Cyprus rejection sends EU back to the drawing board


21 Mar 2013 | Torrie Callander, Global Reach Partners

OVER THE WEEKEND the news broke that eurozone finance ministers had agreed a €10Bn (£92bn) bailout for Cyprus - but with conditions attached. Cyprus had to raise some money on its own.

Many ideas were bounced around and it was suggested that the best method of raising funds quickly was to impose an immediate tax on all deposits held. This was overwhelmingly rejected by the Cypriot parliament on Tuesday and failed to receive a single MP's backing. This sent ministers back to the drawing board in search of a plan B.

The impact of this situation is much more significant than it appears - notwithstanding the controversial one-off tax raid on local and expatriates bank savings accounts. The precedent is set. If any EU nation comes "cap in hand" for a bailout from the European Central Bank (ECB), they will met with strict terms and conditions.

What does this mean for the euro?

Italy and Spain are still in economic trouble. Their borrowing costs may have stabilized last year with the announcement of the European Stability Mechanism, but this stability is now under threat again. If the borrowing costs get too high, they will need help from the ECB. But will they get slapped with the same obligations as Cyprus? If so, it would be a much bigger issue compared to the Cypriot situation. This has spooked the market and the euro has fallen from its two year high against the pound. Investors are watching closely to see what deal is struck in Cyprus as an indicator for future euro stability.

Rising inflation, weak growth, upcoming German elections and an overvalued euro are all starting to weigh heavily on the eurozone economy once again. The charts show that the GBP/EUR rate has now bounced off a five year strong support level. Has the euro seen its highs? In the short term, I think so.

Torrie Callander is a corporate dealer at Global Reach Partners

Exporters queue up as QE is put off again


12 Mar 2013 | Torrie Callander, Global Reach Partners

SO THE Bank of England voted against further Quantitative Easing and Sir Mervyn King was out voted for the fourth time in his tenure as Governor. All the talk about negative interest rates proved to be nothing more than that, with rates being kept on hold yet again. This surprised those in the market many of whom expected a fresh round of money printing. The Pound was the immediate benefactor, rising by half a cent on the Dollar within minutes of the announcement.

What is next for Sterling?

The Pound has been one of the biggest losers in the currency markets so far this year driven lower by consistently negative data releases from the manufacturing and construction sectors, a credit rating downgrade and expectations for QE. This has been great news for UK exporters who have been significantly more competitive as the Pound has weakened.

For British importers however, it has been a different story. The sudden drop in the value of Sterling saw many caught off guard and unprotected. The speed of the fall was certainly unexpected and many Sterling sellers sat on their hands expecting retracement that never came.

Today's announcement should give some balance to the equation. One of the drivers of Sterling weakness was the expectation of further QE. Now that this has been put off for at least another month the market - and the Pound - can breathe. This may afford importers the chance to sell Sterling slightly higher up the range in the coming weeks and they would be wise to seize the opportunity.

However, in the next three to four months, the Pound will remain under pressure. Until we see sustained growth in the UK economy there will be little to support the currency. The threat of QE will continue to loom, especially with a new BoE governor taking over in June. The remaining ratings agencies will be scrutinising the AAA rating and investors will be reluctant to hold Sterling.

Exporters should make hay while the sun shines, while importers should be considering hedging measures that protect their budget exchange rates.

Torrie Callander, corporate dealer, at Global Reach Partners

Sterling hammered in wake of downgrade

Ocado's stunted listing compounds UK's faltering IPO market

11 Mar 2013 | Mark Ackroyd, Global Reach Partners

IT HAS BEEN on cards for a while but the UK losing its AAA credit rating has still shocked the market, particularly in its timing. Rumours of a downgrade were rife and the pound has struggled recently as a result. Sterling has depreciated by 8% against the US dollar since December 2012 and as much as 11.5% versus the euro since October last year but the most common view was that a credit rating downgrade was most likely to follow the UK's Q1 GDP figure which is released in April. The GDP release is likely to confirm that we will have entered a triple dip recession, when put in this context a rating downgrade is no surprise.

The downgrade compounds the recent flow of bad news from the UK and brings both political uncertainty and monetary policy concerns. The chancellor has hung his hat on the UK's prized AAA credit rating. Strict austerity measures have been implemented in order to get the UK out of debt and keep rating agencies at bay. Moody's downgrade shows a clear failure to do so and undermines government policy moving forward. Where do they go from here? The BoE have already doubted the UK's return from recession and with current policy clearly not working there is now debate over further QE, interest rate cuts and purchasing corporate bonds.

