WEBVTT - FDI Showed Substantial Growth in Ireland 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.480 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanivik. We're here every day bringing 0:00:07.320 --> 0:00:09.840 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.680 --> 0:00:17.159 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:20.000 analysts in more than one twenty countries. You can download 0:00:20.000 --> 0:00:23.239 Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.200 You can also listen to our radio show at two 0:00:25.200 --> 0:00:27.880 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.920 --> 0:00:31.680 YouTube search Bloomberg Global News. We actually have a perfect 0:00:31.680 --> 0:00:35.000 guest to talk about what's going on over in Europe specifically, 0:00:35.040 --> 0:00:38.239 and and lots more in terms of his own local economy. 0:00:38.600 --> 0:00:40.720 Nice to have with us, and and actually here in 0:00:40.840 --> 0:00:43.360 studio is Martin Shanahan. He's the CEO at i D 0:00:43.479 --> 0:00:47.080 a Ireland. It's Ireland's government agency. They are responsible for 0:00:47.159 --> 0:00:49.440 the attraction and development of f D. I were talking 0:00:49.440 --> 0:00:52.680 about foreign direct investment into that country. So nice to 0:00:52.680 --> 0:00:54.760 have you in studio with Tim and myself. How are you. 0:00:55.280 --> 0:00:57.360 I'm good, Thanks Carl. That's great to be back here. 0:00:57.400 --> 0:01:00.080 With yourself in time. It's been nothing two years that 0:01:00.160 --> 0:01:01.560 it is here in personal even though I know we've 0:01:01.600 --> 0:01:07.760 spoken over various platforms in the meantime. Yeah, it's you know, 0:01:08.959 --> 0:01:11.280 I suppose it's been a bizarre two years and we 0:01:11.319 --> 0:01:13.319 thought we were just coming out of those bizarre two 0:01:13.360 --> 0:01:16.720 years and now we're back into a whole new level 0:01:16.760 --> 0:01:21.120 of challenge. But but but I'm good. I'm back in 0:01:21.920 --> 0:01:25.520 traveling and back in in the US here for the 0:01:25.560 --> 0:01:30.200 week of Evince associated with Saint Patrick's Day. UM, I 0:01:30.319 --> 0:01:32.679 was down. I get tangled in a parade over the weekend, 0:01:32.800 --> 0:01:35.160 walking the dogs. I was down in New York Stock Exchange. 0:01:35.240 --> 0:01:37.360 This morning for Ireland Day, we rang the bell. It 0:01:37.480 --> 0:01:39.959 was so Yeah, we're very much out on the road 0:01:40.360 --> 0:01:43.000 doing what we did previously, promoting hardening Ireland as a 0:01:43.040 --> 0:01:45.440 location for investment. And we want to talk about investments 0:01:45.440 --> 0:01:48.200 going in and your economy. Got to ask you that 0:01:48.280 --> 0:01:49.800 when I think it's prone to talk about what's going 0:01:49.800 --> 0:01:52.880 on in Europe UM following the Russian invasion subsequent war, 0:01:53.560 --> 0:01:57.040 do you think and what's the take and the conversations 0:01:57.120 --> 0:01:59.560 you all are having with political and government leaders, in 0:01:59.560 --> 0:02:03.000 business leaders um about the responses so far by NATO 0:02:03.080 --> 0:02:08.600 and the United States against Russia. Have they gone far enough? So? So, 0:02:08.840 --> 0:02:11.920 I think firstly, and you know, our thoughts are with 0:02:12.040 --> 0:02:14.560 the people of Ukraine at this time. This This is 0:02:14.800 --> 0:02:19.919 you know, first and foremost a humanitarian story exactly, and 0:02:20.240 --> 0:02:25.760 I suppose Ireland's response has been primarily humanitarian, albeit that 0:02:25.840 --> 0:02:29.880 we are also obviously together with our European colleagues, EU colleagues, 0:02:30.320 --> 0:02:35.160 and we've taken sanctions against Russia, as has the US, 0:02:35.200 --> 0:02:38.680 and you know, those global sanctions are the most severe 0:02:38.720 --> 0:02:44.440 we've seen for any country, and um, you know, we 0:02:44.520 --> 0:02:48.240 hope they will have the desired impact. At the moment 0:02:48.320 --> 0:02:52.400 in Europe, what we're seeing obviously are the Ukrainian population 0:02:52.440 --> 0:02:56.760 