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This is an audio transcript of the FT News Briefing podcast episode: Biden-Putin spar over Ukraine

Marc Filippino
Good morning from the Financial Times. Today is Wednesday, December 8th, and this is your FT News Briefing.

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Marc Filippino
Another shoe could drop in China’s ongoing crackdown on technology companies, and US president Joe Biden warned Russian leader Vladimir Putin not to invade Ukraine. Here’s the take from our Moscow bureau chief.

Max Seddon
This isn’t Putin trying to signal that he is preparing to invade Ukraine. This is more about demonstrating to Ukraine, but even more importantly, the US, that Russia has the capacity to crush Ukraine if it wants to.

Marc Filippino
We’ll also talk about the latest moves from activist hedge fund Elliott Management. I’m Marc Filippino, and here’s the news you need to start your day.

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Beijing is planning to restrict technology upstarts from using a crucial financial channel that other Chinese technology groups have been using to attract international capital. The FT reports that Chinese authorities are preparing this blacklist, and it would limit the role of foreign shareholders in Chinese tech companies. A new ban would likely apply to start-ups, not tech companies that currently use the investment tool to run their businesses. They’re called variable interest entities or VIEs. Chinese tech groups like Alibaba and Tencent use VIEs to get around foreign investment restrictions and raise billions of dollars from international investors. Sources said the blacklist could include sectors that use a lot of data or involve national security concerns. And if this sounds familiar, it’s because Washington has taken similar measures to restrict Chinese investment in Silicon Valley start-ups.

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US President Joe Biden held a two-hour video call with Russian President Vladimir Putin yesterday. This comes amid US concerns that Russia is planning to invade Ukraine. Biden used the call to warn Putin that there would be strong economic measures if he sent troops into Ukraine. Biden’s pressuring Germany to block Russia’s Nord Stream 2 gas pipeline. It was built to feed Russian gas into Germany and is still awaiting the green light. The FT’s Moscow bureau chief Max Seddon has been monitoring the talks from Russia. He says the Kremlin’s take on them is that Putin made it clear he wants security guarantees about Russia’s red lines.

Max Seddon
Something that a lot of people in Moscow have told me is this isn’t Putin trying to signal that he is preparing to invade Ukraine. This is more about demonstrating to Ukraine, but even more importantly, the US, that Russia has the capacity to crush Ukraine if it wants to. And that means that Russia is important and you have to listen to it and talk to it about what it wants on its terms. And for Putin, he’s been unusually explicit about this in recent weeks. He says that the West has to respect Russia’s red lines. The red lines are no NATO expansion and no deploying weapons systems in countries that border with Russia, and it looks like that the White House is ready to at least talk on this. The Kremlin said in the readout of the call that Biden and Putin had agreed to have future consultations on sensitive issues that appeared to be referring to this new security architecture for Europe, which is something that Putin has wanted for at least 15 years. That could really be what ultimately comes out of this, not an invasion or lack thereof, but some sort of broader security talks about some kind of new architecture is what Putin has been pretty public about seeking.

Marc Filippino
Max Seddon is the FT’s Moscow bureau chief.

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The Scottish energy group SSE is battling Elliott Management. Yesterday, the activist hedge fund slammed SSE’s plan for a cleaner energy transition and called for sweeping changes. Now SSE is only the latest company to contend with the aggressive activist hedge fund. Elliott is famous for going after corporate boards to maximise shareholder value. Elliott pushed for Twitter’s chief executive to leave. It’s been involved in the fight over Toshiba’s future, and it successfully pushed SoftBank into agreeing to another big share buyback. These are just a few of its victories. To find out more about Elliott, we have our hedge fund correspondent Laurence Fletcher on the line. Hey, Laurence.

Laurence Fletcher
Hi, Marc.

Marc Filippino
So Laurence, who runs Elliott Management, who’s behind the fund?

Laurence Fletcher
So Elliott is headed by and founded by Paul Singer. Actually, it was founded in 1977, and this is what he’s been doing for pretty much all his career. He’s a billionaire. He’s built a huge and very successful fund here, $50 billion in assets and across a huge range of strategies as well.

Marc Filippino
Now, how have they become so effective at getting corporate boards to do what they want?

Laurence Fletcher
I think it’s a few things. I think firstly, their size, and so for a fund like that buys into you, then you have to sit up and listen. They’ve also got a reputation for tenacity and some really big scalps as well. And I think the investment to really point to is was their 15-year battle with the government of Argentina, which is sort of an epic tale that ended in them winning and forcing the government to pay out on the defaulted debts. And it’s gone down as one of the greatest traits in hedge fund history. So when you’re up against that as a corporate CEO, you’ve got to listen.

Marc Filippino
So Laurence, when Elliot focuses on increasing shareholder value, does that go hand-in-hand with strengthening the company?

Laurence Fletcher
Yes, I think so. And actually in a recent letter to investors, they talk about sort of how it’s become a bit more difficult for activists. They talk, talk about sort of diminishing number of activists out there where you’ve got companies that are increasingly focused on stakeholders, a range of stakeholders and be that sort of employees and be that wider society and be that sort of environmental lobby groups or whatever. And Elliott really just see its role as saying, OK, you know, what we got to do here is make sure this management is held to account actually and is delivering what it should be delivering for the owners of the business.

Marc Filippino
You know, Laurence, it’s interesting to hear you say that there are fewer activists out there. You know, I feel like every time I turn around, there’s some sort of activist pressuring a board of an oil company or something else along those lines.

Laurence Fletcher
I certainly think Elliott is one of the funds that is leading the way and is helping, you know, show how to, for smaller activists, how they can take on companies. You’ve had much smaller firms such as Bluebell Capital, for instance, that’s had a lot of success. That’s a fund that’s worked with Elliott in the past as well. But I think more generally, we’re living in a sort of a really fruitful time for activist funds at the moment. You’ve got markets overall that have been buoyant and have been in activists’ favour. And you’ve also had some huge dislocations given the flows into ESG, given the coronavirus pandemic. So you had a real, some really good opportunities for activists to sort of get stuck into companies, and they hope they can create value.

Marc Filippino
Laurence Fletcher is the FT’s hedge fund correspondent. Thanks, Laurence.

Laurence Fletcher
Thanks, Marc.

Marc Filippino
And before we go, China’s population is ageing and shrinking, and the government really wants women to get married and have more babies. The problem is that weddings are really expensive. One study found that the average value of engagement gifts for rural couples that includes dowry like cash or housing has surged to nearly $50,000. It’s more than six times the annual household income. Now, earlier this year, officials launched a campaign to make marriage more affordable. They came up with suggested gift prices and tried to persuade people that happiness has nothing to do with engagement gifts. But not many people are buying that. Data show that marriage licences have actually fallen to a 13-year low.

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You can read more on all of these stories at FT.com. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

This transcript has been automatically generated. If by any chance there is an error please send the details for a correction to: typo@ft.com. We will do our best to make the amendment as soon as possible.

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