India shines at G20 summit

This is an audio transcript of the FT News Briefing podcast episode: ‘India shines at G20 summit’

Marc Filippino
Good morning from the Financial Times. Today is Monday, September 11th, and this is your FT News Briefing.

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The G20 summit turned out to be a big win for India — maybe not so much for the group as a whole. Australia’s biggest pension fund is going digital and PwC is turning down millions of dollars in business. Plus, investors are piling into Venezuelan government bonds as Washington and Caracas inched towards a deal. I’m Marc Filippino, and here’s the news you need to start your day.

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The Group of 20 summit came to a close over the weekend in India, and one thing was clear: the alliance between the world’s biggest economies is holding on by a thread. Here to talk to me about this is the FT’s John Reed, in New Delhi. He covered the G20 this year. Hi, John.

John Reed
Hi, there.

Marc Filippino
OK. So usually the big thing to come out of these annual summits is something known as the leaders’ declaration. It’s a joint communique of sorts from the leaders at the G20. So what jumped out at you about this year’s declaration?

John Reed
G20 is kind of boring. It’s very dull and worthy of stuff. But everyone — most notably the journalists — focus on the leaders’ communique because that’s where you see the real friction in our world. Right? And the point that we were all focused on was the language condemning the war in Ukraine, which was carried over from Indonesia’s presidency and the Bali summit last year, which basically condemned Russia for its, quote unquote, “aggression against Ukraine”. Whereas that that was agreed a year ago and just barely by the G20. This year it became clear during India’s presidency that there was no way that Russia and China were going to sign off on that. So what happened apparently over the past few days was that the US and other western countries caved a bit and watered down the language. So now it talks about the war in Ukraine, does not call out Russia by name for what it’s doing, deplores the impact of the war on, you know, markets and prices, which is very much the Indian view.

Marc Filippino
So there’s this watered down language about Russian aggression in Ukraine. What else came out of the summit?

John Reed
The other big outcome of this summit is that the African Union was admitted as a full G20 member. And this is something that Narendra Modi, the Indian prime minister, had been proposing. He wrote to G20 leaders back in June asking them to admit the AU as member. India succeeded in this. So it’s a concrete outcome that you’ve got Africa sitting directly at the table. Until now, you’ve just had South Africa as the sole representative of the continent in the G20.

Marc Filippino
Yes. Speaking of India, the summit was a key moment for the country’s prime minister, Narendra Modi. How did he make out?

John Reed
I think this was an unadulterated win, both for India and for Modi personally. It’s worth remembering his going into an election early next year. The G20 presidency, it’s basically a routine duty, but India sort of parlayed it into this year-long festival and celebration of all things Indian. They almost ran it like, you know, as if they were holding the Olympics. And India also kind of amplified its role as a voice of the global South.

Marc Filippino
John, just out of curiosity, what — if anything — did this summit signal to you about the strength of the G20?

John Reed
I think it’s a good moment for the principle of multilateralism, which has been seriously frayed over the past couple of years, starting with Covid, which set off this race to the bottom, in some cases to the war in Ukraine, which obviously divided Russia and its allies on the one side and democracies on the other. The G20 was looking like it wasn’t fit for purpose anymore. And India managed to produce both some actual results, and that’s kind of a small miracle.

Marc Filippino
That was the FT’s South Asia bureau chief John Reed, in New Delhi. Thanks, John.

John Reed
Thanks, Marc.

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Marc Filippino
PwC is giving up on tens of millions of dollars in consulting work. The Big Four firm is telling US clients that they’ll stop offering some advisory services. It’s part of PwC’s wider revamp of its audit work, and it’s meant to reduce the risk of conflicts of interest. There’s this big worldwide debate happening right now over how accounting firms stay independent when auditing companies, they also consult. Clients are becoming less tolerant of conflicts, and reputational concerns in the profession are making it harder to attract young people. A lot of people see PwC’s move as a challenge to other firms to follow suit. It would be a tough pill to swallow, though. Public disclosures show Big Four firms sold $1.5bn of tax and miscellaneous consulting services to US-listed clients last year.

