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As President Donald Trump approaches the one-year anniversary of his second term in office, the FT’s chief economics commentator Martin Wolf, and Nobel prize-winning economist Paul Krugman sit down to discuss the US economy and the state of American democracy. Are American consumers finally feeling the effect of Trump’s tariffs? Is AI to blame for the frozen labour market? Or is the spectre of a weakening democracy and plutocracy to blame for slumping consumer sentiment? In the first of four weekly episodes, Wolf and Krugman unpick the US and world economy, with Krugman explaining why he’s less pessimistic now than he was earlier this year.

Subscribe and listen to this series of The Economics Show on Apple Podcasts, Spotify, Pocket Casts or wherever you listen to podcasts.

Read Martin’s column here.

Subscribe to Paul’s Substack here.

Find Paul’s cultural coda here.

Find Martin’s cultural coda here.

Produced by Mischa Frankl-Duval. Manuela Saragosa is the executive producer. Original music and sound design by Breen Turner.

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Infrastructure investors including BlackRock, Brookfield and Apollo are courting the leading oil and gas companies, sensing an opportunity as the sector grapples with lower prices and a lack of enthusiasm from public-market investors. 

At a closed-door meeting ahead of this month’s Adipec energy conference in Abu Dhabi, the heads of ExxonMobil, TotalEnergies, Eni and BP were urged to offload more of their networks of pipelines, storage terminals and other assets to raise cash to be deployed elsewhere in their operations. 

“You guys need to rethink how you think about capital,” one participant told the majors, arguing that equity markets were “not as receptive” to the industry.

“You’re trading at four to seven times earnings multiples. What’s wrong with selling your infrastructure assets for 10 to 12 times?” the person asked. “Take the cheap capital and reinvest it in your core business.”

Saudi Aramco is among those to embrace the trend, completing an $11bn sale and leaseback deal with BlackRock-owned Global Infrastructure Partners in August for the gas network of its Jafurah project. It is weighing further disposals, according to one person familiar with the situation. 

“Why sit on such a vast and lucrative asset base?” said the person. “A lot of the major sovereign wealth funds and private funds were frustrated they did not get a piece of the Jafurah pie and the deals team has been flooded with offers. So they were told to pitch and come formally with ideas.”

Aramco has not determined how much it may sell, according to the person, but such transactions have the potential to raise billions of dollars to support its balance sheet and fund capital spending.

Abu Dhabi moved in 2020 with a $20.7bn pipeline agreement with GIP, Brookfield and the sovereign wealth fund of Singapore, while Oman, Bahrain and Kuwait have all either completed or are considering similar transactions.

Such deals signal a change of approach for state oil companies that have not traditionally sought to open up their businesses to foreign capital.

David Waring, head of energy in Emea at Evercore, said the Aramco deal had “sparked a real wave of interest” from other state oil groups and infrastructure funds seeking a “piece of the action”.

Fossil fuel infrastructure has become more attractive for private-capital groups as expectations grow that the green energy transition will take longer than previously forecast.

Energy groups’ pipelines and other assets, which come with steady revenues backed by long-term contracts, are appealing to funds backed by pools of insurance money that are seeking to deploy large amounts of capital and secure reliable returns.

“They have captive insurance money, which is long-term and cheap,” said the head of the deals team at one oil company. “They sit in the middle and take 2 per cent to 3 per cent.”

The big international oil companies (IOCs), by contrast, have been more cautious, although they have started doing deals as they seek to balance their growth plans against shareholder demands for tight balance sheets and a focus on dividends and share buybacks. 

This year, Shell offloaded its interest in the US Colonial pipeline to Brookfield in a deal that valued the asset at $9bn, while BP sold a stake in the Trans-Anatolian network to Apollo for $1bn.

Waring suggested the influx of money from infrastructure funds into the state-run oil companies would trigger a reaction from the IOCs, which have often relied on more conventional financing.

“Can the IOCs afford to operate within the confines that the equity market imposes, without considering more innovative solutions?” he asked.  

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One of the world’s biggest cyber insurers is pulling back from the market as it contends with rising claims and falling prices, even as rivals extend their bet on policies covering hacks and ransom demands.

Beazley reported this week that cyber gross written premiums, a measure of top-line revenue, declined 8 per cent in the nine months to September 30 to $848mn, sending shares in the FTSE 100 insurer tumbling on the day.

“There’s more claims, and they’re more expensive,” chief underwriting officer Paul Bantick told the Financial Times. He said a rise in ransomware attacks and hackings had been fuelled by rising geopolitical volatility, as cyber gangs used such tactics to sow distrust.

“What we’re trying to understand is why the market’s not reacting to those things,” he added.

While Beazley has trimmed its exposure, Chubb and AIG — two of its largest rivals in the US market — have maintained or grown their books. The diverging strategies highlight volatility in the nascent sector.

