Investor Relations Week: Activist investors see opportunity in market turmoil, investor interest in cybersecurity grows and markets ‘decide’ amid UK chaos

– Activist investors in the United States see opportunity in rocky markets, said The New York Times (pay wall). Turbulent times for markets aren’t generally considered the best times for activist investors, but at the 13D Monitor Active-Passive Investor Summit held in New York earlier this week, the “business of activism ” appeared quite nimble.

While volatile markets are often considered bad for the kinds of moves recommended by hedge funds, those who attended the conference saw a plethora of undervalued companies pushing. Activist hedge funds have been relatively quiet over the past two years. Professionals at the conference said the optics of pushing for change during the pandemic weren’t great or that some changes weren’t possible.

– The difficult global economic climate has not weakened the US cybersecurity market, according to safety week. In Q3 2022, a total of 221 companies in the industry raised $3.3 billion, while 104 M&A deals had a disclosed value of $11.7 billion: 2022 is expected to set a new M&A record. purchases. Investment interest remains high despite cybersecurity stocks falling 2.1 percentage points in the third quarter. Although stocks fell, cybersecurity continued to outperform the broader tech industry, maintaining Q1 and Q2 trends of high inflation, rising interest rates and recession fears leading to volatility of the market.

Investment consultancy Progress Partners said there had been an overreaction to market conditions. “While current conditions may put pressure on near-term earnings, we believe the market has overcorrected to the downside and stocks are trading at a steep discount to their intrinsic valuations,” Progress Partners said in a statement. its Q3 Cybersecurity Market Report. “This is especially true in cybersecurity software, in our view.”

– UK Prime Minister Liz Truss’ resignation has left markets ‘taking the reins’, says Bloomberg (pay wall). This month of economic chaos will be a warning to any future British leader about the risk of being reckless with the country’s finances, UK traders said after Truss resigned. In interviews earlier this week, many investors predicted that the next prime minister would restore calm and make policy decisions that would bring stability to markets. The pound strengthened above $1.13 and the yield on UK 10-year gilts was close to levels before the mini-budget announcement last month. The FTSE 250 index rose 1.2%. “The markets are in control right now,” said Geoffrey Yu, senior FX strategist at Bank of New York Mellon. “That’s the bottom line.”

– Tesla announced its third-quarter results and executives answered a wide range of questions during the earnings call, including macroeconomic concerns and CEO Elon Musk’s impending takeover of Twitter. Shares fell about 5 percentage points after the results, reported CNBC. The company’s net income for the third quarter of 2022 reached $3.33 billion, with automotive gross margins flat at 27.9%, exactly where they were in the second quarter of 2022. the same period last year, Tesla reported profits of $1.62 billion.

During an earnings call earlier this week to discuss the results, Musk answered questions from shareholders about demand for electric vehicles and a potential stock buyback. “I can’t stress enough that we have great demand for the fourth quarter and we plan to sell every car we make as far into the future as we can see,” he said. Tesla is likely to make a “significant buyout” next year, he added, potentially between $5 billion and $10 billion, pending board approval.

– Saudi energy giant Aramco is “moving ahead with plans” for an IPO, reports Reuters by Bloomberg. The world’s top oil producer is adding more banks to the IPO, which could value the unit at more than $30 billion, Bloomberg reported, citing people familiar with the matter. No final decision has been made and the IPO could be delayed or canceled if market conditions worsen, the report adds.

Reporting the same news, Yahoo finance noted that although the global IPO market has suffered due to weakening economies and rising interest rates, there is still plenty of appetite for deals in Saudi Arabia, which is the fastest growing group of major G20 economies. Arabian Drilling Co, an oil services company, attracted $43 billion in orders for its listing this month. Aramco, controlled by the Saudi government, is considering the deal at a time when other national oil companies in the Persian Gulf are also looking to expand their business operations.

– The Bank of England has confirmed it will continue selling £80bn ($89bn) of UK government bonds from early next month. As The Guardian underlined, the sale will start a day later than expected despite fears about the unstable conditions in the financial markets after the mini-budget.

The central bank said it would delay the start date to November 1 to avoid a clash with the government announcing its debt reduction plan, which is due October 31. The decision to go ahead comes despite swirling speculation that the bank may be forced into a longer deadline to ease bond market turmoil following the former chancellor’s unwelcome mini-budget Kwasi Kwarteng.

Earlier this week, the bank dismissed a report in the FinancialTimes that it was set to delay the sale of bonds made up under its quantitative easing program since the 2008 financial crisis, amid concerns over turmoil in the gilt market.

– UK asset managers have warned of tough times as investors withdraw or divert cash, reported The Guardian. Asset managers said they were navigating difficult investment conditions in the UK as economic turmoil reduced the value of their portfolios and persuaded clients to withdraw and divert their money. London-based firms including Jupiter, Schroders and St James’ Place issued trading updates on Thursday, laying bare the challenges facing fund managers amid soaring inflation and global uncertainty, including the effects of the war in Ukraine. Jupiter alone suffered net outflows worth £600m in the three months to the end of September. This is despite investors placing £3.8bn of new money into the company during the quarter, including £500m from an anonymous client of sovereign wealth injecting money. fresh money in UK investments.

– Retail investors took refuge in cash after the stock market rout, said the FinancialTimes (pay wall). He noted that nearly $140 billion had been poured into money market funds as traders remained on the sidelines. The rush for cash followed a long and volatile selloff in U.S. stock markets this year that wiped nearly $15 billion off the valuations of publicly traded companies. Wall Street’s benchmark S&P 500 index closed its longest streak of quarterly losses since the 2008 financial crisis last month.

– BlackRock and Vanguard have chosen not to abandon fossil fuel investments, reported the FinancialTimes. The world’s two biggest asset managers were among financial institutions that told a UK survey they would continue to invest in fossil fuels and disagreed that climate change plans require the end of new investments in coal, oil and gas. The statements made earlier this week responded to a request from the UK’s Environmental Audit Committee, which in August wrote to members of the Glasgow Financial Alliance for Net Zero, an umbrella climate finance group, asking how they were going to balance the retirement of fossil fuel assets with ensuring the UK’s energy security, given the ‘pivotal’ role of the financial sector in achieving the UK’s environmental objectives.

– Fund clients have called for new rules to tackle ESG ‘false labelling’, according to Bloomberg. Professional investors believe that asset managers who deal with their ESG allocations need more regulations to keep them in check. The question of the treatment of ESG fund labels is becoming more and more thorny. In the United States, the SEC has proposed rules that would require companies to provide more data to justify the ESG labels they use. In the EU, asset managers are struggling to keep up with regulations based on an unclear definition of “sustainable investing” and have already reclassified hundreds of funds amid widespread confusion.