Chapter 21 LONDON
after a perfect weekend with Sophie, Tom Barton found himself alone in
Paris; just two hours from London by Eurostar. The idea of heading for the
Gare du Nord tempted him, but once again he hesitated, remembering the
many explanations he may or may not have owed to certain people.
Although he had fallen into the habit of jumping on a plane at the slightest
pretext, bound for some far-flung destination, he still baulked at the idea of
returning to London. His year-long odyssey had led him to places he would have
had neither the occasion nor the inclination to visit ― even for a vacation: Dubai,
India, Thailand, and barely known Caribbean islands. A curious turn of fate
considering his past stay-at-home lifestyle.
During the boom years he had frequently travelled to Spain; flying potential
buyers to Marbella on weekends to visit villas and apartments built Grupo
Martínez, for whom Barton’s brokerage arranged mortgages. Things had changed
since those happy go lucky days. Through his own making he had become a
frequent business traveller, falling into the trap of thinking he was only doing
something useful when he boarded a plane to somewhere…anywhere. A perverse
but real sentiment, a feeling that many politicians and business travellers
developed, a justification for their addiction.
The trouble was travelling cost money, a lot of money, especially after he had
become used to first class travel and five star hotels. He had made some fairly
serious money speculating on oil, but the gains derived from his venture into
commodities and Forex markets were less exciting. Given the bleak business
climate the thought of dilapidating his capital persistently nagged him. Past
experience, together with the eye opening discoveries of his odyssey, had reminded
him fortune could suddenly deal him a bad card. Slowly Barton was becoming
aware he had much to lose.
It was time to put his considerable knowledge and experience to gainful use.
Fitzwilliams was a good starting point; the banker had even intimated he could use
Tom’s experience. What Barton needed was to transform the nascent idea of an
investment service into something concrete.
In other circumstances his experience as a City mortgage broker alone would
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have limited his options. But the world had suddenly changed. With foresight, he
had made the decision to get out at the right moment; by cashing in on his
investments in late 2007, banking the capital necessary to restart his life. However,
the idea of setting himself up as an independent investment advisor was still
indistinct. Now, from his newly established base in the Caribbean, he could,
without the need of a nameplate, or a conventional workplace, transform his idea
into reality.
The previous day, Sophie had chided him, gently mocking his fears of returning
to the UK as unfounded. Now almost twenty four hours later, after idling the
morning away in his Paris hotel room, he was forced to admit it was time to
confront his past. Picking up his phone he scrolled down the numbers, stopped at
Steve Howard’s name and pressed ‘call’.
‘Hi Steve, it’s Tom Barton.’
‘Tom, I was just thinking about you. Where are you?’
‘In Paris.’
‘Great. Travelling on that Dominican passport,’ Howard said making a friendly
jibe.
‘How’d you guess, said Barton uncomfortably. ‘Where are you?’
‘I’m in London.’
‘Great, let’s get together. Can you come over to Paris?’ he asked half-heartedly.
‘Still nervous about coming to London?’
‘No…,’ he replied, without conviction.
‘Where’s Sophie?’
‘'Gone to Strasbourg...business.’
‘Then do it! Now!’
‘Now?’
‘Take the Eurostar, I’ll meet you at St Pancras, then we’ll stay in town.’
‘Sounds good,’ he replied more positively. ‘How are things over there?’
‘A bit slow, you know Spain and all that.’
‘I met a couple of Chinese investors in Bangkok who were interested in European
property. What do you think?’
‘They’re the only ones who have any money to spend today. We can talk about
it.’
‘Great.’
‘Call me back when you know the time of your train.’
Early that afternoon, as Barton slipped his travel documents into his pocket, he
started to worry about his Dominican passport; would it raise eyebrows at
immigration in the UK? Then, on second thoughts, he figured there was no reason
why it should. There were plenty of expat Brits living in Dominica who regularly
used their local passports when travelling home. In any case, he thought consoling
himself, nobody was looking for him ― with the possible exception of the Irish.
At Gare du Nord he produced his Dominican passport, stamped with a multiple
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entry Schengen visa, to the French police controller. He then presented his British
passport to Her Majesty’s official who with barely a glance waved him through
with a cheerful ‘Good morning Sir.’