Chubb and AIG declined to comment.

Despite the rise in claims and high-profile attacks on businesses, premiums for cyber insurance have been falling since early 2024, according to broker Marsh, due to rising competition for a finite pool of clients and a broader flood of investment into speciality insurance.

“They’re all fighting for new business,” said Kelly Butler, head of cyber for Marsh. “It’s not an oversaturated market, but there’s a limited pool of buyers.”

Businesses in the US and UK have purchased more cyber coverage in recent years due to the rise in claims. Despite rising demand for policies, margins have been eroded as hedge funds, private equity firms and other investors flooded the insurance market.

Some risk managers also doubt that cyber policies will cover enough of the costs of an attack, after exclusions came under criticism from brokers and clients.

In response, Lloyd’s of London, the insurance marketplace, has pointed to the need to limit liability for potentially sweeping claims stemming from cyber risks, in order to offer any cover against the peril.

While cyber insurance prices had fallen 6 per cent to 7 per cent for each of the past four quarters, Butler said the price slide was now slowing.

Chief executive Adrian Cox told analysts on a call that Beazley was willing to continue to shrink its revenue from cyber in the US, where he said the business line had become “unprofitable”, to protect margins.

He warned that cyber insurance prices could experience “extreme swings in pricing” if others continued to cut their rates.

Beazley shares have since pared their losses, leaving them about 2 per cent lower since the start of the year and valuing the insurer at just over £4.8bn. The stock has gained 120 per cent since 2020, however.

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Western banks have been the biggest beneficiaries of Hong Kong equity sales this year, shrugging off US-China tensions as dealmaking booms in Asia’s financial hub.

Morgan Stanley helped raise $11.6bn in equity offerings in the year to the end of November, according to data compiled by Bloomberg. Goldman Sachs was in second position after raising $7.4bn, followed by Chinese banks Citic and CICC and Switzerland’s UBS.

The data includes both initial public offerings and follow-on share sales by companies already listed in the territory, including a $4.6bn share sale by the world’s largest battery maker CATL and the IPO of mining company Zijin Gold.

Hong Kong’s capital markets have been revived by a wave of Chinese companies raising billions of dollars in the city, which is on track for a four-year high in IPO fundraising. Foreign investors are showing renewed interest in Chinese equities after years of shunning the market.

“For huge deals you still need these global brands,” said Alicia García Herrero, chief Asia-Pacific economist at Natixis. “The reason why they still need Goldman or Morgan Stanley is they want to attract foreign investment, especially into the big deals like BYD,” she said, referring to the Chinese electric vehicle and battery maker that had a $5.6bn share sale in March. 

Hong Kong-listed ECM activity hit $73.1bn so far this year, up 232 per cent on the same period in 2024, according to data from LSEG.

“We’ve seen quite a strong turnaround with respect to equity issuance from Chinese companies in Hong Kong,” said Saurabh Dinakar, head of Asia Pacific global capital markets at Morgan Stanley.

Rising US-China tensions have put the banks’ operations in Hong Kong under more scrutiny. This month, a US congressional committee wrote to Morgan Stanley’s chief executive Ted Pick to request more information on the bank’s underwriting of Zijin Gold, the offshore arm of China’s Zijin Mining.

The committee alleged that Zijin Mining is associated with human rights abuses in the Xinjiang region of China and has “deep ties” to the communist party.

Morgan Stanley declined to comment on this matter.

Federico Bazzoni, executive chair of Eight Capital Partners, said Chinese companies “need these [western] banks to reach out to international investors”. He added: “Of course, you’ve got the trade war and political tension but I think the markets are opportunistic.”

Chinese banks have expanded in Hong Kong, with the goal of taking a larger share of advisory fees in the territory, where deals often have bigger fees compared with mainland China.

CICC, a prominent mainland investment bank, recently announced a plan to acquire two smaller brokerages.

“We are seeing Chinese securities firms expanding aggressively in Hong Kong,” said Rowena Chang, a director at rating agency Fitch. “Typically they want a US investment bank and a local investment bank as joint sponsors.”

Chinese banks CICC, Citic Securities and Huatai Securities top this year’s Hong Kong deal volume for IPOs alone.

They have established relationships with Chinese companies that are already listed on a mainland bourse, said Jean Thio, a partner in the capital markets group at law firm Clifford Chance, which has advised on 18 IPOs in Hong Kong this year.  

Chinese banks are important partners for mainland companies seeking to list in Hong Kong because of their close channels of communication with regulators in Beijing such as the China Securities Regulatory Commission, which must give mainland companies approval before they list offshore.

“Communication with the CSRC is important and that’s where the PRC banks have strengths,” Thio added. 

Data by Haohsiang Ko