spilling across borders out of necessity. I think there has 0:02:56.800 --> 0:03:00.480 been a very warm and generous response from the people 0:03:00.480 --> 0:03:03.839 of Europe Ireland. Is it a sea change in terms 0:03:03.919 --> 0:03:07.040 of are we seeing a new geopolitical division in our 0:03:07.080 --> 0:03:10.800 world potentially going forward longer term? Obviously we hope not. 0:03:11.600 --> 0:03:15.040 But but I think that the situation is very challenging clearly, 0:03:15.200 --> 0:03:18.519 and you know, we will, Ireland will play it's part. 0:03:18.720 --> 0:03:25.120 We have seen five thousand Ukrainian refugees arrive at our 0:03:25.160 --> 0:03:27.880 borders in the last two weeks. And again for your guests, 0:03:27.880 --> 0:03:32.480 Ireland is the furthest away probably a European country, you know, 0:03:32.480 --> 0:03:34.840 we're on the western edge of Europe. But but but 0:03:35.120 --> 0:03:38.440 we've taken you know, our our position is that Ukrainians 0:03:38.480 --> 0:03:40.800 are welcome in Ireland. They can come in. They don't 0:03:40.840 --> 0:03:44.640 require visa's paperwork at this point. They can arrive, they 0:03:44.680 --> 0:03:47.800 will receive all of the supports that Ireland can offer, 0:03:47.880 --> 0:03:50.880 whether that's healthcare, they will provide with social security numbers, 0:03:50.960 --> 0:03:55.120 they can work in Ireland immediately, and we will, you know, 0:03:55.240 --> 0:03:58.080 support and our expectation is we will have many more 0:03:58.120 --> 0:04:00.880 in the coming weeks. It is a human hearing crisis, 0:04:00.920 --> 0:04:04.960 as you mentioned, it's also a crisis with global implications 0:04:05.000 --> 0:04:08.200 in terms of geopolitical markets, and we're certainly seeing that 0:04:08.280 --> 0:04:11.040 play out in global markets right now, whether we're talking 0:04:11.360 --> 0:04:14.920 markets in the United States, in Europe or even other 0:04:14.960 --> 0:04:17.560 markets around the world. What about for your job when 0:04:17.560 --> 0:04:20.160 it comes to attracting foreign direct investment, does it make 0:04:20.160 --> 0:04:23.040 you at all concerned that the cell of of Ireland 0:04:23.480 --> 0:04:26.200 is going to be more difficult given its proximity, Given 0:04:26.200 --> 0:04:28.520 that it's in the you've given that, it's it's proximity 0:04:28.600 --> 0:04:31.400 to Ukraine. Yeah, so, I mean I think a couple 0:04:31.480 --> 0:04:35.920 of things. Firstly, and you know, undoubtedly this is has 0:04:35.960 --> 0:04:39.240 made probably Europe less attractive for FDI. I think this 0:04:39.279 --> 0:04:41.960 will also impact on the global flows of foreign direct 0:04:42.040 --> 0:04:45.479 investment as investors become more cautious and they take time 0:04:45.839 --> 0:04:50.560 to make decisions. And obviously FDI had already global flows 0:04:50.880 --> 0:04:53.799 I had already been heavily impacted by the COVID pandemic 0:04:53.839 --> 0:04:57.440 and are only recovering now from the pre COVID level, 0:04:57.560 --> 0:05:00.760 so so so that there's going to be a continuation. 0:05:00.760 --> 0:05:04.440 I think of that caution, then Europe potentially slightly less 0:05:04.440 --> 0:05:07.480 attractive than it was. I think within Europe again, Ireland 0:05:07.560 --> 0:05:11.279 is the supposed to the most geographically distant from you know, 0:05:11.360 --> 0:05:15.200 Eastern Europe. Well what I think in so far as 0:05:15.240 --> 0:05:18.120 there was any kind of you know plus here, you know, 0:05:18.560 --> 0:05:21.880 it just gives us more stability, you know what I 0:05:21.880 --> 0:05:24.920 meaning that we're not in the direct region. So you know, 0:05:25.040 --> 0:05:29.400 it was already a really competitive world for foreign direct investment. 