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Feb 03, 2023

The week in investor relations: BlackRock’s push for more retail investors in the EU, Chinese IPO regulations and US call for crypto ban

Our pick of the IR stories from around the web you might have missed this week

– BlackRock joined forces with neo-broker Bux to offer low-cost savings plans that use ETFs in a push by the world’s largest asset manager to encourage more retail investors across Europe to adopt them. The Financial Times (paywall) reported that investors will be able to build investment portfolios of up to 10 BlackRock iShares ETFs in a so-called savings plan that will cost a flat fee of just €1 ($1.09) per month on the Bux platform. Investors will be able to make portfolio trades that can adjust the allocations across all of the ETFs they hold for a €1 commission fee and the minimum required investment has been set at just €10 per month to appeal to younger savers.

– China’s planned easing of rules for initial public offerings will allow more mid-sized companies to tap domestic investors, with larger firms considering listing onshore instead of Hong Kong, Goldman Sachs said. A report from Bloomberg (paywall) noted that the China Securities Regulatory Commission’s plan, unveiled this week, eases rules for IPOs across all of its exchanges that will simplify and quicken the process. The regulator is now seeking public feedback on the draft rules until February 16.

Once implemented, the changes ‘will bring the Chinese onshore market closer to international practices,’ said James Wang, co-head of Asia ex-Japan equity capital markets at Goldman Sachs, in an interview. ‘It will attract further interest from international investors that are seeking to build A-shares market exposure, but currently see it as being too distant and complicated. It’s a very significant milestone.’

– In crypto news, according to CNBC, Berkshire Hathaway vice chairman Charlie Munger urged the US government to ban cryptocurrencies, as China has done, arguing that a lack of regulation enabled wretched excess and a gambling mentality. ‘A cryptocurrency is not a currency, not a commodity and not a security,’ Munger said in an op-ed published in The Wall Street Journal earlier this week. ‘Instead, it’s a gambling contract with a nearly 100 percent edge for the house, entered into in a country where gambling contracts are traditionally regulated only by states that compete in laxity. Obviously the US should now enact a new federal law that prevents this from happening.’

– Meanwhile, Cointelegraph said Indonesia’s Ministry of Trade is reportedly aiming to roll out a national crypto exchange by June this year, six months after its previous target of December 2022. Trade minister Zulkifli Hasan shared the new target launch date on February 2 at the opening of crypto literacy month in Jakarta, noting that the government is currently reviewing which companies meet the criteria to become part of the exchange, according to local reports. There are five active crypto exchanges currently registered with the country’s regulators and, according to Zulkifli, the ministry’s crypto exchange could encompass all of them.

– According to Reuters (paywall), a rising wave of shareholder activism has turned Tokyo into a growth market for businesses that offer advice on shareholder relations, as corporate Japan scrambles for help to deal with investors that are no longer silent. The growing presence of such advisers, including new entrants, shows how Japanese companies are more actively addressing concerns about weak governance, poor allocation of capital and chronic stock underperformance – even those that have not yet been targeted by activists.

– Russia’s central bank recommended earlier this week that retail investors convert their foreign currency Eurobonds into local ‘replacement bonds’ as ₽5.7 tn ($81 bn) of investor holdings remain frozen by western sanctions. Reuters noted in a report that since Russia launched what it calls its ‘special military operation’ in Ukraine last February, foreign payment companies have blocked ruble transactions due to sanctions, making it harder for Russian companies to pay out to holders of Eurobonds. In response, President Vladimir Putin signed a decree last July allowing Russian companies to issue replacement bonds that are denominated in foreign currencies, as Eurobonds are, but are repaid in rubles.

Several major Russian companies, including state-run gas giant Gazprom and oil firm Lukoil, have substituted their Eurobonds in this way.

Staff Writers

The staff writers on IR magazine are from our team of highly experienced journalists.