The week in investor relations: Investor pressure, reporting practices and cannabis ETFs
– Major institutional investors have called on British executives to buy more shares in their own companies to better align the interests of senior management and shareholders, reported the Financial Times (paywall). The investors, including Aviva Investors and Allianz Global Investors, think better alignment could help reduce corporate scandals. The topic is expected to be a key talking point during this year’s annual meeting season.
– The Wall Street Journal noted that the UK’s Financial Reporting Council (FRC) has urged companies to improve governance and reporting practices. The warning comes as the new UK Corporate Governance Code becomes mandatory for premium-segment listed companies on the London Stock Exchange. Some early adopters of the code were called out by the FRC for failing to adequately describe their culture and purpose.
– The first European ETF focused on the medical cannabis industry launched amid continuing investor interest in the sector, reported Investment Week. Created by Purpose Investments, the fund will ‘deliver targeted exposure to the rapidly expanding medical cannabis industry’. Investors remain focused on opportunities in the sector despite a difficult 2019 when valuations of some new cannabis ETFs fell significantly.
– US President Donald Trump has reaffirmed that a ‘phase one’ trade deal with China should be signed around January 15, reported Reuters. Speaking to a US television station, Trump said: ‘We’re going to be signing on January 15 – I think it will be January 15 [or] shortly thereafter, but I think January 15 – a big deal with China.’ The trade war between the US and China was one of the major concerns for investors throughout 2019.
– Activist hedge fund the Children’s Investment Fund recorded its best year since 2013 with returns of 41 percent in 2019, according to Bloomberg. The London-based fund, headed by Christopher Hohn, performed far better than the broader hedge fund industry, which last year suffered low returns and outflows. Hedge funds have struggled to match the performance of the broader market amid the longest-running bull market in history.
– The Philippine securities regulator issued a new corporate governance code, reported Regulation Asia. The new code has 16 recommendations and companies must respond on a comply-or-explain basis. It comes into effect on January 12 and public companies will have six months to publish a new corporate governance manual, according to the news service.