0:05:29.880 --> 0:05:32.400 I think it's just become more challenging in terms of 0:05:32.400 --> 0:05:36.400 I suppose the the economic impacts on Ireland though, of 0:05:36.480 --> 0:05:38.720 the Russian invasion of Ukraine. I think the first thing is, 0:05:38.760 --> 0:05:44.160 you know, we're not directly exposed. You know, even if 0:05:44.200 --> 0:05:46.919 I look at our own portfolio of foreign direct investment companies, 0:05:46.920 --> 0:05:49.880 there are there are eight Russian companies, you know, operating 0:05:50.200 --> 0:05:54.800 in Ireland. There are very few, if any Ukrainian companies 0:05:54.839 --> 0:05:57.920 operating in Ireland, so that direct exposure doesn't exist. But 0:05:57.960 --> 0:06:00.360 what what will happen, and what is clear is there's 0:06:00.360 --> 0:06:03.400 going to be indirect impacts. And those indirect impacts are 0:06:03.440 --> 0:06:04.920 going to come in a number of ways. They're going 0:06:04.960 --> 0:06:08.560 to come through increased energy prices and we're already seeing that. 0:06:08.640 --> 0:06:11.960 And you know, and even though Ireland isn't directly exposed 0:06:12.000 --> 0:06:14.159 again because we get our gas from the gas field 0:06:14.160 --> 0:06:17.560 off the shores of Ireland and from the UK, prices 0:06:17.560 --> 0:06:19.960 in general are going to increase as you know, blind 0:06:19.960 --> 0:06:22.719 demand issues kick in. We're going to see supply chain 0:06:22.760 --> 0:06:25.760 issues potentially, and we're already against seeing some of that 0:06:26.440 --> 0:06:30.680 coming out of both Russia and Ukraine. Aircraft leasing an 0:06:30.720 --> 0:06:35.720 issue Ireland, you know, is heavily obviously exposed in aircraft 0:06:35.760 --> 0:06:38.000 leasing because we have some of the largest aircraft vestors 0:06:38.040 --> 0:06:40.280 in the world. And and you're going to see so 0:06:40.320 --> 0:06:42.400 you're gonna see a lot of indirect impacts coming through. 0:06:42.440 --> 0:06:44.640 We're going to continue along these lines, and we're going 0:06:44.680 --> 0:06:47.400 to continue with Martin Shanahan, CEO at IDA Ireland. He 0:06:47.520 --> 0:06:51.280 is in studio with us right here at Bloomberg Headquarters. 0:06:51.320 --> 0:06:53.919 This is Bloomberg Business Week, and this is Bloomberg Radio. 0:06:55.200 --> 0:06:59.240 This is Bloomberg Business Week with Carol Matter in Bloomberg 0:06:59.279 --> 0:07:03.320 Quick takes him Stan on Bloomberg Radio. We're here with 0:07:03.400 --> 0:07:06.480 Martin Shanahan. He's CEO at I d A Ireland. This 0:07:06.560 --> 0:07:09.760 is the agency responsible for really upbringing in for direct 0:07:09.800 --> 0:07:13.040 investment into the country. He's here in our Interactive Brokers studio. 0:07:13.440 --> 0:07:16.280 So the global corporate tax rate, you guys have been 0:07:16.320 --> 0:07:21.240 a haven. Maybe is that the that is not a 0:07:21.240 --> 0:07:26.520 fair all right? But the question okay, because of your 0:07:26.600 --> 0:07:31.760 low global corporate tax rate, you've got Google, Apple, Meta, uh, Facebook, 0:07:31.760 --> 0:07:34.320 of course, UM, so many I think TikTok has just 0:07:34.480 --> 0:07:37.560 been has gone into Ireland because of your low global 0:07:37.560 --> 0:07:41.200 corporate tax rates. I will not use that h word. Um, 0:07:41.320 --> 0:07:45.080 but you guys last fall are now all in on 0:07:45.440 --> 0:07:48.560 a global minimum corporate tax rate of now fift It's 0:07:48.560 --> 0:07:51.840 been twelve and a half percent in Dublin and in Ireland. Um, 0:07:52.000 --> 0:07:55.440 why the change. Yeah, the change results because there's a 0:07:55.440 --> 0:07:57.960 global agreement and you know what you had to do it, 0:07:58.000 --> 0:08:01.120 didn't you Well, we were the last interet I think, 0:08:01.200 --> 0:08:03.720 as you know, and because and we wanted certainty. We 0:08:03.760 --> 0:08:06.520 wanted to certainty about what rate we would be going 0:08:06.600 --> 0:08:09.680 to and that's why it took so long, because you know, 0:08:09.800 --> 0:08:12.080 there was wording there which said, you know, at least 0:08:12.120 --> 0:08:15.320 fifteen percent. Ireland wanted to know at what rate exactly 0:08:15.360 --> 0:08:18.360 we would be um setting our rate at, which was 0:08:18.400 --> 0:08:21.080 whatever the you know, the most competitive rate was going 0:08:21.120 --> 0:08:23.760 to be. So when true discussions at the o e 0:08:23.800 --> 0:08:26.040 c D it became apparent that fift was going to 0:08:26.080 --> 0:08:30.640 be the minimum, and it was became apparent that everybody 0:08:30.720 --> 0:08:32.920 was going to leave at once. Then that provided the 0:08:32.920 --> 0:08:36.760 context for Ireland to enter the agreement. And you know, 0:08:36.800 --> 0:08:39.720 Ireland just to be absolutely Ireland is not a taxhaven. 