One scoop to start: London-based Schroders plans to exit its fully owned China mutual funds business as the 200-year-old company seeks to streamline its presence in the mainland’s challenging asset-management sector.

In today’s newsletter:

• Will L&G be the City’s next domino to fall?

• Baillie Gifford puts $1.25tn value on SpaceX

• Japanese stocks and AI

It’s been a difficult couple of years for London-based Legal & General, the FTSE 100 insurer and asset manager.

L&G’s share price has been flat as new entrants and tight credit spreads have squeezed profits in its core market — sparking speculation over whether L&G could be sold or broken up, write Lee Harris and Emma Dunkley.

Analysts now question whether L&G’s dividend is sustainable and whether it can survive as a public company. City advisers told the FT that potential bidders, including insurers and alternative asset managers, had been running the rule over the business.

“It’s getting pretty real,” one US private capital executive said about groups drawing up plans to bid for L&G. “People are spending real money on this now.”

“It feels like we’re being dressed up for a sale,” said one current L&G insider. Core businesses, such as index funds in the asset management arm, were “keeping the lights on”. “But they know they’ve got a structural problem and they are trying to throw everything at it.”

Private capital executives told the FT that there were a host of strategic alternatives open to L&G — if it chose to pursue them — from selling off blocks of its sprawling insurance portfolio to offloading assets to reinsurers. It could also find a private capital partner to assume some of its pension risk transfer assets.

Potential bidders have also considered a full takeover of L&G, four people familiar with those discussions said, though any such transaction would be challenging and politically sensitive due to the size of L&G and its large holdings of gilts.

Still, chief executive António Simões told the FT he was not considering a break-up or sale. “There’s no discussions or anything else going on,” he said. When asked if L&G had been approached, he added: “I am 100 per cent focused on executing my strategy.”

Scottish Mortgage Investment Trust has valued SpaceX at $1.25tn, even though it is far lower than the $1.75tn reportedly sought by Elon Musk’s company in what is expected to be the biggest initial public offering in history, writes Emma Dunkley.

Baillie Gifford, which manages the £16bn trust, clarified its valuation in response to a high volume of queries from existing shareholders ahead of the blockbuster IPO, according to a person familiar with the situation.

Scottish Mortgage, the most popular investment trust in the UK and seen by some investors as a “proxy” for SpaceX as a way to gain access to a private company, said this valuation put its own holding in SpaceX at almost £3bn.

The valuation follows SpaceX’s takeover of Musk’s AI start-up xAI earlier this year. Baillie Gifford said its investment team had met SpaceX’s management in recent weeks and its valuation process was based on “verifiable transactions, not press speculation”.

A client briefing note published by the trust added that a more precise valuation would be possible after SpaceX’s full prospectus with audited financial results was published. This could be as soon as this month, the note added.

SpaceX’s IPO is expected to take place in June, potentially coinciding — at Musk’s behest — with a rare planetary alignment and the billionaire’s 55th birthday, the FT previously reported.

The rapid growth in the value of SpaceX, which Baillie Gifford first invested in about eight years ago, means it now accounts for almost a fifth of the trust’s entire portfolio. The holding has grown from its original investment by about 19 times.

An obscure measure of distortion in Japanese stocks has widened to a record level as global investors pile into Tokyo-listed shares to gain exposure to AI outside the US.

The sudden blowout of the NT ratio, a rarely referenced measure that tracks the correlation between the tech-heavy, price-weighted Nikkei 225 Average and the broader, market cap weighted Topix, follows a sustained rise in Japanese shares offering exposure to semiconductors, technology supply chains and AI, writes Leo Lewis.

With the Nikkei at about 62,000 points and the Topix at almost 3,900, the ratio stands at just over 16 times. This month it touched 16.37 times, its highest level since brokers started tracking the ratio in 1970.

As well as showing the unusual concentration of investment in a small handful of sectors, the ratio also reflects a major influx of foreign capital, analysts said.

Driving the recent gap in the NT ratio has been a series of record-breaking upward moves for the Nikkei 225, an index weighted towards exporters whose direction is now led by SoftBank, Tokyo Electron, Advantest, TDK and other large-cap technology names.

The Nikkei burst through the 60,000-point level for the first time in April and is 65 per cent higher than it was 12 months ago. The index has soared more than a fifth this year — significantly outperforming the S&P 500 and Nasdaq indices, even in dollar terms.

A body of private equity investors wants to change a longstanding arrangement that leaves them paying the “runaway legal costs” involved in fundraising.

Hargreaves Lansdown is cutting jobs as it moves away from some manual functions, part of a plan by its private-equity owners to modernise the UK’s largest DIY investment platform and fend off intensifying competition.

Blue Owl has seen inflows at its flagship credit investment fund for retail investors all but dry up, underscoring the challenges facing the group at the centre of doubts over private credit.

Government plans to allow pension schemes to retain half of a retirement pot to help executors cover an inheritance tax bill is a “blow” to beneficiaries and could fuel family tensions, experts have warned.

Japan’s Mitsubishi UFJ Financial Group is in talks with investors to offload its exposure to about $2bn of loans it extended to listed private credit funds.

The National Gallery in London is hosting a collection by Spanish painter Francisco de Zurbarán, spanning altarpieces to still lifes while incorporating drama, vision and mystery.

Until August 23