What is the result of all this uncertainty on the pound? The downgrade from AAA and the prospect of sluggish growth continuing for years has ensured that the news has been awash with stories of the pound's ‘slump to parity with the euro' and forecasts of GBP/USD down at 1.40 before the end of the year. The prospect of GBP weakness across the board is, understandably, concerning UK importers. Support levels have been broken and the pound is showing signs of being the ugliest of the ugly sisters for some time. UK businesses have been actively looking to protect themselves from further downside risk.

Mark Ackroyd is senior commercial dealer at Global Reach Partners

Psyched in the workplace: Let the anger out


11 Mar 2013 | Gavin Hinks

THERE'S A LOT of negotiating going on at the moment. The US and EU are entering trade talks. David Cameron wants powers back from Brussels and the UK has, according to press reports, desperately tried to soften the blow of new European curbs on bankers' pay - with little success. A lot of smoke filled rooms, filled with people trying to win concessions and, essentially, get their own way (there's no such thing as a smoke filled room anymore, surely?).

But how do you do that effectively? How do you persuade people to listen? In these instances it's worth turning to the psychologists for some insight, and one bit of work which might help is research which looked at what happens if you "fake" anger during negotiations.

Academics looked at this because past research had concluded that anger in a negotiation tended to get you what you wanted. The explanation being that counterparties were likely to conclude that you were tough and unlikely to bow to pressure. Conclusion? Just blow your top and the day, trade deal or price on widgets was likely to be yours.

So, some psych boffins from Canada and the Netherlands[1] designed an experiment which looked at what happens during negotiations for a used car. They persuaded actors to help. During the negotiation the actors were instructed to remain emotionally neutral, or fake anger (right up their street) or dig deeper and deliver some "deep acted anger", or what the psychologists thought closely approximated to the real thing. The actors then haggled over the car with undergraduate students. Some quite nuanced results emerged.

Fake anger tended to be met with a tougher negotiating stance from the undergrads. In short putting on a face wasn't of much benefit. "These findings provide initial evidence that surface acting anger does not have the favourable consequences that were identified in past research on the effects of showing anger, and that surface acting anger instead carries costs for negotiators," they conclude. This was especially the case if talks went into a second round. However, genuine anger, they discovered, "elicits concessions".

"The strategic management of anger has important consequences for the behaviour of parties during negotiation, and, we suspect, for social behaviour in general," they say.

The team has caveats, not least that a neutral emotional position may come across as detached, steely poise that frankly that people find persuasive, especially when they're able to compare it to fake anger. Also, the genuine anger experiment was conducted using video footage. It may be that people watching film concentrate more on emotional reactions than they do when face to face.

But the issue may just be trust. People don't like fakery so they toughen up in the face of faux anger. Likewise, when the anger appears real, they soften their stance.

Recently I came across another note on persuasion. Psyblog[2], written by Jeremy Dean, author of Making Habits, Breaking Habits, points out that a truck load of research has concluded that simply saying to someone that they are "free" to choose could be one of the most influential persuasion techniques going. A review of 42 studies by Christopher J Carpenter[3] demonstrated that this was a useful approach to getting your own way. Dean says: "By reaffirming their freedom you are indirectly saying to them: I am not threatening your right to say no. You have a free choice."

It made me wonder whether it could be even more effective if combined with some genuine vexation. Which had me conjuring unlikely images of David Cameron loosing it with euro politicians and declaring: "You're free to choose but, frankly, I'm livid." And then miraculously they all say he was right all along (it's only an image in my head).

Cameron doesn't come across as someone prone to displays of emotion, especially in negotiations. I imagine he would prefer to be seen as a somewhat cool, reserved character in line with the British stereotype of the stiff upper lip, what the Europeans like to call our "phlegmatism" (there's more than a little truth in this). Which means, as negotiators we are not overly given to angry outbursts. Perhaps, if we really want a deal with Europe, or you want to seal that big acquisition, or protect bankers' pay we need a little more emotion.

Gavin Hinks is a freelance journalist and writes the Profits and Loss blog at

[1] The Consequences of Faking Anger in Negotiations: Stephane Cote, Ivona Hideg and Gerben A. van Kleef, Journal of Experimental Social Psychology, Vol 49, pp453-463, (2013)
[2] Read the PsyBlog at
[3] A Meta-Analysis of the Effectiveness of the "But you are free" Compliance-gaining Technique, Christopher J Carpenter, Communication Studies, Vol 64 Issue 1, (2013)

AIM is at the crossroads


06 Feb 2013 | Tim Ward, QCA

IF CURRENT TRENDS continue we will wait a long time to see a substantial rise in IPOs, fundraisings and general corporate activity.

But AIM could be starting to see a growth spell after a period of clear-out. The number of UK companies on AIM has fallen from a high of 1,347 to 870 at the end of 2012. Many of the departing companies had a market capitalisation below £10m.