0:08:39.760 --> 0:08:42.320 It never has been a tax We have a competitive 0:08:42.440 --> 0:08:46.240 rate of taxation to encourage businesses, both Irish business international 0:08:46.240 --> 0:08:50.360 businesses to be there and and some can, but it 0:08:50.400 --> 0:08:52.920 would be incorrect and and obviously they have a definition 0:08:52.920 --> 0:08:55.120 of what that is and and meets Ireland meets none 0:08:55.160 --> 0:08:58.679 of the crisis definitely brings corporate companies, big corporate companies 0:08:58.720 --> 0:09:01.840 to you guys, certainly is one of the factors. Undoubtedly, 0:09:01.960 --> 0:09:05.520 as well as the very high rates of education and talent. 0:09:05.800 --> 0:09:07.480 Both are the Irish talent and the talent that we 0:09:07.480 --> 0:09:11.520 have attracted it from elsewhere, the pro enterprise policies, the stability, 0:09:11.640 --> 0:09:15.800 so even post you know, it was known all out 0:09:15.880 --> 0:09:18.040 last year we're likely to go into the agreement, we 0:09:18.080 --> 0:09:20.480 have continued to see even though we're increasing the rate 0:09:20.480 --> 0:09:24.560 for companies over seven in frontever absolutely not and in fact, 0:09:24.679 --> 0:09:27.079 you know, we gained market share of FDN and to 0:09:27.160 --> 0:09:31.440 Europe during twenty one in the midst of the pandemic. 0:09:31.720 --> 0:09:35.000 And that's because again I think, you know, when companies 0:09:35.160 --> 0:09:38.280 were much more cautious about the investment decisions that are made, 0:09:38.280 --> 0:09:40.679 they couldn't travel and so on, they decided to go 0:09:40.800 --> 0:09:43.720 with stability and track record. And you know, we have 0:09:43.800 --> 0:09:47.120 seventeen hundred companies from across the globe operating in Ireland, 0:09:47.200 --> 0:09:49.240 many of the global brand names that you have mentioned, 0:09:49.400 --> 0:09:52.920 but also companies internationalizing for the first time out of 0:09:52.960 --> 0:09:55.440 the US, out of other countries, and they're choosing Ireland. 0:09:55.440 --> 0:09:58.520 To forty nine companies invested in Ireland last year, to 0:09:58.559 --> 0:09:59.920 be fair, and I'll give you this that in an 0:10:00.160 --> 0:10:02.120 environment that we are in today, where you realize you 0:10:02.160 --> 0:10:04.120 can be in a market and things can change pretty 0:10:04.160 --> 0:10:07.280 pretty rapidly, you do look for stability. Stability in terms 0:10:07.280 --> 0:10:09.839 of setting up your international operations. Yeah, to that end, Martin, 0:10:09.880 --> 0:10:13.040 I'm wondering about what you need to go out and 0:10:13.080 --> 0:10:17.640 sell to potential investors who are thinking and considering Ireland 0:10:17.960 --> 0:10:20.280 now that the tax rate that there is parody and 0:10:20.400 --> 0:10:22.480 one from one country to another. You talked about education, 0:10:22.520 --> 0:10:25.280 you talked about skill level, but but what is the 0:10:25.480 --> 0:10:27.480 number one selling point right now, and that there is 0:10:27.520 --> 0:10:30.720 parody on the tax level. The number one conversation that 0:10:30.840 --> 0:10:32.920 we are having with clients, and this has been the case, 0:10:32.960 --> 0:10:37.120 I would say for at least five years, it's talent, talent, talent, talent. 