Investor Relations Week: Stocks Plunge on Recession Fears, JPMorgan Hunts German Midcaps and McDonald’s Leaves Russia
– Billions were wiped from the FTSE 100 on Thursday as investors around the world reacted to fears of an inflation-fueled recession, reported Sky News. The blue-chip index fell 1.8%, joining a rout in global markets. Royal Mail led the fallers, down 12%, after warning of a battle to control soaring costs. Unilever, Diageo, Reckitt Benckiser and British American Tobacco posted declines of between 1.7% and 5.3%, while supermarket chain Tesco plunged nearly 4.1%. The selloff comes near the end of a brutal week that has seen the worst losses for U.S. stock markets since June 2020.
– Reuters (paywall) via Yahoo Finance reported that JPMorgan Chase & Co plans to make further inroads in Germany by targeting more of the mid-sized companies that form the backbone of Europe’s largest economy, executives said. American bank. The move is a challenge for established lenders such as Commerzbank, UniCredit’s HypoVereinsbank and Deutsche Bank, which have dominated a crowded market for Mittelstand businesses for decades. JPMorgan, whose European hub is in Frankfurt, has become one of the largest advisory banks in Germany in recent years, with an average market share of 14% in mergers and acquisitions for German companies from 2016 to 2021, double its share in the previous six years.
– The Wall Street Journal (paywall) reported that McDonald’s Corporation announced that it would leave Russia and sell its business there following the country’s invasion of Ukraine. McDonald’s announced in March that it was temporarily closing its 847 restaurants in Russia, while continuing to pay the 62,000 people it employs there. On Monday, he said maintaining ownership of his business in Russia was no longer tenable or “consistent with McDonald’s values.” McDonald’s said it would pursue the sale of its entire portfolio of restaurants in Russia to a local buyer. He said those restaurants would no longer use the McDonald’s name, logo, brand or menu.
– Billionaire Leo Koguan, who claims to be the third largest individual shareholder in Tesla stock, has called on the automaker to announce a $15 billion share buyback as the company’s stock price continues to slide , CNBC reported. In a tweet to Martin Viecha, Tesla’s senior director of IR, Koguan said the company should immediately announce plans to buy back $5 billion of Tesla stock this year and $10 billion next year. He added that Tesla should use its free cash flow to fund the takeover and that shouldn’t affect its existing cash reserves of $18 billion. Shares of the company have fallen more than 30% this year.
– The register reported that Intel shareholders voted to reject the chipmaker’s executive compensation packages, according to regulatory filings with the SEC, although the vote was not binding on the company. The Intel Form 8K SEC submission dated May 12 shows that approximately 1.78 billion votes were cast against Intel’s executive compensation for its listed executives, with approximately 921 million votes in favor, or nearly a two-to-one odds against the packages. Last year’s compensation measures also failed to win shareholder approval. Intel said it takes feedback from its investors very seriously and is committed to engaging with investors and addressing their concerns.
– Bloomberg reported that Boeing Co’s largest airline customer in China had removed more than 100 of the US manufacturer’s 737 Max jets from its near-term fleet plans, citing uncertainty over deliveries. China Southern Airlines Co Chairman Ma Xu Lun told an investor briefing that Boeing’s best-selling planes would be excluded from fleet deliveries until 2024. The carrier plans to take delivery of 78 planes in total over the period, compared to 181 in a previous one. scheduled for March. China Southern said in its annual report in March that 39 were expected to arrive this year, out of a total of 103 deliveries through 2024.
– In other airline developments, JetBlue Airways said it planned to launch a hostile takeover bid of discount carrier Spirit Airlines after Spirit rejected JetBlue’s $3.6 billion bid in under an existing agreement with Frontier Airlines, the WSJ reported. JetBlue is directly appealing to Spirit shareholders by launching a tender offer for their shares, hoping to pressure Spirit management to resume trading, JetBlue said. At the same time, JetBlue said it urges Spirit shareholders to vote against Spirit’s planned merger with Frontier Group Holdings on June 10 to send a message to Spirit’s board.
– Emirates Telecommunications Group announced that it had acquired a 9.8% stake in Vodafone for approximately $4.4 billion, one of its biggest investments in more than a decade, the FinancialTimes (paywall) reported. The state-controlled investment group, whose chief executive spent 17 years in senior roles at Vodafone, has expressed its full support for the company’s management and strategy. The surprise arrival of the Emirati group in pole position on the list of Vodafone shareholders “gives some breathing space for the management”, said one of the first 20 investors in the London-based company. Vodafone CEO Nick Read “will probably have at least this year to show he can turn the business around”, added the investor.
– The exchange reported that technology will shape the world’s trading strategies in the future, and companies that don’t adapt to it will be left behind, according to a global buying outlook panel at TradeTech in Paris, in a discussion on the trading strategies that should be prioritized to best adapt to another year of market uncertainty. Matt McLoughlin, Head of Trading at Liontrust, stressed: “You have to keep the end customer in mind, and that focus is really important. But companies that can offer liquidity and differentiate themselves [themselves] are the ones that will stand out. The future will be all about technology, and that will be crucial in navigating the liquidity landscape.