Investor relations week: Liquidity dries up, bankers’ money hits the headlines and hedge funds turn to Russia and Ukraine

– “Liquidity has been a feature of the $51 billion U.S. stock market,” noted the FinancialTimes (paywall), “but over the past two weeks fund managers have watched its deterioration as costs rise to make large buys or sells, prompting some to avoid making big trades altogether.” The document reports that the “huge swings” in US stocks such as Meta, PayPal and Snap reflect surprises in their financial results, but also highlight what investors say is a recent dramatic drop in the ability to trade large lots of shares. Stocks below Wall Street estimates plunged in value on a scale rarely seen outside of a crisis, the paper said.

– Banker salaries made headlines this week as Bloomberg (paywall) reported that big bonuses are back, with yachts and champagne back on the bill. eFinancialNews says $500,000 is the new $400,000 for CEO salaries at banks and the FT describes how Credit Suisse changed bonus rules in an effort to retain top executives. Credit Suisse has warned senior bankers they will have to give up part of their cash bonus if they leave within three years, the newspaper said, describing the move as “a controversial step designed to retain staff as the lender is struggling to recover from a series of crises”. .’

– The FT reported that hedge funds are “recovering” Russian and Ukrainian assets after steep declines since last fall, while institutional investors are “staying on the sidelines”. The newspaper said the institutions see heightened political risks as “too hot to handle”. Many large investors have become increasingly nervous about the possibility of military conflict in Eastern Europe. The specter of war or Western sanctions against Russia has made financial assets in the region “too difficult to hold” for some large traditional managers, the paper notes, although it adds that some hedge funds are “plunging on the market” looking for bargains. , believing that while Russian President Vladimir Putin is unlikely to back down soon, he will not want to risk a significant conflict. The newspaper quotes David Amaryan, founder of Balchug Capital, a global fund managed from Moscow, saying: “We are absolutely convinced that there will be no war”.

– In a similar vein, the United States on Thursday warned Chinese companies that they would face consequences if they sought to evade any export controls imposed on Moscow in the event of an invasion of Ukraine by Russia. CNBC reported US State Department spokesman Ned Price making the remark after China’s Foreign Ministry said China and Russia had coordinated positions on Ukraine. “We have an array of tools that we can deploy if we see foreign companies, including those in China, doing their best to thwart US export control actions, evade them, circumvent them,” he said. Price during a regular press briefing.

– Rio Tinto this week released a full self-commissioned report into the treatment of its 47,000 employees worldwide, with the findings described as “deeply disturbing” by CEO Jakob Stausholm. According to CNN, the external review found that “bullying and sexism are systemic on Rio Tinto worksites, with almost half of those being bullied”. The company has promised to implement all of the report’s recommendations as it seeks to rebuild its reputation following the demolition of the Juukan Gorge caves in Western Australia in 2020, a move that ultimately forced the then CEO, Jean-Sebastien Jacques. Stausholm, the company’s former chief financial officer, took the top job, promising to “restore confidence”. the FT said it was “a report that should be read widely” and described it as a wake-up call for business.

– According to Wall StreetJnewspaper (paywall), US and European activist investors are targeting some of the UK’s largest public companies, taking advantage of falling share prices to push for corporate breakups and other changes. The flurry of activity shows how particularly ripe the UK market is for activist campaigns. The benchmark FTSE 100 index has a total market value of approximately $2.7 billion, making it one of the largest European indices and providing investors with a pool of large-cap candidates. At the same time, the market has become cheap due to problems with individual companies, a relative lack of high-growth technology companies and the economic fallout from Brexit.

“The opportunity to restructure companies and improve returns that have been weak in recent years makes the UK attractive to activist investors, private equity or other global investors,” said Sharon Bell, strategist European stocks at Goldman Sachs.

– Reuters reported that Shell began trading with a single line of shares after the British oil company confirmed the assimilation of its A and B shares as part of plans to simplify its two-tier structure. The group, which dropped “Royal Dutch” from its name last month after moving its UK headquarters from the Netherlands, said its shares would begin trading on Euronext Amsterdam, the LSE and the NYSE. Shell, which held its first board meeting in London on December 31, introduced the two-class share structure in 2005 after a previous corporate overhaul.

– Alphabet, Google’s parent company, said its board approved plans for a 20-to-1 stock split, CNBC reported. The move comes a year and a half after Apple recently split its stock, giving away three shares for every share held. Alphabet intends to split the stock’s Class A, Class B and Class C shares, according to an income statement, although the change will require shareholder approval. Each shareholder at the close of business on July 1 will receive – on July 15 – 19 additional shares for each share of the same class of shares that he holds. In 2012, Google added Class C shares, which have no voting rights. The company already owned Class A shares, which carry one vote per share, and Class B shares, which are closely held by the founders and early investors and carry 10 votes.

– The “memestock” revolution “is largely filling the pockets of large financial companies”, according to WSJ. He reported that brokerages serving retail investors received a windfall last year for selling their clients’ order flow to e-commerce firms, even as the practice came under scrutiny. increasingly scrutiny from regulators. The top dozen U.S. brokerages earned $3.8 billion selling their clients’ stock and options orders last year, up 33% from 2020, according to news reports. data compiled by Bloomberg.

– Hong Kong hopes for a revival of the IPO after a disappointing second half last year, according to the South China Morning Post. He noted that “several companies have applied for a listing in Hong Kong just before the Lunar New Year holiday”, with companies betting that demand for initial public offerings will improve after a “dismal” January that did not saw only a handful of offers. The newspaper reports that BIEL Crystal, the world’s largest maker of smartphone screens and a company that counts Apple among its customers, is one of the companies to have filed for listing plans. This is the second time the company has submitted IPO plans, after its application expired last summer. At the time, Biel founder Yeung Kin-man said the company was aiming for around $2 billion.

Another notable IPO request comes from Trinity Acquisition Holdings, a special-purpose acquisition company co-sponsored by Li Ning, a former Chinese Olympic gymnast and chairman of the eponymous sportswear company, which already trades on the stock exchange. from Hong Kong.