0:10:37.200 --> 0:10:42.360 It is those companies and those countries that can attract, 0:10:43.559 --> 0:10:45.880 retain and grow talent are the ones that are going 0:10:45.880 --> 0:10:47.360 to be such. I have to jump in here, Carol 0:10:47.400 --> 0:10:49.319 and I were part of a Bloomberg Live event last 0:10:49.360 --> 0:10:51.839 week work Shifting, where we focused on the future of work, 0:10:51.960 --> 0:10:54.559 and the theme was how difficult it is to attract 0:10:54.559 --> 0:10:56.679 and retain talent here in the United States in a 0:10:56.720 --> 0:10:59.960 post COVID world. How would you characterize it in Ireland 0:11:00.160 --> 0:11:01.880 right now? Is it tough for companies to attract and 0:11:01.880 --> 0:11:05.240 retain that talent? There are talent challenges everywhere. I would 0:11:05.240 --> 0:11:08.040 say relatively, our Land does very well because of that 0:11:08.200 --> 0:11:10.719 education system I mentioned earlier. You know, we have really 0:11:10.800 --> 0:11:14.920 high participation rates in third level. We have really tried 0:11:14.920 --> 0:11:17.560 to align the output from our education system with the 0:11:17.559 --> 0:11:21.280 needs of enterprise. But crucially we have remained open and welcoming. 0:11:21.520 --> 0:11:24.360 Say immigrate, are you gout? You guys are welcoming. Yes, 0:11:24.520 --> 0:11:27.520 absolutely so, your full mobility within the European Union. And 0:11:27.559 --> 0:11:30.600 then you can where the skills aren't available within the 0:11:30.600 --> 0:11:33.320 European Union, you can bring in a talent from outside 0:11:33.320 --> 0:11:35.720 of the European Union. That is, you know, the a 0:11:35.760 --> 0:11:39.680 key selling point Martin. How does the economic global economic 0:11:39.760 --> 0:11:42.160 environment look. We've just got about forty seconds. Yeah, it 0:11:42.160 --> 0:11:44.400 looks very challenging and uncertain, to be honest, I mean 0:11:44.600 --> 0:11:47.079 it has been a very challenging two years, we were 0:11:47.160 --> 0:11:51.720 just I suppose, seeing some stability and across the globe economically, 0:11:52.000 --> 0:11:55.400 we were seeing those global FDI flows recover. And obviously 0:11:55.480 --> 0:11:59.480 the recent developments in Eastern Europe have certainly, um you know, 0:11:59.559 --> 0:12:01.880 created a whole new level of challenge which we weren't 0:12:01.880 --> 0:12:03.560 dealing with up to that. Is there any talk of 0:12:03.600 --> 0:12:07.240 recession or is there talk about recession in your home countries? 0:12:07.280 --> 0:12:10.680 You look at at the moment at predictions are for 0:12:10.920 --> 0:12:14.160 about five percent growth this year, So elsewhere do you 0:12:14.160 --> 0:12:16.920 get Listen, I think we're in un chartered territory at 0:12:16.920 --> 0:12:19.320 the moment, so I you know, I think most recent 0:12:20.320 --> 0:12:22.840 predictions from kind of the international institutions are sowing still 0:12:22.840 --> 0:12:25.760 positivity for European Union. But let's be honest, you know, 0:12:25.800 --> 0:12:28.679 everything could change in coming weeks. We're very serious and 0:12:28.679 --> 0:12:30.839 watching what's going on in Ukraine, but every once in 0:12:30.880 --> 0:12:32.319 a while we need something on a little bit of 0:12:32.360 --> 0:12:34.640 a lighter, lighter fair And I gotta say, I was 0:12:34.640 --> 0:12:37.520 walking around in my hometown and ran into a St. 0:12:37.559 --> 0:12:40.760 Patty's Day parade. You are actually headed to the White House, 0:12:40.960 --> 0:12:45.320 are you are? Your Your group is yes. So this 0:12:45.559 --> 0:12:47.720 week every year you know, we're we're, we're. You know, 0:12:47.840 --> 0:12:50.679 there's a huge governmental presence in the US and indeed 0:12:50.679 --> 0:12:53.960 across the globe bringing the Irish message. I mean this 0:12:54.040 --> 0:12:57.280 year that the plan was very much a celebrity, celebratory message. 0:12:57.320 --> 0:12:59.959 I think post COVID it would be the first time 0:13:00.040 --> 0:13:02.360 two years exactly. This is the first time in two years. 0:13:02.400 --> 0:13:07.000 Having said that, somewhat tempered obviously given what's happening in Ukraine. 