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A ‘very ugly’ day expected for Japan stocks after Ishiba’s election

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Good morning. Today we’re covering:

  • Thailand’s cash handout programme

  • How Israeli spies penetrated Hizbollah

  • The chaos and glory of Hong Kong’s Chungking Mansions

But we start in Japan, where Shigeru Ishiba’s election as leader of the ruling Liberal Democratic party is expected to put pressure on the country’s stocks this morning.

Ishiba, a former defence and agriculture minister who is set to take over as prime minister on October 1, is a China hawk who has vowed to prevent the nation from falling back into deflation.

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The new LDP leader has said he supports the Bank of Japan’s plan to normalise monetary policy. But investors are concerned about his support for heavier taxes on companies and investment income.

Before the winner of the leadership race was announced on Friday, Japan’s Nikkei 225 index had rallied 2.3 per cent and the yen had fallen, suggesting the market was positioned for a win by economic security minister Sanae Takaichi. Takaichi supported stock market-friendly “Abenomics” policies of ultra-low interest rates and fiscal stimulus.

Nikkei 225 futures traded in Chicago fell sharply after the LDP election result announcement.

“The futures market tells us it’s going to be very ugly on Monday,” said a trader at one of Japan’s largest investment banks. Read the full story.

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  • FT View: To succeed as the leader of a divided party, Ishiba will need to show a strong streak of pragmatism, rather than pursue his own, long-held political projects, writes our editorial board.

  • More Japan: Six decades after the first bullet train left Tokyo Station, Leo Lewis celebrates the shinkansen — an icon of speed, style and national identity.

Here’s what else I’m keeping tabs on today:

  • Economic data: S&P Global reports September manufacturing and services PMI data for China. Japan publishes August preliminary industrial production and retail sales figures.

  • United Nations: The UN General Assembly debate concludes in New York.

Five more top stories

1. Thailand has begun rolling out a $14bn stimulus programme this week to distribute cash to millions of citizens, pitching it as the centrepiece of an economic plan to boost growth. But the much-anticipated scheme may not be enough to turn around south-east Asia’s second-largest economy. Here’s why.

2. Israel has launched a wave of air strikes against Houthi rebels in Yemen, dramatically widening its offensive against Iranian-backed militants. The strikes came just two days after Israel assassinated Hizbollah leader Hassan Nasrallah in Lebanon. Here’s the latest.

3. Rescuers are still searching for survivors after heavy rain and wind from tropical storm Helene devastated south-eastern US, leaving more than 60 people dead, destroying homes and causing power outages for millions. The storm could result in up to $34bn in losses from property damage and reduced economic output, according to Moody’s.

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4. Austria’s far-right Freedom party was on course to win a historic electoral victory yesterday, in a result that will consolidate pro-Russian, anti-establishment forces in central Europe. The FPÖ, which has never come first in a national election before, was projected to win just under 29 per cent of ballots cast. The result bolsters the claim of its firebrand leader Herbert Kickl to become Austria’s next chancellor but he still needs coalition partners to form a government.

5. A recent string of indicators pointing to the Eurozone’s slowing growth will probably lead to a 0.25 per cent interest rate cut by the European Central Bank next month, economists predict. The long-standing consensus among economists had been that the ECB would wait at least until December before deciding on a further rate cut. Here’s what changed that view.

News in-depth

© FT montage/AP Photo/Hassan Ammar

In the past few weeks, the Israeli military and security establishment has delivered a steady drumbeat of devastating blows to Hizbollah, culminating in the assassination of its leader Hassan Nasrallah on Friday night. But the successful attacks on one of its biggest regional rivals belie an uncomfortable truth: in nearly four decades of battling Hizbollah, only recently has Israel truly turned the tide. What changed, said current and former officials, is the depth and quality of the intelligence that Israel was able to lean on.

We’re also reading . . .

  • Bacha Coffee: The Singapore-based coffee brand is embarking on an aggressive expansion as it launches a store on the Champs-Elysées in Paris and other locations across Europe.

  • The UniCredit-Commerzbank tussle: Banks getting bigger may be attractive, but there are significant drawbacks, writes Simon Samuels, especially for the taxpayer.

  • Green business rethink: An overdue push to reshape markets, not just individual companies, is under way at last, writes Pilita Clark.

Chart of the day

Paint manufacturers are pushing for a rethink of EU anti-dumping measures against Chinese exports of titanium dioxide, a key raw material, saying they will lead to factory closures and further erosion of the region’s industrial base.