This creates space for better structured and better capitalised companies to join; ones which are more suitable to be a public company.

With Nomad numbers falling from over 80 in 2007 to just over 50 now, perhaps we are seeing a concentration of better financed and more competent advisers.

I am hearing advisers and fund managers saying that we are already 18 months into a seven-year bull market for small and mid-caps. If these words start turning into positive actions, by investors, companies and advisers, then this will further help to accelerate the recent turning point where, for the first time in 20 years, net new money is being allocated to small and mid-cap investment. If we can foster the flotation of more technology companies, such as the AIM growth company WANdisco, this will send a strong message to other sectors

Even more money could start to flow into the small and mid-size quoted company space through the inclusion of AIM shares into ISAs. The government will be shortly consulting on this.

This regeneration of AIM could be a fantastic opportunity to provide more finance to growing companies so that they can continue to expand their business and create more jobs.

For me I'm sensing zoom rather than gloom.

Tim Ward is chief executive of the Quoted Companies Alliance, the independent membership organisation that champions the interests of small to mid-size quoted companies. His past roles have included head of issuer services and head of marketing at the London Stock Exchange and finance director at FTSE, the index company.


Psyched in the workplace: The Hobbit - an unmotivated employee

hobbit hole

24 Jan 2013 | Gavin Hinks

CHRISTMAS may seem like a dim and distant memory now, but perhaps the season's big cinema release is not. The Hobbit: An Unexpected Journey, the latest Tolkien movie from Peter Jackson, was the blockbuster that dominated the silver screen.

Watching Bilbo Baggins (the Hobbit of the title) team up with a group of peeved dwarves, I couldn't help but wonder: why does he do it? What's his motivation?

One way of asking this question is by casting Bilbo in the role of a slightly unenthusiastic employee who needs geeing up a bit. You know the kind: they turn up each day, but their Twitter habit tends to suggest their hearts are not quite in it.

For those who don't know, Bilbo's story is that he persuaded to go on a quest with 13 dwarves to recapture their lost kingdom from a bad tempered dragon.

Bilbo makes his decision to sign up knowing he will confront more dangers than your average High Street on a Saturday night. Orcs, wargs, goblins and and dragons are all on the opposition's team sheet. So, why sign up for all this agony?

Psychologists have something to teach us here. Last year US academic Teresa Amabile wrote in the Harvard Business Review about her research looking at the diaries of hundreds of project workers. She wrote: "We discovered the progress principle. Of all the things that can boost emotions, motivation, and perceptions during a workday, the single most important is making progress in meaningful work."

Amabile goes a little further, however, and proposes that motivation is also fostered by catalyst events (help from colleagues) or nourishing events (respect and encouragement). Gandalf, a wizard, not only tells Bilbo he is useful but frequently lauds him for prompt action to save the group of dwarves (especially in a nasty incident with trolls).

But I couldn't help but feel that wasn't enough to explain Bilbo's willingness. So I turned to military thinkers. Why not? Bilbo and the dwarves are effectively engaged in a military campaign.

Research during the last Iraq war from the US Army War College concluded that "unit cohesion" was the secret to keeping someone motivated. In other words, people form strong bonds with their colleagues, or fellow soldiers, and keep working or fighting to fulfill an unspoken commitment to them.

Bilbo takes a while to do it, but eventually forms a powerful bond with the dwarves who recognise his worth and come to see him as one of their own. the dwarves leader is the last to change his mind about Bilbo but even he has to see the Hobbit's worth eventually.

But I think the lesson from The Hobbit is that both workplace and military psychologists have something to offer to managers leading teams. Employees need to see progress and be reminded they are making progress. Catalyst events (aid from fellow workers) boost morale and so do respect and encouragement. But they seem to be part of the process of forming strong bonds with colleagues. Commanding officers sports team coaches understand this intuitively and business managers should too.

All these things keep Bilbo going, but it's entirely likely that if you can find skillful ways of employing these factors at work, they'll keep your staff motivated and productive. You can be a Gandalf too. Though, forget the beard.

This column is based on an article on The Profits and Loss blog

Gavin Hinks is a journalist and leadership advisor

City celebrates, but fiscal cliff deal far from conclusive


16 Jan 2013 | Torrie Callander, Global Reach Partners

2013 STARTED with a bang in The City! Positivity dominated the first trading days of the year as investors welcomed the New Years day resolution of the "fiscal cliff" issue.

A special meeting of US Congress managed to come to an agreement late on 1 January that postponed public spending cuts and extended some Bush era tax cuts. Had these measures not been taken then the likelihood of a return to another recession in the US was very real, markets were showing signs of considerable strain in the lead up to the deal.