0:13:07.040 --> 0:13:09.079 So it is a message I think, still a celebratory 0:13:09.120 --> 0:13:12.160 message after two years of of COVID where Ireland came 0:13:12.200 --> 0:13:14.880 through that, you know, I think it relatively well, but 0:13:14.960 --> 0:13:17.600 also solidarity with Ukraine obviously in the context where we 0:13:17.600 --> 0:13:20.160 find yourself. We will be down in d C later 0:13:20.200 --> 0:13:24.000 in the week. Uh. Normally the Prime Minister of the 0:13:24.000 --> 0:13:27.680 Theater gets to meet with President of the Day and 0:13:27.760 --> 0:13:31.520 President Biden has again UM will again host at such 0:13:31.559 --> 0:13:35.520 a meeting on Thursday, so the theatock will meet with 0:13:35.600 --> 0:13:37.880 them and I will be in the White House for 0:13:37.920 --> 0:13:42.360 the traditional Shamrock reception. What's the message that you're hoping 0:13:42.360 --> 0:13:45.120 to get across that day. Yeah, I think the focus 0:13:45.160 --> 0:13:48.000 on on Thursday is likely to be on on three things. 0:13:49.080 --> 0:13:52.760 Undoubtedly Ukraine and developments. There will be I think on 0:13:52.840 --> 0:13:56.080 the on the agenda, very high on the agenda, the 0:13:56.200 --> 0:13:59.679 very strong bonds between Ireland and the US, and you 0:13:59.720 --> 0:14:01.480 know how we continue to build them. I mean they 0:14:01.480 --> 0:14:05.520 are extraordinary strong. And then Todly braggit in the Northern 0:14:05.760 --> 0:14:08.080 Protine call. I think it's likely to come up with one. 0:14:08.160 --> 0:14:11.240 Are you gonna have corn, beef and cabin listen, We'll 0:14:11.280 --> 0:14:16.040 have to see. I'm just saying, Martin Shanahan, safe travels. 0:14:16.040 --> 0:14:17.800 We always appreciate that you make time for us. He 0:14:17.920 --> 0:14:20.080 is the CEO at i D A Ireland. Here on 0:14:20.120 --> 0:14:24.160 Bloomberg Radio, you're listening to Bloomberg Business Week with Carol 0:14:24.240 --> 0:14:28.680 Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:14:28.960 --> 0:14:30.600 So this next story, it is one of the most 0:14:30.640 --> 0:14:32.640 right on the Bloomberg. It's also the Bloomberg Big Take, 0:14:32.840 --> 0:14:35.720 and it is in the upcoming new issue of Bloomberg 0:14:35.720 --> 0:14:38.520 Business Week. It'll be out later this week. It's really 0:14:38.560 --> 0:14:41.880 the story everyone is and needs to read. It's about 0:14:41.880 --> 0:14:44.280 the eighteen minutes of trading chaosk to him that broke 0:14:44.640 --> 0:14:46.840 the nickel market. Makes me think of the tin crisis 0:14:46.840 --> 0:14:48.560 of the mid nineteen eighties. I don't know about you guys, 0:14:48.840 --> 0:14:53.440 unforgettable moment exactly that ten crisis that I knew so 0:14:53.520 --> 0:14:57.840 little about, and I read Jack Farchis story in Business Week. 0:14:57.960 --> 0:15:00.200 You're hearing Joe Webber, editor at Bloomberg business Week. He's 0:15:00.200 --> 0:15:03.040 with us in the Bloomberg Interactive Broker studio. Jack Varchie 0:15:03.040 --> 0:15:05.520 is senior Energy and Commodities reporter for Bloomberg News. He 0:15:05.600 --> 0:15:08.720 joins us on the phone from London in all seriousness, Joel, Um, 0:15:09.240 --> 0:15:11.240 that's a superlative that I think last week and this 0:15:11.280 --> 0:15:14.040 week we were using and are using because of how 0:15:14.080 --> 0:15:18.400 big of a crisis this was, Yes, and basically remains. 0:15:18.960 --> 0:15:22.520 You know, a week ago the nickel market basically came 0:15:22.560 --> 0:15:27.200 to to an utter and complete halt um that basically remains. 0:15:27.240 --> 0:15:30.360 We don't know exactly how that's gonna end yet, um, 0:15:30.480 --> 0:15:32.800 But you know, for me, like all of a sudden, 0:15:32.840 --> 0:15:36.880 like we published a big nickel feature like a month ago, 0:15:37.120 --> 0:15:40.240 wasn't a month ago, It seems like forever. Uh. And 0:15:40.320 --> 0:15:44.200 that one was obviously about this huge scandal involving Singapore, right, 0:15:44.360 --> 0:15:46.920 and now we have a tycoon in China all wrapped 0:15:46.960 --> 0:15:50.000 up in this one jack, Who who is he? And 0:15:50.120 --> 0:15:55.320 what are the stakes here? His name is san Juanda 0:15:55.560 --> 0:15:58.680 and I'm sorry I probably miss brounced that, uh, but 0:15:59.440 --> 0:16:03.320 he is the owner of a company called Singshan uh 0:16:03.320 --> 0:16:06.360 and and in many ways he's quite an impressive figure. Um, 0:16:06.680 --> 0:16:09.880 you know, starting out from from pretty much nothing, he 0:16:10.000 --> 0:16:13.080 built this company, Tingshan into what is now by far 0:16:13.120 --> 0:16:16.800 the world's largest producer of both nickel and stainless steel. 