Take a break from the news

Since opening in 1961, Hong Kong’s Chungking Mansions have been synonymous with chaos, its name a byword for transience, petty crime and low-end trade. But in the wake of Beijing’s political crackdown on the city, perceptions of the dense and decrepit warren of flophouses and eateries have shifted, the FT’s Orla Ryan writes in a must-read for FT Magazine.

Chungking Mansions
Chungking Mansions houses a number of restaurants, shops, apartments and guesthouses © Bob Henry/UCG/Universal Images Group/Getty Images

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Five of the best Riviera properties

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Five of the best Riviera properties

By Hannah Williams

For secluded luxury

Nestled in the hills above the bay of Villefranche, this six-bedroom property (main picture, above) boasts a spectacular view, while maintaining utmost privacy. With a terrace overlooking the azure waters of Saint-Jean-Cap-Ferrat, it’s the perfect Riviera bolthole for those who want to entertain in peace. Outside there’s a pool, landscaped Mediterranean gardens and staff quarters; inside there’s a home spa, cinema and adjoining wine cellar. The asking price is €22mn.

For waterfront views

On Saint-Jean-Cap-Ferrat peninsula, this beautifully designed contemporary home features uninterrupted ocean panoramas, even from the pool. Arranged over four floors, each served by a lift, are a vast master suite and adjoining balcony, five en suite bedrooms and a large, open-plan dining/reception room. Tired of merely looking at the view? Don’t worry: this property has direct beach access. It’s on the market for £30mn.

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For the Provençal lifestyle

With its pastel exterior and blue shutters, this villa marries typical Provençal charm with contemporary luxury. Originally a 400-year-old farm, the Antibes property was converted and extensively expanded to make room for seven bedrooms, a gym, sauna and media room. Alongside gardens landscaped in the traditional French style, there’s an outdoor pool and tennis court, as well as sea views. On sale for €17mn.

For city slickers

Want the Riviera lifestyle without sacrificing the comforts of city life? This villa in Nice is the perfect compromise. Located in the city’s historic centre, it’s only a short stroll to the Musée des Beaux-Arts de Nice, the beautiful Villa Masséna museum, the Cathédrale Saint-Nicolas — and the beach. Recently renovated, the Belle Époque property features three bedrooms, a living-room terrace and a rooftop relaxation area with Jacuzzi. On sale for €1.95m.

For Monte Carlo lovers

If you’ve a lucky streak at the blackjack table, then this eight-bedroom villa — just 500 metres from Monaco — might be the perfect property. Located within the private community of Parc Saint Roman, the Belle Époque property looks out over the lights of Monte Carlo in one direction, and the unblemished coastline of Cap Martin in the other. A pool, guest house and outdoor gym make it the perfect place to relax or entertain — and it’s only 10 minutes to the Monte Carlo beach. Listed at €37mn.

Photography: John Taylor; Savills; Christie’s International Real Estate; Cȏte d’Azur Sotheby’s International Realty

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Japanese equities drop in early trading after leadership election

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Austria’s far-right Freedom party scored a historic victory in the country’s parliamentary election on Sunday, with the result consolidating pro-Russian, anti-establishment forces in central Europe.

The FPÖ was projected to win just under 29 per cent of the ballots cast, according to a near final official estimate of the vote late on Sunday, bolstering the claim of its firebrand leader Herbert Kickl to become Austria’s next chancellor.

It is the first time the FPÖ, which has embraced increasingly hardline and extremist policies on immigration and the war in Ukraine in recent years under Kickl, has come first in a national election.

Read more here

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Major UK airport to open its first Wetherspoons pub in £1.3billion transformation for Brits heading abroad

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The new terminal will be completed in the summer of 2025

A MAJOR UK airport has announced the opening of its first Wetherspoons pub as part of a whopping £1.3 billion transformation.

Brits jetting off from Manchester Airport can now enjoy a pint at the airport’s first-ever JD Wetherspoon pub next year.

The new terminal will be completed in the summer of 2025

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The new terminal will be completed in the summer of 2025Credit: Getty
Bosses confirmed that the new Wetherspoons will 'feature nods to sporting greats of the North in its decor'

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Bosses confirmed that the new Wetherspoons will ‘feature nods to sporting greats of the North in its decor’

The new pub is part of a £1.3 billion project that will transform Terminal 2.

The popular pub chain will join major brands like Chanel, Pandora, LEGO, and Greggs, all expected to be added to the terminal.

Bosses have confirmed that the new Wetherspoons will “feature nods to sporting greats of the North in its decor”.

The pub’s name has yet to be announced, but future customers are assured they can look forward to the usual Wetherspoons offerings.

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Brits will be able to enjoy discounted cooked breakfasts along with a wide selection of beers, wines, ciders, and spirits.

