Trump’s latest catch phrase this summer has been “Buy American, hire American”, and given the latest unemployment figures, it would certainly seem that industry has been hiring the American workforce.
I would also point out that the success of these numbers has almost nothing to do with this President’s policies, which seem to have had barely any impact since his inauguration. The thanks and appreciation should nearly all go to the economic policies of his predecessor, President Obama, and the good guidance of the Fed – but of course they won’t.
I find it something between amusing and infuriating to have to listen to the Trump propagandists claiming the great success of his policies and claiming recognition for their buffoonish leader’s successful economic policies. Now that is “fake news”.
What is going to be an interesting test of the President’s “Buy American” policy is the potential for any bid that might come through for Fiat Chrysler Automobiles (FCA) from the Chinese car manufacturer, Great Wall. If it does come through, the Great Wall may well hit a brick wall, if this is seen as a takeover of some great all-American brands, like Chrysler and Jeep. But this is an interesting issue for openly capitalist nations. In a free market, you can buy what you like and governments may have a few protected companies of national security, but otherwise investment could be open to all – or is it?
In the UK, we have been ‘selling England by the Pound’ (Genesis 1973) for years and virtually everything has been available to buy, with only a few ‘golden shares’ for strategic national protection. From power infrastructure (the Chinese investment in Hinkley Point), through to power provision with the French and Dutch interconnectors, transport, banking and financing, the UK has seemingly shown itself to be the most open market in the world. Holland & Barrett, the health food chain, has been sold to the Russians, surely the least health conscious nation you can think of!
Even the London Stock Exchange, although listed and operated in London, has an international ownership. Have we gone too far? And if we have, are we too late?
In Europe, the takeover laws have always been far more protective of not just strategic national assets, but in the case of France, almost all national assets. From direct government investment into ‘key’ industries such as car manufacturing, through to government ‘influence’ over banks and oil companies, their attitude is very different.
The initially hostile takeover of the German company Mannesmann by Vodafone in 1999/2000 was a shock to the German and European business world, where hostile approaches and takeovers were virtually unknown, and if not unknown, then certainly disapproved of. It was the Anglo Saxon (US/UK) culture vs the European business culture. The former being for growth by acquisition and shorter term gain and the other by organic development over a longer term.
More recently, the low interest world after the banking crisis has led, with Quantitative Easing, to excess cheap cash in the markets and inevitably to an increase in corporate takeovers and acquisitions. This has led to calling in the EU for further evaluation of the situation, to try and make sure that aggressive takeovers, especially from the more predatory investors from the hedge fund world, seek to force companies to release more short term value for investors. A recent example we saw this summer was the failed effort of PPG to acquire the Dutch firm AkzoNobel, who own the old British Dulux paint brand. Potential interest from Chinese investors has been mooted for other European assets - therefore further moves from the European Commission to tighten takeover rules and opportunities are highly likely.
So now we will see a test for Trump with Great Wall and the old Chrysler/Jeep icons in the financially strapped FCA. After all, Trump said “Buy American” - that is what the Chinese would like to do. However, perhaps he needs to be careful as to just how much of the American economy they want to buy and maybe make sure they don’t buy it all! This will test just how open or isolationist he is going to be.
And finally… Things not to do with a toothpick. A 60-year-old Singaporean man is under investigation for inserting toothpicks into a seat on a public bus, a suspected case of ‘mischief’ that could put him behind bars.
Pictures of three toothpicks sticking up from the seat were posted last month by a Facebook user, who said she noticed them just as she was about to sit down. "Remember to check your seat next time before sitting, guys!" she wrote. The post was shared more than 2,500 times.
Authorities in Singapore come down hard on minor crimes such as vandalism, which is punishable by caning, and the import of chewing gum is banned, in part to keep public spaces clean. Two years ago, a smoker was fined US$14,550 for throwing cigarette ends out of the window of his flat.
The police said investigations into the case of the toothpicks were continuing. The offense of mischief carries a punishment of imprisonment for up to two years, or a fine, or both.
Be careful how and where you sit – have a good week.
Justin Urquhart Stewart
Co Founder and Head of Corporate Development
Seven Investment Management LLP is authorised and regulated by the Financial Conduct Authority. Member of the London Stock Exchange. Registered office: 55 Bishopsgate, London EC2N 3AS. Registered in England and Wales No. OC378740.
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