0:16:16.840 --> 0:16:20.520 And he's really introduced some technologies and some techniques that 0:16:20.520 --> 0:16:24.400 have pretty pretty much revolutionized both the nickel and the 0:16:24.400 --> 0:16:28.680 stainless steel market. Um. But the issue that's that's that's 0:16:28.720 --> 0:16:31.360 come along is that the last few weeks he found 0:16:31.400 --> 0:16:35.280 himself with this big short position in the nickel market, 0:16:35.560 --> 0:16:40.320 and he's been squeezed and squeeze to a point where 0:16:41.520 --> 0:16:44.440 his his short covering and his bank short covering has 0:16:44.480 --> 0:16:48.160 caused the nickel price despike two in a little over 0:16:48.200 --> 0:16:51.440 twenty four hours. And the thing is we care about it. 0:16:51.520 --> 0:16:53.800 I mean, it really caught all of our attention because 0:16:53.880 --> 0:16:56.720 this is a commodity that, as you write, touches the 0:16:56.920 --> 0:17:02.240 entire global economy. It's important. Yeah, that's right. I mean, 0:17:02.440 --> 0:17:05.560 you know, we talk about short squeezes, and I think 0:17:05.600 --> 0:17:08.159 everyone remembers, you know, the stories about Game Stop and 0:17:08.560 --> 0:17:10.600 that kind of thing last year. But it's a bit 0:17:10.600 --> 0:17:13.000 different when you have a short squeeze in a commodity 0:17:13.800 --> 0:17:17.879 than in an equity, because this means the price of 0:17:18.000 --> 0:17:21.600 nicol going up, and nicol is in stainless steel, and 0:17:21.640 --> 0:17:23.800 stainless steel is in all of our homes. You know. 0:17:24.160 --> 0:17:27.480 I'm pretty sure that all of you there have cutlery 0:17:27.520 --> 0:17:29.520 in your cutlery drawer that's made of stainless steel, and 0:17:29.600 --> 0:17:33.200 lots of other things in the white goods around your house. Um. 0:17:33.240 --> 0:17:37.399 It's also crucial for electric vehicles because an awful lot 0:17:37.440 --> 0:17:39.840 of the batteries that are using electric vehicles contain a 0:17:39.880 --> 0:17:44.200 lot of nickel. The London Medical Exchange, the London Metal Exchange, 0:17:44.200 --> 0:17:48.480 excuse me, is an integral part treatment a well, and 0:17:48.520 --> 0:17:51.960 the metal exchange might after and and that's a that's 0:17:51.960 --> 0:17:54.520 a big question is the future Jack, as I read 0:17:54.560 --> 0:17:58.040 in your piece of the London Medal Exchange, Um, how 0:17:58.080 --> 0:18:03.280 does it play into the story and its status after this? Yeah, 0:18:03.320 --> 0:18:07.440 I think it's very uncertain. I mean, the big thing 0:18:07.520 --> 0:18:09.440 that has caught a lot of people's attention more than 0:18:09.520 --> 0:18:12.959 just the twice volatility, which is really extraordinary. I mean, 0:18:12.960 --> 0:18:15.720 it's hard to overstate, you know, you don't see commodity 0:18:15.800 --> 0:18:19.119 prices moving two d in twenty four hours. I think 0:18:19.160 --> 0:18:22.480 it's probably the most extreme moves that I've seen in 0:18:22.520 --> 0:18:24.920 my career, and that most of the people, including some 0:18:25.040 --> 0:18:27.800 of an awful lot older than me, has seen there. Um. 0:18:28.119 --> 0:18:30.359 But the thing that has really caused a lot of 0:18:30.400 --> 0:18:34.639 controversy is that after the price moved on Tuesday morning, 0:18:34.960 --> 0:18:37.200 in this period, there's eighteen minutes that we write about 0:18:37.200 --> 0:18:41.120 in the piece, um from you know, around fifty houses 0:18:41.320 --> 0:18:42.600 of the time all the way out to a hundred 0:18:42.640 --> 0:18:46.920 dollars of the time in the space of a few minutes. Uh, 0:18:47.040 --> 0:18:51.080 the MMY suspended trading in exchange, and then they decided 0:18:51.200 --> 0:18:55.000 to cancel those trades that took place on the Tuesday mornings. 