The highly-anticipated Terminal 2 is set to open in the summer of 2025 and will feature the Great Northern Market.

The new food hall will be able to seat a whopping 472 travellers and will hope to bring the best of Manchester’s street food scene to the airport.

Manchester Airport retail director Richard Jackson said: “We are proud of the world-class facilities on offer in Terminal 2, and a key part of our vision for the finished terminal is to provide an unrivalled experience for passengers shopping and dining before they catch their flight.

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“We’re delighted to be bringing such a varied offering to the second phase of our brand-new Terminal 2, with local brands complemented by well-known high street names and options to suit every budget.”

Bosses recently announced a huge change for Brits jetting off from the major airport.

‘Queues moving well’ in Dublin Airport following major power outage that saw huge delays for holidaymakers

The airport, currently being revamped, has confirmed that 11 airlines will move terminals his fall.

The airlines, including Jet2.com, will move from Terminal 1 and 3 to the brand new Terminal 2 between October and November.

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More airlines are expected to follow the move next year.

Several airlines have begun operating from the revamped Terminal 2 – part of which opened in 2021 – which is being doubled in size to cater to 70 per cent of the total flyers using the airport.

Major airlines including Austrian, Lufthansa and Swiss will move to the brand-new terminal in October.

This will be followed by Egyptair, SunExpress, Biman Bangladesh and Jet2.com which will start operating in the new Terminal in November.

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Passengers who have already booked parking or launce access near Terminal 1 or 3 can contact the airport to change their bookings, Travel Weekly reports.

However, passengers who have booked parking or lounge access through third-party agents will have to contact the provider.

A huge renovation project at Manchester Airport is nearing completion, with plenty of brand-new facilities that will excite passengers.

The £1.3billion project, which was first announced back in 2015, was split into two phases.

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The early stages of the project saw Manchester Airport’s Terminal 2 more than double in size before its west side reopened to passengers in July 2021.

Now in its final phase, work is focusing on the east side of Terminal 2, including a second pier with additional boarding gates.

Construction work on the pier began back in June 2023, and it is nearly complete, as reported by Marketing Stockport.

When the brand-new pier opens, it will double the aircraft capacity at Manchester Airport.

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INCREDIBLE PLANS

Airbus A380 passenger jets will also be compatible with the new boarding gates.

There are plenty of other features for passengers to get excited about when the expansion opens in 2025, including 27 new restaurants, bars and shops.

Specific shops will be announced later this year but several local brands including Manchester brewers Joseph Holt and Seven Bro7hers are slated to be inside the revamped terminal.

The revamped Terminal 2 at Manchester Airport will feature a “market-style food hall” and there will also be a “boutique shopping area”.

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There will also be a champagne bar, artisan cafes and a brasserie.

A new security hall, complete with 3D scanners, will also be added during this phase and a new dual taxiway system designed to improve airfield efficiency.

When the west side of Terminal 2 opens in 2025, it will become the main terminal at Manchester Airport, catering for more than 70 per cent of passengers.

Jill Fraser, Manchester Airport Transformation Programme delivery director, said: “The last 12 months have seen an incredible amount of work and it’s amazing to see the project really taking shape.

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“From the creation of more than 500 jobs, to the work to improve the way the airfield works – this is a huge project but one that will have so many benefits for our passengers.

“We’ve already started to see some of the benefits of the programme, with our passengers who have used Terminal 2 giving amazing feedback and the award of the prestigious Prix Versailles.

“And the exciting thing is that we’ve not even finished yet – so we’re looking forward to an epic 18 months ahead. We’re proud to connect the North to the world and are looking forward to passengers seeing everything we deliver.”

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FT Crossword: Number 17,855

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FT Crossword: Number 17,855

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Deloitte UK partners pocket £1mn despite slowdown

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Deloitte’s UK partners took home about £1mn on average for the fourth year in a row, despite the Big Four firm suffering a sharp slowdown in revenue growth due to waning demand for its advisory services.

Partners received payouts of £1.01mn on average for the year to the end of May, 5 per cent less than the previous year, following an increase in the number of equity partners who share in the firm’s profits. Its top ranks swelled from 714 last year to 749, while the profit pool to be shared between them remained flat at £756mn.

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Deloitte is the only Big Four firm in the UK to report an average partner payout higher than £1mn in the last two financial years.

Revenue at Deloitte’s UK firm, which also encompasses its Swiss operations, rose by 2.4 per cent to £5.7bn — a sharp slowdown on the 14 per cent growth recorded in the previous 12 months. In the year to May 2022, Deloitte had boosted revenue by 10 per cent.

