets. Investors should be more eral economies have been undertaking the news spurred a rally in Euro- stock specific and look for strong global fiscal adjustment and structural reform pean stock markets, as investors brands that are financially robust and in with genuine focus. the periphery is sought an alternative to emerging a position to benefit from growth any- now running a current account surplus, market assets thought vulnerable to an where in the world as well as at home. while labour market reform means spain in particular is gaining inward investment attracted by lower labour costs, excellent infrastructure, an edu- cated workforce and excess capacity. Meanwhile, the eurozone as a whole has moved out of recession. But perhaps the single most impor- tant factor behind equity performance has been valuation. Draghi’s speech moved the focus away from the binary debate on eurozone survival, allowing a reassessment of the valuation oppor- tunities the crisis created. that Europe is in a low-growth environment is not in doubt, but the equity valuations of 2012 meant even a “less bad” scenario 26.3% provided significant upside. there is likely to be a slow work- uNeMpLoYMeNt through of the problems built up over rate iN spaiN the excess years – no V-shaped recov- eries here. But Europe is not likely to SoURCE: SpAnISh nATIonAL go back to the cliff edge and, as such, STATISTICS InSTITUTE valuation should be the main focus. The writer is a European equities fund manager at Invesco Perpetual W 6 |FT.Com/wEALTh 50% of aLL propertY saLes iN “ “ the spaNish citY of vaLeNcia iN the first three MoNths of 2013 were to foreiGNers SoURCE:vALEnCIAREGIonAL GovERnmEnT 41 billionaires are Investing in... based in London, ranked third behind Europe Moscow and New York SoURCE: FoRBES What is the fund? Performance over the past five years Jupiter European Special Situations, (European funds, total return basis, % to start of August 2013) managed by Cédric de Fonclare, is a unit trust that typically holds between 50 and 70 stocks. Its top I wish I had bought 10 holdings include UBS, the Swiss JOHCM European Select Values bank, airline Ryanair and pharma- Franklin European Growth ceutical company Sanofi. 121.6 Why should I buy it? MFS Meridian The fund is run by a good long-term Funds European 112.0 Smaller manager and has been increasing Companies its exposure to European banks, so it is well placed to benefit from the expected improvement in Europe’s 108.2 financial sector. De Fonclare’s strat- egy of selectively adding to more economically sensitive areas has proved successful so far this year and indicates stock selection has -2.0 been a key contributor to perfor- mance. According to Lipper, the fund is up 17 per cent year on year. Willerequity -6.7 Why shouldn’t I buy it? Europe Europe is not for cautious investors Invesco Perpetual – much could still go wrong. Greece Emerging European -13.9 may need to default on even more Fidelity Funds – bonds later in 2013, while the Cyprus European Aggressive rescue package is already unravel- I’m glad I didn’t buy ling. Spain and Italy seem to be holding steady, but only relatively. SoURCE: LIppER 28% Growth iN the vaLue of cLassic cars over the past Year SoURCE: KnIGhT FRAnK LUxURy HAGI; dreAmstIme; Getty; reuters; bloomberG. GrApHIc: russell bIrkett InvESTmEnT InDEx Q2 2013 Photos: FT.Com/wEALTh|7 the ideas column james mackintosh Investing with the herd nvestors do the funniest things. leave as ryan larson, vice-president at Central Bank prompted sudden rever- aside buying shares in tesla Motors, research affiliates, the Californian sals across markets in May this year the electric carmaker, at 200 times company that pioneered the fundamen- and July last year respectively, causing prospective profits, day trading or bet- tal weightings principle for equity indi- losses averaging 10 per cent for those ting on economic data, and, for one ces, points out.