As a result of the resolution the indices breathed a sigh of relief and investors bought risk assets. This meant that traditional safe haven assets - which investors flock to in a time of uncertainty - weakened heavily. The US dollar was the biggest loser with sterling posting a 12 month high against the the dollar and the euro gaining ground alongside. The Japanese yen, the safe haven choice of 2011/12, was also sold heavily amid threats from the new Japanese prime minister to aggressively weaken the currency in order to boost exports.

This trend has continued thus far throughout January. The S&P 500, America's premier equity market, has posted five year highs and the dollar and the yen have continued to weaken. Positive comments from the European Central Bank have also given strength to the single currency. The euro has gained across the board - a move that would not have been predicted amidst the Greek debt crisis of 2012.

Now that the dust is settling, investors are looking further ahead. The "fiscal cliff" deal, while important, was far from conclusive. Public spending cuts have only been extended until the end of February and, with the US debt ceiling very close to breaching point, this creates a problem.

It is law in America that the US government cannot issue bonds if their value would increase US debt above the agreed debt ceiling. This means that, unless this new issue is resolved, the US government may run out of money in mid-February.

While this is extremely unlikely, it is concerning for investors and in particular those holding US government debt. Most people expect the same old story to unfold - a lot of tension in the build up to a deal but ultimately a deal will be done.

Markets don't tend to take that chance however and many risk assets could be sold off around this type of uncertainty. This may lead to a reversal of the gains made so far this year.

Therefore, while 2013 has started positively, the next obstacle is only weeks away. Momentum is to the upside, but we are not out of the woods yet.

Torrie Callander is a corporate dealer at Global Reach Partners

Aim Higher: Politics or Networking - now you see it, now you don't


20 Dec 2012 | Stuart Pickles,

I ASKED A CFO recently: "What's the biggest mistake that people make in organisations which holds them back from success?" His answer was: "To hold the belief that stuff only gets done through formal channels and visible systems". Another one said: "Lack of political savvy".

Of course we've known for years that the coffee machine and corridor conversations are where a lot of important things happen. Many people judge that this reality is still "wrong" - that's not how it should be, it's not fair, it's not visible, not everyone (including me!) is involved, it's not following the right process etc. But let's face it - this is reality, it's not just your organisation, your boss, or your colleagues - it happens everywhere, and it's what humans do. The best thing to do is "get over it" and work out how to live with it and make it work for you.

A manager asked me: "How do you deal with office politics"? My first response to this is: Start by refusing to admit it exists. Politics is just a word used to describe the stuff that's going on around us with other people that we don't understand. It is the fact that different people have different agendas, they have skin in the game and they do what they can with whoever they can to advance their agendas. The question is: How do you deal with this?

It's about relationships - try getting to know and understand the people that are most important to you, and find out what their agendas are. Then see how you can help them, put some credit in the "relationship account" without expecting an immediate return - people want to work with you more if you are not always asking for something, and trust that over time they will repay you. Is this "playing the political game" ... or is it just effective relationships building and networking?

Networking can come in many forms, some more visible than others. The advent of the online world has raised everyone's awareness of what networking is - and for the new generations (Y and Z) it is an integral part of their existence. Interestingly, the online world is quite a structured networking environment (albeit not all is visible to all).

What will remain unchanged is that the more informal networking (offline and online) will continue to be a vital hub of activity, networking is much more than what happens in the formal/visible channels of communication. Don't think that by going on Facebook and LinkedIn and finding a few more friends, that you have cracked networking. The bar has been raised now - everyone has increasing numbers of online contacts, the question is what you do with them.

Regardless of where and how you network, there is always one fundamental principle: you will have a spectrum of extremes from (1) many/far/shallow relationships to (2) few/near/deep (the ones that know, like and trust you). The questions are: how do you increase your few/near/deep, and how can they help you? Who do they know that can help you, because they'll be prepared to ask on your behalf? And then how do you "skim" the many/far/shallow relationships in a way that gives them a positive experience of you (however brief) and allows you to spot the ones that might be worth investing more time in?

For aspiring leaders, another increasingly important factor is internal vs. external networking - an organisation can no longer afford or hope to have internally all the resources it requires. One major multi-national corporation states that a minimum of 30% of leadership time should engaging with external networks (not just in the sales context). How does this reconcile with your reality?

The truth is, we all know how to network and build relationships, be it online, face to face or other contexts. But some of us are better at it than others and some invest more time and energy than others. There are ways to improve technique, it does take time and you have to be selective and focused - but the return on investment is your longer term success. If you don't, it will be a case of "now you see it, now you don't."

Stuart Pickles is the former FD of Foster's EMEA. He now runs and is blogging regularly for Financial Director

Image credit: Shutterstock


Page 6 of 19