Relieved Barton made his way down to the waiting Eurostar. Soon, as the flat
landscape of northern France flashed past, his mind slowly drifted back to his still
embryonic business plans. A persistent doubt lingered. Just as things were
beginning to look better new clouds had appeared on the horizon in the form of a
sovereign debt crisis. Barton wondered whether it was simply another passing
storm, or was there something more menacing behind it? It was impossible to say,
few now dared make predictions. Those who had recently announced the imminent
collapse of the euro had been forced to eat their hats.
In spite of the huge sums of taxpayers’ money that had been thrown at the crisis,
things had not improved and huge debts were being accumulated by governments.
The US alone needed to raise a couple of trillion dollars, and then there were
Europe’s needs, not forgetting the rest of the world, some feared there would be
insufficient money to go around.
As the Fed allowed the dollar to slide, in a not too subtle form of devaluation,
China was caught between two stools. On the one hand the value of its dollar
reserves fell in real terms, and on the other, its artificially undervalued dollar
pegged currency, the RMB, made Chinese exports even more competitive in other
markets.
This dismal outlook left little hope the world would return any time soon to the
prosperity of recent years. Barton comforted himself with the idea that even in the
worse crisis there was always a niche for the wise investor. The question was
where. Asia seemed an obvious choice, the future seemed to be there, but he was
forced to admit, apart from his very recent experience in South East Asia, he knew
very little of that vast region. As to Japan it was a no-go, mired in the same kind of
debt problem as the West, but for already more than twenty years.
China seemed a good option. The Chinese were becoming more adventurous,
arriving in places like Dominica bearing gifts, perhaps there was business to be
done there.
That morning, the main headline news speculated over the possible bankruptcy of
General Motors and the fate of GM Europe, owner of Opel in Germany and
Vauxhall in the UK. What surprised Barton most, a company he had never heard
of, the Beijing Automotive Industry Corporation, was listed amongst the potential
bidders at the carve-up of the troubled firm.
As far back as he could remember Vauxhall had always been a household name
in British cars. In the same way Opel was in Germany. Looking back it would have
seemed totally inconceivable that such iconic names could be bought-out by the
heirs of Mao’s China. It was like being told Rolls Royce had been bought by
Martians he thought, before remembering the legendary firm was now owned by
BMW.
Barton was aware China, as the holder of vast quantities of US dollars and
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treasury bonds, was increasingly concerned about the risk of having all its eggs in
the one basket. If the US was seized by an inflationary spiral their investment
would be become worthless. Their best hedge would always be fixed assets, bricks
and mortar, and that was a business Barton knew. What better an asset for a
Chinese investor than a piece of prime property in Belgravia or Mayfair? He
remembered Tom Kavanagh having sold a run down, but well located property in
Bloomsbury to a Singapore businessman in the mid-nineties, at what had then
seemed like a vastly exaggerated price. In retrospective, it was an excellent
investment despite the prevailing depressed market. There was a lot of prime
property in London for foreign investors and if the Russians had retreated then why
not look for Chinese investors.
A little over an hour later the familiar pleasant Kent countryside, showing all the
signs of spring, zipped by, and soon London’s sprawling 19th century brick
suburbs appeared. Nothing had physically changed during his absence. There was a
certain permanence. People changed, economics changed, politicians changed, but
physical attributes changed so much more slowly.
In all, the journey to London had given him just enough time to take a snack and
glance through the English newspapers. Once arrived, he had little time to admire
the recently opened St Pancras Eurostar terminal. He joined the line of
disembarking passengers, uneasily filing past the keen eyed customs and stern
faced police officials. He let out an involuntary sigh of relief as he exited through
the sliding glass doors out onto the main concourse. There he spotted Steve, a
newspaper tucked under his arm, smiling and as usual boasting a healthy tan.
‘How’re you doing Tom? Nice to see you again,’ he said pointing the way to the
exit where they joined the line for a taxi. ‘We’re booked into the Churchill, it’s on
Portman Square, it’s where I normally stay when I’m in London.’
‘Still living out of a suitcase?’ remarked Barton.
‘Yep, home is up North. Rarely get up there these days, not since my parents
passed away. It’s not worth having a fixed place here, too much trouble, too
expensive for what I need—not that money matters, though I don’t believe in
throwing it away,’ he said with a wry smile. ‘At Churchill’s I’ve got everything at
my fingertips.’
