The week in IR: US bears brunt of market falls, investors debate IPOs versus direct listings, and UK sees string of CEO changes
- US equities bore the brunt of global stock market declines this week, reports Bloomberg (paywall). The MSCI USA Index fell almost 3 percent over two days, while MSCI’s index of equities outside of the US market dropped only 1.45 percent. US equities did better than the rest of the world during the first eight months of the year, but have now trailed other markets since August. This reversal ‘suggests investors are increasingly concerned that the US economy, which has been able to weather the global slowdown better than most of its major peers, is finally starting to buckle,’ says the news service in an opinion piece.
- Investors debated whether IPOs or direct listings are the best way to bring tech companies to market at a Silicon Valley conference this week, reports the Financial Times (paywall). IPOs involve the creation of new shares which are underwritten by investment banks, while direct listings see existing shares sold directly to the highest bidders. At the conference, some investors argued that IPOs tend to undervalue shares, leading companies to lose out on potential funds, and also involve costly underwriting fees. However, it was noted that IPOs, through the book-building process, allow companies more control of the share register and the opportunity to bring in major institutional investors.
- BP has become the latest in a string of major British companies to announce CEO changes this week, reports Reuters. On Friday, BP said that CEO Bob Dudley would step down with Bernard Looney, who is responsible for the upstream segment of the energy company, taking his place. Earlier in the week, supermarket operator Tesco and tobacco firm Imperial Tobacco both announced CEO changes.
- Peter Navarro, the White House trade advisor, has moved to quash claims that the US government could de-list Chinese companies from American stock exchanges, reports CNBC. Last week, multiple news providers reported that the White House was considering ways to limit the flow of US investment into China – and one tactic could be to restrict Chinese companies from listing in the US. Referring to a story by Bloomberg, Navarro told CNBC: ‘Over half of it was highly inaccurate or simply flat-out false.’ Over the weekend, a US Treasury spokesperson also said the plan was not under consideration, notes CNBC.
- Activist investors, including Elliott Advisors, are considering taking a stake in British company Metro Bank, according to a report from The Sunday Times (paywall). Last week the bank postponed a £250 mn ($308 mn) bond issue despite offering an attractive yield, while its share price fell by a third. ‘Activist investors are understood to be interested in taking an equity stake or purchasing new debt at a higher coupon in a private placement,’ reports the newspaper.