The slowdown was driven by a slight contraction in the firm’s consulting division — its largest service line — where sales fell 1 per cent to £1.58bn as a tougher economic backdrop forced companies to cut spending on external advisory firms.

Revenues at Deloitte’s financial advisory practice also declined 2 per cent during the year as merger and acquisition activity remained subdued.

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The weaker results underline the difficult year faced by the Big Four — Deloitte, EY, KPMG and PwC — which were all forced to cut hundreds of jobs each due to tougher market conditions. PwC last week said its UK revenues rose 3 per cent during its most recent financial year, while average partner pay fell 5 per cent to £862,000.

“This is a strong set of results in a challenging market, against a difficult economic and geopolitical backdrop,” said Richard Houston, Deloitte’s UK senior partner and chief executive. “Like many businesses, we had to carefully consider our cost base and make some difficult choices this year.”

Audit and assurance was Deloitte’s best-performing service line during the year, with revenues climbing 8 per cent to £941mn. The firm’s tax and legal division also posted sales growth of 3 per cent to £1.25bn. Risk advisory sales remained flat with sales of £495mn.

The firm said it invested £263mn in salary increases and bonuses during the year.

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Houston sounded a more upbeat note looking ahead, saying that the UK’s economic outlook has been improving in the past 12 months. He added: “A recovering economy, alongside the government’s commitment to work with business in tackling economic and technological challenges, offers the prospect of stronger growth to come.”

Deloitte is in the process of overhauling its global operations to cut costs and reduce the group’s complexity. Under the plan, its main business units will be reduced to four — audit and assurance; strategy, risk and transactions; technology and transformation; and tax and legal — from the five the firm has had for the last decade.

The firm last month posted global revenues of $67.2bn, a 3 per cent increase on the previous year, its weakest sales growth since 2010.

Deloitte’s headcount at its UK and Swiss business remained broadly flat at 27,573 at year end.

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Reeves unlikely to cut pension tax relief for higher earners, says report

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UK chancellor Rachel Reeves is unlikely to cut pension tax relief for higher earners in her Budget next month because it would hit teachers, doctors and other better paid public sector workers, according to a report released on Monday.

Reeves had argued as an opposition MP for a flat rate of pension tax relief — a move which would significantly boost Treasury coffers — but a report by pensions consultancy LCP argues she will shy away from this move.

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Sir Steve Webb, a respected former Liberal Democrat pensions minister and now an LCP partner, said cutting higher rate pension tax relief would hit a significant group of “mid-ranking and senior public sector workers — a group which the government is unlikely to want to alienate”.

The LCP report said that Reeves is likely to be taking a keen interest in pension tax relief — with a net annual cost estimated by the Treasury at around £48bn — but reform is fraught with political problems.

Currently, when people and their employers pay into a pension, their contributions are exempt from taxation up to a set annual limit.  

When savings are later withdrawn as pension payments, these are taxed like other income, with people able to usually take up to 25 per cent as a tax-free lump sum, up to a maximum of £268,275.  

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George Osborne, former Conservative chancellor between 2010 and 2016, considered reforming pension tax relief in his 2016 Budget but dropped the plan after a fierce backlash from Tory MPs.

The LCP report said that Reeves is more likely to consider levying a rate of national insurance contributions on employer pension contributions, a change that would be less politically painful.

It noted that excluding these contributions from NI costs the Treasury a headline £23.8bn a year, and also encourages the practice of “salary sacrifice”, specifically to reduce NI bills. 

“The chancellor could create a new rate of NI — eg 2 per cent — on employer contributions, and raise a couple of billion pounds by doing so,” the report said. 

“The big advantage for the chancellor is that in most cases this would have no immediate pay packet effect on voters so would have lower political saliency. It could also be implemented relatively quickly,” it added.

Webb said: “The chancellor will be looking for relatively simple changes which can be introduced quickly and will raise large sums with least voter anger.”

In 2016, Reeves — then a backbench MP and a former shadow work and pensions minister — proposed setting a “flat rate of pension tax relief” at 33 per cent, below the 40 per cent tax rate paid by higher earners.

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“This would be a welcome boost for basic rate taxpayers and a cut in the savings subsidy for higher earners, while still rewarding savings,” she said at the time.

The Treasury said: “We do not comment on speculation around tax changes outside of fiscal events.” Reeves has said that tough decisions lie ahead on spending, welfare and tax in the Budget.

The Labour manifesto committed the government to not increase taxes on “working people”, with specific commitment not to increase National Insurance, the basic, higher, or additional rates of Income Tax, or VAT.

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