After checking-in and dropping off Barton’s affairs they stopped for a coffee in
the hotel’s comfortable lounge and exchanged news. Howard’s business in South
East Asia had slowed, but it was more buoyant than that in the UK or continental
Europe. He had little to complain about, which seemed to confirm Barton
impressions, if Asian investors were still making money, then they would be
interested in prime property in London. It would be a safe haven for them and
prices were beginning to look attractive.
There was a mountain of loose cash swilling about in China, where wealthy
Chinese families and businessmen were looking for secure offshore investments.
The Chinese had become wary of stocks and bonds and even more mistrustful of
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their government’s strategy, especially if their economy was to stall. There was
however a stumbling block for would be buyers; apart from Singaporean and Hong
Kong investors, the Chinese knew little of property in London, or in any other
Europe capital for that matter. Their only options were to work with top end of the
market property agencies, such as Guthrie Plimpton, which was daunting for a
Chinese investor given the culture gap, or to use their own close circle of trusted
overseas relations and business acquaintances.
‘I can certainly help you with a few introductions. Chinese investors are
definitely are looking for solid offshore investments. They’re very clannish and
almost always use personal relationships to do business, they call it guanxi.’
‘Guan…’
‘It’s like a social network, but it goes much deeper, business and political
links…same village, same town, same province and especially their extended
family links, something we don’t have.’
‘Oh.’
‘A family in China can include hundreds, even thousands of relatives, from the
same place with the same family name.’
‘Interesting.’
‘I have a couple of Chinese business friends from Shanghai who have invested in
property in Bangkok. Things are a bit shaky in Thailand with the political situation.
So it could be a good moment to suggest they diversifying their investments. UK
property could be a good option, you know a shelter, especially prime properties
― residential and business.’
‘I’d like to meet them.’
‘No problem. We’ll try to set that up. It needs patience, although we’d have to
move fairly quickly before the market recovers.’
‘That’s no problem.’
‘I’m returning to Bangkok in a week’s time, why don’t you join me?’
‘Are things alright there now?’
‘Not really. It’s a tangle of political in-fighting. It’s almost impossible for the
government to function correctly with all these demonstrations going on.’
‘What about the King.’
‘Well King Bhumibol has enormous influence behind the scenes. Be careful what
you say about him by the way, you could end up in one of those Thai jails, lèsemajesté and all that,’ Steve said with a laugh.
‘…and the future?’
‘At the moment it’s not looking so good, business and confidence has been badly
affected, and the long-term outlook is not much better. That’s why some of the
Chinese are getting cold feet, which could help you.’
‘That’s what I thought.’
‘You should try to put together a portfolio of the kind of property that’s on the
market to interest them.’
‘I’ll do that,’ Barton said making a note to speak to Sarah Kavanagh.
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‘Don’t get excited too soon Tom. We’re going through the biggest economic
crisis in more than half a century and it won’t just go away just because a few
journalists or politicians are talking about green shoots.’
‘You’ve got a good point.’
‘People are naive to think that this crisis can be solved just by printing money?
It’s not so easy, on the other hand it doesn’t mean the end of the world is here,
there’s still a lot of loose cash around, the world is a bigger place than it was in the
1930s.’
‘I suppose you’re right there.’
‘One other thing, I’ve got some banker friends looking at setting up a new
property fund. I think you should meet them whilst you’re here.’
‘Property fund?’
‘Yeah, you know an investment fund.’
‘A hedge fund?’
‘That’s right.’
‘I thought they had all collapsed,’ Barton joked.
‘No, there’s plenty of them making good money.’
‘Who are they?’
‘The Nederlandsche Nassau Fund.’
‘Of course, they’re part of the Irish Netherlands Bank?’
‘That’s it.’
‘That’s Michael Fitzwilliams outfit.
‘Yes, I was planning on meeting him.’
‘Great.’
‘There’s a lot of opportunities. Forget the crisis, remember, you and I, a hedge
fund, anybody with some cash, can buy and sell anything…currency, shares, gold,
property ― you name it, it’s all out there for the taking. And what’s better you can
even invent your own product, financial or material, if you think you can sell it.’
‘A little cynical.’
‘Not as cynical as politicians like Brown and Blair!