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Venezuelan bonds are rallying. Investors are betting that the government is getting close to a diplomatic breakthrough with the US. Washington and Caracas have been holding secretive talks for a while now, and an agreement could lead to softer US sanctions. Here to talk more about this is the FT’s Latin America editor, Michael Stott. Hi, Michael.

Michael Stott
Hi.

Marc Filippino
Why are investors so optimistic, Michael?

Michael Stott
They’re optimistic because they believe, based on information in some cases that is leaking out of the talks, that an agreement might be announced in a week or two. The scepticism in my part is based a little bit on the fact we’ve been here before. We had a rally in bond prices earlier in the year and it came to nothing. The talks didn’t have a breakthrough. They went back into hibernation. Now we’re another of those moments where we might be close to an agreement.

Marc Filippino
Now what can you tell us about this potential deal between the US and Venezuela?

Michael Stott
Well, the hope on the part of the US administration would be that Venezuela shows it is prepared to make some concrete moves towards free and fair presidential elections next year. If it sees concrete steps, the administration has said it would be ready to consider relief from some of the sanctions — the very harsh economic sanctions that were imposed on them as well by president Trump’s administration — that would be the ideal. The problem has been that so far, president Nicolás Maduro, who’s now being in power ten years in Caracas, has not given much sign that he is really interested in making any of those real concessions. I mean, what people tend to say in Caracas is Maduro doesn’t want to hold an election that he might lose. And it remains to be seen whether that’s changed.

Marc Filippino
So bond investors like the idea of a deal. What kind of shape are Venezuelan bonds in, generally?

Michael Stott
Well, that they trade at deeply distressed levels. And that’s because Venezuela defaulted on 60bn of debt issued under New York law in 2017 and has not been paying coupons. So they are for the brave only, rather like Cuban bonds, and you only buy them if you believe that something fundamentally is going to change in Venezuela. So they were trading as about 8 to 9 cents on the dollar a few weeks ago. Now they’re trading near 10 to 11 cents on the dollar. So that might not sound like much. But of course, as a percentage rise, it’s pretty significant.

Marc Filippino
And this rises just on the speculation that a deal could get done and the US could ratchet down sanctions. How much of an impact do you think an actual deal would have on the Venezuelan bond market?

Michael Stott
It could be very big. It could be very big indeed, because if the Venezuelan government is able to get some sanctions relief, obviously their priorities are to get sanctions relief on oil exports first and foremost, and on companies being able to deal with the state oil company, PDVSA. If they could get those things and Venezuela could start to really drill and pump oil on a significant scale again, then of course, it starts to become able to pay interest on the bonds. And at that point, the bonds start being worth many times more than they are currently. So the upside is very big, and that’s what draws speculative investors to these bonds.

Marc Filippino
Michael Stott is the FT’s Latin America editor. Thanks, Michael.

Michael Stott
Thank you.

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Marc Filippino
Australia’s largest pension fund is betting big on the digital frontier. The pension fund is called AustralianSuper and it’s investing €1.5bn into Vantage data centres, which is one of the largest data centre businesses in Europe. AustralianSuper’s investment reflects a pivot away from the struggling traditional property sector. You know, the one that focuses on things like malls and offices, and it’s a move towards infrastructure that houses servers and the computer hardware. Data centres are becoming more and more appealing to investors since they’re needed for the booming cloud computing and artificial intelligence industries. AustralianSuper manages nearly $300bn in assets, and sources indicate that this minority investment into Vantage is meant to kick-start a broader involvement.

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Before we go, the embattled president of Spanish soccer has stepped down. Luis Rubiales announced his resignation in an interview with Piers Morgan yesterday.

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Marc Filippino
Fifa had already suspended Rubiales from the role after he forcibly kissed Spain’s star player, Jenni Hermoso, at an award ceremony. The team had just won the Women’s World Cup. Hermoso filed a formal sexual assault complaint with Spanish prosecutors last week.

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You can read more on all of these stories at FT.com for free when you click the links in our show notes. This has been your daily FT News Briefing. Make sure you check back tomorrow for the latest business news.

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