0:18:55.000 --> 0:18:56.920 That's about four billion dollars worth of trade that they're 0:18:56.920 --> 0:19:00.760 just canceled. Um. Now, there's an awful lot of investors, 0:19:00.760 --> 0:19:04.280 heads funds, uh they wanted to play as golden facts 0:19:04.280 --> 0:19:07.040 among them who are very cross about this and have 0:19:07.160 --> 0:19:09.639 been complaining to the ELLEMY and saying you can't just 0:19:09.680 --> 0:19:12.240 can't do that. You know, if you want an exchange 0:19:12.280 --> 0:19:16.000 and people trade, you can't decide that then as the fact, 0:19:17.000 --> 0:19:19.040 just the cancel of trade and a lot of people 0:19:19.080 --> 0:19:21.240 saying that they might no longer trade on the enemy 0:19:21.359 --> 0:19:24.480 after this, because how can you have faith that you 0:19:24.520 --> 0:19:26.840 can trade on the exchange and your contract will be 0:19:26.880 --> 0:19:30.000 honored if the exchange can come along and cancel it 0:19:30.520 --> 0:19:33.239 after the fact. And obviously, Jack, one of the things 0:19:33.280 --> 0:19:35.720 that makes this different is that there's a physical element 0:19:35.760 --> 0:19:40.440 to how how Nickel trades, right, um, So so talk 0:19:40.480 --> 0:19:45.480 to us about your reporting uh today actually right, because 0:19:45.680 --> 0:19:50.040 we think there may be a way out of this yet. Yeah, 0:19:50.119 --> 0:19:53.000 we've moved We've moved forward quite a bit today, I think, 0:19:53.280 --> 0:19:56.959 um in terms of beginning to see how the situation 0:19:57.040 --> 0:20:00.040 might be resolved and we might begin to see the 0:20:00.040 --> 0:20:06.000 me Nicol market reopen. Um. So Mr Shang of seeing 0:20:06.040 --> 0:20:10.520 Shan has reached a deal with m with his banks, 0:20:10.560 --> 0:20:13.560 with the banks that which he held his his short 0:20:13.600 --> 0:20:18.119 bet in Nickel led by JP Morgan, that they will 0:20:18.119 --> 0:20:20.800 give him a standstill so they won't ask him to 0:20:20.800 --> 0:20:22.800 pay up his margin calls. They won't make any further 0:20:22.840 --> 0:20:26.280 margin calls on whom um they're putting together alone facility 0:20:26.320 --> 0:20:28.000 for him and essentially to allow him to hold on 0:20:28.080 --> 0:20:30.800 to this short position not to be squeezed any further 0:20:31.480 --> 0:20:34.560 um and they're hoping that the price will then go 0:20:34.680 --> 0:20:38.040 down to a more normal level. And uh, these billions 0:20:38.040 --> 0:20:41.119 of dollars of losses that he's sitting on at the moment, 0:20:41.280 --> 0:20:45.600 applied to fifty valgy dollars, nickel will then get much smaller. 0:20:46.000 --> 0:20:47.879 And here will he will be able to make money 0:20:47.880 --> 0:20:52.080 from his business producing nicols stainless and loans that could 0:20:52.119 --> 0:20:55.439 allow element nicol market to reopen at some point in 0:20:55.480 --> 0:20:57.440 the coming days. We still don't know when that's gonna happen. 0:20:58.000 --> 0:20:59.320 All Right, We're gonna have to leave it. There are 0:20:59.600 --> 0:21:02.720 a lot in this story. It really helps explain what happened, 0:21:02.840 --> 0:21:04.639 and I mean it was something that happened with a 0:21:04.640 --> 0:21:07.119 lot of superlatives that we talked about last week. Our 0:21:07.160 --> 0:21:10.200 thanks to Bloomberg New Senior Energy and Commodities reporter Jack Forcie, 0:21:10.359 --> 0:21:12.119 and of course, our thanks to Joel Webber, editor of 0:21:12.119 --> 0:21:16.000 Bloomberg Business Week. This is Bloomberg Business Week with Carol 0:21:16.040 --> 0:21:20.480 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:21:20.800 --> 0:21:22.720 A lot of stories in China today. We've talked about 0:21:22.720 --> 0:21:25.320 the panic selling that we're seeing gripping Chinese stocks, the 0:21:25.320 --> 0:21:28.840 biggest plunge since OH eight, widespread lockdowns in China due 0:21:28.880 --> 0:21:30.720 to COVID infections, how they could affect half of the 0:21:30.720 --> 0:21:35.159 country's GDP. Also questions about the relationship between China and Russia. 0:21:35.160 --> 0:21:37.960 And then of course an interesting weekend column, his Saturday 0:21:37.960 --> 0:21:41.000 column by Andy Brown. Yeah, and really really fascinating one. 0:21:41.040 --> 0:21:43.439 Andy Brown is editorial director at the Bloomberg New Economy. 0:21:43.440 --> 0:21:46.160