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May 10, 2019

The week in investor relations: US-China trade talks send shockwaves through markets

This week’s IR-related stories from around the web

The on-off trade talks between the US and China have taken another turn and appear to be headed toward a trade war. Tariffs on $200 bn worth of Chinese goods were set to intensify on Friday after the latest round of talks on Thursday evening failed to produce an agreement to avert the higher levies, reported The New York Times

The trade talk debacle led to ramifications on stock markets, reported Bloomberg, with the S&P set for its biggest weekly drop of 2019. And CNBC noted how investors have now pulled $20.5 bn from global equity funds as a result of a breakdown in the trade talks. 

Looking at the contentious issue of US-China trade, The Economist noted how the heightened trade war scenario is a major geopolitical risk and will result in economic damage for both countries

Earlier in the week, Chinese tech and telecom stocks slumped as two tweets from US President Donald Trump – saying trade talks were ‘too slow’ and threating to put tariffs on Chinese goods – transformed the outlook on the trade talks into a much bleaker place, and sent global markets into freefall, reported Bloomberg

Executive pay has long been a mainstream issue and something of a political football, but attempts by the UK government to deal with excessive executive pay in UK boardrooms have tanked, according to new research from the London-based think tank the High Pay Centre, reported The Guardian

Trend-setting venture capital company Sequoia Capital China will lay off as much as 20 percent of its investment staff as a slowdown in the country’s tech sector has reduced the appetite for risk, according to Reuters. The worrying trend is borne out by the numbers: Chinese venture capital and private equity managers raised a combined $1.5 bn for investment across all sectors in the first three months of 2019, a big drop from the $9.4 bn raised in the same period last year, according to data firm Preqin.

President Tayyip Erdogan of Turkey is ready to provide full support to international investors amid something close to a financial crisis in the country, reported Reuters. The report has Erdogan saying that while attacks on the economy through its currency continued, the government was, in fact, in control of the situation. The Turkish economy has slowed recently with a currency crisis that last year wiped 30 percent off the value of the lira against the dollar. 

Wall Street activist Elliott Advisors has set its sights on UK company Whitbread, according to The Sunday Telegraph. Elliott is reportedly frustrated by the leisure company’s ownership of Premier Inn hotels, which the activist says is diminishing Whitbread’s share price.

German steel giant Thyssenkrupp expects its proposed merger with Tata Steel to be blocked by the European Commission over competition issues, reported the BBC. The merger would have created Europe’s second-biggest steelmaker.

The finance director of UK vehicle breakdown service the AA has quit after a backlash from shareholders, reported The Sunday Times. The newspaper said Martin Clarke resigned after shareholders were unhappy with the company’s decreasing share price, which dates back to its IPO in 2014.    

Shares in UK high street bank Metro slumped yet again on Thursday, this time by 8 percent – another new record low – based on speculation that the bank will plug investors for even more than the £350 mn ($456 mn) it said in February it would raise in a planned rights issue, reported The Times. 

Britain’s economy was given a little boost in the first three months of the year, with growth of 0.5 percent, partly thanks to a massive stockpiling by manufacturers fearing the impact of a no-deal Brexit, reported The Guardian